Kind: captions
Language: en
I want you and I to rank Financial
advice so my producer Drew has put
together some stuff so I don't know if
you're familiar with uh doing like the S
tier ranking all right so uh we've got s
a b CDE e n f okay and S tier is like yo
gangster that's like the the highest
tier all right let's go Drew hit us
gangster meaning good the best okay
because I'm not cool that's like that
Sigma tier I think that's what the S
actually stands for somebody have to
correct me [ __ ] bad terrible fail
fail why he's made it blue on here I
guess it's just a color from Red Hot
amazing to Blue cool lame okay I like
this's exactly yeah the blue is a cold
heart take it's the first one going to
be
me I I would be uh I would be shocked if
you end up anywhere other than S tier
all right okay okay here we go your netw
work equals your net worth all right is
that s tier F tier what do you think I
think that's probably
a yeah not s but
a I believe in it big time but because I
have not done it I'm going to put it C
tier uh I am living proof that you can
do it without it but man do I think that
I should be punched in the mouth by
myself uh this is not an invitation to
people out in public uh for not doing
that more so that that's a big Miss in
my book but you can clearly do it
without it yeah I think I think we've
been messing around with this idea the
five steps so in order to become really
really wealthy step one and two are you
have to work really hard for longer than
you think which is Step uh two you have
to increase the skill stack that you
have you have to have more valuable
skills then you have to take risk once
you have those skills and finally you
have to have connections where you give
and take in order to have like real
wealth and so it's you know your that
thing you talked about in the beginning
grit are you willing to do a hard thing
for a long type of for a long time
resiliency to finally are you valuable
do you have a good skill set to then can
you take risk are you willing to jump in
and choose yourself and then finally
connection so I think it's it's really
helpful at the highest level no doubt
all right Drew next the way to get rich
is to save
money I disagree with that where do it
go I've never met anybody who got rich
that wasn't in their 70s uh and did it
by saving so I think that is an F tier
that's hard F you cannot save money
because of inflation the buying power
will be stripped from you that is a
Fool's errand it's immoral that that's
true yeah but it is true true hard f for
me hard F I mean that's just math
actually literally that's literally just
math I mean have you ever seen the
dollar symbol where basically when the
Fed was created in the 40s yes uh and
then you go all the way to the dollar
amount that an individual dollar is
worth today you can like see it it looks
like this it looks like a sloping ski
slope uh with what a dollar used to be
worth and is worth today it's like a
beautiful visual that only is because of
our government defl every fiat currency
has the same graph that's what I'm
saying these are probably inevitable
Cycles yeah you have to have a currency
that can't be inflated I got to buy more
Bitcoin huh I mean look I try not to
overhype it because right now Bitcoin is
volatile but you need a currency that is
uninfluenced deflates or if inflation
happens you increase your prices and as
long as you make sure you have some
price elasticity the ility to raise
prices for Value then you can continue
to outpace inflation in a way that you
can't if you're in a job now are you
saying that the government being in
control of prices is a bad idea Cody
Sanchez yes did you did you read that uh
tweet from it's actually a friend of
mine his name is Robert he's like a CFO
and he had the world's best tweet about
why price controls is a terrible idea
and it's worth it's worth reading but if
it was the one that like breaks down
like literally from a grocery store
perspectivea I didn't know I don't
remember who it was from but it was
literally brilliant uh and price
controls equal starving to death it's
just quite literally true that tweet and
many other analyses have just walked
people through it it's it's absurd
that's a red flag anybody who says you
should control PR I mean and then people
go like what about Pharma and so there
are instances in which um it makes sense
to make sure that if there is lifegiving
care in some way we aren't gouging
people
for it's interesting I think that what
Mark Cuban is doing would be my
preferred method of dealing with that if
you have created some bizarre system
where the market has been clamped down
on so hard that nobody has done that yes
uh but whoa do that at high risk because
once the government starts doing that
they just want to keep going keep going
keep going but what Cuban is doing with
drugs Cost Plus drugs I forget the exact
name but that to me is brilliant like
get the transparent
let somebody compete in the open market
and let him win and he's doing exactly
that and I hope he gets even wealthier
for doing it he and I certainly don't
see eye to eye on all things but I'm so
glad like so many people have have gone
against him simply because he has a take
politically that they don't like and I'm
like yo look look at what this guy's
done like he brings a lot you could by
all means ignore a lot of the things
that he's saying that don't work in the
real world or you fear won't but man uh
don't throw the baby out with the bath
water oh I agree moral absolutism will
not make you money for sure what's our
next one go buy a house you should rent
e what's your take on buying versus
renting um well multiple aspects one um
I think we have to not just look at what
the math says which is that sometimes
it's cheaper to rent especially if you
add in all additional costs to it and
say the average American has uh let's
see so what is it 60% of Americans have
$1,000 saved up and something like 30%
of Americans have no savings and so if
that's true and the numbers are anywhere
near that anything that we can do to
have assets that increase wealth over
time and mandate that we have an ability
to save with earnings increases are
probably good and so I think sometimes
people talk about this and they're like
no you shouldn't do it because like RIT
seti is sort of famous for this for this
line um but we shouldn't do it because
in fact you should allocate your your
money somewhere else and it'll make you
more money that's like the argument
there except that most people don't keep
their money in the stock market when the
stock market goes down and so you can't
use like the average return of the stock
market which might be 10% because people
get emotional and they pull things in
and out so that's why I think behavioral
economics is really important overlay it
on top of hard math and investment
returns so for me I know that most
Americans net worth is largely tied up
in their homes for instance and that
might be good considering our behavioral
economic patterns of not really saving
at all yeah so I'll put it B uh C tier
excuse me uh so remember this is dear
audience remember uh don't buy a home
rent and the reason that I think that
that's actually mid-tier it's not
terrible advice is dumb money should buy
a house and leave the money in the house
because it's going to be a force savings
account the thing that I don't think
people take into account with the house
all a house is doing is saying pay an
insurance policy and I will keep I'll
I'll make sure your money keeps up with
inflation y housing
prices it's not an absolute it's rare
that housing prices are going up because
suddenly Austin is the hottest place to
be it obviously does happen but for the
most part what's really happening is the
value of the dollar is going down and
just to keep them equal the house price
appears to go up y but houses are
extremely expensive to maintain
especially over long periods of time and
so you're basically justay paying into
an insurance policy to make sure that
the money you save because the
government has done an immoral thing and
they are printing money uh that you're
paying into this insurance policy to
ensure that the money that you sunk into
the house actually maintains its
purchasing power yeah that's it now
you probably on a long enough timeline
you are way better off putting that into
the stock market or whatever uh because
you can just set and forget there but to
your point the actual thing that people
do is they buy low and they buy buy high
and sell low as people actually do um so
there is some protection there for the
average person who is probably buying
the house because they love it um and
not because of literally any other
reason and so cool it's a thing that you
love that you're creating memories
inside of and if you keep paying that
insurance policy it will be there for
you when you retire yeah I mean the
other reason that buying your own home
kind of makes sense to me is that you uh
can also use that as leverage so you can
take out loans against your actual
property but you can also take should do
yeah you could take out loans against
your stock portfolio too stock security
securitization so you could technically
take out both of them but your house
price is probably less volatile than
your stock price so maybe less risk
there and then you do have some tax
benefits of write-offs you can do for it
plus you maybe could turn that asset
into multiple things with like income
properties in it but by and large I
think real estate is for keeping wealth
not making wealth and so that's why I
don't invest a ton in real estate
because the average home in the US I was
just at Bigger Pockets giving a little
speech and the average home in the US is
somewhere between 300 and
$400,000 and it was funny I asked one of
the guys there I'm like so how much
money do you make on a $300 $400,000
house he's like well if you buy it with
cash like 1,00 bucks I'm like hold up
nobody's buying this with cash like if
this is your first house they're not
buying it with cash so with a mortgage
on top of it he's like yeah you know you
probably make 100 40 40 bucks to 150
bucks a month so you you have a
liability that's $300 $400,000 and then
you only make 50 to 150 bucks a month on
it that's not great that's terrible
given that something will break it will
go wrong and it will cost a lot more
than that yeah exactly so I think you're
right I don't think overtime real estate
is the way to make real wealth but
people in real estate hate me saying
that and it it's definitely in some ways
less risk less volatile for sure yeah
the math is the math the math is the
math maybe that should be the name you
got PR you gave me c for your net worth
equals your net wor um so you can't use
C for the house one it got to be a b
or uh then it's a d got it oh man I next
one Speaking of the stock market the
stock market is a
gamble
um I mean no I think that's probably
what I I've already used effan e yeah I
guess that's a d uh the stock market is
a gamble is a d to
me it is a gamble if you're day trading
like don't Robin Hood don't YOLO into
the stock market but over time we have
numerical returns that show that if you
average out the returns it's not a
gamble that um you can have some
predictive ability to see what the
future might look like over a long time
period so I think the the question is
are you investing consistently are you
investing uh for the long term are you
not pulling money out are you using
lowcost Investments because costs really
eat into your returns and investing um
and have you Diversified your risk
enough and and I still think even though
I hate a lot of what happens in the
asset management industry that over time
there is a benefit to having
diversification of income in the stock
market but I I don't give Financial
advice it's totally dependent on what
you want to do I'd much rather you built
a business it's interesting building a
business as a way to secure the bag and
that I if I could do another F tier on
that one uh I would uh just because I
don't think most people are going to be
capable uh I love the energy I love
where you're coming from but I think the
average person is is going to Fumble
that uh but to the
question uh I would just first like to
say definitionally the stock market is
gambling period end of story and if you
think of the stock market as gambling
you're going to be in way better shape
uh the weird thing is though on a long
enough time Horizon what you're gambling
on is the Ingenuity of the people in
whatever sector you're betting on and
betting on human Ingenuity especially uh
if you can take a full global
perspective so you're protected from um
any sort of pocket problem is the best
gamble that I know to make so um the
stock market as a gamble is the give it
the lowest thing that I haven't uh
already
used and if that's B then I'm switching
my uh previous home one up to B and then
this one goes to D or whatever
flip-flopping more than politicians
today yeah well cuz I don't I don't know
the full gamut here of the questions
being asked between the two of us that
that's a e for you that's a e for you
all right word there it is we got two
more we're almost there you should get
out of debt as soon as
possible you should get out of bad debt
which I would Define as highin debt
where you are not out earning the
interest as fast as possible yes whether
you have low interest debt long-term
debt that you're able to out earn
somewhere else uh that I don't think
matters I don't think matters that is
very shrewd advice it's interesting you
clearly have a mental model the person
that you're speaking to is very sharp
engaged they know it the mental model I
have is um somebody who is more likely
to need a set and forget solution uh so
I with all of your caveats I agree like
that if you understand it that well like
you can leverage debt and get way ahead
um but if you don't understand debt is
the one thing that will obliterate you
um so it's but what about a mortgage
yeah mortgage is debt yeah and in 2008
having a mortgage was pretty trash and
you I I can only imagine the number of
people that got divorced because they
lost their house because they were in an
adjustable rate mortgage 2008 they could
make the payments that's what I'm saying
with all your caveats I love it the most
like if you're Savvy and sophisticated
and you get all the things that you just
said amazing but as somebody who spends
a lot of time in the world of crypto and
see people get liquidated like that uh
because they're doing things on debt or
like margin calls that's that's really
dangerous like people just they go ham
and so I get super nervous so getting
out of debt is uh for the average person
getting and staying out of debt is s
tier yeah is the top so you're you're uh
that's what what is it it's uh Charlie
Munger said or the easiest way that a
man lose all loses all of his money
ladies liquid and leverage ladies liquor
and leverage I [ __ ] that one up pretty
royally but it's a great line which is
basically and then Warren Buffett had
the best one where he came back and he
said my partner Charlie I think meant to
say just one L leverage yeah um you know
again it's I think I guess that you're
right I'm I am optimistic about an idea
that what if we can actually I mean if
you really sit
down and you explain to somebody simply
uh here's a calculator that shows you
how much money you make in this scenario
with debt and this scenario with debt
and they look at that calculator and
they see an outcome that comes from it I
think we can teach more people how to
just like most people know how to do
addition and subtraction we could teach
them how to understand finance and I
think the problem with our our world
today is that we don't have any
financial literacy and so this is a
perfect example it's like Charlie merer
and Warren Buffett says the the easiest
way to kill a man and lose all his money
is leverage and yet they're highly
levered to be honest but it's really lzy
it really is I mean not to derail the
conversation but if you want to see the
the oh God who was it that said it it
might have been Sam Harris and he was
like it was during the whole time where
it was like um do men really have that
much power over women and Sam was like
hold on a second yes there can be
situations no doubt but what is the only
thing you could ever imagine a highly
successful man with a family and all of
that what's the one thing that he'll
throw it away on an attractive woman it
is crazy and it's true man it's true I'm
totally derailing the conversation but
that that is it's ladies number one yeah
yeah ladies most people won't take on
that kind of Leverage is because they
don't understand it that's a good point
but the thing that people will ruin men
the thing men will ruin their life over
is a woman that is probably a little too
attractive for their station in life and
men will just do dumb [ __ ] the fact Jeff
Bezos I love you to death man and I am
so sorry I keep bringing this up but the
fact that Bezos has dickpics out there
just tells you everything you need to
does he really I didn't even know that
that's how his whole thing got blown up
was someone hacked his phone and they
were I'm sure trying to take down Amazon
or something like that so like we're
going to go after him they tried to
blackmail him and he was just like yeah
I'm having an affair yes that is my dick
pck and the fact that what I've done
historically I'm not not going to be
blackmailed so um he just stood by it
and credit to him man that's that's a
baller move like he was just like I
don't do blackmail uh so yep it blew up
his marriage um just just the fact that
I can picture Jeff bezos's face and like
his bald head and then what I imagine
it's I don't need that in my life I am
now picturing things about Jeff Bezos I
never needed to picture I can almost
imagine what it looks like like I feel
like maybe they represent the two this
is this is a dark corner of the internet
for me now yeah it's uh but that's the
thing man
there was a time I would like to reflect
it was a very long time ago but there
was a time where I thought that women
would want to see it like that they
would be I thought you were going to say
that you sent dickpics to my wife yeah
there's no Universe in which I could
stop myself with the serious face and
yes I have occasionally to my wife and
my wife is like of course she's very
sweet but both of us know that she
doesn't care
so yeah I'm just very glad don't think
women actually like the other Financial
advice that's a F level has whoever said
that women really want to see your
isolated dickpick is a liar that's an F
that's an absolute fail in the
background the women are like 100%
nobody wants to see that little naked
mole rat out there sreaming around keep
it to yourself you know men are giving
the gift they would want to receive
because if my wife would like to take a
quick pick and send it on any day of the
week you're into it youa I'm here for it
just just shoot it over yeah we are
wired different L and there's been a few
years of confusion here for a minute
about boys and girls being the same and
they are not so my inbox is open Cody
Sanchez my wife can send them all day
long that's that's true I'm I I don't
think that most women are the same in
that that's how we can tell if you're a
man or woman correct actually correct
yeah this is devolved from Financial
advice oh we did start in the beginning
that either we could talk about politics
or [ __ ] and now we've devolved their
both top ranked podcast thank you we're
all the way do we have any more or did
we get all of them I feel like we hit
all of them I had a couple more but the
conversation way
better please just stop