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- [00:00]
A
Welcome back to Ask the Compound. I'm your host Ben Carlson. The stock market fell 20%. Wall street got all beared up. They sold retail, kept buying. When stocks were down, the market came roaring back. Retail was right. Wall street was wrong. Is retail the smart money now? Find out on today's show. Our email here is ask the compoundshowmail.com, we take questions directly from our audience on a host of different topics on today's show. Is financial education finally working? What will it take for retail to stop buying the dip? What does the future of retail investing look like? How will tax deferred retirement accounts evolve in the years to come? And how will AI change the financial landscape? Great guest to help us on the show today, all about retail investing. Today's show is sponsored by Rocket Money. Rocket Money is a personal finance app that helps you find and cancel your unwanted subscriptions, monitors your spending, and helps you lower your bills so you can grow your savings. In some ways, budgeting is harder than ever these days because you can buy just about anything with a swipe or the tap of a card or the click of a button. There's like no more barriers to entry when it comes to spending money. The good news is technology makes it easier than ever to track all your spending. That's where Rocket Money comes in. Track those daily coffee purchases. Not me, of course, all your subscriptions. It gives you a better sense of the categories you're spending on. Rocket Money's dashboard also gives you a clear view of your expenses across all of your accounts. Get alerts if bills increase, if there's unusual activity on your account, if you're close to going over your budget. Plus, they have this new goals feature that automatically saves money for you, right? Out of sight, out of mind. They even try to lower, negotiate, try to negotiate lower bills for you. So Rocket Money has over 5 million users and has saved a total of 500 million in canceled subscriptions, saving members up to $740 a year. When they use all the app's premium features, cancel its unaware subs and reach your financial goals faster with Rocket Money. Download the Rocket Money app right to your phone. Enter my show. Ask the compound in the survey when they just so they know I sent you, don't wait. Download that Rocket Money app today. Tell me you heard about it from us.
- [01:55]
B
You know a useful way. I used Rocket Money the other day I got one of those, like spam texts that said I'd been charged for, you know, something. And I was like, I'm pretty sure this Is spam or, you know, some kind of phishing attempt? But I just opened up rocket money, could see all my accounts at once and made sure that it wasn't an actual charge that had come out.
- [02:12]
A
And if you do get something, it. It actually shows you, like, hey, this charge didn't have. This huge charge that you never had before came through. It's pretty cool.
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B
Yeah.
- [02:18]
A
All right, let's do it. Questions?
- [02:20]
B
All right, up first. Say we got a question from Michael. I think retail investors are more educated than ever, thanks to blogs, books, newsletters, podcasts, and more education about how crazy markets are and to not overreact and to think long term is working. And that's why retail is smart money now could. Could be a good topic. Is financial education working?
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A
All right, let's bring on someone who spends all their time thinking about the actions of retail investors. Steve Quirk is the chief brokerage officer at Robinhood. Steve, welcome to the show.
- [02:49]
C
Hey, Steve, thanks for having me.
- [02:52]
A
I checked this morning. I have been a robinhood user since 2015, which is pretty crazy. So 10 years of it.
- [02:59]
C
That's crazy.
- [03:00]
A
Yeah. How many clients now at Robinhood?
- [03:03]
C
Just shy of 26 million. And average age is early 30s. Half of more than half. It's their first time brokerage, first time being involved in the market, so.
- [03:17]
A
So we've got a lot of new investors this decade, right?
- [03:19]
C
Yeah, a ton of new investors.
- [03:21]
B
They don't even know how lucky they are. They don't even remember a time when they had to Pay, you know, $8 per transaction, you know.
- [03:27]
C
Well, that's what. That's what opened the door. Right. I mean, Robinhood's been credited with really, this revolution of opening the doors to a diverse young client client base that beforehand, you know, you had to wait till you got a certain number of assets, otherwise it wasn't worthwhile to make investments. And, you know, there were minimums on accounts, and you didn't have the ability to. You can invest a dollar if you want, and it's free.
- [03:52]
A
So, yeah, the barriers to entry, I think, is a big part of it. So there's all these studies that show that financial education doesn't help all that much. And these studies show, you know, in one year out the other, if we teach people how to save and invest and stuff, that most people, it doesn't stick. And I. I really either don't believe these studies or I think they're out of date, or they just. The way they were run are unrealistic. Because you mentioned, like, once you take down the barriers to entry and you make it easy and you add the technology piece. So you can automate stuff. Right. You can automate your contributions, you can automate dividend reinvestment. You can automate when you buy and sell. I do think investors are becoming better behaved and it's not just buying the dip when the stock market falls. Right. I think investors are more comfortable with volatility, especially young people. And I think actually crypto is a big reason for this. That crypto is so volatile they can watch it 24, 7. I think, in a way, not. They're not immune to volatility, but just more comfortable with it. So do you see this from your client data, that clients are better at having the steady hand or just not panicking when markets are down?
- [04:57]
C
Well, I think what they. And it's helpful when you have people who start at a very young age because their investment, the duration of their investing, like the time horizon for them is 30, 40 years. So you can, you know, like, when you think about it in that context, and then, you know, they're smart. As you said, financial literacy is just amazing today. The amount of information you can get, you know that that is for free. And the amount of education that you can do on your own around your investment thesis is. Is just remarkable.
- [05:33]
A
Yeah, that wasn't around when I came out of college. The podcast, the newsletters, the blogs, social media people are offering, I mean, it really is more than ever before. And like you mentioned, it's free.
- [05:43]
C
Yeah, even. Even what was. You know, they're used to. And again, I'm dating myself, but when I was in school, there was a lot of. There was. There was some financial literacy being taught, but it was all theoretical. There's nothing practical. So it's like, you know, I always use this analogy. It's like giving me a book on how to ride a bike. Then you put the bike in front of me and I fall over. Like, you have to do it. You have to actually practice it and do it in order to be proficient in it. And people are starting at a young age, so that's great. So when we're talking about buying the dip, like in the context of, you know, people say, well, they bought the dip, you know, during COVID and they bought the dip in the last thing. But one of these times it's going to keep going down. And they'll say to you, well, I can look at the returns if I go back to 1950, and they average about 9%. So, you know, I'm going to be investing for a very long period of time. Might I have a period where it's going to continue to go down? Yes, but I can, I understand the power of compounding and I understand what average returns are over time and I have time, so. And you don't like, I mean, you know, cost. We have, we have customers. That said, like I, I'm just uncomfortable with the market at this point in time. And we have a Yield product that's 4% so put your money in yield. 4% is better than, than a bank, you know, anything you're going to get a bank. And, and I think that's one of the, the other things that is really nice about customers is they have an understanding. Like they don't. They're not required to be investing at all times. Like it's your choice if you're ever uncomfortable with an investment or if the risk is such that you don't feel comfortable doing it, you shouldn't be doing it. You just have to. But to your point, I think Ben, customers, once they've been through a little bit of a volatile session and they understand what comes like this too shall pass. I think they actually look at it as more of an opportunity.
- [07:44]
A
And this is not to say that there aren't people out there who are still speculating and buying things they shouldn't and using too much leverage. Those people are always going to exist.
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C
Oh yeah.
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A
But especially for young people, I think that's the time you want to figure out does this actually suit me just taking those excess risks. Some people are just, I know we were talking about someone today with some friends and we said this guy, it doesn't matter if his Investments are down 80%. He's steady handed. The same way there are other people who would just, who would rather die than see that. So I think having, doing so when you have less financial assets and you have more time ahead of you to make up for mistakes, I think that's the time that you want to do it. And then some people realize like listen, I graduated from that. I'm moving on now I'm going to be more long term. So it's like that's when you want to do it.
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C
Yep. I think it's, look, everybody's going to have some hiccups when they start doing anything. Like, you know what I mean? No matter what it is I'm trying to learn, I'm not going to be extremely proficient in a day one, you know, whether that's, you know, pick it, anything you're doing. But by Doing it. And you know, as you said you could start small, start, start investing $5 at a time. You're going to learn just as much as when you're investing $50. You know, it's, it's the same thing.
- [08:58]
A
That wasn't really possible back in the day. You couldn't buy. When I first came out of college, you couldn't buy these fractional shares. It had to be, you know, big, bigger dollar amounts to invest, and now you can do it with smaller amounts. Duncan, do the.
- [09:10]
B
Back when I was in college, I think I was using Share Builder. I think it was like an ING thing or something. I think I was paying 10 bucks a trade. I was trying to invest a hundred dollars, you know, and paying $10 right off. Yeah, that's not good.
- [09:22]
A
Do the next one, because this kind of touched on something Steve was just talking about.
- [09:25]
B
Okay, up next, we got one from Nick. Ben wrote about how retail investors are now more conditioned to buy the Diplomat. That strategy has worked well, but what happens in a more prolonged bear market? What do you think it'll take for dips to quit being bought?
- [09:38]
A
So, Steve, you kind of touched on this already, but I want to get into it. And my two big trends, the decade I said were consumers just keep spending money, investors just keep buying. John, throw up the chart here. That shows the Robinhood net deposits. So I just wanted to talk about this one a little bit. And this just shows that your net deposits continue to grow over time. And so it's not just like people are buying when stocks go down, it's people are continuously buying. And my question is, where is this money coming from? Do you get a sense of, is this just the fact that people are getting older and they're making more money and they just continue to funnel more and more into their brokerage account? Like, what are some of the sources for this money that continues to pile in here?
- [10:17]
C
Yeah, I think you hit the nail on the head, Ben. If you think about the average age of our customers, they're in the prime of their earning in their career. So they're in the wealth accumulation phase. And my history is I came from the TD Ameritrade Schwab's, and they're in the wealth decumulation phases there. Their customers are an average age of like 58. So our customers are just making more, and they realize they have to put that to work as hard as they work. They want their money to work equally as hard, so they're putting that money to work. But we've also started to take a lot of customers from our competitors. Because as we've expanded our offering into things like retirement accounts and the yield product and all the other things that we're doing, we've become more attractive place for people who are more engaged and even people who have a larger pool of assets.
- [11:10]
A
Do you think people are just more comfortable with your technology as well? It's just that the interface is so much easier to use. Everything is a click of a button. And a lot of those legacy financial firms, the websites are pretty stale. It looks like they were made in the 1990s. Is that a big part of it for young people?
- [11:24]
C
They were. They were.
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A
Oh, yeah, yeah.
- [11:27]
C
And there's been a lot of consolidation. So when there's consolidation with firms, my firm, TD Ameritrade, got bought by Schwab. You have to cobble together that technology and migrate people onto other technology. So at Robinhood, we've been kind of blessed because we have sort of a blank canvas. So we got to start with what we think is the best technology and the best interfaces and then go from there. And yeah, I think your point is spot on customers. Just like an easy, seamless experience. And as we continue to add things like retirement accounts and other things, they're consolidating all of their investing in one place.
- [12:04]
A
Yeah. So someone in the chat was just saying, like, listen, I dollar cost average, and every year I increase the amount I save. And I think that's part of it. So Josh sent me this research report from a Wall street analyst this morning, and it just asked, is Robinhood Gold the Amazon prime of brokerages? So I actually. It's because it's a subscription model. Right. So I'm a Gold member, and to be honest, I might not even know all the features. So what do you get from Robinhood Gold? I know you pay like a monthly fee for it.
- [12:28]
C
Yeah.
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A
What does that all include?
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C
Yeah, you pay. You pay a monthly fee. It's $5 and it includes. So you get level two quotes. Some Morningstar proprietary research, you get three. You get 4% yield on. On, you know, the Sweep account. So.
- [12:45]
A
And that's when they got me just getting the cash. Sweep account. The higher yield, I think that's why I signed up in the first place.
- [12:51]
C
Yeah. And it's insured up to, I think it's 2. 2 million. So, you know, we have a host of banks that are in there, and then. And then you get, like, if you're a trader, you get, you know, better pricing on futures or index options or other Things, so. And then of course on the credit card side, you know, you get the gold card and you get 3% back on which I know Duncan likes. 3% back on all your purchases. And then if you so choose, you can take those rewards and just sweep them right back into your brokerage account. One click and it's easy. Number of people that I know that have that card that are just so enthused with the experience on the app and how amazing it is. It's really great to hear.
- [13:37]
B
Also in the app for the credit card, you can do one time purchases, which is amazing. For like free trials. You can, it will give you a card number that you use for a free trial and it automatically cancels in 24 hours. It's amazing. I've used it, so.
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C
Yeah.
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B
Yeah.
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A
Okay. Because I do that with a lot of financial media websites.
- [13:56]
B
I always go a week later and cancel. But yeah, this does it for you. It's really nice. I like it.
- [14:01]
C
I forget about the cancellation on those.
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B
Yeah.
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A
So do you find that those Robinhood Gold members, I assume are just more implanted as your customers and it's. You don't see as many of those dropping off?
- [14:13]
C
Yeah, I think it's up to like, well, of the new people that are coming in, it's like 30% because it's pretty, it's pretty much a no brainer, you know, if you do the math on what you can get in yield alone, I think.
- [14:30]
A
Right. If you keep any cash in your account. Yeah, because most people keep some cash in their brokerage account. Right?
- [14:35]
C
Yeah, well, and they also wanna, you know, I mean, for instances like we just had people keep some dry powder and then they wanna be able to put that to work. So if they have 30% of their total assets sitting in cash, when they see a real opportune time, like the dip we had, they'll just jump in.
- [14:57]
A
Makes sense. All right, Duncan, let's do another question.
- [15:00]
B
Okay, up next we got what does the future of retail trading look like? Will it be shaped by 24, seven markets, AI driven investing, prediction markets and option strategies. How can investors effectively navigate this evolving landscape?
- [15:14]
A
Okay, so my take here is that there's just never been a better time to be an individual investor. And I've been saying this for 10 years and I feel like it keeps getting better. Right. The costs keep coming down. The access to strategies that retail investors have now, like 15 or 20 years ago, people couldn't have dreamed of the stuff they can invest in, like the types of strategies. The flip side of that, of course, is the temptation has never been greater to make changes all the time. Right. When you take the barriers to entry down, then it makes it easier to make changes. And that can invite taxes and mistimed trades and that stuff. So whatever. Paradox of choice or whatever, how do you think investors are handling all this and how are they going to handle it? Because more and more is obviously coming.
- [15:52]
C
Yeah. I would just echo what you started off with, and I'll give you a little background. I started on a trading floor, well, very long time ago. But when I looked at what I had available to me, like in terms of costs, in terms of the information, in terms of the technology, in terms of the education, it was so ridiculously skewed in the favor of the professional investor as opposed to the retail. And when you look at where we are today, it's a level playing field. It's amazing how much that has been tilted to the retail investor, which is awesome. It's great. That's what it should be. But I think part of that also, to your point, is now they have retail investors, have opinions, and they're like, look, I don't even get it. If I want to buy Stock ABC at $10, why can't I do that? 70% of our customers do their research and their education and look for their investments. When the market isn't open, like the standard market and they're puzzled if they're young and new to investing, as to why the markets close, they're like, hey, I don't need people standing on a trading floor. I saw Covid. There wasn't anybody standing on trading floors, and it functioned fine. Right. So there already are asset classes that are trading around the clock. We have a thousand stocks that trade around the clock.
- [17:20]
A
And how is liquidity on those do you get? I mean, I'm sure those are the. Some of the biggest, more liquid stocks. That helps. But is it, is it a more illiquid market? It has to be, right?
- [17:29]
C
Well, it's. It. Here's the thing. The only thing that, that, that customers can do is put a limit order in. So it's not like they're day trading in the middle of the night. They're saying, hey, I want to buy stock ADC at $10. Do I care if it gets filled at 2am or.
- [17:45]
A
That's good. There's no market orders. That makes sense.
- [17:47]
C
No, no, no market orders. But it's actually quite liquid. And part of the reason that it's liquid is there's international players in there. So like during their waking hours they want to be able to trade the U.S. markets and then you have the U.S. you know, brokers in there as well. So the liquidity and there's more and more coming. So I don't know if you've seen the announcements, but every single exchange now is going to do 24,5 trading. So it's just going to continue to become, it'll be a seamless session within the next couple years.
- [18:17]
B
It always felt weird to me that the market was closed when a lot of companies reported it always felt like that was intentional.
- [18:25]
C
Yeah, because they knew it was going to move. But some of the busiest nights we have are Nvidia comes out with earnings and it's close enough to the close that there's still a session going on, like an extended session. But then the guidance comes and then, you know, the analysts start talking. And so like if you see moves in the middle, you know, as the evening goes on, the other nights that are the busiest night is Sunday night because you bunch together a weekend of news. And lately, you know, this tariff, all this has been happening when the market's not open.
- [19:01]
B
Yeah.
- [19:01]
C
And so customers are like, I'm going to take advantage of an opportunity or I'm going to protect myself, you know, when this news is happening.
- [19:10]
B
Well, like you're saying, a lot of people do their reading on the weekends and discover a stock that they want to invest in. So yeah, they're ready.
- [19:17]
C
The most, the most extreme example of this was 2016, the first time our current president was elected. So the market reacted, it moved down 6 or 7%.
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A
It was a huge overnight move in.
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C
The evening and the next morning it opened up 1%.
- [19:33]
A
Yeah, I remember that. That was.
- [19:34]
C
So you basically had a 7% move in a 12 hour period and people were like. And at that time all you could trade was futures. So people were like, oh my gosh, if we only had the ability to trade stocks, it would have been amazing.
- [19:47]
A
So that's actually a perfect segue to the prediction market stuff because Robin had just recently announced that you're getting into prediction markets. I've dabbled in these a little bit. I think I won a bunch of money betting on the best Oscar winner a few years ago or something. Coda. I took a 10 to 1 shot on Great investment. Like, where are we going with these prediction markets? Do you see them impacting actual markets? Like do you see, do you think your clients are going to be betting on like interest rates rising or falling or is that where we're headed? Like, what kind of markets are you going to be involved in here?
- [20:19]
C
They already can do that on interest rates. They can do it on price gas, they can do it on economic figures. We did the election, and those things absolutely move the market. What we're hearing. And the interest in these is really off the charts. Like, I don't know if, if you've seen the numbers, but we had the election up the election. A week before the election, we launched these contracts and 800,000 accounts opened and 600 million contracts. And it moved the market, of course, you know, pretty dramatically. But what customers are really looking for is. So I'll give you a source of frustration. I'm customer A, and I like Apple and I do my research and I'm digging into Apple and I know how many phones are sold, I know what the revenues are, et cetera, et cetera. I'm pretty good. And Apple comes out with earnings and all that is correct. And you're spot on. And then there's some guidance or something else in there that goes. And the stock goes down and that makes customers so angry. They're like, I did everything right. Like, this is so frustrating to me. So you can imagine whirlware, you abstract that you just say, hey, you know what? Just bet on or make your prediction on how many iPhones come out. And it's a direct. It kind of already has happened in the futures market. So, like, if you think of the grains, you know, the grains would trade and the minute it rained, the grains would sell off because there was a drought. And so they're like, well, why don't we just have a weather future? I mean, that's what we're really doing here. And so they came out with sort of derivatives, which are more closely aligned with what people are really trying to capitalize.
- [21:59]
A
But you can get into the actual fundamentals if you want here.
- [22:02]
C
Yeah, yeah, yeah. And I think that's where this will go. And it's, you know, I think there's just an appetite by people to be able to want to either protect a portfolio or take advantage of an opportunity, you know, with. With respect to an economic figure or whatever it is.
- [22:20]
A
Duncan's favorite stock is Oatly, so he's going to be just drinking more oat milk to try to juice those numbers a little bit.
- [22:26]
B
Yeah, I'm going to boost those sales.
- [22:28]
A
All right, let's do another one.
- [22:30]
B
Okay, up next, we got Robinhood started offering access to IRA accounts a few years ago. Now they've acquired trade pmr. What's the end game here. How will tax deferred retirement plans change and evolve in the years ahead?
- [22:43]
A
All right, so for people who aren't deeply involved in the wealth management industry, who is Trade PMR and what was the reason for the acquisition here?
- [22:50]
C
Sure. Trade PMR is a firm that has about 43 billion in assets and it's RIAs. So registered investment advisor. Basically people who help those who would like help in their investing journey. The reason for the acquisition and the reason for retirement accounts and sort of our move there is up to probably a year ago Robinhood has largely been self directed. That's it. Period. Like I know I want to do this myself. I'm confident that I can do it and I'm going to self direct. In other words, I'm going to make the decisions on what I'm investing in. What we've heard loud and clear as our customers have grown up, they either get to a point where they get a certain size of an account and they're not comfortable doing it anymore or life happens like hey, I'm 25 years old, I don't have any. I got all the time in the world, I'm working on this, I'm investing and now all of a sudden I'm 30 and I have children and I have life gets in the way and I need help. And by the way, that's what retirement accounts as well because they get to that point where they start saving for retirement or whatever else it is. And so if you look at the size of the number of assets that are self directed in the US and then the number of assets that are advised, you know, through advisories or other wealth management solutions, it's like three times the size of self directed. And we hear loud and clear from our customers, hey, I would love to do everything in one app. I don't want to be in multiple financial services firms. But you don't have the ability to get me an advisor. And now we do. The other thing that's probably the most fascinating aspect of this is there's this massive, massive $124 trillion wealth transfer that's already started. It's already started and it's being passed down, sometimes even skipping a generation because a lot of people are living to such an old age that their 65 year old kid doesn't really need the finances that they're going to pass down. So they pass it down to the kid's kid. And I know you guys know this number, but 70% of those kids fire that advisor.
- [25:08]
A
The they get oh yeah, definitely.
- [25:10]
C
And, and so like establishing a connection with the 26 million people are going to be receiving that money is really important for advisors because they want to be able to take advantage of that relationship and maintain it or start a new one. And so, you know, we, we're going to start a referral program and refer these, the people who want to have some assistance in their investing to these advisors.
- [25:36]
A
My other question for you is on the IRA side that you guys have had now for a few years. The 401k and IRAs are typically more long term in nature. Right. And the way that we've heard from a lot of people is, listen, that is kind of my set it and forget it target date fund index, whatever it is. And then my brokerage account is where I go to kind of scratch the itch. I pick a bunch of stocks that I like. Maybe I trade some options, I own some crypto. I'm probably more active. Maybe I hold some cash because I'm trying to get, get the next correction or whatever. Do you see that in your data as well? Is the behavior different in Those brokerage accounts versus the IRAs?
- [26:10]
C
Yeah, it's different. It's, it's, it's what you described. So like when we did a retirement account, we did it a little differently. So I think close to 40% of our customers are either partially or completely self employed. So there's no such thing as a 401k. Nobody's matching their contributions, nobody's incenting them to save for retirement. So we said, okay, we'll match you. So you know, if you're a gold gold customer, we'll match you up your contribution up to 3%. If you're not then 1% and it's in an annual basis. Every time you contribute, you're up to your maximum limit. We'll match that. And it's been great. Traction's been amazing and people really look forward to it. But to your point, Ben. Yeah. That is where they, they typically will put you get a core portfolio and they don't mess with it as much as they would on the self directed side.
- [27:03]
A
Yeah, that makes sense. Everyone in the chat seems to be wondering why the market's down today. So the market just all of a sudden fell off 1%.
- [27:11]
C
And I've been watching it, it just was really dramatic.
- [27:14]
B
I think someone said Trump is talking.
- [27:17]
A
Okay.
- [27:17]
C
Oh really?
- [27:18]
B
Okay.
- [27:18]
C
Because it was almost unchanged and it just kind of fell off a cliff.
- [27:22]
A
All right. My stock answer is usually, I don't know, I have the J.P. morgan. It'll fluctuate, but I'm sure someone's had something. All right, we got one more question.
- [27:29]
B
Okay. Last but not least, we got one from Craig. Ben. How far away are we from an AI advisor that can guarantee a solid 6% ish rate of return for a reasonable monthly fee? Is AI going to be my financial advisor someday?
- [27:43]
A
Okay, I don't know that anyone's going to be willing to offer any sort of guarantees. I don't know if you can do that. But, I mean, AI is certainly going to create more strategies. And my guess would be young people will be more open to them in portfolio management and financial advice than older people.
- [28:00]
B
I would say higher. You know, you have all the knowledge of the world and an AI. I want more than 6%.
- [28:05]
A
Josh always says that wealthy people are not going to trust a robot. So I actually think it's going to be more of those DIY people who want to need financial advice but maybe don't hit the minimum of a wealth management firm. I think they're the ones who are going to benefit the most from AI at the start. What do you think, Steve?
- [28:22]
C
Well, I actually think we just had a beautiful use case for AI. You just said, why did the market go down? We're building something. You can ask that question and it'll tell you. So it'll just take the. It'll. It aggregates all kinds of information from all.
- [28:36]
B
Like a chat feature within the app.
- [28:38]
C
Exactly. And it's. And it's good. It's just going to deliver that news for you, which is a great starting point. Right. Because that's half the battle. And we'll get to the point where it'll do more eventually. But I think that's like. If you ask, that's like the most glaring need for customers. Either A, they want to take advantage, they're looking for an opportunity, or B, I have a portfolio. Why. Why is my stock moving? Or why. Why is. Why is it moving up or down or what's going on with it? And I want to know quickly. I don't want to have to search all over the place. So I think there's going to be a lot of use cases that are going to be really helpful. But to your point, Ben, I think the people that are going to be most adventurous with this would be the young people.
- [29:24]
A
Yeah. And I think it could be at the point too, where someone is asking a bunch of questions through the AI chatbot and you get to the point where the AI chatbot doesn't give you exactly what you need. It's more cookie cutter or something. And then that's the impetus to. Okay, now I really do need to talk to an expert in a person. I've reached the limits of this and now I need to talk to someone. But for people just starting out, I do think it's going to be very useful and helpful. Hey, I'm 25 years old. I'm going to save 10% of my salary until this, and then I'm going to increase it every year. How does my plan look? Give me some feedback on my plan because that's what we get all the time. Here's my asset allocation. Am I diversified enough or what do you think of it? Or. And I think that those types of features where sometimes people are maybe not willing to reach out and ask someone else because people don't like to talk about money very much, I think that's going to be very helpful a feature.
- [30:08]
B
I'd love to see that it pops up and says you're about to trigger a wash sale. That'd be pretty cool.
- [30:14]
C
Yeah. Yeah, that'd be cool. I also do think, like, I think, you know, that's another thing that I think has been a positive since we started off the segment by talking about education and how good it is. I actually think people are a little more open to talk about their finances than they used to be. You know, it used to be something that you didn't talk about. You know, you didn't. But now people, you know, at least the young people that I interact with, they're more open to talk about it and ask for advice.
- [30:41]
A
Social media, yeah, social media has helped there. I always say that in the 90s, selling out was the worst thing you could possibly do. Right. No one sold out in the 90s. Now it's just more. It's okay. People don't mind it as much. So I think that's part of it is why people are actually more willing to talk. And again, I think that's a function of the risk appetite of certain generations just being more willing. So, yeah, it's interesting. Yeah, we talked before we got on here that a lot of people thought that this was a fad, this whole retail investing thing. There's no sports going on in the pandemic and people are. Instead of betting on sports, they're putting their money in the market. But I think we've just really seen a really big shift and I think it's. Some of it is generational, some of it has to do with there being a Long bull market and all. But I do think it's, it's, it's real and it's not something that's just going to go away overnight.
- [31:29]
C
Yeah, it always cracked me up when you, you know, you heard the narrative, oh, these lazy kids sitting on the couch in their parents house gambling with their stimmy money.
- [31:39]
A
Right.
- [31:39]
C
And I'm like, you know, you sound like every old person talking about every young. Oh, those kids with the skateboards and the. You know what I mean? Like, hey, they're, they're investing. There's a lot of worse things they could be doing. You know what I mean? They're learning how to invest. You should know what you should be doing. You should be helping them.
- [31:56]
A
Yeah.
- [31:57]
C
And welcoming.
- [31:58]
A
What did you say, 50% of all the brokerage accounts open from Robinhood are first timers, right? Yeah.
- [32:03]
C
Yeah.
- [32:03]
A
Even if, yeah, even if they're gambling or speculating or whatever, not all of them are, but if some of them are, it still could be a gateway to eventually learning and realizing like, this is not the way. We need to try something else. And I think the fresh air in the early 2020 is the free shares.
- [32:16]
B
For signing up was, was a big deal. I got so many people to sign up for that. Yeah, my, my wife got a share Facebook. That was pretty big. That's pretty big.
- [32:25]
C
And you know, and you know what, there's a lot of people today that enter the market through crypto.
- [32:31]
A
Yeah, no, that makes sense. I can see that.
- [32:32]
C
Start with crypto and then they work their way into, oh, you know what, I'm going to open a retirement account and buy some ETFs or whatever else it is. So to me it's less important how you start, it's more important how you do.
- [32:46]
A
Yeah. And like I said, that's when you want to make mistakes early on. So yeah, I think it's this whole, this has been a total net positive just because it got so many more people invested in the stock. And for the first time in nearly two decades, we finally saw an uptick in the number of people invested in the stock market. Households. Right. Basically stagnant since 1999 or so when the dot com bubble blew up and now it's on the rise again. I think that's a, that's a net positive for society.
- [33:10]
C
Yeah, I think we're approaching 60%, which is amazing by the way. That's where the envy of the world, you know what it is in other parts of the world, it's like 20.
- [33:19]
A
Yeah. Much, much smaller. Yeah, it's.
- [33:21]
C
They would love to see that level of participation because then they're not going to be relying on the government when they, you know, get to the retirement age.
- [33:29]
B
Right.
- [33:30]
A
That's great. All right, Steve, thanks so much for coming on and sharing today.
- [33:33]
B
Yeah, thank you.
- [33:33]
A
We appreciate it.
- [33:34]
C
Thank you for having me.
- [33:35]
A
Yeah, Steve, you're on with TCAF with Josh and Michael last month. So if anyone missed that, check that out. Great episode. New TCAF tomorrow. Or email us askthecompoundshowmail.com if you have a question. I know people are asking questions in live chat today. Thanks everyone who showed up there. Thanks everyone for watching live on Twitter and we'll see you next time.
- [33:50]
B
See you, everyone.
- [33:51]
A
Thanks, everyone. Thank you.
- [33:55]
D
Thanks for listening to Ask the Compound. All opinions expressed by Ben Carlson, Duncan Hill, and any of their guests 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.