Wealth Formula Podcast

By Buck JoffreyBusiness Investing

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Wealth Formula Podcast episodes

July 26, 2020 222: The Dollar Milkshake Theory with Brent Johnson
Back in the early 1990s, I was a freshman at Columbia University in New York. Frankly, I wasn't very interested in the academic part of college at the time. I was too busy doing what a college kid might do after being dropped into Manhattan after going to private school in the midwest. In fact, I realized that college courses were starting to interfere with my nocturnal lifestyle so I started taking an increasing number of evening courses. The evening courses had a lot of older students in them—many of them graduate students that took their studies pretty seriously. I recall taking a political science class one time where I am quite sure I was the only freshman there. The lecturer was some fancy academic guy who many thought would eventually run for office. The lectures often led to spirited discussions which I found intimidating for multiple reasons—one of which is probably because I rarely came to class having adequately prepared myself with assigned readings, etc. One evening a lecture stirred an interesting idea in me that I wanted to share but, again, felt too intimidated to share in front of this older, intellectually talented class. So, I decided to wait until a break we typically took midway through class and talk about it with the professor one-on-one. To my delight, the professor called my idea interesting and spoke to me like a colleague rather than the 18-year-old punk that I was. Emboldened by my success, I awaited the next time that I could interject myself in class. On one occasion, the discussion turned towards the Clinton administration stance on gays in the military. There was lively discussion on this hot button issue primarily around the effect on morale. I didn't get it—why did people care, I thought. So, I raised my hand and, in front of a classroom and stood up. I looked at the packed classroom of intellectual heavyweights and said, "Why do we even ask them if they are gay? Wouldn't it make sense just not to ask?" There was an odd silence for a minute and then two or three students reminded me that the Clinton administration had just passed the "don't ask, don't tell" policy. After an uncomfortable moment, I quickly sat down about as embarrassed as I had ever been. The class, briefly stunned by my profound ignorance of current events, continued their discussion where it had left off before I interrupted. I never did go back to that class. It wasn't too late to drop it fortunately. Why did I tell you this story? Well, as you can probably tell from the frequent appearance of economists on my podcast, I really enjoy learning about macroeconomics. That said, with a medical background, trying to follow some of these theories can be kind of humbling. I've gotten better over the years but I am sensitive to the fact that you may be a super smart professional in your own field that knows little about how the economy works. Meanwhile, the alternative podcast ecosystem is talking non-stop about the fall-out of Covid-19 and the potential consequences of unprecedented fiscal and monetary policy interventions that we are seeing. One of the theories circulating out there is called the "Dollar Milkshake Theory". It's counter to some of the doom and gloom scenarios that are out there right now—at least for the next 2-3 years. It's not the easiest thing to understand. So, I appreciated the fact that this week's podcast guest, Brent Johnson, allowed me to dumb his theory down enough so even a surgeon could understand it! Let me know what you think!
47 min
July 19, 2020 221: Average Sucks!
"Be careful what you wish for…lest it come true!" -Aesop's Fables I remember back in college going to the mail center daily in hopes of finding and acceptance letter to medical school. Back then, I really romanticized the idea of being one of those heroes in a white coat. Fortunately, I got what I wanted and was very excited. The next August I drove to Chicago from my parents home in Minnesota medical school orientation. On the drive, I heard a famous neurosurgeon on the radio (who is now HUD Secretary oddly enough). He was asked the question of how he knew that he was capable of something so delicate as brain surgery. He replied that he excelled at hand-eye coordination sports like table tennis as a kid. It was then that I knew that I belonged in neurosurgery. After all, I was great at ping pong! And…being a brain surgeon sounded kind of cool. So, I decided then and there that my goal was to get into a neurosurgical residency training program—no small feat in the competitive world of medical school. A few years later, not only did I get there, but I got into the program of my choice with the chairman that I envisioned being my mentor. Along the way, I even realized I liked neuroscience so it wasn't entirely for my ego. But two years into neurosurgical training, I came to a stark realization. I didn't like being woken up at night! That was a problem. I was getting woken up every night I was on call with snowmobilers being flown in with brain trauma from the Upper Peninsula of Michigan. And while my fellow neurosurgical residents seemed to get an adrenaline rush out playing superman in the middle of the night, I was just tired and cranky. I wanted to sleep. I wanted a life. That wasn't going to happen the way I needed to in neurosurgery. So…I quit neurosurgery and decided to switch into a surgical specialty that did not involve the brain. In order to do that, I headed out to San Francisco for a new residency program that left me, frankly, uninspired. I wrote academic papers at a feverish pace for recognition but my heart was not in it. By the time I finished training, I was just going through the motions with no passion at all. Now, if you had told that kid back in college hoping to get an acceptance letter to medical school that he would finish surgical training at UCSF (my prestigious alma mater), he would have been absolutely thrilled. So why wasn't I? I guess the distant idea of an accomplishment or a kind of lifestyle is usually better than the achievement itself. After all, what you want in life is dynamic. Every time you get to a certain place in life, your desires have already moved on to the next thing. I think it is sort of inevitable to one degree or another for most people. The extent of the dissatisfaction with life varies of course. But the need to grow and be better in one way or another is always there in high performers. You are not alone. I am sort of the extreme example. I stopped practicing 8 years after surgical training. The 16 years of college, medical school, and post-graduate training could not convince me that I had to stay as it does to some of my colleagues. I've found a better fit for myself in entrepreneurship and education, but I'm still trying to fill needs all the time. In fact, my latest decision was to get a real estate license in hopes of getting involved with luxury real estate in my town. Why? Well, it's not for the money. The amount of money I make that is essentially time independent makes just about anything that requires my time to seem like a poor financial decision. For me, it's about getting out of the house! For the last three years since leaving Chicago, I have barely left my house. My work is online and in the podcast sphere. Sometimes I go a whole week without seeing anyone but my family. In the meantime, I gained weight, I let my beard grow uncontrollably to unabomber levels and I simply didn't feel energized. What I was missing in my life was interacting with people! When I realized this, the old saying about choosing your profession based on what you do in your free time crossed my mind. Clearly it was a little late for me to get involved materially in the NFL. But I do spend a lot of time on Zillow and Trulia looking at luxury homes. So, putting together luxury homes and interaction with people as a job requirement—it just made sense to get my license and to go to work. Now don't get me wrong. I am feeling very uncomfortable with this new identity so far. Right now, I'm the new guy who knows very little. It is a humbling experience that I have not felt for over a decade at least. But sometimes radical change serves as a nice shock to the system and makes you feel alive. Who knows how this decision will play out but I'm excited. Want to buy a house in Santa Barbara? Let me know! Anyway, this idea of feeling restless in your skin is something that is common enough that my friend Michael Bernoff wrote a book about it. It's called Average Sucks. That's what we talk about on this week's Wealth Formula Podcast!
52 min
July 12, 2020 220: Crisis=Opportunity for Real Estate Entrepreneurs!
Entrepreneurs are just professional problem solvers who keep score by how much money they make. I know this because I am an entrepreneur at my very core. It's not a choice I made, it's the way I was born. Entrepreneurship is not usually glamorous as frequently depicted in the movies or on reality shows. Most of us have more failures than we have successes and the failures often create profoundly negative effects for the people around us. It can be a bit of a curse. But the high that an entrepreneur gets when identifying a problem and finding a solution is very strong. Being able to look at an inefficiency and realizing that it can be fixed by creating a business around it is exhilarating. And when is the best time to find inefficiencies in a business model?… When times are bad! You see, when times are good, profitable businesses usually leave way too much meat on the bone because they are already fat and happy. Few people look at ways of doing things better when they are already making a good profit. Only when the tide goes out do you discover who's been swimming naked. Profits get tight and businesses have to rely on becoming more efficient to survive. This is the perfect setting for the entrepreneurial mind who sees opportunity where others see crisis. My friend Jorge Newbery is the purest entrepreneur that I know. He is, of course, the founder of AHP Servicing and Debt Cleanse. He has been on Wealth Formula Podcast several times before. This week, we are going to talk about his latest business that stems from the embargo on foreclosures note holders are now facing in many states—specifically those who are trying to foreclose on vacant property. In usual Jorge style, it's an elegant solution where everyone wins. The good news is that there is an opportunity for you to participate and get your own feet wet as an entrepreneur. Don't miss this week's episode of Wealth Formula Podcast as Jorge and I discuss the business he calls Pre-REO.
41 min
July 05, 2020 219: Macrowatch with Richard Duncan!
When in Rome, do as the Romans do. If we follow that advice, what do we do in an economic environment like today? Austrian economists would tell us to stop printing money and to keep the Fed out of the bond market. If we did that, we would go into a depression. No one denies that—not even the Austrians. The disagreement is on whether or not it's the right thing to do for the long term. The bad news for the Austrians is that they are grossly outnumbered and we do not live in a gold-backed world. We live in a Keynesian wet dream with essentially limitless money printing and government spending. For now, it's keeping the economy alive. We did the same type of stuff in 2008 and it saved us then as well. Oh...by the way, we didn't get the inflation that was predicted by the Austrians either. Instead, we shipped it off to the rest of the world without trade deficit. We could very well do the same this time around. It's a bizarre economy that's for sure. But don't fight it. Just try to understand it and do as the Romans do. There may be a day of reckoning from this game we are playing but we need to ride this wave as long as we can. It's the only thing we can do. But again, the first step is trying to understand what is going on. Understanding macroeconomics gives you a chance in a crazy financial climate. That's what we are going to try to do again on this week's episode of Wealth Formula Podcast as I once again interview economist Richard Duncan.
53 min
June 28, 2020 218: Resilience of Apartment Investments During the Pandemic: Dante Andrade
Robert Kiyosaki's Real Estate Advisor, Ken McElroy, was kind enough to give his perspective on the current state of apartment investing on last week's episode of Wealth Formula Podcast. Ken's perspective on the state of the apartment market was pretty bleak. While there is no doubt I respect Ken's views, I also think it is important to get the perspective of others to begin formulating your own opinions. Remember smart people can, and often are, wrong. The extreme example is someone like Peter Schiff. I think Peter Schiff is a very smart guy but he's also wrong a lot. He's doing an end zone dance right now about the economy going south, but he's been predicting that for years. Even a broken clock is accurate twice every day. Ken is definitely not a zombie apocalypse guy, but he also stopped buying real estate 3-4 years ago and has been on the sidelines since. During those years, there was money to be made and others as smart as Ken did exactly that. Don't get me wrong, I respect the hell out of the guy. I just think it's important to not take any one person's predictions as fact. That's not fair to him either. Instead, let us do what any intelligent person should do. Let's gather facts. Let's talk and listen to people on the ground who are monitoring what's going on in real time. It's hard to do that when you are not in the business every day. The most successful operators are following everything in real time and, so far, what's really happening may surprise you. One of those guys you should be listening to is one of my real estate partners, Dante Andrade. Dante is based in Dallas and is one of the most granular researchers of real estate that I have ever met. So, if you are one of the many apartment investors out there trying to get informed of what's really going on, you will NOT want to miss this episode of Wealth Formula Podcast.
54 min
June 21, 2020217: Ken McElroy: What’s Happening with Multifamily Real Estate?
I have been on the record for a while now anticipating the “tsunami following the earthquake.” In other words, COVID-19 was a destructive economic force but the aftermath may be even worse.
The theory is based on historical observations of how these things tend to play out. The problem and potential flaw in the rationale, however, is that there really isn’t a situation that is truly parallel to what we face now.
When has the entire world shut down for business for months at a time before? Never.
But when has a country with the economic might of the United States flooded the system with so much money and so many ways to keep businesses alive? When has a country paid some people more to be unemployed than to work? I can’t think of any time like this. Can you?
The point is that beyond my predictions and those of the other armchair economists whom you may follow lies a harsh reality—none of us really know what’s going to happen.
Sure that tsunami I keep talking about seems likely but it may not happen because fiscal and monetary policy do their job and an earlier-than-expected vaccine saves the day.
Alternatively, the tsunami could hurt selective parts of the economy and leave others relatively unscathed. So far, in multifamily real estate, our investor club is seeing asset performance matching if not exceeding pre-COVID levels across our portfolio!
Our portfolio is a very specific niche, however. We focus on working-class apartment buildings in rapidly growing red state cities such as Dallas and Phoenix with relatively low cost of living index.
The details matter. Being in Texas instead of California means we don’t have to worry about “rent strikes” and courts saying how much we can charge for rent. Population growth gives a natural benefit of increased housing demand.
Being in working-class housing right now means two things. First, we have a lot more people moving down from A to B and high C class housing then we have C class tenants moving down to the depths of D class hell.
Our working-class tenants do appear to be working and those who are not are receiving unemployment benefits that are exceeding their typical salaries. These unemployment benefits are more than enough in low cost of living areas to buy food and pay the rent.
Conversely, people living in the A class apartments are losing jobs and unemployment doesn’t provide them with the ability to maintain the same lifestyle.
Anyway, that’s what we are seeing right now. I should add that the demand of this housing has been such that we are continuing to raise rents. Crazy, isn’t it?
Anyway, the point I’m trying to make here is that when you listen to anyone right now about what’s going to happen with the economy and with real estate, you have to listen to them in a nuanced context.
You also need to remember that we have no idea what further fiscal and monetary policies will be unleashed in the next few months to further mitigate the damage to businesses.
Listen to everyone who is worth listening to but make sure you identify the context and do a little thinking for yourself. Now, one of the guys that we should all listen to in the area of apartment buildings is Ken McElroy. Ken is probably best known as Robert Kiyosaki’s Rich Dad advisor on real estate.
However, I listen to Ken because he is a multifamily real estate syndicator who has had a lot of success for a long time. Ken’s niche is a little different than mine. He’s an A class and new construction guy but what he has to say in the context of what’s going on right now is important for all of us to digest.
So make sure to listen to this week’s episode of Wealth Formula Podcast as Ken McElroy and I dive into the Post-Covid Real Estate Reality.
Ken McElroy is the epitome of the word entrepreneur.
For over two decades, Ken McElroy has experienced massive success in the real estate world-from investment analysis and property management to acquisitions and property development. With over $750 million investment dollars in real estate, Ken offers a unique perspective on how to get the biggest return on investments.
Ken is the author of the best-selling books The ABC’s of Real Estate Investing, The Advanced Guide to Real Estate Investing, The ABC’s of Property Management, and most recently his book on entrepreneurship: The Sleeping Giant, where he shares his real-life examples and ideology of how to be successful in business and in life. As the Real Estate Advisor to Robert Kiyosaki of The Rich Dad Company, Ken is also a chapter contributor in the newly released Rich Dad book, More Important Than Money: an Entrepreneur’s Team.
A champion and advocate for entrepreneurs and real estate investors, Ken has spoken worldwide at top industry events. With media appearances on television and radio, Ken also host Entrepreneur Magazine’s Real Estate Radio program, where he helps listeners navigate the financial and legal arenas of real estate.
Never taking life for granted, Ken is active in the community. He has served on advisory boards for Child Help and AZ Food Banks where he conducted the largest food drive in the state of Arizona. Ken was the Walk Chair for Autism Speaks Arizona for both 2015 and 2016. He currently serves on the Board of Directors for the Southwest Autism Research and Resource Center (SARRC). Ken and his family reside in Scottsdale, Arizona. In the MC Family he is a strong advocate for The Sharing the Good Life Foundation allowing all MC employees the opportunity to join him in the pursuit of giving back to the community.
Shownotes:
How has the pandemic affected Ken’s business?
Real estate fills a need for the people, not the other way around
When will we know when it is time to buy?
Ken’s latest book, “Return to Orchard Canyon”
kenmcelroy.com
mccompanies.com
46 min
June 21, 2020 217: Ken McElroy: What's Happening with Multifamily Real Estate?
I have been on the record for a while now anticipating the "tsunami following the earthquake." In other words, COVID-19 was a destructive economic force but the aftermath may be even worse. The theory is based on historical observations of how these things tend to play out. The problem and potential flaw in the rationale, however, is that there really isn't a situation that is truly parallel to what we face now. When has the entire world shut down for business for months at a time before? Never. But when has a country with the economic might of the United States flooded the system with so much money and so many ways to keep businesses alive? When has a country paid some people more to be unemployed than to work? I can't think of any time like this. Can you? The point is that beyond my predictions and those of the other armchair economists whom you may follow lies a harsh reality—none of us really know what's going to happen. Sure that tsunami I keep talking about seems likely but it may not happen because fiscal and monetary policy do their job and an earlier-than-expected vaccine saves the day. Alternatively, the tsunami could hurt selective parts of the economy and leave others relatively unscathed. So far, in multifamily real estate, our investor club is seeing asset performance matching if not exceeding pre-COVID levels across our portfolio! Our portfolio is a very specific niche, however. We focus on working-class apartment buildings in rapidly growing red state cities such as Dallas and Phoenix with relatively low cost of living index. The details matter. Being in Texas instead of California means we don't have to worry about "rent strikes" and courts saying how much we can charge for rent. Population growth gives a natural benefit of increased housing demand. Being in working-class housing right now means two things. First, we have a lot more people moving down from A to B and high C class housing then we have C class tenants moving down to the depths of D class hell. Our working-class tenants do appear to be working and those who are not are receiving unemployment benefits that are exceeding their typical salaries. These unemployment benefits are more than enough in low cost of living areas to buy food and pay the rent. Conversely, people living in the A class apartments are losing jobs and unemployment doesn't provide them with the ability to maintain the same lifestyle. Anyway, that's what we are seeing right now. I should add that the demand of this housing has been such that we are continuing to raise rents. Crazy, isn't it? Anyway, the point I'm trying to make here is that when you listen to anyone right now about what's going to happen with the economy and with real estate, you have to listen to them in a nuanced context. You also need to remember that we have no idea what further fiscal and monetary policies will be unleashed in the next few months to further mitigate the damage to businesses. Listen to everyone who is worth listening to but make sure you identify the context and do a little thinking for yourself. Now, one of the guys that we should all listen to in the area of apartment buildings is Ken McElroy. Ken is probably best known as Robert Kiyosaki's Rich Dad advisor on real estate. However, I listen to Ken because he is a multifamily real estate syndicator who has had a lot of success for a long time. Ken's niche is a little different than mine. He's an A class and new construction guy but what he has to say in the context of what's going on right now is important for all of us to digest. So make sure to listen to this week's episode of Wealth Formula Podcast as Ken McElroy and I dive into the Post-Covid Real Estate Reality.
46 min
June 14, 2020 216: Tom Wheelwright: Update on Taxes and the Economy!
In our latest Wealth Formula Network video conference, a question was asked that I think pretty much all of us have at this point. If the economy is in the tank, why does the stock market seem to be tone-deaf to what's going on? It's the elephant in the room, right? Well, I don't claim to know the answer to that but let me give you my two cents. First, fiscal and monetary policies are in full force. The Federal Reserve has the printing press on full time and we have added a trillion dollars to the debt in just the last couple of months. The Federal Reserve has shown willingness to buy high yield corporate bond ETFs (aka junk bonds)—literally picking winners and losers. If they are willing to do that, what's keeping them from buying S&P 500 ETFs? The law? Well, at this point that seems like a formality. If the ship starts sinking again, it seems not unlikely for this to occur. So, if you are managing client money, what are you going to do? If you missed out on the 40 percent recovery since March, you are probably going to get yourself fired. Instead, it might make more sense just to follow the money—the Federal Reserve in this case. To me, that's why stocks are doing as well as they are. To say the least, the economy has significant challenges ahead. No one doubts that. However, remember that a crisis often brings about opportunities. These are the times when wealth is transferred significantly and you want to try to be on the receiving end of that. As part of its arsenal, the government has provided substantial support to small businesses and by changing the tax code. It is imperative that you know the changes that are going on. Even if you are not a business owner, understanding what's happening on the ground will help you better understand the realities of the economy and prepare accordingly. For that reason, I have asked my friend and CPA, Tom Wheelwright to join us again on this week's podcast to explain the most recent updates to the tax code and what he is seeing with his clients in real-time.
48 min
June 07, 2020 215: Robert Kiyosaki on the Post-Pandemic Economy!
Robert Kiyosaki is the author of Rich Dad Poor Dad, the best selling financial book of all time. He went on to publish several books including Cashflow Quadrant which fundamentally changed my life. To say that Robert Kiyosaki has made an impact in the world is an understatement. He has helped to create a generation of entrepreneurs inspired by his writings. Many, including myself, discovered the very concept of entrepreneurship for the first time through his teachings. Pretty impressive right? Imagine making such an impact on the world. It sure sounds like a life worth living to me. And you know what makes it all the more inspirational? He was 50 years old when he published Rich Dad Poor Dad! Of course Robert was successful before Rich Dad Poor Dad. But he would be the first one to agree that the trajectory of his life really peaked after 50. This pandemic has taken its toll on many of us. While thousands have died, the emotional casualties will never be truly appreciated and is reflected, in part, by the social unrest we are seeing across this country. In that context, I am looking for something to be hopeful about today. To me, Robert Kiyosaki's books were paradigm changing when I first read them. But now, as a 46 year old guy feeling a little blue, it's his success later in life that has me feeling inspired. The truth be told, I don't agree with everything Robert says these days, but he is someone that has earned the right to be heard. As a guy who does not routinely engage in hero worship, he has also earned my eternal gratitude. As such, it is my pleasure to present you with this week's Wealth Formula Podcast featuring an interview with Robert Kiyosaki regarding the post-pandemic economy.
36 min
June 07, 2020 214: Ask Buck Part 3
There were a few questions left in the "Ask Buck" file that have finally been answered! You can listen to the latest episode HERE. The good news is that this format seems to be quite popular. I really do enjoy these virtual interactions and encourage you to keep those questions coming! Enjoy.
29 min