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In this episode, I speak with Mick Heyman, a Seasoned Financial Analyst and Founder of Heyman Investment Counseling. With over 40 years in wealth management, Mick brings a unique perspective that blends formal education in economics with a deep understanding of human psychology and philosophy. We dive into his book; "Mellow Your Money: How to Surf the Market and Build Wealth Without Stressing Yourself Out," and explore how emotions drive market behavior. Mick shares his insights on the importance of understanding our own emotions to avoid making poor investment decisions. He explains how his interest in literature, particularly Dostoevsky and Tolstoy, has prepared him for a career on Wall Street better than any statistics course ever could.

Throughout our conversation, Mick's warmth and genuine appreciation for the wisdom he has gained over the years shines through. We discuss the concept of "benign neglect" in investing, the importance of mindfulness and meditation in managing stress. He also shares how to differentiate between real and perceived risks. Mick's stories, from his early career lessons to his personal experiences with meditation, offers valuable takeaways for anyone looking to improve their financial well-being. Whether you're a seasoned investor or just starting out, Mick's practical advice and relatable anecdotes will leave you feeling more confident and inspired to take control of your financial future.

Join us for an engaging and enlightening discussion that promises to change the way you think about money and investing.

📺 Watch on YouTube

https://youtu.be/tPI4mJrWbZY

Key Takeaways

00:02:00: The Spirituality of Investing

00:15:43: Warren Buffett's Investment Advice

00:18:21: The Role of Emotions in Investing

00:19:48: Mindfulness and Meditation in Investing

00:30:22: Determining Risk Tolerance

00:38:01: A Question About the Future

Tweetable Quotes

"If we don't understand ourselves and don't understand the emotions that drive us, we will make mistakes at the wrong time. The rules are simple, but it's not easy to follow them when the market's going down or way up."

"For most of us, the strategy of benign neglect is what we should be doing most of the time. You don't want to sit and do nothing forever, but for the main part, having good quality companies and not doing much with your portfolio is often the best approach."

"My daily meditation practice allowed me to accept uncertainty, live without having to be sure, and be more present and appreciative in the moment. It made me a better person and a better investor."

Guest Resources

Website - https://www.mellowyourmoney.com

LinkedIn - https://www.linkedin.com/in/michael-mick-heyman-cfa-b417bb16/

Book Mentioned

Mellow Your Money: How to Surf the Market and Build Wealth Without Stressing Yourself Out - https://www.amazon.com/Mellow-Your-Money-Stressing-Yourself/dp/B0CBL6YGB6

Mindful Money Resources

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To buy Jonathan’s second book – Mindful Investing: https://www.amazon.com/Mindful-Investing-Outcome-Greater-Well-Being/dp/1608688763

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Website: https://mindful.money

Jonathan on LinkedIn: https://www.linkedin.com/in/jonathandeyoe

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Mick Heyman 0:00 - 0:35

I guess what I mean is the study of emotions, crime and punishment, and the guilt that Ross Gonikoff, I think, had, and that emotion that you get through Dostoevsky or Tolstoy, that is both what moves the market and moves us. And if we don't understand ourselves and don't understand the emotions that drive us, I do believe that we will make the mistakes at the wrong time. I can't remember who was on your podcast, and he was saying, it's not brain surgery. The rules are simple, what you're supposed to do and not do in the market.

Aundefined 0:37 - 0:59

Do you think money takes up more life space than it should? On this show, we discuss with and share stories from artists, authors, entrepreneurs, and advisors about how they mindfully minimize the time and energy spent thinking about money. Join your host, John Jonathan Dio, and learn how to put money in its place and get more out of life.

Jonathan DeYoe 1:03 - 1:46

Hey, welcome back. On this episode of the Mindful Money podcast, I'm chatting with Mick Haman. Mick is a chartered financial analyst and founder of Haman investment counseling. He spent 40 years in wealth management, ten years longer than I have. It's rare to find helping families and institutions build and preserve wealth. This is one of the reasons I want to have on the show. Despite formal education and economics and financial analysis, Mick says that it's interest in philosophy and psychology that showed him that human emotion is ultimately what drives markets. Totally agree. He thinks this makes him a better investor and led him to write the book mellow your money, how to surf the market and build wealth without stressing yourself out, which is why we're talking. So, Mick, welcome to the Mindful Money podcast.

Mick Heyman 1:46 - 1:50

Thank you so much, Jonathan. I'm really excited to be here, and I also appreciate the opportunity.

Jonathan DeYoe 1:50 - 1:59

Yeah, I'm excited to have you here. This whole program laid out. I got questions prepared. We kind of touched on this earlier, but do you remember the movie point break?

Mick Heyman 2:00 - 2:10

I do remember, and for some reason, maybe it was because of the pandemic, I had to watch it again. So I kind of watched it a long time ago and got a refresher course.

Jonathan DeYoe 2:10 - 2:42

So the reason this is important, I actually watched the new one, the remake, with my son, who's 19, a couple years ago. So I watched that one as well. I love the original. In preparing for this, your book, how to surf the market, I think that there's something spiritual. Think about this. There's something spiritual about investing. There's something spiritual about the struggles and the things we overcome about investing. So is this part of your sort of ethos in the book. Is this part of the process without. I realize spiritual kind of sounds soft, but tell us.

Mick Heyman 2:42 - 3:58

I totally believe you're right. And you think of point break and you think of some real surfers. My boys would definitely correct me if I said I was a surfer, but I have bumbled and stumbled in there. And in the process of learning how to surf, it did remind me very much of what investing is all about. And like what you say, that spiritual moment of when you are actually up and sometimes it's for a few seconds and seems like a longer time than it is often, but that moment of when you're actually doing things right is not as difficult, but it is when you need to be in one with nature. And I think with investing, the same thing is very true. You need to keep your eyes on dry land, not down in the drink. And when your eyes go down in surfing, so do you. And the same thing with I believe in investing. When you look at the small stuff, when you look at the daily stuff, that's all being talked about, that in itself can drive you crazy and get you feeling like you're drowning. And if you can focus in on the dry land and focus in on your long term objective, that's where I think the kind of similarity appealed to me and where some of the title came from.

Jonathan DeYoe 3:58 - 4:35

Yeah, I just remembered his name. Patrick Swayze and Keanu Reeves. Patrick Swayze and Keanu Reeves. They're sitting on their boards in the ocean, and Keanu was kind of learning how to surf a little bit. Patrick Swayze is the guru, and they're just in the ocean and they're doing this thing, and he's like, feel the water. Feel the water. I kind of think there's something to that. There's something spiritual to that when you're surfing, just like you said. And there's something about markets and economies just work. If you just let them work, they work. But you're right. If you get sucked into those details, that today's whatever GDP report, what happened with the Supreme Court today or whatever, the thing is, if you get pulled into that, it makes you make wrong.

Mick Heyman 4:35 - 5:09

Jonathan DeYoe 5:09 - 5:15

Yep. I got ahead of myself. I got excited. So tell us where you call home and where are you connecting from?

Mick Heyman 5:15 - 5:57

I'm actually in San Diego, California, so near the beach. I grew up in Dayton, Ohio, so not a lot of surfing there. So I moved out here about 20 years ago, and my boys were like a magnet to the water. And of course, that's kind of led me there. And they are actually both accomplished surfers when basically the waves, what they'd say, it's almost too flat to surf. Dad, that's my wave now. That's when I'll get out there. But it's been our home for 20 years, and it's been about that long that I kind of switched from the institutional world back to where I started, which is managing money for individuals and where I really like this place of investing.

Jonathan DeYoe 5:57 - 6:05

So go back to the very beginning. You're growing up in Dayton, Ohio. What are the money? Maybe entrepreneurship lessons you learned growing up.

Mick Heyman 6:05 - 8:24

That's funny. I've heard you ask that question. And I was thinking, gosh, I didn't think anything about money growing up. I had just enough to buy my candy and save a little bit here and there and borrowed some money for college and got help by my dad and by my grandparents. I got into the business, and I'm not even sure I could have explained what a stock was. It was just something to try to do something. The funny thing is, that's where my lesson started, is really right out of college. And so I was in Cincinnati at the time and working for this company, and all of a sudden, I realized I like helping people. I saw my boss helping individuals and trying to manage their money. Some of them were quirky and fun and interesting. I love that part of the business. And then, of course, the other part is I thought I wanted to be a master. I wanted to be a Lewis Rukaiser. I wanted to be a star. And soon thereafter, I got my head handed to me a few times and also learned that the wonderful lesson of learning never stops for sure. And so that early part of my career probably provided so many lessons. But when I think of back as a kid, did I think about money? Hardly at all. It started literally as I was trying to help the firm, help people, and then get a lot of history lessons. I was sent back to the library to build some data in our computer. And so I had to go back to old barons, like in the twenties or thirties. And of course you couldn't help but look at the headlines each week. And what I noticed was the big things, of course, were obvious. The crash and Pearl harbor and such. But it didn't matter. Every week it seemed like there was something that could end the world or that we were worried about. And yet you knew. Because I was, this is history. The next week it was going to be okay. And what a lesson is that? And can teach us that today because we think, oh, my God, this is different. Oh, my lord, the government's going to shut down or so and so is going to be president or whatever it is. The market keeps moving and so do our lives. And that was probably my first and best lesson. It's like ocean coming out of it.

Jonathan DeYoe 8:24 - 8:27

Just does its thing, right? It has its metric. It just does it.

Mick Heyman 8:27 - 8:36

The waves keep coming. Might be in there for a few minutes or an hour, but guess what? It's going to just keep coming. And so accepting that is great.

Jonathan DeYoe 8:36 - 8:49

I got to push back a little bit because I didn't think about money as a kid. No, that's not true. I mean, what was your first job? Did you ever see your parents fight about money? Did you always have enough? Were you ever worried about not getting the thing you wanted? No. One doesn't think about money at all as a kid. Come on.

No, that's true. But I had probably a terrible idea about money. I was a lifeguard making, I don't know, $1.65 an hour. And I was excited because I could go out with my buddies and sneak into bars and get some beers. So it wasn't irrelevant. But I remember thinking other people were saving money, which I highly recommend, by the way. Don't take my kid experience. I kept thinking I could save this dollar 65 or I could go spend it and in the end am I going to be homeless because I didn't save the dollar 65? That is not good logic. Don't pass on to clients because it's great to be in the habit of saving money. One of my great clients, she was opposite to me. She was rolling quarters with her mom and saving from the get go and saving her allowance. I can't admit to that I was spending what I was earning and enjoying every moment of it, but it was really later on that I saw the difference between people who continue to act like that and those who learned how to save at an early age.

I'm going to flip over the book here. So. I love that you wrote the book, by the way. Not everyone's read the book. I say, go read the book if you haven't read the book. It's a series of these stories. Like, every single chapter is a story about an experience, about a person, about an attitude and something you pulled out of it. What's your favorite story from the book? Can you pick one?

Okay. Gosh. There's a more emotional one that is regarding my mom. But I guess the one I would lean to is I was invited to a luncheon with an economist. This is back in the late nineties. And what he would do is pass out cards and he'd say, okay, pick where you think the market's going to be at the end of the year and pick where interest rates are going to be, and throw in a surprise. What do you think could be a good surprise for somewhere during the year? And so I wrote down a bunch of stuff, and we're going through dessert. He's looking through the note cards, and he goes, wait a second. Who wrote down war? What crazy comment. Who would have thought of that? Of course, there's a long silence. I learned how to pause early in my career, and I was thinking, oh, God. And eventually he's looking around. He wouldn't let it go. I raised my hand and he says, what were you thinking of? Was it maybe Chile or Venezuela? And I'm thinking, I have no idea about any of these countries. And I finally, thankfully, came up with my answer, which was, listen, ed, I was. You said, surprise. I have no idea why there would be a war. That's what a surprise is. You just never know. And he shakes his head, and everybody else is shaking their head, going, God, I'm glad I'm not that guy. And it was just kind of a funny story to laugh about back at the office, until three months later, the planes hit the trade center and we're at war. And what a lesson is that we don't. I mean, did I sell my stocks? Did I do any? No. This is a fun story that I had nothing, no real prediction about. But that is in our lives, in the market, there's constantly this unpredictable things. And if you think you can get away with either trying to predict them or avoid them, it's not going to happen. In the pandemic, everything.

I'm certain you've had this experience where a client says, after 2008, yeah, I saw that coming. And you're like, yeah, maybe, but so how do you, after you have that experience, how do you come out of that not thinking that you are clairvoyant or whatever? Can predict the future?

Well, I had plenty of experiences of me not predicting things, and that's why I'm a long term investor, Jonathan. I tried trading, I tried to become the master of the Chicago Board of Trade, and I learned I'm a long term guy.

I did options and I was so bad.

There's a great quote, I think somewhere in the book. I'm going to try to remember it. I sent two kids to college trading options. Unfortunately, they were both my broker's kids.

You actually opened, that's not quite open the book, but one of the first stories in the book is Eloise, and it's kind of how her benign neglect, she used benign neglect to sort of tame the market in her own minds. Can you talk about that a little bit?

Sure. And I have to admit, I don't know if Eloise knew even the word benign neglect, but it was our kind of phrase of what we were describing. Her parents actually became clients of the firm back in the thirties. So she had stocks that had enormous capital gains. And back in the early 1980s, the capital gain tax was much higher than it is today. And the income we were earning in the portfolio was more than sufficient to buy her retirement home for her and support her maid and her cook that she was also supporting at the retirement home. And so, first of all, what is your objective? That was what my boss kept saying. Her objective was income. She needed enough income to support her and she wanted to give a couple of month away to various charities. And I was the lucky one to write those checks, being a young guy that wanted to do something valuable. But we did very little in our portfolio. But in most of our portfolios, we were buying and selling and going in and out of the market a little bit and trying to improve things. And then at the end of the year, we would track who did the best, Eloise would do the best. And what were we doing for Beloise? Nothing. We were sitting. And part of the book, I've said, you don't want to sit and do nothing forever. You should readjust and you should realign and rebalance. But for the main part, she had 25 to 30 good quality companies. There was nothing to do. So we nicknamed that strategy the strategy of Benign neglect. And for most of us, that's basically what we should be doing most of the time. Now, if we have some hot stock like Nvidia or whatever it is, do we take profits along the way? Sure, or else Nvidia becomes your whole portfolio. You don't want that to happen. And then occasionally you might get a Woolworth or an Eastman Kodak in there. At some point you need to part ways with something. But in the main, most of us should adopt the strategy of benign neglect, not do much with our portfolio and do other better things with our lives.

Totally. So this is a bit of an aside for me. So what do you think about Buffett on the stage, or in any of his annual letters saying, after me, I'm going to advise my family to put 90% of their money in the S and P 510% in cash. And that's like setting up for benign neglect. Just buy the whole large cap us market and just let it ride. What do you think about that?

I think if people understand what that means, it's not a terrible strategy. But I think what people forget is, and this is another thing that I recommend, is know what you own. So when we say buy the S and P 500, well, you could buy that ETF IV or any other number of ETF's that mimic the S and P 500. But when we get those surprise events and things go down, and you have one thing that says IVV or whatever that mutual fund might be, it's the S and P 500, you'll get scared because you don't know what that is. All you know is that you had $100,000 last week and now you've got 80. So within that right now, Apple, Microsoft, Nvidia, that makes up. If you add up those top five to ten stocks, it's 30% to 40% of the S and P 500. It's vulnerable now over the long term, over the next 1020, 30, 40 years, the S and P 500 will rebalance itself sometimes by those stocks going down, and you'll be fine. But if you don't know what it is, I think you'll make those bad decisions when you get scared. And so it's important to know what that is and also know that's the risk you want to take. With a lot of my clients, they want income. They don't care about outperforming the s and P 500 when it's going up. What they don't want is the risk when it's going down. And so those are the choices that people probably need to make before they follow the guy with billions of dollars. Yeah, he can take that risk and so can his family, but each of us need to make our own decision about that. Yeah.

And he's fully capable of sitting still through a 50% decline. I mean, he's done it. I don't know 15 times. Like, he's done it quite often. So it's not a big deal to him. And most people aren't. I'm sure I can, but I'm not sure all my clients could. So we have a bunch of stuff in common, and I know that probably many things. But you say in the book that your favorite subjects are philosophy and psychology and literature. So I love what you said about Dostoevsky being way better preparation for Wall street career than statistics and economics. So what do you mean by that?

I guess what I mean is the study of emotions, crime and punishment, and the guilt that Ross Skinakoff, I think, had, and that emotion that you get through Dostoevsky or Tolstoy, that is both what moves the market and moves us. And if we don't understand ourselves and don't understand the emotions that drive us, I do believe that we will make the mistakes at the wrong time. I can't remember who was on your podcast, and he was saying, it's not brain surgery. The rules are simple, what you're supposed to do and not do in the market, but it's not easy to follow those rules when the market's going down or way up or our friends are bragging about bitcoin or any of these other things. And so if we're not in touch with our emotions, we will make the mistake. And then regarding the market, you can study statistics and looking back all you want, and it's emotions that really move the market. It's the power of how, how positive the emotions of the marketplace is, both on the up and the downside. And if you think you can figure out by just analyzing a PE ratio or the cash flow analysis, well, I've sure never seen that work, and I would even suspect it'll be interesting. I'm sure everyone's testing AI different things, and is AI in touch with the market emotions? I guess we'll find out in five or ten years, but, yes, we will. I'm suspicious.

So let's talk about something that's near and dear to my heart. So, mindfulness meditation. So you write in your book that you would sit for 15 to 20 minutes each day, sort of allow your thoughts to come and go without judgment. And you said that my daily meditation practice allowed me to accept uncertainty, live without having to be sure, and as a result, be more present and appreciative in the moment. I began to focus on enjoying what I did have instead of fearing what I might lose. And that made you a better person and a better investor. Please connect those dots for me, because I try to connect them in my own books and my own writing on a regular basis. I would love to hear you connect those dots. How does that happen?

Sure. And I actually tried to meditate in the nineties. I became enamored with all kinds of eastern religions and native american philosophy, and I kept trying to quiet my mind, and I've heard this so many times, oh, meditation bells quiet your mind. Well, I'll tell you what, I was a crappy, quiet your mind person. I could not do it. I was frustrated that meditation was awful and it was a bad experience and did not make me a better person. Then 911 hit, and I'm having to travel, and I'm looking around the plane like everyone else is, and we're thinking, are we the next ones? And I was anxious every time I stepped into the airport. And so someone suggested mindful meditation. In fact, this one was transcendental meditation. But in today's world, it doesn't have to be tm. It can be just any mindful meditation. And the first thing that the teacher told me was, thoughts are going to come in your mind, and you just go back to your whatever. It could be a mantra, it could be a word, it could be anything. It could be your breath. But allow the thoughts to come in, they will not allow it. They will naturally come in. They will go out. And that's a natural thing. And it was like, oh, my God, I can do that because thoughts are always coming in my brain. And so all of a sudden, I thought. And she said, and don't judge. You sit for the 15 minutes, and you don't say, oh, that was great, or, oh, that was terrible. Oh, I reached the mountaintop. Anytime you do that, anything you try is not meditating. Trying is sitting, or meditating is sitting. And so much in everything we do, we're trying hard. We're trying hard to do this or work hard or help our kids, and we're trying. Meditation is the opposite. It's just sitting non judgmentally, letting the thoughts go in and letting them come out. I've heard of so many people talk about their crystal cave on the top of the mountain, whatever it is. I've not had that experience. But for me, just that 15 minutes, sitting in quietly. What I found was all of a sudden, I was not fearful as much. I was more creative. Somehow, that process of allowing those thoughts to come in and out. And you do realize we are not our thoughts, no matter how bad a thing we're going through, whether it's a relationship or whether it's in our finances or in our workplace, it's just our thoughts about it. And if you sit for 15 minutes, it's almost hard to think about the same thing over and over again. It goes away and you realize, huh, just a thought. And so by doing that, it did allow me to be more confident in the advice I was giving to people. All of a sudden, I was a calmer person, and my advice and my investing did become more calm, I believe. And part of that was dealing with some relationships in my life that allowed me to be less competitive so often. Another story in my book was about competition. We try to compete and brag and talk about that in the market. It's going to get you. It's an Achilles heel. And so that's a long winded meditation thought I had, but it's something everybody can do. It's not just for the gurus on the top of the mountain, and it's just about sitting.

So it was a perfect answer. I'm going to go back to the thing I was going to ask, and I didn't because we were talking about emotions and how emotions create problems for us when we're investing now. We've talked about mindfulness and how mindfulness sort of calms those reactive emotions. So when I try to explain the benefits of mindfulness to investing, it's investing. It's not just our own heads and our own psychologies. It's something happens. And then you've got 15 media stations and the people you work with at the water cooler and your dad and your uncle, they're all calling you saying, oh, my God, this is terrible. It's the end of the world. What are you going to do? What are you going to do? What are you going to do? And your body's like, oh, I got to react. I do something.

What do I do?

I sell all my stuff. That's what I'm going to do. I'm going to sell my stocks. That's the only way I can protect myself. There's that emotional overreaction. And so mindfulness, that non judgmental awareness of the present moment, enables you to sit still when that's when it's the right thing to do. Is that right?

That's exactly right. And then becomes more of a funny thing. You see the people scattering around and you think, I don't have to do that. I'm on my own out here. And the first time, even in zero eight, it was coming down or something was whatever that was being talked about. And I thought to myself, there are people sitting around a million conference rooms angsting about this thing, and everyone has to have their little opinion and back and forth, and everyone's doubting this and that. I thought, thank God I can just sit here for two minutes, make my decision, and move along. And that's what each of us needs to do. Even if you're stuck in one of those rooms, realize that all these things that people are going, don't get sucked into it. Focus again on the old rules of investing. Don't go away. And it just feels like it once in a while.

Every now and then, it feels very painful. But you just stick to those old rules. They work. They're rules for a reason. Another great thing that comes out of the book, I love that you referenced this. You're talking about George Costanza Seinfeld. The opposite. I know you remember this, but for the audience, George realizes that every decision he ever makes is causing him to fail. And so he says, I'm going to do the opposite, and it starts to work. Put that in the investor space. What does that Seinfeldian parable mean for the investor?

Well, I was, in a way, thinking of myself. This is, I'm not bragging here, but I used to park at this garage and walk over the bridge from the red stadium over to the building I worked at. And so many days, the market would have had a good run or something. I'm counting them there. I am counting my money, and I get in there, and immediately, there was some earnings surprise, and boom, there goes the stock. And I thought, and so often when we're listening to the rants on tv, you can see it. You can go back and just look at headlines in history, major bottoms and the major tops. And the headlines are always the opposite. And if we pay attention to those headlines, we will lose every time. And I've seen clients that were so excited by the bottom of 87, one client said, oh, gosh, Mick, if you said, if the market dropped 2020, 5%, we should buy stocks, let's do it. They knew exactly what they wanted to do, and they were making the smart decision. Another fellow just fired us and said, I'm going all CDs and exactly the wrong time. And so the impulses that we think we have, so often people say, well, follow your feelings. What do you feel? And in the market, don't do that. I would say, pay attention to your feelings, but understand that when you're feeling that fear, it's not telling you to sell. It's telling you probably near a bottom. Now, we're not about, don't plunge half your house equity into it, but it's probably closer to the bottom when you're feeling like, oh, man, am I smart. Look at my Nvidia and look at my apple and look at what I've done. And gosh, I even buy a little bitcoin. When you're feeling real smart about things, it's a little red light should go on. It's the opposite. And I loved that Seinfeld thing because I thought of not just investors in general, but myself. It's easy to poke fun at other people, but we all have that inner George Costanza in us. Oh, yeah, well, maybe not everyone, but I know I do. I have that same ability to do the wrong thing at the wrong time. It's listening inside and saying, oh, yeah, this is telling me to do the opposite.

Another thing you talk about is this art of determining risk, recognizing real versus perceived risk. So I don't want to sugarcoat and say, just sit in your hands, do nothing. There is real risk. There is perceived risk. How do we tell the difference?

I think you have to look in your mind, what can this asset or this asset class do to hurt me? Let's say somebody really did want to buy a little bitcoin. They just couldn't resist it. And is that the end of the world? If they bought, if they have $100,000 and they put $500 in bitcoin, what's the real risk versus the perceived risk? They could lose $500, but that's not going to hurt them. And I'm always worried about kids starting out, and somebody says, you should be 100% in stocks. So that 1st $1,000 goes into the market and right at the wrong time, as is invariable, and it goes to $800. The perceived risk is such that, okay, it's a couple hundred dollars, but if that causes that person to then not invest because he thinks stocks are kind of dumb, think of the money over a long period of time. That was a real risk. And so just because you're young doesn't mean you shouldn't analyze how much you could be hurt by something, and what would that cause you to do? And so I believe each person needs to look at themselves in the mirror and say, how much real risk could I take if the market drops out of the blue? 20% to 40%. And if they say, I'm okay, if that happened, I'd buy, that's fine. And when should you do those kind of things? Well, right now is not a bad time. The market's at an all time high. So figure, I'm not saying it's going down, but this is a great time to analyze. How much could you lose? Before you say, Jesse Livermore wrote a great book, reminiscences of a stock operator, filled with quotes you see all over the Internet. But I loved his quote of always take stocks down to the sleeping level. That's something every investor should think about. Yeah.

It's interesting that you said two things there. One, know what you can sort of stomach in terms of downside, and then how that will change your behavior. Because at the end of the day, and this is what we try to get, this is what risk tolerance questionnaires try to get to is. And none of those are very good, but that's what the attempt is to figure out, okay, how much can the client lose and still hold on? Because no matter what we do, there's a downside. No matter what we do, it's going to go wrong. There's no way to avoid the going wrong. The question is, can I have enough in there that could go wrong that would give me those good long term returns? Or if I do that, if I have that much in there, will I panic out? Will I have the emotional response that kills me? So how do you determine, you're just a guy out there thinking about investing. How do you know how you will respond when markets go down 30%? Like, how can you possibly understand that if you don't have that money at risk?

The problem is, I think you can put it on paper to people. You can say, here's your $100,000, and let's take it down to 70,000, or you can actually put it on paper in some regard, that helps. But what I've also said to people is, it doesn't happen in a vacuum. Oh, now it's down 30%. I should buy. You got to add to it those headlines. The headlines aren't going to be very friendly at that point. And you're going to say, oh, my God, now it's going to go down another 30%. Another. And on and on and on. Because no one rings. My old boss would say, I'm sure he's quoting somebody. No one rings a bell at the bottom. In fact, it's the opposite. If they're ringing a bell, they're saying, get out. And so I try to provide not just the actual dollar amount, but also the potential headlines. That would be very scary at the bottom.

Right.

And what I found is that over time, clients will adjust, they will get their minds around it. I have one client who came to me very skeptically because he had one guy, got him into tech stocks too high in the nineties. He moves to another guy who got him into banks in the mid two thousands. And so I was the lucky one to get him as an investor right after the bottom. And of course, we had some good years, but, boy, every time there's a threat of a government shutdown or something, he's calling up and he's worried. And of course, the market has tended to already be down. But now we have such a fun conversation, he'll call me up. He says, I know what you're going to say, but I need to hear it one more time. And so that's part of why we're here, and that's part of why russian literature and such is more important. And he doesn't want to talk to a statistician back. He wants to talk to someone who understands him.

I love the self awareness, because I have those same clients, like, I know what you're going to say, but just, can we go through the exercise of the. Yeah, we can.

Exactly.

So there's a ton of noise out there. I like to ask everyone to simplify stuff for us. You're sitting in front of a new couple, their perspective, potential clients. What is one thing that they can focus on that would lead them to better sort of personal and financial success?

I think the key for the average person is to really get in touch with, first of all, we've talked a lot about risk tolerance, but then what is their long term goal and what are they trying to accomplish, and how are we going to do that? It does feel fairly mechanical to say every time the stock market goes from 60% up to 65 or 70, cut back to 60. But those kind of decisions, and the same thing with a stock. Let's say you bought Nvidia, you're fortunate enough, and now it's not 3% of your portfolio, it's ten. Cut it back. Be a mechanic with a lot of these things. And so whether you've got an advisor, you're doing it yourself. Be willing to be mechanical about these things and then keep rooting for it. I have these still the same discussions with my dad. We cut back on something. He's going, yeah, but look, then it went up. It's like, well, good, you've got a lot of it. We're still cheering for it, but move it over to something else and be diversified and be willing to do the things that don't always look right at the time, but they're mechanical. And if I look back at most of my, like, look like prophetic decisions where, oh, my God, you sold and the market went down. Was it because I thought the market was going to go down? No, it was because I thought it was at 60% of the portfolio and the clients now had 65 or 70%. I said, huh, good time to cut back. Why? Not because of the economy, not because of some guy on tv. It was just time. And all of a sudden the market goes down and I look like a genius. I'm not. I'm a mechanic in that, but that it's the discipline there that can then overcome the emotions that we all feel.

I love it. Just be a mechanic in the stuff. That's exactly right. Don't overthink it. Don't think too much about it. That's what they should do. We get told so much crap in the financial world. There's just so much stuff. What is one thing that they've been told someone sell them a product, whatever, that they should just ignore?

I think basically ignore the noise, all of it. Don't watch these shows. Sorry. I know I'm not going to ever get interviewed on Kramer because I'm telling people don't. And he's a smart guy, by the way, but he doesn't help you.

Entertainment.

He's entertainment, but he's not in touch with your objectives. Focus on your objectives and don't pay attention to other people. You're at a party and somebody's bragging about ethereum or bitcoin or something, move away. That's not you. Focus on your objectives and ignore all this noise. And a lot of the noise is not necessarily from social media, it's from our friends.

Gosh. Yeah. So I take it you haven't invested in bitcoin and ethereum?

Actually, I talked about the dollar 500. I felt like I'm an investment guy, I should put the dollar 500 in. And I guarantee when I put it in, not on this run, on the last run, on the way down, my $500 became $200 before I knew it. And I thought, there you go again. But there I analyzed, how much could I lose and not care? And anyway, that I'm cleared out. And once I got out of it, of course it was allowed to go up.

Of course, now that you're not playing, right. I've never been enamored of it enough as a tool to buy the currency. I do think blockchain is an interesting technology and it's going to be useful and it's changing lots of things. But I don't understand the currency at all. It's just a trading mechanism. I don't know.

It's just a trading thing and it could go up, it could go down, but it's hard enough to know what the heck Nvidia makes.

We know what they make come on chips, we know that.

And they go into AI and. But bitcoin makes nothing.

Bitcoin is like, not my circus, not my monkeys, that someone else can play that game. I don't want to do that. So just before we wrap, I like to go back to personal a little bit. What would constitute a perfect day for you?

I'm in San Diego, and if I could jump in the water in the morning and whether I'm body surfing or actually on a board and be with my kids and have that day with them and maybe play a little golf as the sun is setting and be with the people I love, that's, I mean, I don't need to be in Tahiti or some Fiji or somewhere. I just love family and doing some simple things. That's a perfect day and luckily can be repeated out here so I don't have to have one out of 365.

My son's at UCLA and he talked about, yeah, we went to the beach. I'm like, ah, shut up. I'm in northern California. We don't get to do that. So if you could get the truth about any single question about your future, about life, and all you had to do was ask, what would you ask?

That's such an interesting question because, you know, so often you ask about health or the markets, and to me, part of the fun is not knowing that truth. And of course, I'd love to hear what will I come back as? Will it be another investment guy? Or I'm going to come back as a cockroach or something, but. Or who knows what goes on? I would love to hear what goes on as long as this question is open ended, what goes on after we leave this incarnation or planet? That I would love to hear that you're going to tell me now.

Great answer. No, I can't answer the question. It's a great question. I haven't heard the question here, but I think that's, I'll adopt that question. I'm curious, too. Finally tell everyone how they can connect with you. How do people find you?

Mickelleryourmoney.com is my email, and I'd love to hear from anybody. I have my own business, it's a boutique thing and I've got time to chit chat so anybody who wants to dialogue with me, I'm happy to do it. I'm not looking for clients, but the chit chatting sounds fun.

Mick, thanks for coming on. I love the ethic. I love the sort of the philosophy. We're going to make sure all that stuff in the show notes and thanks for coming on the show.

Thank you Jonathan, really appreciate it. It was a lot of fun.

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