What Does 'Dumb Money' Mean? A Financial Advisor's Take on the Movie

Chris, have you heard the phrase dumb money prior in your industry at all? Or was this totally new to you? Well, interestingly enough, I really hadn't. Okay. And, and not to not equating it to just kind of the average Joe, you know? And, and cause really that's who I work with. Just regular, everyday people, small businesses, families. And so, you know, I consider my clients like family. So I'm, you know, I want them to be smart money. Right. And so it, ironically enough, that's not a term that I've ever thrown around before. Okay, cool. Yeah. There was a bunch of terms. There was dumb money. There was diamond hands, which I guess means as someone who has a high risk tolerance for high volatility stocks or assets, I don't know. Basically to me, to me that meant like you're about to ball out. Could I tell you another way of saying that? Sure. It's just called an aggressive investor. Okay. Yeah. Okay. You have an aggressive risk tolerance. Okay. And then there's paper hands and then that's someone who scared, I guess. And then HODL. See, you said that they spelled it wrong on, on Google. It said, it stands for hold on for dear life. HODL. Yeah. See, see, that's the generation gap thing. Like to me, they just spelled hold wrong. Cause they were saying hold. Yeah. Right. So who knew it was an acronym? I would never know that. Who knows if it really is an acronym. Maybe they just try to justify it later. Fred, I'm a millennial. I had no idea what any of these terms just mean. And I'm in finance. So maybe that means I have an old soul or I just don't spend enough time on wall street bets. So yeah. So these Robinhood investors are not investors. I'm sorry. The Robinhood CEOs, managers, um, they, they, everyone, all the retail buyers are on Robinhood cause it's free and, um, free. Yeah. First of all, explain that. What does that even mean? Well, it, it's not free because what, what they're doing, they're making money one way or the other on people depositing money into those accounts. And so they're not charging you a direct commission. Uh, but, um, the money there's a flow of the money where, you know, it's coming into there and then they, they send it out for it to get traded and all these different things. And so Robinhood had a relationship with Citadel. And so Citadel was basically the one paying, uh, Robinhood in lieu of the people who were depositing money to direct money to there. Correct. Right. Correct. And frankly, I mean, I'm not so sure you shouldn't have to pay some, even if it's a small transaction cost, because you're going to Robinhood or, or Schwab or E-Trade and they're providing you a service, you know, they're saying, Hey, you come on our platform. Uh, we will link you up with, um, you know, a buyer or a seller will make you a market. Right. And that, that's a valuable thing. I mean, when I was growing up, you needed a seat on wall street to do that. Yeah. It was, it wasn't, there wasn't none of this online stuff. Yeah. So, I mean, it's a legitimate service, you know, to do that. But they, what they did is I think they misled a lot of people by saying, you know, Hey, it's free. Come on in. I was like, Oh, it's free. Yeah. And another thing that I think gets missed here that, um, the, the Robinhood app, I think causes people to make bad financial decisions because naturally it's tilted more towards making these high risk, maybe high reward plays. Um, but you can lose a lot of money and we've seen that. And so you're better off, you know, build yourself a portfolio, whether you do it yourself or, you know, you educate yourself or you, you find a trusted advisor. Um, but to just, you know, with no background knowledge or, or understanding in some cases, you know, you're, you're, you're getting people to sign up and to go chase some high flying stock and Robinhood, you know, could hurt the average person just as much as, you know, the hedge fund, like they portrayed or just as much as an ignorant buyer who doesn't have the slightest idea of what they're doing and just going in heart, you know, I like the name or it's me all the way. I'm a high risk equity guy. High risk equity. I have this very heavy risk tolerance. I'll try it. Yeah. I don't gamble anything I can't afford to lose. So I put it in there, watch it if it doubles them out. Yeah. And, and, uh, what, what I was, I was, I saw the movie with my wife and I must've tapped her 10 times and said, sell half, sell half, crazy. Hold the line. Don't hold the line. Sell half, take your profit. Now you're on house money and go buy, go diversify that out, you know, or, or use that to fulfill a purpose, you know, like paying off your student loans or like helping mom with, with the mortgage or whatever. Yeah. So you're, you're talking, you're talking in, you know, you're making sense of it all. To me, the theme of this movie was, you know, there's so much division in us, right versus left in this country, but this movie was about the division top versus down. And I think this was about, you know, all of the people on the bottom saying, screw you guys. You know, you guys want to put GameStop out of business. We love GameStop and we want to go against you. You're at the top. You got all the money again for watching the real generation gap. Please make sure to like comment, subscribe, let us know what you guys think we should review next. What did you guys think of dumb money? Have you seen dumb money? Are you going to see it? Make sure to check us out on Spotify. 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