Fintech Nexus caught up with Public.com about where their members are investing now–and the co’s latest tech

Last week, we published a survey of fintechs flouting recession vibes — like going-out-of-business experts SimpleClosure, in addition to some robo-advisors, earned wage access (EWA) platforms, and cash-flow analytics solutions. Turns out some consumers are flouting recession vibes, too. 

Research from brokerage platform Public suggest its users obeyed that old Rothschildian adage and bought the dip. Public saw a plurality of orders over the past six weeks when the S&P 500 was at its lowest — a net buy rate 57% higher than the week thereafter, when the stock market began to creep slowly out of its (current) abyss. 

To make sense of these stats, and to understand its implications for Public and other fintech operators (and to touch on a few other topics, like Public’s new zeitgeist-y asset class generation tool), we interviewed Stephen Sikes, Public’s Chief Operating Officer. 

The following has been edited for length and clarity.

To what extent did the data of retail investors buying the dip surprise you?

It didn’t. I’ve been in the industry serving retail investors in one form or fashion since 2017, and so I’ve seen many a cycle that looks a lot like this. The consistent pattern is for retail to buy these sorts of more temporary market dips. (How you want to define temporary is, you know, a bit of an art.) We see very strong dip buying behavior all along the bottom. We started to see the market sell-off starting in late February into Liberation Day; we saw some early dip buying in late February, and then it really crescendoed through April. 

I remember December 2018 seeing exactly the same thing when the Fed hiked rates somewhat unexpectedly. Similar in COVID. I think what it comes back to is our customer at Public is a digitally native customer. They are folks who’ve grown up with the internet — on the high end of the age range, they’re somewhere in their 40s, even into the low 50s — but most of these people have lived their entire adult lives in more or less a bull market, and because we’re pretty close to all-time highs right now, their experience is every bear market has come back to a higher level. This generation of investors has been trained that way.

So then who’s selling?

I think the selling pressure predominantly comes from institutions playing the shorter-term game. The average institutional manager has targets they have to hit in a year, sometimes quarterly. And they’re very much focused on matching or beating their benchmark. It’s just the rational time horizon difference.

You offer a corporate bonds portfolio, currently offering a 7.2% yield. How much do you see investors moving towards those kinds of somewhat more predictable assets?

I think our best month ever for inflows into our fixed-income products was in April. And I think that was driven by a slightly more risk-averse segment that saw equities selling off, and [saw] a bond allocation that could earn them 7% at a lower risk than even a diversified equity. I think a lot of us have been trained in the modern portfolio theory, where we expect 7% to 10% long-term annualized returns in the equity markets. Getting 7% in a diversified fixed-income product isn’t a bad one either. 

How much has Public, operationally and strategically, been planning for bear markets when it comes to the kinds of products it’s been building?

It’s extremely intentional: We want to make sure we have a multi-asset product set that can serve serious investors through any part of the cycle, regardless of where they’re entering, regardless of their time horizon, regardless of their risk tolerance. That full spectrum includes fixed-income products. Building the exact ladder that you want that matches what you want is something unique, and that was a very intentional strategy that came out of the pits of 2022 as we saw retail-investor interest in the equities market start to wane a bit. We heard directly from our members, Hey, treasuries are awesome. How do I get more treasuries in my portfolio? That led us to that product. And then as Treasury rates started to fall, as the market started to price in Fed rate cuts, we saw members come to us and say, Hey, I really liked earning five-plus percent. How can I [still] do that? 

With that in mind, there are certain canaries in the coal mine right now macroeconomically: from household debt to the ripple effects of tariffs and delayed imports potentially starting to hit people’s wallets through hiked-up prices. I’m wondering if and how you’re planning around that.

To some degree, we’re privileged because we do serve the top quartile of earners: That’s where the vast majority of our business comes from. That segment of the population is very healthy. We continue to see growing and accelerating flows into the platform, which is downstream of our customers’ financial strength. Going back to the conversation about buying the dip: You have to have savings, disposable income, to be able to buy the dip. We see there’s still — and persistently through the full cycle — more cash there. 

I don’t want to say we’re not cognizant of the fact that that can change. I think our mechanism for managing that as a business is just by having a diversified product set. One of the dynamics that you see running a business like this is, every two weeks, and on the 15th and 30th, you see payday, and you see it in the flows numbers. One of the things we look at is, Hey, how does every other Friday look on an ongoing basis? Do we see those flows growing as we track the paycheck? They continue to grow. One of our most successful products is our high-yield cash account. That might be the first place where we would expect to see some weakness, and we haven’t yet.

Did you see any changes in where people allocate their capital in response to the new administration being pro-crypto, etc.?

We did. Starting in November and December, we saw strong inflows into crypto. I think that won’t surprise you. And crypto-linked companies too. The more longer-term-oriented, more speculative end of our member base certainly embraced crypto. And this isn’t really administration-linked, but AI-related companies have consistently pulled in flows. The last category would be the Tesla and Elon-linked strong inflows through Q4 of last year. I haven’t looked at what specifically those names did in March and April, but those three are what we saw immediately post-election. 

What’s next in the product pipeline? I know you recently launched generatedassets.com — is that sort of a harbinger of things to come for you?

I think we are committed to continuing to use state-of-the-art technology to help our investors be better investors and have better long-term outcomes. A big place where we find modern technology to be really helpful is in things like portfolio construction and idea generation. And we think giving the power of modern LLMs tied to a model that helps people generate a very well-diversified portfolio according to a set of parameters is awesome. 

There’s a second bit of technology that’s downstream from there, which is the ability to build and construct well-diversified direct index portfolios. Think that’s what I would expect to see from us over the next several months: continuing to invest in products that help people own a very well-diversified portfolio and get the most out of it according to what they want.

Do you see any risks in handing over that portfolio curation to users? In contrast, you’re choosing the corporate bonds portfolio and tailoring a very particular set there. 

Our platform today is fundamentally a self-directed platform. I think the vast majority of people will take things that we might have curated or constructed, customize them for themselves, and implement them. Our users know they’ve never had better content tools available for making good investment decisions, and they like to do it. And again, like, the generated assets platform can just as easily take your prompt of “bald CEOs” and build you a portfolio, as it can take “the S&P 500 minus oil and gas” and do that. It’s a tool that helps people express what they want in their portfolio. Being able to implement that and make that into something that’s really investable for the long run is sort of the next step. 

Facing off against the Fidelities of the world, do you see product differentiation as really the driver, or is it distribution, or a mix? Where do you see the potential to become a behemoth? 

There’s differentiation to be had, certainly, on product and technology. We think things like being a leader in using AI tools, having modern infrastructure that’s highly reliable — which is increasingly becoming a problem for incumbents — is a massive differentiator. Second, having great user experiences that are fun is an opportunity to differentiate. And then the last is that sort of intangible brand.