The Prof G Pod with Scott Galloway - Prof G Markets: Trump’s Memestock Goes Public, the Problem with DEI, and Daniel Kahneman’s Legacy

Episode Date: April 1, 2024

Scott and Ed break down Truth Social’s first couple days on the public market and question how Trump might cash out of his shares. Scott then takes a look at a report that reveals how ineffective corporate diversity, equity, and inclusion programs can be. Finally, Scott discusses the work of Daniel Kahneman, a Nobel Prize winning economist who greatly influenced how he thinks about money.  Further reading: Carnivirus Subscribe to No Mercy / No Malice Pre-order "The Algebra of Wealth," out April 23rd 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, $3.1 billion. That's the estimated amount Americansicans spent on easter candy this year ed do you want to hear my favorite candy poem please jack and jill went up the hill so jack could lick jill's candy jack got a shock and a mouthful of cock because jill's real name was randy from the box media podcast network do you think we're going to survive this do you really think we're going to survive this yeah we always do i don't know how we always survive that beat out uh that beat out uh Do you know why,

you know what people call me because I love Reese's? Sorry, what? Do you know what people call me because I love Reese's peanut butter cups? I don't know what they call you. They accuse me of being a Reese's. Yeah, that's...

Get it? Reese's? That's a terrible joke. Yeah, the mouthful of cock one was definitely the way to go. Randy wins. Yeah, Randy wins. Randy wins every time.

All right. Today we're discussing food socials IPO, DEI failures. Oh, really? I thought DEI was totally immune from all scrutiny. Oh, my God. I sound like a fox host right now, don't I? I'm literally, I'm getting older. And the legacy of Daniel Kahneman.

Here with the news is PropG Media analyst Ed Elson. Ed, what is the good word? I'm doing very. And the legacy of Daniel Kahneman. Here with the news is Profiting Media Analyst, Ed Elson. Ed, what is the good word? I'm doing very well, Scott. How are you doing? I'm actually stressed. For the first time in my life, I have this really nice lady. Nice lady, listen to me. I am a Fox host.

I have a doctor who comes to my house. And for the first time in my life, why is that a lot? What's that? Just learning who the lady was. Yeah. It's a doctor. Yeah.

Doctor. I don't even know her last name. I just really like her. I just call it doc. Anyways, my blood pressure was almost outside the normal range and I'm clearly getting old. I've never had any doctor ever tell me, they're usually like, oh, this is amazing. And this is amazing. And you have good blood. You have all the, you know, and she's like, yeah, your blood pressure is borderline. I'm clearly getting old. I've never had any doctor ever tell me. They're usually like, oh, this is amazing. And this is amazing. And you have good blood.

You have all the, you know. And she's like, yeah, your blood pressure is borderline. I'm like, what? I'm like, take it again. So anyways, the answer is, how am I? I'm clearly stressed out. Something's going on. And I can't figure out what it is.

Anyways, I'll blame it on the ketamine or the weather. Or the weather. It must be the weather here. Is that what she said? She thinks it's stress? No, she said it's nothing to worry about. It's still in the normal range. I'm like, I'm not used to being in the normal range. I'm used to being in the, you know. Perfect range, yeah.

Yeah, the right range. It's got me a little bit freaked out. Well, you're going to Africa next week, so maybe that'll help, right? Going to Egypt. Start investing in this relationship. I'm going to Africa over Christmas. I'm taking my sister and my nephew and niece. I'm going to Egypt on Saturday. Hold on. Do you think that Egypt isn't a part of Africa? Oh, are you accusing me

of being a racist? That was good. That was good. Egypt is in the continent of Africa. Just want to make sure we're clear on that. I've heard.

I've heard, but I thought you meant, I thought you were referring to my trip. I'm going to South Africa over the holidays. Different Africa trip. Anyways. thought you meant, I thought you were referring to my trip. I'm going to South Africa over the holidays. Different Africa trip. Yeah.

Okay. Anyways. Well, yeah. Are you excited for Egypt? Yeah, I am. We're doing one of these flat boat river cruises and it's great. You meet a, you like do all these cultural things, which I hate, but supposedly it's good for kids.

So we're going to see the Sphinx and the pyramids and spend a couple of days in Cairo. I'm curious to see how my kids react to Cairo. Yeah, I'm excited about it. We're going with another family. The key, just a pro tip, once your kids get above 10 or 11, if you don't travel with other families and other kids, it's a nightmare. Your kids are not impressed. They don't want to relax. They don't care about food. They don't care how beautiful the place is. If you don't have other kids with you, they just turn on you. They just turn on you and they turn awful. So anyways, we're traveling with another family, the Bjorgessens, who are with this wonderful family with cool kids and the parents are fun. So it's not easy to find families you like who have kids.

It is not easy. The mom's got to get along. The dad's got to get along. The kid's got to. If you find a family you can travel with, hold on to them, Ed. Hold on to them. Anyways, get to the news. Let's do it. Let's start with our quarterly review of Market Vitals. The S&P 500 had its best start to the year since 2019, climbing about 10%. The dollar rose marginally. Bitcoin soared 60%. And the yield on 10-year treasuries increased about 8%. Shifting to the headlines.

Boeing CEO Dave Calhoun is stepping down at the end of 2024 as part of a larger management shakeup. As we discussed in previous episodes, Boeing is dealing with a slew of safety concerns and its stock is down more than 20% this year. Baltimore's Francis Scott Key Bridge collapsed after a cargo ship lost power and struck the bridge early Tuesday morning. The disaster will have sweeping impacts across the economy, disrupting ports, trade, and about 155,000 jobs. Krispy Kreme's stock soared almost 40% after it announced it will sell its donuts at McDonald's nationwide by 2026. That news provided relief to Krispy Kreme shares, which were down 20% year over year,

largely due to Ozempic concerns. And finally, Reddit's stock fell 14% after Hedgeye Risk Management said the stock is quote, grossly overvalued and should trade at about half of where it is now. The next day, Reddit dropped another 10% after its CEO and COO disclosed they both sold about half a million shares each. Scott, thoughts? Look, the Boeing CEO, I think they did the right thing. Also, I believe the chairman of the board resigned. And we talk about this a thing. Also, I believe the chairman of the board resigned. And we talk about this a lot. Crisis management, acknowledge the issue,

have the top guy or gal address the issue, take responsibility, and then overcorrect. And this is them overcorrecting. This is, if Boeing planes don't maintain the brand image, and I still think they have this, but the brand association of safety, I mean, that could literally take the firm out. The reality and the perception needs to be that they're taking this very, very seriously. From your experience on boards, how does firing the CEO or asking them to step aside usually go down? I'm not sure I've ever been in a situation like this, but I would bet there's a more than likely like an 80 plus percent likelihood that the call went down something like this. The board met and said, we just have to show the market that we're serious here. And my guess is the chairman or not the chairman, but the head of the lead director

called and said, this sucks. We recognize a lot of this is out of your control, but given what's going on, we have to show the marketplace that we're making serious changes. We're going to ask you to step down. And he's a grown-up. I bet he understands. At the end of the day, the buck kind of stops with him. So heads got to roll here. And my guess is heads are going to roll all over Boeing.

But if the CEO or the top guy's head didn't roll, that just sends a bad signal about how serious the board is and just more like, oh, okay, senior people who play golf with the board always seem to survive. Should we move on to this Baltimore Bridge and collapsing? Any thoughts on that? There are so many ships, so many moving parts in our infrastructure. I'm surprised more freak accidents don't happen more often. I used to, when I was going down to South Beach, I used to, I had a place in the Continuum down in South Beach, which was lovely, which was lovely. And I'd go down to the Smith & Walensky and I'd order one margarita, two margarita, three margaritas. After three margaritas, watching the ships come in and out of the cut there in Miami is fascinating, Ed. It's fascinating. These cruise ships, especially I think on Friday afternoon, would steam out of there. And you'd look at these things and you'd think, how do people not crash and die every day on these sinks? It's just amazing that they've figured this shit out. So where I went was not knowing anything about the accident was, one, America always feels like it needs to find someone to blame. And I wonder if this was just a series of unfortunate accidents. And the other thought I had is that I'm glad the infrastructure bill passed, because I think we take for granted how important our infrastructure is and how much upkeep it needs. And you hear

about what happened to the apartment complex in Florida, where, I mean, the thing just collapsed in the middle of the night. That just shouldn't happen in America. Do you have any thoughts? Well, it was interesting that this coincided with the Carnival Cruises earnings report, which came out the following day. And they pointed out that they're going to lose $10 million a year because of this collapse, because one of their main ships

is based in Baltimore, et cetera. But just as sort of a side note, the earnings from Carnival Cruises were exceptional. Like they had record revenue, five and a half billion, record net yields, record customer deposits, just kind of separate from this bridge collapsing. They're doing better now than they were before the pandemic. And it's just kind of staggering to think about

how much these cruise line companies have bounced back from COVID. I mean, I remember when COVID hit and that stock fell around 90% and everyone was talking about how it was going to go bankrupt. And so just seeing these earnings, I mean, it's a crazy turnaround, which I was thinking, I'm pretty sure you predicted this, right? Didn't you at one point say that you thought that cruise liners were going to come roaring back? Am I right about that? I wrote a no mercy, No Malice blog. That's our newsletter on Friday.

I shouldn't call it a blog. And I wrote an entire post on how I thought Norwegian cruise lines and carnivals were amazing stock buys at that point. And literally within like two weeks, I think, of writing that, they got cut in half again. They went down 50%. This always happens. You're too early every time. The key is holding on for a long time, I find, with stocks. But anyways, demographics are destiny here. And what do you have? The fastest growing population in America are old people. And also the population that they own real estate, they own stocks, their 401ks have exploded. It's just a perfect storm of good things. And cruising just gets more and more popular every year. And this is one of the ways I can tell I am getting older is a cruise doesn't sound like the seventh circle of hell for me. I actually think, oh, wake up in a different city. That sounds nice. 24-hour buffet. Oh, wait, they have trivia games and the dance. All of a sudden, like, everything that horrified me when I was your age sounds like now kind of appealing.

Quick story about my dad, which will give you insight into my dad. When my dad got fired for, like, the fifth time during reengineering and realized corporate America wanted nothing to do with him, he was, like, traveling around, living off of different women through the U.S. And he decided he was living in Arizona, and I think it was about 70, 75. And he worked for the cruise lines. And what they do is you could go on a cruise, and they pay you a small amount of money,

you get to cruise for free. And all you had to do was dance with at least, I think it was eight women, different women a night. My dad was basically a man whore. And they have these guys, they have these older charming gentlemen on boats because men die before women. And so these cruises are populated with a ton of older single women. And my dad was like a in shit. He likes to dance. He loves attention from women. You know, it's just all of this stuff. He's also very charming. And, you know,

at one point was very handsome. We need to get your dad on the podcast at some point, by the way. Yeah. Like we're hearing more and more about this guy. Yeah. Yeah. Uh, but I just thought it was hilarious. And me and my sister and I would get on the phone like, yeah, dad's somewhere off the coast of Key Largo dancing the night away. That is so funny. Yeah. Look, it's an amazing business. I like it because it's capital intensive, so you just can't spit out ships that quickly. That was just an unbelievable buying opportunity during COVID, just to make sure there wasn't a bankruptcy risk there, which I don't think there was. But Rich Carlton just launched cruise ships. Four Seasons is launching cruise ships. That business is just going to continue to boom. We should move on after this, but I just want to make a point about Reddit and ask you a question. I found it very interesting, the fact that the

stock fell 14% after that short seller report came out. Specifically because it's just such a significant drop on news of a barely important, semi-important investment firm saying that they're considering shorting the stock. And they didn't even confirm that they're actually going to short it. They just said, you know, we're considering it. We might. As we've discussed, you're a shareholder in Reddit. Does it concern you at all that Reddit's stock is so sensitive to relatively insignificant news like this? In this instance, I think the market was probably, at least on this trading day, looking to take the stock down and use that as an excuse. So I don't know if that report, I mean, first off, the stock has been exceptionally volatile since its IPO last week. And so I think

the media tries to latch onto a reason. I'm not sure. We don't know. We don't know if people read this report and started selling. It's also a low float, a fairly small float. It could be the meme of all meme stocks if Redditors decide to take it up for whatever reason. I don't think that's happened so far. It really comes down to the following. If Reddit can show progress against monetizing their traffic, the stock's going to skyrocket. If they continue to demonstrate an inability to monetize this firehose of traffic, it's going to get cut way down. We'll be right back after the break with a look at Truth Social. We're back with Profiteer Markets.

Donald Trump's social media platform, Truth Social, went public with shares popping as much as 59%. The stock swung wildly through its first day of trading, prompting the Nasdaq to temporarily halt trading before shares closed up 16% from the issuance price. Truth Social rose another 14% on its second trading day, giving the company a market cap of $9.5 billion. Just a note, this stock is very volatile, so it will likely swing again by the time you hear this. Scott, speaking of meme stocks, we have our newest one. What do you make of Trump Media Group? I think it's insane. I don't, I mean, okay, ground zero for the hottest company in the world, NVIDIA. I mean, people think this thing is, most analysts say it's near impossible for this thing to grow into its valuation. It's trading at 37 times sales. Reddit, which a lot of people think is probably trading at a very lofty multiple, I think is at somewhere between 9 and 11 times sales. Okay. Truth Social is trading at 1,500 times annualized sales.

Do you realize, Ed, that, do you realize this year, Prof G, the Prof G pod, not Pivot, the Prof G pod, we're going to clock register more revenue than Truth Social. Yeah. And we'll be profitable and we won't lose 59 million. And I'm pretty sure we're growing faster. So if you want to talk about the meme-iest meme in meme land, this is true social. And let me be clear, this is not financial advice.

I wouldn't get near this thing right now because it has no basis in gravity or reality. And that is, I mean, the corruption here is so ripe or the potential for corruption. I wonder if a president who say lacked moral fiber and was under threat of going bankrupt might say to somebody, hey, I saw you're a big, big shareholder in ByteDance, I will ban the ban or whatever, figure out a way for you to make billions. If you maybe take 10, 50, 100 million bucks and go aggressively at buying True Social for the next six months until... I mean, this is a way basically of getting Donald Trump money or showing your support for him. Because anyone who's buying at these levels is not buying based on anything resembling. I mean, I guess you could argue if he becomes president, it might have a shot. But this thing has 5 million, I think 5 million users,

monthly active users, I think. 1 million. I'm sorry, that was 1 million? I've seen 1 million daily active users, DAUs. Oh, here we have active users at IPO. Facebook, 845 million. Twitter, 215 million. True social, 1 million. Okay. So I don't know what to make of this other than I would tell someone, just stay the hell away from this. You don't know what's going to happen here. This thing is volatile, wild swings.

And I just wouldn't be surprised if in several years or several months we find out that there was something weird going on here in consists of his son, the CEO, who's in his back pocket, Devin Nunes, the Walnut Farmer-turned-conqueror-turned-head-of-social-media-network-that-has-one-million-people, the Linda McMahon, a failed Republican Senate. I mean, this is basically—this board makes the Tesla board look like a model of good corporate governance. And so he might just say, change the rules, get rid of my lockup, I want to sell tomorrow. But they have to disclose that. And the day either before he can sell or the day it's announced he can sell, oh my gosh, watch out what happens to this stock. Because while people love Donald Trump, I think the majority of them love their money more. And they might say, oh, who knows what's going to happen? I'll invest. Let's go Brandon, whatever it is. Let's take women back to old Spain with

Donald Trump. I'm going to buy some truth social, whatever it is. But I think once they realize they could lose 90% of their capital in 48 hours, which this could easily happen here. And that trigger, you were talking about a hedge fund issuing a report and it's sending the stock off 10%. The moment it is clear that in short order, Donald Trump could sell his shares, because I don't think he's going to do like a measured sale. I don't think he believes in it. He knows this company is just total horse shit. He knows it. Once he's able to sell, look out below.

I mean, so just for context, he's got a $454 million civil fraud case. He needs $175 million to put the judgment on hold. So he needs to find that $175 million somewhere. And so, you know, everyone's looking at this and saying, okay, well, this is going to be his judgment on hold. So he needs to find that 175 million somewhere. And so, you know, everyone's looking at this and saying, okay, well, this is going to be his financial lifeline. Maybe he can sell his stock. I mean, that's what you just mentioned. The other thing that people say is, oh, maybe he'll borrow. The thing to remember with this company, as you've mentioned, this is a company with a million users. That number is declining. It's doing less than $4

million in revenue. Its website traffic is falling nearly 30% a year. I just don't think that any credible lender is going to let Trump borrow against this thing. I mean, it's barely a company. So I think he's stuck because he can't really sell and he can't really borrow. I think there is one thing he could do. And this is when they created the SPAC, they sold $300 million worth of shares to investors. And that money is sitting in the company right now in cash. So I think Trump, I mean, he's clearly aware of this. I think the question he's asking himself right now is is how can I get that cash out of the company? And the most logical answer to me, I think Trump

media group's going to announce a dividend. They're going to give the money to shareholders. Trump takes 60%. It'll all be money that was in essence put up by, you know, his supporters who bought the stock and he'll use that money to pay off the lawsuit. So it would be one of the greatest grifts ever. The strategy you're recommending, I think the company lost $59 million. I mean, that's shareholder lawsuit crazy because, and what does it have, 180 million in cash? Is that right? Got around, originally 300 million. I think they've lost around 75 million because of all of these lawsuits that they've been having to deal with with those guys on the board who are now going to jail um so i think it's around a

little over 200 million now the dividend would solve some of his problems but that's an automatic shareholder lawsuit because a company a company that's losing this much money with so little revenue you're not acting as a fiduciary when you just push out i mean what you could do potentially what would be more of a fiduciary is to say this company makes no sense we're closing it down and we're distributing the cash to the shareholders but if you're supposed to be a fiduciary and ensure this thing's going to be an ongoing concern then you would you can't say oh we decided to give and there's emails they would get the emails and say the only reason you did this distribution is because you got pressure from your larger shareholders going broke and you've put every other shareholder at risk because we don't have enough cash now to operate for

longer than 12 or 18 months. So this feels, you're right, he's painted into a corner. But the thing about President Trump is I think he probably says, don't worry, trust me, it's worth 10 billion. It will sell it all. It'll be worth 2 billion. I'll get my 1.2 billion. All you people on the board will get your 10, 30, 50 million. Yeah, it's going to go down 80 or 90% as we sell this stuff, but it'll be okay. I'm going to be president and I'll make sure that everyone's fine. That's kind of his thing. Trust me, don't worry. And then everybody ends up in a courtroom. One other thing you mentioned, you talked about bite dance just now, and that there's going to be some, we're going to find

out something shady about this company. I looked at the shareholder list. The biggest institutional investor in this company is this investment firm called Susquehanna. And it's run by this guy, Jeff Yass, who's friends with Trump. Susquehanna is, it's run by this guy, Jeff Yass, who's friends with Trump. Susquehanna's, it's largely a trading firm, but it also does some private investing as well. And in 2012, it invested in a small Chinese tech company called ByteDance. So Susquehanna is the largest backer of Truth Social. It's also one of the largest investors in ByteDance. It owns 15%. And as we know, just a couple of weeks ago, Trump announced he was reversing his position

on the TikTok ban. So it's clear Jeff Yass has Trump in his pocket. And if that's not already clear, then I would add the following detail, which is that a week before Trump announced the reversal, so about a month ago, he and Jeff Yass had lunch at Mar-a-Lago. So we're constantly hearing from Trump about how he puts up his own money.

He isn't bought and sold. He doesn't answer to anyone. I think this is just a perfect example of what a load of BS that is. It's really disappointing. You're not old enough to see the arc here, but literally ethics or any sense of fair play in government have fallen off a cliff in the last decade. You just never would have been able to do this. You never would have had, you know, presidents used to put their stocks in a blind trough. They would never be allowed to pull this shit, at least as far as I know. And I mean, what do you have here? The most esteemed

institution I think in the world was the Supreme Court. And we have justices getting lap dances on Republicans' boats and getting flown all over the world. And I mean, their credibility has been totally trashed. And then you have basically, you know, this thing about Jeff Yass, when we just said this, you could say to Jeff, wink, wink, I'll make sure. He seems to have totally reversed course on ByteDance and the notion of banning TikTok. He was for it until he was against it after having lunch with one of the largest shareholders who's now potentially could be supporting or providing the support for True Social. It might not even be that much money given the float to support it. And also, to be fair, there's corruption on the Democratic side.

Speaker Pelosi has waved off or gotten in the way of any restrictions around trading stocks for Congress people. And it ends up that Speaker Pelosi has a better track record than Berkshire Hathaway or Ken Griffin. It just ends up that Speaker Pelosi, an 83-year-old woman, is an amazing stock picker. I mean, really? Really? So I think we need two things. We need much tighter conflict of interest laws across the Supreme Court and our institutions, and we also need to pay them dramatically more. I believe we should pay Congress people a million bucks a year, senators three million a year, president 10 million a year, such that they don't feel like they need to paint their fucking fence right after they leave. This wouldn't matter for Donald Trump because I just think he's corrupt and basically a sloppy criminal. But the thing that's really, I think, really hurt us, or one of the things that's really hurt us is a lot of these politicians, Kyrsten Sinema is going to get a job in private equity. Terrible senator, managed to get the child credit stripped from the infrastructure bill,

but we stripped that out, but we made sure that private equity firms maintain carried interest, which is nothing but a massive tax break for the wealthiest people in the nation. And trust me on this, she's going to get a job or advisory or board roles from private equity firms

now. That just shouldn't happen. So it strikes me just how far we have fallen in terms of the credibility and ethics around our institutions. And I think a lot of it is from both sides of the aisle and they get away with it. And the temptation to be rich is like, well, I'll sacrifice my ethics to get money because as long as I have money, I'll sacrifice my ethics to get money, because as long as I have money, I'll surround myself with people that think I'm just very honest. I don't know the answer. I don't know if it's different penalties or regulation, but I actually like what Singapore does. They pay their public officials a lot of money, so they're not tempted to try and figure out a way to make a lot of money during or after their

service. We'll be right back after the break with a look at DEI programs. We're back with Profit Markets. A recent report from the UK government found that diversity, equity, and inclusion programs might not be worth the investment. Apparently, there's very little evidence that efforts such as mandatory anti-bias training can actually yield a positive impact on a company's culture. It's a damning report, considering U.S. companies spend an estimated $8 billion every year on DEI training. Meanwhile, in the U.K., taxpayers spend over half a billion

pounds per year supporting 10,000 DEI-related government jobs. Scott, you've been calling BS on DEI for a while now. What do you make of this report? Well, to be fair, the report said it also didn't hurt. My understanding is that DEI is like a similar scam to alternative investments in that it's underperformed the market by the amount of its fees. It doesn't hurt companies. It just doesn't help them. So the company is losing the amount of money they spend on it. But it's not why ships are crashing. So I think DEI, I think everyone wants to blame DEI on the right for every problem, and that's not true. The reality is, though, is that there's no evidence that it works or this training. And I've had some exposure here.

I think that when, I'm not sure if it was L2 when it was purchased by Gardner, but I remember receiving a thing saying we were due for DEI training or something. And I remember going, I'm not doing this. And it wasn't that I don't believe in DEI, but there's no way I'm gonna spend a half a day talking about unconscious bias in the workplace. I'm just not doing it. We were supposed to do DEI training. They made it optional at Stern.

And Stern is not a conservative place. It is a pretty aggressive place. I don't think anyone showed up. It doesn't work. And typically what I found with DEI is that the places with DEI professionals and DEI initiatives are already the most diverse and inclusive places on the planet. It's like building a fire station in the middle of the Atlantic. We're having a really interesting conversation around identity, because something that has been really important is that it has been a really effective way to

identify people who have wind in their face and deserve additional programs and resources is by race. Black people just had it harder in America. They just did. And also by gender. Women were making less money than men. A lot of that, not all of it, but a lot of that has been fixed, and there are laws to protect against that. Women under the age of 30 are actually making more money in the city than men. They own more homes. Granted, they still go to 77 cents on the dollar when they have kids, so that's obviously still a problem. People of color don't make as much money, but also if they have an education, they make as much. I mean, it's a complicated situation.

The academic gap between black and white used to be double what it was between rich and poor, and now it's flipped and it's double between rich and poor versus black and white, which signals remarkable progress, remarkable progress. But the question is, in terms of trying to create an equitable society, which involves leveling some people up, what is the key metric for identifying the people who need leveling up? And where I think a lot of DEIs ended up is that everyone deserves attention, protection, additional rights, except white males. And when we're in a society now where white males are 30% of the American population, the white males have revolted and said, what the fuck? I'm the minority here.

And basically you're saying the other 74% gets special rights. I mean, what DEI, my publisher, Penguin Portfolio Random House, I went to their website and all the senior leadership were white women. And there was one guy who was the CFO. And then there was a DEI officer. She was in senior management, DEI. And I'm like, so it's her job to get more men in senior positions? Like, what exactly is her job? I think America. There's just no getting around it. In the last 30 years, women have all of a sudden exploded in terms of the opportunity they deserve, right? Women were basically treated as beasts of burden for the last 2000 years. They were there to have babies

and work their ass off in service of men. Sexism has been a systemic entrenched part of our world. And in the last 30 years, there's been remarkable progress. And there's a lot of people, especially the most conservative and extreme parts of any religion, who just don't like these uppity women. And I'm parroting Fried Zakaria's book a little bit here. There's a blowback, and that blowback is unhealthy. And that blowback gets into really scary places like bodily autonomy. But I also do believe there is some justified pushback from people who say, DEI is now eating its own tail, that in order to justify these departments, in order to hit these targets, we end up discriminating against people. We end up

with an inefficient, nonsensical... I mean, I've been on boards and I've been in management meetings where the DEI person comes in and everyone just kind of rolls their eyes. Everyone's like, oh shit, now they're just going to tell us they want to see what candidates, our candidate pool is for this position. And it's like, well, guys, you find people saying, did I not get the job because I'm white? Did I not get the job? Did I not get promoted because I'm a male? So I don't think it should be DEI or DEI. I think the metric should be economics. And that is, I think if corporations really want to focus on making America a better place, a more equal place, they should have a skills-based assessment as

opposed to a certification-based assessment. What do I mean by that? Whites and males have had too much privilege. And quite frankly, people who have opportunity to go to college have such an advantage over poor people who don't have the opportunity to go to college. And corporate America has essentially become a place where there's a zero chance you'll get into a professional job if you don't have a college degree. And the greatest indicator of whether you're going to get a college degree is how wealthy your parents are. So I think the ultimate DEI initiative for corporations would be to say, we're going to allocate 10, 20, 50% of our professional track jobs based on a skills-based assessment, right? Tests, psychological tests, skills-based tests,

whether or not you have the certification that has largely been sequestered to the children of rich people. But I just don't think race-based affirmative action or DEI is working. And I think there's a lot of evidence it is not working. Jesus Christ, that was a word salad. Did that make sense, Red? That made sense.

So I end with a really good quote, I thought, from the report. They said, quote, It is not self-evident that focusing on visible characteristics promotes a meaningful level of diversity. An organization may be proportionately representative of the population in gender and race. However, if the workforce remains largely socioeconomically

and geographically homogenous, it is likely unrepresentative in life experience and values. I just thought that quote did a really good job of capturing this idea that these external indicators of diversity, i.e. race and gender, are no guarantee of a diversity of viewpoint. And actually what companies should be really pushing for is getting, casting as wide a net, as diverse a set of viewpoints as possible. And so it feels like, you know, just relying on these external metrics and DEI

in some ways is quite lazy. And we should be doing a better job of trying to get as many different types of people as possible. Nobel Prize-winning economist Daniel Kahneman died last week. Kahneman's work focused on how psychology can inhibit rational decisions, and his research played a seminal role in the rise of behavioral economics. His best-selling book, Thinking Fast and Slow, explored the ways we act on instincts and take mental shortcuts rather than thinking deliberatively. And those shortcuts, he found, can cost us in the long run. Scott, I know you were a fan of Kahneman's. How did his work impact how you think about money and also how you think about life?

I mean, he has this great quote, We are prone to overestimate how much we understand about the world and to underestimate the role of chance. This guy understood more about life, I think, than economics and just how, I mean, he's a great life coach. And what I took from that quote is that markets and random chance trump individual performance. And we have a tendency to try and assign individual performance or fault to everything. And the reality is when something really good happens to you and make a great investment, when you get promoted, keep in mind a lot of that is you're in the right place at the right time and be really humble. And at the same time, when you make an investment in the next

week, the thing gets cut in half or you get fired or you say, forgive yourself, because a lot of it is just out of your control. And now Professor Sapolsky and Sam Harris have taken it even a step further in saying that we don't even have free will, which I think is a little bit out there. But also the way he's changed, really changed my financial approach or my financial life is he talks about kind of what I think he refers to as loss aversion theory. And that is the pain of loss is greater than the emotional benefit of gains. And so a lot of times when you lose money in a stock, when it goes way down, you're just like, I can't handle the pain. I got to sell. I just got to get out. And you should not trust your emotions in investing. You should just not trust your emotions in investing because humans are similarly wired,

and the emotion you're feeling is the same emotion that every other shareholder is feeling. So there are just too many people who think, I can't handle this pain, and they sell the stock, and it becomes oversold based on the underlying dynamics of the stock. And then it's due for a mad rip up. And then, boy, are you really upset, right? I sold at the bottom. Or at the same time, thinking you're a genius and doubling down and buying more on margin because clearly you're great at this whole stock thing.

So why not lever up? So what he taught me in investing was that really emotions are your enemy. But I love the notion like slow down, take a beat, right? Don't have an emotional response to something. And as a young person, you don't have to respond to every slight. Slow your thinking. Is the lizard brain, the fight or flight taking over? Think about what's really going on here.

Sleep on it. This too shall pass. He's absolutely changed the way, or a lot of the way, I try and regulate my emotions, especially around investing. Because keep in mind, the real way to make money is to zig when everyone's zagging. And your emotions are not isolated to you. And you can imagine everyone else has the same emotion. In 2009, everyone couldn't sell their real estate in Miami fast enough. They just couldn't get out of real estate in Miami fast enough. Everything's going bankrupt, going to zero. And that was the time to buy real estate was to say, okay, everyone's feeling the same thing here, which means that there's an opportunity to go the other way. His other kind of breakthrough research was about the relationship between money and happiness. And what he basically did was he kind of punctured the myth that money

can't buy you happiness. It actually can. And there's two lessons here. One, unfortunately, it can. In a capitalist society, I don't think there's any shock. Middle-income people are happier than lower-income people. Higher-income people are happier than middle-income. His theory was it kind of topped out. And then a younger academic challenged that. And so instead of shitposting him, he said, I'm going to work with you. And he went out and they actually dispelled some of his work and he updated it. And this is not only a wonderful testament to Professor Kahneman, but to the academic field. And that is, it is regular practice to let other academics challenge your work and then to celebrate them when they find that your work actually needs updating. And I think about Washington, D.C. No one seems to be interested in actually getting to the right solution, they're only concerned with being right and convincing people the other side is wrong. I also think it's a nice story because

we learned so much more when they collaborated. The new paper that they published basically put an end to the money and happiness debate. And what they found is that happiness is associated with greater income, but there's a lag between them. So when you jump from $60,000 to $120,000 a year, you get the same increase in happiness as jumping from $120,000 to $240,000 a year. In other words, the more you make, the less you gain. So they basically rediscovered the law of diminishing returns as it relates to money and happiness. I can tell you that the difference, as someone who grew up lower,

kind of lower, I would say we were upper, lower middle class. Once I got to a point where I was making kind of good money, you know, making $100,000 a year, right? I kind of did that right out of business school, right? That was the first time I had enough money to kind of spend money on my mom and think about buying a house. I was much happier, just much happier. It was just such a, not a struggle because you're young and you have beer and friends and you can find fun other ways, but it just was a lot of stress growing up without money. And I mean, I just look back on it and it's like, I would say that it was like this ghost following you around kind of saying you're not worthy and you have to

think about things that other people don't have to think about. You have to think about, I just remember like, I don't know if you've ever done this. I couldn't buy a full tank of gas until I was like 25. I would always put five bucks in or eight bucks in. I never had, like, when I got to a point where I could just, like, fill her up, that felt liberating. And that wasn't until my kind of late 20s. And then getting, making real money, quite frankly, I got even happier. It was so much fun to be able to do these extraordinary things that a capitalist world provides you. Maybe at some point give a little bit of money away. Like, be not only generous with your thoughts, give a little bit of money away. Be not only generous

with your thoughts, but be generous with money to people and start to pay people well. It just got happier and happier. Now, what his research, in my view, indicates in terms of public policy is that once you get to, say, a million bucks a year, really the incremental gains are just tiny, right? You're just probably not going to be much happier if you go from, call it, one million to two million. And granted, some people would argue in New York or LA, actually, you know, you need more than a million, whatever. But okay, call it five million, right? Going from five to ten isn't going to give you much incremental happiness. If the objective of a society is to have people who feel reward and are satisfied and happy, what it says to me is that we absolutely need to restore a much more progressive tax structure.

And that is the difference between having $30,000 and $40,000 can be just huge for people, right? It can be the difference between maybe getting to take a vacation with their kids, getting to buy them books or what, I mean, just not worrying about going to the doctor, right? The marginal gain from call it 30 to 40 or 30 to $50,000 is just enormous. Whereas the marginal gain from one to 2 million is tiny. And what it says to me is the following. We should be taxing the shit out of people who make more than a million bucks because what we're taking from them is very little. It's not really going to impact their self-worth, their happiness, their satisfaction. And if we can redistribute

that money to the one in five households where kids are food insecure, it's just going to fucking make their year. I mean, it's just going to tangibly change the course of their life and their self-esteem and their ability to find time to love others and love themselves. There's no reason we shouldn't have a 90% tax or, okay, 50 at least on people making more than call it 10 million a year. What is that going to do for you? What is it going to do for you in our society? People say, well, these people aren't the most productive. No, they're not. Show me someone really, really wealthy and I'll show you someone that took advantage of taxpayers.

Yours truly, Pell Gramps, University of California, Jeff Bezos, United States Postal System, Elon Musk, subsidies for EVs, Tim Cook, GPS and DARPA and Apple. I mean, all of these people were fucking feeding at the trough of the American taxpayer and US government, and now they don't want to pay back. And I get that, that's selfish. But the bottom line is you're not going to get that much happier. So why wouldn't we have parabolic tax rates once you get above that number that Kahneman identified that even – you're just not going to get much. You're just not going to get much more. So why wouldn't we take it and deploy it to people where it's going to make an enormous difference in their life. Anyways, that's my Elizabeth Warren, Bernie Sanders rant. Let's take a look at the week ahead. We'll see the U.S. unemployment rate for March, and Disney's shareholders are costing their votes at the company's annual meeting. So we'll see if Nelson Peltz finally gets a seat on the board. Scott, any predictions? My prediction is that Nelson will not get a seat

because if it's going to a vote, that means he's already lost. Bob has more insight into the shareholders than Nelson. He knows all of them. He's talked to all of them. And his proxy solicitor has read the tea leaves and said, Bob, we're going to win. Otherwise, he would have already flown down to Florida and kissed Nelson's ass and said, how'd you like one board seat? When I ran a proxy fight against the New York Times, I don't know if you know this, Ed, I was on the board of the New York Times. But when I was running a proxy fight, I'm like, this company needs to spin off its building. Do you realize the New York Times owns 17% of the Boston Red Sox? I mean, none of this shit made any sense.

So I raised $700 million around our proxy price. When the CEO and the chairman of the company showed up in our office, I'm like, we've won. The only reason they're negotiating with us is they have called their shareholders and they've said, no, put that guy on the board. I'm like, they've lost. They wouldn't be here unless they knew they had lost. The only reason this is going to a shareholder vote is that Bob and his proxy solicitor have done the math and said, we're going to win. So the prediction is that Nelson Peltz does not get a seat on Disney's board. 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. Lifetimes You held me In kind reunion As the world turns

And the dove flies In love, love, love, love