How Chinese Debt & Business in China Have Evolved (w/ Fraser Howie)


FRASER HOWIE: My name’s Fraser Howie. I’m an independent analyst on China. And author of a number of books on the Chinese
financial system, in particular, Red Capitalism, and then before that, Privatizing China. So I’ve been in Asia for about 25 years, primarily
working in the financial sector– Hong Kong, Beijing, Hong Kong, again, and now I’m based
in Singapore. But always with a big focus on China, in terms
of my day job, but also my writing and commentary. It was actually myself, and a co-author, and
a colleague at a company called CITIC, which was the first Sino jointventure securities
company set up in China. About 15 years ago, we started writing about
the Chinese financial system, simply because we saw what was being written by China back
then, and this was in the late ’90s, 2000 or so. And frankly, we thought it was nonsense. We were on the ground in China. We saw what the securities markets were like. We saw what the stock market was like. And it was clear that the pundits in Hong
Kong were just far too optimistic about what China was. And then we thought, there’s a story to tell. That got us writing. It was actually on the back of a report we
wrote for the CICC at the time. And we wrote Privatizing China, which was
based on a look at what was then about 15 years of the stock markets in China. And really, just going right back to basics–
really in the late 70s, when reform started in China, fair share issuance in ’79, and
then the development of 4trading through the ’80s, listings– And they say that was privatizing
China. But then as the knot progressed, we realized
that we had more to say, and in particular, in the banking sector because if you remember–
go back to that time when we were writing Privatizing China and riding on the stock
markets. The Chinese banking system was basically bankrupt. In 1999 Zhu Rongji, the Premier at the time,
started a big bailout program where they set up bad banks, asset management companies in
China, and we saw that happening real time. It was a very long process. And so by ’05-’06 you started seeing these,
what were just previously, bankrupt banks being listed, raising multi-billions of dollars. And we thought, this is nonsense. These are Chinese banks. These aren’t Western banks. And they aren’t banks in the way we understand
them in the west. And we thought there’s a story there. So that was the genesis of Red Capitalism. And in Red Capitalism, which was eventually
published in late 2010, beginning of 2011, we went through that history of how banks
were reformed in China, how you took a bank or banking system and you made it into what
was, at the time, basically, the world’s most expensive banks. Valuation– I think it was something like
a quarter of a trillion dollars, $250 billion with all the Chinese banks. That’s an incredible figure remembering that
day declaring the system was bankrupt. So that was the genesis of Red Capitalism. Interestingly, the bulls thought it supported
their case, the bears thought it supported their case. We didn’t write it with any case in mind. We wanted to tell a story because we felt
that, again, so much of the hype, so much of the headline in China is superficial. In understanding China, you’ve got to get
away from the facade, the face of China. China is great at telling a story about how
it sees itself. And a lot of people buy into that because
China can be a very opaque and difficult place. But especially in the stock markets and then
in the capital markets in general, that almost certainly what it says on the tin isn’t what’s
in the tin. And so therefore, it’s important to understand
the background to these things, to understand the accountancy behind it, and this chicanery,
quite frankly, in a lot of the financial system. I think it’s really important if you want
to understand where we are in China now. It’s what I call the Olympic cycles. If you look back to the ’08 Beijing Olympics,
I would still maintain, although the economy was probably less than half the size it notionally
is now, I would say that’s the modern high point of China, frankly. That If you look before– the Beijing Olympics,
they put on this incredible show. They built so many subway lines. They did so many things which no other country
allegedly could do. It was a great catalyst for building across
the country. The economy was booming. Everything seemed to be going. Everyone was pandering to China. And I think that really was a high point. Of course, that was August in ’08. And then, of course, global financial crisis
and we all remember– or maybe we don’t remember now, but that last quarter of ’08 really was
dreadful. Things, literally, just fell off a cliff in
that last quarter. And that was very important in China’s case
as well because China was hugely affected by that. I think that everyone, of course, remembers
the output or the response to ’08, by the Chinese government, this huge stimulus program,
which started off a whole series of events, which we’ll come to. But I think, remember, before that, and the
real reason for that was not simply to keep global growth going, but China had, was it,
the headlines, 20, 30 million people unemployed, these migrant workers. This was the mainstay of the Chinese economy
that this migrant population was working in factories along the coast, and that just the
downturn in exports, the downturn in the global economy really impacted China. And so what you saw there– and this again
was absolutely central to why we wanted to tell the bank story– was because the response
of this stimulus was basically you turn on the credit taps. That after spending the better part of a decade
trying to reform the banking system, trying to make it into something that was something
at least approaching a market-based system where there was some degree of risk control,
some oversight, you basically had the rulers in Beijing reverting to their old practice
of using the banks as a piggy bank to basically fund growth. And so you turn on these credit taps, and
literally any warm body could get money in ’09. And so you had this huge expansion of credit. And of course you saw, guess what, a big rebound
in growth, which should not surprise anybody. Growth’s an output, not an input into these
models. And so you had this huge expansion of credit. But I think that was the start of something
that has taken China, as I say, before those Olympics, before that last quarter of ’08,
China was a growth story. There’s no question about it. It had been 20 years by then of double digit
growth. China could continue to grow for another two
decades, three decades, whatever it may be. And yet, that was a real turning point because
China’s gone from a debt story– or from a growth story to a debt story, which is just
staggering. And I think we forget about this because the
growth numbers have still remained high. And people say, yes, they’ve fallen from their
highs, but hey, they’re still doing 6 and 1/2% or 7% if you believe in those numbers. They say, it’s still much better than what
the West’s doing. But that’s incidental, because the real story
in China now is that the reason you’re still getting that growth is because credit is growing
at double the rate of GDP growth. And so that ’08, that response, that ’09 stimulus,
the early stimulus to keep growth going really set in motion an addiction to debt, and took
China– and let’s remember, well, there was clearly an impact from the global economy. It wasn’t necessarily a crisis per se. And so it’s interesting now that you look
and you compare Chinese growth numbers and the growth, particularly the build up of gross
debt in the economy, it gets compared to what the US is or what the UK is or Japan is or
Greece or whatever. You can take any of these countries. But these are all countries that have clearly
gone through crises. In China’s case, I don’t see there’s a crisis. Yes, there’s slowing growth. There’s lots of problems with their economy. There’s many areas in China you can look at
and say there’s real problems. But in terms of actual real fundamental financial
crisis, there isn’t one. There’s no real panic there. There’s still a lot of faith in the government. There’s still a lot of resources and capacity
of the government they can put to work. And so, you’ve had that huge credit build
up in spite of a real problem, which really makes me wonder when I think about future
issues, when you think, if a crisis does come in China, and given what’s happening in the
States with the new president, you can certainly see scenarios where you are going to get crises
coming, then will China have the wherewithal and resources? But coming back to that stimulus. So you had a positive response from China
in ’09. That obviously was lauded at the time that
this would support global growth, support global demand. At the same time, you also had a government
who started to acknowledge that there was fundamental imbalances in their economy, and
that this needed to be reformed. And of course there was lots of nice words
and nice talk about this, how we’re going to restructure, we’re going to move away from
this dependence on fixed asset investment. and we’re going to move more towards a consumer-driven
economy. And here we’re eight years on, an Olympic
cycle– two Olympic cycles later, and you think, this really is quite horrible. You’ve effectively had the growth rate halved
and the debt double, which hardly is really a successful formula in many ways. I think whether China becomes the world’s
largest economy is almost frankly irrelevant, because that’s just– that’s like just weighing
the health or measuring the health of your kids based on their weight. There are many other factors that are far
more important to think about than simply, are they simply getting bigger? Are they growing? And I think China has continually failed over
this past eight years or so to really grasp that reform process. And again, this isn’t just something from
the new leadership. This is something if you go back to about
five or six years, there was a big report from the World Bank, done in conjunction with
the Chinese government, called– I think it was China 2030, but need to restructure their
economy, move away from fixed asset investment. And it laid out a whole series of reforms
and steps to try and remove this dependency. But guess what? As the global economy has failed to recover,
as China’s own economy has started to stutter in many ways, there has been a continual dependency
on debt. And so what you’ve seen in China, you’ve seen
incredible innovation, but in the worst possible way. That instead of, whereas at the start of this
crisis in ’08 you still had 60% of debt in their economy- – or probably higher, certainly
a decade more or so ago, you had 80% of debt in China basically being from bank loans,
very simple. You can look at the amount of deposits they
had, and you looked at their bank loans, and you control that through a loan to deposit
ratio. So it was very easy to literally turn the
tap on and off. But what you’ve seen is a proliferation, over
the past eight years or so, of broadly called shadow banking. And I think that doesn’t even come close to
describing it, because it’s such a murky term by definition. But you have had incredible innovation, as
it were, of bankers and entrepreneurs and businessmen figuring out ways to get around
systems which are put in place by bureaucrats to try and limit credit. And the difficulty is that returns for much
of China’s business is low, and therefore they’re desperately trying to look for new
inventive ways. At the same time, as rates have fallen in
China, you’ve also got depositors who are saying, I want better returns. And so you’ve had this springing up of– and
we talked about this when we wrote Privatizing China. This was really just the start of this process,
of these wealth management products, short term products, guaranteeing better rates which
got immediate deposits, which weren’t necessarily carrying it under the loan to deposit ratio. But again, got around that, that lending restriction. We got depositors’ funds into the hands of
those who wanted it. And in some ways, it’s a good sign. It’s a liberalization of the currency or of
the interest rate market, which is always a very important thing in China. But effectively what’s happened is that much
of that control over the banking system has been lost. And where we had highlighted this at the end
of Red Capitalism, the system now has become so much more complex. Whereas you really could think previously
of a dozen banks or so controlling the bulk of the loans, you knew exactly where they
were going, and it was very manageable, you now have a highly opaque system of banks,
of shadow banks, of wealth management products, of trust funds, of corporate lending of what’s
called entrusted loans– it’s just loans being siphoned through banks– wealth management
products created by securities companies. And then mix into that guarantee companies,
which have sprouted up to try and guarantee these loans. You have then also things being sold on the
internet. You have pawn shops where– it’s almost endless. And I keep thinking, I should write down and
try and map this whole system out. And then I though, it’s like trying to map
the brain, that there’s almost so many connections and nodes that have appeared. And the difficulty is you don’t actually know
the connections from one to the other. And you’re so, am I double counting this debt? Is this a chain of debt that’s growing? Is this new debt? And so you can actually– and I read some
reports about estimating the size of debt in China. And I think, I have absolutely no idea if
that’s true or not. These are huge numbers. And again, argued that there must be some
double counting there. Clearly what you see when you actually speak
to our entrepreneurs, when you speak to businessmen on the ground, when you speak to banks, there
is, without question, an A lending to B lending to C lending to D, and this chain and this
node of connections. And then you think, this is clearly worrying. And it is worrying. But what no one seems to have any idea about,
including myself is, when is too much too much? And this is the real problem. We can talk about this problem. We can talk about this growing problem in
China. But frankly, I have no idea when the party
stops. And again, you can look back in history. A lot of cases, you know, the Ottomans probably
peaked in the 17th century and they were still going up until the end of the Second World
War. Things can go on– bad things can go on for
a long time. I think also that the greatest comfort that
China should take in its current debt situation is that Japan still exists. For my 25 years in finance, I started following,
like many, the Japanese warrant market. And you know, Japan had problems. Japan was falling. And then people thought, there was even people
in the early ’90s who thought the Nikkei was going back to 40,000. But it was actually on the way to 7,000. And Japan has largely been in recession for
the best part of 20 years or more. And you think, well, why can’t China pull
off a similar trick- – a different sort of trick. It’s clearly not as rich, clearly not as developed,
but you are ultimately still underpinning so much of this in China, even if you can
map this highly complicated system, which you can’t. Because into that you’ve got, is it local
government financing? Is it, like I said, the wealth management
products? Is it the regular bank business? Is it rich individuals? Is it overseas funding? OK, so let’s see you map it all. But who’s actually going to be the person
to pull their fingers out of the dyke and let the water fall through? Because in China, there is this continued
belief still that the government will underpin everything. And to some extent as a working model, I think
that probably makes sense. And again, anyone who is predicting the collapse
of China– first of all, I have no idea what that means. If your debt’s doubled and your growth’s halved,
that looks pretty much like a collapse in some ways already. The bullish case in China has now become it’s
not collapsing, which is a big turnaround from where we were five or six years ago. So, even if you can map all that, I still
think, yeah, you’ve got to look at the politics here as well. You’ve got to look at the mindset, the control
of information. So someone goes bankrupt? Why should I care about someone else’s bankruptcy? My wealth management paid back. Wealth management product is very difficult
to get someone out in the street protesting or really causing a stink for someone else’s
misfortune. And so therefore I think, how does this really
become a systemic crisis? And it’s not clear to me that it does. Telling me the numbers are getting bigger
still doesn’t tell me how you get a systemic crisis. What staggers me is that there are so many
people– and again, clever people, lots of smart people. And whether it be economists, hedge fund managers,
whatever, lots of smart people who will go on TV and talk about the economics of the
debt issues, et cetera. And I think, can’t really argue with any of
that. I’m not a trained economist. I may be right, may be wrong. But what does stagger me is that there is
often a willingness or a willful blindness on the politics of it. And I think nothing in China– you simply
cannot divorce economics from politics in China. And certainly if you’re worried about debt
situations, and from big picture– so if you’re looking at the stability of the banking system,
if you’re talking about the currency, if you’re talking about government debt, if you’re talking
about local government financing vehicles, bank bailouts, however you want to propose
it, the politics is absolutely essential. And to think that it’s somehow China– I would
say the law of economics works just as well– if they work at all, they work just as well
in China as they do outside of China. They don’t stop at the border. So in that sense, economics, yes, does work
in China. But at times people think, oh, somehow the
Chinese have got their own economics or it works differently. I say, well that’s because you’re not accounting
for it probably, because much of that other accounting is effectively the politics, and
you’ve got basically the government is standing there. And without question, I think that the right
view to take, certainly for the moment, is that the government will stand by. It’s certainly going to stand by the banks. You’re not going to get a Lehman Brothers
moment. One of the big banks, one of the big– I think
they technically have four and then seven what they call systemically important banks
in China. So none of those big banks are going under. Smaller rural banks, yeah, that’s possible,
but they will be merged in something else. But politics and political support is absolutely
essential. And to ignore that, you do so at your peril. I think the trouble there is though, I think
it was Churchill who said about Chinese politics, “It’s like two dogs fighting under a carpet.” You frankly got no idea what’s going on at
any given time. And I think the very rise of Xi Jinping, where
you may take the positive stance that this is a strong, powerful leader consolidating
power, and so can push through reform– you say, well frankly, that means we had everything
wrong about Chinese politics before. Because before he came into power, the consensus
across the board– there was just no.. China was now a consensus driven leadership
by committee type of model. There was not going to be a strongman again. That was not going to be a strong political
leader. So basically we have either completely misunderstood
things previously to allow Xi Jinping to come into place, or we just were just simply ignorant
of the fact in the first place. I think the mistake is that, to almost give
too much credibility to Chinese political institutions, that we have seen certain things
happen over and over since Tiananmen Square, so over the past 20 years. And we have assumed that these are institutionalized
processes of smooth transfer of power. And frankly they weren’t. There was a lot more fighting behind the scenes. Bo Xilai is an obvious example like that you
know. 2011, people were talking about Bo Xilai,
as of 2010, as a possible next leader. Very few people saw the Bo Xilai issue coming. Those that did were roundly abused to be certain. No, no, this could never happen in China. There is no sort of coup coming. There’s nothing like this. And clearly the behind the scenes machinations
were very active. So while I may say, the politics is important,
I’m also going to admit somewhat contradictory as well, I have no idea what’s going on in
politics half the time. And as I say, I think Xi Jinping, by the analysis
of five years ago, should never have come to power. His consolidation of so many titles– how
much power he’s got, there’s probably some debate. But certainly of titles, again, should never
have happened either. That was not supposed to be able to happen
in this consensus model. And so, you think, but even with that power,
what does he really want? I come back to even why we started writing. Even that phrase reformer in China– he’s
a reformist. He’s a reformer. I have no idea what that means in the Chinese–
I do have a– but what I tell you, it doesn’t mean what we think it means in a Western sense. And again, it’s not just like the Chinese
have their own way of doing things. But these names, just these labels have such
different meanings. And so when Xi Jinping wants reform in the
sense that he wants things to run better, he wants the Communist Party to run better,
he wants state-owned enterprises to be more efficient, he wants less dependency certainly
on the US dollar, certainly on the States. He wants less dependency on foreigners. He doesn’t want Western ideas seeping into
Chinese education, and so things like that. So if that’s reform, it’s reform. It’s a self-sufficiency that he wants. But the idea that he wants to embrace free
markets in any way, or even embrace the market as a decisive factor– which his own documents
have said– I think is highly misleading. This is a person who wants it– Reform so
often in the West is understood to be economic reform with the government pulling back, of
the markets taking a bigger hold and market forces taking a bigger hold, of bankruptcy
coming to the fore. Hey, your business is bankrupt. We’re going to bankrupt your business. We’re going to close this. We’re going to sell these assets. That’s not what the Chinese mean by reform. They’re talking about administrative reform. They don’t necessarily want to face all those
arbitrary things. And so when you look at what happens in the
markets, I think this is a classic. It’s, let’s go back. So we’re at the end of 2016. Let’s go back 10, 11 months and we saw the
renminbi collapsing. It moved a few percent, if that. It’s hardly a collapse. The renminbi in the past 18 months have moved
10%. I think the yen did it in about six weeks
recently, and sterling did it in about six hours. So this is hardly major market moves. But of course for China, these are are major
market moves. And I think if you go back to the beginning
of the year, January, February, when the currency started to get very weak, the panic in Beijing
simply wasn’t lower currency levels. It wasn’t that the moves had been so significant. They’re all well within any bands they themselves
have set. They’re well within historic ranges. But what they didn’t like was they didn’t
like the market pulling them. And this, I think, is the real fear. Because if you start having a market fall,
as the stock market did in 2015, as the currency started to do then later in the year and beginning
this year, as anyone who’s spent any time in a market knows, that takes on a dynamic
of its own and so on that forces people to come out and do something. They have to act because it will be even worse
tomorrow. And that’s of unexpected or that unknown reaction,
that being forced by the market to do something is what really worries the Chinese. Now we’re nearly touching seven. We’ve already had a PBOC fixing of 6.95 in
the past few weeks. And so in that sense, it’s not simply the
lower level which is the worry, but it’s the unexpected and the volatile nature of markets
that forces people to do things. Chinese leaders don’t like to be forced to
do anything. They certainly like to give the impression
they’re very much in control. And they themselves– This idea, I think one
of the things that sticks– there’s a number of things from, let’s say, the past 20 or
30 years in China that stick– or in Asia that stick with the Chinese leaders. 1997, the Asian financial crash really stuck
with them. I think they looked at Hong Kong. They looked at Thailand. And these sort of headlines, whether they
were true or not that a New York hedge fund manager presses a button and a billion dollars
leaves Thailand, and Thailand is decimated and people are unemployed and factories are
closing– very simple, very tabloid type of headline, but that’s exactly the type of thing
the Chinese government are desperate to avoid. And so that volatility of markets, the unexpected
nature of markets is something that they recoil against. So, where does that leave the currency? It’s going to get weaker. I don’t think that’s really any surprise. But do I see a great devaluation? No I don’t, because I don’t see how that plays
into the government’s favor. This idea of taking sort of tough medicine
early, getting the worst over with, I think sadly that’s passed. I think that’s the difficulty, that that time
has now passed for them. I think if they were to do that– And again,
we know markets overshoot. And again, if you were to say if the currency
is overvalued– and I don’t really care if it is overvalued or undervalued, I just know
it’s not market-driven. And I’m pretty big on market-driven forces. So, in that sense, I don’t know what the right
level is. But should you devalue 5%? Is 5% enough? Well, why 5.0%, 4.9%– well, 5.1%? Be a numbers snob, go for 9.9%. You know, is it 10%, 11%, 12%, 13%? I don’t know, is it 15%? Maybe it should go to 20%. Maybe it should go to 8.5%. I don’t know, what’s enough? What’s enough and what are you guys trying
to signal there? Because certainly if you were to go back to
8.3, where we were for best part of 15 years or so, then that sends a very bad signal of
course. That basically almost wipes out the past 11
years of currency movements and currency strength. And then you think, oh my God, China is like,
it’s really going back to some almost prehistoric economic environment as it were. So I don’t see them doing that because I think
it sends such a destabilizing signal. I think instead they’re going to waste more
reserves, waste a lot of time, a lot of effort by this slow depreciation. And it’ll come in fits and starts. It’s not going to be a straight line. But there’s going to be some fits and starts
on the way down. The argument that somehow they’re wasting
reserves, the Communist party has never been efficient. They’ve been– it’s efficacy, not efficiency. They achieve what their goal is. They’ve got lots of people. Their entire history is about wasting resources
to achieve some arbitrary goal they set on one day that the next day was no longer important. My God, this was a country that sent out schoolchildren
to clap all day to ensure that sparrows couldn’t land so they would die, thinking that that
would improve public health in Beijing. So in that sense, I get that somehow they’re
wasting resources. I don’t think that matters to them, because
what they’re focused on is maintaining control, and not necessarily being exposed to that
market volatility and that whiplash. Because goodness knows where that could take
you. Because if you lose confidence in the government–
and again, this is what underpins so much of what goes on in China. You can talk that, oh yes, they’re rebalancing. The growth rate’s coming down. You could argue their debt’s not too high. But everyone basically falls back on, but
the government’s in control. They’re still in control of all those levers,
whether it’s fiscally, whether it’s socially, whether it’s the internet, information flow,
whatever. And if you have that sort of shock to the
system, then I think that becomes highly destabilizing. When you’re talking about politics and risks
of China in the coming years, I think the risks are ultimately political, not actually
economic. Because the politics– and again, how can
anyone be sitting here at the end of 2016, while thinking ahead to next year, without
thinking about Donald Trump, because the rhetoric there, that relationship– which has always
been a bit of a love and hate relationship, going back for centuries– clearly will change. It’s already started to change. For better or for worse, we’ll find out. I think though what’s very clear is that Trump
is clearly going to take a much tougher stand on China. He’s certainly talking tougher on China. What his stand is on China when he’s in power
and we’ve been through six months, a year, then I’ll tell you what it is, because frankly
I have no idea what it’s going to be now. But you know he’s going to certainly try and
be tougher on China. I think there are a number of things that
are worrying about that though. Not that being tougher on China is a bad thing,
because I think if my complaint– and I’ve often been called about, I’ve been bearish
on China. And I think that’s a dreadful term. I think bulls and bears exist in the stock
market. I think they’re dreadful terms with trying
to talk about countries or bigger picture things. I’ve always seen myself as a realist in China
because I’ve spent a long time there. I’ve worked with Chinese companies. And I’m very realistic about the real limitations
of China, often that China, because of its sheer size of population, of financial reserves,
or whatever it may be, seems to be this behemoth which seems unstoppable. And yet the reality of dealing with Chinese
companies and often individual Chinese, or even the Chinese government, is much more
fractious and nowhere near as successful as the big picture would be. And so when I’ve been sort of negative and
critical in China, it’s because I think one of the first things is to start talking truthfully
to China about China and about your relationship with it. So in that sense, tough talking does no harm. I think because much of what China– I think
the frustration that people have often with China is that China doesn’t even live up to
its own promises, of whether it be reform, of market opening, market access, and things
like that. So in that sense, there’s lots of reasons
to be tougher with China. And that’s the good side, if you like, of
Trump. Although, is that what he’s going to do? I don’t know. What worries me more with Trump is that there
seems to be– he’s fighting the wrong battle. He’s fighting a battle from a decade ago or
from two decades ago, that somehow that the very basic model of American jobs moves somehow
direct from America straight to China, and that if only we are tough on China, put tariffs
on Chinese goods, that those jobs will come back. Well, if that simplistic picture was ever
true, it’s certainly not true now. And simply putting tariffs on Chinese goods
doesn’t solve that problem. So I’m worried that the– and certainly his
economic adviser Navarro, whether his economics even holds up, many economists would argue. But certainly his China policy doesn’t necessarily
seem to hold up. He seems to paint China as the great evil
in the world that’s responsible for all ills. And certainly China has a role to play in
many of those ills. And certainly Chinese policy has certainly
contributed to many of those apparent ills. And there’s things we should be tough on China
about. But simply this rather belligerent attitude
I don’t think is very conducive. Not that I’m annoyed or worried about upsetting
the Chinese. That’s almost an argument for saying those
things if you’re just upsetting the Chinese Communist Party. I have no problems with that at all. But you’re not necessarily going to achieve
the goals you want. I think that’s what you’re– Trump’s wanting–
needs wins, and he needs wins against China. The approach he’s taken, I’m not convinced
he’s going to be able to do that. What you have seen as well of course– and
this plays into Trump’s worldview, and others– is it China of course themselves have become
more and more belligerent over the past five years or so. And this has certainly increased under Xi
Jinping. It’s partly been to support their own economy. And this has come across a wide range of issues. One of course is of economic and the greater
focus on domestic production of certain goods, of restricting fair competition from foreign
companies or forcing foreign companies to onsource certain activities into China, particularly
in the technology space, which is obviously very worrying given the tight control that
China has over technology, et cetera. So there’s those sorts of aspects. But you’ve also seen them being nationalistically
much more belligerent. Obviously we’ve seen that in the East China
Sea. You’ve seen that in the South China Sea. And it’s China as the bully, China as the
big country and you’re the small country, get used to it type of model. Which, ultimately I think will backfire on
China. yes, we all know China’s a big country. We all know that all the countries in Asia
are very dependent on it. Economically they’re very linked with it. But China is– I’m not quite sure what it
thinks it’s setting itself up for, because it has no friends. I was once giving a talk in Europe and I said
that China has no friends. And a lady from the Chinese embassy came up
afterwards and say, “But that’s not true. We do have friends.” I said, “Well name one.” “We have a friendship treaty with Pakistan.” I went, “Ah, anyone else?” And she said, “Singapore.” I said, “Sorry, is that a question or a statement?” And so China doesn’t have friends. It goes out almost out of its way to alienate
countries in the region, certainly countries it should be cooperating with, countries that
have large Chinese diaspora as well. So they have natural affinities with them,
but they seem to be unable to build an inclusive type of model. And it becomes a very Han chauvinistic model. And this, I think, is ultimately an underlying
weakness in the politics in China. So, you look at those domestic sort of political
issues, that domestic inability to build friendships and alliances, even within Asia, its natural
community. You then bring into this Trump, who has almost
alienated everybody he meets. And then you think, this is clearly going
to be volatile for the coming years. Being tougher on China, not a problem. Is Trump the person to do it? I really have to doubt, because I can’t see–
he’s a man who revels in his own ignorance, and seems to have surrounded himself with
people who, again, are not necessarily think that simple solution to complex problems are
the way forward. I don’t think that’s necessarily is going
to be– it may be good for markets. There certainly will be volatility, as many
of my friends would say. But it’s not necessarily going to be good
outcomes I think. What is interesting– and obviously I work
in finance and I write about the Chinese financial system, but I don’t manage money. I thankfully don’t need to give people advice
to what to invest in China, although my default answer is, I’m sure there’s lots of good of
good business to invest in China. But I think what’s interesting or when I think
about China or how I think about it differently from others, or many of the people who would
be my peers or the readers of Red Capitalism, that I came to China because I was interested
in China. I didn’t come to China for the market because
it was a big market or there was a big stock market or there was business opportunities. And so I’ve often thought that’s given me
some advantage, perhaps, of trying to understand China or trying to just, maybe, just accept
some of the frustrations there. And I think of this particularly over the
past– since that Asian– or since the global financial crisis. So you look at over that long eight years,
those two Olympic cycles as I talk about, and you think about, lots of people have done
lots of work on debts and whatever, and this growing network of debt and all these notes
and look at these empty apartment buildings and whatever. And I said yes, that’s true, that’s very nice. And then they automatically then sort of jump
through on to, well this must stop, that this must come to an end, that default beckons
or whatever. And I think, that’s sort of true. Of course it’s true, and ultimately there
is a price to be paid. But I think in China, two of the things that
I always think about China– this is because I’ve been interested in China long before
the economics of it as it were– is that China is the land of the absurd and the arbitrary. And I think unless you understand or appreciate
that China is this absurd country in some ways that’s struggling to become modern, then
you come too quickly to these conclusions. Oh the bank’s accounting’s all hocus pocus. The bank must therefore go bust and I’m shorting
the banks. Well why would you do that? There’s no evidence banks are going to go
to zero. There’s no short sell report that’s going
to show– expose all. And so you’re almost looking for the wrong
sort of outcome. And I think it’s understanding this, of the
absurdity and the arbitrariness of it, that you simply, when you do your China analysis,
you are left with a lot of unanswered questions. You are left almost in dead ends. You think, but surely the next step means–
I say, well it does. I’m not saying it doesn’t. But who’s going to take that next step? Who’s going to force the bankruptcy? Who’s going to ask the difficult question? In Chinese, when you raise these types of
points, Chinese will say to you, semi-apologetically, but also in earnestness about just apologizing,
In China it’s like this. And you think, not again. And you know it’s true. But this, sadly, is– and I think if you’re
an investor, at all sorts of levels, not just whether you’re picking stocks or whether you’re
doing real business– and clearly people have made a lot of money in China. So it’s not as if it’s just a complete fiction
or fraud. But you simply end up with a lot of these,
like I say, loose ends and unfinished stories, that often sort of fizzle out in some way,
and it doesn’t come to a clean bankruptcy or something. But what you find is that the loss has been
socialized in some ways, that someone else bailed somebody else our or they borrowed
from here, and the story morphs into something else. And that’s very difficult, I think, to explain
a lot of the time. It’s a bit like the politics we talked about,
the politics and economics being tied up. But it’s often very difficult. If you focus just on the numbers, yes, the
numbers can expose a lot of sort of malfeasance or wrongdoing. But that’s only part of the story, because
there’s also then another parallel track of almost like back as it were or state support
or local support that carries on in the background that allows things to continue. And everyone sort of plays along with the
game. It’s in nobody’s interest to pull the rug
away in that sense. So I think once you understand that about
China, I think, does it make you a better investor? Maybe– maybe you get a bit less frustrated. Because again, people– even though I’m in
sort of financial markets, I was authorized. So I consult with various people on all sorts
of China topics. And I remember somebody came here doing a
big project, a big property deal, with a big blue chip Chinese name. And I was advising him over a glass of wine
as you do. And he said something like, “So, what did
you think of my Chinese partner?” And I said, “Well the first thing you need
to understand is that all Chinese partners are bad partners.” And he said, “Well what did you mean?” I said, “Well it’s not necessarily they’re
out to defraud you, but they’re almost certainly not what you think they are. And so even though this is a blue chip name
and they’re saying they’re going to invest X hundreds of millions of dollars with your
property project, do they have approval to bring the money out of the country?” “Well they’re a big Chinese name.” I said, “Do they have approval to bring–”
“We’ve not asked, but surely they’ll be able to get it.” “Why would they be able to get it? Aren’t you watching the news? Don’t you know how difficult it’s getting
money out of the country? Have they got approval to do the project in
the first place?” “Oh? You mean they may not?” “Well why would there? You cannot assume that.” So it’s not that they’re necessarily lying
to you. They may be very honest about doing this project. They may have the money in China. But you don’t need the money in China. You need it somewhere else. And so I think understanding the framework
in which China operates, partly you could argue is a good deal due diligence. But it’s also understanding how China operates,
how entities, how individuals operate, that will often speak well beyond their capabilities
because they’ll think something will turn up, that oh, we’ll figure out a way to do
it. And often, of course, they won’t figure out
a way to do it, which makes it very frustrating because you think, I’m dealing with a blue
chip Chinese name here. And then actually they are just as beholden
to the arbitrary regulations of the government as anyone else.

Structuring Deals #1:”Subject To” Deals


Hey, it’s Joe Crump. In this series I’m going to do, I’m going
to explain the different zero down structures. There’s five of them that I’m going to focus
on that encompass just about every different type of structure that you can use. And there’s a hierarchy based on the type
of offer that you’re making, whether you’re buying or whether you’re selling. I’m going to try to explain some of those
things in these videos. The first five videos in this series are going
to be explaining each of those different structures. So you’ll probably want to listen to them
all eventually, one after the other. But right now we’re going to trickle them
out, you know, once a week or whatever, and you’re going to be able to listen to them
that way. After that, I’m going to do some example deals
and I’m going to show you here is a situation, here’s how much they want for the property,
here’s how much it’s worth, what kind of offer can you make on it that would work as a zero
down structure that would make you money. So that’s how I’m going to go through this
next series of about 15 videos or so. So let’s start, first of all, with subject
to. What is buying property subject to the existing
loan? Essentially, what you’re doing is asking the
seller who already has a property and has a mortgage on that property to transfer the
title to you. Transfer the deed to you. And so they sign over the deed to you, you
take over the property, and you start making payments on their existing loan. You’re not going to qualify for that loan,
you’re going to take over that loan payments. You’re also going to transfer the insurance
into your name and you’re going to start making the tax payments as well. So you’re going to be paying principal, interest,
taxes and insurance on that property. And you’re going to go out and find someone,
probably, to lease option that property. And they’re going to make payments to you. So you’ll, let’s say you have a property and
it’s got $150K mortgage on it and it’s worth $160K. You turn around and sell it for $165K,
$170K maybe. You get $5,000 as a down payment and you’re
going to get let’s say $1,200 a month for the income for it. But the payments on it are $1,000 so you put
$1,000 towards the payment, the PITI, plus you take $200 for yourself as cash flow for
that property. So that would be one scenario where you could
keep this property and pay it off over time, using the existing loan on it, getting, having
no money into it, making $5,000 pretty much when you close that deal because you’re not
going to close it until you find a lease option buyer to move in. So you’re making money immediately on it. But the way you’re taking control of that
property is having the title. This is the strongest way to buy a property,
having control of the title and not having your name on a loan. Now you don’t have to qualify for the loan,
you don’t have to have good credit, you don’t have to have any down payment and you have
full control over this property. The seller has no control over that property. You now have control over it. If you don’t make the payments on that property,
you trash their credit. So you’re obligation, your ethical obligation
is to make sure you make those payments. If you take that property, start collecting
rent on it, don’t make the payments, that’s considered fraud and they can put you in jail
for that. So don’t do that. It’s also not the right thing to do. I’ve seen people do it before. I’ve also seen a guy go to jail for it. So make sure that you do this properly and
you watch out for the people who you’re buying the properties from. If you get into a position ever where you
can’t make the payments, my promise to our sellers whenever I take a property from them
is that they won’t ever have to worry about this again. But, I tell them if I ever get into a situation
where I can’t sustain this property for whatever reason, I will give it back to them in as
at least as good a condition as I what I took it over at. And I won’t have, you’ll also get it back
without the payments being late. So even if it’s a few days before the next
payment is due, I’m going to do that. And if the next payment comes do, then I make
that payment so that they, so it’s never comes late on them. So you have to take responsibility. So by learning these things it gives you a
great power and with great power comes great responsibility. I feel like Spiderman’s dad, or grandpa. Anyway. So, use this stuff wisely. It is the best way to buy property and you
can build a whole portfolio. The likelihood that you could put together
ten of these $150K properties in one year, one a month even, is very high. That means that you just built $1.8 million
worth of property and it’s probably worth more than that. So, you can probably get close to $2 million
worth of property in a year doing it this way. I’ve had lots of students that have done it
that way. And a lot of these things you can get with
some equity in them. A lot of times you’re buying them without
any equity where you, like I said, you get $150K mortgage, and it’s got $10,000 of equity. Okay, $10,000 of equity isn’t real equity. You can’t turn around and sell it and pay
a realtor and get out of the deal. You’re going to have your expenses to sell
that are going to be higher than that. But if you keep the property, you’re going
to get some benefits from it. You’re going to, every month, you’re going
to get a buy down on that note, you know, ,maybe it’s a couple of hundred dollars down
on that note. You’re going to get tax depreciation which
is over 27.5 years on the tax basis of that property so it’s about 3.64% of the improvement
value of that property. So, on a property like that you’re probably
talking about, I don’t know, $4,000 or $5,000 a year and, which is you had, you’re in a
30% tax bracket, that means you’re making about $1,500 per year in you know, your tax
benefits. You’re also going to get appreciation on that
property. The properties typically go up over time so,
if it goes up just 1% in a year, it’s gone up another $1,500 in value. So you get the buy down on the note, you get
appreciation, you get depreciation and of course you get the rental income on the property
as well. And eventually, and you’re also going to get
the lease option fee. So anytime somebody buys it on a lease option,
they’re going to give you a down payment. So, let’s say they give you $5,000 and you
can get anywhere from $5,000 to $15,000 on a deal like this, on a lease option. Let’s say you get $5,000 so you get that cash. You probably want to put that in an escrow
account and hold that as a reserve because you’re probably going to get that property
back. The likelihood that they’re going to exercise
that option when they buy it is very low. Less than 30%. And if they do, then, and you sold it for
$165K, that means they still owe you $160K on it, you owe $150K, they give you $160K,
you get $10,000, you make a profit if they buy it. If they don’t, you get the other benefits
of owning that property as a rental property for as long as you own it. And you’ll pay it off eventually. If it’s 20 years left on the mortgage, in
20 years it’ll be paid off. If you’re making more cash flow on it and
as time goes by, you’re rents go up typically, and as your rents go up, you could start paying
more down on your principal and pay it off instead of 30 years you could pay it at 20
or instead of 20 years you could pay it off in 10. And you can get to that place where those
things are paid off a whole lot quicker. Or, you can just keep the cash flow for yourself
and use that to live on. Just make sure you keep a reserve on these
properties. I’ve seen too many people buy a bunch of subject
to properties and then they’d have vacancies and they wouldn’t be able to make their
payments because they spent all of the money that they got in lease options to live on. And that’s a mistake. So, don’t get into that situation because
you don’t want to default on these properties if there’s any way that you can avoid it. And you don’t want to have to give it back
to that seller later if you can avoid it. One thing, though, when you do have to give
it back, if that ever happens, it won’t damage your credit. It won’t cost you anything other than what
you promised them that you would do which is keep it current. So, that’s how you do a subject to. That’s the basic structure of this and all
it takes is them deeding you the property. Now, we have a whole package of documents
that we ask them to sign, you know, disclosures, and you know, giving us the right to have
control over the insurance policy, you know, those types of things that we have on every
subject to property that comes through. We also have the right to talk to a lender,
which we get in writing, we ask them to give us the password to their online account, their
bank account that shows the mortgage account so we have access to the mortgage. We can pay it online if we want to and do
it that way. One of the things I’ve talked about in previous
videos is the due on sale clause. A lot of people are concerned with subject
to because of the due on sale clause. Every lender has, or every mortgage has a
due on sale clause that says if you transfer that property they have the right to foreclose
on that property. There’s some ways around it by using a land
trust or doing things like that or hiding the fact that it got transferred from the
bank by not recording the deed, you know,. We’ve done those things as well, but I’ve,
we’ve done so many of these subject to’s, hundreds, and with my students, thousands,
and when I look at over all the years that we’ve done this for, I’ve never seen one bank
every foreclose using the due on sale clause as its reason. So, I wouldn’t worry too much about that happening. Of course I can’t give legal advice. I’m not an attorney, so, take my advice as
from my experience, not because I legally have the right to give you legal advice. I don’t. I don’t even play one on TV. So, anyway, hope that helps. That’s subject to. Next time when we come back, I will talk to
you about multi-mortgage as the second in the hierarchy. All right. Hope that helps.

GoBearTV Ep 24 | Know the Market Forces at Work


A volatile market is inevitable. With various market forces at work, how does one identify and be prepared for moments that move markets? In this episode of GoBearTV, we’re chatting with CMC Markets’ analyst Margaret Yang to understand what market-defining moments are and how traders can stay ahead. Hello Margaret. Hello Garima. Can you just help me understand what are the recent market movements that we’ve seen? Well, the most iconic market movements I can recall are the EU Referendum back in June 2016 and also the US Presidential Election, the latest one, in November of the same year. So during those two days, markets suffered huge volatility and we saw that sterling tumbled over 12% in the same day and the US futures tumbled more than 5% during Asia trading hours. So these two scenarios were never seen for the last decade, and it was probably a once-in-a-decade opportunity for many traders whereas the rest lost their entire portfolio because the volatility kicked them out of the market. So what was it like over here on the trading floor during that time, seeing it all happen real-time? I can still recall what happened in June 2016 during the EU Referendum. The result was totally unexpected by anybody and the investors globally were just panic-selling their sterling, and because there was suddenly so much of uncertainty surrounding Brexit and also the EU and UK’s future, everybody seemed to be selling sterling at one moment. And when the currency market suffers such huge volatility, the selling force can become self-reinforcing. So initially, the speculators were selling, after that more people came in and took the opportunity to sell off. However at the same time, on the other side of the trading, those people who were taking long positions on sterling, who were buying sterling, they were forced to close their positions, so they also went in to sell. So everybody in the market was selling, and that resulted in a 12% drop in sterling versus the US dollar. Let’s talk a little bit more about the US Election. Donald Trump was elected to become the president of the United States. This outcome was totally unexpected by many people, and because the result came out during Asia trading hours, we saw that the futures of S&P, Dow Jones and NASDAQ tumbled as much as 5% during Asia trading hours. And it even triggered a circuit breaker by the futures exchange because this kind of movement is very unusual, so they had to stop trading for a short period of time. Till now, today, I think Donald Trump still has a very big influence on financial markets and even his Twitter will affect the movement of US dollars as well as crude oil. He has started a trade war with China, which led to global sell off in equities and risk assets from May 2018. And still now we are facing a lot of political and foreign uncertainties because of Donald Trump’s presidential election. So that is the most significant political event that moved the market in recent years. So, of course, as you said, some people lost a lot of money. So how can traders protect themselves from such losses in a volatile market? Well, in CMC Markets we offer a very unique tool to help traders mitigate such huge downside risks, which is called Guaranteed Stop-Loss Order or in a short form, GSLO. This order, once placed, will guarantee that the client’s position will be closed at a specific, pre-described level. So no matter how much the market is moving, or if there is a gap up or down, there will be zero slippage and your order will be guaranteed to be executed at the set level. So the guaranteed stop loss is a very important tool for traders to mitigate those downside risks. But of course the GSLO comes with a premium. It’s just like someone who is buying insurance. The GSLO premium will be fully refunded if the trade is never executed or the trade is withdrawn. It will only be deducted when the trade is executed at that level. So in the trading world, I think the traders should better manage their portfolio, balance the risk and return, and for those big political events, they have to be very clear of the upside and downside of their underlying tradable markets. And they need to analyse the potential best and worst scenarios and protect their positions from incurring those unexpected market volatilities. Thank you Margaret, thank you for your insights, it was great talking to you. Thank you. If you’d like to learn more about market forces or trading in general, visit cmcmarkets.com to find out about CMC Markets’ upcoming webinars and events. This is Garima from GoBearTV and we’ll see you next time.

IRA for Self Employed (EVEN BETTER THAN A 401K!)


if you’re a freelancer or solopreneur of
any kind then this video is for you so all you real estate agents models
digital nomads consultants coaches yoga teachers and anyone who really makes a
1099 income I’m talking to you this video will also apply to you if you have a full-time job that you have a side gig on the side so I’d get on a side a side
gig that brings in 1099 income listen if you’re self-employed I feel you I used
to have a 401 K back when I was working in corporate and it was nice because I
got an employer match and you have you know something to help you out
to save for retirement but when you’re self-employed you’re completely on your
own but ever since I started working for myself I figured out that there are
other ways to save and invest for the future
so just because you don’t have a 401 K does not mean you’re screwed
so if you want to learn more about how to use IRAs and take full advantage of
all the tax friendly ways to help you save for retirement as a solopreneur or
self-employed individual then keep watching hey and before we get started
go ahead and hit that subscribe button my channel is all about money and
investing for beginners and I know it’s gonna help you learn a ton so make sure
to hit subscribe and hit the notification bar for new videos every
week if you’re self-employed there are two types of IRAs you need to have the
first type is either a Roth or a traditional IRA everyone whoever you are
whether you’re self-employed or you work for a company is allowed to have a Roth
or a traditional IRA they’re both amazing ways to stay for retirement and
there’s really no reason not to take full advantage of them so the first step
for you as a self-employed individual is to open a Roth IRA or a traditional IRA
both types give you tax benefit but you get the tax benefits of the Roth on the
back end and you get the tax benefit of the traditional on the front end or a
more in-depth explanation of the difference between a traditional and a
Roth IRA then be sure to check out this video right here once you open either a
Roth or traditional IRA the second type of IRA you need to have is the SEP IRA
most people who have corporate jobs get a 401k with their employer but for you
since you don’t have a 401k what you can do instead is to open a SEP IRA which
stands for simplified employee pension deaf IRAs allow you to put away up to
twenty-five percent of your income or fifty six thousand dollars whichever is
lower and that’s five percent of your net income so after
the expenses that you report so let’s say you make a hundred thousand dollars
of net income in one year then you can contribute twenty five thousand dollars
into your step IRA that year twenty five percent the best part is that you can
write off any contributions you make to a SEP IRA so it’s a really good way to
reduce the taxes you have to pay every year it’s like why pay any more taxes
than you need to contributing to my SEP IRA saves me thousands of dollars in
taxes every year not to mention it helps me save some serious bucks for
retirement I’ve talked to way too many freelancers and solopreneurs who aren’t
doing anything to prepare for retirement and I know it’s a really long way off
but there’s no corporation that’s gonna do it for you so you really need to
think about your future and take advantage of any tax loopholes and ways
that the government gives you to help you prepare so ideally you have a SEP
IRA and you have another IRA either a Roth or traditional and you are maxing
out your contributions to both now if you’re a full-time employee and you have
a 401k but you also make income on the side as a solopreneur then you are a lot
to have a SEP IRA as well but tax laws are pretty complicated and there’s
always exceptions and what not giving your specific situation so the only way
to know for sure is to talk to your accountant but in general you are
allowed to have both the 401k and the SEP IRA as long as you stay within the
total annual contribution limit as of 2019 you’re allowed to put up to fifty
six thousand dollars per year tax-free into your step IRA and or 401k combined
there are other retirement savings options for self-employed people but in
my opinion they aren’t as good as the SEP IRA the simple IRA is another option
but the annual contribution at $12,500 versus the step IRAs fifty-six thousand
dollars is a lot lower so the simple IRA is a much less popular option than the
set and another option is the solo 401k but those require a lot more paperwork
and similar administrative stuff that a SEP IRA doesn’t have so in general it’s
not really worth the hassle to have a solo 401k over a SEP IRA unless you’re
over 50 years old and that’s because the solo 401k lets you do what’s called
catch-up contributions now I’m not gonna get into the specifics of Scylla 401ks
in this video but just know that if you’re self-employed and
you want to be able to save a ton of tax-free money for retirement and keep
your investments in a tax ID account a SEP IRA is a super easy and hassle-free
option to open a SEP IRA all you have to do is choose a brokerage that offers the
SEP IRA as an account option I currently have my SEP IRAs adela t and I love it
but there’s a lot of other really great brokerages out there to choose from
Vanguard is great for anyone who wants to invest in index funds although
fidelity is good for that too betterment is another option you can look into it’s
a Robo advisor that offers professionally designed investment
portfolios that you can choose from and then customized for your goals and your
risk tolerance the interface is super nice and easy to use other brokerages
that offer stuff IRAs are TD Ameritrade e Trade Charles Schwab and Interactive
Brokers if you learn something from this video please give it a thumbs up and
feel free to let me know in the comments if you have any questions and I’ll be
sure to get back to you once you’ve set up your step IRA and you want some ideas
on what to do with it check out these two videos right here for some beginner
friendly info on how to start putting your money to work and of course if
you’re new to the channel be sure to hit that subscribe button for new money and
investing videos every week always remember to go after your dreams
unapologetically and to live life on your terms Cheers

How to Analyze a Multi-Family Rental Property | Deal of the Day | Lewiston, Maine


Hey, Everyone, I’m Dave Meyer with BiggerPockets.com and today we are analyzing a 4 unit multi-family to see if it makes a good investment on this episode of Deal of the Day. Thank you, everyone for joining us. Today’s Deal of the Day was submitted by BiggerPockets user Al Smith, who lives in Indianapolis, but is looking at a deal in Lewiston, Maine. Before we jump into the numbers and the specifics, how to analyze this, I’m going to talk a little bit just about the details of the house that Al gave us and some of the questions he asked us specifically to address. So, the house was built in 1881, definitely
a house on the older side. It was converted into a fourplex at some point after its original construction, so we know it wasn’t designed this way, but that’s not
necessarily a bad thing. It’s listed at $110,000 and has an estimated monthly rental income of $2,250 per month. Taxes are only $2300/year for 2017. So, I’m already liking the numbers on this
deal before we really get into any of the details The location is in an older part of town which isn’t really a bad thing, but something to think about. And as for Al, our BiggerPockets member, he’s a first time investor. He has $40,000 saved up, so great job Al,
but he prefers not to put that $40,000 all towards the down payment and is looking to use a conventional 30 year loan with 20% down… which definitely would be possible with
these numbers… (Volume Up)

Investing In Real Estate With A Full Time Job?


All right, what’s going on everybody? In today’s video we’re going to be talking
about, can you have a full-time job and still invest in real estate? I would say absolutely you can and, not only
that, but you should have a full-time job. If you’re looking to become a full-time real
estate investor, I would actually recommend that you have a full-time job and then do
real estate investing on the side before you gain some consistency to the point where eventually
you could quit your job if you wanted to. There’s a couple of reasons for that. Number one, just like any business when you’re
getting started, it’s going to be hard to be consistent and do consistent deals when
you’re first getting started. Now, some people, they might start doing two
or three deals per month but other people, it might take them a little while to get started. From a pure cash flow perspective, you might
save up some money but if you’re not making consistent income, like you would from a normal
job, that money can dry up pretty quickly, ask me how I know. I would definitely recommend having a full-time
job. Ideally, a full-time job in the real estate
industry so you can gain even more experience before you even think about quitting your
job. The next thing I would keep in mind is, when
you’re getting started as a real estate investor sometimes you can do extremely well in your
first couple deals, and it might even just be dumb luck. If you’re doing marketing sometimes you can
just … I know some investors that have made 100,000 on their first couple deals, which
is definitely doable but it’s, I’d say that’s, I’d probably consider that pretty rare in
the real estate industry. You want to be able to have done at least
a minimum of three deals but ideally more like five or six deals before you think about
quitting your full-time job. The reason for that is, yeah, some deals might
be amazing, other deals might take a little bit longer and you might not make as much
so you want to have a wide spectrum of deals under your belt before you decide to quit
your job. Sometimes you get cocky too after you maybe
do two or three good deals but then your fourth deal, because you’ve done so well in those
first couple, you think, “Oh, I’m going to hit another home run,” and then that deal
doesn’t go so well. You really want to see a wide spectrum of
deals before you think about quitting your job. Another great reason to invest in real estate
on the side, while you have a full-time job, is to build up assets. By that I mean you want to build up … You
can even buy rental properties. It’s going to be significantly easier to purchase
rental properties if you have a full-time job rather than if you’re just self-employed
doing the whole full-time real estate investor thing, so that’s one reason. You can buy two, three, four, five rental
properties with your full-time job income before you take the leap to being a full-time
real estate investor. Then, in that case you have cashflow coming
in that would help to stabilize some of the months when you’re first getting started. Not only that but you also want to extend
your credit lines and potentially get new credit lines as much as possible when you
have the security of a job. Myself personally, I have over 100,000 in
credit and I’m trying to get over a million dollars in personal credit and possibly business
credit as well. When you have a job that’s going to be 10
times easier because they just look at the income, they might look at your taxes, and
they’ll give you sometimes a pretty quick approval. You should have, I’m talking about credit
lines with the bank. Sometimes you can just get a personal credit
line with your bank and you can apply for 50,000. Now, they might not give you 50,000 and they
might say, “Hey, what are you spending that for? You say, “Hey, I might be making some large
purchases soon.” You don’t really need to get too specific. I don’t want you to lie or anything like that
but, generally speaking, if you have good credit and a steady job you can ask for a
personal line of credit, which is essentially like cash. It’ll just be in your account and you can
use it whenever you need to. You should do the same with credit cards. You should have three or four credit cards
and try to extend the credit lines on those as much as possible. Most people are not even aware that you can
probably just call your credit card company today and ask, if you’ve been paying on time
and you have a steady job, probably ask them to double your credit limit. That could give you a lot more financial security
when it does come time to quit your job. What will happen is when you’re self-employed,
especially when you’re getting started, you’re going to have amazing months where you’re
like, “I’m a genius, I’m going to be a millionaire next month.” Then you have months where you’re like, “Crap,
I need to get a new job. I need to get a subsidized apartment. I need to make some serious life changes.” Having all that built in, credit lines that
you can rely on if you need to. I’m not saying get a credit line just to go
buy a boat, which theoretically you could, but use those credit lines as security or,
potentially, if a buying opportunity comes around sometimes you might … Maybe there’s $100,000, you need to bring
$100,000 to the table and you might be able to finance that in creative ways with credit,
your credit line, and savings, for that matter. Okay. The next reason why I recommend investing
in real estate part-time, while you have a full-time job, is you can get good at outsourcing. Being a real estate investor, being a full-time
real estate investor, you actually don’t spend as much time as you might think. A lot of my business is outsource. You should outsource these three things when
you get started as a real estate investor. Number one. Your leads. Some investors purchase leads, you can purchase
different motivated seller lists. You can also pay a researcher. I have a virtual assistant that I’ve trained
to basically pull different motivated seller lists for me. You want to have somebody get the list for
you, the list of motivated sellers, the list of people that you’re going to be marketing
to. That’s just for my business, some people have
other ways of getting deals. The way I get deals is I basically have a
long list of people and I send them a lot of direct mail. Now, there’s other ways of getting deals. You can do a ton of networking, you can just
search the MLS, but in my experience I think direct mail is definitely the best way to
go. You would outsource getting the list, and
I have different videos on how I get lists and different things like that. If you have questions about getting lists,
just drop them in the comments and I’ll respond. The next thing you should outsource is having
somebody answer the phone. You should have a business phone line with
your business. You don’t want to just put your cell phone
on different marketing pieces and things like that, it doesn’t look very professional. If you’re working a full-time job you’re not
going to be able to just answer every single phone call. There’s plenty of, there’s countless services
where you can have Phone.com to get a business phone number. Then, I use a call service called Dedicated
Office Systems. They just basically screen all my calls and
send me leads, essentially. They notify me via text message as well as
email and it just says, just has the lead info sheet which basically has the property
address, the name of the seller, how soon they’re looking to sell, the address, and
the amount they’re looking for. I know pretty much within 30 seconds whether
it’s a good deal or not because they’ll say, “Look, I want to sell fast, the house needs
a lot of work, and I’m looking to sell it for 200,000,” which might be an amazing deal. You should outsource the calls as well so
Dedicated Office Systems is good. There’s Pat Live, P-A-T Live. There’s also Answer First, and then there’s
also you can hire a virtual assistant. There’s plenty of other services but those
are really good for real estate investors. Then, the third thing you should outsource
is your direct mail. I do a lot of direct mail. If you’re doing cold calling, you can do that. If you’re doing networking, that’s obviously
more in person. If you’re searching the MLS, maybe you can
just pay someone to search the MLS for specific types of properties like TLC, Handyman Special,
Investor Special, things like that. Then, maybe they could send it to you every
single day. For outsourcing my direct mail, I use a service
called clicktomail.com where the person sends me my list that I’ve already outsourced. I basically upload that list to Click to Mail
and it sends out postcards for me. I basically just do that once a week and I
send out a lot of postcards. I get about a 1% response rate but out of
that 1% response rate you’re going to get some very motivated sellers, especially if
you get 10 phone calls. If you can just make your phone ring 10 times
in a month, you’re going to get two or three pretty motivated off market sellers, that’s
also going to help you. Once you go full-time, you’re going to have
a good idea of building a team and things like that. Once you go full-time, you’re going to want
to have a steady source of leads coming in, a steady source of deals that you can evaluate. You can practice with that, with outsourcing
those three things. Then lastly, before you become a full-time
real estate investor, it’s good to have a job in terms of the cashflow. You can also say, “Look, a year from now I’m
going to be a full-time real estate investor and I’m still going to have a job, I’m still
going to have the cashflow coming in. Maybe within that year you say, “Look, I’m
going to network. I’m going to meet 100 different people in
the real estate industry.” You can say, “I’m going to try three different
strategies for finding deals.” Maybe one would be direct mail, maybe one
would be cold calling, maybe you set up a YouTube channel, but you should try three
different marketing strategies during the time just so you can test and tweak and see
what works because once you go full-time you’re pretty much going full-time. It’s kind of hard to go back to work in a
full-time job. You need to be sure that your marketing strategy
is scalable, and that it works for you, and that you can get predictable results. That’s what I like about direct mail, it’s
very predictable. I know if I send out, let’s say, 500 letters,
I pretty much know how many phone calls I’m going to get. If I send out 1,000, it’s going to pretty
much be the same percentage. Obviously, if I send out 100,000 there might
be some, eventually it’s not going to have the same percentage but, generally speaking,
you can predict how many leads you’re going to get. Use your full-time job as security. Maybe you start buying some rental properties,
maybe you start flipping, maybe do at least five deals before you really jump in. Use that time to network as much as possible,
go to RIAs, meet up groups, anything like that. Try to meet at least 100 different people
in the industry and then try different marketing strategies while you’re working a full-time
job. Maybe you just wake up an hour earlier and
you send out some direct mail. Maybe you wake up an hour earlier, you make
a YouTube video, you do different networking, you reach out to different people. You really want to have tested some market
strategies before you jump full-time into the business. There you have it. Hope I answered your question on can you have
a job, a full-time job, and also invest in real estate. I would highly recommend that you do get a
full-time job before you think about becoming a full-time real estate investor. Especially, if you can get a job in real estate,
it’s even better because there’s going to be a lot of things that will carry over to
your own business. Thanks for watching. Please like, please share, please subscribe,
and I will see you in the next one. All right, bye.

My Property Business Plan of 2018 | Samuel Leeds


Hi, my name is Samuel Leeds and, in this video
I’m going to do something absolutely crazy that I don’t think any other property investors
are doing. In this video I’m going to expose and reveal
my 2018 property investor’s business plan. It means that you will get to see exactly
what I am planning and strategizing to buy myself. Now, a lot of people would pay thousands of
pounds to have this information, and you might be thinking, “Are you crazy? Why would you
reveal your business plan?” People have tried to tell me not to do this. I’ve had close
friends of mine saying, “Don’t do it. If you reveal your property investing business plan
everyone is going to copy you, thus you will create competition for yourself. You will
push the property prices up, and it just doesn’t make any sense. What’s the point?” So, let me explain, firstly my reason for
doing this. The most successful businesses in the world reveal their business plan to
the world. Let’s take Mcdonalds. Mcdonalds is one of the largest businesses in the world.
Believe it or not, do you know what they make most of their money on? Property investing.
That’s how they make their money, and their business plan, Mcdonalds is revealed online
for the world to see. The book of Ezekiel says write down the vision,
make it plain so that all can see. Why? Why do that? Well, I believe that when you speak
it out, write it down so that all can see suddenly it just begins to happen easier. So, most property investors are pretty secretive
about their businesses. They keep their cards close to their chest. I am not going to do
that in this video. So, stay tuned and you’re going to get to see exactly what my business
plan is for property investing in 2018. So, in 2018 I am going to buy 10 houses in
total. Two of those houses are going to be lease option agreements that I’ll be keeping
for myself. A lease option agreement is a property where you buy now, pay later. So,
you fix the price now, and you pay for it later. I believe that right now we’re having
a massive expansion and property prices are on the rise. Lease option agreements are no money down
deals, and in the time where you are waiting for completion, you will benefit from all
the rent and all the capital appreciation, regardless of not putting any money down up
front. Lease option agreements are something that
I’ve been doing for almost a decade and if you’ve been to my Property Investor’s Crash
Course, or even just read my book you’ll see it’s something that I’ve been teaching openly
to people for probably about five years now. Two of my properties are going to be straight
forward, buy low rent high HMO’s. HMO’s standing for House of multiple occupancy, where you
rent the property out on a room by room basis. Again, this is something that I’ve been teaching
at my Property Investor’s Crash Course. It’s also in my book for quite some time, and I’ve
been doing successfully for almost a decade. The five rules of HMO’s and certainly for
the way I want to be doing it for these two is going to be one, make sure that it’s close
to a city centre. I’m going to be buying two HMO’s in Middlesbrough. Two, it needs to be
in good condition, because if you’re going to be having to do a refurb then that could
be a deposit on another house. The bank will not lend you money to do up
the property so, it needs to be in good condition. Three, it needs to be in an area whereby there’s
a power team and an HMO manager. Four, you need to have a minimum of four lettable rooms.
Five, you should never pay more than 25,000 pounds per lettable room. So, if there’s five bedrooms, you shouldn’t
pay more than 125,000 pounds for the HMO. The other six deals are a little bit more
interesting. Buy and refinance. When I started out property
investing, in fact the first house that I ever bought, I bought at 25% below market
value and then I refinanced it back up to its true value that same day. Now, this was in 2008, 2009 where the recession
was just about to hit the country hard, and what happened when the recession came, is
they changed the rules, they said, “You can no longer buy and refinance the same day.
You’ve got to wait six months,” which was the first problem. The second problem was
when you waited six months, the value would come and they would undervalue it. So, you
wouldn’t be able to pull your money out at all, and the reason that was happening was
because the recession was on the way. Things are beginning to get a bit easier in
this area now, and things are beginning to shift. So, because house prices are going
up considerably and lenders are laxer than they have been previously as well in a lot
of areas, my plan is to buy a cheap HMO property. It won’t be a current HMO, it’ll just be a
big derelict property and to come and buy it for cash. I will then spend six months doing it up,
renovating it into a nice, big, professional house of multiple occupancy. After six months
I will then refinance the property and I will pull out all of the money that I put in, and
potentially even some of the refurb costs as well, meaning it will be left with a very
little money down deal, and of course, I’ll even be generating a high rental income from
it as well. Now, this type of deal always comes with its
risks, because whenever you’re expecting builders to stick to budgets and stick to time scales,
and surveyors to be in a good mood, there can be problems, but fortunately now, at this
point in my journey, I’ve got full-time builders that work specifically and exclusively for
me, I’ve got a full time project manager, and I think I’ve got a team, and I think the
rules in the economy are at a position where I can now continue to pick up my journey of
buying and refinancing. Exciting times! Property six, title splitting. This is pretty
fun. They call this slice and dice, and it’s where you buy a big property, maybe an old
house, and you convert it into two apartments, a minimum of two apartments, and you split
the title, and then sell each apartment leaving you with a nice profit. An example of this would be if you bought
a big old derelict house for 70,000 pounds, you spend 20,000 pounds doing it up, and you
converted it into two apartments, which would be a very good cost, but when you’ve got full-time
builders and the right team that would be possible. So, so far you’ve spent 90,000 pounds and
you’ve now got two apartments. You then sell each apartment separately for 65,000 pounds
each, bringing you in 130,000 pounds, leaving you with a gross profit of 40,000 pounds,
which is not a lot of money, but it’s not bad if it’s just one deal in 10 over a year’s
period. Property seven, seaside apartments. Now, I
know I teach that property investing is not about feelings, it’s all about formulas, but
you know you can actually make quite a lot of money from seaside apartments. There were
seaside districts some years ago and you could buy apartments there for 80,000, 90,000 pounds,
but what happened was the council regenerated the area and suddenly, you’re talking 150,000
pounds minimum just to buy a one bedroom apartment. There aren’t many seaside resorts in the UK
that haven’t now been regenerated. So, typically speaking you’re going to spend about 150,000
pounds minimum for a seaside apartment. However, there are a couple of areas in the UK whereby
they haven’t regenerated the areas just yet. So, what I’ve done, is I’ve found an area
which is a seaside district where they haven’t regenerated the area just yet, but they are
about to. So, prices, I believe are going to go up very,
very highly, however capital appreciation doesn’t pay the bills so you can’t rely on
it. So, this particular area that I found you could buy a nice apartment for less than
100,000 pounds, and the rent that you can demand is around about 750 to 800 pounds per
month. So, even if they don’t regenerate the area like they are going to, and even if prices
don’t go up in the area, which they are going to, you still are going to be making a very
healthy return on investment from these type of seaside apartments. So, I’m going to be buying a seaside apartment,
hopefully for around about 85,000 pounds, renting it out for 750 pounds. Where am I
going to do this exactly, what’s the area? I probably shouldn’t tell you this. This is
a thing people are being telling me not to do because of competition, but I’m going to
tell you where I’m [inaudible 00:09:34] buy my seaside apartment and it is going to be
in Western-Super-Mare. Property eight will be a HMO flip. What do
I mean by HMO flip, and how will that work? In the last 12 months I have traded over 150
HMO properties to my students and investors. They’ve bought these HMO’s for around about
80,000 to 100,000 pounds. They’ve spent about 5,000 pounds getting them looking pretty,
and then furnish them as well, and a lot of these HMO properties now are worth 120,000,
130,000 pounds, sometimes even more. So, because they’ve done them up, and they’ve
put furniture in, and they’ve put tenants in suddenly the value of the property has
shot up. You see, if you’re a London investor and you see a HMO opportunity, but you’re
going to have to do it up, you’re going to have to furnish it, you’re going to have to
put tenants in it, you might think, “It’s 80,000 pounds. I’m not sure if it will work.” But, if someone comes and does that for you,
and tests it out, and buys it, and puts the furniture in, puts the tenants in, and it’s
generating 50 and 100 pounds a month, suddenly as this busy, rich, maybe London investor,
or Dubai investor will say, “Oh, I’ll pay 130,000 pounds for that, no problem. Here’s
cash.” So, my strategy is going to be next year,
and I have done this before, but I’m going to be doing it again this coming year is going
to be to buy a property very, very cheap, maybe around about 60,000 pounds HMO to renovate
it cheaply, perhaps spending 10,000 pounds, plus furniture, and then to sell it as an
up and running HMO to a wealthy, busy investor and make, I want to make a profit, a gross
profit of a minimum of 30,000 pounds doing that, which again is not bad for just a little
bit of work, especially if you enjoy it. Auction property. Auction property is something
that everybody thinks is a great thing to do, and lots of people attempt. However, if
you don’t know what you’re doing you can fail miserably. So, what I would suggest is stay
away from auctions unless you know what you’re doing. If you know what you’re doing you can
make good money. If you don’t you can get burned badly. So, that is my business plan for next year.
I’m sure I’m going to go on to do a lot more than that. I’m still going to be finding deals,
and packaging them, and selling them on, I’m still going to be doing a little bit of training
as well. So, I hope that’s been useful and interesting. If you want to go and copy me,
go for it. In fact, if you want to copy me, and you want me to help you copy me, I will
even do that. So, just get onto one the training sessions or find out my mentoring packages,
I’ll happily help you to do the exact same. If you found this video interesting and you
want to see me doing these, you want to see me in the auction room, you want to see me
at the seaside negotiating, buying the properties then please do subscribe below, and you’ll
get to journey with me through the year. Also, I would love to know what your strategy’s
going to be. What’s your business plan? What are you hoping to achieve? What are you hoping
to buy next year? So, please do comment below and let me know what your strategy is, and
I will read with great interest and cheer you on all the way. Oh, and I almost forgot number 10. Number
10 property will be a serviced accommodation property. So, I’ll keep you posted on how
I get on, and do get in touch. Come along to one of my programmes. I’m very happy to
help in any way that I can. So, subscribe right now, and I’ll see you very soon. God
bless.

Fox Business – Melissa Francis – Time To Buy The Market


IT IS ALWAYS ABOUT MONEY MELISSA: OUR TOP STORY TONIGHT, THERE IS NO STOPPING THE WALL STREET RALLY. THE DOW CLOSEDED AT A RECORD HIGH FOR THE 7th DAY IN A ROW AT 14,455. SO WHAT ARE YOU DOING ABOUT IT? WHERE IS YOUR MONEY RIGHT NOW? TODAY’S POWER PANEL IS HERE WITH WHAT THE AVERAGE INVESTOR SHOULD BE MAKING OF ALL THIS LANCE ROBERTS, CHIEF ECONOMISTND CEO OF STREET TALK ADVISORS. SPENCER PATTON, CHIEF INVESTMENT OFFICER AT STEEL VINE INVESTMENTS. YOU RECOGNINIZE JONATHAN HOENIG, HE IS PORTFOLIO MANAGER MANAGER AT CAPITALIST PIG.COM AND FOX NEWS CONTRIBUTOR. THANKS TO ALL THREE OF YOU FOR JOINING US. LANCE, LET ME START WITH YOU. THE AVERAGE PERSON IS WATCHING THIS AND HEARING RECORD, RECORD, RECORD. SAYING WHAT AM I MISSING? WHAT ARE THEY MISSING?>>WELL OBVIOUSLY THEY’RE MISSING THE MARKET GOING UP BUT THERE IS KIND OF THIS ASSUMPTION THAT THE AVERAGE INVESTOR HAS BEEN OUT OF THE MARKET THREE YEARS, FOUR YEARS NOW AND NOW THEY’RE JUST KIND OF WAKING UP. THAT IS NOT THE CASE. MOST PEOPLE THAT ARE INVESTED –. MELISSA: YOU DON’T THINK SO?>>NO, IT IS NOT. IF YOU LOOK AT LOT OF DATA, ONLY 20% OF THE AMERICANS ARE ACTIVELY INVOLVED IN THE MARKET ANYWAY. THE BULK OF THOSE ARE INVEED FOR THE MOST PART. THEY’RE IN THE MARKETS. THEY’RE PARTICIPATING AND, YOU KNOW THE ISSUE REALLY BECOMES THOUGH WE HAVE TO LOOK AT RISK HERE. WE’VE OBVIOUSLY GOT THE FED INDUCING MARKETS. 85 BILLION A MONTH. MELISSA: RIGHT.>>DRIVING THESE MARKET PRICES HIGHER. THAT’S FINE. NO PROBLEM WITH THAT. MARGIN DEBT IS BACK AT LEVELS WE HAVEN’T SEEN SINCE 2007. MELISSA: YEAH.>>YOU HAVE HIGH YIELD CREDIT, HIGH YIELD CREDIT YIELDS ARE ATHE LOWEST LEVEL ON RECORD. WHICH BASICALLY MEANS THE YIELD CHASE AND RISK IS DEFINITELY THERE. SO YOU JUST WANT TO BE MORE CAUTIOUS WHERE YOU GO TOO FROM HERE. MELISSA: J JONATHAN, I’M THINKING ONE IN FOUR AMERICANS WHO TAPPED INTO THEIR 401(k) TO TRY TO PAY THEIR BILLS OVER THIS PERIOD OF TIME. I’M ALSO THINKING ABOUT THE PEOPLE WHO STOPPED CONTRIBUTING TO THE 401(k) WHEN THEY SAW THE MARKET TANK BECSE THEY GOT NERVOUS ABOUT IT. THEY’RE WAKING BACK UP TO WHAT IS GOING ON AND SEEING THEY MISSED TH RIDE UP. WHAT WOULD YOU TELL THE PEOPLE DO NOW?>>GET OUT OF THE HABIT MAKING INVESTING ALL OR NONE DECISION. YOUR POINT SPEAKS TO THAT EXACTLY. GO BACK TO 2009, 2010. INVESTORS OBOUSLY BECAME VERY SCARED AND A LOT OF THOSE INDIVIDUAL VESTORS UNFORTUNATELY PULLED ALL THEIR MONEY OUT OF THE MARKET. WE’RE AT ALL-TIME HIGHS ON THE DOW. WE’RE STARTING TO SEE THAT TRICKLE IN. I DISAGREE SLIGHTLY WITH OUR GUEST. WE HAVEE SEEN ESPECIALLY FOUR OR FIVE YEARS, COME OUT STOCKS GO INTO BOND AND INTO GOLD. MELISSA: I AGREE.>>MARKET HAS BEEN UP NINE DAYS IN A ROW. I THINK THE TREND STILL CONTINUES. I SEE HIGHER PRICES FOR STOCKS DESPITE THE RUN WE’VE HAD. MELISSA: SPENCER DO YOU THINK THE RETAIL INVESTOR IS ON THE SIDELINE AND WHAT SHOULD THEY BE DOING?>>I THINK WE SEE MORE RETAIL INVESTORS IN BONDS SIGNIFICANTLY. AND THERE IS CHU ON THE SIDELINES. WHAT PEOPLE NEED TO DO IS WAKE UP THE FACT THEY HAVE LOST A LOT O OF PURCHASING POWER LAST FIVEEARS. GASOLINE IS $4 A GALLON WHERE IT WAS AT TWO. GOLD WAS $750 AN OUNCE. NOW IT IS AT 1500. THEY NEED TO GET INTO REAL ASSETS. BUY THINGS LIKE REAL ESTATE. GET INVESTED INTO AGRICULTURE. GET INTO THINGS THAT WILL ESERVE THE PURCHASING POWER. DO NOT BUY THE MARKET ONCE IT IS UP NINE CONSECUTIVE DAYS THE LONGEST IN 16 YES. YOU WILL WAKE UP AND REGRET IT IN THE MORNING. PLEASE RUN AND DON’T MAKE THAT MISTAKE AGAIN HERE. MELISSA: LANCE, IS THAT GOOD ADVICE? THAT IS A GOOD POINT. YOU’VE LOST A LOT OF PURCHASINGNG P POWER. THE FED IS JUST GOING TO KEEPEP DOING WHAT THEY’RE DOING. SO ITEMS IS A LIKE THAT TREND COULD CONTINUE. DO YOU AGREE WITH THAT? WHAT ADVICE WOULD YOU GIVE IN LIGHT OF THAT?>>I THINK IT IS GREAT. ACTUALLY I AGREE WITH BOTH OF YOUR GUESTS OVER THE LAST TWO POINTS. I CALL THIS THE TAYLOR SWIFT MARKET BECAUSE THEY TREAT THIS LIKE A BAD RELATIONSHIP. WHEN IT DOESN’T WORK OUT BAIL O AT WORST TIME AND TRY TO GET BACK IN AT THE TOP. MELISSA: YES.>>BUT THE REALITY I AGREE WITH BOTHINGS LOOK THE MARKETS ARE VERY EXTENDED HERE. THERE IS RISK. YOU WANT TO BUY O ON CORRECTIONS. AGAIN, AGREE WITH JONATHAN, YOU DON’T WANT TO GO ALL OUT OF THE MARKET OR ALL-IN. IT IS NEVER GOOD. YOU CAN NOT TIME THE MARKETS. IN RESPECT TO YOUR SECOND GUEST, STEVE IS ABSOLUTELY RIGHT, IT IS ABOUT ASSET ALLOCATION. STOCKS ARE A FINE PLACE TO BE WHEN ALL THE FUNDAMENTALS ARE IN PLACE BUT EARNINGS ARE DETERIORATING. RISK IS HIGH. AND PEOPLE ARE CHASING STOCKS BECAUSE THEY’RE GOING UP. BUT LOOK, THERE IS SOME GREAT PLACES TO PUT MONEY. BOND PRICES HAVE ACTUALLY DECLINED OVER LAST COUPLE MONTHS WHICH HAVE GIVEN GOOD OPPORTUNITIES IN THE BBB RATED SPACE. THERE IS GREAT OPPORTUNITY, GOLD HAD A GREAT DECLINE OVER LAST FEW MONTHS. VERY, VERY OVERSOLD. THIS IS THE MOST OVERSOLD GOLD HAS BEEN IN LAST THREE YEARS. THIS IS GOOD OPPORTUNITY. MELISSA: I WANT TO ASK EACH OF YOU IN REALLY PLAIN LANGUAGE. IF PEOPLE HAVE MONEY SITTING ON THE SIDINES RIGHT NOW AND THEY’RE TCHING THIS RECORD DAY AFTER DAY AFTER DAY, WOULD YOU ADD MONEY TO STOCKS RIGHT HERE? I’M GOING THROUGH EVERYONE. JOJONATHAN, WOULD YOU START FIRST. WOULD YOADD MONEY TO START HERE?>>ABSOLUTELY, MELISSA. THE BEST INDICATOR OF THE MARKET IS THE MARKET. SO I DON’T BELIEVE AS THE OTHER GUESTAS SAID, I DON’T BELIEVE YOYOU BUYUY ON DIPS, BUY ON CORRECTIONS. YOU NEVER KNOW IF THE CORRECTION IS BEGINNING OF SOMETHING MORE SUBSTANTIAL, SOMETHING MORE SERIOUS. I BELIEVE IN BUYING STRENGTH. RIGHT NOW, LOOK AT STOCKS, BOND AND GOLD UNQUESTIONABLY, STOCKS IS THE BEST ASSET CLASS TO HAVE YOUR MONEY?>>DON’T BUY NOW. YOU WILL REGRET IT IF YOU BUY AT PEAKS, YOU BUYY ON CORRECTIONS. THAT IS WHAT DATA IN THE PAST SHOWN. BUY WHEN THINGS ARE CHEAP. DON’T BUY AT THE VERY TOP. MELISSA: I’M THOROUGHLY CONFUSED. LANCE YOU WILL BE THE DEAL BREAKER, THE TIEBAKER. WHAT DO YOU THINK?>>LOOK THE BOTTOM LNE IS, THAT MARKETS ARE VERY OVERBOUGHT. THEY ARE GOING TO PULL BACK AT SOME POINT. MAYBE THIS SUMMER. BUY ON CORRECTIONS. BUY ON WEAKNESS. THAT IS WHEN YOU MAKE THE BEST OPPORTUNITY. BUYING NOW, YOU’RE GUARANTEED IN THE NEXT THREE TO FOU MONTHS VALUES WILL BE LOWER THAN THEY ARE TODAY. MELISSA: JONATHAN, YOU’RE ODD MAN OUT NOW. I’LL LET YOU HAVE THE LAST WORD TO MAKE YOUR CASE.>>I MEAN, IDEA OF BUYING ON CORRECTIONS, MELISSA, YOU GO BACK TO 2007. YOU WOULD HAVE BOUGHT ALL THE WAY DOWN TO A 50% CORRECTION IN THE DOW. I IN FACT DON’T SEE THAT NOW. THE MARKET MOVES IN TRENDS. THAT IS THE BEST INDICATOR WE HAVE. RIGHT NOW YES, OF COURSE THE MARKET WILL GO DOWN ONE DAY IN THE FUTURE. IT WILL NOT GO UP FOREVER. I THINK IT IS BEST ASSET CLASS YOU CAN HAVE. STOCKS ARE LIKE SUSHI. YOU DON’T WANT A BARGAIN. DON’T WANT THEM ON SALE. BUY QUALITY, BUY STRENGTH. TREND TEND TO PERSIST. MELISSA: WHAT YOU LEARN IS SOMETHING WE LEARN EVERY TIME THERE IS BIG STOCK MARKET CRASH LIKE WHAT HAPPENED IN ’08. THAT IF YOU GET OUT AT HUGE CRASH YOU’RE ALWAYS SORRY LATER SO IT COMES BACK.

Chatting with a 23-year-old Stock Trading Millionaire


Hey, I made her Hales welcome to another edition of chatting with I’m here with Umar. Hey, how you doing guys My name is omar ashraf and i’m a stock trader. Thank you so much for being here. Thank you for having me man Let’s see stock trader. Is that different from stock broker? Yeah, it’s a lot of people get that idea very confused. They Confuse me with the stock broker But there’s a huge difference between them a stock broker somebody that allows that kind of purchases shares for you You give them a call they purchase itself for you and stock traders somebody who does it themselves, you know for him or herself Yeah, you’re like buying and selling stocks like the same day, right? Ah, not not always I’m sometimes buying it and holding for two three weeks. Sometimes I’m buying it and Buying the same day selling it the same day. It’s just different strategy some days. I’m day trading some days I’m swing trading it just it all depends. How old are you? I’m 23. Oh Wow So this could be 23 year old. Are you a millionaire? Yeah Yeah, this would be the title then. So basically I started trading when I was 18 That’s when I first got into the market and when I first started I literally had no idea What I was doing was just like hey, I want to dabble into stocks I want to make money and I know so many people make money off stocks. Hmm So I was like, let me jump into it I had about 20 grand saved up at the time and the money I had saved up What I did was I put all of it into the market without having any knowledge. So I took all my monies rusty Yeah, but at the time, you know, you’re young you kind of wanna you think you know it all mmm So I’m like, oh, I know everything I know what I’m doing Let me just take all my money and dump it into the market Okay I dumped in too much was that how much is what how much did you have that you 2010? That was all the money. I had to put one every day exactly everything Wow. So now once I put everything into the market Next thing, you know is I made a few trades. I remember the first stock I bought was JCPenney So the first trade I made was around It was it was a January because that’s when my birthday is and I turned 18 I opened up a brokerage account and I bought JCPenney and I made 25 hundred on that trade so now After that, I kept taking all my money and dumping it into one stock. No risk management not okay. Hold on Why did you choose JCPenney? Absolutely, no reason I just saw the stock and I was like, oh, I think it’s a good buy and I bought you spam Why did you think it was a good buy? I I just looked at the charts and I had no idea what he was telling me but I just felt like it was a good Buy and I and I put money into it anyone else. Yeah, like with me not knowing anything I see like what it’s normally and if it’s low then I’m like, alright, it will probably go back up It was something like that because I know retail at that at the time was having a huge problem Retail was falling. So I was like aha JC Penney. They’re never gonna go down. Let me buy them So I bought them and next thing, you know They went up two days later and I made about twenty five hundred bucks and you sold it Yeah, and I sold that made twenty five hundred bucks now Oh you put 20k into one stock Wow and it went up I think interesting new percentage and As they went up it might might before you when I’m twenty-five hundred bucks is the the fee what were you doing etrade? what I Scottrade Scottrade Okay, that’s like one of the many yeah Scottrade They got bought out by teaching now, but at the time, you know, it’s like $15 per traders It was seven seven dollars of trades 7 2 by 7 to sell. Okay, no percentages or anything. No, no, no. No, okay There’s no just seven seven seven four. Yeah, that’s about us when you’re 18 Yeah, so I’m in high school right now. Cuz I like I said, I have a early birthday So I just made 2500 off one trade. Yeah, so now I’m like, wow, I’m in high school. I made 2500 Oh man. This is it This is what I’m gonna do for the rest of my life and it kept going well for me. It was all beginner’s luck So my account went from the 20 grand to 35. Okay a matter of two months Then you put 35 into one thing everything into one thing. I knew no risk management. I’d had no idea what I was doing So it was working for me right like every book I’ve read on it says don’t do that don’t Exactly, but I didn’t read anything. I just dumped my money into into that one stock over and over again The sun’s like too good to be true. Yeah, and then I mean obviously everything that’s too good to be true goes downhill Okay, so now once I built my count to thirty five thousand in two months What do you think happened? Next you the loss at all? I lost it. All everything went down everything everything went downhill in a matter of six months bad trade here bad trade there bad trade here bad trade there and Everything just went down and my account finally hit about 2000 bucks. Okay in a matter of four or five months Mm-hmm and now once that happened I took a step back and everyone around me was like stocks or risky stocks at gambling and don’t touch stock. Stay away from stocks So I’ve started you know, it kind of got to me. I’m like, ah man maybe stocks isn’t the right way to go It’s something I should stay away from. Mm-hmm. But uh, I was like, you know what? I know so many people that actually make money off stocks So let me actually keep focusing on this. I didn’t know what I was doing So now let me take a step back and actually try to learn the right way Because in the stock market, there’s always a winner and there’s a loser. So if I lose 2,000 you made two thousand So it’s like you’re kind of taking my two thousand from me and the broker just makes his or her Commission. Mm-hmm So I was like, okay. I lost it. Somebody beat me they beat me at the game. So I just need to get better Yeah, so now long story short. I for the next six seven months All I did was I was focused price Li just on the market. Okay, I just focus Directly in the stock market how it’s moving. I was watching youtube videos, whatever. I was watching. I would apply it with real money So yeah, you got down to two thousand. You’re like 19 or still 18 still 18. Okay. Um, did you ever have a job? Uh, yeah, I was doing delivery at the time. Okay, so starting from 2000 you worked way back Oh, yeah, so starting from 2000. I worked my way back up, but I Started my account in the next January when I was 19. Hmm. But now when I restarted my account I started with started with 5,000 okay, so I saved the money I had 5,000 and now when I had 5,000 I kept trading and he put it all into what Now I was a little little bit smarter. Okay. Now I knew what I was doing, huh? So instead of me putting all 5,000 into a trade, whatever what I was doing was I was taking smaller positions Hmm, the purpose of that was for me to learn I was like, okay You know instead of me putting 5,000 and losing five six percent Let me only put a thousand now if every five six percent on a thousand fifty sixty bucks But I’m getting the learning learning experience, okay? so now once I started doing that I gave that about two three months and I would learn so many new things on my own like, oh, wow when this line crosses that line the stock moves up Yeah, when this goes here the stock goes down So I started picking up all these things as I was reading books because I was reading and then I would apply it Wow Now as that started going more and more I was like I need more money Hmm. So the best one of the best things I ever did was I open up a credit card when I was 18, so When I opened up the credit card, they allowed you to have balance transfers. Mm-hmm So what I did was I took a cash advance check which it’s only a 3% fee. It’s not like 25% fee There’s a three percent fee. You don’t pay for 18 months. So I took that and I had a twenty thousand limit So I took fifteen thousand out of that and put it up my bumhole To put it into the market Okay, because I was like I was like I need more money. I five thousand is enough I need to diversify our map my account and things like that So once I took all of that amount, I just started training my first year wasn’t the greatest I made money But I think it was maybe I made around 20-some thousand. It wasn’t this is all short-term stuff all short-term Yeah, all short-term and now you’re a millionaire. Yeah, it took me Three years by twenty twelve million. Was there any big break like where like Yeah, I have you a good I had big breaks with gold last year gold Yeah in 2017. Ah gold this ETF for gold. Mmm. They were spiking up like crazy I remember it went from like 18 bucks to 80 dollars in a matter of a month So every day I would be trading it Wow It would go up and I was margining the whole trade margin is when you borrowed the brokers money Why was it going up? You thing? I it was going up at the time. I don’t remember I know the US dollar was taking a hit I don’t remember the exact reason it was I was going it was going up But I know the US dollar was taking a hit There’s a lot of stuff going on with the feds and and yelling and interest rates, which was so many factors There’s a lot of factors. Yeah, but it was just on a solid uptrend So I was like just buy buy buy buy it is always a gamble at the end of the day. Not really It’s not a gamble. That’s where a lot of people are wrong They think stocks are gambling but the way you have to look at it is you have to look at it from An aspect where how much you’re looking to lose and how much you’re looking to make? Right. So now think of it like this, let’s say you make 10 trades, right? You make the total 10 trades each trade. You have a ratio of three to one Meaning you make 3,000 you’re right and you lose $1 when you’re wrong Okay. So now then out of those 10 trades, even if you’re right only three times you make nine And usual if you’re wrong, I mean you lose seven you see what Wall Street. Yeah. Yeah. Yeah, that’s broken, right? Wolf of Wall Street is yeah. They’re brokers. And oh, yeah. Yeah, they just They don’t care whether it goes up or down there. They just get the Commission exactly like that That was how they made McConaughey part. Yeah. Yeah Yeah, but yeah, he so but he you know, he claims no one can knows whether it’s up or down It’s relatively impossible for you. Don’t know if it stocks when we go up or down Yeah, so the whole concept of it is to manage your trade. Yeah What do you think of Bitcoin I? Think personally, I think it has it has long-term potential. Mmm. I just think right now Crypto is being used more. So as a way to make money Yeah, and as a form of currency, of course, you know, so with that being said there’s too much fluctuation is going on but I do think crypto itself will be big and I think one of the biggest reasons is blotching. Blockchain is is enormous. Yeah. Yeah. Well Do you think Bitcoin will eventually replace the dollar? I don’t know if there will be Bitcoin cuz I don’t see anything special about Bitcoin, but I do believe Long run crypto will have a place in the market. I don’t know if it’s gonna replace it I think it should because the dollar just value just keeps going down So it’s it’s relatively that’s where the dollar keeps going dollars value keeps going down inflation If you look at what what the relic could have got gotten you a hundred years ago poster now again, it’s insane. Yeah, interesting Do you think the banks will regulate Bitcoin banks That’s the biggest problem banks don’t want Bitcoin or crypto to be a big thing. Right? But I Personally feel like it just eliminates so much stuff like paying fees it’s like you have to pay fees to take your own money out and Banks don’t have control which is the biggest thing that they’re facing which is why they will try to regulate Yeah, but it’s just tough to see how they’re gonna regulate it. Yeah. Yeah because it’s blocked chance. It’s like that’s the weight of the other way exactly the way they did I know change try to Regulated was they weren’t allowing any transactions to Cohen base go through them. Mm-hmm. So they have they have contact So if coinbase is one of the brokers to you know, buy bitcoin and stuff So if you made a transaction to put money into coinbase, they would block it. Hmm I don’t know if they’re doing that now, but I know they did that a few months ago. Hmm Do you own a Bitcoin? No, I have like coin I have ripple and I have you doing Bitcoin I don’t have any Bitcoin one week. I’m not a big fan of Bitcoin bitcoins the rock star, isn’t it? It is the rock star but a long term, I don’t see anything special in it. Hmm. I Feel like the biggest ones probably gonna make it. It’s like, oh not in the long run it’s it’s probably I personally feel like it’s probably gonna keep going up and then You know eventually once it does come become a form of quantity, I don’t see anything special in Bitcoin Well, what difference does it make it’s all electronic, right? Yeah, but some of them is some of them are quicker Some of them have more features more benefits things along along the lines of that. Mm-hmm. What’s the best book? For someone just getting in for them to start one of the dead folks I read was Trading for a living. I don’t remember the author’s name. Okay Trading for a living. Yeah, I think that’s that’s actually a very good book I’ll link that in the description is actually my very good book with my Amazon link Yeah, that’s that’s actually a very good book train : you have a million dollars in cash or assets or now stocks right now my brokerage account I have 600 in my brokerage account from building that up and I I constantly keep taking it out now I have other cash that I’m sitting on. Mm-hmm where I’m looking to invest but now this is my dilemma with investing right now I personally feel like the markets going to crash well within the next year or two Doing all right, and I feel like it’s very extended So what I want to do is I’m trying to accumulate a lot of cash. Yeah, and Save it purchased, you know a lot of stuff at that time How why do you think is gonna crash? I just feel like it’s very extended it’s it’s for extending yourself out like it’s it’s kind of like a Extent, what’s I mean? so we we we’ve went through we went through cycles in the market where You know when the market runs for a very long time it needs to pull back or come into recovery mode recession But not a session, but it needs it needs to come into mode for recovery mode that hasn’t happened but now the factors I think that’s going to drive us into hitting recession or – one is Student loans. Yeah student loans are it’s a very high and they’re not. Yeah, I don’t see them getting paid back There’s no jobs out there for them to get paid back Yeah, and second auto loans auto you can literally anyone can go buy any car without having any proof It’s the same thing that happened with the housing market in Oh seven, you know you don’t need to provide proof of income and proof of employment anything. So people are You know putting on more depth on them and they’re they’re purchasing these vehicles which is kind of out of their reach So I feel like that market is kind of Oversaturated so then we’re gonna need another bailout from the government. Uh, We got to see what’s gonna happen, I just feel like it’s everything is building up And as soon as one thing is pulled out anything’s gonna fall anything. That’s like I Ivan We’re so a year two years and this is a crazy part. I think the only reason it hasn’t happened sooner it’s because of Trump Wow, I think Trump has been doing a great job with the Like Peter car. Yeah. No, I don’t know agree with a lot of stuff he does but with the economy I think he has been bringing it up You know, if you look if you know this with the market and housing market, everything’s been going up. That’s a great office. Yeah Hmm. What are some I guess techniques So some techniques that I feel like a lot of people mess up on. Mm-hmm is people go right into indicators Such as the RSI MACD and they look at that to buy or sell stock I think you should gather as much as information as you can from the chart. Mm-hm and see the trend Stop see what direction the stock is going yet, like did a feeling so it’s kind of like this It’s kind of like this. Right and this is like the easiest to explain it So think about it as in you’re driving from here to New York Right, so if you’re driving from here to New York You’re gonna take breaks, right? You’re gonna you’re gonna because it takes for three days, I think Mm-hmm, right, so you’re gonna take gas stops. You’re gonna start to sleep and things of that nature. I Stock is very similar You have to understand where it’s headed. You have to know. Hey the stocks headed from here to Miami here to California I mean here to New York here to Philadelphia. Whatever. What is the trend? What is the direction the stocks going yet? How do you know where it’s hurting? All right, when you look at the chart it shows you if it’s going up or down so there’s really three directions There’s an uptrend meaning starts going up There’s a downtrend meaning the stock is on its way down and there’s a sideways trend and use trading between a range Okay. So once you understand the overall Trend of the stock. Mm-hmm. Now your job is to focus on when it’s gonna take a break. Yeah When is it gonna pull over for a gas stop when is again? Uh, but when is the person gonna sleep when is when it’s stopping to sleep for quite some time? Mmm That’s the next step. You have to look at What people do is they look at look at the RSI or MACD or technical indicators, but they don’t know the trend They don’t know where the car is going Yeah, if you know where the car is going It makes the whole process that much easier you think Tesla will keep going up Tesla’s very tricky Yeah, very tricky very tricky because um Elon was very tricky. Yeah. He just started some shit like a week ago Yeah, he made that he made the tweet. Yeah, the tweet is uh, He’s gonna get in trouble for that. I feel like he shouldn’t he can’t really make that tweet. He couldn’t put that tweet out I didn’t even see the tweet. I just saw like an article He just wants to go private private But you can’t announce it because now what if they really are going private let you say hmm It’s gonna boost up the stock price to four or fifteen or whatever. He’s taking in private at so now Anyone can literally buy the stock and make money off it if they go private Wow, which is why he shouldn’t have made that tweet Yeah, it goes against SEC rules for him to do so SCC SEC there, they’re like the cops of the stock market Wow What are some no nose for SEC like insider trading? I had biggest one insider trading, uh People get two people to do it people get away with it. Well, that’s a big no-no Yeah, you can go to like prison. Yeah, a lot of people have you done any shady shit. I Don’t know Yeah, great. Great place to ask that. Yeah a lot of ah No, I’ve gotten there’s actually a funny story about that There’s actually a funny story about about that thing with the company. I’ll talk about it right now. Mmm-hmm So, yeah, actually I didn’t do anything shady, but I did get into trouble for something. So this was two years ago and There’s a company called Sun works right there. They they work with solar solar panels and snoring so what I did was I was invested into a stock and the company was getting a project from Fresno a ten million dollar project Mm-hmm, but nobody knew about the project. How did you know, so now I knew that they’re bidding with the city They’re bidding with the state. So if you’re bidding with the state or city, it’s available to the residents Right, so I figured that out that it has to be somewhere out there So I kept digging digging digging I made accounts in this and that to you know Get access to the bidding portal and I finally got access Right and I saw that they actually benefit ten million and they had the job Where I messed up was I actually posted it on StockTwits so StockTwits is a Twitter for stocks, stock trade Yeah, so I posted it on StockTwits. Now what happened the people on StockTwits started calling him Fresno They started saying hey when we’re not there gonna win the job When are they gonna get the project bla bla bla and now they got fed up with it Because they’re dealing with the public company so they cancelled the contract Now as they cancel the contract the stock plummeted. Yeah, and now I get a call one day from this CEO of the company Right his name was Jim. He… and I remember I was driving and I get a call from like a California number and I’m like California and I pick up he’s like hey This is Jim. Is this Umar speaking? This is Jim from Sunworks Yeah. Hey Jim. He’s lke yeah how you doing? How’s everything? I just wanted to update you about Fresno You know, we’re still working with them, but you know, please stop posting stuff It’s like it’s really getting to them and they’re there. They’re probably not gonna give us the project if they keep getting bothered So, please stop putting information out there and please don’t tell anyone I even called you so That was really it but that that wasn’t anything with SEC but uh that that turned out to be a huge thing How did you first hear about some words? I was just trading it just popped up you scanned So you do something called scanning when you scan you’re looking for certain indicators certain stocks? So when I was scanning some Brooks popped up. Yeah as it popped up was it kind of like a penny stock? No it was This is thing with penny stocks lot. Uh The the actual term of penny stocks or any stocks under $5, right, right I look at penny stocks anything under a dollar. So it just depends on where you’re going And with the stop is priced around 250 280 at the time So technically yes, it was a penny stock. But in my book it wasn’t couldn’t you like post like, oh, I think So and so is going down on stock twits and be like not a better sell like people do that Try to get people people do that. That’s why if you’re somebody that gets influenced by others easily Yeah, stay away from stock – it’s okay. Because now if you’re going to stop – it’s you’re gonna see crazy comments Hey, the stocks can go to 10. The stock can go – ah, yeah, so anyone can say sure Yeah, so what’s the point of stock twists? There or there is that 10% Of stuff that that is valuable out of the hundred Yeah, there’s very few stuff that is value like somebody does research and they find something so they post it But it’s very little little stuff. So it sometimes what did you go through it with your knowledge. You can come. Yeah Yeah filter out all the bad stuff. You have any other investments? Uh I have stock market lab I am working on an app I do have money, you know into tech stuff that I don’t make no I really can’t speak about right now Okay, they are like I’m trying to get into tech industry. It’s related to investing know It’s it’s it’s yeah, it’s a game. Yeah I want to make it like it just a simple like yeah Yeah blowing up insane I have like a like eight youtuber friends that have their own like a little game app Yeah, there’s this that app call. What’s that? What’s that company called? Twitch. Twitch is blowing off Yeah, but just blown up. I’d still need to get into that which is it’s insane for unit. Twitch man. That’s that’s something else Hmm, you have some stalking twitch note Which is owned by I believe Twitter know Amazon Amazon owns him Amazon owns twitch, okay They the Amazon bought at twitch. So Amazon owns. And so if you own twitch you own Amazon. Yeah Amazon I heard took him like 10 years to be profitable No, they were profitable all the time. Only thing is they would take the profits and reinvest it right all in a research and development You have some stock in Amazon. I traded it, but I’m not really I don’t long-term I’m not I’m not even anything long time right now. How did you find me through just three? I actually yeah III was watching YouTube and and you came up and I saw you into because I remember I saw you and YouTube Three years ago. Yeah, ah, are you doing something completely different new pranks? Yeah pranks and stuff and then I I saw you on YouTube for you were doing interviews and then I saw with real estate and this and that and I was like, oh Let me reach out to you cool, right? That’s how I can cause you yeah, I appreciate it. No, I appreciate you man Thank you. Um, I need any last words anything you want. Shout out your Instagram uh, yeah if you guys have any questions about stocks or you know, I want to ask me anything you guys can my Instagram is Omar uh sure if you ma are a sh RAF or almost Yeah so you guys can DM me ask me any questions you guys have about stocks and I’ll To help you guys out as much as I can sweet Well, yeah, that was totally wraps it up. Yeah. Thank you so much Thanks for watching. Thanks for subscribing. Let us know what you think of everything we talked about here and I will see you next week

Gold, Bitcoin surge in wake of economic uncertainty


STUART: THEY ARE SELLING STOCKS AND GETTING INTO REAL ESTATE AND KEEPING CASH.>>>LET’S CHECK THE PRICE OF GOLD. THAT IS A TRADITIONAL SAFE HAVEN. IT’S UP ANOTHER $8, $1484 ON GOLD. AT LEAST A SIX-YEAR HIGH.>>>BITCOIN, THAT SPIKED YESTERDAY WHEN WALL STREET, THE STOCK MARKET WAS SELLING OFF. RIGHT NOW IT’S AT $11,700 PER COIN. I WANT TO BRING IN RON PAUL, FORMER TEXAS CONGRESSMAN, FRIEND OF THE SHOW. SIR, I ALWAYS THINK OF GOLD AS THE GO-TO SAFE HAVEN. WOULD YOU ACCEPT BITCOIN AS THE NEW GOLD?>>I DOUBT THAT. I THINK THAT IT SHOULD BE MADE AVAILABLE AND WHAT I WORK ON IS MAKING SURE THAT IT IS LEGAL BUT I THINK ITS HISTORY IS SHORT-TERM SO YOU DON’T KNOW. GOLD HAS A LONGER HISTORY LIKE 4,000, 5,000, 6,000 YEARS PEOPLE HAVE DEPENDED ON IT TO MAINTAIN WEALTH. IT IS DIFFICULT. THE BIGGEST PROBLEM PEOPLE HAVE IN MAINTAINING THEIR WEALTH IS NOT WHETHER YOU HAVE GOLD OR STOCKS OR BONDS OR WHATEVER. IT’S WHETHER OR NOT YOU HAVE YOUR FREEDOM. BECAUSE JUST THINK OF IN THE DEPRESSION, PEOPLE THOUGHT GOLD MIGHT BE A GOOD THING TO HOLD SO THE GOVERNMENT TOOK IT AWAY FROM THEM AND MADE IT ILLEGAL. [ SPEAKING SIMULTANEOUSLY ] STUART: YOU DON’T THINK WE’RE FREE? I CAME TO AMERICA AND REVELED IN THE FREEDOM I FOUND HERE. YOU DON’T THINK WE’RE FREE?>>WELL, COMPARED TO OTHERS, YES, WE’RE DOING PRETTY WELL. BUT I DON’T CONSIDER US A CONSTITUTIONAL SYSTEM OF GOVERNMENT THAT WAS DESIGNED MANY YEARS AGO. I DON’T CONSIDER IT A LIBERTARIAN SYSTEM. THERE STILL IS RESPECT FOR PROPERTY BUT THERE IS WAY TOO MUCH GOVERNMENT INTERVENTION. MAYBE MOST OF OUR PROSPERITY IS DEPENDENT ON DEBT. HERE WE ARE LIVING IN A SYSTEM WHERE YOU CAN ENDLESSLY PRINT MONEY, TAKE INTEREST RATES BELOW ZERO, THEN BORROW MONEY AT TRILLION DOLLARS A YEAR. SOMEBODY HAS TO PAY. WHEN YOU ARE VERY MUCH IN DEBT YOU ARE REALLY NOT FREE. YOU SHOULD BE FREE FROM DEBT. THAT’S WHEN INDIVIDUALS FEEL BETTER WHEN THEY DON’T OWE A LOT OF MONEY. STUART: I’M GOING TO READ A TWEET THE PRESIDENT PUT OUT ABOUT THE FED WHICH OF COURSE, YOU ARE VERY INTERESTED IN. I’M SURE YOU HAVE SEEN THIS BUT I WILL READ IT FOR THE VIEWERS. CHINA DROPPED THE PRICE OF THEIR CURRENCY TO AN ALMOST HISTORIC LOW. IT’S CALLED CURRENCY MANIPULATION. ARE YOU LISTENING, FEDERAL RESERVE. THIS IS A MAJOR VIOLATION WHICH WILL GREATLY WEAKEN CHINA OVER TIME. YOU HAVE NO TIME FOR THE FEDERAL RESERVE AT ALL. DOES THE PRESIDENT HAVE A POINT?>>VERY WEAK ONE, BECAUSE YES, THE CHINESE ARE MANIPULATORS BUT WHAT ABOUT QE? DIDN’T WE MANIPULATE OUR CURRENCY? DON’T WE MANIPULATE WHEN WE BADGER THE FEDERAL RESERVE TO LOWER THE INTEREST RATE NO MATTER WHAT THEY REALLY THINK? THEN THEY COME ALONG AND LOWER IT A QUARTER OF A POINT AND EVERYBODY GETS HYSTERICAL AND THE MARKETS CRASH BECAUSE IT WASN’T A WHOLE HALF A POINT? YES, WE MANIPULATE JUST LIKE EVERYBODY BUT IT’S DIFFERENT BECAUSE WE AS THE RESERVE CURRENCY, WE ARE THE BIGGEST MANIPULATOR BECAUSE WE GET TO PRINT AS MUCH AS WE WANT AT WILL, AND LICENSE OUR CONGRESS TO RUN UP DEFICITS OF A TRILLION DOLLARS A YEAR. THERE’S TREMENDOUS MANIPULATION. YOU HAVE TO COMPARE SOMEBODY THAT’S RUNNING A RESERVE CURRENCY TO SOMEBODY THAT DOES NOT HAVE A RESERVE CURRENCY. I WOULD SAY THERE’S WAY TOO MUCH INTERFERENCE AND RIGHT NOW, WHEN YOU’RE DEMANDING THAT INTEREST RATES GO LOWER, WHICH IS WHAT OUR ADMINISTRATION IS DOING, YOU ARE MANIPULATING THE CURRENCY. YOU ARE SAYING LOAN THAT MONEY OUT VERY CHEAP. I WOULD QUESTION THIS WHOLE THING SO I WOULD SAY CHINA PROBABLY IS A MANIPULATOR, THEY PROBABLY ARTIFICIALLY KEPT THEIR YUAN TOO HIGH FOR A LONG TIME. NOW THEY ARE SORT OF MAKING UP FOR LOST TIME. STUART: RON PAUL, YOU JUST MADE