Lead-Lag Live

Navigating Investment Markets: From Meme Stocks to Treasury Bills with Sam Nofzinger

• Michael A. Gayed, CFA

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Discover the secrets behind the evolving world of retail investing with our special guest, Sam Nofzinger from Public.com. You’ll learn how the focus has shifted from electric vehicle stocks like Tesla to the skyrocketing AI sector, led by NVIDIA. Sam brings his rich background in institutional investment management to the table, shedding light on how Public.com provides a diverse selection of investment options, such as stocks, ETFs, options, crypto, and fixed income products, all tailored for retail investors in their mid-30s. This episode promises to equip you with actionable insights and innovative solutions for making informed investment decisions.

Join us as we track the fascinating journey of retail investors, from the 2018 retail stock trading boom to the current preference for safer assets like treasury bills. Sam discusses how rising yields have influenced this shift and the maturing mindset of retail investors who now prioritize diversified and long-term strategies. We also cover the essential educational journey many investors undertake, which often begins with single stocks and gradually expands to more sophisticated products like ETFs, bonds, and high-yield savings accounts. You’ll gain a deeper understanding of the complexities of navigating a fluctuating market environment and the importance of staying well-informed.

Our discussion takes a deep dive into current retail investment trends, from the AI stock craze to the enduring interest in meme stocks like AMC and GameStop. We explore how options and crypto trading continue to attract investors due to their volatility and potential high returns. Sam emphasizes the critical role of safeguards and education in preventing significant losses, ensuring that retail investors are well-supported. We also delve into the burgeoning interest in cryptocurrencies among younger investors and the efforts to make bond investing more accessible. Tune in for a comprehensive look at the strategies and opportunities shaping today's retail investment landscape.

DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of Public Holdings, Inc. and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

 Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.


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Speaker 1:

So there are some longer term trends right, which we've seen, kind of the shift away from your EV and Tesla and Tesla being literally right, 15, 20% of retail volume every day. Now it's 100% AI, right, nvidia has 100% replaced Tesla. Tesla is, you know, down in the five to tens, you know, in terms of the top most traded, where literally it was number one for three years, four years straight. Now NVIDIA, every single day, is three, 4x higher volume than any other stock out there, other AI stocks. So supercomputers, super microcomputers, things like that, which have seen very, very volatile days. Folks trying to think about, hey, what's the next NVIDIA? There's a lot of people trying to play that game as well, and so really it's been the AI story this year very special sponsored lead lag live episode with sam nofsinger.

Speaker 2:

This will be actually really intriguing, given the types of things that sam sees from publiccom, which, if you're not familiar with the company you're about to be actually a really well-run and interesting way of accessing bond stocks. If any of you want to ask questions during this live conversation, I can see your posts via X, youtube, linkedin. Let's make this interactive and engaging. And with all that said, my name is Michael Guyatt, publisher of the Lead Lag Report. Join me, for the rough hour is Mr Samopfziger of publiccom. By the way, kudos on getting that domain. I can't imagine that that was that cheap if you didn't register back in 1998. But, sam, introduce yourself to the audience. Who are you, what's your background, what have you done throughout your career and what are you doing currently? Great.

Speaker 1:

Thanks, michael, appreciate you having us on so very quickly. My background started in the institutional world working at a family office managing portfolios for all kind of worth investors. That was super fun. For about a decade Decided to hop over into the FinTech community and really get into the business of investment management and step down to that retail level and provide all of the tools and information and education that folks with $100 billion have. How do we get that down to the folks with $10,000, $100,000, $1 million and really provide all the same access to all these different investments to not just a few people but to the broader world? And so I jumped in the fintech space, spent four years at SoFi running a lot of their investment divisions, managed their robo portfolio, watch their ETFs, things like that and then hopped over to publiccom about two years ago to run the brokerage and crypto business.

Speaker 1:

And so public we offer effectively every asset class that you could possibly want, so not just stocks and ETFs, but also your options, crypto. We have fixed income available, which a lot of our peers do not. And then we have solution tailored accounts, so we have high yield cash accounts. We have treasury accounts, so it's very, very easy to access kind of a T-bill market and then recently, kind of given what we were hearing from our members, we launched kind of a supercharged yield account that has access to not just government debt and not just, hey, let's loan to a bank. But there's thousands of corporations out there that are offering pretty, pretty good yields in this environment, offering pretty, pretty good yields in this environment. So how do we provide our members access to bonds, which I think most institutional investors have but I think is kind of still a new asset class for the retail?

Speaker 2:

investor. So you mentioned it right there. You're focused much more on the retail end Any sort of rough numbers just out of curiosity, as far as average account size, average net worth. What part of the retail end is public targeting as?

Speaker 1:

you can expect with our hundreds and hundreds of thousands of members. It spans right from 18 to 99. But you know, you know kind of our core member base is that you know kind of mid 30s. You know well established in their careers. You know probably have you know kind of mid six figures. You know net worth, you know investment portfolios are, you know kind of five figures, six figures and so kind of really going after that investor that's well on their way but still needs a lot of help to get kind of to that final push and really achieve their investment objectives way down the road, whether it's 10, 20, 30 years.

Speaker 2:

All right. So you've got the ability for investors to get all these different asset classes. I'm going to make the assumption that stocks are probably the most popular asset class in terms of what people are trading. Maybe I'm wrong on that. Either that or crypto, although I think the crypto excitement might be kind of waiting a little bit. More recently we can touch on that. Let's talk about, just from that standpoint, what tends to be sort of the order of interest in terms of the different asset classes that retail can access.

Speaker 1:

Yep, no, it's funny. When I started in this industry in 2018, that was kind of the boom of the retail stock trader and over the past four years, that's all investors want to do. Right, how much Tesla can I buy? How many levered products can I buy? How can I game for the hills AMC GameStop? As investors got a little bit more educated over those four to five years and then actually started to lose money, they quickly realized, hey, I don't want to trade, I want to invest.

Speaker 1:

And so, starting in call it 2022, 2023, when the stock market stopped going straight up, we started to see folks take an interest in different asset classes and it's not always fun to lose money than to make money. And so we actually see, when the markets go down, people just step away because they're like, oh, what do you mean? Things aren't going up anymore, what do I do now? And so in 2022, as yields were starting to rise, we said, hey, what do people want when yields rise? They probably want T-bills, because if current cash rates are four and rates are expected to rise, you can probably get 5% new in T-bills. And so we offered a T-bill product right as rates were rising and literally 90% of the dollars on the platform went straight into the six month T-bill, not stocks. People had enough stocks. They lost some money in Tesla. They're like, hey, what else I want safety. Yields are rising. It's risk-free, it's 5%. I've never had an interest on a cash before, so I'll take the 5%. And so in 2023, literally the number one asset class on our platform was the six-month treasury bill, way above and beyond NVIDIA, tesla stocks as a whole. People just wanted yield, they wanted safety. They had seen a good ride in the stock market and they were saying, hey, how do I take some money off the table? 5% risk-free is not a bad trade-off.

Speaker 1:

Since then, I think it's changed a little bit. Then it was hey, where's the best place to put my money? Oh, it's cash. T-bills actually are less than cash. Let me go to literally short-term paper and just pick up this 5% yield. And now investors are like, uh-oh, what do I do? I have so much cash in my balance sheet, I'm happy to earn 5%. Do I want to earn 3% on that? And so I think investors are starting to realize these days are over. We're not going to see 5% risk-free for the next coming years, and I think a lot of investors are kind of confused because it's really easy on the way up right, you just buy cash when rates are rising. But when rates are falling, I think the retail investor doesn't necessarily understand what that environment might mean for them.

Speaker 2:

I actually think that's really interesting, that the decision to go into T-bills was a function partially of Tesla or single stocks that they would probably over allocate to probably over-allocate too. Do you find that most of the accounts are highly concentrated in a select number of stocks, or is the retail audience that you're targeting playing with ETFs, more diversified baskets, doing more traditional asset allocation? The vast majority of our clients?

Speaker 1:

are long-term investors. They have relatively well-diversified portfolios. They are young, so well-diversified could just mean a single holding of BOL. That's perfectly acceptable for a lot of young folks out there. But when you look across our folks, as we continue to add asset classes, people continue to invest into that. So a lot of people we have different yield products. So we have cash account, we have treasury bills, we have corporate account. We have a lot of people who have all three, because diversifying your yield is just another way to protect yourself if one of those baskets doesn't work as intended. And so for us really just offering different products, I think has been helpful for most people to become educated and say, hey, let me try this out for myself.

Speaker 1:

I think that's what most people don't understand, or at least what we've found about the retail investor is they really like to learn, and they really like to learn by doing it themselves. So the first way they get into investments is buying a share of Tesla, right? They don't know what an ETF is. They don't know what diversification is, they don't know what funds are. Right, they just know, hey, my buddy bought Tesla, they made some money, let's go do it. And then, as they kind of do that journey along the way right. Then they say, oh, I know what diversification is, let me buy some ETFs. Oh, the stock market can be risky. Let me buy some bonds. Oh, I need some savings in my account in case things go awry. Let me put some money in a high-yield savings account. And so I think we've seen a really good maturation of the retail investor over the past four to five years, really diversifying their portfolios away from just holding Tesla and GameStop to actually having relatively broadly diversified portfolios holding Tesla and GameStop to actually having relatively broadly diversified portfolios.

Speaker 2:

So actually I like this conversation around maturation, because bonds have maturities, right, and try to find a way to transition it.

Speaker 2:

And I think when we talk about education, at least when it comes to stocks, I think most people's initial education is figure out a way to read a chart, right, technical analysis, trend lines, maybe not so much fundamentals, doing a deep dive on income statements, balance sheets. For bonds, though, it's a different education process, right, because bonds are not just here's a bond and here's a high yield and I'm going to buy into that high yield, but there's, as I always stress, there's two real drivers of bond returns. First of all, bond funds, which are different than a bond which matures right. So that's a whole different discussion. But on top of that, there's credit risk, there's duration risk, there's different things on covenants which really get nuanced as far as being called away. So let's talk about that education drive that public tries to do when it comes to the bond side, because, let's face it, the bond market has been horrible for the last three years, but now you can make a case.

Speaker 1:

The cycle has changed and it's been challenging, I think, not only for investors to figure out how to get educated, but it's been challenging for us to find ways to help them get educated about bonds because, as you've said, bonds are relatively complicated. If you go to any bond chart or if you're in a stock chart you look at a stock chart, stock shows up, good, let me buy it. You go to a bond asset page. You've got probably five different percentages. You got maturity dates, you got coupon payments, you got yield to maturity, you got yield to call, you've got credit radians, you've got cash flows to worry about and you don't know what's going on. And it's the jam study. When you basically get to the grocery store, you see 100 things of jam on the shelf and you say that's too confusing, I'm not even going to buy jam, right.

Speaker 1:

And so I think, initially, when we rolled out fixed income, people don't wake up saying, hey, I want to buy bonds today. And so we had to reorient how we frame it, because when people want bonds, they want yield right, they want a surety, they want a relatively low risk asset to guarantee returns, or at least promise you returns. And so I think we had to pivot away from. Hey, let's overload you with all these technical details, and let's just put in front what's important, like hey, five years to maturity and you're going to earn a 6.5% yield. All the details are under the fold, if you care about it.

Speaker 1:

For most investors, they just want to see the stock chart, and for bonds, they just want to see the yield, and so for us not overloading them with information, but providing it behind the scenes if they want, it has been a much more effective way for us to get folks interested in bonds and then again, retail likes. Once they do it, once they learn about it, they do it again, and so it's really just that first step. If we can get you that first step, you get your first bond. Then it's off to the races and that's what we've seen, and once people buy one bond, they come back for more and more and more, because they understand a lot better.

Speaker 2:

Do you find that because you guys actually have a pretty good screener? I looked at it before on the bond side Do you find that the first thing that people screen for is just straight up yield? I mean, it seems like again, if not knowing the nuances, that would be the natural thing to do.

Speaker 1:

Right, I want the high-income we see three main fixed income investors on our platform this year. One is the hey right. I've been doing well in T-bills. I know treasuries are really, really safe. Let me go buy one year, a three-year, a five-year, a 10-year right, because I know all about treasuries right. I've had some experience there. Two is the buy what you know investor right. Retail loves to buy what they know, whether it's Amazon, whether it's Tesla companies. They like companies they see in their daily lives.

Speaker 1:

We see a lot of folks flock to technology bonds. So Nvidia, amazon, apple, microsoft, those have been probably some of the hottest sellers on our platform because, one, they're offering attractive yields and two, people trust these companies more than they trust the US government right. So I think you know if you're going to sign up for a government to pay you for the next five years, or you're also happy to have Apple pay you for the next five years, and so that's been the second bucket. And then to your point yes, we do see folks, you know, reaching for yield, you know kind of that.

Speaker 1:

But yes, we definitely have people that they come for the yield, they want the high yield, and then it's our job to educate them that high yields aren't necessarily the best thing. If you're looking at a 50% yield, that's probably more of a red flag than a green flag, and so we have things in the app to educate you about. Hey, this is a high yield bond right. Risk of default right May not be around, right? This is risky investment. So things like high yield bonds we do try and educate members that if you see a 40%, you know that is far from guaranteed right. You certainly may not get that by the time this is all said and done.

Speaker 2:

That was interesting to me, what you said about the kind of bonds are gravitating towards, or the same kind of stocks that are gravitating towards right, NVIDIAs and those types of recognizable companies. Right, I guess the way to think about it. What about? Yeah, please.

Speaker 1:

I'm sorry On that. One point a funny thing we've been seeing is the contrast between AMC stock and AMC bonds. We've had way more people make money on AMC bonds, which I think have almost doubled or tripled over the past year. They go to the cash, of course, exactly. So it's such a funny concept, right? If you like AMC stock, you got to love the bond at 25% yield, because if you're confident in the equity, you got to be confident in the debt as well, and so we have a lot of people playing both sides of that game and actually having that play out appropriately for those folks.

Speaker 2:

So that's a whole other interesting dynamic, folks. So that's a whole nother interesting dynamic because, as you know, the AMC crowd tends to be extremely, extremely excitable, for lack of a better way of saying it right. And that makes total sense. Right Again, because bonds have a claim while equities are less in line in a bankruptcy proceeding. What about other sort of story, stocks? I mean, I don't think we have the same degree like we had with the meme mania coming out of COVID, but do you find that there's other things which people are showing some interest in that getting more buzz, outside of the EMC types or NVIDIA types, any sort of more unique types of investments that are getting some buzz?

Speaker 1:

I think there are some longer term trends which we've seen, kind of the shift away from your EV and Tesla and Tesla being literally 15%, 20% of retail volume every day. Now it's 100% AI. Nvidia has 100% replaced Tesla. Tesla is down in the 5 to 10s in terms of the top most traded, where literally it was number one for three years, four years straight. Now NVIDIA, every single day, is 3, 4x higher volume than any other stock out there Other AI stocks. So supercomputer, super microcomputer, things like that, which have seen very, very volatile days. Folks trying to think about, hey, what's the next NVIDIA? There's a lot of people trying to play that game as well, and so really it's been the AI story. This year.

Speaker 1:

Things come and go right. Earlier this year we had AMC pop off, gamestop pop off kind of with deep value back in the game making things interesting again. That was very, very short-lived, much more short-lived than it was back in the heyday. Those prices quickly, I think with that. You know, pot stocks right always kind of pop up here and there with legislation and things popping up there. Djt right, not surprisingly, has been a controversial and very popular name on the platform, both on the buy and the sell side. Certainly on the options people are playing that up and down. So we've seen a lot of different activity. The summer's been very hot with NVIDIA, you know. Certainly it's just that kind of just drives it as and it just seemed like the regular stock market right. I mean, you post all the time about how NVIDIA is basically the only thing making things go up and down, and certainly that's what we see as well on the retail platform.

Speaker 2:

I want to pivot towards options Because, again, when I think about retail, I actually think primarily more on the option side. Because of zero DTE and at least on social media, it seems like everyone's playing with calls and puts and turning $200 into a million dollars supposedly. Have you seen a pickup in volume and activity in the options market, as I guess is there seasonality to options?

Speaker 1:

activity. It's funny there's more seasonality to stock trading, I think partly because that's long, only so, if the market's not going up, people aren't buying, whereas in the option world there's a lot of different strategies that you can employ, and so, even if, whether stocks are going down, whether stocks are going up, whether stocks are range bound, options allows you to capitalize on any type of trend or lack of trend in the market. And so I think what we've seen is just a differing of exposure. When the market goes down, right, you see more people you know buying puts. You see people buying put spreads and things like that, less people taking right really far out of the money call option trades.

Speaker 1:

But on the flip side, as things go down, retail loves to buy the dip. So why not take a flyer on a call option after right, some stock crashes 20% overnight. So we do have. We definitely continue to see money flowing, certainly not the extent that we did when it was the stimulus check season and everyone was sitting at home and had a bunch of cash on the sidelines. It's a little less now, but we definitely see folks continue to buy the dips and continue to have a lot of confidence in the long-term stock market.

Speaker 2:

It's very easy, as you know, to blow up with options. I mean, there were a lot of amateur traders. Some of them, tragically, really went through some horrible pain. Look, I get it as a platformer. You want to make sure people can trade easily and accessibly. But I am curious are there Safeguard is not quite the right word, but are there ways of limiting the potential for those retail traders using public to not have that risk of ruin because they just don't know what they're doing exactly?

Speaker 1:

I think it would take that very, very seriously. Obviously, robinhood's at the stage for proper ways to do things and in ways that you maybe can do things better, and so I think we've learned a lot from others along this pathway. And again to your first point we don't want to be paternalistic. We are not the arbiter. I'm not, you know, anybody's parent. I'm not going to tell you you can't do this or you can't do that. Our job is to put in right proper guardrails and then also proper education and then proper limitations, right, you know, not everyone is allowed to trade options on our platform, right, if you don't meet the criteria that we've set, then unfortunately, right, to help you along the way and we have a lot of you know stuff within the app to kind of help you understand, you know how you're doing as a broader company.

Speaker 1:

Kind of the mantra is hey, now we have all these tools, you know, on the platform. Right, we have SOC, we have options, we have bonds. How do we turn all those things into solutions? So, to your point, you know, providing someone with tools that doesn't know what to do with them isn't very helpful. So how do you actually provide people with solutions who may not know how to use the tools themselves, and so I think in the options world over the time we're going to hopefully Structured products is probably the wrong word, but package solutions or more friendly ways. So, hey, if you're buying a stock, do you want to add some downside protection? If you're buying a stock, would you like a little income on the side to help kind of guide you along the more sensible ways to use options, as opposed to what you're talking about, which is just punting on zero day key options at 3.30 for expiration, because certainly that's not the behavior that we want.

Speaker 2:

It's not good for our members and it's not good for our business long term. So the old adage is retail can't really beat the market In general. Most people in quotes and institutions't really beat the market In general. Most people in quotes and institutions can't beat the market. And there's, I think, a line of thinking which I think has some degree of truth to it, that retail has become more sophisticated over time. You see more of these do-it-yourselfers and self-treaters. They don't need financial advisors, they do it themselves, public. As an example, I'm just curious is there any evidence to suggest that the average performance risk adjustment of retail self-directed traders has improved over the years? Is there some truth to the idea that retail now can, in quotes, compete against the big boys?

Speaker 1:

If you're asking, have all of our members outperformed the S&P 500? No, right, although if you ask them, they might say yes. They might say yes, but then I think if you look at how the professionals are performing right, if you look at how hedge funds are performing over the long term, they're not doing that great either. And I think another important point, right, our investors were heavily invested in Tesla during that entire run up, right, and the institutions didn't. So all our investors crushed the S&P 500 that year because it wasn't even in the S&P 500, right? No active managers were allocating Tesla.

Speaker 1:

Similarly, this year our members have like 20, 30%, like Nvidia. Like they're crushing the markets Not every investor for sure. It's a disservice to retail to not give them credit for picking up some of these trends well before the institutional dive and profiting a lot more than the institutions along the way. So sure they make mistakes, sure, right, you know a lot of them probably are underperforming, but I think a lot of them as a whole are not doing any worse than a lot of the big hedge funds that are charging exorbitant fees to institutions.

Speaker 2:

No, I think that makes sense and I mean clearly to the extent that NVIDIA has gone vertical because of retail participation as well. Right Then, it makes sense because in the media all the time and it has kind of captured the imagination of that audience. Let's switch a bit to the crypto side of things. We kind of tease that out a little bit. Sort of activity, first of all. When did public get into the crypto end of it and how has the sort of interest been over time? Sure, so late 2021.

Speaker 1:

And, as you can imagine, that was probably the peak of crypto appetite. Certainly, you know, throughout the US that was, and you know it has done extremely well since then. It's always, I think, been an important part of young investors' portfolios. You know, if you ask, you know the retail investor. If you ask people under 35, certainly under 25, you know where are you allocated. I think they're anywhere from 5% to 40% in crypto. So I think for us, it is a very, very long-term asset class that I think we are more than happy to be a part of.

Speaker 1:

It certainly is volatile. It certainly has its ups and downs. There's certainly a lot of regulatory scrutiny still that I think has to be sussed out. We don't have many people with 100% crypto portfolios. It's often a smaller portion of their overall portfolio, but a lot of people do view it as an important part of their portfolio and even since, I think the Bitcoin ETFs have gotten out, we still see more folks gravitating to the spot coin because they do trust they want to hold the actual asset.

Speaker 1:

Whether or not the ETF is a perfectly acceptable way to access it. I have no qualms against it, but we do continue to see a lot of demand for crypto. Certainly, when prices go up, we see more demand. When prices go down, we see less demand, just like in the stock market. But I think this year in particular has been a big resurgence, certainly in the first quarter, as Bitcoin prices were rising. In the second quarter, when Ethereum started to get in the, and then I think it's been a little bit of a summer low, as they've been range bound. But as I think we're starting to turn the corner from a regulatory standpoint, you know the skies are starting to open up. Whether you're a Republican, whether you're a Democrat, both sides seem to be getting a little bit more, you know, favorable on, you know, these assets and kind of where they're going to go, going forward, and so I think once we get a little bit more regulatory clearance from the government, then I think, yeah, it'll be an even more impactful investment for a lot of our members.

Speaker 2:

Here's something that's also, to me at least, kind of been intriguing Different asset classes probably attract different types of frequency of trades. So, going back to bonds, ideally anybody that's buying bonds it's not going to be trading the bond because they're getting it for the income. So I'm going to assume the turnover there, you know buying and selling is probably a lot lower than stocks. But if we go through those different asset classes stocks, commodities, you know options or the way of playing different asset classes do you have a sense of sort of where people tend to have the most activity, most volume, most in and out type of behavior?

Speaker 1:

Certainly options, probably just because they expire. So you're kind of you're forced to kind of get back in the game and roll your positions and things like that. They're also more volatile, right. So people do tend to trade them if they make a bunch of money quickly or lose a bunch of money quickly to hedge their losses After that, I think. Certainly crypto we see a lot of volume in crypto, it's your point right Then stocks, and so, yeah, it definitely just follows that. Hey, the more volatile assets are definitely the most active on our platform because there's the most opportunity there. Right, in the short-term trading, you are guaranteed to lose if you short-term trade bots right, the transaction costs and the spreads within those instruments are, you know, prohibitively, right from expensive, you know, if you want to trade them every day or even every week.

Speaker 2:

Yeah, and hold on before you continue that, because I think that's an important point. This point about spreads right, it spreads right, it's the slippage, effectively right. So I'm going to assume, like the very big bond issuances, like from Nvidia and the others, that some of these retailers are gravitating towards, they don't have to worry so much about the spread because they're so large, right, but it's the more higher yielding side where it can be really detrimental.

Speaker 1:

That's certainly true, and you can see the market in the app, you can gauge whether or not the yield of the bid is appropriate relative to the yield of the ads, and so, for sure, the bond market is illiquid. Part of what we're trying to do, bringing retail into this space, is increasing the liquidity, bringing ticket sizes down, because it's just been inaccessible to the market. And so, for instance, if you go on most major wire houses, it's a $10,000 check at the minimum, if not $100,000, to purchase a single bond, whereas in our platform we have hundreds of bonds that you can buy for $100. And it's only because we've invested in the technology to bring the ticket size from 1,000 to 100, that now you are able to literally craft a diversified portfolio of bonds without that much money.

Speaker 1:

We just launched a bond account, a relatively simple kind of expression of hey, how do I invest in corporate bonds without looking through a screener? I just want a good, attractive yield right and diversification. Okay, fine, right, here's 10 bonds. Put them in an account, right that you're kind of good to go and you can, you know. Basically, put in $1,000 and you get 10 different bonds right, with maturities over the next three to five years and you have a really well diversified portfolio that's paying you really really strong income.

Speaker 1:

That's harder to do at wire houses if you have to put $10,000 into everyone, and so I think another thing that we do so well is saying, hey, how do we provide all these different things that really really really wealthy people get? How do we get it, just so that it's available to the average guy walking down the street? And so just bringing ticket sizes down, making things like a bond account where it's just easy to put in money and earn almost 7% without even having to think about it, how do we basically again, how do we bring a solution to the retail audience as opposed to just here's a bunch of tools. Go figure it out for yourself.

Speaker 2:

You find that retail gravitates towards macro discussions, macro education, macro ideas, or is it really more about the story of a stock?

Speaker 1:

I think stocks, they love the stock story, they love re-earnings reports, they love learning about Tesla, they love going and actually using the products. Right, it's a very tangible, I think, thing for them. And I think with bonds, they don't really care about the company, right? Sure, you have the third of the people that I love NVIDIA. I trust them. I'm gonna buy just NVIDIA stuff or just Apple stuff.

Speaker 1:

But I think what we've learned when we launched this bond account, which has been super successful the 10 bonds in there I don't think really many people know what those companies are if they saw them on a billboard. And so I think in the bond world, it's more about hey, what's the risk here? What's the potential yield, yield. And then, right, how long is it going to take me to get that money back? And I think in the bond world, they're thinking about it not because of anything else but the macro environment. So I think the macro environment really drives our cash products, our fixed income products, whereas in the stock market it's still much more oriented on the individual company. Having said that, I think options is actually more macro driven. So most of our options trades are spies are the queues. So I think those folks are hey, right, is the jobs number going to be good at 830? And they're really focused on those indicators that are going to drive the indexes, whereas I think, yes, stocks is definitely. Hey, let me see, I really like this specific company.

Speaker 2:

So actually that's interesting, right? So on the macro economic news, you're clearly seeing some activity on the retail side. Again, I don't know if you've actually looked at this I'd be interested just for myself. But are there certain macro news pieces or data points that get retail really hyped? Right, Well, like unemployment is always the one that's hyped the most by traditional financial media, yeah, right, but it's like I don't know retail sales sentiment. I mean, do they tend to act off of that or is it just kind of these big headlines, yeah?

Speaker 1:

no-transcript. What about other?

Speaker 2:

things that you think might be interesting from an accessibility perspective. I mean, you've got all the major asset classes covered, obviously, but are there parts of the investment landscape that you think kind of need more of a spotlight on for retail outside of the most obvious asset classes?

Speaker 1:

I think there's a lot of room to run in the structured product space. Yeah, so kind of this way. So you have a lot of folks in the old age currently who go to your wire houses, have a big financial advisor, pay a percent in fees and they do everything for them. You have the other investor who says, hey, I know exactly what I want, I'm going to build my portfolio with all these tools. And I think you have a lot of people in this middle that are kind of like hey, I don't want to pay the 1%, but I don't really trust myself to do everything myself. And they kind of want these semi-homemade solutions, if you will, which is kind of like what a robo is right. Those are kind of like semi-homemade solutions. You kind of pick whether you're conservative or aggressive and you get fit into a model.

Speaker 1:

But I think that is just the tip of the iceberg for what this call it. You know, this semi-homemade piece of this big middle puzzle can be, and I think that's what we're trying to tackle right. So, not just the tool solution, but how do we pride the solution? And so, whether it's, you know, buffered products or a, you know we're going to do a, do a robo, but we're going to run it like 1.2x right, like there's no reason you couldn't do like a levered robo, for instance. And so there's a lot of different ways to construct portfolios and construct solutions and can, you know, really fine tune someone's objective to put them into the right set of investments and not just have those investments be ETFs but also include bonds, also include options, also include cash and really have a much more wholesome multi-asset class portfolio that folks are able to access and tweak on their own and understand and that really becomes kind of their main vehicle for their economic freedom.

Speaker 2:

So again, folks, this video is sponsored by publiccom. Speaking about publiccom, the opposite of that is private, private credit. Speaking about things that people can have access to. You and I both know this has been a part of the marketplace that's also been on fire. A lot of retail is also gravitated towards private credit. Any thoughts on that as sort of another iteration of things to give access to? I mean, I have my own feelings on private credit. I think it's probably much more risky than people realize. I could be totally wrong, but let's riff on that for a bit.

Speaker 1:

The biggest thing, I think, for investors to consider when institutions are kind of pushing down institutionalized investments whether it's private equity, hedge funds, reits are the fees and the cost of these investments, because they are not the same when someone packages these things and offers them to retail than they are when they package them and offer them to the Qatar Foundation or whatever. The fees are a lot higher and the premiums that you get in these asset classes whether it's an illiquidity premium, whether it's an access premium, whatever they can be seriously devalued by the extra fees that come with this and you might not be any better off than buying the Vanguard S&P 500 ETF. So I think a lot of times these come with really, really good, strong marketing messages. Everyone wants to have access to hedge funds and private equity and real estate, but when you actually look under the table what you're getting and what the returns are after fees, after taxes, I think it's hard for the retail investor to really come out ahead of where they would have been by just taking a very, very basic indexed low cost approach.

Speaker 1:

And that's no fault of these investments, right, it's just because there's a lot of middlemen involved. You got to wrap it in a wrapper and a wrapper and a wrapper right and there's a lot of legal fees and so I think over time a lot of these kind of intermediary costs for these investments can come down, but I'm not quite sure we're there yet. To your point on private credit, I remember in one of the in my multifamily office days, we got into private credit back in 2010 and you were earning 12, 13% with no risk right. Those are now 6, 7% and there's risk so the market risk.

Speaker 2:

well, that's the thing it's like, and, and I think you know, when we talk about education right, educating retail and having people that are new to markets the thing to focus on from an education perspective is not how much you're going to gain, it's how much you could lose, but that's not what people want to educate themselves on initially, right? Yeah, where it's like greed is more powerful than fear most of the time, until the fear really kind of hits. Yeah, which is kind of an interesting dynamic as far as how you would describe public in terms of how it compares against other platforms where people can access different instruments. What do you think is sort of the main claim to fame or the thing that differentiates you guys? The?

Speaker 1:

most. I think we've always tried to align ourselves with investors in a lot of different ways, and I specifically say investors, not traders. Right, we do welcome traders on our platform, but really we are built for investors. We're built for kind of that long-term investing, really a multi-asset class approach. You're accessing not just stocks, but you're having your cash, having bonds, having the right options, having your entire portfolio under the umbrella and also being very transparent about how we make money and where we can help you.

Speaker 1:

So, for instance, when we launched options, we had to take peep off, because that's kind of how the market works.

Speaker 1:

But we said, hey, we're going to take peep off in the option space, we're going to give half of that back to our members, and so your members have the opportunity to earn essentially what we earn on every trade that they're making. And so I think it just helps to basically be upfront with that and be perfectly aligned with your investors, so that everyone's kind of working on the same page and they're not thinking, hey, do I trust these guys? Is there something I'm not getting here? Just by putting it all out on the table, we can have a very open and transparent conversation with our members, and so that there's, you know, a lot of trust that you know we built, you know, around our product and so when people come, you know to the offering and you know they trust. When they give us their dollars right, you know they're going to, you know we're going to have a responsible place for them to utilize their dollars and be able to do responsible things with those.

Speaker 2:

Sam, for those who who want to not just track you, because you're a very good speaker, as a lot of people can hopefully tell here, but just learn more about public other than maybe just going to the website, which is the obvious answer when do you point people to to get them to at least take an interest in some of the stuff that you guys offer?

Speaker 1:

Sure. So public offers all kinds of stuff for consumption, so we have a lot of different podcasts that are very, very active. So you can find we have a different one. We have morning podcasts, we have afternoon podcasts, we have midweek podcasts just to help give you context around the markets and what's happening. These are all just free. Just sign up. Listen to our really good production value stuff. Certainly, our website is a great place to learn about everything. Our public is on Twitter. We're on LinkedIn. We're always teasing out insights, offering helpful tips on how to use products and what you can find on public and how you can help manage your money.

Speaker 2:

Again, folks, this video was sponsored by publiccom. I certainly enjoyed the conversation, I think actually it's interesting to kind of think through a lot of these things and see a part of the world that I don't normally see, other than what I see from X, which is maybe not exactly representative of the retail audience. Everybody, please make sure you check out publiccom. Appreciate everybody that watched this and thank you, sam for the time here. Thanks, michael, really appreciate it. Cheers everybody.

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Michael A. Gayed, CFA

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