Want to learn about cash flow stocks and how they compare to investing in Jacksonville real estate? Andy Tanner, a Rich Dad Advisor, shares how to make stocks cash flow like real estate on JWB’s Not Your Average Investor Show.
If you only know one asset class, such as only investing in single-family homes, you may have a weak spot in your strategy. But how do you build expertise in different asset classes without getting confused with the jargon and complexities? Wouldn’t it be great if we could simplify how to make money consistently through Wall Street investments?
THAT is why we're bringing Rich Dad Advisor, Andy Tanner, to teach you how to treat the stock market like you should treat real estate- by mitigating risk through cash flow!
In this episode of the Not Your Average Investor Show, he explores the depths of:
- Clearing up big picture topics like the FED, money printing, and the balance sheet
- Understanding how to treat stocks like a real estate investor treats real estate
- Learning to treat investing like you treat personal development
Andy has taught hundreds of thousands of people throughout the world how to take control of their investing. Over the years, Andy developed teaching techniques to demystify stock investing to make it easy for anyone to understand. Here is your chance to sit down and hear what this expert has to share!
What is going on, big picture with the Fed?
What's interesting about the Fed is how much they are changing. It is really different right now, more than it has ever been. For example, we have double the liability side of the financial statement in 2020; double, from 4 trillion to 8 trillion.
What we know is that the world is changing, and we are printing a lot of money. We are at an all-time high in the amount of money we have borrowed. The amount of money we print is at an all-time low in its velocity, meaning the time it takes for 1 dollar to change hands. Everything is very slow-moving right now, and that is why we see what we see.
Why do you think that things are different now, and do you see them returning to what they were?
Short answer, I don't. If you look at history and you say, “well, here's a period of inflation, and here's a period of deflation,” I don't think that's the best way to view it. If you think about a balloon, it looks stable, and everything seems fine, but what if there was a hole in the balloon? You would have to pump a lot of air in to equalize the deflationary force of that hole.
A person might look fine, but you open up their medicine cabinet and realize that they are actually very sick. When I open up the Fed's financial statements and look inside their medicine cabinet, it tells me that massive deflationary forces are pushing against our inflationary forces, and it tells me that this battle is going to get even more fierce before one side wins.
Would the impact of technology contribute to deflationary forces?
Yes, absolutely; technology is deflationary. Automation and globalization are deflationary. There are a lot of forces that we deal with at the moment, and we are trying to fight it all with creditism and inflationary tactics.
Let's look at real estate.
Let's talk about supply and demand. Demand is a function of the desire to buy something and being able to do so. If we look at 2008, the loan atmosphere at the time gave a lot of people the ability to get credit, which drove prices up.
What would happen to the real estate market if you yanked the ability to borrow money to buy any real estate?
- Prices would go down.
That tells us that credit is supporting the real estate market.
As you look at credit expansion, you can see this is an inflationary force that fights deflation.
At the end of the day, is this balloon going to pop?
My honest answer is that I have no idea how long this can last. I know that throughout history, we have bubbles and pops & bubbles and pops.
Instead of trying to predict what will happen, I take the Warren Buffet approach, and I prepare. Like you buy insurance in case your home burns down, you didn't predict that your home would burn down; you prepare in case it does. In our current situation, what could burn down in the next year, your home or your 401K?
To answer your question, will it pop?
Well, there are four pillars that I use to invest, the first being “Fundamentals.”
- I look at a financial statement, and I ask, “What is the strength of this asset?”
What we see in the stock market and the real estate market right now is what I call a “Detachment from Fundamentals.” People are willing to pay more now than ever before.
We see this detachment from fundamentals because there is so much money. The amount of money out there makes it very easy to buy things; that is why we see the stock market up and the real estate market up.
To simplify what the Fed is doing right now…
The Fed creates unfair competition. You can beat any business if you have the ability to print money because now your production cost is zero, and you can just print money to solve all of your problems.
If JP Morgan wants to loan money to Wells Fargo, they have to get a better rate than they can get at the Fed because I can deposit money at the Fed and get guaranteed payments. So, because of that, the Fed gets to set the standard of where interest rates are.
Picture the Wizard of OZ. He has all these levers and dials, and you have to max them all out. Eventually, he is going to lose track of them!
Can you guide our investors on the best assets for their future?
We can all agree that trying to predict where the stock market will go tomorrow or in a week is a tough deal, so let's stop trying that, and let's say, “I am done predicting.” If we have deflation or inflation, what assets would I want to have to live, survive, and thrive?
I want people to understand this principle.
- Your net worth goes up if you buy things that go up in value.
- Your net worth goes up if you borrow things that go down in value.
I don't like to predict things, but I would bet my bottom dollar that the dollar is going to be worth less than it is now in the future, and that is why real estate is one of the smartest things people can learn about if they are using debt.
Can we go over the four pillars of investing that you mentioned earlier?
Sure, it's easy, and it's really quick!
There are four pillars that I use to invest:
- Fundamental Analysis – Certain fundamental things should be right in a financial statement: growth, more income than the expense, and more. Basically, the strength of the entity before you decide to invest.
- Technical Analysis – Technicals is the study of the investor's emotions. We typically see this in the form of stock and crypto charts!
- Cash Flow – How do I take this information to benefit myself in these environments? This helps you decide to go long, go short, and how to position yourself. There is never bad news, only bad positions.
- Risk Management – The most important of the four pillars! When the fundamentals change suddenly, we have to have a plan-B. This brings it back to our insurance analogy; we don't bet that the house will burn down; we simply prepare in case it does.
How do you ensure that cash flow in the stock market?
With me, it's all business. I look at the financial statements and numbers exactly like you would with real estate! I look at growth, earnings, prices, valuations, and I see if it fits my predetermined criteria.
For example, we know that the Jacksonville real estate market is hot right now; I would then look at their population, employment opportunities, projected growth, etc. I treat stocks the same.
How do we build cash flow into that stock investment?
I use options trading! Simply put, I sell an option to buy something, that something being stocks and cryptos like Bitcoin & Ethereum. Doing this allows you to develop a cash flow out of your asset. It's very possible for real estate investors to take their real estate investing fundamentals and apply them to stocks!
How much time does it take to do this?
I only spend about fifteen to thirty minutes a day reviewing my positions. I treat my stocks exactly like I treat my real estate investments; I like them to be relatively passive the majority of the time. What I mostly do is look at options month-to-month.
I check the current price of my options and assets, and I keep loose track of where everything is in the process. I know that I have an option to sell Bitcoin at $80,000, and I see today that the price is at $60,000…. And I say, “ok, that's it for today!”
I make my decisions based on those quick summaries and check-ups, so it doesn't take much time at all.
Ask me what I do for a living…
What do you do for a living?
I own a company called Coca-Cola; I also own a company called Apple, Berkshire Hathaway, and more.
You see what I mean.
I want people to look at dividends the same way that they look at rental income! You have to believe in inflation to believe in real estate and dividends; the same. You have to believe that your property will be worth more in the future than it is now, and dividends work exactly the same; they grow over time.
I'm no Warren Buffet, and I'm not a billionaire, but I have enough money to take my kids for a Dairy Queen “Blizzard,” and it doesn't hurt too much, so I have a pretty great life!
What is the next step for us here, with all this great information?
The mistake people make is when they say, “I don't understand this stuff, so it's not for me.” That couldn't be more wrong. If we all have some small success moving closer to our financial goals when we look back, that success probably happened because of personal development in these skills. The barrier of entry might feel high, but you can take small steps on your way in.
Years ago, my wife and I read the book “Rich Dad, Poor Dad.” That book really inspired us.
We went out and decided to invest in real estate, but we let our “What ifs?” and worries keep us from pulling the trigger. So, we went home and decided to read the book one more time to see what we missed.
It was the title….
My wife said: “We already have a poor dad, so we are halfway there.”
We realized that the book was really about finding someone that could help you learn. So, we stopped looking for “Deals” and we started looking for people that could help us learn!
If today is the first day that someone decides to take the first step and find someone who can help them learn, then this is all worth it!
What other questions should I ask about cash flow stocks?
Andy was handing out some incredible information, and we know that some of it might take a second listen to really sink in. Make sure to listen to the full episode on Apple Podcasts and prepare to take a deeper step, or maybe your first, into the stock market world and options trading!
If you are interested in being a rich dad in your future:
- Study the four fundamentals
- Find someone who can help you learn; like Andy
- Research options trading and consider taking the first step
How Do I Find Out More About Investing In Turnkey Rentals With JWB?
Contact the JWB team to begin the discussion. If you want to invest in Jacksonville real estate, now is a great time to jump in. Go to www.ChatWithJWB.com and find out how we can help you reach your financial goals through turnkey single-family rental homes.
If you want to become part of the JWB online community, join us in the JWB Facebook Group at https://www.facebook.com/CashFlowProperties.
You can also go to www.JWBInventory.com to see what properties are currently available. We encourage you to contact the JWB team for a consultation to determine how our turnkey rental properties can deliver positive passive cash flow.
We hope you enjoyed this master class on cash flow stocks with Andy Tanner, there is so much to unpack, and we had a great time together. The Jacksonville real estate market is an excellent opportunity for real estate investors.
Learn more about the incredible opportunities with JWB and contact us today at www.ChatWithJWB.com. The Jacksonville real estate market is headed for a period of sustained growth, and JWB has a proven formula for helping investors enhance their wealth with turnkey single-family rental homes.
To Your Success,