Ask Steve Now!(right-click to download) | I want every family listening to this radio show… when the stock market crashes again in seven or eight years… for it not to affect you the way it has this time. You need to insulate yourself, you need to have some investments, not just speculative vehicles like your stocks, which most of you have your 401ks and IRA’s in. Now, I have to be careful saying that because some of you have taken the next step and you’re self-directing those IRA’s and you actually have those IRAs in true investments like real estate which you can do without taxes or penalty. Many of you don’t even know that.
Now the only thing I can say there is that there is a certain personality that likes this comment: “I didn’t know”. Well let me tell you this: if you go break a law… and we’ll call most laws principles… you go tell the judge, “Man, I just didn’t know.” What is that judge going to say to you? …and I hope everybody knows this… Ignorance is no excuse. They’re going to throw you in jail anyway.
You broke the law. “Well I didn’t know.” It doesn’t matter. It’s your responsibility to know. Just like if you’ve had your money for years in an IRA thinking that you could only invest in speculative things like the stock market, bonds, stuff like that… if you’ve been doing that, you can’t hide behind that anymore. “I didn’t know” …it’s no good. That’s not what capitalism is about.
That’s not what investing is about.
I want to talk a little bit about last week… and if you go to the front page of LifestylesUnlimited.com… you’ll have to scroll down because there has been a lot of information added since. A lot of people are emailing me saying, “because of the new website, you’re actually my home page now.”
Because when they wake up in the morning, they’re getting the positive side of the environment. One of the most positive sides, which all of you should view… it’s about 6 or 7 posts down. You’ll see the Texaplex Video, which showcases why Texas is the best… it says Real Estate market in the world, but I want you to understand that that is going to encourage you no matter what career you’re in. I don’t think a lot of people are aware of why Texas is so strong in this “economy”.
It’s because 50% of all jobs that were created in the economy in ‘08, guess where 50% of them were? Texas… Texas. So I all of you to please watch that video. While you’re there also watch the John Stewart vs. CNBC. We talked a lot about this last week. We got a lot of input from listeners about how that has changed your life. Comments like, “No longer will I depend on the media to teach me about investing.. or to make decisions about my financial future.
It’s just a bad combination for a news media that gets paid by advertising to be telling you who to put your money with. It just doesn’t even make sense. But it’s brought to light in that John Stewart video where unfortunately Jim Cramer takes the brunt of the impact of that attack, but it’s not just about Jim Cramer, it’s about CNBC and the entire financial… I don’t know what to call it… you can’t call it education, but that’s what people are using it as. They’re going to CNBC, they’re reading Money Magazine, they’re reading these advertising tabloids and using that as a way to find out what to invest in.
When I phrase it that way, isn’t it ludicrous? …but how many of you have done it, I know I did it… before I had a mentor and actually knew people who had money… What else can you do? Well, that’s what this show is about. There’s no more asking what else can you do. You better belong to some clubs where they talk about finance… and talk about building wealth… and you better meet some people who are getting the results that you want.
Let’s start getting you some information from people like my mentors, that have been retired since the age of 35, that have been through two down markets, the late 80’s and what we’re going through now… and they’re making more money than they did in the up market.
The only reason… and I know this is offensive… but I’m speaking directly from Warren Buffet’s comments… the vast majority of Americans wait to invest until everything has already gone up… because everything’s great, everything’s positive.
The rich, the investors, invest when everything is a catastrophe… because why? Do things keep going up? No. Do things keep going down? No. So what always happens? If you buy at the bottom, it’s going to go back up. Now, I’m not a proponent of speculation. That’s not what I’m talking about. What I’m talking about is we’re buying houses $30,000 less than we were 2 years ago, the exact same houses… we’re getting twice the cashflow.
Remember though, the equity capture, the appreciation… that’s the icing. What we’re going for is the cashflow. We’re buying for cashflow. Since real estate fluctuates in price, maybe 10 - 20% both ways… we don’t care… because it pays for itself.
Some of you are going, “I got you Steve… I got you man… I know what the problem is… What happens when you can’t lease those things?” No, you don’t have me. In fact, you’re living under a lie. The people who told you it’s hard to lease stuff? Forgive me… They are failures. Otherwise they couldn’t tell you it doesn’t work.
You know the other source? If they’re not failures, in other words, if they didn’t buy rent property and run it into the ground and have a true story to tell about how they ran it into the ground… here’s the other source. You literally made it up.
How do you figure it out? 1, you have to be brutally honest with yourself. The other thing is you have to ask yourself, who told you it was hard to lease properties. No there’s only two answers: …either you heard it from a failure… because could a successful real estate investor tell you it’s hard to lease properties? No. Only a failure could tell you that.
And if you answered, I don’t even know who told me that… You made it up. You doggone made it up. You lied to yourself to keep you from taking action. Don’t do that.
I don’t think its unfortunate that Jim Cramer took the brunt of the John Stewart’s complaints. Jim Cramer has admitted to manipulating markets when he was a hedge fund manager. These institutional investors will buy huge blocks of stock which sends up the price, then this creates a real buzz around that stock. More and more people buy into it because of the buzz and the “artificial” price inflation, and at that time the institutional investor will pull out and sell at a high. He’s gained money for his investors, but thousands of other investors have lost money. In other words, the average Joe who is watching CNBC has lost money. This is how the stock market has worked for decades.
Houston PBS recently ran a show that was about the market crash of 1929. This show sounded as relevent today as it was in 1929. Back then a few big money investors would manipulate the price of a stock by buying huge chunks of stock and then they could pull out at any time because it’s gone up only because of their purchase of that stock. The price of the stock didn’t go up because of good performance by the company, it went up because of hype. That still happens today. It’s an inherent disadvantage for the average investor.
Thanks for that explanation, Alfonso. I’ll have to add that to the list of reasons why I don’t believe in the stock market anymore!