A Conversation About Financial Markets, and the Future of Fannie & Freddie with Dan Rawitch

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Go check it out right now, visit LOKestudy.com and download your free copy today. Hey, listeners, what's up, Jeff Zimper, your host for another edition of Mortgage Marketing Radio. I want to say thank you for tuning in. I want to say thank you for coming back. I want to say thank you if you've left me a review, and by the way, if you're inclined and you haven't yet left me a review, I would love it. You can leave a review wherever you're listening to this on whatever podcasting app you're at, or you want to go over to their Facebook page, Mortgage Marketing Institute on Facebook, or even send me an email if you ever want to reach out and connect. It's podcast at MortgageMarketingRadio.com or just hit me up on Facebook, Instant Messenger. And I do respond to all emails, all messages and outreaches, unless you're some kind of wack or whatever, that's asking for my bank account number because you have a rich uncle in Nigeria that needs my information, so yeah, okay, thank you. So here we are, another episode, and listen, by now you know that I'm a big believer in leaving with education, an educational platform. Everyone's talking about differentiation, everyone's talking about value proposition, a lot of people talk, talk, talk about it, what are you doing about it? How do you actually implement that in the real world on a daily basis? There's lots of different ways to do that. I'm going to tell you about one particular way that I'm a fan of. Why? Well, yes, it's because of one of the things we provide here for Mortgage Marketing Institute and that is our Mortgage Marketing Pro membership. What is it? It's an online turnkey library of Zoom ready to go, templated classes that you teach to real estate agents virtually over Zoom. Hey, when COVID goes away and you can get back face to face in person meetings, you'll do it that method as well. But for now, we are working with loan officers to help them never make a call call again. Build their agent awareness, build their influence amongst real estate agents, attract agents instead of chase agents, and put them through a process of structured, formatted classes and content that drive engagements, conversations, relationships, and referrals with you and real estate agents. We've got it all done for you over 17 classes, turnkey ready to go, the flyers, the speaker notes, the power points, the recording tutorials of me actually delivering a presentation so you can just copy it from there. Want to learn more? Go to MortgageMarketing.pro. Alright, next up, my special guest for this episode. This episode, I had a blast, I just finished recording it, and it's not my usual episode because we talk about a lot of different things, but I thought it was one of the best candid, kind of authentic, real conversations that I've had in a long time. My interview is with Dan Roch and Dan has been in this mortgage financial space for many, many years. As the guy who does the mortgage rate updates and rate watch through mortgage coach, and so I've been following Dan for a number of years, my buddy Dave Savage, a mortgage coach said, hey, you should interview Dan, boom, here we are, we did, and it was an amazing conversation. And if you don't know Dan's background, he was a bond trader at Bear Stearns in the 80s. He was the founder of DataFacts, the fourth largest mortgage credit reporting firm in the nation that was sold to TransUnion, he's the founder of RPM Mortgage, he's a CEO of Finet, a NASDAQ traded company, which at one point reached a billion dollars in market at CAP. As I said, he's been the host of rate watch since 2008, right? And what rate watch is, if you don't know, it provides economic and technical analysis on the bond market. It goes on and on and on. He's got a newsletter. He's got a platform called University of Options, which is learning how to trade options the right way. And the best part of all of this is all the success that Dan's got, still humble, great guy, right? The guy you'd want to sit down and have a beer with, a coffee, whatever it is, and it's completely transparent, authentic, and willing to share everything he possibly can. So we talk about what's the future of interest rates? We talk about the mortgage market, the stock market, right? What the future looks like for inflation versus deflation. We talk about Fannie Freddie, all kinds of cool stuff. I just hope you enjoy this conversation as much as I did. If you want to connect with Dan Moore, we're going to put links to it in the show notes. The main place to connect with Dan right now is UniversityofOptions.com. If you're hearing this and you're like, oh, I want to learn how to trade options better, that's the place to go. I don't get nothing for that. I like to bring people, good people, to bring awareness, to good people that are doing good things. So if that's for you, go check it out. So without further ado, let's get into this week's show. Hey, Dan, welcome to the show. Thanks for having me, Jess. I'm excited. Awesome, man. You're making time from your remote undisclosed location and hopefully the internet holds up for us. So listen, I know you obviously from Dave Savage, mortgage coach, you've been providing kind of rate watch updates and stuff for years. You're clearly intelligent, informed, and you've been in this space for a long time. So for those that may not know who Dan Rawich is, give us the brief bio. Who are you? What are you all about? Well, I'm old, I'm 61 years old, three kids, all grown, youngest is 21, four grandkids, and we travel extensively. And my passion is just really digging down and understanding the financial markets, the economy, always been my passion since college, always been a student of the economy. Well, I understand what you say, you hate that and don't like being put on the spot. So let me give you the brief resume and I'll be leaving a couple of things off. But you were a bond trader for Bear Stearns in the 80s. That must have been fun. Some stories there. Founder of data facts, the fourth largest mortgage credit firm in the nation sold the Trans Union, founder of RPM mortgage, sold to finite holding, CEO of finite and as decorated company, which reached a billion dollar market cap, host of rate watch as we said since 2008. And you still have your podcast avoiding the storm? I'm not as good as you are in the court of my podcast. I'm more or less replaced to jump with my newsletter called Swamp Enomics. Okay, Swamp Enomics. And where would I find that if I wanted to subscribe to your newsletter? On my website at universityofoptions.com. Cool. I'm going to put a link in the show notes. We'll also talk about some of the other things you're doing there. But let's face it, the audience is primarily made up of mortgage professionals, some real estate professionals, you know, we're here coming into an election time of year. It's I mean, dude, did you see this coming at all in 2020 with housing and interest rates? I did. You know, I'm excited to say that because it's easy to say that, but you know, everything I say is recorded and it's out there. So last year, actually in 2018, I gave it talk and I said that 2020 in 2021 would be the best years the industry had ever seen. And I think that that carries in the 2022. And then again, I don't mean to sound like a normal. I also said that I thought the economy would get into severe trouble. This was before the pandemic and that the stock market would crash. But I said, I don't even understand why I'm saying this back then. The housing market will dodge the economic bullet and that's never happened. Housing has always led us into recession and out of recession. But the pent up demand was so extreme and the inventory was so low and the millennials were getting of age by homes and as old guys were downsizing and it just made sense to me that housing was going to really be on fire. OK, and so you mentioned this looks positive into 2021 and even 22. Now it's interesting because David Stevens just came out with an article, I haven't read it yet. I don't know if you saw that. I read it. Yeah. So yeah. So good. So by the way, for those that don't know, what it basically said is he's foreseeing a uptick in rates in in 2021, right? Right. So why do you feel different? Yeah. So first, I want to say, you know, I met him. I don't know, Dave, but I would say that he's a class act and it's, it's, it's, so anything that I say is not, not controversy toward Dave, it's just, I think he missed some really important things. So first of all, what I agreed with, and I'm going by memory, there were five things. What I agreed with was the 50 basis point toll that the agency suddenly dropped on us. That's fact. That's going to affect rates a little bit. The Banny and Fred being freed from conservatorship and becoming, you know, standalone public companies, they're going to have to do more to make more. And so that will raise the guarantee fees, probably. Hold on. Do you do even think that that's going to happen? I think it's going to eventually happen. I don't see it happening in the next 12 months. Well that, so, so conversations just to take a, conversations I've had with other people around that before, about them becoming public companies means that is going to impact interest rates as well. Yes, because they'll be like free enterprise, capitalists, and they'll probably try to raise the guarantee fees. And you know, that'll be interesting to watch. And I think that the reason I think that the government better be real careful about letting go of them is you've got Fannie and Freddie competing with one another and there's nobody else. I mean, you could say FHA, but it's a different animal. And so you've got these two guys, it's almost like a cartel in some ways. I'm sure they don't call each other and say, hey, I'm going to raise, are you going to raise? But that's exactly what happens. If Fannie may raise a 10, we have Freddie Mac raises 10, they'll just say their market adjustments. So you could see these two just taking, taking things up too much. And so there's going to have to be some controls in place. Yeah, and then how does that go to the great, like the affordable housing for everybody and to the sense they're really a quasi public slash government entity right now. And there's so a lot of benefits that can come from that. And then they become about pure profit. Well, does that then reduce the creative, the lending possibilities for those that might otherwise not qualify under normal situation? I don't know if that makes sense. But it doesn't to me. So I'm just going to edit that out. Yeah, it does. But go ahead. What did I just say? What did I just say? I have no idea. Take it from there. You boom. Is this a good thing for consumers, ultimately, for them to be private or public? Right. No, how could it be good for consumers? The only the only win here for the consumer, in my opinion, if I mean, if you have no governmental control at all over to capitalistic companies, you know, trying to please their shareholders, fat in the CEO's pockets. I mean, it doesn't it doesn't end well. But unless you take a penny Mac or somebody like that that's gotten massive size, who knows? Maybe UWM going public. I'll show your podcast on that one. It would take such an amazing amount of capital, but somebody like that is going to have to be able to go to the capital markets with that kind of size and at least be a threat to Fannie and Freddie. Instead of a customer, they got to be a competitor. That's how we're going to keep rates down. Let me ask you a question. That's exactly question. Yeah. And this make me maybe sound like I'm an, you know, I don't understand it, but here it is the end of the long week and it's the afternoon and, you know, why, why do they exist in the first place, Fannie and Freddie? So they came in to play going off memory, but I believe it was in the late 60s early 70s. And banks were lending too much of their capital out and so the, in the back then they were savings and loans and that was pretty much the only way to get money. And as rates started going up, the savings and loans just kept raising rates and consumers didn't have access to capital. So that's really, they were, they were born. I feel, I feel ignorant here because I used to tell you the president and the time and all that stuff, but, but they were created specifically for as consumer advocates to make sure that consumer always had capital to purchase homes. Interesting. And which kind of goes to what I was alluded to earlier. So if we take that away as these consumer advocates, then it becomes, put the hands of the companies that are only there purely for profit. Yeah, and I gotta admit, Jeff, I, I hadn't thought that through as much as I, you just made me think it through because I was just thinking, what I said, you know, I, maybe 20 to 30 basis points will get added on to price just a fat and their pockets a little bit, who cares, 20 to 30 basis points is not going to be felt in rate much by a consumer. But if they really become pure, you know, Amazon or somebody like that and trying to raise their share price and please their shareholders, anything is possible. And then, yeah, like we saw with the, the intent to add that half a point, you know, a fee, if you will, thankfully our industry kind of rose up and wrote like 80,000 letters or whatever it was to get that at least postponed, but who is our, you know, watching out for the consumer? Like you say, I mean, what's to prevent that from happening again? Yeah, and I won't get too nasty here. The guy that's heading up F H F A. Yeah. He's supposed to be watching the consumer. Yeah. That's the guy that's supposed to be watching out for consumers. And then he does a middle of the night, frigging back door, half a point hit with no lead time, no warning, no nothing. Yeah. And then the whole thing, when, when, when, when, when, when, when, when, when, when lenders were on their knees with, with warehouse issues and all that stuff, you know, only had to do is just say, we're going to offer servicers some kind of a bailout if you take care of the borrowers and it just was unwilling to do anything that was necessary at that time. Wow. Interesting. I don't know why he has a job. I really don't. You should have a job. I wouldn't want that job, man. Too much pressure. All right. So very interesting conversation, you know, the future of the mortgage industry and, you know, when they stop, again, I'm not as tied to the market as other people. But look at their, their largest purchaser of mortgages, right? So what happens when that stops? The business would be on its knees. I mean, there, there's just no other capital out there. Look what happened to jumbo loans during that meltdown in February, March. They, they, they evaporated because there's no secondary market for jumbo loans. There is, but it's so sensitive in terms of investors buying those, those securities. And, you know, the, the pools of loans are made, then they have to get rated by the rating agencies who are probably afraid to put any kind of rating on a pool of mortgages when the industry is, you know, melting down. And then who's going to buy those securities? If Annie, if Annie was the only game in town, we, we all would have been really in big trouble. Yeah. Exactly. And so since we've been talking, I just kind of pulled up the history there and everything, just the additional context from, I'm trying to approach this from the layman's standpoint. But basically, what we're talking about is liquidity to be able to continue loaning money. It's ultimately what you're talking about. And if we don't have that, Fannie and Freddie liquidity, so mortgage companies could continue to make loans available because they don't want those on the books, right? Because I mean, back in the day, we had mortgage-backed securities, right? Remember how fun that was. Yeah. Well, I'm just a little bit of history, so when I worked for Bear Stearns after, you know, being a bond trader, I became what was called an asset liability manager. And I worked with the major banks to help them balance their assets and liabilities. So in other words, if I have $100 million of mortgages at 5%, but I'm paying my income of five, but I'm paying my depositors 10%, that's not very sustainable. This is exactly what happened in the 80s. So these agencies had billions and billions of dollars of 5% mortgages, and then 79, 80, 81, they're paying out what's 17% on the T-bills. So it was a disaster. I mean, to me, it was some of the best years of my life, because we were buying those things, securitizing them and creating liquidity for the banks that way. But the banks were selling those at huge discounts. They were selling a portfolio of $1 billion of mortgages, and maybe 50% discount, because it was 5% and a 12% market, so that's, without that liquidity, it's a problem. And so, sorry, my point is, we don't want banks to go back and be the only of the primary lender, because if they start taking them in a bunch of three or four percent loans and rates do go up, the whole banking industry will collapse. Who does banks care about? Banks. They're profits. And of course, let's not forget that during the COVID-19 pandemic, Fannie and Freddie are the ones that put the moratoriums on foreclosures and evictions for that time period, which gave people breathing room. So I think, yeah, we need somebody to be looking at. It's funny, because it's like, who's policing them, right? It reminds me of this, the documentary I mentioned to you a moment ago, which is the social dilemma, which for everybody listening, if you haven't watched it yet, please watch it. I know I posted it on my social, but social dilemma on Netflix. Anyway, the point being is, you've got these algorithms that are influencing the whole premise that you'll find this funny, the kind of the premise of the documentary side, what do we call this tangent here? But you'll love this. You'll love this. So the premise is you've got basically 35 white guys that live in one state that all have these Stanford degrees, and they're all frigging math wizards and stuff, and they're influencing what two billion people do at scale, right? And so the whole issue, the whole challenge is, is who's regulating these companies? Who's policing these companies of the influence they're having? And you got Zuckerberg saying, well, we just need more algorithms, you know? I was like, let's see how to do it. Where was she learning? Yeah, exactly. And I've never really been a regulation guy, but after seeing this in similar to how we have regulations in the mortgage and financial sector for good reason, because if you don't rein that in, right, there's some bad kids who like to do some bad stuff, man. Yep, agreed. 100% agreed. By the way, while you were doing research, I was too. So Freddie Mac was formed in 1970. Fannie Mae was formed in 1938, and that was, as I recall, that was the white Eisenhower, because again, he saw a big problem coming out of the depression. You know, the banks didn't have liquidity post depression to lend money. And you know, guys coming home and fighting the war wanted to buy homes. Yes. Exactly. So I jumped on Investopedia, I'll put a link in the show, and that's what the hell if anybody wants to read some more stuff about Fannie Freddie, because it's really interesting. And it even goes back into the 2008 financial crisis and the role they played in that go to bad in that discussion. But that's a whole nother discussion. Okay, so you are, I don't know how I would give you, I'm trying to think of a name to give you, you know, the interest rates, the scientist, I don't know, whatever it is, but you're pretty damn smart when it comes to rates, mortgage markets, stock markets. You're a guy who does a lot of trading, right, in the stock market daily, are you a day trader? The real term is probably be swing trading. Most of our positions were in for a few days. We're not in the same day, all options, which is like stocks, but it's a little different. And I say if you had to call me something, Dave calls me the mortgage coach economist, which sounds really fancy, but I would say I'm more of a market analyst. I mean, that's what I consider myself, I study, I analyze. Yes. How do you think, or to what degree do you think a mortgage professional, and I'll underline professional, and you and I know what we mean by that, meaning somebody who's not working in a call center, just the phone jockey, right, but saying, giving professional advice. How important is that you think today to understand markets to be a professional? Well, so, long wanted answer, but it's okay. Yeah, please. When I founded our pay mortgage, it was 1989, and rates were still around 11%, and I had just come off of Wall Street, and so I still had all this stuff in my brain, and I could not not be looking at screens. And so it was very expensive, but I got something called a tellerate terminal, because we didn't have the internet. Trade and email. We had carbon paper. So, I had that in my office, and it just made me feel good to see what rates were doing with the bond market was doing, and when I started recruiting loan officers, they saw it over there, and the fascination they had was kind of mind blowing to me, and I didn't realize there was this sort of dark cloud around, not necessarily dark cloud, but behind the curtains, most capital market guys, the mysterious and a lot of problems. They're fascinated by that job, and so I began as part of my recruiting, saying, I will teach you everything I know about the bond market, and we recruited something quite a, well, yeah, I think you probably know this as a RPM mortgage, even today, they're a very successful company, and I think that had a lot to do with its roots. We ultimately took that tellerate screen, and we put it in the main object part of the lobby, not the lobby, but like the open office where the cubes were. When loan officers would meet the client in the lobby, they would walk them to their office, and they'd go buy the screen, and they would say, let me show you what we look at, so we can really advise you in terms of when is the right time to lock your loans, and I try to teach them, don't try to sound smart, don't try to use big words, don't use jargon, you think that makes you sound smart, it makes you stupid, if you can't speak the same language as who you're speaking to, and probably the people you're speaking to are smarter or smarter as you, but they don't know that, so why would you just talk about that? So, we taught them how to speak real simply about the charts and bonds, and how bond prices work, and I don't know how much the borrowers understood, but what's that saying, Jeff, people won't necessarily remember what you said, but they'll remember how you made them feel. Exactly. So, I think that when they sat down with that loan officer, and our guys always were studentized, it's pretty old school stuff, and they felt like they were really sitting with a financial advisor, they really understood the markets, and what that really did, in my opinion, was, because it was always frustrating for a loan officer to tell a bar, I think you should lock your loan, and the bar was always like, my neighbor or my uncle, Joe's cousin told me, no, it's going to go down to whatever. Remember, we went through that terminal, and we looked at that range, and we're crashing through that range rate, oh yeah, and so it's, I think it really gave him credibility when it went time to lock, so that's along with an answer, going way back then, we built the company around that, recruited around that, our loan officers, and you know, you can see what Barry Habib has done, you know, about the time I was doing that with RPM, Barry was ahead of me, you know, he was already on CNBC, and he was a mortgage guy, you know, talking about the mon market all the time, so I feel like it's really important for them to understand it. I'm glad you made that point, you made how you make them feel versus what you said, because what you want them to feel is confident, right, number one, in choosing you, confident that I'm making the right decision, and to get into a little brain-based stuff here, you know this well, as people make decisions emotionally, but back them up with logic. Yep, and so you're covering both sides of the fence there. Yep, and then also just in terms of dripping on people, dripping on real estate agents, dripping on borrowers, a quick screenshot of the chart with a quick blurb on, hey, today durable orders came out, they were disappointing, we're seeing a nice bounce in rates, we should talk Monday about locking while we have this bounce. That's meaningful, that's not like, here's my aunt's cookie recipe in a newsletter, you know. Right, right. I mean, people don't love that, come on, man. I like it, I like cookies. I need another version of banana bread myself, you know. Incredibly high value. Hey, you know what, I'm funny, I'm thinking, did we ever cover the why you don't think rates will rise in 2021, like David Stern's, Steven's does? No, we didn't actually finish that. All right, let's finish that. You brought up that fan-y thing and it went down a rabbit hole. It came very top-of-oaking. So those are the two things that I think he's right about, the agencies, if they do stand along, they will probably raise the G fees, the guarantee fees at Lenders Pay. And then we already have this 50 basis points, but that's already a known thing. Where I think he really got it wrong is he talked about the Fed, not needing to continue to buy bonds, I couldn't be more and more long. In fact, just now before this call, I was looking right now, the Fed owns 18% and they're buying it like crazy of something called TIPS. These are treasury bills that are adjusted for inflation. They're buying them so fast, they're just controlling the market. That's why bonds are trading so incredibly thin. I personally think that were, I actually, one of my newsletters was titled Winter is Coming. And it was a knockoff from Game of Thrones admittedly and I had the picture on the screen with guys. I probably get sued for that, but hopefully I'm too small. So Winter, to me, is a season of extreme deflation and I don't understand where this comes from. But there's this belief out there that the debt that the Fed is creating and this huge deficit is inflationary. It's the opposite, it's deflationary because let me ask you this, if you, I've been there where I had too much credit card debt, I didn't have enough money, did I go on and spend a lot of money when I had all this credit card debt and car payments and income was not enough to pay my bills? No, that's deflationary in my home, right? Well, that's what the government's at. The government has trillions of dollars of debt. They really can't afford to pay the debt based on the income they collect. The income is those taxpayers. So if you don't have enough income to pay your debt, where does this inflation come from? It's deflationary, it's always been deflationary. And I could show you charts which are really interesting. The only two times that we had really, well, there's been more but I'll say sustained periods of big inflation were the 78, 79, 80 period. If you look at the chart and you see what was happening with the deficit, it was going down. The Fed was trying to balance the budget and they were not stimulating the economy and that's when we got inflation. After World War II, we stopped stimulating the economy because there was a fear of too much growth and we had inflation. So inflation comes from no stimulus, no growth, not growth in the deficit. It's sort of a backwards belief. So in my opinion, the deficit is going to get much, much bigger. And there's this really big, long philosophical discussion about something called MMT, modern monetary theory, which I won't get into because it's super geeky. But the basic premise is that it doesn't matter how much the Fed stimulates the economy and how big the deficit gets as long as that debt is going to growing the economy. As long as the economy is growing, we're building jobs, we're building infrastructure, and you make the deficit as big as you want. I wrote an article about it with the full intent of talking about how foolish MMT was, like what kind of knucklehead would ever think of this work, and I proved that it probably does work. So I don't see the deficit from Saul to Paul or whatever that conversion was. So I think the Fed is going to have to do a lot more because we are going into a deflationary period. And deflation is what killed Japan. I mean, 20 years, two decades, they called the lost decades for Japan. Japan took their rates to zero. Did they have inflation? No, they still don't have inflation. Our birth rates going down. Japan's birth rates going down. We so closely looked like Japan did 20 years ago that I just think we're headed down the same road. And I'm not saying it's something dark, horrible thing. I'm just saying the Fed is probably going to have to push rates beyond zero. Beyond zero. Yeah. Negative. Yeah. Really? That's what I think. If they're so concerned about deflation, I don't see any other way around it because they just can't create inflation. Hold on a second. So deflation, and this is much better than me, I'm reading the description definition here. It's a reduction in money supply or credit, right? Well, that's a component. But if you just look just from a common folk way to look at deflation is I have a mortgage and that's a fixed payment of say 2000 a month. And now society is deflating. So my paycheck goes from 4,000 to 3,500. Company prices are going down. They just go down. Everything goes down, but your debt stays the same. So all the reasons why we tell everyone go get a mortgage, because even the amount of how hard that, I was just talking to my daughter about it, because it kind of lives out in the country. We helped her buy a house. The payment was 1,600 a month. She was like, I thought she was going to die. And we were taught, and this was five years ago, when we were talking about she was, that I can't believe I thought the payment was high. And her income has not really changed that much. It's just, you know, everything else inflated, but the mortgage stayed the same. So it goes the other way, though. Your wages go down, but your mortgage stays the same. And so what you're saying is that makes a strong case for mortgage rates, buying houses, all that. Yeah. My mortgage rates have to, they just have to stay low. They're going to, I think they're going to, even if the Fed doesn't keep buying bonds, there is a spread between mortgage rates and the tenure bond, or mortgage rates and the Fed funds rate, and that spread is historically maybe one and a half, or we'll call one to one and a half percent, that spread's been running closer to two. And the reason the spread is higher right now is that investors are afraid of the risk of buying mortgages because of what's going on in underlying economy. So there's some risk price right now in mortgage rates. So I believe that you're going to see that spread, and that's going to bring rates down all by itself. So I think really next year, we should really see a very low two interest rate on 30 or fixed. Really? Wow. So the refires are going to continue. I think that's why we started the processing company. We just don't see it stopping. Now there's a caveat, Jess, and yes, in studying inflation as much as I have, the only real correlation I can see to inflation is the dollar. If the dollar devalues too much, there is a correlation to inflation. If the economy gets really weak, you know, Trump's been pushing all along, we need a weaker dollar. Our dollar is too strong. And in a way that's really horrible to say, like that's like saying, we need a weak in America. But on the other hand, he's not wrong because if our dollar is really cheap, our stuff looks really cheap to all the other countries. Right. That's where the inflation can come from, a flood of money coming in from other parts of the world. So you can see the dollar getting pushed down to help the economy, which in turn could create some inflation. So what could blow all this up? I mean, the stock market would, is the stock market over, it's funny, I've been talking to too many people that are smart like you who, and so I pause on my question, like Logan Manashami from Housing Wire, shout out to him, right, what about the stock market being overvalued? Let's use that word. Is there such a thing as being overvalued? Yeah, it's horrible right now. There's so many ways to look at the stock market, but the most simple is stocks trade on a multiple of a company's earnings. So by earning a dollar a share, and I have a hundred shares, I'm earning a hundred dollars. So I'm earning a hundred dollars, I have a hundred shares, that's a dollar a share. That makes sense. I say that right? Yeah, yeah. Now Wall Street says, or the market says, well, you're growing really fast. So we're going to multiply that dollar a share, and that's how we're going to perish your stock. So historically, the S&P has been trading at about 16 times earnings. Right now, it's trading at 21 times earnings, but it's not trading at 21 times now, it's trading at 20 times forecasted earnings for 2021. It is absolutely insane. If you look at the earnings based on trailing the last years earnings, we're probably trading at 30, 35, 40 times earnings. You have companies like Apple, trading at 60, 70, 80 times earnings. It doesn't make any sense, unless you believe the economy is just going to just explode from here and just go straight up, and I see a lot of trouble water ahead in the economy. So I think there's a major, a much bigger crash coming, and I think what keeps stopping that is these Robin Hood guys, all these Robin Hoodies, there's millions of them throwing millions of dollars, and every time the stock market goes down, the mantra is stocks never go down, and they buy the dips. But what I'm watching in the underlying is the institutions. Every time the market runs up, they quietly are selling, and that's what I like today. The market was up, but something called market breath was down, meaning the volume was too low. There were too many stocks that fell versus stocks that went up. So there's all these signs. The institutions are selling on these updates, and then the Robin Hoodies are buying on the down days. All the Robin Hoodies are doing is feeding these big institutions, and then they're selling into those rises. So at some point, the Robin Hoodies are going to be crushed, I believe, and the institutions are just going to keep selling. And of course, remember, bad news, not just use that term, but for the economy, bad news for the economy, or typically a negative stock market is good for mortgage interest rates? Absolutely. 100%. That's the whole point. So that's probably one of my bigger concerns is the stock market. But so valuation is one part of it, but corporate debt is the bigger part of it. Corporate debt has never been higher, and what's happening now is, if you look almost all the corporate, the vast majority of corporate debt is like B-rated or double B-rated, think about sub-prime debt. These companies are so weak, but there's so much money out there flowing from the Fed. Thank you very much. By the way, the Fed's creating all these problems. These companies are able to borrow money, and these are literally zombie companies. These, 20% of the companies on the Russell 2000 are zombie companies, meaning they don't make enough money to pay their debt. They don't make enough, they can't service their own debt with their wages. Using those, the shareholders, they survive every year by selling more bonds. So this thing just keeps getting bigger and bigger and bigger and bigger and bigger. It's going to be way bigger than the mortgage sub-prime meltdown. It's going to be a corporate sub-prime meltdown. Oh, so we're going to see a lot of bankruptcies and stuff in sales and sees, yeah. That's what I think. Now on the positive side, I think this is what we try to tell our members all the time, it's an opportunity to build incredible wealth. Yeah, I'll sell. This is why I showed up today. How sell? Well, you want to keep your powder dry. If I'm long, and the stock market goes up another 10 or 20%, you're going to call me and yell at me. If I'm right, and the stock market goes down 80%, I'd rather have you yell at me and call me and say, I wish I would have listened to you. There's a saying, I'm a pilot, and the saying is, I'd rather be on the ground wishing I were flying, and in the clouds wishing I were on the ground. That's a good one. It enables technology, but it's not a mystery technology. Do you know what a coax cable is? You know, you screw it into your cable. Yeah. Do you like screwing those things in? No, they're panning the ass. I think the stupidest things in the world. Yeah. Why doesn't somebody make a connector for coax cables? A better connector. Yeah. Dude, that's a billion dollar idea. Think about you selling it to all the cable companies? That's what I think, too. Let's do it together. Let's do it. In the Tesla connections. If you saw where I'm sitting today, I have this, the campsite thinks I'm crazy. I got this cool. It goes up about 30 feet in the air, and with wires all over it, it looks like a freaking space station, because we need internet everywhere we go, and it's putting these coax cables together. It makes me insane. I like that. That's a good one. All right. So that, I love that. Let's close out on this one. It's a different feel. If you could send a message to the entire world, what would you say in 30 seconds or less? This is going to be really cool, but it's honestly where my heart is. Is it really worse killing people, fighting, anger, hatred? Is it solving anything? I mean, if we could just all try to sit down and understand the other person's point of you. It goes back to the first thing I said. Can we agree there's a difference through an opinion, in fact? An opinion and on a fact? You're going to open your mind to my opinion, which are not facts, because this world is scaring me. I love it. I love it. And that deserves a. Yes. I'm close. You're inspiring me, dude. I want to have my game on the podcast. You look good. You got the old stuff going on. It's only five years into making. That's all. All right, Dan. Listen. Love the conversation here today. I really appreciate your insights and, man, really just great to get to connect with you and know you. Thank you so much for making time. Yep. I had a lot of fun getting to know you as well. You're a great guy and I'm just excited to watch your success. Same here, man. So once again, we're going to put in the links and the show notes to all the stuff that we talked about, your newsletter, all that kind of jazz. Listeners, I hope you like this episode. There's a little something different coming at you, mixing it up and, hey, I appreciate you tuning in. And as always, if you like it, leave us a review. We'll see you on the next one. Bye for now. Hey, guys, what's up? Real quick. You've heard about the mortgage marketing pro membership before and I just want to quickly remind you of that you're in a place in your business where you simply need more purchased loans. You need to fill your pipeline with purchase business. 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