➡ Big companies grow into giants by managing their finances like a business, not a consumer. They focus on structuring capital and balance sheets, not just budgets. This strategy, used by a company called Strategy (formerly MicroStrategy), involves changing the financial architecture of the company to a treasury-based system, leveraging debt to grow wealth. This approach has led to significant growth for Strategy, and the same principles can be applied to personal finances to change the way we manage money.
➡ Inflation reduces the value of money, making life more expensive and savings less effective. However, by understanding how assets and liabilities react differently to inflation, we can strategically manage our finances for long-term advantage. This involves using debt as a tool, not something to be eliminated, and leveraging it to control assets greater than our equity base. This approach, known as wealth arbitrage engineering, can lead to significantly higher returns on investment.
➡ The text discusses the concept of structural arbitrage, which involves using your assets and liabilities to create wealth. It suggests that you can make your assets work for you by leveraging them and using them against each other. For example, you can take out a loan against your home equity and invest it in a product that gives a higher return than the loan interest. This way, you’re making money from an asset that was previously idle. The text emphasizes that you don’t need to be a big corporation to do this; even individuals and small businesses can apply these strategies to increase their wealth.
➡ The text discusses a strategy of investing in MicroStrategy, a company that holds a large amount of Bitcoin, and expecting a significant return in the next few years. The author suggests that this method can help turn idle money into a profitable investment by leveraging the strength of one’s balance sheet. This is one of many strategies taught in the Wealth Operating System, a program designed to help individuals increase their wealth, save on taxes, and manage their money more effectively. The author invites readers to a live event where they can learn more about these strategies.

Billion dollar companies don’t run on budgets, they run on balance sheets. And that one difference explains why they grow into giants, while households doing everything they were told to do, struggle just to keep up. You were trained to manage money like a consumer. Companies, they’re trained to structure capital. Now, you can do the same thing. You may not get the same results, but you can learn to play the same game. And once you see how to play by these rules, you’re never going to look at money the exact same way. So let’s go. We’re going to jump right into this one today because I have an exciting lesson for you.

It’s going to change everything. Teach you how to go from a consumer to a company, run a billion dollar company, but for yourself. Now, to really illustrate this, before we dig into how you can apply this drone situation, let’s use an example. All right, so this is the strategy, and it’s. The strategy is presented by a company called MicroStrategy, formerly MicroStrategy and now they’ve turned the name, change the name to Strategy. And, and Michael Saylor, who runs that, literally has the playbook, the strategy. And he’s been going around to corporation to corporation to corporation, and he’s been teaching people the strategy on how to do it as well.

As you guys already know, you’ve seen my interviews with Michael Saylor. We’ll link to some down below. I’ve got to spend quite a bit of time with him. I’ve figured out how to take his strategy for corporations and apply it to our own personal situation. But let’s just look at how powerful this is, first of all. So now Strategy, which is formerly MicroStrategy, their ticker is MSTR. And this is not a commercial about that. I’m not telling you to buy it. But they were, you know, a software business. They’ve been a digital software business, a SaaS business for a long time.

The problem is that they weren’t really able to compete against the big ones like Microsoft. And so while they were making a good amount of money in 2020, Michael Saylor was stuck. The revenues were flat, the stock wasn’t going up. And he found himself at this crossroads where like, they’re making revenue and it’s enough, but he’s not able to grow the business. He can’t grow the revenue anymore. Maybe like your own personal situation, the stock wasn’t going up and he didn’t know what to do with this money. And so he decided to do something drastic with the company and he decided to Build a financial architecture.

All right. And this is what changed everything. I’m going to break this down for you, but by changing the financial architecture of the company from going from a revenue based, a P and L based company to a Treasury based company. Right. So it’s a bitcoin treasury strategy company. Treasury strategy being the key piece. So when he went from that P and L based to a Treasury based, everything changed. How big did it change? Well, let’s take a look at this. So what we can see since they did that move in 2020, you can see their performance against a bunch of other assets.

MicroStrategy MSTR stock is up 83% and it’s beaten everything else. You have bitcoin way down here, the magnificent seven, the mag seven, 28% gold, S&P 500 real estate money, bonds, et cetera. So it’s been crushing property performance over the last five years because of the shift in the financial architecture that they did. Let’s take a look at a couple other charts real quick now. How does it rank against some of the really big dogs? So this is Bitcoin’s strategies, Bitcoin holdings versus the biggest corporate treasury. So you hear about the big companies, the Mag 7 and how much cash they have sitting on huge stockpiles of cash.

Berkshire Hathaway, Warren Buffett’s company is at the top of the pile right here, 344 billion. We have Amazon, Google, Microsoft, and then here we have strategy right here sitting right here at number five. And just five years ago they were like teetering on the verge of going out of business. And now they find themselves in the top five companies in the world with how big their strategy is. Their stock has been one of the best performing stocks in the S&P 500 because of this strategy. And you can take a look at this robust capital structure. So their enterprise value of strategy is basically a hundred billion dollars, $98 billion.

Their market cap 83 billion. And they have Bitcoin. They have $71 billion of Bitcoin. Also they have debt. We’re going to get into how they do this so you can figure out how to do it for yourself. They have debt, but look how small the debt is. They got 8 billion of debt and 6 billion of debt. So they have 13 or 14 billion dollars of debt against $100 billion of assets. I think we’ll take those loan to values every day of the week and we can take a look and see exactly how they did this.

So they’ve grown to 640,000 bitcoin. They have again, $71 billion of bitcoin. Their acquisition cost, not their debt, but their acquisition cost was 47 billion. So they’re sitting on, you know, roughly $30 billion of profit over their acquisition cost. And again, a lot of it, they use debt, but again, they’re at about $13 billion of debt for $100 billion of enterprise value. So they’ve taken the market cap, and this is a key piece. They’ve taken their market cap. You and I might think of our net worth or our balance sheet from 3.6 billion to 98 billion in five years by switching from a revenue based, P and L based company to a Treasury based company.

And we’re going to break that down for you now. A couple of things we want to understand. First of all, most people, they were, and most of us as people have been playing the wrong game. And a lot of the reasons why we’re playing the wrong game is because the rules changed. One of my favorite stories is of Einstein when he was a professor at college. And every year he’d give out the same test. And one year one of his assistants came up, the teaching assistants came up to him and said, Einstein, you know, kind of sheepishly, I’m not sure if you’re aware, but you gave out the same test that you gave out last year.

And Einstein, Einstein’s like, yeah, so. And the assistant’s like, well, I mean, the students from last year will have the, have the answers and they could share them and people could cheat. And he said, no, the answers changed. Not the questions, the answers changed. And so things change. And so our financial system changed. We went from a debt from a equity based, goal based system to a debt based monetary system. And what schools are teaching you, or lack of teaching you today don’t equip you properly. So the wrong game. Personally, we think about budget. How much income do I have? What are my bills, how much budget do I have left? If I have anything left, maybe I can save a little bit.

I need to work harder because my cost of living keeps getting more and more expensive. I’m not saving enough. I’ll put in overtime. I’ll try to get a side hustle. I’m going to work harder. I’m going to be extremely disciplined. I’m going to skip that coffee in the morning because if I, you know, five bucks a day, then I’ll skip a Starbucks I can put in there. We’re going to do all that and I’m going to try to pay down My debt as quick as possible. Because, you know, all these things are piling up. And if I pay my debt down, I can get my expenses down.

That’s what people are thinking personally. And I get it right, like it’s like, it’s like a drowning tide. The cost of living keeps going up faster than your income is going up. And no amount of budget thinking, no amount of working harder, no amount of discipline saving, and no amount of paying your down, your debt is going to solve that. You’re sort of like in the MicroStrategy 2020 Phase or Pre 2020Phase. On a corporate side, they use the balance sheet. We’re going to break this down for you. Don’t worry. They learned how to apply leverage. They use those balance sheet and the leverage to grow their wealth.

MicroStrategy went from 3.6 billion to a hundred billion. Imagine doing that in your own portfolio. And they did it with leveraging debt. Let’s break all this down so you can see how this plays out. Okay, why this fails though, right? Like I said, the answer’s changed. So everything that we were taught, everything that we learned, like I said, through school, our parents, however we learned it, it’s wrong. And then there’s a few reasons why, number one, and inflation is a structural force. Okay? So why this fails is you have the wrong frame, you have the wrong structure.

All right? It’s not that your intentions are wrong, it’s not that your effort is wrong for sure. Right? You’re working hard, but you have the wrong structure and frame. Inflation is this structural force. Inflation is doing two things simultaneously. One, it is taking the value out. So it’s making our, our life get more expensive, but it’s also creating debasement and it’s also offsetting the discipline. So no matter how much more I work, no matter how much more I skimp on my Starbucks and I save, the debasement is greater than my discipline. The rate of debasement is growing faster than I can save.

And the problem that we run into is we find out that our cash flow, because we’re managing our P and L, right, our budget, I need to make more income, I need more cash flow. Like MicroStrategy was trying to get more cash flow, but they couldn’t, they couldn’t grow against Microsoft. Sort of like you might be in your own personal finances, they couldn’t get enough cash flow. The cash flow is fragile because the cash flow they got was earning less and less and less and less and less all the time. So what they learned is that the position that they take their assets in on their balance sheet, the position that they create is greater than any budget.

Rather than trying to compete, be, be a better competitor against Microsoft to make more money, they just learned how to position their balance sheet better. And we can do the same thing. So we want to stop managing money for short term performance and we want to start to change our structure, start structuring capital for the long term advantage. I’m going to give you some illustrations of ways you can do this. I call it modern wealth alchemy. You would call Michael Saylor a financial engineer, whatever you want to call it, I’ll show you some exact examples of how you can do this on your own.

All right, so in order to really understand how we mobilize our balance sheet, how we change the structure, we have to learn a new term. I call it the balance sheet asymmetry. All right, it’s asymmetric. We have assets and liabilities on our balance sheet, right on your P and L, your assets minus your liabilities. But what you have to understand is that they react different to inflation. The inflation is the structural force that you weren’t taught to manage, but it’s there, it’s powerful, it has power over your life. But the assets and liabilities don’t react the same, they react differently.

That’s the asymmetry. Inflation, as I already told you, crushes your cash flows, your cash flows that you’re bringing in, you’re working harder, trying to get more customers, trying to squeeze more money from your customers. But the inflation is stealing the power, the purchasing power from that cash flow, that’s bad, it reacts differently. But the inflation destroys or decays. I like destroys, destroys my fixed liabilities. So if I have long term debt, right, because the money’s getting worth less and less and less, right now, my payment, let’s say I have a 30 year fixed note. I’m paying 1000 bucks a month.

1000 bucks a month today is one thing, but 1000 bucks a month in 20 years is hardly anything. So the inflation destroys my income and it also destroys my debt. You see how those assets, they work differently. So assets, you have assets and you have liabilities. We have to look at those different on the balance sheet. And then we have to understand the duration of those and, and then we can have the proper structure. I’m going to break all this down for you. But this allows the same person, homeowner A and homeowner B, it allows the same company, micro, microstrategy, or Strategy.

Strategy’s main business model. They still sell the software. They’re not out competing Microsoft, it’s not a better company. They just went from microstrategy to strategy. They started leveraging the treasury strategy. Same person, same company, but to one, wildly different outcomes. Two, wildly different outcomes. Literally, MicroStrategy had $500 million, not a small amount of money. Today they have a hundred billion. Now if you want to learn how these two different people, these two different corporations can actually build out these separate paths, I’m going to have a live event for this. I’ll be live right from this stage.

I’m going to give you dozens of ideas and practical applications of ways that you can keep more of your income and you can get it growing faster than you’ve ever imagined through wealth arbitrage engineering. I’ll put a link down below here. I’ll put a QR code on the screen if you want to come check it out. You don’t want to miss it. I do it one time per year, but let’s just keep going on this video. I know you’re not going to like this, but most of us think that debt is bad. Debt’s bad. Debt, debt’s dangerous.

I’m going to pay my debt as quick as I can. I’m going to try my, try and pay my mortgage off faster. If I, if I put two extra payments a year, I can pay my mortgage off sooner, right? Pay off my credit cards, all those things. But we have to understand that debt is not bad and it’s not necessarily good either. Debt is a tool. That’s it. It’s not good or bad. Debt is a tool. And it comes down to how do we use the debt, how do we use the tool? Now back to the answers have changed because today we live in a debt based monetary system.

Let me write that here. Debt based, that means that money is created through debt. When you get a house, a car, a boat loan, that money is created out of thin air, meaning that the money, the dollars that you’re given is the liability and the debt becomes the asset. The debt is the asset and is collateral for more debt. So if we’re in a debt based monetary system, then the way to build wealth is with debt. And you can try to save your way to wealth, but you have the structural problem of inflation. So we have to understand that debt is a tool.

And just like any tool, it can be misused, it can be dangerous. For example, a knife, a knife is very dangerous. Like you could cut yourself you could kill somebody, you could really hurt yourself, which is why you don’t let little kids play with sharp knives. They don’t really know how to handle it properly and they could really do harm. As you get older and become an adult, you learn how to manage the knife. Once in a while we might still cut ourselves a little bit while we’re in the kitchen or something like that, right? But we’ve learned how to manage it good enough, so it’s not catastrophic for us.

So we learn to use the tool. Debt is a tool. Now, personally, most people are thinking about eliminating debt, right? So I’m looking at my budget. Every month I’m trying to pay off my debt as quick as I can. My goal is to be debt free. There’s a whole rabbit hole. I can go down on that. But companies, companies aren’t trying to do that. Companies have debt. All the mag seven those companies. I showed you the top the all the companies that have more cash than MicroStrategy, they also have billions of dollars of debt. Why? Because they engineer wealth with debt.

Again, this is the difference of the average consumer versus a company. All right, so reframe your brain around that. Now, leverage is what redefines our ability to restructure our balance sheet and engineer this wealth leverage. We can talk about this from a bunch of ways, but in this context, the institutional definition is the ability to control assets greater than the equity base that I have. I only have $100,000, but I could probably go control a million dollar property with a hundred thousand dollars. My Equity base is 100k, but I can control a million dollar asset. That’s leverage.

Now why does that matter? Well, if I pay cash for 100k property and it goes up, let’s say 10%, that means it’s now 110k. I made 10. If the same million dollar asset goes up by 10%, that’s 100k. Now which is greater, 100k or 10k? But what’s even greater is the 100k on 100k investment. That’s a hundred percent return versus this person got a 10% return. Which is better, a 10% return or 100% return? You’re starting to get it. Okay, we’re just scratching the surface. Stick with me here. So all companies are leveraged. They’re all leveraged.

And it’s not bad. And it’s not because they don’t have $300 billion in the bank. Even though they have $300 billion in the bank, they still might have billions of Dollars of debt because they’re using it for leverage. You have to understand that fragility is the risk here. It’s not the leverage that’s the risk. The fragility of not being able to manage it properly, not be able to manage the knife properly. So rather than saying I’ll never use a no, just learn how to use the knife. Learn how to put in protection measures into the knife so we don’t cut ourselves.

Instead of not going in the pool, just take swimming lessons or wear a life jacket. Right? Okay, now, in order to take this to the next step, I’m going to show you some examples of how you can do this. But I need to lay down the framework and the groundwork for you. Okay? Structural arbitrage. My goal is to teach you the strategies, the principles. There’s thousands of ways that you can apply these principles. And once you start to understand it, you’re going to see opportunities everywhere and you’ll be able to create money almost out of thin air.

Financial engineering like what Saylor’s done, you’ll be able to do that. So I’m teach you the strategies, teach you the structure, teach you the principles. So now we want to understand arbitrage and we want to understand the structural arbitrage. Okay? So in this wealth engineering that we’re doing, trying to engineer our balance sheet, we want to understand the structure. And we have to understand that arbitrage isn’t the price of things that we pay. Arbitrage is not the value of our assets. Arbitrage is the structure that we create for our assets to move in so we can benefit between them.

All right? So we have to realize that parts of our balance sheet, so all the different things, the buildings or the equipment or the whatever that you own on your balance sheet, they behave different. Different things are different. And the reason why is some debt might be fixed, so 30 year fixed loans, some might be floating. You know, a credit card adjusts monthly. For example, cars are five or six or seven years, right? We have short dur duration versus long duration assets and loans and leverage assets adjust versus fixed liabilities. And so we have to understand that we have different assets, they work differently.

A lot of times we can organize them to work differently, but we can get them to work against each other. What we want to do is we want to think about our balance sheet as liquid. So again, a balance sheet, right? You’d have all your assets, your house, your business, your office space, your car, your, you know, equipment that you have, etc. So this is your assets. And then down here you have your liabilities. And now I have my house loan, my office loan, my car loan. And then down here you have your net worth. But what I want to do is I want to think about all these things here as liquid.

I’m able to mobilize them, I’m able to move them, I’m able to leverage them, because the idle balance sheet decay. What do I mean by that? Well, for example, one of this items on my balance sheet is my 401k, let’s say. So I have this month. This is in my 401k, it’s in a mutual fund, and it’s making me whatever, 8% a year, okay? So even though that asset is there and it’s making the 8%, it’s decaying, it’s losing value. And so that’s what happens when assets sit idle on our balance sheet. We have to learn how to mobilize them to get greater than the rate of debasement, as we talked about earlier.

Now, cash is the fuel that allows us to do this. So when we start adding in the leverage, we start adding in the arbitrage, the cash is able to help offset that. But the cash is the fuel to the system. It’s not the safety in the system. Because as we talked about earlier, the cash is also being destroyed by the structural inflation that we have in the system. Now here, intent matters more than the size. So you don’t have to think that I have to go be as big as MicroStrategy. You can just start really small.

And I’ll give you some examples. Actually, I’ll give you one that you could probably do. Most people could probably do right away. But real quickly, here’s how we would apply. Apply this if we’re a personal, like a homeowner or consumer or if we’re a business. So, number one, if you’re a person, you know, you probably see what Saylor has done with MicroStrategy and you thought like, well, that’s cool that he was able to turn 3.6 billion into a hundred billion. But I can’t do that. I mean, I don’t have a public company. I can’t go tap into the public equity markets and the public debt markets, okay, you probably can’t.

If you don’t have a corporation or, I’m sorry, a publicly traded corporation, then you probably can’t tap into the public credit deb markets, but you can still get debt, you can still get credit, you still have equity. So what do I mean by that? So personally you have a balance sheet, right? I mean, at least you should a home, a car, a business, right? Some sort of assets of stocks, right? So you have something on your balance sheet and if not, start working on that first. Secondly, you should have credit available to you. If your credit’s bad, clean it up.

Go on ChatGPT, figure out how to clean up your credit, start applying for credit cards, go down to your bank, apply for a personal line of credit, Start applying for credit cards. I know a lot of people who are getting 100,000, sometimes $200,000 credit cards with like 0% APR for 12 months and then you can just like roll the balance. And then again you may have equity. So maybe you have a home with some equity in it, a car with some equity in it. So you have both credit and equity available to you. Now that’s if you’re just a consumer, personal, you know, personal, et cetera.

If you’re a business, you have the same three. So you also have balance sheet, credit lines and equities, both personally and on a business standpoint. But now you also probably have business financing available to you. So now through your bank you can probably get like business lines of credit. Also you business equity as well. So even if you have a small entrepreneurial, you know, solopreneur type business, sometimes you can sell equity to a private investor. You have a million dollar business. Sell 30% for 300 grand, bring the 300 grand forward. That’s what Michael Saylor is doing with MicroStrategy when he sells the common stock, the MSTR stock into the market.

Now you might say, well, but I can’t get it near as cheap as he can. I’m going to pay way more on my credit line, on my credit card, et cetera. Well, one of the ways that he’s raising money right now is through selling the preferreds, Strike, Strife, Stride and Stretch. So you buy Stretch and he gives you a coupon payment. So for example, Stretch is paying about 10.75%. I think Stryfe is about 12, 12 and a half percent. So I’m pretty sure you could probably get credit for less than 12%, which is what he’s paying.

Those are ways that you can do that. But let’s break down an actual example so you can see how this works. So again, I’m teaching you the, the principles, I’m teaching the strategy. You can apply this a thousand different ways, but here’s one that most people could probably take advantage of. So let’s say that I have a home. And for easy numbers, let’s say that I, I owe 100,000 on it, but it’s worth 200,000. So I have 100,000 of equity. Okay, now you might say, but Mark, I don’t have a home. Okay, well, then figure out another way to get equity.

Like I said, go apply for some credit cards, go to your bank, get a loan against your car. Like, figure it, figure it out. But you’re going to need some equity. Okay, so I’m pulling out equity. I can get a home equity line of credit. I can refinance my house. And I’m going to take this money that’s sitting here. It’s in the house. It’s on my balance sheet. Right? It’s on my balance sheet, but it’s decaying because it’s not keeping up with the rate of debasement. So I can unlock what I call lazy because it’s not working very hard or dormant capital.

So I take the 100,000 and I bring it over here. What do I do with it? I’m probably going to pay, you know, I don’t know, 7 or 8% interest on that. So now I’ve taken 100 grand, but I owe 7 or 8%. What am I going to do? How am I going to afford the 7 or 8%? Let’s engineer that. Okay, so what if I took the 100K and I put it into a product like MicroStrategy has STRK, and that’s paying me about 9.5%. Well, now I have about a 1.5%, what we call positive carry.

That means I’m actually getting paid for taking money out of here and holding it here. But it gets even better because this can be, if you set it up properly, tax deductible. And this is also tax deferred, which means instead of 1.5, I’m probably making closer to 4% for sitting on that 4% money that was just sitting there doing nothing. Now I’m making 4%. But it gets better because what strike does is it’s convertible to shares of MSTR once it gets to $1,000 a share. So if, if it gets over that, then it converts up. So not only am I getting 4% for waiting, I have the potential upside.

What does that mean? Well, Currently, let’s say MicroStrategy has 650,000 Bitcoin. They’ll probably have a million by 2030 in the next four or five years. Bitcoin is probably going to hit a million in the next Four to six years. So a million Bitcoin at a million dollars is a trillion dollars. Let’s say right now they’re at a 1.1 times M nav. I know this is a lot of lingo for you, meaning they’re trading a little bit more than their net asset valuation. But historically it should be around 2. But let’s just say it gets back to like 1.25.

All right, so that’s a 0.25 multiplication multiple on their net asset value. That would put it at one share of MicroStrategy, around $3,000, $3,100. I’m getting paid 4% for doing nothing, just for making a couple moves. And then in four or five years this could turn. You know, I’m buying stock and it’s going up big time. I have this big capital gains now. Don’t get caught up in the weeds on this. This is just one strategy where I can unlock dormant capital, lazy capital, doing one job, decaying on my balance sheet. I can leverage my balance sheet.

So hey, look at the bank. I have these assets. They’ll give you credit because of the strength of your balance sheet. Then I can apply it, make a positive arbitrage and then I can apply in something that provides the positive arbitrage and gives me more upside. So in four or five years, maybe I have enough to retire. Depends on all of these functions here, but hopefully you understand that now. This is one of like dozens of strategies that I teach inside the Wealth Operating Systems. The Wealth Operating system is all about wealth engineering. How do we create these environments to keep more of our income by tax deferral or, you know, tax savings? And then how do we multiply faster getting our money to one job, two jobs, three jobs.

If you’d like to learn dozens more strategies just like this, I’m going to have a live event for three days right from this stage right here called the Wealth Operating System Accelerator Live event. I’ll put a link to it down below. Put a QR code on the screen right here. It’s January 7th. I’m going to teach you how to save more time, how to multiply your wealth faster than ever. Save money on taxes so you can multiply it even faster without having to make more money, work harder, all those things. You don’t want to miss it.

I’m only doing it one time per year and it’s going to be live right here from this stage. I’ll put a link down below. Hopefully I’ll see you there. But let me know what you think about this. Can you run your portfolio or your balance sheet like a billion dollar corporation? Yes or no? Drop in the comments down below. As always say at the end to your success, I’m out.
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See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.