History lessons for the modern investor
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"It is imperative that investors learn how to interpret data. I think that if the last two and a half years have shown us much, it's that people are very bad at interpreting data. And that is not a political statement in any way, shape or form. It's just a fact." — Patrick Huey, author, History Lessons for the Modern Investor
This episode brought to you by Cultivate Elevate's USDA organic mushroom powders and Shilajit. Get 10% off here.
Curt Mercadante interviews Patrick Huey, the owner of Victory Independent Planning, LLC., as well as the author of History Lessons for the Modern Investor and The Seven Pillars of (Financial) Wisdom.
He is a CERTIFIED FINANCIAL PLANNER™ professional, Chartered Advisor in Philanthropy® and an Accredited Tax Preparer. Patrick earned a Bachelor’s degree in History from the University of Pittsburgh, and a Master of Business Administration from Arizona State University.
Lieutenant Huey served as a Naval Flight Officer from 1996-2005 earning the Strike Fighter Air Medal during combat operations and two Navy Achievement Medals. He enjoys travel, golf, tennis and spending time with his wife Dixie and their son Fletcher.
FULL RAW TRANSCRIPT OF THIS EPISODE:
[00:00:00] Curt Mercadante: And hello, freedom lovers. My name is Curt Mercadante. This is the freedom media network podcast. I'm very grateful. You are here. If you are a first time listener or viewer. Welcome. If you are a return visitor, viewer, whatever listener. Welcome back. We're happy to have you here. And you're joining us on a wonderful day.
[00:00:22] Now I say that for every. But today, I really mean it. Sometimes I'm lying in the past. No I just kid anyways, today we have a wonderful guest. His name is Patrick Huey. He's the owner of victory, independent planning, as well as the author of history lessons for the modern investor and the seven pillars of financial wisdom.
[00:00:43] Before we started recording, I was also telling Patrick that I just introduced my kids to top gun. We can talk about that because Patrick used to have a little habit. Landing airplanes on aircraft carriers. So maybe we could talk about that a little bit today. He's a certified financial planner, professional chartered [00:01:00] advisor in philanthropy and an accredited tax preparer.
[00:01:03] My, uh, my apologies for that, my condolences for having to deal with the tax system, Patrick earned his bachelor's degree in history from the university of Pittsburgh and a master of business administration from the Arizona state university Lieutenant Huey served as a Naval flight officer. 1996 to 2005, earning the strike fighter air metal during combat operations and to Navy achievement metals.
[00:01:27] He enjoys travel, golf, tennis, and spending time with his wife, Dixie and their son Fletcher. Patrick, thank you so much for joining us today. Kurt merch and Dante. I just want to say, uh, first time, long time, uh, first time guests, longtime follower, uh, and I could not be any happier to be hanging out with.
[00:01:48] Yeah. And, and we've shared a bottle or two of them are low. I believe in the past. I believe it was Marlo at the, at the fine, uh, Orlando's finest Longhorn steakhouse. I think it was, [00:02:00] is that a plug? Are you going to get money from them for this? I should. I should. I should get an affiliate. Um, although my, our latest there's, none of those around here is a Texas Roadhouse.
[00:02:09] That's where we're taking the kids on the way back from spring training a few times.
[00:02:13] Patrick Huey: So, I mean, God bless America, right? Uh, if there's a. If you need a steak, uh, there's usually one pretty close by no matter where you are. So, you know, again. Yeah. Yes. And amazing. Amazingly I th the stakes are probably slowly killing me with metal toxicity, but some of those cheap steaks are better tasting than some expensive steak restaurants you go to.
[00:02:38] Yeah, definitely more bang for your. Yes. Yes. That's the first financial tip today. Eat cheap steak. I was going to say, we can talk about bang for your buck.
[00:02:45] Curt Mercadante: So in under 30 seconds, Patrick, now, can you tell us every history lesson that the modern financial investor can learn from today? Go, no, I'm just kidding. I'm just kidding.
[00:02:57] Patrick Huey: I could probably do it. Uh, [00:03:00] I know you're joking, but if I had to distill all the knowledge and 200 and some odd pages of a book into 30 seconds, uh, it would just be, learn how stupid your brain really is and, uh, and be willing to compensate for it.
[00:03:15] Curt Mercadante: Um, well, I'm going to throw some stories out and I, if you have to go back to the book, cause sometimes people ask me about things I wrote in my book.
[00:03:24] I'm like, oh wait I got to go back. I don't remember. That was a couple of years ago, but I have to start with this story and, uh, you've blogged about it. And, uh, I have to start out with it because it is an event that occurred on April 29th. Which is my birthday. We're in the month of April as we record this.
[00:03:44] So I have to start off with this April 29th, 1986. I was 11 years old. We're going to go to Fenway park. Yeah. Phil Bradley is up to the plate. Roger Clemens is about to, if he strikes him out, right. He's going to break the record for strikeouts. [00:04:00] Can you tell us, can you tell our viewers, our listeners a and by the way, Phil Bradley from McComb, Illinois, not far from where I grew up.
[00:04:11] Okay. And he stands up and he stands up to the plate. What does this date in history? Roger Clemens, who by the way, is, is people are petitioning, right? For him to get into the hall of fame braking on April 29th, he broke out the strikeout record. What can financial or what can moderate investors or.
[00:04:31] Basically almost applies to everyone today. Learn from this date in history,
[00:04:34] Patrick Huey: um, at the risk of getting myself in trouble. Uh, I think it is imperative that, uh, investors learn how to interpret data. Um, I think that if the last two and a half years have shown us much, it's that people are very bad at interpreting data.
[00:04:53] And, uh, and, and that is not a political statement in any way, shape or form. It's just the. Um, and that [00:05:00] particular story, uh, you know, I used it to kind of bring up the issues that economists have when they model economic data. Okay. So w when you're looking at gross domestic product or GDP, which is basically how we measure economic expansion in this country, um, the way they do it is they, they actually have three.
[00:05:22] Revisions to that data because the keep bringing in more data over time. And my point was, you know, if we did that in baseball, if we stopped the game after the third inning and extrapolated the rest of it, uh, Roger Clemens wouldn't have broken the strikeout record that day. I think he would have had something like 16.
[00:05:41] I'm still pretty good. Uh, and by the way, I think that, I think those guys should be in the hall of fame, but we can talk about that later. Um, Yeah. So you gotta be careful about how people are measuring data for you, uh, and be willing to look a little bit deeper than, than just, you know, the [00:06:00] headline or just, uh, what is presented as, uh, as fact, uh, you gotta be willing to, to delve a little deeper look at individual and look at primary sources.
[00:06:11] That's a big one today. So many times we just get our information from secondary or tertiary sources. Uh, like social media and we don't bother to look any deeper. Um, I think you have to look deeper or else you're doing yourself a disservice you're, you're buying into all your mental biases. Um, and you're not really getting to, uh, to, to the essence of the game.
[00:06:34] Uh, so there,
[00:06:37] Curt Mercadante: yeah, and it's, it's interesting, you mentioned last two and a half years, but some people will quote data from a podium, but then you actually go and look. The data they're quoting and it says something different. I often think about, I was big into track when I was growing up track and field and, and, uh, you know, you look at some records that are broken and, you know, some [00:07:00] of them, they put asterisks next to, you know, if it's at Mexico city at whatever 9,000 feet, you know, for us here at Sedona.
[00:07:07] Uh, and of course they, you know, they, they, they marketed to when they did. But there's some other things, right? That you probably can't pay attention to the track. You look at marathon records. I don't know that they take into account wind, uh, cold. Uh, Hills, right? I mean, the, the, the Boston, marathon's got some major Hills in it from when I know Chicago marathon, I talked to someone who ran and he's like, oh, the Hills were horrible.
[00:07:32] I'm like, come to Sedona, dude. Right. Like, you know, but they have a marathon out here. So, so that data is, do you think the main danger is ignorance, uh, confirmation bias, um, willful. Misinterpretation of the data, or it just depends on the person.
[00:07:51] Patrick Huey: Uh, it reminds me of an old joke, uh, from my military days. Uh, what's the problem here?
[00:07:57] Is it ignorance or is it apathy? [00:08:00] Well, I don't know. And I don't care. Yeah. Um, so, you know, I, I think the problem is, um, number one, our brain, and I want to go back, uh, And talk a little bit about, uh, one of your points. They're talking about Mexico city and talking about how we, how we, um, kind of handicap sports or don't, uh, in, in certain cases, the problem is there are infinite, infinite number of variables out there, right?
[00:08:29] Be it sports, investing, whatever you want to talk about. Uh, there are a lot of variables and you know, one of the things you and I have talked about previously, and I know we both have. And interest in his stoic philosophy, um, where, you know, I believe the best investors are Stoics because they tend to tune out a lot of those variables and they concentrate on the things that they can affect and they don't worry about the stuff that they can't affect.
[00:08:54] Um, so I think that's important to, to bring forward because all that is is tuning out [00:09:00] some of the noise. Right. And I think that there's so much noise. Um, I, I talk about, I talk about in the book, how, you know, television and then the internet, and now social media have basically created an unholy Trinity of information that is basically bent on making people do stupid things, uh, investors included.
[00:09:21] Um, so I think that amount of information people are looking for shortcuts naturally, uh, that's, that's ingrained in our brains. We don't want to have to learn things multiple times. Uh, we would rather take other people's words for it if we can. Um, and a, and a lot of scenarios now, that's, that's what we're doing.
[00:09:39] And your background in politics, I think is, is interesting because they will use what is known as anchoring bias against you. Right? Because they'll say something and as soon as they've said it, that data is in your brain and you can't ever go back and get rid of it. And now [00:10:00] you're. Uh, tolerance for the, the real information is anchored on whatever just came out of their mouth and they know this, right.
[00:10:08] They know that if they say something that's incorrect, nine times out of 10, they don't have to walk it back because, because either we've forgotten and moved on or, you know, your now set with that anchor in mind. And you're, you're not going to look for solutions that are too far outside of the data they just gave you.
[00:10:29] So that's a, that's a long winded, uh, you know, roundabout discussion of just mental bias. You know, we, we, we are more than ready to have people give us information, uh, but we need to be a little bit pickier about how we process that information. If we process it.
[00:10:49] Curt Mercadante: Yeah. And one of the things you've written about a lot, um, and it, we just had Jason Gregory on the shows and Eastern philosopher, and he has a new book called spiritual freedom in the digital [00:11:00] age and, and talks about how the constant attention and addiction to screens is just messing with our, our minds.
[00:11:09] And I think it's important to realize there's always been when you go 2,500 years ago. Gosh, even if you, if you really look at what the gospel, even what Jesus was saying, or you look at what lotsa was saying, right. Or certainly the Stoics there's always been pleasures to distract. Um, and even back then, there's, there is a wonderful, uh, pieces of wisdom in.
[00:11:33] Turning it off. They didn't have a screen back then, but they had other things, they had wine, they had, uh, you know, drink. They had a well in the, you know, the, the Epicureans right. Had food and, and the others and, and the, and the orgies or whatever it is. Right. Yeah. And now we have, that would be distracted.
[00:11:51] Yes, yes, yes, yes. There's one going on right here. I'm trying to figure it out. Uh, the, I won't turn around the camera, but yeah, it's, it's, it's the. [00:12:00] Um, now we have an orgy of information coming at us. And one of the things that Jason writes about and we talked about in our interview, and one of the things that you've written about is the fact that our mind is not evolved or equipped or built to deal with that constant stream of information, which now I think there's more in a day or an hour than the average human ever had in a lifetime before.
[00:12:25] And so it I'd love to get your take on this. At the very beginning of the era that we're currently in, whatever we want to call it in pandemic era, I had two economists. Uh, well, one was an economist at O at Duquesne, near Pittsburgh and university. And the other guy is that here in Arizona, he's more of a political science guy to come at it from a freedom point of view.
[00:12:49] And they were saying, oh, we talked about the danger with experts and trusting experts. So on the one hand, we have democratization of data and news and [00:13:00] information coming at us. On the other hand that requires us to have a brain that's equipped to parse it out and make sense of it on our own. So it's almost as if we have to increasing rely on experts to parse the data, which brings us back to the same problem we talked about with statistics at the beginning.
[00:13:19] So, so the average person investor, and you've talked about, you know, the millionaire next door, the person, you know, people hire you, not because they're. Because they need someone to be the expert for them. What do you say to someone who's like, I don't know who to trust anymore. I don't trust anyone, but I, I, I don't, I don't trust myself either.
[00:13:40] So how do you, how do you counsel someone like that?
[00:13:44] Patrick Huey: Uh, it's interesting because, um, I I'm, I'm blanking on the name of the author, the first name anyway, his last name is Epstein. Uh, but not, there you go. Yeah. And the focus of the book is called brain. Okay. Uh, and he [00:14:00] talks exactly about what you're talking about, how, uh, experts can very often have these types of cognitive biases that work that we're discussing, but they can be worse than the average person.
[00:14:14] I mean, think about somebody who's been in academia for 30 years, they have a specialty and then you come to them and say, well, we found this. Their immediate reaction is going to be no, no, no, no, no. I'm the expert, you know, I I've seen this for the last 30 years. In fact, they did a study, uh, on, uh, intelligence, um, estimates, um, and this appears in his book and basically they had all these, you know, uh, I think it was pre Soviet union, uh, brief the fall of the Soviet union and they had all these intelligence experts coming in.
[00:14:49] Give their predictions for what was going to be going on in five or 10 years. And then they had a group of kind of regular people come in, listen to all the experts, distill that [00:15:00] information and then say what they thought was going to happen. And every single time, the group of non-experts was closer to the mark than the experts.
[00:15:09] Why is that again? It's these mental biases that if you don't, if you're not aware of them, I don't care what you're an expert in. If you're not an expert in. How your brain works, you're going to fall, fall into that trap and you're gonna fall into it consistently. And you're going to pound the table and say, no, no, no, no, no, I'm right.
[00:15:27] And you're wrong. And the more you say it and we're going to believe it. So it's, it's this insidious, you know, thing that we think of experts as experts and we should follow the experts. And yes, that is sometimes correct. But there should be a layer between that expertise and the decision making. And that's honestly what I try to give my clients, you know, I, I'm an expert in some things, but I'm really a Jack of all trades.
[00:15:52] Right. And you see, I've got three different designations. Um, I work in taxation. I work in and I know that's a, [00:16:00] it's a tough place to be. You're, you're absolutely correct. I work in taxation. I work in investing. I work with gifting. Uh, you know, I work with, with financial planning and retaining. But I want to be the person who's listening to the experts, distilling what they're saying, and then bringing it in to my clients.
[00:16:17] And that's where I think I fit in. And that's where I think we should all strive to fit in. Uh, if we're working with, with clientele,
[00:16:25] Curt Mercadante: I was thinking about this yesterday. Um, just because there's a number of people. I know, uh, clients and family members who have literally almost been killed. MDs by doctors over the last year in terms of prescribing the wrong medications.
[00:16:40] And it was just a complete, it was, it was a mistake. It wasn't like, oh, it literally was a mistake. Um, and some other advice. And I was thinking about this yesterday that, uh, I don't know, things pop into my head every once in a while. And it was like, I want a creative doctor versus a smart dog. Correct. And does that [00:17:00] kind of go along the lines of what I was saying that in March, 2022, please give me someone with creativity versus someone who can just spew out data or yeah.
[00:17:11] Um, is that, is that kind of what we're talking about here?
[00:17:14] Patrick Huey: I think so. I think you've got to have some latitude to make decisions. Uh, I think that, uh, you know, you're gonna, you're gonna take me down a path here. There'll be interesting, but, uh, you know, I think you're right. I think medicine, and I've heard, I've heard doctors say this medicine has gone the route of checklists, right?
[00:17:32] So you come in, you have this, we do this workup. We go to this, we send you to this specialist, they do this workup. They've sent. And you keep, I'm going through this with, you know, with family, uh, now as well, where you just have this circular pattern of, of a lots being done, but not a whole lot's being accomplished.
[00:17:52] Um, so yeah, I would want somebody who's, uh, got some latitude to make decisions. I would want somebody who [00:18:00] takes inputs from a lot of different places, somebody who reads the studies, um, and incorporates that into their practice. Those are far and few between, I think anybody who's seen a primary care physician in the last 20 years has seen the way it's changed.
[00:18:17] Um, unfortunately for them they're, they're on a clock, you know, they only have so much time to spend with individual patients. Um, and I know from my own experience that that's not good. Uh, you know, you've got to be willing to spend the time with people in order to, to get to the bottom of their finances.
[00:18:37] How are you going to get to the bottom of the human body in seven or eight minutes? It's just, it's not possible. So yeah, I think you're, you're spot on. I think that expertise is out there for a reason. Uh, but. Yeah.
[00:18:54] Curt Mercadante: And when you were talking about the experts versus the, uh, you know, people, uh, the non-experts perform better, [00:19:00] uh, two things came to mind.
[00:19:01] One is, you know, Elon Musk and rocket ships, you know, and there's this host of, I don't know if it was buzz Aldrin, but this host of astronauts and rocket, you know, experts. And, and I think it was 60 minutes where Elon broke down crying saying, you know, yeah. It hurts me that they came out saying I'm a threat.
[00:19:18] Right. And yet now he's the. Right. Does it, does it, does it, is it simply a matter of courage and then time courage on behalf of the non-expert to just keep forging and proving his or herself, and then time, once everyone sees that they shift from, oh wait, forget the experts. Now Elon's the expert because it can be frustrating.
[00:19:42] Right? When we talk about health, right. Medicine, if you're the person who's a little more aware, But the person with the health problem is getting the crappy advice and you're standing there frustrated, but that person is, so you talked about anchoring and programming is so no, no. I got to listen to the doctor.
[00:19:58] I got to listen to the doctor. I got to listen to the doctor [00:20:00] and you're like, but I can see it. You know, what does it, what does it take for that to break through? I mean, in the financial realm, you know, there's, I mean, right now we're dealing with a crypto, you know, part of me is like, Hey, maybe with everything going on in the world.
[00:20:15] Maybe, maybe, maybe, but there's also a part of me, like. That's new. I don't trust it. What the heck? You know,
[00:20:22] Patrick Huey: there, there's also, uh, you know what I think of when you're talking about those things is the pandemic that's been going on really since the seventies in the United States. Um, and that is, uh, obesity and diabetes.
[00:20:37] Um, what are the experts tell you? They tell you that eat a high carbohydrate diet, uh, and a bunch of small meals during. What's that worked out for us, you know, how, how are we doing, you know, 40 years into that experience experiment. I can tell you from going to the beach, uh, and from going through airports all over the country, it's not going well.
[00:20:57] Um, you know, it's, uh, it's bad [00:21:00] advice, um, and you can break that down. There's a great book by Nina Teicholz, uh, called the big fat surprise that breaks down why that all happened. Going back to the fifties. And, uh, I think that it was once again, it was an expert who got very attached to his ideas and random through, uh, to the point of, you know, now that is federal policy.
[00:21:27] That's how they feed our kids in school. That's how they feed our military. Um, and in fact, doesn't give you the heebie-jeebies, it, it really.
[00:21:37] Curt Mercadante: Yeah, it, uh, and yet all the data in the world from people who say they trust the data, all the data in the world. Won't, I mean, there's people who will follow the experts off a cliff for, um, health wise, which is obviously dangerous.
[00:21:50] And we're seeing that, but financially wise as well. And I think that leads me to another question too, is, is in your [00:22:00] book, you write about, uh, MTSU. Okay. And, and I'm going to take it a little different direction, but maybe not, then you take it in the book, which is kind of, Hey times were good. We're going to get, we're going to get rest on our laurels, that type of thing.
[00:22:11] Yeah. But when we were in Italy in 2019, so this was may or June of 2019. So I dunno what, six, seven months before everything the craziness started, we were in a piano de Sorento, which is above Sorento. So you can see Mount Vesuvius. I could sit on. Porch and see Mount Vesuvius. And I sat there and I had a cigar.
[00:22:35] I was spoken cigars at the time and I sat there and, and was really thinking we had just gone through Pompei that day. And I'm thinking like they were living in the lap of luxury. This is great. They didn't have the weather channel. They didn't have, you know, now we know, oh my gosh, you know, and I have a client who's like addicted to the weather.
[00:22:52] Right. And he rationalizes it and all this, but it's like every, every storm he knows about I'm like, why would you want to do that? But, [00:23:00] okay. So we have that, we have the predictions by law. They didn't have that. And all of a sudden it's like, whoa, what the heck wiped out? Yep. And I sat there and I actually wrote a blog post back in when we got back.
[00:23:10] So it was in June that, um, are we, if something like that happens, are we going to have the creativity to overcome it? Or are we going to see. You know, and, and, and, and I revisited it in April of 2020 and said, Nope, I guess we're not, you know, and, and this may piss people, some, some people off, I think I was correct on that.
[00:23:33] But, um, when you look at the, uh, the loling to sleep, that you kind of write about times are good, but also collective consciousness. Which I think also happens with the anchoring and, you know, uh, I was part of that. I was a PR flack on Capitol hill, worked for big food, big pharma, and was part of [00:24:00] pushing the collective consciousness with quote unquote data.
[00:24:03] I was in charge of going out and buying experts from, you know, to do studies. Literally. That's what I. And so you have this collective consciousness in Charles Fillmore and Eric Butterworth who are two philosophers, kind of spiritual philosophers. And they write about every single and he was writing about this in the early 19 hundreds, most massive epidemics, most or all market dry.
[00:24:27] Um, things of that nature, economic downturns have been the result, not effects, but of collective consciousness and FDR, you may love them or hate them on. I'm not a particularly huge. He was absolutely correct when he said the only thing to fear is fear itself. He was talking about that collective consciousness and it can work either way.
[00:24:47] You write about it in, in, in Vesuvius, long story to come back to this, the collective consciousness of, oh, everything's cool. Everything's okay. It's like, it's like no is building the arc and the town's like, no, everything's cool. Yeah. There's some [00:25:00] rain coming, but we're cool. We're fine. They get, yeah. But it can also happen the other way too.
[00:25:04] Right? Where it's panic. Oh my gosh. Oh my gosh. That's always happened. Right. Is it more dangerous now with this orgy of screens and information that we have coming our way?
[00:25:13] Patrick Huey: I think it probably is because, you know, um, somebody wrote and it wasn't me that, um, you know, this wasn't the first pandemic in history.
[00:25:26] But it was the first pandemic in history with social media. Right now. We're seeing the first European war and history with social media. It's a game changer, you know? Um, I, I, I wrote an article recently, um, kind of talking about my biggest, uh, wealth management, uh, tips for people in 2022. One of the big ones was being antisocial, meaning get off social.
[00:25:51] Uh, and if he can't get off social media, at least set some, some common sense limits, uh, because you know, and I have this [00:26:00] conversation with people. The more time you spend on there, the less information you're really getting. Okay. The algorithm is not built to give you new information. The algorithm is built to take what you already like or already think you like and give you more.
[00:26:18] Right. Uh, that's that's confirmation bias. Uh that's. That's how people get, get into trouble on their own. And then when you build a system, uh, to allow them to do it in mass numbers, you, you, you get what we get now, right? So I'm not saying that the pandemic wasn't real, I'm not saying that, um, uh, that the health crisis in this country, uh, isn't a huge problem.
[00:26:44] What I'm saying is. All of this stuff has made worse and it's harder to combat because of social media. And I, and I really do believe that I think that there's a, a large portion of people already out there with the panic button. Um, just because [00:27:00] they've been geared up with 24 hour news and social media, and you know, why are you watching the weather channel 18 hours, but who cares?
[00:27:08] I mean, You're the reason they're, they're naming winter storms now. Yeah.
[00:27:14] Curt Mercadante: About 46 years on this earth, I've never heard of a bomb and cyclone before and again,
[00:27:20] Patrick Huey: what are you going to do about the weather, right?
[00:27:23] Curt Mercadante: Yeah. Right. Get an umbrella. But yeah, it's like
[00:27:28] Patrick Huey: be prepared, but you know, it's not like you can change it.
[00:27:30] Curt Mercadante: Well, there's some people who also watch it and they're like, well, I need to know what's happening to the markets. But minute by minute, I was always taught. And this maybe goes back to experts and, and, but, and raises another issue about the markets. You know, I was always taught growing up. Hey, don't watch it day to day.
[00:27:49] Because it's time, it's over time. And one of the things we always preached, and I remember when I was on Capitol hill and there were downturns, which was, Hey, during the great depression, you look at the [00:28:00] market at the beginning of the great depression at the end of the great depression. If you would just not panicked, you would have made money.
[00:28:05] You wouldn't have lost money. Now you look at the numbers, but also by the same token, then you look over mark Cuban looks at it and says, if you put money in 1970 in the market, you'd have no money today. Put it all in cash. I think it goes, it probably goes back to philosophy. And who, who you want to pay attention to her?
[00:28:21] Patrick Huey: Yeah. Uh, all due respect to mark Cuban as a, as a fellow Pittsburgher, but, um, that's not the kind of advice that I think people need to be following out there. He's uh, an interesting guy, uh, let's keep in mind. He made one trade in his life that worked out really, really, really well. Uh, and more power to them.
[00:28:43] Uh, but, uh, I don't think the millionaire next door, or even the a hundred thousand to a hundred thousand they're next door should be trying to replicate mark Cuban.
[00:28:53] Curt Mercadante: Yeah. Yeah, exactly. I brought up crypto [00:29:00] and. Looking back. And I have another question related to the book and the timing of when you wrote the book, right?
[00:29:07] Yeah. And you and I have talked to you like, Hey, there's some things I want to update with everything that's gone on over the last two years. But when you, when you look at crypto, are there any lessons from history? And by the way, are you, are you weed whacking while we're a, this is,
[00:29:22] Patrick Huey: this is the problem with south Florida.
[00:29:24] You can't get away from the. Uh, the lawn care noise. So my apologies.
[00:29:30] Curt Mercadante: No, it's fine. I, uh, I have a friend, um, uh, well, Joe. Yeah. And he's like, yeah, I have to sometimes, uh, re restart my podcasts because of the lawn mowing. It's like, it's even in January,[00:30:00]
[00:30:09] Here we go. And it's funny as I was bringing up the pandemic and, and online and people being more tolerant and used to everything my internet goes out.
[00:30:18] So hang on one second. Let me close the damn door.
[00:30:50] Patrick Huey: Yeah. Now we don't have enough flight. Oh, it's going so well, Curt, it wasn't that bad by the way.[00:31:00]
[00:31:01] Curt Mercadante: At first I actually thought I was wheezing.
[00:31:09] Patrick Huey: All right. How's that?
[00:31:10] Curt Mercadante: I actually thought I was wheezing for a little bit. Like, I was like, what's that noise? And I've had a cold. So I was like, I think I'm wheezing. And then I was like, well, for those of you listening, uh, we had a jump cut because as I was talking about people during the pandemic becoming more used to technical difficulties, my internet went out.
[00:31:27] So, uh, so we are back if, if there was a weird jump there, uh, that's what it. Uh, and I think it was probably mark Cuban, pulling the plug, probably listening in on us. He's got connections. Yeah. Yeah. Um, and I'm trying to remember where you were. We, we were talking about, uh,
[00:31:45] Patrick Huey: by the way, there's a direct quote from the book that I have to go back to.
[00:31:49] Since, since mark Cuban randomly came up, he does appear in the book. Uh, and my, my advice for investors is that buffets are for eating buffets [00:32:00] and Cubans are for smoking. That's. Nice. Nice. Very good. Very good.
[00:32:06] Curt Mercadante: Well, Buffet since you brought them up is, is now usually there's some crypto people. I follow not because I have anything to do with crypto because I haven't jumped into it and it's kind of that daily, every more, every day, I'm like, I should really get into it.
[00:32:22] I should learn more about it. And then it's like, what if it's China or the. And, you know, that have created is there's something, you know, I go back and forth, but one of the, one of their famous, uh, uh, you know, uh, people to, uh, to, to, you know, rip on is Warren Buffet, who said some not nice things about crypto probably a few years ago.
[00:32:42] Is there anything in history? Uh, what we're seeing with. Uh, and some of you are going to be like, that's a dumb question. Yeah. We, we used to have trading posts and then we had money and then we did that. But in terms of what we're seeing in this new kind of outside the governmental [00:33:00] realm, um, what lessons can we learn?
[00:33:02] Let me put it that way. Before the crypto nerds jump all over me. Can we learn from history?
[00:33:08] Patrick Huey: Be careful. The, uh, the crypto Twitter mob is, uh, they're they're legit. Uh, So with that said, I'll, I'll wade directly into this. Um, you know, I talked a little about that a little bit in the book about, um, currencies and how specifically the us green greenback, uh, came into being, and it wasn't that long ago.
[00:33:28] I mean, you know, people think we had, you know, greenbacks going all the way back the revolution. We didn't, it wasn't until civil war that we actually caught. Uh, a national currency and made it a standing currency that we all know today. Um, so the, the history of that really is not that expansive. Right. Um, and I think it's, I think it's interesting crypto, as a, as an [00:34:00] idea.
[00:34:00] I mean, I trend libertarian. Um, so I, I love the idea of the people's currency, right? Something that, um, you know, trades and is a medium for trade outside of, uh, of the government's per Vance. I'm also a realist. Um, and, uh, the federal government has already moved, uh, to tax crypto as a. Uh, thing and not a currency.
[00:34:30] So when you buy and sell it, you're, you're taxed on capital gains. Um, they're already talking about replacing it with their own crypto, which then that becomes somewhat terrifying to me as a, as a libertarian, because now the government's tracking. Uh, all of your purchases, uh, on this digital currency, and I'm not the only, I'm not the only tinfoil hat where who's saying that, um, there are some good minds out there who are very, uh, worried about that.
[00:34:57] So crypto in general, [00:35:00] yeah, it sounds like a great idea. Crypto is an investment I'm hesitant to invest in anything that is not being used the way it was designed. Right. It wasn't designed as a store of value for people to speculate. It was designed, designed as a monetary instrument. And that's not the way it's being used now, so that I have some caution from that.
[00:35:21] Um, I also don't bet on regular currencies, right. It's way too speculative for most investors, uh, to, to jump into that game. Um, again, I'm sure the Twitter mob will be, uh, you know, lighting up about those comments, but I don't care. Um, I will, I won't see those comments, so it's perfect.
[00:35:41] Curt Mercadante: Well, and you know, we talked about collective consciousness and we've seen the collective consciousness.
[00:35:46] I mean, you know, Ilan tweet something. Makes up a currency out of whole cloth as a joke. And it becomes somehow a value. Um, and I know people would say, well, the way it was set up this [00:36:00] guy who set up Bitcoin, the way it's set up is there's a limited and it's a true, it's like the gold standard. And it's true.
[00:36:04] This it's not a Fiat currency, but the way you see these things rise and fall is, is, is very, uh, conscious, dependent. I forget.
[00:36:13] Patrick Huey: I love the idea. Um, and that's all money is. Fiat currency or crypto. It's an idea. Uh, it has no real value unless we say it does. Um, so, you know, it's, uh, it's kind of like a, a mass Ponzi scheme, right?
[00:36:36] Where as long as nobody looks too hard or starts raising the questions that we can all go on about our business and, and exchange things, uh, forgotten. But what is the dollar? I don't know. Yeah. Right. I know what they say it is. Um, and I know that it's worth less than it was a year ago. Uh, but other [00:37:00] than that, it's just an idea.
[00:37:02] Um, I think it's a good idea. I think it's gotten us, you know, where, where we are. Um, but a Fiat currency is just that it's a Fiat and that's not, we're not talking about the car. Right, right. Yeah.
[00:37:16] Curt Mercadante: And with gold, we used to have gold. I mean, it was something you could hold in your hand and people may say no, but there's coins out there and they're mining forum.
[00:37:22] Patrick Huey: Yeah. Gold. Why? Because we say it, is he right? Yeah. I mean, there, there are, there are metals out there that are less, uh, available. But don't carry Gold's price tag. Why? Because we say it's valuable.
[00:37:39] Curt Mercadante: Yeah. Interesting. Yeah. And, and it's, it's do you counsel your clients and I don't know what you can get into or not here, but, uh, do you just say stay away from it at all?
[00:37:51] Or you're like, Hey, play around with it if you want, but I'm I'm out crypto.
[00:37:55] Patrick Huey: Yeah. Uh, I would consider it a [00:38:00] very speculative investment. Like I said, it could be appropriate for some folks in small quantities. Um, but you know, if that quantity is more than say five or 10% of a portfolio, there better be a damn good reason, uh, because, um, and by the way, I wouldn't just say that about crypto.
[00:38:20] I would say that about, uh, precious metals. I would say that about any other currencies that people want. Uh, try to invest in, I investing in currencies, you're trading, you're not investing. Um, you're, you're, you're trying to make money, uh, typically not over a long period of time. Although crypto folks will argue that and say, it's a long-term investment.
[00:38:42] We're just waiting for the, the regulatory environment to be right. Uh, to where we can suddenly make, make crypto the thing. Good luck with that.
[00:38:54] Curt Mercadante: Yeah. Yeah. The, uh, well, let's get an NFTs that no, I'm kidding. I'm [00:39:00] kidding. It's a, my, my nephew was trying to explain NFTs to my mom. I back in December kids the sentence, right?
[00:39:07] I just, well, she lost him at like gorillas at another, some NFT with these gorillas that are worth like a ton of money and you can go on a yacht. And I said, listen, you have fun in the metaverse . I'm going to be outside of the metaverse with my real life gun
[00:39:26] at such time in which, you know, we figured out Tron, uh, you know, then, then I'll jump in. But, um, and I know, I know there's some kids out there right now who are like that old man. He doesn't know what he's talking about. It's like, okay, when you had the context of the world, I'm not anti anything, but I'm also, um, uh, you know, The older you get, and this is maybe it leads to another question I want to, if you have, if you want to go back, please do, but with risk and risk tolerance [00:40:00] and, you know, there's benefits, I was telling someone the other day that the real lesson of top gun, and you know, now that I'm 46 and watching it, it's not just about checks and your friend dying and fast planes.
[00:40:17] To me, it was really about. And when you look at stoicism or you look at, for instance, the doubt eight Ching, which I'm really getting into the real lesson is the more you overthink shit, the more problems you have and Iceman for all his skill. When it came down to it, I'm out, I'm out. He was overthinking the shot.
[00:40:39] And as soon as Maverick started overthinking. He was kind of useless. Right. And, and maybe finding that balance of overthinking versus, you know, taking too many risks. Am I off my rocker with that?
[00:40:55] Patrick Huey: Yeah. Um, what's the co [00:41:00] oh, okay. Let me, let me see if I can get it right. You'd have time to think up there if you think you're dead.
[00:41:07] Curt Mercadante: Right, right. So, right. Exactly.
[00:41:08] Patrick Huey: All right. Yeah, pretty much. Yeah, pretty much.
[00:41:13] Curt Mercadante: That's an awfully big gamble with a $30 million airplane and she's a thousand percent correct.
[00:41:18] Patrick Huey: Um, and by the way, if anybody ever sees that little clip, uh, I won't be welcome back at the reunions. Um, no, uh, you know, I think that, uh, Oh, God, the movie's bullshit first.
[00:41:33] Uh, it's a fantastic film. Uh, it got me to join the Navy. It got me to want to fly airplanes and it got me to want to fly the F 14. Um, all of those, all of those happened. Um, but as far as, uh, as far as being, you know, anywhere true to shoot a live for true to form, it's very much a Hollywood concoction.
[00:41:56] However, I like what you're saying there. I like where this is like the [00:42:00] Tao of Top Gun. Right, right. Yeah. Right. It, wasn't applying to two planes, but more of finding a balance between, cause my problem right now is I have deep seated anxiety that I didn't even know I had and I overthink shit by the way.
[00:42:12] I'm trademarking talent, top gun. So nobody out there steal that shit. There you go. I'm doing that. Um, no, uh, yeah, I think that, uh, you're spot on with that, that, uh, It's a fine line as a human being, to not think too much and not overthink. Right. And that's the line we have to walk. Um, not only as you and I, but I think humanity as a whole, um, I think you can overthink yourself into, but we always said back in back in 07-08, that we were talking ourselves into a recession, you know, it, uh, you mentioned, uh, FDR, I think of Jimmy Carter, he talked about.
[00:42:59] I can't remember the [00:43:00] exact term, but it was something about malaise. So general malaise, uh, in the late in the late seventies. Um, and just looking at the fashion from that era, you can, you can understand why. Um, but, um, I think it is possible to talk ourselves into a collective. Uh, be an economic or social, or be it a healthcare.
[00:43:24] You could talk yourself into a crisis. Um, and guess what? Social media we're right there to say, oh, that's what you're scared of. Here's more of it. Uh, and by the way, here's some ads to, to, to pad the pockets. But, um, yeah, it, it, for me, a lot of. Concerns me is, you know, obviously you're worried Ukraine is a tremendous humans, human tragedy.
[00:43:57] Um, but, [00:44:00] uh, this is going to sound glib, but it's also human nature, uh, for us to think that war was gone, you know, magically when the Soviet union, uh, disappeared. Well, you know, there's 20 years in Afghanistan. Uh, and another 20 in a rock, uh, that would, uh, well, maybe 15 in Iraq, uh, that would, uh, that would dissuade you from that argument.
[00:44:24] But, you know, we tend to, we tend to forget those things. I just think that human nature is human nature. Um, and, uh, we gotta be very careful about how, how, how far we think we've gotten, uh, with, with our own. Uh, evolution
[00:44:44] Curt Mercadante: and it's it, you know, nuance more than ever. And you know, human nature, I think takes nuance and throws it out the window for like 10 different reasons we've already discussed today.
[00:44:55] But now it's coming at you so quickly and you look at, you know, you, [00:45:00] you can, at one hand on the one hand say, well, on the one hand, say all wars are tragedies. You can also say Putin is not a great guy. You can also say, uh, I feel bad for the Russian people, as well as the Ukrainian people. And that's a human rights tragedy and in the same breath, not take away from anything you just said and say, yeah, and there's a lot of other bad stuff going on in the world and look at, you know, it's interesting.
[00:45:30] And since we're talking about money, Russia, doesn't buy a whole lot of our stuff. Yeah. In relation to China, why is it that it's political to talk about Hong Kong? Or why is it that no one puts flags about the Uyghurs who are being used for human organ harvesting, you know, and I bring this up, not as a political point, but, or maybe it is, but this information that we have coming at us and it's like, uh, Jason Gregory [00:46:00] said he wants, had a teacher who said, uh, don't be like a windshield.
[00:46:04] We are you just go back and forth depending on what they say to pay attention, to focus on the road. Right. And that's not to say, get mad about everything that goes on in the world, because like you said, there's basic human nature, but it's interesting now the first European war in, uh, in, in the, the social media era.
[00:46:23] And if you can unplug a bit and stand back, And have a little bit of detachment you can look and say, and maybe that's maybe that, you know, the Tao of top gun is have a little bit of detachment, but not too much. And I that's the young right. That they say, is it that chill out? But move forward in this, I guess this is a question I there's a lot of, I guess it's a question that goes back to what we talked about at the front, with the amount of information coming at us in 2019.
[00:46:56] When you talk about, uh, markets and, and when you talk [00:47:00] about the, the, the amateurs outperforming the experts. Yeah. Uh, you know, there's a lot of believers in like the Iowa electronic markets when they predict certain things. Right. And it's not always right, but apparently some of these markets, when you look at them, they're pretty, they're better than the experts are.
[00:47:17] They're pretty right on, depending on where you're on, certainly with elections. Um, and it's all based on. Overt information, but also subconscious information. I would assume that's out there. Right? Like in, in 2019, I felt 2020 was going to be a shit show. I don't know why I was unplugged from media and my financial guy.
[00:47:44] I said, listen, I want out, I don't know what's going to happen in 2020. I think. I look back and there was information out there. And this goes back to what you said about talking ourselves into things. There was like bill Maher almost wished. I mean, he, he basically [00:48:00] said he wishes there was a recession to end the Trump presidency.
[00:48:03] And I'm not, this isn't a pro-Trump anti-Trump, but that stuff was out there probably now that I look back, that was, and I don't watch bill Maher, but you hear stuff. Right. And those subconscious bits of information. Does the, I recently had Sunil God save talks about intuition and listening to it. When you're up in a plane or down and dealing with the financial markets, how do you allow your intuition to come forward without clouding it with the need to push, push, push?
[00:48:37] Right? Cause it's in that quiet that the intuition comes up, but you said you have time to think. Where's that balance. And I guess apply that too, if you can, you know, financial.
[00:48:48] Patrick Huey: Yeah. I think that's where it comes into being the synthesis point of a variety of experts in a variety of [00:49:00] viewpoints. Right. Uh, because I can't tell you how many times I've heard people with gut feelings that didn't work out.
[00:49:09] Yeah. Right. I mean, Going on 99%. Um, and the reason is because they, what they thought was intuition in my mind is really anchoring bias. Right. They jumped on something and then just kind of collected a bunch of information to go with that. And that's their gut feeling, right? It's anchoring bias. And then it's confirmation by.
[00:49:38] Uh, where you're just ignoring anything that would, would, um, would take away from your argument. So I think you have to be very careful with trying to be a sincere. It's it's, it's extremely difficult. Uh, you know, you gotta get a number of decisions, right? It's not just the decision to, [00:50:00] I'm not criticizing anything that you did back in 2020, but, uh, if you're gonna make a decision like that, you've gotta make a decision to get out.
[00:50:07] And usually you have to make a decision to get back in. And that type of timing is a notorious. So, what I would say is just going back to it, by the way, it's David Epstein, uh, who wrote the book that I could look that up. Uh, I would go back to that book and say, okay, how did, how did those guys do it? How did they make better decisions than the experts?
[00:50:29] Well, they took a lot of different viewpoints and synthesized it into one. Uh, that's what the media used to do right before. Uh, the media does not do that anymore because the media does not get paid the way the media used to get paid. Right. Media gets paid on, on clicks. Um, and if a story is going to go viral, um, it can't pull in a number of different experts.
[00:50:57] It's got to follow one and [00:51:00] then find information that backs him up and then make somebody else look like. That's the only way you get clicks, right? Uh, in America or worldwide. So the formula has changed. The media has changed. Um, and you know, I think that it, it really now is on the individual investor and the individual consumer of information to be that person for themselves.
[00:51:23] You have to synthesize it for yourself,
[00:51:26] Curt Mercadante: uh, talking about some old school media, and this is my final question. Uh, Which is you can actually get an old fashioned paper right away.
[00:51:37] Patrick Huey: It's the way I prefer it. Yeah, yeah.
[00:51:39] Curt Mercadante: Yeah. I've started really doing that as we were traveling around the country. I have my iPad.
[00:51:42] I didn't want to carry books. Uh, and now it's like, I'm going back to it. Cause I just, I'm so sick of staring at screens. Um, and I first thing in the morning, I don't want to do it certainly lasting at night. And so now if you look down, I have, I have way too many, uh, cause I'm like [00:52:00] five behind, you know, but, um, but your book, you wrote it prior to the last two years.
[00:52:06] Yeah. Um, And for those of us watching this in a time capsule, 50 years from now, I'm referring to the COVID era. Uh, what would you change if you rewrote your book today, from what you put in your book, when you originally wrote it?
[00:52:28] Patrick Huey: Uh, there's a chapter in there about the great plague where I might word some things differently. That's why. Um, but there's also, I think, you know, what did I learn from, from 2020? Um, I learned that it's great to make money, but it's even better when you don't lose a lot. Right. Which is [00:53:00] kind of counterintuitive until you're on the losing.
[00:53:03] Right. Uh, people hate losses two and a half times more than they like gains. Uh that's uh, that's uh, a statistic from a, uh, a number of studies, uh, in behavioral psychology. Um, and it's not just what they hate, but it's. It's what matters to them. Right. So you can talk about risk. And obviously we talk to our blue in the face about risk and then a client looks back at you and says, yeah, how much, how much money are we making?
[00:53:35] It's like, well, you know, obviously that's important. Um, but are you going to do dumb things when you're under pressure? Because the market's going down 33% in five weeks, like it didn't. That's really what I, what I learned is you have to stress test investments, you have to stress test people, [00:54:00] right?
[00:54:00] Because if it asks you what your risk tolerance is today, it's going to be different than it was six months ago. And it's going to be different than what it will be in six months from now. Right. I talk about this. This is the Mount Vesuvius example, right. You know, obviously in 80, 80, a year after the volcano.
[00:54:19] Uh, people's risk tolerance was pretty freaking low. Uh, you know, they, they were scared shitless. Uh, let's see, loving your packets. Oh yeah, I guess. Okay. I guess, I guess too late, already. Good. That's like the least you could say. Yeah. So, you know, a year after that, they're, they're terrified. But then five years after that they're less terrified.
[00:54:37] And 20 years after that, they basically forgotten it. And, you know, 2000 years later, some of the most expensive homes in the world are in the desk zone from MTSU. Um, so that is just kind of how we see risk, if it's right in front of us, you know, I mean, think about it. How many, how many people do you see wash their hands [00:55:00] in 2019 versus 2020?
[00:55:02] It was right in front of them. So they felt the risk and they took the mitigation measures for whatever they were worth. Um, and over time that fades out. Right. Um, So my, my goal really is to keep 20, 20 close, close at heart closer. Most of my mind, uh, because I've learned some things there about the way people react, um, and the way panic sets in because 2020 in the markets was a panic.
[00:55:36] Um, and, uh, being ready for that, uh, the, the next time of concern, cause it will come around. Not just because I say it well, but because we've set up a mechanism to do it over and over and over again with the internet and social media.
[00:55:54] Curt Mercadante: Yeah. Interesting. Interesting. Yeah, they, the what's the old line that everyone always used, but no one paid attention [00:56:00] to which is, is, is, is the line, which is, uh, those are not aware of the past are condemned to repeat it.
[00:56:06] I can't remember exactly who said that, but everyone always used Hitler as the example. Right. And going into Russia and everyone uses those cliches. It's funny how the cliches are actually true, but no one listens to them.
[00:56:18] Patrick Huey: Yeah. I mean, you know, the other cliche is that history doesn't repeat itself, but it rhymes.
[00:56:23] Yeah, or it echoes. Um, and yeah, there, there is some of that, uh, every situation is unique. Um, but I think the way we process information and the way we, uh, the way we think through problems has not changed really in 20,000 years, 10,000 years. Um, because our brains, all of this is so new. I mean, you know, this stupid thing didn't exist.
[00:56:53] I'm trying to get it in frame that didn't exist to me 12 years ago. And now it's part of my everyday life. [00:57:00] How does my brain accounting for that? It's not like it can't um, so you really have to, to take these, these tools and use them in smart ways and understand the way your brain sees them. I mean, you know, you can't have this thing on at night and sleep.
[00:57:19] Yeah. Yeah. Not just because of the dings and dongs, but because you know, you've got energy and all that stuff flipping through the air. Again, our brains are not built for, for the time we find ourselves in. It's not our fault. Uh, but I do think there are things we can do to mitigate. Uh, our, our bad decisions.
[00:57:40] Curt Mercadante: W when, uh, when, uh, the official, uh, invasion of Ukraine began, my wife got texts from people saying, are you going to take your, all your money out of the bank? And then I talked to my mentor, who said his wife was getting texts. Should we take all our money out of the bank? And he's like, If there's a cyber attack and everyone's screwed, we're [00:58:00] all screwed and you can't use your money anyway.
[00:58:01] So leave it in.
[00:58:04] Patrick Huey: I mean, there, there are certain scenarios that only end in us, you know, throwing rocks and sticks at each other, right. The complete dissolution of society. There's nothing I can do to plan for that.
[00:58:16] Curt Mercadante: Right. Learn to hunt. Yeah.
[00:58:21] Well, Patrick, I want to thank you so much for joining us by the way everyone we're going to, we're going to link to the book. It's a, it's a, it's not only an interesting book. It's a fun book. I mean, we talked about some of the examples from baseball to mountain of Suvi is to narrow to Ben Franklin, everything in between Constantine.
[00:58:36] Uh, yeah, there's a,
[00:58:38] Patrick Huey: there's a lot of stuff going on up here. You know, it all kind of got to. Uh, puts out on paper and that book,
[00:58:45] Curt Mercadante: well, history buffs will love it. People who like to be entertained will love it. Uh, Patrick, you have to update the book. We'll link to it in the show notes. Thank you so much for joining us in the freedom media network.
[00:58:56] Always. My pleasure.