5 Detours That Led a Wall Streeter to Waffle House, With Jason Hartman

Jason Hartman

Jason Hartman of Platinum Properties Investment Network has had a long, fruitful career in real estate investment. He’s experienced a lot of things in his time as an investor… but nothing quite like the story of James Adams.

James Adams was a major player on Wall Street. Then, the Recession hit. Overnight, his world as he knew it was destroyed, and he was left without a job. Finding a job in his field became impossible – no one was looking to hire Wall Street investors. Even McDonald’s refused him. Waffle House was the only place that seemed willing to bring him on board.

But what led this Wallstreeter to the Waffle House? What sort of mistakes did Wall Street make that led this man to have to take double-shifts as a waiter? Jason Hartman of Platinum Properties Investor Network was privileged enough to hold an interview on his podcast with James and was able to divine what decisions led the market to its demise.

Jason Hartman of Platinum Properties Investment Network Found Out: James Was One of the “Bad Guys”

James admitted during his book that, on the front lines of a hedge fund, he wasn’t working in a field he’d describe as an “honest job”. James admitted to Jason of Platinum Properties Investors Network that he witnessed a lot of unfortunate practices that, while not illegal, contributed to the collapse.

During an interview with CNBC, James explained his background in the financial sector:

“I spent the early part of my career in the corporate bond market, investing premiums on behalf of two publicly-traded life insurance companies. Subsequently, I worked for three years in the product management group of a $30 billion asset management firm. We purchased billions of dollars’ worth of mortgage bonds on behalf of banks, pension funds, insurance companies, sovereign wealth funds, etc. Customer portfolio values collapsed during 2008, our client base dwindled, and I was consequently laid off early the following year.”

Jason Hartman of Platinum Properties Investor Network has never trusted in Wall Street, due in large part to their predatory practices… but that can’t be said for all investors. The financial collapse came as a big surprise to many investors, real estate and otherwise, including James.

Jason Hartman of Platinum Properties Investment Network Found Out: Reckless Underwriting Contributed to the Collapse

James explained, during the podcast interview with Jason, that he started to see what was coming in early 2007.

“In early 2007, I really saw the written on the wall. We had to get on a phone call with some investors in Tokyo. They were getting nervous, but we were comforting them by saying, ‘Don’t worry, it’s just some of the weaker players getting shuffled out of the market.” We based that on the idea that there had never been a double-digit price decline in American home values since the Great Depression, across the United States.”

In short, investors began to believe that there was no chance it could happen simply because it hadn’t happened in their lifetimes. Jason Hartman of Platinum Properties Investor Network knows that humans have unique mental coping mechanisms in place that often push off the ideas of negative outcomes, forcing us to believe that “it could never happen”. But that’s exactly what DID happen, and not long after the phone call, James had with the Tokyo investors.

Jason Hartman of Platinum Properties Investment Network Found Out: Rent to Home Price Ratios Were Unbalanced

In his interview with Jason, James explains that the trouble started with the thinking Wall Street players were espousing: that they could not fail.

“We knew that the rent to home price ratios were skewed. The problem was that there wasn’t enough post-Depression history. As far as they saw things, we never had any truly serious reckonings.”

When James spoke with Jason Hartman of Platinum Properties Investors Network, he outlined this as the number one underlying issue. There had never been a sign that things would stop looking up, despite the price of renting is significantly cheaper than buying a home.

Jason Hartman of Platinum Properties Investment Network Found Out: The Rippling Effects of Leverage Played a Big Part in the Collapse

While the experiences of James Adams led to him publishing a book, and eventually having that book made into a movie, not everyone came out of the recession with such positive experiences. Assessing what caused the crash in the first place is a search that is still ongoing, but James has his theories.

“It the layer upon layer of leverage that creates systemic instability in the housing market,” James divulged during the interview with Jason Hartman of Platinum Properties Investors Network. “People underestimated the domino effects of leverage. Even though you had a greater collapse in the total value of the stock market during the Dot Com Bubble bursting, because real estate was financed with layer upon layer of debt, the unwinding effects were multiples of what happened during the Dot Com Bubble.”

“Just because something hasn’t happened in a long time, doesn’t mean they can’t happen,” said James.

Jason Hartman of Platinum Properties Investor Network not only agrees but has seen the bits and pieces of what James spoke of. Attitudes from Wall Street financiers have only changed because they are steadily being forced to, not because they’re seeking to gain wisdom from the recession. There are still many financiers who haven’t learned the lessons James has… and, to be frank, they should read his book and absorb some of that wisdom.

Jason Hartman of Platinum Properties Investment Network Found Out: The Crisis Was Bigger Than Anyone Anticipated

While some people were expecting there to be some repercussions to Wall Street’s fallout-free approach to playing the leverage game, no one was anticipating the size and scope of the recession.

“There was no place to hide in the American mortgage market,” James said during his interview with Jason Hartman of Platinum Properties Investor Network. “It used to be if you were diversified if a local market collapsed you were ok because you had investments elsewhere. Not this time.”

When trying to outline the mistakes that were made by his fellows on Wall Street, James admitted that “it would take a book”.

Thankfully, James has, indeed, written a book: Waffle Street: The confession and rehabilitation of a financier. Jason Hartman of Platinum Properties Investment Network urges you to grab his book asap, so you can pick up on all that James learned during the recession that nearly destroyed his life.

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