Thoughts from the Desk of Bob Repass…

Most of you know I am a huge football fan. I do all I can to keep up with what is going on by subscribing to ESPN, CBS Sports, The Athletic, The Player’s Tribune and several other media sources.

The other day something that came across my feed from The Player’s Tribune caught my eye. It was about a little known linebacker named Brandon Copeland who plays for the New York Jets. What captured my attention was the line “By teaching financial literacy at the University of Pennsylvania, he takes control of his future and helps students plan for theirs.”

Why did that catch my eye? First and foremost, my son Robbie, played football and graduated from the University of Pennsylvania and whenever I see a story about the school or one of their alumni I take a minute to check it out. Secondly, I have always been a believer in the needs for young people to learn about financial literacy.

Simply put financial literacy is the education and understanding of various financial areas including topics related to managing personal finance, money and investing. Things as basic as balancing a checking account or creating and sticking to a budget are integral parts of financial literacy.

I shared the link to the short video story with Robbie. I was somewhat surprised by his reply “Very cool – wish I had a financial literacy course at Penn!” You can check out the story at the link below.

https://www.theplayerstribune.com/en-us/articles/plan-for-amazing-brandon-copeland

This really resonated with me. The University of Pennsylvania is an Ivy League institution that only accepts the “best of the best” from not only across the country but from around the world and not only is one of the alumni who is now a professional player in the NFL back on campus teaching a class in financial literacy, buy my son realizes that would have been beneficial to him when he was there.

If students at one of the top schools in the world need financial literacy education, then so do a lot of other people across our country. I have always thought that financial literacy should be a required class in high school. Just think about the number of high school graduates who may or may not be heading off to college without a clue on how to manage money!

Financial illiteracy affects all ages and all socioeconomic levels. It is inspiring to hear the story of Brandon Copeland who in addition to playing professional football owns a real estate investment company doing fix and flips and owning rental properties. I’m going to reach out to him and make sure he knows about the note business!

He refers to the class he teaches as “Life 101” and realizes the lack of financial literacy may lead to making poor financial choices that can have negative consequences on the financial well-being of an individual.

I encourage you to take a couple minutes and check out the video. As we get ready to start a new year, think about who you can share your knowledge with to get them on the right track towards financial freedom. Share your gift of knowledge!

My wife Angie and I wish each and every one of you a Merry Christmas and a Happy Holiday Season.

We are looking forward to a great 2020.

Bob Repass
Managing Director

Stay up to Speed with Eddie

Waiting Until Tomorrow is Not a Strategy

by Eddie Speed

Some milestones matter more than others. And I’m fixin’ to hit a big one.

No, my car odometer is not hitting 100,000 miles. This milestone is bigger than that. I’m turning 60! (Feel free to gasp in disbelief.)

Now I can get what I’ve been waiting for my whole life: The senior discount at WhataBurger! (If you don’t have Whataburger’s in your neck of the woods, you don’t know what you’re missing.)

I can honestly say life has never been better. Martha and I just welcomed our first grandchild into the world. Business is doing great, and I’m blessed with good health. So there’s no need to send me any Geritol, PoliGrip, or compression socks.

People keep asking me if I’m going to retire. I tell them, “Heck no!” I love what I do, and the idea of not doing what I love seems crazy to me.

I’m also blessed with the ability to choose whether to retire or not. I own my own company, so no one is kicking me out to pasture before I’m ready. (That’s another reason entrepreneurs love being their own boss.)

Through NoteSchool, I’ve been teaching people how to build wealth for the years ahead. I don’t claim to be an Einstein, but at least I’m smart enough to take my own advice. I’ve been using notes to build wealth using the same techniques you learn in our classes, so I could retire if I wanted to; I just don’t want to! I’m old enough to start pulling money out of my Roth Retirement Account, but I’m leaving it in there.

I sometimes have to pinch myself because I’m living my dream. I planned yesterday for today, and I’m making plans today for tomorrow.

It really is true that you reap what you sow, and your later years are when you start to collect your harvest. This applies whether you’re talking about finances or relationships or your health.

The clock never stops ticking and time is always on the march. Tomorrow will be here faster than you think. The time to plan for tomorrow is today. Waiting until tomorrow is not a strategy! You can’t stop tomorrow from getting here, you can’t stop your hair from turning grey or falling out, and you can’t stop wrinkles from showing up on your face. But if you do the right planning today there is one thing you can stop––worrying!

Is your plan for tomorrow in place today? If not, we’re here to help you look forward to the years ahead instead of biting your nails about how you’ll pay your bills if your money runs out of steam before you do.

We’ll teach you how to put together a customized wealth-building plan so you can enjoy financial freedom and steady income for the rest of your life. An important part of the planning we do (and the courses we teach) involves investing money from self-directed retirement accounts. (Martha is a whiz-kid on this.) We deal with over twenty IRA administration companies, showing people how to use money from their self-directed retirement accounts to build wealth for their retirement years. (And I should mention that it’s tax-free wealth!) The staff members from those IRA administration companies frequently tell me that the wealth-building plan we teach at NoteSchool is THE most effective tool they’ve seen to build wealth for retirement.

Looking into the future, what will be the legacy of Eddie Speed? Well, I won’t have any Super Bowl rings or Olympic gold medals. But hopefully, decades from now, people will say, “Oh yeah, I’ve heard of Eddie Speed. He’s the reason we don’t have to worry about money anymore.”

Capital Markets Update

Warren Buffet and Berkshire’s $128 Billion in Cash

By: Ryan Parson

Warren Buffett is sitting on $128 billion in cash and to some he’s seen as a potential savior. To others he’s completely out of touch. A has-been.

California Governor Gavin Newsom is begging Warren Buffett to buy the Pacific Gas & Electric Company, the California utility that went bankrupt in January of 2019 after its equipment sparked deadly wildfires.

PG&E’s stock is down about 75% this year and it is not providing any more 2019 earnings guidance, except for the fact that it expects costs of over $6 billion from the recent California wildfires.

On the other hand, there is David Rolfe, a longtime shareholder of Berkshire Hathaway and the chief investment officer at Wedgewood Partners. Mr. Wolfe told his clients that he sold the firm’s stake in Berkshire after decades of being a shareholder, because of his frustration with Buffet’s huge cash position: “Warren Buffett’s cash hoard of +$125 billion continues to be a considerable impediment of growth, rather than our previous hard expectation of a valuable call option on opportunity in the hands of one of the most elite capital allocators extant.”

And consider this tidbit: Berkshire’s cash went from about $23 billion in 2009 to $128 billion in 2019. In other words, Warren has increased his cash position
by 6-times during the longest bull market on record.

In Warren’s Own Words

Considered one the world’s greatest stock market investors of all time, Buffett has repeatedly said he has one key rule when investing: “Never lose money.”

Has the Oracle of Omaha ever lost money? Yes. But his losses have been small and infrequent compared with his many large, frequent and long-lasting victories – especially when one views his record over the past 55 years.

The value investor in him would rather hoard cash instead of spend money on speculative ideas. And Buffett and his team have just not recently seen many ideas that have met the Berkshire criteria.

In his own words from the most recent annual letter to Berkshire Hathaway shareholders:

“Berkshire will forever remain a financial fortress. In managing, I will make expensive mistakes of commission and will also miss many opportunities, some of which should have been obvious to me. At times, our stock will tumble as investors flee from
equities. But I will never risk getting caught short of cash.

In the years ahead, we hope to move much of our excess liquidity into businesses that Berkshire will permanently own. The immediate prospects for that, however, are not good: Prices are sky-high for businesses possessing decent long-term prospects.”

But Just for Fun…

Consider what Buffett and his $128 billion cash could buy.

Let’s start with fact that nationally, the average business sells for around 0.6 times its annual revenue. That means Warren could buy a business with approximately $213 billion in annual revenues.

And that would include the following:
• Chevron – $166 billion in revenues
• Ford– $160 billion in revenues
• General Motors – $147 billion in revenues
• General Electric – $120 billion in revenues
• Bank of America – $110 billion in revenues
• Microsoft – $110 billion in revenues
• Boeing – $101 billion in revenues

PG&E’s 2018 revenues in 2018 by the way were about $16.7 billion.

Heck, if Warren negotiated well and paid less than 0.6 times revenues, he could afford to buy Microsoft, Boeing and PG&E.

All Investors Should Hold Cash

But there are reasons to have cash beyond limiting risk. Cash can allow investors to invest at opportune times.   When markets drop, there is a lot of chatter about how much cash an investor should maintain.  The fact is, an allocation to cash is an important part of every investor’s portfolio.

As high net worth investors, it is important to have your own criteria, plan and policy when making investment decisions.  You need to decide how much cash you want to have on hand to be able to make investments when the moment is right.  While you may not see yourself as a fortress like Berkshire Hathaway, your own wealth is your own fortress.   You have earned and built your wealth and you now need to manage and grow it into the future.

This topic of ‘holding cash’ and what it means to us as private, high net worth investors, will be discussed in greater detail at our next Mile Marker Club Symposium, happening in Phoenix February 21-23, 2020.  Look forward to discussing this important topic and strategies on how to best take advantage of current market conditions.  There will be several industry experts in attendance to discuss this, and other, relevant topics related to private investors.

To your financial success!

The Trading Corner

One Man’s Trash is Another Man’s Treasure!

By: Scot Tyler

Everyone’s heard the ole saying “One man’s trash is another man’s treasure”. Every fall my wife and I clean out closets, garage, attic, etc. getting rid of stuff/junk that we don’t use or want any longer. My rule of thumb for clothes is if I haven’t worn it in a year then it’s time to go. I’ll set out old lamps, furniture, old lawn equipment, patio furniture etc. for the trash day….You name it my garbage service will pick it up. I even have put an old fridge on the curb and it was picked up. Love that!

It never fails though, the stuff/junk that I set on the curb never seems to be there the following morning for the garbage man to throw in the back of his truck? We have an individual who drives through my neighborhood the night before trash pick-up day in his old pickup truck, pulling a flatbed trailer full of stuff/junk that he has picked up in my neighborhood that was set out for trash day. This man finds the treasure in everyone else’s trash. He piles the old patio furniture, broken fridge, old bicycles and lamps on his trailer. He knows he can either take that junk, clean it up and resale it for a profit or just keep it himself. Either way that trash is his treasure!

This got me to thinking that we do the same thing in the note business. How many loans do you see that no one wants to touch because they say it’s “trash”? Every day I see loans where the credit is poor. The buyers credit report shows non-payment for medical bills, late payments on credit cards, delinquent or slow payments on car loans, resulting in credit scores in the mid to low 500’s.

These loans are sent to me to bid on, because other investors immediately said no thanks to the “trash” strictly due to a certain credit score. But what about the “redeeming factors” the deal may have? If you dig deeper into the trash you’ll also see that the buyer has been living in this property for a while and probably doesn’t want to uproot his family (we refer to this as “emotional equity”). He  came up with a decent down payment that I’m sure took them a while to save for and the seller of the loan can provide proof of the monthly payments either by copies of their banks statements showing the deposits going into their bank account or even with copies of all the checks the buyers have sent. So why would you pass on this “trash” just because of a credit score? This loan could actually be a treasure. The borrower’s credit situation doesn’t allow them to get a loan through a bank (which is why the loan was seller financed), and although their credit reflects they have trouble paying other bills, they still need a place to live and will make that mortgage payment before making that Visa payment.

Ask yourself, are you the individual driving around picking up trash turning into a treasure or are you the one who doesn’t dig into the junk and immediately turns away a potential treasure?

So, the next note that comes across your desk Dig into Trash and find the possible treasure. Figure out what the positives are in the deal (where is the money to made in this deal?) and not just look at the negatives and move on. Those deals are typically the deals you can make the most money on.

One Man’s Trash is Another Man’s Treasure is so true in everyday life but it also applies to the note business too!

Here’s a loan that came across our trade desk that we recently funded. If you’re interested in buying it, email me at [email protected]

Performing Note – Condo-O/O

Columbus, SC

BPO $89,400

$68,000 sales price with $0 down

$68,000 @ 0% @ $491.25/month for 139 months

38 made / 101 remain

Current UPB $49,615.25

Until next month!

Special Feature

Relive NoteExpo 2019!

The note industry’s conference of the year NoteExpo was held November 1st & 2nd in Dallas and by all accounts it was another successful event! But don’t just take our word for it, now you can experience it for yourself.

Whether you were there and witnessed it all first-hand and just want to take a longer deeper dive into your favorite sessions or if you were unable to make it this year, you will benefit from being able to replay NoteExpo 2019 as often as you like. The content is both educational and inspirational.

I recommend getting your highlighter and note pad out and be ready to “chew on” some of the ways to develop your note business along with your entrepreneurial spirit and real estate investing knowledge.

The video replays are now available for download. All main stage presentations from the opening keynotes, the panel discussions, general sessions and the popular NOTE Talks are all included. AVAILABLE HERE

And remember to keep up with the latest news on what will be happening next year at NoteExpo 2020, be sure to follow NoteExpo on Facebook

In The Spotlight

As 2019 winds down, I would like to extend a very special Thank You to each and every member of our team. There are a lot of folks behind the scenes that make our companies successful. I am confident we have the very best people in our industry and I would like to recognize all of them this month. We are very fortunate to have a great team of employees.

Executive Team: Eddie Speed, Martha Speed, Bob Repass, Charles Mangan, Susan DeLaGarza and Ryan Parson

Executive Support Team: Jeanna Clifford and Adam Dozier

Trade Desk Team: Angie Repass, Nathan Cheung and Scot Tyler

Asset Management Team: Linda Risk and Matthew Edwards

Customer Fulfillment Team: Riley Goff, Jesse DeLaGarza and James DeLaGarza

Sales and Business Development Team: Derek Stringer, Ben Haught and Tiffany Alexander

Curriculum and Liaison Team: Joe Varnadore, Andrew Werner and Kevin Moore

Quote of the Month

“If you’re in the business of making something, be in the business of making something great” – Robert Iger

This Month’s Poll Question

Connect With Us

Are you on Twitter? If so, be sure to follow us on Twitter @NoteSchool and @ColCapMgmt, if not, why not?