The Borrow Smart Chronicles - Financial Bubbles are Narrative Driven

Episode 16

Author

Todd Ballenger
February 23, 2024

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"In a world run by AI, the human qualities in our work become more important than ever”"

― Ashok Veda

The Nvidia Moment: Nvidia added $200 Billion to its valuation yesterday, the biggest single market cap increase in history. That increase was based on record earnings from AI-related technology investments by global companies. That increased global wealth by $2 Trillion in a single day.

In 2024, over $85 billion has been invested in artificial intelligence (AI). This is a profound moment, as I remember my first meeting with a technology company in 1993 that told me I could send messages via my computer - it just made no sense to me at the time… why would I do that? There was no one I knew who could receive these messages, and we had a company that distributed flyers to all our partners because it was cheaper than mailing things and much faster. This was a new paradigm, I had no mental construct for what was coming.

It took me a while but once I started to understand the implications we pivoted quickly and were the first lender in NC to close a loan via a live online underwriter with Flagstar. It was on ABC News!

We can’t begin to imagine yet how this will change searching for a home or getting a mortgage. What I know from my prior experience is some things will stay the same and some things will change enormously. This investment means whatever change is coming will come faster than the last cycle, and the technology used to show homes approve loans, and connect with other humans will get a lot smarter. Change is the only constant and while knowing you don’t know is the birthplace of learning - you can’t sit this one out on the sidelines. It is time to become a learner with a beginner’s mind…

Those working in real estate, financial advice, and lending should embrace this as an exciting time, where you can utilize your existing knowledge and skills (they’ll be needed) and utilize them with the addition of new technology that will make new things possible (that will be needed too to stay relevant).

It feels like these kinds of cycles are bubbles, and they are… that is part of how massive change happens - huge investments of time, energy, and money flow toward something new (that started with COVID). In relative terms, our ‘bubble’ is small and likely to get bigger, and that will mean major transformations in how we work.

a BORROW SMART CONCEPT
What’s Your Plan?

James Clear asked a great question this week: ‘What if you stopped looking for the best idea, and focused on the best idea you have now.?’ Whatever that is for you, you should also have an idea for your future financial self that might not want to work as hard as you work now. The guy below had a plan, bet it all on one moment. I don’t recommend this as a strategy, but it is still a fascinating story.

Whatever your plan is, I think I can make it better. I have a gift for you. Score your current retirement and financial acumen on us. NIOFE.org, will cover your $7-a-month subscription fee to Savology. See how you are doing and figure out if your future financial self is on track.

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Liabilities
What’s Happening?

lower rate debt keeps getting paid off by higher rate debt (source GRodit)

and the average couple keeps moving up (source GRodit)

average loan balances are increasing (Source GRodit)

but higher rates really hurt lower price homes (Source Economica)

and insurance costs make affordability less affordable (source Mish Talks)

the US borrowing is getting out of control and expected to continue to 10X

REAL ESTATE
What’s Happening?

housing prices on a 6% annual growth rate for 2024

the best measure of true housing cost is the cost per square foot, also going up

and inventory continue to remain low and unsustainable

it is falling in more states than it is rising

this puts pressure or real estate and mortgage professional income generation

and makes it harder to buy a house which has gone from 31 to 49 years

this might be part of why population is also declining

and why people started staying in homes longer

"The work you do while you procrastinate is probably the work you should be doing for the rest of your life."

Jessica Hische

ASSETS
What’s Happening?

real estate starts as the biggest part of your wealth but declines as other assets compound and grow

the primary home stays a major if not the major component for most

and even farmland is now being taken on by corporate investors

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“It is better to be a Warrior in a garden
than a gardner in war.”

Chinese Proverb

ON BEING HUMAN
What’s Worth Sharing?

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“Most people end up being conformists;
they adapt to prison life.
A few become reformers; they fight for better lighting, better ventilation. Hardly anyone becomes a rebel, a revolutionary
who breaks down the prison walls.
You can only be a revolutionary when you see the prison walls in the first place.”​

— Anthony de Mello​

DOPAMEMES
And Other Inspirations…

AIdeas
Future Hacks…

A favorite AI tool for quick logos and graphics: https://app.artflow.ai/

Trained this AI with 10 pictures, and now I can put myself in all kinds of interesting situations. Not perfect, and I don’t wear two watches, but some of the pics are hard to tell they are not actual photos… go play!

Another fun one - share with your favorite Realtor:
https://hotpot.ai/real-estate-headshot

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