Are your “profitable” investments making you rich or poor? Learn more about what Jason has dubbed “The Vast Wall Street Conspiracy” and the difference between nominal value and real value. While the financial media was bragging about the Dow’s record high earlier this year they were hiding the truth that investors actually LOST purchasing power and became poorer in real terms. Who cares about meaningless numbers when the numbers buy less and less? Next, Jason chats with CL Osborn about the special concerns and opportunities for female real estate investors.
Happy New Year!
Announcer: Welcome to Creating Wealth with Jason Hartman, President of Platinum Properties Investor Network in Newport Beach, California. During this weekly program, Jason is going to tell you some really exciting things that you probably haven’t thought of before, or a new slant on real estate, fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible.
Jason is a genuine self-made multimillionaire, who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in nine states. This program will help you follow in Jason’s footsteps on the road to financial freedom through real estate. You really can do it. And now, here’s your host, Jason Hartman.
Jason Hartman: Good afternoon and welcome to another addition of Creating Wealth. This is Jason Hartman. It’s great to be talking with you today as we are on the brink of a new year. Yes. It is almost 2008, and I hope you have your goals set for the new year, especially in terms of your investments and your wealth creation because that’s what our show is all about here. I’d like to share with you an article dated April 27, so this was something a little bit earlier this year, but it really illustrates a good point. And it’s by Peter Schiff with Euro Pacific Capital who is really one of the truth tellers in the aspect of keeping the stock market in check and also telling the truth about the real value of money, the real value of purchasing power, and the real value of inflation, both good and bad.
I want to thank our prior guest on one of our podcasts, or two of our podcasts before, Dr. MacVay, for bringing this one to my attention, and even though it is from several months ago, it is still a very telling point. And then later in this podcast we will have an interview with CL Osborn, and we will talk about women and investing and the special and very specific needs of female investors and how they should be thinking about their money, how they should be thinking about their investments. And we are starting a women’s investor club here at Platinum Properties Investor Network, which you will hear more about on future shows. But let’s just get into this article first here by Peter Schiff, and I think you’ll really enjoy it because he really, really makes some very good points here.
Now, you remember earlier this year the Dow hit a record high. It went over 13,000, but the question is what does this really mean to us, if anything? Or is that really just a big false kind of a scam in a way to make that seem like it’s such a big deal? You look at CNBC, you look at the financial press, “Wow, Dow hits new record high.” Well, so what? Let’s see, so the article is entitled, “What Record High for the Stock Market?”
“As the Dow burst through the 13,000 milestone this week, few understood the hollowness of the achievement. Measured against the rising dollar-denominated prices of just about everything else on the planet, the Dow has actually lost value over the past seven years. Measured against the truest benchmark, the price of gold, the record high for the Dow was set back in January of 2000,” so he’s saying the real record high was seven years ago. Now, obviously, and this is a little bit of my commentary in here so hopefully you can tell the different between when I’m reading and commenting, but obviously gold is not the only benchmark. It’s just one of many, and the gold bugs will tell you that that’s the best benchmark. I don’t really think it is. I think you have to take into account a whole bunch of different benchmarks, other currencies, other prices of other products and services that we constantly buy, and in just a moment here we will play an audio track for you of a very interesting video that illustrates this.
So he says that the Dow really hit its record high back in January of 2000. That was seven years ago, or almost eight years ago when the price equaled approximately 43 ounces of gold, but today that same Dow, even though the number is higher, okay, me talking again, at 13,000, it is really worth less because today it’s only worth 19 ounces of gold. “To better appreciate,” Peter goes on to say, “just how much of the stock gains can be attributed to inflation, consider that the record high for the Dow in 1929,” now we’re talking, what, almost 80 years ago, “of approximately 380 also equaled about 19 ounces of gold. So despite all of the hoopla of a 30-fold increase in stock prices, the Dow has actually gained no real value during the past eight years.” No real value in the past eight years.
“The entire rise from 360 back in 1929 to 13,000 has been an illusion made possible through the magic of inflation. So much for the concept of stocks being a ‘can’t lose’ long-term investment, unless you feel that 80 years is not quite a long enough time horizon. Now that is not to imply that the Dow has not generated returns during those years because it has. However, those returns have been a function of dividends and not appreciation.” Now folks, just notice that if you have a stock that does not pay dividends, it really is only an issue of appreciation, of capital appreciation in the stock’s value. If you have a dividend paying stock, this picture gets slightly better but it’s still nothing great at all because, remember, all of these things that we talk about pretty much are measuring inflation at the rates the government tells us, not the true rate of inflation. And we’ve talk about that in other podcasts and we’ll continue to talk about it in future shows.
Okay. Let’s go on with the article here. “But it’s not yields that Wall Street celebrates; it’s prices. By dazzling investors with higher prices, they distract their attention from the unpleasant reality that they are actually treading water. What difference does it make if you have more dollars if the dollars themselves have less purchasing power? Despite the recent eclipse of 13,000 of the Dow Jones, it now buys 30 percent fewer euros than it did then back in 2000,” that was about seven years ago, “priced at approximately 11,500. It also buys 35 percent fewer gallons of milk, 40 percent fewer bushels of corn or wheat, 65 percent fewer ounces of silver, 70 percent fewer barrels of oil, 80 percent fewer pounds of copper, and 90 percent fewer pounds of uranium.”
“Try figuring what the Dow will buy in terms of other necessities such as housing, insurance, college tuition or medical care as a way to measure it. The Dow is worth far less today then it was in January of 2000. Back in 1980, one Zimbabwe dollar was worth more than one US dollar. Therefore, a billionaire in Zimbabwe was also a billionaire in America. Today, almost everyone in Zimbabwe is a billionaire, yet few of them can afford a pack of chewing gum.” See, Zimbabwe, of course, has had this rampant just disgusting kind of inflation. “Do you think that anyone invested in the Zimbabwean stock market these past 30 years cares how many record highs that market has made?”
“Many might feel that a comparison of the US to Zimbabwe is ridiculous. However, fundamentally there is no real difference between a Zimbabwean dollar and an American dollar. They are both simply pieces of paper, the value of which depends on the resolve of politicians not to print too many of them.” In other words, what he means there is if you print too many, the value of each one goes down, of course, creating inflation and lower purchasing power. “During the difficult economic times that lie ahead, the pressure on the Fed to run its printing presses full throttle will be immense.” Now remember folks, this was written before the major collapse of the credit markets and the mortgage meltdown last August, so this is even more intense now, that pressure.
“Think back to the German experience with hyper-inflation during the Weimar Republic. At the time of its currency meltdown, Germany was an economic power, even after the devastation of the First World War, yet that status did not prevent its currency from becoming worthless. The impetus for Germany’s hyperinflation was the fact that its industrial base had been so badly damaged during the war, yet under the terms of the Treaty of Versailles it was obligated to pay enormous reparations to the Allies. Lacking the ability to export goods to repay its debts, it resorted to a printing press instead.” Just printing more and more money.
“America is now in a similar predicament. Although our industry was not destroyed by bombs, it’s gone just the same.” In other words, it’s been outsourced largely to China. “While we might not be bound by a treaty to pay reparations, the trillions and trillions of dollars of American IOUs now owned by foreigners will be just as burdensome an obligation. It is hard to image we can ‘repay’ these debts without some kind of civil unrest, massive inflation, or both.”
“The point to remember when it comes to our records, it is real purchasing power, not nominal value, that counts.” In other words, he’s saying it’s not numbers that count. It’s not what number is the Dow; it’s what does it really mean to you in your real life? And similarly, everybody, remember home equity, the dangers of home equity. Home equity is denominated in what? If you are a US homeowner or have any kind of property ownership here, that is denominated in US dollars, so equity is at risk for inflation because equity is constantly being attacked by inflation. Think about it. If you made $500,000.00 on a piece of real estate here in the US, and that was over the course of ten years, the question is not what did you make, that $500,000.00, the question is what is the purchasing power of that $500,000.00 today compared to that $500,000.00 ten years ago? Again, that’s me talking. Let’s go back to the articles.
“It is real purchasing power, not nominal value, that counts. Measured by its purchasing power, the Dow has clearly lost value over the past seven years. Those who have remained invested in Dow stocks during that same time period are clearly poorer as a result.” Now, the financial press would have you believe, everybody, and this is me talking again, that you are richer, but you are not richer. You are poorer. It’s a game of smoke and mirrors. Okay, back to the article. “Those who continue doing so will likely lose even more of their wealth in the years ahead, regardless of how many more nominal record highs the Dow sets.”
The same is true for the S&P. The same is true for your savings account. The same is true for any dollar-denominated asset. That’s why we know as smart investors the way to get rich in real estate is borrow because our debts are denominated in dollars, too. When we have more inflation, we pay those debts back in progressively cheaper dollars. Lots of old podcasts on the subject. I won’t belabor the point.
Now, let me have you listen in to an audio track from a short video, which if you want to see the visuals is on our website at www.jasonhartman.com, and this one is about how deceiving the record highs in the stock market can be. They make a very good point for it, and I want to give the authors credit. They say who they are on the actual audio track so you’ll hear that in a moment, and you can see it on our website. It is sort of a monotone video, so just bear with us. It’s only a few minutes long. It’s not super passionate or exciting, but it makes a very good academic case for understanding what is really going on here. And I think, everybody, this is really the most critical thing you can possibly understand about finance, about money, about wealth creation and wealth destruction as it affects every facet of your life. So let’s listen in and I’ll be back afterwards.
Video: Are your profitable investments really making you richer? How much are your investments up recently? Are you like many investors with proud returns of 50, 60, maybe 70 percent over the last four years? When you look at major US indexes like the Dow Jones Industrial Average recent gains, do you see a great bull market? What if we told you that even with positive investment returns of 50 to 70 percent over the past four years, in real returns your investments may merely be breaking even? What if we told you that we think understanding this message may be one of the most important financial lessons you could learn? In fact, we believe our financial future depends on understanding this short video message.
This video is brought to you by www.investmentscore.com. We do not know your specific financial situation and we are not financial advisors. This message is not intended to be financial advice, but we wish to share our opinion and unique perspective on the financial markets so let’s get started.
This is a chart of a major US financial market called the Dow Jones Industrial Average from roughly mid 2002 to 2007. At first glance this rally is very impressive. With returns of roughly 65 percent from the start of this advance, we think many investors in this market are pleased with this return. But in our opinion, returns of 50 to 70 percent over the last four years is not good enough. Why? We will explain the difference between the price of an investment versus the value of an investment. We believe many investors are becoming poor, not because their investments are not experiencing a positive return and increasing in price, but because their investments are losing value.
This is a critical difference to understand. Although the price of many people’s investments may be increasing, the purchasing power of those investments is likely decreasing more quickly than the price is increasing. You see, the value of an investment can be measured by determining its purchasing power in comparison to other investments. For example, have you been a homeowner for the last seven years? Think back seven years ago to what you paid for your house. Would you sell your home for that same price now? On average, does the same amount of dollars buy a bigger or smaller house? Smaller. Therefore, relative to a house, the US dollar has lost purchasing power and therefore value.
In 1970, the average price of a home was roughly $65,300.00. Today the same amount of dollars will purchase a much smaller house. What about gasoline? Can you fill your car for the same price you did seven years ago? The price of gas in 2000 was roughly $1.46 per gallon. What does gas cost you today? Relative to gasoline, the US dollar has lost significant purchasing power over the last seven years, and therefore value.
Let’s use gold for an example. In the year 2000, the US dollar could purchase one ounce of gold for approximately $250.00. Today that same ounce of gold will cost approximately $650.00. Relative to gold, the US dollar has been losing value as it loses purchasing power.
So what about the Dow Jones Industrial Average index? Yes. Relative to the Dow Jones, the US dollar is losing purchasing power. In our opinion, it is safe to say that over time the US dollar is regularly losing value. Another way of saying this is that generally, over time, the US dollar continues to purchase fewer and fewer assets, goods, and services.
So how does this affect our investments? Let’s take another look at the Dow Jones example. Because the value of US equities is measured in US dollars, indirectly the Dow Jones index is actually a ratio between the value of the Dow Jones index and the value of the US dollar. As a result, whatever happens to the value of the US dollar directly affects the price of the Dow Jones index. Assuming the Dow Jones index does not change in value, if the value of the US dollar increases, it will take less dollars to purchase one share of the Dow Jones and the index will drop. Conversely, if the US dollar decreases in value, it will take more dollars to purchase one share of the Dow Jones and the index will rise.
As we discussed earlier, we believe the value of the US dollar is decreasing but the price of the Dow Jones index is increasing. Therefore, the critical question we ask ourselves is are our investments increasing in price quicker than the US dollar is dropping in value? Or what is the value of our investments relative to other investments? What if we compared one investment directly to another investment? What if we bypassed the distortion of the fluctuating measuring stick, the US dollar?
In this case, we would like to find out if we were to trade our current investment for another investment, how much of that new investment do we get for that trade? For example, we now know that indirectly the price of the Dow Jones index is a ratio between the value of the Dow Jones and the value of the US dollar. The price of gold is a ratio between the value of gold and the value of the US dollar. If we compare those two ratios directly, the common denominator of the US dollar cancels out. Therefore, we are now comparing the value of the Dow Jones to the value of gold. This is a direct investment-to-investment comparison.
In the year 2000, the Dow Jones index was worth roughly 11,700 while gold was worth roughly $285.00. When we divide 11,700 by $285.00, we learn that in 2000 it took roughly 41 ounces of gold to buy one share of the Dow Jones index.
In the year 2007, the Dow Jones index was worth roughly 12,500, while gold was worth roughly $650.00. When we divide 12,500 by $650.00, we learn that in 2007, it took roughly 19 ounces of gold to buy one share of the Dow Jones index.
If we compare the year 2000 to the year 2007, we can clearly see that it takes less gold to buy the same amount of the Dow Jones index. Relative to gold, the Dow Jones is losing value.
Here is a chart of the Dow Jones index relative to gold from about mid 2002 to March 2007. As the black line heads lower, it takes less and less gold to buy the same amount of the Dow Jones. In other words, the Dow Jones is losing value relative to gold, and conversely gold is increasing in value relative to the Dow Jones.
A common investment strategy is to buy and hold investments long term regardless of macro economic conditions. So when we back up and look at the big picture, generally what has happened to long-term holders of the Dow Jones index since roughly 2000? As you can see, in 2000 the Dow Jones and most US stock markets had a serious correction followed by significant events; however, it should be noted that individuals invested in this market through this entire period had a losing position for nearly a seven-year period.
In the year 2000, the Dow Jones index was roughly 11,700, and in early 2007 it is about 12,500. In seven years, this is approximately a mere 6.8 percent price gain or 0.6 percent per year. But how much of that trivial gain was from the stock market gaining real value and how much was a result of the US dollar losing purchasing power? In relative value, is the Dow Jones index advancing at all?
Here is a chart of the Dow Jones relative to gold from roughly 2000 to 2007. In the year 2000, it took roughly 41 ounces of gold to buy one share of the Dow Jones index. In the year 2007, it takes roughly 19. Relative to gold, the Dow Jones has been significantly losing value. In our opinion, most major US stock market indexes have been treading water in price but crashing in value relative to other markets. In our opinion there is no debate about the poor performance of the Dow Jones Industrials, S&P 500, NASDAQ and other major US stock market indexes. Generally speaking, in our opinion, these major markets have been crashing in value relative to many other investments.
We believe the drop in the value of the US dollar has been hiding the real value of these investments. In our opinion buying and holding on to US equities for the last seven years has been a very poor investment. So why is this understanding important? Well, if our investments are losing value as our cost of living increases and our investments regularly purchase fewer and fewer things, we will become poor as a result of holding these investments regardless if the price is increasing.
The price of our investments may rise, and we may experience a positive return, but we will not be wealthier. Ultimately, wealth is more than just a large number that may vary in its purchasing power. Wealth comes from the ability to maintain and grow one’s purchasing power long term. Unforeseen, many people do not understand this important distinction. More important questions we ask ourselves are, over the next few years, is it likely this trend will continue? What investments are gaining in value relative to other investments? How can we invest our money to become wealthier?
To learn more about our opinion on important questions such as these, subscribe to our free newsletter at www.investmentscore.com. In the past, have you tried to explain the concepts in this video message regarding financial markets to a friend, relative or co‑worker? Do you get frustrated when they seem to not quite get your explanations? If you found this video informative, we ask that you share this important message with others. Please email a link of this video to anyone you think could use this perspective on the markets. Feel free to post a link or embed the video in your favorite chat room or blog. Rate our video on www.youtube.com and www.googlevideo.com. Please help us spread the word to your friends and family about real value and real wealth.
Finally, we wish to remind you that we do not know your financial situation and this video was not intended to be financial advice. We are sharing our opinion, we are not financial advisors, and this video message is for entertainment purposes only. Data such as numbers and dates used in this video were approximated. We believe the information to be true but we do not guarantee its accuracy. For more information, please visit our website www.investmentscore.com to read a full legal disclaimer.
Jason Hartman: Okay. Welcome back. I hope you enjoyed that audio track. I’d like to now introduce an interview I did about a month and a half ago or so with CL Osborn who is very big into helping women invest in real estate. And women do have some definitely different characteristics. You’ll be hearing about on a future podcast, we are starting a women’s group here. Women live longer, they have different dynamics going on in their life, so listen in to this and enjoy it. And again, if you have any questions on any of these topics, please visit our website, fill out the “contact us” form at www.jasonhartman.com and one of our investment counselors will be in touch with you very shortly to provide visual aids, backup materials, additional information and help you apply this to your own life. So here is the interview.
Okay. We are with CL Osborn via telephone. CL, welcome to the show.
CL Osborn: Thank you, Jason, for having me. I am very thrilled to be here.
Jason Hartman: It’s great to have you on. Tell me, why did you start the National Association of Women Real Estate Investors?
CL Osborn: Oh, that’s exciting. It always excites me, and maybe no one else, but I was in the real estate business for many years, owned my own company and was a national speaker, management consultant and that kind of thing. And then I went back to school to become a psychotherapist, of all things, and I did that for about 14 years.
Jason Hartman: Was that helpful in real estate?
CL Osborn: Yeah. People ask me that all the time. They go, “Real estate, psychotherapy, kind of the same business,” working with people, that kind of thing.
Jason Hartman: That’s true.
CL Osborn: But after about 14 years of that, I woke up one day and I said, “You know, as long as your “butt” has got to be in the seat, you’re not going to get wealthy.” And I had done the altruism thing for several years there with that, and I thought, “I’m going to go back to investing in real estate,” which I had done all along. Most realtors do not invest but I had as a realtor, so I started going – getting involved in the investment clubs which had come on the scene, and I realized women were not represented anywhere and –
Jason Hartman: What year is this, if you can give us some time perspective?
CL Osborn: This was about five years ago is all.
Jason Hartman: Okay. So 2002.
CL Osborn: Yes, 2002.
Jason Hartman: All right. Go ahead.
CL Osborn: And a lot of times there were only about 20 percent women that did attend these clubs, and I attended them throughout the country. And the ones often that were attending were kind of an appendage on some guy’s arm that they had to ask permission to take a brochure or something like that, and –
Jason Hartman: Now, you know what’s interesting about that, though, is that’s not at all what we find in the universities around the country. I mean, women are filling up business schools and law schools.
CL Osborn: Absolutely.
Jason Hartman: And they’re becoming entrepreneurs all the time.
CL Osborn: Yeah, 424 new businesses a day started by women.
Jason Hartman: Yeah.
CL Osborn: So that’s just in this little niche of the world, and also over 50 percent of traditional realtors are women, so in this industry investment area it was very unusual. I was surprised.
Jason Hartman: That’s unusual, yeah.
CL Osborn: So after a while, though, people started coming to me and saying why don’t we [inaudible] that I had a business background. And long story short, I had a lot of women really wanting me to do it, and I don’t think I really knew what I was getting into but I did it. And what we found out was women do business differently than men in a lot of ways, which is probably another pod call.
Jason Hartman: Okay. Well, can you give us maybe an example or two of how women are different?
CL Osborn: Okay. One is they like to hear from somebody else how they did what they did from a friend of theirs. Okay. Before they go do it, they want to know that you did it and what you did. And the big thing is they don’t buy at the meetings that clubs present where they have the big guru come in and sell a $5,000.00 training package of books and tapes and –
Jason Hartman: Those are usually a big overpriced package.
CL Osborn: Exactly.
Jason Hartman: Not always but most of the time.
CL Osborn: And men will buy them because they’re trained to buy a tool if they need it. Women are culturalized to go ask permission to buy a broom.
Jason Hartman: Interesting. But aren’t we the ones that never want advice and won’t ask for directions? Isn’t that the stereotype?
CL Osborn: Well, directions are different than taking your own permission to go pay $2,000.00 or $5,000.00 or whatever for a tool. “Oh, I need this tool.” Come on, “Ruff,” right?
Jason Hartman: Okay.
CL Osborn: Now, where women, “I’ve got to ask my husband.” So they don’t buy statistically those packages, plus that was one of my training pieces. I learned that they don’t want to do that and they don’t do that and they think they’re going to and they go home and the husband didn’t get the same report so he goes, “You can’t buy that,” right?
Jason Hartman: Okay. What’s another way in which they’re different as the way they approach investing or business?
CL Osborn: Well, they like the team approach. They like more support. They like more hands on. They want to know more. They make more clear decisions very often, and they’re actually in many ways much better equipped to do it. They just do it differently.
Jason Hartman: What is different, CL, about a woman’s financial needs versus a man’s financial needs or goals?
CL Osborn: Oh, I love that question. I’m going to go through a bunch of statistics for you, Jason, on this to make it make sense because at first glance it may be difficult to believe that women’s financial needs are all that different from men’s because the general principles of financial planning are pretty universal, right? But women face unique challenges that amount to a different financial need. Now, let me run through these numbers for you that when I first read them and discovered them after research blew me away.
So to start with, each one by itself is not that big of deal, but when you get it all together, women live longer than men, an average of seven to nine years, so they need 20 percent more retirement, okay?
Jason Hartman: That is so unfair.
CL Osborn: On average, women earn 25 percent less than men, and women today earn 76 cents to every dollar earned by men.
Jason Hartman: With that, should we put the sort of little caveat to that that we talked about? A lot of women leave the workforce for a while to raise families.
CL Osborn: If you let me get there, I’m going to cover that, too.
Jason Hartman: Sure.
CL Osborn: And so that 76 cents is the highest it’s ever been, but the gap still impacts the lives of both single and married women. Now, let me –
Jason Hartman: And when you look at the retirement issue, women are living longer in retirement. They’ve got to have more money. They’ve really got to do more planning.
CL Osborn: I’m going to cover that, too. Since women – and just let me go through these statistics and it takes the whole – makes the whole story. Since women tend to take time off to raise children or take care of parents, women take approximately 11 years off more from work than men do. They save less than men do for retirement as a result of that. So after earning lower salaries for fewer years, women’s Social Security benefits are about half of men’s, not to count that they didn’t have the money to save in the first place.
Jason Hartman: Wow, that’s like a double whammy.
CL Osborn: It’s a big double whammy. Women get an average of $1,000.00 or less and men get an average of $2,000.00.
Jason Hartman: And that Social Security payment doesn’t work for either party, but especially not for women, yeah.
CL Osborn: Exactly. The majority of women, to go on, had certificates of deposit – in the research that was done – and CDs and their retirement savings account in a more aggressive investment vehicle would have been much more appropriate. Divorce still dissolves almost one out of every two marriages, and as you know money is the leading cause of all divorces. And divorced women’s income, the minute they get dropped, drops an average of 73 percent on average.
Jason Hartman: Wow. After a divorce, huh?
CL Osborn: After a divorce, so the poverty rate among children quadruples when they live with a divorced mom instead of married parents.
Jason Hartman: How interesting, yeah.
CL Osborn: Fascinating. One-third of older single women count on Social Security for 90 percent of their income. Now, that’s pretty bad.
Jason Hartman: That is, yeah.
CL Osborn: And Social Security, as you know, is anything but secure, and the last census showed 36 percent of all households are headed by women, and many two-paycheck families depend on a wife’s income to make ends meet so this isn’t just single women. The consequences, therefore, are serious. Let me give you some more numbers on that. Almost one in four women are broke within two months of a husband passing away – we’ve basically said that before – and over 75 percent of all women are widowed at the age of 56.
Jason Hartman: I was just going to mention that, CL. I heard that statistic about a month ago and I could not believe it. But if you’ve got a lot of cases where you’ve got the man being a bit older than the woman, I sort of did the math on that and women outlive men, so 56 years old.
CL Osborn: She’s single and poor for a long time.
Jason Hartman: Right. So women really have to make an extra effort when it comes to investing, especially real estate investing because if they are on their own at age 56 – now, is that on an average?
CL Osborn: If you’re going to widowed, on average women are widowed at 56. Just a few more statistics that add to that; 53 percent of women are not covered compared to only 22 percent of men not covered by a pension. A staggering 87 percent of poverty stricken elderly are women. The statistics are startling, but it’s never too late. Like you were just starting to say, Jason, just start taking control of your financial future. While more women today are taking charge of that financial future, many leave money management to men or employers or ignore it altogether. I’ve got – the book I’m writing is Ladies: The Man is Not a Plan.
Jason Hartman: I love that title, by the way.
CL Osborn: Yeah, me too. I get more reactions – and it’s not me putting men down by any stretch. It’s not men’s fault. This is something we all need to pay attention to. The men that I know that have daughters are concerned about all this. So as a result, far too many women stay on the sidelines of the money game and never take charge of their financial future because we’re conditioned to be this way. We go to school to get out MRS degree.
Jason Hartman: Fortunately, that conditioning is obviously changing, but it’s still there to some extent, so women need to get on the ball and do investing and that kind of stuff. CL, you say there are three kinds of investors. Can you tell us what they are?
CL Osborn: Yes. They’re kind of blatant and in your face once you hear them. They’re very simple. Well, No. 1 is people who do not invest. That was me. I don’t know how and when you first started investing, Jason, but I didn’t. I didn’t have a clue and nobody had ever told me, “You need to do this or do that.” And then when I was divorced I went, “Oh, my God.” And the older you get the more you look at that, so we’re just not taught to invest. We’re taught to rely on the corporation that’s going to give us all those things, get the gold watch and work there 20 years and you’ll be fine.
Jason Hartman: And that plan has not worked in a couple of decades.
CL Osborn: That’s right. And so the third one is people who invest not to lose. They take the advice of some of these planners and they get a little insurance and they invest not to lose. In other words, they’re very passive. They have the job, they –
Jason Hartman: Right.
CL Osborn: – may have the savings or the CDs and maybe some mutual funds, and they’re coming from a lack of money or a fear and their wealth imprint is set very low. Their wealth imprint is about the secret sauce I’ll tell you more about later if you want.
Jason Hartman: I’m so glad you mentioned that because that’s something I say at my seminars. So many people are playing the financial game not to lose rather than playing it to win. And we’ve got to play it to win because people don’t even realize how much they’re losing with the effects of taxes and inflation just attacking their money, their savings and their wealth. And that whole concept of save for a rainy day, play not to lose, I think these people will wake up in 20 years and they will be just devastated. It’s so unfortunate, and I’m hoping that I can solve that problem for a lot of people, and you can too, and like-minded people. So that’s –
CL Osborn: Absolutely critical that we let the people know that we are no longer going to be here. Very soon a three-culture society, and we’ve always been the great nation of the three classes – the poor, the rich and the middle class, which is the majority of us in the United States, or has been. Well, that’s shrinking fast. What’s going on is scary and most people are just kind of in a zombie-like state and don’t understand that and aren’t getting that education, and they’re going to wake up one day and if they’re not rich they’re going to be the poor.
Jason Hartman: I know because the middle class is shrinking, and the middle class is really the only group that’s under attack. We’re coming up on a presidential election here and a lot of candidates, and very few of them are really talking much about being advantageous for the middle class. The middle class is the group that is most under attack. The poor, they’re getting benefits. They’re getting taken care of in some ways. Of course, this is up for debate, but at least there’s attention to it, okay? I’m not saying it’s all working.
CL Osborn: Yeah, that would be another whole fun conversation.
Jason Hartman: No question.
CL Osborn: I mean, it’s devastating. There are several books already out there about the shrinking middle class.
Jason Hartman: Yeah.
CL Osborn: So people can get themselves educated on this easily. We can’t cover it like we’d like to today, but you already said the third kind of investor is an active, aggressive real estate person who is compounding their real estate, dealing with tax-free growth, and they’re taking advantage of the tools that we have to do that, and other advanced vehicles. And they’re dealing with the abundance of it in their attitude and having some fun, and they’ve got a real wealth imprint that’s set very, very high, and so they go after it. Like when Donald Trump, who obviously has a wealth imprint set very high, says, “Why don’t you invest in the stock market and why do you do real estate?” And he says, “Because I can control it.”
Jason Hartman: Yeah, I love that.
CL Osborn: Yeah, I love that too.
Jason Hartman: Well, that leads into a good question for you, CL. What is the secret sauce of investing? Tell us about your recipe for the secret sauce?
CL Osborn: It is the wealth imprint. It’s actually how you think, your thinking. Create your feeling, create your behavior, and if your thinking is, “I’m in fear,” or, “I’ve got negative self-talk. I’ll fall on my face. I’ll make a mistake,” instead of, “Okay. If I fall on my face I’ll get back up and keep going,” then you can have the most financial education in the world, and you and I both know lots of people that are magnanimously studying and buying programs and learning more and still don’t do anything with it because they don’t take the first step.
Jason Hartman: Those are the spectators. Those are the seminar junkies, the people that just sit on the sidelines of life and never jump in and actually do it, and there’s no glory for them, unfortunately. You’ve got to take that step and jump in and do it. Millions have before you.
CL Osborn: Yes.
Jason Hartman: So I’m saying that to the listeners, get in there and get in the game. That’s where all of it is.
CL Osborn: Yes. There’s no such thing as a perfectly safe investment and way to go aggressively about creating wealth. You’re going to fall on your behind occasionally, you’re going to make mistakes and you’re going to get back up and keep going. And Donald Trump has fallen down and put it all back together, and there’s a big difference, this wealth imprint. I could sit down and talk to somebody for five minutes, and you could too, Jason, and find out where their wealth imprint was, whether they really can actually handle or will get to financial freedom or if it’s set very low and they’ll stay right where they’re at. People that win the lottery, you know the statistics on that?
Jason Hartman: Yeah, they lose their money. They give it all back –
CL Osborn: Yeah.
Jason Hartman: – pretty quickly.
CL Osborn: It’s the same thing. If you don’t have the right mental attitude about this, you’re just not going to make it. That is more important than all the knowledge you could get any other way.
Jason Hartman: Is there just maybe a question or two you could share with the listeners on how you would determine someone’s wealth imprint? Like what would you ask them?
CL Osborn: Well, first, the No. 1 question is where are you right now?
Jason Hartman: Okay. No. 2 question?
CL Osborn: No. 2 is how do you feel about taking some risk, taking the steps?
Jason Hartman: Right.
CL Osborn: Are you scared to death? Who do you have in your psychological or literal family? Do they tell you shouldn’t do this?
Jason Hartman: Right.
CL Osborn: “You can’t do that,” right?
Jason Hartman: Yeah, right.
CL Osborn: That message, and are you willing to just move away from them? You don’t have to not like them anymore or not have them around; just don’t have them in that part of your thinking process.
Jason Hartman: To some extent you need to not have them around. I remember reading one of the – I’m sure you’re a fan of him, too – Jim Roan’s books years ago, and he gave this great analogy. He said the people you hang around with are so influential, it cannot not be that way. They always influence you, and it’s like if you’ve got a good idea, if you want to go for something in life, if you want to make something happen, it’s like getting in the elevator and pushing the up button and they’re pushing the down button.
CL Osborn: Oh, good. Beautiful analogy.
Jason Hartman: Yeah.
CL Osborn: Yeah, I like that.
Jason Hartman: Good point about the wealth imprint. Why is real estate investing a good choice for women?
CL Osborn: Okay. It is such a good choice for women, No. 1 because you get to stay home and work from home and have all the success you want. First of all, there’s lots of reasons like that’s a good tax write-off and all kinds of things, but what I hear from not just women, men too is, “What’s the No. 1 thing that you want to have in your life?” “Well, I want more time with my family,” is the big answer that I get the majority of the time. There’s all kinds of other answers, but what we work towards is having people have what we call financial freedom. We’re just starting this whole new concept called financial freedom pods. Financial freedom means that you have the freedom to choose the life that you want, and at a point, a realistic point. I mean, you can become a multimillionaire in three to five years – Jason, you know this – in real estate investing –
Jason Hartman: Sure.
CL Osborn: – realistically with the compounding. It’s not a get rich quick thing, and everybody’s not going to do that, but you can do that. But if you can raise a family and take care of the home and take care of kids, you can do this, and you can do this whether you’re on the beach or traveling or wherever you wanted to do it from, from home, if you use what we call the Wealth Formula One. It’s a program put together by NAWREI, a five-step system that you repeat over and over which compounds wealth. And you can do it with what I call monkey dust and dragon guts.
Jason Hartman: What are those? What’s that mean?
CL Osborn: Well, monkey dust, you can get started, you know this, in real estate investing without much money. And even if you have credit that’s not where it should be right now, there are ways to get started with it, and it might take you just a little bit longer than if you’re starting with assets already. Yes, you can get there faster. And dragon guts is just the determination, and you heard that in my tone of voice, right? Determination.
Jason Hartman: Yes.
CL Osborn: You are not going to quit, and that’s where I come from on this. I may fall on my face or wherever, and I have done that, and I get back up and I keep going. And I’ve done that all my life until I learn how to quit doing that part of it and do it a lot better, so monkey dust and dragon guts.
Jason Hartman: Yeah, that’s awesome. I heard you’re writing a book. Tell us what it’s about.
CL Osborn: Well, I love the title of it, and we talked about it already, Ladies: A Man is Not a Plan – Why Women Need to be Wealthy.
Jason Hartman: That’s a great title.
CL Osborn: And that pretty well says it. We want you to take responsibility for yourself, not relying on other people so that you wake up, whether it’s when you’re 56 and become a widow or whether you’ve lost that mate through death, divorce or desertion, or you never had that mate. More and more women are choosing not to do that. And you can have this financial freedom in your life, and it’s a very simple process and we teach you the Wealth Formula One and the compounding and access to things that will change your wealth imprints and that kind of thing and that’s what we’re about.
Jason Hartman: Excellent. Well, CL Osborn, thank you for you being on the podcast with us today, and that’s all great advice and we’ll look forward to having you back on a future podcast, as well. Thank you.
All right. I hope you found that valuable. I just want to wish all of you a very happy, healthy, and prosperous 2008. As we come into a year of tremendous opportunities, we will see a lot more negative media attention paid to the real estate market, and that’s okay because remember there’s no such thing as a national housing market. There are only about 300 or so local markets around the USA, so lots of good opportunities out there. And it’s the Warren Buffet and the J. Paul Getty quotes that just I think make the upcoming year so exciting for all of us. Remember I shared the Warren Buffet one on the last show, and he said, “Be greedy when everyone else is fearful, and be fearful when everybody else is greedy.” So what do you have going on right now? You have a lot of fear out there. That is when opportunity is there for us investors who know what to do, who know how to play the game right.
And then J. Paul Getty said, “Buy when everybody is selling and sell when everybody is buying.” So a lot of people are selling now – great time to buy. We are negotiating tremendous deals for our investors on brand new properties all around the country. We’re in 35 markets all around the US, and we have got tremendous buys right now. Remember there are two business cycles that developers look at, and this is why we like really working with the developers the most because they have their business cycle and then the market cycle. And many of these developers are on a national business cycle, and they have investments in many bad, overvalued markets that are really in trouble right now.
Well, other markets that they also have homes in are actually very healthy markets, the markets we recommend, and so as they’re looking at this from their level of nationwide pressures to make their numbers come in, to report their numbers to Wall Street, they tend to cut very desirable deals in markets that are actually quite healthy. So this can work to your advantage, and go to www.jasonhartman.com, fill out the “contact us” form, and one of our investment counselors will be in touch with you to help you with more on that.
Again, all the best in 2008. We will have a lot of great shows upcoming for you, and thank you so much for listening and making us so popular on iTunes and all of the other podcasting websites. We really appreciate your support, and again, all the best in 2008. It’s going to be a great new year.
I’m here with Area Manager and Investment Counselor, Lynda Mulley, and she just returned from Kansas City and also Grand Junction, Colorado. And Lynda, tell us about what you saw in Kansas City.
Lynda Mulley: Kansas City is a great market, Jason. It’s very stable and solid. It’s a market where there’s good growth and lots of things going on, and there are some great projects there that I took a look at that I think the investors would love to hear about.
Jason Hartman: Now, one of the things we always do is you’ve got to go buy your own house there –
Lynda Mulley: Yes.
Jason Hartman: – if you want to recommend the area to clients, and, of course, I’m already an owner in Kansas City. I bought a four-plex there. But tell us what you’re recommending today in Kansas City.
Lynda Mulley: What we have is a great single-family home, three-bedroom, two-bath, about 1450 square feet for $189,900.00.
Jason Hartman: Brand spanking new, right?
Lynda Mulley: Brand new, rent ready, close to schools and a beautiful shopping center, big upscale shopping center called Zona Rosa, which I had lunch at and just fell in love with.
Jason Hartman: Excellent. What’s the projected return on investment?
Lynda Mulley: Projected investment return here is 34 percent based on our usual assumptions that we put on our performance projections and the loan that you could get.
Jason Hartman: Excellent. Boy, 34 percent annually. Don’t try that in a mutual fund or the stock market. You probably won’t get it, but you can do it pretty conservatively and prudently with the right real estate investments with the right structure. Lynda, thanks so much for talking about the property in Kansas City.
Lynda Mulley: You bet. Thank you so much.
Jason Hartman: Hey. I just wanted to announce a couple of quick things for you. If you are interested in a Platinum Properties Investor Network franchise in your area, we are now approved for franchising in 18 states. Please visit www.jasonhartman.com and click on the franchise link and fill out the short application.
If you are able to come to one of our live events, we would love to see you and meet you in person. We’ve had people fly in from all over the US for them. So hopefully you can join us for some of those events.
Also, if you are interested in career opportunities with us, our company is growing quickly and we would love to talk with you about career opportunities. Also remember our rental coordinator is here to help with your rental properties. If you need assistance with your rentals, your property managers, your advertising, remember we’re here to help, and we stay with you through the life of the investment, so feel free to call our office anytime and ask for the rental coordinator for assistance on your rentals.
Also want to remind you, listen to our old podcasts. At least go back to Podcast No. 13 forward and listen to all the podcasts after that. You’re welcome to listen to all of them. The ones before No. 13 are older, but they’re also good, but the newer ones, No. 13 and forward, which are really good ones to listen to, so please take advantage of that.
Be sure to see appropriate disclaimers and disclosures on our website at www.jasonhartman.com. Remember that we are not tax or legal advisors. So give us a call on any of these issues, and remember, we are here to help, and we will look forward to talking to you on the next podcast.
This material is the copyrighted creative work of either Jason Hartman, the Hartman Media Company, Platinum Properties Investor Network, Incorporated or the J. Hartman Company, all rights reserved.
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Duration: 50 minutes