Pivot · Oct 14, 2022

Elon and Russia, the Metaverse, the Economy, and Alex Jones

Automatic transcript of the end of the episode, from 36:03. Speakers are labeled by software and may contain errors. Highlighted passages are Scott’s predictions.

Scott Galloway · 36:03 I think there's a lot of parallels here with World War two. So Kara Swisher · 36:06 Alright. But the economy itself, our economy, because it it will matter from an election point of view. But just from a... From an economic pain point of view, what is your thought? Scott Galloway · 36:13 We're gonna go into a recession. A recession's typically happen every seven years. It's been thirteen years. It's overdue. It's like enough already. Bring it. And Jamie Dimon's interview, he was... When he was asked to define what a recession is, he had the best answer. He said something that happens every seven years. But anyways, you asked about the economy. A dollar that is gonna be amazing for our ability to control inflation, unfortunately, is wreaking havoc around the world, especially for developing economies that borrowed in dollars and now have to pay it back, and it's gonna crowd out every other piece of discretionary income that they have. You're gonna see tremendous havoc. Our dollar is literally fucking with the world right now because it is so strong. But in terms of the American economy, yeah, I think we're gonna go into a recession. I think we'll see inflation come down, and I think that our inflation will drop faster than it will anywhere else in the world. Kara Swisher · 37:06 Interesting. There's a lot of pushback from China around COVID restrictions. They're tired of the restrictions. They wanna get back to business, get Scott Galloway · 37:12 back to When people sit down, if they really... I mean, again, we're asking people to be rational. But, okay, the pandemic, we've walked back. We're... Four hundred people a day are still dying. The pandemic is not over, but it looks like we've come back from the precipice. It looks like that we are, for the first time, have real unity in the West, and it's and it's working. It really is working. It's extraordinary what's going on here. And I believe that inflation will come down. And there's a chance that if the market perceives this recession is coming, but it's not gonna be terrible, and they see an end to the interest rate increases because inflation starts to come down, you'll probably see the markets come out. I mean, it's impossible to time this shit. And I have a tendency to talk my own book because the idea of Trump getting back in office scares the shit out of me. But I think the economy... I think the market's gonna fall pretty dramatically from here, and nobody knows. But everybody complains that the market's dropped so much. The market's back to where it was just two or two and a half years Kara Swisher · 38:10 20% more. Scott Galloway · 38:12 Yeah. So... And still that takes it back not that far. Yeah. I mean, I just... It's so funny when I talk to people under the age of 40, and they're like, oh, the economy is bad or the stock market's bad. I'm like, you don't know what bad is. I mean Kara Swisher · 38:25 How were you doing that grandpa thing? Oh, in my day, we had to, like Scott Galloway · 38:29 Well, okay. From 1990... No. From 1999 to 2001, you were around. I'm Cisco, which was considered the old stalwart amazing network infrastructure tech company, and Amazon, the hottest new company, lost 90% Kara Swisher · 38:44 They did. Scott Galloway · 38:45 Of their equity value. Kara Swisher · 38:46 Amazon dot bomb. Scott Galloway · 38:47 If you put a $100 in Amazon and Cisco, was worth twenty four months later, it worth $10. Kara Swisher · 38:51 Amazon dot bomb. Scott Galloway · 38:53 The majority of what I'll call the real pain has kind of been sequestered to the really growthy stuff in crypto. We haven't seen, like, what what I'll call, like... I mean, in 2009, do do you remember the the way stocks went down? I don't know if you checked your portfolio back then. It was crazy. Kara Swisher · 39:08 Anyway I don't I ever look at it. Do you know I don't ever look at it ever. Scott Galloway · 39:12 That's the... That's arguably Ever. One of the best investment strategies. Kara Swisher · 39:15 One of the one of the people I work with was like, have you looked at it? I'm like, no. I said, I'm not going to. I... Yeah. If I turn a certain age and I need the money, I'm fucked, but I will just not look at it until I need it. Scott Galloway · 39:27 So To that point, there was an analysis on... I think we mentioned this a few weeks ago. And the best performing cohort of investors, dead people because they didn't trade. Their accounts just stayed. No fees. Kara Swisher · 39:38 That's Kerasushi. Scott Galloway · 39:39 And they just left it alone. And over time, the natural trajectory of the market is up. People having babies, they're more creative, more intelligent, more productive. The economy's natural trajectory is up. Kara Swisher · 39:49 That said, and I will end on this, the people who are gonna suffer, people who live paycheck to paycheck, and the prices of these things going up is gonna affect them rather dramatically. It's not everyone who owns stocks, which is a lot of people too, but everyone is gonna feel the pain, but the pain will be more abrupt to people who it matters, food and and gas prices. Scott Galloway · 40:07 But one of our failures as a society is we study to the wrong test. Everybody knows that the Nasdaq or the Dow was up or down today, but they... We're not spending enough time talking about we're back to record levels of opioid overdoses. Kara Swisher · 40:19 I wonder. Did you write a book called Adrift about drugs? Scott Galloway · 40:22 We're obsessed with the Nasdaq. Yep. Who gives a fuck what the Nasdaq is? Yeah. Fifty four thousand people are gonna die in unmarked graves, basically, from opioid overdoses. We study to the wrong test. Kara Swisher · 40:34 Speaking of people that deserve to go to jail, the Sacklers, let's bring that up again. Okay, Scott. Let's pivot to a listener question. Scott Galloway · 40:41 You've got you've got I can't believe I'm gonna be a mailman. You've got mail. Kara Swisher · 40:46 Alright. This question comes from Jess. I'll read it. I'm a mid forties single mom with a VP job in tech. I have a great salary, own my home, robust four zero one k, savings, and trade accounts. My question is, in this economy, should I temporarily reduce my four zero one k contributions in lieu of holding more cash? No investments seem to be giving a great return right now, and rumors of recession and more Credit Suisse type problems make me think I should increase cash reserves. Bottom line, where should I put my savings now? Love all you do. Thank you, Jess. There you go, Scott. You have another minute to go on... To bang on. Is it... It's gold in the safe, money in the mattress? What? What? Scott Galloway · 41:24 Well, first off, just let me say that this woman is is what makes the world go around, single mothers, and who's working and managing all that. Kara Swisher · 41:31 Like that. Scott Galloway · 41:31 Mhmm. Two, it's it's impossible to time the markets. Mhmm. And a four zero one k is an amazing way to save money because it's tax advantaged. Stay the course. The only thing the only thing you might wanna consider is that in a four zero one k or most tax advantaged investment vehicles, you get some influence over how it's allocated. And they've always said over time that generally speaking, the mix should be sixty forty equities to bonds, and most people have gone to, like, 80 or 90 Mhmm. Equities because there's been such a run up in equities. What I would just consider doing is speaking to your financial adviser or someone at Fidelity or Vanguard or someone who is knowledgeable and try to speak to more than one person because there is a collective wisdom of crowds and say, should we consider increasing our allocation of fixed income? Because for the first time, fixed income credit investors are getting the yield they deserve based on the risk. That's correct. So for the first time, I'm looking at bonds. I haven't invested. I bought, like, one bond in my life, but you're... This Twitter paper that's going out Mhmm. It might go out at an effective yield of, like, 16 or 20%. Kara Swisher · 42:36 Yeah. Yeah. Scott Galloway · 42:37 $50.50 cents in the dollars. And if they're $13,000,000,000, the company is probably worth at least 10, so the creditors would get almost all of their money back even if shit got really bad, and they're gonna get paid well. So Yeah. I would at the court. Kara Swisher · 42:49 Buy buy Elon debt. That's what you should do. That's probably who could... And and he... Someone else will probably be owning the company if he continues to be our... A national leader on Scott Galloway · 42:59 foreign policy. Just to wrap up, stay the course. Don't try and time the markets. If you're smart and you're already doing the right things, which clearly you are, but you may want to talk to whoever's managing your money and say, should we be thinking about increasing allocation to bond funds, low cost ETFs, index funds, and then focus on your work and your kid. That would be That my Kara Swisher · 43:20 is what Kara Swisher does. That's what Kara Swisher does. I have some money in cash and stuff like that. And I'm thinking of buying, you know, Scott's house in London at some point at this reduced rate. Scott Galloway · 43:29 Anyway 20% less. Kara Swisher · 43:30 I know. I'm waiting. I'm waiting. I'm waiting. Scott Galloway · 43:32 It's all cash. Literally, I thought I was a fucking genius. I'm like, I'm gonna buy all cash because the pound's at a record low of a dollar 26. I move in, and it's a buck 3. Okay. I've lost 20%. The only [Ad break] Kara Swisher · 43:44 Come on once again, rich people's problems. Scott Galloway · 43:46 The only consolation I have is that when Musk moves into this house called Twitter, he's down 70% on Kara Swisher · 43:52 this one. I love it. Schadenfreude. Scott Galloway · 43:53 I love it. Kara Swisher · 43:54 Alright. Anyway, if you've got a question of your own that you'd like answered, send it our way. Go to nymag.com/pivot to submit a question for the show or call 85551 Alright, Scott. One more quick break. We'll be back for predictions. [Ad break] — Predictions segment begins — Kara Swisher · 45:46 Okay, Scott. Let's hear our prediction. Let's make it tight. Scott Galloway · 45:49 So this is just sort of a... Putting a fine point on everything we've been talking about. The Twitter transaction is gonna close, and it's almost immediately... It will probably not be the worst acquisition in history. Time Warner... AOL's acquisition of Time Warner is probably the worst. But I mean, people call out Google's acquisition of Motorola where they lost $13,000,000,000 On day one, let's look at this company. It has a billion dollars in EBITDA. And right away, it's going to have $13,000,000,000 in debt. I was on the board of a publicly traded media company. And whenever our multiple, our debt to EBITDA went over three equity investors got scared, this starts at 13 times debt to EBITDA. In addition, by any sane metric, these people are paying $54.20 for a stock that's worth 10 to $15. This deal closes, on day one, the moment it closes, what's unique here is when AOL bought Time Warner, it took everyone a year to recognize that this was the worst acquisition in history. Within sixty seconds of closing, the world is gonna realize that this is the second worst acquisition in history. Kara Swisher · 46:58 Which means Elon will do something loud. I don't know. Something. He'll, like, marry Kim Kardashian. I don't know. Something like, oh, yeah. Because then Kanye would be mad. Scott Galloway · 47:07 Oh god. Kara Swisher · 47:07 He'll try to do a lot of hand waving. He's gonna have to wave those hands. Scott Galloway · 47:11 Oh, there's gonna be a lot of jazz hands coming out of this closing. Payments. — Predictions segment ends — Kara Swisher · 47:15 Payments. We're gonna do it. Let's annex Canada. Like, all good. Sure. Why not? I have gotta go off. I've got an interview. You know who I'm interviewing today? I'm at Lesbian Su Tech. That's why I'm in San Francisco. I'm gonna be interviewing. Who Scott Galloway · 47:26 did that with you two years ago and was the second heterosexual male to be on stale at Les Misconceptions. Kara Swisher · 47:32 Hit. This one's in San Francisco. Scott Galloway · 47:33 Can I just relive that moment? Kara Swisher · 47:35 Sure. Scott Galloway · 47:35 We're about to go on stage. They go, and ladies and ladies, please welcome Kara Swisher and Scott Galloway. And you turn to me, and in the most stern, like, mom to son voice, you go, don't make fun of the disabled or transgender people, and then walked out. And I'm, like, sitting there. I'm like, you... I'm like, this person thinks I would make fun of disabled or transgender people. You you said those exact words. You were, like, very serious. Don't make fun of disabled people or transgender people, and then we walked out on stage. Kara Swisher · 48:09 You did a good job. They loved you. Anyway, I've gotta interview Brian Chesky, who is very excited. Gonna interview you, a congresswoman who's doing a data act around women's health at Sarah Jacobs. But then I'm entering entering Jason Buttigieg about gay parenting. It's gonna be quite Scott Galloway · 48:25 me. He followed me. Kara Swisher · 48:26 Oh, see. Scott Galloway · 48:27 I wanna roll with that guy. Ask him if he wants to grab dinner and Kara Swisher · 48:30 You know what? We can do it in DC. We're gonna have a play date. Scott Galloway · 48:32 You always say that. Kara Swisher · 48:33 Well, to come to DC. You're like, I don't know where you are. Scott Galloway · 48:36 It's the rabbit coat. My dad's third wife, he used to promise her a rabbit coat, and it never happened. Kara Swisher · 48:41 Okay. Anyway, we're gonna miss you at Lesbians Who Tech. Know, speaking of things, I'm gonna finish on the... I was talking to someone who did some investments, got some investments by one of the billionaires. I'm not gonna say which one. And things went didn't go well as I... And I said, I... Didn't I tell you that? And they they said, this is what you told me. You said, do you know the difference between billionaire owners and terrorists? And he said, what? And I said, you can negotiate with terrorists. Scott Galloway · 49:10 There Kara Swisher · 49:10 you another go. Good one just like that. I don't believe I said that to you, I remember saying that. But see, I had your best Scott Galloway · 49:15 interest very serious, and you were very worried that I was about to, like, mock the disabled. Kara Swisher · 49:20 Well, I didn't want these lesbians to take the stage and kill you. I thought that would be bad. I thought it would be bad for my career, really. Scott Galloway · 49:27 Yeah. No. I realized it was out of of concern or protection, but anyways. Kara Swisher · 49:31 Yeah. Anyway, you did beautifully. I'll say hi to all the lesbians from you, but that's the show. We'll be back on Tuesday with more pivot. There's so much more to come. There's so much happening. Scott, thanks for waking me up here in San Francisco at this very early time here. Scott Galloway · 49:44 You're very welcome. Today's show is produced by Lara Naaman, Evan Engel, and Taylor Griffin. Ernie Indra Todd engineered this episode. Thanks also to Drew Burrows and Miel Severio. Make sure you subscribe to the show wherever you listen to podcasts. Thank you for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business. Meta employees, stay the course. This will pay off. [Ad break] Scott Galloway · 51:02 See you [Ad break] Scott Galloway · 51:02 for details.