It Is Starting At Blackstone

Hey, everybody. Economic ninja here. I hope you’re doing well. I’ve got great news. And why is it great news? It’s because it’s bad news for Blackstone. You know, I’ve talked about this a long time ago. I said, there will be a day where the big funds that bought up real estate and all these assets all around the world will actually fail. They’ll start to become sellers of those assets.

Many people laughed at me, and just now, we saw something happen. Now, there have been things happening at Blackstone for a little bit of time, where I reported they handed back one of their flagship properties, a CMBS default, if you will. They didn’t own it, but they handed it back. Right. It was the non performing asset for them. It was an empty office building. I want to say it was in Manhattan.

I’m totally blanking out right now. Off the top of my mind, there’s a story I want to talk about, and I want to give you some hope, because as you talk about doom and gloom. Excuse me, all this doom and gloom, that’s the first time I’ve sneezed online on a video. It’s funny. Things are happening, but they always have to start somewhere. I’ve done videos about how in 2006, the New York Post had reported how real estate New York had just fallen for the first time in, like 20 years.

Back in 2006, it was like, oh, my gosh, it was such a shock, and it dropped, like, 1%, and they’re like, this never happens. But that’s where it started. And they got worse and worse and worse going into the great financial crisis. So check this out. Blackstone’s flagship breed records worst annual performance since inception. This is out of zero hedge. The Blackstone Real Estate income Trust, or breed, recorded its lowest annual return since its inception in 2017, with a half a percent loss in 2023.

Now, again, you got to start somewhere, right? But you have to realize that rents are falling across the nation. It shows it all across the nation, there are more and more properties, homes being built, they’re being finished, more apartment buildings around the country, as a matter of fact, at a pretty alarming rate. Apartment complexes are finishing, and you are seeing signs in metropolitan areas for rent, move in specials, and we’re already seeing the median price of the homes dropping.

You have to go through the Fed. They’re showing you that other statistic companies have not, like, statista has not even came up with their final 2023 numbers. But the Fed out of St. Louis shows that the median home prices dropped right on a much more impressive percentage than the median home price dropping through the great financial crisis, mind you. Okay, so you have to start somewhere. And this is the big boy that everyone says can’t fail.

All right. All right. It says here, this shows that Blackstone’s flagship real estate trust for high net wealth investors was not immune to the Federal Reserve’s interest rate hiking cycle and a commercial real estate downturn. This is exactly what I’ve been talking about forever. And I’m not sitting there going, hey, look, I was right. I’m trying to give you hope because there’s a turn coming. I’m seeing foreclosures popping up all around a city that I’m looking at buying in right now.

It’s going to get good. The wave of foreclosures hits around June because of how long foreclosures take now because of DoD, Frank, it’s a totally different game. There were foreclosures passing through recently in the last couple of years, little by little, even though the shutdown gave a lot of opportunities to people not to lose their homes, but those filtered through. But the big wave starts in June. It’s not going to all be in June.

It starts in June. Okay. And there’s also, just so you know, in December, we saw another uptick in, they say, severely past due. It’s 30 days or more. Right? Had an uptick that we haven’t seen since May. So those are already starting again. And I can’t wait to see January. If that same number translates into January, we got ourselves another great wave coming of foreclosures. Okay, so it says here, in a recent shareholder update, Blackstone told investors, we built Bret the real estate investment trust as an all weather strategy designed to build long term wealth across market cycles.

We are pleased that Bret has delivered an 11% annualized return since inception seven years ago. Nonetheless, the past year’s sharp increase in interest rates, regional bank meltdowns, and a downturn in the commercial real estate market have ended that era. It’s so funny. Think about this every once in a while. You get 100 good comments and you dwell on the one negative. That’s just life. I don’t dwell on it because it hurts my feelings.

I know what’s really happening in the markets here. It doesn’t take a Harvard grad to figure it out, but sometimes it takes a Harvard grad, I guess, to listen or I just don’t know how that part works. I got a bunch of people that are just full of themselves, I guess, around America, and they sit there and they say you’re a doom and gloomer. This is the biggest fund.

Like the most powerful one out there, right? The company out there, Blackstone talking. They said we had regional bank meltdowns. That’s their word. That’s doom and gloom, right? It’s because it’s bad. It was really bad, and it’s actually going to get worse. They’re not going to tell you that. Why? Because their investors would pull their funds. So it’s bad. And so it says right here, that shift, they say, led to a slight loss of half a percent last year following returns of 8.

4% in 2022 and over 30% in 2021. Those are fairytale numbers, I might add, because no fund can sit there and go, yeah, we do this all the time. When the nation shuts down, you’re forced to go inside, you’re given stimulus money, and all the banks are given free money, like literally 0%. This happens all the time. No, it doesn’t. Those are fairytale returns. But yet stock investors, just like during the great run up to the crash of 29, what we saw in the.

com era, just run up to the bust of the. com bust and then the same thing in the great financial crisis, or even all the shareholders that were at a peak in 19, what, 80, when everything was going great, then there’s all these peaks, but yet they just forget the simple term. The bulls climb upstairs and bears jump out a window, meaning that the fall happens all of a sudden, really quick.

Right. Because of fear. And so you have to start somewhere. And that’s what’s happening with Blackstone right now. They’re taking a hit. I did a story a week ago. You have one of the largest pension funds in the nation. This is insane. And of course, it’s not getting a lot of play because I don’t think they want. People just don’t want the truth out there. They want to sell you a bunch of stuff.

I got a story about Goldman Sachs. I can’t find it right now. I’ll find it and do it in another video, probably tomorrow. All last year, where they’re telling you to buy, they were selling their shares. I told you this was going to happen. And again, this isn’t like, oh, look at me, I ain’t that bright. And just, I barely made it through high school. I’m an investor.

These are logical signs that you can see and you can point towards and go, yep, I see the trajectory. I see which path we’re on. I don’t know exactly when we’re going to get there. But the path is clear. It’s going to be awesome. It’s straight, narrow road. Everyone else is trying to traverse. All this crap. They were selling crap to you. Just like Jamie Dimon selling his stock.

Warren Buffett selling his stock. All the successful people are selling now. Do I have stock? Yeah, my portfolio is up 100% since September. I don’t. And I’m just in mining stocks. Yeah, I think 100% resource stocks. But I’m pulling money out. I’ve been selling, too. I’ve been a seller of stocks. I remember as I make 100%, I pull money off the table. So my whole thing is, I’ve been talking about this real estate crash.

We’re seeing price drops everywhere. We’re seeing days on market extend. We’re seeing inventory start to balloon and wait till spring, because that’s when you start to see inventory pick up. Right. We always see a natural contraction in real estate during these months, the November, December, January, February. And then we see an expansion. So I’m already seeing days on market getting big. I’m already seeing, I just look at the last seven days on realtor.

com in certain regions I look at and I’m like, oh, man, we got some really cool stuff. Things are going pending fast. But again, I always like to ask realtors, I’m like, are those ones that are going pending? Are these sort of panic buyers? And nine times out of ten, they are. They’re like, yeah, they saw a dip in the real interest rates. Boom. They dove in. Check this out.

Breath’s performance has also severely lagged behind 26% of returns of the S and P 500. The fund’s net asset value is around 62 billion. So one of the largest reits out there. Right. Meanwhile, Blackstone has limited investor redemption requests for more than a year. Now, remember when they had redemption requests a while back and they said, we’re not going to let you redeem your money? That was sort of a panic.

Right. Well, they’ve had limited investor redemption. So now that it’s went negative, I’m curious how many of these, because these are wealthy individuals, right. You have to be accredited to be able to buy into this. This is why I got accredited when I was 26. I wanted to be able to buy things that most people couldn’t buy. Right. And that’s why I want you to become accredited. And the easiest way to become accredited is through real estate.

I’ll be able to show everyone that as this downturn happens, we start picking up real estate it’s really cool to be able to buy stocks before they hit the market. You want to make money, that’s what you need to be shooting for. So you got to figure out, how do I get to a million dollars in net worth or make my yearly income certain amount for a few years so that I can become an accredited investor? Because those are the kind of opportunities you want to be looking for.

This is how the rich make a lot of money. So it says that it has returned 14. 3 billion of investor cash since November 30 of 2022, according to a shareholder letter earlier this month. The good news is that a backlog in redemption requests has been easing recently. You guys know, I never read these stories ahead of time. So there I was, proved right, because a while back they had a backlog of those requests.

And what it was, was not only was there a run on the bank going on, there were a run on some of these funds. And as interest rates go up, most savvy investors know the end game is that real estate tanks if rates stay higher for longer. And that is exactly the verbiage, the actual words that come out of Jerome Powell’s mouth. So I think people need to understand they’re not joking around.

They want to hold it. Maximum pain, maximum pain. Everything crashes and boom. And I want people to understand that by the time they start to lower rates, it’s too late. Everything’s happened. Recession follows, usually on average one quarter after the Fed starts lowering rates. Why? Because GDP has already went negative for one quarter. Okay. Bloomberg noted that Blackstone has enlisted realist interest rate hedges to mitigate the pain from soaring borrowing costs.

The firm said in a memo that even if there might be some immediate sting, sustained lower rates will lift real estate values across fund portfolio. Isn’t that really cool how they say that? Because they were trying to keep you on the hook, because they want you to stay in their fund and not liquidate. But here’s the deal. The Fed keeps saying we’re going to stay higher for longer.

They’re going to crush this economy. They may even dip just a little bit this year, which I believe is going to be politically driven. It’s a trap. I teach my students this, how to use history to show when a sustained interest rate lowering cycle is happening, as opposed to a fake out, because there’s been four fake outs since 72. And I can’t wait to watch that because I believe it’s going to happen.

And I have people that comment all the time. Like you said, it’s going up now. It’s going to go down and it’s like, look, you need to put on your thinking cap, maybe act your age or settle down and stay quiet for a second and listen. This is what I tell some people. The long term trajectory of rates is going much higher because we’ve lost control of the dollar.

Please understand that. But interest rates don’t just go straight up. They do like a house price. They do this on a term, a long term, or they go long term trend downwards. We’re on a long term trend upwards. So make sure your real estate agent understands these things because the way that they market stuff to you, are they marketing right now, properties just because they need money, because they’re not getting any sales? Or are they looking out for your best interest long term? I know a lot of real estate agents are part of an engineeration that see this, they understand it.

They’ve taken the courses, the lessons, they call me, or they’ve contacted me and said it’s a game changer. As a matter of fact, I went to go put in an offer a year ago on a property I was going to turn into a mini farm and I was going to make more money in write offs, tax savings and write offs than it would cost me on the mortgage payments each year for the next four years.

And the selling agent was a student of mine and so it was really cool to meet her in person. Even she was blown away. So why are you buying this place? I told her really quick why I was doing it. She goes, oh, my gosh, it’s smart. But most people don’t think like that. Most people don’t. Buyers don’t think like investors. I don’t care what the price the property is going to go to.

I did the same thing in the top of 2005. I’ve said this many times, I bought at the top and I knew it was going to fall by 50%, fell by 46%. These are good times. These are exciting times. Hey, and to everyone else that has done that, search on YouTube. What is it? That if you search on YouTube, this will make you rich channel. You guys can do me a favor and hashtag, this will make you rich.

And then hashtag, this will make you rich channel below. It’s growing insanely fast. Those guys over there have only put out five videos. They’re going to put out a bunch this weekend. They’re really basic right now, but in the next 30 days you’re going to see some stuff that they’re going to start teaching very high level things that are going to lead you to becoming rich because you are going to learn things about economics that isn’t taught, even on YouTube.

So go check it out, please. Thank you so much for checking that out, hitting the subscribe button, watching a couple of videos. Even if you’re completely out of debt, we are going to help a ton of people not only get out of debt, but in 365 days from now, those people are not only going to be out of debt, they’re going to be talking like they came out of a Harvard econ class.

Hope you got something out of this. Thank you so much for watching. The economic ninja is going over the real estate ninja, so check him out, too, over there. That guy got a great hair. See you guys. .