The Prof G Pod with Scott Galloway - Prof G Markets: The AI Wars, Bed Bath & Beyond’s Share Sale, and Scott’s Options Trade

Episode Date: February 13, 2023

This week on Prof G Markets, Scott breaks down the state of play in the AI wars as Microsoft and Google compete in a lightning fast hype cycle. Then Scott breaks down why institutional investors would pour more money into Bed Bath & Beyond when it's on the brink of bankruptcy, and why he made an options trade on the stock’s volatility. Learn more about your ad choices. Visit podcastchoices.com/adchoices

I just don't get it. Just wish someone could do the research on it. Can we figure this out? Hey y'all, I'm John Blenhill, and I'm hosting a new podcast at Vox called Explain It To Me. Here's how it works. You call our hotline with questions you can't quite answer on your own. We'll investigate and call you back to tell you what we found.

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credit cards. Head over to nerdwallet.com forward slash learn more to find smarter credit cards, savings accounts, mortgage rates, and more. NerdWallet. Finance smarter. NerdWallet Compare Incorporated. NMLS 1617539. This week's number, $4 billion. That's how much Americans will spend on chocolate this Valentine's Day season of 5% over last year. No joke, I did for the first time last night, mushroom chocolates.

And I like me. Welcome to Prof G Markets. Today, we're discussing the AI wars, Bed Bath & Beyond's share sale, and why I made a trade on that stock's volatility. Here with the news is Prof G Media Analyst, Ed Elson. Ed, what are you doing for Valentine's Day? I haven't made plans. I have a date tonight, though, so that's good. So you're hoping that converts into some sort of Valentine's Day thing. That's pretty optimistic. Yeah, yeah. After one day, we'll see what happens. Can you explain

your psychedelics experience last night? I'd hardly call it psychedelics. I have trouble relaxing. Should I say that? I have trouble relaxing? No, it's mostly just about hedonism. Last time I've been mushrooms was in Joshua Tree. And first I threw up and then I just couldn't stop laughing. It was so much fun. And I was with a bunch of college buddies. I think it was my senior fifth year. I would ask you if you've done mushrooms, but I'm economically secure so I can speak openly about my drug use.

You shouldn't yet. Yeah, exactly. No comment. Yeah, it was nice. It was fun. It was easy. And I'm using it as a means of trying to reduce my alcohol consumption, which I think is actually harder on your body than THC. Enough about that. And by the way, just a quick tip on Valentine's Day.

My girlfriend told me that she didn't want to do anything for Valentine's Day. She said, let's agree to do nothing for Valentine's Day. But what I didn't realize that is that she wasn't talking about gifts. She was talking about sex. Okay. What else? Tell us about what's going on in the markets here. Let's start with our weekly review of market vitals. The S&P 500 was volatile as earnings rolled in.

The dollar bounced on signs of a strong labor market and continuing interest rate hikes. Bitcoin dipped below 23,000 to a two-week low. And the yield on 10-year treasuries rose. Shifting to the headlines. Turkey's stock exchange suspended trading after two catastrophic earthquakes sparked a $35 billion sell-off. That's the first time the exchange has shut down in 24 years. As a follow-up to our discussion last week about the Adani group Hindenburg Short, Gautam Adani's bankers sent him a margin call asking him to put up more than $500 million on a personal loan after his stock plummeted. Instead of posting more collateral, though, he simply wrote them a check

of $1.1 billion and repaid the loan in full. For an explainer on margin calls, check out our episode from October 17th. CVS is acquiring Oak Street Health, a medical care company, for $10.6 billion. Uber reported record revenue up 49% from a year earlier and said it expects to achieve operating income profitability this year. Meanwhile, Disney beat on sales and earnings. In the first earnings call since his return, CEO Bob Iger unveiled a restructuring plan, which includes cutting 7,000 jobs and $5.5 billion in costs. $3 billion of that will come from content. The company is also reorganizing into three units, entertainment, ESPN, and parks and experiences.

Disney stock rose about 6% in after-hours trading. And the next morning, activist investor Nelson Peltz, who we talked about on this podcast, said, quote, the proxy fight is over. Scott, what are your thoughts? A lot there. I mean, at first, it was obviously we hope the best for the rescue efforts in Turkey. You know, the small silver lining around these types of natural disasters is, I think, that's

somewhat of an opportunity in that it's for the West to really weigh in and help them with whatever resources they can. The Donnie group, it's a baller move. You know, the stock is up. I would bet it's probably a good time to go short the thing now because paying off this loan doesn't do anything about the corruption. It just provides liquidity or reduces the debt, avoids a margin call. CVS is super interesting. CVS is a management team that's like, yeah, we're just not going to fade slowly into the sunset here. We're going to do some baller moves. It's still a very big company, decent market cap. And they're kind of forward

integrating or reverse integrating to actual healthcare. They have those minute clinics or whatever they're called. They're trying to get more involved in insurance. They're taking advantage of the fact they have such incredible custody of the consumer. And that's become paramount. And that is if you own the relationship with the consumer, you can sell them other things. You can steer them towards different products and services. So that's an interesting acquisition. I don't know much about Oak Street Health and whether they overpaid or underpaid. The one that's more interesting relative to the news was that Uber revenue of 49% year on year. And in the quarter, Uber registered 2 billion trips, which is just dramatic. I mean, at the end of the day, my buddy Richard Kramer at Arte, Arte, I never know what the fuck, change your name, Richard. Anyways, it says that Uber is essentially a marketplace pairing buyers and sellers. In this case, people who want to ride and people who are willing to give them a ride. They have, when you think about it, a great interface. They have your credit card and they make it a very seamless market transaction. In this case, ride hailing. And his thesis all along is that they'll be able to get into other things. But this reflects pricing power. It reflects that there might be a light illuminated at the end of the profitability

tunnel or the tunnel towards profitability because if they can grow their revenues like this, they should be able to become a substantially profitable company. And my sense is they're just rolling over everybody. I don't know if you remember it, but three or five years ago, people would say Uber and Lyft. Now it's just Uber. It really is. Lyft is kind of a pimple on the elephant or an afterthought. And then the Disney thing is sort of interesting. We got that prediction wrong. I predicted that Disney would put pelts on their board. They did not. But it's pretty obvious they came to some sort of accommodation. And my guess is that Iger called and said, so you want us to find efficiencies. That's kind of your big thing

here. You want us to buy the rest of Hulu. Well, actually, we're contemplating selling Hulu. And I'm going to lay off 7,000 people, cut $5 billion in costs. Does that feel right as rain to you? And my guess is Nelson said, yeah, that feels good. And then Bob said, I don't want the distraction here. You can declare victory. It can be your idea if you want.

So it's sort of a win for Peltz. It's a win for Bob Iger, who's seen as decisive after kind of, you know, I shall return in his first action at Sea or big action stocks up. So it feels like win, win, win all around. Do you own Disney stock yourself? I don't. I love the stock. There's just very few companies that have this diversity of reliable, robust cash flows. Nothing has the flywheel effect of Disney and their characters. The movie franchises they have between Star Wars, Pixar, and Marvel, I mean, they just have so many assets and so many moats around this business and such pricing power. And then Disney Plus has cost them a ton of money because they've had to go toe-to-toe in this crazy nuclear arms race that is content spending on streaming. But Disney Plus sends a very clear signal about what it is. And I worry that actually Hulu doesn't send that clear a signal. It's very dependent upon individual hits.

I do get my live TV through Hulu. It's very expensive, but that's how I get live TV. So I pay 85 bucks. So occasionally I can watch Anderson Cooper or the State of the Union address. Worth it. Worth it. Because I don't know if you know this, Ed, AC and I are very close. We're very good friends. So I just feel like it's the right thing to do. Anyway, it's an unbelievable asset. And I think the stock's off, I don't know, a third or 40% or something. I think Disney is a great long-term hold. Okay, we'll be right back after the break with the state of play in the AI wars and a look at Bed Bath & Beyond's share sale. Stay with us. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Thank you. And how do they find their next great idea? Invest 30 minutes in an episode today.

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We're back with ProfgMarkets. Microsoft and Google both held events last week unveiling their new AI-powered chatbots, and it was a tale of two stocks. On Tuesday, Microsoft showed off its search engine Bing with new AI capabilities thanks to a partnership with ChatGPT. Microsoft's stock popped more than 3% after that event, bringing its market cap above $2 trillion for the first time in months. A day later, Google revealed its own chatbot, Baud. However, after this announcement, Google stock fell nearly 8%, erasing more than $100 billion in value.

We'll get into AI in a bit more depth in a second, but Scott, why do you think there was such a divergence in the market's reaction here to basically the same announcement? I think people are looking for reasons to like Microsoft and not like Google right now, because the general consensus in the market's reaction here to basically the same announcement? I think people are looking for reasons to like Microsoft and not like Google right now, because the general consensus in the market is that Microsoft is ahead of the game here and has made some visionary early investments and has sort of this, I don't know, maverick feel to it right now because it has less to lose. One of these companies has 93% share of search, and one of them has four, I think.

And the rest is some other, whatever it is, Baidu or Vintanka. I guess they break out by different regions. But the Google launch felt hurried and reactionary and catch up. And then a self-inflected wound, I guess the question they asked it about the web telescope that actually got wrong. So this feels like people are looking for a reason to take Google's stock down. And there really is an existential threat here. And that is, if you spend a lot of time on chat GPT, which I would suggest everybody do, and if you have the money, 20 bucks a month, such that you can use it anytime and it feels more powerful. Actually, I don't know why you paid 20 bucks. I did. Anyways, that's how I roll. Actually, I was probably under the influence of mushroom chocolates, but I believe when Microsoft launches Bing powered by OpenAI or whatever they're going to call it, Bing GPT, so far the demo is a big head fake. You're not really demoing it yet. But if it gives you one really good answer, which is kind of what a prediction engine should do, you could see Bing's share quintuple overnight. And then whether that holds that share or not remains to be seen.

But the market anticipates that. The market anticipates that Microsoft is in the best position to leverage the excitement around artificial intelligence and has kind of a first mover advantage here. And I think that's reflected in the stock price. Do you have any thoughts around this, Ed? Well, I found one quote that Satya Nadella said

really interesting. He said, when he was talking to the Financial Times, he said, from now on, the gross margin of search is going to drop forever. And he was saying this proudly, that he's basically going to use AI to bring up the costs of search, because it needs to be more sophisticated now, you need to hire sophisticated engineers to build these products. And basically saying that just by bringing up the costs of search as an entire sector, that's going to basically give Microsoft some sort of edge over Google. And all that I can glean from that is he just wants to disrupt Google in any way possible because of that 95% market share. And it doesn't really matter how he does it, even if he pays tens of billion dollars to acquire ChatGPT. But yeah, I think that sort of falls in line with what you were saying that anything to begin to eat Google's

lunch. And that's a positive sign for Microsoft. Yeah, I think what he's saying, though, is that, in so many words, is that Google is about to lose their monopoly. And the primary means of establishing monopoly abuse is pricing power. And so when he's saying margins are about to come down in search, what he's saying is the company that controls 93% is going to have to lower their prices because they're about to get competition. In addition, the dynamics or the complexion of the business model of search could change dramatically when you're just offering people one answer as opposed to 15 different answers. I mean, it's just fascinating. If you look at search over the last 20 years, it used to be initially kind of Google was you type in something and it would have two heavily shaded

answers at the top. And they said, add. It's like, okay. And you would ignore them and go to the next ones, the organic links. And then slowly but surely they lightened that shading to the point where you didn't know what was an ad and what isn't. And on some searches, if you type in best hotel in Orlando, the entire first page, two thirds of it is going to be links that people are either paying for or taking you to places that Google can further monetize, like their hotel booking engine. And the idea of just trying to present one answer is an existential threat to Google. In addition, the processing power of my understanding is costing the single digits of cents to actually process the query.

Whereas Google, I think it's one seventh the cost. So cost going up, margin power or pricing power going down, more competitors. The player here, and I'm an investor, I'm an investor in Yahoo. I know the guys at Apollo and they give me an opportunity to invest in it. And I've always loved Yahoo. Yahoo is my home screen and it's very old school, but I still think Yahoo does the best job on finance. And I like the people there.

I like the content. I always thought it was kind of undervalued. I would argue that Yahoo should be partnering with chatbot Joey Bag of Donuts or whoever's doing an interesting job. Maybe even it's Alibaba. I don't know who it is who has something interesting and just put it front and center because they have a lot less to lose. Yahoo is 1% share and even at 1% share, it's still a very

profitable business. But I would have thought that they have a lot of leeway to do some really interesting stuff around AI. The other thing about these other companies getting into AI, that is happening. So Google and Microsoft are the leaders, but lots of other companies are building their own chatbots. So last week, Baidu, which is sort of the Google of China,

they unveiled Wenxin Yiyan. That's their own chatbot. It's going to launch in March. Alibaba is also announcing it's releasing a chatbot. Meta actually had a chatbot called Galactica, and that was released in March. Alibaba is also announcing it's releasing a chatbot. Meta actually had a chatbot called Galactica, and that was released in November. Almost immediately, though, Galactica started spreading misinformation and hate speech. What do you know? So Meta had to take it down.

But then there are all these other companies that are working on AI for other functions. Snap's using it for augmented reality. Apple's using it for Siri. And even they said car crash detection technology in the iPhone. Amazon has a whole suite of AI services for AWS. And then there's this giant ecosystem of startups that's popping up. VC investment in generative AI has increased 425% since 2020. So this entire tech wave is moving really quickly. And my question to you is, have you ever seen a hype cycle move as fast as this one? Oh, never. I mean, war's broken out here. There's been AI around for a long time, and then ChatGPT comes along, and it just has set up an arms race. And you can bet that every one of these players is like,

wait, we've been working on AI and these guys come out and dominate. I mean, just dominate the headlines. And I think there's a chance, the big opportunity here is around business model. And that is the thing that really has fucked the internet and society is that the internet has basically now been totally fueled and financed by advertising. And when it's an ad model, it's an attention model. And when attention

is the goal, the motivation, the resource, the rare earth material you're trying to mine, the algorithms say, well, how do we just capture more and more of people's attention? And it's like enraging them, showing them weird content, conspiracy theory. The subscription model, while there's some downsides, you create two worlds, one people who can afford subscriptions and one who can't. But in general, it's a much healthier ecosystem. So I would argue with AI, if open AI, which was initially created to try and protect the world from some of the externalities of artificial intelligence, if they want to stay somewhat true to that mission, which they've already shit-canned as they smell Benjamins, they would really try and encourage and show a

future around subscriptions, motivate people to pay $20, and then just having a compact with the consumer that Google has broken. We're going to take you to the best place. We're going to try and give you the best answer, not the answer that gets you to go somewhere else we can further monetize or the answer that someone is paying us to take you to the best place. We're going to try and give you the best answer, not the answer that gets you to go somewhere else we can further monetize, or the answer that someone is paying us to give you. U.S. retailer Bed Bath & Beyond, which is on the brink of bankruptcy, just secured more than $1 billion in an equity sale. The investor behind

that capital raise is Hudson Bay Capital Management, which has provided $225 million up front and up to $800 million over time in exchange for convertible preferred stock. What is convertible preferred stock? You can think of it as a hybrid between debt and equity. It's slightly riskier than a regular loan as you're not the first in line to get your money back in the event of a bankruptcy. But the upside is that if the company survives, you can convert your investment into regular shares. So Bed Bath & Beyond will use that cash to pay off its creditors. Last month, the company missed its interest payments and defaulted on its debt. So this round of financing really is a lifeline. Scott, this deal definitely makes sense for Bed Bath & Beyond, but Hudson Bay is essentially investing in a dying, almost dead company.

Why would they do this? A lot of people look at this and say, okay, they're just pouring good money after bad. But here's the thing. One of the wonderful things about America is not that we embrace failure, but that we tolerate it. And that is no better depicted or epitomized or reflected in our bankruptcy laws.

And that is we say, okay, bed, bath and beyond, you're a $7 billion company or revenue company. I don't know. Yeah. I think it's 7 billion and with a market cap of around 300 million. Right. And it's got 760 stores. But bankruptcy essentially says there's chapter 11 and there's chapter 7. Chapter 7 is this shit makes no sense. Close it down, put a lock on the door, sell the furniture and get whatever pennies on the dollar and give it back to the debtors. And it's important to notice that the debtors are first in line. You get any money from selling the company or figuring it out, it goes to the debtors first.

And then the equity, the tail of the whip who demand higher returns, get totally wiped out in a bankruptcy. So retailers are sort of purpose-built for bankruptcy. And that is what you get to do is if you declare bankruptcy, you get to go through those 760 stores, cherry pick the ones that are working on a four-wall unit economic basis. And that might be 300 of them and go, okay, 300 of these stores are still very profitable. Pick the ones you want to hold on to and then go to your debtors and say, we can't sustain this debt load. We're going to convert it to equity and NUCO, and you're going to reduce the debt load. So we have lower lease payments and we have much

lower debt interest payments. And now we have a company that might actually be reborn. So chapter 11 is there's still something here. It's a good company. There's good assets, a good brand. It's just got a bad balance sheet and really bad lease commitments. So they look at that and they think, okay, if it goes bankrupt, we don't convert these shares of life, it might become worth, say, one-tenth of revenues, and we double our investment and convert to stock. So convertible debt in a situation like this can actually be quite lucrative. Yeah, you mentioned on our editorial call earlier that you've had experience with this person, specifically with Eddie Bauer. Could you take us through what happened there? Yeah. So Eddie Bauer, iconic retailer, opened a bunch of stores and was struggling. And the creditors and investors asked me to go on the board and help them work through bankruptcy filing. And again, got to go through, pick the stores we wanted, and we knew there was value

there. So the Eddie Bauer brand, we could have just sold the brand to a licensing company who would put the brand, lay off all the employees, close all the stores, and put the brand on backpacks, fishing poles, fishing vests, flannel shirts. And the brand alone was probably worth somewhere between $100 and $300 million to a licensing company. So there was value there. It just didn't make any sense in the context of a larger company with all these expenses, where I think it had 1,200 employees, a bunch of stores. So I went on the board there, and we did, in fact, take it through bankruptcy. It came out of bankruptcy. A private equity firm bought it, thought there was real potential. I believe the debtors got all of their money back. Most of the employees held their jobs.

And then again, I think it went bankrupt again. I was well off the board by that time. Unfortunately, I have personal experience here. And then as a company, I started Red Envelope in 1997, went public on the NASDAQ in 2002. Just the land of all bad karma for me. And Wells Fargo pulled our credit line and boom, we were literally chapter 11 in what felt like 72 hours. It was probably 72 days. So all of the equity holders, including yourself, get totally wiped out. But all the debtors, that is the people who have shipped you products and haven't been paid yet, the employees, everyone got paid because Liberty Media came in and bought the company for more than the debt or more than the money was owed. So no one got laid off. The equity got wiped out. And then it kind of went on because there was value in the company. That was very painful for

me because obviously all my investment was reflected in the form of equity. But bankruptcy is a feature, not a bug of American society. It says, okay, even if you're in over your skis, even if you have a bad balance sheet, even if you have too much debt, if there's value here, we're going to try and figure out a way to hold on to the value. The difference here that I'm seeing is that there's this new thing called a meme stock. And that is what Bed Bath & Beyond is.

And that's a compelling argument that you've made that Hudson Bay actually likes this company and they're making a long-term investment play. But do you think there's also a possibility here that Hudson Bay sees this meme stock as sort of a meme stock engineering opportunity that they can capitalize on the volatility and then eventually dump it on retail investors? My guess is they're saying if for whatever reason Reddit takes a shine to this thing again and the meme stock animal props up its head again and for some reason

Bed Bath & Beyond skyrockets for irrational reasons, then great. I don't think they're counting on that. I would call that that's sort of a low probability, high upside outcome. But I don't think they're making the investment assuming that it's going to become a meme stock again. But I'm sure in the back of their minds, they're like, okay, there's a one in 10, one in 50 chance. Reddit gets all hot and horny for this thing again. And the thing goes to 10, 15, 20 bucks a share. We convert and get the hell out of Dodge. More power to young people who think you're sticking it to the man. So I'm sure that's part of their quote unquote calculation, but that's not the reason they're making this investment. So Scott, you told us on our editorial call that you actually

wrote options on Bed Bath & Beyond stock. And it turns out that you have $900,000 on the line here. We'll be back after the break to discuss why. Hey, it's Scott Galloway. And on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions Thank you. to give you a primer on how to integrate AI into your life. So tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. What software do you use at work?

The answer to that question is probably more complicated than you want it to be. The average US company deploys more than 100 apps and ideas about the work we do can be radically changed by the tools we use to do it. So what is enterprise software anyway? What is productivity software? How will AI affect both? And how are these tools changing the way we use our computers to make stuff, communicate, and plan for the future? In this three-part special series, Decoder is surveying the IT landscape presented by AWS. Check it out wherever you get your podcasts. We're back with Profit Markets. Scott, yesterday in our editorial meeting, we were discussing the Bed Bath & Beyond news, and you described a trade that you'd made on the stock BBBY, a pretty big trade.

We found this fascinating, and I think our listeners would be interested in both the mechanics of the trade and your rationale. So this was an options trade, and we've discussed some of this before on Markets, but the specifics can get hard to follow. So let me describe how I understand the trade and tell me if I've gotten this right. So last week you sold 4,000 put option contracts on Bed Bath & Beyond at $2.50, expiring in four days at 25 cents a share. You're right. I wrote 4,000 contracts or sold 4,000 put contracts, which is the equivalent of a put agreement on 400,000 shares with a strike price of 250 expiring Friday at four. So let me just unpack that. A put is a kind of option. It gives the buyer of the put

the option to sell you shares of Bed Bath & Beyond at $2.50 at any point during a given time frame. In this case, the time frame was what you set, four days. In exchange for that option, the buyer paid you 25 cents per share. Now, the buyer is betting that the stock is going to drop below $2.50 because if it does, they can buy the stock at the lower market price and immediately sell it to you for $250, i.e. they win. If it stays above $250, though, the put simply expires and they'll lose because they paid you $0.25 per share on that option for basically nothing. Now, each contract is an option on 100 shares. So at $0.25 per share, you sold each contract for $25 and for 4,000 contracts, that means you

are paid $100,000. The risk though, is that if the stock goes below 250, you will have to honor the contract and buy it at 250. So if the stock goes to say 225, you'll break even. You made 25 cents per share when you sold the puts, but now you're going to lose 25 cents per share when you buy them back. If the stock goes to zero, which isn't likely, but it's your worst case scenario, you have to buy 4,000 worthless shares for $2.50, which costs you a million dollars. And that's against the 100,000 that you made when you sold the puts. So that's a net loss

of $900,000. Do I have that right? That's exactly right. Okay. Scott, the question here is, why did you do this? What I do is once a week, I look at the most volatile stocks. So when I saw that Bed Bath & Beyond plunged 45% because it looked like it was hurling towards bankruptcy, I thought two things. One, it takes longer than people think for this to play out, even if it's on its way to bankruptcy. The stock on Tuesday was trading at $2.62, and I could get 25 cents for writing a put that expired on Friday at a strike of $2.50, meaning that if it did not

go down by 15% by Friday, I make money. If it stays the same, I make all the premium. If it goes up, I make all the premium. If it goes down $0.12, it's still above $2.50, I make all the premium. If it goes down to $2.25,, I still make money until $225,000, and then I break even. It could go all the way to zero, and then I could potentially lose $900,000. People want to avoid pain so much. It's a basic human attribute that they avoid things like this. So I go out, I write the put because I believe the likelihood of the stock going down 15% in the next 72 hours is less than people think. Now, having said that, you can get hurt really badly. Two key things here. One, don't try this at home. Unless you have substantial capital, you probably can't do this,

but B, you don't want to. And two, I don't spend more than 30 minutes a week on the phone or examining this or looking at this. I don't want to spend a lot of time thinking about this. But what you want to do is you want to model a scenario, if you decide to do this, where the stock goes to zero and assume a black swan event and assume, okay, it's okay to be bummed, but it shouldn't change your life. And I model those things. So losing $900,000 is my maximum out of pocket. And that would be a bad day for me, but it wouldn't change my life in any way. I'm disciplined about this. I do it across two or three stocks every week. And generally speaking, despite some very ugly weeks that really give you some indigestion, I've been writing calls or shorting true Social for a long time, you think, wow, Scott, you've made a lot of money. Yeah, over the long term. But in one week when I wrote calls against True Social, it went from 50 to 95. And I had to write a really big fucking mushroom chocolate layered check for that person who showed up and said, OK, you have to go buy these and I get to buy them from you at 50 bucks. And I think I got maybe

three or four bucks in premium. Anyways, I find if you're disciplined in this market with a lot of new money into the market, a lot of volatility, I find this is a really good strategy. But again, this is not for the weary or for people who don't have strong stomachs. Two, do not spend a lot of time thinking about this. And three, make small trades that even if they go horribly wrong, it's not going to impact your life. Sort of a personal psychological question. When you lost all that money on Truth Social, did you tell anyone? Did you talk to your wife about it?

Did you get it off of your chest in any way? Or did you just sort of eat the loss and move on? I'm transparent with people in my life about my wins and losses, but I aggregate them. I won't talk about stuff in the moment, like, oh, I lost this this day or I made this day. I find that people, generally speaking, talk a lot more about their losses. I remember my mom's friend, my mom lived in Vegas and her friend was always talking about all the money she made in slot machines. I'm like, well, she's omitting when she loses because over time it's impossible to win in slots. I just don't care who you are.

So yeah, so I'll be very transparent. This year, year to date, I'm down. But I find that one of the things you have to do as an investor is be very unemotional. I think this strategy works. And at some point, if I kept losing week after week after week, I'd have to stop for financial reasons. But I've been doing it every week for the last three and a half years. And when I look at the whole year, the premiums have outweighed, sometimes significantly outweighed what I've had to write checks for. But no, I'm not. I don't come home and say, oh, my God I lost this. Or I made honey, honey, a champagne and cocaine for dinner. That's just not how I roll.

Do you have options positions in any other companies right now? Yeah, I wrote options. I wrote what's called a covered call option. So I wrote options exactly equivalent to my position in Airbnb. In my bigger holdings, I think of them as apartment complexes. And the way I collect rent is I sell out of the money calls. So say Airbnb is trading at 120. If you write an out of the money call at 130, if it goes to 135, you technically just gave up the upside because the underlying stock goes up. But if it doesn't go to 130, you collect a little bit of rent every month. And I've been doing that every week on my biggest holdings for the last two and a half or three years. And that's where it's called covered calls. That's not as risky. You technically give up some upside if the stock surges. But I generally think, okay, I'm going to write a call that's three or 5% out of the money. And if the stock doesn't go up three or 5 percent, I just collect the premium. Some weeks are tough. You're like, oh, it's a bummer to have missed out on the upside. But over time, I find if you're disciplined, you collect rent on that stock. Okay, well, we'll have to tune in for next week's episode to see

how Scott did on this trade. Yeah, these are famous last words. This feels really uncomfortable, to be honest. I kind of just want to check in on these trades every week now. We should create Scott's options section in this podcast. We had that. Someone made an anti-Galloway index because I made a terrible call on Tesla. Most of the other ones I said were going down have gone down, but Tesla went up 700%. So the anti-Galloway ETF. Well, that index is bullshit, though. Just so everyone knows, that index basically omitted all of your wins. Well, since Tesla, even with its recent run-ups,

gone down 66%, I noticed the people tracking this index decided to stop tracking it because it didn't fit their narrative. Yeah, exactly. Anyway, that whole meme movement pisses me off, but maybe I'm just protective of my boss. Anyway. Turn to mushroom chocolates. It'll help deal with that anger. Let's take a look at the week ahead. We'll see the consumer price index for January,

as well as retail sales, business inventories, building permits, and housing starts data. And we've also got earnings from Airbnb. That's a big holding of yours. Shopify and Roblox. Do you have any predictions for us? So my prediction is I think Disney, I used to think Disney was going to acquire

the rest of Hulu. I think Disney is going to sell Hulu. I've never thought that Hulu has its kind of center of gravity. Disney needs to reduce its balance sheet. It has a great, very well positioned, clear signal, clear reason for being streaming network with Disney plus to me, Hulu is sort of the island of misfit content. I don't quite get it. Occasionally they have a hit. I think they've

done some good work, but I don't, this feels to me like a company that's not obvious Disney should own. They think they can get 20 billion for their stake. So I think Disney is going to sell. And also Warner Brothers Discovery has totally done a 180 on their stated strategy and said they're going to keep Discovery Plus a distinct streaming network. And initially they'd announced that they were going to bundle it to make this one kind of omnibus jumbo, you know, Kenneth Moss Macho streaming network with a lot of stuff on it. And they've decided not to do that. And I think that reflects a couple of things. One, I think it reflects that they vastly overpaid. They need to begin divesting assets and they're going to package this thing, pretty it up and sell it. So two things, you're going to see Disney sell its stake in Hulu, and you're going

to see Warner Brothers Discovery sell Discovery Plus. That's all for this episode. Our producers are Claire Miller and Jason Stavers. Benjamin Spencer is our engineer, and Drew Burrows is our technical director. Special thanks to Catherine Dillon and Mia Silverio. If you like what you heard, please follow, download, and subscribe. Thank you for listening to Property 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. You have me in kind reunion As the world turns and the dark flies In love, love, love, love Jesus Christ, let's just pray. If the thing goes to zero tomorrow,

I'm going to, it's going to be rough. Not me. If it goes to zero, I make $223. Boom. Jason, Jason sent me. Did you get it? Jason's like, fucking Jason takes the other side of the trade and sends me the trade confirm. That's right.

Balling out. That is so Jason. I'm like, oh, he thinks his boss is smart. I'm like, oh, wait. He bought calls. Or wait. I bought your contract. That's right. You're on the other side of the trade. Yeah, I'm on the other side of your trade. And you are winning right now.

You bought puts. Hello, I'm Esther Perel, psychotherapist and host of the podcast, Where Should We Begin? Which delves into the multiple layers of relationships, mostly romantic. But in this special series, I focus on our relationships with our colleagues, business partners, and managers. Listen in as I talk to co-workers facing their own challenges with one another and get the real work done. Tune into Housework, a special series from Where Should We Begin, sponsored by Klaviyo. Support for this podcast comes from Klaviyo. Clavio. and more, making every moment count. Over 100,000 brands trust Klaviyo's unified data and marketing platform to build smarter digital relationships with their customers during Black

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