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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Discover how the wealthy think about, earn, spend, and invest money In Eavesdropping on Millionaires: Investment Strategies and Advice on How to Build and Maintain Wealth, John and Tiffani Mauldin of Mauldin Economics, follow millionaires over 12 years to deliver a one-of-a-kind money management guide based on the investment habits, lessons, and techniques used by a cross-section of affluent people. The book provides revelatory insights to those aspiring to new financial heights, investment managers who want to know more about their clients, and for those firmly on the path of financial freedom - a rare window into the lives of your peers. The authors show you how to achieve significant wealth by demonstrating how real people have already traveled that road. You'll find: * Discussions of how the subjects of the book made their money, how they invested, how they spent, and the plans they've created for the immediate future. * Explorations of how millionaires enjoy life, their outlooks, mistakes, pivotal lessons learned, how they teach their children about money, and their personal spending habits. * Examinations of how the affluent make important decisions and deal with adverse market and money events like bear markets, recessions, career changes, and life transitions. An inspiring and eminently practical resource about how people gain, maintain, and grow significant fortunes in the real world, Eavesdropping on Millionaires is a must-read roadmap to wealth for contemporary investors and those serious about financial freedom.
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Veröffentlichungsjahr: 2023
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Table of Contents
Cover
Table of Contents
Title Page
Copyright
Dedication
Preface
Acknowledgments
Introduction
How to Read This Book
Insight Journal
CHAPTER 1: Rediscovering Purpose:
A Hike, a Moment of Clarity, and Walking Away When It Doesn't Feel Fun
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Eavesdropping on Millionaires and Their Children
CHAPTER 2: Slow and Steady Wins the Race
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Most Important Life Lessons from the Mouths of Millionaires
CHAPTER 3: Never Let a Bad Situation Get the Best of You
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Eavesdropping on: Millionaires' Childhoods
CHAPTER 4: Creating Your Own Path:
From Family Expectations to Personal Fulfillment
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Advice Millionaires Took to Heart
CHAPTER 5: From Immigrant to the American Dream Embodied
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Charts
CHAPTER 6: Can a Book Change Your Life?
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Eavesdropping on Millionaires' Business Lessons
CHAPTER 7: The Worst Mistake or Best Decision?:
Joining the Family Business
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
The One Thing That Could Have Kept You from Achieving Your Goals/Success
CHAPTER 8: Going Debt‐Free and Focusing on Doing What I Like
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
Eavesdropping on Millionaires – Their Early Years
CHAPTER 9: Don't Let Complacency Keep You from Achieving Your Goals
SIX YEARS LATER …
SIX
MORE
YEARS LATER …
What Do You Think Is the Next “Big Thing” and To What Personal Character Trait Do you Attribute Your Financial Success?
CHAPTER 10: A Blank Piece of Paper with My Preferred Future
SIX
MORE
YEARS LATER …
SIX
MORE
YEARS LATER …
Insight Journal
Index
End User License Agreement
Guide
Cover Page
Title Page
Copyright
Dedication
Preface
Acknowledgments
Table of Contents
Begin Reading
Index
Wiley End User License Agreement
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eavesdroppingonMILLIONAIRES
Investment Strategies and Advice on How to Build and Maintain Wealth
JOHN MAULDIN & TIFFANI MAULDIN
Copyright © 2024 by John Mauldin and Tiffani Mauldin. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per‐copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750‐8400, fax (978) 750‐4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748‐6011, fax (201) 748‐6008, or online at http://www.wiley.com/go/permission.
Trademarks: Wiley and the Wiley logo are trademarks or registered trademarks of John Wiley & Sons, Inc. and/or its affiliates in the United States and other countries and may not be used without written permission. All other trademarks are the property of their respective owners. John Wiley & Sons, Inc. is not associated with any product or vendor mentioned in this book.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
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Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic formats. For more information about Wiley products, visit our web site at www.wiley.com.
Library of Congress Cataloging‐in‐Publication Data is Available:
ISBN 9781394194872 (Cloth)
ISBN 9781394194896 (ePDF)
ISBN 9781394194889 (ePUB)
Cover Art & Design: Paul McCarthy
For Pee‐Paw and Papa Joe
& all those who came before
And for my Daddy
& all those who will come after
PREFACE
The Creation Story of Eavesdropping On Millionaires
“Oh, that? I never thought it was eavesdropping, Aslan. Wasn't it magic?”
—C.S. Lewis, The Voyage of the Dawn Treader
Over a decade ago I sat up in bed after one of a handful of vivid dreams I've had in my life. I looked at the time on my pink Razr flip phone, and it was 2:37 a.m. Back then I was recording my dreams in the morning, and I had a yellow legal pad beside my bed.
I didn't dare turn on the light and risk the dream fading faster. I grabbed my pen and started writing. I knew (from past experience) that when writing in the dark, I would probably write over the same line more than once. So I wrote a few sentences and flipped the page. A sentence there, two words here, a few question marks, some seemingly outlandish words. Ten pages later, I went back to sleep.
The next morning, I awoke to over a dozen missed calls. My grandfather had passed away in the middle of the night during the surrounding moments I had been recording this download of a dream, June 21, 2007.
The next day Dad (John Mauldin) and I boarded a plane for a business trip and the dream flowed out in a waterfall of ideas as we refined it (as all good ideas on planes do). I knew this would become a book series. This was the strongest impression the dream had left me. As he'd done with other ideas I'd shared over the years, Dad told me to go for it. At the end of 2007 we started to interview our millionaires. The book was to be published the following year.
Well, life happened. I had one of the loves of my life, a little girl. I took other ideas from the back of a napkin he gave me and brought them to fruition, all the while never taking the folders far from my line of sight.
In 2015, I thought, “Why not see where our millionaires are today, after the Great Recession?” We reached out to them, and another round of interviews and research began.
Yet again, life brought a curve in the road.
Through all the gaps between the interviews, this book has always been just behind me, whispering ideas. I revisited their interviews, made countless notes on my phone or notepad (I still have quite a few of these, spanning years), and avidly researched the books and articles of this segment of the population. In March 2020, my father and I were walking along the beach and trail back to his home in Puerto Rico. I told him I wanted to reach out to our millionaires a third time. I could just feel this was it. He graciously said that he could see I was still passionate about it, and to go for it.
This set of interviews was like catching up with old friends. We genuinely were excited about their personal and business growth, and we were honored when they shared with us some not‐so‐easy moments.
There are so many more interviews that I hope to continue to share. There is a plethora of data and charts and statistical findings that would not fit in this book; hopefully, in the next.
Not everyone has shared my vision, but there is nothing else to say but that I have been compelled to bring this out into the world, to share a little bit of my life and the stories and lives of others. The connection between us is what it is all really about anyway.
While I cannot recall today the dream itself, the residue of the experience has followed me for 16 years. As you read these words, you have become a part of the magic of that dream.
ACKNOWLEDGMENTS
From John:
First and foremost, this book would have not been possible without Tiffani. It was her idea to start with. We started this project together in 2007, gathering data and doing hours and hours of interviews, but by the time we were ready it was already the Great Recession. Not a good time for publishing a book on millionaires. Seven years later, at her urging, we began to do a second round of interviews. Time passed. But she never lost her passion for the project, the people and their stories. And she once again picked up the gauntlet, we did a third round of interviews and while I participated, she has done the bulk of the work to bring this book to reality. Both the work of writing and editing – and the harder part of getting Dad to focus and keep up with her. She has been through storms, but she has brought this book into the harbor. I am proud of her and to be part of this project with her.
Second, I have to thank those who so willingly told their stories and went through multiple interviews. Who filled out loooong surveys and shared their lives with us.
Finally, I am grateful to my readers who allow me to come into their lives and give me the most precious thing of all – their time and attention. They make my life possible and I am humbly grateful.
From Tiffani:
There is no way that I could “acknowledge” a portion of all who have been a part of this creation the last 16 years. But I am gonna give it a go.
To you, dear reader. I have had this beating in my heart all this time … to share with you.
To our millionaires. So many of you didn't make this first book, and I hope to still share your stories. I really developed such a fondness for you all, your personalities, your passion, your frankness and struggles, and moments of vulnerability. You honor me with your stories, and I in turn honor you.
To my girls, Jessica, Ten, and Holls, for such real authentic support, the kind of friendship a woman really needs. To GLB (and Trish) who supported and followed my progress, or lack thereof sometimes, and always believed in the highest. To Ash, for getting goose bumps with me at “adult summer camp” when I decided to pick it back up again. To dear, dear Terra for being a witness and rare window to the evidence of that which is greater than us and a compass directing me to stoke that same light in me – and always answering my “can you read this edit please” texts.
A thank‐you to Tyler Moore for your first dive into our data, and to Jamil for your extreme patience in this project and willingness to help wherever needed. Doug Harrison for countless times I needed access to the data … again. And Tammi “the right hand” Cole, for all you do and make happen for us!
To my slew of transcribers and personal editors and organizers from eons ago: Charley Sweet, Sommer “Dooley,” Lynn Frederick, and Jeri Benjamin, and more.
I know I am forgetting someone. Oh yeah! Destiny Benjamin‐Vandeput;). You have been there since day one with inspiration, transcripts, edits up to the end, random phone calls in my search for old documents, and help with heading titles – and with all my personal drama in between. Your love, support, and trust are priceless. And I'd better make the acknowledgments in your book.
To the team at Wiley, all the editors and behind‐the‐scenes work that completed this.
To Miss Vivace for your passion to be who you are and teaching me the same every day, and your patience for Momma needing early bedtimes for early writing mornings. Never stop the hugs!
And to my Daddy. None of this would be on paper if it wasn't for the legacy you have paved. The respect and love I have for your integrity, support, and example know no bounds. (Even if I had to re‐pitch this to you a million times over the years.) I love you.
INTRODUCTION
A note from John:
Part of the theme in our findings is that there isn't a pattern. There are a lot of paths to achieving financial success, with as many different twists and turns on the way there. These stories have some major distinctions, but also themes of similarities.
Sometimes people think they have to do it through investing, in one way or another. But our research and the research of others indicate that's not always true. There are numerous ways to achieve financial independence. Very typically, that path is founding a business, making it grow, and adding value. It could also be an inheritance or taking your money and saving it, not living beyond your means – so that you do have money to save and invest.
We want to be able to show people what some of the roads taken are and to encourage people that, yes, you can do it.
This book is really about stories. I invite you to eavesdrop on these stories that illustrate all the unique plot twists on those paths. And then we add in some of the wisdom that we picked up on along the way.
We can't give you the “portrait of a millionaire” because, simply, our findings are all different …
… so find what connects you.
A note from Tiffani:
I have grown quite fond of our millionaires. When you read thousands of words of transcripts and spend countless hours on each person's story, it's hard not to. There were moments of humor, many off‐the‐record discussions, too many tangents to mention, and a beautiful amount of vulnerability. We had to whittle all of that down to a couple of thousand words for each.
What is special about this book is that these aren't just ideas we compiled, sorted, and calculated on how to achieve financial success (though we do have data too). These are actual longitudinal case stories, if you will, of real‐life experiences. They show how having certain characteristics, values, and mindsets works together over time.
“Neuroeconomist Paul Zak has found that hearing a story with a narrative with a beginning, middle and end causes our brains to release cortisol and oxytocin these chemicals trigger the uniquely human ability to connect, empathize, and make meaning.”
—B. Brown, Rising Strong, 2015
When you read their story and connect with even one portion – it could be about their children and money, their upbringing that led them to an inspiration or business, a creative solution, or a mistake and how they learned from it – take note.
Try not to absorb just as a reader, but to experience what they did. Their background and life journey are provided to help you see through their eyes, to take a deep look at how their choices came about. Maybe it will come to mind when a choice develops in your own life. I am asking you to follow a fleeting inspiration, to connect and discover parts of yourself – because maybe you don't know what you want, desire, or which direction to go because it hasn't crossed your path yet (i.e., it doesn't exist yet).
Apply any “aha” moments into your own situation. Play freely with this script. This is a movie you are creating. Sense what it feels like with different choices you might make, inspired by the stories here.
Then take a breath. What will you do differently knowing what you know now? What could you incorporate from that insight into your life? Will cognitive dissonance play a part as you process these stories? Will you use a story to rationalize their behavior or your behavior, or will you accept reality and adjust?
Don't lose the thought – write it down.
I borrow from Malcolm Gladwell, as he says it best:
“Good writing does not succeed or fail on the strength of its ability to persuade … not this book anyway … it succeeds or fails on strength of its ability to engage you, to make you think, to give you a glimpse into someone else's head – even if you conclude that someone else's head is not a place you'd really like to be.”
—Malcolm Gladwell, What the Dog Saw and Other Adventures, 2010
I consider this book a success if even one person is moved by an inspiring thought they can implement that brings them a deeper awareness and clearer direction in their own self and life.
From John and Tiffani:
I'm sure you will see our own fumbling in the rounds of interviews and the familiarity as we each grew as an interviewer and a person. Bear with us at the start, when we were going for facts in the first six years and then moved into what they had learned about life – it became about each person, what they experienced, and what that can mean to others.
Sometimes the facts repeat themselves in interviews that are 6 or 12 years apart. That is by design. If you hadn't talked to someone in 6 years and they asked you about something pivotal in your life, you might repeat yourself too. Some of the repetition we left, because it emphasized the importance of it to them, and it was said in a different way.
There are many, many more interviews and stories – including women, couples and international, pages of more data and charts, millionaires' Myers‐Briggs personality test results (spoiler: our millionaires' results don't fall in the same personality distribution as the general population). Our hope is to release these and compile the conclusions and their patterns in the next book.
Finally, there is longevity in these stories. They may span the Great Recession, a bull market, and the pandemic, but the lifestyles, advice, financial implications, and decisions are timeless.
How to Read This Book
There are quite a few “millionaire” books out there. They each have their theme and more detailed advice to “that one way.” But to echo John, what we have found is there is just simply not one way to financial freedom. This book is about those different ways.
Perhaps you connect with the story of saving and never having debt – so you combine it with a budgeting book.
Perhaps your heart rate sped up when you read the story about real estate – there is book for that too.
Perhaps – as many of our millionaires did – you follow your gut and instinct to not be in a 9‐to‐5 – or you have a need to be near mountains – so you follow that and the opportunities fall into place. Maybe you pick up Secrets of the Millionaire Mind next.
Perhaps you're inspired by the story of simply saving until a financial goal is reached, so Automatic Millionaire may be more up your alley.
Perhaps you find an innovative product and have an idea where there is a gap in the market, so you hunker down, knowing it will take a few years. You build that business by putting any money back into it and, barely take a paycheck – then sell it for a windfall – yes, there is a book for that, too.
Maybe you highlight some of the life lessons learned and mistakes made – and then formulate a personal map of your values to start choosing opportunities based on those hard‐won lessons and the perceived failures of others.
If you buy this electronically – highlight your standouts and then take a moment to review other reader’s highlights on your e‐reader; or share with us on X (formerly Twitter), @Eavesdrop_On; Instagram, @EavesdroppingOn; or tag us on your social platform with #EavesdroppingOnMillionaires. If you like, follow us, and maybe something that didn't stand out to you in a story when you first read it will really hit home as a separate quote underlined or posted by someone else.
Pause and think for a few minutes about why you just highlighted a sentence – what that would mean to you.
There are so many insights and stories we did not have the space to share in this book. We wanted to continue to share their journeys they so generously offered. As we continue our research, we are sending out a millionaire story or topical insights every so often. This is completely free; we are just compelled to honor the others and share their equally inspiring stories. Just sign up at https://www.eavesdroppingon.com.
We use some icons over and over to emphasize a theme:
When you see this look for key insight, theme, or pivotal moment.
This points to all things “numbers.” It includes income, savings, spending, investments, business sales, change in net worth, and more.
Often there is a piece of wisdom or a beautiful turn of phrase that merits a moment to pause and think. You will see this icon in the margin near those quotes.
Questions from Our Other Millionaires: When we started our third round of interviews, some of our millionaires began asking us questions. They were curious to hear the answers of the other people who were being interviewed. They let us know that they wanted to know what their peers were doing. This separate box at the close of each story are the answers to questions specifically posed by other millionaires.
Breakout Pages: As only 10 of our millionaires' complete stories made it into this book, that means we have stories and insights from hundreds of others. On these pages we organize some of their insights by specific topics.
Quotes to Ruminate On: These pages are also organized by topic – but just a sentence or two of concise answers to questions we posed to all our millionaires.
Chart Data: Our initial survey in 2008 and the follow up survey in 2023 produced over 23,000 unique surveys. We had over 100 questions and, but a few of these make up the charts in this book. We are excited to release more of the data in the future.
Insight Journal
Create Your Own Story: What do you love to do? What have you done that has been the most satisfying? What activities have always been easy for you that may be difficult for others? What do most people compliment you on? What was your best “mistake”? What would you do differently knowing what you know now? If you connected with something, put yourself in that situation, think about what you would have done or not done, and follow that imaginary path. If something gave you a bad taste in your mouth, consider why and what choices you would make differently.
Look back at what stood out to you, what you highlighted.
What were your “aha” moments? Don’t lose the inspiration. Write it down now.
Our hope is that you find these stories as fascinating as we did, learning from the success of others, and find a few inspirational thoughts that you can translate into your own life. Now, let’s eavesdrop on a few new friends …
CHAPTER 1 Rediscovering PurposeA Hike, a Moment of Clarity, and Walking Away When It Doesn't Feel Fun
MEL A.
Net Worth: $18–20 Million
Income: $250K
Started Investing: 30
Attained Millionaire Status: 40
Quite a few of our millionaires had the trickle‐down influence of parents who grew up during the Great Depression, and Mel is no exception. He grew up hearing stories about his grandfather, his namesake, and an entrepreneur. The man who led the family from their Iowa farm and then worked to build several businesses. The same man who lost most of it during the Depression. Mel describes looking up to him. “I remember him being kind of out there, willing to try anything and look after people.”
When Mel was young, his father lost 90% of his eyesight, but still managed to maintain his income tax business. He remembers his father bent over, holding a piece of paper six inches away, viewing with a magnifying glass, always working tirelessly and never complaining. That was just what you did back then.
It was an era of not having much, and saving what you did have. There was no debt, and he cannot remember family fights about money.
Since Mel's blind father was eventually unable to fully support the family, his mom went back to work and took over management of their small real estate holdings.
“We never lacked, but we never had much. I remember we went out twice a month for dinner. That was a big thing in high school. If we even got pizza for takeout, that was an activity. There was camping, everyone loved the outdoors. My Mom would just let us explore and backpack while she was in a tent or little hotel building nearby.
“I had my first horse when I was 10. An Arabian Palomino named Abner. He was too much horse for a 10‐year‐old, but still could be amazingly gentle with a kid. I took care of him by myself for five whole years. I really enjoyed that and, you know, ‘responsibility.’ That was a significant part of my youth. Back then, I could get on the horse and ride through the hills all the way to Oakland. I could be gone all day as a 12‐year‐old kid and no one thought twice. Those days were good. I just really never thought about us having less money or lacking.”
When Mel was younger, he got mediocre grades in school, but there was one teacher who saw his potential and put him in an advanced class.
He was convinced he was going to be the “dummy of the class,” but his mom wouldn't let him give up. Her encouragement challenged him to dig in and study. This had the effect of ingraining in him that, despite what he was convinced of, he actually could do it. He went on to make good grades in high school and developed an interest in engineering. “It was the 1960s; we all saw a man on the moon and a lot of focus was on engineering, math, and sciences, so that was the direction I leaned.” After graduating high school, he was accepted into UC Berkeley to study engineering.
It was the tail end of the Free Speech Movement in 1964 and 1965 and the beginning of the Vietnam War protests. Berkeley had long been a hotbed of radical thinking. In his first year at Berkeley, Mel was tear‐gassed by riot police, and he remembers you could buy heroin on the corner if you wanted.
His wife's mother didn't allow her to go to Berkeley because of all this happening. In contrast, his mother had attended Berkeley in the 1930s – the time of people literally standing on soapboxes, communists professing dogma and theory. “Because of that, me going off to Berkeley in '68 didn't faze her at all,” he said with a chuckle.
That first year he took a job at Edwards Air Force Base as part of a work/study program with the engineering school. “While I liked engineering, I looked at these guys that had been doing it for 10–15 years and they looked, well, kind of bored and locked in. They didn't go anywhere, just to some family commitments, and that kind of spooked me. Being an engineering major, I realized that was all I would focus on, and I had always wanted to take some English and maybe go to law school. That spook had me ending up transferring to a major in business as the prep for law school and I did actually minor in English Literature.”
He only pursued the minor because he wanted to broaden his exposure and improve his writing. He is the first to admit that he was taking classes with English majors who were clearly much better at it than him. “I was just happy to be there, and if I ever got a B, I was typically happy.”
While in college, Mel led mountaineering trips in the summer. He would take people out for 2–3 weeks at a time to experience nature, which also seated in him a respectful orientation to the environment. He looks back at those trips as one of the most formative times of his life, teaching him the joy of doing something he was really good at.
He interviewed for jobs in his last two years of college and realized, yet again, he couldn't see himself working a nine‐to‐five job. So, of course, he decided to do what he was good at and lead more trips. That winter he lived on the Southside of Chicago. “At that time, I had the smallest apartment. I'll always remember that you could open up the sofa bed and it touched the wall on the other side, but I wasn't there a lot, so that worked fine for me.”
One September, when all the camps had finally closed and all the kids had gone home, he decided to take one more hiking trip. “I still remember it was a distinct experience and realization. I came back and asked myself ‘Why am I doing this?’ I had already hiked 1,000 miles that summer. I didn't need to hike another 30. I realized the reason I liked doing it was working with people and being with groups of young kids. That is what gave it a purpose. That realization made me start thinking what else I wanted to do in life.”
A friend suggested business school to explore more directions. “Maybe it wasn't an immediate answer to what I wanted to do, but it was a good way to do something that would lead to another step. I remembered that I had taken a real estate class years before; there had been a case study on a project in New York and the professor asked, ‘Who would like to do this?’ I kind of snuck my hand up. What I had liked about that project was that it was a combination of designing. It combined engineering, quantitative math, some architecture and legal activity which appealed to my interest in law.
“That moment had stuck in my mind. I called up that same real estate professor and told him what I was thinking. He suggested three or four business schools. So, when I went to business school, it wasn't so I could get a job that would make me a lot of money; it was just following what I liked to do.”
Mel's college tuition for one quarter was $150 and another $150 for room and board. His mother had some real estate that she had inherited that helped cover some of that. In business school, that real estate was able to fund the tuition portion, and he got a job to pay for his room and board.
While he was at Wharton School at Pennsylvania University, he took a job at a Fortune 500 company that owned trucking and shipping companies. They were building LNG tank carriers from the aftermath of the high oil prices in the early 1970s and the oil embargo. He worked in the fairly small corporate planning department.
“It ended up being quite interesting. The guy I worked for had been a professor at a PhD program for economics. He was like having a private tutor for the next year.” It was through this relationship that he discovered what he truly wanted to do. He decided to pursue his interest in real estate, specifically development activity. He connected the dots from his earlier thought in life that he might love the development and project management side of business.
His love of having topography around him, wanting mountains at the door, pushed him to look west. He found a position back in Los Angeles to do corporate banking for real estate lending and the energy sector.
During this time in business school, Mel met his wife, who was in the same business training program through UCLA. “We are grateful that our children grew up when we didn't have a lot,” Mel reflects. “My wife clipped coupons, and we went camping for vacations. What we realize now is that if you work hard enough, are effective enough, and take those chances when they come up, you can succeed,” he says, echoing his Mom's encouragement from childhood.
He went to work in corporate banking, handling construction lending to small companies regionally. He soon realized they were lending 90% of the monies these construction companies needed in order to build, but they were only getting paid “prime plus a kiss.”
“We thought, why don't we lend a little bit more and get a piece of the equity transaction?” He got approval and began allocating $100 million to go into industrial buildings and then into residential buildings. He built up a small team to do profit participation loans. They went through the first $100 million in nine months and felt they were on a pretty good track, got approval for another round, and continued that course, growing his team to 25 people.
This was at a time when real estate in California was extremely lucrative. “That was pretty much the crux of our activity, and it grew until we had done about $2 billion in lending activities.” Then the recession of the 1990s was upon him, and they wound down that activity. He utilized the range of experience he had gathered in developing in a move to be responsible for the REO (real estate owned) activity.
Like many of our millionaires, Mel had the instinct to leave his job when it stopped being fun. “I could have stayed on, but I was offered a package that let me walk away with three years of income, so that's exactly what I did. I left the comfort of the big company that never paid huge amounts, but was comfortable, and I got a decent bonus. The job had been safe, I guess, but it was not something I wanted to do anymore.” He considers his “best mistake” to be leaving the corporate world.
When he left the banking industry, he was worth $1 million, had debt of $600,000 from remodeling his house, so was liquid only $250,000.
At that time, he and his wife still didn't have a long‐term savings plan. They maxed out their IRAs every year but didn't save much above that.
Mel decided to take out $150,000 of what he had to start a small business.
He ended up losing it entirely. Every penny. A friend was doing specialty marketing manufacturing and had some ideas for licenses to a big company for limited edition watches. He wanted some help and Mel signed up with his $150,000.
Off to China they went. “In that whole experience, while unprofitable and not successful for a variety of reasons, the key lesson learned was that the quality of the product and the idea doesn't make any difference if you can't get what I would call ‘distribution’ – if you can't get the product in front of people.
“It was an eye‐opening experience into how things worked. I came away realizing if you wanted to make anything and do it in mass production, not necessarily the highest quality, you had better want 10,000 of them. This was due to the manufacturing setup and the assembly line to crank them out was not worth it below that number to the manufacturers. The whole experience itself was worth the money I had invested, which was a lot at that time.
“Now, for a number of years I regretted that, but in hindsight it gave me a different perspective from people in the corporate world. It taught me to be entrepreneurial, to be solely dependent on what I could do for myself. That attitude helped me greatly when I went out and started my own investment management business.”
Let us remind you that Mel hadn't been paid during that year and a half venture, where he also lost his shirt. The women in his life came to the rescue. Mel's mom once again stepped in and covered about 70% of their mortgage payment, and Mel's wife was able to cover the day‐to‐day expenses, food, and utilities. They didn't spend much and vacations were camping trips, just like when he was a kid. “We just kind of got by and always seemed to have enough for the next thing down the road.”
Through his previous relationship with the employer he considered a mentor; it came full circle, and he was asked to join a new venture. It was the right time in the market, as CalPERS (California Public Employees' Retirement System) had initiated a real estate investment program in previous years and they were looking to expand by adding a land development program where they felt there was a need for capital support in California.
This had been primarily done through the savings and loans through the 1980s, and now those S&Ls were gone and couldn't provide that. They ultimately got approved by CalPERS for a large equity capital allocation. Then relationships with other entities formed and so they started their own capital firm.
The first year, he and his partner couldn't pay themselves, yet again. “We each contributed $5,000 to the company to pay our secretary and cover the next three months. We figured if we could get through the first year, we'd make some money. We got paid in fees, we basically got an origination fee and spread that over the life of the project. In hindsight, it was pretty attractive. We would leave the excess profits in there to run the business. The origination and management fees and the profit incentive fees were what we would take out. And we just kept doing that.
“We were trying to hit singles; we weren't trying to hit a home run or take any big risks. We were trying to do solid deals. I remember when we would do a typical home building transaction, we would get $300,000 of the origination fees, and if it did well, we might get a projected $300,000 of incentive fees. I was like, this is a lot of money for two guys who were just kind of scrapping things together.”
From that business that was just trying to hit singles, Mel ended up making about $40 million. After paying $18 million in taxes, he had approximately $22 million take‐home. “I probably got a little carried away at the racetrack, as I was doing a little racing on the side, and I lost some of that money on that … a bit foolish.”
He invested a large chunk of his money but currently still has $10 million in cash and owns his house outright, and also a second home they bought with the profits. He also has about $2 million in stocks. Even with a net worth of $18–20 million, he and his family live on $150,000 a year (after taxes) and are comfortable with that. “That salary won't let me do some of the things I would like to do, but it's adequate. Occasionally, I'll take out profits to do something unusual, like a trip to Africa.
“I am conscious of protecting what I have. I will probably always keep 20–30% in relatively liquid investments. I am deciding on how much to direct myself. I found I love doing real estate investments – rolling up my sleeves and getting into them. I don't have the same satisfaction of studying companies and looking for value. It is just not as much fun. To the extent that I can have an investment advisor that will direct some of that side, it is useful.”
His kids grew up in the early years before he made most of his money, and because of that they are very grounded and not materialistic. Like their father, his kids are well read and like to think about things. “I have raised them to make their own decisions. Instead of working for a ski shop, how about owning your own ski shop, son?”
