Wealth Formula Podcast

Asset Allocation Diversification and Leverage Permanent Life Insurance and the Wealth Accelerator Multi-Family Real Estate Asymmetric Investing: Taking a Risk How to Avoid Single-Point of Failure?

Zulfe Ali is a broker dealer and investment advisor—but not your run-of-the-mill type in this field. He's been in the middle of the action on Wall Street as a mergers and acquisitions guy for JP Morgan and Bank of America in the 90s and ran a multibillion-dollar sovereign wealth fund for over a decade. I've seen photos of him with world leaders like former UK Prime Minister Tony Blair and others as part of his former position. To say the least, he's not one of those 6 week course advisors out there. While he has now opened his door to individual investors like us, he is using institutional principals to help clients grow their money. As you can imagine, those principals are quite different from your typical advisor and I am happy to endorse him to anyone looking for a third-party financial advisor. Many people have asked me for a recommendation throughout the years and I have not been able to give one until now. In this episode of Wealth Formula Podcast, I speak to Zulfe about his perspective on asset allocation and the current economy. Make sure to tune in to see what a guy at his level is thinking. And later on this week, tune in for my "Back to School" episode where I give you insight into how I design my own investment portfolio. Listen NOW!

Return to Personal Finance: Estate Planning Do You Need a Will? Is the Estate Tax Stupid? Avoiding the Estate Tax

Those of you who have been listening to me for a while know that I am not really a precious metals guy. I know the arguments and I respect them. Gold has held its price over an unprecedented amount of time. An ounce of gold got a guy a nice toga and sandals in Roman times and today it will get you a nice suit and a pair of shoes. In that regard, gold has been the ultimate hedge if you are looking for wealth preservation over a thousand years. And that's what people selling you gold will tell you. They aren't lying but there is often an element of fearmongering involved in that world that I find distasteful. The thing that I don't really like about gold is that it is an asset that doesn't throw off any money. And if you are storing it somewhere it's going to cost you money to do so—kind of like real estate that has negative cash flow. With negative cash flow, leverage doesn't make sense either—not like it's available on gold anyway. So I guess my perspective is if you want a real asset that is hedged against the dollar and keeps up with inflation, why not buy real estate? In fact, if you don't put any leverage on the real estate it's pretty much behaving like gold but giving you an income as well. I remember Dante Andrade and I looking for properties for Touro and seeing Chinese buying $30-40 million dollar assets for cash. They were essentially buying a storage of value outside of China. Kind of sounds like gold, right? Except the real estate cashflowed of course. Anyway, today I'm not anti-gold by any means. I'm just not a gold bug. As for other precious metals, they often have more utility than gold so that certainly is an appealing quality. Silver, for example, is used in several industrial applications. In that sense, there may be some additional value there that could lead to price increases in the future. I'm certainly not an expert in this area though. That being said, personal finance is personal and you should hear the argument for all types of assets and make your own decision. My guest this week is an expert on silver and makes a pretty interesting case for why you might want to add some to your portfolio. Make sure to tune in! P.S. Later this week, look for another podcast as part of our "back to school series"!

I live in Montecito, CA. It's a small beach town of about 5 thousand people at the southernmost part of Santa Barbara. I moved here from Chicago in 2017 and started living here as a renter. One thing I learned over the years is that whenever I move to a new area, I always end up finding a part of town I like better so it's best not to buy right away. There was also quite a bit of sticker shock when I moved here. In the northern suburbs of Chicago where we moved from, I paid $2 million for a 7000 square foot home on 2.5 acres and an indoor pool. $2 million didn't get you much of anything in Montecito so I needed some time to digest this new reality for a bit as well. In hindsight, that wasn't such a good move. Since 2017, Montecito homes saw an average sale price increase of over 60 percent—the steepest rise in prices in California during this time. And to be frank, that number sounds a bit low to me. Covid didn't help. Rich people from LA, San Francisco and New York realized that if they had to work from Zoom anyway, they might as well do it from paradise where they could also hike the mountains and go to the beach on the same day. You know what else didn't help?... Low interest rates. However, I will say that the number of cash buyers of multimillion-dollar homes in my area is unreal. As for the rest of the country, the suburbs pretty much everywhere took off. Near zero interest rates and nowhere to go made people buy homes so they had a nice place to be all day long while quarantined. Now that quarantines are over and interest rates are high, you might think home prices would have fallen off the cliff. Nope. Remember it's all about supply and demand. Right now, supply is low. Why? Well, if you bought an expensive house at a fixed rate in the last few years would you be selling anytime soon? Mortgage rates have more than doubled. In other words, many people today could not afford the house they bought a few years ago. That's a problem across the country. As a result, supply is so low that even minimal demand is keeping housing prices high. All I can say is thank God I ended up buying a house before it got too crazy. The issues around real estate prices right now are complex but worth understanding. My guest on this week's Wealth Formula Podcast is an economist who specializes in these specific issues. Make sure to tune in and see what she has to say about this very unique time in real estate history.

I don't know about you but my kids are about to head back to school. In this spirit of that, I thought it might be nice for us to get back to basics as well. For the next few weeks, I will be releasing at least one podcast that involves the basics of personal finance in addition to whatever else may be on the docket. This week's back-to-school episode is about asset protection and my guest is Doug Lodmell. Make sure to tune in and let me know if these shows are helpful!

I have a medical degree and am a former board-certified surgeon. Yet that is not my identity. My identity is that of an entrepreneur and investor. This is an identify for which I did not go to school. Without trying to sound dramatic, I was born this way. I think it's a genetic thing. You see my dad came to this country in the late 1960s and trained as an engineer. He eventually got caught doing real estate on the job and got fired shortly after I was born. That's sort of my story too—I was working at a cosmetic surgery company while planning to start my own company. When they found out, they perceived me as a competitor so they fired me. The apple does not fall far from the tree I guess. He went on to a career as a real estate entrepreneur and continues in that endeavor even today into his 80s. Despite my detour into the surgical world, I too have spent the majority of my life as an entrepreneur. It wasn't a choice. It was in my nature. I am unemployable. I hate having to answer to others and I despise hierarchy—unless I'm at the top. That's why I am a business owner and not an employee. Again, to be clear, I don't think there is anything wrong with being an employee. I just am not built that way. Now, in my case, I had the daredevil instinct to start businesses from scratch. Some of my business ideas failed and some were wins. The good news about being an entrepreneur is that you just need a few big wins. Now if I did not have daredevil entrepreneurial instincts would I have been able to be a successful business person? Yes, but I don't think I could have started businesses from scratch. But that does not mean that you have to have to be born an entrepreneur like I was. It just means that you might want to find a more structured way to get into the arena. Buying a business is certainly an option. I will say that when you start a small business you get suspicious of buyng other small businesses because you know that somewhere in your own business there is a closet full of skeletons. When you buy a business, you don't know where that closet is. That closet often has all kinds of secrets. For example, it may tell you who the key people are that make or break that business. What if those people leave when you buy the business? The only way to avoid buying a business with such an Achilles heel is to buy one of sufficient size that can't rest on just a few shoulders. But not all of us can afford a $50 million business with an executive team in place. That's where franchising might make sense. The value proposition of a franchise involves having the playbook on how to successfully run a business with the backing of a larger entity behind you. In theory, this should provide you with play-by-play directions on how to start and run a successful business. In addition to guiding the less business inclined into ownership, franchises may also provide some level of risk mitigation to people looking for business opportunities but reluctant to deal with the unknown variables of business ownership. That said, it is not without a price. Franchise fees are real and must be weighed into the entire equation. My guest on this week's Wealth Formula Podcast helps people navigate the world of franchise opportunities and is a great resource for those interested. I should point out that I have no financial relationship with Kim nor have I found franchising suitable for myself at this time. But it might be for you and you should certainly know a little bit about this option. So tune in!

It turns out that the conversation about getting out of fossil fuels and into green energy is a lot more complicated than just energy. Of course "black gold" has literally fueled our society into its wealthiest state since the beginning of man. No one argues that. But there is a clear movement globally to try and move to clean energy for the sake of the environment. Beyond energy, however, oil plays a pivotal role in the manufacture of several products that we rely on in our daily lives. For example, the petrochemical industry heavily depends on oil as a raw material. Petrochemicals derived from oil and natural gas are the building blocks for a wide range of goods from plastics to resins, synthetic fibers to rubbers, detergents to adhesives, and even solvents. Without these materials, you wouldn't even have the materials to make the computer or smartphone you're using to read this email. Right now, we literally need oil to live. Many pharmaceuticals such as aspirin and the coatings on time-release pill are made from oil derivatives as are artificial heart valves, artificial limbs and even contact lenses. I could give you a myriad of other products that rely on oil but suffice it to say that life without these products would not be the same. Does that mean that we should give up on alternative energy? No. We should always be looking for cheaper and cleaner alternatives. The point is that to truly get off fossil fuels we also need to start thinking about alternatives for all of the products that rely on oil as well. It's an underappreciated problem that my guest on this week's Wealth Formula Podcast addresses and it's worth your time to understand the full scope of the issue. Listen Now!

It has been a tough year for real investors. Inflation and interest rates have created distress and uncertainty. But let me remind you of a few things. Investing isn't for the faint-hearted. EVERYONE loses at some point. The idea that you can always win is a fallacy. Of course everyone would agree with that statement rationally. However, our brains are not wired to think rationally in stressful times. It's a tall order. There is a concept in psychology called "loss aversion" that means we are wired to fear loss more than we desire gain. So if you have an investment go bad in a distressed market, you might let the fear of future losses prevent you from investing in an asset that might create significantly more gain down the road. The Chinese word for crisis is the same word for opportunity. When there is blood in the streets, you want to activate your instincts as a predator more than that of the hunted. That's something all the world's greatest investors will tell you. And by the way, those investors have all lost money at some point in their life. Go back to basics. Why do you invest your money rather than leave it in the bank? I invest my money because leaving it in the bank is a way to guarantee loss of purchasing power. Think about it. Last year, inflation soared over double digits. Did you get even 1 percent return on the money in the bank? Money in the bank guarantees a loss of real buying power—double digit losses over the last year. Why do you invest in real estate or other alternative assets instead of only a portfolio of stocks, bonds and mutual funds? I invest in alternatives because they can result in extraordinary returns. I have experienced that over and over again and taking some losses now is not going to change my view of investing in the future. I stand by the notion that no one ever gets rich with a portfolio of stocks, bonds and mutual funds. At best they are going to preserve your wealth with modest growth. I'm willing to take a little bit more risk for the larger reward. So far it has paid dividends. The point of all of this is to say that decision making in personal finance is like anything else. The hardest part of it is to stay rational and not let fear or other emotions cloud your thoughts. My guest on this week's episode of Wealth Formula Podcast knows a lot about making decisions under duress. He's a fighter pilot who has had to think clearly to avoid imminent death. And well…it's the same type of thinking you are going to need to do if you're going to make money as an investor in this unpredictable world. Listen to the interview NOW!

I was in high school when the Berlin Wall came down. The ensuing decade was really like no other I have experienced in my life. It was the 1990s. There was no more cold war. Decades of fear of nuclear annihilation vanished into thin air. And 9/11 had not yet happened so we did not yet know the new world of terrorism. It could be that I was young and stupid but life seemed good. The news of the day was about Monica Lewinsky's stained dress and political conflict seemed ludicrous but benign. Back then, I used to think that the world just got better with time. But in the last 20-30 years I have realized that it's actually more of a pendulum. There is no doubt that we now live in turbulent times. The country is horribly divided to the point where rational individuals have brought up the idea of a national divorce. Ronald Reagan is rolling in his grave. Nevertheless, as crazy as these times may seem, we should keep in perspective that we have seen worse before. In 1861 we actually did have a civil war. As for cultural wars. Well, all you have to do is go back to 1968 to see that what's going on now is actually pretty tame. Of course, I don't need to tell you that the United States has had numerous economic booms and busts throughout our history. Bottom line is that history does not repeat itself but it certainly does rhyme. My guest on today's episode of Wealth Formula Podcast is an esteemed historian that has recognized specific historical patterns and suggests that they are highly predictable. So what's next for the United States and its economy? He thinks we are in the final stage of an 80-year cycle. Find out what that means for you on this week's Wealth Formula Podcast.

Shownotes: 0:00:00 - Advancements in Cancer Detection Technology 0:00:35 - GRAIL Galleri test 0:02:11 - About Dr. Josh Ofman 0:05:14 - Cancer really is a disease of the genome 0:12:35 - Various guidelines for early detection of certain cancers 0:16:45 - Cancer Detection in Blood Biology 0:19:03 - Cell-Free DNA 0:23:38 - How many cancers is the GRAIL Galleri test able to detect?

Why is financial education not part of our school system? To understand that, you have to understand where our school system came from. Our educational system started during the industrial revolution and was influenced heavily by the Prussian system. What do you think of when you hear "industrial revolution?" I think of factories and conveyor belts. This was a time of massive production gains in the United States and a fundamental change in the way we live. So not only did businesses need to produce more products with factories, but they also needed factories to create people to work in those factories. Schools became factories for people. Students were treated like products on an assembly line, all learning the same thing at the same pace, much like widgets rolling off a conveyor belt. The rich business owners were the beneficiaries of this system. They got a workforce ready to fit into their industries, and these workers were less likely to question or challenge the system because that's not what they were trained to do. Despite the fact that we have moved beyond the industrial revolution into the information age, the old education system remains. Lots of standardized tests, rote learning, and teachers seen more as authorities than guides. Now, ask yourself why financial education isn't part of our school system. It becomes pretty obvious doesn't it? Why would a system designed to create a workforce teach them about money? After all, financial independence doesn't exactly incentivize someone to continue working. My guest on this week's Wealth Formula is a young woman trying to change the system. It's clearly an uphill battle but make sure to listen and hear how she's planning to do it.

This week's podcast is about energy. But before we do that I want to comment on a few things about our investing ecosystem. A decade ago when I first started playing around with this podcast concept I was very excited about a whole new world of investing that I was learning about. Why invest in the stock market if you could invest in real estate, oil and gas and other businesses that seemingly made a lot more money and had a lot less risk? A decade later, I can see why it often makes sense for people to just buy ETFs and call it a day. Or, maybe a highly stable asset class such as permanent life insurance i.e. Wealth Formula Banking. Private investing can be very lucrative, but it's not regulated so it attracts all kinds of nefarious and/or incompetent characters to the space. Retail (mom-and-pop) investors are particularly vulnerable to these people because they tend to have less financial sophistication. That's not to say they aren't intelligent. It's just hard to be a full-time professional and a sophisticated investor at the same time. That gets a little dangerous because personal finance podcasters like me are looking for content. We see ourselves as providing education and entertainment when in fact we often inadvertently endorse individuals to whom we should not give a platform. I have to admit that I have been guilty of this myself. Especially early on, I would interview anyone with an interesting idea without considering that my listeners might take the interview as a stamp of approval from me. For example, despite my own vehement and vocal dislike for investments in oil and gas drilling, I've given a platform to people on my podcast who were raising money for that. People in our community lost money because of that. For that, I apologize. In recent months, retail investors in this space have been hit especially hard. The SEC has shut down funds in the carbon capture and cannabis spaces that appear to be based in some level of fraud and other funds have simply collapsed based on poor business plans that were never attenable in the first place. Fortunately, our group was able to dodge these schemes. It's hard enough to invest without swimming with sharks. Case in point…my real estate portfolio and that of my investor group absolutely has some losers in it right now. Much of that is due to an unprecedented slope of rate hikes and unexpected price escalations in such things as materials, property taxes, and insurance. But it's not because of fraud. In investing, you can't always win. You just need to win more than you lose. At the end of the day, my own investments are still going to net out quite profitably. I've borrowed from traditional investing paradigms and "volume-averaged" into a lot of different assets. I've stuck to a plan over several years that will, fortunately, overcome some setbacks and I will now position myself to be opportunistic and take advantage of oncoming distress. It will get ugly and most will be too scared to take action—especially if they have suffered losses. But that's exactly when you want to be greedy, not afraid. But going back to how we can move forward in the safest way possible, we do need to be proactive in risk mitigation—especially when it comes to avoiding scams. So what am I going to do? 1) I will not interview anyone actively raising capital unless I am personally involved in the operation in a position of transparency. 2) Our Investor Club will only present opportunities in which I am a managing partner and/or which has undergone due diligence by a third-party SEC registered broker-dealer. In taking these steps, my podcast itself does become a little bit more challenging. As you may have already noticed, we have shifted to more macro issues than investment-related topics. However, I also believe that the steps we are taking with the podcast and with the investor club will provide our group a "best in class" retail experience that involves institutional-level due diligence. It will be more complicated and challenging to execute but that's what you deserve. Now, getting back to this week's episode of Wealth Formula podcast. We are going to talk about oil and alternative energy sources at the macro level. It's information that you need to understand the larger global financial picture today so make sure to tune in!

What a crazy ride it's been. Despite Covid, plunging interest rates actually made home prices explode to new highs. In my own neighborhood, housing prices doubled. Then it started to look like the housing bubble had started to burst. There were mortgage companies in distress and laid off thousands. Economists warned the next housing recession was upon us. It all made sense. How could such a wild ride not end with a hangover? But then a funny thing happened. For the last few months, housing prices actually started creeping up again. They aren't going up by much. But the big thing is that they're not going down. A lot of this is really due to reduced inventory. People who were going to sell their homes, most likely sold them as they saw their largest asset bubble into a pile of potential cash. With less inventory bidding wars are helping to push prices up further. In fact, Zillow predicts home prices will keep rising in 2024. Obviously a lot of that will depend on what the Fed does in the next few months. This is tricky stuff to predict. My guest on this week's Wealth Formula podcast is using Big Data to make his own predictions. Listen now to hear what he has to say.

Last week I called the economy schizophrenic. Actually, that's an insult to schizophrenics. This is simply a dysfunctional economy. It's the product of a good idea called capitalism with excessive intervention—namely by the Federal Reserve Bank of the United States. Today's economy reminds me a little bit of the movie, Jurassic Park. Altering the natural order of things has unexpected consequences… like a T-Rex eating you alive. Similarly, the Fed printed money for years and kept interest rates at artificially low levels—even when it probably didn't need to. Sure, raising rates 10 years ago might have caused a little recession along the way, but that's NORMAL. Instead, they decided to take intervention to a new level. Rather than seeing the role of business cycles in a healthy economy, they became reactive to equity markets. To be clear, keeping equity markets in a bubble has never been a mandate of the Federal Reserve. But there they were. They would threaten to raise rates, the markets would panic sell and then the Fed would quickly back off. The Fed was playing a game of chicken with investors and the investors won over and over again—so much so that people began to believe that the Fed wouldn't ever let the markets go into free fall. Then Covid happened and, with it, something unprecedented. True helicopter money was released into the hands of ordinary Americans by the United States government. You see when the Fed prints money it lands in the arms of banks who would simply hoard it. This time, things were different. People needed the money to eat so the government put it into their hands. And that, along with high demand for goods because of a crippled supply chain lit the fire of rapid inflation—the worst we have seen in 40 years. Of course, somehow the Fed didn't realize that it was real at first and didn't act quickly. In hindsight, gradual increasing of rates would have made sense and probably prevented the need for extreme measures. Instead, it waited for things to get out of hand and then put its foot on the gas like never before. Now we are sort of in no-man's land. Inflation seems to be getting under control. There is some distress in the economy as seen by bank failures and corporate bankruptcies at 2010 levels. The commercial real estate markets are a mess. But…we also added 339,000 jobs last month. Why? I don't know other than to guess it has something to do with optimism that the Fed will change course and become Dovish with rates. In other words, businesses may not believe that the Fed will let things get that bad before they reverse course and start cutting rates. It reminds me of a spoiled child who knows that if he whines long enough his parents will give in. It's not the kid's fault that he behaves that way. It's the way the parents taught him to behave. Similarly, businesses and investors don't really believe the Fed when it says enough is enough about low rates and money printing. I'm not sure that I do either. So, that's this non-economist's take on what's going on with the economy. There's a good chance that I have several flaws in my argument but, as I've said before, I'm trying really hard to make sense of it so I can move forward. Richard Duncan is a real economist—one who recently spoke to Congress on what he believes needs to be done to move America ahead. He has some pretty good ideas about what's going on with the economy now that I think will be useful to you. Listen to my interview with him on this week's episode of Wealth Formula Podcast!

I am annoyed with this economy. That doesn't seem like a very professional thing to say but I don't know how else to express my feelings any better. You see, nothing really makes sense. Inflation has been as high as it has been since the 1980s. At first, the Fed didn't think it was real and then reacted by increasing interest rates at the fastest rate in American history. Businesses are feeling it. Corporate bankruptcies are at 2009 levels likely in response to illiquid lending markets. The commercial real estate market is paralyzed with blood starting to seep through the streets. But…last month's jobs reports showed that we added 339,000 jobs significantly exceeding expectations. WTF? It makes no sense at all. Why is the jobs report important for us? Well, because that's one of the variables that the Fed is looking at as they decide what to do with rates going forward. Inflation is down to 4 percent which is starting to feel comfortable, but a jobs report like that is going to give the Fed pause on being dovish going forward. So, I have no idea what to expect next. And if I have no idea what to expect then other businesses and investors are likely equally confused. And the problem with that is that uncertainty is what the markets hate the most. So…that's where we are at and that's why I am so annoyed. This week on Wealth Formula Podcast I interview an economist who teaches entrepreneurs. He's written a book on how we can start looking at the economy in a practical way. His perspective is a little different than the academics who run the Fed and it will be worth your time to hear what he has to say. Listen NOW

There is a significant amount of distress in the investor world right now. With inflation and interest rates climbing quickly, it has left the equity and real estate markets in shambles. We will get through this. And while I encourage you to fight against the fear of investing so that you can take advantage of oncoming blood in the streets, I understand if you are reluctant. We've had tough times in American economic history. The Great Depression of the 1930s was a period of extreme economic hardship and uncertainty. It started with a stock market crash on Black Tuesday, October 29. The Dow Jones Industrial Average lost about 12% of its value that day. The crash continued into the following weeks. By mid-November 1929, the market had lost over $30 billion in value (approximately $400 billion in today's terms). This loss of wealth led to reduced consumer spending and investment, which in turn led to job losses and business closures. Real estate prices also fell significantly during the Great Depression. Many people were unable to afford to keep their homes or buy new ones, leading to a surplus of available properties and a corresponding drop in prices. However, life insurance companies displayed a surprising level of resilience during the Great Depression. While it was a challenging time for these companies, as it was for the entire economy, they weathered the storm better than many other types of businesses. For this reason, an entire generation of individuals put a premium on permanent life insurance as an investment. It was all they had left once the dust of the Depression had settled. Nevertheless, the next generation of Americans forgot about the depression and the value that permanent life insurance had played in their parents' survival. Even with insurance strategies that significantly increased investor returns, financial advisors focussed on their personal AUM continued to treat it like a red-headed stepchild. As you may know, I am an advocate of permanent life insurance, specifically overfunded type policies such as Wealth Formula Banking and Wealth Accelerator. They have been a source of profitability and stability for me. Even in times like now where my portfolio has taken such a beating, I can count on the insurance portion of my net worth. As I thought about that last week, I decided to bring it back on your radar so I invited our insurance partners back to the show. If you haven't yet secured permanent life insurance as part of your portfolio, you will want to make sure you listen to this week's episode of Wealth Formula Podcast.

With rising interest rates, I keep getting questions about whether value-add real estate is dead. The answer to that question is a firm no. Remember, people have made money and lost money in all kinds of interest rate and cap rate environments. The interest rates we have right now aren't even close to the highest they have been in the United States. So why is there so much distress in the real estate market and all other correlated markets then? The biggest problem that the Fed has created for us is that they did not react to inflation fast enough and so it got out of hand. They ended up having to play catch up and raise rates at the highest slope in American history. All markets hate instability and extremely rapid rising rates wreak havoc on all of those markets that we typically rely on for investments including real estate and equities. This is particularly problematic for floating rate scenarios and for businesses that need liquidity. Banks don't like to lend when rates are moving up quickly. The truth is that I don't know anyone who hasn't lost money during this period of time—whether that be in real estate or stocks. That doesn't mean it feels good although misery does love company. The key, as I will continue to emphasize, is to be prepared to mentally cut against the grain of fear. Investing money while you are down is extremely counter-intuitive to the human psyche. Fear is designed to protect us. If you were running from a lion, you wouldn't be inclined at that moment to consider how you might avoid running into one in the future. You would be focused on the danger at hand. That reaction of focusing only on the danger might be useful in the wild. But when it comes to investing, it could prevent you from keeping your eyes out for great opportunities. While they might not be here yet, be prepared mentally. These are the times when investors with ice in their blood make a lot of money. Use this time to get the rest of your house in order. Get your asset protection and estate planning in place. Start learning about other sectors. The truth is that there is almost always something to invest in if you know how. How about tech? How much do you know about artificial intelligence? Probably not much. I don't either. But it's clear that this is going to be life-changing technology for better or worse so maybe we can make money off of it. Today, we are going to spend some time talking to an expert in artificial intelligence. I urge you to listen to this episode. I learned a great deal and it opened my eyes to its potential. Listen HERE

This week's Wealth Formula Podcast features me trying to answer your questions. Make sure to tune in as I try to answer questions about interest rates, the state of value add real estate and Central Bank Distributed Coins! Listen HERE

Joe Biden says the economy is "strong as hell" but he's wrong. Interest rates increasing at the steepest slope in history over the last year have caused a serious problem for the economy and hell is about to break loose. I'm not the zombie apocalypse type but I have seen some shady-looking dead people walking around with silver dollars in my yard and I am a little concerned. Bankruptcies are up 216 percent on the year, higher than the 2008 crisis and double that during the Covid lockdowns. This is before a recession has even been declared. Banks aren't lending. Much like they did in 2008, they are sitting on bailout money. Not only does this cause bankruptcies but it also keeps healthy companies from thriving. The Federal Reserve has really screwed us and it could take a while before we dig ourselves out of the impending mess. It doesn't help that the current administration appears blind to the problems that we face. We as real estate investors are not immune from the carnage. We rely heavily on debt and those rates have made the markets illiquid and have significantly affected property values. So we need to come to grips that there is a good chance many of us are going to lose some money soon. I know I have already. But it is important to put things in context. The ride up has been fun. Anything people bought and sold between 2009-2021 invariably was a win. But that's not how markets work. Everybody loses sometimes. The key is understanding that to get ahead you have to win more than you lose. That means learning lessons when you lose and also not giving up. In other words, just because you lose some money in this market doesn't mean you don't prepare yourself to take advantage of the same set of facts on the buy side. That would be a mistake. Nothing that happens in the next year is going to kill you. Don't lose sleep over it. This too shall pass. My guest on Wealth Formula Podcast this week has thought and written a great deal about the psychology of investing and retirement. Listen to this interview as it may help you to navigate the headwinds before us.

I was a surgical resident for years. I started out as a neurosurgeon, moved over to Otolaryngology Head and Neck Surgery then ended up in cosmetics. During my training, it didn't matter how much I worked. I would always get the same paycheck. I wasn't lazy but I certainly didn't enjoy working for what amounted to minimum wage. And I was not about to volunteer for any more work than I was assigned. Eventually I did finish training and I was hired by a facelift company. I know it sounds kind of weird but they would recruit patients with questionable marketing tactics and hired an army of young surgeons to do the work. I got paid about 15 percent on revenue I generated for the company. They didn't charge as much as your typical facelift surgeon, but because I was doing 3-4 facelifts a day, it turned out to be really good money. For reference, my most recent job was as a chief resident in San Francisco for which I was paid $50K per year (that's poverty in SF). The day I became a capitalist was the day I got my first real paycheck. In two weeks, I made more than I did in my entire surgical internship year. It blew my mind. Suddenly I realized that the harder I worked the more money I could make. And that made me work really hard! Suddenly, I was more than happy to put in long hours. I enjoyed doing the procedures and I was good at it. But I also liked the idea that my work was getting proportionally rewarded with dollars. There was a noticeable change in my spirit. Even though I didn't own the place, I cared about the office and wanted to make sure we were doing a good job. I took ownership and that mattered. After all, in the history of the world, no one ever took a rental car to the car wash. Of course, like all entrepreneurs, I eventually realized that there was an even better way to make money than getting paid for the amount of work I did for the business—own your own business. I went on to start multiple businesses and the rest is history. But the moral of the story is that opportunity for those who have talent and work hard is endless in our country and getting paid for the first time gave me my first taste of that. Anything that threatens that reward system threatens the very core spirit of who we are. Of course not everyone shares my views—especially these days. And it's not always as simple as perhaps I make it sound. We still need to take care of people in need and we still need to provide opportunity for the underprivileged. This became even more evident during Covid when people simply couldn't work. But I fear some of the remedies of a difficult time have permanently altered our culture. After all, it is difficult to take things away from people after you give it to them. My guest on Wealth Formula Podcast today was right in the middle of policy making during the Covid crisis and was making decisions like what to do about people who couldn't pay their rent. What makes his perspective interesting is that he is a libertarian who works for a libertarian think tank. Find out how a small government guy navigated the biggest government intervention in American history on today's economy on this week's Wealth Formula Podcast!

When I was a kid, my dad deposited $1,000 for me and my two siblings at a local bank. I'm not exactly sure why he did that, but what I do recall is that my older siblings showed me that I could go into the bank every couple of months and ask for "interest." I remember being about 7-8 years old and riding my BMX bike to the local bank with my bank passbook in hand. For those of you who remember, the passbook was kind of like a passport with your bank information. Every time you made a deposit or withdrawal, they would put the record in there. This was the early 1980s, and interest rates were exceeding 15 percent. Now I don't know exactly what my rate was, but I do remember coming out of that bank with serious dough—like 20 bucks at a time. To celebrate, I'd cross the street and get myself a 99-cent McDonald's cheeseburger. Times have changed. No more passbooks, and I doubt the bank would let my 8-year-old daughter walk in and ask for the interest on her account. In fact, they would probably laugh at her and tell her that banks don't pay interest anymore. But wait…should they be? Back in those high-interest days, people were getting 10 percent interest on their money and living off of it. Of course, for the last several years, we have been accustomed to near-zero interest rates. It was great for taking out loans but not great for deposits. The thing is that now interest rates have risen back to levels more consistent with historical levels, and banks really ought to be paying us more interest. They know that. But as my buddy Peter Arts recently pointed out to me, they aren't going to offer it to you unless you ask. Pete's my old neighbor in Chicago and knows the banking system as much as anyone else. He's getting over 5 percent on his money sitting in the bank, and he says we should be too. Simple tweaks to make you thousands of dollars per year sounded like a great reason to interview him for this week's Wealth Formula Podcast. Not listening to this podcast could literally cost you tens of thousands of dollars, so make sure to tune in!

I used to be a guy who prided myself on being a minimalist. Despite doing pretty well for myself financially, I drove the same 2007 Prius I bought the day after residency until just a couple of years ago. My clothes often didn't fit and I never shaved. Oh yeah—I was about 25 pounds heavier because I didn't really care how I looked. I also didn't really spend much on vacations or special events— I used to just blame that one on parenthood. It's funny because I sort of took pride in my rejection of material possessions and my frumpy looks. I was sort of giving society the finger. Then all hell broke loose: namely the beginning of Covid lockdown and the end of my marriage. They kind of happened at the same time so it was a little rough. Confused and disoriented, I didn't know what to do so I just began to hike the beautiful mountains in Montecito. It reminds me of the movie, Forrest Gump, where Forrest just decides to run one day and keeps going back and forth across the country until he seemed to figure something out. I hiked so much during those days that I pretty quickly shed most of my extra weight. Meditating on my life through those gorgeous trails every day made me see myself for what I had become: kind of repulsive. Ok, so maybe that sounds a little harsh but that's the way I saw the old me. I needed to update my self-image for myself. It started out with the material things. I bought that Italian sports car I always wanted. I bought clothes that actually fit me and that were younger than my children and I started to take my health seriously. Oh… and I started shaving every day. They say the Chinese word for crisis is the same as the word for opportunity. Well, I took this crisis as an opportunity to overhaul my life and to start over. In starting over, I became acutely aware of the time I had wasted not living the life I want: material or otherwise. I just didn't want to spend the money. But why wasn't I spending any of this money that I was working so hard to make? After all, I can't take the money with me after I'm gone. I'd already done a good job of setting my kids up with assets and insurance. Why not spend on me? Well, that's what I started doing! And I have to tell you it's a lot more fun than the alternative. And maybe I'm spending too much now, but I also have a lot of time to make up for. So now I'm buying the stuff I want and also living a life full of new experiences. The funny thing is that this was supposed to be about me, but I found that this change has also been great for my daughters as we now travel more and go to a lot of cool events. So why do I bring this up? Well, a couple of months ago, a friend and WF listener texted me and suggested I read a book by Bill Perkins called Die with Zero and it seemed to encapsulate so much of my new ethos that I wanted to share my thoughts on it with you. So I grabbed a couple of familiar faces to do a little book club on this week's Wealth Formula Podcast. Make sure to tune in!

Government is a funny thing. It is an organization that makes and enforces rules and regulations. The more rules and regulations it makes, the bigger it gets. It's a monster. Government is also a significant employer that doesn't seem to care much about being lean and profitable. Instead, it thrives on making itself even bigger and creating more things to control. But as the government starts to infringe on people's perceived personal space, people start to push back and that is the only force that resists this monster's thirst for power. Make no mistake, during these times when governments are held in check by their people, the monster's appetite for power and growth does not go away. It lurks in the background waiting for its opportunity to pounce. That opportunity comes when people are at their most vulnerable—in times of crisis. When things go south, people are willing to give up more of their freedoms in exchange for stability. Governments are more than happy to oblige. Just think about some of the crises in recent history and the government response to those events: The Terrorist attack of 9/11, the 2008 financial crisis, Covid, and the Silicon Valley Bank failure. In each situation, the government found an opportunity to change the rules and obtain more control. This playbook isn't just a conspiracy theory. It's just how things work. Mainstream government figures will tell you the same as you'll find out in this week's episode of Wealth Formula Podcast. Listen Now!

You know the old saying coined by Ben Franklin, "Nothing is certain except death and taxes". Longevity science might eventually prove that death is not inevitable but for the time being it is. As for taxes? Well, I've spent a lot of episodes talking about tax mitigation while you live and I know for a fact that a number of you are legally not paying income tax. (HINT: REP) But there's another kind of punitive tax called the estate tax (aka death tax) that kicks in when you die. The death tax is sometimes also referred to as the "stupid tax" because it has been creatively dealt with by savvy estate attorneys for years. They would tell you if you died with a ton of money without this kind of planning you might have been kind of stupid. All of this stuff might seem a bit too sophisticated for your situation if you are not in the ultra high net worth crowd. After all, doesn't that estate tax thing kick in at $25 million if you're a married couple? Well…for now, yes. But various tax laws are changing and that amount gets cut in half in just a couple of years. Do you think you are likely to have an estate of greater than $12.5 million ($6 million if single) by the time you die? If you listen to my podcast then there is a good chance the answer is yes. In other words, don't think that the world of irrevocable trusts and gifting does not apply to you because you aren't worth that much today. It's probably a pretty good idea for you to at least know your options. Even if you believe you will never get that wealthy, there are some things that pretty much everyone should do when it comes to estate planning. These things are inexpensive and only have to be done once. Whichever camp you fall in, this week's episode of Wealth Formula Podcast will be of interest to you as I interview my own estate planning attorney, Joe Longo. This topic might not sound sexy but I'm quite sure you will find this interview to be extremely useful and pragmatic. Make sure to tune in!

I have been at this alternate investment game since I finished surgical residency in 2009. Luckily, since then my wins have significantly outnumbered my losses and I have made a lot more money than I ever did as a physician. But It hasn't always been smooth sailing. The first apartment building I bought for myself in 2010 was a big flop. Why? Well, I knew how to do real estate from reading lots of books and crunching numbers, but I didn't really know how to not get bamboozled. Let's just say the seller in that first deal was creative with his financials and I didn't anticipate blatant fraud while I was doing my due diligence. I should have known better than to buy in a D-class South Side Chicago neighborhood anyways. I lost $300K when I sold that building but it was a tremendous relief to get it off my hands. Sound horrible, I know. But frankly, the amount I learned by experiencing my own personal real estate horror story was priceless. Since then, I've never lost money on any apartment building. When I started investing in assets as a limited partner, the skill set for success was different. Early on, I was given some reasonable advice: Only invest with those who you know, like and trust. That's not terrible advice but what I've realized over the years is that it is incomplete. There is a lot more to investing than to know, like and trust the operator. For example, you may know, like and trust your brother-in-law who is starting out in real estate syndication. But that doesn't mean he knows how to operate a multimillion-dollar asset. He may give it his best shot but that doesn't make him competent and certainly does not put your investment in good hands. Know, like and trust is only useful to the extent that it should give you some confidence that someone is not trying to rob you (on purpose). After that, you have to do your own research. Ronald Reagan used to say, "Trust…but verify". You can trust the operator but you still need to verify their competence. Ask a lot of questions. Look at the qualifications of the team to carry out the business plan put forth and be cognizant of the operator's track record. If you do all of these things, you will minimize your risk of disappointment. I say minimize because there are no guarantees in the world of investing. In competent hands, real estate will provide a profitable outcome most of the time. But not always. So what is an alternative investor to do? The task of vetting where you deploy your assets may seem both critically important and daunting. So, what are your options? Well, you could give up and invest in Vanguard ETFs. If you do that, you might be able to preserve your wealth but you aren't going to get wealthy. Alternatives create wealth on a regular basis. So what else can you do to maximize your chances of success? I have said this before but will say it again—there is great power in collective intelligence—especially if people bring different skill sets to the table. At the very least, creating such a tribe of like-minded individuals will help to pool the right questions to ask about any opportunity. So how do you put together a tribe? After all, chances are that your friends and family are not into this stuff. If they are, you are all set. Otherwise, you may need to go to some in-person meetings like our Wealth Formula Events and network with others of like mind. The concept of tribe is really important in alternative investing. My guest on this week's Wealth Formula Podcast created a business to help various tribes to deploy capital in an efficient way. Make sure to listen in for some ideas on how you and your tribe could use these tools!

I am going to keep this brief because I have a cold and I don't want to subject you to Sudafed altered commentary. This week's Wealth Formula Podcast features an interview with Jay Parsons who is Chief Economist at RealPage. He is an authority on topics affecting multifamily apartments which, of course, is of significant interest to us all. The picture that he presents is one of transition. The short term is consistent with what we are already experiencing…pain. But as I said last week, there seems to be an undercurrent of optimism for the near future given the significant interest from big money to invest in apartment buildings. I was encouraged to hear what Jay had to say and I think you will be too. Let me know what you think!

The Fed just raised rates another 25 basis points despite global banking instability and investor angst. This wasn't a surprise. Curtailing inflation continues to be their primary motivation. How long will the Fed continue to raise rates? Well, inflation has to be clearly under control and/or there must be something else that happens that threatens the global economy. Isolated bank failures remedied by corporate takeovers do not appear to be threatening enough. So what is it going to take to get inflation really under control? I hate to say it but it's hard to see inflation getting under control without increasing unemployment. You see, the economic pain is shaping up to be a top-down phenomenon. Every day people have not felt the pain yet so they have not curtailed spending. When people either lose their jobs or start worrying about losing their jobs, inflation will finally be curtailed. Until this happens, expect more of the same. The investor class is going to feel more pain. But as I've been emphasizing in recent podcasts, with pain comes opportunity and I continue to believe that is what we will see in the latter half of this year. In this week and next week's podcasts, you will hear a similar theme that should make you feel somewhat reassured if you invest in multifamily real estate. The common theme is that multifamily assets are favorable in down economies and that these assets have become a darling for large investors and institutions alike. On this week's Wealth Formula podcast, I interview Harry Dent. Harry is a really interesting guy. In recent years, he has been pretty pessimistic about the economy. And now, he's raising even more red flags. But again, pay attention to what Harry thinks is going to happen with the economy as a whole and also his take on multifamily real estate. Harry is also famous for his economic forecasts based on demographics which I find fascinating. It's definitely worth a listen. Tune in now!

Oh what a mess this economy is! Helicopter money during Covid and supply chain issues brought on inflation like we haven't seen in decades. To respond to this self-inflicted predicament, the Federal Reserve began raising interest rates at an alarming pace. Never have we seen interest rates rise at this steep of a slope—even in good old Paul Volker's days. Inflation has been going down for several months although the most recent CPI figure is still 6 percent. That is well above the 2 percent target the Fed has had for years. That's why Jerome Powell was so hawkish last week about continuing to raise interest rates aggressively. They could do that without worry if nothing bad happened. But in the last week, something broke. Specifically, we saw bank failures of two regional banks. They weren't doing anything nefarious. In fact, they seemed to be doing what they were supposed to do—investing in conservative bonds that became worthless as interest rates rose. Things are moving quickly now. By the time I release this podcast a week from now, things could get a lot worse. So now, the Fed is in a pickle. Usually, when something "breaks" like it did, that is a signal for the Fed to back off its hawkish stance. But with inflation still at 6 percent, that isn't exactly an easy decision. So what do I think is going to happen? Well, whether or not rates go up at the next meeting is irrelevant. Unless there are other signs of systemic weakness too hard to ignore, the Fed will continue to raise rates until inflation is tamed. That is going to result in a lot more destruction to the economy than we see now. We are hearing all about banks right now but the real estate market is also about to see a reckoning. I do believe within the next few months, there will be the proverbial blood in the streets. In that process, it is quite possible that you will lose some money. However, the most important thing is to keep a level head. You see, it is in times like these that the most money is made. Those who are paralyzed with fear will lose out. Those who act rationally will win big. A buyer's market in real estate will be here shortly. This week on Wealth Formula Podcast, I speak with Jorge Newbery about the real estate and debt markets. Make sure to tune in!

If you want to build wealth quickly, you have to learn as much about tax mitigation as you can. Most of these mitigation opportunities are in the world of real estate and business. However, there are creative (and legal) ways to mitigate taxes for W2 employees as well—just not that many. And sometimes it's not obvious that, despite a very attractive tax benefit, you should probably stay away. I learned that the hard way by investing in oil and gas multiple times. Oil and gas drilling comes up often for high-paid W2 employees because of the compelling ability to deduct most if not all of the investment in the first year. The problem is that oil and gas investing, by nature, is quite risky. After all, you're essentially a speculator hoping your team hits a well. Oil and gas is also ripe with fraudsters and charlatans I have learned. Unfortunately, after multiple investments in oil and gas almost a decade ago, I have yet to get even close to recovering my money on any of the investments. I stopped investing in oil and gas years ago and now have stopped even interviewing anyone in that space. You're better off paying the tax in my opinion. Fortunately, there are a hand full of other opportunities available that don't rely on speculation or trusting PT Barnum types. For example, recently I interviewed a guy on short-term rentals. If I was a W2 guy, I'd be all over that. Ultimately though, you've got to figure out a long-term plan that potentially can transform your W2 income into non-W2 income. We've talked about this on the show before. In order to accomplish a complex strategy like this you need a good CPA. Tom Wheelwright, as you may know, is a great CPA. So, while you figure out who's going to get your tax plan together, take time to listen to this week's episode of Wealth Formula Podcast where Tom will update us on important new tax laws and give us some free tips on how to lower our tax bills. Listen now!

Why is decentralized finance advantageous? Let's ask artificial intelligence. As you may recall from last week's episode, ChatGPT is widely accessible to anyone right now. Here's the explanation on the value of decentralized finance from the ChatGPT software itself: "Decentralized finance, or DeFi, is advantageous for several reasons: Accessibility: DeFi allows anyone with an internet connection to access financial services without needing to go through traditional financial institutions or intermediaries. This opens up financial services to people who might not have had access before, particularly those in underbanked or unbanked regions. Transparency: DeFi operates on a public blockchain, which means that transactions and financial data are visible to anyone. This transparency reduces the potential for fraud or corruption and allows for greater accountability. Security: DeFi uses cryptography and smart contracts to secure transactions, making it difficult for bad actors to manipulate the system. Additionally, DeFi eliminates the risk of a single point of failure, which reduces the risk of a catastrophic failure of the financial system. Interoperability: DeFi protocols are designed to be interoperable, meaning that they can work together seamlessly. This allows for greater flexibility and innovation in the development of financial products and services. Efficiency: DeFi operates 24/7 and is not subject to the same regulatory constraints as traditional finance, which means that transactions can be processed quickly and at lower costs. Additionally, DeFi eliminates the need for intermediaries, which reduces fees and transaction costs. Overall, these advantages make DeFi a compelling alternative to traditional finance, particularly for those who value accessibility, transparency, security, interoperability, and efficiency." Not bad for a robot, right? Here's the thing. Decentralized finance is going to become mainstream finance in our lifetime. Large institutions are going to have to adjust or they will be irrelevant as the phone booth 20 years from now. So we need to understand what it's all about and figure out how we can capitalize on it. My guest on this week's Wealth Formula Podcast will give us a human expert's opinion on why. Listen NOW!

Ok, I know you keep hearing about how the world is going to look radically different soon. I have too. But what is that radical change and when is it going to happen? I'm no expert in technology but it is clear that the radical changes we are expecting are coming from two emerging technologies: blockchain and artificial intelligence. Blockchain really defines this thing that people call Web 3. We've talked about it before on the podcast but essentially Web 3 is the decentralization of various industries such as social media and finance (aka DeFi). Artificial intelligence (AI) is the other technology that is supposedly part of this great disruption that is about to occur. We've seen it in action without necessarily thinking about it already. Look at the WAZE application for example where shortest driving routes are based on huge amounts of human generated data points. In the last couple months, a new demonstration of the power of AI has come to surface and is widely available. It's called ChatGPT. Again, I haven't used it yet but essentially instead of searching for something on google, ask ChatGPT anything and it will give you an answer. Ask it to generate a speech on interest rates and it will. Ask it to give you a summary of a book and it will. It's really fascinating stuff that I wish I had during college to do all my homework but, as you can imagine, it also has the potential of being dangerous. The problem is technology is growing at a faster pace than perhaps we are ready for. Just because these technologies are powerful doesn't dissuade nefarious actors. It may be a bumpy road ahead. This entire space is so complicated that I wanted to get a real expert to discuss it…especially this ChatGPT thing. That's what this week's Wealth Formula Podcast is about. This was a really fun interview to do and I encourage you to tune in NOW.

The two most common mistakes I've seen people make in personal finance is to not think about asset protection and to not think about estate planning. Not thinking about estate planning is sort of understandable. Death is a topic that many try to avoid. Some are even superstitious in that if they set up an estate plan, it could trigger their demise. The topic this week is not estate planning but we've done that show in the past. Here's a little hint: The bare minimum you need is a will and a living trust to keep your assets out of probate should you die. OK, enough about estate planning. As I mentioned earlier, failure to implement a reasonable asset protection is the other most common mistake I see in new investors. Now I get it. If you don't have much then you have little to worry about. But once you start accumulating assets you've got to do something. Let me explain why. If you are a real estate owner, you have got two enemies to defend against. The first is the tenant who slips and falls. The second is the guy with the broken bones your kid hit driving her new car. Either one would love to get at something valuable that you own in retribution (and probably a little greed). That's where asset protection comes in. And here's the thing. If you set up good asset protection from the beginning you may not get sued at all. A lot of this legal stuff is optics. If you put up a lot of walls and traps, you're less likely to get sued in the first place because your estate will start looking a little bit like a turnip to any attorney working on contingency. Asset protection can be fairly simple but needs to be done right. My guest on Wealth Formula Podcast this week explains how and why that is important. He also spends a little time talking about tax advantages of producing movies which I thought was interesting as well. Listen NOW!

When you are in the alternate investment space like me, everyone assumes you are a gold guy. I used to be. The idea of gold holding its value over time is very real. An ounce of gold in the times Christ would buy you a nice toga and sandals. Now, an ounce of gold will buy you a nice suit and shoes. Admittedly, that is a pretty darn good track record. So does gold belong in your portfolio? Well, for me, gold is not an investment. It's money. So to the extent that you may want to have some of your "liquid assets" in gold, it may make some real sense. It's just hard to carry in your wallet. I am still trying to find someone to convince me otherwise, but to me, real estate has all the qualities of gold that I want while providing additional benefits. First, gold does not cash flow. When you buy real estate it should. In fact, with real estate, you can leverage and buy more of it and pay off the debt with income from the property. You really can't reasonably leverage the purchase of gold and, if you did, you'd have no income to offset interest rate payments. Both gold and quality real estate are hedges against inflation. Residential property is particularly advantageous when it comes to inflation because leases are typically year to year and can keep up with the rise in the price of other goods and services. But to be clear, this is just my opinion. I don't own physical gold but a lot of smart people do. I don't claim to be right in that regard. Personal finance is…personal. On this week's episode of Wealth Formula Podcast, I have a guest who speaks eloquently for the case of gold. Whether you are a gold bug or not, it's worth a listen to help you make your own decisions.

I've never spent much time on the concept of short-term rentals (Vacation Rentals) before because it didn't sound particularly appealing to me. But after interviewing Tim Hubbard for this week's podcast, I may have changed my mind. Here's the deal. Unless you are a limited partner in a syndication, there is no such thing as truly passive income in real estate. If you want your asset to succeed, you are going to have to do some work for it. And for me, making $300 per month for anything that takes more than 10 minutes per month is not really acceptable. But short-term rentals provide a sexier take on active ownership of real estate for busy professionals. Make no mistake, there will be some work involved. But now you may be making 5X the monthly income that you would with a traditional long-term rental. Maybe the rental income is still not that compelling. But what if you started buying properties in places you might actually like to visit yourself on occasion? At any point in the future, you could theoretically flip the switch and make it all your own. In the meantime, short-term rentals have extremely advantageous tax benefits—and not just to the real estate professional status types like me. If done properly, you could have a short-term rental, do a cost segregation analysis and apply that depreciation to other active income. Let me reiterate that I am not a tax professional but my understanding here is that through material participation in short-term rentals, depreciation losses can be ACTIVATED and used against your W2 income. If you can pull this off, the tax savings alone would be worth doing it in my humble opinion. With conservation easements pretty much DOA (victims of the IRS) and with oil and gas being full of crooks and fraudsters, short-term rentals could possibly be the best thing out there if you are trying to mitigate taxes. If this sounds intriguing, I highly encourage you to listen to this week's episode of Wealth Formula Podcast. At the very least, it's an option you ought to know about.

Digital currency is not dead. But it was wounded pretty badly over the past few months. Paradoxically, the undoing of the decentralized world happened from centralized companies and individuals like Do Kwon of Terra Luna and Sam Bankman-Fried of FTX. Ultimately, the greed of both these individuals and the flawed platforms that they ran resulted in billions of dollars being lost in the market. No one was immune. Companies like BlockFi ended up declaring bankruptcy and others, like the Grayscale Bitcoin Trust (GBTC) are on the brink of insolvency. Digital currency has never been a favorite of the SEC. This is an institution with a deep distaste for the wild decentralized west as it represents a very difficult animal to tame. The IRS also wants to dig its claws into digital currency realizing that they are likely missing out on hundreds of millions of dollars in revenue because of people not reporting. They are also left with a huge challenge on their hands—-trying to figure out who is misreporting. Bottom line is that the climate is right for some serious changes to the law involving digital currencies. This week, I speak to one of the foremost experts in cryptocurrency tax law to discuss the recent crypto collapse along with all of its implications. Make sure to tune in. There is some free tax advice in there for you as well if you own cryptocurrency!

What is all this wealth stuff for anyway? I have spent the last 15 years trying to accumulate wealth. It wasn't until about two years ago that I decided to start spending it. Why? Well, there were some major changes in my life and it made me think about mortality. Don't worry…my health is great. But everyone has to die someday right? Before this realization, I was doing what pretty much all responsible professionals do. I was working hard and wouldn't spend much money on myself. In hindsight, I'm not sure what I was waiting for. I probably should've tried to spend more on myself in my 20s and 30s and had some more fun. Of course, I can't change that now. But what I can do is to start enjoying life and trying to figure out how to stay feeling young as long as possible so I can make up for lost time. The good news for all of us is that there is an abundance of science and technology growth in the field of longevity and it's developing fast. We know so much more than our parents did on what to eat, how often to eat, how to optimize exercise and…what supplements and prescription drugs appear to lengthen not only lifespan, but more importantly, healthspan. There is so much information out there that it is also a time to be careful. Just think about all the money fraudsters can make off people by selling them the fountain of youth. As a physician myself (not practicing), I have spent a lot of time trying to understand what's real and what's not. Some of my friends and investors in our own community have pivoted their careers to the practice of longevity medicine. They know more than me. One of these guys is Dr. Rob Hamilton. Rob spoke at our last Wealth Formula event and seriously blew the audience away with his presentation. He is an encyclopedia of knowledge in the field of longevity and my guest on Wealth Formula Podcast this week. If this stuff is new for you, I urge you to start looking into what's out there. After all, what's the point of accumulating wealth if you don't have a long healthy life to enjoy it? Whether you are already on that journey or are interested in learning more, you will want to listen to this podcast. I'm biased because of my interests, but I think you might find this to be one of the most useful podcasts you've ever listened to in your life.

If you read business or entrepreneurial books you are probably sick of people telling you that you have to take risks and get uncomfortable. I get it. But what are you doing to take risks and to get uncomfortable? After all, it's really the only way to grow in your career or in your life. These concepts apply to everything. Think about all the things you didn't do in life but would like to. Maybe you should try to do some of those things? After all, what's the purpose of wealth? It is to have the freedom to focus on self-actualization. Need an example? Well, I never learned to swim as a kid. I remember my older brother and sister going to swim lessons. I would go with my mom to drop them off. But I was terrified of anything but the baby pool. When it came my turn for swim lessons, I declined. And, unfortunately, my parents didn't push back. So, I spent a good chunk of my adult life not being able to swim and it bothered me. As an adult, I tried private lessons on numerous occasions. I wasn't afraid of the water anymore. I just couldn't figure out how to move in the water. I had given up until 5-6 years ago when I heard Tim Ferris talking about having a similar experience as an adult who couldn't get swimming down. He also had multiple trainers who failed to get him functional in the water. That is until he met Terry Laughlin, the creator of the Total Immersion (TI) Technique. Tim said that Terry got him swimming laps by the end of a week. Well, I had to give this a try. So I reached out to Terry who lived in upstate New York. As it turned out, he had end-stage cancer and hadn't been doing lessons for some time. However, he had just finished chemo and was feeling a bit better so he invited me out anyway. So a few weeks later, I was at Terry's house out east in his training pool. The way Terry taught me was very easy and methodical. And believe it or not, by the end of the day, I was swimming. I stuck around for another day but had to get back to work. I figured I'd come back in a few months to get down the only part that I still struggled with—breathing. I wish I had stayed. Terry passed away just a couple of months later. So now I can swim, but not long enough to do laps for exercise. I still can't breathe. I tried another TI instructor, but it wasn't the same. Terry was a master. The point of this story is to illustrate getting uncomfortable to get over a lifetime full of anxiety and self-consciousness about being unable to swim. All I had to do was find the right instructor and be uncomfortable for a day. You could probably apply this to things in your life. What have you been avoiding for the last few decades? Is it time to confront these things and move on with your life? You'd probably feel better. And if it's something you need to do physically, well, you aren't getting any younger either. My guest this week on Wealth Formula Podcast has a unique take on risk and discomfort. He suggests that we should constantly be seeking discomfort in our lives. Maybe he's right. Listen in and see what you think!

We are in a unique period of time with the economy. We know something is going to declare itself soon enough but have no idea when or what it will look like. This time it's not just the contrarians. Everyone is predicting some kind of trouble in the coming months ranging from a mild recession (Biden) to an all out zombie apocalypse. Even the big brain contrarians differ on what lies ahead. Jim Rickards sees a rapidly coming deep recession followed by the Fed capitulating its hawkish stance. Nomi Prins forecasts a deep recession as well but sees the markets as relatively shielded because of a great distortion between the real economy and the financial markets as the Fed caters to what the markets need to grow. My guest this week on Wealth Formula Podcast, David Stockman, differs from both Rickards and Prins. He believes that the Fed will not reverse its course regardless of recession and he also believes that what Prins describes as a distortion between financial markets and the economy will not last and that, rather, a great catchup will see the equity and real estate markets correct in significant fashion to reflect the fledgling economy. David Stockman was Ronald Reagan's budget director and was in Washington through hyperinflation and the Paul Volker years. He has also spent a significant time on Wall Street in his career. He knows what he's talking about. But so do Nomi Prins and Jim Rickards. None of them are dummies but they can't all be right. That's just the nature of the period that we are in. The best any of us can do is to study what the economic gurus are saying and try to make decisions based on what we can conclude for ourselves. Listen to my interview with David Stockman HERE. And, if you haven't done so, go back and compare these opinions with those of Rickards (episode 348) and Dr. Nomi Prins (episode 339). They all make sense but they can't all be right. Let me know what you think!

The new year makes me think about how things keep changing so rapidly (including my age). For those of us who went to high school in the era of pay phones, it is a truly remarkable trajectory and it makes me wonder what the next few decades will unfold. There are so many technological advances in Science and Technology that have already laid the foundation for a completely different world. As a former practicing physician, I can't help but be excited about things like longevity science and potentially eradicating killer diseases such as cancer and cardiovascular disease If you think that sounds far-fetched for the next decade, I would disagree. All those billionaires who made their money in tech now realize that they are getting older and will die someday. They don't like that idea and now a ton of their money is going into research to battle death. But how quickly can we get there? The problem in making those kinds of estimations is that we don't know what other tools will be available to accelerate the work that needs to be done. One of those tools that will play a major role in revolutionizing healthcare and pretty much everything else in our lives will be artificial intelligence (AI). AI sounds scary but we are already using some of it today. Think of the app WAZE which calculates shortest drives based on traffic etc. Just like this application sneaked into our culture, I think you will see a ton of new technologies like this in several fields. One day you'll see it all around you. Anyway, Artificial Intelligence is an exciting science and to help us learn more about it, I have an expert in AI on this week's Wealth Formula Podcast. This is fun stuff that you might consider investing in. Listen now!

I hope you all had a wonderful Christmas! As we head into the last week of the year there is much to reflect upon. The last few years have been absolutely bonkers. If someone had told me in mid-2019 that a global pandemic would happen, and the world would be practically paralyzed for the next two years I would never have believed it. Oddly, during 2020-2021, the stock and real estate markets did great! Historically low interest rates made cheap money abundant for investors and, for that reason, the markets paradoxically rose as the real economy actually shrunk. Nomi Prins talked about this phenomenon on one of our past shows—"The Great Distortion" refers to the decoupling of financial markets with reality. While monetary policy made asset prices rise, fiscal policy contributed to inflation. Certainly, supply chains created problems of low supply. But helicopter money gave people extra money to spend and a huge injection of liquidity directly onto Main Street. The fact that we have been dealing with high inflation, therefore, should not be a surprise. It's simply policy chickens coming home to roost. And when there is high inflation, rates must go up and that's exactly what happened. What happens next is the big question. The Fed has never raised interest rates over 400 percent in 9 months. Usually, a small change in interest rates isn't really accounted for in the economy for about six months. The economy and inflation have clearly slowed down but what happens in the next few months will be very interesting. Will we indeed have a deep recession? And if we do, does the Fed reverse course on its hawkish stance? Interest rates will probably not go back to zero anytime soon. But remember, investors have always made money regardless of absolute interest rate percentages. There were investors making a lot of money even when interest rates were double digits. We just need a stable interest rate environment to get back to business and I do believe that will happen in 2023. That's my take on where we are now and what may happen. That said, as Yogi Berra said, "It's tough to make predictions, especially about the future". All we can do is to watch and wait and hopefully educate ourselves a bit. That's what this podcast is about and that's why this week I interviewed one of the smartest people you'll ever meet on these topics: Jim Rickards. You won't want to miss this show. LISTEN NOW!

The cryptocurrency markets have been crushed and don't be surprised if they go even lower once the full extent of the FTX meltdown is realized. However, it's clear to me that this in no way is the end of cryptocurrency. Believe me, I've been around crypto long enough to have seen it declared dead several times over. It won't happen. The reason for this is that behind cryptocurrency is a technology. It's not just tulips. Tulips didn't do anything. Underlying crypto assets lies decentralized distributed ledger technology that will change our world. Ok…so you've heard me and others make that statement before and it might be getting old. So, I think it's important to go into more detail and highlight examples of what this technology can do. Decentralized Finance (DeFi) is a major revolution that is happening now. It is still in its infancy but it is pretty clear that this technology represents the future of banking and really all market transactions. But why is it advantageous? This is an important question. You can easily be fooled by people selling you "tokens" while they are raising money for real estate or other assets. Tokenization does not replace good operations. In reality, most of these offerings are just marketing gimmicks. Just because your shares are represented by a token doesn't mean a lot. There are clearly advantages to tokenizing assets in the sense that they can be traded and potentially provide more individuals access to things in which they might not otherwise be able to invest. But there are a lot of kinks to be worked out. And while I believe in the technology, the current state of DeFi is still fraught with charlatans and Ponzi schemes. A major reason this is possible is that few DeFi projects are purely decentralized. When someone is in charge, that's not decentralization. It's a complicated topic so I asked someone knee-deep in the DeFi world to help us understand it a bit better. You should know a thing or two on this topic as it will enter your world sooner or later. So make sure to listen to this week's episode of Wealth Formula Podcast!

It's cold outside…even in Santa Barbara. The real estate markets are especially frozen now and will continue to be at least for the next couple of months into the new year. Why is this happening? Real estate, more than any other investment, is highly dependent on interest rates. Right now, there is simply too much volatility for reasonable underwriting. To be clear, it's not HIGH interest rates that are the problem. It's moving goalposts. All markets hate uncertainty. That said, we need to keep deploying money to keep up with inflation. I know a lot of people are sitting on cash which isn't a terrible idea. But just know that in the process you are losing 7-8 percent buying power on an annual basis. My own strategy has adjusted to this current reality. I've started looking at businesses as investments. In the right hands, businesses can provide streams of income that exceed cash on cash of real estate acquisitions. Indeed, if you bought your own business chances are that your return on capital would project out to about three years. Larger businesses will have smaller multiples. You see it's all about risk and reward profile of any investment. The reason large apartment building tend to trade at cap rates slightly below the mortgage rate is because they are extremely stable assets with few moving parts. Businesses inherently have more moving parts and, therefore, you should be rewarded for taking a bit more risk. I'm different from many of the podcasters in the personal finance podcast ecosystem because I started out as an entrepreneur. In fact, I started 3 multimillion-dollar businesses before I ever got into real estate syndication. In other words, I know a thing about starting businesses. That said, evaluating and buying businesses is a different skill set altogether. Zulfe Ali who you may have met at one of our last couple of meetups used to run a sovereign wealth fund and spearheaded acquisitions of multiple billion-dollar companies. That's a different level of expertise in business acquisition and that's why I'm following his lead. To be clear Not everyone should be an entrepreneur. My friend Jorge Newberry and I once talked about how you are most often born an entrepreneur and it's often a curse for people around us. So if you are not an entrepreneur but are interested in investing in businesses, what should you do? Well, you can look for private acquisitions to invest in passively. We have one of those coming up this week! But if you want to get your hands dirty, you might consider looking into franchises. Franchises often provide the guardrails for people who are not natural entrepreneurs and/or want a greater level of support. This week's guest on Wealth Formula Podcast is an expert at matching people with franchise opportunities. Listen in. This could be something you might get interested in and end up finding your next calling!

Happy Holidays everyone. I'm very thankful for you Wealth Formula Nation! It is a great pleasure for me to serve you as clarifier-in-chief at Wealth Formula. Listen in to this week's edition of Ask Buck. We talk about real estate depreciation issues, asset protection and more! Don't miss it!

It's been a while but this week's episode of Wealth Formula Podcast is the latest "Ask Buck" episode. As you know, most of the time I interview other people so I don't get a chance to talk to you directly. These episodes are great for learning. In fact, go back and listen to the last 10 "Ask Buck" shows and you will know as much as I do about personal finance! This week we have questions about multifamily investment opportunities, the Theory of Population Collapse, and bonus depreciation. Make sure to tune in!

Warren Buffet talks about being greedy when others are fearful. I think it's fair to say that there is a great deal of fear in the financial system right now with interest rates climbing as quickly as they are. Eventually, this will lead to distress in all financial markets. The stock market is already down—especially tech stocks. The Real Estate market is frozen. There is very little trading. That's why our investor group has not acquired anything since May. The worst part about where we are now in this cycle is uncertainty. Rates going up to more historical levels is not, in and of itself, problematic. The problem relates to the unexpected speed of rate increases and the fact that we don't really know when it will end. Even with higher rates, we can go back to business as normal. Buyers and sellers just need to have some sort of interest rate benchmark with which to underwrite. But the Fed is moving the goalposts too quickly for anyone to use a specific interest rate to put into a spreadsheet. One thing you might be wondering is why there is no significant distress in the market. The answer is largely that most buyers on floating rates purchased rate caps. But over time those will expire and if rents are not raised quickly enough, they could see negative cash flow pretty quickly. We could start seeing opportunities early next year. And when we do, I will be buying! Over the last month, the cryptocurrency market also got hit hard. It went from beloved, even by teenagers, to red-headed stepchild status within days. In crypto, down markets mean DESTROYED. And… that's where we are right now. Could it go lower? Maybe? But I am a buyer of bitcoin at this price. Bitcoin isn't going anywhere over the next several years and I believe will eventually be worth a lot more than it is today. It may be controversial to say, but investments in bitcoin or bitcoin mining today might be some of the more obvious plays to make for savvy investors. But again, there is fear in the financial ecosystem. Investors, as much as they like the idea of buying low and selling high usually do the opposite in these situations. But remember, be greedy when others are fearful. Cryptocurrency is down but not dead. People just stop talking about it when there is a bear market. But that's exactly why we should talk about it on Wealth Formula Podcast. My guest this week will tell us why blockchain and cryptocurrency are an inevitable part of the future…even for banks. And if that's the case, should you be investing? Make sure to tune in and find out.

As we get closer to the end of the year, I know a number of you are trying to figure out how to deploy capital. We will have some opportunities that are not real estate oriented. I also believe that it is a surprisingly good time to consider various life insurance strategies that we have discussed before. I have included the email sent to me on this topic by Rod and Christian and they will be my guest on this week's Wealth Formula Podcast. Make sure to listen in! —————————————————————————— We frequently receive questions about how the recent increase in interest rates will impact the strategies we teach that utilize the combination of high cash-value life insurance and leverage. Interest rate reset First, it's important to realize that rising interest rates are great for life insurance! Cash value life insurance is designed to outperform general interest rates. When interest rates go up, it allows life insurance companies to generate higher returns in their general account, that additional return then passes on to the policy holder. In fact, we're already seeing cap rates on IUL's begin to climb and adjust to the market. This increase in caps will result in a higher overall return inside the policy! In traditional whole life insurance, higher interest rates means higher dividends! It's also important to understand that life insurance companies primarily invest in bonds and notes, the types of investments that are sensitive to interest rates. However, there's a significant difference between an individual investor and an institutional investor. Life insurance companies are able to make considerably larger investments and for considerably longer time frames. We're talking about as long as 40 or 50 years. This advantage allows them to be more selective as to the types of investments they buy and for how long they will lock. In the context of our strategies, the recent increase in interest rates is actually creating a much healthier and more profitable environment for life insurance companies, which of course also means that dividends and cap rates will rise. Interestingly, the effect on loan rates is more short-lived. In many cases, when we run the Wealth Accelerator stress tests for the 1980's, we actually end up with a higher long-term IRR than when we run our baseline projections using a very conservative 2% spread. The impact of higher rates on Wealth Formula Banking If you're not yet familiar with Wealth Formula Banking, check out our webinar by going to www.wealthformulabanking.com. In a nutshell, we build up our investment opportunity fund inside of an overfunded whole life policy. We then loan against our cash value to invest in real estate, business, etc., our money stays and continues to grow inside of the account. By doing this, we're able to double dip, and create value in two places at the same time. This is the perfect time to get involved with WFB, especially if you're one of the many people who have money sitting on the sideline waiting for the right deal. Why let it sit in a checking account or money market account earning nothing, when we can put it in a WFB policy and generate a long-term 5%+ tax-free return? By the way, that 5%+ return is going up with interest rates! Here's a question I'm often asked: If I'm using a loan, and interest rates are rising, what does that mean for the WFB strategy? The good news is that for most of our clients there's a direct relationship between the interest they're paying on their loan and the interest that's being credited to the portion of their cash value that is collateralizing the loan. So, if interest rates keep going higher, the interest rate we earn on the collateralized cash value will keep going higher as well. The Impact of higher rates on the Wealth Accelerator For anyone who isn't familiar with the Wealth Accelerator, check out our webinar at www.wealthformulabanking.com. Briefly explained, we're building an asset using leverage. The individual puts the initial funds into overfunded whole life and/or IUL policies, and then we finance all future contributions to the policy. We're taking advantage of the spread that can be generated by creating higher growth in the policies than what we're accumulating in interest on the loan. The goal is to generate double-digit tax-free returns, which then creates massive future tax-free income and/or income-tax-free funds for estate planning. Many people assume that the rise in interest rates kills the opportunity to create a spread. This couldn't be further from the truth. As we mentioned above, a rise in interest rates creates a huge opportunity! The fact is, with interest rates going up, we're already seeing caps rising within IUL policies. And, although there's a slight lag time with dividends on whole-life policies, those will rise as well. One aspect that I think can help alleviate concern as well is the fact that we carry a healthy cushion in the form of our "Net Equity" value. This represents the amount

What makes for a highly successful entrepreneur or investor? It is the appetite for calculated risk. As Bruce Arians, coach of the Tampa Bay Buccaneers famously says, "No risk it, no biscuit". In entrepreneurship this might be more obvious. You probably know entrepreneurs who took risks by leaving their day job and pursuing a business that they KNEW was going to be successful. I'm one of those guys. In my case I got fired from a job that helped accelerate the development of my first business. But the next one was even riskier. Why was it riskier than the first? Well, when I started the first business, I had nothing. By the time I started the next business, I had a lot to lose. But I remember playing out the business model in my head and feeling like, "This will work". In my mind, there was no risk…only upside. I know that sounds reckless but that's the way young entrepreneurs must think to create successful businesses. In my case I was right fortunately. That next business did extremely well and took me to another level. Of course entrepreneurship is different from investing but there are some similarities. Again, it's not hard to hit singles and doubles. But in order to hit home runs, you have to be willing to take some calculated risks. Often there is asymmetric risk where the upside is huge but there is a possibility of losing it all as well. Some of you have already experienced that for better or worse in the world of cryptocurrency. The bottom line is, "no risk it, no biscuit". Ordinary investing will yield ordinary results. If you strive for more, you have to train yourself and your coronary arteries to be ok with risk. No one knows that more than my guest on this week's Wealth Formula Podcast. He has served as president and/or CEO of multiple major brands that you will recognize and is known for his unconventional approach for high performance through strategic thinking. Listen here to learn how to jump first and think fast!

The last 15 years have been a game of chicken between the Federal Reserve and the financial markets. Think about the old movies where the kids would speed in their cars towards each other until someone decided to quickly turn out of the way and avoid collision and certain death. Similarly, the financial markets and the Federal Reserve have been trying to figure out who would chicken out first for the past several years. Let me give you an example. Despite COVID shutting down the entire country, the asset markets (after quickly blinking) went sky high. Why? Because investors knew that the Fed would come to the rescue and they did. Rates dropped to zero, quantitative easing controlled the bond markets and all of that helped to embolden investors and reinforce the concept that the Fed will always come to the rescue. If you were at a Casino, wouldn't you keep playing if the house guaranteed you wouldn't lose money at the end of the night? That's the way investors came to see the Fed—as an insurance policy. So then we got this inflation thing because of the massive amount of helicopter money injected into the system and supply chains creating huge demand. Of course, the Fed started raising rates again. At first, the markets shrugged it off. Playing chicken again. Then the Fed showed some cajones and kept raising rates and now all of the sudden it's not quite as clear if they will blink first. The Fed has been clear about getting inflation under control. They know it has to be done. That's finally getting through to some investors…or is it? We also know that we can only raise rates so much because of sovereign debt issues. And what if we end up in a massive recession because of the rate increases? Many investors think that's exactly what's going to happen. The moral of the story is that there is now a well-established disconnect between the economy and financial markets. The question is where does this all lead us? Dr. Nomi Prins is one of the smartest financial authors out there and she's just released a new book on this very topic. She's going to tell about this great distortion and what it means for us in the long term. DO NOT MISS THIS SHOW!

If you made it out to our event last weekend I want to thank your for taking the time to prioritize our meetup. And if you were there, I'm guessing you were not disappointed. We had a few familiar faces in the morning talking about taxes and asset protection and some great presentations around asset allocation, the economy and bitcoin mining. But what I think really blew people's minds were the talks on longevity by Dr. John Foley and Dr. Rob Hamilton. This is something we are going to do more often for sure given the response we have gotten thus far. These meetings are also great in that I get to see what others are doing. I am in a bubble sometimes in Montecito behind my computer screen and there is nothing better than going out to meet people of like mind. There are people in our community who are doing amazing things and it's fun to hear their stories. It's even more fun for me to hear that I've made a difference in someone's life. Dr. Irene Lambiris was supposed to come to the meeting but ended up having to put her doctor hat on and miss it. I was bummed because she has a great story. And if you are up to hear about how a young female physician is kicking ass in the investor space, you are going to want to listen to this week's episode of Wealth Formula Podcast!