Show HN: Double – Design and invest in your own stock index

This is cool. There is a lot of hesitation to move significant assets from my Charles Schwab brokerage account. That's going to be my main hurdle. I need to understand the safety, trust, trading mechanics, flexibility that I have with Charles Schwab, all of those things become very valuable when talking about high amounts for retirement purposes. I don't really know what you can do there to attract such clients? Will anyone move $5m from their top tier brokerage to Double yet?

jjmaxwell4 · a year ago

"Will anyone move $5m from their top tier brokerage to Double yet?"

I have!

But I understand that yes this is a hard thing to get people to move and trust, safety and trading mechanics are incredibly important. We are trying to be as transparent as possible on all those factors. I would love for you to try us out with a smaller amount first to see observe all the mechanics before making a larger move. We support full and partial ACATS transfers of existing stock positions (meaning you don't have to sell anything).

TuringNYC · a year ago

>> There is a lot of hesitation to move significant assets from my Charles Schwab brokerage account.

I'm incredibly double-minded about this. M1 offers essentially the same service and they do it very well. I've compared M1 vs Fidelity Basket Portfolio (which also offers yet almost the same service.) Here are my takes

- M1 is easy to use (mostly, though same super-strange UX choices)

- M1 is a pleasure to use

- M1 doesnt fail on the main features

- M1 Baskets of Baskets gets complicated, but understandably so.

- Fidelity is better in some ways as it allows trading anytime, not just on specific windows as M1 does (this can also be a downside for itchy fingers)

- Fidelity Basket Portfolios is broken 30% of the time. Their OWN buy function fails any time they cannot get a quote for any 1 member of the portfolio

- Fidelity: It is absolutely a headscratcher how, in 2024, Fidelity can have trouble getting quotes for liquid public stocks during market hours (e.g., the other day, their buy of an entire pie failed because they could not get quotes for "DVY" which is highly liquid

- M1 fails absolutely miserably on back-office functionality. Selling losing lots is almost impossible without major Excel wizardry since the accounting info is held separately in APEX

- M1 fails dangerously on things they should never fail on -- for example setting beneficiaries has been a 4-month journey and still remains unresolved. If you dont have a will, get prepped for Probate! Worse, the failure is a silent failure as it suggests on the UI that beneficiaries are set. You get different answers from different people and each wants to help you but runs from "complex" issues (in M1's case, they are designed to have a single account, so their backend features fail if you have multiple accounts (e.g., a RothIRA and a non qualified account.)

The dangerous, infuriating, and befuddling experience with setting beneficiaries on M1 lead me to stick to the majors (Schwab, Fidelity) because at least I can rest assured they have the basics solidly figured out. It also makes me very hesitant to go to startups for this sort of stuff

dmoy · a year ago

> accounting info is held separately in APEX

So the good news is that M1 doesn't use apex for clearing anymore

The bad news is that... things got worse? After they swapped to doing clearing in house, they dropped like a month of incoming wires without reaching out at all, until I noticed on my monthly login. Turns out that they had changed the underlying wire instructions (makes sense), but sent an email saying that nothing would change on transfer instructions (not true).

Then the next month, they still dropped wires even with the correct instructions, because... ???? unknown reason. Again no contact, until I reached out and asked wtf. Third month, everything worked even though nothing was changed from the prior month.

So there's a reason why I won't put more than SIPC worth in M1 or any other new fintech. And yes, it's backend incompetence as the primary reason.

Very basic, maybe stupid question: If you're not changing your portfolio strategy or altering your weights, does this work by rebalancing your investment every so often, so that the % of total dollars you hold in an index continues to match the weights you set?

Like if a customer creates an index that's 50% AMD and 50% NVDA, and you put $100 in that index, does the customer have some underlying account that initially apportions $50 to each, and then if the next day their NVDA is worth $52 and their AMD is worth $48, the system will sell $2 worth of NVDA and buy $2 worth of AMD?

And if that's so, can you set target thresholds for when you want it to rebalance? Like, not until one stock deviates more than 10% from its ideal weight?

jjmaxwell4 · a year ago

Not a stupid question at all.

Short answer for your simple scenario is yes it would rebalance. The longer answer is it depends on the output of our optimization engine.

Our optimizer tries it's best to make the portfolio better, taking into account drift, trading costs and taxes and potentially holding costs for etfs and a factor model for broad diverse portfolios. Wash sales also play a large part because by default we prevent any wash sales from taking place.

These objectives can compete against each other (tax harvesting is generally good but in your example requires selling AMD not buying it). We run an optimization to try and balance these and come up with trades that make the portfolio better. By default we rebalance if the optimizer thinks the portfolio will get better above a threshold we set.

We have the ability to rebalance based on naive weight drift as you discussed at the end of your comment - right now it's not enabled by default. We are hoping to add a setting so users can enabled the optimizer to only trade if x number of stocks have drifted more than y%.

Please check out this article to learn a bit more: https://help.double.finance/en/articles/9718142-portfolio-op...

bb88 · a year ago

Another stupid question. How much of that is your total portfolio?

More than 30%? Less than 30%?

Less than 30% means that you're still ok if double fails. More than 30% means you have a significant portion riding on it.

If you're worth 50 million, you can probably lose 5-15 million and still be okay...

nyrulez · a year ago

noduerme · a year ago

ecuaflo · a year ago

In the feature comparison table, I find it deceptive or at least a dark pattern to mark the competitors with a simple check and yourself with a big green check when a feature is present.

asciimike · a year ago

A product that I've wanted for a long time is "broad market index fund , minus the individual stocks I am overweight in due to current or previous employment equity" (e.g. VTSAX - MSFT, GOOG/GOOGL), any chance you can handle this today/build it out in the near future? Sounds like you might be able to handle this already?

Yes we can handle this already. You can customize our broad market indexes by removing or lowering the weights of specific stocks (or sectors although you asked about stocks).

Awesome, thanks for confirmation!

Etheryte · a year ago

From a functional perspective, you can already do that using options, look at market neutral strategies for an example of how to construct a position like this. From a practical point of view, I doubt you want to get your nose into complex financial instruments just for that.

To your point, I _very much do not_ want to stick my nose into complex financial tools, hence my desire to use a more simple tool to get the exact value of "give me the thing I generally want, minus the one or two things I don't." Sounds like this is one option for doing so!

Terr_ · a year ago

I'd argue it's a good idea to consider one's current job-industry as an aspect of diversification even without having large RSUs/stocks/options.

Better to have either a market downturn you can ride out while working, or chronic unemployment while your investments are strong, instead of the double-whammy of long-term unemployment and a big portfolio downturn at the same time.

Totally valid, I should have written it as, "current employment, current/previous equity."

thebmax · a year ago

I'm JJ's brother and an investor in Double so I'm a little bit biased but I believe reducing/eliminating AUM fees is a huge net positive for the world. The performance drag over long term that money managers charge is a tax on people's retirement savings. What Vanguard/Bogle did with Index funds was massive, and I think Double can be this generation's Vanguard. Professional and powerful money management tools with rock bottom/no AUM fees is a massive opportunity. Congratulations on the launch JJ and Mark!

sooheon · a year ago

If Double doesn't charge management fees nor commissions for trades, how does it get paid? Flat fee or payment for order flow?

jsonis · a year ago

SV money and banking relationships don't prevent a total meltdown, as seen in the Andreessen Horowitz-backed Synapse saga with Evolve.

Assume there's just a 0.1% of a meltdown and you're better off sticking to Vanguard ETFs.

https://archive.is/G3cYF

nekitamo · a year ago

This is great, exactly what I was looking for, but how do I know I can trust you? I'm a bit hesitant to wire large amounts of money to a startup.

Also, how do you make money?

Why trust us?

1. We're working with Apex Clearing, a large US Custodian with more than $100B of assets. Your account is in your name there.

2. We're well funded and backed by reputable investors (YC, Matrix, Youtube Cofounder, and many others).

3. We are registered with the SEC as an registered investment advisor.

4. I personally am in the process of transferring nearly my entire net worth onto the platform.

We eventually will charge a monthly fee as described in our Form CRS, but we are waiving this fee for the time being. Eventually we plan on making money eventually like Robinhood, M1 and other commission free trading pioneers. This means PFOF, Stock Lending, line of credit, etc. We are not currently offering these products. Please see our website for more details and our disclosures: https://double.finance

Great answer, thank you.

Another question: do you guys support trading of fractional shares in these custom indexes? If so, what's the smallest supported share % (eg 1%, or 0.01%)?

dzink · a year ago

PFOF is a deal breaker. If everyone but Fidelity is doing it thats a huge selling point for Fidelity. Go against the grain and do what is right for your customer if you want to have the net worth of people who care about their money and thus more trust than Robinhood.

daxaxelrod · a year ago

Love 4.

patorick002 · a year ago

Several years ago, I worked at a company called Motif Investing that was conceptually similar this. It was marketed more as a "build your own ETF" kind of thing. You could assemble and weight up to 30 stocks in a "Motif" and manage it over time. We had some of the features you mention as well. I was happy with the product and enjoyed working their, but the business never really took off. I wish you the best in developing your company!

Thanks. I know of and have always respected Motif.

Would love to chat about any hard learned lessons along the way if you're up for it - founders@double.finance