I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. A driving principle of value in the financial world is supply and demand. Okay, I know that is a super generic statement, but it is a very general principle. Supply and demand dictates how much baby formula costs during a pandemic, what price you might get charged in an Uber or even how much you pay for investments. But Doug Hauert says supply and demand are just two pieces of a much bigger puzzle. Doug is an economist who pioneered a new model he calls Hypernomics, which is also the name of his book, which you can find in the show notes. Today, we talk about how his model has helped restaurants make more money, has helped NASA, and can even help us the next time we invest. Doug Hauert, welcome to Money Rehab.

Well, thank you so much, Nicole. It's my great pleasure to be on your show. Thank you.

It's It's been a great pleasure to have you on the show. You've taken traditional economics theory and given it a huge facelift with your hypernomics. I would love to dig into this nerd to nerd a lot more. But first, can you just define what you call hypernomics?

Yeah, the prefix means existing in more than three dimensions. And nomics comes from anonymy, N-O-M-Y, meaning a field of study. So it's a field of study that starts in four dimensions and goes from there. While it sounds like it might be complicated, it takes things that you already know and then glues them together into something you haven't seen before, but you need to know.

When you hear fourth dimension, you think we're in woo-Woo, twilet zone land. Can you dig a little deeper into that concept? What are we actually talking about when we're talking about multiple dimensions?

The most simple example is when I went out with my wife. This is the origin story of the field here. I went out with my wife to buy a washing machine, and she We went up to this one washing machine in this big box store, and she said, I like this machine. It's got more capacity than we have at home. I thought, Capacity versus price. She's working what you would call a two-dimensional problem with all the dimensions being volume, positive, price. Then she says, We only have one delicate cycle at home. I like to have more cycles. I thought, Cycles, capacity, and price. She's doing a 3D problem. Then we saw the next machine up the line. It was a little bit more expensive. I said, What about this one? Because they have more of everything. She said, It's too pricey, we can't afford it. I realized that our little purchase was going to take the quantity for that particular machine out one unit. It was quantity versus price. I realized that she had a four-dimensional problem she was solving. She was solving for capacity, cycles, price, and quantity. All these are economic dimensions, not physical dimensions.

I realized that she was working a 4D problem in her head. Then, Palman figured out a way to draw this. It turns out that everybody in that store and everybody worldwide is doing these problems in their head all the time in ways that we can describe mathematically and that we can use. And so what this does is this forms a boundary for the market, which we call a demand frontier. And this gets back to your budgeting thing. Of course, everybody that's listening to Nicole knows that she wrote a book about budgeting that she calls Rich Bitch. Which you read. Thank you, Doug. Yes, and I loved it. And what occurred to me was that the world does budgeting, too. And the world budgets how many people can buy the really expensive washing machines, which are a few. Then as the price falls, more and more people can buy that machine. What forms in this market is this seemingly amorphous mass of prices and quantity points that exist for every machine that's out there. When you plot those things, it turns out that there's a limit to them. And very interestingly, what happens in the world is when people try to exceed these limits, which happens in government and industry and personal finance, back to your point, all the time, people get into trouble.

And that's part of what hypernomics does is it looks at what the limits are for any particular market and then tries to work with that.

You've probably seen this trend online about girl math. I have some issues girl math because I think girls can do terrific math. But it actually brings up this other dimension when solving these everyday problems, whether it's buying a washing machine or buying something else, of, Oh, I had saved something before, so maybe this can offset that. I think it's actually really interesting how you can discern from these everyday problems that there is so much more depth than would meet the eye.

Yeah. And this is something that's existed, I maintain since the beginning of mankind. So after I wrote my book, I had this very interesting encounter. I know that you're a physical fitness fanatic, and I am, too. One day, I was out about three or four months ago, went out for a run. I get down with a run and I'm on this asphalt parking lot and I'm breathing heavily and I bend over and I see this little redish-black ant. It's called a rock aunt. And I know that Dr. Richard Wyman, the Nobel a prize-winning physicist, used to study ants, and so I thought I'd study this ant for just a bit. I noticed this guy started to go in a counterclockwise fashion. He's doing this in fits and starts. After about 10 or 20 seconds, he traces out 360 degrees, and he's out just a little bit further than where he started. I watch him again, and he does another circle like this. Then I get out even closer to him, and I noticed every time he stops, he's on top of a little pebble. He's on a high for himself. And then it hit me.

This little guy was doing reconnaissance. And so I raced home and I typed an ant reconnaissance into a search bar. And sure enough, ants do a recon. And they go after new dwellings for themselves that have the right ceiling height. So if this sounds like how you would shop for a property, it's the same thing. The right ceiling height, the right amount of floor space, it has to be dry, next to a food source, and they want it to be away from the neighbors. I remember reading your stuff about how you had noisy neighbors one time you broke your lease. The ants are doing the same thing. They don't like noisy neighbors or other ants that could harm them. And so this species of ant has been on the planet for at least 140 million years. And so I submit, since we're at least as smart as ants, that we've been doing this multidimensional analysis for forever. So these ants are weighing out what the value of the ceiling height is, how dark it is, how close it is to food. They're weighing all these things individually, just like when you go out and shop for a car.

Do I want to carry two people or am I going to carry my friends and have four? Do I want to be electric? Do I want to be hybrid? Do I want to be a gas vehicle? Do I want a really long range or a lot of horsepower? You're weighing all these things out. The ants have been doing the same thing for over 100 million years.

Have you seen the bee dance? Yes. Have you ever seen the waggle dance or whatever they do?

Yeah.

They come back. It's so cool. I've seen it in person. They go find food somewhere, and they come back to the vive, and they do this little wiggle, wiggle dance, but it's showing the coordinates of where the food is.

Yes, it's phenomenal. In fact, they do that with pheromones, is the thinking. And so industry is now following what the bees are doing. There's a thing called digital pheromones that little vehicles are starting to send back to other vehicles so they can figure out where they have to go. That's pretty cool, too.

It's very cool. Now, listen, we can nerd out about this forever, I'm sure. But what does this mean for folks listening? If they're thinking, okay, hypernomics sounds great. We have a lot of dimensions. We've known this maybe subconsciously that we're grappling with these different things. But how does this change the idea of what we've known as supply and demand, how that affects macroeconomics or even microeconomics in our own personal families and our own personal budgets? How does that change how we make money?

The first thing it realizes that the law of supply demand imagines one supply curve intersecting one demand curve at a single point, which they call equilibrium. That works for a simple thing like iron. But for example, aircraft use iron, and there are 90-some airplanes for private sale and everything from big turbo props to jets that have a certain series of features. What happens is that there's not a single equilibrium point for aircraft. What happens in that market is the law of value and demand, which happens to everything else outside of the feature commodities, which is to say that the product features determine value. That's line one, there's four lines. Value determines price, line two. Price limits quantity sold, line three. Quantity sold is a feature. It turns out that we We work out value on one side of our brain, and then we are all committed to a certain demand on the other side of our brain. The value and demand balance out in opposition to each other. Value always goes up as you get more of what you want, but demand will always fall as the prices go up. This is the interplay of these things that you get to work with.

For example, we use this in stock market analysis. I put up my own fund, my own money. It's not open to the public. I have to say that so the SEC doesn't come down. But we've been using for four and a half years the software that we invented for 4D analysis, and we get to figure out all the things that make stock prices go And so I'm very pleased to tell you that as of last week, four and a half years in, that we're doing 1.5 times as well as the S&P 500, only drawing S&P 500 stocks and only going long. And so the chance of that happening, duty chance, is less than one in a quadrillion. So it works for personal finance.

You also say that the government takes this into consideration when it comes to tax legislation. You've used my hometown, Los Angeles, is mansion tax as an example. Oh, God, yeah. For anyone who doesn't know, the mansion tax adds 4% tax on homes over 5 million, and I think it's 5.5% on homes over 10 million.

Yeah. In fact, interestingly, we did some work on taxes, and it turns out that here in California, we have recreational marijuana that we're taxing. It turns out that if you take a plot of all the taxes that are levied against recreational marijuana, back in 2014, Washington State and Colorado both legalized recreational marijuana the same year. Colorado has three quarters the population of Washington State. At the end of the year, Colorado had $375 million in tax revenue, and Washington State had 50. The reason for that is that Colorado had the tax rate at about 28% and Washington State, no kidding, had it at 108%. What you're getting at there, Nicole, when you're talking about having this real estate tax is it's going to start to push the wealthy people, the people are helping to pay the taxes out of the state. Because people aren't going to want to pay more taxes than the average person does on a piece of real estate. Mark Wallberg famously moved out. He had a nice little piece of property there with a little three-hole golf course, and he's moved to Las Vegas. Why wouldn't you? If other countries are offering you better tax rates, why don't you go there?

I'm guessing you've been to Monaco. Have you been to Monaco before?

I have.

Yeah. Well, you go to Monaco. There's a difference between Monaco and Disneyland. Disneyland cleans the streets three times a day. Monaco cleans the streets four times a day. Why is that? They don't have an income tax. They got a value-added tax. And so everybody's paying the same tax rate, but they got more tax dollars than they know what to do with. So they clean the streets four times a day.

It's very nice. The streets are very nice. You can walk. But what you're saying basically is that the market can only take so much.

Yes, exactly. And it can only take so much in a predictable way. That's the other point, too, is that you can actually figure out, you can predict what it'll do when you introduce change to it, both on the demand side, if you raise the prices for taxes, or if you drop the tax rate, for example, the tax rate. Getting back to marijuana. Why did Colorado make more money than Washington State? Well, a simple answer would be, if I want a lot of money, I'm going to add a big tax to it. Well, that's not what happens. People just go other places to to buy that product. Yeah, we're in California. Yeah. So Washington State, with its 108% tax in 2014, was losing out revenue to the black market and other markets, and Colorado with its 28% tax. Why would you pay more if you can get it for less some other place? Now, when it comes to real estate, of course, people have to move, and there's a moving cost associated with that. But the taxing authorities need to understand that the response is going to happen relative to what happens when you change the taxes.

And in fact, if you wanted more tax dollars in this state, I would argue they need to study what would happen if you dropped the tax rate. You start to draw people here. And people that have more money would be more inclined to come here if the tax rate here were less onerous than it is right now, if it started to approximate what other states do.

Yeah, because there's also other ways the state makes money from other kinds of taxes. Yes, exactly. Which people can contribute to. So you basically say if you tax the rich, you make no taxes. If you do the opposite, you make no taxes. So the answer is somewhere in between.

Yeah, that's actually what's known as the Laffer Curve. So Arthur Laffer is an economist that's here in Southern California that I think he still teaches at USC. He was part of the, I think it was the Reagan administration. He actually came up with a curve that said if you had a zero % tax rate, you get zero revenue. If you had a hundred % tax rate, you get zero revenue. And somewhere in between is the right answer. So here in California, again, getting back to marijuana, what we see is we have the tax rate is so high that people try to go off into the black market. And now you've got law enforcement trying to make sure that people are abiding by the law. You're actually taking away the tax dollars that you would have because you're pushing it back into law enforcement because you made the tax rate too high. What you want to do is you want to get close to that edge of this frontier so that you can maximize what you're going to get. The state is oblivious to that. And so because of that, they're taking money out of the taxes that they could get, and they're pushing into law enforcement where they don't want it to be.

They could switch it all around with just changing the tax rate.

So if you were in charge of that, would you say make the tax rate slightly more than Colorado?

About Colorado. Because it's a little bit higher. And that way, you wouldn't have people a little bit higher. But yeah, to travel to Colorado, maybe make this 30. And then all of a sudden, everything gets mellowed out here. We don't have to lose all that revenue that we've been putting up.

I've seen that your model has been validated by 13 published papers. In your book, of course, you had multiple awards, a patent, and customers like NASA, Lockheed Martin, Virgin Galactic. You I also say a restaurant down the street. I also think that's all very cool, and I would love to know which restaurant you're talking about and what happens.

We have a little restaurant in town, and they don't mind me to use their name. It's called Oggies. That's actually a small chain here in Southern California. Oggie, I, apostrophe S. That's supposed to mean today's in Italian. But of course, if you know any Italian, they really meant to say Dioge. But anyway, that's either here or there.

I believe they didn't get it tattooed because I've seen some weird incorrect Italian and Latin and stuff like that.

Yeah, it's crazy. You remember during COVID here in Southern California, you could eat outdoors in early 2020. You remember all that? People were eating outside. At the beginning before, a lot of the municipalities let the restaurants burgeon into the parking lots, you were constrained to whatever patio area you had. We went down to our local Oje's here, and we're going out the door. We used to always be able to get a seat there. We go there usually once a week. We were going down to get a seat, and the line's out the door. I went out and I looked at what the seating arrangement was. We knew the manager there. I said, Hey, Kayla. She goes, Yeah, Doug. I said, Do you want to make Do you need more money? She says, Of course I do. What a silly question. What do you have in mind, Doug? I said, Your seating arrangement is all wrong. She says, What do you mean? I said, Well, you've got three tables of six, you got three tables of four, and you've got a couple of tables of two. Have you ever noticed, because I have, that the average party that's coming into your place is a party of two.

Now, it turns out that when you do a little bit of research, and I did, that there's more than 2.2 Two five times as many parties of two as there are parties of four, which means that if you had a limited seating space, you'd have two tables of two, one table of four on average. I said, so what you need to do is you need to take out some of the tables of six. And because she trusted my opinion, I said, Look, I want you to record what you made for revenue this month and compare it to what's going to happen a month from now. And so she did that, switched out the tables, not as much as I suggested, but enough that it made a difference. Her revenue shot up 25% in two months. Wow. Just from doing a simple rearrangement that understood that there was a demand curve for seats. So there's only a few people Parties of six or more, there's just 5 or 6% of all parties are that big. Then parties of five, parties of fourth, parties of three, parties of two, parties of one. It turns out that there is progressively more and more people on a percentage basis that go into these categories.

And so understanding that, what's going to let you maximize your return for a particular restaurant.

Hold on to your wallet. Money Rehab will be back. And now for some more money rehab. In addition to this very cool restaurant that I'm sure now loves you, and you can always get a seat there, how do you work with companies like NASA and Virgin Galactic and Lockheed Martin? I'd love to know from a high level, you not only had to pitch these big companies, but you had to educate them on a completely new way of thinking. How do you do that?

What we do is the papers have gone out into the ether, and so we're part of a professional society. In fact, I won a best paper overall award back in May.

Congratulations.

Thank you. I got a chance to address several hundred people to talk about what it did, and I showed how Markets are interconnected. What I managed to do through this network is I managed to get people who are in the industry, a lot of worker bee types, to start to talk to their management to actually incorporate that stuff. Some of the people that are in management are people I knew from my old days back at Lockheed Martin. I used to work for the Skunkworks for three decades. And so what they understand is that I can solve problems that other people can't. For example, I can't tell you the company for which we did this work, but I can tell you that there was a company that was interested in knowing what's the value. This is an important question now because Boeing's in the news about all their safety issues. They, of course, had those two planes that went in the water, and now they've got a space capsule stuck up in space. A lot of big companies, especially in aerospace, seem to think that safety is just a cost element. I was asked by this one company to say, what's the value of safety?

And so we went out and gathered a whole bunch of information from a bunch of different sources, including, very importantly, the Russians. I don't know if you've flown on a Russian plane. I haven't, but I We have to know that there are very safe planes, extremely safe. If you compare them back to planes that existed in the '50s and '60s. But since then, the safety standards have come up with quite a bit. In the Russian planes, it turns out, specifically the Tupilov 204, for example, it crashes 3.5 times as much as the Boeing 737-800. That's the plane that Boeing had before the incidents that they had. It turns out that if you're 10 times safer, people are willing to pay more. They pay about another 50 % for being 10 times safer.

I've heard you talk in your research about Verne Rayburns. This is an early Microsoft guy, aerospace company, Eclipse Aviation, which filed for bankruptcy in '08. This is a cautionary tale based on hypernomics?

Yes. In fact, that- So what went wrong? That was actually one of the first things I did a study on. Vern Rayburn was the eighth employee at Microsoft, and he left Microsoft in the early 2000s, and he formed a company called Eclipse Aviation. They were building a little five-seater personal jet that was going to go 400 and some miles per hour. It had a nice range. It was really cool. And so, Verne coming from the computer industry, said, Well, I'm going to build planes like I used to build computers. I'm just going to crank them out. And he didn't understand that building aircraft is different than building a computer. When your Microsoft computer crashes, what do you do? You hit the reset button. Well, when the plane turns off in midair, you just don't hit the reset button. It's a bigger deal. It's higher stakes. And so, Verne did about two or three things wrong. The first thing he did was his plane, by our analytics, was worth about $2.2 million back in the early 2000s, but he priced it under $800,000 to begin with. Now, what would happen if you had a series of condos?

They were all worth a million bucks, but you decided to sell them at $400,000. You'd be flooded with offers, right? People would come and buy them up as fast as they could. So he gets flooded with orders. He gets 2,600 orders in his pocket, which is about five times as many sales per 10 years as the most popular business jet out there right now. And so he's struggling to try to keep up with this demand. He puts out his first jet, and because he didn't understand that jets tend to grow in weight over time, he put it out with a really small engine, and that first jet didn't really work right. It couldn't take off in the specified distance. And so he had to build a new jet, and that finally worked a little bit, but then he ended up getting some safety issues with that. And long story short, he couldn't make the orders that he had to fill, and so he had to file for bankruptcy, all of which could have been solved by understanding what the value of that speed and the passenger capacity in the range was. It was pretty clear.

In fact, when you do the arithmetic, as we did, It turned out that the chance that he had this price right was less than one in 100, but he fated into the distance.

I'd love to also double-click on your fund. No, this is your own fund. Nobody's allowed to put money in, but it's crushing it compared to the S&P, which is awesome. Can you give us some of what you're plotting or what your methodology is to what you said one and a half times the S&P?

What we do is you could guess that people like certain features in stocks. They like dividends, they like high return on assets, they like a high book value to actual price. They like a whole bunch of different features. What we do is we go out and get the S&P 500, we bring it in for analytics. What we do is we look for the features that we think we like and that the population likes. Many of those same stock features that I just mentioned to you, debt ratio, PE ratio, all those kinds of things. What we do is we use our software, our tool, that lets us pick what they call in math an objective function. The objective function would be maybe the stock price. Maybe you want to figure out what the stock price should be. Then the stock price is what you're trying to figure out. Then there's all these features of the stock. It's return on assets, it's book value, etc. What we do is we put those features into the data and we start to compare how the stocks are performing all at the same time relative to that one variable. We might start out with dividends and the book value, and then it might add in on assets or return on equity and things like that.

What we do is we'll get a list of all the stocks and we'll get a chance to check what their actual value is compared to their predicted value. If the actual value is below the predicted value, we would look for the ones that are most undervalued, and we would put it together, say, three of these variables and figure out what this thing is worth. Then we would go off and take a different set of three variables and do the same thing again and find a different set of stocks that are underpriced and do this over and over and over again. Eventually, then you get a series of lists of stocks that are potentially undervalued. You try to see if those lists match if the same stock keeps showing up over and over again. And if it does, then you go ahead and buy it. And then we have in our algorithm, we have a certain buy point that we make, and then we have a certain sell point. And one of the things that we do that not everybody does is we sell away before we think it's going to peak. So we sell while it's on the upswing, and we don't continue deep into its upswing.

We have a certain point at which we actually cash out and take the money and run. The idea in a nutshell is that you try to find things that are low, objectively, based on what the market is rewarding overall. Now, having said that, the one thing we won't do, you'll never find a NVIDIA or an Apple in the first year or Microsoft in the first year because they won't have the stock figures to support this. What we're buying are a bunch of stocks that have typically been around for 20 to 100 years, in some cases over 100 years. But the market is undervaluing them in part sometimes because they're not cool. For example, we just made money on Bunge Global, which is BG in the stock ticker. And what is it? It's agriculture. It's an agriculture company. It makes food products. And so it's not very cool or sexy or whatever you have you, but it was undervalued, clearly. And so if you do the analytics, you can point yourself to what's undervalued. And what we also do is we cash out more frequently than other people do. Warren Buffett famously said, When asked, they asked, Mr. Buffett, what's the best time to sell a good stock?

And he says, Never. He also has held Coke for forever, Coca-Cola. And he points out the one in eight ounces of every liquid that people are drinking in the United States is a Coke product. So he holds it forever and ever. And what we noticed was a little cycle in the market. And so it turned out that for several years running, come about early March, the stock would hit a low and that would start to pick up as summertime would come, people get thirsty, they're drinking more and more stuff. Then it would fall off a little bit just before the holidays and the holidays would hit, and Christmas would come, it would go up. Then it would keep going up after Christmas. We started to think, why is it going up after Christmas? What's going on? In America, we have a thing called the Super Bowl, the NFL Playoffs. The stock would keep going up to NFL Playoffs, then it would go down to another low. Now, as it's doing this, it's ratcheting up and up, but Each year for several years running, there was a little trough just after the Super Bowl, and then it would hit a peak just before the Super Bowl.

We cashed out, we bought one at a trough and sold it at a peak, close to a peak using something like that. There's some There are other techniques you can use to study the market, too.

So you think Warren is wrong?

Nobody wants to say Warren is wrong. I would say that he could make more money still if he kept cashing out. But he points out that I heard him say that he owns one-twentieth of everything that's in the United States. So what he can do and what you and I can do are different things. And so I think he's got some different constraints that are facing him compared to you and me.

What would you say is undervalued now? Do you have any?

Yeah, we like some of the oil stocks. We're in Devon Energy right now, and I think we're still in Marathon. I'd have to take a look, but we think several of the oil stocks are undervalued. And we also think some of the agricultural stocks are undervalued. We also are doing a little bit what Buffett's doing, too, is we think that the market... There's a thing called the Buffett Indicator or Index. I don't know if you've heard of this, which is ratio of the Wiltshire 5,000 all the stocks in the United States, the ratio of that market cap, which is about 58 trillion, relative to the US GDP, which is about 30 trillion. When that number starts to get much above 1.7, and it's approaching two now, Warren Buffet would tell you that the market is overvalued. We've taken a lot of money out of our fund, out of the stocks, and pushed it into cash in anticipation of the market having a correction. Now, we're not Bernie Madoff. We can't get it exactly on the peak and exactly on the trough, but we anticipate there's going to be a correction in the market coming up here pretty quickly.

A quarter, two quarters, three quarters.

That's the main indicator that you're Are you pulling it?

Yeah, that's one of the main indicators. We're not too fond of the money supply having grown 400% back in 2020. Nobody really was raining in the Federal Reserve, and so they kept cranking the printing presses. Here we are four and a half years later, and we're still suffering from the inflationary effects of that. Now, to their credit, they've been pulling their money supply back, but it's still quite a bit higher than it was before. I think it's going to take them a few quarters to get that corrected.

So what else do you see with these peaks and valleys right now? Of course, the stock market is cyclical. Warren Buffett said he's taking some money off the table. I think he just sold a bunch of Bank of America. It sounds like you can agree on that, but the peaks and valleys, I'd love to just zoom in on that for a second. You say that the intensity of the peaks and valleys are going to lessen over time. What does that look like to you and that these cycles are going to get longer? Right now we're hitting record highs, so everybody feels like we're in the go-go days.

And what Warren Buffet would tell you is that when everybody's excited, you should be fearful. And when everybody else is fearful, you should be excited. And so what's happened here in the world is that people overreact to everything. So the 2008 real estate bubble was an overreaction. And it's my hope that when hypernomics starts to become widespread into academia and to the business arena, people would say to themselves, Do we want to rely on these rating agencies to get the exact right rating for us to make the decision to buy into this particular fund? Because I believe pretty much what happened after all the shrapnel came off of the 2008 bomb there, that the rating agencies were overrating those bundled mortgages. The bundled mortgages were very hard to understand, only a few people did. And a lot of people were getting houses that shouldn't have. And so what this did is It made people way too over-optimistic. And if hypernomics, I would argue, is more widely spread, this run-up is going to start to dampen over time. And so if the peak goes, if the trough to peak goes, say, 20 or 30% in the stock market, we think what will happen is that will go down by a third to a half over time.

That's the height of a wave. Then we think that the frequency of the wave will slow down, too. All three of those things could have been either avoided or dampened by a less strenuous reaction to the market. We think that the frequency of these troughs and valleys will start to decrease, too. That's because people understand that they're overreacting to a product. If they can measure the correct reaction to a product, they can measure the overreaction to a product.

That's why I guess you We could put 9/11 in a different category. That would be like a bless one event. We can't really quantify that. What scares people, of course, because it is terrorism and that's what it's intended to do, is that you don't know when the next one is, or you can't really model out or quantify what the ramifications are in the same way that you could with real estate.

Yeah, you can quantify the real estate runups, and you can figure out if they're out of bed or not. In fact, another little local example, I'll be in one house, you can go analyze. This is an interesting piece of real estate. It's in the news or been in the news. There was a house called Stone Manchin in Alpine, New Jersey, 20 miles north of Manhattan.

Oh, I did a whole story on Alpine, New Jersey when I was at CNBC.

Maybe you saw Stone Manchin when you were there. It was It was put up around 2000. They put it up and it was a fabulous property, 30,000 square feet of acre after acre. It was on the Hudson. It was beautiful. But the owners priced it at $69 million. Our software suggests that it should have been priced around $25 million. About eight years went by and the seller dropped the price to $39 million. It took him another five years. 2013, he finally sold it for just about the price we predicted early on. And so he was holding this property the whole time with nobody in it. $25 million worth of assets just sitting there. Now, I know from reading your books that you don't like the idea of assets sitting around.

I'm so glad you brought up this example because I think this happens a lot with real estate, too, in the rental and in the purchase market, because you'll see people just shoot their shot. They really overdo it with what they're listing their, let's say, even a rental at. And it sits there for months. And then this opportunity costs, like that you don't have somebody renting, and you don't have any income coming from it because you tried to get a few thousand dollars more, and the market just wasn't having it.

That also happened in London at the Shard. You've probably been in the Shard or seen it, right? For those of you that don't know what the Shard is, the Shard is the tallest building in Europe, I believe. It's certainly the tallest in London. It looks like a big pyramid as the name implies, of Glass coming off the sides. And it was fancied as being a new financial center and a series of really high-end apartments. And so they put the property up and the builders thought that, why It's the best building that all the financial properties have. We'll price it like the other financial district properties. But the problem, for those of you who know London geography, is that the financial district is north of the Thames, and the Shard is south of the Thames. They're miles apart. We're not having the idea that I'm going to pay the financial district prices for this property despite its height, and you can scream and protest all you want in order for us to get into the bill to drop the price. So they didn't get that building fully occupied for three and a half years on a rental basis because the prices were too high.

It's the same thing is that people don't understand everything that's involved in the property, and they need to drive out these other features so that they can make a more correct determination on what's going to actually clear the market.

Yes, absolutely. I was just looking up because I think that Qatar owns the Shard. Something like that. Anyways, so many areas to dig into. Even more, we could talk forever and ever. But we end our episodes, Doug, by asking our guests for one-tip listeners can take straight to the bang. I know you have so many, but if there's something you can leave our listeners with about applying hypernomics to their own little microeconomy at home, any tips on using this in your real life investing, budgeting, saving, anything?

Yeah, you could... Well, I would... Just to pump the company a little bit, you could go to hypernomics. Com and see a bunch of vignettes that we wrote to talk about how to use this for your own life. But it basically turns out that things that you think valuable are probably things that other people think are valuable. If you can find more of that in yourself, you're going to make yourself more valuable as an employee or a business owner. If you find something that's valuable for a product you want to buy, you want to try to go about trying to quantify that for yourself. For example, if you're an NFL receiver, for example, and you've been in the league for a certain number of years, and you want to figure out how you're going to increase your value to your employer, the receiver is that you might guess that if everybody gets four catches per game, what's going to make you more valuable to your team? What if I get faster? What turns out when you apply hypernomics to these NFL wide receiver, as we did five years ago now in 2019, if you can get one 20th of a second faster, if you're the slowest guy in the league, that gets you another $600,000 in your pocket.

If you're the fastest guy in the league, get another 20th second out of it, it puts another $1.3 million in your pocket. And so my suggestion to your people is to figure out what you already know and then try to weigh out those features and see how it applies to your own life. And then go ahead and make better decisions based on those internal signals that you have, because your internal signals are going to probably match that of the market. They usually do.

Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive Our producer is Morgan Lavoy. Our researcher is Emily Holmes. Do you need some money rehab? And let's be honest, we all do. So email us your moneyquestions, moneyrehab@moneynewsnetwork. Com, to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Moneynews and TikTok at Moneynews Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.