Welcome back, everyone. Thanks for joining today.
On the Joseph Carlson show. We have an interview from Warren
Buffett and Charlie, Munger. The two legends themselves.
They sat down for about 45 minutes in a CNBC interview and
they were asked about a variety of different topics.
Now, I think the questions were interesting but I think what was
far more interesting was there. Take their actual answer to a
number of these questions. For instance.
Charlie Munger was asked about Jack, ma disappearing in China
and he gave a different take than what I thought about that.
He is on a different. Right side of that issue with
Jack ma disappearing. He also reiterated his view on
Robin Hood, calling it a gambling, parlor masquerading as
a respectable brokerage and that it's beneath contempt.
So we're going to go into why he thinks out of Robin Hood and
many other questions, and many other things that were
highlighted in this interview. And then another story I think
is worth looking at is one of the most incredible engineering
and maybe abuses of tax system. This is petered he'll who use
this completely legal way. A of turning the everyday middle
class Roth IRA retirement account into a five billion
dollar tax free piggy bank. That's right.
He took the Roth IRA that you're only limited to six thousand
dollars per year of deposits and he turned that into over five
billion dollars that now he'll be able to withdraw when you
turn 60 completely tax-free and this outlines how he was able to
do that. So in this episode, I'll be
giving my thoughts on how he accomplished this and going into
the details of it. So with that, we have A lot to
jump into in this episode before we get into all of it.
It always helps out. If you like the video the little
thumbs up button that helps out the YouTube algorithm.
Now, let's go ahead and before we jump into those news items
with the Warren Buffett interview.
Let's go ahead and look at my portfolio.
This is the passive income account.
This is my personal portfolio. I share the value of it, the
gains and losses every single week.
So on the thumbnail of every video in this channel is the
value of this portfolio and that goes up or down.
If the value of my portfolio goes up or down.
I find it almost every month. So I'm constantly putting money
into this portfolio, trying to grow it.
But if the market takes a huge dive, this number will go down.
You can look at the videos around March of 2020.
When we had coronavirus and and that brought down the markets,
the value went down and on the thumbnails, the value went down
dramatically. So I show the progress of this
portfolio every single week, week by week.
That's really one of the big things with this channel is if
you want to follow along a real portfolio and see how things go
over year. Ears of time.
I'm going to continue to track this and build it as my primary
Investment Portfolio. The goal of it is to grow a
stream of passive income and every single company or ETF that
I invest in helps accomplish that goal.
So I've different income funds like the covered call ETF a
different real estate holdings and I even have some tech
companies that are long-term dividend payers like Microsoft
and Apple, but every one of these companies pays dividends
and all that, money flows, back into my account through the cash
balance this $158. Amen, just through dividends.
If I look at different ways to track this.
I have a spreadsheet that I offered a patron members that
helps track the growth of this overtime.
For instance. It has a section that shows you
your upcoming dividends. I can see that Nikes going to
pay me, nine dollars on the first of the month.
So the first of next month, I'll be paid $9.
Then we have tiro price on the 7th, hang me $30, then we have
Vici. This is a new holding paying me
$108 on the 8th of next month. Then we have store Capital with
136. That's a Reit.
That's a big dividend payer. Then we have realty income
paying me $15. That's a monthly payer.
And then we have MGP MGM Growth Properties paying me $21.
And this is all the ones that are officially declared right
now. So this isn't projected income.
This is really what I'm going to be paid over the next couple
weeks. Now, one thing I have to mention
about this style of investing which is dividend growth
investing is not only has it been proven to give very good
stable reliable returns with limited downside and lower
volatility, but it's also an incredibly fun.
Addicting form of investing. It is an addicting form of
investing if I go to my activity feed and filter just by the
dividends and see how much money is routinely constantly flowing
into my account. This is fun.
If I look at Visa, they paid me on the first of the month.
$7.49. Thank you Visa.
Then we have jeppie the covered call ETF.
They paid their monthly dividend of $110.
Then we have Texas Roadhouse. They paid me $15.
I can go and buy a meal at Texas Roadhouse with the money.
They just paid me then we Johnson & Johnson, they paid me
$14, Microsoft paid me there, $34.
Thank you for that. Microsoft.
Then Target paid me $7. Nextera energy a utility
company. Paid me $8.
Then we have realty income Corp. They paid me $15.
That's a monthly dividend. Then we have some big ones Home
Depot, paid me $52. That's enough that I can go
browse around and Home Depot and buy some stuff.
Fifty-two dollars is a lot of money.
It's like having a gift card to Home Depot and they pay me this
four times a year. Then we have Dominion Energy $41
for them. We have Schwab's dividend ETF.
Seh. Di.
This one. Paid me a hundred and forty
dollars and then we have T Rowe Price, which paid me $11 and
keep in mind that this amount of dividends is just in the past
month. This is the past 30 days next
month. It will be the same thing.
Another slew of companies different companies that pay me
dividends and this goes on month after month after month.
And in fact this month, these amount of dividends is one of
the lowest paying months of the year.
So next month. It should be quite a bit more.
Now this type of investing where I see the money up here.
My cash. Without any type of interaction
from me. It just continues to grow
without me doing anything is very addicting.
It's a fun way to invest. It's completely passive and I do
think that dividend growth investing does have very good
risk-adjusted returns some of the Holdings.
I've been focusing on more recently are in the higher
yielding category. I'm buying one real estate
company called Vici. They own iconic,
indistinguishable very complex properties like the Venetian and
Caesars Palace in Vegas. They collect rent from them,
every single quarter and they distribute that out to their
shareholders, which is anyone that buys a stock.
And then outside of ichi, the other Holdings I've been adding
to right now RSC HD Schwab's u.s.
Dividend Equity ETF. I sold out of AT&T and added
that fifteen thousand dollars to this holding.
So that's why I have S CH D. This one.
I think will do well over time and then we have JP, JP Morgan's
Equity premium income fund. This one pays out a very high
yield every single month by doing a covered call selling
strategy. So so these are two Holdings
that I think will increase my income through dividends
dramatically. Those are the three Holdings
that I've been building. Up recently Vici geppi and seh.
Di, and I'll continue to add to each of these overtime.
Now, if you want to see my entire portfolio, there's a link
in the description of this video.
That's updated. It allows you to click into any
of these categories and see which companies I'm holding.
So I'll put that link in the description for you.
Now moving on. We have an interview from Warren
Buffett and Charlie Munger talking about a variety of
different subjects. And I think there's some
interesting things to highlight from this.
Charlie munger's asked specifically about Jack, ma the
Chinese banking system and his thoughts on that compared to the
The u.s. System.
I don't want the all of the Chinese system, but I certainly
would like to have the financial part of it in my own country.
He actually says that he likes the Chinese system in terms of
how they regulate their financial companies.
And he thinks the way that we regulate our system in the u.s.
Is way to lakhs. Although Aunt Financial was
bringing banking to a huge unbanked population before.
I mean, there were things that they were doing that.
I know but you don't want to sway her to run by the banks
have the Implicit guarantee of the government and you don't you
don't want to let any swimmer rob a bank.
Now, you can look up the definition of swinger and
there's a couple different definitions, one of which I do
not believe fits within the context that Charlie Munger is
using here. It doesn't seem to fit the other
one being a lively boisterous person that goes to lots of
social events. I think is more appropriate with
the way that he's using it but interesting phrase for him to
use he goes on explaining why he doesn't want a swinger to be in
charge of the banking system. System.
Oh, what about what they've done to Jack?
Ma. He's kind of disappeared as
well. Yes, but Jack was one of the
swingers, so you just got his, they said the hell with you.
He basically got damn speech when he said to her one party
state, where you guys are a bunch of jerks blown at what
you're doing, and I know what I'm doing and I want to do it
better and he was going to wade into Banking and no rules and
just do whatever he pleased. He also have drunk a lot.
That is gamma is did the right thing.
They just called in Jack Vaughn. Say, you are going to do it.
Sonny, Charlie. Munger goes on to expound.
What he thinks is the problem in the US with the banking system.
He terms, it Shadow banking, which is basically a term for
fintech people say, well, it's the unbanked.
Well, the whole leveraged. Buyout lending aberration
practically left, the banks and went to Shadow banks in our own
country. He's right?
And this is clearly what's going on right now?
Banking is increasingly being done by non Banks.
If we look at M1 Finance for Instance and one Finance is not
a bank. It's a brokerage, but I can go
to borrow and I'm eligible to borrow up to ninety seven
thousand. Nine hundred dollars at 2% 2%,
compare that to j.p. Morgan or Bank of America, or
Citibank or Wells Fargo. None of them can compete with
this, not even close. Even if you have a brokerage
account with them. None of them can compete with
this rate banking is being done by non Banks like em on finance
and frankly, they're doing it better.
They have better more convenient technology.
Easier to use. And even their rates in many
cases is much more appealing than traditional Banks, but
Charlie's primary concern with all of this is the lack of
Regulation that exists with fintech companies.
It hasn't caused any big trouble yet, but I'll be amazed.
If it doesn't. Well, Jamie dimon is said that
and look out for the some of the fintech areas that they're.
Yes, I agree with Jeremy down on that.
I don't think allowing all this winners in the world act.
As though their Banks is a good idea.
Jamie. Dimon has brought up this same.
Concern. Many times saying that banking
is done by non Banks. They don't have to play by the
same rules. They don't have the same
regulations. And if this goes on for too
long, all these unregulated fintech companies in the
financial realm, he thinks it could cause systemic risk.
Now on the subject of fintech, Charlie munger's asked once
again about Robin Hood. Last time he spoke on this.
He said that Robin Hood is not good for civilization.
He didn't say anything positive about it.
In fact, he was heavily criticised as being elitist.
Now, he's had some time and maybe try Hunger has come
around, updated his opinion, on it, and changed.
His thoughts on Robin Hood. So, he's asked, once again,
about this brokerage. Here's his response.
Maybe we should talk about Robin Hood and some of the areas that
come up beneath contempt. Okay, so it doesn't seem like
his opinion on Robin Hood has changed too much.
Why? Well, it's a gambling parlor
masquerading as a respectable business.
Well over a gambling parlor, but it is a gambling parlor.
It's not incurring people. Encouraging people to buy.
A very, very, very low cost, index fund and holder for 50
years. I will guarantee you that you
will not walk in there. Get that advice instead you'll
get advice on how you can trade options.
And and they'll tell you, that is telling people are paying
commissions when the commission's are simply
disguised in the trading. It's basically a sleazy
disreputable operation. So, Charlie Munger doesn't seem
to care too much about the backlash.
She received last time. He criticized Robin Hood.
He's doubled down on it. He It's a gambling, parlor
masquerading as a brokerage, a reputable brokerage, and it
actively entices people into short-term strategies that make
Robin Hood a lot of money, but they don't generate a lot of
wealth for the people pursuing these strategies.
So his opinion on Robin Hood, hasn't really changed for the
better. If anything.
It's gotten worse. Now, moving on we get to one of,
I think the most incredible parts of this interview.
They talk about how they purchased a difficult business,
a very difficult business, one that's more difficult to run
than they anticipated. It was a mistake to purchase.
It and they praised the people that sold it because they said
it was smart of them to sell this business, but we can see we
soon realized it was about to lose what?
Yeah, and so we we sold a department store.
It went out of business in 1983, but hussars which was the souks
talking department store. They went out of business in not
around 1985 or sick, they're gone and the people they're
quite understandably wanted to build more Branch stores, but
you don't want to put more money into a business.
That's Just a value. Now.
We put six million dollars in capital on that and the dumb
decision everything. So they described it as this
difficult declining business, that's destined for failure.
That the people that sold it, where the Smart Ones, they made
a mistake buying it and now they needed out.
So, they sold the company at a loss collecting, six million
dollars and here's what happened with that.
Six million dollars. That's 6 million.
What would it be worth now Charlie, they got four tenths of
Bashar great many billions, so it's tens of billions.
Yeah, out the department store. It.
Succeeded. We'd have a nice little
businessman. It sounds a little track.
But because it failed, we've made 2500, we very much more
than 25 billion in that didn't look like that.
I Bill had that business, succeeded there, six million
dollars would have been wrapped up in that business and they
would have had whatever profits that business generated.
But since it failed and they had that six million dollars to
reinvest into different businesses.
It ended up growing to well over 25 billion dollars.
So the failing of the business Actually ended up to be a good
thing. But at the time it didn't seem
that way. This is one thing that I think
is important to highlight from Warren Buffett and Charlie
Munger because when they have a failing business, they sell it.
They don't hang on to a failing business just because it's
buy-and-hold Diamond hands, never sell.
If the business is failing, if it's declining, if it's destined
for failure in the future, they sell it.
And look for better opportunities.
Now, the last little thing that I'll highlight from this
interview that I thought was interesting, was that Charlie
has fallen in love. Of with zoom and this is brought
up at the last part of the interview.
She asks him. Why he likes Zoom So Much
Charlie. I hear.
You're pretty Adept at Zoom. Oh I fall in love with them.
How often do you talk to people on Zoom?
At least three times a day. I made a deal on Australia.
I think Zoom is here to assist it just adds so much
convenience. Now.
Buffett does point out that Charlie munger's in a little bit
different of a situation, the most people because he's 97
years old. So he's more reliant on video
conferencing just because he's less.
Mobile. He's not as mobile and agile as
they used to be. Now, even though he's he's
heaping Praises on zoom in particular.
I don't think that's a reason to run out and buy stock and zoom
just because Charlie Munger likes it because they do have a
long list of competitors that are well, funded and ferociously
competing with zoom. Right now.
You have apple with FaceTime. They're making big changes that
are mimicking. Zoom.
You have Microsoft with teams. They're going to make that at
the Forefront of their new operating system.
You have course have other companies like slack, you have
gue I'll meet you have lots of different alternatives to zoom.
So we'll see if Zoom can pass the test of time right now.
They're basically competing directly with all the big tech
companies. So that's some of the things
that I thought were the most interesting from this interview.
If you watched it and you found other things, let me know.
Now, moving on, we have to jump into this article called the
Lord of Roth's. This is one part of a series of
articles that have come forth that highlight how the rich and
wealthy. People that have billions of
dollars are using very creative ways and loopholes to Shield
them from paying any Axes in some case.
They're making billions of dollars of real money real
realizable gains and paying no taxes on that money.
This is just one segment of it. One part of this overall series,
and this one's called the Lord of Ross and it highlights Peter
teal. Now, if you're not familiar with
Peter teal, he is one of I think the smartest people in the
world. He's created a lot of companies
like PayPal can name one. That's a pretty decent company
that he founded his also started palantir.
Another, pretty cool company. That you may have heard of if
you've been on YouTube for more than Five minutes, he started
all sorts of creative amazing companies and even more.
So he has a history of doing pretty incredible things to get
things the way that he wants. For instance years ago.
It wasn't well known that Peter teal was gay because he wasn't
ready to come out with that information.
It was a secret something that he wanted to keep private.
Well a website called Gawker outed him and they did it
without his permission. They did it revealing a secret
that was personal to him and Peter too.
Didn't appreciate that. So silently, he looked for ways
to exact revenge on Gawker, and he found an opportunity.
The case with Hulk Hogan and the explicit personal video that
Gawker decided to reveal Peter teal silently funded, Hulk,
Hogan's case with the most expensive, lawyers.
That money could buy, he bought Hulk Hogan the best lawyers and
they destroyed Gawker. It's out of business because of
Peter teal. Now, I think he did the world, a
great service and taking down Gawker personally, but that's a
side from the point. The point.
Is that Peter teal. All is probably a genius.
He starts companies very big good companies and he even
destroys companies. Seemingly at will, he's not
somebody that you would really want to mess with or want to
insult because you don't know what he's able to do.
Well, teal is also very public with his politics and he's
outwardly critical of our tax system.
It says, a founder of PayPal has publicly condemned quote,
confiscatory taxes. He's been a major funder of one
of the most prominent, anti-tax political action, committees in
the country and he's bankrolled a group that promotes.
Building floating Nations, that would impose no compulsory
income taxes. So he's actually trying to
create a new nation. The whole goal of the nation is
that it won't tax, you know, compulsory taxes.
That's the level that he's going to because of his hatred of
taxes, as he's wanting to bankroll the creation of a new
nation that won't tax him. Now this article goes on to
explain how he didn't necessarily need to create a new
country in order to avoid paying taxes.
It says over the last Last 20 years, teal has quietly turned
his Roth IRA, a humdrum retirement vehicle intended to
Spur Americans to save for their golden years.
Into a gargantuan tax-exempt piggy bank.
So someone got ahold of these confidential IRS documents, and
they're sharing it. Now.
They say using stock deals. Unavailable to most people, teal
has taken a retirement account worth less than two thousand
dollars in 1999 and spun it into a five billion dollar windfall.
So when he turns 60 Have five billion dollars, completely.
Untaxed. None of that wealth generated.
There is going to the government, that is absolutely
incredible. Now, to put that in perspective.
The average Roth IRA is 39,000 Peter thiel's Roth IRA is 5
billion. So we have that little speck
there. That is the average then you
have Peter thiel's Roth IRA. They give another comparison
just to show how much money this is.
They say that if every one of the 2.3 million people in
Houston, Texas were to deposit two thousand dollars into their
R bank account today that still want an equal this five billion
dollars. So, newsflash, five billion
dollars is a lot of money and Peter teal is going to have a
lot of tax free money available to him when you turn 60 years
old. Now, how did all of this happen?
How was Peter teal able to grow a Roth IRA with a limit of only
six thousand dollars per year, being able to be deposited into
it? 25 billion dollars.
Well, it starts with the formation of PayPal, way.
Back in 2001. Someone named Tom Anderson, who
is the pens, co-founder? Worked with Peter teal and the
other Executives when they're setting up PayPal, if you really
think this is going to be big, you know, you might want to
consider this new Roth. You're not going to pay tax on
it when you take it out. It's a no-brainer.
The math was compelling teal. Wouldn't get a tax break up
front. But he'd avoid an immense tax
bill later on if the investment surged in value, they
immediately grasped that Anderson said and they did it.
So he was able to purchase a lot of PayPal, right at the founding
of it. They paid.
Zero zero one dollar per share. That's just a tenth of a penny.
So he purchased with $1700 $1700.
He purchased 1.7 million shares of PayPal in hindsight.
I think that was a pretty good deal.
Now, from there. He basically did the same thing
over and over again, to grow this Roth, even more, it was
upwards of 60 million dollars in value in like 2011.
And he used it to invest in other Silicon Valley startups,
even ones that he found it again that weren't even private, so he
could buy in Bargain deals. Another company.
Outside of PayPal is Palin Terry.
This is another one that he helped found way back in 2003,
that he was able to purchase a ton of shares.
They're called founder shares before.
The company was even public. So of course, it wasn't worth
much when he put it in his Roth IRA, but now palantir is a big
public company worth tens of billions of dollars.
So in both cases, he continued to buy these Founders shares and
different companies and hold them in as Roth IRA to let it
grow into billions of dollars of untaxed money.
Now, in an interview, one of the author is a propublica comments
on on the hacking of us tax law by these billionaires.
This is one of the questions that he's asked seems like us.
Tax law is getting hacked by the rich.
In this case. We're talking about billionaires
and there's sort of this asymmetrical data thing going
on, where the billionaires can constantly, adjust their
approaches their tactics to find these enormous loopholes.
And yet Congress doesn't have even anonymized data to
understand how the law is. Being exploited.
I'm sure they're just as surprised as we are today that
this is even happening because we've heard some of the response
to Pro public has initial reports.
Oh isn't this sort of a structural problem where you
know, for especially the digital age?
Congress has to change. The way law is made, they need
to be able to push out software updates to the IRS on a constant
basis. They talk about billionaires
hacking tax law. But one thing I want to point
out is that in 1999. I don't think that Peter teal
was a billionaire. There.
I think he was probably well off founder of a company, but I
don't think he had any where near the wealth that he has
today. All of that happened after
PayPal was a success. So, this isn't like some
already, big billionaire found some loophole.
This was somebody that put founder shares of a company that
still had a lot of unknowns in his Roth IRA.
And it turned out to be one of the biggest successes in Silicon
Valley, even companies like pounder is an incredibly unique
success. Most companies started in Look
on Valley fail and Peter, thiel's PayPal could have been
one of the unknown thousands of companies that failed and you
would not have billions of dollars in its Roth IRA.
If that was the case. The reason that he has billions
of dollars in his Roth IRA is because a company that he
founded turned out to be successful.
So that's my thoughts on this. I think it's going to be very
difficult for Congress or the IRS to update laws on this
because everything that Peter Thiel did was a little bit of
luck with his company's turning out well and just good planning.
He put these companies in as Roth IRA deck.
Jade's ago far before, they were the big monstrous companies that
we see today, but that's all for today.
I hope you all enjoyed the show. I'll have another episode out
soon. So make sure you're subscribed
to the channel. I'll see you next time.