380: Investing Through the Eyes of a Fighter Pilot

Buck: Welcome back to the show, everyone, today. My guest on Wealth from your podcast is Hazzard Lee. He’s a fighter pilot, author and speaker and the author of The Art of Clear Thinking Stealth Fighters Pilots Timeless Rules for Making Tough Decisions. HAZZARD Welcome to the program.

Hasard: Thanks for having me on.

Buck: So you are you have a pretty distinguished background. I mean, I think you, from my understanding, are kind of like, you know, when you talk about Top Gun and everybody’s seen, you know, Top Gun movies and all that, you were sort of the top gun of the top guns. Right? You were kind of like the Tom Cruise character. Is that right?

Hasard: I wouldn’t say that. So I’m a you know, I’d say an average fighter pilot got a chance to fly some awesome jets, the F 16, F 35 plus, you know, we’re Air Force. So we tend to to rag on the Navy quite a bit.

Buck: Oh, okay. Got it. So you do want to be associated with the Navy types.

Hasard: Now, and especially since my brother’s an F-18 pilot. So we go back and forth quite a bit.

Buck: Got it. Got it. So what you know, what do you think in terms of your I guess the question is, you know, what was that like and how do you how did you kind of come how did you how did you frame that when you ultimately ended up writing this book? I mean, you must have realized at some point that you were doing things systematically and that you could actually package it up in it for people to potentially use for other decision making processes.

Hasard: Yeah, that’s right. So as a fighter, really, if you boil down my job, you know, go past Top Gun, it’s just making decisions. So when we fly, we’re making thousands of decisions each flight, often with incomplete information and lives on the line. So you really need somebody who is a great decision maker in the cockpit. And the reason is because that we are leveraging technology.

So I’m sitting in this tub of technology that allows me to do a thousand times more than I could do on my own so I can fly 100 times faster than I could run. I can carry far more. I can see out to the horizon. So it’s it’s highly leveraged. Each decision you’re making can impact the battlefield quite a bit and just a for ship for 30 today.

I mean, each jet’s about $100 million. The helmets we wear are about $400,000 apiece. True. Augmented reality. So it’s putting circles and diamonds over all the the good and bad guys out there. So you can do a lot from the cockpit. But the way I frame the book is that we’re all like that right now. So the phone you have in your pocket, it can do the job of dozens of people from just a few years ago. Same thing with your computer, with your phone. So all the decisions that we’re making are highly leveraged now. And a way to look at that is through our energy consumption. The average human only burns about 90 watts of electricity, and yet our consumption is 12,000 watts. That’s powering the technology, that’s leveraging the decisions we’re making. And with AI on the rise, it’s only getting better or worse, depending on how you look at it.

And right now there are reports out of Silicon Valley that the next billion dollar company will be run by three or fewer people because of AI. So $1,000,000,000 company from 100 years ago that would have taken hundreds of thousands of people from a few decades ago, just a few thousand people. And now three people will be in charge of $1,000,000,000. And that’s you know, that’s a lot of leverage to each one of those decision makers.

Buck: Yeah. So let’s talk a little bit about some of the points that you make in your book. So you talk about clear thinking and how clear thinking may be more valuable than raw intelligence. Do you want to make the if you want to talk a little bit about that, make that distinction?

Hasard: Yeah, I think I think we all kind of know that from an intuitive level that more information does not necessarily mean that you’re able to understand the world better. So I think the reason we learn these mental models is to be able to predict the future. So you’re no matter what you’re trying to do, you’re trying to predict the future, especially in your line of work with investing.

Hasard: You’re trying to see what’s going to maximize your dollar. And so I think just because you have more information doesn’t mean you’re necessarily thinking clearer. And that’s a big problem today. There’s there’s far more information now out there with the Internet, with social media. And there has been in the past and we’re all inundated with we’re far more than we can absorb. And that’s something we experience as fighter pilots. We have a lot of information coming in at us, and we have to to narrow down our field of view through what’s known as a cross-check, focusing on the few variables out there that make a a larger return on investment than than what they might first appear.

Buck: What is the ace helix and how can regular people apply that ace helix to their decision making?

Hasard: So ace helix is the way. It’s a framework that we use for making decisions. So growing up, I think I’m like a lot of people didn’t learn any kind of theory on decision making. It’s not taught in most schools and the Air Force has done a pretty incredible job. They’ll take somebody who’s never flown before and within just a couple of years they’ll be flying combat missions on the other side of the world. And I think a large part of that is due to this decision making framework called the ace helix. So assess, choose and execute. So first you need to assess the problem in front of you. If you’re not able to consistently do that, you won’t be able to to consistently make good decisions. After that, you have to choose the course of action. And then lastly, you have to be able to execute on that decision. So it sounds simple. It is, but it can be difficult to actually do consistently well.

Buck: I think one of the problems, and particularly I’m guessing, you know, in a combat type situation, is, you know, that’s where the clear, thin thinking arc comes back. You know, and as you as I mentioned before, I’m you know, I’m a former surgeon. And the first thing that you do when you assess somebody who’s down on the ground is airway, breathing, circulation. Right. But sometimes it’s not so easy to remember those those simple things when, you know, it seems like somebody is about to die. Right. So I guess it’s a similar idea is trying to assess in real time like when you feel particularly because of stress. And I think that, you know, that’s kind of where I’m going with this is that we are in the investor side. We’re kind of living in a volatile space. You know, we’ve got rising interest rates. Asset values have come down a bit, inflation, all that kind of stuff. So how do you look at it? I mean, if you looked at it from this perspective of investor, how would you apply this eclgs broadly?

Hasard: Yeah. So I think that’s interesting. And the Air Force has done quite a few studies on stress and what they found and originally it was because they were finding that good pilots during World War Two were dying from dumb mistakes in the heat of combat. And so they’ve done a lot of studies since, and they’ve really shown that as stress increases initially, it can be a good thing. But once it gets too stressful, your IQ decreases. And so we have a saying as fighter pilots that as soon as you put on your helmet, you lose 20 IQ points. And that’s just because what looks simple on the ground at one G at zero knots gets gets pretty difficult. When you’re flying, you’re under £2,000 of force. It’s hot in the cockpit.

You’re flying at closure speeds of a mile every 3 seconds. So, yeah, so your your brain function, your cognitive ability to make decisions decreases once you get outside of that zone of performance. So we do a lot as fighter pilots to try and maintain that zone. And the number one thing you can do is preparation. So there’s a lot of little tricks and tips that we use. But the number one thing is being prepared. You don’t rise to the level of your expectation, you fall to the level of your preparation. And so we go out and we design our training scenarios to be even more difficult than combat. And we will spend a lot of time trying to get as good as we possibly can be.

And then we will spend a lot of time debriefing. When we go and fly, we’ll spend about an hour, hour and a half flying and we will spend 2 to 6 hours debriefing that sortie, going through everything that went wrong and how we can be better. So I think the number one thing is being prepared outside of that.

We do breathing exercises. So we have a box breathing 5 seconds in, 5 seconds out or hold 5 seconds, 5 seconds out, whole 5 seconds. And that can be pretty effective for acting your parasympathetic nervous system, decreasing your heart rate. Because what we found is new students, when they go to the tankers, air tankers, airborne aircraft that we refuel from poorly manual maneuver. You’re taught your whole career never to hit another aircraft, and now you’re intentionally touching another aircraft while it’s transferring you fuel at 350 miles an hour. We found their heart rates were getting to about 170 beats per minute. They’re just sitting in a seat. And so at that heart rate, you don’t have that fine motor acuity that you need. So they’re, you know, as we say, squeezing the paint out of the stick. So when we do these breathing exercises to try and slow their heart rate down so they can have that fine motor skill. But we also found that it’s a big factor when it comes to making decisions. So just like affects your your hand-eye coordination. It also affects your ability to make good decisions.

Buck: How is success more attainable when you plan for multiple outcomes?

Hasard: Well, I think you have to be prepared for multiple outcomes. There’s a lot of uncertainty in the world very few decisions. Will you have 100% certainty in the outcome of it. So I think you need to plan for contingency scenarios when things go wrong. You need to be ready to be able to act on that.

Buck: You talk a little bit about power lies. How is that relevant here to decision making?

Hasard: So that is a factor with the assess phase of the decision making framework. So being able to find those few key variables. So three power laws encompass just about everything you’re going to see out there. One is exponential growth. So I’m sure you’re familiar with that from the financial world compound interest. Next is the law of Diminishing Return. We’re all familiar with that. From going to the gym first six months, you’re going to see a lot of gains after that. If you keep the workout the same, you’re going to see somewhat of a plateau that can explain everything from why you only need a little bit of detergent when you’re washing your clothes to why supercars are so expensive.

And then lastly, long tail power laws. That’s why a few shows on Netflix do really well and the rest don’t do so great. So those power laws are really what you want to focus in on. And it can be challenging because as humans we’ve really evolved to think linearly. You walk 30 steps, you’re now 30 steps away. But really when you are amplifying decisions with technology, for instance, in my world speed, you know, we sometimes have to. Fortunately, I’ve never had to. We have ejection seats where a rocket is in your seat. It’ll send you out of the aircraft if the aircraft’s going to crash. So the number one thing to do, even though they’re dozens of steps in the checklist, is just to slow down. And that’s because force is exponential on your body as speed increases. So there are a lot of little variables out there that you can look at and identify those power laws. And those are the things you need to factor in when you’re making a decision.

Buck: How about fast forecasting? Talk a little about what that is and how you would apply that in both a plane and everyday life.

Hasard: Yeah. So fast forecasting is essentially just coming up with the answer to the equation. When you’re making a decision, you just want to find the expected value. So what is the good that’s going to happen from it? What’s the chance of that happening minus the risk? What’s the bad? What’s the chance of that happening now? It can be difficult for people to put in exact numbers. What’s the probability of something happening? But the real answer is that it’s difficult for everything out there. Computer programs. We have some very elaborate computer programs in the military and we’ve made the mistake in the past of overly trusting those, because if you just have one variable that’s that you don’t quite understand, we call it the basis end problem.

So we have these elaborate computer models built on these, you know, unstable bases and it can spit out the wrong answer. So really, one of the themes of the book is for an expert to trust their intuition. I think as a society, we’ve really gone the route of putting too much trust in computer models, in consultants, in committees, and not really holding ourselves accountable for finding the, you know, the answer to that equation. What’s the expected value of the decision that you’re going to make? And so I think every leader out there needs to be able to find the expected value of a decision before they start consulting those outside resources. And that’ll do one of two things that will either double check those resources to make sure they’re correct or if you’re wrong, it’ll show you the flaw in your thinking and you’ll be able to improve over time.

Buck: When you talk a little bit about this, about fear in particular, I guess I want to come back to that. How can people train themselves to overcome fear? You talked a little bit about breathing exercise, but I feel like there is a sort of a multiple there’s different kinds of fear as well, right? I mean, there’s fear You’re going to be shot down in a moment. And the kind of stuff that, you know, you would feel potentially in combat, that’s a different kind of fear. Or maybe it’s not, but it it’s sort of an acute version of an investor worried about his or her portfolio in a decision making process. How do you overcome how do you train yourself to overcome that fear if you’re just a person on a daily basis trying to make those decisions?

Hasard:

Yeah, I think it’s the same fear. So it’s actually one of the things that you get pretty good at as a as a fighter pilot when you go into combat after you come back. Everything seems kind of easy when you’re not getting shot at or you don’t have the risk of having to eject over enemy territory. It gets a lot easier to make decisions because most most decisions in society aren’t aren’t that difficult. You’re not going to get eaten by a lion out here when it comes to being able to manage your fear. I think being able to have a good mindset, being able to stay in the present moment, positive self-talk. I think that’s been a big push for the Air Force in the last 5 to 10 years as being able to to focus on that human performance aspect, being able to manage your fear, being prepared, as we talked about before, is is the single best thing you can do.

But outside of that, I would say being able to being able to have positive self-talk, not having to berate yourself, that’s kind of my job as an instructor. I get a chance to teach some of the best pilots in the world how to fly the F-35, and they’re tremendous at what they do. They’re great from a stick and rudder perspective, but oftentimes you’ll see that they’ll make a mistake and it’ll snowball out of control. So they’ll make one mistake. They’ll be thinking about how they failed the ride, how they might fail out of pilot training. And that will lead to a second mistake, because now their mental bandwidth is tied up in that. You know, there’s those thoughts about fear. And, you know, if you made a mistake, you actually need more bandwidth to be able to to get yourself out of that. So because we were flying so fast a mile every 3 seconds, it just takes a, you know, a few bad mistakes to get yourself in a position that can be dangerous. So that’s part of my job is to be able to mentor some of these pilots, too, to get them up to a position where they can be mentally resilient.

Buck: So I think you’ve also mentioned that stress can become calming in a way. Is that right? So how does that happen?

Hasard:

So I think stress, first of all, keeps you from being complacent. So you need a little bit of stress out there. So if you’re doing something that’s that’s boring, that’s not exciting. You like getting butterflies in your stomach, then? You know, I think you’re not using your emotion to kind of push yourself in terms of being calming. I would say I’ve had a few incidences where I’ve come pretty close to dying and every one of those times, and this isn’t like a macho thing. Every one of those times there is no fear. It was detached curiosity because I was trained in what I needed to do and all those background thoughts went away. It’s like meditation times a thousand. You’re just focusing on the few things you need to do to survive. And, you know, looking back, it’s actually pretty, pretty, pretty amazing. I do want to put myself back into that position. But, you know, it’s something pretty special when all those background thoughts go away and you’re just focused on a few things. And so one one of the times I talk about in the book is when I put an F-35 out of control. I was dogfighting when I was a young fighter pilot and ended up running out of airspeed, going into the vertical straight up and started going backwards in the F-16. Hasard:

Something wasn’t designed to do and went out of control. Fortunate. I was able to recover it a few thousand feet above the ground. But yeah, it’s one of those things where everything just clears out of your brain. You’re just focused on how to survive. Detached curiosity is the best way to describe it. And then the fear comes maybe a couple of hours later when you’re finally, you know, alone by yourself.

Buck: Was that in real combat or was that in in like, training?

Hasard: This is just training. So this was you know, I was a new F-16 pilot and this is, you know, one of those experiences that, you know, decision making. It’s like the Gears of Mechanical Watch, A small, seemingly unimportant gear can really have a big impact on how that clock tells time. And so I was just a few miles an hour too slow, five miles an hour too slow to go into the vertical and do the slope. But it had a big, big impact on the outcome.

Buck: I think one of the problems that investors have is being able to sort of leave behind a previous bad decision or a previous situation and make the next decision clearly. Right. I would imagine that that that relates to what you were talking about with snowballing.

Hasard: Yeah. Stay in the present moment. You don’t want to use that mental bandwidth unnecessarily. And the best tool I know to do that is the debrief. So when you make a mistake in the moment, what I tell myself is I’ll worry about that in the debrief because we have a dedicated set aside time to focus on that. So I think that’s one of the biggest issues that I see in organizations that that don’t do a lot of debriefing is they try to do it real time. And again, you’re using up that bandwidth that you have to make decisions on debriefing yourself, which should come at a separate scheduled time afterwards.

Buck: You So tell me about the consulting work that you do now.

Hasard: So I do. I do quite a bit. So I work with different airlines during COVID to help with their mental toughness program. So one in particular, they were having a lot of issues with their pilots during COVID, you know, is a difficult time. And so they wanted to work through this kind of, it seems, more new age, how to how to stay mentally tough and mentally resilient.

But it’s something that we’ve really focused on and made a hard syllabus on and shown the science behind during the last few years of Air Force pilot training. So I do some things like that also with decision making. So yeah, it’s good to be able to get the word out there.

Buck: Looks like you also are kind of a prolific content creator, one of the most viewed military aviation channels on YouTube, 100 million views. Tell us about that.

Hasard: Yeah, it’s fun to make content out there. So fortunately it resonates with people. We get about 10 to 15 million views a month. And so what I really like to do is I like to entertain and educate people. And there’s a lot of interesting stuff with the military aviation world and people are really interested in it, just like we’ll get Top Gun. But I like to put a credible viewpoint behind that and having a career as a fighter pilot helps me to do that.

Buck: What’s that YouTube channel for anybody who wants to check it out.

Hasard: It’s just under my name, so has it with an air. You just type that in the YouTube or any of the social media platforms and you can see some interesting things.

Buck: And just think where did you where is that most that contact come from? Is it just is it stuff that you’re that you’re taking yourself or is it is it stuff that’s just archived in your you’re finding it and presenting it?

Hasard: It’s both. So I do have some videos of me flying and doing those things, but we go and actually make dedicated videos. So we went to the centrifuge a couple of months back and we brought UFC fighter TRT is he wanted to see if he could withstand the G-forces and spoiler. He he was not able to do it so but I mean the centrifuge spins you up to nine G’s, so you weigh £2,000. The blade has been pulled out of your brain. Afterwards, you have what looks like chickenpox from the blood vessels exploding. So, I mean, it’s it’s intense on the body, but yeah, did the centrifuge went with an astronaut and did the zero-G plane. So, yeah, just just try to do interesting things connected to aviation and military aviation. We just released a video of the most realistic dogfight footage. Every quarter we put cameras in to test F-16s at Nellis Air Force Base. So it’s been kind of a fun, fun journey with that.

Buck: Very cool. Well, the book again is The Art of Clear Thinking Stealth Fighter Pilots, Timeless Rules for Making Tough Decisions. Hazard I imagine that is available pretty much everywhere you buy books these days.

Hasard: Yeah, correct. It’s done really well. It was wall Street Journal bestseller number two bestselling business book in the country last month. So it’s been doing well. I did the audio book. Oh good It good for the first time in Audible history, I recorded parts from the cockpit of a jet.

Buck: Oh, that’s very cool.

Hasard: So, yeah, it’s pretty interesting. But anywhere you get books, fantastic.

Buck: Well, thanks so much for being on Wealth Formula podcast.

Hasard: Thanks for having me.

Buck: We’ll be right back.