Apple or Tesla shares for $1: Why fractional trading is either 'democratizing' Wall Street — or just dangerous.
“I use Cash App to do small purchases because it lets you buy portions of stocks,” said Jeff Wickliffe, a professional photographer in New Jersey. “The tech makes it a bit easier to do without any middleman.”
“The ability to buy a fractional share certainly broadens the appeal of stock ownership,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “The risk, however, is that it invites a casino mentality.” The advent of commission-free stock trades also accelerated the trend. “I think the proverbial game has changed due to the practical elimination of trading costs,” Thrasher said. “That friction of buying and selling shares diminishes the wall separating the average retail investors from participating in stock ownership, compared to the high cost of trading 15- to 20-plus years ago,” he said.
“They think day-trading is something that can provide them with an extra stream of income,” Mooso said. Young investors used to earning a few extra bucks as dog walkers or rideshare drivers see app-based investing platforms like Robinhood as another side hustle, he said — one that has remained accessible in the wake of COVID-19-related shutdowns.
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