'He got on his bike and never came home'
Welcome to “Not Pretty, Not Rich,” a newsletter meant to keep you up to date on what’s happening in the markets and economy, and what you can do to take advantage — if anything. I’m not a financial expert or professional, so don’t take anything contained in this newsletter as advice. It’s also unaffiliated with my employer, and all views contained within are my own.
This week I’m going to focus the newsletter on a sad story that I haven’t been able to shake. It involves a 20-year-old from Illinois who killed himself less than 24 hours after signing up for a Robinhood account.
For those of you who don’t know, Robinhood is an online trading and investing platform, and it’s become incredibly popular over the past few years because it didn’t charge commissions or fees — a feature that has pushed almost all other brokers to drop their commissions to zero, too. This story isn’t about Robinhood — there are several other platforms and apps that do more or less the same exact thing.
Anyhow, he signed up and started trading, but didn’t quite understand what he was doing. Though he didn’t have much money, he started trading put options on margin (it’s still unclear exactly what he was doing), and somehow ended up with a negative $730,165 cash balance. Seeing that balance, it appears, caused him to panic, even though he may not have been that deep in the hole as some of his trades had not yet settled.
“He thought he was exposed, he thought that ending his life would protect his family from the exposure,” Bill Brewster, a cousin by marriage and an analyst at Sullimar Capital, told CNBC in a phone interview. “He got on his bike and never came home.”
I wanted to share this story because I think it’s important for us all to realize the importance of financial literacy and to recognize the power we have at our fingertips.
It’s never been easier to start trading stocks or derivatives, to apply for loans or get our hands on cash through payday lenders. The barriers are all but gone, and it’s very, very easy to get yourself in serious financial trouble.
For example, I remember when I was fresh out of high school, one of my friends had gotten a credit card with a $5,000 credit limit. He had subsequently maxed it out, buying clothes and all sorts of things, because he didn’t realize he would need to pay the money back.
And we’ve all read the horror stories about payday loans and online installment loans, which can trap people in debt cycles for years.
While it’s generally a good thing, I think, that investing is more accessible than ever, stories like this remind us how quickly things can turn. I find it particularly disheartening that the young man in question didn’t seem to even want to ask for help, likely not knowing who to ask or where to turn.
Take what you will from it, but don’t be afraid to talk to each other about money, and offer assistance when you can. We’re living in a day and age when people with little knowledge are able to trade worthless stocks with few or no guardrails. It’s been gamified, but the stakes are real. And even professional investors are worried about the fallout.
To sum it up, it’s very easy to bury yourself. So proceed with caution, and make sure you know what you’re doing when dealing with your money.
As always, thanks for reading. See you soon.