What happens when nine trillion dollars in boring four to oh one k money gets permission to chase yield.
Because that's about to happen. Trump's signing the order. The game is.
About to change forever. I'm talking about trillions of dollars that have been stuck in losing or low yielding retirement accounts now being able to go by bitcoin or private equity or real estate. And for the first time in history. Now this isn't speculation.
It's happening. And here's what everybody's missing.
This is about the entire financial system reorganizing. When the safest, most conservative money in America, retirement accounts, starts chasing alternative assets, you get what's called an asset supercycle, now, the kind that creates generational wealth. So in this video, I'm going to show you exactly which assets explode first, the timeline that Wall Street doesn't want you to see, and how to position yourself before.
The herd arrives.
So let's go all right, So we are talking about one of the biggest moves in the financial system that we've seen today. Of course, it all comes on the back of Trump's executive order. Another one, now, He's racked up quite a bit of executive orders. Not something I'm super fond of. But anyway, that's beside the point. That's
a whole another topic front of the video. What we're talking about is his executive order that's unlocking about nine trillion dollars and a massive amount of money, about forty three trillion dollars total are in these retirement accounts in the financial system. But this is affecting about nine trillion dollars. Now, the big move is that it can now take money the nine trillion in four one ks and can it push them into what we call alternative assets. Now, alternative
assets is where I've basically made my entire career. Forget the stock, the S and P five hundred, We're talking about alternative assets. I'm going to break that down for you now. Part of the reason why is because, of course the S and P. Five hundred hasn't really been getting people where they need to be. We know that about half of all baby boomers are broke. They have no money, number one, Number two. Of the half that do have money average about two hundred and forty thousand dollars.
So we need to get the returns to improve We need to get them to make more money if they're going to have any success or any hope of retirement.
Now.
Part of the reason why they've not been able to do this so far is because apparently it's too risky. People aren't smart enough to know what they're doing. It's too volatile. So we must protect them. At least that's what the government thinks, and Trump says, no more, no more of that, So he signed this executive order to specifically allow people to take their own money in their four oh one K that they was holding the back from what they want to invest into, and now they could direct it.
Now.
A couple things that I think are worth noting in this specifically is we can see that this order unlocks a massive opportunity for PE firms.
Private equity, and crypto investments.
So bitcoin and cryptocurrencies, Like I said, about nine trillion dollars. The White House officials said, alternative assets again, not the SMP five hundred. They offer competitive returns. We need them to get their returns. It offers diversification benefits and will improve americans retirements prospects.
That's the key piece. We need to get them a little bit more money.
If they're going to have success, because surprise, surprise, social Security is not going to be there.
Okay.
It says that typically they have a fiduciary responsibility to plan participants people in the four one K to select appropriate investments, and alternative investments often are more volatile than typical funds.
Okay, so they're trying to protect them.
They don't want them to diversify out too much because typically alternative investment investments are more volatile.
Okay. I'm going to show you some of the data around that.
So this is a chart right here of the treasury bonds. This is represented by the TLT, which is an ETF of the long US Treasury bond, which is supposed to be the risk free rate. It's the bedrock of the global financial system. And what this shows us is that over the last five years, you've lost about fifty percent
of your money. Now, most financial plans in a four one K your financial advisor put you into is something what's called a sixty forty portfolio, meaning sixty percent of your money is in stocks, forty percent of it is in bonds.
And look at what's happened.
You've lost fifty percent of your money so rather than your money being stuck and your plan advisor putting you into plans like this that lose money, I think it's a good idea to let you choose where you want to put your money. But let's explore the alternative investments. Okay, the three horsemen of these alternative investments. We're talking about real estate. We're going to dig into that private equity. We'll take a look at that, and of course my
favorite bitcoin will take a look at that. So let's go through these one at a time. Let's start with real estate. Of course, if you've been following me for any time, you know that I started my career in real estate. I still own real estate. I like real estate. But there's a couple things that we should know, specifically around in your four to one K in your retirement account.
They talk about liquidity, they talk about volatility, and in real estate is certainly ill liquid You can't sell it quickly. At best case scenario, it's probably a couple months. Sometimes it could be even worse, depending on the market cycle where you're located.
Things like that. The other thing with.
Real estate is that there's high transaction costs. It's very expensive to sell a piece of real estate. It's also big, big sales, big purchases, big amount. So let's just say you needed five thousand dollars for a purchase or ten thousand dollars fortification. You can't just get five or ten thousand dollars out of your house, so it's i liquid.
There's high transaction costs to move them. And so most likely if people were going to use this in a retirement account, they'd probably use something like a rate, a real estate investment trust, something like that. They wouldn't want to own it directly. They wouldn't want the maintenance headache. They wouldn't want the property managers getting calls late at night when your toilet's breaking down.
Things like that.
Some other things with real estate in a retirement account that can be problem matic is a geographic concentration risk. But if we take a look at the case Shiller index for real estate, we can see a couple things. Number one, this goes back to nineteen eighty eight. Real estate had been pretty much flat here until the dot com bubble blew up. When the dot com bubble blew up, rates went down, real estate went up into a bubble.
Two thousand and eight we had the real estate crash, and we've been basically on an upward trend ever since. So the last couple decades real estate has been a pretty good investment. Now, let's stack this up and take a look at it in a chart here. So what we have here is reates versus direct So how should we own real estate, especially if we can get money from our retirement account into real estate specifically, So the
investment type here is an equity rate. Here is a private sire commercial real estate, and here we.
Have us home prices.
And what this shows over one year, the rates have performed better in a one year period eight point seven versus two six and two seven. Over three years they didn't do too well. However, they lost less. Let's just stay in commercial real estate and over five years and over ten years they outperformed. So if I was going to move some of my money in my four one k into one of these horsemen's into the real estate bucket, the equity rates are probably the best option for me in this scenario.
Now, of course, there's more advanced options. We're not talking about that. We're just talking about in your retirement account specifically.
It looks like it's when there. Okay, remember those numbers. We're going to stack all these up at the end.
Okay.
The second horseman would be in my alternative investments is private equity. Now Tony Robbins recently wrote I Believe, his third book on money, part of the trilogy, where we talked about private equity being one of the best investments that you can get into, and he talks about wre Typically you're going to make twenty to thirty percent on your money versus you know, sp five hundred and six or eight percent return. A couple things they know about
private equity. Typically they have pretty high minimum investments, so typically you probably need to be an a credit investor. Means you're making over two hundred fifty thousand or a million dollars of assets, and.
Typically you need to put two hundred and fifty thousand.
Up to one million dollars into private equity. Also, the thing with them is they're not very liquid. Typically you have to lock up about five to ten years. When you put your money into the fund, it's stuck there. You can't get it back for like a five to ten year period. Not ideal if you're towards the end a nearing your retirement. Obviously, if you're just starting out, maybe that works.
Okay.
As I said, typically you have to have an accredit investor requirement.
Of course, liquidity issues.
If you're within that lock up period, you can't get any of your money out. And then typically they have very high fees, so you're typically going to pay two or twenty What that means is of the money that you have in the fund, they're going to take two percent as management fees, So every year, two percent of the money of in goes to management. And then on the upside, they're going to take twenty percent of the gains that they get you.
Okay, let's take a look at how this is working out.
What we can see here is that we are currently getting more and more allocations going to private equity from large institutions. And the reason why is again because of their performance, right, because they're beating regular funds. And what we can see here is the allocations we see for endowments and foundations. They're the leader in allocating to private equity.
Endowments being like Yale, Harvard, things like that. We can see they're allocating about twenty five to thirty two percent of their entire fund towards private equity, just so you can see how they're allocating this. Again, most people, most individuals don't have any, but the endow onents they do twenty five to thirty two percent. Okay, what we can see is since they've been doing this and sort of going back to Tony Robbins book, we can see the growth.
Here's the year two thousand and look at the amount of growth.
Here we are. This is only to twenty twenty two.
You can see the enormous move for money going into private equity, chasing yield. The S and P five hundred hasn't been performing well, the mag seven have four hundred and ninety three, other companies not doing so well, and so they're chasing yield. Where do we get it, Well, they move to private equity. Well, let's stack these up and take a look at what we've got so far and what we can see. Here's the assets we have private equity right here, here's the S and P five hundred, NASDAK,
the Russell two thousand and then the Treasury bond. What we can see over one year, three year, five years, and ten years. And what we can see is that while private equity looks really good.
Actually, the winner has been the NASDAK.
What we can see over one year, three years, five years, and ten is we have seven point one percent. One P five hundred did better over one year. The Nasdaq did even better in the one year period. Over five years, we got seven percent here in private equity, almost eleven percent in the.
S and P five hundred, eight and a half in Nasdaq.
Five years, sixteen percent in private equity, about sixteen percent SP five hundred, but almost nineteen.
Percent in the Nasdaq.
And over ten years we have fifteen percent in private equity, thirteen percent in five hundred and sixteen percent in Nasdaq.
So all of them are actually pretty close. Now.
Of course, this is a private equity index. Some have done way better, some have done way worse. What we can see somewhat pretty close now. The Russell index has done pretty poorly overall, hasn't kept up about half of that.
I did put.
The US Treasury bonds on here just so you could see over one year, lost five percent, over three years, lost ten percent over five years. They've done pretty terrible. We also have real estate down here at the bottom ten percent, four percent, six and a half percent, and six percent So what we can see here is that the Nasdaq has been better performing than real estate and private equity.
And of course most of you.
Can buy the Nasdaq and this and P five hundred in your four to one ks right now. You don't need alternative investments to do that. Okay, let's go to the third horsemen of alternative investments, my favorite, of course, Bitcoin.
Now, part of the reason why I love bitcoin.
Is it's brand new, it's technology, it's changing the world as we know it.
But it's also had the best performance.
It has been the best performing asset over pretty much any period in time fifteen years, ten years, five years, three years, and one year. Let's take a look at it when we stack it all up. So if we have private equity, sm P five hundred, NASDAK Russell Treasury, and now we have Bitcoin here. So instead of seven percent, twenty four percent or twenty nine percent, the Nasdaq looked really good. Bitcoin did seventy, not twenty nine, seventy.
Over three years.
We had the winner here the s and P five hundred at ten point nine, but Bitcoin did sixty three percent.
Over five years.
We had the winner right here at nas eighteen percent, but Bitcoin did eighty two percent over ten years, we had the winner right here again back to the NASDAK at sixteen percent, but Bitcoin did one hundred and thirty nine percent. So pretty much, over any time period you want to look at, bitcoin has outperformed. Hard to argue with that, but how people would argue with it? But they'd say, but the risk, it's too volatile.
Well, what we want.
To do as investors is we think about the risk adjusted returns. One of the ways we do that is we use something called a sharp ratio. The sharp ratio looks at.
Both the risk and the reward that we have.
So if we take a look at the sharp ratio of a couple assets, let's look specifically at the sharp ratio of Bitcoin and the US Treasury. Specifically, what we can see is that the max draw down of the US Treasury for the last five years ending June thirtieth, twenty twenty five was forty eight percent.
About half your money was lost hold in US treasuries. In bitcoin, it went down.
The max draw down was actually seventy six percent, so the draw down was much worse. However, if we look at the sharp ratio, which looks at both the draw down and the return profile. We see that TLT was point thirty nine, which was very risky. We see that Bitcoin was over one, which was much much safer. And the reason why is because you have to look at both the return and the game, or the risk and
the reward. I should say, so when we look at TLT over one month, three months, six month, one year, three or five years, and we see that again it is down heavily five years thirty eight percent, But if we look at Bitcoin, it was all gains.
Over one thousand percent game.
And so you have to understand risk and reward in both of these, and so we can see across the board bitcoin wins. But a couple things to keep in mind. It's not just about total performance, total volatility, total risk. We also want to think about liquidity. How fast can I get my money out? Like with real estate specifically if I have single family residents, how long does it take me to get money out if I just need a little bit five thousand, three twenty thousand? How liquid
is that market? All right, now, let's get to the super cycle part of this, because, as I said, we have about nine trillion dollars that's going to be unlocked and it's going to rush into these types of assets.
So what does history say about this?
What can we learn? Well, a couple things that we can learn. First of all, we know that the four to one K was created by the Revenue Act in nineteen seventy eight. Okay, so it's when they change things, when money started flowing into it. We know that stocks became standard in a four to one K around the early nineteen eighties. We saw that the S and P five hundred in nineteen eighty one was about one hundred
and thirty and today it's about fifty eight hundred. That's a forty four times increase since the four to one k's came into existence and started buying stocks what we call passive flows, passively buying them. Now, this is this is different than retail investing. Retail investors are trying to time things. Should I buy now? Should I wait? Four to one k's are every other week. My paycheck has money that goes into my four oh one K and
it automatically buys back to the passive income. But for an illustrative chart, we can see here from nineteen thirty until this point when the four ones were created nineteen eighty we can see that the S and P five hundred was relatively flat. Yes, it went up and down, but it was relatively flat.
But look at what happened since four to one k's started buying the S and P five hundred, it started going straight up.
So, if history is our guide and we now know that the four one ks can unlock and that capital can now move into three types of alternative assets, what do you think happens to those three.
Types of alternative assets?
Well, that may not be definitive, but let's put a let's put a number on it here. What we can see is that if we do the math on how the capital should flow, we can see again, if there's nine trillion dollars sit in four O one k's, if one percent of that allocation moved into alternative assets, that's almost ninety billion dollars. Ten percent of that moved out of four own k's and into one of these three
assets are all three, that's almost nine hundred billion dollars. Now, just to put things into some math, If that's almost nine hundred billion dollars, the entire crypto market is only four trillion. Bitcoin's only about two trillion dollars. So what happens when almost one trillion moves into a two trillion dollar market.
Yeah, it explodes. You can do the math. But let''s look at some other parts of history.
What we can see here is we can understand that pension funds entered also into stocks in the seventies. We know that insurance companies started buying real estate in the nineteen eighties. We know that endowments they started moving into stocks in the nineteen nineties.
This is into private equity and to venture capital.
And we have the tech boom, but now we have retirement accounts moving.
Into this new alternative investment class.
Let's take a little bit more charts, So let's look at gold, for example. We can see what happened right around the same time nineteen eighty gold had been kind of moving higher, and then look.
At the growth that we have right there. As a matter of.
Fact, you can see before it happened and after, before gold became legalized.
A lot of people don't understand this, but back here, well, we don't go that far.
Back in nineteen thirty three, the US government took everybody's gold and made it illegal to even own gold. And it wasn't until here that you were able to own gold legally.
Again.
So again, when a rule change happened legally and people could move their money into the asset, what happened, Well, gold went.
Up, as you can see over four times.
This is the history and this is what happens when money gets unlocked and can move into new assets.
It creates a super cycle.
So I've been talking a lot about something I call the quantum wealth window. About every fifty years we have a technological revolution that opens up.
Now there's two things that happened.
One of the technology changes the course of humanity, right, like instead of walking and riding horses, we had to have cars. Right, instead of having to send a letter in the mail, we now have the internet and email, and we have that going on right now. We also know that the richest people in the world, the legacy wealth, was always created.
In one of these wealth windows.
Now we are in the sixth wealth window we've seen in the last three hundred years. And at the same time we're seeing this, we're seeing now nine trillion dollars being unlocked and ready to rush into these new asset classes cryptocurrencies, bitcoin, etc. Now this isn't just another trade, it's not a short term move. This is a structural reformation of the entire capital market, right, not another trade.
We're talking about nine trillion dollars that just got permission to now come out of their locked gates in a four one K and can now come into these assets again. Not a correction, a reformation, and this is the greatest
wealth transfer in history. Now, if you want to know more about how we're positioning for these and how that money might move into bitcoin and where that goes over the next ten, twenty, thirty forty years, you might want to watch this video right here, and I'll see you over there.