Wealth Formula by Buck Joffrey

Dive into the intriguing world of hypernomics as the hosts discuss its complexities and real-world applications. Recent market turbulence has raised concerns, but there are silver linings in real estate investing. Understand how Fed rate cuts influence mortgage rates and potential opportunities in the market. As interest rates decline, cap rate compression could boost asset values. The shift in market liquidity presents exciting chances for investors, especially in multifamily properties.

Every time we underwrite a new asset, we build models. But modeling an apartment building isn’t like modeling a house. The price isn’t just what someone thinks it’s worth; it’s determined by net operating income and cap rates, which are heavily influenced by interest rates. Modeling for apartment investing also includes measures of job and population growth in a given area and the impact of new construction. Suffice it to say, underwriting major real estate assets is pretty complicated. The funny thing is that even the inputs we use in our models are based on other models. So, essentially, you have models based on models. For instance, central banks use models to manage inflation, predicting the effects of monetary policies. In the corporate world, businesses use models to forecast demand, optimize pricing strategies, and manage supply chains. These variables directly influence our underwriting models. Herein lies the limitation of modeling: it depends on the accuracy of the input data. Models are only as good as the data fed into them; inaccurate or incomplete data can lead to misleading results. So, if the models generating the numbers for your models are off, then your model is off as well. So why do we do it anyway? Well, it’s the best we can do, and most of the time, in my experience, the modeling points us in the right direction. On this week’s episode of Wealth Formula Podcast, I interview Doug Howarth. He’s developed a unique approach to economic modeling called Hypernomics. He shares his insights on how Hypernomics can uncover hidden dimensions in markets and provide deeper understandings and strategic advantages. 04:40 What is Hypernomics? 11:21 Application Towards Real Estate Investing

Buck reflects on the concept of true wealth and the things that bring genuine happiness.

Franchise ownership grabs attention as a savvy business strategy, balancing execution skills with significant investment demands. The podcast dives into economic trends, highlighting the Federal Reserve's potential rate cuts and shifts in the market away from big tech. The impact of treasury yields on real estate is examined, revealing opportunities amid falling interest rates. Bitcoin's resurgence sparks discussion about its evolving status as an asset class, while ETFs offer a user-friendly option for navigating today's fluctuating markets.

When I talk about the mathematical Wealth Formula, I describe it as Wealth = Leverage (Mass X Velocity). For you physics geeks out there, you can see that I’m ripping off Newton a little bit. In this equation, velocity is your rate of return and leverage is debt such as a mortgage that amplifies positive returns. Mass is simply the amount of money you actually invest. Mass is critically important. After all, if you don’t invest any of your money, it doesn’t matter how good the other variables are.  Now luckily most in the Wealth Formula community have plenty of mass. Our community is made up of a lot of high paid professionals. Income is not typically our main problem—it’s the other variables that help turn that income into wealth that provide us with our biggest challenges. I tend to think of my businesses as the fuel that ignites my investments that then turn into wealth. The more fuel I’ve got, the more ability I have to grow my wealth. Imagine me shoveling cash from my businesses into a bunch of real estate to keep the wealth churning—that’s literally how I think about it. Now you may be quite happy with the amount of money you are able to put into your investments, but if you’re not, one option is to consider is start or buy a business.  There’s no doubt that businesses require more work. Anyone who tells you otherwise is lying. However, that’s also the reason they tend to cash flow more. There are a lot more variables in businesses making them more risky then a piece of brick and mortar. And because there is more risk, there is more reward. Nevertheless, it might be a risk worth taking. And if you are not a start-up type or need a little bit more structure, franchising might be worth looking into. This week’s guest on Wealth Formula Podcast is an expert on franchises and gives us all the ins and outs you need to know to determine whether you should consider it for yourself. 08:10 Franchising in Uncertain Times 12:53 Return Profile on Franchises 16:59 Advantages of Franchising Compared to Buying a Business 20:42 Partnerships and Hiring in Franchising 24:33 Initial Capital Investment in Franchising

Buck talks about the impact of uncertainty, particularly during presidential election cycles, on decision-making and offers advice on how to navigate through uncertain times.

This week, Buck and Zulfe discuss various topics related to wealth and finance. They start by talking about the mindset of the wealthy and the common denominators among successful people. They also discuss recent political events and their potential impact on the market. They then delve into the current state of interest rates and how it affects real estate investing. Finally, they introduce Ryan Haley and Jonathan Wield, partners at Velerity Wealth, and discuss the comprehensive financial advisory services offered by a family office.

Discover how individuals are influenced by their internal wealth thermostat, as seen in cases of lottery winners and resilient figures like Donald Trump. Learn strategies to reset your mindset for financial success and explore transitioning from corporate to real estate entrepreneurship, alongside insights on book publishing and investment opportunities.

Buck recounts the time he met his hero through manifestation.

This week’s episode explores the world of artificial intelligence as it relates to stock trading. While I’m not a stock trader, I find the use of AI in various aspects of finance fascinating. But before we do that, let’s take a step back for a moment and realize that sometimes you don’t need artificial intelligence to guide you. Sometimes you just need common sense and some guts. If you’ve got those qualities, you should be chomping at the bit right now. As Warren Buffett famously said, “Be fearful when others are greedy, and greedy when others are fearful.” This contrarian approach has proven successful for many investors who have had the courage to act when others hesitate. Historical examples demonstrate the potential rewards of this approach. Following the 2008 financial crisis, investors like John Paulson and Sam Zell capitalized on depressed real estate markets. Paulson’s hedge fund reportedly made billions by purchasing distressed properties and securities, while Zell’s Equity Residential acquired thousands of apartments at steep discounts. The current multifamily real estate market provides another opportunity for people to make extraordinary profits. We are just at the beginning of a new cycle. Unprecedented interest rate increases have decimated property values, creating a unique opportunity for investors. The key to success in these situations is to identify markets that are temporarily depressed due to external factors rather than fundamental flaws. In the case of multifamily real estate today, the current downturn is driven by interest rates, not a lack of housing demand or oversupply. When investors purchase already discounted properties in high-interest rate environments, they position themselves for further potential windfall gains as rates normalize. As interest rates decline, property values typically increase. The moral of the story is this, while fear may dominate current market sentiment, history shows that those who invest wisely during downturns often reap substantial rewards. As Buffett noted, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” The current multifamily real estate market may well be one such golden opportunity for investors with the vision and courage to act. All you need is some common sense and some guts. But in this week’s Wealth Formula Podcast, we are going to talk about more nuanced things that might require something extra like artificial intelligence. 05:50 Using AI for Stock Trading 07:30 Do You Use AI for Daytrading or Long Term Trading 11:31 Is AI Closing the Gap Between Institutions and Everyday People? 19:16 How to Get Started with Using AI for Daytrading?