Why A Lamborghini Can Be An Amazing Investment

Most people think buying jewelry or a sports car or Rolex is dumb. But what if I told you that I'd rather own all 3 of those than a maxed out 401? Now, before you go and think I've lost my mind, let me ask you something. If you're making $250,000 or $500,000 or maybe $2 million a year, why do you still feel broke? Right? Because you work harder and harder, harder for, you know, harder than almost anyone you know. You make good money, you're doing everything financial advisor tells you to do, but somehow you're still not getting wealthy. You're still not free. And the crazy part is probably that it's not because you're not making enough money. It's because the average investor's wealth is static. It just sits there. It's locked up for decades, but I want my investments to be liquid, right? I want my money to flow and I want it to work in multiple ways at the same time, reclaiming my time, optimizing every dollar, and then multiplying my wealth faster than I ever thought possible. And that's exactly what I'm going to show you today. So in this video, I'm going to walk you through 3 sort of unknown investments I actually like more than my 401. I want to show you why thinking about your investments as liquid instead of static will completely change the way you build wealth, because you don't build wealth by locking money away. You build it by keeping it moving. All right, let's go. All right, let's start with the first one, and we're going to talk about jewelry. Now, I know how that sounds, Jewelry, Mark?

Seriously?

And you know, I don't even wear jewelry, but, but hear me out on this. Most people look at jewelry as an expense, but the wealthy, they look at it as a liquid asset doing multiple jobs. Now I've been a gold bug for a long time. I've got gold sitting in a safe, gold bars, gold coins, and they're just sitting there. Now at some point I looked at it and I thought, hmm, what am I even doing with this stuff? I mean, it's just sitting there, right? So I thought, why not just take some of that gold that's sitting there and then turn it into jewelry for my wife and then let her wear it. I mean, seriously, I still own the gold. It's just in a different form. So instead of sitting in a dark vault collecting dust, now it's walking around, now it's bringing joy, and it's still worth the same amount. That's what I mean when I say wealth is liquid, right? It's not stuck in a static bucket. It can move, it can flow, it can still serve you even as it holds its value. Now here's where this starts to get a little bit more fun or interesting, right? This is just a very simple example, but it shows you one of the core principles we teach inside the Wealth Operating System. It's called optimization because Most people trap their wealth in one place and let it do one job. But when you optimize, that same dollar can now hold value, right? Be a store of wealth. It can bring enjoyment so it can increase the quality of my life. It can stay liquid so it's available whenever I need it, right? And that's one asset doing three jobs. And when you start stacking these principles across your entire financial life, then things start to change. That's when wealth starts multiplying faster than you ever thought possible. All right, but we're not even barely getting started yet. Let me show you how this works with something even a little bit bigger. Now, the second asset, we're gonna throw in a sports car. Now, this one is actually kind of funny because if you know me, if you've been watching my videos for a while, I've never been really a sports car guy, right? I've had one supercar in my whole life, just one. I just drive a Ford Raptor around every day. In fact, I've driven a truck my entire life. Now, my biggest flex I've talked about before is that I can drive my golf cart to the office. But a few months ago, I saw this incredible car, it caught my eye, it was black and orange. It's my brand colors. So it caught my attention. All of a sudden, I thought, that looks kind of fun. So the next day, I told my wife, like, hey, I'm thinking about buying this sports car. And she goes, like, why would you do that? Like, where are you even going to drive it? She said, you only drive like 3 miles a week. And I said, yeah, but I like it. So I went to the dealer, I started looking, looking at the car, I was going to buy it. Well, I did buy it. And I was Putting some clips up on social media and I got all these comments telling me, why would you spend your money on that? What a waste of money. You should just buy more Bitcoin. And here's the thing. I did buy more Bitcoin. I bought more Bitcoin and then I borrowed against the Bitcoin using a loan. I unlocked some of that, the capital that was there. And I just paid cash for the car. I literally just got it zero down. And now I just have a monthly payment and the interest payments are tax deductible through my business. So I get to enjoy the car. I get a tax write-off. My Bitcoin is there growing, hopefully doubling this year. It's going to pay off the car completely if I want to. And then if I get tired of driving it, which I probably will, I don't know, 9 to 12 months, I can just sell it, pay off the loan, but I still have the Bitcoin doing its thing. Now, before I break into that, I do want to let you know real quick, if you like these videos, but you want to see this live, you want to see it with real numbers on a real screen, I am running a live workshop pretty soon. If you click on the link right here down in the description, or there's a QR code on the screen right here, you can come join me live. We'll go through this. There's not many seats left, but if you If you get in, we can discuss this live. You can ask all your questions to me live. It's going to sell out though. So go ahead and grab your spot before it's too late. So that one move did 3 jobs. One, it kept my Bitcoin invested. So it was still compounding. Two, it gave me a tax deduction, right? So it saved me money. Three, it gave me something fun to enjoy and improved my quality of life today. All right. That's the difference between static and liquid wealth. Real leverage is accessing capital without selling appreciating assets. So I didn't have to choose between buying Bitcoin or buying the car. I got the Bitcoin. And then I have to liquidate the Bitcoin and trigger a taxable event. I just borrowed against it at a low rate. My Bitcoin kept growing, it kept compounding, and I get to enjoy the car today. And if Bitcoin doubles, cool, then the car basically is paid off, right? And I get the tax savings all along the way. That's the power of using leverage and arbitrage. When we put those two together, right, you're not just moving money around, you're making it do multiple jobs simultaneously. And when you understand how to layer these principles across your income, your business, and your investments, well, that's when you stop working harder for money and start making money work harder for you. All right. The third one, let's talk about watches and trophy assets. Now, look, if you've got cash, let's say sitting in the bank, right? That's static. It's losing value every single day to inflation. So why not move that same capital into something scarce like a rare Rolex or a Patek or something like that? I mean, the money's got to sit somewhere, right? So why not let it sit on your wrist instead of a savings account, right? That way you could enjoy it and it probably holds value just as well, if not better. And the crazy part is that the data actually backs this up. You see, luxury watches, when you buy the right ones, have appreciated about 8 to 12% annually over the past few decades. That's basically the same performance. Maybe it even beats your 401 account, right? The difference is instead of sitting in a 401 account, you get to wear it, you get to enjoy it, and you can sell it tomorrow if you need to. The same money, but a better experience. Similar of not better returns. And the same idea, it applies to what I call trophy assets. What do I mean by that? Well, my buddy, he has two vintage Shelby Cobras, right? He bought them years ago, got them cheap, like $50,000 to $75,000 each. Now they're worth millions. One of them was actually signed by Carroll Shelby himself. I mean, he literally signed the glove box for him. Now, everybody doesn't drive these. They're in his garage. They're up on lifts. Now he can go out there, he can walk out there, he can check them out, he can start them up, he can touch them. But that's way more enjoyable than watching a number go up boring index fund. Now, most financial advisors would tell you that's a bad investment, but here's what they don't tell you. Classic cars tracked by the Knight Frank Luxury Investment Index have returned 8 to 12% annually over the past 20 years. That's better than the S&P 500's long-term average of 9 to 10%. Except my buddy, he gets to walk into his garage and he gets to look at a piece of automobile history. Now try doing that with your Vanguard account. Or take art. Right. We can look at art as another example. Between 1995 and 2024, fine art appreciated at 11.4% per year. The S&P 500 over that same period, 10%. So art actually beat the stock market and you get to hang it on your wall. Contemporary art has done even better. It's been growing at over 12.6% annually from 1995 to 2022. And if you want something really wild, this is something I just learned about from my wife recently. The Hermès Birkin bags, you know, the luxury handbags, they're appreciating at 14.2% 2% per year. That crushes the S&P's historical 10.5% return. Now look, I'm not saying you should go buy a Birkin bag, right? That should not be your retirement plan. Although honestly, it's not the worst idea. But what I am saying is that the wealthy know something most people don't. They know that you don't have to choose between enjoying your wealth today and growing it for tomorrow, right? You can do both at the same time. This is the multiply piece of the Wealth Operating System. You've seen how we can optimize our assets, right? Getting it to do multiple jobs at the same time, like jewelry. We can then leverage our capital. So that's borrowing against Bitcoin to buy the car. Then we can multiply it through appreciation. So that's like trophy assets that grow in value while you enjoy them. And when you start stacking these principles on top of each other across your entire wealth system, that's when things start moving fast. Your money isn't just sitting in a retirement account, hoping to compound over 40 years. It's working today. It's bringing you joy today. It's building you wealth today. All right. That's what I call liquid wealth. That's the game that the 1% play. Okay, now look, the point of this video isn't that you should just go run out and buy a Rolex or a Lamborghini or Birkin bag. I'm not trying to give you investment tips into that. I'm trying to give you a new frame, a new lens to start looking through. All right, so let's recap what we just learned. Example 1, right? I took gold sitting in a safe and I turned it into jewelry that my wife can wear, right? The same asset now doing multiple jobs: a store of value and enjoyment and liquidity. That's optimization. Example 2: I borrowed against Bitcoin to buy a car So I got the tax write-offs and my Bitcoin still compounding. So now I have $1 doing 3 jobs at once. That's leverage. Example 3 was I got trophy assets like watches or art or classic cars that are appreciating at a faster rate than the S&P 500. That means I can actually enjoy them. The wealth is growing while improving my life at the same time. That's multiplication. Now, this is what I call the ROM system. R, reclaim your time and freedom. O, optimize every dollar. M, multiply your wealth. And when you stack these 3 principles together, that's when wealth starts moving exponentially. Now, as I said, most people's wealth is static. It just sits there. It's trapped in a retirement account, it's trapped in a savings fund. It's doing one job for 40 years. But real wealth is liquid. It moves, it flows through assets, through opportunities, through your life. And when it moves, it multiplies. You've heard me talk about stacking layers, investing through layers, and that means you're having your money do multiple jobs at the same time. Well, one of those jobs is improving the quality of your life. In fact, that's the one of the most important jobs. Your money shouldn't just grow to serve you in the future. It should buy you freedom, experiences, and enjoyment today. Wealth isn't supposed to be punishment now for a payoff later. You don't have to scrimp, save. You don't have to suffer today just so maybe one day you can enjoy it. Now, when you understand how to stack these layers, now you can use leverage and arbitrage correctly. You can do both at the same time. And the point is that I'm not trying to tell you to put your money into a specific vehicle. What I want to do is show you the principles, because once you understand the principle, you can start spotting them everywhere, right? You can start to choose the options that fit your values, that fit your goals. So what are some of those principles? One, you want assets that hold value and outpace inflation. Two, you want things that you can borrow against without triggering taxes. Three, you want to create velocity because capital that moves through layers is faster, makes more money than it's sitting idly. And finally, four, you want to align your wealth with your purpose, not someone else's plan. So when you start thinking like that, you can say, here are a bunch of options that meet my requirements. And one of those just happens to be jewelry for my wife or a cool sports car for me. And so if there's one thing to take from this, stop trying to store your wealth, start learning to circulate it. You don't get rich by locking money away in one static bucket for 40 years. You build wealth by keeping it liquid, moving it, multiplying it, and making your life better right now, because wealth isn't just about the velocity of money. It's about the velocity of freedom, of fulfillment, and of impact. So keep it flowing.

There's a $13 trillion lie sitting inside your retirement account right now. Not a risky bet, not a bad investment. A straight lie. Now, the people that are running it, they have a fraud score higher than Bernie Madoff. But what makes this so bad, so dangerous, that this time the money isn't coming from Wall Street, or the banks. It's coming from your pension funds, from your 401s, your retirement accounts. This belongs to teachers, to nurses, to firefighters, and maybe even you. Now, when this unwinds, the fund managers who've already gotten paid, they're not going to take the loss. You will. So here's exactly what we're going to cover in this video. What this actually is and how it got inside your retirement account without your knowledge. The specific math that proves the numbers are fabricated. Out and the two ways this probably ends so that you can end up on the right side as this whole system breaks and destroys an entire generation of savers. And by the end of this video, you'll understand something the SEC completely missed and that one guy with the laptop exposed. And we're going to break it down. So let's go.

All right, let's jump right into it.

We have a lot to break down. Now, this is, uh, on the back of a lot of research that's been put together by some other people. We'll link to their original research down below if you want it. But we're going to talk about this $13 trillion lie. This is really dangerous if you have a retirement account, a pension a 401, whatever you have. And I do want to say just real quick, this is a lot of work that we do bringing these deep dive thesis all the time. And if you wouldn't mind doing me a small favor and just hit that subscribe button right now, it'll really help out me, the rest of the team that we're all here working really hard. It'll also help other people that need to see this get this information. All right, let's break this down. So the first thing, this is all revolving around something called private credit. Now, over the last week, you might have heard about this because it's becoming a pretty big deal, but most people have never heard about private credit. They don't understand what it is, because of course you haven't invested into it. You don't even know about it. But basically what private credit is, is it's credit that banks won't approve. So typically the banks issue loans, they give you credit, they give you business lines of credit, business loans, small business loans, things like that. But when banks won't do it, when you're so risky, when you're not good, you don't have good creditworthiness, then they— the banks won't approve it. So they go to private credit. So that already tells you right off the bat, it's like, prime, subprime, and then banks won't even touch it. So go to private credit. Now, this is something that we're calling a shadow banking system.

Why?

Well, the banking system really has 3 purposes, right? So we have storage of money, we have payments, and then we have loans, right? So they're doing all the loans, but not in the traditional banking system. It's a shadow banking system. Now, the reason why we call it shadow is it's not in the light, but it's also much more dangerous. It's not really regulated the way that, that other banking systems are. And a lot of your retirement money is going into here and no one's paying attention. But we're going to break this down. Okay. Now, some of the big names you've probably heard of— Blackstone, they're one of the really big participants in this. Apollo is a big one. Blue Owl. They've been in the news a lot lately. I'm going to break down exactly why they're in the news. But the question is, where do they get the money? But before we answer that question, let's just take a look at this so you can see the growth of the private credit markets. This is going back to about 2000 when they were barely not even existent. But as you can see, even though banks keep getting bigger and the margin requirements governments keep getting dropped on banks so they can make more loans than ever before. The extent that this private credit is being used is going almost parabolic. Here we have— this is through about 2023, uh, 2025 it's even higher. But you can see the rapid rate of growth. And of course, the red here is all in America here. So you can see it's being used in other countries, but it's mostly being done in America. So it's becoming really popular. But again, you've probably never heard of it. But let's take a look at this. Where does the money come from? Because this is the big piece that's gonna maybe irritate you a little bit. Let's break this down. So as you can see here, this sort of breaks down how the private credit system works. So what we have up here, private credit and investors and borrowers. So right here, this is the long-term investment horizon. This is the money that comes in. And right here it says pension funds. So maybe some of your money going in there. We have insurance corporations. So if you have money in some sort of insurance policy, it's right there. Sovereign wealth funds and of course retail. So all that money goes into these funds that we're going to talk about here. And eventually it comes down to these corporations that need to borrow money that are maybe too risky, that can't get it from the banks. But it's coming from your pension funds. It's coming from your retirement accounts specifically. Now, the problem that makes this so dangerous is, as I said, it's like the shadow banking system, meaning it's not being watched, it's not being exposed, and it's not being regulated the rest of the system the way the rest of the system is. And the problem is that we have a massive conflict of interest. Now, I said conflict. Or is it a model? Have they developed a model that's a conflict of interest, but it's the way the model works and they need the conflict of interest in order for the model to work. So let's take a look at how all of this works. Now, first of all, one of the big firms that we're going to use as our example here is Cliffwater. So what we can see is that Cliffwater Corporate Lending has been given an A, an A as their issuer credit rating. So on paper it looks great. Oh, A+, A, okay, that's fine. Looks really good. At approximately with nearly $40 billion in assets, Cliffwater Corporate Lending is one of the largest U.S.-based perpetual life funds.

Perpetual life.

So they loan money through that. And A means they have a long-term issuer credit rating. Okay, so they're really good. But how do they get that A credit rating? Well, it's pretty interesting the way that works. Let's take a look at this. So we can see here, it says a Bloomberg TV segment on private markets warns So even TV is warning people. Most people just haven't picked this up. They're warning that private equity, they have a very strong incentive. They have strong incentives. Charlie Munger would say, show me the incentives, I'll show you the outcome. Look at the incentives here to cherry-pick prices that let them reap higher fees at the expense of their clients. Of course they do. They want the most amount of fees. Former SEC chair warns they do things to make sure that you keep getting your stream of management fees. So what they're doing is they're writing their own book. They're picking the things that that have the highest fees to make their fund look, look like it's doing better. They cherry-pick and they pay the valuation firms. So they have this vested interest or this, I should say, conflict of interest where they pay the fund or the firm to give them a good credit rating. And if they don't pay them, then they don't get a good credit rating. So that's why it's a conflict of interest. Now, if we peek under the hood and we start looking at the real data, we can start to see just how bad this is. And I put here cooking the books because again, This is all a conflict of interest, and that's how they're getting away with it. So if we go by loan by loan, I didn't go through 2,300 loans. I'm using some of, again, some of the research by this guy Nick. I'll put a link to his full research down below if you want to get it. But we can see here he went through, he went through and did the work that the regulator is supposed to do. He went through and did the work that you would hope that the SEC or some sort of regulator would do to protect you. Maybe your fund manager, pension fund manager. Of course they don't. Around because they all want their cut. But let's take a look at what he did. So he went loan by loan, 2,330 positions. That's a lot. Good thing we have AI today to do that. But he went through and researched hundreds of them. And here's what he found: 189 loans where borrowers couldn't pay cash interest. So we have borrowers who can't even afford to pay the interest on their loans. But instead of defaulting, instead of calling the loan due, which would cause them to mark those loans down. Instead, they just let them roll it into their principal. I understand you're too broke, can't afford your payments. Don't worry, we're not even going to give you a delinquency. We're just going to allow you to continue to roll that into the principal. We're going to give you more credit because you can't pay for the credit you have right now. They saw that 58 of those were loans that had to be restructured entirely because they couldn't even afford to keep making the payments and they kept putting it into the principal and they couldn't afford that either. Over 50 loans where borrowers aren't generating enough cash to service their debt at all. So on paper, it looks like they keep making money. On paper, the fund's doing amazing. On paper, they report no losses. But when you peek under the hood, you can see that's not the picture at all. What the industry calls non-accruals— they carry on the book at full value. The reason why they want to carry on the book at full value is, again, so the fund looks like it's doing good. Not quite a Ponzi scheme. Sort of like a Ponzi scheme. But the interesting thing is the question is how many of these non-accruals does Cliffwater officially report? What do they actually show? Well, the answer is zero. You see, so they're cooking the books, but how do they get away with it? Well, they get away with it again because they pay the rating agencies to come in and mark their book. And as long as they mark their book to still be active collateral, they look good. We can see right here. Here. If the marks don't move— so the marks being how much their loan book is worth— if the marks don't move, volatility is near zero. If volatility is near zero, then any positive return produces an astronomical Sharpe ratio. So the Sharpe ratio shows the volatility and the return profile of that. And so these are getting astronomical Sharpe ratios because they're showing no volatility. So any tick makes it look amazing because there's no downside. But why is there no volatility? Well, because the marks don't move. And again, why don't the marks move? Because the rating agencies don't move the marks. That's where we're talking about the conflict. We can see here, there we can see it's evidence that the Sharpe ratio being so high, it's evidence that the marks are fiction. So we know that that loan book is not worth what they say it is. It says that they have an A rating. And the marks haven't moved because the rating agencies haven't moved them down because of conflict of interest. But we know they're fiction because of that. It says a skewness of a -2.45 and an excess kurtosis of 1.44. So this is measuring the, the ratio, the Sharpe ratio to— so we understand how much risk and how much reward profile we have. It says risk is catastrophically asymmetric to the downside. We don't want that. We want asymmetric to the upside, meaning we have more upside than downside. But in this case, you have way more downside than upside. We don't want to invest in that stuff. Kurtosis of 14.4 means extreme events are hiding in the tails. So they're not showing up. You don't see them in the monthly returns, but eventually they all arrive at once. That's the problem. The returns look calm 96% of the time, and then disaster strikes. So what they're saying is that there's massive risk. You can see it if you dig a little bit into the numbers. You can see that there's massive asymmetric risk. So there's It's not going up. All the risk is to the downside. And that's what's going to catch most people off guard.

Okay.

And the problem is this is everywhere. When you dig through the private credit, when you dig through private equity, you start to see this is just the way the game is played. The incentive structure. Again, show me the incentives. I'll show you the outcome. Because of the incentive structure, this is what we get. This is the outcome. Now, what we can see is Apollo, one of the big funds. Let's take a look at this. Apollo's own executives admit as much. And we've seen Blackstone, one of the biggest, Blue Owl, they've had to recently now stop redemptions. It's a pretty big deal. You can see some news headlines right here. Trapped in private credit, investors wait to pull out $5 billion. So investors who have their money in there that want to get their money back out, the redemptions are paused. Blue Owl peers push back on private credit risks amid market jitters. You can see private credit funds face redemption crisis. So it's not just Blue Owl.

All these private credit funds are facing the same redemption crisis.

Now, is why are the credit funds having problems? Well, part of it is because these are going to businesses and mostly what we'd call white-collar borrowers. So these are not the blue-collar borrowers. These are the white-collar borrowers. And what's happening, a lot of people are saying because of the softness in the job market, AI specifically targeting that layer of jobs is causing the weakness here. Blue Owl, HPS joint private credit funds stung by February losses. So they're seeing massive losses and all of a sudden they're having to freeze redemptions. Never a good sign. Jamie Dimon, he says that when you see one cockroach, there's probably many more. It's like they say, when you see smoke, there's probably fire. When you start to see that all of these books look to be cooked and they're starting to pause redemptions like a Ponzi scheme would, then you have to imagine there's lots of cockroaches, that there's probably fire on the other side of this. Now, this is a really big deal. It's a really big deal for everybody, but we can decide which way we end up.

Now, when I look at this situation, I see two potential outcomes.

There could be 3.

I see 2.

Let's break these down. The first one is that there's a very fast version like we saw in 2008. What do I mean? In 2008, we saw the great financial system unwind. It collapsed and it happened very quickly. All right. Everything broke at one time and then it started to recover again. All right. That'd be the good version. I'll get to the second version first. But we can see back if we go back to 2008, the subprime mortgage crisis. That the losses on mortgage-backed securities rapidly spread throughout the banks. So it was like contagion. As soon as it started happening, it was like one domino after another. And the whole, the whole house of cards came crumbling down really quickly. It rapidly spread through the banks, forcing simultaneous interventions. And so because it happened so fast, because all the banks started cascading down, it required massive intervention at the same time, simultaneously. It says here an unregulated private-label mortgage securities market exploded from $148 billion in 1999 to $1.2 trillion by 2006. So this market had grown from $148 to $1.2 trillion, $148 billion to $1.2 trillion. So it grew really fast, unchecked. So the whole system came down with contagion and then it required a simultaneous intervention. So it happened quickly. The system collapsed quickly and the intervention happened quickly. That was 2008. That would be the good version. Okay, let's talk about the version number 2. This one's the most dangerous and it may be the most likely of what we're looking at. Okay, so the second one is the long, slow version, and Japan is the best parallel for this. So with Japan, it didn't break all at once. In Japan, it started slowly, unevenly, and it's gone on for over 2 decades. Look at this. So we can see from 1992 to 2000, over 2 decades, Japan spent ¥86 trillion yuan, about 17% of GDP dealing with non-performing loans. Exactly what we're talking about, loans that were going bad and they had to kind of keep papering over them a little bit here and there. But Japan's Lost Decade, or two decades, describes how highly leveraged firms and investors defaulted over time. So not all at once like in 2008. They did it over a period of time. The non-performing loan ratios— non-performing loans sound familiar— started to rise pretty rapidly. Banks merged and they become zombies. They tried to kind of solve the problem. Banks started kind of joining together, merging together to try to solve it. They became zombies. They couldn't afford it. And slow regulatory response. So because it didn't happen quickly, we didn't get this fast regulatory response like in 2008. It happened very slowly and it turned what could have been a short shock into instead a decade of stagnation and deflation, which is much worse. Said here by the mid-'90s, there were vast, vast underestimates and that those losses kept emerging but in waves. So it was like it got really bad and then it kind of got better and then it got bad and it got better and it got bad and got better. And it went on for decades instead of happening all at once. And here's where it gets really bad. So what does that mean for us as investors? What does that mean for you as an investor if you have money in a pension fund, in the stock market, in the 401? Well, we can see what happened right here. Here from 1972 all the way here until 1982. For over a decade, we saw investors here in the United States in the S&P 500 lose money. So we saw a peak right here and then it crashed down, okay, into 1974, 1975, and it took over a decade to get back up. But that's not what it was like living through there. So when we look back with a lens, it's easy to go, oh well, I guess I had to wait a decade to get my money back. Well, if you were retiring somewhere somewhere around here or here or here, that's pretty bad. But for us, we go, oh, I guess it was a decade. But what was it like living through that? Because this is really the key piece. During that time, you lost 2% per year after inflation. You lost about 20% of your purchasing power over the decade. So even though it came back, I still lost about 20% of my purchasing power. It's really bad if I'm trying to retire. But what was even worse is the volatility that happened. And what happens is, as investors, our emotions get the best of us and we get shaken out. And so all of a sudden it gets worse. Oh my gosh, I hope it's going to hold. And then it bounces. Okay, it's going to, it's going to bounce. And then it gets worse. Oh my gosh, what's going to happen? I hope it, I hope it finds its footing. And then it falls all the way down. And then maybe it bounces a little bit. We're like, I'm out, I'm out. I'm just going to hold my money and I'm going to wait till it hits the bottom. So I'm going to sell somewhere here along the Bottom. bottom. And what happens is humans are terrible investors because emotions get the best of us. So we buy the tops of the market and we sell the bottoms. And so what happens when you go back and actually study this period, you see that almost all the investors got flushed out of the market during this timeframe. So if you held for a decade, sure, you kind of got back nominally. You lost 20% of your purchasing power. But the reality of people that lived through this situation is they were shaken out of the market.

They kept buying at the top.

They kept selling at the bottom.

They bought at the top.

They sold the bottom.

They bought the top. They sold the bottom.

Bottom. And so that's the problem of living through this. That's the problem of having this long, slow version, which is what we're looking at right now. Happened over 20 years. The market chopped down 10%, up 20%, down 15%, and we all got shaken out. Retail got completely destroyed because again, they sell the bottom, they buy the tops, and they do that over and over and over. Okay. So now that we know all that and thankful that we have the benefit of hindsight today, we can go go back and study what's happened in the past. What are we going to do about that as investors and how are we going to think about this? Well, first of all, who's exposed here? So we have to understand that retirees are the ones that are the most exposed because they're the ones that are living on that money right now. And if it starts going up and down while they're trying to live on it, it's going to be very difficult for them. But it's also bad for any of us that have money in the market. We can see that pension plans have been pouring billions into private credit funds. So if you're— if you have a pension plan or you have some sort of a plan, a administrators run your 401 or mutual funds, you probably have exposure here. And the key is, a very important key here, is that participants do not choose these complex allocations. So you have money in your retirement, your company's retirement plan, your pension plan, whatever. You didn't choose this. No one gave you the option. Hey, do you want to invest in this private credit? And hey, look at how they get rated and how they mark their market and look at the Sharpe ratio. You didn't get that. You don't even know you're exposed here. Most likely you didn't choose this. And it says here, savers investors rarely see, or if they see, rarely understand private fund documents altogether. So here's what you want to do. First, know what you actually own. What do I buy? I talk to so many investors all the time and they're like, well, I have my 401, I have my mutual funds. But your 401 is just a wrapper like an IRA. There's stuff inside of it. What do I have in there? I have money with my pension fund. What does my pension fund hold? So the first thing is know what you actually own. You wanted to understand your exposure. Then what percentage of your portfolio is exposed to this? What percentage of your portfolio is exposed to private credit and private equity? Get on the phone with your, with your plan administrator and ask them that question. What percentage of your portfolio are you exposed to this stuff? Then understand the difference between asset marks. So start to understand, well, they're saying the value is this, but is the value really that? How do I know that's where the value is?

And we want to start to understand how they Mark the value of those assets.

And then finally, dig your well before you're thirsty. Build a system before you need one. So start thinking, shoot, if I have all this exposure to this, maybe all my money's in this pension fund and I don't really have any control over that. What happens if we're exposed to this? What happens if we go into this lost decade? What happens if we have this volatility?

What am I going to do?

And you want to start building a system before you need one. That investing some of your own money outside of that system, trying to get exposure in areas that may be counter to that or some way to protect yourself. Because the private credit market, it's a problem. It's going to continue to be a problem. As Jamie Dimon said, if you see cockroaches, there's probably more. And we could be like 2008. It could be swift and a swift recovery, or it could be more like Japan's 2020. I'm going for more Japan 2020.

How do I automate it? So I take all my emotion, thought process, all the time, effort, energy out of that to make sure I'm guaranteed to achieve my goals. But if you wanna know about the entire wealth operating system that this is only just one piece of, you might wanna go watch this video right here to build a system that pays you forever. It's on the screen right here. I'll see you over there.