Losing Money Is Easy

Hi all, it's Eric. The technology industry likes to make things easier and cheaper. But sometimes friction isn’t so bad. Take recreational financial speculation, for example. There was a time when people who wanted to take on credit card debt to trade complex financial products had to demonstrate a certain level of sophistication. Making reckless trades often meant calling up a human broker and instructing them to carry them out on your behalf, which could be embarrassing and time-consuming. That was good!

Inevitably the internet changed things, and there have been recent reminders of the consequences. Last month, a man committed suicide after his account on Robinhood Markets Inc., the company at the vanguard of low-friction stock trading, appeared to be $730,000 in the red. He’d been making complex trades that showed a negative balance that far exceeded his actual financial situation. This week, the New York Times spoke to another user who funded his Robinhood trading account with $15,000 in credit card debt and multiple home equity loans. “When he is doing his trading, he won’t want to eat,” his wife told the paper.