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How To Use The Inversion Technique To Succeed In Finance



Charlie Munger, one of the world’s savviest investors, recommends mathematical inversion as an all-around problem-solver in life and finance. It’s Charlie’s not-so-secret process that turns problems into solutions — a keen skill for the Vice Chairman of Berkshire Hathaway.

Inversion takes a problem, flips it upside down, and runs it forwards and backwards until the solution spills out in front of you. As Charlie’s partner, Warren Buffett, said, it’s “like singing country western songs backward. That way you can get your house back, your auto back, your wife back, and so forth.”

Inversion turns bad things into good things.

For a real life example, take the State Lottery. It’s unquestionably the worst government program ever, bringing unfounded hope and endless disappointment to our poorest citizens, even if the profits end up in State coffers. How could we turn the State Lottery from the worst government program to the best?

Invert it. First, make it involuntary and assign everyone a number, rich or poor. Reduce the prize money to reasonable amounts. Delay the drawing until every player is old or sick. Make every player a winner, not just one lucky soul who might well be destroyed by the windfall.

What you get: Social Security, the government program hardly anyone hates.

If inversion still isn’t clear, let’s go to the movies. In the beloved classic It’s A Wonderful Life, selfless, tempest-tossed George Bailey is saved from suicide by guardian angel Clarence, the heavenly clockmaker.

Simple but rational Clarence just inverts George’s life: “You’ve been given a great gift, George. The chance to see what the world would be like without you.”

George is horrified by the misery he finds for friends and family in a George-less world, and begs to return to his former life. Everyone he ever helped rushes in to repay him.

Here are four ways you can use inversion to help your financial future:

Invert the thrill of individual action into the power of mass action.

As individual humans, we evolved to like and enjoy other individual humans. Our most popular war movies—Star Wars and Casablanca—are really not about massed armies at war, but the character and actions of a few individuals caught up in war.

Just as we prefer individuals to the mass of humanity, we prefer individual stocks to the broad market. People love to pick their own stocks. But as Humphrey Bogart says at the close of Casablanca, individuals “don’t amount to a hill of beans in this crazy world.” Most individual stocks don’t, either.

Quit focusing on individual stocks. Accepting the counter-intuitive wisdom of diversification will protect the bulk of your portfolio from ruin, and assure your fair share of market gains.

No one would make a movie about low-cost index funds, but they work. Even the best hedge funds are “closet indexers!” The S&P 500 returned 10% for the past fifty years. Have you?

Invert the delight in risk into the security of making a safe bet.

James Bond and Indiana Jones take awesome risks, win their bad bets all the time, and earn our undying love and admiration. Nature leads us to admire and emulate risk-takers. Risk-taking may benefit humankind, but not the individual taking the risk.

That’s why so many portfolios crash or never even get off the ground. As the Wall Street maxim goes, “There are bold investors and old investors, but no old, bold investors.” Invert that primal urge for risky bets and seek the best bet, not the worst.

No one would write a song about the heroes of compound interest and long-term investing, but that’s where the money is. And it’s money we’re after, not just adrenaline.

Invert the urge to keep betting and keep trading into thinking long-term.

“Place your bets, ladies and gentlemen!” cries the croupier. But the croupier serves the house — and the house wants you to bet again and again. Why not? The odds are in their favor: the more you bet, the more you lose to the house.

Since the 17th century, we’ve known that frequent stock trading leads to investor losses. The only ones to get rich from frequent trading are the financial industry and the pundits who encourage it.

Charlie Munger says this about betting: “To me it’s obvious the winner has to bet very selectively.  It’s been obvious to me since very early in life. I don’t know why it’s not obvious to very many other people.”

It’s not obvious because we are not evolved to think long-term, but to peck at a lever like a trained pigeon. Instead, invert: Bet rarely, and only when the odds are with you.

Invert the bad into the good: Vice into virtue, gambling into investing.

Remember: Gambling is a vice. Like “smoking, drinking, never thinking of tomorrow,” as the Duke Ellington and Michael Parrish lyrics for “Sophisticated Lady” go. Gambling is making bad bets in the mathematically unlikely hope of a big win.

The more bad bets you make, the more likely you’ll lose your fortune and your future. Give up gambling, and invest instead. Stick to the good bets and the sure bets. Build virtue instead of vice. Isn’t that what you really wanted to do all along?

Like many simple concepts, inversion can evade your common sense until you absorb it and practice it. Then, like riding a bike, the skill never leaves you. How often should you invert? Carl Jacobi, the 19th-century German mathematician who invented inversion, loved to preach, “Invert, always invert! [Man muss immer verkehren!]” Invert all the time.

Gift it to others and it will keep right on giving to you. Just thank Carl and Charlie. In German, you can thank them both at once: they’re both Carls.

This article originally appeared on ValueWalk. Follow ValueWalk on Twitter, Instagram and Facebook.


Airbnb Experiences: 5 Easy Ways To Make Extra Cash Today



Airbnb Experiences: 5 Easy Ways To Make Extra Cash Today

Airbnb is a great way to earn money by renting out your home or apartment.

However, did you know that you can also make money by offering experiences on Airbnb? Here are five easy ways to make extra cash today by creating and offering Airbnb experiences.

1. Offer a food tour

If you love food, why not share your passion with others? Create a food tour experience in your city, showcasing the best local cuisine. You can offer a walking tour or a bike tour, and include stops at local markets, restaurants, and cafes. This is a great way to meet new people and earn money at the same time.

2. Teach a skill or hobby

Do you have a skill or hobby that you’re passionate about? Share your knowledge with others by offering an experience on Airbnb. You can teach anything from photography to cooking to yoga. People are always looking for new experiences, and they’re willing to pay for them.

3. Host a cultural event

If you come from a different culture, why not share it with others? Host a cultural event, such as a traditional dance, music, or art class. This is a great way to showcase your culture and make some extra cash.

4. Offer a nature experience

If you live in a beautiful area, offer a nature experience on Airbnb. You can offer a hiking tour, a kayaking trip, or a birdwatching tour. People love to get out into nature, and they’re willing to pay for it.

5. Host a wellness retreat

If you’re passionate about wellness, why not host a retreat? You can offer yoga classes, meditation sessions, and healthy meals. This is a great way to help people relax and recharge, while earning some extra cash.

In conclusion, offering experiences on Airbnb is a great way to make some extra cash. With these five easy ideas, you can get started today.

For more ideas and tips on how to make money, check out this Airbnb guide inside our academy.

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10 Tips for Making More Money with Your Airbnb Listing



If you’re an Airbnb host looking to increase your revenue, there are several strategies you can implement to make your listing more appealing to potential guests.

Here are 10 tips for making more money with your Airbnb listing:

  1. Set competitive pricing: Research the prices of similar listings in your area to ensure you’re offering a competitive rate. Consider lowering your prices during slow seasons or offering discounts for longer stays.
  2. Offer extra amenities: Providing extra amenities, such as a pool, hot tub, or complimentary breakfast, can make your listing more attractive to guests and justify a higher price.
  3. Invest in high-quality photos: High-quality photos of your space can make a big difference in how many bookings you receive. Consider hiring a professional photographer to capture the best aspects of your listing.
  4. Keep your listing up to date: Make sure your listing accurately reflects the current state of your property. Update your photos, descriptions, and amenities regularly to keep your listing relevant and appealing.
  5. Respond promptly to inquiries: Quick responses to guest inquiries can lead to more bookings and positive reviews. Make sure to check your messages frequently and respond as soon as possible.
  6. Provide excellent customer service: Going above and beyond for your guests can lead to positive reviews and repeat bookings. Make sure to communicate clearly and address any issues promptly.
  7. Offer local recommendations: Providing guests with recommendations for local restaurants, attractions, and activities can enhance their experience and justify a higher price for your listing.
  8. Allow instant bookings: Allowing guests to book instantly can make your listing more appealing to those who need to book at the last minute. However, make sure to set clear guidelines for instant bookings to avoid any issues.
  9. Offer discounts for repeat guests: Offering discounts to guests who have stayed with you in the past can encourage repeat bookings and increase your revenue over time.
  10. Keep your space clean and well-maintained: A clean and well-maintained space can lead to positive reviews and repeat bookings. Make sure to keep your space clean and address any maintenance issues promptly.

Implementing these 10 tips can help you make more money with your Airbnb listing and improve your overall hosting experience. Happy hosting!

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How Big Real Estate Moguls Avoid Taxes (And How You Can, Too) 👀



I was looking around Google for an old article on tax strategies and this five-year old video of myself happened to pop up.

I’m interviewing a tax expert about how real estate investors avoid paying taxes in perpetuity—AND how everyday citizens can do the same thing.

(Real estate—our TEMPLE I and TEMPLE II projects included—has a number of tax benefits savvy investors have capitalized on for years, including Opportunity Zone breaks and 10-year tax abatements.)

There’s the 1031 exchange, of course, which I’ve shared with you guys before. 

Just to refresh your memory, the 1031 Exchange allows you to roll over gains from your last project into a new property TAX FREE—as long as said property is worth the same or more.

But there’s ANOTHER TAX LOOPHOLE that can take your portfolio to an entirely new level by splitting your capital gains into MULTIPLE properties.

So I thought I’d share it with you guys. 💎

You can check it out here.

Let me know what you think. 😎

PS: In our next update, I’m going to break down how real estate moguls get paid from their properties…tax free. 👀
PPS: If you want to learn how to implement generational wealth strategies like this one, you can join our NYCE wealth academy (TRIBE U) here.

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