Lead-Lag Live
Welcome to the Lead-Lag Live podcast, where we bring you live unscripted conversations with thought leaders in the world of finance, economics, and investing. Hosted through X Spaces by Michael A. Gayed, CFA, Publisher of The Lead-Lag Report (@leadlagreport), each episode dives deep into the minds of industry experts to discuss current market trends, investment strategies, and the global economic landscape.
In this exciting series, you'll have the rare opportunity to join Michael A. Gayed as he connects with prominent thought leaders for captivating discussions in real-time. The Lead-Lag Live podcast aims to provide valuable insights, analysis, and actionable advice for investors and financial professionals alike.
As a dedicated listener, you can expect to hear from renowned financial experts, best-selling authors, and market strategists as they share their wealth of knowledge and experience. With a focus on topical issues and their potential impact on financial markets, these live unscripted conversations will ensure that you stay informed and ahead of the curve.
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Lead-Lag Live
The Truth Behind Investment Gurus and Fast Money
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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It’s social media with a secret sauce: FOOD! The world’s first network for food enthusiasts. HowUdish connects foodies across the world!
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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, very little of this stuff works. What investing takes and getting in shape takes and getting you know your marriage right and it takes work. It takes a crap, ton of hard, serious work and any magic pill, magic fat pill or any magic newsletter or any magic you know. As an a ria, I'm regulated by the scc, but all these people with bitcoin and all these people that go on there with these newsletters or subscribe to my whatever because I made 200 in six months, I mean this is disgusting.
Speaker 2:I was at a concert yesterday at Mass Square Garden seeing Shinedown and Bush, so I don't really know how loud I'm talking during this live stream because I can't really hear myself following that rock show. I am rounding out a significant number of podcast shows this week and then hopefully I'm going to be bringing in somebody new who's going to be helping me on these going forward. I'll make a big announcement about her soon enough, but I'm very excited to bring her on to the LeadLag team and, as always, I appreciate those who watch us on a continuous basis. So, with all that said, my name is Michael Guyatt, publisher of the LeadLag Report. Joining me here is Mr Mark Mattson, who I didn't realize was kind of a big deal. We were chatting a little bit before the show and he's a big deal, not because of the big American flag with his virtual background, as long as I have mine, as you can tell. But, mark, for those who don't know your background, introduce yourself. Who are you? What have you done throughout your career? What are you doing?
Speaker 1:currently I own a company called Mattson Money. It's a registered investment advisory company. We have $11.5 billion under management. I started the company in 1991 with very little resources, $30,000 in debt and a yellow pattern overhead projector. That was well before the internet and well before cell phones and well before formats like this, and then so I've been managing money for all that time. We have 35,000 families. We work with 500 various financial advisors around the country. I'm a big stand for free markets, patriotism, the American dream, entrepreneurism, capitalism, and I really fight. I've created a class called Experiencing the American Dream. It's a two-day workshop that investors go through, learning how to invest their time, energy and their money to live an extraordinary life, and that's who I am.
Speaker 2:We should talk about the American Dream for a bit, Because it used to be the case that the American dream was just to own a home. That's kind of hard now, given how expensive things are. Has the definition as the vision of what an American dream is? Has that changed over time?
Speaker 1:Yeah, I think it has. You're right, michael. The traditional American dream is own a house, pick a fence right, retire at 65, have a pension, have a couple of kids, maybe try to get them to college, try to elevate from one generation to the next or even with inside that generation, potentially starting with nothing and then becoming prosperous and having a better quality of life. And I think that's always been part of the American dream. The opposite of the American dream is entitlement, victimhood, blaming other people and not going out there and creating wealth and prosperity for other people first, before you expect getting it to yourself first, before you expect getting it to yourself.
Speaker 1:I think the American dream has had a bad rap because I think a lot of people are critics American dream critics, I call them who view the American dream as not capitalism but materialism and based on greed. And for me, growing up, my family grew up in, I grew up in West Virginia, in the hills and hollers there. For me, the American dream I define it in the book is a way of looking at the world that gives you agency to take powerful actions to create not just money, wealth or prosperity, but love, freedom and fulfillment and connection within your family and a view of optimism and creativity for the future. So for me, in the book I describe 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 own business, become instrumental in growing another business. So the big deal, and I think that a lot of people have lost sight of what the real American dream is. We're trying to reclaim it and help people really focus on it.
Speaker 2:You said something that was interesting, that you said creating wealth for other people before yourself, or something along those lines. I want you to tug at that a little bit, because the idea of when I was younger I used to read a lot of leadership books and I forget which book it was, but it was some book I read about leadership that said if you want to be a leader, you have to make leaders of others, and this reminds me a little bit. It's like if you want to be wealthy, you want to focus on, maybe, creating wealth for others. So let's explain that a little bit.
Speaker 1:Yeah, one of the things I talk about is, if you want to create the American dream for yourself, it's really easy. Help other people create their American dream and then you won't have to worry about yours. The thing most people, most people have, whether they acknowledge it or not, have a tinge of entitlement that they deserve something without creating. My dad said it quite bluntly. He said no. We said Mark, and Brenton was very, very small, probably seven or eight years old. He said, mark, nobody owes you shit. Nobody owes you anything in life that you don't earn. And so if you're, if you want to create wealth and prosperity for your family, for your employees, for your clients, you have to first create wealth and prosperity for them and then you're entitled to something coming back to you.
Speaker 1:But that is the primary view of a capitalist. The capitalist, an entrepreneur like yourself, has to always be concerned with what value am I bringing to other people? And if an entrepreneur doesn't focus on what value they're bringing to other people, then they quickly disappear and they evolve out of the system. Another great thing of capitalism if you don't help other people have a service or a product uh, that's valuable, then you evolved out of the system. That's the way it should be in capitalism. The other thing about focusing on other other people focusing on other people is that it takes uh, it takes me and those I know that practices. It takes them out of morbid self-reflection out of morbid self-reflection, pity, fear, greed. Because there is greed in the world. And the more I focus on other people, the less I'm worried about my own problems and my own petty complaints about the way the world is.
Speaker 2:Can you make others wealthy, and then my session're wealthy, um, through diversification, or does it have to be through some form of concentration? Because I remember at a conference I was at the speaker. One of the speakers said something along the lines of uh, diversification is a luxury for the rich and the implication there is that you know, the only way to get wealthy and also to get broke is to take a high conviction bet.
Speaker 1:That's a great question. So I think a great example of this is Tony Robbins' last book, although he's written three books about investments, they're all equally terrible, but the last book is the Holy Grail of Investing and the idea is that, basically, that diversification is for chumps and if you want to be a billionaire, then invest like a billionaire. And then he talks about real estate and private placements and hedge funds and Bitcoin and toxic investments that can be very destructive to investors. There's two ways basic ways to create wealth. From the investing perspective, we believe in using academic investing principles and, because markets are highly efficient, all the knowable and predictable information about the future is already factored into the stock prices today. Therefore, only random and largely unpredictable events will drive stock prices going changes in the future. So betting highly non-diversified attempts to dump money into projects or to dump money into different stocks whether it's Nvidia, or whether you're doing Bitcoin cryptocurrencies on the side, or whether you're doing commodities and options, or whether you're doing private placements or hedge funds this is all gambling and speculating with your mind, and for every guy that got lucky and became a billionaire, there's hundreds of thousands that lost everything and went totally bankrupt.
Speaker 1:So I believe that number one is especially if you're young and you have a lot of time is to be an entrepreneur and own your own business and hustle like hell and create value for other people. So that's going to create your income coming in and that's you know. So when the book, I talk about how to invest, not just not just your money, but how to invest your time and your energy, because those are going to be income generators and an investment in yourself. Learning and getting trained to be a leader, to be an entrepreneur, to be a vision maker. How to do that training in that it's going to be very, very valuable if you're willing to take the actions to actually have it. You know, see it to fruition. So, creating wealth through being an entrepreneur, but then investing the money to widely diversify. We're in over 70 countries and over 20,000 holdings and there's no better way to go bankrupt fast than to dump your money in three or four or five stocks. It's one of the most destructive things you can do.
Speaker 2:Although, admittedly, at least the last couple of years it has worked and you can argue maybe that skill, luck, combination of the two or just some random cycle that at some point gets undone. But it's a reminder that Nassim Taleb line it's around sort of the, the graveyards of their field, of people that have done all the things very successful people have done Right, yeah, have done right, yeah that you only hear about what the successful people have done but in reality if a lot of people are following those things, that same map, they end up not getting anywhere.
Speaker 1:Right. I always, I laughingly say you know, even a ham sandwich could make 20% rate of return over the last five years. Look, you didn't have to be a genius, 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 the way human beings actually look at investing and it's easy to get sucked into dumping your money and you know the magnificent, you know seven and and think that you're going to be rich. That's the same problem from 1995 to 2000.
Speaker 1:The S&P made 22% per year average five years running. Tech stocks from 1995 to 2000 made 45% per year. Per year, michael and investors were dumping all their money. Guess where they were dumping it? Large tech stocks. And then large tech stocks lost 75%. Now the reality is most investors were not in it for the whole five years. They dumped their money in the last year or two after the high performance, not before. And that's the problem with investors they're always chasing. So the investors that dumped all their money in tech stocks. They all lost 75%. The people that dumped their money in large stocks in general in the S&P, they lost 55%. Many of them sold, locking in their losses, only to get back into the market after it had already recovered 100%, 200%, and so the cycle goes and look if you got lucky.
Speaker 1:People say, well, I did well the last five years. Well, that's great, good for you, but you got lucky. It's like going to the casino and betting 35 red. That's a 30 plus percent payout. If you get lucky enough to get it right, take your money off the table. Diversify prudently, because disaster, you know. It's one thing to lose 75% of your 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 year when you're 65.
Speaker 2:I think the problem is that social media makes it look like there's many more people than not right that are. They're crushing it right, and in reality it's like you mentioned home bias, availability, risk, right, it's like it goes, it's front of mind because the timeline's showing it, but the reality is, all these people are screenshotting their accounts and how many millions do they bid? Assuming it's real, it's probably like 0.01% of the population.
Speaker 1:Well, wow, the internet. Wow, you got me. 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, very little of this stuff works. What investing takes and getting 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 fat pill or any magic newsletter or any magic. As an RIA, I'm regulated by the FCC. But all these people with Bitcoin and all these people that go on there with these newsletters or subscribe to my whatever because I made 200% in six months, I mean this is disgusting and a lot of these people aren't regulated if they're just selling a newsletter or selling some program that you day trade on and it's so destructive to people you know. I think the world would be a much better place if people could look at their life and see when they were wrong and admit it.
Speaker 1:In 1991, when I first became aware of academic investing principles, three main academic investing principles efficient market theory, modern portfolio theory. Efficient market theory is Eugene Fama. Modern portfolio theory was Harry Markowitz, and then the factor model, three-factor model, by Fama and French. When I first became aware of those, I thought, wow, this is going to be a renaissance. People are going to stop speculating, they're going to stop gambling, they're going to prudently invest, they're going to stay disciplined, they're going to rebalance.
Speaker 1:And, michael, nothing has been the furthest from the truth. It's harder now for people to prudently invest than it ever has been because you've got this thing 24-7. You've got Robinhood right next to DraftKings on your phone. You've got all this wrong information on there and I don't see AI is going to actually clean any of this up. It's probably only going to make it worse. And I don't see AI is going to actually clean any of this up. I'm only going to make it worse. And you have tons of different exotic, 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 news programs and stations committed to telling you you can predict the future and time your portfolio. So it's actually worse than ever before and human behavior obviously hasn't significantly changed in 30 years. But I see more speculating and gambling now than ever and I think that that's very destructive. A lot of people are giving up their American dreams because they're gambling with their money.
Speaker 2:I'm smiling because so much of that sentiment I have expressed over the years on various platforms I myself write on. But there's something that's interesting here, as we think through this, which is that you said it correctly it's Robinhood and DraftKings is right next to it. We are a gambling society, but doesn't that inherently make markets less efficient, at least in the short term?
Speaker 1:This is a great. This is an interesting argument, and I've dealt with this for 34 years. So the part of the argument is well, if everyone stops speculating and gambling and trading, then the market would be less efficient. And then what would happen? Would asset allocation and efficient markets fail in some way? And the way I look at it is is hypothetical questions sometimes can be very useful if you've been in the form of a thought experiment.
Speaker 1: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 that gambling doesn't work? What would happen to Vegas? People are always going to gamble, they're always going to speculate, even when they know they're doing it as long as they can get a free room and a drink. Same thing with dieting. Well, what would happen to the diet industry? Or Monjaro and these other drugs that help you lose weight? What happened? What would happen to them if people all of a sudden could control their instincts and their emotions and stop overeating?
Speaker 1:Uh, it's a hypothetical question that I don't ever expect uh to happen. If it did happen, I think it would be great, because a lot of people would not uh be speculating and gambling with their money and they would actually look, look, risk. The hardest thing for people to quantify is not return. They build these portfolios and they have no idea. When we analyze them and show them you could lose 60% of all your money in a bad market and no one can predict with anything like accuracy when these things are, they're shocked that their portfolios are so dangerous. So, to answer your question, it's a hypothetical, interesting question, but I don't think that's ever going to happen.
Speaker 2: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 clients that say things that are either buy more or sell or whatever else. So you know, you've got your asset allocation, but people always feel like they need that illusion of control. All right, so they're calling you all, I'm sure, or your advisors. So what do you say to somebody who says that First of all, I think this is great.
Speaker 1: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 an interesting word in there, and that word is feel Feel.
Speaker 1:You should be highly skeptical of your own feelings when it comes to investing, Because feelings and emotions are your enemies when it comes to investing and they almost always control the actual behavior. In fact, psychologists have found out that when it comes to behavior, the vast majority of your behavior is not from your conscious mind. We'd like to think we're all Spock 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 emotions many, many times call the shot, and then we consciously try to think of a reason of why we did that stupid thing in the first place, and we almost always come up with the reason. So look guys, don't trust your feelings. Markets are random and unpredictable, because all of the knowable information is already in the market and because you're dealing in a market where other people are emotional too, dealing in a market where other people are emotional too, just because it feels overweighted or overvalued, that doesn't necessarily mean that it is. So here's what I'd rather I'd like to see you do. Instead, I'd like to see you focus on 80 years of research and look at the statistics of what you're doing. So, for example, large US stocks have averaged 10% over the last 80 years. That's the longest data set we have, and over 80 years, 10% of your money debt doubles approximately every seven years.
Speaker 1:You don't get to know in advance if the market is over or underweighted or overvalued, let's say. In fact, you'd probably be best to get that language out of your lexicon. It's actually. The market is exactly where it's supposed to be, based on people's instincts, emotions, and supply and demand. What you don't get to know is where the next 20% is, For example, I always tell investors no one can tell you where the next 20% is going to be up or whether it's going to be down. What we do know historically, though, is the next 100% has always been up, so you want to focus on the next 100%, not the next 20%, because nobody knows.
Speaker 1:And then you want to build a portfolio that has the amount of risk, so if it does crash and the odds are about one out of every four years you have an event where it's a crash, Markets are up three out of every four years. When they're up, they're up an average of 22%. When they're down, they're down an 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 that type of risk. Now you can offset that risk with high-quality fixed income that has very low volatility. So if the market does go down 30%, you can rebalance your portfolio, sell your high-quality fixed income and buy more of those equities while they're low. That takes you out of the market timing game trying to feel your way through whether or not the market's over. You know too high, uh, or overpriced, uh, and. And it can give you some peace of mind because you're not always trying to predict what's coming next.
Speaker 2:And therein lies the issue with our industry. That word predict, um. So I always frame things myself in terms of conditions. Right like I, I can't predict the exact mile marker. I might crash my car, but I know if it's raining I gotta slow down right now. Valuations, and to your point about the word feeling, you know they can feel overvalued, they can be factually overvalued, but they can stay overvalued for a long time and the valuation is going to resolve themselves. You don't necessarily have to have a crash. You can have a whole bunch of sideways, lost decade type action in stocks, but that doesn't necessarily mean other asset classes during that go through a similar dynamic. So talk me through as you think about portfolio construction, what types of asset classes do you diversify into? You talk about international positions right, but beyond stocks, bonds, alternatives. Talk to me about the mix that we like.
Speaker 1:Yeah, it's great. So first critical discussion for an investor is what is the mix going to be between equities and fixed income? That is the most critical decision that you can make. Equities, long-term, have a great, have greatly outpaced inflation. Fixed income especially if you have short, short, short-term high quality have stayed up with inflation, but they haven't beaten inflation. So when we so the first critical discussion that you want to have is how how much large versus, excuse me, is how much equity versus how much fixed income.
Speaker 1:The next conversation you want to have is okay, how do I diversify my equities? Well, to diversify your equities in the US alone, you're 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 average 12, 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 average 12 where large stocks have average 10, but they're also great diversifiers because that decade you mentioned, micro cap, small stocks actually made around 8% per year during that same 10 year period, the lost decade, where stocks were down a total of 9% over 10 years. They had two major crashes. So small and then value. We view that as high book-to-market value stocks. Historically those have averaged 14% versus the S&P at 10. So now you're starting to get a wide diversification in the United States. But on your equity side of your portfolio you also want to look to international because that has the best offset with correlation to just having a pure US portfolio. For example, this year international stocks in our portfolios are up 25%, while US stocks are only up 3% or 4%. So there's a massive benefit from international diversification and then you rebalance those on the highs and lows. But many people have been sucked too much. They've given up on international because it's been a while since they did this. But there's whole decades where international just destroys US and you don't get to know in advance which decade we're getting ready to go into. So as a result, you diversify and then you rebalance your portfolio and then you want to make sure that you own small and value stocks internationally, emerging market stocks internationally. So you want wide diversification so you don't get stuck gambling on any one thing like tech stocks.
Speaker 1:On the fixed income. People make terrible mistakes on their fixed income because they're trying to juice their returns. They're going with junk bonds, so there are high risk bonds and they're trying to extend maturities so they can get an extra half a percent, maybe 1%, but when they do that, if you're not using short-term, high quality bonds, the volatility becomes extremely high and if the interest rates go up just two or 3% or a 20 or 30 year bond, you could find yourself losing a massive 10 to 20% of your portfolio. That's in your bonds, which were supposed to be the safe part of your portfolio. And if the equities have crashed and your bonds have crashed at the same time, now you don't have anything to rebalance with Because they both went down simultaneously. You're really stuck. What you want is high quality short term bonds, both corporate and government, diversified globally, and then you can suck off that fixed income and then put it in your equities while it's down.
Speaker 2:You do that automatically and you take the emotion and the instincts out of it High quality and government typically tend to not go hand in hand, but I'm framing it that way because I think it's interesting. I would assume that if you're putting an asset allocation together for a client and you suggest having treasuries in there, there might be a little bit of a pushback. It's like why do I want to give it to the government? Look at how much they're spending, 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 to agree that they're going to put their money to work in things that they hate? Because that's another line I'm a big believer in, which is that true diversification means having things in your portfolio that you just can't stand.
Speaker 1:Yeah, I think it's a great point If you're broadly diversified. Another area this comes up in frequently is investing social conscious investing. You know, esg investing this idea that we're only going to invest in morally great companies that we've, you know, are not in war or not in tobacco or not in whatever causes you don't think are great. The problem with that is that then you end up stock picking and then, without knowing it, your portfolio loses. Broader diversification.
Speaker 1:The other problem with that is, if you're an investor, you're never going to have totally clean hands. What I mean by that is, let's say, you don't want to own companies that make bombs or make military equipment. The problem is you invest in a company that makes steel, or you invest in a company that makes you know radar, or you invest in a company that makes you know parts for computers. Those companies are going to use those assets to run their business. So the only way to supposedly keep your hands clean is not to invest at all, because if you're an investor, you're going to be funding a lot of different stocks.
Speaker 1:So, as far as ESG investing and all this crazy stuff, use the science of investing and if there's causes you believe in or things that you want to fight against. Fine, go on the internet and talk about you think there's too much debt, you know, for America, and trillions and trillions, and we're overspending, and let your voice be known that way. Or support political parties or or charities that you you uh believe in with your money, that you believe in with your money. But don't skew your investing portfolio based on your likes or dislikes. It's a major problem if you're trying to be a prudent investor.
Speaker 2:I love this conversation because every time you say something, I want to go in a direction based on the tangents. So, likes and dislikes A lot of people like and dislike our current president. Yeah, and I'm always of the mindset that whoever is president has far less impact on the economy and the stock market than we are led to believe. Right, and I think there's a lot of evidence that suggests that. But people tend to invest based on their political views, right, if they don't like the current administration, they're bearish on stocks. If they love the current administration, they're bullish on stocks. How do you get people to think?
Speaker 1:differently and to disassociate the politics from their portfolio. Well, you look at the facts. What you do is you go back through history and you look at different presidents and different, not just the president, right. So you got the presidency, you've got Congress, you've got Senate, you've got all these political factions, and you can actually go back through history and look at markets where the Democrats were in control, markets where the Republicans were in control, and then you can go back and look at the different policies and you can say is there anything in any of these policies or these presidencies that could correlate? Can you find a correlation? And you can't find a correlation. There's no correlation. You might not like the Senate, you might not like the Congress, you might not like the president, but there is no correlation between what you like, what party you support, and the performance of the market. It just doesn't exist in the data.
Speaker 1:So, whether you like them or not, this is what we got, and I'm not, and I think overall, the policies for the economy. While you can't predict the market, but you can look at, are the policies good for the economy overall? And I think low taxes are great for the economy. I think free trade is great for the economy. I think independence of oil and energy is great for the economy. I think, when you're able to. I mean, look how bad for the economy would it have been, or the world would it have been if Iran 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 his fascination with crypto and Bitcoin and his own crypto. I think you should lay off of that. I think it's bad direction. But I call balls and strikes right. I don't emotionally get, I don't try to emotionally get involved with who's president, but the economic policies I can see can have a positive effect on our economy.
Speaker 2:Yeah, and many of that know that I've been on a deregulation train for a while. I think there's a lot of tailwind potential there, which actually is maybe an interesting additional direction to go, which is that you mentioned being an advisor. I've got my own advisory firm as well, separate from this effort on the Lee Black side, we got to deal with a lot of red tape and compliance. Right, I mean, let's talk about some of the pros and cons of regulation, because there are some pros. I mean it's not all negative.
Speaker 1: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 some regulation. So you know, and it does make the business more difficult there's a lot of red tape, there's a lot of expense, but some of these you know, like Sam Bankman, freed and some of these other crooks I think you're going to find many, many more crooks involved in this than you could possibly imagine. The crypto in general is used by criminals, it's used by the mafia, it's used by cartels, it's used by one of the big ones is. Several years ago, we had someone try to hack into our system. This is a big problem with business. Right now. They've even tried to hack the Pentagon and treasury and so forth. You can get your systems hacked as a business person and a lot of these big, even mutual funds, have been hacked, and they steal the information and then they turn around and try to ransom it. They turn off your own system so 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 million dollars in Bitcoin. Of course it's not regulated. Well, they wanted a million dollars in Bitcoin. Of course it's not regulated. So I think it's very disturbing For our listeners.
Speaker 1:Reviewers, the cryptocurrency is a misnomer Number one. It's not a currency. Currencies have to have very low volatility and currencies have to be widely accepted. Low volatility and currencies have to be widely accepted. Try going into a mall and spending your cryptocurrency to buy something at the mall. You're not going to be able to do it and it has massive volatility and there's nothing there. When I buy a stock, I own part of a company. When I own a bond, I own a commitment against the company to pay me back or the government, but when I own a cryptocurrency, there's literally, literally nothing there at all. There's nothing. The only thing that makes it valuable is that there's got to be a bigger fool coming behind me that's willing to pay even more than I paid for something that doesn't even actually exist even actually exist. So I think crypto is one of the most toxic investments that you can own, and I would highly recommend investors that are trying to fulfill their American dream to stay away from it.
Speaker 2:I feel like that's a hot take. That on X will get a lot of attention. My view I share a lot of your similar views. I mean it's like there's a lot of fraud. I think. Having said that, at least if you look at Bitcoin, maybe Ethereum, you can make an argument that those are still in quotes, investments, so they should have some even minimal allocation if you look at a total portfolio, but I get it, it's not for everybody and it's certainly not for me from a maximalism perspective.
Speaker 1:People have been making this argument for a long time about not just diversification in cryptocurrency, but diversification in what many people in our industry as you know, michael call alternative investments. So alternative investment would be gold. Well, and gold has, they say, a low correlation with the market. Well, that may be true, but when I'm diversifying a portfolio, I want two things. I want low correlation to other parts of my portfolio, but I also want a return and historically, gold has only averaged 5%. So I have something hugely volatile, just as volatile or if not more volatile than the market itself, the stock market itself. So it's as volatile, with half the return Right and people like to feel it and touch it and they want the Midas get rich quick thing. And you got Peter Schiff out there pumping it and you've got these gold bugs out there pumping it, saying it's the end of inflation. You can't have an asset that is highly volatile as a hedge against inflation and it's a thousand times more volatile than inflation. That makes it a terrible hedge against inflation. Inflation could be up 2% and you could lose 40% of your money 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 by dissimilar price movement, but then does it actually have a real return for the volatility that I'm taking on?
Speaker 1:And a lot of these assets that people dump into their portfolios have three, four, maybe five years, maybe even 10 years of good performance. They dump this garbage in their portfolio and they get burned. A good example of this is commodities in general. In 2008, 9, you had the real estate crash and when you had the real estate crash, you had the market dropping 50%. Commodities were up 30% or 40% during that period of time, so everyone then started saying, well, this is a great diversifier. A lot of people got money in commodities at that time and the commodities index over the last 20 years has made exactly zero, not a single dime of profit. And at the time people were talking black swan events and you got to add all these exotic things to diversify. What you should have done is sold your fixed income and bought more stocks while they were down. Easy to say, hard to do.
Speaker 2:We touched on a lot of topics here. You mentioned you know, congrats. You built a nice size RIA 10 billion plus, and having been in business for a while I know how hard that is, so congrats on that. But I want to transition a little bit to management style, because you went from to your point owing $30,000 in debt early 90s building up this big firm. I'm kind of going through some of this myself now. When you're at that kind of hockey stick moment in a company, you know you are used to doing the grunt work and all the minutiae and you've got to at some point transition from, as Alex Formosa would say, sort of the nitty gritty grunt work to being the idea man. Talk to me about how you manage your company and the people involved, given your philosophy.
Speaker 1:That's great. So I think it's one of the greatest challenges for any entrepreneur. You talked about the self-development books that you read, which I've also been a student of since I was 10 years old. My dad gave me Think and Grow Rich and said you know, read this book, psycho Cybernetics. I also read it when I was 10 and said you know, you want to study human behavior and you want to study how the world works and if you want to be a true entrepreneur, you read this book. Read it once every year, you know, for the rest of your life.
Speaker 1:And I have the thing about employees is you have in the book, in my book, experiencing the American dream, I talk about asking the right questions, uh and, and having those questions serve as a screen for how you see the world. So when I first started my business, I had a screen for investors. I had me and two other employees and I had a screen for for for um, employees that employees are hard to manage, hard to hire, hard to keep focused. They're not creative. It's easier to do it yourself. I ended up hiring them and training them and then having to fire them, you know, and basically it was a screen. The way I saw it was that employees suck. And then I. And then I said well, what, you got a dream to? We have 70 employees today. You got a dream to build this company and to help people invest their money and to help them fulfill their dreams. So you're not going to be able to do it with two people. Is there any anything that you're? Is anything in the way you see the world skewed? And it was because having that view 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 with them. I got to be righteous, I got to be 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 costing me the future.
Speaker 1:So then I asked a different question. The question I asked was well, is it really true that all employees suck? Couldn't be true, because there were companies with 10,000 employees, so it can't be true that all employees suck. That can't be true. And if it's not true that employees suck, then what could it be? Well, it could be that employees are awesome and employees are the key to the future, and that was the new screen that I took on, and so I had to do something that very few entrepreneurs ever do. I had to stop asking why can't I find good people? And I had to ask the question what in the hell makes you so good, mark, that you think good people would want to come to work for you?
Speaker 1:And, looking at that question, how can I create the environment, the opportunities, the vision for them, the excitement for them, the passion for them, the energy for them? How do I create a company that draws and pulls the right people in while, at the same time, rejects the ones that really aren't hardworking and don't have 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, but it's taken a lot of experimentation over the years, and I tend to hire slowly and vet people as well as I can, but your vetting is only going to be so good and then when I find someone that doesn't fit the right model, I get rid of them as fast as I possibly can.
Speaker 1:And the other thing I do which is, I think, is I've been really looking at this lately is you got to make sure you have the people in the right position. It's like a coach for football or baseball or whatever. You know there's people that in the organization, or could be, that are in the wrong position, and I've had people in management trying to manage people. I've discovered they weren't good at that but, hey, they were great at creating R&D and new presentations. I had a guy just recently was in operations and I discovered he had a real gift for marketing and and I put him in the marketing We've got. You know our workshops are packed full now. So you want to make sure you have the right people in the right position and you have good boundaries. You have good positioning. They see working for you as part of their passion and part of their dream in life and you want to focus on how do I create a company that attracts those type of people One of the toughest things for an entrepreneur to do by far.
Speaker 2:Yeah, because it's like. The other thing is like, if you're an entrepreneur, you're also very alpha in terms of you know, you view yourself as very competent, right, and obviously you want other people to work at your level. But not everybody's an entrepreneur, which means the odds favor whoever you bring in is not going to be as intense as you are, because they've never been a business owner themselves, right? And and then, as a business owner, you have to come to terms with the fact that people are not going to be at your speed and that that's OK.
Speaker 1:Yeah, we have a thing in our company called the cancer of casualness, and being in business takes a high degree of urgency.
Speaker 1:It's it's a fire in the belly that things have to get done and have to get done now.
Speaker 1:And I think it starts with the head entrepreneur of the visionary of the company, the visionary of the company, and it really demands control systems for the employees, specific goals, specific timelines, specific urgency and the cancer of casualness.
Speaker 1:Once the casualness gets into your company, it destroys the future because, especially with AI and quantum computing, I tell our people that we have our core values but we have to evolve our company every two to three years into something unimaginable, because if we don't, the market's going to do it for us and it's going to put us out of business. So we have a sense of urgency and a sense of mission and a sense of accomplishment and it's got to happen now. And if we get casual and we don't know our numbers and we're not focused on the results and we're not late, creating that SEAL Team 6 environment, it will be the slow death of a company. And that's part of what I talk to our advisors, that I coach and train about, is how to create that sense of urgency, both first for yourself and then for all of your employees underneath under you.
Speaker 2:Yeah, there's so many things behind the scenes that those on the outside have no idea about that we're we have to deal with as business owners. Mark, for those who want to learn more about or track more of your work or get access to, you know the services that your company provides and they might be interested in the book. Talk them through sort of how they can get all that.
Speaker 1:Yeah, one of the easiest ways to get connected is you can go on. You can get it on Amazon or any of the online bookstores. You can grab a copy of our bestselling book Experiencing the American Dream. Rob Lowe did the forward to it, arnold Schwarzenegger endorsed it, gary Sinise endorsed it, a Nobel Prize winning Harry Markowitz endorsed it, steve Moore, Steve Forbes got a lot of great endorsements on the book, so that's a great way to start. We also have a two-day workshop called Experiencing the American Dream. We have a virtual one starting up this Thursday and Friday actually and it's how to eliminate speculating gambling from your investing portfolio, how to talk powerfully about money, how to find your purpose for your money and how to grow. And that's the virtual one is open to anybody that wants to attend. If you'd like to learn more about 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:We've got to get you on X, Mark.
Speaker 1:I know my PR people are like, hey, you've got to get you on X, you're right, I do need to get on X. You're absolutely right with that.
Speaker 2: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 edited podcast under Lead Lag Live on all of your favorite platforms. I'll see you all on the next episode of Lead Lag Live. Thank you, mark. Thanks, buddy, cheers.
