This Advice Costs $1,200… But Will Make You Millions
The Amplified Impact Podcast
October 8th, 2023
Recently I gave you all a behind the scenes look at one of my coaching calls with Wyatt. It was a bit longer than most of my episodes, so incase you missed it, or you skipped it, here’s a little breakdown of the lesson:
1️⃣ Dealing with overwhelm: Starting a new venture can be overwhelming, especially when there are so many variables to consider. The key is to get clear on your goals and the next steps, which helps alleviate the overwhelm. Remember: you can only focus on the macro or the micro at a time, so give yourself permission to be present in whichever aspect needs your attention.
2️⃣ Pricing structures for digital products: When it comes to pricing your digital products, it’s crucial to strike the right balance between perceived value and what you’re charging. Cheaper may not always be better; instead, consider pricing your product at a higher value to convey its premium nature and instill confidence in your audience.
3️⃣ Building a sticky community: Want to create a community where members stick around? Ensure that the group as a whole is driven and dedicated to growth. Remember, a community will revert to the mean, so be mindful of who you allow in. Surround yourself with like-minded individuals who will uplift and support you in achieving your goals.
TWEETABLE QUOTE:
“The median participant projects… has historically been wildly detached from reality, so it’s probably not even relevant.”- Anthony Vicino
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Episode Transcript:
Anthony Vicino:
What’s up, everybody? Welcome back to the podcast. It’s been a couple minutes since we’ve done a new episode.
Anthony Vicino:
Yeah, it’s been a bit since we’ve been 15 minutes.
Anthony Vicino:
Exactly 15, maybe 20. Yeah, we’ve been we’ve been busy, but here we are. We got reed has brought us the juiciest quote, the juiciest info, the juiciest insider info you could ever want straight from the lips of Jerome Powell about what’s gonna happen to interest rates next year. Jerry, he’s usually so tight lipped, so for him to finally crack loose, I think Reed weaseled the information out of him over a couple of margaritas.
Anthony Vicino:
He looks like he eats a lot of onions. Like, pursed lips. I think you got to watch on YouTube. Otherwise you don’t know what the hell’s going on. I’m pursuing my lips.
Anthony Vicino:
I think that’s one of the characteristics they look for when they’re hiring for that position. They’re like, let me see your onion face. They’re like, that’s a freaking good onion face.
Anthony Vicino:
Perfect.
Anthony Vicino:
Yeah, you’d be great. Okay, so here’s the quote. It came from bigger pockets, an article on bigger pockets. Do you want to read it? Yeah, go for it.
Anthony Vicino:
I have it printed.
Anthony Vicino:
Oh, perfect. I got on my phone yeah, you’re.
Anthony Vicino:
Going to look anti social if you sit there.
Anthony Vicino:
I don’t want to no, I’m here, guys. I’m present, I promise.
Anthony Vicino:
All right. I’ll read the whole well, we’re already queued it up, so here’s the quote that came from Powell’s purse lips. If the economy evolves as projected, the medium participant projects that the appropriate level of federal funds rate will be 5.6 at the end of this year, 5.1 at the end of 2024, and 3.9 at the end of 2025.
Anthony Vicino:
Good old glory days coming back. Hallelujah.
Anthony Vicino:
That is a very slow and gradual decrease over the course of two years. That’s not sensational at all.
Anthony Vicino:
Not sensational, no. But I think what was sensational about this is the fact that when Reed comes to us with some of these podcast episode ideas, and he’s like, I got this quote. He read it, and we’re like, wait, powell didn’t say that, did he?
Anthony Vicino:
Well, yeah, you got to be under the bus, Reed, because you said, here’s what Powell said, the rate here’s what Powell said. Interest rates are going to be in the future. And I was like, no, this is.
Anthony Vicino:
Super important to read, like, the nuance. If you’re just a headline reader, you might miss this. And this article was on bigger pockets and from what we understand, didn’t go into the nuance here. Powell is not saying that he believes or that their intention is to track these rates at this level. He’s not saying that.
Anthony Vicino:
Yeah. No, I think, honestly, if it were up to Powell, he’d be like, no, the appropriate federal funds rate is nine all the time.
Anthony Vicino:
This man is he’s got a phobia.
Anthony Vicino:
Of inflation, and he will kill it no matter what.
Anthony Vicino:
Kill it with fire and a hammer?
Anthony Vicino:
No, honestly, I think what I’ve gathered is well, I guess first let’s touch on the nuance.
Anthony Vicino:
The nuance is important here.
Anthony Vicino:
The median participant projects. Now what he’s referencing is something called the dot plot, which is published by the Fed. And it’s where all of the Fed officials are surveyed and asked basically, where do you see the Fed funds rate in X amount of time? And they all submit their answers and they create this little scattered plot of dots, and then you can kind of glean from that. Okay, here’s where the consensus kind of lies, which I was saying to these guys before the show, has historically been wildly detached from reality, so it’s probably not even relevant.
Anthony Vicino:
You know what’s really interesting about this to me is the fact that there are people, like, if you came to me and said, hey, will you plot out where you think the interest rates will be over the next two years? I’d be like, I’m not going to even bother doing this.
Anthony Vicino:
It’s like asking me what the weather is going to be. Yeah, I’ll try. I might be right.
Anthony Vicino:
I’m throwing a dart at the wall in the dark. What does it matter what I think it’s going to be in two years? You’re wrong, I’m wrong.
Anthony Vicino:
You know that much. But yeah, it caught me very much off guard because I was like, he does not project where rates are going to be. But yeah, I think it’s worth noting that if people are just now starting to pay attention to this because rates are high for the first time or relatively high for the first time ever, had you been watching dot plots for the last five years? 2022 and 2023 were not in the dot plots. Okay. Nobody missed those.
Anthony Vicino:
Yeah, go figure.
Anthony Vicino:
And if you remember, up until the interest rate hike started in kind of early to mid 22, I think it was like April, May, where the first hike came. Immediately before that, the constant narrative from the Fed was we’re not even thinking about thinking about raising rates. So historically, what they do is they say one thing, they lie, and then randomly they grab the wheel and jerk it the other direction. So these forecasts are like, they don’t matter, really.
Anthony Vicino:
So this gets to one of the questions Reed asked us coming into this episode. He asked, okay, so what do you guys think the interest rates are going to be? Do you go in for soft landing, a hard landing, all this, and I’ll let you go first.
Anthony Vicino:
Well, I’m going to see what Howard Marks was just saying the other day because I respect his forecast a lot. Even though he’s adamantly not a forecaster, he had some really good logic behind where he thinks they’re going to be, because right now he qualified them as restrictive, which is keeping the economy from growing, maybe even threatening the well being of the economy in the interest of driving down inflation. And so right now we’re at restrictive. And his definition of restrictive was basically, from what I gather above, four and a half when we’re in the fives, that’s restrictive. And what Powell is saying the Dot plot is representing here or is suggesting here, is that we’re going to be quote unquote restrictive all the way through 2024. And I feel like I can trust Howard Marks a lot more, who says we are currently restrictive, and he sees us settling at a non restrictive yet higher than we used to have place next year, which would imply somewhere between two and 4% for federal funds. So not 5% all the way through next year and not way down to where it used to be, which was, like somewhere between zero and two, but somewhere that’s kind of in the middle where it makes sense, where it’s not restrictive, but it’s also not so accommodating that you can take money for free and put it into yolo bullshit and actually make money.
Anthony Vicino:
Yolo.
Anthony Vicino:
Yeah.
Anthony Vicino:
I always think about fundamental concepts like reversion to the mean, right? And asking over a long enough time frame, everything kind of reverts back to the mean. And we had this period of time with really historic lows and we’ve had periods of time back in the with historic highs, right, like very, very high interest rates. And so you just kind of look at it and you’re like, okay, what’s the mean that we’re inevitably going to revert back to? I don’t know, but it’s probably not where we’re at. It’s probably not where we were. It’s probably somewhere between I feel pretty confident to say that in the next two and a half years, we’re going to be somewhere between where we were and where we could be.
Anthony Vicino:
Yeah, well, funny you mentioned that because that brings up another concept that Howard Marks likes to talk about, which is, yes, we obviously reversed mead, but we spend very little time at the meat we’re usually on.
Anthony Vicino:
You never hit me.
Anthony Vicino:
You kind of fly right through it during an overcorrection. So that kind of implies, like, yeah, we’re going to start to revert that direction, probably go a little bit too far, like we have in the past and then overcorrect. But there’s something else that happened today with non farm payrolls that came out which showed that the labor inflation is actually moderating quite a bit. And that’s been that sticky thing that the Fed’s been pointing to for the last year, saying, yeah, okay, inflation is coming down across the board. But those wages they’re still inflating, well, we’re seeing an annualized wage inflation rate of like, 3.8%. So when you plug that into their formula, their core inflation number that they like to speak to is also right around two to two and a half. So looks like the job’s done. They’re probably going to sit here for a bit and then meander down to what Howard Marks mentioned there.
Anthony Vicino:
And then we’re probably going to have some other catalyst that jerks us off, drives us off in a different direction.
Anthony Vicino:
That’s what’s going to happen here.
Anthony Vicino:
We’re going to cut that in post, right?
Anthony Vicino:
No, we’re keeping that. All right. Yeah. I think where we’re at now is my gut tells me that the work has been done. Now it’s just a matter of waiting for the data to come back incontrovertible. And that’s probably going to take a little bit of time for them to go. Yes, okay, we’ve done our part here, but at the end of the day, I think we’re just looking at our crystal ball. And I’m not a fortune teller, so I don’t know.
Anthony Vicino:
Just focus on what you can control. Focus on the fundamentals operations. Do good work. Don’t get too speculative. Don’t get too cocky, kid.
Anthony Vicino:
Don’t bet on rates going down. Set yourself up so that it’s wonderful if they do, but do deals that make sense in a high rate environment and you’re probably going to be okay either way.
Anthony Vicino:
Cool. That’s going to do it, I guess. Yeah.
Anthony Vicino:
Sorry, Powell. Yeah, sorry, old you don’t care about your participant, onion lips.
Anthony Vicino:
That’s all we got. Let’s just end it here, Sam.
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