Notes from Tony Robbins Platinum Partnership Finance Trip, Whistler

22nd-26th Feb 2019 (Notes: Part 1 of a 2-part series, for part 2 where I share my insights, click here
 
I found myself sitting in a room with 400 others that have spent over 100k USD on personal development and coaching; there was an all-star list of speakers such as Ray Dalio, Bo Shao, Peter Diamandis, Howard Marks, Luca Padulli, and Tony Blair.
 
“I’ve made billions of dollars, why am I making more money and why am I spending time worrying about money?"
 
“How many uncorrelated assets do we need in our portfolio?”
 
“How much will it take for you to have absolute financial freedom?”
 
“What stage of the lifecycle of wealth are you in?”
 
“How do billionaires think when they contribute money to a cause and influence others to match it?”
 
“Do you need a new BBJ or is it better for you to rent a Global Express for $8k/hour?”
 
These are themes and highlights of the discussions, and below are my notes from the event.
 
$$$ and time
This is the investment required for me to get into the room: USD $40k, 48hrs of travel + Jet-lag
  • $35k: It costs $85k USD for a year to be a Tony Robbins Platinum Partner but an additional $10k USD payment was required to attend this event.  Therefore I estimate this event to be worth at least $35k USD.

  • 48hrs of total travel time from Singapore to Whistler and back, the physical cost of being jet-lagged, and airplane tickets + hotel ($5k USD)
 
Topics I left out and why:
  • Taxes and real estate: Skipping this was a strategic decision I made. Being at this event was like drinking water out of a fire hose, and since these two topics weren’t as applicable to me living in Singapore, I decided to spend this time resting and recapping the parts that were of greater immediate usefulness for me.

  • Binary speculations (eg. BTC will go to $35k and another bubble will come). The risk of losing the context of these pose a higher risk to readers than the potential amount of value that would be offered.

  • My financial plans: A combination of the fact that I prefer to keep this private and that it’s a relatively complex thing to share in articles in a way that does it justice.

Speakers and what was said

Tony Robbins:
  • Different life conditions need different blueprints, when it comes to finances it’s important to accurately determine where you are on the map before deciding where to go.

  • The core four: 1) Don’t lose money 2) Asymmetrical risk/reward 3) Tax efficiency 4) Diversify

  • The key strategy for earning more money is extremely simple and powerful. To figure out how to earn more money, figure out how to add more value.

  • To learn effectively, take notes like you’re going to teach someone - someone that you care about. (I’m now writing this to share with you)

  • Instead of fearing "Winter", embrace it. Winters are necessary for the next Spring to be available.

  • Split your assets into three "buckets":

    Bucket #1: Security/Peace of Mind - Treasury Bills, TIPS, Cash, Real Estate that you live in, Ultra-Short Term Bonds,

    Bucket #2: Risk/Growth (and Hybrid) - Stocks, Bonds, Gold/Commodities, Real Estate

    Bucket #3: Dream Capital - Jewelry, Watches, Cars, Vacations, Boats, Homes, Planes, Islands
  • Favourite quotes from the event:
    • “You can’t control her (referring to someone’s daughter), controlling is not loving."

    • “Everything that is a problem is an opportunity"

    • “Choose the meaning the empowers you"

    • “The difference between the rich and the poor is the mindset of ‘get to’ and ‘have to’."
 
Tony Blair
  • Africa’s middle class is going to double in the next 10 years and China is on track to capitalise on that.

  • When asked who he went to for advice and learned from: “Lee Kuan Yew (Singapore's first Prime Minister), who taught him that while idealism is important, ideology hurts."

  • Favourite quotes from the event:
    • “It’s less about the LEFT or the RIGHT and more about an OPEN or CLOSED mind."

    • “When you decide, you decide. Leaders make decisions. In every important decision he made, Tony Blair faced opposition before it, hell while he was doing it, and when it was over he wished he’d done more of it."

    • “Partnership always work best on equal terms."
 
Harry Dent
  • Interesting facts and speculations:
    • 70% of money is spent by consumers, look at them and demographics to predict financial cycles

    • 22% of condo units in China are empty and prices are going up, this shows how the Chinese see real estate.

    • India will peak in the year 2055

    • South Africa will peak in 2040

    • Cruise consumption peak at age 80 - “For the newlyweds and nearly dead” 

    • 10 woman to 1 man in nursing homes - “Talk about when your best shot at getting laid is, gentlemen, I just can’t promise you it will be good sex."

    • People weigh the most at age 60

    • South East Asia and India has the best productivity and demographics for investing

  • Favourite quotes from the event:
    • “Economies are like the human body, if there’s something toxic in it, you want to get rid of it as soon as possible. That’s why bubble bursts should not scare you but be seen as a natural part of a necessary market detox."

    • “Long-term cycles are easier to predict, in the short-term too many things can happen."

    • “People don’t like cycles because there are downs.”

    • “Young people cause inflation, they cost a lot and produce nothing (until they become productivity engines."

  • Big predictions:
    • 6-12 months into a bubble, we’ll be in a recession in 7-9 months (Oct to Dec 2019)

    • Next boom: 2023-2037 - determined by tracking U.S. millennial buying trends

    • Bitcoin to make a run up to 35k before crashing.

    • Next cycle with the biggest upside will be biotech.

  • Recommendations:
    Hedge with 2.5% of your portfolio for 3-6 months at a time using options
 
Bo Shao
  • Retired at age 29 after exiting from his first company for ~200m USD

  • Came back to the VC game in China and invested in over 10 unicorns

  • “I’m invited here to talk about China and that is what most of you want to hear about, so I’ll talk about it, but that’s not what I’m really here for."

  • In the past, most Chinese Tech companies used the strategy of "copy and localise”. This is no longer the case.

  • Biggest value creation sector in the world is in the China Tech sector. 

  • Story: When he was in school, a boy came and asked him who his friends were, and because he didn’t have any, he tried to quickly cover it up by claiming two popular kids in school to be his friends, figuring that since they have many friends it’s more likely it would be believable. A few days later, one of the two popular kids came up to him and said to him, “Why did you say I’m your friend, we’re not friends.” Shao was devastated and started closing himself off emotionally. For the next 20 plus years of his life, he never ever called anyone his friend. When he saw emails from people in school or work calling each other friends, “how do they have so much courage to call each other friends” popped up in his head. He only started calling other people his "friends" two years ago.

  • In the first 3-6 months, a baby has no sense of self, their sense of self is merged with their Mum’s, so during the first 3-6 months, it’s better to focus on the Mum’s well-being.

  • On his child crying and him scolding the child and even smacking him in rage once. The prefrontal cortex is not developed until about 25 so there’s no point in asking his kid to calm down since the limbic system is required to calm him down. The most effective strategy he found now is to simply sit with the child for 10-15min, which was extremely hard for him the first time.

  • “There’s a vacuum for meaning in China” - He was pleasantly surprised when he left the VC world and many of the CEOs of his portfolio companies reacted positively, this really encouraged him.

  • "Teenage suicide rate in female doubled while male increased 30-40% in the last decade"

  • Beggars on the streets of China are holding up their QR codes for money because no one has the cash to give any more

  • Quotes from the event:
    • "Meditation is a long-term investment and people find it hard to get into it because there is no instant gratification"

    • “All parents are responsible but not to be blamed."

    • “It’s that we mistake the shell as the true-self, this is the source of most suffering."

    • “If I can be connected to people more often, life is good."

    • “Technology is currently brining people together, but with low fidelity. This asynchronous communication is bad for people."

  • Recommendations:
    • Breathwork - could directly experience true self

    • Hoffman process - one-week of retreat and therapy work focused on the relationship with parents

    • Internal family systems (IFS), Daniel Brown from Harvard - MD, know Tibetan, very precise teachings for meditation.
I felt something I never felt before when I heard him speak - Deep down I recognise how much emphasis I place on other people’s perspective of me
 
Ray Dalio
  • Interest rate dropping to 0% is the limit for spending, this is when it’s the most dangerous. Europe and Japan are at 0%, and the US is only at 2.5%

  • Capitalism doesn’t know how to distribute pie, Socialism doesn’t know how to increase their share

  • There is currently a lot of resentment about Capitalism, the net worth of the top 0.1% is equal to the bottom 90%, which makes it obvious for a clash and resentment from the lower income group

  • It’s hard for policies to be successfully implemented when Left and Right are screaming at each other.

  • Micro-financing $1 produces money flow of $12

  • The important thing about the situation with China is that it’s not a trade dispute; it’s a rising power challenging the current dominant power.

  • US has an individualistic approach, the individuals are of paramount importance, and it’s a bottom-up system.

  • China has a Confucianism culture which prioritises a hierarchical structure and family. In Chinese, country is written as 国家 (guo jia), where 国 (guo) means country or state and 家 (jia) means family. 

  • In the rising of power, the winner will be the one who has the best technology, the best economical consequences, and the most military power.

  • Huawei is the world leader in 5G technology, which will greatly impact everyone in all ways.

  • It’s more difficult to play the alpha-game than compete in the Olympics. This stood out strongly for me because we see so many people trying to beat the markets and play the alpha game when they would not consider themselves to be the Olympic level equivalent, so most people have no shot.

  • There are so many professionals and institutions playing the alpha game that many assets in various countries are quite well balanced from an expected value perspective, so it’s more effective for people to think of diversifying to 15 uncorrelated assets

  • At 5 uncorrelated assets, risk is eliminated by 50%. At 15 uncorrelated assets, risk is eliminated by 80%.

  • This divide between Left and Right is the most important issue in our time, the most effective strategy is to bring the country together and not have extreme Left or Right

  • Education provides the best financial ROI for any government in a capitalism model in the long run, it’s worth injecting money into the education system.

  • “I’m a professional capitalist and I love capitalism, but it’s good for reform right now."

  • Recommendations:
    • Have 5-10% in gold and hold some neutral currency like the Swiss franc.

    • All seasons portfolio: 40% Long-term bonds, 30% Stocks, 15% Intermediate US bonds, 7.5% Commodities, 7.5% Gold.

  • On Universal Basic Income - This is considered a substitute for programs, so we have to choose which is better. It costs less money to distribute because there is less bureaucracy, but who will the money be in the hands of? If poor decision makers get access to the money, the money could be going from school books to poor decisions.

  • I’m most optimistic about the potential of using algorithms, I write down how I make decisions in algorithms that operate parallel with my thinking. Young people speak algorithmically, and if you want to succeed quickly go and find successful people with quality thinking and break that into algorithms you can work with.
 
Howard Marks:
  • The two most important skills of an above average investor are asset election and market cycle positioning.

  • Always ask yourself, how much optimism is factored into the price?

  • His most important 7 words to know that it’s the wrong time to invest - “Too much money chasing too few deals.”, this stuck out particularly strongly for me when I spent months trying to network in the blockchain space to get access to what I perceived to be good deals, which didn’t work out.

  • “First the innovator, then the imitator, then the idiot.” - Warren Buffett

  • Another sign of the cyclical high is when investors start getting jealous of the gains of others.

  • When you use averages, “never forget the man who was 6-foot tall that drowned in the 5-foot stream on average.” 

  • Quotes from the event:
    • “There has been no penalty for extremists and no rewards for centrists"
    • “Being out of the market is the greatest risk"
 
Jawad Mian
  • 60% of Iranians are under 30 years old

  • Political risk is most misplaced in the Middle East

  • Crazy investment thesis
    • Short God - Buy Saudi Arabia stock market, Saudi Arabia ETF Ticket KSA
    • Long Arab Millennials - Smart money is investing in the Middle East now
    • Short Capitalism

  • Turn more defensive and cautious when you see Uber IPO. When you see the biggest company in the hottest market IPO-ing, it’s a sign of the top.
Peter Diamandis:
 
Side note: I’m an A360 Digital member so some of the thoughts might be a combination of Peter’s presentation and his A360 digital content as my brain does not segment information to separate the two. Many interesting things are skipped because there’s too much to be excited about.
  • We are linear thinkers in an exponential world

  • More wealth will be created in the next decade than the last 100 years

  • The rate of acceleration is accelerating

  • VCs invested 130b in 2018, an increase of 84b from 2017

  • Crowdfunding projected to reach 300b by 2025, anyone with great ideas will be funded and capitalised on

  • There is an increasing reward for crazy ideas and experiments

  • Just like how the Stone Age did not end from the lack of stones, the oil age will not end from the lack of oil.

  • Secluded areas on top of hills might be more valuable when self-driving flying cars become real

  • Car ownership will be dead in the US by 2025, it’ll be 5x cheaper to use car as a service. The value proposition for car as a service is so much higher

  • Countries can do geographic arbitrage by create supportive regulations. Africa will skip roads for flying drones and cars.

  • There will be 100 times more of these new flying vehicles than airplanes.

  • If we worry about Earth not having enough space, just look up into the sky and see how much empty space there is.

  • China will take the lead in autonomous cars.

  • Anything that saves us time will be the most valuable commodity

  • Peter’s 6 D’s for exponential technology are: Digitise, Deceptive, Disruptive, Dematerialise, Demonetise, Democratise.

  • AR and VR are currently going from Deceptive to Disruptive. Magic Leap One is released in 2019, and it’s a foregone conclusion that AR will be ubiquitous and as big as or bigger than smartphones.

  • We’ll find out more about the human race because of AI, “what can humans do that AI can’t do? What is truly human by subtraction?"

  • If I was betting on the marketplace, I’ll short the car companies or buy put options

  • "Jobs around empathy and compassion will be hard to displace, when AI replaces jobs we need to create more jobs around empathy "- Quoted from Kai-fu Lee of Sinovation Ventures, one of Peter’s go-to sources for all things AI

  • Ray Kurzweil says that in 15 years we’ll be connecting our minds to the cloud.

  • China Inc is no longer a copycat company

  • China will catch up with American AI in 2020, overtake in 2025, and dominate by 2030

  • Chinese companies are thinking of the 1.4b Chinese people and Americans when they create technology, Americans don’t think the same

  • 90% of hardware is currently made in one city in China - Shenzhen

  • How to prepare yourself for exponential technology
    • Get your own strike-force by finding a dozen people under 30, you can go to universities and get interns and ask them to disrupt your business with technology. This creates cognitive surplus around you and you can see the world through a millennial’s eyes. Create a small ecosystem of strike-force around you.

    • ABCCD - Assets, Brands, Cash, Clients, Data, how do you utilise these more optimally? Are there fresh grads or entrepreneurs that can utilise this for me more efficiently? Back some crazy ideas outside of your main company and start an ecosystem of startups around you.

    • 6 D’s, HeroX to put a competition like XPrize - you don’t have to know the answers if you can tap the crowd for the solutions.

  • It’s less important what you know, and more important what questions you ask.

  • We tend to focus on problems to solutions 10:1, and we forget the fact we have technological progress to solve problems.
 
Wences Casares:
  • Wences took an approach of recommending a small 1% of your assets in cryptocurrency as a speculative bet.

  • He said that BTC is an experiment and there is a 20% chance of failure, but there is also a good chance that it becomes the global currency reserve and it goes to $1m per BTC which is a 250x return

  • Warren Buffett sees everything as an asset - if it’s not an asset there’s no point investing. If you are an F1 driver, it doesn’t mean everybody should drive like you.
 
Luca Padulli:
  • Invest in pleasure - companies and businesses that create pleasure for people are most resilient in times of crisis because demand is inelastic
    • Beer has returned 13.5% compounded over 100 years, chocolates 10-15%

  • I invest in China through Singapore

  • Brexit voting happened because of patriotism from Queen’s birthday ceremony a few days before voting, Citizens feeling patriotic so it was just bad timing.

  • Some moonshot bets in the climate change area.

  • Quotes from the event:
    • “It’s not part of your DNA” and “fear is not us” while teaching his son.

    • “Split your spiritual and material self, there is no link between the two except a judgmental relationship."

    • “Health is the new wealth. You cannot enjoy what you do unless you are healthy. Put health as your priority."

    • “Not every value is a value that needs to be passed on to the next generation. As a father, you decide what value to give to your child."

    • “Honesty is profitable.”

    • “You have to learn from the masters, most people improvise, but learning from the masters always pays off."

    • “Wealth disparity offers the opportunity to create jobs in diverse areas, including hospitality, entertainment, craftsmanship (unique and bespoke items).
 
Ajay Gupta:
  • Explained the process of the following:
    • Hire a fiduciary

    • Disciplined re-balancing

    • Tax-loss harvesting

    • Investment vehicles such as Life Settlements, MLP’s, Real Estate, Private Credit, Private Equity, Cash Management, Covered Calls and Exchange Funds

  • Biggest wealth destroyers:
    1. Brokers in disguise

    2. Erosive impact of fees

    3. Inefficient taxes

    4. Emotional decisions - by far the greatest wealth destroyer
 
Michael Smorch:
  • The biggest mistakes we make in investing are deeply embedded in our assumptions

  • Many people assume risk and uncertainty are the same thing, but risk is something you can identify and create a mathematical solution for, while uncertainty is when you enter the unknown.

  • The bigger the uncertainty, the bigger the potential upside

  • Asymmetrical themes and opportunities right now: Cannabis, Biotech, BTC, Latin America

  • US GDP would be higher if companies such as Uber, Airbnb and Amazon didn’t exist. The massive increase in productivity is suppressing inflation, and we are currently living in a world that wealth creation is negative to inflation.

  • Deflation is coming because of technology

  • Millennials think: “Be kind, be thoughtful, or we’ll be mean to you."

  • 3 important forces to watch: currency, geopolitical activity, and millennials.

  • When millennials were asked, "if you had $1k in your bank, would you rather own BTC, Real Estate, Stocks or Gold?”, most picked BTC. The next generation will buy more digital assets in the coming years. 

  • "Cannabis in Canada is just an appetiser, the US is the main course."

  • China is still classified as part of Asia when it comes to Biotech, this just shows that many American companies are sleeping

  • BTC is a liquid Store-of-Value with minimal dilution, it has a great potential candidate as the global currency reserve asset.

  • The most interesting chart to look at for BTC is the lowest point of the year, which measures how many people that refuse to sell BTC.

  • Latin America will be interesting to follow, the US will need to spend money on them to fight for it’s hemisphere and it’s sphere of influence.

  • "The signals that many of the richest in the world use to look at the world are no longer the same in the next gen."

  • “This is the most alpha-rich opportunity in my life."

  • “There are no short-sellers in the Forbes 400 list."
 
Jeff Hodgson:
  • "Create optionality for yourself in deals, it usually costs you nothing and there is a lot to gain."

  • “It’s about pushing hard until the opportunity comes."

  • “Documents are written for when the storm comes."

  • “Do things that really make you uncomfortable - that’s where the gold and magic lies."

  • “Thinking long-term is one of the biggest edges you can gain in this lifetime."
 
My Action Steps:
  • Execute on my first investment plan right away:
    • 70% Growth/Risk Bucket, 20% Security Bucket, 10% Dream Bucket

    • Growth Bucket to include 10% BTC, 40% Company, SEA Index 5%, Indian Index 5%, Singapore Index (G3B.SI) 5%, Vanguard 500 (VUSD.L) 5%. Find a SEA index and Indian Index to invest in

    • Security bucket to include 10% for Singapore property, 10% for bonds including Singapore Savings bond 

  • Monthly Pay of 20% and an additional 20% from coaching to investments

  • Talk to finance friends for Fiduciary recommendations, my suspicion is that it’s not a thing in Singapore.

  • Talk to finance friends that have some understanding of statistics and correlation to find at least 10 uncorrelated assets. I could build a model together with them using SPSS or R.

  • Scheduled in my calendar - Revisit my finances and rebalance on 31st March 2019, 30th June 2019… (every last day of the quarter)
 
Key Distinctions / TL;DR:
  • A lot of people have net worths that are way higher than ever before, and as a human, we naturally think we deserve it. The psychology of losing a large percentage of it is something not many humans can deal with, and as such, there will be a massive opportunity during the next downturns if you are willing to make some asymmetric risk/reward bets. If we mentally prepare ourselves for downturns in our net worth, we can be less emotionally and adopt strategies with higher expected value during the downturns.

  • The greatest arbitrage opportunities come from thinking long-term instead of short-term. A heuristic that Naval Ravikant talks about is that when we are faced between two close decisions, always choose the one with more short-term pain (aka greater long-term utility)

  • There is a split between the experts between whether the Financial Winter is coming soon or not, so the most resilient strategy is to still deploy your assets while also having adequate liquidity to take advantage of the opportunity should a Financial Winter come.

  • You can find bargains at the point of maximum pessimism and should run for the door when there is maximum optimism.  

  • Asymmetrical risk/reward works for everybody, which means to make bets that have a high expected value while managing your risk of ruin (or sufficient to maintain the lifestyle you want).
 For my insights, please click here (part 2).
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