0:00:00 - 0:00:20 At the moment, a hurricane, a powerful hurricane is barreling towards the coast of Florida. So it might be a great time to tell you why I would never live there. I had this conversation with my mother-in-law who does live there. I've got a brother-in-law who lives there as well. And, uh, this was several 0:00:19 - 0:00:37 months ago and she seemed quite surprised by the things I brought up. But the primary argument I have against this is just that statistically speaking over the course of decades, your house is going to be destroyed by a hurricane. Now, most people say, yeah, but it'll only be partially destroyed most 0:00:37 - 0:00:56 likely. And I have homeowners insurance and I'll pay for it. And I said, well, what happens when companies stop covering these areas? One thing that's happened in insurance in general in recent years, just as I said, it would is that companies aren't covering the same places and people that they did 0:00:56 - 0:01:19 before and they're jacking up their rates. And that's for a variety of reasons. One of the major reasons is that it's harder and harder for them to make money the way they used to insurance. People think that insurance companies make money because the premiums are so much larger than the payouts. That's 0:01:18 - 0:01:42 not true. Actually, insurance companies make their profits on investing the premiums. And so when those investments aren't as profitable, they start losing money and they have to raise rates to compensate for that. If their only source of income was the rates you pay, they would be much higher than they 0:01:42 - 0:02:03 are. And that's why traditionally not to get off on a tangent insurance had to be among very tight sub segments of the population. So for example, if you wanted health insurance, you would gather together with a group of people who uh if you wanted affordable health insurance, you wouldn't use it for 0:02:03 - 0:02:29 health for, for um e elective health services. You wouldn't go for checkups, you wouldn't use it for normal things or I sprained my ankle. I'm gonna go to the hospital. No. So you would also band together with people who had abnormally good health because that's what you'd have to do to keep the payouts 0:02:29 - 0:02:48 low. And so you see this even today with the Amish, they don't have health insurance, they just band together and take care of each other, but they don't go to the doctor for dumb things. So it's just massive catastrophic stuff like I got cancer which incidentally they get less cancer because uh they 0:02:48 - 0:03:09 eat better and they actually exercise. Uh, their work is physical and they're not obese by and large, get the pun. So anyway, um, as you insure larger and larger groups, you need to make up the difference somehow because you're gonna be losing a lot of money on payouts. Um, especially because of the 0:03:09 - 0:03:29 moral hazard. You know, if you, if you're, if you know the people, you're paying the paying out when something happens, you're not gonna pay out if it's for something stupid when it just goes off to a company and a third party is making the decisions. All of a sudden, people engage in more reckless behavior 0:03:28 - 0:03:50 . And then you have, for example, obese people who are on your health insurance plan. And, uh, so they're, they're taking a disproportion, disproportionately large share of the benefit just like they do at the table. So I'm sorry, I'm just in a mood today. Ok. So that jokes aside, um, back to Florida 0:03:49 - 0:04:12 , it turns out that these insurers are typically national companies and Florida is using up a disproportionate amount of the payouts and you say, yeah, but the premiums are higher, not high enough to offset that it's subsidized and the subsidization goes even further because of the federal payouts for 0:04:12 - 0:04:34 disaster relief. That's tax money that, that, well, let's be honest. It's just, uh, it's debt, it's, it's national debt that's generated and paid out disproportionately to people of Florida who live in a place where you shouldn't be building houses. Um, there's a reason why historically the only homes 0:04:33 - 0:04:57 in Florida were shacks. It's because people just knew that storms would come from time to time and totally destroy everything. So why invest tons of money there? So, as far as homeowners insurance goes, I said years ago, I said that the premiums are gonna continue to rise in many places and on different 0:04:57 - 0:05:18 kinds of insurance and that there would be more and more companies that refuse coverage to certain people, certain places. Well, guess what has happened in Florida since then, the homeowners insurance premiums have gone through the roof. That's just gonna get worse and coverage. Uh, several companies 0:05:18 - 0:05:40 have, have ceased offering coverage there, that's gonna get worse too. And here's the thing about all that nice federal aid from Uncle Sugar. The thing about socialism is that you eventually always run out of other people's money and that's an acronym that if you say it fast enough sounds an awful lot 0:05:40 - 0:06:02 like opium. And that's not, uh, it's a coincidence, but it's a funny one. It turns out that you can promise people the world, but as soon as it comes time to pay that promise you run out of money because what you're doing is you're incentivizing bad decisions and when you do that, you get more of them 0:06:02 - 0:06:27 and that generates more need and when you have more need, you have a supply and demand problem and you can only increase taxes so far because there's a limit. It only goes up to 100% right? And usually people revolt before then. So there are all these factors that, that suggest that a time is coming 0:06:26 - 0:06:46 when people will not want to live in Florida. And when that happens, what's gonna happen is that there will be a mass exodus and people will lose their property value because they won't be able to sell again a supply and demand problem. So the people who are smart will get out before that happens. And 0:06:45 - 0:07:09 maybe with this hurricane, maybe in the aftermath is a great time to make that decision. It's not a place I would live because you're just asking for trouble, the, the storms enough, but the storms are, are, are enough to provide a sufficient reason not to live there. You don't really have to go over 0:07:08 - 0:07:33 any other factors. So you might ask, well, what other states would you not live in? I'd rather not give you a list because in these things and everything else, the best we can do is help people to not be dependent on us to teach them the principles of how we're generating these ideas rather than just 0:07:33 - 0:07:56 the ideas. The greater value is the generative power. And so I've given you some principles here. Why would you live in a state that's subject to predictable natural disasters against the backdrop of worsening natural disasters? The expectation is there for various reasons and it, even if it just stays 0:07:56 - 0:08:15 the same, it's not worth living there, but it's going to get worse, the frequency and intensity is going to increase. So, why would you live there? Things are gonna be bad enough in places where these disasters are not expected. Why would you live in a place where they are? And that's the argument. So 0:08:15 - 0:08:33 I encourage you to do this sort of thinking as you look at where you might live because most people live in places where they shouldn't. Now, the good news is that, that it's, it's, uh, it's still early if you want to get out of Florida, uh, you know, maybe right after a storm is not the greatest time 0:08:32 - 0:08:52 to maximize your property value. But we're still in a time where people haven't woken up to the absolute stupidity of living in a place like Florida. And so you can get out and get equity for your house and still move to a nice place and over time it will be harder and harder and that's the same for 0:08:52 - 0:00:00 all these other places. I hope you find this sort of reasoning, uh valuable and I hope you can apply it to your own situation.