January 7, 2025 • 54 mins
Happy New Year! I'm incredibly excited for you to hear this latest episode with Andy Tanner. Andy is known for his unique insights into investments and financial education. In this episode, we explored many valuable topics, from the origins of the 401k to the importance of financial education for families and the role of asset ownership in today’s technological world. Andy also shared his personal journey, including his and his wife’s survivorship over cancer, which has deeply influenced his approach to life and teaching.
Introduction to Andy Tanner and His Work
Andy Tanner, a well-respected author and financial educator, recently updated his book "Form of Chaos." He is also known for his association with the Rich Dad, Poor Dad team, having spent 14 years traveling and learning with them. Andy’s insights are shaped by his extensive experience in financial markets and education.
The History and Evolution of the 401k
The 401k began not as a planned retirement strategy but as a loophole for wealthy executives to defer income. Richard Stanger wrote the original 800-word section, spurred by lobbying from companies like Kodak and Xerox through Congressman Barbara Conable. Initially, the financial impact of 401ks seemed minimal, but today, they account for $11 trillion. Andy highlighted that Congressman Conable was unaware of the significance of the 401k when it was enacted. Consultant Ted Benna later capitalized on the 401k for employee bonuses, which led to employer matching and the shift from pensions to 401k plans.
Critique of 401ks and Wall Street
Andy criticized 401ks as favoring Wall Street due to the compounding costs that benefit the financial industry more than the participants. He urged listeners to examine the real value of their 401k plans and warned of hidden drawbacks. Financial education and understanding are crucial to make informed decisions rather than relying blindly on such systems.
Personal Background and Family Life
Andy shared his personal journey, including a significant experience when his wife was diagnosed with breast cancer three years ago. Thankfully, they are doing well now, and this period kept Andy at home more, focusing on teaching from his home studio and spending time with his family. Both he and his wife are cancer survivors, influencing their decision to start a family later in life.
Financial Education for Kids
Andy believes in integrating financial education into family life. His children have benefited significantly from being homeschooled, especially during COVID. This homeschooling emphasized vital financial skills from a young age. Andy uses practical experiences and games like the "Cashflow" game to teach his kids about financial concepts.
Investment Philosophy
Andy advocates for business owners to leverage their profits by investing in assets to expand ownership. Owning assets is crucial in a world increasingly dominated by technology and AI. Andy recommends benefiting from AI advancements by owning stocks in various sectors beyond just tech. He values operational cash flow over mere price speculation, aligning with Warren Buffett’s investment principles. True compounding requires reinvesting profits, similar to business and real estate ventures. Andy views stocks as ownership in a business, stressing the importance of sustainable growth.
Real-World Exposure and Financial Activities with Family
Andy involves his children in financial activities from a young age. He shared how real-world exposure, like bringing his kids to real estate dealings and letting them invest small amounts in family ventures, helps them understand ownership. Andy talked about the concept of "sponsorship equity," stressing the role of financial education and involvement in tangible activities like stock trading and buying tangible assets like silver.
The Role of AI in Investing
Joe mentioned...
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Most entrepreneurs can buildpretty incredible businesses for
themselves, for yourself, you know?
Within your control, you couldgenerate some really great
revenue, have a great lifestyleand kind of do it your own way.
But when you go to investingoutside of your business or even
adopting new technology like AI,A lot of people get tripped up or
just approach it the wrong way.
(00:20):
So today's guest, hisname is Andy Tanner.
He actually spent 14 yearstraveling with Robert
Kiyosaki, author of Rich Dad.
Poor Dad.
It's the first bookthat I read right before
starting my own businesses.
And Andy ended up teaching hisnine-year-old son, how to invest at
a level that most of us never learn.
(00:41):
And this is how it'sinvesting in other companies.
It's also investing in your ownbusiness and approaching technology
in a way that's really smart.
And there's a whole process.
Andy breaks down.
It'll help you reinventthe way that you think of
wealth and controlling that.
Yeah, not only in2025, but also beyond.
So enjoy the episode.
Let's get into it.
(01:03):
Andy, we're rolling.
We're finally doing this.
I appreciate your timeand being here today, man.
I know we're going to have a blastbecause you think differently
around investments in general.
And you have some really coolinsights into technology,
the world we're all living innow, the, I guess the bullish
side and the bearish side.
So, uh, how are you doing today?
(01:25):
My friend,
Man, I couldn't be, uh,more grateful to, uh,
to join your, your show.
You do a lot of great stuffand anytime, uh, anytime
you're invited, it's an honor.
So, uh, appreciate the opportunity.
Look forward to our discussion.
Should be a great time.
it will be, and you already justthe, the, you know, the, the cover
(01:45):
of you online immediately when wegot introduced, I saw rich dad,
poor dad, one of the advisors there.
I'm just like, well.
Robert Kiyosaki andrich dad, poor dad.
The book got me into thiswhole entrepreneurship
game in the first place.
It was the first book I read andimmediately everything shifted.
I want to say there are 40 millioncopies in like 90 plus languages.
(02:06):
And, you know, Robert,uh, completely changed my
life and I always give ashout out to Kim as well.
Uh, that advisor team, I, I traveledwith them for about 14 years.
Uh, all around the world and,you know, it was funny because
we, we were invited to comeas a team as teachers, but for
me, it was all learning, man.
(02:26):
I, I, you know, I was justsharing what I was learning as
a student with that group and,uh, nowadays, uh, you know, I,
I spend most of my time teachinghere from my home studio.
Uh, my wife had an illness,uh, about three years ago.
She was diagnosedwith breast cancer.
So, uh, we're doing great.
Uh, but that brought me home.
My kids play high school basketball.
(02:47):
So, my biggest focusright now is like, I still
teach from my home studio.
But I don't, uh, I don't carefor the travel much anymore.
I, I like to be a, like, like beinga dad right now and a husband.
So, that's, that's the priority.
That's
I love it.
Has it always, was it always, Imean obviously did a lot of travel
before, but did you always have thatkind of intention for the family and
(03:09):
kind of making it for your own time?
And
percent.
Uh, you know, my wife and I hadour, our kids a little late in life.
Actually, we wereboth cancer survivors.
I had testicular cancer as ayounger man, so it took us a
while to get the family going.
And, uh, so it became a big priorityonce we finally got it here.
Uh, but yeah, and Robert wasamazing, um, because, This, I mean,
(03:33):
not to go too far down this road,but, uh, he would invite my kids.
Robert and Kim don't have kids, sohe would invite my kids with me.
So, you know, I have, our homemovies are a little weird.
You know, I've got my nine, I'vegot my nine year old son, you
know, standing up on stage inArgentina, you know, diagramming
some, you know, real estate dealfor infinite returns, and, so
(03:55):
my kids grew up Rich Dad, andthey, uh, it's ingrained in them.
Um.
And when, uh, when COVID hit,uh, I brought my older son
home after eighth grade and wespent a year of homeschooling,
nothing but financial education.
Two years later, his youngerbrother wanted to do the same thing.
So we, we attacked this thingas a family and we, we jumped in
(04:17):
both feet and you know, they're,they're still in high school.
So we'll see how that turns out.
well, yeah, I mean, no betterway to learn at such an age,
obviously even better from yourparents, your dad, you know, like
learning the financial stuff.
And it's obviously not, notwhat's really taught in school.
So you're navigating them atthis spongy age, you know, your
(04:40):
Ah, it's so good forthe relationship, too.
You know, it's just, we, wejust get, we were always good
buddies, but even better.
So it was great.
I mean, this is a great way tostart because you're obviously
priming your kids with this awesomefinancial knowledge and hands on
experience and all that stuff.
So a lot of business owners,you know, mainly that's
entrepreneurs, business ownerslistening, you know, we're, we're
(05:02):
really good typically at makingthe money in our businesses.
But I feel like a lot of us,and this is why I bring folks
like yourself onto the show.
I'm like, okay, so how do we,yeah, Expand from that and have
this financial knowledge ofyou know, how do we You know
leverage things like what whatyou do in stock markets and all
(05:23):
these other financial Vehicles,but like where do we start?
Like how how would youadvise someone who is
rocking with their business?
They're feeling pretty good Ormaybe they just want to expand
and don't know where to go Yeah,
there's a saying that the ultrawealthy, you know, you make your
money in business and then you takeyour profits and you compound by
(05:45):
investing, you know, you acquireassets, you know, businesses
generate cash, but they don't expandownership unless you're investing.
And you know, the thing I tellmy, my sons and the thing I
believe, especially now with AI.
I think business ownership andasset ownership is, is really
important simply because otherwiseyou're going to compete against AI.
(06:08):
So if you don't expand, youknow, what, what we're doing,
uh, it's going to be tough.
It's going to be really tough to,to keep up and battle with that
AI if you don't expand ownership.
And I think stocks are a greatway to do that because it's
not just finding, you know,NVIDIA and, You know, doubling
your money on a chip maker, youknow, people who, you know, sell
(06:30):
food, people who, raw materials.
Everyone will benefit from AI.
So I'd rather own itthan compete against it.
And just as the tech boom ofthe 90s, you know, blew up
the market, there's potentialfor AI to do that again.
It's that big.
So, you know, I, I've toldmy sons, I said, any white
collar, you know, job orcareer you might enjoy, great.
(06:53):
Great.
But you're going to be competingagainst computers now in a way that
is exponentially un, you know, it'sgrowing in a way we can't predict.
Owning it is probably better thancompeting against it, in my opinion.
I don't know if I'm right,but it makes sense to me.
Hmm.
you know, like maybelet's break that down and,
(07:15):
Yeah, I,
yeah, let's do that.
I, uh, I agree with Warren Buffett.
Um, most people, if we were to turnon CNBC right now, those people
aren't interested in owning stocks.
They're interestedin trading stocks.
And it's price, price, price,price, price all day long.
Nothing but what's up, what's down,bear, bear, bear, bull, bull, bull.
They are always making predictionswhere, if you read Warren Buffett's
(07:36):
letters, you know, he had a greatone to the shareholders about
three years ago where he said,the most important metric, and
you know this as a business owner,it's your operational cash flow.
In other words, how much moneydo you make from the business?
So, the nursery rhyme, I guess,or the Apesoft's fable level
of this is a golden goose.
(07:57):
Nobody bought a golden goose tosay, I think the price of this
goose might go up next week andI can sell it for a quick buck.
Every single child can understandthat the operational cash flow,
which is the eggs that it wouldlay, that allows you to compound.
True compounding reallyhas a reinvestment element.
for listening.
So if I have a business andI'm compounding, I'm buying
(08:21):
a share of another business.
Real estate syndications arethe same thing, aren't they?
Um, you have a group of peoplethat, what a beautiful word, share.
And, and, so when I look at stocks,I don't think about a piece of paper
that goes up and down in value.
I think about, you know, myself inmy garage trying to build an iPhone.
(08:42):
And failing or trying to tryto come up with a vaccine and
failing or trying to do quantumcomputing like Google and failing.
And yet these entrepreneurs willshare the value that they give
to other people with me if I'llshare a little money with them
and buy a share of that pizza andsharing that operational cash flow.
(09:05):
I like that.
It's, it's built into the word.
Yeah, exactly.
It's the share and.
a beautiful word.
The fact, the fact Steve Jobs wouldshare his genius with me, with the
likes of a guy like me, and he putme in my garage to build an iPhone,
I'm not coming out alive, I'd starvein there, I'd never get out, so.
It's a, it's a great lever of, agreat way to lever other people's
(09:26):
genius and, When I think aboutstocks, if you want to start where
to start, think about net producing.
When I brought my son home,we went for home school,
one of the first lessons.
We went to the gasstation, filled up the car.
It's like a hundredbucks or whatever it was.
Then I took him homeafter that consumption.
And I showed him on my AmericanExpress statement how much
(09:49):
fuel we put in the air.
You know, how much fuelwe put into the sky.
And it was, it was a good number.
I said, this is going tobasketball practice and,
you know, going around.
But then I took out my brokerstatement side by side and I said,
you know, we own some Exxon Mobil.
And we have dividends and wewrite a lot of options on that.
And not the capital gain, notthe price move, but simply the
(10:11):
dividends of being a fuel producer.
An energy producer faroutweighed consumption.
And I said, so stocks are a wayto become a net producer where
I'm producing more in the world.
that I'm consuming.
Then we did it with our AT& T billand our, our Apple phones and we
just went through all these areasof things where we had consumption,
(10:35):
but we also were participating inthe production on all the stocks
I owned and it was, it's a, it'sa way to become a net, a producer.
That's a real great wayto, to build wealth.
I like that.
And that's, and that is kind oflike Warren Buffett, I guess.
You know, it's like, okay, well,you're gonna, you're investing
in the things, you know, right.
The things that you're using that,you know, there's demand for in the
(10:58):
I mean.
Warren Buffett is, is a genius.
I wouldn't pretend that he'snot, but I think his genius
overshadows something moreimportant, which is his temperament.
If you looked at the stocks heowns, they're not the best ones,
um, in terms of price, uh, butthey have what he calls a moat,
you know, um, Coca Cola, heoften 2 billion drinks a day.
(11:22):
And uh, so I went out and boughtsome, you know, this is okay,
I want to be a part of that.
And it, you just, the colawars proved it, you know,
Pepsi tried, no one's going totake down that castle, right?
And so, I don't think about riskin terms of stock price movement.
I think about termsof risk in the moat.
(11:43):
You know, if you took that Coca Colacompany, you know, started in 1886.
Okay, what's it survivedin, in that 150 years?
Um, you know, World War One,World War Two, uh, plagues, uh,
9 11, uh, global financial crisisof 2008, recently a pandemic.
(12:04):
You can't kill it.
You just can't kill it.
And so that's where I seethe risk management in just,
they're not going anywhere.
You know, it's, it's solid andthey always bounce back up.
You know, if, if you had achance to buy, you'd always
want to buy it the worst times.
hmm.
Well, and that's theoverall rule, right?
It is yeah, yeah Mm
(12:29):
So we're talking about kindof these, these long lasting
companies like Coca Cola.
And then you already mentionedNVIDIA, you know, has had some
pretty steep movements already.
Insane.
And of course, they'releading the whole AI thing.
So, you know, I'm curiousof there's, I guess,
two ways to look at it.
I'm sure there's more, butlike, how do you look at the
(12:50):
stocks that you're looking at?
You know, or the, or theshares, let's call them.
And then you mentioneddividends too.
So I know
Yeah, and you youasked a great question.
How's the person get started?
So, you know this having done somuch business when you embark on
a venture of business ownershipYou know the entrepreneur Or
you embark, uh, as an investor.
(13:11):
What you're really doing,whether you know it or
not, is you're starting apersonal development program.
You're embarking inpersonal development.
Uh, your weaknesses, at leastit was for me, are rooted out
very quickly and they are put ondisplay for the whole world to see.
And so when you, if you reallywant to start investing or
entrepreneurship, uh, You'regoing to learn things like
(13:34):
an improved temperament.
You're going to learn waylike discipline, you know,
keeping an even keel yourtemperament, which is hard for me.
Cause I was an emotional guy.
I would get really excited or panic.
You know, it was really toughfor me to overcome, uh, is to
just become an even keel guy who,uh, who has discipline, who has
consistency and most important.
(13:55):
And it's why I'm aneducation advocates.
Why I'm in the business is,is to learn four important.
Uh, financial education,uh, curriculum.
If you go to school,you know what's there.
Biology, and science,and literature, and
art, and mathematics.
You know, the STEM stuff,history, all that's there.
(14:16):
But there's four things thatif you can learn, In financial
education, you're well on yourway to becoming an entrepreneur or
an investor and they are thus Um,the first one's called fundamental
analysis where There's just certainfundamental fundamental things
that business should do whetherit's your business and when you're
going to buy It has to do withthe financial statement and you
(14:38):
should look at that financialstatement There's just got to be a
certain amount of growth Criteria.
And that's how you, you know,any entity anywhere in the world,
you look at assets, liabilities,income, expenses, statement of
cash flows, you know there'shealth there or sickness there.
You look at thefinancial state of the U.
S., very, very sick.
Uh, you look at a financialstatement like Joe, you know,
(15:01):
probably pretty healthy.
And so
at least.
for sure.
They're not hard to beat.
It's not a high bar, but, but,uh, you know, and so fundamental
analysis, the ability to analyzethe business and say, Hey, this
is good business as of today.
Now tomorrow, who knows?
That's where that moat comes in.
It's like, yeah, it'sprobably gonna stick around.
The second one.
(15:22):
Especially if you're goingto be an option trader is,
is technical analysis andthat's your price movement.
That's your study of theemotions of the market.
You know, the, the company'sone thing, but the buyers
and sellers are another.
And that's justinformation gathering.
But the third pillar is cash flow.
How do I position myself withinthis information to have a profit?
(15:43):
And then finally is the mostimportant one, risk management.
That's where my team isjust crackerjack, man.
They're awesome.
You know, I've got guys that areprofessional risk managers, Series
4 Option Principals, and they, uh,You know, guys like that, they help
you deal with the sudden change.
And the insurance of whenthe unforeseen happens.
(16:03):
Every single thing you findin, as an investor, will fall
within one of those four.
It's either a fundamental issue,a technical issue, a cash flow
issue, a risk management issue.
And if people can learn those,that's where I would start.
Is with temperament, discipline,learn the four pillars.
And then you can havea foundation to invest.
Yeah,
(16:25):
I just think of, you know, we talkedabout AI already and how, well,
there's no real temperament with AI.
It's purely, you know, it'slogic and it's, it is what it is.
And, um, you know, I'm curiousof what you think would be the, I
guess the most difficult of thesefour to deal with, you know, um,
(16:46):
and because you had the temperamentthing, uh, you know, emotional.
I feel like a lot ofpeople are emotional when
it comes to this stuff.
I think it depends on the person.
Uh, you know, the engineers, uh,seem to have a good temperament,
but they're actually more afraidthan you think, because they, they
overanalyze, you know, they'reterrified of some type of mistake.
I think the most, I don't knowif it's the most difficult,
(17:07):
but the most important one,if you, have great risk
management, then that givesyou the ability to move forward
because you know you'll be okay.
Um, if, if I, you know, if I havea seatbelt, if I have a helmet,
you know, whatever it is, if Idrive my car, the more safety
mechanisms I have around me,more confidence I have to invest.
(17:29):
I think that risk managementis the most important one.
Uh, once you get that down, ittakes away the fear, frankly.
And, and, you know, as anentrepreneur, I would imagine
there's, are there certain,let's talk about risk management,
you know, as someone witha business, are there some,
you It's fundamentals therethat you would recommend.
I think so.
Robert Kiyosaki, I was upset thatI didn't see how obvious this was,
(17:52):
but I remember this like it wasyesterday, he had a flip chart out
and he wrote, he wrote this, hesays risk is related to control.
Um, the more control you have, theless risk, the less control you
have, more risk and no control,well that would be gambling.
Uh, we have no, you know, whereround and round it goes, where it
stops, we don't know, we can't say.
(18:13):
And so, in a business, I thinkpart of the, part of what brings
controls is you want to have goodstandard operation procedures
where You kind of remove, maybenot the human element, they still
have to follow those procedures.
But you want to McDonaldizethings as much as you can.
You want to have systems inplace, legal in place, great
(18:36):
communications in place.
You know, those arethe, the fundamentals.
Um, You know, inside of a,of a, of a business triangle.
Leadership is important.
That's a fundamental.
Having a mission, uh,is really important.
Having a team really reducesrisk if you have a great team.
So those are some of the thingsI think as an entrepreneur
(18:56):
you can think about.
Probably the least importantone is your product.
Um, but if you have greatsystems, Great standard operating
procedures, great legal,great communication, and, you
know, some stable cash flow.
You know, you'recontrolling a lot, you know.
I don't know if you can get totalcontrol, but the more control you
(19:18):
have, the less risk you'll have.
That's the basic principle.
Yeah.
the idea of having solid systems, Imean, that any business at any level
should have great solid systems,even if it's just you and yourself,
but like that can carry into so manydifferent projects or investing,
you know, even if it's outside ofyour own business, there's still
(19:39):
systems and, you know, you needthat support when you go anywhere.
Yeah.
Yeah.
if, if you have a business.
You, you have to know your, uh,your key performance indicators
and monitor those, and if somethingneeds to be tweaked, you get a
system to address, you know, whatthat is, and you, you tweak your
(20:01):
system or improve your system,but, you know, key performance
indicators are fundamental analysis.
You know, it, it really ishow your business is running.
And, uh, as you analyze businessas an investor, there are
key performance indicators,especially valuation indicators.
And even as you're on yourown, your own business, you
want to have KPIs in hand,
(20:23):
Are there, so when it comesto fundamental analysis, just
to understand some, you know,for, for folks listening here,
and I want to obviously sendthem down to more resources
after this too, to go deeper.
What are some of those KPIsthat you would recommend really
understanding and studyingon the fundamental side?
uh, as an investoror business owner,
(20:46):
Uh, I was thinking investor, butyou know, in business owner, I
don't know if you, if you wantto cover a little bit of those.
Let's talk a littlebit about investor.
That's probably the easiestone if you were a beginner
and you just want to startto invest There's a couple of
books you could read there'sthere's one that's really hard.
I don't recommend itIt's about this thick.
(21:06):
It's called Securities Analysis.
It's by Benjamin Graham, whois Warren Buffett's mentor.
And it's doorstop, man.
I mean, you, you, you, yougot a robber coming into your
house, just throw that bookin the, in the hallway and
Yeah, exactly.
it'll stop any door.
Um, the other one is a betterone, a little easier to read,
called The Intelligent Investor,also by Benjamin Graham.
(21:28):
That's more of a book on temperamentthan on securities analysis.
But it does talk about two metricsthat really help you see value.
Market knows this, um,it's earnings and growth.
Uh, if a company is earning moneyconsistently, what does that prove?
Well, number one, it proves thatpeople want the product or service.
(21:50):
So that's really important.
We have proof of concept.
And number two, it meansthey're operating in the
time being at efficiencies towhere there's a profit there.
So it proves efficiency and itproves people want the stuff.
Uh, growth means that it'sheaded in the right direction.
More and more people are liking it.
So those are pretty basicfundamentals, you know,
earnings and growth.
(22:10):
And we have all types of.
Valuation, EBITDA, you know,enterprise value, EV over EBITDA
is a metric that is a lot likeprice earnings and peg ratios
are price earnings in the growth.
And so those, those littleratios are important.
Understanding the work thatis done is really important.
(22:31):
Do they do great work and are theyefficient in the work they do?
And if you, if you do that,You can have the confidence
to scale in at a small amount.
You don't have to buy thewhole company by a few shares.
Um, first shares I boughtabout 10 shares of a stock
that was 16 my first timejust to see if it would work.
(22:52):
So 160 was my first investment.
You know, just see if thebutton would really give me
checks out and Yeah.
Uhhuh
So yeah, um, you know, onthe, on the business side,
if you own your own business.
Those KPIs are very similar.
You know, can we grow?
Can we scale?
That's a big buzzword now.
(23:13):
Scaling up, that's a big buzzword.
Which means growth,you know, that's all it
same thing.
Yeah.
fancy word.
But it's essentially the same.
Now when, when you own a businessyourself, you're going to have more
nitty gritty and more hands in it.
Nice thing about investingand buying a business, Buffett
doesn't mess with the management.
(23:33):
He doesn't micromanage.
When you're buying a stock,you get to buy the management.
They come with it, included.
It's turnkey.
Uh, batteries included, right?
Uh, you have themanagement team in place.
Warren Buffett said this.
Uh, I hope I don't destroythis quote, but he said, uh,
The ultimate irony of theinvestment business is that an
(23:57):
obstetrician can deliver babiesbetter than the husband or wife.
And if you take dentists asa whole, they can fill teeth
or pull teeth better than thepatients try to do it themselves.
But in the investment world,somebody who believes in American
business and will seek out thelowest way to participate in
business and do it consistentlywill achieve results that exceed
(24:21):
those, uh, of the Wall Streetprofessionals, the group, in
fact, it's the only industryyou can think of where the.
Professionals effortssubtract value from what
the layman could do himself.
I think the key in that quotethat I picked out is the
lowest way to participate
Uh, and that's stock ownership.
You don't show up to the work Youdon't drive your car to the office.
(24:42):
You have the management built inThey're they're the ones checking
the kpis and managing all thisstuff And you simply participate by
receiving a dividend Maybe you sellsome options for you know, increased
cash flow and compounding power YouUh, but it really is about ownership
and it's a, you know, you playMonopoly and you just buy the board.
(25:05):
And I always tell my family inthe family trust, I tell my sons,
I go, you fricking better neversell our real estate ever because
if you can acquire a piece of landon the earth, there's only so much
earth, you keep it in your family.
You don't give it up.
Well, it's the samewith American business.
If you can acquire some shares.
Of our gross domestic productand the work that's being done.
(25:28):
Why would you ever want torelinquish that ownership of
those shares of the, of the GDP?
I mean, Warren Buffett's got5 percent of the S& P now.
It's about how big he is.
And, and that's what one man can do.
Uh, and so ownership ismore important than working.
I think work for ownership,not for paychecks.
(25:51):
Yeah.
Work to
that.
Yeah.
And I mean, we can buildthat into us, you know, what
we do as business owners.
You know, I've had really smartfolks like Roland Frasier, uh,
who's been on this podcast andhe's, you know, he's got, I don't
know, 30 plus businesses, but, youknow, he's not technically, uh,
yeah, he's not on the, you're notgoing to find him on an org chart.
(26:12):
That's what he alwayssays, you know, and.
That's one strategy, you know, hehas ownership equity and things
But in the way that you're sayingthrough shares and the stock market.
Well, there you go You cankind of do something similar,
you know, you're not Operatinganything you're you're doing
your own analysis on your side
(26:33):
The, epiphany that escapes andit, it having done this for
30 years, it, it is such, um,it's an enigma to me that, that
people think about the risk.
They think it's almost entirelythat I'm scared that the stock
market will crash or that thevalue of my shares will go down,
that the price will go down.
(26:54):
That's not it.
Warren Buffett said it.
Operation, operating earningsis what you're concerned about.
Who cares what the price of thegoose is, it's whether or not it
will continue to lay the eggs.
And if the goose is a hundreddollars and it's laying,
you know, a ten dollar egg amonth, You, you, you're fine.
You're going to get your money back.
You're fine.
(27:14):
It's in, and if the price, Imean, imagine Buffett, about
half his wealth is in companiesthat are not for sale, like
Fruit of the Loom, Dairy Queen,Geico, Duracell Batteries.
Geico Insurance, all thesecompanies that have no price.
Um, they're not forsale on the market.
(27:35):
They're not listed.
And so, you know, like, the pricesof my homes don't fluctuate.
Because they're not for sale.
The prices of mystocks don't fluctuate.
Mine don't becausethey're not for sale.
That, that stock market only mattersto me if I want to give up the
golden eggs that the goose delivers.
(27:56):
And I just don't see the pointin doing it if, if I can, if the
option market is there and I cansell premium and if the dividends
are there and you get a double digitreturn off those two efforts, the
hell do you care what this price is?
I like that.
Yeah.
And that, that enigma,it blows my mind.
If you turn on CNBC, not oneperson talking about product
(28:18):
that I guarantee you turnit on right now, they'll be
talking about a damn price.
They will.
And it's just not how it's done.
It's just not how it works.
So, dividends and options,are those the two things?
I mean, that's the, that'sthe cash flow, right?
Yeah.
I mean, there's There'sonly six things you can do.
You can buy a stock, sella stock, buy a put, sell a
(28:39):
put, buy a call, sell a call.
Now the combinations ofthose get really exciting.
There's a lot of combinationsof those we can learn.
But all wealth building is, islearning to conduct, conduct
a transaction intelligently.
It's all it is.
And, and that's what financialeducation boils down to,
is how do I conduct thesetransactions in a way that is
(29:02):
going to, uh, Produce cash flow.
Well, you're exactly right peoplepoo poo dividends and It's crazy.
They think a dividend is nevergonna move Inflation makes
prices go up makes the cost goup, but it also makes the The
the cash flow go up the gapbetween the two Warren Buffett
(29:25):
bought coca cola at three dollarsand twenty five cents a share.
That's his cost basis I thinkit's a two dollar dividend
Wow.
that thing's paying for itselfevery 18 months or whatever, time
after time, and the compounding,when you're compounding it
at 50%, that's astronomical.
(29:47):
So it's, it's not what the dividendis today, it's what the dividend
will be tomorrow and 10 years fromnow, and hopefully people can think
dynastically, you know, legacy,to where when I die, hopefully
my kids have been educated wellenough that they can, you know,
Become stewards of, of the dynastyand pass it on to their children.
(30:08):
Hopefully.
Yeah.
Hopefully that's a great,great goal and legacy.
It's well, you know, on that point,because I keep going back to, I
love the fact that you educate yourchildren and you know, like, that's
what I've, I have a five year oldand a 12 month old at this time.
And
you're in the hot, you're, you'rein the beautiful sweet spot.
I
mean, Santa Claus and
(30:29):
Oh yeah.
and, I mean,
already questioning Santa atfive, which I'm like too young.
Come on.
ha, good for
But the, what I'm thinking hereis that, you know, they're at
such an impressionable time and,um, it like, what are some of
these things you mentioned, uh,real estate, you know, like don't
sell the real estate, you know,that's yours and all these assets.
(30:53):
Um, What are some some things thatyou just think that we should all
know that kind of like you taughtyour children at this young age so
well, I gotta give aplug to some Rich Dad.
They have a game, uh,called the Cash Flow Game.
Yeah
And we started playing thatgame before they could do math.
Mom and dad were theauditors, so we did the math.
(31:15):
But they just needed tounderstand the arrows, the
direction of cash flow patterns.
And so the game was number one.
Number two is we wouldtake them with us.
Uh, when we do real estate.
And we started buyingstocks very young.
First thing I just said, whatwould be a fun company to own?
And one of them chose, uh, Disney.
(31:36):
So we went on a businesstrip to check on how
the operation was going.
And we stood in line.
Uh, for many hours bonding as afamily as we stand in line, uh,
lot of demand right?
Yeah, and they look aroundlike, man, we're doing well.
This is good stuff.
My other son, I hate McDonald's.
I can't stand theirfood, but kids like it.
(31:57):
So he bought McDonald's and hewalks in like he owns the place,
you know, when he's seven.
And that idea of ownershipat a young age that you could
own these incredible companieswas very natural to them.
In the real estate, once they hada little lemonade stand money,
you know, not much, when we woulddo a syndication, we would, Uh,
(32:17):
let them pool some of our money.
That's probably co mingling offunds that I'll get arrested for,
but I think a few bucks chippedin by the kid, uh, that we keep
track of on the side is okay.
And so they, they understood thisstuff, and then also, they were
just blessed to hang out with, like,one of my son's favorite guys is,
I don't know if you're familiarwith Than Merrill, he's, you know,
(32:38):
you know
here in San Diego.
Yeah, so Than is one of my dearestfriends and, and, you know,
he texts my son all the time,you know, telling him to push
it because Than's an athlete.
My kids are athletes and, uh, andso hanging out with, with guys like
Than, you know, they understood.
I remember Than waspitching a, a syndication.
They have a, like 2.
2 billion fund, I think now.
(33:00):
That's a lot of, a lot of money.
Assets under management for a guyfans age but but We watch those
things together and I said son,what do you take from fans pitch?
He goes Sponsorship equity.
I says, you know, that's it.
He said I like the sponsorshipequity so yeah, just involving
(33:21):
them and and they have their own
What we call they have theirown brokerage accounts and
so those are the things we do
with your kids,you've involved them.
You know, let them know.
Um, we make a sacred pact.
We don't talk about, You know,our cash flow net worth with
other people, but they'reinvolved in the stocks.
They're involved in the, youknow, they, they buy, uh, silver.
(33:45):
They have little silver coins.
They don't have a lot ofgold, but they have silver and
you just let them make somemistakes, you know, let them,
It's a game.
You know, it's, it, it truly is.
And learning the rules early,like you said, the cash flow game.
That's one I haven't played.
I've seen before though, soI'll, I'll be picking that up.
it is, it is, when, when we're in,when we would travel to Australia,
(34:06):
or Argentina, or Paraguay, or Rome,all these places, and my kids,
Robert would call them up on stage,and they'd dissect what really
appeared to be pretty complex stuff.
Go to a book signing and everyonewants my kids to sign the books, you
know, they're one in the morning.
They're keeling over and They saidwe want to be rich not famous dad.
(34:27):
I go bingo.
That's a big lesson.
You learn right there Don'tbe famous be rich But but what
was interesting is all of thatpeople would say how'd you
kids learn all this and I sayslisten All kids are geniuses.
My kids aren't any different.
They're not magic.
Okay?
There's nothing special about them.
They're, they're just kids.
But the financial education, theydidn't ascend to a great height.
(34:51):
The education wasbrought down to them.
That's the secret of a great teacheris we didn't try to push them up.
We brought the educationdown to within their grasp.
And that's what the cashflow gamedoes is it, uh, it is so good.
So many lessons and that's whythey could get on stage and
understand those cashflow patterns.
(35:12):
Cause it was ingrained in themsince they were very little,
like before they could do math.
I'm, I'm picking that upfor, for them and for me just
Yeah, pick up the cash.
Five years old, she won'tmaybe do the math yet.
Well, you and your wife can do that.
And we would have, and it's along game, like Monopoly takes
nine hours to play, right?
Same with the cash flow.
So we, we just had a littlehiding place under a lamp
(35:36):
table is where we'd put it.
And we just put the game under andwe'd pick it up where we left off.
So 45 minutes, they can, they havean attention span for 45 minutes.
Ha ha ha.
Yeah.
Well, what I'm thinking,Andy is like, so we've talked
about AI before and I thinkof, AI is such a great way to
distill information and make itactionable and to learn rapidly.
(36:00):
And like you mentioned, um,you know, the books earlier,
like the thing I do is like, Ilove to use things like chat.
GPT is a tool to, you know,if I have the actual resource,
maybe upload it, or it obviouslyhas a lot of knowledge.
Are you using AI yourself or yourteam in ways to enhance, or maybe,
(36:20):
you know, do some of the processthat we're talking about here?
You know, the more I use chatGTP, the less impressed I am
with it, and the more I realizehow far it really has to go.
It's true.
Anyone experienced in salesor rhetoric and understand the
difference between a rhetoricalcontext and a veridical one
Understands that that version ofAI has been programmed rhetorically
(36:42):
not veridically I would never useit to trade in a million years.
I wouldn't trust the data It'sreally really good at saying.
Hey, here's This spreadsheetreorganize it for me or it's
really, really good at saying,well, semi good at saying,
here's this math problem.
Go do it for me or write thisblog, but the the inaccuracy
(37:05):
is, is a really big flawbecause it's, it's, it's taking.
from the world of knowledge, whichis highly rhetorical with an agenda
trying to convince someone, and asa result, accuracy is sacrificed.
So there's certainly somethingto, I mean, we've been
trading with, what is AI?
(37:25):
It's a buzzword for more advancedalgorithms than we had before.
That's all it is.
We don't have general AI yet.
We're way far away from that.
We're just getting reallygood at algorithms that
can do a lot of tasks.
Um, trading, most of it's been doneby computer for the last decade.
I'd say 90 plus percent ofthe New York Stock Exchange
(37:47):
is just Set it and forget it.
And they're just trading highfrequency fiber optic, you know, and
read flashboys and you get a, you
Oh yeah, that's true.
So, you know, do I use AI?
I don't use it hardlyat all with my trading.
I might use it for, it's going totell you what's past, you know,
what's the five great stocksthat will make me rich, you
(38:08):
know, tell me what the future is.
AI can't predict the future.
It'll tell you what thepast was or what now is.
Well.
You know, NVIDIA has been good.
Well, that doesn't meananything about the future.
So, we're a long ways ofreplacing education with AI.
People want thatbecause they're lazy.
Don't get all get on a rantif we go down this road.
(38:29):
We have a culture ofadvice, is what we have.
That's why Wall Street's rich, it'scalled Assets Under Management.
Why do they have AssetsUnder Management?
Because people don't knowhow to do it themselves.
So they wax rich, insanely rich.
That's why 401Ks are so awful.
Is they wax rich withmediocre results.
playing off people's ignorance,pretending, very much pretending,
(38:51):
that they can predict thefuture better than you can.
I'll go back to Buffett's statement,they subtract value from what the
layman can do himself, for sure.
It's the only industry wecan think of like that.
Um, it's, it's terrible.
So, education is where it's at.
Advice is for people who are lazyand don't want to go to work.
I, really, what they'reasking for free money.
(39:12):
Andy, give me a stock pick.
What they're really saying isgive me money for free that
I don't have to work for.
I just got to push a button.
That's lazy.
It's not, it's not howwealth is, is built.
It's built by education,not the culture of advice.
I love it.
Okay.
Thank you.
And I'm happy I asked that and I
That's a long winded, youput a nickel in me, you
(39:33):
know, it's terrible, you
that's great.
20 answer on a 10 cent question.
I don't know It's
in terms of resources and goingdeeper, like let's because there's a
lot here and you tease the 401k, youknow, just how that's such an awful
machine that you wrote a book about.
(39:54):
It's actually rightbehind your head there.
So what are some resources folks?
Can people people can go downa little deeper with you?
And also though, you do some, some,um, workshops pretty often that
maybe we can invite folks to it too.
first edition of Form of Chaos,which is this old vintage one,
you know, the publishers tenyears later asked me to write a
new one, so I just finished it.
(40:16):
So don't go out and get thisone, it's ten years old, but the
new one's coming out, and youknow, whenever those guys, my
part's done, I've written it,so it's all in their hands now.
So however long that takes.
I would just say briefly,You know, if people really
understood, uh, the, the originsof the 401k, where it came
from, they'd be flabbergasted.
(40:36):
There was no point was there agroup of smart women, smart men
that got together, think tankor brain trust that said, let's
figure out a great way to retire.
This is not like anengineered machine.
It's more like the evolutionof a beast, like an organism
that evolved across time.
And, uh, and so I won't go into thathistory, but I didn't put it in this
(40:58):
book for fear people would be bored.
And then when I showed thepublishers the real history,
they said, Oh, you're a moronfor not putting this in here.
But it was basically, uh, youknow, a 30 or 40 year evolution to
where, uh, it was off label use.
The, the original 401ksection was 800 words.
(41:20):
And the guy who wrote it said,was a guy named Richard Stanger,
who's still around today, mucholder, but but Barbara Conable,
late Barbara Conable from New York,Congressman, got Craft in or Kodak
in his ear and Xerox in his earsaying, Hey, we want a loophole,
(41:41):
uh, for our rich executive bonuses.
You know, Carter, President Carterwas failing in his presidency.
He's got Iran and, you know,gas prices trying to do
tax reform to do something.
And, uh, these guyssaw an opportunity.
So they go to this congressmanand he hires this young lawyer
right out of Temple University,20, 20 something young guy says,
(42:03):
write this, this, uh, Well, I wasinterviewing Richard, you know, I
was talking to him on my podcastand he said, Andy, we, we put
this to the, you know, Conablewas on the House Ways and Means
Committee, he was the chairman.
And they put it to the, uh, theIRS and also the Congressional
Budget Office and the Treasuryand all of them have to run
(42:26):
analysis on it to say, whatwill the impact be to, the U.
S.
government.
How much money are we goingto lose by deferring this?
And they came back, I about fellout of my chair when he said
this, they came back and theiranalysis said if they enact this
law, the difference to the U.
S.
budget will be lessthan a million dollars.
(42:49):
There's 11 trillion dollars in 401ksjust in the United States today.
Wow,
So, Conable goes 20 yearslater, he writes this book
called Congress and the Tax Law.
So all his speeches he gave,no mention of 401k in it,
even once, not even once.
And he's at a party, and BarbaraConable's at this party, and his
(43:12):
colleagues come up and say, Hey,congratulations, you've been
nominated for Man of the Century.
Because you invented the 401k andBarbara Combs says, I did what?
Uh, what's a 401k?
He had no idea.
For 20 years it was growing.
Calls up the Ways and MeansCommittee and says, Do
I have anything to 401k?
And they say, Yeah, yousponsored the legislation.
(43:34):
He said, I'd forgottenit completely.
It was a favor to my buddies.
At Xerox and Kodak.
So, uh, it sat there fortwo years from 78 to 80.
And a guy named Ted Benna, whowas a consultant, uh, was working
with a bank that wanted to getthese big bonuses for them.
And they had this legislation calledERISA that had frozen the law.
(43:55):
And he found that little loopholeand he said, What if we gave
them bait, an employee match,And, uh, the employer match was
born, and next thing you know,people gave up their pensions.
If, if you look at a pension, uh,it's a function of the financial
statement on the cash flow side.
Income expenses.
(44:16):
Never touch theassets or liabilities.
It was a cash flow issue.
Lifetime income.
Pension.
The people didn't have thefinancial education to see that
when pensions were replaced bya 401k, that it became a balance
sheet issue, a net worth issue.
And now it's basically anhourglass that's gonna out, you
have to outlast your retirementfor the hourglass shrink.
(44:38):
So, it's a horrible deal.
I won't even talk about howmuch Wall Street makes on this.
Um, they make thelion share the money.
They make more money than the 401kguys do through compounding costs.
It's a bad deal.
So, you don't need to buy thebook, but, but, uh, You know,
it's, it's just somethingyou should investigate of
whether it's really worth it.
(45:00):
And that bait is foodthat conceals a hook.
So even though that employer matchlooks like money and smells like
money, tastes like money, thereis a hook inside of that bait
that is not seen by most people.
And if you really do the mathon it, there's a real question
about whether it's even worthit if you do the long term math.
Which I've done so, um, so yeah,resources, people can find me.
(45:23):
We could take people, youknow, I founded the Cashflow
Academy not because I wasbeating Warren Buffett in an
investing contest 20 years ago.
Uh, I founded the Cashflow Academybecause people had said, Andy,
you have a talent for making stuffpretty simple and pretty plain.
And so since then, uh,we've been very blessed.
You know, about a third of ourstudents are outside the U.
(45:44):
S.
Uh, 170 countries now we're in.
And, uh, we're very blessedto teach people as far as they
want to go with investing.
If they just want a littlebit of knowledge, we
can give them a little.
If they really want to becomea full fledged stud option
trader, we can do that too.
you know, if you, if you'dlike more information, uh, we
(46:05):
can give you a little link.
It's the cashflowacademy.
com.
You know, T H E.
the cashflowacademy.
com And then just put aforward slash in there
and then put in hustle.
We thought that'd be appropriateSo the cashflowacademy.
com forward slash hustleand we've got a fun ebook.
It's free And it'll tell you alittle bit about uh a little bit
(46:27):
about that fundamental analysisand getting out of the rat race
So it's a great place for someonejust to start if they just want to
do something for free and and uhlearn more about financial education
Awesome.
Andy.
I appreciate you so much, man.
I love the way that youeducate the pace and the style.
And I, I.
Your kids are lucky for onefor learning for so young,
(46:49):
I don't know if they'd agree.
I don't know if they'dagree with that.
they'll look back andthank you guarantee.
we get along pretty well, we
it sounds like it.
So appreciate you.
We'll be chatting soon.
And, uh, thank you very much.
Oh, Joe, I had a great timeand, uh, hope people found
value in our conversation.
Thank you so much.
Absolutely.
Most entrepreneurs can buildpretty incredible businesses for
themselves, for yourself, you know?
Within your control, you couldgenerate some really great
revenue, have a great lifestyleand kind of do it your own way.
But when you go to investingoutside of your business or even
adopting new technology like AI,A lot of people get tripped up or
just approach it the wrong way.
(00:20):
So today's guest, hisname is Andy Tanner.
He actually spent 14 yearstraveling with Robert
Kiyosaki, author of Rich Dad.
Poor Dad.
It's the first bookthat I read right before
starting my own businesses.
And Andy ended up teaching hisnine-year-old son, how to invest at
a level that most of us never learn.
(00:41):
And this is how it'sinvesting in other companies.
It's also investing in your ownbusiness and approaching technology
in a way that's really smart.
And there's a whole process.
Andy breaks down.
It'll help you reinventthe way that you think of
wealth and controlling that.
Yeah, not only in2025, but also beyond.
So enjoy the episode.
Let's get into it.
(01:03):
Andy, we're rolling.
We're finally doing this.
I appreciate your timeand being here today, man.
I know we're going to have a blastbecause you think differently
around investments in general.
And you have some really coolinsights into technology,
the world we're all living innow, the, I guess the bullish
side and the bearish side.
So, uh, how are you doing today?
(01:25):
My friend,
Man, I couldn't be, uh,more grateful to, uh,
to join your, your show.
You do a lot of great stuffand anytime, uh, anytime
you're invited, it's an honor.
So, uh, appreciate the opportunity.
Look forward to our discussion.
Should be a great time.
it will be, and you already justthe, the, you know, the, the cover
(01:45):
of you online immediately when wegot introduced, I saw rich dad,
poor dad, one of the advisors there.
I'm just like, well.
Robert Kiyosaki andrich dad, poor dad.
The book got me into thiswhole entrepreneurship
game in the first place.
It was the first book I read andimmediately everything shifted.
I want to say there are 40 millioncopies in like 90 plus languages.
(02:06):
And, you know, Robert,uh, completely changed my
life and I always give ashout out to Kim as well.
Uh, that advisor team, I, I traveledwith them for about 14 years.
Uh, all around the world and,you know, it was funny because
we, we were invited to comeas a team as teachers, but for
me, it was all learning, man.
(02:26):
I, I, you know, I was justsharing what I was learning as
a student with that group and,uh, nowadays, uh, you know, I,
I spend most of my time teachinghere from my home studio.
Uh, my wife had an illness,uh, about three years ago.
She was diagnosedwith breast cancer.
So, uh, we're doing great.
Uh, but that brought me home.
My kids play high school basketball.
(02:47):
So, my biggest focusright now is like, I still
teach from my home studio.
But I don't, uh, I don't carefor the travel much anymore.
I, I like to be a, like, like beinga dad right now and a husband.
So, that's, that's the priority.
That's
I love it.
Has it always, was it always, Imean obviously did a lot of travel
before, but did you always have thatkind of intention for the family and
(03:09):
kind of making it for your own time?
And
percent.
Uh, you know, my wife and I hadour, our kids a little late in life.
Actually, we wereboth cancer survivors.
I had testicular cancer as ayounger man, so it took us a
while to get the family going.
And, uh, so it became a big priorityonce we finally got it here.
Uh, but yeah, and Robert wasamazing, um, because, This, I mean,
(03:33):
not to go too far down this road,but, uh, he would invite my kids.
Robert and Kim don't have kids, sohe would invite my kids with me.
So, you know, I have, our homemovies are a little weird.
You know, I've got my nine, I'vegot my nine year old son, you
know, standing up on stage inArgentina, you know, diagramming
some, you know, real estate dealfor infinite returns, and, so
(03:55):
my kids grew up Rich Dad, andthey, uh, it's ingrained in them.
Um.
And when, uh, when COVID hit,uh, I brought my older son
home after eighth grade and wespent a year of homeschooling,
nothing but financial education.
Two years later, his youngerbrother wanted to do the same thing.
So we, we attacked this thingas a family and we, we jumped in
(04:17):
both feet and you know, they're,they're still in high school.
So we'll see how that turns out.
well, yeah, I mean, no betterway to learn at such an age,
obviously even better from yourparents, your dad, you know, like
learning the financial stuff.
And it's obviously not, notwhat's really taught in school.
So you're navigating them atthis spongy age, you know, your
(04:40):
Ah, it's so good forthe relationship, too.
You know, it's just, we, wejust get, we were always good
buddies, but even better.
So it was great.
I mean, this is a great way tostart because you're obviously
priming your kids with this awesomefinancial knowledge and hands on
experience and all that stuff.
So a lot of business owners,you know, mainly that's
entrepreneurs, business ownerslistening, you know, we're, we're
(05:02):
really good typically at makingthe money in our businesses.
But I feel like a lot of us,and this is why I bring folks
like yourself onto the show.
I'm like, okay, so how do we,yeah, Expand from that and have
this financial knowledge ofyou know, how do we You know
leverage things like what whatyou do in stock markets and all
(05:23):
these other financial Vehicles,but like where do we start?
Like how how would youadvise someone who is
rocking with their business?
They're feeling pretty good Ormaybe they just want to expand
and don't know where to go Yeah,
there's a saying that the ultrawealthy, you know, you make your
money in business and then you takeyour profits and you compound by
(05:45):
investing, you know, you acquireassets, you know, businesses
generate cash, but they don't expandownership unless you're investing.
And you know, the thing I tellmy, my sons and the thing I
believe, especially now with AI.
I think business ownership andasset ownership is, is really
important simply because otherwiseyou're going to compete against AI.
(06:08):
So if you don't expand, youknow, what, what we're doing,
uh, it's going to be tough.
It's going to be really tough to,to keep up and battle with that
AI if you don't expand ownership.
And I think stocks are a greatway to do that because it's
not just finding, you know,NVIDIA and, You know, doubling
your money on a chip maker, youknow, people who, you know, sell
(06:30):
food, people who, raw materials.
Everyone will benefit from AI.
So I'd rather own itthan compete against it.
And just as the tech boom ofthe 90s, you know, blew up
the market, there's potentialfor AI to do that again.
It's that big.
So, you know, I, I've toldmy sons, I said, any white
collar, you know, job orcareer you might enjoy, great.
(06:53):
Great.
But you're going to be competingagainst computers now in a way that
is exponentially un, you know, it'sgrowing in a way we can't predict.
Owning it is probably better thancompeting against it, in my opinion.
I don't know if I'm right,but it makes sense to me.
Hmm.
you know, like maybelet's break that down and,
(07:15):
Yeah, I,
yeah, let's do that.
I, uh, I agree with Warren Buffett.
Um, most people, if we were to turnon CNBC right now, those people
aren't interested in owning stocks.
They're interestedin trading stocks.
And it's price, price, price,price, price all day long.
Nothing but what's up, what's down,bear, bear, bear, bull, bull, bull.
They are always making predictionswhere, if you read Warren Buffett's
(07:36):
letters, you know, he had a greatone to the shareholders about
three years ago where he said,the most important metric, and
you know this as a business owner,it's your operational cash flow.
In other words, how much moneydo you make from the business?
So, the nursery rhyme, I guess,or the Apesoft's fable level
of this is a golden goose.
(07:57):
Nobody bought a golden goose tosay, I think the price of this
goose might go up next week andI can sell it for a quick buck.
Every single child can understandthat the operational cash flow,
which is the eggs that it wouldlay, that allows you to compound.
True compounding reallyhas a reinvestment element.
for listening.
So if I have a business andI'm compounding, I'm buying
(08:21):
a share of another business.
Real estate syndications arethe same thing, aren't they?
Um, you have a group of peoplethat, what a beautiful word, share.
And, and, so when I look at stocks,I don't think about a piece of paper
that goes up and down in value.
I think about, you know, myself inmy garage trying to build an iPhone.
(08:42):
And failing or trying to tryto come up with a vaccine and
failing or trying to do quantumcomputing like Google and failing.
And yet these entrepreneurs willshare the value that they give
to other people with me if I'llshare a little money with them
and buy a share of that pizza andsharing that operational cash flow.
(09:05):
I like that.
It's, it's built into the word.
Yeah, exactly.
It's the share and.
a beautiful word.
The fact, the fact Steve Jobs wouldshare his genius with me, with the
likes of a guy like me, and he putme in my garage to build an iPhone,
I'm not coming out alive, I'd starvein there, I'd never get out, so.
It's a, it's a great lever of, agreat way to lever other people's
(09:26):
genius and, When I think aboutstocks, if you want to start where
to start, think about net producing.
When I brought my son home,we went for home school,
one of the first lessons.
We went to the gasstation, filled up the car.
It's like a hundredbucks or whatever it was.
Then I took him homeafter that consumption.
And I showed him on my AmericanExpress statement how much
(09:49):
fuel we put in the air.
You know, how much fuelwe put into the sky.
And it was, it was a good number.
I said, this is going tobasketball practice and,
you know, going around.
But then I took out my brokerstatement side by side and I said,
you know, we own some Exxon Mobil.
And we have dividends and wewrite a lot of options on that.
And not the capital gain, notthe price move, but simply the
(10:11):
dividends of being a fuel producer.
An energy producer faroutweighed consumption.
And I said, so stocks are a wayto become a net producer where
I'm producing more in the world.
that I'm consuming.
Then we did it with our AT& T billand our, our Apple phones and we
just went through all these areasof things where we had consumption,
(10:35):
but we also were participating inthe production on all the stocks
I owned and it was, it's a, it'sa way to become a net, a producer.
That's a real great wayto, to build wealth.
I like that.
And that's, and that is kind oflike Warren Buffett, I guess.
You know, it's like, okay, well,you're gonna, you're investing
in the things, you know, right.
The things that you're using that,you know, there's demand for in the
(10:58):
I mean.
Warren Buffett is, is a genius.
I wouldn't pretend that he'snot, but I think his genius
overshadows something moreimportant, which is his temperament.
If you looked at the stocks heowns, they're not the best ones,
um, in terms of price, uh, butthey have what he calls a moat,
you know, um, Coca Cola, heoften 2 billion drinks a day.
(11:22):
And uh, so I went out and boughtsome, you know, this is okay,
I want to be a part of that.
And it, you just, the colawars proved it, you know,
Pepsi tried, no one's going totake down that castle, right?
And so, I don't think about riskin terms of stock price movement.
I think about termsof risk in the moat.
(11:43):
You know, if you took that Coca Colacompany, you know, started in 1886.
Okay, what's it survivedin, in that 150 years?
Um, you know, World War One,World War Two, uh, plagues, uh,
9 11, uh, global financial crisisof 2008, recently a pandemic.
(12:04):
You can't kill it.
You just can't kill it.
And so that's where I seethe risk management in just,
they're not going anywhere.
You know, it's, it's solid andthey always bounce back up.
You know, if, if you had achance to buy, you'd always
want to buy it the worst times.
hmm.
Well, and that's theoverall rule, right?
It is yeah, yeah Mm
(12:29):
So we're talking about kindof these, these long lasting
companies like Coca Cola.
And then you already mentionedNVIDIA, you know, has had some
pretty steep movements already.
Insane.
And of course, they'releading the whole AI thing.
So, you know, I'm curiousof there's, I guess,
two ways to look at it.
I'm sure there's more, butlike, how do you look at the
(12:50):
stocks that you're looking at?
You know, or the, or theshares, let's call them.
And then you mentioneddividends too.
So I know
Yeah, and you youasked a great question.
How's the person get started?
So, you know this having done somuch business when you embark on
a venture of business ownershipYou know the entrepreneur Or
you embark, uh, as an investor.
(13:11):
What you're really doing,whether you know it or
not, is you're starting apersonal development program.
You're embarking inpersonal development.
Uh, your weaknesses, at leastit was for me, are rooted out
very quickly and they are put ondisplay for the whole world to see.
And so when you, if you reallywant to start investing or
entrepreneurship, uh, You'regoing to learn things like
(13:34):
an improved temperament.
You're going to learn waylike discipline, you know,
keeping an even keel yourtemperament, which is hard for me.
Cause I was an emotional guy.
I would get really excited or panic.
You know, it was really toughfor me to overcome, uh, is to
just become an even keel guy who,uh, who has discipline, who has
consistency and most important.
(13:55):
And it's why I'm aneducation advocates.
Why I'm in the business is,is to learn four important.
Uh, financial education,uh, curriculum.
If you go to school,you know what's there.
Biology, and science,and literature, and
art, and mathematics.
You know, the STEM stuff,history, all that's there.
(14:16):
But there's four things thatif you can learn, In financial
education, you're well on yourway to becoming an entrepreneur or
an investor and they are thus Um,the first one's called fundamental
analysis where There's just certainfundamental fundamental things
that business should do whetherit's your business and when you're
going to buy It has to do withthe financial statement and you
(14:38):
should look at that financialstatement There's just got to be a
certain amount of growth Criteria.
And that's how you, you know,any entity anywhere in the world,
you look at assets, liabilities,income, expenses, statement of
cash flows, you know there'shealth there or sickness there.
You look at thefinancial state of the U.
S., very, very sick.
Uh, you look at a financialstatement like Joe, you know,
(15:01):
probably pretty healthy.
And so
at least.
for sure.
They're not hard to beat.
It's not a high bar, but, but,uh, you know, and so fundamental
analysis, the ability to analyzethe business and say, Hey, this
is good business as of today.
Now tomorrow, who knows?
That's where that moat comes in.
It's like, yeah, it'sprobably gonna stick around.
The second one.
(15:22):
Especially if you're goingto be an option trader is,
is technical analysis andthat's your price movement.
That's your study of theemotions of the market.
You know, the, the company'sone thing, but the buyers
and sellers are another.
And that's justinformation gathering.
But the third pillar is cash flow.
How do I position myself withinthis information to have a profit?
(15:43):
And then finally is the mostimportant one, risk management.
That's where my team isjust crackerjack, man.
They're awesome.
You know, I've got guys that areprofessional risk managers, Series
4 Option Principals, and they, uh,You know, guys like that, they help
you deal with the sudden change.
And the insurance of whenthe unforeseen happens.
(16:03):
Every single thing you findin, as an investor, will fall
within one of those four.
It's either a fundamental issue,a technical issue, a cash flow
issue, a risk management issue.
And if people can learn those,that's where I would start.
Is with temperament, discipline,learn the four pillars.
And then you can havea foundation to invest.
Yeah,
(16:25):
I just think of, you know, we talkedabout AI already and how, well,
there's no real temperament with AI.
It's purely, you know, it'slogic and it's, it is what it is.
And, um, you know, I'm curiousof what you think would be the, I
guess the most difficult of thesefour to deal with, you know, um,
(16:46):
and because you had the temperamentthing, uh, you know, emotional.
I feel like a lot ofpeople are emotional when
it comes to this stuff.
I think it depends on the person.
Uh, you know, the engineers, uh,seem to have a good temperament,
but they're actually more afraidthan you think, because they, they
overanalyze, you know, they'reterrified of some type of mistake.
I think the most, I don't knowif it's the most difficult,
(17:07):
but the most important one,if you, have great risk
management, then that givesyou the ability to move forward
because you know you'll be okay.
Um, if, if I, you know, if I havea seatbelt, if I have a helmet,
you know, whatever it is, if Idrive my car, the more safety
mechanisms I have around me,more confidence I have to invest.
(17:29):
I think that risk managementis the most important one.
Uh, once you get that down, ittakes away the fear, frankly.
And, and, you know, as anentrepreneur, I would imagine
there's, are there certain,let's talk about risk management,
you know, as someone witha business, are there some,
you It's fundamentals therethat you would recommend.
I think so.
Robert Kiyosaki, I was upset thatI didn't see how obvious this was,
(17:52):
but I remember this like it wasyesterday, he had a flip chart out
and he wrote, he wrote this, hesays risk is related to control.
Um, the more control you have, theless risk, the less control you
have, more risk and no control,well that would be gambling.
Uh, we have no, you know, whereround and round it goes, where it
stops, we don't know, we can't say.
(18:13):
And so, in a business, I thinkpart of the, part of what brings
controls is you want to have goodstandard operation procedures
where You kind of remove, maybenot the human element, they still
have to follow those procedures.
But you want to McDonaldizethings as much as you can.
You want to have systems inplace, legal in place, great
(18:36):
communications in place.
You know, those arethe, the fundamentals.
Um, You know, inside of a,of a, of a business triangle.
Leadership is important.
That's a fundamental.
Having a mission, uh,is really important.
Having a team really reducesrisk if you have a great team.
So those are some of the thingsI think as an entrepreneur
(18:56):
you can think about.
Probably the least importantone is your product.
Um, but if you have greatsystems, Great standard operating
procedures, great legal,great communication, and, you
know, some stable cash flow.
You know, you'recontrolling a lot, you know.
I don't know if you can get totalcontrol, but the more control you
(19:18):
have, the less risk you'll have.
That's the basic principle.
Yeah.
the idea of having solid systems, Imean, that any business at any level
should have great solid systems,even if it's just you and yourself,
but like that can carry into so manydifferent projects or investing,
you know, even if it's outside ofyour own business, there's still
(19:39):
systems and, you know, you needthat support when you go anywhere.
Yeah.
Yeah.
if, if you have a business.
You, you have to know your, uh,your key performance indicators
and monitor those, and if somethingneeds to be tweaked, you get a
system to address, you know, whatthat is, and you, you tweak your
(20:01):
system or improve your system,but, you know, key performance
indicators are fundamental analysis.
You know, it, it really ishow your business is running.
And, uh, as you analyze businessas an investor, there are
key performance indicators,especially valuation indicators.
And even as you're on yourown, your own business, you
want to have KPIs in hand,
(20:23):
Are there, so when it comesto fundamental analysis, just
to understand some, you know,for, for folks listening here,
and I want to obviously sendthem down to more resources
after this too, to go deeper.
What are some of those KPIsthat you would recommend really
understanding and studyingon the fundamental side?
uh, as an investoror business owner,
(20:46):
Uh, I was thinking investor, butyou know, in business owner, I
don't know if you, if you wantto cover a little bit of those.
Let's talk a littlebit about investor.
That's probably the easiestone if you were a beginner
and you just want to startto invest There's a couple of
books you could read there'sthere's one that's really hard.
I don't recommend itIt's about this thick.
(21:06):
It's called Securities Analysis.
It's by Benjamin Graham, whois Warren Buffett's mentor.
And it's doorstop, man.
I mean, you, you, you, yougot a robber coming into your
house, just throw that bookin the, in the hallway and
Yeah, exactly.
it'll stop any door.
Um, the other one is a betterone, a little easier to read,
called The Intelligent Investor,also by Benjamin Graham.
(21:28):
That's more of a book on temperamentthan on securities analysis.
But it does talk about two metricsthat really help you see value.
Market knows this, um,it's earnings and growth.
Uh, if a company is earning moneyconsistently, what does that prove?
Well, number one, it proves thatpeople want the product or service.
(21:50):
So that's really important.
We have proof of concept.
And number two, it meansthey're operating in the
time being at efficiencies towhere there's a profit there.
So it proves efficiency and itproves people want the stuff.
Uh, growth means that it'sheaded in the right direction.
More and more people are liking it.
So those are pretty basicfundamentals, you know,
earnings and growth.
(22:10):
And we have all types of.
Valuation, EBITDA, you know,enterprise value, EV over EBITDA
is a metric that is a lot likeprice earnings and peg ratios
are price earnings in the growth.
And so those, those littleratios are important.
Understanding the work thatis done is really important.
(22:31):
Do they do great work and are theyefficient in the work they do?
And if you, if you do that,You can have the confidence
to scale in at a small amount.
You don't have to buy thewhole company by a few shares.
Um, first shares I boughtabout 10 shares of a stock
that was 16 my first timejust to see if it would work.
(22:52):
So 160 was my first investment.
You know, just see if thebutton would really give me
checks out and Yeah.
Uhhuh
So yeah, um, you know, onthe, on the business side,
if you own your own business.
Those KPIs are very similar.
You know, can we grow?
Can we scale?
That's a big buzzword now.
(23:13):
Scaling up, that's a big buzzword.
Which means growth,you know, that's all it
same thing.
Yeah.
fancy word.
But it's essentially the same.
Now when, when you own a businessyourself, you're going to have more
nitty gritty and more hands in it.
Nice thing about investingand buying a business, Buffett
doesn't mess with the management.
(23:33):
He doesn't micromanage.
When you're buying a stock,you get to buy the management.
They come with it, included.
It's turnkey.
Uh, batteries included, right?
Uh, you have themanagement team in place.
Warren Buffett said this.
Uh, I hope I don't destroythis quote, but he said, uh,
The ultimate irony of theinvestment business is that an
(23:57):
obstetrician can deliver babiesbetter than the husband or wife.
And if you take dentists asa whole, they can fill teeth
or pull teeth better than thepatients try to do it themselves.
But in the investment world,somebody who believes in American
business and will seek out thelowest way to participate in
business and do it consistentlywill achieve results that exceed
(24:21):
those, uh, of the Wall Streetprofessionals, the group, in
fact, it's the only industryyou can think of where the.
Professionals effortssubtract value from what
the layman could do himself.
I think the key in that quotethat I picked out is the
lowest way to participate
Uh, and that's stock ownership.
You don't show up to the work Youdon't drive your car to the office.
(24:42):
You have the management built inThey're they're the ones checking
the kpis and managing all thisstuff And you simply participate by
receiving a dividend Maybe you sellsome options for you know, increased
cash flow and compounding power YouUh, but it really is about ownership
and it's a, you know, you playMonopoly and you just buy the board.
(25:05):
And I always tell my family inthe family trust, I tell my sons,
I go, you fricking better neversell our real estate ever because
if you can acquire a piece of landon the earth, there's only so much
earth, you keep it in your family.
You don't give it up.
Well, it's the samewith American business.
If you can acquire some shares.
Of our gross domestic productand the work that's being done.
(25:28):
Why would you ever want torelinquish that ownership of
those shares of the, of the GDP?
I mean, Warren Buffett's got5 percent of the S& P now.
It's about how big he is.
And, and that's what one man can do.
Uh, and so ownership ismore important than working.
I think work for ownership,not for paychecks.
(25:51):
Yeah.
Work to
that.
Yeah.
And I mean, we can buildthat into us, you know, what
we do as business owners.
You know, I've had really smartfolks like Roland Frasier, uh,
who's been on this podcast andhe's, you know, he's got, I don't
know, 30 plus businesses, but, youknow, he's not technically, uh,
yeah, he's not on the, you're notgoing to find him on an org chart.
(26:12):
That's what he alwayssays, you know, and.
That's one strategy, you know, hehas ownership equity and things
But in the way that you're sayingthrough shares and the stock market.
Well, there you go You cankind of do something similar,
you know, you're not Operatinganything you're you're doing
your own analysis on your side
(26:33):
The, epiphany that escapes andit, it having done this for
30 years, it, it is such, um,it's an enigma to me that, that
people think about the risk.
They think it's almost entirelythat I'm scared that the stock
market will crash or that thevalue of my shares will go down,
that the price will go down.
(26:54):
That's not it.
Warren Buffett said it.
Operation, operating earningsis what you're concerned about.
Who cares what the price of thegoose is, it's whether or not it
will continue to lay the eggs.
And if the goose is a hundreddollars and it's laying,
you know, a ten dollar egg amonth, You, you, you're fine.
You're going to get your money back.
You're fine.
(27:14):
It's in, and if the price, Imean, imagine Buffett, about
half his wealth is in companiesthat are not for sale, like
Fruit of the Loom, Dairy Queen,Geico, Duracell Batteries.
Geico Insurance, all thesecompanies that have no price.
Um, they're not forsale on the market.
(27:35):
They're not listed.
And so, you know, like, the pricesof my homes don't fluctuate.
Because they're not for sale.
The prices of mystocks don't fluctuate.
Mine don't becausethey're not for sale.
That, that stock market only mattersto me if I want to give up the
golden eggs that the goose delivers.
(27:56):
And I just don't see the pointin doing it if, if I can, if the
option market is there and I cansell premium and if the dividends
are there and you get a double digitreturn off those two efforts, the
hell do you care what this price is?
I like that.
Yeah.
And that, that enigma,it blows my mind.
If you turn on CNBC, not oneperson talking about product
(28:18):
that I guarantee you turnit on right now, they'll be
talking about a damn price.
They will.
And it's just not how it's done.
It's just not how it works.
So, dividends and options,are those the two things?
I mean, that's the, that'sthe cash flow, right?
Yeah.
I mean, there's There'sonly six things you can do.
You can buy a stock, sella stock, buy a put, sell a
(28:39):
put, buy a call, sell a call.
Now the combinations ofthose get really exciting.
There's a lot of combinationsof those we can learn.
But all wealth building is, islearning to conduct, conduct
a transaction intelligently.
It's all it is.
And, and that's what financialeducation boils down to,
is how do I conduct thesetransactions in a way that is
(29:02):
going to, uh, Produce cash flow.
Well, you're exactly right peoplepoo poo dividends and It's crazy.
They think a dividend is nevergonna move Inflation makes
prices go up makes the cost goup, but it also makes the The
the cash flow go up the gapbetween the two Warren Buffett
(29:25):
bought coca cola at three dollarsand twenty five cents a share.
That's his cost basis I thinkit's a two dollar dividend
Wow.
that thing's paying for itselfevery 18 months or whatever, time
after time, and the compounding,when you're compounding it
at 50%, that's astronomical.
(29:47):
So it's, it's not what the dividendis today, it's what the dividend
will be tomorrow and 10 years fromnow, and hopefully people can think
dynastically, you know, legacy,to where when I die, hopefully
my kids have been educated wellenough that they can, you know,
Become stewards of, of the dynastyand pass it on to their children.
(30:08):
Hopefully.
Yeah.
Hopefully that's a great,great goal and legacy.
It's well, you know, on that point,because I keep going back to, I
love the fact that you educate yourchildren and you know, like, that's
what I've, I have a five year oldand a 12 month old at this time.
And
you're in the hot, you're, you'rein the beautiful sweet spot.
I
mean, Santa Claus and
(30:29):
Oh yeah.
and, I mean,
already questioning Santa atfive, which I'm like too young.
Come on.
ha, good for
But the, what I'm thinking hereis that, you know, they're at
such an impressionable time and,um, it like, what are some of
these things you mentioned, uh,real estate, you know, like don't
sell the real estate, you know,that's yours and all these assets.
(30:53):
Um, What are some some things thatyou just think that we should all
know that kind of like you taughtyour children at this young age so
well, I gotta give aplug to some Rich Dad.
They have a game, uh,called the Cash Flow Game.
Yeah
And we started playing thatgame before they could do math.
Mom and dad were theauditors, so we did the math.
(31:15):
But they just needed tounderstand the arrows, the
direction of cash flow patterns.
And so the game was number one.
Number two is we wouldtake them with us.
Uh, when we do real estate.
And we started buyingstocks very young.
First thing I just said, whatwould be a fun company to own?
And one of them chose, uh, Disney.
(31:36):
So we went on a businesstrip to check on how
the operation was going.
And we stood in line.
Uh, for many hours bonding as afamily as we stand in line, uh,
lot of demand right?
Yeah, and they look aroundlike, man, we're doing well.
This is good stuff.
My other son, I hate McDonald's.
I can't stand theirfood, but kids like it.
(31:57):
So he bought McDonald's and hewalks in like he owns the place,
you know, when he's seven.
And that idea of ownershipat a young age that you could
own these incredible companieswas very natural to them.
In the real estate, once they hada little lemonade stand money,
you know, not much, when we woulddo a syndication, we would, Uh,
(32:17):
let them pool some of our money.
That's probably co mingling offunds that I'll get arrested for,
but I think a few bucks chippedin by the kid, uh, that we keep
track of on the side is okay.
And so they, they understood thisstuff, and then also, they were
just blessed to hang out with, like,one of my son's favorite guys is,
I don't know if you're familiarwith Than Merrill, he's, you know,
(32:38):
you know
here in San Diego.
Yeah, so Than is one of my dearestfriends and, and, you know,
he texts my son all the time,you know, telling him to push
it because Than's an athlete.
My kids are athletes and, uh, andso hanging out with, with guys like
Than, you know, they understood.
I remember Than waspitching a, a syndication.
They have a, like 2.
2 billion fund, I think now.
(33:00):
That's a lot of, a lot of money.
Assets under management for a guyfans age but but We watch those
things together and I said son,what do you take from fans pitch?
He goes Sponsorship equity.
I says, you know, that's it.
He said I like the sponsorshipequity so yeah, just involving
(33:21):
them and and they have their own
What we call they have theirown brokerage accounts and
so those are the things we do
with your kids,you've involved them.
You know, let them know.
Um, we make a sacred pact.
We don't talk about, You know,our cash flow net worth with
other people, but they'reinvolved in the stocks.
They're involved in the, youknow, they, they buy, uh, silver.
(33:45):
They have little silver coins.
They don't have a lot ofgold, but they have silver and
you just let them make somemistakes, you know, let them,
It's a game.
You know, it's, it, it truly is.
And learning the rules early,like you said, the cash flow game.
That's one I haven't played.
I've seen before though, soI'll, I'll be picking that up.
it is, it is, when, when we're in,when we would travel to Australia,
(34:06):
or Argentina, or Paraguay, or Rome,all these places, and my kids,
Robert would call them up on stage,and they'd dissect what really
appeared to be pretty complex stuff.
Go to a book signing and everyonewants my kids to sign the books, you
know, they're one in the morning.
They're keeling over and They saidwe want to be rich not famous dad.
(34:27):
I go bingo.
That's a big lesson.
You learn right there Don'tbe famous be rich But but what
was interesting is all of thatpeople would say how'd you
kids learn all this and I sayslisten All kids are geniuses.
My kids aren't any different.
They're not magic.
Okay?
There's nothing special about them.
They're, they're just kids.
But the financial education, theydidn't ascend to a great height.
(34:51):
The education wasbrought down to them.
That's the secret of a great teacheris we didn't try to push them up.
We brought the educationdown to within their grasp.
And that's what the cashflow gamedoes is it, uh, it is so good.
So many lessons and that's whythey could get on stage and
understand those cashflow patterns.
(35:12):
Cause it was ingrained in themsince they were very little,
like before they could do math.
I'm, I'm picking that upfor, for them and for me just
Yeah, pick up the cash.
Five years old, she won'tmaybe do the math yet.
Well, you and your wife can do that.
And we would have, and it's along game, like Monopoly takes
nine hours to play, right?
Same with the cash flow.
So we, we just had a littlehiding place under a lamp
(35:36):
table is where we'd put it.
And we just put the game under andwe'd pick it up where we left off.
So 45 minutes, they can, they havean attention span for 45 minutes.
Ha ha ha.
Yeah.
Well, what I'm thinking,Andy is like, so we've talked
about AI before and I thinkof, AI is such a great way to
distill information and make itactionable and to learn rapidly.
(36:00):
And like you mentioned, um,you know, the books earlier,
like the thing I do is like, Ilove to use things like chat.
GPT is a tool to, you know,if I have the actual resource,
maybe upload it, or it obviouslyhas a lot of knowledge.
Are you using AI yourself or yourteam in ways to enhance, or maybe,
(36:20):
you know, do some of the processthat we're talking about here?
You know, the more I use chatGTP, the less impressed I am
with it, and the more I realizehow far it really has to go.
It's true.
Anyone experienced in salesor rhetoric and understand the
difference between a rhetoricalcontext and a veridical one
Understands that that version ofAI has been programmed rhetorically
(36:42):
not veridically I would never useit to trade in a million years.
I wouldn't trust the data It'sreally really good at saying.
Hey, here's This spreadsheetreorganize it for me or it's
really, really good at saying,well, semi good at saying,
here's this math problem.
Go do it for me or write thisblog, but the the inaccuracy
(37:05):
is, is a really big flawbecause it's, it's, it's taking.
from the world of knowledge, whichis highly rhetorical with an agenda
trying to convince someone, and asa result, accuracy is sacrificed.
So there's certainly somethingto, I mean, we've been
trading with, what is AI?
(37:25):
It's a buzzword for more advancedalgorithms than we had before.
That's all it is.
We don't have general AI yet.
We're way far away from that.
We're just getting reallygood at algorithms that
can do a lot of tasks.
Um, trading, most of it's been doneby computer for the last decade.
I'd say 90 plus percent ofthe New York Stock Exchange
(37:47):
is just Set it and forget it.
And they're just trading highfrequency fiber optic, you know, and
read flashboys and you get a, you
Oh yeah, that's true.
So, you know, do I use AI?
I don't use it hardlyat all with my trading.
I might use it for, it's going totell you what's past, you know,
what's the five great stocksthat will make me rich, you
(38:08):
know, tell me what the future is.
AI can't predict the future.
It'll tell you what thepast was or what now is.
Well.
You know, NVIDIA has been good.
Well, that doesn't meananything about the future.
So, we're a long ways ofreplacing education with AI.
People want thatbecause they're lazy.
Don't get all get on a rantif we go down this road.
(38:29):
We have a culture ofadvice, is what we have.
That's why Wall Street's rich, it'scalled Assets Under Management.
Why do they have AssetsUnder Management?
Because people don't knowhow to do it themselves.
So they wax rich, insanely rich.
That's why 401Ks are so awful.
Is they wax rich withmediocre results.
playing off people's ignorance,pretending, very much pretending,
(38:51):
that they can predict thefuture better than you can.
I'll go back to Buffett's statement,they subtract value from what the
layman can do himself, for sure.
It's the only industry wecan think of like that.
Um, it's, it's terrible.
So, education is where it's at.
Advice is for people who are lazyand don't want to go to work.
I, really, what they'reasking for free money.
(39:12):
Andy, give me a stock pick.
What they're really saying isgive me money for free that
I don't have to work for.
I just got to push a button.
That's lazy.
It's not, it's not howwealth is, is built.
It's built by education,not the culture of advice.
I love it.
Okay.
Thank you.
And I'm happy I asked that and I
That's a long winded, youput a nickel in me, you
(39:33):
know, it's terrible, you
that's great.
20 answer on a 10 cent question.
I don't know It's
in terms of resources and goingdeeper, like let's because there's a
lot here and you tease the 401k, youknow, just how that's such an awful
machine that you wrote a book about.
(39:54):
It's actually rightbehind your head there.
So what are some resources folks?
Can people people can go downa little deeper with you?
And also though, you do some, some,um, workshops pretty often that
maybe we can invite folks to it too.
first edition of Form of Chaos,which is this old vintage one,
you know, the publishers tenyears later asked me to write a
new one, so I just finished it.
(40:16):
So don't go out and get thisone, it's ten years old, but the
new one's coming out, and youknow, whenever those guys, my
part's done, I've written it,so it's all in their hands now.
So however long that takes.
I would just say briefly,You know, if people really
understood, uh, the, the originsof the 401k, where it came
from, they'd be flabbergasted.
(40:36):
There was no point was there agroup of smart women, smart men
that got together, think tankor brain trust that said, let's
figure out a great way to retire.
This is not like anengineered machine.
It's more like the evolutionof a beast, like an organism
that evolved across time.
And, uh, and so I won't go into thathistory, but I didn't put it in this
(40:58):
book for fear people would be bored.
And then when I showed thepublishers the real history,
they said, Oh, you're a moronfor not putting this in here.
But it was basically, uh, youknow, a 30 or 40 year evolution to
where, uh, it was off label use.
The, the original 401ksection was 800 words.
(41:20):
And the guy who wrote it said,was a guy named Richard Stanger,
who's still around today, mucholder, but but Barbara Conable,
late Barbara Conable from New York,Congressman, got Craft in or Kodak
in his ear and Xerox in his earsaying, Hey, we want a loophole,
(41:41):
uh, for our rich executive bonuses.
You know, Carter, President Carterwas failing in his presidency.
He's got Iran and, you know,gas prices trying to do
tax reform to do something.
And, uh, these guyssaw an opportunity.
So they go to this congressmanand he hires this young lawyer
right out of Temple University,20, 20 something young guy says,
(42:03):
write this, this, uh, Well, I wasinterviewing Richard, you know, I
was talking to him on my podcastand he said, Andy, we, we put
this to the, you know, Conablewas on the House Ways and Means
Committee, he was the chairman.
And they put it to the, uh, theIRS and also the Congressional
Budget Office and the Treasuryand all of them have to run
(42:26):
analysis on it to say, whatwill the impact be to, the U.
S.
government.
How much money are we goingto lose by deferring this?
And they came back, I about fellout of my chair when he said
this, they came back and theiranalysis said if they enact this
law, the difference to the U.
S.
budget will be lessthan a million dollars.
(42:49):
There's 11 trillion dollars in 401ksjust in the United States today.
Wow,
So, Conable goes 20 yearslater, he writes this book
called Congress and the Tax Law.
So all his speeches he gave,no mention of 401k in it,
even once, not even once.
And he's at a party, and BarbaraConable's at this party, and his
(43:12):
colleagues come up and say, Hey,congratulations, you've been
nominated for Man of the Century.
Because you invented the 401k andBarbara Combs says, I did what?
Uh, what's a 401k?
He had no idea.
For 20 years it was growing.
Calls up the Ways and MeansCommittee and says, Do
I have anything to 401k?
And they say, Yeah, yousponsored the legislation.
(43:34):
He said, I'd forgottenit completely.
It was a favor to my buddies.
At Xerox and Kodak.
So, uh, it sat there fortwo years from 78 to 80.
And a guy named Ted Benna, whowas a consultant, uh, was working
with a bank that wanted to getthese big bonuses for them.
And they had this legislation calledERISA that had frozen the law.
(43:55):
And he found that little loopholeand he said, What if we gave
them bait, an employee match,And, uh, the employer match was
born, and next thing you know,people gave up their pensions.
If, if you look at a pension, uh,it's a function of the financial
statement on the cash flow side.
Income expenses.
(44:16):
Never touch theassets or liabilities.
It was a cash flow issue.
Lifetime income.
Pension.
The people didn't have thefinancial education to see that
when pensions were replaced bya 401k, that it became a balance
sheet issue, a net worth issue.
And now it's basically anhourglass that's gonna out, you
have to outlast your retirementfor the hourglass shrink.
(44:38):
So, it's a horrible deal.
I won't even talk about howmuch Wall Street makes on this.
Um, they make thelion share the money.
They make more money than the 401kguys do through compounding costs.
It's a bad deal.
So, you don't need to buy thebook, but, but, uh, You know,
it's, it's just somethingyou should investigate of
whether it's really worth it.
(45:00):
And that bait is foodthat conceals a hook.
So even though that employer matchlooks like money and smells like
money, tastes like money, thereis a hook inside of that bait
that is not seen by most people.
And if you really do the mathon it, there's a real question
about whether it's even worthit if you do the long term math.
Which I've done so, um, so yeah,resources, people can find me.
(45:23):
We could take people, youknow, I founded the Cashflow
Academy not because I wasbeating Warren Buffett in an
investing contest 20 years ago.
Uh, I founded the Cashflow Academybecause people had said, Andy,
you have a talent for making stuffpretty simple and pretty plain.
And so since then, uh,we've been very blessed.
You know, about a third of ourstudents are outside the U.
(45:44):
S.
Uh, 170 countries now we're in.
And, uh, we're very blessedto teach people as far as they
want to go with investing.
If they just want a littlebit of knowledge, we
can give them a little.
If they really want to becomea full fledged stud option
trader, we can do that too.
you know, if you, if you'dlike more information, uh, we
(46:05):
can give you a little link.
It's the cashflowacademy.
com.
You know, T H E.
the cashflowacademy.
com And then just put aforward slash in there
and then put in hustle.
We thought that'd be appropriateSo the cashflowacademy.
com forward slash hustleand we've got a fun ebook.
It's free And it'll tell you alittle bit about uh a little bit
(46:27):
about that fundamental analysisand getting out of the rat race
So it's a great place for someonejust to start if they just want to
do something for free and and uhlearn more about financial education
Awesome.
Andy.
I appreciate you so much, man.
I love the way that youeducate the pace and the style.
And I, I.
Your kids are lucky for onefor learning for so young,
(46:49):
I don't know if they'd agree.
I don't know if they'dagree with that.
they'll look back andthank you guarantee.
we get along pretty well, we
it sounds like it.
So appreciate you.
We'll be chatting soon.
And, uh, thank you very much.
Oh, Joe, I had a great timeand, uh, hope people found
value in our conversation.
Thank you so much.
Absolutely.
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