Rental Demographics & Davos World Economic Forum Recap

Jason starts the show discussing rental demographics and his predictions for the upcoming decade. He talks about continuing with the fundamentals of investing and not be distracted by new shiny objects most notably Opportunity Zones. Later on the show, he brings on in-house economist Thomas to talk about the recent World Economic Forum in Davos. Thomas gives his predictions for the next 2-3 years and looks at deflation and why that may be a good thing.

Investor 0:00
Well, I like real estate just because I like the benefit of being able to have a mortgage pay off real estate over time so that when I retire, I have something I like the fact that it’s boring. I want to be able to be entertained and travel and do a lot of things in my retirement. And that boring investment of real estate allows me to do that.

Announcer 0:24
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you Follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:14
Welcome and thank you for joining me Episode 1125 1125. This is your host Jason Hartman coming to you today from my home in South Florida. The Treasure Coast Florida. Yes. Now today, I know we promised we would do this last week but we were stacked up with episodes we had to get out to you our listeners. And many of you gave us some fantastic feedback on the episode so thank you for that. You know, it really makes us feel good to hear that we are making an impact. Several of you especially talked about the opportunity zones the so in appropriately named opportunities zones. I think they should be called the overrated zones. Yes, the overrated zones, the Aziz be overrated zones. Yes, opportunity zones. Maybe that that name is a complete and total misnomer. Yes, it is. Well, time will tell, history will be the judge. But, you know, I’m usually pretty right on about these things. Because I have learned after many hard lessons over the years, that you shouldn’t fall for the shiny object syndrome. shiny object syndrome can be very dangerous. Don’t know it, don’t fall for it. Now. It doesn’t mean every shiny object is bad. It just means you shouldn’t instantaneously fall for one without thinking you know, usually, if you kind of just observe for a few minutes and wait on the sidelines now you don’t want to miss an opportunity, but The opportunities to go for are the stayed in proven opportunities. Just buy some houses, okay? Buy some little houses, it’s so simple, doesn’t have to be complicated, right? Just buy some houses, rent them out to other people. And you know all the demographics. I said years ago that the next 10 years coming at the rental housing market are nothing short of phenomenal. And you know what, I’m extending that prediction because it just keeps pushing back. It just, it just keeps looking good. You know, we had Generation Y and now we got Generation Z coming up. And we’ve got marriage has gone out of style, sadly, from a culture war perspective, but from an income property investor perspective, it’s pretty good deal because married people buy houses more than they rent houses and so there are so many good trends supporting the real estate investor. And it’s not just about the price of rental housing, of course, you know, it’s a multi dimensional asset class. And so you can adjust your strategy. Maybe it’s a capital gains type of market somewhere in your path of your real estate portfolio building and holding, holding. As they say, when they asked Warren Buffett, what’s your favorite holding period? And he answered forever. That’s my favorite holding period. I couldn’t agree more. Just hang on to these places. You know, it’s interesting, the houses I bought, you know, 1214 years ago, and of course, I bought many years before that, you know, decades ago, but those houses I sold a lot of them and that wasn’t a bad decision. Because they were in cyclical Southern California market, they would have made me a lot poor keeping them because of the cash flow demands on those properties and in the very poor rent to value ratio. CEOs, but seemingly, when you go on to Zillow and you look them up and you think, what was my old house worth? What were those three houses I sold that I used to own a Newport coast, California, what are they worth now? They’re worth a lot more. And so at first I get kind of sad. But then I take out my yellow legal pad, and I scratch a couple numbers down, and I pull out my HP 12 c calculator. Yes, my vintage. I have three of them. Are those worth any, like significant money yet? Because they are antiques, but they’re the greatest calculator ever. The HP 12 see, most of you have no idea what I’m talking about. I get it. It’s this calculator that costs like $100 and to learn how to use it. I took a three day class when I was 20 years old.

Jason Hartman 5:51
It’s still my favorite calculator, you know? Yeah, I got it on my phone and all that stuff. But yeah, it’s just not the same. You know, there is no equal Sign on the HP 12 see calculator. And in fact, I remember seeing their magazine ads years ago when we had magazines. Oh, yeah, we still have those. Okay. I remember seeing them. And the headline would be the HP 12. See, that calculator with no equal? Because it didn’t have an equal sign? Yes, it had other buttons, but no legal side. Anyway, it’s the greatest calculator ever. But I scratch out a couple things. And I realized, you know, if I look at the money, I would have lost the opportunity cost I would have had by holding those properties that are now worth a lot more money, right? They didn’t pencil, my cheap properties, my cheap linear market rental properties, because the cash flow is so much better even though the appreciation isn’t better, at least in the short runs when you’re at the peaks in the market cycle. Now if you average them out, as you know I’ve talked about this many times over the years with you. And I’ve shown the graph at our live conferences, one of which we have coming up, look forward to seeing you there at meet the Masters in March. When you do that, you see that on average, because you don’t have the give back during the down cycles and the cyclical market, those linear markets perform exceptionally well. But you know, it’s so tempting to see only the peaks and think, Wow, if only Haida. But remember, it can’t hear the dogs that don’t bark. You can hear the dogs that don’t bark. And it’s the old parable of the tortoise and the hare, right? And so, that’s the thing that really runs the game. And so Warren Buffett’s favorite holding period is forever. You know what, so is mine. Another reason you don’t need an overrated zone, opportunity zone, lack of opportunity zone. That’s why don’t fall for the shiny object syndrome. Okay, so we’re going to talk we’re going to do a thing with our economist today or in house economist, Thomas is back. And we recorded this about the World Economic Forum, and just kind of gabbed a little bit about the economy in general. But before we do that, since it ties right in, I wanted to play this little video. Now, you may have heard about this in the news. Their result was a lot of doom and gloom MERS, right. And, you know, maybe he’s right. Okay. The hedge fund billionaire, Seth Klarman issued a dire warning, right, he circulated this letter to the big wigs at the World Economic Forum in Davos. And this little video is about just that. Not all of it is audible. So I’ll read you a couple things from it, too. Here’s the thing that I’ve always said about these doom and gloom predictions, you know, they on the surface, they seem true because they’re doing the math The math is legit, right? It’s empirical. Right? It’s it’s not an anecdotal opinion, math is viewed with a lot of credibility. And I agree that it has a lot of credibility. However, however, there’s a lot more to life than math. And a lot of times what they don’t really say, you know, is they don’t say that, hey, there’s a Counterparty to all of this. And one of the interviews that I did, I think it was yesterday. I think we’ll probably have that one coming up next week with one of the four founders of Blackstone, yes. I interviewed him yesterday from his estate in Aspen, Colorado. He was super interesting, obviously, super knowledgeable, you know, has tons of Wall Street experience, worked at the Office of Management and Budget under reagan for five years in the reagan White House, just in incredible interview really and so we’ll have that Coming up, probably will get that out to you next week. I think he talked about these problems too, and the concerns about the debt levels and so forth. And I those are all very legitimate concerns, no question. However, one of the things I said to them, as I said, Look, there’s always a Counterparty. Right. And by the way, that’s david stockman. Okay, he was in Congress for two terms, and so on and so forth. Okay, a director of Office of Management and Budget under Reagan, you know, there’s always a Counterparty to this. So the thing that happens during bad economic times is, is that the wealth doesn’t disappear. Like I’ve always said, right? The day before the great recession started in 2008. If you looked around the world, and you saw the number of houses that counted the amount of gold and oil and every asset on Earth, right, and then the Great Recession occurred right, and the next day as things were falling apart as Lehman Brothers was going under, etc, etc. Right as these you know, near trillion dollar bailouts were going on and Hank Paulson and you know, you remember all this right Bernanke he the whole the whole shooting match these guys right? So it was all this was going on and you looked around the world after all that happened, guess what, all the same assets were still there. They just changed ownership, and they changed the nominal value, but the real value. Now see, that’s one of the reasons, these fake financial assets, the difference between the wall street economy and the main street economy are so it’s so important to really grasp this, because the fake assets are so much more volatile because they are just that they are fake. financial assets are fake. All this wall street innovation. It’s just crap. It’s only as valuable as anybody believes it is right. But the utility type assets that we like aka housing right that has universal need. Everybody in the world needs it. Those have real legitimate intrinsic value. Okay, I’m running along as usual. Let me get to this video. And then we’ll get to the interview. And we’ll so we’re talking about Davos and the World Economic Forum. This happens every year. All the elite bigwigs go and hey, it’s on my bucket list to go and attend Davos myself. So here is this short video. He warned about growing sovereign debt levels and rising geopolitical tensions. And the business leaders and Davos here was their reaction guy,

Thomas 12:35
I didn’t see the letter. What I can tell you is that the cohesion of societies in the developed world has definitely gone down. One of the contributors, I believe, is the internet itself, and the ability to mobilize small groups of people to basically undercut what society’s typically would want to do and we’re becoming fractionated in there’s no head of state we tell you things are the same today sounds

Jason Hartman 13:05
like a little too much central planning for my taste but

Thomas 13:08
okay democracy and so in that sense of the Seth is correct it is a world that is becoming less governor but certainly in the democracies and and that inhibits solutions to problems and and governments need to provide solutions to slow down any of your spending any of your interest in making new acquisitions. Not necessarily depends where you invest.

Jason Hartman 13:39
So that’s what you got from Blackstone Okay. What’s interesting about that is you know, this whole idea that we need to be so governed right you know, that definitely Spoken like an elitist right. There you go Spoken like an elitist. Okay, here is Arnie Sorenson and he is Marianne co It is.

Thomas 14:02
I think both,

Thomas 14:03
if you will, I mean, if you think about the positive side for a second, people love to travel today more than ever. And young people particularly would put travel very high on their list of things that they got to do. When I was growing up. It used to be sort of a discretionary luxury, if you will. Now, forget it. I’m going to take that vacation, and I’m going to do that before I buy a car maybe before I get an apartment or whatever. And that’s happening all around the world. That’s true. Of course, we talked about it in the sense of people want experiences more than they want stuff. And I think there’s I think there’s real truth to that as well for the hotel business.

Jason Hartman 14:36
Now here’s Ray Dalio, Bridgewater. Okay. You know, Ray Dalio, we’ve talked a lot about him on the show over the years,

Thomas 14:42
terms of creating and disruption. There’s a certain time horizon, maybe a few months, nine months by bit. And so if you take corporate tax cuts, they make stocks worth more, or if you have interest rates at such a long, low level that a return on investment of buying equities, for Those who own equities I mean, the people who own their companies and they have buybacks that support stock prices. So the mechanics of that even populism of the right, capitalism, and making profits is what motivates the stock market. It’s not what motivates the whole economy. So you have to realize that you’re buying an income stream, the implications of the political flick for markets are very profound. So we’re going to start to talk about that, for example, this is a 70% tax rate going to happen. And I hope we will behave with capital gains. Yes, does that have an effect? So these factors, the the combination, I think the three big factors are the combination of the wealth gap and the politics as it would come to the where we are in the later cycle, and the inability of central banks to ease as much that’s the cauldron that will define 2019 and 2020. In my opinion,

Jason Hartman 16:01
Alright, so there you go, you got some of the word from some of the elites at Davos and interesting, the first one, from Blackstone batches. That just annoys me. You know, oh, well, we shouldn’t limit the power of government government because people are free and they communicate on the internet. God forbid. Wow, that’s almost scary talk really is. But hey, before we get to our discussion with Thomas, more about the World Economic Forum, I just want to share with you one I thought, pretty good quote from the State of the Union address last night, okay. And I know many of you listening are Trump haters. I’m not saying I’m a Trump lover, but you know, he makes some good points. Okay. So be a rational person and give him credit for what he makes a good point. How’s this one? No issue better illustrates the divide between American Ken’s working America’s working class and America’s political class than illegal immigration. Wealthy politicians and donors push for open borders while living their lives behind walls and gates and guards. That, my friends is the hypocrisy of the left right there. It’s really the hypocrisy of both sides but it’s way more on the left minute is on the right. So for whatever it’s worth, I thought I’d throw that quote in. Okay, here we go with the interview with Thomas Get your tickets for meet the Masters if you haven’t done so already, Jason hartman.com slash masters. And let’s jump to the interview.

Jason Hartman 17:46
Hey, listeners, I’ve got Thomas our in house economists back on the line with us. We told you we would talk to you a little bit about the World Economic Forum, that annual event with the world’s elites in the financial industry and it just goes to show you that the financial industry is the world industry. So there’s a lot to it. Anyway, Thomas, welcome back. How are you doing? Well, how are you? Fine, thank you. So we talked about the happiness quotient, and whether or not that’s related to GDP and the productivity of a population and the country a little bit about inflation versus deflation. This is, you know, a huge issue, obviously, for how one might invest and so forth. It sounds like you think and this is probably contrary to what I think that there there’s going to be a little bit of deflation coming up and you don’t think it’s that bad. Tell us more.

Thomas 18:42
If inflation was measured the way it was back in the 70s, then I don’t think there’s any way we’d see deflation but with the way it is measured now and the trend of disinflation since the 1970s. If that trend continues, then different could be the case in 2020. The average inflation rate has gone from around 6% in the 70s to 5% in the 80s. And then 3%, two and a half percent, and it looks like this decade, it might, might be below below 2%.

Jason Hartman 19:16
So the target, the feds target is to have inflation around 2%. And they’re playing to the Phillips curve, which is the inflation versus employment theory. What, you know, I think there’s some legitimacy to that. I mean, what would be the cause of that technology is a deflationary force. Monetary policy is an inflationary force because it’s so irresponsible, largely, what would be the cause of deflation or, you know, just a sort of at par environment where there’s just no inflation or deflation, just not much is happening at all sort of stayed? Well, I don’t want to say stagnation because it doesn’t mean the economy’s necessarily stagnant but Just nothing much is happening on the inflation scale, I guess I’ll say,

Thomas 20:03
yeah, I think the technology is certainly part of it, the globalization of the supply chain. It’s put downward pressure on prices for a while now, that that keeps going. You know, it’s hard to see real strong inflation. And then the way we account for the substitution of goods. So say Uber or Airbnb, they put downward pressure on prices. And it’s not like they’re they’re not decreasing the demand for goods, they’re just putting downward pressure on the supply. So, in essence, they’re they’re pushing up demand, which boosts economic growth, but they’re also putting pressure on the price point. And I think you know, with that, that continues, then we could see what we saw in the 1870s to the 1900s, where we saw bouts with deflation, but overall economic growth was pretty strong.

Jason Hartman 21:02
How deflationary is technology? I mean, it’s pretty deflationary, isn’t it?

Thomas 21:08
Well, I think you already know the answer to this. Yeah,

Jason Hartman 21:10
I do. I’m asking for the benefit of

Thomas 21:13
a lot of the questions you ask. Right? And we do like Airbnb, does it put downward pressure on prices? And when I looked at it, it looks to me like at least puts a couple percentage points, downward pressure on hotel revenue.

Jason Hartman 21:30
Yeah, you know, that’s really interesting. I’m glad you brought up Airbnb, or let’s make it even more broad. Let’s just talk about the sharing economy. So the sharing economy is a technology at heart because it really is enabled by technology. Without the kind of technology we have nowadays, there’s no way you could coordinate all this unused capacity in our economy, and I was listening to an audio book yesterday or maybe a new story and it talked about This company that is now coordinating empty semi truck space for shipping cargo, right? And how 40% of the truck trips, the truck is empty. And that’s a tremendous waste, of course, right? And if you could fill all of that space, and use all of that unused capacity would obviously be dramatically more efficient. And so you know, this is we’ll call it the Uber and Lyft of semi trucks right? And whether it be the bicycles, the Airbnb concept, the ride sharing whatever sharing economy concept it is, it’s putting a lot of unused assets to work. And once those assets are all used, the price discovery has occurred, right. And then after that usage happens, you can start to see whether or not there will ultimately be in afterwards because initially, it’s downward pressure, like certainly, taxi cabs have had to compete with Lyft and Uber, and they’ve become cheaper or they’ve just gone away. Right. And so it’s a deflationary thing. But once you kind of work that through the system and all the capacity is filled again, then I don’t know, maybe the monetary pressures come back into play,

Thomas 23:23
right, man cause inflation. Yeah, that’s an interesting thought. I hadn’t thought of it that way. It makes sense that after the bottom point of prices are discovered that there’s nowhere to go but up.

Jason Hartman 23:35
So Thomas, let me catch that in the global labor market perspective. Okay. I have this weird theory. I could be totally off here. But I’ve said it before. So it’s not the first time I’ve said it on the show. That Nixon I mean, it’s just too much of a coincidence that in the early 70s, Nixon took us off the gold standard right, he made the final disconnect in 1971. You know, it was right around the time that he took that historic trip to China and opened up China. Was he this brilliant president possibly, that saw that, you know, because the dollar was no longer tethered to gold at all, that of course, the politicians could buy votes and spend whatever they want. And inflation was coming. And it certainly did long after he was gone from office, but it certainly came and there was the OPEC crisis and the gas lines and all of that stuff. You know, he opened up China. So we exploited this in you know, I don’t mean that in a negative way. We sent a lot of business there. Right. And that was deflationary by manufacturing in China, that workshop of the world, right.

Thomas 24:43
But where do you go after that?

Jason Hartman 24:45
It’s like almost every vestige of cheap labor around the planet has already been now used to that capacity is now utilize, right, yeah, certainly Africa’s got resources and so forth, but Africa a mess, right? There’s too many tribes and governments very fragmented. So, you know, maybe that kind of price discovery is actually happening now, you know, just the same way as it might with the sharing economy. What do you think I know, these are big, weird macro thoughts, but I stay up late night thinking about this stuff.

Thomas 25:18
I like it, you know, the shift to a fiat currency. It’s coincided with a ballooning in debt. And with the exception of the 1980s. Debt grew during the 1980s. But you know, we’ve seen corporate debt, government debt student debt explode over the past few decades. And part of that is connected with the ability to issue fiat currency. It’s not a problem when the GDP growth plus the inflation rate is greater than what the yield curve is say on the 10 year note.

Jason Hartman 25:52
Okay, explain that to us a little bit more good. unpack that one. I don’t know if people understand it. I don’t even know if I understand it. I mean, I know g GDP and population, those need to sink a bit. Otherwise, you know, you’ll have inflation or deflation as a malady. How does the yield curve come into play?

Thomas 26:11
The idea is that as long as you’re growing fast enough to pay off any debt issuance costs are the, you know, the issuance cost plus the coupon rate, so long as you can pay that off, you’re fine. And that’s exactly what governments have done. So with the exception of a few years in the 80s, GDP growth and inflation rate that generates the tax revenue to pay off the bonds, and as long as that’s growing, say at 2% plus 2%, the GDP growth plus inflation rate of 4%. As long as that’s higher than the say, the 10 year note which I checked this morning, it was floating at about 2.73% as long as it’s growing faster, there, okay, you know, any debt coming due can just be reissued. As long as the coupon on that is less than GDP growth plus inflation rate, there’s no pressure, what you’re talking about

Jason Hartman 27:07
there is treasury bills, right? government debt. Yeah.

Thomas 27:09
And treasury bills. The same thing applies to say corporate debt, just replace GDP growth with total revenue growth.

Jason Hartman 27:18
Right. So it applies in the macro, the micro and even the personal sense. With household that even the I don’t know, you could make that little bit of a stretch, but they can’t do the same things that the public companies and the government’s can of course, but yeah, interesting

Thomas 27:34
in connection to technology, though, if if we’re reaching a point to where the lowest possible price point is reached on a macro scale, then you know that that means there’s price pressure coming up, which that’s a problem. You know,

Jason Hartman 27:49
well, it’s an opportunity if you invest for inflation like our listeners, do. You mean it’s a problem, meaning inflation is coming right?

Thomas 27:56
In that case? Yeah, you looked at the glass half full. I looked at the glass half empty.

Jason Hartman 28:00
Yeah, well listen, like I say most people really get hurt by inflation, but our clients benefit from it and not in the normal way that most people say, hey Real Estate’s a good hedge against inflation. Our clients leverage that dramatically. And, you know, that has like an order of magnitude better than most real estate investors for our clients, because we have a few little secrets that helped them do that. So yeah, good stuff. You know, the question I always ask people is compared to what compared to what? So the US has all these problems, we have, you know, $20 trillion in debt or whatever, we have these big deficits. We have this that and the other thing we have divisiveness, etc. But compared to what I mean, look, Europe is on the brink of some serious problems have four countries in Europe are essentially insolvent. decent sized countries, the pigs I’m talking about. China is really got a tough road ahead. The World Economic Forum, they talked about both of these things. Give us an update on those.

Thomas 29:12
Oh, yeah. If I were a betting man, and I guess I kind of am. I’d say that the ECB, the European Central Bank will have lower interest rates by the end of this year, then they will higher interest rates. It’s just I can’t see what the weakness there that the ECB would even consider raising rates they’d ever raised rates, like, you know, the Federal Reserve did it put him behind the curve and now now what do they do? They rates are already pretty much zero. We’ll probably see real discussion about negative rate on a currency held in banks, not the actual currency. Right. But, you know, balances held in banks. Kind of like, what the Bank of Japan did.

Jason Hartman 29:59
Yeah. So So that was Japan’s last two decades, not last decade, but last two decades. And the thing though, that is interesting. Is it Harry dent was, you know, one of the first big names to argue this ideas that Japan’s real problem. Of course, they have all these problems, right. But their real core big problem is that they have a demographic problem, and so does China. And so does Western Europe. I mean, if you don’t have young people working, paying into the system, you got a big problem. Yeah. I mean, your country becomes insolvent in short order. Russia’s got the same problem, too. I mean, pat buchanan years ago, wrote that book death of the West and I interviewed him on the show, and, boy, that was a prescient book. I mean, I think he wrote it in the mid 90s or something. And he’s right. The West is just not reproducing. I mean, the fertility rates are dismal. Nobody has Kids anymore. I mean, it’s it’s really a it’s kind of a shocking thing. It’s not really talked

Thomas 31:06
about very much either. There was an article out this morning in the Wall Street Journal, I think I’d have no check. But the idea was that there’s a trade off between women entering the labor force and having children choose one or the other. I don’t think some will say they can, you know, families can have both.

Jason Hartman 31:26
Yeah, contrary to popular belief of the Superwoman syndrome. You know what raising kids is a lot of work and having a career as a lot of work to it’s pretty much a trade off, right? You can try and do both, but one is going to suffer at the expense of the other. There’s, there’s just no question about it. You know, people only have 24 hours in a day. That’s equal opportunity for everybody and you can only do so much with it. Right? You know, I mean, I grew up with a working mom. I didn’t see her too much. I was a latchkey kid, and hey, look at how I turned out, no one would recommend

Thomas 32:01
So you’re the exception rather than the rule? No, I

Jason Hartman 32:04
might be the rule. poking a little fun at myself here, but that’s definitely true. But you know, and and Mark Stein, the political commentator talks about this in his books, you know, you can’t have a country without a population in few decades, Japan and Russia and Western Europe will essentially be gone. I mean, there’s no people there. How can you have a country without people and he makes a really good argument for that. But I guess the environmentalists will be happy because, you know, according to them, people are not a resource. They are the scourge of the earth. I view it the other way. I like people, I think they are a resource. I think they solve problems. Which, speaking of the environment, the elitist hypocrites in Davos, Switzerland, this year, they topped the record for the most private jets. There is they went to talk about how every It should have a lower carbon footprint. absolutely ridiculous. But I think Bill Gates, I just read an article he invested in a company that can make gasoline from carbon dioxide in the atmosphere somehow. That’s a stretch but, but that’s pretty amazing. And that’s my point, though Thomas, people do solve these problems. Yes, they mess up the world. I completely agree, people litter they consume, they pollute, but they also come up with great ideas. And I just kind of have faith that people will, you know, if we have more people here, we’re gonna have more people to come up with great ideas. I just view people as a resource. But you know, everybody can argue that until the cows come home

Thomas 33:44
as they say, right, okay, so just once Yes, once I’d like to see you be pessimistic Yeah.

Jason Hartman 33:49
Oh, really. You don’t think I’m a pessimist? Sometimes I’m really pessimistic about something. So you know, but I’m, I’m kind of weird, optimistic and happy. A mystic. Yeah. Well, I gotta ask you, what are you optimistic or pessimistic about the economy next five years? What’s it look like?

Thomas 34:07
Well, I think the next two years look good. Rates are still relatively low. The equity markets are up around 14% since the December downturn doesn’t surprise me that corporate earnings came in somewhat weak for the fourth quarter of 2018. But, you know, most of that was priced into the market. That’s why markets collapse in December, they expected that and there’s still a good amount of growth left for the economy,

Jason Hartman 34:36
you know? Sure. Yeah. So after two years, are you saying it depends on the presidential election or were we just don’t know or you think, in 2020, things change a lot.

Thomas 34:48
I’d have a hard time saying a recession during a presidential election year. I don’t think we’ll see one in 2019. So that pushes that at least out to two 2021

Jason Hartman 35:01
we shall see how it all shakes out. We shall see. Okay, anything else you want to share with our listeners as we wrap it up?

Thomas 35:10
You know, we’re in the midst of the fourth industrial revolution. And times are good.

Jason Hartman 35:15
Tell us about that. The is that is the information revolution. I mean, we’ve been going through that one for a while. But what do you mean?

Thomas 35:22
This is kind of a debate whether we’re in the fourth or if we’re still in the third. The first one was the 1716 1840 railroads, the steam engine, you know, that that boom period and then the 1870s and 1910, mass production and electricity and assembly lines and then in the 60s, semiconductors, mainframe computers, personal computing, the internet came along and then now, assuming we can distinguish between, you know, what we saw in the early 2000s and what we’re seeing now, you know, maybe call it the digital revolution. Artificial Intelligence is something worth considering machine. Learning Internet of Things, you know the service economy, right? The depth is just amazing in Europe it took 120 years for the swindle. So we are called the swindle to make it make its way the spindle sorry, this

Jason Hartman 36:19
is this for the clothing textiles is talking about

Thomas 36:22
textiles and 220 years for the spindle to make it across Europe. And, you know, the internet took 10 years to cross the world, right?

Jason Hartman 36:30
It’s pretty amazing. It really is an amazing time to be alive. Forgive me for sounding optimistic. But hey, listen, if you want me to get pessimistic, let’s talk about war. I am really pessimistic about culture. I think there’s a lot of tough things happening in the culture. But as far as technology and the right strategy for dealing with the economy, I’m not saying the economy is all great or anything. I’m just saying you can adapt the strategy. And that’s why I love income property, because it’s very adaptable to changes in the economy, whether it be a cash flow strategy, a capital appreciation strategy, a blend of the two, whatever, you know, that varies, but yeah, we’ll, we’ll talk about that another time. But yeah, very interesting. And there’s it’s just amazing the kinds of things we’ll see. I was studying a little bit more about this amazing material graphene that we’re all starting to hear about, that is going to revolutionize so many things and solve so many of the world’s problems. It’s absolutely mind boggling. So more about that. In fact, maybe I’ll share the audio from a video I watched recently on that it’s, it’s quite fascinating. Thomas. Thanks for joining us today. And until next time, happy investing. Good talking to you.

Thomas 37:50
Join us March 23, and 24th for the 2019 meet the masters of income property. Let’s break this down and look at some of the strengths of income from operating as an asset class, I found that this event is really helpful because I am totally a newbie to real estate investment. And so I picked up so much information. One of the great things about it is it’s so fragmented, right? embrace the fragmentation.

Thomas 38:18
We’ve actually been learning a lot about the tax benefits to real estate and a lot of I’ve been investing actually well over 10 years now. And I learned a lot of new things today. The other advantage of this weekend is networking. Meeting new property managers meeting new area specialists and seeing the product they have to offer that changes here by you. Register now with

Thomas 38:41
Jason hartman.com slash masters.

Thomas 38:46
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