Bloodbath

Summary

Podcast Summary: The Compound and Friends – Episode "Bloodbath" (Released April 4, 2025)

Hosts: Downtown Josh Brown, Michael Batnick
Guest: Steve Quirk, Chief Brokerage Officer at Robinhood

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1. Episode Overview

In the "Bloodbath" episode of The Compound and Friends, hosts Downtown Josh Brown and Michael Batnick engage in an in-depth conversation with Steve Quirk from Robinhood. Released on April 4, 2025, the episode delves into the tumultuous market reactions following significant tariff announcements, Robinhood's strategic expansions, customer behaviors during market volatility, and the future trajectory of wealth management within the brokerage sector.

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2. The Market's Current State

Initial Remarks on Market Quietness
The episode begins with the hosts noting the subdued activity in the markets:

• Josh Brown [00:00]: "So not much going on in the markets these days. We'll try to just come up with some stuff."

Transition to Unprecedented Volatility
The conversation quickly shifts from initial calm to the sudden market upheaval triggered by political actions.

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3. Robinhood's Expansion Plans

New Headquarters in Chicago
Steve Quirk discusses Robinhood's strategic move to establish a second headquarters:

• Steve Quirk [00:24]: "Still, we have about 100 people in Chicago. Robinhood does. We're building our second HQ in Chicago, and it's opening like now, like this spring."

Enhanced Office Environment
Quirk elaborates on the new office space's features, highlighting its open-plan design and proximity to a music venue, which resonates with the company's musically inclined Chicago team.

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4. Tariffs Announcement and Market Impact ("Bloodbath")

Tariff Details and Economic Implications
The core of the episode centers around the severe market downturn following a major tariff announcement by President Trump.

• Michael Batnick [09:01]: "Trump announced a weighted average tariff rate of 18.3%, around 3% higher than the bank expected... it's catastrophic. It is global economic Armageddon."

Historical Context of Tariffs
Josh Brown emphasizes the unprecedented nature of the tariff increase:

• Josh Brown [09:10]: "This is the US effective tariff rate back to 1900."

Market Reaction
Hosts and guest discuss the immediate and drastic decline in major stock indices:

• Michael Batnick [19:16]: "The NASDAQ is having its worst day today outside of COVID. This is a big drop."

Impact on Specific Stocks
The conversation highlights significant drops in prominent companies like Nike, reflecting broader economic distress.

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5. Robinhood’s Customer Behavior During Volatility

Demographics of Robinhood's User Base
Steve Quirk provides insights into Robinhood's predominantly young and relatively inexperienced investors:

• Steve Quirk [09:51]: "We have 25 million customers, but they're young, just over the average age of 30. Half of them are first-time brokerage users."

Trading Patterns Amidst Turbulence
Quirk observes that Robinhood users tend to respond to market volatility by rotating out of appreciated assets into undervalued ones:

• Steve Quirk [11:25]: "Young investors... have powder for a reason, because they look for opportunities."

Behavioral Insights
The discussion touches on the tendency of both retail and institutional investors to sell high-performing stocks to realize gains, even amid broader market downturns.

• Josh Brown [09:51]: "You should never take risk that you're uncomfortable with."

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6. Robinhood's Growth Strategy

Comparative Growth with Traditional Brokerages
Steve Quirk contrasts Robinhood’s rapid user growth with that of established firms like Charles Schwab and TD Ameritrade:

• Michael Batnick [43:27]: "In 2023, Schwab was 23 times the size of Robinhood by market cap. Now they’re only four times the size."

User Acquisition Tactics
Quirk attributes Robinhood's explosive growth to its user-friendly platform, zero-commission trades, fractional shares, and viral onboarding process:

• Josh Brown [43:48]: "They made it so easy for people... fractional share ownership."

Market Positioning
Robinhood's ability to attract younger investors positions it favorably for long-term growth as these users mature and expand their investment portfolios.

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7. Acquisition of Trade PMR and Future Wealth Management Strategy

Strategic Acquisition
Robinhood's recent acquisition of Trade PMR is highlighted as a pivotal move to enhance its wealth management offerings:

• Josh Brown [47:39]: "They acquired Trade PMR... because they have a perfectly good one with clients, money, and a great reputation for customer service."

Integration with Wealth Management
The hosts and Quirk discuss how Trade PMR will enable Robinhood to offer comprehensive wealth management services, including financial advising and retirement planning:

• Steve Quirk [48:58]: "We have... a blank canvas in how we create."

Future Plans
Robinhood aims to build a world-class referral program and streamline advisor-client interactions through advanced technology and seamless onboarding processes.

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8. Robinhood’s 24-Hour Trading and Its Effects

Implementation of Extended Trading Hours
Robinhood has introduced 24-hour trading, akin to platforms like Amazon's constant availability, catering to a global and increasingly crypto-native user base.

• Steve Quirk [63:05]: "Our biggest volume days are earnings like Nvidia... and again, customers are globally active."

Customer Adaptation and Market Liquidity
The extended trading hours have led to increased liquidity and user engagement, particularly during overnight hours when international markets are active.

• Steve Quirk [64:05]: "The spreads have always been tight... Volumes have grown."

Regulatory Considerations
Quirk addresses initial SEC concerns regarding liquidity but reassures that Robinhood manages trading through limit orders effectively.

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9. Discussion on Leveraged ETFs and Speculative Products

Customer Engagement with Leveraged Products
The episode explores the surge in transactions involving leveraged ETFs and inverse funds among Robinhood users during volatile markets:

• Michael Batnick [40:24]: "Inverse ETFs are ripping Sox's triple levered bearish SEMIs up 28%."

Speculation vs. Hedging
While some users engage in leveraged products for speculative purposes, Robinhood emphasizes educating users on appropriate usage to prevent risk mismanagement.

• Steve Quirk [42:16]: "Most use leveraged ETFs for upside opportunities rather than hedging."

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10. Future Steps: Wealth Management and Financial Advisors

Enhancing Advisor Partnerships
Following the Trade PMR acquisition, Robinhood is focusing on expanding its wealth management services by partnering with financial advisors and streamlining client onboarding.

• Steve Quirk [51:17]: "We're partnering with Trade PMR to enhance our wealth management capabilities."

Technology-Driven Solutions
Robinhood plans to leverage its robust technology infrastructure to offer superior user interfaces and efficient financial planning tools, differentiating itself from traditional robo-advisors.

• Josh Brown [52:00]: "Technology is the answer to scale and to get the wealth industry to care more about the outcomes of people when they're younger."

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11. Closing Remarks and Future Outlook

Reflections on Market Movements
The hosts and guest reflect on the day's unprecedented market drops, emphasizing the importance of experience and risk management for investors.

• Michael Batnick [71:29]: "It's official. It's official. Bloodbath out there today."

Looking Ahead
Steve Quirk expresses optimism about Robinhood's ability to adapt and grow through strategic acquisitions and technological advancements, positioning the platform to better serve both self-directed investors and those seeking professional wealth management.

• Steve Quirk [73:10]: "We're gonna figure it out and make it an experience that like none other."

Final Thoughts
The episode concludes with mutual appreciation between the hosts and Steve Quirk, underscoring the significance of Robinhood's innovations in the evolving financial landscape.

• Josh Brown [73:52]: "Thanks, Steve. We would love to have you back."

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Notable Quotes

• Josh Brown [09:10]: "This is the US effective tariff rate back to 1900."
• Steve Quirk [10:49]: "You should never take risk that you're uncomfortable with."
• Steve Quirk [16:47]: "The more you do it, the better you get at it."
• Steve Quirk [53:49]: "Our job is to let and help people do what they want to do. It's not to influence what they should be doing."
• Josh Brown [73:00]: "I really meant what I said."

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Conclusion

The "Bloodbath" episode provides a comprehensive analysis of a critical market event triggered by geopolitical actions and its cascading effects on investors, particularly those using Robinhood's platform. Through insightful dialogue with Steve Quirk, listeners gain a deeper understanding of Robinhood's strategic responses, the behavioral tendencies of a younger investor base, and the company's forward-looking initiatives in wealth management and extended trading operations. This episode serves as a valuable resource for both seasoned investors and those new to the market, offering expert perspectives on navigating unprecedented financial turbulence.

Transcript

[Josh Brown]

So not much going on in the markets these days. We'll. We'll try to just. We'll come up with some stuff.

[Michael Batnick]

Like watching paint dry.

[Josh Brown]

Yeah, yeah.

[Steve Quirk]

It's quiet.

[Michael Batnick]

Watching paint melt into your eyeballs.

[Steve Quirk]

Yeah.

[Josh Brown]

Where's your home? Where's your home base?

[Steve Quirk]

Chicago.

[Josh Brown]

Okay.

[Steve Quirk]

Still, we have about 100 people in Chicago. Robin Hood does.

[Josh Brown]

Where?

[Steve Quirk]

Right in the train station right downtown.

[Josh Brown]

Okay.

[Steve Quirk]

Yeah.

[Josh Brown]

We. We're building our second HQ in Chicago and it's opening like now, like this spring.

[Steve Quirk]

Is it?

[Josh Brown]

It's in the salt shed. Oh, okay. So you know that area?

[Steve Quirk]

I do not.

[Michael Batnick]

Well, Goose Island, I think.

[Steve Quirk]

Yeah, yeah, it's Goose Island. There's a lot of new. A lot of interesting things being built around there.

[Josh Brown]

Well, so we're. We're one of them. So we took office space like, I guess a year ago. We committed or something like that. And they're, they're building like, really cool. I don't call it loft space, but like, you know, big open plan, high ceiling. And then it all has a view down into the music venue, which my people in Chicago are all music people, so they are beyond excited.

[Steve Quirk]

Yeah, that music venue is kind of cool.

[Josh Brown]

So we're gonna come out there at some point and celebrate when everyone's moved in. But Chicago's an awesome city for our business because there are just thousands of people who know what they're doing. And we've been able to hire a lot of operations staff in addition to advisors in Chicago.

[Steve Quirk]

Well, I mean, what makes it such a cool city is you used to have forex changes with thousands. And I came from that world. Thousands and thousands and thousands.

[Josh Brown]

The Chicago Board of Trade, cme, Chicago Stock Exchange.

[Steve Quirk]

Cboe.

[Josh Brown]

Cboe. Right.

[Michael Batnick]

Yeah.

[Steve Quirk]

So you had four exchanges and you had tons of talented people on those exchanges and they kind of went away for the most part. CME still got some presence.

[Michael Batnick]

What type of people work with you of the hundred? What roles are they?

[Steve Quirk]

We have everything. Cx, you know, a lot of product development people, engineers, everything across the board in Chicago. There's a lot of derivatives talent in Chicago. So our whole derivatives team is Chicago. So derivatives would be futures, the event contracts, everything that is.

[Josh Brown]

Yeah, that makes sense. Like you're not going to find a huge talent pool in San Francisco or LA like you would in a place like Chicago, where it was born. And that's kind of like, you know, there's a huge, like brokerage wealth management talent hub in St. Petersburg and Tampa. And that's the legacy of like all the people that have worked at Raymond James over the years. So there are, like, these pockets in the country where you just know if you need a certain type of expertise, it already resides there.

[Steve Quirk]

You know, it's really strong in risk management, too. Chicago's really strong in risk management. Because think of all the trading firms you had there. There are a lot of people who are, you know, and these are leveraged instruments. So risk management is paramount. If you're not good in risk management, it can end very poorly, very quickly.

[Michael Batnick]

Did they hire you as a chief brokerage officer?

[Steve Quirk]

Yeah, I came. So I started with thinkorswim. I don't know if you remember that company. Yeah, with Tom Sosnoff. I knew Tom Sosnoff from the trading world. We never worked together, but he, myself, J.J. kinahan, we're all.

[Josh Brown]

I heard you were the guy that suggested the beret. I heard you said, tom, you're super entertaining on the mic. You're obviously, you've done really well, but what if. Also there was a beret? And he said, all right, I'll give it a shot. And the rest is history. Tastytrade was born.

[Steve Quirk]

And the hair. The hair down to ear. I can't tell you how many meetings I attended with him when we were first acquired by TD Ameritrade. You know, the very first board meeting, because, you know, he needed a interpreter. You know, Tom's acquired.

[Josh Brown]

He's such a great. He's such a great character, though.

[Steve Quirk]

He is a good character. But he, you know, he walks into first board meeting with his, you know, his white T shirt and his ripped jean jacket, and they're all looking at him like, why is this guy dressed like this?

[Josh Brown]

Because he's a billionaire. Shut up.

[Steve Quirk]

Exactly.

[Josh Brown]

Yeah. Yeah. That's basically very cool. Shout to shout to Tom.

[Michael Batnick]

Well, this is without a doubt the reddest day in the history of the compound in France, so we're happy to have you here.

[Josh Brown]

No pressure, no press.

[Steve Quirk]

And it started. It started early. But, you know, what was kind of interesting is like, you know, right after the announcement, we got that drop in the futures market and we kind of just sat there. Yeah. No bounce overnight. There was a little bounce, but really I expected way more.

[Michael Batnick]

Way more selling or way more bouncing. I just.

[Steve Quirk]

Wait, I expected more movement. Like I thought there were.

[Josh Brown]

Back and forth.

[Steve Quirk]

Yeah, yeah. Because we have, you know, we have products that trade around the clock. We have a thousand equities that trade around the clock. We have futures that trade around the clock. So we're all over it. And it was. I mean, we did. There were great volumes, but I just thought there would be more movement.

[Josh Brown]

I think the currency markets went crazy over.

[Steve Quirk]

They did.

[Josh Brown]

Yeah. And I think on the equity side, this is the ultimate tape bomb.

[Steve Quirk]

Yeah.

[Josh Brown]

So I think when a tape bomb drops, sometimes it's not obvious how. How. How to price it.

[Steve Quirk]

Right.

[Josh Brown]

And I think people just looked at each other like, wait, is this the worst news you've ever heard?

[Steve Quirk]

Yeah. Right.

[Josh Brown]

Or maybe it's so bad that it can't be real.

[Steve Quirk]

Yeah.

[Josh Brown]

Let's start the show, so. Oh, yeah, let's do the show. All right, John. Let's do it. All right.

[Michael Batnick]

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[Josh Brown]

Welcome to the compound and friends. All opinions expressed by Josh Brown, Michael Batnik and their castmates are solely their own opinions and do not reflect the opinion of Ritholtz Wealth Management. This podcast is for informational purposes only and should not be relied upon for any investment decisions. Clients of Ritholtz Wealth Management may maintain positions in the securities discussed in this podcast. Ladies and gentlemen, welcome to the biggest, the baddest, the most widely respected investment population in the world. I want to shout out all our listeners in Sydney, Melbourne, Dublin, London, Sheffield, Birmingham, New Jersey. We have listeners around. Do you know we have listeners around the world?

[Steve Quirk]

I did know that.

[Josh Brown]

I have a message for our listeners around the world. The tariffs weren't my idea. It wasn't Michael's idea. The compound has no. We take no responsibility. We love you. We love our international listeners. Please don't give up on us. It's nothing that we personally are endorsing. Guys, we have a very special guest today. I'm so excited to introduce you. I've known Steve for a long time. He's one of these guys in the brokerage business that everybody knows and everybody likes and this is long overdue in my opinion. Steve Quirk is the Chief Brokerage Officer at Robinhood. Prior to joining Robinhood, Steve oversaw the strategy and deployment of initiatives for trading at TD Ameritrade. God bless TD Ameritrade.

[Michael Batnick]

Hell yeah.

[Josh Brown]

Prior to his role at td, Steve was responsible for the development of new trading tools and technology enhancements for Think or Swimming trading platform. Steve, thank you so much for coming. Welcome to the show.

[Steve Quirk]

Thanks for having me.

[Josh Brown]

We appreciate you being here.

[Steve Quirk]

Yeah, you guys do a great job on this. Thank you. Had friends come on here and they've had a great time like Joe.

[Josh Brown]

So Joe Moglia, who else?

[Steve Quirk]

Just watch that. Watch Joe.

[Michael Batnick]

Many others.

[Josh Brown]

Many, many others.

[Michael Batnick]

You're off the hook.

[Josh Brown]

You're off the hook.

[Steve Quirk]

Thank you.

[Josh Brown]

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

[Michael Batnick]

Okay. Trump announced a weighted average tariff rate of 18.3%, around 3% higher than the bank expected. However, roughly one third of total imports are exempt, which makes the increase in the effective rate 12.6% below Goldman's 50. So anyway, however you slice this, there are other estimates. John, we have a chart. This is from, from Yale. They're expecting 22% rates, whatever. However way you slice this, this is catastrophic. It is global economic Armageddon.

[Josh Brown]

This is the US effective tariff rate back to 1900.

[Michael Batnick]

So the biggest tax increase on American consumers that we've ever seen. And if this sticks, which it sure sounds like he's talking like it will for the rest of the year, it is going to be really bad for consumers, for companies, for households, for stocks, obviously. What was your original take on the announcement?

[Steve Quirk]

Well, I think I always look at everything through the lens of our customers. You know, we have 25 million customers, but they're young, so they're just over the average age of 30. Right. Half of them first time brokerage. So in other words, they're new to investing. A lot of them new to investing. They've never seen this before.

[Josh Brown]

Right?

[Steve Quirk]

They've never seen a day like this before. I mean, some of them have lived through Covid and you know, there were Many shocks during COVID But they were.

[Josh Brown]

In high school for the great financial crisis.

[Steve Quirk]

Yeah, basically. Yeah. Their parents were navigating it, so they probably listened to it at the dinner table. But so I think, you know, there's experience. You can't replace experience. You know what I mean? Shocks like this, you have to navigate these. So I think for a lot of people, they actually just say, you know what? I don't want to navigate this. I don't know how to deal with it. That's why we give them a Yield product. It's 4% sit in a yield product. You should never. If you're not comfortable investing in something, then don't invest.

[Josh Brown]

You shouldn't take risk that you're uncomfortable with.

[Steve Quirk]

Right. Because it's going to put you in a bad situation. You guys know, you live this. I mean, you talk to clients all the time. Like as soon as they get uncomfortable, they make poor moves.

[Michael Batnick]

One of the silver linings of the sell off. So this morning or today, there's 75 stocks, give or take, that are down 10% in the S P. It's bad.

[Steve Quirk]

Yeah.

[Michael Batnick]

And maybe I'm grasping for straws, but from the investor behavior perspective, you can't simulate risk. And you don't really know where your internal line of like, too much risk is until you go over it. And this is one of those lessons that will be learned and remembered and repeated for investors forever.

[Steve Quirk]

Yep. I completely agree. And I think the fortunate thing is, like, these young investors, they're pretty savvy. So like, when they have something that's appreciated, like they've been in Nvidia, they've been in other names that have really had good appreciation, they rotate. They don't sell at all, but they rotate out of that and move into things that they think are attractive and been depressed. And so they, generally speaking, they have powder. They're not sitting there leveraged up with margin. I'm all in.

[Michael Batnick]

Some of them are.

[Steve Quirk]

Well, some of them are. But yeah, the majority of them have powder. And they have powder for a reason, because they look for opportunities.

[Josh Brown]

I think there's a higher predilection for transactions among the Robinhood cohort than there is for maybe the Charles Schwab.

[Steve Quirk]

Without question.

[Josh Brown]

Because I think one of the initial things that attracted them to the platform, of course the trades are free, but now that's true everywhere. I think the technology makes it really seamless to make changes and, and take action on ideas.

[Michael Batnick]

And there's no friction.

[Josh Brown]

There's no.

[Steve Quirk]

There's no friction.

[Josh Brown]

There's no friction. So I was. I was telling somebody about this. I remember placing my very first trade. I was a cold caller at a brokerage firm, so I thought I knew what I was talking about.

[Steve Quirk]

Yeah.

[Josh Brown]

And I was. I think I was, like, 19. It was like a summer job. And I remember, like, I didn't have enough money to open my own account at the brokerage I worked for, but I had a UGMA account sitting at Merrill Lynch. My dad's broker.

[Steve Quirk]

Yep.

[Josh Brown]

And I remember calling him up with, like, a ticker symbol, and I was like, can you buy me a hundred shares of this?

[Steve Quirk]

Right.

[Josh Brown]

And he just started, like, hysterically laughing at me. He's like, why do you want to do that? It's like the whole experience was so humiliating. And the stock, of course, cratered.

[Steve Quirk]

Yep.

[Josh Brown]

And I don't remember what it was to this day, but just like.

[Steve Quirk]

And you paid $150 for that, right?

[Josh Brown]

Oh, I would guess. I wouldn't even know. It was probably. It was probably a principal transaction where they made a market in it. It was probably some NASDAQ thing, but. So this generation never had to explain to somebody who would laugh in their face.

[Steve Quirk]

Right.

[Josh Brown]

Why they want to try something, why they want to experiment with a trade, why they want to change, you know, something in their portfolio, which I think mirrors their experience in other facets of life. They can DM a girl before having to, like, ring her doorbell and look at her eye to eye. There's that. Or vice versa. There's like a. There's a comfort in doing things from a screen that you don't have to do in person. And I think there's a good and a bad. But I think on the investing side, you could make mistakes without your dad's broker laughing at you.

[Steve Quirk]

Yeah.

[Josh Brown]

So I kind of like that.

[Steve Quirk]

I actually think it's actually pretty remarkable. Well, I got. I started the week of the crash in 1987.

[Josh Brown]

Is that right?

[Steve Quirk]

Trading floor.

[Josh Brown]

Okay. A lot of. So many people.

[Steve Quirk]

The crash. That's when I started, you know.

[Michael Batnick]

You know, I think everyone's.

[Josh Brown]

I think everyone's causation correlation guy.

[Michael Batnick]

I think everyone's lying to us. It can't be that. We have. We've had, like, five guests.

[Steve Quirk]

Yeah.

[Michael Batnick]

We started in, like, November, but it.

[Josh Brown]

A lot of people have that. Have that as part of their origin, though. We do hear that.

[Steve Quirk]

Yeah. But I mean. So in those days, I just think about all the things, and I'm on a trading floor with thousands of people. I had access to Information no retail customer had access to. I had technologies that no retail customer had access to. I had pricing. They were paying $150 to make a trade. I was paying a couple pennies, and I had education and how to do it that was unavailable to them. All those things. That playing field's been largely leveled from a retail standpoint. Like, market makers today are everybody in the world for a lot of these products. So I think that's pretty cool and remarkable. And I think it. I can't even imagine having to, like, in your scenario, how am I gonna be successful? By calling up, getting picked off on the spread, paying $150, and having to have a certain amount of money to be even be able to invest. Man, if you were successful, you were Michael Jordan.

[Michael Batnick]

Yeah. People act like Citadel is the enemy. We should. Like, investors should thank God that they exist.

[Steve Quirk]

I agree.

[Josh Brown]

To provide liquidity. Well, there. There has been an argument. I think it's largely dead now, but in the early days of. Of Robin Hood, there had been an argument that, like, maybe a little bit of friction is a good thing. It's helpful from the standpoint that if something is so easy to do, that there are. That there's nothing in your way, you might do things that you shouldn't do.

[Steve Quirk]

Yeah.

[Josh Brown]

And I sort of bought into that a little bit.

[Michael Batnick]

Wait, I still. I still believe that. We know the more you trade, the worse you're gonna.

[Josh Brown]

So, like, someone's. So someone's like, all right, fidelity is a $15 commission, but I could trade for free on Robinhood. It's like. So let me get this straight. You think you have a good investment idea, but a $15 commission is stopping you from doing it?

[Michael Batnick]

But wait a minute. Wait a minute. You know that people are trading way more without. Without commissions. They just are.

[Steve Quirk]

Fact.

[Michael Batnick]

A lot.

[Josh Brown]

100%, we agree.

[Steve Quirk]

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

[Michael Batnick]

What do you mean by that?

[Josh Brown]

If you're trading, not investing, do you.

[Michael Batnick]

Mean more frequent trades or the more experience over time?

[Steve Quirk]

More experience. Like the idea, like, you know, I'll give you a bunch of simple examples of this. Like, okay, look, I came from the other side. I've chased. I walk from the back of where I'm receiving a trade all the way to the front where I'm helping people. Okay, retail customers, what do they do? Let's say there is a spread on something, they try and buy it and they won't put their price in the middle of that spread. And they'll probably get filled. The reason that they're not getting filled immediately is because I'm the market maker and I know that they're antsy and they're going to go back and forth.

[Josh Brown]

They'll wait.

[Steve Quirk]

They can't wait.

[Michael Batnick]

People don't even know what spreads are anymore.

[Steve Quirk]

Well, I mean there aren't that many spreads, which is a good thing. But okay, think about if I'm a person who's kind of does this a couple times a month and I can, I can save myself on, I'm using options or even equity, you know, 10 cents on. Every time I'm, I'm making that spread, I'm getting something in the middle that's on in and out. It's meaningful change my return. These are just things you learn by doing. And so I think there's a lot of lessons that can be learned by taking the time to understand every aspect of it. A lot of people spend tons of time on the research of what to buy, but they don't spend as much time on how to do it.

[Josh Brown]

Oh, we agree. And when to sell. And I think there's a lot of merit to what you're saying. For a trader, obviously the more trades you have under your belt, the more mistakes you've made. And a lot of those mistakes you'll never make again. So of course you're going to improve through not having catastrophic outcomes.

[Steve Quirk]

Right.

[Josh Brown]

So now when I'm wrong, I lose 10%. I used to lose 50%. Okay, 100%. I think where people get into trouble is not knowing that they're not a trader. They are an investor who makes sometimes places trades.

[Steve Quirk]

Yeah.

[Josh Brown]

But in certain market environments, they look around, everyone else is doing it and they think they're a trader, but then they don't have any risk management chops or they're not paying attention to the right things. So like that's an example where more trading isn't better.

[Steve Quirk]

Yeah.

[Josh Brown]

Where somebody isn't really serious about what they're doing.

[Steve Quirk]

Yeah. I also think to your point, like you pointed at the screen and said like, what do you do there?

[Josh Brown]

Yeah.

[Steve Quirk]

If I've been through that three times, that doesn't, that doesn't. I know what's going to happen here. I'm a little less plussed about what happened?

[Michael Batnick]

You might not know what happened, but you know how you're going to react.

[Steve Quirk]

Yeah, I know how I'm going to react. I feel like it's, we like to say it's a roller coaster. It's never as good or bad as you think it is. You know what I mean?

[Michael Batnick]

So getting back to today, we've got the S and P on the lows of the day. We're recording this at 320 right now. No bounce. Market's down. S and P is down four and a half percent. NASDAQ is down worse. And I think the market is still underestimating the literalness of the tariffs. Because if we don't get $280 a share on the S and P and we get 250, 260 and you have lower multiples, we have a long way down to go.

[Steve Quirk]

Oh, yeah.

[Michael Batnick]

So you can argue that we should be down 11%, something. I'm making that number up. But Neil Dada said it better than I did. He said, quote, trump shot the hostage. I am really doubtful that this is part of some opening negotiation. This is what he believes. Republicans on Capitol Hill believing this to be a negotiation might be in for a rude awakening alongside equity investors thinking that this is Trump getting ready to do deals. And then Lutnick was all over TV today. No chance Trump will back off on tariffs. Countries can fix non trade tariff barriers. Negotiating is talking. No talking, just doing. Trump will stand firm. What countries can do is stop exploiting us. We don't have a plan about the dollar. Lol. Anyway, they're, they're talking tough.

[Steve Quirk]

Yeah, yeah.

[Michael Batnick]

And the market I think is probably still underestimating that because it just sounds so crazy, like there's no way this isn't a negotiating tactic. And I think like I'm still there. I still haven't come around to the fact that this might actually happen.

[Josh Brown]

There are hundreds of stocks that are green today, which tells me everything I need to know about what? The belief of the market. The market does not believe that these are going to be the final numbers. That's, I mean that's just with me on that.

[Michael Batnick]

No, that's the market's take. That's not your opinion. That's what the market is saying.

[Josh Brown]

And I am in agreement with it.

[Michael Batnick]

You're in agreement with the market?

[Josh Brown]

Yeah, I'm in agreement with the market. That now comes the negotiations, the one offs, the carve outs, the exceptions, people presenting grand plans for what they're going to build. And then maybe they'll build it, maybe they'll run the clock.

[Michael Batnick]

How quickly you think we got those talks? Because if it doesn't happen, the market's going to fall 3% a day until something happens.

[Josh Brown]

No, I think it's. I think it's very. I think it's imminent and I think I'm looking at the screen today. Here's what's up. Kroger, American Waterworks, McKesson, Philip Morris International, Duke Energy, Rollins, Coca Cola, Church and Dwight. Cme Yum Brands, T Mobile, Verizon. I don't mean up like a few pennies. These stocks are up between 2 and 5% that I just referenced.

[Steve Quirk]

Well, if we keep doing this, cme, cme, cboe, all of them are going to benefit. Right.

[Michael Batnick]

This is interesting. The NASDAQ is having its worst day today outside. The worst day of the decade outside of COVID Like, this is a. This is big drop.

[Josh Brown]

Can I, can we double click on what you just said? So CME makes money. The more people are reacting to volatility and trading.

[Steve Quirk]

Yeah, yeah.

[Michael Batnick]

All time high today.

[Josh Brown]

By the way, why don't people use that as a, as a hedge in their portfolio? Does it not work?

[Steve Quirk]

Very good question. Really good question.

[Josh Brown]

Because, you know the other one that's making record highs right now is Trade Web. You know that company?

[Steve Quirk]

Yeah, I do.

[Josh Brown]

Tw. I barely know who they are. I've been on Wall street all my life. What is Trade Web?

[Steve Quirk]

I think they're. I think they're fixed income.

[Josh Brown]

Yeah, but like they sell analytics and data, but then they also make money on the brokerage side, I believe. So that stock is rallying.

[Steve Quirk]

Yeah.

[Josh Brown]

I wonder why people don't consider a basket of, I guess the trading exchanges as a hedge. Because this is an amazing day for them.

[Steve Quirk]

Well, you can abstract it one level further, which I think people do use. Just use volatility.

[Josh Brown]

Just pure investment.

[Steve Quirk]

Pure volatility. Just buy a VIX Future or VIX Call spread or something like that. And guess what? When the VIX goes up, the exchanges go up. Right. Cause it's a direct correlation. So I don't even need the exchanges because then you gotta pick which one. Like what products can be more popular. Futures, equities, derivatives.

[Michael Batnick]

This was Trump an hour ago. Like literally Trump on the market reaction. He said, quote, it's going very well.

[Josh Brown]

And then he said, for cme. You didn't listen to the rest of the sentence.

[Michael Batnick]

And then he said. Yeah, I took it out of context. No, no. And then he said, the market's going to boom.

[Steve Quirk]

Yeah.

[Josh Brown]

Well, look, one thing we can all agree on is this is a day for the ages. I saw that the dollar had its worst one day performance since 2015.

[Steve Quirk]

The currencies were crazy. Yeah, that's where I don't know about you guys, but I just like. Well, I wouldn't have anticipated the move that we saw, but then again, I didn't anticipate all the messaging and what it was gonna be, but it felt like the currencies were kind of all over the place.

[Josh Brown]

Bond market was notable today. Huge collapse in rates on the 5 year. The 10 year fell to like 4. Spot 05. Where is it now?

[Michael Batnick]

404.

[Josh Brown]

404.

[Michael Batnick]

The 2 years. Dropping like a stone.

[Steve Quirk]

All right, and then he did want rates lower. I think he's.

[Josh Brown]

We got it.

[Steve Quirk]

There we go. I think he's kind of accomplishing that.

[Josh Brown]

He did say, Besson did say don't watch the S and p, watch the 10 year. All right, well, he got both lower.

[Steve Quirk]

Yeah, so.

[Michael Batnick]

So Besson said that tariffs need. This is from Nick Timaros, that tariffs need not raise consumer prices so long as the dollar appreciates and the dollar's just collapsing.

[Steve Quirk]

Yeah, yeah.

[Josh Brown]

Are you surprised that the epicenter of this seems to be in the NASDAQ and not in the Dow? It's a negative 5% day. Yeah, but the Dow is like on the NASDAQ.

[Steve Quirk]

People still are accustomed. You got. You guys been around a long time. This is like, that's where people think there's safety, you know.

[Josh Brown]

But what. I guess, I guess, like, I would. Yes, because there were staples in there and Berkshire Hathaway's in there, but they.

[Steve Quirk]

Have more international exposure.

[Josh Brown]

That's what I was gonna 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?

[Steve Quirk]

No, because I guess if I just look at it from a behavioral standpoint, on what's been the most actively traded in the marketplace, even at Robinhood, it's what people own.

[Josh Brown]

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

[Steve Quirk]

Exactly.

[Josh Brown]

This is. 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.

[Michael Batnick]

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 Adams at Bloomberg. It's like 90% meta. So we're looking at the top 10 tech stocks, okay, in terms of where their cost of goods are. And it is dramatic. These are highly exposed to the global economy and Trump just dropped a nuke on it.

[Josh Brown]

Wait, why? Why does Meta have a high cost of goods sold X us?

[Michael Batnick]

Yeah, honestly, I have no idea.

[Josh Brown]

What is that about?

[Michael Batnick]

I don't know.

[Josh Brown]

Huh. Okay.

[Steve Quirk]

I wonder if that's regulatory. If it's related to a regulatory, I don't know.

[Michael Batnick]

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%?

[Steve Quirk]

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.

[Josh Brown]

Right.

[Michael Batnick]

So you sell what's green on your screen.

[Josh Brown]

So I believe that people do that and not just retail investors. I think institutions do too.

[Michael Batnick]

No, you sell your winners, you hold onto your losers.

[Josh Brown]

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 Deckers down 17. HP and Best Buy both down 16. Dell Garmin down 15. Tapestry, which I think is coach. Right. The apparel, okay, crushed. But then they crush 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. Quito by 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.

[Michael Batnick]

Unbelievable.

[Josh Brown]

Unbelievable. They were told by prior administrations, move your manufacturing out of China to Vietnam. They said, ok, sure, no, no problem. The tariff on Vietnam will be higher than the tariff on China. So have fun with that. I don't know. This is one of the big ones.

[Steve Quirk]

That was the one that I like. I just really struggled to wrap my.

[Michael Batnick]

Head around John, chart 6. So the share of Nike footwear manufactured by country, it's Vietnam, it's Indonesia, it's China.

[Josh Brown]

I mean they are in a.50% of Nike's footwear is made in Vietnam.

[Michael Batnick]

They are in a world of pain. All their profits are gone. So this is Joe and Trace this morning talking about Nike.

[Josh Brown]

Michael Jordan should personally call Trump and get an exemption. And I bet you, I bet you it would work. Yeah, the 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.

[Michael Batnick]

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 US the manufacturing is done in countries like Vietnam and the whole brand exists as it does because the US is a global powerhouse for exporting culture like star athletes. It makes perfect sense for the stock to get nuked like this as both its basic business model and the American brand value gets trashed. And other American apparel companies, Lulu and the likes of that put up that.

[Josh Brown]

Percentage off the high for Nike just for context. So this is down 68%. 68% from the 2015 highs.

[Michael Batnick]

It's back to where it was in 2015, just a 10 year round trip.

[Steve Quirk]

I think that's the one part that I, that is maybe underappreciated is you know the people that, that really love US brands, are they going to love them after this? Are they going to still clamor to.

[Josh Brown]

It's a legitimate concern.

[Steve Quirk]

It's a huge concern.

[Josh Brown]

Is that going to look cool if you're on the streets in Berlin.

[Steve Quirk]

Yeah.

[Josh Brown]

Or in Tokyo.

[Michael Batnick]

So this is why even if we back off and come to a deal, how much brand damage has been done that you can't undo? Yeah, and we'll find out. One of the, 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, 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 lows. New, 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, it's really nothing. And what I don't mean to minimize the pain that people are experiencing with individual stocks that are down way worse than the index. But the S and P down 11%, the Q is down 15.

[Josh Brown]

Maybe I need to see that hit 2022 levels because I actually think the situation we're in now is worse than 2022. So that, I mean I think, I think, 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 four handle 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 negotiation that doesn't take away the uncertainty. So all the capex stuff gets frozen, hiring decisions get frozen. So I think the situation now is more dire than 2022. So a 16% increase, 16% of, of companies at 50 week lows is like not enough for me to say we've been like fully watched previous bottoms in.

[Michael Batnick]

The last 15 years. You had to get to like at least I'm generalizing, at least like 20%. We're close, but not, not quite yet.

[Steve Quirk]

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 gonna be curious to see is once and they've started already. But once these negotiations start, like you're gonna be better served being early in the negotiation than late.

[Michael Batnick]

100%.

[Steve Quirk]

You do not wanna be the last guy.

[Josh Brown]

Bill Ackman made that point on Twitter and I think it's right. Yeah, it's that game theory like do you wanna be the last negotiator or the first?

[Steve Quirk]

Yeah. No. Can you imagine if you're the last?

[Josh Brown]

Right.

[Steve Quirk]

Forget it.

[Josh Brown]

No. Cause then we, we don't need you in your headlines. We have this right. I wanted to ask you, have you ever met Howard Lutnick?

[Steve Quirk]

I have. Yeah.

[Josh Brown]

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 and I always, I never met him, but I always looked at that as like an incredibly admirable thing that he was able to accomplish. What's your take on, is he the same guy as he was in the brokerage industry now that he's in politics. How do you feel about the way he's communicating these days? Do you believe. Take, take what he's saying at his word.

[Steve Quirk]

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. So I can't really say how he was from a business standpoint. I mean, I think he's communicating what he's supposed to be communicating. Whether people are like it or not.

[Josh Brown]

That's the job. Yeah, yeah, I agree.

[Steve Quirk]

I would argue it's probably not resonating very well, even with Trump supporters.

[Josh Brown]

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.

[Steve Quirk]

Yeah.

[Josh Brown]

He's not slick and he's not stage managed. He's much more like Trump where you can tell he kind of just whatever pops into his head, he, he says it. And I think Wall street people kind of like that.

[Steve Quirk]

What you see is what you get. Yeah, Steve, that's where we all came from, right?

[Josh Brown]

Yeah.

[Steve Quirk]

Yeah.

[Michael Batnick]

Robin had serves a younger customer and I have a chart later in the show showing how they're, they're growing up. Days like today, environments like this are, 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. You 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, these are gifts.

[Steve Quirk]

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, you should be taking risks with your portfolio because we know what happens with compounding. We know what happens if you look, you know, you guys know it well. Go back and look 1950 and what the average return is. Guess what?

[Michael Batnick]

Pretty good.

[Steve Quirk]

Wow, this is scary as hell. In 30 years, you'll be super happy.

[Josh Brown]

One thing about the Robinhood customer, the ones that became customers in 2020, which I assume is like the bulk of the, the accounts now, they didn't come in to sell short, they came in to buy.

[Steve Quirk]

Yeah.

[Josh Brown]

Like they came racing in and they were buying and I bet they were net buyers every day that year, if I had to guess.

[Steve Quirk]

Well the interesting point because you know, like it's Robinhood's associated with GameStop, AMC, etc. 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. I have 50 bucks I can start investing. That's amazing. Nobody else let me do that. No commission, fractional.

[Josh Brown]

Fractional share ownership.

[Steve Quirk]

$5. Yeah.

[Josh Brown]

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 splits.

[Steve Quirk]

Nobody ever split a stock.

[Josh Brown]

Nobody ever split up a stock that way.

[Steve Quirk]

Yeah. And by the way, for people who are brand new to investing, the notion that I have to buy a hundred shares like wait, oh no, I can only buy 66 shares like it's an anachronism. What the hell is that?

[Josh Brown]

It's an anach has nothing to do with anything.

[Steve Quirk]

This amount of money to work make it easy for me. I don't care about all this back back door plumbing.

[Josh Brown]

So I think Robinhood pioneered the idea of just put the dollar amount and we will figure out the amount of shares.

[Steve Quirk]

Exactly.

[Josh Brown]

You and I grew up in 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. Shares was a lot.

[Michael Batnick]

The incumbents still enter shares. You could switch it to dollars but it's so much easier to just default to dollars.

[Steve Quirk]

Yeah, yeah. I think the one. But the one point that I was gonna make is so all those people that started because you know there was the return of the meme stocks like a year ago.

[Josh Brown]

Yeah. Of course it didn't go as well short lived.

[Steve Quirk]

So everybody in the media came knocking on our door and like hey, we wanna talk to you. Are your customers back? Are they doing it again or 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. So the point that we were trying to make is it's not how you start, it's where you are.

[Josh Brown]

So I agree with you. And the Gamestop as gateway drug never bothered me because my generation was onboarded in the Yahoo message board Days we weren't any smarter. We were doing stupid shit.

[Steve Quirk]

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.

[Josh Brown]

Yeah, it was not materially different. It just didn't move as quickly and. 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 90s. I want to ask you, how does Robinhood think about when they're catering to traders versus when they're catering, catering to investors? Or do you guys look at the population as just this homogenous group of people with accounts and not really try to delineate between who's doing what?

[Steve Quirk]

No, actually it's a good question because.

[Josh Brown]

I'm very good at this.

[Steve Quirk]

Yeah, you are. It's like you've done it before.

[Josh Brown]

It's true.

[Steve Quirk]

So if you think about Robinhood the way it started, every. You know, if you're a new company or new brokerage firm, you always start. You have a niche, right. The niche for Robinhood is self directed and you know, within a year or two will be the largest self directed. We're right, right behind Schwab. Congratulations on both equities, options, everything.

[Josh Brown]

It's 30 million accounts. It's incredible.

[Steve Quirk]

We're right behind them.

[Josh Brown]

Yeah, okay.

[Steve Quirk]

But what we've heard loud and clear is these 20 some year olds have grown up now, they have a family, they have more investable wealth, they're in their prime earning years or to lose. And they say, you know what, I was super comfortable managing this. Now I don't have as much time because of whatever else is happening in my life. I have a larger pool of assets. Days like this spooked the hell out of me. I can make more in good times, but I can lose more in good times. I need somebody to help me.

[Josh Brown]

So.

[Steve Quirk]

We've heard that loud and clear. So we've been working on trying to figure out what's the best path to get into. Like this self directed side is this big. This is this big. It's your guy's space. You understand it. That's why we bought trade pmr.

[Michael Batnick]

Okay, we're gonna get into that in a sec. But before I just wanna talk about some of the flows that we saw. Investors buying and selling in the first quarter and One of the themes that our friend Todd son have 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 gotta, there's some sort of imbalance. So Tata's this great chart showing levered long and the inverse levered. And that peaked at a ratio of 12 to 1. So for every $12 in the levered long, there was $12. There's $1 in the levered inverse and the levered short. And that has now since contracted from 12 to 1 to 7 to 1. And I would guess that a lot of your customers are involved in these products and why? John, next chart please. On a day like today, you've got a lot of red on the screen. But you know what's working? I mean, obviously, right. The inverse. The inverse ETFs are ripping Soxs triple levered bearish semis up 28%. People like to trade these.

[Steve Quirk]

They do like to trade them, but I'd say, you know, you know what they there 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. Q. Q. Q. IWM.

[Josh Brown]

Oh, that's interesting.

[Michael Batnick]

Oh, I would have thought the opposite.

[Steve Quirk]

No, in a big way. They move like you watch our volumes, percentage of our trades that happen in those names goes up.

[Josh Brown]

So 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.

[Steve Quirk]

They have more confidence in their ability to read the entire market than they do any individual day. By the way, that's not unique to Robinhood. That's unique. That's the whole brokerage space.

[Michael Batnick]

I wonder. I guess it depends on the market environment. But do you think that they're more likely to buy the inverse of the longs today on the leverage side?

[Steve Quirk]

You know, I think a lot of our, our, our customers who are more active are contrarian. Like they're, you know, they.

[Michael Batnick]

So they're buying the dip.

[Steve Quirk]

Well, yeah, they can't.

[Josh Brown]

By definition. They can all be contrarian.

[Steve Quirk]

That's true.

[Josh Brown]

Right.

[Michael Batnick]

Just some of them. So. All right, trade PMR.

[Josh Brown]

Wait a minute. When they're using leveraged ETFs, it's like 99% of the time not for hedging, it's for speculation.

[Steve Quirk]

I don't know if I can, I don't know if I could say that. I think it's probably a mix.

[Josh Brown]

Yeah, but a mix bias toward what?

[Steve Quirk]

I think a mixed bias toward.

[Josh Brown]

There's more people taking shots on a.

[Steve Quirk]

Levered ETF for upside opportunity as opposed to hedging. Yeah, definitely what we try to teach people, though, because, you know, the. I mean, you guys, I'm preaching to the choir. But you understand the way they're supposed to be used, right?

[Josh Brown]

Well, that's the problem with trying to use a 2x inverse ETF as a hedge. After a day or two, it becomes the balance. Yes.

[Steve Quirk]

Crap away all the.

[Josh Brown]

So that's why a speculative trade makes more sense to me than looking at that as a hedge.

[Steve Quirk]

I liked it about. I don't remember. How many years ago was that? 7, 8, 9, maybe even 10 years ago when they washed away all these 30x50x millionx.

[Josh Brown]

Like, that was like, wait, we went beyond 3x.

[Steve Quirk]

Oh, there were days when they. I can't remember who had them out, but this was quite a while.

[Josh Brown]

Oh, I remember who did a 10x.

[Michael Batnick]

I don't remember that.

[Steve Quirk]

I don't want to call any of the. Any of your potential sponsors out, but I would just say there were a bunch of them.

[Josh Brown]

Stratton Oakmont had one.

[Steve Quirk]

It reminded me of the days, and now I'm dating myself when, you know, you could drop the $50 credit card down and get 400 to 1 on FX, you know, and I'm like, oh, my gosh, this is terrible.

[Josh Brown]

What a nightmare era that was. There were cold call. There were cold callers calling people with Forex day trades. And it's like, no, you don't understand. Just send me, like $2,000. We're going to do a huge trade.

[Steve Quirk]

Yeah, right.

[Josh Brown]

And the money was gone in two seconds.

[Steve Quirk]

Yeah.

[Michael Batnick]

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.

[Steve Quirk]

Yep.

[Michael Batnick]

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.

[Josh Brown]

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

[Michael Batnick]

There's a million reasons.

[Josh Brown]

The major reason is you guys are adding customers at a faster rate than anybody else.

[Steve Quirk]

So I can. I'll.

[Josh Brown]

I'll.

[Steve Quirk]

I'll. I'll approach it from two different ways.

[Josh Brown]

And crypto. Sorry. Also crypto.

[Michael Batnick]

Yeah.

[Steve Quirk]

So, like, let's take it at the highest level. Let's just look at it. Like, let's assume this chart goes on for another 20 years. Right. Would you rather be sitting on a customer base of 25 million people that are 60 years old and that are trying to find ways to decumulate their wealth or a customer base of 25 million people that are in their 20s and 30s?

[Josh Brown]

Let me stop you. How much am I billing them?

[Steve Quirk]

How much are you billing them?

[Josh Brown]

Yeah. Makes a big difference.

[Michael Batnick]

Well, so this is part of the.

[Josh Brown]

Story, because how do I answer that question?

[Steve Quirk]

Well, 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?

[Josh Brown]

Fair.

[Michael Batnick]

I think Josh's point of the arpu of Robinhood is way higher than Schwab.

[Steve Quirk]

No, well, that's because of crypto and other things that Schwab doesn't do, they're gonna get.

[Michael Batnick]

But that's a huge part of the Robinhood growth story.

[Steve Quirk]

Yeah, that's the other component of it. So when I competed with Robinhood and when I started to see their explosive growth and all the brokers, all the TD Ameritrade, Fidelity, E Trade, all of us, we all were in the same boat. We're like, holy shit. These guys are growing so fast, and they are plugged in to the next generation of investors.

[Josh Brown]

We better figure out, I think, the.

[Steve Quirk]

How to get there.

[Josh Brown]

I think the. 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.

[Steve Quirk]

Yeah.

[Josh Brown]

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. That was very different. That onboarding process went viral.

[Steve Quirk]

The referral program.

[Josh Brown]

Now, I know the CAC of a traditional brokerage.

[Steve Quirk]

So do I.

[Josh Brown]

And you know, too, I know what it costs them to add the next thousand customers. And it's like sponsoring the U.S. open. Yeah, it's like, expensive shit.

[Michael Batnick]

Got to be like, at least what your guys are.

[Steve Quirk]

So. But here's. Here's. And here's the. To even add on to that point. Like, you're. You know, so people are like, how did you get to. How did 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.

[Josh Brown]

Congratulations. Congratulations.

[Steve Quirk]

Yeah, I mean, I'm sitting at, dad, you did it. I'm sitting at Schwab, and I'm annoying them. Like, you gotta make your money work for you. Like, you work for your money. And one day they come up and.

[Josh Brown]

They'Re like, yeah, okay, dad, I'm in GameStop.

[Steve Quirk]

How you have an account? No, it's Robinhood. I'm like, hey, I don't work for Robinhood. I work for. What is this? And they're like, no, all of our friends, all our cousins, everybody we know has an account here. And I'm like, touche. Yeah. And that was. The virality of it was amazing.

[Josh Brown]

Yeah.

[Steve Quirk]

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.

[Josh Brown]

And, like, they won't stay there.

[Steve Quirk]

Yeah, they can't. Like, they didn't have 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 office.

[Josh Brown]

I want to talk about Robinhood growing up, but I want to do it in two phases.

[Steve Quirk]

Okay.

[Josh Brown]

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 smart.

[Steve Quirk]

Yep.

[Josh Brown]

Because first of all, trade PMR's reputation in our industry on customer service is literally the best reputation there is. They do not let the phone ring. So when an advisor needs a person, like, the call is picked up, and the people who are advisors on that platform love them for it. Okay. You can't say that for every custody solution, of course. You guys buying that? I looked at It And I said yeah, of course. Why would they try to build an RIA custody solution from scratch? You already have a perfectly good one with clients with money and with a great reputation for customer service. I doubt Robinhood wants to build out a customer service arm from scratch. So I got it immediately and I don't know what you paid for it. And I'm sure everyone's happy, especially Rob, especially Monica. Let me sit there. Okay. So shout out to Rob and Monica Baldwin. 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.

[Steve Quirk]

Yep.

[Josh Brown]

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.

[Steve Quirk]

So I, I, I'll even back up a minute because actually we did go through the exercise of thinking about organization I would assume. Yeah. And like, but I also have had experience and either like we bought Scottrade. TD Ameritrade. We bought Scottrade. Very familiar with E Trade. A lot of companies have tried to get in that space and they it's not easy.

[Josh Brown]

You must have been the most important voice in the room for that roadmapping exercise.

[Steve Quirk]

Well, I also was, I was also privileged to be part of TD Ameritrade when we were go back to that chart. When we were a twelfth of their size of Schwab.

[Josh Brown]

Yeah.

[Steve Quirk]

And when they bought us I think we were half their size.

[Josh Brown]

Yeah.

[Steve Quirk]

We were eating their lunch.

[Josh Brown]

We were. And we were, we were with you guys the entire ride.

[Steve Quirk]

I know.

[Josh Brown]

And it was incredible how fast TD was growing.

[Steve Quirk]

Yeah. So I mean I think we have an opportunity to replicate that. But I think the, the thing that excites me the most. And again I'm going to speak about your space from Please. 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 years and that's awesome. But here's this whole space that and again if I'm denigrating anybody, I don't mean to but I would say what's the last innovative thing that's been done? A Robo advisor came out in 2010. Other than that, I mean, what else is changed there?

[Josh Brown]

And the robo advice thing is like sort of a, sort of a commodity. Vanguard does it. Schwab does it. There's nothing. 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.

[Steve Quirk]

But, but so like, okay, so here's the size of the wealth management component here. It's three times the size of self directed.

[Josh Brown]

Right.

[Steve Quirk]

And there's. We're starting with a blank canvas. Like we have trade, pmr and as you said, they have the most important aspects, but we also have a blank canvas in how we create. We're gonna create a world class referral program. Guess what? All those customers that I'm talking to you about that are decumulating wealth, you know who they're giving it to?

[Josh Brown]

The kids who are on Robinhood.

[Steve Quirk]

That's right.

[Michael Batnick]

What about like the repapering? Like, how is that gonna work?

[Steve Quirk]

All of those aspects? That's what we excel in. Yeah, that's what, that's what we're.

[Josh Brown]

I would agree with your onboarding skills are better than anyone else.

[Steve Quirk]

We have 200 engineers. That's live, breathe and eat this.

[Michael Batnick]

All right, so you're gonna figure it out.

[Steve Quirk]

We're gonna figure it out and make it an experience that like none other.

[Josh Brown]

So the idea is you're gonna 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. Interface for wealth management. And I say to a client, oh, you were already at Robinhood.

[Steve Quirk]

We have, we have all your information.

[Josh Brown]

We're already set up.

[Steve Quirk]

Yeah.

[Josh Brown]

All you have to do here is an Eloi. You're going to get an email with a letter of intent to make us a sub advisor. Letter of intent, Letter of loa.

[Michael Batnick]

I don't know. What is it?

[Josh Brown]

What is it? It's an L. O I.

[Steve Quirk]

Right loi. Yeah. Letter of intent, I believe.

[Josh Brown]

No, I don't think so. It's something else igloo anyway. But 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.

[Steve Quirk]

Well, but you also, like, you're also going to have an experience much like Robinhood today. I can see all these assets. I can. You know, obviously.

[Josh Brown]

So let me go there.

[Steve Quirk]

Yeah.

[Josh Brown]

Some of that is not conducive to what financial planners want their clients doing.

[Steve Quirk]

Yep.

[Josh Brown]

We don't. We don't want to show people, here's your financial plan. Here's your current portfolio. And then you guys are jingling the keys with, like, Ethereum next to, like, some of that. I think you guys are going to think through and be like, maybe on certain screens.

[Steve Quirk]

Yeah.

[Josh Brown]

We're not enticing them to look at maybe assets that have outperformed recently or that are going up or down a lot. Because a lot of what planners do is manage client behavior.

[Steve Quirk]

Yep.

[Josh Brown]

And I assume you guys know that already.

[Steve Quirk]

Yep.

[Josh Brown]

And you will build an environment that makes it work for the planners and.

[Steve Quirk]

For you, I would say the one thing. And this comes from Vlad and Baiju. 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.

[Michael Batnick]

That's at Robinhood.

[Steve Quirk]

That's at Robinhood.

[Josh Brown]

Okay.

[Michael Batnick]

Because advisors give advice, and they do tell people.

[Steve Quirk]

Of course. Yeah, but that's. But they want advice.

[Michael Batnick]

Right.

[Steve Quirk]

If they want advice, then go over here and get your advice. And, 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.

[Michael Batnick]

Can you share numbers?

[Steve Quirk]

And I can't share numbers.

[Josh Brown]

I saw a stat recently. There's 100,000 accounts with over a million dollars.

[Steve Quirk]

I think that was.

[Josh Brown]

I think that you guys said that.

[Steve Quirk]

I think. I think it was put out at a conference.

[Michael Batnick]

Somebody leaked that.

[Josh Brown]

No, it's not leaks.

[Michael Batnick]

Were you the model.

[Steve Quirk]

No, no, no, no, no, no.

[Josh Brown]

That's. They said that.

[Michael Batnick]

So how is it. Is it going to be a referral program?

[Steve Quirk]

Where it's like a referral program. Yep. And we are talking to people. We've already been talking with your team about what. What. What do you like about. I know you guys aren't part of a referral program.

[Michael Batnick]

We are not.

[Steve Quirk]

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.

[Josh Brown]

So two. Two things. The biggest RAs in our industry have become the biggest.

[Steve Quirk]

Yeah.

[Josh Brown]

For the most part because of referral. Two things they jumped on the referral programs 15 years ago and monopolized the amount of clients that Schwab and Fidelity and TD were handing over. These are the hundred billion dollar RAs were the best at that. And also they did M and 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 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.

[Steve Quirk]

I would also point out one other thing and like you like, again, I'm like swimming in a pool that I don't fully understand and you guys do way, way, way better than we do. But in talking to Rob and his team and of course other advisors and potential advisors, they accept account sizes of X because that's what they can do profitably.

[Josh Brown]

Yes.

[Steve Quirk]

But if you suddenly capacity constraints, if you introduce a model which is so much more efficient and all the bullshit that you don't like to do and all the good things you do like to do, can, you can spend more time doing that, you can probably lower that account minimum and do it in a profitable manner. And guess what? Once you have them, when they come in at that, at that level and they grow, then it becomes, we 100%.

[Josh Brown]

Agree and we eliminated all minimums. We have, we have our online asset allocation products 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 I 100% we agree. So I think what you guys are thinking and I think the roadmap is brilliant and it makes perfect sense. But then I hear your CEO say the following last week, quote, as you talk about financial advisors whom you're about to partner with, and I know you knew this was coming, 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 who's 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.

[Steve Quirk]

Yeah.

[Josh Brown]

Okay, so that didn't get picked up in the press. That I know that got picked up in the press as Vladimir attacks financial advisors. And I, I said I don't think he meant to. Because why. Why the. Would he buy trade pmr.

[Steve Quirk]

Yeah.

[Josh Brown]

Which, okay.

[Steve Quirk]

If you watched his. The next day he did cnbc.

[Josh Brown]

Nobody watched the next day.

[Steve Quirk]

Well, I'm just saying there was, there was course correction that happened in all those.

[Josh Brown]

Okay, so it was. So, so. But this is not a Vlad issue. This is an industry wide issue.

[Steve Quirk]

Yeah.

[Josh Brown]

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.

[Steve Quirk]

Estate planning, all the other.

[Josh Brown]

It's literally endless. And days like today, the dow is down 1500 points. If you're barely being paid, you're not racing to the phone when it's ringing. It's like what? You barely pay me. I'm not going to listen to you cry for two hours.

[Steve Quirk]

Yeah. Yeah.

[Josh Brown]

Okay. So we understand the incentives in the industry. So do you. You want to like just put a button on that so we can.

[Steve Quirk]

Yeah, I would say like, I think where he was. Where 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, we are partnering with Trade PMR and we understand the value. Customers tell us like, especially on days like today. I mean, this is. They need help.

[Josh Brown]

Okay. We, as. As a spokesman for the American investment adviser, we accept your apology.

[Steve Quirk]

Thank you.

[Michael Batnick]

John, throw up that chart.

[Josh Brown]

Hang on. I have something I have to apologize for.

[Michael Batnick]

What? This is unheard of.

[Josh Brown]

No, I really do.

[Steve Quirk]

I know where you're.

[Josh Brown]

I know what I apologize.

[Steve Quirk]

I know what you're going to apologize for.

[Josh Brown]

So without having seen the video and understood the context the way you and I just figured it out, they asked me a question on cnbc. What do you think of the CEO of Robinhood saying that financial advice should be capped at $250 a year? And my response was sure. And then we'll all go out for gas station sushi. The implication is like, wealthy people are not looking for the cheapest financial advice. They want the best advice and they understand. Dude, you say what you said.

[Michael Batnick]

It's okay.

[Josh Brown]

Own it. So I apologize to all my friends at Robinhood for that comment. I didn't mean it.

[Steve Quirk]

All right.

[Michael Batnick]

Charge 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 is responsible for that.

[Steve Quirk]

We have a guy named Chris Cagle. He's amazing.

[Michael Batnick]

Shout out to Chris Cagle. It is the best slide. So this to me is, is this is the whole kit and caboodle. So this is sort of confusing, but 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.

[Steve Quirk]

Yep.

[Michael Batnick]

You're doing.

[Josh Brown]

So let me pause. So that's for the person who's a self directed, who is just like, you know what, I want part or all of this to be like professionally managed.

[Michael Batnick]

Yeah. It's too confusing for me.

[Steve Quirk]

It's.

[Michael Batnick]

I'm not comfortable anymore.

[Steve Quirk]

Yep.

[Michael Batnick]

You've got the research assistant, which is super cool. What are you calling that?

[Steve Quirk]

Cortex.

[Michael Batnick]

Cortex. Okay. And then you've got, you've got the private banker.

[Steve Quirk]

Yeah.

[Michael Batnick]

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, J.P. 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.

[Josh Brown]

What's the private banker. I don't even know about this.

[Michael Batnick]

You guys made it super easy.

[Steve Quirk]

Yeah.

[Michael Batnick]

To move your direct deposit. So you guys are really going for it. It's much more than just a trading platform.

[Steve Quirk]

It's like one click moving, you know, enabling direct deposit. And then from there you can see like somebody's pay.

[Josh Brown]

Like somebody's paycheck.

[Steve Quirk]

Yeah, 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, etc.

[Michael Batnick]

So if you're, if you're a gold Customer, you're really getting some bang for your buck. How much does that service cost?

[Steve Quirk]

The Gold? Five bucks a month.

[Michael Batnick]

Five bucks a month?

[Steve Quirk]

Yeah. So I mean it's like lad's vision is just to any of your financial service needs, they're all done in one place. Everybody wants that anyway. Like I don't want five apps. Nobody wants five apps. Like it's kind of a pain in the butt and the ability to do that I think is something that, you know, listen, customers tell that all the time, but we have to build it all.

[Josh Brown]

You know what I would tell you it's interesting that like it might not be a positive if the bank really becomes huge because then you get a bank multiple on Wall street and I doubt you guys are excited about trading at 8 times earnings.

[Michael Batnick]

You got a few years.

[Josh Brown]

I want to hit a couple of more things and this has been absolutely awesome. We've never had the opportunity to talk to anyone from Robinhood before, but you guys are obviously a perennial topic of conversation amongst financial podcasts because of how influential the platforms become. 24 hour trading. Yeah, you're at 245 now on basically everything that matters.

[Steve Quirk]

Thousand. Yeah, it's 80% of all the volume.

[Josh Brown]

Of so Apple, Nvidia, blah blah, blah. You could trade at 11 o'clock at night.

[Steve Quirk]

All around the clock is the.

[Josh Brown]

Are what's happening with the volumes there? Are they getting better or the.

[Steve Quirk]

They've been growing.

[Josh Brown]

Tightening.

[Steve Quirk]

Yeah, they've been growing. Well the, the spreads were not my, the spreads have always been tight. My good friend Doug Sifu has been kind enough like when we started doing this to help us out.

[Josh Brown]

And Doug is virtu.

[Steve Quirk]

There's other market makers that are in there as well. But the volumes have grown and so our biggest volume days are earnings like Nvidia comes out or even like last night. Think about what happened. And then it happened basically at 4:00. Right. So all the moves are happening in the evening. Geopolitically 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.

[Josh Brown]

Or hedge or front run it even. Like I think the market's going to react to this tomorrow. So let me get low.

[Steve Quirk]

Well, the futures are open at 5 o'clock. They can see what's happening with the market now. You have a thousand symbols that are open and I'm sure you've seen the news. NYSE, NASDAQ. Oh wait, so they're all coming out.

[Josh Brown]

So 24. 5, it starts Sunday night.

[Steve Quirk]

Sunday night at 8.

[Josh Brown]

So Friday night it's not live.

[Steve Quirk]

Yeah, no, it adds.

[Josh Brown]

That makes perfect sense.

[Steve Quirk]

Yeah. And then Sunday night at 8 it starts. And so, you know, it gets going there. And yeah. The volumes just continue to pick up. It's not just domestic. There's a bunch of Asian and European brokers in there as well, because they want to be able to trade during their waking hours. So.

[Josh Brown]

Okay.

[Steve Quirk]

It's good volume. And it's like, I think the misunderstood. When we first were standing that up, like we went to the sec, talked to trading in 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.

[Josh Brown]

I'm sure they were super casual like that. Hey, Robinhood, what are you guys thinking of doing?

[Steve Quirk]

Well, they were actually pretty cool. Their concerns were like, liquidity.

[Josh Brown]

Yeah.

[Steve Quirk]

Which it would be. And we're like, it's all limit orders.

[Josh Brown]

You know, I mean, if that solves that.

[Steve Quirk]

Yeah. If a customer, you know, customer. Look, these. As I told you, these customers are in their 20s and they're like, let me get this straight. It's an electronic marketplace, but you close.

[Josh Brown]

Like ebay, you know, because they're crypto native. They don't understand why. Wait, why does my bitcoin trade all the time?

[Steve Quirk]

Yeah.

[Josh Brown]

And this. I have to wait till 9:30.

[Steve Quirk]

Yeah.

[Michael Batnick]

Amazon never closes.

[Steve Quirk]

Exactly. And by the way, 70% of them are doing their homework, their education and doing this right now. Like, listen, the market's closed.

[Josh Brown]

Yeah. Yeah.

[Steve Quirk]

And they're like, I want to buy stock ABC at $10.

[Michael Batnick]

Yeah.

[Steve Quirk]

Oh, do you want to wait until 9:30 when some old man rings a bell?

[Josh Brown]

That's right.

[Steve Quirk]

No, I want to buy it whenever the hell I want to buy.

[Josh Brown]

So I got to be honest with you, I was not a big fan of it. But from a. Selfishly.

[Steve Quirk]

Yeah.

[Josh Brown]

Because like, I'm helping people manage risk.

[Steve Quirk]

Yeah.

[Josh Brown]

And I'm giving people advice and I'm. We're like literally managing billions of dollars for people. The idea of being asleep.

[Steve Quirk]

Yeah.

[Josh Brown]

While this shit is popping off, it's just like really is my job now 24 hours a day. So I. At first. At first. And maybe still I was like, all right, I get it. But why?

[Steve Quirk]

You know what's really funny? So when we were first doing this.

[Josh Brown]

Yeah.

[Steve Quirk]

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 a trading floor, I'm like, instead, you're asking me if I want to work 12 hours instead of eight.

[Josh Brown]

Hold on. Instanet. Like, that was like the original 430 trades. Okay.

[Steve Quirk]

They kept going earlier and earlier and earlier.

[Josh Brown]

All right, so people are using it, though.

[Steve Quirk]

Very much so are you guys.

[Josh Brown]

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.

[Michael Batnick]

No.

[Josh Brown]

Is that okay? So none of that's happening yet. Are you not interested in that business?

[Steve Quirk]

We are, but I think we're smart enough to know not to bite off more than we can chew 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 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.

[Josh Brown]

So speaking of biting off more than you can trail, betting and prediction markets.

[Steve Quirk]

Yeah.

[Josh Brown]

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.

[Steve Quirk]

I would say, like, the genesis of it is, like, think it's money. It's event contracts. It is money. Yeah, but I mean, it's event contracts. And, like, the exchanges have been dabbling in the event contracts. Now you have, you know, a bunch of other entities that are dabbling in.

[Josh Brown]

Event contracts, like binary outcome, like the election.

[Steve Quirk]

Or we have one about the Fed. Were they going to raise where they going to lower?

[Josh Brown]

Right.

[Steve Quirk]

We had one about the election.

[Josh Brown]

So there's a bunch of those platforms, and you guys want to be one of them?

[Steve Quirk]

Yeah, we. Well, we either partner with one or we do it, you know? You know, which we're doing now.

[Michael Batnick]

But it's not all bullshit. Like, a lot of this stuff is frivolous. But last night, for example, Kalshee had the odds of a recession were 17% of Q1. They jumped. Look what happened last night. Up to 54%. Like, people want to trade this stuff.

[Steve Quirk]

Well, 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.

[Josh Brown]

Oh, you guys had an election contract on Robin one week. And what percentage of your users, if you had to guess, availed themselves of that. It's gotta be tiny.

[Steve Quirk]

It was 600,000 accounts out of 28.

[Josh Brown]

Million at the time, or 30 million.

[Michael Batnick]

And I bet the spreads in a.

[Josh Brown]

Week'S more than I would have had.

[Michael Batnick]

I bet the spreads are very healthy on those contracts.

[Steve Quirk]

No, no, no, they weren't. We do the same thing everywhere. We're not putting people into illiquid instruments. So you can imagine the same liquidity providers.

[Josh Brown]

Did the Robinhood user base guess correctly?

[Steve Quirk]

Did they have Trump on the election?

[Josh Brown]

Yeah. Did they have Trump in the prediction market?

[Steve Quirk]

I would say. I wouldn't say that. They, like, it's less about. Did they. Were they correct? It was more about when. So, like, we're sitting in a room in New York.

[Michael Batnick]

Sounds like.

[Steve Quirk]

No, Josh, watching. Well, there's equal. There's, like, probably equal contracts on both, but we're sitting watching the election results. And before any of the networks called the swing states, the contracts went like this. They completely diverged. And if you think about it, then Tesla took off, then the cryptos took off, then this. And so they.

[Josh Brown]

Every market was ratifying. And by the way, all at once.

[Steve Quirk]

Crypto was trading, our stocks were trading, the election contracts were trading, the peso.

[Josh Brown]

Was crashing, Everything was happening.

[Steve Quirk]

And it's happening two hours before, you know, the. They get on and, you know, I mean, they.

[Josh Brown]

Look, it's a business philosophically. Is there any concern about conflating? I'm betting on the final four.

[Steve Quirk]

Yeah.

[Josh Brown]

In the same account that I am saving up for my first down payment for a house.

[Steve Quirk]

We've actually given it a lot of thought, and I would say, like, you should expect us to continue with election contracts. How much of that is sports? It'll be a percentage if it's, you know, if it's.

[Josh Brown]

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.

[Steve Quirk]

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.

[Josh Brown]

Well, I think we've all accepted that by now.

[Steve Quirk]

Yeah, it's a business.

[Josh Brown]

Every advertisement is for betting.

[Steve Quirk]

Like, no, no, no. You watch sports. I'm saying sports in general, the whole ecosystem is a business. Yes, it's a business. Just like the energy complex, just like the et cetera.

[Josh Brown]

Yes.

[Steve Quirk]

So like, if I. If I believe in the future of sports.

[Josh Brown]

So you're saying it's like making an investment.

[Steve Quirk]

Yeah.

[Josh Brown]

Betting on a team. Winning, though. I don't know.

[Steve Quirk]

I mean, I'm taking it.

[Josh Brown]

Yeah, yeah. No, I see where you're going.

[Steve Quirk]

Yeah.

[Michael Batnick]

So, Steve, you joined us on the worst day for stocks since June 2020. We went out on the lows.

[Josh Brown]

It's official.

[Michael Batnick]

It's official.

[Steve Quirk]

What was the day, anyway, that June day? I'm trying to remember.

[Michael Batnick]

It was June. I don't know, June something together. But yeah, it was a bloodbath out there today.

[Josh Brown]

No, do we. We closed on the lows. On the lows for every index, for every well, how much was the Dow down? Because I'm a points guy.

[Michael Batnick]

The Dow was.

[Josh Brown]

And don't you dare give it to me in percentages.

[Michael Batnick]

I would never.

[Josh Brown]

1600 points.

[Steve Quirk]

I'd love to know the S P's, too, because I had a few. I may have been working some things.

[Michael Batnick]

The Dow is down.

[Steve Quirk]

I don't know.

[Michael Batnick]

Give me a break. 1300. Whatever it is. It's down a lot. All right. That's the answer.

[Josh Brown]

1300. Whatever it is.

[Michael Batnick]

Oh, no. Oh, 17.

[Josh Brown]

1700 points.

[Steve Quirk]

Wow. We fell out of bed at the end.

[Michael Batnick]

1679 DAB points. 3.98%.

[Josh Brown]

All right, give me crude oil and then traffic and weather.

[Steve Quirk]

All right.

[Josh Brown]

Hey, Jeff, do you have fun on the show today?

[Steve Quirk]

This is amazing.

[Josh Brown]

All right, thank you. The hard part's over. You were. You were incredible. We would love to have you back. I would love to be back.

[Steve Quirk]

Thank you.

[Josh Brown]

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. Who's gonna be on the podcast that week. I said, oh, we have Steve Quirk. He goes, love that guy. Like, that's the universal response to you. So I really meant that, and I wanted you to hear it from me.

[Steve Quirk]

I appreciate that. Thank you.

[Josh Brown]

Absolutely. Yeah. 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?

[Steve Quirk]

Personally or professionally?

[Josh Brown]

Well, you got three daughters who are in their 20s.

[Steve Quirk]

Yeah.

[Josh Brown]

Okay. They live nearby.

[Steve Quirk]

Two of them are in Chicago, and one's in Milwaukee. She's a reporter.

[Josh Brown]

Okay. Are you a grandfather yet?

[Steve Quirk]

No.

[Josh Brown]

So then can I give you.

[Steve Quirk]

I'm probably looking forward. I know, but I don't want to put any pressure on him.

[Josh Brown]

All right. Congratulations on everything, and congrats on being at Robin Hood. Michael, you got anything you're looking forward to?

[Michael Batnick]

Yeah, not far.

[Josh Brown]

Crave Shower.

[Michael Batnick]

Non farm payrolls.

[Steve Quirk]

Yeah, Non farm payrolls. That's right.

[Josh Brown]

That'll move the markets tomorrow.

[Steve Quirk]

Yeah.

[Josh Brown]

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 Robinhood on social media to keep abreast of all the things happening at the company, and we're looking forward to seeing what you guys do next.

[Steve Quirk]

Thank you. Thanks for coming on.

[Josh Brown]

Thanks, John. Thanks, Duncan. Great job, Nicole. We miss you this week. Keith, Rob, Truck Kid, Matt, Sean, everybody. Graham, we'll talk to you soon. Thanks, guys. Have a good day.