Even Nvidia Can’t Rescue the Market From the Fear Cycle

28:10But the one thing that is very strange and concerning is this SPV trend. And that is in some of these debt deals, what these companies are doing, are they using these special purpose vehicles, SPVs? The SPV takes on the debt, presumably to cover up how much debt the company is actually taking on. And then you don't have to report that on your balance sheet. So as the example that we discussed with Michael, Meta raises$60 billion to finance this big data center. 30 billion of that, half of it, shows up on the balance sheet. The rest goes on the balance sheet of this separate entity that they created with Blue Owl Capital, which is this private credit firm, which essentially means that the borrowing is happening, but we can't see where it's happening, and we don't really know where to look.

29:02We know that stuff is being funded. We know that capital is flowing into this, But because there's so much more private market activity happening that isn't being disclosed publicly, whether it's the SPVs or the private financing of these smaller AI companies, or OpenAI, which is the big AI company, and yet no one knows what its financials really look like. We just have to take the word of the CEO. That makes me feel more anxious because it makes me think, actually, we're only seeing sort of the tip of the iceberg because there's so much obscurity and opacity in the private markets that we just don't have access to.

29:44You know, these people aren't stupid. The people issuing debt to these SPVs, they understand, you know, they understand, quote unquote, the risk. What it demonstrates is just so much risk on capital out there that they're willing to basically finance a vehicle that enables the core company or the company that's going to benefit or do a relation with them. It enables them to create a firewall. What do I mean by that? These guys now have so much – there's so much capital out there trying to get on the AI game that they can create a separate vehicle that if that thing goes down the tubes and it can maintain its debt payments, it doesn't get to drag open AI down with it.

30:21So what it reflects is a lot of risk capital looking to participate in the company's ability to sequester themselves from debt obligations. Now, the lesson here is the following. And someone told me this when I was very young. They said the following. They said, never sign a personal guarantee. And oftentimes, when you're borrowing money for whatever it is, a business or something, people will bring up the notion. They'll say, would you be willing to sign a personal guarantee? As a general rule, my advice to anybody would be never sign a personal guarantee. Because whenever you're taking out debt at that moment, you think, oh, this makes sense.

31:00I can handle this. The company can handle this. But the market dynamics always trump individual performance. And people of your generation just have no idea because they never experienced it how bad things can get and how quickly they can get that bad. And it's one thing to lose your company. It's another thing to come home and tell your wife or your husband, yeah, I'm going to have to close down my company and, oh, we no longer own our house. that Silicon Valley Bank or the people who backed my company, I signed a personal guarantee and they get to come after our car, our 401ks, everything. And this is essentially, when I was an activist investor, I used to create SPVs.

31:42And the thing about them was they are sequestered from one another. When you start a fund, all the investments are pooled and the results are netted out, what you would really like to do is have every investment be an SPV. That way, if just any that work, those profits are sequestered from the losses of others. And that's what's going on here. It just reflects still a massive excess or imbalance of risk capital relative to the borrowers. I mean, it's a huge red flag, right? It's a flashing yellow light at best. I think a lot of people seem to be kind of sweeping this part of the conversation under the rug.

32:18The debt part of the conversation, the SPV part of the conversation, the fact that it is weird. Why are you doing that? Why do you need to do that? And I mean, it's, we can probably get into the details of it on another episode, but the reality is like, this is shady and it's not a great thing that Meta is borrowing and then deciding, but this piece of the borrowing isn't something that we're going to report as a company. And you've seen that play out multiple times. We'll be right back after the break. And by the way, we will be recording an Ask Me Anything episode in a couple of weeks. So drop your questions for us in the comments or email them to us at markets at ProfGmedia.com.

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35:45We're back with Prof G Markets. There is a growing patriotic wave in China where consumers are turning away from American brands and buying local instead. At the forefront is a Gen Z movement called Guo Chao, which roughly translates to national tide. We're seeing stark evidence of its impact in luxury. Gucci online bag sales in China have dropped more than 50 % compared to two years ago, while local premium brand Songmont has surged 90 % in the same period. And it's not just fashion. Coffee, consumer electronics, and cars are all part of this shift. So, Scott, service-level news is basically Western brands, particularly American brands, are struggling in China.

36:26We can get into the numbers in a moment. But if you look at Tesla, if you look at Starbucks, Nike, McDonald's, all of the luxury brands, all of the iconic American brands, they are not doing well in China right now. And the deeper, more interesting news is this Guo Chao movement, which is this pro-China nationalist consumer movement where the mission is buy local, by Chinese reject the Western American brands. Pair that with just the overall sentiment towards Americans right now in China, which is highly negative for pretty obvious reasons. And it would appear that basically our geopolitical relationship with China is now impacting the behaviors of young people in China and therefore consumer behavior in China.

37:15And now Americans cannot, our American brands cannot get Chinese business. Your reactions? You're too young to remember this, but when I first started L2 in 2010, 2011, and we were servicing luxury brands, Estee Lauder used to joke that their products, like the moment the ship docked in Hong Kong Harbor, the product was sold. I mean, there was such a thirst. Their economy was coming online, and there was such a thirst for luxury brands. And there was an entire generation of young women who would live at home and they were making good livings and they would rather live at home, take the bus to work and buy a Birkin bag.

37:59The aspirational value of Western brands was just off the charts. And essentially, China was just the, if you, just as you hear the term AI in every earnings call, if you were to go back 13 years and listen to an earnings call of Estee Lauder or LVMH, they just said China over and over and over. And essentially, the Chinese economy and manufacturing base has gone from one of being the cheapest products to innovation. In addition, there's just no getting around it. We think we can treat people like shit. And we're like, oh, you know, we don't. These people, the young people have kind of, America's not in vogue anymore.

38:41And so the Chinese have stepped up their innovation. They don't have Tesla, but they have BYD. They don't have Nike, but they have Li Ning and Anta. They now have viable competitors. And what's always been interesting about China is despite the fact it was the second largest economy in the world, they're terrible at branding. It was really difficult to name one global brand to come out of China. There are more global brands coming out of Brazil than there were China. And now that's changing. Now, I'm a bit of a conspiracy theorist. I think that effectively the Chinese model is to take a Western brand, especially Western technology and media brand, learn everything about it, then prop up a local entrepreneur and basically legislate or regulate them out of business.

39:24But I don't think that's the primary culprit here. I think there's an anti-American sentiment, an increase in innovation domestically. Even what's the coffee shop that the Chinese have that they're now opening? Yeah, Luckin, Luckin Coffee. You can get a good cup of coffee for$1.50. They've just come in and said, you know, we can offer a pretty reasonable facsimile of Starbucks for a lot less. And so you combine a younger generation, more innovative products, a younger generation that doesn't feel that great about America, innovation, a greater appreciation or skills around branding. And we have lost.

40:00I mean, do you realize what's happened to Estee Lauder stock? The companies that were kind of living by the Chinese sword, if you will, or Starbucks. I mean, let's look at Estee Lauder. Let's look at the five-year-on Estee Lauder. It's lost two-thirds of its value. Two-thirds of its value. And it's a really, I would argue, Estee Lauder is actually a really well-run company. It is now at, it's at the same level it was at eight years ago. Let me give you some of the market share statistics that we have here on what's happened in China. So Nike is a good example. They used to be the market leader in China for athletic wear.

40:44Just four years ago, they had 25 % market share. As of today, they are no longer the market leader. It's a company called Anter, which you mentioned. It's the most popular brand for athletic wear in China. Nike is down to 20 % market share. Anta's China business is now 30 % larger than Nike's. So that's been kind of a gradual slide that sort of accelerated in the past couple of years. And now Nike is no longer the leader. Starbucks, 2019, Starbucks had 34 % market share in China. They're down to 14%. Tesla, which we've talked about a lot, their market share just shrank to 3%. It was down from 8 % the previous month.

41:24So it's absolutely tanking. Lowest level in three years. BYD, which again, we've discussed now the leader with 23 % market share. And then it's all of the luxury that we talked about. Gucci being displaced by this company, Songmont, as you've talked about the decline of Estee Lauder in China. So, I mean, these Western brands are getting crushed in China. If you have large China exposure, and we can talk about the AI, which is a whole other story, what's happening to NVIDIA's business in China and Qualcomm, but they're getting absolutely eviscerated. And I feel like a big question for investors has been, why is this happening?

42:00What is the catalyst? And I think when you look at this movement, Guo Chao, and you also look at the sentiment towards America among young people, where you're seeing studies, the younger you are in China, the more you dislike the US. There are plenty of surveys that prove this. It's almost like, well, we don't really need an explanation. Young people hate America in China, and that's why they're not buying their products. Young people in China hate America. Young Americans in America hate America. I mean, we're clearly not doing something right. And look, I'm not, I don't know if you've picked up on this.

42:41I'm not an enormous fan of the current president. But acting like an asshole to everyone all the time, eventually it's going to bubble up in terms of consumer preferences. Also, you just have a bunch of companies who are going to say, all right, we don't know how to plan against this guy. We're going to focus on domestic innovation and investment in domestic supply chain and trying to figure out a way to develop front-end brands. We always had an edge around branding. We no longer have that. In some, when we stop selling them chips, they have a workaround. When we start creating a sclerotic export policy for them in terms of tariffs, they develop a workaround and start building their own aspirational brands.

43:32I think we have slowly but surely just figured out a way. It's like we shoot ourselves in the foot and then we think, I know, let's put the gun in our mouth. and the reliance, and I guess they didn't have any choice because they were selling so much, but the reliance on the Chinese economy just became massive for a lot of these brands. And I remember a year or two years ago, I remember saying like, basically the biggest decliners in the stock market were all companies that were based on their exposure, whether it was Nike or Starbucks, to the Chinese market. So they're now all in kind of retreat.

44:08We can play the blame game of like, who did this? And I'm inclined like you to believe it was probably Trump. I mean, all of the numbers started getting pretty bad around 2016 in terms of Chinese sentiment towards the US. And you saw, I mean, an explosion in negative sentiment towards Americans. And also just like, if you look at Chinese media, you just saw this explosion in negative articles that was, again, state-sponsored and state-supported by the Chinese government. But still, the reality is, like, whatever we did in the past 10 years or so has made China and its people really not like us.

44:50And, I mean, you know, you can have whatever opinion you want to have about that fact, but that is the fact. And the reality, again, is we actually rely on China's economy more than we would like to believe, especially those companies we've just talked about. I mean, China is Nike's third largest market. It's Coca-Cola's third largest market, too. It's Tesla's second largest market. Half of Qualcomm's sales last year came from China. Like, we can make them our enemy as much as we'd like, but then it's like, okay, well, let's recognize that actually, in a lot of ways, we kind of depend on them, or at least some of our most iconic companies kind of depend on them.

45:31So this is, you know, there's a cost here. There's a price that we pay for these pretty god-awful geopolitical relations that we are developing with China. And it goes back to what you've said about pushing them into the arms of our allies. That iconic photo that we saw early in the year between Xi Jinping, Vladimir Putin, and Narendra Modi all hanging out and laughing together. That means something. I think we're beginning to see it in the earnings of these companies.

46:04We'll be right back. And for even more markets content, sign up for our newsletter at prof2markets.com slash subscribe.

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47:02Welcome to The Pitch, Season 14, where startup founders raise millions and listeners can invest. On this season of the show, 10 VCs, 7 startups, with one shot to build the company of their dreams. Oh my God, we built the entirely wrong product. Two shots to build the company of their dreams. With that intro, let's go. Season 14 is available now wherever you listen to podcasts. So subscribe to The Pitch so you don't miss it. This season is presented by Adobe.

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48:16We're back with Prof G Markets. Companies are already warning that 2026 could be the toughest college grad job market since the pandemic. It is discouraging news, given that 2025 was pretty bad already. Over the summer, unemployment for degree holders ages 22 to 27 hit its highest level in over a decade, barring the COVID years. And it is now higher than the overall jobless rate. So, Scott, very bad job market for college grads right now. some of the data we've seen we saw this survey which said that it's the worst job market for grads since the pandemic unemployment for new college grads is really high right now 9.3 percent we're seeing all these mass layoffs we're seeing how ai is threatening people's jobs we're seeing data from handshake showing that full-time job postings are down 16 percent year over year.

49:10Not a good time to be a newly graduated young person in America right now. I guess let's just start with your initial reactions to some of this kind of alarming data we've seen. Well, we know what's going on, right? It appears the ground zero for efficiencies, which is Latin for layoffs of AI, is sort of low-level information work, which kind of spells recent college grad. And I think of the work I did at Morgan Stanley as an analyst. it just feels like a lot of that could be done by ai right now and so far at least those firms aren't reporting big layoffs because they want to train people they're just trying to make them more productive and the economy is still pretty strong but i just don't think there's any getting around it the numbers are bubbling up where a lot of these big tech companies who have naturally and obviously been the first to adopt or really severely lean into ai are just not hiring as many people.

50:01So I think this is part of the natural cycle. Again, I don't want to say I don't feel sorry for them, but I'm like, you know, call me when 60 % of you don't have job offers. And that's what a real recession looks like, right? It's the notion that it's a recession when your neighbor doesn't get a job. It's a depression when you lose your job. But the question comes down to this, is college still worth it? And that's probably the number one question I get in office hours and via email. And a lot of it is situational. If you don't have a lot of money, your family doesn't have a lot of money, and you get arbed down to kind of a second rate college and you're going to have to borrow a lot of money, I think you really have to be careful and evaluate your other options.

50:47If you get into Yale and you're a good student and feel like, yeah, there's a very decent likelihood I'll graduate, I'd say it may even be worth taking a quarter of a million dollars out in debt. If you're going into a field that appreciates a Yale degree, you can justify that type of debt. And I know that sounds crazy, but the strange thing is, and the really sad thing is, at a place like Yale, if you don't have the money, it's no problem. It's the second tier schools that A, don't offer you the same upside who charge the same amount of money because we're basically price fixing vis-a-vis a cartel where you have to take on extraordinary amounts of debt.

51:23Like if you show up to Princeton and you can't afford it, No problem. They'll pay for it if you just have to get in. But here's some facts that what I generally find is the people saying, oh, you don't need college, like saying it more broadly, are people who have graduate degrees from Stanford and it's worked out pretty well for them. Bill Morrow is always like that. And you don't need college. I'm like, you went to an Ivy League school. You went to Cornell. It seems to have paid off for you. 100%. And also when I hear people saying to me, well, I don't know if my kids need college anymore. Usually, I don't say this, but I'm thinking that means little Johnny fucked up the ACT and you're worried he's not going to get into college and you're trying to make everybody, including yourself, feel better about the fact that Johnny's not going to get into Cal State, you know, it's not going to get into Pico Tech and you're bummed about it.

52:12Because here's the bottom line. If you had a drug that made you more likely to make more money, less likely to have diabetes, less likely to self-harm, more likely to engage in a long-term relationship called marriage, much more likely to run for office, you are going to live six years longer. That's called a miracle drug. But the problem is, is we've decided to hoard the drug artificially such that we can make it too fucking expensive. And this is the problem. It's not that college doesn't add a lot of value. It's just that the incumbents, specifically the administrators and faculty of universities, have weaponized the exclusivity, constrained supply artificially such that we could raise tuition two to three times faster than inflation.

53:02And that is the gestalt now around higher ed is how do I, a faculty member, reduce my accountability while increasing my compensation? And it's I know artificially sequester supply, reduce supply. I'm Dartmouth. I sit on an$8 billion endowment, but I'm only going to let in 1 ,100 people, despite the fact I'm in the middle of fucking nowhere, and could double or triple my freshman class. I have the capital, no sacrifice in student quality. I have the infrastructure. I have the faculty. Harvard could take a couple billion of that$53 billion endowment, go to any Southern state, get them to match it, and start a wonderful Harvard adjacent in the South that would have tremendous social benefit.

53:47But no, we're in the business of being fucking Chanel, not public servants. So yeah, college is still an incredible value. The problem is, because of the corrupt, rejectionist LVMH strategy that university leaderships have deployed to make alumni who want to see the value of their college certificate go up by creating artificial scarcity. We've lost the script in terms of its value to society. And the real tragedy is the kid, the middle-class kid who's been taught his whole life or his parents have drilled into him or her. It always benefits to go to college. You got to go to college. That's the American dream.

54:26They don't get into one of these elite universities who take pride in rejecting 90, 95 percent plus of their applicants. They get arbed down to a media university that because of a corrupt pricing cartel in lockstep charges the same amount as Columbia or Princeton that doesn't have the financial resources to give them a financial aid. so they get a meeting with a woman in a pantsuit and a big college logo behind them that reaches across and says, it never doesn't pay to invest in yourself, just sign here, because she wants that free fucking cheap credit to pay for her tuition, such that she can make$200 ,000 or$300 ,000 a year telling young people to borrow more fucking money every day.

55:03Do I sound angry? And then this kid who went to college and maybe wasn't ready for it emotionally or psychologically drops out after two years, but guess what? They get to hold onto that debt But the only form of debt that is not dischargeable in American culture is the debt that should be most dischargeable, and that's the one that burdens young people. This is one of the great failings, in my opinion, of America, that reflects a sickness in our society that rather than loving the unremarkable and trying to create millions or tens of millions of millionaires, we've decided we want to identify the freakishly remarkable and create a super class of billionaires.

55:43and the people leading this charge toward a Hunger Games economy are the faculty, administrators, and alumni of elite universities. Thank you for my TED Talk. I'll be around all week. Try the veal. This does, I mean, college is pretty, it's indisputably and statistically a really good thing. And by the way, I just, I want to acknowledge something you said as well, which I think is very true, which is that all the people who are saying don't go to college went to college and benefited tremendously. Like, two perfect examples, Palantir, Alex Kopp is the anti-college guy. He went to Haverford undergrad, he went to Stanford Law, and then he got his PhD in neoclassical social theory.

56:31But you don't need college. You don't need college. So he's one of the, I mean, this is their whole plan. It's like, we're going to hire you right out of high school because college like is stupid and woke and it doesn't it doesn't benefit anyone peter teal is another good example he's got the teal fellowship the whole thing is like drop out of college and start a company i hate stupid meanwhile he went to stanford undergrad and then he got a law degree at stanford law so i totally agree with your statement where these people love to say these colleges and universities are stupid and yet they went to them, and it's probably because he went to Stanford Underground and Stanford Law that really launched his career and his ability to establish connections with people and give him the veracity and the credibility in the labor market.

57:17So that's the whole thing. However, to their point, there is a question of maybe it was worth it back then, but perhaps it's not as worth it today. And I think the data that we're seeing, I mean, we know that it's a bad job market for young people right now. I think the question is like, is it all young people or is it college grads? And the answer is kind of both. I mean, we've got high unemployment among young people, but it's getting more pronounced among college grads to the point where the spread in the unemployment rate between those who didn't go to college and those who did go to college, yes, the employment is higher or unemployment is lower for college grads, But the difference has been shrinking and shrinking and shrinking.

58:05In other words, having a college degree based on employment rates isn't as effective or impactful than it has been in the past, which begs the question, what is the value of a college degree today? We know what the value was 20, 30, 40, 50 years ago. It was tremendous. But I think the question for young people now is, we're looking at what's happening in AI. We're looking at what's happening in the job market. Can I rely on history and the historical success of going to college? And will that play out for me? Is it actually worth it? It's just situational. When I went to college, it was a no-brainer.

58:49You get into UCLA or Berkeley, you go. And you're right. It's not only just about economics. It's about the, I mean, it did everything for me. It literally, the vision of the regions of the University of California and California taxpayers just saved my ass and ignited an upward spiral in my life. It's where I met my ex-wife. And although I say ex-wife, she was a wonderful woman, high caliber, high quality, just gave me a sense of pride and confidence. And I had a wonderful 10 years with her. It gave me some of my best friends. It taught me how to handle alcohol and substances. It gave me the opportunity to get a job at Morgan Stanley, which got me into business school, which gave me the credibility to borrow money to start and raise money to start businesses.

59:45It just inspired this upward spiral of prosperity and health and relationships. And a lot of it was not economic. It was non-economic. And I just think we want to offer that opportunity to absolutely as many people as possible. And also in different formats. A lot of people don't want a liberal arts degree after four years. They think, you know, I want to get a two-year degree especially nursing or cybersecurity, or I want to meet at the age of 19 or 20, I'd really like to start working on these data centers because I understand how to weld. And I mean, we've got to bust out of this notion of shaming the vocational jobs and take advantage of the infrastructure at these universities.

1:00:24I'm actually very involved in one of these programs called the Accelerator Program at UCLA and Berkeley, where we have no admissions criteria. Anyone who shows up gets in and it's nearly free. And it's a bunch of non-traditional one and two year programs. But there is really a, you know, this is, America does a small number of things really well. We make the best weapons in the world. We make the best media in the world. We make the best software and hardware in the world, the best tech. We also have the best universities in the world. The problem is we have just taken the wrong approach and we've monetized it and are treating it like shareholders instead of treating it like citizens, instead of treating it like public service.

1:01:06And I'm picking on the president of Dartmouth. She seems like a lovely person. I was at the Atlantic Festival and she was talking about AI and education. I'm like, just let in fucking more people. Your big thoughts are awfully interesting, but why are you not letting in a ton more kids? But I think that question gets to the heart of what we're talking about. And it's the same thing that we talk about with luxury, which is like, this is more about branding and exclusivity than more people would like to admit. And like, so you can let in lots more kids, but that also kind of defeats the quiet purpose, which is we're trying to stratify the population in our society such that people can just look at people, see a logo, see a name on the resume, and then decide, yes, you're good enough.

1:01:55It's a filtering system. It's a cast system. It's not a filtering system, but just you reverse engineer it. Let's go further down the supply chain. Public schools spend$15 ,000 per student. Public schools in poor areas spend eight to 10. Elite schools, elite private schools spend$75 ,000 per student. So, oh, what a shocker. The average American kid has approximately$180 ,000 invested in their education before they go to college. A poor kid,$120 ,000. And a rich kid has almost a million dollars invested in him or her. And some people will say a lot of that money is wasted. A lot of it isn't. And what do you know?

1:02:32Middle-income kids from middle-income homes score 150 points more on the SAT than lower-income. And then the real inequality is rich kids score 250 points more than middle-income kids. So if we were going to have true affirmative action where we wanted the SAT to just kind of reflect test-taking ability, you would spot poor kids 370 points. And if they get a 1230, they've got a perfect SAT score. We really have decided in the U.S. that we're a caste system and that the primary indicator of your future happiness, propensity to self-harm, obesity is a function of just how much fucking money your parents have.

1:03:08It is really, we have in a lot of ways lost the script and universities are guilty of being ground zero for this emerging caste system, this dynastic wealth, and just this virus of rejectionism and exclusivity. And I'm not being humble. I'm a talented, I'm a fucking monster. I'm creative and I'm hardworking. But if America had the same bullshit rejectionist strategy towards letting kids into higher ed at reasonable cost then that they have now, I'm sure I'd be making a great living selling copiers door to door. I would figure out a way to make a good living. I'd have nothing like the life I have now.

1:03:51And all of the people my age who graduated from one of these elite public institutions, we have a debt. And that is to make sure that the bigger ladders are thrown down behind us, because what my generation is doing is pulling up ladders everywhere. I think that a lot of people would agree with us at this point that it is a car system and that it's unfair and the the the fact that you go to an ivy and the chances that you hit the top top one percent of owners goes up by 50 is like unfair and the fact that if you're rich you have a way higher likelihood of going to that ivy league school and then we can get into all the legacy staff and we can get into the donation staff it's like the whole system let's just be real with ourselves is pretty unfair and it is a cost system and i would bet that the majority of our listeners actually agree with us on that.

1:04:39I think the question then becomes, if you're a young person, what do you do about that? I mean, we can talk on the governmental level how we need to reorient the system to make college education more fair for all Americans. But if you're an individual person, it's like, okay, it's unfair. It's a caste system. What am I supposed to do about that. And I would like to get your views on this. I think, you know, just starting off on this question, I think one thing that is worth recognizing as a young person is how important branding is. And the fact that, like, you know, this college application, where you go to school is largely a branding event.

1:05:25The education is kind of part of it, but most of it is what seal, what college seal is going to be on your resume. And so when you're thinking about where should I go to college, you should kind of think of it in as one-dimensional, two-dimensional way as I'm describing, where it's like, I should go to the college that most people, the most amount of people recognize or think is good. It's so stupid and it's so unfair, but that is what it is. And if you don't get into a college that you think doesn't hold real brand value, then yeah, you probably shouldn't be taking out debt to go to that college.

1:06:01You should actually be running the cost-benefit analysis in your head. Like, maybe this isn't worth it. It would be worth it if I were going to Harvard or Yale or Stanford or, I mean, a great school that isn't an Ivy League school. But if it's a middle to lower tier school, like, probably not. That's the first thing I would say. I have another thought, but I want to pause there and get your reaction. First off, an honest evaluation around and not shaming or shaming yourself if you're not cut out for college and should consider additional training for some sort of vocational job. Those jobs are just gonna pay really well for the next 10 years.

1:06:39We need 500 ,000 more plumbers and more electricians. So if you have any aptitude or desire for a vocational job, if you have the opportunity to be scrappy and try and find a small business, there's gonna be millions of small businesses owned by baby boomers that have no succession plan because they're kids who probably grew up wealthy. No fucking way I'm taking over dad's curtain hanging business despite the fact that dad has made$600 ,000 a year for the last 20 years. There are opportunities, and I would suggest that young people think creatively and be very honest about whether they're cut out for college.

1:07:10And what you need is a kitchen cabinet of smart people to try and advise you. If you're one of those people, and I think there's a lot of them, who would benefit from college, then there's a few things you should be thinking about. One, I mean, okay, It's passe, but do your best and be very strategic about trying to get into as many schools as possible because what brings down prices is competition. And what people, students do is they think these are such strong brands. They dream of going to Indiana. They get into Indiana. That's it. No, apply to DePaul. Apply to the University of Florida. Apply to, you know, Kenyon.

1:07:42Because once you're in four or five schools, once you're admitted into a school, they play the game of now they really want you. It goes from being a sell to a buy. Do what consumers do and a lot of freshmen don't consider doing. Go to each of them and try and play them off of each other and get as much financial aid as possible. Hi, I got into Syracuse. I would like to come to Syracuse, but I also got into McGill. I also got into Fordham and Fordham's offering me a 50 % ride. Can you match that? You'd be surprised how many of these schools are willing to pull out their checkbook to try and increase their yield.

1:08:18The other arb, if you will, is to say, all right, maybe I'm not quite ready for UCLA, but I'm going to go to SMC. I'm going to go to Santa Monica College, or I'm going to go to OCC Junior College, which are much less expensive. And what the schools do a really good job of, a really good job, especially the big publics, is taking kids in who are transfers from junior college. Because if you can do well at SMC for two years, it says you know how to survive a college and that you're going to graduate. And they are very committed to letting those kids in. A lot of the freshman class or a lot of the incoming kids into these universities, whether it's a UVA, a UCLA, a UCSD, a UC Irvine, are kids from junior colleges.

1:09:04And essentially, you cut the cost almost in half, at least the tuition, because junior colleges, especially the great Cal State system, which isn't a junior college, but the junior college system in California is really, relatively speaking, inexpensive. But be all over your college counselor. Find people who will coach you around this stuff. Be very transparent. Be a consumer. Trying to get into as many schools as possible. Play them off. Play those bitches off on each other. I'd really like to come to your school, but I'm getting more money at this place. Because what happens is kids have a tendency to fall in love with one school.

1:09:40And then they have absolutely no choice. The early decision thing, the early decision, have you heard about early decision? Yeah, but it's fine. For the listeners, you can pick a school and go early decision and the student and the parents sign something saying, if I get in here, I'm going, right? And all your other applications are automatically withdrawn from Common App. It's a total fucking racket. It should be illegal. Why? Because they dangle the, not 10 % of you will get in, but 20%, and they never validate those numbers, will get in on early decision. But then guess what? Syracuse finds that they're a little bit short in their freshman class, and they send out additional financial aid offers to the people who are undecided.

1:10:24The people who went ED and have to go reach out and say, hey, I heard you're giving everyone$10 ,000 off. And they say, fuck you, you got to come here. UNED. So you have no negotiating power. So they are leveraging the exclusivity against the above bullshit cash system to try and reduce all negotiating leverage and consumer leverage and pricing power among the buyers. Yes. So before we wrap up here, the other thing that I think makes college worth it, And this is aside from vocational training, where you're specifically training yourself up to take up a specific skill and get into that profession.

1:11:02We're talking about liberal arts. I think the two things that are really important and what make it worth it, one is the branding, and two is the connections. It's the relationships that are established over the course of your time. And you talk a lot about this, and I think it's very true, and I think it needs to be talked about more. but just some of the data here that supports this argument 70 % of jobs this was a study 70 % of jobs are filled via networking and if you get a referral to a job i.e you know someone you are four times more likely to get hired so if you're one worried about the job market i'm not going to get hired if you know a lot of people and they're down to go to bat for you you are going to get hired and then this is the final stat, which is my favorite stat, and it's the stat that you will be telling your son when he's in college, I believe, next year.

1:11:54This is a Gallup poll which found that more than half of grads who are in a frat or a sorority have a job immediately after graduation, and for unaffiliated grads, that number drops down to a third. In other words, if you have friends, if you're in a community like a fraternity, you are more likely to have a job after college. I mean, you're just you're so bang on. And that is and I don't have the analysis, but I would venture that if you're not planning to go to grad school, I mean, the best thing to do is to get A's and have a lot of friends and be really social. Most people aren't talented enough to a lot of people aren't talented enough to do that.

1:12:30I wasn't. if you had a choice between getting all A's and quite frankly, just studying all the time and not being that social or getting all C's and having a ton of friends, I think a stronger indicator of your success would be to get all C's and have a ton of friends. There was a study done on, I think they're called Baker Scholars, and that is Harvard. The top achievers academically at Harvard get something I think called the Baker Scholarship. And they did an analysis of them, and they found that they were statistically less successful than the average Harvard grad because they were sequestered away in some library, basically getting all A's.

1:13:11And my advice, jokingly, not joking, to college kids when they say, can you give me any advice about college? I'm like, well, I wish I just studied a little bit more because a little bit more, I could have gone from a 2-2 to a 3-2. It just wouldn't have been that much incremental effort to get all B's instead of all C's, D's, and F's. But generally speaking, my advice for anyone going to college would be drink a lot and just make a shit ton of good friends. Have girlfriends. Learn what you like. Learn how to be a boyfriend. Learn how to be a good friend. Have a great time. I was on the phone last night with two of my sophomore roommates.

1:13:51We have almost nothing in common as grown men, except we love each other because we had this great experience together. other when we were in the room of the 80s, which is what we called, amazing name for a room, a fraternity room, back in 1983. We've known each other for 42 years. We're totally different, and we all are really close and look after each other and help each other and give each other opportunities and support. It's just such an incredible, incredible asset. And let me just go back. I used to, you know, when I'm a quote-unquote professor of brand strategy, the kind of the easiest way to assess a brand relative to its competitors or just how much brand equity involved is margin.

1:14:33Margin is a rational behavior. I'm wearing a watch that costs 1100 bucks to make. It costs me$11 ,000, whatever, 90 points of gross margin because it's irrational. I don't wind it. It's not a timepiece. I think it makes me seem younger and more Italian and more masculine, which are stupid emotional attributes. Italian's a new one. Oh, Panerai, Italian, Italian submariners. I just usually hear younger, more attractive. Sorry, continue. By those, well, let me ask you this. What is the tuition now at Princeton? It's 65. It costs them very little incremental. There's a lot of fixed costs. Those buildings, those tenured faculty, all those administrators, that shit's expensive.

1:15:12Well, half of it's donated. So that's the other good thing for the margins. But the incremental costs to deliver an additional seat to Ed Elson, they're getting 90, 95 points of gross margin on you. Can you name any other product in the world that has a$260 ,000 price tag with 90 plus points of gross margin? I want to say a sports car, but I'm going to guess the margins are way smaller. What? Let's look at Ferrari. Ferrari, the gross margins are like 50 points, 55 points. They're nowhere near 90 or 95 points. These are the strongest brands in the world. And unfortunately, the strategy for their branding is exclusive.

1:15:54But anyways, I've beaten this horse to death. Let's move on. Okay, let's take a look at the week ahead. We'll see earnings from Alibaba and Dell. Some delayed data will come in, including retail sales and business inventories for September. We may see the personal consumption expenditures index for October, though it's not confirmed yet. And finally, we will see consumer confidence for November. Scott, any predictions for us? Well, my prediction isn't economic, but I do think it will have meta effects here. I've been reading the emails released from the Epstein files. I could not get over. There's aberrant criminal behavior of individuals, and those people should be punished.

1:16:36But I think the more significant thing here that will impact America is that when you read these emails in between these individuals, the level of entitlement, the notion that they are just above any standards of decorum and the way they speak to each other, it reeks of such out-of-control entitlement and is the perfect sort of embodiment of one of my favorite sayings. And that is the rich now feel protected by the law, but not bound by it. And the bottom 90 % are bound by the law, but not protected by it. And I think more impactful than the embarrassment of the president or maybe some of these people, criminals finally getting served their justice.

1:17:25I think America is going to read these emails and say, you know what, enough. enough I think we're about to see a dramatic rethinking or recalibration of the social order and I don't know how it's going to manifest I don't know if it's higher taxes I don't know if it's more people like Mamdani being elected but I think these emails are going to be the turning point for American society or it's going to enter into a new cycle here where people are just fed up with, okay, let's cut farmers, soybean farmers subsidies by 9 billion, but fine, 40 billion for Argentina. Let's cut taxes and let rich people capitalize and write off 100 % of their Gulf streams, but we're going to take away health insurance and 14 million people.

1:18:12I think we've hit a tipping point and it comes from unusual places. And I just think the vibe of these emails is going to have a much bigger impact than we're expecting. So my prediction is the social order is about to take another turn because of what has become just noxious entitlement amongst our most fortunate. This episode was produced by Claire Miller and engineered by Bentwin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research leader. Our research associates are Isabella Kinsel, Dad Shalon, and Kristen O'Donohue. Drew Burrows is our technical director. and Catherine Dillon is our executive producer.

1:18:52Thank you for listening to Property Markets from Property Media. Tune in tomorrow for a fresh take on the markets.

1:19:03Lifetimes

1:19:09You have me In kind reunion As the world turns And the dark flies In love

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