Mark Moss explains why wealthy people borrow money even when they have cash: credit preserves capital for higher-return investments. He uses a four-layer liquidity framework and describes buying a beach house in Cabo with cash despite expecting Bitcoin to return 30-50%, because personal value matters alongside financial returns.
What's one asset that you paid cash for that you would not do again today? Right. So like, pretty much don't want to pay cash for anything. Certainly not cash for something that I could finance and certainly not cash for something that I could buy with duration. It's a, it's a big mental shift. I was telling you sort of this morning as I was brainstorming with ChatGPT, right, like what we consider risky and You know, you've probably heard me talk about, most of you heard me talk about like the difference of the way the poor and the middle class mentality is towards playing the game versus the wealthy mentality playing the game. And it's like the poor and the middle class, the way that they look at earning money is like, I need to earn to pay for my life. But then it attaches like all these like emotions and assumptions to it. And then there's maybe they're unhappy because they have to work to pay for their life and all these things. And then they look at credit as something that they can do to, either the poor buy things they can't afford or expand their life. So buy the bigger house, buy the bigger car, etc. But the wealthy do it different, right? Because now the wealthy work to buy assets and then the assets pay for the life as we mapped it out. And then the wealthy use credit differently. And a lot of times poor and middle-class people, they look at that and they're like, man, this guy's got so much money, why would he use credit? You ever heard that before? You ever thought that before? That's the poor— that's the poor strategy to the game. If he's got the money, why doesn't he just pay cash for it? Come on. It's because it's cheaper to use someone else's money than their money. My money is making me 30 to 50% in Bitcoin. I'll use the bank's money at 4%. I could sell my asset, lose the compounding, pay the tax, that's going to cost me a lot of money, or I could just use their for-four. Right. And so it's just a completely different strategy to the game. So a lot of the rules were, you know, I'll maintain a minimum of blank months operating liquidity at all times. So that's like the 4 layers of liquidity, how much we want to keep in there. I will not invest into illiquid assets unless I have blank accessible So how much do I want to put into layer 4? So like, do I want to invest into this venture capital fund or this private equity fund or this private credit fund? Do I want to buy this international property? Not if you don't have liquid— liquidity layers 1, 2, and 3 built up enough. You have to decide what those are. And I don't know what those are for you.
Um, you say like the layer 4, you're kind of looking to get a home run or like some high payout too, just because you sacrifice so much in collateral.
Yeah, not necessarily, right? So like, as you get more money, things change for you. And so in the beginning, like, you're— I mean, you've heard generally, Mo, I know you for sure, like, concentration is for growth, diversification is for risk management, right? So like, in the beginning, like, I need to grow my wealth, and I'm like all in, I'm concentrated, right? But as you get more money, you just buy more things. And so not every dollar has to be maximally gained, right? So like my, my house in Cabo, like millions of dollars and I had to pay cash. There's no loans down there for me. That was just a cash deal. Like on paper, that was not the best financial move. But it's like, you know, many people told me, like, if I had a dollar for everyone that told me this, I could have paid for the beach house. But there's like, man, why wouldn't you put that money into Bitcoin? Don't you know how much that's going to be worth in 5 years? And I'm like, why? So I could buy the beach house?
Yeah. Well, there are other things you can't measure, right?
So, oh, so it's going to be worth so much more so then one day I could buy the beach house? Like, how about I just get it right now, right? Exactly. And that's worth way more to me than any amount of dollars. So my point is, is with that, is that not every dollar has to be maximally, uh, or maximized, right? So to answer the question that you're saying, if, if layer 4 is just for the home run assets? No, not necessarily. That's not a home run asset, but I would still consider it a layer 4 asset.
You just have to be very deliberate.
Well, it's judicious because it's, it's not liquid. Right. But, but yeah. So it's like it's a, it's, it's, it's a layer 4 asset, but I'm not expecting a home run from it.
Sure, you're getting a home run for the memories you're going to make.
But it's still an asset. It's still on my balance sheet, right? Worst comes to worst, I could still sell it. Yeah, yeah, it's an asset. It's worth a lot of money. I could sell it if I want to at some point. Yeah, so, so that's what I mean. So it's, it's a, it's a layer 4 asset. It wasn't, it wasn't bought for a home run. Now I also have stock in a few different venture funds and some private equity funds, and those are more of the home run assets. And that's also in there. Like I said, I have some investments into some other funds that are probably dead. I don't know if they're strikeouts yet. I still hope that there's money coming, but I've been waiting for a couple years and I'm starting to lose hope. But those are also in there. And they're assets and they show up on my balance sheet. So there's all types of assets that can be there.
[Speaker:AUDIENCE] So what do you do? Those are going to take as losses to counter against other—
[Speaker:BRAD_STONE] Yeah. I could do that. And so I just wrote them off, you know, got a deduction on my taxes. If by chance somewhere in the future, then, you know, yeah, yeah, I can do that. But my point is just to say there's all different types of assets that go in there and we own different things for different reasons and there's no wrong or right. It's like, who's to say what a waste of your time is? You know, like, I might want to stare at the ocean for 4 hours a day and you might think that's a waste of time, but that's meditation for me. That's what allows me to operate at a high level or whatever. Right. And everyone's like, oh, what about just buy more Bitcoin? It's like, look at Michael Saylor. It's like, dude, I've been to his house. He's got 3 yachts.
He's got 3.
Why? Why not just one? Yeah, he's got 3 yachts. And I've been in multiple houses and I've been to like not just one. Right. It's like, you know, so and obviously he's worth whatever, tens of billions of dollars.
