Do your investments hold water?
What are the fundamental flaws in most people’s investment strategies?
Whose money are banks investing? Hint: Is not theirs…
What does Warren Buffett do that gives him success?
In this episode, Chris Miles tackles the topic of why stocks are not real assets. This is aimed to help you make better decisions based on what your goals are.
Listen in today.
https://www.blogtalkradio.com/moneyripples/2020/10/03/440--why-stocks-are-not-real-assets——————————————————————-
Hello! My fellow Ripplers. This is Chris Miles, your Cash Flow Expert and Anti-Financial Advisor. Hey guys, I want to welcome you out for a wonderful show. A show that is for you and it’s about you. Those of you work so stinking hard for your money, and you’re now ready for your money. Start working harder for you. You want that freedom, that cashflow, that prosperity today. Cause you know that cash flow equals freedom, right? Because you want to live that life. Doing what you love with those that you love. Whenever you want. But guys, it’s so much more than just financial prosperity for yourself. It’s about creating blessings and creating a Ripple effect, the lives of others. And as you become liberated financially, you can do the same too. And guys, I am so blessed and so grateful for you for allowing me to create a Ripple effect through you by teaching these things.
Cause I got to tell you, it’s awesome seeing what you guys are doing right now. It’s amazing to see the work that’s happening. And I see with some of you guys I’m working with one-on-one, I’m seeing what’s going on with some of the feedback you guys are giving me, keep it up, keep up the great work. You guys are making a difference in your own lives. And therefore you give hope and freedom to others too. As a reminder, check out our website, WWW.MONEYRIPPLES.COM Hey guys, not only is there great content on there too, but you can even go to our YouTube page. You can subscribe on there, the Money Ripples, Chris Miles page. If you go on there, you can see a lot of our podcasts are actually video version too. So if you’re a big YouTube fan, check it out because we’re now uploading our episodes there.
So check that out guys. All right today. So I want to go into something that really comes to heart because you know, this year has been a weird year, right? There’s no doubt. And there’s been a lot of different attitudes and you start to see things about people that bubble to the surface, right? And you start to see when people start having this gambler mentality, you start to see what happens with people. Start thinking what something might be real, but it isn’t. Right? And there is no doubt. There is no shortage of fake news out there, right? There is a ton of fake news out there. There’s tons of stuff that even you think that other people are giving you fake news. And the other side of the people that believe something different is fake news. I want to talk about Something
That is fake news and it has been for years before social media. So before AI could trick you, right? If you guys watched the social dilemma on Netflix, you know what I’m talking about, but before AI could trick you into what’s real news and what’s not guys, there was fake news long before, and I’m not talking about the National Enquirer. Although we do live in a day and age, where news is the National Enquirer, let’s admit it. But I want to go back years ago to when people talked about owning stocks and owning assets. Now I want to think about what real assets are today. And I’m going to argue that stocks are not real assets when you own stocks or mutual funds. Those are not real assets. Now, what do I mean by that? Now when I was about real assets, I mean something that’s going to be tangible.
Something that actually has intrinsic value. Now people argue with me all the time. They’ll say Chris, come on, stocks are in companies. These are real things are traded on exchanges. Hey, they’re backed up by everybody, right? Okay. Sure. Yo yes. They’ve got their on exchanges. Yes, they are actively traded and back and pass back and forth. But these things are really paper assets. And we’re really going into a world where I believe that paper assets and digital assets are going to become, you know, pretty false, right? They’re not going to hold water. When, when stress gets applied. It’s, it’s kinda like the the paper cup, you know, like you get those little paper cups at the gym. They look like the little cones. If you’ve seen them, right. You’ll put snow cones in them. You think, Oh, this is going to hold it.
Then as a snow cone melts or that, that water it’s in there, you start to realize that starts dripping out of it. Right? It starts dripping and dripping because it’s soaking through. And you’re like, this is cheap. You know, horrible plat. You have paper here. This is not going to hold water. The same thing is true with the stock market and the mutual fund market. And they are two separate, just so you know, they are very separate from each other. So let’s talk about this. And what’s fundamentally flawed because as a Financial Advisor, I was taught that this was the asset. In fact, I used to teach the fake news, the false belief that, Hey! the number one investors in the stock market are banks and financial institutions. So if they’re investing in these things, it’s gotta be good. Right? Here’s the problem with that.
What I learned later was that these institutions, these banks and these financial institutions are not investing in these places, they’re investing your money. They’re investing average, Joe’s money. These poor and the middle class, of throwing your money into there and gambling with it. Yeah. They’ve got the biggest assets going into these funds, right? But it’s not their money they’re throwing in. They’re throwing in your money. Where are they getting their money from the fees they charge you, right? Every transaction fee you do, you know, there every fee that comes out. Whether it’s administrative fees or even sales commission fees, whatever, it might be, depending if it’s brokered or not, there are fees coming out of your money and that’s how they get paid guaranteed. And their self-interests said, you know what? The more assets we have under management, the more people’s money they give us the bigger the pot is.
Because even if we make 1%, let’s just say a flat number of 1%, they have a billion dollars. That 1% means they make 10 million a year. Right? If they’ve got, you know, $10 billion, they’re making a hundred million a year, they’ve got a hundred billion dollars. They’ve been making a billion dollars yeah. Dollars a year. And so their whole goal is to get you to throw money in, leave it there and let us sit there forever while they collect their fees. And then of course, they’re going to make money in different variety of ways. Now how, because fake news is that the number one advertiser for them are typically the financial shows, right? Not my show. Right? But you’re gonna see the financial shows like the CNM Monies and things like that. You know, the shows you know, MSNBC, you know, or, you know, you got the, all those kind of shows that are talking about money and financial stuff.
Whenever there’s financial shows, you’ve got Cramer, screaming out loud breaking stuff or whatever, you know, you’ve got these companies advertising on their shows, you get the Fidelity’s and the Morgan Stanley’s, right? And the Merrill Lynch’s, you’ve got all these people, you know, putting their 2 cents in. They’re pitching the crap out of you. Of course, if you’ve got these companies paying millions of dollars in advertising fees to these companies, do you really think they’re going to trash talk them on the air? No, they’re not. That’s basically what’s funding. These news channels are these financial firms, right? These companies that are saying, buy our crap. Now you might say, Chris, I get it. I’m not into mutual funds. That’s not my thing. Well, first off mutual funds are not at real assets. Mutual Funds are like a copy of the copy, right? They buy stocks inside their portfolio.
But the thing is, you don’t own the stock. You own shares in a mutual fund, the fund itself. Now, the fund can go up or down in price, regardless of the market. Even if the stocks are strong, if a big amount of money gets sold in that mutual fund, you lose money. Cause it has its own share price, independent of the stock, just like the stock is independent of the business. The stock can go up down in price. Even if the business is profitable or not profitable, it can go up or down. However, at once you’re basically just gambling on guesses, right? And that’s what’s happened with these mutual funds is that you’re in this fund that is based on whether people buy more into it. Now people keep buying into it. Even if the stocks aren’t doing great, you could possibly see more gains.
If people start selling off of it, you’ll see losses. It has it’s own price, it’s own market. It’s again, when you, when you see, and people say, well, I’m investing Corporate America. Do you really think that your 2 cents that went towards Walmart really gives you a say in anything gives you any real asset and maybe you buy it, Walmart stock by itself, or maybe you buy Amazon stock or Zoom stock or Tesla. You buy any stocks. You’re like, I’m an owner. in this company. No, you’re not, man. I just put a slam down on that box. There. No, you are not an owner. They don’t give a crap about you because the real shareholders have those preferred stocks. They actually have ownership in the company, the stocks they sold off into the market. That’s just money being gambled with you. Don’t own squat. You have no say in the matter it’s just like Warren Buffet or Donald Trump, right?
Buffett does not buy stocks, Buffett buys companies. He buys shares in companies, actual, real shares things that he actually will have control and board meetings. Do you have that kind of control? No, you can’t do anything. The stock goes down. You can’t say guys, you need to shape up. You think they’re going to listen to you? No, they don’t care about you. They don’t see anything. Now, Trump, I love it. I have that little sound clip. It’s like a little eight, nine second sound clip from press conference back in March. But this is back when they’re talking about you know, people with insider information that started selling off a lot of politicians were selling off their stocks, right? They were selling off their money there and they asked Trump, they said, Trump, did you sell off stocks? Again, they’re trying to corner him and trap him, you know, to say like, Oh look, Trump sold office stocks.
He knew about the virus. Right? He knew what was going to happen. And Trump again, I’m not the hugest fan of Trump, right? But there’s times I’m like, that was pretty cool. Trump said, I don’t buy stock. I own companies next he’s like, I don’t buy stock. I don’t own stock. I buy companies. Guys, that is a profound few seconds statement because the wealthy understand, they don’t buy crappy stocks. They don’t buy something they don’t have control over. They don’t buy something that really makes them lackluster returns. Cause admit at the stock market is a gamble. Even when I taught people how to trade stocks and options, I taught over 200 people how to do that through a coaching, through some coaching programs like stock coaching companies and things like that. I would flat out just tell them, just to keep my conscience in good order.
I would tell them, listen guys, you’re gambling. You’re not investors. You’re a gambler because there’s no way because investors know how to control and manage the risk gamblers can’t. Yeah. You could say I can do different things here or there to lower my risk in stock trading. And I taught them the strategies. But the truth is you have no say in the matter what happens in the market, you are just guessing. And I do not like guessing. I like certainty. I like predictability. I like money coming in that’s predictable, that’s certain, that gives you peace of mind. And there is real financial freedom. You can never have financial freedom, just investing in things that aren’t real things that aren’t real assets like these stocks or mutual funds, you can’t have freedom because you don’t know what’s going to happen from day to day. You don’t know it’s gonna actually work out for you.
You can try to diversify your portfolio. You’ll want, which just admits that you don’t know what you’re doing. Because if you’re diversifying, it means you’re just throwing it all over the place. Hoping that someone wins, some will lose, but at least you won’t lose too much or gain, you know, but you won’t gain too much either. You’ll just be blah neh. That’s it guys. Real assets are things that have value. Things that people value regardless. There’s no doubt. And if you want to see where real assets are, the best place you can look is look to where banks lend money. I want you to go into the bank and ask them to lend you money, to put in the stock market, go and try it. Just see what happens. Do you think they’ll say yes? Not oh chance banks are not gamblers either. Banks had done enough gambling, you know, and some will still gamble based on people, but they don’t wan to invest in that kind of stuff.
They do not do that at all. They go for this close to a sure bet as possible. You asked for a big bank loan and you’re going to invest in the stock market. They’ll stop you. By the way. When I was selling mutual funds back up until 2005 is when I dropped my securities license. Right? When I sold mutual funds, there was a checklist I had to take people through that had an initial, one of those being, you were not borrowing money to buy into these mutual funds or to buy it from the market. Guys, they said you can’t do that. You can’t do that. Now. There’s things like margin trading and things like that. But again, the company holds the control and then they can stop it. They can call it do. I watched the guy who was, I was teaching how to trade stocks, right?
I just barely started with them. We’re just starting to hit into the intro. We haven’t gotten into the strategy yet. He wanted to jump the gun and get rich. So instead of even trying stocks, he went for options and he goes for those options. Right? And what happens? He ends up losing 90% of his money, 90% in a week. So then from one week to the next, when I talked to him, the stock tanked, finally there was a margin call. They took all their money back because imagine this like, say that the stock tanks and it did, he bought like this cruddy. It wasn’t even a good company. It didn’t have solid fundamentals. It wasn’t a penny stock, but it was low priced off. It was like a dollar something and a share, which is, you know, I talked about those, you know, certain rules or guidelines you do.
You don’t want to be trading those kinds of stocks. He did. And of course it had an auction associated to it, which was very volatile. Well, they called them out. They took all their money back because they took their 50% of the money. They lent him. Right. And, but the rest of the money had already lost. So because if it loses the thing about this, if it loses 80%, right, say the stock loses or in his case, the option lost 80%. Well, the loses 80%, you go from 10,000 down to 2000. Well, here’s the thing, right? Is that you well actually, they wouldn’t let you go that far. It wasn’t an 80%. That’s right. It was less because he lost about 40%. So when it went down to 40%, that’s when they said you’re out, we’re calling it do because they don’t wanna lose their 5,000.
So when he lost 4,000, he had 10,000, right? Lost four. And I was down to six, they took their 5,000 out. Cause that was the half they had initially left him a thousand bucks. So I ended up being like a 90% loss for him. They got their money back, but he didn’t, you know, guys that kind of stuff doesn’t work. But banks, what would they lend on? They lend on a few things. If you go in for a business loan, will they lend to you? Yes. If there’s some personal guarantees or you have some good track record, right? They will invest in companies, but they don’t invest. They invest as a debtor. For one, they don’t invest as an owner, they invest as a debtor and they want to make sure that you are actually making money and they want to make sure they put parameters around that.
And that they’ve got liens against you. They could put against you and everything else. Right? They have recourse. If something goes wrong, they have other assets. Even if it’s your own personal assets, though, they will lay claim to if they have to. On the other side, real estate, they’ll loan real estate all day long, depending on the type of real estate, they’ll give money for real estate because it’s a real asset. It’s real. It’s tangible. Think about it, guys. If you want to be a good investor, watch what banks do. They will invest and put money in things that are real. And yes, you know what? They even do it in life insurance. They actually sometimes put over 25% of their assets in buying life insurance. So yeah, they put it in real stuff, things with guarantees that behind it. And they’ll put it in some other things too.
But my point is, they’re not putting in the stock market, despite what I was taught as a Financial Advisor, and then trying to teach everybody else that banks and financial institution was the number one investors that is not true. They do not do that. It is a gamble. It is sham. You are not investor. If you’re putting the money in the market, you are a gambler. And I know some of you guys are putting money in the market and you’re probably ticked off of it. Some of you are even trading. You might be making money. Congratulations. I am happy for you, but you will soon find out there are still no freedom. There are still management. You got to do and things just to try to make money. But you realize there’s no passive income. There’s no real, any real income that comes from this good cash flow.
You have to earn your keep. You have to keep hunting. You have to keep watching. Even when I talk to people try to do it for like a half hour a day. You start to keep doing every single day. It’s way different. When I buy real estate, I don’t watch the thing every single day. I don’t watch to see what the price is doing, once a month to get a statement from my property managers saying, Hey, you got paid again. La dee da. You know, it’s so predictable in certain. Can Crazy stuff happen? Yes. Can there be unexpected expenses? Yes. But the reality is the majority of time that stuff doesn’t happen. It’s boring and boring is sexy because it’s real. It’s a real asset. And when crap hits the fan of the economy you start to see who has real assets and who has fake assets. And those that are stuck in the markets,
Have fake assets, those that have real assets, real, tangible stuff. Those are the ones that feel more certain. During those uncertain times. Guys, we were moving into a period of uncertainty. I’m not telling you what to invest in here, but I don’t have new questions. What the rest of the world calls an asset. And it’s usually the biggest asset they have besides our home. It’s usually something like their 401ks, it’s mutual funds and stocks. And I guarantee a lot of you, people, even those that have started to shift their mind differently still have it. And you’re still gambling with it. Watch out, be careful because there will be a day when people will say that wasn’t real. That was just an arbitrary number on a piece of paper. And until I get cash out, it’s mine. Guys, that is my warning to you. Stocks and mutual funds are not real assets. You are not a real investor. If you have money there. Guys, I know that’s controversial, but accepted. It’s hard to admit the truth because it’s real guys. I hope you make it a one full process week. And look for real assets, invest in real things that will pay you real money. That is my challenge to you. Make it a wonderful day. We’ll see you later.
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