Smart Investing

Smart Investing With Andrew Lanoie

TWS 50 | Smart Investing


When it comes to investing, it’s important to be smart and informed. You got to differentiate between what you’re feeling or thinking and what the reality is, because education mitigates that emotion and allows you to make the best decision possible with the money you have saved. On today’s show, Patrick Donohoe chats with Andrew Lanoie, a full-time investor specializing in the past seven years in the affordable housing investment sector. Andrew is a smart investor and somebody you should follow and learn from. Don’t miss this episode to learn more about how you can achieve financial independence by investing in real estate.

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Smart Investing With Andrew Lanoie

We are going to be talking about real estate again but investment in general. I have a good buddy of mine that I’ve known for a long time, Andrew Lanoie. He is one of the Managing Partners at Four Peaks Capital Partners. They specialize in a specific niche of real estate. He started a new podcast and I want to get him on the show to share that with you. I’ve been getting a lot of questions and inquiries in regards to what’s going on in the investment world, in general, especially in real estate.

A few episodes back, we talked about the investor behavior curve. It’s typically driven by emotion and what to look for there. I’ve heard stories of a lot of speculation, where uninformed, uneducated individuals are going about investing, whether it’s using the simple to use platforms like Ameritrade or Robinhood. They’re making uninformed trades and investments, and my concern is that that’s happening in the real estate market as well. It is an interesting time not to say that there aren’t deals out there because there are always deals. You’ve got to differentiate between what you’re feeling, what you’re thinking, and then what the reality is.

It is the perfect time to get second and third opinions and find other perspectives that may be more informed than yours. Whether it’s some of the stories around oil went to nothing and everyone wants to get into buying oil at the dip but yet, they go on. They find an ETF that sounds like it’s oil, but it’s an oil company who doesn’t benefit from the old price as being that low and ultimately going bankrupt or it’s people trying to get into a FAANG Index, Facebook, Apple, Amazon, Netflix and Google or Alphabet. It is the top tech stocks. They ended up buying the ETF, which is not the bank stocks, and ultimately buying on margin and getting crushed there.

These are the times where you have a lot of emotion driving decisions. Education is what mitigates that emotion and allows you to make the best decision possible with the money that you have saved. There being opportunities at the same time, I see high emotion. When there’s high emotion, it doesn’t always equate to the best investment, unless it is fear-based emotion. I don’t think we’re there yet. It’s time to be smart and be informed. I think Andrew is informed. He’s been a smart investment for years and I believe he’s somebody you should follow and learn from. Without further delay, I’m going to get to my interview with Andrew.

I’m joined by my good friend, Andrew. It is awesome to see you. You have been in the show before, but it’s been a while.

I’m always pumped to be here though.

Andrew is the Cofounder and Managing Partner at Four Peaks Capital Partners. He’s been in the real estate game for years. Andrew, you’ve given your background before, but why don’t you talk about your background, both previous to your real estate investing profession and what you have been doing.

I’m in Phoenix. I’ve been here for a few years. Prior to that, I was in Los Angeles for many years and I was in entertainment. If anyone’s seen the show, Entourage in HBO, I worked for the William Morris agency, which that show was based-off of and represented comedians and celebrities. I was at the company for about sixteen years. Sometime right after the subprime crash happened, my parents, my mom was a retired nurse and my dad was a retired plumber. Their retirement got crushed in the downturn in the subprime crash and here I am, making six figures at a huge talent agency, but all of my money tied up in the market. That was my big a-ha moment of, “How does that happen?” They raised three kids, lower middle class, followed the advice of their financial advisor and it didn’t work out during the subprime crash. I started reading a lot of books on economics and it all led to real estate and started investing in single-families. It was 2009, looking back on it, it was a good time to get into the market as far as pricing goes. In 2009 was when I started this whole real estate journey.

TWS 50 | Smart Investing

Smart Investing: Real estate is so macro, and there are many niches within it. Affordable housing specifically is a great place to be.


That was good timing. It’s one of those things like your portfolio and the markets, you crash the bottom, but you get into one of the better asset classes. The market’s rebounded. This is a side note before we get into our topic. When you look and understand that most habit if the market goes down by 20%, the Dow, S&P, and NASDAQ goes down by 20%. If it goes up by 20%, you don’t go back to even. If I give you $100,000, you lose 20%. Now you have $80,000 and you gain 20% of the $80,000, not the full $100,000. It’s interesting to see how people are like, “That’s simple math, but I’ve never put that together before.” When most people are super afraid of any type of investment, it usually always works out. I think you got in at that time, which hats off to you, where most people were like, “That’s all different investments.”

Looking at it through a different lens, it’s hard to wake up every day when you’re heavily invested in the stock market and you see all the swings and it feels volatile. I have many people that I talk to that were tired of it, especially when the market’s down. That clearly happens quite a bit. For me, it was all about income. It wasn’t looking at, “I want to put money into something and try to double it in a period of X amount of time.” I’m looking for things that generate cashflow. We all know that gets harder and harder now, especially where we are in this market. Back then, it was easier to find assets that you purchased. It was all about passive income. I didn’t care if the $100,000 property I bought went to $200,000 in X amount of time. It was like, “What’s my annualized return on that?” It’s good to be looking at through a different lens.

The values of real estate went down, but because of people getting foreclosed on not having a place to live, they had to rent something. In essence, it pushes rents up. Another celebration is that you launched a new podcast, The Impatient Investor, which I’d love to talk to you about. Also your partner, Michael Ayala has a podcast as well, Investing For Freedom where you talk about your story, what you’re seeing, and opportunities that exist, which we’re going to get into. Talk about what is the mission of The Impatient Investor and Investing For Freedom, which you are all part of?

The Impatient Investor has something that’s been in the back of my mind for years. I told this story before, but it’s an eye-opening moment for me to watch my parents’ retirement get devastated. Even further to that, my dad’s dad grew up, got married, had three kids, owned a home and car, put everyone through school, lower middle class, and all on one salary. That’s completely out the window. The theme of The Impatient Investor is the American dream is dead. What worked for my grandfather does not work for modern times. It’s all about having multiple streams of income and being able to do what you want. That’s the theme behind this.

We’re going to get into one of the main questions I get around real estate, which is, “How do you achieve financial independence by investing in real estate?” That question is interesting because there’s an implied answer that a person wants when they ask that. When you hear that question, how do you first characterize independence? You mentioned it with what you said in regards to the American dream, which I agree with.

Independence means different things for different people. For me, I didn’t want to be tied down to W-2 jobs in Corporate America and the whole golden handcuffs. When you’ve worked in Corporate America and even as great as that job could have been. My gig was good, but it’s Corporate America. There is a lot of backstabbing. I think independence means a lot of different things to different people. For example, some people want to create passive income where they’re not working for that money. It’s their money working for those returns. That gives them another ten hours a week to spend with their family or time to go on a 3-day, 4-day, or 5-day long weekend. It’s different things, but it’s freeing up that time because, at the end of the day, it’s all about time.

Time is the only finite commodity. You can argue that, but you look at what humanity has done for hundreds of years. It’s figured out ways to get more time. We don’t need to go down that tangent, but it’s the same thing. There are meaningful things that people want in life, even though we live a lifestyle and work at 9:00 to 5:00, it’s unlike any in history. At the same time, people are always wanting more. They want to grow. We’re driven for innovation and that’s where I wanted to get into real estate. Real estate is one of those asset classes. It’s broad.

There are many micro opportunities within that macro asset class. Sometimes it’s confusing. When you speak of real estate, there are a lot of things that probably come to mind for people. Talk about the different ways to invest in real estate and then segue into the passive income, the real estate that allows someone to experience more time and freedom. There’s real estate that does not give you more time and not give you more freedom.

The first thing is figuring out, “Are you looking for another job?” If you are and you want to go out to flip houses and be an active real estate investor, which means, “I’m going to go out. I’m going to build a team. I’m going to buy whatever asset class. I’m going to manage it.” There are a lot of variations within that. That’s great and maybe there are some higher returns on the backside. There are also a lot of risks, especially if you haven’t done it before, but going back to what you said, it’s also adding another job. A lot of the people that I talked to who are in my circle, they’re not looking for more work. They’re not looking for more jobs. They’re looking to put money to work. On the active side, certainly, there are opportunities there across the board, depending on where we are in the market cycle.

More on the passive side, it’s figuring out, “Are you looking for something that’s an income-based model? Are you looking for something with growth? Are you into something that’s more of speculation?” We are in the middle of Coronavirus or COVID and no real estate is the same. Right now, I wouldn’t want to be an owner or operator of office buildings. You had a portfolio of office buildings and they were at 81% occupancy and literally in probably a week, it goes to 5% or 0% or 9%. The same thing with retail. Real estate is so macro and there are many niches within it. It’s interesting to figure out what’s going to look at in the long-term. I’ve been in residential real estate my entire real estate career, which is always going to weather a lot of storms, depending on what part of that sector you’re in. Affordable housing specifically is a great place to be. It’s figuring out, “Do I want another job? Am I looking for something more passive where I do all the due diligence on the front end and then figure out how to put your money to work?”

Independence means different things for different people. At the end of the day, it’s about freeing up that time. Click To Tweet

These are good points and you brought up some inherent risks that are in all real estate, but at the same time, there are certain questions you can ask and put your crystal ball cap on looking into the future. Sometimes you can see it or you can’t. Look at retail, how many people put it everything under retail? Amazon comes around and disrupts it in the office. Few people could have seen what was going to happen. We’re still shut down. It’s become the psychology of business where you don’t have to hire somebody in your local area. There are opportunities and they’re going to exist around the country. Who knows what that’s going to do because office leases are typically 5 to 10 years? It may have to play out over a period of time, but things are shifting because of how people are invading, also Black Swan events.

You had said something interesting from a residential standpoint. Residential still has multiple niches, but from a residential standpoint, people need a place to live. That’s never going to change. Talk about those different micro sectors of the residential investment world. We can unpack some of the opportunities and perhaps some things to look at in the future because I think things are in the midst of changing.

The first thing to look at is 50% of wage earners in the country make less than $31,000 a year. What’s interesting is a lot of those people are essential workers. If you think about what someone at Costco is making or Amazon fulfillment, gas stations, whoever’s left at restaurants, all the essential workers are out there. A lot of those people fit that profile. You’ve got 50% of people. Let’s say you make $30,000 a year and you take home $24,000. What does that get you for a housing allowance? The last median mortgage numbers I saw was somewhere around $1,200 a month.

You can’t afford $1,200 a month. Probably, you don’t have the FICO to qualify for that. Further to that, Chase announced that on a single-family home loan that their minimums are now no less than 20%. Their FICO went up to what you needed to qualify. How does that affect the housing market? It means there are more people that need to be renting because 30 days ago they were able to qualify for a mortgage. Let’s go back to the 50% of wage earners making $31,000 or less. Generally, they don’t have the FICO to buy a single-family house. They don’t have the down payment for a single-family house. It goes really to that segment. Most Americans, 1 in 3 have less than $5,000 in savings. Some have no retirement whatsoever. There are long-term demographic shifts towards lower-income housing. They talk about the middle class is shrinking. Does that mean that the upper class or the richer are growing? It is not. Certainly, to a degree but the lower-income people, that niche is getting bigger.

Innovation is doing more with less or doing the same thing with less. You start to look at labor. It is expensive. I’ll be frank, when my team went home and I started working there, I don’t have a food allowance. I don’t have parking. I saved quite a bit of money. There are lots of different expenses, whether the FICO that we pay, Social Security, Medicare, health insurance benefits, and there are other benefits. These eat into the business. When businesses are not receiving as much revenue as they had before, they’re looking for ways in which they can innovate. That’s where I would say, the longer you’ve been in a profession or a specific career, the more of a habit it’s become, and the less likely you’ve been to innovate. By not being able to innovate, it puts you out of the money that you were used to receiving. That’s why it’s vital for that. Half of the country is living at that level, but still, they need a place to live. They need a place to work. They’re going to go seek those places. How do you describe maybe the different types of affordable housing that are out there?

There are a couple of types. You’ve got multifamily. I saw an article and it said, “Even with mortgage assistance, 47% of homeowners are considering selling their homes due to the pandemic.” There are many trends that we’re seeing that are pushing towards America becoming more of a rental market. That’s not a new trend, but the circumstances that we’re seeing are all pointing towards that. As far as different kinds of affordable housing, we’ve been in the manufactured housing space for a while. That’s one of them. Maybe it’s C or D-class apartment buildings. The other thing that’s interesting with all of COVID-19 is if you’re not a candidate to buy a home and you’re going to live somewhere, do you want to move into a big apartment complex? Maybe not. If that’s within your budget, I don’t know. We’re having this new resurgence of cases. I’m here in Arizona and all of a sudden, there are more cases and they’re starting to shut things down again.

I don’t know if I would want to live in a big apartment complex, so that’s one of them. Manufactured housing is another one. In some markets, there are still single-family houses that you can pick up for $40,000, $50,000, or $60,000 maybe less. I would qualify that as affordable housing if you can afford it $800, $900, or $1,000 monthly home allowance. I was thinking about tiny homes, but those are people downsizing by choice. It’s a lifestyle choice. Those are $40,000, $50,000, $60,000 or $70,000 too. It is more of a lifestyle, but those are the big ones.

TWS 50 | Smart Investing

Smart Investing: If your core mission in real estate is residential, until there isn’t a demand for affordable housing or housing in general, figure out what your comfort is on certain niches.


Let’s go in that direction, the idea of a crystal ball, you look at the wealth gap and it is broadening. You also have a young generation and it has pushed up prices of apartments. It’s also caused some physical shifts from East Coast areas to Southeast areas, from West Coast to parts of the Midwest, Texas. They also have a different lifestyle. The younger generation has a different lifestyle. Given COVID, you have a demand and able to accommodate people that work from home, but also you do have those fears associated with living in a denser environment where you have neighbors that are a few feet away. You see those trends, and what’s hit with COVID and what things we’ll do in the future. It’s interesting to look at what the Baby Boomers are going to be doing. It’s good to look at what the Y Generation and Millennials do. Also from a wealth gap perspective, a lower-income housing, it’s going to be interesting to see those trends as well. Where do you see things seeing shaking out? I think we’re still in the middle of it, but what are you trying to keep a pulse on?

It was interesting to think about and looking at the US as a whole and you’ve got these major markets. You’ve got Los Angeles, DC, New York, and all these very densely populated areas, certainly New York City at the top of that list. They were the leader in all of this COVID-19 at the beginning for a while. You would see all of these small, secondary, and tertiary markets around the US, and some of them are flat or maybe in decline. You’ve had many companies that are outsourcing to the outside of the US. A lot of its jobs. We all saw what happened in Dallas, Texas the past years. Why were companies moving out of California and in other areas? They weren’t business-friendly. They weren’t playing ball with these companies, so the companies said, “Why am I going to pay this extraordinary amount of taxes to be here when you treated poorly? Why did Dallas explode the past years?” It was the job.

If you are here in North Dakota and you can’t find work, Dallas, Texas had affordable housing back then, but it’s more expensive nowadays. You’re going to move because you’re going to move to where the jobs are. It was interesting, do people cluster more around the big markets and Dallas becomes larger because there was land and they could build an expansion and all of that? That was a pretty interesting trend that was prior to this. I feel like it’s potentially going in the other direction, because do you want to live in New York City? Do you want to live in these big, massive apartment complexes? I’m sure we’ll see the other side of what’s happening with COVID and crossing our fingers that the destruction, we know it’s going to be massive, but hopefully isn’t going to completely destroy the economy. Only time will tell. It’s 1, 2, or 3 years from now. I feel like the trend of leaving some of these major markets, we’re going to see more of that. It will be interesting to see what the data shows on that.

We’re early in it and at the same time, you look at opportunities. I see things happening in a number of ways. At the same time, you’re not going to be able to tell. As you look at investment opportunities, these are where good due diligence questions come from. When you are presented with an opportunity, you’re able to ask questions about, “Where’s the demand coming from? How much is it there? What is the quality of that demand?” What came to mind when you were talking is the supply chain. I don’t think people realize how disrupted it’s been.

There’s going to be more of manufacturing in the United States because there’s more control and there’s less disruption. The manufacturing cities, I wouldn’t be surprised if there’s more demand there for better housing. Looking at where trends are going and trying to make bets, make investments, you’re able to mitigate risk by understanding what’s coming in the future. As we get into what your specific businesses, talk about what you have seen for the past years, as far as real estate investment trends, whether that’s a single-family, apartments, and what have you seen as some successes and some failures?

Overall, we always go back to until there’s not a need for affordable housing, it’s always going to be a viable option out there. It is hard to tell if you’ve got someone who’s building A-class luxury houses. There’s certainly a niche for that, but what happens during a downturn? The first thing that happens is talking as a business owner and other business owners are. You’re looking at your expenses. You’re figuring out, “How do we batten down the hatches?” We’re looking at these numbers and as of now, there are 4 million jobless claims. That’s incredible. Does that get the 50 million? Does that mean six months from now that there’s half of those still out of work?

Does that continue to affect retail? Does that continue to affect office space? My guess is it will affect residential real estate. I would assume, depending on how bad this gets. If your core mission in real estate is residential, until there isn’t a demand for affordable housing or housing in general, it’s figuring out what your comfort is on certain niches. Back to what you were saying, you would never have thought the office space building market would be devastated in days. Retail, you could see the Best Buy and these massive buildings that are whatever square footage. There are only many tenants and I can go into that. Your niche as an owner, being able to rent that out is small.

We’re bullish on affordable housing, but residential real estate in general for the long-term is going to be safe. You made an interesting comment when the stock market and all of the swings. If you own a piece of real estate and you’re in a correction, you may lose value in that home. You may have a home that’s $150,000 and now it’s worth $98,000. Did the rents decrease? The answer across the board is not really. Rents have always trended up for the most part. It doesn’t mean you can pick a market and say, “The rents were lower here in this year,” but overall they have always increased.

Residential real estate, specifically affordable housing, is always going to be needed. Click To Tweet

It goes back to the story with my grandfather. People are sitting scratching their heads and saying, “Why is it that we have four jobs in this household and we can barely make ends meet?” The reason is that expenses are through the roof and salaries are not keeping up with that. That goes back to the American dream is dead. That worked 30 or 40 years ago to have one salary and live up a pretty nice life. Weren’t wealthy necessarily, but you paid the bills and put the kids through school, but that’s out the window. That’s scary. If that’s the trend, what does this look like in 50 years or a hundred years? I don’t have the answers, but you can look at the data and you look at where the trends are going.

You made some interesting observations, which is a question that we got, which is where the primary difference is between real estate investment and other types of investment. You hit on something first and foremost, where supply and demand oftentimes, as well as access to financing, are big factors when determining the value of a real estate. In supply and demand, if there is more demand, the prices go up. Demand these days is contingent on how easy financing is to get. At the same time, you have rental income. People need a place to live in. That is one of their first bills, their housing and their food. That right there secures residential in an area which is unlike other investments because you have two things going on, the income side of things and the value side of things.

Also with real estate, tax is different if you own the real estate. From an investment standpoint, there’s different taxation. From a real estate standpoint, there’s different taxation. With real estate, it’s much more favorable. If you looked at it, prices are going up. We’re in a monetary system that requires debt. The debt was increasing the money supply and it’s because the monetary policy wants growth, they need growth. Their target inflation is positive all the time. They don’t want deflation because it means they’re not going to have enough money to pay interest on the debt that they’ve been racking up.

You also look at their incentive to keep pushing more money into the system, and the value of your property is going to go up. At the same time, if you’ve used financing or leverage to acquire the property, the value of that debt goes down as inflation sets in plus rents typically will rise with inflation. You have a lot of interesting pieces and characteristics of real estate that don’t necessarily exist in other investments and then focusing on a big slice of the demographic bell curve. It’s not to say that real estate from an affordable housing standpoint is without risk. There are a lot of factors that help you mitigate it.

Through all of this, where we sit, there are too many unknowns with jobless claims and everything else. Our good friend, Ken McElroy has been saying that they’re talking about 30%, 40%, or 50% mortgage failures over the next amount of time. The courts have been shut down through most of this time. You’ve got people that haven’t been paying rents on their office building that they own. The same thing with the people that are leasing out of this. I saw another headline that said that mortgage delinquencies surged by $1.6 million in April 2020. We’re so far behind on the date of what’s happening. Every single month, there’s new information that comes out. It’s complicated and complex, but I keep going back to if you have the option to invest in residential real estate and it makes sense, and you’re clear on your direction, “I have an income model and it’s a long-term.” You’re not trying to flip things, which is out the window these days. Residential real estate, specifically affordable housing is always going to be needed.

Let’s speak a little more about your business, specifically in this niche. When we first met, you focused on single-family homes. You learned about being able to form a business where you syndicated. You started to get other investors’ money together and you form a business around being able to take that money and allocate it to bigger projects to have bigger leverage. Maybe talk about what Four Peaks Capital Partners is like what you guys have been doing for the last several, several years. Also, what are some of your plans moving forward?

I think 2013 is when I stopped buying single-families and it was simple. They stopped penciling out because the market crashes in the subprime crash and everything within that time period, all of a sudden, real estate is on sale. We’re not in a real estate crash. We even don’t know what we’re at. Are we even in a recession? I don’t think so. It’s still a pandemic.

Without the fed, we would be in a depression, but they’ve printed so much money. That’s another one of the benefits. That’s papered over what the real issues are.

In 2013, I stopped buying single-families. It was looking at what the next opportunity was and took off a hard look at commercials, different kinds of residential and apartment buildings, and the whole thing. We stumbled across manufactured housing and looked at the metrics. Even back then, you can complicate this stuff so much, but the simplicity is its supply and demand. It goes back to 50% of the wage earners are making $31,000 a year. In this sector, the collections over the past 90 days have been fine. We don’t know where this is going to go but we’ve been okay through this as an owner and operator in the affordable housing space. I didn’t see a pandemic coming in 2020 but looking at the numbers in the supply and demand. Does manufacture housing pencil out and make sense? It certainly did. That’s been our focus. My partner and I got a big heart for our residents in providing safe and affordable housing for them. That’s been our business model for the past years and is most of the focus on what we’ve been doing.

The reason I got excited about what you were doing was probably back in 2011 or 2012, I was helping the son of a friend of mine who had some drug problems. He was getting his life back together and he had tons of debt that he was trying to figure out. I helped him with some debt consolidation stuff. I put a savings plan together, spending plan together, but he had been working for this group that essentially owned or manufactured home areas around the country. It was just a family. They didn’t necessarily syndicate, but they were extremely well-off and successful, not because they had them, but because they figured out the business.

That is something that I knew you had within your mind, as far as understanding the entertainment space when you were back in that industry, how you brought that experience, and Mike’s experience as well to form a business out of it, which is not just buying and renting. It’s establishing a community. It’s using systems and applying those systems to different areas of the country. You have been able to do that remarkably successful. Talk about maybe that element of things because it’s not just the ability to identify an opportunity where there are numbers that makes sense. Numbers measure something. When the measurement is a process, a system, or an activity without a business around that, those numbers aren’t realistic. Maybe talk about that element of the business that you guys have created.

Looking at this from more of a 20,000-foot view, there are three big parts of our business. One is our resonance, the other is investors and the third is our team. When we started out doing this, we were a virtual company. I was in California. We had people and assets all over the US. For what we were doing, it simply didn’t work. It was too hard to manage and cruise multiple markets and multiple states. One of the reasons I moved to Phoenix was to open the office here with Mike. Let’s talk about the residents. We’re going into these markets that potentially poorly managed assets and you can’t go in and say, “Rents are this, and they should be this. We’re going to raise the rents the first year and we’re going to pass back utilities.” Without our residents, we don’t have a business. You have to be thoughtful, mindful, and conservative about how you approach each market and how you increase rents.

The second part of this is our investors. Without our investors, we wouldn’t also have the business and then the team. The team is probably one of the most important parts of this because with the right team, you put a plan into place and you can execute that. We spent a lot of time building out a vertically integrated company where we didn’t have to outsource a lot of this. We could be thoughtful about we’ve got all of these projects that we’re working on. How do you build a team to manage these efficiently? That’s what we’ve spent years doing. It is amazing to move to Phoenix, put roots down here, and work on executing the plan.

TWS 50 | Smart Investing

Smart Investing: There are three big parts of a business – your resonance, your investors, and your team.


You’ve also had some incredible mentors too. Kenny mentored you based on his extensive experience that you have been involved with. Some mutual relationships that we have where you’re learning from those that have the experience, which is huge. There’s only so much attention span we have as well as readers. We could probably keep talking for the rest of eternity. Talk about ways in which somebody can learn about Four Peaks Capital Partners, you, and about Mike, what you are up to and check out the podcast. Start to talk about some of those resources.

Four Peaks Capital Partners is our main equity company. It’s The Impatient Investor, which is my new podcast, and that’s on all the major podcasting platforms. Mike has Investing For Freedom. Those are the big three things. Back to what you were saying about the mentors and everything. We were around a lot of smart, successful people. The common thread between a lot of those people is giving good information and good content. How can you help? It is an abundance mentality, which probably the reason that we have been friends for this long because we feel the same way. It’s about how do you help? How do you give content? There are a lot of different ways. That’s always been a big mantra with everything we do.

One of those areas where there’s been so much innovation, I’m speaking to real estate investment and how it’s evolved over the years, especially the capital formation, putting deals together and how to provide good returns safely to people. It’s fascinating because it’s gone so fast, yet the mentality most have in relation to making investments is still tied to what they’ve always been taught, 401(k)s mutual funds, ETFs, stock, bonds. If it’s not there, then there are other investments out there. There’s been this evolution. At the same time, the way in which people think about investments has been changing slower than the investment world has innovated.

I look at what you have done and put together. It’s something that I would check out if you are an investor. You have some capital. You have some interest in real estate. Maybe you have a real estate already. It’s not something you hand them on over to Andrew. It’s one of those things where Andrew has been doing tons of education. You have done tutorials, videos, and you’re putting together another website. That’s providing even more information so that investors can do due diligence, ask the right questions, and subsequently make the right decision. Andrew, talk about that website that you have been working on and what that’s all about.

Be around smart and successful people. The common thread between them is they give good information and content. Click To Tweet

It goes back to what worked for your grandparents. It doesn’t work these days because the American dream is absolutely dead. The website is It’s talking about how to create a more passive income, especially in all of the crazy times that we’re living in.

Andrew, it’s been awesome. Thank you again for taking the time and sharing your wisdom. Go and visit Andrew’s website,, and

Thanks, Patrick for all the things that you do at Paradigm. There’s unbelievable content so you could spend a couple of years on your site.

That’s a good thing and a bad thing sometimes. Thank you again for the time. I appreciate it.

Thanks, Patrick.

I have a couple of other episodes coming up in the future. Make sure you go and get on the newsletter list so that we can send you updates when new episodes come out. Go to to subscribe. I hope you’re doing well, safe, and enjoying so far. I’ll talk to you next time.

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About Andrew Lanoie

TWS 50 | Smart Investing Andrew Lanoie is an expert at building teams and connecting people with opportunities. Formerly a Talent Agent at William Morris for 16 years, he represented some of America’s biggest celebrities – from Sheryl Crow to Barry Manilow to Peter Frampton to Lily Tomlin. In 2009, Andrew began investing in single-family residences. He left the agency to focus on investing full-time, specializing for the past 7 years in the affordable housing investment sector. Andrew and his partners have acquired tens of millions of dollars of income-producing real estate in some of the best-performing markets in the country. Andrew is skilled in out-of-state investing strategies, creating operating systems, and investor relations.

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Assessing Investment Risk With Andy Tanner

TWS 3 | Risk Assessment For Investments


Making smart, worthy investments is all about the preparation – the research and the analysis. This is why risk assessment for investments is such a crucial part of the process of deliberation. One bad investment could set you back a whole lot. Andy Tanner is a renowned paper assets expert and successful business owner. Andy speaks to Patrick Donohoe about what you have to be looking at when you’re making a big choice about an investment. Let Andy teach you some of the techniques that will help you make smart investments.

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Assessing Investment Risk With Andy Tanner

It’s an honor to interview Andy Tanner. Andy is a Rich Dad advisor. He is the author of 401(k)aos as well as Stock Market Cash Flow. He was also the host of The Cashflow Academy podcast. Andy’s been on here before. He is a good friend of mine. We get to do some things with our families together. We have these marathon meetings whenever he comes in to do a show that lasts up to 4 to 5 hours. Andy is someone that I have a tremendous amount of respect for. He has principles as his foundation, as well as his personal values that I have tremendous respect for, but yet he continues to change.

How he changes is because of the environment that he’s in. For those of you who are not familiar with Robert Kiyosaki, he’s the author of Rich Dad Poor Dad. As an organization and as a philosophy, they are constantly growing. They do not conform to the status quo. Even though Andy has an incredible foundation, he continues to be challenged and refined because of him being the paper asset guy. He’s written extensively about markets and the role that they play as well as how to capitalize from an investment standpoint on it whether it’s up, down and sideways. Andy and I have those discussions on. You are going to enjoy it. I know he has several free resources. However, his bread and butter is a paid membership course where he mentors you directly. Andy is a great guy. You are going to love it. We have a cool conversation.

This season is awesome. I want Andy on early because he and I have a similar philosophy and perspective on things. Him speaking about the stock market, which is his expertise I felt was appropriate. As I assume most readers, especially new readers, this is a primary investment that you are a part of yet. Most investors are participating in this asset class in much the same way. This is a different way to look at it. I hope you enjoy this episode. We will have another great one next time. For those of you who are new to the show and want a better context as to how I perceive and view investments and the role investments have with your overall personal wealth strategy, go back and read the previous seasons. We’ve had five so far.

The show has been on forever since 2007. However, we have been taking a season approach where we’re focusing on one central theme and it’s awesome that investment has become the capstone of the previous five seasons. Those themes have been life, liberty and property as the 2018 seasons and themes. In 2019, we focused on capitalism, which is the infrastructure in which the rights of life, liberty and property are able to bear lots of fruit as we’ve seen historically.

The entrepreneur, which is the last season of 2019, we focused extensively on how to maximize your best asset. You had to find ways in which you can improve yourself, make more money, discover a meaningful career, profession, something that you love that you would never retire from. Go back and keep supporting us the way that you have. You have been amazing. Subscribe to the show. Give us a good rating on iTunes, it always helps. Share it with your friends and family.

I’m here with my friend, Andy Tanner. He is my distinguished guest. We’re going to talk about investment. We’re going to talk about your expertise, the depth of experience that you have. You have a unique perspective and experience. It’s going to be hugely valuable, but we’re going to start with some rapid-fire stuff. Who was your role model? Someone that you looked up to, who inspired you?

It’s my dad.

What superhero or icon in history do you most resonate with?

It’s Superman.

What charitable causes do you support?

Multiple sclerosis, but the biggest one is cystic fibrosis. That’s huge for us. They have huge advancements.

If there was one attribute that you can impress upon your kids, grandkids, the world, this audience, what would it be?

It’s self-discipline.

We could go off on many topics, but we’re going to talk about investment. Rapid-fire was more to tell you how a person thinks. That’s important, especially as you talk about investment. You’ve written some books on it, 401(k)aos and Stock Market Cash Flow. Do you have any other books that we don’t know about?

I write all the time cathartically. I don’t know if I’ll leave it on my computer for my kids to find, all my little catharsis. When I have an issue in my head, I find writing about it. If something bothers me, that’s a great form of catharsis for me. I cannot type, so it’s hunt-and-peck. A lot of bad voice-to-text technology makes no sense. As a person who doesn’t know how to type, spell, or grammar, I write all the time but I don’t like to publish. I like to write about my own stuff.

So many people are in an investment they don't understand. Click To Tweet

There are many different benefits from it. Ryan Holiday wrote a book called Stillness Is the Key. He talked a lot about writing. The fact that the activity itself, it’s much out of your mind, it allows you to see things differently and see them clearer. That’s stoic.

A good insight is if something is inside of you and you write it down, it releases it from outside your body. At least it’s out there where you can see it.

The physical activity of doing it is huge.

I do a lot of that.

Let’s talk about investment. This is a broad subject. I wanted to start with a broad question. How do you characterize an investment?

An investment is when you put something in whether it be time, energy, heart, soul, money, and hope with the aim to get more back than what you put in.

Does that happen a lot?

Sometimes it does. Sometimes it doesn’t. Sometimes you put in and you don’t get it back. That’s what risk is.

Let’s talk about financial investments. What have you experienced over the years? Your profession in a sense is money, financial education and speaking. You do a lot of market-based things. What are some of the common reasons why investment will succeed? What are the most common reasons you see that investment fails?

I would say number one is financial education. If I were to write another book, I would call it The Second Bridge. In all my travels, I’ve seen two things. Why do people go to seminars? Why do people read books? Why do people listen to podcasts? Thousands of people wanting to do better, which is good and right and so should they. When I’ve asked the question, if I start seeing the same faces and they don’t get out of the rat race and they don’t get it, two things that they usually don’t have. Number one is they’re in an investment they don’t understand. In a culture of advice, people center on the investment rather than the investor.

Education is about the personal development of the investor. For example, let’s say we do some options. We sell an option. We sell a naked put. You would think a naked put is a naked put for one person, for another person, the risk is there. It’s not true. Warren Buffett does this. My mom does this. There are two different outcomes. The education and understanding of what you’re delving in are massive. Most of the time in my life when I’ve lost money and when I’ve asked other people that have lost money, it was a lack of understanding of what we were doing. We got excited about the investment but didn’t take pride as an investor. Is an investor someone who invests? That’s like saying someone with a scalpel is a surgeon.

It’s not the activity. The action is the last step. You can’t skip to the last step.

I can’t call myself a doctor because I do surgery. I can only call myself a doctor because I have the skill to do surgery and I’m certified to a certain level. The second gap, which is one that is more frustrating for me. I’m not a great student. I’m willing to work enough to get it. I don’t learn quickly, but I’m willing to put in the time to learn. What is frustrating my life, which comes back to the question you asked. What would be the thing I’d want to instill in my children more than anything else? It’s discipline. Often, what happens is we have the knowledge, but there’s a second gap that requires a second bridge between what we know and how we behave. I’ll have people that I know well how to trade options and they know how to manage risks. I’ll see them blow up an account. I’d say, “Why did you blow up your account? You know better.” “Andy, I didn’t follow the rules.”

Knowledge is the first bridge. If you don’t know what you’re doing, you’re in trouble. You bridge the gap between ignorance and knowledge. Once you have the knowledge, there’s another gap between what you know and how you behave. I always make the same joke. It never gets old. I always say there are 50 pounds on me that my wife isn’t legally married to according to her. She says, “I’m not married to that. That was not part of the original agreement.” One of the majors of many I went through in college trying to figure out what I want to do is exercise physiology. There’s no gap there in how this little pocket of mine got here. No gap in knowledge. I know what happens on the atomic level, the Krebs cycle, CO2 out, O2 and carbon in the whole bit. Despite that perfect knowledge of how it got here, for some reason, I’ve implemented that in my life. It’s a lack of either discipline or implementation. Those are paramount to investing.

You have cognitive mastery, which is mastering with information. You have physical mastery.

It’s practical. There’s not a practical mastery, which is why when you said for your sons, what’s the number one thing? Self-discipline, the ability to execute what you know. Discipline is when you do what is right whether it feels good or not, whether it’s timely or not. You know what to do and you do it. That’s a huge part of investing. This important question you’ve asked because we have a culture of advice where people don’t want any of those bridges. Do it for me. Give me a financial advisor to make all the decisions. I’ll hire that stuff out. There’s danger in that because now you’re limited. There’s a bit conflict of interest, number one, and now you’re limited to their knowledge and their behavior rather than you’re handing over the ship. If you drop your kids off to daycare for twenty years and you come back and they’re not the people you wanted them to be, don’t complain.

TWS 3 | Risk Assessment For Investments

Risk Assessment For Investments: An investment is when you put something in – time, energy, heart, soul, money, hope – with the aim to get back more than you put in.


The big picture, the key to investing is the investor less than investment. The culture of advice is an investment-centered culture. The culture of true investing is the personal development of the investor. Warren Buffett is not who he is because of what he bought. It’s because of what he knows and what he does. There’s more than one way to heaven. There’s an interesting book by Zucman who writes for the Wall Street Journal on Jim Simon. It’s interesting because Simon destroys Buffett in terms of returns. He almost doubles him up. He’s almost twice the effectiveness.

Buffett usually starts in the ‘60s when you look at what he did with Berkshire. This guy started in ‘88, so it’s a good sampling. He destroys Buffett. Buffett buys and holds and gets dividends. This guy, he’s in a trade for a week. He’s a swing trader. It doesn’t matter which one you want to do if they work. Don’t get dogmatic and say, “This is the best way,” but it’s not because of what they bought. It’s because of who they are. I hate the 401(k) for that reason because it suggests returns and prosperity minus the development of knowledge and discipline that is required for anyone.

Two points back when you’re making the comparison between Buffett and Simon. When you compare returns, it’s a comparison. Here’s this factor and that factor. When you look at all the other very variables, I’ve often said the same thing, but what I thought about when you said that is what Buffett trading is? What’s the scope of it?

It’s not fair to compare them because Buffett has only got one stock in his stock portfolio that isn’t paying a dividend. The reason he bought it is he thinks it is somewhat probably will and his cost basis is low. When you look at Coke, Buffett probably looks at it in two ways. If you compare Buffett to Simon, you can say Coke’s at $60 or $70. Buffett bought it at $3. That’s his average cost basis. You can say he bought it at $3 and now, it’s $60 that’s his return. That’s unfair to compare that to what Simon does because Simon will get more because that’s capital gain.

What Buffett cares about is the $1.47 dividend they pay every year. He’s at 50% a year on the dividend based on a cost basis. In that way, Buffett is probably destroying Simon. Either way, they both got more billions than they’ve ever known what to do with either way. It’s a little bit unfair because one is more of a cashflow model and the other is more of a capital gain model. Certainly, Wall Street is all about the capital gain model. They don’t care about dividends.

I would also say it comes down to objective. What is the individual investor? What are they doing it for? Because for Buffett, it’s a business. For Simon, it’s a business. For the individual investor, they have their business, probably their profession, their job and so forth, but you have their investments. How do you read between the lines and say, “What is a knowledgeable, educated investor?” What’s their objective? What are they after? The actual training, education, seeking that, do they need to have a refine purpose in order to do it successfully? Does that even matter?

The purpose and objectives are different. Purpose, why am I investing? Objective, what do I want to achieve? For the average person, this is quagmire because the education system doesn’t point you to either one. The education system says work for money, get a job. That’s it. That creates a problem for everybody because they’re trying to be something that they’re not. People come to me with the 401(k) thing all the time and they say, “What should I do with my 401(k)?” Advice question, not a growth question, tell me what to do question. For that person, that’s a quagmire in terms of that objective and purpose. They may not even know what that is at all in the beginning. Let’s say my purpose is freedom. My objective is to get a passive income above expenses, so I don’t have to work anymore. That’s fair.

That’s where you begin to study and that’s where you start. You’re a cashflow investor. I have a dogma that I prefer. It aligns with Robert Kiyosaki’s dogma, which is cashflow. I would be blind to the truth if I didn’t find many people that have become tremendously free, rich through capital gains stuff. Simon and Buffett are great examples. Buffett is a cashflow guy. Simon is a capital gain guy. It’s billions both ways. Both of them are financially free. Both of them don’t want for money. Both of them are living lifestyle-wise, they’re close. Philanthropy, it could be the same.

Most money managers, portfolio managers are cashflow guys because they live off of fees whether it’s performance fees or management fees.

Businesses are cashflow. If you look at the BI Triangle, you’ve got your three integrities outside and your other five in. Foundation is cashflow. The outside is mission, leader, and team, but the inside is foundations, cashflow. Businesses are certainly fundamentally in fundamental analysis. As soon as your cashflows debt, if you look at that cashflow idea from a financial statement, you got four boxes, income, expenses, assets, and liabilities. Expense is always the same as money going out. Everybody has them. You’ve got three boxes left. You either do what job people do, which is new money, in cashflow or cash investors, new money in.

The best way, this is my opinion, to deal with expenses that are new is with money that is new. If you have a new phone bill, you got to have new money coming in to take care of it. If that cashflow dies, you got two boxes left to pay. You got assets to pay or liabilities. If you have no cashflow, how do you pay? You’re in a capital gain of can you buy and sell your gold fast enough to keep up with your expenses? That puts an hourglass. The third one is, “If you have no assets left and you have no income, you have to borrow, which is the cashflow pattern of the US government.”

That’s fine for them to do that because they can print money, no problem. You looked at this and asked this question as an investor. What’s your objective? How do I want to pay my bills? Do I want to do it with a job that gives new money or I get laid off and I have to work? Do I want to make investments that produce new money, that’s dividends and rent, or do I want to make a capital gain? You’re moving from the income column depending on the asset column to pay your bills. That’s tougher to do maybe. Unless you’re Jim Simon where you’re a stud and you can compound that thing way faster than your expenses, which in a sense gives you an income above expenses in a way.

The problem with the 401(k) is those two cashflow patterns, income was the old pension model. Capital gain is the new 401(k) model. Most people don’t have the financial education to see that the column they’re draining into expenses is switched. The risk has switched because of the income from a pension, that’s the company problem to deal with stock market fluctuation and problems. 401(k) now to me. As an investor, you can learn a lot about investing by looking at the 401(k) model and deciding, “What is my purpose? Is it freedom? Is it riches?” If it’s freedom, it’s passive income above expenses. If it’s riches, probably capital gain because you’re going to have to expand your assets drastically. If you want to be a philanthropist and change the world or your cause or if you want to be driving fancy cars, which is not my thing because I don’t fit.

How do you characterize markets? How have you come to understand the different markets that are out there and their purpose?

I’m not an economist, so you’re smarter than me on this stuff, but to me, a market is a category of supply and demand. We have an energy market. What is the supply and demand for energy? We have an agricultural market, whether it’s corn or soybeans. What is the supply and demand for that? We have a financial market, which is a stock price is based on supply and demand, not the earnings of the company. The earnings of the company are secondary, the supply and demand are primary. That’s why the chart tells the truth more than the fundamentals do. To me, a market is looking at the supply and demand in the emerging market. What is the supply and demand for this stuff that’s emerging in these countries?

That creates all things being equal, fair pricing. It creates a clearing price.

The culture of true investing is for the personal development of the investor. Click To Tweet

In theory, AI is an interesting thing to think about because most of the transactions on Wall Street are made by machines. That’s tough because does it create a fair market? I suppose everything is fair. Define fair, life isn’t fair. Therefore, everything is. All is fair in love and war. I sometimes wonder if we’re a little disconnected from the fundamentals sometimes because if your machines are doing high-frequency trading and the AI is looking at technical stuff, historically markets have gone up over time. Does it disconnect from the fundamentals?

I certainly look at the run we’ve had in the last several years, which is unprecedented. I don’t think our GDP has grown. I don’t think what we’ve produced so is that fair pricing? I like saying this. If you had a beauty contest with all ugly girls, that’s what it looks like. Perhaps US stocks are the least ugly person or man in the beauty contest. Do you want to save euros? Do you want to risk everything in gold that doesn’t cashflow?

It’s not good for things to go down. The overarching theory for business is they like when things go up.

If you look at Jim Simon’s portfolio, do you know what’s the two best years are? Two best years he ever had were in the downs. It’s down bad. It’s all perspective.

People want growth and consistency.

Prices are going up and down. If you go to the gas pump and you’re an employee and the gas goes up, that’s a bad thing. If you own an oil company or you own some ExxonMobil and you see the gas price go up, depending on how many shares you have. One guy can go to the gas pump excited and one guy is bummed. It’s all relative to where you are. I wouldn’t say the market is going up or down or good or bad. If it goes up huge and it’s a bubble, is it good? Is a forest fire bad? Is it bad to purge Yellowstone National Park with forest fire? I don’t see up as good, down as bad. I’m like, “Up is up and down is down.” Robert Kiyosaki says it this way, “I don’t have a right hand and a wrong hand. I’ve got a right and left, they’re different.” In terms of people getting hurt, it gives you a different perspective. People say, “401(k)s are going up, that’s good for people going down.” I don’t know. They give all their men in Wall Street anyway.

That’s where I was going to because of a lot of the asset prices, stock prices, company prices. There’s been the biggest corporate buyback in history where you have businesses that are essentially issuing bonds that have low-interest rates. Not necessarily investing in infrastructure, but creating liquidity in their company, keeping the price and the value high and going higher. You also have this wave of how businesses are capitalized and how valuations are done.

There are a lot of reasons to issue bonds though. Apple is a great example. Over in Ireland, they’ve got all that money. If they bring that money home, what’s their charge? It’s 30% or whatever it is. They issue a bond at 3% tax-free, borrow money tax-free, repatriate the money. I’d go bond every time.

There are all sorts of reasons, but you’ll look at what you see most commonly, which is corporate buybacks in order to prop up share value.

Some people look at it that way. Some people say, “We’re confident about buying our own stuff.” You look at that in a macro idea. For this market to go higher, what is required to get it higher? It’s an influx of cash. In other words, money needs to come from somewhere. That money earned is one thing. If it’s borrowed, it’s another thing. If it’s created out of nothing, which the fed starting to do again surreptitiously, that’s a whole other show for you and me.

There are many forces. Fundamentally supply and demand, there is much supply and much demand. This creates a price. If demand goes up, prices go up. If supplies the same. If supply goes down, but demand goes up the even higher price. Assuming a stable dollar, that’s fundamental, but there are all of these other forces. The way in which accounting is done, the different financial instruments. You have many different options in order to get an outcome. One of the biggest lawsuits going on is by Citadel, where they’re suing their quant. This strategy that’s all based on this micro volatility is where they’re making all of their money. It’s not necessarily on the fundamental value of Bank of America or GE.

I have a graph in my class where I draw a line of the timeframe from long-term to micro trading in milliseconds. I have a graph of the importance of fundamentals, against that goes to zero. The fundamentals don’t change in a microsecond. That brings up another thing back with AI. They’re worried about competing against AI and I would warn them not to think that way because you don’t need AI. You’re not trading against AI. You’re not competing against them. You’re playing a different game.

The way you play the game is you say, “The market goes up, down or sideways. I’m going to be prepared for all three in terms of risk management, position size number one.” You can go in all three ways. Does it matter what causes that? No. In other words, if AI causes it to go up, who cares that went up. Maybe it was better sales that made it up. Maybe it was better GDP that made it go up. Maybe it was a devaluation of dollar where it takes more dollars to buy that many shares that made it go up. Is it more valuable then? I don’t know. Regardless of what makes it go up or down, I’ve never cared and nor will I ever care. If it’s AI that makes it go up and down, high-frequency train, I don’t care. What is interesting is if we’re going that way, does that disconnect you from the fundamentals? The answer is yes. You’d have to because they’re making such quick decisions there.

Who still bases their decisions on fundamentals?

Buffett does.

Who else?

TWS 3 | Risk Assessment For Investments

Risk Assessment For Investments: Most people don’t have the financial education and literacy to understand that the column they’re draining into expenses is switched.


I care about fundamentals. I hate talking about the same stock all the time. It seems like every time I’ve been on a radio or on podcasts that talk about Kraft Heinz, and it’s a Warren Buffett company. He owns a ton of it. I bought a lot of it off the dip. I didn’t do that for technical reasons. I did it for fundamental reasons and for cost basis reasons. I did it because I think there’s going to be ketchup on the table regardless of what AI does. If I go to a restaurant a few years from now, I think there’s going to be Heinz on the table. I don’t know that that’s the risk, but that’s my bet. That’s a fundamental decision where I write options to get paid to buy it, reduced my cost basis with an eye of faith that their dividend will get higher with inflation. Their dividends will increase as the dollar loses value. My cost basis will be low and we’ll still be eating ketchup.

That would be an interesting econometric type of study is to look at the volatility and how quickly people’s tastes changed when it comes to condiments as opposed to food. Food changes differently.

They own Oscar Mayer. They own Kraft macaroni cheese, Philadelphia cream cheese. Nestle is bigger than they are, but they’re the third-largest in the country. There’s more salsa sold than ketchup. There are a couple of big knocks on it if you want to look at the other side of that trade, not to get into the minutia of it. A lot of people are more health-conscious and so they say, “Is macaroni and cheese in trouble?” I’ll keep that personally sustained out of my own family. I’m not worried about that. People like salsa. With that said, I still think that fundamental analysis, I don’t think ketchup is going away.

The other problem with them is they’ve got too much debt. Understanding it economically is a big deal. This blew me away that their stock dropped on this. I feel like I’m on an island because I’m not an economics professor. I’m a C-minus average basketball player trying to stay eligible in college. I didn’t understand this because I always feel like there are people that should be way smarter than me on this. They had a write-down of their brand equity. Meaning what’s the brand Heinz or if we sold the name Heinz that you sell a new mayo under it. They overestimate that, which happens all the time.

It’s like, “What’s your house worth?” You don’t know until you sold it. It’s the only time you know, so maybe you put down in your balance sheet, “My house is worth $10 million.” It’s only worth $5 million. They wrote down billions in that, but that doesn’t affect the cashflow. It doesn’t affect how many ketchup bottles were sold. Their stock drops hugely. I’m like, “That’s good. That’s cleaning the house.” What that means is your return on assets went up. The amount you’re declaring in assets is that’s a better ratio to income. Why is it going down? I don’t know.

The SEC’s mad they did it. There are probably people smarter than me, but the thing that gives me a lot of sauce in that, Buffett is making $300 million a year off it. If you have a machine that’s making $300 million a year in dividends and someone says, “Your machine lost some value if you want to sell your machine.” Do you care? Cashflow investing, whereas these other guys, all these algorithms were about prices of stocks for a capital gain, but from a dividend cashflow’s point, are they selling ketchup? Do you know what percent of their profits go to the investors for dividends? It’s 57%. Do you know why that’s a big deal? Heinz is 57.

Has it been that way? Is that coincidence?

It has nothing to do with Heinz 57 sauce. It’s a coincidence. Buffett is thinking about this cashflow-wise. What does the company make? What do they sell? The AIs are totally disconnected from the business. They’re like, “What’s the stock price at?” I’ve tried to be less dogmatic. You and I like sound money. You and I like gold. We’re probably not fans of Fiat currency, but in the reality of it is I have to say we’ve been calling for crashes forever. How long is the last? This doesn’t feel right. No money out of nothing. Our dogma in our mind is like, “How can you?” You look at Japan, how long has Japan been? Their GDP is the worst in the world that I’m aware of a major country.

They continue to grow 100-year mortgages, crazy stuff. I went back and read some of Bernanke’s stuff. If you’re dogmatic about it, you say, “You don’t print money out of nothing.” What’s interesting, if you took his side and reread what he said about, he says, “A currency like gold is valuable based on the value we place on it and the quantity of what we have.” The problem I see with it is that you can invent it out of nothing. The reality of it is we don’t trust men with that power. That’s probably where you and I have a big issue.

When you think about it, if the population grows, you’re going to need more currency. Keep up with population demand, you can dig up more gold to back it. If people did trust it and as long as you controlled it, what’s the difference? If we say this is a dollar, it’s valuable, they’re limited in supply. The problem is if men get there what we see is they flip that switch and they turn it on to fix everything. There was no sacrifice of anything of substance. It’s money out of nothing. Fiat currency is our issue. When the S&P hit 2000, I’m nervous about being bullish ever since, but I have to do what the chart says. I can’t say, “It’s going to crash.” I have to do what my chart says because the chart tells the truth.

If you look at money supply and how much liquidity, you can go back in hindsight and say, “That totally makes sense why things kept going up.”

What’s crazy is we’ve got $22 trillion on balance sheet, $150 trillion off promised obligations. If you don’t freak out at $1 trillion and you don’t freak out at $5 trillion, the guy who understands it is the guy that would know at what point it doesn’t work anymore. If you were back in the Ross Perot days where he had his little charts, “Back in 1971 when $1 is a $1.” If you’d have told Ross Perot back in the ‘80s that we’re going to have a $22 trillion deficit, he will say, “You will collapse far before then.” That’s an interesting thought.

We’re beyond this point where people we’ll freak out. I’m not sure at what level it is. Maybe it’s no level.

No one talks about it but us. Congress isn’t talking about it. Trump hasn’t talked about it. Pelosi hasn’t talked about it. Is it wag the dog for both of them? We’re making wars. We’re doing impeachments. We’re doing all the stuff. We’ve got to keep this fight going because if people realize that we owe $150 trillion, they’re going to freak out, so let’s fight with each other in public as long as we both agree not to talk about that.

In 2019 when they diverted away from what they were trying to do with interest rates, I think they had three or four cuts.

What was interesting about that, you and I have talked about this, but what’s weird is if you looked at the economic policy as medicine to where I say, “The economy is sick.” What do we have in the pharmacy? We can print money, we can change rates, we can change the fractional reserve rate. What are the tools in our cabinet? What medicine do we have? If you looked at the Federal Reserve as a pharmacy with different medicines, I could see after ‘08 where we lost half its value. You’re going to drop interest rates to practically nothing. We’re at all-time highs. What’s the unemployment rate? How far back do you have to go to find that low of a number? Here you got stock market all-time high. You got all-time unemployment low. Their job is price stability. Why are we medicating the economy?

Markets go up, down, and sideways. Click To Tweet

It’s the government who are monetizing them because if interest rates did go up, they wouldn’t be able to afford the interest on it.

The question is, is the economy healthy it as to be propped up? You and I would say no because if you got to give you heroin, the heroin hit makes you feel good. Get off the heroin and see how you do. In 2018 going into 2019, we started trying to pull off heroin. We tried to raise rents. Look what the market did and how it goes. We will be patient. Yellen was not cryptic. She’s going to do whatever she says she’s going to do. Powell is maybe a little more cryptic. Bernanke is a little bit more cryptic. Yellen was an academic. They’re all academics, but it’s interesting. Why is the monetary policy accommodated? We’re addicted to cheap money.

It’s almost 2008 that created the precedent for the role of the fed. There’s much more power. Their influence has changed.

They used to buy bonds, now they’re buying private stuff. That was a big change.

The whole repo thing is fascinating because the overnight market, bank-to-bank lending, but they stopped lending because it was less risky and a huge reward keeping money at the fed as opposed to giving it to each other. Banks putting up crappy collateral and that’s when the interest rates spiked on the repo stuff.

Maybe that’s why he got $1,500 gold again. Maybe some people always want to turn to gold.

There are many different things happening where I find it interesting. At the same time, it’s beyond my understandings from a rational standpoint.

That’s where technical. People say you’re a fundamental guy or technical guy. I talk about my Heinz trade as a fundamental trade. I’m in line with Warren Buffett. Why do I care about the technical as well? This is exactly why. It’s because they tell the truth. When you come right down to it, let’s say markets go up, down and sideways. Let’s decide to create a risk management strategy that does well regardless of the cause. What we’re talking about is the cause, “Is it the fed? Is it the debt? Is it the overnight stuff? Is it the repo stuff? Is it the AI stuff?” We’re talking about causation. If you say, “I don’t care what the cause is. I need something that helps me if it goes up, down or sideways, regardless of the cause.” You have a little bit of freedom there. That’s why technical analysis is an important thing. Direction matters. At the end of the day, it’s the truth. It might not correlate to what the fundamentals are doing, but it correlates to your buying power and what you have to show for yourself.

This might be a good tangent. How do you characterize risks when it comes to investment? You have more knowledge of markets.

First of all, it’s weird having an insurance guy ask me about risks because that’s your wheelhouse, not mine. The greatest lesson I ever learned from risk because I credit Robert Kiyosaki with so much of what I’ve learned. We were in Phoenix and I remember he said this, it resonated as true to me. He said, “Risk is about control. The more control you have, the less risk. Less control you have, the more risk.” I said, “If you have no control, you’re gambling.”

What are some examples of control?

Control is when you can force an outcome. Let’s do several examples across the asset classes. Let’s say you’re a guy like Than Merrill who understands markets well. He knows that regardless of what the market’s going to do, that he can take a single-family home and he can renovate it. People bash flippers. Why don’t you bash developers then? Because all flipping is redevelopment. If you can have a development business, you can have a redevelopment business. If he understands what those rents are and he understands what those home prices are, in a short amount of time because it takes a long time for the housing market to crash.

He can force appreciation like Kenny McElroy does, better management, better facilities, better features, different cashflows. They can force that appreciation. They go and borrow out money against the need to get tax-free cash. They’re managing their risks with knowledge and being able to force appreciation of some kind. Kenny McElroy is the same way. He buys development. He says, “How can we raise the NOI? Can we force that to happen?” As opposed to a stock where you buy Apple, now force the price up or down. The reason that real estate investors freak out about stock is like, “I have no control. I can’t force appreciation. I can’t force this up.” True, but if you marry the stock market with the options market, now you gained control back because an option gives you a guarantee on where you can buy or sell.

It does it in a liquid environment or real estate. If you get in trouble there, how are you going to get rid of that? Neither one is better than the other. As a salesperson, the reason people are scared of working on commission is there is an illusion that they can’t control the outcome. One person goes and he goes into sales and his mindset is, “I can’t make people buy from me,” but a skilled salesman that understands stimulus and response. If he controls the stimulus, he controls the response and he can walk into a business meeting and know he’s going to get the contract because he can force it to happen with his skills. It’s a low risk. If you find a square mile area with a certain population, a certain economic status, you plop a McDonald’s in that, try to stop people from coming through the drive-through. All you can do is put your close sign up because you’re going to make money. You can’t stop it from happening. The amount of control you have is the risk.

I look at markets and it’s interesting because risk, the likelihood of loss, I look at real estate being more consistent. There are only many things that could go wrong. If you’re able to look at the example you gave, which is here’s this city, here are the demographics, and here are the trends over the course of time. Putting McDonald’s there, there’s a high probability it’s going to be successful. Ultimately there could be an earthquake, that happens and everything is gone. My point is like, “What could cause loss?” How do you go about identifying that in markets?

There’s a lot. Real estate is riskier than that because real estate is dependent on the debt market. If you made a law that said you’ve got to pay cash for it, what would happen to the real estate market? You said, “No more debt for real estate.” The amount of debt you have enables the purchase. The more you enable people to purchase, the more they’ll purchase. The more student loans you create, the higher the tuition it will go. Why did we have a bubble in the 2000s in real estate? It’s zero down, no doc loans. In other words, anyone can get a loan.

TWS 3 | Risk Assessment For Investments

Risk Assessment For Investments: Risk is about control. The more control you have, the less risk. The less control you have, the more risk.


When you give a loan to anybody, anyone can buy the real estate. To me, that doesn’t sound like a real safe environment. It turned out it wasn’t. People say, “What about the stock market?” Mark Cuban has Ross got his baseball games over the internet all over. People listen to their baseball games than radio. Yahoo at that point was bigger than Google. Yahoo was the search engine. Some people don’t even know what Google was. He sells his company for $6 billion in stock. For Yahoo, maybe it’s $100 a share. The 2000 crash, tech bubble. In 2000, it was $5 a share. Let’s say it goes from $100 to $5, 95% is value.

Cuban is fine. Why? He bought the right guarantee. What’s more solid than that? He’s got a guarantee at which you can sell no matter what happens. The company can go bankrupt. As a person in the insurance business, why do I buy insurance on my home or my life or whatever else? It’s to give me some guarantees and people will buy guarantees. Those are derivatives. That’s the driven market. Is one market more solid than the other? I don’t think so because they’re intertwined and they’re both relying on the debt market so much. The largest market in the world is the currency market. The bond market is much bigger than the stock market. The stock market is much bigger than the options market. Debt is probably the one that links them all together and makes them all risky because they’re all dependent on debt.

You also look at the risk associated with the bond market versus risk associated with the equity markets and risk associated with the options markets. The risk keeps going higher and higher in a sense. It depends on how it’s used because a bond is a guaranteed coupon rate. Bonds are used as equity in a sense because it’s bought and sold, not kept.

It makes the paper asset class relevant because people hate paper, “I want gold. I want real estate. I want business.” Paper is everywhere. You put money in the safe or gold. It’s printed on paper. You put your car in a valet and they give you a stub. It’s on paper. You got a title for your real estate. You got an insurance policy. What you’re talking about is social to primal. If you want to take it to the extreme, does your paper hold water? In a primal world, if I’m bigger and stronger, then I get the sandwich and my kids eat. We fight and you lose. It’s primal, it’s not civil.

If you’re civil, you have a government, you have paper, you have agreements because that’s all these are. This paper has meaning. It should. If we’re honest and true, all papers are a handshake written down. As long as there are honesty and truth, “This is my house. I’ve sold it to you. Now it’s your house,” agreed on paper. If we grow primal, we throw all that out. Put up our dotes and we go back to caveman days where the biggest, strongest guy becomes the alpha male of the group. Paper is an interesting thing. In order to invest, there’s a certain amount of trust that you place in civility. You need a certain amount of trust that you put into this stuff. Hopefully, that trust is not always misplaced.

I’m not necessarily talking from your perspective, but from a retail perspective, what is typically the fear associated with markets and with market investing? Looking at them, I would say the majority of people that have ownership or stake in the market. Are they ones that do it based on your definition of risk or is there a different definition for them?

Are you asking like factors?


Employment is a big number because employment suggests people’s ability to buy. Debt is also a big one because it suggests people’s ability to buy. You have to earn money. You have to borrow money. Innovation is a huge one because if we innovate, now we’re creating value out of nothing. Unlike a Fiat currency, you create a new drug like Trikafta for CF. Trikafta has $300,000 a year for a kid to be on that thing. That’s a new value there and it’s worth it. As you innovate, that’s a factor. What’s the risk of failure to innovate?

The war between the United States and China is less of a trade war and more of who gets to AI the fastest. They’ve taken a much different path towards AI than we have. If they out-innovate us, that’s a huge risk. Failure to innovate is a major risk because that’s called obsolescence risk. Obsolescence risk is Blockbuster Video. They failed to innovate. Netflix did, they didn’t. Netflix won. They’re gone that quick. How fast did Blockbuster die? You have legislative risks.

Innovation always displaces the technology in which it was inferior.

If you go out of the individual, you say, “l have legislative risk.” For example, the new 401(k) law. It’s awesome for Wall Street. It’s horrible for the worker under the guise of being better for the worker, legislative risks. Geographic risk, does the Middle East run out of oil someday? Political risk, we’re going to start a war with Iran may be. Purchasing risk and inflation, all these risk factors are there. You look at and you freak out. That’s outside. If you want to go inside, you say, “What can I control?” That’s the real key. Risk is about control. You can’t control legislative risk. Do I run from options? No, I embrace them because of my best chance to control them. An option is a guarantee. It gives me a choice to do something. Someone else makes me a promise. Do they make good on it? You can’t control that either.

All those risks are evident and you have the retail investor world that doesn’t know how to control ignorance risks. That’s where you look at having the upper hand is being able to know what your options are and be able to make moves so that whether it’s up, down, sideways, you’re capitalizing on the opportunity.

It comes back to those two bridges. If you have the ignorance to knowledge, any gap there is risky because now you’re in an environment where you can’t control it because you can’t control what you don’t understand for sure. That second gap is if you don’t apply it, you’re also at risk.

I was going to make a comment on China, which is fascinating because China has tons of money. They’re building these massive cities because they have tons of capital. What I found interesting is I was reading a report on the billionaires and millionaires of the world and the fastest-growing population, and it’s in Africa.

The policy of China, they have controls on population. They had to. They’ve got a big population. It’s against the law to have kids over there.

Real estate is risky because real estate depends on the debt market. Click To Tweet

Do you know where the biggest investor in Africa is? It’s China. As you look out, what they’re doing there. They have a big presence in the Middle East as well. It’s interesting because you look at China years ago when we would do a show, we would say, “They’re building these massive cities. They have tons of resources and they have those limitations on kids.” They’re destined for failure, but they’re innovating by going outside. That’s where I find it’s fascinating. It’s how the world is becoming global.

It’s important to be patriotic, but not dogmatic because I’m a red-blooded American. I love my country. Is it unpatriotic to say they might be beating us? That’s reality. You have to live in reality. You can still be patriotic and that’s not anti-American to say they’re beating us. It’s weird because they have this economic capitalism and yet they still have this communistic social stuff, control, big brother and all that. Hong Kong and China, it’s a weird place because you go over there and you feel the energy of capitalism, yet it’s still under North Korea-type crazy dictatorships. You give them that stuff, they’ll revolt. They’ll want their freedom.

They get enough freedom to make a buck. It’s interesting how they’re playing the game and what we don’t want to be. If we’re not all part of the human race and we decide, “It’s us versus them.” We don’t want to be arrogant because they got a lot of minds. If you believe two heads are better than one, how many engineers do they have as opposed to how many AI guys they have working on this? We’re smarter because we’re Americans. They have resources. They’re spreading their influence. They have a culture of, I wouldn’t say of an underdog. We feel like in America. Pride comes before the fall. You got to respect those guys. Probably the best thing to do is start learning how to get along in the world. That’s probably the best thing, like do unto others type stuff, build bridges and not panic. See them as enemies. That’s the way the world has always been.

The world is the world. We’ve known there are people all over the place, but it’s becoming so much more linked because of technology and a lot of the innovation that’s happening is allowing third world countries, emerging markets to start to live a better life.

Where’s Google Translate going to be in 30 years? Pretty soon, we’ll be listening to Chinese podcast and they’ll be listening to yours and ideas will be exchanged so much more freely with language barrier dropped and innovation.

There’s this velocity of people where you have innovation, ideas and things are compounding. They’re going to continue until the language barrier is going to become less and less significant.

People hate change. Change causes upset. People resist change. Dogmas will take the truth. Chain it with their chains and sink it at the bottom of the ocean if it doesn’t fit the rhetorical goals. As we innovate and the truth is discovered from the epistemological standpoint, do you think we’d be able to change? We’ll have a culture of change is okay? Do you think that will ever happen or do you think the DNA that we’ve evolved into don’t change?

There’s equity in change. What I mean by that is there’s a room or the capacity to change. In the US, I don’t think there are tons of capacity other than the Millennial generation who are going to be inheriting trillions of dollars over the next few years. I look at the rest of the world because we’re 300 million people in the US, but there are billions everywhere else. As the world becomes more connected, they’re going to see what’s possible in life and they’re going to want that. Equity for change is huge. The capacity to change outside the United States is big.

Millennials are interesting to think about. I hate that stereotypical thing is you label all these people. You’re Millennials, you judge them because they’re a diverse group and any other thing is. With that confessed and with that caveat, they’re an interesting group because on the one side, we see them as more open to change and brighter. My kids even below Millennials got iPads. You learn differently. You think about the world differently. The other part of it is a lot of them have been tested like the greatest generations like World War II guys if they had resistance. Because on the one hand, they’re like, “School should be free. Everything should be free. We shouldn’t have to suffer.”

They’ve been coddled a bit. Assault can be done with words like that book, The Coddling of American Mind. All of a sudden, you go on a college campus, “I need a safe room because someone said something.” I look at them as maybe they are strong to handle these problems? They’re smart and they’re open to change. That’s going to be an interesting generation to see how they deal with all the crap that the Baby Boomers dumped on them.

There are challenges, problems and there have been forever. People go through different challenges. Going through world wars and being at the brink of death, that’s a big challenge. The challenge is going to be different. You can measure extreme, but extreme in a sense is based on perspective. They’re smart. They want simple. They want easy. They’re looking more for lifestyle than they are for security. That is a different motivation that drives behavior that is unprecedented. When you put resources in their hands, it’s going to be in better use than with Baby Boomers. Have you seen the Bill Gates docu-series that’s on Netflix?

It shows how he’s helped to brainstorm finance trade awareness to some of the global challenges mainly in Africa, third world countries, whether it’s about pollution or HIV or the water cleanliness. One of his big projects in that docu-series that they talked about was how kids in parts of Africa continue to die because of diarrhea. There’s so much bad water, bad sewage. He essentially brought good minds together to create a sanitary system that was affordable. It took several years to do it, but what he’s been able to accomplish there, that’s the mentality of Millennials. That’s Bill Gates. They see how things should be and they’re empathetic.

That’s where equality comes from that group. They care about equality out of empathy. Quite frankly, the Baby Boomers did not feel that way.

No, because they were in a war. It was about survival. Survival is you first before anybody else. Millennials haven’t had to go through that. They are sympathetic, empathetic and that’s where their minds work differently. How they get information, how they organize. It’s different. They may be able to get a better outcome than the methods that were used previously.

They got more intelligence, more knowledge than we had in our generation. Back to investing, when you look at all the stuff we’ve talked about, generational stuff, economic stuff, risks and all that, investing is about wanting first to sacrifice, first put out before you get in. That can hurt people right from the beginning. Notice when you asked me that question, what’s investing? I didn’t do it in a monetary sense because I don’t think about it that way. There are investments of time, energy, love, and many kinds other than money. It’s when you give and hoping that it’ll come back bigger. Whether you’re investing in your children, you’re hoping the fruit of that will be bigger than what you put in. Playing the piano, you’re hoping the fruit of it will be bigger than what you put in.

It’s an exchange where there’s an output that’s greater than the input.

The thing that’s tough is whenever you put something out because there’s not a guarantee that will happen and there’s your risk. You manage that with control saying, “If I put this out, what can I control to ensure that this comes back?” It’s so much not about advice. In 2020, I’m going to take my gloves off and I’m going to start punching advice in the culture of advice because it’s dangerous. Why fight personal development? Why fight that work? Why fight becoming before having or doing? Give me advice and tell me what to buy.

TWS 3 | Risk Assessment For Investments

Risk Assessment For Investments: Employment is an important number because employment suggests people’s ability to buy.


If you were to read this blog, what people are going to do is they’re reading about all this talk we do about Millennials or AI or any stuff we’ve talked about. They’re still going to be caught in it. What am I supposed to buy? At the end of the day, what they’re craving, what their addiction is like heroin. I want to know what to buy. I want to know what to do. There are plenty of people who will sell that heroin on the street. They’ll sell it to them and give them advice. They’ll suck it up. If you sell this in a different way of saying, “No, it’s not about what I’m going to buy, it’s about what I’m going to be.” I do personal development, that should be sexy, that should be exciting, it should be healthy. You look at and say, “My schooling told me to get a job and it’s not looking good. Maybe my next schooling is I’m going to learn to invest. I’m going to be an investor before I have investments.” That’s “be have” behavior. When you take the ‘be’ and you put the ‘have’ and put them together, that’s behavior. You’ve got to be before you can have. The doing is in-between behavior.

As a final point and then I’ll have you tell everyone how they can buy your books, access your courses, follow you. What I would say is on that vein, which is as I’ve looked at giving people advice and doing the show and we have a business that revolves around it. People rarely connect to why they’re doing what they’re doing. They connect to the objective. They do it because they’re supposed to do it. That’s never qualified. I look at what an individual realizes that they think all of these things have to happen in order for them to experience something. That experience gives them a feeling or an emotion. That’s ultimately what it is.

I look at those emotions, those feelings can be experienced. You don’t need all of these things to have that outcome. That’s where you look at those that have achieved enormous amounts of wealth, success, and prestige, but they’re still way more miserable. In some instances, they take their own life. It’s one of those things where you need to connect the role of money, the role of investment because we live in a time that we’re all wealthy. If you compare to other parts of the world and look at it in history, you look at what we’re able to do, experience and how incredible it is. It doesn’t mean that investing and achieving more isn’t going to bring more of those experiences, but you got to connect that first. If you go about thinking that your life’s going to suck until you have this much money, this job, this title or this bank account balance. It doesn’t work that way.

My parents raised me in church and I don’t get out as much. There’s a wonderful passage that I remember and I don’t remember where specifically it came from, but it was about a group of people. It’s a wonderful idea where they figured it out. A group of people that had a society where it was almost communist because of all things common among them. They lived after the order of happiness. That’s a huge thing. When you look at the role that money plays in that Maslow’s hierarchy’s instructive is food, clothing, and shelter. You got to have some to do that. People say, “Money can’t buy happiness.” Hunger doesn’t buy happiness. Sick kids without medicine don’t buy happiness, and being naked and afraid on day 25 isn’t happiness, especially if it could be day 300.

As you go up there and you look at familial relationships that are different. Having money means you have time. I think having a little extra cash helped me spend more time with my kids. It’s been better not to have a 9:00 to 5:00 job that most people look at normal and having more time to put into my kids. The problem is that some people get caught up with the money. They never put in that time for those relationships. The money eclipses through relationships, so they’re killing. In that case, too much money kills that hierarchy. Self-actualization, try to buy that. How many Ferraris can you buy? You’re not going to get it.

Happiness, huge part as you get into your investing thing. I love Robert Kiyosaki’s CASHFLOW game, the rat race. Cashflow, if you get out of the rat race, that’s when you win it. It’s not when you get to the fast track. It gets ridiculous after that. I’m doing this charity thing. I’m making millions of dollars and I’m buying this. They’re big deals. When you look at where that game is played on the first page of financial. When you get passive income above expenses, now you have freedom. That’s a huge happiness thing.

If you go into your investing and you say, “If I don’t do anything more than that, does it get passive income above expenses?” There is some happiness to be found in that. That is not in the money, it’s in the life that you have at that point. Where if you have time, you can study what you want to study and if that’s your thing to go out and get another $100 million, you have to pursue it. Passive income above expenses out of the rat race, that’s a good place to start with a goal of investing that many people would find attractive.

What you’re saying is profound and still goes to the idea that it’s the life people are looking for and they think that having to get to certain points from a financial standpoint is when they’re going to be able to experience it. I’ll use an example with a client who got divorced as he was about to sell his business. He owned tons of property. He had been going to different personal development conferences and had studied, read books and watched videos. While he’s doing it, it was all for his family. That’s what he told himself, but yet he neglected his family the entire time. He neglected their needs. It’s that whole mentality where “I’m doing this all for them. They should love me because of that.”

They won’t give you love for that specific purpose. Plus, after you achieve that level where you have the money, freedom and time, suddenly life is going to start. I keep going back and forth on it because I look at the necessity that’s in me, which is I have to keep growing. I have to keep contributing, but I find fulfillment in that. If I do more, I’m going to have more of that fulfillment, yet I’ve connected that fulfillment piece to it. I’m satisfied fulfilled. If I get more, it’s going to be more. I’m good with where I’m at.

Investing is not about money. In other words, money is a subset of investing but not vice versa. We opened the program with it. Investing in people, hobbies, and growth is a huge thing. How we spend our time, that is the investment that is required. You have a limited amount of time. You can’t make it. How you invest the time is huge. Part of that time will be invested to learn and make money. Part of it will be to foster relationships. Part of what we’ll do philanthropic things. What did you achieve? What’d you build? What’s your legacy? Steve Jobs has an incredible legacy. Look at the stuff we use and what he left and what he gave us. I don’t think he went to work for more money. He knew what he wanted, who, why, and all that stuff.

How can readers get a hold of you and learn what you put online?

I’m changing my pitch on this stuff. When I google stuff, they google me as everyone else does. Google is looking at what I search and because I’m in investing, the ads I get on my YouTube stuff are all about stocks. I’m so sick of them. I hate them. I hate how they’re presented. It’s usually some guy in a Learjet, “I’m the greatest option,” or there’s this one, “I used to work on Wall Street and I found their dirty little secret. I’m going to share it with you.” I’m like, “Are people this stupid?” Before we talk about how people get a hold of me, I am going to take my gloves off in 2020. I have no interest in having any students or anyone read my books that want advice and that don’t want to develop themselves and put a little work.

I was over in Vietnam and I saw some people saying, “Sign up for one program. Click the button, follow, to do is $10,000 a day.” I was like, “People believe this. They sign up for these programs.” My website is The Cashflow Academy. The way we approach this is we say, “If people that want to learn, be investors and get excited about learning, this is the best place in the world you could go.” For the people that want quick tips, the people that want something for nothing, that’s not an investment. Remember something for nothing is not investing. Investing is putting out something and getting something back. If you put out nothing, that’s not investing. We’ve tried to purge any messages when we do promos. We didn’t want to work with those people frankly. First, I’m saying, “There’s only a certain type of people we want to drop by.” Is that bad to do? I don’t know if it’s bad to do or not, but I’ve grown weary of the environment of advice, programs, books and stuff. I like to be frank and clear. Would you like to do some work and put in some effort to gain knowledge and discipline, then we’re going to be a great resource for you.

That’s the natural order of things. If you want to get something more than what you have, there has to be more in the process.

Our website is The Cashflow Academy. We’ve got a lot of free stuff. It’s good stuff. We teach the 4 Pillars of Investing. We teach fundamental, technical analysis, cashflow, risk management in a way that’s fun and simple.

It’s good to have you here.

It’s fun to hang out. I always look forward to this stuff.

Andy, thank you. I appreciate it.

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About Andy Tanner

TWS 3 | Risk Assessment For InvestmentsAndy Tanner is a renowned paper assets expert and successful business owner and investor known for his ability to teach key techniques for stock options investing. In 2008, Andy was key in helping develop and launch Rich Dad’s Stock Success System, which teaches investors advanced technical trading techniques to profit from bull and bear markets.

He serves as a coach to Rich Dad’s Stock Success System trainers and as the Rich Dad Advisor for Paper Assets. He is currently authoring an upcoming Rich Dad Advisor book on paper asset investing.

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