In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, dives into the art of decision-making and how honing this skill can elevate your financial and personal life. Drawing parallels between the decisiveness needed in investing and the permanence of tattoos, Darryl shares practical tips to help listeners approach life’s toughest choices with a thoughtful and deliberate mindset.
Key highlights of the episode include:
● The distinction between decisiveness and impulsiveness – and how to avoid costly mistakes.
● Why setting the right mental stage (including adequate sleep and a clear mind) is crucial for sound investment decisions.
● The importance of asking better questions to uncover deeper insights for your financial strategy.
● Insights from Jim Collins’ Good to Great: quoting “Fire bullets, not cannons” for measured, thoughtful decision-making.
● The risks of overconfidence in investments, including myths about the U.S. dollar and diversification strategies.
● How to measure and manage downside risk effectively using tools like Monte Carlo analyses and structured products.
For more insights and to explore how PAX Financial Group can guide you on your financial journey, visit http://www.PAXFinancialGroup.com. If you enjoyed this episode, share it with someone who could benefit!
Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. And also, I want to remind you, if you’re not a client of PAX, all good, but if you want to be, at least kick the tires.
There’s a Connect with Us button on the website and you’ll get a 15-minute consultation with an advisor. It can be over the phone. It can be through zoom, it can be in person, but it’s just to see if it’s a good fit. So that’s just a kind of a non-threatening way to just see if we could work together and help you guys.
So, I want to talk a little bit about decision making today. The idea of being decisive is very attractive to me. And it’s not one, it seems to be more fluid for some people than others. But if you study it a bit, you recognize that there’s this, it’s like a muscle. And people who are decisive have worked out that muscle over the years.
And so how does how does somebody become decisive? And there’s good content and research out there. And I’m going to take a lot from some, some research and I’ll reference the book that I used in the show notes. But I mean, wouldn’t it be nice to be more decisive, like some, some of you guys like.
No, that’s easy for me. Well, there’s one thing about being decisive. And then there’s another being impulsive. And so, there’s something different. And so, when I say decisive, I’m saying, you know, being able to process a lot of sometimes conflicting information and then making a decision and then moving forward. And so, I want to talk about that construct.
And then I thought about it a little bit more, and I go, you know, I really want to share it with, our community, the idea of being decisive because I think it has some elements that translate very well to your investing experience. But also, I thought who do I know in the world that is, decisive as a group of people.
And of course, you’re thinking about things like age groups, demographics and all that. So, you know who the decisive group of people is. People who get tattoos. They’re decisive. Now, I just want to share with you I wanted to I want to tell you how many tattoos I have, but I’m going to I’ll tell you at the end of the show, but I want to talk about being decisive when it comes to your investments, and I actually want to relay that to the tattoo world.
I think I was at Schlitterbahn. I didn’t go this summer, but the previous summer, if you had been to Schlitterbahn in New Braunfels, it’s the best water park in the entire world. But if you go just so you know, you’re going to see a lot of tattoos on people that probably should have them removed. And that’s the interesting thing about tattoos.
45,000 people and this is 2013 data had their tattoos removed. So yeah, they were decisive, but ultimately, they regretted it. And the question that you have to ask is when did they regret it? Like immediately. Probably not. Maybe. But most people regret it. And about two years after they get a tattoo, and actually, statistically, 1 in 4 Americans admit to regretting at least one of their tattoos.
So yes, they were decisive, but very impulsive. So, let’s talk about how we can differentiate the two. So, number one, I think it’s important that we set the stage for decision making. And setting the stage actually is interesting relative to tattoos because many people get tattoos after breakup, but about 20% of people actually get tattoos under the influence, usually alcohol.
And so, I think when it comes to making investment decisions, a lot of you guys are not subject to this, but I think it’s worth mentioning, having the right mental makeup for making good investment decisions really has to be in place. That includes sleep. That includes being sober. I’ve always said, high emotion leads to a low financial IQ, and it reminds me of mixing those two together, high emotion and financial decisions is like mixing orange juice and toothpaste.
It just doesn’t work. And yes, over the years I’ve actually I mean, we’ve been doing this a long time, seeing a lot of clients over the years. Yes, we’ve gotten some client calls where we were not 100% sure those clients were actually sober. And we try to work with them through that. But my main point is that when we make investment decisions, it’s adequate sleep, low emotion, and of course, sober minded.
The second thing I want to talk about, setting the stage that may be easy for you to do is just to be sober minded and cerebral. But I think the next thing we have got to do is just ask the right questions. And sometimes we just don’t know that I was we don’t know the right questions to ask.
The other day, I was buying insurance. And I asked the question. I was just kind of stuck. I was like, no, it wasn’t insurance. Excuse me. It was a new phone. I had to get a new phone. And I was asking about the, the offer that AT&T was giving us. And I was stuck. And I just asked the guy, are there any questions that I should be asking you that I haven’t asked?
And honestly, that’s one that I pull out of my toolbox from time to time. But that’s a good question to ask. And I think often times we just don’t know what questions to ask. And you know what I love in today’s economy? And I want you to start leveraging it like ChatGPT like go in there and say, what questions should I ask about investments?
I really feel that if we get better at asking the right questions, we’ll be able to make better decisions. And sometimes we just don’t know what questions to ask. There is, I’m sending, one son in college, and so my daughter is going to college in about a year and a half, and I was navigating some information on various sites, and there was one site that gave good questions about college and the question that I thought was good was not, is this the right college?
But what life do I want and what college can help me get there? Now, asking a 17-year-old that question is a deep question, but I think it is a better question then is this the right college? The better question is what life do I want and what college will help me get there? And that’s part of the investment process too.
What retirement do I want and what investment strategy will help me get there or what? Whatever the case is, it’s just asking better questions. And if you have a financial advisor, I think the question is appropriate. What question should I have asked that I didn’t ask? And so how do we get better at asking questions? And I do find over the years that those people that are doing well with money, life and business, just ask better questions.
Okay. The next one, I think in terms of framing your decision-making process, to learn to be more decisive is from Jim Collins’ work. Jim Collins is one of the great business minds of our generation, and he wrote Good to Great. And he says fire bullets, not cannons, meaning in a tattoo sense, you know, maybe get one before you get your whole arm, you know, see how it goes.
And that’s the same thing when it comes to investments. And I think it’s important in today’s economic environment to think about how the market has gone up and the prices of many stocks, not all of them are expensive. I was just talking to an analyst for a few weeks. A few minutes ago. And we were talking about how stocks are expensive in the technology space, but not in the health care space.
But many of us are thinking, okay, I’ve got cash on the sidelines, I’m going to move into the market. But I’m scared. Well, fire bullets, not cannons. Dollar cost average into the market. In other words, let’s say you’ve got $500,000 you want to invest, but the market you’re waiting for, and I’m using air quotes. You’re waiting for the right time rather than trying to figure out the right time, because no one really knows.
Put 100,000 in in January put 100,000 in February. Dollar cost average until it gets all in, make it unemotional. Fire bullets, not cannons or in a tattoo analogy. Maybe get one before you get your whole body. Okay, so then I think that we ask, you know, I think the idea about being decisive is a matter of confidence, but it’s definitely not overconfidence.
And as you would imagine in a tattoo analogy, you know, just having this conviction that everyone’s going to like it. And the reality is, there’s still plenty of people in the world today, right or wrong, that still find tattoos repulsive. And so, you have to consider the audience and maybe even future job interviews.
But this idea of being overconfident, this hubris, does exist. We all have it to a certain degree. We may have this conviction that the market’s going to go up, or we have this conviction that the market’s going to crash. And the reality is it’s probably somewhere in between. But I see this overconfidence in one specific arena that’s pretty much been on the surface for about five years now, maybe even longer.
And that’s that the US dollar is going to crash, right? Yeah. You’ve heard this. The U.S. dollar is going to crash. I’m not saying it’s going to. I’m saying that’s what people have said for a number of years. And in 2024, the US dollar again was the strongest currency against its peer group. And I’ll put some data, I’ll put some data in the show notes.
But Mitch Zacks, he’s a portfolio manager. He says it’s very likely that the US dollar will continue to do well. The United States has strong growth, foreign investment, a reasonable risk profile for the return. You get pro-growth policies. I mean, we lead the world in patents. The list goes on and on. Why the US dollar likely won’t crash, but still, there’s this huge group of people that are extremely overconfident that the US dollar is going to crash.
And so, that’s where the idea of diversification plays a key role, where you’re not making a bet one way or another, you’re spreading it out, and over time you’re going to have some investments in your portfolio win and some lose. But the people who have this overconfidence tend to shift all of their money. Maybe one day they’ll be right.
But so far in the last 4 or 5 years, they’ve been dead wrong. Okay, so the last one I want to articulate when it comes to being decisive is to absolutely measure the downside. I really find that this is the skill that most successful businesspeople in the you know, I love to study leadership. I love to study businesses.
And I find that many of the decisive people measure the downside. And then they go, they measure the downside, and then they go. And I think that you can do that well with your investments because there’s different tools now that you can measure downside. So, if you haven’t run this tool with an advisor or you can probably do it online, it’s called a Monte Carlo analysis.
And it looks at the probability of failures. And so, it really gets this objective, quantifiable methodology that identifies the degree of potential risks that may exist in the construction of your portfolio. And so, you can measure the downside pretty well now. And it’s not again, it’s not a crystal ball. So, it doesn’t know the future. But based on historical data you could look at your portfolio and say, okay, it looks like the potential downside is 20% okay.
I can tolerate that. Or the other thing is we’ve been doing this a lot is the structured products, which actually manages the downside. If you haven’t talked with your advisor about structured products, they’re a way to be able to have exposure to certain markets and also manage the downside through specific contracts. They’re very unique. I’ve done a podcast on them before, but if you haven’t talked to the advisor, talk to your advisor about it because it’s a way to manage your downside.
And so, when you manage your downside, the best, most decisive people have that downside risk in context. And then they go and then they go. They go into optimism mode. They don’t keep worrying about it. They’re like, I’ve already managed the downside. I’ve already measured the downside. They go with optimism. That’s what decisive people do. So decisive people are unique.
But I think anybody can be decisive in that context. You know, setting the stage, asking the right questions, firing bullets, not cannons. Don’t be overconfident and then measure the downside and go. Now, I heard a story recently about a tattoo artist. I believe this to be true, but the tattoo artist said, actually, in the conversation, the customer started the conversation.
Immediately after the tattoo was done, the customer asked the tattoo artist. So how long before this washes off? And the tattoo artist said, haha, funny, I hear that one a lot. The customer is still staring at the tattoo artist, like dead serious. Then the tattoo artist says, well, it doesn’t, it’s permanent. And the customer says permanent. Like, like a month.
And the tattoo artist says, dude, are you being for real? Tattoos are forever. They don’t wash off. Why do you think it hurts so much? And there was blood. That was blood, not red ink. Please tell me you’re joking. No, you tell me you’re joking. You never said it was permanent. Do you need to be told that water is wet?
What does that have to do with anything? This is apparently a true story. And the tattoo artist thought he was trying to get out of pain. But no, he was really ignorant. And so, at that point, the tattoo artist had to explain what laser removal was and scratch his head. And so, I said, do I need to start putting a sign on the door that says tattoos are permanent?
So, the last thing I’ll say about being decisive that I think is, one of the most important elements of being decisive. And actually, if you study public speaking enough, it’s the most important element to public speaking. And that’s just being prepared and doing your homework. And so, out of all the attributes of decisiveness that I gave you today, that one could be the most important.
And when it comes to investing, I think that many of us have room to improve. And I’m trying to improve myself all the time. And even in our investment experience, we have room to improve. And so, I think if you follow this framework and continue to build those decisive muscles, I think you’re going to find the outcome to be better in your invest investing and frankly, business in life will as well.
Thank you very much for hanging with me today. And remember, you think different when you think long term. Have a great day.
Resources:
Mitch on the Markets The Strong Dollar’s Impact on Markets and Economy in 2025
Decisive: How to Make Better Choices in Life and Work
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