The Big Beautiful Bill - Incentives and Outcomes - 3rd Edition

You may have heard the oft quoted statistic that 90% of millionaires made their money in real estate. Whether or not that's precisely true, a key reason so many flock to real estate investment and entrepreneurship is because it's incentivized in our tax code. With the passing of the Big Beautiful Bill, entrepreneurship and investment are more incentivized than ever.

The bill is quite literally, BIG. 2300 pages to be precise.

With profound implications for us as individuals, investors, and business owners there’s far too much to do them justice to them in a newsletter that guarantees brevity.

Therefore, over the upcoming weeks, we’ll be utilizing the ‘Feynman’s Finance’ section to break down key components of the bill, making them easily understandable and actionable.

What we’ll be covering over the next few weeks:

If there’s anything else you want a deep dive on - let me know!

Morgan Stanley issued a stark warning last week that “U.S. equity markets and the real economy are increasingly telling different stories, highlighting a structural disconnect that could pose risks for investors.”

In laymen’s terms, they’re saying that the stock market is not an accurate reflection of the strength of the actual economy, and that pricing is divorced from value.

What’s going on?

A small number of giant technology companies, often called the "Magnificent 7", are driving most of the growth in the stock market right now, especially the S&P 500 index.

Those 7 companies make up roughly 40% of the value of the market or $19.3 Trillion of the total $58 Trillion value of the stock market.

This likely reflects the amount of optimism/hype investors have about AI.

Something to consider: the internet has turned out be just as revolutionary and disruptive as most everyone thought it would. But that didn’t mean that many tech and .com stocks weren’t dramatically overvalued in the early days.

In the early stages of another tech and societal revolution - it’s entirely possible that AI will be just as transformative as everyone thinks it is, and also entirely possible that Nvidia isn’t worth $4.5 Trillion Dollars.

In short, the stock market is rarely a reflection of economic reality and most often a reflection of investor sentiment.

Legendary investors like Munger and Buffett are often given prophet-like status, with Buffett famously known as the Oracle of Omaha. But their expertise lies less in fortune telling, and more in human nature.

Munger believed that understanding incentives is central to predicting behavior. If you analyze what motivates people, whether it's financial gain, recognition, convenience, or something else, you can reasonably forecast what actions they'll take and the results that will follow. He argued that people reliably optimize for those rewards, sometimes even at the expense of common sense, ethical standards, or organizational health.

In short, if we're looking to optimize the rewards of our energy expenditure, we'd be wise to understand the game we're playing.

As partisan a world as we live in, the government has consistently made its preferences crystal clear through the tax code: they want capital flowing into business creation and real estate development. As highlighted in this weeks Signal section, the "One Big Beautiful Bill Act" has made made these incentives even more powerful.

The wealthy didn't get rich despite the tax code—they got rich because they understood it and aligned their wealth-building strategies with government incentives.

This isn't about gaming the system or finding loopholes. It's about recognizing that the government uses the tax code as a policy tool, rewarding behaviors they want to encourage. They want business creation (jobs), real estate development (housing), and productive investment (economic growth).

In our final installment, we tackle the most practical question: How do you actually use cap rates to make investment decisions?

By the end of this series, you'll understand not just what cap rates are, but how to use them as a tool for building wealth through real estate. To read part three, click here: What actually IS a Cap Rate?

Naval has become one of my favorite thinkers, and his book (‘The Almanack of Naval Ravikant’) has become something of a life, money, and business manual for me.

"You will not get rich renting out your time. You must own equity—a piece of a business—to gain your financial freedom."

Whether you're putting in 20, 40, or 80 hours a week, trading time for money has a hard ceiling. There are only so many hours in a day, only so much you can charge per hour, and a limit to how long you can sustain that pace.

So, what's the difference between those who trade their time for money and those who build lasting value? It's not intelligence, drive, or competence. It's fear. As Naval puts it, "Fear is a feeling, not a fact."

But what if you could see fear for what it is – a mere obstacle between you and financial freedom? What if you could acknowledge it, and then move forward anyway?

As Naval says, "The biggest risk is not taking any risk... In a world that's changing really quickly, the only strategy that's going to work is to be more and more yourself."

Question for the week

Instead of asking "How can I make more money", maybe ask "How can I own more of my future?"

Find out who are, what we do differently, and why our we only work with the top 1% of private equity sponsors and operators to put investors first. Always.

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