Where To Invest: Real Estate, Stocks, and Crypto w/ Mike Dillard and Jason Hartman #TheOnePercent

So you will be buying real estate, I will be buying businesses, and you.

Will be buying multifamily and crypto.

Yeah. So he likes real estate and cryptocurrency. Talk about opposite ends of the spectrum.

Let's talk about crypto here for a second. It takes one free person to create change. This is the show for them. We are the creators of the free world. This is capitalism dot com. And we are the 1%.

Welcome back, everybody, to Self Made Man. This is Mike Dillard. Today I'm joined by a good friend of mine here in Austin, Texas, Ryan Moran and my good friend Jason Hartman, who I've known for two days now.

Oh, he's known me for longer than you.

Oh, okay. I'll be like, hey, everybody, welcome to Creating wealth.

This is Jason Hartman.

Today we're gonna be joined by the man himself, the legend, Mike Dillard yourself. How was that?

That was good.

It's better than I do it.

It's way better than I do it. Okay, let's go.

How do you not make a comment about. It's three men talking about the economy. Oh, that's hilarious.

No, it's three. It doesn't have to be like that. We're. We don't have to poke fun at ourselves for that.

Yeah, you're the whitest white man ever then.

Okay.

Just the way we are.

All right, since you're the host, why don't you.

Am I all right, everybo. Okay, so. So I can't say the diversity hour.

You can say whatever you want. Yeah.

Okay.

Economic diversity.

Oh, hey, everybody. Welcome to the we have no idea what we're calling it show with three dudes and three vastly contrary opinions about what's happening in the markets.

We actually don't know if we'll be contrary.

I.

We're not sure.

I thought we were going to find.

Out here and agree with each other and that was going to be it.

Everything's great in the economy and nothing is going to go terribly wrong. Yeah. In the next while. What's up, Mike?

Glad to be here, brother. Good to see the lake house and hang out with these amazing people that we've hosted here the last couple days.

It's an okay place.

Yeah.

What's up, Jason Hartman?

Yeah. Hey, thanks, Ryan. This has been an awesome little mastermind retreat you put together. And your lake house is gorgeous. And we are in the crow's nest room, which is the super cool room where we can see in every direction.

Well, why don't you give a 60 second overview on your. Not your Perspective. But your background in investing in economics.

Sure. So I've been a real estate investor for many, many years, since I was 20 years old. And I teach people how to invest in real estate.

So you've been a real estate investor for two years?

Yes, two years. Actually nine years. I didn't want to tell you though, but yeah, yeah. And I'm really interested in big macro trends. I really study the big macro things. I don't watch the market day to day. I don't think about, you know, technical stuff like that. I just like the macro trend side of things. So I think that might be opposite than. Mike, I don't know.

But Mike, your perspective or what's the context which you're looking at the economy?

You know, it's, it's been interesting to, to see where we are today versus where we are in 2008. And I'm of the opinion that we're going to see a pretty big decline here fairly soon. I don't know how big it's going to be and on one hand I don't really care that much compared to last time because I'm not in the market at all. All of my investments are in my companies or other people's companies or startups or crypto and. But it's interesting to see it repeating because I see a lot of the same stuff starting to happen in same conversations and same fears and same questions being asked. And so it's been interesting to watch.

Well, you've called a lot of trends and it's always good for clickbait when I can say the man who called, the man who called the silver boom now predicts economic collapse.

You know, I mean, my opinion of it is that.

What should have happened in 2008 and the system getting cleaned up and the fraudulent activities or the bad investments and the bad money being purged out of the system wasn't, and instead it was bailed out.

And so now I think we've seen the biggest bubble in U.S. equity history and we just saw the biggest bubble in crypto history a year ago. Not even a year ago. It's going to end the same way. If you see an exponential record breaking run up, there's only one way it's going to go at some point. The question is when? And.

Again, I don't have a big personal vested interest in when it happens right now. So I'm not too worried about it. But for people who do. You know, I called my mom last week and I was like, hey, have you had a conversation with Your advisor about the market and what their contingency plan is for your portfolio. Do they have sell stops in place or is their answer don't worry about it? And if that's the case, then you probably need to start making some more phone calls.

I said the same thing to my family at Thanksgiving. Yeah. So my background is in kind of traditional economics. I studied economics in school and in college went in and think I was gonna be a pastor. That didn't happen that story for another day. But I left with a business and economics degree. But I come from the Black Sheep school of economics, which is the Austrian School of Economics, which they're pretty much. They think the market's gonna collapse all the time. And I'm not that angry and resentful as that kind of school of thought, but I studied. I actually my senior paper was on the correlations between the 2008 collapse and the Great Depression. And I don't think it's 2008 all over again, but I think we're at the top of the current economic cycle. That's the context in which I'm operating in one distinction.

I want to ask you guys, when you say the market is going to collapse, I believe you're referring to the stock market. Of course, that's interrelated.

But.

But, you know, is that what you mean? Especially Mike.

Oh, gosh. What's the book? The Four Cycles.

The Bible.

The Guinness Book of World Record.

It's the four cycles of.

The human species and economies.

I'll totally come to the fourth turn.

The fourth turning.

Oh, the fourth turning, yeah. Strauss. The other and his other. Not the other. Neil Strauss, but Neil Howe. Yeah, yeah.

So.

So if you read that book, right, and you look at the cycles that that history has gone through, it really kind of prints out the blueprint. And what was fascinating about that book is that it was written, I believe, in the mid-90s. And they said the fourth turning for the Western civilization in the United States is going to take place around 2005 to 2015, 2018, and it's going to be precipitated by an economic collapse. So these guys are 10 to 15 years beforehand, predicted it basically down to the year.

And they went way back, thousands of years.

And the interesting part about that concerns me the most with where we're at today is that in the book going back through thousands of years, every fourth turning, the winter season, the time where everything gets blown up, literally happens physically, where there's a global conflict that's been associated with every single fourth turn. And so they said the last. The last fourth turning was around World War II. World War I. I don't remember the exact exact date. It's about every 80 years.

And it's always resulted in some kind of conflict without exception. And this is the first fourth turning that we'll be entering into, which started in 2007 that will involve nuclear weapons. And so what I find really interesting and concerning is now what's going on with China and with the United States and with Russia and how Europe's now becoming splintered, NATO is becoming splintered. And we're at the height. Entering the height years, the final years of the fourth Turning. And you see all of this happening that's talked about in their book that they wrote, 25 years.

But, Mike, that's like the secularized version of the Bible predicting me too.

We're Nostradamus.

Yeah, yeah. Like you could find any book and say, well, this has a pattern of predicting this, and this is the first time that Obama's president or. Or that this is happening or that.

Or there's a guy in the Middle east with a turban with a blue star on it or something.

Yeah, you can make that correlation. It works great.

The book is fascinating. I mean, it really is a fascinating book. I didn't fully comprehend it. I think it's. There's just a lot there. It's. It's just a lot.

Yeah. I just got the primary message is that history repeats.

Yeah.

And. And that, you know, going back, there's a track record of this happening. So if you're looking for a pattern so that you can make prediction and make ideally a good decision about something, and that's all you have to go by, then the patterns they've identified and share, you know, pretty serious.

Well, Jason, to your point, I think there's definitely a difference between markets and economies. Like markets, whether it's the stock market, I'm saying, like financial markets, asset classes. And they're all different, obviously, but they're also all overvalued. And if we look at. In terms of comparison to cash flows, and that is you can have a market peak or a market valley without it being a recession. I mean, recession is pace of growth or.

Negative GDP for three quarters.

Yeah.

So I am of the opinion that markets are way overvalued because of things being propped up, because of things being bailed out. We haven't had that correction. But economic fundamentals are fairly sound. So you might have a slowdown or even a recession. But I don't Think we're in a rebuilding of society or rebuilding of the economy even close to what we had in 2008 or 1931.

So we talked about how we might make some predictions during our interesting chat today. And I want to just mention a couple of things. Number one, you're absolutely right that there is a Wall street economy and there is a Main street economy, and they are very different. You know, there are financial assets and there are real assets. And what, what I've always said that's interesting, I talk about this a lot on my show, is that the day before, like, you know, most people consider the Great Recession beginning with the fall of Lehman Brothers, okay? And that was 10 years, just over 10 years ago. And the day before Lehman fell, or whenever you consider the Great Recession to have begun, right. The day before that, you looked around the world and everything had. Everything was there, right? All the real estate was there, all the gold was there, all the silver was there. All the companies were there. All the, you know, copper was there. Every commodity on earth was there. And the day after that, when the recession started, and even at its worst point, all those assets were still there.

Well said.

The only thing that destroys them is war, right? Like Mike was alluding to earlier. So the real wealth is still there, but it definitely changes hands. You know, the title of that wealth definitely moves around a lot, and that's what everybody listening wants to protect themselves from. And so, you know, one of the things I would say is own real assets. Financial assets are much more volatile, and one reason they're much more volatile is, well, number one, they're not real, and number two, they're easily tradable. And when things are easily tradable, the value can change very quickly. We've seen that in the cryptocurrency markets, obviously in the stock market, real assets that are. They have a lot more friction to the trade. They don't move with so much volatility. And, you know, I'm a real estate fan, right? It has a lot of friction to trade it. High cost of trading, slow process of trading, that kind of thing. So you can. You have a little more time to react. Whereas if you're investing in a financial asset, you don't get as much time. You really have to be on your game.

What do you consider a company is a business, a real asset?

Well, a business that makes money is a real asset. A business that is propped up by Silicon Valley venture capitalists that has a burn rate is not a real asset. Those are, you know, those are largely Bullshit businesses, right? But to be fair, you know, you could argue like Amazon doesn't really focus on profits at all, right? But that's a very real business. We all know that, right? So there are lots of distinctions there. And I'm not a stock market expert, but businesses that make money and have real customers and sell real things are definitely real businesses.

So what I'm hearing you say is that right now you might still buy what you would consider real assets, like hard assets, but in a market collapse or an economic collapse, your assets are still there and they might even still be profitable if you bought them on.

Cash flow, if they have intrinsic value. For example, I host another show that I don't do very much anymore called the Holistic Survival Show. And during the Great Recession that was my second most listened to show after the Creating wealth show. You know, one is a positive show and one's a negative show, right? One's doom and gloom and the other is a positive opportunity show, right? And so with the Holistic Survival show, you know, a lot of that bad news, like people wanted to hear it, right? And the interesting thing about the survival community is that, you know, they talk about, well, let's, let's store gold and silver and precious metals, right? But what's really going to be valuable is food and, and literally bullets, you know, because bullets you can trade, that's a commodity with intrinsic real value, right? Food is vodka, cigarettes, you know, those are, those are things people actually need.

So are you storing up on bullets right now?

I, I have a few bullets, yes. More than a few actually, but yes.

Yeah. Crazy. Yes.

You, you crazy.

Yeah. It's the thing I really hate are leaf blowers, actually. I mean, I think leaf blowers should be outlawed. Guns should be legal.

Anyway.

Anyway, so, so you're, you're of, of the mindset that you're kind of detached from what the economy is going to do because your wealth is in hard assets and those are continue to perform well no matter what the market.

As long as they're like. And you asked about businesses, right? So take that and compare it to real estate. Real estate that doesn't make sense in high end areas like Los Angeles, New York, South Florida, you know, those kinds of places, those sort of trophy cities, right? Those are overpriced assets that don't work. Those are like businesses that don't make money. They're just fueled by speculation. But assets, you know, properties in places like boring Indianapolis or Memphis.

Hey, hey now, hey now. Indianapolis is a great town, okay?

Cleveland, that's your home.

Cleveland's a great town, too.

Yeah, yeah, no, those. Those are good towns that, you know, the asset works, it performs, it makes profit. Right.

But in speculative markets. So you're. You are. Basically, you're. You are. You are anti. Anything.

Not inflation driven. But. Yeah.

Thank you.

And I happen to agree with you, Mike.

Yeah. Great, great markets, horrible baseball teams.

Yeah. Yeah. Maybe that's a metric, you know, that hurts.

Guys, get out of my house.

Well, you can own the Cleveland Indians someday, right?

That's correct. How many times do I need to tell you that for you to remember that it's the Indians?

My whole thing right now is I'm looking to store up as much cash as I can to buy in if and when something happens.

And what would you buy if and when something happens?

So the last time, the best. The best investment that I made post crash in probably 2009 ish, 2010, was multifamily real estate. So we averaged probably a 35% return a year for three, four years on those properties.

Where were they?

San Antonio, here in Houston.

Yeah. Good.

And we had the big opportunity that I had in hindsight, during the crash in Austin. The window to invest in Austin real estate was three or four months long at a discount. That was it. But I had opportunities to buy two or three properties downtown for between the 1 and $2 million range. 1 was the only private residence on 6th Street. I don't know if you're familiar with that. It's on Airbnb now.

Yeah.

There's a single family home.

It went up for sale recently. You can buy it back if you'd like.

Well, they're losing. They're losing their Airbnb license. I believe that's confirmed. But I did some research in it, because I saw that, too. But I had an opportunity to buy that Property for like 1.1 then. And then there was another one downtown, same price, 1.5 ish, that we call a block blocker. Right. Meaning we see a lot of urban industrial development going up in downtown Austin. So if you own the little property that some big buyer like the Fairmont's going to come in and have to pay you well over market value for to get you rid of you, we have that opportunity. And now it's the Zaza Hotel. Right. So we could have probably sold for 5 mil, you know, something like that. So.

So you're accumulating cash so that you can buy up undervalued assets when Tish hits the fan.

And much like you, it would be primarily Cash flow, real estate, and then I'll call you and ask you what your favorite dividend.

Okay.

And you know, dividend paying stocks is. That's the same philosophy.

Right.

I like that.

I mean, if you, if I was.

A stock market investor, that would be my play.

Yeah. If you look at three companies I like right now, Ford, IBM and AT&T mean they're, they're undervalued compared to everything else. Their dividend is super high, their profits are high. And like, that's a good company at a good price, no matter what the overall economy is doing.

Sure.

And so those are, those are the asset classes that I pursue. And yeah, I have plenty of cash on the sidelines waiting for basically the same thing. My deployment of it is probably going to be different. It'll be in businesses rather than other assets.

The hardest part of that is, you know, when we were selling income properties back in 2008, 9, 10, 11, 12. The hardest part is overcoming one's fear. Because you, when you're, when you're in that trough, you don't know where the bottom is. Everybody feels like it'll get much worse.

So there's a great hack for this in terms of, in terms of stocks specifically. My hack for this is I sell naked puts on the way down. So do you know that term or.

Should I. Yeah, I've heard the term, but you can.

So, so very, very, very briefly, you're an options trader. Well, I'm not. So right now, Facebook stock, as we're doing this, is at $140. So you could sell a put, which means that you will have to, you might have to buy it at a future date. Someone buys the put from you and at $125 price. Now we're basically saying I will buy Facebook at $125, and right now it's at 140. But you're going to get paid between three and five dollars for every share that you agree to buy in the future if it drops below 125. So it's basically a way to get paid to do dollar cost averaging. And so my strategy there is what do I think is a fair price for this, regardless of what the overall economy is doing? And I'll sell naked puts on that because I will buy AT&T at 28 or $29 all day long, no matter what, as long as your dividend stays the same, and it has for over 30 years. So I will, I will agree to buy it. Now, it might not get put to me because it will stay, it usually stays over that, but at any point it goes below that. It's like a way of triggering.

And you're getting paid no matter what, Correct?

Yeah. You're at least getting the option premium. Now you could also lose your shirt in a way if you, if, if.

It goes the other way.

Well, in the case where when I sold a Facebook put at $150 when the stock was at like 170, what dropped below 140 and I might have to buy that stock at a lower price than it was previously. But if I had bought the stock anyway, I would have lost way more.

What's your time lapse between the transaction for the stock being triggered? Now you have it in your portfolio and you've been able to liquidate it at market value, ideally within 30 minutes. 20 minutes.

Yeah. Okay.

Immediately.

Yeah. So the risk is not super high.

The trade is already set in advance, right?

Yeah. Well, I mean your, your buy, your buy option is set in advance. You get paid to sell that buy option and as soon as it's triggered. Yeah, you can.

Yeah, maybe, maybe 1%, 2%.

Yeah. It's not like the, the risk is. Now you could, you could lose more than that in the events that you agreed to buy Facebook stock at 150 and now it's at 130.

Right.

You have to buy it at 150 so you can only sell it for 130. So if you were to sell a naked put for something and it falls 50% the next day, well, you still lost less than if you had bought the stock. Which is why I only agree to buy stocks that I want to own anyway.

Right.

Trying to trade options, especially in today's environment, I mean that's, that's a full time job and you can do quite well with it. If it's a full time job, that is not my business. So I just try to buy good companies at good prices.

Right. When and whenever it's strategy, you're essentially acting as an insurance company for the counter.

Essentially, yes.

Yeah. Right. So you know, as the insurance company, you're going to have to pay out some claims. And so as long as that payout isn't too large, then you're investing.

Well, the only difference is you're buying an asset when you pay out the claim, as you put it. Now we're getting super technical here, but that's how I am mitigating the risk of not having my money deployed and buying things on the way down at the right price.

See my skepticism of the Wall street thing. Other than that Wall Street's the modern version of organized crime. Right. But taking that out of the equation, there are so many incredibly smart people with incredibly calibrated computers and software systems. I just don't think I can beat them.

But that's, you know, but that's a traders, that's a trader's thing where you're competing now with like a John Carter or Wall street or whatever.

Yeah.

Where Ryan's not doing that. He's buying good companies. He's Buffett style.

Yeah.

Just like you are.

If I was a Wall street guy, I would be a Buffett guy.

You know, you are not a, you're not a house flipper, Jason.

Yeah.

You are a long term investor. And I'm the same thing with businesses and companies.

Totally agree.

So I'm buying cash flow. I'm buying on PEs. I'm buying because they're, there's good fundamentals there. You brought up an interesting question I'd like to pose to Mike, which is, are there any, are there any, are there any sectors or are there any, is there any major debt crisis this time around that you think could like upend the entire system?

Yeah, I mean, last time, right, the, the whole thing was the derivatives that were around the real estate market. So the potential money lost and the counterparties were into the trillions dollars.

Right. Huge.

And so is there the same condition or trigger right now in the global economies? And what's really interesting is this week we've seen, I believe, the German stock market and the UK stock market both dip below their 200 day moving averages. So they're already declining past where the US is.

Would you explain why that's important? I've heard you bring that up.

That's a common indicator.

Yeah. So why, why is, why does that matter? The 200 day average, it's the strongest.

It'S the strongest moving average because it's got the longest period of history behind it and momentum behind it.

Right.

So from a. And I'm not a technical analysis trader.

But we should probably give a disclaimer here that this is all for entertainment purposes only. No one here is a licensed financial planner. And you'd be an idiot to listen to a thing that we say. We're three very diverse group of human beings here just flapping our gums about investing.

Legal advice.

All right, go on this. You know, the weekly moving average would be like the strength of a piece of paper.

Right.

You know, breakthrough, it come back up and the further down you go in the longer period of time where the 200 day, think of it as like a brick wall, much harder to break through that market structure. But if you do, that means there's something significant that is right.

I understand.

And that either happened here with the US Market this last few days or it's right.

It's right at it. Yeah, it's right at it.

And if it dips below that, what's interesting is, and you see this in the crypto markets all the time because it's so much volatility you see this happen all the time.

Is that Wall street has all of their sell stops and sell orders at that 200 day moving average. So the moment it breaks below it.

Sell orders, it becomes a downward spiral. Right?

Yeah, cascade.

So, yeah. So to see it happen in Europe right now and to see what's going on with China's economy, it's not here, it's everywhere.

Well, both of those places have political unrest going on right now. And we have absolute unity here in the United States.

Do you think everybody's behind the President?

What do you think? How do you think the political climate. Climate, climate, which is like a climate.

You need some coffee.

How do you think the political climate could impact what happens next?

That's the conspiracy side of, of my.

Oh, oh, here we go. Yeah, here we go. Mike, give us the good stuff.

I mean, I think, I think it's obvious to anyone who's been watching both sides of the media from this whole last election. Meaning you're not just reading the New York Times and you're not just listening to Alex Jones. Right. But you're watching the entire media landscape, which I, I do.

Is it's incredibly obvious that the mainstream media and Hollywood and Wall street and Washington are all completely aligned against Trump.

If you just measure all of the media positive stories versus negative, it's like 95% against Trump, despite the fact that it's record breaking employment levels and everything's GDP growth and. Right.

Yeah.

And so there's zero fairness there, which means you can see where their interests are aligned. And I can't think of another period in my lifetime where I've seen so many centers of power go after one individual to sabotage them or get them out of office. And so when I look at Trump right now, for the last few months, specifically since those economic numbers have started to go on the, on the positive side, I've seen a lot of the, the Mueller investigation, talk die down in the media and the, the riots and stuff die down. But now that the market is at those critical, technical, you know, places.

Now, all of a sudden you see the Mueller stuff come back. And I think if the story breaks or the, the findings break against Trump, it's going to send the market dive, diving pretty quickly. If it comes back neutral, I think the markets will go back up again.

And the conspiracy side of me thinks that Wall street and the powers that be in Washington are more than happy to push the market lower past those technical levels to crash it, to take away Trump's armor, which right now is his approval rating. And the moments the market goes down and the news can blame all of that on him, he's exposed, Mueller comes out with his investigation, they get, you know, him up on the stand or whatever, and there would they want to be.

So that's, it's way less conspiracy theorists than I thought you were gonna go. But I, I do think that how the unrest with Trump plays out will have a large determination of, is if we say above that 200 day moving average or not. I think technically we're at such a sensitive spot that there's a lot of sentiment keeping things up and could obviously drive things down. And I think the fundamentals, partially in part because of good policy, are there to mitigate, like an economic collapse, which is why I think we're more in for a market, A market collapse and an economic collapse.

Yeah.

Significant market correction.

Yeah, yeah.

And you mean stock market when you say that.

Yeah, Well, I think, I think real estate prices in a lot of places are overvalued.

I totally agree.

So the same type of correction that you see from a lot of speculative markets is the case. But in, again, in places like Cleveland and Indianapolis, those, they don't have that much further to come down.

Right. I mean, we saw that in the, in, in, in 2008, the exact same thing. Vegas got crushed, but Indianapolis and Cleveland and other emerging markets, just Miami, Yeah, they had, they had a slowdown, but it was a normal recession. Hey, podcast listeners, real fast, I want to draw your attention to January 21st. The 23rd in Dallas, Texas is the next capitalism conference. This event absolutely will sell out. So I want to draw your attention to it. This is the event where you're going to make the connections, you're going to get the insight, and you are going to get the strategies that are going to allow you to make more money, invest it well and keep it. We also have some pretty sweet bonuses about finding extra sales and revenue in your business and keeping more of it away from the evil tax man. The event is in January in Dallas. This is the thing I am most proud of that we do here@capitalism.com and rather than bore you by telling you all the amazing keynotes that we have, I just got to tell you, it's the most transformative three days that you will spend all year. If you are set on this being your year, on this being your time, this era being your opportunity to set you up for life, you need to be at the Capitalism Conference January 21st through the 23rd. Go over to the capitalismconference.com to reserve your spot. I don't know when you're listening to this, but at certain times we're doing some pretty sweet bonus packages too to help you get some results right now and to make really life changing and business changing connections when you are at the event. So thecapitalismconference.com go there and come to the event. I will see you there.

Look, you know, I know my listeners know all this, but your listeners don't know it as much.

What are you saying about my listeners?

I think your listeners are super smart. They just haven't heard from me enough.

And they're really good.

So I haven't been on your show in a while. But you know, there's three types of real estate markets in the world. Linear markets, cyclical markets, and hybrid markets. So the markets we like and we seem to agree on here are linear markets. Places like Indianapolis, Houston, San Antonio, Cleveland. All those types of markets are linear markets. They chug along. If you're looking at a graph, they just kind of chug along and do their thing. They have little ups and downs, but they're minor. Cyclical markets are the trophy markets of the world. Los Angeles, South Florida, San Francisco, Seattle, all the west coast, basically New York, the expensive northeastern markets around the world. There are places like Dubai, Hong Kong, Paris, London. Okay, places like that, they look like a roller coaster on a graph, right? Hybrid in between the two. Austin is a hybrid, for example, Phoenix is a hybrid in between the two. Right. They have bigger ups and downs, but not as crazy as the cyclical. So the linear markets are like your dividend paying stocks. They have intrinsic real value because the real estate, like so many assets nowadays, are credit based assets. And so when credit goes the other way, like it did during the Great Recession, you know, the price of that asset just collapses because it can't be financed anymore. And, and so that's what happens. But when you've got properties that make sense to buy for cash without financing, the collapse is a Small effect. It's just not a major thing. It'll. It'll hurt. It just won't hurt that much. No.

Yeah, that's when you go shopping.

Yeah, yeah, absolutely.

So you will be buying real estate, I will be buying businesses, and you.

Will be buying multifamily and crypto.

Yeah. So he likes real estate and cryptocurrency. Talk about opposite ends of the spectrum.

Let's talk about crypto here for a second. Right. So with the three of us, like, you like it in theory, I love it and you love it, and I'm like, wtf are y' all doing? So let's go there. Mike, why are you so bold, bullish on that?

I see where it's going 10 years from now. What, to zero kind of functionality? Well, I don't look at it in terms of.

Bitcoin. I look at it in terms of it's a new type of technology that has never existed before and the benefits that it brings to the table, there's already a market for.

Right.

So from a.

Cryptocurrency perspective, it's getting rid of 2 to 3% merchant, you know, merchant fees, wire fees, having banks control the Internet.

Of privacy. Like, just the economics that it brings to the table from a streamlined perspective and an efficiency perspective, it's already coming. Like, bank of America is the largest patent holder for blockchain tech because they see the writing on the wall. Like, as soon as there are alternatives, like the Cash app today is from Square, where you can buy Bitcoin as the number six app on iTunes. It was number one yesterday above YouTube.

So I see that as a huge piece. And then I see the two other primary segments besides digital money are that it creates digital objects of value for the first time in history. So it's a completely new class of asset and material, basically, where anything in the digital space now doesn't have a ton of value because it can be knocked off, copied, and bootlegged, whatever, it may be hacked. You know, Bitcoin, if we look at that from a value set, just from the software perspective, it's the only software that I know of, and I could be very wrong in this, but from what I'm aware of, that's never been successfully hacked that's ever been created. Windows has been hacked.

Every software on the planet has been hacked except the bitcoin blockchain. So there's value there.

Right.

And so now we've got digital objects of value, which means I can turn any object that I want in the physical world into A digital object that has a one to one relationship. So that laptop, I can digitize it, put it for sale, transfer ownership to a friend, whatever it may be. A can of Coke is a great example. I can send you a can of Coke digitally. There's a company called BlockV that's doing it from the graphical interface perspective. So you're not dealing with public keys or private keys or any of that. It's literally an icon of Coke on your phone that I can swipe and send to you and you can hold it up at the gas station and redeem it for an actual can of Coke. So there's a whole new entire economy of digital objects that's coming that'll start in the gaming industry.

And this is going to be huge for intellectual property because copyrights and you know, electronic, you know, when you sell.

A song, right, you know, the song can be copied, the ebook can be copied. You know, Kindle and itunes, you know, they've done some things to, well, let's.

Just take concert tickets and the fraud and the theft that those companies have to deal with when you go to buy a 500 ticket to an event and somebody's ripped it off. So these will all be handled on the blockchain now it'll be possible, impossible to counterfeit those. And then the third category that has me super excited is the security token. Security tokens. So essentially be able to tokenize any asset, whether it's a business, a piece of real estate, your company, whatever it may be, a car collection, an art collection, a boat, and essentially go through. You know, the SEC is going to have a role in this thankfully because they're going to have to keep things legit, but it's essentially going to allow anything to go public. So I can take my company public, you can take yours. We can issue a token that serves as shares and we can enjoy in that kind of liquidity and appreciation. We can send out dividends to the token holders just automatically via the wallet. There's no intermediaries.

It's crowdfunding 2.0.

What it's going to do is it will truly create a global economy. That is there's no third party intermediaries that are necessary that can interfere in the process. So there's freedom of money for real, not the illusion of it. And it will allow us to invest in an apartment complex in Shanghai from our phone if we want to, and raise money for our businesses without having to be one of the 5,000 companies on a stock exchange. So the liquidity and the Money and the opportunity that's going to create it around that kind of ecosystem is going to be never before.

It will, it will decentralize and democratize capital flows. No, no, yeah, capitalism. Yeah, absolutely. Yeah, that, that's good. You know, one other thing you didn't say, and I'm going to go pro crypto for a moment. Okay. Is that if you look at bitcoin, one of my mastermind group members talks about this a lot, is Bitcoin has a huge proof of work behind it because all the mining and all the trades that have been done and that proof of work is, you know, represents real human effort, even though it's an amorphous digital thing.

Money and time invested.

Yeah, right. And a lot of electricity, by the way, and a lot of environmental damage with that electricity, for sure. But that is a proof of work and that, that doesn't have a tendency just to just evaporate, you know. But I'll tell you about my skepticism when you're ready.

But yeah, so I disagree with absolutely nothing.

That you just said, Mike. But, but what you are describing is basically the Internet as a platform versus buying the. Like, I can't buy the Internet.

Right.

I can buy companies, but I can't go buy the Internet and I'm not going to try to buy the Internet. And, and well, Al Gore. Right. So what I'm hearing you say is describe the platform, which is great, but to the measurements of that platform, like the currencies created on that platform to me are all valueless. Now companies that have some sort of utility built upon the blockchain, great. But, but to buy individual coins, ultimately all value is going to come back to a measurement in US Dollars.

Yeah.

So, so here's, so here's what that had to do. Bitcoin specifically has a ton of intrinsic value built into it that I think is far superior than any fiat currency. Again, it's the freedom of movement and it's the privacy and it's the fact that it can't be counterfeited or inflated away.

How is that intrinsic value?

Because the dollar is being inflated away every single day. You're losing value every single day that you're holding dollars.

Okay, well, he's right. But here, like, I'll take the counterpoint now, you're absolutely right about that. Of course, the difference is though, the dollar has a standing army and a lot of aircraft carriers and nuclear missiles behind. Sure. You know, and, and a huge brand called America like that until it's abused. Yeah.

Which it, which it has Been abused. In which it was in 2008.

Absolutely.

In which it will continue to be abused.

It's been abused since the creation of the Federal Reserve.

Right.

And it's lost 96% of its value. Right? Yeah.

And now we're seeing Venezuela leave, we're seeing Russia leave, we're seeing China, you know, diversify away from the dollar as the standard measurement of value for the reserve.

Are we really concerned about Venezuela leaving?

Well, it's.

It's just.

It's one other domino in the process. Right. Where the dollar's days of being the gold reserve currency are numbered. And will Bitcoin be the replacement? No, but digital currencies will. And if you take, okay, one of the companies that I'm an investor in, which is basis. So they're creating a dollar pegged stablecoin that is based on an algorithm. So it's decentralized based on an algorithm. Just kind of like Bitcoin. There's no central point of control, but the value is also tied to a global basket of physical goods and commodities. And so the algorithm changes the circulating supply of the basis point in real time to keep it pegged to the dollar. So if it starts to go down in value, great, they'll print more of them, bring it back up to a dollar. If it goes above a dollar, they'll burn some and they'll leave it there. The incredible part about it is that because it is decentralized, there's no central point of control or government that has ownership of it that then can go out to third world countries in Africa and in South America and countries like Venezuela and give the people now an option to transact in US Dollars because it's pegged to the dollar in a completely decentralized way that the government cannot stop and that all you need to have is a phone to participate.

Okay, so may I. Like, I completely see that sales pitch. I think it's awesome. And I think of any cryptocurrency, that's the one. Because, you know, but that currency will win the day when it has a contract with the. The Federal Reserve and the US Government. Right? Because here's the thing, like, even though everything you said is true, they can't stop it. It's decentralized. It's just. It's just, you know, binary code. Right? That's all it is. But they can still make it illegal. Any cryptocurrency is competition for a government's major product. What is a government's major product? It's their currency. It's the dollar, it's the yen, it's the, the euro, you know, and they're, I don't, I just don't think they're going to stand by and let that happen, you know, like, you'll see.

So I've asked that question to a lot of people.

Yeah. What do they say?

Our friend Kamal, who's pretty deep in this space and is one of them. And he, and he's like, this tech is moving so fast that the people in Washington only became aware of it and came onto the radar like two years ago.

Yeah, of course. Yeah.

And then the Silicon Valley guys and the entrepreneurs see the opportunity. It's the Internet 2.0. And they see what's happening from an adoption perspective in Asia like Singapore, Hong Kong, where these blockchain companies are being opened with welcome arms. They're going up to Congress being like, look, the genie's out of the bottle, can't contain this anymore. The question is, do we want to be the center hub of influence for this innovation or do we want it to go to Asia? And so they're out there every day getting this legislation, trying to push through with the SEC and the government. And I don't think.

I agree with you because I had the same concern is like, why would the US Government let this happen?

Yeah.

They're not just going, I don't, I don't think they're going to be able to stop it at this point. They might try to regulate it, which they're doing now with KYC and making.

Everybody register every account, meaning know your customer banking laws because they want their tax revenue.

Sure. And, and ultimately we're going to see a US Reserve crypto dollar.

See, that's the one. I'll put my.

Say that again. A U.S. reserve crypto dollar.

We'll see, we'll see.

The one sanctioned by.

Oh, yeah, I, I, I don't doubt that at all. So this is probably the first time I have ever been excited about crypto and, but here, here's why. The conversation that we've been having has been about the technology, the businesses that will come out of that, the disruption of government. Holly freaking Luya. I mean, this, this is all great stuff. The technology is incredibly fascinating and I think it will probably change the world, but when it comes to trying to buy specific coins.

Yeah.

I don't understand how anyone thinks that's a good idea. Give me a company that is amazing means of exchange on the blockchain system. I'm all in.

The problem is there's so many, there's so many choices. I mean this world has become giant, right? And I just want to say for the record, like I said to you at lunch today, I would love to be wrong about this. I would love nothing more than to see cryptocurrencies succeed. Non governmental cryptocurrencies, I just don't think they're going to let it happen.

All crypto is doing is, is it's, it's decentralizing things and adding liquidity to every asset class and, and freedom of movement for that money and value to, to be moved around. Bitcoin is serving as a store value because there's only so many that will ever be created and that can't be changed or manipulated.

But, but I could, I could blow my nose in 21 million tissues and say there's only 21 million created. I'm not blowing my nose ever again.

Well, it's, it's, it's obviously the real value is determined by adoption and use, right? So if nobody's using Bitcoin, it doesn't matter that there's only 24 million.

Proof of work.

Well network, we're just using it. Right. So when, when we can go to Starbucks and use it. That's great. So that's coming, right? So Bakkt is, is being launched January 24, which is started by ICE, the company that owns the New York Stock Exchange. So they built this in partnership with Microsoft on their cloud department and they partner with Starbucks and you can literally go to Starbucks website and look at the press release on the corporate website that says we're bringing an app and the backed functionality with crypto payments to every single 15 million Starbucks users that have our app and use it every day.

So basically you could order Starbucks with any cryptocurrency, any crypto you want.

You know what's fascinating about that is that remember the story about the guy who paid like two bitcoins for his pizza? The first guy that used to it or something?

40, 40,000 I believe.

Bitcoins, yeah. Oh, oh yeah. Now that's, that pizza is worth billions, billions of dollars. Right. And so you know, it's got. The other key element about it is for it to be used and useful it's got to be stable. Like it cannot fluctuate like that.

That's where the stable coins come in.

Yeah, right.

And, and as every market matures, we got to keep in mind that the entire global market cap for crypto today is around $180 billion, which is nothing in the GR. Less than half of Walmart's market cap.

Yeah. Right.

So this is over the entire world and a fourth of different cryptos is worth half the valuation of Walmart.

Yeah, sure. It's not.

We're in the second inning.

I'd rather own a half a Walmart.

But, but I mean, so you see the, just like the Internet, when the Internet came out, we saw a bunch of ideas and 90% of them were bad and went out of business. We're going to see the exact same thing with crypto. It's going to be very volatile. But the, the potential gains, the, the risk versus reward in my opinion is very asymmetric at this point where I can go out and buy substratum tokens for $0.04 today or you know, you know, pick a dozen of them that have real utility and value. So substratum is the first.

Decentralized Internet project where that's a utility token. It's a fuel to use the network basically that has penetrated the Chinese Internet firewall. So you can go watch a demo of this on YouTube, but they've essentially decentralized the Internet so it's not using anything, anybody's backbones. It's just the nodes of the people who are on the network and it's fully encrypted. And they set up these computers in China and then got on the substratum network and were accessing Facebook and Google in America, which is impossible to do.

In China right now without a vpn.

Yeah, Well, I just know that it's the hardest firewall in the world to penetrate. And now this little token is going right around. That's interesting. And it's decentralized, so there's no one for China to go after.

Once the code is released, it's there.

That's actually really interesting.

Yeah.

So here's, here's something interesting. Like we all have different opinions on what's going on in crypto or real estate or the stock market or even the economy overall markets. But for all of us, our foundational investment and financial strategy is at search of the business of having a cash flowing business, earning your cash and then taking that money and deploying it elsewhere. Yes, yes, yes. So like that is the foundational strategy. And so often it's easy for people to just start guessing at investments, thinking that that's their wealth strategy. And I think that is, that's a huge mistake.

I learned that from Mark Ford. So he was the second or third podcast interview I ever did. And I really resonated with Mark because we have the same skill set, said insane business where he was in the information publishing space for 30 years. And his skill is copywriting.

Yeah. And he's great at it.

Very quiet guy. And I'm like, you're me, like, 30 years older. And, you know, it's like, what is your advice when it comes to investing? He's like, your.

Business is your source of wealth, and your only job from an investment perspective is not to lose money. So most people have to rely on their investments to build wealth because they have a set salary and a job. We have the ability to produce cash flow on demand and build wealth rapidly, much more rapidly. Our job is to not lose that money. And so that conversation flipped it, because I used to think, I'm making money to then put into this thing to become rich, where the opposite is true. And it's like, the business is what makes me rich, and now just have to put it in there to create some leverage, but do it in a way that doesn't lose.

You know what's interesting about that statement, I interviewed Mark Ford also, and his. His nom de plume, his pen name is Michael Masterson. Right. And he wrote one of my favorite books, Ready, Fire, Aim. It's interesting that he would say that, which sounds like a very conservative statement, and then have that awesome book, Ready, Fire, Aim. You know, like, super conservative.

Financially super conservative. And I think. I think it's. He probably learned a lot of lessons when he was young. We all burped as entrepreneurs. Our biggest risk is that we're okay with risk.

Yeah, yeah.

We're usually. We're very, very comfortable with risk. And so when I applied that nature to my first set of investments back in 2007, 2008, 2009.

I would just, here's 100 grand. Here's 100 grand.

Here's 100grand.

And a lot of them did work out.

And I was like, oh, now I'm now broke, poor, essentially, compared to where I was until I had that epiphany from Mark where it's just like, great, you made the money. You've done it. Job well done. Just don't eff it up.

You know, Mike, that's. That's a really interesting point. You know, don't lose money. Right. And Warren Buffett says, don't lose money. And, you know, people say that a lot. You know, there's another kind of a. Another area of life where a lot of people are losing money, and they don't really think about it the same way as that. So you divorce. Well, Divorce, the big B word, is a very costly thing. And interestingly, usually people think it's oh, because he got half or she got half. Right. And that. And they were bitter about that. But that's really not the biggest cost of divorce necessarily. It's being forced to liquidate assets at inopportune times. So if you've got a portfolio of real estate, you know, I always say time your divorces and get divorced at the peak of the market.

Okay, that was a great time to get divorced.

Now is a pretty good time. Yeah.

Well, what was the other expense except.

The Trump trade and the stock market has now been pretty much wiped out. Right. So.

Well, what was, what was the other.

Expense that you're getting, but the other expenses? Just like I'm thinking about that because, you know, we're sitting here in your beautiful house, your second home in Austin, Texas, and we all live now in or me being the most recent in a no income tax state. And when I moved in Orange County, California, you know, I was paying mortgage payments of $14,000 a month. My property tax bill was, you know, about 14 grand a year and my tax bill was 13.3%. So if you want to not lose money, and I say this to my listeners all the time, just get on a plan to get yourself to eventually, maybe you can't like get up and move next year. Right. Or this year, but you know, over five years, see if you can make a plan for your life to live in a no income tax state and.

Buy your real estate and a no income or no real estate tax property tax. So yeah, live in Texas, buy a property in Aspen.

Yeah.

Well, you have property taxes everywhere. What do you mean?

The real estate taxes are, are dramatically less in Colorado than they are in Texas. Yeah, they have income tax. It's flopped.

Texas has high income tax, but there are some no income tax states with low income. They're high. Yeah, High property tax, like 3%. Right, but. But you know, the thing about Texas is the real estate is cheap, though. So even though the tax rate is high, you know, the, the real estate is not very expensive when you buy. Well, but you come from a California mindset and everything looks cheap. Right. You know, that's a. So real estate is not real expensive in most Texas areas.

We're not confined geographically to Texas. It keeps spreading.

Yeah, yeah, absolutely. Absolutely.

All right, well, Mike, where can people follow you and what type of content do you create for your peeps?

Self madevan.com and we create content for young men with ambition who Want to become entrepreneurs and build off.

And it's a great show and it's a phenomenal show.

Thank you.

Phenomenal show, Ryan.

I'm Ryan Daniel Moran, founder of capitalism.com My podcast is called the One Percent and we're about building businesses, investing the profits and paying fewer taxes.

Yeah. Awesome. Awesome. And I'm Jason Hartman. Jason Hartman.com. and my main podcast is the Creating wealth show.

Gentlemen, want to grab a beer?

Yeah, let's go have a beer.

Let's do it. Thanks for watching everybody.

Thanks. Happy investing.

Sweet.

Boom. That was fun.

Yeah. Good job. Good job. Yeah.

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