4 Observations from Dinners w/ Million and Billionaires

Email agenda:

Estimated read time: 3 minutes 10 seconds

1. 4 Observations from Dinners w/ Million and Billionaires

2. NBA Players Average Investment Returns

Good morning and happy Monday - let's get smarter

4 Observations From Dinners w/ Million and Billionaires

Last week was a wild week

I had dinner with multiple entrepreneurs out in Scottsdale

2 of them had amassed $100+m and one will (upon sale of his family's company) be a multi-billionaire

There were 4 key observations that I had as I reflected on the meetings while not sleeping on my red eye flight home

1. Building an asset you can sell

2. Where you live matters

3. Money makes money

4. Everyone matters

1. Build an Asset You Can Sell

Every single one of them had started a business with their own money (not VC) 25-30+ years ago

They scaled the business and had a large liquidity event

With today's technology and work from home being more prevalent, there isn't a better time to start something on the side even if it's a small micro-SaaS

By leveraging your job or current employment to pay bills and save, starting a podcast, newsletter, micro-SaaS, etc, gives you equity that can scale

In a job where your inputs = your outputs, you only have so much time

A liquidity event like selling a business gives you a large sum of money taxed at capital gains rates, which are lower than your ordinary income rates, that you can use to invest and build passive income

Example: Sell a business for $100k, and use that plus bank debt to buy a $500k real estate opportunity

Now you have an asset that pays you monthly cash flow and can pay your living expenses

Now you have more time to do other things or possibly quit your job and start another business

2. Where You Live Matters

Where you live has a bigger impact on your life than you realize

The people surrounding you can bring you up or down

I noticed even more so in Scottsdale, that all of the heavy hitters in the area knew each other

They do real estate deals together, they share deal flow in other opportunities

While Scottsdale isn't the mecca of the world, a lot of wealthy individuals retire there or have a home there

Living in a tier 1 city or a place that can elevate your game by connecting you with people doing big things can change your life

3. Money Makes Money

Similar to my point above, the heavy hitters want to do deals with other heavy hitters

They get access to investment opportunities that can generate 30-40% that the public world will NEVER see

It's unfair, but that is the game

So how can you get involved before then?

Offer some sort of value to them that isn't money

I am a math and finance guy

I show them the returns they can make on opportunities or model it out

Now I get to hang out with them and get access to these opportunities without being on their level

If you can save them time or money by automating tasks, managing a project, anything of value, you can get in the room without having the $ they have

Someone at the dinner's was young and hungry and just solved basic problems for a different billionaire like entertaining guests and doing other executive admin tasks

They were kind and well connected

This got them invited to every dinner

4. Treat Everyone Like They Matter

There are plenty of people with wealth that I know don't abide by this

But the people I was with were genuine to every single person

At restaurants they are asking the wait staff their name, shaking their hand, thanking them

When the valet picks up their car they remember their name and give them a $100

There wasn't a single person in the room who's name they didn't know

They made it important to make everyone feel like they mattered

While there is almost always an element of luck and timing that go into it, I thought these were the 4 most important things that stood out to me

NBA Players Average Investment Returns

As I mentioned above, last week while in Scottsdale I had meetings about private investments with potential investors

One of the meetings we had was with an NBA agent who works with a few well known players

I asked him "What are the typical returns NBA players are looking for with their money?"

"Oh if they make 7% they are thrilled. They have so much money, they just don't want to lose money."

7% is about the S&P 500's annualized average over a 20-30 year time period

The key to outperforming the average?

Avoiding big drawdowns of capital

Humans have FOMO

We hate the idea of missing out on the next big "stock tip" that could be a 10x

But this isn't how you actually outperform everyone else

Year to date the S&P 500 is down 21.76%

That means in order for you to BREAKEVEN or get back to where you were, you'd have to get a return of > 25%

Playing defense and avoiding massive drawn downs of capital can be your best offense

Is it too late to start playing defense?

No - we aren't at the end of market turmoil

If you still have exposure to risk assets such as stocks, crypto, or asset classes with a lot of volatility, my advice is simple:

On day's when there are bear market bounces, start selling your exposure and building cash

On these days, because the US Dollar ($UUP) is inversely correlated to the S&P 500, the US Dollar will likely be down

Build cash, and if you'd like, buy the US Dollar

Fixed income (like bonds), will have their time and place soon

However - bond prices move inversely to interest rates, so as rates continue to go up, bond prices will continue to go down

Typically when the bond market starts to sniff out a deeper market correction, bonds yields will be the first to know

When bond yields figure out about a continuing slowing of US (and the world) GDP through the beginning of 2023, we will buy buying bonds

We are still shedding crypto and stocks on bounces and buying the damn US Dollar

- Dev

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.