Manage Money You Make with David Stein (CFFL 0198)    

Manage Money You Make with David Stein

Jack Butala: Manage Money You Make with David Stein. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.

Jack Butala:
Your bio says, “Hey, I’m David Stein. I teach people about money, how it works, how to invest it, and how to live without worrying about it. Through stories, analogies, and easy to understand examples, I give individuals the tools and confidence they need to navigate and increasingly complex and unpredictable investing landscape.”

This is what I found really interesting. This is what he did before he retired. “For close to two decades, I advised and managed assets for institutions and financial planners. I was the chief investment strategist, and chief portfolio strategist and Fun Evaluation Group, LLC, a $33,000,000,000 investment advisory group where, I co-headed the 21-person research group,” and it goes on to say some pretty impressive stuff.

Fill us in. What are you doing these days?

David Stein:
I did retire as a professional investor and adviser. Since then, I spent essentially a year calling myself retired, and the local paper asked me to start writing a person finance column. Suddenly, I found myself back to writing regularly on the economy, investing.

Shortly after that, I launched the podcast, Money for the Rest of Us, which is done very well. It is a great platform just to teach people about what’s going on. It’s a weekly show. Then, as listenership grew, listeners kept asking for more guidance, more help. I didn’t want to be a registered investment adviser again, so I launched a education platform on investing and the economy called the Money for the Rest of Us Hub. I spend my time … It’s still part time, but I typically spend my week, when I’m working, just writing and teaching either through the podcast or the membership site.

Jack Butala:
That’s great. Jill and I had a very similar experience. We tried to tone it down for a while and, ultimately, ended up teaching through our company, Land Academy, teaching what we know best: buying and selling land.

David Stein:
It’s a different dynamic. What I missed about the investment space was the teaching aspect. I worked with a lot of institutional investors, and [inaudible 00:02:24] foundations, and their investment committees and boards, and I kind of missed that. What I didn’t miss was the day to day pressure of actually managing people’s money, either institutions or individuals through financial planners. This is a way that I can still give back, still help without having to feel … Essentially, let the individuals make their own investment decisions, as opposed to me actually pulling a trigger, and looking at their accounts on a day by day basis.

Jill DeWit:
I love it, David. It sounds like we have a lot in common. Your story’s a little bit like us. You think you’re retired and you’re just going to kind of coast, but you’ve probably got that personality where you just can’t sit still. I appreciate, too, what you said about the giving back. That’s part of what we’re doing now, and it’s just so much more fun watching other people be as successful than even my own success. Parent pride.

David Stein:
Absolutely. You realize people … they just need some guidance. They need some help.

Sometimes, they just need a mentor to guide them along, and then they do very well, especially in the investment space. Most people, or many people, don’t necessarily trust an adviser to turn everything over to them. They want to have the control themselves, but they’re seeking help so they can maintain that control, but still get insights from professionals or others. Ultimately, they feel very comfortable making the final investment decision on their own.

Jill DeWit:
Exactly. I love that.

I was going to ask you: how many people are you mentoring? Is it a small group that you just help along, or is it anybody who asks for it?

David Stein:
No. The show itself, Money for the Rest of Us, gets about 20,000 people downloads per episode. That’s a broader group, and those that want more specific guidance, there’s about 350 members on the Money for the Rest of Us Hub. People can do it monthly … With any type of site like that, you have people who come in and out, but generally, it’s continued to grow, and there’s 350 members at this point.

Jack Butala:
That’s pretty impressive. When did you start doing this? When did you launch the site and the podcast?

David Stein:
The podcast’s two years old, and the education platform’s about 18 months old. It’s like anything. It grows person by person recommending it, and that’s been pretty good.

Jack Butala:
That’s fantastic. Where do you see it in 5 years? Do you continue to see it grow?

David Stein:
Hopefully, but it might … This is a lifestyle business for me, so this is not something that I want to grow to thousands of members. I like keeping it small. I don’t have any help. I don’t have any type of ritual assistance or employees at this point, so I kind of try to leverage technology as much as I can. When people e-mail me, I e-mail them back, and as long as I can keep that interaction, I’ll keep doing it.

I don’t have any huge … I already grew an investment firm with my partners and sold that, so I don’t have any desire to build a big enterprise. I like having a little lifestyle business where I can help individuals out.

Jack Butala:
I have somewhat of a personal question. I wonder what it is about the pacific northwest that makes all you guys so calm up there.

David Stein:
I don’t know. I used to have clients back east, and they would say the same thing. I’m a naturally calm person anyway, but there is something to be said … I had my shot to work in New York. My old investment firm was based in Ohio, but I’ve been in Idaho for 15 years, telecommuted for the vast majority of those. There’s plenty of space out here. There’s plenty of clean air, and places you can go just to think.

I love New York. It’s my favorite town. I love the northeast US, but it’s nice to come back and be a little more relaxed. That’s for sure.

Jill DeWit:
You know, David, doesn’t a healthy bank balance help calm you down?

David Stein:
Yes. Right, and that was part of it. One reason I left my old firm was it had done well. I kind of hit that number that I needed for my nest egg to not have to … Certainly, I did manage the investments prudently, but not have to be fighting day to day, I guess, in terms of worrying whether we were going to make it or not, and that does reduce it. I admire entrepreneurs and those that struggle, because there is a great deal of pressure. What I’m doing now, if it fails, I’m going to be fine, so that does take a little bit of the pressure off.

It also means I don’t have an alternative objective. I can be independent. I don’t take sponsors on my podcast, or anything like that, because I don’t need to. I can just sort of do it in a way that’s aligned with the listeners.

Jack Butala:
The more we talk here, the more our stories are pretty similar. We don’t take sponsors either, at least currently, and our numbers are about the same. Our normal operation- our land investing operation- just continues to run in the background. We don’t try to grow it the way that we used to, but it’s certainly a good paycheck, and we focus more now on just helping people learn how to do it. That’s really cool.

David Stein:
Right.

Jack Butala:
What are your three kids doing now?

David Stein:
Two are in college, and the other’s doing an internship in audio engineering. We have been empty-nesters for all of about two weeks now. Our youngest just moved onto campus, and we just moved out to our farm here in Teton Valley, so we’ve been here two weeks. This is some ground, about 80 acres, that we’ve owned for 5 years, and sort of used it as a second home, and sold our primary home and moved out here.

My wife, Pearl, and I … we’re definitely in transition, so it’s been interesting, because it’s beautiful out here, but not having a bunch of people, like you’re used to, in and out, is quite the adjustment.

Jill DeWit:
Oh, we’re pretty jealous over here. That’s not a bad thing. That’s a good thing, right? They’re on their way, so you did your job.

David Stein:
They are, and they’re doing well.

Jill DeWit:
That’s good.

Jack Butala:
Sometimes, when the dust settles, you got to talk to your wife, man.

David Stein:
Actually, I mentioned this to her. “It’s been 25 years since it’s just been you and I, but what makes that transition easier is I’ve worked out of my house for most of the past 15 years.” It’s not like they left and we were strangers. We spent plenty of time together, and we travel a lot, so we get along just fine.

Jack Butala:
Did the audio engineer put you up to this whole thing?

David Stein:
No, no. He got into it after I did. I am, by no means, an audiophile. The podcast … I don’t know you do yours, but I have my mic, and I record right into garage band, and I throw some intro music on and that’s it. It’s a pretty straightforward show, 25 minutes. I don’t do interviews.

At some point, he’ll come in and help out.

Jack Butala:
You do it by yourself, then.

David Stein:
Oh, yeah.

Jack Butala:
Do you script it first, or just say whatever comes into your head? I got to listen to it now.

David Stein:
It’s partially scripted. I use my weekly article that I write for the local papers as sort of the base script. Your typical podcast is about 3,000 words. I’ll have maybe a 1,000 word script, and add stories and anecdotes from there.

Jill DeWit:
As you can tell, David, we have no script. We never do. We have loose guidelines that we go with and that’s it.

Jack Butala:
That’s saying a lot actually. You ever hear Car Talk on NPR?

David Stein:
Exactly.

Jack Butala:
That’s what we modeled our whole show after. Car Talk, only about land.

David Stein:
If it’s an interview, it’s easier to do that, right? If you’re talking to yourself, and there’s not somebody else to fill in the gaps, you have to have a little more structure.

Jill DeWit:
That’s true. At least there is the two of us, and that makes it really nice.

Jack Butala:
Can I read your top 10 things that people probably don’t know about you?

David Stein:
Yeah, go ahead. That’s fine.

Jack Butala:
On his website, he says, “My favorite places to visit are Japan, the Yucatan Peninsula, and Maine.” Three completely different places.

Number 2 is “I’ve flown close to 2,000,000 miles, mostly next to the window in the exit row.” You can tell, Jill, he’s a writer. “Piled up at least a million of those miles writing a novel over a 4-year stretch of time. Finished the book and never published it.” Man, just keeps coming with stuff that we have in common. Although, it did teach you how to write. That’s great.

Number 4 is, “I applied and rejected for law school at Harvard, Yale, Virginia, and Michigan.” Hey, you know what? I got rejected and UVM, too.

“I took 33% pay cut when I took my first investment job, and later, when I was a managing partner, I rewrote a compensation plan for future employees so they didn’t have to take the same pay cuts when they joined the firm.”

“I preferred vintage clothes and new ones. Buy most of my clothes on e-bay and in vintage stores.” You know what? I’ll tell you in a minute, but about two weeks ago, Jill made me go buy all new clothes, because she told me I look homeless when I’m not at work.

“I’ve been a road biker since I was 4. I’ve owned only 5 road bikes.” This is eerie, because I do that, too.

“I used to speak Spanish.” So did I. “Semi-fluent.” I’m not that at all. After 3 beers, I think I can sort of speak it.

Number 9: “When the three kids were younger …” This is really interesting. This what I found most interesting in the whole thing. “When my three kids were younger, they each got to take a solo trip with me every year to a far off US city, and occasionally overseas. Now, we all travel together whenever we can.” Jill, isn’t that just fantastic?

Jill DeWit:
I love it. That’s really cool.

Jack Butala:
What were some of the highlights of those trips?

David Stein:
Usually, when they turn ten, it’s nice to spend one-on-one time with them. When you have a group of kids, when they’re alone, just one-on-one, you just get to know them a lot better. I had frequent flyer miles, so that made it easier.

Certainly, some of the most memorable trips was taking my son, Brett. When he turned ten, he said where do you want to go in the world, and he chose Australia, because he wanted to be … He wanted to meet Steven Irwin. This was before Steven Irwin passed away. We went to the east coast of Australia, and up to Steven Irwin’s … the Crocodile Hunter, I think … zoo. We went up and snorkled up there, at the great barrier reef, etc., so that was fun.

We still travel a lot together. Once I quit my last job, we spent 3 months traveling in Asia and Europe together as a family, and still take the occasional trip. I had promised my one son that, if Cuba ever opened up, that we would head to Cuba. It turns out, now anyone can go to Cuba, but even earlier this year, if you were journalist, you could basically go to Cuba, so he and I went to Cuba. As it turns out, being a podcaster counts as a journalist. It’s really easy to go to Cuba. You just self-nominate yourself, and say, “Yeah, I’m a journalist,” and so we booked our chartered flights and went over for a couple of weeks.

Jack Butala:
I don’t think you get to be where you are without issuing a good workaround once in a while. I’ve always thought of myself as a journalist also.

David Stein:
Exactly. It turns out, when you go to Cuba, there’s no body even asks for your paperwork. You just need … If you have your passport, and just like any other country, you fill out a tourist visa essentially, but we had these signed affidavits thinking they were going to, “Prove to us you’re a journalist.” Nobody asked for it. We just walked into the country and walked right out.

Jill DeWit:
That’s really funny. I love it. Good thing you got back out.

David Stein:
It was fine. Amazing. Wonderful, wonderful people. It is definitely a time warp when it comes to … They’re struggling. That’s for sure.

Jill DeWit:
How much time do we have to get down there before it really changes? Do you think it’s going to be a while? We really want to go.

Jack Butala:
Before it becomes Miami.

David Stein:
I’d go this year. It’s really challenging because, now that commercial airlines are starting to be able to … I’m not sure who’s flying there now, because before you had to have a commercial flight, but there’s already plenty of tourists there.

In fact, you feel way more like there’s tourists in Cuba than if you go to Mexico. You can go to places in Mexico there aren’t any Americans or Europeans, but Cuba, there is just a lot of tourists, and there have been. There just haven’t been a lot of Americans.

What’s fascinating is, literally, you have these old cars just driving around everywhere, and the entire infrastructure is dilapidating. The sad part is, as more and more tourists come in, the food prices keep going further and further up, and the economy hasn’t been … They haven’t modernized their economy enough to support that, so inflation is really accelerating, and it’s hurting individuals there. They’re in a tough situation.

Jill DeWit:
I was hearing, too, I think Air B&B recently, in the last I don’t know how many weeks, recently opened up there too, so that’s probably going to change it.

David Stein:
That’s what we did. I had no idea. It’s like, “How am I going to book a hotel?” I’m thinking this is traveling to Mexico 20 years ago, where you got to call and figure out … We’ve been heavy users of Air B&B over the years, and sure enough, you can get Air B&B, and it was fine.

Now, on their end, no body’s allowed to have internet in their home. You go into the parks, and everybody’s … They’re allowed to have internet, they just can’t have it in their home, so people there that have Air B&B are going to the park to get wifi so they can do their bookings or whatever. Logistically, it’s a little more difficult for people there to do it, but if you’re a user of Air B&B, it was as straightforward as anywhere else. It worked out great, because then you can can stay in your homes.

That’s actually what helped Cuba support the number of tourists. They do not have anywhere near the hotel infrastructure for the number of tourists there, so the vast majority live or stay at people’s homes, essentially through the bed and breakfast type of thing. The Air B&B was a great fit for them, because that’s what Cuba has done for decades now.

Jack Butala:
They’re in a full blown repressive situation, and it’s really too bad.

David Stein:
It’s the only business that you’re allowed to have. As a small business, you can run a restaurant, and you can run a homestay type bed and breakfast. Now you can run little side car stores on the street, but that makes it tough.

Everybody has their little gig. I’ve never seen a more entrepreneurial people. It’s amazing. Everybody has their thing that they’re doing because that’s what they do to survive.

Jack Butala:
Really interesting.

Hey, David, let’s get back to business for a second. You have this incoming new people who want to learn from you. Is there a couple of traits that you see that are huge misconceptions that you really have to undo right when they come through the door? The figurative door?

David Stein:
I do everything I can to not attract people that want to be traders. I’m a long term investor. My basic investment philosophy is primarily buy and hold, but adjust your allocation based on market conditions. Be willing to make adjustments based on valuations, or based on economic trends, or based on what I call market eternals- the level of trend and momentum. What we’re looking for is regime changes. If the US and the world is going into a recession, the typical loss has been about 46% in terms of the global stock market. It’s these type of things that you want to avoid, and not be trading currencies of things like that, because essentially, it’s a loser’s game.

It’s balancing out … Not being completely buy-and-hold passive- because I don’t think that’s necessarily the answer- nor being an active trader and trying to outsmart the market. As you bring people in, just try to attract the people that kind of want to go for that happy medium. They’re willing to rely primarily on asset allocation, primarily on passive investments, but make adjustments based on market conditions. Then, if they’re going to try to do something active, do it more sort of like what you’re doing with your business on the private side. Find the particular real estate deal if you’re interested in that, or land deal, or things of that sort. I think that’s important to do. Don’t have all of your financial assets tied into the financial markets.

Jack Butala:
I call it buckets. There’s got to be a bucket for everything. Sometimes, there’s the super high risk bucket. There’s the money-in-the-bank bucket, and everything in between.

David Stein:
Right. You want different drivers of return. You don’t always know which is going to do well in any particular year, but you also want pockets of independence. One reason we own a farm is so that we have some land, and we have something with food storage completely separate from the financial system. Not because we’re expecting, or forecasting, or hoping for some type of economic meltdown, but just so we’re prepared if something goes awry that’s unexpected.

Jack Butala:
I bet you some money that you probably paid too much for those 80 acres. That’s what we teach.

I’m just joking. That’s for my listeners.

David Stein:
Not necessarily. When I used invest at my old firm, you’d have these timber investors. Timber managers. They would buy timber properties. They would always have a section called “Higher and Better Use.” This land that is worth more than it is strictly as timbers. When you have 80 acres that are looked down, and overlook the Teton mountain range, that’s higher and better use property. It’s worth more than it is as a dry farm.

We didn’t pay that much more … Typically, dry farm acreage here is $1500, $2,000 an acre, and by dry farm, not irrigated, because in Idaho, most land is irrigated. We ended up about $3,000 an acre, so we did fine.

Jack Butala:
You did great, actually.

David Stein:
Compared to the top of the bubble, things were selling at $10,000, $20,000 an acre here in Teton Valley. The downside is … The bubble here was absolutely amazing. They platted an 80 year supply of building lots in this valley.

We bought for the long term. We bought, one, because we’d looked for years. It’s a beautiful spot, but it’s by no means … This was not something we were going to flip in two or three years. This is we’re going to hold this for 20 years and wait for the next bubble and, in the meantime, we’ll enjoy it.

Jack Butala:
Are the counties managing all those separate APNs, though? Those separate assessor parcel numbers? That’s a lot.

David Stein:
They are, but they’re in the process … There’s people that are trying to get them to vacate.

We have, behind our 80 acres, just to see how mismanaged it was, there were three subdivisions right in this are with about 250 lots, and one of the requirements is they needed a community water system to support it, right? They started selling lots before they had found enough water to do this. They essentially have one well with a permit for about 20 homes. The rest of them are never going to be built on, because they haven’t been able to find water. By now, one subdivision has been vacated. The other is up for sale. We’ve looked at it. It’s basically 350 acres. They want $300,000.

The challenge is they’ve already sold 4 of the 150 lots. At those prices, it’s almost dry farm prices, but you have to go find those people that own those four lots, and either get with the county to either replat the whole subdivision … It’s something we’ve toyed with, but at the end of the day … We’ve bought land, we’ve both real estate, but as you know, it takes some work, and so it’s a question of whether we want to do the work or not. The legwork, really, to work through the county and all the planning issues and such.

Jack Butala:
Right.

David Stein, of Money for the Rest of Us, it was fantastic to speak with you. Please let us know where we can find you on the internet before we part ways here.

David Stein:
Sure. The home of the podcast and the best place to reach me is at MoneyfortheRestofUs.net. I’m also on Twitter at @JDStein.

Jack Butala:
Thank so much for speaking with us. Have a good time.

Jill DeWit:
Thanks, David.

David Stein:
Thanks, Steve and Jill.

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