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In today’s episode, I delve into the empowering reality that the vast majority of wealth in America is not handed down through generations but is actually self-made. It’s a fact that flips the script on economic fear and opens up a world of possibility for anyone with the drive to succeed, even amidst global turmoil.
I bring you stories and insights from my years as a financial advisor, shedding light on how an average income can be the seed for a thriving financial future. The key? Business ownership and strategic investments in solid companies. This isn’t a tale for the elite few; it’s a roadmap for anyone ready to grasp financial opportunities, regardless of the economic climate.
But it’s not all about the numbers. We face a “gathering darkness,” an array of challenges that stir up our primal instincts of fear and flight. I address the importance of mindfulness as a tool to navigate through the sensationalism and anxiety that often accompany uncertain times, encouraging a steadfast focus on long-term goals.
By breaking down these concepts and offering practical advice, I aim to guide you through the tempests of doubt and into a future where your aspirations are not just intact but flourishing. Join me as we confront the “gathering darkness” and transform it into a journey towards financial liberation.
📺 Watch on YouTube
Key Takeaways
(00:00) Generation Control and Inherited Wealth
(06:17) Building Wealth for Your Family
(09:44) Natural Selection’s Power in Our Minds
(17:48) Owning Shares in Great Companies
Tweetable Quotes
“Owning shares in the great companies of the US and the world is the dominant cause of all wealth. It is greater than all of the other causes combined.”
“As the darkness gathers, the screaming will get worse. We have to recognize that the facts may also get worse as well. Until, eventually, they start getting better again. No one’s going to know how markets or economies will react… There are no facts about the future. The light will always be followed by the dark, and the dark again by the light.”
“The only reliable way to build wealth for yourself and your family that you can turn into a rising stream of income that rises to match your rising cost of living and last the rest of your life is by owning businesses, owning shares of the great companies of the US and the world.”
Mindful Money Resources
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Transcript
00:00 - Jonathan DeYoe (Host)
Surveys of wealthy people and IRS and academic data tell us that wealth is a function of ownership. 75% of the wealth in the United States is first generation affluence. It was created by the generation that currently controls it. This means that the other 25% of the wealth in the US was inherited. One hopes that there was appropriate estate taxes and inheritance taxes paid on these things, but that's not really the point of this conversation. My goal today and in this podcast series is to describe the cause of wealth.
00:33 - VO (Host)
Do you think money takes up more life space than it should? On this show, we discuss with and share stories from artists, authors, entrepreneurs and advisors about how they mindfully minimize the time and energy spent thinking about money. Join your host, jonathan DiYo, and learn how to put money in its place and get more out of life.
01:30 - Jonathan DeYoe (Host)
The goal that my brother and I had was to make personal finance simpler for the rest of us, the people who are not in the top 1% or maybe even in the top 5% or 10% of income or wealth in the United States. Our goal when we first started workers financial in 2006 was to help real people in real life situations make better financial choices, spend more authentically, use debt more intelligently, save more and invest better All things that we knew led to better outcomes. To that end, I interviewed over 90 individuals coaches, advisors, entrepreneurs, investors, authors, artists, non-profit leaders all in an attempt to normalize the money conversation, give people resources and offer just some simple tips that people can use to implement right away. They're going to support better financial outcomes. In the meantime, I've been working on my own addition to this effort. I've been writing, editing a short series of short series to support greater investing courage in those who are. In the meantime, I've been working on my own addition to this effort. I've been writing and editing a short series to support greater investing courage in those who are new to investing or are a bit afraid of investing.
I was raised in very ordinary circumstances. I was lower middle class at a time when the difference between lower middle class and upper middle class wasn't much of a big deal. Both my parents are college educated, but my family didn't really have a stable income. Between my third and 15th birthday, my parents worked hard, but I could always see the differences between our lives and the lives of my friends at school. I swore early on that I would not have the same limitations when I grow up. At the end of 2021, after my brother died, I merged my wealth management firm into a larger firm and my financial issues were basically over. I still have a lot of psychological issues around money that I deal with on a regular basis, but, for all intents and purposes, my financial plan is complete. I had, over a 25-year period of nonstop work, built something of value. When my brother died, I couldn't build it anymore or even manage it, so the merger was my way of taking care of my team, my clients and my family. It also freed me up to focus on you, my clients, this podcast audience and the Mindful Money subscriber base, and it's for you that I wanted to record this series focused on investing in the great companies of the US and the world.
Surveys of wealthy people and IRS and academic data tell us that wealth is a function of ownership. 75% of the wealth in the United States is first generation affluence. It was created by the generation that currently controls it. This means that the other 25% of the wealth in the US was inherited. One hopes that there was appropriate estate taxes and inheritance taxes paid on these things, but that's not really the point of this conversation.
My goal today and in this podcast series is to describe the cause of wealth, and I think it comes down to a single thing 95% of the wealthy have ownership stakes in publicly traded or privately held businesses. The more wealth that these people own, the more stakes they have in publicly held or privately held businesses. Owning shares in the great companies of the US and the world is the dominant cause of all wealth. I use that word dominant purposefully. It is greater than all of the other causes combined. The vast majority over 90% of ultra wealthy got there through creating something bigger than themselves, harnessing human resources other than their own and growing a company or a business of some kind. The vast majority of the wealth belonging to the 1%, the 0.1%, the 0.01% and the 0.001% was created through entrepreneurship and business ownership. People started businesses or people ran businesses and were paid in stock, or people invested their liquidity in equity shares of public or privately held businesses. More anecdotally, in my experience as a financial advisor, sort of lowercase W wealth those of us in the top 5% of wealthy, but not necessarily in the top 0.01% that wealth is also a function of business ownership. In some cases, these average wealthy people were successful in small businesses, local restaurants, local retail shops. But in many cases of average everyday wealthy people, they worked for another company and simply committed their savings to owning shares in great companies of the US and the world, and then they let time do the rest.
My goal in this podcast series is to explain this path to lowercase W wealth in the simplest terms possible. I want you to know how to build wealth for your family. I want to describe the path that is available to almost everyone, regardless of education or income. It's a path that can take someone with a below average income to an above average wealth. It is a simple path that builds inevitable wealth. The path I'm going to describe over the next couple months is available to anyone with an average starting income, the ability to defer a little gratification, the desire to increase that income and the stomach for buying and holding shares of the great companies of the US and the world.
I would go so far as to say that wealth everywhere is a function of commitment to owning great businesses, but there is a problem that faces the owner of any business. I'm going to call that problem the gathering darkness. In this first episode of this eight, maybe nine, episode series, I want to share the reasons most people don't build wealth. It's the reason most people don't buy and hold the great companies of the US and the world what is popularly referred to as stocks or shares or equities. I would go so far as to say that this explains why most people struggle with me to their financial goals, why people fail to build the retirement income they need and why people don't leave a legacy for their families In the next breath. I would hope that those listening to all eight of these podcasts or these recordings would enable more people to fix these problems with a few simple tweaks to their actions In 2023,.
I spent a great deal of space in the Mindful Money newsletter explaining how the newsletter had changed over the years and where I thought the newsletter might be going. There's no question that writing helps me think I've written on an almost daily basis for over 20 years, but I also thought the newsletter's direction was important to our growing readership, rather than it just being a cathartic exercise for me. The reason the newsletter and now the podcast are taking a slight turn towards the personal is because I want to make the process of a human mind navigating difficulty, which is a given in something as emotional as investing, more transparent. I will, in the spirit of my coach and friend, nick Murray, refer to these difficulties in investing as the gathering darkness. By being transparent about my own personal difficulties and how I process them, I believe I can help you overcome the challenges you face to owning shares in the great companies of the US and the world. By looking honestly and deeply at how we process all forms of darkness presenting itself in our lives, we can learn to process darkness better. In the next eight episodes, I will be suggesting tools and beliefs that you may discover will enable you to process the darkness as opportunity instead of a threat. You can call this an exercise in applied mindfulness practice. Yes, going through these conversations, it's healing for me to do it, and I'm also doing it as a form of preparation for our going through other forms of darkness together.
So natural selection has developed our brains to operate with speed and simplicity in most things. In the most basic description, we are attracted to things we believe will make us happy and we are repelled by things we perceive will hurt us or make us unhappy. It's remarkable how similarly driven we all are. This is our hard wiring. There's no software update that's going to change this. When we perceive an opportunity for happiness, we may engage our frontal cortex, imagine a path forward and plan a way through to a desired end. We might also engage this higher mind to creatively avoid distant pain or future potential unhappinesses. However, when the perceived pain or unhappiness is immediate, our limbic system, meaning our lizard brain, goes into overdrive to find a solution. Our amygdala will jump to conclusions, it will lie to us, it will create stories to convince us and rationalize anything necessary to draw us away from that thing which we perceive will hurt us.
The darkness I mentioned is but a single representative of myriad dark forms. It is my shorthand for that which we perceive will hurt us. Because of the questions I receive on a regular basis and the conversations that usually ensue, I sense you might be feeling the darkness gathering right now. In fact, in my three decades helping people invest and build wealth, the periods of people sensing an all clear, like no gathering darkness have been relatively short lived compared to periods where most people were afraid of one thing or another. And in those periods I know you feel it because I feel it too Today, we are not alone in this belief that there has been a massive shift in the world over the last few years.
There have been innumerable written pages and hours of conversations on television and radio and in podcasts describing the many changes in minute detail. We better believe that these things are just beginning to pick up steam. The world order, the Pax Americana that's existed since the Cold War, with its global agreements and cooperations, has either already ceased to exist or is in the process of unwinding. Russia, ukraine, israel, palestine, china, Taiwan these are all symptoms of the unwinding, as are the nationalistic impulses that we are seeing in the US, impulses we have not seen since Eisenhower. We cannot know how far this is going to go. We can't know how long it's going to take or where it's going to end.
This is darkness. At the same time, the US deficits and debt are out of control and getting meaningfully worse, with no end in sight, and the legislature is in total chaos. This unsustainable fiscal path is only going to get more unsustainable as time passes. This is darkness. The annual interest cost of paying for the swelling debt is rising at a time when we need the resources to continue the work of post pandemic recovery, to put Social Security and Medicare back on secure paths, to consider changes to our education system has anyone seen the collapse in our ACT SAT scores? We need to recommit more funds to the national defense, given the strength of China and Russia, and we need to consider every other fiscal issue on the table. This is darkness. We're just beginning or I guess this started maybe a few months ago, but we're just beginning a presidential election cycle between perhaps the two most unattractive candidates in the USA. It boggles the mind that we are a political system, can't come up with better than these. We are unimaginably but seriously split in that, going into 2025, if one guy is elected, one half the country is going to expatriate, but if the other guy is elected, the other half the country will expatriate. This is darkness.
This collection of darknesses and any number of additional elements of darkness you can think of, is what I'm going to refer to in the coming months as the gathering darkness as it gathers. We have to remember that it's going to create its own echo chamber. There will be singular risks that are covered ad nauseam by hundreds of pundits, making the singular risk appear bigger than it is. This is the darkness gathering. The more ad dollars that Google, facebook and Amazon can draw from the inevitable we're all going to die stories the more stories they're going to feed us, the more we are fed, the closer we will come to believing this is the darkness gathering. The more clicks and likes people get for their screaming it's the end of the world, the more people will, desirous of the clicks and like, begin to scream. This is the essence of both financial journalism and social media. This is the darkness gathering. Gorging on we're all going to die stories and screams of it's the end of the world will make it difficult for us to remain calm and unmoved.
We have to now expect this we have to expect it and we have to prepare for it. If you don't have a quiet contemplative practice of some kind, now might be a really good time to start one. I'm actually going to start teaching a. I've got a six session course in mindfulness practice that you can join. Look on the link in the notes. When the media, our friends and neighbors, our fellows at work and every element of our culture forces to engage them in the apocalypse, it will be incredibly hard to stay the course or stick to the plan, even when we know that staying the course and sticking to the plan is the only way to reliably create those retirement income streams which we can't outlive and financial legacies that we want to leave behind. As media and social media begin to nash their teeth and rend their garments, they warn us that it's time to do something. Sitting still will feel naive. This time is different. They will say this is what they always say. After a time, things will return to normal, as they always have. In a few years, we will inevitably come to know how we should have responded. When they say this time is different, we should say this too shall pass.
As the darkness gathers, the screaming will get worse. We have to recognize that the facts may also get worse as well Until, eventually, they start getting better again. No one's going to know how markets or economies will react. No one will be able to tell us when the worst will come. No one will know when the worst is going to be over, no one will know what catalyst will bring about the turn and no one will know how quickly things will return to normal. There are no facts about the future. The light will always be followed by the dark and the dark again by the light. We don't get straight lines ever. While it zig and zag, the world today does, in fact, appear to be getting a little darker, and as the still-gathering darkness worsens, the implications of the darkness will eventually, if they're not already, challenge your convictions about your portfolio's ability to support your future. If or when you start to feel the itch, set up a time to talk with one of us right away. For your own financial success, you have to find a way to keep a steady hand on the wheel.
A recent paper December of 2023, from five economists from Harvard, princeton and the University of Chicago suggests that average income and lower wealth households sell their ownership in the great businesses of the US and the world during the period's economic concern, while high net worth households and high income households add to their ownership at the same time. That link is also below in the show notes. This is not the first time we're hearing this. There have been study after study that shows lower wealth people liquidating their ownership stakes at the wrong time for the wrong reasons. In every instance, this is the gathering darkness doing its work, creating emotional overwhelm. We know the only reliable way to build wealth for yourself and your family that you can turn into a rising stream of income that rises to match your rising cost of living and last the rest of your life is by owning businesses, owning shares of the great companies of the US and the world. Committing to owning shares in these great companies is not easy, but it works better than the alternatives. Getting still through short-term market volatility is the price we pay for long-term returns Again not easy, but we know it works.
Today we described the gathering darkness. Over the next few weeks, I'm going to lay out the beliefs that enable us to hold on through the challenges before us. You're going to hear about the history that you might have forgotten, some theories about how companies both innovate and steward capital, stories about specific companies that are doing this, as well as my reasoning behind the belief that a portfolio of the great companies in the US and the world is perhaps the very best way to combat the effect that darkness can have on our financial lives. Today, we identified the gathering darkness, the thing that keeps us from committing to permanently and forever owning shares in the great companies of the US and the world. Over the next eight weeks, I'm going to lay out my best arguments to counter the gathering darkness. If you ever wonder why I'm going on and on about owning shares in the great companies of the US and the world, please revisit this episode.
Your financial success requires ownership in stocks, equities I call them the great companies of the US and the world. Owning the great companies of the US and the world requires commitment. Your commitment will be tested over and over again by whatever the current version of the gathering darkness is. Overcoming the gathering darkness is my why these next two months. That's what we're going to do. Today we talked about the gathering darkness. Our next eight or so sessions are going to be a step-by-step explanation of versus the gathering darkness. I want to say thanks for joining me today. I hope you're going to stay tuned and share this episode with others and help them prepare to own these shares for the rest of their lives. Next week we're going to deal with a simple semantic issue and how that impacts our feelings about our investments, and I hope you'll join us.
21:10 - VO (Host)
Thanks for listening. Full show notes for each episode, which includes a summary, key takeaways, quotes and any resources mentioned are available at mindfulmoney. Be sure to follow and subscribe wherever you listen to your favorite podcasts and if you're enjoying the content and getting value from these episodes, please leave us a rating and review at ratethispodcastcom forward slash mindful money. You'll be sure to read those out on future episodes.
