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Summary of Transcript:
Ralph Powell discusses the current state of the economy and how it affects the crypto market. He suggests that the current situation, caused by various factors, including the pandemic and underinvestment in commodities, results from inflation and reduced demand. He explains that the market usually balances itself, but in this case, the Federal Reserve is engineering the economy, causing people to take the financial hit. Powell believes that the market would be better left alone to stabilize itself. He emphasizes the importance of investing in crypto for the long term and thinking of it as retirement money.
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Summary of Description:
Former hedge fund manager and global macro investor expert Raoul Pal joins Tom Bilyeu to discuss the realities people need to know to thrive in a worldwide recession. Pal emphasizes the importance of income and the ability to advance on opportunities and shares the quote, “he who has cash in a recession is king.” Pal discusses leveraging and the importance of a solid work ethic, optimism, and a willingness to look for opportunities during extreme weakness. The conversation also covers the changing global order and the potential for growth during volatile markets.
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Empowering Yourself in a Global Recession with Raoul Pal
The global recession is on everyone’s minds these days. With high tensions and expenses soaring, people are looking for a way to thrive in this economic downturn. Understanding the realities of the situation is crucial to finding a way to succeed, and that’s precisely what Raoul Pal, a former hedge fund manager, serial entrepreneur, and global macro investor expert, discusses in his interview with Tom Bilyeu.
Why Cash Is King
Raoul highlights the importance of having cash in a recession. As prices rise and inflation sets in, the dollar in your bank account will be worth less in the long run. Therefore, having cash on hand becomes critical to staying afloat during these times of economic volatility. Understanding the money market and loanable funds is essential to gain this financial knowledge.
The Danger of Debt and Leverage
Raoul explains that humans have an innate propensity for borrowing to create this image, but sometimes the mismatch between fantasy and reality is debt. While borrowing can be an excellent way to accelerate progress toward our future selves, using debt to fund a dream that will never come true is problematic. Leveraging debt to create a future self-image can create extreme weakness during crises.
Thriving in Volatile Markets
Raoul encourages people to focus on their income and work hard, coupled with optimism and a strong belief in future growth opportunities. This approach can lead to moments of extreme weakness that allow people to buy into the market and make smart investments. The ability to look for moments of strength in a weak market and make moves without leverage is an effective method of thriving during turbulent times.
Opportunity for Growth
The key to success during a recession is looking at opportunities others might not even consider. Raoul cites the example of Nathan Rothschild, who advised people to “buy when there’s blood in the streets, even if the blood is your own.” The idea is that solid action during moments of extreme downturns in the market can lead to lifelong success. Creating a solid work ethic and constantly seeking out investment opportunities can pay dividends in the long term.
Changing Global Order
Change is inevitable, and people need to accept this reality. However, they can also take advantage of these changes by staying current on global shifts and looking for ways to exploit the opportunities. Leverage the opportunity in a worldwide recession to make moves that can increase options in the long term.
Final Thoughts
The global recession is scary for many people, but it doesn’t have to be. Those who have the mindset and skills to survive these downturns can potentially emerge even stronger than before. Understanding the realities of the situation, having cash on hand, avoiding dangerous debt and leveraging strategies, focusing on income, and seeking out opportunities others might not consider are effective ways to thrive in a volatile market.
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Source Description
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Show Notes:
The global recession is being talked about literally everywhere. You can’t help but feel the tension rising between the gas pump and groceries alone.
Raoul Pal, a former hedge fund manager who retired at 36, serial entrepreneur, and global macro investor expert, is joining Tom for a second time to discuss the realities people need to be aware of to thrive in a worldwide recession.
A word of wisdom he shares that was passed on to him: ” he who has cash in a recession is king.” The bottom line Raoul is openly sharing is that income and the ability to advance on opportunities make all the difference.
“Buy when there’s blood in the streets, even if the blood is your own.” – Nathan Rothschild.
Having a solid work ethic, a strong (and maybe unreasonably optimistic) belief, coupled with income and the knowledge to look for moments of extreme weakness to buy and make moves, without leverage, against opportunities can get you to the other side of this crisis potentially better off than when it all began.
You get to decide what to focus on. Will it be the existential global crises or the opportunities most are too scared to see or take advantage of?
Recommended Reading:
William Strauss and Neil Howe, The Fourth Turning: https://www.amazon.com/Fourth-Turning-History-Americas-Rendezvous-ebook/dp/B001RKFU4I
SHOW NOTES:
0:00 | Introduction to Raoul Paul
1:10 | The Makings of a Global Recession
12:30 | Money Market & Loanable Funds
21:00 | Debt and Leverage Explained
32:56 | Stopping the Economic Implosion
47:23 | Death of the American Dream
54:47 | Opportunity for Growth
1:09:36 | Thriving In Volatile Markets
1:18:39 | Changing Global Order
1:28:37 | How Raoul Increases His Options
QUOTES:
“Rising prices and inflation are evil for our savings because the dollar in your bank account is worth less in a year.” [3:03]
“As prices go up, the economy slows down […] and therefore it becomes self-regulating, and it becomes that because people are quite in debt.” [11:16]
“Leverage allows you to borrow future money to use now […] We’re always trying to meet the expectation of our future selves; that’s what drives humans.” [22:11]
“This is what people don’t understand about leverage. You don’t own that thing; you only own it when you pay it off.” [26:35]
‘Everyone’s got debts ’cause we borrowed for our future selves.” [37:58]
“Humans tend to borrow to create the image of this future self. […] that dream we had in the 50s, that dream died decades ago, and to fund that dream, the mismatch between the dream and the reality is debt. Sometimes debt is not all bad. Sometimes it can help accelerate some things, but if you’re doing it to fund a dream that will never exist, that’s the danger.” [47:23]
“Focus on your income, work hard, look for other opportunities that can leverage that income and opportunity set that you’ve got for you, […] look for investment opportunities that can change my life.” [57:51]
“You can’t be in it to win it if you’ve got leverage or if you’re out of the market.” [1:05:52]
“Where are we in the volatility, and will this survive? […] and if the long-term trend is there, you should buy into all of this.” [1:13:18]
“Change is happening, and you can fear it, but you’re not going to stop it.” [1:25:53]
“Always out of bad times eventually is the good times, and it’s the same with investing. That cycle is pretty common and a very human trait.” [1:28:24]
Follow Raoul Paul:
Website: https://www.realvision.com/
Twitter: https://twitter.com/RaoulGMI
Instagram: https://www.instagram.com/raoulgmi/
YouTube: https://www.youtube.com/channel/UCBH5VZE_Y4F3CMcPIzPEB5A
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