Episode Transcript
[00:00:00] Speaker A: You say, well, I didn't do that. Okay, well. But nonetheless, you can still recognize that during times of famine, I want to say this now, during times of famine are the best times to sow.
[00:00:28] Speaker B: Welcome to the Wealth Builders podcast. And I just want to thank all of you for sharing. I know you're sharing this podcast because our numbers are growing and we really appreciate you. I've got a really special guest for you today, none other than our founder, Billy Epperhardt. Billy, thanks so much for joining us.
[00:00:48] Speaker A: I'm glad to be here with you, Karen. Look, I'm really excited about what we're going to talk about today.
[00:00:52] Speaker B: I am, too. There is so much going on, Billie. We've just got to get a better understanding of what's happening in the economy. We get a lot of questions. You see the emails that come in. I know you and Becky review those. And in the webinars we have so many questions like, what should we do? It's so turbulent. Should we do nothing?
You know, should we just stop and see how the election goes? So as we share this economic update, my first question for you is, is there an opportunity? What should we do in these turbulent times?
[00:01:24] Speaker A: Yeah, I think, you know, for us to have a perspective. What's interesting, I didn't know we were going to do this podcast right now, and I talked about it in another video you just did.
It was just organic, right?
[00:01:34] Speaker B: It was.
[00:01:35] Speaker A: But, you know, this will help everybody understand. I've been talking for about the last 18 or 19 months about where we are economically, and what has happened has been that factors have contributed to this, been a little bit more prolonged. But I'm convinced that in most parts of the market, and then I'll talk about specific things. In most parts of the market, going back to about 18 months, we started seeing real signs of what I would call a recession.
[00:02:01] Speaker B: Yes.
[00:02:01] Speaker A: What is happening now, though, and that has been artificially delayed, is what has happened. And it's happened under current, some of the current economic policies that we're under. So what has happened 1819 months ago, I talked about that we were going to start seeing opportunities, start looking for certain kind of assets.
[00:02:21] Speaker B: Yes, you did.
[00:02:21] Speaker A: And then what you do and what kind of assets do you look for in those recessionary times? So here's where we are now. What has happened is that we came through Covid and I've talked about this many times, but there are several factors economically that happened. One is the money supply went up during the co Covid time. We called those the stimulus, and we actually had two of those stimulus, right?
[00:02:46] Speaker B: That's right.
[00:02:47] Speaker A: In most western nations had two of those stimulus. Some developing nations had one or two stimulus. So what has happened is that the stimulus has increased the money supply in the market. And then the other thing that happened, up until our central bank started raising interest rates, we had low interest rate. So what you had was a ton of dollar bills, hundred dollar bills in the economy, and more than we've ever had in history. More than we've ever had. So if you just think about paper money being printed, we had all this paper money coming into the economy. And one of the things I follow, Karen, is I like to follow the luxury market because it ends up being a lead indicator for what's actually happening in the economy. So when you see the prices of luxury goods going up, and this is literally the chart, we may be able to put it up on this podcast, there's a chart where it goes up almost like a hockey stick into about March, April, May of 2022. So everybody understands.
[00:03:51] Speaker B: And just things like it's watches, it's.
[00:03:53] Speaker A: Watches, it's handbags, it's luxury clothes, luxury cars, all of that is reflected, all of those kind of goods. And then there's some services that are reflected in there as well, some higher end services that are reflected in that luxury market. But then in March, April, May of 2022, we see it hit the peak and then it starts coming back down. And it literally has come down now. It has come down a little bit faster than what it went up. It went up like a hockey stick, literally like this. But then coming down, it has, it has. It came down with a little bit more gradual decline than it did on the incline, but it was very similar. And then it started leveling out a little bit. And what that tells me, when I see it start leveling out, it tells me that all of that money supply has now been spent in the market. So the money has, I call it washed through the money has washed through the market and those luxury goods have come down in value.
Okay. It's really. And now there has been a more steady decline, not just a straight down, but more of a steady decline, and it started to level out a little bit. What that's telling me is that that big, huge money supply has washed through.
The second thing that's happened is central banks and western nations have started raising interest rates. And so interest rates have also slowed down the spending that has happened.
But what has happened is because of other artificial policies in the market, what has happened is that it's actually affected assets. Real assets, not luxury. Luxury goods are not real assets. Some people think they are, but they're not. A diamond ring is not a real asset and a watch itself is not a real asset. Okay. That kind of thing for guys that are watching and certainly clothes are not a real asset. Okay. And for some people to know how to buy and trade some of those things, such as, let's say a luxury car of some sort, like a high end sports car or something like that. And I know people who actually buy and sell in that market and so therefore. But they buy cheap. Right. They're not overpaid.
[00:06:03] Speaker B: They know when to buy.
[00:06:04] Speaker A: Yeah. They do it more from a business standpoint then for them it could be an asset, but for most people it's not an asset, it's just a toy. Right. So what happens is that money has now washed through. Now people will say, well, what does that mean, Billy? Well, I'll explain it. So during the stimulus, what we call the m one supply of money was actually sky high. And what that meant was m one supply is the amount of money somebody, for example, has in their checking account.
[00:06:30] Speaker B: Yeah. Available to them.
[00:06:31] Speaker A: It's available. They can write a check on it. And that money, if you look at the charts, which we have, that m one money supply has gone way down. As a matter of fact, it's that m one supply has gotten down to basically nothing at this point. Then there's what's called m two supply. And the m two supply is money that typically is in IRA accounts, those kind of things. And we have seen that supply come down.
It hasn't like, diminished like the m one, but it has gone down dramatically.
[00:07:02] Speaker B: Wow.
[00:07:02] Speaker A: And then what we've seen that is actually a negative icing on the cake is we have seen credit card debt come up to levels we have not seen seen before in recent times. So what has happened is that now there's less money in the market to not only buy those luxury goods, which they're always the first ones to go down, okay. But then real assets like real estate, stocks. Right, right. And then if you've ever listened to me, you hear me talk about gold and silver, now gold and silver is going up because gold and silver is a defense against that. So it's a defense against that. Negative money supply coming, getting negative over here. But, and we'll talk about other assets in this podcast or another one, we'll cover it. But what I'm talking about now about the money supply and where we are. So with interest rates going up, it has also affected it. So your money, the amount of dollar bills has gone down. The cost of money. Right. We were at zero cost money for a long time. That always drives up these luxury goods. But also, so, you know, even in ministry, right. When we talk about ministry, I call it. So luxury goods represent discretionary spending.
When we talk about, when we look at ministries and nonprofits, what we see is what we call discretionary giving. And we've seen both of those begin to come down. The luxury goods have led the market coming down. Now we're seeing it actually in discretionary giving. And we have a company here. We're sitting here on the campus of Charis Bible College. As we're recording this and as we're doing that, even we have some outside firms that help us understand giving. And across the board and nonprofits, not just ministry nonprofits, but across the board nonprofits have seen a contraction in discretionary giving. So they've seen it come down. We've actually seen some of that here. So what I mean by that is that that means the impact is happening. Right. And things have been tightening up and then we can talk about what to do about it. Right. But right now that's been where we are. So the money's washed through, interest rates have gone up, everything has now contracted or tightened, and there's not any more stimulus coming at this point. Right. So because of that, that means that, that both luxury goods and real assets at some point will start coming down in price, except for true defensive assets.
[00:09:34] Speaker B: Do those two things, do they always relate? For example, when you started to see what was happening with discretionary income, were you able to then just know the point that we were going into ahead of time so, you know, so you could plan for that financially?
[00:09:53] Speaker A: Yeah. For this ministry, what none of us knew, I definitely didn't know it was going to go up that high. In other words, I didn't realize that we had, now we saw it happen in real estate, which is a real asset. We also have seen it happen in the stock market, which is a real asset. Okay. What was surprising, right, to a lot of people was how dramatically the luxury market was affected, right. Because it is a true lead indicator to us. When people have that extra money, that's where they go. So they buy all kinds of stuff that really does not in the real world have intrinsic value. It may have some market value, but it doesn't have real intrinsic value. Now when you see things like real estate and stocks. So real estate market went up during COVID stock market went up in Covid, all that. So real assets also went up. But now that these things that are not real assets, they start coming down. That's a lead indicator for real assets or where real assets are going, the prices are going to get soft. Now I've been saying that, yes you have on real assets for 18 months.
I'm telling you we're coming into that season. So I've been saying now for six months I'm starting to look to buy and I'm waiting for some indicators, some more indicators, but there's starting to be deals out there. Matter of fact, there have been deals out there for the last 912 months that you did not see at all during COVID However, there's more deals coming. There's going to be better prices on real assets, stock market and real estate. And we'll talk about some others that are going to start coming. Now, gold and silver have been going up, right. And so right now these central mark, central banks are starting to talk about lower rates. So they're going to start, right. They're hinting and I've said that.
[00:11:37] Speaker B: You said that.
[00:11:37] Speaker A: You said they would lower it in September for the election here.
[00:11:40] Speaker B: Yes, you did.
[00:11:40] Speaker A: I said that nine months ago.
[00:11:42] Speaker B: Well the other thing you said is everybody was saying no, they're going to be lowering all year. And you said no, they're not in your right.
[00:11:48] Speaker A: I said in November, December, yes you do. Of 2023, they will not lower rates at the rate of the market was pricing in. And I said rates will not, we will not see what we call a basis decrease in interest rates until September to what I said you did of 2024. And guess what they're talking about at the next central reserve meeting in September of 2024, they're talking about lowering rates 50 basis points for the, I think they'll do, I think they'll lower 25.
[00:12:20] Speaker B: Basis points because inflation is so high.
[00:12:22] Speaker A: That's right. It's stubborn, it's held in. All that money is just now washing through.
[00:12:29] Speaker B: Wow. And what I was really impressed with as we were talking is I was just seeing that this economy, the things that you study, we don't need to be caught by surprise.
[00:12:41] Speaker A: Right. We don't have to be.
[00:12:42] Speaker B: We don't have to be. And I think a lot of us, we just feel like we're at the whim of whatever is happening in the economy and you're bringing confidence in and saying, look, if you study this and the things that you have told us is going to happen, is happening, it does not need to be a mystery.
[00:12:57] Speaker A: Yeah, it doesn't have to be. I mean, if you look at what Joseph did, right, in the book of Genesis and how God called him and he said there will be seven years of plenty, and he said there will be seven years of famine. And if you look, his plan was he took 20% of the plenty and he put it aside, right? So if you do 20%, he actually put 140%, so to speak. He put that much, seven times 20 into savings or aside. Well, you know what you say, well, I didn't do that. Okay. Well. But nonetheless, you can still recognize that during times of famine, I want to say this now, during times of famine are the best times to sow. You know, the Bible says about. Says about Isaac in Genesis 26, right? You got to get over to Genesis 484-947-4849 to see Joseph. If you come back to Genesis 26, the Bible says that Isaac, the Bible in verse twelve of Genesis 26, it said then, t h e n. Then Isaac sowed in the land. He sowed. Isaac sowed in famine. I want you to hear me here. So most people use that scripture to only talk about giving, but what you need to understand is he sowed as an investor. He sowed in the land and he planted seed for a harvest. And the Bible says that he reaped a hundredfold. Now, I didn't say that. The Bible says Isaac reaped a hundredfold. But what they miss is it says, then he sowed. What he did was he waited, and I'll teach on this later. And he waited until times were favorable. And the Bible, I mean, no matter what translation you look it up in, it says then, after all certain things happened, then Isaac sowed in the land and reaped 100 fold. So I believe we're coming to the then.
Right? And so sowing is not just giving, it certainly includes giving, but it also includes what you do to sow for a harvest, financially, to reap. So you say, what does that mean in the real world term? It means that we're going to start seeing assets that I've been talking about for 18 months. We're going to start seeing the opportunity to start investing in a much bigger way than what we've done heretofore. Even I know some have now, because there's been some opportunities, there's going to be more opportunity for better deals that are going to start coming. And Miss Becky just told me this morning, my wife, Becky, she just told me this morning that it's time now to buy a building. She told me that. I've been waiting. She's got great time, and I've been waiting. And sure enough, I look one up and I think I may write an offer.
[00:15:34] Speaker B: Oh, my goodness.
[00:15:35] Speaker A: Yeah. I saw something I hadn't seen. I saw prices I hadn't. It's amazing.
[00:15:38] Speaker B: Well, see, this is so helpful because there's so much in the media, which we hear all the time, where people are wanting to retreat, and that's the last thing that we should be doing right now.
[00:15:49] Speaker A: Yeah, you need to start looking for opportunity in times of famine, which is what Isaac did. You know, he did two things. The first part here in verse twelve. Then he sowed. He waited for the right time. The other people didn't sow. He did. So he was the one that profited from the sowing. And then a little bit later, it says, and then he dug again, the wells of his father Abraham. So he was looking for the right time to do certain things. What I am saying on this podcast, we are now there. We're coming into that time. In fact, I won't comment currently on the political situation. I'll just say there's going to be opportunity coming within the next six to twelve months. The next twelve to 24 months.
[00:16:31] Speaker B: Yeah. And part of what you teach, too, Billy, is to make decisions. It doesn't have to be a mystery either, on how to make decisions, when to buy real estate. Because you've provided all the things that we look for to keep us in a safe place.
[00:16:45] Speaker A: That's right.
[00:16:45] Speaker B: I remember something else you told us, and this was maybe, maybe six, maybe six months ago. And twelve months ago, you said to keep our powder dry for this time.
[00:16:55] Speaker A: That's what I said.
[00:16:56] Speaker B: And so keeping the cash available to do it, getting the financing, put yourself.
[00:17:01] Speaker A: In a place where you can do it. And honestly, I can say this truthfully. I have worked hard, not that I have to work too hard sometimes, but I have worked hard on making sure that I'm positioned so that when I see the triggers, I can pull them.
[00:17:14] Speaker B: That's so good.
[00:17:15] Speaker A: Yeah, but you gotta wait for the triggers.
[00:17:18] Speaker B: Yeah.
[00:17:18] Speaker A: And so I talk about this, if you go back and look at videos and podcasts I've done, I've talked about this in depth, and I'm telling you now, there are things that, now the political situation, that's in the country, because we're coming up on an election, that will affect it. But the effect of the money washing through and the effect of inflation currently, that's a fact that has happened. Now that hasn't changed. So there's certain things that no matter who's elected that some of that stuff, it's going to take a little longer to cause it to come back up.
[00:17:51] Speaker B: Yeah, that's really good. So we only have a couple of minutes left. This has been super helpful. Billy, what advice would you give people that are kind of trying to figure out what to do right now? And most of the questions that come in actually have to do with real estate. So what's some advice that you could give us in real estate?
[00:18:07] Speaker A: Well, for those that are newer, they need to learn, right. So they always ask me, what should I invest in? Should invest in yourself. So for those of who maybe already do know, and they already do or do understand, some of them that I know about are really looking right now. And you, you know, an example would be in commercial real estate. So when I talk about the specifically offices, office buildings, you know, a lot of people say, well, the whole work thing has changed. It has. People can work from home. Zooms change things. However, I can tell you long term, I know that the trend will continue to go towards some at home work, but I'm telling you, the long term trend is most people are going to have to come back now as workers. People don't like to hear that. But on the flip side of that is that's going to happen.
But you're going to be able to buy some of those office buildings cheap enough if you know what you're doing, that there's other ways to make money besides just ringing for offices. Whole nother deal, whole nother podcast. But nonetheless, even in the office structure, I don't think that's gone away forever. I do think there's some dynamic in the office rental space that has changed permanently. However, some of those buildings, you're going to be able to buy them at a price. If you're watching now, for those in single family real estate that you're investing, you know, to buy, there's going to be plenty of opportunity. And I'll just say this, I don't know, I don't, I don't have a better, I don't have better words to express it. When there's blood in the streets economically, that's when you want to look to purchase, right. And so sometimes to purchase, it costs a little more right up front, but don't worry, then it'll even out. And if you, for example, if you did, if you use too much cash or you borrow the money, a little high interest rate or whatever it is, that some of those things will level out and you can take opportunity of that because you're buying an asset at a much lower price. And always remember, in any kind of asset, any kind of real asset, you make money when you buy.
[00:20:04] Speaker B: That's so good. And something that I repeat all the time to people that you've shared with us is to stay in for two real estate cycles.
[00:20:11] Speaker A: That's it.
[00:20:11] Speaker B: And you gave us the best advice, which you've all heard him talk about this too, but you said, make sure you've got that minimum of $300 cash flow because then it does not matter if the prices go up and down, you can ride it out because rents always are behind.
[00:20:26] Speaker A: Rents never go down like prices do. They always lag. They may go down in the deflationary season, but it's not near as dramatic. Right. That's the difference. So prices will go down much more dramatically, which means opportunity, right. So instead of fretting over it, you look at it as an opportunity.
[00:20:43] Speaker B: Yeah, that's so good. And that's such a biblical perspective, too. Biblical, because we look at things through God's eyes, right. And there's always a way for us to be prosperous no matter what's going on in the world.
[00:20:53] Speaker A: That's correct. Matter of fact, in times of famine, the Bible says, I think it's in Jeremiah 48, verse 17, that the Lord will teach you how to profit. So you have to learn as you listen to the Lord. He'll show you the right time and the right place. But you can still know the times and seasons in the sense of the Bible says that the sons of Issachar understood the times and because they understood the times, they knew what Israel was to do.
[00:21:17] Speaker B: Yes, we have that same.
[00:21:19] Speaker A: That's what we're talking about in this podcast, opportunity.
[00:21:20] Speaker B: That's so good. Wow, this has been amazing. I can't believe our time is up. But if you want to learn more about real estate, we have a real estate workshop that is coming up October 11 through the 13th and it is a full weekend and you will get a lot of great information. I think we are talking, there's like 16 workshops, there's like twelve other main sessions. We have a lot of networking going on. You'll get to meet people, we get to visit with you, which will be wonderful. So I would encourage you, if you really want to invest in real estate, that's a great place for you to start. Invest in yourself. You can go to wealthbuilders.org events. We would love to see you there. All right. Well, Billy, do you have any last thoughts that you'd like to share with people before we sign off?
[00:22:04] Speaker A: Well, I would say to people, just get ready. I think we appreciate you being a part of the podcast and watching the podcast.
And I say that spiritually, financially, in every part of your life, you need to get ready. For those who are new to real estate and even those who are more experienced, the real estate workshop will be a great opportunity for you not only to learn more and learn other things. Additionally, because we have workshops that are for advanced workshops that are for beginners, but also it will help you network with other people that are out there doing it.
[00:22:36] Speaker B: Yeah. Thanks. Thanks so much, Billy, and thanks, all of you, for joining us. God bless you and make it a great rest of the day.
