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- [00:00]
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- [00:25]
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- [00:52]
Host
What's your advice for people that because we never really talked about this before, what's your advice for margin? People that want to use margin, that.
- [00:59]
Steve
They want to use it? Yeah, I would say if you want to use it, I would be, I would be very methodical about the way you use it. So in other words, like, here's the way I would think about it. This is me personally. If I see an opportunity in a stock or in something that I think is really good opportunity, like I've been following stock ABC for a long time. The fundamentals look amazing to me. I think there's an opportunity that others are missing and it just doesn't look like it's trading where it should be trading. That to me is like opportunistic. And I say, you know what, with the amount of money that I have in my account, I think I have an opportunity to get outsized gains. Would I advocate that people do that on a continual basis? No. No, I would not. I would say, you know, you always have to come up with a plan, stick to your plan, and that's good or bad. So if that goes against you, then you have a plan to get out of it the same way you have a plan to get out of it if it goes in your direction. And I think the thing that we've been really, really pleased with seeing is that when people stick to a plan like they, you know, you can't change your plan in the middle of the movie. You have to stick to that plan. And when they do, I think that we tend to see more success. But so the direct answer to the question is I think what we tend to see is people using margin episodically when they have, when they think that there are opportune times, you know, for that to be a good thing for their portfolio.
- [02:32]
Co-Host
Was last month.
- [02:32]
Steve
One of them was last month. You know, in the eyes of some customers. I think so, yeah. Because I think they tended to see even though our margin balances came down, that's just because the balance, you know, the balance, everything came down. It's 20% lower, you know, but I think you see people like, you can watch them become more aggressive when they think something is at a level that they feel is really attractive.
- [03:01]
Co-Host
Yeah.
- [03:02]
Analyst
Steve, you guys sit in a unique position. Obviously you said the average age is about 35 and so of a retail investor, but you are seeing sophisticated trading behavior. Right. When you just talked about margins, even options buying low during, during opportune times. What are some of these other characteristics that you're seeing? Obviously you've been in this space in finance for a number of decades.
- [03:25]
Steve
Yep.
- [03:26]
Analyst
What are some of the other atypical things that you're seeing from such a young age demographic when it comes to trading?
- [03:32]
Steve
You know what, what's, what's kind of interesting is, look, so I came from the world of Schwabs and TD Ameritrade. The average customer age is 55 to 58. Their accounts are way bigger because they've been doing it for much longer and you know, they're at the end of their, or toward the end of their investing both.
- [03:50]
Host
The average account for the Schwab and.
- [03:52]
Steve
Just count over there is like 250. Average account at Robinhood is about 7k. Okay, so there's a couple things. Number one, I, I absolutely reject the idea that just because I'm younger and my account smaller that I'm not as sophisticated. I can tell you with absolute certainty that's not the truth. But I think that the thing that's kind of ironic is there's a lot of similarities between these customers even at that age with that account size and the younger ones with the smaller account size. When the market starts doing what it did, has done in the last month, becomes very volatile. Customers move away from individual securities and they trade broad based ETFs. They trade the spider, the IWM. The QQQ.
- [04:40]
Co-Host
Yep.
- [04:40]
Steve
Because here, here's their logic. This market has moved down 20% in a very short period of time. I like stock abc, but I don't have as much certainty that it's going to rebound as I do that the market is going to rebound. So it, and by the way, this happens across the industry like you can see the volumes across the industry. Broad based ETFs become a bigger percentage at Robin Hood at all these other places. And it's just a safety factor for customers. Like they want to, they want to be opportunistic, but they like you're protecting yourself. Right. Like if there's some anomaly with one stock and I'm wrong and it goes down 50%, that's ugly. If there's some anomaly with one stock and I bought the S&P 500, it goes down a penny. Yeah, right.
- [05:33]
Host
I'm glad you said this because something I've been saying for a long time. Yeah, yeah, it's, it's right in line with our philosophy for sure.
- [05:42]
Co-Host
On the AI side, I have a question for you. What plans do you guys have for AI in terms of integration on the platform that you can tell us about? Because I, I think at some point there will be some kind of integration into Robin Hood Gold. But is there anything you can tell us about how you can use AI to become a better trader or investor on the platform?
- [06:00]
Steve
Yeah, we're doing a lot of it. Like, like a lot of financial services companies we started internally, so I mean, you know, efficiencies and helping people. But I think one of the first things we're doing and one of the things we talked about at our, at our gold event was Robinhood Cortex, which is essentially using AI to, you know, if I have a portfolio or I have a watch list and I have interest in these securities, like anything that's happening, any market moving news, you, you know, we aggregate it and get it to you right away. The second iteration of that will be okay, well now I want to know, you know, I'm bullish, I'm bearish, I'm, you know, neutral. You know, what is a, what is a good strategy that you think might be able to assist me in whatever that investment thesis is? And that's where I think, you know, that's where really interesting. And that's the next iteration.
- [06:50]
Co-Host
So like a real time AI advisor.
- [06:52]
Steve
Yeah, exactly.
- [06:53]
Co-Host
Okay.
- [06:55]
Host
Well, Steve, thank you for your time. Before you leave, one last, one last question.
- [06:59]
Steve
Yes.
- [07:02]
Host
The Trump administration.
- [07:04]
Steve
Yeah.
- [07:05]
Host
Interesting choices that they've been making so far. Are you, are you bullish or are you bearish on the political leadership as far as how it's going to impact the stock market?
- [07:17]
Steve
I'm, I'm, it's weird. I'm bullish on some of the things that are being done. I'm bearish on the way they're being done. I'M I'm actually bullish on some of the things I think they needed to be. Some of the things needed to be addressed. I just don't like the way they're being addressed. And I would also argue that, like, in the interest of, like, stop telling us that it's all going to be good and, you know, and that we should understand what the changes are. Nobody understands.
- [07:48]
Co-Host
No one gets.
- [07:48]
Analyst
It's a Hollywood tariff, including the person saying it.
- [07:55]
Steve
I have more clarity on how much water my shower can flow now than I do on what tariffs are going to be in some country. So I would argue like, like, let's get the messaging down so that, look, we're all in the market all the time. Like, what we don't like is uncertainty and we not give us the rules and we'll play them right.
- [08:15]
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- [08:34]
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- [08:35]
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- [08:47]
NerdWallet Ad
By Smart Travel, a new podcast from NerdWallet. Smart travel doesn't just cover points and miles. They break down all the financial aspects of your trip, whether that's the best days to book, how to avoid hidden fees, or which fancy travel credit cards pay off and which ones are just an expensive flex. If you want your travel budget to work harder, then dive into the best deals, products, services and more with Smart Travel from NerdWallet. Wherever you get your podcast casts.