5 Things You Should Know About Alternative Investments – Episode #386

Alternative investments—venture capital, private equity, collectibles—are assets usually held by institutional investors. With more complexity and a greater degree of risk, should individual investors still look into them? On this episode of the Dentist Money™ Show, Ryan, Matt and Rabih talk about five factors an investor should consider before jumping into private investing.

 

 

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Podcast Transcript

Ryan Isaac:
Welcome back to the Dentist Money Show brought to you by Dentist Advisors a no commission, fiduciary, fully comprehensive financial advisor just only for dentists. Check us out at dentistadvisors.com. We love answering your money questions, reach out to us. Today on the show, it is my pleasure to have Matt and Robbie. Special guest Robbie on the show. The three of us have been talking about a few articles that have been out recently about private investments and the Yale Endowment and a few other big funds that are making changes to the way that they view private investments for their investors and their clients. And we just thought it would be a really interesting conversation to discuss how those things affect a dentist in a dentist investment strategy.

Ryan Isaac:
And more than right or wrong or good or bad this is a discussion about principles and questions to ask yourself. And really trying to figure out what are your priorities? What are your main goals and do your money decisions support those goals? So, thanks to Matt thanks to Robbie’s always fun conversation. Thanks to all of you for joining us. And if you have any questions go to dentistadvisors.com. Click on the book free consultation link. We’d love to have a chat with you and point you in the right direction and answer your money questions. Thanks for being here. Enjoy the show.

Jess Reynolds:
Hey there it’s just with Dentist Advisors. Did you know we recently launched a new service called the Dentist Money Membership? It’s an affordable way to support your personal financial strategy with cutting edge technology and guidance from dental focused CFP advisors. The Dentist Money membership includes the Elements financial monitoring app and annual financial checkup, CE courses, an automated investment platform and more. To learn more about the Dentist Money membership and to get started go visit dentistadvisors.com/money.

Announcer:
Consulting an advisor conduct your own due diligence when making financial decisions. General principals discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors or registered investment advisor. This is Dentist Money. Now here’s your host Ryan Isaac.

Ryan Isaac:
Welcome to the Dentist Money Show where we help judges make smart financial decisions. It is Friday and I am Ryan and I’m here with Matt as always. And also a special guest beloved by the people, Robbie, welcome back Robbie. What’s up guys? Thanks for being here. Hello.

Matt Mulcock:
Hello Ryan. Hello Robbie.

Rabih Dimachki:
Hello.

Ryan Isaac:
Hello. You both said at the same time and then hello.

Matt Mulcock:
Hello. Yeah.

Ryan Isaac:
I’m excited for today’s episode because there’s a lot of I’ll just say this at a high level when people have success maybe there’s just a human characteristic when we start getting good at something or we start to feel we’ve mastered something and maybe not even master as in it’s complete, it’s finished but we start to get to the point where we don’t notice the pain of it anymore. We’re in it, it’s a habit it’s when you hear…

Matt Mulcock:
It’s part of your identity or something.

Ryan Isaac:
Yeah. You’re just doing it. It’s like, when you hear a dentist who’s just absolutely killing it and they’re like, “This is easy.” And you’re like, “It’s not easy, you’re just used to it.” Or a runner who casually runs 20 miles for training and they’re like, “It’s easy.” You’re like, “It’s not easy, you’re just used to it because you’re good at it now. You did it for 20 years and now you’re good at it.”

Matt Mulcock:
Like my neighbor who happens to also be a dentist by the way and a client who for his 50th birthday decided to run 50 miles.

Ryan Isaac:
Wow. It’s that kind of crap. It’s like no…

Matt Mulcock:
And he did it without breaking a sweat. You know who you are.

Ryan Isaac:
And then it was casual, I know, yeah. What’s up Eric?

Matt Mulcock:
He will say, “What’s up Eric?”

[laughter]

Ryan Isaac:
Yeah. He’ll say that’s easy but it’s not easy. And he’ll go run a seven figure dental practice and be like, “I don’t know. It’s boring. It’s easy now.” It’s like no you just did it for a long time and you’re really good at it now. Humans are funny. What is that? What’s the bias there? Our brains push out stuff that’s no longer novel and puts it on autopilot and then we start thinking it’s easy or below us now? I mean, why did dentists run multimillion dollar practices and then somehow feel that’s there’s a better step. That’s below them now and they gotta do something harder or more sophisticated or complex. What is the brain doing?

Matt Mulcock:
I feel for better or for worse, the human brain is wildly adaptable. So, we can adapt to any situation. Again, for better or for worse. And you see this in psychological studies that talk about hedonic adaptation. Right? You adapt to your surrounding which leads to lifestyle creep. This is why you buy the new car. The car is really cool. You love that new car smell for about a month or three months. Like whatever it’s…

Ryan Isaac:
Yeah, I think new car like 60 days, you care, maybe.

Matt Mulcock:
Yeah. Whatever that timeframe is. And then before it it’s just a car.

Ryan Isaac:
It’s just a damn car.

Matt Mulcock:
And then to get that dopamine hit you have to get something new and then you adapt to that. So I think I feel you’re kind of speaking to that right now even at the career level or really any level of life.

Ryan Isaac:
Yeah. Anything.

Matt Mulcock:
Like we just adapt for better or for worse.

Ryan Isaac:And for the better part is that it keeps us, maybe that’s the evolution part that actually keeps us growing is there’s a part of our brains that searches for other things that’s actually good, because it keeps us progressing, and growing, and challenging, and pushing new limits. And if we didn’t have that we probably wouldn’t have accomplished the things that we have in the first place. Right?

Matt Mulcock:
That’s a good point. It’s probably what’s led to modern society and the growth we’ve seen over the last, however long thousands of years of humans.

Ryan Isaac:
Yeah dude. Our buddy wouldn’t be running 50 miles and running a multimillion dollar dental practice if that part of his brain didn’t exist in the first place to get into the pain in the first place. ‘Cause it wasn’t easy when he began. But then the downside is…

Matt Mulcock:
By the way I haven’t run 50 miles in my life just for the record. [laughter] So he did it on his birthday.

Ryan Isaac:
He did it on his birthday. It’d be funny. And so yeah. And so there’s good, we’re not trashing on it but there is also the downside of feeling there’s something else. This thing that I’ve mastered is no longer good enough for me. I need to move on to something else. And that can be dangerous. That can actually cause us to ruin what we’ve built as a good foundation in the first place.

Matt Mulcock:
By the way I’m just waiting for Robbie to give us the answer. You and I have been sitting here we’re talking.

Ryan Isaac:
We’re rambling. Robbie. What save you.

Matt Mulcock:
Robbie, what is the answer?

Rabih Dimachki:
I’m nodding my head. I agree with you guys. I like this conversation.

Ryan Isaac:
Oh, we agree.

Rabih Dimachki:
I think, it’s an important point and I think because at some points our brains fail to distinguish between a startup mode and maintaining mode. It takes a different mindset to build something but also completely different mindset to maintain it. And this applies to everything. No.

Ryan Isaac:
Yeah. ‘Cause maintaining there…

Matt Mulcock:
That’s the answer. That’s the answer.

Ryan Isaac:
That was the answer. I said it. [laughter] Yeah. Going off of that though because the maintaining mode, that’s the mode where you need patience and you need long-term thinking. When you’re in that startup mode and you’re starting to run your first 10 miles you’re kind of in a survival panic and everything’s so short term. But you get into maintenance mode and your brain has to start thinking long term which is the problem with human brains. We’re not good at that. I’m guessing. I’m not a psychologist. I have no idea what I’m talking about. All right here’s the…

Matt Mulcock:
Oh, sorry good. Let’s get to the point. Yeah let’s get to the point.

Ryan Isaac:
I was gonna say here’s a reason why that…

Matt Mulcock:
Why are we even talking about this?

Ryan Isaac:
We’re talking about this because there was a series of articles and I think most of these are fairly recent. I’m just looking at the dates on them. They’re fairly recent articles about a subject that’s really common and popular among dentists which is the concept of finding something else to invest in. When you think of most dentists there’s probably three main asset classes that most dentists are involved with. And that has to do with building a private business which is usually just their practice being involved in real estate which is usually the house they live in and the building they work in. And maybe a piece of investment real estate and then public markets, stocks bonds, mutual funds.

Ryan Isaac:
The three big boring ones that take 20 years to turn into something and they do if you stick with it. But the question comes up like, “Well what else is there? Well what else can I do?” And I there’s probably a lot of reasons why people start asking that, but that’s the topic we’re talking about today. And so there was a few good articles Wall Street Journal articles that we’re gonna kind of outline and talk about, talk about some of this stuff. And what disclaimers do you want to put? I want to say before we start this isn’t a trash these things episode. This isn’t these things are wrong or bad.

Matt Mulcock:
Oh, then why am I here?

Ryan Isaac:
Yeah. [laughter] This is what Matt specializes in.

Matt Mulcock:
That’s exactly what I was signing up for.

Ryan Isaac:
Yeah. Matt’s is like I’m not recording on a Friday if I don’t get to fired up about something.

Matt Mulcock:
All right, now we’re gonna get spicy on a Friday afternoon.

Ryan Isaac:
Yeah. No, these articles are cool. There’s some really great data in here and I think there’s some good advice in here and there’s good context and lessons to take away from this. So, anything else you guys wanna say about today’s disclaimer.

Matt Mulcock:
Just glad Robbie’s here to set us straight.

Ryan Isaac:
That’s fair.

Matt Mulcock:
And hope you find it that way.

Rabih Dimachki:
I can say the same with you guys. Let’s dive into it.

[laughter]

Ryan Isaac:
Let’s, do you guys have a preference which one of these three we start with? Do you want to start the Yale one?

Matt Mulcock:
Yeah that’s great.

Ryan Isaac:
Is that good with you guys? Okay.

Matt Mulcock:
Love it.

Ryan Isaac:
So, this is Wall Street Journal March 10th, 2023. Yale invests this way. Should you?

Rabih Dimachki:
The Yale investment model is actually a 50% allocation to alternative investments, which to a usual retail investor that’s like, “How do I get my hand on that? How can I capture those ads classes that are VIP that no one knows about and I want to be part of it?” Right. And they ended up doing really well. The reason it’s famous is because they had a compounded return higher than the market. But I think there are multiple layers to it to which I think I would love to spend hours explaining [laughter] there are multiple layers.

Matt Mulcock:
Let’s do it. Let’s do it.

Rabih Dimachki:
To why they showed up this higher return and whether they apply to an individual investor because it’s an endowment. It’s the fund that funds all future projects and scholarships and expansions to a university with an indefinite time horizon. So, where do you guys want to start?

Ryan Isaac:
Well, you kind of started where I was gonna ask first, Yale invests this way. That’s part of the the title. I was gonna say what way? What does that mean? You said, they invest half of their portfolio in something called Alternative Investments. How would we explain that to somebody? What does that mean?

Rabih Dimachki:
Well alternative investments is a big umbrella and a lot falls under it. I think the biggest portion is private markets. AKA investing in companies, or investing in commodities, or investing in lending debt that is not publicly traded on exchanges like what we do with public stock market or bonds. Popular names that are catchy on the air are usually venture capital, private equity, merger and acquisitions.

Matt Mulcock:
Now, just speak in my language Robbie. Speak language.

Rabih Dimachki:
Hedge funds, long short strategies. They’re all sexy names but we really want to dig into it. With venture capital you’re investing in a company that’s still too young and too risky to be on a public exchange. Right? Or if you’re doing a leverage buyout, a company’s getting bankrupt and a big player decided to borrow some money, buy it out to try to fix what’s inside it and then flip it over. Or when you’re doing long short strategies and hedge funds you are looking at statistical signals that deviate from one another and you invest in opposite directions hopefully, they converge back to that statistical knowledge that you know of and you make money off of it. So, they are simply just different strategies that aren’t available everyday, you have to go and dig for them and they are not somewhere where there’s a lot of information.

Rabih Dimachki:
And some hedge fund managers or private equity managers go out there create a fund out of it and if successful actually make a good return. But it’s not really something from a different planet. It’s something that you can do. If you go to a grocery store and you saw that in one grocery store the eggs are very expensive right now. A dozen of eggs is cheaper in one store than another store. You buy it from one and you go to the next store and you sell. You just did arbitrage. This is something of what hedge funds do but they do it with stuff that we as individuals don’t have access to.

Ryan Isaac:
So, I want to point out too how big is… The world of stocks and bonds is big, right? But it’s not so big that you can’t wrap your head around it. I mean there’s a finite amount of publicly traded companies and they’re all listed somewhere and you can buy them in big funds, and compared to the private world, when we say private investments we’re talking about everything from your next door neighbor’s new tech startup to these gigantic hedge funds and private equity funds that are searching scouring. I mean, they have teams of PhD level scientists flying around the world in villages and small towns looking for the next thing, the next piece of the economy, the next commodity export. It’s so big, it’s so expansive. Can you give some context about the size of the private investing world compared to the size of the public investing world? Or maybe that’s… No it’s just gigantic. It’s so huge.

Rabih Dimachki:
It’s huge given that it includes everything from your lemonade stand to…

Ryan Isaac:
Yes. Literally everything. Yeah.

Rabih Dimachki:
Yeah. It’s much bigger. It’s the difference between…

Matt Mulcock:
It’s basically, everything but stock bonds and cash. Right?

Rabih Dimachki:
Exactly.

Matt Mulcock:
I guess in real estate it’s own separate county.

Ryan Isaac:
But even private real estate when people are like I wanna…

Matt Mulcock:
Private real estate. Yeah.

Ryan Isaac:
Yeah. When people are like, “I wanna get involved in real estate.” It’s like that world is also so gigantic. It is so much big. So these are just really big worlds. Again, that’s not a good thing, it’s not a bad thing, it’s not right or wrong but it’s just that’s what it is. It’s huge. And what you were saying Robbie if I could recap that, if I could cascade if you will, you’re saying that the job of these managers is to go out and scour the earth in in search of these opportunities in different industries and strategies. And then that’s not something that I can’t just go to my TD Ameritrade account and access the thing that they, like with Ameritrade manager…

Matt Mulcock:
Call me after, we’ll talk. Call me later.

Rabih Dimachki:
It’s fine.

Matt Mulcock:
Call me after. Yeah.

Ryan Isaac:
Yeah. It’s hard because they’re playing with money that have so many zeros, that is required to be in that space a lot of times that it makes it inaccessible for the average person. Is this why people when you… Like on TikTok or just somewhere on the internet or just some Facebook group, someone’s selling a book or a course or a speech coming up in a hotel ballroom that’s $199 for the weekend or something, and there’s the secret investments that they don’t want you to know about.

Matt Mulcock:
It’s always Dave, who?

Ryan Isaac:
The wealthy.

Matt Mulcock:
Who doesn’t want you to know.

Rabih Dimachki:
Who doesn’t want you to…

Matt Mulcock:
Who doesn’t want to know about these things?

Ryan Isaac:
Yeah. I’m pretty sure they want to sell you everything possible that there is to sell.

Matt Mulcock:
Look I’m pretty sure the idea is for that you do know about them.

[laughter]

Ryan Isaac:
Yeah, that’s how they make money.

Matt Mulcock:
Exactly.

Ryan Isaac:
So, this kind of mystique around this stuff, right? It’s just huge. It’s really hard to access. It’s in dollar amounts that price out the average person by such a long shot. And there’s just this mystery around it which makes it… So when you hear Yale does it and it’s been going successfully for a long time you’re like, “Well, why wouldn’t I do that with my 100 grand in my brokerage account? Or even I sold the DSO and I’ve got $5 million why wouldn’t I take $5 million and copy the Yale Endowment format?

[laughter]

Rabih Dimachki:
The huge difference. There are multiple reasons why you’re not Yale and two of the…

Ryan Isaac:
Shut it down. That’s it. See you guys. Thanks for joining.

Matt Mulcock:
You’re not Yale. There’s the answer.

Rabih Dimachki:
The two main points are one, most probably the opportunities Yale is getting aren’t the ones that are being marketed as mysterious. You want to be there that’s one. Two, it’s when I meant you’re not Yale it’s the sheer size guys. We are talking tens of billions, hundreds of billions of dollars to be able to access such asset classes.

Matt Mulcock:
It’s over $40 billion by the way as of this writing…

Ryan Isaac:
The endowment…

Matt Mulcock:
It was Yale’s Endowment fund. Yep.

Ryan Isaac:
Yeah. Wow. That’s a lot.

Matt Mulcock:
So, to come back to Robbie’s point. You are not Yale. Well, I mean like I honestly.

Ryan Isaac:
You’re not well the article digs into it. The article lists. There’s some there’s some good tips, Matt you were gonna share something from this article about was it five things to think about before? Is it before? .

Matt Mulcock:
Well it’s just basically reinforced as Robbie’s point of the five reasons, before you invest in alternatives here’s five things you should be thinking about and it’s kind of another angle of saying you are not Yale and here’s my, basically.

Ryan Isaac:
Well, so if you want to go there first or I was gonna ask either one of you in the second part of the article or the title it says in Yale Invest this way. Should you? Do you want to tackle, what are the differences they’re trying to make between something of the size of a Yale endowment versus the average person. Even I would say the average dentist exit with a few million bucks or the DSO exit. That still a big price tag but still is a very different world. Do you guys want to say anything about what makes people different or do you want to hit those those five. Maybe that’s a good explanation Matt. Those that list of five things.

Matt Mulcock:
Yeah. Rob, do you have anything on that?

Rabih Dimachki:
I always do, but if you…

Matt Mulcock:
No, hit it.

Ryan Isaac:
Robbie go and then Matt you go, then you hit the list.

Rabih Dimachki:
Okay. The question is like, should you? Can easily be written like, should you invest in those asset classes? We’re talking about venture capital companies, private real estate, private equity. Well, you can, and maybe you should if you are at a certain net worth level where you have really excess cash. But what you need to take in mind is like, “Where do these asset classes fit in the global landscape of like risk return compared to the other asset classes?” Like the reason why Yale can invest in those products and be fine, where you might struggle in terms of like distress situations where you need cash, is because the required time horizon on such investments to actually capitalize, it’s much longer than the publicly available stock market, which we already think is too big. According to the average…

Ryan Isaac:
Most people don’t hold funds that long anyway. Yeah.

Rabih Dimachki:
So yeah, if you are expecting a venture capital fund to take 10 to 15 years to materialize, and you’re in your 50s, do you want to wait that long to… And waiting for an investment that’s as risky as stock, if not riskier? And when we’re talking like for example, private lending or venture capital debt or venture capital equity, if you look at the company size, it’s even smaller than the small cap value that we preach as being…

Ryan Isaac:
What do you mean about that? What does that mean? If you look at the company small, it’s even smaller than small cap value that we talk about in company.

Rabih Dimachki:
I’m talking about the market size, we’re talking about the amount of sales they make, we’re talking about the depth and size of the industry they function on, they’re usually newer technologies and…

Ryan Isaac:
You’re saying Yale takes money and puts it into companies so small that it’s even smaller than what we would consider a small cap value stock that’s going in our diversified portfolios?

Rabih Dimachki:
Oh yeah, of course. And it’s very…

Ryan Isaac:
Micro, these are like micro startup. Very small.

Rabih Dimachki:
Of course. It’s so funny. Here’s me ranting, I thought Matt could be ranting but I’m ranting.

Ryan Isaac:
No, it’s cool.

Rabih Dimachki:
I don’t get when there’s an investor who has all his brokerage account in tech stocks, which are large cap growth companies, and he thinks the next best investment after that is to go all the way to a venture capital fund. What happened going from large cap to mid cap to small cap to micro-cap to maybe private investments. That’s the correct increment of risk increasing. Why are you jumping from one side of the sword to another?

Ryan Isaac:
This would be maybe a whole other, sorry, Matt, I was gonna say, go to Matt…

Matt Mulcock:
No, you’re good.

Ryan Isaac:
This might be a whole other discussion in another time, is that scale, ’cause what Robbie talking about is the size of company in public stocks all the way from giant large cap stocks all the way down to small cap stocks. And the size of these companies and the smaller and smaller they get, the more return they can provide, but the more risk they can also put on your plate as well. And I like this idea of progressing. It’s like when you listen to Dave Ramsey’s, it’s like, What does he say? “Buy a large cap growth stock mutual fund.” That’s his investment advice. We’re not gonna…

Matt Mulcock:
It’s gonna be up, please, please, please don’t listen to David Ramsey when it comes to investment advice. Debt stuff, cool, investment stuff, please do not. Yeah.

Ryan Isaac:
Don’t invest. But he’ll say that…

Rabih Dimachki:
That’s as spicy as I’ll get on a Friday afternoon.

Ryan Isaac:
No. You get worse, man. He’ll say that for someone like investing their first $100, get an app on your phone, and he’ll say that. Yeah, don’t do that. But that’s what he’ll say for the basics, but then it’s like, you can start to get more and more sophisticated, layering in pieces of a portfolio that will give you different parts of return, different aspects of return, smaller companies, cheaper companies. And you can build a portfolio. Here’s what’s kind of crazy, you could probably mimic with less risk, more liquidity, more transparency, you could probably mimic the risk profile and the high return expectations in public stocks using smaller value companies, than even having to mess with the private world. I think there’s good academia out there, that would show that you not only mimic it but probably with less risk and more return, have a better outcome.

Matt Mulcock:
Yeah. I would let Robbie confirm or deny that ’cause I…

Ryan Isaac:
Robbie, that’s what I’m waiting on you to say, is that true?

Matt Mulcock:
Robbie, I need you to a sure in that.

Ryan Isaac:
I guess that’s another aspect.

Rabih Dimachki:
No, it’s a very valid point. But the problem is, there’s a huge information asymmetry. And venture capital and private equity investments, they’re not as old as the public stock markets, and we don’t have a 100 years worth of data to actually, for me to tell me that, I’m confident that this statement might be true, still don’t know. But the fact, here are some facts. The fact that private investments have become more popular over the last decade and a lot of money is being funneled into them, their returns aren’t as high as they used to be. And they…

Ryan Isaac:
Because of that? Because there’s more money.

Rabih Dimachki:
Yes. Because there’s now more demand onto them. You’re pumping up the prices forever.

Matt Mulcock:
It squeezed out the alpha there?

Rabih Dimachki:
And now the return is more comparable to public equities, but on the longer term horizon, I don’t think we’re that deep into the industry age to know whether this is for sure.

Ryan Isaac:
Well, and maybe I’ll just rephrase it and this is probably a different subject, and I’m trying to… I guess I’m actually end up proposing a solution, that’s not what we’re trying to do today. But I guess you could say for the person out there looking to increase some aspect of maybe volatility or risk in order to try to get higher returns, there are ways to do this in a more liquid transparent way in a public portfolio than having to chase this stuff. There are opportunities where you can actually do that without having to chase down something like that.

Matt Mulcock:
And I think this comes back to what Robbie was saying was, if you think about this rationally, it’s like why would you… So you mentioned kind of the tech guy, right Robbie? But it’s like, “Let’s take a dentist.” And Ryan, exactly to your point, and you’re thinking about this rationally, it’s like, if you wanted to move a little bit closer to that spectrum, a little bit closer to that end of venture capital of these private investments and increasing your risk for possible return. To your point Ryan, there’s ways to move down that spectrum, without having to go all in and jump in the deep end of a venture capital hedge fund.

Ryan Isaac:
And give up your liquidity.

Matt Mulcock:
Give up liquidity and all the trade-offs that come from doing that.

Ryan Isaac:
More fees, more cost. Yeah.

Matt Mulcock:
Exactly, which by the way, let’s be honest, a lot of these people, the whole strategy of what they don’t want you to know, all those are sales tactics, because a lot of these groups have found out, there’s a lot of sucker money out there. There’s a lot of people they can get to buy into this watered down strategy, because they know how sexy this stuff seems. So again, before you go to jump into that, I totally agree with what you’re saying Ryan and saying, there’s ways you can kind of tweak it a little bit.

Ryan Isaac:
Let’s explore it first.

Matt Mulcock:
Explore it kind of incrementally move towards it. But the one thing I will say that it is, I think this angle we’re taking right now is a very rational strategy, we’re assuming that people that are even asking about this or thinking about it in that way, and I don’t think most people are. They’re thinking about it from a psychological and emotional job, not like a rational. Let’s add some incremental risk to my portfolio type thing.

Ryan Isaac:
You’re saying that someone comes away from a conversation, a meeting, and they’re kind of just hyped on the emotional pitch that they heard, and then just being like, “I’m going in. I’m going in guys.”

Matt Mulcock:
I think a lot of this is what’s called…

Ryan Isaac:
Send me in coach.

Matt Mulcock:
I think a lot of it’s mimetic desire. They’re trying to mimic what they have modeled as like the sophisticated investor, right? Like you’re saying like, oh Yale like or, forget Yale ’cause they are institution, they model in their mind, whether it be an imaginary person or a real person, they’re saying, “I want to be like that guy.” Peter Thiel, “I want to be like that guy.” So, they think that they can achieve that. Even though when you really break it down like, sorry, you’re not Yale, you’re not Peter Thiel.

Ryan Isaac:
Yeah, and I like what Robbie said too about, I mean, because we could do the other side of the coin here, and I could say, well, I could show you, and you could do the same thing Matt, I can show you clients who have successfully navigated with a very high, very liquid net worth, usually post-sale or just late career, and they’ve saved literally millions of dollars in a boring way. And they’ve now started to explore more private investment opportunities, private lending, private credit, private real estate, not with giant chunks of their net worth. And they’ve so far navigated it fairly successfully. So yeah, you said that Robbie because, yeah of course, of course you can do that. If that’s your personality with rational parts of your net worth, that’s not going to jeopardize the foundation of everything else you build. Yeah, people do have success with that, for sure.

Rabih Dimachki:
We’ve been talking about the Yale model which has like 50% in alternative investments, and we just mentioned the defence size is 40 billion, but I don’t know if you guys are aware of something called the Norway model. Which is Norway is a country that has a lot of budget surplus because it’s a huge exporter of oil and had a lot of excess cash, they created a sovereign wealth fund. And their Norway model is a global diversified portfolio of 60% equity, global diversified portfolio, 60% of 40% bonds, and it’s $1.3 trillion. So you don’t have to, like, not all “Big guys” have to go into alternative investments to make it, and you have to mimic them to make it. It’s just a different model of how you approach it, and I think once you have that conversation, and you have both perspectives, I think the hype goes down.

Matt Mulcock:
So that’s where my family is from. My ancestors are from. So that’s why I vibe so much with that model. Gotta be. I’m Norwegian.

Ryan Isaac:
That’s why you’re a viking dude, that’s making a lot more sense, you’re a viking. Okay, so you just said that the Norway fund, because that’s a country that pays a lot of public benefits is 1.3 trillion?

Matt Mulcock:
It’s a decent amount of money.

Ryan Isaac:
Okay. And it’s a 60:40 stock and in bond portfolio?

Rabih Dimachki:
Yep, with a little bit of real estate they recently added it. That’s all.

Ryan Isaac:
Okay. And that endowment for that country is paying for a lot of people, just like the Yale endowment has to pay for a lot of people, but you’re pointing out something that I think is really important, which is, these are still choices, these aren’t what’s the right way? What’s the wrong way? What’s the best way? What’s the worst way? You’re pointing out what is the preference of the person, or the country, or the fund, and how they want to approach these things? I would imagine that the Norway model is a lot easier to wrap their head around from a management standpoint and an administration standpoint. I would imagine the Yale model, ’cause I’ve dug into it in the past to where the cycling that they have to do in these private funds, I mean, these aren’t long-term things, they’re lasting for a few years, sometimes it lasts longer, but they’re constantly just almost scrambling sometimes, especially in certain market cycles to keep finding the next thing. So, I would imagine this is preference, and it’s also like there’s some consequences of what you’re gonna have to deal with depending on what’s on your balance…

Matt Mulcock:
Yeah. The administrative burden of the Yale model I’d imagine versus…

Ryan Isaac:
That’s gotta be nuts.

Matt Mulcock:
I bet Norway is just on TD Ameritrade, I’m guessing.

[laughter]

Ryan Isaac:
It’s like one person.

Matt Mulcock:
It’s like, yeah just one person. Yeah.

Ryan Isaac:
Oh man. There was this article, I’m gonna have to find it. There was this article about a hedge fund out of Vegas that was ran by one person because it was a simple fun just like this versus it was a comparison between funds. Matt, what’s the list of five things in this Yale article I thought was really cool?

Matt Mulcock:
Yeah, so in this article talks about so Lawrence Siegel is the Director of Research at the CFA Institute, he talks about five key advantages you must share with the Yale endowment fund to basically what he says qualified for investing in alternatives.

Ryan Isaac:
Okay, so this is the chair of the CFA?

Matt Mulcock:
The CFA Institute, yeah.

Ryan Isaac:
Okay. So, probably knows a few things?

Matt Mulcock:
Probably knows a few things. Yeah, so Robbie’s been through this, Robbie could probably speak more to the CFA Institute, but kind of like the V kind of model for investment management, investment knowledge, right? Just to shout out, Robbie is level 3 CFA. Okay, we’re moving on. So five key…

Ryan Isaac:
I hate to say that as much as we can.

Matt Mulcock:
We really do. So, five key advantages you must share to really basically kind of qualify. They use the word qualify to invest in alternative, so I’ll kind of list, do you want me to just give you all five and we can kind of break them down?

Ryan Isaac:
Yes, yes.

Matt Mulcock:
So, all five, number one expertise, number two is time, number three is risk tolerance, number four is new money, and the number five is size. We’ve kind of already alluded to a couple of these.

Ryan Isaac:
Okay. Expertise, time.

Matt Mulcock:
Yeah, so basically, they talk about… So expertise, time, risk tolerance, new money and size.

Ryan Isaac:
Okay, so expertise. So again, this list is, these are the characteristics of someone who might be a good candidate. Also if they just choose to do it. Because you could have all these things and still just want the most simple balance sheet ever. But these five characteristics are… You probably should have these in order to consider having these kind of things on your balance sheet in a healthy way. So, number one was expertise?

Matt Mulcock:
Yep. So it just talks about, I mean, Yale’s obviously is huge. It’s got a full staff of specialists, I’m sure a couple of PhDs, maybe a handful, maybe…

Rabih Dimachki:
They outsource a big chunk of it too as well.

Ryan Isaac:
Okay. If you were a dentist, now, I mean, you outsource to investment teams and managers and there’s funds and boards, the dentist isn’t having to do all this due diligence. But there is still an element, if you’re a dentist and you are going to have private investments on your balance sheet as a conscious choice, there is an element of how do you… It’s such a giant world. How do you know? How do you stay on top of it all? Are you calling into all the board meetings? Are you reading through all the filings and the documents? Are you going through the accounting records and documents and the reporting that comes out quarterly? Do you have to? Should you? Should you have the expertise to do that? This person is saying, you probably should have the expertise to at least stay on top of it all.

Matt Mulcock:
Yeah. To be qualified, you’d have to have some level of expertise and or have people that can do it for you.

Ryan Isaac:
Okay. Yeah.

Matt Mulcock:
Basically.

Ryan Isaac:
Have somebody, and I’m just trying to think of what a dentist who’s involved in this would say. I think they would say. But yeah, I have people, I found a fund…

Matt Mulcock:
I went to the seminar.

Ryan Isaac:
I went the seminar and I…

Matt Mulcock:
I went to the seminar.

Ryan Isaac:
They found me somebody…

Matt Mulcock:
I found out what they didn’t want me to know, and now I know it.

Ryan Isaac:
And now I know the secrets of the rich and the wealthy. Okay. Expertise. Yeah, that makes sense. And part of that is just… Oh, one of them is time. Is that number two?

Matt Mulcock:
So number two is time.

[laughter]

Ryan Isaac:
Yeah. This is a big one for me, for preference, Matt. ‘Cause it’s just like, if you save all this money or you sell the DSO and you’ve got all this cash and now you’ve got the time on your hands, free from practice, are you looking for another part-time job where you’re kind of an investment manager of sorts? Or do you want to do other stuff? I’m projecting, ’cause I just would want to do other stuff.

Matt Mulcock:
Well, yeah. And I feel like in a lot of ways in that situation, it’s just the game is completely different. Right? It’s like the difference between getting wealthy and staying wealthy, right? Like this whole…

Ryan Isaac:
Yeah. Startup and maintaining like Robbie was saying.

Matt Mulcock:
Yeah. It’s exactly what Robbie was saying. It’s a different game. But I do feel like in some cases you’re using the example, Ryan of, let’s say a dentist gets bought out by a big DSL or they’ve done all they need to do to retire. Right now they can walk away, they sell their practice, they’re sitting on multiple millions of dollars, let’s say. It’s like you’ve won the game. You’ve won the game. Right? And now you’re playing a different game, which is how do we protect what we have and live out the rest of our life, hopefully enjoying in and living a life fulfilled.

Ryan Isaac:
And maybe, oh, sorry. Finish your thought.

Matt Mulcock:
No, I’m just saying like, I feel like sometimes, this is why I think it’s just so critical to be asking these introspective questions of like, “Okay, What are you optimizing for?” I’m not saying there are not valid reasons to do it. Maybe there are.

Ryan Isaac:
Or someone doesn’t. And I think this is rare, but maybe someone actually has the personality. They’re like, “I graduated from running a successful dental practice. Now I actually want to be the person who is chasing down investment deals and being involved in projects.” And then you can respect that. You can respect that and be like, “All right. Okay.” You’re signing up for that. You’re aware of it. You’re informed of what’s going on?

Matt Mulcock:
I have a client that I’m thinking of right now.

Ryan Isaac:
Me too.

Matt Mulcock:
He’s probably listening. Shout out, you know who you are. My guy Hunt. He sold, made a lot of money. Right? And now he’s very much into, he’s still working. They can still make a lot of money working back, but he is now very much into this game. He’s very much into chasing down real estate deals and doing private investments. And he told me, we talked recently mainly for the learning. Like it like really drives him. He really likes it.

Ryan Isaac:
I know someone like that too, and I have a client just like that too.

Matt Mulcock:
But we just talked about it and he’s like, and literally he said to me, “Man, this is way harder than I thought.” But he really likes it.

Ryan Isaac:
Really likes it. It’s worth it.

Matt Mulcock:
That’s what drives him. Yes. It’s Worth it.

Ryan Isaac:
Yeah. It’s worth it. I can think of a very similar client too, consciously spending time on this post dentistry because they want to. And then I can think of clients who just have a huge net worth and a lot of liquidity, like millions of liquidity. And they will just have something come across their desk that seems pretty simple. They can wrap their head around it and they kick out a little bit of money to it, but they’re not spending, this isn’t like a second career for them. Which it sounds like for your client, the one I can think of too, it’s almost second career kind of they’re managing a fairly, good little portfolio of private investments scattered across different managers and industries, and they’re spending time on it consciously. Okay. So expertise and time. All right.

Matt Mulcock: Expertise, time. So, what they mentioned with time is Yale was founded in 1701. And here’s another thing.

Ryan Isaac:
Wasn’t that when Warren Buffet was born? Wasn’t that his birthday? Okay.

[laughter]

Matt Mulcock:
I think so. Here’s another thing with Robbie. When he says you’re not Yale, I mean, again, we kind of laugh like, “Well, of course not.” But I mean, there’s some key fundamental differences here when you talk about an organization, a government entity, or a company, or a school. So Yale was founded in 1701, and as it says here, expects to be perpetual. That very much changes your mindset and time horizon when you’re talking about that versus a human with is not gonna be perpetual. It’s a whole different dynamic.

Ryan Isaac:
Yeah. That’s a really interesting point.

Matt Mulcock:
This Gives you the luxury of waiting many years for illiquid investments to pay off.

Ryan Isaac:
Yeah, ’cause when your time horizon is infinity, you’re not like, in year 13, I’m gonna start withdrawing this money because I’m done working. I’m not gonna teach anymore. I’m not an associate anymore. Now I’m gonna start spending 30 grand a month or 20 grand a month. That’s different because they can layer and cycle through these things. You’re like, “That’s a 30 year time horizon. That’s 100 year time horizon.” Like, whatever that’s not as consequential because the time horizon is infinity. That’s really interesting. Okay.

Matt Mulcock:
Yeah. Robbie, any thoughts on that?

Rabih Dimachki:
No, I think also this is why they’ve went into alternative investments in the first place. Because when we’re talking about like the return, where does the return of alternative investments comes in? It’s not like a whole new return. No. It has elements of the equity market in it because you are buying the company as an owner. It is affected by interest rate, it’s affected by the growth of the GDP, which what you will find in the public equity markets. But the difference, the addition on top is what we call the illiquidity premium, which means the longer you can’t hold your money and because of that fact, you should earn a reward for you not be able to capture it whenever, but that’s it.

Ryan Isaac:
Yeah. I’m so glad you just said that. People should recognize when they’re evaluating an investment that seems to be like, “Well, this is a no-brainer. This has such a higher return than my regular dumb portfolio or my real estate.” It’s because you’re trading something for higher expected return. And in a lot of times it’s access to your money. It’s always a tradeoff. And a lot of times it’s the access to your money, it’s your liquidity and you’re trading in. When you own a diversified portfolio of thousands of stocks and bonds and mutual funds from all over the world, the only way that goes completely to zero permanently is if all the companies in the world just go out of business at the same time. But you’re also trading in some of these private investments, the possibility of permanent loss of capital in one investment, liquidity and introducing the possibility to permanently lose the money. You should get paid more money for doing that. You have to get a higher return. Otherwise, no one would do that. They would just go do the easy stuff, the boring stuff. I don’t think it’s easy.

Matt Mulcock:
Also, you just triggered me real quick, ’cause I’ve been watching the last of us. I’m HBO.

Ryan Isaac:
I Haven’t started that yet.

Matt Mulcock:
Oh my gosh. It is fantastic. But when you just said all the companies like the Wonder World’s over, I’m watching. Oh, my Well, it could happen. It could happen. The answer is fungus.

Ryan Isaac:
Oh, really? Crap. I didn’t want to know that.

Matt Mulcock:
It’s a fantastic show. It’s so Good.

Ryan Isaac:
Okay, I’ll get there. We’ll get there. Okay. All right.

Matt Mulcock:
Okay, number three.

Ryan Isaac:
What’s next?

Matt Mulcock:
Risk tolerance. So, stocks about like, obviously the infinite time horizon, to your point Ryan, and then the vast, just the sheer size and vast pool of their assets. It allows them to take losses that a normal household just can’t, like they can take losses to the tunes of billions of dollars. And this is kind of connected to the next one. So, we’ll kind of loop that one into this, which is new money, like the new money from tuition and money coming in is endless really, for a school like Yale, it’s like the biggest brand in the world.

Ryan Isaac:
That’s the two sides of the same coin. It’s an endless time horizon for the investors and the managers. And it’s an endless time horizon for the money pumping into it. That is not similar to anyone’s real life ever.

Matt Mulcock:
Nope.

Ryan Isaac:
That’s an interesting component. I don’t think I’ve ever heard anyone really bring up in this scenario. And again, someone’s gonna say, “Well, I do private investments and I don’t have an endless time horizon or an endless stream of money. That’s infinite.” Well, like yeah, totally. But these are interesting characteristics just to note, because this should all be swirling in the conversation about what do you put on your balance sheet? What is worth it to you? What risks are worth taking? That’s an interesting one. L.

Matt Mulcock:
Well, and to your point Ryan, that person might say, “Well, I’m doing private investments and I don’t fit this criteria.” And I would say, “Yeah, well maybe you shouldn’t be doing private investments.”

Ryan Isaac:
Maybe We should have asked about this list before we did ’em.

Matt Mulcock:
Maybe.

Ryan Isaac:
Maybe.

Matt Mulcock:
Yeah. It’s Possible. But I will say, it is interesting when we talk about new money and we bring this up with clients all the time in a kind of a similar context. So, when you talk about like, how risky should I be when it comes to just like basic allocation between bonds in stocks? Right? And well, you’ve got a dentist with significant cash flows, right? It’s kind of this concept. You’ve got new money you can take on a little bit more risk, but this is taking it to a new level, right? This is saying that when we talk about new money for, it doesn’t say here what they have as far as like inflows, but I’m guessing you can imagine the level of inflows they have coming in each and every year for this new money that allows them to take, again, just exponential levels of risk compared to like an individual person.

Ryan Isaac:
Yeah. So good. Okay. Was that four?

Matt Mulcock:
The last one is size. So again, they said, or they say here, the Yale’s endowment fund exceeds 40 billion, which gives them the privilege access and fee discounts from the world’s best private fund managers and all the thing, all the people Robbie was saying like the outsource to these different groups, but their sheer size allows them access that most people do not get.

Ryan Isaac:
My favorites from this list are expertise, time and size. And Robbie said size earlier, because there’s nothing wrong with someone with significantly sufficiently large net worth and liquidity. It doesn’t matter if your net worth is huge, if you have no liquidity too, ’cause then that’s other risks, but sufficiently large net worth and liquidity to take reasonable chunks of that and put it at different risks, the size of that net worth is absolutely what determines how much you are able… What you can afford to do in that situation. I love that time, expertise and size for me tho those determine everything. And again, it’s personality because it’s like, you can take two dentists both cash out, they get 10 million in cash, one of ’em is gonna build a 60:40 portfolio and maybe buy a rental house and then just nothing, and then just go do whatever they do. And then the other person’s gonna go get 50 different private investments on their balance sheet and spend 30 hours a week thinking about it. And they’re both gonna want what they chose hopefully. Just personality, like one’s not better, one’s not the way, and one’s not like a lower way, they’re just choices. And you just hope that they’re informed choices, right? As an advisor.

Matt Mulcock:
That’s the whole thing is I hope they’re informed choices. And I hope you’ve taken the time to consider, like, again, this whole idea of what am I optimizing for? Kind of the why behind this decision? Why do I really, like, we talked about should you do this or should you not? Like only you can answer that. But to your point, Ryan, hopefully you’ve made the informed decision. Can I read a quick little excerpt of this rather after this little section here?

Ryan Isaac:
Yeah. Right before you read that, I just want to say to your point, and hopefully you have someone in your life who’s not in the transaction, who’s pushing you to answer these why questions. Partner, friend, spouse, advisor, CPA attorney, like somebody who’s not in the transaction, not getting paid.

Matt Mulcock:
Who’s not incentivized either way.

Ryan Isaac:
Not incentivized by the transaction to like push you just to answer questions about yourself and what you’re trying to do. Hopefully you have some, and if you don’t, there’s another I… If I threw a number six on that list, I’d be like, have someone who’s pushing you in these questions before you do something like that, anyway what’s the quote?

Matt Mulcock:
Yeah, there’s just a quick excerpt here from again, what was his name? Siegel?

Ryan Isaac:
Steven Segal? Steven Segal.

Matt Mulcock:
Yeah, Steven Segal. Lawrence Siegel, again the head of the CFA Institute. So, they talk about if you’re high net worth, you’re considered high net worth with assets of $1 million or more. Right? So at that point is when you start… You get into the seven figures.

Ryan Isaac:
Your high net worth if you have 100 million?

Matt Mulcock:
No, sorry, a million.

Ryan Isaac:
Oh, okay.

Matt Mulcock:
One million. Yeah. So, I think as you enter that like seven figure range of like investable assets, you enter the high net worth category, right? And so he says, “This is where you start to entertain alternatives or you’re getting pushed or sold alternatives.” His quote is, people who think they’re rich but aren’t, are endangering their retirement by gambling in the alternative asset market. So, that might be a little harsh. He’s saying like, “You think you’re rich but you’re not.” I think what he’s really getting at is again, just emphasizing the difference in what, like Yale is 40 billion fund versus like, you might have a couple seven figures, which is fantastic. You are top 1% of the country, but it doesn’t make you to the size that you should really be considering this according to him.

Ryan Isaac:
Yeah. I think that’s a great quote. And when you said a million dollars, I’m like, “I could show you so many dentists who have a million dollar net worth on paper and have no money in the bank.” You can have a million dollars of net worth in a dental practice in your dang house these days and then have nothing in the bank and like, are you a candidate then for being a private equity investor? No.

Matt Mulcock:
Well, I would say even, dude, even say you’ve got a million dollars in a brokerage account.

Ryan Isaac:
Yeah. You have a million of liquidity still. What do you spend as a dentist? The average dentist is spending high teens per month, 17 grand a month. How long will that last you? That million dollars has gone in five years if you had to spend out of it using your current spending. So it’s a lot. It’s everything’s relative.

Matt Mulcock:
Exactly. Yep.

Ryan Isaac:
That’s really good. We’re running long on the tooth as they say. The other two articles I thought were interesting.

Matt Mulcock:
Doesn’t sound like us. Doesn’t sound like us at all.

Ryan Isaac:
Yeah it’s not typical. Anything else you guys want to say about the Yale article? That one had the most meat on the bone [laughter] as they also say. [laughter] Any other comments about the Yale article? I wanted to mention the, okay, the topic of the other two, one of them is called Some Public Pension Funds are pulling back on private equity. These are all from this year. And then another one, Tiger Global writes down venture funds by 33% in 2022. These are two articles highlighting some big funds starting to decrease their exposure to private equity. Robbie, why are they doing that? Is that just like a knee jerk, ’cause last year was a bad year or are they realizing something that’s different about the future? Why is that happening in some of those bigger funds?

Rabih Dimachki:
There are two main points in the articles for why this happened. One is like, I don’t know if you’ve seen that documentary on YouTube, the Age of Cheap Money type of thing everyone’s talking about.

Ryan Isaac:
I don’t know.

Rabih Dimachki:
It’s on YouTube and the fact that we didn’t have any investible asset classes about public equity for like 10 years. Everyone was trying to go out, take extra risk just to be able to find something to invest in. So that was like a global driving force and why assets and private investments are at an all time high. But the second point is just what happened last year. You are right when interest rates go up, value of financial assets should go down. And the public stock market it’s more of a democratic system where every day we are voting on what the value of the company should be and the stock market for 2022, the s&p 500 closed down 19.4%. Right? Well, those private companies, which are riskier than large cap stocks should also reflect that risk. And the way it gets done is that they’ll open their spreadsheet, they’ll change their assumptions, they’ll look at recent merger and acquisition transactions. They’ll take insights from that and they will have to write off the value of their companies. And that’s the second article. That’s why they slash down 30% of the value. You have to make sure that those private investments are comparable in terms of like risk reward to other asset classes. They’re not really that different. They have a positive correlation.

Matt Mulcock:
And the process in that situation, Robbie is far more arbitrary, right? Like meaning compared to the public markets as far as when they do a write off. It’s just like, you and I talked about this earlier today. They’re just kind of like putting money or putting numbers into a spreadsheet and kind of making some arbitrary adjustments. I know based on some data but far less transparent right. Than the public markets.

Rabih Dimachki:
Exactly. There are no information like when it comes to the public markets, how do you decide the value of the company? You see what the stock price is, you multiply it by the number of shares, now you have the value of the equity, you go look at their bonds that are traded and you get that value. Now you have the value of the bonds, add the equity and the bonds, you have the value of the company. Simple as that. When it comes to private companies, you have to look at something. Most of the time they don’t have earnings, right? You have to look at their sales and we’ll say, “Okay, let’s take seven times the sales or 12 times the sales.” And what determines this multiple 12 or seven is, oh our next door neighbor, that company got bought for seven times, so let’s just use that metric. So, given that the market isn’t as liquid transactions don’t happen in the same frequency and the frequency of those valuation doesn’t show up you, you get drastic measures and shifts and values.

Matt Mulcock:
Which by the way, dentists out there might be listening to this and saying, “Oh, I have some familiarity with this because of these DSO offers that are coming in right now.” You’re getting a taste of this in the private market. That’s exactly what this is. Private investments, private equity coming in, that’s what adult DSO is, is a private equity back backed by private equity and that’s why you might get five or 10 DSO offers and they’re all different. ‘Cause they’re all gonna be using different metrics to value your business.

Ryan Isaac:
Yeah. This is really helpful. I think my takeaway, you guys can say, if you want to add on this, my takeaway is that, as a financial advisor, I’ve always, just in working with dentists only, I’ve always thought, man, the the path of dentistry is long, it’s expensive, it’s really time consuming, it’s hard to get where you get. By the time you hit mid-career and you’re a practice owner and you’re making money and you’ve got all that debt and all those years of experience, and all that stuff is literally like in your hands. If you break your hands like you all… You can’t even do it anymore. I feel really protective as an advisor of just making sure that all pays off and it’s because of dentists income and potential cash flow. It’s really basic how a dentist can take their cash flow and build wealth over a career of dentistry and then have plenty to spend later and plenty to pass on even, if they want to.

Ryan Isaac:
It’s so easily possible for every dentist to do that, that I feel protective of making sure that let’s at least get to that point before we take on any extra risk. And I also feel protective because of the predatory nature of the industry we work in. I just want people to know what the heck they’re looking at or hearing about or they’re gonna do. There’s so much emotion, there’s so much hype, there’s so much sales that people can get suckered into just jumping into stuff they don’t actually understand. And that’s so frustrating to me because our industry can be so dirty and shady. So those are the two things on my mind all the time. Just like, look, let’s just make sure you get to point B from all this hard work and time and sacrifice you’ve put in to even get where you’re at right now.

Ryan Isaac:
And I just want you to understand what you’re doing before you do it. Let’s ask some questions. That matters to me so much during these, and it’s not about what’s right, and what’s wrong, and what’s best, and what’s worse. Like it doesn’t matter. Build a real estate portfolio, build stocks and bonds portfolio, build a portfolio of practices, any number of those, you’re gonna have to do it for decades for it to be big enough to pay off the way you want it to. So, this isn’t right or wrong, it’s just like, protect what you’ve got. Don’t ruin your foundation and understand what you’re doing before you get into it. That gets me going. Anyway, that wasn’t too spicy. What do you want to add to that Matt and Robbie?

Matt Mulcock:
That’s keep you going.

Ryan Isaac:
Yeah, I mean, in this topic, in this particular conversation, yes.

Matt Mulcock:
I hesitate to allow this, but Robbie you can go.

Ryan Isaac:
Don’t hesitate.

Matt Mulcock:
I hesitate to go behind you and Robbie.

Ryan Isaac:
Oh. Yeah. Okay. Robbie.

Matt Mulcock:
You should jump ahead at Robbie.

Rabih Dimachki:
Actually, I loved Ryan’s point and I want to add to it like, once you get to that point B where everything is under control and you start facing those salesy calls, just go back to basics. Any investment there is, if you are buying equity, you are becoming an owner in a company, whether it’s private or public, and some macroeconomic environment happens like higher interest rates or inflation showing up or a recession is hitting. Don’t expect that what’s happening to the big tech companies or the big oil companies is not having the same effect on your small company. And you are delusion to think that there’s no volatility in the asset class. Just go back to the basics. If you are investing in a private lending investment, what happens to banks, what happens to mortgages in public markets is also gonna happen to small companies that are private. Just don’t think that they are too separate from one another.

Ryan Isaac:
Love it. Okay. Follow it, Matt?

Matt Mulcock:
Yeah, I mean, I hate following Ryan and Robbie. And I don’t have honestly too much to add. I think just echoing your guys’ points, and Ryan, to your point of just there is no right or wrong here. There truly isn’t. We joke around sometimes about how we get accused of being anti something, right? We’re like anti real estate or anti this, and we’re really not, we’re pro making thoughtful decisions with… We’re pro you thinking things through understanding the why behind your decisions. Actually, so I’ll tell you just a very quick story. Like one minute. I had a client the other day who emailed me. He says, “Hey I found, or a house come up my street, I’m gonna buy it for a rental.” And he said on that line, the bottom line was, “Houses has never come up on my street, so I’m gonna buy it and rent it.

Matt Mulcock:
And he even said, he goes, “I don’t know if it’s gonna cash flow, but I’m buying it.” And I said, “kay, cool.” I wrote a response back, he then writes me back a day later and says, “Am I crazy for doing this?” I say, “I don’t think you’re crazy. I just want you to ask yourself a couple questions.” And then the questions were, why ask yourself client, why am I doing this? And what am I optimizing for my life? And then does this support that vision or goal? Just be asking those questions. He called me the next day and was like Matt, “I’m not doing this. I thought about it.” It’s the first time ever. I think maybe.

Ryan Isaac:
I was gonna say you talked someone out of real estate, man. It never happens.

Matt Mulcock:
And I didn’t mean, truly…

Ryan Isaac:
Yeah. You didn’t.

Matt Mulcock:
I was not talking about it.

Ryan Isaac:
No, you had a question.

Matt Mulcock:
And I just said, “Look, you’re not crazy.” But I wanted to ask these questions and he called me back the next day and he’s, like that set me like you set me straight and I’m not gonna do this. I was just doing it out of like, he said, he used the word FoMO. I was doing it for FoMO. Again, just to reemphasize your point, Ryan, just understand the why. Be thoughtful. If this serves your values, your goals, your vision of what you’re trying to accomplish, awesome. But then beyond that, make sure to Robbie’s point, you’re doing it in a way that… Like you have all the information, you actually know what you’re doing and not just kind of falling prey to this trap of like, feeling sophisticated.

Ryan Isaac:
Well, you explained what I thought was really important, which is do you have someone in your life that’s gonna push you to ask more questions? Not necessarily tell you what to do all the time, but that’s really healthy. I love when I have relationships like that when people push me to, instead of give me answers all the time, just push me to ask more questions.

Matt Mulcock:
Just ask questions. Be curious. Be open. Yeah.

Ryan Isaac:
Any parting thoughts? Those are parting thoughts. That was it.

Matt Mulcock:
Those are the parting thoughts. This great love, love hanging with you guys.

Ryan Isaac:
Yeah. Thanks for doing this on a Friday, guys. It’s sunny where I’m at. I don’t know where you guys are. How you guys are feeling.

Matt Mulcock:
You know what? Robbie don’t start.

Rabih Dimachki:
Don’t start.

Matt Mulcock:
Don’t start. Okay. Don’t start.

Ryan Isaac:
I’ll be good.

Matt Mulcock:
This is the winter that will never end.

[laughter]

Ryan Isaac:
Yeah. It won’t. I know, man. That’s so true. Well, thanks guys, and thanks to all you for listening and joining us. If you have any questions for us, we love helping point you in the right direction and answering money questions. So go to dentistadvisors.com, we’re happy to answer questions. Thanks man. Robbie, thanks to all you for joining us. We’ll catch you next time on another episode of the Dentist Money Show. Take care now. Bye-bye.

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