121: Why Americans Are Losing Trust in the Stock Market w/ Caleb Silver

0:28You're about to make a trade. event invites and pin messages so no one forgets mom's 60th, and never miss a meme or milestone, all protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Hey, everyone, and welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify brought to you by public.com. My name is Austin Hankwitz, and I'm joined by my co-host, Robert Croak. Robert is a seasoned entrepreneur in his 50s with lifetime revenues of over 300 million, and I'm an entrepreneur in my late 20s with a background in finance and economics.

1:04Since quitting my full-time job in corporate finance a few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies around the world. As the show name might suggest, every episode we talk about rich habits as they relate to business, finance, and mindset. However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. Robert, what are we going to be talking about in today's episode? This is an exciting episode this week of the Rich Habits podcast because we're joined by Caleb Silver.

1:39He's the editor-in-chief of the largest investor education platform in the world, Investopedia. I'm sure you've heard of it. He's also the host of Investopedia Express podcast, which is an incredible, incredible show. And we We invited Caleb onto the show, not only because he's a thought leader in the investing space, but because he has a very unique perspective to share as it relates to what retail investors are searching for on Investopedia, how they're responding to headline news and what actions they're actually taking. That's right. This interview is all about getting an inside look onto the markets from the largest investing news and resources platform in the world, Investopedia.

2:17Caleb, we are so excited you are here, my friend. Where are you right now, by the way? Give our audience a little inside peek as to what's going on behind the scenes. Yeah, well, thanks for having me. First of all, I'm a huge fan of the podcast. I'm a huge fan and follower of both of you. I am at the Reagan National Library in Simi Valley, Reagan Economic Forum, the first of its kind. There's some big thought leaders here, some big heavy hitters like Jamie Dimon's here. We've got some senators here. We've got heads of some of the biggest committees in the Senate and the House of Representatives all here talking about the future of the economy and economic policy in America.

2:48But I think they're, you know, using the platform of Reagan, who kind of really changed the course of the American economy when he took over as president in 1981 as a launching pad for these conversations. So delighted to be here. You got CNBC over my left shoulder here, Fox Business over to my right. The big media heavy hitters are here. For some reason, they invited me, too. So that's where I'm speaking to you from. Simi Valley, California. Great to be here. How exciting. How exciting. Well, not only are you there, but you're also on the show right now. So let's give the audience a 30-second intro as to who Caleb Silver is and what you've been working on for the last couple of years at Investopedia.

3:22Well, I'm an art major, former restaurant cook turned business journalist, also documentarian, but I've been in business journalism for 30 years. I did start my career in the restaurant business, but I then became a cameraman, a videographer, started my own production company, eventually found my way into business news at Bloomberg in the late 90s as the internet bubble was forming. I went from Bloomberg over to CNN, ran the business news desk, ran all the business news at CNN for a while. And then I've been at Investopedia for nine and a half years. Now, I thought I'd be there for a few minutes.

3:52Turns out this has been a great place to be. It's an honor to be the editor-in-chief of Investopedia because I have been using it my whole career, basically. We're 25 years old as a website. So to be able to be the editor-in-chief and represent the brand is a real honor for me. And I'm delighted to be here and to share what we hear and feel from our readers and investors all the time with you guys. 100 % man, super excited to dig into things. And just to make sure on the same page, for those of you who might not have heard of Investopedia, which is like crazy if you haven't heard of it yet, it is quite literally the encyclopedia for investing.

4:27You can type in any term, any word, any names it relates to finance, investing, the economy, anything. And then you just put the word Investopedia after it. And Google will pop up with the Investopedia landing page with all the information. They've got how-to videos. They've got news. Literally all of it's there. So I've been using Investopedia since I was actually a freshman in college studying finance, trying to figure out the little terms and things for the test and study and things like that. So big fan of Investopedia. Highly recommend everyone to give it a shot. Now, Caleb, you have brought a lot of data and analytics with you today as it relates to the average investor.

5:01So let's kick things off with this chart that is on screen right now, dividing up investor optimism versus investor pessimism. Can you walk us through what's going on here and what's happening behind the scenes that supports this data? So I'm seeing on my screen right now, 34 % of respondents are cautiously optimistic at the moment, with the second largest respondent being here skeptical at 23%. And then the third is hesitant. What's going on and why are people so skeptical? At Investopedia, we have a lot of people coming to us searching for answers to questions. That's one way we track their sentiment.

5:37We have a finger on the pulse of what they're searching for because when people are fearful or opportunistic, they try to get educated and then take action. That's a big use case for Investopedia. But we also have this massive reader base of our daily newsletters, about a million and a half newsletter subscribers. So every two months since the pandemic, we've been sending them this six-minute survey. How are you feeling? Optimistic, pessimistic. What are you afraid of? What are you opportunistic about? What are you buying? What are you selling? What would you do if you had an extra$10 ,000? The ultimate discretionary investing question.

6:04So we want to know directly how they feel. And they respond to us. It's a loyal audience. And we've been doing this every two months. So in the last few months, as you can imagine, during the tariff turmoil, we've had a lot of cautiousness, right? A lot of skepticism based on the to and fro of policy, right? The back and forth, or we don't know where we stand as it relates to tariff. what's going to happen to the American economy. So people get very fearful in times of uncertainty, uncertainties like kryptonite for investors. We can't really move. We don't really want to move when we can't see the future.

6:33And I think that's the sentiment among retail investors. That said, even though they may be cautiously optimistic and a lot more of them are skeptical, that fear has eased a little bit as we've had a little reduction in the tariff talks a little bit as well. But they haven't done that much with their portfolios. And that's what I find really interesting. People say one thing, they may be fearful and scared, they don't necessarily take action. Some people do. Some people do on the extreme. Some people go, you know, right into the fire and try to short stocks or buy options or buy inverse ETFs or try to ride an interesting promiscuous wave there.

7:07Other people get really guarded. And I think it's about age, where you are in your investing journey. So people tell us how they're feeling. The emoji meter is just a cute way of representing that. And people are as cautious as pretty much they've been in the past 12 months, a little bit more cautious two months ago, but still cautious and still reticent, but not necessarily changing their behavior. I read something interesting this morning that kind of really illustrates and goes along with this chart. And that is that markets have an erosion of confidence, not a change in spending. And it's really interesting because that really fits alongside this chart, because I don't see a difference and most people don't see a difference, but the confidence difference is definitely heightened right now and has been for months.

7:47So that leads us into this next chart, which I find super interesting. When you asked your most active, educated users on Investopedia, what stock would you buy if you had to hold it for 10 years? This was their answer. Walk our audience through this and why you think so many people chose these specific names. Most of them to me were pretty apparent. Austin and I were like, this is a great chart, but there were a few surprises on this one. So walk us through what you think about these names, what they chose, and give us an idea of how many people this list was built on. What sample size was this built on?

8:25Yeah, we usually get a couple of thousand respondents to our survey every couple of months. So that's a pretty good handle. And we know that people that read Investopedia are 18 to 80. They're throughout various stages of their investing journey. So when you look at the top stocks, a lot of them look like the top of the S &P 500. It looked like a lot of S &P 500 index funds. You got your Microsofts, you got your Amazons, you got your Apples, of course. But then you can feel it with an older cohort. You got an ExxonMobil there. We feel like that's an older investor. They love the dividends. They've been investing in the oil and gas space for a while.

8:54I think we see a Berkshire Hathaway on there somewhere as well. Palantir, that's obviously a stock that's come on in the past five to 10 years. Been a very hot stock, but I think that's a younger, newer investor. And then you have the vanilla stocks that people just like to hold in good times and bad. The Walmarts and the Costcos of the world, those are super dependable. They've delivered excellent returns for investors. They also pay nice dividends. But you can see here the balance between who's sort of in the younger part of their investing journey and believes in the companies that are transforming the future and who is still tied to the companies that have sort of brought them here along a 30 or 40-year investing journey.

9:28It's always fascinating to see what they would buy and hold. And we also ask them, what are you holding right now or what have you been buying or what have you been adding to that looks just like the NASDAQ 100 or the top of the S &P 500? So individual investors, you know, we like to think that we're diversified. We actually run in packs, we run in herds, and we gravitate towards big stocks and the safe stocks that sort of brought us to the party, very reluctant to move away from that strategy. Isn't that so funny, though, to think about? Because to your point, you know, we're a big, big believers in people should be investing the vast majority of their portfolios into these low cost index funds and ETFs that tend to go up into the right over a long period of time.

10:07So think the S &P 500, the NASDAQ, things of that nature. You know, after you've built your base, after you've got$100 ,000 invested across all your accounts and into these ETFs and index funds, we encourage people to think about diversification. If that's different asset classes or single stocks that might be part of uncorrelated sectors of the markets, things of that nature. It's so funny to see how despite, you know, encouraging people to diversify, they really just double down, right? They got the big Microsofts, the big NVIDIAs, the big Palantirs, the Teslas, the Apples, the Walmarts, the Amazons.

10:38I will say one name on here that really surprised me and I'd never heard of it was Enterprise Products Partners. I'd never heard of that company. EPD, I believe, is their ticker, though. I was looking at this and I was like, what the heck is that? So I thought that was pretty funny. Yeah, that was an unusual one. We haven't seen that pop in in this survey, I think, ever. And maybe that's somebody jumping on the quantum AI space or thinking that it's another ticker. There's a lot of people that confuse tickers sometimes too, but people listed this one as well. You can tell who's sort of been in this for a while and who's sort of new to it and discovering new stocks on their own.

11:08And we do have very active traders who read Investopedia. We have a very big options sort of learning environment. but we also have a stock simulator there. You can use options on that and a crypto simulator too. So we're always asking people as well, what about crypto? Have you been adding more Bitcoin to your or Bitcoin related spot ETFs to your portfolio? How willing are you to take risks with new asset products, private capital, private credit? And the most part, retail investors are not that ready to take that type of risk with our portfolio, even though it's part of a diversified investing strategy.

11:42I think when you say diversification to a lot of retail investors who don't have a lot of experience, that means they're going to buy two shares of 60 stocks. You know, that doesn't necessarily work unless you hit the right one with the right amount of money. You got to kind of have maybe like 10, 12 stocks that you actually build positions in over time. And diversification, we're talking about various asset classes that can help mitigate the ups and downs and what goes on inside a portfolio. So it's so fascinating. And the fact is that not only do we get this reading from them by asking them, sending them out the survey, but then we actually see what they're buying and selling and see what strategies they're pursuing as well.

12:17And we look at data across the industry and there's this thing in investing, especially with individual investors like us called the relentless bid. We do the same thing every two weeks. We get our paycheck. We go put our money into our 401ks. We've made our allocations. We're very loathe to make changes. And that's what you usually see month after month in our surveys and also in our traffic to our website. Yeah, one of the most important messages out of this chart and this portion of the show for me is Austin and I for years now have been speaking diversification, build your base, diversify, but also keep it simple.

12:50We always try to get people to work and act like investors, long-term investors versus gamblers. And it's something Caleb, we speak on all the time. And I feel that the people that get too fancier and always chasing the shiny ball syndrome are gamblers and not long-term investors. So I really appreciate seeing the information on this specific chart because it really does show a picture that people do keep it pretty simple. And as long as they keep it under that format and they don't get too fancy, I think it's a better way to build wealth than chasing every new lead and every new stock. And people can do that with a very small portion of their portfolio, the fund portfolio, the brokerage account, the crypto account.

13:32If you want to have some fun, do it with a very small percentage so you don't blow yourself up. But, you know, it's a marathon investing and it's a lifelong marathon. So it's about staying in the race, not blowing yourself up over a couple of trades because you heard a crazy idea or your friend told you to do something or you got FOMO because you're watching people, you know, make money in ways that you don't understand. I just came from Las Vegas, the Bitcoin 2025 conference. Funny enough, it was in Las Vegas at a casino. And right downstairs is, you know, the biggest crypto event in the world where it's not necessarily gambling, but there's still a lot of price arbitrage that you can see investors trying to take advantage of in a new space that doesn't have a lot of safeguards yet.

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14:46And for a limited time, Public is offering a 1 % match on all IRA contributions. So if you're finally investing towards a Roth IRA this year, do it on Public and get that free 1 % match on all contributions paid for by public investing, full disclosures in the podcast description. All right, let's now jump back to our interview with Caleb. Now, speaking of not blowing up your portfolio, this next chart that's on the screen right now is kind of an extension of that. When you all asked your correspondents if you had an extra$10 ,000 to invest, where would you invest it? 25%, which is the vast majority here of people, said that they would park that money into either a money market fund, a CD, or a high yield savings account.

15:31Now, as you know, we always want to encourage our listeners to make sure their money is working as hard for them as they work to earn it. And sometimes parking it in cash or CDs or money market funds isn't a good long-term strategy to do that, right? Earning three and a half to 4 % on something versus the long-term average of the S &P's 8, 10, 12 % is very different. So why do you think so many Investopedia users responded the way they did here? I think it was the fear trade. It was the tariff uncertainty, and that we're still in a period of great uncertainty. So if they were going to put extra money to work, where would they put it?

16:04And I think some of that is I want to make sure my own personal financial situation is set. My foundation is strong in case we go into a recession. Recession has been one of the most spiked terms lately. There's been a lot of traffic behind the term recession because people are seeing what's going on in the economy and they're seeing mixed signals, but they also maybe saw that big dip in GDP for the first quarter from the fourth quarter of last year. So they're worrying about that and they're thinking maybe 4 % sounds pretty good right now if I had that extra money just in case the bottom falls out.

16:36So this changes obviously as headlines change. So usually it's individual stocks. Most of our readers are active investors. A lot of them are self-directed and they like putting money to work and you can see their favorite stocks. They love these stocks. So when they say something other than individual stocks, whether it's ETFs for a broader diversified perspective, or it's money markets, high yield savings and CDs, you know, they're a little bit more cautious, a little bit more fearful. But this question though, is interesting, because it's what would you do with an extra$10 ,000? That's a discretionary question, not what are you doing with your money right now?

17:09What am I doing my money right now? The same thing I do every two weeks. But if I had extra money, I probably put it somewhere safe just in case. And I think that's the mindset of consumers and investors right now as we go through this great period of uncertainty. Yeah, I look at this chart and I feel like it's flip-flopped, you know, because when you're thinking of extra, then I would look at it that that would be something you could take a little more risk with. But actually, the audience went the opposite direction. They went more safe. Because when I look at the bottom of the chart, real estate, cryptocurrency, gold, only making up 10 % of this chart, that's really shocking to me.

17:42And that leads me to believe that the older audience is really looking for safe havens more so to really sit in cash and earn these smaller amounts than they are with having any risk. That really is a great chart for me and really opens my eyes up that I need to think differently as far as these audiences, because this is great, great information for everyone watching this podcast right now to understand the sentiment of the rest of the market, not just what Austin and I state, but what people generally think. Because, Caleb, one of the things we say all the time that I think is really magical for our audience is personal finance is personal.

18:20We live in an era right now where everyone is kind of playing follow the leader. We live in a very comparison-based lifestyle through social media. So most people just don't know how to think clearly on their own and make decisions on their own for what is best for their situation. So I love this data. This is really, really strong. And to your point, Robert, I think during a lot of this policy uncertainty and economic uncertainty, we've seen a lot of traffic to things like what happens if Social Security gets privatized? What happens to my 401k if we go into a recession? Is it too late to move money into a backdoor Roth IRA?

18:56You can feel older investors thinking about playing defense right now, much more defense than I'm used to seeing. And younger investors thinking, is this still the best possible path, right? Index investing, buying stocks every two weeks, right? Are we going to get the type of returns that we've seen over the last 20 years or so? And the fact that yields have been high, this is the flip side of high interest rates, means there has been an alternative. So if savers have done okay over the past few years, even though the stock market's been great, you've had high yields too. So for the older investor or the saver that wants to make sure that the foundation is strong, they've had an alternative, which is why you see continued interest in these savings products.

19:33The one thing that I think is crazy about this chart, and it goes to show just like how early sometimes we can be, but I'm only seeing if people had an extra 10 ,000, right? Only 3 % of them would put it into cryptocurrency slash Bitcoin, or only 7 % of them would put it into gold. Gold has gone parabolic over the last 12 to 18 months, right? This thing has gone up 100%. Bitcoin has done a very similar fashion, but people are so risk off right now as it relates to those asset classes. And so it's just so interesting to me because when I look at these prices, when I look something go up a hole, I'm like, oh, man, I don't want to buy that.

20:08It looks like it's gone off the rails. I feel like I'll be buying the top and things of that nature. Right. But on the flip side, maybe it seems like people, it's just not even on their radars. Maybe this could just be the beginning for the adoption of some of these different asset classes over time. So it's just it's really interesting to see this like firsthand data from a large data set of people. I feel that the crypto portion of this with this extra$10 ,000 is so small, yet very meaningful because of the fact that even as people are risk off, it really brings back something that I believe Warren Buffett said when he was asked about his strategies of how to get rich.

20:42And he said the reason that nobody copies his style is no one wants to get rich slow. And I think that's really important because so many of the younger audience that Austin and I speak to, even they, when we talk about index funds and some of these slower processes that are more assured to bring wealth over time, they really want to go on the fast track. They want to YOLO their money into some of these meme coins and crazy stocks and penny stocks and all that. And I think that is why, you know, you find this imbalance between long-term investors and people that are YOLOing their money. And so it's just really interesting when we see data like this.

21:20And I really appreciate you sharing this with our audience today because it just gives us a better insight as to what is really going on in the minds of investors, like you said, from 18 to 80 years old. So I really appreciate it. Now, I will respect the fact that I see here in the notes of the data that this was a survey conducted on May 9 through May 13 of 2025. So if I rewind a little bit in our brains, right, tariff tantrum was still very much happening. Headline news was all over the place. I don't think the China deal was struck yet. So there was definitely a lot of uncertainty in the markets, but it's still pretty interesting to me to reflect upon the data here.

21:56This captured the very end of this captured the Sunday and the Monday of the 90 day tariff truce between the U.S. and China. So it captured some of that. But still, I think people are not convinced. One really interesting question we've been asking for really since January, since the inauguration is, has your trust in the capital markets eroded under this administration? Do you trust this administration to safeguard the capital markets to protect your investments? The question is not, you think the market will go up or down under that under them? We ask that as well. I mean, that's pretty split, as you can imagine, just like the rest of the country.

22:26But do you trust the administration? Do you trust where your money is? And that mistrust, lack of trust has been rising close to 50, around 50 % the last few months. I find that interesting and a little bit terrifying because as you know, this whole thing is based on trust. This is all based on the fact that if I continue to invest, if I do the right thing, I'll return, you know, eight to 10, eight to 12 % a year. If I stay diversified, I'll protect my investments. If I keep my money in the bank, it'll be safe. I think that lack of trust is very interesting and pretty terrifying. And then when you see what's going on in terms of the crypto movement and the involvement of this administration, the broadening out of cryptocurrency and the widening of it.

23:05Now the 401ks may be accepting Bitcoin anytime soon. All of that is happening at a really interesting time as our entire economy has been transformed just in the last six months. Let's talk through it. Nearly half of all respondents stated they trust the U.S. stock market less now that Trump is in office. What is your perspective here and why do you think that is? Is it because he broke everything so quickly and everyone was fearful that he wouldn't be able to put it back together or that he didn't have a reason to break the economy and the stock market to be able to hopefully make the U.S. safer and stronger again and bolster the U.S.