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Sunday, July 9, 2017

My worst buy ever, and first negative experience with Robinhood

I've been told it is a rite of passage. Almost every new dividend growth investor goes out and chases a high yielding risky stock hoping to make a quick buck. I was no different.

So when Frontier Communications came around last year, I dove in. It was a small company trying to expand with a large buy from Verizon. Analysts were super positive about them. I believe one even had them projected to go to $9 a share. Even the cynics looked at FTR like a high yielding bond. At five dollars a share I figured why not. Take a dip and grab a yield boost, it was over 8 percent.

Then the problems started. Debt, less than average earnings, and rumors of a dividend cut. I didn't care I had a relatively stable 8 percent yielder. I attributed the earnings to acquiring the new accounts and growing pains. The price dropped to $3 per share. I decided to wait it out. Then came the dividend cut and $2 a share. I thought hard about selling but decided to ride it out. Then $1.14 per share. At that point I decided it was at rock bottom and I'd just wait it out. After all where else was I going to get the high yield for that money.

I knew the 15-1 reverse split was coming. But I figured I'd get a fractional share and wait it out. Wrong. This was my fault I should have researched it more. My shares got sold. For a little over a dollar a share. The money is tied up in Robinhood for a few weeks. Annoying but also my fault.

The good news is it wasn't a large investment. It's why I got my feet wet slowly with stocks. A total cost basis of just 58.62. Now worth a dollar in change. In a way it was time to rip the band aid off too. I should have sold a long time ago. And honestly I can think of a better place for the $12-13 dollars I have left.

My annoyance with Robinhood isn't the sell. It's the communication or lack there of. The day it happened I got an update in the Robinhood newsfeed that FTR had a reverse split and money would be returned to my account in a couple of weeks. FTR was moved to my watch list. There was no e-mail like I get for every purchase or sell. There is no place on the site for me to even look up what is going on with this reverse split or sell. I can't even remember what the sell is for or if they told me in the first place. I just have to wait a few weeks and find out what went on. The is honesty not a huge deal for $12 or $13. But down the road what if it is $500-600? I accept the blame for what happened is on me. But I need to know what is happening with my money. It shouldn't pop up once in my newsfeed and then have no place for me to view it.  Overall I'm treating it as a lesson learned. But if Robinhood is going to take an action which involves returning money for my shares. I should have at minimum an e-mail, but there should be some way of tracking what is going on. Even if it is just a pending tab that says "FTR had a reverse split. Your money will be returned to your account within two weeks." It shouldn't go away after one view.


  1. Sorry for your lose. Glad it wasnt a huge purchase like u stated. I havd never used robinhood but that does sound annoying

    1. Thanks for the comment. It was a learning experience. Learned a valuable lesson about cutting losses and sticking to an investment strategy. Long term that is well worth a less than $50 loss. It could have easily cost me more money down the road.

  2. Same situation ,Bought FTR and sold it in robinhood as my first stock,it was $50 purchase

  3. Nice to know I wasn't alone. I guess we can be thankful for little mistakes.

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