How To WHIP The Stock Market Safely, Easily & Automatically | Episode 101 - a podcast by Bryan Ellis - SelfDirected.org

What did Warren Buffett predict about long-term stock market returns… and how can you consistently beat those returns, so consistently, in fact, that you can plan on it – while taking FAR LESS risk?  I’m Bryan Ellis.  I’ll tell you how to banish the bulls and bears and just collect the BUCKS… right now in Episode #101.

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Hello, my friends!  First, a quick update – the upcoming Passive Property Flipping Summit on August 7 in Phoenix that I’ve mentioned to you before is 100% full.  No more spaces available!  Thank you for filling that event 3 full weeks ahead of time.  You people amaze me… I’m so grateful to you.  You can still go over to S3Flip.com to see the presentation and get on the waiting list if we have another one.

So, how can we safely, consistently whip the returns offered by Wall Street?

Well, let’s get our objective in clear focus.

The lion’s share of most individual investor’s portfolios are dedicated to the stock market.  Sometimes in the form of individual stocks, and most frequently in the form of mutual funds and exchange-traded funds.

Can we beat results offered by those assets – and by “beat”, I mean get a consistently better rate of return – while experiencing more safety and more consistency along the way?  I mean, to my way of thinking, that’s the very definition of investment wisdom:  strong returns, predictability and low risk… all of those things TOGETHER, SIMULTANEOUSLY.

Well, we’ve got to know what those rates of return REALLY are.  And there’s nobody better to comment on this than the venerable Warren Buffett.  Yes, it’s true that Buffett is frequently more concerned about political correctness than with being totally forthcoming, but still, his analysis of what one should REALLY expect from the stock market is rather revealing.

In a conversation with Bloomberg, Buffett made a very interesting analysis.  He said:  “The economy can be expected to grow… at an annual rate of about 3% over the long term, and inflation of 2% would push nominal GDP growth to 5%.  Stocks will probably rise at about that rate and divided payments will boost total returns to 6-7%.”

And do you know what?  History bears that out pretty well.

So, 6-7% per year.  To make it simple, let’s split the difference at 6.5%.

I can just hear it right now.  Some of you are thinking?  6.5% annually?  Ha!  I made that much last week on my Apple stock?

And of course you did… congratulations!  Apple has been on a great run lately… except for that brutal firesale a couple of years ago when Apple plunged over 40% very quickly. Right now, Apple is doing great.  They remind me of Microsoft… the powerhouse software company that could do no wrong in the market… until the Justice Department cracked them open, and the company was never the same again.  Apple reminds me of Texas Instruments – a company whose trajectory in the late 90’s makes Apple’s rise look dull by comparison – until the market changed, and changed painfully, rather quickly.

No, I’m not saying you can’t make money in individual stocks.  You certainly can.  But there’s clearly a HUGE amount of risk in doing so.  And the odds that you’ll beat the law of averages is, quite scientifically, improbable.  That’s why nearly all individual investors invest either in mutual funds or ETF’s.  By investing in many different stocks simultaneously, the overwhelming risk of individual stocks is rounded out.

But can you and I, as self-directed investors, do better than that?

And more importantly, can we do better than that while taking LESS RISK?  SUBSTANTIALLY LESS RISK?

And more importantly still, can we do better than that while having essentially ZERO volatility along the way?

Let’s pick a healthy rate of return.  Let’s say – 8%.  If you could make 8% per year… CONSISTENTLY… and be paid your returns each and every month… and have a RISK measurement of your investment be very near ZERO… would you want to do that?

Yes… to be clear, I did just ask you if you’d like to substantially beat the stock market every single year… Do so predictably… Do so with REGULAR cash returns into your account… and Do so with an almost unspeakably low level of risk to your principle?

Well… I can tell you how.  And the truth is… if you want to do it all yourself, you can make more than 8%.  But I’ll explain this to you on the assumption that you would prefer for someone else to do everything for you, so that all you have to do is invest your capital and cash the checks you get every month.

So here’s how it works:

Imagine you have $100,000 to invest.  What if you did something VERY simple with that money.  What if you LENT that money to someone at 8% interest.  They’ll make an interest payment to you every single month, and at the end of a period of time – whatever you choose – maybe 2 years or 5 years or 15 years – whatever you choose – they pay the $100,000 back to you.  And all the while, you’ve been receiving interest payments directly into your pocket every single month, yielding a consistent, predictable 8% return on your investment.

Answer this question for yourself:  If that could be done… and could be done ABSOLUTELY SAFELY… would you be interested?  I’ll tell you how it can be done very safely in just a moment, so relax, ok?  Hehehe.  But answer for yourself this question:

If you could, with overwhelming safety, collect a consistent, predictable rate of return of 8% on your capital, would you do it?

Not everybody would, and that’s ok.  But many of you understand with gut-level instinct why this makes so much sense for your specific portfolio.

So for those of you who “get it” – for those of you who resonate with the opportunity to make a consistent rate of return that WHIPS the stock market averages, and does so at an infinitesimally small fraction of the risk you must take in the stock market – well, to you folks who “get it”, here’s how we do that, and we do it very, very safely:

The key, my friends, is a simple concept:  COLLATERAL.  You know all about this.  When you got a mortgage to purchase your last home, the bank gave you a loan, but they made you put up your home as collateral.  So the deal is simple:  If you don’t pay, you lose your house.  Pretty simple deal, right?

But here’s where banks do this poorly, and you and I will do it very, very wisely.

Imagine yourself.  When you got that mortgage loan, the bank probably required that you make a down payment of 10% or so in order to have some of your own money tied up.  Heck, maybe they even made you put up 20%.  The idea is that, the more of your own money is in the deal, the more you have to lose by defaulting on your loan… and thus, the more you have to lose, the safer the loan is for the lender.

What if you and I took that to something of an extreme?  What if, rather than requiring 10 or 20% equity in the property, you and I demanded something much larger?  Maybe 35%?  Maybe 50%?

If our number was 50%, that would mean that your $100,000 would be loaned to someone who could give you collateral – probably real estate – that has a verifiable value of $200,000 or more.  And they’d pay you your 8%...

That, my friends, is a SAFE way to make a VERY, VERY strong return of 8%.

In fact, if you do the entire process yourself – if you find the borrower, vet the collateral, do the research, and make sure that all of the legal issues are properly handled – it’s very plausible for you to make 10%+ through this strategy.

But if you just want it totally handled for you… where you write a check, and you get to collect interest from a loan that’s extremely well secured… well, that can be done at a very, very solid interest rate of 8%... in a totally passive manner.

So what do you think?  This notion of making a loan as a way to invest your capital is very simple.  You understand it already.  It’s also very safe… you understand why collateral is such a great idea, too.  And 8%... well… Warren Buffett has already shown us that 8% is much better than you’ll get from the stock market in the long term.

So… for those of you who GET IT… who understand the beauty of a great rate like 8%... in a safe, secure, predictable investment, and if you’ve got at least $50,000 of liquid capital and want to know how to make it happen for YOU… easily and automatically, just text the word GETEASY8 to 33444.  I’ll give that to you again.  There are no spaces in this word  It’s GETEASY8 spelled G-E-T-E-A-S-Y number 8.  Text GETEASY8 to 33444 and I’ll be happy to get back to you.

 

My friends… as always… invest WISELY today, and live well forever!

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