What’s going on guys? Brandon here, we have a special one. We’re gonna be doing some more stuff. We’re in the Home Office today and I lost my markers, which is awesome. We’re talking about valuation channels and some really fun. This is something that I get asked about a lot and there’s a lot of people whether in the real estate industry or not. And they asked me why. I say there’s a down market right now, why it’s not a great time to buy a home and invest in real estate. There are great times and there are bad times and there are good times and there are decent times to invest in different kinds of markets. I want to talk about the valuation channel today. Again, this is our Tuesday Q and A’s where we do our macro approach to everything, a 30,000-foot view and it’s questions that we get regarding that because we do our insiders reports and we look over that stuff.
But I talk about this a lot. I tell people, and really, the biggest question I get is I call myself a cycles investor. I’m not a real estate investor, I’m not a stock investor, I’m not any of these specific types of investors. I’m just cycling investor. I don’t discriminate. I don’t care what asset class it is. We have businesses, we have real estate and we have commodities that we own. We have numerous different asset classes that we own, but we really, and I have no stock, no paper actually. So, that’s the one thing other than cash, but we don’t hold any specific type for a purpose that you might think. I guess it’s probably the best way to say, I don’t discriminate. We go after things that are undervalued and right now the biggest undervalued asset is commodities. It’s really truly gold and silver. If you want to dive down to the third level, silver is the most undervalued asset there is. So this is again, the valuation channel and when I talk about this with people a lot, and it’s again, it’s a question I get a lot of times when I’d say I’m a cycles investor. You know, this other thing, this really quick, thing of this is evaluation channel we call Mike Maloney is one of my biggest mentors and it’s something that I’ve been studying now for about eight years and been trying to accumulate undervalued assets since then. These are the markets, right? So things that are generally inverse of each other, you know, a lot of times stocks and real estate are pretty closely linked together. But then you have commodities are opposite.
So pretend the blue line is the DAO or like paper real estate, something like that. And then we’re going to pretend that the red line is, we’re going to say that this is no gold and silver or commodities. So we’re going to say that. So when these asset classes are up, and again, business, is the other asset classes kind of hangs out there and it kind of depends on what kind of market it is. Kind of depends on what business it is. It’s a whole different animal. We’re not going to talk about that today, but generally when the DOW real estate is up, gold and silver, commodities, gas, oil, wheat, all lot. That stuff is usually down a lot of times. A lot of times they go inverse of each other, especially gold and silver, and silver is very undervalued right now.
Silver gold ratio because you know, we have silver, you know, 15, $16 an ounce spot pricing gold’s at 12, $1,300 and then DOW real fear breaking records. So we know that this varies. A simple explanation and these are really high and these are really low right now. And then to take it a step further, like I said, you have gold and silver ratio. So you had to take the gold divided by 16. So $1,300 an ounce. And I haven’t even looked in a few days. I don’t even know what they are. It doesn’t matter. The point is you would take the price of the gold an ounce and then you take the price of the silver ounce and divide it and then you would get in it. Right now it’s been about 80, so I don’t know exactly what that math is, but right now it’s been about 80 over the last couple months, right about 80.
So, when you get down into the twenties and thirties, that’s when gold is really a great buy and it is really starting to become an awesome thing to buy. But when you’re up in this ratio where you can get 80 pieces of silver for one ounce of gold. That means silver is extremely undervalued. So it was a very quick ratio to see, to utilize and see what is up and what is down. So again that’s the goal, that silver, you divide it and then that’s the ratio you get. So you might get 20, 50, you might get 80, you know when it’s in that 50, 60 range, it’s fairly balanced. You know, you can kind of get away with either one, but when you’re in that 20, 30 range, anything less than that you want to be buying gold. And when is that above that you want to be buying silver.
So right now silver is just incredible. So again, when we go up here, we go to the markets being inverse. So when the Dow and real estate are are coming down, that’s when these are going up. Go back through history and like I said, we’re going to figure out how we can do more training on this over time and actually show real graphs and not have to try to recreate these things from my mind and all the things I’m studying and the notes I have. But I’m going to give you actual numerical examples, not the equations but the actual stats of the gold-silver and in really wanting a great chart actually when it shows a house in what you can get a house. If you spent $20 on gold piece in 1920 and then you had that same amount of money invested and you went through these valuation channels and what you did was at the peak, so something like right now, if you jumped out of the DOW or paper IRA, 401k, stocks, bonds, mutual funds, he jumped out of that, into this in right now into gold and silver commodities, and then you wrote that up while this crashes and you kept repeating that process over and over again, you can get out of that valuation channel.
The biggest thing is any asset class you’re in. If you stay in this valuation channel, if you just keep trying to ride this up and down, you might make a couple of percent over time, maybe some inflation or something like that. You might make when you come out here at the end of your life, maybe a second or third generation of your kids, you’re going to come out maybe a few percents ahead, five percent ahead, but you’re going to be stuck in valuation channel your entire life.
Why be a cycles investor?
The reason I am a wealth cycle of person, a cycles investors, because I want to escape the valuation channel, right? You want to be outside of the evaluation channel. You want to be writing this up way the entire time. So instead of just continually bouncing off like bumpers on a bowling alley, you are writing, you’re selling off into this and then you’re writing this up, you’re selling out so it would look like this.
So you ride that off. If you took these peaks and you kept writing these up, what would that look like? Right? So you have this peak here, right there, and then you ride again, this, the other peak. So once golden in the DOW’s bottoms and you sell out of gold and silver or commodities and you come back down into the down in real estate, you come up, you’d ride that up and then you sell off again. Again, when the market turns again and DOW Real estate are overvalued and jumped back in and then you would ride. Shouldn’t make that a little bit longer, but you ride that up.
So you can see that you’re riding these peaks up, you’re hitting these peaks and you’re catching them every single time and you were trying to ride this valuation channel up instead of always just bouncing back and forth. Think about what happened last time in the or the great recession. How many people do you know in your life, this is the greatest thing I can, I can leave you with today, do you know that had a 401k had stocks, bonds, mutual funds, investments, all these things that we were taught we needed to grow up with and have how many people lost their ass? How many people lost 50 percent, 60 percent, 40 percent, 30 percent? Just now we’re getting back maybe to that place they were.
10-Year Cycle Valuation
This is that valuation channel. Over the last couple of years. He’s really climbed a lot and then now he’s gone down again. Well, guess what? Now, this is the client. Now we’re, what, 2018, right? These, the market goes in seven to nine-year cycles, you know, basically eight to 10-year cycles. So you have this period right here, this beer right here, and this will probably be something like 2028. Again, you know about that, it’s going to be right about that. So it’s again, this could be happening next year because this was, 08, 09. This could be, maybe it’s 2019, but again this is the whole point of this is the, is the pattern when we do our market updates because we want to see the pattern of what’s going on in the real estate market in a local area. Well, listen, what’s going on in a broad 30,000-foot view, right? So is this making stuff making sense guys? I really hope. I hope this is making sense, kind of sinking in. Let me know the questions you guys have. I love the questions that we get all the time here. I get so many emails from you guys and Snapchats and Instagram DM’s and things like that. But throw your comments in here, if you are seeing this on the replay later or on the YouTube channel and we will get to them that my promise to you is we will get to all the comments. So again, that is a seven and nine, eight to 10-year cycle that we go through and if you come out of that, like I said, most people, what do they do? They stick, anyone you know, think of anyone, you know, maybe it was you, you had this, you know, this fund that you’re invested in or as 401k or whatever it may be and you wrote it up and then it came down and then, oh, it looks like it’s going up again and it’s getting up there. And then things were exciting.
Riding Gold and Silver
Well, guess what’s undervalued right now. You know, we have gold and silver right here. Gold and silver are very undervalued and you can get a ton for your money to your currency, I should say. You can get a ton of your currency. So taking this wealth cycle and really taking advantage of them buying out. No, this is 2018 right here, right? So selling out and then jumping into gold and silver right here and then riding that explosion up when that does happen. And then in 2000, you know, 28 or whatever that is, you know, again, these peaks, that’s when you want to jump in and out of these cycles when they’re never going to catch it right away or the exact top right. You want to come out around the top, you know, if you can jump out here or maybe even here if you’re lucky, but you generally want to come out somewhere in here or somewhere in here. You want to be before things get bad, you know, because once things go bad, you really don’t know what’s gonna happen.
So I hope that makes sense guys. Like I said, let me know what questions you have. This is the stuff that really gets me going. This is what I love helping our clients with, guiding them in the right direction and like I said, we have a lot of people that we haven’t done business with them this year because they’ve held off. They’ve taken our advice, they’ve listened to our stuff and they are holding off. They are making different plans because they know things are coming and I really feel it’s my job. Yes. One of the businesses we have is selling real estate, but also we invest in real estate. We have other businesses that do that and help businesses grow and things like that. We have a bunch of other things we’re doing right now and our whole job I think our true job is a media company. It’s really, to tell the truth, and to disseminate information and put as much value as we can because we know in the end that things will be taken care of if we take care of the people. So I appreciate you guys for your time and energy because it means the most to me. It’s the most important thing we have. So, uh, I appreciate you joining me here in the Home Office today and I’m looking forward to seeing you soon.