The Prof G Pod with Scott Galloway - Prof G Markets: Scott’s Investment Portfolio — a Breakdown

Episode Date: April 8, 2024

Scott shares how he allocates his investment portfolio between asset classes. He explains how he gains access to certain investment opportunities, and why he can take greater risks than most people. He also shares his biggest losses from the past year, and his biggest wins.  Pre-order "The Algebra of Wealth" out April 23rd Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. This week's number 32 million dollars that's how much revenue the caribbean island of anguilla earned last year from dot ai web domain registrations true story yet last night i was at a urinal in a bathroom at a famous restaurant the guy next to me said oh you're circumcised and i said nope that's just the wear and tear I like that. I like that. Get it, Ed? Get it? I get it. Okay. Welcome to Prop G Markets. Ed, what are we discussing today? We're doing something a little different today, Scott. We're going to take a look at your own

personal investments over the past year. We'll talk about what went well, what went poorly, and perhaps what surprised you. And at the end, we'll discuss your investment strategy for the year ahead. Sound good? Sounds good. So let's start with a pretty general question. Between stocks, bonds, real estate, private investments, what does your overall asset allocation look like right now? My asset allocation is about 40% real estate, which is a lot, and then about 40% private investments, and only about 15% or 20% publicly traded stocks. Has that balance changed significantly from previous years,

or is that pretty standard for you? When I was younger, obviously, I had a lot of money in real estate because I kind of levered up to buy a home. And then as I got more money, it was more public stocks. And I have reduced my public markets exposure, increased my private market exposure, increase my private market exposure, and increase my real estate. So the reason why I own so much real estate is, one, I really think it's a tax-advantaged asset class. And it's the kind of asset you can, if you don't lever it up too much, you can hold forever and then might make a good asset to give to your kids. But essentially, I have two types. I have kind of consumption real estate and then rental units. The rental units are great because you can depreciate them 2% or 3% a year. Real estate is the most tax

advantage asset class in the world. Even though these rental units that I have have gone up in value every year, every year I can depreciate them, I think it's 3% a year. There's no other asset that as it's going up in value, you can take a write-off against it despite the fact it's increasing in value. Then I look at demographics and we are building one and a half million fewer homes than we need every year, which just says to me that there was going to be a demand-supply imbalance for a long, long time. So I just love rental units and I think it makes sense. Where I have the bulk of my real estate holdings is in what I call a 0.1% strategy that I've adopted over the last five years. And that is, I used to own one home, now I own four. My belief, again, based on economic trends, is that what's happened in the US is happening

around the world, and that is massive income inequality. And that is the 1% continues to garner more and more. They weaponize government. They keep their taxes low. They invest in monopolies. They massively weaponize the tax code. And there seems to be, in my opinion, just unbelievable explosion in the ultra-rich. So in the US, for example, the last 10 years, the number of billionaires has gone from 500 people to 2,500. And so what I've done is I've bought four homes in what I call 0.1% neighborhoods. So I have homes in London, New York, Palm Beach, and in Aspen. And there's some consumption in there in the sense that as I get older, my priorities are the following. I want homes where my kids, when they leave for college, will come visit me.

And so I want to have homes where they think, oh, we'll go see dad. And two, as I get older, I primarily just want to, as I always say, I want to be in beautiful places and just wait for the ask answer. And so there is some consumption here. And generally speaking, I think that as income inequality continues to get out of control, that these areas are going to increase in value faster than inflation. And then privates is disproportionately high because I have access. I know a lot of, after working in tech and business for 30-odd years in consulting where you speak to a lot of CEOs and in academia where what I do, I meet with a lot of CEOs

and a lot of venture capital firms based on starting companies. I have a lot of access that other people don't have. And if it's a story of privilege, trust your instincts. But I get invited to invest in companies alongside of kind of tier one private equity and VC firms. At sort of negative fees, they will let me invest. If I put in, say, a million bucks, they'll give me 1.2 or sometimes up to 2 million in equity to go on the board or be an advisor. So I get to invest. Most people have to invest with fees. I get to invest with negative fees.

And so I disproportionately allocate money to privates. I have less money in the stock market because I've come to the conclusion that nobody can pick stocks. The only time I invest typically in a stock is when I have access to the IPO because I either have advised the CEO or the investment bank running the book for whatever reason I can get allocation. It's a rigged market. Most of the pop for the first couple of years is usually on the first trade. So unless I can get allocation in the IPO, I don't do it. Again, if that sounds like privilege and access, it is. I've worked hard to get it, but it's still a rigged market. But I don't invest that much in public market stocks anymore because I find it a bit emotionally trying. Today, I checked my stocks probably six times.

And I hate having a scorecard every day. One of the reasons I've never purchased crypto is I know my personality. The fact that it trades 24 by 7 would just be bad for me. So one of the things I like about owning real estate and owning privates, which is 80% of my assets, is that you don't have to mark your book every day. And I find that is emotionally comforting or just less kind of emotional stress, if you will. Yeah, I think the thing that jumps out to me is this unusually low public markets exposure and you're sort of over-indexing on private investments and real estate. Your advice to listeners is generally speaking, diversification, low-cost ETFs, let time take over. But when I look at this portfolio,

just from the bird's eye perspective you just laid out, it doesn't totally reflect that. Is there a reason why you're not following your, say, standard advice right now? So some things I'm following, some things I'm not. So a couple of things. One, this is not, it's like, don't do this at home, kids. And here's the reality. If I lost 90% of my wealth, I'd still be fine. I'd be bummed out. I probably couldn't maintain this lifestyle, but I'd still have enough money to live really well. And my kids would be fine. I can take more risks than most people. In addition, I have access that other people don't have. I mean, that's the reality. And I'm trying to lean

in. And I do that. I lean into my access. I'm very self-conscious saying it, but that's the reality. I am following diversification. I have everything from an investment in a company that buys old aircraft engines, fixes them up, and then leases them out to cargo planes, to real estate, to investments in software companies, to investments in supply chain benchmarking companies, I have to claims against a bankrupt FTX. I do have decent diversification. I'm not diversified geographically. Most of my companies are in the US. I have a little bit of exposure to Europe, but I do have pretty good diversification. I'm not diversified geographically. Most of my companies are in the US. I have a little bit of exposure to Europe, but I do have pretty good diversification. And I do let time take over in the sense that I usually don't invest in anything. I'm not a trader. I usually don't invest in anything that I don't plan to hold for several years. And a lot of the

stuff I buy, I mean, for example, the real estate, I don't plan to ever sell it. None of it. I mean, until my kids need it or want it or what have you. So the other thing I don't do, I don't try to time the market. I realize that it's very difficult to do. I find a good company or a good opportunity. I lean into it and I plan on holding it for a long time. So let's go through your wins and losses and we'll start with the losses. What have been your biggest failures in investing in the past 12 months? Well, I don't think of it as failures. My biggest loss is because if you do what I do and you invest, I mean, I think I have 30 or 40 different investments. If you looked at every investment

over, I don't know, a million dollars in value, I have at least 30 or 40 of investments. If you looked at every investment over, I don't know, a million dollars in value, I have at least 30 or 40 of them. And that goes to diversification. I don't like to have any more than, you know, I have one asset that's probably almost 15 or 20% of my net worth, one of my homes, but that's it. Nothing else is more than kind of 5% and most is two or three. The biggest loss, I lost $15 million shorting the market last year. I do it as a means of hedging. I had a lot of exposure to tech stocks. I had a lot of exposure to individual stocks where I got in the IPO. So I would short some high flyers by selling calls against them and some of them just skyrocketed and I got just hammered. Now, the year before I made money, the year before that, I'd made a lot of money, so I started believing that I was good at it. And that's a lesson to not trust your emotions. I was lucky

I wasn't good, and I started believing I was good at it, so I got more aggressive with it, which really hurt me. And also, I write covered calls in all my stock positions. So if I own Airbnb at $100, I'll write a week hundred bucks, I'll write a week long, I'll write calls on the number of shares I have. So if I have 10,000 shares at a hundred bucks, I write calls on 10,000, say expiring at 105 and I'd get a buck premium that week and I'd make 10,000 bucks. And it's all great as long as the stock doesn't go above 105. Now, technically you're hedged because you just give up the gains above 105 because the stock's gone up. But what happened to me a lot last year is these stocks would skyrocket. And if I wanted to hold onto the stock, I had to go buy the calls back and it cost me a lot of money. And then I wrote

calls nakedly against some companies that I thought were really high flyers and just made no sense. And I learned the hard way, the market can stay irrational longer than you can stay liquid. And some of these companies, a couple of them went up 30% in three days. And I'd have to write a check for two or three million bucks. Anyways, I've still made money on this strategy over the last three years, but I lost $15 million on that. A couple of my private companies I've marked down substantially in value. I was an investor in Post News, or am an investor. Fantastic CEO, fantastic idea. Competitor to Twitter. Competitors to Twitter haven't gotten any traction other than threads. So I made a substantial investment there. I've marked that down. I'm still hopeful. a text messaging app focusing on the healthcare industry. Everything made sense, smart people, healthcare, handhelds. I love it, pushing out healthcare to lower-income people through corporations. Sam's or Walmart signs up, and for eight bucks a month per employee, you can contact a dermatologist or a doctor and give them your symptoms over the phone,

text message, and they use AI to connect with the right person. Great business. Hasn't grown as fast as we'd all hoped. I invested at a really high valuation. A vocational training company here in Europe I have marked down. Really good company, but I think the valuation I invested at, it was extraordinarily rich, and the company's doing well, but the market's rationalized in the private market, so I've marked that down by $2 or $3 million. So of my losses last year, I mean, they all add up to probably about $25 million. When you say you're marking these investments down, are you coming up with your own valuations when you mark them down? Are you getting reports from the team and learning based on other investors' valuations? When you mark them down, are you getting reports from the team and learning based on other investors' valuations? How does marking them down work for you at a personal level?

So I find generally speaking, if you don't keep track of how much money you're spending and how much you're making and the value of investments, you're due for an unwelcome surprise. And so as a regular practice, at least once a year, if not more, I sit down with the guys at Goldman and I go through every investment. Actually, I probably do it twice a year and try and mark the investment. And an easy way to mark it is if a company raises money in the market, follow on round at a hundred million, you know, and 1% of it, then you know your stock's worth a million, at least if it's a legitimate mark, not just insiders. I try to be conservative on the marks. That's that I don't get too crazy with my spending and overestimate my net worth. And I always try and value it probably maybe 10% or 20%

realistically than what I could get in the open market. And some of these things are difficult to mark because they're so illiquid. But I try and go through everything and have an honest, sober assessment of what I think it is worth at that moment. We'll be right back. We're back with ProfitG Mark G markets just a question on liquidity I think what's also surprising about your portfolio is just how insanely illiquid the portfolio is I mean you only have 15 20 percent in public stocks how do you manage liquidity like how did you manage liquidity when you needed the cash to say buy a house in Aspen this year. What do you do about liquidity? Well, one, you can borrow against, if you have, say, 30 million in stock, you can borrow 20

million against it. So I do what a lot of wealthy people do, and that is I borrow money against my stocks. I don't do it to double down on the stock market, but I'll do it to invest in another asset that's diversified, and you can borrow at very low rates. And also, I'll sell stuff, and I have liquidity events. On a regular basis, I was an investor in a subscription-based search engine called Neva. I wanted to invest in companies where I thought provided a solution to some of the systemic problems of big tech. I hate the ad model of Google. I think it's led to really terrible places. And I met this guy, Sridhar Ramaswamy, who I just thought was so incredibly bright. He was lead engineer at Google and he was starting a subscription-based search engine. I put 3 million bucks in. The company never got traction, but Snowflake came in and I think basically did an acqui-hire because they're like, this team is so incredible. We'll pay all your investors back. And now, of course, Street R is the CEO of Snowflake, and I'm actually thinking about investing in Snowflake because I just think so much of this

guy. So I got my 3 million bucks back, which is like the best venture investment in the world because I got a lottery ticket, and when it didn't hit, I got my dollar back. So I actually see that as a kind of a win. I have so many investments that typically two or three a year will have a liquidity investment. And then I deploy that capital. Also, no matter what wealth I have, I always want to make money. And between books, podcasting, speaking, you know, the reality is I make a lot of money.

So I try to still live within my means. I try to still live. I try to make as much as I spend. And occasionally if I don't have cash, I have an investment opportunity now and I've had, I've ramped up, I've got a line against one of my homes. So I try to always make sure, I try to always line up kind of dry powder in case an opportunity comes along. But I do try to keep track of how much leverage I have because leverage is kind of the smart person's way to get poor fast.

And that is if the market has a real hiccup and you get caught with a lot of leverage, if I have X worth of net worth, I try not to lever up more than 0.1 or 0.2 X, recognizing that you might have enough money to pay it back, but it's not liquid. And the problem is when you need liquidity, it's when no one wants to provide it. There's been some times I've been in a little bit stretch, but for the most part, like on all my homes, I have almost no mortgages. So if I really need money, I can borrow against them or borrow against the stocks. Speaking of liquidity events, let's focus on your wins. What were your liquidity events this year? What went right? Where did you cash in? I had no idea that Bitcoin was going to skyrocket. But in a matter of less than a year, that investment more than quadrupled. My public stocks have done really well this year.

Airbnb is up, I don't know, 40% or 60% this year. I'm a holder on Amazon and Apple. They've had really good years. But my big win was about seven years ago, I invested two and a half million dollars in a bankrupt consumer company. And the distressed credit investor is a friend of mine. He called me. He's like, I'm investing in this smoking cessation company called Enjoy. And this was seven, eight years ago. And the idea was smoking is going away. And two of my friends use Androids to help to quit smoking. And I'm like, oh, I've heard of this company. I know it. So he said, do this, go on the board. So I invested two and a half million bucks. And this company, I went into it because I thought it was gonna make a lot of money, but I thought it was gonna get a twofer because my mom died of a smoking related illness. And I thought smoking cessation is great. And the UK, the health ministry or the equivalent of the FDA here sends you a vape if you're smoking because they're like, this is just, it's not good for you, but it's not nearly as bad as combustibles. Anyways, that company,

we kind of went through the valley of death, if you will, and a really strong CEO, really smart investor, a guy named Jason Mudrick, who I've been friends with for about 20 years. Anyways, long story short, Altria bought it and and that investment paid about $75 million off a $2.5 million investment. I gave a third of it away. But as you can imagine, that's still a huge liquidity event. So that was my biggest, that was by far my biggest hit, my biggest hit ever, other than maybe when I sold L2. And just if you have any questions about how the rich have weaponized the tax code, I was also able to take advantage of 1202. And just if you have any questions about how the rich have weaponized the tax code,

I was also able to take advantage of 1202. And because I'd held the stock for longer than five years and the company had net asset value of less than a certain amount, the first 25 million were tax-free. So if you don't believe that the tax code has been weaponized by rich people, it absolutely has. But I try to make myself feel better. I give a bunch of it away. What did you do with all that cash? Did you immediately invest it?

Yeah, I deployed it in different—it's amazing how fast you can spend money. I deployed it across a bunch of different investments in private companies. I paid off all the debt on all my homes because mortgages exploded. And I was dumb. I had five-year mortgages. And now looking back, we all wish we'd cut 10 or 30-year mortgages. But I thought, oh, interest rates are never going up. So I had kind of five-year mortgages. They all sort of seemed to come due last year. And I just paid them off because the cost to refinance them was going to, or the cost to take out a new mortgage is going to be about 7%. And I thought, I'll just pay them off because a 7% guaranteed return feels pretty good.

So I paid off almost all the mortgages on my homes and properties, made some new private investments, but it went pretty fast. When we spoke earlier, you also mentioned this company, Flight Lease Capital, that you invested in, which is like an aircraft leasing company. Yeah, it's a great company. A friend of mine, Ashad Azimi, a super bright private equity guy, found this great group of guys in Florida, and they're total gearheads. And they go out and they have just a look and a lock on this strange market where they buy used aircraft engines from, usually from companies or airlines all over the world going out of

business. They buy the engine. Essentially a plane, if a plane is worth 10 million, 9 million is in the engines. They buy the engine, they refurbish it. They're fantastic engineers. And then they lease it to usually a cargo company. And I'm an investor in there. And it's just been a great, every year it's done really well. So that one's returned like IRRs of like, I think, almost close to 30%. But the reason I did that one, I didn't get negative fees. I actually pay fees on that one, is I love the idea of diversifying.

I thought air cargo is probably, you know, I want to, I'm much more inclined to make investments in things that aren't tech right now because I'm so levered to tech because that's where I get opportunity. The thing I loved about this company was it wasn't really tech. It was like a lot of these engines are leased out to companies, you know, transporting, you know, materials between Mexico and, you know, Texas or wherever their cargo planes are flying. But I love that investment. Do you have any income generating investments?

I mean. Other than Ed Ellison? Well, that counts. Yeah. We make good money here. You know, we make, you know, millions of dollars doing books, podcasts, speaking gigs. So, you know, I try not to spend more than I'm actually making in terms of current income and then let the asset base grow. So I don't have kind of cash. My real estate, my rental units generate income, but I usually

reinvest that back in other stuff. But I'm not at the age yet where I need cash flow for my investments. I still manage to live within my means for my current income, for my day jobs, if you will. And you have no interest in debt, it sounds like. I know you were considering private credit at one point, but we haven't discussed bonds. Yeah. I actually bought my first bond. I bought a $10 million bond in Gannett because I know the guys at Apollo and I like them and they were investors and they carved out a piece for me. But I sold that I think about two years ago and I haven't been back in the credit markets. I would like whatever liquidity events I get in the remainder of the year in 2025, I would like to put into the

credit markets because interest rates have come up and I think it would be good diversification for me to have some exposure to the credit markets, but probably some sort of tax deferred or tax advantage vehicle that's a low fee in the credit markets. But you're right to point that out that I have a dearth. It's a hole in my portfolio. I should have, you know, they say 60-40. I'm not. I'm whatever, 40-40-20, and none of it is in the credit markets. I don't think so. The other thing that I find interesting, which I didn't totally appreciate, is that you basically manage everything yourself and actively. I know you have a guy at Goldman, but you're making all of the investment decisions, it sounds like.

It doesn't seem like Goldman's actually doing that much. My question to you is, what does Goldman actually do for you? Well, they do execution. When I write covered calls on stuff, they help me figure out asset allocation. They're real thought partners. They're really good fiduciaries. They have all these funds. I've invested in several opportunity zones, which is also real estate through them. But I'll call them and say,

this VC approached me and said I should invest in this, and they're going to give me additional options or RSUs. And meanwhile, they have all their own products, which they get fees from. And they'll say, oh, no, you should do that. They really are good fiduciaries. They put themselves in my shoes. They also handle my taxes, which is getting increasingly complicated. They will sit down with me and say, what investments are you planning to make over the three, six, 12 months? What is your burn? And they'll say, this is where we need liquidity. And they'll manage all that for me. I'm going to try and outsource more of it. Like this credit vehicle, I'm just going to put money in there and let it go away

or just not think about it because I'm spending too much time on it. I'm a bit of a, I've talked myself into thinking it's worth it and it's like do as I say, not as I do or whatever it is. But I do have these opportunities. My investments are usually pretty hands-on.

So if I get an opportunity to invest in something, especially if they're going to give me additional options, I'm expected to work on that company. I'm expected to get involved. So I like to stay very involved in this stuff and really understand where everything is. And having said that, my advice to people is to take all of the time you're spending on your investments and give it to other people, low fees, and then focus on your work to make more money. But I've talked myself into believing that a lot of my investments, it makes sense for me to be active in. I probably should move to more passive as I get older. I probably spend easy a third of my week on money, managing investments, figuring out where I can invest,

what opportunities I have to invest, advising the companies of my investments, stuff like that. I spend a lot of time, I'm on several boards of companies I invest in. So I do spend a lot of time on it. And I think as I get older, I'm going to start moving more into passives. I guess I'm surprised that you're still doing it yourself. Is there a reason why you haven't made that switch yet? Because of my business, which is I'm in the business of advising CEOs and advising investors, I get crazy access. And if I really like a company, I'm not above this. If I really like

a company, I'll call the CEO and say, hi, I'm Scott Galloway. I love your company. I'm not above this. If I really like a company, I'll call the CEO and say, hi, I'm Scott Galloway. I love your company. I want to invest. And these are, in my view, let's set up lunch. And then I'll sit down at lunch and say, I think these are the three things I would be thinking about if I were you. And most of the time, I don't get a callback. When I get a callback, most of the time, I don't get a lunch. But occasionally, I get a callback and a lunch. And occasionally, I get a callback at Most of the time, I don't get a lunch. But occasionally, I get a callback and a lunch. And occasionally, I get a callback at lunch, and I think, okay, this guy would be a good person to have on the cap table. Most even wealthy people don't have that kind of access. And that's the reason that I'm so heavy in privates is I'm not above calling someone that I think is doing a great job or a company I really like and saying, you know, I want in on this. I think there's a real opportunity here. This is what I would do to improve the company. This is why I like you guys. And, you know, this is why I want

to invest. I mean, it comes right down to this. Returns are a function of how kind of hard you're willing to work in your access. And I, right now, at some point, my contacts will start to dry up. I won't have the profile I have now, and I won't just have this type of access. We'll be right back. We're back with Profiteer Markets. Has anything happened this year that was particularly unusual? Is there anything that's surprised you? Anything that caught you off guard, perhaps? Maybe a liquidity event or an unexpected loss?

What's been strange this year? Everything's been kind of strange. Like, everything is such a random walk. At one point, I marked Enjoy down to almost zero. You know, every year I mark my investments. At one point, I made a $2.5 million investment. I think at one point I marked it down to half a million dollars. Because you got the financials and they just went up to scratch?

No, it was just such an ugly space. And we were trying to get FDA approval. The key to this company was basically a regulatory play. The FDA, it cost us, I think, $100 to $150 million to do all of the studies and tests to show that this is a company and a product that's not only safe or reduces the harm on a net basis of getting people off of combustibles and nicotine, but also the youth studies to show that we were unlike other players in the space, that youth weren't buying our product. To get FDA approval for a company like that cost, I think it cost $120 or $150 million. So that was a massive investment. And then when all hell broke loose a few years ago, it felt like none of these things were ever going to get FDA approval. They were just all going to be removed from all shelves. And it was very hard to raise money. But, you know, we got through that. The FDA decided that smoking cessation or electronic nicotine delivery systems are a net good and provided FDA approval to like a handful of companies, and we were able to sell the company for, I think, $2.8 billion. Or anyway, some crazy number. It paid off huge. And then other companies, I'm an investor in public.com, great guys,

online trading. They don't do payment for order flow. And I'm like, I like these guys. They're not preying on young men's gambling addiction. They're trying to promote responsible investing. So I invested there. Overnight, I marked that from $1 million to $10 million, and then Robinhood has crashed. And so now that company I would mark down substantially. And then investing in a Twitter competitor from the guy who ran, who founded Waze. This guy is probably the best product guy in the world, literally in the world. He took on Google Maps and beat them. He's amazing. He's just such a talented guy. You just meet him and within three seconds, you're like, I'd back this guy to do anything. All of those companies are down. And what it all comes down to is the following.

Nobody knows. Nobody knows. I wrote Enjoy almost down to a zero. I thought I was under the next best thing with text messaging and healthcare, a subscription-based search engine run by the head of Google Engineering, one of the brightest people I've ever met. And here's the thing, nobody knows. I mean, you always want to look for concepts that you think work. And most importantly, you want to find good people because good people have a tendency to, at worst, get you your money back. But no one has any idea. And that's why I never invest now, other than a couple of homes. I don't invest more than 3% of my net worth in anything. If you looked at my portfolio now and said, something's going to go to zero in the next three months and something's going to go up 20x. I'd have almost no idea.

I would literally be throwing darts in my portfolio. I don't know. So I spread it around in a bunch of different stuff. I try to find good people and good opportunities. More importantly, things where I get better economics. If I can invest in better economics than a tier one VC firm, over time, if I do enough of those, I should be fine. But my random walk through the world of investments is that nobody knows. So you want to diversify, you want to lean into your

strengths, and you don't want, especially when you get money, the key to being rich is to stay rich. And so I'm not looking to get rich, I'm looking to not get poor. And the way you manage that is through diversification. Now, I can take a lot of risk, but I take risks in different things that are somewhat sequestered from each other. But yeah, every year it's like, I can't believe this company isn't doing well. I'm just shocked. And then who would have thunk that claims against a bankrupt AFTX go from 23 cents to 95 cents in about six months. Who would have thought that? So the key is to make a bunch of bets. You don't know what number is going to come up, so you want a lot of chips on the table. And the way you do that, if you don't have access like I have access, is through index funds. Let's switch to the year ahead. Are there any investments that you're looking at right now? And how is your overall strategy for 2024 shaping up? So I want some exposure,

as you referenced before, to the credit markets. Also, I think the DIPO market is going to boom in the next six months. So I'm trying to find a way into great companies that are about to go public. And that is try and find companies that I think are great companies, see where I could add value, and quite frankly, call the CEO and say, I want to invest in your

company. And I think that the IPO market in the back half of this year is going to be really, really strong. And I think we've seen that, and we've talked about it on this show with Astera and Reddit. And in one of those companies, the CEO reached out to me, said, can I do an hour-long call with you? And I said, sure. And he asked me for advice. I gave him advice, said, anything I can do for you? And I was like, yeah, I want allocation in the IPO. And by the way, I asked for X and he only gave me 0.3X. But it was still more than most people got.

So I'm going to try and do that a bunch, whether it happens or not. You know, I don't know, but I'm aggressive. Your success in life, financially and personally, is your willingness to get out a spoon and eat shit. And what I mean by that is endure rejection. I don't just wait for people to call me and say, oh, you're awesome, well, you're going on board. I'll call people and say, I love your company. I'd like to invest. That's how I kind of try to have outsized returns. But be clear, I get it wrong all the time. What I try to do is be so diverse or diverse enough that it doesn't keep me awake at night. I assume I'm going to lose everything and ask myself, if I lost everything, would I not be able to sleep? If that's true, I don't make that size of investment,

I reduce the size. And also, I try to go in for the long term. And just to manage my own mental health, I've been in privates a lot because I don't like to have a scorecard every day. And like I said, I'm just trying to be really diversified. And yeah, and now I'm trying to take a certain percentage of every investment and give it away because it's like forced philanthropy, which is fun and also has tax advantages. My takeaway here is you have throughout your entire life actively managed your portfolio. I don't know what your net worth is, but you've said on this podcast that it's nine figures. I think it's safe to say that you are a very good investor. I just want to end this by reflecting on what you think you're actually good at and what you think your strengths are and whether you believe personally that you are a good investor too.

I'm not a good investor, Ed. I'm a really good communicator. I have the ability to take ideas and communicate them through storytelling, which has given me access to the highest levels of corporate America. The CEOs of the biggest companies in the world and the most esteemed investors are willing to sit down and let me tell them a story about what I think they or their company should be doing. And as a result, they've given me access that any fucking idiot could make money on if they diversified and just weren't stupid. And I was smart enough to diversify such that no one mistake of which I made a lot of,

it might've hurt, but I had Kevlar, so I didn't get, the injury wasn't fatal. And also being a great communicator isn't enough. What my superpower has been, my core competence has been communicating, but my superpower has been attracting and retaining really talented people because that scales what you're good at. And every company I talk about, every piece of access I've had, it's because of a firm or a consulting firm or something where I was working with great people and we had credibility. So I got, you know, we established a good relationship with these companies or these investment firms. You know, at Profit, we were doing brand strategy engagements for Kleiner Perkins. So I got to co-invest with

Kleiner Perkins. By the way, lost everything investing with Kleiner Perkins, but the point is I got access. And so am I a great investor? I don't think so. I think if you said manage a hedge fund, I'm not sure I'd be any good. And also, Ed, let's be honest, I've just been really fucking lucky. To come into my prime income earning years when the market was about to have an unprecedented bull run. I mean, to think about it, I hit, I kind of hit 40 just as the market was starting to scream. So I'm finally making really good money. I have enough capital to deploy into the market and the market just goes batshit crazy up. That's got nothing to do with me. So a smartest decision I've ever made was being born in California, a white heterosexual male in the 60s at unfair advantage, and coming into my prime income earning years during the greatest bull market in the greatest country in

the world. So yeah, am I talented? Hands down. You know, I might be the best merchant in Tehran if I've been working there, making $30,000 a year. But I might be the best hotel operator in Cape Town making $80,000 a year. My exceptional wealth is a function of things that aren't my fault.

This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Catherine Dillon and Jason Stavis. Jennifer Sanchez is our associate producer. Mia Silverio is our research lead and Drew Burrows is our technical director. Thank you for listening to Prof G Markets

from the Vox Media Podcast Network. Join us on Wednesday for office hours and we'll be back with a fresh take on markets every Monday. In kind reunion As the world turns And the dark flies In love, love, love, love