August 5, 2025 • 50 mins
Mark Mattson, founder of an $11.5 billion investment advisory firm managing wealth for 35,000 families, delivers a masterclass in separating investing truth from financial noise in this compelling conversation about wealth creation, market efficiency, and reclaiming the American Dream.
Mattson cuts through the clutter of internet investment gurus with refreshing candor: "What investing takes—and getting in shape takes—is work. A crap ton of hard, serious work." In an age where financial advice is abundant but results are scarce, his focus on evidence-based investing principles offers a stark contrast to the get-rich-quick schemes flooding social media.
The discussion explores a counterintuitive approach to wealth building that prioritizes creating value for others first. "If you want to create the American Dream for yourself, help other people create their American Dream and then you won't have to worry about yours," Mattson explains. This perspective shifts the focus from entitlement to contribution and provides a framework for sustainable prosperity.
Mattson dives deep into portfolio construction, making a compelling case for broad diversification across asset classes, geographies, and company sizes based on academic principles like Efficient Market Theory and Modern Portfolio Theory. He methodically dismantles arguments for concentrated investing, warning that "there's no better way to go bankrupt fast than to dump your money in three or four or five stocks." Instead, he advocates for a disciplined approach that removes emotion from the investment process through systematic rebalancing.
The conversation tackles controversial topics like cryptocurrency (which Mattson calls "one of the most toxic investments"), political biases in investing decisions, and the challenges of building a company culture with urgency and purpose. Throughout, Mattson's experience as both an investment manager and entrepreneur shines through, offering practical wisdom for anyone looking to build wealth ethically and systematically.
Whether you're just starting your investment journey or managing substantial assets, this discussion provides a roadmap for navigating financial markets with intelligence rather than emotion. As Mattson reminds us, "No one can tell you where the next 20% is going to be, but what we do know historically is the next 100% has always been up."
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
I mean, the internet is so full of lies and offers
and everybody's a guru,everybody's got life lessons,
everybody's got investing advice, everybody's got health advice
but at the end of the day, verylittle of this stuff works.
(00:21):
What investing takes andgetting in shape takes and
getting you know your marriageright and it takes work.
It takes a crap, ton of hard,serious work and any magic pill,
magic fat pill or any magicnewsletter or any magic you know
(00:42):
.
As an a ria, I'm regulated bythe scc, but all these people
with bitcoin and all thesepeople that go on there with
these newsletters or subscribeto my whatever because I made
200 in six months, I mean thisis disgusting.
Speaker 2 (01:06):
I was at a concert yesterday at Mass Square Garden
seeing Shinedown and Bush, so Idon't really know how loud I'm
talking during this live streambecause I can't really hear
myself following that rock show.
I am rounding out a significantnumber of podcast shows this
week and then hopefully I'mgoing to be bringing in somebody
new who's going to be helpingme on these going forward.
(01:26):
I'll make a big announcementabout her soon enough, but I'm
very excited to bring her on tothe LeadLag team and, as always,
I appreciate those who watch uson a continuous basis.
So, with all that said, my nameis Michael Guyatt, publisher of
the LeadLag Report.
Joining me here is Mr MarkMattson, who I didn't realize
was kind of a big deal.
We were chatting a little bitbefore the show and he's a big
deal, not because of the bigAmerican flag with his virtual
(01:48):
background, as long as I havemine, as you can tell.
But, mark, for those who don'tknow your background, introduce
yourself.
Who are you?
What have you done throughoutyour career?
What are you doing?
Speaker 1 (01:57):
currently I own a company called Mattson Money.
It's a registered investmentadvisory company.
We have $11.5 billion undermanagement.
I started the company in 1991with very little resources,
$30,000 in debt and a yellowpattern overhead projector.
That was well before theinternet and well before cell
(02:19):
phones and well before formatslike this, and then so I've been
managing money for all thattime.
We have 35,000 families.
We work with 500 variousfinancial advisors around the
country.
I'm a big stand for freemarkets, patriotism, the
(02:45):
American dream, entrepreneurism,capitalism, and I really fight.
I've created a class calledExperiencing the American Dream.
It's a two-day workshop thatinvestors go through, learning
how to invest their time, energyand their money to live an
extraordinary life, and that'swho I am.
Speaker 2 (03:02):
We should talk about the American Dream for a bit,
Because it used to be the casethat the American dream was just
to own a home.
That's kind of hard now, givenhow expensive things are.
Has the definition as thevision of what an American dream
is?
Has that changed over time?
Speaker 1 (03:15):
Yeah, I think it has.
You're right, michael.
The traditional American dreamis own a house, pick a fence
right, retire at 65, have apension, have a couple of kids,
maybe try to get them to college, try to elevate from one
generation to the next or evenwith inside that generation,
(03:39):
potentially starting withnothing and then becoming
prosperous and having a betterquality of life.
And I think that's always beenpart of the American dream.
The opposite of the Americandream is entitlement, victimhood
, blaming other people and notgoing out there and creating
wealth and prosperity for otherpeople first, before you expect
(04:01):
getting it to yourself first,before you expect getting it to
yourself.
I think the American dream hashad a bad rap because I think a
lot of people are criticsAmerican dream critics, I call
them who view the American dreamas not capitalism but
materialism and based on greed.
And for me, growing up, myfamily grew up in, I grew up in
(04:23):
West Virginia, in the hills andhollers there.
For me, the American dream Idefine it in the book is a way
of looking at the world thatgives you agency to take
powerful actions to create notjust money, wealth or prosperity
, but love, freedom andfulfillment and connection
within your family and a view ofoptimism and creativity for the
(04:47):
future.
So for me, in the book Idescribe it as a screen, a
mental screen that you can use,that then gives you the ability
to go out there in the world,take chances, potentially be an
entrepreneur in your ownbusiness, become instrumental in
growing another business.
So the big deal, and I thinkthat a lot of people have lost
(05:08):
sight of what the real Americandream is.
We're trying to reclaim it andhelp people really focus on it.
Speaker 2 (05:12):
You said something that was interesting, that you
said creating wealth for otherpeople before yourself, or
something along those lines.
I want you to tug at that alittle bit, because the idea of
when I was younger I used toread a lot of leadership books
and I forget which book it was,but it was some book I read
about leadership that said ifyou want to be a leader, you
(05:33):
have to make leaders of others,and this reminds me a little bit
.
It's like if you want to bewealthy, you want to focus on,
maybe, creating wealth forothers.
So let's explain that a littlebit.
Speaker 1 (05:45):
Yeah, one of the things I talk about is, if you
want to create the Americandream for yourself, it's really
easy.
Help other people create theirAmerican dream and then you
won't have to worry about yours.
The thing most people, mostpeople have, whether they
acknowledge it or not, have atinge of entitlement that they
deserve something withoutcreating.
My dad said it quite bluntly.
(06:07):
He said no.
We said Mark, and Brenton wasvery, very small, probably seven
or eight years old.
He said, mark, nobody owes youshit.
Nobody owes you anything inlife that you don't earn.
And so if you're, if you wantto create wealth and prosperity
for your family, for youremployees, for your clients, you
have to first create wealth andprosperity for them and then
(06:34):
you're entitled to somethingcoming back to you.
But that is the primary view ofa capitalist.
The capitalist, an entrepreneurlike yourself, has to always be
concerned with what value am Ibringing to other people?
And if an entrepreneur doesn'tfocus on what value they're
(06:55):
bringing to other people, thenthey quickly disappear and they
evolve out of the system.
Another great thing ofcapitalism if you don't help
other people have a service or aproduct uh, that's valuable,
then you evolved out of thesystem.
That's the way it should be incapitalism.
The other thing about focusingon other other people focusing
on other people is that it takesuh, it takes me and those I
(07:17):
know that practices.
It takes them out of morbidself-reflection out of morbid
self-reflection, pity, fear,greed.
Because there is greed in theworld.
And the more I focus on otherpeople, the less I'm worried
about my own problems and my ownpetty complaints about the way
(07:38):
the world is.
Speaker 2 (07:38):
Can you make others wealthy, and then my session're
wealthy, um, throughdiversification, or does it have
to be through some form ofconcentration?
Because I remember at aconference I was at the speaker.
One of the speakers saidsomething along the lines of uh,
diversification is a luxury forthe rich and the implication
(07:59):
there is that you know, the onlyway to get wealthy and also to
get broke is to take a highconviction bet.
Speaker 1 (08:06):
That's a great question.
So I think a great example ofthis is Tony Robbins' last book,
although he's written threebooks about investments, they're
all equally terrible, but thelast book is the Holy Grail of
Investing and the idea is that,basically, that diversification
is for chumps and if you want tobe a billionaire, then invest
(08:29):
like a billionaire.
And then he talks about realestate and private placements
and hedge funds and Bitcoin andtoxic investments that can be
very destructive to investors.
There's two ways basic ways tocreate wealth.
From the investing perspective,we believe in using academic
investing principles and,because markets are highly
(08:51):
efficient, all the knowable andpredictable information about
the future is already factoredinto the stock prices today.
Therefore, only random andlargely unpredictable events
will drive stock prices goingchanges in the future.
So betting highlynon-diversified attempts to dump
money into projects or to dumpmoney into different stocks
(09:17):
whether it's Nvidia, or whetheryou're doing Bitcoin
cryptocurrencies on the side, orwhether you're doing
commodities and options, orwhether you're doing private
placements or hedge funds thisis all gambling and speculating
with your mind, and for everyguy that got lucky and became a
billionaire, there's hundreds ofthousands that lost everything
and went totally bankrupt.
(09:39):
So I believe that number one isespecially if you're young and
you have a lot of time is to bean entrepreneur and own your own
business and hustle like helland create value for other
people.
So that's going to create yourincome coming in and that's you
know.
So when the book, I talk abouthow to invest, not just not just
(09:59):
your money, but how to investyour time and your energy,
because those are going to beincome generators and an
investment in yourself.
Learning and getting trained tobe a leader, to be an
entrepreneur, to be a visionmaker.
How to do that training in thatit's going to be very, very
valuable if you're willing totake the actions to actually
have it.
You know, see it to fruition.
(10:20):
So, creating wealth throughbeing an entrepreneur, but then
investing the money to widelydiversify.
We're in over 70 countries andover 20,000 holdings and there's
no better way to go bankruptfast than to dump your money in
three or four or five stocks.
It's one of the mostdestructive things you can do.
Speaker 2 (10:41):
Although, admittedly, at least the last couple of
years it has worked and you canargue maybe that skill, luck,
combination of the two or justsome random cycle that at some
point gets undone.
But it's a reminder that NassimTaleb line it's around sort of
the, the graveyards of theirfield, of people that have done
all the things very successfulpeople have done Right, yeah,
(11:01):
have done right, yeah that youonly hear about what the
successful people have done butin reality if a lot of people
are following those things, thatsame map, they end up not
getting anywhere.
Speaker 1 (11:10):
Right.
I always, I laughingly say youknow, even a ham sandwich could
make 20% rate of return over thelast five years.
Look, you didn't have to be agenius, you just had to be lucky
.
People have a hometown bias,they have a familiarity bias,
they have a hurting bias.
These are all emotional,instinctive brain problems with
(11:31):
the way human beings actuallylook at investing and it's easy
to get sucked into dumping yourmoney and you know the
magnificent, you know seven andand think that you're going to
be rich.
That's the same problem from1995 to 2000.
The S&P made 22% per yearaverage five years running.
(11:53):
Tech stocks from 1995 to 2000made 45% per year.
Per year, michael and investorswere dumping all their money.
Guess where they were dumpingit?
Large tech stocks.
And then large tech stocks lost75%.
Now the reality is mostinvestors were not in it for the
(12:16):
whole five years.
They dumped their money in thelast year or two after the high
performance, not before.
And that's the problem withinvestors they're always chasing
.
So the investors that dumpedall their money in tech stocks.
They all lost 75%.
The people that dumped theirmoney in large stocks in general
in the S&P, they lost 55%.
Many of them sold, locking intheir losses, only to get back
(12:41):
into the market after it hadalready recovered 100%, 200%,
and so the cycle goes and lookif you got lucky.
People say, well, I did well thelast five years.
Well, that's great, good foryou, but you got lucky.
It's like going to the casinoand betting 35 red.
That's a 30 plus percent payout.
(13:01):
If you get lucky enough to getit right, take your money off
the table.
Diversify prudently, becausedisaster, you know.
It's one thing to lose 75% ofyour money when you're 30.
It's a whole.
Not, we work with a lot of 60,70 year olds.
It's a whole different yearwhen you're 65.
Speaker 2 (13:17):
I think the problem is that social media makes it
look like there's many morepeople than not right that are.
They're crushing it right, andin reality it's like you
mentioned home bias,availability, risk, right, it's
like it goes, it's front of mindbecause the timeline's showing
it, but the reality is, allthese people are screenshotting
their accounts and how manymillions do they bid?
Assuming it's real, it'sprobably like 0.01% of the
(13:41):
population.
Speaker 1 (13:44):
Well, wow, the internet.
Wow, you got me.
I mean, the internet is so fullof lies and offers and
everybody's a guru, everybody'sgot life lessons, everybody's
got investing advice,everybody's got health advice,
(14:05):
but at the end of the day, verylittle of this stuff works.
What investing takes andgetting in shape takes and
getting your marriage right?
It takes work.
It takes a crap, ton of hard,serious work, crap, ton of hard,
serious work.
And any magic pill, magic fatpill or any magic newsletter or
(14:36):
any magic.
As an RIA, I'm regulated by theFCC.
But all these people withBitcoin and all these people
that go on there with thesenewsletters or subscribe to my
whatever because I made 200% insix months, I mean this is
disgusting and a lot of thesepeople aren't regulated if
they're just selling anewsletter or selling some
program that you day trade onand it's so destructive to
people you know.
I think the world would be amuch better place if people
(14:58):
could look at their life and seewhen they were wrong and admit
it.
In 1991, when I first becameaware of academic investing
principles, three main academicinvesting principles efficient
market theory, modern portfoliotheory.
Efficient market theory isEugene Fama.
(15:20):
Modern portfolio theory wasHarry Markowitz, and then the
factor model, three-factor model, by Fama and French.
When I first became aware ofthose, I thought, wow, this is
going to be a renaissance.
People are going to stopspeculating, they're going to
stop gambling, they're going toprudently invest, they're going
to stay disciplined, they'regoing to rebalance.
And, michael, nothing has beenthe furthest from the truth.
(15:43):
It's harder now for people toprudently invest than it ever
has been because you've got thisthing 24-7.
You've got Robinhood right nextto DraftKings on your phone.
You've got all this wronginformation on there and I don't
see AI is going to actuallyclean any of this up.
It's probably only going tomake it worse.
(16:04):
And I don't see AI is going toactually clean any of this up.
I'm only going to make it worse.
And you have tons of differentexotic, toxic investment
vehicles that are out there.
You've got 24-7 news cycle,which you didn't have in 1991.
You've got all these newsprograms and stations committed
to telling you you can predictthe future and time your
portfolio.
So it's actually worse thanever before and human behavior
(16:27):
obviously hasn't significantlychanged in 30 years.
But I see more speculating andgambling now than ever and I
think that that's verydestructive.
A lot of people are giving uptheir American dreams because
they're gambling with theirmoney.
Speaker 2 (16:39):
I'm smiling because so much of that sentiment I have
expressed over the years onvarious platforms I myself write
on.
But there's something that'sinteresting here, as we think
through this, which is that yousaid it correctly it's Robinhood
and DraftKings is right next toit.
We are a gambling society, butdoesn't that inherently make
markets less efficient, at leastin the short term?
Speaker 1 (17:03):
This is a great.
This is an interesting argument, and I've dealt with this for
34 years.
So the part of the argument iswell, if everyone stops
speculating and gambling andtrading, then the market would
be less efficient.
And then what would happen?
Would asset allocation andefficient markets fail in some
(17:24):
way?
And the way I look at it is ishypothetical questions sometimes
can be very useful if you'vebeen in the form of a thought
experiment.
This is a hypothetical question,though, that it's never going
to happen.
It's kind of like saying well,what would happen if everybody
was virtuous and discover thatgambling doesn't work?
What would happen to Vegas?
(17:46):
People are always going togamble, they're always going to
speculate, even when they knowthey're doing it as long as they
can get a free room and a drink.
Same thing with dieting.
Well, what would happen to thediet industry?
Or Monjaro and these otherdrugs that help you lose weight?
What happened?
What would happen to them ifpeople all of a sudden could
(18:07):
control their instincts andtheir emotions and stop
overeating?
Uh, it's a hypothetical questionthat I don't ever expect uh to
happen.
If it did happen, I think itwould be great, because a lot of
people would not uh bespeculating and gambling with
their money and they wouldactually look, look, risk.
The hardest thing for people toquantify is not return.
(18:28):
They build these portfolios andthey have no idea.
When we analyze them and showthem you could lose 60% of all
your money in a bad market andno one can predict with anything
like accuracy when these thingsare, they're shocked that their
portfolios are so dangerous.
So, to answer your question,it's a hypothetical, interesting
(18:53):
question, but I don't thinkthat's ever going to happen.
Speaker 2 (18:56):
So yeah, question off of X I'm going to show here.
Let's be about timing.
Markets and efficiency.
Stocks feel so overvalued.
How do we navigate this?
So you got all kinds of clientsthat say things that are either
buy more or sell or whateverelse.
So you know, you've got yourasset allocation, but people
always feel like they need thatillusion of control.
All right, so they're callingyou all, I'm sure, or your
(19:18):
advisors.
So what do you say to somebodywho says that First of all, I
think this is great.
Speaker 1 (19:22):
This is the first podcast I've been on where we
had actual live questions.
I love it.
I think it's wonderful.
First of all, there's aninteresting word in there, and
that word is feel Feel.
You should be highly skepticalof your own feelings when it
comes to investing, Becausefeelings and emotions are your
(19:46):
enemies when it comes toinvesting and they almost always
control the actual behavior.
In fact, psychologists havefound out that when it comes to
behavior, the vast majority ofyour behavior is not from your
conscious mind.
We'd like to think we're allSpock and data from Star Trek,
that we're all logical machines.
We're not.
We're not machines.
We're not very logical.
Our instincts and our emotionsmany, many times call the shot,
(20:09):
and then we consciously try tothink of a reason of why we did
that stupid thing in the firstplace, and we almost always come
up with the reason.
So look guys, don't trust yourfeelings.
Markets are random andunpredictable, because all of
the knowable information isalready in the market and
(20:30):
because you're dealing in amarket where other people are
emotional too, dealing in amarket where other people are
emotional too, just because itfeels overweighted or overvalued
, that doesn't necessarily meanthat it is.
So here's what I'd rather I'dlike to see you do.
Instead, I'd like to see youfocus on 80 years of research
(20:52):
and look at the statistics ofwhat you're doing.
So, for example, large USstocks have averaged 10% over
the last 80 years.
That's the longest data set wehave, and over 80 years, 10% of
your money debt doublesapproximately every seven years.
You don't get to know in advanceif the market is over or
underweighted or overvalued,let's say.
(21:13):
In fact, you'd probably be bestto get that language out of
your lexicon.
It's actually.
The market is exactly whereit's supposed to be, based on
people's instincts, emotions,and supply and demand.
What you don't get to know iswhere the next 20% is, For
example, I always tell investorsno one can tell you where the
(21:33):
next 20% is going to be up orwhether it's going to be down.
What we do know historically,though, is the next 100% has
always been up, so you want tofocus on the next 100%, not the
next 20%, because nobody knows.
And then you want to build aportfolio that has the amount of
risk, so if it does crash andthe odds are about one out of
(21:56):
every four years you have anevent where it's a crash,
Markets are up three out ofevery four years.
When they're up, they're up anaverage of 22%.
When they're down, they're downan average of about 11%.
So statistically, long-term,you're in good position.
But the S&P could also lose 30%or 40% in any given year.
But the S&P could also lose 30%or 40% in any given year.
So you have to understand thattype of risk.
(22:18):
Now you can offset that riskwith high-quality fixed income
that has very low volatility.
So if the market does go down30%, you can rebalance your
portfolio, sell yourhigh-quality fixed income and
buy more of those equities whilethey're low.
That takes you out of themarket timing game trying to
feel your way through whether ornot the market's over.
(22:40):
You know too high, uh, oroverpriced, uh, and.
And it can give you some peaceof mind because you're not
always trying to predict what'scoming next.
Speaker 2 (22:49):
And therein lies the issue with our industry.
That word predict, um.
So I always frame things myselfin terms of conditions.
Right like I, I can't predictthe exact mile marker.
I might crash my car, but Iknow if it's raining I gotta
slow down right now.
(23:10):
Valuations, and to your pointabout the word feeling, you know
they can feel overvalued, theycan be factually overvalued, but
they can stay overvalued for along time and the valuation is
going to resolve themselves.
You don't necessarily have tohave a crash.
You can have a whole bunch ofsideways, lost decade type
action in stocks, but thatdoesn't necessarily mean other
asset classes during that gothrough a similar dynamic.
So talk me through as you thinkabout portfolio construction,
(23:34):
what types of asset classes doyou diversify into?
You talk about internationalpositions right, but beyond
stocks, bonds, alternatives.
Talk to me about the mix thatwe like.
Speaker 1 (23:45):
Yeah, it's great.
So first critical discussionfor an investor is what is the
mix going to be between equitiesand fixed income?
That is the most criticaldecision that you can make.
Equities, long-term, have agreat, have greatly outpaced
inflation.
Fixed income especially if youhave short, short, short-term
(24:07):
high quality have stayed up withinflation, but they haven't
beaten inflation.
So when we so the firstcritical discussion that you
want to have is how how muchlarge versus, excuse me, is how
much equity versus how muchfixed income.
The next conversation you wantto have is okay, how do I
diversify my equities?
Well, to diversify yourequities in the US alone, you're
(24:30):
going to want to add.
The way that we look at it,you're going to want to use
small micro-cap stocks.
Micro-cap stocks have average12, where large stocks have
average 10.
The way that we look at it,you're going to want to use
small micro cap stocks.
Micro cap stocks have average12 where large stocks have
average 10, but they're alsogreat diversifiers because that
decade you mentioned, micro cap,small stocks actually made
around 8% per year during thatsame 10 year period, the lost
(24:51):
decade, where stocks were down atotal of 9% over 10 years.
They had two major crashes.
So small and then value.
We view that as highbook-to-market value stocks.
Historically those haveaveraged 14% versus the S&P at
10.
So now you're starting to get awide diversification in the
(25:12):
United States.
But on your equity side of yourportfolio you also want to look
to international because thathas the best offset with
correlation to just having apure US portfolio.
For example, this yearinternational stocks in our
portfolios are up 25%, while USstocks are only up 3% or 4%.
(25:33):
So there's a massive benefitfrom international
diversification and then yourebalance those on the highs and
lows.
But many people have beensucked too much.
They've given up oninternational because it's been
a while since they did this.
But there's whole decades whereinternational just destroys US
and you don't get to know inadvance which decade we're
(25:55):
getting ready to go into.
So as a result, you diversifyand then you rebalance your
portfolio and then you want tomake sure that you own small and
value stocks internationally,emerging market stocks
internationally.
So you want widediversification so you don't get
stuck gambling on any one thinglike tech stocks.
On the fixed income.
People make terrible mistakeson their fixed income because
(26:18):
they're trying to juice theirreturns.
They're going with junk bonds,so there are high risk bonds and
they're trying to extendmaturities so they can get an
extra half a percent, maybe 1%,but when they do that, if you're
not using short-term, highquality bonds, the volatility
becomes extremely high and ifthe interest rates go up just
(26:39):
two or 3% or a 20 or 30 yearbond, you could find yourself
losing a massive 10 to 20% ofyour portfolio.
That's in your bonds, whichwere supposed to be the safe
part of your portfolio.
And if the equities havecrashed and your bonds have
crashed at the same time, nowyou don't have anything to
rebalance with Because they bothwent down simultaneously.
(27:00):
You're really stuck.
What you want is high qualityshort term bonds, both corporate
and government, diversifiedglobally, and then you can suck
off that fixed income and thenput it in your equities while
it's down.
Speaker 2 (27:13):
You do that automatically and you take the
emotion and the instincts out ofit High quality and government
typically tend to not go hand inhand, but I'm framing it that
way because I think it'sinteresting.
I would assume that if you'reputting an asset allocation
together for a client and yousuggest having treasuries in
(27:33):
there, there might be a littlebit of a pushback.
It's like why do I want to giveit to the government?
Look at how much they'respending, look at how the debt's
ballooning and that argument,by the way, has been consistent
throughout decades, right?
So how do you get somebody toagree that they're going to put
their money to work in thingsthat they hate?
(27:54):
Because that's another line I'ma big believer in, which is
that true diversification meanshaving things in your portfolio
that you just can't stand.
Speaker 1 (28:00):
Yeah, I think it's a great point If you're broadly
diversified.
Another area this comes up infrequently is investing social
conscious investing.
You know, esg investing thisidea that we're only going to
invest in morally greatcompanies that we've, you know,
(28:24):
are not in war or not in tobaccoor not in whatever causes you
don't think are great.
The problem with that is thatthen you end up stock picking
and then, without knowing it,your portfolio loses.
Broader diversification.
The other problem with that is,if you're an investor, you're
(28:47):
never going to have totallyclean hands.
What I mean by that is, let'ssay, you don't want to own
companies that make bombs ormake military equipment.
The problem is you invest in acompany that makes steel, or you
invest in a company that makesyou know radar, or you invest in
a company that makes you knowparts for computers.
(29:09):
Those companies are going touse those assets to run their
business.
So the only way to supposedlykeep your hands clean is not to
invest at all, because if you'rean investor, you're going to be
funding a lot of differentstocks.
So, as far as ESG investing andall this crazy stuff, use the
(29:31):
science of investing and ifthere's causes you believe in or
things that you want to fightagainst.
Fine, go on the internet andtalk about you think there's too
much debt, you know, forAmerica, and trillions and
trillions, and we'reoverspending, and let your voice
be known that way.
Or support political parties oror charities that you you uh
(29:53):
believe in with your money, thatyou believe in with your money.
But don't skew your investingportfolio based on your likes or
dislikes.
It's a major problem if you'retrying to be a prudent investor.
Speaker 2 (30:04):
I love this conversation because every time
you say something, I want to goin a direction based on the
tangents.
So, likes and dislikes A lot ofpeople like and dislike our
current president.
Yeah, and I'm always of themindset that whoever is
president has far less impact onthe economy and the stock
market than we are led tobelieve.
Right, and I think there's alot of evidence that suggests
(30:24):
that.
But people tend to invest basedon their political views, right
, if they don't like the currentadministration, they're bearish
on stocks.
If they love the currentadministration, they're bullish
on stocks.
How do you get people to think?
Speaker 1 (30:40):
differently and to disassociate the politics from
their portfolio.
Well, you look at the facts.
What you do is you go backthrough history and you look at
different presidents anddifferent, not just the
president, right.
So you got the presidency,you've got Congress, you've got
Senate, you've got all thesepolitical factions, and you can
actually go back through historyand look at markets where the
Democrats were in control,markets where the Republicans
(31:01):
were in control, and then youcan go back and look at the
different policies and you cansay is there anything in any of
these policies or thesepresidencies that could
correlate?
Can you find a correlation?
And you can't find acorrelation.
There's no correlation.
You might not like the Senate,you might not like the Congress,
(31:21):
you might not like thepresident, but there is no
correlation between what youlike, what party you support,
and the performance of themarket.
It just doesn't exist in thedata.
So, whether you like them or not, this is what we got, and I'm
not, and I think overall, thepolicies for the economy.
While you can't predict themarket, but you can look at, are
(31:44):
the policies good for theeconomy overall?
And I think low taxes are greatfor the economy.
I think free trade is great forthe economy.
I think independence of oil andenergy is great for the economy
.
I think, when you're able to.
I mean, look how bad for theeconomy would it have been, or
(32:04):
the world would it have been ifIran had got a nuclear bomb.
So, whether you like him or not, the guy's doing what he said
he was going to do.
I'm not a big fan of hisfascination with crypto and
Bitcoin and his own crypto.
I think you should lay off ofthat.
I think it's bad direction.
But I call balls and strikesright.
(32:26):
I don't emotionally get, Idon't try to emotionally get
involved with who's president,but the economic policies I can
see can have a positive effecton our economy.
Speaker 2 (32:39):
Yeah, and many of that know that I've been on a
deregulation train for a while.
I think there's a lot oftailwind potential there, which
actually is maybe an interestingadditional direction to go,
which is that you mentionedbeing an advisor.
I've got my own advisory firmas well, separate from this
effort on the Lee Black side, wegot to deal with a lot of red
(33:01):
tape and compliance.
Right, I mean, let's talk aboutsome of the pros and cons of
regulation, because there aresome pros.
I mean it's not all negative.
Speaker 1 (33:11):
Well, as I've gotten older, I've tended to appreciate
some of the regulation.
Like you know, for example,cryptocurrency is one I think
should definitely be regulated.
You know you can't sell stocks,you can't be a money manager,
you can't own a broker dealer.
Even hedge funds have someregulation.
(33:34):
So you know, and it does makethe business more difficult
there's a lot of red tape,there's a lot of expense, but
some of these you know, like SamBankman, freed and some of
these other crooks I thinkyou're going to find many, many
more crooks involved in thisthan you could possibly imagine.
The crypto in general is usedby criminals, it's used by the
(33:57):
mafia, it's used by cartels,it's used by one of the big ones
is.
Several years ago, we hadsomeone try to hack into our
system.
This is a big problem withbusiness.
Right now.
They've even tried to hack thePentagon and treasury and so
forth.
You can get your systems hackedas a business person and a lot
of these big, even mutual funds,have been hacked, and they
(34:19):
steal the information and thenthey turn around and try to
ransom it.
They turn off your own systemso you can't access your own
system and all of these hackers,when they try to ransom you.
What do they want?
Well, they wanted a milliondollars in Bitcoin.
Of course it's not regulated.
Well, they wanted a milliondollars in Bitcoin.
Of course it's not regulated.
(34:40):
So I think it's very disturbingFor our listeners.
Reviewers, the cryptocurrency isa misnomer Number one.
It's not a currency.
Currencies have to have verylow volatility and currencies
have to be widely accepted.
Low volatility and currencieshave to be widely accepted.
(35:00):
Try going into a mall andspending your cryptocurrency to
buy something at the mall.
You're not going to be able todo it and it has massive
volatility and there's nothingthere.
When I buy a stock, I own partof a company.
When I own a bond, I own acommitment against the company
to pay me back or the government, but when I own a
cryptocurrency, there'sliterally, literally nothing
(35:20):
there at all.
There's nothing.
The only thing that makes itvaluable is that there's got to
be a bigger fool coming behindme that's willing to pay even
more than I paid for somethingthat doesn't even actually exist
even actually exist.
So I think crypto is one of themost toxic investments that you
can own, and I would highlyrecommend investors that are
trying to fulfill their Americandream to stay away from it.
Speaker 2 (35:42):
I feel like that's a hot take.
That on X will get a lot ofattention.
My view I share a lot of yoursimilar views.
I mean it's like there's a lotof fraud.
I think.
Having said that, at least ifyou look at Bitcoin, maybe
Ethereum, you can make anargument that those are still in
quotes, investments, so theyshould have some even minimal
(36:02):
allocation if you look at atotal portfolio, but I get it,
it's not for everybody and it'scertainly not for me from a
maximalism perspective.
Speaker 1 (36:25):
People have been making this argument for a long
time about not justdiversification in
cryptocurrency, butdiversification in what many
people in our industry as youknow, michael call alternative
investments.
So alternative investment wouldbe gold.
Well, and gold has, they say, alow correlation with the market
.
Well, that may be true, butwhen I'm diversifying a
portfolio, I want two things.
I want low correlation to otherparts of my portfolio, but I
also want a return andhistorically, gold has only
averaged 5%.
(36:46):
So I have something hugelyvolatile, just as volatile or if
not more volatile than themarket itself, the stock market
itself.
So it's as volatile, with halfthe return Right and people like
to feel it and touch it andthey want the Midas get rich
quick thing.
(37:06):
And you got Peter Schiff outthere pumping it and you've got
these gold bugs out therepumping it, saying it's the end
of inflation.
You can't have an asset that ishighly volatile as a hedge
against inflation and it's athousand times more volatile
than inflation.
That makes it a terrible hedgeagainst inflation.
Inflation could be up 2% andyou could lose 40% of your money
(37:29):
in gold.
Same thing goes with Bitcoin,but you want to add.
When you look at your portfolio, you want to say, okay, does it
add diversification bydissimilar price movement, but
then does it actually have areal return for the volatility
that I'm taking on?
And a lot of these assets thatpeople dump into their
portfolios have three, four,maybe five years, maybe even 10
(37:52):
years of good performance.
They dump this garbage in theirportfolio and they get burned.
A good example of this iscommodities in general.
In 2008, 9, you had the realestate crash and when you had
the real estate crash, you hadthe market dropping 50%.
Commodities were up 30% or 40%during that period of time, so
(38:16):
everyone then started saying,well, this is a great
diversifier.
A lot of people got money incommodities at that time and the
commodities index over the last20 years has made exactly zero,
not a single dime of profit.
And at the time people weretalking black swan events and
you got to add all these exoticthings to diversify.
(38:37):
What you should have done issold your fixed income and
bought more stocks while theywere down.
Easy to say, hard to do.
Speaker 2 (38:44):
We touched on a lot of topics here.
You mentioned you know,congrats.
You built a nice size RIA 10billion plus, and having been in
business for a while I know howhard that is, so congrats on
that.
But I want to transition alittle bit to management style,
because you went from to yourpoint owing $30,000 in debt
(39:04):
early 90s building up this bigfirm.
I'm kind of going through someof this myself now.
When you're at that kind ofhockey stick moment in a company
, you know you are used to doingthe grunt work and all the
minutiae and you've got to atsome point transition from, as
Alex Formosa would say, sort ofthe nitty gritty grunt work to
being the idea man.
Talk to me about how you manageyour company and the people
(39:26):
involved, given your philosophy.
Speaker 1 (39:28):
That's great.
So I think it's one of thegreatest challenges for any
entrepreneur.
You talked about theself-development books that you
read, which I've also been astudent of since I was 10 years
old.
My dad gave me Think and GrowRich and said you know, read
this book, psycho Cybernetics.
I also read it when I was 10and said you know, you want to
(39:52):
study human behavior and youwant to study how the world
works and if you want to be atrue entrepreneur, you read this
book.
Read it once every year, youknow, for the rest of your life.
And I have the thing aboutemployees is you have in the
book, in my book, experiencingthe American dream, I talk about
asking the right questions, uhand, and having those questions
(40:13):
serve as a screen for how yousee the world.
So when I first started mybusiness, I had a screen for
investors.
I had me and two otheremployees and I had a screen for
for for um, employees thatemployees are hard to manage,
hard to hire, hard to keepfocused.
They're not creative.
(40:33):
It's easier to do it yourself.
I ended up hiring them andtraining them and then having to
fire them, you know, andbasically it was a screen.
The way I saw it was thatemployees suck.
And then I.
And then I said well, what, yougot a dream to?
We have 70 employees today.
You got a dream to build thiscompany and to help people
(40:53):
invest their money and to helpthem fulfill their dreams.
So you're not going to be ableto do it with two people.
Is there any anything thatyou're?
Is anything in the way you seethe world skewed?
And it was because having thatview that employees suck meant
that I didn't have to take risk,I didn't have to hire them, I
didn't have to communicate withthem.
(41:14):
I got to be righteous, I got tobe right, I got to blame them
for the company not growing.
So I got to, I got to complain,bitch and moan about the state
of the world, but it was costingme the future.
So then I asked a differentquestion.
The question I asked was well,is it really true that all
(41:34):
employees suck?
Couldn't be true, because therewere companies with 10,000
employees, so it can't be truethat all employees suck.
That can't be true.
And if it's not true thatemployees suck, then what could
it be?
Well, it could be thatemployees are awesome and
(41:54):
employees are the key to thefuture, and that was the new
screen that I took on, and so Ihad to do something that very
few entrepreneurs ever do.
I had to stop asking why can'tI find good people?
And I had to ask the questionwhat in the hell makes you so
good, mark, that you think goodpeople would want to come to
(42:18):
work for you?
And, looking at that question,how can I create the environment
, the opportunities, the visionfor them, the excitement for
them, the passion for them, theenergy for them?
How do I create a company thatdraws and pulls the right people
in while, at the same time,rejects the ones that really
(42:41):
aren't hardworking and don'thave a lot of grit and have a
lot of entitlement?
And it's been a journey.
Within 34 years.
We have a great team now, butit's taken a lot of
experimentation over the years,and I tend to hire slowly and
vet people as well as I can, butyour vetting is only going to
(43:01):
be so good and then when I findsomeone that doesn't fit the
right model, I get rid of themas fast as I possibly can.
And the other thing I do whichis, I think, is I've been really
looking at this lately is yougot to make sure you have the
people in the right position.
It's like a coach for footballor baseball or whatever.
You know there's people that inthe organization, or could be,
(43:26):
that are in the wrong position,and I've had people in
management trying to managepeople.
I've discovered they weren'tgood at that but, hey, they were
great at creating R&D and newpresentations.
I had a guy just recently wasin operations and I discovered
he had a real gift for marketingand and I put him in the
marketing We've got.
You know our workshops arepacked full now.
(43:46):
So you want to make sure youhave the right people in the
right position and you have goodboundaries.
You have good positioning.
They see working for you aspart of their passion and part
of their dream in life and youwant to focus on how do I create
a company that attracts thosetype of people One of the
toughest things for anentrepreneur to do by far.
Speaker 2 (44:09):
Yeah, because it's like.
The other thing is like, ifyou're an entrepreneur, you're
also very alpha in terms of youknow, you view yourself as very
competent, right, and obviouslyyou want other people to work at
your level.
But not everybody's anentrepreneur, which means the
odds favor whoever you bring inis not going to be as intense as
you are, because they've neverbeen a business owner themselves
(44:30):
, right?
And and then, as a businessowner, you have to come to terms
with the fact that people arenot going to be at your speed
and that that's OK.
Speaker 1 (44:39):
Yeah, we have a thing in our company called the
cancer of casualness, and beingin business takes a high degree
of urgency.
It's it's a fire in the bellythat things have to get done and
have to get done now.
And I think it starts with thehead entrepreneur of the
visionary of the company, thevisionary of the company, and it
(45:02):
really demands control systemsfor the employees, specific
goals, specific timelines,specific urgency and the cancer
of casualness.
Once the casualness gets intoyour company, it destroys the
future because, especially withAI and quantum computing, I tell
our people that we have ourcore values but we have to
(45:24):
evolve our company every two tothree years into something
unimaginable, because if wedon't, the market's going to do
it for us and it's going to putus out of business.
So we have a sense of urgencyand a sense of mission and a
sense of accomplishment and it'sgot to happen now.
And if we get casual and wedon't know our numbers and we're
not focused on the results andwe're not late, creating that
(45:47):
SEAL Team 6 environment, it willbe the slow death of a company.
And that's part of what I talkto our advisors, that I coach
and train about, is how tocreate that sense of urgency,
both first for yourself and thenfor all of your employees
underneath under you.
Speaker 2 (46:04):
Yeah, there's so many things behind the scenes that
those on the outside have noidea about that we're we have to
deal with as business owners.
Mark, for those who want tolearn more about or track more
of your work or get access to,you know the services that your
company provides and they mightbe interested in the book.
Talk them through sort of howthey can get all that.
Speaker 1 (46:24):
Yeah, one of the easiest ways to get connected is
you can go on.
You can get it on Amazon or anyof the online bookstores.
You can grab a copy of ourbestselling book Experiencing
the American Dream.
Rob Lowe did the forward to it,arnold Schwarzenegger endorsed
it, gary Sinise endorsed it, aNobel Prize winning Harry
Markowitz endorsed it, steveMoore, Steve Forbes got a lot of
(46:49):
great endorsements on the book,so that's a great way to start.
We also have a two-day workshopcalled Experiencing the
American Dream.
We have a virtual one startingup this Thursday and Friday
actually and it's how toeliminate speculating gambling
from your investing portfolio,how to talk powerfully about
(47:09):
money, how to find your purposefor your money and how to grow.
And that's the virtual one isopen to anybody that wants to
attend.
If you'd like to learn moreabout that, you can go to our
website it's mattsonmoneycom,and then you can hook me up on
Instagram or Facebook.
That'd be great.
Speaker 2 (47:28):
We've got to get you on X, Mark.
Speaker 1 (47:31):
I know my PR people are like, hey, you've got to get
you on X, you're right, I doneed to get on X.
You're absolutely right withthat.
Speaker 2 (47:37):
Well, I'll see if I can get you on that All right.
Appreciate it.
Ready to watch this live again?
Folks, this has been an editedpodcast under Lead Lag Live on
all of your favorite platforms.
I'll see you all on the nextepisode of Lead Lag Live.
Thank you, mark.
Thanks, buddy, cheers.
I mean, the internet is so full of lies and offers
and everybody's a guru,everybody's got life lessons,
everybody's got investing advice, everybody's got health advice
but at the end of the day, verylittle of this stuff works.
(00:21):
What investing takes andgetting in shape takes and
getting you know your marriageright and it takes work.
It takes a crap, ton of hard,serious work and any magic pill,
magic fat pill or any magicnewsletter or any magic you know
(00:42):
.
As an a ria, I'm regulated bythe scc, but all these people
with bitcoin and all thesepeople that go on there with
these newsletters or subscribeto my whatever because I made
200 in six months, I mean thisis disgusting.
Speaker 2 (01:06):
I was at a concert yesterday at Mass Square Garden
seeing Shinedown and Bush, so Idon't really know how loud I'm
talking during this live streambecause I can't really hear
myself following that rock show.
I am rounding out a significantnumber of podcast shows this
week and then hopefully I'mgoing to be bringing in somebody
new who's going to be helpingme on these going forward.
(01:26):
I'll make a big announcementabout her soon enough, but I'm
very excited to bring her on tothe LeadLag team and, as always,
I appreciate those who watch uson a continuous basis.
So, with all that said, my nameis Michael Guyatt, publisher of
the LeadLag Report.
Joining me here is Mr MarkMattson, who I didn't realize
was kind of a big deal.
We were chatting a little bitbefore the show and he's a big
deal, not because of the bigAmerican flag with his virtual
(01:48):
background, as long as I havemine, as you can tell.
But, mark, for those who don'tknow your background, introduce
yourself.
Who are you?
What have you done throughoutyour career?
What are you doing?
Speaker 1 (01:57):
currently I own a company called Mattson Money.
It's a registered investmentadvisory company.
We have $11.5 billion undermanagement.
I started the company in 1991with very little resources,
$30,000 in debt and a yellowpattern overhead projector.
That was well before theinternet and well before cell
(02:19):
phones and well before formatslike this, and then so I've been
managing money for all thattime.
We have 35,000 families.
We work with 500 variousfinancial advisors around the
country.
I'm a big stand for freemarkets, patriotism, the
(02:45):
American dream, entrepreneurism,capitalism, and I really fight.
I've created a class calledExperiencing the American Dream.
It's a two-day workshop thatinvestors go through, learning
how to invest their time, energyand their money to live an
extraordinary life, and that'swho I am.
Speaker 2 (03:02):
We should talk about the American Dream for a bit,
Because it used to be the casethat the American dream was just
to own a home.
That's kind of hard now, givenhow expensive things are.
Has the definition as thevision of what an American dream
is?
Has that changed over time?
Speaker 1 (03:15):
Yeah, I think it has.
You're right, michael.
The traditional American dreamis own a house, pick a fence
right, retire at 65, have apension, have a couple of kids,
maybe try to get them to college, try to elevate from one
generation to the next or evenwith inside that generation,
(03:39):
potentially starting withnothing and then becoming
prosperous and having a betterquality of life.
And I think that's always beenpart of the American dream.
The opposite of the Americandream is entitlement, victimhood
, blaming other people and notgoing out there and creating
wealth and prosperity for otherpeople first, before you expect
(04:01):
getting it to yourself first,before you expect getting it to
yourself.
I think the American dream hashad a bad rap because I think a
lot of people are criticsAmerican dream critics, I call
them who view the American dreamas not capitalism but
materialism and based on greed.
And for me, growing up, myfamily grew up in, I grew up in
(04:23):
West Virginia, in the hills andhollers there.
For me, the American dream Idefine it in the book is a way
of looking at the world thatgives you agency to take
powerful actions to create notjust money, wealth or prosperity
, but love, freedom andfulfillment and connection
within your family and a view ofoptimism and creativity for the
(04:47):
future.
So for me, in the book Idescribe it as a screen, a
mental screen that you can use,that then gives you the ability
to go out there in the world,take chances, potentially be an
entrepreneur in your ownbusiness, become instrumental in
growing another business.
So the big deal, and I thinkthat a lot of people have lost
(05:08):
sight of what the real Americandream is.
We're trying to reclaim it andhelp people really focus on it.
Speaker 2 (05:12):
You said something that was interesting, that you
said creating wealth for otherpeople before yourself, or
something along those lines.
I want you to tug at that alittle bit, because the idea of
when I was younger I used toread a lot of leadership books
and I forget which book it was,but it was some book I read
about leadership that said ifyou want to be a leader, you
(05:33):
have to make leaders of others,and this reminds me a little bit
.
It's like if you want to bewealthy, you want to focus on,
maybe, creating wealth forothers.
So let's explain that a littlebit.
Speaker 1 (05:45):
Yeah, one of the things I talk about is, if you
want to create the Americandream for yourself, it's really
easy.
Help other people create theirAmerican dream and then you
won't have to worry about yours.
The thing most people, mostpeople have, whether they
acknowledge it or not, have atinge of entitlement that they
deserve something withoutcreating.
My dad said it quite bluntly.
(06:07):
He said no.
We said Mark, and Brenton wasvery, very small, probably seven
or eight years old.
He said, mark, nobody owes youshit.
Nobody owes you anything inlife that you don't earn.
And so if you're, if you wantto create wealth and prosperity
for your family, for youremployees, for your clients, you
have to first create wealth andprosperity for them and then
(06:34):
you're entitled to somethingcoming back to you.
But that is the primary view ofa capitalist.
The capitalist, an entrepreneurlike yourself, has to always be
concerned with what value am Ibringing to other people?
And if an entrepreneur doesn'tfocus on what value they're
(06:55):
bringing to other people, thenthey quickly disappear and they
evolve out of the system.
Another great thing ofcapitalism if you don't help
other people have a service or aproduct uh, that's valuable,
then you evolved out of thesystem.
That's the way it should be incapitalism.
The other thing about focusingon other other people focusing
on other people is that it takesuh, it takes me and those I
(07:17):
know that practices.
It takes them out of morbidself-reflection out of morbid
self-reflection, pity, fear,greed.
Because there is greed in theworld.
And the more I focus on otherpeople, the less I'm worried
about my own problems and my ownpetty complaints about the way
(07:38):
the world is.
Speaker 2 (07:38):
Can you make others wealthy, and then my session're
wealthy, um, throughdiversification, or does it have
to be through some form ofconcentration?
Because I remember at aconference I was at the speaker.
One of the speakers saidsomething along the lines of uh,
diversification is a luxury forthe rich and the implication
(07:59):
there is that you know, the onlyway to get wealthy and also to
get broke is to take a highconviction bet.
Speaker 1 (08:06):
That's a great question.
So I think a great example ofthis is Tony Robbins' last book,
although he's written threebooks about investments, they're
all equally terrible, but thelast book is the Holy Grail of
Investing and the idea is that,basically, that diversification
is for chumps and if you want tobe a billionaire, then invest
(08:29):
like a billionaire.
And then he talks about realestate and private placements
and hedge funds and Bitcoin andtoxic investments that can be
very destructive to investors.
There's two ways basic ways tocreate wealth.
From the investing perspective,we believe in using academic
investing principles and,because markets are highly
(08:51):
efficient, all the knowable andpredictable information about
the future is already factoredinto the stock prices today.
Therefore, only random andlargely unpredictable events
will drive stock prices goingchanges in the future.
So betting highlynon-diversified attempts to dump
money into projects or to dumpmoney into different stocks
(09:17):
whether it's Nvidia, or whetheryou're doing Bitcoin
cryptocurrencies on the side, orwhether you're doing
commodities and options, orwhether you're doing private
placements or hedge funds thisis all gambling and speculating
with your mind, and for everyguy that got lucky and became a
billionaire, there's hundreds ofthousands that lost everything
and went totally bankrupt.
(09:39):
So I believe that number one isespecially if you're young and
you have a lot of time is to bean entrepreneur and own your own
business and hustle like helland create value for other
people.
So that's going to create yourincome coming in and that's you
know.
So when the book, I talk abouthow to invest, not just not just
(09:59):
your money, but how to investyour time and your energy,
because those are going to beincome generators and an
investment in yourself.
Learning and getting trained tobe a leader, to be an
entrepreneur, to be a visionmaker.
How to do that training in thatit's going to be very, very
valuable if you're willing totake the actions to actually
have it.
You know, see it to fruition.
(10:20):
So, creating wealth throughbeing an entrepreneur, but then
investing the money to widelydiversify.
We're in over 70 countries andover 20,000 holdings and there's
no better way to go bankruptfast than to dump your money in
three or four or five stocks.
It's one of the mostdestructive things you can do.
Speaker 2 (10:41):
Although, admittedly, at least the last couple of
years it has worked and you canargue maybe that skill, luck,
combination of the two or justsome random cycle that at some
point gets undone.
But it's a reminder that NassimTaleb line it's around sort of
the, the graveyards of theirfield, of people that have done
all the things very successfulpeople have done Right, yeah,
(11:01):
have done right, yeah that youonly hear about what the
successful people have done butin reality if a lot of people
are following those things, thatsame map, they end up not
getting anywhere.
Speaker 1 (11:10):
Right.
I always, I laughingly say youknow, even a ham sandwich could
make 20% rate of return over thelast five years.
Look, you didn't have to be agenius, you just had to be lucky
.
People have a hometown bias,they have a familiarity bias,
they have a hurting bias.
These are all emotional,instinctive brain problems with
(11:31):
the way human beings actuallylook at investing and it's easy
to get sucked into dumping yourmoney and you know the
magnificent, you know seven andand think that you're going to
be rich.
That's the same problem from1995 to 2000.
The S&P made 22% per yearaverage five years running.
(11:53):
Tech stocks from 1995 to 2000made 45% per year.
Per year, michael and investorswere dumping all their money.
Guess where they were dumpingit?
Large tech stocks.
And then large tech stocks lost75%.
Now the reality is mostinvestors were not in it for the
(12:16):
whole five years.
They dumped their money in thelast year or two after the high
performance, not before.
And that's the problem withinvestors they're always chasing
.
So the investors that dumpedall their money in tech stocks.
They all lost 75%.
The people that dumped theirmoney in large stocks in general
in the S&P, they lost 55%.
Many of them sold, locking intheir losses, only to get back
(12:41):
into the market after it hadalready recovered 100%, 200%,
and so the cycle goes and lookif you got lucky.
People say, well, I did well thelast five years.
Well, that's great, good foryou, but you got lucky.
It's like going to the casinoand betting 35 red.
That's a 30 plus percent payout.
(13:01):
If you get lucky enough to getit right, take your money off
the table.
Diversify prudently, becausedisaster, you know.
It's one thing to lose 75% ofyour money when you're 30.
It's a whole.
Not, we work with a lot of 60,70 year olds.
It's a whole different yearwhen you're 65.
Speaker 2 (13:17):
I think the problem is that social media makes it
look like there's many morepeople than not right that are.
They're crushing it right, andin reality it's like you
mentioned home bias,availability, risk, right, it's
like it goes, it's front of mindbecause the timeline's showing
it, but the reality is, allthese people are screenshotting
their accounts and how manymillions do they bid?
Assuming it's real, it'sprobably like 0.01% of the
(13:41):
population.
Speaker 1 (13:44):
Well, wow, the internet.
Wow, you got me.
I mean, the internet is so fullof lies and offers and
everybody's a guru, everybody'sgot life lessons, everybody's
got investing advice,everybody's got health advice,
(14:05):
but at the end of the day, verylittle of this stuff works.
What investing takes andgetting in shape takes and
getting your marriage right?
It takes work.
It takes a crap, ton of hard,serious work, crap, ton of hard,
serious work.
And any magic pill, magic fatpill or any magic newsletter or
(14:36):
any magic.
As an RIA, I'm regulated by theFCC.
But all these people withBitcoin and all these people
that go on there with thesenewsletters or subscribe to my
whatever because I made 200% insix months, I mean this is
disgusting and a lot of thesepeople aren't regulated if
they're just selling anewsletter or selling some
program that you day trade onand it's so destructive to
people you know.
I think the world would be amuch better place if people
(14:58):
could look at their life and seewhen they were wrong and admit
it.
In 1991, when I first becameaware of academic investing
principles, three main academicinvesting principles efficient
market theory, modern portfoliotheory.
Efficient market theory isEugene Fama.
(15:20):
Modern portfolio theory wasHarry Markowitz, and then the
factor model, three-factor model, by Fama and French.
When I first became aware ofthose, I thought, wow, this is
going to be a renaissance.
People are going to stopspeculating, they're going to
stop gambling, they're going toprudently invest, they're going
to stay disciplined, they'regoing to rebalance.
And, michael, nothing has beenthe furthest from the truth.
(15:43):
It's harder now for people toprudently invest than it ever
has been because you've got thisthing 24-7.
You've got Robinhood right nextto DraftKings on your phone.
You've got all this wronginformation on there and I don't
see AI is going to actuallyclean any of this up.
It's probably only going tomake it worse.
(16:04):
And I don't see AI is going toactually clean any of this up.
I'm only going to make it worse.
And you have tons of differentexotic, toxic investment
vehicles that are out there.
You've got 24-7 news cycle,which you didn't have in 1991.
You've got all these newsprograms and stations committed
to telling you you can predictthe future and time your
portfolio.
So it's actually worse thanever before and human behavior
(16:27):
obviously hasn't significantlychanged in 30 years.
But I see more speculating andgambling now than ever and I
think that that's verydestructive.
A lot of people are giving uptheir American dreams because
they're gambling with theirmoney.
Speaker 2 (16:39):
I'm smiling because so much of that sentiment I have
expressed over the years onvarious platforms I myself write
on.
But there's something that'sinteresting here, as we think
through this, which is that yousaid it correctly it's Robinhood
and DraftKings is right next toit.
We are a gambling society, butdoesn't that inherently make
markets less efficient, at leastin the short term?
Speaker 1 (17:03):
This is a great.
This is an interesting argument, and I've dealt with this for
34 years.
So the part of the argument iswell, if everyone stops
speculating and gambling andtrading, then the market would
be less efficient.
And then what would happen?
Would asset allocation andefficient markets fail in some
(17:24):
way?
And the way I look at it is ishypothetical questions sometimes
can be very useful if you'vebeen in the form of a thought
experiment.
This is a hypothetical question,though, that it's never going
to happen.
It's kind of like saying well,what would happen if everybody
was virtuous and discover thatgambling doesn't work?
What would happen to Vegas?
(17:46):
People are always going togamble, they're always going to
speculate, even when they knowthey're doing it as long as they
can get a free room and a drink.
Same thing with dieting.
Well, what would happen to thediet industry?
Or Monjaro and these otherdrugs that help you lose weight?
What happened?
What would happen to them ifpeople all of a sudden could
(18:07):
control their instincts andtheir emotions and stop
overeating?
Uh, it's a hypothetical questionthat I don't ever expect uh to
happen.
If it did happen, I think itwould be great, because a lot of
people would not uh bespeculating and gambling with
their money and they wouldactually look, look, risk.
The hardest thing for people toquantify is not return.
(18:28):
They build these portfolios andthey have no idea.
When we analyze them and showthem you could lose 60% of all
your money in a bad market andno one can predict with anything
like accuracy when these thingsare, they're shocked that their
portfolios are so dangerous.
So, to answer your question,it's a hypothetical, interesting
(18:53):
question, but I don't thinkthat's ever going to happen.
Speaker 2 (18:56):
So yeah, question off of X I'm going to show here.
Let's be about timing.
Markets and efficiency.
Stocks feel so overvalued.
How do we navigate this?
So you got all kinds of clientsthat say things that are either
buy more or sell or whateverelse.
So you know, you've got yourasset allocation, but people
always feel like they need thatillusion of control.
All right, so they're callingyou all, I'm sure, or your
(19:18):
advisors.
So what do you say to somebodywho says that First of all, I
think this is great.
Speaker 1 (19:22):
This is the first podcast I've been on where we
had actual live questions.
I love it.
I think it's wonderful.
First of all, there's aninteresting word in there, and
that word is feel Feel.
You should be highly skepticalof your own feelings when it
comes to investing, Becausefeelings and emotions are your
(19:46):
enemies when it comes toinvesting and they almost always
control the actual behavior.
In fact, psychologists havefound out that when it comes to
behavior, the vast majority ofyour behavior is not from your
conscious mind.
We'd like to think we're allSpock and data from Star Trek,
that we're all logical machines.
We're not.
We're not machines.
We're not very logical.
Our instincts and our emotionsmany, many times call the shot,
(20:09):
and then we consciously try tothink of a reason of why we did
that stupid thing in the firstplace, and we almost always come
up with the reason.
So look guys, don't trust yourfeelings.
Markets are random andunpredictable, because all of
the knowable information isalready in the market and
(20:30):
because you're dealing in amarket where other people are
emotional too, dealing in amarket where other people are
emotional too, just because itfeels overweighted or overvalued
, that doesn't necessarily meanthat it is.
So here's what I'd rather I'dlike to see you do.
Instead, I'd like to see youfocus on 80 years of research
(20:52):
and look at the statistics ofwhat you're doing.
So, for example, large USstocks have averaged 10% over
the last 80 years.
That's the longest data set wehave, and over 80 years, 10% of
your money debt doublesapproximately every seven years.
You don't get to know in advanceif the market is over or
underweighted or overvalued,let's say.
(21:13):
In fact, you'd probably be bestto get that language out of
your lexicon.
It's actually.
The market is exactly whereit's supposed to be, based on
people's instincts, emotions,and supply and demand.
What you don't get to know iswhere the next 20% is, For
example, I always tell investorsno one can tell you where the
(21:33):
next 20% is going to be up orwhether it's going to be down.
What we do know historically,though, is the next 100% has
always been up, so you want tofocus on the next 100%, not the
next 20%, because nobody knows.
And then you want to build aportfolio that has the amount of
risk, so if it does crash andthe odds are about one out of
(21:56):
every four years you have anevent where it's a crash,
Markets are up three out ofevery four years.
When they're up, they're up anaverage of 22%.
When they're down, they're downan average of about 11%.
So statistically, long-term,you're in good position.
But the S&P could also lose 30%or 40% in any given year.
But the S&P could also lose 30%or 40% in any given year.
So you have to understand thattype of risk.
(22:18):
Now you can offset that riskwith high-quality fixed income
that has very low volatility.
So if the market does go down30%, you can rebalance your
portfolio, sell yourhigh-quality fixed income and
buy more of those equities whilethey're low.
That takes you out of themarket timing game trying to
feel your way through whether ornot the market's over.
(22:40):
You know too high, uh, oroverpriced, uh, and.
And it can give you some peaceof mind because you're not
always trying to predict what'scoming next.
Speaker 2 (22:49):
And therein lies the issue with our industry.
That word predict, um.
So I always frame things myselfin terms of conditions.
Right like I, I can't predictthe exact mile marker.
I might crash my car, but Iknow if it's raining I gotta
slow down right now.
(23:10):
Valuations, and to your pointabout the word feeling, you know
they can feel overvalued, theycan be factually overvalued, but
they can stay overvalued for along time and the valuation is
going to resolve themselves.
You don't necessarily have tohave a crash.
You can have a whole bunch ofsideways, lost decade type
action in stocks, but thatdoesn't necessarily mean other
asset classes during that gothrough a similar dynamic.
So talk me through as you thinkabout portfolio construction,
(23:34):
what types of asset classes doyou diversify into?
You talk about internationalpositions right, but beyond
stocks, bonds, alternatives.
Talk to me about the mix thatwe like.
Speaker 1 (23:45):
Yeah, it's great.
So first critical discussionfor an investor is what is the
mix going to be between equitiesand fixed income?
That is the most criticaldecision that you can make.
Equities, long-term, have agreat, have greatly outpaced
inflation.
Fixed income especially if youhave short, short, short-term
(24:07):
high quality have stayed up withinflation, but they haven't
beaten inflation.
So when we so the firstcritical discussion that you
want to have is how how muchlarge versus, excuse me, is how
much equity versus how muchfixed income.
The next conversation you wantto have is okay, how do I
diversify my equities?
Well, to diversify yourequities in the US alone, you're
(24:30):
going to want to add.
The way that we look at it,you're going to want to use
small micro-cap stocks.
Micro-cap stocks have average12, where large stocks have
average 10.
The way that we look at it,you're going to want to use
small micro cap stocks.
Micro cap stocks have average12 where large stocks have
average 10, but they're alsogreat diversifiers because that
decade you mentioned, micro cap,small stocks actually made
around 8% per year during thatsame 10 year period, the lost
(24:51):
decade, where stocks were down atotal of 9% over 10 years.
They had two major crashes.
So small and then value.
We view that as highbook-to-market value stocks.
Historically those haveaveraged 14% versus the S&P at
10.
So now you're starting to get awide diversification in the
(25:12):
United States.
But on your equity side of yourportfolio you also want to look
to international because thathas the best offset with
correlation to just having apure US portfolio.
For example, this yearinternational stocks in our
portfolios are up 25%, while USstocks are only up 3% or 4%.
(25:33):
So there's a massive benefitfrom international
diversification and then yourebalance those on the highs and
lows.
But many people have beensucked too much.
They've given up oninternational because it's been
a while since they did this.
But there's whole decades whereinternational just destroys US
and you don't get to know inadvance which decade we're
(25:55):
getting ready to go into.
So as a result, you diversifyand then you rebalance your
portfolio and then you want tomake sure that you own small and
value stocks internationally,emerging market stocks
internationally.
So you want widediversification so you don't get
stuck gambling on any one thinglike tech stocks.
On the fixed income.
People make terrible mistakeson their fixed income because
(26:18):
they're trying to juice theirreturns.
They're going with junk bonds,so there are high risk bonds and
they're trying to extendmaturities so they can get an
extra half a percent, maybe 1%,but when they do that, if you're
not using short-term, highquality bonds, the volatility
becomes extremely high and ifthe interest rates go up just
(26:39):
two or 3% or a 20 or 30 yearbond, you could find yourself
losing a massive 10 to 20% ofyour portfolio.
That's in your bonds, whichwere supposed to be the safe
part of your portfolio.
And if the equities havecrashed and your bonds have
crashed at the same time, nowyou don't have anything to
rebalance with Because they bothwent down simultaneously.
(27:00):
You're really stuck.
What you want is high qualityshort term bonds, both corporate
and government, diversifiedglobally, and then you can suck
off that fixed income and thenput it in your equities while
it's down.
Speaker 2 (27:13):
You do that automatically and you take the
emotion and the instincts out ofit High quality and government
typically tend to not go hand inhand, but I'm framing it that
way because I think it'sinteresting.
I would assume that if you'reputting an asset allocation
together for a client and yousuggest having treasuries in
(27:33):
there, there might be a littlebit of a pushback.
It's like why do I want to giveit to the government?
Look at how much they'respending, look at how the debt's
ballooning and that argument,by the way, has been consistent
throughout decades, right?
So how do you get somebody toagree that they're going to put
their money to work in thingsthat they hate?
(27:54):
Because that's another line I'ma big believer in, which is
that true diversification meanshaving things in your portfolio
that you just can't stand.
Speaker 1 (28:00):
Yeah, I think it's a great point If you're broadly
diversified.
Another area this comes up infrequently is investing social
conscious investing.
You know, esg investing thisidea that we're only going to
invest in morally greatcompanies that we've, you know,
(28:24):
are not in war or not in tobaccoor not in whatever causes you
don't think are great.
The problem with that is thatthen you end up stock picking
and then, without knowing it,your portfolio loses.
Broader diversification.
The other problem with that is,if you're an investor, you're
(28:47):
never going to have totallyclean hands.
What I mean by that is, let'ssay, you don't want to own
companies that make bombs ormake military equipment.
The problem is you invest in acompany that makes steel, or you
invest in a company that makesyou know radar, or you invest in
a company that makes you knowparts for computers.
(29:09):
Those companies are going touse those assets to run their
business.
So the only way to supposedlykeep your hands clean is not to
invest at all, because if you'rean investor, you're going to be
funding a lot of differentstocks.
So, as far as ESG investing andall this crazy stuff, use the
(29:31):
science of investing and ifthere's causes you believe in or
things that you want to fightagainst.
Fine, go on the internet andtalk about you think there's too
much debt, you know, forAmerica, and trillions and
trillions, and we'reoverspending, and let your voice
be known that way.
Or support political parties oror charities that you you uh
(29:53):
believe in with your money, thatyou believe in with your money.
But don't skew your investingportfolio based on your likes or
dislikes.
It's a major problem if you'retrying to be a prudent investor.
Speaker 2 (30:04):
I love this conversation because every time
you say something, I want to goin a direction based on the
tangents.
So, likes and dislikes A lot ofpeople like and dislike our
current president.
Yeah, and I'm always of themindset that whoever is
president has far less impact onthe economy and the stock
market than we are led tobelieve.
Right, and I think there's alot of evidence that suggests
(30:24):
that.
But people tend to invest basedon their political views, right
, if they don't like the currentadministration, they're bearish
on stocks.
If they love the currentadministration, they're bullish
on stocks.
How do you get people to think?
Speaker 1 (30:40):
differently and to disassociate the politics from
their portfolio.
Well, you look at the facts.
What you do is you go backthrough history and you look at
different presidents anddifferent, not just the
president, right.
So you got the presidency,you've got Congress, you've got
Senate, you've got all thesepolitical factions, and you can
actually go back through historyand look at markets where the
Democrats were in control,markets where the Republicans
(31:01):
were in control, and then youcan go back and look at the
different policies and you cansay is there anything in any of
these policies or thesepresidencies that could
correlate?
Can you find a correlation?
And you can't find acorrelation.
There's no correlation.
You might not like the Senate,you might not like the Congress,
(31:21):
you might not like thepresident, but there is no
correlation between what youlike, what party you support,
and the performance of themarket.
It just doesn't exist in thedata.
So, whether you like them or not, this is what we got, and I'm
not, and I think overall, thepolicies for the economy.
While you can't predict themarket, but you can look at, are
(31:44):
the policies good for theeconomy overall?
And I think low taxes are greatfor the economy.
I think free trade is great forthe economy.
I think independence of oil andenergy is great for the economy
.
I think, when you're able to.
I mean, look how bad for theeconomy would it have been, or
(32:04):
the world would it have been ifIran had got a nuclear bomb.
So, whether you like him or not, the guy's doing what he said
he was going to do.
I'm not a big fan of hisfascination with crypto and
Bitcoin and his own crypto.
I think you should lay off ofthat.
I think it's bad direction.
But I call balls and strikesright.
(32:26):
I don't emotionally get, Idon't try to emotionally get
involved with who's president,but the economic policies I can
see can have a positive effecton our economy.
Speaker 2 (32:39):
Yeah, and many of that know that I've been on a
deregulation train for a while.
I think there's a lot oftailwind potential there, which
actually is maybe an interestingadditional direction to go,
which is that you mentionedbeing an advisor.
I've got my own advisory firmas well, separate from this
effort on the Lee Black side, wegot to deal with a lot of red
(33:01):
tape and compliance.
Right, I mean, let's talk aboutsome of the pros and cons of
regulation, because there aresome pros.
I mean it's not all negative.
Speaker 1 (33:11):
Well, as I've gotten older, I've tended to appreciate
some of the regulation.
Like you know, for example,cryptocurrency is one I think
should definitely be regulated.
You know you can't sell stocks,you can't be a money manager,
you can't own a broker dealer.
Even hedge funds have someregulation.
(33:34):
So you know, and it does makethe business more difficult
there's a lot of red tape,there's a lot of expense, but
some of these you know, like SamBankman, freed and some of
these other crooks I thinkyou're going to find many, many
more crooks involved in thisthan you could possibly imagine.
The crypto in general is usedby criminals, it's used by the
(33:57):
mafia, it's used by cartels,it's used by one of the big ones
is.
Several years ago, we hadsomeone try to hack into our
system.
This is a big problem withbusiness.
Right now.
They've even tried to hack thePentagon and treasury and so
forth.
You can get your systems hackedas a business person and a lot
of these big, even mutual funds,have been hacked, and they
(34:19):
steal the information and thenthey turn around and try to
ransom it.
They turn off your own systemso you can't access your own
system and all of these hackers,when they try to ransom you.
What do they want?
Well, they wanted a milliondollars in Bitcoin.
Of course it's not regulated.
Well, they wanted a milliondollars in Bitcoin.
Of course it's not regulated.
(34:40):
So I think it's very disturbingFor our listeners.
Reviewers, the cryptocurrency isa misnomer Number one.
It's not a currency.
Currencies have to have verylow volatility and currencies
have to be widely accepted.
Low volatility and currencieshave to be widely accepted.
(35:00):
Try going into a mall andspending your cryptocurrency to
buy something at the mall.
You're not going to be able todo it and it has massive
volatility and there's nothingthere.
When I buy a stock, I own partof a company.
When I own a bond, I own acommitment against the company
to pay me back or the government, but when I own a
cryptocurrency, there'sliterally, literally nothing
(35:20):
there at all.
There's nothing.
The only thing that makes itvaluable is that there's got to
be a bigger fool coming behindme that's willing to pay even
more than I paid for somethingthat doesn't even actually exist
even actually exist.
So I think crypto is one of themost toxic investments that you
can own, and I would highlyrecommend investors that are
trying to fulfill their Americandream to stay away from it.
Speaker 2 (35:42):
I feel like that's a hot take.
That on X will get a lot ofattention.
My view I share a lot of yoursimilar views.
I mean it's like there's a lotof fraud.
I think.
Having said that, at least ifyou look at Bitcoin, maybe
Ethereum, you can make anargument that those are still in
quotes, investments, so theyshould have some even minimal
(36:02):
allocation if you look at atotal portfolio, but I get it,
it's not for everybody and it'scertainly not for me from a
maximalism perspective.
Speaker 1 (36:25):
People have been making this argument for a long
time about not justdiversification in
cryptocurrency, butdiversification in what many
people in our industry as youknow, michael call alternative
investments.
So alternative investment wouldbe gold.
Well, and gold has, they say, alow correlation with the market
.
Well, that may be true, butwhen I'm diversifying a
portfolio, I want two things.
I want low correlation to otherparts of my portfolio, but I
also want a return andhistorically, gold has only
averaged 5%.
(36:46):
So I have something hugelyvolatile, just as volatile or if
not more volatile than themarket itself, the stock market
itself.
So it's as volatile, with halfthe return Right and people like
to feel it and touch it andthey want the Midas get rich
quick thing.
(37:06):
And you got Peter Schiff outthere pumping it and you've got
these gold bugs out therepumping it, saying it's the end
of inflation.
You can't have an asset that ishighly volatile as a hedge
against inflation and it's athousand times more volatile
than inflation.
That makes it a terrible hedgeagainst inflation.
Inflation could be up 2% andyou could lose 40% of your money
(37:29):
in gold.
Same thing goes with Bitcoin,but you want to add.
When you look at your portfolio, you want to say, okay, does it
add diversification bydissimilar price movement, but
then does it actually have areal return for the volatility
that I'm taking on?
And a lot of these assets thatpeople dump into their
portfolios have three, four,maybe five years, maybe even 10
(37:52):
years of good performance.
They dump this garbage in theirportfolio and they get burned.
A good example of this iscommodities in general.
In 2008, 9, you had the realestate crash and when you had
the real estate crash, you hadthe market dropping 50%.
Commodities were up 30% or 40%during that period of time, so
(38:16):
everyone then started saying,well, this is a great
diversifier.
A lot of people got money incommodities at that time and the
commodities index over the last20 years has made exactly zero,
not a single dime of profit.
And at the time people weretalking black swan events and
you got to add all these exoticthings to diversify.
(38:37):
What you should have done issold your fixed income and
bought more stocks while theywere down.
Easy to say, hard to do.
Speaker 2 (38:44):
We touched on a lot of topics here.
You mentioned you know,congrats.
You built a nice size RIA 10billion plus, and having been in
business for a while I know howhard that is, so congrats on
that.
But I want to transition alittle bit to management style,
because you went from to yourpoint owing $30,000 in debt
(39:04):
early 90s building up this bigfirm.
I'm kind of going through someof this myself now.
When you're at that kind ofhockey stick moment in a company
, you know you are used to doingthe grunt work and all the
minutiae and you've got to atsome point transition from, as
Alex Formosa would say, sort ofthe nitty gritty grunt work to
being the idea man.
Talk to me about how you manageyour company and the people
(39:26):
involved, given your philosophy.
Speaker 1 (39:28):
That's great.
So I think it's one of thegreatest challenges for any
entrepreneur.
You talked about theself-development books that you
read, which I've also been astudent of since I was 10 years
old.
My dad gave me Think and GrowRich and said you know, read
this book, psycho Cybernetics.
I also read it when I was 10and said you know, you want to
(39:52):
study human behavior and youwant to study how the world
works and if you want to be atrue entrepreneur, you read this
book.
Read it once every year, youknow, for the rest of your life.
And I have the thing aboutemployees is you have in the
book, in my book, experiencingthe American dream, I talk about
asking the right questions, uhand, and having those questions
(40:13):
serve as a screen for how yousee the world.
So when I first started mybusiness, I had a screen for
investors.
I had me and two otheremployees and I had a screen for
for for um, employees thatemployees are hard to manage,
hard to hire, hard to keepfocused.
They're not creative.
(40:33):
It's easier to do it yourself.
I ended up hiring them andtraining them and then having to
fire them, you know, andbasically it was a screen.
The way I saw it was thatemployees suck.
And then I.
And then I said well, what, yougot a dream to?
We have 70 employees today.
You got a dream to build thiscompany and to help people
(40:53):
invest their money and to helpthem fulfill their dreams.
So you're not going to be ableto do it with two people.
Is there any anything thatyou're?
Is anything in the way you seethe world skewed?
And it was because having thatview that employees suck meant
that I didn't have to take risk,I didn't have to hire them, I
didn't have to communicate withthem.
(41:14):
I got to be righteous, I got tobe right, I got to blame them
for the company not growing.
So I got to, I got to complain,bitch and moan about the state
of the world, but it was costingme the future.
So then I asked a differentquestion.
The question I asked was well,is it really true that all
(41:34):
employees suck?
Couldn't be true, because therewere companies with 10,000
employees, so it can't be truethat all employees suck.
That can't be true.
And if it's not true thatemployees suck, then what could
it be?
Well, it could be thatemployees are awesome and
(41:54):
employees are the key to thefuture, and that was the new
screen that I took on, and so Ihad to do something that very
few entrepreneurs ever do.
I had to stop asking why can'tI find good people?
And I had to ask the questionwhat in the hell makes you so
good, mark, that you think goodpeople would want to come to
(42:18):
work for you?
And, looking at that question,how can I create the environment
, the opportunities, the visionfor them, the excitement for
them, the passion for them, theenergy for them?
How do I create a company thatdraws and pulls the right people
in while, at the same time,rejects the ones that really
(42:41):
aren't hardworking and don'thave a lot of grit and have a
lot of entitlement?
And it's been a journey.
Within 34 years.
We have a great team now, butit's taken a lot of
experimentation over the years,and I tend to hire slowly and
vet people as well as I can, butyour vetting is only going to
(43:01):
be so good and then when I findsomeone that doesn't fit the
right model, I get rid of themas fast as I possibly can.
And the other thing I do whichis, I think, is I've been really
looking at this lately is yougot to make sure you have the
people in the right position.
It's like a coach for footballor baseball or whatever.
You know there's people that inthe organization, or could be,
(43:26):
that are in the wrong position,and I've had people in
management trying to managepeople.
I've discovered they weren'tgood at that but, hey, they were
great at creating R&D and newpresentations.
I had a guy just recently wasin operations and I discovered
he had a real gift for marketingand and I put him in the
marketing We've got.
You know our workshops arepacked full now.
(43:46):
So you want to make sure youhave the right people in the
right position and you have goodboundaries.
You have good positioning.
They see working for you aspart of their passion and part
of their dream in life and youwant to focus on how do I create
a company that attracts thosetype of people One of the
toughest things for anentrepreneur to do by far.
Speaker 2 (44:09):
Yeah, because it's like.
The other thing is like, ifyou're an entrepreneur, you're
also very alpha in terms of youknow, you view yourself as very
competent, right, and obviouslyyou want other people to work at
your level.
But not everybody's anentrepreneur, which means the
odds favor whoever you bring inis not going to be as intense as
you are, because they've neverbeen a business owner themselves
(44:30):
, right?
And and then, as a businessowner, you have to come to terms
with the fact that people arenot going to be at your speed
and that that's OK.
Speaker 1 (44:39):
Yeah, we have a thing in our company called the
cancer of casualness, and beingin business takes a high degree
of urgency.
It's it's a fire in the bellythat things have to get done and
have to get done now.
And I think it starts with thehead entrepreneur of the
visionary of the company, thevisionary of the company, and it
(45:02):
really demands control systemsfor the employees, specific
goals, specific timelines,specific urgency and the cancer
of casualness.
Once the casualness gets intoyour company, it destroys the
future because, especially withAI and quantum computing, I tell
our people that we have ourcore values but we have to
(45:24):
evolve our company every two tothree years into something
unimaginable, because if wedon't, the market's going to do
it for us and it's going to putus out of business.
So we have a sense of urgencyand a sense of mission and a
sense of accomplishment and it'sgot to happen now.
And if we get casual and wedon't know our numbers and we're
not focused on the results andwe're not late, creating that
(45:47):
SEAL Team 6 environment, it willbe the slow death of a company.
And that's part of what I talkto our advisors, that I coach
and train about, is how tocreate that sense of urgency,
both first for yourself and thenfor all of your employees
underneath under you.
Speaker 2 (46:04):
Yeah, there's so many things behind the scenes that
those on the outside have noidea about that we're we have to
deal with as business owners.
Mark, for those who want tolearn more about or track more
of your work or get access to,you know the services that your
company provides and they mightbe interested in the book.
Talk them through sort of howthey can get all that.
Speaker 1 (46:24):
Yeah, one of the easiest ways to get connected is
you can go on.
You can get it on Amazon or anyof the online bookstores.
You can grab a copy of ourbestselling book Experiencing
the American Dream.
Rob Lowe did the forward to it,arnold Schwarzenegger endorsed
it, gary Sinise endorsed it, aNobel Prize winning Harry
Markowitz endorsed it, steveMoore, Steve Forbes got a lot of
(46:49):
great endorsements on the book,so that's a great way to start.
We also have a two-day workshopcalled Experiencing the
American Dream.
We have a virtual one startingup this Thursday and Friday
actually and it's how toeliminate speculating gambling
from your investing portfolio,how to talk powerfully about
(47:09):
money, how to find your purposefor your money and how to grow.
And that's the virtual one isopen to anybody that wants to
attend.
If you'd like to learn moreabout that, you can go to our
website it's mattsonmoneycom,and then you can hook me up on
Instagram or Facebook.
That'd be great.
Speaker 2 (47:28):
We've got to get you on X, Mark.
Speaker 1 (47:31):
I know my PR people are like, hey, you've got to get
you on X, you're right, I doneed to get on X.
You're absolutely right withthat.
Speaker 2 (47:37):
Well, I'll see if I can get you on that All right.
Appreciate it.
Ready to watch this live again?
Folks, this has been an editedpodcast under Lead Lag Live on
all of your favorite platforms.
I'll see you all on the nextepisode of Lead Lag Live.
Thank you, mark.
Thanks, buddy, cheers.
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