The Prof G Pod with Scott Galloway - Why Markets Don't Panic Anymore + How to Build Real Relationships at Work

Episode Date: May 13, 2026

Scott Galloway explains why algorithmic and passive investing have changed how markets respond to crises (and why that's not entirely reassuring), offers practical advice for introverts building relationships with senior leaders, and makes the case that city living is still worth it — but only if you do it young. Want to be featured in a future episode? Send a voice recording to [e-mail], or drop your question in the r/ScottGalloway subreddit. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Should the U.S. start bringing troops home from Europe? I worry a lot that this is where we were headed. Trump sort of signaled it a lot during his first term. And in my conversations with European friends, I have been telling them, be ready for this because I do not think we get through four years without the United States reducing its European footprint. I'm Jake Sullivan. And I'm John Feiner. And we're the hosts of The Long Game, a weekly national security podcast.

This week, we debate whether the U.S. should draw down its true presence in Europe. and we break down the latest developments in the Iran War. The episode's out now. Search for and follow the long game wherever you get your podcasts. Megan Rapino here. This week on a Touchmore, I'm talking to my good friend, former soccer player and current soccer analyst Lori Lindsay

about all things NWSL, the past, the present, and the future. Plus, I'm taking a look at the athletes who crushed at the Met Gala and Angel Reese's firm boundaries with the media. Check out the latest episode of a Touchmore wherever you get your podcast. And on YouTube.

Does anyone really know what goes on behind closed doors at the Supreme Court? Four years ago, I got a tip about the court. And I was not in the market to cover it whatsoever. But this tip was about a secret influence campaign that had been carried out inside the court. As you know, the very idea of that is outrageous. I'm Preet Bharara. And this week, New York Times investigative journalist Jody Cantor joins me to discuss her expose on the court's shadow docket. The episode is out now.

Search and follow. Stay tuned with Preet wherever you get your podcasts. Welcome to Office Hours with PropG. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question for next time, you can send a voice recording to Office Hours at Proptchimedia.com. Again, that's Office Hours at Proptchummeda.com. Or post your question on Scott Galloway subreddit, and we just might feature it in our next episode. Our first question comes from previous Golf 95-4-1 on Reddit, they say,

Hi, Scott, love your stuff, and thanks for what you do. I don't trade individual stocks except for my company through the employee stock purchase program, which I liquidate as it becomes eligible to buy index funds. Therefore, the S&P is really what matters from my returns. I keep hearing you and others express fascination at the resilience of the market in the face of pandemics, tariffs, elections, wars, and AI. Could part of what's going on here be advances in electronic? trading tech that are modulating reactive trading. I'm talking about so-called robotraders,

but I feel like it's more nuanced than that. As AI is further integrated into market strategy and trading tech, is it better at dampening emotion and panic that would have led to severe market downturns in the past? Is AI better at buying the dip? Do we know about AI traders and the risks involved? Thank you for your thoughts. My immediate reaction is, it's always dangerous to think it's different this time, and the market is resilient. As a matter of fact, you're just saying that is, in my opinion, a little bit of a sell signal. I remember in the late 90s when the NASDAQ surge passed any rational number, there was an article in the Wall Street Journal saying, maybe we have moved to a different evolution of our economy, where valuations should be

fundamentally reprised. And of course, 2000 came and said, no, fundamental still matter. So what this question really gets to is the following. Has the market composition and change so fundamentally that the old emotional panic dynamics no longer apply in the same way. The honest answer is yes, maybe. No, the honest answer is maybe, but we don't know. Where you do see what I'll call buy the dip sooner, creating shallower dips, is in geopolitical meteors. So the war in Iran, you would think, wow, massive dip.

9-11, pandemic. But what you've seen with these geopolitical occurrences is there's a dip, and the market almost always in the following year, sometimes the following months, rips back. So the market has a memory and says, well, why don't we buy back sooner and make money? So the dips have become less severe, as evidenced by the fact that the S&P has hit an all-time high as we continue to what feels like enter into a deeper and deeper quagmire in Iran. So what do we know? Algorithmic trading accounts for roughly 60 to 75% of total trading volume. Think about that. Three quarters of trading is a computer in the equity market.

In the U.S., algorithmic trading grew from about 15% of equity volume in 2003 to over 70% by 2010, and has since plateaued around 70 to 80%. So if you think you're a stock picker, just keep in mind you're competing against an algorithm that looks at millions of points of data designed by a ton of PhDs, making a lot of money, all in real. room who do nothing but try and pick up on signals. And you're watching CNBC or deciding because we see a long line outside of Tripoli that you're somehow informed on the markets. Anyways, which begs the question, what even is the market anymore? Index funds now account for 57% of equity funds by assets up from 36% in 2016. In 2024, U.S.-based equity index funds inflows of registered inflows of 415 billion year-to-date compared to outflows of 341 billion for active managers.

Passive investors by definition don't panic. They just rebalance on a schedule. In 2024, the assets under management of passive funds surpass that of active funds for the first time, and its market share continues to climb. Institutional investors account for 61% of the algorithmic trading market. The retail segment is expanding, but at a much smaller base. So does algorithmic trading really affect volatility stocks? Here's what the research says.

Algorithms don't really panic. They don't read a scary headline and sell everything. Studies suggest algorithms reduce volatility partly by dampening investor sentiment and herd behavior. Basically, they stop the crowd from stampeding. In stable periods, algorithmic trading provides a steady stream of orders that keeps markets liquid and prices tight. But during severe stress, though, affirms, decision to scale back can create a sudden liquidity gap. And when every algorithm steps away at once, there's no one left to buy. So see above another type of stampede. The October 24 yen flash crash is a

recent example, a 3% drop in 90 seconds triggered by algorithms hitting their own kill switches in a feedback loop. And in some cases, algorithmic traders can actually exploit volatile periods, placing directional bets that generate even more volatility. Researchers call it chicken and egg problem because the causal evidence still isn't settled. So what to do with this? First off, you had said that as soon as you got liquidity in your stocks you sold, I think that's a good idea. I mean, if you're on the inside and you see that your company's just compounding like crazy and it feels like a decent valuation, okay, maybe leave some in. But generally speaking, you could sell everything you have in your company and you'd still be heavily invested because

your most important capital is your time. So you're investing a lot of capital. into one company. But I'm a big fan of diversifying once you have an asset base. And all these stories about Mark Zuckerberg reinvesting in his company or Steve bomber borrowing against his stock in Microsoft to buy more stock in Microsoft. Those make the headlines. What doesn't make the headlines is what happened to me. And I fell into this bullshit notion that my venture capitalist instilled in me that, Scott, are you in it to win it? And when I started coming out a red envelope, and I took every penny I had and kept reinvesting in red envelope. And then when it went bankrupt in 2008, I woke up at 42 and had nothing. Actually, less than nothing. I think it wasn't dead. So diversification is really

powerful. Also, you're going to be tempted to pick stocks. Occasionally you might get some sort of asymmetric opportunity to invest in a private company where you think there's a lot of upside or you get or you just have a lot of confidence in something. Fine, have out it. Pretend you can pick stocks better than other people. Take 30% no more of your portfolio and have some fun with it. And then over the long-term, you know, your winners will stay front of your prefrontal cortex or front of your lobe, and you'll convince yourself you're better than Warren Buffett you aren't. But have out and have some fun, and who knows, maybe you get some opportunities other people don't. But I do believe the majority should go into index funds. Now, here's the wrinkle. The S&P is no longer an index fund. It's a fund

that's basically betting on big tech, specifically 10 companies, which compromise 40% of the S&P. So I think if you're going to do index funds, you want to be diversified across asset classes. And just as importantly, across regions. My kind of stock pick for 2025 was Big Tech was Google and also emerging markets who had underperformed the U.S. for 15 years, and I thought that you'd see a reversion in the flows of the rivers of capital, and we'd begun to see that. Anyways, in sum, I think that it's more reason to be diversified and more reason to be an index and low-cost diversified index and maybe quant funds. because you are up against PhDs and technology that your brain and your gut and your patterns of observation around,

oh my gosh, a ton of people going into Zah. I just love this Zara Top. I'm going to buy it. That was kind of the Peter Lynch 80s method of investing. I would be really careful with that. Diversification, low cost, index funds. And also, I think you're smart to be selling regularly shares in your company because you're already very invested there. Thanks for the question.

Hi, Scott. I'm a quieter, more introverted person, and I struggle with social anxiety and some imposter syndrome at work. I know building relationships with senior leaders is important, but I feel like I don't have much in common with them, and I'm not great at small talk or banter. How do I actually connect better with them without it feeling forced or awkward? Thanks for taking my question. Daniel.

I relate to this, and I think a lot of people relate to this. I'm paid to be an extrovert, but I'm actually an introvert. And my first firm was a firm called Profit Brand Strategy. I started my second-year business school. And my job was basically to go get new clients and then deliver kind of the final consulting, you know, the final sort of consulting findings. And consulting essentially back then was you established a proxy, you know, kind of a proxy father-son, brother-to-brother. And I used mail. It was all men back then.

When I was consulting in the 90s, all my kind of biggest clients, once I got above, CMO were men. And I worked with the CEOs of William Sonoma, Levi-Strausson company, dryers, you know, just these big companies. And you would establish these deep or really strong relationships. And I found it exhausting. One of the things I did when I sold the company is I literally made to the Conscious Sision. I am never going to play golf again. It's a wonderful sport, but six hours on a Sunday, takes you away from your family.

I just, and I didn't like constantly trying to establish these friendships. The best wealth managers, the best salespeople are extroverts, and it just comes naturally to them. They just like people. You can't fake it. And because I was younger and really hungry, I could sort of fake it, but as I've gotten older, I've become much more introverted.

So what can you do? introversion is usually to a certain extent that you are not comfortable being very social in a certain medium. What do I mean by that? You're not as social in the office, in person. However, you can be social and thoughtful in different mediums. So there are people in my company who will forward stuff to me or write really thoughtful emails about stuff or create connections that establish a bond. And that is, they do good work, they send a congratulatory email, but they're not, they're not extroverted. Also, I do think that as the world becomes more competitive, the kind of intra-office relationships and ass kissing has become less important.

Yeah, unfortunately, it probably hasn't. But I do think there's other ways of establishing credibility other than being kind of the guy or gal with a bright, shiny suit. One, you're going to have to have a certain level of comfort around people. That's just, it sucks to be a grown-up. If you want to be a senior executive, you have to figure out a way to present. But being sort of the quieter one, who shows up prepared, who writes really well, thoughtfully, sends notes of gratitude, sends notes of congratulations. And also, I think there is a lot of room for the person who's more measured, listens more than they speak, and kind of shows up with their work and their data and their kindness. So I don't know if I have, and also I would avoid sales jobs, but I think being kind of the more

reserved person who just let your work speak for them, I think there's a certain power and grace and dignity in that. So I wouldn't be too worried. I think you let your work show up and do the pitching for you, but do try to develop and establish relationships in other formats. You know, when I give bonuses or I do something for people, some of them, a third of them will send me a card to saying, I very much appreciate working here in the bonus. I mean, you don't have to be an intro or an expert to do that. You just have to be thoughtful and go to, you know,

and send a card or send an email. And that's a form of relationship building. Another way to build relationships, introverts are sometimes better at building relationships with people below them. And that is really try to champion them. mentor them, take them aside, teach them, be a player coach, what does that mean? Sit down with them, show them, don't give them feedback, give them instruction. You could edit this a little bit better. This is how I would do it, pull up the chair next to them, and do it.

I found that extroverts are great at managing up and managing out, and sometimes introverts are better at managing sideways and down because they have an easier time or a little less, I don't know, intimidated by their junior employees but can play a role in men. mentoring them and helping upskill them. And your senior managers will know that. I know the people. People notice. I would say to the employees, I've never run a big company, but I've run small, medium-sized

companies, and the employees make the mistake of thinking we don't notice. And that is, if you take the time to mentor younger people and train them and provide them really robust feedback, really thoughtful, supportive feedback, especially young people who need a lot of watering, notes, praise, instruction. senior managers notice. I don't know if I have any blinding insight here, my man, other than to say that introverts, a lot of introverts do really, really well, and I feel you. The other thing is just to say yes a lot. I was around this weekend. I got invited out Friday and Saturday night. I didn't want to go out. I went to dinner with my sons, but then I forced myself to go out after and meet with people.

A lot of times is it, do you really feel awkward, or would you just rather be doing something else? And if it's just you would rather be doing something else, then okay, make the effort, go out, talk to people, get to know them. I find as I get older, the bands within, you know, the boundaries within which the people and situations I'm comfortable in are narrowing. And what I have to do is push them out by saying yes more. Anyways, say yes more, mention your younger employees, find different mediums where you can be a little bit more extroverted, whether it's posting things or writing about things or sending

people notes. But the world, you know, they say the meek will inherit the earth. I don't buy that. But there are a lot of introverts who do really well by showing up and communicating nonverbally with their kindness and their work and their confidence. Thanks for the question. We'll be right back after a quick break. Support for the show comes from LinkedIn. It's a shame when the best B2B marketing gets wasted on the wrong audience. Like imagine running an ad for cataract surgery on Saturday morning cartoons. or running a promo for this show on a video about Roblox or something. No offense to our Gen Alpha listeners, but that would be a waste of anyone's ad budget.

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Spend $250 on your first campaign on LinkedIn ads and get a free $250 credit for the next one. Just go to LinkedIn.com slash Scott. That's LinkedIn.com slash Scott. Terms and conditions apply. I'm Mitch First, two-time IndWsale champion, championship MVP, and forward for the U.S. Women's National Team. Before I went pro, I graduated from Harvard with a degree. in psychology, which comes in handy more than you think.

Any athlete pursuing greatness knows there's a certain mentality you have to have. What people don't know is what that costs. In my podcast, Confessions of an Elite Athlete, I sit down with the best athletes in the world and explore the psychology, mindset, and unseen battles on the path to greatness. So take a seat and learn from the Confessions of an Elite Athlete on YouTube or wherever you get your podcasts. Welcome back. Question number three comes from Skinny Skeptic on Reddit. You said that every person should be in a city, but have also said that larger cities, including New York, are tough for those who aren't wealthy. How do you square the ROI of city living with the real cost of living associated with that?

Given the odds of being a baller in the top 10%, 90,100 people who take that advice will struggle. Thanks. Fair question. So that's why you want to get to a city when you're young. When I moved to New York out of UCLA, I lived with a friend from UCLA, a guy named Monty Yort, who was this all-American water polo player, who just emailed me and I haven't gotten back to him. Monty, if you're out there, I'm going to follow up and we'll get together in New York. I'm sorry, in New York when I get back there. We ran it at a one-bedroom, and there were three of us in there. And it was $1900.

I slept in the living room. I think Monty had a bedroom, and the other person slept in what was the entryway. You can do that when you're young. And then after work, we would all pull our vouchers, our car vouchers and our per diem. If you worked past 8 or 9 p.m., you got a $25 per diem. So there'd be four of us. We had $100 and four cars or vouchers for cabs or cars, and we'd go out and have fun. And I didn't, I just didn't spend a lot of money.

And you can dance between the rain jobs when you're really young. Now, having said that, it's gotten much harder in big cities because of inflation. I think it goes to structural policy. I think we need to lower taxes on earners, especially lower earners, less than, say, a quarter of a million dollars. We could do that by just enforcing our tax code, the tax gap $750 billion and having an alternative minimum tax on corporations and the wealthy, but that's another talk show. And also tax credits for more building, more housing. Anyway, I'm not going to get it. Anyway, I recognize it's gotten harder, but it's never going to be less hard than when you're young.

because where cities become almost impossible or impractical is when in 2010, when I had, or 2011, when I had a newborn and a three-year-old and was living in faculty housing at NYU, making $160,000 a year, I just couldn't afford to be in New York. I just couldn't do it. And so we moved to Florida. Now, having said that, though, being in New York from 2000 to 2011 was incredibly productive for me. I made a lot of progress, established. I'd like to think a lot of credibility, teaching at NYU,

started my company L2, which ultimately I went down to sell for about $160 million. But, and then I did an arbitrage. I moved to Florida where we rented a house on the water on the intracostal for $4,500. In my kids' school, one being $58,000 a year to $12,000 or something. Anyways, my point is, it is hard. It is expensive. And it is doable. typically when you're younger.

And it is not doable when you get older and start collecting dogs and kids unless you're making a shit ton of money. So I acknowledge that it's very expensive, but I think it's a great training. I think it's hard. I think it's difficult.

I think it's motivating. But generally speaking, even if you decide to leave, which most people do ultimately decide to leave big cities that are expensive, usually when they have kids, I think it's a good training.

I think from a lifestyle and a life experience, a fantastic experience. The density of ideas, capital, creativity, and culture, you know, ideas need to have sex, and you're just going to bump off more ideas and more opportunity in a city. In some, I feel you. It's not an option for 90% of people, but it probably is an option for about half of young people. There's a lot of service workers. You can make good money as a waiter in New York. Can you live in a fat apartment in Soho? No, you probably They have to take a train out to Guanaas or Queens, but there are people who do it every day.

I think the number of people who live in Manhattan is actually two or three million, but during the day it's eight million because people come in to service all the wealth. In sum, I stand by it. If you're an economic animal, two-thirds of economic growth is going to happen in one of 20 cities. Get to the city. Do it while you're young because to your point, it gets increasingly hard and sometimes just not doable as you get older. Thanks for the question. That's all for this episode. If you'd like to submit a question,

please email a voice recording to Office Hours of ProptionMedia.com. That's Office Hours of Prophti Media.com. Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit, and we might feature it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Jinnair. Cameric is our social producer. Brad Williams is our editor.

And Drew Burroughs is our technical director. Thank you for listening to the Propgee Pod from Propheum Media. Thank you.