Is Robinhood Bad for Investors? Plus, a Special Announcement | 7investing
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Is Robinhood Bad for Investors? Plus, a Special Announcement

May 26, 2021

Robinhood has been all over the news as a stock platform used largely by younger traders — people new to the market who maybe don’t really understand what they’re doing. It’s a platform that does bring buying stocks to a new audience but it’s also one that encourages inexperienced investors to do things that could be dangerous like buying on margin and using options. We’ll also kick the show off with a special announcement from 7investing CEO Simon Erickson.

Companies Mentioned

Apple (NASDAQ: $AAPL)

Airbnb (NASDAQ: $ABNB)

Alphabet, INC (NASDAQ: $GOOGL)

Transcript

Sam Bailey  0:14

Welcome to 7investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.

Dan Kline  0:24

Good afternoon 7investors and welcome to the Wednesday edition of 7Investing Now. My name, of course is Daniel Brooks Kline. I’m the host of the program. I’m being joined today by Simon Erickson. Looking dapper Simon. Good morning, or good afternoon. So it’s well, it’s still morning for you.

Simon Erickson  0:39

Thanks very much, Dan. We got some big announcements today. So I figured I might as well dress the part.

Dan Kline  0:43

Yeah, we are going to kick off with something that just went live on Twitter. Simon, why don’t you give the headline and then we’ll go through the three parts of it.

Simon Erickson  0:52

We do we have three separate announcements all related to 7investing’s pricing going forward in the future, we’ll break them up into separate segments. So it won’t just be me monologuing. But we’ve got some exciting news to announce.

Dan Kline  1:03

So here’s the first part, I’m going to set the table and you’re going to talk about it. We are raising our price. Now there’s a big caveat in section two. But for new members after July 7, we are raising our price. Simon why don’t you explain the new pricing?

Simon Erickson  1:18

That’s right, so our first announcement that we’re making is that effective on July 7 2021. So 7/7, the pricing of our membership for 7Investing will increase to $49 a month, or $399 per year. We’ve made some pretty incredible strides since we launched last March. And I think one of the biggest things that we’ve done, has been hiring an incredible lead advisor team, we brought in new lead advisors that have graduate degrees, or we have domain expertise in everything that we cover. And I think this offers a really unique insight into the innovation that’s taking place in the market.I would put our advisor team up against any other investing newsletter that’s out there.

And yet, the thing is, when we market 7Investing, and people find us on the internet, through our marketing and through promotions, they see the $17 price point and they think that we’re a entry level service. And so we’re increasing that membership rate to $49 a month $399 a year to better align with the true value of our service. I think this is a really good move for us and for our marketing going forward.

Dan Kline 1:58

I’ve told this story before Simon, but my aunt who is a big, big time investor, seven figures in the stock market. When I told her our price, she basically said Why would I bother, and she’s spending significantly more for vastly inferior services. And I’ll point out I don’t have a graduate degree in the traditional sense. But I don’t think there’s anyone else who covers my space, who’s worked in my space as extensively as I have. And when you look at all seven of us, our backgrounds are unique, but extensive. I’ll also point out that we became an international service with the the introduction of Anirban Mahanti to our team. So I think this is much needed. But there’s a major caveat, there is something great for all of you out there who are already members or those who choose to join, we’re doing something I’m not sure I even agree with the second part of this because I see the value in $49.99. But if you’re not a member —

Simon Erickson 3:10

$49! Not even $49.99.

Dan Kline  3:18

You get 99 cents back, we’ll give you 10 Bitcoin, no, we won’t do that. Simon what happens with existing members or members who sign up before the July 7th deadline?

Simon Erickson  3:29

Well, the other thing, like you said, Dan, that we’re really excited about and thankful and grateful for is everybody who gave us their early support at 7investing, we are we are so thankful that you help us get this business up and launched and running. And so what we want to do is actually grandfather all of our current members in at your existing rates of $17 a month or $170 a year. And in addition to everybody who’s grandfathered in, who’s currently a 7Investing subscriber, we’re also going to offer anyone who signs up before July 7, that same existing rate. And again, we want to do this, you know, we couldn’t have done this without your support, we want to continue, this will remain for as long as you remain an active subscriber, you’ll keep getting the same rate, it will not increase for anyone who’s currently a 7Investing member.

And let me be clear, if you’re a 7Investing member now and like your credit card goes bad because of an expiration date, we’re a customer service friendly company, you message us, we’re gonna look and be like, Oh, yeah, Joe was a customer. We’re not gonna play games with this. We really appreciate everyone who’s joined us. There are a lot of you who joined us early. So you’re going to get insider pricing forever. We’re never raising your price. This is the time to tell your friends. This is the time to get your affiliate code out. Because we’re never going to offer $17 pricing again. So it’s an unbelievable deal. Sam Bailey, why don’t you share how people can subscribe that is 7Investing.com/subscribe. You don’t have long to get in to be what I’ll call it a founding member of our community of our family.

Dan Kline  5:00

The value we offer is unbelievable. And we’ll be doing things like our new member call to walk you through what you get. We’ll be doing our subscriber calls, which are an absolute blast, where we have record attendance at the last one, where people just ask us anything about our picks. And we don’t talk about our stock picks here on 7Investing Now. And I promise you, we’re gonna get to a show, we’re going to talk about Robinhood, we’re going to talk about Google (NASDAQ: $GOOGL) and healthcare. And we’re going to talk about my topic where people are really mad at me on Twitter, is we’re gonna talk business travel, and what you’re hearing is not true. But Simon, we’re doing something else special too, because we want younger people, new investors, people who are, you know, don’t have the money to pay these prices, because they’re early in their life journey. We want them to have a good value, too. What are we doing that’s special for people who are still in school?

Simon Erickson  5:48

Well, I’d like to get into that in a minute, Dan. But first, if it’s possible, Sam, if you do have the graphic that we have that shows the comparison of when7Investing was launched to where we are at 7Investing today. Oh, thanks very much, Sam. This is kind of what we’ve added to the service within the last year and few months. You know, when we launched $17, a month in March, we had four lead advisors, we kind of had some domain competence in a couple of different segments. You know, we’re providing our recommendation reports and some company updates. Of course, you still got access to Matt’s dad jokes back then when we launched in March. But if you kind of see how the offering has expanded from March of last year to July, and where we are today, we’ve now got experts to cover a lot more fields.

Biopharmaceuticals, synthetic biology, Dan with entertainment, consumer discretionary, and retail, we’ve got telecom covered, healthcare, renewable energy, we’ve really added our expertise in so many different segments of the market. And what I want to point out is that we really are being innovative and showing the insight of where these markets are heading. We’re not just throwing tickers out there and saying, Hey, good luck, we hope that this works out for you. We’re saying this is where we see the market going, we’ve got a unique insight to that, that goes into our stock picks. And so I just wanted to clarify that this is kind of the value of 7Investing, that we want to align with everything out there.

Dan Kline  7:06

Let me let me jump in. We also explain the long term thinking. And I think that that’s important, because when we talk about business travel later, conventional wisdom says one thing, but it’s also been saying it for 20 years, and it’s been wrong. So when we do a stock pick, we don’t just tell you, Hey, this is going to go up. And here’s this minor reason, we give you the in depth reason I’m writing my report to go live June one. And I’ll tell you, it’s a company you’ve heard of, it’s not an obscure company. But the reason I’m saying you should buy it isn’t the reason you would think. It goes much deeper than that it’s experiential, it’s having worked in this space, it’s having talked to the leadership of this company. That’s where we go, excuse me, we’re not just picking short term things, we really understand where we’re going.

I’ve got some brilliant talks on air and off air with with Anirban, or with Maxx or with Steve or really with anyone on the team. But with those those people specifically, where I’m just amazed at the depth of understanding they bring to these companies. And that is no sleight to any other service out there. But we’re playing a different game. And you know, Simon said, we’ll take on any team of investors, I absolutely support that. But in investing not in pickup basketball, we would not, Steve Symington would help but the rest of us would not be great there. Simon why don’t we close this out with the third part of our big announcement here.

Simon Erickson  8:23

It is an incredible team that we have and a lot of insight into a lot of different places. The third part of the announcement that I want to announce is that we’re actually in tandem to this other announcement, we’re issuing a new student rate that will go into effect also on July 7th and that student rate will be at $84 per year, which is actually only $7 when broken down on a monthly basis. And the reason we’re doing this is because we want to, we want to encourage people to invest as early as possible. So you can get the power of compounding to work in your favor for years, if not decades into the future. And we also realize because we’ve been there ourselves that when you’re a student, you don’t have a whole lot of disposable income, right? You don’t have a lot of money to go out there. But we want you to encourage you to be an investor and get involved in the stock market.

And so we’re offering a special rate this will apply for students of any type: med students, grad students, undergrad students, high school students, anyone that’s enrolled in an academic institution that wants to become more familiar or actually do investing in the stock market. We’re going to offer a special 7Investing student rate of $84 per year, which will also go into effect on July the seventh.

Dan Kline  9:30

I’ll share a comment here from gibran1218, “we’re all students of the market so we’re set.” No, you actually have to be a student in a school.

I want to share a couple of comments. And then we’re going to get to talking about Robinhood. Daniel Delgado shares a great one. “Thank you so much, I truly appreciate and I will spread the word on 7Investing’s value.” We appreciate all of the members. Our very own Ashley Wilson congratulates us on the milestone, and the growth of 7Investing. We thank you for that as well. And finally, we’ll take another one from gilbran(1218) And then we’re gonna let Simon have the last word. “Still a killer price, especially with the new advisors added” I am knocked out every day by how impressive this team was, I wish this team was a little less impressive at 11:30 at night, as tends to be our way to do it. Like, I’ll be nodding off watching a basketball game and look at my phone. And there’s like an impassioned debate between Matt and Steve or Anirban or something. So some of that I can live without, but we are an amazing, amazingly passionate team. Simon, why don’t you recap the new pricing and then we will get to talking about Robinhood?

Simon Erickson  11:19

Well, most importantly, I really want to thank everyone for the support of us as we as we move through this increase in our membership pricing, which goes to effect on July the seventh. As most of you already know this, this program is free, our live stream is always free, our podcast is always free, we publish our monthly perspectives for free, we want to be educational, because our mission is to empower others to invest in the stock market. And we’ve always said kind of the paywall of Do you want to see the recommendations themselves and some exclusive premium content as well. And we want to encourage students to get involved with that to see stock market recommendations. And so we’ve now offered our special student rate, which are going to affect on July the seventh, that’s $84 per year as an annual option.

In addition to that new members, our new membership pricing that will go into effect, will be $49 per month, or $399 per year, you see there’s a special discount if you sign up for the year, as opposed to just a monthly rate there. And then again, everyone who’s a current subscriber or who signs up by July the seventh will still be locked in for our current rates of $17 a month, or $170 a year. Dan, I will go so far as to say I might be biased. But I think that’s one of the best deals on the internet right now.

I think it absolutely is, I argue that the price was too low for a long time. But I’ll point out, we can’t do this without you. We’re not spending 10s of millions of dollars in marketing. Our marketing is all of you taking to Twitter and sharing your affiliate codes. It’s, it’s telling your friends around the dinner table or the bar or wherever you might happen to be now that the world is open. Oh my god, these guys at 7Investing know what they’re talking about. They’re helping me, you’re getting seven very different investors, I would argue that what I do as an investor isn’t duplicated anywhere else. You know what the way Anirban is seeing things the way Simon is seeing things. This is not how things are applied at other companies. And we give you we show the work we do we actually record I’m doing mine today, because we had some we had some rain issues in Houston, I’m doing my pitch to the team.

Dan Kline  13:19

And I have a big slide deck prepared. And I’m gonna lay out why I’m picking this company. And I’m going to get hit back with questions on Well, what about this? You know, has this happened? Is it too late to get into this game? Whatever those questions might be, I’m going to answer them and other people in the team might weigh in and answer some of them because again, this is a company you’ve heard of. So we show the work, we give you our whole process in a way other companies just don’t with that we have —

Simon Erickson  13:49

If you want to work the 7Investing system in your favor, we have a referral program where you actually get free months, in addition to even lower rates. So if you join today, you get locked in at that $17 a month. And then you can also get your friends and family free months of 7investing by getting them signed up as well too. And having them referred others every referred new member that joins, you get one free future month, we already have some members who aren’t paying a single dime until 2025. So the only thing that’s even better than locking in a low rate is getting a free rate. And we want to encourage that as well.

Now is the time you have just a couple of weeks. We’re still in May. So you got about six weeks to get people in. But you’ve only got a week until our June picks go up and I am really excited about our June picks. We’ll share it one more time 7Investing.com/subscribe. We appreciate the indulgence of this very long announcement at the beginning of the show. And one of the things we’re doing at 7Investing is we’re democratizing investing, we’re making it so people that don’t have a ton of money can invest and understand why they’re investing can build a long term mindset.

Dan Kline  14:55

And that’s part of that is something that Robinhood has sort of kind of done. They’ve taken this attitude of, Hey, everyone can invest. And they, in theory have made their platform really easy to join. I say, in theory, because I went through the process and could not connect it to my bank account, I have never had that problem on the other services I use. So they have no customer service. So when things don’t work, it’s a problem. But they started with what I would consider a noble mission. But Simon, that’s not actually what they’re doing, right?

Simon Erickson  15:23

It’s interesting. There’s two sides to the coin here, Dan, it’s been a very controversial company. When we talk about Robinhood, I think that the headline or the first thing that comes to mind when you talk about Robinhood is Oh, hey, there’s no commissions, I get to trade. I can even do fractional share trading with a lot of securities and don’t have to pay any commission. So what does that do? It makes you kind of in your mind think, well, I can get in and out as often as I want to, with these stocks, trade as many times as I want to, and even in a certain week or a certain day, and not have to rack up those commissions that we’ve gotten used to. The problem is we don’t really encourage that. And that’s really very different than long term investing. And we’ve even seen some issues with GameStop, or other short term traded securities come up or the platform actually shuts down and says, Hey, we’re not going to allow any more buying on this, because it’s not an integrated Clearinghouse like so many of the other brokerages and exchanges have. So there’s some complexity with Robinhood, I think that people should really be aware of.

So let’s look at some of the fundamental dangers here. Because there’s everybody offers commission free training right now you can get that through your bank account. In many cases, it is not difficult to get free trades. Fractional shares aren’t everywhere. I use TD Ameritrade as my main platform. They don’t offer it yet, though, I believe they will at some point. So there are some positives to Robinhood. But here’s the negative when you make a trade on. And I’m not saying buy a stock, because it really is trading when you make a trade on Robinhood, you get gamified celebration. And really, you should be getting celebrations for hey, you’ve held this stock for three years that you should be getting education on why making a lot of trades might seem like a good strategy, but it generally doesn’t work. 97% of day traders lose money, Simon, they’re also doing a couple of other really dangerous things. Maybe you want to elaborate there.

Yeah, absolutely. I echo everything you just said Dan. In fact, we have a monthly subscriber call and a new member welcome call as well every month that we host on zoom. And you always do such a good job of explaining the benefits and the power of long term investing, as opposed to trying to get in and out frantically and figure out what your your price is going to be. The other danger of Robinhood is a practice known as payment for order flow. And what this means is that the exchanges themselves are not fulfilling the orders, there are financial middlemen that are actually fulfilling the orders in the transactions themselves. And what that means is often times investors are not actually getting what the pricing that is advertised on the exchanges are it’s not what’s actually being fulfilled in the transactions, there is a more narrow Delta in the bid ask spread that’s being pocketed. And so what that means is that a lot of times investors are not getting the best pricing when you trade through an exchange that has this practice of payment for order flow.

And a lot of the brokerages do it then, you know, Schwab does, Fidelity does, Interactive Brokers does not. But for the large part, Robinhood is getting paid a much much higher rate. When it comes to payment for order flow of what it’s actually having those financial high frequency trading middlemen fulfill the orders are getting a much better rate than a lot of the other brokerages. And this is a practice that was basically banned in the UK in the EU, they thought that it was not for the good of the public or for individual investors. And they said, Hey, we’re gonna shut this down. And they found that it actually improved the pricing that was achieved for individual investors over a long period of time. It’s still a practice that’s legal here in the United States, Robinhood is not breaking any regulations by doing this. But there’s a lot more magnifying glasses kind of keeping an eye on this. Because this is something that’s questionable whether it’s actually good or not for traders.

This isn’t even the most dangerous thing they’re doing. I’m gonna throw two out. They are encouraging option trading. That’s one, Simon  I want you to explain why that’s risky. I know that a lot of our friends in the investing space use options lightly. But almost every long term investor I know says don’t use options until you’ve invested for at least a year until you really understand what you’re getting. That’s one. The second danger is they’re making margin trading. That is borrowing money to buy stocks really, really easy. That is horrendous. Simon, why don’t you start with the dangers of options? Again, options aren’t inherently bad, but they’re very, very risky. Simon?

That’s right, Dan. There are a lot of other ways that larger brokerages are making money, right? So if you’re working with fidelity, fidelity has got accounts and funds that they’re managing and they’re taking assets under management. They’ve got consultants that are kind of talking people through the stock market, they’re making money in other ways other than just commissions. Robinhood is making money in two ways. One is from payment for order flow. Which is described. One is from margin interest balances, which is what you just described. So when people are are investing with money that they do not have cash in their account to actually buy stocks, Robinhood is charging them a balance for the money that they’re loaning them the margin that they are loaning to them. This is very, very bad for investors, if the stock prices you’re buying go down, it’s very, very bad if you get a margin call where you have to put the money up front, even if it’s not in the account right there. And this is something that even though it seems like it’s a great way to juice your returns, hey, I can take some extra risk because I can use money I don’t have, keep in mind, there’s always another side of the coin. And we never know what the market is going to do in the short term, you’re exposing yourself to a lot of short term risk that I don’t think investors should be comfortable taking, if you take margin balances out, especially for options or short term trading.

Dan Kline  20:50

And it’s really important to remember that stock prices aren’t predictable in the short term. So if you look at our 7Investing recommendations table of all the stocks I’ve picked, I only have one stock that’s down. And I would argue that it’s the most solid stock I’ve picked in terms of the results, they’ve had the growth potential, sort of all the picture. So in the long term, do I believe that company will grow significantly? Yeah t’s tripled in the past three years. In the past six months? Is it down? Yes. So if I borrowed an option, and that was down, they could go and say, okay, you need to put the money in your account to cover this, or you need to sell in a lot of cases you that have to sell at a big loss a stock you believe in.

Option trading is dangerous, because options. When you buy a share of a stock stock, if I buy tugboat Inc, a company that makes tugboats, I’m just making something up. Remember what the pick and what I’m not allowed to talk about. You buy a share of tugboat Inc for $50. And they say we’re going to turn tugboats into the newest form of entertainment by putting polka bands on them. And this is a terrible idea it tanked but I thought it was going to be great, and I bought 100 shares at $50 each, the worst I can lose is $50 per share. If I bought an option that that was going to go up and it doesn’t, there’s an endless amount of loss potential as the stock fall. So I don’t even really understand options Simon, you might want to jump in and explain this better than me. But if the stock keeps going up, and I bet it’s going to go down, you could just lose an endless amount of money because you have to buy a share of that stock to cover your bet, correct?

Simon Erickson  22:28

Yes, and there’s different types of options, right? There are some that are that are more simplistic and a little bit quote unquote, safer. If you’re selling your covered call for security you already have because you just want to establish an exit price. That’s something that’s a safer option. If you are buying a naked put that is extremely risky option for options. And there are all points in between these. I think that the point is that even for large cap securities, even for companies that are traded in large volumes on a daily basis, it’s it’s very unpredictable. And even companies like Apple (NASDAQ: $AAPL), Dan, we don’t know where they’re going to head in the short term.

And I’ve heard stories I’ve personally heard stories from people that thought they were making no brainer option trades on Apple, one of the largest companies in the S&P, and it turned against them in the short term because of an announcement that nobody had any insight into and person lost a fortune, you know, you cannot see something like that in the short term, we highly discourage it. And this is why we have established 7Investing scorecard to be buy and hold. Right We have certainly taken some some of the higher beta higher risk companies that we’ve recommended have taken it on the chin this last month as the market sold off.

But over the long term, we’ve seen the academic studies, we’re very convinced that even with short term sell offs, the primary correlation between stock market returns in the long term and companies is revenue growth and valuation multiples would jump around in the short term but solid fundamental solid revenue growth over long periods of time five years plus is the key to compounding wealth, don’t step on landmines and expose yourself to unnecessary risk in the short term.

Dan Kline  23:59

Guessing at short term pricing is like betting on the second quarter score of a basketball game. I’m a big Boston Celtics fan and obviously with injuries we are not going to beat the Brooklyn Nets.

Simon Erickson  24:11

Better than my rockets though, Dan! You made it to the playoffs.

The Rockets didn’t lose every game this year. So if you’re betting, you know, hey, the rockets are playing the Lakers, the Lakers are much better, doesn’t mean the Lakers in the second quarter are gonna have a big lead. And that’s kind of what you’re doing at the end of the game, most times tends to go the way you think it’s gonna go the way the betting line expects it to go. In the middle of the game, it’s impossible to tell and that’s what guessing stock prices are. So let’s recap here before we move on. There’s nothing inherently evil about Robinhood if you choose to use Robinhood, because it’s an easy to use platform and you’re tuning out the noise isn’t what we would pick. There are more customer friendly companies. I use TD Ameritrade we use stock pile as a company to buy fractional shares. We’re not recommending any of those specifically, but I would go towards credible companies that have a back end of customer service that have an actual person now, is Bank of America going to make it easy for you to get a person? No, it isn’t. But there are people there. Simon, any last thoughts on Robinhood and brokerages before we move to what we’re watching?

Yeah, you said it perfectly. I have nothing else to add, Dan.

We would love your questions and comments. We know we surprised everybody with the pricing news. And I just want to say the comments have been overwhelmingly positive, both here on the show what we’re seeing from our marketing team, we believe it’s a great value, and we appreciate that you’re along for the ride. And remember, you still have time you got about five weeks to lock your friends, your family into the old price. If there’s someone you don’t like, maybe tell them on July 7 to join 7Investing but the people you do like you want them to go to 7Investing.com/subscribe to sign up and join our service. We won’t belabor that, as we’ve talked about it.

Dan Kline  25:56

So we’re going to do this slightly out of the order we planned. But Simon I’m going to read you a quote. And this was reported by Yahoo Finance, it’s from the CEO of Airbnb, “Business travel, as we knew it is never fully coming back. The bar to get in a plane to go for a meeting is now higher and fewer people are going to do it.” That’s from Brian Chesky, the CEO of AirBnb (NASDAQ: $ABNB), I have some definitive thoughts on this. But let me throw it to you first, Simon. Are you going to travel any less Once COVID is a thing of the past?

Simon Erickson  26:26

No, I’m going to be traveling more because I want to get out there for conferences again for 7Investing.

So there’s not that much I can say about this. But we’ve seen the death of business travel predicted since the first time I had to drive or take the train from Long Island to New York City into a conference room to do a video conference. It was with JBL the speaker people, i was a 20 year old kid running a magazine covering high end audio installations. And I was nervous at how young I looked. I didn’t really want to do a face to face meeting. But the second video conferencing became a thing, you started hearing people weren’t going to travel, it’s fundamentally wrong. Do I think there’ll be shifts to how we travel? Yeah, we might not jump on a plane for the three hour meeting. But big deals are gonna get closed at meetings, we might see some travel that would have been that that one on one quick meeting, go to Hey, our company’s not using the office as much. So maybe two times a year instead of once we’re going to bring in all our people for a conference, you’re going to see shifting dollars.

Dan Kline  27:25

You’re also going to see in the next three months or the next four months, maybe what I’m saying isn’t going to look true because air capacity is down. So if you want to go somewhere, it’s actually pretty expensive. We have a glut of rental cars, I actually have to visit some people at in the Washington DC area on one trip and the Charlotte area on another trip and renting a car was crazy difficult and way more money. That’s short term. That’s not inflation. It’s not it’s rental car companies sold off their inventory to get through the pandemic and they can’t buy new cars because the chip shortage. So that’s a short term problem. airlines are going to take a while to ramp back up. And they’re only going to do it when there’s clear demand. So we will see less travel immediately.

But I’m calling it the 12 months of Las Vegas, every tradeshow next year is going to be booked solid Orlando, Florida the Javits Center in New York, that the Chicago which has a couple of convention centers, these are going to be massive successes. And look, I did Skype interviews a decade ago, when I ran rock band summer camps and had to hire directors and 50 or 60 cities. It was less than I was like 20 or 30 cities, I still flew out to those locations to do sales, because you know what you couldn’t convince a parent to do over Skype? Give me $800 to go to a week of rock band summer camp. It’s still gonna be like that.

We’ve talked about, Simon, my brother is a big time sales executive. I don’t know what his title is. But he runs business for the Tottenham Hotspur’s in the Premier League. And I don’t think he’s going to close his stadium naming deal in a zoom call. He’s going to do that in person. When he closed the the Hard Rock deal for Hard Rock stadium here in Miami, Florida. He was in and out of their offices constantly. We’re not going to replace in person. Are there going to be shifts? Absolutely. I’m not going to fly a Houston for you and I to have a 30 minute meeting. Am I still gonna fly to Houston a couple of times a year so we could have FaceTime? Is our team still going to fly? Yeah, it might look different. They might be longer trips. But the overall dollars, I don’t think is going to change. There’s there’s not much more I could say on this, Simon. Any last words on this topic?

Simon Erickson  29:29

Yeah, it’s an interesting one. Dan, you know, I spent my 20s as a direct sales rep. And I think that this kind of gives a little bit of insight into how the business world does travel. You know, we’ve changed the definition of what’s inside sales versus direct sales. You know, you’ve still got direct sales that are meeting with the largest accounts, and they want personal interaction. They want someone shaking their hands and talking through the plans, because they’re really large accounts. Things have moved the inside sales more and more on online, you know, through call centers originally and now it’s kind of through self service on the internet. So they become more efficient that way, but I think business travel itself still maintains.

And from my perspective, you still have a budget as a sales rep that you use. And you always stay at the same hotel chain because you want to get the points right, you get the Marriott points, every time every room it looks exactly the same. They’re the same picture up on every single wall feels like your room after a while. But you know, that’s business travel that kind of stays with that. I always thought that Airbnb, which I also stayed at quite a few Airbnb’s over four years of traveling for conferences, you know, if if you’re staying for, you’re going in town to see family or you’re on your own dime, or you’re not just getting the company picking up because you got a set budget for things. You might consider Airbnb for things like that.

Either way, I don’t think that it just goes away. I don’t think that business travel stops. I don’t think that direct sales is a thing of the past. I mean, people still want to interact with other people. I think a lot of people are getting tired of zoom calls, especially if you have anybody to talk to and they’re on mute, or they just don’t understand how to connect things. Or it’s choppy, and you can’t hear it. I mean, we’re kind of all over it with the zoom thing. But I think that I agree with you, it maintains there’s going to be plenty of business travel definitely for years to come.

Yeah. And let me give you some insight from the four years I spent selling really expensive American made scaffolding on the road, my family owns a ladder and scaffolding business. And my time on the road wasn’t about sales, I would put myself in front of people, that would be pretty angry, I’d say yeah, scaffold frame $68. It’s, I could get one from China for 19. And I’d say okay, I could sell you that too. But what happens when you need American made when you’re going higher, whether it’s a long term installation, and I might have to knock on that door 10 times where they pretty much slam the door in my face, the actual sale happens when they need something, and they would call me and they’d say, Oh, my God, we just got this contract to do this skyscraper in New York, I need two truckloads of American scaffolding, rental or purchase. And I need it tomorrow. And I would say, Hey, no problem. Gotcha. And I would act like they were nice to me the whole time. And then I’d have a new customer.

Dan Kline  31:57

That’s how you build relationships. Nobody is taking a zoom call from a random salesperson, they don’t know. So that’s where you’re gonna see the transition, you’re still going to see people on the road. And I’ve got a lot of people say, but yeah, companies understand the value of $1. And they’re not going to want to spend that money on airfare. A lot of those same companies are going to be saving money on Office expenses, there’s going to be less people in the office, they’re going to shrink their office, there’s going to be more budget put into get togethers. So as I said, there have always been shifts in business travel, but nobody does business travel purely for the business.

I’m sure there’s people that have miserable travel all the time, jobs that hate it, you know, I like travel, because I’m not home. And I like home. But when you have kids, you want a couple of nights to yourself where your your job is going to dinner in a bar with your clients and, and or a trade show where Yeah, you’re at the trade show. And look, when I go to a trade show, I might start at seven in the morning and work till six at night, and maybe go to a dinner. But you know what happens after that there’s blackjack at the casino, and the dinner was great. And I’m in a nice fancy room and I don’t have to deal with day to day life. I think every person who travels No matter how much they lament, I wish I was with my kids. There’s a little bit of gratefulness, you know, again, not people who travel two thirds of the year, people who travel for business once or twice a month, are pretty happy to do that. That’s all I’m gonna say in the matter. You could send a hate mail to @worstideas7 on Twitter, there’s a pretty active phase on this Simon

Simon Erickson  32:32

Dan, I would like to reaffirm my assertion that you are the greatest people person I’ve ever met in my entire life. It’s just such a social force in the world.

Yeah, well, that seems like I’m so excited to get out there and just talk about 7Investing. You know, and I’ve met so many people through the years just like striking up a conversation at a bar or in a pool or at a blackjack table or whatever it happens to be. And I can’t wait to be able to probably talk about what we do. You know, and convert members and I promise you I’m not a bore in public. I don’t know I don’t always talk about but work but work obviously comes up. I got some wonderful insight into how Chick-Fil-A operates. Because I was with a very drunk Chick-Fil-A executive in a hot tub. I’ve told that story on air. So I won’t tell it again. But Simon for what we’re watching. You wanted to talk about Google’s latest play in health care. It seems like Google tries and fails an awful lot in health care.

If you are out and about and you run into Dan Kline, and he starts talking about 7Investing, make sure that he picks up the bar tab. That is one requirement of going out and talking to Dan about about our company. Google, Dan. Yeah, I mean, Google’s doing another shot into healthcare, right? We’ve seen this a couple of years ago. They called it Project Nightingale at that time, which was Google trying to get closer to the electronic health records of essential health care in the Midwest United States, right. Google wanted to go to a hospital and say, Hey, if you give us your patient data, we’ve got some really cool AI algorithms that we can crunch the numbers on it and give you even more real time advice for your doctors.

And this blew up Dan. This was public outcry when this happened. People were raising their hands like this and in an outcry, saying Wait a minute, we don’t want Google data privacy, this is the most important data we have is our patient records and our health care records. Get off my lawn Google at the time.

But this is just using aggregate data similar to I mean, it’s an opt in with Apple. But with your Apple Watch, you can opt in to sharing your heartbeat records and all the other things they track. And in theory, they might find, oh, my God, we have access to a half a million men in the, you know, the southern part of the country that are similar to Simon and Dan. And we see an increased rate of heart attacks for people who don’t walk 5000 steps a day, and then they could put out hey, if you walk 5001 steps a day, you’re 30% less likely to die. There’s a lot of good that can come out of this. I don’t see it as a privacy concern. Do you do have these same concerns that people are obviously hyped and worried about?

It’s going to be controversial Dan, there’s no right answer to this. You know, we’re seeing it again now with HCA healthcare in Nashville, which is also allowing Google to use some of their patient data through Google’s algorithms. Now, to be clear, this is still HCA’s data, the hospital still owns the patient data, and they’re using it for their own purposes. Google isn’t going out there and you know, using it for everything else, that they’re making money on advertising, and everything else from this is a specific contract just for this one hospital chain that is hiring Google.

There is a great amount of trust in Google, from the hospital chain, that they’re getting it right, if you’re going to be giving physicians actionable, real time advice on what they should do based on what your algorithms have, you better be right, because people’s lives are at stake on this. And this is again, this is not Google’s typical, you know, blow it up with a billion users product that it has this isn’t Gmail and Google search. And you know, all of Google Drive, Google, we’ve typically seen get larger and larger products that they want to scale internationally. This is more of a case by case basis, that it’s working with hospitals.

But Google I think has a lot of good, like you said that they can offer. Because there’s a lot of actionable data, we’re stripping away the the individual information, it’s not directed to the patient itself, it’s collaborating on large data sets. And then trying to connect the dots between this is what we see and this is what we should do. But again, if we keep talking about healthcare and AI and big companies and big tech companies, this is another step in that direction that Google is taking.

This is Nashville, so I’m hoping the hc in HCA stands for hot chicken, but probably probably probably not, that is a bizarre joke. Simon, we’re in a golden age of information here, I’m actually pretty thrilled about this, I want not my personal information, my aggregate information out there because I want AI these big algorithms to be able to identify the best practices and we’ve had a lot of you know, very basic best practices, like you should walk 10,000 steps a day, that’s very general, the more specific they can get, you know, I read a lot of articles and talk with Maxx a lot. And they’re saying, Hey, if you’re in your 40s, and you’re overweight, you know, and I and I could still lose a few pounds. And you do X amount of this type of exercise, here is percentage wise, all the benefits you’re going to get. I actually base my week on that. That’s how I work out with my trainer. That’s how I decide, you know, after we finish at three o’clock today to how long my walk is going to be and how much sodium I have, and all sorts of things like that. I actually really, really welcome this. So I’m gonna give you the last word. Before we segue to a couple of comments here.

Healthcare is the ultimate personal industry, right? Healthcare data is so personal, and it’s individual, you can’t just make assumptions, it’s something that’s going to work for Dan is going to work for Simon, every patient is unique. And data is the basis of every decision that’s made in healthcare. It’s also when it’s costing us almost $4 trillion dollars a year, even just within the United States. So it’s incredibly expensive. And there’s a lot of efficiencies to be gained. I remain very optimistic that I think that as a whole, we’re progressing in the right path. But this is still a very, very hard problem to solve. I don’t want to make it seem like next week, we’re going to solve all the problems in health care, using Google’s AI algorithms, we’re still learning about the genome itself and what different genes mean, we’re still having different looking at a diagnostic could be interpreted in different ways, by different doctors or by different algorithms. So we’re getting in the right direction. I’m pretty excited about this field. But I also want to kind of temper expectations that this is going to happen tomorrow, because this is something we’re still going to be talking about five years from now.

So I think there’s a lot of good coming out of this aggregate data sharing. But Simon, just a quick aside, I wanted to share something a little evil in this space. So my wife decided we needed a new bed frame for one of the beds. It’s in her office. So it’s sort of a guest bed. And we were discussing this nothing electronic between us just discussing it. And I opened up Facebook and you want to guess what all the ads in my Facebook feed were for? They were for bed frames.

I figured it had something to do with the bed.

Dan Kline  39:49

I didn’t search bedframes, she did. So I do think we absolutely need to be conscious and careful of data and how it’s being used. But I do not worry, science has been using aggregate data, the challenge has always been gathering it. We’re at an amazing time where our ability to gather data to track it to do interesting things with it. I guarantee you studies like this and studies like the ones Apple are doing are going to produce results that are meaningful across hundreds of 1000s, if not millions of lives.

And it might be something simple like, wow, if your water intake was higher, you live three years longer. Like there’s a lot of things we couldn’t even do the math on that now we can do the math. We appreciate so many of you watching the show. We appreciate you telling your friends, there’s already been people joining on annual subscriptions. So our friend Ravi Shah asks, did the special announcement happen already? Yes, it absolutely did. Simon, why don’t you quickly recap before we hit our finisher here?

Simon Erickson  40:50

Yeah, thanks for asking Ravi and Zulfiqar to I saw that you’re interested in the announcement that we had. The price of our 7Investing membership will increase on July the seventh of this year to $49 a month, or $399 per year. But that’s kind of part one of two of the announcement which part two of the announcement is if you are a current 7Investing subscriber, or you join before July 7th, we are locking in and grandfathering you in to the current rate of $17 a month or $170 a year. So our big announcement is if you want to lock in with 7Investing, you want to keep the current rates that we have for as long as your membership remains active. Sign up today. We think that this is a great opportunity to do so.

Dan Kline  41:34

I thought we were gonna announce Maxx’s rap album which is of course under the name “OGenome.” That is a joke. There is no Rap Album there. A quick comment from Zulfiqar. He remembers something I said in a previous show, he said, “Dan, you were right about media. Now they have started to bring guests on that are in favor of growth stocks and overhyped in impact of inflation.” CNBC is noise. It’s just filler, they have to fill the time, I sympathize. I was a local newspaper editor. And you couldn’t say hey, there’s not a lot of news today. So I’m just not going to print anything on the front page. Like they have eight hours to fill. It’s, it’s why you know, sports talk radio, I’m a giant fan of sports talk radio. But if you’re in like the debt of the season, where Nothing’s going on, there’ll be like, we’re gonna want to talk about whether Pete Rose should be in the Hall of Fame, like there are just some things you have to do to fill the space. And that’s what CNBC is doing.

I don’t mean to pick on them any, any financial news, it’s probably true of Bloomberg, you know, really anybody out there that you don’t get to decide, hey, there’s nothing going on. So we’re just gonna go dark today. But I also think most of the analysts on there and I go back to the value of 7investing, they see prices increase, and they think there’s inflation. They don’t understand supply chains, because you know, what they’ve never run what like people are talking about the price of lumber, I bought wooden planks for scaffolding for four years, the first thing I did every morning was talk with my supplier about the price of lumber, and whether it made sense to put some on order or to order some or to bring some in, or to just have some reserve because the price, you’re playing a major game when you’re buying these commodities that you absolutely have to keep track of. And I don’t think guy in a suit who went to business school on CNBC necessarily understands the game he’s playing.

And again, I’m sure there’s some smart voices there. They just don’t have the experience. Our team does. We’ve come at this from so many different angles. Simon, we also didn’t mention, I don’t think you mentioned we will also be having a special $84 a year price for student members. So if you’re a student, we want you involved, we’re not only not increasing that price, we’re lowering the price for students who want to join us. This has been exciting. I am sweating. I am redder than usual. But we’ve been prepping this. We’ve been debating this. We’ve been talking about this for a very long time.

Nothing we do here at 7investing is done quickly. And I don’t mean that in a negative way. I mean, we are all weighing in, we are bringing in our marketing team led by Sam Bailey, who directs the show. We’re getting outside counsel from people we respect we are really, really measured in a good way about what we do doesn’t mean when something exciting happens. We can’t react quickly. Of course, we’ve done special shows we we changed the topic of this show twice between the point I woke up and the point we went on air we were originally going to talk about something else. And then we realized there was a reason we probably shouldn’t. So we are nimble and quick, but not when it comes to things that affect our members. We are going to be very, very careful. And we appreciate that.

With that. Sam Bailey, why don’t we hit our finisher? This is one of our most successful polls ever. Oh over 2200 of you voted in this and that’s more people than vote than when like the MSG network puts up a poll. So this is really exciting. Which sector will make more people millionaires over the next decade. Only about 15% said space and cannabis I don’t think it’s cannabis 42% said cryptocurrency. 27% said electric vehicles Simon. I’m gonna say it’s cryptocurrency but I’m gonna also argue that just like our friend, Jason Hall shared an article when his portfolio went over a million dollars, hey, now I’m a millionaire. And then two weeks later, when the market went down, he shared Hey, I’m not a millionaire anymore. I kind of feel like that’s gonna be the cryptocurrency story. If I was looking for safest bet, I would argue space, but I don’t necessarily think it’s the company’s people think it’s going to be I think it it could be picking shovel plays, it could be a 3d printing company I’ve never heard of that all of a sudden is making, you know, giant inroads. This is something you think about more than I do. What are your thoughts on this one?

Simon Erickson  45:34

Could we put the graphic back up one more time, please, Sam? Because I love the beautiful way that this was actually phrased for the poll. If we could show it one more time, just so I can make sure I’m here it is. Which sector will make more people millionaires over the next decade, beautifully worded Daniel Kline, I love this so much. Because first of all, when we say millionaires over the next decade, we’re talking about compounding for long periods of time, right, you’re going to see some people announced on Twitter that they made millions of dollars off of Dogecoin or off of GameStop or anything that you know, spiked really quickly. But then you’ve got to kind of get out quickly before you get stuck holding the bag and everything, everything falls apart. Right?

We saw that with pot stocks a couple of years ago, we saw that with 3D printing stocks a couple of years ago. For this to truly take hold and create millionaires you need to have compounding over long periods of time. And you need to have access for individual investors to invest in one of these choices. And so all of that considered I think the answer is almost certainly in my mind cryptocurrencies, not only because you can buy bitcoin directly, you know, you go on Coinbase set up an account and start buying it directly, which gives you access but there’s also so much momentum behind this cryptocurrency movement right now.

This is why we talk to crypto EQ all the time to see like okay, other than the headlines of the price of bitcoin today, how is this being used? Why is Elon Musk buying $1.5 billion of Bitcoin for Tesla’s treasuries? Why is Michael Saylor out there being an evangelist for Bitcoin talking with corporations on how they could use this for actually buying and selling and doing transactions? How are investors getting access through institutional funds to replace their cash balance with Bitcoin, in the upcoming year? I mean, things like this, Bitcoin kind of got I think a lot of people had a bad taste in their mouth when they when they first heard Bitcoin, because it was going up and down. So volatile, this is a really big trend. It’s just still getting started. We’re in the second inning of seeing cryptocurrencies get more business and institutional adoption. I’m going cryptocurrencies on this one, Dan.

Dan Kline  47:34

Just remember that all cryptocurrencies are not created equal. I have two friends, one who made a lot of money, about 30 grand on a very small investment in Shibu. I don’t even know what that is. And it’s not sold on Coinbase. So I have no idea how you would buy that. But he did it as a goof. And the second he saw it, he went, Oh, I’m taking this money out. I have another friend that bought a few $100 worth of Dogecoin forgot about it, went and looked at the account and realized he had $80,000. This is not a friend with a lot of money.

The danger and when I talk to both of these about is not realizing that they just hit the lottery. I always talk about the roulette analogy, the worst thing that can happen to you in roulette, is if you win early, because it gives you this perception, that roulette is easy. And the reality is the odds are terrible. I don’t buy lottery tickets because I understand math. Like it’s not fun to me to like throw in 10 bucks and ever just Well, we might win like no, you’re not gonna win, you didn’t win, like statistically there is there’s a better chance I’m gonna get eaten by a bear that I’m gonna win the lottery. And with crypto, there are good investments. And that’s why I will suggest you check out our friends at Crypto EQ. Simon, is there a link on our website to to our friends at crypto EQ?

Simon Erickson  48:45

Well, there certainly is it’s cryptoeq.io. But then also I’d like to plug our advisor updates. You know, if you’re signing up with 7investing today taking advantage of our special rates for $17 a month or $170 a year, check out 7investing.com/research and then dig into our advisor updates. Every month we chat with the team of crypto EQ, not only about what they see, because they’re analysts that dig into the cryptocurrencies themselves. But Steve and I also talk about what is the impact of cryptocurrencies on equities. Or said another way what stocks are really ahead of the game in adopting Bitcoin right now? And why does this matter if we want to invest in the stock market, but we don’t necessarily want to buy bitcoin? And so we publish that every month Dan, that’s in the advisor updates section of our research portal 7investing.com/research if you want to check it out. I really enjoy those conversations every month.

Dan Kline  49:32

We’ll close out with a couple of comments. Stock investor says we appreciate you Dan. It’s the other way around. I appreciate all of you. I am really looking forward. And I would encourage people I’m pretty easy to spot. If I’m out in public and I’m by myself, feel free to say hi, like, you know if I’m if I’m having a drink quietly at a bar, whether I’m in Vegas, or a cruise ship or wherever it is. Come on over, there’s a pretty good chance I will buy you a beer. I’d say if you see me with my wife and kid just say hi a little more directly, but my wife doesn’t go out that much. So it’s not, it’s not that likely that would happen.

I want to meet you, I want to hear your investing stories, I want to learn who you are, you know, I look at this as very much a family investing service, we’re not going to have millions of members, you know, we’re going to have a membership that can really be connected to us, I recognize the names who are commenting on a lot of these shows. And I’m always excited when we get a new one. And sometimes we see someone disappear, and I’ll reach out and I’ll hear I’m listening, or watching every day just my work schedule change, I can’t watch live. And then they’ll follow up with like two comments about things we talked about. So I really appreciate it is a busy entertainment world. And you and you are taking your time to come watch the shows.

We will close out with the final comment from Ravi Shah is Sam, if you want to change that one, “Even the increased price is a HUGE DISCOUNT compared to others.” This is the best value in investing. We could have gone double where we went. And I’d still think it would be a good deal for what you’re getting. But we want everybody to be able to come in. So tell your friends now there is still five weeks or so to get in at the current pricing to get your friends in. You know, to really be an evangelist for 7Investing. Simon, you haven’t slept in days you’ve been working on this. I dealt with a real estate transaction, I have to say I am really looking forward to a long weekend.

I need to decompress. You bought a house before buying a house. You know, in a resort was even more complicated wire transfers and all the paperwork and all the things you have to deal with. It was not an easy week for me. Obviously with you the price increase has not been an easy week, just getting all the messaging and the marketing out. Sam Bailey, we appreciate all your work. Ashley Wilson, JT Street, everybody behind the scenes working on this stuff, we absolutely appreciate it. With that we are out of time, I will be back on Friday with kind of a unique show. I’m going to have Anirban Mahanti on and I’m going to be here live, Anirban’s in Australia. So we’re going to tape his segments. But we’re going to take your questions on that show. Because again, I will be here live.

So it might look a little weird. Maybe I’ll wear a different shirt when I tape with Anirban. So there’s a little bit of distinction. I don’t own any shirts that aren’t black. So it won’t be that different a shirt. But we will figure this out. We’re really excited to get his perspective. He is just a brilliant investor and a major piece of value here at 7Investing with that. If you want to get in touch with us if you have questions about anything we said today, that is info@7investing.com, Steve Symington like this right now in front of the keyboard, getting ready to answer your questions. If you want to talk with us on Twitter, we are at seven that is the number seven investing (@7investing). Again, this was an interesting, exciting day. We’re seeing people join up. And Simon you wanted to make one more comment?

Simon Erickson  52:50

I do. And just to echo what you said also, Dan, I mean, hashtag dedication. We’re, I know we’ve gotten you on your vacation to do the live show just to interact with people. You know, we spend a lot of early morning hours talking as a team. We are really dedicated to what we’re doing. We’re really, really excited about where we’re going as an organization, multiple people on this team have run services before that were much more expensive than 7Investing. I’m actually the most excited about 7Investing compared to anything that I’ve done in my professional career. Thank you for your support on our journey. We’ve got some really exciting new news coming up within the next couple of weeks to announce for subscribers as well. Please take advantage of our offer $170 a year or $17 a month. And we hope to see you join 7Investing. Thanks very much for your support.

Dan Kline  53:36

I’m pretty sure I know what you’re hinting at. And I have to say I’m unbelievably excited. Simon This is an aside but I wanted to take Daniel Delgado’s comments are being in Sugarland, Texas I feel connected with is that where Sugar Bear from Super Sugar Christmas from. Is Sugar Land texas a real place?

Simon Erickson  53:52

It is. Imperial sugar. You know, it was it was the big establishment out there. And there people are really sweet too Dan. So it’s a perfect fit for that area.

Dan Kline  54:01

I hope to broadcast from Frosted Flakes, Wisconsin, or, and lots of other ridiculous places. And I will point out, my job is a vacation, I travel to different places, I am very lucky to not have a linear work schedule most days. So you’re gonna see me in all sorts of crazy settings on cruise ships on wherever doing this show. It’s gonna be pretty rare. I take an actual day off because this is fun. We like talking with our team on slack and hearing different opinions. It’s fun. It’s always polite. And I found that in our Twitter as well. I’m amazed at how people could tell me you’re an idiot. Everything you’re saying is wrong in such a nice way that I actually feel supported and feel like okay, we can disagree. And that’s not how Twitter normally works. So the fact that we have such a giving audience and so many people that support our mission.

I’m going to stop here because I could go on like this for a long time and I think we all need a cup of coffee before our next show. I drank something called Super coffee this morning. So I am perhaps more energetic. Sam Bailey thank you for this. We will be back on Friday with Anirban Mahanti. For Simon Erickson. I am Dan Kline. We will see you Friday

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