Jason Hartman and Investment Counselor, Doug, share supporting investment tips based on the book, The Dao of Capital by Mark Spitznagel. Jason and Doug also discuss position or Profit. Urging investors to position for the rise of suburbia. The contributing factors for migrating away high-density areas to suburbia are increasing. The investment strategy Jason Hartman shares have been used by Jason for decades are more than ever are appealing.

 

Jason Hartman 0:55
Welcome to Episode 1476 1004 176 thank you so much for joining me today. As the stock market is booming, the housing market is booming, and Rome is burning. It’s crazy what’s going on in the world, as we know and have discussed numerous times. But what’s even crazier is how all of these parts of the economy are just doing well as we have this massive unemployment and chaos in the streets. But what does that mean for cities? Well, it’s a double whammy. First, I predicted two and a half months ago that the pandemic, when maybe it’s three months now the pandemic would push people into the suburbs. And now the civil unrest is another reason for them to get out of the city. And I’m looking at an article here that Evan posted in our private content group, and basically talks about elevator phobia, something I talked about two and a half to three months ago. The media is finally catching up to me. You know, I’m gonna keep mentioning that for a little while longer than I’ll stop saying it.

Jason Hartman 2:04
But it’s just, it’s just great to be first I was the first one that thought that I know of. If I’m wrong about that, go to Jason Hartman comm slash ask and tell me how wrong I am. And I will correct the errors of my ways. But the article says, imagine what happens to rents if your potential tenant pools shrinks by 15 to 20%. They’re talking about downtown landlords, both commercial and residential. And by the way, we are noticing rent collection to be extremely strong, really, almost like it wasn’t even mentioned. Right? Like we should have never even bothered talking about it like we were a couple of months ago. But I’m still seeing articles talking about apartment rent collection. We can weakening a little bit more but still strong. And now you know Well, the June 1 rent has been due for a couple of days. So you know, there’s always a little grace period. And we’ll know what happens with June rent in about a week or two. Okay, any in terms of the big institutional apartments? It’s interesting what’s happening. I want to say congratulations, and thank you to all of you. And there were so many that attended our asset protection asset defense webinar. By popular demand, many people have asked for us to run that again, we will run it again. And I think we can use will not I don’t know if we can use the same link. So don’t worry Next week, we’ll we’ll get that webinar running again for you because a lot of people have asked, they attended once they want to see it again, or they couldn’t attend and they want to see it. But I do want to answer a couple questions. Number one, and this is before we get to our investment counselor, Doug is our guest today, talking about a well known book in economic circles that you’re going to hear this interview. It’s very informative. So we’ll have Coming up in a moment, but two things. Number one, our attorney who we hosted on the webinar, he does offer a guarantee. So if you go ahead and sign up for his package, and you know, we gave out the link on the webinar, and you have the consultation with him and you’ve decided there, I don’t need to do any of this stuff. It’s not for me, he will refund you. Okay, so you you do get the consultation, money back guarantee. Okay, so as long as you don’t move forward and actually form the entities and create all the structure, you can get a refund after your consultation. Okay, so just keep that in mind. And then another question we got is someone asked, What is the difference between the program outlined on the webinar? And by the way, of course, we will be announcing another webinar next week. So don’t worry. Just if you didn’t see it, then you can come next week. We’ll probably run that next Wednesday. Okay, next week. We’ll give out our link on maybe Monday’s episode for that. But what is the difference between his strategy and the series LLC strategy that I talked about with a different attorney on the show a little over a year ago, he can form a series LLC for you. But here’s the thing about the series, LLC, the concept is, and again, I’m not a lawyer, I’m not a tax advisor. This is just my laypersons understanding, okay. But the concept is that you can have just one LLC that has many, we’ll call it children or series under it, okay. And each one of those series, in theory would act like a firewall. Now, some lawyers trust this model and some don’t. The series LLC is not recognized by every state, and it is also a newer animal. And when something is new in the legal world, and it hasn’t been tested a lot and there’s not a lot of case law, you know, meaning there were lawsuits. And the court ruled this way or that way. That’s when there’s case law, there’s a history, there’s a precedent to create more law about this new vehicle. Okay, but in this case, the series LLC, then lawyers and clients start to feel more comfortable with it, because it’s been tested, you know, if it’s going to be tested, let it be tested by somebody else, not you, right. And so, Bob is part of his offering on the webinar can form your LLC in any state, and he can do a series LLC for you. But that doesn’t mean that you want to do one necessarily. So that’s why you have a consultation with him. You know, this is a real attorney thing. It’s not, it’s not some hokey mill where there’s no attorney, and you can figure that out with with him in your individual consultation where he looks at your individual situation. Okay, so I just wanted to mention that and if you need us, of course, reach out We’re here for you to guide you to assist you along your investing journey and your wealth building journey, and wealth, defense and protection journey. Go to Jason Hartman comm or call us if you’re in the United States at one 800 Hartman and we are here for you our investment counselors are happy to do portfolio makeovers. talk to you about different markets around the country, depending on your time horizon, your risk tolerance, your investment goals. And if you need help with considering selling properties or refinancing properties, doing 1031 exchanges, or the 1031 exchange alternative that we talked about on a recent podcast, they’ll help you with all of that stuff, too. And of course, that’s how you reach them. Okay, so let’s talk to one of those investment counselors right now. And pretty much all of our investment counselors start out as clients and this one is no exception. You’ve heard Doug on the show many times. Over the years, he was a client starting maybe, I don’t know, 1112 years ago, he became a client and started buying investment properties and, and then has spoken in a few of our events meet the Masters profits and paradise. And now he wanted to talk about a well known book in economic circles and a well known guru in economic circles and what it means to your investing strategy and your portfolio and your overall goals. So that’s what we will do today. Let’s go ahead and bring Doug on the show.

Jason Hartman 8:37
Hey, it’s my pleasure to welcome Doug back to the show. He’s been on many times you’ve met him and seen him speak at our meet the masters and prophets and paradise events over the years. Also, he was the one who hosted the portfolio makeover games in various different iterations over the years, and it’s great to have him on Doug, how you doing

Doug 9:00
Doing great Jason. I mean, you know, as great as anybody’s doing, you know, with the world coming to an end, but yes,

Jason Hartman 9:05
well, we’re gonna get into the world’s coming to an end. And we’re not so somber about it either is some are. But But speaking of the world coming to the end, maybe we’ll start right there you are right now really following more so than before Mark Spitz Nagel, and that’s correct. He’s the hedge fund manager. He’s got a few books out another one coming out next year. But I believe you’re currently reading the Tao of capital, and that’s tau da o but pronounced tau i believe. And then the Austrian investing in a distorted world, with foreword by Ron Paul, who’s Of course been on the show and spoke at our meet the Masters event two years ago. So he’s really a doom and gloom investor. Right?

Doug 9:51
That’s correct. And to give the listeners a little bit of context. So Mark Spitz Nagel was a student of Nassim to lab at New York City University and I’m a big fan of Nassim yes and so to lead he wrote that fooled by randomness Black Swan anti fragile probably one of my favorite authors in my game you must read it

Jason Hartman 10:11
again again that’s maybe the most important one of all Yeah, go Yeah.

Doug 10:14
Yes getting in the game and anti fragile I think are probably two of the are probably his magnum opus. Right. But and the thing that’s unique about Spitz Nagel, is that of course he has an obviously very bearish perspective, but University Capita booked a 3,612% gain in March of 2020. And if users are saying I mean, not users, sorry. listeners are probably saying, Wait a second. 3000. So 36 x Yes, 36 x. And because his whole strategy is about buying your it’s largely about options. It’s about buying options that are way way, way out of the money that they can buy for almost nothing that normally don’t pay off. They normally Burn capital in time decay. But when a crisis event happens, those types of thing just shoot up in value. And in this case, there was a crisis event. volatilities went up, the Dow went down, the s&p went down, the values shot up and they booked a whole bunch of gains. And so what we can learn from someone like Spitz Nagel is a his strategies because of course, the exact strategy is going to be hard for the regular person to implement. But the style of strategy, you know, as he says, The Tao of capital, what he talks about really is the idea of instead of focusing just on how much money you make, focus on how you’re positioned so that you will be able to consistently move your position to take advantage of opportunities that come up, because a lot of times if you just try to make money now, what you’ll end up doing is you’ll end up locking yourself into a course of action that you can’t very easily adjust and in the world, world. Right now it’s really positioning yourself so that you can be flexible, because nobody knows what’s gonna happen, you know, COVID could you know, it could take another dip or it could be solved next week? Nobody knows. Right. And I think that’s a really important thing that a lot of people can take away from it. And I think that’s one of the things that you’re really helping people to do with your pandemic investing.

Jason Hartman 12:20
Yeah, thanks. I’m beginning to wonder, and I think a lot of people are, but this is sort of easy to say and I can’t say it’s hindsight yet, but it feels like we’re getting into the the era where this is becoming it’s moving into the background a little bit, right. And everybody’s, well, not everybody, but some are now asking, you know, a lot more asking, was this just a massive overreaction? Of course, the conspiracy theories are flying. And some of those are definitely worth entertaining. I haven’t had much time to investigate any of them, frankly. But, you know, we’ve got to remember something folks, that if you’re in the US Uh, you know, other countries have similar things. But you know, in the US we have a constitution. Okay. And the government has just, frankly trampled all over that. And the First Amendment, the very first thing is that is not only the right to free speech, which, you know, I think we all pretty much have, unless you’re on one of the big tech platforms, Facebook, Twitter, the rest, which decides that they’re going to censor speech, which is absurd, Google, etc. But the right to peaceably assemble. Okay, so what if you wanted to have a political rally right now? You know, you couldn’t do it, right. It’s just something we need to remember that, you know, there’s, who knows, you know, no, but nobody knows. We may never know really what the significance of this whole thing was, and if we’ve overreacted or not, but Spitz Nagel, now you quoted a 30 600% return, but I’m looking at a thing that says like 40 400%, I think that’s a annualized number. That’s for the whole that’s for the whole year.

Doug 14:00
I was for one month, in one month in March, it was a 30 600% return. Yeah, yeah. So so it doesn’t do that every year.

Jason Hartman 14:09
Yeah. So what did he invest in ventilator stock, facemask and whatnot.

Doug 14:15
And so actually, I’m actually working with a friend of mine on a because I think he is his good friends with one of the deans of business down at Portland State. And so he spends a lot of time in the Bloomberg lab. And so one of the things that we’re working on doing is reverse engineering the trades of universe to figure out what their positions were. But from what I understand what a lot of what he invested in were things like say when the SMP Oh, when the s&p was at like, say 3300. What anybody would do is he’d buy options at say 2800 or 2500, or something like that way, way, way out of the money which it turns out hit. If you have an option that goes from super far out of the money to all of a sudden now the market price is at the option price, your price just goes up a hockey stick curve And that’s almost certainly what they did. Because those are going to be your most liquid options. Those are the options you can get for the longest amount of time. You know, and then of course, you can also do things like you can cherry pick weak companies, you know, like, of course, when Tesla was trading at 900 bucks, that’s an easy long term put just go way, way out of the money because, you know, they’re going down, you know, a number of other over leveraged companies that are extremely fragile. You know, when you have a research staff that’s looking for companies like that you can you can use financial derivatives very effectively. That way, you know, you can also use financial derivatives very ineffectively. But, you know, that’s how the game works.

Jason Hartman 15:34
What you’re basically doing is just betting on the long shot. And so the long shot bet is a cheap bet. And the odds are good, but again, or sorry, the, the odds aren’t good, the odds are terrible, but when it pays, it pays big. That’s what I meant to say. It’s like, you know, going to the horse races and betting on the horse that never wins. You know, it’s the odds are that you’re going to lose your money, but you don’t lose them. Much and the payoff is big. So

Doug 16:03
exactly what

Jason Hartman 16:04
what does this tell us for real estate investors? If anything, maybe nothing so,

Doug 16:10
so I think what it tells us for real estate investors is that in the case of Spitz Nagel, he was positioned to take advantage when there was a big disruption. You know, now most real estate investors aren’t going to be allocating, you know, say like, you know, $50 million to university capital, you know, but, you know, we just don’t have the capital base to play in that kind of game. But what we can do is we can make sure that we are adjusting our personal portfolios so that we have the ability to be flexible, because I know that one of the ideas that you present in the pandemic investing is to segment your capital between right you know, between cash flow, your regular cash flow holdings, to have some speculation for upside, to have some hedging to protect against downside and to keep some of your holdings just in cash just in liquid reserves. And at the That construct is really important because what it does is it lets you shift your position as the market market evolves. So for example, one of my clients that I was talking to recently, he has a property in the San Francisco Bay Area, that’s it’s a multiplex, it’s doing very well. And he was concerned about not being able to replace all the cash flow, if he took the equity out of that and then reinvested it someplace else, you know, ideally, someplace down like, you know, someplace like Texas or Florida. Well, but some of the conversations we’ve been having are that, you know, the Bay Area right now is basically at or very near a price peak. And of course, it’s hard to attend the market but it’s hard to imagine that the Bay Area is going to continue appreciating the way that it has in the future. Well, so one way

Jason Hartman 17:47
you when you say at or very near price pq you’re insanely optimistic, if you better go ahead. Okay.

Doug 17:55
But what and so that’s the thing. Yeah, the a lot of real estate in the Bay Area is actually probably down off its peak. Oh, yeah. And, and it’s not probably not gonna be back there for a very long time very long time. Because I think the the prior peak was 2007. And it took until I think about, what, three or four years ago, or something like that, you know, it took almost a full decade to get back to that those peak levels. And it’s very likely that it’s going to be at least five to eight years before the recent peak levels we saw just a couple months ago, before those can be replicated. So the question is, right, you know, if you can pull some equity out of you know, of something that you have in a volatile market, like, say, the Bay Area or Southern California or New York, then what you can do is you can say, okay, you know, now you have some flexibility because you have a cash base. And for example, you know, he’s very fond of our LMS and Jacksonville, right. And so this particular client, he’s, he’s developed a very good relationship with one of our local market specialists down in the Florida area, you know, down in the Florida coast. And one of the things that he really likes that we talked about a lot is how there’s a lot of population that’s missing. migrating toward Florida a lot of population from the east coast is moving toward Florida. Just because you know the fate the favorable weather, the favorable tax status, etc. Well, when you have these population migrations, what it does is it puts upward pressure on both price and rents. In all likelihood in the near future, there’s going to be probably more upward pressure on rents. But at the area where our clients are investing, you’re also going to have upward pressure on prices, because you’ll have a lot of people coming down from more expensive real estate. And if we have a quality product that’s priced below median for an area, it you know, it’s very hard. It’s very hard to imagine a situation where you wouldn’t have demand for those types of properties. So

Jason Hartman 19:40
this is such a significant trend and we’ve been talking about it on the show for quite, you know quite a while now. This mass migration out of high density, expensive areas to low density suburban areas. And it’s Think of it like this everybody listening. It’s like the person in Las Vegas who just won a bunch of money, and they’re, you know, they go out and they celebrate. And they spend money like a drunken sailor. And that’s kind of how it is. Or it’s sort of like, when when we’ve, you know, there, it depends on the era, there have been times when, for example, Australian investors or from any part of the world, but I’ll use Australia as an example because that was a particular one, where our dollar made our real estate look cheap to them, and they came here and bought up stuff like crazy. And even if the the investment wasn’t that good, they were simply arbitrage in the currency trade. Okay? Just the currency trade alone made the deal. Good. Okay. And, you know, that can work both ways, obviously. But when someone leaves New York City with the astronomically overpriced real estate there, and they sell their property, even at a loss or maybe they don’t even own but They take their housing budget, and they bring it to a place like Florida. It’s like everything looks super cheap to them. And so they spend more freely. And when they spend more freely into the market, that really puts upward pressure on prices. So this is the trend that is already happening to a small extent. But as these quarantines are lifted is going to really, really gain steam. And I’m not just talking about New York and Florida, I’m talking about any high density living anywhere, moving into lower density living where people can socially distance and feel safer. And, frankly, that trend was was already underway. This is just putting it on steroids and adding rocket fuel to it because the trend was already happening. And we’ve reported on that for years and years, but now it’s got legs galore. And if you want to Look at some numbers for a moment. Doug, you’re a numbers guy for sure. Absolutely. Let me just tell you about rental units only this does not I want to clarify, this does not include condos. This is only rental units, okay, mid rise and high rise buildings in terms of rental units. And during the pandemic investing, webinar presentation that we will be announcing Soon, we will go into this in greater detail. But there are about 2.3 million of those units now that are mid and high rise. In other words, places where people are trapped in an elevator, a danger zone, and places where most of the time people are using mass transit, another Danger Zone, that’s 2.3 million units. Now, each unit has maybe two people, for example, if only 15% of those people want to move, and I think that’s a small number. By the way. I think it’s going to be bigger than that. Okay, now, just because they want to move doesn’t mean they all will move, whatever. I think there’s going to be a higher number than that in terms of potential Movers. That’s 340,000 units needed. Spread that among 50. markets. That’s another almost 7000 homes needed in each market in an era when we already had before any of this a massive housing shortage.

Doug 23:32
Okay, and Jason, I’d actually like to append on what you’re saying. Sure. You’re saying there’s what 700,000 homes needed, and they’re not 700,000 340,000?

Jason Hartman 23:42
Okay. Yeah. 340,018% number move. Yeah, exactly.

Doug 23:45
Yep. They’re not 340,000 homes that cost $750,000. He actually they’re 350 or 300,000 homes that probably need to be more in the two fifth right around in that Yeah, and the sub 250 which there’s Not a lot of inventory,

Jason Hartman 24:01
right? Well, not only that, but think about if someone owns their high rise condo in New York, they sell it for $3 million. Or say they kind of do a fire sale and they sell it for 2.5 million. So two and a half million dollars, they move to suburbia, and to get a just a gorgeous home in suburbia, they can spend 600,000. Now their housing cost has dropped dramatically. Everybody’s worried about the economy being so bad, but look at all the extra spending money that family now has look at their ability to buy additional rental properties and the upward price pressure that creates. Okay, so I mean, are investors following our plan can just win win win. Now, I’m not saying the economy is okay because I don’t think it’s okay at all. I think the economy’s got major problems. But the issue is it’s this war between the economy overall All in the mass migration trend and how it affects real estate both rental and for sale real estate in markets we’re targeting that you can find at Jason Hartman comm slash properties. There’s your There’s your Spitz Nagel hedge fund strategy in real estate, right?

Doug 25:19
Well, and I think that the the two ideas play in because in the Tower of capital, one of the things that Spitz tinkle does is he contrasts while comparison contrast sunsoo versus Carl von Clausewitz, because, in a lot of cases,

Jason Hartman 25:34
The Art of War at some zoo, but what and then what is Karl’s philosophy?

Doug 25:39
So Clausewitz was a Prussian military thinker in the early very early 19th century. And he his book is called on war. And it’s about basically it’s about it’s about your tactics and strategy of warfare, but it’s really about how warfare is an extension of commerce and more aptly an extension of politics. Meaning that strategies that are used in warfare can be applied to, you know, can be cross applied to many different, you know, to many, many different spheres of human existence. Right, you know, because a lot of people think, okay, war is just killing people. Well, not quite. There’s a lot of strategy involved. And the strategy is, how do you position yourself so that your consumption of resources for maintaining your standing army, your ability to defend and your ability to attack plus counter attack are all optimized, you know, because what a lot of people do, especially in the era, is they immediately go for a quick win, or they go for a, you know, for visible wind. In our case, it would be somebody who’s going for as much money as they can make right now. But what that would do is that would lock them into that that would lock them into certain positions that would limit their flexibility. And so what would happen is you’d have say, for example, one general who would retreat their army someone would pursue after them, they’d get overextended and then they could turn their flank and actually defeat a much larger force with a small concentrated force. The the think the extension to investors is that flexibility is really important. So like, for example, you’re talking about, say somebody who moves out of the city and moves into the suburbs. And then now they have some extra capital that they can hold reserve and then they can use to start buying rental properties. And because I’d like some clients that I’ve had, they’ve said, Okay, well, you know, I’m, you know, I’m going to liquidate some holdings, I’m going to have some capital, I’m wondering whether I should deploy it all at once, or that I should hold sit on it or what I should do. And my you know, my advice is usually to just make a plan and follow a methodical plan because it might be an L shaped recovery, it might be a U shaped recovery, it might be a V shaped recovery, we don’t know. And so you know, what you do when you don’t know is just make a plan and be methodical and consistent because then that gives you flexibility. So instead of buying say 10 houses right now, maybe you pick up two and then two more, and then two more and then two more, but by just being methodical with that really does is it you know, it gives you that flexibility and that positive movement that will that will really help you adapt to however the market unfolds, because we don’t know.

Jason Hartman 28:11
Right? And is that another way of saying dollar cost averaging?

Doug 28:15
Exactly. Yes. That is a although, you know, yeah, that, that that’s a way you know, it’s basically averaging in or your dollar cost averaging, you know, the way that you would do that, the way that your financial planner would recommend doing that, is to just basically put the same amount of money into a mutual fund every single month.

Jason Hartman 28:34
You know, a lot of fair warning, though, a lot of times dollar cost averaging, is just being used, particularly by the Wall Street cartel, to essentially just get you to keep investing in crappy investments. So, you know, to be fair, I mean, the concept certainly makes sense in some ways, but it’s also used as that cover, which is what I hate about it. You know, so

Doug 29:01
yeah, and see that’s the thing yet yeah, averaging can’t turn a bad investment into a good one. what it can do is it can smooth out your timing, so that you don’t have to try to figure out the exact top or bottom.

Jason Hartman 29:12
Right, right, which nobody can figure out. Okay. And that is correct. And that’s definitely the thing. So good stuff. You know, let’s talk about market timing for a moment, then we’ll wrap it up. So the market timers always I find them incredibly frustrating and silly. And here’s why. Number one, they say things like this, well, I’m going to keep my cash so I can pounce on all the deals during the next recession. And I’m gonna really profit by doing that, while that’s what they say. But then what they forget to say is that they said this in 2013. And they waited seven years for the pandemic to happen or the recession. We got it this way, which it was coming anyway. Because it’s always coming. And they lost out on the opportunity to get any return during that time because they were in cash. So they didn’t buy those real estate deals because they thought they were too expensive. They didn’t buy the stocks because they thought they were too expensive. So they missed everything. And taxes and inflation ate them alive. So they never calculate the return, they lose by waiting. That’s a dog that doesn’t bark, because it’s an opportunity cost. And then the other thing that happens is when it comes to real estate, they don’t consider their motion, mostly lack of ability to obtain good financing. It’s amazing, Doug, how myopic people are. I hear all these economists like these supposedly brilliant people. One that I’m particularly frustrated with is Robert Shiller, Nobel laureate Robert Shiller who completely complete pletely misses the whole concept of real estate. He acts as though everybody buys real estate with cash. And their only return on the real estate is the nominal appreciation, rather than the multi dimensional benefits of that investment. That’s one thing. Another thing is his index is two thirds waited on cyclical markets, super frustrating. But the thing they don’t consider these market timers is the price of the money. They think they’re just buying the house. What they’re really buying is the mortgage. And they say, well, housing prices have gone way up. In fact, they’re at the price they were before the last peak. Okay, and then what happened we had a recession. But what you didn’t notice is what the mortgage payment was at that time, versus what the mortgage payment is today. That’s the true cost of the house. It’s not the price. It’s payment. People don’t buy houses on a price they buy it on a payment if they bought it on a price houses would hardly appreciate it all. They’re buying it because the payment is affordable not because that price they don’t care about the price. Nobody says oh gosh, this house is $400,000 so it’s too much for us know they say okay the payment on this house now is only $2,000 and gosh you know we were looking 12 years ago and the payment on a house like this they don’t care about the price just a house like this square footage age neighborhood, etc. Okay, was 20 $800 it’s cheaper now. Houses are cheaper. Okay, because you evaluated on a payment not a price. Oh, my God, that seems so simple. But apparently Nobel laureate economist can’t seem to figure that out. blows my mind.

Doug 32:54
Yeah. And and also, I think it goes even a little further than that. Because unlike A lot of cases people, it’s like you say you want to evaluate on a nominal payment, but if you evaluate under real payment, and then deflate for constant value dollars, oh, yeah, very good. Yeah, sure, yeah. That the real cost of owning houses is actually surprisingly affordable.

Jason Hartman 33:14
It’s it’s incredibly cheap. Really? Yes. So inflation adjusted real dollar mortgage payments. That is the only real metric you should give a lot of weight to. Of course, there are some other things, but that’s the one you really look at. And, you know, it’s stated fairly clearly in the housing affordability index. So there you go. Don’t get any final remarks to wrap this one up.

Doug 33:42
Well, I think the main thing is just that, you know, there’s there’s a lot of fear out there and I don’t think people need to be afraid. I mean, cautious, yes. aware, yes. But afraid. No, there’s going to be opportunities. And, you know, for people who are paying attention and taking action, they’re, you know, there’s no reason to think that you know, that you know that the future is going to be you know, is going to be blighted. You know, the future is going to be difficult for a while, but then it’s going to be the future. And there’ll be opportunities. So just take them.

Jason Hartman 34:11
There’s always opportunities, always opportunities. Good stuff. Doug, thank you so much for joining us. Anybody can have you help them with their investment purchases, go to Jason Hartman calm or reach out at one 800 Hartman and until tomorrow, happy investing, happy investing.

Jason Hartman 34:34
Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.Jason Hartman and Investment Counselor, Doug, share supporting investment tips based on the book, The Dao of Capital by Mark Spitznagel. They also discuss Position or Profit? Urging investors to position for the rise of suburbia. The contributing factors for migrating away high density areas to suburbia are increaing. The investment strategy Jason Hartman shares have been used by Jason for decades are more than ever are appealing.

 

 

Intoduction Speaker 00:04

Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the complete solution for real estate investors.

 

Jason Hartman  00:55

Welcome to Episode 1476 1004 176 thank you so much for joining me today. As the stock market is booming, the housing market is booming, and Rome is burning. It’s crazy what’s going on in the world, as we know and have discussed numerous times. But what’s even crazier is how all of these parts of the economy are just doing well as we have this massive unemployment and chaos in the streets. But what does that mean for cities? Well, it’s a double whammy. First, I predicted two and a half months ago that the pandemic, when maybe it’s three months now the pandemic would push people into the suburbs. And now the civil unrest is another reason for them to get out of the city. And I’m looking at an article here that Evan posted in our private content group, and basically talks about elevator phobia, something I talked about two and a half to three months ago. The media is finally catching up to me. You know, I’m gonna keep mentioning that for a little while longer than I’ll stop saying it. But it’s just, it’s just great to be first I was the first one that thought that I know of. If I’m wrong about that, go to Jason Hartman comm slash ask and tell me how wrong I am. And I will correct the errors of my ways. But the article says, imagine what happens to rents if your potential tenant pools shrinks by 15 to 20%. They’re talking about downtown landlords, both commercial and residential. And by the way, we are noticing rent collection to be extremely strong, really, almost like it wasn’t even mentioned. Right? Like we should have never even bothered talking about it like we were a couple of months ago. But I’m still seeing articles talking about apartment rent collection. We can weakening a little bit more but still strong. And now you know Well, the June 1 rent has been due for a couple of days. So you know, there’s always a little grace period. And we’ll know what happens with June rent in about a week or two. Okay, any in terms of the big institutional apartments? It’s interesting what’s happening. I want to say congratulations, and thank you to all of you. And there were so many that attended our asset protection asset defense webinar. By popular demand, many people have asked for us to run that again, we will run it again. And I think we can use will not I don’t know if we can use the same link. So don’t worry Next week, we’ll we’ll get that webinar running again for you because a lot of people have asked, they attended once they want to see it again, or they couldn’t attend and they want to see it. But I do want to answer a couple questions. Number one, and this is before we get to our investment counselor, Doug is our guest today, talking about a well known book in economic circles that you’re going to hear this interview. It’s very informative. So we’ll have Coming up in a moment, but two things. Number one, our attorney who we hosted on the webinar, he does offer a guarantee. So if you go ahead and sign up for his package, and you know, we gave out the link on the webinar, and you have the consultation with him and you’ve decided there, I don’t need to do any of this stuff. It’s not for me, he will refund you. Okay, so you you do get the consultation, money back guarantee. Okay, so as long as you don’t move forward and actually form the entities and create all the structure, you can get a refund after your consultation. Okay, so just keep that in mind. And then another question we got is someone asked, What is the difference between the program outlined on the webinar? And by the way, of course, we will be announcing another webinar next week. So don’t worry. Just if you didn’t see it, then you can come next week. We’ll probably run that next Wednesday. Okay, next week. We’ll give out our link on maybe Monday’s episode for that. But what is the difference between his strategy and the series LLC strategy that I talked about with a different attorney on the show a little over a year ago, he can form a series LLC for you. But here’s the thing about the series, LLC, the concept is, and again, I’m not a lawyer, I’m not a tax advisor. This is just my laypersons understanding, okay. But the concept is that you can have just one LLC that has many, we’ll call it children or series under it, okay. And each one of those series, in theory would act like a firewall. Now, some lawyers trust this model and some don’t. The series LLC is not recognized by every state, and it is also a newer animal. And when something is new in the legal world, and it hasn’t been tested a lot and there’s not a lot of case law, you know, meaning there were lawsuits. And the court ruled this way or that way. That’s when there’s case law, there’s a history, there’s a precedent to create more law about this new vehicle. Okay, but in this case, the series LLC, then lawyers and clients start to feel more comfortable with it, because it’s been tested, you know, if it’s going to be tested, let it be tested by somebody else, not you, right. And so, Bob is part of his offering on the webinar can form your LLC in any state, and he can do a series LLC for you. But that doesn’t mean that you want to do one necessarily. So that’s why you have a consultation with him. You know, this is a real attorney thing. It’s not, it’s not some hokey mill where there’s no attorney, and you can figure that out with with him in your individual consultation where he looks at your individual situation. Okay, so I just wanted to mention that and if you need us, of course, reach out We’re here for you to guide you to assist you along your investing journey and your wealth building journey, and wealth, defense and protection journey. Go to Jason Hartman comm or call us if you’re in the United States at one 800 Hartman and we are here for you our investment counselors are happy to do portfolio makeovers. talk to you about different markets around the country, depending on your time horizon, your risk tolerance, your investment goals. And if you need help with considering selling properties or refinancing properties, doing 1031 exchanges, or the 1031 exchange alternative that we talked about on a recent podcast, they’ll help you with all of that stuff, too. And of course, that’s how you reach them. Okay, so let’s talk to one of those investment counselors right now. And pretty much all of our investment counselors start out as clients and this one is no exception. You’ve heard Doug on the show many times. Over the years, he was a client starting maybe, I don’t know, 1112 years ago, he became a client and started buying investment properties and, and then has spoken in a few of our events meet the Masters profits and paradise. And now he wanted to talk about a well known book in economic circles and a well known guru in economic circles and what it means to your investing strategy and your portfolio and your overall goals. So that’s what we will do today. Let’s go ahead and bring Doug on the show. Hey, it’s my pleasure to welcome Doug back to the show. He’s been on many times you’ve met him and seen him speak at our meet the masters and prophets and paradise events over the years. Also, he was the one who hosted the portfolio makeover games in various different iterations over the years, and it’s great to have him on Doug, how you doing

 

Doug 09:00

Doing great Jason. I mean, you know, as great as anybody’s doing, you know, with the world coming to an end, but yes,

 

Jason Hartman  09:05

well, we’re gonna get into the world’s coming to an end. And we’re not so somber about it either is some are. But But speaking of the world coming to the end, maybe we’ll start right there you are right now really following more so than before Mark Spitz Nagel, and that’s correct. He’s the hedge fund manager. He’s got a few books out another one coming out next year. But I believe you’re currently reading the Tao of capital, and that’s tau da o but pronounced tau i believe. And then the Austrian investing in a distorted world, with foreword by Ron Paul, who’s Of course been on the show and spoke at our meet the Masters event two years ago. So he’s really a doom and gloom investor. Right?

 

Doug 09:51

That’s correct. And to give the listeners a little bit of context. So Mark Spitz Nagel was a student of Nassim to lab at New York City University and I’m a big fan of Nassim yes and so to lead he wrote that fooled by randomness Black Swan anti fragile probably one of my favorite authors in my game you must read it

 

Jason Hartman  10:11

again again that’s maybe the most important one of all Yeah, go Yeah.

 

Doug 10:14

Yes getting in the game and anti fragile I think are probably two of the are probably his magnum opus. Right. But and the thing that’s unique about Spitz Nagel, is that of course he has an obviously very bearish perspective, but University Capita booked a 3,612% gain in March of 2020. And if users are saying I mean, not users, sorry. listeners are probably saying, Wait a second. 3000. So 36 x Yes, 36 x. And because his whole strategy is about buying your it’s largely about options. It’s about buying options that are way way, way out of the money that they can buy for almost nothing that normally don’t pay off. They normally Burn capital in time decay. But when a crisis event happens, those types of thing just shoot up in value. And in this case, there was a crisis event. volatilities went up, the Dow went down, the s&p went down, the values shot up and they booked a whole bunch of gains. And so what we can learn from someone like Spitz Nagel is a his strategies because of course, the exact strategy is going to be hard for the regular person to implement. But the style of strategy, you know, as he says, The Tao of capital, what he talks about really is the idea of instead of focusing just on how much money you make, focus on how you’re positioned so that you will be able to consistently move your position to take advantage of opportunities that come up, because a lot of times if you just try to make money now, what you’ll end up doing is you’ll end up locking yourself into a course of action that you can’t very easily adjust and in the world, world. Right now it’s really positioning yourself so that you can be flexible, because nobody knows what’s gonna happen, you know, COVID could you know, it could take another dip or it could be solved next week? Nobody knows. Right. And I think that’s a really important thing that a lot of people can take away from it. And I think that’s one of the things that you’re really helping people to do with your pandemic investing.

 

Jason Hartman  12:20

Yeah, thanks. I’m beginning to wonder, and I think a lot of people are, but this is sort of easy to say and I can’t say it’s hindsight yet, but it feels like we’re getting into the the era where this is becoming it’s moving into the background a little bit, right. And everybody’s, well, not everybody, but some are now asking, you know, a lot more asking, was this just a massive overreaction? Of course, the conspiracy theories are flying. And some of those are definitely worth entertaining. I haven’t had much time to investigate any of them, frankly. But, you know, we’ve got to remember something folks, that if you’re in the US Uh, you know, other countries have similar things. But you know, in the US we have a constitution. Okay. And the government has just, frankly trampled all over that. And the First Amendment, the very first thing is that is not only the right to free speech, which, you know, I think we all pretty much have, unless you’re on one of the big tech platforms, Facebook, Twitter, the rest, which decides that they’re going to censor speech, which is absurd, Google, etc. But the right to peaceably assemble. Okay, so what if you wanted to have a political rally right now? You know, you couldn’t do it, right. It’s just something we need to remember that, you know, there’s, who knows, you know, no, but nobody knows. We may never know really what the significance of this whole thing was, and if we’ve overreacted or not, but Spitz Nagel, now you quoted a 30 600% return, but I’m looking at a thing that says like 40 400%, I think that’s a annualized number. That’s for the whole that’s for the whole year.

 

Doug 14:00

I was for one month, in one month in March, it was a 30 600% return. Yeah, yeah. So so it doesn’t do that every year.

 

Jason Hartman  14:09

Yeah. So what did he invest in ventilator stock, facemask and whatnot.

 

Doug 14:15

And so actually, I’m actually working with a friend of mine on a because I think he is his good friends with one of the deans of business down at Portland State. And so he spends a lot of time in the Bloomberg lab. And so one of the things that we’re working on doing is reverse engineering the trades of universe to figure out what their positions were. But from what I understand what a lot of what he invested in were things like say when the SMP Oh, when the s&p was at like, say 3300. What anybody would do is he’d buy options at say 2800 or 2500, or something like that way, way, way out of the money which it turns out hit. If you have an option that goes from super far out of the money to all of a sudden now the market price is at the option price, your price just goes up a hockey stick curve And that’s almost certainly what they did. Because those are going to be your most liquid options. Those are the options you can get for the longest amount of time. You know, and then of course, you can also do things like you can cherry pick weak companies, you know, like, of course, when Tesla was trading at 900 bucks, that’s an easy long term put just go way, way out of the money because, you know, they’re going down, you know, a number of other over leveraged companies that are extremely fragile. You know, when you have a research staff that’s looking for companies like that you can you can use financial derivatives very effectively. That way, you know, you can also use financial derivatives very ineffectively. But, you know, that’s how the game works.

 

Jason Hartman  15:34

What you’re basically doing is just betting on the long shot. And so the long shot bet is a cheap bet. And the odds are good, but again, or sorry, the, the odds aren’t good, the odds are terrible, but when it pays, it pays big. That’s what I meant to say. It’s like, you know, going to the horse races and betting on the horse that never wins. You know, it’s the odds are that you’re going to lose your money, but you don’t lose them. Much and the payoff is big. So

 

Doug 16:03

exactly what

 

Jason Hartman  16:04

what does this tell us for real estate investors? If anything, maybe nothing so,

 

Doug 16:10

so I think what it tells us for real estate investors is that in the case of Spitz Nagel, he was positioned to take advantage when there was a big disruption. You know, now most real estate investors aren’t going to be allocating, you know, say like, you know, $50 million to university capital, you know, but, you know, we just don’t have the capital base to play in that kind of game. But what we can do is we can make sure that we are adjusting our personal portfolios so that we have the ability to be flexible, because I know that one of the ideas that you present in the pandemic investing is to segment your capital between right you know, between cash flow, your regular cash flow holdings, to have some speculation for upside, to have some hedging to protect against downside and to keep some of your holdings just in cash just in liquid reserves. And at the That construct is really important because what it does is it lets you shift your position as the market market evolves. So for example, one of my clients that I was talking to recently, he has a property in the San Francisco Bay Area, that’s it’s a multiplex, it’s doing very well. And he was concerned about not being able to replace all the cash flow, if he took the equity out of that and then reinvested it someplace else, you know, ideally, someplace down like, you know, someplace like Texas or Florida. Well, but some of the conversations we’ve been having are that, you know, the Bay Area right now is basically at or very near a price peak. And of course, it’s hard to attend the market but it’s hard to imagine that the Bay Area is going to continue appreciating the way that it has in the future. Well, so one way

 

Jason Hartman  17:47

you when you say at or very near price pq you’re insanely optimistic, if you better go ahead. Okay.

 

Doug 17:55

But what and so that’s the thing. Yeah, the a lot of real estate in the Bay Area is actually probably down off its peak. Oh, yeah. And, and it’s not probably not gonna be back there for a very long time very long time. Because I think the the prior peak was 2007. And it took until I think about, what, three or four years ago, or something like that, you know, it took almost a full decade to get back to that those peak levels. And it’s very likely that it’s going to be at least five to eight years before the recent peak levels we saw just a couple months ago, before those can be replicated. So the question is, right, you know, if you can pull some equity out of you know, of something that you have in a volatile market, like, say, the Bay Area or Southern California or New York, then what you can do is you can say, okay, you know, now you have some flexibility because you have a cash base. And for example, you know, he’s very fond of our LMS and Jacksonville, right. And so this particular client, he’s, he’s developed a very good relationship with one of our local market specialists down in the Florida area, you know, down in the Florida coast. And one of the things that he really likes that we talked about a lot is how there’s a lot of population that’s missing. migrating toward Florida a lot of population from the east coast is moving toward Florida. Just because you know the fate the favorable weather, the favorable tax status, etc. Well, when you have these population migrations, what it does is it puts upward pressure on both price and rents. In all likelihood in the near future, there’s going to be probably more upward pressure on rents. But at the area where our clients are investing, you’re also going to have upward pressure on prices, because you’ll have a lot of people coming down from more expensive real estate. And if we have a quality product that’s priced below median for an area, it you know, it’s very hard. It’s very hard to imagine a situation where you wouldn’t have demand for those types of properties. So

 

Jason Hartman  19:40

this is such a significant trend and we’ve been talking about it on the show for quite, you know quite a while now. This mass migration out of high density, expensive areas to low density suburban areas. And it’s Think of it like this everybody listening. It’s like the person in Las Vegas who just won a bunch of money, and they’re, you know, they go out and they celebrate. And they spend money like a drunken sailor. And that’s kind of how it is. Or it’s sort of like, when when we’ve, you know, there, it depends on the era, there have been times when, for example, Australian investors or from any part of the world, but I’ll use Australia as an example because that was a particular one, where our dollar made our real estate look cheap to them, and they came here and bought up stuff like crazy. And even if the the investment wasn’t that good, they were simply arbitrage in the currency trade. Okay? Just the currency trade alone made the deal. Good. Okay. And, you know, that can work both ways, obviously. But when someone leaves New York City with the astronomically overpriced real estate there, and they sell their property, even at a loss or maybe they don’t even own but They take their housing budget, and they bring it to a place like Florida. It’s like everything looks super cheap to them. And so they spend more freely. And when they spend more freely into the market, that really puts upward pressure on prices. So this is the trend that is already happening to a small extent. But as these quarantines are lifted is going to really, really gain steam. And I’m not just talking about New York and Florida, I’m talking about any high density living anywhere, moving into lower density living where people can socially distance and feel safer. And, frankly, that trend was was already underway. This is just putting it on steroids and adding rocket fuel to it because the trend was already happening. And we’ve reported on that for years and years, but now it’s got legs galore. And if you want to Look at some numbers for a moment. Doug, you’re a numbers guy for sure. Absolutely. Let me just tell you about rental units only this does not I want to clarify, this does not include condos. This is only rental units, okay, mid rise and high rise buildings in terms of rental units. And during the pandemic investing, webinar presentation that we will be announcing Soon, we will go into this in greater detail. But there are about 2.3 million of those units now that are mid and high rise. In other words, places where people are trapped in an elevator, a danger zone, and places where most of the time people are using mass transit, another Danger Zone, that’s 2.3 million units. Now, each unit has maybe two people, for example, if only 15% of those people want to move, and I think that’s a small number. By the way. I think it’s going to be bigger than that. Okay, now, just because they want to move doesn’t mean they all will move, whatever. I think there’s going to be a higher number than that in terms of potential Movers. That’s 340,000 units needed. Spread that among 50. markets. That’s another almost 7000 homes needed in each market in an era when we already had before any of this a massive housing shortage.

 

Doug 23:32

Okay, and Jason, I’d actually like to append on what you’re saying. Sure. You’re saying there’s what 700,000 homes needed, and they’re not 700,000 340,000?

 

Jason Hartman  23:42

Okay. Yeah. 340,018% number move. Yeah, exactly.

 

Doug 23:45

Yep. They’re not 340,000 homes that cost $750,000. He actually they’re 350 or 300,000 homes that probably need to be more in the two fifth right around in that Yeah, and the sub 250 which there’s Not a lot of inventory,

 

Jason Hartman  24:01

right? Well, not only that, but think about if someone owns their high rise condo in New York, they sell it for $3 million. Or say they kind of do a fire sale and they sell it for 2.5 million. So two and a half million dollars, they move to suburbia, and to get a just a gorgeous home in suburbia, they can spend 600,000. Now their housing cost has dropped dramatically. Everybody’s worried about the economy being so bad, but look at all the extra spending money that family now has look at their ability to buy additional rental properties and the upward price pressure that creates. Okay, so I mean, are investors following our plan can just win win win. Now, I’m not saying the economy is okay because I don’t think it’s okay at all. I think the economy’s got major problems. But the issue is it’s this war between the economy overall All in the mass migration trend and how it affects real estate both rental and for sale real estate in markets we’re targeting that you can find at Jason Hartman comm slash properties. There’s your There’s your Spitz Nagel hedge fund strategy in real estate, right?

 

Doug 25:19

Well, and I think that the the two ideas play in because in the Tower of capital, one of the things that Spitz tinkle does is he contrasts while comparison contrast sunsoo versus Carl von Clausewitz, because, in a lot of cases,

 

Jason Hartman  25:34

The Art of War at some zoo, but what and then what is Karl’s philosophy?

 

Doug 25:39

So Clausewitz was a Prussian military thinker in the early very early 19th century. And he his book is called on war. And it’s about basically it’s about it’s about your tactics and strategy of warfare, but it’s really about how warfare is an extension of commerce and more aptly an extension of politics. Meaning that strategies that are used in warfare can be applied to, you know, can be cross applied to many different, you know, to many, many different spheres of human existence. Right, you know, because a lot of people think, okay, war is just killing people. Well, not quite. There’s a lot of strategy involved. And the strategy is, how do you position yourself so that your consumption of resources for maintaining your standing army, your ability to defend and your ability to attack plus counter attack are all optimized, you know, because what a lot of people do, especially in the era, is they immediately go for a quick win, or they go for a, you know, for visible wind. In our case, it would be somebody who’s going for as much money as they can make right now. But what that would do is that would lock them into that that would lock them into certain positions that would limit their flexibility. And so what would happen is you’d have say, for example, one general who would retreat their army someone would pursue after them, they’d get overextended and then they could turn their flank and actually defeat a much larger force with a small concentrated force. The the think the extension to investors is that flexibility is really important. So like, for example, you’re talking about, say somebody who moves out of the city and moves into the suburbs. And then now they have some extra capital that they can hold reserve and then they can use to start buying rental properties. And because I’d like some clients that I’ve had, they’ve said, Okay, well, you know, I’m, you know, I’m going to liquidate some holdings, I’m going to have some capital, I’m wondering whether I should deploy it all at once, or that I should hold sit on it or what I should do. And my you know, my advice is usually to just make a plan and follow a methodical plan because it might be an L shaped recovery, it might be a U shaped recovery, it might be a V shaped recovery, we don’t know. And so you know, what you do when you don’t know is just make a plan and be methodical and consistent because then that gives you flexibility. So instead of buying say 10 houses right now, maybe you pick up two and then two more, and then two more and then two more, but by just being methodical with that really does is it you know, it gives you that flexibility and that positive movement that will that will really help you adapt to however the market unfolds, because we don’t know.

 

Jason Hartman  28:11

Right? And is that another way of saying dollar cost averaging?

 

Doug 28:15

Exactly. Yes. That is a although, you know, yeah, that, that that’s a way you know, it’s basically averaging in or your dollar cost averaging, you know, the way that you would do that, the way that your financial planner would recommend doing that, is to just basically put the same amount of money into a mutual fund every single month.

 

Jason Hartman  28:34

You know, a lot of fair warning, though, a lot of times dollar cost averaging, is just being used, particularly by the Wall Street cartel, to essentially just get you to keep investing in crappy investments. So, you know, to be fair, I mean, the concept certainly makes sense in some ways, but it’s also used as that cover, which is what I hate about it. You know, so

 

Doug 29:01

yeah, and see that’s the thing yet yeah, averaging can’t turn a bad investment into a good one. what it can do is it can smooth out your timing, so that you don’t have to try to figure out the exact top or bottom.

 

Jason Hartman  29:12

Right, right, which nobody can figure out. Okay. And that is correct. And that’s definitely the thing. So good stuff. You know, let’s talk about market timing for a moment, then we’ll wrap it up. So the market timers always I find them incredibly frustrating and silly. And here’s why. Number one, they say things like this, well, I’m going to keep my cash so I can pounce on all the deals during the next recession. And I’m gonna really profit by doing that, while that’s what they say. But then what they forget to say is that they said this in 2013. And they waited seven years for the pandemic to happen or the recession. We got it this way, which it was coming anyway. Because it’s always coming. And they lost out on the opportunity to get any return during that time because they were in cash. So they didn’t buy those real estate deals because they thought they were too expensive. They didn’t buy the stocks because they thought they were too expensive. So they missed everything. And taxes and inflation ate them alive. So they never calculate the return, they lose by waiting. That’s a dog that doesn’t bark, because it’s an opportunity cost. And then the other thing that happens is when it comes to real estate, they don’t consider their motion, mostly lack of ability to obtain good financing. It’s amazing, Doug, how myopic people are. I hear all these economists like these supposedly brilliant people. One that I’m particularly frustrated with is Robert Shiller, Nobel laureate Robert Shiller who completely complete pletely misses the whole concept of real estate. He acts as though everybody buys real estate with cash. And their only return on the real estate is the nominal appreciation, rather than the multi dimensional benefits of that investment. That’s one thing. Another thing is his index is two thirds waited on cyclical markets, super frustrating. But the thing they don’t consider these market timers is the price of the money. They think they’re just buying the house. What they’re really buying is the mortgage. And they say, well, housing prices have gone way up. In fact, they’re at the price they were before the last peak. Okay, and then what happened we had a recession. But what you didn’t notice is what the mortgage payment was at that time, versus what the mortgage payment is today. That’s the true cost of the house. It’s not the price. It’s payment. People don’t buy houses on a price they buy it on a payment if they bought it on a price houses would hardly appreciate it all. They’re buying it because the payment is affordable not because that price they don’t care about the price. Nobody says oh gosh, this house is $400,000 so it’s too much for us know they say okay the payment on this house now is only $2,000 and gosh you know we were looking 12 years ago and the payment on a house like this they don’t care about the price just a house like this square footage age neighborhood, etc. Okay, was 20 $800 it’s cheaper now. Houses are cheaper. Okay, because you evaluated on a payment not a price. Oh, my God, that seems so simple. But apparently Nobel laureate economist can’t seem to figure that out. blows my mind.

 

Doug 32:54

Yeah. And and also, I think it goes even a little further than that. Because unlike A lot of cases people, it’s like you say you want to evaluate on a nominal payment, but if you evaluate under real payment, and then deflate for constant value dollars, oh, yeah, very good. Yeah, sure, yeah. That the real cost of owning houses is actually surprisingly affordable.

 

Jason Hartman  33:14

It’s it’s incredibly cheap. Really? Yes. So inflation adjusted real dollar mortgage payments. That is the only real metric you should give a lot of weight to. Of course, there are some other things, but that’s the one you really look at. And, you know, it’s stated fairly clearly in the housing affordability index. So there you go. Don’t get any final remarks to wrap this one up.

 

Doug 33:42

Well, I think the main thing is just that, you know, there’s there’s a lot of fear out there and I don’t think people need to be afraid. I mean, cautious, yes. aware, yes. But afraid. No, there’s going to be opportunities. And, you know, for people who are paying attention and taking action, they’re, you know, there’s no reason to think that you know, that you know that the future is going to be you know, is going to be blighted. You know, the future is going to be difficult for a while, but then it’s going to be the future. And there’ll be opportunities. So just take them.

 

Jason Hartman  34:11

There’s always opportunities, always opportunities. Good stuff. Doug, thank you so much for joining us. Anybody can have you help them with their investment purchases, go to Jason Hartman calm or reach out at one 800 Hartman and until tomorrow, happy investing, happy investing. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.