Navigating Estate Tax Changes

I hope you had a great Thanksgiving! I am thankful for you and your support. I’ve been doing this podcast for over a decade, and I can’t tell you how much it means to me that you’ve supported my efforts through both good times and bad. That’s the nature of a show that has been around this long. In the world of investing, we have cycles. If you stick around long enough, you’ll see it all—and by now, we most certainly have.

When I started this podcast, it was just a few years after the mortgage meltdown of 2008. No one was excited about investing in real estate, but those of us who did really killed it. We had several years of a real estate bull market that ultimately culminated in the frothy COVID-era markets.

Then, as interest rates skyrocketed, we saw the bottom fall out. And now, it’s like 2012 again—the market is bottomed out. The smart money recognizes it and is moving in, but retail investors are scared and probably won’t join the party for a couple more years, when the market is already hot.

History doesn’t repeat itself, but it certainly rhymes. That’s why it’s important to take notes and try not to make the same mistakes again. In the spirit of that idea, I thought I’d make a short list of the lessons I’ve learned over the years. Hopefully, they will be useful. After all, the best way to learn is through mistakes—but they don’t have to be your mistakes.

1. Quit While You’re Ahead

No bull run lasts forever. If it looks like everyone is making money and it seems too easy, you might be in a market that’s at its peak—and it’s time to sell.

Back in 2008, there were stories of strippers buying multiple mansions and flipping them. Strippers are not typically known for having good credit. The subprime market was in full gear, and the market came crashing down soon after. In 2021–2022, everyone became a real estate syndicator, buying up hundreds of millions of dollars in real estate. Tertiary markets like Oklahoma City were hot. That only happens in frothy markets. If you see that happening again, stop buying and become a net seller.

2. Be Greedy When Others Are Fearful (Warren Buffett)

A good friend of mine was a celebrity home builder in LA before the 2008 financial crisis, making millions of dollars before the age of 40. He lost everything in 2008 but realized it was also a great buying opportunity. He saw hotels being sold at massive discounts.

He tried to raise money, but no one wanted to invest. Ultimately, he was able to scrape together enough money to start buying. That culminated in a $100 million sale for him last year. None of it would have happened if he hadn’t taken action when others wouldn’t.

3. There’s Always Something on Sale

Our built-in psychology makes it hard to be good investors. I’ll be the first to admit I’ve been a victim of my own instincts.

Since 2017, I’ve believed that Bitcoin will eventually become a sort of digital gold. I knew we’d see $100K Bitcoin when it was priced around $3K, and I truly believe we’ll see $500K Bitcoin by the end of this decade.

You’d think I would have accumulated Bitcoin every time it got slaughtered, right? Well, I did—but the “crypto winter” got me to capitulate. Rather than holding on to what I had while markets remained sluggish for a few years, I sold and invested in other things.

Now, I did make money on those other things, but not nearly as much as I would have by simply holding on to Bitcoin. Luckily, I bought my dad’s Bitcoin when he decided to make the same mistake. Sorry, Dad!

Right now, real estate is on sale. I don’t want to make the mistake of not buying.

4. Don’t Sell Bitcoin

As a corollary to the last rule, I will do everything I can to hold onto my Bitcoin, regardless of what happens to the market, until its market capitalization is on par with gold—that would be at a price of approximately $900K. At that point, I believe it will stabilize and behave like gold, which means I’ll sell.

5. There’s More to Life Than Real Estate and Cryptocurrency

I’ve made money in other ways when I’ve followed the aforementioned rules.

For example, a couple of years ago, the uranium market was beat up. I bought it because it was on sale. Right now, uranium is in the early stages of a bull market. The stock I owned went up 10x, so I sold.

Keep your eyes open for anything on sale, and when you buy, be patient. Eventually, markets turn, and selling into a frothy market feels great.

6. Don’t Let the Tax Wag the Dog

This is a nuanced rule I continue to struggle with. As a real estate professional, I find it very difficult to invest in things outside of real estate because of the massive tax benefits I receive.

But sometimes markets get frothy. Sometimes the price of Bitcoin or uranium—or any other asset on sale—is hard to beat.

While taxes are an important consideration, don’t let them be the only factor in your decision-making process. I have to constantly remind myself of this.

So there you have it—six very important lessons I’ve learned, and hopefully, they’ll benefit you too.

Now, speaking of not letting the tax wag the dog, this week’s episode of Wealth Formula Podcast is all about taxes—specifically, the likely changes under the Trump administration.

While we don’t want to let taxes always wag the dog, we also don’t want to be foolish. Knowing what’s likely in store on the tax front is critical to financial planning.

So make sure you listen in. There are some very critical issues addressed that you need to know about!

Buck