Control What You Can, and Plan For What You Can’t

Control What You Can, and Plan For What You Can’t

controlling the real estate markets

Life can throw some wrenches your way, especially when you live in a post-pandemic world with financial uncertainty on the horizon. When it comes to your financial game plan, it’s always a good idea to focus on areas where you can direct the course of events. When you are unable to control a situation or outcome (like most things in life), it is best to have a plan to deal with it.

Here are three myths and ideas to have a strong plan for the uncontrollable:

Myth 1: Controlling People

I have learned from operating companies as large as 50 employees, that you must focus on people’s strengths, and accept them for who they are and how they operate. This applies not only to work, but to every single relationship in your life. Fortunately, I was raised in a high acuity personality environment. My mother analyzed personalities for a living. Barbara is an expert consultant helping large companies to analyze personality profiles which help them understand why people behave in certain ways, utilizing the DISC system. Additionally, we have been using the Culture Index extensively through our business partner, Don Dalrymple in very effective ways.

You cannot change people, nor should you try. Understand how they operate and bring out the best in them.

 

Myth 2: Controlling the Markets

S&P:Case-Shiller US National Home Price Index

If you decided to sell your real estate back in November 2016 because the S&P/Case-Shiller National Home Price Index pointed to the top of the market, you would have missed out on the largest real estate bull run in the history of real estate. The Index climbed from 184 to 284 in four years. When planning for real estate, you must consider liquidity needs, demographic growth projections, and tenant rental income.

Devising a plan to continue to cash flow your property over 10 years or more is the best way to accumulate massive amounts of equity without worrying about how to time the markets.

Myth 3: Controlling the Government

As discussed in my previous blog dated April 21, 2021, Uncle Sam’s Deadliest Tax, Inflation, we are currently witnessing unprecedented inflation as a result of relentless deficit spending and irresponsible fiscal and monetary policies coming out of Washington DC.

You can hedge against the government’s predictable tax, print, and spend policies by investing in real estate, commodities, and non-US denominated foreign stocks and currencies.

We all want more control, but at the end of the day, what matters most is that you have a plan to manage the challenges in life that you cannot control. This will help you to enjoy your life in a way that is much more stress free and informed. And when you have your plans in place, I recommend the following book by Dale Carnegie, How to Stop Worrying and Start Living. One of my favorites.

Your Most Powerful Currency: Positivity Currency

Your Most Powerful Currency: Positivity Currency

Darren Nakos Owner of Recentric in Cabo

As we push hard to get through a challenging year, there is one common thread we all share. We are all trying to be more resilient in our lives whether it’s our personal net worth and investments, or our business vitality and meeting growth expectations. We pour over quantitive and qualitative research and analysis to allow us to make the right decisions and cannot just print more dollars to meet our goals, like a country with a fiat currency.  However, you can print your own Positivity Currency. This is your own personal currency that can be printed and stored as an asset. 

cabo
darren & amy
My wife, Amy and I recently in Cabo, where we are building a second home.

Here are three ways to build your Positivity Currency:

Keep Good Records

When you write down your positive thoughts and moments, they register higher value than non-written forms of positivity, according to research by the founding father of Positive Psychology, Dr. Martin Seligman of the University of Pennsylvania.  Record your positive currency transactions and keep a written tally with categories such Family, Friends, Work, etc. 

Create Your Own Bull Market

Financial markets boom when more and more people want in.  Likewise, positivity is socially contagious and can compound.  In the research behind their book Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives, Harvard’s Nicholas Christakis and the University of California, San Diego’s James Fowler explains how happiness depends not just on our own choices and actions, but also on those of people who are two or even three degrees removed from us. Share your Positivity Currency with others. 

Portfolio Perspective

Resilient individuals diversify their risk and their positivity currency.  Try evaluating what provides the highest returns across your entire “life portfolio” and then invest more in those areas.  In a 2015 report entitled “The Happiness Study” from Blackhawk Engagement Solutions, respondents ranked their jobs eighth out of a list of 12 contributors to overall happiness. Ranking in the top spots were their family, friends, health, hobbies, and community. By creating more positivity currency in those areas, you will increase the ability to bring your best self to work.

In order to reinforce your Positivity Currency balance, it is important to consistency review your written notes. So, in the spirit of Thanksgiving at a time when gratitude is at the top of the menu, I implore you to start printing your own Positivity Currency. This is a great time to spend quiet time building your portfolio of your own currency that will pay dividends for the rest of your life. 

Maintaining the Value of Commercial Real Estate: The Vital Role of a Property Manager

Maintaining the Value of Commercial Real Estate: The Vital Role of a Property Manager

eric rehm

Delivering excellent service happens when you put yourself in someone else’s shoes. That’s what our property manager, Eric Rehm does for all our tenants and vendors at each Recentric property. He ultimately considers what experience each practitioner is trying to offer their own patients and seeks to help them deliver that level of service. 

Meet Recentric Property Manager, Eric Rehm

With over 15 years in property management in Aspen/Snowmass, Summit County and the Denver Metro area, Eric knows the value and importance of vendor relationships. He is proactive in seeking out the best vendors to care for our Recentric properties and builds trustworthy relationships with each of them. He magically nails that balance of quality and cost. He finds the best resources at the best price point, in order to keep our own operating costs low for our investors. He gets to know the contractors of each vendor, so that he has a direct line to the resources he needs. He respects the relationship and puts himself in their shoes, never calling out favors unless it is important.

No two days ever look the same for Eric. Between all our properties, he could be managing landscaping updates, checking pressure systems, talking to insurance companies, or getting to know a new tenant. While Recentric makes great efforts to be proactive with preventative maintenance, some issues are just unpredictable – like four feet of snow in one morning in Denver which caused snow plow delays, freezes, and leaks. Eric Rehm went above and beyond that day, after just flying in from LA and independently purchased a shovel from Home Depot to clear the walkways and parking lots himself! 

Keeping High Standards For Vendors and Quality Service

Eric knows that the experience at each property represents the Recentric brand, which is high quality, professional, and authentic. Everything from the curb appeal of the exterior building to the cleanliness of the bathrooms need to show class and thoughtfulness for the tenant and their patients. Because Eric is naturally able to put himself in someone else’s shoes, he delivers the type of experience that he would prefer, while making others feel appreciated and cared for.

 

What’s Your Life Genome?

What’s Your Life Genome?

hiking

With all the serious and perplexing issues going on this world today, I feel compelled to share a positive and constructive message to help you live your best life, physically, emotionally, and financially.   After all, our company’s slogan is “Investing in America’s Health”. Without going into too much detail on the scientific definition of the word “genome” and, for purposes of this article, your life genome can be described as an organisms’ complete set of genetic instructions.  Here are a few ideas to create your own set of life instructions:

Put Yourself First

To stay healthy and fit, your first instruction is to make “you” first. Schedule your week in advance and block out enough times to stay active, biking, hiking, walking, yoga!  Anything to keep moving.

Be a Digitally Engaged Patient

Your second instruction is to be a digitally engaged patient. 

There is a digital health revolution in progress across the globe.  

I recently starting using Welltory, both with my iPhone 12 and my Garmin Fenix watch to record my HRV (heart rate variable) and activities. Welltory uses an AI data approach to help you with your sleep, stress and even help you drink less alcohol. 

These daily instructions and feedback can provide a wealth of health information.

Tune Out the Noise

Here are ten reasons to ditch your social networking.  

Even some younger people are starting to feel the pressure. In March 2018, it was reported that more than a third of Generation Z from a survey of 1,000 individuals stated that they were quitting social media for good as 41 percent stated that social media platforms make them feel anxious, sad or depressed.  

What are my new instructions?  Since quitting Facebook last year, I now have time to visit my bike therapist for a few more hours a week. 

Surround Yourself With Successful People

Did you know that you are the average of the 5 people you hang out with most? According to Jim Rohn, this is true. 

As you start to gravitate towards positive and successful people, your life will in turn become more positive in all areas. While this instruction may be intimidating, you will be forced to step up your game. Plus, I find that successful people drink better wine!

Your life genome is yours and only yours to create, nurture and evolve over time.  Our human body is made up of millions of cells, each with their own set of instructions. It’s your recipe for life. If you apply this concept to important parts of your life, you can define your own set of instructions to a path for an enriched and fulfilled life.   

Uncle Sam’s Deadliest Tax: The Inflation Tax

Uncle Sam’s Deadliest Tax: The Inflation Tax

Deadliest Tax Inflation

According to the Cambridge Dictionary, the term Hedge (noun) is defined as: a way of protecting, controlling, or limiting something. As a result of Modern Monetary Theory, investors are now worried about the inflation tax, and what they need to do to protect, control and limit their exposure to this devastating wealth killer.  

The Federal Reserve has unleashed the printing presses causing a tidal wave of liquidity in the US and global economies. In fact, the Federal Reserve is printing $120 billion every month, according to Richard Duncan, author of Dollar Crisis: Causes, Consequences, Cures. As the US post-COVID-19 economy reopens for business, the cost of goods and services will undoubtedly soar.  

You have probably noticed that inflation is already rising so far in 2021, in terms of consumer goods like food, gasoline, lumber and metals. According to Manoj Pradhan, a former Morgan Stanley economist, the real increase will begin next year. “The real challenge will come in 2022, when a lot of spending will have been deployed into goods or into housing, monetary aggregates will still be high with velocity rising.” In simple terms, inflation is a tax on savers, wage earners, and those without hard assets. Any class of US citizen who is not hedging the inflation tax will be crushed under the weight of soaring costs, similar to the 1970’s Carter Administration’s era of loose money policies causing runaway inflation.   

Here are a few “hedges” against inflation you should consider: 

1. Leveraged multi-tenant real estate:  Recentric invests in multi-tenant health care real estate that is conservatively levered with debt. In today’s low interest rate environment, you would be better served to finance the purchase with 10-year fixed rate boosting your internal rate of return and hedging against inflation with the annual increases in rent and ultimate rise in the value of the asset.  

2. “Commodities tend to have outsized returns during times of high inflation,” says Adem Selita, CEO of the Debt Relief Company. Commodities are a type of real asset. They are things like crops, raw materials, or natural resources. Their prices go up with those of other goods or services that use those goods.  Two easy ways to invest in commodities are:

  • Buying shares of exchange-traded funds (ETFs) that specialize in commodities. 
  • Buying shares of stock in companies that produce commodities.

3. Stable Foreign Currencies/Foreign Stocks:  Investing in corporations that buy from suppliers using dollars or are paid by customers in foreign currencies is a great hedge against inflation. Corporations that source resources in the United States will have lower costs from an international perspective. Many multinational companies, such as Coca-Cola and Boeing, have benefited from a weaker dollar. As always, discuss your financial decisions with your accountant of financial planner. 

In today’s fiscal runaway train of inflationary “print and spend” policies, and soon to be “tax and spend even more” fiscal policy, hedging against inflation will be the most important financial topic for 2021 and beyond.

Stay tuned for next month’s article on Biden’s Tax Policy and how to legally lower your tax bill in an unfriendly tax climate coming out of the US government. 

“Sleep With One Eye Open” – The Velocity of Money

“Sleep With One Eye Open” – The Velocity of Money

inflation and the velocity of money

We are currently witnessing an unprecedented expansion of the US dollar money supply. 

It seems as though each presidential administration is attempting to outperform the other in increasing the money supply as the economic history books are written. Obama increased the US dollar money supply 65% over eight years, Trump increased it by 54% in four years, and in just a few short months, the Biden administration is on track to increase money supply by 10%. 

According to Investopedia, M2 money supply is defined as all elements of M1 as well as “near money.”

M1 includes cash and checking deposits, while near money refers to savings deposits, money market securities, mutual funds, and other time deposits.

In fact, M2 money supply has grown so much over the last several years, that the Federal Reserve website no longer tracks this metric. I am guessing they don’t want the public to really know how fast the US dollar is being destroyed.

Velocity of Money

The Real Threat For Inflation

Contrary to popular belief, the size of US dollar money supply does not entirely dictate whether or not we have inflation. The real threat for inflation this time could be the velocity of money which measures how rapidly the US dollar exchanges hands. As a result of government shutdowns in 2020, the velocity of M2 Money Supply fell by 18% as indicated on the chart above. This basically means that much of the money that is getting pumped into the economy is sitting dormant. 

Inflation and the Velocity of Money

Some may argue there are no correlations between inflation and the velocity of money. However, we have never been in a situation where the growth of money supply has been so steep, combined with a forced closure of the US economy suppressing businesses and the exchange of money.

What will happen when the economy is 100% open? A major spike in the velocity of US money could overload supply chains causing a large spike in the cost of goods and services, also known as inflation.

This is why I am sleeping with one eye open and watching the measure of the velocity of money in the United States. 

Would you like to dialogue more about this? Join us for a Virtual Happy Hour to discuss. We will send you the drinks and snacks and a link to join us on Zoom.