WEBVTT - Some Cigarettes: Accreditation, Memes, Naughty ESG 0:00:03.160 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio news. We haven't done this 0:00:10.560 --> 0:00:11.040 for a while. 0:00:11.480 --> 0:00:13.080 We haven't seen each other in two weeks, I know. 0:00:13.320 --> 0:00:15.360 But after like ten days of going by your desk 0:00:15.520 --> 0:00:17.079 and everyone's like, no, we don't know where she is. 0:00:17.160 --> 0:00:20.560 Oh my god, Like I told them all, just if 0:00:20.640 --> 0:00:22.840 that comes by, I'm not here. No, I don't know 0:00:22.840 --> 0:00:25.680 where I've been. But now we're back in the booth. 0:00:25.960 --> 0:00:29.640 Back in the booth. Hello, and welcome to The Money 0:00:29.680 --> 0:00:32.480 Stuff Podcast. You're a weekly podcast where we talk about 0:00:32.479 --> 0:00:36.440 stuff related to money. I'm Matt Levian and I are 0:00:36.440 --> 0:00:38.839 at the Money Stuff comn for Bloomberg Opinion. 0:00:38.760 --> 0:00:41.199 And I'm Katie Greifeld, a reporter for Bloomberg News and 0:00:41.240 --> 0:00:42.680 an anchor for Bloomberg Television. 0:00:44.360 --> 0:00:46.360 It's good to be back, Katie, It's good. 0:00:46.159 --> 0:00:46.880 To be back. 0:00:47.040 --> 0:00:48.000 What's gone on today? 0:00:48.240 --> 0:00:51.760 Well, we're going to talk about incredited investors what that is? 0:00:51.840 --> 0:00:57.080 Should it exist? We'll talk about beamstocks growing up or Meme. 0:00:57.000 --> 0:00:59.400 Investors investment firms. 0:00:59.440 --> 0:01:02.400 True, that's true, and we're going to talk about naughty esg. 0:01:04.360 --> 0:01:11.480 It's less fun that it's accredited investors. 0:01:11.800 --> 0:01:15.160 Yeah, what are they? So? Currently two hundred thousand dollars 0:01:15.200 --> 0:01:17.880 income is what you need to be or a one 0:01:17.920 --> 0:01:20.120 million dollar net worth if I'm an individual. 0:01:20.720 --> 0:01:22.520 Yeah, so it's all sorts of like bars. Right, So, 0:01:22.600 --> 0:01:25.560 like the way it sort of like casually works is 0:01:25.600 --> 0:01:28.640 that you can invest in private stuff if you're an 0:01:28.640 --> 0:01:31.880 accredited investor, and you can and anyone can invest in 0:01:31.920 --> 0:01:36.480 public stuff. And the accredited investor bar used to be 0:01:36.560 --> 0:01:39.000 like I don't like one or two or five percent 0:01:39.040 --> 0:01:42.200 of households, and now it's like twenty percent of households 0:01:42.280 --> 0:01:44.759 because it's not index to inflation. So now you need 0:01:44.800 --> 0:01:47.200 to have an income of two hundred thousand dollars a 0:01:47.280 --> 0:01:49.640 year or three hundred thousand dollars for a couple, or 0:01:49.640 --> 0:01:53.280 have networth of a million dollars, or have a series 0:01:53.360 --> 0:01:55.400 seven or serious sixty five lescens. So if you have 0:01:55.440 --> 0:01:58.120 like the securities license, you can be an accredited investor, 0:01:58.480 --> 0:02:00.920 and if you're an accredited investor, you can invest in 0:02:01.160 --> 0:02:09.239 various sorts of private investments, mainly like startups. And people 0:02:09.320 --> 0:02:12.079 don't like these rules. Yeah, I should say, I read 0:02:12.080 --> 0:02:14.760 about this the other day, and he'll point out they're 0:02:14.760 --> 0:02:19.040 actually two like higher bars. So there's the bar for 0:02:20.160 --> 0:02:24.840 investing in hedgehunds and private equity firms, which is basically, 0:02:24.960 --> 0:02:26.800 if you're an investment manager and you want to charge 0:02:26.919 --> 0:02:29.920 performance fees like hedgehunds and private equity do, you need 0:02:29.960 --> 0:02:33.760 to have qualified clients, which basically means like a two 0:02:33.800 --> 0:02:35.600 point two million dollar networth, So it's a little bit 0:02:35.600 --> 0:02:38.320 of a higher bar than the accredited investor bar. And 0:02:38.360 --> 0:02:41.079 then the other thing is like there's certain kinds of 0:02:41.120 --> 0:02:45.440 private investments that are only open to quibs qualified institutional buyers, 0:02:45.480 --> 0:02:48.320 which basically means an institution with at least one hundred 0:02:48.320 --> 0:02:51.120 million dollars. So like those are the higher bars, but 0:02:51.320 --> 0:02:54.000 anyone can invest in startups in theory if they're an 0:02:54.000 --> 0:02:57.760 accredited investor, which means, you know, a two hundred thousand 0:02:57.760 --> 0:03:01.400 dollars income, which is like not that uncommon these days. 0:03:01.400 --> 0:03:02.880 Like one thing I pointed out is that like the 0:03:02.960 --> 0:03:06.360 number of people who meet that qualification is about equal 0:03:06.360 --> 0:03:08.920 to the number of people who own stocks directly. So 0:03:08.960 --> 0:03:12.919 it's like the investor class is pretty much overlapping with 0:03:13.080 --> 0:03:16.320 the accredited investor class. There's this perception that like these 0:03:16.360 --> 0:03:19.480 days the good investments are the private investments. Yeah, like 0:03:19.480 --> 0:03:21.760 we were talking about a lot, right, and so they're like, 0:03:21.800 --> 0:03:23.440 why is it that, like people who don't have a 0:03:23.440 --> 0:03:25.720 lot of money can't get the good investments? And then two, 0:03:25.720 --> 0:03:30.280 why is it that, like the term accredited just correlates 0:03:30.280 --> 0:03:32.680 with the wealth, Like it sort of seems like accredited 0:03:33.080 --> 0:03:35.200 means good or smart. 0:03:34.920 --> 0:03:37.960 Or perhaps qualified In some right. 0:03:38.040 --> 0:03:40.360 It seems unfair that qualified would just be in like 0:03:40.440 --> 0:03:43.440 having enough money, and so there's always this push to 0:03:43.480 --> 0:03:46.400 open it up for like a test. So it used 0:03:46.440 --> 0:03:48.560 to be only the money qualification, and now if you 0:03:48.600 --> 0:03:51.200 have certain securities licenses like this Ery seven, you can 0:03:51.240 --> 0:03:53.600 also be an accredited investor because you're, like, you know, 0:03:53.640 --> 0:03:55.720 if you like work at an investment bank, like, you're 0:03:55.720 --> 0:03:57.720 probably like you know, probably know as much as the 0:03:57.760 --> 0:04:01.120 average bear about like investments. And so the most recent 0:04:01.160 --> 0:04:03.720 news is that, like the Senate is pushing for a 0:04:03.720 --> 0:04:06.880 bill to make the sec write an exam that anyone 0:04:06.880 --> 0:04:08.560 can take, and if you pass the exam, then you're 0:04:08.560 --> 0:04:11.040 an a credited investor and you can buy private stuff. 0:04:11.360 --> 0:04:14.240 This scratched a memory up to the surface. This is 0:04:14.280 --> 0:04:17.200 slightly different, but it's related. In April twenty twenty two, 0:04:17.960 --> 0:04:23.200 FINRA called for comments on whether they should introduce knowledge 0:04:23.279 --> 0:04:28.240 checks before you know, retail could buy what they defined 0:04:28.240 --> 0:04:31.520 as complex products, which basically meant like leverage and all 0:04:31.560 --> 0:04:33.599 these like funky ETFs that we talk about on this 0:04:33.640 --> 0:04:38.839 podcast sometimes. And that was met with outrage. People hated 0:04:38.880 --> 0:04:39.600 that idea. 0:04:39.480 --> 0:04:42.200 Right, because that's like those products are public product. Anyone 0:04:42.200 --> 0:04:44.040 can buy those, right. You don't have to be a 0:04:44.160 --> 0:04:47.960 credited investor to buy a triple LEBRITYTF or zeroed A 0:04:48.000 --> 0:04:51.320 options on socks. There's all sorts of stuff that is 0:04:51.800 --> 0:04:54.560 available to the public, which basically sort of means like 0:04:54.600 --> 0:04:58.560 it's meant disclosure requirements, right, there's not formally supposed to 0:04:58.560 --> 0:05:01.640 be like really substantively of like whether it's a good investment. 0:05:01.760 --> 0:05:03.640 You know, there's like a certain amount of pressure on 0:05:03.680 --> 0:05:06.480 stuff to not be crazy stuff. But like in general, 0:05:06.560 --> 0:05:09.160 there's a lot of public stuff that is risky, and 0:05:10.600 --> 0:05:13.960 there's this weird situation where a lot of public investments 0:05:14.000 --> 0:05:16.359 are very risky and dangerous and sort of hard to 0:05:16.400 --> 0:05:20.080 understand and anyone can buy them. Yeah, And then there's 0:05:20.120 --> 0:05:23.080 a lot of private market stuff that's like like space 0:05:23.279 --> 0:05:25.640 stuck that like you're not allowed to buy because it's 0:05:25.680 --> 0:05:27.800 limited to people with at least two hundred thousand dollars 0:05:27.839 --> 0:05:31.760 of income. It's weird that anyone can buy the products 0:05:31.760 --> 0:05:34.599 that Finnerun's toy strict and then like they're trying to 0:05:34.640 --> 0:05:37.719 expand the qualification for the act. 0:05:37.839 --> 0:05:40.800 Time again they opened it up for comments. They received 0:05:41.160 --> 0:05:44.640 more than twelve thousand comments, which was pretty wild. That 0:05:44.800 --> 0:05:47.320 shattered the record. I don't know if it's since been shattered, 0:05:47.320 --> 0:05:50.520 if they've opened up comments to anything else crazier, but 0:05:50.839 --> 0:05:54.000 usually they get like a couple dozen comments, so this 0:05:54.160 --> 0:05:57.320 was wild. It is interesting, you know, the disclosure base 0:05:57.960 --> 0:05:59.400 sort of whatever is how we do it now. I 0:05:59.400 --> 0:06:02.520 don't know how it want to talk about that, but basically, 0:06:02.560 --> 0:06:05.560 you can market all of this crazy risky stuff as 0:06:05.560 --> 0:06:07.760 long as you put in like big bright letters that 0:06:08.279 --> 0:06:12.000 you might and probably will lose money on that. That's fine. 0:06:12.279 --> 0:06:15.479 Yeah, although like a weird aspect of that is you're 0:06:15.640 --> 0:06:20.440 often buying it through your app, right, Yeah, Like there's 0:06:20.440 --> 0:06:24.040 no requirement that you've read any of the disclosure The 0:06:24.120 --> 0:06:27.400 firms can't market it without all the warnings disclosures, but 0:06:27.520 --> 0:06:29.440 you can buy it, you know, you pushed button. 0:06:29.560 --> 0:06:31.960 That's what one of the points that Finn made at 0:06:31.960 --> 0:06:35.440 the time that since these rules were put in place. 0:06:35.640 --> 0:06:38.080 There's a lot more self directed investors in the market 0:06:38.080 --> 0:06:41.479 now that aren't necessarily going through a financial advisor. There's 0:06:41.480 --> 0:06:44.000 a lot of people just clicking around on robin Hood 0:06:44.040 --> 0:06:45.919 for example. That's a deep tease to what we'll be 0:06:45.920 --> 0:06:49.320 talking about next. And that's why they floated the idea 0:06:49.440 --> 0:06:53.440 of a knowledge check that was unpalatable. It's interesting that 0:06:53.560 --> 0:06:57.040 the Senate is pushing for some sort of test now. 0:06:57.440 --> 0:07:00.240 Yeah, and like private investments are the opposite, Right, you 0:07:00.279 --> 0:07:01.640 can't buy them on it app. You do have to 0:07:02.320 --> 0:07:04.039 you know, essentially buy them through a broker or a 0:07:04.040 --> 0:07:08.320 financial advisor, right, And there is some history of skepticism 0:07:08.360 --> 0:07:10.720 about how aligned the interests of some of these brokers 0:07:10.760 --> 0:07:12.440 are with their clients. Right. I mean, there's a lot 0:07:12.480 --> 0:07:15.840 of private market stuff that is very high fee has, 0:07:15.880 --> 0:07:19.200 like lots of layers of fees for products that like, 0:07:19.280 --> 0:07:21.120 you know, you could probably do better by buying a 0:07:21.360 --> 0:07:23.800 you know, index CTF, but like the advisor gets paid 0:07:23.840 --> 0:07:30.000 more for selling you the complex product. And making people 0:07:30.080 --> 0:07:35.800 pass a test might make them more resistant to getting 0:07:35.840 --> 0:07:38.800 pitched bad products, but it might just make them feel 0:07:38.800 --> 0:07:43.040 more sophisticated and then make the advisors salivate of even 0:07:43.040 --> 0:07:45.280 more over selling them bad products. Right, I don't know 0:07:45.320 --> 0:07:46.160 about these tests. 0:07:46.680 --> 0:07:48.520 You know, there's not a lot of teach one. 0:07:48.400 --> 0:07:51.080 I would I wrote, I would love to write one, right, 0:07:51.080 --> 0:07:52.800 I would also love to I love taking standard I 0:07:52.840 --> 0:07:57.400 s house but that tracks. Yeah, but like it would 0:07:57.400 --> 0:07:58.800 be so fun to write this list. But like just 0:07:58.920 --> 0:08:00.840 you sort of know what it would be like. It 0:08:00.880 --> 0:08:05.640 would be like, you know, like compound interest and like that. 0:08:06.000 --> 0:08:08.200 It would be like sort of like financing trivia. He 0:08:08.240 --> 0:08:11.200 would potentially give you the illusion of being sophisticated and 0:08:11.240 --> 0:08:14.040 being able to sort of see through. Yeah, but that's 0:08:14.120 --> 0:08:18.040 that's all your financial advisor needs, sow you sort of 0:08:18.080 --> 0:08:20.480 ruinous product. If you were starting from scratch, you would 0:08:20.520 --> 0:08:22.720 not like divide the investment universe this way, right, Like 0:08:23.320 --> 0:08:25.600 you would not let people buy all of the risky, 0:08:25.640 --> 0:08:28.440 weird products that Fenner is nervous about. When the Senate 0:08:28.480 --> 0:08:30.160 talks about this, they talk about like, you know, investing 0:08:30.160 --> 0:08:32.679 in like local small businesses, right, Like you can't like 0:08:33.080 --> 0:08:35.680 those they are exemptions to the rules. But in general, 0:08:35.760 --> 0:08:38.400 it's kind of like difficult and risky for small businesses 0:08:38.400 --> 0:08:41.839 to raise money from like people in their community. Because 0:08:41.840 --> 0:08:43.760 like there are you have to bet SEC exemptions, like 0:08:43.800 --> 0:08:46.040 there's a credit investor tests, and it might be nicer 0:08:46.160 --> 0:08:49.520 if more people could make those sorts of private investments. 0:08:49.880 --> 0:08:53.880 And those investments in some ways seem like more appealing 0:08:54.120 --> 0:08:57.480 or more like wholesome than like triple levertyts or whatever. Right, 0:08:58.080 --> 0:09:00.760 the complex products that that Fenner is right, this is 0:09:00.800 --> 0:09:03.040 more of a niche comment, but I liked it. So 0:09:03.679 --> 0:09:06.240 I used to be a convertible bond underwriter, right, And 0:09:06.320 --> 0:09:09.240 like a lot of bonds are done under an SEC 0:09:09.400 --> 0:09:12.160 rule called rule one forty four A, which basically means 0:09:12.280 --> 0:09:14.120 that you have to be one hundred million dollar institution 0:09:14.240 --> 0:09:17.439 to buy them, right, And it just like it makes 0:09:17.480 --> 0:09:20.000 their disclosure a little bit easier. But one reader was like, 0:09:20.480 --> 0:09:22.040 why am I allowed to buy the stock of a 0:09:22.040 --> 0:09:24.480 public company but not their one forty four A bonds? 0:09:24.679 --> 0:09:28.080 The one forty fairy bonds are sort of by definition safer, right, 0:09:28.080 --> 0:09:30.360 they're like senior in the capitol structure, but like he's 0:09:30.400 --> 0:09:31.679 not allowed to buy them because he doesn't have a 0:09:31.800 --> 0:09:34.719 hundred million dollar fund, right, But like anyone can buy 0:09:34.760 --> 0:09:36.680 the stock. So there's a lot of stuff like that 0:09:36.720 --> 0:09:39.040 where it's like what gets treated as like a risky, 0:09:39.120 --> 0:09:41.320 dangerous thing for retail investors, and what gets treated as 0:09:41.360 --> 0:09:43.080 like no problem, anyone can buy that by clicking a 0:09:43.120 --> 0:09:47.199 button just doesn't track any like economic or disclosure reality. 0:09:47.480 --> 0:09:49.920 So I don't know, I don't have a good solution. 0:09:50.120 --> 0:09:52.800 I've written my bad solution, which is that the SEC 0:09:52.840 --> 0:09:55.920 should give out a certificate of dumb investment where you say, 0:09:56.320 --> 0:09:58.320 I know I'm buying something dumb, and they slap you 0:09:58.679 --> 0:10:00.480 and you say, no, I really want to buy something dumb, 0:10:00.720 --> 0:10:03.600 and then like they give you the certificate. But like 0:10:03.600 --> 0:10:07.000 the important thing in my original proposal was that then 0:10:07.000 --> 0:10:09.160 if the thing goes to zero, you're not allowed to complain, 0:10:09.320 --> 0:10:11.600 like to the press or to anyone, right because like 0:10:11.640 --> 0:10:13.800 a lot of this stuff, it's like retail investors buy 0:10:13.800 --> 0:10:15.679 this terrible thing and I realized that is a terrible thing, 0:10:15.760 --> 0:10:17.400 Like no, no, it's gonna be great, and then they 0:10:17.440 --> 0:10:18.920 buy it and goes to zero and they're like, oh 0:10:19.000 --> 0:10:20.559 I was defrauded. It's like, oh, you knew it was 0:10:20.600 --> 0:10:24.880 a terrible thing. So the idea of like making people 0:10:24.920 --> 0:10:27.240 sign a form saying they know they're being dumb is 0:10:27.240 --> 0:10:28.800 appealing to me because when it would sort of like 0:10:28.840 --> 0:10:32.040 obviate some complaints. And then two, like all this stuff 0:10:32.080 --> 0:10:36.000 about accredited investors, like it comes from a place of 0:10:36.080 --> 0:10:39.320 like thinking, those are the smart investors who get access 0:10:39.360 --> 0:10:42.360 to the good stuff, and I suspect that the real 0:10:42.400 --> 0:10:44.440 experience is kind of the opposite, where like those are 0:10:44.440 --> 0:10:47.960 the investors who get pitched the expensive, weird stuff. And 0:10:49.559 --> 0:10:54.480 when you make it a test of financial sophistication, then 0:10:54.559 --> 0:10:56.480 like people want to take that test. They want to 0:10:56.480 --> 0:10:58.400 pass that test, and then they passed. This was like, oh, 0:10:58.440 --> 0:11:00.920 I'm so sophisticated, and then they buy the worst stuff 0:11:01.200 --> 0:11:03.880 because like they have this illusion of sophistication, Whereas if 0:11:03.920 --> 0:11:05.800 you make them sign of things saying this is dumb, 0:11:06.400 --> 0:11:09.880 like it's less aspirational and like maybe maybe like deters 0:11:09.920 --> 0:11:10.960 them from buying the worst things. 0:11:11.080 --> 0:11:13.840 That's true. I mean it would be labor intensive to 0:11:14.200 --> 0:11:16.640 have to line up like a staffer to slap every 0:11:16.679 --> 0:11:18.680 single person that it's. 0:11:18.559 --> 0:11:20.880 Really a hypothetical, but like I like it, you know. 0:11:21.080 --> 0:11:22.560 I don't know, I think we should kick it around. 0:11:22.920 --> 0:11:41.840 Write the test, Matt. We didn't insult any dentists when 0:11:42.040 --> 0:11:45.840 mean stocks grow up? You know, Robin Hood, do you 0:11:45.880 --> 0:11:49.480 know Robin I remember a time when their bare case 0:11:49.520 --> 0:11:51.280 on robin Hood is that, you know, you would have 0:11:51.360 --> 0:11:54.560 all these people who use robin hood as a gateway 0:11:54.600 --> 0:12:00.679 drug and then graduate up into proper investments such as 0:12:00.679 --> 0:12:03.800 index funds, and that they migrate over to like Schwab 0:12:04.040 --> 0:12:07.160 or Fidelity for example. That hasn't really been the case, 0:12:07.840 --> 0:12:08.240 hasn't that. 0:12:09.240 --> 0:12:11.640 I mean, you and I were reading this Baron's article 0:12:11.679 --> 0:12:14.600 about how robinhood is growing up, and like the stat 0:12:14.640 --> 0:12:17.080 that I found shocking is something like ten percent of 0:12:17.120 --> 0:12:20.839 Americans have robinhood account Yeah, like American adults whatever and 0:12:20.920 --> 0:12:24.240 rest adults, and robinhood has zero point three percent of 0:12:24.280 --> 0:12:25.480 like retail financial. 0:12:25.160 --> 0:12:27.400 Assets, which is sixty five trillion. 0:12:27.760 --> 0:12:33.120 Sure, but like they are thirty three times bigger by 0:12:33.720 --> 0:12:36.000 number of people than by assets, right, Like they have 0:12:36.520 --> 0:12:38.240 a lot of people, but like a tiny fraction of 0:12:38.240 --> 0:12:40.280 those people's assets, or else they have only the people 0:12:40.280 --> 0:12:43.880 with very few assets, right or some companies. Yeah, and 0:12:44.000 --> 0:12:47.640 that does sort of suggest that that bear case had 0:12:47.679 --> 0:12:50.760 some truth to it, which is that people do the 0:12:50.800 --> 0:12:53.920 fund trading on Robinhood, but when they grow up to 0:12:54.040 --> 0:12:56.120 like their index funds, they do it somewhere else. 0:12:56.200 --> 0:12:58.640 Well, two points to that number One, the stock is 0:12:58.720 --> 0:13:00.520 up like one hundred and ten percent this year, so 0:13:00.600 --> 0:13:02.800 like in terms of it being a bare case, it's 0:13:02.840 --> 0:13:05.120 certainly not playing out in the stock market. And two 0:13:05.400 --> 0:13:09.199 that may be the case. Robinhood is working really really 0:13:09.240 --> 0:13:12.800 hard to grow up, which I find interesting. They had 0:13:12.840 --> 0:13:14.880 their Hood summit in Miami. I think it was last 0:13:14.920 --> 0:13:17.080 week or the week before, But in any case, they 0:13:17.080 --> 0:13:19.120 have all these new features that are coming out. They 0:13:19.120 --> 0:13:23.280 have this desktop trading platform. That's one thing. They're offering 0:13:23.320 --> 0:13:25.880 index options for the first time. That's kind of exciting. 0:13:26.120 --> 0:13:28.800 But I thought that this was interesting. There's one to 0:13:28.880 --> 0:13:32.800 three percent matching bonuses for investors who transfer assets to 0:13:32.920 --> 0:13:35.840 robin Hood's platform, so they'll pay you to bring your 0:13:35.880 --> 0:13:39.559 money over to Robinhood. And as of June twenty twenty four, 0:13:39.640 --> 0:13:42.760 Robinhood has provided customers more than two hundred million dollars 0:13:42.760 --> 0:13:46.959 in matches on asset transfers and retirement account contributions. That's 0:13:46.960 --> 0:13:51.000 according to the company. So they are trying to grow up. 0:13:51.040 --> 0:13:52.520 Right, It makes little sense, right, I mean, if you're 0:13:52.559 --> 0:13:55.040 a person who has like one thousand dollars robin Hood 0:13:55.040 --> 0:13:59.280 account for fun and like your retirement savings at Fidelity, 0:13:59.559 --> 0:14:02.160 and it is like, bring all your retirement savings over 0:14:02.200 --> 0:14:03.520 to us, and we'll give you one percent of the 0:14:03.600 --> 0:14:07.360 or three percent of them, Like yeah, why would you done? Right? 0:14:07.400 --> 0:14:09.679 And if you're like relatively self directed in your retirement 0:14:09.720 --> 0:14:12.160 savings or an ETFs anyway, like yeah, that's free money. 0:14:12.320 --> 0:14:13.839 There's some lock up on it where you bring the 0:14:13.880 --> 0:14:15.480 money over you you have to keep it at robin 0:14:15.520 --> 0:14:17.600 Hood for a while. So right, it's it's part of 0:14:17.600 --> 0:14:20.320 the strategy for them to go from being people's like 0:14:20.360 --> 0:14:23.200 fun money play you know, shows confetti when you do 0:14:23.240 --> 0:14:26.040 a trade account to being like their main you know, 0:14:26.600 --> 0:14:29.120 savings and investment account. The other thing that I thought 0:14:29.160 --> 0:14:31.560 was interesting about what they're doing is they're talking about 0:14:32.000 --> 0:14:36.240 getting into building out a wealth management farmware. Instead of 0:14:36.720 --> 0:14:39.600 just being self directed, they have some sort of advisory business. 0:14:39.600 --> 0:14:42.320 And that's probably not like opening branches with people, but 0:14:42.360 --> 0:14:44.880 it's like, yeah, you know, some sort of robo advising, 0:14:45.120 --> 0:14:47.680 some sort of automated you know, AI driven advising where 0:14:48.240 --> 0:14:50.880 if you are not a person who wants to watch 0:14:50.920 --> 0:14:52.800 the markets all day and be on Reddit and like 0:14:52.840 --> 0:14:55.440 sort of you know, do your own investing, but you 0:14:55.560 --> 0:15:00.160 want someone to help you do your retirement planning. If 0:15:00.240 --> 0:15:02.560 robin Hood can offer that, Like, that's just a ton 0:15:02.600 --> 0:15:04.880 of assets that you know, have to be tied to 0:15:04.920 --> 0:15:05.760 some sort of advice. 0:15:05.920 --> 0:15:08.400 Yeah. They basically want to be like the one stop shop, 0:15:08.400 --> 0:15:08.760 don't they. 0:15:08.840 --> 0:15:10.320 Which is like but you know, with like Fidelity and 0:15:10.600 --> 0:15:12.320 all these people like to have some roots and being 0:15:12.320 --> 0:15:14.400 self directed discount brokrages, but they're all like, you know, 0:15:14.440 --> 0:15:17.040 trying to help people, you know, give people advice on 0:15:17.080 --> 0:15:17.920 their retirement accounts. 0:15:17.960 --> 0:15:19.840 I should have looked into it. But don't they have 0:15:19.880 --> 0:15:20.880 a credit card as well? 0:15:20.960 --> 0:15:22.160 Or do you have a credit card? 0:15:22.200 --> 0:15:25.480 Yeah, that's like good, yeah card Goldman have some painful 0:15:25.520 --> 0:15:28.160 news about that this week. It seems hard to just 0:15:28.640 --> 0:15:29.640 create a credit card. 0:15:29.800 --> 0:15:31.240 I don't know if you have money market funds, Like 0:15:31.240 --> 0:15:33.280 it's like a synergy there. I have to assume that 0:15:33.280 --> 0:15:35.320 when robin had started, but you started from nothing, Like 0:15:35.760 --> 0:15:39.760 there's so much opportunity in like showing people confetti when 0:15:39.800 --> 0:15:43.920 they do trades, right, Like the pool of money that 0:15:43.960 --> 0:15:47.880 you can extract by like helping people do fun trades 0:15:47.920 --> 0:15:50.640 on their phone is enormous, right, And it is enormous, 0:15:50.680 --> 0:15:53.760 but it's like, you know, it's a tiny fraction of 0:15:53.800 --> 0:15:56.560 the pool of money from people like saving for retirement, right, 0:15:56.560 --> 0:15:58.080 and so like, when you get big enough, you're like 0:15:58.200 --> 0:16:00.480 the way to go to the next level of is 0:16:00.480 --> 0:16:02.880 to get people's retirement money and not just their fund 0:16:02.920 --> 0:16:05.120 trading money. Now, I will say the other thing about 0:16:05.120 --> 0:16:08.840 the barecase of people graduating from meme stocks to retirement 0:16:08.840 --> 0:16:13.000 funds is that Robinhood so far makes a lot of 0:16:13.000 --> 0:16:17.200 its money on trading pad for order flow, right, And 0:16:18.240 --> 0:16:21.440 two Sili's facts about that are one, if you are 0:16:21.520 --> 0:16:23.960 just buying ets for retirement, you're not trading that often, right, 0:16:24.160 --> 0:16:27.040 So Robinhood is getting less money from your buy and 0:16:27.080 --> 0:16:30.440 hold investing than they are from your frantic day trading. 0:16:30.880 --> 0:16:33.760 And then two where they get most of their money 0:16:33.920 --> 0:16:37.560 from payment to order flow is options in crypto, Like 0:16:38.200 --> 0:16:41.440 frantically trading stocks less good for them financially than frantically 0:16:41.440 --> 0:16:45.040 trading options and crypto and buying and holding stocks even 0:16:45.040 --> 0:16:47.880 worse than frantically trading stocks. So there is like a 0:16:48.120 --> 0:16:50.360 margin compression as they go to the to the higher 0:16:50.360 --> 0:16:52.840 dollar you know, retirement funds, but hopefully you make it 0:16:52.920 --> 0:16:53.480 up on volume. 0:16:53.680 --> 0:16:56.560 Yeah, another bare case that you could put in there, 0:16:56.640 --> 0:16:59.440 and this falls more into the psychology category is we 0:16:59.520 --> 0:17:02.040 might have moved passed this for Robinhood. But I was wondering, 0:17:02.160 --> 0:17:05.320 you know, when we were watching the fantastic fall of 0:17:05.359 --> 0:17:08.480 all these meme stocks and just so much money was 0:17:08.560 --> 0:17:13.320 being destroyed of retail dollars, whether instead of graduating into 0:17:13.560 --> 0:17:16.760 index funds, et cetera, whether or not people would just 0:17:16.760 --> 0:17:20.639 get totally disenchanted and leave the market all together. But 0:17:21.240 --> 0:17:24.440 it seems like that hasn't been too bad for robin Hood. 0:17:24.760 --> 0:17:27.000 Yeah, I don't know. I mean, I think a lot 0:17:27.040 --> 0:17:31.040 of people interpret memestocks as themselves a phenomenon of disenchantment, right, 0:17:31.040 --> 0:17:33.159 where like people feel like they can't get ahead, and 0:17:33.160 --> 0:17:35.800 so they put their money into gambles rather than like 0:17:35.840 --> 0:17:40.159 investing it sensibly in index funds or whatever. Yeah, And 0:17:41.080 --> 0:17:44.760 I don't know what comes after disenchantment with that, right, 0:17:44.800 --> 0:17:47.200 Like I I think some people are like, I'm going 0:17:47.240 --> 0:17:50.560 to stop gambling and start saving responsibly. Some people are like, 0:17:50.560 --> 0:17:53.040 we're disenchanted before, and now they're extra disenchanted, right, I 0:17:53.080 --> 0:17:53.320 don't know. 0:17:53.359 --> 0:17:55.800 I feel like it has sort of played out with crypto, 0:17:56.119 --> 0:17:59.159 Like I think that so many people lost money on crypto. 0:17:59.240 --> 0:18:02.040 I'm talking about just like day traders lost money on 0:18:02.080 --> 0:18:05.280 crypto because this time around with bitcoin got pretty close 0:18:05.280 --> 0:18:08.080 to seventy thousand sometime in the past few weeks. It 0:18:08.200 --> 0:18:11.560 just feels like Bitcoin at seventy thousand this time around 0:18:11.720 --> 0:18:14.800 is a lot different than before, like the FTX collapse, 0:18:15.160 --> 0:18:18.720 when I think that did disenchant a lot of the 0:18:18.760 --> 0:18:19.760 retail community. 0:18:19.960 --> 0:18:22.199 I agree, although then I want you to tell me 0:18:22.200 --> 0:18:24.040 why bitkind is back in tewenty thousand. 0:18:24.280 --> 0:18:26.200 I the podcast just ends. 0:18:28.359 --> 0:18:30.639 No, I agree, But like this is my cryptos skepticism 0:18:30.680 --> 0:18:32.919 coming out. Like go ahead, if you've got into crypto 0:18:33.000 --> 0:18:36.840 for gambling and you got disenchanted and you stopped being 0:18:36.840 --> 0:18:39.720 in crypto, like that's all like totally consistent, right, because 0:18:39.760 --> 0:18:41.480 it's like should beat this out. But it's essentially a 0:18:41.480 --> 0:18:44.119 gambling product, right, Like not all you know, like stayble 0:18:44.119 --> 0:18:46.879 goo whatever, right, but like you know, like the stuff 0:18:46.880 --> 0:18:48.520 that you see on like coin market cap is essentially 0:18:48.560 --> 0:18:50.800 a gambling product, whereas like if you got into the 0:18:50.800 --> 0:18:54.280 stock market for gambling, like that's a tiny, tiny fraction 0:18:54.359 --> 0:18:55.800 of like why people are in the stock market of 0:18:55.800 --> 0:18:57.919 what you can do this. It's mostly you're just like 0:18:58.400 --> 0:19:01.680 you're investing in like the growing productive capacity of the world. Right, 0:19:01.680 --> 0:19:03.159 Like that's what the stock market is, right, it is 0:19:03.160 --> 0:19:05.240 like companies and like you have economic growth, so the 0:19:05.240 --> 0:19:08.719 companies make more money and like that accrues to their shareholders. Right. So, like, 0:19:09.280 --> 0:19:11.720 if you get into the stock market for gambling purposes 0:19:12.160 --> 0:19:14.240 and there's a thing you can stay for that isn't 0:19:14.320 --> 0:19:17.440 gambling purposes with cryptos, I'm not so sure that's true. 0:19:17.960 --> 0:19:19.840 There are people in crypto are building good products blah 0:19:19.880 --> 0:19:21.880 blah blah blah. Right, but if you're like buying the tokens, 0:19:22.000 --> 0:19:23.520 you know, like there's a lot. Yeah, it's like hard 0:19:23.520 --> 0:19:24.480 to invest in those. 0:19:24.320 --> 0:19:26.680 Things anyway, that's that's in it for the tech. 0:19:26.760 --> 0:19:28.240 But no, I mean, like, right, I agree, if you 0:19:28.280 --> 0:19:30.200 get into memes stacks and you lose all your money 0:19:30.200 --> 0:19:33.680 and you get disenchanted and you like decide that investing 0:19:33.680 --> 0:19:36.640