December 14, 2024 • 24 mins
Mick Heyman is the author of Mellow Your Money: How to Surf the Market and Build Wealth without Stressing Yourself Out and the Founder of Heyman Investment Counseling. Mick has built a reputation for helping individuals and institutions grow and preserve their wealth through a stress-free approach to investing.
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Episode Transcript
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Speaker 1 (00:02):
This is What's at Risk with Mike Christian on WBZ,
Boston's news radio. Hi, Mike Christian, hero of What's at Risk.
First up on tonight show, we have Mick Hyman, the
author of Mellow Your Money, How to Surf the market
and build wealth without stressing yourself out. He is also
(00:22):
the founder of Hyman Investment Counseling. Mick has built a
reputation for helping individuals and institutions grow and preserve their
wealth through a stress free approach to investing. And in
our second segment, an Encore presentation, we speak with Hank
Philip E. Ryan, Emmy winning investigative reporter for Boston's WHDHTV
(00:45):
and best selling author of fifteen novels of suspense. She
provides keen insights on our early television career, her unique
and incredibly successful creative process, and her relentless pursuit.
Speaker 2 (00:59):
Of justice es.
Speaker 1 (01:05):
Mick Hyman is the author of Mellow Your Money, How
to Surf the market and build wealth without stressing yourself out.
He is the founder of Hyman Investment Counseling. Also with
a distinguished forty year career in wealth management, Mick has
built a reputation for helping individuals and institutions grow and
preserve their wealth through a stress free approach to investing.
(01:28):
His work highlights the importance of a balanced approach to wealth,
viewing financial health as integral to overall well being. Although
his formal education is in economics, mixed passion for philosophy
and psychology has greatly influenced his understanding of market dynamics,
emphasizing the role of human emotion in financial decision making.
Speaker 2 (01:52):
Money served the.
Speaker 1 (01:54):
Way you do it, money full of the relative. Okay,
our guest today is Mick Hyman, author of Mellow Your Money,
How to surf the market and build wealth without stressing
yourself out. It sounds like a lofty ambition. Thanks for
joining us.
Speaker 2 (02:13):
Thank you, Mike. I'm excited to be here to appreciate
the opportunity.
Speaker 1 (02:17):
Yeah, it's great to have you. Maybe a good place
to start to start our listeners, A little bit about
your background.
Speaker 2 (02:22):
Sure, I actually grew up in Ohio and went to
school up in Chicago and started in the business about
forty years ago and at a very small industment counseling
company in in Cincinnati and dreamt of being a master trader.
And you know, one of the stars in that way,
(02:44):
and really through my bad trading and disadventures, learned that
investing is really about the long term and enjoyed working
with clients sometimes over thirty years, you know, managing their
money and seeing how they built wealth over time. And
so I as time went on, I thought, write a
(03:04):
few blogs, and eventually it turned into a book. And
and I just thought, you know, as you see so
much information out there, and often it's useless information, and
often it's you know, information, it's too much information, and
I thought, maybe there's a way to de stress ourselves
in the market regarding money. And so that that kind
(03:28):
of brought me to writing this book that got out
about a year ago.
Speaker 1 (03:32):
Now, your formal education is in economics, but you have
a passion for philosophy and psychology. How those two topics
or subjects influenced your style and your approach.
Speaker 2 (03:43):
Thankfully much more than economics, because although it was something
that I thought was important to learn in college, it
was never my best subject. I loved, you know, Russian
literature with you know, the emotions of the people growing
up there and facing the challenges of life. And so
(04:04):
it was philosophy and those type of topics that really
interested me. And what I found is I began investing,
is that the markets are all about emotion. That's what
drives the markets, and of course it's our own emotions
that either help us or get in the way of
becoming good investors. And so dealing with those emotions I
(04:27):
found over time were the most significant things to being successful.
And as I grew up and kind of got out
of college, I realized that it was these areas that
really helped me the most.
Speaker 1 (04:39):
You mentioned emotion, markets being emotional, is it, you know?
So then that made a market is a collective thing,
So is it a collective emotional response? And is it
predictable in any way?
Speaker 2 (04:53):
I think at times you can kind of see how
the emotion either carries the market higher than what might
be normal or and oftentimes lower, and it's really on
the downside. You'd always say the market goes up slowly
and comes down fast, and you definitely can see that
in the different experiences that we've had over time, whether
(05:16):
it was you know, the nineteen eighty seven crash or
even in two thousand and eight that was it was
a horrible time in the market, and yet it ended
in about a year and so, you know, but we
have to deal with the pain of that. And the
trouble is that we there's so many things out there
(05:39):
for people to follow. To become good investors. All you
have to do is what are the major things I
need to deal with to invest over the long term.
But the moment something unpredictable happens, like the pandemic, we
throw out all those rules immediately because we say, oh
my gosh, well this has never happened before. What do
(06:00):
I do? And so if we haven't dealt with the
fact that surprises happen in the markets, and how are
we going to deal with them when they do happen,
then then we panic at the first sight of it.
And so, yes, the emotion the market is driven by
that excitement, either up or on the downside, But it's
also what are we doing about it? And how are
(06:22):
we able to mellow out while the rest of the
world is panicking.
Speaker 1 (06:28):
Yeah, that's a great that's a great question or great
view of it. I saw this quote on a promotional
piece for your book. Money management can be a form
of meditation that, when practice correctly, blazes a path to
peace rather than a road to emotional ruin. I love
that to maybe talk a little bit about that.
Speaker 2 (06:47):
I try to explain that one. Yeah, I guess what
I'm what It kind of gets back to that thought
that the market can reveal our weaknesses, and so it
is it is a way of of looking at the
at the emotions that we face when when the market
is either up or down, or how we're looking at
our money. That can that can help us learn lessons
(07:10):
in our life. You know, what what is it that
that it is revealing about ourselves? There's you know, some
great teachings on mindful meditation of being in touch with
who we are and what is happening in the present moment.
And the market constantly gives is giving us opportunities to
be in the present moment and what are we feeling
(07:33):
and what are those feelings generating. It's not that we
should ignore the feelings that the market is presenting us.
It's how we're acting on it. That that there's a
story I wrote about my uncle lou who would torture us,
you know with this you know, say uncle, say uncle,
as he's twisting our ear or giving us the noogies,
(07:56):
and and eventually we had to give in it was
that pain of of you had to finally give into
that to his torturing us. But anyway, I remember at
the bottom of a market as the nineteen eighty seven
crashed and the market dropped twenty two percent in a day,
and I thought to myself, say uncle, as people were
(08:20):
panicking and selling it. That's what I felt like, and
that moment of say uncle, is not a time to sell,
It's a time to look at ourselves and say, this
is a time to relax a little bit because the
rest of the world is panicking, and can we do
the opposite. There's a great Seinfeld episode of George Costanza
(08:45):
and he admits to Jerry and saying, everything I've done
in my life has been awful. Every decision I've made
has led to disaster. I need to do the opposite.
And for that series, at least made the opposite decision,
and of course everything went well for him. Well, we
need to consider that too. Oftentimes in our lives in
(09:08):
the market that oftentimes it's that that initial emotion that
we just react to, and if we think about it
and consider it, it's sometimes the opposite of what we're
thinking about.
Speaker 1 (09:20):
Yeah, that's great. One of my favorite episodes, by the Way,
is too. So we all look at money in a
particular way. I guess we all have a mindset about money.
How do we objectively look at our mindset and then
change it if it's something that we should, you know,
that would circumstances would dictate us to do at a
(09:41):
point in time.
Speaker 2 (09:42):
We need to first look at how risk averse are
we in the markets? That how how much do we
worry if things go the wrong direction? And each of
us might have a unique and different view of what
that is. A great trader back in the nineteen twenties
(10:02):
Jesse Livermore, and one of his great quotes was take
stocks down to the sleeping level. And so for each
of us that might be a different thing. You might
think as as as younger you know, as younger kids,
they should be one hundred percent in stocks because you know,
over thirty forty years, who cares, you know about the
(10:23):
short term. But if they're risk averse, that's not the
place for them to be because when the when the
surprising thing happens, they're going to panic and maybe maybe
stop investing in stocks because of an unpredictable turn. So
we need to look at what are that what you
know historically does does the market potentially drop that would
(10:48):
cause us to be concerned. Some oftimes it's half your money.
You say, well, if the market drops thirty percent, if
I have half my money in stocks, maybe I've only
lost ten or fifteen percent, and that doesn't worry me.
And in fact, if that happened, then I have strong
hands and I can buy stocks. And so what is
(11:10):
it that? And I think each person as they begin investing,
should think about what is it that would allow us
to have strong hands in the face of an unpredictable event.
That to me is the one of the most important
decisions to make at the beginning. And then each of us,
you know, at times you know may have a lot
(11:31):
of money to invest in. Maybe the best way if
you if you if you have a lot of money
to slowly get in the market, don't make it one
day plunk in you know X amount of dollars, because
almost invariably when you do that, the market drops the
next day and you think you have all this regret,
and so it goes slowly. Many of us, because of
(11:52):
the four oh one ks in different ways of investing.
Over time, we'll invest over. You know, every month you
put it a little bit in. Well, if you do that,
if you have that kind of a plan, you don't
really you're very neutral about whether the market goes up
or down, because each if the market goes down one month,
you think, oh, I'm getting in a little lower here.
(12:14):
In fact, if it goes down for a year, maybe
you've bought at more attractive prices. So if you have
those kind of thoughts in your mind, it relaxes you
and you can go about your business and worry about
other things in life, or and hopefully enjoy other things
in life and let money kind of coast along over
the long term.
Speaker 1 (12:34):
Now, the market's been very strong in the past few months,
all time highs in many areas. Yet we have a
new administration coming in. There's other geopolitical risks. There's always risk, right,
what do you What are your thoughts about the current
market and how people should look at that?
Speaker 2 (12:50):
Sure, Well, one thing I would say is it kind
of gets back to that that allocation to stocks that
I talked about, That is your each person has to
figure out what that is. But what I would say
in a year like this and actually following up on
a year like last year, where a market was up
twenty percent or so a little bit more this year
(13:11):
now well above twenty percent. The odds are if you
had a certain allocation to stocks, maybe it was fifty
or sixty percent by definition, because the market's run up
like it has, you probably have five or ten percent
more in stocks than you had beforehand. This is the
(13:32):
time where you can take that allocation back down to
what it is is in the normal allocation. And I
say this not predicting that the market is going to decline.
It's just good good investing. It's good portfolio management to
take it back to that sleeping level because maybe we
have the unpredictable recession or something else that drives the
(13:55):
market downward, and you're back to your normal allocation, and
then if the market goes now, you can add back in.
So it's almost be a mechanic as opposed to a
predictor of the current market. But because the market's been up,
the likelihood is that we should take a little bit
out and put it back to our normal allocation. And
I'm not predicting that the climb because of that. It's
(14:18):
just good long term investing decisions to do that. And
then so the other thing i'd say, and regarding your
question about the new administration is and I have to
start off saying, I'm not saying that politics is irrelevant,
but regarding investing, don't let it impact your investing over
(14:40):
any period of time. Typically, over if you look at history,
the markets have done about the same whether it's been
a democratic administration or Republican administration. So don't you know
someone will say, oh my gosh, it's a Republican and
it's going to go up for a democratic worry about it.
Over time, It's not had a great impact. The other
(15:01):
thing I would say that's going on right now is
everybody's trying to figure out what stocks are going to
do well because of a new administration. And what I
would point out just at least the recent recent experiences
in people trying to do that. When President Trump was
elected in twenty sixteen, a lot of people thought, oh,
(15:22):
buy oil stocks because they're going to go up because
of his policies. Well, that was not a good place
to be for those several years. So trying to predict
what stocks are going to go up because of this,
and take when President Biden got elected, green energy stocks
soared for a little bit of time because people thought,
(15:43):
oh my gosh, that's going to do great well and
over time, over the last several years they've been a disaster.
So the point is, don't get overly hyped up about
politics relative to your investments. At least. That's probably a
lot long winded answer there, but it's it's, you know,
keep with your long term focus and don't get.
Speaker 1 (16:05):
Distracted politics aside. We do have some things looming like immigration, tariffs, AI,
inflation up and down, interest rates. What do you what
are your thoughts about that? I mean, I think you're
you've made You've made your point about having discipline, creating
a discipline for yourself, regardless of all the extraneous things
(16:27):
that may impact the market. But you think there's any
of those things AI, maybe maybe AI in particular, that
would have a fundamental change on the market.
Speaker 2 (16:36):
I do think that there will be a fundamental change
in our lives because of AI. But kind of like
if you recall back when the Internet kind of took
off in the nineties, and you know, we you know,
everyone became excited about this new thing that was going
to change our lives. But the thing is, it was unpredictable.
(17:00):
How you know, there were so many little dot com
companies that got blown away in the early two thousands,
and one of the stocks that declined but actually was
a for real company. It was Amazon. You know, back
then we thought it was a bookstore, and you know,
of course it got knocked apart like everything else, but
(17:22):
to think of what it became, and you had time.
You didn't have to discover Amazon back in the nineties.
If you did, you might have gotten scared out in
early two thousands. And even if you bought it in
the early two thousands and thought, oh my gosh, that's
kind of like buying bitcoin ten years ago. That was
a home run. But you didn't have to do that.
(17:44):
You could have allowed yourself to buy Amazon long after
when you actually realized it was a real company. Same
thing with AI. It's going to change our lives, it
seems like. But just like you know, smartphones and everything
something else that was unpredictable back in the late nineties.
I think there's going to be unpredictable things that occur.
(18:07):
We just need to keep our eyes open and regarding investing,
if you're diversified, if you're in a just an s
and P five hundred index fund, you're going to have
exposure to those things over time because the market changes.
If you look at how the S and P was
situated back in the eighties, thirty percent of the S
(18:28):
and P five hundred I'm estimating this was in energy
stocks because that was the major thing that was going on.
And over time the market drifted up and energy became
less and less and less, and now I think it's
three or four percent of the S and P five hundred.
So simply by owning an index fund, you don't have
to be so smart to predict which stock is going
(18:50):
to outperform in that kind of thing. And certainly the
other thing though that one of the things you mentioned
there was interest rates. There's one ball to watch, and
I'm trying not to, you know, have people predict anything
but interest rates themselves. Sometimes it's the most important driver
(19:10):
of the market. And if we see interest rates stable
or declining, that's a good thing because it means that
companies can can make money on lower interest rates, and
that feels good. When interest rates are rising, that's a
that's a troubling sign. And so if there's one thing
I look at to say, uh, oh, you know, trouble
(19:32):
might be on the horizon. It would be if we
saw rising inflation or rising interest rates. Right now, those
things are stable ninety percent of the time, they're stable,
and it's not not something to worry about. But if
we see you know, mortgage rates get that, you know,
much higher levels, you know, obviously that's going to affect
home prices and everything else and that. But what tends
(19:55):
to happen is interest rates rise the economy, we cands
people sell and then interest rates fall, and so yes,
that could be a warning, But if you just ignore
the whole thing, eventually the cycle kind of fixes itself.
Speaker 1 (20:12):
Right. What about alternative investments outside of the market, like cryptocurrency,
real estate, fine art, private equity. There's a lot of
alternatives to public stocks. What are your thoughts about including
those in a diversified portfolio.
Speaker 2 (20:27):
Let me take real estate first, and my experience is
if you're the type of person that actually can figure
out how to use real estate as a as kind
of an income slash appreciation investment where you're where you're
doing the work, you're renting, you're able to buy a place,
(20:49):
you're able to rent it, you're able to you know,
even fix the roof and the toilets or you know,
obviously some of those things you need help with, but
if you're actually willing to put the work in. I've
seen people very successful with real estate over time. And
if you look back, especially out in California where I'm at,
people have made a lot of money in real estate
(21:11):
and they say, oh my god, look at what I've done.
If you compare it to the stock market over the
last ten or twenty years, even out here, it's probably
not that different. So if that's your thing, and the
good part about real estate is there's potentially consistent income
that flows, and so there's an argument that if you
(21:35):
can do it on your own, that's great. But what
I haven't found is a way to do that in
the market. It's more like, like you've said, it's an
alternative investment that you need to consider, but think of
it economically. Make sure that you don't jump in and
buy something because somebody says that prices are high, and
(21:56):
I think there's a lot of potential risk going into
real estate. Regarding cryptocurrency, I simply don't understand it, and
I've learned over the long term, when you don't understand
something you're better off letting someone else make that money.
Maybe it's going to be, you know, a home run
(22:16):
for somebody, and certainly it has been if you got
in at the beginning, but so has technology stocks, which
I do think I can understand how they're making money
and they're going about things regarding their crypto. Certainly, if
somebody wanted to say, well, but I wanted to buy
a little bit, nick, how about a little bit you know? Sure,
(22:39):
you know, if you're putting one percent of your money
in something and it really turns into something, that's fantastic.
Speaker 1 (22:46):
So one last question, how can people better understand their
own tolerance to risk and then incorporate that, probably with
advice from people like you, into how they build a portfolio.
Speaker 2 (23:00):
I think very importantly is to actually take the time.
You know, most people don't want to. The market or
investing is something that we didn't learn about when we
were younger. Unfortunately, it's just not part of our educational system,
and so because of that, we're all vulnerable to misinformation
and other information. And so what I've tried to do
(23:23):
is encourage people to take the time to think about it,
think about what risk they're willing to take think about
what their long term plan is. And then make sure
that when you talk to an advisor that you understand
first of all, what are they charging you, does it
make sense? And then secondly, make sure that they understand
(23:44):
your unique objectives and your risk tolerance. Don't just let
someone put you in a box and say, well, you're
thirty five years old or you're fifty years old, and
you ought to have this much on this and this
much of that or this much an alternative investments where
you don't understand what's going on, and so make sure
you understand each thing that you're owning and then let
(24:07):
it go. You know that if you do your homework
on the front side, then you don't have to worry
about all the different things that are being said out
in the you know, the news and the social media
and such.
Speaker 1 (24:18):
We've been talking to Mick Hymond, author of Mellow Your Money,
How to surf the market and build wealth without stressing
yourself out. Mick, thank you great advice. So I really
appreciate you being on the show.
Speaker 2 (24:29):
Thank you, Mike. I've really enjoyed it and really appreciate
the opportunity.
Speaker 1 (24:44):
Okay, we'll be right back after the news at the
bottom of the hour
This is What's at Risk with Mike Christian on WBZ,
Boston's news radio. Hi, Mike Christian, hero of What's at Risk.
First up on tonight show, we have Mick Hyman, the
author of Mellow Your Money, How to Surf the market
and build wealth without stressing yourself out. He is also
(00:22):
the founder of Hyman Investment Counseling. Mick has built a
reputation for helping individuals and institutions grow and preserve their
wealth through a stress free approach to investing. And in
our second segment, an Encore presentation, we speak with Hank
Philip E. Ryan, Emmy winning investigative reporter for Boston's WHDHTV
(00:45):
and best selling author of fifteen novels of suspense. She
provides keen insights on our early television career, her unique
and incredibly successful creative process, and her relentless pursuit.
Speaker 2 (00:59):
Of justice es.
Speaker 1 (01:05):
Mick Hyman is the author of Mellow Your Money, How
to Surf the market and build wealth without stressing yourself out.
He is the founder of Hyman Investment Counseling. Also with
a distinguished forty year career in wealth management, Mick has
built a reputation for helping individuals and institutions grow and
preserve their wealth through a stress free approach to investing.
(01:28):
His work highlights the importance of a balanced approach to wealth,
viewing financial health as integral to overall well being. Although
his formal education is in economics, mixed passion for philosophy
and psychology has greatly influenced his understanding of market dynamics,
emphasizing the role of human emotion in financial decision making.
Speaker 2 (01:52):
Money served the.
Speaker 1 (01:54):
Way you do it, money full of the relative. Okay,
our guest today is Mick Hyman, author of Mellow Your Money,
How to surf the market and build wealth without stressing
yourself out. It sounds like a lofty ambition. Thanks for
joining us.
Speaker 2 (02:13):
Thank you, Mike. I'm excited to be here to appreciate
the opportunity.
Speaker 1 (02:17):
Yeah, it's great to have you. Maybe a good place
to start to start our listeners, A little bit about
your background.
Speaker 2 (02:22):
Sure, I actually grew up in Ohio and went to
school up in Chicago and started in the business about
forty years ago and at a very small industment counseling
company in in Cincinnati and dreamt of being a master trader.
And you know, one of the stars in that way,
(02:44):
and really through my bad trading and disadventures, learned that
investing is really about the long term and enjoyed working
with clients sometimes over thirty years, you know, managing their
money and seeing how they built wealth over time. And
so I as time went on, I thought, write a
(03:04):
few blogs, and eventually it turned into a book. And
and I just thought, you know, as you see so
much information out there, and often it's useless information, and
often it's you know, information, it's too much information, and
I thought, maybe there's a way to de stress ourselves
in the market regarding money. And so that that kind
(03:28):
of brought me to writing this book that got out
about a year ago.
Speaker 1 (03:32):
Now, your formal education is in economics, but you have
a passion for philosophy and psychology. How those two topics
or subjects influenced your style and your approach.
Speaker 2 (03:43):
Thankfully much more than economics, because although it was something
that I thought was important to learn in college, it
was never my best subject. I loved, you know, Russian
literature with you know, the emotions of the people growing
up there and facing the challenges of life. And so
(04:04):
it was philosophy and those type of topics that really
interested me. And what I found is I began investing,
is that the markets are all about emotion. That's what
drives the markets, and of course it's our own emotions
that either help us or get in the way of
becoming good investors. And so dealing with those emotions I
(04:27):
found over time were the most significant things to being successful.
And as I grew up and kind of got out
of college, I realized that it was these areas that
really helped me the most.
Speaker 1 (04:39):
You mentioned emotion, markets being emotional, is it, you know?
So then that made a market is a collective thing,
So is it a collective emotional response? And is it
predictable in any way?
Speaker 2 (04:53):
I think at times you can kind of see how
the emotion either carries the market higher than what might
be normal or and oftentimes lower, and it's really on
the downside. You'd always say the market goes up slowly
and comes down fast, and you definitely can see that
in the different experiences that we've had over time, whether
(05:16):
it was you know, the nineteen eighty seven crash or
even in two thousand and eight that was it was
a horrible time in the market, and yet it ended
in about a year and so, you know, but we
have to deal with the pain of that. And the
trouble is that we there's so many things out there
(05:39):
for people to follow. To become good investors. All you
have to do is what are the major things I
need to deal with to invest over the long term.
But the moment something unpredictable happens, like the pandemic, we
throw out all those rules immediately because we say, oh
my gosh, well this has never happened before. What do
(06:00):
I do? And so if we haven't dealt with the
fact that surprises happen in the markets, and how are
we going to deal with them when they do happen,
then then we panic at the first sight of it.
And so, yes, the emotion the market is driven by
that excitement, either up or on the downside, But it's
also what are we doing about it? And how are
(06:22):
we able to mellow out while the rest of the
world is panicking.
Speaker 1 (06:28):
Yeah, that's a great that's a great question or great
view of it. I saw this quote on a promotional
piece for your book. Money management can be a form
of meditation that, when practice correctly, blazes a path to
peace rather than a road to emotional ruin. I love
that to maybe talk a little bit about that.
Speaker 2 (06:47):
I try to explain that one. Yeah, I guess what
I'm what It kind of gets back to that thought
that the market can reveal our weaknesses, and so it
is it is a way of of looking at the
at the emotions that we face when when the market
is either up or down, or how we're looking at
our money. That can that can help us learn lessons
(07:10):
in our life. You know, what what is it that
that it is revealing about ourselves? There's you know, some
great teachings on mindful meditation of being in touch with
who we are and what is happening in the present moment.
And the market constantly gives is giving us opportunities to
be in the present moment and what are we feeling
(07:33):
and what are those feelings generating. It's not that we
should ignore the feelings that the market is presenting us.
It's how we're acting on it. That that there's a
story I wrote about my uncle lou who would torture us,
you know with this you know, say uncle, say uncle,
as he's twisting our ear or giving us the noogies,
(07:56):
and and eventually we had to give in it was
that pain of of you had to finally give into
that to his torturing us. But anyway, I remember at
the bottom of a market as the nineteen eighty seven
crashed and the market dropped twenty two percent in a day,
and I thought to myself, say uncle, as people were
(08:20):
panicking and selling it. That's what I felt like, and
that moment of say uncle, is not a time to sell,
It's a time to look at ourselves and say, this
is a time to relax a little bit because the
rest of the world is panicking, and can we do
the opposite. There's a great Seinfeld episode of George Costanza
(08:45):
and he admits to Jerry and saying, everything I've done
in my life has been awful. Every decision I've made
has led to disaster. I need to do the opposite.
And for that series, at least made the opposite decision,
and of course everything went well for him. Well, we
need to consider that too. Oftentimes in our lives in
(09:08):
the market that oftentimes it's that that initial emotion that
we just react to, and if we think about it
and consider it, it's sometimes the opposite of what we're
thinking about.
Speaker 1 (09:20):
Yeah, that's great. One of my favorite episodes, by the Way,
is too. So we all look at money in a
particular way. I guess we all have a mindset about money.
How do we objectively look at our mindset and then
change it if it's something that we should, you know,
that would circumstances would dictate us to do at a
(09:41):
point in time.
Speaker 2 (09:42):
We need to first look at how risk averse are
we in the markets? That how how much do we
worry if things go the wrong direction? And each of
us might have a unique and different view of what
that is. A great trader back in the nineteen twenties
(10:02):
Jesse Livermore, and one of his great quotes was take
stocks down to the sleeping level. And so for each
of us that might be a different thing. You might
think as as as younger you know, as younger kids,
they should be one hundred percent in stocks because you know,
over thirty forty years, who cares, you know about the
(10:23):
short term. But if they're risk averse, that's not the
place for them to be because when the when the
surprising thing happens, they're going to panic and maybe maybe
stop investing in stocks because of an unpredictable turn. So
we need to look at what are that what you
know historically does does the market potentially drop that would
(10:48):
cause us to be concerned. Some oftimes it's half your money.
You say, well, if the market drops thirty percent, if
I have half my money in stocks, maybe I've only
lost ten or fifteen percent, and that doesn't worry me.
And in fact, if that happened, then I have strong
hands and I can buy stocks. And so what is
(11:10):
it that? And I think each person as they begin investing,
should think about what is it that would allow us
to have strong hands in the face of an unpredictable event.
That to me is the one of the most important
decisions to make at the beginning. And then each of us,
you know, at times you know may have a lot
(11:31):
of money to invest in. Maybe the best way if
you if you if you have a lot of money
to slowly get in the market, don't make it one
day plunk in you know X amount of dollars, because
almost invariably when you do that, the market drops the
next day and you think you have all this regret,
and so it goes slowly. Many of us, because of
(11:52):
the four oh one ks in different ways of investing.
Over time, we'll invest over. You know, every month you
put it a little bit in. Well, if you do that,
if you have that kind of a plan, you don't
really you're very neutral about whether the market goes up
or down, because each if the market goes down one month,
you think, oh, I'm getting in a little lower here.
(12:14):
In fact, if it goes down for a year, maybe
you've bought at more attractive prices. So if you have
those kind of thoughts in your mind, it relaxes you
and you can go about your business and worry about
other things in life, or and hopefully enjoy other things
in life and let money kind of coast along over
the long term.
Speaker 1 (12:34):
Now, the market's been very strong in the past few months,
all time highs in many areas. Yet we have a
new administration coming in. There's other geopolitical risks. There's always risk, right,
what do you What are your thoughts about the current
market and how people should look at that?
Speaker 2 (12:50):
Sure, Well, one thing I would say is it kind
of gets back to that that allocation to stocks that
I talked about, That is your each person has to
figure out what that is. But what I would say
in a year like this and actually following up on
a year like last year, where a market was up
twenty percent or so a little bit more this year
(13:11):
now well above twenty percent. The odds are if you
had a certain allocation to stocks, maybe it was fifty
or sixty percent by definition, because the market's run up
like it has, you probably have five or ten percent
more in stocks than you had beforehand. This is the
(13:32):
time where you can take that allocation back down to
what it is is in the normal allocation. And I
say this not predicting that the market is going to decline.
It's just good good investing. It's good portfolio management to
take it back to that sleeping level because maybe we
have the unpredictable recession or something else that drives the
(13:55):
market downward, and you're back to your normal allocation, and
then if the market goes now, you can add back in.
So it's almost be a mechanic as opposed to a
predictor of the current market. But because the market's been up,
the likelihood is that we should take a little bit
out and put it back to our normal allocation. And
I'm not predicting that the climb because of that. It's
(14:18):
just good long term investing decisions to do that. And
then so the other thing i'd say, and regarding your
question about the new administration is and I have to
start off saying, I'm not saying that politics is irrelevant,
but regarding investing, don't let it impact your investing over
(14:40):
any period of time. Typically, over if you look at history,
the markets have done about the same whether it's been
a democratic administration or Republican administration. So don't you know
someone will say, oh my gosh, it's a Republican and
it's going to go up for a democratic worry about it.
Over time, It's not had a great impact. The other
(15:01):
thing I would say that's going on right now is
everybody's trying to figure out what stocks are going to
do well because of a new administration. And what I
would point out just at least the recent recent experiences
in people trying to do that. When President Trump was
elected in twenty sixteen, a lot of people thought, oh,
(15:22):
buy oil stocks because they're going to go up because
of his policies. Well, that was not a good place
to be for those several years. So trying to predict
what stocks are going to go up because of this,
and take when President Biden got elected, green energy stocks
soared for a little bit of time because people thought,
(15:43):
oh my gosh, that's going to do great well and
over time, over the last several years they've been a disaster.
So the point is, don't get overly hyped up about
politics relative to your investments. At least. That's probably a
lot long winded answer there, but it's it's, you know,
keep with your long term focus and don't get.
Speaker 1 (16:05):
Distracted politics aside. We do have some things looming like immigration, tariffs, AI,
inflation up and down, interest rates. What do you what
are your thoughts about that? I mean, I think you're
you've made You've made your point about having discipline, creating
a discipline for yourself, regardless of all the extraneous things
(16:27):
that may impact the market. But you think there's any
of those things AI, maybe maybe AI in particular, that
would have a fundamental change on the market.
Speaker 2 (16:36):
I do think that there will be a fundamental change
in our lives because of AI. But kind of like
if you recall back when the Internet kind of took
off in the nineties, and you know, we you know,
everyone became excited about this new thing that was going
to change our lives. But the thing is, it was unpredictable.
(17:00):
How you know, there were so many little dot com
companies that got blown away in the early two thousands,
and one of the stocks that declined but actually was
a for real company. It was Amazon. You know, back
then we thought it was a bookstore, and you know,
of course it got knocked apart like everything else, but
(17:22):
to think of what it became, and you had time.
You didn't have to discover Amazon back in the nineties.
If you did, you might have gotten scared out in
early two thousands. And even if you bought it in
the early two thousands and thought, oh my gosh, that's
kind of like buying bitcoin ten years ago. That was
a home run. But you didn't have to do that.
(17:44):
You could have allowed yourself to buy Amazon long after
when you actually realized it was a real company. Same
thing with AI. It's going to change our lives, it
seems like. But just like you know, smartphones and everything
something else that was unpredictable back in the late nineties.
I think there's going to be unpredictable things that occur.
(18:07):
We just need to keep our eyes open and regarding investing,
if you're diversified, if you're in a just an s
and P five hundred index fund, you're going to have
exposure to those things over time because the market changes.
If you look at how the S and P was
situated back in the eighties, thirty percent of the S
(18:28):
and P five hundred I'm estimating this was in energy
stocks because that was the major thing that was going on.
And over time the market drifted up and energy became
less and less and less, and now I think it's
three or four percent of the S and P five hundred.
So simply by owning an index fund, you don't have
to be so smart to predict which stock is going
(18:50):
to outperform in that kind of thing. And certainly the
other thing though that one of the things you mentioned
there was interest rates. There's one ball to watch, and
I'm trying not to, you know, have people predict anything
but interest rates themselves. Sometimes it's the most important driver
(19:10):
of the market. And if we see interest rates stable
or declining, that's a good thing because it means that
companies can can make money on lower interest rates, and
that feels good. When interest rates are rising, that's a
that's a troubling sign. And so if there's one thing
I look at to say, uh, oh, you know, trouble
(19:32):
might be on the horizon. It would be if we
saw rising inflation or rising interest rates. Right now, those
things are stable ninety percent of the time, they're stable,
and it's not not something to worry about. But if
we see you know, mortgage rates get that, you know,
much higher levels, you know, obviously that's going to affect
home prices and everything else and that. But what tends
(19:55):
to happen is interest rates rise the economy, we cands
people sell and then interest rates fall, and so yes,
that could be a warning, But if you just ignore
the whole thing, eventually the cycle kind of fixes itself.
Speaker 1 (20:12):
Right. What about alternative investments outside of the market, like cryptocurrency,
real estate, fine art, private equity. There's a lot of
alternatives to public stocks. What are your thoughts about including
those in a diversified portfolio.
Speaker 2 (20:27):
Let me take real estate first, and my experience is
if you're the type of person that actually can figure
out how to use real estate as a as kind
of an income slash appreciation investment where you're where you're
doing the work, you're renting, you're able to buy a place,
(20:49):
you're able to rent it, you're able to you know,
even fix the roof and the toilets or you know,
obviously some of those things you need help with, but
if you're actually willing to put the work in. I've
seen people very successful with real estate over time. And
if you look back, especially out in California where I'm at,
people have made a lot of money in real estate
(21:11):
and they say, oh my god, look at what I've done.
If you compare it to the stock market over the
last ten or twenty years, even out here, it's probably
not that different. So if that's your thing, and the
good part about real estate is there's potentially consistent income
that flows, and so there's an argument that if you
(21:35):
can do it on your own, that's great. But what
I haven't found is a way to do that in
the market. It's more like, like you've said, it's an
alternative investment that you need to consider, but think of
it economically. Make sure that you don't jump in and
buy something because somebody says that prices are high, and
(21:56):
I think there's a lot of potential risk going into
real estate. Regarding cryptocurrency, I simply don't understand it, and
I've learned over the long term, when you don't understand
something you're better off letting someone else make that money.
Maybe it's going to be, you know, a home run
(22:16):
for somebody, and certainly it has been if you got
in at the beginning, but so has technology stocks, which
I do think I can understand how they're making money
and they're going about things regarding their crypto. Certainly, if
somebody wanted to say, well, but I wanted to buy
a little bit, nick, how about a little bit you know? Sure,
(22:39):
you know, if you're putting one percent of your money
in something and it really turns into something, that's fantastic.
Speaker 1 (22:46):
So one last question, how can people better understand their
own tolerance to risk and then incorporate that, probably with
advice from people like you, into how they build a portfolio.
Speaker 2 (23:00):
I think very importantly is to actually take the time.
You know, most people don't want to. The market or
investing is something that we didn't learn about when we
were younger. Unfortunately, it's just not part of our educational system,
and so because of that, we're all vulnerable to misinformation
and other information. And so what I've tried to do
(23:23):
is encourage people to take the time to think about it,
think about what risk they're willing to take think about
what their long term plan is. And then make sure
that when you talk to an advisor that you understand
first of all, what are they charging you, does it
make sense? And then secondly, make sure that they understand
(23:44):
your unique objectives and your risk tolerance. Don't just let
someone put you in a box and say, well, you're
thirty five years old or you're fifty years old, and
you ought to have this much on this and this
much of that or this much an alternative investments where
you don't understand what's going on, and so make sure
you understand each thing that you're owning and then let
(24:07):
it go. You know that if you do your homework
on the front side, then you don't have to worry
about all the different things that are being said out
in the you know, the news and the social media
and such.
Speaker 1 (24:18):
We've been talking to Mick Hymond, author of Mellow Your Money,
How to surf the market and build wealth without stressing
yourself out. Mick, thank you great advice. So I really
appreciate you being on the show.
Speaker 2 (24:29):
Thank you, Mike. I've really enjoyed it and really appreciate
the opportunity.
Speaker 1 (24:44):
Okay, we'll be right back after the news at the
bottom of the hour
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