2351: Doomers vs. Bears and Why the Empowered Investor Should Always Maintain Control

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I'm Russell Gray, Main Street Capitalist show and the founder of the Raising Capitalist Foundation. I'm here at the Jason Hartman Empowered Investor Live event. It's my first time being here, having a great time. I got a chance to see Sharon Lechter speak. I've never seen her speak. I've known her for years, never heard her speak. She was amazing. Of course, Tom Wheelwright was amazing. Jason had a lot of great things to say. What I really like about it is the big picture stuff, tax strategy, legal strategy, but they also get down in the weeds is how do you actually execute, how do you find properties, how do you manage properties, how do you automate, how do you keep yourself in the 21st century? So if you're serious about your real estate investing, your real estate portfolio, this is a great place to be. Lots of great resources, lots of great energy, a lot of great information, and hopefully I'll see you at the next one.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slang 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.

Good day, empowered investors, and greetings from Hilton Head, South Carolina. It is a beautiful, beautiful day here and I am at a great event where we're doing some learning some business stuff, talking a lot about artificial intelligence and many, many other things in the business world, and also doing some biohacking, which is very interesting. So feeling good. You gotta optimize your health and your finances, but I'm here to talk to you about your finances. If you want to know about optimizing your health, check out my other show, which is the Longevity and Biohacking Show. Admittedly, we haven't been posting a lot of episodes to that one, but there's a great library, some of the leading longevity sciences experts in the world on that show. So the Longevity and biohacking show. Check it out when you have a chance. Let's look at existing home sales. Now this is a very important chart if you are watching on video, if you're not, basically this chart goes back to 2016 showing a volume of about 5 to.5 million home sales annually. And then it progresses up to Covid and sales volume plummets to 4 million. And then of course, as the Federal Reserve and the government starts pumping the money printer and pumping the money supply and quantitative easing and all of that stuff, the real estate market just goes through the roof. Now this is not prices, this is sales volume we're talking about. But we get to a peak, according to this chart of nearly 7 million. Now the other charts I've looked at and the other studies I've looked at show it at just over 6 million. But this one is almost 7 million. So phenomenal. Insane amount of home sales volume. And then of course, we see the fastest interest rate increases in history and the market just comes to a screeching halt a few years ago. Now why is this important? And here we are back hovering around 4 million home sales per year. You know, we see this long normal stretch where it's about five and a half million, give or take, right? Depends on the year, of course. These things move up and down. Depends on the month, of course. And that's why they show you saar charts, usually seasonally adjusted charts, because home sales are, of course, they vary quite a bit throughout the year and the seasons. So it's better to look at a seasonally adjusted chart. Anyway, we're down at about 4 million. And I've talked about this before, it is not the first time you've heard me say this, but let me flip to the next chart here. And for those not watching on video, I took the same chart and I pasted a red rectangle that says pent up demand. Because if you look at five and a half million as sort of the norm and you look at nearly 7 million at the peak, right? We have had a deficit for a few years now. And that deficit is of home buyers would be home buyers, I should say, who didn't buy because the interest rates were too high, the, the market was too uncertain. Whatever their reasons, usually they just can't qualify, right? Or I should say they can't qualify for their expectations. They could qualify for some home probably, but they just can't qualify for the home they believe they deserve, right? And so expectations and ability to qualify and supply prices of those homes are way out of sync. And so sales volume has plummeted to hovering around 4 million. So we have now this deficit of would be homebuyers that have been waiting and waiting and waiting. And I've shown you the chart before and talked about it many times before of how many. In other words, the mortgage sensitivity. And now this is the sensitivity in a positive way. As rates come down, millions and millions of new buyers will be able to qualify for the median price home. And and we've got just over 800,000 homes for sale. This is the Altos and Housing Wire data. It is not the NAR data. Who says more homes than that are for sale? But they include pending and contingent sales which aren't really for sale. We've talked about that before and it really doesn't matter what survey you use as long as you use them consistently. So you're comparing apples to apples over the years. So if you look at the data, I'm using the ALTOS Housing Wire data and you compare to the NAR national association of Realtors data. And if you're looking eight years back or five years back, it's fine. Just use the same data at each point in time so you have an accurate comparison. Either way is fine. But really we have just over 800,000 homes for sale. Millions of people have been waiting and waiting and waiting. I estimate this number of pent up demand at about 6 million would be home buyers that didn't or couldn't buy. And now that we see mortgage rates dropping, those people are starting to enter the market. Business is much better for us.

I'm so happy about that.

It's been pretty slow the last few years but you know, still okay, but just kind of boring. A very muted market that we've had and business is definitely picking up. But boy, we see another half a point drop in rates which we all know is coming with the Fed easing and then Powell getting the boot soon that's not too far away. So we're going to see lower rates and we're going to see a very.

Active housing market because there's a lot.

Of pent up demand in the marketplace. We've talked over the years many, many times about inflation induced debt destruction. My trademark strategy for the last 21 years. And I wanted to show you a new way of viewing this and what I'm looking at here is a chart that shows annual nominal versus inflation adjusted real payments over time. Now of course it's important sometimes to actually think of the definition of a word. The word nominal just means in Name only. It's the name of something. A dollar is called a dollar. It was called a dollar back in 1975, it's still called a dollar today, but the value of it is very, very different. This survey goes back to 1975 and you can see that the payment burden because of the wonderful benefit of inflation induced debt destruction, which income property offers this better than any other asset class in the entire world. And that's why it's the most historically proven asset class in the entire world with a very, very long track record. You get this wonderful inflation induced debt destruction because that payment burden just eases and eases over time. For example, if annual, now this is annual, but it doesn't matter. The concept is the same. Annual, monthly, doesn't matter, the amount, the concept is the same. But here we're showing annual payments of $1,250 on the median price house back in 1975. Well, actually this goes back to 1970, I guess because the chart goes back further than the date you see, right? So whatever the case, right? And then we see the real value of those payments once they're adjusted for inflation. You think you're paying $1,250 a year, but by the year 2000, you're really only paying about 250 bucks. And this is why the people that own the real estate, that own the income producing assets just keep getting ahead over and over and over time. And by the way, of course, this is only one dimension of the beautiful multidimensional asset class that we call and love income property. The most historically proven asset class in the entire world and the most tax favored asset class in the entire world. Okay, let's think about it another way. Inflation adjusted real payments over time. And here we see the same kind of thing. And so we're looking at 100 as the payment, okay? And then we're looking at over the years how that just declines and declines and declines to, and you've heard me talk about it before, to $24 a month. That monthly payment, it feels like $100 originally because the dollar value wasn't debased by inflation. But over time, as it was debased by inflation, that monthly payment feels lighter and lighter and lighter. You keep writing the check every month for the same amount, but the meaning, the inflation adjusted meaning or impact of that payment is much, much lower. And you've got it fixed. I did a speech in Toronto a few days ago. I was up in Canada and God, I gotta tell you, I feel so sorry For Canada. Such great people and such a great country. I've always loved Canada ever since I was 21 years old when I visited there my very first time. I had a very beautiful girlfriend from Vancouver. I just always loved the place. It's just beautiful, right? The east coast and the west coast, beautiful country. But it has been so devastated by Justin Trudeau. Now Carney, you know, it's like they, they keep playing the same record. You know, it gets worse and worse and they don't change anything. But that's the way the globalists and the elites are, you know, basically controlling these politicians like puppet masters. And I gave this speech on Saturday there to a group and I talked about how inflation impacts your investments and how proven income property is. You know, a lot of people there invest in cryptocurrency and listen, I hope bitcoin becomes a thing, right? You know, I own some of it. I think it's, it's a great idea. But the chances of that happening versus the very, very proven asset class for literally thousands of years of income property just aren't really a great comparison. So again, you know, you can play with these more speculative things a little bit. And what does that mean, right? It depends on your net worth, depends on your financial situation, depends on your outlook, depends on everything. But I would limit my investment portfolio to about 10% for those speculative things. That's just my opinion. Of course, everybody has a different opinion. And I'm not, you know, like a traditional Wall street financial advisor. I'm a real estate guy, right? But you know, you put about 10% in those sort of home run type things, right? If it goes well, great. You know, if you're investing in a speculative startup or something like that, great, right? You'll hit the home run. But don't be too greedy. Put the main thrust of your investments in the historically proven things. Not only, of course, the most historically proven asset class, but the most tax favored asset class in America. Oh, I know what I was going to say too. A lot of people that conference kept asking me about international investing and there is absolutely nothing keeping us from recommending and selling through our real estate referral network, International Properties. We can do business anywhere on planet earth, no problem at all to do that. In fact, we get pitched on this all the time. People that are doing deals in places like Costa Rica or different countries in Europe or China and Japan, South America, Columbia, very popular, right? All of these places, right? They're saying, hey Jason, you know, can I offer these properties to your audience? And I'LL pay your referral fee on them just like you do with your U.S. properties. And we have never found a deal that is good enough to offer to you because the US is a very special real estate market in all the world. Why? Many reasons. I've talked about them over the years. But one and probably the primary one is that the mortgages are subsidized by the US Government. And by the way, if you're listening to this, we have listeners in 189 countries worldwide. If you're listening from outside of the US we have a very unique loan program for foreign nationals that offers a really, really good opportunity for you to own US property with very favorable mortgage terms. It is rare to have this available, but we do have it available at least last time I checked. So reach out to your investment counselor if you're working with one already or just go to jason hartman.com, fill out any web form and we'll get back to you. And our US non toll free number 714-820-4200 inside the US 1-800-hartman works as well. So that's great, isn't it? Funny, by the way, you know, when I read the book the Rational Optimist, such a great book by the way, you're just hit again with the idea that everything just keeps getting better. And now I'm not talking about culturally because culturally I actually think things have.

Gotten a lot worse.

But economically, in terms of standard of living, it just keeps getting better and we all just take it for granted. You know, we don't appreciate it. Like who cares if you have a toll free number anymore? That's why I meant to say that because you know, calling the phone is basically free within the country, right? You know, you can call anywhere inside the country for free, right? But it used to matter, right? That used to matter. And companies used to spend, I used to spend when I was in traditional real estate and even after that, right, I, I would spend a lot of money on my toll free number. And now who cares if you have a toll free number? It's just like a vanity number. It doesn't even matter because they can call you for free anyway. So things just keep getting better and none of us appreciate it. Right. It's just kind of the human nature. And now let's talk about Marco Santarelli Norada again. He was charged by the government with bilking investors out of just over $62 million. Some estimate that to be about $90 million. And he pleaded guilty on Monday in federal Court in Santa Ana, California, Orange county. And he is going to take a plea deal. It looks like his sentencing won't be until next year. We'll report on the story for you. But as I always say, folks, be a direct investor. Follow my commandment number three, Thou shalt maintain control. Thou shalt maintain control. And for those watching on video, I'm.

Just going to show you and go.

Over a couple of the legal documents here. And you know, you want to maintain control and be a direct investor so you don't leave yourself susceptible to someone ripping you off, losing money because someone's incompetence or them just taking a huge management fee off the top for managing the deal. And I guarantee this, of course, what I'm about to say, there are many, many syndicators and fund managers out there right now, people you and I both know who are stealing your money. Okay? They are either outright stealing it or they are laundering money basically to their other entities, right? And you are getting the scraps of the deal. Okay? So if you're investing with these people, watch out. Marco Santarelli with Norada, just like Bernie Madoff, he took a plea deal, so now there won't be a trial. And a lot of these people like to take those plea deals, of course, have to take their chances if they go to trial, but they take the plea deal because they don't have any more stuff being exposed, any more crookery, Right? So here's a list of the cases that we found on pacer. You can just go to PACER and look this stuff up. It's the federal court system and you can just make a free account on pacer and, and look up these cases. But this is the securities and Exchange Commission versus Marco Santarelli, the sec, there's that case. There's the United States of America versus Marco Santarelli. And that, I guess, is the criminal case versus the SEC being the civil case, I believe. And then American Express national bank versus Marco Santarelli. Now, I don't know the details of what happened here, but what I understand is there were a bunch of credit card charges as part of the alleged Ponzi scheme. So that's part of it. There's Roberto Madero et al. This is probably a bunch of the investors against Marco Santarelli and Nerada Equity. You know, there's just a bunch of other cases here. So you can see all these. And these amount to how many? This is, wow, 21 lawsuits. Okay. There's the criminal case and then there are these other cases as well. 21 of them. That's just shocking. This is what happens when you trust the wrong people, folks. And you want to be a direct investor. So you are not susceptible of. To this type of thing. And a lot of people have asked me for documents on the case. They've asked me for more information on the case. You know, we'll get that to you some way. But you can just go on pacer, okay? Just get a free PACER account. It's the Federal Court Systems website where they've got these. These things. But, you know, we can get them to you as well, possibly. So here is the SEC case against Marco Santarelli. And this is the, I guess the consent. This is the plea deal. It says, defendant has pleaded guilty to criminal conduct relating to certain matters alleged in the complaint in this action, specifically the United States versus Marco Santarelli. And then there's the case number. Defendant pled guilty in a sealed plea agreement. See, we don't get to know. Right. Docket number eight. In this action, this consent shall remain in full force and effect regardless of the existence or outcome of any further proceedings in United States versus Santarelli. I guess the sentencing will be, I believe, March of next year. So we're going to know something about that plea deal. Yeah, there's just a lot here, and I'm not a legal expert, so I can only tell you certain things. But you've got Santarelli's signature on here. It's notarized. He was just in court on Monday about this case. So there you go. That's kind of the scoop. And this is why, folks, you should be a direct investor. Don't leave yourself susceptible to crookery, stupidity, or a legal business, right, where they're just skimming the profits off the top. And there are so many of these syndicators and so many of these fund managers who will never be caught. Okay? It has to be just an egregious scheme like Bernie Madoff, like Marco Santarelli, like the others like this to get caught or have any consequences. Some of these people will just operate their whole lives. And this is, I think, the biggest thing. It's the money laundering. Now, I don't mean like criminal money laundering, right? Like a drug smuggler launders money, you know, to clean it up.

Right.

And then use it. And what was that show? It was on. I think it was on Netflix. I used to watch that show a couple of years ago where it was like the Money Launderer. It was. It was interesting. You probably know what I'm talking about. But what I mean is they've got all of these different entities and the entity that they raise money from, the investors is now using that, those investor funds to pay like their property management company to pay service providers that they own and control. And they set up to basically launder the money out of the main entity, out of the pockets of the investors to steal that money legally. Right. And pay their management company, their construction company, their whatever service provider company to pay for their private jet, to pay for their meals and entertainment. You know, you can get away with all of this stuff and that's why you don't want to be susceptible to this. Be a direct investor, just buy some houses, keep it simple. Be in control of your financial future. Do not violate commandment number three. Okay, so I think that's it for today. More to come on all of these stories and all of this stuff. But we are here to help you build a nationwide real estate portfolio, whether it be one property that you buy every year or a hundred properties you buy every year. We've got clients just starting out and we've got clients who are experienced and buying lots and lots of properties and going big into the investment world. We can help you just reach out. We've got great properties, we've got notes, we've got co living properties. We've got all sorts of tools and software to help you be very successful as an investor. So just reach out through Jason hartman.com or call us 1-800-hartman like we talked about. Not that you need a toll free number, but it's Easy to remember. Or 714-820-4200 and press extension 2. Get with one of our investment counselors and they'll be glad to help you do a free portfolio makeover which will show you the highest and best use of the assets you have so that you can get the highest return and make your money work for you.

Folks, you know that I rail against doomers in Crash Bros. However, I understand there are also bears, right? There are bulls and there are bears. I thought we should have a conversation about the important distinction between a doomer and a bear. And we're going to have this conversation with the legendary investor Jason Hartman. How you doing Jason?

Good. I am airport bound, so pardon the bad conditions but I'll do the best I can.

Well, the audience appreciates it. You come with us Monday at 9am come rain or shine or airport. So we appreciate you. But why don't you take a stab at this first? When you think Doomer, Crash Bro and bear, where does that Delineation start to break down for you?

It's a great question. That's a really good topic because being a bear, I think is logical. Being a doomer is a religion and it's a religion for profit. Right. It's a religion for money, for clicks, for attention, and it's not built on any sound ethical background. Whereas being a bear is just, you.

Know, market conditions obviously change.

Right. And that, you know, I've been a bear at times, I've been a bull at times.

Right.

And you know, I think that's just logical and normal. Right. There are cycles in everything.

Yeah. When I think about yo, I. I totally agree. And I love the fact you called it a religion. And again, it's. I'm actually getting much harsher in my tone. I think being a doomer or a GR Gas, bro, is frankly pure evil.

Yeah.

I think they are okay in the business of stealing hope. They don't give any kind of, you know, how to take advantage of. They never own their mistakes, which are years and day, you know, repeatedly wrong. So there's all kinds of stuff that, that a doomer has. But yeah, it's. There's nothing good. There's nothing good about a doomer. And you know, I think being a bear is, is right. I, I think the biggest change for me between a doomer and bear kind of structurally is when new information comes in, a bear will change their opinion. A doomer just goes on to the next lying excuse.

Yeah.

Right, right. And I love how you said they.

Never own their mistakes. Right. And you know, I would argue actually that they're not even mistakes, they're just planned. Right. They just say this stuff to get money and get clicks and get attention, but they, they definitely never own it. And they're constantly wrong. And so that's a very good point, Michael.

Yeah. And the other thing you brought up that I want to really hammer on is being a bear or being a bull is cyclical. Right. All markets have cycles. Some are longer, some are shorter. And it doesn't always pay to be a bear, it doesn't always pay to be a bull. And that shows that cycles are there. The other thing again between a doomer and a bear is doomers steal hope because all they say is fear, fear, fear, fear, fear. A bear, at least in my opinion, will tell you how to take advantage of it. It says, basically, this is my bear thesis. If you agree with me, do this, this and this, and you will profit. Because you can profit from being a bear. A doomer just says Fear, fear, fear. Don't do anything. Steals hope. There's no upside.

That is a very, very good point.

And you know what?

We've talked about this before on shows that we've done, Michael. But one of the interesting parts about it is look at the way our legal system works. And I think it so informs this discussion. Because if someone is promoting an investment and they lie to you, they overstate the returns, they're too rosy. And they hide things, right? They hide material facts that would affect your decision, and you get into a bad deal, you can take them to court, right? You know, and you can take them to court for your losses, right? And sue them. But the biggest losses people have are due to the doomers because of action.

They didn't take, right?

The opportunity cost.

The opportunity cost is huge.

And another way to say this, which.

I've talked about forever, is you can't hear the dogs that don't bark, right?

And the dogs don't bark very loudly.

When you don't do something, when there's inaction, right? When you don't do it and you lose money because you just sat there passively as a spectator. Those losses aren't as pronounced.

I mean, they're there.

Like people always say, I remember when I could have bought that property for $100,000, and now it's 500,000, right? We've all heard that story, of course, and we've felt it ourselves, of course, on properties we've sold.

But the doomers just categorically cause people to lose, I would argue, hundreds of.

Billions of dollars maybe into the trillions.

We.

We will never know because they have.

Giant audiences and they are influencing people.

To avoid action, right? And those people have that huge opportunity cost because of the. The investment they didn't take, but nobody sues them, right?

Isn't that interesting that.

That it's really hard to pin liability on them for talking you out of the good deal.

Yeah, that lack of action. And, and I do think that's the difference between a bear and a doomer. Again, the doomer wants to scare you into inaction. They want to steal hope, so you do nothing. A bear wants to articulate an opinion, and then to your point, comma, do this if you believe me, right? And there's a huge distinction between a bear going, hey, I think the Mag 7 is overvalued. If so, do this in the small cap and do this. This, you know, whatever a doomer's like, be afraid, be afraid, be afraid, right? Be afraid, be afraid. And you know, it just continues.

We all, of course, growing up, heard the story of Chicken Little.

And why, why is it that as.

Much more knowledgeable and better informed and seemingly more logical adults.

Right.

We don't view these people as Chicken Little. The people who keep saying the sky is falling. And you know, a broken clock is right twice a day, of course. Right. Once in a while the sky does actually fall, but it's so rare.

And, and the opportunities missed in between.

When the sky is up there. It's just the cost to people is incalculable really. For the missed opportunity, for the opportunity cost, for the action they didn't take, for the dogs that don't bark, the investment return that wasn't earned, that should have been ear had they not had their mind poisoned.

Yeah. I mean, it's so bad. I mean, I know there were people out there that were convinced thanks to Revenger Consulting and others in 2021 and 2022 not to do anything.

Right.

That's when his doom fear took off and he became a monster channel. Right. I think he's got 6, 000 subs or whatever.

Oh yeah, he's got, he's got more subscribers than we do combined.

Combined.

Yeah, I know.

So again, he's doing something right. So you know, hey, if that's how you want to sell your soul, then go nuts. But you know, there were people that didn't buy in 21 and 22 because of him. Not only have they lost the value, but the real problem. Well, there's two problems. One is they also lost out on fixing their shelter costs. Right. Rent is up dramatically since then.

Right, Right.

Lifetime low interest rates just for their own.

For their own personal residence is what you're talking about.

Yeah, exactly. And then the last thing is some of these people, and I don't know what the percentage is, let's call it 20, maybe as high as 40% will never. Yeah, never buy because they missed 21 and 22.

Right, right. And they will become doomers themselves because they missed out. And now they feel so bad they're jealous of the people who had the confidence to take action and they just missed out. These are like life changing decisions, you know. All you have to do really in life is catch one wave. Think of it like a surfer, right? You catch one wave that might be in one decade, there's going to be strong wave where there's lots of money to be made. And if they don't catch that wave, they just might be discouraged forever. There could be suicides attributed to these Doomers. Right. It's really a sad state of affairs. And the algorithms reward them. Human psychology rewards them. Because, you know, the way we evolved is we evolved to see negativity because that negativity was threatening to our survival. And then the Industrial revolution came along, and we had a world of abundance where the negativity really wasn't such a threat.

Right.

Where it really wasn't that present like it was throughout history. And so we didn't adjust our minds. Our minds take, you know, thousands of years to evolve to this. Right? But, yeah. Yeah, folks, that's crazy.

Yeah, folks, at the end of the day, you know, we've got Jason Hartman in an airport. I want. I want to kind of close with this request for you. If you have followed a doomer and they've been wrong for a year, two years, three years, somebody needs to step up and ask them to own that. Why were they wrong?

Yeah.

And they. They just ignore it. You need to fill in their comments and say, why were you wrong? Why were you wrong? Why were you wrong? There's no ownership there.

Not just. Just why? Not just, why were you wrong? But why don't you admit it? You know, why don't you admit. You know, look, I have taken screenshots of their YouTube videos with the titles and the thumbnails and the dates on them.

And.

And I suggest everybody do that to hold these people accountable.

And, yeah, I've actually got a. I got a whole clip almost a minute long of them calling for 20 crashes over the years that never happened. They won't admit it. Yeah, they won't admit it. Well, Jason, you're amazing. Thank you for your commitment. Thank you for being here. Peace. Thanks, buddy.

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