What Hath God Wrought & the Timeless Rules of Money, Power, and Information | Ep 125

James
I just finished a 900-page Pulitzer Prize-winning book about 1948 and that around time period. And I'm going to be honest, my biggest takeaway from that entire thing was like, Solomon was right. There is nothing new under the sun. And so we're going to talk about that. And why that matters for real estate investing in today's podcast on the Furlo Capital Real Estate Podcast, because we dive into the intricacies both now and And then of passive real estate investing. And our mission is to equip people with the hindsight of history to invest wisely in both property and residences so that together we can build wealth while improving housing. I'm James, and this is my wife, Jessi.

Jessi
Yep, I'm here. Yeah, I think you're right. I agree. I think I'm right. I agree with that. There's nothing new under the sun. Correct. Yeah. It's all the same.

James
If you listened. To our Jesus podcast episode. Yeah. Like, oh, yeah.

Jessi
There was something that we were, oh, I think we were talking about politics the other day. Yeah. And I listened to something on a podcast that was like, What in the world? Like, this same issue politically happened, yeah, 50 years ago, 100 years ago, 200 years ago. Like, The same types of conflict and how people deal with them are like. This is ridiculous. Yeah. How have we not figured this out? But then, I mean, you go back to biblical times because you got to read a 900-page book like you're talking about, right? And it's like I didn't read it, I listened to it on Audible, but still, it was read.

James
Someone read it to you. That is true. It was read. Oh man, it was a lot. So this is part of our series this year, where we're celebrating the 250th birthday of Hellos hostados enidos. Sorry. We were in a Mexico meeting, so I got Spanish on the brand.

Jessi
I mean.

James
And so, United States, America. And. So to do that, I'm reading books that span all of U. S. history. I broke it into quarter centuries. And so this quarter century happened to be 1825 through 1850.

Jessi
There you go.

James
And the book that I read was called What Hath God Wrought? Which we'll actually get into the title and how it was created a little bit later on today. And so, throughout all these books, so I've read about Washington, Lewis, and Clark, and now this time period, which wasn't about a specific person, though, we're also going to dive into a very specific person, which is very similar to another specific leader today. And and so, um, so, anyways, um, been reading these books and then while reading them, yes, enjoying the history and soaking in the amazingness that is America. But also, like, yeah, what can I learn from this? Right. Because history does rhyme. Yeah. And that's part of what Solomon was saying in Ecclesiastes, where he says there's nothing new under the sun. Like, that's his, like, yeah, man, a lot of these things. They all come up.

Jessi
And I think that's true for the same tendencies, the same problems, the same thought processes.

James
Yeah. Yeah, we tend to think that there's something called a novelty bias. I was looking this up. It's where we think our moment is uniquely chaotic.

Jessi
It's so true.

James
Yeah.

Jessi
So, I mean, you hear it all the time with parents talking to their kids, and they're just like, oh, when I was a kid. You know, like this was so simple, or that wasn't great. You like, yeah, you have no idea. The world's going to pieces now. And I was like, dude, that's what my grandma said.

James
I'm going to blow your mind. There's so much that we're going to talk about. I guarantee you, you're going to be like. Oh, here's my guarantee. By the time you finish listening to this podcast, you're going to be like, oh, 100% right. Like, okay. Okay. And I've had. Yeah, it'll be interesting to talk about the conclusions, but let's just kick this off, okay? So let's talk about 19, let's talk about 18. 37. 1837. Okay. There was the panic of 1837, right? There was easy credit. Which, you know, think low interest rates, easy to get loans. There was a lot of speculative land things going on because on the West. We had the Louisiana purchase was done, and people were like, oh man, land. So people like thinking, oh, Land's just going to keep going up. No big deal. Tell me if that sounds familiar yet. And then There was a sudden contradiction, and a lot of that was driven by the president doing some stuff, which we're going to talk about a little bit later. But here's the deal: like Land sales, they were up by 400%. Holy moment. Like, we're talking like through the roof, just people selling like crazy. If this sounds like 2005 to 2008, like you're on track here. And then it was President Jackson. He did a thing called a species circular, which essentially he was like, Yeah, we're changing the way banks run and how credit happens. And just overnight. Crashed it, seven-year depression ensued. Oh, again, if that sounds a little bit like 2008, you're right.

Jessi
Wait, what did he change?

James
He was not a fan of paper money. He liked the hard assets, money being backed by gold and silver. There's also a banking thing, which we'll get into a little bit later. And so he was like, I don't like paper money anymore. And because apparently, again, tell me what this house failure. He was just like, I'm the president, changing the rules. Here's what's happening. My word. We're going to get deeper into that one.

Jessi
Okay. Okay. I'm sorry, I'm like off track on this because it's just so fascinating to me. I claim that I don't like economics, but then we start talking about it. I'm like. Hold up. Like, Alex is amazing. Right. I get all like worked up, and I'm like, um, really? Like, that's how this works. So he just essentially said, like, your dollars are worth nothing. You have to use gold now.

James
No, no, no. It was dollars backed by gold as opposed to backed by just how it is today, just by the faith that this is worth a dollar. Yeah, it was weird. Like, there wasn't just. And currency at the time. There were multiple currencies. And he was able to say, the government is only going to accept this kind of currency. Now. Wow. Yeah, because they were still like they were fingering it. Yeah, they were still ink. Trial and error. Bibbity-bobbity. Yeah. So here's the deal: civilization didn't end. Right, it was a cycle, it was bad, and then by the way, we had a massive boom period afterwards, and so I think that's like And and oh, and the other one, my other note was that just wealth was reshuffled, right? It shifted between people.

Jessi
Sure.

James
And I think that's. What we saw in 2008. Yeah, like, I mean, for some people, it seemed like it was the end of the world, and it was genuinely bad. Like, I'm not trying to minimize that. It was bad, but it wasn't the end of civilization. It wasn't the end of the United States. And And I think that's true. Like, we saw that with COVID, right? Where like things went a little crazy. It wasn't the end. That obviously had a different catalyst, but. But I think, but the point of what I'm trying to say is: yeah, these things come. There's cycles. And if you know it, You don't over-correct or over-react because you go, okay, we've seen this before. And here's kind of how this, and it's not like these things get fixed in a year, even though that's what everybody wants.

Jessi
It's like, no, these are.

James
These cycles take a while, and that's okay.

Jessi
It totally reminds me of like biblical examples. I mean, you talk about Solomon and like his perspective on things, but it's like Oh my word, this is so true. Like, just looking back at stories from the Old Testament and the Israelites, it's like, okay, and now there was 70 years. Of famine or exile or whatever it is. And now there was 40 years, and it's like, oh, okay. Yeah. Yeah. Yeah. It was not, like, it was a full generation before it got reset or. Moved on or whatever. And then it's like, okay, now you had this whole great span, and this person stepped in and tanked it. You know, like you're talking about.

James
This just tells you how like tenuous things can be, too, when you have like a single person. Right.

Jessi
Do all that she has that much power.

James
It is what it is. I think this one's kind of interesting. It's about New York. And in 1817, so this is. A little earlier.

Jessi
Yeah.

James
New York, like New York City, it was decent. Like it was good size, but it wasn't like Philadelphia and Boston. That's where it was massive. They were the big cities. And then, who is the guy? I feel like I wrote down his name and I didn't make it into my final version. That's okay. There was a guy, he decided to dig a ditch.

Jessi
In New York?

James
In New York, from Buffalo and New York out to the water. They called it the Erie Canal. Which everyone was like, this guy's crazy. He spent a ton of money. This was in 1825. And I'm thinking I might get my numbers right because I read a second book about this and they had like slightly different numbers. But essentially, it took shipping. Shipping went from $100 a ton down to $10 a ton, just like dramatically dropped costs. And so, shocker, everyone was like, oh, we're going to ship to New York now. Yep. And that was when New York exploded, grew and kind of like never let go of that mantle.

Jessi
So, okay, let me see if I get this right. So, the Erie Canal was dug so you could like, so you could take ships further inland or further inland.

James
The big thing that ultimately took over wasn't invented yet. The what do they call it? The old iron horse. Yeah, to the railroad. Which we're going to talk about that. That's also happened in this time period. It was a wild, like, we talk about like Like crazy change happening at the speed of it. Like, yeah, in this one of the 1800s, people were like, things are changing so fast, I can't keep up with it. Oh my gosh, how do we manage all this? Sound familiar.

Jessi
AI, cell phones. Wow. Yep.

James
Yeah. And so the question that I want to ask around this one is: what is our Erie Canal? Like, what is this thing that is coming along? Where you're like, oh, this is going to make a shift in where things and people's behavior and what they're doing. How do you make sure you invest in that? And you're not like Philadelphia, who's like, nah, we're good, like, we're fine. And just ignore it. Wow. So you don't like so that's my that's my question. And I mean, there's the big stuff, right? Like AI. Sure. Great. But I think there's also questions just locally in terms of development. Like what's what's Going on there. You know, like, I know, like, Lebanon, what was this like, this was like a decade or two ago? It was like, we're going all in on the teaching hospital. Yeah. Like, that was a tectonic shift. Which at the time people were like, oh, okay, yeah, that's interesting. I think we could all kind of see it. Like, oh, yeah, if they pulled this off, this could be good. They did, and it was, and it continues to be good. I think that was Oregon State for Corvallis way back in the day. Like that changed things. For them. And I think there's things like that that happen. And those are big citywide examples. And I think those things happen in a neighborhood as well. Near Corvallis High School, right? There was a big house that was on a It was like a, it was huge, um, like a huge lot, and now they're turning it into um uh cluster cottages, like a whole bunch of different houses that are on there, right? And to me, I'm like, oh, that's a new building trend. That everyone's going off of. And it was funny. I was at a presentation, and this lady said that she did a cottage cluster. The big reason was if you did an apartment, it was an apartment. And she goes, and it was like a, it was crazy. It was like a two-year, maybe even three-year get-through with all the approvals and permit process. She goes, but instead, I just built eight. Homes, which is that he went, oh, it's a home. And it was like a two-month process because it was easy. And so she's like, I could get started today, even though the building costs were technically a little more expensive. Sure. And it wasn't as efficient of the use. But she was like, I lost out on one unit. And she goes, and honestly, like people want to have their own walls. They don't want to have the shared walls. So I can charge a little bit more. She was like, so mathematically, it kind of came out. And she's like, and I got to get started like years earlier. And so there's trends like that. But the question is, you, as an investor, as you're looking at, like, what is your Erie Canal? That's either a massive project, or again, even more local. Like, what is that thing where you're like, oh, this is the change, and people are going to change as a result of this? I want to be on that.

Jessi
I mean, to me, it kind of seems like some of those outlying places as well, you know, it's like it may not be in the city that you're in, but like you were saying, there's these tangential other places that like. Oh, this place is putting in the hospital, or this place is building a school, or this place is closing a school, or this or that. And it's like, yeah, okay, maybe I'll shift. Because I mean, like, a couple of the elementary schools are going to close and shift students to different places. Like, housing is going to shift, I'm imagining.

James
Where people are gonna well, there's questions like what are they gonna do with that real estate? Like, right? There's there's opportunity there. We all don't know 100% what it is, but there's something that's definitely there. And at the very least, like you're talking about, there's some sort of Oh gosh, it's not generational shift. It's you know, it's just different ages. It's just population shift. Population shift. Demographic. That's what I want. Yeah. There's a demographic shift that has happened. Or has been happening, and we're starting to see the impacts of that. It's like, okay, like, we got to pay attention to that because that's going to matter.

Jessi
Yeah, it affects.

James
I think you've seen stuff like a lot more senior housing options wanting to become available. I think that's a big one. When the interest rates were super low and then jumped up, there was that. There was a huge opportunity there for subject for taking. Homes subject to the existing mortgage because all of a sudden you can lock in that low interest rate. Like that was a shift that happened. There's a bunch of them. And so got to be looking out for those. Paying attention to them.

Jessi
Find your eerie canal. Oh. Don't be afraid to dig it. Yeah, dig that ditch. Whoever that guy was.

James
Yeah. Gotta be smart in how you do it. But yeah. All right. Here's what I labeled this one. You ready for this one? Old Hickory and the Orange Tornado. Same play, different stage. So, okay. So, President Jackson had a nickname of Old Hickory. I wish I could remember why. Probably had to do something with some sort of wood.

Jessi
Like a tree.

James
I think who knows? Yeah. I don't know. I don't know. And some people refer to our current president. Mr. Trump as the orange tornado. And so I decided to have a little fun with that. Nice. It's shocking the parallels. All right. So I had to write these down. So Jackson, he was a populist. He did what the thought was popular. He was combative. He was despised by elites. He was beloved by ordinary people. He declared war on the central bank.

Jessi
Does any of this sound familiar?

James
Yeah, so crazy. There's this guy, his name is Biddle. He was kind of like the central banker guy. He tried to force through an early charter renewal of. what was supposed to be like the new national bank at the day. They called it the the BUS, the bus, the bank of the United States. And he tried to do it in 1832. Jackson vetoed it, and then he ended up winning reelection in a landslide and just like killed that bank off. And so. And what happens was, like, all this money has to go somewhere if there's no more national bank. And so it went to all these state banks that were friendly with him. And his friends. Oh, my goodness.

Jessi
And it just power suddenly, like economic power suddenly shifted.

James
Yes, that was part of what helped ferment. The Panic of 1837 was him preferring his friends over a national thing, which again, if this sounds familiar. It's because it is. Oh, um, I will say there's a bunch of things that Trump does that I like There's a bunch of things that he does where I'm just like, oh my gosh.

Jessi
Yep.

James
And his whole war on the Federal Reserve and just wanting to just lower interest rates because it'll look good. I'm like, come on, man. And, like, gotta let these things do their thing. Which, thankfully, he's not going to win and do that. Let's see. They both governed by personality over precedent. They were both hostile to and yet dependent on the media. Yeah. Oh my god. And there was the same establishment panic.

Jessi
That's so wild to me.

James
I'm listening to this. I'm like, dude, just like cross out his name, put in the new one.

Jessi
Which is incredibly crazy thinking about the time periods and what is going on culturally or economically, or like that it's my point. Yes. Yeah, is like. Weird. Like you would think it would be a totally different circumstance, even if that same person, you know, if you had taken Jackson out of where he existed and plunked him into today. Like, yeah. It's the same. It follows these same trends, these same patterns.

James
Totally.

Jessi
Wild.

James
Yeah, yeah, yeah. Yeah, their rhetoric listening to the book is almost the same. Like, again.

Jessi
So at this point. I'm trying to think through like the timeline of technology and where we're at. Like there's no recordings of Jefferson.

James
Of Jackson?

Jessi
Yeah, of Jackson. Uh, no, there's super fascinating. Like, if you played it side by side, like, were they similar in other ways?

James
Like, there's got to be transcripts of the speeches. Oh, yeah. If you like, you could then use AI to have Trump say it. And I think you'd be like, yeah. Well, the mannerisms are off, but that's totally something he would say. Yeah. And yet, at the same time, like he Jackson did amazing things. Like, he progressed the country forward in some really cool ways and enabled some really cool technology to happen. And And again, like, no one's perfectly good, perfectly bad. We're all kind of in some ways, you know, it's a mix. And so, and so he was. Let's see here. Jackson. Oh, how about this one? He vetoed more bills in one term than all prior presidents combined.

Jessi
Oh, my word.

James
They made a point to say, oh gosh, let me think if I can remember it. It was, they were saying, like, he found new and novel ways to interpret the president's power. And things that he would allow to happen. So I'm like, dude, again, that's what people are saying today. And which, yeah. So, all right. So.

Jessi
Fascinating.

James
Yeah. Right?

Jessi
Wow.

James
Just crazy. So here's, here's why this matters to us beyond like interesting and beyond the whole like Just take a breath. Don't panic. He's not going to be in there forever. It's okay. Yeah. It's that populist disruption doesn't always end in collapse. Look, Jackson, he killed the central bank. Any economy was fine. Yeah. It was okay. And I think there's still like the 190-year-old playbook is still good, which is buy tangible assets, reduce your leverage when there's unknown things, and be patient. Like, those don't change. Those are fundamentals. And so, what you don't want to be is the headline reactor, right? You don't want to reposition every time. The new policy changes.

Jessi
Yeah.

James
And whiplash. Yeah. Like when the whole tariffs thing was going up, like, I'm sure there were some companies who were like, oh gosh, we got to change everything. And others were like, okay, well, like, we'll write it out and see what happens. The guys who wrote it out, they turned out they were fine. And Maybe they'll get a reimbursement check. Maybe not. I don't know. It's super confusing. All right. Okay. You think times now are crazy with technology? Yeah. Yeah. Let's talk about 1800s.

Jessi
What changed in this time period?

James
Okay. Pre-telegraph. Okay. Pre-telegraph. All right, let's start with this. So, yeah, pre-telegraph. News traveled at a speed of 100 to 150 miles per day. Like on a horse? So yeah, set the speed of horse. The speed of horse. The speed of horse. Which Yeah, let's think about this. So, we're in order for us to get to the California border, we're about 233 miles, right? Ish, call it 250. So, two days. So, it took two days of travel to get to the border.

Jessi
Okay.

James
We're 600 miles from my parents. That's a let's call it a five to six day Message message, just travel time. Yeah, and then a guy named Morse was a portrait painter. Decided that wasn't for him. He took 12 years. Wow. Of work to come up with this idea that he had either heard about or seen. Like, there was ideas behind it. And he was like, I'm going to figure out how to transmit messages through wires. He eventually got $30,000 from Congress to make it happen. And then on May 24th, 1844, the very first message he sent was, What hath God wrought? Title of the book. And it was crazy. Within a decade, it was all over the continent. And it was instant, by the way. Okay, not quite instant, but like relatively speaking, he could go that 100 miles in like 30 seconds.

Jessi
Holy cow.

James
Like it was unbelievable.

Jessi
Yeah, that the shift between the two, the delta, is like. What?

James
Yeah, but here's what's interesting, and here's what I want you to think about. Okay, the winners in this new economy, in this new information age that they created, it wasn't the wire builders. It wasn't the people putting in the infrastructure. It was the people that exploited that information speed. Okay? So, I think it was like railroads. They actually said this is one of the things that enabled the railroad: they were able to communicate up ahead: hey, there's a train coming, look out, or the train's gonna be on this time. Like, we're on track, we just left the station. Without the telegraph, trains would have been. A lot more harder to coordinate and not as con and like people wouldn't have known. And so it wouldn't have taken off. The telegraph is actually the thing that enabled the railroads to work as efficiently as they did and become The iron horse, the thing that eventually all the canals got shut down because they're like, dude, the train's kind of way faster and it's over land.

Jessi
And yeah, yeah.

James
I mean, it's like it's I think it's hard to understand. I know, I know. Internet's kind of a big deal. Telegraph was like, it's up there in terms of also a huge deal. They could now like uh that was when the Associated Press got joined. Because what would happen is you'd have all these people like, Hey, we got news. Would they try to send it to a place? And they're like all these news people were like, Well, we don't want to like create new information. And so they created The AP, hey, this is Association of the Press where we'll get it and then we'll disseminate all the information. That still exists today. That was made then because of the telegraph. That's pretty cool. Figure out how to spread news.

Jessi
Yeah, that is wild. And even to think like, I don't know. My head goes to like just the normal average person in that setting of like, that's massive to have Been waiting, you know, for information and then now to instantly have it, like your life completely changes.

James
That was also why it was during this time period that they switched the elections, went to November on a Tuesday. And it was because they had to wait. It was like this magical time when farmers could get away. But they also were like, we can't do it on a Monday because we need to give people our church on Sunday, so we need to give them a day of travel to get wherever it is. But then they were able to tally everything up and send the results. Fast so you can get it all.

Jessi
Right. It didn't take weeks and weeks to kind of gather it.

James
Yeah, because it used to kind of be like, hey, would like each state will kind of do it differently. And it was like a five to six month Type of thing to figure it out. And I went, nope, boom, we're doing it quick now. Wow. That was another change that happened, which you're like, that's like a massive political shift. Because it went from Oh, yeah, all the politicians could travel to all different places, do their things. Like, nope, can't anymore. Now you got to make a speech, and then we're going to send it over, and other people can read about it and get the news. And that was like People talked about having information overload and getting too much news. Like, I can't take it all in. What do we do? I can't.

Jessi
And brains would have expanded. It feels a little bit like. Like the frog in the boiling pot of water, where it's like, we're just kind of in this simmering, and it's getting hotter and hotter and hot. You keep saying, like, it wasn't the end of civilization. I'm like, do we ever get to that point? Because I kind of feel like if it keeps getting worse and worse. So here's the thing.

James
So that's. That's an interesting thing that you bring up.

Jessi
Unless you think you're more describing this. Like it goes up, it goes down. It goes up, it goes down. It's not like It goes up and down, but overall we're we're headed towards catastrophe.

James
Honestly, when the when Gutenberg first came out and invented the press, there's a whole bunch of other information that came out at the time where people were like, I can't tell what's real and what's not because anyone can publish anything. And tablet. You're like, all right, here we go. Well, you would like, it was a lot of money to print something on Gutenberg. And so, like, you would write things that would get people excited and pumped. Yeah, and so, like, which are like, yeah, dude, having a social media, it's the same thing. And so, like, yes. And, and I think this is an important caveat because, um, because I started the next book, which is about the Civil War. It's like, yeah, at some point it did almost totally collapse and crumble. And had a few different events gone a few different ways. Like, yeah, no, we wouldn't be a United States anymore. Yeah. So it actually did get pretty tenuous, and this is all kind of that lead up to it. They were growing so unbelievably fast. There was so much going on. And then there was also this one really divisive issue. That split them up, but the spoiler we'll get there, we'll get there, we'll get there. Yeah, so I think that if I think about AI, right, and I put AI kind of in that camp, right? And especially with the internet, right? It wasn't the Comcast of the Worlds. I mean, they're big and annoying, but like they weren't the big winners. It was people who took advantage of it: the Googles, the Apples, the Amazons. The Facebooks of the world. And so when you think about AI, yes, it requires a whole bunch of data centers and things like that in order to run it all. Like there's infrastructure. Data center people, they're not going to win. It's fine. Well, the question is, what's that layer on top? Who are they going to be? And is there a way to invest in them?

Jessi
So is another way to say that it's like not the developer of the technology, but who's utilizing the technology is actually. . The winner or take off.

James
Correct. Yeah. Who's able to leverage this technology to do better? And that's the thing, you hear about that with AI stuff all the time, where it's like, okay. What used to take 10 people now, with the help of AI, or maybe like in the short future, you can do it with one person, and they'll be using AI agents to help leverage them. You don't necessarily write code, you now create agents that go write the code for you and you're just kind of managing it. Like that's the future that everyone's imagining. I don't know. We also imagine flying cars and that hasn't happened. Yet, either so, um, it'll be interesting to see kind of where that ends up going, but it is the companies who figure out how to leverage it. I don't, I'm not, despite all that I I'm not convinced that it's going to be OpenAI and Anthropic and Google who are the major winners from all this. It might be people who build tools and services on top of Top of them, which to their credit, like they've got all these foundational models and they're trying to be the people to build all the tools and services on top because I think they get it.

Jessi
Yeah.

James
And so. There's a chance that like OpenAI figures out, like, oh yeah, this is like, which for now is like this, their whole chat thing is fun. And that could be it. I have a hunch it's not. I think there's something else. And there might be another company who builds it on top of their model. And AI, despite all the money and everything they're telling about changing the world, they're not the ones who directly do it. That's honestly my guess.

Jessi
Interesting. It's someone using it for something.

James
Yeah. I also have a hunch because in most things, like he gets one or two winners and then everyone else. And right now we got three big horses in the race.

Jessi
And so we're like, well, yeah.

James
One of them's going to struggle, is my guess. And that's the kind of thing. You got to pay attention to that. Like, that's another history rhyming thing. How many different smartphone softwares are there? Two. How many computer softwares were there? Two, how many big social networks are there? Let's see, there's Facebook and LinkedIn. I mean, technically Twitter exists, but it's a distant, distant third in the same way that Linux is a distant, distant third.

Jessi
Yeah.

James
Yeah. So I would not be shocked if, and my guess right now is that OpenAI is something that struggles, but we'll see. I don't know. Okay.

Jessi
That'll be interesting to follow.

James
So just to kind of, I'm going to skip that part. Yeah, it is interesting. And yeah, the Telegraph, man. It was a big deal. It was a huge deal. And I get it. Today, internet, social media, now AI It's all crazy. Like, yeah.

Jessi
Yeah, comparatively. It's crazy then. Yeah, comparatively, the technology is wild, even how much it's changed. But if you just put yourself in that little sliver of history and think about

James
The telegraph not existing and then existing is like, holy cow, change from it's awesome that I can FaceTime my parents pretty much anywhere in the world, but like, you know, if I think about that 600 Mile distance, right? It's amazing. And it was almost as fast for the telegraph. It just wasn't video or voice. But like, that was like wild. Right. And you think about what's the step change between Horse speed, five days of travel to get a letter to okay, almost, you know, within minutes.

Jessi
Yeah.

James
I now can get that quote, same letter. The same information versus a written letter to audio to then video, right? Like all of those are now instant. It's just a different media, but it's and it's the speed. That's the thing that I'm trying to emphasize, like the speed with speed at which it. Now I actually wanted to have the internet enabled. And they talked about this with the telegraph. Was all of a sudden like, oh, wait, we're competing. It's like a global economy. We're competing with all these other people because now we have faster travel, faster communication. You have all these local people who are like, oh, this is really hard. Like I didn't have to compete with the big guys. True. And the Industrial Revolution took off. Yep. Okay, I'm gonna. I'm going to do a kind of a hard pivot here. Just because I thought this was cool, I didn't know how to fix it in. So we're going to do it. This is crazy. So, yeah. The U. S. kind of came up with this whole manifest destiny idea. It was some journalists actually coined the term, and President Polk was like, I love this idea. And he was like, We're going what time for Maria now? This is 1840s. Okay. Early 1840s-ish to mid-1840s. Yeah, yeah, yeah. And so Polk's president, and he's like, we're going for it. Mexico owns a lot of the land. And he's like, I don't care. And so Polka was another, like, Character. They actually talk about he's probably the one that had he not won and it had been this other guy, like history would have been very different than what it was. Probably would have avoided the war and stuff like that. Maybe. I'm like, dude, you don't know. But, anyways. He was like, We're gonna take some troops and we're just gonna march near the Mexicans and we're just gonna get near them. That's all just baited them. Finally, Mexicans were like, and I'm like, Oh, we're they would just step over the line, like that kind of thing. Mexicans took a shot, and like, oh, dude, you shot first. Game on. Wow.

Jessi
Yeah. Sounds like sibling rivalry a little bit.

James
Oh, it was, it was like, they were just looking for any excuse. Oh, that was a 100% what happened. And so the U. S. was like, we're all in. And so we started the Mexican-American War. And I got to admit, after reading, I'm like, Proud of that one, yeah, and uh, yeah, we definitely took advantage of Mexico, and they had a It was kind of interesting. He was okay. Don't forget about parties, like things flip-flop all the time. So he was a Democrat. Then he had the Whigs, the other party. Lincoln was a Whig. Polk was a Democrat. Again, parties move and change. Don't worry. Anyways, the two commanders were Whigs. So they were in the other party. And people were like, oh, that's kind of weird. They were like, why are we fighting this unjust war? Again. Sounds familiar. And so, anyways, they're doing a bunch of fighting. US is winning. And then Polk gets a bigger appetite. And he's like, you know what? I don't just want what is now modern-day California and Texas. He's like, I want all of Mexico. Like, I want to be able to get to the Baja Peninsula so that we can get our ships in there and like super, you know, whatever. Yeah. And so he's like, let's go more. While one of the Whig commanders was like, Dude, like, that's not the original thing. Anyways, this guy comes. Telegraph wasn't, like, the wires weren't out there yet because it wasn't U. S. territory. One of the commanders, he's out there. Polk gets upset with him, decides to fire him. But he doesn't really find out about it until he goes into negotiations with Mexico, offers them $15 million for essentially for California, Arizona, Nevada. I think they had already bought Texas. Like that was a separate deal, which was like kind of like independent for a little bit, hence the whole lone star thing.

Jessi
Yeah.

James
There's a lot there. Anyways. He negotiates this treaty, essentially, where it's like, hey, give us all this. We'll draw the line, or it's currently drawn today. Which Polk was like, what the heck? He was like, that was what you originally asked for. Anyway. Figures it all pays them $15 million for it. Just so you know, the U. S. also wanted to buy Costa Rica for $100 million. And instead, they got all this land and Mexico settled. They're like, we'll take it. It was crazy. So the U. S. grew like a quarter in size, and Mexico lost like a half of their country. Which again, like, Russia's like, Yeah, we know that move. Like, let's go for that. Yeah. Just insane. Crazy. But here's the nuts part: was So, all this happened. It all kind of like it got ratified, got settled down in 1848, if I'm remembering correctly. No, 1847, I guess, is when. What at all? Like, we got to settle. We're here. This is the U. S. And then the US also bartered with it was Britain and I think like France for Oregon and Washington. Okay. As well. And they kind of they put the line with France to say, Yep, Canada, that's there. We're going to take these, like this. It was just all Oregon, honestly, at the time, like Washington got split off later. And Oregon was actually really popular. Like, that's where everyone was going.

Jessi
Yeah.

James
And, and, um, and what was, and I was part of the U. S. , like, dude, we're there. Like, Come on. And so we negotiated with London or Britain, and we got that. And then in January of 1848, make sure I read this right. Um, what was his name? Uh, Sutter had a mill and he discovered gold in California.

Jessi
Hello.

James
Oh, yeah. And it was like It was unreal. Go Niners. Like, yeah, yeah, exactly. Well, that was what happened in 1949. A bunch of people from Oregon were like, well, dude. Forget this. Let's go. People started moving all and California's growth rate exploded. It was unbelievable.

Jessi
God, Mexico was probably like they said 300,000 people flooded California.

James
They were there by 1850. Like it was this whole thing. They were talking at one point. Like, when they first got started, you can make like 15 bucks a day getting for gold. And then they're like, but then it started to drop as more people were in there. It went to like $10, then $5, and like $2. But if you were like a tailor maker back on the East Coast, you were making 50 cents a day. So it was still a great deal. Sure. I mean, but it also tells you how much people were making at the beginning and why there was so much gold fever. You're like, wait, I can make. 30x, what someone over there is making. Yeah, I'm in. And then that was when people started coming from other countries over in Asia, like, we're doing this, let's get in. And that's actually one of the reasons why California is as diverse as it is, because it was like, it was pulling people from all over the world. Going for the gold, and they all stayed there. Yeah, and it helped it had pretty good weather, which is nice.

Jessi
Wow.

James
Yeah, absolutely nuts.

Jessi
Are there any? This is Kind of a side topic, but it made me think of that. Are there any other places in the world that had a gold rush type of thing?

James
I don't know. I don't think so. Seems pretty famous.

Jessi
Yeah, I'm yeah, it does, but I don't know if that's just 'cause we're American and I don't know. That's a good question. Like, you know, you hear about like diamonds in Africa, I guess, or like There's probably different things that were mined at different times and perhaps had ebbs and flows.

James
But yeah, that one's so here's here's the here's what I want to pull back for investors because we can often get caught up in the main of the next thing. Yeah. And that may not be the object, but really, what you want to do is you want to look at the next step removed. So, Sutter died totally broke. All right. There's a guy named Sam Brannon. He bought all of the mining supplies, and he was California's first millionaire.

Jessi
Oh, also from selling mining supplies.

James
Yep. Also, you want to know who also did pretty well? It was a guy selling Pizza by the name of Levi Strauss.

Jessi
Oh, my word. Mining pants, mining pants, working pants, gotta have them. That's so funny.

James
And so the question is: like, what, who are the people who are supplying the mania? Yeah. And, like, how do you get in on some of that? Right. So, you think about like every major disruption that we've had in more recent history, right? The dot-com, crypto, real estate, right? Those are miners who are chasing But it's the merchants who ultimately win. So you got to ask yourself, right? Are you the miner or are you the merchant? How are you helping out with that? Which I. With my property management business, I'm like, oh, that's totally a merchant type of thing. I'm a bit of a miner as well. Sure. Yeah. But yeah, something that's worth thinking through on, like, okay, what. And again, like and if you think about like AI specifically, like trying to build your own AI doesn't necessarily make sense. And we can actually see that, right? All these companies are spending hundreds of billions of dollars to create this thing. It's like, oh man, like Who are these other winners going to be to support these things? And again, you think about like real estate stuff where it's like, okay, maybe there is going to be the rush on for the schools being closed in Corvallis. That's going to do something. What's a support service there that can help it out? Maybe it is kind of like, hey, we'll help you manage an empty building. Yeah.

Jessi
I don't know. I don't know. I don't know. Rent it out.

James
There's something there.

Jessi
Yeah. What's fascinating to me is like. Like you're saying, it's these tangential investments, I guess, for lack of a better word, that are super successful. It's not necessarily the direct thing. That everybody's going after the mania, like you were saying. And so to me, it's almost as if those people were asking the question: like, They weren't going, how do I get this one thing? It was more like, huh, what am I noticing about what other people need in this hole to build System.

James
Yeah, everyone's out of toilet paper. How can I help solve that? Right. Or remember, oh, the masks, right? The masks. That was a tough one. People were like, oh, we're going to start making these and selling them. And how many were there like in the front yard? Like, you know, leave a dollar. Yeah. And, you know, pick up a mask. Like, that's. That's that's it, right?

Jessi
Yeah, so it's it's it's interesting, it's having a different eye, not for the investment, but almost for the need, yeah, for what people are gonna Need in order to accomplish the mania or to get the thing that they need, that they want. Yeah.

James
Yeah, right. I would say learning video editing skills right now, huge. I would also say learning how to use all the AI tools. Sure. Huge skill. Yeah. Very, very valuable.

Jessi
Yeah, because like you were saying, like me, I'm like, I don't have time to figure this out. Exactly. And like you were saying, there's still going to be a human component of managing the AI or using it. And

James
If you don't know how to use it, then I mean, I was the whole thing: we used to make fun of social media consultants or social media gurus.

Jessi
Sure.

James
Right. But like, yeah, they're assessing your needs. Like, oh, there's companies they need to be online. They need to be posting. They don't know how to do it or don't have the time. Yeah, I can help you do this.

Jessi
Yeah.

James
Like, it's totally like, yeah, 100%.

Jessi
Interesting.

James
That's where that's the question is. And that's like for me, right? Okay, people are investing. Like, how can I help out? Ah, property management. That's definitely something. Can help with. And yeah, for past investors, like, yeah, how do you invest in those things? That are people doing it.

Jessi
Yeah.

James
All right. So, quick-ish recap here. So, cycles, they're reliable. They go up, they go down. The timing, not so much, but the general arc. Is the same where you see the expansion, you can get the excess, then there's the contraction and then the recovery, right? Like we see those things. Information asymmetry is still really good. Like the canal people, like when they invested early in the canal, they were awesome. And then if they didn't see the train piece coming, Like they didn't do so well, or if they saw it, like they did awesome. And so I think what you want to do is you want to look ahead and say, what are those structural shifts in the next 18 to 24 months? Before the market figures it out and prices it in. Like, that's like that's the asymmetry that we have as investors: is like looking ahead and placing our bets wisely on what those are. Populist disruption, it happens. It often just reshuffles wealth.

Jessi
It doesn't necessarily destroy it.

James
And so the question is, you know, for that one, like, okay. Obviously, Trump, he's doing a lot. Like again, Orange Tornado, really mixing up a lot of stuff. Can we look ahead to try to see what he's doing? I was listening to an interesting podcast. I think this will be published after this happens, but he was talking about all the shit, all the blockade stuff.

Jessi
Yeah.

James
He's like, there's like a six-week lag. Between when the blockade started to when those ships hit the US shores. And at the time I was listening to the podcast, he's like, that hasn't happened yet. It hasn't been six weeks. He's like, just wait. And that's an example of looking ahead and trying to think through what's going to happen. By the time this thing is published, we'll know the answer. Yeah. What happens there, which is crazy. And then you just want to make sure that you have active sponsors who are helping you out, right? The best. 1830s and 40s investors, they had operators they trusted to help navigate that chaos, people who are paying attention to what's going on and what those trends. And so, complexity, it's not necessarily an argument for doing more yourself. It's really an argument for being more selective about who you have it do it for you. Help you, help, help you out. Yeah, help me, help you out. The pitch for me, obviously. Okay, yeah. So, listen, we had some people in history, Solomon. Samuel Morse, 49ers, they all played different, they had like very similar plays, but different costumes. And so you just gotta watch out for them. So if, here's my closing question, you ready for this one?

Jessi
Ready.

James
If a future investor were to read a history book of 2020 to 2030, okay, the way that I read this book about the 1820s to 1848. What patterns will they say were completely obvious that we couldn't see? Wow.

Jessi
Definitely technology and AI has got to be in there somewhere. Oh, AI, smartphone, economics for sure.

James
Or what does that mean, the economics?

Jessi
Well, like the tariffs and interest rates skyrocketing. And dude, had they just done this. They would have been able to solve it.

James
Imagine a book like 100 years from now talking about COVID, all of that. Yeah. Wow. Oh, man. That'd be really fun.

Jessi
There's already super interesting documentaries.

James
Yeah, I know, but like we're so close to it.

Jessi
We're so very close to it.

James
I want the hundred years of hindsight view of it. Oh, yeah. It's gonna be interesting. So, so that's what we got. Really interesting book. I would not say it was the most like, it was a little dry, but it was good, right? And I was constantly like, oh my gosh, just a ton happened in that. Yeah. Quarter six degree. So it's good. Recommend it.

Jessi
Wow.

James
And I probably read the other two books first, but it was good. So if you enjoyed that in history and you'd like to rhyme with us, you can do that at furlo.com. There you can see. Our history of investing and how we've done, along with our investing thesis today and the things that we're seeing going forward in the future and the types of things that we're invested in. So, with that, thanks for listening. Have a great day.