First Quarter Review - with Aswath Damodaran | Prof G Markets

This week on Prof G Markets, Aswath Damodaran returns to the show to discuss the impact AI had on Big Tech’s Q1 earnings. He breaks down the significance behind Meta and Google’s decisions to start paying a dividend and what it means about their places in the corporate lifecycle. He also shares his thoughts on the death of corporate governance at tech companies. Finally, he explains why May will be a “make or break” month for the mood of the markets - and how you should invest accordingly.
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Timestamps:
00:00 - This week's number
00:24 - Today's episode
02:46 - Market Vitals/Headlines
17:37 - First Quarter Review - with Aswath Damodaran
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[@RyanGunn]

By far and away my favorite miscellaneous podcast.

[@theProfgShowscottgalloway]

Thanks buddy

[@thomas6502]

We're all excited to see Ed get a raise, we all need to make a living wage. 🙂 (Also, appreciate Dr. Damodaran's perspective. Thank you.)

[@softMediaWox]

Please Keep the Demodaran guest appearances exclusive to earnings quaters. It's really worth the wait.

[@theProfgShowscottgalloway]

sure

[@BrazilianSwedSamurai]

So glad I found this channel! These quarter reviews with Aswath are invaluable. My dad was his students years ago and has always very highly about him, I can see why!

[@nathanward4654]

#1 person I would love to have dinner with is Aswath. Favorite guest on the show who always has an informed perspective.

[@paxdriver]

Oh!! I almost forgot, Scott's Ted talk was amazing. His best talk ever and Ted's best talk since back when they vetted speakers 8 years ago. Fantastic, so well done and fully immersive. Great effin talk man, kudos.

[@freshofftheplane]

No place for government to dictate contracts between private parties. Let the free market do the work.

[@johnsonwillams-lo3kj]

*The Crypto market is pretty unstable at the moment, but if you do the right math, you should be just fine. Bloomberg and other finance media have been recording cases of folks gaining over 250k just in a matter of weeks/couple months, so I think there are a lot of wealth transfer in this downtime if you know where to look.*

[@MaxJennifer-kr6hj]

I feel Investors should exercise caution with their exposure and.exercise caution when considering new investments, particularly during periods of inflation. It is advisable to seek guidance from a professional or a licensed expert in order to navigate this recession and achieve potential high yields

[@reneobDelmarclal]

Interesting, This is superb! Information, as a noob it gets quite difficult to handle all of this and staying informed is a major cause, how do you go about this are you a pro Investor?

[@Johnny-rl2ul]

Mrs Tracy cool services was my hope during the 'bear summer' last year. I did so many mistakes but also learned so much from it, and of course from Tracy.

[@HannahAdams-cd3hu]

the first step to successful investing is figuring out your goals and risk tolerance either on your own or with the help of a financial professional but is very advisable you make use of a professional.

[@LucyJames-em3bg]

YES!!! That's exactly her name (Tracy cool services)

[@HelmutRockstroh]

The non-recognition of catastrophic risk with the advice for the climate change activists was stellar, priceless , even!

[@user-vj5gn4cv3f]

Holy shit, this may be the best news of my week so far; two eps a week to keep me sane. Thanks, gents.

[@amdave76]

$2.5M house for Aswath - baller!

[@shakthidhasan4544]

As usual Aswath blows your mind. Thank you

[@chrisbradford4273]

Testimonial: When I want useful and entertaining miscellany, Prof G is the podcast I listen to. Let’s make it rise to the top of the category!

[@sheanathan3566]

0 seconds ago Excellent One thing I always hear over and over is ‘Never time the market.’ Then you see Warren with his huge pike of money waiting for a big opportunity and Awath saying to wait for a dip. It makes sense

[@mistermandeep4786]

Brilliant Brilliant Brilliant! can hear Aswanath all day. Thank you for sharing this.

[@brianwoods553]

F'ing great podcast you guys have here.

[@babarkhanjaved4835]

Shari Redstone is Siobhan "Shiv" Roy. The only scenario for take-over is one where she's no longer in charge.

[@bvanderford]

Very insightful analysis thanks

[@jet4tv]

Best EVER podcast! Scott, You guys should have millions of views!! Also, Loved your TED talk, So important :)

[@annasillanpaa1111]

Wow! This was great. Very insightful.

[@kiranwingelaar7009]

Good points.

[@rpena0899]

Prof g sighing that he sounds like Bernie when Bernie has been making the same argument for decades should make him see how right bernie has been for so long.

[@ReasonableHuman1]

Thank you!

[@noobmaster-dm7tu]

Ed needs to start addressing him as Professor and not "Aswat"

[@paxdriver]

Prof G, the king of "swing anna misc" lol

[@chrisjeanneret5091]

The Canadian investment community has been complaining about dual class share structures for years.

[@nicholasporter8606]

Glad you're expanding the content, you guys rock.

[@theProfgShowscottgalloway]

Thanks

[@victorhankinson1530]

Excellent episode, thank you all

[@theProfgShowscottgalloway]

Thanks dude

[@SPLUGA]

What's the problem with Miss Elanious?

[@-Gramps]

I ALWAYS look forward to ASWATH. Thank you!

[@adiwidjonarko2229]

Miscellaneous 🎉❤

[@pottanatgeorge]

congrats Ms. Miscellaneous!

[@danielschmibt1417]

Scott it's ok to agree with Bernie Sanders sometimes

[@joeysnetwork]

He has misunderstood catastrophe risk. It’s not catastrophe for the investor on the entire portfolio that we are worried about. It is catastrophe for one of the stocks in the portfolio. So how would we incorporate that risk? I think we can use traditional DCF valuation, but assign a small probability to receiving zero free cash flows. But the discount rate has to be commensurately higher as well which I think finance researchers have handled (hopefully) with some discount rate model.

[@jtrealfunny]

Great guest. Funny nobody talks consequences of AI, how is it not dystopian? and only good for rich people wanting ever more. Do I get a choice? Is our government a credible regulator? Will AI tell us how to reverse income inequality?

[@chrisg8995]

But young people only eat fast food. So won’t their increased wages just go to more expensive fast food?

[@jonathanslaughter8542]

Most fast food chains are franchise businesses. Raising wages doesn’t increase revenue. They’re at the end of their pricing power. There’s inevitably going to be less fast food workers. Just like unionized work forces shrink over time too because those companies often aren’t growers. Pause.

[@yamuiemata]

Always great to hear Mr Aswath's thoughts

[@dowdalld]

"Prof G Markets" isn't appearing on KZbin. Is the content going to be on KZbin or do we need to go somewhere else?

[@jmbelarmin]

A little hilarious that the one episode that Scott and Aswath can put Tesla and Elon Musk on a positive light - and not even one mention. Did you guys agree before the show the you absolutely should not mention Tesla? Did they really just say 5 out of the 7 Mag7 companies are transitioning into low growth phase (because these 5 are issuing dividends moving forward). The 2 companies that are left Amazon and (what's the other one now?) are set to be the only companies investable now if you want real growth. Aswath asked the question of which companies with business models build around climate change are putting the solution on a positive light? The company is Tesla Aswath with Elon giving consumers the most fun cars in the market (and btw does not pollute). And Scott..which company stands a chance to monopolize a huge segment of AI (real-world AI using cameras/videos) and has entered 3 humongous markets (US, China, Europe)?

[@who8thapiza]

Can’t find prof g markets

[@ura1a]

Brazil's 3rd most valuable company (Nubank) is younger than Meta, Airbnb, and Uber.

[@cscarothers1]

isn't Malone a big part of WBD and a good asset manager?

[@Ludinjapan]

About catastrophic risk, it’s a fascinating and important part of the Japanese economy. The culture here is shocked out of investments because of catastrophic incidents, examples being the great Kobe Earthquake and the 2011 Tohoku Earthquake. The reality is that you only have a limited time on Earth so to base investment decisions around hedging catastrophic risks will just lead to only indecision. All industries are exposed to catastrophic risk one way or another.

[@paxdriver]

I'm going to break your listeners' minds on Nvidia right here: every other faang is developing RISC-V AI tensor cores. Nvidia is using ARM instructions which are themselves license RISC-V chips. Every single big tech is better off building their own ASICs never mind multipurpose cores on their own instruction sets over time. Don't buy Nvidia, meta, Apple, Netflix, all of them will outdo Nvidia because Nvidia is split on multipurpose when everyone else is building hard-wired ASICS en masse to accomplish thé tasks of Nvidia gpus for different applications like encoding/decoding, or inference, or training, convolution, or just barebones multiply-accumulate arrays. It's not hard it's just a matter of time. Nvidia also has to work on developer tools for their multipurpose hardware, when dedicated chips only do one thing so they don't need a stack of software to get them running right out the gate. Lower power, smaller, cheaper without license, no dev stack of software just to use it through a hardware api (drivers), and no restrictions to changing the engineering spec because there's no approval process or red tape. Nvidia is overvalued. I wouldn't dare short it, but it's way too late to buy it.

[@spacecadett]

First here 💪

[@reedmacdonald210]

I can understand the "Miscellaneous" label but Atomic Habits is definitely not a business book

[@paxdriver]

5-8% is very very healthy. A smart country encourages citizens to save and own their government debt as opposed to foreigners holding that bag, backed by tax payers. There's nothing wrong with 6% fed rates unless you leveraged yourself as you were told and taught not to do in 2008, so that's kinda your fault at this point.

[@OmegaX907]

If AI provides an even greater advantage to the already giant tech companies, isn't it the case that the FTC and anti-trust issues should be viewing those 7 giant tech companies as an oligarchy?

[@voicification]

Aswath Damodaran = 🐐

[@annasillanpaa1111]

😂

[@LumenMichaelOne]

1:10 ... SCOTT!!! ... 🤪 ... 😬 ... 😣

[@DanielDwire]

I struggled to describe to my spouse who Scott Galloway is and finally I said “he says fuck”

[@minhhoang1192]

Aswath is not as sharp as usual. He has not been very right this year.

[@rafaelalbertoderasfunes1910]

What are you beating in miscellaneous? deGrasse Tyson, Some comedian's biography and Penn & Teller's magic guide number 6?

[@PaulMcCannWebBuilder]

If you were still on the board of the NYT, you'd be able to do something about being miscellaneous.

[@javadbacker481]

Prof G backdrop is bad. Ed's is great.

[@theProfgShowscottgalloway]

brohh lol..

[@icecoldfroste]

wait you wont get prof g markets on youtube or spotify anymore???? kinda whack if so

[@adamisherwood6708]

Share buybacks don’t make sense; If I own shares in Apple then I own a share of all its assets and cash at bank so any excess money can be returned to shareholders as a dividend, so why would I allow Apple to buy my shares with the assets I already own. They are effectively buying my shares from me with my money! What am I missing?

[@wallysan31]

It reduces the total shares outstanding, which means the slice of the pie you get in dividends increases. Think of it like this. There are 11 shareholders, 10 individual and a brokerage as the 11th. The company issues a dividend to all 11 shareholders, then buys back the entirety of the public shares from the brokerage. Now there's only 10 shareholders, so they get a larger slice of the dividend pie. That's essentially how it works in the market.

[@honor9lite1337]

​@@wallysan31Understood.

[@scottshort6204]

The upside to disciplined buybacks would be the focus on the business and not chasing overpriced M&A with your balance sheet. They became me a way for mgmt to hit bonus numbers… they should really be used to adjust leverage

[@guru47pi]

Dividends are taxed, but buybacks aren't. So, assuming share price is a predictable multiple of P/E, reducing the share number outstanding thru buybacks should increase the value of each share without the company (the company writes it off an expense, so will never pay taxes on it) or you needing to pay taxes (until you sell the stock and realize the gain). Whether the price goes up or not is debated and depends on the company, and whether they bought their own stock at a good price, but the above is the logic of buybacks vs dividends

[@TheRustyLM]

Buybacks increase your percentage ownership of the company. But I want the company to only do this when the stock is undervalued. Certainly not a P/E of 28 🤨

[@zooq-ai]

Feedback : Eliminate the market numbers in the beginning. It's useless and adds no value to the content. we all know market goes up or down an any given week. Go to the important headlines straightaway

[@andybaldman]

16:05 "The industry can't grow." No pun intended.

[@magalengo]

Scott continuing his weird dance of loving big liberal government to have full control over the economy. Then saying he loves free market capitalism 🤔

[@codycockreham7753]

I hate the orange

[@LumenMichaelOne]

0:12 ... 😄 ... Well - that's probably, Exactly what The New York Times said after they read your book. "What category should we put this into?" ... "I have No idea ... like ...WudDuhFuck???!!!" I think it went whole lot like that over there ... 😏 So both you, and The NY Times are actually on the same Page (no pun intended) but are reading from different sides of ... whatever.

[@icecoldfroste]

lol

[@ziv2liv]

Nonsense! Yes, there is no free lunch and minimum wage should be raised IF!.... The market needs more unskilled or minimum skilled workers, not because the STATE decides what the minimum wage should be. During the pandemic it was hard to find workers and employers were willing to raise the wages of minimum-wage workers and that was justified, but now the state decide? Fine, raise the minimum wage, raise the price of the product, Prof. Galloway can certainly afford it, boy, even I can afford it, but how many Americans will start crying that "Oh, no I cannot afford it anymore, inflation is killing me"... And before you know it f**king Trump is president again... Sheesh! Having said all that, I LOVE listening to Aswath Damodaran mainly for his philosophical outlook.

[@montpelier28]

so only clean jokes now? boo

[@JohnCorrUK]

Private jet flyer ProfG not worried about low income workers losing their jobs ... Let them eat cake

[@MFunkibut]

Scott - go back and review yourself on tape for the last three weeks. Your hands seem to be constantly touching your face or in front of your mouth. It's distracting. And I want you to do your best. Think about it.

[@kyleinpa5285]

You’re so out of touch. Now the food costs more for customers and the customers are mostly the working class. If you were right, they could just raise the wage to $40 per hour if the food doubling in price is an acceptable outcome.

[@SavanaT]

Why the cursing sir? 💔

[@tvm73836]

Two irrelevant guys keeping each other amused! Guys instead of wasting your time here please watch all in podcast or the BG2 podcast for great investment ideas and to understand where the world of AI is heading