What Are Repo Markets, Precious Equity, and Private Notes?
A couple of weeks ago, I published my top 5 takeaways from the Real Estate Guys summit on the sand. It was incredible to spend time with economists like Doug Duncan, world-class investors like Kenny McElroy, one of the most respected accountants in the world Tom Wheelwright, authors like Robert and Kim Kiyosaki, Ed Griffin. I could go on and on. . . Doug Duncan who is the chief economist of Fannie Mae had a brilliant presentation that showed why Fannie and Freddie Mac are predicting housing prices to continue upward from the short supply with rent growths lagging by approximately a year.
The presentation reminded me how complicated and out of control the economy seems. However, is it?
It feels pretty simple, prices up, wages flat. And that is the exact takeaway. I have always been told to work hard, and invest in your 401K for retirement. While that is great advice if your employer is matching money in your 401K, my takeaway from the summit was to come back to the simple lessons of Rich Dad, Poor Dad: Invest in deals that are common sense. Deals that solve a specific problem and generate cash flow.
Here are 3 items from the summit that helped me land on that conclusion:
1. Repo Market – George Gammon
This is the plumbing of how the Federal Reserve’s balance sheet is intertwined and providing life support to all economies across the world.
This market provides the liquidity that is needed for banks across the world to operate. Learn more about it here: https://www.bankrate.com/banking/federal-reserve/why-the-fed-pumps-billions-into-repo-market/
The primary takeaway is that these markets affect everyone, and few people pay attention to them.
The risk that most investors face is that no one knows who or when the next Lehman Brothers, Bear Stearns, Long Term Capital Management will happen. . .
What that means for an investor is that you are taking more risk in your money market funds, ETF’s and other financial securities than you may understand.
For those who want to learn more George Gammon does a fantastic job of explaining complex topics in 3 easy steps.
It was an absolute pleasure to meet and have dinner!
This is one reason why BMD Investment Group focuses on simple private investments that generate cash flow. It reduces counterparty risk and it’s great when your investments send you a check every quarter!
2. Precious Equity – Russell Gray
This strategy helps individuals unlock equity in real estate for savings and investment. To execute individuals, refinance existing properties, and invest their equity in private notes to build a cash flow stream covering the debt payment. This helps people take advantage of asset appreciation to protect their equity! The summit helped me build a network of companies investing in private notes, selling precious metals, and syndicating a diverse set of assets. All of these are key tools for wealth preservation and growth.
3. Private Notes- Jim Griffin
Precious equity is only possible once you understand the power of private notes.
I spent several lunches with Jim Griffin of Glastonbury Thorn discussing. Here is a short video explaining how to achieve the benefits of passive income.
Ok great . . . you went to a summit, financial markets are complicated, and you like to read books . . . so what?
My goal is to highlight that we don’t all need to be experts in the repo market like George Gammon. However, it’s important that each person is aware of the basic concepts. For example, the world used to settle all trade with gold. After World War II everyone agreed to use US Dollars backed by gold. Then in 1971, after France asked for their gold, Nixon and the world went to a full fiat system (print as many dollars as they wanted). That landscape is what has shaped the repo markets today. These other strategies of precious equity, private notes are tactics for protecting and growing your wealth despite these risks. In closing, by having awareness and focusing on simplicity we can create a world that thrives despite an out-of-control financial system!
If you found something valuable in this note, make sure to share it with family, friends, and colleagues! You can print, share on social media, or forward. If you have questions or want to build a cash flow strategy then take action today by sending an email or setting up a call!
Until next time, Share the Wealth!