Josh Mettle: The final chapter of your book is about defeating myths. Talk to us just a little bit about that formula and specifically how defining and following one’s soul purpose fits into the equation.
Garret Gunderson: Well, I would give a soul purpose like you know it can stand a little bit like an airy-fairy kind of deal, or you know, like what does that mean. Let me say it this way: we all have our own investor DNA, and that investor DNA kind of looks like this. First of all, what are our core values, you know. We have to know our core values to know where to invest is one example. The second thing is what are our core abilities or our core competencies, right? Which is what is that we know, what is it that we naturally study that we’re really good at? Then we look at, what is our core kind of drivers, what are the things that we’re really engaged or interested in and that motivates us. Then, really our core focus, if there’s all these possibilities out there, where is it that we’re going to get tons of expertise, and we’re only going to focus in that area instead of diversify it amongst a bunch of things we don’t really understand. That’s the first part.
The second part is what is important from a lifestyle or quality of life standpoint? Because it may not make sense to invest in an investment that might do okay and creates tons of fear and worry and concern for us, you know. That’s why a lot of people aren’t taking their chances. They’re creating an investment that even though it might work out, it might not have been a good investment for someone because they couldn’t sleep at night. They didn’t know what they were doing, so really what soul purpose has to do with, even investor DNA, is what are you best at? What do you know? Why don’t you stay in alignment with that when you invest? Only invest in things that you have an interest in, that you understand, you don’t rely completely upon someone else’s expertise. I mean when I think about you Josh, and your real estate portfolio, you knew to focus on cash flow and go to seven year ARMs because you thought through that. You didn’t just hand your money over and hope that it works out. But in finance, far too many people do that.
Now, I’m not telling people they have to get daily involved in their money and make it a second job. That’s not what I’m saying at all. I’m just saying they have to know why they’re doing, what they’re doing, how it works, how it benefits them, and stay in things that are aligned with their wheelhouse. I don’t invest in technology, not because I don’t think there’s a lot of money to be made in technology. I just don’t keep up with it enough that I’m always a few steps behind and there’s too many acronyms, and I get bored talking to people that know tons about technology, so that’s not just where I put my money. I put my money in the world of finance because I have more of a photographic memory and a deep set of knowledge inside of it and even more specifically, I put it primarily in my business that I control because we’re in this great time right now from the standpoint of how cheap is money? I mean money is so cheap, you know, compared to, you know, the early ‘80s or late ‘70s. I mean money is cheap which is a very efficient way for business owners to access capital and build their businesses to a whole different level.
The downside to that is it’s harder to get really great return in the traditional way than handing your money over to money managers. The days of 10 percent, I believe, are so far long gone in the stock market. Even though we have a nice little run up for a couple of years now, Warren Buffet, who is the greatest investor of our time, says that if you can get more than 6 percent, you’ll be lucky, you know. I just feel like you know we saw a lot of the wealth go down from ’08, the first few years, and we saw it kind of run back up, and I just expect that to go down again because we’re in this time where really small companies are disruptive.
Small companies can really harm big, sustainable Fortune 500 companies because they find old bureaucratic ways that people have done business, and they bring it in a much more efficient, highly leveraged, and technological way that allows, you know, if you think about companies like Airbnb or Uber, puts the regular person to work instead of having a big union and a big workforce and a lot of bureaucracy and not a great experience for the customer. I think we’re in a really exciting next 10 years, but I think that there’s going to be a lot of companies struggle, a lot of the S&P 500 decline massively as the small companies can have so much more muscle.
You can have eight employees and sell a company for $1 billion today. That’s insane you know. That’s unheard of, but it really changes the way we used to think about investing, and it makes it more important to invest in what you know because if you don’t, the diversification is a surefire way to have more losses than you could ever imagine or expect because now you’re spread thin. You have more things that have an opportunity to lose, and sure even though you’re in it, it’s almost like admission of, I don’t know what I’m doing overly diversifying. I mean you know, so stay focused, protect what you focus on, invest in alignment with your investor DNA, and enjoy life along the way. That’s kind of probably the main message there is for today.
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