Wealth Formula Podcast

For most high-income professionals, the path to financial success seems straightforward: work hard, earn a great income, save diligently, and invest wisely. The problem is that even the highest-paying jobs have two significant limitations. First, much of what you earn is exposed to taxation. While there are certainly strategies to reduce your tax burden, there is a reason many of the wealthiest people in the world own businesses rather than simply collect paychecks. Business ownership creates opportunities for tax efficiency that are often unavailable to employees. Second, a job—even a very lucrative one—is generally not an asset you can sell. You may earn hundreds of thousands or even millions of dollars per year, but when you stop working, the income stops too. A successful business, on the other hand, can generate ongoing cash flow while simultaneously building enterprise value. Over time, that value may become one of your most important assets and, ultimately, something you can sell for a substantial payout. Now, this is not a call to quit your day job and become an entrepreneur overnight. In fact, for many of us, the better question is whether there are opportunities to acquire an existing business rather than build one from scratch. Every day, thousands of profitable small and mid-sized businesses are owned by operators approaching retirement who may not have a succession plan. In many cases, these businesses can be acquired with financing, professional management, and a thoughtful growth strategy. This week's guest, Joe Prencipe, helps us understand exactly how that world works. Joe is an attorney who specializes in business acquisitions, sales, and deal structuring. In this episode, we discuss what makes a business valuable, how buyers and sellers often leave money on the table through poor planning, and why deal structure, taxes, financing, and operational realities frequently matter far more than the headline purchase price. We also discuss practical issues such as SBA financing, seller financing, valuation multiples, how to evaluate acquisition opportunities, and what characteristics make a business easier to grow and ultimately sell. Whether you already own a successful practice or business, are considering acquiring one, or simply want to understand why business ownership remains one of the most powerful wealth-building tools available, I think you'll find this conversation particularly valuable.

This week, you're going to start hearing a familiar narrative again… "Inflation is back." And on the surface, it's going to look true. The next CPI print is very likely to come in hotter than expected. We're already seeing it in real-time data like Truflation. Energy prices have surged, and because energy feeds directly into headline CPI, it's going to push that number up—fast. But here's the problem… That's not the whole story. Energy is notoriously volatile, which is why the Fed focuses more on core inflation—stripping out food and energy. But even core isn't immune here. Petroleum touches nearly everything in the economy—transportation, manufacturing, packaging—so some of that pressure will bleed through. So yes, in the short term, inflation is going to look worse. But step back for a second. This spike is being driven largely by geopolitical tension—specifically the situation with Iran. And unlike past conflicts, this is not shaping up to be a multi-year war like Iraq or Afghanistan. In fact, the current administration is already signaling that this could be resolved relatively quickly. Whether it's weeks or a few months, the key point is this: This is a temporary shock, not a structural shift. And when that shock fades, energy prices will likely come back down… bringing headline inflation with it. Meanwhile, underneath the surface, something very different is happening. Core inflation—particularly housing—is already decelerating. Housing makes up roughly 30% of CPI, and here's the kicker: The way it's measured is lagged by about six months. In other words, the official data you're seeing today is reflecting what rents were doing half a year ago. But in the real world, rents have already been cooling. That's why the most important question right now isn't: "What does CPI say?" It's: "What's actually happening in real time?" That's exactly what we explore in this week's episode of Wealth Formula Podcast. Our guest, Edward Coulson, is one of the leading experts in housing data. He uses alternative models that track real-time rental trends—and more importantly, he's been consistently ahead of the curve in predicting the direction of core inflation. Even before this recent energy spike, his data has been showing a clear trend: Inflation has been overstated—and it's been slowing for months. So while the headlines may soon scream "inflation is back," the reality may be the opposite. This is one of those moments where understanding the components of inflation—and the timing behind them—matters more than ever. Listen to this week's Wealth Formula Podcast to get the full picture. Because if you're making decisions based only on headline numbers, you're likely to get this one completely wrong.

If you spend enough time listening to economists, you'll notice something interesting. They rarely agree. Over the years on the Wealth Formula Podcast, I've interviewed economists from across the spectrum—Keynesians, Austrians, monetarists, market practitioners, academics. Some are bullish about the next decade. Others are extremely pessimistic. But there's one thing that almost all of them have agreed on in private conversations. The entire economic outlook changes if artificial intelligence dramatically boosts productivity. And that possibility is no longer theoretical. The Latest Jobs Report Was Weak Last week's employment report came in significantly weaker than expected. Instead of adding jobs, the U.S. economy lost about 92,000 jobs in February, when economists had expected modest growth. The unemployment rate ticked up to 4.4%, and several sectors showed surprising weakness. Even healthcare, which has been one of the most reliable job creators in the entire economy for years, actually lost roughly 28,000 jobs last month. There are explanations floating around for this. Some point to strikes and temporary disruptions. Others point to geopolitical issues or policy changes. But there's a bigger question worth asking: Is this the very early sign of something structural? In other words—are we already starting to see the early effects of AI-driven productivity changes? The Wild Card That Changes Everything Every economic model—every single one—is based on assumptions about productivity. If productivity grows slowly, you get one set of outcomes. If productivity suddenly accelerates dramatically, you get something entirely different: • Faster economic growth • Lower production costs • Strong deflationary pressures • Potential disruption to labor markets And that's exactly what AI could bring. Some economists believe the next decade could look sluggish because of demographics and debt. Others think inflation and fiscal pressures will dominate. But almost all of them admit the same thing: If AI dramatically increases productivity, their forecasts could be completely wrong. The Fed's Risk There's another implication here that matters for investors. If AI is already starting to push productivity higher and costs lower, the Federal Reserve could easily misread the signals—just like they did during the inflation surge a few years ago. Central banks tend to react to data after the fact.Technology moves much faster. If policymakers underestimate the economic impact of AI, they could once again find themselves behind the curve. Fortunately, it appears increasingly likely that Kevin Warsh may become the next Federal Reserve chair, and he is widely viewed as someone who takes technological change and productivity dynamics seriously. That could matter a lot. This Week's Episode This week on the Wealth Formula Podcast, I interview another economist—one who leans heavily toward the Austrian school of economics. On many issues, his outlook is quite skeptical about the future of monetary policy and debt. But what was fascinating is how the conversation evolved toward the end. Even he acknowledged that his entire outlook depends on what happens with AI. In other words, even the skeptics recognize that this technology could fundamentally reshape the economy. And if that happens, many of the assumptions investors rely on today will need to be reconsidered. Listen to the full episode now. The only forecasts that matter right now are the ones that understand how profoundly AI could change the economic landscape. And that story is just beginning.

There is one truth that has followed every major technological revolution in human history. Energy demand always rises to meet technological capability. When we industrialized, coal consumption exploded. When we built the modern transportation system, oil demand reshaped global geopolitics. When we entered the digital age, electricity quietly became the backbone of the global economy. And now we are entering the AI era. What most people don't appreciate is that AI is not just a software revolution. It is an electricity revolution. Training a single advanced AI model can consume as much electricity as tens of thousands of homes use in an entire year. And once trained, these models continue to run inside data centers filled with specialized hardware operating 24 hours a day. A single large AI data center can require over 1 gigawatt of power. To put that into perspective, that's enough electricity to power roughly 700,000 homes. One building consuming the equivalent of a major city. Now consider that companies like Microsoft, Google, Meta, and Amazon are planning dozens of these facilities. Suddenly, you begin to see the scale of what's happening. Even individual AI queries consume more power than traditional computing tasks meaningfully. One estimate suggests an AI query can use roughly 10 times the electricity of a traditional search query. That difference seems trivial until you multiply it by billions of interactions per day. This is why, for the first time in decades, electricity demand in the United States is accelerating again. For nearly 20 years, electricity demand was relatively flat. Efficiency gains offset economic growth. But AI, electrification of transportation, and domestic manufacturing are reversing that trend. And here's where the story becomes even more interesting. China understands this. China is building power infrastructure at a pace that is difficult to comprehend. They are adding entire national-scale power capacity every few years. In 2023 alone, China added more new coal power capacity than the rest of the world combined. At the same time, they are installing solar and wind at record rates, becoming the global leader in renewable deployment. They are not choosing one energy source. They are choosing all of them. Because they understand that energy availability determines technological leadership. Meanwhile, in the United States, building new power plants and transmission infrastructure can take a decade or more due to regulatory hurdles, permitting delays, and political resistance. This creates a very real risk. The country that can generate the most reliable, scalable energy will have a structural advantage in AI, manufacturing, and economic growth. Energy is becoming the limiting factor. And whenever something becomes a bottleneck, investment opportunities emerge. We are entering a period where trillions of dollars will be spent on power generation, grid modernization, nuclear energy, solar, battery storage, geothermal, and technologies that most people have never even heard of. Some of the biggest fortunes of the next decade will likely be tied directly or indirectly to solving this energy constraint. In today's episode, we explore alternative energy sources, the challenges we face, and the technologies that may power the future. Because understanding energy is no longer optional if you want to understand where the world is going. And as investors, those who see these shifts early have the opportunity to position themselves ahead of the crowd.

At some point in a successful career, taxes quietly become your largest expense. Not housing. Not lifestyle. Not investing losses. Taxes. And unlike most expenses, they grow automatically as your income rises — unless you deliberately structure around them. You know that my favorite means of tax mitigation is through investing in real assets like real estate and operating businesses. That approach has been the backbone of my own strategy for years — taking active income and redirecting it into assets that generate cash flow while providing meaningful tax advantages. I've also recently explained how you can use Wealth Accelerator in conjunction with charitable pledges to potentially create a future stream of retirement income — essentially at no net cost — while also establishing a death benefit. It's a powerful framework when structured properly. That said, there are also more traditional tools in the tax code that are important to understand. They may not be flashy, but when layered together they can meaningfully reduce lifetime tax burden. I wanted to put together a simple overview — not exhaustive — just a practical framework for thinking about what's available. Let's start with the basics. A Roth IRA remains one of the most elegant structures in the tax system. You contribute after-tax dollars, but the growth is tax-free, and withdrawals are tax-free. That's incredibly powerful compounding over decades. The challenge is that most high earners exceed the income limits for direct contributions. Fortunately, the tax code provides a workaround. The Backdoor Roth is simply the process of contributing to a non-deductible traditional IRA and then converting those funds into Roth status. It's not massive in annual dollar amount, but over a long horizon it's meaningful — especially when tax-free growth is involved. For those with access through certain employer retirement plans, the opportunity expands further through what's commonly called the Mega Backdoor Roth. Some plans allow substantial after-tax contributions followed by immediate conversion into Roth treatment. Instead of moving a few thousand dollars per year into tax-free territory, you may be able to move tens of thousands. It's one of the most underutilized opportunities I see among high earners. From there, we move into more aggressive tax mitigation territory with Defined Benefit or Cash Balance plans. These structures were designed for business owners and high-income professionals and allow very large deductible contributions — often well into six figures annually, depending on age and income profile. They require actuarial design and administration, so they aren't simple, but they can significantly reduce taxable income during peak earning years while accelerating retirement accumulation. Many people assume pensions are relics of another era, but in reality, they've evolved. Structured properly, modern private plan approaches can create predictable future income streams while providing current tax advantages. For the right profile, this dimension of planning is often overlooked. Finally, charitable strategies sit at the intersection of planning and purpose. Whether through donor-advised funds, charitable remainder trusts, gifting appreciated assets, or more advanced leveraged structures, thoughtful design can reduce current taxes, avoid capital gains, support meaningful causes, and improve estate outcomes. In some cases, the real economic cost of giving is far lower than most people expect once tax effects are considered. The big picture is this: No single strategy solves the tax problem. But when retirement positioning, Roth strategies, defined benefit structures, charitable planning, and real asset investing are layered together, they form a system — one that can materially change long-term wealth outcomes. High earners don't just earn more. They structure more. This week's episode of Wealth Formula Podcast reviews these concepts in detail with an expert in the field.

This week's episode of Wealth Formula features an interview with Claudia Sahm, and I want to share a quick takeaway before you listen — because she's often misunderstood in the headlines. First, a quick explanation of the Sahm Rule, in plain English. The rule looks at unemployment and asks a very simple question: Has the unemployment rate started rising meaningfully from its recent low? Specifically, if the three-month average unemployment rate rises by 0.5% or more above its lowest level over the past year, the Sahm Rule is triggered. Historically, that has happened early in every U.S. recession since World War II. That's why it gets cited so much. And to be clear — it's cited a lot. The Sahm Rule is tracked by the Federal Reserve, Treasury economists, Wall Street banks, macro funds, and economic research shops globally. When it triggers, it shows up everywhere. That's not by accident. Claudia built one of the cleanest early-warning indicators we have. But here's the part that often gets lost. The Sahm Rule is not a market-timing tool and it's not a prediction machine. Claudia emphasized this repeatedly. It was designed as a policy signal — a way to say, "Hey, if unemployment is rising this fast, waiting too long to respond makes things worse." In other words, it's a call to action for policymakers, not a command for investors to panic. What makes this cycle unusual — and why talking to Claudia directly was so helpful — is what's actually driving the data. We're not seeing mass layoffs. Layoffs remain low by historical standards. What we're seeing instead is very weak hiring. Companies aren't firing people — they're just not expanding. That distinction matters. And this is where I think the big picture comes in — not just for understanding the economy, but for investing in general. When you step back, the big picture includes a government with massive debt loads that needs interest rates to come down over time. It includes fiscal pressures that make prolonged high rates politically and economically painful. And it includes the reality that if the current Fed leadership won't ease fast enough, future leadership will. History tells us that governments eventually get the monetary conditions they need — even if it takes time, even if it takes new appointments, and even if it takes a shift toward a more dovish Federal Reserve. That doesn't mean reckless money printing tomorrow. But it does mean that structurally high rates are unlikely to be permanent. And when you combine that with investing, the question becomes less about this month's headline and more about what's positioned to benefit when the environment normalizes. That's why I continue to focus on real assets that are already deeply discounted — things like multifamily real estate — assets that were repriced brutally during the rate shock, but still sit at the center of a growing, rent-dependent economy. This conversation with Claudia reinforced something I've been talking about for a long time: The biggest investing mistakes usually happen when people zoom in too far and forget to zoom back out. I've made this mistake myself. If you want a thoughtful, non-sensational, data-driven discussion about where we actually are in this cycle — and what the indicators really mean — I think you'll get a lot out of this episode.

The Wealth Formula Podcast is one of the longest-running personal finance podcasts still standing. For more than a decade, I've shown up every single week to talk about investing, markets, and the forces shaping the economy. What's interesting is how much my own thinking has evolved over that time. Early on, I was more rigid. I was—and still am—a real estate guy. But back then, I didn't give much thought to ideas outside that lane. I was dogmatic, and I didn't always challenge my own beliefs. Time has a way of doing that for you. I've now lived through multiple market cycles. I've watched the stock market melt up to valuations that felt absurd—and then keep going. I've seen gold go from flat for a decade to parabolic over a year. I've seen interest rates sit near zero for a decade and then snap higher at the fastest pace in modern history. And I've learned, sometimes the hard way, that diversification is about survival and that every asset class has its day. One lesson I learned that I am thinking a lot about these days is: ignore major technological shifts at your own peril. Back in 2014, I first started hearing people talk seriously about Bitcoin. At the time, I dismissed it. I listened to the critics, was convinced it was a scam, and didn't take the time to truly understand it. That was a mistake—not because everyone should have bought Bitcoin, but because I ignored a structural change happening right in front of me. Bitcoin went from a cypherpunk expression of freedom to the largest ETF owned by BlackRock. Today, the dominant story is artificial intelligence. And whether you love stocks, hate stocks, prefer real estate, or focus exclusively on cash flow, you cannot afford to ignore AI. This isn't a fad. It's a general-purpose technology—on the scale of electricity, the internet, or the industrial revolution itself. That doesn't mean it's easy to invest in. It's hard to look at headline names trading at massive valuations and feel good about buying them today. But investing in AI isn't about chasing a single company. It's about understanding second- and third-order effects: energy demand, data centers, productivity gains, labor displacement, capital flows, and how blockchain and decentralized systems intersect with all of it. What experience has taught me is this: you don't need to be first to invest—but you do need to be early in understanding. If you wait until something feels obvious, most of the opportunity is already gone. This week's episode of the Wealth Formula Podcast is focused squarely on AI and blockchain—what's real, what's noise, and where the long-term implications may lie. Listen to this episode. You'll come away smarter. And years from now, you may look back and realize this was one of those moments where paying attention really mattered.

First off — Happy New Year. To kick off the year, this week's episode of the Wealth Formula Podcast is a solo one from me. I spend the episode walking through my outlook for 2026 and sharing a few predictions for how I think this cycle is going to play out. Lately, I keep hearing the same question phrased in different ways. The economy feels tight, but markets are holding up. Growth is coming in stronger than expected, inflation is easing, and yet a lot of the signals people usually rely on just don't seem to be lining up. That disconnect is really the starting point for this episode. Rather than reacting to headlines or making short-term calls, I wanted to step back and talk through the mechanics of what's actually driving this environment — and why it looks so different from the cycles most of us learned about. A lot of it comes down to debt, policy constraints, how capital moves today, and the growing influence of technology. When you start looking at those pieces together, some of the things that feel confusing begin to make a lot more sense. This isn't meant to be alarmist or overly optimistic. It's simply an attempt to frame the environment clearly so you can think about it more intelligently — especially if you're deploying capital or deciding whether it makes sense to sit on the sidelines. If you've felt like the economy and the markets aren't really speaking the same language right now, I think you'll find this episode useful.