Chris Martenson is a trained scientist who uses his knowledge of data to predict the outcome of the economy. People from all over the world know Chris for The Crash Course, a seminal video seminar that elaborated on a then prediction of the 2008 housing market crash.
How would you like to meet a guy who can see the future? In fact, not only can he see the future, he can predict the future. Not only does he say he can, he’s actually done it before. That’s not all. He comes from a place of wanting to create a world worth inheriting. My friend and guest, Mr. Chris Martenson, is going to teach us all about what’s going on today and what to expect tomorrow.
Chris Martenson On Data and the Human Condition
Chris, welcome to the show. Thank you for being here.
Mitch, it’s a real pleasure to be with you and all your listeners.
I’m really intrigued by your history. It’s actually amazing to think that you predicted some of the major events that have gone on in the financial world. Could you give us a little history about that and tell us what happened?
I had really started focusing on the housing market as something that clearly didn’t make any sense to me. I researched it and dug into it. You have to understand my background. I’m a scientist by training and a PhD from Duke University. I used to do basic data research, so I love data. When the data doesn’t make sense, you’ve got to make sense of it. What’s your theory? What’s your hypothesis? I had all these crazy stuff. The housing market just looked insane to me. As early as 2006, I was writing about that. Then in 2007, I personally started short selling shares short of home builders and mortgage insurers and all of that. I love the way you characterized it. It’s wonderful to say I predicted the future but in truth, it’s the same amount of prediction as if I let go of a hammer and I predict it’s going to go to the ground. What I really do is I just find stuff that doesn’t make sense and I put my finger on it and I say, “That’s going to change. That’s going to be different.” The question is, can you profit from that difference?
There are things around us going on in the world that are direct signs to basically show us the way that many of us don’t see. I think I’m crediting you with looking and seeing when very people truly did see it as you did.
There are a lot of people who claim they did but the records are pretty clear. There weren’t that many people in that camp. It confused me. I gave some information when I said I’m a scientist. I like data. I got trained that data would speak to me. I realized over time though that it doesn’t speak to everybody. In fact, not even to myself in certain circumstances. I had to do a whole big detour for a while through areas of behavioral psychology, behavioral economics, classic Jungian psychology to answer this question which is, what prevents us from seeing? It’s not an intellectual block. It’s that we have beliefs and if you understand which beliefs are enhancing you and which are limiting you, you get way ahead of the game. What I found was trying to talk to people about the housing bubble I saw. Many of them didn’t want to believe me so they would reject data in the most bizarre ways. That was a big learning. Your beliefs can help you and they can harm you. Knowing the difference is critical.
You said something before that I think is important to point out. You said, “Data speaks to me.” Here is an example of when you have total surety on what data really is and you feel as if the data you’re looking at is more honest and truthful than your own fears or the fears of those around you. That’s when data speaks to you. It doesn’t speak to everybody because they don’t have the scientific background to look at data and trust it. I think that’s the difference.
It is part of the difference. This isn’t to elevate anybody with science training or whatnot. I learned in certain ways to use data. Wired into the human condition is this use of beliefs. I think they served us evolutionarily really well, but they betray us sometimes especially in modern life. They were really there to help us. You didn’t have to relearn over and over again that saber-toothed tigers were bad. Belief systems are a great way to bring in a lot of information and then operate from that standpoint. It works fine if the road is straight. It doesn’t work well if there’s a big corner in the road. We might find that in our own personal lives. Some people get blindsided by a sudden divorce or it doesn’t work when the economy suddenly changes. It’s certainly not working for the people who got displaced by robots and didn’t see that coming. These things can really hurt because we’re operating as efficiently as we can so we hold on to our beliefs. This is where it gets tricky. How do you know when you’re looking at data that you have to take the extra step of saying, “I’m going to have to get through my emotions around this and get down to something more logical around this. When am I going to do that?” It’s an expensive process.
We pivot a little bit into people who invest in the stock market deal with every day. The stock market and the financial markets, if nothing, provide an abundance of data. The problem is that unless you’re highly skilled at interpreting that data or unless you’ve studied a system, as an options investor I’ve studied many systems. I know that if I ignore my emotions and stick to my system, I have a better chance of making money than if I react to the fear of a sudden crash or sudden event in time that should derail me from my system. I assume that you’re talking about something like that?
I am. Let’s back it up one step further. The system you might have learned as an options trader had rules that were understood and understood often very expensively with the school of tuition. There was a set of rules that operate it. I will now draw a line in a timeline and I’m going to say before 2008 and after. Before 2008 where most of my understanding of technical analysis, charts and what’s happening and how things operate was formed and those rules were established when humans were primarily the rule setters in this. After 2008, we’re at a place now where computer algorithms are north of 80%, sometimes 90%, of all trading activity. They just do what they’re programmed to do. They don’t behave the same as humans. I know personally a lot of old-time traders, some that I trained under my own future strategy, all started to shred in 2008 and fell apart. That’s an example of where if you have these rules, and you don’t understand that the rules have changed, your strategies formed under the old rules no longer work. This is a perfect example because I stuck to losing strategies for way too long. They used to work. I just thought I have to be diligent. I’ve just got to keep applying this. It took me about a year, a year and a half before I realized, “Something’s changed big time in the story.” I didn’t understand what it was, so I walked away from futures trading. I’m glad I did because J.P. Morgan’s last report came out and said, “Our trading desk in 2016 had zero days of losses. Every day was a positive return from that department. The average take was $80 million a day.” You’re a trader so you know that if you have zero losses, there is zero risk, which means they’re not trading. They have access to asymmetrical information that’s so powerful. They harvest $80 million a day from the markets. Where did that $80 million come from? I’m ashamed to say some of that came from me.
We’re here to help businesses. What I want to do is switch our conversation into a little bit different gear. You told me that you spent a lot of time and you went through the MBA program. Then you went to a big corporate finance company and then from there to Pfizer. Then, eventually to a startup which you said was interesting. Maybe you could fill in some of the gaps here so we can get to the point where we really are talking more about your business.
The quick story is that I really love teaching. I got my PhD because I wanted to teach. Then I discovered, because I’m a quick learner, eventually that schools actually don’t award or reward you on the basis of how good a teacher you are. It was a different game so I was like, “That’s not my game.” I went and got an MBA and then I’m in corporate finance for a while. It was okay. I did well and I was advancing but I felt like a whole ship full of Chris Martensons could sink in the North Sea and it wouldn’t affect the company. I didn’t like that feeling. I want more sense of self in mission and purpose. The startup I joined was a dot-bomb era thing. It was in 2001. I learned more from riding a company during the last six months of its life than I did in all the other business and MBA programs combined. That was great. Then I went from there into a company called SAIC, Life Sciences Division. I was a vice president. We were body shopping upwards of 400 people on a project. It was okay. Again, I had this gnawing sense that I don’t want to be working for a paycheck. Nobody ever got rich working for a paycheck. Not that I was seeking riches but I wanted to be the captain of my own destiny here, rise or fall, based on what I did.
At that moment in time and I remember that, by the way, I was running one of those dot-bombs. I probably would have successfully navigated those had my VC firm not been shut down by the SEC. Sorry to hear that that wasn’t necessarily uncommon back then. There were so many crazy things going on. In your case, what happened to you that I think is the most significant thing and I think the thing that I really want to hear the most about is you decided at a point in time that you wanted to be the captain of your own ship and start a blog. Not a new franchise, not a new invention, not a new business, not another dot-com, a blog. For heaven’s sakes, what were you thinking?
If we only put some context on that too, I was 42 at the time, three young children. I gave up a really decent six-figure salary, walked away from a lot of options, and I just couldn’t do that anymore. I started this blog because at least I was putting my ideas out there about this housing bubble thing that was going on. One thing led to another and it turned out to be a really critical piece of time. My wife and I changed a lot. We changed where we lived. We moved to a much smaller place with the young children. The TV didn’t come along for the ride. We told them it got broke, we’re replacing it soon. We never did that. Then decoupling was really important because all of a sudden, a really big idea started to come in. I was lecturing, teaching, writing about the economy and then I said, “There’s more to this.” I found another part of the story. I found another part. I had this awful monstrous eight-hour seminar I would give people over two days. It was terrible. It’s charts and graphs and everything. It was awful. Somebody in the audience one day said, “You should put that online.” I was like, “How am I going to put this much material online?” It sparked me and I realized I had to condense it.
In May of 2008, I started taking all of this material I’d spent three years developing like a full sabbatical. I put out chapter one. It was a little video. I learned how to do some flash coding and stuff. I put it up. A bunch of people said, “You’ve got another one?” So I put out chapter two. I didn’t really know where I was going with it yet, and then chapter three and it turned into twenty chapters. The last chapter came out in October 2008. Around about early August, people were starting to send me checks saying, “I’ll give you money if you just do this faster.” It was a serialized. I didn’t realize the power of it. Now, I can look back and say, “A serialized release that captures people is awesome.” I had luck. The seminar series was called The Crash Course. It was about how things were about to really break and change. The last chapter came out one week before the stock market break in 2008 in October. I was lucky but it gave people an understanding of why what was happening was happening that was totally different from what they’re reading in the newspapers which was, “Nobody could have seen this coming. Isn’t this odd? We’re so sorry you had losses.” I was telling everybody what was coming. That helped. It was right around then that my very first subscription came in, not somebody donating, but I opened a subscription service to a newsletter. My first dollar came in right there in mid-2008.
How much did you charge for that subscription?
Same as I’m charging today. It was $30 a month.
Then, it happened. More and more and more of those subscriptions started to come. For those who have blogs and were wondering how to get either that first $30 or how to get more $30 every month, Chris, tell us exactly how you do it? Other than just putting out content, there’s got to be a marketing plan, maybe you have a funnel. Help us understand what that stuff is.
The first thing is that The Crash Course is arguably the best work I’ve ever done in my life. It was harder, more focused, more concentrated than my PhD. It’s just I’m a curious guy and I’m very persistent. This was the best work of my life. It may be the best work of my life. I gave it away for free. It really caught on and it should have been a disaster at some guy speaking over a bunch of slides. It really caught on and it got translated into twelve languages by volunteers, their countries. Huge effort. It might take 1,000 hours to translate this whole body of work and we had two languages that was done all the way. That happened. It got millions of views. That was the funnel. The people were saying, “He got this right. He speaks clearly.” I was speaking to my particular strengths, which is if you said, “Chris, one word, what are you?” “I’m a translator.” I can take complex concepts and explain them in a way that people go, “It makes sense.” That’s my gift. I really use that and the invitation was, “If you come over here behind this paywall, I will tell you more.” The public side was, “Here is the general context of what’s happening,” and I would say, “Behind the paywall, more context. We go into little deeper analysis and I’ll tell you actions you can take around that.”
What you’re basically saying is take what you’re doing and spread the word. Do it in a way that is clear. That makes a complex topic or a topic of which you are an expert extremely simple for others to understand. The theory is that if you happen to attract the right people, then some of them will want to pay.
Here’s the value proposition I’m offering because I’m very good at synthesizing complex stuff. If somebody said, “What do you do every day?” I say, “I read.” That’s literally six to eight hours every day. I’m just reading what’s happening in the world, trying to make sense of it, connecting dots, because that’s what I’m good at. First piece of advice, only do something you’re actually good at and you want to do. The rest of it will wear you down and you’ll hate yourself. You’ll know you’re good at it because it’s just easy and you wake up wanting to do it. We live in an information age but more than that, we live in too much information age. What I’m suggesting is that you do the work of gathering that, distilling it, and giving it back to people so they don’t have to spend six hours reading something. They can spend ten minutes and go, “That’s what’s happening in the world today.” Whatever you’re doing, whether you’re providing tips on home building or gardening or wherever your interest is in this territory, you’ve got to do the work. Your job isn’t to present more information to people. Your job is to make it easier for people to navigate the sea of information that you are the expert in.
We see that all the time. Clearly, you are accomplishing that with the work that you’re doing now. If you were to look at your business today and here we are in 2017, has your blog provided the type of business for you that you dreamed of when you first started it in 2008?
Well-exceeded anything I could have imagined. Let me just review this year so far. As a consequence of this work, I’ve been invited to serve on a UN panel on sustainable energy. It’s a wonderful, very high-level panel, full of all sorts of accomplished people and then this guy, this blogger dude. That came about because the man who’s organizing this is a very high level official from China. He runs something called the China Energy Fund. He had discovered parts of my Crash Course a while ago. One of the parts was so good at explaining how energy and economics comes together that he uses it to train his staff. He’s like, “Just watch this,” as they come onboard. He’s like, “Watch this and then we’ll talk.” These are the ways that I put my free stuff out there and I had no way of predicting nor would I have guessed that it would have been watched, viewed, used by somebody of like this gentleman’s caliber, and then it would lead to this other opportunity. I’ve been invited to the faculty on something called Summit at Sea with very accomplished real estate investors. They want to know what I know about building different forms of capital. The people who put this on know about my work, had come across it, it had resonated and said, “We’d like to get this guy,” and so on and so on.
Quick anecdote, in 2014 we had this thing called the polar vortex in New England. My family and I decamped to Hawaii for four weeks. I don’t tell anybody I’m going on long vacations for security reasons, household all that. We’re in Hawaii and my kids don’t really get what I do. They’re like, “He does something on the internet.” We’re in Kauai and I bumped into a guy and he‘s like, “I know your work.” I go on the local radio station and this other guy gets a hold of me. It turns out he is the owner of the pro shop that’s got one of the best surf shops in Kauai. It’s Sunday, he hunts me down and he finds me. He says, “If I can bob in the waves and talk to you, I’ll get your family all tricked out.” My kids love surfing, “We’ll get you our best surfing instructor.” All of a sudden, my kids discovered the value of what I do because they were like, “We’re getting free surf stuff. This is awesome.” They felt the social connection around that. What they also saw was every single place we went on any of the islands, we ran into somebody who knew my work. These people, I don’t know them from the site. They don’t log in. They don’t identify themselves. They don’t comment. Until I get out there, I don’t know how many people I’ve been reaching. One of the pieces of advice I would give is that if you have quality material, you’re reaching ten times more people than you know.
You could look at the statistics on your website. I may get a subscriber or two here and there, but I see several hundred page views on a daily basis, so I agree. I know that’s happening. For those of us who may not have this position that you do, which I would say you have some fame around your reputation and the work you’ve done and deservedly so, for those of us who don’t and we just want to build a blog and a blog business, can you give us a couple of steps? How important for example is a book? What else would you recommend to someone who wants to build a business around the same idea of taking a body of information, distilling it down, and helping others understand it?
I wish there was a one size fits all formula but some of the keys that are essential, the first is persistence. One of the things that the internet is especially punishing for is variable output. If you say, “I’ll take a month off, but wait I got three blog posts this week and next week none.” It doesn’t work. People require consistency. It changes all the time but it’s no longer the internet. It’s a sea of related areas where people hang out. You’ve got to have your Twitter, you’ve got to have your Facebook, maybe have a little LinkedIn, you’ve got your own blog. You’ve got to start linking all of these things together. The data really helps. You can get so much information. Change one word in the headline and watch a response difference live. There’s a lot of really good information. If you’re just throwing stuff against the wall and then not tracking it and just hoping, you better be writing stuff about the Kardashians nobody else’s got. It’s got to be something really just amazing. Otherwise, that persistence is you’ve got to watch what works, watch what doesn’t work, swallow your ego, “That didn’t work. People don’t like it when I write about that stuff. That fell flat. Where did I go wrong?” and really start to work with that because it’s a really competitive environment. Getting eyeballs is increasingly difficult. That’s part one.
Part two is, this is getting to be an overused word, but it’s got to be authentic. Everything I’ve ever written about myself is true. I’ve never gussied. I’ve never inflated. I’ve never said anything that wasn’t true. If I write about the importance of garden or bees or anything like that, you come to my house. You’ll see it’s already there. Everything I’ve ever talked about I’ve done. Authenticity is really key because as soon as you lose trust out there, it’s gone. People are really looking for lots of reasons to discount this or that or, “Why am I going to follow this person or won’t?” You’ve got to really be honest, “I am expert in this, not that.” You’ve got to really be clear about that.
I can relate to that in my own business as well. I can only confirm what you’re saying. It really is true. Authenticity is like a lie detector. If the authenticity is off by a tiny percentage, then it’s going to stink to high heaven all over the internet. It’s the way it is. I remember the old days of this thing. Remember we used to have this stuff back then, it was called privacy. I always thought to myself, “What is the big deal? I’m not doing anything I’m ashamed of. There isn’t a thing I’ve ever done that I would not want people to know about.” Clearly, I don’t want them knowing my financial accounts and passwords and such, but there’s nothing out there that I feel as if I have to hide. I think if we live that way, then authenticity is really only notching up this thing we call honesty. People appreciate it. I went through a time in my life where I was addicted to heroin. I don’t hide that. In fact, I use that to help other people understand the value of overcoming almost unbelievable odds. If we are staying authentic, if we work on trying to basically share who we are, then only those people who we need to attract will show up. I think that’s what you’ve done so well. I really like what you’ve done.
You’ve raised a second word in that which you demonstrated beautifully, which is vulnerability. That’s part of authenticity. We have a bunch of people out there in Facebook. It’s just a lot of people posing and pretending as if their lives are perfect. Being human is messy. If you can be honest about that and upfront, you will attract more people than you trying to pretend everything is perfect in your life because deep down, we all know that isn’t true. That’s part of it. To really be successful out there now, you have to stand out.
You’ve raised a second piece, which is what I call the small world phenomenon. 200 years ago, you lived in a little village. You didn’t have any privacy in the sense that everybody knew your business. We’ve gone through this little period where everybody felt anonymous for a while and that brings out not the best in everybody. That ability to be anonymous. It’s part of the reason we don’t allow anonymity at my website. Everybody’s got to log in and they have real names and stuff like that. It helps the conversation amazingly. If you don’t have that ability to understand that you need to act as if the world is really small again, you are back in a village. Everything you do that’s electronic is tracked and recorded. I hate to be this blunt but it’s true. It’s been true for a long time. That has a corollary which is, it’s best not to make enemies because people can really ruin you. If somebody really decides they want to take you down because you’ve offended them in some way, they can print miserable stuff that’s impossible to erase. It doesn’t have to be true. It’s the world we live in.
To add to what you said, not only is it there for everybody to see but it never goes away. It’s totally permanent. This is what our world is. If you accept it and make use of it, then it’s very valuable instead of thinking that it’s a terrible thing quite the opposite. Here we are, we are in 2017. I think you’ve given us some great information and a lot of knowledge bombs that folks can go out and really use. Now, I have a question. This is out of personal interest more than anything else, Chris. I’d love to know what your take is on the stock market today and even a little bit about your viewpoint on the world and where Trump is taking us and all of these things that we see changing in front of us almost daily.
This is where my real passion is centered. As a quick aside, Trump got elected for very obvious reasons to me. I didn’t predict it in advance. That one caught me by surprise but in retrospect, here’s an explanation for it that gets us back to the stock market eventually. They did these studies in the 40s and 50s and it’s called shock-induced aggression. They take these poor rats and they put one in a cage. It’s got an electrified floor that they deliver random shocks. They have no way of escaping. You do that for a while and the rat gets very unhappy but tolerates it. The problem comes in when you put a second rat in the story into this cage. You start doing the shocks. They look at each other and like, “It’s you.” They blame each other and they fight because they have something to get their pain out on that they understand. Let’s look at the actual statistics that we have. Middle class families have been getting destroyed for about twenty years by the statistics. Real median income going down. Everything getting more expensive. The number of families with $1,000 in savings or less. There’s no safety net. We live in a country that’s like Darwin. You run out of your savings. You get a medical bill for a $250,000 for an overnight stay, tough luck. Go sleep under a bridge. Without that social cohesion, without that underpinning of fairness, let’s look at what happened. In 2015, 62 people had as much wealth as 3.5 billion people. 50% of the world had as much wealth than 62 people. In 2016, that same number dropped to eight. Eight people now have as much wealth as 3.5 billion. One thing humans are wired for is unfairness.
How did those people get that wealthy? I’ll tell you how. The central banks are throwing $200 billion a month into the markets. That flows to people who have financial assets. If you are one of the people at the top of the list, congratulations. You’re even tippy topper of that whole list now. That’s not fair. The central banks have all these fancy unemployment, but what they’re really doing is they’re shoveling money into the top tiers of our society at pace that we’ve never seen before. This is how Trump got elected. The whole middle class of the world was looking around saying, “Nobody cares about us.” Even if he wasn’t the right guy to care, people were looking at him saying, “At least, he’s talking about it.” Right or wrong, all of that stuff. That explains Brexit. It’s probably going to explain the surprise come-from-behind win of Marine Le Pen in France. This is people saying, “We’re being delivered shocks and we don’t know what to do about it.” That’s why we see groups starting to fight each other and all this stuff. I just want to wave my hands and go, “No, your aggression is pointed in the wrong direction.” If you have the context you can suddenly go, “It’s a system. The rules have changed. If I can skate to where the puck is, I got a better chance than if I just sit here being miserable, taking my shocks and lashing out at the wrong people from time to time to dispel that stuff that’s going on.”
My view of the stock market is that it’s heavily inflated right now by this $200 billion a month. For context, ten years ago, it was a big month if $5 billion got tossed in. Now, it’s $200 billion. There might be more later, who knows? That distorts asset prices. It changes the rules of the game. It means that things that used to work don’t work because there’s a lot of noise with the signal. The winning strategy in the stock market for the past two and a half going on three years now was to just buy the index. You can’t beat it. Hedge funds haven’t beat it. Private equity hasn’t beat it. Companies that have been in the business 30 years beating the market haven’t beat it because there’s no market. In a geek talk, there’s no alpha anymore. Alpha is your personal knowledge that beats the market. It’s all beta. Beta is just the market going up or down.
My view is that the central banks pump the markets with their fingers double crossed behind their backs going, “We need growth. Growth is going to come back. It always has. If growth comes back, we’ll take our foot off the gas, good to go.” The problem is that the growth hasn’t come back. The GDP growth again for this quarter, you’re recording this, and towards the beginning of the second quarter of 2017 is 0.9%. We’re thinking 0.6% growth for US GDP. Worldwide growth in this last quarter maybe 2%, 3%. It’s not enough to sustain these asset prices. The central banks don’t know what to do so they’re going to keep running. That’s my view of it. I look at that and I go, “I see a lot of potential,” like the upside risk, downside risk, asymmetrical. At this point, I’m advising people beginning cash is an okay position. While you sit and wait, look for local opportunities that you can understand. Look for value place that you can get your heads in. All my investing now is in local small enterprises, my own business, other things like that.
I understand the way you explained it. It makes a lot of sense. The question is, when you have the IMF predicting 3.5% growth and actual growth showing up at 0.6% to 0.9% growth, what are they smoking?
They’ve been smoking it for a long time. I have this chart in my possession. It’s wonderful. It shows year by year by year starting in 2009 what the IMF predicted for global growth. It looks like a little checkmark because they were like, “It’s going to go down this quarter,” but that is going to shoot up. They have made that same prediction year after year after year and it looks like a little series of checkmarks. It’s just going nowhere. They’re always predicting rapid growth because they have to. If they predicted what is actually likely to come, you can’t justify the stock and bond valuations where they are. It’s just not possible. Quick example, Amazon last I checked had a PE of close to 200, about 190 something, which means an investor saying with a price to earnings ratio of 200, “I’m going to put a dollar into Amazon and their earnings will pay me back over the next 200 years.” Obviously, nobody has put that money down for 200-year payback so you’re thinking, “It’s going to grow really quick.” That’s great but let’s look at Amazon’s earnings over the last fifteen years. Where have they gone? “Nowhere, but it’s going to come soon.” It’s a lot of hope built into that. Hope is the most dangerous strategy I know about in investing. It’s time to get back to fundamentals and all of that. When I knew we were in a bubble back in 2007, so much stuff is happening, I have a screener that I use to screen stocks. I go, “How many have a PE of more than 200 and are big enterprises, more than a billion in market cap?” I used to get a couple on a page. I can get six pages of results now. It’s across all sorts of industries. It’s crazy.
When I bring this up to speak to the people that work with me on investments, their consistent answer is,“ A stopped clock is right twice a day.” I think the point here is that you could take your money out of the market or you could try and time the market, but there aren’t any folklore stories of successful market timers. Unfortunately for the average person, it still is either duck under the covers and hide or jump in and keep your money there and ride it out no matter how rough it is. It’s tough.
. You’ve got to think about your timing. You’ve got to think about time horizons. If I’m 70 years old today, which I’m not, but if I was, I would not be in this market in an equity side of the story. Not at all.
If listeners are wondering how we got off on this topic, it was quite deliberate on my part. I know that many of us have investments. I know that as an entrepreneur our job is to manage our assets. Even as a human being, our job is to manage our assets. I think what Chris is saying here, if I may interpret a little bit for you or if not repeat what you said, basically is invest in yourself. Take that money and use it to build your own company. Use it to get together and help others in the environment that you are already familiar with. Instead of relying on somebody who’s going to charge you every minute of the day to manage your money whether it goes up or down, find a way to take that money and make it work for you. Is that pretty much what you said, Chris?
Absolutely. There are investments that we talk about on the material side, of material capital. Solar, thermal as an example or just a box that heats water on the roof of my house. I’m in Massachusetts, I’m not in sunny Arizona; I can show you in a simple spreadsheet that that investment has an eight-year cash payback. It has an internal rate of return over 100%. Try finding an investment you can be pretty much almost guaranteed of 100% investment out of Wall Street investment return, you’re not going to find it. There are investments like that but first we have to change. We’ve been marketed to every day that investing means sending your money to Wall Street, where people like J.P. Morgan skim $80 million a day off of that. Thank you very much, keep playing. The game is to keep you playing. If you haven’t watched Wolf of Wall Street, do late lunch scene between Matthew McConaughey and Leonardo DiCaprio. He’s describing what the game is. The game is to keep the people invested at all times while Wall Street put the money in their pocket and walks away day after day. That is the game. Understand that.
Let’s reframe investment to understand that a business might invest in some capital today because it’s going to reduce their future cashflows, which is a flip from saying, “I’m going to invest today so I have more money coming in the door.” Instead you’re saying, “I’m going to invest to this so I have less money going out the door.” It’s just flipping it and there are a lot of investments like that. I think we’re in an era where investing is no longer going to be easy. It’s going to be back to, you’ve got to do your homework, you’ve got to put your diligence in. When I talk to real estate investors, they all have expensive tuition lessons, and the bottom line is evaluate 100 deals with the intention of finding one then you’ll know it. A lot of people are just like, “I’ve looked at two houses. I picked that one. I’m struggling as a landlord.” You’ve got to put your work in. That’s just part of life.
Great advice, Chris. Put your work in. Do the due diligence and not just get the benefit of what comes out of it but get the benefit of learning from it. I love the way you put it. Chris, this show absolutely took a turn I didn’t expect but I’m so glad it did. I really enjoyed our time. Once again, thank you for being on the show. If listeners want to get a hold of some of your material, where can they go?
PeakProsperity.com is the main website. You can start there. There we have The Crash Course video series. If you don’t have that much time, we have The Accelerated Crash Course series. If you want it in book form, there’s the Crash Course book at Amazon. We also have a second book, which is called Prosper!. It’s about solutions. You can find us on Twitter, which is @ChrisMartenson. You can find us on Facebook all over the place. Really PeakProsperity.com, that’s the mother ship.
Chris, thank you for being in the show. Let’s talk again soon.
Thank you, Mitch. I had a great time.
Links Mentioned in This Episode:
- Summit at Sea
- Peak Prosperity
- Crash Course
- Accelerated Crash Course
- The Crash Course Book
- Chris Martenson’s Twitter
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