Well, what do you think?

Yes.

I mean, we're going into September, which you guys all point out, like historically is not a good month for the markets.

But also when you look at the markets coming into September after this kind of run, that actually is a good setup for September.

And I think ultimately, more than seasonality, fundamentals are going to matter here.

When you look at the amount the economy is growing, when you look at earnings growth, when you look at consumer spending, all of that's still really strong here.

So I would actually kind of come as a contrarian here.

I want a true correction because then I think you can better judge valuation relative to interest rates.

Do you see the Robinhood clientele worrying about bond yields right now? And if so, how would you measure that? What would you look at as a CIO to know how the bond market may be impacting the stock market?

I think a couple of things.

One is I think the bond market is now like the stock market in that in the short term, it's a voting machine and long term, it's a weighing machine.

And what that means to me is that you can't necessarily control it when you see the five year, five year inflation measures not really moving, but the the 10-year going up, that means real yields are rising.

And it's really hard to control.

Yes, we are in a seasonally kind of quiet period.

Everyone's on vacation.

But are you because there have been people on the show that have said five percent might be sort of the breaking point.

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Steph, that, what do you think about that?

Uh, I mean, I agree that, you know, typically, like, when you have a period where a hedge fund, for example, blows up, it's a sign that there can be just easy credit conditions and leverage builds up.

What about Amazon? What do you think about Amazon?

I've always struggled with Amazon because it's hard to say like, what is Amazon? They do a lot of different things, right? Like they have a consumer retail business.

Now they're going to have their own shipping business.

Now they sell- The healthcare business.

Yeah, I mean, they've got so many different things.

And I'm like, as soon as I say like, oh, I don't want to invest in this company, someone can give me an argument about something like, they're like, well, how many boxes do you get a day from Amazon? Right, there you go.

You know, and I'm like, yeah, okay.

I go, okay, take a look at what's happening here.

Like, take us inside your head at this very important moment for the markets.

Um, you know, it's been, like for the last few weeks I've been looking at the market and, and just particular names and thinking like, is there a point at which this just gets overheated? And, you know, this might be Monday mor-morning quarterbacking [chuckles] now, um, but it...

I, I don't think there's anything fundamentally broken in the market, um, in terms of like, yes, we have some risks.

Interest rates are higher.

We still have an, a, a conflict happening in the Middle East.

Oil prices are still high, and I actually think will go higher.

So you do have headwinds, but I, I still think the fundamental story of AI and the margin expansion that we can eventually get from it, um, the productivity gains that we can get from it are true.

The retail investor has changed, and this notion that because there's more retail investors involved with the SpaceX, uh, eventually with Anthropic and in OpenAI, that we're gonna see more volatility because you're gonna see retail investors trading in and out based on what they hear on X. I mean, do you agree with that assessment?

When you look at the behavior of the retail investors, is it starting to mirror what we've seen from more sophisticated traders in years past? Are they becoming so educated or having so much assistance from AI and other platforms that they can now trade like professionals?

Yeah, I mean, obviously, you need to build up your skills and understand and control your own emotions when you're trading.

But absolutely, they have access.

And I feel like I've been saying this almost my whole career.

Like, they have access like they've never had before.

And then it gets even more.

You know, we have agentic trading.

What are you thinking about these names, Stephanie?

[laughs] Yeah, for like three days.

And they were like, "Oh, let's say..." They're like, "It's better than it was, you know, Friday." Um, and so I do, do think they take care of it, or take a part of that.

The other thing I've been seeing is in the prediction markets is I think that's where they are kind of hedging some of this.

You are seeing them play, like, you know, gas prices and oil prices, and also what's happening in the political environment, like LA mayor chances, um, which is amazing.

You agree?

Yeah.

I, I do, and I, I've reflected a little bit in our Robinhood Strategies portfolios.

I took a profit in one or two of the very, like, parabolic move names that we held, um, and put into other high moving but not as parabolic names.

Stephanie?

I actually think it's been a little less broad over the last few weeks, but I actually think if you look back year to date, it has been pretty broad.

And a lot of these names that are coming down today and were rising throughout the year have been not the largest names.

And so I actually think you're going to have some underlying shifts, and that's sort of what we're going through now.

But I agree that I don't think these companies are necessarily expensive.

But there's something Jordi Visser from 22V said, which was that the market will experience speed crashes because we didn't have hockey sticks.

We had like literal sticks when you look at some of the charts and you have to have some consolidation and things come down for a period of time.

It's just I wonder, do you make a lot of what has happened when the slightest little bit of news, it was the AI tax, no, it's not in Korea, or it was laptop shipments are down according to KeyBank and people sort of look, the slightest little bit of news is now kind of pushing this trade off.

Sure

... like, profit-taking in some of the mid and small cap names that were running before.

Like, you saw Bloom Energy kind of blow up yesterday.

That leads in the small cap index.

That's why small cap was down yesterday and large caps were up.

So I do think there's, like, a little bit of a mini rotation happening where everyone just decided to buy chips this week.

Um, or maybe it was last week.

I don't know what it is.

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Now back to my conversation with Stephanie Guild, Chief Investment Officer at Robinhood.

There's another sort of, um, i- issue for CEOs, and I'm curious when you meet them and you talk as part of your diligence, which is as a result of everything you've just described with the market movement, the disconnect between actual execution when the CEOs do get those margins going, um, and the share price can make it hard for them to motivate their employees.

Right? If you're a public company CEO and that direct correlation between your share price and your actual execution gets diluted, what do you think about their ability to hire great talent relative to, say, a big private company, right, that doesn't have that kind of pressure? Maybe it's just my own hot take.

Do you anticipate what you've just described ramping up, or do you think that your team is gonna have more responsibility for getting active diversification going?

It's a good question.

I think maybe it's, it's helping with that active diversification because despite...

Like, if you look at the opportunity set, I think, behind, like, this industrial/AI revolution, like, if you just took Nvidia out of it and a couple of the other, like, larger companies that are integrated in this, and even if you had SpaceX as part of that, um, or Anthropic or, uh, o- um, OpenAI, m- m- more number of companies are s- are actually midcap [laughs] size.

Why?

I am now just because I think we've seen the best of the best.

Um, y- I do agree that, uh, earnings expectations and the growth that we've seen has probably made valuations come down, at least if you look out into 2027 from 21 times to maybe 18 times.

Um, but I am worried about the commodity aspect of it that everyone just seems to be ignoring.

Maybe the market is telling you that it's fine to ignore it.

Um, it is hard to fight this tape.

Um, but I, we, in our portfolios in Robinhood Strategies, we have a decent allocation of resources because-

How much of Robinhood is people who say, "All right, help us invest"?

Hmm.

I mean, I, I think it's all the, uh, moves in AI.

You can't really ignore it.

The difference between the NASDAQ and the S&P today is so big.

But even looking beyond that, like, uh-That is really where the main growth is in the US.

It's where, why the market can ignore what may happen with interest rates, what might happen in the street, and what might happen with oil prices.

And I, I think that is the one remaining risk is what happens with commodity prices and how that will actually affect longer term demand for anything.

What do you need to see out of it?

Until that changes, why would anybody get materially more negative? I, I understand the, the noise and fog of war and, and all of that, but until the fundamental story changes, why should anybody else's view of the market change as you suggest that you're reviewing your 7,500 target on the S&P for this year?

Because we don't know how long this will last, and the uncertainty to me can actually change management decisions in the short term.

And we don't know, like if the-Companies that actually take in, um, things like aluminum and natural gas and around the world, and helium, and those costs go up, they either can pass them on and maintain their margins or not.

And that's where I think I'm not sure what will happen with that.

So we've been investing a little bit in the three buckets that we think can reflect the, the various three outcomes that can actually happen, which is not great, somewhere in the middle, and this all ends very soon.

What do you see?

Our customers are still net buyers of stocks.

Um, they have been adding more to broad-based S&P 500 ETFs than they had in the past.

But still, that, that uncertainty on what this is going to mean longer term, how do you see this-... period affecting retail investors who have had such a big influence over the market over the past few years?

I mean, I think in some ways it's gonna affect the, everybody, not just retail investors the same way, which is you're seeing in real time the impact of policy decisions, and you need to wait and see whether it's something you adjust your budget for, or is it a short-term thing? And I, I think that's what Powell said over and over again, that we're data dependent.

And he even said, you know, we always learn something by the next meeting, and that's especially true this time.

And I think that's like, that's the most important thing to know is that like he- they're not reacting right now.

The one thing I'm wondering about though is that with the rates kind of reacting and going higher in this and probably pushing stock prices down-

What do you tend to see? Maybe what are you already seeing within Robinhood's platform, uh, as we speak in this final hour?

Yeah, I mean, I, I think the point about productivity and what Powell was saying about that is very important because I feel it, there, he said it never lasts, or in the past it hasn't lasted, and so they're shy to kind of reference it 'cause it always dissipates.

But I do think the gen AI story is the lift to, uh, to productivity and to deflation over time, or disinflation over time I should say.

Why do you think that is?

I think our customers take sort of a long-term view and they like to invest in things that they know and understand really no different than past generations.

And I think they feel that they know and understand tech and can understand kind of the long-term secular growth trends that can come from parts of tech and are willing to take that risk.

Even if it's in the space like quantum computing, which is still in sort of discovery phase.

You know what, if you didn't, you did really well, and especially if you played on those MAG7 names.

Yeah, I do think it's shifting now.

I'm sort of a student of looking at the market and saying that, Once you had sort of a post-COVID world, I do think the fact that we have interest rates has shifted what is possible and can outperform.

And there was, you know, COVID kind of brought tech right into front and center and the need for it.