Today Blake talks with Bridger Pennington, the owner of Black Bridge Capital - a successful private equity fund. Black Bridge has done more than 315 deals over the last 2.5 years, and is continuing to gain success in the private market. They discuss Bridger’s background and why he decided to start his own business in the private market. They are also diving into the public market, the private market, entrepreneurship and many other topics that today’s investors need to hear.
Today Blake talks with Bridger Pennington, the owner of Black Bridge Capital - a successful private equity fund.
We discuss why Bridger decided to leave his place in the public market and start his own business in the private market.
We are diving into the public market, the private market, entrepreneurship and many other topics that today’s investors need to hear.
Key Takeaways:
Bridger’s Story + How he found out his dad was rich (1:50)
A fork in the road (6:27)
How tough love led to Bridger’s first capital raise (7:50)
Who are the Wall Street Rebels? (10:04)
What exactly is an investment fund? (12:30)
Why most investors don’t know about some private market funds (14:36)
Public market volatility (17:22)
The Power of Real Estate (21:54)
How Black Bridge’s funds work (25:33)
The Big Picture (27:43)
Bridger’s take on alternative investments (29:30)
Words of encouragement from Bridger (37:38)
--To learn more about what Bridger does visit: investmentfundsecrets.com
--Become a Solomon Investor Today: http://solomoninvestor.com
-- Speak to our team to learn more: https://legacy.boroncap.com/free-call
-- Make sure to subscribe so you never miss an episode!
Today I am talking with Bridger Pennington. Bridger is the founder of Black Bridge Capital, a successful investment firm that helps fund entrepreneurs who want to build a business. Black Bridge has done more than 315 deals over the last 2.5 years, and is continuing to gain success in the private market.
Bridger discusses his background and how he learned how to utilize the private market to create his own investment firm.
We also dive into the volatility of the public market and why Bridger believes that the private market is where the risk is lowest.
--To learn more about what Bridger does visit: investmentfundsecrets.com
--Become a Solomon Investor Today: http://solomoninvestor.com
-- Speak to our team to learn more: https://legacy.boroncap.com/free-call
-- Make sure to subscribe so you never miss an episode!
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- I am your host Blake Templeton. And this is a Solomon Investor Podcast. I've got so much excitement in me right now because I've got Bridger Pennington with me. He's the founder of Black Bridge Holdings. It's an investment fund. It's done over 315 deals in the last two and a half years? And to best explain it, Black Bridge essentially is lending money to small businesses or entrepreneurs who are actually wanting to build a business. Additionally, he has spoke on stage in front of 10,000 people. He's got a podcast of his own that has over 12,000 downloads a month. And another exciting piece of it is, that he is very similar to us in that he has a flag in the ground, emotional conviction against the market. And that there's another way. There's another way to actually build wealth and he's helping other individuals through another platform, build investment funds and help other people just like you. So ,Bridger, so glad to have you on the call. Welcome to the podcast.
- Blake, thank you so much man. Excited to be on. I love your guys' show. I love what you guys do. I've followed you guys for a while now and I'm excited to be a part of it.
- Let's just start at the very beginning. Tell me a little bit about how you got started and who is Bridger. Yeah, so the bio. Yeah, I kind of mentioned I run a small investment fund. We do short term loans entrepreneurs, and I was able to kind of my background story a little bit. I grew up in a very normal house, entrepreneur household, and we can dive into entrepreneurship in a minute if you want to as well. So my dad was entrepreneur. I knew he just started because I didn't really know what he did. And I got into college. I had this big dream, like I set this goal. I wanted to be a millionaire, right? I was like, "I'm going to do it." I didn't want to do it just because I wanted to like buy a Ferrari or something. I thought it'd be cool to have money to like hire family members or pay off medical bills or to help people and maybe buy a Ferrari too. That'd be kind of cool. So I sat on this journey to start. And I thought being an entrepreneur is the fastest way to get there. I looked at all the routes of life, right? You could go work for a big company, you could be a doctor. I thought entrepreneurship. And most people I see in the world that make a lot of money are entrepreneurs, I'm going to do it. So I in college was on business try number seven. At the time I had done, I mean, I've done landscaping, I've done a Chinese tutoring business. I've done essential oils. And these weren't like business ideas. These were like legit businesses, like you know set up, running, making money and anyways, my dad eventually grabs me. My dad's my greatest mentor, I love my dad. And he goes Bridger, "You're kind of a chicken with your head cut off. I want you to go meet with one of my partners, my business partners. And I want you to talk with him and see if he can help you out a little bit." I said, "Okay." So we set up this meeting. I drive to this guy's house. I'd never been there before. And I pull up to the beautiful like first off, it's a gated community. I drive through the gate and I poke this col-de-sac and it's just this gorgeous white home. And it almost encompasses the entire col-de-sac. And I parked my car and I like double checked my address, like, "Is this the right spot? "Like who was my dad's business partner?" And we lived in an average house, like my dad drove a crappy car. Like that was the life we lived, right? And I knock on this guy's door, these 18 foot like beautiful outdoors. And I kind of knock and I'm worried about a butler's going to like kick me out, like "Be gone peasant." Anyways, my dad's partner answers, "Bridger come on in." and we sit down and we start to chat. And he goes, "Bridger, I was just like you, I'd started multiple businesses. And I finally figured out what I should do." And I was like, "What?" And he goes, I had learned for I had a friend who did a lot of the finances and accounting for very wealthy people." And he goes, "He had one client in particular "that made 10 times more money than everybody else." "What did he do?" He ran an investment fund. And so at the time my dad's partner was like, I didn't even know what an investment fund was. But he said he looked into it and he found out like all the wealthiest people in the planet, they all run funds or their kids. They try to get their kids into the fund world, private equity, hedge funds, venture capital. And there a lot of wealth is generated through that vehicle. So he said, "I don't care how long it takes me. I'm going to figure out how to start a fund and get it launched. He goes, "Right now, me and your dad, we run a fund and we manage about $8 billion of real estate." At the time, this is about, I don't know, eight years ago. And I was like, "8 billion!" And to put that into perspective, like Cardone Capital, right Grant Cardone, they manage about 1.1 billion. So the time they were in and they were doing multifamily, just like Cardone Capital $8 billion at the time. Now they're up to about $20 billion under management. So huge, right? And I was like, "What?"` And he goes, and so I started chatting with my kale, "Teach me about funds, how can I learn this?" And he goes, "Well, you should go talk to your dad." And I was like, "No, no, my dad, he drives a crappy car. We live in a small house. Can you be my mentor? Like, I would love to be mentored by you." And he goes, "Actually, me and your dad make about the same amount of money." And I was like, "What?" He goes, "Yeah, me and your dad are about equal business partners." And so I said, "Thanks." I got in my car, I drove straight to my dad's house. I was like, "Dad, what the hell? Like we've gone to dinner for 10 years. I can't even order a soda at dinner because it's too expensive. And you run this huge fund, right." And he kind of laughed. He goes, 'Well, you know..." He goes, "I like to save and invest my money. And my partner likes to spend his money and we just live different lifestyles and that's okay. But yeah, we run this real estate fund." And so he sat down and taught me how funds work, how they started them, how to raise money, the whole nine yards. We probably dive into that in this episode. So I was on a path of the Wall Street. So I learned about this. And my dad taught me the traditional route into the fund world is you go work on Wall Street. You go work in investment banking or consulting. And one of these big firms, you work 80 to a hundred hours a week. You get an MBA. You work, you get experience. And after about 10 years, you can maybe start your own fund. That's the traditional route. Or you can go work for a big hedge fund. You'll kind of work your way up. And so I did this, I was in school. I got good grades. I got a good internship. And I remember I got a six figure offer to go work at this big firm in Silicon Valley. Had stock options, bonuses the whole nine yards. And I kind of looked at it and said, "This is the next decade of my life, right? "I could go down this route." But I looked at my dad and his partners and some other fund managers that I knew, and they didn't do the Wall Street route. I thought, "I wonder if there's a different way to the same ending, the same point of running and starting my own fund." And so, I actually had this idea that I went and found. I vetted with a previous company I'd worked at, I vetted it with the owners that we could lend money to some of their clients. They love the idea. I went and met with my dad. We got the whole fund set up and we've got it structured and stuff. And I remember I had my funds set up and I was like, "I'm going to do this. I turned down the six figure offer. I'm sitting on my fund, we're doing this." But the problem with the fund is you need to raise money. And that's like, the one thing you need for a fund is to raise money from investors. And so I had this great idea. I was like, "My dad is rich and likes to invest. He doesn't spend his money. He said, he loved my fund idea. He'll be a perfect investor into my funds." And so I remember I went and met with my dad. We sat down on this late Sunday night. And I remember asking I was, "Dad..." I kind of get my best pitch voice possible. "Dad, how would you like to be my first investor in our funds?" And he kind of laughed. He said, "Bridger, if I invest in your funds, I will ruin the experience of you going out and raising money and capital on your own."
- Sure. And it was a big tough love moment to me and my dad. And he kicked me out and he said, "You got to go do this on your own. I can't help you any further. I'll give you mentorship, I'll give you advice, but I won't help, I won't give you money." And so I went out, hit the streets. I talked to everybody I knew, and I was able to actually get enough money. I raised $49,000 for my first fund. Like probably one of the smallest funds ever, but it was enough to get started.
- One thing I love about your story Bridger is that you actually had this just like median in the road and you actually could have gone the public market route and the idea of a six figure salary. They're going to give you a six figure salary. They're going to give you the stock options. And that's what my listeners... You know first off, we just kind of break your story apart a little bit. What most don't understand who are listening outside of the podcast itself is, a mutual fund itself average is like a 3.17% actual fee. And that's getting sent out, out of their actual return. So you actually could have gone that route and been that guy that took essentially 30 or 40% of their return and puts it in your pocket. But you went the private market route. And I'd love to just going to kind of break this down and ask some questions so... You teach individuals how to begin a fund. Your groups called The Wall Street Rebels, why? Tell me how you landed on that name.
- Yeah, so our stuff is called Investment Fund Secrets and we are The Wall Street Rebels. And what I found was we hadn't... I just had this idea of let's start a podcast. Let's just see if there's other people like us. I understand the uniqueness of my situation. My dad runs this huge fund. I was able to rent. None of us went to an Ivy League school. None of us went on, you know, did these crazy things. My brother is a securities attorney and he works at a $300 million fund as their Chief Compliance Officer In-house Legal. So we're like the perfect family, right? So we go to dinner and we talk about funds. Like, all we talk about is private equity, the SCC changed this rule. Like it's a very unique family. And so we threw out a podcast to just see if other people were like us they were interested and didn't do the whole Wall Street or didn't do the Ivy League route. And we started to find a lot of people were in our same boat and there was a whole group of people just alone on the internet looking and trying to find other people like us that had done this. We started bringing these people together. And the one thing in common was we were all kind of the Wall Street rebels, is we all hated, absolutely hated the finance pro culture. I think a lot of people maybe listening, know these types of people, I call them the finance pros. These are the guys, you know, on the Wolf of Wall Street type of people. They have the slick back hair. They hang out in clubs and they live this lavish lifestyle and they're kind of just jerks to everybody. And I hate the stigma around finance is you're one of those finance guys or finance pros. You must be a jerk and so into yourself and so about money. And in reality, most people I know in finance that are good fund managers, like my dad are very conservative, they live within their means. They're good at managing money. That's why they have that job. And they're just really humble, good people like you Blake. I know you personally and you're that same way. We started to do that and that's where we put our flag in the ground. I was like, "We're the anti wall street pro route." We're the people actually getting stuff done, actually launching and scaling funds and doing that. That's kind of where we got that mantra from.
- I love that.
- Yeah.
- So you've got a fund, we operate funds as well. And for those who don't know, let's just break that down from define what an investment fund is?
- Yeah. Let's go back to the basics, right? What is a fund? So a fund in the most simplest terms is a pool of money and investors will put money into that pool and a fund manager or the general partner, that's what they're usually called. The general partner or the fund manager like me or you will manage that pool of money can make investments on behalf of the investors in the fund. And when those investments make money, they take a split. The investors get a split and the fund managers get a split. So these types of funds can be used for like anything. You brought up mutual funds, right? That's one type. I actually don't like mutual funds very much. But the funds we usually talk about are private equity, hedge funds, venture capital. So like a typical hedge fund that pool of money goes and trades on public markets. A venture capital fund, same structure, investors put money, they manage it, but they invest into like shark tanks, small entrepreneurs into the seed investments. A private equity fund will do late stage private companies. So they'll go in and buy like Sycamore Partners, just line up an acquisition for a Victoria Secret. So they'll go buy Victoria Secret, like companies like that, right? These bigger companies. I have friends who do funds. One friend, he does a fund. All they do is go buy funeral homes, mom and pop funeral homes, they group them together and they found if they group together, they can sell them on the public market for a two X, multiple.
- Sure.
- I have another friend that does almond farm funds. I have a friend that goes out and he buys movie rights from writers on Wall Street and sells them to HBO or Netflix or all these streaming services. That's all their fund does. There's these little teeny niche funds. And it's pretty, pretty fun to be in this world and have our community to see all this.
- That's so good. Those who are listening, your takeaways are, you know, there's a new ecosystem. And you know, as you guys know, we call it the private market. There's a public market and there's a private market. And so, Richard's talking about there's all these niche industries in the private market that are tangible, they're collateral. They're real. We would say the public markets abstract it's finite, it's futile, it's volatile, it's emotional. So we're both advocates for the power of the private sector. Why do you think that the public Bridger doesn't really know much about that ecosystem? Why is the emo or the mentality they live by, is it their public market mentality to invest?
- Yeah and I think there's a lot of reasons for that. And number one is a lot of funds are exclusive. So some of the biggest funds in the world are Bridgewater in Blackstone, right? Ray Dalio funds, you have the big Blackstone funds with Stephen Schwarzman. To invest in Ray Dalio funds, You have to have a $5 billion net worth and minimum investments' a hundred million dollars. Those are some thresholds, right? My dad's funds, I believe minimum investment's a million dollars, right? You know those ones and the SCC has different qualifications of investors. You have accredited investors, they may have a million dollar net worth, excluding their home. You have a qualified clients who have a $2 million net worth and qualified purchasers who have a $5 million net worth. For some funds, you have to be a qualified purchaser or have a $500 net worth to even talk to them. So I think for the common investor, sometimes these funds aren't even available to you because you have to have a certain net worth. And the SCC, the reason they do that by the way, is to protect the little guy. They don't want fund managers like me to come in and sweet talk grandma and grandma gives me her last $20,000 and I lose grandma's $20,000. Now grandma can't survive.
- Right?
- They believe if you have a certain net worth, you're sophisticated enough in the matters of finance that you can pick and choose what types of funds are best. So I think that's probably one of the biggest barriers. However, the SCC has loosened up some things. And recently you have now crowd funding stuff, you have different ways you can raise money. I know you guys do a lot of stuff like this, where regular investors can get involved. And that's why I think just for so many years, it's been kind of exclusive. And now it's slowly starting to open up to general investors.
- Yeah, great answer. And obviously there is a public market tie of what we'd call those who control that market. There's lots of spiderwebs out of where everyone begins to learn about that market, whether it's through their 401k, when they first started in their twenties and now they're in their fifties. And that's just all they knew was just, I'm in some kind of mutual fund. So there's obviously what we'd maybe call propaganda. It's something that's created that market. And unfortunately it's very unregulated from a fee mindset. From a mindset of what's actually happening in the actual investment itself. Is it actually protected by anything? Everything's very abstract, it's very volatile. It's all in what we call centralized bathtub. There's no diversification in that world.
- You know what? One more thing on the... I'm very advocate for private, for instance, public markets. And you might have talked about this on your show, but with public markets this last year, they did a incredible study. They mapped the revenue of companies versus their stock price. Because you think the revenue of a company goes up, their stock price must go up, right? In the last hundred years of the stock market in 2019 and 2020, it's been the least correlation ever of stock price and their revenue of the company. I think it's like a 5% correlation. You have guys like, you might've already mentioned this story about Bill Ackman, I think you saw this. Right as coronavirus was coming, okay? Bill Ackman by the way, he runs a huge hedge fund on Wall Street. He a very famous investor. Gets on CNBC and this is right as everyone was stirring about coronavirus. He gets on and says, "All hell is about to break loose. My dad is going to die of... I mean, of COVID." He's like, "This is going to be the worst thing we've ever seen in our markets, right?" The next morning, markets tumble, right? A huge crash. You probably already talked about some of the show, the market conditions. Little did everyone know Bill Ackman had a $26 million short on the market? So million a short is when you make money when the market goes down. In two weeks, Bill Ackman turned $26 million into $1.7 billion. And then we're now in a kangaroo market, which is wild, right? As you see this market. And it says these fund managers are really playing around with a lot of metrics on the stock market. And when stock price and revenue don't even correlate, I've seen a lot of investors are fleeing the public markets to private funds and privately held companies that are in real estate or something just more stable than this kangaroo market we're in right now.
- It's a great point. On your show, you talk a lot about volatility. And obviously on our show, we talk a lot about volatility and obviously, that volatility is in the public markets. And it's exactly what you're talking about. It's the rising of the values of the stock when productions in no way aligned, you know what I mean? Amazon's a good example. Everyone would see them as the company of companies. You're in the right place, the right time. You're killing it. But if you look at their numbers. They have a gross revenue of 250 billion, but they only have a 5% profit margin. So it's on 12 billion. They don't pay a dividend. And if they paid a 2% dividend, they would actually lose money as a company. Cause 2% paid out to everyone would be 13 billion. How is that more than your earnings? Because the value of the price is now over 1.6 trillion but you've only made 12 billion. So it's completely astronomical. That would never happen in the private market. Clearly that never happened the private market because we actually have rules and metrics that value something that showed the actual appraised value. And so you're right, 2019, 2020, it's literally just gone bezerk and it's to a point where it can ever come back. And to that point, that's why we both leverage the power of real estate. So tell me more about the benefits. What are the benefits of the power of real estate?
- Yeah. Real estate and these are more my dad's funds or real estate funds. My funds are debt funds, I do loans and we do some real estate stuff. but the power of real estate is it's concrete, right? It's not going anywhere. You have insurance on it. You can never go to zero really. If it burns down, you still have insurance on it. And that's why, like my dad's funds for instance, they really launched out of 2008, 2009. They had done some stuff before they had some smaller funds. In 2009, they said, "This is the best time ever to be in the real estate market. Let's buy up everything." They bought up everything they could. I think they raised over a billion dollars and just went after it. And if they've grown since then. And they're feeling great for this next coming reset, whenever it's going to happen, or what's going to happen with the real estate market. They're feeling great because they buy B class apartments. If you know, A-class apartments are the highest, A B C, they kind of grade them. When the recession comes or whatever happens. There's a deflation. People from A class apartments, miss their rent, they moved to B class, right? And then B class moves to C class. So B class really in C class always have renters. And unless you're like in New York and people don't think it's patriotic to pay their rent, unless you're somewhere like that, most of the time people are paying rent still and doing well. And just real estate is such a hard asset. It's just been proven for centuries.
- Yeah, I love that. And you know, we also do debt funds. And so, you know, guys that's simply put, that would be like you saying, "Okay, I want to invest for us personally. I'm not exactly sure how you'd do your to explain a second, but ours a fixed rate return. So it's a fixed rate return. It's actually backed by the actual assets. So Bob, you come in, you invest, you know $250,000. You invest that in and we're paying you Bob on a fixed rate or terms of the debt. So it's like, you're the bank, it feels like playing in the bank. Your funds are catalyzed by the property or the business or the portfolio. And so it's similar to real estate, whether it's in a situation like what Bridger is doing, where it's actually the fund itself, he's actually then lending that money out to individuals. But it's actually something tangible. It's something that's cloud wise. It's something that's... whereas you know in the public market, as you I'm sure received the same thing from individuals who are in the public market, they feel hopeless. They feel helpless. They feel scared. They feel when the ride's good, they feel great. when we're in a bear market, you know, they feel bad. Their emotions dictate the emotions of the market. And so the difference in the private market is that it's not ran on emotions and the real estate market's never crashed. The centralized banking system might've given to me loans or something, but real estate didn't crash. Whereas in the stock market, you could actually go to zero on a Hertz, value of a stock because it's actually the valuation, not on the production but on the actual emotion. And so, yeah. Share with me a little bit about how your fund works.
- But they're small. I mean, they're five to 10 grand a piece and we do probably every month, 70 to 80 loans a month. Somewhere in there. They're span across. They're very diversified across all industries, across the entire United States. There are small loans. We have them guaranteed and things like that. And our fund, you mentioned a fixed rate. You pay a fixed rate to investors. We do a waterfall structure and you'll hear this from a lot of funds. What I tell investors, if I was pitching you Blake, I would say, "Hey, like you put money into my fund. I don't make any money until you make back the first 8%. So it's called your pref or preferred rate of return. So first 8% goes to you as the investor, I will take the next 2% as a catch up, catch up to the general partner of the fund management of the ninth and 10th percentile come to me." And then what I do in my funds, isn't for every fund. But my funds do from 10 percentiles to the 20th percentile, we split 80 20. So we do an 80 20 split, 80% to you, 20% to me. And then if we get above a 20% IRR, we will split 50 50. So if this year we got a 25% return, first 8% to you next 2% to me, 80, 20 until 20%. And then we go 50 50 until 25% IRR. And that's our waterfall and that's called carried interest.
- And are your guys who you're lending to, is that short term? Is that long?
- Yeah, ours are short term. So ours are four to six weeks long, they're very short.
- Very short. And they just need a little gap funding. We found this little teeny meesh with these we have partner companies. We only work with clients that are pre-approved from all of our partner companies. So people can't just knock on my door and ask for money. They got to go through these other routes to find me. When they need me, I give them 10 grand and for four weeks and they pay me back, 11 grand or 12 grand on that money. And we usually make about 15 to 20%, every six weeks on our money. We just roll our entire fund every six weeks, which is pretty fun.
- Love that. Okay. So big picture is those who are listening. The majority have some kind of money in the market that they're processing through what to do with it. We've talked a little bit about alternative investments. We've thrown some different ideas around, as you know, for us, we are in tangibles like real estate. So it's a portfolio of investments. It could be in the wedding business, in the wedding industry, which is amazing cash flowing group of investments. It could be in self storage, could be in corporate housing, could be in something that's very high cashflow. And it could be an intangible, could be in a website businesses that have high continuity, produce lots of revenue. Could be in a physical businesses that actually they hold this, you know, the standard test of time. could be a portfolio of HPAC companies or something like that. Let's talk back and forth. For the investor who's like, "It makes sense, I get it. Volatile not volatile. Emotional not emotional, I get it. But, I still got some glitches of alternative. What would you say to that person who's still kind of like on the fence of like doing something that's in this new ecosystem. And before you answer, I'd say, you know, this is the revolution. This is the wealth transfer. This is the moment in time which people can actually stand and actually take a step of faith and step up and do what we call being a Solomon investor, where you can actually own that domain. You can actually step up and be the king that you're created to be. You can actually make money like you are supposed to make money, but there's some on the fence. What would you say to them?
- Yeah, I had a lot of things run through my mind, so we'll step through them. But so with alternative investments in the first way, we mentioned the stock market, the volatility, most people in their mind have the old quote, "With higher risk, higher return, lower risk, lower return." That is not always the case. And that's where me, fund managers like me and you will say, "That's not the case." My funds, I believe are high return and relatively low risk. And most fund managers will tell you the same as we have found this little niche for you like the wedding industry, right? We can come in and scoop up these assets. We believe we can. We have expertise to lower our risk and have actually a still a pretty decent return. That's called asymmetrical risk. And that's what all fund managers are seeking. Mutual fund managers really aren't seeking that, wreak managers aren't seeking. I'm talking about alternative investments. I'm talking about people that like my dad's funds, essentially all they do is in the most basic nutshell, they go buy an apartment complex to B class apartment for $30 million. They'll put in $2 million of rehab. And they fix it up. They get rents up and they can sell that for $43 million in about two years. So they make $9 million. It's a fix and flip essentially. They're just doing massive fix and flips. They bought a huge skyscraper in Dallas, Texas. Did a big fix and flip essentially, and they make a huge return on it. And you'd say, well, "There's no way you can get that kind of return without much risk." And they go, "Well, worst case scenario is we just keep running the property and collect the rents there. We still get the rents right? Or we can sell it and take a big chunk there. So let's call it, it's searching for alpha, right? We produce outfits, asymmetrical risk, and it's not always risk and reward. There's a lot of cases. High return, low risk type of funds out there. A very simple way I think, a lot of maybe just one time investors could get involved, if they wanted to not... Maybe they don't want to invest with the fund but just start investing. One example is you can do hard money loans. These are super simple. If for instance, if Blake, if you needed a million dollars from me, okay? For whatever, I don't even care what it is. You need a million dollars for me, I'll say, "Great, I'll give you a million dollars but I need $1.3 million of real estate collateral." And so you put up a property, you have a cabin in Montana or something. You put it up as collateral and it's a million dollars and you're supposed to pay me back in six months, $1.1 million. I'm going to make a hundred grand on the deal, okay? If you don't pay me back, I take the collateral, the $1.3 million and I sell it for $1.1 million or let's say the market dipped 20% overnight. I'm still okay, right? That's a way that you can really back your bases and make 10% your money in six months. So that'd be a 20% IRR annualized. That's a simple example of pretty a high return and low risk type of off. Cause there's no way you really can lose in that situation. So, that's my answer. There's, a lot opportunities out there.
- Yeah, it's true. And it's really good. The thing that's going through people's mind is okay, I get a higher high reward, low risk. I get the asymmetrical a little bit, intellectually I understand it. But guys, what you got to do is call a time out and cut the emotions. Because if you're in the market right now, there's no such thing as asymmetrical. Like...
- Exactly.
- It doesn't have anything tangible at all tied to it. So what most of most people don't realize is that the publicly traded companies are their own company. And then there's a second shell company called the stock of the company and the stock of the company as you know Bridger, it doesn't produce any revenue. It doesn't have a heartbeat. There's nothing here. And you're not actually investing into the public company, you're investing into the stock of a company. And what you were just explaining at the first show is that these are not correlated and they're more not correlated now than ever. And so, if you're listening and you've got some type of like grit of like, but if. No, you're not only not anywhere close to an asymmetrical return, you're in the highest risk situation and if your retirement or your wealth or your future is in the balance, that's where you got to cut the emotions. You got to call a time out and cut the emotions. And Bridger, you know, we have people all the time-
- To add that, can I add something there?
- Sure ,yeah.
- You're competing against some of the smartest people in the world that do this full time. They have teams of people with computer screens over there. They're trading those stocks up and down all day. You hate famous hedge funds that would have done this. There's one in Chicago, they installed, but I think it was $14 million, their own cable directly from Chicago to New York so that they could be a millisecond faster on their trades than other people. That's the type of people you're competing against with in the public markets. And for an average investor. I have a little bit of money of my personal in the public markets, but it's all on spider funds. It's very like a very weatherproof portfolio. To be the best stock picker, is a pretty hard thing to you're competing against some of the best people on the planet at doing this. For instance, last week. I don't know if a lot of people didn't talk about this, but there was a $14 billion dollar short against Tesla pushing down on Tesla stock price, from these huge funds, right? You don't know that's going on. You're just sitting in your office like, "I'm going to buy some Tesla." You don't know, $14 billion is trying to push that down. And then some whatever happened, Elon got money in and they had to cover their shorts and buy back the next day. And Tesla stock price jumped $150. But there were just things. If there's a great book called the "Reminiscences of A Stock Operator." He talks about, this is in the 1915, 1920s. So before the SCC was involved, about how much market manipulation was going on. And just things you don't even know about that are happening behind closed doors. These big, big players will move stocks up and down and you're competing against them basically as a personal investor.
- That's a great book. The book is so three-dimensional. And for those of you listening to understand, Ray Dalia says, "I got 1500 employees. The stock market, the public market is the world's poker tournament. And if you're in it, you're playing at the table with me. And it's a zero sum game. There will be a winner and there'll be a loser. And I'm going to tell you, it's hard for me to win, but I will win." And so I love that story that helps grab the picture of, why? You got to do something now, you've got to activate your wealth. You've got to actually take action. You've got to... If you got money in the market that can actually be moved over that you can actually roll over into something in the private market. You know now's the season, this is the time. You don't actually do it after the storm. You do it before the storm. And obviously there's always another storm coming. So now is that time. Bridger, this has been fun. This has been really good.
- Yeah.
- Thoroughly enjoyed it. There's so much more than we could geek out on. And I'd love to do it another time. If there was something that you could share in motivation, anything that you'd like to share, any last words, what would those be?
- This is something my dad drilled into me since I was little. And he just said, "Bridger, there are people that moved in this country from Nigeria, from Korea, from Thailand. They show up here. They can barely speak English. And in three to seven years, they have two laundry mats and a restaurant and they're making great money." And he goes, "If they can move here with nothing, can't even speak English and do that, you can do a lot more." And he's drilled that into my head forever. And I think there's just so much value in living in such a great country. I love America. I know there's problems. I know that there are things we've got to fix, but I love America for that reason of a place where you can build your own kingdom, right? And all of... You're the solemn investor, right? For all the last thousands of years, it's been pretty hard to build your own kingdom. You have to be born with the right family or place. Right now, 2020, United States is never a better time to build your own kingdom. Its sitting in front of you just have to take the thing. And I was just thinking of the analogy of getting up to the play and swinging. Like I'm going to be in the baseball game. Yeah I'm going to strike out a few times. I started seven businesses before I started my fund. And yeah, I struck out on a few. I hit a couple of little singles, you know, I'm going to hit some few doubles and maybe one day I'm going to hit one over the fence. But at least I'm at the place we most people sit on the sidelines in the peanut gallery and make fun, they comments on Instagram but they're not in the game. And it's very freeing to be in the game and to live like my dad did, he just a very fruitful lifestyle. His monthly expenses, like his entire life were less than like $1000 a month. And he did that so that he could keep getting up to play and swinging, right? He'd never got the big car, the big house until he really had made it. And I've mentioned my dad's story, but I just, I value that a lot and something he's taught me and shared it. And there's so much value of being in the game. And so for some of your listeners that have already made money and then they're out of the game now and just want to passively invest, You can still be in the game pretty actively as an investor. And it doesn't take a lot of your time but it takes some expertise and it's pretty fun.
- Yeah and for those of you who are listening, who are in the public market and you're in your late fifties and sixties, and maybe you've had some hard seasons that your compounding, didn't really compounds. And you're now thinking like I don't have a whole lot left in a whole lot of time left, the encouragement... I would piggyback on what Bridger just said that, "No, trust me, there's still time. In the private market you can compound, you can continue to build. And then when you're not having to continue losing and making them losing and you can compound that. You got at 10 15 years after movement, trust me, you can redeem what the enemy has stolen. There's a whole lot more fruit there than you're expecting. So love that encouragement Bridger. If those who are listening, if they were to find you contact you, what's the best means to do that.
- Yeah. Our podcast is called Investment Fund Secrets and they can find me on Instagram, Bridger underscore Pennington's a good way to find me, website investmentfundssekkers.com So, we help people launch and scale and start funds. So if you want to start a fund and really actually get going on your own fund, that's what we talk about and teach.
- Investmentfundssecrets.com. Very good.
- Blake, thank you so much.
- You're so welcome man. Love your story. Love the continual parallel synergy in the private markets. I'm so excited for you guys who are listening. Follow Bridger. He's got so much going on right now. Some good things, just some good nuggets to be grabbing a hold of. And guys for you guys who know that today truly is the moment to put your flag in the ground. I want to truly just bless you that there is more abundance for you that all you got to do is take action now. There's some activating of your wealth that you can do. And continue following the podcast cause there's more coming. This is a Solomon Investor Podcast. See you again soon guys.