Peter Mallouk — Exploring the Worlds of Investing | The Tim Ferriss Show (Podcast) | Transcription

Transcription for the video titled "Peter Mallouk — Exploring the Worlds of Investing | The Tim Ferriss Show (Podcast)".


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Intro (00:00)

At this altitude I can run flat out for a half mile before my hands start shaking. Can I ask you a personal question? No, I would have seen it at the same time. What if I did the opposite? I'm a cybernetic organism, living tissue over a metal entoskeleton. Lead to Paris show. This episode is brought to you by 99designs. 99designs is the global creative platform that makes it easy for designers and clients to work together. From logos to apps and packaging to books, 99designs is the go-to design resource for any budget. I've used 99designs for many, many years now. I've used them for book covers, for instance mockups for the 4-hour body which went on to become a #1 New York Times Bestseller, illustrations for my multi-volume The Tao of Seneca, and other graphic design projects. I've been really impressed by the quality of their designers and the designs that I've ended up using. Most recently I used 99designs to update the illustrations and layouts of my Five Morning Rituals ebook. 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So check it out. To see what it looks like to get your first free upgrade, please visit and click on the link in the landing page. So again, check it out. This episode is brought to you by LegalZoom, which more than 2 million Americans have used to help start their businesses. Past guests even, such as, well, WordPress lead developer, CEO of Automattic Matt Molenweg, now valued at more than a billion dollars, have used LegalZoom to help with their business needs. Specifically in his case, to form his company. But LegalZoom isn't just for launching your business. Their services include everything from helping you to manage changing tax laws, reviewing contracts, creating NDAs, non-disclosure agreements, important stuff, handling lease agreements, and assisting with really any other legal challenge, hurdle, inconvenience that typically takes time and effort away from running your business. The best part is that you won't get charged by the hour because LegalZoom isn't a law firm. So you won't be running the clock up and spinning circles just to raise your bill. Instead, they just ask you to pay one low upfront price for whatever it is that you're looking to get, a la carte style. So visit and check out their business section for all of their services. And if you want special savings, that's the terminology in the copy that they suggest. I don't know what the special savings is, folks, but it's titillating. If you want special savings, enter promo code TIM, T-I-M, at checkout. Capital T, lowercase i-m. Again, take a peek,, and enter promo code TIM. Hello, boys and girls, ladies and germs. This is Tim Ferriss, and welcome to another episode of The Tim Ferriss Show. Today's episode features Peter Malouk. Peter is the president of Creative Planning, one of the largest independent wealth management firms in the United States. Creative Planning provides wealth management services to clients, manages more than $36 billion for clients in all 50 states and abroad, and has been featured as the number one independent wealth management firm in America by Barron's. That was 2017. Peter is also featured on Worth's magazine's Power 100, featuring the most powerful men and women in global finance, the only financial planner on that list in both 2017 and 2018. Creative Planning was also featured in Forbes in 2016 as the number one RIA for growth over the last 10 years. He is the co-author of Unshakeable alongside Tony Robbins, and that is how the introduction was initially made. And we'll talk, I'm sure, more about that. Peter, welcome to the show. Thanks for having me, Tim. I wanted to have you on the show because we've had a number of conversations, and in full disclosure so people know the playing field, I am not currently a client, but I'm in a position that we have had a number of conversations about money management, and I found a lot of your observations to be thought-provoking and in some cases very counterintuitive. And I had read Money Master the Game, which is how I initially interviewed Tony, and for those who are interested, my very first Instagram photo ever was of Tony palming my entire face, which was taken after that interview. And then Unshakeable was published, and your name kept on coming up, and you do manage money for a number of my friends, but we do not have any type of financial relationship, which I think is important for me to make clear up front.

Investing And Speculating Concepts

Peter's take on investing into gold. (05:50)

I do find your thinking very interesting, and this is a world, meaning finance and personal finance, that can be very intimidating, not only for people who are trying to find their way in terms of asset allocation and looking towards retirement, but really for myself, for friends of mine who would like to think of themselves as competent in other areas or some other areas, this can seem overwhelmingly complex. So I thought we might start, if it's okay with you, and we can steer this in any direction we want to go, but with a couple of very specific asset classes or potential investments and how you think about them, because this might be a way to at least get into your thought process. And the first thing that I have on this list is gold. I do not currently own any gold. What are your thoughts on gold? Well, I don't own any either, and it's a great way to start because it's one of those hot-button issues that half your listeners are going to decide how they feel about me based on this answer alone. I think gold and bitcoin are definitely hot-button topics. So the punchline is I'm not a fan of gold, but here's the reasoning why. So if you think about investing, if you look at the great investors of history, and I think the one all your listeners would be familiar with is Warren Buffett, what they want is they want something that pays them. If you buy a building, you want to collect rent. If you buy a bond, you want to get the yield from that bond. If you buy a stock, you want the dividend, or at some point you want to benefit from the earnings of that company even if it doesn't provide a dividend. Gold doesn't provide any income, and the value of gold is that someone else will pay you more for it later. I mean, is that kind of straightforward? So there's a very speculative element to it. If we look at gold going all the way back to the Great Depression to today, it's performed worse than every major asset class except cash, which if you want to call cash an asset class. So you could have done better in the U.S. or international or emerging markets or with bonds and been collecting income all along the way. Now, not only did it perform worse than all those asset classes, it was more volatile than those asset classes. So you're taking all this volatility risk and you're not getting the reward. We don't have to go all the way back to the Great Depression. If you look at the last 10 years, same story, one of the worst performers, but you're getting all of the volatility and you're not getting any income. And then if you start to look at the tax consequences, you pay a higher tax on the gains in gold. So even if you have some modest gain to show for dealing with all the volatility and getting no income and hoping somebody will pay you more for it later, when all that happens, you're going to pay higher taxes than if you had just bought Apple stock or some other stock. Thank you. So if you had to take the not straw man position but steel man position, meaning the strongest counter argument, what do smart people or otherwise smart people, depending on how you interpret their position on gold, argue for the ownership of gold?

The steel man argument for gold. (08:55)

What would the most compelling, even if you don't find it personally compelling, but of the arguments for gold, what is the most compelling? I think when you see the smart people who are really pro-gold, their main argument tends to be the economic system is a house of cards or fraud, a fraudulent system or a manipulated system. And I don't think it's a house of cards and I don't think it's a fraudulent system, but I agree it's manipulated. I mean, the Federal Reserve exists to help manipulate the economy. That's why it's there. So I'm always fascinated with conspiracy theories that say, "Oh, the Federal Reserve is manipulating the economy." That's their whole job is to control inflation and to keep unemployment low and to do so by trying to manipulate the economy. But I think that's the strongest argument is that the country has an enormous amount of debt. The same thing is happening across all developed countries. Most developed countries have a lot of debt. Someday that debt's going to have to be paid. We're going to have extremely high inflation. Currency is going to be worthless and people will be using gold as the store of value and as currency. And let's just say that that is the case. You have to just draw that to the logical conclusion, right? So now I'm going to walk out of my front door and I'm going to go down to the local McDonald's or Quick Drip and I'm going to pull out my gold and I'm going to buy. I'm going to the grocery store with that. I'm going to go to the gas station with that. What's going to happen? I remember being in Oklahoma seeing some prospective clients and we were talking about this scenario and he said, "Now, what do you think is going to happen if the whole economic system has collapsed?" You know, stocks are worthless, bonds are worthless, the dollar is worthless and we're dealing with gold. And he goes, "Well, I've got my plan right there." And he was pointing across the room at his gun rack. That's basically the world we would be living in. I don't think we'd be too worried about what our currency is. But I would tell you that the people making the case against me would consider that to be naïve. Got it. Yeah, it is very difficult to shave off a small fragment of gold to buy your six-pack at 7-Eleven. You may be better off, like you said, getting stockpiling guns, cigarettes and tampons and other things that you might be able to trade if that's the thesis.

Gold's risk as a potential future currency. (11:41)

Exactly. I don't want to take us too far down the gold rabbit hole. Bitcoin. You mentioned Bitcoin. I might as well talk about that in cryptocurrency. Yeah, just piss off everybody right out of the box. Yeah, I figure that's a good place to start. And I know some of your friends that we have in common are very big proponents of this. They also, I should say, just as a side note, they also have tremendous informational advantage. I would agree with that. That's true. I think Bitcoin is interesting because it gets muddled with other things. So first, we have blockchain technology which backs it up. And a lot has been written about this. There are some very big real companies like IBM and Accenture investing in this, Walmart using it for inventory tracking. That technology is real. But what you hear people say is, "Oh, blockchain is a real thing and you're an idiot if you don't like Bitcoin." Well, I mean, the TV is a real thing. I'm glad it's invented. But that doesn't mean everything that comes out of it is going to work. That doesn't mean that every product that comes out of it is going to work. So blockchain is just a technology that allows cryptocurrencies to work. Now, there are several thousand cryptocurrencies and Bitcoin is one of them. And even the people that are really into cryptocurrencies as part of the future, many of them will acknowledge that Bitcoin is not the one that probably has the best profile to be the winner going forward. But nonetheless, it has a very big following. It was the first one to utilize blockchain technology, I believe, and clearly the first kind of breakout one. But there's a difference between the cutting edge and the bleeding edge. I mean, you have Apple today, you have the iPhone today. But before Apple and the iPhone, there was BlackBerry and Palm. Those were bleeding edge. They came out, they were wonderful things. And someone could have said, "This technology is amazing. You're an idiot if you think Palm or BlackBerry is not going to rule the world." But someone else took the concept and made it better. Before Google, there was Excite and AOL and Lycos. Someone else came along and improved upon the technology and made it better. And I think that's what we're going to see here. Blockchain technology, that's the real thing that's going to change the way the world works much the way the internet did. And I think we're going to move from centralized databases to decentralized databases. And I think probably some cryptocurrency of these 2,000 and however many other hundreds or thousands there's going to be in the future, probably one or maybe a few of them will wind up being used. But the odds it is going to be Bitcoin is very, very low. And so any investment in Bitcoin is to me purely speculative. Again, there's no income coming from it. We're just betting that someone else is going to pay more for it later and that this is going to be the cryptocurrency or one of the cryptocurrencies that prevails. And I think that's not an investment. It doesn't mean someone can't buy it, but it has a much more speculative element to me than being part of an investor's portfolio that's where you anticipate in the future the investment having worked out.

Advantages required for successful investing or speculating (14:57)

So if I look at people who have made a lot of money investing or in some cases speculating, but let's just for the moment assume that they're playing more a single deck game of blackjack where they can actually apply a system of some type. They're not entirely playing roulette. And those people in my experience generally have had advantages whether those are informational, analytical, behavioral. They have some type of advantage that allows them an unfair competitive edge to some extent. So it could be that they know the creators of say in the case of cryptocurrencies, different cryptocurrencies. It could be that say like a John Arnold, they just have an incredible domain expertise and level of access that allows them to work with say energy. And you can go down the line and find people in almost any sector that have these advantages. In the world in which you play in creative planning, or personally, we can make it personally, what do you feel your superpowers are or your differentiators? What are your advantages or systems that allow you to approach things differently? Well I think there are no superpowers and I think no one has I think anymore really public market investing superpowers. I think you can go out of the public markets and you can develop a very big competitive advantages as someone who's involved in investments. For example I do think that someone buying private real estate can be better at that than someone else who's buying private real estate and I think substantially so. I think when you get into the public markets, I'll tell you how I feel about investing in general and then what I think we would do that we would think would add value and make us different and I think are the reasons for our success. I think when you look at the public markets you were talking about people having special knowledge and inside knowledge and the thing about the stock market is that that doesn't exist with the stock market. So when you're talking about the stock market and the bond market, there is nobody that has that insider knowledge. Some people have it but if they use it, it's called insider trading and you can go to jail for that and so the advice would be not to do that. So the kid in his garage in Malaysia has the same information as the top analyst at Goldman Sachs because all the information is public. So we're all sharing this information and the market's become incredibly efficient especially once we got into high speed internet. Once everyone started to get information at the same time. There used to be a time where some people were outperforming the market and someone uncovered it was because they were getting issues of Money Magazine or Value Line before they came out. They were seeing them at the printing press or when they were being delivered to the magazine stand. Even that doesn't exist anymore. We're all getting the information in real time. So if you think about a company like McDonald's, you'll hear with the financial media when the market goes down, everyone's selling. There's never a time where everyone's selling. For every seller, there's a buyer. So if McDonald's has 30 million people sell the stock today, that means 30 million people bought it and there are really, really bright people on both sides of that trade and there are really, really, really stupid people on both sides of that trade. They're all sharing the same information and that's collective wisdom eventually gets the price where it's supposed to be. Now, might there be somebody who can beat this system? Statistics say that's very, very difficult. More than 85% of people trading these large stocks, which make up the huge majority of the market, that are professionals, underperform the index over long periods of time, which means underperforming somebody just buying the 500 stocks and literally doing nothing. And if you do that, you're beating the overwhelming majority of the professionals because by the time you pay the taxes and the transaction costs and you make all the behavioral mistakes human beings are going to make, you're probably going to have that drag, that friction that causes underperformance. And so I think this is a space where a lot of successful people, and you interview the most successful people there, they are, you're interviewing LeBron, LeBron's telling you why he's better than everybody else and part of it is it starts out physical, but it's certainly that's the very small minority of it. 90% of it is what he's doing to make it happen. So very successful people then go to the public markets and go, well, clearly there must be people that are better than others. Clearly I can find this guy that can trade and beat the market. And that's really just not the case. So we do to try to improve upon things is people have a lot of fear when it comes to investing. I think it starts when you're very, very young. Some people have a fear of losing their money or some people think they understand certain things, but they don't understand markets. So they have a fear of investing altogether. Some people spend all their money. One thing I've noticed from this profession is very, very few people have a very healthy attitude about money. You know that it's okay to earn it and there's a smart way to save it and invest it and it's okay to spend it. It's okay to feel good with it, not spend too much, not spend too little. Even when you look at the financial gurus, some of them are telling people don't go to Starbucks in the morning. That's a waste of money. That's silly. So what we try to do is we try to make sure that we can keep people engaged in the portfolio so they hit their goals. So let's take the stock market for an example. If somebody, you know, one of your listeners invests today, the odds of the market's going to be positive a year from now is about 75 percent. Just positive three out of four years, which means one out of four years it's not positive. But if we look at the market over five years, it's positive well over 90 percent of the time and over 10 years it's positive more than 98 percent of the time. So the longer we can stretch this out, the more probable a certain outcome is. So if you have somebody who has short term needs, they shouldn't be in the market because no matter how good we are, someone can fly into a building and everything changes tomorrow and the stocks are going to go down. It doesn't matter how good our analysis is. Anything you're going to need, you know, one year, three or four years from now, those should be in things like bonds where we expect a lower return, but we have a high probability that money is going to be there for us. And the longer term would be stocks and the very long term might be alternative investments. And to do that, you really have to know a person and what's their tax bracket and what state do they live in and do they have outside income sources like Social Security or a pension or rental income? And how much fluctuation can they handle? And when you know all of those things and how much money they need and when they need it, you can start to match the asset classes to their needs. And then they're more likely to stay on that roller coaster. And the roller coaster works out great. Never will have a good time unless you try to get off of it in the middle of the ride. And so I think if you've got a process to match people's investments to their needs, you're more likely to have a good outcome because most people, they screw things up themselves. Like if you take someone who invested before 2008, you'll hear a lot of people go, I'm not going to invest because I lost my money, all my money there then. Those of us that are older have friends that say they'll never invest because they lost everything in the tech bubble or after 9/11. Well, if you're a long term investor and you were diversified, it's basically impossible to have lost money. If you put all your money in, you're the worst investor of the last 90 years and you put all of your money into the market the day before the 08/09 crash, today you've more than doubled your money. I mean the S&P 500 has more than doubled since then. We can do that the day before 9/11, the day before the tech bubble. You have to go out of your way to have lost money. But people find a way to do it by making behavioral mistakes or working with advisors that make the behavioral mistakes on their behalf.

Different motivations for participating in markets (23:15)

So let me dig into a couple of questions related to what you just said. Maybe as a baseline, and you could help me do this also, but there are different reasons for or motivations for participating in markets. One is that you could aim to get rich using the markets. In other words, you could be aiming to be a Paul Tudor Jones or someone like that where you come in with a handful of dollars and that is how you make your fortune in the same way that someone might make their fortune building a tech startup to exit or IPO, for instance. The second would be preserving wealth using the markets in some fashion. And then you might have in third place, or not in third place, but third option being becoming incrementally richer using markets but not counting on it for that bulk of your principle.

Are you hiring a money manager, or a wealth manager? (24:16)

The way you approach things would seem to depend very heavily on which category you fall in. But to come back to, and I'm just talking through also to clarify my own thinking on some of this, how would you then, if you have, how do you assess, let's just say someone's considering creative planning and then firm X, firm Y, firm Z. If the argument can be made that you have to assess over the very long term, how can one separate the good, the bad, the ugly, and the excellent in terms of wealth management over a shorter time horizon? Does that make sense? Because one might be inclined to say, "All right, I'm going to take my 100 units of capital, split it into 20 units, and give it to five different wealth managers and see how they do over a three-year period of time or whatever the period of time might be and then assess." But if each of those wealth managers is saying, "You have to actually stick with us for the long term," then you end up in a bit of a pickle from a decision-making standpoint. So how should the investor think about that scenario? Well, I think I would start with just defining a money manager versus a wealth manager. So let's say that somebody is, they believe that they can beat the market by stock picking or market timing. So market timing being you put your money in the market, you think it's going to go down, you take it out, you put it back in, or you want somebody who's going to trade stocks and try to beat the market. So that would be a money manager. You might say, "Okay, I'm going to go higher, you know, money manager A to buy my large cap value stocks and money manager B to buy my bonds and money manager C to buy my international small stocks." And you might have them all managed in the same space and compare them. And to do this, you have to believe that these managers are going to add value by after fees and taxes, trading stocks in a way where they beat their respective benchmarks. Now, in the alternate world of wealth managers, wealth managers really sitting with a client and looking out at the universe of money managers and deciding with the client, "Okay, where are we going to put our stocks? Where are we going to put our bonds? Where are we going to put our international stocks?" And so the wealth manager is helping with all of the portfolio allocation. They might manage all of it in-house, they might outsource it, and they might also give advice on other things, whether it's tax or insurance or risk management, whatever. They'll look at a bigger piece, and that's more of what a wealth manager would do. Within those worlds, you have a very big debate between passive management and active management. So active management would be Paul Tudor Jones, hedge fund managers, mutual fund managers, severally managed account managers, where you're paying somebody to try to beat a respective index. So an international manager would be trying to beat the international index. A large-cap U.S. manager would be trying to beat the S&P 500 index, which is just 500 of the biggest companies in the country. I think that what you're seeing in the marketplace is more and more money is moving from active managers to passive managers, meaning instead of trying to hire somebody to beat the S&P 500, I'm going to buy the S&P 500. And the question doesn't become, which manager am I going to pick to trade these? It becomes, which wealth manager am I going to hire to help me determine how much should be in large-cap U.S. stocks in the first place versus international stocks versus bonds versus real estate? And so we would be in the group where we're wealth managers looking at everything. We don't believe that if we pay somebody to trade stocks, they're going to do better than the S&P 500. So we're going to buy the index there, and we're going to buy it in several other spaces, and we're going to pick our battles on where we think we can create outperformance or what the industry calls alpha. And we would look at alternative investments for that. We think you can do that in private markets where everybody doesn't have the same information and where if we look at a management team and their education, their credentials and their experience, we feel we can extrapolate that they might actually be better than another team. So if you look at alternative asset classes, it would be things like private equity, private lending, private real estate, things that fall into categories like that, I think are where we would try to get our alpha for the clients. Gotcha. So let's talk about the alternative then for a second. In the alternative investments, what are the alternative options where you like to go fishing or at least exploring?

The basics on alternative investments. (29:12)

Is it a short list? Is it real estate investment trusts, private equity, master limited partnerships? What type of alternative options do you feel are most viable? So I'll start by defining it for your audience because it's a question I get a lot, and I always correlate it to public markets. So you can buy a publicly traded stock, which would be like Nike or Google. You can lend money to a corporation or a government. That would be a bond. If you loan money to the federal government, it's a treasury. If you loan it to a county or a state, it's a municipal bond. If you loan it to a strong corporation, it's a corporate bond. And if you loan it to one that's not doing so great, it's a high yield bond or a junk bond. And of course, there's publicly traded real estate. So someone can go online, open a custodial account at a place like TD Ameritrade, Schwab or Fidelity and type in a couple things and five minutes later own a portfolio of all those things. Each of those things has a private alternative, meaning they're not trading on the public markets. And they follow a different set of rules. They're less regulated. You usually have to be an accredited investor with a million or more to be able to access those. Some of them require that you're a qualified purchaser with five million or more to get into them. But instead of publicly traded stock, you could invest in private equity. So there might be a fund that one fund we use bought Dunkin Donuts and then took a national and sold it. And that was one of dozens of companies they owned. So that's what private equity does. The private lending lends money to businesses, private businesses that are growing. And then there's private real estate where you have somebody raising money and buying apartment complexes or commercial buildings all over the place. And alternative investments, the advantage is we do expect you'll probably do better than the public version of that investment. And part of it's the illiquidity premium, meaning the money is tied up for a while. So if you go put your money in a private real estate fund, you can't just exit the next day because the gal you gave the money to is running around buying buildings. She can't sell a building because you feel like taking the money out and going on vacation. Same thing when you go into private equity or private lending, you're making a commitment to give these funds your money for five years, 10 years or more. So they can go buy all these businesses or buy all these properties and then sell them all. And then the fund closes. Those are the most common alternative investments. And we do think they're the type of company that's running those and their experience. We think that matters. And we think that gives an edge from a performance perspective. Now, basically anything that's not publicly traded is an alternative investment. So if one of your listeners owns a duplex that they're running out, well, that's an alternative investment. There are funds like life settlement funds that buy life insurance policies. And I think these are kind of interesting. There's this whole market that started and it started in a terrible way. I mean, back in the 80s, people were buying life insurance policies from young men that were sick with AIDS. And what I like about the happy ending to that story is, of course, they came up with a cure for that. And all the people that had thought they were buying these policies were going to cash in and wind up going bankrupt. So I like the way that story ends. But what happened is some states started regulating this space and saying, look, if you want to sell a life insurance policy or buy a life insurance policy, you have to go through a regulated process. And once that happened, some actuaries came into the space and private firms came into the space and started buying policies. And about three-fourths of people over the age of 70, they wind up surrendering their life insurance policy. They go back to wherever they bought the policy and go, I don't need this anymore. And the insurance company goes, great, we'll give you the surrender value back. So someone might have a $3 million policy that was going to pay to their family, but now they're 70 and their house is paid for. Their kids are out of college. They don't need that anymore. But they want their $100,000 cash value back because they can enjoy it over the next 10 years or 20 years of their life. Well, instead, these life settlement funds come along and go, hey, we'll buy that policy from you. And they might pay $5, $10 or $12 times more. You know, one of the funds we use is playing about 12 times more for that policy. So they might give that guy $1.2 million for that policy. So that guy's thrilled. You know, they're running off with their money. They're getting way more than they were to get from the insurance company. But now the fund owns, you know, maybe a thousand plus life insurance policies and they're going to collect all those death benefits and they distribute it to the people that invested in the fund. So that's also an alternative investment. It has nothing to do with stocks, bonds, real estate, but it's a little different. And people like investments like that because they don't behave the way the stock market or the bond market does. They don't care who's the president. They don't care what's going on with tariffs or who tweets what. This is actuarial science as far as how this fund is going to do. There's a fund that buys music royalties. So it might buy a catalog or songs from different artists and then own the future royalties. And your performance is dependent on do people still download those songs five years from now, 20 years from now. But the alternative investment space is very interesting, governed by a little bit different set of rules. And I think that's where higher net worth people can get an edge beyond just going with needs-based investing.

The allure and downsides of real estate and when to say yes or no to these investments. (34:45)

You mentioned real estate a few times, and I'd like to touch on that because this is an asset class, depending on how we want to look at it, an asset class that I think a lot of people feel a certain degree of comfort with, rightly or wrongly, because it is very tangible. And some people would argue that real estate is a better investment than the stock market, or they maybe intuitively and wrongly feel that is the case. What is your perspective on real estate? And I know that that is a broad term, but maybe you could expand on your thinking as it relates to real estate. Well, I like real estate as an investment, particularly if it's diversified. I do think that in the private side, expertise makes a very, very big difference. But I will also tell you real estate, in my experience, is a tremendously overrated investment. And I have some clients that are extremely wealthy from running real estate, but I also have some that went bankrupt with their private real estate. And I'm going to give you a couple of reasons I think it's overrated. I think it's misunderstood. I think one of the things is, if you look at a business, look at how big business works. If you are one of the Fortune 100 companies, I'd rather own the company than the building that they rent. And so would they. Most of these big companies, they sell off their real estate because they feel it will drag down their rate of return. When a private equity firm goes and buys a business that has 100 million of revenue, they don't want to buy the building. They're very happy for the owner to keep the building and pay that owner rent because they think the real estate is going to hurt their rate of return. So if you really look at the very big, sophisticated money, they'd rather own the business that's in the property than the property that the business is in. Now, second, I think real estate magnifies wins and losses. And so you're going to see a disproportionate amount of winners. So let's say that you're going to go buy a duplex and it's $100,000. That doesn't exist where you live, but where I live it does. So let's say you're going to buy a $100,000 duplex and you just put down $10,000 and you borrow $90,000 from the bank. And let's say that you rent out the duplex and the real estate market's good, interest rates are low, and now your duplex is worth $110,000 and you sell it. Your gain is 100%. You put $10,000 in and now you're selling it, you're paying off your loan and you have a $10,000 profit. So you've doubled your $10,000 investment. That use of leverage magnifies gains and makes people think the investment is better than it is. Now, the reason you see a tremendous amount of bankruptcies in real estate is it works in reverse. We saw that in '08, '09 during the most devastating example of this in US history where you put $10,000 in and you borrow $90,000 and you own a $100,000 duplex and then the market crashes and your $100,000 duplex is worth $90,000. Well, you've lost 100% of your investment when you sell, right? So you're magnifying the wins and losses. And you can do that with anything, but people are very comfortable doing it with real estate. For example, I could take a portfolio with $100,000 and I can go borrow against the portfolio. I could borrow 50 grand if I wanted to against the portfolio and invest that money and I'd have a $150,000 portfolio with a $50,000 loan. Most people would go, "My God, that's risky. I mean, I'm not going to borrow money against my portfolio to buy more stocks." But that's basically what we're doing when we're using leverage in real estate. We're really counting on the value of real estate to hold. And then third, I would say the thing about real estate is unless you are tremendously diversified, real estate is an investment where everything is okay until it isn't okay. I mean, when it goes bad, it can go bad very, very quickly. So in the community that I'm in, there was a family that became extremely wealthy with shopping malls. And then all of a sudden, those weren't in favor and the story doesn't end so well. It's the same thing with how neighborhoods that you might have been to when you were growing up, if you look at the complexion of them today, some of them hold up and some of them, all of the real estate may as well be worthless. I mean, and so I think it's a deceptive investment. You feel this security because you can see it and you can touch it. A lot of people get rich in it because of leverage. We tend to ignore the people that go bankrupt. And we tend to not look at those parts of town that didn't turn out so well that were pretty good parts of town 10 or 20 years earlier. So again, I like it. I come across like I'm not. I just think it's overrated. We own a lot of real estate for our clients, private and public at Creative Planning. I personally own private and public real estate. I like it as an asset class, but people really need to focus on diversification and understanding where it fits in. If you own a public real estate fund and you own a stock fund, your expectation should be that 20 years later you've made more owning the companies than owning the buildings that they rent.

Art investments. (40:07)

Thank you for that. I want to ask about another asset class that may make me immediately seem like a complete idiot. We'll see. Probably not the only thing in this conversation that will make me look like a complete idiot, but I'll just start tallying those up on one side. But for similar reasons, the tangibility, the personal concrete nature of this class, I want to ask about it. And then jointly with real estate will lead to a follow-up question that I have for you. Artwork, investing in art, what are your thoughts? Does it have a place? Is it overrated, underrated? How would you encourage people to think about that? Or how do you think about it? Well, I think when you look at things like that or collectibles or cars, not a car you would just go by to drive around, but the cars that are more collectible oriented, to me those are like collecting coins. We're counting on there being a marketplace that exists for it, and I think we have a centuries-old legacy of that being the case with art. And so I don't consider that a fad by any means. And there are funds that specialize in owning art. We wouldn't use them with our clients because we really want things that produce income. So to me I consider there are a lot of ways to make money, and I'd rather make money in a way where that I've got the hammock, the safety net there to back up into. I like that if I own bonds or stocks or real estate that if things decline for a prolonged period of time I can still collect money. I can still collect, if the housing market goes down I own some duplexes, keep them running I'm still going to collect the rent. Whereas if I've invested in art and the market turns against me for a decade or two and I want to sell something, I'm not going to make any money in the meantime. But for someone who, I like that kind of investment if you also have a passion that goes with it. So if somebody likes art, they have enough money, and I mean a lot of money, millions of dollars to where you're moving. You don't need this money to be financially independent. If it works out, fantastic. If it doesn't work out, it's not going to kill you. The collectible markets can work, but they have a little bit more speculative element to them.

When assets without intrinsic value are the best investment for an individual. (42:31)

I'm going to turn this into a bit of a personalized therapy session for a moment. The reason I bring up real estate and art is that they coincide with, or have similarities to, for me, early stage tech investing in the sense that one of the primary bugs, which is illiquidity, has turned out to be a huge feature and benefit for me given my psychological weaknesses and propensity to impulse sell or panic sell. Does that make sense? It does. So I have been able to guard against my lesser behaviors by having certain assets, like early stage tech, which I do not recommend to everyone by any stretch of the imagination, because I've done a tremendous amount of upfront due diligence and analysis or had superior information, have made investments, and then been completely prevented to my benefit in most cases from selling those assets until they get to a certain escape velocity. Similarly, if I buy real estate, and I do own real estate, the fees and complexity involved on some level with unwinding those versus going to a brokerage account and just hitting sell on my public equity that I might own guards against one of my most financially self-defeating behaviors, which is panic selling. I suppose this could lead us into a bunch of different territory, but I'm curious to know when things that, broadly speaking, don't make financial sense if we were computers looking at asset classes and so on and so forth, actually make sense for individual clients because of their frailty in being human or weaknesses like those that I outlined. The answer might be there's a better way to prevent me from making stupid mistakes, but I'd love to hear any and all thoughts you have on that brain vomit that I just threw up on you. I'm so glad you asked this. I wouldn't have thought of it as a question, but I would say that earlier I was talking about I think that the things that derail people are exactly what you talked about, their behavioral, and those really tend to come from uncertainty. If you don't know what's going on, uncertainty leads to fear. If you go to a doctor and you have something that they think might be terminal but they're not sure, you're going to be scared out of your mind. Or the doctor's trying to figure something out, you're not going to feel good. The more uncertainty there is, the more fear you're going to have. I think that's what you're talking about with your experience with the markets is you're uncertain about outcomes, it makes you scared, and then what do you do? You might sell because it's so easy to sell. What helps alleviate uncertainty is education. The more informed you are, the more you understand how the investments you're in work and what their time horizon is like and how frequently corrections and bear markets are and how rapid things can go down but how rapid they come back. The more educated you become, the more certainty you get. The less fear you have, the more likely you are to stick with the plan. But despite all of that, even the wealthiest people or the most educated people get scared in down markets. I mean, I'm seeing it today as we speak. For your listeners who listen to this later, the Dow is probably about 4,000 points off of its high and that freaks some people out. Well, I just last week saw someone who was running a state pension in an interview say he felt like he was paying a premium for alternative investments so he could be blissfully unaware of how poor the investments were doing in a down cycle. And I think there's something to that. I remember in the '08-'09 crisis, we meet with all of our clients to do a complete review on top of all of the things we're doing throughout the year and we go through everything on their net worth and then we rerun the plan, make sure we're on the same page. And we go through and we update all of their investments and we're showing them this investment in stocks is down, this investment in your publicly traded real estate is down and your bonds are up or whatever it is. And then we'd get to their house and they'd say, "Oh, my house is the same value." And then we'd get to that duplex they own that they ran out and be like, "Oh, that's the same value and that painting in my house, it's the same value." Of course it's not the same value. If they wanted to go sell the house or the duplex or the art, they'd actually have to take a bigger discount most of the time than the public markets. I mean, there was literally no buyers for any of that. You weren't going to go sell a million dollar coin collection in the middle of all that. And so not having it updated every second of every hour of every business day allows people to be blissfully unaware and not make those behavioral mistakes. And so I actually do think that's a positive. When we have our higher net worth clients that have alternatives, I like the alternatives because I think they're going to get a little bit better return. I think they may have a little less volatility, but I also think it speaks directly to what you brought up. It brings them peace in that it's not priced every single day. And so every single time the markets trend down, they don't have to be reminded that they're seeing their public real estate down in their account, but they're not seeing the private real estate down because it's not repriced every day. And it really does help people not make long-term mistakes.

Timing the market. (48:19)

If we're looking at avoiding mitigating against long-term mistakes, suppose we could also talk about short-term mistakes. Considering how reluctant I am to invest in public markets, and one could argue stupidly so, I've read a tremendous amount. It's not that I'm uninformed as it relates to the trending over time of, say, the equity market. But what catches me, and you noted in some of our exchanges prior to this conversation that in my podcast with Howard Marks, legendary investor, that I brought up fear of losing money. And it seems to me, and maybe you can talk some sense into me, but on one hand, you can argue or one could argue that it's not timing the market, but time in the market that makes the difference. And that the time to get started is now. On the other hand, couldn't one also argue that while it's very difficult, if not impossible, to time the market, it is very, very possible to mistime the market, not by design, but by accident. And if you come in at the top of the market, I know you talked about the day before 9/11, etc., the recovery time in some cases isn't necessarily trivial. So, is there, and just follow me here, this is going to be a little long, but if there are smart people, and maybe this is just like the guy with the sandwich board on the corner saying the end is near, he's eventually going to be right, so who knows, maybe this is one of those cases, but you have some very smart people who historically hold a lot in cash for when there's blood in the streets. At least that's my understanding, like a Seth Klarman or others. My inclination would be, if you tell me that the markets are down one out of every four years, is to wait for the canary in the coal mine or some type of indicator, maybe it's obvious, maybe it isn't, that we are down, and then hold on to cash until that point to invest when the market is not necessarily at its all-time low for the next couple of years. At least that's my expectation, that the market is down one out of every four years, maybe it isn't, that we are down, and then hold on to cash until that point to invest when the market is not necessarily at its all-time low for the next couple of years. The reason I bring this up is that it seems to me that the function of investing is to ultimately, on some level, improve your quality of life. If you invest in vehicles or assets that cause you heartburn and anxiety to the extent that you have trouble sleeping, even if they have a really high IRR or whatever, it is a bad investment from the standpoint of quality of life, if it's creating a lot of additional stress. I have no trouble sleeping when my money isn't cash, even though it's getting slowly eaten by inflation like termites. In an ideal world, I would be able to wait until everyone thinks that we're going to Mad Max and then dump money into the market, much like Howard Marks did in the last, say, 15 weeks or so of 2008, when he was putting in $500 million a week into distressed debt. Where am I going wrong here? How should I think about this, or how would you add to that? I know that's a ton that I just threw at you, but if you could do your best.

Build your wealth incrementally. (52:08)

Well, I would say that I would start with I would agree completely that nothing is worth losing sleep. I mean, money is just something that enables us to do other things that presumably we want to be happy. So there's no sense in being miserable investing it so we can supposedly do something else. So I'm not a believer that if somebody comes in and they have enough money where they could be independent for the rest of their lives, living off bond income, and they tell me, Peter, I'm 70 and you're not going to be able to make me comfortable and I'm going to lose sleep if my portfolio goes down 5%, I'm not going to talk to that person in the stocks or real estate or alternative investments. They should be in bonds because they have all they need. They're not telling me their goal is to have the biggest pile of money ever or to be like the greatest steward of their money ever for the next generation. They're telling me I want to be happy with what I have. I don't need to hit even a double, let alone a home run. And I want to sleep at night. Sleeping at night trumps everything. You have to absolutely be comfortable with what you're doing. So you're so young that I would work on somebody like you and say, well, let's wait a second because we've got a couple choices here. One is that you get comfortable with investing, which means you're going to get there. You need to get more educated about how public markets work so we can make you more comfortable so you could have more certainty about it so you can be a long term investor because you are going to be invested for many, many, many decades. And it's extremely likely that's really going to work out for you. You only have two other choices. One is to own cash, which is a complete disaster. I mean, that's not it should not really be an option. And the third is to add tremendous complexity to your life. So you say I'm going to buy all these different properties and all these different art thing and you're going to wake up one day and you're going to own a whole bunch of all this crap. It's going to be on your net worth statement. I can tell you the cycles and I've learned this from my clients and I've changed my behavior because of it. You know, as people start to accumulate wealth, people come to them with deals and they get excited that, hey, these deals are coming to me. One Indian client translated an Indian saying to me, he said that his dad had told him that the saying money pulls money and he didn't know what it meant until he had money. And then all of a sudden people were coming to him with deals that seemed great and it became easier and easier to make money. I'm sure that's the case for you. And so you wind up doing all these deals and you find yourself in real estate and venture capital and private deals and you're growing, growing, growing. And then a friend dies and another friend dies. And then you go, oh, my God, look at what look at what the survivors are dealing with here, what a mess this is. And you start to unwind all of these things. So you spend the first 20 years of being rich, accumulating all this stuff, and then you'll spend the next 20 years, if you're like at least the clients I've observed, trying to get out of one thing after another to simplify your life. And somewhere along the way, you'll wind up with 20 different tax forms and all this stuff that you don't have to do because you chose not to get educated. And I think that let's just use one education. I mean, you obviously you highlighted its time in the market, right? I mean, I know Howard Marks said that Warren Buffett said that that's a very obvious thing. You don't expect that you're going to go to the store and pay less for a Coke or less for a candy bar 30 years from now than today. You know, you probably think the candy bar is going to cost triple. But somehow you have this fear that the stock is not going to triple. Right. And of course, those two go together. Part of the stock market returns the dividend, part of its earnings and part is just inflation. I mean, so we know we're going to go to McDonald's 30 years from now and the Happy Meal is going to cost more and the value meal is going to cost more. But we're scared to own the diversified stock portfolio. And if you're diversified, you know, we should feel very comfortable. So you might, you know, you're in Austin, it's a great restaurant town. But, you know, the world moves quickly. You know, back in the 70s or 80s, if a restaurant opened and it wasn't very good, someone would go, oh, you know, this restaurant might close in a few years. If you go to a restaurant now and it's not very good, you wouldn't be surprised if it was closed in six months. I mean, the world just moves really fast now. And if I said, hey, Tim, I want you to pick five restaurants in town that you think are amazing and you had to put all your money in them and that they're going to be here 30 years from now, you might think twice. I mean, it doesn't matter what the restaurant is. I mean, I know you've got a tree like this. I would definitely think twice, especially with restaurants. Well, but I mean, you would be like, no matter how good the restaurant is, 30 years from now, things will have probably changed. But if I were to say, look, you can own the restaurant index. So we're no longer betting on, you know, which five restaurants are going to be here 30 years from now where you could lose your money. We're just betting that there are going to be restaurants here and they're going to be charging more and making more than they do today. You'd be much more comfortable with that. And that's very much like diversified stock market investing. And so the more you can learn about that and when you're going to need the money and that, hey, if you're in the stock market and it's down, probably that those private investments you have that aren't repricing every day, many of those are down as well. You can start to build at least some portfolio that you can start to get educated on. You go through your first correction, you go through your first bear market. And then if you're young and you're really smart, you can really tell the very smart investors they like down markets. Right. Because if you're accumulating, you don't want the market to go up. You want the market to be up later when you need to take money out. But if you're accumulating, you would like it to be down. You want to be buying everything when it's on a discount. So my clients that are sophisticated, they're accumulating now, they love this downtrend. They feel like they're buying more and more on sale. Or clients that have a lot of bond exposure and they can sell some of their bonds and buy stocks, they love that down market because they see it for what it is, which is an opportunity.

Market Diversification & Corrections

Why you should never sit on the sideline in a down market. (58:08)

Quick question there. Do you know any people you think are really smart who do not dollar-cost average in on the way down in that camp, but who instead sit on the sidelines waiting for some indicators that that is not a bottom? I'm not saying they predict the absolute bottom or the relative bottom during that period of time, but do you know anyone you consider smart who does not dollar-cost average in on the way down as a way to, I think you put it in the acquisition phase? No, I think it's a loser's game. I heard John Bogle, the founder of Vanguard and Indexing, say that his entire life he never found somebody that was able to do that effectively. He's never found the guy who sold when it was high and then bought when it was low. I've been at this now 20 years. We have over 30,000 clients. Many of them have self-directed accounts. I can tell you I've never seen it done. I've never seen somebody go, "The market's high now," and sell and then feel comfortable buying when it's low. I've seen people who are invested and they stay invested and then they are more aggressive about adding to the portfolio when it's down. I consider that a much smarter approach. The guy who goes today, "Oh, things aren't easy. I'm going to go to the sidelines," if the market gets cut in half, that guy usually doesn't have the intestinal fortitude to go in. There's all these other reasons that things are horrible, and now that narrative that caused them to exit in the first place is reinforced. They have even more reason to stay on the sideline and they usually don't get back in in time. I asked a question earlier about, "Well, why don't I wait for that one in four years for that pullback?" We could use the last 10 years as an example. The market can go from Dow 7,000 to 26,000 like it did without having a bear market anywhere in the middle of it for you to invest in. If the year ended today on the 21st of December in 2018, the market would be down, but it's nowhere near where it was nine years ago. If you had gone to the sidelines in '09 and said, "I'm going to accumulate cash until the market pulls back again," you would have waited 10 years for the next real big opportunity. Now the market's pulled back, but not back to where it was. I think this is the risk that people that are trying to time don't understand, which is the risk of being out of the market is greater than the risk of being in. Let's say you have a million dollars and you go into the market today. One of three things can happen. The market can go up. We're high-fiving. We're having a great time. We're all happy. The market can go sideways, and you're going to earn a couple percent. That's not the end of the world. We're getting our dividends. Now the market could go down. The worst thing there is you collect dividends, and then the market comes back. We've had dozens of bear markets, many, many, many more corrections. They happen on average once a year where the market drops, usually on average about 13.5 percent or so. They've all ended the same way. The markets eventually recover. You collect your dividend. You wait. That's your worst-case scenario as an investor. If instead you're in cash, well, if the market goes down, we're not getting the dividend, and you're probably going to want to stay in cash. If the market goes sideways, we're not collecting the dividend. If the market goes up, we may suffer permanent loss of opportunity. So if the Dow goes from 22,000 to 30, the market may never pull back to that 22. It may never come back to that level, that entry point that you had been afforded the opportunity today. When you're on the sideline, you are risking the market getting away from you. When you're in, it can't get away from you. It can temporarily downtrend with you along with it, but you can't miss that opportunity, which is why anybody that is looking at the odds of investing, they're going to be invested sooner rather than later.

What Jason means by diversification in public markets. (01:02:12)

Gotcha. When you say that the word diversify or diversification has come up a number of times so far, am I accurate in saying that you have a diversified public portfolio to maintain or incrementally increase net worth while searching for alpha primarily through alternative investments? Is that the general approach? And then I have a question about what diversification means. But is that a fair synopsis of generally what you are advocating with your clients? Yeah, what we're trying to do is we're trying to perform better than they would on their own or with somebody else by being extremely disciplined, placing tax trades, being aggressive buyers, owning asset classes that match up with their needs. And diversification to me means you try to reduce dramatically company risk and industry risk. When you're an investor in the stock market, let's start with that. You've got three big risks. One is company risk. So you buy a stock and it turns out to be Enron or WorldCom or Lehman Brothers or Polaroid or whatever. It just goes to zero. That's company risk. There's industry risk. If you were in the mortgage backed securities market in '08 or if you were part of the internet craze of the internet bubble, I mean, industries go away sometimes and never recover. And then there's market risk. If you're very diversified, you're across a bunch of companies, a bunch of industries. If there's a Lehman Brothers in there, if there's an industry in there like not doing well, you're going to survive. And the market risk, it's a temporary risk. The market will go down and then it should come back up. And we can diversify the market risk further by owning other markets like real estate and bonds. And then we can get extremely diversified by going into the alternative investment space. And that would be an investment approach. You said something a little earlier that people have different purposes. You know, some people are trying to hit a home run and some people are trying to invest. I would say investing is what I just described in the markets. You have to approach investing saying, this is not going to do as well as my day job. So when I'm sitting with a business owner or whether the guy owns a restaurant or the gal owns a consulting firm, I tell them, look, you're making 30% on your money with your job or more. You are not going to make that in the market. Don't come to me if you think that's what's going to happen. That's just not what happens when you invest this way for the long run. Now, you can make a business out of investing in these markets. So you could, for example, be a real estate developer. And yeah, you're going to do much better than just somebody who's buying a diversified real estate portfolio. But now you're in this full time. Right. Same thing with Ray Dalio on the stock side, if you want to buy into the idea that maybe he can win over time, it would be because it's a full time job that might use a different approach than a typical disciplined investor would use. So I think you have to come into a portfolio like someone like you is going, I've got my day job. I'm doing all these things and taking all these risks and using my time to make a lot of money. And I'm going to invest in a way where I'll do better than cash, but I'll never make what I'm making with my time and effort and name and everything else. But I'm going to do better than cash. I'm going to do better than bonds by having a disciplined, diversified approach.

Can someone be over diversified? (01:05:41)

And does diversified in this case, because people often think diversified means buying a lot of stuff, right? But if you buy a lot of stuff, and to anyone who's a professional out there, obviously, I'm mostly talking on my ass right now. But if everything is correlated, even though they are different words or different asset classes, then you may not be truly diversified. So if you look at, say, David Swenson, or some of these other guys, they might talk about US stocks, international stocks, emerging market, REITs, long term US treasuries and tips, or something like that. Or Dalio, 15 uncorrelated bets, right? Something like that. What does diversified mean to you? What are the characteristics of a diversified portfolio? And is it possible to over diversify, where you're just spraying and praying, in a sense? Yeah, I think diversification is misunderstood. Sometimes people think, like you mentioned at the very top of the podcast, "Hey, I'm going to hire four money managers, and I'll be more diversified than one." That's not necessarily the case. Maybe all four money managers are trading US stocks. You'd have been better off with one wealth manager who owns four different asset classes, right? So sometimes diversifying money managers doesn't do it. You might buy five duplexes in Nashville on the same block. Well, you're not that diversified. You have the risk of the neighborhood and of the city and of the state. I'd rather own five different properties in five different states to get a little bit more diversified. Certain asset classes are correlated. Your real estate's about 85% correlated to stocks, and the US market's 80-90% correlated to international markets. Bonds have a little bit of correlation. So you want to add things that don't necessarily—you want to remove the concentrated risk. You don't want to own the five duplexes on one street. You don't want to have five money managers doing one thing. You don't want to have five stocks and hope one's not a Lehman Brothers or one or two industries that have 100 stocks. If you own 100 stocks and they're all biotech, you're not really diversified. You want to own asset classes that behave a little bit different in some cases, like US and international, and that behave a lot different over periods of time, like bonds relative to those things, or maybe art would or life settlements would or music royalties would. So the extent you could have those uncorrelated assets, it dampens the ride, which makes it more likely you're going to get where you want to go. And most importantly, it avoids the number one thing everybody worries about, which is blowing everything up. You don't want to do everything right for 30 years, but then the stock or the industry or the real estate market you were in, something unforeseen happened, and all of a sudden, nothing works for you. You are eliminating the chance of the grand slam when you do this, but you are almost eliminating the chance of the strikeout, which is a very important thing for an investor.

Facing a potential major stock market correction. (01:08:40)

Let's run a hypothetical, if you don't mind. This is going to, again, probably make half the people listening just facepalm as I say this. Let's just pretend, well, it's not pretend, it's real. Let's say that I am seeing things in the private markets, which give me pause and make me think that there's a possibility that winter is coming, so to speak, as it relates to public equities specifically.

How Ray sees things as a private vs. institutional investor. (01:09:09)

If I think that there's a decent chance of a fairly major extended correction in, say, the next two years, if that's my assumption, whether you agree with it or not, how would that inform my decision-making about deploying cash? How would you think about it, if that is something I take to be likely true? There's a saying a famous economist said that the market can stay irrational longer than you can stay solvent. In other words, it's just very hard. Even if what you're touching on, I think that's interesting, is returns in the market over the next year or two are not really dependent on valuations, and that really surprises people. So something can be overvalued, but then not come down in price. Instead, the earnings grow into it. You can own a real estate property and maybe it seems overvalued, but instead of the prices coming down, the price holds and over time the rents come up. So not necessarily does the price of the property have to come down. It's the same with the stock market. But if I take your premise that you have a high degree of certainty that the market's going to pull back 18 months from now, well, of course I would say, well, just wait for it to pull back and then go in. I've just never met the person that can do that, no matter how smart they are. And look, we're sitting with some of the wealthiest people in America, and I'm sitting with some of the most sophisticated money managers in America, too. I just don't live in a world where the person can predict that. I listened to your podcast with Howard Marks, and he said, "We're invested, but we're cautious." Well, I mean, that guy's a genius, but he's invested. You're either in or you're out. And so I think that we're all always looking to the future and wondering what's going to happen, but if you look at the most successful investors like Warren Buffett, they're engaged. They're engaged all the time. That's how they got where they are. I think it's important to note, though, that also there are different economics at play and different incentives involved in some instances when you're using institutional money or playing with a 2 and 20, meaning you have management fees and assets under management are a component of your business versus playing with your personal capital. I know a lot of venture capitalists who invest with one very distinct style or approach in their venture deals but treat their personal finances very, very differently. There's no question. Like a lot of the venture capital and private equity people, I know they're invested almost entirely in bonds because they feel like they're in an extremely high-risk game day in and day out with their side of things. You look at Swenson, you're investing Yale's money, you're investing for decades. You're not really investing for five or six years from now, but what I would say is the average American investor, whether they've got $100,000 or $2 million, they are investing for decades and they should be thinking that way. Even the person who's retiring tomorrow who's 65 is investing for decades. And so if we have an expectation that stocks are going to earn 6 to 9% or maybe 10% over the next 20 years and real estate is going to earn 5 to 8 and bonds are going to earn 3 to 5 or whatever it is, that person that's 65 can't say, "I need this money now. I need to be conservative." They need the money for the next 25 years. And we need money that's available to them over the next five and we need money that's going to be available to them 20 years from now. And so I do think that diversified multiple asset class leaning on a publicly traded portfolio, that really should be the core for the typical investor. And I think when you start to leave that, you are taking extra risks. When you go to these alternative investments, whether it's private equity, private lending, private real estate, we're now giving custody of our money to somebody else. We don't have total transparency. We can't exit whenever we want. We're much more susceptible to fraud. It's just there's a lot more unknowns in that space. So if you're very wealthy, you're going for better returns. You don't like to see the public markets all the time. I mean, there's a case to be made for them, but I don't think exclusively, not even for the typical American diversified portfolio, still the core building block. Let's talk about information for a second and just resources because I've read Unshakeable, of course, which I greatly enjoyed. Money Master the Game, I have two episodes with Tony about that, which I quite enjoyed as well. What other … I know you've written books, I mean, The Five Mistakes Every Investor Makes and How to Avoid Them. Besides those books, and we're going to come back to that title I just mentioned in a few minutes, but what books or investors who have writing, who have something accessible to the people listening, do you … have you found particularly valuable or thought-provoking? Are there any particular books or annual letters or anything that comes to mind? A book that I read when I was very young that I thought really kind of explained the investing world in plain English and it was in pretty short was Common Sense on Mutual Funds by John Bogle and it kind of goes back and it compares all these things we talked about, the benefits of timing versus not timing the market and of stock picking versus not stock picking and how to choose an allocation and it was just so straightforward, I really think that's a great read for somebody just trying to understand the basics. And so I always tend to recommend that as one of my recommendations to people when they're looking for a book to really explain things in English.

Investing resources. (01:15:33)

What about particular investors? Are there any particular investors who come to mind, who's thinking you really admire? Aside from Buffett and Munger because they're always on the list or they seem to be, are there any other … they could be lesser known names, they don't have to be, who come to mind who you find particularly insightful or thought-provoking? Well, I think this might be too much in the box given what you laid out but he was the mentor to some of the people you mentioned. I mean, Benjamin Graham's The Intelligent Investor is a phenomenal book as well and I really enjoy that one and I would recommend that to your listeners as well. Got it. What is the best or most worthwhile investment you've ever made? This is one of my fairly common questions, I suppose, but not necessarily capital. I mean, it could be, but time, money, energy, something that really had a high return on investment in your life. Does anything come to mind? Yeah. So, when I was in college, I was in Lawrence, which is a great music town and I really got into music and I invested, I can't remember if it was $10,000 or $12,000 and decided I was going to set up a store that bought and sold CDs and cassette tapes, kind of dating myself a little bit here. And I had a couple partners and we opened the store and it did really well. We took our money and we opened another store, it did really well and we kept doing this and we got to eight or nine stores. Then I bought out one partner and then I bought out the other. And at that point I'd been in this gig for five or six years and I thought, well, I bought out everybody, I'm going to take my first paycheck and I took my first paycheck out, it was $8,400 and then a month later Napster came out. And within six months, almost every location was closed and all the CDs had been donated to a charity. And that was the best education I had. I did a lot when I was in college, I got a law degree, a master's in business, some undergrad degrees. That was the best investment and the best education I ever got in my life, still to this day, was the total loss of all of that time and all of that money. But what I really learned was a real world example of supply and demand and how quick you can grow and how there's a window of opportunity that every business dies. Every business dies. I know that Bezos of Amazon says that all the time. Every business, Sears, one of the greatest businesses of all time, lasted a century, that's almost unheard of. The S&P 500 is changing all the time now because companies just rise and fall much quicker than they ever have. I learned that firsthand and I also learned how quickly technology can change everything. I thought I was competing against the music store across the street and the music store in the mall and I was competing against something I didn't even know existed that was going to come in and destroy everything. Walmart thought it was competing with Target, it's competing with Amazon. That was really to me a lesson in how quick you can grow something, how the economy works, how quick you can be replaced. It really illustrated for me how big money can be made with concentrated risk and total loss can happen from concentrated risk. That takes the cake for me. I'll never have an investment that good. I attribute a lot of my success and paranoia of when I run creative planning and I'm looking at the landscape and going, "What are the threats?"

Financial Advice, Warnings & Resources

Focus on the right threats. (01:19:30)

I'm looking at it with as wide a lens as can possibly be. I don't think for a second that any business is invincible and that will ever be the greatest investment I ever made. That's a great story. What you are competing against is something you don't even know exists. How often is that true? At least it's certainly something that you see a lot in tech in Silicon Valley. The biggest threat is not what you've identified as the biggest threat in many instances. Coming back to your book, The 5 Mistakes Every Investor Makes and How to Avoid Them, published by Wiley in 2014. In an interview that I read doing homework for this conversation, the question from the interviewer, this is from ThinkAdvisor, was what's the biggest mistake?

Turn on, tune in, and drop some diversification. (01:20:21)

Feel free to fact check this and correct if I'm misquoting. The answer is, I have it here, "People don't enjoy their money, especially the ultra affluent obsessive client who has millions of dollars. They've spent a lot of time doing the right thing, saving and making good decisions and being focused on growing, growing, growing. When they get to retirement, they can't turn off those trades that made them successful. They keep doing the things they always did, being thrifty and maybe a little stingy, so they don't spend their money for enjoyment and then they die." This is not me talking. From what I can tell, really, really, really common, not just with ultra affluent types, but with a lot of people across the board. They save, they save, they save, but they kind of mistake the means for the end in some capacity or they can't downshift, like you mentioned. They kind of lose track of why they were amassing or building this wealth in the first place. What do you tell these clients who can't turn it off, the people who keep doing things the way they always did, the people who don't spend their money for enjoyment? What is their homework that you give them? What is the conversation that you have? I tell them true stories that are both personal and about existing clients. I'm going to share one that was personal and one existing client. I had a client. He retired fairly young at 63, at least seems young. The very first day, he would come in for years and talk about how he wanted to garden and that was his dream. He never would spend any of his money, never would go on vacations, never do anything like that. The very first day of retirement, he died. His wife was in the, I think every advisor that has a bunch of clients has a story like this. His wife came in and she was just so upset that he had passed, but that she had found his to-do list. He didn't call it a bucket list, but it was his bucket list. He'd only done one or two things on that list. There were all these things that they could have done together that he never got to experience. He robbed her of that too. That issue that he had of I've got to save, I've got to save, I've got to save, I can't enjoy it along the way, he robbed her of that. I got really in tune with this at a young age because my dad vacations all the time. He's a physician, but he takes a lot of breaks. I learned that from him. He had mentioned to me, there's a famous person in Kansas City where I'm based. He had been the mayor and there's a lot of stuff here named after him. He was a patient of my dad's. One day he got diagnosed. He was very ill and he was going to die. My dad was just in his 20s at the time. He told my dad to sit down. I've got a lesson for you. My dad sat down and he just said, "I've got this named after me and that road named after me and that building's named after me. I've accumulated all of this money, but I never really got to enjoy it. I never really got to enjoy my family." That's very cliche, but my dad took that and he said, "I am not going to be this guy." I looked at some of my clients that have made that mistake and I tell myself the same thing. We also do estate planning here. We prepare wills and trusts and so on. We're very unique. Last week, one of my favorite clients passed and his kids came in. I get to see the kids because I'm also an estate attorney and there are a lot of estate attorneys here. We're here for them. We already know them. We get to see that next generation. What I also see is that the person that couldn't let go, there are people that spend everything they have and there are people that can't let go of anything. Then there's a very tiny group in the middle that is saving what they're supposed to and spending what they need to spend to enjoy. That's a very small group. But these people that are saving all the time, they're in the minority. They might be my client and I might be seeing them all the time, but they're in the minority. They're not going on that cruise ship. They don't get the balcony. When they're flying on a plane, they don't get the business class. They don't get the tall thing at Starbucks because why would somebody pay $6 for that? That's just not in their DNA. That's part of how they got where they are and then they die. Then their kids come in and they're coming in and they've got the Starbucks in their hand. I've had people show up in brand new cars as BMW or whatever. The parents are barely in the grave and the kids are spending the money. So I try to get them to visualize what do you actually think is going to happen when you pass. If you have $3 million and you've got two kids, what do you think is going to happen to that $3 million? What do you think they're going to do? Think about their spouses. Think about their kids and think of how they live and what are they going to do? They're going to buy a house and they're going to do that. I go, "Exactly." They start to think about their money a little bit differently because if you've got $3 million and you really enjoy yourself out of your mind, you might die with $2 million. Well, you know what? Your kids aren't going to notice the difference. If you have $300,000 and you die with $200,000 instead of $300,000, the kids aren't going to notice the difference. It's the perspective of visualizing what is actually going to happen if you don't enjoy this a little bit yourself. And then they'll give you excuses. And the two big excuses are, "I want to save it for my kids," or, "I want to save it for charities." And I always tell them, "Give it to your kids now. Give some of it to them now so you can enjoy it, so you can alleviate." They're going through the most stressful time of their life, trying to pay for college or trying to save for retirement. Why don't you give them some money now when they could really use it instead of you dying at 80 and they're 60 and they don't have those problems anymore? And if you want to give to charity, it's better to give with a warm hand than a cold one. Give while you can enjoy it, while you can see what you're doing with it, while you can make sure the charity is doing what you want. So I spend a lot of time talking to this with our clients because I just think it's a shame. You see these people, these tend to be very disciplined people, and they can't shift. As you said, they just can't shift gears. And I think that one of the best things we can do for them is remind them why they have the money in the first place and to make sure that they can enjoy it. And it goes back to what you were saying about fear and the markets. If people are scared, that's a big reason they'll retain the money. We need to be able to reassure them with very simple projections of how good a shape they're in. And no matter if the market pulled back 50%, here's what would still happen so they can feel okay, they can have that permission to enjoy their money.

Thank you for that. What books, aside from those we've mentioned already, do you gift the most to other people, or have you gifted the most to other people? If any come to mind. They don't have to be related to investing, but they could be. I think probably the book I've gifted the most is Awareness by Anthony de Mello. He was a Jesuit priest, but he was in India. So he has kind of this confluence of different religions from Hindu to Buddhism to Christianity influencing him. But what the book basically, I'm sure I'm screwing this up and that if he were alive he'd say I'm explaining it wrong, but to me what it basically said was no matter how good you think things are, they're not that good. No matter how bad you think things are, they're not that bad. That almost everything you're experiencing with other people is about the other people, has very little to do with you. People don't think about you as much as you think they do. And it's just a very, I think it's just a very, it's a book that gives you a lot of perspective about yourself and the world. And I think if you read it at the right time of your life, for me it brought a lot of peace. I've read the book a few times, so I love that book. I also like, and I give to our employees here the book How Full is Your Bucket, which is like, it might take 15 minutes to read. And I don't know if you've read it, but basically the premise is every encounter you have, someone feels better or they feel worse. And what kind of person are you? Are you bringing positive energy into a room? Are you the kind of person that are lifting people up around you or taking them down, even if it's in the most subtle ways? And it just kind of forces some perspective. There's even a children's version of that I got my kids. I absolutely love that book. And then The Prophet by Khalil Gibrad is one of my favorite books. Someone gifted that to me when I was young and it's a short read and covers a lot of topics as well. That's a fantastic book. I would recommend people get the edition with the illustrations by the author also if you get The Prophet. I think we're getting to the tail end of this round one conversation between you and I. But we could go in any number of directions before we close out. I thought one might be to highlight any particular bad advice that you hear or see being given out often in your world. If there are any particular red flags or types of bad advice or tricks that you would advise people to be aware of or make people aware of.

Warning signs of a bad financial advisor (01:30:06)

I think that our industry, the framework for the delivery of advice is often corrupted. And so I think the good thing is when you're educated you can spot it really easily. But if you look at the industry it's unique in that in the United States most advisors don't have to act in their client's best interest. That's fairly unique to the United States. In Australia they have to act in the client's best interest. In the United Kingdom they have to act in their client's best interest. It's also unique to financial advisors. If you go to a doctor in the US or a lawyer or a CPA they have a fiduciary obligation to act in your best interest. But about 90% of advisors in the United States do not have a fiduciary obligation to their clients. They're operating under a lower standard of the law called the suitability standard. Kind of a buyer beware, this is America, everyone fend for yourself. Which would be fine except the general public doesn't know that. They're assuming when they go to a financial advisor that the financial advisor is acting in their best interest all the time and is legally obligated to do so. I've never read the law about how my doctor or lawyer or CPA has to treat me. I'm just assuming that they have to act in my best interest and that's just not the case with financial advice. So I think one thing your listeners could watch for is, is my advisor an independent advisor? They would be working for what's called a RIA, registered independent advisor. Or are they a broker? Meaning they work for a brokerage house that makes money a lot of different ways on investments. They might make money on a commission, they might own their own products and so on. I think that's one way to kind of quickly figure out, that doesn't mean brokers are bad. There's a lot of brokers doing the right thing every day for their clients. It's just all things being equal. You would always want somebody who asked to act in your best interest all the time. And they might want to do for you what they would do for themselves. I think that's one big thing to know about the profession. I think the other thing to look out for is does the advisor get paid different ways on different investments? So if I'm sitting with somebody and they make more money if I buy a private equity fund than a stock fund, well, don't be surprised if you wind up being sold the private equity fund. We all know that compensation drives behavior, right? So you don't want somebody who is going to get paid more if you buy one product over another. That's very common in a brokerage house, but it can even be something that happens in the independent world. And then you definitely don't want to be working with an advisor that has their own products to sell, where they might have their own mutual funds. They might have different names. That's kind of a trick of the trade, where you might have a brokerage house with one name, and then their products are called another name. So it's a little confusing to the client. But if somebody can avoid those things, somebody who gets somebody who has to act in your best interest, that gets paid on your investments the same no matter what, and doesn't own their own products, you are going to avoid a lot of the things that are going to result in you not getting the best types of investment vehicles. And then it becomes all about competence. I think if you want to screen for competence, I would do it the way you look for a doctor. If you're going to get knee surgery, you want a knee surgeon that does knee surgery all the time, that's at one of the best hospitals and has had a lot of thousands and thousands of people go to them. You don't want somebody that's dealing with just a few people and does knee surgery every now and then, and by the way, does 17 other things and is in a tiny hospital. I think to the extent you can screen for some level of competence and scale, that's helpful as well.

How does Creative Planning make money? (01:33:39)

Gotcha. Thank you. How do you and creative planning make money? We make money by charging a fee to our clients for managing their investments. So if someone comes in and says, I want you to manage a million dollars for us, we tell them the percentage that that's going to cost and it includes managing their money and providing them a financial plan as part of that. And we also would give them all the financial advice they need throughout the year. We would meet with them in person and we would not make a different amount of money no matter what investment they went into. So whether it's appropriate for them to be in investment, ABC alternative or publicly traded, the compensation stays neutral. And we hold our clients money at third parties so they don't have to worry about the custody issue or the birdie made off issue. And then there's no commitment from the client if anywhere along the way they feel like, Oh, I want to go back to doing it myself. They've got an open door to be able to do that. Thank you.

Michael's 30-year-old self (01:34:42)

Yeah. Let's ask just a few more questions. And then we can close up for this conversation. So the first is, what advice, how old are you now if you don't mind me asking? 48. 48. What advice would you give to your 30 year old self? And if you could place us like where you are at 30, what you're doing, or roughly 30, that would be helpful. I think at around 30, I was starting to have some success and I'm a people pleaser by nature. And I was starting to get asked to be on boards by clients. And I just accept all of these invitations. I found myself on all these boards. And I was saying yes to all kinds of things, assistant coach this and be on this charity and so on. And I wound up being terrible at all of it. And I learned this later and I wish I had learned it at age 30 that a yes to something is a no to something else. Once you are saying yes to something, you're saying no to something else. And so it didn't take me too long to get a sense of priority, but when I got it, it became crystal clear to me what my priorities in life were. And it made it much easier the things I was going to say yes to. If I had a time machine, I would tell myself that at age 30 a little bit earlier.

Investment Strategies & Personal Insights

Rules for clarity and focus. (01:36:05)

How do you help clients find clarity on what to hone in on if they're looking for it? If you have clients who are running into the same issues, perhaps. I would imagine on one hand you're managing wealth, but on the other hand you're managing lives. And if we're looking at that holistically, you're probably going to be dealing with many facets of someone's commitments, financial or otherwise. So what tactical advice would you give them if someone's feeling pulled in a thousand directions? They're saying yes to too many things. Well, I think one of the advantages that they would have is we are their no often. So I know a lot of them have a hard time saying yes or no to people that are asking for money. And because, let's face it, somebody's asking for 50,000 or 100,000 from some of our clients, that's not a big deal to that client. But the client doesn't want to wind up doing a whole bunch of different things and wind up with a bunch of tax forms and be all over the place. And so we do two things. One, we develop rules. So you try to develop criteria so that instead of every deal that comes to you, you're evaluating the deal. You're starting by saying what types of deals am I willing to look at? So you're setting criteria on day one. Or if you're being asked to do a lot of charitable giving, instead of evaluating every charity that comes to you, let's set criteria of the types of charities you're willing to support. Maybe it's only in a certain geographic area. Maybe it only involves children. Maybe it's things that a certain percentage goes back into the community versus overhead. If you set those rules, it becomes easier to say no to those private investments or to those charitable donations. And then second, you can always use a third party as a screen. You can always use your advisor or somebody that works in your office. This person's job is to evaluate these things against the principles that we have. We have some clients that have gone so far as to, if they're bigger, they even will create a web page that would say this is how the grant giving works. And so it creates a little bit of work up front for the person asking for the charity, which eliminates a lot of stuff. They've got to fill out an application and explain why and where things are going. And then they might self-eliminate by seeing that they don't meet the rules as well. And then third, they realize it's not just, I'm calling Susan to see if Susan will give me the money. There's a procedure and it's not so personal if Susan then comes back and says no.

Is it worth it? (01:38:38)

That makes sense. What would you put on a billboard, if metaphorically speaking, to get a message out to millions or billions of people, can't be commercial, but a word, a quote, a question, anything at all. Is there anything that comes to mind that you would put on a billboard? I would put is it worth it on the billboard. I'd just say is it worth it. And I'd put that billboard right down my street. So when I was getting in the car, wherever I was going, it would remind me, is what I'm doing right now what I should be doing? If my priorities are family and friends and work is in there and things like that, is what I'm doing, is it worth it? Does it fit into what I'm doing? And I think so many of us, we just wind up getting sucked into all of these things. I hate to be the person that quotes Socrates, but I am a big fan of his and he said beware the bareness of a busy life. We find ourselves just doing all of these different things and if you really stop and look at your week and say everything that you did, did it really align with what you want to be about? And so I'm constantly trying to remind myself of that. I'm constantly looking at my calendar and asking should these things be on my calendar? It's been said, don't tell me what's important to you. I'll look in your wallet and I'll look at your calendar and that's all I need to do to know what's important to you. And so I think any reminder you can have of that ongoing I think is a positive thing.

Avoid creating busyness. (01:40:08)

I agree. Yeah, busyness. What a deceptively problematic characteristic that is to carry through your day to day. Absolutely. It carries over to investing. I think people create busyness with their investments. They get caught up in the news cycle and it doesn't matter if they watch if they could get all the news they need probably in 15 minutes. They don't need to watch three hours a day every day, but they create this busyness and they create this anxiety and they feed that that all of that tension that then creates action. The portfolio that should never happen because they should be like you were talking about earlier, just leaving it alone and finding the discipline to do it. But they create this busyness that creates the anxiety to make the behavioral mistakes that cause the problems in the first place. So just like with life, I think with investing you really got to set your rules and you've got to have a plan. Mike Tyson, who I know, and I just think he's an incredibly smart guy, and he's got a famous saying where he said, "Everyone's got a game plan until they get punched in the mouth." And I think if you've got clarity and vision and you know what you want to do and you know what your priorities are with investing, you can stick with it when you get punched in the mouth as well. So I think that busyness and life, I think it's the same thing with investing. Here, here. People can find Creative Planning at They can find you at Peter Malluk, Where is the best place on social media to say hello or connect with you? And these will all be in the show notes, of course. But do you interact or pay attention to anything more than another or none of the above? Both myself and Creative Planning are on LinkedIn, Twitter, and Facebook, and I know Creative Planning is paying attention to all of them all of the time. I tend to be more engaged with LinkedIn and Twitter personally. Great. All right. On Twitter, @PeterMalluk. On LinkedIn, also, Peter-Malluk. And I'll link to all of this in the show notes for people and to everything that we discussed in this conversation, all of the books and any other people or resources. So folks can find that at and just type in guest name Malluk, M-A-L-L-O-U-K, or Peter, and it'll pop right up.

Living in the best time to invest (or do anything)! (01:42:32)

Is there anything else, Peter, that you'd like to say? Any parting comments, suggestions, requests, anything else you'd like to say before we wrap up? I would give a parting comment that I think really would help people think about investing better. And I think if we can be objective about where we are in history, we are living at the best time that anyone has ever lived. The world lived in abject poverty for thousands and thousands of years until just a few centuries ago. And if you sit with physician clients, they'll tell me there have been more advances with the brain and the heart in the last 10 or 20 years than all of history before. And I know you were very involved in the tech world, and they would tell you the same thing there. And we can go on and on. And if you look at what drives markets, we need consumers to buy things. We need the demographics. We have over a billion people coming out of poverty in the next 10 to 20 years all over the world, in India, in China, in Brazil, and all over the world. So we've got those consumers coming, and they're going to buy Nikes, and they're going to go to McDonald's, and they're going to buy clothes, and they're going to watch movies. We've got those consumers coming. And the other thing that drives markets is innovation and technology. And no rational person can look at the world today and think that we're not doing those things now. And so if you look at the forces that support the markets over the next 10, 20, 30 years, those have never been better. That doesn't mean that there aren't going to be setbacks and pullbacks. But if you can just, no matter with all the negativity we have coming at us from every direction, the reality is it's never been better than this. And so I think that helps me just with life in general, I need to remind myself, but I think as an investor, it helps you focus on the long run and maybe tune out whatever it is that's got you panicking and keeping you from doing the right things for the way you should be investing to get where you need to go. Well, thank you so much, Peter, for taking the time. I really appreciate it. And I've got lots of notes that I'll be following up on, as well as grabbing a copy of Awareness. I'm all for anything that brings peace, especially in these fear-mongering times that we live in. But I appreciate you taking the time for the conversation. So thank you again.

Outtro (01:44:56)

I loved it. Thanks for having me, Tim. And to everybody listening, thank you for tuning in. And you can find the show notes, tuned out blog/podcast. And until next time, have a plan, formulate a plan, whatever it might be, whether it is finances, whether it is fat loss, anything else that might be on your to-do list, especially if it has been on your to-do list for a long period of time and has been punted from one day or one week or one month to the next and then to the next. Formulate a plan. The resources are out there. Thanks very much, everybody. Talk to you next time. Hey, guys, this is Tim again. Just a few more things before you take off. Number one, this is Five Bullet Friday. Do you want to get a short email from me? Would you enjoy getting a short email from me every Friday that provides a little morsel of fun for the weekend? And Five Bullet Friday is a very short email where I share the coolest things I've found or that I've been pondering over the week. That could include favorite new albums that I've discovered. It could include gizmos and gadgets and all sorts of weird shit that I've somehow dug up in the world of the esoteric as I do. It could include favorite articles that I've read and that I've shared with my close friends, for instance. And it's very short. It's just a little tiny bite of goodness before you head off for the weekend. So if you want to receive that, check it out. Just go to That's all spelled out. And just drop in your email and you will get the very next one. And if you sign up, I hope you enjoy it.

LegalZoom (01:46:36)

This episode is brought to you by LegalZoom, which more than 2 million Americans have used to help start their businesses. Past guests even, such as, well, WordPress lead developer, CEO of Automattic Matt Molenweg, now valued at more than a billion dollars, have used LegalZoom to help with their business needs, specifically in his case to form his company. But LegalZoom isn't just for launching your business. Their services include everything from helping you to manage changing tax laws, reviewing contracts, creating NDAs, non-disclosure agreements, important stuff, handling lease agreements, and assisting with really any other legal challenge, hurdle, inconvenience that typically takes time and effort away from running your business. The best part is that you won't get charged by the hour because LegalZoom isn't a law firm, so they won't be running the clock up and spinning circles just to raise your bill. Instead, they just ask you to pay one low upfront price for whatever it is that you're looking to get, a la carte style. So visit and check out their business section for all of their services. And if you want special savings, that's the terminology in the copy that they suggest. I don't know what the special savings is, folks, but it's titillating. If you want special savings, enter promo code TIM, T-I-M, at checkout, capital T, lowercase i-m. Again, take a peek,, and enter promo code TIM. This episode is brought to you by 99designs.

Closing Remarks

99Designs (01:48:01)

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