The Compound and Friends - Bloodbath

Episode Date: April 4, 2025

On episode 186 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Steve Quirk, Chief Brokerage Officer at Robinhood to discuss: the stocks getting hit hardest by the tariff selloff, the state of the retail investor, 24 hour trading, and much more! This episode is sponsored by VanEck. Find out more about The VanEck CLO ETF by visiting: http://VanEck.com/CLOIJosh Sign up for The Compound Newsletter and never miss out!: https://www.thecompoundnews.com/subscribe Instagram: https://instagram.com/thecompoundnews Twitter: https://twitter.com/thecompoundnews LinkedIn: https://www.linkedin.com/company/the-compound-media/ TikTok: https://www.tiktok.com/@thecompoundnews Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

So not much going on in the markets these days. We'll try to just we'll come up with some stuff. It's like watching paint dry. Yeah. Yeah. It's quiet. But you want watching paint melt into your eyeballs. Yeah. Where's your home? Where's your home base? Chicago. OK, still. We have about 100 people in Chicago. Robin Hood does. Where?

Right in the train station. Right downtown. OK. Yeah, we we're building our second HQ in Chicago. And it's opening like now, like this spring. Where is it? It's in the Salt Shed. Oh, okay. Yeah. So you know that area?

I do not well. It's like Goose Island, I think. Yeah, yeah, it's Goose Island. There's a lot of new, a lot of interesting things being built around there. Well, so we're one of them. So we took office space, like I guess a year ago we committed or something like that and they're building like really cool, I don't call it loft space but like you know big open plan, high ceiling and then it all has a view down into the music venue which my people in Chicago are

all music people so they are beyond excited. Yeah that music venue is getting cool. Yeah. So we're gonna come out there at some point and celebrate when everyone's moved in. But Chicago is an awesome city for our business because there are just thousands of people who know what they're doing. And we've been able to hire a lot of operations staff in addition to advisors in Chicago. So I mean, what makes it such a cool city is you just have four exchanges with thousands and I came from that world thousands and thousands and thousands of people.

The Chicago Board of Trade, CMA. Chicago Stock Exchange, CBOE. CBOE, right. So you had four exchanges and you had tons of talented people on those exchanges and they kind of went away for the most part. CME still got some presence. What type of people work with you of the 100? What roles are they?

We have everything. CX, a lot of product development people, engineers, everything across the board in Chicago. There's a lot of derivatives talent in Chicago. So our whole derivatives team is Chicago. So derivatives would be futures, the event contracts, everything that is. Yeah, that makes sense. Like you're not going to find a huge talent pool in San Francisco or LA. No. Like you would in a place like Chicago where it was born.

Yeah. And that's kind of like, you know, there's a huge like brokerage slash wealth management talent hub in St. Petersburg. Yep. And Tampa. And that's the legacy of like all the people that have worked at Raymond James over the years. Yep. So there are like these pockets in the country where you just know if you need a certain type of expertise. It's already resides there.

You know, it's really strong in risk management too. Chicago is really strong in risk management. Because think of all the trading firms you had there. There are a lot of people who are, you know, and these are leveraged instruments. So risk management is paramount. If you're not good in risk management, it can end very poorly very quickly. Did they hire you as a chief brokerage officer? Oh yeah, I came. So I started with Think or Swim.

I don't know if you remember that company. Yeah, with Tom Sosnoff. I knew Tom Sosnoff from the trading world. We never worked together, but he, myself, JJ Kinahan, we're all. I heard you were the guy that suggested the beret. I heard you said, Tom, you're super entertaining on the mic. You're obviously, you've done really well. But what if also there was the beret. I heard you said, Tom, you're super entertaining on the mic.

Obviously, you've done really well. But what if also there was a beret? And he said, all right, I'll give it a shot. And the rest is history. Tasty Trade was born. And the hair. The hair down to here. I can't tell you how many meetings I attended with him when we were first acquired by TD Ameritrade. Yeah, you know the very first board meeting because you know, he needed a interpreter, you know Tom's Tom's acquired He's such a great he's such a great character though He is a good character But he you know, he walks in the first board meeting with his you know

His white t-shirt and his ripped jean jacket and they're all looking at him like why is this guy dressed? Because he's a billionaire shut up exactly. Yeah Shout to shout to Tom Why is this guy dressed like this? Because he's a billionaire, shut up. Exactly. Yeah, yeah, yeah. That's basically it. Very cool. Shout to Tom. Well, this is, without a doubt, the reddest day in the history of the compound in France. So we're happy to have you here. Ooh, yeah.

Yeah. No rush. No rush. And it started. It started early. But you know what's kind of interesting is like right after the announcement, we got that drop in the futures market

and we kind of just sat there. Yeah, no bounce. Overnight. There was no, there was a little bounce, but really I expected way more. Way more selling or way more bouncing? I just wait, I expected more movement. Like I thought there would be. Back and forth. Yeah, yeah, because we have, you know,

we have products that trade around the clock. We have a thousand equities that trade around the, because we have products that trade around the clock. We have a thousand equities that trade around the clock. We have futures that trade around the clock. So we're all over. And it was, I mean, we did, there were great volumes, but I just thought there would be more movement. I think the currency markets went crazy overnight. They did.

Yeah. And I think on the equity side, this is the ultimate tape bomb. So I think when a tape bomb drops, sometimes it's not obvious how to price it. And I think people just looked at each other like, wait, is this the worst news you've ever heard? Or maybe it's so bad that it can't be real. Let's start the show. Oh yeah, let's do the show. Alright, Jon, let's do it.

Let's go, Nolan. Alright. Alright John, let's do it. Alright. Whoa, whoa, whoa, stop the clock. Here's a word from our sponsor. Today's episode is brought to you by VanEck. Think broader. Advisors looking to optimize income generation in a shifting rate environment may want to

take a broader approach to CLO investing. Being limited to triple A tranches means missing out on higher yields across investment grade CLOs. The VanEck CLO ETF, CELOI, is sub-advised by Pine Bridge Investments, a firm with decades of CLO market experience, and takes an active approach to CLO investing to find the most attractive investment grade CLO opportunities from AAA all the way to BBB. Find out more about the VanEck CLO ETF, CLOI, at VanEck.com slash CLOI from AAA all the way to BBB. Find out more about the VanEck CLO ETF CLOI at VanEck.com slash CLOI Josh.

Welcome to The Compound and Friends. All opinions expressed by Josh Brown, Michael Batnick, and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Ladies and gentlemen, welcome to the biggest, the baddest, the most widely respected investment podcast in the world.

I want to shout out all our listeners in Sydney, Melbourne, Dublin, London, Sheffield Birmingham New Jersey We have listeners around the you know we have listeners around the world I did know I have a message for our listeners around the world the tariffs weren't my idea Wasn't Michael's had the compound no, we take no responsibility. We love you. We love our international listeners. Please don't give up on us.

It's nothing that we personally are endorsing. Guys, we have a very special guest today. I'm so excited to introduce you. I've known Steve for a long time. He's one of these guys in the brokerage business that everybody knows and everybody likes. And this is long overdue in my opinion. Steve Quirk is the Chief Brokerage Officer at Robinhood. Prior to joining Robinhood, Steve oversaw the strategy and deployment of initiatives for trading at TD Ameritrade. God bless TD Ameritrade. Prior to his role

at TD, Steve was responsible for the development of new trading tools and technology enhancements for think or swim trading platforms. Steve, thank you so much for coming. Welcome to the show. Thank you for having me. We appreciate you being here. You guys do a great job on this. Thank you.

We've had friends come on here and they've had a great time. Like, Joe, so Joe Mogli, who else? Yeah, yeah, just watch that. Watch Joe. Many others. Many, many others. You're off the hook. You're off the hook.

All right. I wanted to tell you that you can say as much or as little on this topic as you want, but we 100% are starting with the state of the tariff reaction. It's about 22 hours since the Rose Garden, and it's one of the biggest one-day stock market blowups that I can remember my entire career. Some of it's a surprise, though, some of the things that we'll talk about that are happening. Michael, why don't you start us off

with these comments from Goldman. Okay, Trump announced a weighted average tariff rate of 18.3% around 3% higher than the bank expected. However, roughly one third of total imports are exempt, which makes the increase in the effective rate 12.6% below Goldman's 50. So anyway, however you slice this, there are other estimates. John, we have a chart. This is from Yale. They're expecting 22% rates. However you slice slice this this is Catastrophic it is global economic Armageddon. This is the US effective tariff rate back to 1900 so the biggest tax increase on American consumers that we've ever seen and if this

Sticks which it sure sounds like he's talking like it will for the rest of the year It is going to be really bad for consumers, for companies, for households, for stocks, obviously. What was your original take on the announcement? Well, I think I always look at everything through the lens of our customers. You know, we have 25 million customers, but they're young. So they're just over the average, average age of 30, right? Half of them first time brokerage. So in other words, they're new to investing.

A lot of them new to investing. They've never seen this before. They've never seen a day like this before. I mean, some of them have lived through COVID and there were many shocks during COVID. They were in high school for the great financial crisis. Yeah, basically. Their parents were navigating it, so they probably listened to it at the dinner table. But, so I think, you know, there's experience.

You can't replace experience. You know what I mean? Shocks like this, you have to navigate these. So I think, you know, for a lot of people, they actually just say, you know what, I don't want to navigate this. I don't know how to deal with it. That's why we give them a yield product.

It's 4%. Sit in the yield product. You should never, if you're not comfortable investing in something, then don't invest in it. You shouldn't take risk that you're uncomfortable with. Right. Because it's going to put you in a bad situation. You know how, you guys know, you live this. I mean, you talk to clients all the time. Like, as soon as they get uncomfortable, they make poor moves. One of the silver linings of this sell-off, so this morning or today, there's 75 stocks,

give or take, that are down 10% in the S&P. It's bad. Yeah. Maybe I'm grasping for straws, but from the investor behavior perspective, you can't simulate risk, and you don't really know where your internal line of too much risk is until you go over it.

And this is one of those lessons that will be learned and remembered and repeated for investors forever. Yep. I completely agree. And I think the fortunate thing is like these young investors, they're pretty savvy. So like when they have something that's appreciated, like they've been in Nvidia, they've been in other names that have really had good appreciation, they rotate. They don't sell at all, but they rotate out of that and move into things that they think are attractive and been depressed. And so they generally speaking, they have powder.

Like, no, they don't, they're not sitting there, you know, leveraged up with margin, you know, I'm all in. Some of them are. Well, some of them are, but yeah, but I mean, the majority of them have powder and they have powder for a reason, because they look for opportunities. I think there's a higher predilection for transactions among the Robinhood cohort than there is for maybe the Charles Schwab cohort. Without question.

Because I think one of the initial things that attracted them to the platform, of course, the trades are free, but now that's true everywhere I think the technology makes it really seamless to make changes and and Take action on ideas and there's no friction. There's no friction. There's no friction So I was telling somebody about this. I remember placing my very first trade I was a cold caller at a brokerage firm So I thought I knew I was talking that yeah And I was probably, I think I was like 19, it was like a summer job and I remember like I didn't have enough money to open my own account

at the brokerage I worked for but I had a UGMA account sitting at Merrill Lynch, my dad's broker. And I remember calling him up with like a ticker symbol and I was like can you buy me a hundred shares of this? And he just started like hysterically laughing at me. He's like, why do you want to do that? It's like the whole experience was so humiliating. And the stock of course cratered. And I don't remember what it was this day. But just like... And you paid $150 for that, right? Oh, I would guess. I wouldn't even know. It was probably a principal transaction where they made a market in it. Yeah right.

Some NASDAQ thing. Exactly. But so this generation never had to explain to somebody who would laugh in their face. Right. Why they want to try something. Why they want to experiment with a trade. Why they want to change you know something in their portfolio. Yeah. Which I think mirrors their experience in other facets of life. They can DM a girl before having to like ring her doorbell and look at her eye to eye. Or vice versa.

There's like a, there's a comfort in doing things from a screen that you don't have to do in person. And I think there's a good and a bad, but I think on the investing side, you could make mistakes without your dad's broker laughing at you. Yeah. It's not kind of like that.

I actually think it's actually pretty remarkable. I got started, I started the week of the crash in 1987. Is that right? On a trading floor. Okay. We have so many people have that story. It's so bizarre. The week of the crash, that's when I started.

Did you cause it? Did you cause it? You know? I think everyone's lying. I'm a big causation correlation guy. I think everyone's lying to us. It can't be that we've had like five guests. Yeah.

You started in like November. But it... A lot of people have that as part of their origin though. We do hear that. Yeah. But I mean, so in those days, I just think about all the things. And you know, I'm on a trading floor with thousands of people. I had access to information no retail customer had access to.

I had technologies that no retail customer had access to. I had pricing. You know, they were paying $150 to make a trade. I was paying a couple of pennies. And I had education, you know, and how to do it that was unavailable to them. All those things, that playing field has been largely leveled from a retail standpoint. Like market makers today are everybody in the world, you know, for a lot of these products. So I think that's pretty cool and remarkable.

And I think it, I can't even imagine having to like in your scenario, how am I going to be successful by calling up, getting picked off on the spread, paying $150 and having to have a certain amount of money to even be able to invest? Man, if you were successful, you were Michael Jordan. Yeah, people act like Senator L. is the enemy. We should, like, investors should thank God that they exist. I agree.

Well, there has been an argument, I think it's largely dead now, but in the early days of Robin Hood there had been an argument that like maybe a little bit of friction is a good thing is helpful from the standpoint that if something is so easy to do that there are that there's nothing in your way You might do things that you shouldn't do. Yeah, and I sort of bought into that a little bit wait I still believe that we know the more you trade, the worse you're going to do. So someone's like, alright, Fidelity is a $15 commission, but I could trade for free

on Robinhood. It's like, so let me get this straight. You think you have a good investment idea, but a $15 commission is stopping you from doing it? But wait a minute, wait a minute. You know that people are trading way more without commissions. They just are. Fact.

A lot. 100%. we agree. But I would also say, I consider the act of trading like the act of riding a bike. The more you do it, the better you get at it. I mean, assuming you're doing it in a suitable manner, right? So like, the idea that I should do it less frequently and I will get better at it, I just don't.

What do you mean by that? If you're trading, not investing. Do you mean more frequent trades or more experience over time? More experience. Like the idea like, you know, I'll give you a bunch of simple examples of this. Like, OK, look, I came from the other side. I chased, I walked from the back of where I'm receiving a trade all the way to the front where I'm helping people.

Okay, retail customers, what do they do? Let's say there is a spread on something. They try and buy it and they won't put their price in the middle of that spread and they'll probably get filled. The reason that they're not getting filled immediately is because I'm the market maker and I know that they're antsy and they're gonna go back and forth. They can't wait. People don't even know what spreads are anymore. Well, I mean there aren't that many spreads which is a good thing.

But, okay, think about if I'm a person who's kind of does this a couple times a month and I can save myself on I'm using option source or even equity. You know, ten cents on every time I'm making that spread. I'm getting something in the middle that's on in and out. It's meaningful change in my return. These are just things you learn by doing. And so I think there's a lot of lessons that can be learned by taking the time, you know, to understand every aspect of it.

A lot of people spend tons of time on the research of what to buy. But they don't spend as much time on how to do it. Oh, we agree. And when to sell. And I think there's a lot of merits of what you're saying for a trader. Obviously, the more trades you have under your belt, the more mistakes you've made, and a lot of those mistakes you'll never make again. So, of course, you're going to improve through not having catastrophic outcomes. So now when I'm wrong, I lose 10%. I used to lose 50%.

Okay. A hundred percent. I think where people get into trouble is not knowing that they're not a trader. They are an investor who maybe sometimes places trades, but in certain market environments, they look around, everyone else is doing it and they think they're a trader, but then they don't have any risk management chops or they're not paying attention to the right things. So like that's an example where more trading isn't better, where somebody isn't really

serious about what they're doing. I also think to your point, like you pointed at the screen and said like, what do you do there? If I've been through that three times, that doesn't flummox me. I know what's gonna happen here. I'm a little less, you know, plussed about what happened. You might not know what happened,

but you know how you're gonna react. Yeah, I know how I'm gonna react. I feel like it's, you know, we like to say it's a roller coaster. It's never as good or bad as you think it is. You know what I mean? So getting back to today, we've got the S&P on the lows of the day. We're recording this at 320 right now, no balance.

Markets down, S&P is down 4.5%, Nasdaq is down worse. And I think the market is still underestimating the literalness of the towers because if we don't get $280 a share on the S&P and we get 250, 260, and you have lower multiples. We have a long way down to go. So you can argue that we should be down 11% of the day. I'm making that number up. But Neil Dutta said it better than I did.

He said, quote, Trump shot the hostage. I am really doubtful that this is part of some opening negotiation. This is what he believes. Republicans on Capitol Hill believing this to be a negotiation might be in for a rude awakening alongside equity investors thinking that this is Trump getting ready to do deals. And then Lutnick was all over TV today.

No chance Trump will back off on tariffs. Countries can fix non-trade tariff barriers. Negotiating is talking, no talking, just doing. Trump will stand firm. What countries can do is stop exploiting us. We don't have a plan about the dollar, LOL. Anyway, they're talking tough. can do is stop exploiting us. We don't have a plan about the dollar, LOL. Anyway, they're talking tough. And the market, I think, is probably still underestimating that, because it just sounds so fucking crazy. There's no way this isn't a negotiating tactic.

And I think I'm still there. I still haven't come around to the fact that this might actually happen. There are hundreds of stocks that are green today, which tells me everything I need to know about the belief of the market. The market does not believe that these are going to be the final numbers. That's just purely my take.

You with me on that? No, that's the market's take. That's not your opinion. That's what the market is saying. And I'm in agreement with it. You're in agreement with the market. I'm in agreement with the market that now comes the negotiations, the one-offs, the carve-outs, the exceptions, people presenting grand plans for what they're going to build, and then maybe they'll build

it, maybe they'll run the clock out. How quickly do you think we get those talks? Because if it doesn't happen, the market's going to fall 3% a day until something happens. I think it's imminent. And I think, I'm looking at the screen today. Here's what's up. Kroger, American Waterworks, McKesson, Phil Mars International, San Quara, Exelon, Duke Energy, Rollins, Coca-Cola, Church & Dwight, CME,

Yum Brands, T-Mobile, Verizon. I don't mean up like a few pennies. These stocks are up between two and 5% that I just referenced. Well, if we keep doing this, CME, CBOE, all of them are going to benefit. Right? This is interesting. The NASDAQ is having its worst day today outside, the worst day of the decade outside of COVID.

Like this is a, this is a big drop. Can we double click on what you just said? So CME makes money. The more people are reacting to volatility and trading. Yeah. Yeah. All time high today, by the way. Why don't people use that as a hedge in their portfolio?

Does it not work? That's a very good question. A really good question. Because you know the other one that's making record highs right now is TradeWeb. You know that company? T.W.? I barely know who they are. I've been on Wall Street all my life.

What is TradeWeb? I think they're fixed income. But like they sell analytics and data but then they also make money on the brokerage side. I believe so. That stock is rallying. Yeah. I wonder why people don't consider a basket of, I guess, the trading exchanges as a hedge

because this is an amazing day for them. Well, you can abstract it one level further, which I think people do use. Just use volatility. Just pure investing in it. Pure volatility. Just buy a VIX future or VIX call spread or something like that. And guess what? When the VIX goes up, the exchanges go up. Yeah.

Right? Because it's a direct correlation. So I don't even need the exchanges. Because then you got to pick which one. Like what products can be more popular? Futures, equities, derivatives, etc. This was Trump an hour ago. Like literally.

Trump on the market reaction. He said, quote, it's going very well. And then he said- For CME. You didn't listen to the rest of the sentence. And then he said- Yeah, that's right. I took it out of context.

And then he said the market's going to boom. Yeah. Well, look, one thing we can all agree on is this is a day for the ages. I saw that the dollar had its worst one-day performance since 2015. The currencies were crazy. That's where, I don't know about you guys, but I just like, well, I wouldn't have anticipated, you know, the move that we saw, but then again, I didn't anticipate, you know, all the messaging and

what it was going to be, but it felt like the currencies were kind of all over the place, you know? Bond market was notable today. Yeah. Huge collapse in rates on the five-year. The 10-year fell to like four spot oh five. Where is it now? 404. 404.

The two years drop in like a stone. All right, and then he did want rates lower. I think he's, well, he got it. I think he's kind of accomplishing that. He did say, Besson did say, don't watch the S&P, watch the 10-year. All right, well, he got both lower. Yeah.

So Besson said that tariffs need, this is from Nick Timoreios, that tariffs need not raise consumer prices so long as the dollar appreciates and the dollar just collapses. Yeah. Yeah. Are you surprised that the epicenter of this seems to be in the Nasdaq and not in the Dow? It's a negative 5% day. Yeah, but the Dow is like, you know, people still are accustomed. You guys, you guys been around a long time. This is like, that's where people think their safety, you know. But what, I guess, I guess like I would, yes, because there are staples in there and Berkshire

Hathaway is in there. But they have more international exposure. That's what I was going to say. There's more industrial and more international exposure theoretically. But the epicenter of this really seems to be Apple, Tesla, Nvidia. Is that surprising at all to you? No, because like I mean I guess if I just look at it from a behavioral standpoint on what's been the most actively traded in the marketplace, even at Robinhood, it's what

people own. So I agree with that. And somebody I'm friendly with said, like, I don't fully understand, like, why are the tech stocks down more than everything else I own? I said, well, first of all, today, oil is definitely worse than tech. But put that aside, tech stocks were down more than auto stocks today. And my response was, this is what people have to sell. Exactly.

This is the easiest thing on earth to sell. You're probably up 50 to 75% over the last two years in the Nasdaq. Of course you could sell that. But there's fundamental reasons too. And Josh, you're right, it's definitely that. But look at Apple's cost of goods sold. This is from Gina Martin and Anna said Bloomberg.

It's like 90%. So we're looking at the top 10 tech stocks in terms of where their cost of goods are. And it is dramatic. These are highly exposed to the global economy and Trump just dropped a nuke on it. Wait, why does Meta have a high cost of goods sold ex-US? Yeah, honestly I have no idea. What is that about? I don't know. Huh.

Okay. I wonder if that's regulatory. If it's related to a regulatory. I don't know. But if you look at a sector breakdown, in terms of where revenue is coming from, I think tech is the highest overseas. Is it like 55, 60%?

But I think Josh hit on something. Like, if I'm a customer, just think of a retail customer. Like, what's the first thing I'm selling? Hey, I'm only up 55% on something as opposed to selling something underwater. Right. So you sell what's green on your screen. So I believe that people do that and not just retail investors. I think institutions do too. No, you sell your winners, you hold onto your losers.

You sell your winners, hold your losers, because it's just an easier sale. Let's put up this chart of the hardest hit stocks. I guess these are all the places that I would have expected to see red. Let me just run down a few of these. William Sonoma negative 18% today. Ralph Lauren negative 17. Decker's down 17. Um, HP and Best Buy both down 16.

Dell Garmin down 15. Tapestry, which I think is coach, right? The apparel. Okay. Crushed. Um, but then they crushed stuff like KKR down 13%, which is interesting. I guess this is now an even less hospitable market for exits and IPOs. None those are happening this year Norwegian cruise lines is on here. That makes sense. It's consumer discretionary We talk about Nike for a sec. This is

Among the worst situations I've ever seen Nike closed at a I don't know five-year low prior Prior to the tariff analysis announcements. This is unbelievable. This is unbelievable. They were told by prior administrations, move your manufacturing out of China to Vietnam. They said, okay, sure, no problem. The tariff on Vietnam will be higher than the tariff on China. So have fun with that. I don't know.

This is one of the big ones. That was the one that I just really struggled to wrap my head around. JohnChart6. So the share of Nike footwear manufactured by country. It's Vietnam, it's Indonesia, it's China. I mean they are in a... 50% of Nike's footwear is made in Vietnam. They are in a world of pain. All their profits are gone. So this is Joe and Tracy this morning talking about Nike. Michael Jordan should personally call Trump and get an

exemption and I and I bet you I bet you that it would work yeah the CEO of Nike is not gonna get it done. Michael Jordan could probably do a photo op in the White House and get it done. As of the time that I'm typing this the stock is down 14% pre-market as far as I'm concerned Nike is the perfect specimen of American capitalism the profitable design work is mostly done in the U.S. The manufacturing is done in countries like Vietnam, and the whole brand exists as it does because the U.S. is a global powerhouse for exporting culture like star athletes.

It makes perfect sense for the stock to get new like this as both its basic business model and the American brand value gets trashed and other American apparel companies, Lulu and the likes. Put a bad percentage off the high for Nike, just for context. So this is down. 68%. 68% from the 2015 highs.

It's back to where it was in 2015, just a 10-year round trip. I think that's one part that is maybe underappreciated, is the people that really love US brands, are they going to love them after this? Are they going to still clamor to... It's a legitimate concern. It's a huge concern. Is that going to look cool if you're on the streets in Berlin or in Tokyo?

So this is why even if we back off and come to a deal, how much brand damage has been done that you can't undo? Yeah. And we'll find out. One of the pieces, I'm grasping at straws for silver linings, but people were talking about maybe a recent bottom, and you need 52 week lows in order to make a durable bottom. And last week we were down 10%,

and we're still only down 11% off the highs. The NASDAQ's down 15, the MAX 7 is down 23%, but finally, you're starting to see the new low list expand. We're at 16%, I would guess it's going to be closer to 20%. That's not a bottom yet. It's really nothing. I don't mean to minimize the pain that people are experiencing with individual stocks that are down way worse than the index, but the S&P down 11%, the Q is down 15, maybe.

I need to see that hit 2022 levels because I actually think the situation we're in now is worse than 2022. So I mean, I think at this stage in the game, you have a Fed that can't cut because we're about to see CPI reports with a forehand in front of them. So you don't even have like stimulus. There is not going to be any stimulus if we start to see inflation prints like that. So take them off the board. Now you've got basically, even if they start doing these one-off negotiations, that doesn't take away the uncertainty. So all the capex stuff gets

frozen hiring decisions get frozen. So I think the situation now is more dire than 2022. So a 16 percent increase, a 16 percent of companies at 52 week lows is like not enough for me to say we've been fully watched. At previous bottoms in the last 15 years, you had to get to like at least, I'm generalizing, at least like 20 percent. We're close, but not quite yet. Yeah, I think the one thing that I like in just listening to everything this morning and even last night that I think I'm really going to be curious to see is once, and they've started already, but once these negotiations start, like you're going to be better served being early in the negotiation than late. 100%.

You do not want to be the last country. Bill Ackman made that point on Twitter and I think it's right. Yeah, it's that game theory like, do you want to be the last negotiator or the first? Yeah, no. Can you imagine if you be the last. Bill Ackman made that point on Twitter and I think it's right. Yeah, it's that game theory. Like, do you want to be the last negotiator or the first? Yeah, no. Can you imagine if you're the last? Right. No, because then we don't need you in your headlines. We have this.

Right. I wanted to ask you, have you ever met Howard Lotnick? I have. Okay. So CEO of cancer Fitzgerald famously shepherded the firm through the worst disaster any of us have ever lived through, 9-11. A huge portion of the employee population unfortunately perished in that disaster, but the firm kept going.

And I always, I never met him, but I always looked at that as like an incredibly admirable thing that he was able to accomplish. What's your take on, is he the same guy as he was in the brokerage industry? Now that he's in politics, how do you feel about the way he's communicating these days? Do you believe take, take what he's saying at his word? I didn't like, I met him, but we didn't really do in the capacity of my role. We didn't really do much with them. So I can't really say how he was from a business standpoint.

I mean, I think he's communicating what he's supposed to be communicating, whether people are liking it or not. That's the job. Yeah, I agree. I would argue it's probably not resonating very well, even with Trump supporters. He's a departure though from,

I don't know why I'm pointing at you, he's a departure from like the Robert Rubin types. He's not slick and he's not stage managed. He's much more like Trump where you can tell he kind of just whatever pops into his head he says it and I think Wall Street people kind of like that. What you see is what you get. Yeah. Steve. That's where we all you see is what you get. Yeah. Steve. That's where we all came from, right?

Yeah. Robinhood serves a younger customer, and I have a chart later in the show showing how they're growing up. Days like today, environments like this are a gift for people that are still contributing to their portfolios. Nobody should root for all... I know it feels good, obviously, nobody likes to lose money. But you shouldn't root for all time highs every single day you want to be able to accumulate great companies

Yep, great assets at attractive prices. Yep, and who's to say if today's an attractive price We'll know in a couple of months or a couple of years whatever, but these are these are gifts Well, I think if you look at like there's a reason like people say, oh Robinhood customers are probably more aggressive and I came from the world of Schwab and TD Ameritrade. So I know just by behaviors, but they should be. If you're in your 20s, you should be taking risks with your portfolio because we know what happens with compounding. We know what happens if you look, you know, you guys know it well.

Go back and look 1950 and what the average return is. Guess what? Pretty good. Wow, this is scary as hell. In 30 years, you'll be super happy. One thing about the Robinhood customer, the ones that became customers in 2020, which I assume is like the bulk of the accounts now,

they didn't come in to sell short. They came in to buy. Like they came racing in and they were buying. And I bet they were net buyers every day that year, if I had to guess. Well, the interesting point, because you know, like Robinhood's associated with GameStop, AMC, et cetera, the meme stops.

But there was a pretty strong customer base prior to that. It's super passionate people that are really aligned with the mission of just opening this up. I have 50 bucks. I can start investing. That's amazing. Nobody else let me do that. No commission. Fractional share ownership. Five dollars. At the moment, it looked like a toy. But for me now in hindsight, looking back, that was a huge breakthrough,

especially considering how high priced some of the most popular Nobody ever split up a stock. Nobody ever split up a stock that way. Yeah, but by the way For people are brand new to investing the notion that I have to buy a hundred shares like wait Oh, no, I can only buy 66 shares. Yeah, it's an anachronism. It's an anachronism It has nothing to do with anything this amount of money to work. Yeah, make it easy for me I don't care about all this back door plumbing. So I think Robinhood pioneered the idea of just put the dollar amount and we will figure out the amount of shares. Exactly. You and I grew up in a hundred share round lot world. That means absolutely nothing.

It's just the math was easier pre computers. So that's how Wall Street was. The shares was a lot. The incumbents still enter shares. You could switch it to dollars, but it's so much easier to just default to dollars. Yeah. Yeah. Yeah. I think the one, but the one point that I was going to make is, so all those people that started, because you know, there was the, there was a return of the meme stocks like a year ago. Yeah. It didn't go as well.

So everybody in the media came knocking on our door and like, hey, we want to talk to you. Are your customers back? Are they doing it again? They're doing it again. I'm like, here's what I tell you. 80% of the customers that came here and started trading meme stocks are still Robinhood customers.

And now guess what? They have a retirement account. Yeah. They're in yield. They're doing other things that That they've grown up. Yeah, so like the point that we're trying to make is It's not how you start. It's where you are So I agree with you and the GameStop as gateway drug never bothered me

Because my generation was on boarded in the Yahoo message board days. We weren't any smarter. We were doing stupid shit. And by the way, a lot of those people on the message board never bought any of those stocks. Or if they did, they were pumping them. Yeah. It was not materially different. It just didn't move as quickly. But we had our own meme stock. I've told the story before. We had Iomega. It was the first meme stock ever. Before social media. All we had were the Yahoo message boards and raging bull maybe in those, but that and Motley full, but that was enough.

That was, that was the meme stock of the nineties. I want to ask you, how does Robinhood think about when they're catering to traders versus when they're catering, catering to investors, or do you guys look at the population as just this homogenous group of people with accounts and not really try to delineate between who's doing what? No, actually it's a good question because I'm very good at this. Yeah you are. It's like you've done it before. It's true. So if you think about Robinhood the way it started, every you know if you're a new company or new brokerage firm you always start you have a niche right? The niche for Robinhood, the way it started. If you're a new company or a new brokerage firm, you always start, you have a niche, right?

The niche for Robinhood is self-directed. And within a year or two, we'll be the largest self-directed. We're right behind Schwab to you, Mayor Trayvon. Congratulations. On both equities, options, everything. It's 30 million accounts, it's incredible. We're right behind them.

Yeah, okay. But what we've heard loud and clear is these 20-some-year-olds have grown up. Now they have a him. Yeah. Okay. But what we've heard loud and clear is these 20 some year olds have grown up. Now they have a family. They have more investable wealth. They're in their prime earning years. More to lose. And they say, you know what?

I was super comfortable managing this. Now I don't have as much time because of whatever else is happening in my life. I have a larger pool of assets. Days like this spooked the hell out of me. I can make more in good times, but I can lose more in good times. I need somebody to help me. So we've heard that loud and clear.

So we've been working on trying to figure out what's the best path to get into. Like this self-directed side is this big. This is this big. It's your guy's space. You understand it. That's why we bought TradePMR. Okay.

We're gonna get into that in a sec, but before I just wanna talk about some of the flows that we saw investors buying and selling in the first quarter. And one of the themes that our friend Todd Sonnen had been hitting on is there's just, there's too much money in the levered ETFs that are on the long side.

And there's some sort of imbalance. So Todd has this great chart showing the levered long and the inverse levered ETFs that are on the long side. And there's some sort of imbalance. So Todd has this great chart showing the levered long and the inverse levered. And that peaked at a ratio of 12 to 1. So for every $12 in the levered long, there's $1 in the levered inverse, in the levered short. And that has now since contracted from 12 to 1 to 7 to 1. And I would guess that a lot of your customers

are involved in these products and why John next chart Please on a day like today. You've got a lot of red on the screen, but you know what's working. I mean obviously Right the inverse the every CTFs are ripping Sox s triple levered bearish semis up 28% people like to trade these They do like to trade them, but I'd say you know what they, they're on days, on down days, this actually happens in the industry, but even more so in Robinhood. They move away from single names and they move to the broad-based ETFs. QQQ, IWL, Spider. Oh, that's interesting. Oh, I would have thought the opposite.

No, in a big way. They move move like you watch our volumes percentage of our Trades that happen in those names goes on a negative on a very negative day They stop trying to trade individual stocks and they just say maybe they play one of the index ETFs for a bounce They they have more confidence in their ability to read the entire market than they do any of individual in their ability to read the entire market than they do any individual name. That's actually very interesting. And by the way, that's not unique to Robinhood. That's unique, that's the whole brokerage space.

I wonder, I guess it depends on the market environment, but do you think that they're more likely to buy the inverse or the longs today on the Leopard side? You know, I think a lot of our customers who are more active are contrarian. Like they're, you know, they- So they're buying the dip. Well, yeah, they can't, by definition, they can more active are contrarian. Like they're, you know, they... So they're buying the dip. Well, yeah, by definition, they can't all be contrarian.

That's true. Just some of them. So, all right, Trey P. Maury. But wait a minute, when they're using leveraged ETFs, it's like 99% of the time, not for hedging, it's for speculation. Like, or am I wrong? I don't know if I could say that, yeah.

I think it's probably a mix. But a mixed bias toward what I think. A mixed bias toward... There's more people taking shots on a levered ETF for upside? For opportunity as opposed to hedging. I would definitely. We try to teach people though because you know, I mean you guys, I'm preaching to the choir, but... You understand the way they're supposed to be used, right?

Well, that's the problem with trying to use a 2X inverse ETF as a hedge after a day or two, it becomes effectively useless. Yeah, you lose the balance, you just trap away all the edge. So that's why a speculative trade makes more sense to me than looking at that as a hedge. I liked it about, I don't remember how many years ago was that, seven, eight, nine, remember how many years ago was that seven eight nine Maybe even ten years ago when they washed away all these 30 X 50 X million X like that was like

Wait, we went beyond 3x. Oh, there were days when they I can't remember who had them out, but this was quite a lot Oh, I remember it's who did a 10x. I don't remember that I don't want to call any of them Any of your potential but I would just say there were a bunch of them stratton oak Montad one It reminded me of the days and now I'm dating myself when you know You could drop the $50 credit card down and get 400 to one on FX Yeah, and I'm like, oh my gosh, this is terrible. What a nightmare era that was. There were cold call There were cold callers here calling people with 4x

nightmare era that was. There were cold callers calling people with 4x day trades and it's like no you don't understand just send me like $2,000 we're gonna do a huge trade. And the money was gone in two seconds. So Steve I shared this chart with Josh I don't know six months ago. I said would you take a look at this. Chart 13 John please. We're looking at the relative market cap of Charles Schwab and TD versus Robinhood. And in 2023, Schwab was 23 times the size of Robinhood by market cap. And you guys coming up the rear, they're now only four times the size. And this is because Robinhood, the market cap, and the business is exploding.

So why is Wall Street, why are people buying the stock of Robinhood and selling the stock of Schwab? I think two years ago they were selling the stock of Schwab because they were worried about interest rates and cash sorting. That's mostly behind us. So I don't think they're selling Schwab stock. Now I think what's happening is they're buying Robinhood stock. And I think the reason why is a user growth story. There's a million reasons. Can I keep?

The major reason is you guys are adding customers at a faster rate than anybody else. So I'll approach it from two different ways. And crypto, sorry. Also crypto. Yeah, so like let's take it at the highest level. Let's just look at it like like let's assume this chart goes on for another 20 years, right?

Would you rather be sitting on a customer base of 25 million people that are 60 years old and that are trying to find ways to decumulate their wealth or a customer base of 25 million people that are in their 20s and 30s? Let me stop you. How much am I billing them? How much you billing them?

Yeah, makes a big difference. Well, so this is part of the story. Because how do I answer that question? Well, now you're billing them a lot. But when they start passing that money down, who cares how much you're billing them? Fair. I think Josh's point of the ARPU of Robinhood is way higher than Schwab, no? Well, that's because of crypto and other things that Schwab doesn't do.

But that's a huge part of the Robinhood growth story. Yeah, that's the other component of it. So when I competed with Robinhood, and when I started to see their explosive growth, then all the brokers, all the TD Ameritrade, Fidelity, E-Trade, all of us, we all were in the same boat. We're like, holy shit, these guys are growing so fast and they are plugged in to the next generation of investors. We better figure out how to get there.

I think that explosive growth is because they just made it so easy for people, number one. And number two, people loved the user interface and the tech so much. It didn't require any advertisement. Because everyone using it would tell five of their friends, dude, you got to check out this app, how much does it cost?

Nothing. What's the minimum amount of money I have to put on there? You could put a dollar on there, you could put nothing on there. That was very different. That onboarding process went viral. The referral program. Now I know the CAC of a traditional brokerage.

So do I. And you know too, I know what it costs him to add the next thousand customers. And it's like sponsoring the US Open. It's like expensive shit. It's gotta be like 10 bucks at least, what your guys are. But here's the, to even add on to that point,

like you're, you know, so people are like, how'd you get to Robin Hood? I'm like, I tell this story, it's kind of a funny story. Three daughters in their 20s, they're making, you know, they just got jobs, they're starting to make money. Congratulations. Yeah, I'm in, I'm sitting at Schwab. You did it, dad, you did it.

I'm sitting at Schwab, and I'm annoying them, like you gotta make your money work for you, like you work work for your money and one day they come up and they're like Yeah, okay, Dad. I'm in GameStop No, it's Robin Hood. I'm like, hey, I don't work for Robin Hood. I work for What is this and they're like no all of our friends all our cousins everybody we know has an account here and I'm like Touche. Yeah, and that was the virality of it was amazing. Yeah. But anyway, to complete what I was saying,

so like as a competitor, we're looking at Robinhood and we're like, the only good thing is, their offering is so limited that there's graduation risk. Okay. And like, and Thomas. They won't stay there. Yeah, they can't. Like they didn't have a retirement account,

they didn't have a yield product, they didn't have, you you know a lot of the things that you need as you grow up So the idea was we have to build the ability to attract the next generation of investors before They build the rest of the odds. I want to talk about Robin Hood growing up, but I want to do it in two phases Okay, phase one is The custody for advisors, yep, which area that, of course, Michael and I know very well, a lot of our listeners know very well. The illustrious Rob Baldwin, a company you hear today from TradePMR. When you guys announced this deal, I said, so f***ing smart.

First of all, TradePMR's reputation in our industry on customer service is literally the best reputation there is. They do not let the phone ring. So when an advisor needs a person, like the call is picked up and the people who are advisors on that platform love them for it. Okay. You can't say that for every custody solution, of course. You guys buying that, I looked at it and I said,

yeah, of course. Why would they try to build an RIA custody solution from scratch? You already have a perfectly good one with clients, with money, and with a great reputation for customer service. I doubt Robinhood wants to build out a customer service arm from scratch. So I got it immediately.

And I don't know what you paid for it. And I'm sure everyone's happy. Yeah, especially Rob. Especially Monica. Okay, so shout to Rob and Monica Baldwin. So that's where I want to start and then we'll talk about the direct to consumer side. How do you guys see the wealth management opportunity from the perspective of working with existing financial planners, financial advisors? What's the house view of how big that can get and how you plan to begin down that road now that you've acquired trade PMR? So I'll even back up a minute because actually we did go through the exercise of thinking about organic.

I would assume. Yeah. But I also have had experience and either like we bought Scott Trade, TD Ameritrade, we bought Scott Trade, very familiar with eTrade. A lot of companies have tried to get in that space and it's not easy. You must have been the most important voice in the room for that road mapping exercise. I also was, I was also privileged to be part of TD Ameritrade when we were, to go back to that chart, when we were a 12th of their size of Schwab.

And when they bought us, I think we were half their size. We were eating their lunch. And we were with you guys the entire ride. I know. And it was incredible how fast TD was growing. Yeah, so I mean, I think we have an opportunity to replicate that. But I think the thing that excites me the most, and again, I'm going to speak about your space from...

You know where I was. I was tangently involved. I wasn't directly involved, but if you look at what Robin Hood did on the self-directed side, completely disrupted it by making it the experience so much better in every facet. And that's cool. Like we're gonna be the number one player in a couple years and that's awesome. But here's this whole space that, and again, if I'm denigrating anybody, I don't mean to,

but I would say what's the last innovative thing that's been done? A robo-advisor came out in 2010. Other than that, I mean, what else has changed there? And the robo advice thing is like sort of a commodity. Vanguard does it, Schwab does it. Nobody's robo is better than anyone else's. The technology could be better, but like it's 70 TFs. Let's not all fall all over ourselves. Okay, so here's the size of the wealth management

component here. It's three times the size of self-directed. Right. And there's, we're starting with a blank canvas. Like we have Trade PMR and as you said, they have the most important aspects, but we also have a blank canvas in how we create, we're gonna create a WorldCrafts referral program. Yeah. Guess what? All those customers that I'm talking to you about, that are decimulating wealth, you know who they're giving it to? The kids who are on Robinhood. That's right. What about like the repapering?

Like how is that going to work? All of those aspects, that's what we excel in. Yeah. I would agree with that. Your onboarding skills are better than anyone else's. We have 1,800 engineers that live, breathe, and eat this. So you're going to figure it out. We're going to figure it out.

We're going to figure it out and make it an experience that's like none other. So the idea is you're going to have the best user interface because it's Robinhood. And you guys do that better than anyone else. You will have the fastest onboarding for an advisor's client. So if I'm the advisor and I'm using the Robinhood, I don't know what you're calling it, the Robinhood interface for wealth management. And I say to a client, oh, you are already at Robinhood. We have all your information.

We're already set up. All you have to do, here's an LOI, you're going to get an email with a letter of intent to make us a sub advisor. Letter of intent, letter of LOA. I don't know, what is it? What is it? It's an LOI, right? LOI, yeah. Letter of... Intent, I. LOA? I don't know, what is it? What is it? It's an LOI, right?

LOI, yeah. Letter of... Intent, I believe. No, I don't think so. It's something else. Igloo. It's... Anyway, so me, let's say the millennial financial advisor

with the Gen Z client can say, no problem. We don't have to onboard you at all. You're already there. There's 30 million of you. Well, but you also, like, you also going to have an experience much like Robinhood today. I can see all these assets. I can, you know, obviously.

All right. So let me go there. Yeah. Some of that is not conducive to what financial planners want their clients doing. Yeah. We don't we don't want to show people here's your financial plan. Here's your current portfolio. And then you guys

are jingling the keys with like Ethereum. Some of that I think you guys are going to think through and be like maybe on certain screens we're not enticing them to look at maybe assets that have outperformed recently or that are going up or down a lot. Because a lot of what planners do is manage client behavior. And I assume you guys know that already. And you will build an environment that makes it work for the planners and for you.

I would say the one thing, and this comes from Vlad and Beju, so it's always been their mantra. Our job is to let and help people do what they want to do. It's not to influence what they should be doing. That do what they want to do. It's not to influence what they should be doing. That's just not what we do. That's at Robinhood.

That's at Robinhood. Okay, because advisors give advice and they do tell tourists what to do. Well, of course, yeah. But they want advice. If they want advice, then go over here and get your advice. So I'll give you this stat that I think is really telling in terms of what, because people think,

oh yeah, there's tiny little accounts at Robinhood. We have a lot of very large accounts. I can't share numbers. I saw a stat recently, there's 100,000 accounts with over a million dollars. You guys said that. I think it was put out at a conference. Somebody leaked that.

No, it's not leaked. Were you the mole? No, no, no. They said that. So wait, is it going to be a referral program? No, it's not leaked. Were you the mole? No, no, no. No, no, no. They said that. So wait, is it going to be a referral program where it's like left pocket? Yeah, it's going to be a referral program.

Yep. And we are talking to people, we've already been talking with your team about what do you like about, I know you guys aren't part of a referral program. We are not. What do you like about a referral program? What do you dislike about a referral program? And all those things will be factored, that's what we'll work on. Two things, the biggest RAAs in our industry

have become the biggest for the most part. Because of referral programs. Almost all of them. Because they did two things. They jumped on the referral programs 15 years ago and monopolized the amount of clients that Schwab and Fidelity and TD were handing over. These are the $100 billion RAAs were the best at that.

And also they did M&A. But those are the two things that the gigantic firms in our industry have done. We don't do that because we don't need to. We only work with people that are fans of the firm. It's a different model. Most people aren't going to be able to do this. But 30 million accounts, I'm assuming on its way to 50 million accounts, who are coming into their 30s experiencing marriages, pregnancies,

raises at work, promotions, building businesses like that, within five years that's going to be the most coveted pool of potential clients that any RIA could possibly have access to I would also like point out one other thing and like you like again I'm I'm I'm like swimming in in a pool that I don't fully understand and you guys do way way way better than we do But in talking to Rob and his team and of course other advisors and potential advisors They accept account sizes of X because that's what they can do profitably.

Yes. But if you suddenly. Capacity constraints. If you introduce a model which is so much more efficient and all the bullshit that you don't like to do and all the good things you do like to do, you can spend more time doing that. You can probably lower that account minimum and do it in a profitable manner.

And guess what? Once you have them, when they come in at that level and they grow, then it becomes even. We 100% agree and we eliminated all minimums. We have our online asset allocation products that you could have $0. And we found a way to do that business. And talk to a CFP.

And talk to a CFP. So like, I totally agree with you. Technology is the answer to scale and to get the wealth industry to care more about the outcomes of people when they're younger. And 100% we agree. So I think what you guys are thinking and I think the roadmap is brilliant and it makes perfect sense. Yep. So I think what you guys are thinking and I think the roadmap is brilliant and it makes perfect sense.

But then I hear your CEO say the following last week. Quote, as you told my financial advisors whom you're about to partner with. And I know you knew this was coming. Yeah. Quote, as you can see, they might have clients paying tens of thousands or hundreds of thousands every single year. There's literally no limit to this. It's a great deal for them, the advisor and a terrible deal for you. You're literally paying more and more for the exact service. If you go with a robo advisor instead, that's a little bit better, but those

fees still add up to 50,000 or more. I don't know which robo advisor he's looking at. With Robinhood strategies, we're changing all this. I think he's referring to asset management, not wealth management. Okay, so that didn't get picked up in the press that way. That got picked up in the press as Vlad attacks financial advisors.

And I said, I don't think he meant to because why the would he buy trade PMR? Which, okay. If you've watched his, the day, he did CNBC. Nobody watches the next day. Well, I'm just saying there was there was course correction that happened in all those. Okay, so it was so so but this is not a Vlad issue. This is an industry wide issue.

Yeah, there's a huge amount of confusion about what a financial advisor is versus what an asset manager is. There's a huge amount of confusion about what a financial advisor is versus what an asset manager is. The reason why financial advisors earn more money than $250 a year per client is because they would never do the amount of work necessary if that's all you were paying them. The state planning, all the other things. It's literally endless. And days like today, the Dow is down 1500 points.

If you're barely being paid, you're not racing through the phone when it's ringing. It's like, you're barely paying me. I'm not gonna listen to you cry for two hours. So we understand the incentives in the industry. So do you wanna just put a button on that so we can move? Sure, yeah, I would say like, I think where he was, what he meant to say

was exactly what you're saying. It's asset management. It's not the value of the advisor. Obviously we are partnering with TradePMR and we understand the value. Customers tell us, especially on days like today, I mean this is, they need help. Okay, as a spokesman for the American Investment Advisor, we accept your apology. No, I'm just kidding. John, throw up that chart.

But hang on, I have something I have to apologize for. What? This is unheard of. No, I really do. I know what you're gonna apologize for. I know what you're gonna apologize for. So without having seen the video and understood the context, the way you and I just figured it out,

they asked me a question on CNBC. What do you think of the CEO of Robinhood saying that financial advice should be capped at $250 a year? And my response was, sure, and then we'll all go out for gas station sushi. The implication is like, wealthy people are not looking for the cheapest financial advice.

They want the best advice and they understand quality. So, you said what you said. It's okay. Oh, no. So I apologize to all my friends at Robinhood for that comment. I didn't mean it. All right, chart 14. So first of all, I love listening to your earnings call and looking at the slides.

You guys have the best investor presentation. So whoever's responsible for that. We have a guy named Chris Kegel. He's amazing. Shout out to Chris Kegel. He does a great job. It is the best slide. And his team, yeah. So this to me is. It is the best squad. And his team.

So this to me is, this is the whole kit and caboodle. So this is sort of confusing, but what we're looking at here is the average cumulative net deposits by cohort. And it's showing that they tend to grow over time. And so the earliest customers are now depositing the most, which leads directly to Robinhood strategies to the trade PMR acquisition and I love this so I did watch the entire presentation that Vlad gave and so you're doing Robinhood strategies Which is the asset allocation which individual stocks as well. Yep, you're doing let me pause

So that's for the person who's a self-directed Who is just like you know what I want part or all of this to be like professionally managed. Yeah, it's too confusing for me. I'm not comfortable anymore. You've got the research assistant, which looks super cool. What are you calling that? Cortex. Cortex, okay. And then you've got the private banker.

You guys are delivering cash, like physical cash, but better than that, I saw, so one of the reasons why there's so much inertia in the banks, JP Morgan, wherever you bank, it's just a pain in the ass to move everything. Your direct deposit, you guys, at least from what I saw... What's the private banker? I don't even know about this. You guys made it super easy to move your direct deposit. So you guys are really going for it. It's much more than just a trading platform. It's like one click moving, you know, enabling direct deposit. And then from there you can see... Like somebody's paycheck?

Paycheck. And then, you know, from there you're spending your credit card. We have a 3% credit card. And then we have the ability to aggregate so you can see your home, your mortgage, etc. So if you're a gold customer, you're really getting some bang for your buck. How much does that service cost? The gold? Five bucks a month. Five bucks a month. So I mean, it's like the, Led's vision is just to, any of your financial service needs,

they're all done in one place. Everybody wants that anyway. Like I don't want five apps. Nobody wants five apps. Like it's kind of a pain in the butt. And the ability to do that, I think is something that you know listen customers tell that all the time But we have to build it all you know what I would tell you It's interesting that like it might not be a positive if the bank really becomes huge

Yeah, because then you get a bank multiple on Wall Street. Yeah, and I I doubt you guys are excited about trading at eight times earnings Yeah, I want to hit a couple of more things and this has been absolutely awesome. We've never had the opportunity to talk to anyone from Robinhood before. But you guys are obviously a perennial topic of conversation amongst financial podcasts because of how influential the platforms become. 24 hour trading. Yeah. You're at 24.5 now on basically everything that matters.

Thousand, yeah, it's 80% of all the volume of. So Apple, Nvidia, blah, blah, blah. You could trade at 11 o'clock at night. All around the clock. What's happening with the volumes there? Are they getting better? Are the spreads tightening? Yeah, they've been growing.

Well, the spreads were not my, the spreads have always been tight. My good friend, Doug Sifu has been kind enough like when we started doing this to help us out. And... Doug is a virtue. Yes, yeah. There's other market makers that are in there as well,

but the volumes have grown. And like, so our biggest volume days are earnings, like Nvidia comes out, or even like last night, think about what happened And then it happened basically at four o'clock, right? So all the moves are happening in the evening geopolitically things happen tariffs whether it's earnings, but our Aside from episodic events our biggest nights are Sundays Because you have two days of built-up news and people want to either take advantage of

it or hedge. Or front run it even. Like, I think the market's going to react to this tomorrow. Well, the futures are open at 5 o'clock. They can see what's happening with the market. Now you have a thousand symbols that are open. And I'm sure you've seen the news. Nice, NASDAQ.

Oh wait, so 24-5, it starts Sunday night. Sunday night at eight. So Friday night it's not live. Yeah, no, it ends. That makes perfect sense. Yeah, and then Sunday night at eight it starts. And so, you know, it gets going there. And yeah, the volumes just continue to pick up.

It's not just domestic. There's a bunch of Asian and European brokers in there as well, because they want to be able to trade during their waking hours. So it's good volume. And it's like, I think the misunderstanding, when we first were standing that up, like we went to the SEC, talked to trading and markets with the SEC, and they're like, all right, what are you guys thinking of doing?

Well, we want to do this. And they're like, we're worried about liquidity. Yeah, I'm sure they were super casual like that. Hey, Robin Hood, what are you guys thinking of doing? Well, they were actually pretty cool. Their concerns were like liquidity, which it would be, and were like, it's all limit orders. I mean, if a customer, look, as I told you,

these customers are in their 20s, and they're like, let me get this straight. It's an electronic marketplace, but you close? Like eBay, you know. Because they're crypto native. It's an electronic marketplace, but you close? Like eBay got, you know. Because they're crypto native. They don't understand, wait, why does my Bitcoin trade all the time? And this I have to wait till 930.

Amazon never closes. You can buy whatever you want. Exactly. And by the way, 70% of them are doing their homework, their education, and doing this right now. Like, listen, the market's closed. Yeah. And they're like, I want wanna buy stock ABC at $10.

Oh, do you wanna wait until 9.30 when some old man rings a bell? No, I wanna buy it whenever the hell I wanna buy it. So I gotta be honest with you, I was not a big fan of it, but from a selfishly, cause like I'm helping people manage risk and I'm giving people advice and we're like literally managing billions of dollars

from people. The idea of being asleep while this shit is popping off is just like, oh really? Is my job now 24 hours a day? So I, at first, at first and maybe still, I was like, all right, I get it, but why? You know what's really funny? So when we were first doing this, the people most in favor of it were the customers, the people most opposed were the people who work in the industry. And listen, I remember when they were talking about expanding the hours of trading when I was on the trading floor.

I'm like, you're asking me if I want to work 12 hours instead of eight? Hold on, InstaNet. Yeah. Like that was like the original 430 trades. Okay. They kept going earlier and earlier and earlier. So people are using it though? Very much so.

Are you guys, so now you're moving upstream on the asset management side, the wealth side. Are you seeing institutional investors opening accounts on your platform? Are they allowed to? No. Okay, so none of that's happening yet. Are you not interested in that business? We are, but I think we're smart enough to know not to bite off more than we can chew. Smart all at once.

I mean, we want to really do this well, your business well, before we get into that space. We do, we will get there. Okay. Because it's a big business, but we just don't think that we, you know, we want to be careful to do everything. Alright, so speaking of biting off more than you can chew, betting and prediction markets. Yeah. be careful to do everything. All right. So speaking of biting off more than you can chew, betting and prediction markets.

Okay. How does Robinhood see the nexus of gambling on sports versus saving in an IRA versus hiring a wealth manager? It seems like it's a really, really horizontally disparate set of opportunities or maybe you guys see it differently. I would say like the genesis of it is like think it's money. It's event contracts. It is money Yeah, but I mean it's event contracts and like the exchanges have been dabbling in the event contracts now You have you know a bunch of other entities that are dabbling in event contracts like binary outcome like binary election

Well, we have one about the Fed. Yeah, are they gonna raise where they're gonna lower right? We had one about the election. Where they're going to raise, where they're going to lower. We had one about the election. So there's a bunch of those platforms and you guys want to be one of them? Well, we either partner with one or we do it, you know, which we're doing now. But it's not all bullshit. Like a lot of this stuff is frivolous, but last night, for example, Cal-She had

the odds of a recession were 70% to Q1. Look what happened last night. Up to 54%. Like, people want to trade this stuff. Wow. But it's not only just trade, like even the night of the election, I don't know if you heard the numbers, but in the week, we were out for one week. We did 810 million contracts.

Oh, you guys had an election contract on Robhid. For one week. And what percentage of your users, if you had to guess, availed themselves of that? It's got to be tiny. It was 600,000 accounts. Out of 28 million at the time or 30 million. And I bet the spreads- In a week?

It's more than I would have guessed. I bet the spreads are very healthy on those contracts. No, no, no, they weren't. Really? Because we do the same thing everywhere. We're not putting people into illiquid instruments. So you can imagine the same liquidity providers. Did the Robinhood user base guess correctly?

On the election? Yeah, did they have Trump in the production market? I would say, I wouldn't say that they, like it's less about did they, were they correct. It was more about when. So like we're sitting in a room in New York. Sounds like no Josh. Watching, watching, well there's equal, there's like probably equal contracts on both. But we're sitting watching the election results

and before any of the networks called the swing states, the contracts went like this. They completely diverged. And if you think about it, then Tesla took off, then the cryptos took off, then this and so they were. Every market was ratifying all at once. And by the way, crypto was trading, our stocks were trading, the election contracts were trading.

The peso was crashing. Everything was happening and it's happening two hours before they get on and they look it's a business. Philosophically, is there any concern about conflating, I'm betting on the final four in the same account that I am saving up for my first down payment for a house? We've actually given it a lot of thought. And I would say, like, you should expect us to continue

with election contracts. How much of that is sports? It'll be a percentage if it's, you know, if it's. What's interesting is there's definitely something there because I'm guessing the hardcore Robin Hood user is also a hardcore fan duel or DraftKings user. I just think it's like, it's a personality type. But, but, but also I would say like, okay, so think about sports. Sports is a business.

Like I know we like to pretend that it's not a business, but the sports complex is a business. Well, I think we've all accepted that by now. Yeah, it's a business. Every advertisement is for betting. No, no, no, but I'm saying sports in general, the whole ecosystem is a business. It's a business just like the energy complex,

just like the et cetera. So like if I believe in the future of sports. So you're saying it's like making an investment. Yeah. Betting on a team winning though? I don't know. I mean, I'm taking it holistically. Yeah, yeah.

No, I see where you're going. So Steve, you joined us on the worst day for stocks since June 2020. We went out on the lows. It's official? It's official. What was the day anyway? That June day? I'm trying to remember.

It was June. I don't know. June something or the other. But yeah, it was a bloodbath out there today. No... We closed on the lows? On the lows. For every index?

For every index. Well, how much was the Dow down? Because I'm a points guy. And don't you dare give it to me in percentages. I would never. 1600 points. I'd love to know the S&Ps too because I had a few. I may have been working some things. The Dow was down.

Give me a break. 1300 whatever it is. It's down a lot, all right? That's the answer. 1300 whatever it is. Oh no. Oh shit. 1700.

1700 points. Wow, we fell out of bed at the end of the day. 1679 dab points, 3.98%. Alright, give me crude oil and then traffic and weather. Alright, hey Jeff, did you have fun on the show today? This is amazing. Alright, the hard part's over. You were incredible. We would love to have you back.

I would love to be back. Thank you. I really meant what I said. Everyone that I know who knows you, I'll give you an example. Jay Woods at The Exchange, he's like, who do you have on the podcast? He always wants to know who's going to be on the podcast that week. I said, oh, we have Steve Quirk. He goes, love that guy. That's the universal response to you.

So I really meant that and I wanted you to hear it from me. I appreciate that. Thank you. Absolutely. We always end the show by asking people what's the thing that they are most looking forward to? in the future and I guess I'm looking forward to going to bed and waking up to a new day after after today What are you most looking forward to personally professionally? Personally or professionally? Well, you got three daughters who are in their 20s. Yeah. Okay, they live nearby or professionally? Well, you got three daughters who are in their 20s?

Yeah. Okay, they live nearby? Two of them are in Chicago and one's in Milwaukee. She's a reporter. Okay, are you a grandfather yet? No. So then, can I give you your answer? I'm probably looking forward.

I know, but I don't want to put any pressure on them. All right. Congratulations on everything and congrats on being a Robert Hood. Michael, you got anything you're looking forward to? Yeah, the non-farm payrolls. Cold shower? Non-farm payrolls. Oh yeah, non-farm payrolls. Cold shower, hot shower. Oh yeah, non-farm payrolls, that's right. That'll move the markets tomorrow.

Yeah. Hey, let me share something I'm not looking forward to. Non-farm payrolls. Absolutely have no interest in going through that. All right, thank you so much to Steve Quirk. And I guess we tell people to follow Robinhood on social media to keep abreast of all the things happening at the company.

And we're looking forward to seeing what you guys do next. Thank you. Thanks for coming on. Thanks, John. Thanks, Duncan. Great job. Nicole, we miss you this week. Keith, Rob, Shark Kid, Matt, Sean, everybody.

Graham, we'll talk to you soon. Thanks, guys. Have a good day. Peace.