undefined | Better HN

0 pointssemi-extrinsic5y ago0 comments

If you know that there is only one fish and a lot of sharks, sure.

But with payment for order flow you know there are tons of other fish at the table. That changes things, as you only have to beat the other fish to get a small payout. And the sharks aren't focusing on you in particular, so you might get lucky and beat the sharks.

0 comments

stcredzero5y ago

Isn't that the "bigger fool" theory?

To quote Obi-Wan: "Who's more foolish? The fool or the one who follows him?"

semi-extrinsicOP5y ago

Well, yes and no.

If you assume that all Joe Random on Robinhood can do is to chase momentum and try to offload before everyone else, then yes.

But if you believe that certain Joe Randoms are actually talented and lucky enough to identify a bona fide unrealized potential in a stock and then invest in that, all the other Joe Randoms doing stuff provides enough noise that you don't get immediately picked up as a signal by the big players who can outgun you.

j / k navigate · click thread line to collapse