Epic Real Estate Investing - Tariffs Up. Stocks Up. Are YOU Caught In It? FAKE RALLY?

Episode Date: September 12, 2025

Tariffs up, stocks up—does that make any sense to you? Because it shouldn’t. Tariffs usually tank markets. This time, Wall Street cheered. Why? Stick with me, because if you’re holding cash or investments right now, this story will hit closer to home than you think. Stocks are hitting record highs while tariffs surge and the Fed can’t decide between cuts and hikes. Does that make sense—or are you caught in a fake rally? In this episode, we cut through the noise to show what’s really driving markets right now. Tariffs used to tank stocks, yet Wall Street is celebrating. Everyday investors are left confused, paralyzed, and wondering if they’re sitting on a gold mine or a ticking time bomb. You’ll learn how to spot the hidden signals under the chaos, why old investing advice like “just dollar-cost average” no longer works, and what professionals are actually watching when headlines don’t match reality. If you’re an unfulfilled professional ready to step out of the “fog of finance,” this lesson will change how you see the game. 👉 Subscribe for plain-English, contrarian insights on money, housing, and real estate that cut through the noise... ...and get the newsletter, too! 👉 ShadowCapitalBrief.com #finance #investing #realestate Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the epic real estate podcast. Contrarian takes on money, housing, and policy without the guru nonsense. Let's go, let's go, let's go, let's go, let's go, let's go, let's go. Let's go. The stock market just hit another all-time high. At the exact same time, tariffs are exploding, and the Fed is whispering about cuts and hikes in the same breath. So how is that even possible? It's like being told that the plane is falling out of the sky while the capital, then announces champagne service. So what's next for your money? Let's look at it really closely.

You see, this week, the S&P 500 posted its 20th record high of the year. Investors cheered. CNBC ran their stocks only go up graphics. It looked like good times were back, but dig one layer deeper and the ground shakes. See, the White House just slapped sweeping new tariffs on imports, on steel, aluminum, even consumer goods. Tariff wars used to tank markets. This time, Wall Street shrugged, then rallied. Meanwhile, the Fed can't even agree with itself.

Powell hints at easing. Other Fed presidents warn more hikes could be coming. Future markets? They're already pricing in aggressive rate cuts. In fact, they already have, even though inflation isn't dead. So here's the paradox. Record highs on the board while the foundation looks unstable. It's a classic fog of finance moment.

Headlines, they don't lie. Experts don't agree. And people caught in the middle, everyday investors are left staring at their accounts, wondering if they're sitting on a gold mine or a ticking time bomb. And that's exactly where Mark, a client of mine, found himself. Because Mark isn't dumb. He built a thriving online business from scratch. He understands risk. He understands hustle and how to turn a dollar into two.

But when it came to investing that money, he hit this fog. Every morning he'd carve out an hour to stay informed. CNBC alerts, substack posts, economic blogs, Twitter threads, Fed transcripts, and instead of clarity, he got chaos, he got the opposite. And one headline had screamed, recession inevitable. The very next, soft landing achieved. One analyst said, the Fed has room to cut. Another, rate hikes are coming back.

So the jargon is really piled up, quantitative tightening, stagflationary pressures, bearish divergences, and Mark froze. His capital, it's been sitting idle. Deals have slipped away, and his gut calls that they'd totally backfired on the ones that he had taken. And every decision felt like really flipping a coin. And the worst part, the emotional toll. It's really hitting him inside. So one morning, he closed his laptop and kind of scratched his head and whispered,

Am I just not smart enough? I mean, think about that. A guy's smart enough to build his own business, paralyzed because the financial system speaks in riddles. And he's not alone. This confusion is baked in, and it's costing people years off their goal. And so let's call it like it is. The noise is the point. You see, Wall Street survives by making you feel like you can't play the game without them.

Financial media survives by scaring you today and distracting you tomorrow. And the gurus, they just recycle the same old slogans. Just keep dollar cost averaging or don't fight the Fed. But ask yourself, has that advice made you feel more confident lately or more confused? See, the problem isn't you. It's the way you've been told to read the market. Because here's the truth. Markets aren't broken.

The old way of following them is. I mean, if you only read the headlines, you'll think it's all chaos. But if you zoom in on what really moves markets, housing, policy, and the flow of money, you see the signals hidden under the noise. That's why the roller coaster narrative is such a trap. It makes you reactive instead of strategic. The people actually winning right now, they're not chasing every Fed whisper or tariff headline. They're focusing on the handful of levers that truly move money.

And the crazy thing, it's not complicated. It just requires cutting through the noise. So here's what I've done. I took my podcast, the epic real estate podcast, and I've rebuilt it from the ground up. Yes, it's still about real estate strategy, but now it's bigger. It's about the housing market. It's about the economy. It's about the policies shaping both.

Not theory, not jargon, not CNBC reruns. Plain English, contrarian intel. every single week because the truth is you don't need more noise. You need the signal. And if you want to go even deeper, here's how. I just launched a new weekly newsletter called Shadow Capital Brief. It's for people who are sick of the spin. Each Friday, you're going to get two things. One number you can actually repeat at dinner so you're smarter than the average news junkie. And one contrarian insight on money or housing that leaves you lighter, not weighted down. Plain English, contrarian edge, common sense zero BS.

Go to shadowcapitalbrief.com and subscribe. It's free and it'll hit your inbox every Friday. So here's the thing though. Markets aren't broken. The old way of reading them is. And if you can step out of the fog, you'll see the moves the mainstream never talks about. Subscribe at shadow capitalbrief.com and don't miss next week's issue. A lack of capital has killed a lot of dreams, but only for the people who don't know the loophole.

If you have a 680 credit score or better and could use up to 150K at 0% to kickstart your next venture, get approval in 30 seconds or less, and you don't even have to talk to anyone at loophole lending.com. Okay, back to the show. Warren Buffett just made the most confusing move of his career. Back in May, he told everyone to stay away from real estate. Three months later, he quietly dropped $1 billion on home builders. So what changed his mind? And what does this mean for your money right now? I'll tell you exactly what it means and how this could be a real gotcha moment because here's what Buffett knows about real estate.

And I'll use this property in Middle America, Nebraska to demonstrate. Zillow has it valued at $219,900. And we want to know how much money would this property make us. Well, this is how you figured out, the ROI matrix. And this represents the four profit centers of real estate. The first profit center, appreciation. The annual appreciation on record since 1891 is 3.4%. So at the end of one year, that would give us an appreciation of $7,477.

Now, to figure out what our ROI is on that, if we pay cash for it, it'd be very simple. It would just be that $7,477,3.4%. But most people will put 20% down to purchase a property. I mean, that's how most people buy houses. So our return is not calculated on the price of the property, but on how much we put down. 20%, that's $43,980. Now we take our appreciation profit of $7,477, and divide it by our down payment, the $43,980, and that gives us an ROI of 17%.

So in our appreciation quadrant, we're sitting at 17% return. Now let's look at the cash flow. On the same property, the rent estimate here is $2,292. We take 40% of that to cover taxes, insurance, maintenance, vacancy, and management. That's just the quick and dirty math. So we're left here with 60% of our rent. That's what we get to keep. And that gives us $1,375 a month in net operating income.

So from there, now we got to subtract our mortgage payment. So say, six and a half percent interest right now, fully amortized over 30 years. The payment comes out to $1,112 per month. That leaves us with $263 per month. in positive cash flow. So we multiply that by 12 and we've got $3,159 a year in cash flow after debt service. Now divide that by our $43,980 down payment and that's a 7.2% cash on cash return. Now let's look at the depreciation. The IRS only lets you depreciate the building, not the dirt it sits on. So we take 80% of the purchase price. That represents the structure, the building.

That leaves us with $175,920. We divide that by 27 and a half years, and we get $6,396 a year in depreciation. So the IRS lets you pretend your property lost $6,396 in value this year, even though it probably didn't. And at a 33% tax bracket, that saves you about $2,111 in taxes. That's going to vary for everybody depending on your tax bracket, but that's how you'd calculate that. That's money you keep, which is just as good as money earned. That's 4.8% return just from your depreciation. Now, let's go to amortization.

So each month, you make that $1,112 mortgage payment. In year one, only a small slice of that goes to the actual principal. But it still adds up. I mean, in year one, about $1,966 goes to your principal paydown. That's not you writing a check really either. That's your tenant paying down your loan for you, albeit it's indirect. It's still them paying it. So divide that by our $43,980 down payment, and that's a 4.5% return on your investment just from the amortization.

Now let's add it all together. Appreciation ROI is 17%. The cash flow is 7.2%. The depreciation is 4.8%. The amortization is 4.5%. That's a 33.5% total return in year one. Did your 401k return that last year? And remember, that number only grows over time.

Cash flow, that's going to rise with inflation. And amortization, that's going to accelerate every year as more of your payment goes toward the principle. That's not stock market stuff. That's real estate math. That's the ROI matrix that Warren Buffett understands. Then why did he stand up at Berkshire's annual meeting in May and basically say real estate is a nightmare? His exact words, real estate is so much harder than stocks. You've got negotiations, time, lawyers, multiple parties.

he said there's way more opportunity in the stock market. And you can buy billions in stocks in five minutes. Real estate deals take forever. This was a complete flip from 2012 when he said he'd buy hundreds of thousands of homes if he could. Imagine if he did. But here's where it gets interesting. August rolls around and Berkshire's secret filing drops.

$800 million in Lenar Corporation. $191 million in D.R. Horton. Nearly a billion dollars total in companies that build houses. The same guy who said avoid real estate just went all in on real estate companies. So what's going on here? Well, first, let's understand why he said stay away in May. You see, mortgage rates hit 7%. Home prices are sky high.

You need to make $126,000 a year just to afford the average house. Buffett looked at this market and said, no thank you. But then something clicked. He realized there's a huge difference between buying houses and buying houses. the companies that build them. When you buy a house, you're stuck with one property in one location with one tenant. When you buy home builder stocks, you own a piece of a machine that builds hundreds of houses across multiple markets. But wait, isn't inventory rising like crazy right now? I mean, if we can't sell the homes we got, why invest in companies to build more? Because despite the affordability crisis,

America still has a housing shortage of four to seven million homes. And here's what most people don't get about this shortage. It's not temporary. This is a structural crisis that's been building for 20 years. Zillow says we're 4.7 million homes short as of 2003. Even after a five-year construction boom that added 1.4 million homes, we still fell behind because 1.8 million new households formed during that same period. At current construction rates, it would take builders seven and a half years just to close the gap. But that's assuming that no new households formed during those seven years, which is impossible. This shortage has created a mess that most people just don't see. 8.1 million families now double up by sharing homes with strangers.

Millennials make up 38% of these arrangements. Gen Z accounts for 29%. An entire generation is living like college roommates because they can't find their own place. Even with record construction in 2024, we completed 1.63 million units. That's the highest since 2007. Still, not enough. This is why Buffett made his move. He sees what's coming. And here's what triggered his timing. Jerome Powell's Jackson Hole speech on August 22nd. Powell basically announced the Fed is about to start cutting interest rates. His exact words, the baseline outlook and shifting balance of risks may warrant adjusting our policy stance. Translation, we're cutting rates and we're doing it soon.

The market immediately priced in a 90% chance of a rate cut in September. When the Fed cuts rates while the S&P 500 is trading at an all-time high, something really magical happens. There's a historical pattern that's played out 20 times since we started tracking this stuff. When the S&P 500 trades within 2% of all-time highs and the Federal Reserve cuts interest rates, the market posts positive returns 100, 100% of the time over the next 12 months. Not 90%, not 95, 100% of the time. The average return is 13.9%.

But here's what this means for real estate. When the Fed cuts rates while stocks hit record highs, it creates what economists call asset price inflation. Lower interest rates make all income-producing assets more valuable through basic math. Real estate gets a double boost. Borrowing costs go down, while asset values go up. This is exactly what Buffett recognized when he made his home builder bet. And here's the thing about his timing. Home builder sentiment hit 32 in August.

Anything below 50 means builders are pessimistic. 37% of builders were cutting prices. 66% were offering incentives because they couldn't sell these places. I mean, everyone was panicking about a housing crash. Perfect time for Buffett to strike. I mean, this is classic Buffett's, strategy. Be greedy when others are fearful. You see, while everyone else is running for the exits,

he's backing up the truck. But his investment structure reveals something smart. Rather than buying actual real estate, he chose liquid home builder stocks. These companies benefit from the housing shortage while maintaining flexibility to adjust as conditions change, and they might. Plus, homebuilders have pivoted towards build-to-rent models. The sector has grown 270% since 2019. They now control over 350,000 rental homes. This positions them to profit from both homeownership demand and rental market dynamics. The convergence of these factors creates a perfect setup for real estate appreciation. Supply constraints from the 4.7 million home shortage represent decades of underbuilding.

Demand support from millennials forming households and continuing population growth. Fed rate cuts reducing borrowing costs and institutional recognition as Buffett's investment validates the thesis. But let's play devil's advocate for a moment. What if Buffett is wrong? What if those home builder stocks crater? I mean, here's what could go wrong. Construction costs could keep rising. Interest rates stay high longer than expected. A recession kills housing demand. But here's the thing. Even if Buffett's timing is off, the structural shortage remains. Worst case, he's early, not wrong. And that's exactly when you want to follow smart money. Market technician Walter Deemer put it perfectly.

When it's time to buy, you won't want to. Think about that. Right now, every headline screams housing market crash. Your gut says, stay away. Your friends say, wait for prices to drop. You call that guy on YouTube that's advocating for you to buy a house. You call him an idiot in the comments. It's okay.

My feelings aren't hurt. The point is, that's exactly when the smart money moves in. I mean, it's a little frustrating, isn't it? I know. That's why I put together some helpful information for you. You can get a copy of this at frustrated investor.com. I uploaded it over there for you to make it easy. Buffett didn't buy these stocks because he loves home builders. He bought them because everyone else hates them right now. The same psychology applies to your real estate investing. When mortgage rates are high and everyone's scared, that's when the best deal surface. We've been seeing that a lot over the last 12 months. When sellers are desperate and

competition disappears, that's when you find the opportunities. But here's the problem most people face. They know they should buy when others are fearful, but they don't know how to actually do it. They think they need to quit their job or risk everything or become a full-time real estate investor. Now, that's nonsense. Your W-2 income is actually your biggest advantage in real estate investing. Banks love steady paychecks. You have access to financing that full-time investors envy. You can start building your portfolio. without risking your career or your family security. And that's exactly what I show you how to do in this video right here.

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