Based Camp - Pragmatic Investing

00:00:00.000 This is boring, basic financial advice,

00:00:02.820 but I feel like everyone out there

00:00:04.280 is some sort of get what's quick guru.

00:00:06.260 When I look at financial advice,

00:00:07.880 it's people looking at all these charts

00:00:10.160 and making it really complicated

00:00:11.980 and they're way above my pay grade

00:00:14.540 or like way below my pay grade,

00:00:16.200 but pretending to be above, which is the worst.

00:00:18.600 Would you like to know more?

00:00:20.020 Hello, Simone. 0.69

00:00:21.280 It is exciting to be here with you today.

00:00:24.200 I'm so excited.

00:00:25.280 Yeah, we're going to talk today

00:00:26.560 about the most important investment of all,

00:00:29.220 your health.

00:00:29.540 No, just kidding.

00:00:30.460 We're constantly sick because we have kids in school.

00:00:32.480 So the most important investment of all is money?

00:00:34.840 Yeah, the most important investment of all, money.

00:00:37.260 Screw your health.

00:00:38.220 That's a good, that's a good, for your health. 0.96

00:00:40.180 Burn bright, die young, right?

00:00:42.000 Yeah, so it is true.

00:00:43.420 The most important investment is money.

00:00:46.640 After maybe kids, I guess, like, you know,

00:00:49.000 we are pernatalists,

00:00:49.900 so we've got to say that matters as well.

00:00:51.340 But I, you know, I don't know how much actual control

00:00:54.240 you have over the outcome of that.

00:00:56.100 I think it's-

00:00:56.360 That's why you need to have a diversified portfolio.

00:00:58.020 Shoot, that means a lot of kids.

00:01:02.680 Yes.

00:01:03.320 So this is actually a follow-up episode

00:01:05.120 to an episode that we did on how to get rich,

00:01:08.300 where we just went over, like, you know,

00:01:10.240 the basics of, like, the actual financial world,

00:01:12.520 starting companies, stuff like that.

00:01:14.020 And I think we'll do more topics on this

00:01:15.780 because the video did really, really well.

00:01:17.960 And I did not expect it to do well

00:01:20.020 because it's not our normal sort of a topic.

00:01:21.940 But obviously, it's something I know a lot about.

00:01:24.240 I should mention, you know, degree.

00:01:26.040 I've got my MBA from Stanford.

00:01:28.000 Simone has her graduate degree from Cambridge.

00:01:30.860 Both of us have worked in venture capital.

00:01:32.420 Both of us have worked in private equity.

00:01:34.940 And when it comes to investments,

00:01:38.040 Simone, you had a really interesting way of framing it

00:01:41.000 that you were going over with me earlier today about sort of-

00:01:43.040 Yeah, we were talking about the issue of many people we know

00:01:48.700 who've made a lot of money through investing,

00:01:50.820 doing it essentially by making bets, like all-in bets,

00:01:54.220 that tactically, strategically, statistically,

00:01:58.300 weren't very ill-advised, but then paid off.

00:02:01.680 And then they just assume, I'm a great investor.

00:02:04.320 And you actually saw a lot of this happen during the pandemic.

00:02:07.140 And I think a lot of poker players and coaches

00:02:11.600 who, like, teach Bayesian thinking now

00:02:13.940 who have really summed up this kind of thinking really well.

00:02:18.020 They talk about when they're coaching poker players

00:02:19.940 and they teach them to think in sort of a Bayesian way

00:02:23.600 to make very well-considered bets,

00:02:26.720 which are always calculated bets.

00:02:28.640 And a thing that constantly frustrates them

00:02:30.360 is the people they're coaching.

00:02:31.580 Like, they'll lose a hand.

00:02:32.820 And they'll be like, yeah, well, I made the wrong choice.

00:02:35.500 I messed up because I lost.

00:02:36.900 And they're like, no, no, no.

00:02:38.700 You didn't make the wrong choice because you lost.

00:02:40.780 You made the right choice, but you still lost.

00:02:43.060 Because in the end, there's some chance involved in these bets.

00:02:46.800 And the same case happens with investing.

00:02:49.420 Sometimes you make all the right choices and you lose money.

00:02:52.460 But also, sometimes you make all the wrong choices

00:02:54.900 and you make a ton of money.

00:02:56.640 That doesn't mean you're a good investor.

00:02:58.000 That doesn't mean you thought through things well

00:02:59.720 or had a very robust strategy.

00:03:01.500 And in the end, over the long run,

00:03:03.980 you're probably going to lose money

00:03:05.520 if you don't think in a more calculated

00:03:09.040 and statistically sound manner.

00:03:11.420 Which, you know, is what we've seen, right?

00:03:12.960 You were talking about all the people you know

00:03:14.500 who used to make tons of money.

00:03:16.800 Like, I mean, they put everything on Bitcoin.

00:03:18.620 And now, you know.

00:03:20.040 Yeah, no.

00:03:20.640 And I think that for a lot of people,

00:03:22.640 and this is a great, like, evoked set,

00:03:24.340 look at your friends who are bragging

00:03:25.760 about what great investors they were

00:03:27.300 during the last Bitcoin bull run.

00:03:29.520 And we're believers in Bitcoin.

00:03:31.980 But I think that a lot of people

00:03:33.340 overinvest in single assets

00:03:35.360 because it's an asset that they have built

00:03:37.220 a portion of their identity around.

00:03:39.380 And this is something we increasingly see in investing.

00:03:42.600 Whether it's in the crypto space

00:03:44.460 or whether it's in the, you know, like.

00:03:48.120 Or just a stock.

00:03:48.900 Like a stock people really identify with.

00:03:50.700 Or like an industry people really identify with.

00:03:53.500 Yeah.

00:03:54.180 And this is something that in the short term,

00:03:57.460 when I look at these people who were all bragging about this

00:04:00.140 in my, like, Facebook feed and stuff like that,

00:04:02.600 they are not bragging much anymore

00:04:04.200 because what ends up happening very frequently

00:04:07.380 is somebody makes one of these ill-advised bets.

00:04:10.780 It pays off.

00:04:12.340 They now think, oh, I can make, like, an income investing. 1.00

00:04:16.720 So then they start doing, like, really idiotic stuff, 0.99

00:04:19.940 like leveraged investing and stuff like that. 1.00

00:04:22.340 And hold on.

00:04:23.020 I'm going to explain what I mean 1.00

00:04:23.920 when I say leveraged investing is idiotic stuff. 0.99

00:04:26.160 Um, so during bull cycles, 1.00

00:04:29.960 this is something that always happens.

00:04:31.420 Somebody accidentally makes some money investing.

00:04:34.060 They think, well, if I make that amount of money investing

00:04:36.940 every month going forward,

00:04:38.960 then I don't need to work anymore.

00:04:40.700 How can I make more money investing?

00:04:43.040 And then, of course, they find out about leveraged investing.

00:04:45.620 And they go, oh, so this is just, like, a thing

00:04:47.900 where, like, if I'm really smart about my polls

00:04:50.880 and my puts and everything like that, right,

00:04:52.680 like, I can regularly, on average,

00:04:56.000 make money through this investing thing.

00:04:58.440 And that is true for some people.

00:05:00.100 We have some friends who just make astronomical amounts of money

00:05:03.480 through this kind of investing.

00:05:05.720 Yeah.

00:05:06.240 Every single one of them

00:05:07.820 is the type of person who did math for fun

00:05:11.660 before getting into this.

00:05:14.120 Yes.

00:05:14.620 They were all, like, theoretical math people

00:05:17.300 from, like, MIT or, like, programmers

00:05:20.340 who do a lot of programming or, like, AI stuff for fun.

00:05:24.220 The people who do this well,

00:05:26.500 who can actually make money

00:05:27.900 with this sort of investing as an income stream,

00:05:31.660 these are individuals who just have an enormous love

00:05:36.580 and talent for a specific kind of math.

00:05:39.880 If the reason you are going into leveraged investing

00:05:43.900 is because you want to make money,

00:05:46.820 you will fail.

00:05:48.480 Maybe not the first time,

00:05:50.060 but eventually you will fail.

00:05:51.800 It is not a good, reliable stream of income.

00:05:55.140 It is gambling.

00:05:56.780 It is just gambling.

00:05:58.340 And you can make money gambling,

00:06:00.340 but most of the people who make money gambling

00:06:02.120 are math nerds.

00:06:03.260 They're not, like, gambling nerds.

00:06:05.560 I mean, there's a few, you know,

00:06:07.680 obviously, like, people who are just, like,

00:06:09.720 uniquely good at gambling gambling.

00:06:11.520 But when you talk about the people

00:06:13.120 who the casinos are afraid of,

00:06:14.980 they're the math nerds, right?

00:06:16.720 And so if that's not your thing,

00:06:18.760 don't go into that field

00:06:20.300 as a safe source of income

00:06:23.720 for you and your family.

00:06:25.520 So we're starting with, like,

00:06:26.760 some of the things you shouldn't do.

00:06:28.080 And as Simone pointed out,

00:06:29.640 and I actually, you know,

00:06:30.660 I was talking with some of my friends

00:06:31.940 after they made a bunch of money on Bitcoin.

00:06:33.560 I was like, so you're going to balance

00:06:34.680 your portfolio now, right?

00:06:35.820 You made a big windfall.

00:06:36.840 You're going to balance your portfolio now.

00:06:38.740 And they're like, no,

00:06:40.320 my windfall has validated for me

00:06:42.640 that I need to further consolidate

00:06:44.100 my portfolio around the area of my windfall,

00:06:48.100 which is how they usually end up

00:06:49.940 losing more money than they made

00:06:51.340 during their lucky streak.

00:06:52.840 So let's talk about a balanced portfolio

00:06:55.140 and how you should be thinking about it

00:06:57.180 in the world that we're going into.

00:06:58.980 Oh, and before we go any further,

00:07:00.680 we are not investment advisors.

00:07:02.960 We're not giving you investment advice. 0.97

00:07:04.420 We're talking shit about other people, all right? 0.97

00:07:07.200 And we are talking about how we- 1.00

00:07:08.460 Oh, shit shit here. 1.00

00:07:09.140 The second investment advice. 1.00

00:07:10.480 Yeah, we are not.

00:07:11.420 Yes, this is not advice.

00:07:13.860 I just want to make that really, really clear.

00:07:16.740 So if, yeah, no, we're talking about how we do it 0.97

00:07:18.920 and we're talking shit about people, okay? 0.98

00:07:20.500 That's it. 0.99

00:07:21.260 Yeah.

00:07:21.480 So this is the way I would suggest

00:07:24.100 handling your investments.

00:07:26.640 I strongly suggest that you,

00:07:29.100 with your spouse or your family

00:07:31.320 or whoever, you know, is co-related to your assets.

00:07:34.840 And of course, once you intermingle your assets,

00:07:36.580 it makes divorces much harder.

00:07:38.380 So like this is for people

00:07:39.580 in like really aligned marriages,

00:07:41.340 but it does really help to be able

00:07:43.140 to bounce ideas off of another person

00:07:44.680 is I guess what I'm saying here.

00:07:46.300 So you talk through,

00:07:50.400 or I guess was yourself,

00:07:51.640 like on a long walk or something like that,

00:07:53.620 what you think is going to change about the world.

00:07:56.900 And I would generally develop

00:07:58.520 three sort of strategies, right?

00:08:01.660 One is, I call them short-term strategies.

00:08:04.420 One is mid-term strategies.

00:08:06.260 And one is long-term strategies.

00:08:09.320 Using what you predict to change about the world

00:08:12.920 in the near future,

00:08:14.280 make investments.

00:08:16.300 But whenever you make an investment,

00:08:18.060 and you can do this through like E-Trade

00:08:19.180 or something like that.

00:08:20.020 That's a good general site for beginners, I think.

00:08:23.000 Whenever you make one of these investments,

00:08:25.700 be aware that you need to set

00:08:27.460 sort of a clock for yourself

00:08:28.760 of when you're withdrawing that investment.

00:08:31.620 Unless it's in the like

00:08:32.720 ultra long-term investment strategy.

00:08:35.100 And when you withdraw the investment

00:08:37.240 is typically when an event resolves

00:08:40.200 or when, so for example,

00:08:42.560 we had a high confidence

00:08:44.640 that there was about to be an armed conflict

00:08:46.620 leading up to the Ukrainian war.

00:08:48.560 And so we invested in a lot of military companies

00:08:51.180 during that time period.

00:08:53.080 When the war started,

00:08:54.080 I go to Simone and I go,

00:08:55.220 withdraw all our military investments.

00:08:57.280 And a lot of people would be like,

00:08:58.420 wait, why aren't you investing

00:08:59.300 when the war is going, right?

00:09:01.860 Like that's when the companies are doing well.

00:09:03.380 No, that's when the market forces have said,

00:09:06.300 oh, they're unlikely to get

00:09:09.220 like additional cash flows going into them

00:09:12.820 once the war is already going on.

00:09:14.180 Like unpredicted cash flows.

00:09:16.000 It's once the unpredicted situation

00:09:18.000 that you predicted resolves

00:09:19.900 is when you withdraw your money from the market.

00:09:22.520 And this is really critical that you do this.

00:09:26.200 And then that you don't do the silly thing,

00:09:28.420 which is double down 0.64

00:09:29.380 because you made one right bet.

00:09:31.660 So for example, if you're like,

00:09:33.380 oh, this COVID thing,

00:09:34.240 other people don't see coming,

00:09:35.800 I am going to make bets

00:09:38.060 that assume it's going to be here.

00:09:40.420 And then you make some money on that.

00:09:42.100 Don't bet on the same thing

00:09:44.240 that you already just bet on happening further and more.

00:09:47.880 You can make money on that,

00:09:49.300 but most of the people I know who keep doing that

00:09:51.460 end up getting burned more than resolved in their favor.

00:09:55.100 Well, you're saying that basically

00:09:56.760 once mainstream society,

00:09:59.120 or at least a large segment of people

00:10:00.980 have normalized to an idea,

00:10:02.420 you're not going to make money off of it anymore.

00:10:05.120 You're going to make money off of something

00:10:06.420 when you realize that there's a trend coming

00:10:08.380 that other people have not yet really realized

00:10:11.440 or acted upon.

00:10:12.640 But once it's a mainstream idea,

00:10:14.740 like during the pandemic, for example,

00:10:16.760 we knew a lot of people who like,

00:10:18.540 well into the pandemic,

00:10:19.540 were like, oh, I'm going to do mask production.

00:10:21.820 No, they all lost money

00:10:23.520 because it was too late.

00:10:24.980 It was too late already.

00:10:26.220 So you have to think way, way ahead of the curve.

00:10:28.540 Once everyone knows that something is needed,

00:10:30.260 that's priced into the market.

00:10:32.660 Yeah.

00:10:33.680 Okay.

00:10:34.060 So the next thing we're going to talk about

00:10:35.860 is like categories of investment, right?

00:10:37.880 So you want your specific company plays, right?

00:10:41.940 So this is just like,

00:10:42.800 I'm investing in this company

00:10:43.720 or this company or this company.

00:10:45.000 And then you want to invest in some,

00:10:47.960 either ETFs or mutual funds.

00:10:50.760 These are honestly,

00:10:52.740 from the perspective of your like lay investor,

00:10:54.960 you can basically think of them as the same thing.

00:10:57.500 They have different like tax implications

00:10:59.500 and different ways they distribute money

00:11:01.200 and different ways that you reach them as investments,

00:11:03.960 but they're basically collections of companies.

00:11:06.580 So suppose you have a thesis around like

00:11:08.460 some country in South America, for example.

00:11:11.860 Well, then what you do is you,

00:11:15.080 oh, by the way, Simone,

00:11:16.480 can you please withdraw all our South America investments

00:11:18.880 because a lot of them are really reliant on China

00:11:21.220 and I do not expect positive stuff from China 1.00

00:11:24.640 in the near future.

00:11:25.660 Making a note.

00:11:27.500 Ah, you see, this is how you handle investments, right?

00:11:32.740 Because I had forgotten that we hadn't withdrawn

00:11:34.240 all our South American plays.

00:11:35.600 This is how we handle investments

00:11:37.100 and we're not giving anyone advice.

00:11:38.640 Yeah, we're not giving anyone advice.

00:11:39.980 Yeah, I was saying,

00:11:40.580 so this is really useful if you're like,

00:11:42.120 oh, I think this country will do well,

00:11:43.400 then you can look up like ETFs or mutual funds

00:11:45.620 that are tied to that resource or country or play, right?

00:11:50.640 Like I think oil producers will do well.

00:11:53.740 And then you can look up like oil producer ETFs.

00:11:55.500 A recent one for us has been uranium, right?

00:11:59.540 We think uranium will do well.

00:12:01.100 It was really depressed in price after the Fukushima situation.

00:12:06.180 And it's been pretty depressed for a while now.

00:12:07.880 But I think after what's happening in Germany right now,

00:12:10.740 the world's waking up that nuclear reactors

00:12:12.860 were actually pretty high utility.

00:12:14.160 And we're going to get some more online.

00:12:16.420 And once people see that,

00:12:17.840 then we sell our uranium stocks

00:12:19.720 as soon as some country announces a plan

00:12:21.980 to build a bunch of nuclear reactors.

00:12:23.540 I don't wait till the nuclear reactors are there to withdraw.

00:12:26.540 In terms of real estate investment,

00:12:28.900 a lot of people will tell you,

00:12:30.100 oh, it's so easy.

00:12:31.140 Do real estate investment

00:12:32.260 and go into all this debt to do it.

00:12:33.940 And it's like,

00:12:34.960 that makes sense for a portion of your portfolio.

00:12:37.680 And when you do own real estate,

00:12:39.740 you should have debt on that real estate. 0.99

00:12:42.640 It's kind of stupid not to in a growing economy. 0.99

00:12:47.440 Right now, though, it's really screwing people over. 0.99

00:12:49.720 What?

00:12:50.380 Right now, it's not going up.

00:12:51.820 Yeah, right now, it's not going well.

00:12:53.440 But it is the financially responsible thing to do

00:12:56.060 in the way that the world economy has worked historically.

00:12:58.600 Yeah, yes.

00:12:59.120 Which may transform,

00:13:00.480 but I think it'll be about 30 years before it transforms.

00:13:03.000 Yeah.

00:13:03.320 I.e., an economy that's shrinking on average,

00:13:06.040 which is one thing we've talked a lot about

00:13:07.420 in terms of the way that things are going to resolve

00:13:10.240 in regards to demographic collapse.

00:13:12.060 Right.

00:13:12.620 Now, something to note with real estate is,

00:13:15.180 you know, with the world's population

00:13:16.680 not growing as much in developed countries anymore,

00:13:19.060 a lot of people can be like,

00:13:19.880 why are real estate prices continuing to go up?

00:13:22.580 I think this can be very confusing to a lot of people.

00:13:24.940 And it's important to understand what's going on here.

00:13:27.180 What's going on is that families

00:13:28.960 where you used to have like five people to a household,

00:13:31.580 now everybody wants their own house

00:13:32.900 because they're not finding partners anymore,

00:13:35.120 which is why you see this increase in price

00:13:37.940 in things like starter homes and stuff like that,

00:13:40.540 which is interesting.

00:13:41.580 You know, it provides for some economic opportunities,

00:13:44.020 but it is a short-term sort of like market unequilibrium

00:13:48.040 and not a long-term solution.

00:13:49.560 A good play that I would do

00:13:51.780 if I had some cash aside in real estate

00:13:54.060 is buying the types of assets that private equity firms,

00:13:57.960 and this is something that's really important to note.

00:13:59.660 We mentioned this with buying companies as well.

00:14:01.500 There are assets that you can buy and make money off of

00:14:05.320 in ways that a private equity firm

00:14:07.300 would make money off of something,

00:14:08.600 but that are too small to be worth it

00:14:10.780 for the effort of a private equity firm.

00:14:12.880 So if you're buying some like historic building

00:14:14.860 and you're transforming it

00:14:16.300 and dealing with, you know, coding and stuff like that

00:14:18.900 and turning it into like a five-bedroom,

00:14:20.920 like starter housing, right?

00:14:22.160 Like a five separate bedrooms.

00:14:24.320 What's the word I'm looking for?

00:14:25.220 Five singles apartment unit, right?

00:14:27.420 That can be really powerful

00:14:29.640 because that's just like too small

00:14:31.320 for most private equity firms to care about.

00:14:33.600 And yet it can be, you know,

00:14:34.560 an enormous opportunity to make money

00:14:37.440 with a little bit of risk around zoning

00:14:39.240 and stuff like that, depending on how you handle it.

00:14:41.540 So that's real estate.

00:14:43.980 I would generally, I mean,

00:14:45.840 whether or not you own your house,

00:14:47.220 it just depends on how quickly you plan to move.

00:14:50.380 I guess I'd suggest anywhere you plan to stay

00:14:51.980 for over six years, you should probably own.

00:14:54.240 But it really depends, you know,

00:14:55.600 on the sort of like rent versus buy.

00:14:57.040 It depends on interest rates.

00:14:58.020 It depends on the market.

00:14:59.480 It also depends like on people's desired quality of life.

00:15:02.880 But often it's a really bad idea to own a house.

00:15:05.860 I think-

00:15:06.360 We need to do a whole video on buying houses

00:15:08.420 because we have documents and documents on buying houses.

00:15:11.400 It seems like in many cases, you know,

00:15:12.980 you spend so much money maintaining a house

00:15:14.940 that it can be really hard depending on the market

00:15:16.840 to even make a profit.

00:15:17.900 Anyway, so next, crypto assets.

00:15:22.160 Bitcoin, I'd say you always got to eat your broccoli.

00:15:25.600 It was crypto assets.

00:15:26.720 And by that, what I mean is we personally have a rule

00:15:29.780 that any money we deploy in any crypto asset

00:15:32.360 gets matched with a deployment in Bitcoin

00:15:34.300 because it is the, I think, long-term,

00:15:37.680 the safest crypto asset.

00:15:39.160 As to why Bitcoin is like, we're not,

00:15:41.500 I was thinking about doing a full video on Bitcoin,

00:15:43.300 but I don't really think I need to.

00:15:44.840 I can just sort of talk about it a bit here,

00:15:46.880 which is interesting

00:15:47.460 because there's a lot of smart people

00:15:48.480 who don't seem to get why Bitcoin is such a thing of value.

00:15:52.000 You know, you look at like Peter Zaihan,

00:15:53.800 like we agree with him on a lot of stuff

00:15:55.060 and he thinks Bitcoin is just sort of pointless.

00:15:57.000 And I'm like, how, what?

00:15:59.440 Okay, so let's go back a bit.

00:16:02.300 Why do things like art have a lot of value, right?

00:16:06.580 This is an important question

00:16:08.280 that individuals should be asking themselves, right?

00:16:10.240 They have a lot more value than like their actual value.

00:16:13.040 It's because there is a limited quantity of them

00:16:16.640 and a wealthy society can use them

00:16:19.960 as a very lightweight store of value

00:16:23.340 if they ever need to move or leave or flee a country.

00:16:27.260 They are very useful value stores.

00:16:30.220 You can think of them almost like

00:16:31.460 printing something on money.

00:16:32.300 Now, of course,

00:16:33.020 there's also a lot of market manipulation in art.

00:16:34.860 I would not suggest art investment personally,

00:16:37.440 unless you have an enormous knowledge of art.

00:16:39.420 If you're interested in something like art investment,

00:16:42.460 instead invest in an area that you actually care about

00:16:44.920 and have a passion for, like Magic the Gathering

00:16:47.480 or something like that.

00:16:48.740 We know people who've made a decent amount of money

00:16:50.620 in like literal, like collectible markets.

00:16:54.380 So this is not crazy.

00:16:56.960 Yeah, but again, that's the thing

00:16:58.320 was a fixed value that is easily movable, right?

00:17:01.780 Yeah, yeah.

00:17:02.260 This is why, you know, historically,

00:17:04.280 a lot of wealthy people,

00:17:05.280 they had lots of jewels on them all the time

00:17:07.160 and stuff like that.

00:17:08.160 It was so that if they ever needed to run,

00:17:10.300 they would have a large portion of their wealth on them

00:17:12.840 in a way that could be easily sold.

00:17:14.300 Now, this matters a lot.

00:17:16.680 Where this matters was Bitcoin,

00:17:18.400 is Bitcoin is literally the first time in human history

00:17:21.940 there has been an asset class that was divisible,

00:17:26.460 easily transferable, and had a known quantity.

00:17:30.060 Like if you're talking about gold or precious stones

00:17:32.320 or something like that,

00:17:33.000 they didn't have known quantities.

00:17:34.600 If you're talking about art, it wasn't divisible.

00:17:37.700 So-

00:17:38.180 Well, I mean, now with that company

00:17:39.820 that sells fractional pieces of like a Picasso,

00:17:42.540 so it's sort of divisible.

00:17:44.320 Oh yeah, well, I guess it's kind of divisible.

00:17:45.260 Yeah, that's a good point there.

00:17:47.560 So this matters a lot in a world

00:17:51.100 that is becoming increasingly hostile

00:17:54.180 to wealthy individuals, which it is.

00:17:56.660 It is becoming increasingly hostile

00:17:58.140 to wealthy individuals.

00:17:59.040 And in which wealthy individuals,

00:18:01.820 as we predict,

00:18:03.080 like if we're predicting one of the trends

00:18:04.420 we see in the distant, like long-term future,

00:18:07.460 wealth is going to become increasingly concentrated

00:18:09.700 among the top fraction of a percent of the population.

00:18:13.820 And that population disproportionately gains value

00:18:18.140 from Bitcoin as an asset.

00:18:20.820 If you're going to ask why,

00:18:23.180 okay, like who's probably the wealthiest person

00:18:24.860 in the world right now is probably Putin, right?

00:18:26.740 So think about it, you're Putin.

00:18:29.660 If you store even a small fraction of your wealth

00:18:31.880 in something like gold and things go tits up,

00:18:35.380 as they almost did for him recently,

00:18:37.440 was that coup, right?

00:18:38.720 Well, what are you doing?

00:18:39.600 Having a line of 500 trucks full of gold

00:18:43.520 on like Russian highways?

00:18:45.460 No, it's not going to go well.

00:18:47.200 No, and you try to take that into another country 0.98

00:18:49.420 and you're screwed. 1.00

00:18:51.040 It's insane. 1.00

00:18:51.960 And this is true for people all over the world, right?

00:18:56.580 It's just a very high utility asset

00:18:59.720 for corrupt individuals,

00:19:02.860 for ultra-wealthy individuals

00:19:03.960 who don't trust their population,

00:19:05.640 for all sorts of things like that.

00:19:07.560 And we actually saw this a lot firsthand.

00:19:10.500 I think what made us really excited about Bitcoin

00:19:12.860 is the travel agency that we run, Travelmax,

00:19:16.100 has a significant client base in Venezuela.

00:19:18.720 And when we discovered Venezuelans 0.98

00:19:23.080 who were really thriving outside the country,

00:19:25.220 like what were they getting into?

00:19:27.160 What were they using prolifically?

00:19:28.500 Bitcoin.

00:19:29.220 Like it is how they got their money out of the country.

00:19:31.300 It is how they transferred wealth.

00:19:33.480 So we also see like from a like future world

00:19:37.180 and stability perspective,

00:19:38.380 how tactically useful Bitcoin is

00:19:41.500 when nations go a little crazy.

00:19:44.680 And a final thing I'd say about Bitcoin,

00:19:46.240 which is useful for people to know,

00:19:47.640 is think about your successful friends.

00:19:51.500 Divide them into two categories.

00:19:53.860 Young successful friends and old successful friends.

00:19:57.800 Your young successful friends,

00:19:59.560 do they differentially care about Bitcoin

00:20:01.540 more than your old successful friends?

00:20:03.940 And I'm talking about people who have made money

00:20:05.300 in things other than Bitcoin.

00:20:07.340 If the answer is yes, which it almost certainly is,

00:20:10.180 that means that as they gain more money,

00:20:12.340 more assets will be stored in Bitcoin

00:20:14.540 so long as they maintain this interest over time,

00:20:16.760 which just seems so obvious to me.

00:20:19.480 Like when I look at my friend group

00:20:21.580 who is like Bitcoin is a scam,

00:20:23.320 they're old people.

00:20:24.100 When I look at my friend group

00:20:25.300 who is like still really doubling down in Bitcoin,

00:20:28.160 it's young people.

00:20:29.500 Young, successful people, mind you,

00:20:31.600 who are like high producers in the economy.

00:20:34.020 And so what that tells me

00:20:35.300 is that asset will increase in value over time.

00:20:39.440 And this is another thing I'd look at

00:20:40.620 if you're looking at your long-term investments.

00:20:42.460 What's something that like all of the smart,

00:20:44.480 young people you know are investing in,

00:20:46.580 but none of the old people you know are investing, right?

00:20:50.500 That can tell you which assets

00:20:52.300 are good sort of long-term bets.

00:20:55.600 Now, after all this,

00:20:56.660 I still wouldn't suggest having more than 20 to 30% 0.95

00:20:59.480 of your personal portfolio in crypto.

00:21:01.820 I mean, we've had more than that at times.

00:21:03.540 We've had like 51% at some time.

00:21:05.420 Yeah, because the price ballooned so much.

00:21:07.660 Yeah.

00:21:08.300 But this is what I'd suggest

00:21:09.600 is like the good amount, right?

00:21:11.780 What would you say real estate for a person's portfolio?

00:21:15.520 I mean, we're not giving advice.

00:21:18.060 We're probably over-deployed in real estate.

00:21:20.420 Maybe it's like 40% of our assets.

00:21:23.880 And it's a mixture of investment in real estate businesses

00:21:26.460 and actual real estate holdings.

00:21:29.820 I'm generally really against bonds and debt.

00:21:33.020 I mean, now it's a little different.

00:21:34.780 Right now, everyone's like,

00:21:35.760 oh, it's a great market for bonds,

00:21:37.300 blah, blah, blah, blah, blah, blah.

00:21:38.300 Look, I get it, Simone.

00:21:39.600 I do not think it is good enough.

00:21:40.980 I do not think in our lifetime

00:21:42.340 there will ever be a market

00:21:43.780 where bonds make sense in the way that they did

00:21:46.880 when the mathematical models were built

00:21:49.280 that people are using to suggest

00:21:52.040 how much of your portfolio should be bonds.

00:21:55.780 So I'll explain what I mean by this.

00:21:57.860 In the 80s, the US interest rate on bonds

00:22:00.600 went up to near 20% points, right?

00:22:04.060 And this made bonds a great thing to get

00:22:06.860 because, not just for the interest

00:22:10.060 that you were getting on them,

00:22:11.660 but if the economy ever tanked,

00:22:14.560 then what the Fed would do

00:22:16.300 is they would lower the interest rate, right?

00:22:19.340 Because this would boost the economy.

00:22:21.700 And in so doing, the new bonds

00:22:23.440 would generate lower interest rates.

00:22:24.800 It might go down to like 15%, 10% or something like that.

00:22:27.460 And then this increases the value of the old bonds

00:22:29.860 that people have,

00:22:30.600 these high interest rate bonds, right?

00:22:32.460 So not only are you getting the regular cash flow,

00:22:35.460 but if the cash flow is as counter cyclical

00:22:37.580 with market trends

00:22:38.700 because of what the Fed is doing.

00:22:40.960 Now, the problem is,

00:22:42.540 is that from the 80s till today,

00:22:44.420 the Fed never really hiked the interest rate

00:22:46.380 back up again in a significant way.

00:22:48.640 So now we're basically hovering

00:22:50.660 around a 0% interest rate,

00:22:52.520 which means that if the Fed is going to do the thing,

00:22:54.840 now it's gone up a bit since then,

00:22:56.140 which is good, I suppose.

00:22:57.780 But if the Fed is going to do the thing

00:22:59.420 that it needs to do

00:23:00.280 to really increase the value of bonds,

00:23:02.320 it needs to go to a negative interest rate,

00:23:04.020 which it has done in some European countries.

00:23:06.020 This means it's basically,

00:23:07.500 it's weird.

00:23:09.760 I'm not going to get into it.

00:23:11.560 The point being is you can only go so far

00:23:13.500 in a negative interest rate

00:23:14.620 before things get really wonky.

00:23:16.880 And what this means

00:23:18.100 is that the mathematical models

00:23:19.940 that people are using to show you

00:23:21.160 that bonds are good

00:23:22.280 are from a period

00:23:23.620 at which there was like

00:23:24.880 high economic momentum behind bonds

00:23:27.160 because of their starting high interest rates.

00:23:29.740 And then they went down

00:23:30.520 over a period of time

00:23:31.480 and that made bonds,

00:23:33.040 yeah,

00:23:33.740 seem like a good asset

00:23:35.020 in a lot of these economic models,

00:23:37.040 but I just do not believe they are.

00:23:38.900 Another thing that I would say

00:23:40.340 I think is a terrible asset

00:23:41.700 to own is precious metals.

00:23:43.360 Now,

00:23:43.700 I don't consider something like uranium

00:23:45.060 a precious metal.

00:23:45.780 I consider it more like gas or something.

00:23:48.180 But let's talk about

00:23:48.900 why precious metals

00:23:49.660 are such a bad asset

00:23:50.720 to hold going forwards.

00:23:52.260 Because a lot of people are like,

00:23:53.440 well, I don't know,

00:23:54.400 precious metals,

00:23:55.360 what does it seem?

00:23:56.420 Precious metals

00:23:57.180 directly compete with crypto.

00:23:58.660 That is why people

00:24:01.200 historically own things like gold.

00:24:02.700 And they can say,

00:24:03.280 well, gold has these other values.

00:24:05.280 It's used in industry purposes

00:24:07.180 and stuff like that.

00:24:08.020 And it's like,

00:24:08.440 yeah, that's true.

00:24:10.700 But that's not what gives it

00:24:12.500 its assigned value

00:24:13.500 in the marketplace right now.

00:24:15.260 And you know that

00:24:16.820 and I know that.

00:24:17.640 People get it 0.77

00:24:18.240 because it was a fungible,

00:24:20.880 divisible store of asset

00:24:22.140 that historically was used

00:24:23.460 by wealthy people

00:24:24.260 to quickly move their money.

00:24:26.100 The problem is

00:24:26.640 a lot of these assets

00:24:27.500 are just like stored in banks now,

00:24:29.120 right?

00:24:29.680 And you're trading slips of paper,

00:24:31.840 which defeats

00:24:32.920 most of the purpose

00:24:34.940 of that utility case

00:24:37.480 for the asset,

00:24:38.140 which were their primary utility case.

00:24:40.260 And this really matters

00:24:41.420 because when you're making

00:24:42.640 an investment

00:24:43.180 in something like gold

00:24:44.660 these days,

00:24:45.620 you are making a bet

00:24:47.740 not just that gold will do well,

00:24:50.260 but that Bitcoin

00:24:51.000 won't replace it

00:24:52.300 as the core store of value

00:24:54.420 outside of financial marketplaces, 1.00

00:24:56.900 which is a stupid bet to make. 0.98

00:24:59.260 Not because Bitcoin definitely will, 0.99

00:25:01.320 but because it's not

00:25:01.900 a fully priced in bet.

00:25:03.660 A lot of people

00:25:04.500 who are investing in gold

00:25:05.840 are old people 0.88

00:25:07.060 who don't fully understand

00:25:09.260 how much it has already

00:25:10.440 been replaced

00:25:11.180 by crypto assets

00:25:12.560 for the younger generation.

00:25:14.540 And therefore,

00:25:15.600 and this is why gold

00:25:16.620 and other precious metals

00:25:18.100 have not reacted

00:25:18.960 the way people expected

00:25:20.180 them to react

00:25:21.060 in market downturns

00:25:23.180 during periods

00:25:24.180 in which crypto

00:25:24.820 was widely used

00:25:25.800 because they are just

00:25:27.220 not that kind

00:25:28.280 of a counter-cyclical asset anymore

00:25:29.920 and therefore

00:25:30.720 shouldn't be used as one.

00:25:32.960 I'm sorry if I went

00:25:33.720 a little too hard

00:25:34.400 on precious metals

00:25:35.140 because I know

00:25:35.540 we've got some precious metal

00:25:36.580 fans probably in the show.

00:25:38.740 They're like,

00:25:39.080 well, if society collapses,

00:25:40.420 if society collapses,

00:25:41.640 you should have semiconductors

00:25:43.040 and bullets.

00:25:44.240 Okay?

00:25:44.660 You do not need gold.

00:25:46.820 Don't forget the guns, Malcolm.

00:25:48.320 But yes.

00:25:48.560 Well, obviously guns,

00:25:49.840 but who doesn't have

00:25:50.460 a pile of guns

00:25:51.200 in their house?

00:25:51.760 I guess normal people.

00:25:53.880 Normal people.

00:25:54.720 Fun aside though,

00:25:55.980 I'm reading a biography

00:25:58.260 of two women 0.81

00:25:59.420 who were like leaders

00:26:00.520 in the early makeup industry

00:26:02.120 called War Paint.

00:26:04.060 And interestingly,

00:26:05.140 the early, you know,

00:26:05.940 like twist lipstick cartridges

00:26:07.720 were originally built

00:26:09.520 in bullet casings

00:26:10.560 from the war.

00:26:11.840 Oh.

00:26:12.460 Cool, huh?

00:26:13.100 Anyway.

00:26:14.540 Because it was after World War I

00:26:15.760 and they were left over.

00:26:17.280 There was a bunch of,

00:26:17.960 you know, inventories.

00:26:18.780 It was cheap inventory

00:26:19.580 and it's a good delivery mechanism

00:26:21.040 for lipstick.

00:26:22.200 So there you go.

00:26:23.680 That is awesome.

00:26:24.860 Isn't that interesting?

00:26:25.700 Yeah.

00:26:26.100 War Paint.

00:26:26.780 Super interesting so far.

00:26:28.120 Yeah.

00:26:29.240 I'm trying to think

00:26:29.980 of other asset classes

00:26:31.160 which were deployed in.

00:26:32.340 Oh, yes.

00:26:32.740 Personal investments

00:26:33.640 with friends

00:26:34.160 and stuff like that.

00:26:36.300 I think a lot of people

00:26:37.400 undervalue these sorts

00:26:38.740 of debt

00:26:39.240 and equity investments

00:26:40.180 that you can make

00:26:41.020 in your local community.

00:26:42.380 But I actually think

00:26:43.300 it's an important part

00:26:44.220 of being a engaged citizen.

00:26:47.460 A lot of people are like

00:26:48.200 that can cause bad blood. 0.96

00:26:49.180 It can cause bad blood

00:26:50.180 if you go into these investments

00:26:51.620 assuming that they're always

00:26:52.680 going to pay out.

00:26:54.120 Yeah.

00:26:54.300 I would say

00:26:54.700 like we've invested

00:26:58.540 in the majority

00:27:00.180 of friend investments

00:27:00.920 we've made

00:27:01.500 have completely gone bust.

00:27:05.140 We've gotten nothing back.

00:27:06.740 And we're okay with that.

00:27:07.700 Yeah.

00:27:08.500 Because a lot of them

00:27:09.800 are two people

00:27:10.720 I know probably

00:27:11.640 couldn't raise money

00:27:12.560 from other people.

00:27:13.780 Yeah.

00:27:13.920 And we

00:27:15.080 I think to an extent

00:27:16.640 with any investment

00:27:17.540 you also buy social capital.

00:27:19.780 Yeah.

00:27:19.940 And social capital

00:27:20.680 You invest in people

00:27:21.860 and you invest in relationships.

00:27:24.020 Yeah.

00:27:24.220 It's an important thing

00:27:25.040 in being an active member

00:27:26.480 of I think a community

00:27:27.620 that has a skill set

00:27:29.620 around investing

00:27:30.420 or helping people

00:27:31.180 start companies

00:27:31.820 and that sort of thing.

00:27:33.340 But I think

00:27:33.680 our philosophy

00:27:34.880 around investing in people

00:27:36.020 is similar to our philosophy

00:27:37.320 around any sort

00:27:38.160 of risky investment

00:27:38.920 which is

00:27:40.780 we will never invest money

00:27:42.980 that we have to have.

00:27:44.740 Like we're like

00:27:45.200 if this is totally lost

00:27:46.380 that will not hurt us.

00:27:47.860 Like our life is fine.

00:27:49.560 Yeah.

00:27:50.040 And that's very important

00:27:51.260 when you're investing

00:27:51.880 in friend stuff.

00:27:52.840 It should never be

00:27:53.560 a major part of your portfolio

00:27:54.560 but it can make sense.

00:27:56.400 Anything risky.

00:27:57.820 And in addition to that

00:27:59.080 one type of investment

00:28:00.060 that we often make

00:28:00.940 that I think a lot of people

00:28:01.720 don't think about

00:28:02.540 is investments

00:28:04.260 that can pay off

00:28:05.340 with career opportunities.

00:28:07.060 So sometimes

00:28:08.000 when people are starting

00:28:08.740 a company

00:28:09.140 or something like that

00:28:09.880 that I think

00:28:10.600 could do really well

00:28:11.520 and become a good

00:28:12.120 career opportunity for us

00:28:13.680 I'll make an investment in it

00:28:15.440 and I make it

00:28:16.740 with the knowledge

00:28:17.520 that that holds

00:28:18.260 a door for me open

00:28:20.480 if the company

00:28:21.180 does really well

00:28:22.120 in terms of a recurring

00:28:23.100 stream of revenue

00:28:23.880 even outside of my investment.

00:28:25.980 And this is a weird thing

00:28:27.220 that I think a lot of people

00:28:27.920 don't think about

00:28:28.400 but it's actually

00:28:28.960 an important partial payoff

00:28:30.280 for an investment.

00:28:31.840 When you see

00:28:32.220 something analogous to this

00:28:33.440 with how people

00:28:34.500 end up on non-profit boards

00:28:35.820 and then eventually

00:28:36.460 paid boards

00:28:37.180 is when people

00:28:39.100 sort of decide

00:28:39.700 to become professional

00:28:40.740 board holders

00:28:41.620 what they often do

00:28:42.560 to start

00:28:43.100 and this is sort of like

00:28:43.960 I don't know

00:28:44.460 like a rich trust fund

00:28:45.480 person thing

00:28:46.080 but we've seen it happen

00:28:47.060 is first they use

00:28:48.340 like family foundation money

00:28:49.640 to buy their way

00:28:50.560 onto non-profit boards

00:28:51.880 and then they get

00:28:53.100 a bunch of those positions

00:28:54.080 sort of build up

00:28:54.820 their board career

00:28:55.700 and then eventually

00:28:56.800 get their way

00:28:57.960 through all the networking

00:28:58.980 they have with this

00:28:59.700 and with their resume

00:29:00.660 onto real paid

00:29:02.400 corporate boards

00:29:03.300 and that's sort of

00:29:04.740 like a very low effort

00:29:06.240 recurring revenue stream

00:29:07.620 for them.

00:29:08.720 It's similar

00:29:09.380 in what you're saying here

00:29:10.240 is that often

00:29:10.780 you have to invest

00:29:11.820 in someone

00:29:12.640 or something

00:29:13.320 or a company

00:29:14.000 to get a position

00:29:15.140 that ultimately

00:29:15.600 builds up your career

00:29:16.480 in a way that leads

00:29:17.380 to different revenue sources

00:29:18.480 never in the form of ROI

00:29:19.900 or rarely in the form of ROI

00:29:21.880 but often in other ways

00:29:23.760 through opportunities

00:29:24.480 and investing in opportunities

00:29:25.600 I think is an underrated

00:29:26.880 form of investment.

00:29:28.800 Some other

00:29:29.340 just financial health things

00:29:30.740 that I'd suggest

00:29:31.400 for our audience

00:29:32.240 just some of these

00:29:33.320 might be obvious to you.

00:29:34.400 You're not suggesting anything.

00:29:35.360 Other financial health things

00:29:36.900 we do for ourselves.

00:29:38.240 Well no,

00:29:38.740 so I'd say one is

00:29:39.660 insurance.

00:29:40.760 Life insurance.

00:29:41.540 If you have kids

00:29:42.400 you should have life insurance.

00:29:44.300 Just an important thing

00:29:45.440 to go out there and check.

00:29:46.700 For credit cards

00:29:47.800 you can make

00:29:48.820 like it can save

00:29:49.800 you a lot of money

00:29:50.440 in the long term

00:29:51.060 if you have the right

00:29:51.680 type of credit card.

00:29:52.900 Especially if you do

00:29:53.580 a lot of travel

00:29:54.140 you can get like

00:29:54.960 priority pass.

00:29:55.800 What Simone? 0.98

00:29:56.600 Never, never use

00:29:57.480 a credit card for debt.

00:29:59.200 Oh yeah,

00:29:59.760 never use a credit card

00:30:00.580 for debt.

00:30:00.940 I'm just talking about

00:30:01.760 like the privileges

00:30:03.240 a credit card can get you

00:30:04.400 or the cash back

00:30:05.280 and stuff like that

00:30:06.060 and I would suggest

00:30:07.600 everyone have

00:30:08.340 at least one credit card

00:30:09.420 that's for like

00:30:09.980 mainstream expenses.

00:30:11.500 One Amazon credit card

00:30:12.560 which can get you

00:30:13.080 5% cash back on Amazon.

00:30:14.440 You can do a lot of

00:30:14.860 shopping on Amazon.

00:30:15.920 Yeah.

00:30:16.460 In America is doing that

00:30:17.500 and then

00:30:18.160 one credit card

00:30:19.620 associated with

00:30:21.020 a, what do you call it?

00:30:22.720 A wholesale retailer.

00:30:24.380 So we would call that

00:30:25.500 like our BJ's card

00:30:26.400 but it could also be

00:30:27.180 you know,

00:30:27.500 if you're a little

00:30:27.980 fancier Costco card.

00:30:31.700 But no,

00:30:32.000 I'm just talking about

00:30:32.500 like the major

00:30:33.140 expense sources

00:30:34.340 in your life.

00:30:35.220 If you have credit cards

00:30:36.080 that are associated with them

00:30:36.940 you can often get better

00:30:38.060 cash back deals

00:30:39.220 through that.

00:30:40.800 Yeah.

00:30:40.900 for example

00:30:41.540 with our BJ's card

00:30:42.580 this year

00:30:43.220 and we don't spend

00:30:44.220 that much on gross

00:30:45.240 like we're pretty

00:30:45.900 careful about our food

00:30:47.400 spending

00:30:47.700 and we don't eat out

00:30:48.940 except for

00:30:49.560 when doing business meetings

00:30:51.040 our use of a credit card

00:30:53.360 with a like

00:30:54.440 bulk discount

00:30:55.280 grocery store

00:30:56.040 that's dedicated

00:30:56.640 to the brand

00:30:57.400 in this case BJ's

00:30:58.500 has saved us

00:30:59.500 or led to cash back

00:31:01.060 of over $3,000

00:31:02.500 now almost $4,000

00:31:03.700 which to us

00:31:05.080 is a really big deal.

00:31:06.580 Total?

00:31:07.040 Or this year?

00:31:07.800 This year.

00:31:08.660 This year?

00:31:09.500 This year.

00:31:10.680 Wow,

00:31:11.160 we spend a lot of money

00:31:11.940 at BJ's.

00:31:12.940 And speaking of

00:31:14.280 just like another

00:31:15.220 financial health thing

00:31:16.020 that people

00:31:16.520 who have families

00:31:17.720 should be doing

00:31:18.780 if you do not have

00:31:20.460 a what's the word again

00:31:22.040 chest freezer

00:31:22.660 you should.

00:31:23.560 You should have

00:31:23.740 a chest freezer.

00:31:25.420 Chest freezers

00:31:26.240 combined with

00:31:27.820 large box stores

00:31:29.280 like BJ's

00:31:30.320 and Costco

00:31:30.700 will save you

00:31:31.920 astronomical amounts

00:31:33.180 of money

00:31:33.440 if you have kids.

00:31:34.080 Yeah,

00:31:34.220 so if people

00:31:34.560 aren't familiar

00:31:34.940 with these

00:31:35.220 these are like

00:31:35.760 freezers

00:31:36.380 into which you can fit

00:31:37.260 probably three adult humans.

00:31:38.720 So they only work

00:31:40.120 if you have

00:31:40.700 a fairly large house

00:31:41.940 but they enable you

00:31:43.840 to buy a lot

00:31:44.520 of frozen foods

00:31:45.380 in bulk

00:31:45.940 you know

00:31:46.540 everything from

00:31:47.220 vegetables to meats

00:31:48.060 which is a lot

00:31:49.020 more affordable.

00:31:50.440 Yeah.

00:31:51.320 And what else

00:31:52.380 would you say

00:31:53.880 any other types

00:31:55.440 of insurance?

00:31:55.900 I mean there's

00:31:56.200 the regular types

00:31:56.960 of insurance

00:31:57.400 but I'm sure

00:31:57.780 a lot of people

00:31:58.280 are already

00:31:58.800 thinking about that.

00:32:00.180 Any other advice

00:32:01.560 you'd give?

00:32:02.080 this is how

00:32:05.760 we do investing

00:32:06.560 and I would say

00:32:07.000 we're not

00:32:07.280 sophisticated investors

00:32:08.160 there's a lot

00:32:08.720 of like

00:32:09.100 weird tax

00:32:10.380 implications

00:32:11.000 and you know

00:32:12.160 like

00:32:12.560 if you

00:32:13.340 take a loss

00:32:14.260 on something

00:32:14.800 like you know

00:32:15.480 and also

00:32:15.960 how you reinvest

00:32:16.880 money after

00:32:17.680 getting you know

00:32:19.220 a pig payout 0.87

00:32:20.040 like we're not

00:32:20.820 really not

00:32:21.640 sophisticated investors

00:32:22.580 there's a lot

00:32:23.080 of weird rules

00:32:23.960 and and

00:32:24.820 like

00:32:25.780 tax things

00:32:27.040 around investments

00:32:27.840 all we're doing

00:32:28.660 is sharing

00:32:29.060 this is practical

00:32:32.640 this isn't get rich

00:32:33.520 investing advice

00:32:34.500 this is basic

00:32:35.940 financial hygiene

00:32:36.960 investing advice

00:32:37.820 yeah I mean

00:32:39.420 so yeah

00:32:39.920 aside from that

00:32:40.760 we basically

00:32:42.320 we have a very

00:32:43.080 strict budget

00:32:43.900 and we actually

00:32:45.040 do a version

00:32:45.640 of like

00:32:46.300 envelope based

00:32:47.980 budgeting

00:32:48.380 which I think

00:32:48.860 people are really

00:32:49.420 familiar with

00:32:50.020 and as I've alluded

00:32:50.640 to in other podcasts

00:32:51.660 there's like

00:32:52.160 an entire cottage

00:32:52.960 industry of you

00:32:53.600 on YouTube

00:32:54.180 and on Etsy

00:32:54.760 we do

00:32:56.400 we do

00:32:56.880 so every time

00:32:57.600 money comes in

00:32:58.420 like per month

00:32:59.200 like we have a

00:32:59.840 sort of like

00:33:00.240 this is how much

00:33:00.880 money we receive

00:33:01.540 everything goes

00:33:02.520 into actually

00:33:03.240 like separate

00:33:04.000 literally separate

00:33:04.900 bank accounts

00:33:05.540 for our top

00:33:06.540 expenses

00:33:06.940 so home bills

00:33:08.500 child care

00:33:09.700 pet expenses

00:33:10.880 your discretionary

00:33:12.240 income

00:33:12.620 my discretionary

00:33:13.640 income

00:33:14.180 we have a

00:33:15.120 like a

00:33:15.460 we have an

00:33:15.800 internal VC fund

00:33:16.800 which is sort of

00:33:17.480 like money

00:33:18.040 that we allocate

00:33:18.700 for risky bets

00:33:19.800 or weird investments

00:33:20.980 and like friends

00:33:21.700 or just like

00:33:23.000 stuff that might

00:33:23.900 so not stuff

00:33:25.560 that's fun

00:33:26.100 but things that

00:33:26.840 are an investment

00:33:28.000 that is risky

00:33:28.680 we have a fund

00:33:29.720 for that

00:33:30.080 we have a fund

00:33:30.640 for children's

00:33:31.500 education

00:33:32.380 we have a fund

00:33:33.100 for children's

00:33:33.740 side note here

00:33:34.480 for listeners

00:33:35.760 one of the things

00:33:36.640 that we do put a lot

00:33:37.420 of money into

00:33:37.940 is investments

00:33:39.460 that are meant

00:33:39.980 to lower

00:33:40.480 child care costs

00:33:41.460 for us

00:33:41.820 eventually

00:33:42.340 things like

00:33:43.840 you know

00:33:44.420 we put a lot

00:33:45.080 of money

00:33:45.480 towards our

00:33:46.020 non-profit

00:33:46.520 which is

00:33:46.920 developing

00:33:47.340 this educational

00:33:48.300 alternative

00:33:48.920 the Collins

00:33:49.420 Institute

00:33:49.800 and for us

00:33:50.980 that's an investment

00:33:51.880 in that

00:33:52.520 if it can

00:33:53.220 produce

00:33:53.760 this alternate

00:33:54.380 education system

00:33:55.220 and if it's

00:33:55.620 the quality

00:33:56.040 that we want

00:33:56.480 it to be

00:33:56.820 at

00:33:57.000 which we

00:33:57.700 have confidence

00:33:58.240 it will be

00:33:58.840 like I actually

00:33:59.420 think it's

00:34:00.160 taken so much

00:34:00.820 longer than I

00:34:01.300 wanted to

00:34:01.580 to get it live

00:34:02.240 but I think

00:34:02.860 it's going to be

00:34:03.160 so much higher

00:34:03.600 quality than

00:34:04.140 when I initially

00:34:04.700 expected

00:34:05.160 that it is

00:34:06.320 going to

00:34:07.180 really dramatically

00:34:08.460 cut child care

00:34:09.080 costs for our

00:34:09.560 kids

00:34:09.760 and it's the same

00:34:10.780 with you know

00:34:11.440 people who were

00:34:12.120 helping get their

00:34:12.620 businesses off the

00:34:13.340 ground

00:34:13.520 they help us

00:34:14.120 with child care

00:34:14.960 as an exchange

00:34:16.400 for that

00:34:16.740 and so that's

00:34:17.180 a long-term

00:34:17.720 investment in

00:34:18.300 reducing child care

00:34:19.000 expenses

00:34:19.760 yeah but basically

00:34:20.860 if we want to

00:34:22.160 spend money on

00:34:23.140 something and

00:34:23.660 there's not enough

00:34:24.280 money in the

00:34:24.840 account that we

00:34:25.700 have for that

00:34:26.360 thing like travel

00:34:27.300 or gifts we

00:34:28.580 have we have

00:34:29.020 an account for

00:34:29.400 gifts and for

00:34:29.880 travel and it's

00:34:30.740 not happening

00:34:31.220 we're not taking

00:34:32.220 our debt we're

00:34:32.740 not stealing from

00:34:33.360 other accounts and

00:34:34.000 we also have an

00:34:34.760 emergency fund that

00:34:35.640 will cover our

00:34:36.220 basic expenses as

00:34:37.300 a family for six

00:34:38.040 months and that

00:34:39.500 emergency fund is

00:34:40.320 really helpful like

00:34:41.480 when we've lost

00:34:42.040 our jobs or when

00:34:42.680 we stop paying

00:34:43.360 ourselves during

00:34:43.920 the pandemic while

00:34:44.840 still working that

00:34:47.060 was it was really

00:34:47.980 necessary so those

00:34:49.620 are the other things

00:34:50.280 that we do again

00:34:51.060 this is not advice but

00:34:52.100 this is this is how

00:34:53.040 we do and we're

00:34:53.980 not again sophisticated

00:34:54.920 but I so far this

00:34:56.280 has worked well for

00:34:56.800 us but I would say

00:34:57.720 that we don't we're

00:34:59.460 not we don't make a

00:35:00.840 ton of money we have

00:35:01.500 friends who make tons

00:35:02.320 and tons of money from

00:35:03.220 investments and they

00:35:03.940 are super pros and

00:35:04.860 it's all they do and

00:35:05.700 but we would we spend

00:35:07.200 less than two percent

00:35:09.340 of our mental bandwidth

00:35:10.340 on investing yeah so

00:35:12.760 this is this is what we

00:35:13.680 get but it's worked

00:35:14.240 out for us yeah all

00:35:16.100 right well I love you

00:35:17.060 to death Simone and who 0.55

00:35:18.680 knows if this does

00:35:19.500 well as well we might

00:35:20.200 be doing a lot more

00:35:20.920 financial stuff for

00:35:21.880 people oh no this

00:35:23.880 is boring basic

00:35:25.180 financial advice but I

00:35:26.880 feel like everyone out

00:35:27.860 there is some sort of

00:35:28.660 get what's quick

00:35:29.300 when I like look at

00:35:30.820 financial advice it's

00:35:31.780 people looking at all

00:35:32.540 these like charts and

00:35:34.480 making it really

00:35:35.120 complicated and they're

00:35:37.360 way above my pay

00:35:38.060 grade or like way

00:35:39.140 below my pay grade but

00:35:40.040 pretending to be above

00:35:40.940 which is the worst

00:35:42.040 all right love you to

00:35:43.760 death Simone and I

00:35:44.640 appreciate that we

00:35:45.680 have a sound

00:35:47.280 financial strategy where

00:35:48.960 I know that she

00:35:50.660 manages our investments

00:35:51.520 by the way because I

00:35:52.480 I'll tell her like what

00:35:53.300 I'm thinking but I am I

00:35:54.920 take too much like

00:35:55.980 emotional hit from

00:35:56.900 looking at investments

00:35:57.640 going up or down

00:35:58.540 she's she's the best

00:36:00.500 kind of wife the one 1.00

00:36:01.420 who holds your crypto

00:36:02.320 keys to make sure you

00:36:03.320 don't sell during market

00:36:04.400 crashes I love you to

00:36:07.000 death Simone I love you

00:36:08.340 too pizza night tonight

00:36:09.480 see you downstairs

Based Camp - November 13, 2023

Pragmatic Investing

Episode Stats

Summary

Transcript