I think about how maybe do some of – people have been very successful financially, look at investments differently than conventional advice and what sort of leads this lower bond allocation. I think there's historically been this notion that – I'll call it driven by the investment industrial complex that volatility and risk are the same thing and I think that is just the wrong way to look at it.

So you look at terms like a sharp ratio and a sharp ratio is a way that people often look at assets like hedge funds or something like that and say, "How good is it?" You don't just say, "What is the typical rate of return?" But it basically divides that rate of return by the volatility.

So say, "Hey, if this thing returns 20% and this other – option A returns 20, option B returns 10, but option A is twice as volatile as option B, then effectively, they're just as good as each other." You can choose how much risk you're willing to take and then you get proportionally rewarded in your upside.

But I think this idea of volatility and risk being the same thing, I personally just don't follow that in my portfolio. I think if you have an amount of money that you don't need anywhere in the near term, let's say you don't need it until retirement, so that could be 10, 20, 30 years away, what matters to me much more is how much money am I going to have at age 70 when I want to retire and not how smooth is my path to age 20.

Hello and welcome to another episode of All the Hacks, a show about upgrading your life, money, and travel. I'm your host, Chris Hutchins, and one of the things about money that I've always been fascinated by is how wealthy people manage their finances and invest their money. And thanks to today's guest, I've been able to get a peek behind the curtain.

I'm talking with Tad Fallows, who's become an expert on the topic since co-founding Longangle, a free online community for high net worth investors. It all started when his company was acquired in 2016 and he and his co-founder were abruptly confronted with a bunch of personal finance questions. So they created Longangle, which has grown to become a diverse group of a thousand members and offers a private online community where people can discuss a wide variety of issues from asset allocation to taxes, philanthropy, insurance, raising kids, and more.

The community has no membership fees, no advertising, and no selling of member data. So I want to invite Tad to join me to shed some light on the money and investing habits of wealthy investors by walking through this year's Longangle portfolio benchmarking survey. I wanted to break down the mysterious world of alternative assets and teach you about some of the assets you might never have considered.

We're also going to share some of our favorite real estate and home buying hacks and a lot more. So let's get started. Tad, welcome to the show. So excited to be here. Thank you for having me. Yeah. So I'm going to just start and ask you a question since, and we'll get into a lot of why you're an expert here, but what do you think the most common misconception is around how wealthy people, high net worth people are spending and managing their money?

Yeah, it's a great question. I mean, I would say if I look at it, I don't know if this is a misconception or not, but what struck me is different from honestly the way I do things myself and the way I see a lot of other people do things maybe who are not in the high net worth demographic is how light on debt they are.

We do a benchmarking survey where we look at overall how people allocate their portfolios and how much debt they hold and that sort of thing. I would say a full 50% of the members of our group don't have any debt of any sort on their house. A quarter of them don't own a primary residence at all and then another quarter own their residence outright.

I think it's 80% of members have less than 25% of their assets is debt. So to kind of put that in concrete terms, if you had 10 million of assets, it would mean you had less than 2 million of debt. And I think if you look at general stats about the American population, et cetera, you've got a much higher debt to assets ratio than you see among this group.

And it's not that it's a risk averse group. These are people who have started companies, work at hedge funds, work in venture capital, people who are willing to take a lot of risk. But I think one of the reasons they're comfortable taking that risk is they go quite light on debt or leverage, however you want to phrase it.

Yeah, it's fascinating. So let's rewind. You brought up a few things. We're going to get to this benchmarking survey, but I just want to talk a little about long angle. So you talk a little about what it is and why you started it? Yeah, sure. So I started this group about two years ago with my friend Sri Ram.

We've been friends actually since I think freshman year of high school. I remember watching the Smurfs with him after school some days. But what led us to start this is that shortly after college, we were both in consulting and then decided we wanted to kind of give it a try ourselves of starting our own company.

So we started a software company and we ran that for about 10 years. And we bootstrapped it, which means we basically didn't take any outside venture capital. In practical terms, it meant we didn't make any money ourselves. We didn't take any salary out of it. We just rolled every dollar we made back into the company.

And then after about 10 years, we were fortunate enough to sell it to a strategic acquirer. So it meant from a kind of a personal finance dimension, we made no money until our mid-30s. And then on one day, we got our compensation for the last 10 years of effort.

And so we were quite abruptly introduced to all these high net worth personal finance things, whether it's estate taxes, alternative assets, umbrella insurance, et cetera. For a variety of reasons, we didn't want to go the model of just saying, "Hey, Goldman Sachs, here's all my money. You guys are in charge.

You take it from here." We wanted to sort of manage things ourselves, but we realized we had a lot to learn. So we basically wanted to set up a group of friends of ours who were all in a similar situation financially and where nobody was trying to sell each other anything.

And that's really still what we're doing. I think our initial expectation, this would just be a couple of dozen friends and sort of our first or second degree circle. It ended up that need was a lot more broadly felt. And so people introducing their brother, their co-founder, their board member, et cetera.

We've grown to about 1000 members all across the US and growing share in Europe, Australia, Middle East, et cetera. Not that we are trying to have one cookie cutter member profile of, "Hey, everybody's an early 40s software entrepreneur with two little kids." We want as much diversity as we can get professionally, geographically, et cetera, provided everybody's on the same page around the non-solicitation and confidentiality.

Yeah. When I came across Longigo, which I think I found in a Reddit thread on Fatfire, which we can get to later, I was like, "Oh my gosh, this is exactly something I'm interested in." It's a community where it's private, so you can be transparent. There's no fake profiles.

There's no anonymous. Everybody goes by their name and talk about every aspect of life. So I've been really excited to be a member. I've learned a ton. I've tried to do my best to give back and share what I know. But I'm so curious. You said you've done 1000 members.

You've done probably half those interviews at least. What kinds of things have you learned talking to all these people who fall into this? And maybe talk a little about where's the threshold for who's a member so people get a sense of the profile of members of Longangle? The bulk of people are in what banks would call the very high net worth demographic.

And that means between 5 and 30 million of investable assets. We've got maybe another 15% or 20% on each side of that. We do validate that everyone's at least a qualified client. And the SEC defines that as having 2.2 million or above in investable assets. And that's really just a threshold that sort of governs what kind of assets you're allowed to invest in.

So those are the kind of people that I've had this discussion with. I think there's a few things that have come as a surprise to me. Well, first, I would say I've just really enjoyed these interviews. I've met 500 fascinating people. And maybe the biggest thing I've learned is there is no one path here.

We've got members who started cybersecurity companies. We have members who were employee number three at Pick Your Public Company, people who work at hedge funds, people who work in real estate, corporate executives, people who put one paycheck into crypto back in 2011, people who inherited money. So I'd say one thing is there's a lot of paths to significant financial success.

The second thing is I would say that I don't think any of our members feel like they "have it figured out." I think if you look on a personal level, probably 80% of our members have little kids. And I don't think anybody feels high confidence that they know the right way to raise kids with wealth.

I think there's this balance of, "Hey, having significant resources creates these opportunities. I can get private tutors. I can help them pay for whatever activities they're interested in, get them private gymnastics lessons, etc." So there's a lot of opportunity there. But I think there's this real tension of, first, I don't want to spoil my kids and just have them not turn into good people.

And second, I don't want to deprive them of their ability to feel they've succeeded on their own terms and struggled and figured out the right way to do things. And I think that's something where, unfortunately, I don't have, "Hey, here's the answer about how to do it." But I do think if people are worried that they're not sure how to strike that balance, they're far from alone.

And I think beyond that specific question of kids, I think even people who have achieved quite a bit of significant success financially, I feel like from a pure personal finance perspective, there's some big gaps in how they do things. Maybe it's, "Hey, I've heard about umbrella insurance. And I know that's a thing, but I don't know what it is or how much I should buy or where to buy it." Or maybe it's, "Hey, I've got no trust in estate plan.

Again, I know that's a thing. If I keeled over tomorrow, my assets would go into probate that caused all kinds of problems, but I don't know where to start or how to wrap my head around this. Or maybe I'm all in cash and can't bring myself to invest." For each person, it's different.

But I would say most people feel like they have some real gaps and don't have it figured out. And finally, the last thing that actually just gave me a lot of personal comfort is I would say 80% or 90% of people feel like they are the one sucker really paying their taxes.

I think there's this impression of, "Hey, everybody out there is moving to Puerto Rico and doing 1031 exchanges and doing all these clever things that ends up with effective no tax rate." But the significant majority of people feel like, "Hey, I'm paying 30% plus in effective taxes and I haven't figured out the way around it," which personally, I think is actually not a bad thing.

It just makes me feel better about being in that same situation to know that most people are paying their share. Well, one, now I feel a lot better. I'm also paying my share. And as much as I love to find the tax hacks, it makes me feel better. I guess unless I talk to people in real estate that seem to always say they're not paying taxes.

I thought the misconception you might say at the beginning was that everyone thinks that the wealthy have it all figured out. And if there's something I've learned being in the group, it's like people are open about the fact that they haven't figured it out. And I like that. And someone listening might say, "Well, is it just staying within the bubble of the wealthy and all this knowledge?" And I think things like this, and we're going to talk about your benchmarking survey, hopefully are an opportunity to get some of that information out.

But I know that where they're not a closed-door ecosystem, you just might not... People might not be as open to sharing. So it's this catch-22 of if you made it open for anyone to come, you might not actually get the conversation going. But if you close it, how do you get that information out?

Any thoughts on ways to share some of the knowledge that's coming out of a group like this with more people? So people that aren't there have a higher likelihood of getting to that group in the future? Yeah, I think it's a fantastic question. And I think you're right. There is this tension there.

So one of the guiding principles we put in place is this idea of confidentiality. Because we do think that having a real names policy and people actually being who they purport to be is really important, but people are just not going to open up about... It's one of those things that people just don't talk about money.

And I would say, at most wealth demographics, that's not unique to the high net worth. So I think there is a bit of attention there, as you mentioned. As you said, for example, we do this annual benchmarking study. And what we do there is we ask all of our members to put in a spreadsheet across 60 some different asset classes, how their portfolios break down in percentage terms, not absolute dollars, but across these asset classes.

And then we synthesize all that data, normalize it, correlate it with a bunch of dimensions and create a report around that. That's something that actually we publicize and share with everybody. So anybody who wants that data is certainly welcome to access it. I think going forward, it's a great idea to think about other ways that we can look to share things that don't compromise confidentiality.

I think there's always going to be certain things and first-person anecdotes that just can't be shared. But I think a lot of this, we're looking to do more synthesized and aggregated data. And that's not something that I would look to prevent being more broadly disseminated. We do this once a week.

We'll do a... We call it a mini benchmark. In the forum, we'll ask one question, just give four possible answers. And that can be anything from what do you expect interest rates are going to top out at, how much allocation do you have to emerging markets, securities, do you use a wealth manager or not?

And I think that's a great idea. We can maybe just tweet the results of those out to anybody who follows us on Twitter. The one about wealth manager, actually, you'd asked earlier what might be surprising. And one thing also that's surprising to me is I personally don't use an RIA or wealth manager.

I had been under the impression that I was sort of the oddball in that approach. But actually, if we look at overall membership, only about 40% of people have any sort of third party, whether it's a multifamily office, RIA, wealth manager, etc. About 60% of them do not. And I think it mostly comes down to...

The biggest thing is probably just this fee structure of paying half a percent or 1% of your assets every year. Just people both, I think, don't really like the idea of paying a percentage as opposed to just paying straight dollars. So like, "Hey, I pay my lawyer by the hour.

I pay my account by the hour. Why can't I pay my wealth manager by the hour?" And then just the absolute number. If somebody has $10 million paying 1%, that means you're paying $100,000 a year, which is just quite a bit of money. So that was another surprise to me is that I was not in the minority of saying that I'm just going to do things myself.

I think if I look at our membership, you get to a certain level and I aspire to be there, but not there myself. If you're over, say, 50 or 100 million, I think it just starts to get to this level of complexity that even just managing the paperwork and dealing with the tax returns, you really can't do that by yourself unless it's really your 100% job.

So people do hire and help to that. But below that kind of level, I'd say most people, at least in our group, are managing everything themselves. And managing it yourselves doesn't mean you don't have an assistant, or you don't have a bookkeeper, or you don't have someone that files your taxes.

It just means you're not paying someone a percentage of all of your assets to manage your investment. Yeah, that's exactly right. I'd say almost everybody has a CPA who's doing their taxes, and that can be a very reasonable amount of money. Somebody can be making $2 million a year and only pay $1,000 or $2,000 a year for somebody to file their taxes.

It does not need to be a backbreaking amount of money. And I actually think at a certain point, it's just silly not to hire somebody else to do it because you can have all the good intentions in the world, but it's really easy to misread the tax code at a certain level and either underpay or overpay.

And I'm not sure which is worse. I don't think people want to be doing either one. So certainly, as you're saying, yes, bookkeepers and assistants and that sort of thing. But I think just this principle of saying, I'm going to pay somebody half a percent or a percent a year just to tell me to put something into a 60/40 index fund is...

Now, I will say our group tends to be younger, as I said, in their 30s and 40s. And overwhelmingly, probably 95% of people didn't grow up with this kind of wealth, but generated themselves at some point along the way. So I think probably has a relatively high dose of self-confidence in their ability to do it.

So probably a bit of selection bias there. But it's not an unconventional approach. One thing when it comes to taxes, even if you don't want to hire a CPA forever, I would encourage everyone to hire someone for one year. Or even I found that as part of a sales tactic, most of the accountants I've talked to file taxes, when they get to know you, they say, "Hey, why don't I review your last year's return?" And you're still within the window of being able to refile if you mess something up.

And I wouldn't say I found any glaring mistakes from when I was doing it myself. But even when I hired a firm that was not that great, the next firm I ended up hiring was like, "Well, here's a couple things you could have done differently." And so I found that at almost all levels, hiring someone to do this pays for itself in what they're able to understand and file for you.

So I think that if I filed my taxes myself, forgetting the time it would take, I would actually end up not filling out the right things and ending up making less at the end of the year than I would if I paid someone. I agree. And I think there's also value to have somebody throughout the years you're trying to make decisions, you can bounce ideas off of.

So for example, we own a home in Southern California we used to live in, and we've moved since then. And I'd like to sell it because it's just a hassle to manage. But then I had concerns about, "Okay, if I sell it, is that going to have big tax implications?" And having somebody who I've worked with for a number of years knows my whole situation.

So I can send her an email saying, "Hey, I see these options here. I could sell this and do a 1031 exchange and then defer sort of indefinitely paying taxes on it, or I could just sell it, but I'm worried I'm going to have this big gain. This could be taxed under California tax rates, and it's going to sort of wipe out the whole point of doing it." And somebody who has that whole context, she was able to easily identify and say, "Okay, well, you've got these passive losses you haven't been able to take, and you can net these out." And really, it's not just a matter of the end of the year getting accounting right, but she was able to help me make better decisions along the way and say, "Hey, here's what the tax implication will be when you're filing your returns next year if you do this, but here's this other way to structure it that is just as good economically, but it's going to be a lot smarter way to go about it." You mentioned the benchmarking survey.

And one of the things I think is really interesting is that so many of these benchmarking surveys exist. If you search Schwab RIA benchmarking, you get a lot of them, but they all are tied to some brokerage firm or some RIA. And so the results end up looking very similar to whatever that investment advisor is recommending their clients do.

And so I don't feel like it's as practically useful for anyone other than if I want to steal clients from this RIA, I now know what their clients look like. But your benchmarking survey, like you said, 60% of people don't even have wealth managers, is really fascinating. So I thought maybe it'd be fun to go through some of the learnings.

I think anyone listening would certainly be educated in many ways about what are all these people doing? How are they structuring their portfolios? What are they thinking about debt, leverage, all this stuff? So maybe we could just run through it. Like you mentioned, it'll be available. So I'll just link to it in the show notes if people want to go take a look at it and follow along.

But maybe we could just walk through it and talk about it. The way that we run this, to be clear on that, is that we share it with all of our members. Once a year, we share the survey. And we define something like 60 to 65 different asset classes and ask people to put in how their personal portfolio is allocated across these different kinds of assets and these different kinds of debt.

Then we gather all that data together. And we also know a lot of other demographic data about our members, how old they are, what was their source of wealth, where do they live, all that sort of thing. And we now have a big enough N that we can actually correlate across those things and not just say, "Okay, on average, people have this much money invested in private equity," but say, "Okay, compared to people who are younger or older or more or less money in total, how does that affect their allocation to different asset classes?" So that's sort of how we go about it.

I would say, I know that radio is not the best medium for talking about a lot of numbers. So I'm not going to get into exactly what percentage point to each one. But I'm happy to talk about sort of a few high-level takeaways here. As I said, I'd encourage people to look at the link if they want to see more details.

I'd say at the highest level in terms of how people's portfolios are allocated, it is roughly one-third into public stocks or public equities. So that's anything, whether US or international, buying Microsoft, Apple, et cetera, mostly via index funds, but it could also be individual shares. It's about a quarter into equity in real estate, whether that's somebody's primary residence or whether that is investment properties, vacation homes, commercial buildings, warehouses, what have you.

And then about a quarter into alternative assets, which could either be private companies they hold, could be crypto. We can get a little bit more later in the show into what alts are, but about a quarter into alternative assets, and then the rest about 15% into cash and bonds.

In terms of changes that we've seen over the last year, you can see there's a big drop in terms of shares and public equities that went from about half of people's portfolio down to just a third. And what made up the difference was more in real estate and more in alternative assets.

And do you think that some of that is just the market was down a pretty significant amount between years? Or do you have any qualitative data around this to understand how much of it was market-driven versus portfolio structure-driven? Yeah, I think it was both. I don't know if I can break down exact percentages.

But yeah, the fact is the market's down something like 20% over the last year, whereas the real estate market's gone down a little bit lately, but it's probably up. And alts have also done well. So I think some of it's market-driven. But yeah, your question about qualitatively, I can say with confidence that people...

And partly because we asked in the survey, "What are you personally doing to change your allocation?" And that is something people are intentionally doing of feeling like the environment that we were in before is not the one we're in now. And so something like real estate, for example, two years ago, that was probably a fantastic buy.

You had 2.5% debt that you could get on things, and very reasonable expectations of inflation at two to three times that level. So that was a real smart move to do. I'd say today, something like real estate is less attractive. Again, higher interest rates tend to make public stocks less attractive.

So I think we are seeing people intentionally trying to increase their allocation, especially to alternatives. And then a couple of others to dive into the details, things that people may find surprising. I think I mentioned earlier on here that about a quarter of our members don't own their own home.

And I would say for almost everybody, that is by choice. It's not a matter of, "If you've got $5 million, you could afford to buy a house." But again, asking people qualitatively, "Why don't you buy a home?" I would say it probably falls in two categories. There's a set of people who just don't want to live in any one place.

These often tend to be the people without kids, but they're nomads and say, "Okay, I want to be in Mexico City for the next three months. Then I want to be in Switzerland. And I just don't see a point in owning a house if I do that." And then there's also a lot of people who just don't want the sort of mental burden, the time burden, the financial risk, et cetera, associated with owning.

They would rather just rent and know, "I'm going to pay this. And if the lights need to be changed, the plumbing breaks, the roof leaks, that's not my problem. I'm just going to call the landlord and tell him to deal with it." So that's a big thing. And then if you look at the three-quarters of people who do own a home, again, a quarter of those don't have a mortgage on it.

So you have pretty much fully half of members without a mortgage. So I found that interesting. And another thing on the personal real estate is that, leaving aside the caveat I had that there's a material percentage of people who don't own a home, if you look at those who do, up to about $50 million, the home continues to be a pretty significant piece of people's net worth.

If you get somebody who's a billionaire, of course, their primary residence is probably not a big part of their portfolio. But somebody could have over $25 million and still have 10% or 15% of their net worth in their home. So that's something else that's interesting to me is how much people's primary residence value continues to scale along with their net worth.

So I want to just point out, I'm a big fan of the fact that Ramit Sethi spends a lot of time telling the world that renting is not the worst thing in the world. And I love that you're seeing that here. And this is another message that's reinforced. I know so many people that think that renting a house is just throwing away money.

And I couldn't. I've spent a lot of money on property tax. I've spent a lot of money on insurance. I've spent a lot of... There's a lot of costs that come with owning a home that end up getting thrown away. Mortgage interest being another one. So I want to make sure we pause for a second and reinforce the fact that renting is not a decision that is something that means you won't make money.

It means you're throwing all your money away. I've done the breakeven analysis and built spreadsheets to figure it out. You look at the costs and you look at the cost of mortgage interest and all that stuff. I generally think that if you're not in a house for more than 5 years, all the money that you're spending to buy a home and the brokerage fees, everything, you're also throwing away and you actually would have been better off renting.

Now, there are a lot of factors that play into this that who knows if rents are going to rise, who knows what happens to mortgage rates and home prices and appreciation. But my rule of thumb has always been less than 5 years owning actually doesn't make sense. And if you think, "Oh, I could stay in the place I am for the next 10 years." And you buy a place, but you buy a place that's so big that it will work 5 to 10 years from now, but it's actually way bigger than you need for the next 1 to 5 years, you're effectively overpaying.

And if you were renting, instead, you might rent a 1 or 2-bedroom. But now because you want to adhere to this 5-year rule, you buy a 4-bedroom, then you're also still going to come out behind because for the next 3, 4, 5 years, you would have saved so much money renting the 1 to 2-bedroom.

So I just try to take every opportunity I can to reinforce the fact that buying is not the end-all best path forward for everyone. And renting, certainly, while you don't get to recoup that money, you also have a lot of expenses associated with buying that you don't get to recoup.

Yeah, I agree with that. And I think the other thing I would say is when you're looking at real estate, not only should you look at how long should I stay there, but it really matters what is the economic environment I'm buying in. And by that, I primarily actually mean what's the interest rate you're paying.

If you buy a house in cash, it's not a bad investment, but nobody is becoming a multi-millionaire by buying property in cash. The reason that real estate often turns out to be a very good investment is that you're putting in 20%, 25% of your own money and 75%, 80% of somebody else's money.

In that case, if it goes up 5%, you're seeing a 25% return on your money. And that's great. And I would say over the past five years, I've actually personally been buying a lot of real estate and trying to take on as much of that leverage as possible. But that is not a universal answer.

That was the case when interest rates were down at 2% or 3%. And I think anybody who is looking at government policy and that sort of thing knew that inflation was going to be a lot higher than that. That's not the environment we're in anymore. Rates have gone up 3% over the last number of months.

And you're seeing I think the highest average mortgage rates we've seen in the last 20 years. So you can still take on debt, but you're paying way more for that. And so it's unlikely to be that same wealth generator now. So I think you need to look at your own situation, but also just look at what's the overall economic environment.

And this doesn't just go for real estate. This goes for other asset classes. If you look at bonds two years ago, I didn't hold any. In my opinion, that was a terrible investment. If you look at something that's a 30-year bond that's yielding 2%, there's no uncertainty. Mathematically, if you hold that to maturity over the next 30 years, you're going to earn 2% a year.

And there's near total certainty that inflation is going to be higher than that. So you're basically locking yourself into losing money over 30 years. Now that environment by the flip side has become a lot more attractive. Personally, I still don't buy bonds because I'm not that compelled by a 5% rate, a 4% rate, but that's way better than the 2% you had before.

So I think across any asset class, there's not one universal, "Hey, here's the right answer. Here's a portfolio that makes sense." You have to be somewhat reactive to the situations you see it. And unfortunately, you only get to live your life once. And it may be that ideally, when you're 28, you'd like to buy a home, but it's not a great environment to buy a home.

You just have to react to that fact, but you need to look at a combination of what's going on internally and externally for you. I will also add right now, because I know there are people, especially in my friend group, that are like, "I finally have the money for the down payment, but interest rates are so high." I will say two things.

One, I have noticed even in the Bay Area, that there've been a lot of price decreases. So if you factor in the fact that you might get the house a lot cheaper than you would have a year ago, that could be an impact. And then the second is, you're never locked into 7%.

If you get a mortgage right now, and it is 7%, and hopefully, for the sake of those people that that comes down quickly, if mortgage rates drop back down in three years, you can always go ahead and refinance. And so funny enough, I had been doing some calculus, or calculations at least, when I was trying to decide whether we got a 30-year mortgage or a 10-year mortgage.

And I was looking at the breakeven point on the 10-year mortgage. And it's not 10 years. In my worst case scenario math, I was saying, "Okay, well, at the end of the 10-year period, rates go up to 7%. And now I'm paying way higher than 2.5% or whatever I would have done on the 30-year mortgage." And the breakeven point was still like 12 or 13 years.

And so what that meant was, if I had gotten a 10-year mortgage and paid, let's say, half a percent lower than my 30-year fixed for 10 years, and then it rose up to 7%, the savings I got for those first years actually was totally made up for by even having to pay 7% for three years.

So if you inverse that and say, "If I get a mortgage now, and for three years, I have to pay 7%, and then after that, I can refinance," the net effect over a decade or more is not going to be as impactful. And probably, and I have not done any math, this is not financial advice, but probably not going to outweigh the fact that you might be able to get the house at a significantly better deal right now, because so many people are scared off by mortgage rates.

Yeah, I would agree with that. The only other hack I would add in the world of buying a house. So I bought three houses since my wife and I have gotten married. And we have followed the same strategy on all of them. And I've been very happy with the purchase on each one.

And that has basically been looking for houses that have been on the market for a year, two years, and they came on way too high, nobody wanted it. And so then after a while, they started cutting, they kept cutting and kept cutting. And to the point where we bought it, in each case, it was about 30% below where they'd originally brought it on.

And I am confident that any one of those, if they had brought it on just at the right price at the beginning, it would have sold right away would have sold for more than we paid. But you start to get this dynamic where a house just gets stale. And I remember, you know, most recent one we bought, it was actually a vacation house in Southern California near my brother is really excited about this opportunity.

We've been working with a realtor for a while there and couldn't find anything that sort of was what we were looking for, as price we could afford, etc. To find my wife, you know, she was on Zillow said, Hey, you know, what about this one? This looks amazing. This looks, you know, has great ocean views has exactly what we're looking for.

And you know, this price seems super reasonable. And we talked to our broker, he said, No, you don't see that it's been the market forever. And so we push her, like, really do want to say, it's hard to show, you know, tenants, they're messy. I was like, why on earth would I carry the tenants?

They're messy. Like, I'm not looking for tenants, I'm looking for a property. Anyway, you know, we finally got into into it finally saw it, and we bought it. And then, you know, afterwards, he's saying, I don't know why this thing was here. You know, this thing should have gotten a heartbeat that, you know, 20% higher than this.

So I think, you know, that is a strategy. As I said, it wasn't a one off. It's been all three houses we bought, just this idea of a stale house, it's no longer hot. And then, you know, people just get spooked by it and say, Hey, it's been there for a year or two, there must be something fundamentally wrong with this house.

There's a reason nobody else wants it. And then you just get these sellers who keep having to do these little salami slices of, you know, cutting, you know, 3%, 5% at a time and end up well below the market. My two house buying hacks, one that we've done for both one that we've done for one was earlier in our careers, we were like, well, we, we knew that we wanted to be in a house for a long period of time, if we wanted to buy it, because you kind of needed that for the math to work.

But we also didn't want to pre buy space we didn't need. So we found a house that had three bedrooms, but it had a private entrance for one of the bedrooms. And we can basically converted that to a studio and rented it out. We locked the door from the inside between that bedroom and the rest of our house.

It didn't have a kitchen. But you know, in the Bay Area, there are lots of young people who either work at a company that provides them all their meals, or don't mind cooking and, you know, in a microwave and going out to eat and all of that. And so for almost a decade, we rented a room out in our house.

And then right about the time we were about to have our first daughter, we were like, you know what, we need that third bedroom now. And we are in a financial position to not need the rental income anymore. To make the make the mortgage payments. Now, all of a sudden, we're like, now we've just upgraded from a two bedroom to a three bedroom, but we didn't have to move.

And we had that extra income. So right now, that could be a great opportunity. And it seems so crazy to me, or at the time, it seems so crazy to me to think, what if it didn't have a door now? Now I knowing everything I know, the cost to like cut a hole in a house and put a door is probably actually not as much as I thought.

So I think early on, I was like only looking at houses that were set up for this. Knowing what I know now, you could look for any house and relative to the cost to buy a house, the cost to cut a hole and put a door is actually going to be pretty insignificant.

So it doesn't even have to be perfectly situated for this, it could just, you know, be perfectly situated for you to make that modification. And then the second one, which most people have told me is a terrible idea, but I've done it twice, and I like it. So this is again, not not advice for you.

But I've gone to a house that we found the house we'd like to ourselves, we found it on Redfin or Zillow or somewhere, we went and looked at it. And then we convinced the selling agent to be the our agent also, which is called a dual agency. And so the seller's agent now represents both the buyer and the seller, they have to get permission from the seller to do this.

And if you find someone that is, you know, you reasonably would trust to act fair and impartial, because they're legally required to do that. So you have both the law, but also you want someone that you feel like can ethically handle that circumstance, you end up in a situation which they make two commissions if you buy the house, and they make one commission if anyone else buys the house.

So I will say they are very motivated for you to buy the house. And so I think in the as a seller, I don't know if I would ever do this. Maybe I would do it if if I could agree that the agent would rebate me a significant part of that commission back.

But as a seller, I want you know, I want I don't want someone to be motivated by one buyer, I want somebody to be motivated by the highest price. As a buyer, I would much rather want an agent who's motivated to sell to me than anyone else. And so in both scenarios, I think we got an, we were able to close and purchase contract before other higher offers came in, in some cases by hours.

And in some cases by by by a day, but you know, we were able to make an offer on the house we're in now, before it went on the market, and and have it accepted. And the backup offers that came in were higher than our offers, at least as best I understand it.

So that's my little hack, which I wouldn't do as a seller, but as a buyer has worked well. I like that hack. And you know, I would build on it. I think that works the way you did it, that works great in a competitive market where the challenge for you is to actually get the buy.

I think if you say, hey, maybe today's markets not so hot, you know, I've got time, it's more of a buyer's market, or maybe a more balanced market. But I think you can easily flip that around. And I haven't done this myself. But I have a friend who's done this several times where he'll put in an offer, and he'll write into his offer, you know, I'm not represented by an agent.

And part of my offer is that the seller is no longer paying a 6% commission, they're only paying a 3% commission. So he's basically saying, hey, when you look at my offer here, and maybe, you know, I'm bidding 970,000, my competitor is bidding a million, but you, Mr. Owner, are going to net the same amount because I am explicitly stating that that commission goes back to the seller, then I think, you know, you can basically get a lower price on it.

Again, it's not something I've done. But I think it's the flip side. If it's not a competitive market, if it's more of a buyer's market, you can use that as a way to find a lower price that's not going to hurt your seller. Yeah, when we did it, we actually the first time, the second time, this didn't work.

But the first time we convinced the agent to rebate the 1% of their commission back to us, meaning one of the 6%, not 1% of their overall thing. So you know, we were able to bid a little higher because we were getting it back. I've never thought about what you just described, which is like just take the commission out, and then you can offer lower.

So those are fun hacks, especially if you're buying a house in this market and want to try to find a way to get it get the best deal. But I want to jump back in. So we're talking about real estate as part of your portfolio, we talked about what happened to stocks.

Let's talk about a few of the other interesting things. And I think alternative assets is one. Maybe because I have a lot of questions there, we could start with cash, and then jump to alternatives, because I think we could spend a bit more time there. Anything you learned particularly interesting about cash or anything else that we've kind of missed when we talked earlier?

Yeah, I would say that if you think of conventional financial advice, it would probably look like a 60/40 portfolio, 60% stocks, 40% bonds. If I look at our typical member, and so again, we're talking about people with 5 to 30 million, their typical portfolio is only 15% cash plus bonds altogether.

There's just been very little appetite historically for those instruments. Now, that could be different. Now, the interest rates have tripled over the past number of months. If we run this next year, we might find that bonds become more interesting. But to date, I think people keeping very little cash and bonds, and part of the flip side of that is probably not having much debt either.

It's saying, "Hey, I'm not going to take a lot of risk here and put a lot of leverage in my portfolio. But by the same token, what I'm putting my money into, I want to have a high expected return. I'm not happy with the expected return of 2%. I want to get 10% or 20% or something like that." And I think part of this comes down to...

Apologies if I'm taking a little field from your question here. But if I think about how maybe do some of... People have been very successful financially look at investments differently than conventional advice and what sort of leads this lower bond allocation. I think there's historically been this notion that...

I'll call it driven by the investment industrial complex that volatility and risk are the same thing. And I think that is just the wrong way to look at it. So you look at terms like a Sharpe ratio. And a Sharpe ratio is a way that people often look at assets like hedge funds or something like that and say, "How good is it?" You don't just say, "What is the typical rate of return?" But it basically divides that rate of return by the volatility.

So say, "Hey, if this thing returns 20% and this other... Option A returns 20, option B returns 10, but option A is twice as volatile as option B, then effectively, they're just as good as each other." You can choose how much risk you're willing to take, and then you get proportionally rewarded in your upside.

But I think this idea of volatility and risk being the same thing, I personally just don't follow that in my portfolio. I think if you have an amount of money that you don't need anywhere in the near term, let's say you don't need it until retirement, so that could be 10, 20, 30 years away.

What matters to me much more is how much money am I going to have at age 70 when I want to retire, and not how smooth is my path to age 20. So not that I don't care at all. Everyone, of course, is somewhat emotional, is not going to be happy about seeing a million dollars go down to 100,000, then jump up to 5 million.

But you're much better off ending up at 3 million than having it just in a bond going from a million to 1,000,001 to 1,000,002 and ending up only a million and a half in 30 years rather than 3 million. So this idea that risk is very real, but I see risk much more as what is the chance that in the end, I'm going to have a permanent loss on this, a permanent impairment of capital.

These are not new concepts for me. Warren Buffett talks about it in the same terms, the risk that you permanently lose this money, not just how much does it bounce around in the interim. So I think that would be something that I would encourage everybody to think about, especially if you do work in a financial advisor.

I'll give an anecdote. When we sold our company and I was talking to a number of financial advisors, one of the big name, high profile banks I was talking with, actually a good friend of mine who works there, he's a wealth manager and he was sort of giving their pitch.

He said, "You know what we can do for you? We can give you half the return on the stock market at a quarter of the volatility." I said, "Why would I want that? Why don't you give me twice the return on the stock market at the normal volatility?" He just looked at me like I was crazy, like, "No, it's not what we do.

We give you lower returns and lower volatility." I think that's fine if you have a known need for this. If you're sending your kid to college in two years and that money needs to be there, and it's no good for you that you'll have money in 10 years, well, then you shouldn't take risk with it.

But I think a lot of your listeners are probably earning good salaries in an active savings phase and if they're younger and earlier in their careers, are going to be in a savings phase for decades to come. I would encourage them, unless that they know that they personally just don't have the risk appetite and are going to panic and sell in a downturn, unless that that's the case, just not to be as worried about near-term volatility.

I think there is less panic selling than people are led to believe. I think it's in the interest of the financial advisors to sort of say, "Hey, if you're going into these things by yourself, and you're going to these risky asset classes, you are going to panic the next time .com bubble happens or next time a great financial crisis happens." That's not universally true.

That's some people, but that's not everybody. I think there's a lot of people who can just say, "I'm going to set on autopilot. I save $1,000 a month and I never look at that. And I just check my portfolio once a year and hope it goes up." I mean, the good news, this is not good news for our accounts.

But in the last, I don't know, three years, we've had what happened when the pandemic started. People that were invested in equity saw their portfolio crash. And you can ask yourself, "How did I react?" And if you were able to hold back your fear and not react, well, now you've been able to test yourself.

Now we're again, in a double-digit, 20+% correction in the stock market. And then anyone who's held basically any amount of crypto in the last handful of years has probably had a separate, sometimes correlated, sometimes uncorrelated, completely 50% haircut in that market. So I think a benefit to young people today --I'm going to pretend I'm young right now-- is that these things were things that some people didn't see for 10, 20 years.

And now, we've seen 2 in the public stock market in the last 2 years. And so people have really gotten to understand how they feel, and even understand how they felt the first one, and now see how it changed in the second one. And I think that's something that historically, people have needed maybe 20 years to find out.

And now, we're fortunate, I guess, maybe not right now with our portfolios being down, but we're at least fortunate that in a very short period of time, we've gotten 2 opportunities to see how we would react, and what happens, and understand our own appetite for risk and short-term volatility.

And for me, I don't love logging in and seeing that my portfolio is down 20%. But the portfolio is down 20%. I don't need now. So you can get caught up and say, "Oh man, my net worth is down." But it's like, "I'm not trying to withdraw this money to spend it now.

So maybe it doesn't matter." And one thing we didn't touch on before we talk about cash and alternatives is the balance between indexes and individual stock investing. And I'm a little curious what you've seen in the long angle community with this survey of people trying to pick stocks and pick winners, which is...

I know often, a thing that people are told you can't do, but then you're like, "Well, Warren Buffett's doing it. What are people in the community doing here?" Yeah, I would say they're probably picking a lot fewer individual stocks than you would expect. We did ask of your total public equity exposure, how much of that is in index funds versus individual stocks.

And the significant majority is index funds. And I would say those individual stocks, they often tend to be employer stocks. So hey, I was an employee of X company before it went public, and I've got a lot of shares, or I just get every year as part of my compensation package, I get a certain number of shares and haven't gotten around to sell them.

So I would say that there is not a lot of individual stock picking. Now, of course, nothing's universal. There are the guys who love it. But in general, I'd say that for their public equity exposure, people go diversified. Now, the one plug I will put in favor of individual stock picking, and I do a little bit of this, not that I think I'm great, but mostly for fun, is to your point around, "Hey, the market went down 20%.

I feel 20% poorer." I think that's largely a perception of people's relationship with a stock is just this number on the screen. But the more you're actually thinking about, "I own 1,000,000th of a percent of Apple, and that's the thing I own. I don't own a share of Apple that today is worth 100, tomorrow is 140, but I own this little share on their future income." You know intuitively, Apple didn't just become 20% or 30% less valuable.

This is just the market pinging around. Or a more extreme case, Facebook did not lose 75% of its value over the last six months, even though the price went down 75%. So I actually think it's not that harmful. If you're somebody who enjoys it, I wouldn't just put all your eggs in one basket.

But if you want to buy a sort of balance of 20, 30 different stocks, you're almost certainly just going to track the overall index. But if either you find that a fun diversion, it's something that you enjoy, and maybe that's a form of spending. So rather than going on a fancy vacation, you're spending by investing in these stocks.

It's not a bad thing financially, but especially if it makes you more comfortable and a drawdown, because you can really just look at a profit and loss statement and say, "Hey, P&G sold 3% more tide this year than last year. So I don't really care that the market's down because they're still paying their dividends.

They're still making tide. Exxon is still pumping oil." I think that can actually be really helpful. People sort of ride out some of this volatility. And to your point about Warren Buffett and picking stocks, I think that's exactly how he talks about it. He says, "Don't look at my market to market.

Just look at what is the operating cash flow of the businesses we own and do a look through basis. I own 5% of Apple and that made X billion dollars of profit next year." So that's what I think it's worth, not what I could get if I happen to sell my Apple shares today.

Let's move to the topic of alternatives, because I think it's something that seems so mysterious to people. And in some ways, even just through the LongAngle community, I've started learning like, "Wow, even I felt like there was a lot more that I knew." So maybe if you could give a little bit of an overview to people listening on what you even mean by alternatives, what does that whole space look like?

And then we can talk a little bit about how to think about them, when to think about them, where to get them, what kinds, and all that. Yeah. Awesome. I'm super excited to talk about this. I think this is just a really interesting asset class. So first of all, I'll say alternatives is a very broad term.

At its highest level, it means really anything that is not stocks, bonds, cash, or real estate. Now, some people will call real estate an alternative, but I don't think it really belongs there, but it's basically everything else. So when I talk about it here, I'm sure that you'll have somebody writing in, listing 10 different alternatives I left out, because pretty much anything you can think of putting your money into, you can define as an alternative.

But it's everything except those conventional ones. Now, to make that a little bit more concrete, they tend to share a few characteristics. I would say they tend to be less regulated. When you're buying stocks or buying bonds, you have this whole infrastructure of the federal government and the Securities Exchange Commission and all these rules and courts that make sure that you have full information and that every company has to publish their quarterly earnings or else the CEO and the board is going to be sued and that sort of thing.

There's a lot to ensure transparent information and effectively efficient pricing. This is part of the reason that you can just go out there and buy whatever stocks you want to. If you buy enough of them, you're probably just going to track the index because there's good information. But there is a lot less regulation and a lot less information on alternatives.

In terms of less information, I can go out there today and find a list of every publicly traded company in the US, and that's just an objective, factual list. If you said, "Hey, what is every alternative out there?" There is no list you can look at. You can do Google searches and say, "Okay, what's every hedge fund out there?" and you'll find different lists, but it's only going to be people who opt into that hedge fund index.

And also, they tend to be usually less liquid. That's not universal. Something like crypto, I can go sell it tomorrow. It's a very liquid market. Or maybe foreign currencies, I can go sell those tomorrow, very liquid. But a lot of them tend to be less liquid, just means it's a higher friction to buy and sell and longer holding periods.

Now, this idea of being less regulated, less transparent, less liquid, that sounds bad, but it's not necessarily bad. I think that's the... There's both a good and bad on it. The bad is that it is a lot more dangerous to be a naive investor in alternatives. The good is that if you actually know what you're talking about, there's a lot more opportunity to sustainably have high rates of return.

If somebody tells you they're going to buy public stocks and return 25% a year consistently with low risk, I would just run away from that. It's just not possible. The market is efficient. Any good news, good information just gets arbitraged away very quickly. But in the alternative space, you can find a little niche where if you really understand it, you know the people you're partnering with are good.

Because it's not transparent, because it's not liquid, you don't have trillions of dollars of capital flooding into that particular niche and arbitraging away the whole opportunity. You can have a consistent sustainable source of... It's called alpha or just consistent above market rate returns. I think it's extremely attractive. Personally, I'm doing most of my investing there, but it's one where you have to be more careful because you can either make a lot or lose a lot of money depending on how you do it.

If you want, I'd be happy to get a little bit more into what some of the specific kinds of alternatives are, classes, and what to expect in each of those. Yeah, I think that'd be really helpful and include some examples of some of the interesting ones that maybe people would have never thought of as an investment.

Again, with the caveat that I'm sure I'm going to be leaving out more than I mentioned here, I would probably put them into four big groups. I think the first one is some sort of equity, some sort of ownership in a business. Typically, people think of stocks and buying Microsoft or Google, but that's really only the biggest 5,000 or 10,000 companies in the country.

There's another multiple millions of companies in the country that are not publicly traded, and so they're all accessed through some kind of alternative. Within there, I think there's some really interesting asset classes. Maybe people are most familiar with angel investing, and that really means somebody just... It's basically at an idea stage, you've got a small team of two or three founders who want to build something, and they're raising maybe half a million or a million dollars to start hiring a team, start proving this concept works.

That's very early stage, super high risk. Most of those are going to go bankrupt, but super high return. If you happen to be the angel who invests in Google, you're going to get 1,000 times your money back. That's angel. You get a little bit further along in the process, and you move into what's called venture capital or VC.

There are different stages. The earliest stage is seed round, then you've got A, B, C, D, E, and so on. As the companies get bigger and bigger, their valuation gets higher and higher, but the risk goes lower and lower. Angel people often do themselves. I would only recommend doing that if you work in technology or biotech or robotics or something like that, or AI, and you know people who are starting these companies, you have a lot of confidence in them, that's a great way to do it.

If you don't have as much access there, I probably would go light on that. Venture capital is more traditionally done through venture capital funds. You can think of a lot of big names there like Sequoia. There's a million of them and often have a very good historical track record.

Those are the ones that are putting money into companies that are usually growing quickly. They have some degree of proof that their model works, but they're not yet at scale. They're giving them millions or tens or hundreds of millions to basically scale up and reach their opportunity there. Again, it's still risky compared to investing in a public company, but it's a lot less risky than Angel, especially the further down the trail you get into these late-stage series C and D and E.

The companies are fairly proven and mature, but you still have some upside there. A third one is private equity. Basically, what private equity does is they're not looking to turbocharge these smaller companies, but they're buying companies that are usually fairly mature companies. Sometimes they're very profitable. Sometimes they have some dents and scratches on them and need to be fixed up, but they're basically buying mature companies and they might take them private.

A company that is publicly traded, they'll take it private. If you think of Twitter, that being a sample of a company taken private recently, or they might just be buying them from the guy who started it or a previous private equity firm that bought it. Buy it somewhere in private market transaction.

Their idea there is they'll usually put in some amount of their own money, maybe 25% or 50% of the purchase price, then they'll borrow the rest. Their idea is to run that company better and to throw off more cash, and then eventually after maybe five or seven years to sell it to somebody else.

Those tend to also have very good historic returns. If you think of VC maybe having in the 20% plus returns, I think private equity often the good ones can get in a similar return range there. Again, that was almost entirely done through a fund or a third party. Unless you happen to be somebody with an enormous amount of money, you can't personally take a company like this private, but you can invest in some of the big names or companies like KKR or Blackstone or Carlyle, some of the better known private equity funds that hold many billions of dollars.

Then there's one other actually really interesting class of equity alternatives, which is search funds. People don't know about this as much, but it has one of the highest returns actually of any asset class out there historically. Stanford does a lot of studies on this and they've been tracking it for more than 30 years.

Over that period, the average internal rate of return or IRR, just the average return on money there has been above 30% almost consistently every year over the past three decades. Basically, the search fund model is that someone typically, a new MBA graduate from some high-end school like a Harvard or a Stanford MBA will spend a year or two going and looking to find a small company to buy, and they will get maybe half a million or a million dollars of backing from a number of investors to pay their own salary and pay their expenses as they're looking for this company to buy.

Then after a year or two, they've identified the company, they buy it often from the person who started that company, and then they try and scale it up or run it, somehow improve it for five years or so, and then they sell it off into another private equity company.

This idea of basically buying it at a relatively low multiple from the founder, and then improving it and selling it at a high multiple to a follow-on private equity company has just almost like clockwork returned unbelievable returns. This one, the flip side, and this is what I was talking about in general where alternative assets can be low information, hard to get into, but then really good.

I'd say search funds tend to be an example of that really good. It's hard to get into, but if you find a good search fund sponsor, you can see those kinds of returns. If I look at the deals that we have done within the long-angle community, that's probably some of the ones I'm most excited about are those search fund opportunities.

We talked about a class of equities. I think there's also a class of commodities. Examples of that could be crypto. That's probably one of the most accessible alternative assets out there. If you're looking at a major coin like an Ethereum or a Bitcoin or even anything in the top 10, top 20, you can go buy that in Coinbase or really any marketplace for crypto, and you're going to get basically the exact same thing.

You don't need somebody's help to buy Ethereum. You can go just do that yourself. Another example of commodity might be whiskey. This is something that we've done a few deals and recently I've found really interesting where there has been a pretty consistent appreciation curve where newly distilled whiskey that's just put into the barrel, or maybe I should say like Kentucky bourbon to be more specific, will often be about maybe $1,500 a barrel.

Then when it's three years old, it's usually worth more like 3,000. When it's five years old, it's worth maybe 4,500. There's been this just very consistent and rapid appreciation curve. Don't want to spend too much people's time to talk about exactly why that curve has existed there. But that's an example of something that I never would have thought before, this idea of, "Okay, I'm buying a barrel or shares of 100 barrels of newly distilled Kentucky bourbon." But if you look historically, if you have a good operator there, you can consistently see these really pretty exceptional rates of return.

I won't say that that is totally uncorrelated. Assets, especially in a down market, tend to have some degree of correlation. When it's a bad market for public stocks, probably art, probably real estate, probably whiskey, probably everything's going to get hurt to some degree, but it's not perfectly correlated. You're going to get some benefit of that lack of correlation.

Commodities are another example. Then there's a whole set of things that are just around complex financial structures, where basically there's some stream of money or some asset that someone then wants to structure in a certain way and sell on to somebody else. I'll give you a more concrete example.

There's something called equity finance, where if you have someone who's lucky enough to be an early employee at a company, maybe it's like a private company, but it's been quite successful. So think of like a SpaceX or a Stripe or some private company that now their shares are worth, let's call it $10 million.

If that person, they may actually want some liquidity from that, but it's not a public stock today. So they can't just go and sell it through their brokerage account. One thing that, and also to actually realize the value of that to a stock option, to get a little bit into the weeds, a stock option, if I actually want to turn it from an option to so-called exercise or turn into a share, I have to spend a certain amount of money called the strike price to actually say, "Okay, maybe this share is really worth a dollar, but my option is to buy it at 10 cents." Well, at a million shares, I need to now come up with $100,000 to buy those shares at 10 cents.

I know it's a great deal because they're worth a million, but I still got to find the $100,000 and I can't necessarily sell them for a million here. So what do I do? There's something called equity finance, where a third party will go give that employee the $100,000 and tell them to use it to exercise these shares.

And that in return for that, you can negotiate however you want to, but they will get some fraction of the upside on it and some shared downside on it. So if that million dollars of share now doubles to 2 million, maybe the person who put in $100,000 to allow the person to exercise their options, maybe he or she gets 50% of the upside and the other 50% goes to the employee.

So those are just illustrative numbers, but this idea of a structured financial arrangement where I'm putting in money to get a certain claim on a certain asset, there's an almost unlimited number of these. There's also things called secondaries. So basically, anything that's in a fund, whether it's a real estate fund, a venture capital fund, any kind of fund where there's not day-to-day liquidity, where you can't just go to the venture capital fund and say, "I want my money back," because they'll say, "Well, too bad.

It's invested in private companies. I can't give you your money back until those companies go public." I can turn around and sell it to you, Chris, and say, "Hey, Chris, I want to sell you my stake in this Sequoia fund here. And I think the underlying assets are worth a million dollars." Typically, these secondaries will have a discount and you'll say, "Well, I'll give you $800,000 for that million dollars of shares in Sequoia." And this is, again, across any of these asset classes, this idea of secondary transactions at a discount to the underlying value is a very common form of settlements.

There's even more esoteric things like buying somebody's life insurance policy from them and assuming the premium when they pass away, you get the money. I haven't done that particular one myself, but that'd be another example of structuring something. And then finally, you've just got a whole grab bag of esoteric approaches you can take.

So just talk about a couple of fun ones. For example, there's a professional athlete revenue share, where let's say somebody just signed a minor league contract and they don't have any money right now. They're making very little on that, but they're likely to become the next major leaguer and sign a very big contract.

But it's going to be quite a while out because they're going to be in the minors for three years or five years. And then the way contracts are structured in the major leagues is your rookie contract lasts another five years and it's not worth that much. So they could be 10 years out from their high earning potential.

You could say, "Okay, I'm going to give you $100,000. And in return, I want 2% of your salary should you make the majors. If you don't make the majors, I've lost my money. You got $100,000. That's the risk for me. But if you do make it and I get 2% claim on it, if you sign $100 million contract, now I'm getting a $2 million payout there." So that's just an example of, again, how almost anything can be an alternative asset.

And where do things, art, farmland, those fall in one of these buckets also? Yeah. I mean, to this point of almost anything you say, "Is that an alternative?" And the answer is going to be yes. I think something like farmland, that probably falls into your overall world of real estate.

And I would analyze those deals the way I'd analyze any other real estate deal. I think that's probably a low risk, low return version of real estate. It's a pretty predictable yield. I'm going to rent it to a farmer for a few percent a year. And it's probably just going to slowly appreciate.

The jackpot for farmland real estate is if you happen to be in the path of urban sprawl. I live here in Dallas. There's a neighborhood north of town called Plano that 20 or 30 years ago was cornfields. And now it's all 10 and 15 story skyscrapers. The guy who owned a ranch there did super well.

But that's kind of what farmland looks like. You've got these things, as you're saying, like art, like watches, and probably crypto is like this as well, where there's not really an obvious measure of what's the intrinsic value here. Is a Picasso worth $1 or is it worth $100 million?

It's really only worth what somebody will pay for it. There's no cash flow stream there. I personally have not gone heavily into any of those collectibles. Baseball trading cards would be another example of this. I think the ways you can do well there is either you can just look at this as a hobby and say, "Hey, I am really excited about owning this cool Rolex watch.

And I don't really care if I've "lost money and can't sell it" because that's something I'm excited about owning. My wife's wedding ring, I have no idea if that's worth more or less than I paid, but I really don't care. We're not looking to sell her wedding ring. We just like it to be a wedding ring." And so I think there's things...

And art, again, you could pay a few thousand dollars for commissioning a piece of art from a local artist. You're probably not going to make money on that, but the point wasn't as an investment. The point was to have it. I think if you're looking at it as a pure investment, I would say this is really a case where you have to know what you're doing.

I think there's the old apocryphal story about the poker player where if you don't know who the sucker at the table is, it's probably you. Then I think that could be very true in collectibles markets or art markets where if you don't know what you're doing and are just sort of buying at the price that's given to you, I think there's a...

If you have fun along the way, that's great. But I think your odds of making money as a non-expert in something like art are probably pretty low. You mentioned at the outset, the reason you set a threshold for long-angle members is because they have to meet some requirements. Whether that's a qualified, I think, customer, or even I know in other cases, there's a credited investor, are those things always going to be the minimum?

And someone who doesn't meet them, is there any accessible way to partake in a lot of these alternatives? I know that's two questions. So maybe we could talk on who's even eligible for this, and then we can move into how would you even go about evaluating it or finding it?

Yeah, great question. So as you said, two things. First, who can? And then second, who should? I think in terms of who can, it really depends on the asset class. As you said, there's sort of accredited investor, which basically means you've got a six-figure income or you have a million dollars.

Then there's some higher thresholds like qualified client and qualified purchaser. Qualified purchaser is actually a very common one. That's the highest level. That means you have $5 million or more. So there's a lot of the most interesting ones, you have to be a qualified purchaser and you can't get in if you don't have that $5 million of investable assets.

I think there's also a question of, hey, you shouldn't be putting 10% or 20% of your portfolio into any one of these. They tend to be more volatile, or maybe volatile is not the right word. Risky, you want to diversify across them. The same way you shouldn't put 10% or 20% of your money into a single company's stock, you should diversify across stocks.

Same thing, you should diversify across alternative assets. So if you're talking about putting 1% of your portfolio into something, you need to have enough money that 1% is going to be a meaningful investment. If 1% is $100, then no good sponsor is going to want to take your money.

It's not worth your time thinking about it. There can be some complex taxes with 1099s and it's not worth the administrative burden. So I think typically this range of low seven figures of having a million or 2 million or certainly if you have 5 million, it's definitely plenty to play.

But I think that if someone has maybe $100,000, I would probably not yet go into alternatives. I think the two exceptions I'd make there, one, as I said, crypto is a very accessible alternative. You can put in as little money as you want. And there's very good information about pricing.

I don't know what a Bitcoin is inherently worth, but I have as much information as anybody else does about what it's inherently worth. So I think there's nothing wrong with dabbling in that. I also think angel investing, if you happen to have friends who you know and trust and respect and think that they're very successful, angel investments are often small dollars, $5,000 and relatively small dollars compared to some of these other ones.

So you don't need an enormous amount of money to make a bet on your roommate from college if you think he's going to start a very impressive company. But for a lot of the other ones, I think it often needs to get into high six figures, low seven figures before the administrative burden is worth it and before the good sponsors of these funds will be interested in talking with you.

Having spent a lot of time in venture capital, I'll push back a little and share one stat. I believe 95% of all the returns in venture capital are derived from the top 3% of funds. So I've always been someone who, as much as I've played in this space and even professionally invested others' money in startups, I have been very reluctant to angel invest, mostly because I think, "I've started companies.

They haven't all worked. I have friends that I thought were smart, and those companies didn't work." I feel like it's just a very hard game where you have to be willing to lose all the money. The one place, which you aptly pointed out that I think is the one place where I will consider writing a small check in a person's company is if it's a person I just know really well and I believe in.

But I will say I've also had enough reps working at, investing in, and meeting people who start and raise money and build companies that I feel like my barometer for someone who's great is adjusted for what it takes to also build a big company. And I think that if you had asked me 15 years ago, which of my friends were awesome and I would want to back, I'm not sure I would have picked the same way I would now.

So I'm probably the person that's sat by the sidelines more often here. And I'm sure I have at least a handful of friends who didn't and have hundreds of thousands or millions or 10s of millions because of it. And there are certainly early-stage deals that I remember. I remember lots of people trying to write early-stage checks in Uber and it wasn't even something that crossed my mind.

And that turned out really well. So I'm a little bit more risk-averse in that space than I think maybe you are. But maybe I'm a little jaded from living and breathing it and feeling like my real estate's in the Bay Area tied to tech, my jobs that I've had, my jobs my wife's had are all tied here.

So I think that's another factor to consider is if you work at a technology company, and your spouse works at a technology company, and you live in a place where technology is a big part of the neighborhood or the city you're in, thinking about diversifying how you invest a little differently.

If you're getting paid in Facebook stock and your spouse is getting paid in a startup stock, maybe tech is not the place to invest. So I just want to flag a few of those before and then get your reaction to... There are a bunch of platforms online that let you invest in both alternatives, as we've discussed, but also things like private REITs and real estate funds that aren't public, wine, that kind of stuff.

What thoughts do you have there? Because I think many of them have made it almost as accessible as buying crypto and not something where you're necessarily going direct to a fund that has a higher threshold. I'll start with the disclaimer that I do not invest through any of those platforms.

And I'm both happy to share what I see as the pros and cons and can share how I go about it personally, to the degree that may be helpful to some of your guests. So as you said, there are a huge number of these crowdsourced investing platforms to whether you want to get into wine, venture capital, farmland, private equity, etc.

There are crowdsourced platforms for you there, fine art, etc. I won't get into the sort of pros and cons exactly of each specific one and their fee structure. But I would say generically, I think the biggest advantage of this is it does allow you to get access to an asset class without needing to have personal relationships with the partners at those firms.

And without being able to write six or seven figure checks, often the minimums will be 5,000 or 10,000 or 20,000, not in some cases, 5 or 10 or 20 million to get into some of the best funds. So it definitely gives access and it democratizes that access and brings down the barriers to entry.

Now, in terms of what I would say are the downsides and the reason I don't do it personally, there's two of them. I think the obvious one is that there are extra layers of fees on it. And I think there's nothing inherently wrong with those fees. They are providing a service, they have real costs.

I would just caution people to make sure that they truly understand the fees of what they're looking at, because often there'll be an advertised fee of saying, "Okay, we take 0.75% per year of assets under management," something like that. But what they won't necessarily disclose is that there's also certain administrative fees being paid or maybe the asset that went in there, they purchased on the open market and then marked it up 10% and then sold it into their fund.

There's certain things like that, which can actually make the fees a lot higher than they first appear to be. So you want to just make sure you really understand the fee structure of those. The second thing, and I think potentially the more important disadvantage and reason I don't do it, is that there's a selection bias.

Now, you said earlier that if you look at venture capital, you said something like 90% of the returns are driven by the top 3% of funds. That's going to be true across a lot of these asset classes, where the top 5%, 10%, 25% of the funds are driving all the returns and really skewing the averages.

And you're going to have adverse selection almost universally, where I would be shocked if you're going to find Sequoia as a venture capital fund offered on one of these platforms. They're not going to have the very top tier funds there, because those guys are much more careful if there's access.

Again, if you want to get into search funds, the good search funds or probably any search funds are not going to be on there. It's just not an asset class that is looking for "retail investors." And I think that selection bias is going to cause you problems, because if you're expecting that venture capital returns 20% or 30% a year, but then you slice off the very best part of that, what you're left with, the venture capital you can actually get through these crowdsourcing platforms is not going to have nearly those same returns.

You won't necessarily lose money and you'll get some exposure to the asset class, but it's not going to be the same sort of profits there. You're seeing the deals that couldn't get funded by the more connected private investors. That sounds like a negative story, and so I'm not saying this can't be done.

I'll share the way that I do it, is I think basically the most effective way is to do it via networking. Now, I personally, that was actually part of the reason I started Long Angle, is I was interested in getting into a lot of these asset classes, but I didn't have the network.

There's some things I knew well. I'd started a software company, so I do know other people who are starting software companies. I can do that angel investing by myself. I maybe even know some VCs and could do the VC investing, but I don't know anything about mineral rights and I don't know guys who are buying acreage in the Permian Basin and that sort of thing.

I didn't have the right first-person connections at private equity funds, search funds, etc. So the way I do is actually, it's all through the Long Angle network, where basically we've got 1,000 members every day. One of them is sending me a deal with 1,000 members with very different professional backgrounds, so in every one of these industries.

So there are people who, if you're interested in AI and ML driven crypto trading strategies, there's people who that's part of their whole job. They start funds that do that. So we're both seeing access to them. They send them to me or one of the other guys who's helping manage the community.

We then pick out the ones we think are most promising. And I think in addition to the access, you want the evaluation. So we also get a volunteer deal team of three or four people who really know a particular asset class well. So for example, we were looking at one that was around tertiary oil field rejuvenation through oxygen injection, and it was fairly technically complex.

So we just got a team of three or four members who were all petroleum engineers by background. That team did a deep dive on it. We ended up passing because we weren't confident with the technology of it. The point being that it was both sourced by somebody who worked in that industry and then evaluated by people who work there.

And so that's how I've done my private market ones, is that the handful of ones where that deal team likes it, and I would say this is only one to two deals a month across a variety of different asset classes. We then create a special purpose vehicle or SPV, basically a fund within our group where anyone in the community who's interested in investing, everybody's making their own decisions, but they can read the deal notes and look at the calls and talk with the guy running it.

If they like that fund, they can then choose to put in a little bit. And again, we're able to bring down the fees or the sort of minimums because collectively making that investment there. So that's how I go about personally. Now I realize that only works for me because I'm within the network.

If somebody joined the community, they could certainly participate there. But I think this is also extensible to people who are not in our community. We're saying leverage your personal network. And I don't think you have to invest in every one of these alternative asset classes. I think it would be a lot better for you to say, "Hey, there are one or two or three of them where either I have personal expertise, or I am good friends with somebody who really has expertise here, and I'm going to leverage that person's connections and that person's expertise," as opposed to saying, "Hey, I just think that watches are a really cool asset class, and I don't know anything about watches, and I'm not going to take the time to learn it, but I'm just going to throw some money at it." You might make money, but you're likely to lose money there.

So I would focus on fewer asset classes where you really can get that first degree network yourself. I totally agree. And full disclosure, while I've signed up for many of these platforms and played around, the only one I actually use is Masterworks. And that's because I like the idea of investing in art with a small part of my portfolio, but certainly didn't have the assets or the expertise to do it myself.

And I was okay with the fees, especially when I felt like they were doing something more than just charging for access to a fund. But yeah, the whole alternative space is something that for a while, I just was excited about. There weren't a lot of platforms to do anything 10 years ago, so I was just learning.

And I did what you did, which was pick an industry where it was technology and dive into it and understand it deeper and feel like I understood the companies and that. And then worked in venture capital. And even with all of that, I'm still pretty hesitant when it comes to angel investing.

So it doesn't mean you have to do it. But now I have enough knowledge about that space that people ask me questions. And every now and then, someone will share a deal or something that makes sense. And I've heard the same thing is true with real estate. I've asked lots of people, "How do you find all these great real estate deals?" Because the number one thing I hear when I ask someone about real estate deals is they seem to always say two things.

And they're the most stressful two things to be paired with each other. One is, "Gosh, real estate deals are so great. I've made so much money on real estate deals. And oh, by the way, 90% of all the real estate deals are terrible, and you're going to lose money." And I'm like, "Okay, well..." So I basically decided I have two options.

I can either really try to understand the real estate community, understand what makes deals good or bad, meet people that can help guide me through that, or I can just steer clear. And so for me, real estate has been one where I just haven't been involved. But the opportunity to go to real estate investing meetups and meet people and understand they're out there.

And I know that if that was one of the asset classes I wanted to get into, I could. It's just... It hasn't been an exciting passion of mine. And so I'm okay missing out on all those deals. And there are probably a handful of deals that are going to come up in LongAle that I'm more interested in now than I was before.

So I'm glad we got to talk about it. Yeah. I would agree with you that I wouldn't pressure myself to invest in an asset class because I'm going to miss out. If you put all your money into an S&P 500 index fund, keep it there for 30 years, you're going to do fine.

There may be an opportunity to make a little bit more by doing certain well-selected alternatives or mixing them in the portfolio, but I would not do it at the expense of stretching and investing in something where you don't understand it or don't have the access or don't feel like you can really evaluate it.

And it's funny because in advance of this call, I went and looked... I filled out the benchmarking survey. And I went and looked at mine. And it's like, even despite my passion in this, even despite all of these deals that come up on the platform, I'm at... I think it was like 88% of everything that I have is in equities and my primary residence.

And of the 12% that's left, it's like half split between cash and alternatives. So even for me, with all the exposure and knowledge and some of the access, but certainly not as much as you have, it's still something that I try to keep down to the sub 10% part of my portfolio.

And the vast majority of it, 85% of all of that equity is in index funds. So for me, as much as this is exciting and interesting, and I like to think about it, dabble in it, and maybe that'll grow over time, I just want to make it clear that my passion and excitement about learning about it is certainly not commensurate to its position in my portfolio.

So that was like a masterclass on alternatives. But I am curious about another type of financial education, which is how you're thinking about sharing all of this knowledge with your kids. Because mine, right now at two and five months, we're not really talking about it a lot. A guy I know, Rob Phelan, has this awesome book called M is for Money that we bought for my daughter.

So it's like an alphabet book, except each page is talking about an aspect of money. And my daughter knows that the piggy bank has money and that money buys things. And that's about as far as we've gotten. You're further on the journey. How have you thought about trying to make sure your kids both understand all of this and are equipped with the knowledge?

But also, I went to a conference recently, and there was a group of people that said, "How do we raise kids that aren't entitled?" And have you thought about that? And what are you doing? Yeah, I love this question. And of course, I'll start with the comment that I don't have all the answers here.

But if I look at myself and actually all the members of our community, I'd say, "What is the number one problem that most of them are struggling with?" It's this question of, as you're saying, what's the right way to raise kids in regard to money? And I might put that into two groups.

One, you talked about how to make sure you're instilling them with the right values and not to take things for granted, not to be entitled. And then the other one is just practically how you get them the information and knowledge about it. In the world of not being entitled, I don't have a full answer there.

But a few things, I think one, in general, I would say that communication and honesty and transparency, I think is the best way to go. So my kids are a little bit older. They're 7 and 11. And we've been trying to do this throughout. So in terms of making sure they value money, of course, they can see that we have a nice house.

If we want to go on vacation, we go on vacation. But my wife and I are transparent when we talk about decisions we're making. We bought a new car recently. And my son was asking, "Well, why didn't we get a luxury car? Why did we get a Hyundai?" And he goes, "That we didn't have the money for." I said, "We could if we wanted to buy a fancier car.

But that's just not important to us. And other things that we spend our money on are more valuable to us." And I used actual numbers with him. Okay, here's how much a Mercedes would cost. Here's how much the Hyundai costs. And this one seems nice to me. They both get from A to B.

So just this idea of communicating, no matter how much or little money you have, there are trade-offs, whether it's whether to buy the coffee at Starbucks versus making it at home versus do you want to fly private versus do you want to fly commercial. I personally have not moved beyond the idea of flying economy.

I can't get my head around flying first class. So the kids actually, it de-mysticizes it. They see this as something that mommy and daddy talk about, and they think about these trade-offs. And I think that kind of gives them exposure to it. In terms of how to educate the kids on money and how it works is something where I wouldn't say that we've done a lot of things right in parenting, but this is one where I feel like we have done a pretty good job of it.

I think the fundamental thing is your kids are interested in everything that you're interested in and everything you do. So again, my wife and I just talk transparently about our jobs. And when I'm looking at an investment here, I will put it in words that will make sense to a seven-year-old or make sense to an 11-year-old, but I'll tell them, "Hey, we're looking at this whiskey aging fund, and here's how it works.

You're buying stuff that this factory makes, and you're holding onto it, and you think you can sell it for more for later. And does this seem like a good deal?" And asking them, "Hey, what would you be worried about on this deal? How do you think it might not work out?

Why do you think it does make sense here?" So I think that just that open talking about it of not having money be a taboo. Our son was asking about how we bought a house and how we decide which one to buy. And we didn't make up numbers saying, "Okay, let's pretend a house costs $100." We talked about the actual prices of that because they are sooner than we want or realize going to get access to the actual numbers.

So versing them those real numbers is super helpful. And then the other thing we've done is actually just tactically in the world of investing. Each kid, as soon as they were born, I opened a brokerage account for them. So this was separate from their 529 college savings, but just a brokerage account to buy individual shares of stock.

And then for every birthday and Christmas and Hanukkah, they each get to pick out one stock that they're interested in. It starts when they're little kids like, "Okay, how about Mattel? Or how about Disney?" Or something like that. And I just print out a cute, goofy looking stock certificate.

And they think that's semi cool. But then especially my son, now he's 11, has gotten older, he's expressed interest in this. And so we will actually talk about particular companies and say, "Hey, your birthday is coming up. What do you want to look at?" And it depends. Sometimes he'll be, he wants a share of stock in the company where my wife works or something like that.

And sometimes he'll want to actually say, "Well, which one's growing faster?" And start to do a junior version of analysis on them. And it's not like this is his passion. He may show no interest in it for two months, but then the brokerage statement will come, he'll look at it, he'll read it.

And the cool thing about kids is if he's getting 75 cents in dividends from some companies that, "Wow, I just got 75 cents I didn't work for." For a grownup, you might say, "Hey, who cares about 75 cents?" But for a kid, actually, those small numbers are an exciting amount of money.

And it's a way to start getting them that exposure there and they can get those little wins. And they actually then see that continuity where a year from now, in two years, in five years, he's seen those same shares that he got for his third birthday. Now it is eighth birthday or his 13th birthday.

He's seen those there. If he puts on dividend reinvestment, he's seen those numbers get bigger. And just at least for him, I saw this light bulb go out of these dividends, "Hey, I didn't do anything. And now I got this money here." I think he gets the value. We also nudge them in that direction where they get an allowance and we give them the option of, "Hey, you can spend it on whatever you want to.

It's your money. It's your choice. But if you donate to charity, we're going to match that 100%. And if you invest it, we're going to match that 100%." And so the kids, they spend some on trash, but I would say most of it they choose to donate or invest and they see the value of that 100% investment and it gets it compounding pretty fast.

I've also found, especially as they get older, it's been a nice discipline tool. You know every parent, discipline is such a challenge. You lecture them, you give them consequences, timeouts, takes things away, et cetera. But for a certain class of misbehavior, this can actually be really effective. So my son and I were at Boy Scouts a couple of weeks ago.

He was throwing around his Boy Scout book and he accidentally threw it up in the rafters and it got stuck there. And so I was being so frustrated with him like, "Why'd you do that? It's going to cost $25 to buy a new Boy Scout book." And I realized, "You know what, Jack?

You got to spend the $25 to buy that Boy Scout book. I told you not to throw it around. You knew that was the wrong thing to do. It factually cost $25. We can look on Amazon here and saying getting a new book is costing $25. That's coming out of your account there." And so that was, I would say, it was a very fair consequence.

It was just a natural consequence of what he did, but it really reinforced it. He has not done that same thing again when he realized, "Hey, I have to pay out of pocket for this." And of course, if he destroys our sofa, we're not going to charge him thousands of dollars for that.

But you get these small classes of things where you can actually just make them more responsible, at least with material things, by making them live with the consequences when they act irresponsibly. I like it. I feel like I got a lot of thinking to do before we get there.

I will ask in case you've thought about it, have you thought much about college savings and 529s versus just keeping something in a little bit more liquid, less restrictive place? Yeah. I looked at this a lot when they were born, and I've just started to put on autopilot since then.

The math I did when they were born was basically if you put $1,000 a month from day one into a 529 plan, assuming some reasonable rate of return, that's going to more or less cover the cost of college when they get there. Since that was seven, 11 years ago, it's probably a higher number today.

Maybe it's 1,200 bucks that you need to put a month into that. But I just started that from day one, and those accounts have been building up. I think the upside to 529s, they're great from a tax perspective. You put the money in untaxed at the beginning, but basically it grows untaxed.

The dividends are untaxed, capital gains are untaxed. And when you take it out, as long as you're spending it on education, and there's a very broad set of things that cause education, there's no taxes ever when you're taking it out. So it's great there. The only "risk" is that you actually overfund it, and maybe your kid doesn't go to college, or they get a full scholarship, or they go to an inexpensive in-state school, and you've got too much money in there.

I think it's a really pretty small problem. One reason is that you can take that money out and just pay a penalty. But if it's been compounding for 20 years, you've probably done better than the penalty anyway. Or if you're fortunate that you've got extra money, and there's money left over in there, you can always just repurpose that to a new beneficiary.

So in theory, you could make your grandkids the beneficiary of that, and then you've done your kids' college savings on their behalf for them. And so I have probably overfunded what we need to have in there. But just in the idea that the downside is pretty small, and the upside of not having to worry about it is pretty significant.

There are other things you can do in terms of also putting money in trust for your kids, and UTMA accounts, etc. I wouldn't say I have the exact answer there. But for the 529s, I think just picking a number and consistently putting in every month is kind of a no-brainer if you can afford to do it.

Yeah, someone sent me... I can't even remember the name of the website, or I'd share it. But this guy who basically teaches a course or does consulting, I can't quite figure out whether it's legitimate or... "Fraud" is the wrong word. But I can't figure out how legitimate it is.

But it's a bunch of hacks and a series of tactics to basically offset the cost of college. And it seemed like it was asset location meets scholarship eligibility and financial aid and all that kind of stuff. So I'm thinking of doing an episode on college savings in and of itself.

And I'm trying to do some research now. So stay tuned if I learned anything interesting. And if I don't, then that means there's not really any interesting tactics to learn from. Yeah. And I will say, if you send your kids to private elementary school, you will question why you're saving for college.

It costs just as much to send them to a private elementary. Fortunately, our kids are going to a public school now. But when they were previously going to a private school, I really questioned why there was all this hoopla around it when it cost just as much before that.

Before we wrap, that was kids. Are there any other areas of life, things you've picked up, tactics you want to share, tips, hacks, before we take off? I think one that does not work for everybody, and I don't personally do this, but if you can make it work, there's a huge upside to is having you or your spouse become a real estate professional.

And what that means is whoever is a real estate professional needs to spend 750 hours or more, and at least half or more of their kind of business hours doing real estate. It's a pretty broad variety. It can be a contractor, a real estate agent managing your properties, et cetera.

But if you do that, then all of your paper losses on real estate are actually deductible against your ordinary income. So if you have one spouse, say your wife is a lawyer earning a lot of money or a doctor earning a lot of money, and you can qualify as a real estate professional, you can actually cancel out her income with your paper losses on real estate.

So I don't know that I think this is good public policy, but if it's something you can do, I think it's a real savings for your portfolio. I know you love all this stuff. This conversation has been great. We've had other ones before. Are there other places online that you consume content?

You've got Long Angle, you've got this podcast, of course, but what other resources, sites, blogs, people you follow to stay on top of all this? Yeah, for sure. There's a couple of websites I like. Mr. Money Mustache, I'm sure you're familiar with, a lot of your listeners probably are.

He was one of the ones that initially got me into this idea of a lot of the investing and financial hacks. It's fairly different from some of the stuff I do, but I find him a very entertaining writer and a lot of interesting content there. There's also the Fatfire Forum on Reddit, which Mr.

Money Mustache is all about extreme frugality. Fatfire is more around financial independence, but spending a lot of money. So between those 2, you get a yin and yang of it. In terms of podcasts, there's probably 3 that I really like. One is the Odd Lots podcast by a couple of the Wall Street Journal reporters.

It covers different economic topics in a really good degree of detail, sort of like yourself. There's one called Money for the Rest of Us that, again, he'll pick one generally investing concept or asset class and really go deep on it for half an hour or so. I've learned quite a bit from that one.

Then there's one that won't appeal to all listeners, but it's called the Business of Family, especially people who are in a demographic of having a family office or a family company and having quite a bit of assets in some company like that. Every episode, he interviews the person leading one often multi-generational family company and talks about what they do to pass values and wealth and practices and other things on across generations and how to run these family companies.

I'm not exactly personally in that situation, but I just find it fascinating to hear what some of these very successful families have done there. Those were 3 that I would point you to. Great. Then you know this already. We always end up asking you to pick a place that you're pretty familiar with and share a few recommendations, something to do, eat, drink.

What's your spot? I live here in Dallas. I've lived here about 7 years. Anybody who talks to me knows I'm basically the Dallas Chamber of Commerce. I love it here. I'll talk about a couple of things with Dallas. If I were looking at a really nice day in Dallas, I'd probably go for a walk down the Katy Trail, which is our rail trail here.

There's a nice place called the Katy Trail Ice House. There's not great food there, but the atmosphere is awesome. One of those places where you can get a margarita the size of your head. That's a fun kind of people watching on the trail. Then where I'd probably go, what might surprise people about Dallas is the symphony here is actually phenomenal.

I'm not a very cultured person and not historically into the arts, but we went one time to the symphony and absolutely love it. We became season ticket subscribers after that. The concert hall was designed by I.M. Pei. Apparently, it has top 10 acoustics in the world among symphony halls given the way they designed it.

We definitely recommend that anybody who has a free Thursday, Friday, Saturday night here in Dallas checks out the symphony. This is awesome. I really appreciate you being here. Where can anyone listening that wants to check out more of what you're working on with Long Angle, where can they go?

Yeah. I'd love to hear from any of your listeners here. Best place to find about Long Angle is just on our website, longangle.com, or feel free to email me directly. It's T Fallows, T-F-A-L-L-O-W-S @longangle.com if you want to drop me an email. As I mentioned, in terms of people joining the community, we do have the qualified client threshold.

So it would be any of your listeners with 2.2 million or above of investable assets is the threshold for the community there. But anybody who wants to join, who's in that demographic, I'd love to have a conversation with you and see if it seems like a fit. Yeah. So that's how to find out more.

Awesome. Thank you so much for joining me. Well, thanks so much for your time, Chris. I really enjoyed this conversation.