The 3 “Sell Traps” That Will Cost You Millions (My $6M Mistake) | EP. 12

0:00 – So you made a home run investment, you tripled your money, and the temptation to cash out the profits is growing.
0:05 – You know it’s a great asset, but that’s a lot of gains to leave on the table.
0:09 – So the question is, do you hold or do you sell?
0:13 – In order to make that decision, you must understand noise versus signal.
0:18 – So today we’re going to unpack the three traps that you can avoid and also share the three reasons to sell.
0:23 – Learn the hard way through lived experience and by studying the world’s greatest investors.
0:28 – And if you hang around long enough, we’re going to share the story on literally the best real estate transaction sale in history.
0:36 – Welcome back to the Sage Investor. I’m Brian Spear and my mission is to help you generate cash flow and build legacy wealth in a tax-efficient manner.
0:43 – Because that’s what I’m trying to do for my family. I’m going to share all the wisdom that I’ve learned along the way.
0:48 – We closed out the last episode with a clip of Charlie Munger basically overtly stating he would much prefer to follow the buy and hold method as opposed to the fix and flip method.
0:57 – He’s got a great quote that basically says, look, the big money is not in the buying and the selling but in the waiting.
1:03 – How do you counteract that, though, when Warren Buffett immediately thereafter, okay, gives you a separate quote which basically says,
1:09 – but we’ve made no commitment that Berkshire will hold any of its marketable securities forever.
1:16 – So of course, in one way, shape or form, they’re stating, hey, we’d much prefer to buy and hold.
1:20 – But Buffett says, but it doesn’t mean we’re going to hold forever.
1:23 – And then he ends with the quote, our favorite holding period is forever.
1:27 – Obviously, that’s very confusing. So how do you determine when to hold and ultimately when to sell?
1:32 – It’s not easy. And I’ve made a lot of mistakes along the way.
1:35 – Got some scar tissue to prove it over the years. I’ve sold 16 different deals, 16 different mobile home parks.
1:41 – Honestly, the great effect made a bunch of money along the way.
1:43 – I know, I know, pour me right, pour me.
1:46 – But I was not evaluating those deals from the lens of a sage investor.
1:52 – We can try to justify some of those transactions and basically state, hey,
1:56 – it was helping us grow our business at the time.
1:59 – But the truth of the matter is that’s just me trying to rationalize those decisions.
2:02 – Human beings are exceptional at this. And I’m no different.
2:05 – Making the difference between being rational and ultimately rationalizing.
2:09 – Human beings are largely irrational, but we try to rationalize everything that we do.
2:13 – And the fact of the matter is in reality, I can already tell you there’s a version of an 85-year-old
2:19 – Brian who’s looking back at these transactions struggling and regretting a lot of those deals that we’ve sold.
2:25 – I mean, I’ve already got a ton of regrets associated with a handful of them.
2:28 – I can think of them off the top of my head.
2:29 – And one of them we’re going to actually discuss in detail a little bit later in this episode.
2:34 – You know, the point is when you sell an asset, you pause compounding.
2:38 – You incur tax penalties and you get a ton of cash drag.
2:42 – And ultimately, you take on way more risk when you try to go invest in another asset.
2:45 – There’s a lot of reinvestment risk along the way.
2:47 – And most investors, they underestimate the cost of interrupting a great asset.
2:53 – So the default is to hold forever.
2:55 – Our favorite hold period is forever.
2:58 – We buy assets with forever in mind.
3:01 – And that’s not a slogan.
3:02 – It is a design principle of how we operate.
3:05 – The default is to hold.
3:07 – Selling is the exception.
3:09 – Compounding requires time holding the asset.
3:12 – Paying taxes introduces a ton of friction along the way and activity,
3:16 – activity, the buying, the selling, the fixing, the flipping.
3:19 – It is the enemy.
3:20 – It is the enemy that is an adversary to your ability to actually
3:23 – build massive amounts of wealth over time.
3:25 – There’s tons of friction costs associated with selling assets.
3:28 – So obviously the default discipline is to hold forever.
3:31 – But we’re not such ideologues that we’re just going to blindly hold
3:35 – regardless of the outcome.
3:36 – The truth of the matter is we don’t want to just be blind and be unbelievably rigid
3:40 – along the way.
3:41 – I’m going to take you through a handful of the sell traps in a minute.
3:45 – But first, let’s get into what operators and investors
3:49 – get wrong and where they get their wires crossed.
3:52 – And what we’re talking about here is signal versus noise.
3:56 – In order to make an appropriate decision as to when you need to hold
4:00 – and when you need to sell, you have to be able to determine the difference
4:04 – between signal and noise.
4:06 – The market moves every single day.
4:09 – But your investment thesis, that shouldn’t.
4:12 – So how do you differentiate a real signal from just the consistent noise
4:16 – in the marketplace?
4:17 – Noise is headlines, price swings, emotional reaction,
4:22 – boredom, but signal, real signal,
4:25 – is structural change, permanent impairment,
4:28 – a regime shift, legitimate material changes
4:33 – in the investment over time, right?
4:35 – You heard me mention a story, a regret.
4:37 – Even though the equity multiple in the result of that respective investment
4:41 – was phenomenal, it’s absolutely insane.
4:42 – We made a ton of money on it, but I regret it tremendously.
4:45 – Let’s unpack why that’s the case because I misinterpreted noise versus signal.
4:51 – We bought a mobile home park in North Carolina about a decade ago now
4:55 – for about a million dollars, absolutely phenomenal asset.
4:57 – We only put about 10% down on that individual transaction.
5:01 – Fast forward just a handful of years,
5:03 – we’d more than double the net operating income of the asset,
5:06 – the value of that deal was about four million dollars along the way.
5:09 – Because that we didn’t put too terribly much money down, right?
5:12 – It was thrown off exceedingly phenomenal amounts of cash flow
5:15 – with no end in sight, a compounding machine, a durably wonderful business
5:20 – that throws off durable cash flow.
5:22 – Today has been thrown off cash flow for decades,
5:24 – is thrown off cash flow today, and is going to throw off cash flow for decades
5:28 – to come and wonderful in terms of the long-term macroeconomics
5:31 – being unbelievably profound.
5:34 – The asset was going to have phenomenal compound interest
5:36 – for as far as the eye could see.
5:38 – But because we’d added a good amount of value,
5:42 – we’d moved it from one million to four million.
5:43 – There was a significant spike in the value of the property
5:47 – due to the fact that significant amounts of liquidity
5:50 – came into the marketplace.
5:51 – We were in the consolidation phase of the mobile home park sector.
5:55 – And when we first started buying mobile home parks around the watercooler 15 years ago,
5:58 – nobody was bragging about owning mobile home parks,
6:00 – right? These were old dirty down trod and trailer parks.
6:03 – The old drug, sex, and rock and roll stuff.
6:05 – That’s the reputation that they had in the marketplace.
6:07 – Couldn’t be further from the truth.
6:08 – These are unbelievably phenomenal areas to live.
6:10 – In fact, I grew up in a mobile home.
6:12 – I understand it better than most.
6:13 – Tens of millions of people live in manufactured housing.
6:17 – But there’s a stigma in the marketplace.
6:19 – And until the asset class was proven with institutional capital,
6:24 – largely the big money avoided the asset class.
6:28 – And then once institutional data finally was compiled
6:31 – over the course of the last decade, a lot of big money started coming in.
6:34 – Billions of dollars came in from the likes of Blackstone and TPG and
6:39 – Carlyle Group and Apollo and so many massive private equity firms have started to come in
6:44 – and consolidate the industry.
6:45 – And what happened is when all that liquidity came in,
6:47 – the prices of the portfolios of a lot of different mobile home park owners
6:51 – spiked significantly, cap rates compressed in a very significant manner.
6:55 – There was a lot of volatility in the marketplace.
6:58 – And all of a sudden, what was previously valued at just a couple of few
7:01 – million dollars became valued at four, five million dollars.
7:05 – And so all of a sudden the offer started coming in for this asset.
7:09 – As we talked about at the very, very, very beginning of this episode,
7:12 – it was a home run investment.
7:14 – The price of the asset had quadrupled.
7:16 – But that’s a lot of gain to leave on the table.
7:19 – So the question is, do you hold or do you sell?
7:22 – I decided to sell.
7:23 – Sold the asset made millions of dollars, had a 13x multiple over a 50%
7:29 – internal rate of return, just a ridiculous windfall.
7:32 – But I regret it dearly.
7:33 – It felt good for about a month.
7:36 – Now I can reflect back after seeing the other side of the table,
7:40 – understanding that that property is no longer with four million or five million dollars.
7:45 – But it’s worth 10 million dollars today.
7:47 – It’s been throwing off additional cash flow every single year like clockwork.
7:51 – The value of the property has continued to skyrocket.
7:54 – It is still a durably wonderful business.
7:57 – And the intrinsic value of that asset is gigantic and will be for multiple decades into the future.
8:03 – I sold because I misinterpreted noise from signal,
8:08 – which leads me into the three don’t sell traps.
8:12 – Most mistakes, most selling mistakes, they come from behavior,
8:18 – not analysis and a spreadsheet.
8:20 – They come from emotional behavior.
8:22 – So let’s walk through the three different don’t sell traps.
8:24 – The first one is volatility.
8:27 – Short term price movement is noise.
8:29 – And that’s what I felt and that’s the mistake that I made.
8:32 – There was a massive volatile increase in the price.
8:35 – And I wanted to get my chips off the table as quickly as I could.
8:38 – You shouldn’t be confusing market to market fluctuation and Mr.
8:41 – market being manic with permanent cash flow and the intrinsic value of the asset.
8:48 – Benjamin Graham will go back to it over and over and over again.
8:51 – The market is a voting machine in the near term.
8:54 – But it’s a weighing machine over the very long term.
8:57 – And if you take the perspective of viewing the free cash flow
9:00 – and discount every year of free cash flow back to the current day
9:04 – and you look out literally add infinum for 100 years into the future,
9:08 – eventually you’d understand the intrinsic value of that asset.
9:11 – Again, it’s a long term perspective.
9:13 – And I was focused on short term profits due to the price volatility.
9:16 – And that’s a good story, right?
9:18 – Meaning we actually made a lot of money
9:21 – when the volatility increased the prices significantly.
9:24 – But price volatility cuts both ways.
9:26 – It’s a double-edged sword.
9:27 – Mistakes can also be made in a volatile price environment
9:30 – when the prices drop significantly.
9:32 – That’s when folks really, truly often get emotional
9:36 – and they sell at the bottom of the market.
9:38 – They try to get out because the pressure is too much.
9:41 – And or they have not structured their portfolio
9:46 – in such a way that they can have liquidity events
9:49 – when market conditions warrant instead of having forced liquidity events.
9:54 – Let me give you a perfect example.
9:55 – When you face situations where the economy goes into a version of a recession
9:59 – and credit markets freeze and liquidity dries up
10:03 – typically in commercial real estate, prices drop significantly.
10:07 – And when prices simultaneously drop significantly
10:10 – and liquidity dries up, what happens?
10:13 – There’s massive refinance risk.
10:15 – And so when prices drop, we literally just saw this
10:18 – in the massive interest rate increase over the last handful of years
10:20 – in the early 20s of commercial real estate.
10:23 – What happened?
10:24 – People that were on floating rate loans
10:27 – over the first three-year term floating rate debt loans
10:30 – ultimately were put into a precarious situation
10:32 – because interest rates skyrocketed, the debt repriced
10:36 – and the value of the properties that they had acquired
10:39 – dropped precipitously.
10:40 – A lot of that equity ended up being just literally disappearing.
10:44 – And so let’s say that they owned 100 assets.
10:47 – Typically across a portfolio, we’ve come to realize
10:50 – that the 80-20 rule applies in a ton of different areas of life, right?
10:54 – Where 80% of the problems that you’re going to ultimately have
10:58 – on a daily basis derive from just maybe 20% of the assets.
11:01 – So the vast majority of your time, energy, effort, attention
11:04 – is focused on fixing the problems in the marketplace,
11:06 – the problem in individual transactions.
11:08 – When the market’s freeze and the properties drop in value,
11:11 – the only way to basically solve that riddle
11:13 – is to have liquidity events.
11:14 – You kind of have to forced, you’re forced to have sales,
11:18 – you have forced selling events, forced liquidation events.
11:21 – But in that environment, the only properties
11:24 – that people are willing to acquire that the market will
11:27 – typically be willing to purchase are the best cherry assets,
11:33 – which means you’re typically across the entirety of your portfolio
11:36 – forced to sell your winners and hold onto your losers.
11:41 – And this is putting you in a very, very difficult position.
11:44 – Peter Lynch has a great quote about this.
11:46 – Selling your winners and holding your losers
11:49 – is like cutting the flowers and watering the weeds.
11:53 – And so the mistake is selling into the price volatility
11:56 – when prices drop significantly.
11:57 – That’s market noise.
11:58 – The way to solve that riddle is to solve it further upstream.
12:01 – You can’t do it in the moment.
12:03 – You have to set up your business in such a way
12:06 – that you do not need to sell assets.
12:09 – You have structured your portfolio in such a way
12:11 – that you have reserves and solid liquidity
12:14 – on the balance sheet to ride out the next inevitable recession.
12:17 – So you have cash flow to ride out the recession
12:19 – and liquidity on the balance sheet
12:21 – to ensure that you don’t have to have forced selling events.
12:24 – And that’s how you make it to the other side.
12:26 – You know, double clicking into structuring your investment
12:29 – in such a way that you’re not forced to have liquidity events,
12:33 – forced to sell to actually get some of the gains
12:36 – and actually take some of those chips off the table
12:37 – and actually win.
12:38 – An example is, you know, if you’re going to go out
12:40 – and you’re going to invest in something much more,
12:41 – more speculative, if you’re looking to buy low and sell high,
12:44 – an example would be Bitcoin or gold or silver,
12:47 – which has, you know, had a massive run up
12:49 – in the last handful of years.
12:50 – But the only way to win in those style of investments
12:54 – is to actually sell.
12:56 – It’s 100% speculation.
12:57 – The definition of speculation from my personal perspective
13:00 – because the only way to actually receive the income
13:04 – and the retained earnings is by literally selling.
13:06 – If you simply just bought gold and you sit there
13:08 – and you look at it, it doesn’t do anything for you.
13:10 – If you bought an ounce of gold 100 years ago
13:12 – and you have that ounce of gold today,
13:14 – you still have an ounce of gold.
13:15 – You don’t have anything else from that.
13:16 – However, if you purchased an income-producing asset,
13:19 – a farm, a business, a real estate investment,
13:23 – you have cash flow that is thrown off
13:25 – and you can go do additional things with that cash flow,
13:28 – live life on your own terms,
13:29 – and then ultimately buy additional assets
13:31 – to build compounding over time.
13:32 – But Bitcoin is something that, obviously,
13:35 – you’re going to be in a situation
13:37 – where you become so much more emotional
13:39 – due to price volatility
13:41 – because the only way you can win is by selling.
13:44 – So you sit there and you stare at the ticker over and over
13:47 – and over and it’s the only way you can actually win.
13:49 – In commercial real estate,
13:51 – when you buy a property or you buy a farm
13:53 – or you buy a business that’s producing income over time,
13:56 – do you care if they give you a price at ticker-tatin’
14:00 – if they quote you on a price to sell that asset
14:03 – in the next day or a week or a month?
14:04 – It is completely irrelevant.
14:06 – We’re less focused on that.
14:07 – We’re not focused on what is the current market valuation
14:10 – of that asset.
14:11 – We’re focused on how much cash flow
14:13 – is this asset throwing off over time.
14:15 – So one of the problems are the issues that folks run into
14:19 – and the mistakes they make when ultimately determining
14:21 – noise versus signal is focusing on price volatility
14:26 – along the way.
14:26 – The second trap that folks run into is simply boredom.
14:29 – It’s literally getting bored.
14:30 – Activity feels productive.
14:34 – Activity feels productive.
14:35 – If you’re out there doing a bunch of things,
14:37 – acting as if you’re doing a whole bunch of stuff,
14:39 – right day trading, day to day basis,
14:40 – I’m sure that you know somebody that has worked
14:43 – you’ve worked with over time inside of your office
14:45 – that is always busy, but they are not productive.
14:48 – Okay, there’s a huge difference.
14:49 – At the end of the day, what we care about is productivity,
14:52 – the results, the end game.
14:53 – I do not care about being busy.
14:55 – The fact of the matter is, you know,
14:57 – selling because you want something new, it’s ego.
15:00 – It is not discipline.
15:01 – Back to what Charlie Munger said at the beginning of the episode,
15:04 – the big money is not in the buying and the selling,
15:07 – but in the waiting.
15:08 – Howard Marx, one of the best investors around,
15:11 – states that look, if you invest in a way that’s exciting,
15:15 – you’re probably not doing it right.
15:18 – It’s supposed to be boring.
15:20 – Boring is beautiful.
15:22 – Boring income wins.
15:24 – And if you find durably wonderful businesses,
15:26 – they’re supposed to be boring.
15:28 – They just print cash flow day after day,
15:31 – week after week, month after month, year after year.
15:33 – The second trap in selling is because you get bored,
15:36 – avoid that like the play.
15:37 – The third trap in selling is ultimately finding
15:40 – an arbitrary price target.
15:42 – You hit some sort of arbitrary price target,
15:45 – like the investment doubled.
15:48 – I hit my number.
15:50 – I’m going to lock in the profit,
15:51 – take the chips off the table.
15:53 – That’s trader logic.
15:54 – That’s fixed in flip perspective.
15:56 – Sage investors think like owners, not traders.
16:00 – So we just covered the noise.
16:02 – We just covered the three reasons not to sell.
16:05 – Now we’re going to go ahead and pivot to the three cell signals,
16:08 – the actual legitimate reasons
16:11 – why you would contemplate actually selling an asset.
16:15 – And the first one is that you have a broken thesis.
16:18 – Your long term investment thesis is now broken.
16:22 – The fundamentals have changed.
16:24 – Not temporary pain, not cyclical softness,
16:29 – but structural impairment.
16:30 – Something has materially changed in the marketplace.
16:33 – So I’ll give you a perfect example, right?
16:35 – We’ve owned real estate now in about 20 states,
16:37 – maybe a little bit more than that over time.
16:39 – And we actually had historically owned
16:42 – mobile home parks in the state of New York.
16:45 – You know, we prefer not to own in tenant friendly states.
16:48 – It’s more difficult to do business in those respective states.
16:51 – We’d much prefer to operate in more landlord friendly states
16:54 – for obvious reasons.
16:55 – But when we’d own there during that duration
16:59 – of the holding period, rent control was enacted.
17:02 – We much prefer durably wonderful businesses.
17:06 – Durable, wonderful, durable income
17:09 – and wonderful outcomes over long periods of time.
17:12 – Wonderful means long term same store and a wide growth.
17:14 – However, when rent control was enacted,
17:17 – the investment thesis broke.
17:19 – The long term macroeconomic tailwinds in place
17:22 – on that respective investment were no longer practical.
17:26 – Were no longer available.
17:28 – If you have the inability to increase rates above inflation
17:32 – at or above inflation, then you’re
17:35 – going to be in a precarious situation over time.
17:37 – If we’re capped hard at a 3% rent increase,
17:39 – and the inflation rate ends up being 4, 5, 6, 7%.
17:42 – If you compound that over a long enough horizon,
17:44 – you end up having what you have in a lot of different rent
17:47 – control departments in downtown Manhattan
17:50 – where literally they become slums.
17:52 – Because nobody is able to reinvest
17:54 – inside of those individual properties.
17:55 – I believe by now, both sides of the political aisle
17:58 – largely understand this.
18:00 – But it doesn’t change the fact that in the near term,
18:02 – it feels good to implement rent control
18:04 – to try to help tenants.
18:05 – They believe that that’s helping.
18:07 – But over the long term, it really adversely affects them.
18:09 – Nevertheless, the first sell signal
18:11 – is if you find something where the investment thesis
18:14 – has broken, you should sell that asset.
18:17 – The second sell signal is if you find
18:19 – a vastly better opportunity.
18:21 – And I’m not talking about 10% return versus 12% return.
18:25 – I’m talking about 10% return versus 25% return.
18:29 – That is a vastly better opportunity on the marketplace.
18:34 – Something that’s got 10% or 15% better returns
18:37 – with the additional downside protection
18:40 – that you demand on your original investment.
18:43 – Because opportunity cost matters.
18:44 – It most assuredly does, but it only matters
18:47 – when the math is dramatically superior.
18:50 – Because if you’re simply trading 10% for 12%,
18:53 – you’re not really including the massive hit
18:55 – you’re going to get in taxes.
18:56 – You’re not including all the friction costs associated
18:58 – with the disposition.
18:59 – You’re not including the additional reinvestment risk
19:02 – just because the performance says 12%
19:04 – doesn’t mean that’s actually going to occur.
19:06 – So it can’t be marginal improvement.
19:08 – It’s got to be material improvement.
19:11 – And the third and final sell signal
19:14 – is when you get an insane price.
19:16 – If somebody is willing to pay an insane price,
19:18 – we’d call it a Godfather offer.
19:20 – When the price has detached dramatically from the value,
19:25 – as I say, price is what you pay, but value is what you get.
19:28 – And when somebody is willing to pay you
19:29 – a Godfather offer as a prudent steward of capital,
19:32 – you have to actually stand up, take attention to that,
19:35 – and potentially sell if they’re willing to pay you a price
19:38 – that is above, and I’d say materially above,
19:41 – the intrinsic value of that asset.
19:44 – I’ll give you a brief example and then tell you a story.
19:46 – If all we’re going to go buy your house,
19:47 – let’s say your house hypothetically,
19:49 – it’s worth a million dollars, okay?
19:50 – Congratulations, boom, your house is worth a million bucks.
19:53 – And now we’re going to come to you,
19:54 – I wanted to buy your house, and I offer you
19:56 – the fair market value, and I’m saying,
19:58 – I will pay you a million dollars for your house.
20:00 – Would you sell it?
20:01 – The answer’s probably no.
20:03 – Why would I just sell for the fair market value?
20:05 – Honestly, it’s going to be an absolute hassle.
20:07 – I’m going to have to pay a lot of taxes along the way.
20:09 – I’m actually not going to walk away with a million bucks.
20:11 – I’m going to walk away with less than a million dollars.
20:13 – And now I got to go move, I got to go pack up on myself,
20:16 – I got to move the kids to a new school.
20:18 – It’s just going to be a hassle.
20:19 – I’m not going to do that.
20:20 – Well, what if I say I’ll pay you a $1.5 million?
20:24 – What if I said $2 million?
20:25 – What if I said $50 million?
20:28 – I’m willing to pay $50 million for that house.
20:30 – The point is, at some point logically,
20:34 – it makes sense to sell the asset
20:37 – when someone is willing to pay you an insane price.
20:40 – You’re not trimming because of a fear.
20:42 – You’re not selling because of noise.
20:44 – You’re selling because a symmetric risk
20:47 – has flipped on its head.
20:49 – And I’ll give you an example.
20:50 – You know, I told you at the outset,
20:51 – I was going to tell you a story
20:52 – about the best commercial real estate disposition in history.
20:56 – Sam Zell built the largest office portfolio in America
21:00 – through a company called Equity Office.
21:03 – He went around for decades
21:05 – buying trophy assets in the best main and main locations
21:08 – in every large metropolitan city across America.
21:11 – In 2007, Blackstone came along
21:13 – and made an offer to ultimately purchase that portfolio.
21:18 – Sam Zell did not want to sell it.
21:19 – It literally took him decades.
21:20 – It was his baby.
21:21 – It was his trophy.
21:22 – It was his pride and joy.
21:24 – He did not want to sell the portfolio.
21:25 – So he declined.
21:27 – They came back with another offer, higher.
21:33 – He declined again, but Blackstone was relentless.
21:35 – They would not give it up.
21:36 – This was the heyday of the run-up
21:39 – of the real estate market in the mid 2000s.
21:41 – And at some point, Sam Zell thought to himself,
21:44 – there is a price at which I would be interested
21:47 – in willing to sell this portfolio,
21:49 – but it’s not a good price.
21:51 – It’s not even a great price.
21:53 – It must be a Godfather offer
21:55 – and offer that is so good
21:56 – that I literally cannot refuse it.
21:58 – So the next time they came into his office,
22:00 – he took out a piece of paper
22:02 – and he wrote down a number,
22:03 – slid it across the desk.
22:05 – And the courier took that paper
22:07 – back to the office at Blackstone.
22:09 – Sam Zell had informed them that this is a take it
22:11 – or leave it Godfather offer.
22:13 – It was $39 billion and Blackstone accepted.
22:18 – Zell looked at the offer and basically said,
22:20 – look, if somebody is willing to pay this much,
22:23 – I would be irresponsible not to sell.
22:27 – So he sold the company for $39 billion
22:31 – and seven months later,
22:33 – the financial crisis began
22:35 – and the office values collapsed.
22:38 – And that’s the lesson.
22:39 – When price detaches completely from reality,
22:43 – you don’t argue with the market.
22:45 – You take the gift and the one line lesson to walk away with
22:49 – is to sell when the price is ridiculous.
22:53 – If somebody is willing to pay you a Godfather offer,
22:56 – you should take it and run with it
22:58 – and reallocate the capital into another
23:00 – durably wonderful business.
23:02 – Noise versus signal,
23:04 – when making a decision as to whether you want to hold an asset
23:08 – or sell an asset,
23:09 – you have to understand the difference
23:11 – between noise and signal.
23:13 – We’ve walked through the three selling traps
23:16 – of one, price volatility,
23:18 – two, boredom and three, arbitrary price targets.
23:22 – And we’ve walked through the three sell signals.
23:24 – You need to know the three sell signals.
23:27 – First, a broken thesis.
23:30 – Second, a vastly better opportunity.
23:32 – And third, an insane price, the old Godfather offer.
23:37 – And if you do hear the signal, that’s a good thing.
23:39 – It means you’re obviously gonna walk away with a win.
23:42 – That’s a beautiful thing.
23:43 – But if you do hear that sell signal, please do sell the asset.
23:47 – And when you do,
23:49 – you have to ensure that you have a plan.
23:52 – And that plan has to be
23:54 – in the most tax efficient structure possible.
23:58 – And that’s why in the next episode,
23:59 – we’re gonna dig into one of the sage investment principles
24:02 – that is defer, defer, delete.
24:05 – You never wanna stop the compounding.
24:06 – So we’re gonna defer, defer, delete
24:08 – to the best of our ability so we can keep
24:09 – as much of that harder money in your pocket as possible
24:12 – and help you compound that
24:13 – over an exceedingly long period of time.
24:16 – So that we help you generate cash flow
24:18 – and build legacy wealth in a tax efficient manner.
24:21 – Because that’s what I’m trying to do for my family.
24:22 – I’m gonna help as many people as possible
24:24 – do that as we can along the way.
24:25 – All right, we’re gonna get out of here,
24:26 – but we will see you on the next one.
24:28 – Until next time, you’d be great.