Billy Peterson: Wealth Management and Happiness

Author(s): Scott Douglas Jacobsen

Publication (Outlet/Website): The Good Men Project

Publication Date (yyyy/mm/dd): 2024/12/12

Billy Peterson is a seasoned author, world champion jockey, and successful financial advisor. His latest book, From the Starting Gate: The Winning Strategies for Wealth, Health, and Happiness, provides readers with actionable advice on wealth-building and holistic well-being. As the founder of Peterson Wealth Services, managing $425 million in assets for over 400 clients, Peterson is a trusted voice in financial education. His podcast, Harnessing Your Wealth, further showcases his expertise, especially in navigating economic uncertainty. His career journey from racetrack success to financial freedom serves as the foundation for his motivational and insightful works.

Peterson discussed the importance of financial literacy and long-term investment strategies, discouraging speculation, especially with cryptocurrencies. He highlighted the connection between financial well-being and health, arguing that financial stress can lead to chronic conditions. Peterson encouraged avoiding unnecessary expenses, focusing on investing in established businesses, and staying patient during market downturns, using historical examples like Walmart’s growth to illustrate the potential benefits of disciplined investing.

Scott Douglas Jacobsen: So today, we’re here with Billy Peterson. We’ll be discussing From the Starting Gate. You’re an expert in wealth and wealth management, and many people typically associate financial well-being with some level of happiness. With this latest work, let’s start with an overview. What message are you trying to convey to your audience regarding wealth management and its connection to happiness?

Billy Peterson: Thanks for having me, Scott. My background is in financial services. I’ve spent 28 years helping people manage and build wealth—accumulating and preserving it. Over the years, I’ve learned that most people don’t understand the basic tenets of financial literacy. It’s not something that’s widely taught in schools. We learn more about math, art, or social sciences than we do about managing money, which we all need to deal with throughout our lives.

Financial well-being significantly impacts every area of our lives. It has a significant influence on our happiness and health outcomes. If we’re constantly worried, anxious, and stressed over making ends meet, affording necessities, or dealing with massive debt—issues many people face today—that stress can take a toll on our health. This is common knowledge, but it’s not as present in our everyday awareness as it should be. People tend to brush it off, saying, “Yes, I get it,” but they don’t fully grasp how closely it’s tied to the rise in diseases and chronic conditions in our society.

Most people want to attribute these conditions to something tangible—something they can see, touch, or study in a lab. But there’s no definitive study for how the mind regulates the body, partly because we don’t fully understand how the mind operates, and it varies from person to person. Some doctors are beginning to recognize this, and it goes back to Freud’s work on the levels of the mind, especially the subconscious. When we’re in a state of fear, anxiety, and stress—whether about money or other things—it affects how our body functions and the chemicals produced within us.

Too much of these negative chemicals can lead to disease and chronic pain. These factors heavily influenced why I wrote this book. I’ve had extensive experience in these areas, and one key principle I emphasize is avoiding speculation and understanding true investment. I view speculation as a high-risk investment—something to avoid.

Jacobsen: So why should people avoid speculation, and what should they understand about long-term investment strategies?

Peterson: That’s a great question. Humans are herd animals. We stay in groups and follow what others are doing, especially if it works. But in doing so, we often repeat the same mistakes repeatedly.

A great book called Devil Take the Hindmost delves into the manias and speculative periods throughout hundreds of years of human history. We look back on these events and think, “How could people have been so foolish?” Yet, we continue to see the same patterns repeated time and time.

We’re living it right now with everything happening—speculation and cryptocurrencies. Hundreds of thousands of cryptos exist, and everybody has a different take on them, such as developing a new coin. You can’t touch, feel, or see but buy it because people want it. Now, what is it going to give you? What utility does it offer? All it is is hoping that someone else will want it more than you do. That’s 100% what it is. It’s supposed to be a currency. It’s supposed to have a limited supply.

And, of course, I know Bitcoin is a big deal, and it’s here to stay—everyone’s talking about it. It’s everywhere. Governments even own it. So it’s become a normal part of our society. However, I ask this: when the proverbial shit hits the fan, what do people want? They want to get their hands back on their cash. They want their money in their hands.

People ask me, “How will that work when we have a major economic collapse?” And sooner or later, that’ll happen—another recession. How are they going to grab all their money? What’s happening to Bitcoin? Where do you get it? You can’t. It’s supposedly in your account, in some digital storage vault.

I understand the technology is there, and I understand it’s cool. But people are speculating on it. They don’t use it as a currency; they’re trying to use it as an investment.

Now, go back and study something as goofy as it sounds—tulip bulb mania. This happened way back in the 1600s during the Dutch Golden Age. The Dutch people were so fascinated with tulip bulbs that they invested their entire life savings. This is common knowledge, a historical fact. People lost everything. But for decades, people were investing in tulip bulbs, and it became so normal that tulip bulbs were worth more than any coins in their pocket or whatever currency they were using at the time.

People were speculating on what those bulbs would become as they flowered. Tulip bulbs are the best equivalent of owning a home in today’s society. Think about how silly that sounds now. But I’m telling you, 100 years from now, people will look back and say, “What in the hell were people doing with this crypto stuff? What were they thinking?” I don’t know what will bring this craze back to reality, but there is so much speculation in our society. I’ve been in this industry for 28 years and have never seen anything like this.

The point is that people are in this mindset that they can retire easily—no work, patience, or discipline. They think they can roll the dice, throw money into the right crypto, and, bam, they’ll retire as multimillionaires. I see it so often, and I’m telling you, this will end badly—just like all the other manias did.

Another factor that needs to be discussed more is government involvement in cryptocurrencies. Governments want to know how much money is in the system, where it’s going, and how to trace it.

Jacobsen: Governments may crack down on cryptocurrency, even though some are involved. Do you see that as potentially one of the factors that could “bring things down to earth” for this mania?

Peterson: Good question. I look at it like this. I always apply common sense to these things because people, especially in the media, often make the rest of us seem out of touch, uneducated, or not up with the times. They did the same thing with the real estate boom and bust. They did the same thing with dot-com stocks in the 2000s—if you can recall that—when tech and Internet stocks skyrocketed. Warren Buffett, one of the most famous investors in our history, shunned those investments. He told people to stay away from them because there were no earnings behind those companies.

They did the same thing to him, saying, “He doesn’t get it. The older man doesn’t understand. This is a different scenario.” And yet, most of those companies went to zero. A few survived and are doing well now, but that’s the same thing I’m saying about what might happen to cryptocurrencies. Something is going to trip the switch. Something will pull one of the cards out of this deck, and they’re all starting to crumble. We are still determining exactly what it’ll be, but it could be government intervention.

When I talk about common sense, do you think any government would want its currency overtaken by a digital currency that everyone preferred over, say, the U.S. dollar? What would happen to our government if the U.S. dollar became second tier to Bitcoin? The whole premise behind Bitcoin is that people don’t want government intervention. They don’t want the government to manipulate it. And in some ways, I agree. Our government has screwed up many things they should’ve kept their hands out of. Government, by and large, tends to mess up more than they help in many areas. The proverbial bias: and yes, I’ll admit that.

Jacobsen: Yes, I understand. This might be a different focus of our conversation, but it’s something on many people’s minds. This is an open space for free-ranging conversation. It was meant to be focused, but I always wonder how these will necessarily turn out. That’s part of the fun—this is a relaxed, authentic space. 

So, let’s say people are anxious. They come to you because they know your background—you’ve written books and know you’re a financial expert. You’ve been managing wealth for clients with portfolios that can reach nine figures. The number I was given recently was $425 million.

To regular people, that number is almost incomprehensible. It’s so large that it doesn’t have a grounding—it’s hard to compare to real-life situations. So, how do you pitch to people to invest in the long term and have patience so their future selves can be less anxious and better prepared for the inevitable storms of life?

Peterson: Scott, I was given this opportunity. Everyone has a role in life. When people find their passion and love what they do, they often want to help others—not just benefit themselves. I have benefited greatly from what I do, which is helping people create, sustain, and enjoy wealth and do the right thing with it.

But I didn’t just stumble into this. My career began because of one pivotal moment when I was 14. I grew up—and still live—in the same small town. It’s primarily a farming community. My dad is a farmer; his dad was a farmer, and his dad was before him.

Everyone in my family farms or ranches. They know how to work with the land and animals. We’d go to the coffee shop every afternoon, and all the local farmers would be there. I went with my dad every day at 4 o’clock. By then, I had already started my career as a jockey. I was exercising horses, riding in races, and winning money.

For a 14-year-old back in those days, I was doing pretty well, but I didn’t fully realize it. I thought I was working hard and making good money for my age. Then, one day, an older gentleman, who surprised me, asked, “Billy, what are you doing with your money? You’re doing pretty well.”

I was proud to tell him I was putting most of it in the bank. But he said, “That might not be the best thing to do.” I looked at him and asked, “What do you mean, Mr. Tucker?” He said, “Come back here tomorrow, and I’ll explain.”

So, I thought about it. I did. The next day, I sat there while the usual conversations about politics, sports, and the country’s state went on, hoping he would remember. Sure enough, he did. He said, “Now sit down here next to me.”

He opened the newspaper—newspapers were a big deal back then. I still read the physical papers. He opened the finance section and scrolled down to the mutual fund section. He circled one and said, “This is a mutual fund.” I didn’t know what a mutual fund was, but he explained it to me in layperson’s terms—terms a rancher could understand.

He said, “This is an investment company that will take your money and invest it for you. All you need to do is sit back and be patient. Keep adding to it if you can.” He gave me an investment application form and told me to fill it out, send in some money, and, most importantly, check the box that says, ‘I want to contribute every month.’

So, I did. I submitted my application for $1,000 and checked the box to add $100 monthly. At that age, it was a big commitment, but I knew I could do it. And I did.

Then, I became passionate because I was watching my money grow. As the years passed and my contributions increased, people started asking me what I was doing. I studied and read the Wall Street Journal instead of some comic books.

I was reading things that enlightened me about the world, investing, and how capital markets work. So, when I went to college, I studied finance and economics. At the same time, I was still a professional racehorse jockey. People in the industry started asking me how I managed my investments and what I was doing.

I began helping them, and it became a natural fit for me. It might not seem that way at first glance—a jockey becoming a financial advisor—but that’s how it transpired. I found my calling and realized it wasn’t so difficult. I didn’t have to work physically hard; I could invest in great companies, support their growth, and make money while they built their businesses, created more earnings, and did good things for the economy.

That’s the story of how I started investing. It’s not hard—you have to begin and not be afraid when things get bad. That’s actually when you should increase your contributions. I still teach that to students today.

I run a free boot camp where I teach 500 students every year. I bring them to a local university, and along with my staff and other volunteers, we spend a full day teaching high school students about financial literacy, debt avoidance, taxes, and much more. That’s my way of giving back because Mr. Tucker shared his knowledge with me. I am obligated to pass that knowledge on to many people.

Jacobsen: To your point about being both a jockey and a financial advisor—that’s not so unusual. I once worked at a show jumping farm owned and run by a former Olympic show jumper for Canada. They trained Tiffany Foster when she was younger—she’s an excellent show jumper from Canada. Many people at that farm were business professionals in fashion, law, and more.

So, you find people in various professions who also engage in equestrian activities, whether for recreation or competition. Tiffany is involved in some fashion or decor-related business, too. Horse people are dynamic.

Although horse racing differs from show jumping or dressage.

Peterson: there are many disciplines within the equestrian world. You’d be amazed at the various avenues and offshoots you can explore with horses.

Jacobsen: If you talk to show jumpers about three-day eventing, they’ll say, “It’s crazy.”

Peterson: No kidding. We’re going to the Breeders’ Cup races in Del Mar, California, in a few weeks. People worldwide—the Sheikhs, the kings and queens, and the wealthiest individuals—will attend. This is called the sport of kings for a reason. The best horses and the most influential people worldwide will gather in Del Mar for those two days of races.

Jacobsen: It’s wild, especially with people like His Highness from the UAE—he loves horses. And Canada had just one gold medalist in show jumping, Eric Lamaze.

But when you look at these life stories, it’s a roller coaster. You get much drama. It could fill volumes of books. That’s off-topic.

What is the most significant state of mind people should have when investing long-term or for financial stability? How can they lower their anxiety and avoid stress-related illnesses caused by financial despair?

Peterson: That’s a great question. It’s tough. Too many people have the mindset that they can’t afford to invest. That’s very shortsighted. You can afford to invest if you prioritize it in your budget. You have to cut back on certain things. Skip that $6 latte today, or resist the temptation to stop at the convenience store and spend $20 on snacks for the kids. It happens so often.

It’s so easy to spend money these days. You can tap your phone—you don’t have to think about it. You don’t have to pull out cash, which is much harder to part with. But when you’re tapping your phone, it feels like, “I’ll deal with that later, no big deal.” So we run up debt. We have more consumer credit card debt in this country than ever. It’s scary. And I understand the big reason is inflation.

We’ve had crazy inflation in the last few years, and the numbers they report don’t reflect the true picture. They say costs have risen 20% over the last four years, but that’s inaccurate. The real numbers are closer to 40% or 50% for daily necessities.

Wages haven’t kept up with inflation, so real wages are lower than before. But that doesn’t mean you can’t invest a certain percentage of your income. Always pay yourself first. And when you invest, don’t chase something that sounds too good to be true. So many people have lost everything trying to get rich quickly, thinking it will happen overnight. Investing is easy, but it takes time to build wealth.

What makes it meaningful is that you’re in it for the long haul. It’s like starting a business. I admire and respect entrepreneurs—they become some of the wealthiest people in the world. However, not everyone has the desire or the capacity to handle the stress, worry, and time it takes to build a successful business.

So why not buy into a business that’s already established? Most people don’t even realize that’s possible—that’s what the stock market is—the capital markets. But when people hear “stock market,” they think it’s a gamble, like going to Vegas.

Peterson: That’s not at all what it is. The market is where you can buy shares of any publicly traded company or sell them whenever you want, which is great because you can get your money back quickly. However, that’s also one of the biggest pitfalls for people. When the news gets scary, they listen to those around them—especially the goofballs on TV—who say the world is ending or the sky is falling. So, they panic and want to pull their money out quickly. The market has already dropped, and they sell when they should be doing the opposite.

They should be buying—buy when things are down, and the news is the worst. That’s when you can get great companies at deeply discounted prices. Some top companies in our models and portfolios include Apple, Costco, Home Depot, Amazon, NVIDIA, and Tesla. These are strong companies with great business models and barriers to entry.

Let me give you a quick example with Walmart. It’s a “boring” company, one most people have shopped at at some point. If you had bought 100 shares of Walmart when it went public in 1972, at the initial public offering price of $16.50 per share, you’d have invested $1,650. If you had just forgotten about that investment, today, those 100 shares would be worth more than $36 million, and you’d receive nearly $500,000 in dividends annually.

And this isn’t even one of the craziest growth stories in history—this is a boring company selling discounted goods. But that’s the power of capital markets. You don’t have to create the business yourself—you can invest alongside great companies and become wealthy.

Jacobsen: Thank you so much for your time today. I appreciate it.

Peterson: Absolutely. Have a good day.

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