Office Hours: Change & Volatility Favor the Young, Investing in Art, And Why David Solomon’s DJing Hobby Is a Good Thing

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0:23Welcome to the PropGee Pod's Office Hours. 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, please email a voice recording to officehours at profgmedia.com. Again, that's officehours at profgmedia.com. I have not seen these questions. First question. Hi, Prof G. I'll stay anonymous for obvious reasons. I'm 26, working in San Francisco at a struggling regional bank. I think management will make something happen before we go bust or get taken over by the FDIC. Whatever happens, heads will roll, and there's not much I can do about it.

0:58I spent close to two years working on a very complex and differentiated product. I've built great relationships here, and the work I do is very niche and professionally enriching. Management hasn't always been the best, but I definitely saw myself working here for a few more years. I've also been studying to take the CFA Level 2 exam this May, and was considering pivoting to a different role internally. This sequence of events has obviously changed my outlook for the immediate future. Do you have any advice for someone in my situation? Should I stay put and let things play out, hoping my specific role and department survive in the event of an acquisition?

1:35Or is it time for me to get the hell out of Dodge? I definitely want to continue working in finance, but I can't help but see myself being eternally scarred by the situation and will be weary of taking on another role in banking. Any advice will be welcome. Thanks. Thanks for the question, Anonymous. I would imagine a lot of people at banks, specifically regional banks or niche banks, are asking themselves the same question. My advice would be the following. This is what you do. Nothing. What do I mean by that? Stay the course. Don't change a thing. We have a tendency as humans to overestimate or to over-dramatize situations in the present.

2:14And let's look at what you have. It sounds like you have a good job. It sounds like you're getting skills. It sounds like you're on the right path towards a CFA. You're getting credentialing, which is really important in our society. And yeah, there's some things you don't love about the company. That's called work. But it sounds like they appreciate you. You're working on a cool product. And here's what will likely happen. If the bank is fine, you keep on jamming. If the bank is not fine and it gets taken over by the FDIC, the bank will get sold. These companies have assets, they have deposits, they have products, they have relationships, and it gets sold to a bigger bank.

2:47They almost never just put a padlock on the door. And guess what? One of those assets that will be sold is you, specifically your skills. So I would be shocked, even if the bank failed and was sold, that you were laid off. I think you're probably, if I had to bet, and I don't know the specifics of the situation in the bank, I would bet that you're kind of in a similar position three or six months from now doing what you're doing right now, distinct of what happens. Also, There is change in opportunity in tumult. Disruption, you sound like a young man. Disruption is especially advantageous to young people because they can move.

3:28They're more adaptive. They can say, oh, okay, I got a new opportunity with the bank that bought us. It's headquartered in Charlotte. I'm going to move to Charlotte and take a better or bigger job. Or a bunch of my senior managers have decided to use this as an excuse to retire or just want out, don't want to incur any more of this bullshit, or quite frankly, are held responsible for some of the bad decisions around risk management. Again, I don't know the specifics. And there is opportunity to move up. When we try and suppress volatility to an unhealthy extent, when we bail out everyone as we did in the pandemic, it robs young people of opportunity.

4:05An example, when you bail out the baby boomer who owns a restaurant, all you're doing is robbing opportunity from the recent graduate of the Brooklyn Culinary Academy who would like to buy that restaurant space or rent it and buy the supplies for 30 cents on the dollar. All the businesses I've started that have done well have been started in recessions where everything was cheap because the market let the economy drop. The reason I am financially secure or what started an upward spiral in my financial security is in 2008, as I was coming into my prime income earning years, I was able to buy Apple and Amazon stock at about 3 % of where it's trading now.

4:42Literally, these stocks have gone up 30x, whereas now we decide to bail out everyone so Pop-Up Banana can stay rich. You want change. Change and a certain amount of volatility is good for you. And this feeling that you've been scarred, come on, boss. Come on, man. This is a blister, and that blister is going to heal over, and it's going to be stronger. This is a learning experience. This is interesting. My first week, I started at Morgan Stanley, I think in September of 1987. And literally, I don't know, two or three weeks later was what they called it Black Friday. And they said all the analysts should go down to the trading floor.

5:19And the trading floor was just mayhem. I think the Dow went from like, I don't know what it was, 1400 to 900. This is a long time ago. It was 1987. And basically, we were all convinced that we were all going to be fired the next day and Morgan Stanley was out of business. And guess what? That didn't happen. And a lot of people lost a lot of money, but at the end of the day We were all fine just as I think you're going to be fine Just as I think you want to stick around and see what kind of opportunity Awaits for you just as you want to learn from this But not be overly dramatic about this. There is a decent chance This might be good for you.

5:54There is a very good chance. It's going to be neutral for you And sure there's a chance it'll be negative for you, but stay the course you are doing the right things You're obviously smart. You're young. You're in a good position. And change and a certain amount of volatility favors the young. And what I always say and what always gives me comfort, I always remember this. I keep it in my back pocket or the front of my head. Nothing is ever as good or as bad as it seems. All the things you are feeling right now, keep in mind, it's not as bad as it seems. Thanks for the question and best of luck.

6:26Question number two. Hi, Scott. This is Sarah from Seattle. I work as a photographer and graphic designer for a digital marketing company. I'm curious to hear what you think about collecting fine art as an investment. As someone who studied design, I deeply value art from a personal level, but do you think there is a rational place for collecting and investing in physical art? And do you personally ever make investments in art, or do you purchase it simply for your own pleasure? Or is fine art even an interest of yours at all? At this point, I have a fairly diverse portfolio outside of the art space and feel like I would enjoy starting to collect more pieces when possible.

7:00But as art is so subjective, I wonder if I should be viewing fine art as an overall sunk cost, other than the obvious pleasure of viewing it daily, which, in my opinion, has a very high emotional return. Thanks so much for taking my question. I love the pod. Sarah from Seattle. So this is sort of the mother of all problems. Should I buy and collect art? So art represents a massive asset class. According to the Chartered Alternative Investment Analyst, the CAIA, the art market has about$60 billion in annual transaction volume, along with an estimated global value of, get this,$1.7 trillion. So this is a huge asset class.

7:35Contemporary art, which I think its definition is art post-1945, has displayed positive historical price appreciation between 1995 and 2020. Contemporary art has outperformed the S &P 500. I read regularly that the best-performing asset class of the last several decades has been art. In 2020, when in-person auctions were canceled, the contemporary art market appreciated by, get this, 15%. It's obviously a great hedge against inflation, and you also get more psychic return than if you own treasury bills. Now, I don't own, I should say, I own, I think, two pieces of art, and it's more of a personal thing.

8:15I've always felt self-conscious about buying certain things. I feel as if I'm trying to pretend to be someone I'm not. I grew up kind of upper, lower, middle class. I order beer. I never order wine. It's wasted on me. I find it uncomfortable when people order really expensive wine. I understand if they appreciate it, that's their right. I just find it, I don't know, uncomfortable if you're at dinner and someone orders, you know, a$3 ,000 bottle of wine. I'm just, I feel as if I'm trying to, we're trying to pretend we're people that we're not, or at least I'm not. Anyways, and then art is sort of the same for me.

8:51I'm intimidated by it. I've never really understood it. And I feel as if it would be me trying to be something I'm not. I find a lot of my friends who, when they hit it big, decide they're going to buy art. Having said that, it's a great asset class. It just is a great asset class. And if you get emotional reward from it, history shows if you know what you're doing and you buy right, it's a fantastic asset class. So in a word, my sister, you know, in terms of if you have the money and you get the opportunity to buy smart and it gives you psychic income, word, my sister, buy art. We have one quick break before our final question.

9:31Stay with us.

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10:37Welcome back. Question number three. Dear Prof G, I get the notion of optics and the recent broad criticism of David Solomon's DJing hobby, distracting from his day job when times are tough. But I would assert based on my own experience and other professionals whom I look up to that outside interests and hobbies are inextricably linked to professional success. It's often when we're cycling or gardening or playing the guitar or painting or DJing that we come up with ideas that translate into our professional lives and feed our souls, allowing us to recharge for the next day. Curious to hear your thoughts on this idea of outside interests playing a part in professional success.

11:24Thanks. It's an interesting question. And so I have a bias here. I work with Goldman Sachs and I know David Solomon and I like him. I find that there's a cartoon of these investment banking CEOs, whether it's Jamie Dimon or David Solomon, or I don't know who the other heads are. I know Jamie a little bit. I wouldn't describe us as friends. I think he's a very impressive man. He's very thoughtful and concerned with other people and a great leader. I think David Solomon is a good man. as a matter of fact I have a story about David Solomon and it relates to his DJing about I don't know what was it three or four years ago when all the WeWork shit was going down I got a copy of the S1 in anticipation of their IPO and I read the thing and I was in Nantucket with my family and within two pages of reading this thing I went out and said to my family I can't go to the beach today I gotta stay home and write about this this thing is so ridiculous and I wrote up a thing it was probably like there's certain moments in your career that kind of take you, step change you to the next level and this is one of them.

12:26I wrote a post called We What The Fuck basically just tearing apart how ridiculous this S1 and this company was. And one of the things I wrote was that the company is taking them public. I think we're J.P. Morgan and Goldman. And I said very snarkily that DJ Soul, which is David Solomon's DJ name, is a terrible DJ and a worse fiduciary for agreeing to take this bag of shit public. And it was a good line. And I heard from the head of comms at Goldman, who was some former, as you would imagine, Obama administration PR person saying, David would like to meet. And generally speaking, I don't meet.

13:03I try not to. I turn down a lot of meetings. I know this sounds like self-important with powerful people because I've spent the last 20 years of my life running my brain to kind of powerful white guys. And it was a really good living. and I'm just kind of done with it. And I want to focus on media. I want to focus on meeting with young people. And so I said to this guy, no, I'm not interested in meeting with David. And also I find that I become biased when I meet with people. And that is I meet with them, I like them. Generally speaking, leaders are very likable. That's how they became leaders.

13:34And I stopped speaking or writing my mind. Anyways, freaking David Solomon calls me or texts me and says, I live around the corner from you. Let's grab coffee. You're not going to be rude. So we go to breakfast. And by the end of breakfast, no joke, I had decided to transfer all of my assets to Goldman Sachs. I was so impressed with this guy and thought he was so nice and so sort of thoughtful and level-headed. I'm like, okay, I'm transferring all my assets. And now Goldman manages my money. Anyways, and also I found them to be just really good people and they attract great human capital. All right, where am I going with this?

14:09The fact that he's a DJ, he's gotten a lot of shit for it. And not only that, he'll get even more shit for it. They'll start deciding that it's a distraction when the bank doesn't do well. On a risk-adjusted basis, it is probably not a good idea for DJ Sol or for David Solomon to be DJ Sol while he's the CEO of a global investment bank. Having said that, I think it's a creative and I think it's a smart thing for David Solomon. And that is, I think when he's towards the end of his life and he's hanging out with his grandkids, I think his grandkids and he are going to be glad that while he was the CEO of Goldman Sachs, he was a DJ.

14:47It just, that kind of behavior, that kind of activity, that kind of differentiation, that is the spice of life. That's what makes people individuals. individuals. So on a risk-adjusted basis, in terms of overall professional demeanor or his status or creating soft tissue that people are going to press on if Goldman has a bad quarter, yeah, it's probably not a good idea. But it's a good idea as it relates to David Solomon, his life, his legacy, and just the kind of person he wants to be and the kind of life he wants to lead. Hobbies, self-actualization, living out loud, those are the people we admire most.

15:24People to say, this is who I am. I'm going to be who I am. I'm going to enjoy what I enjoy. And as long as it doesn't hurt anyone else, I don't really give a shit or I'm willing to endure some pain and some judgment and some stereotypes because this is how I want to lead my life. And I'm a big fan of this. I think it's good for him. Good for him, DJ Soul. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at Prop2Media.com. Again, that's officehours at Prop2Media.com.

16:08This episode was produced by Caroline Shagrin, Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prop2Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly markets show. Support for this show comes from Odoo. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other? Introducing Odoo. It's the only business software you'll ever need.

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