Andy Tanner - Educator, Investor & Author | The Four Pillars of Investing

It is so hard for people to go from the advice mindset to the education mindset. And the reason is the advice mindset is lazy. In a world where most people gamble with their money, he teaches them how to take control of it. Andy Tanner is an educator, investor, and the mind behind the cash flow academy. A global platform that helps everyday people understand markets, manage risk, and build real financial freedom. Gambling is a process where money is moved from the uneducated to the educated. It's just odds. But investing is business ownership. Investing is only an asset. From stocks to cash flow systems, he's coached thousands through the strategies the wealthy used, but rarely talk about. He turns confusion into confidence and fear into financial literacy. Where did your journey start in investing in education? I got started in education as a student, it was by losing money. In college, it's great for a lot of people. A lot of people find a passion in that I never did. And so it was really after college all that basketball stuff was over, I found a love for teaching. That's something I really enjoyed. What were the biggest mistakes that you made when you first started investing? One of the biggest mistakes that I made is I started looking for deals before I started looking for people. When you go through your life, you're either a net producer or you're a net consumer. You got all the freedom in the world to work your butt off, enjoy that journey a little bit more and stress a little bit less because it's going to be okay. Andy, you talk about the difference between gambling and investing being education. So explain that thought to me. Well, you know, gambling's an interesting thing. If you go to Vegas, it's not just education. I think it's also temperament to mean if you get on the other side of the roulette table, the guy running that never exclaims. They never shrug if they lose. They never cheer when they win. And they just know the math. They know the probabilities. They know the table limits. Gambling is simply a process. Gambling's a process where money's moved from the uneducated to the educated. It's just odds. But, you know, investing is business ownership. You know, investing is owning an asset. And that's a huge difference in gambling. Gambling, you're placing a bet on something. But with investing, you know, you're going to, you're going to own something, you know, own an asset that serves people. And that takes education. That takes lots of risk management education. It takes a fundamental analysis education. So it's a, I get it. You know, it's funny you'd ask that because in the election, they've created these securities, these vehicles where people can bet on the winner. That's not owning anything. You know, I understand the people like the entertainment of it. But that's really the difference. And as you said, requires education for sure. But when did you start to go down this path of understanding that, listen, if I'm going to be a successful investor, I'd better get some education because again, common sense is in common. And I think that a lot of people invest without the education component. And that just ends up looking like gambling. So where did your journey start in investing in education and helping you and you understanding all these ex-factors that could lead to investment success? A losing money. That's, that's used to where a lot of us start. Yeah, there's a, there's a huge culture of advice. And education is, it's kind of an unsung hero. It's not something people value as they should. Education for most people is something they're trying to get out of the way of. You know, you'll go to a college campus and someone will say, you know, what are you? I'm a junior, but I'm really trying to finish my education. I'm trying to finish. And to me, that's a very strange approach to it because education is actually fun. It's, it's illumination. It's discovery. It's a great journey. But how I got started in education. Oh my gosh. As a student, it was by losing money, not knowing what I was doing. And that, you know, those are great little classes you can take for yourself is through mistakes. But the other thing for me personally, I'll bet it's true for listeners. Have you ever found that you learned something better if you're forced to teach it? I think that when, you know, the way my brain is worked is I didn't get into teaching because I was beaten more in Buffett and investing contest. You can do that. I got into education because it was Kim Kiyosaki. He once told me his size is Andy, I found out with some pretty cool teachers. You have an ability to simplify. And so that really put a feather in my cap. I was grateful because I didn't feel I had a lot of talents. But I got into education because I had a ability to simplify things that were complex. And it's just fun to learn. So as a student, I got into it because I had to. I just learned losing too much money. As a teacher, I got into it because, you know, I'm a big guy. I'm six foot eight. So I can screw in your light bulb. I can put a star in your tree or I can make stuff simple. And, you know, that's about that's what I can offer. I guess because when the basketball career doesn't work out, then you got to figure out something else to do, right? Boy, you got that right. And that's an interesting comment too, because that's the only reason why the college was to play hoop. In college, it's great for a lot of people. But, you know, that catalog starts with accounting, biology, communications all the way down to geology. And a lot of people find a passion in that alphabet somewhere. I never did. I never found something. I was like, ah, chemistry. Awesome. You can't wait to go to that. And so it was really after college all that basketball stuff was over where you look around and I found a love for teaching. And that's something I really enjoyed. So that was great. When people, and you can talk about your own experience too, because I think that the best teachers are people that recognize their own mistakes. And then they stop people from making those mistakes as much as they can. And the question was actually going to be what are the biggest mistakes that people make when they first start investing. But I'm going to change how I say that question and ask you what were the biggest mistakes that you made when you first started investing. One of the biggest mistakes that I made is I started looking for deals before I started looking for people. And if people have heard me share the story before I apologize, but it's instructive, I'll give you an example. So my wife and I, we read the book, Rich Dad Poor Dad, we're newly married. I'm not quite newlyweds, but pretty close. And a friend of mine gives me his book, Rich Dad Poor Dad. And I started reading it and immediately I knew I wanted to share this with my wife. So I bought another copy. And as my wife and I do, we do everything together. And I said, hey, would you like to read this with me? I'll read a paragraph. You'd read a paragraph. And let's go through this journey together. So we finished the book and the mistakes that we made started is we were going to be real estate investors. And we failed miserably. I'll bet we looked at 100 houses. We didn't buy one, not one. And it's because we just thought that book was about assets and liabilities. We didn't understand what that book was. My wife found it. She said, let's read it again. You always failed, didn't buy anything, no progress. And she said, let's read it again. See what we missed. I go, we miss anything. We read every page because let's just read it again. And I'm not kidding. We go to approach the book for the second time. And she says, I got it. I know what our first mistake was. We haven't even opened it yet. She goes, look at the cover. She goes, this isn't a book on assets and liabilities. It's a book on mentorship, Rich Dad Poor Dad. We already have poor Dad. So we're halfway there, man. And we made a shift. We made a shift where we stopped looking for deals. In other words, we stopped looking to just do a deal or find a deal to do. And we started looking for people that could teach us how to get things done. And that shift in focus from people just want to invest. And what happened is we made a shift from the culture of advice to the culture of education. So let me talk about the mistake if I could because I think it's a great thing that I learned and if someone can learn it, I think it'll help them. So Wall Street is this culture of advice. And the question I get more than any other is, Andy, if you only had $10,000, what would you buy? Or Andy, what do you think of Bitcoin? Or Andy, what do you think of real estate? Or where do you think of this AI stock? Or they're asking vice. If you were to say Andy, should I buy gold? If I said yes, or if I said no, would you know anything more about gold than just before? And if the market changes, then how do you know when to change? So when people say, what do you think about gold? I say, what do you know about gold? If they say nothing, this is probably not your best asset. So we shifted from this culture of advice of trying to figure out what to buy to a real culture of education to learn how to buy it. And it was amazing. We, we, I said, a gathering within probably a month in what you, what you focus on expands, what you look for you will find. Instead of looking for deals and looking for people, and I'm at this party and an old basketball buddy of mine from a few years ago named Greg hadn't seen him in a few years. And I said, what are you up to? He goes, well, I'm a real estate investor, really. So now I became kind of a stalker. And I said, you know, I want to come to your office and watch you do this, what you, what you do is just what? And he says, really not that issue. He goes, interesting to me. I go, I've been trying to buy real estate for six months. I'm bought one. I just want to see how it's done. And with a little convincing and some bribery, he said, okay, you and your wife, you'd be in my office nine am. By Wednesday, we had our first property. So that shift from just trying to find an asset to really finding a person that could help me, I think that's one lesson. One mistake that you make is if you try to go it alone. Very few people, I think, can stand and win entrepreneur the year. And so, oh, yeah, I did this all by myself. And, you know, this was easy to do. So one mistake is trying to do things on your own. It's a team sport. I'm curious when you look at that first deal that you did, what was the thing that shadowing Greg showed you that you did not, that you were not able to figure out on your own? Well, first of all, I would look at a deal with no education. And there was a fog of concern that would come in. We looked at a lot of deals. But I'd say there were just details to it. They say, well, why are they offering for this price? It seems like a good price, but maybe it's not. I didn't feel comfortable in pulling the trigger. And what if the renters baked crystal meth in the basement? And right now it's summer. But what if there's a leak in the roof? And I can't see it. I don't know construction. And, you know, all these questions that I didn't know, the thing I learned from Greg is he had a system. And he had a checklist that he would go through. And he says, you know, here's how you check these things from financing to he had people. He had connections with mortgage brokers. He had connections with agents. He had money lenders. Another thing I learned was, as he said, you know, how to use the debt right. And that you could use private money instead of you. I mean, there's so many of those things. So the details, the biggest thing I learned from Greg is there was a system and he invested based on criteria. He had a very specific criteria. And if it matched it, it was a deal. If it didn't match it, it wasn't a deal. And he just, it was actually quite simple from that point on. Outside of having a checklist or a system, we actually just spoke on another podcast a lot about mindset. So I think checklist system is very important. What are some fundamental mindset shifts that you went through and you think other people have to go through to be successful investors? I'll revert back and maybe hit that nail one more time at the risk of pounding it too far. It is, I've taught for, you know, 30 years now. It is so hard for people to go from the advice mindset to the education mindset. That is so tough. And the reason is, is the advice mindset is lazy. You think about, I have so many people say this. Well, I don't want to learn anything. Just tell me what to buy. In other words, I don't want to do any work. I don't want any growth. I don't want any knowledge. Just tell me, it's like they want free money. Well, just, if you just tell me what to do, I'll do this and I'll get free money. And there's no after that. And that's how Wall Street gets rich, by the way, is they take that mindset and they charge fees under the guys that they could do it better than you. And they get rich because of it. So I would say, above all, making that shift from the advice culture and listening to other people telling you what to do to the education culture where you don't need advice, you know what to do. So I would say that's a mindset that is really, really important. And then you and I spoke about this one. Is I have four main areas of study when people say, all right, education boy, you know, what should I learn? I say, well, you should learn four things. And the most important of those four, by far, is risk management. The mindset of understanding risk, not from a tolerance. You certainly have to have some tolerance. But understanding risk, I would say mechanically, maybe, might be a word to say it, to take that concept of risk and make it measurable and understand what those metrics mean and understand the relationship between risk and control and sizing and all of the different tools we have for risk. I think the mindset of understanding risk, that's a huge one to have. If a person can't deal with risk, forget about it, it's over before it starts. So those four pillars, you have fundamental analysis where you understand the numbers, you have technical analysis where you read trends and patterns, you have position management for strategic placement of cash flow, then you have the risk management. Talk to me about how these sort of four pillars they all work together because you mentioned risk is sort of the first one that you need people to understand. But then there's three more that are also very important. Yeah, I'd say risk is number one in terms of importance. But it's really the last, but not least, it's the last thing you do before you pull the triggers, you have a higher risk. So I start with, impressive that you know those four, we start with fundamental analysis. The word fundamental, if you don't mind a long form podcast, this is nice because I get to talk about it a little bit. You do, we have, we have no time limit. And we can, we're in the schedule. Yeah, we can edit. We can always edit, you know. You know, I'm the guy asked me a 10 cent question. I'll give you a $5 answer. So fundamentals is an important idea. What is, what does, what does that jargon mean? Well, everyone knows what fundamentals are. They're the important things. They're the things that are basic. If you're going to be a basketball player, you got to dribble past and shoot or you're going to struggle. The fundamentals are marriage or listing, communication, love, and selfishness, right? There's just certain fundamental things. Well, in every business, in every entity, whether it's a household, a church, a nonprofit, a school, a nation, only Venezuela or the US, everyone has a financial statement. Everyone does. They have income, they have expenses, they have assets, they have liabilities, they have a statement of cash flow. And a person can look at those as a start and there's just certain things that should be there fundamentally. You should have cash flow. You should have earnings and runners surplus, not a deficit. That's fundamental. You should have value. You give to other people. You know, all of business is if it has earnings, all that means is that there's some value that they're giving to the world and they're able to deliver that value with certain efficiencies that allow for profit. That's all it is to me. So when you invest, you're really a business owner. So if I, if it were a stock, for example, or you're going to real estate deal, for example, that we'd say, look, are these fundamental boxes we mentioned criteria? Can we check those boxes? Warren Buffett says, is there a moat? You know, Gita talks about Coca-Cola selling two billion drinks a day. That's a castle that's, you can have a Cola war in the 80s and you're not going to win that thing. I mean, their moat is solid because the value they deliver on such a grand scale and such efficiencies. So the first two fundamentals and tentacles are information gathering. And the first fundamentals tells me there's just art things running the way they should. Are they checking the fundamental boxes of a business that makes sense? Generally, those are valuations. It helps you know what you're buying. If prices what I pay and values what I receive, fundamentals gives me the lighting to know what I'm getting. So for example, you're in the VC world. You've had a lot of experience in, you know, credit and investors. So if I get a PPM from you, and you say here, invest in my deal, you know, the longer the brochure, the worse the deal. Usually because they're having to flour this thing up and the lipstick on the pig with this big long brochure. Just show me the fundamentals. And I'll know, show me the fundamental analysis. You know, show me show me that those basic things and that they're in order. And then maybe we risk some capital. The second pillar you mentioned, which is technical analysis, is studying markets and and sentiment. And that's important for more than stock investors. That's actually very important for options investors because the difference is, you know, when you're buying a stock, you know, a company, there's no expiration date. So you're always going to invest in a stock, but you're always going to trade an option because they expire. And that expiration date has a lot to do with where the prices. So we need, if we're going to add the option element to that, we need to understand how to get metrics and take emotions of market and put it into data that we can interpret. So once I have an understanding of the business and then I have an understanding of the emotions of the market, I can take those two things and it's just information gathering. I can't change fundamentals. I can't change market sentiment, but I can take that information. And then I go to the third when you mentioned, which is cash flow. How am I going to position myself to share and contribute and share in those profits? How am I going to put myself in the way of that success and share in that opportunity? And then, of course, the last one you mentioned is, okay, when that's all over, what's your plan B? And you mentioned earlier, what's interesting gambler and investor? Gamblers don't have a plan B. They bet on red. And once the wheel starts turning, what's your plan B if it misses? Yeah, you don't have one. But investors, they have exit strategies, they have hedges, they have insurance, they have sizing, they have lots of strategies for adjustment, they can pivot while the wheel's still spinning. You mentioned KPIs, key performance indicators. If those start to get ugly, you can pivot, move, and influence. So those are some of those with four pillars of investing. And that's usually where I start with a new investor is saying, let's learn those four. Because they transcend language, I mean, show me any company in the world, income expenses, asset liabilities. It doesn't matter where, which might be why Warren Buffett, he's investing in Japan a lot now. It's the same game. Same thing. You speak a lot about paper assets and focusing on cash flow from paper assets. So when we jumped on your pod, we were talking about VC and angel investment and startup and I've done some private equity as well, which is really just, you're taking a majority ownership of a company that has a little bit of historicals and a P&L as opposed to something that doesn't have any revenue at all. And that's sort of the world I know. Other investment opportunities, you have stocks, you have bonds, you have real estate. It talked me about paper assets because I don't think, I don't think I know as many people that know paper assets very, very well. I feel like if people jump into investing, they kind of look for the shiny things that all their friends and maybe they see on Twitter or online, right? I don't know if they understand how to use paper assets for cash flow. So maybe just give us a breakdown of why you emphasize those. We're talking about asking me a question that can't wait to answer. I mean, that one's like, that's a softball over the plate, man. And I enjoy it and I appreciate the question because I think it's an opportunity to clear up a lot. So a lot of people will say, well, a paper asset is like a stock or a contract or something on paper. And it's all papers. Like, similar to say, well, he's a millionaire on paper, but not from real. And they have this thing called real estate. And so it's really funny. We might be able to get two birds with one stone on this. A lot of people, you talked a little bit about the, you know, on our podcast, you talk about the locus of control. And what a lot of people feel is, well, I want something I can, you know, touch and feel. You know, something I can see, touch and feel. I can hold gold in my hand. If I can, you know, touch real estate, I can see the property and turn the door knob on the door. But boy, paper's just this sheet of paper. What's really behind it? And when you talk about the locus of control, what a lot of people will do is they'll put that, that focus on, they'll make their success a function of an asset class as opposed to a function of personal development. What I mean by that is they'll say, Andy, what's a better asset? Paper or real estate or business or Bitcoin or gold or oil? Tell me the best asset. And that advice gives me the key to success. That very discussion makes the success a function of the asset class. But what I think you'll find is whether it's Warren Buffett in stocks or, you know, someone in real estate, you know, T-Boom Pickens in energy, you know, whatever it is, you'll usually find a success of the investor. So I'm on this panel and there's all these people, and they have an open mic session where the audience can ask this panel. The panel was about which asset class was best. So I'm supposed to defend, you know, stocks and bonds and paper assets as being a superior asset class, which is silly. But it was a really interesting thing watching these guys fight as if their asset class was good and you're more on if you're Warren Buffett buying stocks, right? And whatever asset class you want to bash, you're going to look like an idiot. Because if I bash real estate, I got to go to a successful real estate investor, like, you know, maybe Kenny McAroy and knock on his door and say, yeah, this billion dollars, you have a real estate. What are more on you are? And if I say stocks are no good, I got a knock on Warren Buffett store and say, you ignore Amos. You know, what are you doing? You're way off Warren. You're way off. So what a paper asset is, is I'm sitting at a dinner later with the same guys as on this panel with. And it's a large table with many, many students. And this guy was selling gold. I said, well, how much gold should I buy? And he said much as you possibly can. It's the best asset. You know, it's historically held its value. And I was, you know, fungible. And I said, well, you know, a 10 million dollars in gold at my house doesn't seem very safe. He says, oh, no, I have a service. I've evolved. I'll even store it for you. I said, well, how do I know the money's mine? How do I know it's mine? He says, well, I, you know, I give you a receipt. And you have a thing that shows yours. I go, what do you write that on? And he knew he'd been had. He's like, paper funny. What's a deed? Paper. What's a, what's a claim check? What's a valley stub paper? So a paper asset in and of itself simply represents, and that's a long, I know it's a long one way to get to it. But a paper asset represents ownership of something, of value. And so a deed is a paper asset. A receipt for a gold store in a, and a vault somewhere's paper asset, a stock certifies. It's certain. It certifies. In the old days, money was backed by gold. Currency was, you had a silver certificate. It's certified. It literally set on it. This certifies that the bear of this note has an ounce of silver or whatever $100 and silver payable to the bear on demand. It was a certification. And so a stock is simply a certification of something that you can see touch and feel. One time I was at a similar debate and I was really tempted. I didn't think I'd do it, but I, I wanted to grab the guy's phone and his iPhone and just dump it in his, in his glass of water and say, why are you upset? It's not real. It's not real. The fact quit paying your phone bill because it's not real. In fact, quit eating your cereal. Quit going to Costco because it's not real. Quit buying your, your ketchup because it's not real. Quit putting eggs on mobile gas in your car because it's not real. All these stocks I own represent real value and real dollars and real dividends that come. So paper asset is in terms of stocks is when you have a piece of paper that certifies ownership. And when you talk about the VC world or the entrepreneur world, the reason I'll point people sometimes towards paper assets is if you got a nine to five and you don't have the ability to raise capital and you don't have the ability to manage people and you don't have the skills or maybe you're later in life. You're not 20 anymore or even if you are 20, what paper assets allow you to do is leverage brands, leverage people, leverage systems that you never could have built on your own. The word share, I mean, you have to forgive me. I'm a capitalist through and through. Through and through. I don't think you're you're not talking to a Kendrick spirit here. So I might when people people talk about the elites and you know, the 1% and all this, you know, victim of I don't have an opportunity. My gosh, you know, if you put me in my garage and you say build an iPhone and you can't come out and tell it's built, you can order any parts you want but you got to build an iPhone. I'm going to die in that garage. I don't have the ability to do it. Steve Jobs, the late Steve Jobs is willing to share his genius with me, unbelievable that I he'll say, look, Andy, let's share and share like, if you'll share a little bit of your money with me, I'll share my business with you and you can have a share of my business. I'll share with you. What a beautiful word share. And so now as a non-techie, you know, I can stand next to Steve and say, this is our company. I own shares of this. And I taught my kids this, you know, they bought Disney first. Just, it didn't even matter, Disney's Disney. And where we went to Disneyland the next week as a business trip to see our businesses running, we're standing in line, bonding as a family, standing in line. My kids are like, this is incredible. We own this. They walked around like they own the place because they did. And that sense of ownership takes you beyond paper. You have management that's better than your brain. You have a brand that's something you could never build like Coca-Cola. And you have all these things. And what's ironic about Warren Buffett, who's the best at this, is he's never started a company. Ever, never. What he's had is a temperament and a discipline and a consistency to compound. He buys a goose that lays golden eggs. When the goose lays a golden egg, he buys another goose that lays golden eggs. When they both have two golden eggs, he buys two more geese that lay golden eggs. And he engages in that wealth principle of compounding by leveraging established businesses that already serve the masses. He doesn't have to reinvent the wheel. He buys it. And that's paper. And it's a beautiful way for someone to own powerful brands receive consistent dividends by into America. He's not a Wall Street guy. He lives in Nebraska. Same house. He's always lived in. Wall Street is for people that are managing your money and collecting fees. Wall Street is one I don't want to manage this. You manage it and collect fees. True paper assets investors really mess with Wall Street. We buy Coca-Cola. We buy Apple. We expose ourselves. And I will say this. Paper is really important right now because I love real estate. I won't bash real estate. I just you don't bash an asset class. There's money everywhere. Tax advantages leverage. But an A-class property will always be comparable to another A-class property. In other words, you never get to really hit the home run. It's a base hit business. But you buy an AI company. How big can how big can Nvidia go with selling shits? How big can you get your upside is crazy. So if I have a job and I'm white collar and now I realize man it's pretty tough to build a robot that can pick carrots the right way or pick strawberries. But my job AI is going to be doing it in five years. I have five years. My job's gone. Don't compete with AI. Buy it. Because AI is going to make exon mobile better. It's going to make craft hines better. It's going to make Amazon better. It's going to make Apple better. It doesn't even need to be a tech company. Every business is going to be more productive, more profitable therefore. So only AI don't compete with it. Two ways to get exposed to AI. Either learn coding and learn quantum computing and get a chandelier with a refrigerator to get cold enough to keep those qubits stable or go by IBM and own it. Go by Google and own it. So that's kind of a long winded answer. I'll apologize for. But no, don't apologize. It's a good answer. I didn't go that. So it's so interesting because that advice is the most sound advice and it's the most it's the most grounded advice. But people always want. People always want quick. People, people always want. And that's why I mean, this is why VC and Angel exist. This is why this is why binary options exist. This is people always want to gamble. People want to gamble. And I love I love the reposition of your success is not dependent on the asset class. Your success is dependent on your self-education and your upskilling as an individual in understanding that asset class. So you can be successful with gold and silver and real estate and crypto and stock and key bills and you can be successful anyone. Yeah, you just got to learn. You just got to learn that asset class better than anyone else and that's what Warren Buffet did. And he played the long games. Not only is he investing in the long game, he's also a lifelong learner. That's really that's that is the secret, which is not even a secret. But what Wall Street or what funds do is they say they play into that. They say, you don't have to learn. We learned for you and we're going to charge you for your for our expertise. And instead of spending a year on YouTube, just give us your money and we'll take X percentage of it. I mean, this is why private equity funds exist. We even spoke about VC. A lot of VC is our funds where you're just going in as an LP. Angel is angel is like direct investing. Angel is the most risk where you are just having a direct relationship with the founder. So again, the returns are are the returns that you're going to get are directly correlated the amount of work and education and upskilling that you're going to do as a person. And yeah, you you asked an interesting question earlier about mindset and you know, what what changes in mindset? I'll give you another one. Warren Buffett is brilliance is on question. He's probably got an IQ of 160 plus you know, whatever his IQ is, it's it's insane. But I've spent my life, a lot of my adult life studying him and I will tell you that often his brilliance overshadows and takes attention away from perhaps a even more important attribute that he has, which is temperament. And and he he makes it so simple, you know, he once said this, it's a famous quote, he said, I will show you how to become rich, close the doors, be greedy when people are fearful, be fearful and people are greedy. And what's really interesting is a consumer, you know, we're coming up on Black Friday soon, right? Day after Thanksgiving or whatever it is. And I'm blown away, that people stand in line waiting for these prices to go down, just can't wait to just get the money out of their pockets fast, that they can't. They're trying to get rid of their money, they're fighting for position in line to give their money away before the guy behind me. I can't wait to get rid of my money so fast and buy something that will ultimately be in a landfill. For sure, like whatever they're going to buy someday, it's in game, it's in the landfill. And and so people just cannot wait for a price to drop when it's a consumable. Well, if you read Warren Buffett's letter to his shareholders in 2021 after the diving COVID, he said the beauty of this asset class is that on occasion, he calls it a shooting the fish in the barrel experience. That's what he calls it. Shooting a fish in the barrel denotes ease, not difficulty. An idiot can shoot. You don't have to be skilled. You just have to have your gun ready and nowhere to shoot. And he says that shooting the fish in the barrel is really interesting because there are certain times where the prices of these companies are so low that they're irresistible. And if you were to look at a stock chart of my lifetime, starting in 1987, you know, out of high school, that's this black, bright black Monday, then you had the dot com bust. And then you had the subprime meltdown and then more recently COVID. If you look to the chart, those would be the best times to ever buy your assets when everybody is selling. He's right. There's a temperament. So a black swan gets me stimulated. And black Friday makes me think, why would you get rid of your money so fast? And so I can't wait for the black swan. I can't wait because there's an obsession on CNBC with price instead of cash flow. That's why I'm the cash flow Academy, not the capital gain net worth academy. The reason why the cashless academy is said nobody ever in history said nobody. I think I want to buy that goose that lays the golden eggs because the price of the goose might go up next week and I can make a quick buck. Said nobody, I've had children on my show and I'll say, what you want to golden goose for golden egg? And I'll say golden goose every time. Why? Because it makes eggs. But if you turn on CNBC right now, the predominant conversation will be about prices moving rather than value being delivered. So if you go into paper assets with a sense of buying one and selling high, you'll have no control over that. Your risk goes up. You can't force Apple higher. But if you go and you buy that, shares a business owner saying, how does it cash flow? And how do I increase that cash flow? And how do I get more out of it? Regardless of price. Now you've got something. Now you're real business owner. So it's fun stuff, man. That temperament and change of mindset of looking at golden eggs rather than the price around the goose's neck. That's a mentality that very few people can have and it comes from the 401k culture when we went from a function of cash flow, a pension, which is an income statement idea to a 401k, which is a balance sheet idea of net worth. And people are worried about the value of their old money rather than the ability to generate new money, which is cash flow. Quick question. What's your go to when you got 10 minutes before a meeting or a workout? 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That's NetSuite.com-scot-clary. NetSuite.com-scot-clary. I think it's a much needed shift because then you're not, again, looking at the capital gains or the percent increase. And that's, of course, that's a fueled all of crypto, too, because people were getting a thousand acts on their money in a very short period of time and then a lot of people lost a lot of money. So when you educate people on how to invest for cash flow, it's interesting that you do this through publicly held or probably, it would be publicly held companies. But either way, but I was looking at it, you don't know my whole story, but when I started to invest in venture and angel, I actually didn't like it, because my money was locked up for too long. And I was looking for some big exit event, which is why I started to gravitate more towards private equity. Private equity is just owning a company, the cash flows. You own majority share in a company, the cash flows. So then you can take money off the table if as long as you can still support the business growth. So when you look at investing in paper assets, the cash flow, what's the playbook for understanding how to invest? Because now you're looking at investing companies that pay dividends. Correct? Yeah. Yeah. In my brain, dividends are a foundation. I do cater towards dividend paying stocks because I want the cash flow. And you can pay a dividend. There's a book that Warren Buffett's Mentor Benchman Graham wrote called Securities Analysis. I don't recommend it. It's about this thick, and it's a doorstop book. If you want to stop a moving train, throw that book in front of it, it trains in trouble. And it's it's dry. And it's written in Benjamin Graham's youth. So I'm going to say great depression type of times, right? But it's really a book on bonds. And back then, people didn't, if you invested in equities, you were way too risky investing the debt, investing the bond. But he talked about how to analyze the security. And it's the same. If the security can pay interest, if a security can pay a dividend, that means that there's cash flow there. That means that there's some stability there. It means there's profit. And certainly speculators, you know, you bet on Elon Musk, you won't be big because there's growth. And I get that. And I wouldn't begrudge anyone doing that. But I can take a more conservative approach that if I start with a dividend, at least I know there, dividends tend to be much less volatile. They're certainly not risk-free. They can be changed. But take Exxon mobile for a moment. That's one of the stocks I picked up. I picked up a lot of shares of Exxon in the COVID crash. People weren't flying planes. People weren't driving cars. Price of oil went negative. You'd actually get paid to receive oil. Instead of having to buy it because of the futures market and how jacked up that got. You know, there's no place to put the oil. So if you had a future and you promised to take delivery of oil but you're a speculator and you don't have any tanks to put it in, you've got to pay someone to take the delivery for you. So oil was literally not just free. They would pay you to receive the oil. You got paid to take it. You don't have to pay for it. So people pick not only pick it up free oil. If you had a place to put it, people pay you to take it off the hands. Amazing, right? So Exxon mobile is in the 30s. You know, how do you miss? How do you miss when you can buy a bohemus energy company like that? You know, people need food, clothing, shelter, medicine, energy, communication, technology. They need it. You buy a stock anywhere in there. You are an important, you serve the public. So you start with a dividend but that's just the beginning because if you learn how to use options around that, you could do this in an IRA. Start with a very basic option strategy like a covered call strategy. We'll add a half percent a month to that in a conservative way. Learn to manage any additional risk. Okay, so maybe you get a 4% dividend on Verizon or Exxon mobile. Okay, go rise some covered calls between a half a percent, one percent a month. Now you got a double digit return. You start compounding. Okay, then add another option strategy and start stacking incomes. Start stacking that. It's a lot like real estate. What are ways to squeeze more money? Well, I got the rent. But let's put in a coin laundry. Okay, let's put in some vending. Okay, let's put in some covered parking. You know, let's put in a storage, storage unit for somebody. You just start stacking income and having more ways to get cash flow from that asset. And now you can take the goal and egg and reinvest and accelerate your compounding to where that hockey stick becomes meaningful in that shorter amount of time. So yeah, it's cash flow-based investing and it's different in speculation. But it's the one I prefer because I think for most people, if they really stick to it and they have a little bit of patience, I think the long game can be a safer bet than the overnight riches. Are there any risks in adding options? Yeah, for sure. There's always risks involved. But those risks are a not nearly what people think they are and be their manageable. And the reason option, we mentioned technical analysis. The most people in stocks are forced to make predictions that are very difficult which is direction. So in the stock market, I might say, okay, let's set cash flow aside and let's buy Tesla. You know, it's Tesla going up or down. It's Nvidia going up or down. It's Apple going up or down. I couldn't tell you. I can't tell you where it's going tomorrow. I can't even tell you where it's going to go month from now. So positioning yourself as a technical analyst based on direction is very difficult. But what options investors do particularly on the sell side is we don't predict directions nearly as much as we'll predict a range. So shift your mind on that. So if I said this, I'm going to bet that tomorrow, Apple is going to be between zero and five hundred dollars. And all I had to do was be right on that range. That's pretty easy. I'll take that bet. Take it every time. Okay, well, let's say Apple, you know, let's say it's a 220 today or 230 or whatever it is. Let's say it isn't going to go up, you know, double, but let's say, is it going to go up $50 tomorrow? No, it's going to drop $50 tomorrow. Probably not. So that's a much safer bet for me. So if I can position myself in such a way that I get paid by being correct on my range, now I can start using standard deviations and start using technology to say, what is the behavior of this generally? So I'll give you an example. I bought some Dow chemical in COVID. So it's 4.3 years ago. I've owned it for, you know, a thousand plus however many days that is 1400 days or whatever it is. It's 4.1 or excuse me, 4.3 years. So that's entirely paid for the whole stocks paid for. I bought it at 4381 and they pay a 70 cent dividend. So over the past four years, my success rate in receiving that dividend has been 100%. They have not ever come out and said, oh, you know, we can't pay the dividend. You know, now people were like, oh sure, one Williams is going to replace us in the, you know, 30 index or whatever. But the truth is they just pay 70 cents all the time. So that's 280 a year I start with, right? 280 a year, four times a year. Well, I'm 89% over that same four years success on my option writing. Picking a range. So there are times where it will go outside of a standard deviation. I have to adjust. That's risk management's going to happen. But, you know, you can have those probabilities. That's it's quite a track record because it's about the same every year. You know, eight, eight, nine percent success, nine percent success, nine percent success. So the high probabilities of picking ranges are much better than the coin flip. The 50, 50 of picking. If I pick a direction, I'm going to be about 50, 50. I'm right. I'm wrong. If I pick a range within a certain standard deviation or outside of that, I can be statistically right. Like a casino owner. Yeah, I can be statistically right, nine percent of the time. The table limit is what protects the casino from the anomalies outside of those probabilities. My position size protects me and also my ability to just and exit by something back. They are liquid, right? It's not like VC where I say, here's my money. Yeah. And I can't call them back and adjust tomorrow and say, I want to get this back and the options are liquid. So if I see it moving, I can adjust. So it's a fanned, I'm blown away as an educator. When I, you know, my son, he's kind of a bubble player. You know, he's got some D1 schools talking to him. He's had offers at the JC level. And he's got offers from Hacker breakfast at the D3 level. And one of the schools that, you know, we probably won't be able to make it academically and get him. But he got invited to MIT's camp because he's pretty smart. He's four or a kid and all this. But those kids are cyborgs, man. That's not normal. They're not normal. So yeah, so we go there and you know, basketball-wise, he's, you know, he hangs fine. But, you know, you got to have a perfect ACT and, you know, crazy stuff. You got to, you know, you've got to put your private school and you've been prepared for this your whole life. You know, my son is just a basketball player. But the point is really this. He got asked to go to this great coach, great program. And it was a very prestigious school, not quite MIT. But it didn't offer scholarship, you know. It gets you in, which their acceptance rate, like, you know, 7% or whatever it is, gets you in. And so the price tag on that was over $300,000 to go to school for four years. Get that piece of paper. And at the end, you know, if you get a liberal arts degree or, you know, now you're a sociologist or whatever, great, $300,000. And I just said, son, you know, learn, learn, learn to invest. Take a couple classes on, on compounding and dividend investing. And hire all those people that are working for the company, you all can spend the $300,000 for their degree and put them to work for you. Because I, I just as a teacher and an educator, I just think your proposition to invest in yourself, to learn to be invest and have money work for you as far better and working for money. I agree. I mean, this is, I think we're very much on the same page as to why some traditional education is, is not just too expensive. I mean, they totally miss the mark in high school and early education when it comes to finance and investing and, I mean, I wasn't calling any of this stuff. It's pretty easy. Price is what you pay, values, what you get. Yeah. And so, you know, the bigger a price tag is, you better be getting a lot. Lines with $300 a lot for a... Sure, row at art, so agree. Yeah, I don't know what the row at is on that. You better be a damn good sociologist if you're going to make back that $300,000. That's like, there's some law schools that are less than that. That's a lot of money. It's crazy, right? It's crazy. That's a lot. When you, you mentioned like categories, just serve people as great things to look at when you're investing like dividend, dividend-paying companies. Are there any other factors that you consider? I know there's probably a lot, but is there anything else outside of this company? Is it good company? It serves a segment of the population that needs this product or services. Is that one of the more important just mental models to go through or thoughts to go through? Yeah, you know, when I taught this to my sons, you know, I appear we can't see it, but I have a little cash flow jack in the box up on my shelf. And if I brought it down, it's got three components. It's got a handle. It's got a lid that pops up with cash that comes out. And it's got a price tag. So three things, price tag, cash flow, and the handle. The most important part of that jack in the box is the handle. That's what you're really talking about. Is you turn the crank and you have what's called operation, like in real estate, you have net operating income. Operating. You have operational cash flow operating. You walk into Apple, if they're, well, you got quite an operation going here. You're doing work. You're operating. And your cash flows based on the quality and efficiency of that value being delivered of that work. So in Coca-Cola, they sell the sunny water. They sell beverages at IBM. You know, all these American Express financial services, Exxon mobile energy. So when you, when you go through your life, you're either a net producer or your net consumer. Very people, very few people are even on it. So when you talk about the work that a company does, that's the moat that Buffett talks about. It's the service that we can't live without. You know, people say, everyone needs shelter. No, not everyone needs shelter. Go to Los Angeles, go to Seattle, go to any of these cities. You'll find a lot of people are making it without a home. A lot of people every day they go out without a home. They all have cell phones. So you need a cell phone. You can't live without medicine. You can't live without technology. You can't live without food, clothing, shelter, and energy. And so when times get rough and money gets tight, those are the places that people go. Now, there's money in their payment, right? People want that. There's money in those types of things. But in those basic staples, that's where I like to be. Because I know that if I'm a producer that people need me, here's a way to think about it. So my son graduates from the eighth grade and it's COVID year, it's 2020. And we're looking at going into school, the fall of 2020. And we're like, I don't want to go to school right now, because there's no basketball to play. You really want to burn a year sitting, you know, no one's showing, you know, masks. Parents can't come to games. We're not doing that. So in my home state of Utah, they have very liberal home school laws, where you can sign a paper. And now you're the teacher, you're kidding. Teaching wherever you want. You have to teach physics. You don't have to teach. You can teach them how beekeeping if you want. So we took that year and we studied financial education. He and I, one on one, every day, learned business, learned taxes, learned real estate, learned stocks, learned options every day. And one of the first things I did in the fall is we drove down to the gas station. And you know, he's going to get his driver's license in a couple of years. And he and they'll have Philip the car. So we learned how to fill up the car with gas. You know, we already knew. And it was $100 or whatever it was to fill a tank. I said, that's consumption. We paid out $100 to consume fuel, to consume energy. We went home and I opened up my American Express statement for the year previous year. And we saw how much money we spent on fuel on energy, a particularly gasoline. And it was a pretty good size number. I said, see, all that, run around a basketball practice we do. And that's what it costs. Then I pulled out my statement for Maxon Mobile. And we looked at dividends and call writing. We did not look at the capital gain because it's, you know, it's, it's more doubled since then. But I don't care about the price. Why sell my gold and goose, no matter how valuable it gets, I want the aches. And it wasn't close. And my son's looking at that and he had a real good moment. So here's how much energy we have in our life as a consumer. And here's how much energy that we have as a producer. So the money that goes out of consumption is a very small percentage of the money that comes in by production. That's what stock ownership is. That's what it is. Is how much money you bring in from producing as opposed to consuming. And if you become a net producer and you take that excess and keep investing and become a larger net producer, you compound into a pretty good situation, which anyone could do by the way. My son's, you know, since that eighth grade, he maintains his own account. He trades his own options. And that's where the capitalist in me gets a little irritated with people to say, well, no one can make it. No one can make it. It's not a millionaire. He's just learning how to pick away at his tiny little account. His account's small. It's not supposed to be big. He's 18 years old. But I'll tell you, by the time he's 30, and by the time he's 60 and, you know, Warren Buffett's 90, a compounding is a special, special principle. What are some of the, you mentioned 401K just briefly? What are some other potentially not, I don't want to say horrible, but not as useful as perceived financial instruments or frameworks or ideas that people say, well, what about this or what about that? Or my financial advisor told me to put money into this. What are some of the things biggest myths that you wish you could just dispel? Well, you're, you're kind, you're not to say that they're horrible. So I'll say it, they're horrible. A scam is an interesting word because it denotes that it's illegal, right? So it's not illegal, okay? It's not so bad that it should be outlawed. But gambling is outlawed in certain states. You got to go to Vegas to gamble. So if you were gambling outside of Vegas, it would be a scam because you're, you've created a mechanism. Why is gambling illegal outside of Vegas? Because if you set the entertainment value of dopamine, you know, of dopamine hits and then serotonin and crashes, you know, that crazy experience of gambling that people label entertainment, it's illegal. Because it's unfair. It transfers money from one pocket to another mathematically over time, regardless of what happens. It's a sure thing for the casino. So it's not a scam in Vegas because it's legalized outside of Vegas. So unfair, so egregious, so immorally, so such a bad thing that it's illegal. Well, 401Ks are simply legal everywhere. But they are, they are, if you set aside the legal, the legality of it, you just say, how does it work? It is a scam, for sure. And here's why I'll say that boldly. And it's not an opinion, it's just a freaking fact. Number one, if you, if your listeners can Google this, it's Spiva, right? S&P 500 versus actively manage funds. It's Spiva for short. So you Google S&P 500 versus actively manage funds. And there's an annual Spiva report. And they simply measure how well Wall Street funds do against the S&P, right? So in other words, how well does active management do compared to the S&P? And they're about 90% worse. They fail 90% of the time over 15 year period and it gets worse as you go back in time. They fail to beat the S&P. So right there, you start with what Warren Buffett said. He said, and I'll try to get the quote right. He said, the ultimate irony of the investment business is that there's no question that an obstetrician will deliver babies better than the husband or wife. If you take dentists as a whole, they'll fill teeth or, uh, gotta get the quote right. They'll fill teeth or remove teeth better if the patients tried to do themselves. But in the investment world, somebody who believes in American business, this is key, and seeks out the lowest way to participate in that business and is consistent, they will achieve results that exceed those of the Wall Street professionals. It is the only industry I can think of where the Wall Street professionals subtract value from what the layman could do himself. Two important points in that quote. Number one, what does it mean to participate in business at the lowest level? What the highest level would be owning it and showing it up every day and running it. You made the, you made the transition from medium participation as an employee to full participation as an operator to the lowest level of participation as an investor. So in Buffett says you participate at the lowest level, you buy a share of Coke, and that's all you're doing. That's the lowest way you can participate in American business. Well, you will exceed those results on Wall Street who subtract value. That's called fees. One percent fee over the life of an investor, Buffett's term is enormous. John Bogel, founder of Vanguard, his term is robbery and tyranny in compounding costs. So if you're to take a compounding calculator right now and you put, and you say, what is the earning power of a thousand dollars over a person's lifetime, 65 years, age 20, age 85, those are your, you know, your adult years, 65 years. That thousand dollars at 8% of the market turns into 148,000. If you take two and a half percent of that out for a fee, you'll make 30 grand and the other 110 goes to Wall Street. It's a simple scam. 80% of the money, look it up, John Bogel, battle for the sole capitalism. Founder of Vanguard does this math in the book, the battle for the sole capitalism. It's there. The math is there. So Wall Street takes the line share of the compounding power via fees, and people see one percent fee, half a percent fee, half a percent fee over the investor's life takes a quarter of the money, half percent fee, quarter the money over the investor's life. So it's an absolute scheme because they subtract value via fees. Anyone that understands comp, sorry, this is kind of my thing. Anyone that understands compounding knows that a subtraction of 1% or an addition of 1%, kind of like when you in sports where they throw a pick and instead of a touchdown, it's a 14 point swing really because you could add seven instead you lost seven. That giving up of a percent that you could have had over the life investors, millions of dollars, most of the time, millions of dollars, aggregate trillions of dollars. Why do people put money in a 401k bait, which is an employee match and it does not help the compounding. It's money upfront. What is bait? Bait is food. Real food smells like food, taste food looks like food smells like food. It's real food, but it conceals a hook. What is an employer match? It is real money. It looks like money, spends like money, it tastes like money, but it conceals a hook and it gets you in early and then now you're going to pay fees. Imagine a business where there was a mandate to sign up. That's how it is in the law now that Wall Street has gotten goods with the government and said it's going to be mandatory enrollment. You show up, people aren't saving up money. You have put in the 401k. Imagine being Wall Street and the champagne corks popping on that one because now every, you're going to slice off a piece of every single paycheck. You put in none of the money. You take none of the risk up down to sideways. You get a percentage that fee. You're going to get wealthy. So it is horrible and it's a horrible thing. The final reason, don't give me go on this, man. We will kill an hour. The reason 401ks are such a freaking scam is I've interviewed the guy who invented him twice. I've interviewed the guy that wrote the legislation. Richard Stanger wrote the legislation. He's still around. Ted Benna, father of the 401k. I know I'm not great, but I've interviewed him three times. He's the guy that came up with the employee match in the 401k 40 years ago. So we've had 40 years. Someone went from 20 to 60 now. For 25 to 65, we have the experiment now. 40 years. If you go to Vanguard right now and type in how America saves, you'll get their annual report. Somewhere a page between page 40 and 50, there's the demographics to show the median balance. And this is at a market that it's an all time high, all time high, the median balance of a 401k age of 55 to 64 is $80,000. Which is 300, which is about $300 a month to the 4% withdrawal. So the other reason it's terrible is it doesn't work. And think about that. They have, there's $11 trillion in 401k plans and Vanguard has about 2 trillion of that. That's a pretty good sampling, 2 trillion of it. And in those people, age 55 to 64, they have the most money. More than half of, or at least half of them have less than 80 grand at the end of the four-year experiment. So don't tell me that it works. That's not a debate of person when they are harrowable. They are terrible. And they make Wall Street rich and their ROI on Wall Street, their return on investment percentage is infinite because it's division by zero. They put in no money. They put in no risk. And that's the opposite of the risk reward rule that the more reward you get, the more risk you're supposed to take. They invert that, like the Starship Enterprise, some warp drive. They have infinite return and no risk. 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See with HubSpot everything's connected in one platform instead of duct tape together. So if you're tired of being spread too thin, check out HubSpot.com slash marketers to see how this actually works. Well, you know what? So this is an interesting sort of inflection point in my life. So my dad worked for the government and he had the old type of pension where you get 70% of your best years. Yes. Yes. And I don't know how there was Wall Street pulled this move to get rid of that and say instead of just doing that where you can retire at 65 and if you made a hundred grand that company is going to be paying you about 70 grand until the day that you died, they said instead of that, we're going to get you to invest in this 401k or in Canada or RSP. All right. I don't mean can the super in superannuation in Australia. I don't understand how they how they got well it was lack of financial education that allowed them to sell it to people and then all the companies got on board because they're like, wow, this is going to be way less expensive for us. Now we don't have to worry about supporting employees until they die. And then that thought alone and the realization that I could not get that kind of pension at a very young age I started doing the math in my head. I'm like, listen, if I want to make that, if I want to make a hundred grand every year after our tire at 65 and this before I was entrepreneurial, how much money am I going to have to have saved? And actually, ironically enough, the best boss I ever worked for was a boss who was a company that was acquired by private equity and I was leading their sales and marketing and it wasn't a big enough company to have an RSP slash 401k contribution pension. But he's like, I'm going to do you one better. And I think it was once a quarter if I'm thinking back. And once a quarter, he'd basically just put the SMP 500 on a screen and be like, just invest in this. Don't put your money anywhere else. Just invest in this. And just by me telling you this, it's going to be worth more to you than any pension matching system we set up. And those two events really shaped my view of investing and how traditional financial instruments are a scam and people aren't financially educated. And yeah, I mean, I don't really get it either. But enough people subscribe to this idea. So obviously our views are not mainstream. You asked a question that I think is really important. How did it happen? I'll tell you exactly that happened. The best place to start with this idea is in 18 in 1875, the very first pension in the United States was the American Express company. Now they were not a credit card company then they were like federal Express. They were a career. They had a rail system. You could send parcels and packages. So you have to understand that the relationship between employees and the company is is a business relationship. And their goal is attraction and retention of employees. And so what they did is they offered the first pension and it was horrible. They said, look, a you don't get it until you're 60. Well, in 1875, guess what the average life inspecting was is a 20-year-old white male. It was 60. So the actuarial table said that more often than not on average, they wouldn't have to pay the pension. So it's an actuarial game. Number two is the pension was pretty minuscule. And number three, there was a committee at the end that it could approve and disapprove you. And what that effectively did is says, now you can't go on strike, now you can't quit, now you can't be mad at your boss and walk out. And we have you, right, with this pension. Well, it caught on like wildfire, but then the pendulum swung. And then there's a really interesting thing. In the 1950s, post-World War II, the auto industry exploded. And in the United States, the auto worker union just took control. And you know this, if you plot a 30-year of chart of a business's earnings, it doesn't just go like this. It's just good years, bad years, anomalies. Well, there's this huge boom in the auto industry and the employees of the Studebaker company, Chrysler, they had what was called a pension gold rush. And the unions went in and they said, look, you're making all this money, all these automobiles, we're going to retroactively pay these pensions up these agreements. And so they had no choice. They'd go on strike and the management said, okay, here's your great pension. So now instead of being bait with an actuarial hook of, you know, not paying the pension, now they wanted real food basically. Well, as business cycles changed, Studebaker, they failed to innovate. They failed to sell cars, the business cycle turns and pretty soon you have two types of liabilities on your balance sheet. You have money that's borrowed, bonds, right? Corporate bonds is made borrowed. You have money that's promised, which is pension. That's those are different risks. Because pensions don't have collateral, promised money is what's killing the US today, promising healthcare, promising money that isn't borrowed yet. So now they have this balance sheet of obligations. We call them unfunded liabilities. That's massive. And Studebaker goes to the unions and says, we can't pay this. And they even say, so what? Pay it. And they go out of business. So all these people lose their pension, all these people lose their retirement. There's a huge uproar. So what do people do when when they get screwed like this? There should be a law. The government's left fault. So they go to President Kennedy. He gets killed. They go to Lyndon Johnson. Nothing happens. They go to Nixon. He says he was a crook, but he was and finally get to present Ford in 1974, a hundred years after that first pension. And in 1974, President Ford signs a RISA, the employee income retirement security act and what it created was an insurance company to back pensions where now if you're a corporation offering a pension, you got to pay extra in this insurance company that made him fiduciaries. They the pendulum swung to the worker. And they hated this. They absolutely hated this. The corporations did. But what can you do? Well, in in 1978, there was a congressman in upstate New York named Barbara Conable in his constituents were Xerox and Kodak. And they said, we have bonuses. We're paying that are being taxed back then at a 70% marginal rate. So in other words, if you work there and you get a bonus, you know, 70% of it's gone to the government right there. They said, we wanted to defer this. So he hired a young lawyer. This this Barbara Conable hired a young lawyer named Richard Stanger. He's right out Temple University is 20s and he becomes a staffer basically and he writes 800 words. And that 800 words became something called a 401k, which would allow business owners to pack away money tax deferred as long as they offered it to the smaller employees too, which you know, didn't always work out. And so you think about 800 words. What do you think the affordable healthcare act is? You know, 5,000 page a lot. This a lot of 800 words. So it's on the books for two years and he does this little favor for his buddies at Kodak and Xerox and on the book of two years. And and in 1980, there's a bank called Shelton and Bank that wants to recruit people with bonuses or from other banks. And they have a consultant named Ted Bennett. And Ted Bennett is a, you know, benefits consultant. They say, look, the old banks pre-arris are grandfathered in to where they can defer their stuff. The new banks aren't grandfathered in. So we can't attract top talent because their bonuses are all taxable. So Ted Bennett is a very religious man and he prays about this. And he literally prays about this. He book, he says it's an answer. He had a revelation of sorts and inspiration, probably better word. He says, let's, let's get the lower level employees to buy into this 401k thing by giving them an employee match. We'll match them 25 cents on the dollar. So the pitch was tough. And this is the real key. What happened was is you go to a bank teller with a hundred dollar bonus and a 15% tax break. They say 15 bucks and they don't have any Christmas money. So they don't want to participate. You go to the exec who gets $10,000 in a 70% tax bracket. Seven grounds gone. He wants to participate. So the 800 words had a discrimination language that says, look, if the, if the bottom third, two thirds is participating, the top third can't. So how do you get the bank teller to buy into this? Well, Bennett goes to and says, look, we'll give him 25 cents on the dollar. That's 15% tax savings, 25% there. That's a 40% on the dollar. Now they'll do it. And they said, okay, you know, okay, that sounds good. And he'll save you guys money because a lot of people won't participate enough. Will now you get your actual aerial stuff back, but we less than 1% of payroll. So the bank didn't want to do it. It sounded screwy and like they were messing with the law pioneering. So Bennett did it at his own firm and then January 1st, 1981, the 401k was born. Now here's the big thing everyone missed on the education side. You made a great point, Scott, when you said, here I have this $70,000, your pension. That if you look on a financial statement, none of that money touches the balance sheet. It is income that pays expenses. And if you have some left over, you have a surplus, if you don't have a deficit. So as a function of cash flow, as a function of the income statement, pensions never touch the balance sheet. Now you have an hourglass, because now it's in the asset column. And your pension is a function of net worth rather than cash flow. And in that asset column, the company now wipes their hands of all the risk and all the management, a lifetime liability, a lifetime liability. They get a wipe that off when you quit and you're left with a nest egg, which is really an hourglass. And it's a race against time is, will my money run out before I die? So that switch from being a function of income to a function of balance sheet was insane. And that's why I say these 401ks are freaking awful because if you go up to Canada, people are more afraid of living and dying because they're afraid they'll outlive their money. Yeah. And they look at their RSP and they say, I'm not going to make it because now it's not the net worth academy is the cash flow academy. Cash flow is the holy grail of retirement and financial freedom that you and I've talked about before. It's a function of cash flow. It's not a function of net worth. And you traded a river of money for a reservoir of money and the reservoir gets small and dries up and has risk. You're susceptible to all the whims of the market plus the fees on Wall Street. And that's how it happened. It happened with the Studebaker company going bankrupt, complaining of the government, little tiny law. Last little part of the story I think is interesting. I mentioned this Barbara Conable guy, right? He was the congressman the putter and he was the chairman of the House Ways and Means Committee. And I was interviewing Richard Stanger. I said, when you were writing this 800 word legislation, you know, what you think? He said, Andy, one of the most interesting things about that legislation is if you're going to mess with the tax law, you have to go to the treasuring, you have to go because it's going to affect their income, have to go to the IRS and you have to go to the Congressional Budget Office and see how much of an impact, in other words, if people start deferring taxes, how much does the government lose in revenue if this were enacted? They did their research. And they came back and they said, this 800 words will impact the federal tax collection by less than a million dollars. In other words, it was a favor. It was a favor and they thought it'd be buried in a bunch of pork and in Carter's tax reform. They said 800 words will throw it in there. There's 11 trillion dollars in 401k now in just the United States and they thought it'd be less than a million. And Carnival Barber goes from 1980 to 2020 years and now these have blown up. I mean, there's you know, trillion dollars in them. And Carnival gets nominated by an investments pension magazine as man of the century. He gets nominated as man of the century because he invented the 401k legislatively. And he had no idea what the 401k had done from there. He goes to a party and his colleagues start congratulating him on being nominated for man of the century. He goes, they got it wrong. I don't even know what you're talking about. Calls up the ways and means committee. You know, that he's no longer there. He calls up his buddies in Washington to say, do I have anything to do with the 401k? I'm getting nominated for man of the century and all this. I mean, is this right? And they said, sir, you put the legislation. And remember Xerox and Codac? And what was crazy is, is he was interviewed in his home before he died by a biographer in 2004, whatever it was. And he said, I had absolutely no idea. He said, I had forgotten about it completely. And the crazy thing is that's the most resultant legislation that he ever had. He wrote a book on, on called Congress and the tax law on all his speeches. He gave 401k's not even mentioned once in his life, Magnum Opus. This was an accident. The 401k was not a machine that was designed by an Elon Musk mind. It is more akin to the evolution of an organism that just haphazardly came with butterfly effect. And now Canada has an RSP Australia has a superannuation and you can't believe this in Japan. You know what it's called in Japan? What? It's called the 401k. They copied it because they didn't know what else to call it. It's a 401k in Japan. So don't give me going. I wrote a book on this called 401k. So I'm actually, they've asked the publishers 10 years later, asked me to write a second edition. So you have to do is you have to write a second edition. But you have to, I think bringing light to the origin story is important because then people start to realize, wow, we shouldn't be putting as much trust in it as we are. Yeah, I mean Wall Street came in with their fangs showing because what they do is they blame people. They blame the victim. They say, oh, you've only got 80 grand. You haven't been saving enough. That's, if you should be shame on you, shame on you for not saving enough. Here's an interesting thought. There's something called a put option. And I buy stocks like this all the time. A put option is basically promising to buy a stock at a price you want in advance. So Warren Buffett bought a whole railroad like this, bought British Northern Santa Fe this way. So he basically say, look, I think it's worth a hundred bucks to share. But, but I'll promise to buy it if it dips to 72. And you pay me a premium for that insurance. So on the price side, we talk to these people worrying about price. Some Wall Street hedge fund guy has, you know, Burlington, Northern Santa Fe, he bought it at, you know, 80. He scared of it goes below 70. He loses his job because they're all about the price movement. So he says, I'll give you six dollars to share Buffett if you'll insure me for two months. And if it falls below and I can hand this to you at 70, you have to take it. Well, Buffett owns guy code. He's in the insurance business. He says, give me the premium because Buffett doesn't care about the price. He wants the asset and he knows long terminal pay for himself. So think about this. You're making a promise in advance, right? To say, I promise to buy this stock low, give me the money for that promise. And it goes up. I keep the money down. I keep the money sideways. Keep the money. It goes down really far. I'll buy the asset from you. And I keep my premium. Okay. Now think about this. What's a 401k? It's a promise to buy equities in advance. True. I sign up. They're going to pull my head, promise to pay it. But instead of collecting a premium for that commitment in advance, because in the real market, that's worth a lot of money. A commitment in advance to pay money at a certain price, that's worth a lot. You should, you should get paid for that risk. Buffett does, I do. In a 401k, they don't pay you for that commitment. They charge you fees for that commitment. So think about that alone is if you just learn that one strategy, think about that. Do your cash flow pattern. Instead of fees leaving when you buy assets, you had getting paid in advance the buy assets. And most of the time, you can get per annum Buffett's average is between 20 and 50% per annum for that cash. Right now Buffett has $300 million in cash. I would bet my bottom dollar that he's selling puts for the next market crash to get paid to buy low at a high rate. People in the 401k don't get it. And you can do the same thing. RSP is the same. So interesting, right? Do you know why it took off the way it did? Because it was not meant to take off the way it did. What happened? Two things. What happened was is the way I teach about my new book is there's like a snow globe you look in and you watch the players, right? Yeah. You watch the 401k players in this little crystal ball. You've got the worker, the government, Wall Street, and corporations. Those are the four players. So the reason this took off is this is if you look at companies are going bankrupt today, even that promised money is a millstone around their neck. Because you're promising you have time risk. For example, if you take a a field curve, a normal yield curve, right? And you buy a 30 year bond, you're going to pay more to have your money tied up. You're going to need to get paid more to have your money tied up for 30 years. Look, if you and I watch the news tonight, we will not see another assassination attempt on on either president. We won't see a tsunami. We won't see an earthquake. We won't see an anaron. We won't see a new war breakout. If we watch the news tonight, if we watch the news together for the next three years, all of those things will happen every one of them. So that amount of time brings risk. So when a company says, I'm going to pay you a pension 30 years from now that'll start and then it'll and it'll keep going another 30 years. That's insane for business to do because business goes ups and downs and you have all these changes in your business. So if they can unload that liability and place it on the shoulders of the worker by saying, look, we'll give you a little money upfront with an employer match. But when you're done, you don't have any of this risk anymore and you have to deal with the volatility market now, they'll do that every time because it's less expensive. Right now, there's a huge fight at Boeing, the airlines, right? Yeah. And the workers are the workers are fighting management. And one of the things that the management is saying is we'll bump your 401k contribution. And the workers are saying, we want to go back to pension. The way that so if you have these agreements, what you do is you declare bankruptcy. Look at the bankruptcies. GM declared bankruptcy. Why? United Airlines declared bankruptcy. Why? Hosts has done it twice. Why? It's simply a way to break the promises to these employees, pension wise, they go to the government. They show them their financial statements. They look at our liabilities. We can't make it. So the government smacks the gavel, kills those promises. Now we got a 401k that you can fund. And so they legally break the promises to do it. So the reason they exploded initially was it saves the company's huge amount of money, not to have those long-term difficult to keep promises over 30 years. They can just pay as they go with the employer match. And that's a payment today. Now they can wipe their hands of this. They can shrink their workforce, expand it. It's just better for companies. The other reason it grew is Wall Street was showing their fangs because they're like, oh my gosh, are you kidding me? We can get a piece of every paycheck. Are you kidding me? And so the reason it grew is a benefits Wall Street, a benefits corporations at no time ever in this whole saga. Never was there a group of smart women and smart men that got together and said, let's figure out a better way to retire than pensions and implement it. It was an accident, a legislative, tiny little accident, some guy cook it, use an off-label use on it. If you want to use that term, off-label use of it. Bam, now we have a $11 trillion in the system. Crazy, right? This is why entrepreneurship, this is why investing financial education is so important. Because right now, you had the companies have the tools to screw you again and again and again if they want to. So you gotta remember, locus of control, right? That's it. Preach. Yeah. Yeah. Locust of control. I bet on myself, I bet on myself any day over those guys. Bet on myself any day. What would be, you know, people have been listening to this. I don't want them to be stressed out if they do have a 401k. But, you know, I think that that's a pretty natural reaction if they aren't entrepreneurial. A lot of entrepreneurs listen to this, a lot of investors listen to this, but there's people that definitely are in the situation of nine to five. I have a company matching my contribution right now. So let's sort of land this playing about 401k and financial education. Yeah. You want to talk to the audience and just give them some easy next steps on what they should do, what where they should go learn, what actions they should start to take so that they can really take a hold of their own future. Well, if you're a highly paid employee, you know, your six figures plus, I'd say you're going to put it enough there that's going to mass some. You're probably looking for a balance and say, I'm doing all right. I'm going to retire. It's going to work for me. If you're in the upper echelon of that, you're maybe the upper 80, 20 rule, the Pareto principle in the top 20. Maybe you're making it. You'd be freaking furious if you saw how much Wall Street made off it and what you could have had. You'd be freaking furious. But a lot of people going to struggle to show say, well, I don't want to learn anything. It seems you work and great. But everyone else is looking at that, you know, you say, well, I don't want to make anyone scared. Well, maybe we should. Because if it's out of sight, it's out of mind, and they're spending more time on the Christmas list than their financial education. So that's where I'd start. Learn the four pillars first. Learn how to evaluate a financial statement and see value and learn the prices what you pay and growth or earnings or sales or book values, what you receive and start to educate yourself. And you will be so surprised that this will be much more about the temperament and the consistency of investing than it is the financial education. The education you can just simply get by learning, you know, conversations like this. Hopefully someone learned something new by listening, right? That's all learning is is listening and practicing. The temperament will be the big key. Can you be consistent? You know, that's one thing a 401k does do. It is, you know, if it's going to pull it out of your paycheck, you are putting something away consistently. But if you say, hey, I could do that. If you say I could do that on my own, then do it on your own. So I would say the first step is, you know, do you want to have a locus of control? I love that phrase, do you want to move your locus of control from Wall Street, the corporation, or the the government and put it here? Okay, if that's going to be the locus control, I'm going to learn a little bit. So it starts with education. And you know, if they're fishing for employees and you're a fish and you want to have a happy life, swim in the lake, do you really want to consult the fisherman for your retirement plan? Do you really want them to build it because they're the ones that came up with it? Do you think they really built that for your benefit? Are they a philanthropic company, you know? Usually it's not. Usually not. Education's first. And it's not hard work. It's exciting to learn. It's fun to learn and have the discovery of, wow, I can really do it. It's fun. Where can people connect with you and then assume some more your content? See your next book that's coming out. You know, the book's done. It's with the publisher, but it won't come out for probably a year because you have to, you know, make a big campaign and launch it right. That's out of my hands now. I don't really care about that. I just care about writing it. I have an ebook, but a lot of people like that I call rat race escape plan. And it talks a little bit about those four pillars. It talks about the asset classes and it talks about how to plot a plan from A to Z. So if people want to get that, they could, you know, Google me or what have you. I mean, if people really want to know, they can find who we are and what we do. I had my team do a link. If you go to cashflowacademy.com forward slash success stories. I think I've got, we could put that in the notes or whatever. Yeah, I'll put your social in the notes. I'll put a link in the notes too. Yeah, they can get a free, they can get a free book, give it a read and see if it fits for what they want to do. But whatever, I mean, whatever people on the side, I wouldn't bash like VC. I wouldn't bash an angel investing because people that are smart are successful and all that stuff. So, you know, I love what you say about the looks to control that if it's about me, then I can make myself successful in whatever my passion might be. So, kind of dip your toe in the water, tell you find something you like and then jump in. And I mean, like that's the thing, like any asset class you invest in. I mean, the more time you spend in it, the more, the more you're going to be successful. If you jump from real estate to crypto to bonds to angel in the same week, you're going to lose a lot of money. But if you do it for 10 years, then maybe you'd be successful. I think there's an opportunity to risk all of those avenues for people. They should explore all of them. Last question I like to ask everybody, you've had a great career. If you could look back and tell your 20 year old self one thing about life, success, wisdom, finance, whatever, what would that thing be? Oh, I would tell myself not to worry so much. And I look in my eyes and tell me the same thing today. And you know, after talking to you, it might be, hey, keep your locusts of control with you. You know, it might be what I've said. We, I don't know what it was said to myself. I'd probably said, don't worry so much. You got, you know, you got all the freedom in the world. Go work your butt off and enjoy that journey a little bit more and stress a little bit less because it's going to be okay.