1498: Housing Market Recovery Index, Macroeconomics, Adam Robinson Pt 2

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.

We have got part two of Global Macro Advisor today, but if you haven't done so already, I must encourage you to watch our new webinar. This one is good. It's good. It's good. This is a market profile webinar for Florida and Georgia. And you know, there's that song, the Florida Georgia Line. So I figured it was kind of easy to remember. Just go to jasonhartman.com floridageorgia jasonhartman.com Florida, Florida, Georgia. And many of you have really been pleased with the asset defense asset protection webinar and the incredible deal, frankly offered by the attorney featured on that webinar, which, by the way, is a super good deal. Everybody has pretty much unanimously agreed with me on that. And just a reminder, that one you can watch and you may want to see that one again. I know that's a, there's this stuff gets into the weeds. So if you want to see that one, it's just jasonhartman.com Asset Protect your ass at.

Jasonartman.Com Asset so there's two great webinars for you this weekend as we celebrate in the U.S. the Fourth of July, Independence Day. And I tell you, after the fake race war is over and the marginally fake coronavirus scare, that's not obviously totally fake, that's just sort of an opportunistic thing. I guess you could say that that's true about the race war too. You notice how I just so sort of just throw these things out there, right? Just throw them out there. The civil unrest and the craziness. But hey, weren't you happy to see the Seattle mayor who kind of let everything go on? Hypocrite. Hypocrite. And then when it's right in front of your own house, oh, it's time to shut this down, of course, because it's affecting my life. So finally, the Seattle mayor took some action. God, this government. If we leave this stuff to these corrupt politicians, what a world we would be in. Thank God we have some redress. And by the way, I have to say, I know we have a lot of listeners in Hong Kong and a decent amount in mainland China, too. I gotta say, I am sad for. For what has happened in Hong Kong. As you may know, the deal was, when Britain turned it over back to the Chinese government, it was to remain a special administrative zone for five decades until 2047. And the Chinese government, you know, the CCP, they're just not so interested in freedom, you know, so they have really cracked down on Hong Kong. And I doubt that will remain the financial capital to the extent it has been in the past. You know, this is the thing. This is one of the things. And we've talked to some degree over the years about international investing. You know, I have been to 87 countries. I very much like to think of things as a world perspective. I like to think of myself as a citizen of the world, not just of the country where I actually have citizenship, the United States. And as such, you really, when you look at real estate investing around the world, and this may well change, okay, you know, everything. By the way, here's my disclaimer, okay? One of many. I reserve the right to change my opinions because things change, okay? Things change. You never want to be that dinosaur that views the world from a lens that is out of date as the world has changed all around them. But right now, and for the long foreseeable future, at least from this vantage point that we're in today, the US has, of course, such a unique real estate market. It has such a unique market in so many ways. Greater data transparency, better rule of law, access to comparable sales information, uniformity of practices. I know, I say embrace the fragmentation and it is fragmented, but compared to what? Compared to the way they do things in other countries, this is not fragmented at all, folks. If you compare it to that and the mls, just the fact that there is an MLS system, a multiple listing service, and just the customs and the procedures and all of that stuff. But in addition to that, the lack of political risk. I mean, think about it. If you were like so many an investor in the Hong Kong, very, very cyclical real estate market. As you know, there are three types of markets in the world, linear, cyclical, and hybrid. And Hong Kong would definitely be classified as a cyclical market. But you add to that, and of course, the speculators some of them made a fortune investing in Hong Kong real estate. And Carmen and I were there last year and had a great time. Well, except we did get into one argument and that wasn't so fun. But other than that, other than that, we had a great time. And you think of. And you look at how rich that little specialty administrative zone is, or district, I should say. And then you look at Macau. We went over to Macau as well, and boy, I had, I think for the first time in my life there an ear infection. And we walked into this Chinese pharmacy in Macau and the guy didn't speak much English And I pointed at my ear and he gave me some stuff. And I just took the chance because it was bothering me so much, it really hurt. I think that's the first time in my life I actually had an ear infection. Maybe when I was a little kid and don't remember it, but never had that before, and that was bothersome. But I digress. So I took a chance and put the drops in my ear and I guess it helped a little bit, but that was that. What was I saying? Oh, yeah, Hong Kong. That's what we're talking about. Political risk. And speculators in the Hong Kong market, at the right time buying properties, they made gobs of money. I mean, gobs of money, you know, if you're lucky. And it's pretty much just luck for folks investing in a cyclical market and being the beneficiary of a good cycle, that's the road to riches. Because those properties will never, ever make sense from day one. They will never follow commandment number five. What is commandment number five, you ask? Thou shalt not gamble. No gambling. No gambling. Invest in properties that make sense the day you buy them. And how do you know if they make sense? Because they have good cash flow. They have a good rent to value ratio, which, by the way, not being a dinosaur. See, I'm not a dinosaur. I revised the rent to value ratio on a recent episode. Yes, yes, yes. Why did I revise that? Because the world changed around us. The world changed all around us. And we have to make new metrics and new ways to evaluate properties when the world changes. How did the world change? Well, we got the lowest interest rates in 3,000 years.

3,000 years. The lowest interest rates in 3,000 years.

Did you catch that? Yeah, I know. Not 1,000 years, not 2,000 years. 3,000 Years. So if you think of someone in, oh, I don't know, let's pick 800 BC. 800 BC you know, if you're out trying to buy something and borrow money, you know, you. There was no Federal Reserve back then. Clearly that was, you know, that was like, the Federal Reserve has only had like 1/30 of that life and it's been too long because most people listening were not alive when the Federal Reserve was created. In fact, I will venture to guess nobody listening was alive when the Federal Reserve was created. But it is possible because there are some people that are old enough to have been alive when the Federal Reserve was created and still be listening to the Creating wealth show. Thank you for listening. We appreciate it. So 3,000 years, 800 BC, you borrow money, you found a real estate deal you liked in 800 BC and you'd pay a higher interest rate than you'd pay today. Yep, that's how good it is, folks. Make sure you appreciate it because it just got even better. So here's an article from Housing Wire. It says, housing market recovery. Things are looking up. Trends remain positive. See, if you got all into negativity during the COVID crisis, you'd be missing this now. But I know most of you aren't because, hey, you've been buying properties like hotcakes. And I guess the overall impression is hotcakes always sell really well, don't they? So they're selling like hotcakes is the old saying. Well, you know, I haven't had a hotcake in years and you know, I, I'm not gluten free. I eat gluten. I love bread. You know what bread I especially love the most? If, by the way, I know we have a lot of listeners in my old hometown, Orange County, California. You go to Mastro's restaurant in Crystal Cove in Orange County, California, which is Crystal Cove, basically Newport beach, super duper high end area. Where, by the way, interestingly, a lot of people that live in Crystal Cove and in Newport coast, the sort of sister area where I used to live, I owned three homes in Newport coast. And a lot of people that live in those places have cars with Nevada license plates. Hmm, that's interesting. They are Nevada residents. Hmm, that's interesting. Yeah, Nevada residents. But they live in Crystal Cove or Newport coast or Laguna beach, whatever. I guess they don't want to pay California taxes. See, whenever you rip people off, this is for you, State of California and Governor Gavin Communist Newsom. And he is a. I'm going to call him Governor Nuisance because he is a nuisance to productivity for sure.

So Governor Nuisance, by the way, Governor Nuisance, you're certainly welcome to come on the show. I love to chat with you. I promise I'll be respectful, even though I will probably shred your silly ideas that you have. But they're not all silly. I don't disagree with everything you do, but you know a lot of things. Anyway, Governor Nuisance chases people out of the state as Governor Moonbreem Jerry Brown did before him with their oppressive taxes. So anyway, back to the subject at hand. Jason. Yes. Stay on track here. Okay, so the housing market recovery index says that things are good. The index is set at 100. 100 is sort of that benchmark. Okay. Set at 100 for the last week of January. Right. As Covid kind of really hit. And the value of 100 means the market has recovered to the pace seen that month. Okay, so it was booming, Covid hit, everybody freaked out. Right. Now where does it stand? That is the question. That is the question. To be or not to be. That is the question. Okay, well, the housing market Recovery index reached 95.8 nationwide. Now that's nationwide last week for the week ending June 27th. And 12 of the 50 largest markets are showing recovery with the greatest occurring in. Now this really amazes me. I wonder why this is. You always have to dice, slice and dice the statistics to know the truth of what is really happening. I guess it's kind of like what we shared yesterday. When you go trough to peak, then it looks really good. And my argument is that's why the stock market likes and I would argue designs. Doo doo doo doo doo doo. That's my Twilight Zone imitation. I know, it's really bad. Yeah, don't hire me for sound effects, voiceovers, impersonations of celebrities or jokes because I'm not good at any of that stuff. But I'm good at investing and I'm good at economics. Anyway, I'm pretty good dog dad, I think. I don't know Coco. What do you think? She's over there laying down. I'm not that good because if I was a better dog dad, Coco would get a lot more exercise than she does. But we do okay anyway. I would also get a lot more exercise than I do. You know I do okay, but could be better. Always room for improvement, folks. So here there's. So I would argue that the conspiracy theory that the stock market designs volatility in so that they can use those valley to peak comparisons and say how good things are. Remember, that's what I shared on yesterday's episode how the Dow is up, the S and P is up. Oil is up 80%.

Well, 80% from what compared to what the Jason Hartman question says. So yeah, you know, it's all it is, what it is anyway. You, you can see through it. So here they're saying greatest recoveries in. You ready for this? Boston, San Francisco, Seattle, Denver and Philadelphia. To me that is suspicious. But I think they're saying that because they had the greatest declines. And what else doesn't this tell you? It doesn't tell you what the recovery index measures. Is it measuring sales volume, sales prices, number of listings on the market, number of listings sold? Is it the pending home index, in other words, the deals that go into escrow under contract? Or is it the index of closings? Because of course that closing has at least a 60 to 90 day lag behind it, as I've taught you many times over the years. So for whatever it's worth. But I can tell you anecdotally, and I don't have my own index, I should have my own index. Why don't we have the Hartman index?

Someone please check into that. We need a Hartman index. What would it measure? Well, I think it would measure compared to what? Something along those lines would be good for the Hartman index. Okay, think about that, folks. If you have an idea, I'd love to hear from you. Jason. Hartman.com Ask and maybe we can make a Hartman index. That'd be cool. All right. It says in the US the overall weekly index value calculated as a weighted composite of four indexed components including housing demand, based on realtor.com online search activity. Okay, so that's only on search activity. That's not on what happened activity yet. But wait, there's more. Home prices based on the median list price. That's important. What is the home price based on then? Housing supply based on new listings and pace of sales based on median time on market. Okay, I think that's actually, that's kind of an interesting index. I like that. I like the way they've done this. Now the question is compared to what? Right. It's all. That's the question again because it's compared to what in those, in the items that the index is measuring. Remember when the consumer price index. Let's use that as a comparison here to talk about it. In our thought experiment, when the consumer price index measures inflation or deflation. Remember the way they trick us that I've taught you over the years is they measure fiddle and adjust the dials. They keep adjusting the dials on three things. The three main things. They keep adjusting the dials On. Okay, so think of it as a stereo system, right? Mostly think of it like an older stereo system with knobs and dials because it's much more cool to visualize it that way. You know, you might have volume. Volume is the big knob or dial, right? And that just turns the volume up or down. But then you might have three others. And what would they be? They'd be treble for the high pitched sounds and mid range for the middle and then bass for the low end. So you could adjust the volume, but you could also adjust the treble and get the high sounds. Sound like the Bee Gees. And then you could adjust the mid. Well, no, that was bass I was doing. Let's get it right here. This is the mid range right here. That's kind of mid range. And you could adjust the bass and the deep sounds. Nah, that wasn't a good way to do it. I put my hands over my mouth to make that effect. How about this? The base, you could adjust the base.

You know, it's the end of the day here. I'm getting a little punchy. It's been a long day. Well, most of them are long days. So when you adjust these things, it's like adjusting the inflation index, weighting, hedonics and substitution. That's how you adjust the weighting of what things in the index are making up the important part. So let's dive into this one and let's talk about the housing recovery index. Okay, Remember what I told you? I said search activity home prices based on median price and that's very misleading. It could be very deceiving. There. Housing supply based on new listings. That's pretty clear. And then pace of sales based on median time on the market. Notice, median and average are of course not the same thing. I don't need to go into that. So the search activity is 10% of the index, the median or the median list prices, not sales prices. By the way, list prices are 30% of the index. And the supply of new listings is another 30% of the index. And the pace of sales is another 30% of the index. So there you've got 100% when you add all those three up or all those four up. So yeah, for whatever it's worth, it's interesting. But I can tell you, forget about indexes and anything complicated, I can just tell you real estate sales are booming, booming, booming. So there you go, let's get to part two. But I know you've been waiting for this and I better just tell you today because I Don't want to have to wait till Monday. Now, before I tell you this, let me just tell you, page is not totally finished. So I've been holding off, but I'm gonna, I'm gonna share the link because I know you've all been bugging me like crazy and I appreciate that. I'm so glad you're so interested to register for our upcoming Meet the Masters virtual conference. We don't have all our speakers on the page yet. We don't have all our topics on the page yet. So most of you are just going to go buy tickets. And we love you, we appreciate that. But hey, after you buy the tickets, check back middle of next week, watch the page evolve as we add more speakers and more information to the page just so you can get more and more excited about the event. But here it is. You ready? You can go get your tickets now. This is the announcement you've been waiting for. Jasonhartman.com masters jasonhartman.com masters to get your tickets for our virtual Meet the Masters. Coming up, we've got George Gammon, Harry Dent, we've got several other speakers we're going to be announcing as well. And it's just going to be a great fun event. So go register. Jasonartman.com Masters get your tickets. And here is part two. As we talk about global macroeconomics.

A lot of the environmentalists would talk about how this. I agree, even though I don't agree with the way environmentalism has been so politicized and a lot of untruths have been told since then. But conceptually, this concept is interesting. You know, this whole world built on consumption, consumption, consumption. And, you know, if you look back to the time before the 20s, okay, and before, and I don't know if you know who like Edward Bernays is, and he's, oh, okay, okay, yeah, you know, you know, okay. So he created modern advertising, modern public relations and so forth. And, you know, Americans were a pretty frugal bunch. And in all the time before that, so far as I can tell, frugality was like a virtue and it was something that was considered. You were considered of good character to be frugal. Now at least maybe recent events are changing that. But now you're considered a cheapskate and no fun. And, you know, it's been all about bling and showy cars and whatever, everything we could consume. You know, we can't have a system that's based on just radical consumption forever. That is a losing battle, isn't it?

It's such a losing battle. And I'm going to give your listeners a framework for understanding really anything, anything human. And that is the notion of question and answer. And I'm going to get back to consumption in a sec. Everything human is an answer to one or more questions. So for example, the coffee that I'm sipping, it's an answer to a question. What can I drink that will satisfy my thirst and give me a little late afternoon pat coffee? This podcast is an answer to questions your listeners have. Where can I go for world class information on topics of a financial nature curated by someone I trust? It would be your podcast is an answer. Your podcast would not be an answer for someone seeking what hairstyles are prominent or how to cook a chicken. Right. You would not go that would not, you would not be an answer for that question. And so I say that because even marriage is an answer to a question. Having children is an answer to a question. Los Angeles is an answer to a question. So I'm belaboring this point for a second punchline coming.

Yep.

If someone wants to get ahead in that in the media world or music or arts or entertainment, Louisiana is an answer to that question. Right. Houston, Texas is not an answer to that question. Houston, Texas would be an answer to other types of questions, but not that one.

Yeah. Like oil. Yeah.

Right, oil. Right. So it's really important. So what's happened in the world is we've equated things even consumption is an answer to a question.

Right.

We would hope America that predicated on freedom giving one the opportunity in pursuit of happiness and liberty. Right. You think about those things. Freedom and happiness and opportunity. That's what America was about. And what's happened is we've equated if we get enough things then we'll be happy. But it's left the world in a state of despair. Spare and I I stated earlier, I only state what I know if your listeners. This is an experiment that each can do on Google. If you go to the Google landing page and in fact, you know, Jason, you can do this right now you go to the Google landing page. Got to be the Google landing page.

Okay, sure.

And then you type in, type in this. So about a year ago I was curious what are people interested in landing learning how to do?

Okay.

One would be like learning how to create wealth. Right. Okay, one thing. So let's type in without hitting enter to see what it autofills. How can I learn too?

Oh, okay, okay, okay, I get it. That's good. Yeah. Okay.

And what's what's the number one? How can I learn too?

Okay, sing. Love myself. Code.

Bingo.

Computer code. Speak Spanish. Draw. Play the piano. Code for free. Do the splits. Play guitar.

The second one. That, the really critical one.

Love myself. Yeah.

How can I learn to love myself? Now, wait. Now here's another. Type in. Why do I feel so. Okay, type that in. Why do I feel so.

We didn't think we were going to get a psychology psychology session out of this, but this is great. Why do I feel so. And here's the answer. Tired. And number two alone. 3. Bloated, weak, empty, sad, hot, nauseous, cold, depressed. That's it, right?

Tired, by the way, is a euphemism for depression.

Yeah, I agree.

And so I'm saying this. This isn't the lesson. This isn't an idle lesson in psychology. Your listeners are interested in growing their wealth, and it's important they understand that that's what's going on in the world and that we're dealing with a world that has gone into debt to buy things they didn't really need and have left them indebted and feeling depressed and lonely and empty. So this is what's going on right now is a radical reshift recalibration. And everyone's going, wait a second. What do I mean?

I'm glad you said that. Okay, so here in my Pandemic investing presentation, a lot of our thoughts just mirror each other's. This is really interesting. You know, I have predicted that this recovery, when we wake up from this, we are going to wake up to a much smaller economy. And the reason is that that 70% of our economy is based on consumerism. And I think people have really, truly changed. I think they've reevaluated their priorities. They are going to seek a simpler life. And I think a lot of this has been good for us in some ways because a lot of people, I think, including myself, are really thinking about what is life really about. It's not about showing off a driveway full of overpriced cars. It's just not about a lot of this crazy stuff that we've all been doing. It's definitely still about financial freedom, but it doesn't have to be about massive consumerism trying to fill a void. There's a real centering, I think, that's going on, and I think a movement toward a simpler life.

I could not agree more. Not surprising that you and I mirror each other. You come at it. You know, we come at it through different lenses and arrive at the Same point. And I could not agree more. And now the challenge in the world is that people are gaining enlightenment about really what matters. If each of us look at what we've done in the last, you know, 10 to 12 weeks, we've narrowed down the number of people we see and reach out to. We're thinking about how we spend our time and with whom.

And.

Right. Product purchases. We're thinking, do we really need another one of those? And no, actually.

Right.

We don't.

One caveat to that before you go on that's kind of interesting is that people are spending on the home. The home has really become the center of the universe, and I think that trend will continue. People want to have a nice, comfortable home because they're stuck in it so much and they're afraid they might be stuck in it again. So they are spending on home exercise equipment, furniture, home office equipment. I've definitely been spending more on my home. Okay. Because this is where I'm spending all my time, you know?

Right. I didn't say we weren't spending money. Do we need another one of those things? And right now you're exactly right. What's gone on is money shifted away from external spending. We're not going out to restaurants, so that means we're going to and doing things socially. Global tourism is 10%. Got to let that land of the global economy. 10%, that's gone. That's just flat out gone. So the global GDP just from tourism, that's gone.

So that'll take $8 trillion or so away from the global economy. Right. Because it's about an $80 trillion GDP. Right.

There you go. So what's gone on is a reshifting of the. Where we spend the money. So, for example, clothing, we don't need lots more clothes. We're not going out as much. And we can rewash the things we have, but we are, you know what? Creature comforts at home. That's where we're spending our money. We're not going to Equinox Gym. We're going to buy a peloton.

Yeah.

Right. And by the way, peloton stock was getting crushed.

Yeah, it was getting crushed. And now it's through the roof. I know, Right? Through the roof.

And so there were lots of things you look at. So anything involving work at home or play at home. Right. Stay at home has done extraordinarily well. Anything related to commercial business activity has gotten crushed.

Yeah.

And so airlines, they've gotten crushed.

Right.

But Zoom meeting. Right. Zoom Stock, ZM or Microsoft Right. Anything that a technology that allows you to do things at home or interact.

Right.

Distance from at home.

Right.

Like zoom meetings like. Or anything involving entertain doing things at home, whether it's exercise, entertainment, living. So you're right. Things like Lowe's and Home Depot.

Whoa.

People are spending a lot more on home improvement.

Absolutely. Yeah.

Swimming pools. Okay. We're not going to go out.

You don't want to work pool anymore. Yeah, right, right.

A number of these trends were in place before COVID and Covid has just accelerated them.

Just accelerated so much. And so you're right, of course people are spending. It's a shift. They're not spending it outside the home to spending it inside the home. Right. So life inside the home. And anything that allows us to reach out of the home via technology, those companies have done extra, extraordinarily well.

Yeah, absolutely. Very interesting talk. You know, I could talk with you, Adam, for three or four hours quite easily and you're an interesting person. You got some insights. Wrap it up for us with any closing thoughts. Maybe something we didn't talk about already. Whatever you want to leave us with.

Well, I think the key thing is this. I've spoken about this theme since three and a half years ago when I was with Tim Ferriss. I Back in 2016, I said pay attention to things that don't make sense. And that's true internally. When you yourself as an investor, your listeners. Right. So each individual, your listeners. When you yourself go, huh, that's odd, or you hear a commentator or some political or corporate or some expert on something say huh, that's odd. That anomalies are signs of enormous opportunity. And instead of just going huh, that's strange and forgetting about it, go, huh, that's strange. Great. That's a million dollar opportunity. Or more. And so whenever things don't make sense in your environment or you hear others saying it, they are blind to what's going on, they go, huh, that's strange. Wonder why that stock keeps going up. So again, things that. Or something's going down, doesn't matter. It's a sign of something hugely powerful. Get in on it.

Good things that don't make sense. Very interesting, Adam. So watch out for those things that don't make sense. That's counterintuitive. But it needs to be considered because this time it really is different. I think we've agreed on that, right?

Absolutely.

Yeah. Good stuff, Adam.

Give out your website freely. I want to thank you, Jason, for giving me the opportunity. I try to share what I know about the world freely. My pleasure and my clients more detailed information Hedge fund managers different but such wisdom I have about the world and insights I'd like to share. If they go to imadamrobinson.com I share a lot there. And Twitter again I am adamrobinson on Twitter.

Yes, both excellent, excellent. Adam Robinson, thank you so much for joining us and happy investing.

Thank you so much. Jason.

Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the 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 advice in any other specialized area, please consult a 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.