Feedback I get often is that I do a lot of crazy things that are really fun, but that they aren't practical for normal people. I understand where this comes from. I marvel almost every day at how very good my life is, and how if I didn't already have it, it would seem unattainable. Besides the things that actually matter, like having a great family, wife, and friend group, I get to live in several places across the world, drive a cool car, and generally do whatever I want.
If you're rich, these things would all be very easy to do. But if, like me, you're not rich, you have to rely on finding sweet spots. This has essentially always been the case for me because I've always been frugal and have always had tastes that exceeded my means by normal standards.
A sweet spot is a situation or combination of situations that gives you something that seems like a luxury at a value that most people wouldn't believe.
I bought a two bedroom condo less than fifteen minutes from the strip for under $50,000. I bought an island with a close group of friends for under $10,000 each. I bought my dream car, a Bentley, for $22k.
These aren't tiny amounts of money, but I feel like with each one I got a lot more in value than I spent.
One thing that these three purchases (and others I can think of) all have in common is that they are things that other people usually finance. When people have access to financing, they usually buy something that is irresponsibly expensive. When they don't, they often buy the cheapest thing possible, because it's their only option.
This creates a middle, where things are too expensive for cash buyers to afford them, but inexpensive enough that a financed buyer would just buy something more expensive. Why get a used Bentley when you can get dealer financing on a new Mercedes?
When I bought my condo there was some law that made it impossible to get a mortgage on it. As a result it was about 1/3 cheaper than any place you could get a mortgage on.
This dovetails nicely with my financial philosophy of never financing everything and always paying cash. Besides the financial and peace-of-mind benefits, it also puts you in that middle zone where you can buy things that offer the best value.
Another thing that all of these purchases is that each one comes with a very strong preconception which clouds people's judgment. Most people do very little research and feel uncomfortable going against popular opinion, so they never even see what they're missing.
I'd guess that 95% of people in America think of Las Vegas as a very expensive place to live that's dominated by gambling and partying. The truth is that it's a very inexpensive place to live, has excellent access to nature (skiing, boating, hiking, rock climbing, off roading, etc), and that most people here rarely or never go to the strip.
This mismatch between popular opinion and reality creates a demand gap. Las Vegas would be a great place for tons of people to live, but they have no idea and won't even consider it, so the demand is artificially low. Everyone (except for me) thinks that New York and San Francisco are great places to live, so the demand is much higher than it should be.
People think that Bentleys will cost them a fortune in maintenance. They think that only billionaires can own private islands.
I love finding sweet spots. It's like wandering around and stumbling across a treasure chest that no one else noticed was even there. It does take a little bit of confidence to go through with them, as everyone tells you that you're making a mistake, but then a few years later they start wondering how you inexplicably have such an awesome lifestyle.
Photo is from my last little trip on Lake Mead before they shut it down for Coronavirus. I was excited when the lockdown started because I thought that I'd go boating and skiing all the time, and then both were immediately shut down.
In 2003, Rick Rubin offered me a ride in his Bentley Arnage. I declined because I thought the place we were going was within walking distance, and only after he drove off did I realize that I was thinking of the wrong place and had missed a chance to ride in what I still believe is the most beautiful car ever built.
Ten years later I was reading an article of the top ten most depreciated cars, and the journey from number ten to number one ended in that very car, the Bentley Arnage. Bentleys retail for $250,000 or more, but at the time of the article the Arnage could be had for $30,000. That was still more than I would spend, but it brought the idea to earth at least.
I'm not really a car guy. I have a soft spot for Mercedes, coupes in particular, but I'm mostly interested in getting from point A to point B. I've never financed a car, and when I bought my last car the only three categories I'd consider were Japanese minivan, barest-bones econobox, or 90s era Mercedes. I ended up buying a 1996 Mercedes C220 for $1600 and spending $900 to get a couple problems fixed up. It shifted with a bit of a thud and the AC was cool, but not quite cold. I figured it would last a year or so, but it's still going strong two years later.
A few months ago I decided to see if Bentleys had depreciated further. Sure enough, they had. Some could be had as cheaply as $20k. The Mercedes was still clunking along, but at that price I couldn't help but do a little research. What I found whipped me into a bit of a frenzy.
Arbitrage and speculation get a bad rap sometimes, but they're incredibly useful.
I'm leaving Ulaanbaatar shortly and I'll be heading to Japan. I went to stock up on some basic supplies - personable consumables and work stuff.
Strikingly, paper is really expensive here for Western-grade, Western-style paper. The local shops literally don't carry it. Instead, they have this checkered sort of paper. It's like graph paper, but with thick black lines. I prefer black ink, and after trying out one of those notebooks, I couldn't read what I'd written.
I tried some of the upscale department stores (Sky Department Store, State Department Store) and there's literally no Western-style, 60 sheet lined notebooks in the $1 to $2 range like you'd see in the USA. They have high end notebooks for $6 to $12, and they have these thin flimsy 20-page booklet-type things for around $1. I settled for the booklet.
Now, if there was the demand to make it worth it, someone importing Western style paper from China at 20 cents a notebook and selling it here for $2 per notebook would be creating a lot of value. If this presented a large enough opportunity, eventually you'd see the margins go down towards cost, as happens in almost all industries.