Stig Brodersen  06:50

Yeah, Pres, I agree with you. So since all commodities are basically traded in dollars, and especially what I’m seeing here in Europe, I would say so the price of a barrel of oil, tat’s not just $30, or is like American would look it, because I will also have to include so what’s the exchange rate? And so if they say that the dollar is appreciated by 20%, well, it’s suddenly 20% more expensive for me to buy that barrel of oil. So I completely agree with you, Preston. That’s it’s something that’s crossing the commodities market at the moment.

Preston Pysh  07:23

Yeah, and I think a lot of people that are domestically in the US, they’re not looking at it through that lens that you just described it, which is awesome for people to be able to hear that, because that’s what’s not just happening in Denmark. That’s what’s happening in every other country around the world, that’s what they’re experiencing. So it’s just a very, very important point to highlight. And it’s just not oil. It’s every other commodity.

And so when you look at a business, any business that produces a good instead of a service, there’s some type of commodity tied to that business across the globe. So this is a very big idea. And this is something that I think people need to wrap their head around and understand that if the dollar is getting stronger and stronger and stronger, that squeeze that you’re getting on the dollar concerning its value, it is going to have some implications in the long run, because whenever things get out of balance. That’s what’s happening here, things are getting drastically out of balance. When there is that movement that occurs that shifts this back, the thing that I think about whenever I think about low oil prices, and the Fed just allowing this tightening to occur on the dollar versus every other currency in the world…

08:36

This is how I kind of view this. If you’re familiar with a hurricane and a hurricane comes onshore, when it first, let’s just say the eye of the storm goes through a town C, we’ll call it. So as this storm approaches town xX The winds are blowing in one direction, let’s say 100 miles an hour to the east. That is the eye of the storm passes through and it’s going through the town. Now, you’ve got the winds going to the west. They’re going back the exact opposite way after it passes through. And here’s my concern with this. And I’m not saying that this is a hurricane, everything’s going to just explode. Even though it’s in the realm of possibility, we don’t know, we’re not ruling anything out. I’m just using this as an analogy to demonstrate something to you.

And what I’m trying to demonstrate is after the US and I think it’s going to be dependent on the US devaluing the dollar, to bring it back into the realm of reality, compared to every other currency. What you’re going to have is you’re going to have commodities, in my opinion, the price of the commodities go up a lot, in a very rapid and quick manner. And the concern that I have at that point, think about it from a United States consumer standpoint, I’m driving down the road and I’m used to $2 a gallon of gas, and I become accustomed to that lifestyle, of being able to buy commodities at these ridiculously cheap prices. And now, the eye of the storm, it’s in the Fed devalues the currency to just, you know, spark the economy. There is an issue there because now instead of $2, gallon gasoline, I’m paying $4 in a quick timeframe. And that adjustment is going to not be fun for a lot of people. And so that’s my concern.

And as we move forward, this is something that I think you need to pay close attention to is this relationship between the Bank of China and the United States Fed, and who’s devaluing and whatnot. Every time you’ve seen the Chinese currency, the yuan, devalue, you’ve seen a horrible day on the US stock market. And that is the reason why is because that’s their way of tightening monetary policy in the United States indirectly.

Stig Brodersen  10:45

So really, it’s important to understand that China is not just China. So basically think about what happens whenever China devalues the currencies. That means that the Chinese will buy less in Europe, which means that they will violation Japan. Guess what? Then the Europeans will buy less American goods and the Japanese will buy less American goods.

And I think that the discussion about China was one of the most interesting ones, at the Davos meeting. And China is going through a transformation. I found this really, fascinating because when we usually think of China, we think of this as either a country in the primary sector. When I say the primary sector, it’s something like mining, agriculture, fishing, at least that is what we used to in the previous decades. And today, it’s more perceived as a secondary sector type of country. So we were thinking of China in terms of industry and cheap labor.

What’s happening these years is that was one of the main topics at the Davos meeting is that’s not the truth anymore. It is not the whole truth. China is growing more and more in the third sector, which is the service sector. And that’s usually what you would see in Western Europe. And that’s what you see in the States. You know, they have this huge service sector, and it’s growing rapidly in China. It is growing more than the overall economy. I think it’s important for people to understand that the Chinese are looking less at the States and looking less than Europe. They’re looking more domestically right now because they have this growing middle class. They have more and more money and, and just to give you some numbers. So the states they usually are known for being pretty big consumption. So I’d say around 70% of GDP that’s, that’s consumption. In China, it has just grown from 44% to 51%. I mean, it’s a huge factor in China and also the world economy.

Preston Pysh  12:47

So good points as Stig’s bringing up here. What he’s potentially talking about is a shift in global power, what this is coming down to. And my opinion on this is when you don’t have the wealth across the domestic country, let’s take the US as an example, okay? If you don’t have that wealth distributed equally across to all the participants, it’s very hard to have sound spending habits or uniform spending habits across the country.

So as we look at the United States, the wealth has truly never been more focused with a few select people, at this high of a level since kind of the 1930 timeframe of the late 1920s. That’s when we’ve seen wealth focused on such a few amount of the population. And now you’re seeing again at an equal level. I think I have a chart somewhere I could pull up that shows the percentage of the wealth distribution and the focus on just a few wealthy.

13:52

So when you have that happen, this is in my mind how I understand this. So let me just describe it to the audience and you guys can make up your own mind whether you agree or not. But let’s say we have 100 people in a room. And that represents the US population. If all that money is focused on one or two people in the room, and everyone else has a much, much lower income level. When you’re talking about things from a spending and consumption level between all those participants in the room, if a person has an inordinate amount of money, one person in that room, there’s still spending at a level that’s what it costs to live every day. They’re just paying for meals, they’re paying for transportation. Now, yeah, they might have a little bit more excesses.

But imagine if that money was, was distributed, and I’m not saying that this is what I want to happen. So please don’t take this in a political direction. I’m just describing things from a spending standpoint. If that money was spread across everybody in the room, what I think you would see is you would see an elevation and overall spending of everybody in the room. But because it’s focused on calling it one or two people, those people are living their normal lives just like everyone else in the room, but do you know what they’re doing with all the extra money? They’re buying financial assets. And guess what? A financial asset doesn’t necessarily consume as a person consumes, it might be a bond that he’s bought that that rich person in the corner of the room is buying.

And so that’s what you have going on, in my personal opinion here, domestically in the US. You have this happening in Europe, you have this happening in Japan,. You don’t necessarily have this happening in China, in my personal opinion. And so from distribution of wealth, when you have that uniformly distributed more than let’s say something more focused, I think it’s more conducive spending to occur. And we’re talking about the long term because China right now is a mess. Don’t get me wrong. We’re talking like a 10-20 year picture here. So they’ve got some levers to play with here, okay? And they also got a reserve of $2 trillion in the green on the People’s Bank of China balance sheet. They’ve got like, in their Treasury, like $2 trillion surpluses.

Stig Brodersen  16:02

Yeah, Preston, I like your point that where you’re saying it’s the middle class that’s driving the economy, especially in the type of economy, like the States where 70% is consumption. And just for a fun fact and again, I don’t want to be political or anything. But if you look at the States, the median wage, not the average wage, but the median wage is the same as in States as it were in the 1970s. And we still work more and more. More and more women are in the labor markets. So like, again, I don’t want to say if it’s right or wrong. I’m just saying that that is what we’re seeing right now.

So what you see here also in China, when we have more and more people, you know, be part of that middle class, you know, what the middle class does? And it’s amazing for the economy, they spend all the money. In the middle class, they buy meals and clothes.

Preston Pysh  16:47

Just enough to get by that month. So yeah, this is a very real conversation that I think a lot of people need to think about. And a lot of this comes down to the focus of wealth. Just the obliteration of the middle class, and the inability for people to spend beyond just their daily income. And I think a lot of people out there don’t have savings. You know, they’re living paycheck to paycheck. And I think that that would be a majority of the population if you did a study and looked into this.

17:19

All right, so enough of all that talk, let’s talk about this book. The name of the book is “The ONE Thing.” This book was written by Gary W. Keller and Jay Papasan. In general, this was a very good book. I think that this book is fantastic for the person out there that is just overwhelmed in their daily work. Let’s just say you have a lot of things going on and you just feel like you can’t ever focus on the thing that’s important. Go out and get this book, this book is for you, busy person. Like it’s having trouble prioritizing what’s important. Go get this book, read it through. And I think that it’s going to help you out tremendously. If you’re kind of like us, scatterbrain kind of person. And you got to know yourself, unfortunately. If you’re the type of person that starts one thing moves off to another thing and then goes over to something else and don’t have that follow through or finish with what you’re doing, this book is also for you.

18:13

This book is not for a person that is very focused. If you would describe yourself as a very focused person, you are very good at and follow through and all that stuff, this probably wouldn’t be the best read. I like this book. I think it was good. With that said, this is kind of like the love-hate relationship I have with this book. I’m listening to the book each day and each time I’m listening to him say okay, yeah, got that last time. Got that, Okay, I need to be focused on the one thing and add value and just nothing else. And so it got very repetitive.

But with that said, this is the love part that I had for the book is it did cause me to focus on the stuff that’s important and stop doing a lot of the minutia, which I loved because I feel like the last two weeks have been extremely productive for me as I’ve been reading this book. So that’s, I guess, my assessment of this book. And you know, make no doubt about it. This book is all about focus. This book is all about, what is that one thing that’s going to add the most value to whatever you’re working on right now. And when you’re working on a bunch of different things, you know what you need to be doing. I know, at least I do.

And I know Stig when we’re talking about building this podcast or whatever, we know what we need to do next. And a lot of the times we don’t do it, we do something else. Maybe we’re, sending out Twitter messages or whatever, which it’s not the most important thing that we need to be working on. But this book will help you focus and this book will help you help tell you what the most important thing is that you need to be working on.

Stig Brodersen  19:45

Yeah, I completely agree with you, Preston, that everyone always knows what they should be doing. But for some weird reason, we just don’t do it. If I look at myself, my day job, I should usually be preparing for the next semester or now the semester starts, I should be preparing for the next lecture. But you know what, it’s not that funny. And it requires a lot of concentration and me sitting down, and not be doing anything else in that. And for some reason, it’s just not easy for me to do.

Let me give you another example. So, right now we’re in the middle of changing our platform. So for the podcast. And Preston and I, we’ve been scouting this for a long time. And we both know that it’s extremely important. If we have to change our platform, then we have to speak to experts. We also have to do something we’re not completely comfortable with. It’s just easier just to postpone that, that kind of job, at least for me, and I can just see it. And that’s also why Preston is smiling right now and saying that we’ve been productive over the last two weeks that probably because we read this book like we know what’s important, but we just don’t do it.

Preston Pysh  20:49

There’s no doubt the reason that I’ve been so productive is that I read this book. But I didn’t like the book. I think at the end of the day, I didn’t like it but I liked it weirdly. So I don’t even know how to describe it. The book helped me be more productive so that’s why I liked it. But as far as the repetitiveness in it, I was like, “Oh, geez, Okay, I got it, I need to be focused.”

Stig Brodersen  21:10

One of the things I liked that one of the takeaways is that I shouldn’t be busy. At least that was how I looked at it. It might sound extremely weird, like, why shouldn’t you be busy? And one thing that I started to realize is that in corporate Denmark and corporate America, it’s almost like a badge of honor if you keep telling people, “I’m so busy. I don’t have any time to do whatever.” But one of the things in the book is that you shouldn’t be busy because if you are busy, you are not creative. You don’t have the bandwidth to do what’s important. Instead, you’re just running around in a loop. And I can just see that from myself. Like I’ve been just… I feel like one of those hamsters, you know, that just keeps on running because I have this schedule set out. And I’m also a very organized person, so I kind of like to know what I’m doing next Tuesday at 2:15. I like all these plans but are also very bad for me because I don’t set aside time to be creative and to do what’s most important instead of just do what’s in my calendar. So I try not to be busy. That’s one of my takeaways from this book.

Preston Pysh  22:14

So one of the things that I want to highlight, I think that if you’re a project manager, or you’re somebody that is in charge of a big project, this book is probably going to be a little frustrating for you. So let me put this into some context. So I had an amazing experience, being an assistant project manager for the government. And believe it or not, the government because they’re making such large acquisitions, these are huge purchases. They put people like me at a young age in charge of potentially some large programs. Well, this was a couple of years back. I was in charge of a portfolio of about $1.3 billion of acquisition. So all that money I was in charge of building and construction stuff if you will. Different pieces of equipment, new and developmental projects. I was in charge of spending that much money and creating and adding value and working with industry and putting them on contract and all that stuff.

So when you’re dealing with a project size and scope of that magnitude, you can’t just do one thing. Okay, and it briefs well from this book. But let me tell you, you might have up to 1000 parallel tasks that are all happening at the exact same time. So what this book is getting at is what’s your critical path. If you have an end state, let’s say you’re going to build an iPhone, that’d be a perfect example. They do this at Apple. So if you’re going to build an iPhone, and you’re a project manager, you have to lay out all the steps and I mean, every single solitary step from the start and to the finish of how that’s all going to take place. So you got to develop the circuit board.

Well, inside the circuit board, there’s you know, 10 other tasks. Inside one of those tasks, there are another 10 tasks. These things are all happening in parallel. And some of them are happening not in parallel, they’re happening in series, meaning one thing can’t happen before the next. And what this is, is this is how you accomplish really, big things. You’re an expert in managing all of these things happening all at the same time and happening in series.

24:24

What I would tell you is reading a book like this is great for the beginner, this is fantastic for that person who’s maybe trying to manage a small project or something that’s not all that complicated because it gets you to focus on the critical path. What’s important, as you get more advanced, you know, for like somebody who’s a systems engineer and does this every day, let me tell you that I don’t think that this is probably a book that you’re going to enjoy that much because it’s quite basic, and it’s got a simple message.

But what it is saying is, when you line up all those things that you’re doing. When I look at our podcasts and the brand that we’re trying to create and everything else, there are critical path items that need to take place. And there are other things that are happening in parallel. And what it’s telling you to do is focus on the critical path. We refer to it in project management land as beat down the critical path, focus on the critical path, make sure you don’t slip the critical path. And that’s that one thing that is going to hold up your timeline, which turns into cost, in the long run. Just some thoughts for people out there that have maybe never managed a big program like that, and kind of how that all works, and how that all fits together.

Stig Brodersen  25:29

A very recent example of how this book has been helpful for us. And I know that we keep saying that there’s a lot of things we don’t like from the book. And then we keep saying, but there have been like thousands of things that have helped us with just the last two weeks. But as an example, I have had many inquiries of people that want to build apps for us. I don’t know why. But recently, it’s just been like a ton. People wanted to build apps for us. I was excited about this because, “Wow, it sounds cool to have an app.”

So prior to the podcast, not this episode, but one a few weeks ago, I asked Preston about that. He was like, “You know, Stig. I think it sounds cool to have an app, but what should we use it for?” I was like, “I have no clue. I have no clue why we should use an app for.” And it was just going to be a distraction, especially for an entrepreneurial type like me. New, shiny things. It’s awesome. I just said, like, five minutes ago, we should be changing our platform. That’s the most important thing and it is. And here, I’m thinking, you know, stop talking about how we should build an app, which I have no clue how to do, instead of focusing on that one important thing.

Preston Pysh  26:31

And in your story, you make it sound like I’m the focused one and you’re the scatterbrain. And in reality, folks, it’s the opposite way around. I assure you.

Stig Brodersen  26:41

In any case, this is one of the good things about having a partner because you can get so much sucked into like one thing that you just think it’s the most brilliant thing you ever thought of. And then this good to speak with Preston. For instance, for the app and say, “Why?” which is like the most horrible question you can ask an entrepreneur, right? Because you just have this voice screaming your head saying, “It’s just cool.” But you know, guys, if that’s the only thing you could come up with, you should probably not be doing that.

Preston Pysh  27:11

Oh, my Stig. If you could hear all the other conversations with my scatterbrain ideas.

All right, well there’s a lot of points. So here’s the main point, we wrote an executive summary of this, and we go chapter by chapter for all the main points. And there’s a lot of things that we didn’t talk about with this book. But there’s one thing with this book, and that’s that you need to focus on that one thing that’s going to add the most value, 80-20 principle, all that kind of stuff we’ve talked about in the past, but really if you get the executive summary from us. We’ve got every chapter. 18 chapters are outlined here in the executive summary. So just download that if you guys want to learn more. Maybe you just read that because it gets the point.

27:52

But I think the main value with this book was me having to listen to it every day and it just basically saying half hour at a clip, “You need to be focused, you need to be focused.” And so when I heard that for the entire day, it made me focus more. So the name of the book is “The ONE Thing.”

If you guys go to our website, you click on our link for Audible. You can download this book completely for free. So we highly recommend that any book you can use this one. You can get any other book. But that first book is completely free. So if the book is 30 bucks, a free gift from Stig and I for you to download that free book.

28:27

We appreciate everything that everyone in our audience does for us. The comments that we get are just phenomenal. You guys are steering the show. You might not feel like it, but you guys are steering the direction of this show, because of the comments that we receive and what you guys want us to focus on. So keep sending those messages, go to asktheinvestors.com, record your questions, so we can play them on the show.

I think what Stig and I are going to do is kind of consolidate the questions into one episode, every month, or whatever, and then we’ll do that and we’ll send out our free book to anybody that records the question and gets it played on the show.

So that’s all we have for you guys. I hope you guys enjoyed the conversation and just continue to watch your finances very closely. Realize that there’s a lot of risks out there in the market. I have no idea how deep this could go. Or even if it’ll even go deeper, I don’t know, the Fed could come out and ease tomorrow. You never know. But I think that the main thing that people need to understand is that there are risks in the market. And you just need to be prepared for those and a lot of downside risk exposure for you. So great chatting with you guys. And we’ll see you next week.

Outro  31:25

Thanks for listening to The Investor’s Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www.theinvestorspodcast.com. Submit your questions or request a guest’s appearance to The Investor’s Podcast by going to www.asktheinvestors.com. If your question is answered during the show, you will receive a free autographed copy of The Warren Buffett Accounting Book. This podcast is for entertainment purposes only. This material is copyrighted by the TIP Network and must have written approval before commercial application.