Wealth Formula Podcast

In 1593 a Dutch botanist named Carolus Clusius planted several tulip bulbs in his botanical garden and over time he proved their ability to grow in the harsh conditions of the Low Countries. Tulips were new to Europe and they looked nothing like plants the Dutch had seen. Furthermore, a virus specific to the Tulips (the mosaic virus) made them even more extraordinary. These particular tulips took years, often over a decade, to cultivate and would bloom with colors that appeared flame-like. It was a site to see. The novelty and scarcity of these tulips turned them into status symbols for a growing Dutch middle class that was seeing increased prosperity after their new found independence from the Spanish. Of course this created increased demand and, as a result, the price of tulips. Soon, the price of tulips became clearly excessive. At the peak of tulip mania, some single tulip bulbs sold for more than 10-15x the salary of the average craftsman—more than the price of the typical Dutch home. People were "flipping" tulips because of the appreciating market and there was even a futures market for tulips that drove prices even higher! Then one day in February of 1637, a tulip auction failed to attract buyers. It isn't clear why although some speculate that the bubonic plague kept most people home. At any rate, the merchants with tulips were thrown into a panic that resulted in a massive sell-off. In short order, the flowers became worthless. Now, every time you hear about a wild, speculative market that seems irrational, people bring up tulip-mania. So, is cryptocurrency the new tulip? A lot of people seem to think so including really smart people like Jim Rickards. Teeka Tiwari doesn't think so. He is a former hedge fund guy who has become one of the most vocal proponents of cryptocurrency in the mainstream. He is my guest on Wealth Formula Podcast this week. Whatever you conclude, this is a conversation that you simply cannot afford to miss. I believe that distributed ledger technology and cryptocurrency will fundamentally change the world. This is the rise of the internet in the mid-90s. How, if at all, are you going to get involved? Buck

I am a refugee of the Thomas fires that crept dangerously close to my home in Montecito, CA. That's why my audio sucks on the introduction of this week's podcast. Fortunately the actual interview was done before my evacuation. As I mentioned in the introduction of last week's show, I woke up to ash on my deck and my smoke detector went off without any apparent fire. The air was clearly getting worse. So, my wife and I made the decision to drive about a hundred miles north to San Luis Obispo. That worked for a couple days until we saw smoke creeping over the mountains. It was a little eerie—like it was following us. So, we got back in the car and drove up to Santa Cruz where my wife grew up. We've been away from home living in a hotel for about a week now. Now…we didn't really anticipate being gone for this long so we didn't bring much. We were pretty stressed out and the kids could feel it. They were scared and emotional. In the midst of feeling sorry for myself, I started thinking to myself—imagine what it would be like if you had someone shooting missiles at you at the same time and you couldn't feed your kids. That's what's going on in Syria. Now how does that kind of reality affect a five year old boy's perspective? What if he sees horrible things and feels hopeless every day? How does that manifest itself in adulthood? Of course, since this is ultimately a show about money, I'm thinking about this in financial terms. If you grow up not knowing if there will be food to eat or if you have a roof over your head, how does that influence your view of the financial world as an adult? I don't think there is one answer to that question. I will tell you this, however. My dad grew up in India dirt poor—now that's poor. He started tutoring other kids in the neighborhood as a child and helped put food on the table for his family. As an adult, he came to the US in the late 60s on an engineering scholarship and he never looked back. The opportunities that he saw in this country—well, he was like a kid in candy store! I truly believe that his experience as a kid working to survive without safety nets served him well as a scrappy real estate entrepreneur who truly lived the American dream. What about the rest of us? How can we tap into our inner immigrant? It's hard. You have to imagine a world without the structure we are so accustomed to having. You have to imagine a world where simple things like clean water and a roof over your head are not guarantees. If you do this, the world seems a lot more scary. But..maybe a little bit of that perspective is healthy? After all, most of the security we feel is artificial. Take for example the concept of job security. There really is no such thing as job security. If you work for someone else, you are at the mercy of your company's financial performance. Just because you don't get to see company financials doesn't mean they don't exist. And…if you are the boss and you own the business. You know even better that there is no such thing as job security because you have likely been confronted with the prospect of letting people go and because you see your own financials go up and down! You see, behind our façade of a "secure" world is an underbelly of reality that we should be cognizant of and for which, at the very least, we should be prepared. The major difference between immigrants fleeing hardship and most of us living comfortably in this country is that many immigrants have seen the world without its makeup on and it ain't pretty. I am grateful that I have not experienced that world, but I know that it exists. Gena Lofton did not grow up in a war torn country but she did grow up homeless in this one—that world isn't pretty either. On this week's Wealth Formula Podcast, learn how Gena used her experience to leverage into the world of the accredited investor!

I cannot tell a lie… Despite the fact that I am a libertarian and seem to run in circles with some pretty depressing people: I do not see the future filled with doom and gloom. I do not believe that the United States is screwed and that you should start preparing for Armageddon. I do not believe that you need to buy a wheelbarrow to carry your cash to the supermarket in hopes of buy the last loaf of bread on the shelves. I do not own any army fatigues nor do I have a hide out place in the mountains. No…overall, I'm pretty optimistic about the world and our future. What history tells me is that we, as humans, are pretty good at adapting and are pretty good at solving the problems of our day. In 1798, Thomas Malthus famously predicted that human population growth would outpace the world's food supply and push us back into darker times. It didn't happen. Instead, we just invented some better farming equipment. Technology always moves quicker than we think it will. Look around you. Much of what you see around you technologically will be obsolete in 20 years. It reminds me of walking down the street in London with my oldest daughter when she was 4 years old. She saw a phone booth and asked, "Daddy, what's that?" Now, I am not saying that we are not going to experience some tough times. I'm sure we will. I think we are at a time in history when there will be some dramatic shifts in the world economy that will result in some fairly dramatic shifts to the world as we know it. But…I think we will land on our feet and I have no doubt that the United States of America will continue to be the envy of the world until the day I die. I don't need another passport. If the US is going down, there will be no place to hide. I know people feel otherwise, but I'm not one of them. It's probably because I am the son of immigrants who barely had enough to eat who came this country in the late 60s and became a real estate millionaire. So, I don't prescribe to apocalyptic beliefs about this world or our country. But…like a fellow Minnesotan said back in 1964, "The times they are a-changin" and to not recognize that and be ready to adapt is not very smart either. The biggest concern that I have for my children is climate change. Now I'm not going to get political here and I don't pretend to know the solution. Alex Epstein gave us the moral case for fossil fuels a few weeks ago and I don't know if he's right or wrong. But... the weather is getting funky. Can we agree on that? That was a lot of hurricanes this year, right? If you don't believe something's going on, how many thousand year storms do you need to have in one year to convince you otherwise? I'm hoping we figure this one out and maybe we will. I saw something on TV the other day about how sending a bunch of sulfur dioxide into the air could reverse global warming. That sounds great except…would that mean that everything would smell like rotten eggs? In the meantime, we've got a new reality on our hands. The weather is really unpredictable and it made me realize that survival strategies aren't just for people wearing camouflage anymore. After all, look at Puerto Rico. No electricity for how long? Houston? What if you spent a little time now on coming up with a strategy for food reserves? What about medication? Maybe you are a diabetic or an asthmatic. What would happen to you if you weren't able to get your medication for a month or two? What we've seen happen in some of these areas with big weather related catastrophes makes this all very real doesn't it? It does for me. That's why I asked Chris Martenson to come back on Wealth Formula Podcast this week. Chris is a smart guy. There is no question about that. He backs up everything he says with a tremendous amount of financial and scientific data. Given the flux of the global economy and geopolitics along with what happened to the weather this year, I couldn't think of a better person to speak to as we approach the New Year. So if you want to be prepared for all the changes that are happening in the world today, do not miss this episode of Wealth Formula Podcast!

Thousands of years ago, in the Roman Times of Christ, you would go to your local store and trade your ounce of gold coins for a nice toga and a pair of sandals—something worthy of wearing to the coliseum. Today, an ounce of gold will buy you a pretty nice suit and a pair of shoes—something worthy of wearing to the theater. Gold is money and it has been for centuries. That's a pretty good track record and that's why "gold bugs" hang on to it like they do. After all, these days we have little more than "fiat currency". Fiat currency is money that a government has declared legal tender. These days, it's paper with some ink on it. Inherently, it has no value. It is not backed by anything except for trust in the government that issues it. When you think of it, it's kind of scary right? What gives our money value is nothing more than a collective agreement that it means something. What if people started not "believing" in the currency anymore? We've seen it happen in history multiple times. Usually it is the result of hyperinflation such as seen in Weimar Germany—you remember the images of people bringing in barrels of money to buy a loaf of bread. It's hard to have much faith in currency when it literally AND figuratively isn't worth much. Why does hyperinflation occur? Well, it usually has to do with governments trying to pay off their exorbitant debts. In the case of Weimar Germany, it had to do with ongoing debts of the first World War. Today, we have 20 Trillion dollars of national debt in our country. How are we going to get out of it? Tax cuts? Listen, I love tax cuts but the idea that tax cuts are going to get us out of a $20 Trillion dollar hole is not going to happen. In the meantime, like any debt, interest has to get paid. If you aren't generating enough tax revenue to pay the interest, what are your other options? Well, you could default on the payments. That is probably not a good idea for our sovereign credit rating. Well, if you aren't going to default on the interest payments and you aren't creating enough tax revenue to pay the bills, what's left? There is only one option—make your debt worth less. How do you do that? Inflation right? Inflation erodes debt. If you dilute the buying power of your currency—just print more money—then it's a lot less painful to pay it back! Why do you think the federal reserve has a target inflation of 2 percent historically? Again, over time, if the value of the currency is less than at the time the money is borrowed, that's a pretty darn good deal for the borrower. Why do you think I love using debt in real estate so much? It's like printing your own money! And with 20 Trillion dollars of debt to pay off and a relatively stagnant US economy, do you think the powers that be might want to see inflation tick up just a little bit? Now in an economy like ours, hyperinflation like that seen in Weimar Germany, Latin American or African countries is not likely, but it certainly can pick up quite a bit. As recent as 1980 inflation peaked at 14.76 percent. Can you imagine losing almost 15 percent of your buying power year over year without a significant increase in income? Ouch! But stuff like that happens in the world of fiat currency. The US dollar, has no intrinsic value and you can print as much as you want. Say what you will about cryptocurrency, but there is a finite number of bitcoin (21 Million) and the only way it increases in value is through demand. No wonder the gold bugs are as passionate as they are. Gold is finite and has been real money for thousands of years. Owning it makes them sleep better at night. Should you own gold? That's for you to decide but if this topic is foreign to you and you have not considered it before, it's probably a good idea to listen to this week's Wealth Formula Podcast as I interview Dana Samuelson from the American Gold Exchange. ​​​​​​​Don't miss out!

Why do you believe what you believe? Are you a republican or a democrat? Are you pro-choice or pro-life? How about guns? Should guns be outlawed in the United States? Do you ever look at the "other side" and wonder if they are absolutely nuts? "How could they believe what they believe and stand for what they stand?" Do you remember when there were only facts?—Not alternative facts? Do you remember a world without a 24 hour news cycle that argued past each other all day and all night using professional pandits? Intelligent discussions--debates like those from my childhood between intellectual giants such as William F. Buckley Jr. and Gore Vidal just don't make for good TV anymore. The problem is that we have a lot of serious stuff going on these days—crazy weather, mass shootings, a short fat North Korean dictator armed with nuclear weapons and a president who tweets our foreign policy. If you are a person who likes a good old fashion debate based on real ideas, you're pretty much out of luck these days. In fact, if you think deeply about your own opinions, how often are they the product of the opinions around you rather than ones you have made through careful thought? Believe me, I am guilty as anyone else. I am often dogmatic about issues that I may not have truly considered the opposing view. One of the more pressing issues of our day is the use of fossil fuels. Now I live in California and, like most Californians, I care about the environment. My knee-jerk response is to say yes to anything limiting fossil fuel emissions. But maybe there is another way to look at the issue. Maybe there is a moral case for fossil fuels. My guest this week on Wealth Formula Podcast wrote a book making just that case. Alex Epstein is the New York Times best Selling author of The Moral Case for Fossil Fuels. Now whatever your biases are going into this show, do yourself a favor and keep and open mind. Alex is a philosopher by training and he is not only going to give you his argument, but he is also going to show you how he constructs it. Make sure to tune in to this episode. It's a unique look at an important issue.

When you listen to my podcast or read my book, you might think I am rigid about my investing. After all, the principals of wealth creation that I teach are: Invest in cash flowing assets. Understand how your investments work. Invest in real things—things you can see touch and feel. Invest in things that people […]

When you listen to my podcast or read my book, you might think I am rigid about my investing. After all, the principals of wealth creation that I teach are: 1) Invest in cash flowing assets. 2) Understand how your investments work. 3) Invest in real things—things you can see touch and feel. 4) Invest in things that people need—like places to live, food, and water. 5) Use the mathematical principals of wealth creation—namely velocity and leverage. Does that mean that every time I invest in something, I do a checklist to make sure each one of these criteria is met? No—clearly not. As you may know, I am a huge fan of the life settlement asset class: https://www.wealthformula.com/life-settlement-investment/ There is no monthly cash flow there and I don't know if an insurance policy counts as something real or not. However, I do know that people who are over eighty years old and have multiple health problems die and that buying their life insurance policies at a huge discount is a pretty good bet. In that scenario, the cards are clearly stacked in my favor as an investor. When else might I consider breaking the rules? Well, I will say that over the years, as my own wealth has grown, I have realized that one of the biggest principals wealthy people use to grow their own wealth is "insider information". Now, let's be clear, I'm not talking about the illegal Martha Stewart stuff. I am talking about knowing people who are some of the top authorities in a given asset class—the people that make markets or who are truly elite operators. The wealthy know these people and find out about things ahead of time. They get their money in early in these opportunities. By the time the general public hears about the opportunity, there is little meat left on the bone. Meanwhile, the insiders enjoy massive gains and might even exit their positions while the outsiders continue to buy up scraps. Now here's the problem, as a high paid professional, might have. You make a lot of money, but just not enough. Or, maybe you make enough, but you don't live in THAT WORLD. The way you invest is no different than the way the poor and middle class do. Does that sound like you? If so, understand that you are still fodder for the market makers. You aren't an insider. Who are these market makers anyway? It's hard to get to know those people and about those opportunities if you aren't wealthy. I'm sure you suspected something like this already and I'm here to tell you that you are right! Now I'm doing my best on Wealth Formula Podcast and through this community to help you get in on some of that unfair advantage of the wealthy and hopefully you have learned things already that have opened your eyes to a whole new world. But, there are some things to which you will remain an outsider until you really start creating significant wealth and/or start living in the insider's world. That goes for me as well. There are layers to this insider thing—like peeling away at an onion. I'm further in then most but I've still got lots of layers to peel ahead of me. As you get into deeper layers of this world, the advantages become even more apparent. That's another reason why the wealthy continue to get wealthier over time. None of this sounds fair right? Well, it's not but life isn't fair. You need to focus on finding your own unfair advantages. If you prefer, you can also forget about this insider thing for now and protect yourself by simply using the fundamentals of cash flow, real asset investing, velocity and leverage to build wealth the old fashioned way. Just know, that this "insider's world" does exist and that if you tap into it, it can help you tremendously on your wealth building journey. My guest on Wealth Formula Podcast today understands this whole concept of the "insider's world" well. In fact, he has built an entire community of outsiders to try to make sense of the bizarre world and economy in which we live. Like me, he tries to help individuals who are "outsiders" get in on some of the insiders' action. His name is Nick Hodge, founder of the Outsider's Club and he is my guest on Wealth Formula Podcast this week. You won't want to miss this episode!

Being a podcaster is kind of unusual. Last month I had over 30K downloads (not bad) yet I only speak to a fraction of you through investor club. Even fewer of you know each other despite the fact that you have a lot in common. The good news is that I will be launching a course in the first quarter of next year that you are going to love and it will also include an opportunity to join the Wealth Formula Network--my new online community. That's where I am planning to spend a lot more of my time and to be accessible to my listeners via Facebook live and other digital hangouts. In the meantime, I want to make sure I continue to involve myself in this community as much as possible. One way for me to do that is by answering your questions. In recent months I have done that mostly through direct emails or via the Weekly Wealth Widget. This week I'm going to do it with an episode of "Ask Buck". Make sure you keep sending those questions and comments in--that's what it's all about on my end. Hope you enjoy the show!

Last summer I learned how to swim for the first time. I was an athletic kid but somehow missed that window in my life when it was ok to not know how. After all, when you are two or three years old, not knowing how to swim is par for the course--but not when you are a teenager! By that time, it became too embarrassing to go to a swim class--especially when you have a huge ego like mine anchoring you down in the water. The funny thing is that, despite not being able to swim, I really was not afraid of the water. You might even say that I had an irrational LACK of fear when it came to water. I went snorkeling all the time and loved being in the ocean. Talk about a sitting duck for an undercurrent! Now, I am 44 years old and I am at that stage in my life where I am trying to make up for some of the things that I didn't do when I was younger. So, last summer, I decided that enough was enough. I needed to get this swimming monkey off my back. After expressing my frustrations to my friend Zed Williamson, he fortuitously sent me a video of Tim Ferris talking about the Total Immersion technique created by Terry Laughlin, a legendary swim teacher. Tim, too, had struggled with swimming and despite having tried harder than me with multiple coaches and even Olympians, had failed miserably. That is, until he found Terry. Terry taught Tim Ferris to swim and Tim Ferris seemed like he was a tougher case than me. So, it became clear to me that I needed Terry to teach me how to swim. I headed out to upstate New York for 2 days of intensive training with him. Remarkably, In just 3 half day sessions over two days, Terry taught me how to swim. The way he did it was masterful. It was like Mr. Miyagi training the Karate Kid. Terry was a master who dissected out the intricacies of swimming to its basic components and that made it possible for him to teach his art to even the most hopeless of cases--Tim Ferris and me for example. I was so excited about my new skills that I asked Terry if he knew a coach in Santa Barbara that could continue to help develop my skills. As it turned out, he was planning to spend the winter in Santa Barbara anyway which was great for me. He was planning to come out in November. I couldn't wait to work with him and also have him teach my daughters the Total Immersion Technique. So, last month (October 2017), I emailed Terry to check in when he was coming to town. There had been a change of plans. Unfortunately, Terry had been fighting aggressive prostate cancer for some time and it had spread to his bone marrow. My last email correspondence with him was October 9th. He still seemed very optimistic. Sadly, I learned this week from Tim Ferris' updates that Terry passed away just 11 days after that email he sent me. Tim had recorded an interview with him just two weeks before his passing and it is the most current episode on his podcast. I encourage you to check it out. This was an amazing guy and I feel lucky to have gotten to know him. Terry was a true teacher and a master. Swimming was his art but his methodology and philosophy could be applied to just about any field--even money and investing. In some ways, I'm trying to emulate Terry. I'm trying to take something that is seemingly complex as growing financial wealth and trying to "master" it. I'm ahead of many people but I still have a great deal to learn. I'm also doing my best to teach you what I know because that is my mission. Listen, I know there are A LOT of highly educated people out there who haven't a clue about money and investing but, like me with swimming, feel embarrassed to admit it. Ego is a terrible thing--can make you drown and it can make you broke. So, if you are one of those people who feels like they ought to know more than they should at this point in their life about money--I've got great news. You don't need to get in the pool with a bunch of youngsters and admit your weaknesses. Just listen to my podcast! In fact, this week's episode of Wealth Formula Podcast is about something that VERY FEW people in the general public even know is possible--investing in real assets like real estate with your retirement account. Don't miss this episode. Start putting your money to work for you!