by | 15, Feb 2022

Why Is The Housing Market So Aggressive?

This week we talk about the big one… the big B-word… The Bubble!

What is going on with that crazy housing market? Why is it so aggressive right now?

We’re going to step into our time machine to explore the past, present, and future to better understand how the market got to this point. When it really comes down to it, it’s a supply and demand issue, and understanding that, can give you some clarity on the market and its current status.

So… is there a bubble… is it going to pop?! Will the housing market simmer down or bubble over?

We will talk about these things…and more in another episode of Multifamily Investing Made Simple.

Tweetable Quotes:

“The invisible hand of the Fed… where they just have to make the threat, or just the hint of an interest hike, and the market responds.”  – Anthony Vicino

“You’ve got a shortage of supply and you’ve got the dollar losing value. So those two things combined equals the absolutely crazy price action that we’ve been seeing.” – Dan Krueger

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** Transcripts

[00:00:13] Hello and welcome to

Anthony Vicino: [00:00:14] Multifamily investing made simple, the podcast, it’s all about taking the complexity out of real estate investing so that you can take action today. I’m your host, Anthony Vicino of Invictus Capital, joined by Dan, and look at those two thumbs Krueger. All right. If you’re listening to this at home, you can’t see his thumbs, but just know he gave two thumbs up.

Dan Krueger: [00:00:31] Mm-hmm. I was doing this guy pose. Yes, you were like, who’s got two thumbs and fill in the blank?

Anthony Vicino: [00:00:37] Who has two thumbs? And is this guy this guy

Dan Krueger: [00:00:41] That is incredibly accurate,

Anthony Vicino: [00:00:42] Entirely accurate. All right, Dan. I’ve had enough witty banter. I want to get to the meat. I want to get to the potato.

Dan Krueger: [00:00:51] There we go. I need the

Anthony Vicino: [00:00:51] Potatoes. You want potatoes? Yeah, OK. All right. Here comes the taters. Today, we’re going to talk about why is the housing market so damn hot? So aggressive. So stupid.

Dan Krueger: [00:01:03] I’m going to slap me in the face,

Anthony Vicino: [00:01:05] It’s too much, it’s too much. It’s got to stop. I won’t stand for it. Ok, so today this is actually going to be an interesting episode. We’re going to try and unpack for everybody at home. Why we think it is that the housing market, both in single-family and multifamily and all across the board is just so damn aggressive. It’s so, so hot right now. And then maybe we’ll also talk about, do we think it’s too hot? Do we think it’s too aggressive or is there? Is there room for us to crank up a few more, a few more degrees of Fahrenheit? Can we go chemical hotter? Maybe. So stay tuned for that. But in the meantime, before we get to that, we have to do this obligatory bit. Our producer makes us do it. I don’t want to do it. We’re just contractually obligated. So without further ado, I guess, Dan, do you want to bring some bad investing advice to our listeners? I guess it makes me feel. Producer Yeah. Dirty barking in your ear. Yeah, but these producers, they’re just all over us. All right. The people, what they want. So this is what you guys, you tell us this is what you want. So are you not what they want? Are you not entertained? Here you go.

Dan Krueger: [00:02:16] That’s not why you were here.

Anthony Vicino: [00:02:18] All right. So Dan, what’s our bad investing advice this week?

Dan Krueger: [00:02:20] That’s a good movie I haven’t watched.

Anthony Vicino: [00:02:21] It’s such a good movie. Oh, they’re making a gladiator part two. Oh no, I know. I know.

Dan Krueger: [00:02:27] Risky, risky. I know he doesn’t watch it. Anyways, I think he died

Anthony Vicino: [00:02:33] in the movie. Oh, probably OK, anyways. Spoiler alert. Sorry, people,

Dan Krueger: [00:02:38] We have attention deficit disorder. Back to the show.

Anthony Vicino: [00:02:41] Some of us have been diagnosed.

Dan Krueger: [00:02:43] I have not been diagnosed, but I’m pretty confident there’s something.

Anthony Vicino: [00:02:47] There’s something wrong, but something goes bad. Investing advice. Let’s get happening. Our producer is about to yank us off the show. He is looking us over there. They are mad at us.

Dan Krueger: [00:02:56] All right. Bad investing tip of the week cryptocurrency.

Anthony Vicino: [00:03:00] That’s it’s going to the Moon. Oh hell, yeah, OK, I agree with this. Yeah. Wait, you got to be in it. Is this your bad investing advice? Yes, but I agree with it. Great. Ok. I’m so confused. Ok. Yeah.

Dan Krueger: [00:03:14] Uh, better advice. Think about the two thousand dot com bubble pop.

Anthony Vicino: [00:03:24] Ok. Right, yeah.

Dan Krueger: [00:03:26] It’s pop. It was this has nothing to do with crypto. It does, because there was a very similar dynamic of, Hey, there’s this new thing that’s emerging on the internet and there are all these new companies starting up that are around the internet that something attached to that internet kind of wave was just bought up and gobbled up like crazy. And there were all these little bubbles forming all over the place, and a lot of them crashed and only a handful of companies actually made it out of that.

Anthony Vicino: [00:03:53] It was a bubble bloodbath.

Dan Krueger: [00:03:55] It was a bubble bloodbath. And the point I want to make is that there’s a very stark, similar or very is very similar in the sense that we have this kind of new technology coming into being. And people were trying to place bets on specific companies that and they were thinking that everything attached to this, this technology is going to be amazing. We’re all going to get rich and then actually end up happening. And we’re in a very similar spot here now because what people ought to do is and why the dip some people did in back in two thousand was they. They focus on the fundamental thing that was happening, which was the evolution of this new technology. And if you can make your bet on the fundamental technology and not try to pick the individual stocks coins, you’re going to do well because the blockchain technology is going to be game-changing for the entire world and for the future. But don’t try to put all your eggs into bitcoin or Ethereum or DOGE or whatever coin you think is going to be the winner, right? If you want to put a little bit into all of them, great go for it. But honestly, I don’t know if the coins are even going to matter in 15 years, but the blockchain technology is really where it’s at. So focus on the fundamentals of things like this that are changing and make a bet that isn’t predicated on trying to pick a winner. Other than the technology, that’s the foundation of all the things that are hot. So that’s my better advice.

Anthony Vicino: [00:05:22] Yeah, the thing with crypto right now that I hear a lot of people talk about crypto or bitcoin is great for all these reasons, like it’s a store of value, it’s an inflationary hedge or whatever. And you’re like, OK, it’s really too soon to even like, speculate at any of that. Like when we say, like, bitcoin is a store of value, OK, for now, until everybody decides it doesn’t. And because it doesn’t have the backing of, like, you know, a large government or many populations, maybe it will be a store of value. Maybe it won’t. I don’t know. What I do know is the technology underlying this all blockchain. It’s not going anywhere. It’s going to revolutionize so many different things. And that’s really what you want to be banking on. That’s how I look at crypto because I’m not looking at different coins. I’m looking at the underlying utility of the technology and saying, like, what is this going to enable and

Dan Krueger: [00:06:14] How do we play that wave? Yeah, that’s the horse that’s going to win.

Anthony Vicino: [00:06:18] Exactly. And in the short term, also like the thing I would really suggest and I know that the difference between like investing and I say that with air quotes and speculating. I say that with air quotes because really, they’re the same thing in some ways, like it’s really just a spectrum, right? I really do look at crypto right now as like very heavy speculation. It’s not really investing at this point. I think you should be involved with it. I think you should be aware of it. It’s not really investing yet because there is no expectation of return. And that’s one of the things for me that delineates investing and speculating, and that’s just a subjective opinion. But the reason I consider investing in real estate, investing in not speculating is like there is an expectation of return that I can look at and I can say this is the formula. If we do this, the value is going to increase in this way, it will deliver these returns. Same with investing in a business. Can’t really do that with crypto right now. There is no expectation of return.

Dan Krueger: [00:07:10] Yeah, I mean, people will forecast all day long and they’ll have some pretty good calculus to back it up. And it’s like, OK, I can kind of get that. But your point is so damn early. So, yeah, and you might just be like I said before. In the right race, but putting your money on the wrong horse, right? You might be in you might be looking at the right thing, but you just happen to pick Pets.com. Yeah. Or any of the multitude of companies that failed and had people just been more focused on the internet, like how do we capitalize on the internet? Like what are the companies that provide the resources for the internet, like the companies that produce, you know, computers, write computers, microchips, routers? Yeah, like semiconductors, like there are all these components that are going to be necessary for this technology, regardless of what coin wins, if any coin wins. It’s like with the cannabis craze, it’s like go buy fertilizer stocks, right? That way, it doesn’t matter what company does well, only fertilizer you. You find those things that support the technology and focus on that. That way, you don’t have to try to pick a winner. Yeah.

Anthony Vicino: [00:08:15] And if you do, if you do want to invest in crypto and you want to invest in blockchain technologies, I got a coin. My my, I’m not buying, I bought the Krueger coin. Not that it’s going to. What I would suggest is to make very small bets across everything as much as you can, like the horses that you think have the best chance of winning, make really small bets across the gamut. And the reason for that is because if we look at risk versus reward and asymmetric returns, maybe two of those horses are likely to. Maybe, hopefully, if you’re lucky, win really big and everybody else is going to go to zero. And it’s the same principle with angel investing. So if you want to learn more about this concept, there’s actually a really good book by Jason Calquence called Angel. It’s all about Angel investing in and like the strategies and tactics of that, but also the psychology of what it looks like to place many small bets with the expectation of only one of those winning and everything else going to zero. If you want to invest in crypto, I think that’s really what you need to be wearing right now.

Dan Krueger: [00:09:12] If it works for your personality, I will say that that’s a style that certain people tolerate well and other people do not. Certain people want to have a really high win rate.

Anthony Vicino: [00:09:21] Then you need to not be in crypto.

Dan Krueger: [00:09:23] Then you need an opportunity

Anthony Vicino: [00:09:24] To not be in crypto.

Dan Krueger: [00:09:25] You’re taking paper cut after paper cut, knowing that at some point you’re going to have this thing that just goes the moon. Great. Go for it. Do it. Most people are going to get discouraged by all those paper cuts and give up before they get to the thing that actually hits big. So you’ve got to figure out what fits with your personality. Don’t just read a book by some guy and say, Oh, this guy did really well and it worked for him. It matched his personality.

Anthony Vicino: [00:09:47] So what I would say is make sure it, regardless of where you are and if it fits your personality, makes it a small amount of your net worth a small like discretionary funds that you’re OK losing. If you’re OK losing it, then as soon as you put that investment away and put it into the crypto or whatever you’re going to do, then just treat it as though it’s gone right, then you don’t have to worry about the paper cuts. You just say, Oh, I got cut, it’s done.

Dan Krueger: [00:10:08] You’re getting up at night and looking at your phone. Oh, you can see how things are going. Then you have too much if

Anthony Vicino: [00:10:12] You’ve been checking your Coinbase account. Daily for the last two weeks, months like you, you have too much emotional attachment and you have allocated probably too much. I’m not saying take it off the board, but just realize maybe you’ve

Dan Krueger: [00:10:30] Overstepped and that’s the thing with the crypto thesis.

Anthony Vicino: [00:10:32] Don’t buy the dip. I’m just saying if you’re like up at night, don’t buy the dip right now.

Dan Krueger: [00:10:37] Don’t ever buy dips. It’s a loser’s game. Wait until it’s obviously turning around anyways. One last thing? Oh, what was I going to say? You switch to the camera

Anthony Vicino: [00:10:46] Right now he’s getting he’s on camera and he’s losing it. What is it, Dan?

Dan Krueger: [00:10:54] Um, what was it? It was. So it’s right there.

Anthony Vicino: [00:10:58] But was it really good?

Dan Krueger: [00:10:59] I feel like it because I was excited to see it.

Anthony Vicino: [00:11:02] Well, that’s the problem, Dan is. Sometimes our feelings make it seem like, Oh, there go, OK, I was going to buy you some time. Screw this. But I do want to say this. Sometimes our feelings make it seem as though dots connect that do not OK. Anyway. It’s good. Where’d that come from again? Tom Bill, I can’t take it.

Dan Krueger: [00:11:18] No, that’s great. That said that before. What I was going to say on the whole crypto thing is people get really aggressive with this because they’re so excited about it. But if the thesis plays out that a lot of really smart people are laying out with a lot of calculus to back it up, if it plays out, you need an incredibly small position. To have a life-changing thing happen, so there’s no need to put more than you can afford to lose into it because if it actually plays out, that’ll be life-changing. So taking on any more risk than that is just silly. Foolish. Greedy. Don’t be greedy. Don’t be greedy.

Anthony Vicino: [00:11:53] All right. So let’s talk about greed as it relates to the housing market. Because God damn it Dan, the housing market is too aggressive. It’s too hot. People get greedy and paying prices are just didn’t make sense.

Dan Krueger: [00:12:04] Makes me wanna slap your momma.

Anthony Vicino: [00:12:05] Don’t slap my mama. I mean,

Dan Krueger: [00:12:07] That’s a Friday reference.

Anthony Vicino: [00:12:08] That’s just she doesn’t deserve that. She doesn’t deserve it. I mean, maybe sometimes she does. But the thing is, I think we can all agree right now. There is the sense that like, gosh darn it, the housing market is very hot. You look at the prices of single-family homes and how they’re just increasing at an exponential rate. And you look at multifamily, look at all retail sectors. It’s not retail. I’m sorry, real estate sectors across the board, they’re all just going gangbusters. And the question is like, are we at the peak, or are we at the tip of the bubble? Is it about to pop? Like, how much multiples have tips? So I don’t know how bubbles work, honestly. Tips peaks. I think it’s spears perfect sphere sometimes. But the question is why first not? Let’s not try to answer quite yet. Like, Are we at the peak? Let’s just understand why is it like this? What has happened? What is the confluence of events that have led us to be in this environment where people are like, I want to move up into the next house or I want to get into my starter house, but there are no starter houses. Then one of the biggest issues that you’re going to have when you go to sell your home is, OK, now I need to go buy a home. That’s a nightmare because homes are like selling them in less than seven days, getting one hundred offers, and going way above asking. And then on the multifamily side, we see a lot of the same thing, like compression of cap rates, people paying incredible multiples for things like Why is it this way? Why are we here? What happened?

Dan Krueger: [00:13:34] It’s a good question, Anthony. Let me tell you, it’s because people are buying houses in dollars. The house, the apartment building, whatever it is, provides the same amount of utility it did five years ago. So there’s nothing fundamentally different there. But the dollar is losing purchasing power. It’s becoming worth less and less. People have to pay more dollars to get the same thing. If you were to go and buy a house in bitcoin, you’d be paying a heck of a lot less than you would have paid five years ago. So if we’re talking about things in terms of dollars, that’s a big part of why the price is going down. There’s no more utility to a house than there was four years ago, but people are paying multiples of what they used to pay. So there are two things going on here. One, there is a shortage of supply, both in apartments and houses and just residential real estate for people to rent. In general, there’s just not enough supply. This started in 2008. With that crash, we never got caught up. And you have 20 20.

Dan Krueger: [00:14:32] We’re building in production of units and houses was. Brought way down, and we’ve got inflation at the same time, so we’ve got the dollar losing value at the same time, we’ve got a shortage of supply, which is what gives you this bubble a vicious look and activity, especially in the single market. You don’t see it as much in the multifamily space because you have something a little bit more quantitative in black and white to determine value. But in the single-family market, people are paying whatever they want to to get these things because it’s not quite as rational as an investor buying an investment property. It’s just somebody that says, Hey, I want this thing, keep bidding, keep it and keep bidding. It’s a little bit more emotional, I think than the multifamily space. But fundamentally, you’ve got two things going on. You’ve got a shortage of supply and you’ve got the dollar losing value. So those two things combined equals the absolutely crazy price action that we’ve been seeing. I see you taking notes. I think I’m making notes

Anthony Vicino: [00:15:29] Of your gold. Yeah, I’m writing notes because I’m like, Wow, darn spitting some fire here. I’m learning things. But if you were to look at my notes, it maybe looks more like a doodle. No.

Dan Krueger: [00:15:41] So stickman.

Anthony Vicino: [00:15:42] Yeah, at its core, I know it’s going to steal my soul, my thunder. You nailed it on the head. It’s a supply-demand equation, right? Like, it is striking to me how so many things in life and business, real estate investing, period, just come back to this simple concept of supply and demand. On the one hand, we have the supply right, inventory is what it is. And the problem is over the last decade, we just haven’t been building enough period. The other part of this is demand. So what fuels demand? Well, a couple of things demand is, well, how many people are there? Well, the population has been growing pretty steadily over the last decade, so demand is increasing from that perspective. But demand is also relative to do I have the ability to actually do something? Can I go buy the thing? And when we look at liquidity, when we look at equity in the system, when we look at the amount of money that people have in their bank accounts and also the amount of money that the banks have in their accounts and their willingness to lend.

Dan Krueger: [00:16:41] Not just willingness, but like strong like desperation.

Anthony Vicino: [00:16:44] Yeah, their desperation. Desperate to lend. You look at this like, OK, there’s not enough supply and there is so much demand, right? Like, there are the people that need it and they have the money to do it right. So they have the bullets and the desire to use the bullets. And that’s a problem. And when you’re talking about the single-family market, it’s a very emotional thing, right? So we can go in there, we can justify paying all these things. But even in multifamily, we did a, I think, a really excellent podcast episode where we shared an experience that we had recently with a seller where it was called How to not get into a verbal fistfight with a seller. I recommend you go listen to that episode because at its core, one of the most, I think one of the most important concepts to understand when it comes to investing, is this, a building does not just have a number that it is worth, it is not like that is the objective. That building is worth $10 million. It’s not like that. It’s just a building has a certain value to all different participants in the market, right? For somebody who is living in the back of the van $80000 in debt, the value of that building is like ten dollars because that’s what they can afford to pay for.

Anthony Vicino: [00:17:57] Us looking to generate certain returns or looking to take on certain levels of risk, it’s going to have a different number. It’s maybe going to be very, quite higher than that guy’s number. The value that the seller had for his building was quite a bit higher than ours. Right. And so we got into this disagreement because fundamentally he was of the equation that or the persuasion that his building was worth X and we were of the persuasion that it wasn’t worth X to us. That doesn’t mean it’s not worth X to somebody else. And that, at his core, is what I think in a lot of cases, fueling this really aggressive market when we look at like, how can somebody justify paying those multiples or paying that much for a house that two years ago sold for half of that

Dan Krueger: [00:18:35] Because they wanted the house more than they won the money? Exactly, exactly. The money’s worth. Do we swear in here? Yeah, sure. Dog shit, it’s losing money, that’s why the banks want to get rid of it that way. That’s why everyone’s just throwing it into something that’s not a dollar. Whether it’s stocks, houses, the banks don’t want it. It’s like a hot potato.

Anthony Vicino: [00:18:54] So yeah, especially like, I think

Dan Krueger: [00:18:56] I got an economics textbook.

Anthony Vicino: [00:18:58] Oh, yeah, yeah, we just got we did not go back to that man because that would end in an actual fistfight. You didn’t get it. But I think I think a lot of people don’t get it, and I think that can make it can lead to the feeling that the market is too hot. The people are stupid, that they don’t know it. They’re doing that. It’s all a bubble. It’s all going to collapse. I can’t really speak to whether it’s a bubble and it’s all going to collapse because I don’t yet see it. I don’t know. And maybe that’s like one of the hallmarks of being in a bubble is that you can’t see it until after it’s popped. But I don’t see it yet because, at its core, it’s a supply-demand thing. And there’s not we’re not at that equilibrium yet.

Dan Krueger: [00:19:35] Right? I’ll tell you, it is a bubble is a whole. The financial system. And that’s important in general because this is the first time that we’ve ever seen the entire world do this at the exact same time every time this has happened in the past. It’s been like one country or one region that did it and blew themselves up. And then the wealth and the power transferred to another region where they started to do the same thing and blew themselves up. And this is the first time everyone has done it together, which is terrifying. It’s terrifying. I’m reading daily right now, which is why

Anthony Vicino: [00:20:13] I covered scare

Dan Krueger: [00:20:14] You, right? Doom and gloom mentality. But it’s fascinating because I didn’t connect those dots until I was reading his book because I was like, Oh, this has happened before. It happened before, but it’s never happened

Anthony Vicino: [00:20:22] To all of us

Dan Krueger: [00:20:22] All at the same time.

Anthony Vicino: [00:20:24] And I do. I do. I am. I am more skeptical about, the global financial situation and like the banking situation. I do think there’s a lot of froth there, but when I look at real estate, one of the things about real estate is that it is a physical, hard asset that like, no matter what happens, like has a valley of value, it has a utility and stock might just go to zero. It’s a piece of paper that doesn’t do you very much good, but at the end of the day, a building is a building. Right? And like, unless somebody comes and physically takes your building from you like it’s still your building and that has an inherent value. I’m not saying it’s going to be worth what you paid for it or that you’ll ever be able to sell it to somebody because maybe there’s just no more money in the world, but

Dan Krueger: [00:21:06] At least you have a place to

Anthony Vicino: [00:21:07] Live, at least you’ve got a place to live. And also, we did another podcast episode not too long ago. I highly recommend you guys go listen to this one where I was like the top six secret benefits of owning real estate that you had never would have that nobody’s ever told you about. In that episode, we shared a tip. And then we got a message from somebody a couple of days ago there it was like, I do that one all the time. So if you’re curious about what that one is, I’m going to give you a hint that has to do with potty breaks. So now go listen to that podcast episode.

Dan Krueger: [00:21:35] It’s good. It’s a good episode. That’s a fun one. I mean, it was kind of a little tongue in cheek in that like, I was dead serious, actually. Well, yeah, I mean, the title implies like, oh, benefits of owning rental property. It’s like, you’re going to think it’s like, Oh, the returns, the tax benefits, all those B.S. You’ve heard us say that these are kind of funny.

Anthony Vicino: [00:21:52] These are the ones that nobody is literally ever told you. Like, you probably never heard anybody on a podcast.

Dan Krueger: [00:21:56] Talk about it on any property owner is going to agree with them, for sure, because we’ve all at least participated in a couple of those little benefits. Yeah.

Anthony Vicino: [00:22:04] So I guess these days, with the housing market being what it is, what should we do as a result? Like, let’s take it from the single-family market side. You were talking before we went live that you and your wife, we’re talking about how these days you’re better off just going find it finding a plot of land and building a new home rather than trying to buy something. The difficulty there is that land is a fixed, fixed thing, right? There’s only so much of it and a lot of the land in where we are and where we want to live. It’s already taken, so we’ve got to go out into the boondocks, the boonies,

Dan Krueger: [00:22:32] The boonies or you just have a lot of money. So you go and find a house, you buy a house and then you bulldoze it and you build another house. If you got enough money for that. That’s the way to do it.

Anthony Vicino: [00:22:41] If you got that kind of money, you’re not listening to us right now trying to figure out what you should do with your money. You’re like, maybe don’t knock down my house.

Dan Krueger: [00:22:48] I mean, we are kind of entertaining sometimes. That’s true. We’ll just tune in to laugh and chuckle.

Anthony Vicino: [00:22:53] I’m here for the I’m here for the giggles.

Dan Krueger: [00:22:56] Yeah, well. We’re not doing anything serious today, I can tell you that much, but what was the question you posed there before we went?

Anthony Vicino: [00:23:02] I think as a result of the housing market being so aggressive, so hot, what should we do? Yeah, well, what do we do with this?

Dan Krueger: [00:23:08] Yeah, I mean, I guess don’t try to. Don’t try to look at your house as an investment. If you’re out there shopping for a property to live in and you’re trying to, like, get a good deal, it’s like, what are you trying to do? You’re trying to get a good deal. I mean, are you trying to invest and like if you’re buying a house live and you’re buying a place to live, right? So the price is like whatever, like how much do you want the house versus how much do you want the money? That’s what you need to be looking at. And then on the investment side, if you’re looking at an investment property like, I mean, you just need to make sure that your thesis includes some sort of correction in the cycle that we’re in right now, because at a certain point, I mean, we’re shooting this right at the end of January. Twenty twenty-two and the Fed is talking about some, some rate hikes that are much more aggressive than what they were saying about six or eight months ago. And so it’s implied that there is going to be some kind of tapering going on here, whether it be interest rates going up and bond and asset purchases coming down.

Dan Krueger: [00:24:15] But what I’ve noticed recently is that the Fed tends to get the response in the market that they want without having to actually do the thing. So my assumption is that even though they’re saying I think up to like three or four rate hikes this year, which is a hell of a lot higher than they were saying a year ago, they probably aren’t actually going to do that many because the last time they tried to raise rates, it did not go well. The market rejected it. They backpedaled and they got dovish again, and they need to compete with all the other governments around the world that are still printing money. And so if the Fed starts to raise rates and China’s not doing that, then that’s a problem. So it’s a completely new paradigm. My guess is that they’re going to get painted into a corner to try to keep up with the rest of the world and the money printing, and no one wants to be the first one to start to slow that down.

Anthony Vicino: [00:25:10] So it’s I think Adam Smith would approve of what I’m about to say. Here is the invisible hand of the Fed, where they just have to make the threat, or just the hint of an interest hike and the market responds.

Dan Krueger: [00:25:26] It’s the invisible hand of the Fed. Yeah, it happened. It happened yesterday. I mean, Apple earnings came out, did fantastic and they’re getting pummeled because the entire market was down a couple of percent because they announced this news that was already pretty much out there. And the hikes aren’t even going to happen until the future. So the market immediately prices what’s going to happen. And so by the time it gets to the point where they have to actually lower the rates, they’ve already started the response it’s priced in. So like, what’s the point? Just keep them low. Yeah. The other thing going,

Anthony Vicino: [00:25:58] The other thing I’ll add onto this to the question what should we do given the market how high and aggressive and whatever it is, is just to be really patient? Stick to your investment thesis. Don’t budge off of that and, you know, revise it and update it as you see fit. But be patient. Don’t just rush into deals to get them done. It can be really tempting given the market and how like cash is burning a hole in your pocket. So you’ve got to put it somewhere. But just sometimes you got to sit on your hands and be patient for the opportunity, the right deal. It’s better to do no deal than it is to do the wrong deal. So, yeah, all the advice I got for you guys. Good luck out there. So before we boogie boogie boogie on out of here, let’s do a book recommendation. My book recommendation for the day is one that’s going to resonate if you’re an entrepreneur or you’re like a self-employed, whatever. If you’re a manager, a leader of people, one of the interesting things when you think about what it means to be a leader versus being an employee or just as a cog in the machine, is that the cognitive machine? That’s the worker they get turned as a result of all the other cogs and levers and things being pulled and whatnot.

Anthony Vicino: [00:27:12] So they’re going to get turned regardless. The problem with being a leader or an entrepreneur or whatever is that there is no cog connected to you, so you’re not going to turn as a result of somebody else having done their turn. You have to walk up and pull the lever that then starts the machine and all the cogs turning. So the big issue is how do you self-motivate and hold yourself accountable and manage yourself to get the work done, a.k.a. pulling the lever? And one book out there that I think is really good on this topic is called Managing Oneself by Peter Drucker. It’s an old book. It’s a short book. But if you can manage yourself, if you can lead yourself like that’s a prerequisite number one before you can lead others is how can you manage yourself? So I got nothing else to add there, it’s kind of self-explanatory.

Dan Krueger: [00:28:01] I’m writing it down.

Anthony Vicino: [00:28:02] Yeah. So if you struggle to get yourself out of bed, get yourself motivated, get the work done that you need to get done. Go pick up this book. It’s going to change. You pretty sure

Dan Krueger: [00:28:10] You told me today you slept in super

Anthony Vicino: [00:28:13] Late. Super late. I did. But that wasn’t a result of not being able to manage myself. That was a result of I’ve been training Brazilian jujitsu really hard for the last couple of months as I’m like ramping up and trying to do things. And sometimes when you probably really had this back in your bodybuilding days or your physique king days, sometimes you just wake up and you’re like, My body needs more, it needs more rest. It needs to recover. So that was where I.

Dan Krueger: [00:28:40] Maybe you overdid it on the jujitsu?

Anthony Vicino: [00:28:42] I did.

Dan Krueger: [00:28:43] I did. So that’s where you need to manage one’s yourself and not jujitsu.

Anthony Vicino: [00:28:46] So much to get the results that I want to see. And I’m getting old so I don’t recover as quickly as I used to. I have to work. I have to do that hard work, but I also have to allow myself to be compassionate about allowing myself space to recover.

Dan Krueger: [00:29:00] That’s a tough sell, and I’ve struggled with that. My whole life is forcing the recovery because people think more is better, especially when it comes to fitness stuff. The recovery is where the magic happens. It’s like a little bit of work. Plus a lot of recovery equals amazing results, especially if you’re an old man like this guy. I mean, when you’re 20, you can get away with pretty much.

Anthony Vicino: [00:29:18] I remember when I was young, I was a machine. I could work out every single day for seven hours, eight hours a day. Easy. And anyway, being old sucks. I think you guys all get it. No, no, it’s actually it’s fine. I like it. It’s there are benefits to being older. I’ll tell you that, and I say that I’m thirty-seven point thirty-eight, so I’m not. I’m not old. And you’re not super. You’re what? Thirty-five something like that? Yeah, you’re not too old. We’re young at heart,

Dan Krueger: [00:29:46] So stop counting after twenty-one. Yeah, it’s a point. If that,

Anthony Vicino: [00:29:49] Yeah, I don’t have more than twenty-one fingers, so why keep counting? So guys and gals, thanks as always for joining us. Hopefully, you got a little bit of benefit out of this episode, and if you did, then you owe us. You owe us to go to iTunes. And leave us a review. That’s right. I’m calling in the chip you owe us. We gave you this value. I’ll reciprocate. Go leveraged you like literally right now.

Dan Krueger: [00:30:16] Right now you’re already on your phone. You’re there. I know

Anthony Vicino: [00:30:19] You’re ready. I’ve been thinking about doing it. I know and

Dan Krueger: [00:30:21] Scrolling for 20

Anthony Vicino: [00:30:22] Minutes. Ok. This was like a really, really aggressive review. Ask almost as aggressively as the housing market. But now you know why the housing market is aggressive. And if you stay tuned for a future episode, maybe you’ll learn why I’m so aggressive.

Dan Krueger: [00:30:36] Quick bonus on the book rack. Go up the I already recommend this one that I to bring it up again.

Anthony Vicino: [00:30:41] If somebody is listening to the very, very end, like kudos to you, by the way, you’re going to this, you’re getting this extra.

Dan Krueger: [00:30:46] I know you didn’t leave a review because you’re still here. So mad about it, but I’m going to give you a book reco anyways. I already recommended this one recently, but big debt crisis by Ray Dalio. I mean, we talked about so much that was talked about in that book. So if this topic this this this this topic of just why things are happening the way they are, like check that book out. Like that’ll scratch that itch if you’re trying to figure out what the heck’s going on, because Daily did a lot of research on this, and he’s distilled it down so that the commoner like us can understand the big picture if you zoom out. Yeah, it’s really fascinating.

Anthony Vicino: [00:31:21] If you’re itchy, go back up the book. All right, guys, that’s officially going to do it for us. If you stayed through this long, kudos to you. You’re awesome. We love you. We’ll see you in the next episode.

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