Can I be honest, I'm becoming more scared by the minute. You see in the 1900 the real estate mortgage business was awesome but then eventually they relaxed their lending practice which led to massive crash in 1932. This is important because people were investing based on the idea of a good business , but they changed the business so much, that it was a different animal.

Whenever I see brokers getting credit cards, bank accounts , lending money to make more or now the new thing which lending your stocks to make more money it always worried me a little. Because yes we might be covered by SIPC insurance but you can imagine the headache that might be.

Robinhood is giving people the opportunity to make money from the stocks they already own and the idea is really simple. You're allowed to grab that you basically own and they're going to lend it out and a part of the income they make from it they're going to bounce it back to you. It means instead of having your stocks just sitting in the account , why not lend your stocks out and have your stocks make you some passive income

The first thing is , Robinhood, well it sounds good but it used to be that basically the only people that could lend out their securities and make some passive income from them were the rich so now us poor people are able to participate and make our money and Robinhood is breaking barriers.

So what are things you have to know , what securities are eligible to actually do this you have stocks you have EFTs exchange Trader funds and you also have ADRS , you're basically using Foreign Companies and so on. So you're able to lend whole shares , if you have one Apple stock , you can lend it out. But it's not gaurenteed that they'll lend it out. It's on their basis. So why would someone pay you money to borrow stocks ?? Well the short sellers goal is they borrow money to buy stock , they sell it immediately , they hope the stocks goes down then they buy it again later at a shorter price. They make profit on the money and get back to stock. Well they do this consistently. The transactions on Robinhood flow through alot faster so they make alot of money. Robinhood is a house they make money where you lose or win. All they care about is the Transactions since people trade all day.

There's alot of hidden truth behind all of this. Make sure you checkout my next post to figure out more .