Transcription
The United States Securities and Exchange Commission, the SEC, and the Fed, they just admitted that there's some issues in the public market that they are not comfortable with. It can change how you do business and how you invest. I'm going to tell you what it means. I'm going to tell you what these changes are, and I'm going to tell you what you can do about it.
Okay, so let's start with the Fed. Last week, the Fed made the minutes from their late April meeting public. And in that meeting, we learned that officials are concerned about asset valuations and they are also concerned about liquidity. Who would have thought? I've been told you that this was a problem, but they're now coming out admitting to it.
While at the same time, the SEC is making huge IPO deregulation changes. What does this mean? So, they have noticed that more companies are not going public or public companies are taking their companies private because more money has been put into the private markets. Y'all know I'm a private market galley. Why are the private markets much more attractive? One, because insider trading is legal. Also, it's not so regulated and you got less people that you got to report to.
So the SEC basically is saying hey we are going to reduce transparency to make public markets more attractive. This means that companies they don't have to do as much reporting. There's this threshold for the size of company. There's three different sizes of companies that are publicly traded and their reportings are different. Obviously if you're a smaller company the reporting is one thing. It gets more strenuous as your middle and then large company. They're going to lift some of these minimums so that these companies are much more likely to come into the public market.
What does this mean for you? This means you have less information. This means you know less about the companies that you are buying in your 401k. And for you day traders, you're going to know less information.
Okay. So, what can you do about it? If you are investing, most of you are not going to do this, but for the ones who are, I see you. We're here. You're going to have to understand asset valuation models because you're going to have to put way more of your thinking cap on to figure out what's going on. One of my favorite ways to value assets is the discounted cash flows method. Use this formula to set the benchmark on what something is valued at. instead of just looking at what the asset is trading on the public market and saying, "Hey, this is what the value is." Because the Fed is coming out and they have said, "Hey, this stuff is inflated." They didn't use that word, but they said they're concerned about asset valuation in relation to the actual fundamentals.
The next thing you need to learn is learn about the time value of money. So many of you do not understand this. A dollar today is not worth a dollar tomorrow. and you need to be able to discount it into the present value to understand the value of that dollar and thus the value of the asset under certain rate circumstances. Value should change. So if you're using valuation methods to value your real estate portfolio, your stock portfolio based on conditions that were 2019, even 2023, you need to reconsider everything. I'm not saying go sell anything, but you need to revalue it.
I'll post some other formulas down below. I'll also give you a resource for you to be able to learn some formulas. I'll post that down below as well. You already know I'm going to go in-depth on my newsletter. I sent a dope newsletter last week. It was literally my favorite newsletter. Comment newsletter down below and I'm going to send you the link so you can get last week's newsletter and this week's newsletter where I'm going to really give you a full breakdown how to do your own valuation for your investing.
All right. Love you all.