Category: Insights

This post is part of a series:

Part I Part II Part III Part IV Part V Part VI Part VII Part VIII Part IX

When we left off yesterday, we were borrowing dollars against our Bitcoin to buy real estate. 

By doing this, we didn’t have to pay taxes on our capital gains. We could leverage their entire value into acquiring assets that produce monthly cash flow. 

That’s the key. The cash flow has to pay off the debt.

This is just one way in which debt and taxes go hand-in-hand. And as I mentioned yesterday, real estate is an incredibly tax-advantaged asset.

The way the tax code is structured, we should never have to pay taxes on our rental income. No kidding. 

What’s more, there’s a way to generate massive paper losses for tax purposes using rental real estate. By paper losses, I mean non-cash losses. They go on the tax return, but you didn’t actually lose money. In fact, you made money.

Think about what that could look like…

Imagine writing off $100,000 against your active income. That means whatever the gross income number at the top of your tax return is, you subtract $100k from it. Then you pay taxes on whatever’s left.

That’s the power of rental real estate, if done correctly. 

Continue reading “How I Came to Love Debt and Taxes: Part V”

This post is part of a series:

Part I Part II Part III Part IV Part V Part VI Part VII Part VIII Part IX

When we left off yesterday, we came to the realization that the “nest egg” approach to retirement was a scam. That’s because it puts us in a fragile situation unnecessarily.

Plus, it takes a really long time… with no guarantees.

Fortunately, there is a better way. It’s an approach that puts us in a much stronger financial position. And it does so in a far shorter period of time.

It’s the monthly cash flow approach. Instead of focusing on capital gains, we focus on building monthly income streams.

But wait a minute. 

Readers may be wondering, what does any of this have to do with debt and taxes? Isn’t that what we are supposed to be talking about?

Well, dear reader. Stay with me. We’re building up to that crescendo right now.

If you recall from Part I, I learned a single overarching principle from my experiences as an investor. Focusing on monthly cash flow is part of it. But only part.

The secret is much more nuanced. I’ll explain by getting back to my Bitcoin conundrum.

So I’m sitting there looking at my Bitcoin stash, and it’s a large number. At least large for me.

And my problem was – how do I access this value without getting hammered in taxes? It’s a big number now, but after taxes it will be substantially smaller.

Then I discovered the solution. It was debt.

Continue reading “How I Came to Love Debt and Taxes: Part IV”

This post is part of a series:

Part I Part II Part III Part IV Part V Part VI Part VII Part VIII Part IX

When we left off yesterday, we were pondering a conundrum. What do you do when you have large investment gains on paper, but you know that you’ll have to pay a massive tax on them if you sell?

After all, the whole point of investing is to become financially independent. But if you constantly lose 15-30% of everything you make to taxes, it’s very hard to break out. You lose the power of uninterrupted compounding.

In my case, I had some large gains in Bitcoin. And as I watched my Bitcoin holdings appreciate in value, I started to realize that we had been going about it all wrong.

We have been conditioned to think that the key to getting out of the rat race lies in building a big “nest egg”. That’s been financial planning 101 for decades now.

As such, we are taught to chase capital gains. That’s why investors obsess over portfolio returns. 

It’s dated now, but I remember Dave Ramsey telling people to slog their money away in mutual funds that would grow their wealth 7-8% a year. That’s the nest egg mindset.

Then you get things like the “Rule of 72” and other slogans that further pushed the capital gains approach. It’s all been a scam. I’m not mincing my words on that.

Continue reading “How I Came to Love Debt and Taxes: Part III”

This post is part of a series:

Part I Part II Part III Part IV Part V Part VI Part VII Part VIII Part IX

When we left off yesterday, I had just been burned by my first investment strategy –  buy the stocks Merrill Lynch says to buy. 

In fact, one of those stocks went bankrupt not long after Merrill touted it. That was my wake up call. 

After reflecting upon this, I pivoted to a “hard assets only” strategy. This entailed making some big changes I had been wanting to make anyway.

First, I bought a five acre property way up in the mountains. And then I bought a bunch of gold, tools, provisions, and stored food. The idea was to become as self-sufficient as possible.

This one was hard to explain at the time. But it sure came in handy when the Covid regime launched its attack on us in 2020. 

And our provisions remain an asset today. They will come in handy with supply chain disruptions and the manufactured food shortage potentially heading our way in the coming months.

But the problem with the hard assets only approach is that it only goes so far. You only need so many tools and provisions. Then what?

For me, the answer was Bitcoin. 

Continue reading “How I Came to Love Debt and Taxes: Part II”

This post is part of a series:

Part I Part II Part III Part IV Part V Part VI Part VII Part VIII Part IX

I’ve experimented with four distinct investment strategies over the last fourteen years. And as one would expect, I learned a few valuable lessons from each strategy. That’s always nice.

But far more importantly, I learned one single overarching principle. Perhaps secret is a better term. 

What I stumbled upon is something the financial press desperately doesn’t want us to know. CNBC would go the way of CNN+ tomorrow if this got out.

The more I think about it, the more I think we’ve been spinning our wheels unnecessarily. As a society and as individuals.

Simply put, the way we’ve been told to go about things is wrong. If our goal is financial independence – financial freedom – there’s a better way. 

I’ll explain with a little context. It starts at the beginning of my financial journey…

My first investment strategy was simple. I bought whatever stock Merrill Lynch’s free research reports said to buy. 

The beauty of this approach was in its simplicity. Every time my paycheck hit, I went online to find out what Merrill was touting to its low-dollar clientele. Then I punched in the ticker and pressed buy.

This is how I found the most valuable investment I ever made. The company was called A123 Systems. It was developing lithium-ion batteries for hybrid electric vehicles.

Continue reading “How I Came to Love Debt and Taxes: Part I”

I have had something of a revelation over the last year or so.

Many of us have seen the decline of civil society in America coming for years now. In fact, this is something I’ve been concerned about for nearly a decade.

Of course, this view didn’t win us any friends at backyard barbeques. At best we were labeled unpatriotic. At worst, conspiracy theorists.

Fast forward to today and the decline is evident to anybody who is even half paying attention.

Even those who enthusiastically supported the Covid regime at first – the masks, the lockdowns, the experimental injections – many of those people are starting to wake up. They have seen things that they can’t unsee.

In many ways this is validation for the concerns I’ve had for years. But I’ve also realized that I got something very important wrong.

Simply insulating yourself from the decay isn’t a solution. And thinking that somehow a better society will blossom from the rubble by itself is likely a fantasy. The late Gary North’s words ring in my ears here:

You can’t replace something with nothing.

That’s where I went wrong. I thought the game was simply to ride out the storm from safety and isolation. But that’s not living.

Have you noticed that society is rapidly self-segmenting, right before our eyes?

Continue reading “Where I Went Wrong”

If you’ll permit me, I am trying something new here.

I am following up last Friday’s communication – my first journal entry in over three years – with a light-hearted piece of a different format.

I’ve been about as unplugged as one can be for the last five years. I would skim through the headlines on Zero Hedge… and I would update the plug-ins for Zenconomics.com, but that’s about it.

For all other extents and purposes, I have been disconnected from the world.

In fact, one of my crowning achievements came a year or so ago when my publishing network asked me to interview a gentleman they were considering hiring as an analyst.

After I agreed to do so, I guess they wanted to give this guy some background on me. Apparently, the common protocol for this is to send over LinkedIn profiles ahead of time.

I don’t think this way, but it makes sense. They figured this gentleman should have a basic picture of who he would be speaking with. And LinkedIn would provide that picture.

Except they couldn’t find me anywhere on LinkedIn. Or Facebook. Or any other mainstream social media platform.

So when I get on the call with this guy he gave me the full scoop. “Yeah, they said they were going to send me your LinkedIn info, but they couldn’t find it. They told me you must be pretty dark. I wasn’t sure what to make of that.”

I was so proud.

The joke’s on them though. Had they searched MeWe, they would have found me.

Continue reading “Hope For the Green Revolution”

“By their fruits shall you know them.” – Jesus of Nazareth

The S&P closed today’s trading session at $3,961. Gold closed at $1,721.50 per ounce. Crude Oil closed at $94.65 per barrel. The 10-year Treasury rate closed at 2.78%. Bitcoin is trading around $22,625 per BTC today.

Dear Journal,

It has been over three years since I’ve last written… and boy does the world look different.

In fact, I would wager that 2019 feels like a lifetime ago for many of us. It seems like we’ve experienced a fundamental shift since then.

For example, Bitcoin was trading around $8,000 when I last penned a journal entry. And we were seeing signs that momentum was picking up.

Fast forward to today and Bitcoin has crashed by over 70%. In just eight months. It now trades at just $22,625.

Imagine that headline three years ago: “Bitcoin crashes to $20k!”.

Yes, dear journal, the world sure is different these days. And I have great news – what they call “green” energy is now viable. Check it out:

That’s right – I now have my home office fully outfitted with solar energy. I call it the solar shed.

And it’s 100% off the grid. We are producing all of our own electricity up here. Pretty cool.

What’s more, this process taught me a thing or two about electrical systems. I shadowed the brilliant gentleman who installed it for me… and it’s really not as complicated as it appears. Though don’t expect me to do it myself.

Here’s a look at the power center that makes it all go:

Continue reading “The Secret of Green Energy”