As the professional podcast interviews for investors continue (this new found form of listening to long form personal visits) a most recent interview of famed investor Sam Zell hit the airwaves. Sam is candid, entertaining, humble, some what self deprecating and very interesting as he outlines his successes, failures and a few good ideas we could all add to our persona. This from the fantastic Grant Williams Podcast series.
On a personal note, after receiving permission from Grant to produce this and his statement to share with his vast network, the pressure is on for a good post… hope it lives up to the standard!
Hope you Enjoy reviewing as much as the creating of this post.
Sam Zell, Candid, Open, Background.. Take Aways’
A first question right out of the gate:
Do you see echo’s to 2007 and/or bubbles?
Yes, some inflation and not sure if it is transitory, but not necessarily bubbles. Tons of pressure on wages and do not know where workers have gone, but they are not there.
Zell on dealing with labor inflation…
Able to do lesser staffing without customers complaining. Expectations of service and services are going down.
Recent conversations about supply chain issues…
“A year ago, people would tear their hair out, but today an acceptance!”
Inflation thoughts…
“Inflation is an event and mindset!” So far only an event and has not turned into a mindset…. Yet.
Ask for a big enough price increase so you do not have to go back and ask again (specific to hospitals he owns, but good for all types of businesses.)
Background, childhood and education …
Immigrants son, born three – four months after coming to this country. Family fled Poland. “My Dad felt the streets of USA were paved with gold, due to opportunity!”
Tough family that was told to study and work hard. Sam not a great student.
First job, bought a Playboy for 50 cents in the city and sold it for $3 to his friends back in the burbs…. Starting his own import export with maintaining margins.
While Students in school, offered to let Sam and a friend stay for free if they would manage the building. Soon were managing a dozen of buildings while completing Law School.
Had 43 interviews and 43 rejections post law school graduation.
Finally accepted and offer, and four days later went to his boss
“This is not a good use of my time!” and his boss allowed him to go, but also asked to invest with him as Zell went back to real estate.
Zell on Business and his success and failures …
Self Confidence was very helpful in accomplishing his goals.
Businesses have changed every 3-5 years as no matter how good idea is, someone will copy.
Always very cautious towards risk and understanding things.
“Competition is great, for you … me, I want a monopoly or at least and oligopoly.” Too much competition is bad.
Example of We-Works… Zell watched from the 1970’s and all went bankrupt because at some point over supply kills the model.
In order to be the best, keep ideas simplistic and being scared, and willingness to let a great deal go by. Many times being wrong, but that is ok.
“Give me a guy with motivation and average IQ and I will turn him into a successful business leader!”
Build a better mouse trap and more will come to it, not true, everything is sold as an idea.
Staying Power is the name of the game… No surprises!
Given the high valuations of today, have you changed the way you do business? More cautious and conservative.
How do you narrow your deal opportunities? Do not see or do any deal that Zell does not understand. Does not want to run a business, but have had to over his career.
If you cannot tell me everything I need to know in two sentences, it’s too complicated.
Successful ideas, do not require multiple steps, just conviction and understanding and recognition the shortest distance is straight between two lines.
Real Estate Industry has a long history of lack of discipline. Appears safe and people let their guards down and then trouble.
No one has ever proved that scale works in Real Estate. Do not be afraid to be a small profitable company rather than a big less profitable, not all companies should be big.
Discipline keeps Zell safe.
Real money by long term holdings, be patient.
Mentions a company sold after holding for 37 years and another for 20 years that were not always profitable every year, but over longer term very successful. Sustainability is often times more important than constant success.
If market timing is selling something that some one will pay you too much for, so be it, next.
Many investors are assigning no risk to certain hard assets today, but history shows that is never the case, there are always risks.
Will you slow down? People ask me that all the time…”Slow down from what…I like what I do,”
There you have it, thoughts, habits, beliefs and ideas from a legendary investor…. some of which we could all integrate into some aspects of our life!
Have a Great “Sam Zell Review” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Q4 2023 J.K. Financial, Inc. Newsletter … Good News on Interest Rates for Pensions and Pension Recipients, What? … Don’t Fight the FED Are we Fighting the Fed? Yes … Important True-Up Reminders for Year End Deadlines i.e. 401k … Handy Cyber Tips and Tricks … RMD Age Date Changes and Others … By John Kvale CFA, CFP …
Welcome to our Video and Audio Podcast Review of our Q4 2023 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.
Click the Download button below, for a direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page
Let’s get going! We hope you enjoy!
Q4 2023 Newsletter
(YouTube)
Rate Increase GOOD for Pension Plans and Pension Recipients
Special thanks to Milliman and Rebecca head of medial relations for allowing us the ability to reference this fantastic data… also sourced at the end of our post/article.
Here are the top 100 pension plans, a lot of names you likely know and maybe even have a pension with… At least one family member included in this.
With higher interest rates, something we have mentioned numerous times… Notice because of a rather complex future liability projection, pension plans for the most part are FINALLY funded….YAY
Don’t Fight the Fed! Wait, are we Fighting the FED? YEP
This unusual correlation especially when the blue line is going down, represents the FED (Federal Open Market Committee) pulling money from the economy or trying to slow the Economy.
Add higher rates, at the fastest pace ever….
Interesting that participants are fighting the FED, even though they regularly quote “Don’t Fight The FED!”
Stimulus still sloshing around in the Economy…
True-Up Reminders – 401k and the Like
In the year 2023 (Currently heading towards a close) the maximum amount WE (not including matching) can contribute is $22.500 and for those either age 50 or older or turning age 50 happily in 2023, you get a nice catch-up amount of $7,500 bringing your deferred amount to a whopping $30,000!
Pro-Tip – Contribute evenly throughout the year, with a terminal amount of maximizing in late November or early December.
Pro-Trick – Similar to rushing/upping your contributions near the end of employment to maximize levels, if you are new to an employer and wish to maximize your contributions for the year, dump all you can to maximize your contributions now, with the intention of dropping that contribution level down to a normal level (see Pro-Tip above) after the turn of the calendar.
Do Not Overfill Duplicate Plan Years
Remember, if you have contributed to a plan earlier in the year via another employer, your new employer will not be able to throttle your contributions back if you happen to go over the total annual limit. Reach out for help and clarity on this!
Be Aggressive in New Plans
Lastly, in new plans, starting from scratch with new contributions, allocation should be wide open and aggressive with the hope of choppy entry points as your contributions make up the majoring of the plan and will take advantage of the ups and downs in the early years of the plan.
Cyber Reminder- Tips and Tricks
If there’s one thing, for those of us with little time or patients for a long read that we would like you to take from this article it is that most cyber intrusions come from an e-mail that has a bad actor with a hot link click, do not click on that bad hot link!
The second thing and more encouraging, most cyber security situations are not extremely complicated and are allowed by a simple letting of our guards down- see above point!
RMD Age Changes and other Important Dates
RMD (Required Minimum Distributions)
One of the most important and likely most confusing due to the recent multiple updates is the adjustment of Required Minimum Distributions (RMD) They are now mandatory to commence for those aged 73. Those turning 75 after 2033, your new RMD age is 75. Recall, these just a few years ago, moved from age 70 1/2 to 72, now to age 73 and eventually age 75. No wonder we are all confused!
Social Security Mandatory Commencement Date reminder age 70
The current maximum age that you may defer commencement of Social Security still remains at age 70, well below the new younger thresholds that we hopefully are all feeling.
The earliest one may take Social Security remains age 62, with a 25% discount to the full retirement age (FRA) benefit amount AND has a maximum earnings level of $21,240 from W-2 or 1099 (working income) not pension, investment or other non working types of income.
Have a Great Fall! Talk after the turn of the Calendar!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
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Posted in Debt - Debt Management, Donald Capone, Economy, FOMC, Forecast, General Financial Planning, Interest Rates, Investing/Financial Planning, Jen Hill, John Kvale, Market Comments, Newsletters, Personal, Podcast, Video
Tagged 401k, Bonds, Cyber, Fight the Fed, Interest Rates, Milliman, Newsletter, PBO, Pension