RPF0109-Robbins

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00:00:30.000 | Today on the show, I have a comprehensive review and in-depth critique

00:00:36.400 | of Tony Robbins' new book called Money, Master the Game.

00:00:40.640 | I'm going to share with you the general outline and framework of the book,

00:00:45.200 | share with you the lessons I learned and the things I loved,

00:00:48.640 | and then go through some of the minor and major flaws of the book in detail.

00:00:54.080 | ♪

00:01:10.720 | Welcome to the Radical Personal Finance Podcast.

00:01:12.880 | My name is Joshua Sheets and today is Monday, December 1, 2014.

00:01:17.760 | Six days after it was promised, I finally bring you the show of...

00:01:23.520 | Excuse me. Bring you the show with the review of Tony Robbins' new book.

00:01:26.480 | It's going to be packed. Stick with me.

00:01:29.600 | ♪

00:01:43.040 | This show today is actually going to be the first book review that I have done

00:01:46.160 | on the Radical Personal Finance Podcast.

00:01:48.240 | And there's a reason that I'll get to in just a moment why I haven't done them.

00:01:51.840 | And let me tell you straight up off the top,

00:01:54.160 | this thing sank me to try to do a good review.

00:01:57.600 | And I'm not sure that I have the right temperament and personality

00:02:00.800 | to do good book reviews for a show like this,

00:02:03.920 | because this thing was a beast to put together.

00:02:05.920 | And as you'll hear when we get into the content,

00:02:08.000 | it was probably unnecessarily too much of a beast.

00:02:10.960 | There are a few ways that I could have handled this,

00:02:13.120 | but I'm doing it the way that I would be interested in listening to.

00:02:18.080 | And it was a challenge to prepare this review.

00:02:20.320 | I hope you guys like it.

00:02:21.680 | Let me quick outline for you what you can expect in the show.

00:02:25.280 | And then also, let me, then I'll give you a little bit of preamble

00:02:29.120 | about why this thing is six days late,

00:02:30.960 | because I think it's important, you know,

00:02:32.000 | because I've learned something even going through that.

00:02:34.080 | So this show, I got Tony's new book.

00:02:37.120 | I didn't get an advanced copy or anything like that.

00:02:38.960 | I wasn't not cool enough yet to get those.

00:02:41.120 | So I just ordered it and I had pre-ordered it and it showed up at my door.

00:02:44.160 | And so I went ahead and read it and it's a great book.

00:02:46.320 | It really is. It's a great book.

00:02:47.760 | And I prepared a review,

00:02:48.800 | but this review is probably going to be a little different

00:02:50.560 | than any other book review that you've often heard.

00:02:53.120 | That I'm going to try to do in an audio format.

00:02:55.040 | I'm going to try to use this book as an outline for teaching concepts,

00:02:59.520 | that some of the concepts that Tony teaches.

00:03:01.760 | I'm going to do that without plagiarizing his content,

00:03:04.160 | but I am going to reference it and encourage you to read it.

00:03:06.400 | And then I'm also going to critique the book

00:03:08.640 | and point out some of the flaws in the book,

00:03:11.440 | because there are some minor flaws and there are some major flaws.

00:03:15.040 | I will make note of the timestamps for the different sections.

00:03:18.800 | I expect today's show to be fairly long.

00:03:21.120 | It could be two, three hours or more. I don't know.

00:03:23.600 | You can obviously know at this point when you see how long it is on your recorder,

00:03:27.040 | or on your player.

00:03:28.560 | But I expect it to be long and in-depth.

00:03:30.400 | So feel free to use those timestamps if you want to click around.

00:03:34.160 | And please divide this up into multiple listening sessions.

00:03:36.800 | This is not, I'm not going to be repeating myself multiple times.

00:03:39.840 | I'm going to be attacking the subject matter from a few different contexts

00:03:44.400 | and using each of my points and critiques as a way to teach you about a basic concept

00:03:51.280 | in financial planning.

00:03:52.560 | I do need to first apologize to you.

00:03:54.240 | I learned something this last week in preparing for this review.

00:03:56.480 | Today is Monday as I record the show, December 1.

00:03:58.960 | And my last show was last Monday, episode 108.

00:04:02.240 | And I had planned to have this review finished by Tuesday

00:04:05.600 | and then ship it out the door and then Wednesday do for you a show on gratitude,

00:04:11.040 | essentially, in preparation for the American holiday of Thanksgiving.

00:04:14.240 | And I didn't get it done.

00:04:15.920 | And I also didn't do a very good job of communicating with you guys.

00:04:19.200 | I didn't disappear.

00:04:19.920 | I got a couple of emails and a voicemail saying, "Joshua, where are you?"

00:04:24.560 | And I apologize.

00:04:26.000 | I should have done a better job communicating.

00:04:28.000 | I had, just before I started recording the show,

00:04:30.880 | had a great email from a listener who shared with me his thoughts.

00:04:34.720 | The listener said, "Don't leave us hanging like this."

00:04:36.480 | Because basically what came through is it's an abandonment of,

00:04:39.520 | it's essentially a violation of trust,

00:04:42.720 | of the trust that you put in me because I've committed

00:04:44.640 | and I've set a standard of doing a daily show.

00:04:46.720 | And so I never even thought about it that way until I had heard from the listeners.

00:04:50.000 | And I apologize to you guys.

00:04:51.120 | I'm new to this whole podcast and online stuff.

00:04:55.200 | And I never thought about it that way.

00:04:56.560 | I just figured if I don't have something to,

00:04:58.960 | if I'm not ready to say something that's worth listening to,

00:05:01.120 | why would I put something out?

00:05:02.160 | But you're right.

00:05:02.720 | Consistency is important.

00:05:04.160 | And so I've learned my lesson.

00:05:05.680 | This show, I've taken a lot of time preparing for it for multiple reasons.

00:05:10.640 | Number one, I had to read the book and it's a 600 page book

00:05:13.120 | and it's heavy and it's thick and it's meaty.

00:05:15.120 | And it's a great book, but it's heavy and it's thick and it's meaty.

00:05:17.840 | Number two, as I started preparing a review,

00:05:19.840 | I needed to fact check a bunch of stuff.

00:05:21.520 | And so that kind of took a lot of time.

00:05:23.520 | And even in terms of just preparing for it,

00:05:26.320 | it just sucked up a lot of time.

00:05:28.000 | And I wanted to do a good job with it,

00:05:29.520 | especially because I think it's a great book

00:05:32.400 | and I also have some serious concerns over it.

00:05:34.480 | And poor little old me,

00:05:38.880 | who am I to go up against Tony Robbins?

00:05:40.880 | One of the great icons of, I guess,

00:05:45.760 | the self-help and self-improvement,

00:05:48.640 | life mastery, to use his branding, the life mastery movement.

00:05:53.600 | So I wanted to do a good job with it.

00:05:55.440 | On Tuesday, I had a busy day with a couple of interviews.

00:05:58.800 | And what I should have done was gone ahead

00:06:00.800 | and played some interviews on Tuesday and interview on Wednesday

00:06:04.080 | just so their show would be out, as I'd said,

00:06:06.160 | instead of just simply not doing a show.

00:06:07.680 | But I learned my lesson.

00:06:08.560 | I apologize to you all.

00:06:09.680 | So I will be much more conscious of that going forward.

00:06:12.320 | So enough of the preamble.

00:06:14.240 | I apologize about missing the days.

00:06:16.480 | And then Thursday, we left.

00:06:18.080 | My wife was a little bit sick, just a bunch of things,

00:06:19.840 | but I could have done a better job communicating.

00:06:21.920 | So just busyness.

00:06:22.720 | And then the holiday that we had here in the United States

00:06:24.560 | was out of town Thursday through Sunday.

00:06:26.240 | But I'm back now.

00:06:27.360 | Let's get to the meat of it.

00:06:28.720 | So this show is a book review.

00:06:32.080 | And I don't really like doing book reviews.

00:06:34.480 | I think it's important to do them,

00:06:35.840 | especially for many people

00:06:37.680 | that can be a really good thing to do.

00:06:38.880 | But I don't really like, personally,

00:06:40.560 | really want to do them on the show,

00:06:42.400 | at least not in audio format.

00:06:44.240 | Because in a book review,

00:06:45.520 | often you're going to be necessarily critical.

00:06:49.120 | And I don't really like to be critical.

00:06:51.280 | More than anything, I like to just simply shut my mouth

00:06:54.640 | and learn what I don't know.

00:06:55.680 | And I also, when doing a book review,

00:06:59.760 | I often feel unqualified to do reviews

00:07:03.120 | of being critical of other people's work.

00:07:06.000 | I really feel what I think the author must feel

00:07:08.400 | when they pour their heart and their soul

00:07:10.320 | into a book for years, usually, to prepare a good book.

00:07:13.600 | And then it's criticized.

00:07:14.480 | And I imagine myself in that place.

00:07:15.920 | And I think, what would I feel?

00:07:19.680 | And so I don't like to be very critical.

00:07:21.680 | But this show is constructive criticism.

00:07:24.480 | And I really admire Tony Robbins

00:07:25.760 | for taking on this challenge.

00:07:26.800 | I think it's an awesome challenge that he's taken on

00:07:29.360 | and very, very needed.

00:07:30.720 | In summary, this book really is a great book.

00:07:33.760 | It's well worth the money.

00:07:35.280 | It's extremely effective at doing a lot

00:07:39.360 | of what it's designed to do.

00:07:41.040 | And it's probably going to be one of the best expenditures

00:07:43.760 | on a money book that you could make.

00:07:45.760 | I'd encourage you, don't get it from the library.

00:07:47.760 | Buy it.

00:07:48.160 | I wore out four highlighters on the book.

00:07:52.000 | And I filled all of the back pages

00:07:53.600 | where I take notes in books with notes.

00:07:55.440 | So I ran out of room at the back.

00:07:57.520 | And so if that's any kind of endorsement,

00:07:59.680 | it really is a great book.

00:08:00.640 | Books are phenomenal when you start looking at them

00:08:03.760 | as far as the return on investment.

00:08:05.760 | I've made a decision sometime back

00:08:07.600 | to not save money on books.

00:08:08.960 | I've gone through a period of time

00:08:10.000 | where I used to buy a ton of books.

00:08:11.200 | And then I bought way too many books.

00:08:12.480 | And then I quit.

00:08:13.040 | And I said, I'd get them all from the library.

00:08:14.880 | And then finally, I realized, for me,

00:08:17.200 | I need to destroy a book with an ink, with highlighters,

00:08:20.560 | and with pens for me to learn from it.

00:08:22.480 | And when you look at the amount of value

00:08:24.240 | that you can get from a book, it's phenomenal.

00:08:28.960 | And this book, the primary reason that I bought the book

00:08:32.320 | was when I heard who Tony Robbins interviewed

00:08:34.880 | for the book, I pulled out Amazon,

00:08:38.480 | and I pre-ordered it immediately.

00:08:40.160 | Because evidently, according to his notes,

00:08:43.040 | he interviewed almost 50 people or something around 50 people,

00:08:47.040 | many of them incredibly successful billionaires,

00:08:49.680 | many of them involved in the investment markets.

00:08:52.000 | And these are people that I don't, at the moment,

00:08:54.800 | have access to.

00:08:56.240 | I would love to sit down and speak with all the people

00:08:58.400 | that he spoke to.

00:08:59.520 | But I haven't developed the ability

00:09:01.280 | to get that access myself.

00:09:02.720 | And I haven't made the time in order

00:09:04.400 | to build the platform like Tony Robbins has.

00:09:07.200 | So I just figured, man, if I can listen to Tony

00:09:09.600 | or read Tony's interviews of that,

00:09:11.200 | even if they're just excerpts, that'd be phenomenal.

00:09:13.520 | He puts excerpts of the interviews in the book.

00:09:17.200 | But just the excerpts alone are worth the price of admission.

00:09:20.640 | I'd pay thousands to get the full excerpts

00:09:24.320 | of his interviews.

00:09:25.520 | I'm sure he has them in his notes.

00:09:27.040 | Man, I'd pay thousands to get a book with those done.

00:09:29.920 | Because, I mean, and that would be a cheap price

00:09:32.640 | when you compare it to what--

00:09:33.840 | when you compare the value of what you can get from somebody

00:09:37.760 | just by reading something like an interview transcript.

00:09:40.160 | I would love to do the research process for a book like this.

00:09:43.520 | It's a great book.

00:09:44.960 | And what Tony Robbins tried to do,

00:09:46.320 | as far as when he set out,

00:09:47.920 | is he tried to create a book that would appeal to beginners

00:09:50.800 | and also to experts.

00:09:52.240 | And to the poor, just getting started.

00:09:54.480 | And to the rich, you were already arrived, so to speak.

00:09:58.240 | And so he set himself a tall benchmark.

00:10:02.400 | Did he hit it?

00:10:03.040 | I'm not so sure.

00:10:04.880 | I do think it's a great book,

00:10:06.000 | but I don't see any way that he hit that.

00:10:08.160 | But I think that there are ideas in it

00:10:10.240 | that can be pulled out of it

00:10:11.600 | and applied to just about any situation.

00:10:13.680 | My primary motivation to reading the book

00:10:17.040 | was to gain access to the billionaire transcripts.

00:10:19.360 | And also, I wanted to learn how to teach.

00:10:21.040 | One of the things that I am focused a lot on

00:10:25.440 | is trying to learn how to be a better teacher,

00:10:27.760 | especially a better teacher of financial concepts,

00:10:30.640 | to you, the audience.

00:10:32.240 | I'm really trying to build and practice

00:10:34.720 | the skills of being direct, succinct,

00:10:37.120 | using appropriate metaphors and analogies,

00:10:39.600 | but not using hyperbole.

00:10:41.360 | And so I wanted to see how Tony Robbins did it,

00:10:43.920 | because he's widely renowned as being a phenomenal teacher.

00:10:47.200 | I've never met him.

00:10:49.840 | I would love to meet him.

00:10:50.800 | I'd love to interview him for this show,

00:10:52.240 | which, by the way, if any of you know how to get in touch with

00:10:54.400 | and do those author interview requests, things like that,

00:10:57.440 | I'd love to interview him on a show like this.

00:10:59.120 | I live probably 15 minutes from his house in Palm Beach.

00:11:02.880 | But I never met him, never been to any of his seminars.

00:11:05.360 | Years ago, I listened to his--

00:11:07.280 | I bought his courses, a couple of his courses.

00:11:10.560 | I bought his personal power course,

00:11:12.080 | his time management course,

00:11:13.360 | and his healthy body course, something like that.

00:11:16.000 | And I really enjoyed them.

00:11:18.080 | I found probably the personal power course

00:11:20.240 | to be the most interesting and the most applicable.

00:11:22.880 | The other two, I thought the ideas were interesting,

00:11:24.960 | but I wasn't able to apply them to my life very effectively.

00:11:28.320 | They were long on kind of psychological tools,

00:11:31.200 | but they didn't seem to fit--

00:11:32.240 | the psychological tools didn't seem to fit my needs at the time.

00:11:35.120 | So I still have them.

00:11:36.880 | His time planning system, rapid time something or other,

00:11:41.760 | it was interesting, and I valued it.

00:11:43.600 | But I didn't really--

00:11:44.480 | wasn't able to apply them.

00:11:45.360 | But the personal power ideas were very interesting and very useful.

00:11:49.520 | Someday, I want to go to his seminars.

00:11:51.200 | I really do.

00:11:51.760 | I had a friend that went recently

00:11:53.120 | and really benefited from one of his seminars.

00:11:54.880 | But just for me right now,

00:11:56.320 | I don't think I've extracted all the value from his CDs or his books yet.

00:12:00.880 | In order for me--

00:12:01.520 | to be worth it for me to spend $500 or $15,000 on a seminar,

00:12:06.720 | I don't need--at this point, I don't need the emotional lift.

00:12:09.120 | I don't think I need the emotional lift that a seminar provides.

00:12:14.080 | I need to focus on just the application.

00:12:16.800 | I'm pretty clear on applying the technique

00:12:18.480 | without needing to go to a seminar.

00:12:20.320 | But books are a different animal.

00:12:21.840 | A book in a seminar is very different.

00:12:23.920 | In fact, he says that right in the preamble of his book

00:12:26.160 | as far as developing the book and trying to use it as a teaching method.

00:12:30.320 | And I really love more than anything the purpose of the book.

00:12:34.960 | He sets out and he basically says how he got around to writing it

00:12:38.880 | because it's been 20 years since he's written a book.

00:12:41.280 | And so he laid out for himself--

00:12:44.800 | he talked about the history in the beginning

00:12:46.880 | about basically watched the financial crisis in 2008

00:12:50.480 | and saw basic criminal behavior, essentially,

00:12:56.160 | and then people walking away scot-free on Wall Street.

00:12:58.960 | So he set out the purpose of this book.

00:13:00.720 | And on page 30, he says,

00:13:02.320 | "This book is committed to one primary outcome--

00:13:05.520 | to set you up so you have an income for life

00:13:08.480 | without ever having to work again--real financial freedom.

00:13:13.440 | And the good news is it can be achieved by anyone,

00:13:16.480 | even if you're starting out in debt, deep in the hole,

00:13:19.280 | no exaggeration, with a little bit of time, consistent focus,

00:13:22.560 | and the right strategies applied,

00:13:24.400 | you can get to financial security or even independence in a few years."

00:13:28.400 | So I thought, what a great purpose for a book.

00:13:30.560 | That's exactly what my show is about.

00:13:32.320 | And I really--man, if I had to create that for a purpose statement of my show,

00:13:36.720 | I'd be totally--that's exactly what this show is about.

00:13:39.280 | To me, I want to read a book like that.

00:13:41.680 | And there are really some amazing things and concepts taught in this book.

00:13:47.520 | But in some things, you're going to have to read through the lines.

00:13:50.560 | Read through the lines and look for the themes

00:13:53.520 | that are surrounding some of the words.

00:13:55.600 | You got to ignore some of the words.

00:13:56.960 | In many ways, the book is actually a study in contradictions.

00:14:00.800 | As I was going through it, I was constantly making notes.

00:14:03.360 | This contradicts that.

00:14:04.320 | This contradicts that.

00:14:05.280 | This contradicts that.

00:14:06.080 | I'm going to give you many of those examples.

00:14:07.760 | It used to bother me in a finance book.

00:14:10.160 | But as I've matured, it bothers me less.

00:14:13.440 | It bothers me because I feel like an author

00:14:15.600 | should be able to remove some of those contradictions

00:14:17.920 | or should address them.

00:14:19.600 | But I recognize now that finance, the field of finance,

00:14:22.720 | is inherently contradictory.

00:14:24.320 | And I'll give you many specific examples of those contradictions

00:14:30.000 | so you can understand what I mean.

00:14:31.280 | Because one of the challenges you have to learn, I think,

00:14:33.600 | to deal effectively in the world of finance,

00:14:35.120 | you have to learn how to hold seemingly contradictory ideas

00:14:38.560 | in your head at the same time.

00:14:39.760 | That's tough because we're not taught to do that in our society.

00:14:41.920 | We're mainly taught black and white, right and wrong.

00:14:44.800 | This is right or this is wrong.

00:14:46.160 | This investment strategy is right.

00:14:47.360 | This one is wrong.

00:14:48.400 | And it was frustrating for me until I finally recognized,

00:14:52.400 | you know what?

00:14:53.040 | I can hold these things at the same time in my head.

00:14:56.800 | I also used to take books like this as gospel,

00:15:00.240 | essentially saying, this book is right.

00:15:02.160 | It has the answers.

00:15:03.600 | And now I just say, what can I learn from it?

00:15:06.160 | How can I fit this into my own mental models?

00:15:08.880 | And I do like to argue with books.

00:15:10.320 | I like to argue with the author and see

00:15:12.240 | whether I can, in my head, defeat the author and say,

00:15:15.680 | OK, I know something different.

00:15:17.120 | Or I can say, hey, this author defeated something

00:15:20.800 | that I was able to deal with.

00:15:22.240 | And I don't know any other way to do that.

00:15:24.320 | I think books are a good way to argue with people.

00:15:26.000 | Arguing with people in verbal writing--

00:15:28.720 | or excuse me, verbal conversation,

00:15:30.240 | I think it's usually completely ineffective.

00:15:32.000 | Because then you have to deal with a relationship dynamic

00:15:34.800 | and hurting the relationship, and you never win an argument.

00:15:37.040 | But arguing with books, to me, that is a key thing.

00:15:40.080 | Because that's how we change.

00:15:42.160 | The book is long.

00:15:43.280 | It is 600 pages.

00:15:44.880 | And in many ways, this gives me courage.

00:15:46.960 | I've struggled with self-confidence

00:15:49.920 | as far as my long shows.

00:15:51.200 | And some of them I really regret.

00:15:52.960 | That was why I didn't record this show sooner.

00:15:55.840 | As I said, I regret some of the shows that I published,

00:15:58.000 | because I don't think they were packed with enough information

00:16:00.320 | in the past.

00:16:01.200 | And I've learned from that.

00:16:02.400 | And I am learning from that.

00:16:04.000 | But then also, sometimes when I do a show

00:16:06.160 | and I feel like that was perfect,

00:16:07.440 | but it was three hours, then I look out in the marketplace

00:16:11.200 | and I say, well, no one else is doing that.

00:16:12.560 | Is it too long?

00:16:13.600 | The average podcast is supposed to be 30 minutes long.

00:16:16.160 | That's what everyone says it should be.

00:16:17.600 | But if Tony Robbins can sell--

00:16:19.600 | he says his average seminar is 52 hours.

00:16:22.160 | If he can sell 52-hour seminars and 600-page books on money,

00:16:26.640 | I figure I could do two-hour-long podcast episodes,

00:16:30.000 | as long as they're packed with content

00:16:31.760 | and they're entertaining and they're riveting.

00:16:34.640 | And the way he set out this book is really interesting to me.

00:16:40.400 | He is a master teacher.

00:16:42.480 | And he says specifically up front that his writing style

00:16:46.000 | is different than many other authors.

00:16:48.480 | He specifically says, stick with me,

00:16:50.240 | because I'm teaching you in a certain way.

00:16:52.320 | And he explains how to do that.

00:16:54.240 | I don't know.

00:16:55.840 | I assume it's effective, because there's

00:16:57.360 | millions of people that have done it.

00:16:58.480 | It's not my favorite way of consuming content

00:17:03.600 | and consuming writing.

00:17:05.040 | But I did find it to be a good book.

00:17:06.880 | So maybe it was effective.

00:17:08.160 | Time will tell, right?

00:17:09.520 | The general layout of the book is

00:17:12.080 | that it's organized around Tony's seven simple steps

00:17:15.600 | for success.

00:17:16.240 | So he lays out these seven steps.

00:17:19.440 | And this is the organizing principle.

00:17:20.720 | And each of the seven steps has sub-steps and sub-chapters.

00:17:25.040 | The chapters are numbered one through seven,

00:17:27.600 | and then 1.1, 1.2.

00:17:29.600 | Step one is a focus and a desire to basically say,

00:17:34.560 | make the most important financial decision of your life,

00:17:38.400 | which is to be an investor and not just a consumer,

00:17:42.400 | and decide what percentage of your income

00:17:46.240 | to put away for the future.

00:17:48.560 | Automate it, and then use some mental tricks

00:17:52.400 | to increase that amount of income

00:17:57.760 | that you're saving over time.

00:17:58.880 | So he starts with a commitment to action,

00:18:02.720 | essentially saying the number one biggest decision

00:18:04.880 | in your life is, what percentage of my income will I save?

00:18:08.320 | Will I save 20%?

00:18:09.440 | Will I save 10%?

00:18:10.320 | Will I save 50%?

00:18:11.040 | That's step one.

00:18:13.600 | And I really thought that was valuable.

00:18:15.200 | He goes in detail into an idea

00:18:17.520 | showing some psychological research

00:18:20.000 | on the focus of save more in the future,

00:18:22.560 | where they've substantially increased

00:18:24.720 | the amount of money that people were saving

00:18:28.160 | if they committed to future increase of savings.

00:18:30.560 | I learned this years ago from Brian Tracy.

00:18:33.200 | He had a financial audio course of some kind

00:18:37.680 | that I listened to, and he talked about,

00:18:39.520 | anytime you have an increase in income,

00:18:41.760 | save half and spend half.

00:18:44.560 | So if you get a 6% raise,

00:18:46.160 | increase your savings by 3% of your salary

00:18:49.120 | and spend the 3% of your salary.

00:18:50.960 | That way you can build some of that emotional gratification

00:18:53.920 | of the higher income and also higher savings.

00:18:56.800 | So in my mind, that's a really great idea.

00:19:02.240 | And I'm not gonna actually criticize these steps

00:19:04.240 | at the moment very much.

00:19:05.840 | I'm just gonna lay them out for you.

00:19:06.960 | Step two is become an insider

00:19:08.880 | and know the rules of the financial game

00:19:10.640 | before you get in.

00:19:11.520 | And this section is organized around nine different myths

00:19:15.600 | that he talks about.

00:19:16.400 | Myth one, he says,

00:19:17.280 | the myth is that it's possible to beat the market.

00:19:20.480 | And 96% of actively managed mutual funds

00:19:24.640 | fail to beat the market over any sustained period of time.

00:19:27.440 | And essentially, myth one is very clear

00:19:29.440 | that passive index investing with Vanguard is the solution.

00:19:33.280 | It's very strong on that.

00:19:35.360 | Myth two is that the myth is that

00:19:38.640 | fees aren't super important.

00:19:40.080 | And he shows how fees, the amount of money,

00:19:42.640 | the fees that you pay on investment strategy

00:19:44.640 | are incredibly important.

00:19:46.080 | And they are incredibly important.

00:19:48.240 | He illustrates that over time,

00:19:50.160 | small fees become massive as far as their impact

00:19:54.240 | to your actual return.

00:19:55.840 | Myth three says that essentially,

00:20:00.880 | the returns that we list in the mutual fund literature

00:20:03.840 | is what you get.

00:20:05.280 | And basically, this is a debate over dollar-weighted returns

00:20:09.120 | versus time-weighted returns.

00:20:10.960 | I'm going to go into detail on this one

00:20:13.120 | when I start the critique in a moment.

00:20:15.440 | But essentially, the idea is there's two different ways

00:20:19.040 | of measuring the rate of return that you receive

00:20:22.240 | on an investment portfolio.

00:20:23.840 | A time-weighted return doesn't track a specific dollar

00:20:27.120 | that is in the portfolio.

00:20:29.040 | It doesn't track your specific results as an investor.

00:20:33.200 | It just simply removes the dollar-weighting of returns

00:20:36.320 | and says, "On January 1, the portfolio from January 1

00:20:40.080 | to December 31 performed according to such."

00:20:42.640 | Dollar-weighted returns, on the other hand,

00:20:44.720 | are basically tracking individual dollars

00:20:47.440 | through the portfolio instead of focusing on the time.

00:20:51.920 | And I'm going to go into that debate in detail

00:20:53.440 | because I think it's one of the big flaws of this book.

00:20:55.440 | Myth four is that I'm your broker and I'm here to help.

00:20:59.760 | And so essentially here, he's talking about

00:21:02.400 | the importance of a fiduciary standard for all advisors

00:21:05.840 | and for you to work with an advisor

00:21:07.440 | who's operating under a fiduciary standard.

00:21:09.680 | This one also has a lot of flaws in it,

00:21:11.200 | which I'll point out in a moment.

00:21:12.640 | Myth five is that your retirement is just a 401(k)

00:21:15.520 | and here he basically hammers all the problems

00:21:17.680 | with the 401(k) system with a major focus on expenses.

00:21:21.040 | Myth six is that target date funds are perfect.

00:21:25.680 | You just set them and forget them.

00:21:27.280 | This one's really unclear, in my opinion.

00:21:29.760 | But essentially, the myth is that people don't really

00:21:33.600 | understand the target date funds and also that the asset

00:21:37.040 | allocation that the target date funds are selecting

00:21:40.240 | is not necessarily right for you.

00:21:42.720 | And I agree with both of those points.

00:21:44.080 | People don't understand target date funds

00:21:46.160 | and there's no proof that that asset allocation is for you.

00:21:49.120 | But it doesn't deserve inclusion here in the myth.

00:21:51.920 | Myth seven is all about annuities.

00:21:53.600 | Essentially, the myth is that annuities are bad.

00:21:57.040 | And he says that not all annuities are bad,

00:22:00.080 | that there are some good ones.

00:22:01.600 | Myth eight is you got to take huge risks to get big rewards.

00:22:06.640 | And his point is that there are products,

00:22:08.880 | investment products, that give you great rewards

00:22:11.040 | without significant risks.

00:22:12.320 | Specifically, he talks about buying structured notes,

00:22:15.440 | investing in market-linked CDs, and fixed indexed annuities.

00:22:19.120 | And then myth nine, he talks about the lies

00:22:21.920 | we tell ourselves, which is basically

00:22:24.000 | that we have limiting beliefs about what's possible.

00:22:27.120 | His next section is to make the game winnable.

00:22:30.480 | This was my favorite section, actually,

00:22:32.160 | where he focuses heavily on calculating

00:22:36.880 | the actual price of your dreams.

00:22:39.680 | And he illustrates that the numbers that you need

00:22:42.880 | are probably far less than you actually think.

00:22:45.520 | And I learned this was just doing financial planning,

00:22:48.560 | that a lot of times when people would talk about how much money

00:22:53.040 | they need and what they need to be financially independent,

00:22:55.520 | they're crazy high.

00:22:56.960 | They don't need anywhere near as much money

00:22:59.280 | as they need to actually achieve their dreams.

00:23:03.280 | And so they're either crazy high or crazy low,

00:23:05.360 | and a lot of error in between.

00:23:06.800 | And I'm going to steal, actually,

00:23:09.040 | some of the concepts from this.

00:23:11.200 | The biggest benefit that I see from this section

00:23:15.760 | that I'm going to steal going forward

00:23:17.360 | is he lays out five financial dreams for people to consider.

00:23:21.840 | And he talks about different levels of financial success.

00:23:25.360 | Because when talking about what is your dream,

00:23:31.920 | I want to have $10 million,

00:23:33.600 | well, what do you want the $10 million to do?

00:23:35.680 | And if you're starting with a net worth of negative $1 million

00:23:38.720 | or negative $200,000 or negative $20,000

00:23:40.960 | because you just got deeply in debt with student loans,

00:23:43.760 | then he talks about that.

00:23:46.800 | And he says, you probably don't need that much,

00:23:50.720 | but let's break the goal down into lesser dreams.

00:23:53.680 | And so he lays out here five different stages

00:23:56.960 | on what you should pursue,

00:23:59.360 | which is financial security, financial vitality,

00:24:03.280 | financial independence, financial freedom,

00:24:06.000 | and then his final one, absolute financial freedom.

00:24:09.200 | And I'm actually going to steal those five things,

00:24:11.040 | and I'll credit him whenever I can,

00:24:12.640 | but I'm hereby officially declaring

00:24:14.400 | I'm stealing his five steps.

00:24:15.760 | But I'm going to add some other steps,

00:24:17.200 | which I'll go over in a moment

00:24:18.880 | when I get to specific ideas

00:24:20.800 | that I thought were really powerful.

00:24:23.360 | Immediately following those five steps,

00:24:25.200 | he talks about ways to increase your speed

00:24:29.040 | with how quickly you can get those investment results

00:24:31.760 | or those financial results,

00:24:32.960 | which is to spend less, save more, earn more,

00:24:35.840 | cut fees and taxes, and get better returns.

00:24:38.240 | So I thought that was really, really, really neat.

00:24:40.240 | The next section is all about

00:24:41.280 | making the most important investment decision of your life,

00:24:43.520 | which is your asset allocation.

00:24:45.280 | And here he starts with focusing on

00:24:47.440 | how much of your money do you put into a security bucket

00:24:50.240 | instead of a risk or a growth bucket?

00:24:53.040 | And this is valuable and important.

00:24:55.600 | It's also flawed

00:24:56.480 | because there's not enough framework around it

00:24:58.320 | to actually know, well, how would I decide?

00:25:00.480 | There's got to be some methodology for deciding,

00:25:02.800 | and that's not provided in the book.

00:25:04.640 | Number five, create a lifetime income plan.

00:25:06.720 | Here he goes through some different portfolios

00:25:08.640 | with a major focus on Ray Dalio,

00:25:10.960 | who is a hedge fund manager.

00:25:12.160 | His all seasons portfolio,

00:25:13.680 | which is a playoff of his all weather portfolio,

00:25:17.360 | which is the actual portfolio he manages,

00:25:19.520 | which we'll cover in detail,

00:25:20.880 | and also annuities.

00:25:22.400 | Number six is to invest like the .001%,

00:25:25.520 | and here he goes through the interviews

00:25:28.080 | with those billionaires and hedge fund managers, et cetera,

00:25:32.560 | and investing titans.

00:25:34.400 | And then seven is just do it, make it happen,

00:25:36.720 | and enjoy it and share it, which is about philanthropy.

00:25:39.120 | So it's a really great book,

00:25:41.280 | and you can't fit everything into a book.

00:25:43.520 | I get that.

00:25:44.160 | But I'm going to use this to show and teach you

00:25:48.160 | about some of the major flaws that there are

00:25:50.720 | and some of the major lessons in the financial business.

00:25:54.240 | And I'm going to start with things

00:25:56.080 | this book does really, really well.

00:25:57.840 | And he does so much well in this book.

00:26:01.920 | First, he lays out very well the problems

00:26:05.600 | that are facing aspiring retirees.

00:26:08.160 | If you work with a financial planner,

00:26:10.640 | if your financial planner hasn't been talking

00:26:12.400 | about this with you, you need to bring this up with them.

00:26:15.760 | But there are some serious challenges.

00:26:21.120 | Facing the retirement market, lifespans are increasing.

00:26:24.400 | Page 31 of the book, there's a 50% chance

00:26:28.160 | that among married couples, at least one spouse

00:26:30.640 | will live to the age of 92,

00:26:32.640 | and a 25% chance that one will live to 97.

00:26:37.040 | So basically, one out of four,

00:26:40.720 | one out of four couples interpreting those statistics,

00:26:44.320 | once they reach a certain age,

00:26:45.760 | it should be what that statistic is based upon.

00:26:48.000 | Once you reach about age 60 or 65,

00:26:50.080 | one out of four of couples,

00:26:52.400 | there's going to be a spouse that lives to the age of 97.

00:26:56.320 | That's phenomenal when you look at

00:26:59.680 | how do I plan for a long-term retirement.

00:27:02.480 | Simply put, there's a quote from John Chauvin,

00:27:05.600 | who is a Stanford University professor of economics, says,

00:27:08.560 | quote, "It is not realistic to finance a 30-year retirement

00:27:11.600 | with 30 years of work.

00:27:13.120 | You can't expect to put 10% of your income aside

00:27:15.440 | and then finance a retirement that's just as long."

00:27:18.400 | And so this is a major deal.

00:27:20.320 | He talks about the increasing volatility of markets,

00:27:22.960 | which lead to increasing fear,

00:27:24.640 | which lead, in my words,

00:27:25.760 | to increasing bad behavior investment.

00:27:28.720 | Talks about decreasing government welfare benefits.

00:27:32.160 | If you go back and you look in 1950,

00:27:34.400 | coming from page 34,

00:27:36.080 | in 1950, there were 16.5 workers

00:27:38.880 | paying into the social security system

00:27:40.640 | to support one person getting benefits.

00:27:42.640 | Now it's 2.9 workers per recipient.

00:27:46.560 | That's a tremendous change.

00:27:48.240 | And also he talks about the fact that the wealthier you are,

00:27:52.480 | the less likely you are to retire.

00:27:54.080 | Here, he actually cited an interesting study.

00:27:56.240 | Well, he didn't cite it.

00:27:57.040 | One of my complaints is that

00:27:58.400 | there's no bibliography in the book.

00:28:00.240 | In the section that would be a bibliography,

00:28:03.360 | he refers you to the website

00:28:04.800 | and there's no bibliography on the website,

00:28:06.320 | at least not that I can find.

00:28:07.440 | And I did several types of searches

00:28:09.600 | to try to make sure that I found it.

00:28:10.960 | So that's one of my complaints.

00:28:13.440 | I had to find these things by hand.

00:28:14.960 | But he references in the book,

00:28:16.640 | he says, quote from page 34,

00:28:19.600 | "Studies show that the more money you earn,

00:28:21.360 | the more likely you are to keep working.

00:28:23.520 | It used to be the goal was to get rich

00:28:25.520 | and retire by the age of 40.

00:28:27.360 | Now the goal is to get rich and work until you're 90.

00:28:30.320 | Nearly half of all individuals

00:28:32.240 | who earn $750,000 per year or more

00:28:36.000 | say they will never retire,

00:28:37.520 | or if they do,

00:28:38.400 | the earliest they would consider it is age 70.

00:28:41.360 | How about the Rolling Stones and Mick Jagger at age 71,

00:28:44.400 | still rocking the world?

00:28:45.760 | Or think of business moguls like Steve Wynn at 72,

00:28:48.960 | Warren Buffett at 84,

00:28:50.240 | Rupert Murdoch at 83,

00:28:51.760 | and Sumner Redstone at 91."

00:28:53.600 | So I went and found that study.

00:28:57.200 | And what it actually comes from

00:28:58.880 | is a study by the Spectrum Group.

00:29:01.840 | And it's entitled

00:29:02.640 | "The Financial Attitude of Wealthy Investors

00:29:05.200 | Based on Income Spectrum."

00:29:06.960 | Now I couldn't find the actual source,

00:29:08.640 | the actual study.

00:29:09.600 | They wanted, looked like about 3,500 bucks for it.

00:29:12.400 | So I found a couple of articles that talked about it.

00:29:14.880 | And essentially it is that statistic

00:29:17.040 | that is simply saying

00:29:18.160 | that the richer people are much less likely,

00:29:20.800 | or excuse me, the higher income earners,

00:29:22.320 | not necessarily synonymous with richer people,

00:29:24.720 | are much less likely to want to retire early.

00:29:28.080 | And there may be various reasons for that.

00:29:29.760 | It may be that they enjoy what they do more.

00:29:32.000 | It may be that they can't support the lifestyle

00:29:34.240 | and they haven't saved enough money

00:29:35.440 | to support a $600,000 a year lifestyle.

00:29:38.320 | There may be many reasons.

00:29:39.440 | But that's been something that I've suspected,

00:29:41.840 | but I've never found any numerical evidence for that.

00:29:45.760 | And so I was thrilled to find that.

00:29:48.240 | He does a really great job in the book

00:29:49.760 | of talking about the importance of starting early.

00:29:51.840 | And he begins the book with this.

00:29:53.040 | It's on page 50.

00:29:53.840 | He talks about tap the power,

00:29:55.360 | make the most important financial decision of your life,

00:29:57.760 | which is to start and to start early.

00:29:59.680 | And he talks a lot about the benefit of compound interest.

00:30:03.680 | And it's so, so key.

00:30:05.040 | He uses the example of two brothers,

00:30:11.600 | William and James, in his story,

00:30:13.200 | that William opens a retirement account at the age of 20

00:30:16.720 | and invests $4,000 for the next 20 years,

00:30:20.240 | from the age of 20 to 40.

00:30:21.920 | And at 40, he quits funding the money,

00:30:24.640 | putting any more money in it,

00:30:25.680 | but leaves it alone and it grows at 10% per year.

00:30:28.240 | His brother starts at 40 and puts in $4,000 a year

00:30:32.320 | with the same return and keeps going until he's 65.

00:30:35.280 | But the difference is, in the end,

00:30:37.840 | the brother who started earlier,

00:30:40.080 | even though he'd only invested a total of $80,000,

00:30:42.560 | had two and a half million bucks.

00:30:45.200 | But on the flip side, the brother who started later,

00:30:48.880 | he had invested a total of $100,000

00:30:52.400 | and he had less than $400,000.

00:30:54.000 | $2 million gap because of that point of starting early.

00:30:58.240 | And to me, this is one of the most important lessons to start

00:31:02.400 | by teaching somebody is the power of compound interest.

00:31:05.520 | So valuable.

00:31:06.240 | He talks a little bit about the importance

00:31:09.360 | of avoiding bankruptcy and wipeout.

00:31:12.080 | And he does this in the context of talking about athletes.

00:31:14.960 | He goes through the lesson that essentially,

00:31:18.320 | you can't earn your way to financial freedom.

00:31:20.480 | You have to actually save and then put a plan in place

00:31:24.400 | for avoiding problems.

00:31:26.720 | He goes through Kurt Schilling, a baseball pitcher,

00:31:30.320 | earned more than $100 million and then went bankrupt.

00:31:34.160 | He's $50 million in debt.

00:31:35.840 | Kim Basinger, an actress, she earned more than $10 million

00:31:39.600 | a pic per picture and she ended up bankrupt.

00:31:42.000 | Marvin Gaye, Willie Nelson, MC Hammer, Meat Loaf,

00:31:44.960 | made loads of money and all of them were nearly bankrupt

00:31:49.520 | or bankrupt, actually bankrupt.

00:31:51.360 | And so amazing to me because those examples just blow my mind

00:31:56.960 | every time you think about them,

00:31:58.400 | about how much money you can earn

00:32:00.000 | and then you can simply outspend it if you're not careful.

00:32:04.160 | So very, very valuable, very, very valuable illustration.

00:32:11.840 | He talks really well about the value of why you invest

00:32:15.920 | and then essentially a mental framework

00:32:18.480 | that you're investing to build a money machine

00:32:23.040 | to fund your life.

00:32:23.920 | One of my favorite quotes from the book comes from page 54.

00:32:27.360 | Quote, "You're already a financial trader.

00:32:30.160 | You might not think of it in just this way,

00:32:32.000 | but if you work for a living,

00:32:33.680 | you're trading your time for money.

00:32:36.480 | Frankly, it's just about the worst trade you can make.

00:32:39.520 | Why?

00:32:40.020 | Well, you can always get more money,

00:32:42.400 | but you can't get more time."

00:32:44.560 | In my mind, this is one of the key things

00:32:49.680 | that differentiates different people

00:32:51.600 | and their success with becoming investors.

00:32:54.160 | Those who become investors become investors

00:32:58.160 | because they see the value of becoming wealthy

00:33:01.520 | and living off of their portfolios,

00:33:03.200 | living off of their investments.

00:33:04.800 | That's a major factor.

00:33:06.320 | If investing is viewed as deprivation,

00:33:08.880 | the idea is, "Well, I can't go out

00:33:10.320 | and buy this shiny new thing,

00:33:12.080 | that shiny new object syndrome,

00:33:14.080 | this shiny new thing that I need," whatever it is,

00:33:16.800 | whether it's at a new iPhone

00:33:18.800 | or right when it comes out at full retail price

00:33:22.160 | or whether it's a brand new mega yacht

00:33:25.520 | that just happens to be the latest, coolest thing

00:33:27.520 | because it has two helipads on the top instead of one,

00:33:30.640 | whatever that shiny new object is at your level

00:33:35.760 | at which you play the game,

00:33:36.880 | if you don't see investing as being superior,

00:33:40.960 | essentially investing is superior

00:33:43.920 | because it allows you to go on

00:33:46.960 | and have more in the future,

00:33:50.240 | you never invest successfully.

00:33:53.760 | You just always view it as deprivation.

00:33:55.360 | I think that's why people have trouble saving money.

00:33:57.840 | If you have a reason to save money,

00:34:00.640 | a powerful, compelling reason to save money,

00:34:03.200 | a clear vision of what it's going to do for you

00:34:05.600 | and a belief that it's attainable,

00:34:08.640 | then I think it's fairly simple

00:34:10.880 | to save money at that point in time

00:34:13.520 | because it's compelling to you.

00:34:14.800 | Near the end of the book, Robbins talks about timing,

00:34:18.560 | essentially that those who are skilled with investors,

00:34:21.200 | they're able to trade a little bit

00:34:23.760 | of current gratification and pleasure

00:34:27.200 | for that compelling vision

00:34:29.120 | of being able to have more in the future

00:34:31.200 | and to me, that is key.

00:34:33.600 | He gives some amazing stories in this section

00:34:36.080 | which is just awesome.

00:34:37.360 | I love these stories.

00:34:38.400 | I've collected them just partly for myself

00:34:40.560 | but he talks about how if you start early enough

00:34:42.960 | and essentially these are the power of compound interest,

00:34:45.920 | if you start early enough

00:34:47.440 | and you set aside consistently

00:34:49.040 | and if you get decent returns on your money,

00:34:51.680 | you can build up an incredible asset base

00:34:55.680 | with a little bit of focus.

00:34:59.680 | My favorite story because it's the most extreme

00:35:01.520 | was a man named Theodore Johnson

00:35:03.520 | who started with UPS in 1924.

00:35:08.240 | Evidently, he worked hard,

00:35:10.880 | moved his way up in the company

00:35:12.000 | but he never made more than $14,000 a year

00:35:14.960 | but he set aside 20% of every paycheck he received

00:35:19.920 | and he saved every Christmas bonus

00:35:22.400 | and he put it into UPS stock,

00:35:23.840 | UPS for United Parcel Service.

00:35:25.520 | The delivery company

00:35:26.480 | and he just always did it

00:35:29.280 | and over time with the growth of UPS stock,

00:35:32.720 | evidently his stock account had grown in value

00:35:37.200 | to over $70 million by the time he was 90 years old.

00:35:42.720 | Now, at that point in time,

00:35:44.400 | it's a little late to enjoy it.

00:35:47.360 | I hope he enjoyed it

00:35:49.200 | but maybe for him,

00:35:51.120 | leaving $70 million behind to a worthy cause

00:35:53.680 | was his definition of enjoyment.

00:35:57.040 | That wouldn't necessarily be my definition of enjoyment

00:36:01.360 | but I hope it worked for him and I hope so.

00:36:03.840 | But what an amazing story

00:36:05.760 | and evidently it does say that at the end of his life,

00:36:08.720 | he donated over $36 million

00:36:10.640 | to different educational causes.

00:36:12.320 | He made $3.6 million in grants to two schools for the deaf

00:36:16.480 | because he'd been hard of hearing for many years.

00:36:18.720 | He set up a college scholarship fund for UPS

00:36:21.040 | for the children of employees.

00:36:22.960 | How awesome.

00:36:23.680 | And maybe I'm sure he got far more enjoyment from that

00:36:26.640 | than from spending it.

00:36:27.840 | But you see in that story,

00:36:31.360 | the themes that are important in financial planning.

00:36:33.760 | Am I saving some percentage of my income?

00:36:36.320 | He set aside 20% and every Christmas bonus.

00:36:39.040 | Am I investing it wisely?

00:36:41.040 | And then am I giving it enough time for it to compound over time?

00:36:44.880 | He gave a story of a lady named Osceola McCarty

00:36:48.320 | who washed and ironed clothes

00:36:50.800 | and never made much money at all.

00:36:53.680 | She washed and ironed clothes but she always saved.

00:36:57.360 | And she donated at 87 years old,

00:37:00.320 | she donated $150,000 to the University of Southern Mississippi.

00:37:05.200 | Now what's heartbreaking for a financial advisor

00:37:09.440 | is she donated $150,000

00:37:12.160 | because it seems that from the story that she never invested it.

00:37:15.840 | And you think, man, how much more if she had invested it?

00:37:18.400 | But how incredible for that lady

00:37:20.480 | who from Mississippi washing and ironing clothes

00:37:23.360 | to accumulate $150,000.

00:37:25.200 | Amazing.

00:37:26.400 | Talks about John Templeton

00:37:28.800 | who is one of my favorite investment managers.

00:37:32.080 | Just seems like an amazing guy.

00:37:33.440 | And starting with nothing,

00:37:36.240 | he committed and saved 50% of his income from the beginning

00:37:39.360 | when he was a brand new stockbroker in New York City

00:37:42.640 | around the time of World War II.

00:37:45.360 | Amazing.

00:37:45.920 | Interesting tidbit.

00:37:47.680 | A couple of interesting tidbits for you on John Templeton.

00:37:49.760 | I'm fascinated by Templeton.

00:37:51.520 | He did a couple of things.

00:37:55.200 | First, he saw the opportunity and he saved 50% of what he earned.

00:37:58.800 | So he had set aside a lot of money.

00:38:01.120 | And then in World War II,

00:38:03.680 | when he looks around and says,

00:38:06.240 | "Man, everything is going crazy,"

00:38:08.480 | he pulled together $10,000.

00:38:10.000 | And some of it he borrowed, some of it he had.

00:38:13.280 | But he pulled together $10,000

00:38:14.960 | and he bought 100 shares of every company

00:38:17.680 | that was trading under a dollar a share.

00:38:20.480 | Including those that were considered nearly bankrupt.

00:38:22.960 | So all he did was just simply set this arbitrary price limit

00:38:25.920 | of this very low valuation and invested into it.

00:38:30.560 | And then after the war, when the economy grew,

00:38:33.360 | it grew quickly to be a much larger portfolio.

00:38:37.840 | If memory is correct,

00:38:38.880 | I think only three of his stocks wound up going bankrupt.

00:38:42.400 | All the rest of them made money and came back.

00:38:44.400 | I wish I had had, I think, back to 2008

00:38:48.960 | and unfortunately I was a dumb-dumb

00:38:51.040 | and I didn't have enough money pulled together.

00:38:53.280 | And also I was in the process of starting a business.

00:38:55.360 | Maybe I wasn't a dumb-dumb,

00:38:56.400 | but I wish I had been more diligent when I was younger

00:39:00.080 | to save more money, save more capital

00:39:02.480 | to put in at that point in time.

00:39:04.960 | And I hope that, you know, for you older people

00:39:07.760 | are not going to like this,

00:39:08.880 | but for me as a young guy,

00:39:10.320 | I hope desperately that we wind up in another situation like 2008.

00:39:14.880 | I missed it.

00:39:16.160 | And just because I didn't have the capital set aside,

00:39:18.320 | I was ready to invest.

00:39:19.280 | And I was, I missed it.

00:39:21.920 | But next time I'll be ready.

00:39:23.040 | Next time, next time.

00:39:23.840 | But the cool thing about Templeton,

00:39:25.280 | another interesting tidbit that I noticed in the book

00:39:27.200 | that you might be interested in also

00:39:29.040 | is that Templeton was originally American.

00:39:31.120 | But in the book it says he was a British citizen.

00:39:33.040 | You often hear him referred to as Sir John Templeton.

00:39:36.560 | And I wondered why he was a British citizen

00:39:38.640 | because it was clear he was from the United States of America.

00:39:41.440 | He was originally American.

00:39:42.960 | Well, I went and researched it.

00:39:44.160 | And according to Wikipedia,

00:39:45.280 | he actually renounced his citizenship in 1964

00:39:48.640 | and became a naturalized British citizen living in the Bahamas.

00:39:52.400 | And according to the Wikipedia entry,

00:39:54.400 | he saved about a hundred million bucks in taxes by doing that,

00:39:57.120 | which he was then able to move that money

00:39:59.360 | and devote it towards philanthropy.

00:40:00.880 | According to some articles that I read,

00:40:04.400 | this happened because there was a 1962 change in the tax code

00:40:09.200 | which regulated the tax deferral of income

00:40:11.760 | in a controlled foreign corporation.

00:40:14.800 | It seems like he had originally set up his funds in Canada

00:40:19.120 | and he was a US citizen.

00:40:20.240 | But when they changed that tax code,

00:40:22.400 | then that really affected him.

00:40:24.720 | That law and the tax code, that really affected him.

00:40:27.280 | So he renounced the city of citizenship.

00:40:29.840 | So I say good for him.

00:40:31.440 | That's awesome.

00:40:32.160 | It's a subject I'm interested in,

00:40:34.400 | in this need to find people who have done it effectively

00:40:37.040 | and successfully over the years and saved a lot of money.

00:40:40.000 | And when I look forward at some of the tax uncertainty

00:40:42.560 | and some of the capital controls that you sometimes wonder

00:40:48.480 | if the stage is being paved for them with changes,

00:40:52.960 | I'm not sold yet, but I look at it suspiciously.

00:40:55.280 | Researching expatriation and renunciation of citizenship

00:41:00.400 | is a part-time hobby of mine.

00:41:02.000 | So neat little story on Templeton.

00:41:04.160 | But the point is Templeton saved 50% of his income

00:41:07.200 | and he turned it into a multi-billion dollar portfolio.

00:41:11.920 | A really amazing achievement.

00:41:15.280 | Robbins does a really amazing job of talking about

00:41:19.360 | some cool behavior tricks.

00:41:20.720 | And I learned something new called the Save More Tomorrow idea.

00:41:25.520 | And let me read you one paragraph here from page 67.

00:41:28.880 | And paragraph says, "Bernard C. and Thaler first tested

00:41:35.120 | the Save More Tomorrow plan almost 20 years ago

00:41:38.160 | at a company in the Midwest,

00:41:39.760 | where the blue-collar workers said they couldn't afford

00:41:42.080 | to squeeze another dime out of their paychecks.

00:41:44.880 | But the researchers persuaded them to let their employer

00:41:47.520 | automatically divert 3% of their salaries

00:41:50.240 | into a retirement account,

00:41:51.760 | and then add 3% more every time they got a pay raise.

00:41:55.920 | The results were amazing.

00:41:58.080 | After just five years and three pay raises,

00:42:00.800 | those employees who thought they couldn't afford to save

00:42:04.000 | were setting aside just under a whopping 14% of their paychecks.

00:42:09.680 | And 65% of them were actually saving an average

00:42:12.960 | of 19% of their salaries."

00:42:15.440 | So the Save More Tomorrow idea was that,

00:42:18.320 | I didn't know it had been tested.

00:42:19.680 | I had read some of the literature saying,

00:42:21.120 | "Hey, this is effective."

00:42:22.320 | But I didn't know it had been tested with results like that.

00:42:24.880 | But how neat that just basically the idea is,

00:42:27.440 | commit to saving more in the future.

00:42:28.800 | Don't do anything today,

00:42:30.080 | but commit to saving more in the future.

00:42:32.240 | So as your income goes up, or even if it doesn't,

00:42:35.040 | you just say, "Well, I'm going to save a little bit,

00:42:36.480 | little by little by little."

00:42:38.080 | I've used this with clients.

00:42:39.520 | And I would encourage you to consider it in your life.

00:42:41.600 | If you're not saving any money, say,

00:42:43.840 | "I'm going to save 1% and then increase it by 1% every month."

00:42:47.120 | Or start with something laughably low,

00:42:50.480 | maybe half a percent, go to half a percent every month.

00:42:52.960 | What that'll happen is you can find those little tweaks

00:42:55.600 | and those little tricks.

00:42:56.640 | And if you commit to yourself

00:42:58.560 | that I'm always going to save this amount of money,

00:43:01.040 | and then you do it, and then you work to figure it out,

00:43:03.040 | that slow, easy easing in can really lead

00:43:07.120 | to much stronger long-term results

00:43:09.520 | than many times saying, "I'm going to go from nothing to 30%."

00:43:13.280 | Now, I think both are doable.

00:43:15.520 | Some people respond well to the go from nothing to 30%.

00:43:18.400 | That's kind of my personality.

00:43:21.680 | I get a little frustrated if things are slow.

00:43:23.760 | But many people have noticed it's effective if you do that.

00:43:26.480 | Now, the trick is you've got to set up some kind of system

00:43:28.480 | for actually doing that.

00:43:29.600 | And I guess these systems are actually being tested

00:43:33.280 | with some of the 401(k) companies,

00:43:35.040 | which Robbins talks about later in the book,

00:43:36.880 | which I think is really neat.

00:43:38.400 | I would love to have an option like that myself

00:43:41.200 | because you can just sign it up and do it.

00:43:42.800 | And I think that should be really rolled out more and more.

00:43:46.000 | Should be optional, but it should be rolled out more and more.

00:43:49.040 | Robbins does a great job of also talking about the emotional needs

00:43:53.520 | and the connection with emotional needs versus financial issues.

00:43:57.040 | Some people try to meet their emotional needs with money.

00:44:01.280 | And this is classic Tony Robbins.

00:44:03.600 | He talks about the first need that we have is a need for certainty.

00:44:07.360 | A sense of certainty and for comfort.

00:44:10.000 | But the second most important need we have

00:44:13.600 | is a need for uncertainty and variety.

00:44:16.160 | So, both of these things are necessary.

00:44:20.640 | Too much certainty, you get bored.

00:44:22.080 | Too much uncertainty, you get stressed and you can't handle it.

00:44:25.280 | Talks about the need for significance,

00:44:27.280 | the need for love and connection,

00:44:28.960 | the need for growth and the need for contribution.

00:44:32.960 | And money is often tried to be applied to those certain emotional needs.

00:44:37.520 | The need for significance is probably the easiest one

00:44:40.480 | where people try to measure their significance by displaying their wealth.

00:44:44.880 | I've got the fanciest car.

00:44:46.640 | I've got the biggest house.

00:44:47.680 | I've got the nicest diamond ring.

00:44:50.160 | Or on the flip side, you see people just try to display their significance

00:44:55.280 | by not displaying their wealth.

00:44:56.880 | I'm worth $10 million, but I drive a $2,000 car.

00:45:01.760 | And the key that I drew from this section was,

00:45:04.640 | if you can fix emotional problems,

00:45:06.880 | then a lot of times the financial problems are relatively simple.

00:45:09.600 | But if you can't fix the emotional problems,

00:45:11.520 | no matter how fancy your financial problem,

00:45:15.040 | excuse me, no matter how fancy your financial solution,

00:45:18.560 | it's not going to work.

00:45:21.040 | And I've seen this happen with some of the financial plans

00:45:23.120 | that I've designed have fallen apart for clients.

00:45:25.360 | And it wasn't due to a mistake that I made in a technical sense.

00:45:28.480 | It was due to a mistake I made in not perceiving the emotional needs.

00:45:32.240 | So I'm glad he brought that in.

00:45:33.920 | Robbins does a great job of talking about topics comprehensively

00:45:37.360 | and then giving some practical advice and some useful tricks.

00:45:41.920 | I really appreciate it.

00:45:43.760 | In his section on how to speed up your financial results,

00:45:47.200 | he talks about some different strategies.

00:45:49.200 | And I'm going to spend a little time here

00:45:51.040 | because this is really practical

00:45:53.040 | as far as things that you can do to speed up your strategies.

00:45:56.720 | Now, remember, put this in the context of the framework that I use

00:45:59.760 | and that I talk about constantly.

00:46:01.600 | I can focus on income.

00:46:02.960 | I can focus on expenses and the difference between those.

00:46:06.080 | And I can focus on investing the difference intelligently

00:46:09.920 | and getting higher rates of return on the difference.

00:46:13.360 | And again, I may have, I think I made that up in my mind,

00:46:16.800 | but I may have stolen it from somewhere.

00:46:18.240 | But you see that same theme in his different strategies.

00:46:21.200 | Here he lists three strategies.

00:46:23.760 | Strategy one is to save more and invest the difference.

00:46:26.560 | And some practical things, he goes through a little idea

00:46:30.240 | on saving money on mortgage payments.

00:46:32.880 | The idea that do on your mortgage,

00:46:34.960 | if you're interested in paying off your mortgage more quickly,

00:46:37.440 | make pocket change pre-payments.

00:46:39.680 | The idea is instead of making big payments,

00:46:42.480 | just make little payments.

00:46:43.920 | And the key one is to pay your next month's principal payment.

00:46:47.840 | And I love this idea.

00:46:49.040 | I actually did this idea on my mortgage.

00:46:51.440 | I did this myself on my mortgage for the first,

00:46:54.560 | for the first, let's see, was it a year of living in this house.

00:46:58.880 | And every month I would run down the amortization schedule

00:47:02.080 | and I would try to pay my normal monthly payment

00:47:05.760 | and then at least the next month's principal payment.

00:47:09.520 | And then some months I would do several months.

00:47:11.600 | But instead of sending $1,000, I would calculate,

00:47:14.480 | well, one month is $232, the next month is $247,

00:47:18.560 | and the next month is $280.

00:47:20.560 | And I would add those three things together

00:47:22.160 | and I would send a check for whatever that number was, $867,

00:47:26.240 | so that I could keep my amortization schedule

00:47:28.240 | nice and cute and clean.

00:47:29.680 | And I just thought it was a fun idea and I liked it.

00:47:32.240 | And I was trying to balance this idea of invest

00:47:36.400 | versus pay off the mortgage and the emotional need,

00:47:39.040 | especially for my family,

00:47:40.080 | of having the mortgage paid off and investing.

00:47:42.160 | So I was just saying, well, this is,

00:47:43.680 | I'm making progress in the right direction

00:47:45.280 | without committing to say,

00:47:46.720 | I'm gonna get this mortgage paid off

00:47:48.240 | and primarily doing investing.

00:47:49.680 | When I decided to start the show, I stopped doing that.

00:47:51.520 | But I love that idea and I commend it to you.

00:47:53.600 | Run your amortization schedule,

00:47:55.440 | figure out where you are,

00:47:56.320 | and then just make a little extra payment.

00:47:58.320 | And then try to make that also, is my idea,

00:48:00.720 | try to make it out of money that you would

00:48:03.440 | otherwise be spending on consumption.

00:48:06.960 | And maybe that'll give you a little psychological trick

00:48:09.200 | that'll help yourself.

00:48:10.320 | It goes to the practicality of getting rid of the BMW

00:48:13.280 | and getting a better car,

00:48:14.960 | going through all your expenses,

00:48:16.720 | looking at the latte factor,

00:48:18.320 | David Bach's idea from "The Automatic Millionaire."

00:48:22.800 | Look for that daily consumption

00:48:26.320 | that you're doing on an ongoing basis

00:48:27.840 | and figure out how to adjust that.

00:48:30.720 | One of the best solutions that I found

00:48:32.640 | that I also commend to you

00:48:33.680 | is a way of essentially applying the idea

00:48:38.880 | of the latte factor to higher consumption clients.

00:48:41.760 | And this is something I've really struggled with

00:48:43.760 | in my financial planning practice

00:48:45.120 | of how do I connect with my clients

00:48:47.040 | who are more lifestyle oriented

00:48:49.840 | and not so worried about saving little things.

00:48:52.320 | They like living a nice lifestyle.

00:48:53.760 | They like their fancy house.

00:48:54.880 | They like their fancy cars.

00:48:56.080 | They like their fancy clothes.

00:48:57.680 | They like eating out constantly.

00:49:00.080 | And so the ultra thrifty, ultra frugal people will say,

00:49:03.440 | "Well, I gotta get rid of that."

00:49:04.320 | How do I help them to still save money?

00:49:06.480 | So I love this trick.

00:49:07.600 | Quote from page 255, one paragraph here.

00:49:09.760 | He says, "I'm not saying you have to give up bottled water

00:49:12.640 | or stop getting coffee,

00:49:13.600 | but the savings are there somewhere.

00:49:15.520 | Isn't it time to find them?

00:49:16.800 | Don't forget about our impulse purchases,

00:49:19.840 | you know, the ones that feel great in the moment,

00:49:22.320 | like the pricey work bag or the beautiful Hermes tie.

00:49:25.760 | Lisa, a young mom from Nashville,

00:49:28.560 | has a taste for the finer things in life.

00:49:30.960 | She drives her husband batty with her impulse purchases.

00:49:34.160 | She'll come home with a great new dress

00:49:35.920 | or an amazing pair of boots

00:49:37.680 | and her husband will invariably ask,

00:49:40.080 | "Were they on sale?"

00:49:41.280 | Or, "Did you check online to see

00:49:43.040 | if you could get them cheaper?"

00:49:44.640 | After several spats,

00:49:45.920 | Lisa and her husband agreed on a new plan.

00:49:48.560 | When Lisa found herself unexpectedly

00:49:50.560 | at Saks Fifth Avenue or Jimmy Choo,

00:49:52.720 | she'd take a photo of her next must-have

00:49:55.040 | and send it to her husband.

00:49:56.640 | He had two weeks to find her a better price online.

00:49:59.600 | Otherwise, she'd order her purchase

00:50:01.280 | over the phone at full retail.

00:50:03.280 | But, as Lisa sheepishly admitted to me,

00:50:06.400 | over 80% of the time,

00:50:07.680 | he did find whatever she was looking for

00:50:09.600 | and often at 20 or 30% cheaper.

00:50:13.520 | So I thought that was a really neat idea.

00:50:16.560 | And I'm gonna use that idea.

00:50:18.160 | I commend it to you.

00:50:19.040 | If you are in a marriage relationship

00:50:21.360 | where you struggle with,

00:50:22.480 | you know, "I have a spouse who's a compulsive spender.

00:50:25.040 | What do I do?"

00:50:26.160 | And you can combine it with this idea.

00:50:28.800 | You can combine both finding better deals online,

00:50:31.840 | things like that,

00:50:32.560 | or you can also combine this

00:50:34.800 | with essentially putting a time limit on your desire

00:50:38.240 | to lower some of those impulse purchases.

00:50:40.720 | So that's an idea that I'm gonna share with clients

00:50:42.960 | in the future for those clients that,

00:50:44.560 | you know, stop drinking at Starbucks.

00:50:46.160 | This simply doesn't work for 'em

00:50:47.200 | 'cause that can really matter.

00:50:48.560 | And again, the key about this,

00:50:52.320 | which I mentioned a few minutes ago,

00:50:53.600 | it's not about lifestyle.

00:50:54.560 | It's about timing.

00:50:55.280 | Quote from page 256,

00:50:57.040 | "Why not make simple changes today

00:50:58.720 | to ensure that you have more than enough down the road

00:51:01.200 | to continue to fund your lifestyle and your dreams?

00:51:04.640 | You can still enjoy life's finer pleasures,

00:51:06.720 | but you're in control now.

00:51:08.480 | You get to choose how to allocate your funds

00:51:10.560 | and where to put the biggest bang for your buck.

00:51:12.720 | That's the key."

00:51:13.360 | He does a great job continuing on this theme of strategies

00:51:16.800 | in earn more and invest the difference.

00:51:19.680 | So the first strategy to speed things up was save more

00:51:22.800 | and invest the difference by lowering expenses.

00:51:24.720 | Now you flip it over to the earn more

00:51:27.280 | and invest the difference.

00:51:28.800 | And I'm gonna read you a page and a half

00:51:33.040 | from page 260 where he talks about his story

00:51:37.200 | when he was a young man

00:51:38.240 | and he talks about going to a Jim Rohn seminar.

00:51:41.520 | And I'm gonna do this in my Jim Rohn voice

00:51:43.920 | because Jim Rohn was a master at conveying simple concepts.

00:51:50.000 | But this page and a half excerpt here

00:51:51.920 | from page 260 is incredibly, incredibly valuable.

00:51:57.200 | And for those of you who are Jim Rohn fans,

00:51:59.040 | I'm gonna try to do my Jim Rohn voice here.

00:52:00.960 | Quote, "I became obsessed."

00:52:03.440 | This is Robin speaking about how when he looked around

00:52:06.880 | and saw some people struggling,

00:52:08.080 | "Why is my family struggling to stay ahead

00:52:09.760 | of the bill collector

00:52:10.880 | when other people are making loads of money?

00:52:12.640 | Other people are doing well.

00:52:13.680 | What's going on?"

00:52:15.520 | "I became obsessed.

00:52:16.960 | How was it possible that someone could earn

00:52:18.960 | twice as much money in the same amount of time?

00:52:21.280 | Three times as much, 10 times as much.

00:52:23.680 | It seemed crazy.

00:52:25.040 | From my perspective, it was an unsolvable riddle.

00:52:27.360 | I was working as a janitor and I needed extra money.

00:52:30.880 | A man my parents knew and whom my father had called a loser

00:52:35.200 | had become quite successful in a short period of time,

00:52:37.920 | well, at least in financial terms.

00:52:39.920 | He was buying, fixing, and flipping real estate

00:52:42.880 | in Southern California,

00:52:44.240 | and he needed a kid on the weekend

00:52:45.680 | to help him move furniture.

00:52:46.880 | That chance encounter,

00:52:49.360 | that fateful weekend of working my tail off,

00:52:52.160 | led to an opening that would change my life forever.

00:52:55.200 | His name was Jim Hanna.

00:52:57.600 | He took notice of my hustle and drive.

00:53:00.640 | When I had a moment, I asked him,

00:53:03.040 | "How did you turn your life around?

00:53:04.880 | How did you become so successful?"

00:53:07.440 | Interrupt the story here.

00:53:08.960 | Pay attention.

00:53:09.600 | He took notice of my hustle and drive.

00:53:11.840 | I've gotten, I think, two jobs off of just simply my hustle and drive.

00:53:15.520 | I was with some friends at an event recently,

00:53:18.560 | and we were noticing just some people that were moving some things.

00:53:22.000 | I was thinking, "I would never in my life"—

00:53:24.320 | I knew the person—

00:53:24.960 | "I would never in my life offer this person work

00:53:27.120 | because I cannot stand how they are approaching this moving opportunity."

00:53:33.520 | Teach your kids to move quickly and to hustle,

00:53:36.560 | and opportunities come.

00:53:37.920 | So, Robbins is asking this man named Jim,

00:53:40.320 | "How did you become so successful?"

00:53:42.160 | "I did it," Jim said, "by going to a seminar by a man named Jim Rohn."

00:53:45.920 | "What's a seminar?" I asked.

00:53:48.480 | "It's a place where a man takes 10 or 20 years of his life and all he's learned,

00:53:53.280 | and he condenses it into a few hours so that you can compress years of learning into days,"

00:53:59.920 | he answered.

00:54:00.560 | "Wow, that sounded pretty awesome.

00:54:03.440 | How much does it cost?"

00:54:04.480 | "$35," he told me.

00:54:06.880 | "What?

00:54:07.600 | I was making $40 a week as a part-time janitor while going to high school."

00:54:12.160 | "Can you get me in?" I asked.

00:54:13.600 | "Sure," he said, "but I won't, because you wouldn't value it if you didn't pay for it."

00:54:19.520 | I stood there disheartened.

00:54:22.160 | "How could I ever afford $35 for three hours with this expert?"

00:54:26.160 | "Well, if you don't think you're worth the investment, don't make it," he finally shrugged.

00:54:32.400 | I struggled and struggled with that one, but ultimately decided to go for it.

00:54:36.560 | It turned out to be one of the most important investments of my life.

00:54:41.040 | I took a week's pay and went to a seminar where I met Jim Rohn,

00:54:44.880 | the man who became my life's first mentor.

00:54:47.600 | I sat in an Irvine, California hotel ballroom listening to Jim, riveted.

00:54:52.720 | This silver-haired man literally echoed the questions that had been burning in my mind.

00:54:57.600 | He, too, had grown up poor, wondering, even though his father was a good man,

00:55:02.640 | why his father struggled so hard only to suffer while others around him prospered.

00:55:08.480 | And then suddenly he answered the question I had been asking myself literally for years.

00:55:12.800 | "What's the secret to economic success?"

00:55:16.080 | "The key," he said, "is to understand how to become more valuable in the marketplace.

00:55:22.400 | To have more, you simply have to become more.

00:55:26.400 | Don't wish it were easier. Wish you were better.

00:55:31.280 | For things to change, you have to change.

00:55:36.000 | For things to get better, you have to get better.

00:55:38.640 | We get paid for bringing value to the marketplace.

00:55:43.200 | It takes time, but we don't get paid for time. We get paid for value.

00:55:47.840 | America is unique. It's a ladder to climb.

00:55:51.440 | It starts down here at, what, about $2.30 an hour?

00:55:54.560 | This was many years before current minimum wage days.

00:55:57.040 | What was the top income last year?

00:56:00.000 | The guy who runs Disney, $52 million.

00:56:03.600 | Would a company pay somebody $52 million a year?

00:56:06.720 | The answer is, of course.

00:56:10.240 | If you help a company make a billion dollars, would they pay you $52 million?

00:56:15.840 | Of course. It's chicken feed. It's not that much money.

00:56:21.360 | Is it really possible to become that valuable?

00:56:25.120 | The answer is, of course.

00:56:28.480 | And then he let me in on the ultimate secret.

00:56:32.640 | How do you truly become more valuable?

00:56:34.800 | Learn to work harder on yourself than you do on your job.

00:56:40.320 | So, can you personally become twice as valuable and make twice as much money in the same time?

00:56:46.240 | Is it possible to become 10 times as valuable and make 10 times as much money in the same time?

00:56:52.400 | Is that possible?

00:56:53.360 | Of course.

00:56:54.720 | And then he paused and looked directly in my eyes and said,

00:56:58.880 | "All you have to do to earn more money in the same amount of time is simply become more valuable."

00:57:06.800 | And there it was.

00:57:08.560 | There was my answer.

00:57:10.720 | Once I got that, it turned my life around.

00:57:12.640 | That clarity, that simplicity, the wisdom of those words, they hit me like a 100-pound brick.

00:57:19.440 | Those are the exact words I've heard Jim Rohn speak probably a hundred times.

00:57:24.960 | I've carried them in my heart every day since,

00:57:28.000 | including the day that I spoke at his funeral in 2009.

00:57:31.360 | That man, that seminar, that day, what Jim Rohn did was put me back in control of my own future.

00:57:39.680 | He made me stop focusing on what was outside of my control, my past, the poverty, other people's

00:57:47.280 | expectations, the state of the economy, and taught me to focus instead on what I could control.

00:57:53.120 | I could improve myself.

00:57:57.360 | I could find a way to serve, a way to do more, a way to become better, a way to add value to

00:58:04.800 | the marketplace. I became obsessed with finding ways to do more for others than anyone else was

00:58:10.320 | doing in less time. That began a never-ending process that continues to this day. At its most

00:58:16.800 | basic level, it provided a pathway to progress that continues to drive and lead every single

00:58:22.080 | decision I make and action I take. In the Bible, there is a simple tenet that says there's nothing

00:58:28.240 | wrong with wanting to be great. If you wish to become great, learn to become the servant of many.

00:58:35.280 | If you can find a way to serve many people, you can earn more. Find a way to serve millions of

00:58:40.960 | people, you can earn millions. It's the law of added value. And if the gospel of Warren Buffett

00:58:47.360 | is more your thing than biblical verse, the oracle of Omaha is famous for saying that the most

00:58:51.920 | powerful investment he ever made in his life and that anyone can make is an investment in himself.

00:58:57.360 | He talks about investing in personal development books, in educating himself,

00:59:01.760 | and how a Dale Carnegie course completely changed his life. Buffett once told me this story himself

00:59:07.040 | when we were on the Today Show together. I laughed and asked him to keep telling that story. "It's

00:59:11.760 | good for business," I said, grinning. I took Jim Rohn's message to heart and became obsessed.

00:59:18.480 | I would never stop growing, never stop giving, never stop trying to expand my influence or my

00:59:23.840 | capacity to give and do good. And as a result, over the years, I've become more valuable in

00:59:29.280 | the marketplace to the point that I'm extremely fortunate enough today that finances are no longer

00:59:34.800 | an issue in my life. I'm not unique. Anyone can do the same. If you let go of your stories about

00:59:41.280 | the past and break through your stories about the present and its limits, problems are always

00:59:46.160 | available. But so is opportunity. To me, that was more than a page and a half. Those two and a half

00:59:56.880 | pages are worth the price of admission. Just those two pages, in my mind, lay out the formula that

01:00:02.640 | somebody needs to go on to become wealthy. I know for me, ever since I heard Jim Rohn say that,

01:00:08.880 | I think he was the first, I've thought a lot about that. How do I become more valuable? How do I

01:00:13.040 | become more valuable? How do I become more valuable? How do I become more valuable? And in my

01:00:18.160 | mind, at least in the system that I live in, in the United States of America, that's the key. If I

01:00:22.800 | can become more valuable, I can earn more. So instead of saying, "How can I?" The only way to

01:00:28.880 | answer the question, "How can I earn more? How can I get paid more? How can I have more?" is,

01:00:32.160 | "I need to become more valuable. I need to grow and expand and learn and develop."

01:00:36.560 | Interestingly, he puts in a little box here updating those numbers.

01:00:40.960 | This is also, I want to read this to you from page 263. "What does the American income ladder

01:00:46.160 | look like today? My bet is Jim Rohn couldn't have imagined that in 2013, the low end of the ladder

01:00:53.040 | would be $7.25 an hour, $15,080 annually, and that the high end earner of the year would be

01:00:59.680 | Appaloosa Management founder and hedge fund leader, David Tepper, who earned $3.5 billion,

01:01:07.360 | with a B, billion, in personal income. How could any human being make even $1 billion a year,

01:01:15.440 | much less $3.5 billion? Why such an incredibly low income for some people and such a high income

01:01:22.640 | opportunity for others? The answer is the marketplace puts very little value on being

01:01:28.000 | a cashier at McDonald's, $7.77 an hour, because it requires a skill that can be learned in a few

01:01:34.880 | hours by almost anyone. However, successfully expanding people's financial returns in a

01:01:40.560 | significant way is a much more rare and valued set of skills. When most Americans are getting

01:01:46.800 | less than 33 basis points, a third of 1%, annually, as a return on their money from the bank,

01:01:52.480 | David Tepper delivered a 42% return for his investors in the same time. How valuable were

01:01:58.480 | his contributions to their economic lives? If he got them a 1% return, he would have been

01:02:04.480 | 300% more valuable. A 42% return means he added 12,627% more economic value to their lives.

01:02:15.280 | That's the formula, right? That's what's so frustrating to me, why I hammer so much on the

01:02:22.880 | school thing, is because if you're making $7.77 an hour at McDonald's today, you're going to be

01:02:30.960 | replaced in under five years with a touchscreen, and you're going to go from $7.77 to nothing.

01:02:35.760 | If you're taking orders and if you're flipping burgers in the back of McDonald's, you're going

01:02:40.240 | to be replaced in under five years by a robot. The person out front pushes the touchscreen and says,

01:02:47.360 | "I want a Big Mac," and the machine's going to make it, and it's going to be perfect every time.

01:02:58.640 | Now, that machine may cost $100,000, $200,000, it doesn't matter. Compare that to $15,080 per year,

01:03:06.560 | plus cost of employment taxes, plus cost of insurance, plus the hassle of dealing with

01:03:12.080 | management, managing employees. That's going to be the change. In a world where we're already

01:03:18.160 | accustomed to going in and simply interacting with machines, where sometimes many of us prefer

01:03:26.880 | not doing our own self-checkouts, we don't have to talk to anybody, we're becoming sensitized

01:03:31.040 | to interacting with machines over time. What does the minimum wage earner do? We've crippled

01:03:36.080 | many of the people at minimum wage. We've crippled them with schooling.

01:03:42.080 | Rant over. The point is that that is the key. Earn more in yourself. Amazing, amazing.

01:03:54.560 | Another key stat that I learned from this section was on the next page, page 264,

01:03:59.360 | and about the importance of that skill set, and especially as it relates to things like

01:04:06.400 | unemployment. Think about what a big difference some of your friends, maybe some of you listening,

01:04:12.080 | who've been unemployed for a year, two years, three years, and 2008. What a massive setback

01:04:18.640 | that was to your financial plans, or is to your financial plans. I told the story on shows past

01:04:23.840 | about my client who had gotten laid off from a job and just took two years of unemployment,

01:04:30.640 | and then wound up not being able to find a job, and was stuck not being able to find a job,

01:04:37.280 | and wound up pulling tons of money out of their 401k. Now consider this paragraph from page 264.

01:04:45.280 | During the Great Recession, 8.8 million jobs were lost. In 2008, 2.3 million jobs were lost in that

01:04:53.120 | year alone. Unemployment peaked at 10%, but remember that 10% unemployment rate is an average.

01:05:00.240 | Some portions of the population had unemployment levels over 25%, but for those making $100,000

01:05:07.760 | per year or more, what would you guess was their unemployment rate? The answer, close to 1%.

01:05:16.160 | The lesson, if you truly develop skills that are needed in the current marketplace,

01:05:21.600 | if you constantly improve and become more valuable, someone will employ you, or you'll

01:05:26.880 | employ yourself regardless of the economy. If you employ yourself, your raise becomes effective

01:05:33.120 | when you are. Isn't that stunning? 1% unemployment for those making a nexus of $100,000 a year,

01:05:41.120 | average of 10%, as much as 25% in some sectors. We're living in a time of this incredible

01:05:46.640 | reshuffling and transformation of our economy, and it's going to have massive impact.

01:05:53.120 | Massive impact. Got to be aware of it. The key is self-development and getting the situation

01:05:59.920 | where we're earning in excess of $100,000 and learn the skills. Tells a story, Robbins does,

01:06:05.120 | that blew my mind about a Korean teacher who is earning $4 million a year as a teacher.

01:06:13.520 | It's a man named Kim Kihun, and he saw an opportunity doing online education.

01:06:20.160 | He was a teacher and he said, "I can do this better online." Today, it says on page 267,

01:06:28.240 | he works about 60 hours a week, but only three hours are for giving lectures. The other 57 hours

01:06:32.880 | are spent researching, innovating, developing curriculum, and responding to students. He

01:06:36.800 | charges his students based upon an hourly fee for their instruction. Based upon this hourly fee for

01:06:45.360 | their instruction, he wound up earning $4 million last year. Students log on for $4 an hour to

01:06:53.040 | watch his classes. Isn't that stunning? Here's a teacher, $4 an hour for each student, but he's so

01:07:00.000 | effective at teaching that he earned more than $4 million. Amazing. He tells a story on the next

01:07:07.440 | page, 268, about a lady named Daniela who was working in a marketing department doing art

01:07:12.000 | design. She's working in a company. She was doing other people's jobs. They were being lazy.

01:07:16.480 | Basically, she went to her CEO and said, "Listen, I'm doing the work of four people.

01:07:20.720 | I know what I'm talking about. I've gone to courses. I've learned. I've taught myself about

01:07:26.160 | visual arts, marketing, and social media. I'm not going to throw any of the other employees under

01:07:30.240 | the bus, but I can save you 50% of your marketing costs right now and eliminate three people by

01:07:35.040 | taking on their jobs myself, and I'll do a better job. Don't trust me. Let me prove it. Let me do

01:07:40.880 | their jobs for the next six months, and I'll do my assignments and theirs, and you can have two

01:07:46.240 | different examples to pick from, and you decide what's best." She did it. She proved herself,

01:07:53.360 | and she made a lot more money over time. Isn't that cool? Isn't that a strategy that many of

01:08:03.520 | you could do if you're working in a company? Pick up the responsibility. I remember Brian

01:08:07.200 | Tracy always taught in his courses, he would always teach, "Ask for more responsibility.

01:08:12.720 | Ask for more responsibility. Do the responsibility well. Discharge it and ask for more responsibility.

01:08:17.280 | Ask for more responsibility." It's a useful thing that can be applied if you're trying to figure

01:08:22.080 | out, "How do I earn more?" Look at it from that perspective. Tell us a story about GoPro. I didn't

01:08:27.520 | know the story of GoPro. It's fascinating to me. Evidently, it was started by a man named Nick

01:08:32.320 | Woodman, who was a surfer, and he just started toying around with making waterproof cameras.

01:08:37.520 | Today, GoPro, I mean, the guy's worth over a billion bucks because he found this niche in

01:08:43.600 | digital cameras and created the GoPros, and they have executed on the idea phenomenally well,

01:08:49.920 | but an amazing financial success story. He also tells the story that I thought was fascinating

01:08:56.640 | about a lady named Sarah Blakely, who is the world's youngest female self-made billionaire,

01:09:01.680 | and she invented Spanx, control-top pantyhose. One of the things that I thought was interesting,

01:09:07.760 | he profiled in the book on page 271, that he says here, "Sarah shared with me that one of

01:09:12.960 | the most important secrets to her success was that from an early age, her father actually

01:09:18.000 | encouraged her to fail, but he defined failure not as failure to achieve a result, but failure

01:09:24.080 | to try. Around the dinner table, he would ask if she had failed today, and he was truly excited if

01:09:30.160 | she had because he knew that meant she was on the path to success. 'Tony, it just took away my fear

01:09:36.400 | of trying,' she told me. Down and out in a dead-end office product sales job, Blakely infested all the

01:09:43.200 | money she had in the world, $5,000, and set out to create body wear that would work for her. 'I

01:09:49.200 | must have heard no a thousand times,' she said, but she didn't listen. In addition to the $5,000

01:09:54.800 | she invested, she saved $3,000, which she didn't have, on legal fees by writing her own patent

01:10:01.120 | from a textbook. And Spanx went on, 'Today it's worth over a billion dollars,'" and they have over

01:10:05.920 | 200 products, including, I guess they're developing a product for men. That's my weak point. I wonder

01:10:12.800 | if I'll have to check out the Spanx and suck my tummy in with control top pantyhose for men.

01:10:17.120 | Just kidding, sort of. So, amazing. I noticed that because, as you know, I think a lot about

01:10:24.400 | education, and I think a lot about the incentive system for failure. And what I don't like is that

01:10:28.960 | every great inventor, every great entrepreneur talks that I've read, many great inventors,

01:10:33.840 | entrepreneurs talk about the value of failure, but we've set up an incentive system for children

01:10:38.880 | that incentivizes them not to fail and penalizes them for failure. Now, there's a difference

01:10:43.920 | between defining failure as getting a C. If you're capable of getting a C and you get a C,

01:10:48.480 | that's a success. But I think a lot about how can we clarify the incentive system for children

01:10:53.520 | to incentivize them to try, to try new things. And you don't get incentivized to try and measure the

01:11:00.960 | way that the current schooling system works. Strategy three that Robbins talks about is a way

01:11:06.400 | to speed things up, which is reduce fees and taxes and invest the difference. And so, this ultimately

01:11:12.560 | is all part of my number two thing, cut expenses. Anytime you can lower fees and lower taxes,

01:11:18.080 | you're cutting expenses, and that's going to improve your situation. And tax efficiency is

01:11:24.720 | one of the, in Robbins' book here, it's one of the most direct ways to shorten the time it takes to

01:11:29.680 | get from where you are now to where you want to be financially. He talks a little bit about his

01:11:36.240 | personal tax story. He says that if you're in a high income or in a high income state, such as

01:11:40.240 | California, where he used to live, your total tax bill is 62% by the time you bring in all of the

01:11:46.320 | taxes for income, investment taxes, payroll taxes, the new Obamacare taxes, and social security.

01:11:51.760 | He does a good job of going into the long-term capital gains rates versus the short-term capital

01:11:56.400 | gains rates, just a really effective job of talking about how the major, major impact that

01:12:02.560 | reducing taxes and fees can have on how quickly you can achieve your financial results. I'll

01:12:09.760 | mention this later when I talk about lifestyle, but one of the things that Robbins did was he

01:12:14.000 | moved from California to Florida recently and saved a massive amount on taxes just by eliminating the

01:12:20.720 | California state income tax. I'm going to give you details on that when we get to the, in a moment,

01:12:27.760 | or it's not going to be in a moment, but later when I talk about his emphasis on lifestyle.

01:12:31.760 | He's so, so valuable. Let's do it now. One of the things that just, to me, I really love that he

01:12:40.240 | talks about lifestyle first. I really think that in many ways, lifestyle should be the first place

01:12:47.600 | to start. He mentions it towards the end of his book, but I think you should start by designing

01:12:53.360 | the ideal lifestyle. That means many things. It means living in an ideal scenario and an ideal

01:12:59.200 | place. If you want to live in the mountains, go live in the mountains. Don't wait for retirement.

01:13:02.080 | If you want to live in the warmth, come live in Florida. We've got plenty of jobs down here.

01:13:06.160 | Build the lifestyle for yourself first because ultimately money is only good to fund lifestyle.

01:13:10.800 | So if you can create lifestyle without having money to fund it from investments, just go do

01:13:16.160 | that first. But then also build the lifestyle in a way that's going to be effective. And so with

01:13:22.000 | that tax efficiency, he talks on page 287 of his book, he goes through the details of how he was

01:13:28.480 | born and raised a Californian and had lived there for years, even though he traveled most of the

01:13:32.480 | time. But California in 2012 raised taxes on the highest income earners by more than 30%

01:13:39.280 | to a top rate of 13.3%. And so his effective tax rate had shot up to 62 cents for every $100

01:13:47.760 | that he earned. He was left with $38 after taxes. And worst of all, they made that tax retroactive.

01:13:57.920 | So after they passed it, after they passed the bill, they made it go back all the way up to that

01:14:03.920 | same year or to the prior year. I'm not sure which it was. So they changed the rules after the fact.

01:14:09.600 | And so for him, finally, it convinced him to do something else. So he went on a massive search

01:14:13.280 | all around the country to find different options. And he came to Florida, right where I live,

01:14:18.640 | right to Palm Beach. And I used to walk across Palm Beach Island every day to, you know, not

01:14:22.720 | every day, but to go to the beach when I was in college. He came to Florida and said, "Oh, okay,

01:14:26.560 | I only know Florida, alligators and old people." But what he found was Palm Beach. And so from page

01:14:32.560 | 289, after looking at 88 properties in three states in just three weeks, I told you I'm a

01:14:37.360 | massive action guy, we found the only brand new home on the water in Palm Beach. Two acres, nearly

01:14:43.920 | 200 feet of ocean frontage on one side and the Atlantic intercoastal waterway on the other,

01:14:48.640 | with a 50 foot boat dock. I feel like I'm back in my home in Fiji. It's extraordinary.

01:14:53.920 | My wife has everything she wants close by, world-class restaurants, et cetera, et cetera,

01:14:57.680 | et cetera. Of course, the price tag was way higher than I ever wanted or imagined paying for a home.

01:15:03.440 | But Florida has no state income tax. We went from 13.3% state income tax in California to nothing,

01:15:11.840 | nada, zip. So here's the kicker. With the state taxes we're saving every year,

01:15:18.480 | we are literally paying off our entire new home in six years. Did you catch that? We're paying

01:15:27.840 | for our entire home out of the tax savings we now get as residents of the sunshine state

01:15:33.680 | instead of the golden state. Kind of makes you think we should have done it sooner, huh?

01:15:37.920 | Better late than never. And he goes on and says we massively improved our quality of life

01:15:43.360 | with that change as well. And one of the coolest resources that I'll commend to you is a website I

01:15:49.120 | had never heard of. And I love the theme of the website. It's called howmoneywalks.com.

01:15:54.960 | I love this theme and I'd never heard of this site. So I'm really glad I found it.

01:15:59.040 | howmoneywalks.com is a site that is using the IRS data that the IRS tracks as far as where people

01:16:05.680 | move from and move to. And it talks about basically where people are moving from and to,

01:16:15.920 | and where the money is flowing out of and where the money is flowing into.

01:16:20.560 | And the most interesting thing is you can go in and you can identify your specific situation.

01:16:25.760 | Sorry about that. My dog barked. You can identify your specific situation and you can say, "Hey,

01:16:31.600 | if I made this move from here to there, what will that do for me?" I just think this is the coolest

01:16:39.280 | thing. And the best thing about it, he's got an app. So look it up in the app store that you can

01:16:44.400 | use. And evidently he's written a book as well. But he's got an option where you can put in,

01:16:49.040 | "If I move from here to there, how much money would it save me?" So I made up a number and I

01:16:53.760 | said, "Okay, let's say I move from Chicago, Illinois to Florida." And I pretended I said a 29

01:17:00.320 | year old person married, filing jointly with two dependents making $100,000 a year.

01:17:06.480 | If you moved from Chicago, Illinois to Florida, you would save $4,590 per year. If that $4,590

01:17:15.360 | is then invested each year at 6% interest until you retire at the age of 67, you would have an

01:17:20.240 | additional $623,800 net worth. Isn't that incredible? This has got to be one of the best

01:17:28.720 | tools ever for showing you, "Hey, here can I save?" And I hear from many of you who say,

01:17:33.440 | "I actually went and did my cashflow statement based upon how you told me to do it. And so when

01:17:39.920 | I did it, I found out that I was spending all this money on taxes." Yes, you can do it. Now,

01:17:46.560 | do I expect everyone to move? No, of course not. But if you have a company that you can move,

01:17:51.120 | if you have an ability to earn income from other places, if you have a job that you can clearly

01:17:56.160 | move from and easily move from, this should definitely be on the consideration. And the

01:18:00.160 | good thing is that everybody wins. Number one, you win by doing something that's in your best

01:18:04.560 | interest. Number two is that by voting with your feet and moving, the place where you go gets

01:18:11.360 | better as long as you're a productive person, and you probably are, otherwise you wouldn't be

01:18:15.200 | moving. And then by voting with your feet and getting out of there, the other place wakes up

01:18:19.840 | and says, "Hey, I need to change something. This is competition." Doesn't usually exist in government

01:18:24.480 | circles, but in this situation, it might exist in some. So the Detroit government, after everyone

01:18:29.040 | left and everyone goes bankrupt, has had to restructure things. So that's good. Clear out

01:18:33.040 | a bunch of debt, go bankrupt, reset everything. Now new people come in, new innovation comes in,

01:18:38.320 | people move there for different reasons. Just apply that on a macro scale. So there's really

01:18:43.520 | one of the few ways that reform can happen in this country is by moving. So I thought that was just

01:18:49.120 | an awesome scenario. I think Tony does a good job of treating financial advisors fairly. And this is

01:18:56.400 | always an interesting conundrum. Oftentimes when I come to books like this, I have this internal

01:19:02.240 | bias because I come from the financial industry. And just like I feel so bad for people who are car

01:19:08.080 | dealers that you get so hammered on for, "Wow, you're a used car salesman," you kind of build up

01:19:13.600 | this defense mode. And I have family members who are car dealers, and I'm in the financial world.

01:19:18.880 | No attorneys in my family, though. But you get used to this defense mode. So I find that constantly

01:19:23.920 | affects me, even though I don't identify with much of the financial industry and how it works.

01:19:27.920 | Oftentimes when the financial industry is being criticized, I often get really upset about that.

01:19:33.920 | Not upset, but I have to deal with it. I have a bias that I have to deal with.

01:19:38.400 | And so he's clear about this. I think he treats advisors fairly. On page 86, we read,

01:19:44.880 | "Now let me be clear. This book is not another Bash Wall Street book. Many of the large financial

01:19:50.400 | institutions have pioneered some extraordinary products that we will explore and advocate

01:19:54.720 | throughout this book. And the vast majority of people in the financial services industry care

01:19:59.200 | intensely for their clients. And more often than not, they're doing what they believe to be the

01:20:03.600 | best thing. Unfortunately, many don't also understand how the house reaps profits, whether

01:20:09.280 | the client wins or not. They're doing the best they can for their clients with the knowledge,

01:20:13.600 | training, and the tools, products, they have been provided. But the system isn't set up for

01:20:18.480 | your broker to have endless options and complete autonomy in finding what's best for you. And this

01:20:23.280 | could prove costly." I think that's accurate. I really do. I think that's accurate.

01:20:27.200 | So he clearly, throughout the book, illustrates the need for financial advisors in a number of

01:20:35.040 | different ways, ways that I've talked about and also just directly simply saying it.

01:20:39.920 | One of the things that I've grew to love as a financial advisor is the primary

01:20:43.520 | basis upon which I would bring on board an investment client was on the basis of what

01:20:48.480 | Nick Murray calls the behavioral investment counseling option. I believe one of the most

01:20:53.040 | valuable services that an advisor can provide for their client is helping the client to optimize

01:20:59.280 | and optimize their general behavior through good financial planning and then also to mitigate their

01:21:06.080 | destructive behavior of dealing with certain market gyrations, essentially. On page 96,

01:21:13.120 | you see this where he quotes the Dalbar returns comparing the returns of the average mutual fund

01:21:20.880 | versus the average investment fund. So over a 20-year period, December 31, 1993 through December

01:21:28.240 | 31, 2013, the S&P 500 returned an average annual return of 9.28%. But the average mutual fund

01:21:35.680 | investor made just over 2.54%, according to Dalbar, one of the leading industry research firms.

01:21:41.360 | So this is a major, major problem that I think financial advisors can help with.

01:21:45.760 | He also does a good job of talking about the importance of asset allocation,

01:21:49.840 | which in my mind is one of the key scenarios that a good financial advisor should be working

01:21:54.160 | with people is helping them to figure out and identify their asset allocation and just the

01:21:59.200 | necessity of doing that carefully with asset allocation. It's a big, big deal.

01:22:07.360 | And so if you can combine asset allocation, which he makes the point in the book that is free return

01:22:13.600 | with behavioral investment counseling, to use Nick Murray's words, to me that is tremendous.

01:22:21.120 | And this page 336 here, he talks about the value of advice. "Some people just won't listen to

01:22:26.800 | advice. They have to learn the hard way, if at all. But to avoid those kinds of painful lessons

01:22:31.600 | and to help you decide which options are right for you, I have to remind you that a conflict-free,

01:22:36.160 | independent investment manager can be the right choice. Notice how professional athletes, men and

01:22:41.120 | women at the top of their sport always have coaches to keep them at peak performance. Why is that?

01:22:46.160 | Because a coach will notice when their game is off and can help them make small adjustments that

01:22:50.000 | can result in huge payoffs. The same thing applies to your finances. Great fiduciary

01:22:55.120 | advisors will keep you on course when you're starting to act like a teenager and chasing

01:22:59.200 | returns. They can talk you off the ledge when you're about to make a fateful investment decision."

01:23:04.480 | So really, really powerful. On the next page, he talks about a quote from the leader of J.P. Morgan,

01:23:11.280 | one of the financial divisions at J.P. Morgan, a lady named Mary Callahan Erdos, or Erdos,

01:23:18.560 | I'm not sure. And so in building out an asset allocation, he identifies, in my mind,

01:23:24.400 | the power of a financial advisor. Let me read to you these four paragraphs.

01:23:27.680 | "When I interviewed J.P. Morgan's Mary Callahan Erdos, I asked her, 'What criteria would you use

01:23:34.080 | in building an asset allocation? And if you have to build one for your kids, what would that look

01:23:40.400 | like?' 'I have three daughters,' she told me. 'They're three different ages. They have three

01:23:45.520 | different skill sets, and those are going to change over time, and I'm not going to know what

01:23:49.200 | they are. One might spend more money than another. One may want to work in an environment where she

01:23:54.160 | can earn a lot of money. Another may be more philanthropic in nature. One may have something

01:23:59.360 | that happens in her life, a health issue. One may get married. One may not. One may have children.

01:24:03.920 | One may not. Every single permutation will vary over time, which is why even if I started all

01:24:09.520 | of them the first day they were born and set out an asset allocation, it would have to change.

01:24:14.000 | And that has to change based on their risk profile, because over time you can't have

01:24:18.400 | someone in a perfect asset allocation unless it's perfect for them. And if at the end of the day,

01:24:24.320 | someone comes to me and says, 'All I want is treasury bills to sleep well at night,'

01:24:28.880 | that may be the best answer for them." I said to her, "Because it's about meeting their emotional

01:24:34.480 | needs, right? It's not about the money in the end." "Exactly, Tony," she said, "because if I

01:24:39.440 | cause more stress by taking half their portfolio and putting it in a stock market, but that leads

01:24:44.160 | to a deterioration of the happiness in their lives, why am I doing that?" "What is the purpose

01:24:49.360 | of investing?" I asked. "Isn't it about making sure that we have that economic freedom for

01:24:53.760 | ourselves and for our families?" "That's right. To be able to do the things you want to do," she

01:24:58.880 | said, "but not at the expense of the stress, the strains, and the discomfort that goes along with

01:25:04.000 | a bad market environment." "So what's the lesson here from one of the best financial minds in the

01:25:09.520 | world? What's more important, even the building wealth is doing it in a way that will give you

01:25:14.160 | peace of mind." In my mind, that's one of the key values of a financial advisor. So I think he's

01:25:20.240 | very, very fair in dealing about that. He also clearly in the book, another major benefit of the

01:25:26.000 | book, he does a great job of clearly discussing the need for setting the price on the dreams,

01:25:30.640 | on your dreams. And in my mind, this book is worth it for this chapter alone,

01:25:36.800 | because this is what people don't do, and I'd encourage you to do it. And as he says,

01:25:43.280 | you may find that the price tag is less than you ever imagined. Let me read you one example here,

01:25:50.160 | to kick this one off, from page 203. He says, "I usually kick off my financial seminars with

01:25:56.880 | a question, 'What's the price of your dreams?' Then I invite people to stand up and tell me

01:26:03.120 | what it's going to take for them to be financially secure, independent, or free.

01:26:08.160 | Most don't have a clue." So he goes on to ask, and I ask you now as Robbins asks in the book,

01:26:16.640 | "What's the price of your dreams? Do you know the price, the actual price tag?"

01:26:21.440 | This one really made me think, because I realized that I need to update my price tags on my dreams.

01:26:28.320 | I have a list, and they have price tags, but I realized I need to update them. And

01:26:33.840 | what most people do is they write down a number of some kind, and then he talks about,

01:26:40.080 | they write down a number, and it's a big number, and it's kind of scary,

01:26:43.840 | they don't know what to do with it. They don't know what it means. On the next page, he says,

01:26:48.960 | "Recently at one of my high-end programs, a young man in the back of the room stood up to name the

01:26:53.920 | price of his dreams. He threw back his shoulders and announced, 'A billion dollars.'" There were

01:27:00.320 | a lot of oohs and ahs from the crowd. This person was in his 20s, one of the younger participants

01:27:04.800 | at the conference, and he probably hadn't earned his first million yet. So I asked him to consider

01:27:09.840 | what that number really meant. Robbins goes on and talks about how what was driving him was

01:27:16.960 | significance, the idea of having a billion dollars, that if he had a billion dollars,

01:27:22.800 | if he was a billionaire, then he would matter, he would be significant. People would recognize that.

01:27:28.960 | But as far as how to actually work with him, Robbins went on and talked to him and said,

01:27:35.920 | "Well, what kind of lifestyle would you live?" The man says, "I'd like to have a Gulfstream jet,

01:27:41.360 | a jet that I can really fly around the world in." Let me just read this. It says on page 206,

01:27:50.960 | "I started by asking my young friend what his lifestyle would be like if he had a billion

01:27:54.560 | dollars. He thought for a moment, then he said, 'I'd have my own Gulfstream.'" "Your own jet,"

01:27:59.040 | I said, "where will you fly to?" He said, "Well, I live in New York. I'd probably fly down to the

01:28:04.160 | Bahamas and I'd probably fly to LA for some meetings." I had him write down how many times

01:28:08.800 | he'd fly in a year and he figured it was probably a maximum of 12 flights. And how much would a jet

01:28:13.840 | cost him? We looked it up and a long distance Gulfstream G650 would cost him about $65 million.

01:28:20.400 | A slightly used Gulfstream IV would only set him back about $10 million,

01:28:25.600 | not including fuel, maintenance, and crew. Then we looked up the costs of chartering a

01:28:31.520 | private jet instead of owning one. A mid-sized jet was all he really needed for himself and

01:28:36.320 | three family members to fly and that's around $2,500 an hour. He would be flying for maybe 100

01:28:42.160 | hours a year for a grand total of $250,000 per year or around $5,000 per hour or $500,000 per

01:28:50.400 | year if he wanted to fly by a Gulfstream on every flight. Still far less than the annual price of

01:28:55.360 | maintenance on many jets and at a cost that would be less than 1% of the cost of buying that Gulfstream.

01:29:01.600 | Even from the stage I could see his eyes lighting up and his mind working. He goes on and says,

01:29:06.960 | "What else would you buy? Buy an island." Robbins tells the story of buying his own island and

01:29:12.160 | worked through the list and looked up the cost and figured out he could buy an island or he could just

01:29:16.880 | rent Richard Branson's Necker Island for $350,000 for a week. That comes with a staff of 50 people

01:29:24.720 | to take care of everything and host all of his friends there. If he did that every year for a

01:29:29.280 | decade, it would only cost $3.5 million versus $30 to $40 million needed to buy an island with

01:29:35.520 | no work to maintain the property. We worked through his list, I'm on 2H208, and guess how much it would

01:29:41.120 | cost to have the lifestyle he wants to have for the rest of his life. When we added up the real cost

01:29:46.880 | of even his wildest dreams, not just his needs, it came to a grand total of not $1 billion, not

01:29:54.320 | $500 million, not $100 million, not $50 million, but $10 million to have everything he dreamed of

01:30:04.960 | having in his lifestyle and never have to work for pay for it. His dreams were gigantic.

01:30:10.800 | The difference between $10 million and $1 billion is astronomical. These numbers exist in different

01:30:19.840 | universes. He goes on and talks about really big numbers. Pay attention to these two paragraphs,

01:30:25.040 | trying to compare the definition and the difference between millionaires and billionaires.

01:30:31.840 | My first question is, how long ago was 1 million seconds ago? Take a moment,

01:30:37.760 | even if you don't know, what do you guess? The answer is 12 days ago. How close were you?

01:30:46.320 | Don't feel bad. Most people have no clue. If you got it, congratulations. Now we're going to up the

01:30:51.760 | ante. Since you now have a perspective of what a million is, a million seconds being 12 days ago,

01:30:57.680 | how long ago was a billion seconds ago? Stay with me. Come on, make a guess. Commit to a number.

01:31:04.080 | The answer is 32 years ago. How close were you? For most people, they're pretty far off.

01:31:13.680 | That's the difference between being a millionaire and a billionaire. 12 days or 32 years.

01:31:21.520 | Do you see what I mean by saying they live in different universes? You can never say millionaires

01:31:28.560 | and billionaires in the same breath and be talking about the same thing. Just to complete the

01:31:34.160 | thought, when you hear the US government has $17 trillion in debt, how much is a trillion? Well,

01:31:40.720 | if a billion seconds was 32 years ago, how long ago was a trillion seconds?

01:31:46.640 | The answer, nearly 32,000 years ago. Big difference, huh?

01:31:55.200 | When you hear people talk about national debt figures and things like that,

01:32:01.600 | keep that in mind. Trillions are big numbers. Difference between a million, which you might have,

01:32:09.920 | and a billion, which you might have, and a trillion, which you don't have,

01:32:13.600 | is a big number. The point is by actually defining a price tag for goals, you can achieve them

01:32:21.840 | because they're not so scary. I found this time after time myself in doing retirement planning.

01:32:26.960 | People say in retirement planning, "What are you going to do in retirement?" "I'm going to travel."

01:32:29.600 | Define travel. How many months a year are you going to be gone? "Well, not a month,

01:32:35.040 | just two weeks, three weeks. I want to take a three-week trip to Europe."

01:32:38.160 | "Okay, you want to do that every six months?" "Well, no, just once."

01:32:41.280 | So your price tag is 5,000 bucks maybe, the high end. You could spend thousands, but I don't know.

01:32:49.040 | I could go to Europe for 1,000 bucks for three weeks,

01:32:52.240 | all included. So you've got to figure out what's your price tag.

01:32:57.360 | What I love in this section, I mentioned it earlier, is his five steps. Let me go through

01:33:02.640 | them and I'm actually going to add my own. Let me start with his. He gives five dreams,

01:33:09.120 | basically, in five different numbers. I think these things are useful to give to people.

01:33:15.120 | Look at the power of certain financial models. Look at Dave Ramsey's seven steps,

01:33:19.680 | seven baby steps. Look at how powerful that is to give people a clear organizing framework.

01:33:24.800 | Look at how powerful having a goal given to you can be.

01:33:29.040 | Well, what I like about Robin's approach here is he gives these five dreams and he

01:33:34.400 | asks you to give price tags to them. So let me go through his first and then I'm going to add

01:33:38.320 | what I'm thinking about developing going forward. Number one, he says dream one is financial

01:33:42.960 | security. What does security mean? He says it's these five things. Your home mortgage,

01:33:49.920 | for as long as you live, paid forever. You never have to work again to pay for your home.

01:33:53.520 | Number two, your utilities for the home, paid forever. You never have to work to pay for your

01:33:57.920 | phone bill or to keep the lights on. Three, all the food for your family, paid forever. Four,

01:34:02.560 | your basic transportation needs. Five, your basic insurance costs, all of them paid for

01:34:07.600 | without you ever working another day in your life. And so for him, he goes and leads you through

01:34:12.560 | defining those things. You write down your mortgage payment, you write down your food

01:34:17.600 | costs, your utility costs, your transportation, your insurance costs, and figure out what that

01:34:22.320 | average is. In the US, that average is about $34,668 a year according to Bogle.

01:34:28.400 | And so then flip out of that and just say, "Well, how much money would I need in a portfolio to fund

01:34:34.560 | that for the rest of my life?" And if we use, let's just use for sake of scenario, 25 times

01:34:42.480 | annual expenses, if that basic level for you at $34,650 times 25, that's $866,700 of savings. Now,

01:34:51.680 | that's a lot of money, but it's not as much money as millions of dollars, and that's basic

01:34:57.360 | financial security. And he goes on and gives a couple of stories about how to create that number.

01:35:02.160 | His dream number two is financial vitality is what he calls it. And he says it's a mile marker

01:35:08.080 | on the path to financial independence and freedom. And so he says, he figures out, he calculates it

01:35:14.400 | as all of those basic costs plus half of your current monthly clothing costs, half of your

01:35:19.520 | current monthly dining and entertainment costs, half of your current small indulgences or little

01:35:24.160 | indulgence or little luxury costs, and figure out what that additional level of income is.

01:35:29.040 | Then dream three is financial independence. And so financial independence for him is the way he

01:35:36.800 | mentions that number is he goes with all of those other expenses plus whatever goals and ideas as

01:35:45.200 | far as the big money that you would want to spend on really your dreams or at least the dreams

01:35:53.600 | related to your current lifestyle. Basically, he says, "What's your current lifestyle? Let's fund

01:35:56.800 | that," with the assumption that most people are spending more than the basic expenses. So financial

01:36:00.800 | independence is funding current lifestyle. Step four is financial freedom. And so financial freedom

01:36:06.800 | means you're independent, you have everything you have today plus two or three significant luxuries

01:36:11.520 | that you want in the future. So this might be things like a vacation condo. In the example here,

01:36:17.200 | he talks about a person that he was advising that wanted to give $100,000 a year to their church

01:36:23.360 | and also have a condo in Steamboat Springs. And so figuring out that number for financial freedom.

01:36:29.680 | And then his fifth dream is absolute financial freedom. And he talks about what is the absolute,

01:36:35.680 | all of the dreams that you possibly have, no matter what. You can own, you can rent the jet,

01:36:40.880 | so you can have the jet lifestyle without having to own it. You can own part of the sports team.

01:36:44.960 | What are all of your dreams and figuring out the total number and targeting that number. And so in

01:36:52.400 | the example, he got somebody that wound up, the person wound up needing $673,000 a year.

01:36:59.680 | And you can figure that out with payment. So here's where I'm going to expand on this concept.

01:37:04.720 | I love this idea of the five models. And Robbins in the book here says, "At most, pick three,

01:37:09.440 | pick three numbers. How are you going to keep five numbers in your head?"

01:37:12.000 | What I don't like about this is that he starts with financial security. And financial security

01:37:19.360 | to him, that first number, that first goal is the idea of having all the money and investments to

01:37:29.200 | pay for your basic living expenses, housing, utilities, food, transportation, and insurance.

01:37:35.120 | But that's still a big number. That's $600,000, $700,000, $800,000. My thought is, I wonder if

01:37:40.880 | we could develop this with some additional numbers. So the first thing I thought was,

01:37:45.920 | step one could be financial solvency. So applying the idea of the power of setting out clear steps,

01:37:52.960 | I've wondered if we could develop a model that would say, "Step one is financial solvency. And

01:37:56.720 | I define this as current on all of your bills." If you look at Dave Ramsey's seven baby steps

01:38:02.560 | system, he said, "The first thing is get current on your bills. Then step one is save a thousand

01:38:07.360 | bucks, I think." So step one is financial solvency. And I would say, "Get current on all of

01:38:12.800 | your bills." Maybe you could add in a preset, a pre-step. I mean, you could get ridiculous with

01:38:17.600 | this. But the idea is if you're counseling a 16-year-old young man or woman that is trying

01:38:24.160 | to say, "What are my goals?" Well, maybe that would be a goal. Maybe step two could be financial

01:38:29.520 | stability. So you're current on all of your bills, plus you have an emergency fund of a certain size,

01:38:34.720 | six months of expenses, something like that. Maybe the next step would be debt freedom or

01:38:39.680 | consumer debt freedom. We've paid off all consumer debt to give a nod toward the power of paying off

01:38:45.280 | consumer debt and then build up into partial financial security. This is just my ideas I'm

01:38:50.400 | trying to figure out. If you have any ideas on that subject of how you would name that,

01:38:54.320 | I'd love to hear them. Comment on today's show and let me know. If not, what I would encourage

01:38:58.960 | you is set out your own set of goals. So for example, on my personal financial plan,

01:39:04.720 | my goal ultimately is to be able to provide for the lifestyle of my family at a comfortable level

01:39:11.840 | without needing to work, with being able to pay that off of investments. I think that as far as

01:39:19.600 | for us, what a comfortable level would be something like, I don't know, somewhere on the

01:39:24.160 | order of like six grand a month. I'm a pretty simple guy. I can fund most of my luxuries on

01:39:29.760 | $6,000 a month. So that means when I actually run the math for me, that means about 1.8 million

01:39:36.560 | bucks. Now at the moment, we spend somewhere between three to four on a monthly basis,

01:39:40.960 | depending on what we're doing. So that's also part of my scenario is, let's just say $36,000

01:39:47.760 | times 25, that's about $900,000. So there are some luxuries that I think we would enjoy spending at

01:39:54.800 | the higher level that we don't currently do. I can imagine a few things that would be fun to do.

01:39:59.440 | So that's why for me, that $6,000 number is pretty luxurious. I don't want to move. I don't want to

01:40:04.080 | live in a house on the water. I don't want to drive a new car, but I would like to buy an RV.

01:40:08.560 | So some things like that, that's where that difference is. So for me, the kind of a baseline

01:40:12.880 | is the $900,000 number. But on my financial plan personally, one of my earlier goals is to get this

01:40:19.040 | show to a point where it can actually fund my basic lifestyle and then my ideal lifestyle,

01:40:25.520 | with the idea being that I'll fund the basic lifestyle at $3,000 a month off the show.

01:40:30.560 | I'll grow it up to be $6,000. I'll save 50%. Anywhere beyond the three, basically three

01:40:35.920 | to $4,000 a month that we spend, everything beyond that is going to savings. And then all

01:40:42.640 | of that money that's going to savings is going to build the portfolio. And then once I hit

01:40:46.240 | the $3,000 number in passive income at that point in time, then ideally we'll start to increase our

01:40:51.840 | lifestyle after we've started with that financial, well, Robbins calls it financial security. I call

01:40:58.480 | it financial independence. So make up these ideas for yourself. I thought this was really powerful

01:41:02.880 | and I loved his five models. I thought it was a super useful idea. And I can see how I can

01:41:08.880 | expand on this and expand on this for yourself. Everyone's ideas are going to be different.

01:41:14.560 | But in my mind, the key is make the celebrations come more quickly, but make them in the direction

01:41:20.800 | that you want to go. If you set off with absolute financial freedom, which is what many people do,

01:41:26.000 | if you're not already part of the way there, does that really meaningful? Start with financial

01:41:30.960 | solvency. And I think if we add a couple of steps, then maybe we can help someone

01:41:37.200 | cross the gap and know that we're going to absolute financial freedom, but work on financial

01:41:41.200 | solvency first. So I share those ideas with you. I hope they're useful to you.

01:41:46.080 | One of the other things that I really thought was excellent about this book and really interesting

01:41:51.920 | was the portfolios. And in the book, Robbins talks a lot about different portfolios,

01:41:59.440 | and there are three that stand out. Within the context of the asset allocation discussion,

01:42:05.200 | he's constantly talking with different people and saying, "Well, how would you allocate your money?"

01:42:08.800 | And remember, most of the people he's talking with, or at least many of these billionaires,

01:42:13.040 | are billionaire hedge fund managers. None of them are mutual fund managers. They're all hedge fund

01:42:17.840 | managers, which by the way, is its own show in and of itself as far as what's happening in the

01:42:22.000 | mutual fund market. But the first one that appears is on page 327. This is David Swenson's portfolio.

01:42:31.200 | David Swenson runs the Yale Endowment. And so he's running a $24 billion portfolio

01:42:37.440 | for the Yale Endowment. And evidently, he's done an excellent job with that portfolio.

01:42:45.120 | Kind of bugs me a little bit, by the way, just as an aside, bugs me a little bit some of the

01:42:49.680 | attention some of these portfolio managers get when there are, you know,

01:42:54.080 | they're insurance companies that are managing $150 billion portfolios with incredible finesse

01:43:00.800 | and they don't seem to get much press. But the Yale guy does. Now he's had good returns.

01:43:07.200 | But the point is, this is the guy that we're supposed to look for and say, "How would we

01:43:11.680 | allocate the money?" So he talks about, this is the portfolio selection that he recommends.

01:43:18.080 | 20% in domestic stock, 20% in international stock, 10% in emerging markets, 20% in real estate,

01:43:25.600 | real estate investment trusts, and 15% in long-term U.S. treasuries, and 15% in TIPS,

01:43:32.480 | treasury inflation protected securities. When you run the numbers on it, it comes out to be 50%

01:43:36.560 | in stock, 20% in real estate REITs, and 30% in bonds. And this is an interesting portfolio

01:43:42.400 | because it's fairly straightforward, 50/50, 50% in equities, which is very interesting.

01:43:49.600 | And then the bond portfolio is interesting to me because he splits it between long-term

01:43:55.120 | treasuries and TIPS, so treasury inflation protected securities. Without going into the

01:43:59.680 | details, essentially what he's trying to do here is he's splitting his bond portfolio out

01:44:05.840 | to try to make the connection between success in inflation or in deflation.

01:44:17.840 | In inflation, in an inflationary environment, the TIPS protect your portfolio. In a deflationary

01:44:24.240 | environment, your treasuries protect your portfolio. So I thought that was interesting.

01:44:29.040 | 50% stocks, 20% real estate, 30% bonds, essentially.

01:44:32.560 | Robbins kind of glosses over that in favor, focusing primarily on something he calls the

01:44:40.080 | all-seasons portfolio, which is an offshoot of his interview with Ray Dalio. And he's got a very

01:44:45.360 | interesting story behind this. Ray Dalio running a very successful, well-known fund called the

01:44:52.000 | All-Weather Portfolio, which has had some really impressive performance over time.

01:44:55.760 | And within the context of the discussion, he goes through and talks about how he was able to get

01:45:00.960 | Dalio to lay out for him the allocation that he recommends. And I was not familiar previously

01:45:09.040 | with the All-Weather Portfolio. Portfolio management is not my bailiwick. So this is not

01:45:14.480 | something that I was really familiar with. But it was interesting to read about. And I do spend a

01:45:21.680 | little bit of time focusing on the fundamentals. And for those of you who I've done a show on the

01:45:25.680 | past on the permanent portfolio, which is an interesting strategy, I was struck by how similar

01:45:30.080 | this is to the permanent portfolio approach with a slight tweak. What Dalio explains is that what

01:45:37.120 | makes his All-Weather Portfolio different than many others is that instead of basing his asset

01:45:44.080 | allocation decision on the different asset class on a set percentage, such as what Swenson said,

01:45:53.600 | where I put 50% in stocks, 20% in real estate, and 30% in bonds, Dalio says, "I'm developing my

01:46:02.400 | percentages based upon the volatility of returns." So as an example, if you were running a portfolio

01:46:11.120 | that was 50% stock and 50% bonds, even though that is "balanced" from the perspective of 50/50

01:46:18.560 | with regard to the percentages, it's not balanced based upon the amount of risk, based upon the

01:46:24.800 | volatility of the portfolio. And so what he does is he calculates the volatility of the stock

01:46:30.400 | portfolio, and he uses that to address what percentage should be allocated. So I'll go

01:46:38.800 | through his allocations in just a moment, but the other thing that struck me about his approach that

01:46:43.280 | Robbins relates Dalio's lesson in the book is that he's very much focused on the idea of the four

01:46:51.680 | different economic environments, which is what I originally learned when studying the permanent

01:46:55.840 | portfolio. And so in summary, on page 386 of the book, Robbins lays this out for you. He says

01:47:02.320 | that there are only four things that move the price of assets. Number one, inflation.

01:47:08.320 | Number two, deflation. Number three, rising economic growth. And four, declining economic growth.

01:47:17.760 | So if you plot those things on a matrix, you can have your four different options. Either we're

01:47:24.240 | going to have an inflationary growth environment, or we're going to have an inflationary declining

01:47:30.080 | environment, declining economic growth environment, or deflationary growth, or deflationary

01:47:36.480 | decline. So very interestingly, Ray's just simply saying, "I don't know what's going to happen."

01:47:41.680 | There's all kinds of story in the book, but Ray says, "I don't know what's going to happen,

01:47:45.680 | but I do know we're going to be in one of those scenarios." He also makes the interesting point

01:47:49.920 | that the key is not what's actually happening, but the key is whether or not it's expected.

01:47:55.760 | So with investing, you often hear that, "Well, they had higher than expected earnings, so

01:48:01.840 | therefore that moved their stock price. We had lower than expected earnings, so therefore that

01:48:05.440 | moved their stock price." And in general, this is a scenario that the idea that the forecasters and

01:48:14.160 | the analysts in the world of investing have already priced into their model whatever they

01:48:18.800 | think their forecasts are. So the price that they're willing to pay or not pay for an asset

01:48:24.720 | is based upon their expectations. And so that price is going to change when either expectations

01:48:32.720 | are not met or not met, either positively or negatively. So Dalio makes that point as well,

01:48:40.480 | which is very interesting. Now in these four environments, we could have higher than expected.

01:48:45.200 | The expectation is the key. So we're either going to have higher than expected inflation

01:48:51.200 | and rising prices, or we're going to have lower than expected inflation or deflation. We're going

01:48:56.640 | to have higher than expected economic growth, and we're going to have lower than expected economic

01:49:00.640 | growth. So Dalio builds the portfolio for that. And I'm often wondering when I try to wrap my

01:49:07.440 | head around investment topics, what works well in what scenario? On page 388, Robbins has a very

01:49:14.640 | useful chart. And the chart has four quadrants, and on the top is growth and inflation. So on the

01:49:25.760 | left two quadrants, we're dealing with are we in a period of higher than expected economic growth

01:49:31.200 | or in a period of lower than expected economic growth? And then are we in a period of higher

01:49:36.240 | than expected inflation or are we in a period of lower than expected inflation? And he links the

01:49:43.600 | asset classes to these, which I always find very interesting. So in a period of higher than

01:49:49.200 | expected economic growth, that we did expect stocks, corporate bonds, and commodities and gold

01:49:56.480 | to do well. In a period of lower than expected economic growth, we would expect treasury bonds,

01:50:01.840 | inflation-linked bonds, or TIPS to do well. In a period of higher than expected inflation,

01:50:07.920 | we would expect commodities and gold to do well, inflation-linked bonds, TIPS to do well. And in

01:50:13.760 | a period of lower than expected inflation, we would expect treasury bonds and stocks to do well.

01:50:18.080 | So that's what he sticks in there. Then Dalio goes in and talks about how allocating risk. So

01:50:24.560 | he wants 25% of his risk in each of those quadrants, not necessarily just to match a 25%

01:50:32.000 | asset allocation based upon percentage. He wants 25% of the risk. So on that basis, Robbins in the

01:50:42.240 | narrative gets him to give the actual percentages. And so here's what they are. Robbins makes clear

01:50:48.720 | in the book, and Dalio makes clear, this is not specifically his all-weather portfolio, because

01:50:55.360 | in his all-weather portfolio, he is using some fairly sophisticated portfolio management

01:51:03.760 | techniques. But this is pretty close, according to Robbins' book here. So his asset allocation,

01:51:11.920 | he puts 30% in stocks, 40% in long-term US bonds, 15% in intermediate US bonds,

01:51:21.920 | 7.5% in gold, and 7.5% in commodities. It's very interesting. So I really enjoyed reading about

01:51:31.840 | that. And I learned something I'd never learned before. I'd never thought about the model of the

01:51:36.080 | idea of allocating risk. And so I'm going to have to give that some thought, because it does make a

01:51:41.520 | lot of sense to me. I think it's very interesting. The other port—and I commend it to you. Again,

01:51:46.320 | the book is well worth the price, so buy it and read it. That section alone is fascinating.

01:51:52.480 | Where else? I mean, I'm not going to get—well, I guess I'd be a little short-sighted of me. At

01:51:56.160 | the moment, I don't think it's likely that next week I'm going to sit down with Ray Dalio and

01:52:00.240 | have the necessary clout to get him to talk to me about all those details that he may have talked

01:52:05.920 | with Robbins about. Now, the other portfolio that was interesting was Mark Faber. He talks

01:52:11.680 | about his portfolio. And what struck me about Mark Faber—Mark Faber was a billionaire Swiss investor—

01:52:17.360 | is that Faber had focused—he's well-known for being a contrarian doom-and-gloom guy,

01:52:23.600 | which is—he's great. It was my favorite interview in the book with the profiles of the billionaires

01:52:30.560 | that he talked about. He was my favorite. But he talked about that his portfolio—he used to focus

01:52:35.680 | it on 25% stocks, 25% gold, 25% cash and bonds, and 25% real estate. So I thought it was really

01:52:42.400 | interesting. Those of you who love the Porvino portfolio concept, you all will like these

01:52:46.400 | models. I was struck by how similar they all tend to be. A couple other major lessons I learned from

01:52:55.440 | the book. I learned that the average American evidently spends $1,000 a year on the lottery.

01:53:01.760 | I couldn't believe that one. I searched and searched and searched to try to find

01:53:05.520 | the actual citation for that. But in the book, Robbins cited a professor, but he didn't cite

01:53:13.840 | an actual study, and there's no bibliography. So I searched and searched to find that one.

01:53:19.200 | All of the numbers I found online about how much the average American spends are far lower than

01:53:23.200 | that, but maybe there was new research that the professor knew. I don't know. I learned—Robbins

01:53:28.240 | makes a big point about the greatest investors in the world finding an asymmetric risk-return

01:53:34.960 | ratio. I'm going to talk a little bit about this again. But the best way to find an asymmetric

01:53:40.240 | risk-return ratio is in the world of investment management. I'm going to save this. I'm going to

01:53:45.360 | mention this when I get to talking through the investment manager. It's very fascinating to me.

01:53:49.600 | One of the most compelling things I learned was about the power of a disempowering story.

01:53:58.240 | Pages 190, 191, Robbins talks about the stories that we tell ourselves and the impact that that

01:54:05.200 | has on our physical experience. He talks about various people, including Richard Branson,

01:54:11.840 | that had dyslexia, but they view dyslexia not as something that is an obstacle that

01:54:18.720 | is going to keep them from achieving something, but rather as an obstacle that they're going to

01:54:25.360 | have to work harder to overcome. He cites some interesting research from a health psychologist

01:54:31.520 | at Stanford University named Kelly McGonigal, who talked about the dangers of stress for a long time.

01:54:38.400 | Then she wondered one day if it wasn't stress itself that was causing the problems, but rather

01:54:46.240 | how people viewed stress. A quote on page 191 says from her, "I'm converting a stimulus, stress,

01:54:53.920 | that could be strengthening people into a source of disease." So, it's actually the impact of the

01:54:58.880 | stress, not to the actual stress. According to her research, it evidently is the research is now

01:55:04.640 | showing that when you change your mind about stress, you can actually change your body's

01:55:09.200 | reaction to it. The quote from page 191, "In an eight-year study, adults who experienced a 'lot

01:55:17.440 | of stress' and who believed stress was harmful to their health had a 43% increase in their risk of

01:55:23.440 | dying. However, people who experienced an equal amount of stress but did not view stress as

01:55:28.640 | harmful were no more likely to die." McGonigal says that the physical signs of stress, a pounding

01:55:34.480 | heart, faster breathing, breaking out in a sweat, aren't necessarily physical evidence of anxiety

01:55:39.600 | or signs that we aren't coping well with pressure. Instead, we can interpret them as

01:55:44.080 | indications that our body is energized and preparing us to meet the next challenge.

01:55:50.320 | So, the idea is it's not the stress itself that actually matters, but it's the story that you

01:55:55.040 | attach to stress. This made a big difference for me because I think a lot about how to interpret

01:56:01.280 | events. I was raised with the privilege of basically confronting minor adversity from time

01:56:09.520 | to time and the opportunity to learn to control my attitude around something, and that's made a

01:56:14.240 | major difference in who I am. At a time of adversity, a miserable experience, so to speak,

01:56:19.360 | you go camping and it rains all weekend. This is not something to be cried about. This is something

01:56:23.840 | to be laughed at. The story that I tell about a rainy weekend camping trip, I say, "Well, wow,

01:56:29.200 | we're going to have a fun story later and we can make a good experience of it." That's made a big

01:56:32.640 | difference in my life as far as my ability to interpret experiences into a more positive

01:56:38.800 | framing. With Robin's book here, I think about this with regard to financial stress. Some people

01:56:47.120 | seem to fall apart under financial stress and some people seem to say, "Whatever, no big deal."

01:56:51.680 | Work stress, investment stress, certain things. I want to research this more and try to figure

01:56:57.120 | this out because it aligns with an agenda I'd like to see, which is basically the idea of

01:57:04.480 | empowering ourselves to take control of our circumstances. I'm interested to research that

01:57:08.960 | a little bit more, but I really felt that was a valuable learning. I learned how to buy a tax

01:57:14.160 | deductible vacation property. I commend this to you. I thought it was a great idea.

01:57:20.640 | Robbins talks a little bit about his personal experience with buying a property in Fiji.

01:57:28.160 | He talks about this in two places. Page 207, he writes this paragraph in the context of encouraging

01:57:35.600 | the young man who had said, "I need a billion dollars to accomplish my dreams." He writes this,

01:57:43.200 | "I own a small island paradise in the country of Fiji. It was a wild dream I had early in my life

01:57:48.400 | to find an escape someday where I could take my family and friends and live. In my early 20s,

01:57:53.840 | I traveled to islands all over the world searching for my Shangri-La. When I arrived in Fiji,

01:57:58.800 | I found it, a place with not only magnificent beauty, but beautiful souls as well. I couldn't

01:58:04.400 | afford it at the time, but I bought a piece of a little backpacker resort with 125 acres on the

01:58:09.920 | island. I really didn't have the money, and it probably wasn't the best investment at first,

01:58:15.040 | but it was part of what I call my dream bucket, something you'll learn about later in the book.

01:58:19.200 | Still, I made it happen, and I'm proud to say that over the years, I've purchased and converted it

01:58:23.760 | into a protected ecological preserve with over 500 acres of land and nearly three miles of ocean

01:58:30.000 | frontage. I've turned Namale Resort and Spa into the number one resort in Fiji for the last decade,

01:58:36.000 | and it's consistently rated among the top 10 resorts in the South Pacific.

01:58:39.440 | But how often do I visit this paradise? With my crazy schedule, maybe four to six weeks a year.

01:58:44.800 | So my dream has come true. Everybody else has a great time there. So I thought this was cool.

01:58:50.320 | If you want a tax-deductible vacation home, do it Tony Robbins way. Buy a resort, turn it into a

01:58:56.400 | business that makes you money, and there's not a chance in the world he pays when he's there. He

01:59:00.880 | gets to enjoy it and write all of the expenses associated with it off. Now, maybe his accountant

01:59:05.760 | does pay something. I don't know that, but I just thought it was really interesting.

01:59:09.600 | And he talks about, on page 341, he talks about talking about the resort in Fiji.

01:59:16.080 | Now, over the years, Namale Resort and Spa has become a pretty sizable asset because I built it

01:59:20.400 | up and turned it into one of the top destinations in the South Pacific. I share this with you because

01:59:26.000 | I have thought about this from my personal perspective, and I think this is a strategy

01:59:30.000 | that we could apply to our lives with smaller dollar figures. Remember earlier I also talked

01:59:36.240 | about Richard Branson. In that same section on islands, Robbins says, "Why don't you just go

01:59:40.800 | rent Richard Branson's Necker Island? It's only $350,000 a week. No big deal, and it comes with

01:59:45.280 | the staff of 50 people to take care of you." And I thought, "Interesting." I didn't know you could

01:59:49.520 | rent Necker Island. I don't know. Maybe it's foolish of me. I just hadn't thought about it.

01:59:53.280 | But that's definitely the way to do it. Many people do this already. You buy a cabin and

01:59:59.280 | you put it on the rent a cabin site, and you stay there when you want to. But I just commend you

02:00:06.080 | that you can do this at any scale, at the small scale and at the larger scale. And I think it's

02:00:10.640 | much smarter. I've had so many people sit in my office and say, "Joshua, I want to buy a second

02:00:15.600 | house or a vacation home." And I just often wonder, "Why would you want that? Why would you

02:00:19.840 | want the hassle?" And if you do want it, go for it, but maybe consider at least making a little

02:00:24.160 | bit of money on it. So to me, that makes a big, big difference. I have two favorite quotes that

02:00:29.680 | came out of the book that really made it, for me, were impactful. First quote comes from page 246,

02:00:37.120 | and it says this, "Most people overestimate what they can do in a year, and they massively

02:00:43.360 | underestimate what they can accomplish in a decade or two." The fact is you are not a manager

02:00:51.200 | of circumstance. You're the architect of your life's experience. Just because something isn't

02:00:57.040 | in the foreground or isn't within striking distance, don't underestimate the power of the

02:01:02.320 | right actions taken relentlessly. That quote about overestimating what they can do in a year,

02:01:09.600 | that totally applies to me. Every year I set out much bigger goals than I ever accomplished.

02:01:13.520 | But then I think I also probably do underestimate what I can accomplish in a decade or two. That

02:01:17.280 | really made me pay attention. I'm going to continue to think about that. Another quote

02:01:20.880 | from page 41 is a quote that says, "Complexity is the enemy of execution." This is something else

02:01:28.880 | that I struggle with because he's talking about why we should make investment choices simple.

02:01:34.560 | He shares the idea that in different countries, the percentage of people that donate their organs

02:01:43.440 | varies greatly. In Germany, there's a one in eight chance you'll donate your organs. About 12% of the

02:01:49.120 | population does. But in Austria, 99% of people donate their organs. In Sweden, 89% donate. But

02:01:55.760 | in Denmark, the rate is only 4%. So what's the difference? He goes on and shows that the

02:02:00.880 | difference is the way they ask the question. In Denmark, there's a small box that says,

02:02:07.920 | "Check here if you want to participate in the organ donor program." In other countries like

02:02:12.080 | Sweden, the form says, "Check here if you don't want to participate in the organ donor program."

02:02:17.680 | Nobody likes to check boxes. In that context, he talks about complexity as the enemy of execution.

02:02:23.840 | I've often struggled with this as far as how to connect with people because I'm a very complex

02:02:27.600 | person in the sense of I often go to elaborate, complex solutions instead of simple ones.

02:02:34.160 | That's why, as you see when I dig into my critiques of this book, I get pretty complex.

02:02:41.440 | I think this is oftentimes a problem for me. I'm going to write that one down. Remember,

02:02:46.640 | complexity is the enemy of execution. Ultimately, execution is what matters.

02:02:51.280 | I had to learn that with financial planning. Very simple. Help your clients take action.

02:02:56.640 | Make a simple step and lay it there and make it happen. So I share that with you.

02:03:02.480 | Now, let's get into some flaws of the book. I'm sharing these with you not with the purpose of

02:03:13.120 | being mean to Tony Robbins, but with the purpose of trying to give you some information

02:03:17.520 | and also arm you with some critical thinking skills and show you how in many financial books,

02:03:24.720 | there are a lot of things that if you're not aware of them, they might just bumble past you.

02:03:30.320 | So let's throw out a few minor ones real quick. I already mentioned I can't find the bibliography.

02:03:35.920 | This is a big deal because he cites a lot of stuff, but none of it is actually cited.

02:03:39.840 | He talks a lot about, "Okay, this study shows this." And I had to do some digging to show some

02:03:45.600 | studies because the first thing I do when someone cites a study is I let me go read it because it

02:03:50.320 | makes a big difference as far as how somebody... It makes a big difference when you actually see

02:03:55.920 | the study and see the question that was listened to, which you'll get to in a moment. I'll show

02:04:00.240 | you one of those. And so go read the study. Don't trust when people cite something. Go read it.

02:04:05.120 | And if you can't... A couple of these I couldn't find. I just had to read some articles. At least

02:04:09.040 | find several articles to corroborate yourself, but go read the actual study and then you'll find out,

02:04:15.600 | "Well, wait a second. This is not what this says at all." I assume this is just a clerical error.

02:04:19.680 | In the book, he says it would be found on the website. Well, I've searched the website every

02:04:23.920 | which way I can think of. I cannot find a bibliography, so I assume it'll show up at

02:04:27.760 | some point. But it's a big problem. You've got to cite your stuff, and so that's one issue.

02:04:33.760 | I have an issue with his use of the word "risk." This bothers me throughout, and you see this in

02:04:39.520 | almost in many investment books. They talk about risk, and they constantly refer to different

02:04:46.480 | types of risk, but call them all risk. And so there are so many different kinds of risk. You've

02:04:52.800 | got on the one hand, you've got market risk, which is the risk of the value of your investments going

02:04:57.760 | up and down based upon the gyrations of the market. And on the other hand, you've got currency risk,

02:05:02.160 | which is the value of your investments going up and down based upon the fluctuations of the

02:05:06.880 | currency. Those are two very different things. You cannot eliminate risk. All you can do is plan

02:05:16.080 | for different risks. So the problem is that by only using this word "risk," which I get is the

02:05:24.400 | most commonly used word. By only using the word "risk," we really wind up doing a disservice.

02:05:31.600 | I try to use volatility when I'm talking about market risk. The idea that the value of the

02:05:35.920 | investments will go up and down on any given day, ran completely randomly. I use volatility

02:05:39.840 | for that, and there are many reasons for that, but it bugs me. Because a lot of times, he is

02:05:48.080 | presenting specific solutions for risk that only solve one kind of risk and open you up to

02:05:54.480 | completely different kinds of risk. He talks about saving percentages, but he doesn't give any

02:06:00.320 | guidelines for how to figure out that percentage. He has an app, which I'll get to in detail in a

02:06:05.680 | few minutes, but that's a kind of a bug. In talking about things, he makes a big deal about the mutual

02:06:11.920 | ownership structure of Vanguard, but he doesn't once mention the mutual ownership structure of

02:06:17.440 | different insurance companies. To me, this seems like a big deal, because Bogle modeled his fund

02:06:22.400 | company, to the best of my knowledge, on mutually owned insurance companies where there are no

02:06:28.160 | stockholders. That was what he modeled it on. The key is that there are still plenty of great

02:06:34.960 | opportunities in the mutual insurance company space for life insurance and annuities that he

02:06:40.080 | talks about, but he didn't really mention that small detail. One of the most frustrating things

02:06:46.400 | that I'm tired of reading in financial books is the stupid rule number one with investing.

02:06:52.160 | I'm guilty of it myself. I have said this, "Rule number one of investing, don't lose money."

02:06:57.760 | This is the most frustrating advice in the history of... This is the most frustrating advice,

02:07:04.160 | period. Listen to this paragraph from page 44055. He's using this to introduce the masters. This is

02:07:12.080 | chapter 6.0, "Meet the Masters." It says, "All of these financial legends share these four common

02:07:19.280 | obsessions." The first obsession is one, don't lose. "All of these masters, while driven to

02:07:27.520 | deliver extraordinary returns, are even more obsessed with making sure they don't lose money.

02:07:33.600 | Even the world's greatest hedge fund managers, who you'd think would be comfortable taking huge

02:07:38.160 | risks, are actually laser-focused on protecting their downside. From Ray Dalio to Kyle Bass to

02:07:44.160 | Paul Tudor Jones, if you don't lose, you live to fight another day. As Paul Tudor Jones said,

02:07:48.720 | "I care deeply about making money. I want to know I'm not losing it. The most important thing for me

02:07:53.840 | is that defense is 10 times more important than offense. You have to be very focused on the

02:07:58.880 | downside at all times." This statement comes from a guy who's made money for his clients for 28

02:08:04.480 | consecutive years. It's so simple, but I can't emphasize it enough. Why? If you lose 50%,

02:08:10.880 | it takes 100% to get back to where you started. That takes something you can never get back, time.

02:08:17.120 | Warren Buffett's Rule #1 of Investing, "Don't lose money." Rule #2, if you forget Rule #1,

02:08:28.080 | if you lose money, go back and see Rule #1 or whatever it is. That's so frustrating because

02:08:33.040 | you don't know whether you're going to lose money. All you can do is take a calculated bet.

02:08:37.200 | Sometimes you'll be right and sometimes you'll be wrong. Do great investors lose money? Absolutely

02:08:41.680 | they do. Not a single one of these, and I find that it's not losing money. Now, this paragraph

02:08:47.120 | is the most fair treatment because it talks about protect your downside. I don't have any credentials

02:08:55.120 | whatsoever to talk about what the actual advice that they're giving is and go over it and say how

02:09:01.200 | my idea is better. In my mind, it's useless to say, "Don't lose money." The key is,

02:09:07.280 | how can you make sure that if you do lose money, you're limiting your downside? Because then that

02:09:11.440 | transitions you from a perspective of, "I can't lose money," to a perspective of, "If I do lose

02:09:16.480 | money, how can I protect my downside?" That's actually useful. It also bugs me when people

02:09:22.000 | talk about this mathematical idea that if you lose 50%, it takes 100% to get back to where you

02:09:27.360 | started. This is absolutely true, but it's absolutely not. There's a whole chart in the

02:09:33.840 | book on this on page 401 with a whole chart of if you lose this percent, how much do you have to

02:09:39.120 | gain in order to break even? If you lose 20% of your portfolio, you have to gain 25% to break

02:09:44.400 | even. If you lose 50%, you have to gain 100% to break even. If you lose 90%, you have to gain 900%

02:09:50.960 | to break even. Now, this is mathematically true if you're looking at a period of time.

02:09:56.160 | The problem is that in the real world, is this really how people think? Usually, this one is

02:10:01.920 | trotted out and it's an important mathematical concept, but it's trotted out to say, "You can't

02:10:06.800 | lose money." The question would be, "Do you lose money and you don't have any loss that's ever

02:10:13.200 | going to come back, or do you have a temporary decrease in price while the value of the underlying

02:10:20.400 | asset has not changed?" Think about this with your house. If I'm wrong, tell me I'm wrong and

02:10:27.840 | prove it to me, but this is just how I thought through this one because I used to be really

02:10:31.520 | flummoxed by it and say, "How does this work?" Think about your house. Let's say your house is

02:10:35.120 | worth $100,000 in 2008, then the house goes down in value by 40%. Now, does there need to be a 67%

02:10:44.720 | increase in the value of the house in order for you to break even? Yes, mathematically, there does

02:10:50.080 | if you're measuring things on a year-over-year basis. If on January 1, 2009, your house is down

02:10:55.280 | by 40%, now to gain back the same value, it's got to go up by 67% on the flip side by January 1,

02:11:02.560 | 2010. But that doesn't necessarily mean that it's just this impossibly difficult task.

02:11:11.920 | If your house was already undervalued based upon a larger macroeconomic trend of things going on

02:11:19.520 | in your city and you had gotten it for a good price, the key thing is what did you pay for

02:11:25.600 | and what are the underlying trends? Focus on that. Is the value of the house there and your

02:11:32.320 | dealing with a temporary fluctuation in price? Because the problem is if you're always thinking

02:11:37.440 | about what's the fluctuation in price and I have to gain 67% back to make up my 40% loss, I don't

02:11:43.040 | think that serves very well. I think it's better to think of what's the current price and then how

02:11:47.760 | do I limit my risk? Every one of these great investors has lost money. Warren Buffett lost

02:11:52.880 | a ton of money. What was it? Back in the late '90s when his stock portfolio started just plummeting

02:11:59.680 | as his investment style went out of favor. He lost money. He was worth less money on paper.

02:12:08.160 | Now, did that affect what he actually did? No. Best of all, he didn't do a thing differently

02:12:14.080 | because it was only affecting the price. One of the concerns I have with this book is that a lot

02:12:20.480 | of times the logic seems incomplete to me. Advice is given based upon a system of logic that is not

02:12:27.840 | actually taking into account all of the risks. Now, recognize again, you can't take it... These

02:12:32.720 | are, by the way, these are the minor flaws. You can't take into account all of the risk, but

02:12:37.280 | you can leave people with a false sense of security sometimes. So, in the context on page 149,

02:12:45.520 | in the context of money myth number five, which money myth number five is entitled

02:12:56.880 | "Your Retirement is Just a 401k Away," which is essentially blasting away the idea that the 401k

02:13:04.880 | is a great plan that just is working awesome for everybody. Also, now he talks about unconventional

02:13:10.800 | wisdom of spending. So, on page 149, he says, "If you haven't noticed, our government has a

02:13:17.200 | spending problem. Like an out-of-control teenager with a platinum Amex, Uncle Sam has racked up over

02:13:22.000 | $17.3 trillion in debt and close to $100 trillion in unfunded, not paid for yet, liabilities with

02:13:28.800 | Social Security and Medicare." I think that number is $220 trillion based upon Lawrence

02:13:33.120 | Kotlikoff's numbers, but we'll go with $100 trillion. "So, do you think taxes will be higher

02:13:38.240 | or lower in the future? Did you know that following the Great Depression, the highest

02:13:42.000 | income tax bracket was over 90%? The truth is you can tax every wealthy individual and corporation

02:13:47.840 | at 100% of its income and profits and still fall way short of the government's promises." And by

02:13:53.120 | the way, he has a great video on that, which is really, really great. I will post it in the show

02:13:58.240 | notes. "Conventional logic, as most CPAs will attest, is to maximize your 401k or IRA contributions

02:14:04.960 | for tax purposes because each dollar is deductible, which simply means that you don't have to pay tax

02:14:09.840 | on that dollar today, but will defer the tax to a later date. But here's the problem. Nobody knows

02:14:15.120 | what tax rates are going to be in the future, and therefore you have no idea how much of your money

02:14:20.240 | will be left over to actually spend." Next page, he goes on and says, "If we pay taxes now,

02:14:25.280 | then whatever the harvest time is in the future, we'll be able to spend that tax-free." So, he's

02:14:32.560 | talking about this in the context of, "Okay, you need to go with an IRA because taxes are going to

02:14:38.160 | go up." The problem is the same risk exists that is going to make taxes go up, the same risk exists

02:14:45.040 | with IRAs. On page 154, he says, "Should I convert my traditional IRA to a Roth IRA?"

02:14:51.840 | And says, "Some people cringe at the idea of paying tax today because they view it as their

02:14:57.600 | money. It's not. It's the government's. By paying the tax today, you are giving Uncle Sam his money

02:15:02.960 | back earlier, and by doing so, you're protecting yourself and your nest egg from taxes being higher

02:15:07.760 | in the future. If you don't think taxes will be higher, you shouldn't convert. You have to decide,

02:15:12.400 | but all the evidence points to the hard fact that Washington will need more tax revenue,

02:15:16.960 | and the biggest well to dip into is the trillions in retirement accounts."

02:15:20.480 | The reason I read that is because specifically what he's trying to address is tax risk,

02:15:26.720 | and I'm not convinced that his solution makes a big difference. Now, I would probably, if I,

02:15:34.480 | I would probably, I do think that the Roth accounts are a more valuable tool, and I think

02:15:41.760 | it would be more difficult for the rules to change on Roth accounts versus generalized accounts,

02:15:49.520 | but the tax risk still exists with Roth accounts. And maybe this is just me, maybe I'm being too

02:15:55.600 | nitpicky, but I really would love it if people would talk about that. Later in the book, and

02:15:59.920 | the reason why I'm focusing on this, usually if it were just here, I wouldn't bring it up,

02:16:03.440 | but later in the book, he has two specific sections on life insurance, cash value life

02:16:07.680 | insurance being as an investment product, and annuity products, specifically fixed index annuities,

02:16:14.080 | and he makes a big deal out of the fact that the inside buildup of cash value and life insurance

02:16:19.360 | is protected from tax. He also makes a big deal about the taxation of annuities.

02:16:24.240 | Those products face exactly the same problem of taxation changes. These are all, so he's

02:16:34.000 | keyed in, the same problem he's keyed in on with 401ks exists with those things. I'll use life

02:16:38.720 | insurance as an example. At the moment, as you have cash values that grow and accumulate inside

02:16:43.600 | of a life, inside of a cash value life insurance policy, so this would be a whole life policy,

02:16:48.480 | a universal life insurance policy, or variations thereof, that growth of those cash values is not

02:16:55.920 | currently subject to income tax as long as it stays inside of the life insurance policy.

02:17:01.920 | When you take it out, if you don't take it out in the form of a loan, once you take out more than

02:17:07.920 | your basis, more than the money you've put into it, it will be taxed. If you take it out in the

02:17:11.360 | form of a loan, it's not taxed currently. The problem is this is a tax expenditure,

02:17:16.800 | what the government calls a tax expenditure, and there are lists of these things.

02:17:19.680 | When I was in the life insurance business, every year, I would go to a company conference and

02:17:25.200 | hear what the lobbyists are doing. You go to the industry conferences, and there's a whole team of

02:17:29.280 | lobbyists. Their job is to make sure that the expenditures, the so-called tax expenditure,

02:17:36.080 | for the buildup of cash value for life insurance policies stays exempt from the law. This is a big

02:17:42.640 | deal to insurance companies because it's a major advantage that they have. But it's not just that.

02:17:47.840 | There are many so-called tax expenditures. Quick political rant. Does it drive you a little nuts

02:17:53.760 | when they say, "Okay, we're going to give you a so-called tax break, so we're going to call that

02:17:57.680 | a tax expenditure, that we're spending the tax money"? The language is all twisted. Anyway.

02:18:01.840 | What's the biggest one? Exclusion of employer contributions for medical insurance, premiums,

02:18:06.400 | and medical care. Net exclusion of pension contributions and earnings. The deductibility

02:18:11.520 | of mortgage interest on owner-occupied homes is a tax exclusion. Accelerated depreciation of

02:18:16.320 | machinery and equipment is a tax expenditure. There are others as well. Deductibility of

02:18:22.160 | charitable contributions. Capital gains exclusions on home sales. All of these things are tax

02:18:27.280 | expenditures and all of them can change. I might be making a bit of a mountain out of a molehill

02:18:32.720 | here, but my point is that if you're concerned about tax risk, I'm not sure that moving the

02:18:37.200 | money from a traditional 401(k) to a Roth 401(k) fixes that. It still doesn't solve the tax risk.

02:18:44.080 | The logic here is that you're trying to say, "How do we protect from tax risk?" I'm saying

02:18:49.200 | it doesn't really protect all that much. Maybe a little bit, but not all that much.

02:18:55.200 | I was encouraged that Robbins would think outside the box. In Myth 7, he talks about annuities.

02:19:00.800 | I always thought annuities just were terrible, but now I understand that they're not.

02:19:06.800 | The problem is that he quickly draws polarizing benefits and he goes and he lambasts variable

02:19:12.480 | annuities. Now, I would help him with the vast majority of variable annuity products that I've

02:19:17.840 | reviewed as far as their internal fees, but I wouldn't help him on this comprehensive statement.

02:19:24.640 | That's an issue for me. There's a lot of internal conflict in the book between these scenarios,

02:19:31.440 | depending on where he talks about expenses and says, "We've got to tear these apart," and where

02:19:36.080 | he says, "These are just some expenses and they're not that big a deal." I'm going to boogie past,

02:19:39.920 | actually. I feel like this is dragging with my minor flaws. Let me get to the major flaws.

02:19:45.280 | One of my major concerns is that there is some financial

02:19:48.560 | sleight of hand that I don't think you'd see if you weren't paying attention.

02:19:54.560 | I don't like how—I am guilty of this. I have done this. It's all a matter of framing,

02:20:00.320 | where you're trying to frame certain things and try to make comparisons. When you make

02:20:04.880 | an invalid comparison, I think it destroys your argument. Let me give you one of the ones that I

02:20:12.160 | think is completely egregious. Page 421, he is talking about how to create a certain amount of

02:20:18.720 | income. This section is entitled, and he's comparing using an annuity strategy versus

02:20:24.000 | other investment options. The title of this section is called 2,750% More Income. He gives

02:20:30.480 | three bullet points. He's talking about a client who has a certain amount of money, has $500,000.

02:20:36.240 | He has three options to create income. Number one, he could go to a bank and a CD would pay him

02:20:42.160 | 0.23%, or 23 basis points per year. This arrangement would give him $95.80 per month

02:20:49.120 | and a fully taxable income for a $500,000 deposit. That's a whopping $1,149 a year before taxes.

02:20:57.120 | Don't spend it all in one place. Number two, bonds would pay him closer to 3% a year,

02:21:02.160 | or about $15,000 a year before taxes. But the risk that option would entail would be if interest

02:21:07.840 | rates rise. This would cause the value of his bonds, his principal, to shrink. Number three,

02:21:13.120 | Josh, which is Tony Robbins' son, showed him that a $500,000 deposit into an immediate lifetime

02:21:18.560 | income annuity as of today would pay him $2,725 per month, or $32,700 per year, guaranteed for life.

02:21:29.680 | That's a 2,750% increase over CDs and a 118% increase over bonds without their risk.

02:21:38.480 | Now, do you see the flaws in this comparison? The biggest one is that you have a complete

02:21:44.640 | apples and oranges comparison. The annuity gets rid of the $500,000 of principal,

02:21:49.440 | and the CD and the bonds do not. For examples one and two, he's living off of the income

02:21:56.320 | without invading principal. And with option three, the reason why the difference is there

02:22:02.160 | is because he's spending the $500,000 principal. That's it. Now, should he spend the principal?

02:22:11.360 | He may or he may not, but you cannot use those things. That's utterly dishonest. It's either

02:22:17.200 | dishonest or a total mistake. But that's a completely invalid comparison. What I would

02:22:24.000 | say is, well, he could do nothing. He could take the $500,000, he could decide he's going to spend

02:22:28.800 | it over 20 years, and he could take $25,000 off every single year. That's what he's done

02:22:34.960 | with the annuity. To me, that's unconscionable. That should not exist. That is not a valid

02:22:43.440 | comparison, especially when being used to sell an annuity. I think annuities can be really useful,

02:22:50.560 | but that is not a valid comparison. So that one probably bothered me more than most of the other

02:22:56.880 | ones. The other things about that that bothers me, check out these little things. Number one,

02:23:00.400 | those aren't his only options. He could buy an index fund from Jack Bogle. He could put together

02:23:07.280 | a portfolio based upon Dalio's all-seasons portfolio that Robbins goes through. Now, I get

02:23:13.120 | that he spent a whole book. He can't list all of these examples, but that is not a valid comparison

02:23:18.320 | whatsoever to compare only getting 23 basis points of interest on a CD versus buying an immediate

02:23:26.240 | income annuity. He may only be getting, I don't know, 300 basis points on the annuity. Who knows?

02:23:32.480 | We can't know without knowing his age. Okay, 65. So I could figure that out, but I didn't do it in

02:23:38.800 | preparation for the show. So point being, not a valid comparison. The other issue is as far as

02:23:45.120 | taxes. So Robbins makes some serious mistakes in here in taxes. So in that first part, this

02:23:50.640 | arrangement would give him $95.80 per month in fully taxable income for a $500,000 deposit.

02:23:58.320 | Then in the next part about the annuity, there's a footnote that says about the taxable amount of

02:24:04.960 | the annuity. "The effective tax on income from immediate annuities is dependent on what the IRS

02:24:09.920 | calls the exclusion ratio. A portion of your income payments are deemed a return of your

02:24:14.480 | principal and thus excluded from tax. The taxation from an annuity and a CD are identical. All of the

02:24:21.120 | income from the annuity is taxable income to him, and all of the basis is not taxable income." And

02:24:26.800 | it's the same thing with the CD. It's just that with the CD, the only thing that he's being

02:24:31.920 | reported because he's not invading principal with the CD is the interest income. So by talking about

02:24:37.680 | the fully taxable income, it's talking as though there's some difference. There is no difference.

02:24:42.640 | They're taxed exactly the same just with annuities we call them exclusion ratios.

02:24:46.320 | This taxation issue is throughout the whole... it's everywhere. Page 427, one more very cool

02:24:55.120 | thing. "The IRS looks very favorably on these deferred income annuities, so you don't have to

02:25:00.400 | pay tax on the entire income payment because a good chunk of the payment is considered a return

02:25:04.880 | of your original deposit." So A, it's nothing special about these deferred income annuities.

02:25:11.040 | That's all annuities. They're all taxed identically. You have what's called an exclusion ratio,

02:25:16.240 | which is the basis that you have in the contract, the amount that you put in,

02:25:20.560 | is returned to you with no tax. And then the growth on it is returned to you as tax.

02:25:25.760 | It's the same. And the thing is, the tax principle is the same as every investment.

02:25:31.600 | If you buy an investment house for $200,000 and you sell it for $225,000, guess what? A portion

02:25:39.520 | of that is returned to you without tax because it's deemed to be a return of your original deposit.

02:25:45.760 | That's the tax principle. So there's tax issues all throughout it. I also don't like how Robbins

02:25:51.840 | frames fees and things differently depending on the context. On page 439, when answering some

02:25:59.040 | frequently asked questions on annuity fees, after an entire chapter up front tearing apart actively

02:26:05.120 | managed mutual funds for their "egregious" fees, quote-unquote, he didn't use the word "egregious."

02:26:10.960 | It was characterized as being egregious. He says, "However, if you select the guaranteed

02:26:15.920 | lifetime income, the annual fee for this ranges between 0.75% and 1.25% annually,

02:26:21.920 | depending on each company's individual offerings." Now, I recognize this is at the end of an FAQ

02:26:27.520 | section, but this is the whole issue that many of us have with fixed index annuities is the fees.

02:26:33.760 | And so he spends the whole first part of the book tearing apart fees and then just tax it in,

02:26:38.400 | "Oh, it's no big deal, just 0.75% to 1.25%. That one really bugs me. But I could forgive that if

02:26:47.520 | it weren't other ones. Here's the big one that in my mind I think is really, really bad. Page 445

02:26:55.360 | is talking about tax-free compounding. And this one is coming in the context not of an annuity

02:27:01.360 | discussion, but actually in the context of life insurance. And I was glad to see this in here

02:27:05.520 | because life insurance often gets short shrift in financial planning discussions because people

02:27:09.920 | don't understand it, they don't get it, it just gets, it's not often accurately presented. But

02:27:16.160 | here's the section here, and let me read this to you. "Tax-free compounding, illustrating the

02:27:20.640 | benefits of life insurance. Compounded over time, the advantage of private placement life insurance

02:27:26.320 | is astounding. Let's look at an example of how the identical investment compares when wrapped

02:27:31.040 | inside of private placement life insurance versus taking the standard approach of paying tax each

02:27:36.000 | year. Let's take a healthy male, age 45, and assume he makes four annual deposits of $250,000

02:27:42.720 | for a total contribution of $1 million over four years. If he makes a 10% return and has to pay

02:27:50.480 | tax each and every year, after 40 years his total account balance will be $7 million." Not bad,

02:27:57.040 | right? "But if he wraps the investment within private placement life insurance and pays a

02:28:02.400 | relatively small amount for the cost of insurance, his ending balance or cash value is just over

02:28:08.960 | $30 million. Same investment strategy, but he is left with more than four times or 400% as much

02:28:16.400 | money for him and his family simply by using the tax code to his advantage." Please note that there

02:28:23.920 | are very strict rules around the investment management, it's supposed to be done by a third

02:28:26.560 | party investment professional, not the policy owner. By the way, this same powerful advantage

02:28:31.280 | applies even to smaller investment amounts. This is compounding without taxes. But then I wanted

02:28:37.760 | to know, what about when I want to access my money? So it goes into how to take money out of

02:28:40.880 | a life insurance policy. So I don't know about you, but that math just strikes me as a little

02:28:45.840 | bit strange. So we're going to deal with a 10% return and we're going to talk about the difference

02:28:50.320 | between $7 million and $30 million. So I went and calculated the returns. And let me first,

02:28:57.120 | I want to teach you how to do this, because this is important. Don't let people throw numbers at

02:29:02.320 | you without the ability to sit down and run your calculator and figure this out. So what I wanted

02:29:06.240 | to do is figure out the rate of return. This is a more complicated rate of return to figure out

02:29:11.040 | because of the little twist that the healthy male age 45, assuming he makes four annual deposits

02:29:16.800 | of $250,000 for a total contribution of $1 million over four years. By the way, the reason there has

02:29:22.960 | to be four instead of he can just simply say he invests a million dollars is because you need to

02:29:27.840 | get the life insurance policy to not be a modified endowment contract, which is its own complicated

02:29:35.120 | set of rules. But that's why this is written that way and why he didn't just say we need to put in

02:29:39.440 | a million dollars and run the math on that. But if he had said put in a million dollars,

02:29:43.440 | that would be simple. So the first thing you can do is run the numbers on this to say, okay,

02:29:48.320 | I've got a million dollars and I make a 10% return for 40 years and figure out how we get to the $7

02:29:54.800 | million number. So keep this very simple and don't do it technically correct. Do it the simple way

02:30:00.000 | that you should be able to do. If you've listened to any, if you know how to run it, this is the

02:30:04.160 | basics of a time value calculation of money. Very simple. So clear your calculator, put in 40 as the

02:30:12.400 | end, put in $1 million, change the sign to a negative. So you're going to put a negative $1

02:30:17.280 | million for your present value, put in zero for your payments, and then put in $7 million, keep

02:30:24.480 | it as positive now as future value and solve for the interest. So if you solve for the interest

02:30:30.720 | and you do that simple calculation, you will get 4.98% interest. So that gives you, now this isn't

02:30:38.000 | exactly what the calculation said, but it'll give you 4.98%. Then if you want to compare that to the

02:30:44.800 | $30 million, put in the $30 million number and put that in as your future value and then solve again

02:30:51.360 | for the interest. So now with your ending value being $30 million, the same time period, what is

02:30:57.040 | your investment rate of return? And the answer is 8.875%. So that should make your eyebrows raise.

02:31:04.640 | The difference between 4.95% and 8.875%, that's a big deal. That's all you need to know to know

02:31:10.960 | you've got a major problem with this math. And I'll explain the problem in just a second.

02:31:14.560 | But what you can actually do is, let me teach you how to do this accurately. Instead of using the

02:31:19.840 | NIPV payment and future value function, you're going to use the cash flow function. And so I use

02:31:28.880 | an HP 12C. What you're going to punch in with the cash flow function is you're going to punch in

02:31:35.520 | this four-year scenario. This is too complicated for me to teach it this way. I'll skip the

02:31:46.320 | keystrokes except to say you're going to use the little CFO and the little CFJ function.

02:31:52.000 | And then you're going to use the internal rate of return calculation function. So what you do is

02:31:57.280 | you put in zero for your starting cash flow of zero. Then you put in the four years of payments

02:32:03.120 | of $250,000 as a cash flow into the portfolio. Then put in 40 years of no cash flows into the

02:32:10.960 | portfolio. And then put in the ending cash flow out of the portfolio. And then solve for your

02:32:17.600 | internal rate of return. If you'll do that, what you find is that the internal rate of return on

02:32:22.160 | the $7 million number is 4.68%. And the internal rate of return on the $30 million number is 8.32%.

02:32:28.960 | That's a big difference. Who in their right mind pays that amount in tax on an investment

02:32:36.640 | portfolio? And so my issue with this is having sold life insurance and understanding life

02:32:42.560 | insurance and seeing the value of life insurance, the thing that drives me nuts is when people

02:32:46.960 | oversell life insurance. That is not the scenario that you can face. Man, if you're paying that kind

02:32:52.480 | of tax, especially after three whole chapters on the tax efficiency of index funds and the tax

02:32:58.800 | efficiency of long-term capital gains taxes, for crying out loud, go find a new financial planner.

02:33:04.720 | No one is paying that much tax on investments. Maybe they're paying that much tax on income,

02:33:09.760 | but not on investments. So that kind of basically almost a doubling from 4.68% to 8.32%,

02:33:16.640 | almost double. You're saying you're paying a 50% tax rate on investments when your dividends and

02:33:22.880 | capital gains rate taxes are 15% and 20%. It's just not a valid comparison in any way. But that's

02:33:28.960 | being used to make the point to say you should be doing everything within the context of life

02:33:32.640 | insurance. Life insurance has its place. That's not an accurate assessment. Had a managing director

02:33:38.880 | that used to say to me, "It's good enough without overselling it. Don't oversell it." So that's a

02:33:44.880 | problem. That's a real problem for me. And the average person is not going to see that. And so

02:33:52.560 | you're misinforming people. And I think we've got to be careful with that. And especially it's up to

02:33:58.640 | us in the financial planning community to do... It's up to us to accurately discuss this stuff.

02:34:06.480 | It really is. The tax treatment in this book was really a weak point. Page 244, last example here,

02:34:14.160 | is talking about a lady he knows named Angela who is having income and is saying

02:34:20.000 | she has an income amount. The amount she accumulates because she's going to use

02:34:25.520 | an investment account that using real estate and investing in senior housing that's paying a 7%

02:34:32.800 | income and dividend payment. The amount she accumulates will generate $16,000 of income,

02:34:37.040 | assuming a 7% income payment. And she won't have to tap into her principal unless she wants to.

02:34:42.560 | One last huge benefit, Angela doesn't have to pay income tax on the entire income payment due

02:34:46.800 | to the tax deductions for depreciation. So this is just an example. And this one, again, if it

02:34:52.800 | weren't for that one that I just went over, I would probably skip criticizing the tax stuff.

02:34:57.440 | But this is a big deal on real estate. When you depreciate the property, you will pay the tax

02:35:05.280 | when you sell, unless you roll the property over into another property using a like-kind exchange

02:35:16.000 | and avoid it through another mechanism such as a step-up and basis of death. And that's a deal for

02:35:22.880 | another show. But the point is, real estate doesn't magically give you tax-free money.

02:35:28.640 | You have a loss called depreciation on the value of your property that you do. Now,

02:35:33.200 | real estate does, is beneficial. Again, I would skip that one if it weren't for the other stuff.

02:35:37.440 | So that's a major issue I have. My bet is that Robinson is using examples. But he's a smart guy.

02:35:47.680 | Is that sleight of hand or is that, I don't know. I wrote several times in the margin,

02:35:52.960 | that's a little bit loose with the numbers. Another concern I have is that in the language

02:35:58.400 | that he says in the book, and you'll often see this, and this is what we do in the investment

02:36:02.000 | business, is you talk about, we change language when it's convenient for the point that we're

02:36:09.520 | making. I'm guilty of this. I do this myself. But the problem is in a book, we shouldn't be

02:36:13.840 | doing this when we're teaching people about this. Example here, page 435 in the context of annuities.

02:36:21.200 | Listen to this language. We're getting the upside without the downside because it's all about fixed

02:36:26.080 | index annuities. Well, the insurance, how do we, so the upside without the downside. You participate

02:36:31.120 | in 100% of the stock market index growth. That's right. 100% of the upside with no downside,

02:36:36.960 | no chance of loss, and no cap on your winnings. The insurance company simply shares in your

02:36:41.600 | profits by taking a small spread ranging between 1.25% to 1.75%. If the market is up 10% and it

02:36:50.560 | keeps 1.5%, you get 8.5% credited to your account value. Now, in fairness, I'm going to read the

02:36:57.040 | next sentence. Conversely, if the market is down on a given year, the insurance company does not

02:37:01.680 | keep anything and you don't lose a dime or pay any fees. You pay the spread only if you make money.

02:37:07.520 | That second part I read is important because that would be the point Robbins would make probably if

02:37:10.960 | I were questioning him directly. But here's the issue. If he hadn't started with a whole bunch of

02:37:15.840 | chapters on how active mutual fund management is a scourge of the earth, I would probably be more

02:37:21.440 | receptive. But when you just start with that and try to rip apart the investment industry,

02:37:26.640 | and then suss in, "Well, the company keeps a small spread on your money ranging between 1.25% to 1.75%,

02:37:32.240 | he devoted entire chapters to telling me how that was a massive spread, and it is. He's right,

02:37:39.120 | which is why I don't at the moment like this annuity product at all because of that small

02:37:45.680 | spread. I would rather put that small spread back in your pocket." Now, if the market is down,

02:37:50.800 | the rebuttal to that argument would be, "If the market is down on a given year,

02:37:55.200 | the insurance company doesn't keep anything, and you don't lose a dime or pay any fees,

02:37:59.040 | you pay the spread only if you make money." So the argument is that, well, you're actually getting a

02:38:03.040 | service. I think it's a bogus argument, but it does have its place in some scenarios.

02:38:08.320 | So I don't like how the language is changed to prove a point. Another example here, page 447,

02:38:15.600 | in the context of talking about life insurance, he starts by talking about private placement life

02:38:21.520 | insurance, which are policies that are sold to qualified investors who basically have some unique

02:38:28.480 | investment opportunities wrapped up in a life insurance wrapper. So on page 447,

02:38:33.680 | in order to access PPLI, you must be what's called an accredited investor, and the typical minimum

02:38:41.280 | annual deposits are $250,000 for a minimum of four years. True. However, there is a version

02:38:49.040 | of PPLI that is now available to non-accredited investors with as little as a few thousand to

02:38:53.920 | invest. Unless I don't have a clue what I'm talking about, there's no version of PPLI.

02:39:00.560 | It's just called life insurance. Private placement life insurance is a version of life insurance.

02:39:07.600 | There's no subversion of private placement life insurance that has now been magically

02:39:12.240 | made available to non-accredited investors. It's just life insurance. Call it what it is. Don't

02:39:17.120 | dance around it. It's a life insurance policy. It's a whole life insurance policy, but it's well

02:39:21.840 | designed. It has good fees. That's what makes it great and what makes it different. So to me,

02:39:30.000 | that's a big deal. And then other places in here, there's logical fallacies such as the argument

02:39:34.880 | from the extreme. On page 297, he's talking about diversification. And the two best examples of

02:39:43.280 | reasons to diversify, I'm going to skip that one. We're already two and a half hours and I have one

02:39:53.360 | I know is going to be long because I'm going to explain to you a lot of context on it. I wish also

02:39:59.120 | that authors when they're writing books would explain some of the history and evolution of the

02:40:04.160 | investment business. It's really a problem when people don't accurately explain the evolution

02:40:12.800 | and the growth of the investment business. In the beginning, he spends quite a few pages talking

02:40:17.760 | about investing and talking about active management and passive management and the growth of it over

02:40:24.160 | time. And the issue is that there's no even nod given to the historical context of how index funds

02:40:33.840 | and index fund strategies came around. Active funds make index funds possible. The fact that

02:40:42.080 | we have a generally efficient market and we have lots of investors chasing returns, that's what

02:40:47.520 | makes index funds possible. Now, I love index funds. I think they're an awesome investment.

02:40:51.280 | But at the time, mutual funds were an amazing innovation. And a lot of people, a lot of

02:41:00.160 | investors through mutual funds have become very wealthy by investing through mutual funds. And

02:41:06.640 | they serve, in my opinion, they serve the public incredibly well because they allow the public to

02:41:12.080 | get access to a low cost, fully diversified portfolio with a professional investment manager.

02:41:18.240 | That's the historical context. Now, in that historical context, out of that came the growth

02:41:25.760 | of the passive index fund idea. I mean, index funds didn't exist until Jack Bogle launched

02:41:35.520 | Vanguard in 1974. Mutual funds are governed and they existed before this, but they're governed

02:41:42.240 | by the Investment Company Act of 1934. So there's a major growth that happened over time of that

02:41:49.040 | history. And there's an ongoing struggle in the book is this struggle between active and passive

02:41:54.720 | investing. And it's a struggle in the book because it's a struggle in real life. But I'm not sure

02:42:00.320 | that it's dealt with very well in the book. I haven't found a book that I felt was dealt with

02:42:05.120 | it effectively. Usually it's very, the books are very polarized instead of including the advantages

02:42:11.600 | of both of them. So that's just one of the things I wish authors like him would do, would be to talk

02:42:19.600 | a little bit about the history and evolution of the investment business. Now, we live in a very

02:42:23.600 | different world in 2014 than we did in, you know, than existed in 1984. And the market has responded

02:42:31.760 | to that. Vanguard is doing amazingly well, has more market share than, I mean, it's just, it's

02:42:36.880 | incredible. So the market has responded to that. But I just wish some focus, some attention were

02:42:42.720 | given to the history a little bit. There's a lot of little statements tossed in through the book

02:42:48.800 | that have a lot of emotional appeal, but they don't have any grounding in fact, or if they do,

02:42:54.400 | they're not cited. And that bothers me because they're strong statements. And if they're not

02:43:02.320 | proven, then I need to know. Example from page 85, "Money Power Principle One, Don't get in the

02:43:08.960 | game unless you know the rules. Millions of investors worldwide are systematically marketed

02:43:14.800 | a set of myths, investment lies that guide their decision-making. This quote, conventional wisdom

02:43:22.560 | is often designed to keep you in the dark. When it comes to your money, what you don't know can

02:43:29.360 | and likely will hurt you. Ignorance is not bliss. Ignorance is pain. Ignorance is struggle.

02:43:36.000 | Ignorance is giving your fortune away to someone who hasn't earned it.

02:43:39.360 | If conventional wisdom is designed to keep me in the dark, I need to know about that."

02:43:44.480 | So, I assume what he's referring to here is to the nine myths, but I don't see any design in that,

02:43:52.160 | and that's just, that's troublesome to me because if that's the case, I want some, I need to know

02:43:57.200 | that because I'm talking to a lot of people on the show, so I need to be able to know that so I can

02:44:02.400 | warn you. There are others as well, but that's enough for now. One of the issues also that I

02:44:09.920 | have is oftentimes there are numbers in here that are misused or miscited, and the context of

02:44:17.760 | different numbers is, it bothers me. Page 94, he quotes, he says, "There are 7,707 different mutual

02:44:26.960 | funds in the United States, but only 4,900 individual stocks, all vying for a chance to

02:44:32.640 | help you beat the market." This is in the context of basically trying to say that 96% of active

02:44:38.640 | managers fail to beat the market, which I think is true. But the problem is that that's a little

02:44:44.560 | bit misleading. So I went to check those numbers, and I said, "Okay, there's 7,707 different mutual

02:44:50.000 | funds." So I went and looked up and tried to figure out, well, let's fact check this and see

02:44:54.160 | how many mutual funds there are. I had actually recently fact-checked this for another project,

02:44:58.800 | so I knew right where to go. And you can pull open, and I'll link to it in the show notes,

02:45:04.160 | the Investment Company Institute, which is one of the industry organizations for the investment

02:45:09.120 | world. So go to the Investment Company Institute fact book, and you can find the most recent one.

02:45:14.640 | The 2014 Investment Company Fact Book lists the number of investment companies by type.

02:45:22.160 | And so here in 2013, you can read that there were 8,000, so this is entitled, the chart is

02:45:30.880 | entitled, "Number of Investment Companies by Type." And this is actually an important distinction,

02:45:35.120 | which I'll get to in a minute. So first, Robin's statement is there are 7,707 different mutual

02:45:40.240 | funds in the United States, but only 4,900 individual stocks, all vying for a chance to

02:45:45.360 | help you beat the market. In 2013, there were 8,974 total open-end mutual funds. Open-end

02:45:53.920 | investment companies is technically what they would be called. We commonly refer to them as

02:45:57.520 | mutual funds, but they're open-ended investment companies. So I don't know where he got his 7,707

02:46:03.600 | number, because it doesn't line up with what I was able to find, and there's no bibliography,

02:46:07.520 | so I couldn't find that. But more importantly, there are more investment companies than that.

02:46:12.640 | There are 599 closed-end funds. There are 1,332 exchange-traded funds, and there were 5,552

02:46:21.360 | unit investment trusts for a total of 16,457 different investment companies. So that's one

02:46:30.000 | thing. But the other thing is the comparison to 4,900 individual stocks. Now, it is true,

02:46:35.360 | there are only about 5,000 individual stocks that are listed on the U.S. stock market. But what we

02:46:41.440 | don't know is how many of these funds are stock funds and how many are bond funds. And when you

02:46:47.840 | compare the size of the bond market to the size of the stock market, there is a massive, massive

02:46:54.640 | difference. Massive difference. There are 20 times more... Just stick with municipal bonds.

02:47:02.560 | There are 20 times as many municipal bond issuers as there are companies, stocks. There are about

02:47:11.040 | 100,000 municipal bond issuers in the United States of America, and there are over 2 million

02:47:16.080 | different municipal bond securities. So you can see... Sorry about that, my dog again. You can

02:47:22.880 | see that in the context, when you actually compare it to $2 million, there's a big difference here.

02:47:27.600 | Excuse me, not $2 million. Two million bond individual municipal securities, that makes a

02:47:34.560 | big difference. Now, what's the actual number? I don't know. But I do know that I don't trust that

02:47:39.440 | comparison to try to set the idea that I don't trust that comparison. Is it wrong? It's not

02:47:47.760 | necessarily wrong. I don't like it. One of the ones that I also had an issue with that...

02:47:52.880 | And I just wish people would tighten up their books when they write about stuff like this. I

02:47:57.920 | know that they're writing for a lay audience, but anyway, this is my review of it. One of the

02:48:02.800 | things that I have an issue with is also some statements. So Robbins repeats this study

02:48:09.120 | throughout the book. He says, and I'll cite it from page 127, this paragraph here. The paragraph

02:48:14.880 | is entitled, "Not all advice is good advice." And we're about to go into this fiduciary versus

02:48:20.720 | suitability thing in a minute. "Aligning yourself with a fiduciary is, by all accounts, a great

02:48:25.200 | place to start. But this does not necessarily mean that the professional you select is going to

02:48:29.680 | provide good or even fairly priced advice. And like any industry, not all professionals have

02:48:35.040 | equal skill or experience. In fact, 46% of financial planners have no retirement plan."

02:48:41.200 | That's right. The cobbler's kid has no shoes. "Over 2,400 financial planners were surveyed

02:48:47.200 | anonymously in a 2013 study by the Financial Planning Association, and close to half don't

02:48:53.440 | practice what they preach." Heck, I can't believe they admitted it. "Truth is, we're living in

02:48:58.160 | uncharted territory with endless complexity, central banks printing money like crazy,

02:49:02.640 | and even some governments defaulting on their own debt. Only the elite advisors of the planning

02:49:07.520 | industry know how to navigate these waters." I don't disagree with them on the elite advisors

02:49:12.480 | part. But that's kind of a shocking statistic that 46% of financial planners have no retirement plan.

02:49:19.360 | Now, this one was actually fairly easy to find. Again, no bibliography, but this one was fairly

02:49:25.760 | easy to find. So I went and found it, and it was the Financial Planning Association. I will link

02:49:29.600 | it in the show notes. So I went and read the study on page seven. The question that was asked,

02:49:36.880 | "Question. Do you have a clear plan in place for your own retirement?" 54% of respondents said yes,

02:49:45.600 | and 46% of respondents said no. It goes on and says, "When do you plan to retire?"

02:49:52.640 | Now, here's the key distinction. This is being done in a practice study for financial planners

02:50:00.720 | and their businesses. This study is not, "Do you have a financial plan with savings

02:50:08.320 | and retirement accounts?" This study is not, "Do you have an IRA?" This study is a practice

02:50:16.960 | management study, and it is talking and trying to dig into what is the question of how are you going

02:50:23.120 | to retire out of your financial planning practice, which is a very difficult challenge for many

02:50:27.680 | financial planners. You've built this practice. Do you sell it? Do you find a successor? How do

02:50:32.720 | you value it? It's a big issue in our industry. So this statistic that he's citing, he's making

02:50:38.960 | it sound like the cobbler's kid has no shoes. The 46% of financial planners have no retirement plan.

02:50:44.640 | Guess what? I have a retirement plan, but if I were answering this survey, I would say,

02:50:49.920 | "No, I don't have a clear plan in place for my own retirement if I'm running a financial planning

02:50:55.440 | practice," because there are many things that can change. Those who are answering yes on this topic,

02:51:03.520 | it's talking about their business plan. So if I asked Tony Robbins and I said, "Do you have a

02:51:11.680 | clear plan in place for your retirement from the Tony Robbins companies?" That's a very different

02:51:18.480 | question if I ask him, "Do you have assets set aside and earmarked towards your retirement?" or

02:51:22.640 | "Do you know the retirement number?" Again, did he read the study? I don't know, but to me,

02:51:28.800 | it's fairly clear. This is in the context of the entire survey. You can read the whole thing for

02:51:33.840 | yourself. The entire thing is about business models. If I were answering that question,

02:51:38.240 | in my former practice, I would have answered no for various reasons. Again, this says 56%, 54%

02:51:49.120 | have a clear plan in place for their own retirement. That's a business transition plan.

02:51:54.640 | I think the fact that 54% of financial planners have a clear plan in place for their own retirement

02:52:00.320 | and their business transition, in my mind, that is an amazing number, knowing the complexities

02:52:04.960 | of the financial planning business and how to do it. It's a big example.

02:52:15.360 | Let's dig into myth number four. One of the things that concerns me is it doesn't seem in this book,

02:52:21.280 | it's a little bit sloppy. I was surprised by this because I don't think Tony Robbins is not a sloppy

02:52:27.680 | guy. It's just his fact checkers or whatever didn't... I would assume he would have the best

02:52:31.440 | people in the business fact checking this thing. I don't know, it surprises me. Myth number four

02:52:36.960 | here, it just illustrates that he doesn't really understand some of these issues or terms. Myth

02:52:42.080 | four is called, "I'm your broker and I'm here to help." He's talking about the difference between

02:52:47.520 | the fiduciary standard and the suitability standard. This is an interesting discussion

02:52:52.400 | and it's fairly complicated. I can't go into details. The show is already ridiculously long

02:53:00.080 | and I could do an hour show on the fiduciary standard versus the suitability standard.

02:53:03.520 | It is complicated. Robbins presents the simplified version. My issue with it is how he presents it,

02:53:11.200 | because he presents it without any logical arguments and his entire presentation

02:53:15.200 | is based upon lampooning the suitability standard as ridiculous. Now, for clarity,

02:53:24.160 | I am in favor of a fiduciary standard, pretty much. I've always conducted everything under

02:53:32.800 | a fiduciary standard and I think that anybody who's managing investments should be managing

02:53:39.040 | them under a fiduciary standard. Now, that's different than—that's why I said in the business,

02:53:46.000 | it's a bigger issue than that because sometimes you're managing investments and sometimes you're

02:53:49.600 | selling products and that's the problem. The issue is fairly complicated, but I am in favor

02:53:55.760 | of the fiduciary standard. I've taken fiduciary oaths at least three different versions, I think,

02:54:00.640 | that I can think of. Consider how he lampoons and this is where he argues from the perspective of

02:54:07.680 | the suitability standard. Page 125. Here's the truth. The financial services industry has many

02:54:13.360 | caring people of the highest integrity who truly want to do what's in the best interest of their

02:54:17.600 | clients. Unfortunately, many are operating in a closed circuit environment in which the tools

02:54:22.480 | at their disposal are pre-engineered to be in the best interest of the house. True. The system is

02:54:28.480 | designed to reward them for selling, not for providing conflict-free advice. Also true.

02:54:33.680 | And the product or fund they sell you doesn't necessarily have to be the best available

02:54:37.680 | or even in your best interest. True. By legal definition, all they have to do is provide you

02:54:43.440 | with a product that is suitable. True. What kind of standard is suitable? Do you want a suitable

02:54:49.520 | partner for life? "Honey, how was it for you tonight?" "Eh, the sex was suitable." Are you

02:54:54.240 | going to be promoted for doing suitable work? Do you fly the airline with a suitable safety record?

02:54:59.200 | Or better yet, let's go to lunch here. I hear the food is suitable. Yet according to David Karp,

02:55:04.400 | a registered investment advisor, the suitability standard essentially says,

02:55:07.840 | "It doesn't matter who benefits more, the client or advisor. As long as an investment is suitable,

02:55:13.040 | meets the general direction of your goals and objectives, at the time it was placed for the

02:55:16.800 | client, the advisor is held free of liability." The gold standard. To receive conflict-free advice,

02:55:22.960 | we must align ourselves with a fiduciary. A fiduciary is a legal standard adopted by a

02:55:27.840 | relatively small but growing segment of independent financial professionals who have abandoned their

02:55:32.720 | big-box firms, relinquished their broker status, and made the decision to become a registered

02:55:37.360 | investment advisor. These professionals get paid for financial advice and, by law,

02:55:42.560 | must remove any potential conflicts of interest or, at a minimum, disclose them,

02:55:46.960 | and put the client's needs above their own. Imagine having investment advice where you knew

02:55:53.360 | that the law protected you from your advisor steering you in a specific direction or to a

02:55:57.840 | specific fund to make more money off of you. And he goes on as to how to find one. If there's a

02:56:02.240 | single step you could take to solidify your position as an insider, it's to align yourself

02:56:06.960 | with a fiduciary, an independent registered investment advisor, RIA for short. Now,

02:56:11.840 | is that all true? Mostly. Most of the stuff is true. And I understand why he might not get these

02:56:19.840 | terms. It took me years to figure out the terms myself. But if you're writing a book on it,

02:56:24.080 | make sure you understand the terms. First of all, the independent registered investment advisor is

02:56:30.640 | the firm. And then there's going to be an investment advisor representative, IAR, for that

02:56:37.200 | registered investment advisor, RIA, the firm. As I have an RIA firm, it's in process. I haven't

02:56:45.040 | finalized the paperwork. I've filed it and then it got... Anyway. So been through this process,

02:56:50.080 | and I'm familiar with it. I've just got the whole thing on hold while I start this show.

02:56:52.880 | But I have an RIA firm and I'm a representative of that firm. I would hire then an independent

02:56:58.960 | advisor representative, IAR, to work for the firm. At Northwestern Mutual, before I left, I was

02:57:04.560 | an independent advisor representative of Northwestern Mutual Investment Services,

02:57:11.200 | which was a registered investment advisor. Excuse me. What was the name of the company

02:57:15.920 | that was the registered investment advisor firm? Anyway, we had a registered investment advisory

02:57:19.200 | firm. I lived and worked under a legal fiduciary standard for the clients for whom I was working

02:57:24.640 | in that capacity. That was not all clients. And the key is that it's very difficult to apply a

02:57:30.160 | fiduciary standard to life insurance and products that are affected with commissions. Now, the other

02:57:39.120 | challenge is that I always lived under a fiduciary standard, not because necessarily of the internal

02:57:44.000 | firm requirements, although that did exist, but it was more specific, but as a certified financial

02:57:49.200 | planner. A fiduciary standard is not only applied to registered investment advisors.

02:57:53.600 | All CFP certificates have taken a fiduciary oath to act in a fiduciary manner when they're involved

02:58:00.240 | in providing financial planning services. So as a CFP certificate, regardless of my capacity,

02:58:06.560 | I was always held to a fiduciary standard. And then if you're a member of other organizations,

02:58:10.960 | so if you're a member of NAPFA, National Association of Personal Financial Advisors,

02:58:14.800 | or the XY Planning Network guys I work with, all of the people involved there have taken a fiduciary

02:58:21.120 | oath. And worse, he mixes up the definitions of a fiduciary stand of duty and a suitability

02:58:33.120 | standard when using industry terms of fee-based, fee-only, and commission-based. And what's not sad,

02:58:43.840 | I mean, I don't want to be too strong with this, but what his fact checker should have gotten on

02:58:47.200 | page 132, he talks about how to find a fiduciary, and he says, you know, find a link to the National

02:58:52.800 | Association of Personal Financial Advisors, NAPFA. And then it says, directory of fee-based advisors.

02:58:58.800 | Every NAPFA member that reads this book will be cringing. NAPFA members are not fee-based.

02:59:04.640 | Fee-based means that the most of your income comes from investment fees, and you still accept some

02:59:12.160 | commission product work. NAPFA does not permit fee-based planners. They permit fee-only planners.

02:59:19.440 | And NAPFA, the entire organization, is fee-only. In fact, on the very same page, practically,

02:59:24.720 | it's at the top of the next one, number four, make sure the NAPFA, so he reposts NAPFA's guidelines

02:59:30.880 | for criteria to consider when selecting an advisor. Number four, make sure the registered

02:59:35.440 | investment advisor does not have an affiliation with a broker-dealer. This is sometimes the worst

02:59:40.160 | offense when a fiduciary also sells products and gets investment commissions as well. So just the

02:59:47.040 | fact that NAPFA is listed as a fee-based advisor, and that's what a fee-based advisor is, is number

02:59:51.520 | four. So it's really tough. Actually, I constantly find myself having to learn and say, "Okay, let me

02:59:57.280 | adjust this." But the point is that it's a little bit sloppy. But as bad as that is, it's really not

03:00:03.360 | the worst problem. Because later in the book, he's talking about a fiduciary, but then he recommends

03:00:08.080 | private placement life insurance. Your fiduciary cannot sell that to you. Excuse me, your RIA,

03:00:14.240 | your fee-only registered investment advisor, can't sell that to you because then they would be

03:00:18.560 | accepting commissions. And they would have to do it as a separate firm. It's this whole complicated,

03:00:24.640 | stupid world that we live in with the regulations. Can't buy is fixed index annuity. So the debate

03:00:31.760 | exists for a reason. It's intense for a reason in our industry. Personally, I'm unconvinced the

03:00:38.000 | suitability versus fiduciary standard is actually going to make any difference for clients. Again,

03:00:42.720 | I'm in favor of a fiduciary standard of care. But the current system as it is in a very tough spot.

03:00:49.440 | And I think a better difference would be distinguishing between financial advice and

03:00:54.080 | product sales. I think that would be key. And if you're involved in product sales, be involved in

03:01:00.000 | product sales. Don't be involved in financial advice. We'll see where things shake out. The

03:01:04.000 | SEC is studying it and we'll see where things shake out. But I don't think it matters because

03:01:08.880 | I know lots of good advisors who give objective advice in either scenario. I've lived in both

03:01:13.840 | worlds. I gave the same advice in both scenarios. And I know that there are lots of people who would,

03:01:20.000 | even in a fiduciary system, would be completely prone to self-dealing and working in their best

03:01:28.240 | interest instead of the client's. And can you blame them? Look at the world we live in. In a

03:01:32.720 | world where the president of the United States, from both parties, by the way, for many past

03:01:37.440 | administrations, the president of the United States lies repeatedly to people,

03:01:40.800 | including lying under oath. Example, Bill Clinton, lying under oath, lying consistently,

03:01:49.680 | George W. Bush and Barack Obama, lying consistently. Here's what I'm going to do.

03:01:56.080 | Don't do it. It's absurd. In the current administration, 2014, you have the attorney

03:02:02.880 | general, who's supposedly the person who's responsible for upholding the law, lying to

03:02:06.560 | Congress on multiple occasions. You have the head of the IRS, in my opinion, lying to the public

03:02:10.720 | about the, "Oh, we have the missing emails." You have the secretary of state and possible

03:02:16.080 | future presidential candidate lying about the Benghazi events. And was it a few weeks ago,

03:02:20.960 | Jonathan Gruber, the primary architect of Obamacare, openly admits that they purposely lied,

03:02:27.520 | concealed, evaded, manipulated, and twisted events to get their purpose and agenda for health care

03:02:32.160 | pushed forward. Do you expect me to believe that any of these people have any interest in the truth

03:02:36.880 | as some kind of object of standard? Give me a break. I don't trust any of them.

03:02:42.880 | So when that is the government that's in charge of the SEC, do you expect me to believe that's

03:02:49.040 | going to make a difference? In our current society, there's no moral foundation for holding

03:02:55.440 | your word by anybody for anything. And there are a few people that still exist in it. And yes,

03:03:02.320 | the legal system is there to hold people accountable. And does it do it? Yeah, sometimes.

03:03:06.240 | But there's no moral authority. No one has any moral authority from any enforcement division

03:03:13.280 | to talk about this. I don't trust any of them. And by the way, it's not an Obama thing. It's

03:03:19.760 | every single government administration we've had in my lifetime, and certainly a long time before

03:03:23.040 | my lifetime, has been the same. Best example, listen to how they campaign. Listen to how the

03:03:28.800 | news people report this. We expect so-and-so, now that they've won their primary election,

03:03:34.480 | to modify their position. Are you going to change your political stance now? It's all lies.

03:03:39.440 | So my point is that I don't think it's really going to matter. I think what matters is you've

03:03:45.760 | got to find somebody with character. And I have found people in the investment business in every

03:03:51.040 | model, with every product, that I said, "This person has character, and this person is genuine,

03:03:57.360 | and I would trust." And I've found people in every model that I wouldn't leave my wife in

03:04:01.280 | the same room with alone for five minutes. I wouldn't, for an instant. Another issue I have

03:04:08.480 | is with such a focus, especially making this one of the myths on the suitability standard versus

03:04:12.400 | the fiduciary standard, I think that raises an extra measure here with regard to what the value,

03:04:19.520 | what was Tony doing with his book? And halfway through this book,

03:04:24.560 | I started thinking to myself, "Man, he's mentioning a lot of companies

03:04:29.280 | really positively. This seems strange." And I got the feeling, I was like, "Is this a 600-page

03:04:37.360 | sales letter?" So I hadn't picked up on it until about halfway through. The first company that he

03:04:43.680 | really emphasizes is a company called Hightower, which is an RIA firm. He emphasizes it right here

03:04:49.120 | in the fiduciary chapter, which is a registered investment advisory firm. And he says, "I found

03:04:54.720 | out about this company, and I think his advisor is with Hightower." And he says, "Hightower is

03:04:59.200 | really great, and they've created this great product, and I don't have any connection with

03:05:03.680 | them at the moment. But we're in talks, and that may change in the future." So I thought, "Wow,

03:05:12.960 | this is really great. Good for him for highlighting it, and that would be great."

03:05:16.640 | Well, I go on, and what I found out is he goes on and mentions other companies. And I just got

03:05:20.960 | this strange feeling. So I went looking for disclosures, and I went to the appendices.

03:05:26.480 | And I finally figured out that several of the companies that are profiled in the book are

03:05:30.400 | actually partnerships with him. So you've got companies, America's Best, 401(k), he owns a

03:05:35.920 | stake in that, which is heavily recommended as a 401(k) provider. Advisors Excel, and then a

03:05:41.520 | subsidiary there, a joint venture product called Lifetime Income. So these are the firms that he's

03:05:46.160 | setting up a scenario with to sell annuity products and life insurance products and 401(k)

03:05:52.560 | products. And so he uses a lot of these companies in his examples. So you say, "Okay, well, that's

03:06:01.280 | fine. Nothing wrong with that." But then I thought, "Well, is he really giving a fiduciary

03:06:06.640 | standard here? Is he using this book as a... And by the way, using the book as a sales letter does

03:06:12.960 | not violate a fiduciary standard. But I just thought, is he practicing full and complete

03:06:17.280 | radical transparency?" Well, I don't know. I think he is because it's in the appendices. But

03:06:23.920 | it's constant throughout the book. So for example, page 170, talking about annuities, fixed index

03:06:29.040 | annuities, the solution. If you have an annuity, regardless of what type, it's always beneficial

03:06:33.280 | to get a review by an annuity specialist. You can reach out to an annuity specialist at

03:06:37.120 | lifetimeincome@lifetimeincome.com, and he or she will perform a complimentary review, which will

03:06:42.160 | help you discover the pros and cons of your annuity, determine the actual fees you're paying,

03:06:44.800 | assess whether or not the guarantees are the highest available, and decide whether to keep it

03:06:47.280 | or not, or get out of your current annuity and exchange it for a different type of annuity.

03:06:50.640 | So that's brilliant marketing. And this is what I'm going to focus on. I'll come back to the

03:06:56.800 | question of this is okay or not. This is utterly brilliant. This is amazingly brilliant what he's

03:07:01.600 | done. And I didn't pick up on it until about halfway out, halfway through. But let me share

03:07:06.240 | with you what he's done with this book. On the front page of the book, he says, "I've donated

03:07:11.280 | all of my profits to a charity that's feeding people." And so you buy the book, and the money

03:07:19.840 | from that is donated to the charity. And you read the book, and you benefit, and then you act on the

03:07:25.760 | advice in the book. And he's created this amazing win, win, win, win, win scenario, win for all

03:07:31.920 | involved. And I really am impressed by it. It's really impressive. He laid this thing out, and

03:07:38.080 | it's brilliant. He writes a book out of indignation over a financial collapse. He researches some

03:07:44.560 | really great companies that are providing solutions with his research team. He leverages the power of

03:07:51.040 | his personal brand to create, get access, and create an amazing, really a great book.

03:07:57.440 | Then he donates all the profits from the book to the food charity, giving himself a charitable

03:08:03.440 | deduction, while on the same hand using the book as an incredible 600-page sales letter

03:08:10.560 | for his seminars and for his other products, and most importantly for these companies.

03:08:16.560 | So he gains a massive increase in the value of the companies he's partnered with from people

03:08:21.520 | acting on behalf of the advice and serving millions of people. And the way he's done it in

03:08:25.680 | the book is amazing. So the book is a 600-page sales letter. It's a well-written one with tons

03:08:30.720 | of information. And he's got driving people to the website and to an application, a smartphone app,

03:08:37.040 | which is a really great lead generation tool. And he's driving people to his teams all the way

03:08:43.760 | through. Isn't that amazing? When I finally figured it out, and again, maybe I was dense,

03:08:50.240 | I went back and looked, and I did find that each time he introduced a company, he said,

03:08:54.000 | "I've now partnered with them." And by the way, I'll get to what I think in a second. He said,

03:08:59.120 | "I've now partnered with them." I had missed it the first time. Then I went back and I said,

03:09:02.880 | "This is amazing. Every single financial planner should be following this model,

03:09:07.600 | writing a 600-page sales letter and doing this." Frankly, I'm kind of jealous of him.

03:09:13.440 | He's essentially created what I'd love to create. He's got electronic tools to make it easy. He's

03:09:17.680 | got electronic capture. He's got all these tools with Hightower and America's Best and all these

03:09:22.560 | incredible flow of interest. He's created an amazing process disclosing all the problems.

03:09:29.680 | I think it's really amazing. I do not for an instant doubt Tony's heart, his passion,

03:09:36.800 | his genuineness, his honesty, his authenticity, his righteous indignation at the industry,

03:09:43.840 | and his desire to help people and to give back. I don't doubt it for an instant.

03:09:49.360 | I think he's done a great job at it. I just didn't figure it out until halfway through the book.

03:09:54.240 | I hope to copy him someday. I think it's amazing. But I'm not sure he could actually do this as a

03:10:00.480 | fee-only advisor. I'm not sure he could do it as a fiduciary fee-only advisor. It'd be a nightmare

03:10:05.200 | to work the paperwork work. So that's the conundrum constantly. The toughest question

03:10:10.720 | I get asked is, "How do I find a good financial advisor?" So admire that and learn from it,

03:10:16.960 | because he has done an amazing job. When I finally figured that out, it all clicked for me.

03:10:21.360 | That's the value in my mind of good sales. Good sales is giving people a ton of information

03:10:28.720 | and a ton of value. That's what I'm doing on the show, trying to give away a ton of information

03:10:33.760 | and a ton of value in exchange for selling my ancillary products as I develop them. That is

03:10:38.560 | what I'm doing. So I think it is awesome. Other concerns here. It seems like he doesn't

03:10:48.000 | clearly write about just some basics of some financial products. Another example that I

03:10:58.160 | pointed out, page 438, he's talking about annuities. It says, as a frequently asked

03:11:03.200 | question, about fixed index annuities. "What happens if I die early?" If you die before

03:11:07.920 | turning on your income stream, your entire account balance is left to your heirs. This is a huge

03:11:13.280 | benefit over a traditional income annuity. When you do decide to eventually turn on your lifetime

03:11:18.080 | income stream with a simple phone call, you do not forfeit your entire account to the insurance

03:11:22.640 | company. Your heirs would still get your account balance minus any income payments you would take

03:11:26.320 | into that point. It's completely flawed, because no annuity do you ever lose the value of until

03:11:35.120 | you annuitize it. And then when you annuitize it, based upon the payout options that you select at

03:11:40.720 | the time you turn on the annuity income stream, that's what determines what benefit your

03:11:45.120 | beneficiaries receive. And that's exactly the same with a fixed index annuity as it is with any

03:11:49.600 | other annuity product. So it's like this whole thing about a differentiation. There's no

03:11:57.200 | differentiation there. I get an issue that some of the arguments are not fairly or well or fairly

03:12:04.080 | presented. And probably the best example here, and I get that not everyone can present all sides of

03:12:09.440 | an argument. I probably drive people crazy with trying to give every side of an argument. But

03:12:14.720 | some of these shortfalls in the book are pretty serious. The best example here is myth number

03:12:20.000 | three, which is entitled "Our Returns, What You See Is What You Get." And in here, he makes a big

03:12:24.560 | deal out of time-weighted returns versus dollar-weighted returns. And so I'm going to read

03:12:30.320 | a couple of just excerpted quotes here from a few consecutive pages here. And these are just one or

03:12:36.800 | two sentence options here. "Today, the mutual fund industry has been able to use a tricky method to

03:12:42.000 | calculate and publish returns that are, as Jack Bogle says, not actually earned by the investors.

03:12:48.080 | Now that you're an insider, beware. Average returns have a built-in illusion,

03:12:53.840 | spinning a performance enhancement that doesn't exist. The math magicians on Wall Street have

03:12:59.680 | managed to calculate their returns to look even better. How so? In short, when the mutual fund

03:13:04.560 | advertises a specific return, it's not, as Jack Bogle says, the return you actually earn. Why?

03:13:10.640 | Because the returns you see in the brochure are known as time-weighted returns. Sounds complicated,

03:13:15.040 | but it's not. However, feel free to use that to look brilliant at your next cocktail party."

03:13:19.520 | Goes on and talks about real returns. "And you must also remember that the returns reported by

03:13:25.760 | mutual funds are based on a theoretical person who invested all of his money on day one.

03:13:29.920 | This just isn't true for most, so we can't delude ourselves into believing that the glossy brochure

03:13:34.560 | returns are the same as what we have actually received in our account." I don't get why he

03:13:38.400 | even included this, because to me this is a non-issue. I know Jack Bogle makes a big difference

03:13:43.200 | out of this, but I don't think he's making a... I don't think... I don't buy his argument. I really

03:13:48.000 | don't. I have a ton of respect for him, but I don't buy his argument on this one. "The difference

03:13:51.360 | between time-weighted returns and dollar-weighted returns. Time-weighted returns exist so that you

03:13:55.680 | can compare a portfolio manager's performance independent of what the flows in or out of his

03:14:04.080 | or her fund are. That's what they exist for. Dollar-weighted returns have to do with the

03:14:09.280 | dollars that are actually in the fund and tracking them through." Now, Robbins is right, and Bogle's

03:14:15.040 | right. You only get to spend dollar-weighted returns, your dollar-weighted returns. But the

03:14:20.560 | issue is that what's being talked about here is not essentially the issue of how do I...

03:14:27.760 | there's no lies being made here. And the biggest problem is there are essentially three different

03:14:36.480 | time-weighted versus dollar-weighted returns that we... excuse me, three different returns that we

03:14:40.640 | have to track. So the time-weighted return ignores asset inflows and outflows of the portfolio,

03:14:46.480 | but the dollar-weighted on their portfolio talks about the mutual fund investors. Well,

03:14:50.000 | think about how a mutual fund works. You have a portfolio manager that you hire

03:14:53.920 | to run an investment portfolio. And here's what would actually could happen if you were to compare

03:15:01.120 | the differential between these two numbers. Let's pretend that I start a mutual fund,

03:15:06.080 | and I'm going to start an open-end investment company. We're going to call it Sheetz Capital

03:15:10.960 | Management. And you think that I'm just brilliant, so you go ahead and invest with me right up front.

03:15:17.280 | And so I take and I invest your money. And this year, I do really... I invest the money,

03:15:22.160 | and I make you... I'm going to charge you a 1% management fee as far as a portfolio fee

03:15:26.960 | that goes to the investment advisor on the account, on the mutual fund account.

03:15:31.360 | And so I charge 1% fee. And this year, I make 15% returns. And so net of fees,

03:15:42.960 | you get 14% return on your money. And let's say that the market was flat this year. So all of a

03:15:48.720 | sudden, I'm getting all kinds of people really interested in my fund. And so I get $10 billion

03:15:56.960 | all of a sudden shows up in my fund. And the people say, "Hey, listen, we want you to invest

03:16:02.240 | our money." Well, now I'm sitting on $10 billion. And a month later, I'm still trying to figure out

03:16:09.040 | where do I invest this $10 billion? What's my next good idea? I can't pour it all into one thing.

03:16:13.920 | And so my fund is flat. The average person, the average dollar in the fund is flat. But your money

03:16:22.400 | is up, what did I say, 14%. Whatever the number was, I said. That's the difference between time

03:16:28.880 | weighted returns and dollar weighted returns. So a time weighted return formula would ignore

03:16:32.320 | the $10 billion of new cash flow into my fund. And it would just simply focus on the actual

03:16:38.960 | performance that I had returned. That's how numbers are reported. But worse, so Bogle,

03:16:44.960 | and I guess Robbins too, wants this to be reported for actually the cash flows in and out of the

03:16:50.320 | fund. But this is meaningless in the fund. And my issue with it, the portfolio manager can't

03:16:54.640 | control the cash flows in and out of the fund. And the portfolio manager would rather if they

03:16:59.200 | just all stayed in. And he would love it if the dollar weighted return and the time weighted

03:17:03.280 | return completely matched. But even still, that doesn't do you any good. Because just the dollar

03:17:09.920 | weighted return of the fund doesn't tell you what your actual rate of return is. So this is your

03:17:14.880 | advisor's job to calculate for you. I used to run this for all of my clients. Here's what your

03:17:19.760 | actual investment performance has been net of fees, the actual money that's actually growing.

03:17:25.600 | This is what your actual performance is. So it's a big deal. I don't get why he even included this

03:17:34.160 | whole section because it's not a... I mean, unless I'm ignorant on something, and if I am,

03:17:39.760 | you let me know. But I went back and in preparing for the show, I went and read Bogle's stuff on it.

03:17:44.880 | I read his speeches on it. I'm like, this doesn't make any sense of what he's saying. And it just

03:17:50.800 | seems like Vanguard has more persistency with their investors than many other fund companies.

03:18:00.000 | I think it just would help Vanguard. And that's why he says it. But I don't think it's an accurate

03:18:05.600 | argument. Anyway, let's wrap. Let's talk about active investing versus passive investing.

03:18:17.840 | Throughout the book, this is a constant tension. And if you're trying to gain from this book,

03:18:25.280 | what you should do with active versus passive, this is really, really tough to do. And

03:18:31.200 | I don't know how you could. And it's kind of troubling because I think it's going to leave

03:18:39.040 | people kind of saying, "Huh, what do I do?" In the beginning, he talks about no one can beat

03:18:43.520 | the market. But then he gives countless examples of people that do beat the market. He talks about

03:18:52.480 | in the beginning, a broad base of research discussing about mutual fund managers beating

03:19:02.560 | their market index. But then he doesn't clarify that that's different than you in your situation

03:19:11.200 | looking to beat your index. The index is utterly meaningless. That's useful as a point for

03:19:16.320 | comparison. But he gives example after example from his own life of essentially beating the market.

03:19:22.240 | On page 178, he talks about buying a market-linked CD where he was earning 20 times the rate of a

03:19:30.240 | traditional CD with the same FDIC protection, where his advisor had found him some nice

03:19:37.840 | market-linked CDs. On page 283, he talks about the fact that what you're looking for is an

03:19:46.720 | asymmetric risk and reward, which is what all great investors seek. It's elusive, but it's

03:19:59.920 | out there. And it's just one more way that you can speed up your approach to realizing

03:20:03.680 | your dreams. And he talks on page 313, he gives an example from, again, his own life,

03:20:13.440 | where he's individually underwriting a real estate investment opportunity. "My advisor and I found

03:20:22.800 | out that the real estate investment company was offering the first deed of trust on that house

03:20:26.800 | in Indian Wells as collateral on a $1 million loan, which would pay 10% interest for one year.

03:20:33.040 | It was willing to have one investor take this on, or as many as 25, each contributing $40,000.

03:20:37.520 | In the end, I had decided to invest in the full $1 million myself. You might say, 'Wow, that's a

03:20:43.280 | great deal. You got a $100,000 profit to tie up your money for just one year. But Tony, what's

03:20:48.160 | your risk?' That's exactly why we did a lot of research. The home, we learned, after two qualified

03:20:53.520 | appraisals, was worth $2 million in its current state." So he goes on and he talks about the deal.

03:20:59.120 | And basically what he did was value investing, saying there's a floor underneath it, it's a

03:21:03.840 | specific value, and here's why I chose this amount and chose this idea. So this is one of the

03:21:11.760 | toughest questions to talk through in a financial book, because the discussion is nuanced, as with

03:21:20.720 | everything. And I feel like I'm not communicating it very well here. It's late at night and I'm

03:21:26.560 | tired and I probably should have done this. Anyway, I couldn't go another day without getting this

03:21:30.080 | done. But there are a number of other examples. In the book, the only actual passive investor is

03:21:37.040 | Bogle. He's the only one of the people that he talks about that's a passive investor and indexer.

03:21:42.320 | Swenson isn't actually an indexer. Swenson is running a portfolio and he's got 1,500 guys

03:21:50.080 | working for him or something like that. But he recommends indexing, which I recommend too. And

03:21:54.400 | this is the problem, is that usually, if you're involved in the financial business, you basically

03:21:59.760 | just throw up your hands and say, "You should probably just index, because that's probably

03:22:03.920 | going to be your best scenario." And that saves some people from paying higher fees than necessary.

03:22:10.000 | And the ones who ignore the advice to index are probably the ones who should be the ones who are

03:22:15.600 | ignoring the advice to index. I thought that Mark Faber on page 525 made the best point about active

03:22:25.840 | versus passive. And he talked about the idea that somebody can be a great stock picker, but that

03:22:31.200 | doesn't necessarily make them a great mutual fund portfolio manager. And that's the issue. Just

03:22:35.840 | because a mutual fund manager can't "beat the market" doesn't mean that you can't beat the

03:22:40.880 | market. It's a big difference there. I've got a lot of reservations. I'm going to wrap this up

03:22:45.440 | a little quicker than I had planned. I hope this has been good. Again, this is why I don't do book

03:22:50.880 | reviews, especially on 600-page books. It's a good book. But I have serious reservations about

03:22:56.400 | his fixed index annuity strategies. I'm not going to go into the details right now. This is on my

03:23:01.120 | research list. I've generally been in disfavor of fixed index annuities, although I could see a few

03:23:06.320 | areas they worked in. But I've realized that there must be something I don't know. I've had some

03:23:12.160 | advisors that I respected talk about it. There might be something I don't know. So I need to

03:23:17.520 | go and research this again. I like annuities. I think annuities are very useful. I just don't

03:23:24.960 | like the fees on fixed index annuities. But maybe I could see a place for them in a safer dollars

03:23:29.600 | bucket. The life insurance section isn't precise or very accurate as far as the details. It is nice

03:23:36.560 | to hear about somebody writing about life insurance and writing about it. For example, he talks about

03:23:41.200 | the fact that life insurance cash values are predominantly held by large banks as part of

03:23:46.480 | their tier one capital reserves. It's nice to see that written by somebody who's not a life insurance

03:23:51.440 | salesman. I used to talk with that about my clients. But it's always a little bit suspect

03:23:56.560 | when it's coming from a life insurance salesperson. It kind of bugs me that he ignores some of the

03:24:02.480 | basic planning ideas, some of the basic defensive planning ideas. Again, you can't put everything

03:24:08.480 | into one book, but essentially, he talks about living trusts and kind of exotic financial

03:24:15.680 | instruments. But there's no mention of disability income insurance. There's no mention of health

03:24:19.600 | insurance. There's no mention of property and casualty insurance. No, you can't cover it all

03:24:23.360 | in one book. But in my mind, that's a big deal. So I finish up the show here. I'm just going to

03:24:32.560 | emphasize that one of the great values of books like this is you've got to read through the lines.

03:24:37.760 | I'm following the Tony Robbins—I'm trying to follow the Tony Robbins strategy. Page 187,

03:24:43.520 | Tony writes this, "I've always believed the best way to get a result, the fastest way,

03:24:48.640 | is to find someone who has already accomplished what you're after and model his or her behavior.

03:24:53.840 | If you know someone who used to be overweight but has kept himself fit and healthy for a decade,

03:24:58.560 | model that person. You have a friend who used to be miserable in her relationship and now is

03:25:03.440 | passionate and in love for 10 years going, model her. You meet someone who started with nothing

03:25:08.640 | and has developed wealth and sustained it through time. Learn from those strategies.

03:25:12.960 | These people aren't lucky. They're simply doing something different than you are in this area of

03:25:17.440 | life." When I looked at my notes here on the side, I wrote down, "Copy Tony Robbins' plan.

03:25:24.080 | Become a world-class expert. Become great at marketing and be well-marketed. Create a large

03:25:30.720 | company based upon your core skill. Cash out with an IPO and then work to reduce your risk. And then

03:25:38.400 | continue to provide an ongoing service and build your brand and partner in entrepreneurial activities

03:25:42.960 | as joint venture activities." That's what I wrote down next to it. That's the plan that Tony Robbins

03:25:49.200 | does. The financial stuff that he talks about in here is really important and it has its place.

03:25:54.560 | But keep it in context. Tony Robbins is not rich because he saved 15% of his income in a low-cost

03:26:01.280 | index fund. He's rich because he built a massive company and he sold it, cashed out through an IPO.

03:26:08.240 | He says in the book, "At one point in time, when the market was high, before it crashed,

03:26:12.080 | he was worth $400 million." I don't know if he's worth more or less than that. Now,

03:26:15.520 | it's none of my business. It doesn't even matter. But the point is that you don't get the $400

03:26:19.440 | million net worth by saving 15% of your $200,000 salary in an index fund. But you don't need to,

03:26:24.640 | which his point is valid. Other point, Tony was earning $10,000 a month at the age of 18.

03:26:31.280 | Somewhere in the book, he says he made a million bucks a year soon after that, but it's not clear

03:26:35.840 | to me soon after. And it seems like that point in his life was pretty unstable. I'd planned to go

03:26:40.480 | through each of the examples of the billionaires that he profiles. And it's really fascinating,

03:26:45.600 | the people that he profiles and their stories and the themes they could pick up.

03:26:49.760 | But one of the themes that you see is that every one of them applied asymmetric risk and reward

03:26:54.800 | into business. That's the horrible, tricky, cruel detail. An investment advisor makes money off of

03:27:05.360 | other people's money. So on page 107 of the book, Robin says, and when he's talking about the risk

03:27:16.400 | of investing, like, "How could you be a sucker and take this bet? You put up the capital, you took

03:27:22.400 | all the risk, and they made money no matter what happened." That's what every single one of the

03:27:26.800 | billionaires profiled in the book did. All of them. You put up the money, you put up the risk,

03:27:32.640 | and they made money no matter what happened. Now, they made a lot more money because they did well,

03:27:37.360 | and they were featured in the book because they did well. But that's what this constant

03:27:41.280 | tension is in the financial business. They got asymmetric risk based upon

03:27:47.200 | running their investment fund scenario. That's what I'm trying to do with the show,

03:27:52.160 | exercise asymmetric risk. There's a small risk of failure to me if this fails, and there's a big

03:27:57.680 | risk of potential upside. So consider in your life where you can find asymmetric risk.

03:28:02.800 | Tony closes the book with two valuable sections. He talks a big section about the future is brighter

03:28:06.880 | than you think. I had already written the script for the show I planned to release on the day

03:28:10.240 | before Thanksgiving, which was going to be basically why the future is really bright,

03:28:15.840 | why we have reasons for gratitude and optimism. And then he wrote this amazing section on some

03:28:24.240 | advancements in technology that I was kind of aware of, but he gave some specific examples which

03:28:28.880 | were really, really cool. And then he ends with a focus on philanthropy. And as I close,

03:28:37.280 | it's a great book. Buy the book, read it. And I wanted to go through some of those examples of

03:28:44.560 | issues I have with it to show how you do need to read stuff and you need to listen to stuff.

03:28:49.200 | Listen to what I say with your guard up, because when you're talking about money,

03:28:52.640 | there's a lot of bad information. And listen with your filtering mechanism on. Look for the

03:28:57.840 | logical fallacies, look for the issues, look for the contradictions. And you'll find a lot of them

03:29:03.040 | in this book, but it's still a really great book. I know a few better that are as comprehensive in

03:29:08.720 | scope. Frankly, in the same way that I should probably cut shows like this up into dozens of

03:29:15.840 | smaller shows, Tony should probably have cut his book up into individual books, but he can't do

03:29:22.880 | that. That's why he has 50-hour seminars. And I don't see any way that I could do and be happy

03:29:28.080 | with myself, cut this kind of stuff out and cut it into little sections. But the key is to take it

03:29:37.200 | all in and look for the connections, look for what you can learn. The lens that I found that so far

03:29:44.160 | has held up to everything is the lens in the context of individual personal financial planning.

03:29:48.800 | I can't solve all of these big picture macroeconomic issues, but I can solve in an

03:29:55.680 | individual's life the issues that that individual is concerned about. Personal financial planning

03:30:00.560 | is what gives you safety, margin, stability in your life so that you can weather through the

03:30:05.840 | time so you don't have to become a statistic of dollar-weighted returns versus time-weighted

03:30:11.040 | returns. The key is always an individual application. And as humans, we tend to look

03:30:18.640 | for black and white, right or wrong. And what we actually have to do is look at different sides of

03:30:23.200 | different discussions and then apply it in an individual situation. Another takeaway from the

03:30:28.880 | book, people are always attracted to the idea of a secret investment. Secret investment doesn't

03:30:33.840 | matter. Investing is a business and a service, and you can hire it done, you can do it yourself,

03:30:38.960 | and either is fine. The personal financial plan is what matters. One of the weaknesses of the book

03:30:45.200 | is that it only focuses on financial assets, and I remain convinced that one of the best ways to

03:30:49.520 | prepare for fluctuations in financial assets is to get out of financial assets with different ways.

03:30:56.880 | So if you're looking for a book to tell you the truth, I think you'll be disappointed.

03:31:01.760 | If you're looking for a really great survey of thoughts and ideas to kind of

03:31:07.840 | balance with and try to engage with, this is a great book. Look at your situation through

03:31:13.680 | a financial planning lens. And from an investment perspective, I read you with one quote from the

03:31:20.480 | section with John Templeton. This quote comes from page 543. And John Templeton said,

03:31:28.000 | Tony Robbins asks, "What do you think is the single biggest mistake investors make?

03:31:33.120 | The great majority of people do not build up any wealth because they do not practice the

03:31:37.680 | self-discipline of saving some of their income every month. But beyond that, once you've saved

03:31:43.120 | that money, then you have to invest it wisely in good bargains, and it's not easy. It's very rare

03:31:48.880 | for any one person, particularly any one person working in just their spare time, to select the

03:31:54.240 | right investments, any more than you would want to be your own medical doctor or your own lawyer.

03:31:59.280 | It's not wise to try to be your own investment manager. It's better to find the best

03:32:03.120 | professionals, the wisest security analysts to help you." Tony Robbins, "When I was talking to

03:32:09.520 | some of your associates down in the Bahamas, I was asking them, 'What does he invest in?'

03:32:13.760 | And they said, 'Anything. He'll buy a tree if he thinks he can get a good deal on it.'

03:32:17.360 | Then I said, 'How long will he hang on to it?' And they said, 'Forever, basically until it's

03:32:22.800 | worth more.' So John, how long do you hang on to an investment before you know to let it go?

03:32:28.160 | How do you know if you've made a mistake? How do you know when it's time to actually liquidate?"

03:32:32.880 | John Templeton, "That is one of the most important questions. Many people will say,

03:32:38.240 | 'I know when to buy, but I don't know when to sell.' But over these 54 years that I've been

03:32:42.640 | helping investors, I think I've found the answer, and that is, you sell an asset only when you think

03:32:47.760 | you have found a different asset that's a 50% better bargain. You search all the time for a

03:32:53.680 | bargain, and then you look at what you now own. If there's something in your present list that is a

03:32:59.120 | 50% less good bargain than the one you found, you sell the old one and you buy the new one.

03:33:04.160 | But even then, you're not right all the time." That's the lesson that can be applied from this

03:33:09.920 | book. At least one of many lessons that can be applied to this book. I don't have any interest

03:33:15.120 | in being a billionaire hedge fund manager, and if you do, go for it. We need some good ones.

03:33:21.280 | But I do think that that can be applied in all of our lives, and it can be applied on the scale of,

03:33:26.480 | "How do you know when to sell your grandma's bell collection that she left you

03:33:30.720 | as an investment?" or "How do you know when to sell the next billion dollar company?"

03:33:35.520 | It's a great book. I hope you check it out. Tony, thank you for writing the book. If you

03:33:40.800 | ever listen to this, I really enjoyed it. I hope you tighten it up in the next issue.

03:33:49.200 | But man, I tell you, I don't have the heart to think that I could write it. If I wrote one of

03:33:53.040 | these things, it would be 3,000 pages, and I could never finish it. I had to get this show done,

03:33:59.520 | because I kept going deeper and deeper and deeper and deeper and thinking, "Well, I could research

03:34:04.320 | this and research that," and I just had to sit down and get it done. So as a recorder, it's late

03:34:07.760 | here, and I'm getting it out. I apologize to you guys for missing the shows. I didn't need to do

03:34:13.920 | that. I have interviews I could have released, but I just... Anyway, it didn't mean to break the

03:34:18.240 | trust. So check back tomorrow for another great show. I don't know what it'll be about. I hope

03:34:23.360 | you guys enjoy this. Check out the book. It's really good. I love it when guys like Tony Robbins

03:34:29.280 | take on projects like this, because they have a capacity that is phenomenal, that is so,

03:34:34.080 | so valuable. So that's it for today. Enjoy the rest of your day.

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03:35:51.200 | Thank you for listening to today's show. This show is intended to provide entertainment,

03:35:56.800 | education, and financial enlightenment. Your situation is unique, and I cannot deliver any

03:36:05.920 | actionable advice without knowing anything about you. This show is not, and is not intended,

03:36:13.520 | to be any form of financial advice. Please, develop a team of professional advisors who you find to be

03:36:23.680 | caring, competent, and trustworthy, and consult them, because they are the ones who can understand

03:36:31.200 | your specific needs, your specific goals, and provide specific answers to your questions.

03:36:37.920 | Hold them accountable for your results. I've done my absolute best to be clear and accurate in

03:36:44.480 | today's show, but I'm one person, and I make mistakes. If you spot a mistake in something

03:36:49.680 | I've said, please come by the show page and comment, so we can all learn together.

03:36:54.320 | Until tomorrow, thanks for being here.

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