True wealth creation transcends following conventional money rules; it requires understanding and applying fundamental "laws" of money that govern its movement and growth, focusing on strategic compounding, control, and risk management.
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You can follow all the right money rules
and still feel like you're never getting
ahead. You can save more and invest
early and work hard and still that
scoreboard never moves. I went from
being a janitor to building two
billion-dollar companies and managing
billions of dollars at Goldman Sachs.
And what I learned is that money doesn't
follow rules. It actually follows laws.
So here are the seven laws that will
help you understand how money actually
works. So here's a system to make more
money. It has three parts. The three
parts are momentum, structure, and
asymmetry. So what does this mean? The
job of momentum is to figure out how you
can actually compound money more. The
job of structure is to figure out who
controls the money and what outcomes you
get. And the job of asymmetry is to
maximize the upside and minimize the
downside. Starting with law number one,
money loves speed, but wealth loves
time. When I first got into real estate,
I had access to several real estate
agents who handed me offmarket deals and
I became a flipper, meaning I would get
the deal, I would rehab the property,
and I would sell it. I would flip the
asset. And this entire 5 years, I got
the deal, I put money in, and I flipped
it. I got more deals from our agents, I
put money in, and I flipped it. At that
same time, in that same 5-year period,
my friend did something different. He
started off with one single family
property. A couple years later, he
bought a forplex, meaning four units. He
waited for a couple more years. He
recapped money from it and he bought a
20unit complex. He didn't do any
flipping. He went from one property to
four units to then 20 units. At the end
of those 5 years, I had flipped a 100
homes and made some cash, but he owned
20 units. His net worth was five times
that of mine because I was working on
speed and he was working on time. So, if
money loves speed and wealth loves time,
well, what is speed? And what is time?
Speed is when you see an opportunity and
you act on the opportunity. It is the
shortest distance between seeing and
acting on an opportunity. The faster we
can shorten this distance, the faster
money moves. Well, what does wealth love
time mean? Wealth of time means you make
a good decision and you hold on to it
for a long period of time. But the crazy
part is for the first period that
actually looks like an okay decision.
You don't even know if something's
happening. As the time passes by, you
see the value of that decision. Often
times what most people do is they
confuse fast action with fast results.
Fast action is not equal to fast
results. You want to get the speed right
and you want to get the time right.
Warren Buffett at Burch Hathway
completely flipped this idea of holding
on to something for a long period of
time. He bought highquality companies
and he held them forever. From 1965 to
2024, Berkshire compounded at almost 20%
annually. They beat the S&P 500 by
double. Their total return hit 5
million%. So remember, speed is about
the shortest distance between seeing an
opportunity and taking action. Time is
about making a good decision and
allowing the time for it to compound.
There's one important reason for this
because the best partner that you have
in wealth creation is time. Once you
understand that wealth is built by time,
the next question is who actually
benefits from that time? Because in the
money game, the person who gives the
money controls the outcome. Which brings
us to law number two. He who gives the
money has the power. I've sold five
companies in the last 20 years. And the
buyers of all my companies made 10 to
100x more than I did because buyers and
builders have an unfair advantage. If we
analyze the Forbes 400 list, there seem
to be three types of people who make it
on the list. The first are people that
have made it on earned income, meaning
with their salary. The second are people
that have actually sold a business to
get on the list. And third, the people
who are buyers and builders who
continuously buy and build companies and
opportunities. Well, let's look at the
people who have made it on the list
because of earned income. Well, spoiler
alert, there's zero people that made it
on the Forbes 400 list on earned income
or on their salary alone. But what about
people who sold their business? There
are a few like Mark Lure sold jet.com to
Walmart and he made it on the list. Dan
Gilbert sold Quick and Loans and made it
on the list. But the folks that buy and
build are the vast majority. Take Elon
Musk or Jeff Bezos or Warren Buffett or
Mark Zuckerberg or Don Brent at the
Irvine Company. All of those who buy and
build constantly make it on the list. In
fact, Dan Gilbert who sold Quick and
Loans, he actually bought it back and
then he built it to take it public
again. So, he was an example who got on
the list for selling the business, but
then made it even more powerful by
buying and building overall because he
who actually gives the money has the
power. Facebook bought Instagram for a
billion dollars and it's worth over $45
billion today. Google bought YouTube for
$1.6 $6 billion and it's the core part
of Google's business and the second most
valuable search engine. Take Elon. Elon
bought Twitter for $44 billion. It is
about buying and building. This is even
more prevalent in the sports franchise
realm. Henry Samuel Elli, the owner of
Broadcom, gave $70 million to the
Anaheim Ducks in 2005. And today, the
Anaheim Ducks franchise is worth over
$1.6 billion. Mark Cuban gave $285
million to the Dallas Mavericks in 2000
and eventually sold 73% of it for 3.5
billion in 2023. Even if you take
something as simple as the real estate
market, if there are no buyers, there is
no market. And the main reason for this
is because buyers unlock value. And
however you slice it in economics,
buyers wield the power because they give
the money and they control the terms.
Let me break down what we do at
acquisition.com. We are a business that
builds businesses. We have a flywheel of
building more companies. We use our
brand to attract more businesses. That
business drives the advisory business.
It drives our education business. It
drives our ventures business. It drives
our private equity business. It drives
our real estate business. We have no
plans of selling acquisition.com. Our
goal is to buy and build for years to
come. And you know, whenever someone
says buy and build, you must be
thinking, man, I don't have all the cash
to go buy companies or buy real estate
or invest in private equity. What do I
do? This does not mean you need to have
all the cash. It just means you need to
understand the strategy. The massive
wealth is created by buying and
building. So just understanding the
strategy and being so obsessed with
buying and building will create massive
momentum for you. And when you are the
one giving the money, you'll notice
something immediately. The biggest
players aren't just using more effort,
they're using better tools. And the most
misunderstood tool of them all is
leverage. Next up is law number three.
Leverage multiplies everything. Let me
give you four examples of how leverage
plays a massive role in our daily lives.
Let's say you bought a house for all
cash for a million and in 3 years that
home went up 10% to $1.1 million. Well,
you got a 10% return on your million.
Yay, good job. But instead, if you
actually got a loan and that loan was
for $800,000 and you put $200,000 down,
it was the same exact house and it grew
by 10%. Now, compared to the $200,000
that you put down, you got a 50%
increase in your return. And that was
only possible because of leverage.
Because leverage multiplies everything.
Leverage actually introduced an entire
industry for us. Private equity is where
investors can invest in companies that
you and I know about, the laundromat,
the restaurant, or the roofing company,
and actually unlock value in the company
for them. So what these investors do is
that they bring cash to buying this
business but own just like you would
buying a house and then they get the
bank to finance the rest of the debt as
leverage and because of that the company
gets to grow and also the founders and
the owners get to take some money off
the table. This entire trillion dollar
industry would not even exist without
the existence of leverage because
leverage multiplies everything. This
also happens in the commercial real
estate world. So if you think about
buying a 20 unit multif family apartment
building there's multiple things that
happen there. The first is you only
probably have to bring a third in equity
or cash to close a deal. The rest can be
used in bank financing, which is
leverage. And there's two amazing things
that happen with it. Number one, because
this is a commercial property and it's a
business, the leverage is based entirely
on the value of the collateral, which is
the building. And you don't even have to
do a personal guarantee to it. But the
most important part of all of this is
you get so many tax advantages for doing
this big a deal. So this leverage not
only unlocks several personal advantages
but it also gives you tax advantages
which is why it is such a active
strategy for many investors. But I will
tell you the one strategy that many
people use that don't realize the
leverage behind it. Let me show you how
billionaires save money on taxes by
using leverage. Take Elon Musk for
example. Elon recently bought Twitter
and instead of just selling all his
equity holdings in Tesla or any other
company and buying Twitter, he borrowed
against his Tesla stock. And when you
borrow against your Tesla stock, your
Tesla stock became the collateral. So
the bank tell him, "Sure, go ahead and
borrow against his Tesla stock because
if you default, we'll just take your
stock." And he was then able to take
billions of dollars of his Tesla stock
and then go and buy Twitter. He was able
to do two things. He was able to
leverage his existing position in Tesla
without kicking off any taxes for
himself and then use that to buy an
asset that was significantly bigger over
time. What you're seeing is examples in
our daily lives of how leverage
multiplies everything. A lot of people
talk about how debt and leverage are
bad, but there is a wrong way to do it
and a right way to do it. I want to give
you four ways to think about how you can
use leverage to multiply everything.
Number one, you have to know that
leverage is the number one economic
growth engine because if leverage
stopped in the world, everything would
stop in the world. Number two, you have
to educate yourself on what kind of risk
is available to you. Number three,
leverage is a game of collateral. When
you get a mortgage, your house is the
collateral. When you borrow against a
stock, your stock is a collateral. When
you're investing in a building, the
building is a collateral. And that makes
the leverage much more manageable. And
number four, since we know that taxes
are the number one drug on wealth
creation, leverage does not provide any
income. And since there's no income,
there are no taxes as well. So, it gives
you a massive tax advantage. But
leverage by itself doesn't make you
wealthy. It just magnifies what you've
already built. Which is why we have to
understand the difference between cash
flow and equity. Law number four, cash
flow keeps you alive and equity makes
you free. Cash flow helps fund your
current lifestyle. It pays your bills,
it pays your house, it pays your car,
and it pays your vacations. It is the
money that you need today. But equity is
the wealth that you create tomorrow. So
you may say, well Chiron, what is the
best way to own equity? Well, the best
way to own equity is to own your
business. But that may not be a strategy
for every one of us. There has to be a
second best way. And the second best way
is to own a piece of someone else's
business. Now, what does that mean?
There's a lot of companies in the world
right now that are publicly traded.
You're talking Amazon, Tesla, Google.
They're all companies you can buy shares
in. So, the job there becomes how can
you use your cash flow to buy a piece of
someone else's company? Because at the
end of the day, you either have to own
your own business and the equity in your
business or you have to own a piece of
someone else's business. Either way, we
need the equity to make you free. Let me
tell you how McDonald's makes all its
money. Most people only think that
McDonald's sells burgers and fries, but
there's a lot more to it. Their burgers
and fry business makes a lot of cash,
but their real wealth comes from a
different part of their business, which
is the royalties that account for $1.6
billion of McDonald's franchises all
around the world. And even more is their
real estate, which accounts for nearly $45
$45
billion. While the cash flow makes you
rich, the equity makes you wealthy.
Here's where most high earners still get
stuck. They chase the stability and they
call it wealth. But real wealth shows up
when you understand that risk and reward
don't scale evenly. Law number five is
that risk and reward are nonlinear. Most
companies that are backed by venture
capital actually never make it. So let's
say you take a venture capital firm and
it's making five investments. It puts
$100,000 each into each of the five
investments. That is the maximum amount
of money it can lose, $500,000. But
let's say the first investments goes to
zero. The second investment goes to
zero. The third investment just breaks
even. The fourth investment goes 10x.
And the fifth investment goes 100x. Just
by these two investments, they recapture
all the profits that is necessary for
the portfolio from a $500,000
investment. So they invest $500,000 and
they make 100x that amount. This is
called portfolio theory where you have
asymmetric riskreward where the risk and
reward are not linear. They are not
betting $500,000 to gain $500,000.
They're betting $500,000 to get 10 to
100x more. It's easy to think that risk
and reward are linear, meaning you put
$100 in and you may only get $100 worth
of return. But we want to be in a game
where you can put $100 in and you can
get $10,000 worth of return. Our job is
to maximize the upside, which is the
reward, and to cap the risk, which is
the downside. That's exactly what they
do in venture capital. That's exactly
what you do with leverage. That's
exactly what you do when you buy a home
with a loan. So, if you hear asymmetric
upside and think go allin, that's how
people blow up. The goal isn't to win
one big time. The goal is to never lose
the game. That brings us to law number
six. Don't bet the empire for a pot of
gold. My friend bet his entire life
savings on one deal and lost everything.
He and his wife had systematically saved
a little over $700,000 in life savings.
And then they got introduced to an oil
and natural gas deal. Every part of the
deal was extremely attractive. It had
tax advantages. It had great return
profile. And his friend was actually
promoting the deal. It was almost a
no-brainer. He took his entire life
savings, almost $700,000, and he
invested it in this deal. As you can
imagine, the deal did not go well. And 2
years later, the entire investment
collapsed. over 15 years of savings
instantly vanished. There's a lesson
here to be learned. It's not about
evaluating the investment or evaluating
the friend that brought it to them or
evaluating what they should have done or
not done differently. It's about sizing
the bet. You don't risk the empire for a
pot of gold. You don't risk 15 plus
years of savings all on one deal. And
that is the sizing investment that we
should learn today. So, if this was your
entire empire, our job is to size our
investments correctly. We need to size
our bets and sizing bets is a very
important part of investing. The best
lesson I learned about sizing bets was
to manage risk because the entire idea
of doing this is to manage risk. I
learned this idea of managing risk from
Ray Dalio and I want to break it down
for you. He talked about risk
and return because every investment has
some risk and every investment has a
return. Let's say you have an investment
that has a risk of 150, which is a
random number, and it gave you a 15%
return. Or you had an investment that
gave you a risk of 100 and a 12% return.
Now, what Ray Dalio says is our job is
to keep this return the same, but reduce
the risk. What if you could then get to
a risk of 80, but still get a 12%
return? Or get to a risk of 70, but
still get to a 12% return? or get to a
risk of 60 and maybe get to 11.5% of
return. This becomes the best
investment. Our job is to figure out how
we can reduce the risk and keep the
return exactly the same. The number one
mistake that people make is that they
try to increase the return without
paying any attention to the risk. The
best of the best, the greatest of the
greats figure out how to reduce the risk
while keeping the return exactly the
same. There are two big learnings here.
Number one, protect the machine that
produces the opportunities, which is
your empire. And number two, swing for
the upside when your downside is capped.
And once you size the bets to survive,
the next protection is really simple.
You diversify only where you don't know.
Law number seven, diversification is a
hedge against ignorance. Wall Street
tells you to spread your money across
everything. But every wealthy person I
know does the exact opposite. Here's
why. Because when you don't understand
something or you don't control
something, then you're just hoping that
it works out. Here's a formula for
investing in companies and it has two
vectors. Number one, risk and the second
is control. When you understand risk and
you have control, it tells you whether
you can concentrate or diversify. So in
this case, when you understand risk and
you have control, you get to put all
your eggs in one basket because you know
everything about the business, which is
your business. But what if you
understand the risk, but you don't have
control. It's Apple or Google or some
other company. That means it's okay, but
you still invest in the business because
you understand the risk. If you don't
understand the risk, but you have
control, you have ownership control,
then it just means you're missing a key
operator. So, all you need to do is get
a key operator in the business. But
last, but not least, if you neither
understand the risk nor you have
control, that's the time where you
actually spread your bets out. That's
the time where you completely diversify.
This is why most entrepreneurs and
investors have their entire net worth in
their business. Take Bill Gates or Elon
Musk. And if you remove their equity
from Microsoft and Tesla, they
dramatically drop in the Forbes 400
list. That's why operators like Elon
Musk or Jeff Bezos or Mark Zuckerberg
understand the risk so deeply in their
business that they don't diversify from
it. They own all their stock and all
their equity because they have the
insider information. They have the
insider plans. Then they have the future
control and influence of the risk to
build and grow their business. Now,
knowing these laws isn't enough. You
have to know how to use them as a system
to make you money. Here are the five
questions to ask before investing in
anything. Number one, can this compound?
Meaning, is this a good long-term
investment? Number two, who has control?
Is it you or someone else? Number three,
what happens if it fails? Do you get
some or all of your money back? Number
four, is the upside meaningful and
larger than the downside? And number
five, do you understand the risks?
Meaning, can you clearly explain how the
business works and what could go wrong?
Now that you understand the laws that
decide whether money compounds or
disappears, the next step is knowing how
to apply them in real decisions. Watch
this next video and I'll show you the
exact decision system that tells you
what to do even when the answer is not obvious.
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