Transcription
At the Bitcoin conference, I had so many people come up to me that was encouraging but also scary. So many people came up to me, like dozens and dozens of people were came up to me and like, "Mark, I'm doing it. I'm doing, you know, I've been watching your videos and, you know, I I'm borrowing against my Bitcoin and I'm going to do I'm taking a heloc against my house and I'm I'm buying Stretch. Is that is that the right move? Is that was that what I'm supposed to do?"
And I was like, "Whoa." Like, dude, like you shouldn't be taking action like that. Like, man, it's very dangerous. So, it was like encouraging that like I'm influencing all these people, but it was scary because like, bro, this is kind of dangerous. shouldn't just be doing that. It's like, uh, man, I I watched your videos and I I got I bought a dirt bike and I just went and hit this 100 foot jump. It's like, whoa, whoa, whoa, you're not ready to 100 foot jump yet, right? Cuz you haven't got the other pieces.
And so, like, it just kind of made me think like two things. Number one, I have to be very careful because, man, people could blow themselves up if they just get a little bit of the information. Number two, no matter what you're doing, while borrowing cheap and making more money is good, it's not really good. My definition of smart and good versus dumb or bad. Those are relative terms. So for you, what's smart or good is something that takes you closer to your goal. So while borrowing cheap and making a spread on a productive asset is the right thing to do, it may not be the right thing for you to do because it could ultimately take you further away from your goal.
So for example, I could borrow against my home equity line at 7% and put that into stretch at 12% and make a 5% positive spread. Is that a good thing to do? I don't know. If you're trying to get to your goal in the next three years, putting that money into a into a yield product could actually hold you back. You should probably put that into something with more high convexity. And so, without knowing where you're trying to go, without you clearly identifying what your target is and what your goal is, none of these ideas make any sense. You have to vet each one of these moves through that lens. And if you don't have that lens, then you have to start there.
That was the full conversation I sort of walked away with. It was actually the reason why I created wealth lesson to begin with. I was doing these mastermind pop-ups and all these really high smart, high net worth people were always stuck. Should I sell the business? Should I buy this real estate property? Should I? Should I? Should I? Should I? And the reason why they're all stuck is none of them were clear on where they were trying to go. Because only when I'm clear on where I'm trying to go, then my options start becoming clear to me. I have no lens to view them through otherwise. Yeah. Like buying a rental property that makes me 5% is that smart. I mean, it's better than not, but like is that ultimately going to get you to your goal? Like I want to run a triathlon. Should I go into the gym and do powerlifting right now? Well, I mean, it's probably better than not going to the gym at all, but it's not going to help you do a triathlon better.
So, I call it the GPS. If in order to use GPS, the first thing I have to do is I I don't say take me somewhere cool. I have to put in an exact coordinate. Then they ask me where I'm at. I don't just say I'm somewhere cool. I'm I have to put an exact coordinate. So, number one, where am I trying to go? I need $7,400 per month by 72 months. Then, where am I at? I have $127,000. Then I see what my routes and options are. Only once I see my routes and options, I can determine my time frame and then I know how hard I have to push. If I'm way ahead of my goals, I don't need to do any of this. Why would you take on the excess risk when you don't need to?
I say if I use Google Maps and I had to get to my destination, it could say I could walk, I could ride a bike, I could get in a car, but if I have to be there in 30 minutes, I can't walk or ride a bike. I got to get in a car. What if I have to be there in 20 minutes, but it says it's going to take me 30. Now I have to speed. I don't normally want to speed cuz that's risk. I don't want to take on excess risk if I don't have the speed, but I will. How much risk do I have to take? I have to go 5 miles faster, 10 miles faster. I have to go 30 miles faster. Do I want to take that risk of driving 30 m hour faster? I don't know how important it is to get to my goal on time. If it's just for a meeting, I can call my buddy and say, "I'll be 5 minutes late. No big deal." If my wife's in the back seat dying, I'm going to go 150 m an hour and I don't care what the risk is. So, it's the GPS that without knowing the answers to that, none of this makes any sense to us.
So the problem is when you do this randomly then you could get some outcome but it may not be the outcome that you want. And I used a quote in my keynote at the Bitcoin conference and it was a quote from Naval and Naval said the only real sign of intelligence is if you get what you want out of life. So I can do a bunch of these random things and I could arbitrage a spread from my home equity line to a positive carry or I could go buy Bitcoin. But will those moves actually help me achieve what I want? Now, I could just randomly get in my car and start driving around and maybe I come across a cool view or a cool park or something like that. Or maybe I don't cuz I'm random. And so that's what most people's investment life is like. They're like, well, I just need more. Just more. But but how much more? What we want to do is just be intelligent. We want to achieve the outcome that I want. I want to achieve the outcome I want by the time that I want.
And so what we do is we're wealth engineers. Once I can determine where it exactly is that I want to go, the ideal outcome for my life, and I know exactly where I'm at, then it's just a math problem. Then it's an engineering problem, which is why we're wealth engineers. So now that I know where I want to go and where I'm starting from, now how do I engineer the outcome to make sure I get there at the right time? Can I ride a bike? Do I have to jump on a train? Do I have to drive a car? Do I have to get on an airplane? If I drive a car, how fast do I have to go? And we can just engineer that outcome, but it starts with knowing where you're at.
So the problem that I've seen over and over and over and just at the conference I was met by a lot of people that was encouraging but also scary because they've listened to one part or another part of what I've talked about and they're starting to make moves and they ask me is this the right move? Is it is that right? Is that what I should be doing? And the answer is always I don't know because I don't know if that move will help you get to your goal or if that move actually sets you back. So even though on paper it makes mathematical sense on paper it's a positive carry by making that move it eliminates my ability to make a different move. there's a trade-off there. And so, I might have made a move that was positive, but it prevented me from making the real move that I could have made that would have actually helped me achieve my goal faster. And so, we want to take into consideration the entire picture. Number one, where am I trying to get to and where am I at? Understand my route options. And then all of these strategies that we talk about all become apparent what I should be using.
Now, most people are going to hear this video and they'll probably agree with it. Hopefully, you agree with it. Then you're going to go right back to running the exact same financial plan that you were before, hoping, praying. no plan. But listen, don't do that. If you want to have a better plan, the next video right here breaks down the actual framework that wealthy people use to build cash flow, preserve assets, and create long-term wealth. So, click on this video right here. I'll see you over there.