Category: Strategy
January 7, 2010 ·
The “Barbell” strategy of investing
In the marketplace of ideas, there is no shortage of strategies for investing to produce superior returns. These range from the ‘crackpot’ infomercials schemes that infest early morning television to people that are afraid of the stock market altogether, and also include the research of Nobel laureate economists. The key question for an aspiring investor to ask is what they can learn from each method and strategy.
Let’s start with the Nobel economists. There have been many prominent thinkers who have extolled the virtues of portfolio diversification as it relates to investment in the stock market. The analysis and conclusion of their models are very logical and convincing. When combining securities whose price volatility is not highly correlated, the aggregate effect can be to lower the volatility for the total portfolio, while still preserving average returns. The factor that this analysis misses is the impact of rare, but catastrophic events like a total market collapse. While it is true that portfolio diversification can reduce normal volatility, it is also true that this diversification will not protect against a systemic market disruption.
On the other end of the spectrum, we find people who are afraid of the stock market altogether. Many of the people who express this sentiment were heavily influenced by the stock market crash of 1929 and the great depression. Typically, these people gravitate toward the perceived safety of bonds in lieu of stocks. The implicit problem with this strategy can take one of two flavors. The first is if the bonds are conservative low-interest instruments with guaranteed principal values. There is a significant risk that the value of these bonds will not keep pace with inflation. The other side of risk with bonds is if the investor seeks out high-risk bonds that pay out attractive interest rates, but are issued by companies in dangerous financial condition that may default on their debt obligations.
The final piece of the spectrum is the ‘crackpot’ schemes that are pushed by slick-sounding hucksters. Most of these so-called ‘fool proof’ systems promise fabulous returns by following a few over-simplified steps. Typically, these systems are designed for a particular market environment. When the market shifts, the strategies that once produced tremendous wealth can suddenly generate crippling losses. A prime example is the ‘house flipping’ mania that swept across the country during the real estate bubble. One investor after another reported tremendous gains from buying houses, doing modest rehab work, and then re-selling the house for a significant profit. This system seemed to be working great until the market shifted and the speculative buyers disappeared. At that point, there were suddenly a large number of people holding investment properties that they couldn’t afford to pay the mortgage on, could no longer afford to rehab, and were not able to rent out for a sufficient amount of money to pay the mortgage and taxes.
Each of these strategies carries strengths and weaknesses. The optimal way to blend these factors in an advantageous way is what has been affectionately labeled the “barbell” strategy. The basis for this name is based in the notion of combining relatively stable assets such as income real estate with speculative investments such as stock options. Traditional investment theory recommends channeling funds into the middle of the investment spectrum with a diversified stock portfolio. However, the impact of rare events has shown a need for stability that stocks do not adequately provide. Thus, in order to capture upside growth opportunities it is optimal to speculate with a small portion of the total investment portfolio so that the risk of loss is mitigated by the stable portion of your portfolio.
In the end, this style of investing defies almost all of the advice that is popular in the news media. Traditional advice is tilted toward primary investment in the false sense of security that is offered by a ‘diversified’ portfolio of stocks. Unfortunately, this strategy lacks the ability to withstand rare market disruptions, while possessing a limited upside growth opportunity because of the portfolio’s diversified nature. Prudent investors should seek to build a base of returns from assets like income real estate that are spread around in fragmented markets so that speculative opportunities can be pursued without endangering the base portfolio value.
Podcast: Download
October 29, 2009 ·
The Bottom Line: Current Investment Outlook
As with all difficult times, it can be very hard to see glimmers of light in the midst of economic freefall. With the current trajectory of job losses, economic contraction, and government intervention into the economy, there are many people who are on the verge of giving up hope for a brighter future. The most important point to consider in this situation is that national policy is not within the circle of influence for most individuals. What this ultimately means is that we must focus our energy on the things that we can do within the political environment we live in.
Thus, our attention must shift away from the speed in which the economy is being nationalized and move toward the ways we can position ourselves to avoid personal financial disaster from said circumstances. We must proactively direct our focus off of the way financial markets are being manipulated, and shift in the direction of learning how we can structure our portfolio to avoid the market manipulation entirely.
Make no mistake that there are very difficult times ahead. The generations that were swept to wealth on the bull market of the last 25 years will soon realize that the fundamentals driving previous market rallies are no longer present. The notion of comfortable retirement may extend out of reach for ordinary workers who follow the dogma of savings and investment in the stock market, as returns disappoint and consumer prices skyrocket from government monetary policy.
As proactive, astute investors, it is the responsibility of all of us to structure our finances in such a way that our future is not dependent on the actions of a political movement. At the Financial Freedom Report, we recommend accomplishing this goal through investment in rental real estate located in sensible markets, financed by high- quality, long-term debt. By maintaining a keen focus on the actions that are within our sphere of influence, each of us can create a financial future that remains bright in the midst of chaos and uncertainty in the marketplace.
Podcast: Download
October 22, 2009 ·
The Creating Wealth Show #105:
Propelling investment success using econometrics and
competitive analytics
In the one hundred and fifth episode of Jason’s extremely popular Creating Wealth show, he interviews David Savlowitz, the head of Competitive Analytics (CA), a niche full-service market intelligence firm. In this show, David explains the way that his firm uses a multiplicity of data to generate more robust information for their clients than can be obtained by the simplistic scorecards that are employed by most of the financial media. The methods that CA employs analyze supply and demand by using statistics, econometrics, predictive modeling, comprehensive research, and applied mathematics.
In this show, Jason talks with David about the ways that Competitive Analytics uses comprehensive data analysis to drive prediction models for their clients. One of the methods that they frequently employ is an economic composite score that is based on a multiplicity of weighted indicators. When applying this methodology to the general economy, David’s model is predicting the bottom of the economic cycle in Q4, 2009 with a return to equilibrium by Q4, 2011. Furthermore, David’s models are forecasting a U-shaped recovery that will have an extended trough. This stands in sharp contrast to previous V-shaped recoveries that experienced an immediate “bounce back” from the market lows. The reason for this extended trough is because a significant adjustment needs to be made in order to equalize the debt-financed over-consumption that fueled the recent asset bubbles.
The unique part of David’s methodology is the fact that his team uses a very wide variety of input variables in an attempt to capture future items that may become big swing factors. He rightly understands the implicit danger that can be present within quantitative economics for people that do not fully understand the analysis. This danger stems from the fact that econometric analysis uses trends in the past to predict the future, and thus cannot anticipate the impact of events that have never happened before. The importance of this insight comes from the fact that rare events like September 11th, 2001, the Russian Financial Crisis, and the collapse of credit default swaps were never incorporated into any prediction models because they had never happened before.
Each of these events had an unfathomable impact on the marketplace that left people who were blindly following technical trends of the past absorbing unbelievable losses (or pushing those losses onto the taxpayer in the form of a government bailout). As a point of reference; the hedge fund “Long Term Capital Management” was the brainchild of Robert Merton and Myron Scholes. It made heavy use of econometrics to undertake highly leveraged arbitrage trades in the bond market, but nearly collapsed the financial markets after the Russian Financial Crisis in September of 1998. This became the first iteration of a “too big to fail” argument, and is being used as the precedent for the government bailouts of financial institutions that are currently being pushed on the marketplace.
This is not to say that quantitative analysis and econometrics are implicitly dangerous. It is simply to say that it is a tool . . . a very powerful tool that needs to be understood before it is used. When applied by knowledgeable professionals, it can generate valuable insights. When given over to pseudo-intellectual or short-sighted agents, it can become a tool of mass financial destruction as the algorithms become an item of blind faith that drives insane investment decisions. As with all tools, the result depends largely on how it is used. Thankfully, David keeps the scope and limits of his analytics in perspective. A strong dose of this perspective is highly advised for anybody that seeks to incorporate econometric analysis into investment decisions.
Podcast: Download
October 19, 2009 ·
The Business of Life
By Douglas J. Utberg, MBA
Winners Take Action
The world that we live in is not short on information. In fact, the preponderance of information that we are constantly bombarded with can create a state of constant confusion that scares us into inaction. In the martial arts, this phenomenon is referred to as the “chattering monkey mind.” The key to success lies in filtering down to the useful information – and then decisively taking action.
This is especially important to remember since the preponderance of success and financial literature revolves around “systems” and “strategy.” This is especially true if you have ever suffered from insomnia and run across an “infomercial” on late-night television that advertises a “risk-free” system to make profits with “no money down.” It can certainly be fun to laugh at some of these marketing gimmicks, but even the best strategy in the world is completely useless unless you are willing to act.
Action involves incurring the risk of failure and criticism from friends and family. The factor that most financial books and infomercial systems tend to under-emphasize is the importance of taking the leap. The hitch is that the action must be guided by intelligent thought. Thought without action produces no results, because the strategies are never implemented. Action without thought is effectively the same as gambling, and only works if you are in exactly the right place at exactly the right time with exactly the right system . . . and even then, it may not work the next time you try it.
The proverbial “key” lies in being what Bill Fitzpatrick refers to as a “thinking person of action” . . . namely, somebody that thinks actively, absorbs information quickly, and acts decisively when the opportunity presents itself. In order to achieve this kind of coexistence between thought and action, it requires that your mind be constantly trained on thoughts of opportunities so that it is always ready to act.
Best Wishes, Doug
Please feel welcome to subscribe by
following the link below:
www.BusinessOfLifeLlc.com
Podcast: Download
September 28, 2009 ·
A recent article published by Matt Tiabbi in Rolling Stone magazine articulated the role that Goldman Sachs is believed to have played in market manipulations since the Great Depression. The thesis of this article is that Goldman Sachs places itself in the middle of speculative bubbles by selling financial instruments that it knows are of low quality, and then re-purchasing them at depressed prices after the market bubble collapses. In the midst of the populist political rhetoric and conspiracy theories peppered throughout the article, there are some important points that can be taken away by those who are astute enough to see them.
The most important point is that investment banks and financial institutions have an incentive to drive up asset bubbles, and then pick up the pieces after a collapse and repeat the process. The reason why such nefarious activities perpetually persist is because financial companies tend to have very strong lobbying influence with both political parties. As an aside, it is important to divorce ourselves from the foolish notion that “Wall Street” is for or against Republicans or Democrats. Wall Street is in favor of whoever is in power, and politicians are typically in favor of whoever gives them the most money.
Regardless of the inherent morality (or lack thereof) in the actions of financial institutions, it is important to understand that simply complaining about their despised actions will do absolutely nothing to remedy the situation. The only way that corrupt brokerage houses will be held to task is when a market movement away from their financial products dries up their river of capital. The reason for this is because political restrictions will always be laced with loopholes, and even extreme financial malfeasance will be bailed out by the reigning political powers under the notion that said institutions are “too big to fail.”
Thus, it becomes clear that the only way to side step the ”Bubble Machine” of Wall Street is to develop a portfolio of direct investments that you personally control. The reason for this strategy is because direct control allows you to determine when assets are bought, sold, refinanced, etc. For example, if you own a portfolio of rental properties, you can personally make the call when to raise rents, refinance the properties, buy new investments, and sell to trade up to larger deals.
Whenever your investment assets are outsourced to Wall Street, fund managers get placed in control of all these decisions. Thus, it should not come as much of a surprise when these same fund managers funnel your resources into a speculative bubble in the hopes of capturing large bonuses on the returns generated while the bubble is inflating, and then take those returns to the bank after the bubble pops and your investment assets experience a sharp reduction in value. Direct investment allows an individual to select investment areas that are less susceptible to the effect of speculative bubbles through prudent analysis and due diligence.
Over the coming decades, it is likely that many more bubbles will expand and pop as the government attempts to use monetary expansion and market manipulation to mask the fact that it is unable to meet its entitlement promises that have been used by politicians to secure elected office. Unfortunately, many people will be taken along for the ride, and have their wealth systematically destroyed by the bubble machine. As prudent investors, each of us needs to be aware of this market reality and actively step around the manipulations of government and Wall Street so that the bubble machine passes us by while unleashing its path of destruction on the financial world.
Podcast: Download
September 16, 2009 ·
Jason Hartman’s 10 Commandments of Holistic Survival (Part 2)
#6 – Thou Shalt Control What Is Put Into Your Body
#7 – Thou Shalt Defend Yourself
#8 – Thou Shalt Possess and Control Universally Needed Goods And Resources
#9 – Thou Shalt Protect Your Own FIR
Finances, Identity & Records
#10 – Thou Shalt Have A Support Network
http://HolisticSurvival.com
6. Thou shalt control what is put into thy own body
Health and nutrition are an important part of survival in a catastrophe. Thus, it is extremely important that you control what you put into your body so that it can work at top performance and heal itself adequately in a crisis situation. This is doubly important if you have a family to take care of, because crisis situations will require extensive manual labor and may also see you needing to care for small children who do not have the capacity to care for themselves. One thing that can be done as a regular form of practice is to prepare meals without processed or packaged ingredients. Processed food is certainly convenient, but it is not likely to be available in a crisis situation.
7. Thou shalt defend thyself
It is entirely likely that a crisis situation will invoke looting and rioting. It is also likely that these activities will be heavily concentrated in urban areas with large populations of people who will be simultaneously without resources. Desperate people tend to do desperate things. Similarly, desperate measures will create lots of chaos, and this chaos is frequently concentrated in the areas where there is the most desperation. The principal areas expected to be the target of chaos are metropolitan urban areas with high levels of population density. The more remote suburban, exurban, and rural areas are not expected to be in much danger from riots, due to the difficult of organizing a mob sufficient for it to move out into the suburbs. Since it is not practical to move out of the city for the express purpose of being safe from riots, it is highly advisable for people living in dense cities to engage in very careful preparations for the contingency of a descent into chaos.
It is also possible that you will need to defend your family from attackers, even if prudent preparations have been made. Precautions such as security systems, martial arts training, and access to weapons may help to ward off attackers if conditions turn desperate. It is important to note that many items that are not typically considered as “weapons” can be used to defend your family if necessary. Regular household items such as steak knives, tire irons, mop handles, and frying pans can be the difference between keeping your family safe and being looted by rioters.
8. Thou shalt possess and control universally needed goods and resources
The current economy depends upon currency-based exchanges. In practical terms, this means that everybody accepts dollars in exchange for goods and services. Consider what will happen in the event of severe inflation. What if dollars decline in value, and are no longer accepted in exchange for food, gas, or clothing? In the event that commerce regresses back to barter and trade, you will want to control goods and resources that are universally needed so that you can trade them for other things that your family requires. Typical barter items are things like non-perishable food, gasoline, medical supplies, over-the-counter medication, and maybe even gold, silver, cigarettes, alcohol, or ammunition. This strategy can also be extended to your investment portfolio. The most effective way is by shifting your investments away from “paper assets” such as stocks, bonds, or mutual funds, and purchasing items of universal need, such as rental housing. By denominating your investments assets in “things” that everybody needs, it will place you in control of critical resources when they are needed the most. For more information on this strategy, visit www.JasonHartman.com.
9. Thou shalt protect thine own FIR (Finances/Identity/Records)
One of the first things to happen during times of chaos is a drastic rise in crime and theft. Not surprisingly, identity theft is one of the fastest-growing classes of crime. Keeping your identity safe requires that some prudent precautions be taken so that you do not become an easy target.
One of the first things to do is limit your internet footprint to only the providers that you fully trust, and check your credit report regularly to see if anybody is accessing your information. In addition to this, it is important to keep all personal documents and information locked away where it cannot be easily accessed or stolen. Also make sure to shred any documents you are throwing away that contain personal information or account numbers. When safeguarding your identity, consider the fact that times of chaos may be dealt with by the government in a very oppressive fashion. It may become necessary to drop “off the grid” in order to protect your family. Take some time to consider what you will do if this course of action becomes necessary.
10. Thou shalt have a support network
Consider who you will be depending on for support in a time of chaos. Also consider who will be depending on you. If a rapid deterioration of economic and societal norms emerges, it will be very important to have a strong community of people in your local vicinity. Creating and maintaining this community is one of the strongest defenses that you can build against a crisis or catastrophe. By pulling together the skills, resources, and expertise of people in your general vicinity, it will help to organize your efforts, undertake larger tasks, and make you a less attractive target for looters. Make sure to keep networking . . . of all the commandments, this may be the most important for protecting your family.
Podcast: Download
September 15, 2009 ·
Jason Hartman’s 10 Commandments of Holistic Survival, Part 1
#1 – Thou Shalt Think Independently, Understand the Threats And Become Educated
#2 – Thou Shalt Be Prepared To Do Without
#3 – Thou Shalt Maintain Control
#4 – Thou Shalt Be Self-Sufficient
#5 – Thou Shalt Practice The Primitive Annually
http://HolisticSurvival.com
The notion of Holistic Survival is based on the idea that survival in uncertain times requires an all-encompassing or “holistic” approach to be successful. As a way to articulate this principle, we have prepared “The Ten Commandments” of Holistic Survival as a guide for preserving your personal and financial wellbeing in the current volatile environment. The importance of these guidelines is found in the fact that the world is becoming more complex and uncertain at a frighteningly fast pace. Thus, the strategies of yesterday are no longer suited for the environment of tomorrow.
The Ten Commandments:
1. Thou shalt think independently
Being prepared for the unexpected requires people to develop an aptitude for thinking outside the box. It is important to think about the types of disasters that can occur in the area where you live, and what you would do in response. In crafting your plans, it is also important to anticipate the response of other people who are not prepared. It is very likely that people who have not adequately prepared for disruptions or problems will resort to rather drastic measures such as looting or rioting. Thinking independently includes adequate preparation to provide for your family, along with proactively avoiding the likely focal points of increased chaos. Another important part of being prepared is to learn the emergency plans that have been established for your community. This will enable you to gain a preview of how events are likely to unfold in response to a state of chaos.
2. Thou shalt be prepared to do without
This commandment revolves around having an emergency plan for your family. This emergency plan should be inclusive of planning for going without supplies such as food and water, along with going without information or direction from the political authorities. It is also important to understand that your family may not be at the same place when a chaotic situation unfolds. Furthermore, contemporary means of communication like the internet and cell phones may not be available. In this kind of a situation, communication through Citizens Band (CB) radio and ham radio may become the only reliable means of communication. Of these options, ham radio is the only broad-reach communication option that is outside of the traditional communication grid. Each family should develop a holistic emergency plan and be prepared for the chaos that frequently results from crisis situations.
3. Thou shalt maintain control
The crux of this commandment is to stay cool and calm in a crisis situation . . . similar to our Creating Wealth commandment to maintain control of your investments. Stay positive and avoid excessive stress or panic. Panic only places extra stress on top of a highly stressful situation. Controlling your emotions will allow you to keep a level perspective, and place yourself in a position of strength. Staying positive is doubly important because of the high likelihood for panic to spread out to other people in crisis. Many social problems can result when panic becomes a pandemic and people make rash, emotional decisions out of fear. Many downcast people eat, spend money excessively or become addicted to abusive substances during difficult times. These kinds of self-destructive behaviors need to be proactively avoided so that you will be able to maintain a cool head and clear mind.
4. Thou shalt be self-sufficient
Self-sufficiency is primarily about having the ability to provide for your own food, clothing, water, shelter, medicine, transportation, communication, power and plumbing over an extended period of time.
ost families prepare for this contingency by assembling an emergency kit. You should seek to have sufficient supplies for you and your family to survive for up to 3 months on your own without doctors, grocery stores, or other modern amenities. Consider what you will do if there is no medical care available in your area, or if all of the hospitals are swamped. In the event that a disaster occurs, it is likely that all of the local grocery stores will be out of stock within a few hours. It is important to ensure that your family is prepared for this contingency.
5. Thou shalt practice the primitive
Every year you should prepare by drill or practice to return to the primitive. This means intentionally depriving yourself of the conveniences that we have become accustomed to. The easiest way to practice this is to go on a yearly camping trip and live in the wilderness. Other ways to practice are turning off your power or water for an extended period of time. The importance of these drills is to help your family to develop the skills of rapid adaptation to abrupt changes in the amount of contemporary comforts available.
Podcast: Download
September 10, 2009 ·
This http://JasonHartman.com video as you to “take stock” of the stock market during this economy. It explains how the stock market works, what it was intended to be, and how it has changed into a gambling casino. http://CreatingWealthPodcast.com.
Conventional wisdom has long held that the way to become wealthy over the long term is by compounded investment in the stock market. The reason for this was quite clear when one looked at the chart of historical returns. By making very modest investments at regular intervals over a long period of time, small investors could create very large amounts of wealth. This line of thinking is what has prompted most employers to source their 401k retirement plans with mutual funds that invest in the stock market.
Unfortunately, the movement of stock market investment into the ‘main stream’ of America has caused it to become less of an investment vehicle and more of a gambling casino. The primary purpose of the stock market is to provide companies with a means to raise capital for business investment by selling a partial ownership stake (also known as a ‘share’ of ownership). Typically, investors were rewarded for their investment by the payment of dividends from the company profits. Thus, stock market investing was originally based on the notion of finding a company that was likely to make sufficient profits to pay healthy dividends.
This sentiment changed as the secondary market for trading stocks became more popular. A ‘primary’ issue of stock happens when a company issues more ownership shares.
A ‘secondary’ stock transaction happens when one investor exchanges an existing ownership share with another investor. This is where the stock market turns into a casino. When the focus of investment shifts away from the ability of the company to viably pay dividends on a consistent basis toward the probability that the secondary market will pay more for the company stock at a future date, stock investment becomes much more akin to gambling. When returns are primarily based on price appreciation, continued growth in market value requires a perpetual stream of new buyers. This phenomenon is true for both stocks and real estate, and explains the recent booms/busts very thoroughly.
The only factor that can push up the entire stock market is if there is an aggregate increase in investment capital (similar to how increases in the money supply from the Federal Reserve drive price inflation). When corporate profits grow, it is natural to assume that more capital will be attracted to the market. However, when market values rise faster than corporate profits, the only cause can be a net influx of investment capital.
In the United States, there were two ‘Sledge Hammer’ events that sparked a colossal 25-year bull market for stocks. The first was the passage of the Employee Retirement Income Security Act (ERISA) in 1974, which created standards and stability for company-sponsored stock market investment plans that dramatically increased the supply of equity capital. The second was the pairing of tax cuts in the 1980s and a significant reduction in the cost of debt capital that spurred a rapid growth in corporate profitability. These two events combined to generate a massive increase in stock market investment that pushed values sky-high.
However, these massive gains came with a bit of a shadow. This problem has been created as investors stopped directly buying stocks of individual companies and started investing in funds where a manager buys and sells the stocks. Now these brokers and managers have control over incredible amounts of other people’s capital. This control gives them the power to create or destroy tremendous amounts of value based on the decisions that they make. It also channels market activity more and more toward ‘gambling’ as managers seek to maximize value appreciation. (This set of incentives is very adverse to investor interests, as managers have incentives to take insane risks, since big gains mean tremendous bonuses and losses only mean that they get fired.) Furthermore, most managers charge very hefty fees for their services, which cut into the net investor returns. (Thus far, we have assumed that the fund managers are honest . . . when the ‘crook’ dynamic is factored in, the risks increase significantly.)
Fundamentally, there are four principal risks implicit in this kind of stock market investing:
1) Your broker may be a crook.
2) Your broker may be incompetent.
3) Even if your broker is honest and competent, he will take a big slice of your profits in the form of fees and commissions.
4) These problems are not limited to your brokers . . . all of the middlemen like stock promoters, CEOs, bankers, and all other flavors of hucksters or salesmen.
On top of all these risks, there is a bigger dynamic to consider. Currently, corporate profits are taking a very steep tumble relative to their prior levels. In addition to this, most of the working population is already invested in the stock market, so there is no large pool of capital to attract so that valuation can continue to inflate. Finally, the current market Price/Earnings ratio is well above its historical average. This means that the market is discounting-in a future increase in corporate earnings. If that increase does not come, or takes longer than expected, it will most likely result in market values decreasing.
Finally, there is a longer-term risk of very average performance. Even if the anticipated recovery happens as expected, there is no looming influx of capital to push the market up at explosive growth rates. This means that future market appreciation will look very average by historical standards. (Granted, nominal values will be pushed up by inflation, but real returns will still be very much in the ‘average’ category.)
Ultimately, the stock market is in the midst of a ‘return to reality’ from the large rates of return in prior years. The fundamentals are pointing toward difficulty in maintaining prior growth rates out into the future, including the risk of more near-term price compression if the forecasted economic recovery does not materialize as expected. Granted, there is a probability that the stock market will recover better than expected and produce favorable returns. However, prudent investors should seek to diversify their investment activities into other emerging areas of opportunity to limit exposure to the stock market.
Situations such as prudent real estate investing with a small to negligible downside and significant to infinite upside are what economists call a ‘free option’ . . .principally because the investment volatility runs mostly in the ‘up’ direction because of the downside risk mitigation. Needless to say, these are the investments that we would like to create.
Podcast: Download
September 9, 2009 ·
In today’s video from http://JasonHartman.com, learn how to continually make NON-TAXABLE money from properties investment. http://CreatingWealthPodcast.com
Platinum Properties Investor Network has a series of core concepts that we communicate to our investors. One of these is to ‘Refi ‘Til Ya Die’ with your rental property portfolio. While this description may sound a bit snarky, it is a very powerful strategy for multiplying your wealth over the long term.
The most unique part of this strategy is that it stands in stark contrast to the popular strategy of ‘flipping’ properties by buying and quickly re-selling them for quick profits. The strategy that we recommend is the exact opposite of this. At Platinum Properties, we advocate buying and holding prudent rental properties over a long period of time. This enables investors to build real wealth, instead of constantly churning properties (and creating taxable gains).
There is another very powerful force behind our strategy of buy and hold investing. That power comes when the rents and value of your property increase over time. Typically, an investment property will start with low cash flow, and will grow in profitability as tenant rents are increased. This increase in revenues carries with it a tremendous tool for growing your wealth.
The way that you employ this tool is to refinance your property for more than your original purchase price, based on the increased cash flow. This will allow you to re-invest the amount of your loan that exceeds the original purchase price. And here comes the kicker . . . these net proceeds are not taxed!!!
The reason that you will not owe taxes on the re-financing of your properties is because loans are not taxed. Since you are taking out a loan instead of selling the property, no taxable transaction is triggered. Granted, capital gains can be deferred via 1031 exchange, but you will still lose 5% to 6% of the property value off the top from realtor fees. Thus, investors can ‘Refi ‘Til Ya Die’ and legally avoid paying taxes on the increased loan amount of their properties. (In addition to this, the increased interest payments from your new loan will reduce the tax burden of your regular cash flow.)
These strategies can super-charge wealth creation by allowing investors to capture their equity growth for re-investment. These perpetual re-investments accelerate the natural compounding of your investment portfolio. It also carries the benefit of consistently increasing your use of fixed-rate debt as a shield against inflation. Prudent investors realize the incredible power of this strategy, and should seek to capitalize on it to build their wealth during these increasingly difficult times.
Podcast: Download
September 8, 2009 ·
In this article by Mark MacVay for http://JasonHartman.com, you will see exactly how inflation acts like a termite on your investments, and how to use the power of inflation to create wealth instead. http://CreatingWealthPodcast.com
Do your investments have termites? It may sound like an odd question. But if you’re like many Americans with the typical savings accounts and mutual fund/stock portfolios, then you are subjecting yourself to the ravages of a specific type of termite which is slowly, and clandestinely devouring away at your financial portfolio, taking away the prospects of a secure retirement with it.
What type of termite could do such a dastardly thing, you ask? This termite is called inflation and it is both the scourge of financial security and the product of our current monetary system.
Allow me to explain. Most of us have been brought up to believe that saving and investing are good and getting into debt is bad. While I certainly agree with this general sentiment, it contains one important fallacy – it presumes that the money supply in our economy is static. The reality could not be further from the truth; the money supply is increasing at an ever-faster pace. You see, every dollar added into the economy cheapens those already in existence, and the Federal Reserve in conjunction with the government are increasing the supply of dollars and credit at an alarming rate. This means that your savings and portfolio accounts are being reduced in value as the dollars they convert into buy progressively less and less. Sadly, this termite assault on your wealth is ongoing and relentless.
But, you ask, I heard on the radio that inflation was under control, that the CPI (Consumer Price Index) was relatively low… what gives? Suffice it to say that the CPI is sufficiently manipulated by the government to give the public a much more benign view of inflation than actually exists. To see just how ravaging this inflation termite is, simply look around you – oil, commodities, health care, education, housing, food and now even postage have been going up substantially in the last few years. These increases far eclipse the relatively modest gains in the stock market over the same time period.
Now, at this point, I presume you’re scratching your head and asking… well, how do I eliminate this termite? How can I secure my financial house from this destructive insect? The truth is that there is no Orkin man, no Terminix for this type of pest – that would require a major overhaul of our monetary system. Alas, we are stuck with this troublesome termite for the foreseeable future.
However – and this is where it gets interesting – while you can’t eliminate this pestilence, you can use it to your own advantage to maintain and grow your wealth rather than have your wealth eaten away. How, you say? By properly turning the tables on our financial system and becoming a debtor.
Heretical, no? If you recoiled in disgust, I understand as it runs counter to the way many of us have been brought up. But allow me to elaborate. By debt, of course, I don’t mean going out and indulging yourself on fancy meals, cars and vacations. There is no long-term benefit of purchasing those items using debt. In contrast, by selectively purchasing tangible assets which throw off cash flow, and by buying these assets with the bank’s dollars in the form of a mortgage/loan, you achieve the financial equivalent of a double play. Long term, your asset most likely increases in price as more and more dollars flood the economy, and, just as importantly, you are paying for that asset year after year in progressively worthless dollars thanks to the inflation termite eating away at the dollars you’re now repaying to the bank. Not only is this a shining example of leverage, it can also be thought of as a form of financial martial arts – you are harnessing the energy of your opponent (inflation) and using it against him.
Of course, one of the best asset classes with which to follow this path is investment real estate, a proven path to wealth for many and a good hedge against inflation. In the interim, your tenant helps pay your debt obligations while you allow the aforementioned economic forces to work their magic. Of course, you have to do your due diligence and choose your properties and loans carefully. Nevertheless, this is a powerful technique to build long-term financial wealth.
How ironic that the best defense against the termite of inflation is an investment property with a big mortgage!
Podcast: Download
September 7, 2009 ·
In today’s video from http://JasonHartman.com, we will look at the different types of investor personalities. Some people are better suited for riskier investments, while others need slow and sure investments. http://CreatingWealthPodcast.com
When engaged in the business of living our lives, it is critically important to ‘know yourself’ in all things that you do. In the context of personal relationships, we must learn about ourselves to develop healthy relationships with others. Harmony requires that we be up-front and honest. In an ideal situation, the strengths of one person in a relationship will compensate for the weaknesses of the other.
In the world of investing, knowledge of yourself is no less important. The most important thing that investors can know about themselves is the degree of risk and volatility that they are willing to accept. Similarly, they must be honest about their willingness to take action and close a deal. This principle is doubly important since most investment ‘systems’ focus exclusively on the academic side of deal analysis. It is certainly important to find good deals, and analyze them quickly, but all of this can be for naught if the investor lacks the willingness to take action at the critical moment. Things can also fall apart if the investor does not follow through sufficiently to see the deals through closure and into implementation.
The truth is that there are two types of investor. One type is suited for assembling ‘deals’ that can generate tremendous returns. The other is either uncomfortable with the risk and uncertainty implicit in assembling deals or is unwilling to take action at the critical moment. This type of investor is typically better suited to steady compounding of investment returns over a long period of time to create wealth. It is important to note that both investors can be very successful. The path of the deal maker tends to achieve wealth more quickly than the ‘slow and steady’ investor, but either of them can realize tremendous amounts of success with the proper balance of analysis, discipline, and the willingness to act.
In the end, it is much more important that you know yourself than that you know how to execute a particular system or strategy. Systems come and go . . . strategies constantly change with the business environment. But knowledge of yourself is a priceless asset that will serve faithfully throughout the tenure of your life.
Podcast: Download
September 4, 2009 ·
In this video from http://JasonHartman.com, you’ll find out why the illiquidity of real estate makes properties investment an excellent investment choice, and how some “great deals” can turn into fiscal nightmares. http://CreatingWealthPodcast.com
At times you hear people talk about the volatility of the real estate market. If you want volatility, try the Wall Street conspiracy. They’ve got volatility. Why? Because they also have liquidity. . . instant liquidity. Anyone can log onto their account and buy or sell a stock with the click of a mouse.
Real estate is a cat of a different color.
It is an illiquid asset. Even if you woke up one morning determined to sell a piece of property and there was a buyer equally set on the purchase, chances are it would still take two weeks or, more likely, a month before the deal could be closed. It’s a much more complicated process. An offer must be made and accepted, financing arranged, third party inspections made, title search, etc., before an official transaction can ever be made.
This lack of liquidity is a good thing when it comes to investing. It’s what makes real estate such a stable, appreciating asset. It’s also why, if you’re living paycheck to paycheck, you shouldn’t use your lunch money to buy income property. If the time comes that you need to get out of it quick, you might not be able to. Investing in real estate should be done for the long term with money you don’t need for day-to-day survival. Then you can leave it alone and watch it grow.
Why the Best Deal Isn’t Always (From the JasonHartman.com blog)
I came across an article recently that illuminated exactly why we believe our strategy of having local property managers in various areas around the country saves Platinum Properties Investor Network clients from similar tales of woe. It’s all about micro-targeting location before you EVER pull the trigger on a real estate deal. Is micro-targeting important? Only if you want to avoid having a great $1,000 positive cash flow deal turn into a $30,000 legal hassle.
Gather ‘round the campfire kids, and learn why you have to look further into the ‘great’ deal before you buy it. In this example, the buyers were in the early days of their income property career and got starry-eyed over the prospect of a no-money-down deal. Who wouldn’t want terms like that? Talk about leverage! Problem was, in their haste to not miss out on this ‘deal of the year’, they didn’t check out the local area thoroughly.
What sorts of problems? To start out, the entire block was occupied by an army of drug users and dealers, plus a host of other nefarious characters. No matter how nicely that property was fixed up, think a stable renter is going to want to move his or her family into that war zone? With crumbling ruins flanking it? Next, our intrepid investors were enmeshed in court with fire code violations and a property manager up for manslaughter. Gulp.
Bet they wish they had been getting their real estate recommendations from Platinum Properties! That’s why we have local managers with feet on the ground and an intimate knowledge of the neighborhood.
Podcast: Download
September 3, 2009 ·
Economic collapse is a real possibility in this financial climate. Are you prepared for the worst should society implode from the financial stress? This video from http://JasonHartman.com introduces you to viable survival strategies in today’s economy.
In the midst of financial collapse, massive government deficits, high unemployment, bailouts, and inflationary spending, there is a rising tide of people who are becoming skeptical about the prospects for continued economic growth in the near future. There are many people who are sounding the alarms of doom, but there are precious few who are offering viable strategies for individuals to prosper in such an environment. One of the places where these strategies live is Holistic Survival.
Holistic Survival is an initiative created by Jason Hartman to address the needs of people to protect their wealth, family, and property from the economic turmoil that is expected to come. As the castle of debt created by the government through fiat currency and runaway spending begins to collapse, there will be tremendous disruptions to the lifestyle that people have come to expect. This ‘prosperity collapse’ is expected to have many repercussions throughout the economy.
As inflation comes about from the massive monetary expansion of world governments, sharp price increases are expected to hit the poor dramatically. Some people expect that these price spikes will spur riots and looting, which in turn could result in martial law and government price controls or rationing. In this case, people will need to know how to survive in a world where the supermarket is not always open for business. Extended periods of time with no food available may become normal.
As the currency continues to collapse, it is also likely that barter and trade will begin to replace traditional monetary commerce. It is also likely that many of the products that are currently purchased at the grocery store may need to be acquired through the ‘black market’ in goods that are price-controlled or rationed. This will require people to adapt very quickly in order to avoid very dire circumstances. These are not pleasant thoughts to have, but there is a chance that they will become a part of normal life for many millions of people throughout the world.
There is a famous saying that luck favors the prepared. At Holistic Survival, we couldn’t agree more. We desperately hope that the expected economic catastrophe does not transpire. We remain hopeful that the free market will eventually prevail and return the country back to a path of growth. Nonetheless, it is prudent to be aware of the possibilities and prepared to exist in the world that may exist after the prosperity collapse. Find out more at www.HolisticSurvival.com.
Podcast: Download
September 2, 2009 ·
In this video from http://JasonHartman.com, you will learn how properties investment can actually help you get paid to borrow money. http://CreatingWealthPodcast.com
The cacophony of advice about where to put your money coming at you from all sides can sometimes be deafening. We know that. That’s why we try to be the Joe Friday of investing. Remember the character from Dragnet? ‘Just the facts, ma’am.’
At Platinum Properties, we’re big on facts and when it comes to investing, the facts tell us there is no better place to be than real estate. One of the multitude of reasons we believe this relates to the title of this entry. When you buy a piece of income property, taking out a mortgage in the process, you actually DO get paid to borrow money. At least, that has been the case historically and there seems to be no reason for it to change.
The reason we say you get paid to borrow rests in the reality of inflation, pure and simple. In inflationary times, your best shield against the declining value of the dollar is high-quality, long-term, investment-grade, fixed-rate debt tied to a piece of rental property.
If you muddled your way through that last convoluted, hyphenated sentence, the payoff is this simple statement – the right kind of debt is good. Here’s why and how it works. Let’s assume a dollar was worth a dollar and you bought a house in 1972. Over the next 30 years, continuing inflation driven by near-imbecilic government economic policy drove the value of a dollar down to $0.24 when compared to the 1972 version. It’s all about purchasing power. By taking out a loan that doesn’t come due for those 30 years, you have effectively saved yourself money by paying off the note in cheaper dollars than what you borrowed with.
You just got paid to borrow money, bubs.
Podcast: Download
August 31, 2009 ·
In this video from http://JasonHartman.com, we will look at the “calm before the financial storm”. Times are coming when interest rates will go up, and getting mortgages will become harder. Invest now. http://CreatingWealthPodcast.com
To those who have learned how to read the economic trends, it has been painfully obvious for quite some time that significant inflation is on the horizon. Platinum Properties Investor Network has long supported a strategy of fighting inflation through rental real estate that is financed with fixed-rate debt. The advantage of this strategy is that the debt payments will stay the same throughout the inflationary period as prices are pushed higher. While this is happening, the rents paid by the tenants will be consistently increasing as the scourge of inflation is eroding the value of the dollars that are being used to repay the mortgage.
All of the people who have read Jason’s blogs or listened to his Creating Wealth show for a significant period of time are well acquainted with this phenomenon. The piece that is now important to internalize is the fact that this ‘door of opportunity’ will close at some point in the near future. The reason for this is because of the chain reaction that the inevitable inflation will unleash.
Once the impact of inflation begins to unfold, it will result in more investors selling bonds to avoid seeing their wealth destroyed. This will place upward pressure on bond yields as investors will no longer be willing to accept rock-bottom interest rates for government treasuries. As the treasury yields are pushed up higher and higher, there will be a ripple effect to mortgages that are indexed to these treasury notes. This increase in mortgage interest will increase the ‘effective’ price of real estate since the same monthly payment will not buy as much house as in previous years. As this stall in purchasing power ripples through the market, it will place downward pressure on prices and appreciation. At this point, buying in to the real estate market will become a much more tenuous matter since interest rates will be higher, creating increased mortgage payments and lower cash flow to owners. During this time, the investors who locked down low fixed rate mortgages will be watching their profits expand while their costs stay flat.
The bottom line is that this tremendous opportunity will not persist forever. Once the rocks begin to fall, it is likely that the avalanche will quickly follow. Prudent investors should seek to be ahead of the masses, and lock down their investments while rates are still low, prices are still depressed, and opportunities are still plentiful.
Podcast: Download
August 28, 2009 ·
In this video from http://www.JasonHartman.com, test your fiscal IQ and learn what it means to be Fiscally Fit. Learn more at http://www.CreatingWealthPodcast.com
1) When is debt good?
a. When I feel like spending money
b. When I am buying something that I can see and touch
c. When I am buying something like a house or car
d. When I am buying an asset that produces income
2) When is debt bad?
a. When it causes you to be highly leveraged on an investment
b. When it is used to finance consumption
c. When you use your credit card
d. Debt is always bad
3) What causes inflation?
a. Evil businesses raising prices on the little guy
b. The federal reserve increasing the supply of available money
c. OPEC constricting output to push up prices
d. A tri-lateral conspiracy between George Bush, the Illuminati, and the Vanderbilt Family
4) What is the result of inflation?
a. It destroys the value of savings, equity, and debt
b. It creates jobs by increasing the amount of money in people’s pockets
c. It makes me more wealthy by increasing the value of my house
d. It makes me more wealthy by increasing the value of my 401k
5) What happens when the government increases spending?
a. It means that I get free money in my mailbox
b. It means that those rich people will finally have to pay their fair share
c. It means that the government must extract more resources from the private economy through taxes, borrowing, and inflation
d. It means that the country starts to run better, because the government always does things more efficiently than the private market
1) When is debt good?
The way that debt can work to your benefit is if it is used to finance an income-producing asset that pays your interest costs. The most typical example of this is rental real estate. As the owner, you take out a fixed-rate loan on the house, the tenant pays you rent, and you pay the applicable tax, insurance, and mortgage expenses.
Over time, inflation will increase the value of the house and the rents paid by your tenant. However, the amount you owe on the house will stay flat because of the fixed-rate debt. This will result in your profits increasing.
2) When is debt bad?
Generally speaking, debt will work against you when it is used to purchase anything that doesn’t produce income. The reason for this is because the interest for debt that is used to make these purchases must be paid out of your income. Furthermore, as the amount of debt goes up, it consumes more and more of your income. By concentrating debt in assets that produce income, you can escape this ‘debt spiral’ trap that keep many people confined in financial prison.
3) What causes inflation?
As tempting as conspiracy theories can be, the money supply is the principal factor that drives inflation for the overall economy. Supply and demand can create price spikes and drops in specific products like oil or corn, but the only way to make everything more expensive at the same time is to increase the amount of money in circulation while the amounts of goods and services stays flat or decreases. This phenomenon is known as ‘more money chasing less goods.’
4) What is the result of inflation?
Inflation erodes the purchasing power of all things that are denominated in dollars. When the prices of everything you buy go up, but your savings account only grows at 0.2% per year, it results in a negative ‘real’ rate of return since the savings will now buy less than it did before. In practical terms, this means that dollar-denominated assets, like home equity, savings, and CDs, along with liabilities like debt, will all have their value destroyed by inflation. Because of this, the optimal strategy is to have your assets denominated in physical things and your liabilities denominated in dollar-based debt.
5) What happens when the government increases spending?
The government does not have the capacity to produce anything. The only way that it can spend anything is to first take it from somebody else. Sometimes this is done directly through taxes, and other times it is done indirectly through borrowing or inflation. The way that borrowing takes money is by displacing private debt with government borrowing, effectively reducing the amount of capital available. The way that inflation takes money is by eroding the purchasing power of people’s salary, savings, and home equity to finance government spending.
Because of this phenomenon, it logically follows that any time the government decides to do something that the private sector could do more effectively, it drags down the overall economy by displacing private economic activity. (Granted, the government frequently enacts arbitrary laws & regulations that artificially hamper the efficiency of private industry, thereby creating a perception that the private market is broken, when the problems are all a direct result of government fiat.) The adverse incentives implicit in this balance is that politicians derive their power from the amount of money that government spends. Because of this, politicians have an incentive to make government bigger, regardless of how much it erodes the economy, because it will result in them becoming more powerful and important.
Podcast: Download
August 27, 2009 ·
The current economy offers both danger and opportunity, as the Chinese word for “crisis” explains. This video from http://www.JasonHartman.com explains the effect of inflation on investment prospects. http://CreatingWealthPodcast.com
The market is currently in a period of great uncertainty and volatility. Some believe that there is a budding stock market rally developing, while others believe that the recent economic problems are merely the first of many disruptions that will shake the foundations of America over the coming years and possibly for decades. Our belief is that there are many forces pushing against a return to the rapid economic expansion that many have come to expect over the past 25 years.
The first force is the dramatic government spending obligations that are being financed by inflating the US Dollar. This will indirectly ‘tax’ economic output by eroding the purchasing power of the currency. The second major force is the inevitable increase of interest rates and tightening of credit standards. This will increase the cost of capital for business activities in the midst of rapid price inflation. The most likely result of these two forces will be a dramatic slowdown in the growth rate for the US Economy.
This will create tremendous opportunities for investors that position themselves to take advantage of the upcoming demographic shift of people out of the homeowner pool, moving into the rental pool. As millions of Americans adjust their expectations for the standard of living that they can reasonably afford, they will be paying rent while this transition takes place. Prudent investors should place themselves in a situation to take advantage of this shift.
Direct investment in rental real estate continues to represent the best way to take advantage of this trend by allowing investors to collect regular cash flow and ‘outsource’ their fixed-rate debt to the renters. Over time, inflation will push up the rents and values of properties while the mortgage payments stay flat. This will generate tremendous wealth for astute investors who place themselves in a position to realize gains from the coming shifts and disruptions.
Podcast: Download
August 24, 2009 ·
In this video recap of http://www.CreatingWealthPodcast.com Show #102, learn about new technology for tracking your real estate investments on your iPhone and ways to screen your tenants to avoid evictions and unprofitable renters. http://www.JasonHartman.com.
Jason recently published his one hundred and second Creating Wealth show, and is still providing new and useful insights with each new installment. This week, Jason met with Joel to discuss the ‘property tracker’ software application moving to the iPhone, in addition to its current home on the Internet. The unique nature of the property tracker software is its specialization for small to medium investors. It allows users to quickly analyze the profitability of their potential deals, and keep track of their property portfolio in a user-friendly format. The big advantage that this software provides is that it helps investors to act more confidently when making deals; it helps to keep information organized for working with your property managers, and also keeps everything straight for taxes. Jason is a strong proponent of using technology to drive profitability opportunities, and the property tracker software helps to achieve this goal by enabling investors to make smart business decisions very quickly.
During this show, Jason also announced that he has scheduled an interview with the famous author of the ‘Rich Dad’ book series, Robert Kiyosaki. This marks another key milestone in Jason’s recent string of interviews with notable authors and thinkers. Over the last few months, Jason has greatly expanded the scope of his Creating Wealth show through interviews with market experts. This has given his listeners the benefit of hearing different viewpoints from a very wide variety of expertise. In the future, Jason has scheduled interviews with James West and Addisson Wiggin. Additionally, he is working to book interviews with Ron Paul, Mike Huckabee, and Chuck Norris.
In the second half of the podcast, Jason talked with Jeff Cronrod from the American Apartment Owners Association (AAOA) board of directors. Jeff also has a lot of experience with tenant collections that he shared with Jason’s listeners. Current economics and demographics are shifting in favor of multi-family investing with the significant shift of homeowners to the rental pool, and the emergence of Generation Y as future renters. This will create tremendous opportunities for apartment owners and multi-family property investors.
However, when investing in multi-family properties, tenant screening is a critical piece of generating a favorable return. The reason for this is because bad tenants can be an extremely large liability if they have payment issues or damage the property. Taking extra effort up front can have a very significant effect over the long term by avoiding evictions, lost rent, and building repairs. Common tools for tenant screening are the employment history, tenant history, and criminal background reports. It is also very important for property managers to be a bit of a ‘detective’ and double-check for fake or borrowed social security numbers. Another common practice is to ask for the prior month’s rent receipt, bank statements, W-2 records, etc. The purpose of this analysis is to cross-check documents to ensure that the applicants are representing themselves accurately. While it is not possible to completely eliminate the possibility of accepting bad tenants, doing a little bit of legwork before accepting new applicants can prove to be extremely valuable down the road.
Podcast: Download
August 21, 2009 ·
Many people are stuck in stock market based investments because of their 401k. Jason Hartman shares how investors can break out of 401k Jail and build long term wealth with properties investments. http://www.JasonHartman.com & http://www.CreatingWealthPodcast.com
There are many investors who have heeded the advice of Jason Hartman, and are looking to diversify their investment positions out of the stock market. However, many of these people have a large percentage of their investment assets tied up in a company 401k that has limited investment choices. What can a person do who is being held captive to a limited menu of investment options in the current environment?
In this situation, the optimal strategy is to capture market returns, while minimizing the costs associated with acquiring those returns. Fund managers have a tendency to charge hefty fees for their services, and frequently under-perform their comparable market indexes. The reason for this is not difficult to reason out.
When the gains and losses of all the market players are added together, they average out to the market rate of return. This simple arithmetic dictates that if one manager over-performs the market, that he must be offset by another that under-performs the market. Furthermore, fund managers must overcome the hefty fees that they charge in order to beat the market return. The net result is a zero-sum game created by everybody chasing the same market returns that turns into a negative-sum game when costs are factored in. So how does a 401k investor get out of this fund manager prison of high costs and disappointing returns?
The answer to this dilemma is achieved through the use of index funds in a stock portfolio. By capturing the average market returns at a minimal cost, index funds allow investors to ignore the ‘noise’ of daily stock market volatility and focus on the fundamentals. For investors who are looking for further diversification without losing the advantages of indexing, they can choose market indexes for small or medium sized companies that tend to be more volatile and produce higher returns. Similarly, index fund investors can choose international indexes that produce favorable returns and reduce portfolio volatility.
In addition to this, there is another option available to ‘jailbreak’ some of your money out of the 401k, and that option is to take a loan against your retirement plan. This strategy is typically advised against, because most people use the loan from their 401k to purchase items like cars or boats that decline in value. However, if you are astute and aggressive, there may be an opportunity to use your 401k as a vehicle to acquire capital for investment in other assets like rental real estate.
It is no secret that prudent investors should seek to limit their exposure to the stock market. However, for investors that are in ‘401k Jail’ with their employers, there is a viable way to structure your stock market investments in such a way that the major pitfalls of traditional stock investing are mitigated. And for those who are more adventurous, most 401k plans allow the owners to take a loan against the plan balance for outside investment. By thinking creatively, prudent investors can mitigate the impact of ‘401k Jail’ and use this tool to help build long-term wealth.
Podcast: Download
August 20, 2009 ·
Join this live seminar as Jason Hartman explains the Commandments 6 through 10 for Successful Investing.
6. Thou shalt diversify.
7. Thou shalt be Area Agnostic™.
8. Thou shalt borrow to maximize leverage and accelerate wealth creation.
9. Thou shalt only invest where there is universal need.
10. Thou shalt invest only in tax-favored assets.
http://www.JasonHartman.com & http://www.CreatingWealthPodcast.com
Podcast: Download
August 19, 2009 ·
Join this live seminar as Jason Hartman explains the first 5 of his 10 Commandments for Successful Investing.
1. Thou shalt become educated.
2. Thou shalt have a professional Investment Counselor.
3. Thou shalt maintain control.
4. Thou shalt use prudent financial planning techniques.
5. Thou shalt not gamble.
Find out more at http://www.JasonHartman.com & http://www.CreatingWealthPodcast.com
Podcast: Download
