CW 70: Timeless Wisdom from Earl Nightingale & Dan Sullivan Plus Listener Questions Are Answered

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine self made multi millionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to another edition of Creating wealth podcast number 70. It's great to be here with you today. I'm your host, Jason Hartman. And as you know, I try to have it where every 10th show we do a subject that is not particularly on investments or money or real estate, but it's about life. And today I want to talk to you about something that influenced me a long, long time ago. At the tender young age of 17 years old, I had discovered Earl Nightingale, Dennis Whateley, Zig Ziglar, Jim Rohn and all of these sort of great motivational speakers and life philosophers. And today I'd like to share with you the concept of the person on the white horse. And I think it is particularly appropriate in today's economy when we are in for many, for tough times. I think most people will experience tough times. Hopefully though, the listeners to this show will experience better times because out of every disaster, and we certainly have enough disasters in the news and the financial world nowadays comes opportunity and the disaster and the opportunity are not spread equally. The opportunities seem to fall to certain people and hopefully we're going to be one of those. And I'm going to do my best to make sure the opportunities fall to you and to me. And through proper planning and proper thinking and seizing proper opportunities at the proper times, I think we will be enriched by all these crises we see going on out there. And unfortunately, others who are not listening to the show and who are not following the right investment philosophies and the right thinking, they will be hurt. Their lifestyle will be diminished. For many, unfortunate to say, their lifestyle will be destroyed. And again, the rising tide does not float all ships and the sinking tide does not sink all ships, as the saying goes. So these opportunities and problems are distributed unequally. So let's make sure that we are the beneficiary and the recipient of opportunities and good times because the there will be fortunes created during tough economic times. Let's let you participate in those fortunes, okay? So let's make sure we all participate in those fortunes. So first of all, before we get into the person on the white horse, and I want to circle back with you about what I covered on show number 60 on entitlement versus gratitude. I think that is also particularly important now, and it ties in with the concept of the person on the white horse and sort of the doom and gloom out there. So we'll talk about that. Also, as a follow up to my show last time on Peter Schiff, the famous doom and gloomer, who has really a lot of the right premises. I like Peter's work, as I've mentioned. I think he's a little too gloomy on some things. But listen, you gotta be a little sensational in either case because no one wants to listen to you if you're middle of the road. Right? You know, so you gotta come up with a unique angle. And I think Peter's done that and I'm a follower of his work. And, and I think it's good. I think, unfortunately, though, Peter does not make the distinctions, as I've had some comments on that interview since it was released last week. The distinction he unfortunately does not make is number one, he does not distinguish when he talks about the housing market. He does not distinguish between land values, which I believe are declining, and improvement values, which I believe are increasing. And I think over the coming years are going to increase dramatically. So go back and look at my prior show on risk evaluation for some more information on that, and you can learn more about that. Of course, it is very important to parse this issue up into the difference between improvement values and land values and not talk about the housing market as if it is some single entity, because it's not. It's really multiple entities. And then the other part, where the distinction isn't made with people like Peter and others out there in the media, is that they don't distinguish geographically and they don't, you know, they just don't want to distinguish because it's not their business to parse up housing markets and talk about the difference between Los Angeles, California and Kansas City, Missouri. Those are distinctly different markets. In a recent question that I'll address here in a moment, Jeremy Siegel, another big financial guru and commentator out there and authority, talks about the housing market in Manhattan, New York. Well, you know, folks, if you've been listening, I'm certainly not recommending investing in Manhattan. That Market never made sense to me. I wouldn't invest there. I'm not recommending you do that. But they talk about housing as though it's some national thing. In a country as large and diverse as the United States, there's no such thing as a national housing market. Obviously, it's amazing how obvious this is when you just think, think about it for two seconds. But how people make these blanket statements on CNBC and in various parts of the media and everybody listening is supposed to not think and just take them for granted as though, oh, the housing market is bad. Well, the fact is, just like problems and opportunities I talked about a moment ago, it's not distributed equally. It's distributed unequally. So our job here is to parse that up for you and help you understand where it's distributed to your disadvantage and where it's distributed to your advantage. Okay, so before we get into the person on the white horse and entitlement versus gratitude, circling back on that couple questions, go to jasonhartman.com and click on Ask. Jason, we love to get your questions. Got one today from a KFI listener. We advertise on KFI and I'm a frequent guest on various radio stations. And so we get comments and questions from people who are not necessarily listening to the show here on their iPhone or their ipod or on our website@jasonhartman.com or whatever MP3 player they're using or sitting at their computer while they're doing email and busy work listening. We get people that just hear me on the radio and ask questions. So this looks like one of those. And it comes from David Bly, probably in the Southern California area. And David's question is, Jason, is this a good time to buy investment property using equity in my primary residence? Well, David, definitely, I would say, yes, absolutely it is. It just depends where the properties are located that you're buying and if the property makes sense the day you buy it. So does it make sense? Is it sustainable from a cash flow perspective the day you buy it? That is what is going to determine whether it makes sense or not. But of course it makes sense to get the equity out of your home because the equity in your home is being diminished and debased and attacked by inflation relentlessly. Now, we're going to have a show on this because there is a very important distinction that you've heard me allude to a little bit, but I haven't parsed it out fully for you, and I'm going to do that in an upcoming show. And that is the difference between monetary inflation and asset deflation. And I believe by and large, we have both happening at the same time right now. So monetary inflation says that the value of that equity sitting in your house, that money in your savings account, that mutual fund, those stocks, those bonds are being attacked and the value of them is being diminished dramatically. But asset deflation also means that land values, by and large are declining and overpriced real estate markets are still declining. I still think we are going to see additional decline in the real estate prices in places like Florida, in a lot of the places like New York, Washington, D.C. the Northeastern United States, Boston, California, Arizona, Nevada, overvalued bubble markets, Hawaii. These are declining markets, folks. These are markets we do not recommend at the same time this is occurring. There are very good markets around the country in Texas, Alabama, Mississippi, Louisiana, Missouri, a lot of different markets, the Carolinas, North Carolina, South Carolina. So the answer is David, and thank you for the great question. Yes, it is a good time to buy investment property using your equity, but the question is, where is the investment property? Does the investment property make sense the day you buy it? Is the RV ratio on those properties good? Is the LTI ratio, land to improvement ratio good? So there is more to know to answer that question, but the general answer is absolutely yes. Okay. Got another question from a listener in the Ask Jason section was from Sam Haslam and he's in Long Beach, California. Sam, thank you for sending me this great article. I love it when you guys send me articles. So please continue to do that. You can paste the link right into the web form on the Ask Jason section. And this article was an article that investigated stocks versus houses. Okay. And there is so much misconception on this here because the crooks on Wall street folks would have you believe that stocks are a better investment than real estate. And they will do things like comparing real estate appreciation rates with stock appreciation rates over the course of many years. And when they do this, they're going to show you that in this example, Jeremy Siegel, another big financial guru. This is an article from smartmoney.com Smart Money magazine is part of the vast Wall street conspiracy. These people don't want you to understand the true characteristics of a real estate investment, including tax benefits, leverage, the fact that you can rent your property to someone else and they can service the debt free for you. They want you to compare it on a simplistic basis where you're buying a property with all cash. And after listening to my show, you'd have to be crazy to do that because it doesn't work as well. And so they'll say things like these platitudes. They'll say. In Jeremy Siegel's book, Stocks for the Long Term, he finds that real returns averaged 7% over nearly seven decades in ending 1870, then 6.6% through 1925, and then 6.9% through 2004. He says shares return about 7% a year after inflation. Well, two major problems with that big lie there, Jeremy, and sorry for the lack of respect, but this just burns me up when these comparisons are made because they're just not factual. Okay, Number one is that inflation is much higher. Part of the vast Wall street and Washington conspiracy, if you will, is that Washington, the government, lies to you about the true rate of inflation. Wall street wants you to believe that because they can't sell their inferior financial products like their stupid annuities and stocks and bonds, their polluted toxic assets to unsuspecting middle class investors. Do I really have to tell you anymore after the past few weeks what a scam Wall street is? I mean, do I really have to prove that? I don't think so. Just turn on the news. Okay, I'm getting angry here. I'm going to calm down. I tell you, this is just something else. So they don't want you to believe inflation and know the real rate of inflation because nobody would buy their products if they knew they were automatically from the starting gate losing money. I mean, I have a friend who sells these crappy annuities, and I don't know how you can do this with a straight face where he says, you know, I work for Merrill lynch now, B of A, and you can have guaranteed income when you retire. But what they don't tell you is that this income will be destroyed by inflation. Okay, folks, just use your mind. And you know that this is a lie. It is a huge lie. The monetary inflation rate is far higher than Wall street or the government wants you to believe, number one. And number two, they don't even want you to consider inflation. Okay? So he says stocks return 7% after inflation. Well, sure they do if you believe inflation is only 3.5%, which is a blatant fallacy. It's not true at all. And then number two is, you know, say, for example, you, your rental Property appreciates at 6% on average. Now, this depends what period of history you look at. But according to the Wall Street Journal, you know, and they have an incentive because all their advertisers are financial services companies. And same with smart money. All their advertisers are companies like Ameriprise. By the way, I gotta make a comment on this. Don't you love these commercials? You turn on the TV and you see these commercials. You look at these ads for these financial services companies, the platitude after platitude after platitude. Well, we understand you because you were a hippie in the 60s and you know, you surfed and you drove a Volkswagen bus. And so now you've grown up and we know how you think and how you invest. You're individualistic. Folks. Talk to me about something substantive here about return on investment. Okay? You see these commercials and they've got a picture of a tree. Who was this one for? Smith Barney or something? I don't even know. They've got a picture of a tree and they say, we invest for the long term and we make money the old fashioned way. We earn it. No, you don't. You make money by ripping off middle class investors. You make money by screwing them out of their pension funds. That's how you really make money. Okay? It is a blatant, ridiculous lie that is going on out there. Okay, maybe I've had too much coffee today, but can you tell I'm a little edgy? I feel like Jim Cramer, but on the opposite side of the issue. Anyway, so say you get 6% appreciation in your rental property. You put 10% down on it. Folks, that's a 60% return on investment. It's not a 6% return. And then you'll compare it to stocks where they say, well, you'd get 7% owning shares of a business. Look, I've covered this on other shows. So another part of this article, stocks versus houses valuations. So they give this ratio of what can you rent a property for versus what would it cost to buy the property. And it says in SmartMoney.com's hometown of Manhattan, New York, okay, where more detailed data is available, the ratio of condo prices per square foot to apartment rents per square foot is 22. In other words, saying that you would be better off renting than owning. And hey, I agree, in that market, in a bubble market like California, New York, Washington, D.C. most areas of Florida, you would be better off renting. So rent your personal residence. It's a better deal to rent in those markets and buy some investment properties scattered all over the country. The other thing they don't consider here is the fact. And I've done a show on this, so go listen to it called the Three Dimensions of Real Estate. They don't consider the multidimensional nature of a real estate investment. So for example, here, when you're looking at renting versus owning, well, when these prices get out of whack, you start to see real estate prices decline, but you see rents at the same time strengthen and you see them go up. So look, if I was going to be living in one of the markets where we recommend you invest, I would not be renting in those markets. If I was to move to Dallas, Austin, Houston, Mobile, Kansas City, Indianapolis, Charlotte, you know, in those markets, I would buy. You're better off owning. Fortunately, all of our tenants in our properties don't think that because they don't have the financial maturity to see that it's better to own. So those markets, it's better to own in California, New York, better to rent. Okay, so it just depends where you are. But it's still better to buy investment properties in these other markets. Now, that begs the question, why would people rent if it's such a good deal to buy in those markets? Well, I don't have time to go into it because we're running too long, but there are many reasons, the most of which I would say is what I call financial immaturity or lack of financial maturity, where they just simply can't plan in advance. They're living for instant gratification. Living for today. All right, let's get into the person on the white horse, folks. We are at a trying time in America today. We are at a time when the standards of living for people will be diminished greatly, in my opinion, most people. We are at a time where people have been lulled into apathy, where Americans have been so comfortable for so many decades, where they take it for granted that their lives will be as good as the lives of their parents. And so we have been living in an era where we've had big government, we've had big pensions, we've had a delay in the economic doom and gloom through Alan Greenspan mostly and his increase in the credit bubble, making credit so readily available, causing the economy to expand and expand and expand for far too long a time. We've been in an era where we are living on borrowed time. Now, as far as my investment philosophy goes, I'm ready for this. I am ready for this decline in lifestyle. I am going to dramatically prosper through this, following my philosophy. And if you're following my philosophy, hopefully you are as a listener. You are going to prosper through this time too, I believe. And most people, relative to you, their standard of living will decline. So I'm not going to talk about the money angle of this podcast. 70 is to talk about the mental angle, the life angle of it. You know, we have lived in an era where Roman people in the past had lived in the era of bread and circuses. So if you look up bread and circuses on Wikipedia, you will find that there was a Latin term that described this concept of bread and circuses, which was an ancient Roman metaphor for people choosing food and fun over freedom. It often appears in commentary that accuses people of giving up their civic duty and and following whichever political leader offers to satisfy their decadent desires. And you know what, folks? We have fallen for that. We as Americans and in westernized countries around the world, we have fallen for the bread and circuses, where we're far more interested in the O.J. trial, in the latest entertainment, music, whatever, or the latest Paris Hilton video, or, you know, what Lindsay Lohan or these stupid celebrities are doing. We are interested in hearing politicians give us a lot of platitudes that they have no substance saying hope and change and the future of America, blah, blah, blah. Folks, what we need to hear is we need to hear about getting to work, about putting our nose to the grindstones, about making some hard choices about savings. This great country that has been the beacon of hope and freedom for really billions of people around the world. This has been a great experiment of Westernized democracy. And I tell you something, it's not looking real good. Would I say invest in America and buy rental properties? Most definitely, yes, because there are still ways to profit. I understand what's coming. In my opinion, what's coming is a big change. And I'm going to weather this change. I'm going to profit from this change. I hope you are too. But the philosophy of instant gratification, of hedonistic living, that is part of the massive expansion of credit. And we are going to see that dramatically change. We are already seeing it happen right before our eyes. We, we are seeing huge government bailouts where they are rewarding bad behavior, they are rewarding crooks on Wall street. You cannot trust Washington. You cannot trust the government. You cannot trust Wall Street. These people are in for a power grab. They are there to take your money and your production through inflation, through taxes. And the question, whenever some politician promises anything, you better ask yourself is, how will they pay for it? Because the government is broke. There is no money to pay for this. They're going to pay for it by devaluing the value of your dollar and our Investment philosophy addresses that extremely well. Now I want you to listen to this. One of my preparedness strategies for this economy, this gloomy economy that we are in, is to become the person on the white horse. And when I was 17 years old, I heard Earl Nightingale, a great philosopher of the time, he passed away in 1989, talk about the person on the white horse. So I highly recommend you study Earl Nightingale. You look for his books, you get his audio products from Nightingale Conant. And listen in to this clip from the Person on the White Horse and then I'll be back with you.

All businesses, all organizations, from the smallest to the very largest, need a leader. They have their committees, their echelons of command, and perhaps a widely dispersed group of semi autonomous divisions. But the overall company and each of its divisions must have strong and able leadership. Contrary to popular belief, you do not raise morale in an organization. It filters down from the top. The attitudes of the people working in any organization will always reflect the attitude of the leader. And finally, this leader will always be found to be just one person, the man or woman on the white horse. I'm sure you're aware that even the largest and oldest companies with many thousands of employees and hundreds of management people will, when they find themselves in trouble or not doing as well as they should, seek out one person and place him or her in the position of final authority. The whole company, the board of directors and perhaps thousands of stockholders all look to this one person for leadership and success. The case of Chrysler and Lee Iacocca is an excellent example. Incidentally, we have Mr. Iacocca on the tape cassette program and it's excellent. Wherever you find a successful going concern, whether it's a gas station, a supermarket, a school club, PTA or a well organized home, you'll find behind its success an outstanding leader.

Thank you for listening to the Creating wealth show. This is Jason Hartman, your host and we appreciate you following the show. We have many, many episodes, hundreds of episodes, and some of the older episodes have been archived and placed in our members section and that applies to this one. So we include a sample that's about 25 minutes long. And then for the rest of the show you can go to our members section@jasonhartman.com Many of the other shows are still in their full length complete version. However, some of the shows like this one are in our members section where you can hear the show in its entirety. And again, you just need to go to jasonhartman.com and you can get the full show there in the members section, plus a whole bunch of other great members benefits and resources, whether it be documents, forms, contracts, articles, other video and audio content. Just a great resource. So be sure to join as a member@jasonhartman.com and thanks again for listening to the Creating Wealth Show.

This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.hartmanmedia.com or email mediaartmanmedia.com Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Platinum Properties Investor Network, Inc. Exclusively.