Bloodbath

24:10I think he's... Well, you got it. There we go. 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 Timoreos. That tariffs need not raise consumer prices so long as the dollar appreciates and the dollar is just collapsing. 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 on the NASDAQ. People still are accustomed. You guys have been around a long time. That's where people think there's safety.

24:50I guess 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. Was 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. Yeah. 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, like, down more than everything else I own?

25:34I 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 I said Bloomberg. It's like 90%. Meta. So we're looking at the top 10 tech stocks. in terms of where their costs of goods are.

26:12And 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.

26:55Right. 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 on to your losers. 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. HP and Best Buy, both down 16. Dell, Garmin, down 15. Tapestry, which I think is Coach, right?

27:33The apparel. Okay, crushed. 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 of those are happening this year. Norwegian Cruise Lines is on here. That makes sense. It's consumer discretionary. Can 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 announcement. This is unbelievable. This is unbelievable. They were told by prior administrations, move your manufacturing out of China to Vietnam. They said, okay, sure.

28:12No 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. John, chart six. 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 Tracer this morning talking about Nike. Michael Jordan should personally call Trump and get an exemption. And I bet you, I bet you it would work.

28:51The CEO of Nike is not going to 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.

29:21And other American apparel companies, Lulu and the like. Put a bad percentage off the high for Nike just for context. So this is down 68 % from the 2015 highs. It's back to where it was in 2015. Just a 10-year round trip. I think that's the one part that is maybe underappreciated is, you know, the people that really love U.S. 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?

30:03Yeah. And we'll find out. One of the pieces, I'm grasping at straws for silver linings, but people were talking about like 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%. And that's not a bottom yet. You know, it's really nothing. And I don't mean to minimize the pain that people are experiencing with individual stocks that are down way worse than the index.

30:37But 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 forehandle in front of them. That's number one. 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.

31:16Hiring decisions get frozen. So I think the situation now is more dire than 2022. So a 16 % increase, 16 % of companies at 50-week lows is like not enough for me to say we've been like fully washed out. At previous bottoms in the last 15 years, you had to get to like, at least I'm generalizing at least like 20%. 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.

31:59A hundred percent. You do not want to 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. Right. Can you imagine if you're the last? Right. Forget it. Because then we don't need you in your headlines. We have this. Right. I wanted to ask you, have you ever met Howard Lutnick? I have, yeah. Okay. So CEO of Cantor 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.

32:37And 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 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 him. Okay. So I can't really say how he was from a business standpoint. point i mean i think he's communicating what he's supposed to be communicating um whether people are like it or not that's the job yeah yeah i agree i would argue it's probably not resonating very well um 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 yeah he's not slick and he's not uh 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 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 right like 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.

34:07You want to be able to accumulate great companies, great assets at attractive prices. 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 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.

34:45Go 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. Yeah. Like they came racing in and they were buying. Yeah. And I bet they were net buyers every day that year, if I had to guess. Well, the interesting point, because, you know, like it's – Robinhood's associated with GameStop, AMC, et cetera, the meme stops. But there was a pretty strong customer base prior to that and super passionate people that are really aligned with the mission of just opening this up.

35:27I have 50 bucks. I can start investing. That's amazing. Nobody else let me do that. No commission. Fractional share ownership. $5, yeah. 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 stocks were. Nobody ever split a stock. Nobody ever split up a stock that way. Yeah. By the way, for people who are brand new to investing, the notion that I have to buy 100 shares, like, wait, oh, no, I can only buy 66 shares. Yeah, it's an anachronism. What the hell is that? It's an anachronism.

35:59It has nothing to do with anything. I want to put this amount of money to work. Make it easy for me. I don't care about all this backdoor 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 100-share round lot world. That means absolutely nothing. It's just the math was easier pre-computers. So that's how Wall Street was. 100 shares was a lot. The incumbents still enter shares. You could switch into dollars, but it's so much easier to just default to dollars. 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 return of the meme stocks like a year ago.

36:39Yeah. It didn't go as well. Short-lived. 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? Are they 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 they've grown up. but so like the point that we're trying to make is um it's not how you start it's where you are so i agree with you and the game stop as gateway drug never bothered me because my generation was onboarded in the yahoo message board days yeah we weren't any smarter right we were doing stupid shit and by the way a lot of those people on those 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.

37:36And, uh, but we had our own meme stock. I've told the story before. We had iOmega 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 Fool, but that was enough. Yeah. That was, that was the meme stock of the nineties. I want to ask you, how does Robin hood 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...

38:15I'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, 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, TD Ameritrade. 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 family.

38:47They 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 spook the hell out of me. You know, I can make more in good times, but I can lose more in good time. 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.

39:23You understand it. That's why we bought Trade PMR. Okay. We're going to get into that in a sec, but before I just want to 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 Stone 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 got it. There's some sort of imbalance. So Todd has this great chart showing levered long and the inverse levered. And that peaked at a ratio of 12 to one. So for every$12 in the levered long, there's$1 in the levered inverse, in the levered short.

39:57And 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 inverse ETFs are ripping. SOXS, 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'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, IWM.

40:39Oh, that's interesting. Oh, I would have thought the opposite. No, in a big way. They move, like you watch our volumes, percentage of our trades that happen in those names goes up. So 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 have more confidence in their ability to read the entire market than they do any individual name. Oh, that's actually very interesting. 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 levered side?

41:18You know, I think a lot of our customers who are more active are contrarian. Like they're, you know. So they're buying the dip. Well, yeah. By definition, they can't all be contrarian. That's true. Right, right. Just some of them. So, all right, Trey PMR. 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. Yeah. But a mixed bias toward what I think. Oh, a mixed bias toward. There's more people taking shots on a levered ETF for upside. For opportunity as opposed to hedging.

41:57As opposed to hedging. Yeah, definitely. Yeah. Well, 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, trap away all the - 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, maybe even 10 years ago when they washed away all these 30X, 50X, million X.

42:30That 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 while. Oh, I remember. Who did a 10X? I don't remember that. I don't want to call any of your potential sponsors out, but I would just say there were a bunch of them. Stratton Oakmont had one. It reminded me of the days, and now I'm dating myself, when you could drop the$50 credit card down and get$400 to one on FX. Yes. And I'm like, oh my gosh, this is terrible. What a nightmare era that was. There were cold callers calling people with Forex day trades. And it's like, no, you don't understand.

43:09Just send me like$2 ,000. We're going to do a huge trade. Yeah, right. 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 are 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. Well, I think, so why is Wall Street, why are people buying the stock of Robinhood and selling the stock of Schwab?

43:55I 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. 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 let's take it at the highest level. Let's just look at it. Let's assume this chart goes on for another 20 years, right?

44:29would 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 it makes a big difference so this is part of the story because how do i answer that question well you're now you're 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 robin hood is way higher than schwab no well that's because of crypto and other things that that schwab doesn't do but that's a huge part of the robin growth story yeah see that that's the other component of it so at when i competed with robin hood 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.

45:21We'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. How much, what's the, 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.

45:59That 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 u.s open yeah it's like expensive shit it's got to be like 10 at least what your guys are so but here's here's and here's the to even add on to that point like you're you know so i tell people are like how'd you get to how'd you get to robin hood i'm like i tell this story it's kind of a funny story three three daughters in their 20s they're making you know they just got jobs they're starting to make money congratulations congratulations yeah i'm in i'm sitting i did it dad you did it i'm sitting at schwab yeah and i'm annoying i'm like you got to make your money work for you like you work for your money and one day they come up and they're like yeah okay dad i'm in game stop how you like me now no it's robin hood i'm like hey i don't work for robin hood i work for yeah 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 That was the virality of it was amazing.

47:05Yeah. 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, 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 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 offer. So I want to talk about Robinhood growing up, but I want to do it in two phases.

47:39Okay. Phase one is the custody for advisors, which is an area that, of course, Michael and I know very well. A lot of our listeners know very well. The illustrious Rob Baldwin accompanied you here today from Trade PMR. when you guys announced this deal, I said, so, so f***ing smart. Yep. Because first of all, Trade PMR's reputation in our industry on customer service is literally the best reputation there is. Yep. 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. Yep. Okay. You can't say that for every custody solution, of course.

48:22You 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. Especially Rob. Especially Monica. Let me just say that. Okay. So shout out to Rob and Monica Baldwin. um but all right so that's so that's where i want to start and then we'll talk about the direct to consumer side yep how do you guys see the wealth management opportunity from the perspective of working with existing financial planners financial advisors what's like the 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.

49:24Yeah. And like, but I also have had experience and either like we bought Scott Trade, TD Ameritrade, we bought Scott Trade. Very familiar with E-Trade. 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 roadmapping exercise. I also was also privileged to be part of TD Ameritrade when we were, go back to that chart, when we were a 12th of their size of Schwab. Yeah. And when they bought us, I think we were half their size. Yeah. 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.

50:02Yeah. 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 going to be the number one player in a couple of years, and that's awesome. but here's this whole space that um and again if i'm if i'm denigrating anybody i don't mean to but we 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 uh sort of a commodity vanguard does it schwab does it it's not nobody's robo is better than anyone else's the technology could be better but like it's seven etfs let's not all fall all over ourselves.

51:00But, but so like, 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 you, as you said, they have the most important aspects, but we also have a blank canvas and how we create, we're going to create a world class referral program. Yeah. Guess what? All those customers that I'm talking to you about that are decumulating 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?

51:33All of those aspects, that's what we excel in. Yeah. That's what we're good at. Your onboarding skills are better than anyone else's. We have 1 ,800 engineers that live, breathe, and eat this. All right, so you're going to figure it out. We're going to figure it out and make it an experience that 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.

52:07And I say to a client, oh, you are already at Robinhood? Yeah, 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 - LOI. 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. 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.

52:43Well, but you're also going to have an experience much like Robin Hood today. I can see all these assets. I can obviously monitor. So let me go there. Some of that is not conducive to what financial planners want their clients doing. 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 fucking Ethereum next to like 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.

53:21because a lot of what planners do is manage client behavior. Yep. And I assume you guys know that already. Yep. 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's just not what we do. That's at Robinhood. That's at Robinhood. Okay, because advisors give advice and they do tell customers. Well, of course, yeah. But they want advice. Right. If they want advice, then go over here and get your advice.

53:59And like, so I'll give you this stat that I think is really, 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. Can you share numbers or not? I can't share numbers. I saw a stat recently. There's 100 ,000 accounts with over a million dollars. I think that was, I think that was. 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. No, no, no. They said that. So wait, is it going to be a referral program? Yeah, it's going to be a referral program.

54:29And 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. So two things. The biggest RAs in our industry have become the biggest. Yeah. for the most part. Because of referral programs. 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.

55:04These are the$100 billion RAs. We're 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. and pay. 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.

55:47I would also point out one other thing. Again, I'm swimming in a pool that I don't fully understand, and you guys do 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. 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?

56:27Once you have them, when they come in at that level and they grow, then it becomes even better. We 100 % agree. And we eliminated all minimums. We have our online asset allocation product that you could have zero dollars. 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. But then I hear your CEO say the following last week, quote, as you talk about financial advisors, whom you're about to partner with, and I know you knew this was coming.

57:17Quote, 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. Yeah, yeah. Okay, so that didn't get picked up in the press that way.

57:52No, I know, yeah. 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 f*** would he buy Trade PMR? Exactly, yeah. Which, okay. If you watched his, the next day, he did CNBC. Nobody watches the next day. Well, I'm just saying. There was course correction that happened in all those. Okay, so it was, 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. 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.

58:37Estate planning, all the other, everything. It's literally endless. And days like today, the Dow is down 1 ,500 points. If you're barely being paid, you're not racing to the phone when it's ringing. You're barely paying me. I'm not going to listen to you cry for two hours. Yeah, yeah. Okay. So we understand the incentives in the industry. So do you want to just put a button on that Sure, yeah. I would say like, I think 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 Trade PMR and we understand the value.

59:13Customers tell us, especially on days like today. I mean, 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. Hang on. I have something I have to apologize for. What? This is unheard of. No, I really do. I know where you're, I know what he's going to apologize for. I know what you're going to 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 Robin Hood saying that financial advice should be capped at$250 a year?

59:51And my response was, sure. And then we'll all go out for gas station sushi. Yeah. The implication is like wealthy people are not looking for the cheapest financial advice. They want the best advice and they understand quality. Dude, you said what you said. It's okay. 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.

1:00:22It is the best slide. And his team. So this to me is, this is the whole kit and caboodle. So, and 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 - So let me pause.

1:00:56So 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. Yep. You've got the research assistant, which looks super cool. What do you call that? Cortex. Cortex, okay. And then you've got the private banker. Yeah. 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.

1:01:32What'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. Yes. Your 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, et cetera. So if you're a gold customer, you're really getting some bang for your buck.

1:02:02How much does that service cost? The gold? Five bucks a month. Five bucks a month. So, I mean, it's like the LADD'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, 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. Cause then you get a bank multiple on wall street.

1:02:37Yeah. And I, I doubt you guys are excited about trading at eight times earnings. I want to hit a couple of more things. And, 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. 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?

1:03:13Are 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, you know, to help us out. And Doug is Virtu. He is, yeah. Okay. 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. Yeah. And it happened basically at four o 'clock, right? So all the moves are happening in the evening.

1:03:51Geopolitically, things happen, tariffs, whether it's earnings. But 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 up, so let me get along. Well, the futures are open at five 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, Nicey, NASDAQ. Oh, wait. So they're all coming out. So 24, so 24, five, it starts Sunday night.

1:04:25Sunday night at eight. So Friday night, it's not live. Yeah, no, it, it, that makes perfect sense. And then Sunday night at eight, it starts. Okay. And so, you know, it gets, it gets going there and, um, yeah, the volumes just continue to pick up. Um, it's not just domestic. There, there's a bunch of, uh, Asian and European brokers in there as well, because they want to be able to trade during their waking hours so okay it's good volume and it's like i think the misunderstanding uh 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 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 um their concerns were like liquidity yeah which it would be and we're like it's all limit orders, you know, I mean, if that solves that, yeah, if a customer, you know, customer, look, as I told you, these customers are in their twenties and they're like, let me get this straight.

1:05:20Um, it's an electronic marketplace, but you close like eBay because they're crypto native. They don't understand what, wait, why does my Bitcoin trade all the time? Yeah. And this, I have to wait till nine 30. Yeah. Amazon never closes. Exactly. And, and, 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, yeah. And they're like, I want to buy stock ABC at$10. Yeah. Oh, do you want to wait until 930 when some old man rings a bell? That's right. No. I want to buy it whenever the hell I want to buy it. So I got to be honest with you.

1:05:53I was not a big fan of it, but from a selfishly. Yeah. Because like, I'm helping people manage risk. Yeah. And I'm giving people advice. Yep. And we're like literally managing billions of dollars for people. the idea of being asleep while this shit is popping off. It's just like, oh, really? Is my job now 24 hours a day? So at first, it may be 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.

1:06:33I'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 4 30 trades okay they kept they kept going earlier and earlier and earlier right yeah yeah all right um so so people 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 is that okay 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.

1:07:07Smart 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. 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, it's event contracts.

1:07:48It 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 who will win the election? Well, we have one about the Fed. Were they going to raise? Were they going to lower? Right. We had one about the election. So there's a bunch of those platforms and you guys want to be one of them. Yeah. 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.

1:08:17But last night, for example, Calci had the odds of a recession were 70 % of Q1 look what happened last night they jumped up to 54 % like people want to trade this stuff 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 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 a 600 ,000 account. 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.

1:08:55I 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 prediction market? 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.

1:09:32And 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 - 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, you know, they get on. And, you know, I mean, 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.

1:10:15We'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... So what's interesting is there's definitely something there. Because I'm guessing the hardcore Robin Hood user is also a hardcore FanDuel or DraftKings user. I just think it's like, it's a personality type. 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.

1:10:57Yeah, it's a business. Every advertisement is for betting. No, no, no. You watch sports. I'm saying sports in general, the whole ecosystem is a business. Yes. It's 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. 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? That June day?

1:11:33I'm trying to remember. It was June. I don't know. June something the other. But yeah, it was a bloodbath out there today. Yeah. 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. The Dow was down. And don't you dare give it to me in percentages. I would never. Let's see. 1 ,600 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. I don't know. Give me a break. 1 ,300, whatever it is. It's down a lot, all right? That's the answer. 1 ,300, whatever it is.

1:12:02Oh, no. Oh, shit. 1 ,700. 1 ,700 points. Wow, we fell out of bed at the end of the day. 2 ,679 dab points, 3.98%. All right, give me crude oil and then traffic and weather. All right. Hey, Jeff, do you have fun on the show today? This is amazing. All right, 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 pod? He always wants to know who's going to be on the podcast that week. I said, oh, we have Steve Quirk.

1:12:36He 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 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? Two of them are in Chicago and one's in Milwaukee. She's a reporter.

1:13:09Okay. 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 at Robin Hood. Michael, you got anything you're looking forward to? Yeah. Non-farm payrolls. Non-farm payrolls. Oh, yeah. Non-farm payrolls. That's right. That'll move the markets tomorrow. Yeah. All right. 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 Robin Hood on social media to keep abreast of all the things happening at the company.

1:13:48And 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.