Nelson Nash: The SIMPLE SECRET To Making More MONEY (12 of 30)

You gotta know something about cogeneration. Guys. I'm a forester, remember? I know something about paper bins. They make paper out of trees. All trees come with bark. Bark will mess up the paper. Gotta get rid of that bark. Well, you can mulch trees with it, Curtis, but I'm mulch flowers rather with it. But you know, there's only so many flowers out there. The most you can burn that stuff. Now, bark, that'll heat up water. Heat up water enough. You got steam, don't you? Unbelievable. Power. All right. Power turns to dynamo. Dynamo produces electricity. I guarantee you that some of the electricity we're using right now is coming from the wood product industry in your country. There is no such thing as a paper mill without a co generation plant.

Now, Will you own Scott Faber county. You can produce 10 times the amount of electricity you need to run your plant. What you do with the nine.

You can reduce 10. Well, how do you sell it? Do you string power lines parallel to the other companies and you get a sales force and call on people? Not don't think so. No, to the contrary, you understand how the system works. You take that output lead, you chuck it right in there, and if you got enough on this side of that plug there, it'll make that meter turn backwards. The power company has to pay you. Do you know that there's individuals that produce electricity at home now? Yep. And there's some that produce enough electricity that the power company has to pay them.

Well, the same thing applies here. To get into the banking business, all you gotta do is just understand how the life insurance system works. You plug into it by buying a policy and putting money into it. That is all. It's ridiculously simple. But the people don't see this sort of thing because they just don't think that way. They can't think that it's this simple.

All right, now we got to get some basic understandings fully assimilated in your mind here. So let's go through them. First of all, we've already talked about the fact that you finance everything that you buy, whether you like it or not. You either pay interest to somebody else or you give up interest you could have earned otherwise. There are no exceptions.

Now, everything begins with engineering. Richard, the car you drive used to be lines on a piece of paper, didn't it? It didn't. If the production folks don't do what the engineers said to do, Richard's not going to have a car. But they did. So Richard gets one right off the assembly line. I get the Next one. Right behind him, Darrell. Same makes, same model, same color, same equipment. My car, Richard's car, they're dinner. Now, you want to tell me that his car and my car will perform identically during the lifetime of the car? There is no way everybody in this room knows somebody and get 250,000 miles. Y' all use kilometers. Talk. You guys know I'll quick like that. We're bilingual. We're bilingual. Okay, okay. 100 miles on kilometers. Okay. Anyway, okay. All right. Everybody in this room knows somebody can get 250,000 miles with no trouble. Everybody in this room knows somebody can't get 50,000 out of it before they want it out. Isn't that true? Do we have any NASCAR fans in here?

I thought there's something unusual about you again.

Now, don't y' all be ashamed of it.

Look, folks, Talladega raceway is only 42 miles away from our house. Now, three or four times a year, there's 250,000 folks out there watching cars go round and round that track.

You all know what nice car's about. Do you? Go fast and turn left.

Now, at the last race out there, like I said, There's 250,000 folks there. And they were all there in anticipation of somebody having a rape or somebody else. What, did they have a doozy this year? Half of the cars didn't finish.

Race car fans were very happy. I don't think anybody was killed in that. They didn't have to. All right, now.

In the life insurance business, the.

Engineers are actuaries.

Now, the actuaries are dealing with a field of 10 million selected lives.

Selected lies. Lies have been. People have been through a screening process. Now, they wouldn't put me in that pool. Have I told y' all that I've had quad bypass? No, I meant to. All right. I had quad bypass 28 years and six months ago, they would put me in that field because of that founding.

So a screening process taking place now, they're dealing with, in your country, 100 year theoretical lifespan. Is that still hold? Yes. Okay, we're at 121 in the US now.

Now, they can tell you very accurately how many people in that field are going to die at any one time. They just can't tell you who.

Yeah, but did y' all know the best actuaries in the world are in Sicily?

They can tell you who.

How and why.

They take this data, they turn it over to rank makers that figure out how much do we charge to make this thing work. Then they give it to lawyers that make legal and binding contracts out of it. Otherwise we'd have quicksand. That won't work. And then they give it to agents like you to distribute to people. And that is all in the business. It's ridiculously simple compared with every other business out there.

Banking through life insurance is a process, not a product. If you don't put money into it in the form of premiums, it's a bunch of conversations. You pass the physical and fill out an application and all that sort of stuff. But money's got to flow.

See, when I was talking to y' all earlier there about water. Water's got to flow, money's got to flow, blood's got to flow. If blood doesn't flow, we talk about your past tense, right? All right, well, same thing applies here. Without you putting money into this thing, nothing happens. Now that becomes the property of the life insurance company. It is not yours. It's the companies. They've got to put that money to work to carry out the provisions of the contract. Wayne. And so they're going to put it to work in places like shopping centers and joint ventures and things like that. South of where we live in Birmingham, Alabama, there's a huge.

Real estate development called River Chase that is a joint venture between Equitable Life of New York and the Harvard Corporation. John Harvard.

At that time was one of the hundred richest men in the US and when they cranked up this joint venture, he explained to people in the newspapers what a joint venture is. That's when one party puts up experience.

The other party puts up money.

And John went on to explain that sometime by the time the project is over, they switch positions.

Don't get that, Wayne. But the guy that has the experience ends up with the money, and the guy with the money ends up with experience.

So have you all had any experience out there in life? Oh, yeah.

Yeah. All right. So money goes into these things, and money comes back to the insurance company they lend money to on mortgages, business mortgages, residential mortgages, not subprime. Subprime is Wall street nonsense. This created the worst condition of all out there today, which are like 20% down and stuff like that.

So money goes out, money comes back in. They also send money to the policyholder. It says so in the policy. Money goes out, money comes back in. These are not all the places that insurance companies put money to work. Read the financial statement of any major company and you'll find it says instruments that have been guaranteed a back schedule. I said guaranteed, and we're not talking about Variable life. We're not talking about universal life. We talk about conventional dividend paying, mutual company policy. These are three places they can and do put the money to work, though. I wanted to establish a hierarchy, Dean. Everywhere you go, somebody outranks somebody. Home. Never exception. All right? In this hierarchy, low man on the totem pole is joint ventures and shopping center. You see, there's a certain amount of risk at this level here that doesn't exist in these other two levels. Any of them to Pittsburgh, Pennsylvania.

Y' all know what Pittsburgh is?

Y' all ever heard of the Pittsburgh Gestemas? Yeah. All right, Three Rivers Stadium. What's that Three Rivers did? Well, the Allegheny and the Monongahela come together, and that's the Ohio river. Now. Now, that where they come together is called the Golden Triangle. Now, Bob, you and I are old enough to remember magazines like Life magazine, Look magazine, Colleges, Saturday Evening Post, and maybe one or two others.

Have y' all been to a newsstand lately and see all that proliferation of magazines out there today? The Rat Don't Talk about noise. Good Lord. There's magazines out there that tell you what Lindsay Lohan got arrested for this week.

Magazines. I tell you what. Two and a Half Men. What's that boy's name? Charlie's. Charlie Sheen. What did Charlie Sheen do this week? That is essential knowledge, isn't it, Will?

But that's what we've got going on. All right. Well, way back there, Bob, when you and I were teenagers, or so I remember in high school, I was.

Looking at Saturday Evening folks, when I was a junior in high school, and thank Team 47. And.

Here is. I was looking at Life magazine. I'm sorry, Life magazine.

Here is a pictorial and.

Written story about the rejuvenation of the Golden Triangle. They had pictures of before and after. Before it was swung. Yeah, he was the Pitts. Maybe that's how they got the name Pittsburgh.

Now, that was a major undertaking, Wayne, you know, that was financed by One Life Insurance Company.

One Life insurance company financed all that. That's a big project we own. Now, didn't that insurance company have somebody in the home office overseeing that project? There's no way they're gonna put out that kind of money without somebody that knows something about such dealings overseeing the project. All right, so there's a slight element of risk here. Have y' all ever seen any defunct shopping centers?

Have you seen any. See through buildings.

Downtown Birmingham, right down the expressway? Look over the left there. And last I counted, I think there's nine that been empty since over 30 years, I guess. Wow. Well that's, that's, that's not good. Isn't it? Not producing any income. All right, now, so there's an element of risk here that doesn't exist here. And, and you got high overhead, relatively speaking. Well, the mortgages outrank the other guys because their conventional mortgages 20% down. Every time somebody makes a payment, the strength of the lender increases. Well, what kind of overhead does it take there to oversee that? A slightly above minimum wage. It doesn't take a genius to figure out whether John made a payment this month or not. And.

Now read the policy very plainly. It tells you that this guy, the policy owner, outranks everybody in access to what can be lent in equity from his policy. Now if that's true, which it is, that is absolute and total control.

But people don't look at it this way. And there's a reason for it. These are pluses here. Now, every once in a while, okay, what I, my contribution to the financial world is from my Austrian background, I saw that you need for finance during your lifetime is much greater than you need for protection.

And the life insurance companies have been advocating solving for death claim. Oh, by the way, if you have an emergency sometime, you could buy fossil on it tied to your overnight.

All you need for finance is much greater. Solve for that totally. And if you do, you go ahead and put death claim here. You can't get it past the underwriters, you'll have to end up insuring everybody you have an insurable interest in.