Announcer: Welcome to Creating Wealth with Jason Hartman, President of Platinum Properties Investor Network in Costa Mesa, California. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing, 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 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it. And now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
Jason Hartman: Welcome to another edition of Creating Wealth, Podcast No. 70. It’s great to be here with you today. I’m your host, Jason Hartman. And as you know, I try to have it where every tenth show we do a subject that is not particularly on investments or money or real estate, but it’s about life.
And today, I want to talk to you about something that influenced me a long, long time ago at the tender young age of 17 years old. I had discovered Earl Nightingale, Denis Waitley, Zig Ziglar, Jim Rohn, and all of these sort of great motivational speakers and life philosophers. Today, I’d like to share with you a concept of the Person on the White Horse and I think it is particularly appropriate in today’s economy when we are in, for many, for tough times. I think most people will experience tough times.
Hopefully, though, the listeners to this show will experience better times because out of every disaster – and we certainly have enough disasters in the news in the financial world nowadays – comes opportunity. And the disaster and the opportunity are not spread equally. The opportunities seem to fall to certain people and hopefully we’re going to be one of those. I’m going to do my best to make sure the opportunities fall to you and to me, and through proper planning and proper thinking and seizing proper opportunities at the proper times, I think we will be enriched by all these crises we see going on out there.
And unfortunately, others, who are not listening to the show and who are not following the right investment philosophies and the right thinking, they will be hurt. Their lifestyle will be diminished. For many, it’s unfortunate to say their lifestyle will be destroyed. And again, the rising tide does not float all ships and the sinking tide does not sink all ships, as the saying goes. So these opportunities and problems are distributed unequally, so let’s make sure that we are the beneficiary and the recipient of opportunities and good times because there will be fortunes created during tough economic times. Let’s let you participate in those fortunes, okay? So let’s make sure we all participate in those fortunes.
So, first of all, before we get in to the Person on the White Horse and I want to circle back with you about what I covered on Show No. 60 on entitlement versus gratitude. I think that is also particularly important now and it ties in with the concept of the Person on the White Horse and sort of the doom and gloom out there. So, we’ll talk about that.
Also, as a follow-up to my show last time on Peter Schiff, the famous doom and gloomer, who has really a lot of the right premises – I like Peter’s work, as I mentioned. I think he’s a little too gloomy on some things, but listen; you’ve got to be a little sensational in either case because no one wants to listen to you if you’re middle of the road, right? So, you’ve got to come up with a unique angle and I think Peter’s done that, and I’m a follower of his work and I think it’s good.
I think, unfortunately, though, Peter does not make the distinctions, as I’ve had some comments on that interview since it was released last week. The distinction he unfortunately does not make is No. 1, he does not distinguish – when he talks about the housing market, he does not distinguish between land values, which I believe are declining, and improvement values, which I believe are increasing. And I think over the coming years, they’re going to increase dramatically, so go back, and look at my prior show on Risk Evaluation for some more information on that, and you can learn more about that.
Of course, it is very important to parse this issue up into the difference between improvement values and land values and not talk about the “housing market” as if it is some single entity because it’s not. It’s really multiple entities.
And then the other part where the distinction isn’t made with people like Peter and others out there in the media is that they don’t distinguish geographically and they don’t – they just don’t want to distinguish because it’s not their business to parse up housing markets and talk about the difference between Los Angeles, California, and Kansas City, Missouri. Those are distinctly different markets.
In a recent question that I’ll address here in a moment, Jeremy Segal, another other big financial guru and commentator out there and author, talks about the housing market in Manhattan, New York. Well, you know, folks, if you’ve been listening, I’m certainly not recommending investing in Manhattan. That market never made sense to me. I wouldn’t invest there. I’m not recommending you do that.
But they talk about housing as if it’s some national thing and in a country as large and diverse as the United States, there’s no such thing as a national housing market, obviously. It’s amazing how obvious this is when you just think about it for two seconds, about how people make these blanket statements on CNBC and various parts of the media, and everybody listening is supposed to not think and just take them for granted as though, oh, the housing market is bad.
Well, the fact is, just like problems and opportunities that I talked about a moment ago, it’s not distributed equally. It’s distributed unequally, so our job here is to parse that up for you and help you understand where it’s distributed to your disadvantage and where it’s distributed to your advantage.
Okay, so before we get into the Person the White Horse and entitlement versus gratitude, circling back on that, a couple questions. Go to www.jasonhartman.com and click on Ask Jason. We love to get your questions – got one today from a KFI listener. We advertise on KFI, and I’m a frequent guest on various radio stations. And so we get comments and questions from people who are not necessarily listening to the show here on their iPhone or their iPod or on our website at www.jasonhartman.com or whatever mp3 player that they’re using, or sitting at their computer while they’re doing email and busy work listening. We get people that just hear me on the radio and ask questions, so this looks like one of those.
And it comes from David Bligh, probably in the Southern California area, and David’s question is, Jason, is this a good time to buy investment property using equity in my primary residence?
Well, David, definitely, I would say yes, absolutely it is. It just depends where the properties are located that you’re buying and if the property makes sense the day you buy it. So does it make sense, is it sustainable from a cash flow perspective the day you buy it? That is what is going to determine whether it makes sense or not. But of course, it makes sense to get the equity out of your home because the equity in your home is being diminished and debased and attacked by inflation relentlessly.
Now, we’re going to have a show on this because there is a very important distinction that you’ve heard me allude to a little bit, but I haven’t parsed it out fully for you, and I’m going to do that on an upcoming show, and that is the difference between monetary inflation and asset deflation. And I believe, by and large, we have both happening at the same time right now.
So monetary inflation says that the value of that equity sitting in your house, that money in your savings account, that mutual fund, those stocks, those bonds are being attacked and the value of them is being diminished dramatically. But asset deflation also means that land values, by and large, are declining and overpriced real estate markets are still declining. I still think we are going to see additional decline in the real estate prices in places like Florida, in a lot of the places like New York, Washington, D.C., the Northeastern United States, Boston, California, Arizona, Nevada, over-valued bubble markets, Hawaii. These are declining markets, folks. These are markets we do not recommend.
At the same time this is occurring, there are very good markets around the country, in Texas, Alabama, Mississippi, Louisiana, Missouri, a lot of different markets; the Carolinas, North Carolina, South Carolina. So the answer is, David – and thank you for the great question – yes, it is a good time to buy investment property using your equity, but the question is where is the investment property? Does the investment property make sense the day you buy it? Is the RV ratio on these properties good? Is the LTI ratio – Land-to-Improvement ratio – good? So there’s more to know to answer that question, but the general answer is absolutely yes.
Okay, got another question from a listener in the Ask Jason section; was from Sam Hasslem and he’s in Long Beach, California. Sam, thank you for sending me this great article. I love it when you guys send me articles, so please continue to do that. You can paste the link right into the web form on the Ask Jason section.
And this article was an article that investigated stocks versus houses. There’s so much misconception on this here because the crooks on Wall Street, folks, would have you believe that stocks are a better investment than real estate, and they will do things like comparing real estate appreciation rates with stock appreciation rates over the course of many years.
And when they do this, they’re going to show you – in this example, Jeremy Segal, another big financial guru, this is an article from SmartMoney.com. Smart Money Magazine is part of the vast Wall Street conspiracy. These people don’t want you to understand the true characteristics of a real estate investment, including tax benefits, leverage, the fact that you can rent your property to someone else and they can service the debt for you. They want you to compare it on a simplistic basis where you’re buying a property with all cash. And after listening to my show, you’d have to be crazy to do that because it doesn’t work as well.
And so, they’ll say things like these platitudes. They’ll say, “In Jeremy Segal’s book, Stocks for the Long Term, he finds that real returns average 7 percent over nearly seven decades, ending 1870, then 6.6 percent through 1925, and then 6.9 percent through 2004.” He says shares return about 7 percent a year after inflation.
Well, two major problems with that big lie there, Jeremy. And sorry for the lack of respect, but this just burns me up when these comparisons are made because they’re just not factual. No. 1 is that inflation is much higher. Part of the vast Wall Street and Washington conspiracy, if you will, is that Washington, the government, lies to you about the true rate of inflation. Wall Street wants you to believe that because they can’t sell their inferior financial products, like their stupid annuities and stocks and bonds, their polluted toxic assets, to unsuspecting middle-class investors. Do I really have to tell you any more after the past few weeks what a scam Wall Street is? I mean do I really have to prove that? I don’t think so. Just turn on the news.
Okay, I’m getting angry here. I’m going to calm down and tell you this is just something else. So, they don’t want you to believe inflation and know the real rate of inflation because nobody would buy their products if they knew they were automatically from the starting gate losing money. I mean I have a friend that sells these crappy annuities. I don’t know how you can do this with a straight face, where he says I work for Merrill Lynch, now B of A, and you can have guaranteed income when you retire. But what they don’t tell you is that this income will be destroyed by inflation. Folks, just use your mind and you know that this is a lie. It is a huge lie.
The monetary inflation rate is far higher than Wall Street or the government wants you to believe, No. 1. And No. 2, they don’t even want you to consider inflation. So, he says stocks return 7 percent after inflation. Well, sure they do, if you believe inflation is only 3.5 percent, which is a blatant fallacy. It’s not true at all.
And then No. 2 is say, for example, your rental property appreciates at 6 percent on average. Now, this depends what period of history you look at, but according to the Wall Street Journal – and they have an incentive because all their advertisers are financial services companies and same with Smart Money. All their advertisers are companies like Ameriprise.
By the way, I’ve got to make a comment on this. Don’t you love these commercials? You turn on the TV and you see these commercials. You look at these ads for these financial services companies, platitude after platitude after platitude. “Well, we understand you because you were a hippy in the ‘60s and you surfed and you drove a Volkswagen bus, and so now you’re grown up and we know how you think and how you invest. You’re individualistic.”
Folks, talk to me about something substantive here, about return on investment. You see these commercials and they’ve got a tree – who was this one for, Smith Barney or something? I don’t even know. They’ve got a picture of a tree and they say, “We invest for the long term. We make money the old-fashioned way. We earn it.” No, you don’t. You make money by ripping off middle-class investors. You make money by screwing them out of their pension funds. That’s how you really make money. It is a blatant, ridiculous lie that is going on out there, okay?
Maybe I’ve had too much coffee today, but can you tell I’m a little edgy? I feel like Jim Cramer, but on the opposite side of the issue.
Anyway, so say you get 6 percent appreciation on your rental property. You put 10 percent down on it. Folks, that’s a 60 percent return on investment. It’s not a 6 percent return. And then you’ll compare it to stocks where they say, well, you get 7 percent owning shares of a business. Look, I’ve covered this on other shows.
So another part of this article, “Stocks versus houses, evaluations.” So, they give this ratio of what can you rent a property for versus what would it cost to buy the property. And it says in SmartMoney.com’s hometown of Manhattan, New York, where more detailed data is available, the ratio of condo prices per square foot to apartment rents per square foot is 22. In other words, saying that you would be better off renting than owning and hey, I agree. In that market, in a bubble market like California, New York, Washington, D.C., most areas of Florida, you would be better off renting. So, rent your personal residence. It’s a better deal to rent in those markets and buy some investment properties scattered all over the country.
The other thing they don’t consider here is the fact – and I’ve done a show on this, so go listen to it, called “The Three Dimensions of Real Estate” – they don’t consider the multi-dimensional nature of a real estate investment. So for example, here, when you’re looking at renting versus owning, well, when these prices get out of whack, you start to see real estate prices decline, but you see rents, at the same, strengthen. You see them go up. So look, if I was going to be living in one of the markets where we recommend you invest, I would not be renting in those markets. If I was to move to Dallas, Austin, Houston, Mobile, Kansas City, Indianapolis, Charlotte, in those markets, I would buy. You’re better off owning.
Fortunately, all of our tenants in our properties don’t think that because they don’t have the financial maturity to see that it’s better to own. So those markets it’s better to own. In California, New York – better to rent. So, it just depends where you are. But it’s still better to buy investment properties in these other markets.
Now, that begs the question, why would people rent if it’s such a good deal to buy in those markets? Well, I don’t have time to go into it because we’re running too long, but there are many reasons, the most of which, I would say, is what I call financial immaturity or lack of financial maturity, or they just simply can’t plan in advance. They’re living for instant gratification, living for today.
All right, let’s get into the Person on the White Horse. Folks, we are in a trying time in America today. We are in a time when the standards of living for people will be diminished greatly in my opinion, most people. We are at a time where people have been lulled into apathy, where American’s have been so comfortable for so many decades, where they take it for granted that their lives will be as good as the lives of their parents. And so, we have been living in an era where we’ve had big government. We’ve had big pensions. We’ve had a delay in the economic doom and gloom through Alan Greenspan, mostly, and his increase in the credit bubble, making credit so readily available, causing the economy to expand and expand and expand for far too long a time. We’ve been in an era where we are living on borrowed time.
Now, as far as my investment philosophy goes, I’m ready for this. I’m ready for this decline in lifestyle. I am going to dramatically prosper through this following my philosophy. And if you’re following my philosophy – hopefully you are as a listener – you are going to prosper through this time, too, I believe, and most people relative to you, their standard of living will decline.
So, I’m not going to talk about the money angle of this. Podcast 70 is to talk about the mental angle, the life angle of it. We have lived in an era where Roman people in the past had lived in, the era of bread and circuses. So, if you look up bread and circuses on Wikipedia, you will find that there was a Latin term that described this concept of bread and circuses, which was an ancient Roman metaphor for people choosing food and fun over freedom. It often appears in commentary that accuses people of giving up their civic duty and following whichever political leader offers to satisfy their decadent desires.
And you know what folks? We have fallen for that. We as Americans and in westernized countries around the world, we have fallen for the bread and circuses, where we’re far more interested in the O.J. trial, in the latest entertainment, music, whatever, or the latest Paris Hilton video, or what Lindsay Lohan or the stupid celebrities are doing. We are interested in hearing politicians give us a lot of platitudes that they have no substance saying hope and change in the future of America, blah, blah, blah.
Folks, what we need to hear is we need to hear about getting to work, about putting our nose to the grindstones, about making some hard choices, about saving this great country that has been the beacon of hope and freedom for really billions of people around the world. This has been a great experiment of westernized democracy and I tell you something, it’s not looking real good. Would I say invest in America and buy rental properties? Most definitely, yes because there are still ways to profit. I understand what’s coming. In my opinion, what’s coming is a big change and I’m going to weather this change. I’m going to profit from this change. I hope you are, too.
But the philosophy of instant gratification, of hedonistic living, that is part of the massive expansion of credit and we are going to see that dramatically change. We’re already seeing it change right before our eyes. We’re seeing huge government bailouts, where they’re rewarding bad behavior. They’re rewarding crooks on Wall Street. You cannot trust Washington. You cannot trust the government. You cannot trust Wall Street. These people are in for a power grab. They’re there to take your money and your production through inflation, through taxes, and the question, whenever some politician promises anything, you better ask yourself is how will they pay for it because the government is broke. There is no money to pay for this. They’re going to pay for it by devaluing the value of your dollar, and our investment philosophy addresses that extremely well.
Now, I want you to listen to this. One of my preparedness strategies for this economy, this gloomy economy that we are in, is to become the person on the white horse, and when I was 17 years old, I heard Earl Nightingale, a great philosopher of the time – he passed away in 1989 – talk about the person on the white horse. So I highly recommend you study Earl Nightingale. You look for his books. You get his audio products from Nightingale Conant and listen in to this clip from the Person on the White Horse and then I’ll be back with you.
Earl Nightingale: All businesses – all organizations, from the smallest to the very largest, need a leader. They have their committees, their echelons of command, and perhaps a widely dispersed group of semi-autonomous divisions. But the overall company and each of its divisions must have strong and able leadership. Contrary to popular belief, you do not raise morale in an organization. It filters down from the top. The attitudes of the people working in any organization will always reflect the attitude of the leader, and finally, this leader will always be found to be just one person, the man or woman on the white horse.
I’m sure you’re aware that even the largest and oldest companies, with many thousands of employees and hundreds of management people, will, when they find themselves in trouble or not doing as well as they should, seek out one person and place him or her in the position of final authority. The whole company, the board of directors, and perhaps thousands of stockholders all look to this one person for leadership and success.
The case of Chrysler and Lee Iacocca is an excellent example. Incidentally, we have Mr. Iacocca on a taped cassette program and it’s excellent. Wherever you find a successful going concern, whether it’s a gas station, a supermarket, a school club, PTA, or a well organized home, you’ll find behind its success an outstanding leader. This is the most valuable person in society. In industry, he or she makes the wheels turn, the entire economy work. This is the person who’s been responsible for the growth of nations and their position in the world, the employer of millions, the dreamer, the planner, and the clock to him or her is something that other people watch.
You’ll find this person working early and late, and when not working, he or she is usually thinking and planning. Way back in the depression of the 1930s, the phrase most often heard by employers was I’ll do anything; just give me a job. Millions were unemployed, thousands of business firms had closed their doors, and outside employment offices long lines of people stood waiting for any kind of work. It was during this time in Long Beach, California, crowded to overflowing with thousands who had migrated there looking for work, when there wasn’t enough work to go around for the permanent residents, it seemed, that a friend of mine made an interesting discovery. He found that he could go to work almost anywhere he chose.
Now, amazing as this may sound, it was absolutely true. It dawned upon him one day that the business establishments of various kinds were just as anxious to succeed as were the people looking for work. The owners and managers of these businesses were worried and concerned over the hard times, which had descended upon the country, and a great many of them were looking for somebody to come to their aid, the person who would somehow show up and solve their business problems.
But all they heard was people asking for work and saying, “I’ll do anything.” These people were asking for a paycheck from a company which was very likely teetering on the brink of financial ruin itself. And so signs appeared in windows all over the land, reading, “No Help Wanted.” This was a negative form of advertising, while it kept the frantic hordes away from the door. It also hurt business.
Well, this friend of mine decided to become a part of the solution instead of a part of the problem and his method was simple and it worked like a charm. He sought for the kind of business he felt he would like to work in and in which he could build a career. He then devoted a month to finding out all he could about that particular business. He talked to other people in the same line. He heard their problems and what they felt was wrong. He talked for hours, asking questions, probing about what they felt was needed and so on. He went to the public library and read everything he could find on that industry. And then he began to think of ways and means by which this business might be improved.
When he was ready and finally made his call on the company for which he had decided to work, instead of asking for a job, he said to the boss something like this: I believe I know of several ways in which your business can be greatly increased and I’d like to talk to you about them.
Well, here he was selling the one thing on Earth in which his prospect was most interested. The fact that he knew a good deal about the business now permitted him to talk intelligently. He took a positive attitude, expressed a willingness to pitch in and help put the business on a sound and profitable footing, and of course, that’s right. He got the job. Millions out of work and asking for jobs, but one man, who found a way to be of help, what had he done?
Well, first, he had specialized. He had selected one line of work and decided that that was where his future would be. Now he had to prove himself and he did. The jack-of-all-trades and master of none was the man who suffered during the Depression. People who knew what they were doing and where they were going sailed through those Depression years just like a large ship sails through a storm. It wasn’t as comfortable as it could have been, but at least the crossing was a success. At least they didn’t founder and thousands of businesses actually grew larger and prospered during the Depression.
The best way for you to develop the security that lasts a lifetime is to become outstanding at one particular line of work. Look at it this way. Regardless of economic ups and downs, the industry of which that line of work is a part will continue to operate. It won’t shut down completely. As long as you’re in the top 5 percent of the people in that industry, you know you will always be in demand. You’ll be wanted and needed. Not just where that industry is concerned, but where you and your family are concerned also.
The man or woman who becomes truly outstanding in what he or she does has the world on a string. Here’s the person of confidence and peace of mind. Here’s the person who’s quietly aware of his or her ability and intimate knowledge of his or her job in a particular industry. Here’s to the homemaker or student, who’s at the top of the group. They’ve got it made and they and everybody else know it.
Ask yourself this question. Am I now such a person? Down deep inside, you know the answer. If you answered yes, you’re among the most fortunate people and in one of the smallest and most elite groups on Earth. If your answer was no, it can be turned into a yes in a surprisingly short time. The first step is to make one really big and important decision. It’s a decision a great majority of people never make and suffer as a result. Failing to make this decision keeps a person from every really getting on course or clarifying his or her goals. If you make the decision, I’m now going to recommend you can take a deep breath, give a comfortable sigh of relief, fix your eyes firmly upon your target, and go to work relaxed, comfortable, and sure in the knowledge that the success you seek will be yours.
The great steel magnet, Andrew Carnegie, when asked the formula for success, answered, “Put all your eggs in one basket and then watch that basket.” Let’s be frankly realistic. Who gets laid off work during an economic slump? Well, what gets thrown over the side when a ship is in danger of going down? Everything not absolutely essential to the operation of the vessel and the safety of its passengers.
And it’s the same with a business or any other organization. It has to be that way. With a corporation, its main purpose is to remain in business forever. As long as it remains in business, it can provide the needed product or service, protect the investment of those who have faith in it, and provide jobs for those who are essential to its continuity of operation. It’s the duty of management to protect the firm and the people who depend upon it, just as it’s the captain’s duty to do everything in his power to keep his ship sailing.
All a person needs to do is make certain that he or she is a vital part of the business or organization. Those who insist on remaining spare gear, those who do no more than they must in order to scrape by, those who say I’m not going to do any more than I’m paid to do, must expect to be jettisoned when things get too rough for safety.
Nobody, particularly the captain, likes to see cargo thrown over the side, but if it will help save the ship, there’s nothing else to do. That’s why people are laid off. It has nothing to do with management and labor relations or personalities, and in the long run, it’s best for everyone, since once smooth sailing has again been reached, additional employment can again be made available.
So each of us must decide whether we want to be part of the cargo or a member of the crew. It’s said that millions suffer today from a malady called “pan phobia.” Pan phobia means literally fear of everything. It’s an uneasy feeling, a feeling of insecurity that generally manifests itself as a sort of lump of fear that settles right behind the belt buckle, especially on Sunday evenings and on Monday mornings.
There’s nothing you can put your finger on. It’s just an apprehension, a feeling of foreboding, and this extremely unpleasant condition is said to result from the unspoken, but realized fact that we’re getting credit for more than we’re actually doing or that we’re doing less than we could be doing. It’s the perfectly natural and normal understanding deep within each of us that there’s something basically wrong about getting praise that’s not earned or if you’re an employee, being paid for something you’re not doing as well as you possibly can.
If we have pan phobia, running doesn’t do any good. We find it follows us on vacation and around the house and yard on weekends. It’s inside us and no matter how fast the jet we board or how exciting the television program we’re watching, soon we’re aware of it again.
Now, there’s a simple cure for this malady. It’s to throw ourselves, not out of a window, but into activity, into our work. In the decision to be worth more than we’re being paid, only in this way can we grow. It’s over balancing the scales in the service we give, knowing that our rewards must follow as a natural result.
Anyone who would be honest with himself or herself realizes that he or she has been happiest and most satisfied after having successfully completed a difficult job. A leader is a person who can help and lead others. It’s the conscientious mother who wants her children to grow up knowing the rules for success and happiness. It’s the father who shows by example that any job worth doing is worth doing well. It’s the student who studies to learn, not just to get a grade, who has a mind of his or her own and sets the pace for his or her fellow students. It’s the farmer whose farm sets the example in his area and the small businessman or woman whose business continues to grow and prosper with the passing years. It’s the employee who has the good sense to realize that one gets most out of any job by giving loyalty and dedication to the firm that pays his or her wages.
A leader is any person who realizes the importance of becoming a bigger and better person with the passing of every day, week, and month. A leader takes the responsibility of his or her own growth, a planner, a thinker, a doer. Each of us can become such a leader in our own area of activity. It’s not difficult and in the long run, it’s easier for us and on us than what it first may appear to be the easier of two courses. Simply fix your eye upon your goal, visualize it with every ounce of your being, enjoy the prospect of it, and courageously step out toward it. Maintain a cheerful, helpful attitude toward everyone. Why shouldn’t you be cheerful since you know you’ll achieve everything you’ve set your heart upon?
Become a kind of sponge for information, which will help you on your way. You don’t have to waste years making the mistakes others have made before. You’ll be surprised at how quickly you’ll reach your goal, but don’t be impatient. Know and have faith that what should come to you will come to you in the right time. Everything in the world works on the side of the person who works with nature’s laws. And above all, if you should forget everything else, remember that everything about you – everything you will ever have, know, experience in any way – operates as a result of a law, a law that is true and unchanging, the law of the stars and of the balance of the world.
As Emerson wrote, let him learn the prudence of a higher stream. Let him learn that everything in nature, even dust and feathers, go by the law and not by luck, and that what he sows, he reaps.
Look about you. Take stock of your present situation because it’s nothing more nor less than the result of your past sowing. Are you happy with it? Is it what you want? Then you know what you must sow today and tomorrow and the next day, and in the sowing, rest in the calm, serene, and cheerful certainty that having sown, you will then reap the rich results that come automatically, all the years of your life, the abundant harvest.
Now, this is Earl Nightingale, reminding you that success as a human being in modern society does not come naturally. It requires the conscious utilization of ourselves in the service of others. We have our minds, our genetic possibilities, a certain amount of time, and our free will. We belong to the world minority that lives in a free society. We could become whatever we seriously make up our minds to become. That’s possible because whatever we seriously decide to do is naturally linked to our genetic possibilities. A person with little or no aptitude for science will never decide to become a scientist. A naturally shy and retiring person will never apply for a job in sales or if he does, he’ll soon get out of it.
Each of us has his or her own inner voice. Emerson referred to it as that iron string that vibrates within us. Each of us wants to succeed during our holiday on Earth and each of us should. But we don’t succeed in groups. We succeed or fail as individuals.
The Lead the Field program you’ve heard on these taped cassettes contains the best basic information and the great ideas we need to reach whatever goal we seriously choose. Listen to these tapes often. You’ll be astonished to discover how much you missed with your first and second listening.
Now, there’s a very good reason why this happens. As we listen to a message, an idea will catch our interest and we concentrate on it for a few seconds or longer. Now, while we are thus engaged, we miss what’s being said during the time we’re concentrating on that idea. It’s like lifting the tone arm on a record. Now, the next time, we won’t stop listening when that idea appears and we will really hear consciously, for the first time, what immediately follows. Think of this program and the other Nightingale/Conant Programs you order in the future as your partners in success. You can always refer back to them. You’ll find yourself delighted by the new enthusiasm and excitement you’ll experience as you bring new meaning, new rewards into your life. Thank you.
Jason Hartman: Well, wasn’t that great? That’s what we’ve got to be, folks. We’ve got to be the person on the white horse for our employer or, if you’re in business for yourself, for your customers and for your employees. Be the person on the white horse. Be the person who is the solution. Be the person who adds value. Be the person who is a master of something, who is really good at something.
Did you notice how Earl Nightingale in there quoted Andrew Carnegie and said put all your eggs in one basket and watch that basket? As far as my investment philosophy, I agree with that. Put all your eggs in the most historically proven basket. Buy a bunch of rental properties, diversify them geographically, use debt prudently, exist in the real economy. Rent them out to people. The population is increasing. People need a place to live. It’s really, really simple.
You know what I love about these rental properties? They never understate their earnings. There’s never a CEO or board of directors at the top stealing all the money, skimming all the profits off the top. They just sit there. They provide housing for people and they create wealth for their owner. That’s a great deal.
Now, as part of this being the person on the white horse, go back if you want and listen to Creating Wealth show No. 60 where I talk about entitlement versus gratitude. One thing I forgot to share with you is this clip from a great philosopher, a great business philosopher that I have followed for many years. Now, this clip is at least eight years old and this is by Dan Sullivan. I’m in a group called Entrepreneurs Organization, formerly Young Entrepreneurs Organization, YEO, and Dan talks about entitlement versus gratitude. And I want to play a very short clip for you right now and encourage you to look Dan up. He is the creator of a program called “The Strategic Coach,” and he’s got some great materials. This is just a little quick sample and then I’ll be back with you.
Dan Sullivan: Now, Concept No. 5 I call the “No Entitlement Attitude” and I want to go more deeply into this whole issue of entitlements because in North America today, we’re facing an historical situation that was caused by what happened in the world right after the Second World War. And one of the problems over the past 50 years that is pervasive throughout North America – and it’s true in other countries, but North Americans seem to suffer from this almost more than anyone else – is that, since the end of the Second World War, North Americans and people living in other industrial countries have been living in what I call the Age of Entitlement.
The chief feature of the Age of Entitlement is that during a period of unprecedented progress and prosperity, never have there been more people dissatisfied with their personal lives, dissatisfied with society as a whole. At a time when most people in North America are enjoying the highest standards of living in the history of the human race, there is enormous complaining.
The reason for this dissatisfaction and complaining lies in the belief system that has been built up in people’s minds since the end of the second war. And there’s a lot of research being done. There’s a lot of studies being done by top-rate academics and top-rate journalists. And they’re going back, and they were saying, “You know when we hit 1945, something very fundamental happened to the attitudes of the people living in the United States, living in Canada, and then this sort of spilled over to many other parts of the world. Many people living in North America today believe that society in general and their lives in particular should be perfect.”
After the Second World War, especially in North America, there was an extraordinary economic growth for a 25-year period that lasted right from about 1945 and came to an end around 1970, right about the time when the Vietnam War was at its height.
Now, during this period of time, government and corporate leaders made claims that all the problems in society could now be solved because there would always be more than enough money to pay for everything. There was just tremendous money available for large government programs, for huge bureaucratic endeavors. You had incredible pension plans, incredible benefit plans that were created by employees that worked in government – that worked in large corporations, which most people did, by the way, by the year 1970 in the United States. Virtually, 93 percent of all people had their jobs in fairly large institutions, bureaucratic institutions, and they had incredible benefit packages and they had incredible, easy lives compared to the kinds of lives that people are experiencing right now.
And what happened was that individuals were repeatedly told by their leaders, in election after election, by the people who were spokespeople for the largest corporations – they were told that all the problems of society – poverty, inequality, crime, disease, unemployment – would now be solved either through large government programs or they would be solved through the expansion of large corporations.
And so for 25 years, there was a generation of individuals, the largest generation in the history of the world, the Baby Boom generation, who grew up with their parents saying everything’s going to be taken care of. When you’re our age, there isn’t going to be any poverty. There isn’t going to be any more crime. Equality is going to be handled. Everybody’s going to have a sense of equality.
And so for 25 years, people were educated and not only that, the evidence was all around them. There was this enormous amount of money, so government departments got very, very large. Government bureaucracy burgeoned at the seams because of the enormous amount of money that was available. The large corporations started having hundreds of thousands of employees, who all very rich compensation programs. If you joined a large corporation, it was lifetime employment. If you joined at 18, at 65 you would come out with a wonderful pension. Everything would be taken care of.
And so, we had this period of time when people were led to believe, one, that all the problems of society could be solved; secondly, there was always going to be enough money to solve anything that had to happen.
Now, for 50 years, people have been taught to believe that life in the next generation was always going to be better than it is in this generation. There’s a term that’s used. It’s called the American Dream and you hear politicians using this term today and you hear corporate leaders talking about it. It’s in advertising. It’s in the headlines. It’s on the commercials, the American Dream. And it’s talked about as if Americans always had this thing called the American Dream, but the earliest documented use of the term, American Dream, was 1932. Nobody before 1932 ever used this term. And it was not widely used until the late 1940s and throughout the 1950s.
So, before that period, there was no American dream. There was America. There was opportunity, but nobody had this dream. And what the dream said was it was a land of plenty, where all the problems were going to be solved. Every individual was going to be happy and that life on a society level was going to be perfect. Life on the personal level was going to be perfect. And that’s what the American Dream came to mean.
As a result of this, at least two generations have been extensively educated that life should always be easier for them and should always be more successful and it should always be happier. This is where the Age of Entitlement came from, the belief by the majority of the population that they were entitled to a better society, that they were entitled to a better personal life, than had been true before.
As a result, when it does not happen, and it has not happened for most people, society, in many respects, hasn’t gotten better on these key issues of poverty, equality, unemployment, crime. Things haven’t gotten better. And not only that, but a lot of people have suffered personal setbacks over the last 25 years, so as these setbacks have occurred, many people feel outraged. They feel cheated and they look for someone to blame.
Now, in retrospect, when we look back at that period between 1945 and 1970, we begin to appreciate it that it was just an anomaly. It was just a very unusual period of history. It was just one of those blips. It probably will never happen again in the way that it happened back then.
North America became prosperous because most of the rest of the world was ruined by the war, so everybody in the other parts of the world had to buy from American companies, and so manufacturing exploded. All the different kinds of products or services that America could create, Canada, too, all these factories were going overtime. People were paid overtime. Salaries were at an all time high. There was so much cash in the system that you could give people anything that they wanted. Everybody could have a college education. Everybody could own a home because there was just this money flowing in from the rest of the world.
So, the economy in North American grew in what seemed to be an unlimited fashion. There was going to be no end to the growth. No matter how expensive and how big government became, there was always going to be the money to pay for everything. So, we didn’t resent the size of government because everybody had money. You paid high taxes. It didn’t matter. There was always money.
Now, since 1970, we’ve learned two big lessons. There are many problems that government can’t solve and two, there’s a limit to the money. There isn’t all the cash in the world to do everything that we want to do.
So, as a result of this, over the past 25 years, a lot of people, a lot of groups, have seen themselves as victims because they’re not getting what they feel they’re entitled to. They were promised this. They were promised this for the rest of their life and they’re not getting it, and therefore, they’re being cheated. They were entitled to something and people grew up with this sense of entitlement. I am owed something and you’re not doing it. The American Dream is not coming true for me and therefore, someone is cheating me, someone is to blame for this. They blamed everybody. They blamed their parents, they blamed their teachers; they blamed the people who ran the corporations. They blamed the politicians. They blamed the bureaucrats. They blamed the entrepreneurs who seemed to be making so much more money than they were making.
And so this culture of blame, this culture of complaint, started to take hold. In order to escape from this world of dissatisfaction and complaining, it is necessary, therefore, to have an attitude of no entitlement. No entitlement means that your attitude is that no one owes you anything, that everything must be created and earned through your own efforts, through your own intelligence, through your own connections with other people. The person with a no-entitlement attitude achieves a sense of enormous freedom and opportunity in a world where other people are imprisoned by resentment and by complaining.
The person with a no-entitlement attitude is not bogged down by the unrealistic expectations or by a sense of perfection about the surrounding world. And this is a big thing. We live in a world that is very, very good. We have enormous advantages in this world, but it’s not perfect. It’s never going to be perfect. It’s not possible for anything that’s changing ever to be perfect. There’s always going to be people who are unequal to other people. There’s always going to be poverty. There’s always going to be crime.
During a period when we’re changing from one kind of technology to another technology, there’s going to be winners; there’s going to be losers. There’s going to be people who prosper enormously. There’s going to be people who are unemployed. This is the way it always has been in history. This is the way it’s always going to be in history, as long as we want to have a free country, as long as we want to have the individual freedom, there has to be enormous deficiencies. There’s going to always be things that don’t work the way that we want to work.
So, we have to have a realistic attitude about this. We’re going to go forward. It’s going to constantly changing and each individual has to come to grips with his or her own life. He or she has to adapt a set of attitudes that allows for personal growth, which allows for personal happiness, which allows for personal meaning, in a world where things don’t work for a lot of other people.
Now, as this attitude of no entitlement becomes stronger, it enables us to bypass and ignore many of the negative people in society. We just bypass them. We go past them. And we escape from all of those situations where people are expecting and demanding that someone else do something for them.
Now, the most successful, creative, and happy person in every field of human activity is the individual who has adapted a no-entitlement attitude and I don’t care where this is in society. I don’t care of you’re a child in school. I don’t care whether you’re a teenager. I don’t care whether you’re a university student. I don’t care whether you’re just starting off in your business career. I don’t care if you’re at middle age. I don’t care if you’re in the more advanced years of your life. As long as you don’t have a sense of no-entitlement, there’s constant growth, there’s constant opportunity, there’s constant enjoyment of the world around you.
So these individuals who have the no-entitlement attitude, they know right from the beginning of their lives that their lives and the prospects in their lives are in their hands. They constantly create opportunity for themselves rather than waiting for someone else to do it for them. And as a result, their lives are an endless progression from moving from one stage of growth to the next stage of growth.
Jason Hartman: Wasn’t that great? Dan’s got some good thoughts there. Well, one of the things we need to do is not expect anything, not feel that the world owes us anything, not feel that our employer owes us anything, not feel that the government owes us anything. Because when we get rid of those beliefs, those beliefs that hold us back, that cripple us, we are free to excel and succeed and create our own destiny and create our own future.
There was an email I got recently from International Living and I really liked some of the stuff it said in here, and so I’ll just share this with you quickly in closing. They’ve got some interesting stuff I like to read from time to time.
“The lunatic economics of buying more than you can afford, lending more than you can collect, and printing mountains of paper money over the gaps have finally sent the world’s financial system down the chute. But I have three ideas that might help brighten your personal financial future, despite the current situation. These are not new ideas. Many U.S. and Canadian ex-pats know from around the world that I practiced these ideas for years. I have simply put some names on them. I call them “The Three Pillars.” No. 1, Simply; No. 2, Preserve; No. 3, Get real.
Okay, by simplified, I mean lighten your personal load of useless garbage. Stop buying and doing things that waste your time and money. This can be hard to do. Most of us have been brainwashed into believing that we keep the world turning by running around like little chickens with our heads cut off, burning through as many consumer products as possible. It’s not true, no matter what television tells you.
Preserve; by preserve, I mean preserve your wealth. Stop chasing the quick hit, the sure thing, the one stock that will put you on Easy Street by this time tomorrow. Get into value investments. Get into safety and do something more radical: save.”
By the way, let me make my commentary on that. I don’t believe in actually saving. I believe in not wasting, I guess I should say. So don’t waste your money, of course, on consumer products. Don’t save your money because it gets destroyed by inflation, and you know my philosophy on that.
But what he says here is, “This stuff our grandparents knew, but again, it can be tough to do. We’ve all been tempted to roll the dice by a decade of seemingly endless upside and idiot-proof profits in the stock markets. Now we know that the game was rigged. Believe me, the days of chasing triple digit returns on hot stocks or bizarre trading strategies aren’t over, but they should be for anyone that wants to sleep well at night. Lowering your cost of living is the one sure way to preserve your wealth, and depending on your lifestyle, there are ways you can do that.
“Get real. By get real, I mean put your wealth in the things that don’t go away when the global financial managers crash the bus. Real estate and gold are obvious choices. Their relative value may change, but it never disappears and they will always be worth something.”
Now, my commentary. I would love gold if only it had a couple more features to it. If you could finance it, get tax benefits from it, and rent it out. Unfortunately, it doesn’t, so my favorite investment is simple, little rental properties.
Anyway, this is going a little long today with the samples we showed you from some other great speakers and thinkers, so I want to say goodbye. We’ve got some great guests coming up on Show No. 71, some fantastic content. We are going to be interviewing the head of economics for the National Association of Realtors. We are going to be interviewing another famous doom-and-gloomer and that’s Mish or Mike Shedlock. We had a good interview from him already recorded. I can’t wait for you to hear that and a lot of other great stuff coming up. So, stick with us and join us for the next issue of Creating Wealth. Pause and stay tuned for a couple of announcements right here.
And by the way, we have got some fantastic events coming up. If you’re local, come and join us. If you’re not, jump on a plane and come and join us. We’ve got two Creating Wealth programs, Creating Wealth in Today’s Economy, coming up in October. We have got our Fall into Wealth party on October 16, so you can register for that at www.jasonhartman.com for any of these events.
And then also, we have got a very, very special – it only happens twice a year – Master’s Weekend coming up, where we fly in experts from all over the country on every subject under the sun, from asset protection to tax avoidance strategies to property managers and area agents, and developers from all the markets where we cover all over the country. So, join us for the Master’s Weekend as well. This is going to be a really special Master’s Weekend this time. And again, that only happens twice a year, so I want to make special mention of that. And I will talk to you next week on Creating Wealth. Thanks for listening and here’s a few announcements.
Announcer 2: On October 25 and 26, join us at the Master’s Weekend, A Gathering of Experts. This special event only happens twice a year. With our panel of 16 experts, we’re putting enough real estate brainpower in one room to make Donald Trump flinch. The Master’s Weekend is a powerhouse education that can revolutionize how you think about money and wealth. Our speakers come armed with the latest and shrewd real estate investing techniques, and will address such issues as the smart way to choose your properties, how to grab every tax benefit the law allows, how to put together the most creative financing package possible, the hidden power of the 1031 Exchange, and how to easily invest in dynamic growth markets outside of California.
Order your ticket before October 1 and you’ll receive our early bird discount. Space is limited. Reserve your seat now. Head to www.jasonhartman.com and click on Events. That’s www.jasonhartman.com. The Master’s Weekend beginning October 25.
Jason Hartman: Attention agents, brokers, and mortgage people. Do you know that we cooperate? Do you know that our network is an open system, that you can refer clients and outsource your investor clients to us and receive passive income? It’s a really great opportunity. All you have to do is register your clients at www.jasonhartman.com and tell them to attend one of our live events, our live educational seminars.
Listen to our podcast, go to the website, and request our free CD at www.jasonhartman.com. And if they invest with us per the terms listed on the website, you will get a referral fee. We have lots of agents, brokers, and mortgage people that receive surprise referral fees that they weren’t even expecting. They get a check in the mail and they are just happily, happily surprised. It’s a nice extra supplement to your income. So, be sure to take advantage of our broker cooperation. Agents are welcome. We cooperate with outside people and we’d love to help you with your investor clients.
Hey, I just wanted to announce a couple of quick things for you. 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 U.S. for them. So hopefully you can join us for some of those events.
I wanted to mention to you that we have a new offering, a free CD, a free audio CD, that you will really, really like. We’ve had so many people that have given us really good comments about them, and you can go to our website at www.jasonhartman.com and just fill out a little quick web form and you can either download it or you can have the physical CD mailed to you in the postal mail. But get the free CD, especially if you are a new listener. You need this. And if you are a regular listener and you’ve listened to all the other old shows, you don’t need the CD so much, but it will be a nice review for you either way. But if you’re a new listener, you definitely want to go to www.jasonhartman.com and request the free CD.
Remember that Platinum Properties Investor Network has moved. We are in our beautiful new office in Costa Mesa, California, 555 Anton, Suite 150, in Costa Mesa, California, 92626, and we’re right by world-famous South Coast Plazas. So, come in for a visit and a little shopping.
Also, we just uploaded another video podcast and I’d highly recommend that you subscribe to that. There’s some stuff that just lends itself better to video than audio. If you want to see what’s on that, subscribe to it, you can go to www.jasonhartman.com. If you use iTunes or an iPod and you’re an Apple person, then you can go to the iTunes Store, type in Jason Hartman, and two podcasts will come up, the video podcast and the audio podcast. And you’re probably already, if you’re listening, a subscriber to the audio podcast, so make sure you get yourself a free subscription to the video podcast as well.
And this particular one that we just loaded in the video podcast is about Naked Short Sales and what goes on with this short sale and manipulation of the stock market. It’s a very interesting report from Bloomberg News and I think you’ll really learn a lot from that. So, be sure to tune in and watch 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.
Anyway, we’ll talk to you next week. Thanks for listening.
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: 64 minutes