The Whole Market Looks Expensive — Is it Time to De-Risk?

Summary

Prof G Markets: The Whole Market Looks Expensive — Is it Time to De-Risk?

Date: November 17, 2025
Hosts: Scott Galloway & Ed Elson
Vox Media Podcast Network

---

Episode Overview

In this episode, Scott Galloway and Ed Elson confront a troubling question pulsing through the investment world: Is it time to de-risk given that the whole stock market looks expensive? They analyze recent warnings from prominent financial experts, dive into possible market risks and timing pitfalls, debate what defensive investing genuinely means, and examine the uncomfortable evidence that traditional safe havens—like defensive stocks, real estate, and even gold—may carry more risk than before. Beyond markets, they take a sweeping look at housing policy, America’s energy future, China’s AI surge, and the sociopolitical headwinds undermining U.S. competitiveness.

---

1. Setting the Stage: Sentiment Shift and Market Anxiety

Timestamps: 01:18–09:23

• Ed introduces the growing sense of unease in markets, reflecting on how even legendary optimists are starting to sound bearish.
• He references Professor Aswath Damodaran, who for the first time is considering moving money into cash and even collectibles due to the lack of undervalued opportunities.

  "He said there is, quote, no place to hide in the stock market." — Ed (07:27)

• Goldman Sachs predicts U.S. equities may underperform global peers for the next decade and suggests diversifying beyond the U.S.
• Recent sell-offs in tech highlights fears about overvaluation, interest rate risks, and the subsequent rise in bearish sentiment—not fully mirrored in actual stock prices.
• Michael Burry's shorting and hedge fund closure illustrate how difficult it is to time the market highs and lows.

---

2. Expert Insights and Timing: Damodaran’s Warning

Timestamps: 09:23–14:43

• Scott emphasizes the rare weight of Damodaran's caution, describing how for 25 years he's trusted Damodaran, who historically urged investors to “stay in the market.”

  "It's rattling... I have never heard that tone from him of just, like, he was reaching so far to try and find value that he started talking about collectibles." — Scott (11:40)

• The conversation highlights the near-impossibility of market timing, referencing historic examples where even correct bubble predictions didn’t directly translate to successful outcomes due to market momentum.

  “The markets can stay irrational longer than you can stay liquid.” — Scott (14:43)

---

3. Market Madness: No Place to Hide

Timestamps: 14:43–25:05

• Ed and Scott discuss historically high market valuations: The Shiller P/E ratio is higher than 99% of historic periods.
• Major “defensive” stocks like Walmart and Costco are valued on par with growth stocks.
• Gold and bitcoin have both run up dramatically, undercutting their traditional appeal as safe-haven alternatives.

  “Gold is up 55% this year on pace for its best performance since 1979... I finally threw in the towel and bought some shares in a bitcoin treasury company... 50% destruction in like two months.” — Scott (21:19)

• Real estate emerges as a rare area with potential, but even that is compromised by high prices.

---

4. What Should Investors Do? De-Risking Strategies and Diversification

Timestamps: 25:05–33:31

• Advice offered:
  • Trim exposure: Reduce positions, especially in overrepresented single stocks (no more than 5% in one stock).
  • Diversify further, especially outside the U.S.: Emerging markets like China and Brazil remain relatively cheap.
  • Consider equal weight indices over standard S&P 500 funds: Tech is now a dangerously large portion of mainstream indices (e.g., Nvidia >7% of S&P 500).
  • Move some assets to cash, bonds, or special situations: E.g., “special sits” like real estate or uncorrelated investments.

  “There is more incentive, more reason, today to start to think about de-risking, decreasing your leverage, figuring out where you're overexposed..." — Ed (26:10)

• Scott reflects on his own shift towards risk reduction after decades of aggressive investing.
• Ed urges younger investors to stay diversified and accept market cycles; older investors should avoid excessive risk.

---

5. AI, China, and Energy: Geopolitics as a Market Force

Timestamps: 42:37–55:09

• New Chinese AIs (Moonshot’s Kimi K2) are outpacing U.S. models on price and performance.
  • $2.50 per million tokens (vs. GPT-5’s $10).
  • China’s energy advantage: produces double the renewable energy vs. U.S., driving down AI model costs.

  “China produces way more energy than America… two times more wind power, three times more solar power, six times more hydroelectric power...” — Ed (45:00)

• The U.S. is falling behind due to political resistance to renewables, with the “anti-woke” culture war derailing logical investment in infrastructure.

  “We need to make smart equal patriotic equal cool ... But this stupid feminization and conflating renewables with femininity, as bad thing, and if we’re real men, we’re going after oil... Just put that shit aside.” — Scott (48:24)

Notable Cultural Critiques

• The politicization of renewables—a branding and culture war issue more than pure economics—threatens U.S. innovation lead.
• The “basic” way to restore competitiveness: stop making infrastructure and energy a tool of ideological identity.
• Debate segues into the broader dysfunction of American both-side extremism, from performative wokeness to anti-renewable energy stances.

---

6. U.S. Housing Crisis

Timestamps: 59:03–68:20

• The median age of first-time buyers hits 40 (a record); the share of first-time buyers has collapsed.
• 50-year mortgages are floated as a fix—but hosts agree this is financial engineering, not a real solution.

  “I think the 50 year mortgage is a bad idea. It lowers your payment marginally, but then you just build equity at a slower pace.” — Scott (59:57)

• Scott hammers the role of boomer-aged exclusionists: zoning, permitting, and NIMBYism have restricted housing supply to the wealth-protecting advantage of older generations.

  “My generation is just so fucking selfish... We figured out a way to increase our net worth by creating a rejectionist exclusionary culture...” — Scott (61:55)

• Effective policy recommendations:
  • Deregulate zoning, especially parking/height/lot-size rules.
  • YIMBY-style laws: make it dramatically easier to build.
  • Incentivize supply growth (e.g. grants to municipalities that increase supply).
  • Age-targeted, lower-rate government mortgages.
  • Massive private sector engagement.

  "It's a supply problem. It's easy to figure out." — Scott (67:02)

---

7. Memorable Quotes & Moments

Trust and Social Commentary

• “The key to being offensive is it has to be funnier than it is offensive. And I don't think I got there with this one.” — Scott (01:18, on jokes)
• “People say, oh, he's an introvert. He doesn't like people. That's not true. I just want to make sure people don't really get the full picture of what's going on here.” — Scott (29:54)

AI Bubble and Market Risks

• “If OpenAI gets a shit kicked out of it and announces it's just not growing, they're the canary in the coal mine for Nvidia... Nvidia goes down 80%... That's a $4 trillion destruction in capital... wealthy households all over America start pulling back their spending...” — Scott (37:26)

On American Malaise

• “Put more money in the pockets of young people. They're 24% less wealthy than they were 40 years ago. I am 72% wealthier. ... The most basic thing to fix America right now is: transfer it into the pockets of people under the age of 40. Full stop.” — Scott (64:49–65:34)

---

8. Week Ahead / Closing Highlights

Timestamps: 69:34–71:20

• Key earnings watch: Home Depot, Target, Walmart, Lowe’s; Klarna's first public quarter; Nvidia’s results.
• Scott’s prediction: The White House is about to unleash a “nuclear” distraction to divert from Epstein email leaks.

  “They have to pull out a nuclear weapon of distraction and they’re either going to start bombing… some crazy shit is going to come out of the White House in the next seven days…” — Scott (70:45)

• Amusing closing reflection on San Francisco, the city’s nightlife, and a comparison to his first marriage.

---

9. Key Takeaways

• Even long-term market bulls are cautious—many assets appear expensive with no obvious “safe” alternatives.
• Timing the market remains a mug’s game; asset allocation and de-risking, especially for older investors, becomes more critical.
• The AI arms race is being shaped as much by energy policy and culture wars as technology itself—China is poised to capitalize.
• The U.S. housing crisis is fundamentally about supply; financial gimmicks don’t address the root problem.
• America’s generational wealth imbalance and cultural infighting are undermining long-term prosperity.
• Constructive steps: diversify, trim outsized positions, de-risk where prudent, and legislate to grow supply—not just engineer the finances.

---

For further reading or a deeper dive, subscribe to the Prof G Markets newsletter at profgmarkets.com.

Transcript

[Advertisement Voice]

Adobe Acrobat Studio. So brand new. Show me all the things PDFs can do. Do your work with ease and speed. PDF Spaces is all you need. Do hours of research in an instant with key insights from an AI assistant. Take a template with a click. Now your prezo looks super slick. Close that deal. Yeah, you won. Do that. Doing that, did that. Done. Now you can do that. Do that with Acrobat. Now you can do that. Do that with the all new Acrobat. It's time to do your best work with the all new Adobe Acrobat Studio.

[Ed]

Support for this show comes from Strawberry Me. Be honest.

[Scott]

Are you happy with your job, or.

[Advertisement Voice]

Are you stuck in one you've outgrown.

[Scott]

Or never wanted in the first place?

[Ed]

Sure, you can probably list the reasons.

[Scott]

For staying, but are they actually just.

[Ed]

Excuses for not leaving?

[Advertisement Voice]

Let a career coach from Strawberry Me help you get unstuck.

[Ed]

Discover the benefits of having a dedicated career coach in your corner. Go to Strawberry Me Unstuck to claim a special offer. AI agents are getting pretty impressive. You might not even realize you're listening to one right now. We work 247 to resolve customer inquiries. No hold music.

[Scott]

No canned answers.

[Ed]

No frustration. Visit Sierra AI to learn more.

[Scott]

Today's number 90. That's the percentage of people in Finland who say most people can be trusted. In America, they that number is just 30% ed. One day I'll pretend to be gay. I'll make lots of female friends, gain their trust, become their confidant, and then when they least expect it, bam, I'll fuck their boyfriends. I think the key to being offensive is it has to be funnier than it is offensive. And I don't think I got there with this one. I think that one was more offensive than funny.

[Ed]

It's always a really blurry line with these jokes. I gotta tell you.

[Scott]

Yeah. How are you? I miss you.

[Ed]

I'm doing well. I'm doing well. I miss you. You're a busy man.

[Scott]

I don't know about you, but. And I mean this sincerely, I never miss people until I see them. I'll see. I know a bunch of my friends from college, my fraternity buddies, are coming to our live pivot tomorrow in la, and I don't. I never miss them. And then I see them and I miss them. The only people I've ever actually missed when they're not around are my boys. But when I see people, I'm like, oh, I miss this person.

[Ed]

Yeah. You kind of remember what it's like to be with them. Yeah. No, I feel that.

[Scott]

Yeah, that's right. What have you been up to? What have you been doing while.

[Ed]

I've just been reading Epstein emails all morning. It's all I can do.

[Scott]

Let me guess. Really good news for the President. He's been exonerated. It is a hoax, right? Nothing to see here. Move along.

[Ed]

I assume you've been reading them. I can't get enough of them. I love when these emails get leaked. I mean, the best was when Elon was buying Twitter. And then we saw the correspondence in the text between him and all of these martial universe CEOs and tech executives. But now we're getting that with Epstein and Larry Summers. We got it with my old boss, Michael Wolf.

[Scott]

Yeah, he was advising him, right?

[Ed]

That's right. And by the way, this is what Michael does. I mean, a lot of people seem to want to think, oh, this compromises Michael Wolf. No, his whole thing is that he establishes relationships with all of these very precarious people such that he can get the scoop, which is why he released all the Epstein tapes last year. And as he said before, to almost no effect, people seem to not want to care about Trump and his very obvious relationship with Epstein. Either way, these emails are amazing. Just for pure entertainment reasons. Will it go anywhere? Probably not. I don't know, but that's what I've been doing with my time.

[Scott]

I love how all of a sudden you're a guardian of a pedophile, you're an enabler. Now you're making excuses for Michael Wolff. I don't know Michael, but I'm obsessed with his videos with Joanna Coles talking about. I mean, he has unbelievable sources and I find him actually compelling as a journalist and. Or an author. Oh, yeah. But I watched his video last night talking about. And you could tell he was visibly rattled. No. Oh, I thought so. No, you don't think so.

[Ed]

I mean, of course, if your name is out there being released by the government. Sure.

[Scott]

Affiliated with Epstein, giving him advice. Yeah. That would rattle most people.

[Ed]

He's released tapes with talking with Epstein before. We all know that that's part of his thing was his friendship with Epstein, as it was his friendship with Steve Bannon and Donald Trump. Like, he does this.

[Scott]

Look who's triggered. Defending their enabling pedophile friend. Look who's tr.

[Ed]

Like, you know what this means for you when you get canceled in a few years? This means what you know now is that I will be out there defending you.

[Scott]

Yeah, no, I get it. I actually, Yeah, I don't. He was providing Legal or he was giving them counsel. I guess if you're gonna get the kind of contacts and relationship that a guy like Michael has, obviously that he's gonna say, all right, this is what I would do. Right?

[Ed]

That's exactly right.

[Scott]

What if you're my. It's like Max on Sydow in this great film, Hannah and Her Sisters, when his younger girlfriend is breaking up with him. He's like, you're my link to the outside world. You can't leave me. You're sort of my link to this world. I've been way too busy doing stupid stuff. What have been the other really interesting. Any other really interesting emails that struck you?

[Ed]

Well, one thing that is so striking about these emails is they're so poorly written. And I can't tell whether that's Epstein himself or just maybe the way these guys communicate with each other, but it's like, there's no grammatical structure, and it's kind of hilarious. But the other thing there. Some of these emails are so petty. Like, he's giving relationship advice to Larry Summers, who is, like, annoyed about some relationship that went wrong, and he's doing it with all these other CEOs who are like, should I trust this woman? And Epstein's like, no, she's a hooker. Like, fuck her. Like, it's very Boise gossipy. Like, these people are still children at heart, even though they're kind of running the world. That's part of the thing that I love about it, too. I mean, it's Keeping up with the Kardashians Billionaire edition.

[Scott]

It's funny. It struck me that if any of these people end up in prison, they should be forced during the release program to read Strunk and White's Elements of Style over and over again. I can't stand. It's something I inherited from my mother. My mother, despite leaving school at the age of 13, was kind of a grammar tiger mom, and I was just horrified. Chelsea Handler wrote an email to Pivot or an email to Kara saying, you have to tell Scott to stop saying anyways. And I'm like, oh, she's right. She's right. I should never say that. And I literally saw my mom going, like, horrified. Anyways.

[Ed]

I like anyways.

[Scott]

It's anyway.

[Ed]

I know it's anyway. I like how you say it, though.

[Scott]

I appreciate that, brother. You're being kind, and I appreciate how you're. You've already committed to defending me when this all comes burning down in a house of scandal.

[Ed]

Gonna happen.

[Scott]

You know, should we. Should we get to the headlines.

[Ed]

Let's start.

[Scott]

Now is the time to buy.

[Ed]

I hope you have plenty of the world. Last week we spoke with Professor Aswath Demodoran and he said something quite striking. He said that for the first time ever he is thinking about moving his money into cash and also perhaps collectibles. He said there is, quote no place to hide in the stock market and that was quite striking. He's not alone. Investors have been dumping the debt of America's big tech companies. Meanwhile, Goldman Sachs strategists predict that US equities will likely underperform global peers for the next decade. They recommended that investors, quote, diversify beyond the US and then late last week we saw a broad sell off in tech stocks as many were worrying about valuations in the economy and interest rates triggered another wave of caution in the investor community. In sum, Scott, there is increasing anxiety about the stock market, increasing bearish sentiment that isn't really being reflected in the prices of stocks right now, but at least it's being talked about. I mean Michael Burry shorting Nvidia and Palantir was quite notable and we'll get into what happened there in a moment because there are some updates on that story. But I think the TLDR here is we're seeing a lot more people and a lot more respectable people such as Aswath who are saying I'm not very convinced by the price of stocks right now and perhaps we're going to enter a downturn now. I'm not going to make any predictions as to whether that's actually about to happen and we can talk about that in a moment. But it was striking how bearish he was. So let's just start there. What were your reactions to Professor Demoderin and what he thought about stocks right now?

[Scott]

I think it's really powerful to have role models. There's just so many people out there who know more than you. I'm a big believer in experts or people that you look to for guidance around things and if you have a little bit of success it's so easy to develop Dunning Kruger where you think that you have real insight and wisdom across every issue. I suffer from that. And Aswath, I've known aswath now for 25 years. I just looking back on every recommendation or piece of advice, nobody gets it right all the time in the markets but generally speaking he's gotten it more right than anyone I've ever met. And the thing I love about him is he's able to screen out his political biases I have no idea what his politics are, but I remember when I was saying Facebook's going to get cut in half or Tesla, it was because I just really don't like these people. And he would just sort of say, oh no, you know, met as a buy, it's a cash generating juggernaut. I mean, yeah, maybe it's bad for kids, but as a stock, you want to buy it right now. And I find that he generally is like one of these Josh Brown folks and that he's like, what could go right? And that he's like, you just want to have a bias towards staying in the market. And so what he was, it was the first time I sort of heard in his voice like, yeah, everything's overvalued. And it was rattling for me because I've known him for a quarter of a century, I have never heard that tone from him of just like he was reaching so far to try and find value that he started talking about collectibles and just saying gold's overvalued. You know, I mean, just everything, just even the defensive stuff, he's like, his basic message was, yeah, there's nowhere to hide right now because everything feels overvalued. And I started thinking, well, what does that mean? I would argue for someone your age that means diversifying, but I think someone your age should always be in the market because you just don't know. And again, my other friend from Ritholtz Management, Barry Ritholtz, emailed me and said, you know, I'm a big fan of the economists called the crash correctly the.com and they called it in 97. I said, and the markets went up another 30%. And he immediately emailed me and said, Scott, you're thematically correct, but the NASDAQ actually doubled from 97 to 99. And so it's very hard, it's incredibly hard to time. I think people your age who have the longer time horizon and a greater risk tolerance because you can make the money back, be diversified, but I would still say be in the market. I think a guy my age or people my age who quite frankly don't have the time to make it back, I do believe, and it has since talking to him, I thought so, for example, Apple and Amazon, which are still, I think, good stocks. I'm actually thinking about going, I have no leverage now, which is the first time in my life I have almost no debt on my houses and I don't think I have anything on margin right now. Actually I have a little bit of margin on one account. But I'm actually thinking of substantially ramping down my exposure to the markets and not going into European markets, or not reallocating into different asset classes, but quite frankly putting 10, 20% of my liquid net worth, maybe 30%, just into cash. Because it did feel. He's been more right than wrong around this stuff. And I have never heard Aswath this bearish. And it wasn't panicky. He's not like that. He's just, look at this, look at this, look at this. It just feels, relative to historical norms, overvalued.

[Ed]

So much of this is about timing. And to your point of what Barry told you about how they said in 97, there's a bubble and they were kind of right, but then the NASDAQ doubled. Just the perfect example of why you should not be trying to time the recession, time the correction, time the bubble bursting. Michael Burry just shut down his hedge fund last week. He de registered from the sec. He liquidated the fund. He's returning all of the money back to the LPs. And as Aswath said, he's probably right that Nvidia perhaps is overvalued. Certainly right that Palantir is overvalued. I can put some force behind that. But that's not the question here. The question is, can you get the timing right? And the timing is almost impossible to game. I mean, he miraculously got the timing right in 2008. So he wasn't. And barely.

[Scott]

Barely. He almost got wiped out. He almost got wiped out.

[Ed]

And now he looks like the clairvoyant. But there were plenty of clairvoyants back then, actually, who were saying this is probably bubble territory. What happened was he probably just got quite lucky on the timing, and then he made a killing. And then everyone said, okay, Michael Burry can see the future, but this is a timing problem and you're not going to get the timing right.

[Scott]

That old adage, the markets can stay irrational longer than you can stay liquid. And it is a very. Jim Chanos, this incredibly smart guy short seller, he basically closed his fund. Julian Robertson, who was short all these tech stocks, basically closed his fund. He, like, threw in the towel. One of the legendary investors in 98. And then ultimately he was right, but he couldn't stay liquid and couldn't. I mean, I, you know, I was going short some of these companies by selling, selling call options, saying, okay, Palantir, that makes no fucking sense. It made no sense at 70 times revenues. Well, now it's at 100 times revenues. So you're going to be more right than wrong when you have an optimism bias or constantly ask yourself what could go right. And when you go short stocks, you're swimming upstream because of demographics and productivity increases through innovation. The natural trajectory of the markets is up and to the right. And meme stocks go crazy sometimes distinctive how insane it is that they're at these valuations. Even Jerome Powell said that these stocks are fairly highly valued. And the Shiller PE, which which compares the S&Ps 500 price to its average inflation adjusted earnings over the past decade is now higher than get this ad than it's been 99% of the time. And peaks in this metric have historically coincided with negative 10 year stock returns, including 1929, 1966 and 2000. And something else that Aswa said that really struck me was it's not that means that in the next 90 days or next 18 months, we're going to wake up one morning and have Black Friday. He said typically what happens is it just unwinds slowly. And so, for example, everyone talks about the crash. One of the things we got from our conversation with Andrew Zsorkin was there really wasn't any one big day. It just kind of the air just left the balloon over two years, three years. And if you invested in stocks, I think in the 70s, you almost anybody woke up 10 years later and their portfolio was worth less than when they'd invested in 1970.

[Ed]

I think a lot of people assume that it's two or three or four years where you have losses. And usually that is kind of the timeframe. But we should point out, just as you're saying, there have been periods in US stock market history where the losses occurred over a 10 year Spanish. So it actually happened in 2009. So in the 10 years before 2009, US stocks lost about 37% of their value. So basically what you're measuring here is from peak bubble in the next 10 years to 2009, you're looking at a huge destruction of value. So that is an example where actually There was a 10 year period where stocks went down quite significantly. And there have been other periods where you have losses over 10 years. As you mentioned, 1974, the 10 years before that you had a period of losses also happened in 1939. The 10 years before that also happened in 1921, 1857, 1842. So the point being, what Aswath is describing there is you might have a decline in the stock market that lasts 10 years. And by the way we've actually seen 20 year periods before. It happened in 1932, the 20 years before that stocks lost 14% of their value. It's happened also between 1837 and 1857 where stocks lost 10% of their value. So it does happen actually. And I think this is probably a point that maybe we haven't been acknowledging enough on this podcast is like it's very infrequent and it's very unlikely in the large scheme of the US stock market, but it is possible. And even if you disagree with Aswath's position right now, you should at least consider the possibility that he might be right. That there is a possibility that over the next 10 years the stock market could have a negative return that's possible. Or at the very least a lackluster return that's certainly probably probable. So you just shouldn't write that off. And I think it leads us to a place of, okay, what do we do about that? The first thing we have to do, we have to be mentally prepared and also economically prepared for the off chance that the next 10 years could be negative. And for different people it means different things. For me, it doesn't really mean that much because I'm pretty young and I'm not really going to be selling anytime soon anyway. I just need to be in the market heads down. But it means things for different people depending on where you are in life. And I think what he brings up and we can get into whether he's right, that is aswath. But what he brings up is a very real possibility. You could have pretty negative stock market returns over a period as long as 10 years. It is possible.

[Scott]

You would normally think, okay, the magnums and 10 are overvalued. I need to move to more overweight defensive stocks. But even these traditionally boring defensive stocks look expensive. Consumer staples such as Walmart and Costco, these are mature low margin businesses. They're trading at Nvidia level valuations far above their 10 year averages. And then you think, well, okay, what about alternative investments? Gold is up 55% this year on pace for its best performance since 1979. Okay, I'll put some money in Bitcoin. Well, that just touched an all time high in October. And by the way, I finally threw in the towel and bought some shares in a bitcoin treasury company. I like to talk about my losses, just not my wins. Got in at 14 bucks a share. I think it closed at like $6.80, 50% destruction in like two months. The one place at Aswath said there might be value on a risk adjusted basis. And it's my biggest investment is real estate. He said, look, there's just a structural shortage of real estate and we're short an estimated 2 to 3 million homes. And this shortage could, he thinks, be turned into an opportunity for investors, which.

[Ed]

Is crazy, by the way, considering, I mean, real estate prices have also gone way up. Not as much as stocks, but still record highs.

[Scott]

I'm trying to think, okay, so if you don't want to go buy apartments and get your in laws to manage them, which I have done, let's put those people to work. You can buy a REIT or so for example, the iShares Core US REIT ETF USRT has both residential and commercial exposure and is only up 3% year to date. So I've tried to get away from making stock recommendations and just tell people what I'm doing. And then you decide on your own what you do. But I'm trying to find what I'll call special situations. So I'm now working with a fund actively trying to find tariff claims because I see that as something I don't want to say it's disconnected from the market, but I would definitely call that a special situation. And then also I'm contemplating buying, and these are stories of privilege. I'm contemplating buying another home in Manhattan because of all of my assets, the worst performing one has been my home in Manhattan. I mean, there's some assets that have gone down in value, but New York real estate, I think the existential threat of the new mayor has been vastly overrated. All these idiots who say, I'm leaving, I'm like, okay, fine, see ya.

[Ed]

Good.

[Scott]

And I think New York is still singular. I think we're still going to continue to attract the most the secret sauce. And that, quite frankly, is Ed Ellson and Claire Miller, who some of the the greatest arbitrage or economic driver in history is really talented young people who are willing to work their asses off and take risks. That's the secret sauce of any economy. And more of that secret sauce is poured over Manhattan than any place in the world. There's just a lot of people, even I think, much more than San Francisco. The most talented people in every industry have one thing in common. And they think, you know, I need to kind of punch my ticket and get to Manhattan for a few. And I don't think that's changed. So. And then I look at my place. I've owned real Estate since 2017 in New York it really hasn't gone up much. I did the numbers. I think it's up. I think it's grown about 2% a year now. That's not to say it's a buy, but I feel as if. Okay, you know, I was kind of hoping a bunch of stuff would come up for sale when Mondami was elected mayor. I haven't seen that. Or when people thought he was gonna get elected. I think all of this is like, I'll be in my sisters and then you that she's still around.

[Ed]

Exactly.

[Scott]

So I'm thinking about real estate, but also moving more into cash. Because I have been. The way I've gotten into so much trouble Ed and snatched defeat from the jaws of victory is I've always been so risk aggressive, as is the case for an entrepreneur. And it's really paid off for me. Until it hasn't. And that is being levered and borrowing money to start businesses and doubling down on stocks and borrowing on margin. God, it was fun from like 92 to 99 and then it became really unfun. And then it got so much fun again in 2001 and it got really unfun in 2008 and it's been disco since 2009. But now I'm thinking, okay, I don't want to go back to the it sucks part of the program. And so I'm thinking about substantially scaling down my quote unquote risk profile and shifting some money into cash and shifting some money into special sits that are somewhat uncorrelated and into real estate.

[Ed]

Yeah, that question of like how do you find the non correlative asset is sort of the big question that every investor is asking themselves. And gold is such an interesting example because it's supposed to be like the anti stock, the anti dollar. And yet it's also having this kind of tech like run up. I mean it's more than doubled in the past five years. Bitcoin people said was the same thing. And then we've seen multiple times over and over again. It proves that it is in fact highly correlated with the stock market. When the stock market goes up, it goes up. When the stock market goes down, it goes down. So that has been a big question. The question does then become where do you hide if there's no place to hide, like where are you supposed to be finding value? And I think it's really interesting where your mind is going in terms of special situations. Also perhaps real estate, that makes sense to me. But I think the most important thing you say there is there is more incentive, there is more reason today to start to think about de risking decreasing your leverage, you know, figuring out where you're overexposed and trying to sort of reduce your exposure in those places. And I think that is the thing that people should be thinking about. If you're overexposed in any one company, which you definitely are, because of how much tech has run up, don't sell it, but start to trim, start selling in very modest increments over time. Not to eliminate the position, but just to make the portfolio more balanced. You shouldn't have more than 5% of your portfolio in any one stock. So that's the first thing. The other thing I think people should be considering more now is I think you should be considering the non US stocks and the non US index funds. I still do think, as we said at the beginning of the year, that there is value to be had in many foreign markets. China's trading at 15 times earnings, Brazil's trading at 10 times earnings. These are pretty cheap multiples and that doesn't mean you should stock pick. But I do believe that kind of diversifying away from the US which has had this massive run up and congratulations, you've done well, especially if you're heavy tech. But I do think that we're approaching the time where you start to gather up your gains and your wins and start to try to spread it out a little bit more. The other thing you could do, which I think is interesting, and Goldman has been talking about this too, is invest in the equal weight S and P. Because as we know, all of the returns have been concentrated into a handful of tech companies to the point where the S and P itself is not super diversified. I mean, Nvidia is Now more than 7% of the s and P. So that's just too high. You don't want more than 5%, as I said, in any one company. And if you're buying the S and P like you're buying 7 1/2% exposure to Nvidia. So I think going equal weight, that kind of balances things out and you'll be slightly less exposed to tech. And then there's what you say, which is cash or get into bonds. There's fixed income, there's T bills, there's T bonds. You could even just buy a diversified treasury index or you could just buy T bills directly from the government online. But it does feel that we're approaching the de risking part of the cycle. And that's not to say that tech could continue to run up over the next year, perhaps the next two years, but most likely you're gonna see some more modest returns if we're just looking at the course of history, and you're probably gonna see some sort of correction. I will say I'm a lot less bearish than I think aswath is, and I can get into that. But what you say there about de risking, I do think that's important.

[Scott]

I'm still stuck on the part where you said it was really interesting. Where my mind is going. I think it's more tortured than interesting. And, Ed, the idea of you having real insight into what the fuck is going on in the shit show funhouse of horrors in my head is so frightening to me. You would call your parents and say, I love what I'm doing. I'm making really good money. I love my colleagues, but I just can't be anywhere near this freak show called Scott Galloway. So be careful, don't open that door.

[Ed]

I try to moderate my exposure to your mind. Similar to portfolios.

[Scott]

People say, oh, he's an introvert. He doesn't like people. That's not true. I just want to make sure people don't really get the full picture of what's going on here. But as usual, a lot of what I said, the data is not supporting. The team did some research. So New York real estate isn't outperforming the stock market, but it's been a decent investment. The average yearly rate of return on investment has been 5 to 7%. I'd be curious what the luxury market has done, but if you go, it just. If you put money away when you're 21 and it only grows 6 to 7%, keep in mind you'll have 31 times the amount of money when you're retiring.

[Ed]

Well, I will say only someone in your economic weight class could buy it. So I agree with you in the directional strategy, but I would. I mean, this whole conversation is premised on this very bearish thesis that ASMAT seems to have, which is he thinks the stock market's overvalued. He wants to get into perhaps cash. He wants to maybe look at fixed income, or at least make that a large part of his portfolio. I just want to end this by saying maybe he's right, but I'm nowhere near at the level of bearish that I think he is. I still think that there is a ton of value in AI, and I think there are plenty of tech companies that are not that overvalued and that are actually very well diversified. And that are being managed very responsibly. Of course, there are companies that aren't. OpenAI as an example, we went over that last week. But I think there are companies that are good. And I think one great example would be Meta, which is trading at 20 times forward earnings, which is actually a little bit lower than the S and P average. And yes, they are investing heavily in AI and maybe it doesn't work out, but unlike OpenAI, they actually have the money and the cash flows to actually do this. They can withstand a correction and they're doing this in a reasonable way. So even if we do see a correction, even if the AI bubble pops, Meta is going to be fine. Business is going to still be running very strong. They'll have plenty of cash. It's a great company, great fundamentals. Another example we've talked about is Amazon stocks had a pretty big run up over the past few months, so closer to fully valued than it was before. But having said that, just in terms of this AI bubble, is it, is it causing, you know, huge overvaluations? Chat GPT was launched in November of 2022. Amazon was at 176 at the time. It's at 240 today. So over the past three years, that's a 36% return. That's an annual return of around 11%. That's not that crazy. I mean, it's a little bit more than the S&P's historical return. So if the AI bubble is causing one of the most AI exposed companies in the world, which is Amazon, the data center juggernaut, if it's causing that company to yield an 11% annual return, that would mean that either we're not in that much of a bubble or the bubble hasn't really infected Amazon that much. But I do think there is still value and companies will get hurt. But as we discussed before, it's the companies that are biting off more than they can chew that are extending their leverage out too much, that are becoming too dependent on this future vision of AI and not the cash flows they can bring in today.

[Scott]

Again, every year we do a big tech stock pick and we're careful to say outperform the rest. Because my belief is if, if the rest of the Mac 10 goes down 50%, I think Amazon will go down less. There's no safe harbor here. If, if there's a kind of drawdown that I think we're due for in AI. But the reason why Amazon has underperformed, despite the fact that they are centered or positioned to benefit from AI is that their cloud, which is the most, has the greatest market share of the cloud providers, is seen as not as AI enabled. And so it's actually this notion that their cloud offering has developed a reputation as not being the most AI enabled or friendly or AI adept cloud, which I think is kind of not. I mean their stock hasn't underperformed, it's just underperformed relative to its peers. And what, what Aswath said is these companies just haven't made the kind of all in bets on AI that everyone else has made. He said and it really shocked me that Nvidia was the most scariest one and the most overvalued. And I said well, what about Palantir? And he said, oh well, you've gone from the magnum to 7 magnums and 10. I would say Palantir. But you brought up something that is actually overlooked in the world of investing and that is I can, every board I've been on, I feel like I come in and I talk to the guy or when a CEO's on the call, I can usually tell when we're about to have a board meeting and that is the CEO starts getting defensive and you can just hear this strain and anxiety in his or her voice. And Karp and Altman have shown uncharacteristic stress and defensiveness in their voice recently.

[Ed]

Those are dangerous. Yeah, dangerous positions.

[Scott]

Well, we, we forget these people are human. There's no way for them just to compartmentalize everything. And I get the sense they know they're out over their skis and people are asking really hard questions. They're having a tough time giving good answers for OpenAI.

[Ed]

100% in a very dangerous position. The response from Sam Altman is a total tell. Also the numbers are a total tell. Very dangero by the way, if OpenAI goes out of business and there are real concerns as to what that could do to the larger markets. But say they go insolvent or there's some issue with the timing or they go bankrupt or whatever. I mean, what's going to happen to them? If we're being realistic, they're just going to be folded into Microsoft. Microsoft already pretty much owns OpenAI. They own all of the IP, they have access to all of the IP, they have a substantial ownership over the profits. Like in that scenario, I don't think it just takes down the whole market in a really big way. It's going to take down certain companies. Like Oracle as an example would be a company that's going to get Massively beaten up because of that, because they're so leveraged, basically. And they have these contracts with OpenAI which would put it in a really dangerous position. But again, there are companies that are managing their balance sheets fine. Microsoft's doing a pretty good job of it. Met is doing a good job of it. Amazon, Google, you know, I'm just, again, I'm less concerned than I think some others are. And so I just think it's important to give both sides a little bit of weight, because I don't think the takeaway from this is you need to sell, you need to get out of the stock market. It's still an open question. Obviously going to keep on looking into it, but I just don't want us to conclude like, oh, no, Aswath's worried. I should be worried too.

[Scott]

Okay, so OpenAI last round was 500 billion. If that company were to go away, first off, you're right, it wouldn't go away. It would fold into Microsoft or something else at, say, a valuation of 1 or 200 billion. A destruction in the private markets of 300 billion. That's big. But it's not going to take it on the economy. The reason it would take down the economy or have a serious impact on consumer confidence Amongst the wealthiest 10% who are responsible for the consumer spending. This is the domino effect, and that is if OpenAI gets a shit kicked out of it and announces it's just not growing the way it had hoped. They're the canary in the coal mine for Nvidia, which is a $5 trillion company. Nvidia goes down 80%, which is just not unthinkable. That's a $4 trillion destruction in capital. There's no way that wealthy households all over America don't go, oh, fuck, and start pulling back their spending, which has a disproportionate impact on the economy. I mean, so OpenAI is not the biggest domino, but it'd be the first domino that starts tipping over. Much bigger dominoes. Ooh, that was a good analogy.

[Ed]

Nvidia is definitely a big question mark. It's tough because the valuation, I don't think is completely crazy because the fundamental growth has been crazy. So, I mean, the business is on a tear. I think the question is, will that continue? But what I can tell you with certainty, everyone is overexposed to Nvidia because if you own the S and P, Your position is 7.5%. So you are too exposed. So trim. That's the answer. We'll be right back after the break. And if you're enjoying the show so far, send it to a friend and please follow us if you haven't already.

[Scott]

Foreign comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some high conviction picks, maybe even a few strategic options plays on the side. By the way, be very careful with options and never ride an option unless you have a lot of money because there's unlimited downside. Anyways, the point is you're engaged with your investments and Public gets that. That's why they built an investing platform platform for those who take it seriously. On Public you can put together a multi asset portfolio for the long haul. Stocks, bonds, options. It's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.comprofg and earn an uncapped 1% bonus when you transfer your portfolio. That's public.comprofg paid for by Public Investing. All investing involved the risk of loss including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member Finra SIPC. Complete disclosures available at public.com disclosures Support for the show comes from LinkedIn One of the hardest parts about moving to a new city is finding your people. You can look far and wide, but it's hard to find the people who just get you. And the Same goes for B2B marketers. Educating the right people who align with your business and an audience that connects you with your product and your mission can make all the difference. But instead of spending hours and hours scavenging social media feeds, you can just tap LinkedIn ads to reach the right professionals. According to LinkedIn, they have grown to a network of over 1 billion professionals, making it stand apart from other ad buys. You can target your buyer by job title, industry, company role, seniority, skills and company revenue, giving you all the professionals you need to reach in one place. So you can stop wasting budget on the wrong audience and start targeting the right professionals only on LinkedIn ads. LinkedIn will even give you $100 credit on your next campaign so you can try it yourself. Just go to LinkedIn.com markets. That's LinkedIn.com markets. Terms and conditions apply only on LinkedIn ads. Support for the show comes from SoFi. Planning for retirement doesn't have to be complicated. At SoFi, everything you need is one simple, easy to use app with SoFi's Roth or traditional IRAs you can invest your way. Choose self Directed Investing for hands on control through SoFi securities or let SoFi's award winning low cost Robo Advisor build a portfolio for you through SoFi Wealth. Plus, get a 1% match on IRA rollovers and contributions with no minimum required. That means you don't have to rely on an employer to match your retirement savings anymore. Access a wide range of investment options including stocks, ETF, ETFs, alternatives and more and pay no commissions. All within SoFi's easy to use app. Need some help? Schedule a complimentary 30 minute session with a SoFi financial planner to get a clear view of your financial situation and risk tolerance. Learn more and get [e-mail] profgira that's sofi.com profgira this is a paid advertisement by SoFi Technologies and is not intended to be financial financial advice.

[Ed]

We're back with Prof. G Markets. We talked a lot on the show about how China is closing the gap in the AI race, but now there is fresh evidence that it may actually be pulling ahead. A Chinese startup called Moonshot just released a new open source model that outperformed OpenAI and Perplexity across several benchmarks. Plus plus it is 4 times cheaper to run at scale than GPT5. This news dropped just days after Jensen Huang told the Financial Times quote, China is going to win the AI race. He later clarified that China is, quote, nanoseconds behind and that the US Needs to win by racing faster. But clearly this issue is top of mind for him. Scott Another new model out of China. This One is called Kimi K2. Thinking it's from this company, Moonshot. It cost them four and a half million dollars to train it, which is 1500 times less than what OpenAI spent on R&D this year, outperforming OpenAI's models, outperforming Perplexity's models. A lot cheaper to run. We've been saying this China's just going to flood the market with cheap AI. Here's another one. Your reaction.

[Scott]

If I were advising Xi and I was the head of the CCP and strategy, I would be doing exactly what they're doing. And that is, I'd say, I know, just dump a bunch of cheap, outstanding AI into the market. It's going to put real pressure on these companies that are driving the majority of the American market, which is driving the economy and we're just going to kick them so hard in the nuts. This is our biggest prediction for 2020 that the AI trade unwinds in the US at the hands of government sponsored subsidization of Chinese AI. And they're going to do the equivalent. We used to bitch about them dumping steel, I think into the US market in the 80s, thinking if they sold steel below cost, they would consolidate the market, put all US steel manufacturing out of business and then consolidate the market, similar to what Amazon or Netflix have done. I think they're essentially engaging in the most, in my opinion, the most. Is this true? The most seminal geopolitical action right now is Chinese dumping of AI. Your thoughts, Ed?

[Ed]

Well, I think the most important thing is the price. So Kimmy K2, four times less expensive than GPT5. So I mean we've discussed the pricing before, but let's just go through it again so people understand. So anthropic or Claude, it costs $15 per million tokens. GPT5 costs 10. Kimi K2, which is this new Chinese one is $2.50. Quinn plus, which is Alibaba's one that's again Chinese $1.20. And Deepseek, which everyone knows is also Chinese, $1.10. So they're producing comparably performing AI that is in some cases 10 times cheaper than America's models. And the question that you have to ask is, okay, why is it so much cheaper to create AI in China? That seems like a pretty fucking big deal. The answer is energy. It's because China produces way more energy than America, double the energy that America produces. And where are they leading? You look at the statistics. It's renewables, two times more wind power, three times more solar power, six times more hydroelectric power. And they are continuing to invest in renewable energy. And so that's why electricity in China is cheaper. It's. It's less than half the cost of energy in America. And so it's just so funny because why are we not investing in energy, specifically renewable energy? Because we've decided that it's woke. That's the only reason. And it's happening as we speak. They're terminating grants, they're making the permitting process way more difficult. If you want to build a solar project in America today, there's a new rule where you now have to get a personal sign off from Doug Burgum. That's their big new energy policy. Doug Burgum has to say yes and give it the okay. I mean, that is just a bureaucratic nightmare. And again, why are we doing it? We've decided it's woke. There's no other reason. And it's just so Funny how the anti woke movement is like the new woke movement. It's the same group, think ideological capture that led us down some, arguably some questionable paths during the woke era and now it's happening in reverse and we're falling behind on AI. The reason, again, just connect the dots. The reason that the models in China are 10 times less expensive is because of the energy cost costs. It's because they produce way more energy and they haven't decided that building a solar farm is woke and indicative of liberal capture. So, I mean, there's a pretty clear thing that we need to do here, and that is for whatever reason, clean energy, renewable energy, green energy has been classified as woke and Republicans refuse to touch it. And in many cases they go in and they cut the funding and they gut those projects. So I don't know what we need to do, Scott, but you're the branding expert. How do we, we rebrand renewable energy as not woke? How are we going to do that?

[Scott]

Well, Ed is in the number one New York Times bestselling book, notes on being a man, which, by the way, you did not bring up. You did not bring up.

[Ed]

I brought it up last time.

[Scott]

Everyone's using this term toxic masculinity. I don't think there's any such thing. I think there's cruelty, criminality, abuse of power. But masculinity should be an aspirational thing. But there's a weirdness around. I think Trump was really, I think Trump flying into the quote unquote, not masculinity, but into this faux weird coarseness plus cruelty equals masculinity, fucked up sense of gendering things that. It really worked for him, unfortunately. And so now he's trying to. Anything that feels progressive is feminine, is weak and should be ignored. But what we need to do somehow is make smart equal, patriotic equal, cool equal. It doesn't even need to be a gender. Degender it, for God's sakes. I mean, Texas, which is not known as a progressive, you know, you might even argue like Old west masculinity or whatever, or old South, I don't know what the term would be. Texas, they have more wind power. They're the largest producer of wind power in the nation because the economics work. But this stupid feminization and conflating renewables with femininity and progressiveness, which they then say are bad things and we need to, if we're real men, we're going to go after oil and whatever pollutes the most. That's me. Strong like bull. Okay? Just put that shit aside and say, I understand the notion that if we should have strategic oil reserves, we should continue to drill. The greatest arbitrage in history is fossil fuels and we need to be mindful of climate change. But pick your poison. And we have to be economically competitive. I get it. But to decide that somehow renewables make you less manly, which is some fucked up way conflated with leadership such that you ignore the renewables, which, I mean at a very basic level, we don't know where oil is going. We don't know if it's going to spike to $200 a barrel or going down to 10 bucks a barrel. It is really hard to predict the price of oil. It is a fairly safe prediction that in a decade solar and wind are going to be less expensive than they are now. Every year technologies march around, battery technology, around the dynamics of trying to get more energy from a rotating windmill or a hydroelectric capability or so every year it gets cheaper and better and there's occasionally a blip up. But for the most part, the investment, especially by the Chinese in renewables, which has been much more dramatic than us. They are very good at scale in figuring out a way to drive the cost down. Their strategy is the same as Walmart or Netflix or Amazon, and that is push, push your costs down, pass on those price decreases to the end consumer, consolidate the market. They're about market share at a lower price. Their economy strategy is the same strategy as Amazon, Costco, Walmart. Our strategy in the US has been to elevate perceived value through IP protection and branding and innovation. We have different, we go at different sides. And some people would argue that China's moving up the food chain and now getting an innovation around automation and robotics, et cetera. But this is a really good bet on renewables for any other reason. I am 98% confident renewables are going to be less expensive in 10 years than they are now. I have no fucking idea where oil is going to be. And so it just seems okay. How do we make smart and competence aspirational and cool again as opposed to offending people and going back to the 50s, including the way we treat immigrants and non whites and women. Somehow that's cool and masculine and macho. So I do think there needs to be a rebranding of and to a certain extent we stuck our chin out as progressives. We said, okay, let's end every email by declaring our pronouns and have land acknowledgments every time we open a conference.

[Ed]

It's so fascinating how much damage that actually did to America just because of how much it pissed people off. I mean, just as you say that it almost. I mean we shouldn't, we shouldn't apply too much blame to, to pronounce Sinos. But in a funny way the, the most extreme wokeness has come back to bite us us to the point where we're now. The other side has gotten so insane that they are now deciding that they need to cut clean energy projects because if you're building renewable it just brings up thoughts in your head of land acknowledgments and pronouns at the end of emails. I mean it's just so striking how much that struck a chord in Americans and how much it has actually put. Americans are behind to the point where we're not producing enough energy to build the frontier technology which is AI. Like we're literally falling behind in the AI race because. And you got to connect these dots here because we're not producing enough renewable energy. And the reason we're not producing enough renewable energy is because we've decided that it's too woke. Like it's crazy how these things connect to each other.

[Scott]

The basic cycle of politics in America for the last, I don't know how long it's been, definitely for the last decade or last 20 years is that Democrats are well intentioned and in an effort, a noble effort to repair the injustices of the past. And also Democrats have an obsession with grabbing social virtue even if it means ignoring programs that actually impact the material and psychological well being of Americans. They go crazy and take shit way too hard. Oh, a six' four transgender woman shows up to an NC2A swim meet. Well, let's all applaud and look at each other and pretend that it's inspirational. A bike racer. There's cash awards. A transgender woman crosses the finish line five minutes before the rest of the pack. Five minutes in a bike race. In a bike race. And we all, we all applaud. Anyway. I'm a little triggered. I don't know how we got here. Should we get back to AI and maybe the housing crisis?

[Ed]

We're a little all over the place today.

[Scott]

I can't focus kiss. I'm like a 17 year old right now.

[Ed]

Here's the ending point that I will end us on. Average price per megawatt hour of electricity in China, $88. Average price in America $188. There is a huge disparity here and we are falling behind. And we can say that it's because of wokeness or anti wokeness and I really do think that's a big piece of it or anything else. But the point being we're clearly falling behind so clearly we need to do something about it. So gutting our renewable energy programs probably not a very good idea and it's certainly not going to be very persuasive to do it all in the name of anti wokeness. We'll be right back and for even more markets content Sign up for our [e-mail] subscribe Support for the show comes from Babbel. Small steps lead to big wins. That's how most success stories go, and that's especially true when it comes to learning a language. With Babbel you can learn a new language and see real progress. You can actually track and feel their bite sized lessons fit easily into your daily routine. Team just 10 minutes a day is enough to start seeing real results. Babbel lets you practice real life conversations step by step without the stress. I've been trying to pick French Backup which I lost long ago and it's been great making some progress. I'll keep you posted, but overall I've been enjoying my experience. Here is a special limited time deal for our listeners right now. Get up to 60 off your Babel subscription at babel.com forward/markets get 60 off at babel.com markets spelled b a b b e l.com forward slash markets rules and restrictions may apply.

[Scott]

Support for Propag comes from Aura Frames. When you have family members stretched across the country or even the world, it can be hard missing those big family milestones or even just little everyday things. Aura Frames makes it easy to stay connected with friends and family no matter where they are. Now you can send photos straight from your phone right to an Aura Frame. Just plug it in, download the free Aura app and connect to WI Fi. Ed got an Aura Frame himself. Ed, what did you think of the Aura Frame?

[Ed]

I love my Aura Frame. Yeah, high quality. I keep it at my desk in my office. It's super easy to transfer your photos straight from your phone so I end up seeing pictures that I kind of forgot about. So yeah, it's. It's a nice reminder of good moments in my life. Big fan of the Aura Frame.

[Scott]

That's nice. For a limited time you can visit auraframes.com and get 45 off or as best selling Carver Matte frames named number one by Wirecutter by using promo code propg at checkout. That's a U R A frames.com promo code Prof. G this exclusive Black Friday Cyber Monday deal is the best of the year year. So order now before it ends. And you can support the show by mentioning us at checkout.

[Ed]

These days every business leader is under pressure to save money.

[Scott]

But you can't crush the competition just by cutting costs. To win, you need to spend smarter and move faster. You need Brex. Brex is the intelligent finance platform that breaks the trade off between between control and speed with smart corporate cards, high.

[Ed]

Yield Banking and AI powered Expense Management. Join the 30,000 companies that spend smarter.

[Scott]

And move faster with Brex.

[Ed]

Learn [e-mail] grow we're back with Profge Markets. The US housing crisis is somehow getting even worse. New data revealed that the median first time home buyer is now 40 old, which is the oldest on record. And first time buyers accounted for just 21% of purchases last year, which is roughly half the historical average. Meanwhile, the administration is pitching a 50 year mortgage as the potential answer to this problem. They claim it will make ownership more affordable for younger buyers. God, so much, so much bad news in this episode today. I got to tell you, Scott, how is the housing crisis getting even worse and is this 50 year mortgage idea going to fix it?

[Scott]

So first off, I think the 50 year mortgage is a bad idea. It ends up, it lowers your payment marginally, but then you just build equity at a slower pace. I think one of the advantages of a home as an investment if you account for maintenance and taxes and upkeep. Homes have not performed other asset classes and but it does perform. It is a great way to build wealth because people have a tendency, if they're a little short at the end of the month or they have a choice between taking vacation and putting another 400 or 1000 bucks in their Vanguard ETF, they might choose to take a vacation or spend the money. Whereas if it's about tightening your belt and not getting kicked out of your house, you'll do that. So it's sort of a forced mechanism of forced savings. In addition, it does create bond and momentum towards relationships. There's just something very psychologically rewarding around building something with somebody. And you start practicing building something on a life with someone by getting a house, spending the weekends going to Home Depot to see immigrants have their heads stamped on by people at mass agents. That's what I like about Home Depot. Back into politics. He couldn't resist.

[Ed]

You need to get off this Pivot tour. I blame Pivot.

[Scott]

It is. It's all Pivot's fault. That's right. And by the way, it Hurts our revenues. Advertisers hate politics. Anyways, back to housing. It's psychologically accretive, It's a great way of forced savings. It helps young people find partners or create momentum towards long lasting relationships. So it's a huge issue both sociologically and economically and we're just headed in the wrong direction. And what I hate about this is we act as if these problems are unfixable. Instead of spending all this money on all this stupid shit ranging from tax cuts to ICE to taking the military's budget from 870 billion to a trillion with a substantial amount of money but a fraction of those expenditures, we could provide incentives to the private development community and also pass federal legislation around yimby laws. Whether it's getting rid of height requirements, getting rid of dump shit like you don't have to have a parking space for every three units, getting rid of making it easier to sue if you don't approve of certain permits. Because my generation, the bottom is my generation is just so fucking selfish. And that is we figured out a way to increase our net worth by creating a rejectionist exclusionary culture where we make it harder to get into college and harder order to get new housing permits approved such that the value of the assets I already go up in value. And if we unleash the private sector and developers and created found unincorporated lands near city centers or in areas a little bit cheaper, manufactured homes cost 50% as much unleash give tax subsidies to developers and regulatory coverage and yimby laws such that there was just. It shouldn't be drill baby drill, it should be build baby build build. And just say in 10 years we're going to build 8 million incremental homes which is going to substantial and then weigh in with the full faith and credit have something similar to FHA or VH or Veterans Affair loans give people. I would be ageist under the age of 40 have a goal. If you make the average household income of $72,000 under the age of 40, you qualify for a, you know, 2 or 3% whatever the money is, the government can borrow at that and low down payments. And we're going to unleash the private sector of developers to make just a massive influx of affordable housing. I mean Singapore, we can't do this because we don't have the money. Singapore gives homes away. They say if you work for the government or you have a certain qualification, we'll give you a home because it's a great way to build wealth and a great way for you to feel good about Singapore.

[Ed]

Well, they build those homes. I mean, they built a ton of housing. I mean, it's still. I just, I don't want people to think that like, oh, you can just make the. I mean, you gotta build the thing in the first place.

[Scott]

Yeah. So the bottom line is the incumbents like to pretend they use words like globalization and network effects. No, these problems have common sense solutions. It's just the incumbents wanna spend all of our additional capital on tax cuts. And it's like, no, you're right, this shit's gonna cost money. All right? That's the bad news. The good news is we know how to fix this shit. We it up, we can unfuck it. And the most basic thing to fix America right now is pretty straightforward. Put more money in the pockets of young people. They're 24% less wealthy than they were 40 years ago. I am 72% wealthier.

[Ed]

That's the problem.

[Scott]

That's the basis for dissatisfaction, anxiety, a lack of household formation, self harm, people feeling bad about America, people going to the extreme right and listening to these fucking weirdo gripers or gropers or whatever the hell they're called, these little fascists, or going to the way fucking left and saying, oh, socialism and communism. Now trust me on this, capitalism's brought more people out of poverty than. And it's the, it's the least bad system of its kind. You want to solve all this shit. You want to create more. You want to mend the social factors. Fabric simple. Take money out of the pockets of wealthy senior people who keep voting themselves more fucking money and transfer it into the pockets of people under the age of 40.

[Ed]

Full stop.

[Scott]

That's doors 1, 2 and 3 and.

[Ed]

On housing, just build more. And it's funny because everyone seems to understand this now, like you mentioned, all of those housing policies that are supposed to promote remote supply, which are now happening. And of course there's the abundance thing, that's become a big deal. But what is interesting is like we're also seeing these stupid financial engineering proposals that I thought we all agreed were not going to work. But the 50 year mortgage is a perfect example. It's like, oh, how do we fix the home ownership problem? Let's just increase the amount of time that the loan is extended over from 30 years to 50 years. Because that's going to decrease your monthly payments. Yes, it'll decrease your monthly payments, but it means more months. So you're actually going to be paying more. So that's not going to fix the problem. And then there's the other financial engineering thing that, that, that has come up in the New York City mayoral election which is like, oh, just, just freeze the rent. Like we can just fix it by just freezing it and then you don't have to pay more. And again, and we've been over this, but that doesn't work because it disincentivizes construction, sends rents up everywhere else else and it does nothing to address the underlying problem of supply. So I'm just so sick of us having this argument like how do we fix the housing? It's like, build more houses. That's all you need to do.

[Scott]

It's a supply problem. It's easy to figure out.

[Ed]

We can all agree, supply problem. And by the way, I do think we're making more progress on this. A lot of the ballot measures in New York City there was fast track. The affordable housing construction know, simplify the review process for housing projects, the Road act, the Road to Housing act, which again, it's going to streamline the permitting process. It's also got this interesting grant program where it actually rewards local governments who figure out ways to increase housing supply. So basically the government's being like, do whatever you need to do to increase the housing and we'll just pay you money. That's a great idea. And that, you know, that's passed in the Senate. We're going to move on to the House. So. So there are ways to do it, but the answer is not financial engineering. It's not saying, oh, figure out a new financing process through 50 year mortgages. Oh, just have more rent controls, freeze the rent in these locations. It's just like get more supply into the system. And you can do that through reducing regulatory burden. And you can also use technology to do it. You mentioned some of those technological innovations like, but you know, we do just need to industrialize construction. And yeah, Ezra Klein's right. It's about abundance. It's about increasing the supply.

[Scott]

He's a tall drink of lemonade. He's gotten through a glow up, hasn't he? They're like, let's put some facial hair on that man.

[Ed]

He really had everyone, Everyone loves him. I'm getting a little sick of him. I got to tell you, I like Ezra. Just seeing him everywhere. I like him too. He's getting a little too successful for me.

[Scott]

I think he's. I'm pretty, I'm not sure. I think he's like trying to position himself for a run for.

[Ed]

I feel like he could. Everyone loves him. I just See him everywhere. And then I get jealous because his podcast bigger than ours.

[Scott]

Yeah, we're making more money though. He works for the Times and they won't let him do host read overs because you know, they're, they're so fucking virtuous now. Sell Zbiotics, bitches. Let's make some Benji's. Let's splash the cash. Let's fling the bling, my brother, 100%.

[Ed]

That's why we're winning. I think that's all we got for today, Scott.

[Scott]

God, that was a round one.

[Ed]

How are we feeling?

[Scott]

Jesus, that was.

[Ed]

Let's take a look at the week.

[Scott]

That felt like my first marriage. I'm like, wait, what just happened? What just happened? God, it was interesting and there were some high moments, but where the fuck am I? How did I get here?

[Ed]

The week ahead we will get a temperature check on the American consumer from Home Depot, Target, Walmart and Lowe's. They are all reporting earnings. Klarna will report for the first time since going public. And of course all eyes will be on Nvidia as it reports Wednesday night. Scott, any predictions?

[Scott]

So back to me. I'm back in San Francisco.

[Ed]

Here we go. Here we fucking go.

[Scott]

I literally can't stand it here and I'm trying to figure out why. Because it is a beautiful city. It's the most beautiful city in the nation I think thing and I think it's cuz I just hated it here. I was like I was married and we used to have to do like go to Napa and do wine tastings and like g God. There's no late night drinking spots here.

[Ed]

It's true. There's no wet of pulsy, no clubs.

[Scott]

People would invite you like sailing or mountain biking and Mount Tam and I'm like, oh God, I got to pretend to like this awful city closes at.

[Ed]

10Pm I'm waiting for you to turn this into a prediction. You got to figure it out somehow, okay?

[Scott]

My prediction, I can't help it, it's going to be a political one. There's going to be some fucking crazy shit out of the White House in the next seven days with all the Epstein files coming out, all these emails that you referenced at the beginning. They have to pull out a nuclear weapon of distraction and they're either going to start bombing, they're either going to go into Venezuela and our military action against Venezuela. Some crazy shit is going to come out of the White House in the next seven days because they need to detonate literally a nuclear device to distract from these Epstein emails, which are starting to dribble out.

[Ed]

Okay, here are the credits. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our Associate Producer is Alison Weiss. Mia Saveri is a Research Leader, Research Assistant Associates are Isabella Kinsel, Dan Shalon and Kristen o'. Donoghue. Drew Burrows is our Technical Director and Catherine Dillon is our Executive Producer. Thank you for listening to Profg Markets from Prof. G Media. Tune in tomorrow for a fresh take on markets.

[Scott]

And kind reunion as the world. This message comes from at&t. America's first network is also its fastest and most Reliable based on RootMetrics United States Root Score Report first half 2025 tested with best commercially available smartphones on three national mobile networks across all available network types. Your experiences may vary. Rootmetrics rankings are not an endorsement of AT and T. When you compare, there's no comparison. AT and T.

[Advertisement Voice]

Adobe Acrobat Studio so brand new. Show me all the things PDFs can do. Do your work with ease and speed. PDF Spaces is all you need. Do hours of research in an instant with key insights from an AI assistant. Stick a template with a click now your prezo looks super slick. Close that deal. Yeah, you won. Do that doing that, did that, done. Now you can do that. Do that with Acrobat now you can do that. Do that with the all new Acrobat. It's time to do your best work with the all new Adobe Acrobat Studio. Saks Fifth Avenue makes it easy to holiday your way. Whether it's finding the right gift or.

[Ed]

The right outfit, Saks is where you.

[Advertisement Voice]

Can find everything from the perfect Chloe bag for your hard to shop for sister to a Prada jacket for a fancy holiday dinner. And if you don't know where to start, Saks.com is customized to your personal.

[Scott]

Style so you can save time shopping.

[Advertisement Voice]

Shopping. Make shopping fun and easy this season and find gifts and inspiration to suit your holiday style at Saks Fifth Avenue.