Preview:

Pilots are always looking for investing strategies that can help them grow their money and we’ve introduced quite a few people to Howard Capital Management. Today we are going to share our experience with their investments and why it might be worth considering if you want something a little different than the traditional funds.

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More About This Episode:

Of course we had to bring Lee Hyder back to discuss investment strategies with us. His company, Lee Hyder & Associates, is very familiar with Howard Capital and will share his experience with them as well.  Listen in as we discuss the role of technology in trading, how to manage market volatility, and the unemotional, algorithm-driven approach that sets Howard Capital apart.

 

Here’s what we cover in this episode:

0:00 – Intro

1:35 – Howard Capital

4:17 – A different approach

7:59 – Managing expectations

15:11 – Equities vs real estate

17:11 – Embracing volatility

 

Resources:

Connect with Lee: https://www.leehyder.com/

Learn more about Howard Capital: https://howardcmfunds.com/

Retire Pilots – https://retirepilots.com

Get your FREE Retirement Toolkit – https://bit.ly/3ZmZsaX

Pilot Tax – https://pilot-tax.com/

The Pilot’s Advisor Podcast is also on video. Watch & Subscribe on YouTube: https://bit.ly/3EIEBW2

Connect with Pilot-Tax: https://pilot-tax.com/

 

Episode Transcription:

(Note, this is an automated transcription. Please forgive any errors.)

Ryan Fleming  00:05

Welcome to another edition of the pilots advisor. And we are very welcome. And lucky to have Lee hider on the show which I’ve gotten some feedback that people like you Lee, they think you’re funny. They think you bring a different light to the, to the show some experience, obviously,

 

Lee Hyder  00:20

experience you must you must have a color camera and you see my gray hair when you say experience.

 

Ryan Fleming  00:26

Yeah, well, I always record in black and white. But that’s just because I don’t like the way I look. And I like black and white. But recording this podcast. Actually, I’m on a cruise ship. I’m on I’m a worker, you’ve met my wife, Carrie. Carrie likes to go on vacation. So I do what she says because that’s why we’re married for almost 20 years. So I’m on. I’m on a cruise ship right now we’re recording this while I’m on a cruise ship. So hopefully the quality will be okay.

 

Lee Hyder  00:52

Now, Are you bragging? Or are you complaining about being on a cruise ship?

 

Ryan Fleming  00:56

Yes. Oh, yeah. We’re at sea today. So it’s a good day for me to get some stuff done. But you know, like when the seas on a cruise ship are a little rough. And you can feel the ship moving.

 

Lee Hyder  01:09

While you do what everybody else does on a cruise ship and just get in line with your tray for that next buffet.

 

Ryan Fleming  01:14

Oh, you gotta it’s a fight to 300 pounds, who’s gonna win? There

 

Lee Hyder  01:18

you go. And it’s no accident. And you’ve got your video camera pretty much from the chest up at this point. So I get it.

 

Ryan Fleming  01:25

Thankfully, you’re not really just remember, I’ll see you in person later this year.

 

Lee Hyder  01:30

Yes, you will for sure. Absolutely. And living and living color.

 

Ryan Fleming  01:33

Yeah. Well, one of the things I wanted to talk about today, if you’re up for it, is I want to talk about you know, I have a lot of my clients reaching out to me. And they’re, you know, that the markets been crazy. And, you know, the markets doing its thing. But what it really is, is Howard capital. And I wanted to talk about Howard capital today, for a multitude of reasons. Number one, I introduced you to them a few years back, and your clients have gotten to take advantage as well. And just talking a little bit about what it looks like what it does, what a higher standard deviation does to you. But But mostly, you know, we invest for long term gains or returns on our money so that we can retire or have income in retirement. And I mean, we talked about all the time, the numbers don’t lie. If I was just asking you to share what you want to say about hard capital, what would be the first thing that you would say?

 

Lee Hyder  02:25

I would say that very honestly, I’m blessed that you introduced me to the portfolio. And I know my clients are as well. You know, as I tell people who will who I sit in front of and they say, Well, geez, if this portfolio was so good, you know, why are you only telling me about it now. And I tell them that, you know, you could line up 100 different financial advisors and ask each one, you know, what’s your portfolio? What do you like, and out of the 100 advisors, you know, you would probably get 90 different portfolios. So so the world is certainly cluttered with investment choices. But again, you know, I take my hat off to you, you are probably one of the most astute people in the industry, when it comes to kind of digging out and getting bottom line details. And, you know, when you introduced me to Howard capital, that it wasn’t just hey, look at the returns. I mean, you just had a lot of academic research to go behind what you were sharing with me, and you kind of pulled back the curtain and really introduced me to something that honestly, for a long time, I resisted. I mean, I’ve been a kind of advisor that really believed in passive management and tactical allocation was something I stayed away from. But you can’t deny an over 20 year track record of a company that has produced amazing returns. So I would tell people that, you know, if if you’re really just kind of chasing what I would respectfully say, which is an average return, you know, maybe six or 7%, you probably don’t need a financial advisor, you can probably do that on your own. But if you’re really looking to, you know, beat the market more times than not, I think you owe it to yourself to really take a hard look at Howard capital and what they bring to the table.

 

Ryan Fleming  04:05

Well, absolutely. And I like what you said a long term track record. I mean, we have a track record of over 21 years now of blowing the s&p ln I mean, I say that openly, but the numbers don’t lie. And then what I really like about the fact that it’s very unemotional, I mean it’s an algorithm that’s been tweaked for 20 plus years, getting better and better all the time. And with technology today, if you’re not being tactical, you’re not taking advantage of AI, you know, which I do think is going to play a part in trading as time goes on. If you’re not doing something better, that’s a system to try to beat the market, then you’re probably a dying breed, I would think, because not only gotcha, but just like you said, I mean, if you want I love Vanguard as a company and we can be very, very diversified and long term and let it do its thing but you you are going to pay a low expense ratio and get very average returns. But if you’re looking for something different well, and

 

Lee Hyder  04:56

not only not only something different, but I think In today’s day and age investors need some kind of protection. You know, you need some kind of guardrails around your portfolio to try to minimize some of these market drops. And I’m a big fan of Howard capital’s pivotal program, which kind of you know, very simplistically create stop losses in a portfolio and gives you the opportunity to kind of get out of the market, protect your previous gains, sit on the cash and then invest back into sectors and still pick up those impressive returns even when the markets down. So I think it’s important for investors today more than ever, to have a downside strategy, other than just simply looking at it annuity are sitting on the sidelines in cash. And I really applaud Howard capital’s new pivotal program. Yeah,

 

Ryan Fleming  05:42

the pivot points are great thing. And it just goes to show you, hey, this happened in the market 2022 happened in the market where, you know, markets whipsawing, back and forth, and how do you tweak something to make it better? And as you go on, you always want to, and we I think the Japanese called Kaizen or something like that, it’s constant improvement. Right? And that’s something that’s, that’s very great. And, and yeah, exactly the pivot points we buy into the market, and we have a stop loss on the top and the bottom. And behind that, you know, which is not perfect, it’s it’s the byline. And, you know, a very smart man always says, you know, don’t fight the trend right now, the trend is still clearly up. Even though we have many people out there that know that there should probably be a correction, you know, five 10% correction, to lock in some of these gains that we’ve had, you know, and that’s a sign of a healthy market when it pulls back and solidifies those games. But until that happens, don’t fight the trend. Don’t fight the momentum, take advantage of it, and ride that roller coaster on the upside. And go ahead. Yeah,

 

Lee Hyder  06:43

I was gonna say, you know, even though we all know that, you know, past performance is no guarantee to the future. I think what does guarantee future not necessarily returns is a stylistic approach. And what Howard capital brings to the table is not necessarily a predictable return, but they bring a predictable philosophy and strategy that just simply makes sense over the long term. Well,

 

Ryan Fleming  07:06

and it’s a system it’s an unemotional system that works, it’s proven to work long term, it’s getting better. And I have a lot of my clients reaching out to me right now. And they’re very happy because we’re, I mean, we’re blown it out of the water, and something they don’t get to see, I’m analyzing other pilots portfolios on a day to day basis, it’s not even close. I mean, what these other pilots are doing and these other investors are doing, you’re looking at maybe nine to 10%. And we’re like pushing 24%. Okay, right, more than double. And on a million bucks. Yeah, that’s a lot of money. I mean, that’s 130 140 grand in one year difference, and then it compounds. So I always argue if I can get you an extra one to 2%, every single year, and then it compounds, that that’s a totally different retirement picture. So what we’re doing, I mean, I’m very, I’m very proud of it. And you know, my business has grown significantly because of it. But we’re trying to help people. Now, the other thing I talk about is pilots want all of the upside and none of the downside, well, guess what? That doesn’t exist? That’s not possible. So there’s a lot to be said, for managing expectations as well. Do you have any philosophies on that lay? Yeah,

 

Lee Hyder  08:12

you know, one of the things I like doing specifically with Howard capital is showing the historical returns, and we’ve had some down years. And to be candid with you, I kind of liked the down years from a explanation point of view to a potential client, because it shows them that look, this is this is not always going to be, you know, sunshine and roses, there’s going to be periods of time that we’re going to have a down cycle, you know, so again, I think it’s important that that a client recognizes that, yeah, you know, these portfolios have had amazing historical returns since inception. But through those periods, you have had some down years. So when you talk about managing expectations, you know, people need to realize that the only person who gets the portfolio’s long term return is the person who stays on the ride, even when it’s going through a little bit of volatility.

 

Ryan Fleming  09:05

Yeah, that’s a great point. And 2022 Everybody was losing and losing pretty big. Even if you’re in a conservative portfolio that had a lot of bonds or fixed income, with interest rates going up. I mean, the whole portfolio is getting blown up, and you had to stay disciplined. And I actually feel really bad because I have a couple clients that left me during that year. And if they just would have stayed there would have got that 25% return last year, they would be up in our 24% this year. And I know they didn’t go to a portfolio that’s doing that. And that’s where being disciplined and unemotional and long term really, really matters. And especially with a system like this, where, hey, when things are good, and there’s some momentum in the market, we can hit the gas a little bit and get some good returns.

 

Lee Hyder  09:48

And also, what’s exciting about the Howard portfolio is you have an opportunity to do something within it that you don’t necessarily have the ability to do with other portfolios, you know, as I’m sure you know, maybe some Some of your viewers here have seen some of the returns, which are just truly amazing. But when you have 3040 50 60% returns in a year, it gives you an opportunity to harvest some of those returns, maybe from an aggressive portfolio, move them to a more conservative portfolio. So you just don’t continue to grow a portfolio, eventually having some volatility exposed to it. So I like the ability to kind of tell a client that look, if we have a great year, you know, I think it may make sense to harvest some of those portfolio gains, shift them to a more conservative portfolio. And that’s another way to kind of protect you on the downside as well that you can’t really do if all you’re doing is earning 10% on your money. Absolutely.

 

Ryan Fleming  10:39

And you know, when you have those kinds of gains, you can see how the snowball starts working too. I mean, we talked about the old rule of 72, you know, we can take that and divide it by whatever the return is. And that’ll tell you how long it will take for you to double your money. Well, guess what, when you have returns like this, that snowball gets built very, very fast. And I can tell you right now, 10%, on a million dollars is very different from 10%, on $100,000. And then it compounds. And so you’re really starting to see the compound effect of those things, which I find very exciting. And you know, I’m in this business because I wanted to be able to help people, help them leverage their money to grow and have the life that they always deserve to have. But a lot of that takes discipline that most people can’t do on a day to day basis. Hey,

 

Walter Storholt  11:25

real quick break from the podcast, we want to talk to you about the retirement toolkit. If you have not gotten your copy yet of the toolkit, listen up closely, because Ryan is going to give us the details of what’s in the toolkit. You even have one on hand Ryan that we can show people and some of the things that are inside of it. And what kind of information can people learn? Yeah,

 

Ryan Fleming  11:44

absolutely. If you go to retire pilots.com, you can get a free retirement toolkit and will actually give you a free analysis of your portfolio so you can really see what’s going on. But as you can see, we got some air mail here, nine. That’s what the toolkit looks like some of the things that are in there. There’s a couple tax planning strategies with Zack Smith a pilot tax, we look at long term records where we’ve got a 21 year track record of outperforming the s&p 500 get certified, we can show you that. And of course, I write these with big Kranz, big fat France for pilots. I mean, there’s some Marines and army aviators out there. But I got a couple of books, a couple of books, I’ve written that you’re going to get to talk about retirement planning how you shouldn’t plan for your retirement, talking about taxes and tax planning, some other goodies, other goodies, advice matters, how to let an advisor help you out some of the data behind how much more you will have in retirement, if you hire a professional, what we try to do is to try to get pilots not to speculate and gamble their money. And I want to give you all the tools, you need to not do that. Look at the data. It’s completely free. We’re here to help you out.

 

Walter Storholt  12:56

Very cool. So this is a free toolkit that you’re going to get. And I don’t want to gloss over that fact that you mentioned at the beginning. It also comes with a free portfolio analysis that you’ll do after people get the toolkit. Yeah, absolutely.

 

Ryan Fleming  13:06

I mean, if you have no interest in doing anything else, and you just want the free materials, I’ll put your name right here, we’ll send it out to you. But yes, you do get a free portfolio analysis, I think most of the people after they see the content that’s in there and read the book, they want to they want to talk to us, and we can analyze your portfolio. See if we can add any value, the numbers don’t lie. I mean, we’re gonna find out if we can add value. And we’ll get on a zoom call with you. We’ll go through it, we’ll teach you we’ll show you the numbers. And I like to call that the IQ test. At some point, the numbers don’t lie and you look at and go, Hey, if we can help you out, you know, and do something better. If there’s a better way. Well, let’s help you implement that strategy. Very good.

 

Walter Storholt  13:46

So no obligation to work together. But you definitely get the free toolkit, great resource information. And then if you want to take next steps for that portfolio analysis, you get that as well. So a lot of great freebies there, Ryan, we appreciate you offering those to folks in the first place. I know a lot of people throughout the existence of this show have ordered them over the years. But we’ve still got a good chunk of folks that probably are new to the show, or haven’t gotten their copy of the retirement toolkit. So be sure to get yours again, the way to get it is to go to retire. pilots.com That’s retire pilots.com. And right there on the homepage, you’re gonna see an opportunity to get that toolkit. We’ll also link to it directly in the description of today’s episode. So look for it there as well. That’s your retirement toolkit here on the pilots advisor. Thanks, Ryan.

 

Lee Hyder  14:27

Well chart it, you know, I can empathize with people. I mean, it’s hard to be disciplined when you have your life savings and something that is experiencing volatility, you know, but it’s through our ongoing coaching and our ongoing educational process that more times than not, I believe really helps people kind of, you know, you know, just, you know, stay the course and that’s really what it boils down to. You know, I believe I always have believed and I always will. I mean the equity markets the stock market is simply the greatest wealth creation vehicle that You can find greater much superior than I believe in real estate, but you’ve got to stay in the game to be able to achieve those returns and to be able to accomplish what your goals and objectives are.

 

Ryan Fleming  15:11

Yeah, and with a compare and comparison to real estate, you have a much more liquidity, you have a lot more risk that spread out, you don’t have one or two or five or 10 properties, you have 30,000 Different equity positions that you might have all around the world, and 42 countries and it’s liquid, I mean, you have the ability to buy in and, and sell out anytime you want with the way markets are,

 

Lee Hyder  15:31

you know, the funny thing I guess you’d be if you if you think about the difference between the equity markets and real estate markets, you know, you may have, you may have multiple rental properties, but just because the market crashes, like in 2008, you’re not selling your rental properties at a loss, you know, so for some reason, I think it’s the ability to exit the market quickly, which plays into people’s emotional hands to kind of get out of the market. And I think if I think if it was tougher to get out of the market, you know, people in the long term would be much better off. And, you know, like in real estate, I mean, people who stayed the course are in great shape today. And same thing in the market. I mean, you know, if you stay the course, his history proves out, you’re gonna be you’re gonna be fine. Well,

 

Ryan Fleming  16:12

I think that I’ve never really thought about it that way. So basically, you’re saying with real estate, the barriers to get out are still great, it’s much harder to sell that property and move on, versus the equity markets. And so no different than we always talk about it’s emotion, people are their own worst enemy. And so that liquidity is actually a bad thing. And it

 

Lee Hyder  16:32

gets, and it gets even worse today, when people are doing their own online financial planning. I mean, with one click of a mouse button, you can destroy your portfolio under the auspices of protecting yourself, you can’t do that in real estate.

 

Ryan Fleming  16:45

Yeah, it’s a very interesting point. And I would argue that that’s why you need a financial adviser talking to you off that ledge, because I get it all the time where a client will come to me asking a question or trying to take a loan against her 401k. And I’m like, Ah, that’s for retirement, you know. But if you have to take a loan to go get that next toy, out of your 401 K plan, it might not be time to get that toy, or that next airplane or boat or whatever it might be for a pilot. One of the points that you brought up, you brought up the point of volatility. And I know you know this, but I think it’s a good conversation piece. That volatility. Of course, we all love the volatility on the upside, we don’t like the volatility on the downside. But that volatility in the market is actually how we get our returns. That’s how we get and it’s so different than the risk versus reward, right, you got to take some risk, you got to have your money in the market, and you’re not going to get any of that reward. Yeah,

 

Lee Hyder  17:38

it’s funny, though, that people don’t equate the upside return as volatility. They, they, they, they simply think when the market goes up, that’s kind of what it’s supposed to do. And when the market goes down, there’s something wrong, there’s something, something I need to adjust, I need to make a change it is the volatility of the market is what creates the return or else everything would stay stagnant along the way, and nobody would be investing in anything.

 

Ryan Fleming  18:03

Yeah. And I think that’s a great point just to see. And I would imagine that a lot of the emotion that’s played in with a lot of investors too, is just the lack of understanding on how the market works. If you don’t understand something, or don’t understand the strategy of what we’re doing, it would make it harder to sleep at night and be be, you know, peacefully asleep, knowing that your money was doing what it’s supposed to be doing. And it’s

 

Lee Hyder  18:26

not only that, I think today, we’re in an area of information overload. You know, I mean, you know, it wasn’t long ago that you basically had a six o’clock and an 11 o’clock news. And you had a half an hour, and that was basically it. And you you didn’t know anything until the next morning or the next evening news today. I mean, you’re getting text message alerts, you’re checking your portfolio, I mean, the information I really believe is ultimately doing a disservice for people because it kind of creates, fear it, it just builds in that sense of, maybe I need to do something, maybe I need to buy more, maybe I need to buy less, maybe I need to get out of the market altogether. And, you know, my advice to most of my clients, you know, when they may be having trouble, you know, getting on our website, looking at the website, what have you. So that’s really a great thing. Because you know what, don’t worry about it. It’s doing exactly what it needs to do. And there’s nothing you can do on your computer that’s going to change it well.

 

Ryan Fleming  19:21

And absolutely, and if we wanted to talk about an ideal client, and I’d love you to weigh in on this, my ideal clients, a guy that trust what we’re doing, maybe checks it every couple months, maybe, and goes oh, well, thanks. That’s awesome. Things are going really great. And then we also have that client that you know, they’re on it every single day because no matter what happens there, shoot you a text or some other comment about what’s going on in the market. And I feel bad for that person. I feel like it’s my job. It’s my job to always find a better way or a cheaper way to invest your money. And you know to get those returns we’re looking for that’s my job as a fiduciary but trust me with my job and go have that Margarita and go live life. I I feel bad for the guy that’s in retirement that’s on his phone every single day watching every little tick up and down in their portfolio. And it shows by their level of stress, I

 

Lee Hyder  20:10

feel worse for that client who comes into my office, maybe for the first meeting with a spreadsheet longer than my conference table. And these people are tracking I mean, literally every day, the ups and downs and, and trade confirmations. I mean, the whole reason you go to a financial advisor, I would hope is that you really want to enjoy your life, you want to you want to have time with the family have time planning your retirement, you don’t want to become a slave to your portfolio, you don’t want to become a slave to any kind of newsletter or magazine, you find somebody you trust, you know, you certainly do your homework to be sure that he or she is the right person. And you basically I hate to use the word but you surrender to them, you know? Now, again, there’s a big difference in surrendering and just being blind. But the fact is, you don’t need to be looking at your portfolio on a daily basis. I mean, to be very candid with you. I mean, there are many, many months that go by that I don’t even look at my statement. I mean, I you know, I look at my mail, I see I’ve got my statements from Schwab, you know, I opened them up, and I put them away. But I mean, it’s just not what you as a single investor need to be doing with your time. I

 

Ryan Fleming  21:17

absolutely agree with that. And I think it’s important to step away and, and I find those that do over the long term, because I get to see all those different clients, the ones that haven’t made those mistakes, haven’t made, those emotional decisions tend to have a lot more money at retirement and those that have done, the speculating and the gambling and the market timing and the track record investing and all those things that we talk about,

 

Lee Hyder  21:39

you know, what, when it goes back to expectations, and I think I’ve said this on many of your podcasts before, but it’s really a foundational belief that I have, look, you know, I tell my clients from the beginning that, you know, the market is going to do two things, it’s going to create periods of fear. And it’s going to create periods of jubilation, where you’re really excited. And we don’t know which ones coming next, we don’t know which one’s going to last longer. But I tell them that, you know, we live in Northeast Ohio, and during the winter months, you can look outside most of our windows, and you’re gonna see trees that don’t have the leaves on them. And to the average person, they kind of look dead, but you don’t cut them down, you know, they’re simply going through a season. Now, occasionally, let’s take a fruit tree, it may go through a season and the next year, it may not produce as many apples as you would like, but you don’t cut it down. Because you know, it’s simply a temporary thing. A year later, two years later, all of a sudden, the apples are riper, redder than they’ve ever been before. And it’s the same thing with your portfolio, you don’t dump a portfolio, you don’t make a change just because it’s down. It’s going through a momentary lull season, and it will pass.

 

Ryan Fleming  22:46

I think that’s a great way to end our podcast. And I have a couple things to add to that. Because you know, we engineer a portfolio to handle the ups and downs of the market. That’s why it’s engineered the way it is. And I can’t control the market, I can’t control the market going up, I can’t control the market going down. All I can control is your exposure to the market and your actions to make sure you don’t make mistakes. And we have a individual that we listen to for a long time. And he said it the best way he goes, I don’t know if the next 20% up or down. Nobody does. I have no clue. But I know that the next 100% is up, because it always is. And I think if you follow that mentality, you’re going to win. And that’s what we want to do is create a bunch of winners. Leave what else you got for us before we say goodbye. I want to get back on vacation.

 

Lee Hyder  23:31

I assume the reason you’re ending the podcast is not because you feel that we’ve given this subject everything that needs to be spoken about. But I assume as I look on the clock, It’s almost lunchtime. And we all know what lunchtime on a cruise ship mean. So Have yourself a great day. Great time with your family. And I look forward to maybe sharing some conversation with you in the near future.

 

Ryan Fleming  23:50

Just remember it’s five o’clock somewhere. I’m looking for that cocktail, not the buffet.

 

Lee Hyder  23:55

There you go. Have you had a vacation with the family.

 

Ryan Fleming  23:58

Hey Lee, thanks as always, and we’ll see you next time. Take care