The Compound and Friends: "Retail Investors Just Plowed $100 Billion Into Stocks. THIS MONTH."

Date: October 10, 2025
Hosts: Josh Brown, Michael Batnick
Guest: Scott Nations

EPISODE OVERVIEW

This episode features Downtown Josh Brown and Michael Batnick, joined by veteran markets expert and volatility index pioneer Scott Nations. The trio dives deep into the unprecedented surge of retail flows into U.S. stocks, memes, bubbles, volatility, and the blurred lines between investing and gambling. Scott shares market history perspective, lessons from past crashes, and a dose of humor as the group unpacks what today’s record-setting retail participation means for markets, trading behavior, risk, and the broader financial landscape.

1. MARKET CULTURE: PUMPKIN LATTES, INSTAGRAM, & TRADER ONRAMPS

00:00–10:36

• The opening banter explores Josh’s local viral sensation: people drinking pumpkin spice lattes out of hollowed pumpkins for Instagram likes. This segues into a larger reflection on performative consumption and social media’s influence on behavior.
  • Quote (Josh, 04:09): “Sick picture, bro. Send me that. Definitely send me that.”
• The trio jokes about how traditional masculinity and local businesses have been overtaken by performative social media trends, likening the transformation to changes in Wall Street's own culture.
• They reminisce about Scott's time on the trading floor at the Chicago Mercantile Exchange, contrasting the high-testosterone environment of open outcry trading pits with today’s digital, PhD-driven markets.
  • Quote (Scott, 10:36): “We were just talking about when men really were men … the floor of the Chicago Mercantile Exchange.”
  • On the new professional onramps: "The career on ramp to professional trading now is a computer science degree." (Josh, 13:14)

2. MARKET EFFICIENCY, LIQUIDITY & THE PHYSICS OF TRADING

10:36–16:37

• Scott reflects on the pros and cons of today's hyper-efficient markets: anyone can trade, regardless of size or stature; proximity and connections are less important than skill and smarts.
  • Quote (Scott, 15:29): “Markets are so much more efficient now ... opportunity exists for anybody.”
• The hosts note that while this democratization is positive, it also amplifies the impact of new behaviors and products, and raises the stakes for both retail and professionals.
• Discussion of the physicality of the old exchanges, and how even things like “tall Big Ten football recruits” had access advantages in the pit.

3. RETAIL INVESTORS, COORDINATION & THE RISE OF BUBBLES

16:37–21:23

• The group unpacks the phenomenon of modern bubbles, citing Richard Thaler’s research on how online forums (notably WallStreetBets) have allowed retail investors to coordinate and sustain price runs.
  • Quote (Scott, 18:49): "We all know that … it probably went up another hundred dollars a share that day. And I’m probably, I don’t know, maybe I’m an idiot."
• Self-aware, “tribal” retail bubbles are new—people recognize they're part of a bubble but still participate for the camaraderie or thrill.
• Fantastic Markets: Scott describes people feeling “physically closer” to visionary executives like Elon Musk or Steve Jobs just by owning shares or products, showing how identity and investment intertwine.
  • Quote (Scott, 21:04): "Now I own an iPhone. So Steve and I are friends. We're close."

4. LEVERAGED ETFs, OPTIONS, AND THE LOTTERY MENTALITY

21:23–32:41

• Explosive growth in single-stock leveraged ETFs: $100 billion in net flows from retail in the last month (directionally correct).
• The hosts critique leveraged and inverse ETFs as “money incinerators,” and marvel at how their popularity persists even as most users lose money.
  • Quote (Scott, 24:55): “Nobody should do that … the manager has to roll that product from one expensive futures contract to an even more expensive futures contract every month.”
• Today's retail option traders are savvier than prior generations: using options for payoff shaping, not just leverage.
• Retail “lottery ticket” trades remain perennially attractive, despite academic warnings.
  • Quote (Michael, 29:20): “I know it’s bad for me, but I like it.”

5. PROCESS VS OUTCOME, MYOPIC LOSS AVERSION, AND INVESTOR BEHAVIOR

32:41–34:40

• The classic challenge of “process versus outcome” in investing: luck can produce great outcomes from poor processes, while good processes can sometimes yield bad outcomes.
• “Myopic loss aversion”—the less you look at your portfolio, the better you’ll perform (echoing Richard Thaler).
  • Quote (Scott, 31:21): “The less often you look at your portfolio or monkey around with it, the better your returns are.”
• Provocative thought experiment: what if the market only opened one day per year?

6. $100 BILLION RETAIL INFLOWS: HOW BIG A DEAL?

34:41–38:02

• The crew breaks down the record $100 billion surge in US stock purchases by retail investors this past month.
  • It's the single largest monthly inflow on record, but in the context of a $50T US stock market, Scott suggests it’s not (yet) destabilizing.
  • He hopes retail will keep buying "if the market drops 25%"—true long-term investing.
  • Quote (Scott, 34:41): "100 billion out of 50 trillion is actually not that big a deal."
• Discussion of buyback timing errors by companies and how professionals aren’t immune to the “buy high” human bias.

7. SPECULATION FEVER: TINY STOCKS, MASSIVE VOLUMES

38:02–44:47

• Certain speculative “lottery ticket” stocks are seeing as much dollar trading volume as trillion-dollar megacaps like Google and Netflix, highlighting the shifting focus of retail and algorithmic attention.
  • Quote (Michael, 37:14): "Rigetti ... trades as many dollars as Netflix and Google ... is this wild or what?"
• Similar bubbles have always existed (e.g., dot-coms in 1999, blockchain renamings in 2017), but the scale and ease of today’s trading is new.
  • Quote (Scott, 39:32): “It was much more difficult to physically trade stocks in 1999.”
• These speculative dynamics are seen as a “permanent feature of bull markets” in the digital age.

8. GAMBLING, MEMES, & THE INVESTING-ENTERTAINMENT BLUR

44:47–51:29

• Robinhood’s business model and its metamorphosis into the cultural icon for “fun” trading, with massive growth relative to legacy brokers like Schwab.
  • Quote (Josh, 48:05): “That’s Pumpkin Latte’s guy’s broker.”
• The arms race for retail attention, as finance, sports betting, and entertainment all blur together.
• Historic perspective on the shifting marketing of brokerages, from “get rich quick” messaging in bubbles to “serious business” in busts.

9. VOLATILITY, DRAWDOWNS, AND THE “NEXT CONTRAPTION”

51:29–59:04

• The volatility market now normalizes rapidly after shocks—panic and “vol crushes” disappear in hours, not years, possibly muting news-cycle hysteria and media fear-mongering.
  • Quote (Scott, 56:33): "It reverts very, very quickly, surprisingly quickly, to the point where guys that are my age, are kind of shaking their heads."
• Is retail trading or zero-DTE (zero day to expiry) options the “next” source of systemic risk? Scott thinks not; the size/leverage can’t mount enough to create a crash.
  • Quote (Scott, 58:05): “I don’t think the system can build up enough size, enough leverage in these things to be the next contraption.”

10. PRIVATE CREDIT: THE REAL RISK?

59:04–68:28

• The conversation pivots to private credit, now a popular asset class for both retail and institutional investors, often packaged through Business Development Companies (BDCs).
• Scott is deeply skeptical: high fees, opacity, lack of liquidity, and overconfidence in low volatility pose real dangers.
  • Quote (Scott, 61:19): “Stay away. I am not a fan at all for a lot of reasons. One, it’s almost completely opaque. Fees are huge.”
• Spotlight on recent blow-ups (First Brands bankruptcy and related double-factoring fraud) that shake confidence in credit markets.
• Comparison to “subprime” leading up to the GFC and echoes of 2007’s Bear Stearns hedge fund collapse.

11. GOLD, BITCOIN, AND THE INTEREST RATE PUZZLE

71:07–74:31

• An unexpected bull market for both gold and bitcoin during a stock market boom year, with both assets making new highs. Treasury-bill ETFs are also seeing record inflows.
  • Quote (Josh, 71:33): "Are you shocked that we're in a stock market bull with both gold and bitcoin also making record highs?"
• Scott’s take: with unemployment moderate and inflation still near target, the Fed is prematurely cutting rates, risking new bubbles.
  • Quote (Scott, 73:40): “The Federal Reserve does 10 times, maybe 100 times more damage by keeping interest rates too low for too long than they ever do by having rates too high.”

12. CULTURE & INEQUALITY: THE DELTA FIRST CLASS METAPHOR

76:01–78:31

• Josh presents Delta’s earnings shift as a metaphor for the “K-shaped” economy—most airline revenue now comes from elite, premium “first class” travelers, leaving the masses behind.
• Scott shares another illustration: $450 average Broadway ticket prices, showing the spread between “the well-off” and everyone else.
  • Quote (Scott, 77:30): "There are so many businesses … where the well off are happy to spend money … whether it’s travel or dining or entertainment … or cocaine."

13. CLOSING MOMENTS & RECOMMENDATIONS

78:31–End (83:05)

• The group wraps up with what they're looking forward to—movies, Broadway, and a special live event with Jim Cramer.
• Scott reflects on the enduring importance of financial education amid today’s overwhelming noise.
  • Quote (Scott, 78:49): “To the degree that people are educated when it comes to a retirement or a kid’s education, then God love you.”
• Where to follow Scott: X/Twitter @ScottNations and nationsindexes.com.

MEMORABLE QUOTES & TIMESTAMPS

• "Pumpkin spice latte was the beginning of the end for civilization." — Scott Nations (04:54)
• “Everybody knows that … it probably went up another hundred dollars a share that day. And I’m probably, I don’t know, maybe I’m an idiot.” — Scott Nations (18:49)
• "We all know that … kind of get cut off at the knees because of what we've been talking about. So many investors and so many people who are now willing to fade a big move like that." — Scott Nations (17:41)
• “The less often you look at your portfolio or monkey around with it, the better your returns are.” — Scott Nations (31:21)
• "Nobody should do that … the manager has to roll that product from one expensive futures contract to an even more expensive futures contract every month." — Scott Nations (24:55)
• “Stay away. I am not a fan at all for a lot of reasons. One, it's almost completely opaque. Fees are huge.” — Scott Nations on private credit (61:19)
• “The Federal Reserve does 10 times, maybe 100 times more damage by keeping interest rates too low for too long than they ever do by having rates too high.” — Scott Nations (73:40)

KEY INSIGHTS

• Retail flows and meme stock behavior are now an expected and permanent feature of bull markets, supercharged by online communities and new financial products.
• Efficiency and access have eliminated old barriers to entry for trading, shifting the professional field to quants and physicists.
• Speculative tools (leveraged ETFs, options) are widely misunderstood and mostly destructive to those who buy and hold them, but use continues regardless of warnings.
• Process vs. Outcome remains one of the most challenging gaps to bridge with both clients and the broader investing public.
• The next “systemic risk” may lie in private credit, where bad underwriting, opacity, and diffuse ownership could spark shockwaves—echoes of 2008, but not identical.
• Rising inequality and stratification are apparent in everything from stocks to airline tickets to theater, reinforcing the sense of a bifurcated economic boom.

LISTENERS' TAKEAWAY

This episode offers a sharp, often hilarious but deeply knowledgeable dissection of the new “golden age” of retail investing and its consequences—from bubbles and blow-ups to new risks and enduring behavioral bias. It’s both a snapshot of today’s frothy environment and a historical primer on what never changes in finance.