The Key To Successful Contrarian Investing

For today’s episode, we will be discussing contrarian investing and what it means to go left when everybody else is going right. Why you should zig instead of zag.

We will be going over a framework for understanding and looking at the world for navigating changes. What works today won't necessarily work tomorrow.

 The audible version Passive Investing Made Simple: How to Create Wealth and Passive Income through Apartment Syndications coming soon! 

[00:01 – 08:38] Bad Investing Tip Of The Day: "If it ain't broke, don't fix it"

[08:39 – 12:12] Successful Contrarian Investing

[12:13 – 17:10]  Balance Leads to Excess and Excess Leads to Balance 

[17:11 – 27:28]  The Affordability Index

[27:29 – 32:15] Why You Should Read Books About Economics

Book Recommendation

Basic Economics by Thomas Sowell 

“No matter how good you think you are at a thing. Remain humble, remain open, and always be learning" – Dan Kreuger

"The only constant in the universe is changing, right? That's the only thing we can really rely on is that things are going to change in the future." – Anthony Vicino

"A city allows for people to focus in specifically on what they're doing rather than trying to do everything at once." – Anthony Vicino

"If you stop innovating, you're not just going to cease to grow, you're actually going to shrink because other people who are innovating are going to steal your market share and you are going to go out of business" – Dan Krueger

LEAVE A REVIEW if you liked this episode!!

Keep up with the podcast! Follow us on Apple, Stitcher, Google, and other podcast streaming platforms.

To learn more, visit us at https://invictusmultifamily.com/.

**Want to learn more about investing with us?**

We’d love to learn more about you and your investment goals. Please fill out this form and let’s schedule a call: https://invictusmultifamily.com/contact/

**Let’s Connect On Social Media!**

LinkedIn: https://www.linkedin.com/company/11681388/admin/

Facebook: https://www.facebook.com/InvictusMultifamily

YouTube: https://bit.ly/2Lc0ctX

Transcript

Anthony Vicino: [00:00:14] Hello and welcome to multifamily investing made simple to the podcast, that's all about taking the complexity out of real estate investing so that you can take action today. I am your host. Anthony Vecino of Invictus Capital, joined by Dan. I would like a skinny business card, Kruger.

Dan Krueger: [00:00:29] You know, I was thinking about it and don't. I mean, I like looking at the little skinny business card, but I feel like I would lose them.

Anthony Vicino: [00:00:37] First of all, I would definitely lose them.

Dan Krueger: [00:00:38] And we're talking business cards right before we started. So you guys have no context for what we're talking about.

Anthony Vicino: [00:00:42] I'm just trying to give you a little peek behind the curtains of what happens before we hit the record button so that you can feel like you're part of the VIP all-inclusive club.

Dan Krueger: [00:00:54] Yeah. And to be clear, this was not like an American psycho business per business card comparison. Patrick Bateman.

Anthony Vicino: [00:01:00] I don't even understand that reference.

Dan Krueger: [00:01:02] Ok, well, you should see the movie at a cartoon. No, it's a Christian Bale movie from 2000 to 2001. I think Batman. It's a social satire about a psychopath. It's actually a really good movie. Just check it out.

Anthony Vicino: [00:01:16] Well, I will check it out. Actually, I have seen that.

Dan Krueger: [00:01:19] I'll send you the business card scene.

Anthony Vicino: [00:01:21] Ok, perfect. Now for you, dear listeners that are joining us here today that do not care about business cards or Christian Bale. Well, shame on you. Christian Bale is a national treasure. I actually don't know where he's from. He's not from here. He's a national treasure to somebody. Yeah. Today, we're going to be talking about contrarian investing and what it means to go left when everybody else is going right. Why you should zig instead of zag. And why when there's blood in the street. That is the time to get. I don't know, I don't remember how that reference went, actually, now that I'm starting to say like blood in the street, I'm realizing that's actually a really strange analogy.

Dan Krueger: [00:02:03] It's it said it was said, no, it's a Wall Street thing. Yeah, once when it was in the street, that's when you go out and buy. I don't know how the actual phrase goes, but it's the blood and street part. The people say,

Anthony Vicino: [00:02:15] Ok, OK, yeah. And if I remember, this has nothing to do with today's episode, but now my mind is kind of stuck on this. I'm kind of curious. I think this had a lot to do with World War Two. It was a Rothschild. I think that said this, maybe this quote and I think I actually had to do it. The war in blood, actually in the street. And there's like all this action, a lot of money for the war. Yeah, there was a lot of turmoil and chaos and things were going wrong. It's like, that's the time that people make money. And OK, now I know how to make this connection. And this is actually a perfect connection because, in the last year, we've seen a lot of tumults, we've seen a lot of chaos and this is tying into what we mean by being contrarian investors, which we're going to unpack here in just a couple of minutes. So stay tuned for that. We're going to talk about the blood in the street. But before we do Mr. Dan's bad advice, Kruger hit me with your bad advice.

Dan Krueger: [00:03:04] All right. So this week is going to be a good one. If it ain't broke, don't fix it. Sounds like good advice.

Anthony Vicino: [00:03:11] If it ain't broke,

Dan Krueger: [00:03:13] Don't fix it, yeah, is there something wrong with my grammar?

Anthony Vicino: [00:03:16] I mean, it's no. If it ain't broke, don't fix it. I'm just I'm trying to unpack. My brain was as bad advice. It seems like it's working. Yeah, why do anything with it? Just let it keep doing what it's doing? Yeah.

Dan Krueger: [00:03:27] And I'm pretty sure we've said something very similar to that. Quite a bit in the, you know, we're hyper-focused on our niche, right? And it works really well. So why do something different? The point of this bad advice is to really draw attention to the fact that even though you might be getting really good at a thing and you've been focused on it for a very long time and you think, OK, I know this better than anybody, I am the expert on this thing. You don't know what you don't know, and there's always more to learn. And if you aren't open to receiving that information, you could miss it. And that could set you up for some problems. So remain humble no matter how good you think you are a thing. Remain humble, remain open, and always be learning because you know, we're we've been in this business for a long time and we're still learning something every day. And I was just thinking about it yesterday, actually. I think that's what one of my most favorite parts about this business is the fact that we're just constantly learning because I really enjoy learning, and there's just so much to learn in this business. So every day is a mind-developing experience for me. It's very engaging.

Anthony Vicino: [00:04:36] Yeah, the way I think about real estate is that it's simple but deep. And when you think about different types of games, I'm a big chess player. Chess is a simple game, but with really deep complexity, meaning it's simple in the sense that the pieces only move in so many different ways. And once you understand those rules and how the pieces move, anybody can play that game. And that's why it's so accessible to everybody, but is also a very deep game of tactics and strategies, which means that we can have grandmasters playing this game that children are also playing. Now compare that with Monopoly. Monopoly has a lot of rules, but the strategy isn't very deep, so it takes a long time to learn how all things work. I'm still not really sure how the game works, but once we kind of figured it out, then the strategy is pretty set in stone. So it's a very complex game, but very shallow. And that's what I think is really cool about real estate. It's simple but deep, and when you realize that it's simple but deep, you're constantly learning and saying, like, how can we hone our strategy? The rules haven't fundamentally changed, but how can we continue honing our strategy and our tactics? Because at the core of if it ain't broke, don't fix it. Is this idea that it's as good as it can be right now? I'm not saying go and fix it and tear it down the whole machine and rebuild it from scratch. But you should constantly be trying to improve the machine. How can we make it just a little bit more efficient? Because if your machine is the same today as it was five years ago, I can tell you you're losing market share, you're losing traction. That machine isn't as good as the competition, and if you don't apply energy into the system, it's going to continue decaying and you're just going to continue losing.

Dan Krueger: [00:06:15] Yeah, I think people underestimate the fact that I think you quoted Tom at one of our previous episodes when he said something along the lines of If you're not growing, you're dying, right? That was kind of the message. I forgot how you phrased it exactly,

Anthony Vicino: [00:06:28] But well, he ties that into the second law of thermodynamics, which is that we're constantly moving towards a state of entropy and chaos and that unless we apply energy into a system, the only two states in the universe are either growing or decaying. There is no static state, and if we don't apply energy ourselves, the energy of the universal tendency is to decay, and it's the same with a machine in a business.

Dan Krueger: [00:06:50] Yeah, yeah. And you know, in the business context, you're a lot of people think that, OK, this is working really well today. Maybe I don't want to grow. Well, that's perfectly fine. Maybe you want to stay at the current size, your current revenue, and a current profit and just you don't want to hire more people. Perfectly fine. Perfectly fine. But if you stop innovating, you're not just going to cease to grow, you're actually going to shrink because other people who are innovating are going to steal your market share and you are going to go out of business. It's only a matter of time. Look at the newspapers, right? So you just because you don't necessarily want to grow, it doesn't mean you stop developing. It just means that you keep developing to at least maintain you've got at

Anthony Vicino: [00:07:28] At least do that. I actually don't even think not growing as an option, right? Like if the market is currently expanding at 10 percent, right, like the market's growing at any given moment by 10 percent. And in your industry, it might be different. It might be 20, might be 40 percent. Whatever like the market is increasing at that rate. So if you're not growing, at least at that rate, then you are losing ground from where you were prior. And if you're OK with that, if you're in your sunset years and you're ready just to let the thing kind of decay into oblivion and then retire and be done like cool, that's fine. But if you're looking to at least maintain your current standard of living, you have to keep pace with inflation and with market growth. And so I don't think that you can afford to just set it and forget it, create the machine and then trust that in. One year, five years, ten years, it's going to be just as effective just because what got you here won't get you there. Like we've heard that that maxim all the time, but it's totally true.

Dan Krueger: [00:08:18] Yeah, yeah, that's a good point. Inflation to I mean, if you're not at least growing a, you know, three to five percent, I mean, three to five percent growth is break-even basically, right. So if you're not doing that, you're not breaking. Even if your growth is zero, then you're actually negative when you factor in inflation. So that's a good point.

Anthony Vicino: [00:08:34] I made a good point anyway. I'm going to put that we

Dan Krueger: [00:08:37] All get one. Oh, so

Anthony Vicino: [00:08:39] Now let's tie this in with contrarian investing, which is the theme of today's episode because. The only constant in the universe is changing, right? That's the only thing we can really rely on is that things are going to change in the future. They're going to be different than they are currently. And so we have to be we have to have a thesis. We have to have a framework for understanding and looking at the world for navigating those changes. And if what works today won't necessarily work tomorrow, then we have to have our head on a swivel. We have to constantly be evaluating why we think what we think now. In the last year and a half, we've seen so much change with COVID, with eviction moratoriums, with and specifically in the Twin Cities. We had a lot of social unrest with everything happening on that side of the equation. It was a very hard year for Minneapolis in particular. And so as these things happen, we have to ask ourselves, Well, how does this influence our strategy or framework our way of moving forward in the world? And so, Dan, let's unpack that. What comes to mind initially is as we talk about. Change.

Dan Krueger: [00:09:48] Yeah, I guess the first thing that you know, just out in the contrarian topic and things changing. Just want to kind of provide a little color there. We're not necessarily saying be a contrarian for the sake of being a contrarian and saying, Oh, everyone's running that way, I'm going to go this way, right? I'm just going to do the opposite. And that's the extent of my parameters for whatever it is that I'm going to be doing. We're saying that like, do your homework, figure out what makes sense based on all the data that you have. And if everyone's going the other direction, stick to your guns, right? That's.

Anthony Vicino: [00:10:18] So that's a great clarifying point about what it means when we're talking about being a contrarian investor and specifically, this is top of mind for us because by the time you're listening to this, this is we're in the past and so we're long gone. But we're we've been at a conference the last couple of days and we've been hearing over and over a lot of people who we would look at and say those are really good investors and starting to say, we're changing our investment thesis. We're no longer looking to invest in cities. We're looking to start moving out into the suburbs a little bit. Specifically, this is a conference focused here in the Twin Cities, which is Minneapolis and St. Paul. In the last year, with COVID eviction moratoriums and all the social unrest that Minneapolis in particular experienced, a lot of investors are now saying, nope, not investing in the cities anymore. We see the opportunity out in the suburb, and we were hearing this over and over from pretty much everybody was that, oh, we're moving out into the suburbs. And this isn't just the Twin Cities. This is, I would say, at large. A lot of investors nationwide are starting to say, Oh, cities are dying, New York, not not going to invest there anymore.

Anthony Vicino: [00:11:20] We're going to go out into the suburbs because that's where the opportunity is. But the problem with that and the way that we look at it is if we go out into the suburbs, we're competing with all the same people that are competing and we're just chasing the fad or not. Even it's not even a trend at this point, whereas as they're all leaving, we now recognize maybe there's an opportunity. There's blood in the street here in the cities. And since we're already focused here, we already have our systems and our teams here. We can double down on that. And when there is tumult, where there is a change in chaos, there's opportunity. And for us, instead of going in trying to chase the next opportunity, which is in a different area outside of our focus and it's going to be highly competitive, we're saying, OK, all these people are leaving now. Maybe we can get better price points. We can find a number at which these investments make a lot more sense. And sure, it'll be harder in the interim, but it's really hard to bet against Man's greatest invention, the city.

Dan Krueger: [00:12:14] Mm-hmm. Yeah. And I think that's a really good point there at the end because it ties right into the point I was going to make, which is that we're not being contrarian for the sake of being contrarian. We're not just saying, Oh, everyone's going that way, so we're just automatically going to do the opposite thing. I don't think that's a good investment thesis in and of itself. But when you factor it in with other data, it becomes a really great indicator or confirmation. Datapoint, I guess, is how it phrased that because we've got our parameters right, we know what we're looking for, we've got our job growth, we've got our income and we've got our market rent growth. We've got all these data points that we look at and we've got this fundamental thesis that we're sticking to. And everyone's kind of running the other way. But there are also some fundamental laws of nature that are at play here that I think a lot of people have forgotten. One of which is that balance leads to excess and excess leads to balance, right? And so what we're seeing right now is an excessive reaction to a black swan event, I guess, well, we'll use that term and inevitably things revert to the mean they're going to come back to their standard format and to kind of double down on that a little bit more. The standard format is city living because human beings are conditioned, and you'll appreciate this as a psychology guy. We are conditioned to aggregate in tight areas in cities, right? That's thousands of years of of of of behavior that has made it this way. And that's not going to change because of, you know, the probably the eight hundredth virus that we've had as a species like it's not going to be COVID. That changes that one thing. It's like we're going to go back to the norm. It's only a matter of time. And so we'll be here waiting with all the properties.

Anthony Vicino: [00:13:51] Yeah. When I said that the city is man's greatest creation, I'm not saying that facetiously or ironically, it's true that a majority of the improvements and advancements in human civilization and quality of life occurred as a result of humans being able to aggregate in a close area and do trade and get the benefits of scales of economy. So that now I think it was Adam Smith talking about the specificity of tasks in how I can't remember exactly how we put it, where it's, you know, you can't do everything yourself. You're right. Even something as simple as making a pen is an entirely complicated process that requires somebody to go and mine the ore and then to handle the transportation of that ore that can then be refined and then designed. And then once it's into a product to market it and take it to like there are a million people involved in the process and the city allows for that to happen for people to focus in specifically on what they're doing rather than trying to do everything at once. So with that and said, we are very bullish on cities in general, and when you look at New York and you look at San Francisco in the last year, yes, there's a lot of smart people moved out of the cities.

Anthony Vicino: [00:15:03] But fundamentally, the reasons that people were living there in the first place have not changed. In the short term, yes, but in the long term, human behavior and the benefits of living in a city are going to come back. So now, as we think about it, in particular with our market, the Twin Cities, we and we don't want to just be bullheaded and say we aren't going to change our thesis ever right. Like, that's back to the bad investing advice. That's a bad idea. Like, we need to constantly be reevaluating why we feel the way we do about our thesis. And for us, when it comes to the Twin Cities, we look at macroeconomic trends and we ask ourselves, Well, have has this fundamentally changed? That's number one because where there's a good, strong, diverse economy, there are jobs, and where there are jobs, there are people. So then do we still have that?

Dan Krueger: [00:15:52] Yeah. I mean, we go off on data. We don't go off of feeling and emotion and following others. We look at data and that's what we respond to. And the data continues to support our thesis. And we just had something come across our radar recently as someone we partnered with shot an article from. I believe this was Motley Fool, Motley Fool, Motley Fool, and they do a lot of financial content production, a lot of stuff, and like the stock market and like the public markets. But they had it was either an article or something about the top cities for income relative to the cost of living. Right? Where do you get the most bang for your buck if you're making a buck to live in this city? You know, how much is it going to cost you to to live there, right? It kind of looks at that as a ratio and I think it was I think we were somewhere around like the one-point twenty-five mark, right? So the cost of the income was one point twenty-five higher than the average cost of living or something like that. And that actually ended up. It's fun, actually both Minneapolis and St. Paul. Let's top list Des Moines was number one, Des Moines number one, St. Paul was number two in Minneapolis, was number three for a, I guess, you know, the most efficient place to live from an economic perspective, right? You get the most bang for your buck here and which is incredibly powerful.

Anthony Vicino: [00:17:11] It's yeah, it's incredibly important because this at its core is what's called the affordability index when we're tracking median income in relation to the cost of living and Minneapolis St. Paul is five percent higher than the national average. And what that means is that your money goes further when you're living here. And as we're talking about people living more in a remote work environment, that doesn't mean that they're going to go live out in the boondocks. They're just going to have more choices about what cities that they want to go live in and if the affordability index in the Twin Cities is very high. And this is why in the last year, there was another study that came out that said the Twin Cities were one of the top 10 cities for remote workers. This is why, because their money goes further and when there is more disposable income, people have a higher quality of life. And yes, we have winters that really sucks. But that's something entirely different from the macroeconomic viewpoint, which when we look at that, we say OK from an investment thesis that is still there.

Dan Krueger: [00:18:08] Yeah. And it's also really important to note that you don't want to look at this data point in a vacuum because there might be I didn't look at all the other cities. I mean, I stopped when I got to Minneapolis. Yeah. Had you looked into that number three? But there's there might be cities where this metric also looks good, but they don't have the other fundamentals to support it, right? Maybe the cost of living. Maybe your money goes so far because nobody wants to be there, right? You've got to take a look at some other data points to make sure that's not the case. So you've got to make sure population growth is there. You've got to make sure job growth is there and you got to make sure you've got a diverse job market, which we have more Fortune 500 companies per capita. We've got the job growth and we've got actually really low unemployment relative to the rest of the U.S. below average and population growth. So we've got all these factors showing the people are coming in. We've got a really great catalyst for them to come in a lot of jobs and low cost of living.

Dan Krueger: [00:18:59] And I think the most important thing from a real estate investment perspective is you've also got to look at these types of data points. When you're looking at different cities that you're looking at this data for, you've got to take a look at it and say, you know, if the cost of living is super high, are my rent projections realistic? How high can rents go if the cost of living is already stretched for people? Right? So what I see on this data is it's a really great draw for people to come in and there's a ton of runway as far as growth because prices can go up before it starts to be detrimental to the people that live here. So for an investor, that means there's a nice long runway for you to make a lot of money there and not have to worry about people getting too strapped for cash. Unlike some of the other hot markets that have been going crazy for years where you are not getting nearly as much for your money relative to how much people are getting paid.

Anthony Vicino: [00:19:47] So, yeah, Minneapolis, in particular, is a really interesting city, and that we just recently passed the 20 40 plan, which is the very one of the very I think it was the first city in the country that is going back and looking at single-family zoning regulations and rezoning that so that we can now go in there and build multi-unit complexes. And historically, a lot of cities don't like to do this because the single-family, residents and people that own these homes are like, No, we don't want apartment buildings going up near our homes. That sucks. And so they lobby against it and they shoot it down. But there's such a supply-demand crunch in the Twin Cities that something has to be done and we recognized, well, there's not enough living here, there's not enough supply for all the people. So the city has allowed us to now go and rezone and start to do start building to improve that supply, which presents just a ton of opportunities for us. If you want to get into new development, but recognizing that the vintage multifamily assets that we're buying, are in such hot demand. There's just not very much inventory to go around. And so if you can get those assets, they're only becoming more valuable over time.

Dan Krueger: [00:20:52] Yeah. And I think this is also, you know, especially good data to get because there's been a lot of political chatter recently. You know, all over the U.S., but in our area as well about the concept of rent controls. Right. And so there's a lot of people, you know, specifically, people who are not from here or people who are newer to investing, who are taking a look at this and saying, Oh, wait, this is this going to happen? But none of the data supports that. It actually should happen, right? And that that's what's kind of nice about having this data come in because it reinforces the fact that it's not necessary here if the cost of living is so low relative to income that does not support rent controls, right? If we look at, you know, the density program that Anthony, you just mentioned the with, with being able to rezone and develop, that is the other approach to trying to control rents, which is creating more supply. So it would make no sense to be the first to take that kind of initiative to create more supply and have this ridiculously great cost of a living situation like those things. Do not support rent control, so all of this is just kind of noise, it's political chatter, it's, you know, it's people trying to get elected or not elected, you know, it's just political noise. I really don't think there's a solid chance of this happening because none of the data supports it.

Anthony Vicino: [00:22:11] Well, here's the thing I was talking with somebody yesterday at this conference about rent control in particular. And my stance is that regardless of whether rent control goes into inaction and what we've seen across the world is that at different parameters of rent, control by and large really wouldn't have affected any of our returns here in the Twin Cities. It wouldn't have affected how we execute our business plan. So I'm not super concerned if they enact rent control consistent with what we've seen in other markets. Not a big deal for what we in particular do doesn't change our thesis. Now, what if they come back and they do something really draconian? They go way over the top and they do rent control to a degree that nobody's ever seen before? Well, when the facts change, we change our minds. What do you do? And so if something comes through in a nuclear bomb is about to drop on the city, it's not going to happen out of the blue. We're going to see it like these things don't just happen, and all of a sudden it gets passed. Next week we're going to have a runway. We're going to have time to go, OK, well, this is coming down the pipeline. We're going to need to make a fundamental shift to how we approach this, because now if we're no longer able to raise rents at all, let's say that's like a super draconian thing, then what we do isn't going to work. So now what are we going to do? But without any line of sight on the intentions of anybody doing that, there's no reason to change the plan at this point.

Dan Krueger: [00:23:29] Yeah, I think it's very well said. That's what we try to stick to. When things change, we change. But real estate is a very slow industry and its politics are small. So this is going to be a really long heads up that we have. There is something changing that'll be plenty of time to pivot. So it might be a good time to start looking more at development-type deals like we've got a lot of properties that are on really good pieces of dirt, and the rent growth on those properties isn't all that substantial. What we could do is take something, tear it down, and rebuild something great where it's not predicated on rising rents. It's the business plan that is predicated on creating something new and valuable that would help. The city wouldn't have any issues with the rent control stuff, even if it was the most draconian thing. So there's always a solution. You just have to be aware of what's going on, looking at the data, making rational decisions, and pivoting when you need to pivot so

Anthony Vicino: [00:24:19] That I think that's a perfect plan, right? Like if if there was some inaction or some action that came through and said that you can't raise rents more than two percent per year, OK, well, that's really hard for us to operate as value. Add operators that want to go and do renovations and then improve the units and maybe get seven percent right. So that could be a problem. But we're going to see that coming with enough heads up because we usually do our renovations in about 12 to 18 months. So we're just going to get those renovations done, get the rent increases. And then from there, we'll just ride the organic rent improvements. But then we're going to be looking for opportunities and say, Well, what's the highest and best use now? What can we do? Well, if there is this rent control plus the 20 40 plan, which is saying, Hey, we really want you to build, then we're going to go, let's go do the thing that they're incentivizing us to do. We'll go build. So right now, multifamily value add. Oh, it's gorgeous. It's beautiful. We love it. If that changes, we'll change. We'll pivot and adapt. But right now, we don't see the reason to do it.

Dan Krueger: [00:25:15] Yeah, exactly. Simple, right?

Anthony Vicino: [00:25:16] Simple. Not necessarily easy. It's always hard to stick to your thesis, especially when you're seeing everybody kind of changed directions and say, Oh, we're going to the suburbs now. It's like, Well, maybe I should go to the suburbs, but it's the same conversation people say when they're like, Oh, single single, sorry, self-storage mobile homes like, Oh, this is the hot new thing. Crypto like, OK, crypto is pretty cool, but you just can't change what the tailwinds are. You have to have the conviction of your thesis and understanding why you made that judgment in the first place. And if the rationale for that judgment is still in place, then why would you change your mind? Yeah, right. So that's what it means to be contrarian, at least how we say them. So it's kind of a rant, an interesting one for us to talk through how we feel on some of these topics. So hopefully it's brought you guys a little bit of value. I don't know if it didn't. Well, sorry. I apologize. It hasn't. Well, let us redeem ourselves now because this week's book recommendation is really good. I just read this book and it's 600 pages, so it's not a light read, but it's actually reading really easily for it's about economics. And I know that sounds dry and not very exciting, but seriously, it's so good. I don't consider myself to be like an economics freak, but this book got me really excited about economics.

Dan Krueger: [00:26:27] 100 percent. Yeah, if you read a good econ book, it gets pretty addictive. I mean, if you're at all into the stuff, I haven't read this one yet, and he told me about it right before the show and I'm really excited. But I've read books that are similar to this that are fairly dense and you look at it, it's almost like a textbook. But there was one that I read that was called the history of real estate and banking. I cannot remember who wrote that, but Charles Dobbins recommended that was a great episode. If you haven't listened to that or watched it, go back and check it out one of the earlier ones, but. Really, really good, really good. This is a killer guest. Yeah, and he recommended that one. It was just a really detailed history of everything related to banking and real estate in the U.S. from the beginning of our history. It went from basically through every single market cycle in like 10 to 15-year increments and showed all these charts and explained everything that was happening. I was absolutely fascinated by it. I could not put it down, sat on the balcony with my little stogie, and just went to town. It had a day with it and everyone else I've talked to about that book, they just glaze over and they're like, That sounds boring.

Anthony Vicino: [00:27:29] But this book, actually, that I'm going to recommend is really good. It's super interesting. It's called Basic Economics by Thomas Sowell or soul. It's all. It's so well. It's a big book. Don't let that scare you. And specifically, in the first hundred pages, he spends a lot of time talking about pricing control and rent control, and a lot of the unintended consequences of well-intentioned legislation that leads to very undesirable consequences. And that's really the theme of the whole book is really understanding. Economics is a very complicated thing. It's tied into so many different variables. When you move one thing, it moves everything else. And so this book really helps simplify a lot, and I'm a big guy that's about simplifying things so highly. Recommend basic economics.

Dan Krueger: [00:28:18] Yeah, and it's interesting that you brought up the whole rent control thing there because it's this book was not on my radar, so I did a little Googling right before this episode, basically, so we could figure out how to pronounce his name correctly botch that. But he's not the demographic that you would expect to be pointing out the downsides of rent control, which is good because typically when you hear somebody an economist or politician talking about why rent control is bad, it's an old white man. So you look at it like, OK, yeah. And so that is a very interesting data point. So I'm very interested to read it now for that reason as well to hear his perspective because he knows his stuff, he needs the demographic that he should expect to be not pointing that stuff out.

Anthony Vicino: [00:29:03] He's he's sharp. And one of the things I really like about this book is it talks without talking about it in this specific way is like understanding the incentives of different groups of people and why they're incentivized to do the things. And that's really what economy economics is really about is understanding the incentives for wanting this limited amount of resources to be used in this way. And when you understand that the initiative or the incentive for a politician is very, very different, ultimately from what it would be if their goal was to actually help the economy or the world or their constituents, you would realize that a lot of the things that politicians are doing are to get votes so that they can survive the next election cycle in the next two to four years, and they're not having to live with the constant the consequences of their legislation 50 years from now, which by then everybody is going to have forgotten they're going to be out of office. The people that voted for them are going to have moved on. Nobody's going to care and be able to make that connection anymore. But it's really important to understand what is the incentive of the person on the other side of the table. And once you get that, whether it's investing or in business or in politics, you gain so much more insight into the psychology of that person. You can predict why they're doing what they're doing.

Dan Krueger: [00:30:20] Yeah, it's a really powerful thing to pay attention to. I mean, like we've said all the time with respect to the real estate investing business, right? Vetting operators looking at different financial advisers, we always say, follow the money, like how does this person get compensated right? If you can figure that out, then you can figure out what they want. Same with politicians. I mean, you hit it on the head. It's all about kicking the can down the road. They want to get re-elected, and the problem's always going to be the next guy's problem to solve, like they never have to be around to deal with it, so they're not incentivized to care.

Anthony Vicino: [00:30:52] Yeah. So this book is fantastic. Basic economics Thomas Sole Saule not exactly sure how to pronounce his name is probably one of those, too, but it's super good guys. I go, go read it, do yourself a favor, sharpen your blade. This is a great tool for that, and hopefully, that redeems us if you found this episode really lame. Hopefully, that book recommendation was salvaged. Actually, I thought this episode was really good.

Dan Krueger: [00:31:13] I enjoyed it. We got to actually, I mean, history, real estate, and banking

Anthony Vicino: [00:31:16] History of real estate and banking. And basically, oh man, this is not light reading this time, guys, so won't keep you busy. I hope you hope you wear your weightlifting belt heavy lifting. So that's going to do it for us. We appreciate you taking a little bit of time out of your day to listen to us, to let us in your ear holes. We appreciate you. Now, before you go do us a favor, go drop a review over on Amazon, not Amazon. Or you can do it there too. For the book. Passive investing made simple, otherwise good iTunes and drop a review that would be even more helpful for the podcast. So that's it. That's all. We'll see you next week.