I will never buy a stock in my life that
doesn’t pay a dividend it’s not
returning cash to me it’s a speculation
and an investing I’m in a know called
strike business which is the best
business you can be in and you said that
portfolio balancing is a waste of time
so what are John and Sally dough’s
supposed to depends how much money you
have wanna be happy
build a life not just the business
so today let’s live your best belief
life and learn the best investment
advice from some of the world’s most
okay let’s kick it off with rule number
one get out of debt and use cash with
Mark Cuban and you said that portfolio
balancing is a waste of time so what are
John and Sally dough’s supposed to
depends how much money you have right so
the best way to get a return let’s just
say you have $50,000 in cash it could be
ten it could be a hundred but you know
let’s use fifty the first thing I would
do is pay off all your credit cards
because that’s costing you eighteen
percent that’s what John and Sally
should do first most don’t write there’s
more credit card and student loan debt
relative to a personal income than has
ever been in the history of the United
States second thing you do is you use
the transactional value of cash a lot of
people say you know you’re losing money
to inflation when you just have cash in
the bank I completely disagree I can you
know I know I’m gonna be buying a bunch
of soup toothpaste for my family I know
toilet paper I know all the consumables
that I have I can take my cash and go
get a better value I can take my cash
and go to my store up yeah yeah why not
I mean how much space is toothpaste take
you know but you’re gonna say that but
that’s the whole thing the time it takes
just to figure out your budget it’s
nobody does the time it takes just to
analyze your spending habits you can get
a better return and you’ll end up with
more cash than trying to fight the the
John Paulson’s of the world and these
guys who who have hundreds of analysts
who are working for them why would you
try to do better than them you can’t win
you can’t and now it’s it’s a hundred
times worse because of all the the
program trading but if you have enough
money that you have to put some of it
somewhere to park some of it somewhere
and hope to make a return on it where do
you put it you know what I do I don’t I
don’t think you have to make a return on
it because I’d rather sleep well at
night you know I put it in cash
literally now obviously I’m in a
different position where I don’t have to
live off of the interest pay me one
basis point off a gas right but at the
same time the having that dry powder if
you will
vailable when weeks like today or weeks
like this week hit and days like
yesterday and today and you see an
opportunity you see an opportunity then
you’re ready to take it as opposed to
saying I can’t get out what am I going
to do and I’ll tell you the other part
that’s better you’re gonna cut your
health costs because you’re gonna sleep
a whole lot better at night sleep well
oh I sleep like a baby
rule number two define your circle of
competence with Warren Buffett Ted
Williams wrote a book called the science
of hitting and in it he had a picture of
himself at bat and the strike zone
broken into
I think 77 squares and he said if he
waited for the pitch that was really the
sweet spot he would bat 400 and if he
had to swing at something on the lure
corner he would probably back to 35 and
an investing I’m in a know called strike
business which is the best business you
can be and I can look at a thousand
different companies and I don’t have to
be right on every one of them or even 50
of them so I can pick the ball I want to
hit and the trick in investing is just
to sit there and watch you pitch after
pitch go by and wait for the one right
in your sweet spot and that people are
yelling swing you bum ignore them
there’s a temptation for people to act
far too frequently and stocks simply
because they’re so liquid over the years
you develop a lot of filters but I do
know when I call my circle common so I
stay within that circle and I don’t
worry about things that are outside that
circle defining what your game is where
you’re going to have an
is enormous ly important also if you
want to build confidence like Mark Cuban
Warren Buffett Barbara Corcoran and
others checked by 254 series they’re
free the link is in the description
below I’ve always been passionate some
people thought you know it’s a it’s more
OCD than anything else it’s important to
associate with people that are better
than yourself there’s a lot of man’s
world out there but entrepreneurship is
a level playing field there’s no rules
rule number three control your business
better with Barbara Corcoran you need to
try your best to buy the real estate
you’re doing business in as quick as you
can no matter how small the space is
whether it be a store an office a
kitchen you can control your business
better if you’re not giving the profits
to the landlords I open 20 offices
really my business and out of those 20
offices I bought three buildings when I
sold my business for 66 million dollars
those three buildings were worth more
than 66 million dollars simply because I
was smart enough to buy them rule number
four buy stocks that pay dividends with
kevin O’Leary my mother was born in
Montreal worked at a company called
Kitty’s hogs and she’s to come home and
tell my brother and I because they pay
them every week on Thursday morning
she’d always invest a third of her
paycheck into bail bonds with coupons
she’d always say to me boys never spend
the principal just the interest and
never ever ever ever buy a security that
doesn’t pay a dividend and you know back
in those days
stocks paid higher dividends than the
bonds so example you know Bell Canada
had a 6% yield on its five-year paper
and bonds the stock yield at seven to
entice people to take the risk to own an
equity and we got lost somewhere between
the 50s and the 60s and 70s and we
actually thought that it was a good
investment to buy a stock that didn’t
pay a dividend which to me is insane so
anyways I I wanted to found a firm on
that my mother’s basic concept because
you know she died a few years ago and I
was executive for her state and I looked
at the portfolio which she never shared
with anybody but 40 years compounded
dividends and bonds you know 73% of the
markets returns of the last 40 years
came from dividends not capital
appreciation and she knew that in two
of Lee so that’s how we built the
foundation of O’Leary funds we listen to
mom we don’t own a single security that
doesn’t pay a dividend I will never buy
a stock in my life that doesn’t pay a
dividend it’s not returning cash to me
it’s a speculation and if a manager
can’t send me cash I’m not interested
and rule number five diversify with Ray
Dalio
you guys have an extraordinary track
record of winning yeah is it harder to
compete in the markets today than it has
been since you found at Bridgewater no I
don’t think so really not the way we do
it and the reason I’m saying not the way
we do it is we don’t take systemic
biases I think for a lot of people
they’re systematically long everything
you know and so we have a world in which
there when the world gets bad it’s bad
for them in 2008 it was great for us I
don’t know we had nearly 10 percent
return in 2008 so we have the
opportunity to go either way we just may
be wrong
if we’re wrong so so I’m so scared about
being wrong that it has helped reduce my
chances of being wrong because I’m so
scared I won’t take bets that on you
know that I don’t feel good about and we
diversify our portfolio and that’s how
we we we got the track record I was just
commenting in terms of I see let’s say
so um you asked me about investors so
I’m trying to go back what an investor
should do well absolutely and what you
think is appropriate yes so here’s what
you guys are doing well I want to just
convey to investors I think in the
average investor most everybody don’t
compete against pros like ourselves or
other people don’t making tactical asset
allocation bets or moving around in the
markets because you’re probably going to
lose it’s difficult for us points no you
have to have a devout a balanced
portfolio in other words think about how
you how you’re going to have a balanced
portfolio what you know is that asset
class as a whole over a period of time
we’re going to outperform cash mm-hmm
okay that’s the most thing that you
could be most comfortable with if they
don’t you have a depression the only
times that hasn’t happened but to know
how to achieve a balanced portfolio and
that’s a whole other subject I don’t
know that you want to go through if
you’re talking about tactical bets in
other words I can come on the show I
could say I think this is good but
what happens is if I come a month later
and I then change my mind because
something has happened then I’m gonna
leave something I’m gonna mislead people
so that the tactical bets I don’t think
are gonna be helpful I would say that
we’re in an environment in which it’s
very important to have a well
diversified and that’ll include assets
like to some extent maybe a little bit
of gold in your portfolio in other words
what could I tell investors try to
achieve balance in various ways that’s a
whole subject about how to do it and
also I think that the you know a gold
you know at five percent of your
portfolio five or ten percent of your
portfolio under the circumstances would
be also a prudent thing to do
prudence is the important thing to do
the reason I’m also referring to that is
we have a situation where a debt is
money in other words we have a Fiat
monetary system too and so we’re having
problems as these central banks operate
and so that it’s a think of it as
another form of cash and when cash now
has zero or zero percent interest rates
or less think of it as one of those
possibilities in terms of how do you how
do you create diversification we break
it into two parts we have two basic
portfolios there is the strategic asset
allocation mix which we call all-weather
and that just has nothing to do with
bets it has to do with how to make all
the assets the same risk parity I would
call risk parity the problem is when
people try to diversify and they own
some equities and equities has a
volatility right that’s large or they
own assets that do well when the economy
does well and do badly when the economy
does badly they have a concentration of
their risk in some assets right they
need to have they need to change the
portfolio they need to buy longer
duration bonds or leverage the bonds or
bring up so that bonds and commodities
and pieces have comparable impacts so
that whatever happens in the economy
will then have a balancing effect
because the one thing you could be most
confident is that asset class is on
average will outperform cash okay so if
you have that’s a strategic asset
allocation that’s what
pieces then there’s the bets the bets
are zero-sum right in order for you to
beat me in the game you’re going to you
it’s like poker it’s a zero-sum game I
have we have 1,500 people at work at
Bridgewater we spend hundreds of
millions of dollars on research and so
on we’ve been doing this for 37 years
and we don’t know that we’re going to
win in other words we work that we have
to have diversified bets we have a lot
of diversified bets and so on so it’s
very important for most people to know
when not to make a bet because if you’re
gonna come to the poker table you’re
gonna have to beat me and you’re gonna
have to beat those who take money so the
nature and of investing is that a very
small percentage of the people take
money essentially in that poker game
away from other people who don’t know
when prices go up whether that means
it’s a good investment or if it’s a more
expensive and desperate now I’ve got a
bonus clip with EDM I’d let on how to
invest in things that you understand
that I really think you’re gonna enjoy
but before that it’s time for the
three-point landing questions let’s go
from just watching a video to taking
action here we go question number one
how would you define your circle of
competence number two where do you need
to control your business veteran and
number three how far away are you from
getting out of debt biggest money
mistake I made in my life is investing
in things that I don’t understand and
weird like stocks yeah stocks I bought
that I knew nothing about that I heard
on at CNBC I should buy or having some
guy the one things I like about your
real estate deals it’s straightforward
it’s it’s it’s simple it’s easy to
understand if you present me a deal now
and I can’t regurgitate it back to you
real quick in some simple form I’m not
investing in it I need to at least
understand what it is I’m investing in
yeah even if even if you miss something
you’re willing to miss something I miss
something yeah I’ve missed so many
things yes so if I can’t understand it
or it’s too complicated and I can’t
repeat it back to you pretty quickly you
lost me yeah what was the what’s the
biggest loss you had and
and not following that advice which
would you buy when I bought I bought
Yahoo stock at about I don’t remember 75
or 80 bucks a share and I’m talking like
when I had about 3 million bucks I put
like 800 grand in there and I think I
ended up selling it in like 17 about
Citigroup so I would you buy that I
think in the 70s or 80s I could exact on
us and then like after I learned that
lesson uh 140 grand yeah then I no no
you lost seven hundred and then we’ll
give you two more biggies second one I
did is I bought citi bank stock CN group
stock at like fifty four dollars a share
yet which thousand eight which that was
about seven hundred thousand dollars
worth of that and I think I sold it at
two fifty two dollars and fifty cents is
when I finally sold it because I heard
they were going to be the next day AIG
yeah their work to honey and then the
third one is stuff you talk about I
bought a residential real estate
property that did not provide any
revenue did not provide any equity for
me that was what what do you call it it
would be like a trophy property like hey
I’m a big shot in the big time about was
now wasn’t that long ago either and that
was a property that I wasn’t gonna use
wasn’t getting leverage out of didn’t
generate revenue I didn’t know anything
about the market I was buying and I just
wanted to look like a big shot and I
think I lost two and a half million on
that house and that wasn’t that long ago
that’s just a few years ago so I’ve
still made some mistakes in my life but
though those are probably the biggest
loss probably that house on one deal was
probably that house I lost to the have
already million maybe I lost three
if you want to learn how the world’s
most successful investors think check
out the video right there next to me I
think you’ll enjoy it continue to
believe and I’ll see you there
define which ones you can come to an
intelligent decision on and which ones
are beyond your capacity to evaluate [Music]
doesn’t pay a dividend it’s not
returning cash to me it’s a speculation
and an investing I’m in a know called
strike business which is the best
business you can be in and you said that
portfolio balancing is a waste of time
so what are John and Sally dough’s
supposed to depends how much money you
have wanna be happy
build a life not just the business
so today let’s live your best belief
life and learn the best investment
advice from some of the world’s most
okay let’s kick it off with rule number
one get out of debt and use cash with
Mark Cuban and you said that portfolio
balancing is a waste of time so what are
John and Sally dough’s supposed to
depends how much money you have right so
the best way to get a return let’s just
say you have $50,000 in cash it could be
ten it could be a hundred but you know
let’s use fifty the first thing I would
do is pay off all your credit cards
because that’s costing you eighteen
percent that’s what John and Sally
should do first most don’t write there’s
more credit card and student loan debt
relative to a personal income than has
ever been in the history of the United
States second thing you do is you use
the transactional value of cash a lot of
people say you know you’re losing money
to inflation when you just have cash in
the bank I completely disagree I can you
know I know I’m gonna be buying a bunch
of soup toothpaste for my family I know
toilet paper I know all the consumables
that I have I can take my cash and go
get a better value I can take my cash
and go to my store up yeah yeah why not
I mean how much space is toothpaste take
you know but you’re gonna say that but
that’s the whole thing the time it takes
just to figure out your budget it’s
nobody does the time it takes just to
analyze your spending habits you can get
a better return and you’ll end up with
more cash than trying to fight the the
John Paulson’s of the world and these
guys who who have hundreds of analysts
who are working for them why would you
try to do better than them you can’t win
you can’t and now it’s it’s a hundred
times worse because of all the the
program trading but if you have enough
money that you have to put some of it
somewhere to park some of it somewhere
and hope to make a return on it where do
you put it you know what I do I don’t I
don’t think you have to make a return on
it because I’d rather sleep well at
night you know I put it in cash
literally now obviously I’m in a
different position where I don’t have to
live off of the interest pay me one
basis point off a gas right but at the
same time the having that dry powder if
you will
vailable when weeks like today or weeks
like this week hit and days like
yesterday and today and you see an
opportunity you see an opportunity then
you’re ready to take it as opposed to
saying I can’t get out what am I going
to do and I’ll tell you the other part
that’s better you’re gonna cut your
health costs because you’re gonna sleep
a whole lot better at night sleep well
oh I sleep like a baby
rule number two define your circle of
competence with Warren Buffett Ted
Williams wrote a book called the science
of hitting and in it he had a picture of
himself at bat and the strike zone
broken into
I think 77 squares and he said if he
waited for the pitch that was really the
sweet spot he would bat 400 and if he
had to swing at something on the lure
corner he would probably back to 35 and
an investing I’m in a know called strike
business which is the best business you
can be and I can look at a thousand
different companies and I don’t have to
be right on every one of them or even 50
of them so I can pick the ball I want to
hit and the trick in investing is just
to sit there and watch you pitch after
pitch go by and wait for the one right
in your sweet spot and that people are
yelling swing you bum ignore them
there’s a temptation for people to act
far too frequently and stocks simply
because they’re so liquid over the years
you develop a lot of filters but I do
know when I call my circle common so I
stay within that circle and I don’t
worry about things that are outside that
circle defining what your game is where
you’re going to have an
is enormous ly important also if you
want to build confidence like Mark Cuban
Warren Buffett Barbara Corcoran and
others checked by 254 series they’re
free the link is in the description
below I’ve always been passionate some
people thought you know it’s a it’s more
OCD than anything else it’s important to
associate with people that are better
than yourself there’s a lot of man’s
world out there but entrepreneurship is
a level playing field there’s no rules
rule number three control your business
better with Barbara Corcoran you need to
try your best to buy the real estate
you’re doing business in as quick as you
can no matter how small the space is
whether it be a store an office a
kitchen you can control your business
better if you’re not giving the profits
to the landlords I open 20 offices
really my business and out of those 20
offices I bought three buildings when I
sold my business for 66 million dollars
those three buildings were worth more
than 66 million dollars simply because I
was smart enough to buy them rule number
four buy stocks that pay dividends with
kevin O’Leary my mother was born in
Montreal worked at a company called
Kitty’s hogs and she’s to come home and
tell my brother and I because they pay
them every week on Thursday morning
she’d always invest a third of her
paycheck into bail bonds with coupons
she’d always say to me boys never spend
the principal just the interest and
never ever ever ever buy a security that
doesn’t pay a dividend and you know back
in those days
stocks paid higher dividends than the
bonds so example you know Bell Canada
had a 6% yield on its five-year paper
and bonds the stock yield at seven to
entice people to take the risk to own an
equity and we got lost somewhere between
the 50s and the 60s and 70s and we
actually thought that it was a good
investment to buy a stock that didn’t
pay a dividend which to me is insane so
anyways I I wanted to found a firm on
that my mother’s basic concept because
you know she died a few years ago and I
was executive for her state and I looked
at the portfolio which she never shared
with anybody but 40 years compounded
dividends and bonds you know 73% of the
markets returns of the last 40 years
came from dividends not capital
appreciation and she knew that in two
of Lee so that’s how we built the
foundation of O’Leary funds we listen to
mom we don’t own a single security that
doesn’t pay a dividend I will never buy
a stock in my life that doesn’t pay a
dividend it’s not returning cash to me
it’s a speculation and if a manager
can’t send me cash I’m not interested
and rule number five diversify with Ray
Dalio
you guys have an extraordinary track
record of winning yeah is it harder to
compete in the markets today than it has
been since you found at Bridgewater no I
don’t think so really not the way we do
it and the reason I’m saying not the way
we do it is we don’t take systemic
biases I think for a lot of people
they’re systematically long everything
you know and so we have a world in which
there when the world gets bad it’s bad
for them in 2008 it was great for us I
don’t know we had nearly 10 percent
return in 2008 so we have the
opportunity to go either way we just may
be wrong
if we’re wrong so so I’m so scared about
being wrong that it has helped reduce my
chances of being wrong because I’m so
scared I won’t take bets that on you
know that I don’t feel good about and we
diversify our portfolio and that’s how
we we we got the track record I was just
commenting in terms of I see let’s say
so um you asked me about investors so
I’m trying to go back what an investor
should do well absolutely and what you
think is appropriate yes so here’s what
you guys are doing well I want to just
convey to investors I think in the
average investor most everybody don’t
compete against pros like ourselves or
other people don’t making tactical asset
allocation bets or moving around in the
markets because you’re probably going to
lose it’s difficult for us points no you
have to have a devout a balanced
portfolio in other words think about how
you how you’re going to have a balanced
portfolio what you know is that asset
class as a whole over a period of time
we’re going to outperform cash mm-hmm
okay that’s the most thing that you
could be most comfortable with if they
don’t you have a depression the only
times that hasn’t happened but to know
how to achieve a balanced portfolio and
that’s a whole other subject I don’t
know that you want to go through if
you’re talking about tactical bets in
other words I can come on the show I
could say I think this is good but
what happens is if I come a month later
and I then change my mind because
something has happened then I’m gonna
leave something I’m gonna mislead people
so that the tactical bets I don’t think
are gonna be helpful I would say that
we’re in an environment in which it’s
very important to have a well
diversified and that’ll include assets
like to some extent maybe a little bit
of gold in your portfolio in other words
what could I tell investors try to
achieve balance in various ways that’s a
whole subject about how to do it and
also I think that the you know a gold
you know at five percent of your
portfolio five or ten percent of your
portfolio under the circumstances would
be also a prudent thing to do
prudence is the important thing to do
the reason I’m also referring to that is
we have a situation where a debt is
money in other words we have a Fiat
monetary system too and so we’re having
problems as these central banks operate
and so that it’s a think of it as
another form of cash and when cash now
has zero or zero percent interest rates
or less think of it as one of those
possibilities in terms of how do you how
do you create diversification we break
it into two parts we have two basic
portfolios there is the strategic asset
allocation mix which we call all-weather
and that just has nothing to do with
bets it has to do with how to make all
the assets the same risk parity I would
call risk parity the problem is when
people try to diversify and they own
some equities and equities has a
volatility right that’s large or they
own assets that do well when the economy
does well and do badly when the economy
does badly they have a concentration of
their risk in some assets right they
need to have they need to change the
portfolio they need to buy longer
duration bonds or leverage the bonds or
bring up so that bonds and commodities
and pieces have comparable impacts so
that whatever happens in the economy
will then have a balancing effect
because the one thing you could be most
confident is that asset class is on
average will outperform cash okay so if
you have that’s a strategic asset
allocation that’s what
pieces then there’s the bets the bets
are zero-sum right in order for you to
beat me in the game you’re going to you
it’s like poker it’s a zero-sum game I
have we have 1,500 people at work at
Bridgewater we spend hundreds of
millions of dollars on research and so
on we’ve been doing this for 37 years
and we don’t know that we’re going to
win in other words we work that we have
to have diversified bets we have a lot
of diversified bets and so on so it’s
very important for most people to know
when not to make a bet because if you’re
gonna come to the poker table you’re
gonna have to beat me and you’re gonna
have to beat those who take money so the
nature and of investing is that a very
small percentage of the people take
money essentially in that poker game
away from other people who don’t know
when prices go up whether that means
it’s a good investment or if it’s a more
expensive and desperate now I’ve got a
bonus clip with EDM I’d let on how to
invest in things that you understand
that I really think you’re gonna enjoy
but before that it’s time for the
three-point landing questions let’s go
from just watching a video to taking
action here we go question number one
how would you define your circle of
competence number two where do you need
to control your business veteran and
number three how far away are you from
getting out of debt biggest money
mistake I made in my life is investing
in things that I don’t understand and
weird like stocks yeah stocks I bought
that I knew nothing about that I heard
on at CNBC I should buy or having some
guy the one things I like about your
real estate deals it’s straightforward
it’s it’s it’s simple it’s easy to
understand if you present me a deal now
and I can’t regurgitate it back to you
real quick in some simple form I’m not
investing in it I need to at least
understand what it is I’m investing in
yeah even if even if you miss something
you’re willing to miss something I miss
something yeah I’ve missed so many
things yes so if I can’t understand it
or it’s too complicated and I can’t
repeat it back to you pretty quickly you
lost me yeah what was the what’s the
biggest loss you had and
and not following that advice which
would you buy when I bought I bought
Yahoo stock at about I don’t remember 75
or 80 bucks a share and I’m talking like
when I had about 3 million bucks I put
like 800 grand in there and I think I
ended up selling it in like 17 about
Citigroup so I would you buy that I
think in the 70s or 80s I could exact on
us and then like after I learned that
lesson uh 140 grand yeah then I no no
you lost seven hundred and then we’ll
give you two more biggies second one I
did is I bought citi bank stock CN group
stock at like fifty four dollars a share
yet which thousand eight which that was
about seven hundred thousand dollars
worth of that and I think I sold it at
two fifty two dollars and fifty cents is
when I finally sold it because I heard
they were going to be the next day AIG
yeah their work to honey and then the
third one is stuff you talk about I
bought a residential real estate
property that did not provide any
revenue did not provide any equity for
me that was what what do you call it it
would be like a trophy property like hey
I’m a big shot in the big time about was
now wasn’t that long ago either and that
was a property that I wasn’t gonna use
wasn’t getting leverage out of didn’t
generate revenue I didn’t know anything
about the market I was buying and I just
wanted to look like a big shot and I
think I lost two and a half million on
that house and that wasn’t that long ago
that’s just a few years ago so I’ve
still made some mistakes in my life but
though those are probably the biggest
loss probably that house on one deal was
probably that house I lost to the have
already million maybe I lost three
if you want to learn how the world’s
most successful investors think check
out the video right there next to me I
think you’ll enjoy it continue to
believe and I’ll see you there
define which ones you can come to an
intelligent decision on and which ones
are beyond your capacity to evaluate [Music]
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