Wealth Formula Podcast

The financial meltdown of 2008-2009 feels like ancient history. And like tragedies that happened long ago, it feel more historical and less emotional. I remember going to Pompeii several years ago and seeing people turned to stone from Mount Vesuvius erupting. It must have been horrific. But time has made it more of a museum than the scene of an awful natural disaster. That's the way most people look at 2008 as well—as ancient history. But for many it was a very emotional time. But those who stuck to their guns and took advantage of blood in the street thrived for more then a decade afterwards. A very good friend of mine is an incredibly successful entrepreneur in the real estate space. At the time, he was building multimillion dollar houses for celebrities. He was a household name in Los Angeles. Every famous person wanted a house that he designed. But like many successful real estate people, he got hit hard during that time and lost a lot of money. It was also around that time that his focus was turning towards hotels. By 2010 he was seeing incredible opportunities on hotels and was looking to raise capital to take advantage of the market. But no one wanted to invest. Even though things were at a steep discount, people were just too afraid. Fast forward to today, my buddy stopped trying to raise capital and ended up doing everything on his own. And now, he's in the middle of a $100 million 1031 exchange. And that's just one of his hotels. That time for buying is around the corner again. 2010 is coming. Investment real estate is being hit really hard and its important to keep calm and wait for the opportunities that come before you. My guest today is a new partner that I am going to ride the wave with when there is blood in the street. He's been here before and has had a stellar record even in these tumultuous times. In this episode you'll see how he has not only survived but thrived in this market and also how he intends to take advantage of the coming distress. Listen NOW! Buck P.S. Please note, there is an opportunity referenced in this podcast that can be seen at JoffreyCapital.com. This opportunity may not be available by the time this show airs, but check out the webinar for educational purposes at the least.

I'm not a doom and gloom podcaster as a general rule. There are plenty of those out there predicting the zombie apocalypse. However, I have to say that I'm pretty sure I've been seeing some questionable zombiesque characters running around town lately. It has occurred to me, however, that most people are not seeing what I am seeing. After all, the job markets are humming along just great and inflation, while still high, has decelerated. If you are a high paid professional, you are cranking away at your day job and nothing really seems that much different because a little bump in the price of groceries isn't a big deal to you. In fact, you might be irritated that your investments haven't been performing well and wonder why. But from where I am seated, I have to tell you, it's kind of scary out there. The investment real estate market is in turmoil and there is significant amount of distress because of the steepest increase in interest rates in American history over the last year. Real estate syndicators like me are all chanting the same mantra across the board, "stay alive until 25". The office sector of real estate is already bathing in blood. The majority of that debt is held by small regional banks. It is hard for me to believe that we won't have further bank failures. And it looks like we are about to have another war in the Middle East. What do you think that's going to do to energy prices? Guys…it's kind of scary out there. Pay attention. 2024 is likely to be a very tough year and there will be pain. And the global economy is not the fault of one person or a single company so stop pointing fingers. Now there is a silver lining to this all. As much as these transitional periods cause pain, they are also opportunities. Everyone successful says the same thing. Those who can overcome their own fear and can act rationally during this time will be in for the best investing years of their life. In the meantime, take the time to make sure you've taken care of housekeeping items. Make sure your asset protection is in place. Make sure your estate planning is done and that you have adequate life insurance coverage. Do the mundane things that have to be done for proper personal finance plans. Tax planning is part of that. And, if you haven't really sat down and thought about how to mitigate your own tax liability, you should do that now. My guest on Wealth Formula Podcast this week, Tom Wheelwright, is the smartest tax professional I know. Make sure to tune in to our discussion about taxes and his 5 decades worth of perspective on today's global economy.

My portfolio is not what most would call diversified. I am about 70-80 percent real estate, 10-15 percent permanent life insurance and about 10-15 percent higher risk stuff. My only stock exposure is only high-risk stuff like mining companies on the Toronto Stock Exchange. To be clear, I am not advocating for this approach. That's just what has worked for me up to this point in my life. I should add that, unlike ten years ago, I am also far more open minded to expanding my investments into different areas. That's why our investor club started working with a broker dealer/RIA better versed in private equity and paper assets. Unlike 10 years ago, I am no longer dogmatic in my "alternative asset or bust" position. In fact, as a general rule, I have softened on many of my more emphatic beliefs. My gray hairs have now convinced me that it just makes sense to have an open mind. I still believe that alternative assets are where the life-changing opportunities are but there are other considerations such as sector diversity, hedging and cash flow. Cash flow is not what you typically think of when you think of paper assets, but it is something that you certainly can create with stocks in very unique ways that don't involve simple dividends. Andy Tanner wrote a book about this kind of investing in Robert Kiyosaki's Rich Dad series and there is really no one better at explaining it then him. So, if you want to continue to explore other ways of investing your money, make sure to tune in to my conversation with Andy on this week's episode of Wealth Formula Podcast. Buck P.S. Here's the link for the free course Andy mentions in the podcast https://cf.thecashflowacademy.com/tcfa-6sn-wf-reg

Last week I talked about asymmetric investing and gave you an example of one of my own higher risk bets—Hedera with its HBAR Token. Right now, that cryptocurrency market is still sleepy. So, if you are motivated to do so, you could easily find a few tokens that are 10 percent or less of what they cost in the frothy market of two years ago and grab them. Of course, you would want to make sure those tokens had good projects behind them first. The thing is most people won't do that. In fact, most NEW crypto investors won't come into the picture again until the next frothy market at which point, they will likely go on to lose significant money in the downturn. No matter how rationale it is to buy low and sell high, the natural human tendency is to do the opposite. The same thing really goes for all assets to be honest. The truth is that at any given time, something worth buying is usually on sale. But it gets ignored because it's not the shiny object of the day. Try not to make that mistake. The hype may not be there even for real estate right now but don't ignore a good deal when you see one. Be rationale not emotional. Now getting back to cryptocurrency, the reason I invest in it is because of the asymmetric risk profile. However, I also invest in projects that I believe in. Web 3.0 is real. It's coming and cryptocurrency is the only way I know how to invest in it as a retail investor. Artificial intelligence is also real and there is no doubt that it is going to change the world as well. Unfortunately, I don't really understand how to invest in artificial intelligence. But maybe you do? The way you figure out how to invest in technology is by understanding it and that's what my guest on this week's Wealth Formula Podcast is really good at helping you do. I've done several shows on emerging technologies and I think this week's episode of Wealth Formula Podcast might be the best one yet. So, make sure to listen in! Buck

Last week I did a back-to-school episode for you on asymmetric risk. I told you that my primary asymmetric risk related investments are in cryptocurrency. As a reminder, asymmetric risk investing means you throw in some money that, if you lose it, isn't going to kill you. But on the other hand, if things go well, could make you rich. Cryptocurrency has done both for a lot of people. In fact, in many cases it has done both to the same people at different times (yours truly included). Let's take a step back and review this whole crypto thing a little bit for those who haven't been involved in the rollercoaster ride for the past decade and a half. It all started back in 2009 with a white paper circulating amongst computer scientists authored by someone calling themself Satoshi Nakamoto. The idea was a digital currency with no central authority like the US government or some big company. This currency would be tracked not by one ledger but thousands. In keeping a "distributed ledger", there would be no need central authority. This currency would also be immutable and something that no one could simply confiscate like a bank putting a lien on your cash. This is a massive oversimplification of bitcoin and purists are sure to correct me, but that was the essence of the original bitcoin thesis. It was simply a way to exchange value without a middleman. Bitcoin has interesting parallels to gold. It requires "mining" to make it. Mining in this case requires computational power to solve math problems. Back in 2009 nerdy computer types were mining thousands of bitcoins on their desktop computers. Now it takes serious expensive hardware and warehouses to mine bitcoin. Very few people thought it would be worth anything anyway. In fact, the first commercial bitcoin transaction was made on May 22nd, 2010—almost as a joke. 10,000 bitcoin were accepted as payment for two supreme pizzas from Papa John's. Last year, the cost of a single bitcoin had exceeded $70K. So, I hope that was a good pizza. Anyway, over the next few years, bitcoin saw its ups and downs but the regression line was clearly positive and extremely steep. Within the last 5 years or so, there have been bitcoin futures and publicly traded financial products as well. It has clearly been adopted by the mainstream. And, in my humble opinion, the chances of it going to zero are about…zero. Now despite its volatility, bitcoin has been recognized largely as a storage of value. This is another parallel with gold. And also like gold, it's a little bit difficult to use in everyday transactions. You see, the bitcoin network is extremely secure but very slow (in part because it is extremely secure). It would make your morning stop at Starbuck's unbearable. Other technologies like the lightening network have offered potential solutions to the speed issue, but for now, bitcoin really is a gold-like commodity. In the meantime, tech entrepreneurs have recognized that distributed ledger technology could be used for more than just money. Distributed ledgers are now being used to create a different kind of internet—the so called Web 3.0. Web 3.0 is owned by the user. So think about internet businesses like google and Facebook now. You use them but they are being monetized by a single company that you don't own. Web 3.0, in theory, creates online businesses with similar functionality but now, instead of there being a separate owner, the platform is owned by anyone who owns a token to that business. So…no more big brother like Facebook or Twitter telling you what you can or cannot post. And you aren't making money for corporate America by using these platforms. Anyway, so all these "crypto" projects outside of bitcoin really aren't about exchanging value. They aren't really meant to be money. Instead, the tokens in these alt coins (anything but bitcoin) are more like owning stock in software companies. Some software companies like Ethereum build infrastructure. Others are more specific and build functional businesses or games using the infrastructure software. Anyway, hopefully you get the idea. Web 3.0 is coming for sure. It's just a matter of time where it just infiltrates everything you do on the internet. You may not even know you are using software built on one of these tech platforms. It will just be one more thing that makes our lives easier that we take for granted. Anyway, a lot of these new programs and services require infrastructure that is not only on a distributed ledger and safe like bitcoin. But they also need to be fast. Hedera (aka Hedera Hashgraph) was a project that I learned about and invested in about 6 years ago in a presale. It is arguably the fastest and most secure distributed ledger network in the world. It also currently has the most transactions. In all transparency, I own a fair amount of its native token, HBAR. And, I have been praying for it to explode like many lesser cryptos have for the last 5-6 years. At one point it had gone up about 5X from where I bought it but I never sold. Its technology is so good that I thought it had a lot more upside. And I still do despite it being half the price I bought it for a few years back. Bottom line is that I have not lost faith. The project has met every goal on its timeline. It just hasn't seen the kind of price action that you might expect from what it has accomplished. To be clear, this podcast is not an endorsement to buy HBAR but it's an example of one of my asymmetric bets that I thought I would share with you. Cofounder Mance Harmon has been on the show before and was kind enough to join me again to tell you about the project and give us some insights into the crypto world today. So if you're curious what kinds of asymmetric bets I'm making, make sure to tune in! Buck P.S. If HBAR goes $30 I probably won't be doing this show anymore LOL!

So far in our back-to-school series, we have covered asset protection, estate planning and my capital allocation strategy. Wouldn't it be great if you could hit all these important concepts with a single investment? Well, as it turns out, you sort of can. Let me back up and tell you a story. When I was fresh out of surgical residency and started to make some money, I started looking for advice on what to do with it. One of the questions I had was about life insurance. I was a newlywed and had a baby on the way (she just started high school by the way). So, I started asking the guys I was working with if I should buy term or permanent life insurance. One of the younger surgeons was a bit of a know-it-all. He had a lot of advice about everything and most of it was not good. His facelifts weren't good either as I started revising them just a few months later. Nevertheless, I listened to what he had to say and he told me quite confidently to "buy term and invest the difference". In other words, don't buy permanent life insurance. Stick to term life insurance and, with the money you don't spend on permanent life insurance, throw it into the stock market. The older guy had very different advice. It was 2009 and he was planning to retire until the financial meltdown kicked his butt. He told me he wished he had bought more permanent life insurance because that was pretty much all he had left. And while his situation was illustrative, I felt like I needed to do the opposite of whatever this guy suggested because I didn't want to end up like him. So, I ended up buying term and didn't think about it again until a couple of years later when I had started my own practice and was making a lot of money. At that time, I was part of a mastermind with a bunch of high net worth business people. At some point life insurance came up and several of them talked about premium financed permanent life insurance policies. It occurred to me that a lot of high net worth people actually were buying permanent life insurance despite what that know-it-all young surgeon told me. Anyway, a few years later, I decided to look back into my options. What I discovered was that both of those doctors that were giving me advice viewed permanent life insurance as something that it did not need to be: a poor yielding but stable investment. The reason for that was that most professionals only get to see poorly designed policies that are primarily created to maximize commissions for those who sell insurance. What they think of as permanent life insurance is not the permanent life insurance of the rich. PERMANENT LIFE INSURANCE MEANS DIFFERENT THINGS FOR THE MIDDLE CLASS THAN IT DOES THE RICH. The policies that the high net worth group had were designed very differently and optimized for investment purposes. In fact, in the high net worth world, these policies have a special name: LIRPs. That stands for life insurance retirement plan. Permanent life insurance in this world plays a role in not only risk mitigation and estate planning, but also retirement income and asset protection. The more I learned about these strategies, the more they became no-brainers for me. The guys that taught me most about this stuff are Rod Zabriskie and Christian Allen. They designed all my policies and now design policies for many of you as our Wealth Formula Banking partners. On this week's Wealth Formula Podcast, a couple of guys from that team are going to take us through the basics. If you haven't heard about this stuff before, chances are that you are going to be blown away and wonder why you don't already own a policy. So make sure to tune in. The decision is yours, but you should at least know about permanent life insurance structures utilized by the rich. Listen NOW!