85% of our Assets are in THIS.

Gus wants to know about money allocation. So, let's answer his questions. How am I allocating capital? My company called Reinvest, if you couldn't guess what the shirt says. The whole idea is make money and then reinvest it. Get it? Simple. All right. So, uh companies probably, if we have, call it a hundred mil of real estate and other assets, so those are going to be liquid assets, treasuries, cash, or whatever. Uh it probably breaks down roughly uh like this. I'd go about 80 of that uh is going to be direct real estate, real estate development, accessory dwelling units, apartment buildings, single-family homes. And most of this uh I would say the vast majority of this is in very competitive areas. So, whether those are speculative builds uh in really desirable areas like a ski-in/ski-out area or uh Southern California coastline is another example. Obviously, that's not where ski-in/ski-out is, right? But, uh really desirable land where people want to be there because of the weather or the proximity to a mountain or some something that makes it that gives it more than it's just a roof over your head. It has some sort of draw to it. That's where the vast majority of our real estate is. The reason the vast majority of the assets are exposed here uh is because in in my opinion, the real estate market uh is going to set up for this ridiculous boom after the next cycle downturn, which in my view is not real estate. It's more likely to be stocks, AI, uh unfortunately, as AI spending slows down, I think you could have that sort of cyclical downturn, and it's going to be painful. But, that's okay. We'll, you know, buy the dip through it. And I can include stocks as well. But, my belief is there are three sectors that really, really take off after the next sort of crisis. And I think they have different buying opportunities. The three sectors that I think really take off are number one, the mortgage space, because I call this practical AI. So, I call it PAI. It's your practical AI application for how many thousands of mortgage applications and people's paperwork and their social security numbers and their tax returns and their W-2s and all that bullcrap. How much can we process, how quickly with AI, to give you the best loan at the best rates as quickly as possible, right? So, I actually think mortgage practical AI is going to be huge, as well as real estate AI that's practical. So, for example, Reinvest is building and and has [clears throat] out a beta version for our Homes AI product. And really, the point of this is not to be a pitch, it's just to show you how practical AI can actually work. As rather than, you know, some kind of chatbot, you actually have a tool that goes through listed properties and says, "Hey, here's a deal you should pay attention to. We think, based on our artificial intelligence, we estimate this is what the renovation is going to cost. Based on our AI, this is how much of a fixer-upper we think it is. And here's what we think the after-repair value is using our own algorithms that we've trained." That then gives us a practical tool. Because now, I could look across the entire country and pull up thing, "Hey, I'm going to visit this county. Show me the best deals in this area." And then I can napkin math underwrite the best deals on there to fact-check, cuz you should always fact-check your AI. And and that is called practical AI, right? I can do more loans, I can could real estate deals, I can operate faster as an agent or broker investor or whatever, right? Uh then I think the next practical AI place is actually healthcare. So that's uh healthcare PAI. You know, the companies like Moderna that's got its uh therapeutic uh cancer uh solution basically uh in partnership with Merck which just, you know, was one of the first cancer treatments to go into phase three that is based on artificial intelligence mutation mapping to take what used to take scientists 2 months to do for one patient and turn it into a few hours for one patient and now you could really scale up vaccine therapeutics before the patient dies. Which is really important cuz you're in a race against the clock. AI is enabling that. You know, this is this is just getting started. Practical application in healthcare. And the practical application is also software. So software AI, whether it's cybersecurity or uh artificial intelligence in bookkeeping or uh you know, police body cameras or whatever. These are the three next sectors in my opinion. Uh now unfortunately, I think that if their, you know, rates go to zero at some point in the future because there's another crisis. Unfortunately, stocks end up getting hammered between now and then. And the time to buy the stocks is, you know, potentially in the future with a heavier hand or a heavier allocation, right? So of this 80 in real estate, um you know, maybe it's probably closer to 80 3.5 if I want to be a little bit more exact. I'm just ballparking here, okay? Uh call it about 16.5 ballpark is going to be cash and securities and maybe about, I don't know, 9% of that is in stocks related to some of these visions. Uh and so you could see that the company's got like $15 million in cash for developments in real estate. You could see the real exposure is real estate. And and so a lot of people say, "Oh, well, you know, you're just bullish on real estate because you're so allocated to real estate." But you have to remember when this company was formed and why we're building what we are because I think that like I respect people being jaded. I feel like I'm jaded myself as well, like a jaded person. Um but that's good because that's how you protect yourself, right? Uh but I started this company in June of uh 2022. And that's because I had a thesis. And the thesis was, and you know this, if you've been here for a while, you know this, by 2032, sorry, by 2032, rates uh will be lower than they have ever been before. That's my thesis, right? So I built the company on a 10-year thesis. And I thought that the time between June of 2022 and 2032 would actually be a time where a lot of people look and say, "Oh, I don't want to own real estate. Rates are too high." Which is exactly why we're buying real estate with cash. We have no bank debt on that portfolio, right? No bank debt. That's huge, right? So it's like you're not getting margin called. You can't be done. So that's that's really incredible. So that's where the thesis comes from and and the allocation. Uh and I think, you know, when and if rates do come down, there's there's a really big opportunity not just in real estate, but also I I pay attention to it, PAI, practical artificial intelligence. And that's why I like I didn't know when I started the company in 2022 that we would uh you know, build out our software and eventually license it. Like we had a back then we called it our wedge finder. It was a neural net to help us find deals. Uh and you know, this is something that I've actually been training the software since like 2018, you know, back when we called them big data neural nets. You know, now it's all like AI and your custom algos and stuff like that. But, I never thought we'd be licensing out, you know, real estate software, stock software, or whatever. Uh, and that's just sort of in addition to what we're doing. But, that's also because of my belief that the next cycle is the big winners of the practical AI application layer. That's different from the infrastructure layer, right? The infrastructure layer uh, builds uh, right now it would appear for a lot of software stocks in the bottom. The infrastructure layer comes first. And then the practical AI uh, application, you know, the real profits in the boom comes in the future. So, I think that's really cool. But, so uh, you know, I I think it's worth looking at that and you know, it's obviously not personalized advice for you, but it's just a way of saying, "Hey, I think there are opportunities in stocks and there are reasons to have little allocations uh, to uh, or or smaller allocations to some some stocks that could do really well uh, over the long term. But, I mean, you know, those are more like upside hedges because like let's say we don't rates don't go down to zero and the economy just booms for the next 15 years. Well, then a little seed of equity allocation can boom into, you know, something that performs quite well over the next decade or 15 years. Let's say there's a robotics revolution or we actually get to AGI and the economy just booms even more because of that, right? Great. Great. It's sort of like why people have a little bit of a Bitcoin allocation, right? It's like, "Man, if I put, you know, X% of my portfolio into Bitcoin, if it goes to a million, you know, that that helps offset everything." And if it goes to zero, it's a smaller part of the portfolio. Now, I don't have any crypto exposure. There's no crypto on that list. I got like enough in the little seed of the stock market exposure. Um I think we are closer to a near top in the stock market. And And that's not me being bearish. I'm super bullish on on the companies that that I like being exposed to. But I think that if this is the cycle, okay? Think about when uh I launched a you know, fund around stocks, uh an actively managed fund around stocks, and a venture capital company around stocks. Uh that was in 2022 in like November of 2022. That was the chip bottom. And that's what we were allocating to. Or the venture capital company that we started in 2023 that went into robotics and SpaceX. Those have been, you know, three to five X's, which is great. Uh and and I think now, unfortunately, we're probably closer to near top on stocks. So, I think, you know, there's still room, and who knows, maybe we'll S-curve up, we'll get robotics, or whatever. But I actually think during that same time, you know, real estate in in certainly transaction volume has come down, but some of the overbuilt areas you've actually seen price declines on rents or or prices in the less desirable areas. Uh and so, the pain of interest rates has has already had its impact in a lot of markets, and I think that's now behind us, and we're sort of here in real estate. So, I like buy low, sell high, right? So, I would say real estate's probably somewhere here. And And people are free to disagree with me. Uh and I think stocks are somewhere here. And you might even make the argument that we're somewhere over here, right? After what you saw in June and July. So, you know, I'd rather be more allocated here than here right now. That's it. Simple thesis. I think it's good though to map that out clearly, so that way people know like oh okay got it. So like you know, 9% securities 91% cash, you know, in the cash and securities bucket calling treasuries obviously part of the cash. Uh and then and then out of the whole bucket, you know, cash and securities is like 16% 16.5% or whatever real estate market value real estate is like you know, 83 83 and a half percent of that. Uh and so that just shows you I guess where my longer-term mindset is. That doesn't make me bearish really on stocks. It just makes me more bullish on real estate. We can be bullish on both, just more bullish on one over the other right now. Hopefully uh that that answers your question. Um so so Gus says uh fair allocation investments is wise at the moment uh high-risk environment at the moment. So Gus thinks we're in a high-risk environment. Yeah, yeah. I agree with that. A lot of reasons lot of for volatility and a lot of concerns. Yep. Uh fair. Uh So awesome. >> Why not advertise these things that you told us here? I feel like nobody else knows about this. >> We'll we'll try a little advertising and see how it goes. >> Congratulations, man. You have done so much. People love you. People look up to you. >> Kevin Paffrath here, financial analyst and YouTuber. Meet Kevin. Always great to get your take.