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[00:02]
Host/Announcer
Support for the show comes from Northwest Registered Agent. Your business identity is everything that makes your business legitimate and professional. With Northwest Registered Agent, you don't just form a business. You start a complete foundation built for privacy, credibility and growth. That includes registered agent service, a business address, operating agreement, domain website, professional email, phone number, and built in privacy. In other words, your home address, personal email and phone number. Stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com Prof. Gfree and start using free resources to build something amazing. Get more with Northwest registered agent@northwestregisteredagent.com profg free. You know that feeling. Too many updates, too many meetings, too many things falling through the cracks. Monday.com was built for that gap. The AI work platform design designed from the ground up for people and agents
[01:01]
George Hahn
to work side by side and deliver more together.
[01:04]
Host/Announcer
Drafting the brief, flagging risks, running a competitive scan. Your agent can do it all. And the best part, anyone can build one. Even you. Try it. Create your first Monday agent today at
[01:16]
Sponsor Voice
Monday.com support for this show comes from Odoo. Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other? Introducing Odoo. It's the only business software you'll ever need. It's an all in one fully integrated platform that makes your work easier. CRM, accounting, inventory, E commerce, and more. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you try Odoo for free@odoo.com that's o d o o.com
[02:00]
George Hahn
welcome to the week from Profg Media where we break down what mattered and what it all means. I'm George Hahn and it's Friday, August 7th. Today a hedge fund blew up. South Korea's stock market plunged 44% and the AI trade found its floor. Then why? A generation locked out of financial security is taking bigger risks to get ahead. And finally, Sam Harris on what's actually worth your attention. Let's get into it. Last week, the debt that was propping up the AI boom finally came into view. This week we found out what it does to people. On Friday's Prof. G Markets, Scott and Ed sat down with Jim Chanos, the short seller who called Enron and who now teaches a course on the history of financial fraud.
[02:56]
Jim Chanos
The fraud cycle follows the financial cycle with a lag and the longer the financial cycle goes on, the more amount of fraud is ultimately uncovered on the down cycle. So I've already dubbed this the golden age of fraud. And I suspect that when we're on the down part of this cycle, the bodies will float to the surface as they always do. But remember the other the, the corollary to that is the harshest prosecutor and the staunchest defense attorney of a company is its stock price. Nobody goes after frauds at all. Time highs. They only go after them after investors have lost money because these kinds of things are political.
[03:44]
George Hahn
So why does the boom still look so healthy on paper? Chanos says the accounting is doing the work.
[03:51]
Jim Chanos
And that's a big question because like the dot com boom, we have an accounting identity problem that follows these capex booms, namely that the companies that are spending the money do not expense immediately. Most of that money that's being spent, it's capitalized and depreciated over 5 to 10 years. The companies receiving a lot of that money, the Nvidias of the world, the Caterpillar tractors of the world, the utilities, they're receiving it in terms of revenues and profits immediately. So the same dollar is basically contributing to profits in a far greater extent than it does in a more normalized economy where it would be recognized as revenue by one company and expense by another. And that's what we're seeing. And that's why S and P profits have taken off in the last two years. It's because of this mismatch.
[04:54]
George Hahn
That was the theory this week. We saw it play out. Leopold Aschenbrenner is 24. His fund Situational Awareness was up 439% for the first half of the year, swelling to roughly 4,45 billion dollars. He told investors the sell off had created an unusually attractive opportunity. Six days later, after mounting losses and margin calls, the fund sold most of its public stock portfolio to Ken Griffin's Citadel in a fire sale. Situational was left managing roughly $10 billion.
[05:31]
Ed
Last week we learn a truth bomb, which is that it turns out he was 5x levered up. He was then margin called and then he decided, well, not decided. He was forced to liquidate his entire public equity portfolio. And supposedly he's also selling his stake in Anthropic too. And it is remarkable because if you've been online, if you've been on Twitter and you're kind of plugged into the investing community, this guy was considered AI Jesus. He was like the savant of our time. He could predict the future. He knew everything that was going to happen. And literally overnight, the whole thing has collapsed. And what is it? It's a story of leverage. Once again, he was levering up into the hottest stocks, into the hottest momentum trades in the world, looked really smart until suddenly he didn't.
[06:27]
George Hahn
That was the institutional version. The retail version happened on the other side of the world. South Korea's market fell 44% from its June highs. $2 trillion in value gone. The cause was a product launched in May. Single stock leveraged ETFs tracking Samsung and SK Hynix, multiplying daily returns by two, three, even five times. Here's both Scott and Ed on Monday's
[06:59]
Host/Announcer
Prof. G. Markets leverage on the way up is a ton of fun. It's ugly on the way down. And my understanding is talk about a gambling economy. 92% of investors in these products were retail. And so there were two brokerage accounts for every citizen in South Korea. So it was never institutional risk, it was household risk. And the Goldman estimates that 3.4% of South Korea's adult population has received a margin call. I mean, that's insane when you think about it. So the human cost here is so real that South Korea has rolled out a debt counseling hotline as part of its suicide prevention plan. That's a sentence that should give us all pause. And so the lesson here isn't new. It's just very expensive for, you know, for every generation to relearn this. And that is, leverage doesn't create risk. It removes your margin for being wrong.
[07:56]
Ed
You mentioned the, the craziest stat, I think, which is that more than 3% of the adult population has now received a margin call in South Korea. But I think probably most astounding is some of the imagery that we're seeing coming out of South Korea. If you go to the National Assembly Building in Seoul, South Korea right now, and you go on the sidewalk, you will find pile of funeral wreaths on the street. Yeah, I saw that with a sign that says abolish the single stock leveraged etf. Because suddenly everyone is realizing that this stuff is extremely dangerous. There are literally thousands of people who have lost their life savings because they convinced themselves that this was the way to do it, this is how they were going to get rich. I mean, if you look at the amount of, of people in South Korea that are in on those two names on SK Hynix and on Samsung, it comes out to around 70%. That is, according to the Korean stock market regulators. The response from regulation from the people in charge of South Korea's version of the SEC is they're going to just stop allowing these new listings of the single stock leveraged ETF. This is rising in America. You look at US leveraged ETFs, they've jumped from $120 billion in AUM in April to more than $200 billion today. It's up nearly 70% in just a few months. The number of US leveraged ETFs has more than doubled since 2025, and more than half of them are single stock ETFs, which is the exact same thing that got South Korea into trouble. So it'll be really interesting to see how this plays out in the U.S. i think the same trend is happening, but it's almost like we're maybe a couple of months behind South Korea, or at least we're less concentrated than South Korea is because of how dependent their stock market is on those two names in particular. But the same trends are beginning to happen, and I think it can only end badly.
[10:05]
George Hahn
We'll be right back after the break.
[10:13]
Host/Announcer
Support for the show comes from Odoo. If your business runs on five different apps, 12 browser tabs, and one spreadsheet that everyone's afraid to touch, it's prob time for Odoo. Odoo is an all in one business management software that connects every part of your business into one powerful, easy to use platform. So instead of wasting time switching between disconnected systems, your entire business works together in real time. Your team moves faster, your data stays accurate, and you can actually focus on growing your business. Let one unified system run your entire business. From the first opportunity to the final payment, everything works together in one part place. Whether you're a small business or managing a large operation, Odoo gives you one flexible platform built to grow with you. Try today for free@odoo.com profg that's o d o o.com profg. Support for the show comes from Chime. Summer can cost a lot. A trip here, a dinner there, a couple concerts. It all adds up. But if you really want to elevate your summer and your summers to come, you need to be getting the most out of your money. And that's what Chime is for. Chime is not like a traditional bank. Chime offers the most rewarding fee free banking with the power of the word no. No overdraft fees, no monthly fees, and no minimum balance fees. You get 5% cash back with Chime cards on things including gas or groceries, all while building credit through regular everyday spending. You can also grow your money faster with a savings rate that is nine times the national average. And if you're ever in a pinch, Spotme lets you overdraft up to $200 fee free. Join the millions who are already banking fee free with America's number one choice for banking. Head to chime.com profg that's chime.com profg Sign up now. It takes only a few minutes. Chime is a fintech not a bank. Banking services and Chime card provided by Chime's bank partners. Qualifying direct deposits required terms and limits apply. Go to chime.com disclosures for details. Support for the show comes from Quince. Quince specializes in everyday staples that work harder like their ultra soft organic cotton tees and premium Mongolian cashmere sweaters. They have premium denim and tailor chinos from just $60 with the kind of perfect fit structure and high quality fabrics you'd expect from a luxury designer brand. They're versatile, timeless and transition seamlessly from a casual workday to dinner out. And Claire's gotten some quints.
[12:40]
Ed
I did get some quints.
[12:41]
Host/Announcer
Quince sends me nothing but good stuff. I love their tank tops. I genuinely wear them all summer long. But I know fall's around the corner so probably gonna be checking out their sweaters sooner rather than later. High quality stuff, good price point. Highly recommend them. Upgrade your everyday Download the Quints app for app exclusive offers or go to quince.com profg get free shipping on your order and 365 day returns now available in Canada and the UK too. That's quince.com propg.
[13:25]
George Hahn
Welcome back. The obvious question about the South Korea story is why anyone wanted these products in the first place. On Monday's Prof. G Markets, Ed had an answer and it sounds a lot like what's happening in America too.
[13:40]
Ed
Well, when you think about why has this happened? Why are all these young people flinging their money into these leveraged ETFs and then praying that the stock goes to the moon and then being upset when it crashes to the ground. If you look at South Korea on a demographic basis, there are few nations in the world that are experiencing a loneliness crisis more severe than South Korea. You look at their marriage rates which have declined 40% in the past decade. You look at the fertility rate which hit 0.8 last year. It's the only OECD nation with a fertility rate below 1. You look at what the local governments are doing where they're actually paying people to get married now. I don't think it's a coincidence that they're suffering the same loneliness crises that we're starting to see in America, and also seeing the same sense of financial nihilism that is becoming pervasive among young people, such that they are levering up on these names and praying and hoping that it'll take them into a state of financial security and success. I think the two are definitely linked, and I think South Korea is ground zero for the problems that we're about to see in America.
[14:56]
George Hahn
Underneath this week's market stories was a familiar belief. Endure the present, make the right bet, and happiness will arrive later. Scott's guest on Conversations this week, Sam Harris, has spent much of his career challenging that idea.
[15:14]
Sam Harris
We're living in a much more highly weaponized environment where the smartphone in our pocket has canceled the very possibility of boredom. It used to be that you could get bored and you could become interested in that fact, right? You're sitting in a waiting room, you know, the doctor's taking an hour to see you, and there's no magazines worth reading, and you're just left with your thoughts. And you might have noticed in that situation that your mind is not at rest. It's not at ease. You're just, you're actually not comfortable in your own skin. You're looking, you're casting about, trying to find something worth paying attention to, and you're uncomfortable. Very few of us have that experience anymore because we can always relieve boredom by watching something or reading something or listening to something. And in some ways that's a good thing. I mean, I'm not really just, I'm not advocating boredom in principle as a good experience, but what it used to allow many of us to discover is that there's something on the other side of boredom, right? And boredom really is an illusion. I mean, boredom really is just lack of attention. I mean, when you go on a meditation retreat and do nothing but meditate, state you're in silence and you're doing nothing but pay attention to your moment to moment experience. You're not reading, you're not writing, you're not watching anything. Obviously you're not having conversations with people. You just are noticing sights and sounds and sensations moment by moment, and then. And the arising of each subsequent thought when you just become the witness of your experience in that way, that is meditation. And the moment you can actually do it, the moment you actually build a little bit of concentration in that direction, you discover that boredom is a total illusion. There's. It was just boredom is just an inability to pay attention.
[17:06]
George Hahn
And at the end Scott asked how he allocates his attention now versus in his twenties.
[17:11]
Sam Harris
The real recipe is, you know, paradoxically, it's not worrying about the future, it's not worrying about the past. It's not being ambitious in all the usual ways. I mean, seeking happiness in all the usual ways. It is actually developing a capacity to be more and more present so that you kind of equalize your moments. Whereas, like, even if you're just stuck in traffic, you can locate a depth of well being that makes that not a problem. Right? I mean, the lesson of life, as far as I can tell, is that you can't become happy. You can only be happy. I mean, that's really, it's like that is the structure of our psychology that goes unacknowledged for most of our lives. We live most of our lives thinking we can become happy. What we have to do is we have to get all the things and all the accolades and all the pieces in place such that we have a good enough story and good enough reasons to finally be happy. But for the most part, that's a mirage.
[18:18]
George Hahn
The markets offer their own version of that mirage. One more trade, one more rally, one extraordinary return that will finally make everything feel secure. But leverage can't guarantee a better future. And obsessing over the future can cost us the life happening now. That's the week. I'm George Hahn. We'll see you next Friday.
[18:53]
Ed
Support for the show comes from kpmg. In any organization, disruption is inevitable. But struggling through it doesn't have to be. The KPMG Adaptability Index is your blueprint for building capabilities and to handle what comes next. It uses real data to look at
[19:11]
Sponsor Voice
how your culture, strategy and partnerships all
[19:14]
Ed
work together to help your business thrive. Stop reacting and start adapting. Visit kpmg.com US Adaptability to explore the Adaptability Index and Pulse surveys today.
[19:30]
George Hahn
Hey, it's Ryan Reynolds here from Mint Mobile. Now I was looking for fun ways to tell you that Mint's offer of unlimited Premium Wireless for $15 a month is back. So I thought it would be fun if we made $15 bills. But it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try@mintmobile.com Switch upfront payment
[19:52]
Host/Announcer
of $45 for three months, $90 for six months or $180 for a 12 month plan. Required $15 per month equivalent taxes and fees Extra initial plan term only greater than 50 gigabytes. Me slow when network is busy See
[20:00]
Ryan Reynolds
terms we're all feeling it getting pulled in a million directions. In a world full of distractions, focus is increasingly hard to find. And when you're needing to reset and refocus, you'll want something revitalizing. Pure Leaf Mental Focus is a new line of sparkling, real brewed iced teas made with naturally occurring caffeine from black tea and added L theanine to help support attention and focus without the sugar or calories. And it's available in two delicious flavors, peach and raspberry. Time for a tea break? Time for a Pure Leaf? Try it yourself. Check out the product locator@PureLeaf.com find us.

Summary5 min read

Podcast Summary: The Prof G Pod with Scott Galloway

Episode: The Week: How Leverage Broke the AI Trade
Date: August 7, 2026
Host: George Hahn (for Prof G Media, with Scott Galloway, Ed, guest Jim Chanos, guest Sam Harris)

Episode Overview

This episode unpacks a dramatic week in global markets centered on the collapse of AI-driven trades and the dangers of leverage. The discussion moves from the implosion of a much-hyped hedge fund to the devastation of South Korea’s retail investment boom to the psychological roots of financial risk-taking. The show closes with a philosophical segment about attention, happiness, and the false promise of “one more win” in markets and in life.

Key Discussion Points & Insights

1. The Downfall of the AI Trade – Debt & Leverage Exposed

AI Boom Fueled by Debt
- George introduces the central event: a major hedge fund collapse and the South Korean market’s 44% plunge tied to leveraged AI bets.
- "Last week, the debt that was propping up the AI boom finally came into view. This week we found out what it does to people." (George Hahn, 01:59)

Jim Chanos on the Financial and Fraud Cycle

The Lagged Cycle of Fraud
- "The fraud cycle follows the financial cycle with a lag...the longer the financial cycle goes on, the more amount of fraud is ultimately uncovered on the down cycle. So I've already dubbed this the golden age of fraud." (Jim Chanos, 02:55)
- He notes that frauds are only prosecuted after market collapses—“the harshest prosecutor and the staunchest defense attorney of a company is its stock price.” (Jim Chanos, 03:20)
Accounting Distortions in the AI Boom
- Companies making capital expenditures (capex) for AI don’t expense these immediately, while those receiving capital (like Nvidia, Caterpillar) record immediate profits.
- "The same dollar is basically contributing to profits in a far greater extent than it does in a more normalized economy..." (Jim Chanos, 03:51)
- This mismatch creates inflated short-term S&P profits.

The Hedge Fund Blow-Up: Situational Awareness

Leverage at the Edge of Disaster
- Leopold Aschenbrenner’s Situational Awareness fund: up 439% in H1 2026; then wiped out after a margin call.
- "He was 5x levered up. He was then margin called and...forced to liquidate his entire public equity portfolio." (Ed, 05:30)
- Leopold had been dubbed “AI Jesus”—the implosion illustrates that extraordinary returns often hide dangerous levels of risk.
- Notable: Sold almost $10B in investments to Citadel in a fire sale.

2. South Korea’s Retail Catastrophe – The Human Toll of Leverage

Leverage Goes Mainstream
- South Korea’s market collapse: single-stock leveraged ETFs (tracking Samsung, SK Hynix) allowed 2x–5x betting.
- The majority of investors (92%) were retail, not institutional, making it a massive household crisis.
- "Goldman estimates that 3.4% of South Korea's adult population has received a margin call. I mean, that's insane when you think about it." (Scott Galloway, 06:58)
- Funeral wreaths outside the National Assembly in Seoul protested the financial ruin.
- “There are literally thousands of people who have lost their life savings because they convinced themselves that this was the way to do it...” (Ed, 07:56)
Regulatory Response
- Korean regulators halted new leveraged ETF listings. Current exposure: ~70% of retail capital was tied to a few tech stocks.
- The US is seeing similar trends: leveraged ETF AUM has jumped nearly 70% in months, with most new products mimicking the Korean model.
- "It can only end badly." (Ed, 09:56)

3. Social & Psychological Forces Driving Risk-Taking

Demographic Despair Fuels Financial Risk
- Ed explores why so many young Koreans (and Americans) are willing to take outsized risks.
- "South Korea...experiencing a loneliness crisis more severe than...anywhere in the world. Marriage rates...down 40%. Fertility below 1...There's the same sense of financial nihilism..." (Ed, 13:39)
- Extreme financial bets are driven by a sense of being “locked out” of stable futures.

4. Sam Harris: The Mind’s Role in Happiness and Attention

The Mirage of the Next Win
- George draws a parallel between financial risk and psychological escapism.
- Sam Harris on digital distraction:
  
  "The smartphone in our pocket has canceled the very possibility of boredom...what it used to allow many of us to discover is that there's something on the other side of boredom...boredom is just an inability to pay attention." (Sam Harris, 15:14)
- Harris urges listeners to seek satisfaction in the present rather than postponing well-being for the future.
Reframing Happiness
- “You can't become happy. You can only be happy...We live most of our lives thinking we can become happy. [But] for the most part, that's a mirage.” (Sam Harris, 17:11)
Conclusion: Parallels to Markets
- George ties it together:
  
  "The markets offer their own version of that mirage. One more trade, one more rally, one extraordinary return that will finally make everything feel secure. But leverage can't guarantee a better future. And obsessing over the future can cost us the life happening now." (George Hahn, 18:17)

Notable Quotes & Memorable Moments

Jim Chanos: "The harshest prosecutor and the staunchest defense attorney of a company is its stock price. Nobody goes after frauds at all-time highs." (02:55)
Ed on South Korea: "More than 3% of the adult population has now received a margin call in South Korea." (07:56)
Sam Harris: "You can't become happy. You can only be happy." (17:11)
Scott Galloway: “Leverage doesn’t create risk. It removes your margin for being wrong.” (07:25)

Timestamps for Key Segments

02:55 – Jim Chanos on fraud cycles and distorted AI accounting
05:30 – The implosion of Situational Awareness hedge fund
06:58 – South Korea’s retail leverage crisis; societal implications
13:39 – Ed on demographic despair driving financial risk
15:14 – Sam Harris on attention, boredom, and present-moment happiness
17:11 – The philosophy of happiness versus endless striving
18:17 – Closing reflection on markets and the mounting cost of leverage

Tone & Language

Blunt, direct, and analytical—unafraid to connect personal finance trends with macro-societal pressures.
Moments of empathy, especially discussing the human cost in South Korea.
Philosophical and contemplative in the latter segment, echoing Sam Harris’s meditative tone.

This episode captures a pivotal moment for investors and non-investors alike—warning that today's desire for outsized returns and financial shortcuts carries enormous personal risk, and that happiness remains elusive for those always chasing “the next thing,” in markets or in life.

Loading summary

Transcript30 lines

[00:02]
Host/Announcer
Support for the show comes from Northwest Registered Agent. Your business identity is everything that makes your business legitimate and professional. With Northwest Registered Agent, you don't just form a business. You start a complete foundation built for privacy, credibility and growth. That includes registered agent service, a business address, operating agreement, domain website, professional email, phone number, and built in privacy. In other words, your home address, personal email and phone number. Stay private. Don't pay hundreds or thousands of dollars for what you can get from Northwest for free. Visit northwestregisteredagent.com Prof. Gfree and start using free resources to build something amazing. Get more with Northwest registered agent@northwestregisteredagent.com profg free. You know that feeling. Too many updates, too many meetings, too many things falling through the cracks. Monday.com was built for that gap. The AI work platform design designed from the ground up for people and agents
[01:01]
George Hahn
to work side by side and deliver more together.
[01:04]
Host/Announcer
Drafting the brief, flagging risks, running a competitive scan. Your agent can do it all. And the best part, anyone can build one. Even you. Try it. Create your first Monday agent today at
[01:16]
Sponsor Voice
Monday.com support for this show comes from Odoo. Running a business is hard enough, so why make it harder? With a dozen different apps that don't talk to each other? Introducing Odoo. It's the only business software you'll ever need. It's an all in one fully integrated platform that makes your work easier. CRM, accounting, inventory, E commerce, and more. And the best part, Odoo replaces multiple expensive platforms for a fraction of the cost. That's why over thousands of businesses have made the switch. So why not you try Odoo for free@odoo.com that's o d o o.com
[02:00]
George Hahn
welcome to the week from Profg Media where we break down what mattered and what it all means. I'm George Hahn and it's Friday, August 7th. Today a hedge fund blew up. South Korea's stock market plunged 44% and the AI trade found its floor. Then why? A generation locked out of financial security is taking bigger risks to get ahead. And finally, Sam Harris on what's actually worth your attention. Let's get into it. Last week, the debt that was propping up the AI boom finally came into view. This week we found out what it does to people. On Friday's Prof. G Markets, Scott and Ed sat down with Jim Chanos, the short seller who called Enron and who now teaches a course on the history of financial fraud.
[02:56]
Jim Chanos
The fraud cycle follows the financial cycle with a lag and the longer the financial cycle goes on, the more amount of fraud is ultimately uncovered on the down cycle. So I've already dubbed this the golden age of fraud. And I suspect that when we're on the down part of this cycle, the bodies will float to the surface as they always do. But remember the other the, the corollary to that is the harshest prosecutor and the staunchest defense attorney of a company is its stock price. Nobody goes after frauds at all. Time highs. They only go after them after investors have lost money because these kinds of things are political.
[03:44]
George Hahn
So why does the boom still look so healthy on paper? Chanos says the accounting is doing the work.
[03:51]
Jim Chanos
And that's a big question because like the dot com boom, we have an accounting identity problem that follows these capex booms, namely that the companies that are spending the money do not expense immediately. Most of that money that's being spent, it's capitalized and depreciated over 5 to 10 years. The companies receiving a lot of that money, the Nvidias of the world, the Caterpillar tractors of the world, the utilities, they're receiving it in terms of revenues and profits immediately. So the same dollar is basically contributing to profits in a far greater extent than it does in a more normalized economy where it would be recognized as revenue by one company and expense by another. And that's what we're seeing. And that's why S and P profits have taken off in the last two years. It's because of this mismatch.
[04:54]
George Hahn
That was the theory this week. We saw it play out. Leopold Aschenbrenner is 24. His fund Situational Awareness was up 439% for the first half of the year, swelling to roughly 4,45 billion dollars. He told investors the sell off had created an unusually attractive opportunity. Six days later, after mounting losses and margin calls, the fund sold most of its public stock portfolio to Ken Griffin's Citadel in a fire sale. Situational was left managing roughly $10 billion.
[05:31]
Ed
Last week we learn a truth bomb, which is that it turns out he was 5x levered up. He was then margin called and then he decided, well, not decided. He was forced to liquidate his entire public equity portfolio. And supposedly he's also selling his stake in Anthropic too. And it is remarkable because if you've been online, if you've been on Twitter and you're kind of plugged into the investing community, this guy was considered AI Jesus. He was like the savant of our time. He could predict the future. He knew everything that was going to happen. And literally overnight, the whole thing has collapsed. And what is it? It's a story of leverage. Once again, he was levering up into the hottest stocks, into the hottest momentum trades in the world, looked really smart until suddenly he didn't.
[06:27]
George Hahn
That was the institutional version. The retail version happened on the other side of the world. South Korea's market fell 44% from its June highs. $2 trillion in value gone. The cause was a product launched in May. Single stock leveraged ETFs tracking Samsung and SK Hynix, multiplying daily returns by two, three, even five times. Here's both Scott and Ed on Monday's
[06:59]
Host/Announcer
Prof. G. Markets leverage on the way up is a ton of fun. It's ugly on the way down. And my understanding is talk about a gambling economy. 92% of investors in these products were retail. And so there were two brokerage accounts for every citizen in South Korea. So it was never institutional risk, it was household risk. And the Goldman estimates that 3.4% of South Korea's adult population has received a margin call. I mean, that's insane when you think about it. So the human cost here is so real that South Korea has rolled out a debt counseling hotline as part of its suicide prevention plan. That's a sentence that should give us all pause. And so the lesson here isn't new. It's just very expensive for, you know, for every generation to relearn this. And that is, leverage doesn't create risk. It removes your margin for being wrong.
[07:56]
Ed
You mentioned the, the craziest stat, I think, which is that more than 3% of the adult population has now received a margin call in South Korea. But I think probably most astounding is some of the imagery that we're seeing coming out of South Korea. If you go to the National Assembly Building in Seoul, South Korea right now, and you go on the sidewalk, you will find pile of funeral wreaths on the street. Yeah, I saw that with a sign that says abolish the single stock leveraged etf. Because suddenly everyone is realizing that this stuff is extremely dangerous. There are literally thousands of people who have lost their life savings because they convinced themselves that this was the way to do it, this is how they were going to get rich. I mean, if you look at the amount of, of people in South Korea that are in on those two names on SK Hynix and on Samsung, it comes out to around 70%. That is, according to the Korean stock market regulators. The response from regulation from the people in charge of South Korea's version of the SEC is they're going to just stop allowing these new listings of the single stock leveraged ETF. This is rising in America. You look at US leveraged ETFs, they've jumped from $120 billion in AUM in April to more than $200 billion today. It's up nearly 70% in just a few months. The number of US leveraged ETFs has more than doubled since 2025, and more than half of them are single stock ETFs, which is the exact same thing that got South Korea into trouble. So it'll be really interesting to see how this plays out in the U.S. i think the same trend is happening, but it's almost like we're maybe a couple of months behind South Korea, or at least we're less concentrated than South Korea is because of how dependent their stock market is on those two names in particular. But the same trends are beginning to happen, and I think it can only end badly.
[10:05]
George Hahn
We'll be right back after the break.
[10:13]
Host/Announcer
Support for the show comes from Odoo. If your business runs on five different apps, 12 browser tabs, and one spreadsheet that everyone's afraid to touch, it's prob time for Odoo. Odoo is an all in one business management software that connects every part of your business into one powerful, easy to use platform. So instead of wasting time switching between disconnected systems, your entire business works together in real time. Your team moves faster, your data stays accurate, and you can actually focus on growing your business. Let one unified system run your entire business. From the first opportunity to the final payment, everything works together in one part place. Whether you're a small business or managing a large operation, Odoo gives you one flexible platform built to grow with you. Try today for free@odoo.com profg that's o d o o.com profg. Support for the show comes from Chime. Summer can cost a lot. A trip here, a dinner there, a couple concerts. It all adds up. But if you really want to elevate your summer and your summers to come, you need to be getting the most out of your money. And that's what Chime is for. Chime is not like a traditional bank. Chime offers the most rewarding fee free banking with the power of the word no. No overdraft fees, no monthly fees, and no minimum balance fees. You get 5% cash back with Chime cards on things including gas or groceries, all while building credit through regular everyday spending. You can also grow your money faster with a savings rate that is nine times the national average. And if you're ever in a pinch, Spotme lets you overdraft up to $200 fee free. Join the millions who are already banking fee free with America's number one choice for banking. Head to chime.com profg that's chime.com profg Sign up now. It takes only a few minutes. Chime is a fintech not a bank. Banking services and Chime card provided by Chime's bank partners. Qualifying direct deposits required terms and limits apply. Go to chime.com disclosures for details. Support for the show comes from Quince. Quince specializes in everyday staples that work harder like their ultra soft organic cotton tees and premium Mongolian cashmere sweaters. They have premium denim and tailor chinos from just $60 with the kind of perfect fit structure and high quality fabrics you'd expect from a luxury designer brand. They're versatile, timeless and transition seamlessly from a casual workday to dinner out. And Claire's gotten some quints.
[12:40]
Ed
I did get some quints.
[12:41]
Host/Announcer
Quince sends me nothing but good stuff. I love their tank tops. I genuinely wear them all summer long. But I know fall's around the corner so probably gonna be checking out their sweaters sooner rather than later. High quality stuff, good price point. Highly recommend them. Upgrade your everyday Download the Quints app for app exclusive offers or go to quince.com profg get free shipping on your order and 365 day returns now available in Canada and the UK too. That's quince.com propg.
[13:25]
George Hahn
Welcome back. The obvious question about the South Korea story is why anyone wanted these products in the first place. On Monday's Prof. G Markets, Ed had an answer and it sounds a lot like what's happening in America too.
[13:40]
Ed
Well, when you think about why has this happened? Why are all these young people flinging their money into these leveraged ETFs and then praying that the stock goes to the moon and then being upset when it crashes to the ground. If you look at South Korea on a demographic basis, there are few nations in the world that are experiencing a loneliness crisis more severe than South Korea. You look at their marriage rates which have declined 40% in the past decade. You look at the fertility rate which hit 0.8 last year. It's the only OECD nation with a fertility rate below 1. You look at what the local governments are doing where they're actually paying people to get married now. I don't think it's a coincidence that they're suffering the same loneliness crises that we're starting to see in America, and also seeing the same sense of financial nihilism that is becoming pervasive among young people, such that they are levering up on these names and praying and hoping that it'll take them into a state of financial security and success. I think the two are definitely linked, and I think South Korea is ground zero for the problems that we're about to see in America.
[14:56]
George Hahn
Underneath this week's market stories was a familiar belief. Endure the present, make the right bet, and happiness will arrive later. Scott's guest on Conversations this week, Sam Harris, has spent much of his career challenging that idea.
[15:14]
Sam Harris
We're living in a much more highly weaponized environment where the smartphone in our pocket has canceled the very possibility of boredom. It used to be that you could get bored and you could become interested in that fact, right? You're sitting in a waiting room, you know, the doctor's taking an hour to see you, and there's no magazines worth reading, and you're just left with your thoughts. And you might have noticed in that situation that your mind is not at rest. It's not at ease. You're just, you're actually not comfortable in your own skin. You're looking, you're casting about, trying to find something worth paying attention to, and you're uncomfortable. Very few of us have that experience anymore because we can always relieve boredom by watching something or reading something or listening to something. And in some ways that's a good thing. I mean, I'm not really just, I'm not advocating boredom in principle as a good experience, but what it used to allow many of us to discover is that there's something on the other side of boredom, right? And boredom really is an illusion. I mean, boredom really is just lack of attention. I mean, when you go on a meditation retreat and do nothing but meditate, state you're in silence and you're doing nothing but pay attention to your moment to moment experience. You're not reading, you're not writing, you're not watching anything. Obviously you're not having conversations with people. You just are noticing sights and sounds and sensations moment by moment, and then. And the arising of each subsequent thought when you just become the witness of your experience in that way, that is meditation. And the moment you can actually do it, the moment you actually build a little bit of concentration in that direction, you discover that boredom is a total illusion. There's. It was just boredom is just an inability to pay attention.
[17:06]
George Hahn
And at the end Scott asked how he allocates his attention now versus in his twenties.
[17:11]
Sam Harris
The real recipe is, you know, paradoxically, it's not worrying about the future, it's not worrying about the past. It's not being ambitious in all the usual ways. I mean, seeking happiness in all the usual ways. It is actually developing a capacity to be more and more present so that you kind of equalize your moments. Whereas, like, even if you're just stuck in traffic, you can locate a depth of well being that makes that not a problem. Right? I mean, the lesson of life, as far as I can tell, is that you can't become happy. You can only be happy. I mean, that's really, it's like that is the structure of our psychology that goes unacknowledged for most of our lives. We live most of our lives thinking we can become happy. What we have to do is we have to get all the things and all the accolades and all the pieces in place such that we have a good enough story and good enough reasons to finally be happy. But for the most part, that's a mirage.
[18:18]
George Hahn
The markets offer their own version of that mirage. One more trade, one more rally, one extraordinary return that will finally make everything feel secure. But leverage can't guarantee a better future. And obsessing over the future can cost us the life happening now. That's the week. I'm George Hahn. We'll see you next Friday.
[18:53]
Ed
Support for the show comes from kpmg. In any organization, disruption is inevitable. But struggling through it doesn't have to be. The KPMG Adaptability Index is your blueprint for building capabilities and to handle what comes next. It uses real data to look at
[19:11]
Sponsor Voice
how your culture, strategy and partnerships all
[19:14]
Ed
work together to help your business thrive. Stop reacting and start adapting. Visit kpmg.com US Adaptability to explore the Adaptability Index and Pulse surveys today.
[19:30]
George Hahn
Hey, it's Ryan Reynolds here from Mint Mobile. Now I was looking for fun ways to tell you that Mint's offer of unlimited Premium Wireless for $15 a month is back. So I thought it would be fun if we made $15 bills. But it turns out that's very illegal. So there goes my big idea for the commercial. Give it a try@mintmobile.com Switch upfront payment
[19:52]
Host/Announcer
of $45 for three months, $90 for six months or $180 for a 12 month plan. Required $15 per month equivalent taxes and fees Extra initial plan term only greater than 50 gigabytes. Me slow when network is busy See
[20:00]
Ryan Reynolds
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