Many people are saying a rising stock market is good for the economy, but there are dangers that are overlooked. In this episode Jeff and Rachel cover the dangers of a rising stock market and how to spot opportunities outside of the traditional financial markets.
Many people are saying a rising stock market is good for the economy, but there are dangers that are overlooked. In this episode Jeff and Rachel cover the dangers of a rising stock market and how to spot opportunities outside of the traditional financial markets.
Rachel:
It's time to take control of your money, your health, your time, and your life. I'm Rachel Nabers.
Jeff:
I'm Jeff Nabers.
Rachel:
Welcome to self-directed life.
Jeff:
All right, welcome to bizarre life because what's going on in the stock market right now?
Rachel:
Yeah, well the market's up 27% over the last couple of weeks and this is actually the best 15 day period for the U S stock market since 1933.
Jeff:
Coinciding with the absolute worst period in all of history for unemployment.
Rachel:
It really doesn't make sense.
Jeff:
Right? Well, it makes sense to me.
Rachel:
Okay. Walk us through it.
Jeff:
So here's the problem with the rising stock market right now. Okay. Back in February, you could see the people who knew what they were talking about were saying, this coronavirus thing's going to be a big problem. We need to act now. We need to prepare. And then you could see people who were not experts or people who've had a history of lying that we know we shouldn't listen to saying like, Oh, it's no big deal.
Jeff:
People are emotional, not rational. And the emotional thing to do in late February was to go, okay, I don't want there to be a global pandemic, so I'm going to act like there's not going to be. I'm going to expect, it's just wishful thinking. So nobody wanted the people predicting a global pandemic to be right. And of course, but then people invested with that emotion rather than rationally realizing, Oh gosh, it looks like we've got a pandemic on our hands. So for the same reason that most people who have done any selling or any moving to risk off positions with their investment portfolio, to the extent that they weren't selling in late February as much as they were in mid March just shows you that people look for something that they want to be true and they choose to align with just what they feel they want and they don't deal with it rationally. Rationally right now, our economy's gonna start reopening soon. Now, emotionally we all want it to go really well. Definitely. Rationally we have to realize it might not. You know, there's probably a small chance that we're going to reopen the economy and then bam, go back to the restaurant. Everything's back to normal. Right? That's not very probable. The more we're going to be hesitant, like going into a crowded restaurant or a bar or an elevator, they're worried about
Rachel:
A second wave or getting sick or something?
Jeff:
Yeah. And we already see people are wearing masks everywhere. You know, the CDC finally came out and said, you should wear masks. I mean, someone just walked by her window right now wearing a mask. That never happened before this.
Jeff:
I think that....imagine you're sitting in a restaurant
Rachel:
People aren't just going to rip off their masks and run out into the street and all start hugging each other. Everything goes back to normal, and we have collective amnesia.
Jeff:
Yeah. Well people are going to go to a restaurant and the restaurant is only going to be allowed to have, you know, 20, 30, 40% capacity, and then they're going to be putting their favorite restaurant's food on a fork, and then lifting up their mask. And having a bite and that's when they're going to realize what we can already see now, which is it's not immediately going back to normal. There is some sort of transition period. The other thing is if this wishful thinking, which is probably a mental disease at this point, goes too far, then you know, they might open a lot of cities just like based on the wishful thinking. Everybody go back to normal, just like in New York, they said go to the parade and now they have all of these deaths in New York because they were encouraging people to go out there and do things that would spread the sickness because of just wishful thinking. Hopefullyk it doesn't. If we open things too fast and too soon, then that invites a second wave of the pandemic that can be worse than the first.
Rachel:
So there's almost kind of like a damned if you do, damned if you don't conundrum here, right? If you open things up too fast, there can potentially be a second wave, we have to go back into lockdown again, back into quarantine again. And I think it would be emotionally very distressing for people. I mean they're already feeling sort of stir crazy so they want things back open now. But if they all are reopened too quickly or too completely, then we run the risk of a second wave. If we phase in to some sort of a reopening, then people are going to be confronted with the harsh reality that your life is not back to normal. It's just not. So it's weird because I think what people will experience is either we can try to get back to "normal" as soon as fast as possible and risk having another health crisis or have a phased approach of reopening the economy and have to acknowledge just by living in reality that things are not going back to normal.
Jeff:
Right. Yeah. I mean basically everybody, they just get mixed up between what do they want to happen and what does it look like is really happening. You know, what it look like is really happening. We don't really have the kind of information that can give us a high level of certainty that we're going to reopen the economy soon and then it's going to go fine. We just don't. We know that they're probably going to be cautious about it. We know that people, even if the restaurants, even if the virus completely went away immediately, the restaurants are still going to be not as full as they were for the economic reasons. You know, people are going to be needing to catch up on rent or start paying rent again. So I think that there's that side of things. I think it's very likely that the moment we open the economy back up is going to be the moment that people can no longer buy into stocks based on hope because then they're going to deal with the reality. And then I think we're going to see stocks take a tumble again.
Rachel:
Yeah. I kind of just want to explore a little thought experiment here. Albert Einstein was famous for doing these thought experiments and I mean already it kind of blows my mind and it's weird that you can have a GDP that's largely based on consumption, right? That doesn't seem like it would make any sense that you can have the engine of a, you know, world superpower running just on people buying stuff, not actually producing.
Jeff:
or buying a lot more than they produce.
Rachel:
Right. Buying more than they produce. So is it possible that we could go into a world where the stock market seems to be going up and up and up and up, but people still aren't working or they're earning way less Could that happen?
Jeff:
Yes.
Rachel:
How I don't understand.
Jeff:
But that's a problem too. Okay? It wouldn't happen from the economy getting better. It would happen from financial engineering and that also might be what is causing the stock market to go up right now. Essentially nobody's investing in the stock market for the companies that they're buying. They're investing in the stock market, people are primarily basing their financial decisions on the fed. So the fed has come in and said, we'll you know, back these SBA loans and come in and fund them if we need to. You know, they have said multiple times unlimited stimulus. So gamblers who aren't investors but call themselves investors, then become bullish on the stock market because then they just look at the whole thing and say, well, unlimited stimulus obviously to make stocks go up.
Jeff:
The big problem with the stock market going up, while the average person gets worse off is populist socialism Already Socialist ideas have...there are a lot of people in the U S as a whole, like look at the following for Bernie Sanders who had a pretty big following. Who knows, he could have done pretty well in these elections if the democratic national committee weren't so corrupted in trying to shut him down because he wasn't their pick. But you know, Bernie Sanders has a lot of followers and there's a lot of people who really like these socialist ideas and they don't know that socialism has killed 100 million people. And they think that socialism has never been tried. They've never lived in a socialist country and experienced all the problems that have happened. So there's just this like rosy mythical idea around socialism and you have this rise of populism happening right now.
Jeff:
You know, a lot of households don't even own stocks. Most households don't own enough stocks to equate to, you know, living off of them for any period of time. So the vast majority of the stock market is owned by a tiny fraction of the population. If the stock market is going up, all that that does is put salt in the wound of the masses of people who are in financial pain. And they are going to grab their pitchforks if they continue to be in financial pain and the stock market going up continues to pour salt in their wounds. We're headed, we're in this financial crisis where the wounds aren't going to heal overnight for the everyday person. It's going to be a tough time. There's going to be a lot of unemployment. We've talked about that.
Jeff:
The stock market doesn't make the stock market rising, doesn't make things better. It makes things worse because it encourages the political will for the masses of people who are financially in pain grabbing their pitchforks and calling for wealth distribution, calling for the kind of policies that, you know, like the book Atlas Shrugged is about, where real producers go screw this. I'm outta here. And they stopped producing. And that's what we really need. We need policies like this SBA loan program--you know, the bail asked in 2008, I was furious. When the SBA loan program bailout came out. The PPP loan--it's not capitalism, but we haven't had, you know, real full blown capitalism for a very long time. So if they're gonna do bail outs, at least they're bailing out more of the common person. The common person works for a small business. And so if that small business just got money through their SBA PPP program that they get to keep, as long as they continue to pay their payroll then continuing to pay their payroll is probably doing the most to keep the real estate market going. So rents are being paid out there from money that employees get paid to them on their W2 paycheck through largely small businesses, the biggest employer categorically in the United States, who just got money from the SBA to help them. So that's I think probably the best bailout program we've ever seen and I hope they renew the funding for it. But that's the kind of policy that is essentially helping people in a way that ends up touching the life of that common person.
Jeff:
Making the stock market go up, doesn't. Making the stock market go up, just pisses them off-- On top of bailing out Boeing with the same amount of money that they used to buy back their stocks. So people were furious. If you just remember--like, you know Einstein said imagination is more important than knowledge. So what you have to be able to do is, you know, is really useful in like say 2018 and 2017 when things seem to be going pretty good, I guess, you know, 2018, probably not a good example. At the end of the year, there was a pretty bad crash, but let's say 2017 everything's going great. Boom times big, you know, right in the middle of the bubble--at that time, you needed to be able to use your imagination to remember how bad things got in 2008 and you needed to use your imagination to remember that 2017 was a lot like 2007. And that people thought that everything was fine and that was part of the defining element of that bubble.
Jeff:
But now, we've got to use our imagination and go, the stock market going up doesn't solve any real problems. It amplifies problems.
Rachel:
There's a concept that's gained popularity recently, or this idea of gaslighting. Have you heard of this? It's where someone tries to convince you that what you think about something is crazy or is not real. They're gaslighting you. And sometimes this is used like in abusive situations or something where they try to convince you that, you know, everything's fine. It feels like the stock market returns are gaslighting the masses. They're trying to tell us these returns, like everything's cool. Don't worry about it. We had a little blip but it's all going to be fine. But in reality, there's still, you know, thousands of people that are very seriously ill and more people that are continuing to get ill. There are thousands of, tens of thousands of people are not able to pay their bills. Millions of people losing their jobs.
Jeff:
The economic impact--so the virus is a real problem. That's why I wrote that letter in post ponder event and people thought I was crazy. But the thing that we're going to be talking about in history books is the recession or the depression, the financial crisis aspects, because it's a matter of time before we figure the virus thing out. There may be some longterm health practice elements that are changed forever, but we're gonna not have to wear masks in social distance for the rest of our lives. It's obviously going to get sorted out, hopefully within 12 months, 18 months, 24 months, something like that. But the financial crisis and the economic recession or depression is not going to end just because the virus went away. Because the virus didn't cause this depression. It catalyzed it. What caused the depression was the monetary policy of the last 20 plus years.
Jeff:
Right? So that gaslighting concept though is interesting because in a way gaslighting could almost save the economy if everyone owned a lot of stocks. If the average household was saving and investing because they could and they did, then what you would need is something to give them the hope that causes them to keep holding stocks, or maybe buy stocks. And so in that scenario, if the, you know, the policymakers and the establishment class of people were going, we got to engineer this stock market up to Gaslight these people then gaslighting might help us out of the crisis. The problem is that the vast majority of the stocks are owned by a tiny little sliver.
Jeff:
Let me see if I can pull up a slide that I have from a webinar when I was predicting this financial crisis nine months ago.
Rachel:
Yeah. And just to continue sort of touching on that, you know, attempt at a return to normalcy when the economy has slowed down as much as it has, because we've seen a huge slow down--restaurants have had to start repurposing. You know, 11 Madison Park, a fabulous three Michelin star restaurant in New York city where it's booked out, you know, a year in advance, you're paying $1,000 for a meal or something like that incredible, has been repurposed into a food kitchen. These total shifts in the way that a lot of these restaurants and businesses have had to run has caused a slowdown in the economy. I don't think anyone believes that it's just going to be boom, everything is back to normal. There's going to have to be some sort of gradual re-entry or gradual revamping or regaining speed of economic activity.
Jeff:
Yeah, and this comes back to the core thing that I've been shouting from the mountain tops, which is where we all are, is when people have to face the reality of what's going on when we phase into opening the economy back up, they're not just going to have to face the reality of where things are with the virus. They're going to have to face the reality of where things are with the economy. If this virus never happened, we were probably going to go into a financial crisis this year anyways. It might've just been a little bit later. It might have been not as sharp of a dropoff, might not have been a as fast of a spike of unemployment. But the economic damage, the stage was already set by the policies of the last 10 or 20 years. And what happened was we just had the virus was just in a realm that financial engineer's can't touch, the physical realm, and it affected things that we weren't prepared for.
Jeff:
So there's that aspect, but when people face reality, they're going to have to face, you know, where are we at with this virus on top of, where are we at with this economy? And even without the virus, we would be in a contracting period, a rebuilding period, a period where there is going to have to be a lot of losses and bankruptcies and unemployment anyways.
Rachel:
Before we get into that slide that you're going to walk us through, let's, let's take a quick break.
Jeff:
Yep. I've got it pulled up. Here we go. Quick word from our sponsors... Right Ah, that was great.
Rachel:
All right.
Jeff:
That was our sponsor. I think we'll be back.
Rachel:
We're new to podcasting, so we're still working this stuff all out. And
Rachel:
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Jeff:
And we're back. So I found some of these slides--one of the things that I said in my webinar about a year ago, and let's see, I started teaching almost a year ago. And then we, we taught it a lot in September when the fed repo stuff happened, but this financial crisis was going to be worse because of the last financial crisis. Bailouts happened. It didn't go to the people. It went to basically the elite. And so now there's the inequality gap is bigger and the rising belief in socialism, so the richest 5% of Americans own two thirds of the wealth. So two thirds of the wealth in the U S is owned by the top 5%, the richest 1% own more than half of stocks. And then if you take a look at, say bill Gates, Jeff Bezos, Warren buffet, three men own as much as the bottom half of Americans,
Jeff:
A wealth concentration has spiked. Also the racial wealth divide has actually grown on the racial side of things. Basically the rich have become richer and the poor have gone underwater. And during this same period of time compared to 1942, if you asked 1942 Americans, Hey, during the next, you know, 50 years, do you think most of the nations of the world will have a democratic government, a communist government, or a socialist government? In 1942 14% of Americans saw socialism as the future. In 2019 29% salsa, there is over a hundred percent--107% increase Americans viewing socialism as the future. There's a 72% increase in Americans thinking socialism is a good thing for the country as a whole. So if the stock market continues to rise, while the average person is unemployed, can't pay the rent, getting evicted, getting foreclosed, moving in with their mom, moving in with their kids, trying to figure out how to just put food in their belly while the stock market goes up, then we are going to see social unrest, socialist candidates getting elected crime...like a rising stock market would intensify the social problems and what good is the stock market, what good is a stock portfolio growing in size if the civilization is falling apart all around you?
Rachel:
Well, that's part of the reason why I was saying it almost feels like these stock market returns are gaslighting people, you know, making us think that something's not happening when it really is happening. If you look at, you know, a normal average American, their IRA or 401k at their job took a big hit in March, but now it's back up, you know, 27%. So that's great for those people. But what we also have to acknowledge is during that period when it was way down and maybe their hours were cut or they were laid off, they might've had to dip into their retirement account, take advantage of those coronavirus related distributions that the cares act passed. So now they have less money in that 401k. So when it went down, they also were losing their job or reducing hours, which means some people had to start taking distributions, take money out of their IRAs, which means that even though the market's been going back up, they are not reaping the benefits of all of the money going back up.
Jeff:
No, that's the thing is gaslighting maybe works in the boom part of a bubble, right? And the boom part of a bubble, you know, the average person is financially worse off, but they're still okay. They're still, you know, they're probably still working. Maybe they're underemployed, maybe they're underpaid, maybe they're not able to save. Maybe they're going up in debt. Maybe their net worth is decreasing, but their daily life experience, it's workable. But in a depression, or in a severe recession like you're not gaslighting anybody to say the economy's getting better by pointing to the stock market charts if they go out and look on the job boards and there's no jobs and millions of jobless. So yeah, sure, they might be trying to do gaslighting, but the whole point is it doesn't work. If a person lives in a house and everyone in the neighborhood is unemployed, the stock market isn't the scoreboard for the unemployed person.
Rachel:
Well, and also the stock market, you know, these are still, for most people, at least, paper gains and losses, right? They're unrealized. So the stock market, if it went down, okay, it went down, but now it's going back up. You're still not, most people are not selling now that it's gone back up so that they can pay their grocery bill.
Jeff:
Yeah. But you're still missing the point. Most people don't have any amount of stocks to even consider it as a major financial element. If you're the listener and you have an investment portfolio and the stock market's going up, my message is don't get too excited here. Okay? Because for every one of you, there are tens of thousands of people who don't have hardly any stocks. So whether they sold stocks or, it doesn't matter, to the average person, the stock market doesn't matter. What matters is job. And the rising stock market is not creating jobs. In fact, it's probably going to create more lost jobs by propping up companies that were probably in the process of going out of. So ultimately,
Rachel:
Hold on. That's a very powerful statement that I think that bears repeating--a rising stock market is not creating jobs.
Jeff:
Right? Jobs are what real world people--there's no, like when the stock market goes up or down and someone's just holding their portfolio, it's all just like you pointed out, it's just all just on paper. But whether a person eats dinner or not, or whether a person has to not eat dinner so that they can feed their kids and then lie to their kids and say, Oh, I'm not hungry. I ate earlier--that that is not on paper. And that's the issue here. It's like the stock market has been treated by the establishment as the scoreboard that we can manipulate to manipulate behavior. But the behavior we need to be watching out for is the masses, including unemployed people. And they're not going to pat themselves on the back about a rising stock market that they have almost no exposure to.
Rachel:
Exactly. And you know, we are still seeing the unemployment numbers rise, hearing about massive unemployment. What you're not seeing is stock market has 15 day run since 1933 and there are massive rehires. Everyone's getting their job back. You're not seeing those two statements side by side.
Jeff:
Right. You know, and you've got to understand too that these 16 million unemployment claims from the past few weeks, a few things about that. The SBA P P P program essentially bribed employers through a forgivable loan to not lay their employees off. And then.
Rachel:
So there would be no increased unemployment.
Jeff:
Yeah. So if somebody got their PPP money and they have employees, they have to keep those employees on and pay them, otherwise they have to pay that PPP money back. So already right now there's a whole bunch of people who would be laid off if it weren't for PPP. Now that's good in the short term. But that also means that seven months from now when the loans get forgiven, then that incentive to keep people on who otherwise it would make no business sense to keep on, will result in a whole new wave of layoffs.
Jeff:
Then on top of that, here's another thing is over the past decade, work has been shifting from always for every... Work was dominant, was dominated by employment, jobs, careers, W2, paycheck. And over the past 10 years it's already been transitioning away from that and towards gigs, project work, independent contractors, freelancers, side hustles. And those people don't show up in the unemployment statistics. So the independent contractor has got no contracts, they're unemployed but...so first off, the unemployment statistics don't count the fastest growing portion of work, which is non employment work, and it's been propped up by the PPP program.
Rachel:
Right. I think a lot of people don't catch that because I mean, you know, the PPP program, I think a lot of people will agree is, valuable. You need these--small business owners employ a huge amount of the American workforce so we need to try to keep them going as best we can. But what's also happening is when these people are receiving these PPP loans, as you mentioned, for them to be forgiven, they can't lay off people, which means that the government is trying to do what they can to reduce the amount of unemployment claims.
Jeff:
Yeah. We also have to realize that some of these PPP recipients, you know, they got the loan in the name of their LLC or corporation that employs other people and they got two and a half times all the payroll and, but at the end of the day, if they're going to go bankrupt anyways, then the fact that they might owe a loan back to the SBA isn't going to keep them employing people. Right? So, if we go to reopen the economy, some of those PPP recipients the PPP will have helped them transition through and they will survive.
Jeff:
Some of the businesses who received are not going to survive and those jobs are going to be lost in the next few months anyways. So I think that you know, in a bubble, you're on the other side psychologically. Psychologically, everyone just trusted that the fed was doing the right thing and it seemed like they were doing the right thing because everything seemed to be going good. Everybody just trusted that the economy was in a healthy place because it was repeated over and over and over and over. Number one rule of propaganda, repetition--we essentially had propaganda, economic propaganda, about how as our economy was getting worse, where all of our systems were getting less and less sustainable. You know, it's like measuring the structural integrity of a balloon and then as you start to overinflate it, yeah, the balloon's getting bigger, but the longterm outlook for the balloon gets worse the more that you inflate it.
Jeff:
And so to the extent that people were just really convinced that the economy was doing so good during the bubble, now comes the other side of it where no matter how hopeful they are. So basically in a bubble expansion, people think that things are better than they are.
Rachel:
And that they'll continue that way, right?
Jeff:
When the bubble pops, people think still that things are better than they are. And then the time to buy distressed assets is when things have been so bad for so long that people no longer think. Then people switch over to being, instead of overly optimistic, they become overly pessimistic. Right? And so we've got a big confluence of factors here. If people become overly pessimistic at the same time that tens of millions of people are unemployed and they believe in socialism and they're not just, you know, worse off on paper, they're worse off in terms of what they can eat as a meal and, and that sort of thing. So you know, what we really need right now is we really need markets. You know, I'm not arguing against all of these bailouts because the system is so fragile. Obviously they're going to do them to try to keep things together. But but we've gotta be, we've gotta be ready for our economy to actually repair and the rising stock market is prohibiting that.
Rachel:
So do you think, you know, we're already in a Twilight zone, we've been in this bizarro world for a while now of going on, you know, five, six weeks. Do you think that there is a way that we've seen, you know, "the worst of the crash and the recession" and that they'll try to re-inflate the bubble even more? I mean, is there a way that we can avoid a further recession or depression and get sort of propped up on another house of cards? Is that possible?
Jeff:
No, I mean, this is like if you're in war and you get shot in the leg is there a way to rewind that bullet and be not shot in the leg? No. But now you just have to treat it and, and repair and heal. And you know, in some cases maybe the leg needs to be amputated. That's terrible, but you can't wish it away. And if you don't amputate it, you might die. In some cases you might just pull the bullet--So there's all these different possibilities of real healing and real repair.
Rachel:
But I'm not really even talking about real reality because we're in this bizarro world. What I'm saying is, can you imagine or foresee some way that financial engineering between the central banks, the federal reserve, would somehow stimulate or re-inflate a bubble where they'll come out in six weeks or a few months and just tell us, Hey, that was really tough when we had that 30% drop in March. But good thing it's all back to normal now.
Jeff:
Sure it's possible, but it's not going to create jobs to inflate the market. And if it doesn't create jobs, then you still have a bunch of people with a growling belly, and they're going to start causing problems. So that's why I keep going back to the reality that nobody wants to listen to. We need real economic healing. We need to figure out a way to live as a culture where we do produce as much as we consume. In fact, if the pendulum swings in the other direction, maybe we'll produce more than we consume for awhile. Maybe we'll have to produce more than we consume in order to pay off this debt in some sort of real way. But I think that, what you were just describing, that's what they're trying to do. To the extent that any real investors are putting money in the stock market and it's not just some, you know, smoke and mirrors scheme where the fed is just putting money in the stock market--to the extent that any real investors are getting caught up in this basically, you know, trap, I think, I think it's people betting on just what you explained, betting that the bubble can be reflated because to them, there is no alternative to that back to Tina. But the real problem is if they can successfully reflate the bubble then essentially what they're fighting against is deflation. Right now, you know, they're trying to battle deflation away because when people don't pay back loans and those loans, because of the nature of the banking system, kind of like wizard of Oz behind the curtain, by extending the loans, they're actually creating new money in that moment. So when loans don't get paid back then the overall supply of money and credit in the world is shrinking. And deflation's bad because nobody has any money and they're all just standing around with each other going, how do we trade with each other?
Jeff:
So they're fighting against deflation and they run the risk of tipping things over to inflation. And the whole thing here is we have seen this throughout history so many times. It's never worked to manipulate an economy into being the way that you want it to be. It's never worked once. Could it work here? Maybe, but it's not like it hasn't been tried. And you know, we're talking about millennia--throughout millennia, it's been tried to do what these guys are trying to do, but now everyone just hopes oh, this time it's different. Maybe it is, but it probably isn't because the minute that you need to print trillions or maybe it will become tens of trillions of dollars to keep deflation at bay, how do you avoid, when you're printing that much money that quickly, how do you avoid inviting hyperinflation?
Jeff:
That's a question that nobody can answer. We just, we'll see. So yeah, with portfolios, I mean, we're talking a lot about the problem and the solution as we've talked about for a long time is a strategy that's well thought out and adapted to your situation, that involves cash, gold, silver and Bitcoin. And then there are a lot of elements to implementing that. We do webinars on this too, where a lot of times when it gets down to more brass tacks, then seeing things visually, being able to draw things out on a whiteboard or show you some illustrations on a computer screen is really helpful. So make sure you check the show notes for that. Or you can just check out a nabers.com or Solo401k.com where we'll be announcing our next webinars.
Jeff:
We're definitely continuing to do webinars, but ultimately, like now what you need is you need cash, you need gold, you need silver, you need some Bitcoin--this isn't investment advice. But this is how I'm investing and I've successfully navigated the last financial crisis after predicting it. I'm successfully navigating this financial crisis after predicting it. And when I say gold, silver--physical gold, and silver, and then, you know, the strategy side of it is what most people just hope they don't need. They just go, Oh, anywhere you can buy gold, silver, or Bitcoin, then, you know, call it a day and you're protected. And that's where I think you need to have a strategy for how and where you're going to hold it safely. Because remember, this financial crisis could get severe, I mean it already is severe. It could get more severe, it could be prolonged. And so if you're holding your, you know, precious scarce assets in a place that other people can get to them, then you might lose them. And those other people could be predatory taxation, could be nationalization or confiscation of retirement accounts, or I mean, we're clearly in an emergency. And if you look throughout history, governments do whatever it takes, whatever they think it takes to deal with an emergency. And I think that's another one of the big risks here is that the government itself is in financial turmoil.
Jeff:
They can't afford free market interest rates. They have to have artificially manipulated and suppressed low interest rates that nobody would in their right mind want to lend them for no return with the amount of risk. So I think that you know, we could have some real unpleasant surprises ahead in the bond markets and the realm of interest rates, central banks losing control of interest rates. You know, these are all just various kinds of financial catastrophes when we're already in a financial catastrophe. And what you need is insurance. And because there's no insurance carrier who creates a product backed by, you know, Bitcoin gold and silver, then you need to create your own "insurance".
Jeff:
That's the big thing. The more the stock market goes up, the more you need to not get caught up in the trap and have a diversified portfolio. If you want to have stocks, great, but is now the time to be all in on the stock market?I don't think that'll turn out well. I'm not guaranteeing anything but in the realm of odds, if you want to allocate your portfolio based on reasonable probabilities, the probability is I think low that this is going to just snap back to normal. We've got a lot of work to do as a nation. And let's talk about the good news here. Let's talk about real solutions to the big picture problems.
Jeff:
You know, if we're looking at like a 50,000 foot view at what's going on here, you're not going to see the real solutions because you have to then zoom in to where the real solutions happen. And that's on a peer to peer level. That's individuals, that small businesses, right? It's all this stuff that isn't sensational enough for the legacy media to report on. You know, last month, that's the guys that own hotels that converted their hotels over to temporary hospitals and just donated them to medical workers to have the space to take the overflow patients. That's, you know, Tesla making, was it ventilators or respirators, and giving them to hospitals. That's Elon Musk. And maybe you would see that, I guess, from the 50,000 foot view because he's a billionaire. That's him. You know, getting on the phone with Chinese manufacturers, getting his hands on something like, I can't remember, a thousand ventilators or respirators and getting them.
Rachel:
And millions of masks.
Jeff:
Right. That's Jack Ma over in China, sending millions of masks out to countries in Europe, Africa, United States testing kits. You know, again, back to the theme of self-directed life, it's about self-directing your own life and other people self directing their own life. And it's about finding solutions amongst ourselves and our own community, and our community now spans the whole globe because there are non-geographic communities all throughout the internet. This is a non-geographic community right here. We have people we checked in, we're coming up on our one week birthday of the podcast and we have people from multiple countries listening in. We're creating a community here.
Rachel:
Well, you're kind of self-directing your own brain to right, aren't you, if you're thinking about alternatives or if you're, you know, looking at the stock market and even just questioning like, Hmm, I wonder what's going on here. Is this really reflecting the big picture? That is a form of self directed thinking.
Jeff:
Absolutely. And so I think the biggest opportunity here as an investor is to invest some time, attention, and energy into being an entrepreneur and solving big problems. And so back to Leore's question in yesterday's podcast was what industries do you see growing? You know, obviously there's going to be a lot of need for opportunities, right? So anytime somebody figures out how to solve a problem, how to deliver value to people, and how to monetize some of that value and generate revenue and a profit for a business. There's various ways to expand. I mean, this is even something that we're thinking about because at Nabers Group, we're very busy with consulting clients, opening a lot of solo 401k accounts.
Jeff:
So we've taken a look before at using the franchise model and allowing franchisees to create their own branch of Nabers Group. We've looked at licensing. This is something that kind of...before even Nabers Group, I created the IRA association of America and that was kind of exploring that path. And so we're trying to figure out how to do that as well. We have an affiliate program so our clients refer people over to us and earn an affiliate commission. You know, we're recognizing right now that, you know, anytime we see any opportunities, if we can put those opportunities in your hands to where we can grow together, then maybe there's something there. So we're working on that on our end.
Rachel:
Yeah, there was a really great tweet from Mark Cuban the other day. I'm just speaking to entrepreneurship and really self-directing your own life. He said, when we look back in five years, we're gonna realize that there were 10 to 20 amazing companies that were started, that changed the world and led us to a brighter future. Ask yourself, why not me or why not us? Now is your time. The world is waiting.
Jeff:
Awesome. On that note, what I want to ask from you as a listener is to go to self-directed life.com and click on the button that says, leave a message, leave a voice message and let us know what are you doing, what are you seeing? And of course any questions you have for the show or requests for future podcast topics or guests. We do have a lot of guests lined up. We're in a really weird, you know, tax season. So a lot of various kinds of experts are pretty slammed right now until tax season is over, and tax season is deferred. So we'll be bringing some of those guests on as soon as we can. But yeah. What do you see out there? With us, I mean, we could not grow as a business and we would be fine personally. But we see the opportunity that the more we grow, the more people who are opening self directed IRA and 401k accounts, will get our level of service, which from what we can see and from what our clients tell us is unparalleled. So we want to grow simply so that people can be supported as they're opening self directed IRAs and 401ks in a financial crisis by people who understand the financial crisis and have their own investment strategies and education that survive the reality check of a financial crisis. So what kind of businesses are you guys involved in? What kind of businesses are you growing? What kind of businesses where you consider considering opening? Let me know. Send a voice message at self-directed life. That's it for today's show. Thanks so much for joining us. Talk to you again soon. Bye everybody.