Wealth Formula by Buck Joffrey

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. Tom Wheelwright, CPA is the visionary and best-selling author behind multiple companies that specializing in wealth and tax strategy. Tom is also a leading expert and published author on partnerships and corporation tax strategies, a well-known platform speaker and a wealth education innovator. In Tom’s best selling book Tax-Free Wealth, Tom shows entrepreneurs and investors how to build massive amounts of wealth through practical and strategic ways to permanently reduce taxes. Shownotes: What is the Paycheck Protection Program (PPP)? What is the EIDL Loan Be careful. Anytime you sign a loan, make sure you read the loan provisions. What is the Main Street Loan? wealthability.com

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. Robert T. Kiyosaki Best known as the author of Rich Dad Poor Dad—the #1 personal finance book of all time—Robert Kiyosaki has challenged and changed the way tens of millions of people around the world think about money. He is an entrepreneur, educator, and investor who believes the world needs more entrepreneurs who will create jobs. With perspectives on money and investing that often contradict conventional wisdom, Robert has earned an international reputation for straight talk, irreverence, and courage and has become a passionate and outspoken advocate for financial education. Robert and Kim Kiyosaki are founders of The Rich Dad Company, a financial education company, and creators of the CASHFLOW® games. In 2014, the company leveraged the global success of the Rich Dad games with the launch of new and breakthrough offerings in mobile and online gaming as well as Rich Dad’s CLUTCH, a digital learning platform. Robert has been heralded as a visionary who has a gift for simplifying complex concepts—ideas related to money, investing, finance, and economics—and has shared his personal journey to financial freedom in ways that resonate with audiences of all ages and backgrounds. His core principles and messages—like “Your house is not an asset“ and “Invest for cash flow” and “savers are losers”—have ignited a firestorm of criticism and ridicule… only to have played out on the world economic stage over the past decade in ways that were both unsettling and prophetic. Shownotes: The new normal Robert talks about the Shadow Banking System and the biggest stock market crash in history The dominoes are now only starting to fall and we have yet to see the full impact of Covid-19 on the global economy What does Robert think will happen in Post-Covid America? Robert talks about his book Who Stole My Pension

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. 

As I mentioned last week, we had a lot of questions piled up in the “Ask Buck” file that I need to get answered. As a result, we ended up with multiple shows. 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! Now, in the interest in maximizing your weekly experience, in addition to the “Ask Buck” episode, you will find a bonus episode which features the webinar recently done for us by Tom Wheelwright on the latest tax legislation that you need to know about.  You will get more out of Tom’s talk with the video presentation which you can access at the following link: https://www.wealthformula.com/critical-changes-webinar/ Let me know what you think!

Ever since this COVID-19 thing started, it seems like there is no other news. Maybe what that tells us is that most of the news we ordinarily get on a daily basis is worthless.  But seriously, doesn’t it seem like the world has just frozen into a COVID-19 coma? My ER doc friends joke that everyone stopped having heart attacks and strokes since this pandemic started. As a podcaster, I realize that it is very difficult to not talk about the viral elephant in the room, but it gets old doesn’t it?  Anyway, the virus hit us just as we were doing our 200th episode. At that time, we were going to do a couple of special “Ask Buck” shows but we only got a few of the questions answered. These shows tend to be well received so, if you are one of those people who enjoys hearing my opinion, you are going to love the next few weeks as I get through all of these questions—some of them are pretty old! So, if you want to hear my opinion on investing, taxes and, of course, the pandemic, make sure you listen to the first in a series of “Ask Buck” episodes HERE!

“It’s hard to make predictions—especially about the future.” That’s one of my favorite Yogi Berra quotes. It’s funny but also incredibly true. Think about what is happening now with COVID-19. Social scientists make predictions based on assumptions. The epidemiologists are making projections on the spread of the virus even though they have no significant knowledge of what they don’t know. We are learning something new about this virus everyday. To further complicate things, the virus can mutate. There are already two strains and there could be more in the future makings its virulence and contagion even more unpredictable. In the meantime, economists are basing their predictions on the work of the public health professionals. Their models are predicated on the moving targets of the public health projections. They are also basing models on an assumption that there will be a vaccination or cure in some specified period of time. What a mess right? In fact, no one really knows what’s going to happen next month or tomorrow for that matter. We are in slow motion as the economic fall-out declares itself. Monetary and fiscal policy measures will be unparalleled in size and scope but no one really knows what the real impact of those measures will be. If I am sounding a bit nihilistic, it may be because our Wealth Formula Network mastermind is currently reading Nassim Taleb’s The Black Swan as part of our book club. A lot of people refer to this book when they talk about unpredictable events—even if they didn’t read the book! I do highly recommend it myself although be forewarned, it is not a light read. Taleb actually doesn’t think that COVID-19 as a black swan event. Why? He, along with many others, had predicted this kind of pandemic in recent years based on recent viral outbreaks and the rise of globalization. There are documentaries about the likelihood of a Disease X epidemic and there was even a White House Pandemic Task Force that was dismantled by the current administration. But what Taleb does see as a potential black swan event is what happens as a result of this grayswan. The unpredictability of this economy is ripe for a true event that none of us can predict. So what’s the point of making predictions? Well, most of life does stay on the bell curve. In other words, economics can provide value in the bigger picture when known factors are modeled in. As long as you can stay away from highly unlikely events, they can serve people and businesses well. ITR Economics is a firm that I follow. They’ve been right on 97 percent of their economic forecasts over the last 70 years or so. That said, for the reasons discussed earlier, they didn’t see the severity of COVID-19 impact coming either—again because their assumptions were based on then-available public health assumptions. At any rate, the key to get the most out of economics is to be agile and redirect projections as assumptions change over time.  For that reason, this week’s episode of Wealth Formula Podcast revisits the question of the economy with Catherine  Putney of ITR economics. As you may recall, she was on the show shortly before all of our lives suddenly changed and businesses closed a couple months ago. Make sure to tune in as Catherine gives us an updated forecast for the coming year and beyond! Catherine Putney specializes in applied research for business cycle trend analysis, growth-cycle trend analysis, and implementing cyclical analysis at the practical, company level. She holds a master’s degree in economics from the University of New Hampshire. Catherine regularly contributes articles to ITR Economics’ flagship publication, the ITR Trends Report™, focusing on the manufacturing sector of the US economy. Catherine and the ITR team have put this expertise to work for companies across a wide range of industries, including manufacturing, chemicals, fibers, healthcare, distribution, real estate, construction, and technology.

Last episode we talked about the realities of COVID-19—what it is, what makes it so challenging and how dangerous it really is. We also talked about potential medical treatments. In this episode, we go into vaccinations and economic impacts of COVID-19. Listen to Part 1 here: https://www.wealthformula.com/podcast/208-4-doctors-a-virus-and-a-battered-economy-part-1/ Dr. John Foley is a neurologist specializing in clinical neurology Dr. Ian Kurth is a neuroradiologist Dr. Paresh Mehta is a gastroenterologist Shownotes: The path to the new normal The doctors talk about their current investments and how they have been affected by the Covid-19 situation

What a strange time we live in where even public health issues are politicized. The wingnuts on the right want to downplay a virus that has already taken the lives of more people than the Vietnam war. The wingnuts on the left want to demonize anyone who even suggests an alternative approach to dealing with the pandemic outside of staying at home in perpetuity. They want us to completely ignore the pain, suffering, and death that will inevitably occur from a financial depression. The polarity of thought on this black swan event is the product of politicized news—on both sides. That’s a problem for us all. As a physician and an over-all rational guy, this kind of partisanship when we should be seeking facts is maddening. However, it is not surprising. When I was a kid, there was only one set of facts that people were given and they made decisions based on that. We now live in a world of “alternative facts” which has really made it a confusing place to navigate. That said, the idea that there are alternative sets of facts in science is, in fact, fake news. In science, we follow the studies. Sometimes studies show disparity but, over time, we get to the bottom of things. Take Hydroxychloroquine for example. Donald Trump has been talking it up like it’s a vitamin with no down-side. That’s not true of course. There is some potentially severe side-effects of the drug that have actually killed people in the past few weeks. On the other hand, in order to prove Trump wrong at every turn, the liberal news media makes Hydroxychloroquine sound like an asinine treatment of COVID-19 in any form. The reality… the evidence suggests that the role of Hydroxychloroquine in the treatment of this illness may be nuanced and can’t be characterized simply as a black and white issue. That’s just one example of the complex questions that are being dealt with in overly simplified ways in the press. It’s not helpful for anyone who wants to understand what’s really going on out there. So, this week, I have put together a two-podcast series of interviews with three other physician/investors for you to get some real facts and to help you understand where we currently are with this public health and financial disaster. Listen to Part 2 here: https://www.wealthformula.com/podcast/209-4-doctors-a-virus-and-a-battered-economy-part-2/ Dr. John Foley is a neurologist specializing in clinical neurology Dr. Ian Kurth is a neuroradiologist Dr. Paresh Mehta is a gastroenterologist Shownotes: The current Covid-19 situation Drugs that are currently being considered as possible treatment for Covid-19 Why does it take so long to develop vaccines?

What are notes? Well, for simplicity, let’s call them mortgages. You owe the lender money when you take out a mortgage. However, that lender can sell that mortgage to someone else. That’s what it means to buy or sell a note. Notes can be performing or non-performing. Non-performing notes are simply those that have had trouble paying on time in the past. So, if you buy one of those, you either pay people to move out, foreclose on the property and sell the asset or possibly negotiate the payment to something a person can afford and let them stay in their home. That last option, of course, is a win-win situation. Bottom line is that, in principal, the note business is not that hard.  But as is often the case, the devil is in the details. I found that out the hard way when I tried to learn the note business myself to start a new venture. As it turns out, it wasn’t something that I could do as a part-time gig—at least not at the level that I found personally acceptable. To do really well consistently in the note business requires volume, creativity and a ton of experience. As we sit here in the middle of a black swan public health and financial event, I’m just glad I realized my limitations and didn’t complicate my life any more. One of the great lessons that I have learned with age is that often the best thing to do is nothing at all. When I was younger I used to chase after shiny objects and I was not focussed. Doing that makes it difficult to become really good anything. If I have one bit of advice for anyone going down the entrepreneurial route, it is to stay in your lane and focus. You can’t be the best in the world at everything and, if you try, you won’t be very good at anything. As investors, our most important skill set is often to pick a jockey. We may not be doing the heavy lifting but we need to know who will do it well. This is a very different skill set than being an actual operator and it is important not to confuse the two. When it comes to notes, there is really only one guy I trust: Jorge Newbery. That’s the honest truth. Jorge is smart as a whip and has a lot of scar tissue from the past to help him navigate the current crisis. This week on Wealth Formula Podcast features a really good conversation with Jorge that I had about not only the note market but the residential real estate market in general. If you are curious of what someone who lived through 2008 thinks of where we are today, you won’t want to miss this episode. Jorge P. Newbery Is On A Mission To Help Americans Crushed By Unaffordable Debts. He is Founder and CEO of Debt Cleanse Group Legal Services, a nationwide legal plan to help consumers and small businesses get out of debt without filing bankruptcy. He is also Chairman of American Homeowner Preservation LLC and AHP Servicing LLC, which crowdfund the purchase of nonperforming mortgages from banks at big discounts, then share the discounts with struggling homeowners. He is also a non-attorney Partner in Activist Legal LLP, a law firm in Washington, D.C.  A 2004 natural disaster triggered the financial collapse of Newbery’s former business, leaving him with $26 million in debts he could not pay. Newbery rebuilt himself through AHP, sharing what he learned from his challenges to help families at risk of foreclosure stay in their homes. In 2018, he founded Debt Cleanse Group Legal Services to assist consumers and small business owners settle all types of debts at big discounts – and not pay some at all, He is also a Board Member of the Group Legal Services Association.  He authored Burn Zones: Playing Life’s Bad Hands; Debt Cleanse: How To Settle Your Unaffordable Debts For Pennies On The Dollar (And Not Pay Some At All); and Stories of the Indebted. Shownotes: What is a Note, what is a non-performing note, and what is AHP Servicing doing? Jorge talks about AHP Servicing’s strategy: Play Offense Will 2020 be worse than 2008? Jorge talks about the risk of buying too early and spending too much. ahpservicing.com