Wealth Formula by Buck Joffrey

In case you didn’t notice, we are in the middle of a massive cryptocurrency bull market. We haven’t been here since 2017 and who knows how long it will last. For those of you with solid positions, enjoy the run but don’t get greedy! I certainly learned my share of lessons from the last cryptocurrency bull run. I could have come away from it with a lot more money than I did if I had done things differently. However, like anything in life, investing is about learning from your mistakes and trying not to repeat them. Let me give you an example of one of the lessons I learned.  In 2017 I invested in an initial coin (ICO) offering on a project that I liked. ICO’s were all the rage back then but have since been banned by the SEC in the United States. I invested $50,000 into that project. One day the guy who told me about the project in the first place shot me a text that read “you must be happy you bought into that ICO!” Indeed, when I looked up the price of the token, my $50,000 was worth $4 million! Now there are times to buy and hold, but this was not one of them. That kind of profit on a token that really represented an idea more than anything else was a sell for sure in my humble opinion. The problem was that I couldn’t sell. You see, first of all, the only platform where the token was trading was not open to Americans. My friend who texted me is Canadian so he didn’t have that problem. So, for several months, I watched handcuffed as the euphoria around the project drained out. By the time it was on a platform where I could theoretically trade it, it was worth $500K. That was still 10X so nothing to scoff at. But then I ran into another problem. There was virtually no liquidity on the platform where I could trade it. In other words, the token I had may have been theoretically worth something, but there weren’t any buyers. By the time the token was on sizable trading platforms available to Americans and had some liquidity, crypto winter was upon us. Soon, my $50K that was worth $4 million was worth only $20K. What a miserable story right? You’re right but I can’t say I ever let it bother me that much. This kind of stuff happens once in a while when you are an active investor or trader. The key is to learn something and don’t repeat the mistake again. For those of you who are holding on to significant profits in alternative coins right now, make sure you can sell them if you want to. You might even consider very slowly moving out of the token into something traded on Coinbase where everything is liquid.  Anyway, I thought I’d share that story with you for you to learn from my experience. Crypto is the wild west still, despite tons of added regulation. Have fun and try not to lose money. In frenzies like this, that is very easy to do. Speaking of frenzies, beware of charlatans in times like these. Just like last bull run, you are going to see a lot of unnecessary tokenization and random companies adding the word blockchain to what they do in order to create a buzz.  Here’s a case study: an iced tea company called Long Island Iced Tea. The company made beverages from 2015-2017. But suddenly, in December of 2017 at the peak of the crypto market, the company changed its name to Long Blockchain Corp. (LBCC). The company never really made its mark in anything related to blockchain and, in a press release stated, “there can be no assurance that the company will be successful in developing blockchain technology, or in profitably commercializing it, if developed.” In other words—they were just using the name to pump the stock price. And sure enough, the share price increased by 500 percent! The moral of the story is that in times like these, it is important as ever to ask questions. Yes, I do believe blockchain and, more broadly, distributed ledger technology is the biggest technology advance since the internet. But make sure when you hear people using crypto terminology actually have a real purpose for it other than marketing.  There certainly are some potential use cases. My guest on this week’s Wealth Formula Podcast, for example, wants to securitize real estate ownership via security tokens. Does it make sense to do so? Well, listen to this interview and decide for yourself! Jason Ricks, CCIM, is chief operating officer of Liberty Real Estate Fund, the world’s first net lease security token fund. He is a native Texan, real estate investment expert, and security token pioneer. Mr. Ricks is a principal with Concordia Equity Partners, LLC, and was vice president at AMLI Residential (Morgan Stanley), an $11 Billion+ private REIT; BH Properties and Tarantino Properties. He is also a published author and has been featured on real estate and investing podcasts. Shownotes: What would be the benefit of a single-tenant property within an investment portfolio? What are Net Leases Why would you choose to invest in a fund if you can just afford to go out and buy some triple net real estate? How the security token works libertyfund.io

What gives something value? Gold has been considered valuable since ancient civilization. It has been used as money, as a store of value, and as jewelry. Gold is also scarce and it is not easy to mine. But…at the end of the day, gold is valuable because of a social construct that says it is and that it will continue to be going forward. The longevity of gold’s claim to value certainly adds to its standing as a valuable asset. Gold bugs who disparage bitcoin often point to the relative newness of the asset and its lack of track record over time. However, if we are going to give so much inherent value to the variable of time, it might be reasonable to consider other assets that have been considered valuable for a long time. We have almost certainly been eating and drinking for longer than we have been hoarding precious metals. That’s why we value rare foods the way we do. The European white truffle is a good example.  They grow underground and need to be sniffed out by special dogs and pigs! They cannot be commercially cultivated. How much are people willing to pay for rare food? Well, in 2017, a two-pound specimen sold for $61,250. I love truffles but really? Anyway, I guess it doesn’t matter whether you or I would spend that kind of money on a mushroom. Someone will and that’s why European White truffles are so darn expensive. That brings us to something else that we know can get pretty pricey quickly—wine. I like wine but am certainly no connoisseur. I pretty much put wine in two categories—wine I like and wine I don’t like. I know a little bit more about bourbon. Of course, buying and selling fancy wine has been, for the most part, for the wealthy. However, as we have seen recently in assets such as art and rare cars, technology is allowing for the democratization of many of the investments that were simply too expensive for most to participate in. Vinovest is doing just that for investment quality wine. So whether you’re an investor or you just like drinking this stuff, you are going to want to tune in to my interview with Vinovest founder, Anthony Zhang, on this week’s Wealth Formula Podcast. Anthony is a repeat entrepreneur who has previously founded and sold two companies, EnvoyNow and KnowYourVC. He has also held leadership positions at Blockfolio and is a board member at RateMyInvestor. Shownotes: Anthony tells us how he became an entrepreneur Anthony talks about how his past injury affected his entrepreneurial spirit Why invest in fine wine now? How does Anthony’s team identify investment-grade wine? Is Vinovest open to non-accredited investors? The Vinovest warehouses How to manage your wine investments through Vinovest What about investing in whiskey? vinovest.co

The alternative investing podcast ecosystem is full of doom and gloom. It’s always that way. Any time we get out of a recession and the economy gets a little hot, everyone’s calling for the zombie apocalypse. They tell you to prepare for the worst because the zombies are coming. Start growing your own food and buy lots of precious metals. Because, of course, silver coins are the currency of choice for zombies. Eventually, the natural cycles do their thing and the economy does go south. That’s when the doom and gloomers do their end-zone dance and tell you that they had predicted the down-turn the whole time. They are right. After all, even a broken clock is right twice a day. Now let me be clear. I understand that we live in unprecedented times of sovereign debt, record low interest rates, and the Federal Reserve is printing money at unparalleled levels. Oh yeah—and we have a hell of a demographic cliff coming up next decade. But… if you listened to the doom and gloom crowd for the last 6 years, you missed out on a lot of opportunities to make money. Case in point: our investor club partner Western Wealth Capital has been around for about 6-7 years. Over the last 6 years, one investor turned $750K of invested capital into over $4 million! Now compare that to how far gold has come since 2015. Yeah…no thanks. The reality is that the economy is dynamic and you have to make money when you can. If you’re worried about a depression happening 10 years from now and stop making good investments today, you probably will not fare as well as someone who is actively growing their wealth right now. Building wealth creates resilience. Fear does not. But listen…if you listen to a lot of podcasts, I don’t blame you for stashing gold under your bed. There’s a lot of opportunistic financial forecasters out there telling you that the world is coming to an end…again. You know what I would love to see? I would love to see all economists, especially those who shill gold, provide a scorecard on their financial forecasts. My guess is that in most cases, those who predicted the last two recessions, would also be the ones who predicted 5 more recessions that didn’t happen in between. If you’re good at predicting the future, show us your track record, right? Well, as it turns out, there is one group of economists who have been keeping score since the mid 1940’s and have predicted economic events with 97 percent accuracy since that time. Not surprisingly, they predict both good times and bad. That’s the way the real world works! The firm is called ITR economics and I listen closely to everything they have to say. Maybe you should too. You can get started by listening to this week’s Wealth Formula Podcast where I interview ITR economist, Taylor St. Germain. Learn about the pandemic economy and what’s on the horizon over the next decade. Don’t miss this show! As an economic analyst, Taylor St. Germain provides consulting services for small businesses, trade associations, and Fortune 500 companies across a spectrum of industries. His dynamic personality and extensive knowledge of economic trends and their business relevance are highly valued by clients and colleagues alike. Taylor is a member of ITR’s Dallas team and specializes in forecasting at both the market and company levels. With his depth of experience, Taylor is a key contributor to ITR Economics’ forecast accuracy rating of 94.7%. Shownotes: Why did the market continue to do so well when profits don’t support the valuations? How is a depression different from a recession? What makes the ITR approach to economics unique? http://itreconomics.com/

“Everyone has a plan until they get punched in the mouth.” -Mike Tyson Life is full of surprises…both good and bad. The last 12 months were, to say the least, unexpected. Everyone has a different story. Hundreds of thousands of people died from Covid-19 and left even more people behind to mourn their loss. Businesses closed, people lost jobs and some experienced poverty for the first time. Marriages came to abrupt ends and kids couldn’t go to school. But the funny thing is that, for those of us who survived, we seem to be doing ok. Human beings are incredibly resilient. And, as it turns out, can adapt to pretty much anything over time. I often talk about a certain kind of “wealth thermostat” that keeps people in a certain range of wealth. If you are a $100K person you will somehow find a way to make $100K per year but you won’t make a million. If you are a $1 million per year person, you will find a way to make that amount etc. Unless you figure out how to reset your financial thermostat, you are kind of stuck where you are. As it turns out, there is also a “happiness thermostat”. Most people think that more money will make them happier. But studies recently done suggest that’s only true until you hit about $75K per year. If you can afford food and a roof over your head, you’ve covered the essentials to get to your baseline happiness. Lottery winners, as it turns out, aren’t any happier than most people. The initial thrill of making a lot of money and being able to buy stuff seems to get old pretty quickly. In fact, studies show that they tend to rate the pleasure of mundane events of everyday life lower than others. On the other hand, people who get paralyzed in accidents don’t seem to be any less happy than the general population after an initial period of mourning.  The moral of the story is that we tend to get accustomed to pretty much anything in life that punches us in the face or gets handed to us on a silver platter. Happiness, it seems, exists outside of objective life circumstances. No matter what happens, we tend to drift back to where our happiness thermostats are set. How do we turn up the temperature on happiness in our lives? I wish I could answer that. In fact, a lot of people are trying to answer that question. The topic has spawned an entirely unique body of research which is called positive psychology. Joel Wade is an expert in positive psychology and he is my guest on Wealth Formula Podcast this week! Don’t miss this interview. Listen NOW. Joel F. Wade, Ph.D. is Marriage and Family Therapist and Life Coach, and the author of The Virtue of Happiness, Mastering Happiness, The San People of the Kalahari, and an in-depth online course: A Master’s Course in Happiness, drawing from the increasingly useful research in psychology in general, and positive psychology in particular; and his nearly four decades of working with people professionally. He has written regularly for a variety of publications, including The New Individualist and The Good Men Project; and the Beyond Wealth columns for the Oxford Club. He’s also a world class athlete, having won multiple national and world championships in water polo. Dr. Wade enjoys teaching clear, practical skills and ideas that can be used immediately, inspiring his readers and listeners to take effective steps toward a more rewarding, joyful, and resilient life. As a Life Coach he works with people around the world via phone and Skype, and can be found at drjoelwade.com. Shownotes: How has the pandemic affected the socialization and psychological development of children? How people are going to adjust to normal life again after Covid? ome things that can provide temporary boosts in mood How does Positive Psychology work?

Value is a social construct. Things have value because we, as a society, agree that they are valuable.  That is the only reason that gold has the value that it does. Yes, it has unique metallic qualities and it is scarce, but there is no intrinsic quality that gives it the value it has in society. We have collectively assigned that value to it. And to be clear, this is not intended to be a knock on gold or gold bugs. I am well aware of the value gold has kept since ancient civilization dating back from the Egyptians to the Inca. Longevity certainly matters. I am simply stating what I consider to be an obvious fact—monetary value is not intrinsic to any commodity. Yet, the perception of value in society serves an important function for accounting purposes. But why must we concede value only to ancient stuff? In a technological society like we have today, does it make sense to look only to the past for inefficient stores of value? I don’t think so. That’s one of the reasons why I believe that bitcoin will ultimately serve a similar role in society as gold. Bitcoin is finite, deflationary and you can’t confiscate it. You can cross borders with billions of dollars by simply memorizing a series of numbers and letters.  Robert Kiyosaki calls gold “God’s money” and bitcoin “The people’s money”. That metaphor is golden! I began talking about bitcoin on Wealth Formula Podcast three years ago. Many of you got it then and took action. Some of you even made millions of dollars because of that introduction to cryptocurrency. To you I say…you’re welcome! For those of you who still don’t understand the significance of bitcoin, it’s time to wake up. Bitcoin is here to stay and it will become increasingly mainstream over the next few years. Even if you don’t have the appetite to buy bitcoin now you owe it to yourself to try and understand this phenomenon. This week’s episode of Wealth Formula Podcast is critical for you to understand the future of money. My guest, Samson Mow, is recognized as one of the most influential bitcoin visionaries in the world and there is no one better to explain the past, present and future of this asset. Listen NOW! Samson Mow is Blockstream’s CSO and Pixelmatic’s CEO. Blockstream is the leading provider of blockchain technologies, on the forefront of work in cryptography and distributed systems. Samson founded Pixelmatic in 2011 to creating engaging games that are truly social and encourage new connections to be made. Previously at BTCC, one of the largest bitcoin exchanges and mining pools in the world, Samson’s role as COO was to oversee the day-to-day operations of the company and directly manage the exchange and mining pool business units. Previously, Samson was a director of production and executive producer at Ubisoft, where he spearheaded expansion into Asian markets for web, social, and mobile games. Samson oversaw ongoing development and live operations of the cross-platform (web and iOS) MMO strategy game “Might & Magic: Heroes Kingdoms” in Asia, along with the social games “Castle & Co” (Facebook, mixi, Naver) and “The Smurfs & Co” (Facebook, mixi). “The Smurfs & Co” is Ubisoft’s most successful social game to date, reaching over 10 million users through organic growth. Prior to Ubisoft, Samson was in charge of business development and operations at Sitemasher, a Vancouver based startup developing a SaaS platform for building websites and apps. Sitemasher was the winner of the 2008 Blue Sky Innovation Excellence Award from Microsoft and was later acquired by Salesforce.com for US$20 million and rebranded as Site.com. Samson holds a Bachelor of Business Administration degree from Simon Fraser University in Canada. As a veteran of the game industry, Samson regularly features as a speaker and panelist in conferences such as GDC and CGDC. Shownotes: How Samson got into bitcoin What is bitcoin? Is bitcoin a store of value or is it a currency? The biggest challenge for bitcoin

I am not an economist but I do recognize the importance of understanding a little bit of macroeconomics to guide me as an investor. After all, financial markets don’t move in a vacuum. They are affected by all sorts of things including monetary and fiscal policy. As a reminder, monetary policy is dictated by the Federal Reserve. Essentially, they have two powers that they can wield to impact the financial system. One is the power to set interest rates at which the banks trade with one another—the so-called “Fed Funds Rate.” The other is the ability to print money and buy bonds—aka quantitative easing. Right now this monetary policy is as loose as it can be. With historically low interest rates and quantitative easing cranking away, the Fed is doing what it can to steer us out into a post-pandemic economy. While the Fed does its thing, the US Government and Treasury are responsible for fiscal policy—aka government spending. Obviously, that is also hard at work right now as demonstrated by the recent $1.9 trillion stimulus package. Simultaneously, household savings rates are high and there is enormous pent-up demand for spending that will presumably be unleashed late this summer and into the rest of the year as Covid-19 herd immunity becomes reality through vaccination efforts. All of the ingredients are there for an economic boom like we haven’t seen in decades. The economy could really heat up and we could see some inflation.  Historically the response of the Federal Reserve to a hot economy is to put on the brakes so that inflation does not get out of control. Raising interest rates and not printing money would be the steps that you might expect. But this time, it may be different. The Fed has changed its policy. In the past, the Fed has used a target inflation rate of 2 percent as a major indicator of when it needs to raise rates. But now the policy is to allow rates to overshoot 2 percent and to focus more on the average rate of inflation. In other words, if the economy heats up, they will let it boil! Low interest rates are critical to keep asset prices inflated. One of the misconceptions that people have is that the Fed Funds rate is the primary indicator for long-term loans like mortgages. That’s actually not the case.  Long-term mortgages are more correlated with the bond market—specifically the 10 year treasury. The bond market is complicated and I won’t pretend to completely understand it myself. However, for simplicity just know that as the 10 year treasury rises, so will interest rates for your asset-based loans. Assets will sell off if the 10 year treasury spikes and that’s what happened recently. That’s why there was a huge sell-off in Tesla stock presumably. The 10 year treasury will naturally go up if the markets expect inflation. So if that’s the case and the Fed wants to keep rates under control, what can it do? Well, remember quantitative easing is where the Fed creates money out of nothing. When it prints that money, it buys bonds like the 10 year treasury. If the Fed continues to buy treasuries, it can control the supply and demand and artificially suppress the yield on those bonds. That’s what it’s doing and what it plans on doing more of in the near future. So, the take-away I have from this news is that inflation is coming so don’t sit on cash. That’s a sure fire way of losing money as it loses value over time. I also interpret this as “go time”. The economy is about to boom and I, for one, will position myself in the assets that will benefit from this explosion. Finally, expect this boom to last. The Fed and the Treasury are going to let the fireworks go on for a little bit longer than they normally do. That’s it for my macroeconomic warm-up for the week. Now you are ready to listen to an economist talk about these issues and a lot more in this week’s Wealth Formula Podcast. Listen NOW! P.S. My 11 year old daughter just released a song called “Worst Year Ever” that is available on all the streaming services such as Spotify and Itunes. She used the name Camilla Sabine (her middle name) in case you want to search for it. You can also check it out on Youtube at the following link: https://youtu.be/wUH_AN5kLGM  I bet your kids will love it! Richard Duncan is the author of three books on the global economic crisis. The Dollar Crisis: Causes, Consequences, Cures (John Wiley & Sons, 2003, updated 2005), predicted the global economic disaster that began in 2008 with extraordinary accuracy. It was an international bestseller. His second book was The Corruption of Capitalism: A strategy to rebalance the global economy and restore sustainable growth. It was published by CLSA Books in December 2009. His latest book is The New Depression: The Breakdown Of The Paper Money Economy (John Wiley & Sons, 2012). Since beginning his career as an equities analyst in Hong Kong in 1986, Richard has served as global head of investment strategy at ABN AMRO Asset Management in London, worked as a financial sector specialist for the World Bank in Washington D.C., and headed equity research departments for James Capel Securities and Salomon Brothers in Bangkok. He also worked as a consultant for the IMF in Thailand during the Asia Crisis. Richard has appeared frequently on CNBC, CNN, BBC and Bloomberg Television, as well as on BBC World Service Radio. He has published articles in The Financial Times, The Far East Economic Review, FinanceAsia and CFO Asia. He is also a well-known speaker whose audiences have included The World Economic Forum’s East Asia Economic Summit in Singapore, The EuroFinance Conference in Copenhagen, The Chief Financial Officers’ Roundtable in Shanghai, and The World Knowledge Forum in Seoul. Richard studied literature and economics at Vanderbilt University (1983) and international finance at Babson College (1986); and, between the two, spent a year travelling around the world as a backpacker. Shownotes: Is the worst of the economic fallout from this pandemic behind us? Why would a spike in yields in the bond market cause a sell-off in the stock market? The concept of bank reserves as it relates to liquidity. Richard talks about Macro Watch

Life is not long enough to take advantage of the wisdom that comes with age. It’s really kind of a cruel joke of nature if you think about it. You get smarter as the rest of your body becomes less functional and closer to death. This phenomenon really needs to be experienced in order to be believed. I recall listening to a young syndicator recently telling me that experience is over-rated. That’s easy to think when you are, indeed, young and inexperienced. Experience does matter because, although history may not repeat itself, it most certainly rhymes. When you’ve been through a cycle or two you do have a little bit more insight compared to one who has not. Luckily for me, I’m not that old yet. However, I am in my late 40s and I am seeing patterns in the economy and investing that my younger peers are not. In fact, seeing these patterns come to fruition has made me realize how important it is to learn more history in order to compensate for the things that I have not yet seen. This unique type of intelligence we gain over time is what is called wisdom. Again, It’s really hard to appreciate when you are young. I still remember my father telling me things when I was a teenager that I blew off as nonsense that I realized later in life were profoundly true. These days, when someone has been around longer than me and has wisdom to share, I listen. Wisdom is priceless and I, for one, cannot get enough of it. My friend Russell Gray doesn’t look that old but boy does he have a lot of history to share and I always learn something from him. Hopefully you will too on this week’s episode of Wealth Formula Podcast as I get a chance to reflect on the events of 2020 with Russ and contemplate on what happens next! Russell Gray is Robert’s sidekick on The Real Estate Guys™ Radio and TV Shows. Russ is a financial strategist with a background in financial services dating back to 1986. As a faculty member for the California Association of Realtors, Russ taught Real Estate Finance to Realtors® pursuing the prestigious GRI designation. He is a popular speaker and author. Shownotes: Russ talks about some of the things that surprised him over the past year. What is Stagflation? The best thing to do is to invest in hard assets as much as possible. Russ talks about how real estate is a hedge against inflation.

It’s time for another episode of “Ask Buck”! This week, we field questions on the economy—inflation or deflation, interest rates, and cap rates. We also touch on two sides of the same concept—owning permanent life insurance either your own policy or one that you buy from someone else! Make sure you tune in!

Investing is hard. It’s hard because you have to know what you are doing. But it’s also hard because you have to be tough psychologically and sometimes do things that seem counterintuitive to your own emotions. Believe me, I’m not immune to psychological miscues. At one point, I owned about 100 bitcoin. But, during crypto winter, I needed some liquidity for another investment and sold most of it off for about a tenth of what it is worth today. I could have easily bought that bitcoin back a few months later but I didn’t. Crypto winter took my mind off of what was obviously on sale. I KNEW that it was going to go back up. In fact, I just won a bet with someone from a year ago that Bitcoin would hit 50K by the end of 2021. So why didn’t I listen to my own advice and buy more? Fear. Fear is a tricky thing and the major driver of investors losing money. And I’m not just talking about fear of investing when something is getting crushed like bitcoin was. I’m also talking about the opposite spectrum—the old FEAR OF MISSING OUT (FOMO) thing. FOMO is complicated. There is a cryptocurrency called Dogecoin. It recently skyrocketed. The problem is that there is nothing really behind Dogecoin. It’s not a storage of value like bitcoin and it isn’t a project like Ethereum that is used for creating software. It’s kind of a joke and most people in crypto know it’s a joke. Yet, people have been buying it because it’s gone up so much in price. That’s BAD FOMO. Because eventually, Dogecoin will go to zero. It’s purely a game of magical crypto chairs at this point. Another scenario that often kills investors is the feeling that something has gotten too expensive despite the clear vision that it is not. What is behind that? Well, on May 16th, 1997 Amazon stock was at $1.73. Then, one year later it was over $7. If you were paying attention at that time, you might have thought that the opportunity to make money on Amazon stock was gone. The 700% percent appreciation in just one year just couldn’t continue so why waste your money? Today, as I write this, amazon stock is sitting at $3278. People who understood the potential of amazon early on did very well and never sold even when the stock 10X’d over and over. For those of us who, unfortunately, did not get on the Amazon bus, we look at the price of that stock today and think—“man, that’s pretty expensive. I’m not buying that”. In my case, I’m not going to buy it because I just don’t know enough about the potential upward trajectory of that company and stock at this point.  It’s just not smart for me to jump on the bandwagon now—that would be “bad FOMO” even if the stock keeps going up. I still believe that outside of some speculative plays that you should invest in things you understand. For me, what I understand best is multifamily real estate. People have made a lot of money in multifamily real estate for a very long time. And, in the past two decades, no market has had more winners than Dallas. The question is whether or not that trend continues. For me, it’s an obvious yes! I will continue to invest heavily in working-class apartment buildings in Dallas for the foreseeable future even though it is more expensive today than it was five years ago. Like Amazon in the year 2000, Dallas is more expensive today than it was then. However, as a guy who understands what drives prices in real estate, I can see the clear path to continued growth in this market and resultant increase in asset values. To me, working-class apartment buildings in Dallas operated by competent hands is the single best risk-adjusted investment in the world. So, looking past a week of terrible weather out there, this week’s podcast features an interview with one of my business partners Dante Andrade who knows more about the DFW market than anyone else I know. Make sure to tune in and see for yourself why I am so bullish on Dallas for this decade! Dante Andrade is a man of many multifamily real estate hats. He is a buyer’s broker in Dallas, meaning that he is dedicated to the buyer side of acquisition of large multifamily real estate. He’s been involved in just under a billion dollars worth of transactions, focusing again specifically in the Dallas/Fort Worth market. He’s also a real estate coach and mentor and finally, and probably most importantly, he is my partner in our group called Touro Asset Management Group. Shownotes: How challenging is it to leave emotions out of business and investing? Is it a good time to buy affordable housing in Dallas? If you are looking at real estate in the next decade and you’re not paying attention to Dallas then you are missing the boat.

A few weeks ago I had my CPA, Tom Wheelwright, on the show to discuss what’s going to happen with taxes in the next year or two under the new administration. Of course, the news was generally bad for high-income earners. Taxes will invariably go up. The idea is that the rich can afford it and they ought to pay their “fair share”. It drives me crazy when I hear people say that—after all, what’s fair? Is paying more than half of your income to the government fair? If you live in California you are already doing that. Anyway, let me get off that rant before it takes me into a sea of digression. Let’s focus instead on who is going to be hit the hardest. Is it really the rich who are going to get hit the hardest with the tax hikes? I guess that depends on how you define rich. The truth is that the true rich are not going to see their tax liability change by very much. Apart from professional athletes, the true rich are not W2 wage earners. It is the high paid W2 wage earners who will be hit the hardest with new tax laws. Business owners and investors, those on the right side of Kiyosaki’s cash flow quadrant will likely, net-net, come out even. For all the tax hikes we will see, there will be just as many opportunities for tax mitigation through investments into the things that the government wants to promote. The tax code is, after all, just a series of incentives for investors to take advantage of. That’s why I suspect that for most truly rich people, tax law changes will not make a material change in terms of effective tax rates. If it seems unfair—well, it kind of is. You see, the government sees business owners and investors as vehicles for driving the economy. They produce the goods and services and fund economic growth through investments. Conversely, W2 wage earners are treated as fat cats that do little to contribute to GDP growth. Hard-working professionals may disagree with this assessment but that’s the way the tax law is written and it is what future tax laws will be based on. So, what can you do about it? Well, as Tom Wheelwright says, “If you want to change your tax, you have to change your facts.” From the perspective of decreasing your tax liability, that means shifting more of your resources over to the right side of Robert Kiyosaki’s Cash Flow Quadrant—the world of business ownership and investing. If you are in our Accredited Investor Club, then you already know about the power of depreciation that comes along with investing in real estate. For most, shifting increasing amounts of financial resources into the investor quadrant is the smartest thing to do. However, speaking from personal experience, if you are able to get involved with the business owning quadrant, you can really open up a whole new world of possibilities such as higher levels of passive income and the ability to take deductions that simply are not available to you in any other way. The challenge is that business ownership is not that easy. In the vast majority of cases, business ownership is not passive. However, the financial rewards of business ownership can be dramatic and worth your time. The challenge again is that not everyone is cut out for business ownership and you need to think very seriously about it before you take the plunge. Then you need to figure out how you are going to do it. I’m probably a little different than most in that I feel most comfortable starting businesses from scratch. I have done it multiple times. While there certainly is a good chance of failing, the expenses incurred are often far less than other options. The other way to get into business is through acquisition. We have discussed franchising on previous shows and it certainly has its associated advantages and disadvantages. Another option is simply to acquire a free-standing small business. Admittedly this is not something with which I am terribly comfortable. Furthermore, this is not an area that I can point to someone as a trusted advisor. I am as clueless as anyone else in this world. So, when Carl Allen’s team reached out to me to get him on the show I was happy to do it. Carl’s business revolves around business acquisition. This week’s Wealth Formula Podcast features a conversation I had with him to learn the basics. So, if you are interested in significantly changing your facts and taking the plunge into entrepreneurship by acquiring a business, make sure to tune in to this week’s show! Carl Allen is the editor of Dealmaker Wealth Society. Carl is an entrepreneur, investor and corporate dealmaker with almost three decades of experience. Carl has worked on transactions worth over $48 billion, which includes over 330 acquisitions and sales. For almost three decades, Carl has analyzed thousands of businesses, big and small, in 17 different countries and across nearly every business sector. Carl’s reputation as an investor and corporate dealmaker has led him to advise some of the world’s largest corporations on investments, acquisitions, disposals and restructuring. Carl has also assisted hundreds of business owners in raising both equity and debt finance. Carl shares his wisdom and experience through the Confessions of a Dealmaker newsletter and through his course training on buying a business without using any personal capital. Shownotes: Buying a business vs. starting your own business. If you want to buy a business in an area that you know nothing about, it’s suicide. Dealmaker Wealth society.