Prof G Markets: Carta and the Secondary Market, Bitcoin ETFs, and Scott’s 2024 Investment Strategy | The Prof G Pod with Scott Galloway

Intro

In this episode of “The Prof G Pod with Scott Galloway,” Scott Galloway starts with a humorous and off-topic intro before diving into the main topics of discussion. The episode covers the SEC’s approval of the Bitcoin ETF, a scandal in the startup world, and Scott’s investment strategy for 2024. Scott also discusses recent headlines, including Adobe’s failed acquisition of Figma, The New York Times suing OpenAI and Microsoft, the Boeing 737 MAX incident, activist investor Elliott’s position in Tinder owner Match Group, and the rise in the consumer price index.

Main Takeaways

Market Vitals and Recent Headlines

• Market vitals for 2023: S&P 500 gained 24%, dollar ended down 2%, Bitcoin gained over 150%, and yield on tenure treasuries finished back where it started.
• Recent headlines include Adobe abandoning its acquisition of Figma, The New York Times suing OpenAI and Microsoft, Boeing 737 MAX incident, activist investor Elliott’s position in Tinder owner Match Group, and consumer price index rising 3.4% in December.

Power Concentration in Big Tech and Adobe’s Failed Acquisition

• Scott discusses the impact of Adobe’s failed acquisition and the power concentration in big tech, highlighting the EU’s role in killing the acquisition.
• European regulators blocked Adobe’s acquisition of Figma, emphasizing the importance of competition and lower prices in the design and creative market.
• Adobe’s willingness to pay a premium for Figma raised questions about monopoly premium and the potential negative impact on consumers.
• The EU’s intervention prevented a merger that would have been detrimental to consumers, highlighting the significance of regulatory oversight in protecting market competition.

Boeing’s Crisis and Match Group’s Potential

• Despite the recent Boeing crisis, the company is considered a good buy due to its well-run operations and strong position in the commercial jet manufacturing duopoly.
• The Boeing 737 incident, although dramatic, did not result in any casualties, and the company is expected to recover from the setback.
• Humorous commentary on the Boeing incident, highlighting the unexpected nature of the fuselage detachment and the potential impact on passengers’ fear of flying.
• Elliott Management is praised for its approach to activist investing, emphasizing forcefulness and dignity in communication.
• The potential for growth and success in the Match Group, owning a significant portion of the dating app market, is highlighted.
• Match Group is considering raising prices due to its virtual monopoly in the space, with 60% of the online dating market.
• The market’s importance is highlighted, as young people are willing to spend on high-margin products and frequently switch apps.
• Match Group’s success in aggregating 60% of the market is acknowledged, with a positive outlook on its future performance.

Bitcoin ETFs and the Secondary Market

• The SEC approved 11 applications to issue Bitcoin ETFs on US exchanges, allowing more everyday investors to invest in Bitcoin through standard brokerage accounts.
• The hacking scandal of the SEC’s official Twitter account raises questions about online security and government communications.
• The approval of the Bitcoin ETFs by the SEC brings legitimacy to crypto and Bitcoin, leading to lower fees for traders and attracting new customers.
• The entry of low-cost players like Schwab and Vanguard into the crypto market is expected to reduce healthy margins and impact companies like Coinbase.
• Cauter, a company known for cap table management software, faced backlash for using confidential customer information to make sales calls for its secondary markets platform.
• The secondary market for private companies is expected to grow due to the lack of access to IPOs and the need for liquidity, presenting opportunities for more efficient operations.

Investment Strategy and Financial Advice

• Scott discusses his investment strategy shift, transitioning out of tech and into credit to de-risk his portfolio at 49 years old.
• Geopolitical tensions, such as the Hamas-Israel conflict and ongoing US strikes on Iran-backed Hussi militants, are highlighted as factors to consider in investment decisions.
• The speaker advises young people to focus on something they are good at, work hard to excel in it, and aim for a high-employment rate profession.
• Living like a stoic and saving money is emphasized to build wealth, as being rich is more about saving than earning.
• Investing in ETFs, low-cost index funds, and diversifying the portfolio is recommended for long-term financial growth.
• Embracing the concept of time and leveraging it for wealth accumulation is crucial, as the market’s natural trajectory over the long term is upward.
• Saving and diversifying investments from a young age can lead to financial security in the future.

Summary

Power Concentration in Big Tech and Adobe’s Failed Acquisition

The episode starts with Scott discussing the failed acquisition of Figma by Adobe and the concentration of power in big tech. European regulators blocked the acquisition, emphasizing the importance of competition and lower prices in the design and creative market. Adobe’s willingness to pay a premium for Figma raised questions about monopoly premium and the potential negative impact on consumers. The EU’s intervention prevented a merger that would have been detrimental to consumers, highlighting the significance of regulatory oversight in protecting market competition.

Boeing’s Crisis and Match Group’s Potential

The discussion then shifts to the recent Boeing crisis and the potential of Match Group. Despite the Boeing 737 incident, the company is considered a good buy due to its well-run operations and strong position in the commercial jet manufacturing duopoly. The incident did not result in any casualties, and the company is expected to recover. Match Group, owning 60% of the online dating market, is considering raising prices due to its virtual monopoly in the space. The market’s importance is highlighted, as young people are willing to spend on high-margin products and frequently switch apps. Match Group’s success in aggregating 60% of the market is acknowledged, with a positive outlook on its future performance.

Bitcoin ETFs and the Secondary Market

The episode then delves into the approval of Bitcoin ETFs by the SEC and the controversy surrounding the secondary market. The SEC approved 11 applications for Bitcoin ETFs, allowing more everyday investors to invest in Bitcoin. However, the approval was accompanied by volatility and drama in the crypto market. The hacking scandal of the SEC’s official Twitter account raises questions about online security and government communications. The entry of low-cost players like Schwab and Vanguard into the crypto market is expected to reduce healthy margins and impact companies like Coinbase. Cauter, a company known for cap table management software, faced backlash for using confidential customer information to make sales calls for its secondary markets platform. Despite the controversy, the demand for the secondary market is likely to increase, potentially attracting larger players like JPMorgan and Goldman.

Investment Strategy and Financial Advice

The episode concludes with Scott discussing his investment strategy shift and offering financial advice. Scott is transitioning out of tech and into credit to de-risk his portfolio. Geopolitical tensions, such as the Hamas-Israel conflict and ongoing US strikes on Iran-backed Hussi militants, are highlighted as factors to consider in investment decisions. Scott advises young people to focus on something they are good at and work hard to excel in it. Living like a stoic and saving money is emphasized to build wealth, as being rich is more about saving than earning. Investing in ETFs, low-cost index funds, and diversifying the portfolio is recommended for long-term financial growth. The importance of time and leveraging it for wealth accumulation is emphasized. Saving and diversifying investments from a young age can lead to financial security in the future.

Conclusion

In this episode of “The Prof G Pod with Scott Galloway,” Scott covers a range of topics, including power concentration in big tech, the failed acquisition of Figma by Adobe, the Boeing crisis, Match Group’s potential, the approval of Bitcoin ETFs, the controversy surrounding the secondary market, and investment strategy. The episode provides valuable insights into market dynamics, regulatory oversight, and financial advice for young people. Listeners are encouraged to join the podcast for fresh insights every Monday.