The Prof G Pod with Scott Galloway – Prof G Markets: Goldman’s Earnings Slump, an ETF for Options Trading, and Fractional Jet Ownership

Intro

In this episode of “The Prof G Pod with Scott Galloway,” Scott discusses various topics ranging from the state of the healthcare industry, earnings reports from Tesla and Netflix, the banking sector, options trading, and fractional jet ownership. He provides insights into the challenges and opportunities in these industries and offers his take on their future prospects.

Main Takeaways

Healthcare Industry:

• US healthcare costs are high and inefficient due to the influence of the insurance industry.
• UK healthcare system is believed to be superior to the US healthcare system.
• Health insurance premiums in the US rose by 7% this year.
• Lack of consumer vigilance in healthcare leads to unfair pricing.

Tesla and Netflix Earnings:

• Tesla reported Q3 results that missed on both revenue and earnings.
• Netflix beat expectations on revenue and earnings and reported a surge in Q3 subscribers.
• Tesla’s revenue growth has slowed, but Cybertruck reservations are off the charts.
• Netflix’s success during the pandemic was due to competitors’ spending cuts and consolidation in the industry.

Banking Sector:

• J.P. Morgan Chase, City Group, Wells Fargo, and Bank of America reported strong earnings, while Morgan Stanley and Goldman Sachs saw declines.
• Investors prefer stable cash flows, leading Goldman Sachs and Morgan Stanley to focus on wealth management.
• Net interest income is a boon for these companies this quarter.
• JP Morgan’s acquisition of First Republic Bank is expected to be profitable within 18 months.

Options Trading:

• Zero-day options trading is associated with significant risks but offers a low-cost way to collect income.
• Retail investors account for half of options trading volume, raising ethical questions.
• Writing covered calls is a way of hedging and getting additional cash flow, while writing naked options is more dangerous.

Fractional Jet Ownership:

• Fractional jet ownership is becoming increasingly popular, allowing individuals to buy a share of a plane.
• It provides flexibility and access to a fleet of planes.
• The industry is expected to continue growing, and prices may come down in the future.

Summary

US Healthcare Challenges and UK Superiority

Scott highlights the challenges of the US healthcare system, attributing high costs and inefficiency to the influence of the insurance industry. In contrast, he praises the UK healthcare system for its superior performance in terms of longevity and overall health outcomes.

Tesla and Netflix Performance

Scott discusses the recent earnings reports of Tesla and Netflix. While Tesla’s revenue and earnings missed expectations, the company’s Cybertruck reservations remain strong. Netflix, on the other hand, exceeded expectations in terms of revenue, earnings, and subscriber growth. Scott attributes Netflix’s success to competitors’ spending cuts and industry consolidation during the pandemic.

Banking Sector Shift

Scott analyzes the performance of major banks, highlighting the strong earnings of J.P. Morgan Chase, City Group, Wells Fargo, and Bank of America. However, Morgan Stanley and Goldman Sachs saw declines due to a drop-off in investment banking activity. Scott explains that the shift towards wealth management is driven by investors’ preference for stable cash flows.

Options Trading and Ethical Questions

Scott delves into the world of options trading, emphasizing the risks associated with zero-day options. He raises ethical questions regarding the involvement of retail investors and the exploitation of their inexperience and impatience by institutional investors. Scott also explains the differences between writing covered calls and writing naked options, highlighting the potential dangers of the latter.

Fractional Jet Ownership and Future Growth

Scott explores the rising trend of fractional jet ownership, which allows individuals to buy a share of a private plane. He discusses the advantages of fractional ownership, such as flexibility and access to a fleet of planes. Scott predicts continued growth in the industry and anticipates potential price reductions in the future.

Conclusion

In this episode, Scott Galloway provides valuable insights into the healthcare industry, Tesla and Netflix earnings, the banking sector, options trading, and fractional jet ownership. He highlights the challenges and opportunities within these industries and offers his perspective on their future prospects. Listeners gain a deeper understanding of these topics and the implications they have on various sectors of the economy.