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AMA 101 – Market Timing Beyond the Stock Market with Dan Egan

 

Inspired by an article from Business Insider, Jason Hartman invites Dan Egan of Betterment onto the show to expand upon the idea of market timing. While much of the focus is on Wall Street and how market timing works in the stock market, a lot of these ideas can be applied to real estate investing. They also discuss topics such as long- and short-term capital gain, high-frequency trading and how happy we are with our own achievements in absolute terms.

 
Key Takeaways
02.33 – Stock trading investments are all about assessing long and short-term achievements. Remember that the government views capital gain in terms of short or long-term.
04.03 – Dan Egan describes the ‘bid ask spread’, an economic term for the costs you never see a bill for.
07.20 – High-frequency trading might not be everything it’s cracked up to be. You have to compare the situations of the big traders with average Joe’s actions.
13.30 – Personal satisfaction is hugely important, but it’s always competing with our comparisons to the people around us.
15.20 – For more information about Dan Egan and his company, head to www.Betterment.com
15.28 – Jason Hartman discusses some of the various viewpoints on the inflation/deflation argument.

 
Mentioned in this episode
www.Betterment.com
Flash Boys by Michael Lewis

 

Tweetables

When it comes to stocks, the longer you invest, the higher the chance that you’ll win – and you can win big!

It’s logic; the more you trade, the more chance there is that you’ll get hit by high-frequency investors.

If you’re in a bull market, you’re not a genius, you’re just there along with everybody else.

Transcript

Introduction:
This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit www.HartmanMedia.com

Welcome to the American Monetary Association’s podcast, where we explore how monetary policy impacts the real lives of real people, and the action steps necessary to preserve wealth and enhance one’s lifestyle.

Jason Hartman:
Welcome to the podcast for the American Monetary Association. This is your host, Jason Hartman, and this is a service of my private foundation, the Jason Hartman Foundation. Today, we have a great interview for you so I think you’ll enjoy it, and comment on our website or our blog post. We have a lot of resources there for you and you can find that at www.AmericanMonetaryAssociation.org, or the website for the Foundation, which is www.JasonHartmanFoundation.org. Thanks so much for listening and please visit our website and enjoy our extensive blog and other resources there.

Hey, it’s my pleasure to welcome Dan Egan to the show. He is Director of Investing at www.Betterment.com, and I became interested in his work when I read a Business Insider article about time in the market versus timing the market. Dan, welcome, how are you?

Dan Egan:
Very well, thank you very much for having me.

Jason:
Yeah, it’s good to have you. So where are you located?

Dan:
Betterment is located in the heart of Manhattan, right by Madison Square Park, in what we call Silicon Alley. That’s where a lot of the fintech start-ups in New York are based.

Jason:
Oh, you’re right in the middle. Good stuff. You’re in the belly of the beast of Wall Street there.

Dan:
Definitely.

Jason:
I liked this article that you wrote; the exact title escapes me. Let me see if I can find it here. It’s Investing is about time in the market, not market timing. I like that title. Tell us about the philosophy there.

Dan:
Sure. Think about the stock market and about investing as kind of a reverse casino. If you go to a casino, you know that the odds are in the house’s favor. If you play for a long time and if you play a lot of games, the house is going to win. The odds are that the house might get unlucky in a short period of time; if you go in and you just play roulette once, you might win. The house, in order to stay in business, basically has to win on average. They’re very good about doing that.

The stock market’s a little bit like that, but in reverse. Whereas with a casino, you’re pretty sure you’re going to lose in the long-run, but you might win in the short-run, the stock market’s the opposite. You’re the house. You’re the one who, because you bear short-term risk for the fact that other people might win a little bit in the short-term, you’re going to win in the long-run. The longer that you invest for, the longer that you play for and the more certain it becomes that you’re going to win and win big.

Jason:
So why would that be true? If you’re not winning in the short-term, why would you win in the long-term? The reason I ask, and I know this is part of it, is when you churn and you trade a lot, you lose money with commissions, but commissions in stock-trading are relatively low, compared to say, real estate, for example.

Dan:
I think there are a couple of reasons. Number 1 is commissions, that is very true. It’s important to remember that commissions have fallen relatively recently. A second thing is that people forget that if they do happen to lose, especially over a short period of time, you’re not just making money for yourself, but you’re making money for the government. They’re going to take a higher percentage of any short-term capital gain than they are of the long-term capital gain.

Jason:
Good points, so that’s where real estate really wins the game because you can trade it all your life tax-free if you do tax-deferred exchanges. The taxation will just kill you by being a trader. Yeah, good point. Okay.

Dan:
The other thing is that you start getting into transaction costs that you never actually see a bill for. One of these is what’s called the ‘bid ask spread’. It’s something which is just a transaction cost that exists naturally in the market. If you imagine that I have a share of stock A that I want to sell, and I think it’s worth about $101. The next person who’s most interested in buying a share of stock A thinks it’s worth about $99. Both of us are probably going to end up saying, ‘Okay, let’s split the difference. I’ll take $100 and you can take $99.’ When you think about that transaction, we both felt like we lost a little bit on it. The person buying it had to pay a little bit more than they really thought it was worth, and the person selling it had to pay a little bit less than they thought it was worth. You don’t notice it and you never get a bill for it because you just say ‘Well, I really want to get this transaction done, so let’s do it.’

However, think about it a little bit like a toll on a bridge. If you pay that toll once a year because you drive over the toll bridge once a year, it doesn’t matter. It’s going to be really minuscule. On the other hand, if you’re trading a lot and you’re going back and forth over that bridge multiple times per day, it’s going to add up to a lot. It’s going to be a significant amount over a long period of time. The ‘bid ask spread’ is what I view as a market tie, but you never get a bill for it. You never notice that you’ve actually been taking teeny, tiny hits every time you transact.

Jason:
Now, you probably saw Michael Lewis on 60 Minutes a few months ago, and I did a show about that episode. I also really enjoyed his book, Flash Boys, which I bet you’re familiar with – you’ve probably read it, actually. Is that bid ask spread a lot worse because of the high-frequency traders that are beating investors to the punch all the time?

Dan:
I’m going to say yes and no. I’m going to say yes at large – what they’re essentially doing is they’re trying to basically bid up the price by teeny, tiny little bits. I don’t think that they’re really doing anything that is socially useful; they’re not helping us find better ways to invest in different companies. However, I think it’s also important to be realistic about it. Again, this really matters depending on how much you trade. If you are a hedge-fund that runs an algorithmic strategy and is trying to beat the market all the time and therefore trading a lot, then you really hate high-frequency traders.
Betterment’s customers tend to be buy-and-hold investors, which basically means that high-frequency traders don’t get to get a cut of us very often. We’re just going to hold it; we’ll buy once and then sell 20 years later. We’re just not going over that bridge enough for it to be a worry for most of us. I think that’s true of a lot of investors – as long as you don’t trade a lot, you don’t open yourself up to getting just teeny, tiny bits of you bitten off.

Jason:
OKay, so that’s kind of like a yes and a no on that. Certainly, the high-frequency trading is a very profitable thing. They’re certainly beating investors to the punch and they’re making a lot of money doing it.

Dan:
Sometimes. You have to remember that we always tend to hear about successes in the media, but not necessarily the failures. I wonder, and I don’t have any stats on this, but you have to remember that a lot of these high-frequency trading firms get set up, they try and make money and they fail. I wonder what percentage of the profits in the profitable ones came from basically trading against the high-frequency traders who are a little bit slower or didn’t have much luck in the market. I don’t necessarily know that it’s just a redistribution from your normal Joe to these high-frequency traders because, again, normal Joes don’t trade that much. On the other hand, big algorithmic prop-trading desks do. I think this is a little bit of two professionals duking it out and the average person isn’t really involved in the fight.

Jason:
Interesting, okay. So what else goes on with the buy-and-hold method, versus the, we’ll call it ‘the flipping method’ or the ‘in-and-out timing the market’ method? I say that in the real estate game, the people who buy and hold their real estate just tend to have real wealth, and the people who flip and try and time the market have spending money. There’s a big difference. Spending money is great, but I’d rather have long-term, real wealth.

Dan:
Well, I’ll tell you, you also have more hair and less grey hair and more free time. One of the things that’s very true about any sort of more active thing is that it’s obviously going to take more time and it’s going to open you up to more occasions when you’re going to have made the wrong decision. You generally find that the market is a very deceptive environment. There’s a lot of noise in it, there’s a lot of randomness about things going up and down, so it’s very easy to get fooled into thinking that you have skill. An individual who sells out of GM and buys into X-On on a random day, and then the market goes up the next day – of course, both of those are going to go up and he’s just going to have paid attention the the X-On stock that he’s actually holding, rather than GM.

It’s very easy to get the impression, and this often happens during raging bull markets, and people think that they’re much better investors than they are because they’re mistaking a rise in the whole market for their specific skill at picking a given stock.

Jason:
Dan, I like to say, and I don’t think this is my quote, but I can’t think of who it came from – I remember saying it to my mother a good many years ago: Everybody’s a genius in a bull market.

Dan:
Yup, absolutely.

Jason:
We should look back to that old quote – “A rising tide floats all ships”. That’s not genius, it’s just being in the right place at the right time, and I always say I’d rather be lucky than good. We’re full of cliches here, aren’t we?

Dan:
I know, I’ve got plenty more to use.

Jason:
But they work, you know. They really do. They make sense.

Dan:
Wisdom comes from somewhere.

Jason:
Hey, that’s almost one! I’m not sure what I also wanted to ask you about this, but I think it is possible that people are just attracted to this. It’s like the gamblers’ mentality. It’s like they want to be engaged in it, and it’s almost like playing a video game. It’s as if with all these online trading platforms, Wall Street has really gamified the stock market, and that’s very attractive to people. Some people just love being engaged, it’s like they do it just for the pure activity of it. Kind of like the way they want to go play Blackjack or something.

Dan:
There’s a lot of ‘What could have happeneds’ in stock market investing, much like there is in gambling. It looks so apparently easy if you look back at 20 years of stock market history to say ‘Oh, if I’d just invested before it went up and I’d gotten out before it had gone down, I would be incredibly wealthy’. While that’s completely true, it’s like we don’t believe in how fundamentally noisy this stuff is. The number of times that an economic figure like unemployment or GDP will come out, and the market reacts exactly the opposite of the way that standard economic theory tells us it should. It’s about 50/50. I think that we have such a compulsion or a belief that you need to work very hard at this stuff in order for it to be really relatively successful.

One of the things I like to say is that just investing long-term is probably one of the best jobs you’ll ever get because the fewer days you come into work, the more you’re going to get paid in the long run. The more you come into work, the more you’re going to get docked because there’s just so many market frictions in trying to do work everyday. People seem to have a hard time saying ‘Oh, this is the best gig ever, I’m just going to not come into work; they keep coming into work and they keep getting docked.’

Jason:
Yeah, it’s true. For some reason, that gaming and gambling mentality really seems to hook a lot of people. It’s like they want to work more. They want to be engaged on it, it’s like a high. They get a high from this roller coaster ride. It’s an interesting psychology, it really is. I’m glad I’m not affected by it! Or at least not too much.

Dan:
One of the things you often find it that everybody wants to be above average, and obviously when it comes to investing, if you want to be above average, you have to go out and do something that makes you win. They’re actually done surveys looking at somebody who earns $50,000 in a neighborhood where most people earn $40,000, or it could be somebody who earns $90,000 in a neighborhood where most people earn $120,000. People actually focus a lot more on how they’ve done relative to other people, and that’s what drives their happiness and their satisfaction of an outcome more than how they’ve done just on an absolute scale and on how well they’re set up. That’s a very tricky thing to come to terms with – do you care about winning compared to your wife’s sister’s husband or do you care about just making sure that you’re more than meeting the bills and that you’ve got a good set-up for you and your family?

Jason:
Okay, good. What else do you want to say, just in general, about investments? Where do you think the economy’s going in the market, and what are your thoughts about inflation and deflation?

Dan:
I genuinely just think that it’s going to go up over the long-term. I don’t pay attention to a lot of the short-term noise because it can lead you so easily astray into thinking that something is certain to happen. In general, I think as long as the Fed continues to target 2% inflation and they continue to do what they’ve done in terms of trying to keep the economy a little bit perked up, everything’s going to be fine. Especially when you consider that you’re looking over the next minimum 10-year period.

Jason:
What do you think about the inflation risk, though?

Dan:
I genuinely have no idea. If you had told me 5 years ago that oil would be at beneath $80 a barrel today and that you could go and fill up your tank at $2.80 a gallon, I would never have believed you. Especially when energy plays so much of a big role in modern day numbers for inflation, I just have no idea.

Jason:
Very interesting, good stuff. Give out your website, if you would, Dan, and tell people where they can learn more about you.

Dan:
Definitely. We’d love it if you came and checked out www.Betterment.com, it’s a better, smarter investment.

Jason:
Good stuff. And when we talk about inflation, it harkens back – I remember when Peter Schiff was on CNBC and it was just slightly before the financial crisis when the Dow had bumped up against like 14,000. He was arguing about inflation, blah blah blah. It was the same argument you always hear from him, and I think it’s getting a little old, to tell you the truth. There’s definitely some truth to it, too, so I kind of take a middle ground on this.

One of the interesting things he said at that point – of course it’s different now because we’re at a much different point – was there’d been no real gains in stock values since the Great Depression. He said the only return had been dividends, that’s it, because adjusted for inflation, stocks are the same. That’s over like a 7 decade period! I’ll tell you my own comparison that I made – I remember when the Dow hit like 15,000 and everybody on CNBC was going crazy and all the advertisers and all the broker firms increased their budgets and so forth to attract more new customers. My analysis was that if you look 10 years back and you just left your money it, it would have to be a 15,800 for you to break even, and they were celebrating 15,000 like it was the biggest party of all time.

Dan:
Yup.

Jason:
People just don’t understand inflation well enough. The mainstream public just doesn’t get it. You’ve got to adjust all returns for inflation.

Dan:
Absolutely. I completely agree. It’s a very stealthy pickpocket from your wealth and again, like the bid ask spread, you never get a bill at the end of the year from your savings accountant saying ‘Yes, you got a half percent interest rate, but you’re actually down 1.5% in real terms’.

Jason:
Yeah, ‘Here’s your inflation bill’. Good point. Well good stuff. Any other closing thoughts you want to share?

Dan:
Definitely. I would just recommend anybody who gets involved in investing in the stock market – it’s a little bit of a roller coaster but just remember, the only people who get hurt on the roller coaster are the ones who jump off.

Jason:
That’s good, I like that. Good stuff. Dan Egan, thank you so much for joining us.

Dan:
My pleasure. Thank you very much for having me.

Outro:
The American Monetary Association is a non-profit venture, funded by the Jason Hartman Foundation, which is dedicated to educating people about the practical effects of monetary policy and government actions in inflation, deflation and personal freedom. Our goal is to help people prosper in the midst of uncertain economic times. This show is produced by the Jason Hartman Foundation, all rights reserved. For publication rights and media interviews, please visit www.HartmanMedia.com or email media@hartmanmedia.com. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate professional if you require individualized advice. Opinions of guests are their own, and the host is acting on behalf of the Jason Hartman Foundation exclusively.

 

 

Looking Ahead: Another Financial Crisis?

AMA12-8-14As the US economy regains its feet after the massive financial collapse of 2008, economists are turning their gaze to the future: what will trigger the next major economic crisis – not just for the US, but also for the global economy as a whole? And a bigger question: can it be prevented?

To answer these questions, financial and economic experts are looking at repeating patterns in lending, borrowing and global banking. As a recent article from Business Insider points out, while those patterns suggest that circumstances are very different today than in i2008, that doesn’t necessarily mean that a crisis of a different kind won’t happen.

As Business Insider reports, economists from the Bank for International Settlements have identified key global trends that are likely to affect the world economy, for better or worse, in the coming years. Leading the list: a shift from bank lending to bond markets, and the growing effect of the stability of the dollar on the behavior of world markets.

The Bank for International Settlements has been called the “central bank of central banks.” Based in Basel, Switzerland, it acts as the center for central banks around the world. Its job is to ensure stability in the world’s banking systems, and it does this by managing a variety of transactions including distributing war reparations, making loans to struggling countries and managing gold and foreign currency exchanges.

The financial crash of 2008, which was caused largely by speculative lending without enough underlying capital, is still fresh in the memory of these regulators. And while lessons were learned from that catastrophe, other risks are emerging in today’s volatile marketplace.

One major change has to do with a gradual shift in credit growth from bank lending to capital markets. That wasn’t true in 2008 or the years leading up to it, when US banks both large and small extended credit to borrowers of all income levels, regardless of creditworthiness. As a result of that unbridled lending, millions of loans went bad, largely in the housing sector, leaving banks facing major losses.

Now, on the other hand, the corporate bond market is booming even as traditional bank lending retreats. In this new lending landscape, asset managers may hold the key to financial stability. Those assets include pension funds and other kinds of investments in bonds and other securities, so a credit crisis in that arena could spell trouble for small investors and retirees hoping for money to fund their golden years.

But more significant and far reaching is the role of the dollar in the overall stability of world currencies. Dollar denominated debt has vastly increased over the last few decades, and that means that fluctuations in global exchange rates could send ripples through markets around the world.

Dollar denominated debt is any debt measured in dollars. Even as values fluctuate in global trading, the dollar still reigns as the medium of international exchange thanks to its stability and high profile. That means that many countries, especially those with unstable monies, have to take out loans in foreign currencies.

Borrowing in foreign currencies has its own risks, if there aren’t sufficient reserves to back up the debt in case of a default. If a government can’t trade its own currency for the foreign currency it needs, it can face a collapse. So keeping a reserve of a stable foreign currency such as the dollar is a way to keep from falling into a severe debt default and domestic financial crisis.

When local currencies appreciate, countries are in a stronger position. When they fail, those countries are at risk for financial collapse, which sends ripples throughout the global markets. But when the dollar appreciates, institutions lending exclusively in local currencies feel a pinch and financial structures topple. That scenario played out in Latin America and Asia over the past few decades.

In the end, the perennial stability of the dollar is a key ingredient of world financial balance. That means that factors that affect the stability of the dollar market could play a major role in the global financial balance – and disruptions in that market could pitch not just the US but also the world economy into chaos.

For now, those considerations are merely speculation, based on observed trends. But economists warn that in a tightly connected world, events in one place can have an impact on events half a world or more away. And another financial collapse could come from completely unexpected events. But examining past and present trends makes it possible to speculate on the impact of the dollar on the world markets – and on pocketbooks at home. (Top image:Flickr/SqueakyMarmot)

Sources:

“Bank for International Settlements.” Investing Anwers. investinganswers.com. 8 Dec 2014

“Dollar Denominaed.” Muddy Water Macro. muddywatermacro.wustl..edu. 8 Dec 2014
.
Ferro, Shane. “This is What the Next Financial Crisis Might Look Like.” Business Insider. Businessinsider.com 5 Dec 2014

Read more from The American Monetary Association:

AMA 100: Manage Your Expectations with Christine Hassler

Shady Trading Bilk Small Investors

The Amerucab Monetary Association

Final_AMA_Logo-150x1502

 

AMA 100 – Manage Your Expectations with Christine Hassler

 

Christine Hassler is a Gen Y and millennial expert. She believe millennials have the highest expectations and are often hit hardest when they face reality and realize it’s not as easy as it looks. She talks to Jason about how to manage your expectations better, why she loves millennials, and a little bit about her latest book entitled Expectation Hangover.

 

Key Takeaways:
3:15 – Christine talks a little bit about her book, Expectation Hangover, and who it is meant for.
6:10 – Christine says millennials are hard working employees. They learn quickly and think outside the box.
10:15 – You need to have a break up in order to grow. A break up leads to a break down, which actually then leads to a break through.
13:00 – Take a brief pause in your life to accept the on-rush of feelings you might have, once you’ve done that, then you can work on releasing them.
16:00 – Christine believes millennials will find a better solution for our current broken school system.
19:10 – Don’t base your happiness and self-worth on the result of your goal. If you fail, it will take you longer to bring yourself back up. Have goals, but distance yourself emotionally from them.
20:50 – Christine wants you to optimistic, but she also doesn’t want you to let yourself down for putting too much emotion in that optimism.

 

 

Tweetables:
I found when I coach people, a break up leads to a break down leads to a break through.

The time I spend between expectation hangovers gets longer and the time I spend suffering gets a lot shorter.

Millennials are incredibly innovative, they have a can-do attitude, and they think outside the box.

 

 
Mentioned In This Episode:

http://jasonhartmanfoundation.org/

http://youngwealth.com/

http://christinehassler.com/book-landing-page/

http://christinehassler.com/

 

 

Transcript

Jason Hartman

It’s my pleasure to welcome Christine Hassler to the show. Her latest book is entitled Expectation Hangover. She is also the author of 20 Something Manifesto: Quarter-Lifers Speak Out About Who They Are, What They Want, and How to Get It. So we’re gonna kind of dive in to this topic of the largest demographic cohort in American, if not world history, which is Generation Y, but she also talks more broadly and writes more broadly about a variety of topics. We’re going to focus, I think, on Generation Y. Christie, welcome, how are you today?

Christine Hassler:
I’m great. This is going to be a fun conversation.

Jason:
It certainly will, it always is. You’re coming to us today from Chicago, Illinois, I believe, right?

Christine:
I am. I don’t live here anymore. I went to college here and it’s a beautiful fall day and I’m enjoying in seeing a change in seasons.

Jason:
Yeah, I know you live in California now where I’m from and that’s one of the things I really don’t like California. You don’t get the nice change in seasons, which is kind of cool.

Christine:
Not so much.

Jason:
Well, so tell us a little bit about your latest book Expectation Hangover.

Christine:
Sure. Well, to write this book I had to have a lot of expectation hangovers. *Laughter*.

Jason:
*Laughter*.

Christine:
So, lettme define what a expectation hangover is. You’ve probably never heard of it because I made up the word.

Jason:
It’s a good title.

Christine:
Thank you and it’s rather intuitive. You can kind of guess what it means, but it’s when one of three or four things happen, either you don’t reach your plan, desire, result, expectations, things don’t turn out like you planned despite your meticulous planning and effort-ing and blood, sweat, and tears or things turned out like you plan; you get the outcome or the result, you achieve the goal, but you don’t have the feeling you thought you would.

It’s not as fulfilling as you thought or you’re not living up to your personal or professional expectations or life throws you an unexpected curve ball that’s unexpected and desirable. So, a variety of things happen similar to hangover symptoms but more serve, head is aching for all the thinking and trying to figure it out and if your uncertainty, spinning in confusion, there’s a sense of regret, we lack motivation, and we just want any quick fix to make ourselves feel better.

Jason:
Now, when you talk about expectation hangover, you’re not applying that to just millennials and Gen Y, right? Does this apply to everybody or are they suffering the biggest expectation hangover, maybe? *Laughter*. I’m not sure.

Christine:
Well, I think that..I’ll answer both question. First of all, any one who has ever been disappointed has had an expectation hangover, so the book is really for anyone who has been disappointed and is welling to do the work leverage it rather than be a victim of it. I think millennials or Gen Y are definitely feeling more of one because I think they were raised with the most grandiose expectations.

I think previous generations were sort of raised with the expectation that life can be hard and life is a struggle and kind of that more like glass half empty attitude, but that doesn’t opt someone out of disappointed. I mean, if you expectation disappointed, it’s probably going to happen too. I think millennials were raised with the you can be anything you want and you’re special and go to college and get a degree and you’re going to have the job of your dreams and they’re just facing so much disappointed because the life they were told they were going to have is in direct conflict with the life that they’re discovering.

Jason:
They’ve definitely been the most catered to generation in all of history. It is, if you will, for many a rude awakening. They seem to be dealing with it reasonably well. You know, I’m pretty impressed with Generation Y in a lot of ways. A lot of people like to say bad things about them. Over entitled, spoiled, etc, but gosh, they’re really bright, they’re independent thinkers, I love that they do not trust government and the establishment. I don’t think they should. I think with the technology, it’s just a amazing revolution that we’re going through. I mean, we are on the verge of so many amazing things. I think in the next 10 years they’re going to blow our minds and actually our expectations might be exceed in many ways.

Christine:
Yeah, it’s amazing kind of technology and it’s also a bit consciousness shift. I think people are waking up and discovering there’s so much more to life than the traditional checklist and people are doing the internal personal developmental work in addition to all the external goals and I speak a lot to corporations on millennials and bridging generational gaps. I kind of have my personal developmental spiritual side and then I have the corporate productivity side. I love being able to speak on both topics.

I always defend on Gen Y and millennials. I’m like look, of course there’s group of people that are certain young people who are going to be entitled or whatever, but you can’t let a few people, you know, throw off the reputation of an entire generation and I have found that if you really understand Gen Y and millennials and know how to manage them, they’re the best employees ever. They’re amazing learners, they’re incredibly innovative, they have a can-do attitude, they’re always available on their technology, and they think outside the box completely because they were not raised in a box.

I also think this generation, you know, older generation say, “Oh well, you have to pay your dues, you want instant gratification.” But, look at the world, the environment, the economy, the health care system this generation is inheriting. They’re going to have a lot to deal with, so I definitely think they’re going to be paying their dues, just in a different way.

Jason:
Yeah, don’t forget the student loan debt, which is absurd.

Christine:
Yes.

Jason:
Okay, so very interesting there. So, it’s interesting that you have this sort of two sides, if you will, that you really address. You address the spiritual side and you talked about this new consciousness, can you elaborate on that a little bit more?

Christine:
One of the things about Expectation Hangover in particular is it offers a tremendous transformation opportunity. See, we all sort of kind of are robots based on our story and our life. We all have certain ingrained belief systems, we all have things that happen to us that sort of create issues that we carry around. For change to occur and to really live in to our full potential, we have to upgrade ourselves emotional, mentally, behaviorally, and spiritually.

We can’t just sort of kind of have the same routine that we were raised with and keep doing the same thing over and over. We’re here to grow, we’re here to learn, and we’re here to really evolve our consciousness and it’s through struggle, it’s through difficulty that we have the biggest opportunity to do that. Any time we take on a challenging task, any time something happens in our life, we either can relate to it as why is this happening or this is so hard or we can look at that and go, “What am I learning?”

You know, what am I learning from this? How am I being given an opportunity to grow and dig deeper and maybe heal something emotionally or change my belief system or learn a more efficient, productive behavior. So, I don’t think..I don’t tell people there’s something wrong with them and they need to be constantly improving themselves, but I do think, just like our the phones, we have a consistent opportunity to upgrade ourselves and expand our mind and think differently and not think so much in terms of black and white, good, bad, right, wrong; judgmental, but to really have more of an open expansive mindset and understand that we’re co-creators.

Jason:
Very interesting. I love the co-creator philosophy. It’s very true. We’re not here to just let life happen to us. We are a co-creator and it’s our job to create the life we want and create the world we want, no question. It’s interesting, you know, you talk about the subtitle of your book, overcoming disappointment in work, love, and life. So, tell us about those areas. I know you just alluded to it, of course, but a little more, especially the love angle, I’m kind of wondering why you put that in.

Christine:
I think that’s, I mean, let’s face it like, we’re multi–dimensional beings. We have a work life, we have a love life, everyone wants all of it. I don’t know anyone who’s like, “Oh, I just want a job.” We all want love. I think one of the most painful things we go through is often in the relationship department, love department. I don’t just mean romantic. We love our friends, we love our family, and it’s often in the heartache that we really learn the most about ourselves.

What I found is that, you know, disappointment, it doesn’t matter what area of your life it happens in, it’s really hard. We’re not really given the tools to deal with it. I know for me, I’ve had disappointments in my career and in my love life, especially my romantic relationships, those were kind of the most awakening times for me. I found when I coach people, a break up leads to a break down leads to a break through.

Jason:
Yeah. Well, the old saying, “It’s better to have loved and loss than never to have loved at all.” So those are really good growth experiences, but it’s very hard to see them that way at the time, isn’t it?

Christine:
Oh totally, absolutely. You know, I remember I was going through a divorce and people were like, “Oh, there’s a reason for this and time heals.” It’s like, I don’t know the reason and I don’t really want to wait that long. So, you know, that was one of the things that inspired the book. It’s like, okay, I understand there is a given time where we’re going through the disappointment, but what can we do to move through it a little faster and a little more intention? So, we really are, like I said, leveraging it.

Jason:
Okay, what can we do? Tell us about some tips there.

Christine:
So, the first thing, the book is divided in three parts and the first part is about why we have expectations and why expectation hangovers happen; to teach us some major lessons that we’re all here to learn. Like, we don’t have complete control, our comfort zone is a trap, universe is not here to punish us, and it ain’t out there. We need fulfillment, joy, all those things we’re looking for aren’t found in external things, it’s really a inside job. So, disappointment reorientates us to move inside out rather outside in.

The treatment plan, which is the second part of the book, which is incredibly holistic because in my life and working with people, if you don’t work on the emotional, mental, behavioral, and spiritual level, you don’t fully have the breakthrough. So, the first thing is to accept your feelings about it. You know, we don’t like feelings, we’re not taught how to process feelings, we want to work through them or drink through them or eat through them or distract ourselves and not really feel and so that’s the first part. Just allow yourself to have your feelings about it.

In the book I teach you how to do that in a way where you release from and then recycle your feelings and you learn how to move into compassion for yourself instead of judgment, so our feelings don’t consume us and we don’t identity that with them, but we still honor them so we’re not carrying around all these unprocessed feelings that lead to illness, lead to depression, lead to stress, that lead to feeling like you’re constantly need to be moving or doing something so that’s a big part of it, especially for high achievers and people that are doing, they tend to suppress their feelings the most. So, if you relate to that, then definitely check this out. *Laughter*.

Jason:
No question about that. Very good points. So, this applies to anything in life, any kind of expectation hangover.

Christine:
Yes.

Jason:
It’s certainly not just about relationships. We have feelings about someone who took advantage of us in a business deal, you know, or didn’t keep a promise. I mean, gosh, it’s like if I had a nickel for every broken promise *Laughter*.

Christine:
I know, I know.

Jason:
Just crazy.

Christine:
You know there’s lots of stories about entrepreneurs and their first failure, being betrayed, illness, relationships, you know, the book is stories, it’s exercises, it’s guided processes, it’s definitely a work book. So, it’s not like sit down on a beach and drink a Pina Colada and read this. It’s definitely for people are like, “Alright, I’m ready to have some serious ah-has.”

Jason:
How can we release feelings? You talked about processing them and releasing them, you know, honoring them and not repeating them over and over. I think that’s what most of us do, we get into this trap where we’re upset about this thing over and over again.

Christine:
The biggest key and this is why people recycle feelings and not release them, is not to judge or analyze your feelings. See, what happens is, you’re having a feeling and you’re having a commentary at the same time. “Why am I feeling this way?”, “I don’t like this way.”, “I hate feeling so bad.”, “This is stupid.”, “I can’t believe I’m crying.”, “I’m weak.” Na, na, na, and that’s what perpetuates the feeling. So what we have to learn to do is feel our feelings with compassion, which is just like part of us are having the feeling and then another part of us is like, “It’s okay, just let it out.”

And in the book I teach tools, there’s one tool I teach called release writing where, you know, if you’re not good with just kind of emoting, you just start journaling, but it’s not journaling that you reflect on. It’s like free-form writing just a stream of consciousness, just go and let your emotions come up, and kind of turns into scribble because you’re writing so fast, then when you’re done you rip it up and you burn it, so it’s like purging. So, all of those things are really, really helpful ways to start to release your feelings.

Jason:
So, what do you think is in store for the Generation Y and their future? I mean, they’re, we talked in the beginning and just briefly mentioned how they’re saddled with this massive student loan debt and I think really, you know, this is even a conspiracy to create a whole generation of debt slaves, because as we’ve talked about on many prior episodes, the only type of loan debt that is not discharge-able in bankruptcy is student loan debt. So, literally there is no way out. I mean, these debts must be re-paid.

You know, I think that’s going to slow down the progress. Oddly nowadays, it really is questionable how necessary college is anymore. We’re in a world now where credentials don’t even really matter that much. Seeing old movies, reading old books through the years, it like used to be a big deal. If you called a restaurant and it was hard to get it and you said, “Oh this is Dr. Hartman.” You know, you’d get a great table.

Right now it’s like, “Who cares?” Which is kind of unfair in a way because people have worked a lot and paid a lot and scarafiiced a lot for these credentials and mostly I’m talking about college, but there are other credentials too. Now, it’s more a matter of, “What have you done lately?” You know, what is your track record?

Christine:
Yeah, I think so and I think, again, like, the millennials generation, all these student loans, they have..it’s a big burden. I definitely encourage people to hold it as a loan and not debt, because the more you say debt and debt and debt, the easier I’m just going to undermine everything we say. And, we don’t know, you know, there could be an amazing millennials right now, even one listening right now, who reforms this whole system. We have no idea what’s going to happen and how it’s going to be handled. Yeah, is college necessary? I don’t know that it is. I think every person has to decide that. Not everybody is a natural entrepreneur.

Jason:
I think college is a good deal at a reasonable price. If the government didn’t insure student loans, then there would be less money flowing into these universities and the price would drop. You know, the free market would control the price, but what’s happened, you know, the government has just inflated this bubble and these prices are insane for these colleges. Look, when my mom went to Berkeley in the 60′s, she worked her way through school. You could do that back then. Now that’s just unheard of, you can’t do that any more.

Christine:
Right, right.

Jason:
So that’s part of the problem.

Christine:
Yeah, yeah it is. You know, I just..for anyone out there who’s dealing with student loan right now, just know, one foot in front of the other right now and just know that it is an investment in you anyway that you can hold and just do your best to meet with some kind of financial expert or planning to manage it and get a program in place on how you’re going to pay it and, you know, I think it’s like, I do think it’s an issue that the millennials generation is going to change.

In order for things to change, they have to be bad. That applies to life. For most of us, things have to get bad before we really change. *Laughter*. I think we’re at the point where it’s like, “Oh, this is awful. This doesn’t work.” Something is definitely broken is with the system and this generation, I think, will fix it.

Jason:
I think that’s very possible. I mean, it’s really truly amazing the kind of innovations that are coming out of Generation Y.

Christine:
Totally.

Jason:
Just whole new ways of thinking that just didn’t occur to prior generations.

Christine:
Right, exactly.

Jason:
So that’s very, very exciting. Well, what other tips can you give to people in general and then anything specifically for Gen Y?

Christine:
Sure, well the last part of the book are like my quick fixes that work. So, we talked about a couple of strategies that don’t work. You know, the over drinking, over eating, distracting yourself, over working, all those kinds of thing. So, one of my favorites is don’t go to a Chinese restaurant when you are craving nachos.

Jason:
*Laughter*.

Christine:
*Laughter*. And what I mean by that is, manage your expectations of others. I think so often we really expect someone to give us something or be a certain way that’s just in your personality. They’re just not capable of and we just keep..because we love them or because they’re in our life or whatever, we just keep going back and getting disappointed after disappointed after disappointed, so really when you’re craving nachos ask yourself, “Okay, where can I go to get nachos?” I mean, I know that even if I bring the ingredients to a Chinese restaurant, they’re not going to be able to make them up. So, be mindful of managing your expectations.

The second thing I say is that, the way to reduce disappoint, reduce expectation hangovers, because here’s the thing, I’m not promising we’ll never be disappointed again; even as the author of this book I still have expectation hangovers. However, the time I spend between expectation hangovers gets longer and longer and the time I spend suffering when I have one gets shorter and short.

So, how I pursue my goals and how I coach people to pursue them is with high involvement and high intention, but low attachment. What I mean by that is, you take the steps, you have the intention, you have the vision, you do what you can, but you don’t make your happiness, your worthiness, your okay-ness, your safety, your security dependent on the result, so less is riding on it emotionally and mentally.

Jason:
Vey, very good point. That’s great. You know, it’s like, you know, what is the difference between attachment and expectation, I guess? If there is a difference.

Christine:
Not much. There’s really not much.

Jason:
Yeah, but what I am getting at here, Christine, is the idea of, look, there’s an old saying, “Expect the best, prepare for the worst.” Right. We want to be optimistic, we want to expect big things in our life, kind of sounds like you’re saying, “Well, don’t expect much.” Which, I know you’re not saying that. I just, it harped back to a debate I was having with a friend in highschool when literally I could not believe this, we were actually debating whether optimism was a good thing or not. He was saying, “Well, you know, if you’re optimistic, then you’re just going to be disappointed.” I kind of couldn’t believe that. *Laughter*. You have to have something to look forward to and to have a goal and create that future. Where’s the balance between this, I guess I’m saying or the distinction.

Christine:
See, to me, it’s more about how we want to feel. We expect these big things and we get really attached to the form and the way we want them to come. I think that’s awesome to be optimistic about our qualities and our values. Optimistic about, “Wow, look at all the amazing people and things I have in my life. I’m so excited about how I’m going to learn more about myself and feel more fulfilled and more confident.” That’s what really we have dominion over and be optimistic about who we are and what we’re going to create.

It’s more about self-acceptance and really accepting our life and gratitude for it and excitement for the future and optimistic about how we’re going to be pleasantly surprised as well, but not attaching everything on the grandiose vision. Like, “Oh my gosh, I’m going to sell my company for 10 million dollars by the time I’m 30.” Awesome vision, awesome goal, just don’t invest yourself emotionally in it so that if it does or doesn’t happen, your worthiness and your okay-ness is not dependent on it. Again, intention, visions, all that stuff is good. I’m definitely not saying be negative and expect the worst. I’m saying don’t expect anything as best you can.

Jason:
Right, yeah. Good. Excellent point. Well, give out your website and tell people where they can find the books.

Christine:
Sure, if you go to ExpectationHangover.com and get the book through, then you get all my free gifts. You get a couple of interviews, you get a 10-part video series, or you can just find the book on Amazon and then if you go to my site ChristineHassler.com that’s where you’ll find my blog and my other books and retreats you can come on me and all that kind of stuff.

Jason:
Good stuff. Well, Christine Hassler, thank you so much for joining us today.

Christine:
My pleasure. Thanks for having me.

Drug Lord or Hero: The Silk Road’s Founder Confounds Expectations

Dread Pirate RobertsThe Silk Road is dead.

That eclectic online marketplace for trafficking in illegal substances of every kind was raided and shut down in 2013 by the FBI and other federal agencies, who confiscated its multimillion dollar store of Bit coin.

But its mysterious founder, known online as Dread Pirate Roberts, continues to confound. This enigmatic figure broke new ground not only by creating a super private drug trafficking site using the anonymous digital currency Bitcoin – but also by his relentless championing of Internet freedoms and the right to personal privacy.

Who is Dread Pirate Roberts? The name is a tongue in cheek reference to a character in the cult favorite film, The Princess Bride. And federal authorities think they know. An American named Ross Ulbricht has been arrested as the man behind the Silk Road, with additional accusations of being a hit man and drug kingpin thrown in.

Ulbricht is expected to go on trial in January. One of the jobs facing the prosecution will be to prove that he is in fact the mysterious Dread Pirate Roberts in the first place, and that he actually did run the Silk Road. But whether or not Ulbricht is the Dread Pirate, that individual did – and probably still does – exist. And he used his illegal platform to say some pretty honorable things.

According to a recent piece from CaseyResearch, the Pirate not only opened his site to all and sundry, no questions asked, he also posted regular articles on the site about the value of this fragile thing called freedom of the internet. He even had a book club, and many loyal readers ad fans.

The odd situation of Dread Pirate Roberts points u the contradictions about freedom and personal privacy in this digital age. It also underscores the growing role played by anonymous digital currencies like the Bitcoin in keeping online transactions private.

The Bitcoin’s rise in popularity coincided with its much-publicized use on the Silk Road. Bitcoin and other similar digital currencies are stateless and bankless, and can be used anytime two parties in a transaction chose to do so. They’re virtually untraceable, not controlled by any government, and they were the ideal medium of exchange on the Silk Road, where users wanted to leave no trail.

That association with illegal activity tarnished the Bitcoin’s reputation and potentially contributed to the demise of other leading Bitcoin exchanges and moves by some countries to outlaw its use in government-backed financial exchanges. Still, the Bitcoin rolls on hailed by civil libertarians as a major step toward personal privacy and financial freedom worldwide.

In the writings of Dread Pirate Roberts, the Silk Road founder makes it clear that freedom of choice means just that – the freedom to engage in transactions of any kind anonymously and privately.

The purpose of the Silk Road, he says, was not to deliberately encourage worldwide drug trafficking, but to offer a place where people could exercise those freedoms without fear of scrutiny or pursuit. And Bitcoin was the logical choice for a currency that would support that privacy.

But the primary use of the Silk Road was to conduct highly illegal transactions of all kinds. Though most if its traffic involved drugs, there were speculations that other, darker deeds were concluded via the site as well. That included the murder for hire schemes Ross Ulbricht was eventually charged with.

The US government has defended its takedown of the Silk Road as a necessary step for the safely and welfare of people everywhere. The Silk Ford story was used to justify tightening up surveillance and tracking of online transaction of all kinds – and to demonstrate the dangers inherent in a non-regulated currency like the Bitcoin.

And those measures have worked, to some extent. No successor o the Silk Road has risen. And the Bitcoin, from its heady days of trading at prices hovering around $200, has slipped in world markets, retreating from some of its big gains of 2013.

But once let out, genies are notoriously reluctant to return to their bottles. The Silk Road story and the hunt for Dread Pirate Roberts points up the double-edged sword of Internet privacy and freedom to conduct personal business in whatever medium you choose.

Civil libertarians point out that those freedoms must be granted to everybody, not just a certain few, who are doing the kind of business we like. Otherwise the very concept has no value. For money watchers everywhere, Dread Pirate Roberts, whoever he may be, is watching your back – even if that thought isn’t comfortable to contemplate. (Top image:Flickr/BTCkeychain)

Source:
Rosenberg, Paul. “Druglord, Genius, or Saint? What Kind of Man is the Silk Road’s Dread Pirate Roberts?” A Free Man’s Tale. Casey Research. caseyresearch.com. 7 November 2014.

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Shady Trading Bilks Small Investors

AMA11-14-14In the end, Secure Investment was neither. The popular currency trading site for small investors vanished in early 2014, never to return. It took more than $1 billion in users’ money with it, and the situation offers a graphic demonstration of how to spot a financial scam.

Secure Investment.com catered to smaller investors, making trading decisions for them with the promise of guaranteeing their principal. According to a recent report by Bloomberg Business, the site was once even more popular than the well-known currency trading platform Forex. The site was easy to use and offered individual investors a quick and simple way to track investments and see results.

At the height of its popularity, Secure Investment claimed that it had traded nearly $5 billion daily in over 140 countries for more than 100,000 investors at all levels of participation. Its website claimed to offer managed investing without all the hassle – and while its own reported numbers might be suspect, plenty of investors did sign up.

Most of them didn’t know, or perhaps didn’t care, that the company’s posted address was an office suite in Panama. But users who did a little digging found that out, and plenty more. And the red flags began to wave.

The company was willing to show its licenses only to users who had deposited at least $1000. Investors weren’t allowed to withdraw any of their funds until the end of the investment period – and while the numbers were posted for Secure Investment’s trading activity, individual investors couldn’t check their accuracy.

In an age of active social media, most businesses gather reviews from users, both positive and negative – and those reviews are generally easy to find. But not for Secure Investment. One user noted on a Forex forum that there were no complaints posted about the company. Nor were there any positive reviews. That doesn’t necessarily mean that everyone was satisfied, though. It could simply mean that there just weren’t that many users at all.

For users paying attention, the math in the claims made by Secure Investments didn’t add up either. And although the site was strewn with earnest video testimonials, most of those were performed by actors hired for the job.

All the pieces of the puzzle fell into place when, in early 2014, Secure Investment vanished. Bloomberg recounts the story of a British user whose experience was typical. When he and his wife decided to invest, they were asked to trade their pounds for dollars and wire them to banks in Australia and Cyprus.

Over the months that followed, they got reports of staggering gains to their accounts, posting a fourfold increase on their investment in less than a year. But when they decided to withdraw some of the money, they were met with stalling and obfuscation.

The system was down, said Secure Investment in an email. They apologized and begged for patience. The very next day, though, the whole site went offline, taking investors’ money along with it for an estimated $1 billion or more in losses. It hasn’t been heard of since.

The story of Secure Investment is typical of modern financial scamming. The company created a slick looking website that offered lots of carefully managed information with seemingly logical explanations for things like its constantly changing list of partner banks.

The company generated its own good publicity with scripted video testimonials delivered by actors paid as little as $4 for the job. It posted fake trading numbers on the site. It created its own network of “paper” companies and directed investors to send money to bank accounts owned by those companies – a tactic that laundered investor money and created a complex paper trail that hid the money from investigators.

That’s one of the reasons tracking down scammers like Secure Investment and bringing them to justice is a challenging task. The company had no real headquarters. Numbers and contact information were dead ends. The company only existed online, and the trails leading between it and the actual banks holding investor money are hard to navigate.

Will Secure Investment’s duped investors ever get their money back? Investigators acknowledge that it’s not likely when a company vanishes so completely and erases its entire footprint. In cases like that, victims are usually out of luck. The investors who trusted Secure Investment with their savings – many of whom are professionals with some experience in other forex trading – say that they trusted the company because of its slick look and the reputation it created for itself.

Secure Investment isn’t alone in the world of sophisticated financial scamming – a practice that’s becoming easier thanks to the Internet. And because it worked as well as it did for as long as it did, this company offers a number of lessons in spotting – and avoiding – frauds like this.

Prospective investors need t do their homework before handing over their money. The old adage, “if it looks too good to be true, it usually is,” applies here as it does in so many situations. Fraud experts point out that it’s essential to find out a company’s actual location and contact information – not just their website. And look for independent, third party reviews and experiences from previous users.

It’s important, too, to check a company’s claims against the performance of other legitimate trading companies – and track down the specifics on any banks you’re asked to use for deposits and other financial transactions.

Companies like Secure Investment can pose a real threat to the stability of international money markets – and destroy the lives of the small investors who have entrusted their savings to them. Those investors may never see their money. But their experiences –and the red flags they missed – serve as a warning for eager investors looking for big returns.  (Top image: Flickr/rieh)

Sources:

Bird, Mike. “A Popular Currency Trading Website Vanished Overnight and $1 Billion Disappeared With It.’ Business Insider. businessinsider.com. 13 Nov 2014
Evans, David. “Forex Investors May Face $1 Billion Loss As Trade Site Vanishes.” Bloomberg Business. Bloomberg.com 12 Nov 2014.

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