386 | Dumb Money, Short Squeezes, and FOMO Investing - NYAInsights

The movie about the duel between Wall Street and Reddit over GameStop stock came out on Netflix, and they called it "Dumb Money".

But the story it tells has insights that every smart investor should pay attention to.

That's why we're hosting a special edition of Not Your Average Insights to dive deep into it!

Join co-founder of JWB, Gregg Cohen, and show host, Pablo Gonzalez, to add a little perspective to the story, like:

- what the story behind the story was in the story of Wall Street vs r/wallstreetbets
- why concepts like short squeezes and others that Wall Street has practiced for a long time now represent a different risk for average investors
- how FOMO investing has permeated culture and how to use that to your advantage

This is our favorite content pillar where you get to join in on the conversation as much as possible!

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Transcript

Pablo Gonzalez: 0:00

Today, we are doing a special edition because normally on Thursdays is when we have our resident guest expert, but he joined us on Tuesday. So we are doing a Not Your Average Insights. That is not a book club, GC, but what? A movie review club. Cause a movie is on Netflix that highlights something that we've been talking about a lot lately. I'm not gonna to anybody's horn around here, but it's a subject that, a really smart show host has been kind of like harping about, and it really shown us a spotlight on it. So it's about the movie dumb money on Netflix that talks about the GameStop fiasco with a wall street bets versus I forgot the name of the hedge fund, which probably should have written that down, but, uh, we're gonna break that down. We got some takes on it. We got some not your average insights on it. Welcome, welcome, welcome everybody to the Thursday edition of the Not Your Average Investor Show. I am your host, Pablo Gonzalez, with me as always, the man that I affectionately like to call GZ, because of his genius concepts, because he knows how to generate cash flow, because he's a great co host, and because his name is Greg Cohen. Say hello, Greg.

Gregg Cohen: 2:19

Hello, everybody. Great to be with

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you.

Pablo Gonzalez: 2:21

Great to be with you too, buddy. And before we get into this call, we got someone that we're going to, we're going to be with all our friends on next Tuesday. You want to talk about that?

Gregg Cohen: 2:29

We are wanting to put a special bug in everybody's ear. We have got our Jacksonville real estate market update for Q1 happening next Tuesday. So for everybody who's here in the show right now, in the, in the live audience, you all Don't have to do anything different. It's a normal show that's going to happen on Tuesday. It's the same link that you always use. So can't wait to see you all there. And if you're listening on the podcast or anywhere else in the internets, then just go to NYAIS. com and register for free so that you can be here for the live audience. But it's our, it's our most highly attended show of the quarter. And it's that way for a reason. And it's because we go over the Jacksonville real estate market. In detail and give you all those stats and all that perspective that you have come to know and love from the Not Your Average Investor Show.

Pablo Gonzalez: 3:21

One of the things that we have learned is that folks come to this show for the insider perspective on Jacksonville because Jacksonville is one of the hottest most interesting real estate markets in America right now and Nobody knows it better than my boy genius concepts over here. I'm just gonna throw that there Do you agree with that Greg nobody knows it better than you All right. Here we

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go. It's

Gregg Cohen: 3:43

not my in my DNA to make bold face claims like that, but you know, I've been around the block for a little bit.

Pablo Gonzalez: 3:49

Yeah. Yeah. Yeah. Yeah. Yeah. I know it's not a new DNA. I wanted to make you purposefully uncomfortable there, buddy. You did a good job with that. That being said, GC We have a little tradition that we like to do around here. Do you know what that is? The roll call, baby. We got the MVP kicking us off. Lee Bishop saying hello, everybody. We've got the mystery man saying he gets FOMO when he can't attend the Natural Average Invest show. Denny Davis in the house. We got our leadoff hitter batting third today. John Henning. We got the ring master. Drew Barnhill with a good day to all. We got Glenn Schenken back from Bike Week in Daytona. Glenn, he is now in Massachusetts, joining us next Thursday as the guest investor. Super excited for that one. We got the shaman from the Pacific Northwest, Nadim Shah, with a good morning, good afternoon. We got our regulars, Rosalyn and Gary Riley from Marietta, California. We regard you.

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We got.

Pablo Gonzalez: 4:41

It's a, it's a little awkward when we're not in the same room, but we're gonna, we're gonna keep going here. We got Pamela Mar in the house. Good to see you. Pamela. Mark Soer from Cincinnati, Ohio. It's a new name. No, not a new name. Not a new name.

Gregg Cohen: 4:52

Not a new name. I know Mark's been around the block as well. We appreciate you, mark. But, no, Pablo not a new name. I can confirm not in new

Pablo Gonzalez: 4:57

name. I'm, I'm a little loopy over here in the Philippines. It's like 1230. all my marbles are not in the right place. Sorry about that. Mark. We got the patron Santos, Michael Santos from Northern Virginia. John Henning wants to know Greg, who is your pick to win the players?

Gregg Cohen: 5:11

I don't know how everybody else feels about golf right now, but I don't even know a lot of the guys that are playing on the PGA toy right now. It's so splintered. It's so split up. So, I mean, I'm gonna go with Rory. I hope Rory's playing. Rory's playing, right? I don't know.

Pablo Gonzalez: 5:25

I take the field. All right, we got the mountain man! Billy Green saying hello from the furiously, furious, furiously, flurrious mountains of color. Billy, you got me this one, bro. I do not have all my wits about me. I'm a weakened man. You win. We've got Mama Bear Cody Adams in the house. Good to have you in here, Cody. If you need anything, if you're checking in from the text, And you say hi all I don't know who you are because it just says not your average guest, but I know who is Very not your average friend of ours Marilyn Cotterman from Homosassa, Florida

Gregg Cohen: 6:03

That is the home of the manatees Pablo

Pablo Gonzalez: 6:05

is it? It is. I know! Because we made it famous on the Not Your Average Investor Show! We got Big Papa in the house! I love it when he calls me Big Papa! The co founder of the co founder Jay Cohen, Greg's dad. We got the first family in the house, Ken and Carolyn Milleen, Paychark and Maychark.

Gregg Cohen: 6:22

We salute you! We salute

Pablo Gonzalez: 6:23

you! We got, we got the Maven from the realist, the real estate Maven from the mountains of Denver. Snowmageddon is what's going on over there. Leslie Wilson. I hope you're okay in a snowmageddon. Susan Parker in the house. Good to have you, Susan. And all right. I think we're going to go with charity. Graham checking in Laura Colby, checking in from Washington state, man of steel himself, Vincent Barbarides. Right. Okay. Okay. Okay. Okay. I'm going to stop. I'm going to stop scrolling so we can jump into this. Oh, Juanita Clark from LA. That is a new name. New name. Juanita, good to have you. Good to have you. Hope you, hope you make a, hope you make a habit of this. Robin Schofield from New Hampshire, Bob Wiesner, my buddy from Georgia, right along Raj, Raj Bantu, and our favorite name to pronounce, GC, Aaron O'Neill. Into the light! Into the light! Gametime. Gamison, I'm really having a hard time reading today. We're going to jump into this because I'm not doing my best roll call. But before that, but it'd be, but it'd be, but it'd be, but it'd be, but it'd be, but it'd be, but GC, I think we've got some breaking news. You got some answers for us. I heard,

Gregg Cohen: 7:33

we do. We do. You all give such great questions on the show and guess what? Some of the times I don't know the answer right off the bat. What I always tell you is keep the questions coming. Cause I'm going to get that answer for you. There were a couple of questions on some of the data that I shared in a previous show, and just wanted to do some quick cleanup and get those answers to you guys. So, if you remember a couple of shows ago, I was talking about the differences between the expectations for rent growth in the single family space and the multi family space. And in the single family space, according 2024, they're expecting over 2 percent rent growth in the Jacksonville market. For single family, but in apartments, they're actually expecting about 2 percent rent loss in the Jacksonville market. Again, this is according to John Burns and his real estate consulting team. So the question was, well, what's included? Are townhomes, are single, excuse me, are townhomes, duplexes, triplexes, quads included in the single family? Or are they included in the multifamily? And the answer is They are not included in the single family. They are also not included in the multifamily. So it's just actually not included in either of the data points, according to John and his team. The index that we're talking about for the single family metric that I was talking about looks at median 3 bedroom homes. In the Jacksonville market, and they do that analysis over every market. So, it is one unit properties and it's focused on scattered sites. So triplexes, quads, duplexes, townhomes, non included in those numbers that I was sharing with you.

Pablo Gonzalez: 9:10

Okay. And there was another question. The, the, the recap there was Burns basically said that rents in single family were so that rents overall in Florida had gone up, but rents in single family had gone up while rents in multifamily had gone slightly down. And that's when people ask for the clarification. I myself asked for that clarification because as you know, I just bought a duplex and I am, you know, looking to keep that thing rented and keep my cashflow increasing. But it sounds like then that we are talking about like the typical. single family, standalone home, or the bigger multifamily kind of complexes that asset class of like the small multifamily, two to four doors in one building were not included in either one of the datasets. Correct. Okay. Just making sure I'm just making sure I got that right. I got my Philippine brain over here. What's the other question? Do you see you had another one in there?

Gregg Cohen: 10:09

So then again, a couple of shows ago, we were talking about the housing affordability crisis and how investors, JWB investors, JWB, we are a part of the solution there. As we were painting, what a view of the problem. We talked about how home prices had gone up over 500 percent in the last 40 years. And the question, I think it was from Michael Santorios, our patron Santorios. I think he asked if those numbers were adjusted for inflation. The answer there is no, those numbers are not adjusted for inflation.

Pablo Gonzalez: 10:39

Cool. So numbers not adjusted for inflation. What does that mean? What do I need to infer out of that GC? If it's not adjusted for inflation, does that mean that they sound higher than they really are kind of thing?

Gregg Cohen: 10:49

No, it's so when you adjust for inflation, you basically take what the inflation rate is over that period of time. And you would bring those numbers down and you're looking at kind of like real dollars is what adjusted for inflation. Like the real impact on your spending power is what we say when it's adjusted for inflation. The real numbers are what I shared. But if you want to think about how inflation has affected you know, your spending power, While home values have gone up over 500 percent over the last 40 years, inflation has also gone up some percent. I don't know off the top of my head. So the amount of money that you bring home within your job has also gone up as well, right? You know, we continue to have, we continue to earn higher and higher salaries. wages as an economy, and a part of that is because of inflation. So that's just basically saying that 500 percent is really what home values have done. Your spending ability has also gone up due to inflation as well. So, that's what adjusted for inflation means. That, did I do my typical thing where I just went way too much in depth there?

Pablo Gonzalez: 11:58

A little bit. I was, I was too focused on the Philippine food recommendations that Billy Green was giving me in the chat. but I'm sure, I'm sure it was all fair. I'm sure it all made a lot of sense there. All right, GC, let's get into the topic du jour. That's the topic of the day. We got the dumb money. Movie that's on Netflix. Let us know in the chat. Did you watch it? Have you checked it out on Netflix? It's called dumb money. I thought it was pretty good movie It is about the story that we covered on the show about two years ago when? basically GameStop the stock went bananas for like a for like a period of time and when and then all of a sudden Robinhood the app Shut down and it caused us like weird crash in it. And as the story unfolded in the media, it turns out that there was a internet community in Reddit called wall street bets. And they were all rallying around the stock and there was hedge funds that suffered dearly because of it. And this movie tells the behind the scenes and what the story basically as it unfolds, it is essentially showing this like hedge fund manager guy that's like taking a call. In one of his like houses and then runs, you know, he's like on the water, runs across like two backyards into his other house that he's building because he's building like a tennis court or something like that. So like sets up this whole like wall street rich guy and then it goes into the life of this young man who wasn't like retail banking. Studied finance meeting with like his buddy, who's an actual trader and being treated like crap. And as a study unfolds as a story unfolds this guy as a stalwart of the wall street bets community Creates this thesis on gamestop, which is a company. It's kind of like the blockbuster video of video games, right? Except like you add in like a um, like a used trade in and trade out. Kind of like concept it's like blockbuster Slash used record store kind of thing. And he has a thesis basically saying that it's undervalued and he's got all this like rationale behind it and nobody tends to believe him, but as he continues to increase his commitment to it and then starts bringing in this storyline about how this one hedge fund is like shorting it and how. You know, this is like the opportunity to like, stick it to the man. This message starts to really, really catch fire inside of this group. And as this guy doubles down more and more people start to get they start to get really emotional with it, right? Like you start seeing these, like, Pockets of dorm rooms and this like nurse and a guy that worked at GameStop and not being treated well, but like betting on this thing. And, and all these different like stories come out of the woodwork of people getting behind this movement. That is basically saying, screw the head funds. We're going to try to like, this is, this is time for the little guy to win because why would they call us dumb money? Right? Like, because basically the movie comes from the idea that wall street. Calls the average trader dumb money and what, what it ends up crescendoing is what we talked about, right? Like the stock goes up magnificently. This hedge fund gets in like a lot, a lot of trouble. Financially, this fund manager gets in a bunch of like, gets in a lot of hot water financially because he's shorting the stock. And it's a story of what they're calling a short squeeze. And when they know that A stock is being shorted. Another group comes in to squeeze the other person out. Then it's just like, how much pressure can you add by increasing the stock more to see how long they can last. And at the end of the day, Robin hood shuts down trading because of irregular activity. But there's a whole like murky story around the idea that this hedge fund that was shorting them was also owned by one of their biggest investors. There's a congressional hearing and. You know, it just, it just ends with plenty of winners and plenty of losers. As a story that just happened in American culture, do you see what stuck out to you in like the scenes and kind of the way that that story was told as you watched it? Cause I remember I texted you about this. I was like, Oh man, we got to do it. Not your average. It's like, I watched it on the plane. I'm in what were you thinking when you were watching it?

Gregg Cohen: 16:17

I just, I thought it was really interesting. You know, I was on the sidelines for everything that was going on during that time with GameStop and I didn't take part in it and I was just a, just an observer and it was, it was just, it was new. It's nothing, you know, Pablo, how you, you talk about how this online community that we have, and then. You know, what we have is really special and it becomes this offline community, like at our summit and it becomes like real and you know, so much good comes from this, this kind of like what started as an online community and now it's really affecting people and creating so much value in people's lives. Well, I looked at that and I was like, Holy cow. Well, Pablo was talking as far as like. An online community, a Reddit group, Wall Street Bets, started to really organize a movement. They attached a whole lot, they attached a common enemy to it, and then all of a sudden The real world was absolutely impacted. and really, you know, I looked at it from an investing angle and I was like, Oh my goodness, people are actually putting their life savings towards this or a significant amount of capital. They're actually making decisions that way. And I'm like, Holy cow. Like, I mean, I've been doing this for 18 years. I know how hard it is for people to make a decision with their money to go and invest in something, right? And what JWB does is You know, we invest, we ask people to trust us, to invest with us. And many times we don't ever get the chance to shake their hands and they invest from thousands of miles away across the country. And, and that's a big ask. And I have such respect for that ask. And then I see this movie and I see these stories of people who are literally just putting their life savings into this short squeeze of GameStop. And I'm like, that's how easy it is for people to start Putting their money towards something. I'm like it, that doesn't make sense. That's there's something going on here. So I thought it was an interesting statement on our society right now. I thought it was an interesting statement on how ease of access into investments. And emotion can really play into decisions. Many times without financial education, those are poor decisions. And yeah, I just, I feel like This was something new. This is, there's a lot of new things that are happening because of the access to investments today that we just didn't have 10 years ago, 20 years ago. And of course the internet age and the social media age. And I thought it was a confluence of Of new things that were definitely noteworthy.

Pablo Gonzalez: 19:00

Yeah, definitely, man. you know, I keep thinking about there's just many scenes in the movie where you see these people that are looking down at their phone and it says they have 200, 000 and then they look down at their phone again and they said that has 400, 000 and some have their friends saying, Hey, Sell this thing. Are you crazy? You can buy yourself a house, right? Like there's, there's this like nurse in the movie that ends up, that ends up staying on too long beyond the bubble breaking and doesn't end up making money. And she was like the one that's most like emotionally invested in it. And then there's a couple like college girlfriends that end up selling out and, you know, paying off their, paying off their college education and being worth 200 grand, like coming out of college kind of thing. And To your point, right? Like it's, it's a generational thing. It's a new, it's like a new species of native digital that we have, right? That sees, doesn't have the attachment to paper money like we did. Like, I think you and I see a number in our bank account and, and in the back of our minds, we're thinking about dollar bills and coins and, and this sort, right? But like people that are, right? Right. Right. In the early twenties have likely never actually like touched cash, right? Like it's always been credit cards and Zelle and cash app and stuff like that. Right? So this detachment from the reality of things and it all being one giant game, I think is a, I think is you hit on that. We haven't really touched on, but it is a generational shift of like, Oh, okay. Well, if it's that, then sure. I'll put my life savings into this. Cause at the end of the day, it's just a number on a screen. Right. Yeah.

Gregg Cohen: 20:41

That's really interesting because you think about the evolution from like using paper money to pay for things and the step for call it my generation is like going to credit cards, and that was a big step, right? And, you know, and a lot of folks and still a lot of my friends like to have cash because they like to feel what it's like to pay somebody something because it can be a little painful. If you've got to put money out, it just makes you feel differently. So if you think about that evolution from cash to credit cards, to now like gamified through an app like Robinhood when you're talking about investment decisions that are supposed to provide for financial security and retirement, or for paying your mortgage off, or something along those lines, you can start to see where that can become. You know, just without financial education, that can become very scary. And I think that was a, that was a theme. I remember in that movie, I was watching it. I'm like, I'm, I think everybody's rooting for that nurse. Take the money and just pay off the house. She was a single mom, had some bad things that happened to her in her life. She was working hard, doing all the right things. Just take the money and pay it off. Because, and what we're all looking at is like, what are the fundamentals of what you're investing in? You know, there's not much there. It's, you know, terms that I don't even understand. Like, Diamond hands and hodl, I don't even understand that, but that, that's the fundamentals there, you know, so

Pablo Gonzalez: 22:12

we'll get into those fundamentals, you know, to me, the, the, the reason why it was such an obvious go for me to like, talk about this on the show is because of the confluence of these things that you're talking about, these cultural shifts, these generational things, this technological shift that has happened. We have said when, when this story broke out, we said that there is a new unquantified, unquantified risk out there that the best way that I can describe it is ease of technology and enhanced liquidity of investing multiplied by You know, there's always been groupthink. There's always been like, you know, mass hysteria and things that can happen, but the, the, the rapid information and the increase, the, the rapid information exchange, thanks to the internet and the increased liquidity, thanks to these apps that allow you to get in and get out with just like a tap of a button. You don't have to call anybody or, or any of these things have created a A new category of risk when it comes to investing. Yeah. Michael Santoro saying social media's part correct. To me, social media is the thing that takes group think hysteria, mass panics that normally could be contained to like a movie theater. or, or a congregation or a local economy. And it puts it into this like worldwide scale of billions of people in like an instant. And you multiply that by their access to these apps and the, and the ease of movement of money. Cause it's all electronic now. And things like this can happen all of a sudden a chat room full of You know, nerds and gamers and like, who knows, who knows who was in that wall street bets chat room can create what is a, essentially a, a worldwide story and a, and something that impacted people for, for a very long time.

Gregg Cohen: 24:15

A hundred percent. Let's add one more thing that kind of throws gas on the fire here and lowering the barrier of entry. Because what Robin had did Robin hit Robin hood did was. Make trading stocks free for people that they could get in. I think it was their first stock trade was free, or I don't know. I was never in, never used Robin hood, but it made it either free for the first one or for a number of trades. So you combine all of that and the gamified action of it as well. And it's like, Holy cow. Now we've kind of detached. So far from the fundamentals of how we should be making decisions with our money. We are making decisions with very little financial education and there are real world consequences for it.

Pablo Gonzalez: 25:05

Totally. And to me, the thing that it makes me think is, cause at the end of the day, man, I use Robinhood, right? Like thanks to, thanks to Robinhood, I, I bought my second property, right? Like I was. At a barbecue at the Richie's house. So it was like, I'm going to buy Peloton on February, 2020 decided to go for it. Cause what was trying to sell me a Peloton bike so she could put me in her WhatsApp group. And then I was able to liquidate it right, right on time. But again, it is, there is, there is a fundamental understanding that I had of taking chips off the table because it wasn't just a game to me. But, but for me, the, the thing that it makes me think of is. We are so prone to thinking that liquidity is risk mitigation. And I think that what this tells me is that there is now another, there's now a dark side to liquidity. And it's this, this idea that things can move so quickly. And things can get so hot, so quick, like never before that liquidity now also has. a risk as well.

Gregg Cohen: 26:51

100%. I, I, I juxtapose that scenario. We just talked about with all of those factors and the risk that you're highlighting of what just happened there and the spread of information and the social media age, like Michael was talking about. And I compare that to investing in boring, old, single family rental properties. And you know, there's more barriers to entry to investing in single family rental properties, but that's one of the reasons why it has been such a consistent performer over and over and over again. So, like, highlighting why The lack of liquidity to invest in a single family rental property compared to investing in GameStop over Robinhood is actually, to your benefit, is a very not your average take. But we're seeing that now, whereas And Robin Hood and the GameStop fiasco, crazy variability. If you want to see how variable it was, go watch the movie, right? Billions of dollars were changing hands literally by the hour and by the day there versus single family rental properties, which year in, year out, no matter what gets thrown at single family rental properties, call it a pandemic, call it an eviction moratorium. Even call it the Great Recession, where home values went down, but then have more than recovered over a full market cycle. Over and over and over again, what you're seeing is consistency in single family rental properties. It's not exciting. They're not going to make a movie about investing in single family rental properties. But you have to ask yourself, which do you want to bet on to get your financial future and a great retirement? Do you want to bet on variability and excitement and things of that nature? Or do you want to bet on something boring, something boring, old, consistent, resilient, that's going to grow slowly over time. That's how I'm wired. That's why I like that.

Pablo Gonzalez: 28:54

Yeah. Yeah. It makes a lot of sense. So patron Centorious has a really good question here, man. He says, Greg, with companies like Fundrised, Arrived, Crowdstreet, Realty Mogul, do you think that this could happen in the real estate market since they offer a low barrier to entry in real estate?

Gregg Cohen: 29:10

Well, that's a great question. I think you have to look at the underlying asset. So I think the barrier to entry is definitely lower today in I think all assets. You know, due to technology, due to some government regulations or lack thereof, or changes in that regard, the barriers to entry to invest in almost every asset are a lot lower today than what they were 10 years ago or 20 years ago. But I think what you have to look at is the underlying asset and the barriers to entry of the underlying asset of real estate are a lot higher for the actual acquisition of the asset. What I mean is. the purchase price of the asset is a lot higher in real estate than in other types of assets as well. So the underlying asset is way more consistent and resilient, no matter what market dynamics are thrown at it when you're talking about single family rental properties. And for many of the investments that those, those platforms advertise. So I think you have to look at the underlying asset to really look at, could this happen or not? I'd say. You know, you can never say never, but the chances of it happening in single family rental properties or something, and I don't even separate single family rental properties from other real estate classes because we're seeing more variability in things like commercial real estate and commercial office real estate than we are in single family rental properties. Single family rental properties are a special, special breed of real estate and it's because it is a critical need for the individual and it's a critical need for the government that it continues to work. So I think it's way more unlikely in single family rental properties, less likely in other real estate because it is so consistent even though your barriers of entry have lowered across the board.

Pablo Gonzalez: 30:56

Yeah, I think that's a good, that's well said. You know, I failed to say the fact that when this story first happened, it was like a blip on the radar. I had this theory of liquidity being a risk. and then Silicon Valley Bank happened, right? Again, it was another, you know, this is another one of those moments where a tweet Set off a mass hysteria set off people running to the bank set off you know a bank essentially folding and needing to get a a bailout from other banks kind of thing So this this is a growing trend You kind of see it in the crypto markets, right? Like when ftx went down when like with all this kind of stuff that's happening. So we're seeing this kind of like what's a good terminology to say it. I, I keep saying groupthink and mass hysteria, but it's like somebody yelling fire in a crowd of theater, except that happens across an entire like asset class. And all of a sudden everybody suffers.

Gregg Cohen: 31:50

It's a new playing field when you're investing in something that is called publicly traded with low barrier to entry that you, it is more active management of every investment in that sphere. In my opinion. Yeah, when you are a part of that you've got to pay attention all the time Not just for the market not just for the fundamentals What's the emotion around that? Is there a common enemy? Is your stock becoming the common enemy? And even though you're performing really well, people, they might make a common enemy out of that. Well, you have to pay attention to that. That sounds like a lot of work to me. I don't even understand how to pay attention to that. Do you have to watch social media all the time and see what's trending in order to like, make sure that your retirement is safe? I don't know, but it's definitely a different landscape that we are. You know, if you're investing in assets like that, that you're already part of whether or not you like it, because you're seeing those types of scenarios that have happened literally just in the last year or two years, right? Yeah. You would think that it's only going to happen more and more and more in the future. So start quantifying emotions. That sounds like a lot of fun. That sounds like a fun investing strategy.

Pablo Gonzalez: 33:07

Yeah. Quantifying emotions and quantifying on like unidentifiable links to things that you may not even realize are happening. Right. Like it's like, like Wall Street bets. Linking to, you know, villainizing wall street to then like tearing this thing down. It makes me think of like, there's now these, there is ways to trade right now where they tell you different politicians portfolio positions and they can trade based on what that's happened, you know, on that. So it's like,

GMT20240314-163127_Recording_avo_640x360: 33:42

Diane

Pablo Gonzalez: 33:44

Feinstein's whatever she's investing in, you can invest in that. And you don't know how many other people are also following that. So what happens if something happens where she passes a unpopular law or something like that? And then. All those traits go down because you don't know where the linkages are, right? Like to me, it's just like it becomes infinite in this whole, in this whole thing, which, which is really what is spooky for me. But to your point you talked about this idea of villainization. And one of the things that you brought up to me was like, you know, one of the, you told me you took a little bit of exception of how easy it was to bag on the realist on the, on the, on the wall street guy. Right? Like it was like Seth Rogen. He was clearly the evil guy. The, the founders of Robin hood were like idiots. And they took some pretty cheap shots and you took a little exception to that. You want to tell me about that G?

Gregg Cohen: 34:36

I just think, I think it's so easy to, to say Wall Street is the bad guy. And I'm, I'm not a part of Wall Street. I'm, you know, me, I'm here investing in single family rental properties, but. But I just think it's, it's, it's just such an easy target. And, you know, in the movie, they really villainized wall street. And, you know, if I think about it from the seat of Seth Rogen's character, you know, he's there managing money for his investors. His job is to look for value for his investors. It's in the movie, they talked about how it was such an emotional thing for this, uh, these, this, this, this, uh, this young lady that she really villainized him because her dad was a part of a company that was bought by a hedge fund and then that hedge fund reduced headcount and she said well now my dad, you know, didn't have any money and I didn't, I had a really tough childhood because of this and I just, I think it's not, it seemed like That's an easy path to go down. But if we start to go down that path and we lose the opportunity to empower ourselves and to do big things and to kind of put it on our own shoulders and just, you know, I don't want to blame somebody else. So it seemed like that was going down that path of villainizing, blaming. When in reality, we all have the opportunity to make, you know, something of ourselves. And so I think it's such a, it's a, it's like, Low hanging fruit to kind of go after wall street there. But to me, if you just constantly have that mentality of trying to blame somebody else for all of these problems, then you lose your ability to make a positive impact to yourself. So I, I kind of saw that theme developing and I was like, listen, Seth Rogan's character, it's a hedge fund. His job is to provide value for his investors. He was making you know, short bets on stocks. That's. What a lot of hedge funds do and he's not out there to, you know, remove jobs or kill jobs or things of that nature. What he's doing is provide value and that money that he makes for his investors. What does that turn into? A lot of times it turns into new jobs and new investments for those investors. So, I just, I thought it was a little much that that's all I'm saying.

Pablo Gonzalez: 36:52

You know, I don't know if I agree with you there. Like, I, I do think that there is some like weird stuff that happens on like this short squeeze thing. I mean, we're just like a short squeeze. What, what even is this thing? Right? Like there's so many, like they kind of invented the whole gamifying money stuff. Like, right. If we're gonna, if we're gonna bag on like Gen Z for, for not, you know, truly valuing money for what it is, then I think like it started with this whole kind of like wall street games and derivatives and all these different, it's essentially like a giant casino that they've created for For this industry. But where I can agree with you, Greg, is that man, I can't blame somebody for betting against the blockbuster video of video games, you know, like it feels like, yeah, it feels like a sound bet. You know, like I am a guy, yes, we may have turned. Investing into a casino with wall street, but it sounds like a pretty good bet. It sounds like you're like doubling down on an 11 and, and, and I can't really be mad at that guy for it. But it, it goes to the point of stocks and, and, and these other asset classes. Move to very like irrational things. Like a company can release their best earnings in like 10 years and the stock goes down because now they say, Oh, well it's priced in because somebody decided that whatever, as opposed to no man, this company is performing really, really well, right? Like that. That to me is my problem with it is, is the idea that like the movement of this stuff goes more on emotion than any other, than any kind of like fact or, or, or, or the performance of the CEO and the team that's killing themselves quarter after quarter putting out a good product kind of thing.

Gregg Cohen: 38:36

Yeah. And I see where you're coming from. And to me, there's the idea of the rigged system, which is the stock market, which Wall Street has absolutely had a part in creating for sure to the point where you have a, an entire, you, the, the terminology you use for a retail investor is dumb money. I mean, I, I certainly don't like that. And I definitely think there is blame to go around there for Wall Street. And. You know, that's why I keep as little of my money in the stock market as I possibly can. And it's because I feel like dumb money. I'm called dumb money. I feel like dumb money. And so I can absolutely follow you on that. my take was more of like that one individual investor. It's kind of like, don't, don't hate the player. Hate the game. There you go. Yeah. Don't hate the player. Hate the game.

Pablo Gonzalez: 39:28

I agree there. There we agree. We're back. We're back. We're back to back to you. But to your point, dumb money, right? Like that is the term that they use for the retail investor. You Greg Cohen are dumb money in the eyes of in the eyes of wall street. And at the end of the day, what they're talking about is the thing that I talked about at the summit, right? Like they have an information advantage over us. And. You know, they're able to, you know, everything from milliseconds of trades getting in sooner than everybody else because it moves up and down to just more research and all these other things and, and having all this stuff that makes them have an inherent advantage over everybody else, which makes it, you know, somewhat of a rigged game is really complicated in the stock market. Whereas in real estate is kind of a fair equation, right? Like in real estate you know, the data's out there, there is people like yourself that are out there talking about, Hey guys, this is what's happening. Here's the data, here's what's going on. And I feel like in real estate, it's if you can, you can get a similar informational advantage that isn't rigged in any way.

Gregg Cohen: 40:39

100%. It's encouraged when it is in real estate. We have entire meetups, summits to discuss this information advantage. I mean, that at the core of it is what the summit was all about. It was helping people see how you can make, take advantage of an investment and providing that information and providing the support around it, whereas you just can't do that in other ways of investing in the stock market. It's called insider trading. Right. You can't talk about, you know, company related information or investment related information in the stock market and get a lot of trouble for that. But you compare that to, again, boring old single family rental properties. And for those of you who came to the summit, you got to actually see and touch and feel and go on a walking tour. Of downtown where we were able to connect the dots and say, Hey, listen, sing boring old single family rental properties are the model here. But let me tell you about what's coming downtown Jacksonville. Let me talk to you about the 2 billion of investment that is going to be happening here over the coming years. The 500 million that's happening in 2024 that's kicking off. right here. And then let me make the loop, the connection for you to see when you have revitalized downtowns happen across the country, to see that you have 27 percent more home price appreciation for single family rental properties, right around those other downtown. So you have this model and it's open, it's free, it's accessible, that information flow is encouraged. And we can have a show like this where I can say, Now, here's how you can take advantage of it. You can invest in single family rental properties in Jacksonville today before those gains happen. And you just can't do that in other places. So this kind of touches both sides of the I don't know. Both sides of the brain for me, I guess. I don't know if these are the two sides of the brain, but for me, it's two, two things, right? There's the boring part of this, which I love to talk about how boring single family rental properties are because they're slow. They're consistent. They continue to grow slowly over time. You've got that. But information advantage is really exciting. If you know what the path of progress is or the next big thing coming to your market, now you can make really calculated decisions. And the boring part of you can be satisfied because it's going to continue to perform. And those of you who like the exciting part, you also get that checkbox checked as well.

Pablo Gonzalez: 43:21

Love it, man. Speaking of two sides of the brain, man, I, there is something that's happening here. That is the, my, my new takeaway, right? And it's. What I think is the rise of FOMO investing that had never, that had never existed before. You would just mentioned a term diamond hands. Dave, have you figured out what diamond hands is?

Gregg Cohen: 43:42

I haven't. And just for everybody, we Pablo and I met like five, 10 minutes before the show and he threw out the term diamond hands. And I'm like, dude, I don't know what that means. And he's like, just hold that thought. So I don't even know what diamond hands means. Can somebody explain what diamond hands means please? Yeah.

Pablo Gonzalez: 43:56

So, so diamond hands. Diamond hands and paper hands is now the new thing. It's similar to basically it's saying that, you know, if your hands are made of diamond, nothing can break it. And it's just like compliment of you're holding onto it as long as possible. And you're never going to sell and that means that we're all in it together and all this stuff. Right? So yeah, it's like Denny Davis is right. It's like hodl, right? People that are hodl is the other term that's come out. People that are super long on, on Bitcoin. They say H O D L hold on for dear life. Right? So in, in these asset classes right now, these new These new digital asset classes, people are being told to hold on for a long time and they're being glorified for having diamond hands, right? And not letting things go. But, and that's, that's fine. I have no problem with long term investing. As you know, we know that In rental property investing, the longer you hold it, the better that you do. We are preaching diamond hands for rental property investing. We are preaching huddling your, your single family rental properties because you have so many options. The problem here is that the reason why People are going in these asset, in these other asset classes, these digital asset classes, why there's so much, why I'm calling it FOMO investing is because just like that nurse that's got screwed over the value of these asset classes are directly correlated to the fact that they need you to hold onto it. If people did not have diamond hands with bitcoin and did not have diamond hands with this like GameStop thing and they were encouraged to oh, yeah. Yeah, you can exit man. It seems like the stocks tripled That's a good investment. You can put your money out not don't do it, man Stick with us. If not, the whole thing goes down like that is what everybody is That that's what this new generation of investor has been conditioned to do. Thanks to crypto Thanks to these kinds of things. Is this like You It's good to hold onto stuff because we're all in it together. And if anybody lets go, then we all lose, I think is super dangerous.

Gregg Cohen: 46:08

I don't want to, so I don't like to let people down around me. I mean, when I, when I make an investment, the last thing I want to do is think about my choice of investment. down you Pablo or letting down people in our community here or letting down my community here in Jacksonville or, or, or something. I mean, that's a lot of weight to bear. That's a, that's a, that's a tax on me. Like that's a burden. So in this, in this movie, I felt the burden as I put myself in the shoes of that. Of the, the young lady who said, I believe in this gentleman who was leading wall street bets. I believe in him. I'm not going to sell, even though I could have college paid for me. I'm not going to sell because if I do that, then I let him down and I let everybody else down. And I felt it when they had the story of the nurse and she said, I believe in this. And if I do this, then everybody else is going to be let down, man. I don't want to go into an investment, especially when I'm trying to plan for retirement. It. to think that I can't just make the best decision for myself. And then if my decision is to sell, then I'm going to somehow let down all of my friends and all the people that I, you know, associate with. So I don't want any part of an investment like that. That's, that's what I took away from that.

Pablo Gonzalez: 47:31

Yeah. And not just that, but I, when I think about it from your standpoint, you're like, like you have built an extraordinary company to not let people down. Right? Like you, like you, like I know how seriously you take this idea of people investing in you and putting them in a place to succeed, not in a place to, if you back out on me, we're not friends anymore, bro, right? Like you, you are, you are basically encouraging people to invest in something that they can actually control and that you can help them control. Not the opposite.

Gregg Cohen: 48:05

It comes down to the basic fundamentals of the investment. How did diamond hands and HODL, which in what I internalized from that is like, no matter how bad it gets for you, you got to do this because you're one of us. Like, when did that become the investing strategy versus, you know, Let's talk about what your rental income is related to the expenses that go out, the income versus expenses. And let's talk about tax savings and let's talk about home price appreciation and principal pay down and inflation. And your

Pablo Gonzalez: 48:40

why.

Gregg Cohen: 48:42

Yeah, like when did this become accessible and how did this become so, so ingrained that they made a movie about it? Like, I just don't, I don't know how we have gone so far down that path. And it's not just the GameStop phenomenon. There's a whole lot of decisions that are made each and every day for investors that are not based on fundamentals. You know, a great investment for me should not cause you pain to hold onto it. You know, a great investment should be providing for you today. And it should get better and better with time. You should be excited about hanging onto it because it's It provides a wonderful investment for you today, and it's going to provide a great quality of life for you when you need it, which is what boring old single family rental properties do. I'm always just shocked at what we have right underneath our nose here. I'm looking outside my window here in my home office and I see boring old single family properties. Like we have this right underneath our nose, but we somehow avoid investing in that to go and find investments where the key fundamental is diamond hands and hodl. Like how, how did we get there? And then why do we feel like that is something that makes a lot of sense? There's a whole lot of strategies. in real estate and in single family rental properties where you can have the softest hands ever and you're going to want to hold on. You don't have to have diamond hands. You're just going to, you're going to have soft little baby hands, but you're, but you're going to enjoy it and you're going to get to your retirement goals. And you're going to be much better off than riding that rollercoaster.

Pablo Gonzalez: 50:35

Now I know why real estate is the perfect asset for me. It's because of my soft baby hands.

Gregg Cohen: 50:42

Do you think that'll catch on? Invest in single family rental properties? Soft baby hands. Soft

Pablo Gonzalez: 50:46

baby hands. Type of hands versus soft baby hands. Well, if you need a hand model, Greg, I have famously small hands and they're very soft. Yeah, man. I think it's a really, we're living in a, in a very interesting time, right? Like as a student of category design, I understand that

GMT20240314-163127_Recording_avo_640x360: 51:07

big, you know,

Pablo Gonzalez: 51:08

big Changes in context lead to giant shifts in like innovation and, and, and new, and it begets new categories and new categories create other categories. And we are, you know, for better or for worse, you and I have entered our, you know, like our middle age in the middle of like the fastest moving rate of innovation of all time. And we've just kind of been in it since high school because the internet started. Right. So I think it's going to continue to increase. And I think the more that things change and the more that they evolve and the weirder they get, there's going to be like a real sense of comfort and investing in something you can touch, something that has utility, something that makes sense. You know, like it just like you see it, it just makes perfect sense. People need homes. This, the materials inside of a home cost money, land costs money, land is scarce. Like all the, all the things that like are artificially built into these new asset classes and all these different things don't need to be artificially built into single family workforce housing. And I, I get a deep sense of comfort knowing that is what I'm betting the bulk of my retirement on.

Gregg Cohen: 52:28

A hundred percent. If you just took the label of what you're investing in off of it, if you just remove the label and you just put the fundamentals of, you know, single family rental property investments out there versus these other investments, I can't think of anybody in their right mind who would put any sort of amount that's tied to their life savings. Or what they're counting on for their retirement goals. I can't imagine anybody would do it, but the label really throws people off. We've got boring old single family rental properties here, which have never had rents go down nationally, which almost a hundred percent of the years you see home price gains and rent price gains, not a hundred percent, but almost a hundred percent of the year since 1982. And you've got all these other tax advantages. versus the other one. And if you can just get over the fact that it's, again, boring old single family rental properties, you're going to make better sound decisions. But I agree with you that this, where we are at right now is the beginning of it. As far as the change of the landscape, you would imagine that as technology increases and access increases and barriers to entry continue to be lower and lower and lower for folks, that in the public landscape and public investments in the stock market, right, that liquidity risk is only going to be exacerbated going forward. So if you're like me, I don't want to deal with that. I want to invest in something that is consistent. And if that means that it's slightly less liquid than what the stock market is, but consistency is there and something I can count on, especially as my income needs to be there as I get closer and closer to retirement, count me in for that. And I think that you're going to see people that, that liquidity that they've used as a reason to not invest in real estate, whether or not they name it liquidity, that's going to be a reason To go away from some of those investments and put their money into a consistent performer, like a single family rental properties.

Pablo Gonzalez: 54:29

Yeah, I agree, man. I completely agree. to which point Bob Wiesner says since 2013, there have been six, 70 percent or greater drops in the price of Bitcoin. HODLing has been pretty difficult. You need lots of cocktails and or yoga. but better Greg, Greg Stone brings up a, brings up a really good point here, man. With regard to real estate though, how do you plan for all the updates that will be needed down the road? New roof, hot water heater, et cetera. Those are big expenses when holding off for the longterm. I mean, is that. You know, how would you answer that question? I mean, that is that a baby hands thing or was that a diamond hands thing?

Gregg Cohen: 55:02

Baby hands that you prepare for when you buy the property you make sure that you prepare for Reserves number one that's money that you keep in your bank account for a rainy day And there's easy ways to prepare for that right before you ever buy your first investment property you prepare for that you make sure that you're with a world class management team That is vertically integrated so that, you know, all the incentives are aligned and the goals are aligned to make sure that over the length of time that you're going to hold the investment, that you know, that they're working for you and they're in, they make money when you make money. And then you look and you make sure that you have built in expectations for maintenance costs over the full amount of your whole, and, you know, this is something that we prepare every investor that comes to JWB or we actually Sell the property. There's a lot of planning that goes into place. We're looking at our pro formas on our portfolio that we build for clients. And there it is. If your maintenance expectation, it might be 4 percent to maybe 7. 5%, depending on the property. Well, that's what we're expecting each and every year plan for it in advance. When it happens, nobody's surprised. And what's paying for that? It's not your bank account. It's not your active income. The income generated from that asset is paying for those expenses. So you can do this with baby hands, even though you got, you got maintenance items that will happen down the road. You just plan for an advanced work with a world class team that's been there before. And then you can have baby hands and hold onto this thing. As you get to retirement.

Pablo Gonzalez: 56:38

There you go. Real estate is for baby, baby hands. I like that. Real

Gregg Cohen: 56:41

estate is for baby hands. I think that's the theme here.

Pablo Gonzalez: 56:45

Don't put baby hands in the corner. I thought this was interesting. Do you see, I like this new format of maybe the next one we do it with a book or something like that. Right? But like, I think this like media comes out that talks to the, the, the core of issues that we are seeing in the world and reacting to it with you. I find really, really. And I think we came out with some interesting new storylines around it, like this FOMO investing thing. This the information advantage. I think it's a good content format. did you like it?

Gregg Cohen: 57:13

I think everybody's going to become aware of just how behind the times I am. I think me being, I am definitely lacking in the pop culture references. I will be the first to admit that. So we'll put that on full display and, you know, but I'm, I'm game. I'm in for it. I think this is, I think this is really cool. I think it's cool to kind of take what's going on in the world and, you know, You know, I'm constantly trying to create that same standard. Like, how are you making decisions over here? And then how could you make that same decision in rental properties and what are the pros and cons? So I think it creates that avenue to say, Whoa, we did something in pulp culture over here that is like way off the hinges of fundamentals here in single family rental properties. This is how this would be done, especially to like Greg's point right there, the better Greg's question, right? But how can we relate that back to kind of fundamentals, financial education? Because when you match a consistent asset with financial education and a world class team to support you. That's how you prepare for quality of life in retirement.

Pablo Gonzalez: 58:16

Love it, bud. Love it. Well, I want to thank the community. We had 70 plus people on here the whole time. We still got like 64 folks with us. Never take it for granted that you spend the middle of your day with you the middle of the night here in the Philippines for me. But, you know, like without Lee and Billy making fun of the fact that, the curtains behind me look exactly like my shirt. And I have the same like wrinkle pattern as the curtains and all these different things. It would not be nearly as fun. I love the, I love the conversation that happens in the chat and everybody and everything that happens. We just couldn't do it without you. So thank you to the community for showing up. And we hope to see you on Tuesday for the Q2 real estate market update, the Crown jewel of the not your average investor show every single quarter. Q1, not track, right? Mark it up. The SXP. Yeah. Q1,

Gregg Cohen: 59:04

the Philippines is still key one.

Pablo Gonzalez: 59:07

Yeah, you're right. You're right. I have no idea where I am right now, but at 10 days over here, I haven't really adjusted to the jet lag. So I plan to be back in full force back in studio on Tuesday with my boy GC, where we can do a proper roll call. What do you think?

Gregg Cohen: 59:19

I can't wait, brother. Can't wait. I know you've had a blast over there in the Philippines, but we're ready for you to come home. We miss you, buddy.

Pablo Gonzalez: 59:26

Hey, real quick. Manuel Da Silva says, how do I get involved with SFR investing? Manny Da Silva buys houses at gmail. com. Is SFR single family residences? What do you say to that?

Gregg Cohen: 59:39

Well, reach out to us, Manny, or, you know, Cody, I think we'll probably reach out to you if she hasn't already. Cody's our community manager. and the best thing to do is get on the phone with us and have us, you know, help you build out your plan. but as far as how do you get involved investing with JWB? We're here to make investing in single family rental properties easy for everyday investors. So no matter where you live, what your experience is, you can start building a rental property portfolio. It starts with a phone call. So either we'll connect the dots through Cody or anybody can just send an email to info at jwbcompanies. com or you can go to chat with jwb. com and set up your own phone appointment with our team.

Pablo Gonzalez: 1:00:17

Got so carried away with the movie and all the commentary that we didn't even let anybody that was new know that we're actually a vertically integrated single family rental home investing company that does it all for you and makes it easy. Get carried away out here. All right. GC, any advice for people before Tuesday's show from now until then?

Gregg Cohen: 1:00:35

Don't be average. See y'all on Tuesday. See ya.