8/28/11: August and the Economy Part 4 – Can a Bad Economy Create Great Investments?
Whew. Here we are at our fourth and final installment of the August and the Economy series. How are you holding up? Our brains are swollen.
But, to keep the rally going, we’ve called on some very smart and outspoken money managers. As we’ve said before (and will say again), too many real estate investors operate in their own world – which is far and away from the world of traditional financial planning, economics and paper assets. Real estate investors are deal junkies.
However, there’s a lot to learn from paper asset and commodities guys. And our guests for this episode are no exception.
Sitting at the silver (which some argue is a hotter commodity than gold) microphones, looking for the silver lining in the cloud of recession hanging over the U.S. economy:
- Your silver tongued host, Robert Helms
- Your on-his-way-to silver haired co-host, Russell Gray
- Returning guest, the ever energetic and outspoken President of Euro-Pacific Capital, Peter Schiff
- First time guest, alternative investment money manager, Ty Andros
With all that silver talk, you’d think this episode is about commodities. And certainly both of our guests are concerned about the dollar and bullish on metals. But today’s discussion is much bigger than that.
Peter Schiff has become well known for his very accurate prediction of the financial meltdown as chronicled in his best selling book, Crash Proof 2.o which is on our Recommended Reading list. He’s been contending with many of the mainstream financial pundits for quite some time. We like him because he makes Austrian economics easy to understand.
Since we last interviewed Peter a year ago, a lot has happened. We check in with Peter this episode to get his current thoughts on recent events and where he sees the dollar, commodities and real estate all heading.
Ty Andros is also a money manager, but where Peter focuses primarily on non-U.S. stocks, Ty puts a lot of emphasis on commodities. So as you might imagine, he has a lot to say on the state of the U.S. dollar and its affect on commodity values.
We care about what stock guys think about businesses because businesses are who employ our tenants. We want to know which industries and areas are most likely to have good prospects for stable and growing employment. People with jobs make better tenants.
We also care about commodities for a couple of reasons. First, if our currency is dropping in value, then we need to find alternatives to hold our liquid reserves – somthing that will retain purchasing power. After all, that’s all a currency is good for: buying stuff.
Commodity trends are important for other reasons also. Rising commodity prices are one of the first symptoms of inflation, which will later show up in unemployment (when costs go up, but prices can’t be raised yet, companies will lay off people to reduce labor costs and offset their rising costs of raw materials). Also, rising commodity prices make new buildings more expensive to build, so as replacement costs rise, current buildings are more attractive.
The point is that all this economic stuff really does directly matter to real estate investors. And most don’t ever pay any attention to it. So dare to be different! Listen in to these compelling commentaries and expand your own thinking…right here on The Real Estate Guys™ radio show!
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1/9/11: Gold, Currency, Real Estate and the New Economy – Determining Real Value
Remember the last “new” economy when analysts told us that dot com companies didn’t need to earn profits to be a good investment? Oops. After much pain, stock investors went back to the old school where profits matter.
A closer examination reveals that a flood of new money (to pre-empt the Y2K “threat”) helped fuel stock speculation. Then, the money got shut off and everything crashed.
To solve the stock market problem, though they’ll never admit it, our money scientists lowered interest rates, effectively throwing currency at the problem. The result? The stock market stayed flat for 10 years and real estate took off. Oops again.
Now that real estate took a dump, what are the money scientists doing? Yep. Adding liquidity to the system. Perhaps you’ve heard of “quantitative easing”? Now commodities are taking off.
But not all liquid is good. Gasoline is a liquid, but you don’t use it to put out a fire. Seawater is a liquid, but you don’t use it to quench your thirst. Do you feel like another “oops” might be coming?
The “new” economy we’re talking about in this episode isn’t really new. It’s simply a return to the old school. So even though the money scientists are devaluing the dollar (which is the unavoidable result of excessive quantitative easing), good old common sense is keeping it from circulating. People don’t want to spend more than they can afford. Businesses don’t want to hire more people than they need. Banks don’t want to lend to people who aren’t qualified to borrow.
Of course, this frustrates the money scientists who are trying to get things “moving” again. So their answer appears to be more easing. Hmmmm…. how’s that worked out in the past?
Here’s the point: when the value of the dollar is dropping, how do you know what anything is really worth? And if you can’t judge value, then how can you bargain for a good deal?
To mine for the answers to these perplexing questions, we struck a claim to some studio time and sent out a lifeline to a man uniquely qualified to help us. He is a long time real estate and note investor, he operates one of the largest independent gold mints in the USA, and he’s a member of a small society of deal makers who have mastered the art of doing deals without dollars.
The voices of reason on today’s episode:
- Host and Chief Prospector of Wisdom, Robert Helms
- Co-Host and Nugget Cleaner, Russell Gray
- Special Guest, Robert Kiyosaki’s Rich Dad’s Creative Financing Advisor, Wayne Palmer
Americans tend to denominate value in dollars. And after substantial quantitative easing by the Fed, the dollar has dropped while commodities like gold and oil have gone way up – at least when denominated in dollars.
But if an ounce of gold will buy the same amount of stuff as it did 20 years ago, then the only thing that changed is what the dollars will buy. And when the value of the dollar is warped, so then is our sense of real value.
Wayne says the number one skill for successful bargaining, in real estate or anything else, is knowing how to discern true value apart from dollars.
Listen in as Wayne, Robert and Russ talk though this fascinating and timely issue and discover why you may want to do business without dollars.
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8/15/10: How Capitalism Will Save Us – An Interview with Steve Forbes
The Real Estate Guys™ sit down and talk with Steve Forbes about jobs, the economy and real estate.
We don’t know about you, but any time a billionaire, a CEO of a major company, a best selling author or a legit presidential candidate is willing to sit down and chat, our response is always, “Yes!”. In this case, our special guest for this episode, Steve Forbes, is ALL of those things wrapped into one. So we’re super jazzed to bring this exclusive interview to you.
In the broadcast booth at the Freedom Fest conference in Las Vegas:
- Your Host and interviewer extraordinaire, Robert Helms
- The just-happy-to-be-here Co-host, Russell Gray
- Special guest, Forbes Magazine CEO, Steve Forbes
Mr. Forbes was the keynote speaker at the Freedom Fest conference and remained in attendance for the entire event. In spite of a recent neck surgery, he was very accommodating and so Robert was able to sit down with Mr. Forbes for an impromptu interview.
Steve Forbes with Russ and Robert at Freedom Fest. Russ wrestled Steve into doing the interview, which broke Russ' glasses and injured Steve's neck. But the interview went well and we were all smiles afterwards.
We decided to ask him about his latest book, Why Capitalism Will Save Us – Why Free People and Free Markets are the Best Answer in Today’s Economy. Mr. Forbes’ thesis is that too much government is bad for business because it increases costs, diminishes productivity and takes too many resources away from creating jobs for an ever-growing population. He calls for “sensible rules of the road” to provide a basic framework in which free people can conduct business. Of course, the great debate is over what’s “sensible”. His position is that less is more.
What we’re really interested in is jobs. Jobs are where our tenants get their rent money. It’s where home buyers get the income stream to make the mortgage payments that prop up the property values that create passive equity. Jobs are near the top of our due diligence check list when evaluating a market to invest in. It’s one of the reasons we like Dallas right now. Among U.S. markets, it’s doing pretty well. Ironically, another great job market is Washington DC, but if there’s a changing of the guard over the next couple of elections, that could change. But we digress…
So Mr. Forbes shares his thoughts on the economy, job creation and the role of government in real estate, specifically Fannie Mae and Freddie Mac. In his position as the CEO and editor-in-chief of Forbes Magazine, he gets to talk with many of people who shape, interpret and respond to public policy. We really enjoyed our time with him and hope you will too!
On a side note, Steve Forbes is the nicest billionaire we’ve ever interviewed. Actually, he’s the only billionaire we’ve ever interviewed. But he’s still a very nice guy. So, if you’re a billionaire and want to come on the show and be nice to us, just give us a call. Our door is always open. 
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