Peak Prosperity - Speculation Run Amok: Complacency, Then Crisis

Episode Date: November 29, 2024

Chris and Paul discuss Europe’s energy crisis, U.S. stock market trends, economic risks, and investment strategies, emphasizing the importance of financial planning and risk management in uncertain times.

Nothing in this program should be considered investment advice. It is for educational purposes only. Please hit pause and read this disclaimer in full. You've got to have a strategy to invest, and you have to understand the strengths and weaknesses of that strategy, because you have to understand the consequences of failure. The following is the audio version of a video released at peakprosperity.com. Visit peakprosperity.com to watch the video and to find other insightful content such as articles, discussion forums, and exclusive subscriber-only content.

Well, hello everyone and welcome to this edition of Finance University. I'm your host, Chris Martinson, and today I'm back with Paul Kiker of Kiker Wealth Management. Hey, Paul, happy Thanksgiving week. I can't wait to get into this with you today. Me either. Happy Thanksgiving week to you and all the listeners out there. I just pray God's blessing over the fellowship with family this week. I love getting together for Thanksgiving.

Me too. Me too. Kind of darker circumstances, you know, across the world right now. So a couple of things I want to talk about today. One is a big, big move that looks like Europe's gas is going to get a lot more expensive. That has some big implications for industry over there. Obviously, Germany already suffering a lot under its. Well, we'll talk about all of that and just get into the details.

But then second is, well, we see that Janet Yellen is stepping down. I'd like to talk about the mess. I think she's left behind. And then, wow, I have never seen this level of retail bullishness in stocks. And I want to talk with you about what that maybe means, because sometimes that means a rug pull is about to come. So does that all sound OK for today? That sounds great to me.

That's a lot in itself to cover. It is. It is. So let's start with the Europe situation. You know, I've been tracking that there's all these escalations, and I think Americans and maybe Westerners in general, very much undernourished by the media in terms of really explaining what's going on, what the potential risks are. back in the 60s, Walter Cronkite, certainly we would be hearing about a major world leader like Putin changing their nuclear posture and doing stuff that would at least be talked about. And it's not really being talked about all that much, but it's led to this now. Gazprom is the giant gas industry in Russia that takes the stuff that's west of the Urals and puts it in pipelines

and delivers it to Europe. Europe's been a huge, huge market. In fact, it's really the only market for this gas that's coming out of here. And now it looks like they're talking about in 2025, no more transit of gas to Ukraine. That's going to take out another, I don't know, 10, 11 percent of European gas. This is a big deal. That's a lot, as inelastic as the supply and demand equation is for oil and gas. That's incredible. Yeah, look at this. I mean, this is from Anas Alhaji. Great stuff here on the energy side. I go to him on Twitter all the time, figure this stuff out. So he's posting here, well, let's really look at where EU's natural gas comes from.

This is important because, you know, Germany is the economic heart of Europe, and it is an industrial beating heart. And, of course, this is a global economy. So if it costs you 10%, 15%, 20% more to produce your stuff than your competitors because they have cheaper access to energy. Well, those industries are just not competitive, and they're out. And so we've been seeing this already as a big problem. And here we see Russia. This is the part that would be at risk here. It's about 10.9% on this.

This is as of October 2024. And then there's this Russian LNG, which also maybe this gets at risk. But there's some Russian gas that's kind of hidden in here, too. I think up in this purple section, because they put some LNG on tankers, Paul. It goes to another country and then, ta-da, gets reflagged and goes to Europe. So that's how they get around some of these sanctions, I think. But this is, I know it doesn't sound like a lot, oh, well, they'll just find something to do with their 10.9% that's not coming through Gazprom now. It's actually not that easy. These

are huge volumes, big, giant contracts. It's hard to figure out how to replace all that. And fascinatingly, the EU's Ursula von der Leyen, was how I call her, she said, oh, this will be good. This is actually going to make our gas cheaper. Puzzled marks coming out of everybody's head who listens to that, who knows the energy markets. I don't understand how that statement can even be said, but it doesn't matter. That's how politicians go. I think this could be trouble for the teetering, tottering remnants of industry over there. So basic economics, supply and demand rules everything. So if you have a consistent demand with a reduction in supply, prices go up. So, Chris, where are they going to replace that from? Because they've been destroying nuclear power in Europe, correct? They're completely against the development of any fossil fuels whatsoever. So, an electrical replacement is not there from a technological

standpoint yet. So, where are they going to replace the supply? They don't really have a lot of options at this point. So just this past week, Germany had, well, Europe had a big giant problem because it was kind of cloudy and calm. So their wind and solar just wasn't fit for purpose at that point. And so it turned out in November, Europe's going to have the fastest natural gas draws since it's been measured. And so this is the biggest down withdrawal from the natural gas storage. And it's just because it was just, you know, it was just a little, it was just a little calm and cloudy. So they're already at a place, Paul, right now where, let me see here. You can see here, this is the actual gas storage levels in white, and this is the five-year average. So they're below their five-year average, and it's not a crisis, but they're definitely withdrawing it at a super fast pace. And now they're going to have to replace it from some other area.

And by the way, before somebody says, great, the U.S. will sell a lot of LNG. Let me see here. So this is starting in 1970s. You can see this is the United States here started its fracking, started a lot of dry gas production coming up here through this whole period, this huge explosion with that Permian drill out that happened here. But what's important to note is that this is already all spoken for. There's not like we don't have extra natural gas just sort of kicking around, like 100% of that. And a lot of that's going to LNG now, which is fine.

But the question is, could we get 10% more? And I would just point out that it really hasn't gone up at all in the past year or so. And the price is not constructive right now to get a lot more out of the ground because, well, it's kind of too cheap here in the U.S. So I don't know that the U.S. is going to be a good source going forward. Maybe, but there's a chance here that we're going to see actually a stagnant U.S. dry gas production for a while, just because of prices. So I don't know who Europe's planning on getting all that gas from, but for Ursula to say, oh, this will be good, this will make gas cheaper, supply and demand.

Are they? So you had a chart that you flipped through there of German industrial production. So what's the hope? Let's just destroy the economy to the point that the demand is reduced for the supply that's coming in? I mean, what other alternatives do they have? This is a terrifying chart. I mean, from an economic standpoint, I mean, this is just a steady erosion. This is the big down. Let me go just a steady erosion. This is the big down,

let me go up a little bit. This is COVID, but you can see the trend was already in play, and this just kept the trend going. And it's actually been accelerating a little bit of late. And this is industrial production, also services, Paul. Germany is in contraction right now. It's in services and industrial production, both. All signs of a recession. And you can see there around 100, what, that was at the peak in 07, then it stayed around 100, is that 95 to 100 from 14 all the way out? Yep.

So industrial production is the lowest that it's been since, what, the recession that we were coming out of in 03, because that starts in 04, 08, and then the shutdown in 2020. Yeah, so it's basically, you know, excluding the gyrations, it's basically back to where it was in 2006 and falling. And it's going to fall faster with any diminution of energy. Because energy is the economy. You know, I talk about this a lot, right? It's not just, okay, the price, how much, how expensive. That's the economic side of it.

But basically, if you want to track how much industrial production an economy has, you can just look at the chart of how much energy it's consuming. And so price tends to make you consume less of it. So that just, we focus on the price a lot and maybe the german industry isn't competitive but it's very simple how many quadrillion btus of energy are you produced or consuming and that stuff goes into things right it gets turned into aluminum engine blocks and borosilicate glass tubes and whatever so yeah this is uh the the energy policies in particular the green energy policies have been a complete disaster for this.

And they have tons of data for it. And they can't seem to get their minds around that politically yet in Germany. They still have leaders who are all about, well, you know, we have to have, you know, more green energy. Oh, wait, let me let me pull this up, too, because this has happened now. And on top of this, these are job losses this year. And to this, this is an older list. We have to now include 11000 jobs lost at ThyssenKrupp, which is a steel manufacturer. So and they said they're not going to be bringing those jobs back to at least 2030. And I watched a German finance minister, Paul, get on TV and say these words. He said,

well, but that's because we're producing green steel, which is more expensive. So eventually the world will come around and they will want our green steel. You know, that's the job. That's the idea. That doesn't make sense to me at all. So intellectual, but completely void of any wisdom and common sense at all. Yeah. No, what's going to happen is you're going to lose your steel industries. And then by the time the world may want green steel at some point, which I think we could debate is not actually a viable concept. But assuming even you got to that point, Paul, then you're not going to have a steel industry. There won't be the people there who know how to do that because you will have lost it all in the meantime. And further production and further economic power is going to shift from the West to the bricks and, and East, because there's, there's going to be a

void in, in the demand that's out there. And somebody is going to step in to fill that. So it's just getting the industrial base of those countries and forever weakening the country. Well, this, this speaks to the Paul, to the idea of the power of a bad idea. They're committing economic suicide right now. Gleefully, right? There are people actively, they know not what they do, but the damage is real. When these industries leave, Paul, they don't come back. You know, it was very instructive on me when I was a young man.

I did a lot of driving around. I liked my road trips and we would go to climbing areas. And one of the things that we did was we would drive through parts of Pennsylvania to get down to the new river gorge in West Virginia. Beautiful, beautiful cliffs. But when you drive through a place like Scranton, Pennsylvania, or, or an old coal town in West Virginia, when that economic engine left like 150 years later, that is still a destroyed town, right? Or an old mill town in Massachusetts, right? Some of them are revitalizing a little bit now.

But basically, the point here is that when that main beating heart leaves, it's a many, many decade recovery process. And as easy it is to transport around the world at this point, as small as the world's becoming, you know, those jobs may not ever come back. It reminds me when we were in Ireland back in August, you've got all of these old castles that are standing everywhere. They're not functional to live in. And I know this is a completely different, the economics and society change. But all I can think of is when you drive all over the country and the places that I've been in that used to be major manufacturing bases, you've got these old moneymakers, like the infrastructure that used to be the moneymakers for the U.S. that have been shipped somewhere else. And we've transitioned so far into a retail

economy. But from a long-term standpoint, you have to produce more than you consume. So they're putting themselves in a position to where somebody else is going to be doing the production. They're going to have to be doing the consumption and they're going to be at the mercy of someone else. And then they're draining their economic power instead of building that economic power. Well, it is. It is. And it's just, you know, economics is very simple. It's very simple. Whether you're a household, a person, an individual, a company, a town, either you have more inputs than outputs or you have more outputs than inputs, right? You're either earning more than you're spending,

or you're spending more than you're earning. One of those things, as Charles Dickens said, is happiness. The other is misery. And it's really not that hard. So this idea that you can just become a consumptive economy and perpetually consume more than you produce, it's just a fiction. It breaks eventually. That's what the United States has been doing for a long time. Our trade deficit, Paul, if it was a country, would be the 19th largest economy in the world. It's like $800, $900 billion a year of just, it's unbelievable, you know? And we're just like, oh, well, we'll just do that forever. Well, I think the cycles are longer at the government level, but most people that have been in the finance business really understands,

and we can all see it in family histories if we talk. Wealth rarely lasts more than three generations. It just typically does. It's highly unusual that it goes beyond that third generation. And what I have seen typically is you've got the original founder of the wealth. They were humble. They started out working hard. They outworked their peers.

There was a little bit of luck involved, but they saved more than they spent because it was the challenge of, the money was a byproduct of the excellence of what they do, okay? So then typically you've got the kid of that generation that learns the work ethic, but it's like, you know, dad could afford, dad, mom could have afforded to do more for me and they didn't. So I want to do better for my kids. And then ultimately by that third or fourth generation, you've got kids that are so spoiled and they have such nice things without having to work.

Now it's their expectation of having that. So they've learned how to spend, they've learned how to consume, but they haven't learned how to produce. And it's really rare. Like, I mean, I have seen third generations just of wealth absolutely blow through everything because of the complacency and the lack of the ability and work ethic and the character to save. And, you know, they get the perception of who they are by the things they have, not the things they produce or the impact they make in society. So you look at governments and I think is, I don't know what that cycle would be. You know, Strauss and Howell talks about the fourth turning. I think that's really where it comes about is I think those cycles are longer, but it's the same cycle that that goes through on a smaller level that we can all relate to with family stories,

because everybody out there knows some somebody who inherited a massive amount of wealth and then just foolishly, excuse my language, pissed it all away. Yeah. So, Paul, I want to turn to something very quick, which is, you know, we see these losses here in jobs. And obviously, you know, we've seen the data. The German economy is contracting. Its beating heart is being ripped out right now in terms of its energy intensive industries. Job losses are a very rare thing. I mean, here in the United States, you're like, oh, yeah, thousands of people lose their jobs. But it's a different thing in Germany. It's got a very expensive sort of regulatory,

cultural cost to it. And despite all of that, this is the German stock market from the lows in late October, early November of 2023. And it's just done nothing but gone up the whole way across. I do want to talk about how I think we're at risk right now for, this just doesn't make any sense to me. I don't, for the life of me, this is one of these moments, Paul, I've been, I've had several, I'm old enough with the gray hair. I saw 2000, I saw 2007. I feel like I'm in one of these Wiley E. Coyote moments where I'm like, what is this market thinking, right? Given that backdrop of the things we've just talked about. And so for everybody listening, if you are at all concerned about this, you really probably

should talk with Paul and his team. So go to peakfinancialinvesting.com, fill out a simple form and start the conversation because Paul, you run something called a risk managed portfolio approach. Can you just take people through that very quickly and why it's important in a time like this? Yeah. So, so what, what our industry is consumed by now is modern portfolio theory. And, and, and it's basically, you've basically been forced into modern portfolio theory. And you've basically been forced into modern portfolio theory. And it's really easy. You can have tons of clients, play golf all the time with them, and just trust the markets, trust everybody else, the passive investing. And advisors end up being

relationship builders more than they do actual advisors and then implementing the money management. So I started my career in the late 1990s and there were these wiser, you know, cynical advisors that were like, this is not going to end well. But they were so frustrated because they've been warning people for three or four years. Some of them, you know, didn't have tools to help them play the game by the rules that are forced upon them. And then others had these tools. So essentially what we do is we recognize both the fundamentals because history is a great educator and it'll help the simple to foresee danger and hide themselves like Proverbs said, excuse me, to help the wise foresee danger while the simple pass on are judged for it. So you have to first look at fundamentals. And what I can tell you, Buffett indicator, all of the indicators that are out

there, this is the most on a lot of the indicators and right at the most expensive markets that we've had throughout history. Only on par with 1929, the year 2000. 2007 wasn't that expensive. That was a little bit different issue, but it was still an expensive market. And then 2022, before we had that 20% correction, and then this psychology took over. So what our job to do is first, make sure you're on the right path, okay? Do the things that you can do and control the things as you control. That's why we do the planning with clients when we start. Then once we get the appropriate portfolio to help those clients be the most successful, now it's playing the game by the rules that are forced

upon us because you got one of two options. You can be passive, which is what's taken over the industry. And that works really good when the market is undervalued or fairly valued, because typically you don't have these major calamities when the market's undervalued because it's undervalued after these major calamities, right? But then you get into situations where this market is ridiculously detached from reality, but there's momentum behind it. And it's impossible to pick the top. You don't know how long that momentum is going to carry. It wasn't Jesse Livermore. Maybe it was Jesse Livermore. I believe it was. That first came out and said the market can stay irrational

longer than you can stay solvent. So he learned that by shorting the market and the market kept running in 1929. But he was a legendary trader, great book, Reminiscence of a Stock Operator, if you ever want to read it. But that's our job. So there are times where we have to manage risk because what are the consequences of failure? And here's the point. I tell clients all the time, you've got to have a strategy to invest and you have to understand the strengths and weaknesses of that strategy because you have to understand the consequences of failure. So, Chris, I don't think I've shared this analogy here, but let's say somebody offered me a million dollars to play Russian roulette, and I spend that. It's all statistics, right?

So you spend that. Horrible analogy, but this is a really good teaching tool. You stick that to your head head and you pull the trigger. Well, it's statistically possible that I could pull that trigger 50 times and make 50 million. Now, what do you think the financial bubble media would do if I pulled that trigger 50 times and I was worth 50 million? Now, all of a sudden, they'd be wanting me to write a book. I've figured out how to play Russian roulette and you can make all this money too. But what good is playing Russian roulette if you've accumulated 50 million and you pull that trigger and somebody

else gets to spend it? So what we have to do is help clients understand what are the consequences of failure and then implement strategies to keep that failure from wiping them out. Because here's the thing that I've seen. I saw people go into retirement in the year 2000, and the stock market, the S&P 500, is a representative of the U.S. market. Since 1980, it averaged, I think it was around, let's say somewhere between 16% to 19% a year. I know in the 1990s, it was 19% a year.

And I met a guy that's like, yeah, my advisor told me I could live off 10% of my income. Well, the market went sideways, 10% of my assets. So the market went sideways for the next 14 years. The guy was out of money. He was retired, had to upend his entire life. I saw the same thing happen in 2007 and 2008. So what we implemented is like, look, there was all kinds of individuals throughout history who had risk managed strategies in place. Now, risk managed means it's not a light switch, but let's say we're in 100% equity portfolio.

If the market's really overvalued, then your stops and your exit has to be real close. And so what if you miss a little bit of opportunity in the short run? Because missed opportunity is a lot easier to make up for than lost capital. Because if you lose 50%, and this is a market where from a historical valuation, unless all of history doesn't matter, unless all of what has been taught in the finance education programs throughout history, that all has to be completely untrue in a completely new era, right? What they say back in 1929, it's a new plateau. Permanently high plateau. Permanently high plateau. In 1999, it was the new economy, stupid, right?

They were making fun of Warren Buffett because he wasn't participating in all the tech stocks. Well, Buffett happens to be on the largest pile of cash that he's ever had right now. He didn't stand the test of time by being an idiot. He's got a strategy. So we have a strategy in place that's not perfect. It's not going to pick the top. It's not going to pick the bottom, but it's designed to lower that risk. So if you have a portfolio, if this isn't different this time, okay, maybe it's two more years. Maybe it's two more months. Maybe it's six more months. We don't know. But there are always warnings. There's always tremors under the surface of the market. There's always indication

that risk is high. And if you can take that risk, if it's appropriate from 100% portfolio, maybe down to 50 equities, and you got 50 and something that's safe and guaranteed and protected, or maybe you're 0% exposure to equities. First and foremost, you're protecting that capital. And the first thing we want to do is we want to be investors. We don't want to be speculators. And the only way that you're in a position to take advantage is if you have capital to reinvest once there's blood in the streets. So that's a long-winded answer. That's philosophy behind what we do to help people stay the course. And more than anything, the worst thing you can do is sell if you're going to be a passive investor and the market's

down 50%. So every strategy you're in has a strength and weakness and you have to be prepared for it. Well, I got to talk about these risks because it's never different this time, right? No, it's not. Economics is simple. More in than is going out, right? There has to be stocks. They get decoupled in people's thought processes because they just put them out there as prices, but they have to have a fundamental pinning at some point. So that's what they've tried to convince me of, I think, which is a sin, which is, oh, fundamentals don't matter anymore. What matters is the Fed's going to bail this out, or somehow stock prices always go up, and they get you conditioned for that.

But let's talk about the actual risks. Again, from Sven, Henrik Northman, trader, love following his stuff on Twitter. He said, Fed, look how restrictive our policy is, right? And you mentioned two dates, 2000. There was this huge drawdown here, but this is looking at the value, total value, how much if you had to buy all the stocks, what are they worth in trillions? And then that's the Wilshire 5,000, right? So that's the whole universe of all the stocks, pretty much.

And divided by GDP, right? So here we see that in 2000, they hit this ungodly level of 140%. They were worth 140% of the total underlying GDP, but you can see the mean is actually cranking out down here at about 80% over time, over a very, very long period of time. Well, then the Fed got in and got real interventionist and gave us our 1% blowout rates under Bernanke and brought us to our 2007 peak. We had this big drawdown. Now, this is what you're talking about.

As people sold out down here, some of them had to come out of retirement. They saw their dreams really dented. We saw people suddenly realize they had to work for another decade that they hadn't planned on. These are real serious impacts. And then we got the great financial crisis and the Fed freaked out. And this is when they entered this whole policy, which I think we're going to look back on and say was one of the dumbest policies ever under Bernanke and then Yellen and now Jay Powell, where they've cranked this up, where we've hit this unbelievable amount here. We had this little pullback in for 2020. They really freaked out.

And now we're at 200 percent, 200 percent ratio of stocks to the economy that sits under them. They're worth twice as much as the economy itself. This is simple economics to me, Paul. This just doesn't pencil out. This just doesn't make any sense. Unless something's changed that I don't get. Some fundamental, you know, something about economics has just been reinvented, and they forgot to tell us what that is. I don't believe so, Chris. I believe this is a super cycle, is what it is. And I believe it's a super cycle of foolishness. So there's, there's a scripture in the Bible and I can't, I know the scripture, but I can't remember the exact location,

but it's, there's a way that seems right to a man. And in the end it leads to death. Okay. So we have the 2000 crisis. We had the 2008 crisis. Bernanke's absolutely terrified. You know, he's supposed to be a fed Chairman Bernanke at the time, supposed to be an expert on the Great Depression. All they needed to do was print money and keep it from happening. So what did we do on the other side? QE1, QE2, well, Operation Twist, QE1, QE2, QE3, flood the economy with money, and hopefully we've papered this over.

Well, what this has done is this has fueled speculation. So we've had all of these bubbles throughout history, the South Sea bubble, the tulip bubble. They're all different, but the one thing is human psychology goes with it. For all of the intellectual power we have, for all of the information we have at our fingertips, wisdom is still the most important thing, and we're still void of that. So I remember the first time I read the Bible front to back, you know, you had these cycles to where the Israelites would seek God, they'd seek truth, they would love what was important, they would love truth and foundation and wisdom. And then the wealth that came along after that, and then they would collapse.

So this is cycles that we've seen through economies throughout history. And I believe this is a super cycle of foolishness. And we have so much information that we're flooded with today. And I believe the demoralization of all this money printing, I believe that the asset inflation that has come to the holders of assets, you know, can't afford houses. The image of what they expect the economy to be is not relating down to them. So they either turn to speculation and they've been rewarded because of all this money printing because it's rewarded speculation, or they're turning into demoralization, which is leading to drugs and suicide. So, you know, this is a distorted economy because of all of the foolishness of what our government leaders have done. And we're, you know, I think America has awakened to that at this point, or at least the large majority,

but I don't think that we've suffered the pain yet. But if we choose the right path, that pain will be mitigated compared to what it otherwise would be. But if we choose the right path, that pain will be mitigated compared to what it otherwise would be. So if we're looking for the truth and we're looking for the wise path and we're taking each step with fear and trembling, we might stumble, but we won't absolutely collapse. And that's what you're warning people to do. And that's what we try to do to people, right? If the market goes down 60% or 70%, and God forbid we had another Great Depression, everybody's going to be scarred by that. But those who are wise and have a risk-managed approach might stumble a little bit. You might lose a little bit, but you're not going to be wiped out because you're prepared for what's coming. So the speculation that I'm seeing,

90% of the investors out there, 95%, in my opinion, are speculators and they don't even know it, Chris. They're speculators because they don't understand history of investing. They don't even know what fundamentals mean. Because I had a conversation with somebody who's been in the business a long time and we had some younger investors and money managers that were in there that started around 2011 and 12. And I was trying to warn, like, look at fundamentals. These matter. And they're like, look, I've been doing this for 14 years, and it hasn't mattered so far. So why do you think it's going to matter in the next 10 or 15 years?

I mean, that's the attitude that's out there. And those are the ones that are running the mutual funds now. Because if you were managing money in 2000 or 2008, quite frankly, you're handicapped. So it's those speculators that are in there because they fully believe that because it's not experienced in their 14 years of their career, that it's not going to happen in their life. Well, I mean, that's been true though, right? I mean, this is their whole 14 years has just been nothing but a wall of central bank printing. And to really put this in perspective, this is, you know, U.S. stocks compared to the rest of the world. Let me move this over so we can see all of that.

This is astonishing to me. This comes to B of A global research. U.S. versus global equities, relative performance. This is the boundary level here, and something really happened here. Again, this is back to the great financial crisis. A, the great financial crisis. A, the great financial crisis shouldn't have happened in the first place, right? Because that was, it happened because Ben Bernanke did something monumentally foolish, which was he thought he could jam the

rate of interest way below what the market needed for, remember this? I mean, I'm old enough to remember this yield-seeking behavior, right? People didn't know what to do with their money because you're getting 0% on your savings. And, you know, you needed, you had, I don't know, you were a pension fund. You had a 75 year horizon. You had fiduciary responsibilities, you're a retiree. You needed yield, but there was zero because Ben said in his infinite wisdom, how zero sound. Well, that's terrible, right? Remember in 2019, right here at this moment right here, we had $19 trillion of negative yielding sovereign debt in the world. What even was that, right? What was that?

Well, that was a massive experiment. It led to this huge explosion right here. And now this is where we're at. And everybody's just sort of shrugged and said, well, I guess that's how the world works now. I don't think that's how the world works now. It's just, if you don't look at this chart and realize, you know, maybe I ought to like be controlling my risk a little. It's not sure you're paying attention. What I see in that chart as well, Chris, is that's U.S. stocks versus the rest of the world. So that's what's bizarre about the environment that we're in.

When you take U.S. stocks and most of your Western stocks, they're ridiculously overpriced. That shows right there. So the herd around the world has said there's no alternative. We've got to chase the U.S. They're chasing the popular things, right? Everybody wants to be there. That's those fads. So yeah, there's tons of danger in the places that are detached from historical reality, but that also means there's incredible opportunities in other areas. And there's going to come a time when you're ridiculously rewarded for

participating there. So I don't think the system is going to end. I think this is a cycle that we've been going through and there's going to be extreme pain on the other side. And there's going to be generations of individuals that are going to change their behavior. A generation will change their behavior following the one that suffers the pain of the speculation. That's our whole job is to get people through this and to discover the wise path. And quite frankly, we all know looking back at our lives and other people's lives, the path less traveled is the one that leads to the greatest reward. And it's a lonely path.

Sometimes there's a time to be with the herd and there's a time to be at the edge of the herd, ready to dart in another path and this is one of those periods where you got to stay close to the exit because when this thing does come apart um it's going to be painful but at the same time to have some rules that can have you play the game have a strategy that allows you to play the game by the rules that are forced upon you in a wise manner also keeps you from making a big mistake because you've been sitting you know just think of the pain and this is what i'm seeing take place right now chris there are people who who are wise enough to

understand we were detached from reality in 2015-16 it's like wow we can't cross any other boundaries so they're sitting defensive and here we are nine years later. And that pain of missing opportunity is wearing really hard on people. And I think with this, especially a lot of those that have thought deeply about things and they try to love the truth are so euphoric that Trump has won in a clear, you know, populist vote. Even the people that voted against him are excited about what he's potentially trying to pull off. But now that hope in the interim period is pulling people off the sidelines. And they're like, hey, you know, he's going to kick this can down the road a lot longer. And I believe that if he can implement these things, there's going to

be tons of hope. But I don't know that the markets are going to be as strong as what most people expect, because right now, everybody's pretty much all in. I mean, it's so many people off the sidelines that the boat is choked. It's more than that. I mean, you have the appropriate number of gray hairs. I mean, we've seen this before. So you mentioned rules. I have a rule, and it comes from watching Wolf of Wall Street. And there's this famous lunch scene between Matthew McConaughey and Leonardo DiCaprio. Right. And Matthew's trying to explain how Wall Street actually works. Right. He's drinking martinis, doing coke, you know, and all of that stuff. And he said, hey, the whole job here is we keep them fully invested. We go home with cash in our pockets at the end of every day. Right. So there's a game.

Right. And the game is of Wall Street is to separate the retail people from their cash. If the retail portfolios go up or go down, it's kind of incidental to their game. They don't care what they care about is that they win, retail is funding that winning, right? And again, it's incidental if both happen to win at the same time. We call that bullish rising market. So I have a rule, Paul, which is that the rug pulls can't happen until they've pulled in every last rube dollar they can. I don't want to speak ill of our listeners. I'm not meaning to, but retail is always, they're the marks in this story. What do they say? If you're at the table 30 minutes into a card game and you don't know who the sucker is, you know, right? So we have

to be aware of this. It's a dynamic. So I've watched this happen over and over again, right? Rug pulls happen at the time of maximum engagement by retail. That's right. All right. So here we see, this is from Michael Guyad on Twitter, and he's the lead lag report. And percent of Americans who think stock prices will move higher is now at an all-time record, not even close, right? Here was the old former all-time record in 2018. But you can see here that lots and lots of bullishness. And this is astonishing to me. Small speculators index positioning.

This is in this S&P 500, the SPX. We're at the 99.75 percentile. Like people have never been this bullish, but it's that complacency. But it's also the habituation, which is, hey, 99.75% of people, including me on some level, are like, well, the Fed's probably just going to bail this out because that's what they've been doing. But this is the quintessential setup for a rug pull. That sure is.

Isn't it? I mean, am I misreading that? How do you read that? No, I see that as perfect setup. I think we're in a situation right now where Wall Street finally has the opportunity with retail euphoria to offload their shares. Because if you're managing billions of dollars, you can't move. If you're managing $500, $600 billion, you know, let's say you've got $100 billion in a position, you can't get out of that easy. It's supply and demand if you flood the market. So that's one of the things we'll see from time to time is stocks will hit a certain price,

and you can see that's typically institutional investors offloading. Well, sometimes it'll break through. And that's kind of one of the best things for an institutional investor if it breaks through and you're looking where the economy is going to be two, three years from now, where retail is looking where it's going to be three, six months from now. So this is a perfect environment to offload shares. I don't have the chart in front of me, but corporate insiders are selling stock at one of the highest rates that we've seen. They're not buying as much as they have in the past. Buffett's got one of the largest cash pile that he's had in some time. So professionals are concerned, and retail is absolutely euphoric.

And you can't blame him, Chris, because the thing that makes investing so hard, okay, is it's always a Monday morning quarterback. It's always looking in the rearview mirror and going, had I done this, okay? Because it's always staring you in the face of the decision you could have made. But the problem is you can make the right decisions and not get the right outcome in the short term. So people tend to think that the outcome determines whether you made a wise decision or not. That's not true. By making the wise decisions over the long term, you will end up in the right path. But we're in an environment where the Fed

has set up a position in the background to where they've rewarded speculation. And I believe, Chris, quite frankly, I mean, I can't prove this. There's enough circumstantial evidence. But I believe that as they implemented their money printing programs, that information went out to those that are close, those big banks and big trading desks, so that there was a big impact. So they've been telling the ones that are closely connected to them, here's what's going to happen. Retail kind of stepped back and watched and watched like none of this makes sense professionally. But those that are that are not have not sold their soul to be close to the the money printing presses have stepped back and said this doesn't make sense. And it's just continued to suck people in and suck people in and suck people in. And now you've just got this retail euphoria. And who knows, like it may last for another six to 12 months. But when this does end, it's going to be ridiculously painful for those who have been speculators and had no clue they were speculating.

Yeah, that's why I'm starting my T-LAC fund. That's trade like a criminal. Just kidding. You know, not not what should happen, but what will happen because, you know, they're going to bail. But they do these rug pulls. And people on our end out here in my, you know, out here on the retail side, I experience them. They're very painful. They disrupt lives. They steal people's sense of the future. Often their savings go poof.

So they're bad, but not from the insider's perspective. They end up with larger shares of companies. They pick things up for pennies on the dollar. They pre-positioned and got themselves ready. They actually get rich during downturns. So that's been the game for a long time. And I know that this is part of the conditioning we have to break through on the retail side. CNBC, MSNBC, it is just a wall-to-wall lunch scene with Matthew McConaughey to keep you fully invested, right? Yeah. But what you do is, from the risk management point, is there's times when you step aside, there's times when you, you know, dance fully and you don't try and catch the absolute tops and bottoms, but you, you have a discipline, right? Like over your head says, invest your plan, right?

Yes. Not your emotions. Right. So you got to have a plan. I think, I think those charts we just looked at say you need a plan. People really should. You should. And I'll tell you, quite frankly, I was having a conversation with a client the other day. We had one stock come in last year under the rules of our strategy. And I don't want to say names or anything like that, because then I got to do all these disclosures. But we had one come in. And I literally, I was like, guys, this is going to be an absolute dog. And we had the discussion on the investment

committee. And I joked and I got to open the doors on my conference room and said, I is going to be an absolute dog. And we had the discussion on the investment committee, and I joked and I got up and opened the doors on my conference room and said, I'm going to go on the back porch and puke, so go buy it anyway. And my point being is there are things that come through the strategy both to buy and both to sell that make me sick to my stomach from time to time because I'm like, this isn't going to pan out. But you have the rules of the strategy to increase your probability of success. You filter down to things that clear your hurdles and then you purchase them and the larger majority work out, but not everyone is going to.

And then there's times where you lower that risk, but you've got to have a plan and you've got to have a strategy. And if you don't, you're left to your emotions. And one thing we learned about the media, or one thing that I believe is clear as day, is the pharmaceutical companies have spent so much time advertising in the media that they have an unusual level of control over them. The same thing has happened from CNBC and the financial media, MSNBC, all of those. There's so much money that's directed in that direction by Wall Street. And I also believe that they're so detached from reality. It's like the Hunger Games. You have the capital where everything's great, and then 90% of the rest of the population really understands reality.

And the problem is, is most of your investors haven't been taught fundamentals and strategies. They've been sold a bag of goods to trust me, passive investing is great. You know, set it on the shelf and forget it. There is a time to set it on the shelf and forget it. If you have money and you buy 1931, 1932, after the market's down 80%, set it on the shelf and forget about it. If it's 1974, after the market has recorrected, you know, that big decline that happened in 74 because of the inflationary burst that happened, set it on the shelf and forget about it. This is not a time to be complacent. It's a time to play the game by the rules that are forced upon you, but have a strategy that will help you lower that risk and understand you're not going to, perfection's not going to happen. It's not, we can strive for it, but it's just not going to occur. If we're not striving

for perfection, if we're not reaching for the stars in our lives, we're never going to reach our full potential. So you strive for it, but you understand I'm going to reach for that star, but I may not necessarily get it. I'm going to strive for perfection in the portfolio, but I'm not going to get it. But I'm going to do my best to be prudent, and I'm going to stand the test of time instead of whistling Dixie through a dark room and get hit in the mouth with a baseball bat. And I believe that's what's coming for a lot of investors, especially with all the euphoria that's out there right now. I agree. And you mentioned something near and dear to my heart, which is that 1974 inflationary burst. Can we talk about this for a second. So this is tracking two things. This is the CPI of currently, and this is 1974 to 1982. So here we have, this is 1974 coming along in inflation, and then it bursts up here into 74,

right? Yeah. And then it falls down and then it bursts back up again, right? And here we seem to be tracking this almost perfectly, and it's just turned up a tiny bit again. Who knows what's actually going to happen? Michael Leibovitz here is saying, well, it sort of depends how you scale these things. But there's a chance we could get another inflationary burst here, right? Because, you know, the way I'm looking at this right now, Paul, is that I think we've been set up. I'm a huge non-fan of Janet Yellen. Oh, me too. She has done some things that I just, I see her as having risen

well beyond her capabilities. I've never been impressed with a single press conference she's given. I've listened to her reasoning. I've read her papers. I'm just left very underwhelmed. And she just seems like a political hack to me and she does what's expedient and convenient in that moment so she's stepping down it turns out now uh ash crypto is suggesting that maybe something big will get exposed who knows but here's what she did in treasury i don't like what she did as fed but in treasury she short-termed us she put us on this short cycle, right? Pushing out stuff onto the short end of the curve, meaning that we're, you know, the U.S. government is funding itself with short paper, four week bills, eight week bills, 17 week bills. And so I just went just, you know, she's stepping down. This is what the incoming administration is going to have to deal with. This is the auction schedule just for this week, Paul.

This is for the 26th, announcement date it's going to auction out on the 27th which is today as you can see from my little thing today 17 four week eight week bills 64 billion 95 billion 90. I remember when those were numbers, Paul, that you would see for the whole month, right? 2.5, 2.5. And now we're just, now we're just rolling these out week after week after week. There's going to be another auction next week, and there'll be another auction the week after that and the week after that. So, so this, this is, this is just ginormous funding that has to happen now. And that's courtesy of Janet Yellen pushing it out to us here on the short end of the curve. Like whoever's going to manage this has got their hands full. And I guess that person has been announced. I don't know if they've been confirmed, but he's a hedge fund guy and hopefully he understands this market

really well because they're going to have their hands full. I sure hope so because the most criminal thing that I believe that the Treasury did was you mentioned negative interest rates several years back. As a fiduciary of our national funds, why would you have not issued all of the 30-year debt? 100-year debt. Yeah. Pass a law, push it through, put it out for 100 years, and fix that, right? Like, everybody out there right now has got a 2.5% mortgage.

The last thing they want to do is sell that and go to a 5.5% or, well, 6.5%, 7.5% mortgage right now. They understand how good a position that they're in. Why wasn't that done on an on on a national level with our national debt? Now, I've got a white paper on my desk that's on my to do list to read. I've been putting it off, but there's something to do with shorter issuance of debt and the liquidity that it brings into the economy. So did we really play these short-term games just to juice the markets, which we've been talking about for the past nine months?

My concern was they're going to run this economy hot into the election, and there may be all this euphoria into the end of the year, maybe spring of next year, and then reality sets in with that hangover that occurs on the other side of it. So I'm glad she's gone. I've never been very impressed with her and myself either. Well, there's an unsustainability to all this too, Paul. I mean, this is total federal public debt. This is an old chart now because it's actually at 36 trillion. That says 34. So just mentally, you know, take this red line to the top up here. You can see the shape of that. It's just going off like that. But of course, given the environment we're in,

Elon Musk has just reposted this. This is from Ron Paul. And he's writing to my friends at the Department of Government Efficiency, DOGE. Don't forget about the big one. Look at this. This is interest payments, right? Now, this could open up a very big can of worms. Obviously, the first question you might ask is, you know, these interest payments back here, Paul, I would call that the cost of having a system manage your money for you, right? The Treasury said, and it's, you know, U.S. government's infinite wisdom. Here's what we're going to do. We're going to create this thing called the Federal Reserve. It's a private cartel.

But you know what? Somebody's got to manage the money. We'll put that off in their hands. And it's a very complicated thing to do. And so we're glad they're doing it. This was the cost. Well, the cost of having our money managed by a third party is now exploding these are direct interest payments that go out that is the cost because

you know what could happen is the treasury could just issue money directly it doesn't have to borrow it into existence so this is going to actually open this this conversation up now and it's been interesting because you've seen like trump has said some things i didn't know you could say like maybe we should eliminate the income tax and people are like okay let's talk about that right like this is actually an open conversation that could be having which is why is our country borrowing money into existence from itself in order to be able to have to pay interest on that to third parties, many of them foreign entities, many of them well-connected insider banks, many of them receiving money that got printed out of thin air to buy the same stuff that they just had

to auction off. This could break at some point. It could. And what concerns me is what the loan sharks do, what title palm places do, what the payday loan places do, what do credit cards do when they get people in a lot of trouble? It's, hey, here's some easy credit. Then your interest rates are going to get really high. And then someone's strapped for the rest of their life with this burdensome debt that so eliminates opportunity. And when I talk to kids in high school, that's what I talk to them about when I volunteer my time to go in and talk to the finance class is like, you need to understand just how debt can be used to produce business.

It's one thing if we're using debt to generate income. It's another thing if you've got debt for a toy, right? You know, reserve your capacity to borrow money to buy a business that can pay that debt off quick. We're not doing that with our country. This isn't productive debt. This isn't something that's going to be generating a dramatic amount of revenue. It's like operating like a credit card that's going to saddle the rest of our life, and people just don't realize it until the burden is so high that now they're strapped. And what I teach to youngers, if you'll make sacrifices when you're in your 20s and you're in your 30s, and you'll keep your debt low, and you'll invest into businesses only, by the time

you're in your mid-30s, you're going to surpass all of those people that are living a higher lifestyle than you there. And in the U.S., it seems like our government's more interested in making people look attractive than standing the test of time. And I think you've reached that point to where when Doge gets in there and Elon Musk and Bipak Ramaswamy get in there and they do what needs to be done, there's going to be some impact somewhere in the economy. You can't pull this much money out and get back to what's important without having some type of pain. But there's good pain and there's bad pain.

Well, and this is, I think people need to understand this too, which is, let me just connect that circle of what you just said. So a trillion dollars of interest payments go out. Federal government has to pay those, right? In a year. So that's a trillion dollars, Paul. So where does that go? Let's imagine it goes to one of the big money center banks, right? Because they have a big bond portfolio for all their clients. So here's a trillion dollars. Here you go. What do they do with it? I'll tell you exactly what they do with it. They round trip it back into the next auction over here.

This next auction over here creates another big pile of debt that has to pay higher interest. Okay? Okay, well, then that higher interest payment goes out. So this becomes, we're in that, this has that runaway freight train feel to it, which is the higher the interest costs go up, the more that money gets round-tripped back into the government, which has to borrow more because it has higher interest costs. The higher those go up, the more they have to round-trip it. This is the one-two shuffle. This is what's been keeping the market super well liquefied. This is why everything goes up and to the right. This is a money machine.

It's not quantitative easing. It's the baton has been passed over to the right. This is a money machine. It's not quantitative easing. It's the baton has been passed over to the treasury. And when they can't do this anymore, the Fed will go back to quantitative easing. But this has been the one-two shuffle, and none of it makes us better as a country. None of this is going into necessarily productive stuff. If it's being productively invested, it's kind of an accident. It's a byproduct. It's coincidental. But that, I just want people to be aware, that is the one-two shuffle. More gets auctioned, makes a higher interest payment.

Higher interest payment means there's more cash out there, a lot of which gets round-tripped back into the next auction, which makes the interest costs go up. And that's the one-two shuffle we've been experiencing for a while. Well, what I'm concerned about is the baton thought. This is the thought that came into my mind. Passing the baton, let's change that just a little bit, Chris. It's a hot potato that keeps getting hotter. So the Fed passed that hot potato to the Treasury. They've done what they can do with it, and who knows how much longer that can last, well, guess who's going to catch that hot potato that's turning into a little lava ball at this point?

Who's after the Treasury to catch it? Except for the U.S. taxpayer and the citizens of our country, and then that's going to be a branding pain that we're going to receive if this administration is not able to pull that off correctly. Hey, let's put this, a trillion dollars is, I still have a hard time understanding what a trillion is, right? It's a number. You can express it in years.

Well, let's say this. I want to show the math here. One trillion divided by $450,000. And y'all, to be quite honest, I struggle doing a trillion dollars on a calculator, so a Google search worked good. That's $2,222,450,000 houses. That's right, right? $2 million. $1 trillion trillion divided by 450,000.

2.2 million houses. If we wanted to build $450,000 houses, 2.2 million. 2.2 million a year. Well, on a trillion dollars interest. So think about the opportunity costs. If we didn't have that debt, then we could be, and I'm not saying the government needs to be building people houses. Okay. That's not my point. I'm just trying to put it in perspective so that people can understand exactly how much a trillion dollars is. How much more affordable would housing be if we had that capital to reinvest back into affordable housing, right? I mean, I'm not saying the government should be building houses and giving them away. We need a free market economy. But that's just money that could be used in other places. More infrastructure, better roads so that our commutes to work are not as long as what they used to be.

There's so many things that that could be used instead of just paying interest because of short-term, short-sighted thinking. Well, I'm kind of hoping we're going to get to this reprioritization. Last time, we did talk about how if this Department of Government Efficiency, like, let's imagine they cut $2 trillion out of the federal budget. I mean, oh, my gosh, think of, Paul, fire and brimstone. This would be terrible. It's going to be awful. But that just would get us back to where we were spending right before COVID hit. Right. So we had this emergency spending that became permanent.

Welcome to the swamp. Right. This is just the world we live in. And so the unthinkable proposition is, can we just like that all that fat we just threw on there? Can we just how about we undo that? Right. And then we're going to have to prioritize at some point. We haven't had to have these priority discussions yet in this country in my entire adult life, which is like, do you want to bomb all these various foreign countries or would you like to have nice bridges and roads?

Right. We haven't traded off anything. And we're getting to that point where I think we're going to have to do the straight offs. Right. Pick is just like normal prioritization. D.C. is lost. I don't think it has the muscle memory. I don't think it knows how to do those have those conversations. I don't know that they know how has a little like something, something in there. It's just turned into like all pork, you know, and not real investment. I think some of that, again, accidental, coincidentally, sometimes leads to good things. But for the most part, it's just stuff, you know, it's not thoughtful. It's not strategic. It's not relevant. Yeah. So, well, and I hate to say it, Chris, but I believe as a country is a people, we worship money. Okay.

Because, because the answer is let's throw money at it and see if that'll solve the problem. And yeah, it has because it makes people look a little bit wealthier on paper, but we've reached the point to where it's priced out the average individual. And one of two things has to give, okay? Either we have to have some deflation, and right now, I don't

think deflation is a horrible thing, or we're going to have to have salaries go up dramatically. And I can tell you in studying history and those of you out there right now, inflation is a much worse evil than deflation because inflation is an equal opportunity punisher of individuals. And if we get, God forbid, hyperinflation, that absolutely upends the lives of everyone. There's no way without being ridiculously aggressive that you can avoid the pain of hyperinflation. But the prudent and the wise can survive deflation. They can turn that into opportunity. So either we're going to have to have asset prices come down some, or salaries are going to have to go up dramatically, or it is going to be an environment in 2030 to where about 5% of the people own everything and 95% of the people have nothing.

Well, and that wealth gap is something that started under Bernanke, was accelerated under Yellen, has been continued under Jay Powell. So I think people need to understand that the Federal Reserve is not here serving the interests of American people. No. It's here doing what it's supposed to do. It's a private cartel. It serves the interests of its main clients. That clientele has been getting wealthier and wealthier, but it's really this Cantile, in effect, which is they just happen to have been closest to the money spigot when it got opened, and they are just leveraging the asset prices and all of that, right? And so

to that, back to your point at the beginning of the show, now to sort of like be comfortable, you need $5.7 million of net worth, right? That's a big number. And obviously that doesn't apply to the vast percentage of the people. So this is the other part of the story is that of, by, and for the people's been subverted, obviously. And the Federal Reserve does not work in the interests of the American people. And the press has never held their feet to the fire about that.

I mean, every single Federal Reserve press conference ought to start with a chart of the wealth gap and saying, hey, Jay Powell, now, Plutarch even, thousands of years ago said, the oldest and most fatal ailment of all republics is a gap between the rich and the poor. Y'all are architects of this gap. Where are you headed with this, and how do you see this turning out, right? And they'll try and evade and pretend it's not their problem and point it back over to fiscal policy, but it belongs to the Fed. They print the money. They make sure the markets go up into the right. They reward speculators. The speculators get wealthier and wealthier and the gap gets ever wider. That's on them. And I think they should have to answer for that. I really do,

because it's social engineering and it's dangerous social engineering. And I would like to know what their plan is. Like, oh, we think Plutarch was wrong. Here's why. We have a white paper. Can I see it? I don't know what the plan is, and I'm suspecting they don't have one. But, you know, you would need a functioning press asking reasonable questions to get that kind of answer out of them. Absolutely. And we don't have that. We just don't.

We have the yous, the Joe Rogans, the individuals that are doing the conversations like this long form conversation that are bringing the truth out, but the media is not doing that. They don't even, they don't love the truth enough. Now, Chris, I think we'd talked about that before on the 5.3 million. So for the listeners, it was right before I picked up, before Chris and I started talking, Zero Hedge put out an article, Americans need a $5.3 million net worth in the most recent survey. I haven't completed the article to find the survey to be considered financially successful. They go on a little bit further to say in interviewing people that an annual salary in excess of $270,000 is needed for a person to be considered successful in the United States on

the November 22nd survey. In terms of net worth, it's 5.3 million. Now, to put this in perspective, that's such a small percentage of the population because according to the Epoch Times, Athrapoli reports, Naveen Athrapoli, according to the Social Security Administration, the national average wage last year was $66,621, while the average net worth for a family in 2022, and this is a family, average wage for an individual was $66,000. The average net worth for a family in 2022 was $1,060,000, okay? And because what used to be a $450,000 house is now selling for a million dollars, the large majority of that is their primary residence. And Chris, here's the problem, and most people get it, but I still have a hard time communicating this from time to time. When we do the retirement plan analysis, I don't use your primary residence. Your primary residence is an asset that you have,

and you can go borrow against it, but it doesn't do anything but take money away from you. So if you're going into retirement and you might have a $10 million net worth, but you've got $9.5 million in that house, well, you can't afford that house because if you've only got 500,000, it's not even going to cover the taxes that are there. So that's an extreme example, but your house is an asset taker in retirement. It doesn't generate income for you. So the bad part about that is, is that house being the largest part of that net worth is not something that produces income for people in retirement. So those people who don't understand that are really typically up in it.

I can't tell you how many people I've met over the past six to seven years, 10 years, really, 10 years. They'll come in and they're like, hey, I've got a $2 million net worth and $1.5 million tied up in the house and I want to retire. And then I have to show them, you're going to have to work another 10 years. You're going to have to sell that house and downsize because it's consuming so much of your budget that you can't afford to retire. So I don't think that net worth is income producing money. Yeah. All those people who are confused about this, they need to read a book by my friend, Robert Kiyosaki called Rich Dad, Poor Dad. And in there, he articulates that assets put cash in your pocket. Liabilities take cash out of your pocket. Everybody's primary residence is a liability. It may have an asset value if you have equity in it that's positive and you can cash that out and go do something with it.

But let's be clear about this. My house takes cash out of my pocket every month, Paul. It does. It does. And then when you got- It's a liability. Let's be clear. Yeah.

Then you got the roof that needs to be replaced. It's got to be repainted. And that's another problem in what I'm seeing a lot of people who aren't doing the math when they're buying rental properties, right? If you're purchasing a property that your rent's not going to pay for it in 20 to 25 years, well, you're 35 to 40 years just off the top of my head, depending upon the numbers, before that thing's really going to be a free and clear asset because you got to service the debt down and then you got to repair the roof. You've got vacancies that are going to occur from time to time, increased taxes and insurance, unless it's triple net lease. So we're distorted across the board. So a lot of people are

speculating on these properties that they're buying, thinking, hey, I've got a rental property. This is great. But what they don't understand is it's going to be 35 or 40 years before it really becomes an income-producing asset because things are so distorted. So we're at a period of time where a lack of teaching in our education system, and I believe that's another criminal thing that has occurred from K through 5 and then even in our colleges, people aren't taught this unless you're in the world of finance. And sometimes people even in the world of finance aren't really taught that because what they're taught to do is sell products. And then all of a sudden, you've got this wave of easy money that has lifted all boats and the tides come in, and people think that they're fully clothed. And when that tide goes back out, they're going to be standing there with no swimming

trunks on and, and suffering the consequences that come along with that. It feels like we're in one of those cycle periods you talked about, right? People love truth. People wander away from that over time. And it's the same thing every time right same dynamic which is um possibly the same thing where there's that saying from that book which is that um hard times create good men and good men create easy times and easy times create weak men and weak men create hard times and that's just sort of the cycle so So it's been easy for a long time. Right. And I think

we're all cognizant of the idea that the Fed can't just print forever. Right. It's just, you know, we all know that on some cellular level, like it can't be forever. But I guess I understand getting habituated into the idea that, well, true, but I can't know when that's going to end. And right now it's good. Right. And so that's, that's where we're at. But the season we're in, if I had to guess, we're not in spring in this story, we're in late fall, you know, and, you know, that's just, it's just like, how many more times can we sort of pull the same rabbit out of our hat and just pretend that, that things don't matter? Um, well, I, I think, you know, time to be prudent, time to take a, manage the risk as best as we can and to really understand where we're at.

But this is why what we do is so important. It's education. It's, you have to, you have to have the appropriate education on this. And most people were not educated. I'm not calling them unintelligent. That most people were not educated. I'm not calling them unintelligent. That's not what I'm saying. They don't teach this stuff in schools. They don't teach you how money is created. They don't teach you what APR on a credit card is. They don't really teach you that your total 30-year cost of a mortgage is actually going to be twice the value

of the house when you first bought it. A lot of things like that, right? But that fundamentally, I think the fundamentals are that you can't live beyond your means forever. That's right. At any level, you can get away with it for longer as a nation, but when the turn comes for whatever reason, it can be fast and it can be pretty deep and there'll be those who are prepared for it. And I think they'll do relatively well, if not even exceedingly well. And a lot of people will be caught blindsided by it and they will do relatively poorly, if not very badly.

And that's just, that's history. That's history. And I want the listeners to know, and you know this, Chris, because we've talked enough. I'm not a perma bear and you're not a perma-bear. We're not, you know, this isn't about being bearish and trying to talk people to being exposed. This is about warning. The Bible tells us somewhere that my people die for a lack of knowledge, okay? You can take that to an extreme.

It's just most people don't know, and most people aren't warning about the risks that are out there. This is about talking about the risk. This isn't about burying in the backyard. I had a conversation with my oldest son last night. He's in construction. He's got a commercial builder's license. He's 25. He's doing really, really well. And I'm like, okay, right now is the time for you to build your war chest. Don't do what everybody else is doing. Build your war chest. So we talked for about an hour and a half last night, and I went back and shared with him an individual that's built a small empire in construction in the North Georgia area. And I was sharing his story about in 2007, he was really starting back in about 2005, 2006, he started building his war chest. So when things came apart in 2008, he stayed focused coming out 9, 10, 11, 12.

Then all of a sudden he started buying, basically buying and bringing in everybody in the contracting process from groundbreaking to complete finish. And he's doing so ridiculously well. And I'm saying, look to those individuals there. Don't admire where they are today. I mean, admire it, but go back and find out what they did to get there and what you'll find. There are people who are here that are lucky, right? Right place, right time. There's always going to be those. But the large majority of those that we're admiring today made some sacrifices back then, and they also made some mistakes. And the difference is they learn from those mistakes and they press on to the greater achievements of the future, the Optimist Creed.

I love the Optimist Creed, Optimist Club, by the way. And I'm just trying to explain to him, and he's like, Dad, it's hard, right? And I'm like, yes, it's hard. That's why they call it discipline. That's why they call it the path of struggle. Build your war chest and be patient. Think where you want to be 10 years from now. Don't think where you want to be six years from now, six months from now. Think where you want to be 10 years from now and then build back into the action plan that you can build today to get there. And then surround yourself with wise advice and people who love you enough to call you out for your stupid behavior. The people who love you the most are the ones that are going to tell you you're headed on

a path of destruction and they're going to try to warn you before you get there. And then it's your choice to heed that warning or run off the cliff with the, excuse me, other fools. Indeed. All right. Well, Paul, that's all the time I have today. I got family coming shortly. It's been great talking with you. For everybody who would like to speak with Paul and his team, please go to peakfinancialinvesting.com, fill out the simple form. Somebody will be in touch with you within 48 business hours. Paul, have a great Thanksgiving.

Thank you, Chris. And to you and all the listeners, may God just bless your fellowship with love and great fellowship and conversation around the Thanksgiving table. And everybody just enjoy family and all the different personalities, even the ones that irritate you from time to time.

Just enjoy each other's company because you're there for a reason. And Thanksgiving and the fellowship that comes around Christmas to me is just one of the things I look forward to. Indeed. Well said. I'm Chris Martinson of Peak Financial Investing. This has been Finance U. So, Paul, have a good one. You too, Chris. you