Protecting Your Portfolio in a Bubble, and Is a Move to America Worth the Money?

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1:33Welcome to Office Hours with Prop G, where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you have a question, send us a voice recording at officehoursofpropgmedia.com or post your question on the Scott Galloway subreddit. We just might feature it in an upcoming episode. Question number one comes from Whiskey Ejack. All right. Hey, Scott, longtime listener and fan. For someone who has done all the right things in the realm of investment for my entire life, it's starting to feel like the American economy is a ticking time bomb. Can you give me some feedback on why that might be an irrational or emotional feeling?

2:06Even a diverse portfolio is starting to feel unsafe. I could handle a short-term 20 % drop. How sure are you that we can bounce back and that a dollar-cost average approach can still be the right way to invest in the coming years? I think everyone's asking this question. But as my friends at Ritholtz Management, Barry Ritholtz and Josh Brown say, if you had bought stocks on days where they hit all-time highs, you'd be up. You would have outperformed the market. In other words, yeah, is the market overvalued? Yes, but do we know when it's gonna correct? No, and trying to time the market has proven to be impossible.

2:43And kind of the best strategy is to always be in the market, But perhaps when it gets this frothy by most traditional metrics or all traditional metrics, you may want to think about further diversifying such that if and when there is a correction, you have the Kevlar diversification. But trying to guess when the top happens is dangerous. Probably my biggest investment mistake was the emotional reaction I had to the 2016 election of Donald Trump. I think that Donald Trump and by the way, I've lost a lot of viewers here. I think it pays to be more tempered and not talk about politics on a show like this.

3:20But in sum, I think the president is a fucking idiot and a stain on the American experience and that the grand sum of all of these head up your ass economic and foreign policy decisions will eventually crash this economy or result in long term structural damage that will take decades, if not generations, to repair. So when he was elected in 2016, I sold all my stocks. That was stupid. The market ripped for the next year. There was so much insecurity about him actually winning that the fear had been priced in, stocks ripped up. The government is, or the economy is an iceberg where I think 90 to 95 % of it is below the surface.

4:02And what the government does, does matter. But the majority of the economy just grinds on regardless of who is tweeting what or not tweeting what, or who has prostate cancer, doesn't have prostate cancer. By the way, that made sense for Joe Biden to run again. Who gets metastatic prostate cancer? 81-year-olds or 82-year-olds. When will these people just, if all of a sudden every person over the age of 72 had to resign, if we had to lose Netanyahu, Putin, and Trump, would the world be worse off? Anyways, enough already. But what we had for me was an emotional decision and I sold everything. I had, at that point, a lot of capital gains.

4:40So immediately I lost probably 20. I was living in New York at the time. So I lost probably a third of the gains to taxes. And then six months later, I ended up buying back in at a market that was 10 or 20 % more. So you could argue, at least notionally, that decision cost me 40 % of my liquid net worth in stocks. So what do you do when you think things are way overvalued? You diversify. But I think you always want to be in the market. If you wanted some insurance, you could try and get sophisticated and buy some long-dated puts or maybe sell covered calls against your existing positions. But generally speaking, I think what you want to do is diversify and recognize that just being in the S &P is not diversification because 40 percent of it is in a small number of companies.

5:24Valuations are elevated. The CAPE ratio, that's the price of the market divided by 10 years of company earnings suggested for inflation. It's meant to smooth out spikes. it tells you how many years of profits you're paying for a dollar of earnings. The long run average is about 17. And get this right now, it's 41. That's the second highest in 145 years. Guess when the highest was? You got it. December of 1999. However, it's a bit of a poor timing signal again, because when it's high, sometimes it goes much higher. I think you want to stay in the market. The current economy has been described as K-shaped.

6:01The The line for wealthier households invested in the stock market is going up and to the right, and the line for everyone else is flatter going down. In other words, wealth concentration may be an argument for owning productive assets, not abandoning them. You want to be part of that upper part of the K and in assets, be an owner. The biggest difference in our economy is we keep transferring wealth and opportunity from the owners to the earners. At some point, that is going to collapse on itself. How confident should you be in a bounce back? recovery isn't always quick. It took about four years after 2000 and about four years after 2007.

6:36And we've had decades through the latter half of the last century where the market was essentially flat. But the evidence is clear. Continuing to buy, be stepping aside, and over the medium and long term, you want to be in the market just diversified. Having said that, I am taking down my leverage. Leverage is how smart people go broke, and I'm being diversified. And right now, I'm in a different stage of life. I'm not looking to get rich. I'm looking to not get poor. I try to not have more than 5 % of my assets in any one thing. I'm over-invested in real estate, but I have no leverage on the real estate, so I can endure a down cycle.

7:22And I'm fairly diversified across asset classes. I try to diversify out of America, and quite frankly, that's been a bad strategy so far for me. Those stocks are down. But I've decided that I want to sleep at night and I want to diversify. Most people get wealthy through concentration of their human capital and they go 110 % all in on one thing. But once you get an asset base of any real wealth, I would argue that the most underappreciated word in the English and investing language is the following, diversification. Thanks for the question. Question number two comes from OppositeSpeaker8200 on Reddit.

7:56They say, Hi, Scott. I'm 41 and living in Stockholm with my wife and two young children. I have a PhD in life science and about seven years of commercial experience working in sales towards pharma and biotech. I keep coming back to one question. Should we make a big move to the U.S.? If you were in my position, 41 years old with two young kids, a solid career, and a comfortable life in Sweden, would you take the risk and move to the U.S. in pursuit of greater opportunity or accept that the grass may simply look greener from Stockholm? Thank you for a great show. Okay, so without knowing your specific situation, the kind of the trade-off or the fulcrum here is that the U.S.

8:30offers a much larger life sciences market and potentially greater financial upside, specifically stock options in a more robust private equity-driven market in pharma, right? You'd rather be good to great in the U.S. than average in Stockholm. And by the way, the majority of us are average. The U.S. is one of the world's largest biopharmaceutical markets and a global leader in research and development. U.S. biopharmaceutical companies spent$96 billion on R &D in 2023 and counting for over 20 % of total sales. In 2025, the U.S. biotech sector hit$232 billion in revenues, with over 72 different companies generating more than$500 million in sales.

9:12However, Sweden also has a significant life sciences industry. The sector accounts for about 10 % of the country's exports, and its market size has doubled since 2022 to 474 billion, or about 50 billion U.S. Is that Kroner? What are they called? Is it Kroner up there? By the way, I was just in Stockholm. Jesus Christ, I was there in July. I'll move. Let's swap. Oh, my God, that's a beautiful city. Jesus Christ. On their bikes, roaming around, everyone's, hi, how are you? Yeah, I'm great, enjoying all this free health care. How about you? Anyway, UNICEF ranks the U.S. 40th out of 41 wealthy countries for the quality, accessibility, and affordability of its child care system.

9:49In sum, if you don't have a support system or the money to hire a support system, the U.S. sucks to have kids. Nordic countries ranked near the top. Sweden also devotes a much larger share of its economy to early childhood education and care, 1.5 % of its GDP compared with just a quarter of a percent in the U.S. Look, this is what it comes right down to. The first is, do you have alignment with your partner? I'm in London. I don't want to be in fucking London. It's raining outside in 55 degrees, sea above London. But my partner really wanted to live here. And I figured out early that my role in life is to make my kids and my partner happy, not because I'm a good person, but because it makes me happy when they're happy.

10:28Do you have alignment with your partner? Does she really want to go? Does she have a great support system in Stockholm and is going to be upset living in the U.S.? Or is she ready for a new adventure? Get alignment with your partner. That way, if it doesn't work out, that's okay. You both agreed to it. And if it does work out, you can both celebrate your collective victory. Do you have the money or the professional currency to get the kind of job that's gonna help you make up for the socialist gap? The socialist gap being free healthcare and childcare. That's real cabbage. If you got a great offer from Pfizer or Merck or some cool or Gilead or whatever, that's not gonna be an issue.

11:07You will have the cabbage to do it. and there is more upside for the extremely talented and or the extremely lucky in the United States. The reason why Nordic countries always score towards the top in terms of a general happiness across their population is that in America, we've decided the key to happiness is how much shit you have. Whereas the Nordic countries have figured out that happiness is not only a function of your stuff, but it's a function of an absence of anxiety of things being taken from you. So if you have the alignment and the market currency to get the cabbage in the U.S. to fill in that socialist gap and take away that anxiety, then brother, at 41, if you have alignment, I say roll and come to the U.S.

11:50In general, after having molested the earth for the last 35 years as a strategy consultant and investor, my reductive analysis of the world is the following. The U.S. is the best place in the world to make money and Europe is the best place to spend it. it sounds as if you're still in the making money part of your life. So if you have the opportunity and the currency and the offer, do it. Also, let the market decide. You're going to need more money in the U.S., substantially more money. Do you have an offer for more money? If you do, then boom, America, here we come. If not, then it's great to live in Stockholm with a wife and kids.

12:30This is the mother of all good problems. Do I stay in one of the most beautiful, empathetic cities in the world with a wife and kids and have a lovely life? Or do I go for it and move to the U.S.? And if things don't work out, you can always pull the ripcord and move back still as a fairly young man with a young family to Stockholm. Again, what's the fulcrum here? The market. Got to get alignment with your partner. But assuming you have that, does the market value your currency, your professional currency enough in the U.S. to make up for that gap in social services? Thanks for the question and best of luck to you.

13:05We'll be right back after a quick break.

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16:21Welcome back. Our next question comes from a listener who texted us. They say, Howdy, Scott. I recall from a previous episode that you would describe yourself as a bad manager when you first found yourself in those roles. What do you think you did a bad job of and how would you have done things differently now? Any advice from new managers? I think I was so self-absorbed that I thought that people would just take for granted that I would do the right thing, that I didn't need to outline their career for them, that I would do the right thing and be generous when— you know, if things worked out and they should just keep their head down.

16:54I didn't take enough time to kind of sit down and really focus on, quite frankly, on them. What are you hoping to achieve here? This is what we have planned for you. This is the career path. This is how the company is doing. This is why the company's success is going to translate to your success. I looked at people as a transaction, and a lot of this is out of necessity. If I didn't, And if I didn't have more money, if I spent more money than I took in when I started my first strategy firm, I was closing the company. I didn't have rich parents. I didn't have any money saved. Now I have a lot of cushion and I can, quite frankly, I can overcompensate people.

17:34But what I didn't do that I could have done was a better job of outlining objectives, ensuring they understood I've had a better feel for what was important to them. I assumed that everyone was like me and wanted to be rich and awesome. That's all I've ever wanted to be. And then what you realize as you get older, some people want flexibility. Some people want to manage others. Like they get really excited about the opportunity to manage somebody, even if it's them managing the office manager. Some people want their name in lights. And if the New York Times calls and asks for a quote, we used to do a lot of content marketing, turning it over or referring it to one of the analysts, the younger analysts, it just makes their day.

18:09Praise. I didn't invest enough in praise for God's sakes. Young people need watering, telling people they're doing a good job. job. I just, I was so self-absorbed and assumed that everybody just thought, oh, he's awesome. And when he gets successful, he'll be nice to all of us. I should have done a much better job understanding their priorities, investing in their desires, and really taking time to understand what their unique needs were, outlining what was going on in the company and how that success was going to translate to their success, and proving to them with my actions that I understood their priorities and I was trying to adapt to it.

18:43One thing I did do well in the 90s before it was cool, I hired a lot of mothers, a lot of women with graduate degrees from Darden, from Tuck, who had left the brand management world, corporate America, Nestle or P &G or Clorox. My company was in San Francisco. And I would say to them, come into the office two days a week and you can stay at home three days a week and be with your kids and work remotely. This was like really innovative at the time. This was sort of unheard of. Nestle wouldn't allow them to do that. And what I found is there is no one more productive than a mother. They got to get home.

19:22Like the babysitter is leaving at six. They don't have time to mess about at work. And I found that there was this talent pool. I didn't do it because I was progressive or a feminist. I did it because it was an untapped labor pool of exceptionally talented people who wouldn't go to work. I could compete with Nestle or P &G or Google because I was offering the flexibility that those firms didn't. That's an example of a good manager. Also, something I also got right as I got older, I was talking to my partner in the business, Catherine Dillon. We've always been a little bit, our employees, the team's going to love to hear this.

20:02We've always been a little bit the island of misfit toys. We just have some really fucking strange people working with us. And that's okay. They don't fit. A lot of them don't fit the corporate mold in terms of how they look, smell, or feel, or the way they behave. We have had some real pieces of work to be kind. And the one thing they've all had in common is that they're all talented. They're all good at what they do. And if they're a bit odd, a bit socially awkward, that's fine. That was also a key advantage early on, was pulling together this kind of, this, I don't know what you would call it, Island of Misfit Toys.

20:43But it not only made for an interesting organization, but also I think it made for a high-performing organization. We didn't need, you know, you walk into any company I started, it does not look like Goldman Sachs. It's people from unknown colleges. It's people who just wouldn't, I don't think, desire nor be appreciated in a more traditional corporate world. So I do think that's something we got right. What is the key to being a good manager? One, you have to demonstrate excellence. And that is not only do you have to be really good at something, you have to be willing to do anything you would ask of anybody else.

21:21And that is demonstrate excellence. I call it player or coach, pulling up a chair, showing them how to do something. You have to demonstrate excellence. People want to follow success too. Accountability, a willingness to fire people. Everyone talks about strategic hiring and all this bullshit, hippy-dippy, Brooklyn-sandled bullshit of, oh, they're in the wrong world. No, fire them. In a small company, if they're not working, get rid of them. And that may sound Darwinian and horrible, fine. You're not doing anyone any favors by letting someone's career go sideways. Be generous once you decide to shed them, but everybody in the organization doesn't need to like each other, but they need to look left and look right and say, okay, I get why they're here.

21:59They're good at what they do. And when you don't hold the underperformers accountable, the upper performers, the top performers, stop working as hard and go somewhere else where they can be rewarded for their outperformance. And then finally, and this is where I fucked up, empathy. What is it you want out of this job? I know you're, like me, concerned with your own success and your own economic security. Here is how you're gonna get there. Here's how the company is doing. Here's maybe your share of the profits or your equity. But giving, always giving them a sense that they're appreciated and that they're part of something.

22:34And, you know, creating an environment also, something I learned, where young people can be social and enjoy themselves. It's a little bit harder with remote work, but I think we're a social animal and giving kids an excuse to gather or do fun or social stuff together. All of our team is going to the U.S. Open. I think that investment has a huge ROI because I think especially if you have a younger popular, I just want to go home. I don't, but what you realize is young people want to meet, they want to hang out, they want to make friends. I think that's also kind of a hack if you have a young organization.

23:07Anyways, hope that helps. But yeah, I would describe myself as a B minus manager. I think I got to B plus, but I was smart enough to know what I didn't know. And I've always hired and held on to people who were good managers. Thanks for the question. Our next question comes from longjumpingant570. I get these names. On Reddit, they say, Hi, Scott. I own a small manufacturing business that builds a niche consumer product. We have a company interested in acquiring us. They are a larger and more well-known brand manufacturer who builds a complementary product. We are smaller than we could be, but we have a number of strategic advantages, such as being the only manufacturer of our product outside of Europe.

23:44We're U.S.-based. I believe that if this company acquires us, the strength of their brand would lead to a 10x of sales almost overnight. It would not be practical for them to build our capabilities on their own. My question is, do you have any advice on getting a buyer to value a small company based on its strategic positioning and future earnings as opposed to more traditional valuation methods, such as a multiple of past EBITDA thanks? Yeah, the way you get them to appreciate your future earnings and you get what I'd call an irrational multiple is with a second bidder. And that is where hiring a banker pays off.