1383: Super Bowl Indicator, Cloud Kitchens, Fund Scams, Brexit & HENRY

Just invest. It's still a great thing to do. I know it can be scary to a lot of people. Jason's been doing this a long time. He's got a lot of knowledge. We're in an age of technology and everything's at our fingertips. You can do a lot of homework on your own, but in the end, make sure you're talking to professionals like Jason.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Thank you for joining me today and congratulations to Kansas City for winning the super bowl. And also congratulations to the supporters of Brexit. Brexit has finally happened. I know this was a very, very contested and bitter battle for independence, but I think it's a good thing. I think it's a really good thing. In fact, seeing some more countries leave the eu, the very imbalanced EU I think would be very good for many countries who shouldn't be saddled with supporting these poorly managed countries that are bogging the whole system down. I mean, the whole idea of it just, you know, it's Pollyanna, it sounds good, but it just doesn't work in practice when these countries are so very different and even crazier ideas to get them all to mesh into one currency, that is absolutely nuts. So congratulations on Brexit and congratulations to Kansas City. So we will be talking about the super bowl indicator in just a minute. Have you heard of the super bowl indicator and what it says about the stock market and the economy? We'll get to that. But first I want to say welcome to Henry. Henry is listening. In fact, I know a lot of you are named Henry. What am I getting at here? Henry isn't a real person in this example. Henry is an acronym and I think we've got a lot of Henry's as listeners. I just learned this acronym the other day. We've heard of a lot of acronyms. We've heard of yuppie young urban professionals. That's been, gosh, I've heard that one since the 80s. We've heard of dinks, dual income, no kids. So in other words, a lot of spending money or investment capital available. Well, there's also Henry. Have you heard about Henry? This might be you. In fact, I'm guessing it probably is you. And that's why you're listening to this show. I and of course, hey, it's a matter of a big gray area as to what the ultimate definition of rich means. Because rich is part of Henry and its acronym. Henry. H E N R Y is high earner, not rich yet. High earner, not rich yet. It is certainly not uncommon. In fact, it's almost a cliche among high earners who have not invested, who have not created created wealth for themselves yet. They have a high income, a great lifestyle, but they don't have wealth. They're not rich yet. They're still in the rat race. They're still on the treadmill and they're going around like a hamster even though they make a lot of money. You don't want to be Henry. Henry is better than being poor. For sure. It's good to be Henry. You certainly have nice things, you have a nice lifestyle, you go on nice vacations, but you're still in the rat race. You know the old saying, even if you win the rat race, you're still a rat, right? And you don't want to be a rat. You want to get above that to where you have investments creating income for you. You know, at my creating wealth conferences I show a diagram which is just stair steps and it shows kind of the financial progression of one's life. Well, the hopeful financial progression of one's life where they start out as an employee or an independent contractor, a freelancer, and their income is generated 100% by their own efforts. And as soon as they stop working, their income stops and then hopefully they move to the next level where they have a business and a business is a system that generates that income for them. However, most people are sadly never really free. That business never becomes anything that's self sustaining to where they don't have to pay attention to it all the time, think about it, constantly become completely consumed with it. So they're not free either. And they might be Henrys, they might make a lot of money. In fact, there are many people who are Henry in a corporate job where they have risen and they've climbed the corporate ladder. They've done a great Job at it, I would envision. This is a lot of our clients, by the way, because they want to be free of being in the Henry paradigm, high earner, not rich yet because they've achieved success. I mean, our clients are, you know, successful, no question about it. However, they don't have the highest level of this three step financial progression that I show at my creating wealth conferences. And that highest level is as an investor, you have the asset creating income for you. Now, why is the asset of the investment, particularly income, property, real estate, why is it so much better than a business or. Well, it's so much better than a business because it has so many fewer moving parts. It's just not that complicated. A business is endlessly complicated. There are a zillion things. You always have to be tweaking the dials on a business, right? You know, you've got a competitive threat, you've got a legal threat, I a regulatory compliance issue to deal with, an employee issue, a vendor that's trying to rip you off. It's just everywhere you look, there are so many moving parts in a business, but with an income property, although you should view that as a business too, because it is a business. As an investor, you are in the business of providing rental housing to people and view it as such. But the moving parts are a relatively small number. Yes, it has moving parts. Yes, there are problems. No question about it. There are problems with everything. If you want the problem, free investment, well, grow up because it doesn't exist. I have news for you. Sorry to be the, the bearer of bad news. Don't shoot the messenger. I'm just the messenger. There is no easy way. It's. Listen, life is hard, okay? You know it's hard. But as you overcome obstacles, you just become so much more capable and it gets a lot easier after a while. And certainly think back to when you were younger and think back 10 years, 20 years and think how such small things used to just derail you. Think back to when you were a kid or just observe other kids, observe your own kids or somebody else's kids and how they get so upset about nothing. Okay? Right. It's, it's as an adult, you know, we know this is, this is just nothing. It's small potatoes. It's not worth getting upset about. But as we mature, we can handle bigger things. And if you want to judge how successful you are, by the way, just look at how big your problems are. If you have bigger problems, you are a bigger person. You are a more successful person because the measure of someone's success can be measured by the size of their enemies and the size of their problems. Okay? Small people have small enemies. They have small problems. Big people have big enemies and big problems. So, hey, is that encouraging, by the way? Are you. Do you want to be a bigger person now? Maybe not. Okay, well, you know, it's always easiest to just stick one's head in the sand and not rise to the challenge and not do the big thing. But, hey, you know, doing the big thing is more fulfilling. Speaking of which, you know, playing a football game, playing flag football, or being in the super bowl, what do you think's tougher? Okay, right, It's. It's tougher to get to the super bowl, right? Hey, it's more rewarding. And if you're gonna be here on this planet and live a life, you might as well live a big life. And you might as well dare greatly, even if you come up short again and again. So, what, you became a better person just by trying. I love that Zig Ziglar quote where he. He says, it's not what we get by reaching our goals that matters. It's who we become just by trying. It's not what we get by reaching our goals that matters. It's who we become just by trying. Think about that one. It's a good quote. Thank you to the late Zig Ziglar, who, by the way, I did a speaking tour with Zig Ziglar years ago. I may have mentioned that to you before. I shared the stage with him in four different cities. It was great, great fun. I remember Zig and I were having dinner one night. He was really. He was the number one, the original mentor that changed my life. After Zig Ziglar came Dennis Whateley and then Earl Nightingale, then Jim Rohn and later Og Mandino. All great mentors. I would highly recommend their work. Only one of those greats is still alive, and that is Dennis Whateley. He was on the podcast here, episode number 150. And Dennis Waitley was also rerun as a flashback Friday. And you can just learn so much from these great guys. They were really kind of the founders after Napoleon Hill many decades earlier, author of Think and Grow Rich, who were sort of the founders of the modern success movement. And there are many others, Many other men and women out there who have contributed to this school of thought, but those are the core success philosophers, if you ask me. So commandment number three of my 10 or 21 commandments of successful investing. You know, we couldn't just stop at 10. We had to. We had to come up with some more. So we're up to 21 now. The 10 Commandments is 21 commandments. Long commandment number three has really resonated with people the most, I think, and that is, thou shalt maintain control, be a direct investor, so you don't leave yourself susceptible to. To three major problems when investing. Number one, you might be investing with a crook. Number two, you might be investing with an idiot. Number three, assuming they're honest and competent, they take a huge management fee off the top for managing the deal. Right? And that's entirely legal. Unfortunately, it shouldn't be legal, but it is the way it is. And, you know, I saw an example of this the other day. A company that had bugged us to market, you know, their fund, and we were refused to do it. We. We wouldn't do it. We basically thought it was a scam. And when I say scam and when I say crime, when I use those words, I don't mean that they're necessarily illegal under current law. That's not what I mean. Now, sometimes that's true. I mean, look, if you look at Wells Fargo, the most disgusting big bank in America right now. But hey, what big bank isn't disgusting? There's a lot of small disgusting banks, too. Hey, that's why they call them banksters, right? They're the. You know the old saying, right? If you have a gun, you can rob a bank. If you have a bank, you can rob the entire world. Okay, anyway, enough of that. See how cynical I am? Wow, Jason, you're just so cynical. Not really, but I'm snarky, I'm sarcastic. But hey, there's definitely some truth in my sarcasm for sure. So, you know, I saw this posting on social media the other day for this company, you know, we wouldn't promote their stupid fund. It said, we're proud to be the gold sponsor at this upcoming conference. And it was like a big name conference. I'm sure they paid a few fortune for that. Oh, wait, wait, wait, wait. Let me edit what I just said. I misspoke. I said that they paid a fortune for that sponsorship. I doubt they paid a single penny for it. As a matter of fact, you know who paid for it? Their investors. So when you invest in a pooled money asset like that, the promoter, the sponsor of this asset, of this fund, you know, they can use your money to go raise more money. Now, the more money that they raise does not intrinsically benefit you as the investor. It definitely intrinsically benefits them. So essentially what you're paying for when you invest in these deals like this, when you violate commandment number three, because you are not a direct investor, you're not buying the property directly, you are not maintaining control. Commandment number three, thou shalt maintain control. So you're basically funding their operation to fund more of their operation. Now, you don't get any of that. You're not the owner of the fund when they raise more money that you paid for them to raise more money, because you probably paid for that sponsorship at that big conference. And listen, you know, that kind of sponsorship could easily be a hundred grand, maybe more. It could, you know, it could be hundreds of thousands of dollars. You know, these are big, giant Wall street style conferences, some of them. And they're spending your money to fly their whole team first class to the conference to wine and dine people because hey, part of the whole business is to wine and dine more investors. That benefit should come to you, the investor is what I say, but instead it goes to them and you don't even notice this. I'll give you an example. You know our client Muthiah, who's I'm sure listening right now. Hi, Muthiah. Are you a Henry? You've been traveling the world. Congratulations. And I'm glad to see that those properties you purchased are doing so well for you. And Muthiah was getting a little discouraged about dealing with property managers and so forth. And I couldn't agree more. It's absolutely ridiculous how these managers take advantage of their position. Many times they do. It's the nature of the beast. Look, at any time you're involved with humans, you got to realize that everybody's looking out for themselves. It's a sad reality. It's not a good thing, but it is a thing. It's just what you have to expect. Okay, Capitalism isn't perfect by any means. But as Milton Friedman said on that great interview with Donahue, the talk show host from years ago, I used to watch Donahue as a kid. He was a great talk show host, even though he's a left wing communist. I don't know, maybe I'm being a little harsh on poor Donohue. Anyway, Donahue asked the great economist Milton Friedman, by the way, you should read all of Milton Friedman's books. They are absolute brilliance, brilliance, brilliance. Read Freedom to Choose or Free to Choose. That's I think, his flagship book. I loved that book. It's great. Anyway, he asked Milton Friedman, he goes, but you know, capitalism isn't it just everybody's so greedy. And, you know, this was in the 70s, he's doing this interview, right? And Milton Friedman says, what makes you think that in communist countries people aren't greedy? What makes you think that people in Russia aren't greedy, aren't trying to outdo their fellow humans, right? Aren't trying to get ahead of them? What makes you think that that changes just because you're under communism versus capitalism? And the reality is, of course it doesn't, because the reason all of the commies love communism is because you have this elite class and communism is a pretty great deal for them. Do you think Kim Jong Un likes communism? I think he lives pretty well. Do you think Vladimir Putin, even though Russia's not technically communist, it's definitely authoritarian. Do you think he lives pretty well? You know, some say he has hundreds of billions of dollars stashed away around the world. Maybe, maybe over a trillion dollars. Putin. Maybe the richest person on the planet is Vladimir Putin. Nobody really knows because it's all so secretive. But do you think that these people aren't greedy? I mean, of course they're greedy. They're totally greedy. It's not like the laws of human nature have changed because of the system of government under which you find yourself. There's the coinagente, the elite ruling class, and then there's the hoi polloi, everybody else, right, who is oppressed by the ruling class that keeps all the money. Because people essentially violated commandment number three under a capitalist system, in a sense, you're a direct investor, right? You have, as Ayn Rand said, you have the right to your own labor. When you're operating in a capitalist system, your time and your labor belongs to you. And the fruits of that time and that labor are yours. They do not belong to the government to be redistributed by a bunch of disgusting communists who keep, number one, most of the profits. They skim it off the top for themselves. Because when you're in a communist system, think about it as it applies to commandment number three, or to a lesser degree, a socialist system. It's the same concept, just a matter of degree is all it is. So you are violating commandment number three, right? Thou shalt maintain control. You're not allowed. It's not that you're violating it, you're not allowed to maintain control, right? Because you have essentially given your money into a pooled asset, the communist government, number one, you might be investing with a crook. Well, we know that virtually every dictator that has ever lived in human History is a criminal, whether it be Amalda Marcos and her 5,000 pairs of shoes or Vladimir Putin. I mean, how do you get so rich, right? Even aoc, she says, you don't make a billion dollars, you take a billion dollars. I can't stand aoc. But because the system is this winner take all type of system, that statement isn't completely wrong. Okay, I'd love to say that it is, because AOC's out of her mind. I mean, you know, she and Bernie Sanders and Elizabeth Warren live in fantasy land. They're absolutely immature people that have no clue about the way the real world works. But the concentration. It's a complicated subject. We won't talk about it now. Okay, so number one, you might be investing with a crook. Number two, you might be investing with an idiot. Well, we've. You know, nobody thinks the government is brilliant or any government is brilliant. Okay? Mostly everybody believes that the government is inefficient and wasteful and corrupt. And the private sector can almost always do it better, if not always. So that's number two, investing with an idiot. And number three, they take a huge management fee off the top for managing the deal. So the elites, the cognoscente, the ruling class, they always take a big cut for themselves and then share the rest with the measly investors. And those are the citizens. Right? So commandment number three applies to governmental systems as well as investments. Interesting. Okay, Retail. Well, retail properties. Look, we've talked about the retail apocalypse many, many times. The Amazoning of the world. The Internet is just destroying retail businesses, shopping malls. It is really sad, but as the economist Joseph Schumpeter said, he talked about this in the concept of creative destruction. And it is creative destruction. It has to happen. Is it maybe a little too fast and a little too shocking to the system? Yeah, fair enough. Probably is. Does Amazon abuse its power? Most definitely. Okay, you know, that's where I kind of side with that AOC statement of, you don't make a billion dollars, you take a billion dollars. Right? And Bezos certainly is guilty of all kinds of improper actions. Amazon just rolls over everybody and see if we didn't have lobbyists. And we need lobbyists because, hey, citizens, the idea of lobbying is good, right? Citizens need the opportunity to address their government. But the problem is we get these overfunded tech companies that hire an army of lobbyists, okay? Google, Amazon, all of you, right? Or any traditional industry is much less funded and less powerful. But, you know, they do it too. They go out and they use this lobbying Power to buy off government officials, get all the laws drafted in their favor, and that's how they take a billion dollars, or in today's world, a trillion dollars in some cases, because Jeff has over a trillion, at least in market cap. He doesn't own it all, obviously, but it's pretty amazing. So retail, right? The retail apocalypse. Well, this is a positive lesson in the power of owning the real estate, because when you own the real estate, you own something real. And as bad as the retail apocalypse is, the shopping mall owners and the retail centers, they are figuring out alternate uses for their properties. One example is what they call ghost kitchens. Have you heard of ghost kitchens? Well, this is for the restaurant food delivery trend. Okay? These cloud kitchens, or ghost kitchens as they call them, you know, like cloud computing, right, Cloud kitchens. They are taking many of these old retail spaces and they're using them for kitchens. Not restaurants. They're just kitchens for delivery services. Some of these struggling shopping malls are putting ghost kitchens in their spaces or cloud kitchens. I think they're the same thing. It seems like those are interchangeable words. I could be wrong. If I'm wrong or you have any comments for me and want to tell me how smart I am or how stupid I am, go to jasonhartman.com ask. You can also just ask a question or leave a comment on anything or, you know, smart or stupid, you can vote. Go to jasonhartman.com ask and tell us what you think because we love to hear from you and we may share your questions or comments on the air if we like you. Okay. There's this group, what do they call this group? So Simon Property Group. That's the big retail developer. You've certainly been to a Simon Mall. Their CEO a few years back was like the highest paid CEO when he made like $146 million or some crazy number like that. Surprising that that would be a retail company. By the way, probably all the investors didn't get much of that. The ruling class, just like the government, just like the communist government, the CEO, the ruling class, the cognoscente got the big money and everybody else got their scraps, right? That's usually the way it works. And that's why you should be a direct investor. So anyway, this group, they're dealing with plans to open up 85 kitchens this year and at least 100 more by the end of next year. And check this out. They anticipate spending about $60,000 on upfront costs at each location and reaching profitability in just six months. Okay? Because they can fill about 125 orders a day, averaging 30 bucks each. Okay. And then there's another one, another company doing this, and they do these really small 230 square foot cloud kitchens. Okay? And they only cost about $30,000 to set these up. Now, I don't know, you know, if you've ever thought about, or maybe you've done, maybe you own a restaurant or any kind of fast food place, or you've invested in one of these or looked at one of them over the years, but that is dirt cheap. Okay. To build out a commercial kitchen costs an amazing amount of money. It is absolutely shocking how much building a commercial kitchen cost. So if they can do these things for $60,000 or $30,000 and use these properties that are just absolutely blighted and devastated, they can probably get the property in the space real cheap. I think that's going to be a pretty good deal. Okay, we got to wrap it up. The super bowl indicator. Just thought I'd tell you about that. If you haven't heard about it, Basically this is this totally non scientific pop culture indicator. But I would argue that a lot of the indicators used in the stock market, whether they be technical analysis or charting, a lot of these things are just to some degree, they're just superstition. Honestly, like the fact that things went above or below a certain chart pattern does not necessarily tell you what they're going to do next. And we've talked about this a zillion times over the last 15 years on the show, so I'm not going to get into it now. But hey, you know, the super bowl indicator might just be as valid. Right? And this comes around every year. A sports writer started it in 1978 and you know, it has some pros and cons. Right. It's kind of funny, but what does it tell us in this article? It says the very unscientific super bowl indicator suggests there's a higher likelihood of the S&P 500 falling this year than if the 49ers won. Okay, so because Kansas City won, there's a higher likelihood of seeing a fall. LPL Financial crunched the numbers and found that a win for a team from the original National Football League has produced a positive year 79% of the time. Now, for a non scientific indicator, 79%, that's pretty good, isn't it? Okay. But the S and P has been up 64% of the time when the winner came from the original American Football League. Still, it was a great game. Congrats. To the Kansas City Chiefs, who won their first championship in 50 years, the article says. So anyway, I just thought that was kind of interesting. The funny thing about it is they disclaim over and over that it's a very non scientific indicator. And your humble host here would argue that a lot of the indicators used to predict the economy and the stock market are extremely unscientific also. So take that for what it's worth. All right, go to Jason hartman.com, check out the properties. Reach out to one of our investment counselors. We'll be happy to help you. Of course, we'll help you build a nationwide real estate portfolio. And if you are new to the show, be sure you listen to the Quick Start Podcast. That's another podcast feed we have that'll give you sort of some of the fundamentals of real estate investing where we handpick some episodes for you there. Just type in Jason Hartman quickstart into whatever podcast platform or if you'd like a review, that's always a good place to go and we will look forward to talking with you tomorrow. Until then, Happy Investing.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out this show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own and if you require specific legal or tax advice or or advice in any other specialized area, please consult an appropriate professional and we also very much appreciate you reviewing the show. Please go to itunes or Stitcher Radio or whatever platform you're using and write a review for the show. We would very much appreciate that and be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.