048: Why the Rich Sleep Well at Night!
The stock market has been a bit volatile lately hasn’t it? That’s what I’m reading anyway.
After all, it matters very little to me how the stock market is doing. When it comes to my CORE investments, I am not a speculator.
In fact, for most of my investments, I have learned from the ultra-wealthy to stop praying for results and to start engineering them.
If your investing involved more control and less dependence on prayer, you would probably sleep better at night wouldn’t you?
So, in a world of asset price balloons and volatility, how do you mitigate your downside?
Again, you simply control what you can control.
When I buy real estate, for example, I love the idea of appreciation. I love the idea that I might be able to sell an asset for twice the price I purchased it in a few years, but that’s not a strategy at all.
Here’s a strategy…buy something that cash flows already and increase the net income generated by that property over the next few years by making improvements and increasing rents.
After a couple of years, you have an asset that produces even more cash flow.
And, if you get caught in a balloon economy correction, then what?
For the most part, the answer is: who cares?
As investors, our goal should be to acquire assets that we DO NOT want to sell.
If you have double digit returns coming in from a property and the market doesn’t value it at a favorable price, then you just keep the property.
And when the next bubble comes and stupid money comes out of the woodwork—you sell (if you want to sell).
If you can just tweak your perspective just a little bit and start thinking like a business owner, that will help.
I own multiple businesses. How much are they worth? I don’t really know because I am not trying to sell. On the other hand, I am quite cognizant of when one of my businesses is not cash flow positive.
As an investor, that’s how you should be thinking. Even if your investment is not a cash flowing asset, ask yourself if you have reason to suspect you will come out ahead. If the only reason you have made an investment is because you think the price will go up, you are not in control.
I speculate a little bit—in the cryptocurrency market. However, I do a lot of research before deploying capital. So if you are just putting money into something without at least some sound reason for doing so, you are worse off then speculating, you are gambling.
Balloon markets like the ones we are seeing right now are very seductive. It’s the hardest time to invest frankly because you have to control your emotions. Warren Buffet famously suggested buying when everyone is afraid and selling when everyone is greedy.
We are living in a greedy economy right now.
So, unless you are finding opportunities that make sense, don’t be afraid to stash away some cash—preferable in a vehicle like Wealth Formula Banking that will provide interim growth with easy access to liquidity.
You may need some dry powder after all is said and done. After all, what goes up must come down and, while it may be a bit delayed because of the recent Trump tax cuts, eventually the chickens will come home to roost.
P.S. If you want to know how I’m taking advantage of the stock market bull run without worrying about a crash, check out this strategy!