← The Prof G Pod with Scott Galloway
The Prof G Pod with Scott Galloway
Why International Stocks Are Beating the S&P + How Scott Invests his Money
00:21:44
Loading summary
Transcript26 lines
- [00:01]
Jim Collins
What to make of a Life is the new book from Jim Collins, best selling author of Good to great. Based on 10 years of research, what to make of a Life offers transformative teachings on what it takes to navigate your way through periods of fog, make it past life's inevitable cliffs, and keep the inner fire burning bright long and late. Step into frame with what to make of a Life, the instant New York Times bestseller by Jim Collins, available from Harper Edge wherever books are sold.
- [00:34]
Adobe Acrobat Advertiser
Adobe Acrobat, your team's home base. Collaborate within a shared PDF space. You've got your docs, your plans, your specs, and then invite the crew to build what's next. To talk of the teamwork, here's an updated render. They think that this design could be a contender, and when somebody wonders what's the next step, AI helps you finish the rest. Bolts are tight now your plan's refined. Run a smoother business when you're all aligned. Do that with Acrobat. Learn more@adobe.com dothatwithrobat.
- [01:05]
Indeed Advertiser
This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed sponsored jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate. C According to Indeed data, sponsored jobs have four times more applicants than non sponsored jobs. So go build your dream team today with Indeed. Get a $75 sponsored job credit at Indeed.com podcast. Terms and conditions apply.
- [01:38]
Scott Galloway
Welcome to Office Hours of Prop G where we answer your questions about business, big tech, entrepreneurship and whatever else is on your mind. Today's episode includes questions from our time in Austin, specifically South by Southwest, which I really enjoy. These are questions presented to us from our listeners back in March at South by Southwest.
- [01:54]
Listener from South by Southwest
Question number one Scott, thanks for coming to south by Southwest. My question is related to last year you had recommended to diversify away from emerging markets and international markets, and I know with everything happening in the Middle east there's been a big plummet in those indices. Do you still recommend diversifying away from the US Stock market and into international markets? And do you still see a value there based on their energy reliance and things like that? Thanks for coming.
- [02:23]
Scott Galloway
So every year we make a series of predictions and the one I'm most proud of is that last year we predicted that for the first time in what, 17 years there'd be a rotation out of US stocks into emerging market stocks and emerging markets would outperform U.S. stocks. And we got a ton of shit for this. Never bet against the US US is the home of AI. And look what's happened. If you watched our most recent property POD or listen with Josh Brown, who's one of our kind of fan favorites and a friend of the pod, here's some data from that episode. On a rolling one year basis, developed markets outside of the US are up 48%, emerging markets up 55% and the S&P 500 is up 34%. Year to date in 2026, emerging markets are up 5%. In developed markets, ex US are up 2.4% and the S&P is down 3%. There's just no arguing here. International is winning, even despite the Iran shock. And it doesn't matter which style you pick or asset class. Every version of International is beating the US equivalent year to date. International growth stocks are up 5.5% versus US down 2. International momentum is up 9.2 versus the US at 1.3. International quality is up 7.1 versus US at 1.8. And as Josh put it, it almost doesn't matter what stocks you buy. If you have any global allocation, your portfolio looks amazing. Right now, emerging markets are at about 13 and a half. Forward earnings versus developed markets at 20. I think the US or the S&P is now at 19, and the S&P was at about 23 and has come down to 19. As I said, that gap is unusually
- [04:07]
Indeed Advertiser
wide, even by financial standards.
- [04:09]
Scott Galloway
Even with the international markets coming up and US markets coming down, there's still a pretty big delta here. EM Forward PE is also well below its own trailing PE of 18.5, meaning analysts are already pricing in a big earnings surge in 2026 to justify current prices. JP Morgan is forecasting 40% earnings per share growth in emerging markets this year. So what do you have? Cheap stocks plus strong earnings growth means you capture both multiple expansion and earnings expansion simultaneously. Multiple expansion is something most investors don't understand. And if you invested in Latin America the last 10 or 15 years, it didn't matter how well the underlying company was doing because you just can't outrun multiple contraction at the same time. You look like a fucking genius if there's multiple expansion. So the fear is, and what do you do is look at how concentrated you are. And if you're suffering from a bout of US concentration risk, the top 10 stocks now make up 40% of the S&P 500, more than double their 19% share in 2015 and the highest level since 1972. By contrast, the top 10 make up just 13% of the international equivalent the MSCI most mega cap stocks peaked in November 2025. The S&P's forward PE has already compressed from 23 as we referenced earlier to 19 this year. So in sum, if you think if you're on spy, if you think you're in the S and P, that you're diversified, you're not. About 40% of your assets are in just 10 stocks and you're in a market that is still expensive on a relative basis. Let's talk a little bit about the dollar. The DXY fell nearly 10% in 2025. That's the worst performance in over a decade. Driven by fiscal concerns, policy uncertainty and erod US exceptionalism. Morgan Stanley warned in March of 2026 that the dollar's Iran war rally is short lived and expects further weakening as US Europe rate differential shrink and the war curbs economic growth. A weaker dollar is a direct mechanical tailwind for US based international investors. Currency efforts drove nearly half of international returns in 2025 and some are out of fucking control. Deficit spending, fiscal irresponsibility, sclerotic foreign policy, head up your ass. Decisions in terms of our allies mean that the dollar is weakening as its confidence in the United States. Also, I think that some of the kind of autocratic cronyist approach to companies taking golden shares in intel and in US Steel and punishing certain companies that don't support this administration has weakened one of the underpinnings of why we trade at a premium in terms of a PE multiple and that is rule of law. And I think that is being eroded. And people are rotating out of US stocks into other stocks. So I still think this trade has juice left, if you will. In sum, and I've been doing this, I bought a British aerospace company. I'm actually looking at Mercado Libre or a Latin American stock. And my biggest investment is in a fund that finds special situations outside of the U.S. in sum, this is the prediction from a financial standpoint I'm most proud of because it was definitely contrarian. It has played out and I still think it has legs.
- [07:19]
Indeed Advertiser
Question number two.
- [07:20]
Chris Marr
Hey, Professor Galloway, this is Chris Marr. I live in the New York City area and I run a small social impact venture fund. You look at tons and tons of investment opportunities and I'm sure you get bombarded with them. But how can people actually get legitimate investment opportunities in front of you?
- [07:38]
Scott Galloway
To evaluate, to be blunt, it's difficult. I get pitched a lot on small angel investment opportunities. I don't really do angel investing unless it's a friend. And I do, I ride it off. I'll throw $50,000 in an idea if I like that. You know, if I'm friends with the person and just assume it's, it's, it's going to go away. I basically invest in public stocks and then private opportunities where I feel like I have an edge. Where a Tier 1 VC has invited me in with no fees into a company that they've done diligence on and they'll maybe even give me additional juice or, or boost my participation by going on the board. So I basically only invest in stuff where I feel one, it's a great public company where I can just hold it and give it to my kids and Apple and Amazon, something like that. Or I feel like I have some sort of an edge. I get deal flow because of the people I know, or I get some sort of economic advantage. I've had investment opportunities where if I invest a million bucks, they give me 2 million in equity if I go on the board. If I do that enough times, I should be able to do okay. And now at this point in my life, I'm looking not to get rich, but to not get poor. So I try and diversify a lot. But in terms of, in terms of just an inbound inquiry, would you be interested in investing in this company? I almost never do that. Only one in seven angel companies ever get liquidity or get a return. I'm not smart enough to kind of be in that ecosystem. The reason why people pitch me on that is they want me involved. And I like to think I'm generous with everything but my time. So I'm trying to get off of boards and have fewer investments, if you will. And then the other kind of the third leg of the stool. Private companies will have an edge. Public companies that I want in my trust is real estate. My thesis is that income inequality is only going to get worse. And by the way, I don't think it's a good thing, but it's just an observation and that wealthy people are the super wealthy as identified by people who have over 50 million in assets, want to live in one of five cities, Dubai, London, New York, Palm beach or Aspen. And now I think Dubai has fallen off the list because of the War of Iran. It's just so ironic. We thought that putting US bases in the Gulf would be a security blanket and it's ended up being a bullseye anyways. And I own homes of four of the five. I own homes in all of those cities except for Dubai. And I own Some rental properties because I think that you're going to see just an explosion in the values because the rich or the super rich are the most boring people in the world. What do I mean by that? They all look, smell and feel exactly the fucking same. They all vacation in Saint Barts, wear a mess, and try and get their kids into U.S. ivy League schools. And you could put 10 of them in a room and they literally look like the same people. Whether it's a billionaire from Buenos Aires or industrial magnet from Hamburg, Germany, they're remarkably similar once you get into the middle class. Different food, different clothes, different tastes, much more heterogeneous anyways. They all want to live in the same goddamn places. And these, all these places have finite real estate. I also love investing in real estate because I get to consume it. Most of these are homes that I spend time in. I love kind of one of my hobbies is furniture and interior design. It's sort of a creative outlet for me. And the other thing I love about investing in real estate is I don't have a market. By the way, as I say all this, I realize I come from tremendous privilege. I'm not suggesting that everyone should be able to do this or can do this. I recognize my privilege. There's my land acknowledgement. See above. My mother was a typist. But I like it because there's not a mark every day and I don't with my stocks. I'll get off this pod, I'll check my stocks. And I find that's unhealthy and takes my blood pressure up and down. It's kind of fun, but it's also sometimes unhealthy. Whereas real estate, you really don't have a mark. And I think that's kind of nice. So those are where my assets are. So all the kind of inbound. Hey, I have a, you know, a small little SaaS platform or I'm opening gyms or I have. Everyone thinks I'm in love with marijuana because I said I do edibles, which I do, but I'm constantly getting pitched on THC infused beverages or something like that. I don't do that stuff because I don't have the time and I don't have the skill set to evaluate angel investing. By the way, the weird worst part of the capital structure or the worst asset class is angel investing. Even if you find a good company, you might be washed out at some point and it just takes forever. And it's a ton of investment and time. Although I know a lot of guys my age who really enjoy angel investing because there's a chance for them to mentor young people. But in sum, how do you get an investment in front of me? Quite frankly, you probably don't. That's not that aspirational. But anyways, thanks for the question. Foreign.
- [12:23]
ShipStation and Vanta Advertiser
When your company is growing fast, order fulfillment can make or break your success. Shipstation's intelligence driven platform brings order management, rate shopping, inventory returns, warehouse systems and comprehensive analytics all in one place. And it can save customers 15 hours per week on fulfillment. With Shipstation, everything you need to manage getting your product to customers is in one place. You can connect over 200 sales channels and instead of five to seven disconnected tools, you've got one. You can also set up time saving automations. ShipStation picks the best carrier, finds you the best rate, prints labels in bulk, and sends tracking updates. Done. Their data shows that sharing tracking details can cut customer service inquiries by 12%. Returns management can give your data on what's coming back and why, and analytics can show where you're saving and where to optimize. Try ShipStation for free for 60 days with full access to all features. No credit card needed. Go to shipstation.com and use code Prof. G for 60 days for free. 60 days gives you plenty of time to see exactly how much time and money you're saving on every shipment. That's shipstation.com code Prof. G shipstation.com code Prof. G. Support for the show comes from Vanta. If you're a business owner, you've probably seen the shift. Risk and regulation are rising and customers now expect proof of security before they'll even sign on. Building that trust is critical to closing deals, but it's often costly, time consuming and complex. Vanta says that's exactly the problem they've built to solve. Vanta automates your compliance process to bring compliance, risk and customer trust together on one AI powered platform. So whether you're prepping for a SoC2 or running an entire GRC program, Vanta keeps you secure and keeps your deals moving. This helps companies get compliant fast and remain compliant, opening doors to next level growth opportunities and freeing up valuable time. That means no more digging through audits and spreadsheets. Instead, you get a system working quietly in the background, keeping you compliant, reducing risk and helping your business scale quickly and with confidence. Companies including Ramp and Ryder spend 82% less time on audits with Vanta. That's not just faster compliance, it's more time for growth. You can get started@vanta.com profg that's Vanta V A N-T A.com profile.
- [14:43]
Scott Galloway
Support for the show comes from Indeed.
- [14:44]
Indeed Advertiser
When the pressure's on and you need to hire the right person for the job, Indeed Sponsored Jobs has got your back. It matches you with quality candidates fast, so you don't need to spend tons of time searching for that elusive new talent. According to their data, Sponsored jobs posted directly on indeed are 95% more likely to report a hire than non Sponsored jobs. Join the 3.3 million employers worldwide that use Indeed to connect with quality talent
- [15:07]
Scott Galloway
that fits their needs.
- [15:08]
Indeed Advertiser
Spend less time searching and more time actually interviewing candidates who check all your boxes. Less stress, less time, more results when you need the right person to cut through the chaos. This is a job for Indeed Sponsored
- [15:20]
Scott Galloway
Jobs and listeners to the show will
- [15:22]
Indeed Advertiser
get a $75 sponsored job credit to help you get your job to the premium status it deserves@ Indeed.com podcast just go to Indeed.com podcast right now and support our show by saying you heard about Indeed on this podcast. That's indeed.com podcast terms and conditions apply. Hiring do it the Right Way with Indeed.
- [15:50]
Scott Galloway
Question number three what insight would you have for teachers now? Because things are changing really fast and evolving really quickly and how that impacts classroom stuff because it's completely upended everything everybody does on the academic side. Thanks for the question. So first off, I hate I'm not going to call you a hero. I hate it when people call any profession heroes. If someone calls you a hero, it means you're being fucked. What do I mean by that? It means you're underpaid and overworked. No one ever calls a CEO or radiologist a hero. They call public worker or military or teachers are heroes or nurses, which means they're being dramatically underpaid. So we call them heroes in commercials to sell more fucking life insurance and assume that that's some sort of compensation.
- [16:35]
Indeed Advertiser
Don't call them heroes.
- [16:36]
Scott Galloway
Pay them a fair wage. Let me give you some data here. Teachers reported working an average of 49 hours per week in 2025, 10 hours more than their contracted hours. Average base salary was $73,000 versus $103,000 for comparable college educated workers. So teachers are making about 30% less. U.S. teachers average 53 hours a week. OECD averages 40 hours. So get this, U.S. workers are working 30% more U.S. teachers ranging from 33 hours in Finland to 56 in Japan. Over 8 in 10 students reported using generative AI during the 2025 school year. 89% have used ChatGPT for homework. Though many don't consider it cheating, 94% of AI generated work still goes undetected according to research. Faculty have been told a BL blanket ban on AI is not a viable policy. Schools are scrapping take home tests, returning to pen and paper in class exams and moving to flipped classrooms where homework is done in class instead. So look, I'm of two minds here because I think the labor market needs to be supply and demand and that is if people are willing to work in teaching because they get psychic reward from it and feel like they're doing good work, they're naturally going to make less money. At the same time, it's hard to imagine a more important job in terms of tomorrow's youth. So it makes sense probably to have some sort of federal benefits similar to what we do with the military where they get to shop at government stores with lower prices. I think it's called the PX or whatever it's called. Access to certain types of insurance, lower cost. I know at the school, my son's school, who I was on the board of in Gulfstream Florida we had housing for teachers. I have seen, I do think their salaries are going to go up. I wish I had data on this because I think that schools are recognizing, I think there's a bit of a battle for good really quality teachers and parents, especially private schools who have the money will find ways to compensate those people. I assume there's going to be a lot of opportunity post that career for good teachers. So I'm actually hopeful that teachers are going to make more money moving forward. I think a bigger threat than AI is phones and that is I think we're sending into these classrooms a group of dopa addicted monsters who just can't wait to stop learning and check their Instagram to see how many likes they got from their post from the school cafeteria. The most accretive thing that's happened to schools in terms of test scores is the banning of phones. I think the most consequential scholar of our generation is my colleague Jonathan Haidt who is getting phones because of his book the Anxious Generation banned in schools in entire countries. So I'm actually hopeful through K through 12. I think AI will help bring up the lowest quartile of underfunded schools with the most crowded classrooms. Sort of AI agents can serve as tutors because, and I know this personally as someone who has some money, the education industrial complex for the wealthy just as outclasses low income households. So the average public school spends $15,000 per student in low income area, 10,000 per student. The average private school, get this, spends $72,000 per student. So let's look at 12 years of primary education. You have 180,000 being spent on the average kid and you have about 900,000 being spent on the kid from the wealthy household that gets to go to private school, which is just fucking insane. Well of course kids from wealthy households are just much better prepared for college, more qualified and it shows. What's interesting is that the average SAT score for a middle income kid is 120 points greater than a lower income kid. But where income inequality goes just insane is the difference between middle income and upper income. Because then again, see above tutors, private schools, it's 250 points higher. So if you were going to try and create an equivalent playing field for a low income kid and a high income kid in the SAT, you would spot the low income kid 370 points. And I believe we should do that. I don't believe in race based affirmative action. I think we needed it 60 years ago where the academic gap between black and white was doubled between rich and poor. Now that it's flipped. In sum, I don't think Trevor Noah or Eddie Murphy's children need any help. I think poor kids need help. And the way we come together around this is that that would still impact 70% of the kids who get affirmative action now. Because we still do have sort of an economic apartheid where white households average wealth is 140 grand and Latino and black households it's about 25 or 28 grand. So what's needed here? Affirmative action that puts more money in the pockets of parents from low income and middle income households, full stop. I think it all kind of starts there. I think income equality is just a virus in the United States. And two, I think the market and maybe some federal programs, availability around low cost mortgages, housing credits, access to things like auto insurance and maybe medical care that's subsidized to try and attract more people into the field. We definitely need more male teachers. 70 to 80% of primary school teachers are female. I think school's been feminized and there's a bias against boys. Boys are twice as likely to be suspended on a behavioral adjusted basis. Anyways, back to teaching. I think it's an outstanding profession. I do think it's appreciated in that. I do think there's going to be more competition for the best teachers and you will see incomes start to increase. But I think some school reform recognizing that we are creating a two class or two Americas and that the kids from wealthy households are just pulling away from the other kids. I do think there's some government intervention required there. I would like to tax private schools more. I think there should be a $10,000 per head tax to send your kid to a private school. If you exit the public school infrastructure, you are hurting it because the most important thing about a school is not its resources. Even its engaged parents and wealthy households have the time for one or more of the parents to be engaged. Anyways, big topic of conversation and very much appreciate the question.
- [22:50]
Indeed Advertiser
That's all for this episode.
- [22:51]
Scott Galloway
If you'd like to submit a question, please email a voice recording to officehoursoftmedia.com that's officehoursoptivemedia.com or if you prefer to ask on Reddit, post your question on the Scott Galloway sub subreddit and we just might feature it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Genaire. Cammie Rica is our social producer, Brad Williams is our editor, and Drew Burrows is our technical director. Thank you for listening to the props you pod from Prophecy Media.
- [23:27]
Chris Marr
Hey marketers, listen up. Before this, there was this Our voice. It's how we shared knowledge, build communities. Well, guess what? Voice is back. That's why Spotify Advertising has published a new report, the Soundon Era, because audio moves culture forward. And if your brand wants to be heard, you need a sound on Strategy. Go to ads.Spotify.com to download the Soundonaira and turn up the volume on your business.
- [23:57]
Carvana Advertiser
Hey, sweetie. Your mother showed me this Carvana thing for selling the car. I'm gonna give it a try. Wish me luck. Me again. I put in the license plate. It gave me an offer. Unbelievable. Okay, I accepted the offer. They're picking it up Tuesday from the driveway. I haven't even left my chair. It's done. The car is gone. I'm holding a check anyway. Carvana, give it a whirl. Love ya.
- [24:20]
Indeed Advertiser
So good you'll want to leave a voicemail about it. Sell your car today on carv. Pickup fees may apply.