Ep. 108: Understanding the Stock Market Drop
The X's and O's
In this episode of the Retirement Plan Playbook, hosts Brent Pasqua, Matthew Theal, and Joshua Winterswyk delve into the complexities of the current stock market drop and its implications for the rest of the year.
They analyze the recent market volatility, discussing the significant events such as an assassination attempt on Donald Trump, Biden's drop from the race, and the Japanese market crash. The trio offers comprehensive insights into how these factors contribute to market fluctuations and provide strategies on handling investments during such turbulent times.
Additionally, the episode touches on global market interconnections, upcoming potential rate cuts by the Federal Reserve, and the importance of diversification to mitigate risks. The discussion also includes lighter moments, reflecting on the Olympics, LA's future host status, and personal recommendations for a well-rounded lifestyle.
01:06 Olympics Recap and Personal Reflections
04:52 Market Volatility and Economic Concerns
07:31 Tech Sector Analysis and Future Outlook
16:27 Federal Reserve's Rate Cut Speculations
16:49 Market Reactions and Economic Data
19:08 Investor Strategies Amidst Economic Uncertainty
19:54 Global Market Impacts and Diversification
22:09 Understanding the Yen Carry Trade
23:39 Managing Emotions and Market Timing
30:00 Market Recovery and Election Year Trends
30:37 Personal Recommendations and Final Thoughts
Connect With Evermont Wealth:
Transcript
Welcome to the Retirement Plan Playbook hosted by Brent Pasqua, Matthew Theal, and Joshua Winterswyk of Evermont Wealth. This podcast dives deep into investment strategies, retirement planning, and current events, equipping you with the insights needed to craft a robust retirement playbook adaptable to any political or economic climate.
Join Brent, Matthew, and Joshua as they guide you through the complexities of retirement planning. Offering expert advice. to tackle challenges and the later stages of your journey. It's time to build your optimal retirement playbook. Now let's dive into today's episode.
Brent: Welcome to the retirement plan playbook. We're here. All three of us are back. Back in the studio together. Today we're going to talk about understanding the stock market drop and it has been and was a very tough end of July. It was a very tough start to August and now the market's starting to come back a little bit, but we want to discuss why the market went down and what we can expect for potentially the rest of the year.
Brent: But as we get that kicked off, we I'll watch the end of the Olympics. Which to me is always kind of like a sad time. Aren't you guys always sad to see it go? Cause it's like so fun to watch.
Matthew: I got bored of it, to be honest. It started really good. Like, you know, the gymnastics, the swimming, that's always the probably two most exciting events.
Matthew: The Americans seem to do really well in it. And then by like the second week, I was kind of over it. Once track and field started. Track
Brent: and field was great. There was a lot of drama in those. Don't you agree, Josh?
Joshua: I didn't get bored. No, I thought it was, it was good. Pretty much like start to finish. I thought they did a pretty good job of like scheduling.
Joshua: And then you had the golf that one weekend, you know, tracking a field and he had some individual gymnastics, like. It was good. I loved
Brent: it. I thought that they scheduled it well, where there was great things every day.
Joshua: Yep. And then it closed with like USA winning gold in basketball. The
Brent: women's
Joshua: game won in close
Brent: fashion in basketball as well.
Joshua: The soccer final, although I didn't get to watch it, I heard it was fantastic. That was all at the end. So I thought it was, it was good. And I agree with you. It's sad when it's over. Did you watch the closing ceremonies?
Brent: I did. I thought it was great. You know, I thought Harris did a good job. Like, I don't understand a lot of actually what's happening.
Brent: And I actually thought if I had one knock that the commentating was very poor. Throughout different parts of the Olympics a lot of times. I was wondering who's that? Who's this? What's happening here? And it happened even in closing ceremonies where there wasn't a lot of Description my explanation an explanation of what was happening and I thought that was disappointing.
Joshua: Yeah, it was like we were all trying to figure it out together What was going on right? So I felt about it. Well, I thought Tom Cruise Tom Cruise getting that flag to LA and the concerts they had going on. I thought that was cool.
Brent: Yeah. He's just ageless.
Joshua: Yeah. I wanted to see him run like he runs in mission impossible.
Joshua: That was great. He rode a motorcycle. They did that well.
Brent: Do you want to go to the Olympics in LA? Yes.
Matthew: Yeah, I'll go probably to the gymnastics that I'll take with the girl to that. I think that'll be a fun one for her to see. She likes gymnastics. Outside of that, I don't probably have a lot of interest in the other events.
Matthew: Maybe soccer. I'm sure the basketball tickets are going to be thousands of dollars. It would be cool to see the swimming. Yeah, swimming's cool too. I agree.
Brent: I would go to any of those. I would love to take my family. My wife and kids would love to go to the Olympics. They were into it a lot more this time, obviously, because they're a little bit older now, but they would love to go to it.
Brent: I looked up tickets. I think they go on sale. I can't remember if it's 2025 or 2026 and then it's like a lottery system that you have to go through. Oh, wow. Yeah. So it's not like you could just go on there and start buying tickets. I mean, maybe after the lottery system on the resale market, but I mean, And
Joshua: the golf tournaments at Riviera, I think you can put your name into a hat for those too.
Matthew: But if we're talking about events coming to LA final thought for me is I just have a little bit more excitement about that world cup game. Coming I'm ready to blow a paycheck on that.
Joshua: Oh, that's, that's in a kind of different league. It's a league of its own. When
Matthew: is
Joshua: that?
Matthew: That is 2026, right? Josh?
Joshua: No.
Joshua: Is it? Yeah. 2026.
Matthew: Yes. And that's at SoFi. Yeah. USA opening matches. SoFi. That's pretty cool.
Joshua: So that, but also we have a lot of local. Stadiums that we can go visit too, to go see multiple games. So you can even go to Vegas, Frisco, Arizona, and see more World Cup.
Brent: And are those stadiums that games are going to be played at?
Brent: Yeah. Yeah. That's pretty neat.
Joshua: So that's going to be really cool.
Brent: All right. Well, let's get into the markets. Over the last several weeks, we've seen a lot of volatility in the market, both on the upside and on the downside. More so over the last couple of weeks on the downside, we had a very good start to the year.
Brent: We had one of the best starts to any year. Being that it was an election year, we had the fourth best start to an election year ever over the last a hundred years. And then we saw a lot of that sort of get wiped away in a very quick fashion at the end of July. And today we want to talk about how and why and explain why some of those things have happened.
Brent: Matt, can you talk about a little bit what caused the market to drop and what, and what it is and what the impact was on us stocks?
Matthew: Yeah. So the stock market peaked in mid July and really what we know happened around that time is there was an assassination attempt on former president Donald Trump, who is also the front runner, the candidate for the Republican party to, to be president this year.
Matthew: And, you know, for a while, I think that boosted his odds and the market kind of discounted it for a few days. It still went up and then we had Biden drop out of the race. So we have Biden dropping out, we have Trump getting shot at. And then we have Harris coming in who is really as of recording yet to say anything on her policies.
Matthew: And I think this started to create some uncertainty. So that's one issue that happened. The second issue is we started to see a lot of weak economic data and we're going to talk about what that weak economic data wasn't a minute. And then we had a fed meeting where the fed held interest rates steady in face of this weak economic data and the market's kind of like, Hey, you probably should have cut interest rates.
Matthew: So now we have the market starting to drop because of that. We have you're on an Israel kind of. Pointing missiles at each other, just waiting to hit the button. And then on top of all that, the Japanese market crashed. They had a 1987 moment. That what ended up happening was Japan to fight off inflation, raised interest rates for the first time in years.
Matthew: And their market totally crashed, went bonkers. I think it dropped it over 18 percent in a two day stretch. And then that caused that little mini, not crash, but you know, those couple of down two, 3 percent days that we saw here in the U S flash crash, flash crash.
Brent: And now their president's stepping down.
Matthew: Yeah. Yeah. I've mentioned that. Oh, the Japanese president. Yeah. I saw that. I saw that today. Yeah.
Brent: So that's going to be, you know, the global markets have been impacted greatly. You know, you look at where emerging markets were in the international markets were a month ago, and it's very different than right now.
Brent: Are there specific sectors within these indices that are being hit harder than others?
Joshua: Yeah. Major tech. You're seeing slowdown from a lot of different major tech companies, even Microsoft, Apple, you're looking at Amazon Intel. And, and kind of my summary of this is that you're starting to see slowdowns.
Joshua: It's the same with the economic data, along with the major tech and industry is that I think finally we're filling the effects of these higher interest rates, kind of less. We haven't had like a real reset or recession. And I think that these slowdown numbers that are starting to trickle in are really causing major concerns for investors.
Brent: The, the NASDAQ composite has entered correction territory. What is, so the listeners know what is the NASDAQ and what does that mean for investors?
Matthew: So the NASDAQ is where the majority of the technology stocks trade. And what this means for investors, I think this is actually a good thing. We hit this point in time.
Matthew: Where, you know, almost every client was asking us to put Nvidia stock in their portfolio. And, you know, Josh, you're laughing, but like, I've never seen that in my career and I feel like technology stocks kind of got a little bit overhyped, right? Like the hype cycle is too much and everyone's adding them to their portfolio.
Matthew: So then the NASDAQ coming in, I think is good for the overall market. Because other stocks were picking up the steam like railroads, industrials, healthcare. So they're helping to keep the indices afloat while tech is, is entering a bear market. What
Joshua: I hear you saying too, is like, we don't want a top heavy market.
Joshua: Like, and it's been top heavy. So it's, you know, probably pretty healthy that we're actually seeing some slowdown with other industries picking up to kind of pick up the slack of some of the recent. You know, lower returns from these tech companies.
Brent: Now, would you categorize this as a sell off? Would you categorize this as just a major pullback?
Brent: Would you categorize this as a recession? What, what, where does this fall?
Joshua: I like the word flash crash. When I think a little bit of an overreaction, to be honest. With not knowing what's to come. We don't know what's to come.
Matthew: It's a correction. It's a 10 percent market correction. And it was a little bit more in tech stocks because tech stocks is where all the money has been made over the last 18 months.
Joshua: Did the SMP actually hit correction?
Matthew: Minus 8%. That's close enough.
Joshua: It didn't though. It didn't hit 10.
Matthew: It didn't hit 10. So no correction there. It is close enough.
Brent: I mean,
Matthew: it's not
Joshua: rounding numbers. No, it's not
Brent: with it already starting to come back though. Is that what makes it an overreaction?
Joshua: I think so. I think that Sure, there was some poor data, but it wasn't like the data fell off a cliff.
Joshua: Again, you keep using the word you're starting to see slowing, right? Or you're starting to see some slowdowns in the economy, slowdowns in earnings, but it's not like we compounded this with awful earnings brought across the U S market or. All economic indicators slowing down and, and really being negative.
Joshua: So I think that again, you know, I think it was a little bit overreaction after a year up to this point, wasn't that volatile from the market.
Brent: Let's take a deeper dive into the contributing factors of the U S market data. And the economic data, what recent economic indicators are raising concerns about a potential recession?
Joshua: So with the labor data, you're, you're starting to see wages, wage growth slowed down a little bit, but I think the two ones that had some Kind of more concerning. We talked about this on the last podcast, Matt was consumer spendings coming down a little bit along with the manufacturing economic data as well.
Joshua: And I think that again, we are looking for some of the slow down numbers from this economic uncertainty that we've been searching for, and they're starting to like pop up into this market. And I think that's what really was causing this overreaction.
Brent: I think the question that most people have, like I, I have for my own portfolio and my, I guess most people want to know for their investments is if we are in a recession, what steps can we take to mitigate the impact of the recession on people's investments?
Matthew: That's a good question. And I think it's really hard for people to understand what's happening in the economy. And they hear a session, they think, Oh, the stocks are going to drop. It's very possible we could be in a recession right now. Like the, like Josh was saying, the, the seeds have been planted and the, the flowers starting to come right.
Matthew: Starting to bloom. There is definitely a recession on the horizon, but the stock market might not drop that much. Now, remember we've had two bear markets in the last four years. We had the 2020 coronavirus bear market. And then we had the bear market of 2022 when inflation was going out of control and the Federal Reserve was raising interest rates.
Matthew: And most likely this recession we're starting to see is an impact on the 2022 stock market drop and interest rate rise. And it might not have anything to do with the future. The market already kind of priced that in, so to say. So it's possible the market doesn't drop here.
Joshua: And do you think that like with the federal reserve hinting that they're going to cut rates, that it can fix some of these soft spots in the economy?
Matthew: Historically, no. Historically, when the fed starts to go into an easing cycle, it usually doesn't fix it.
Joshua: Okay.
Matthew: So I think we're on our way to recession. It depends how deep of a recession it's going to be.
Brent: We talked about the disappointing financial. Sectors right now and what's happening in the, in, in the indices like tech.
Brent: Can you provide a little bit of analysis on the recent financial results from companies like Amazon and Intel? Because they've been in the news a lot the last four weeks.
Joshua: Yeah, I can touch on that. Again, you know, I had already kind of mentioned this. Amazon was kind of that top player in there. You're seeing some slower growth. Intel's another big name that was in there that was seeing some slower growth. You're seeing Apple iPhone sales slower as well. And, you know, I think that again, You know, kind of the same story here.
Joshua: We've had such a good start to the year. We were looking for some kind of negative or softening in these earnings and they kind of arose over these last few weeks. So I think it's something to be monitored and I, we already kind of touched on this topic as far as kind of the major tech industries in these companies but you're seeing softening and I think that's normal.
Joshua: It's a normal function of markets. We're going to go through these periods. And I think just a lot of people are expecting slower growth overall going forward.
Brent: Do you see any signs, Matt, that the tech sector might recover soon?
Matthew: I think on an individual company basis. Yes. But I think in general, the tech trade has gotten a little bit old.
Matthew: I, I think, you know, there's obviously some exciting names doing some really exciting things with AI technology, and that's obviously a theme that we're going to be here with for a while. But in general, like Josh was saying, the economy is slowing, tech's been the big leader, and it'll be good if some other companies start leading like healthcare or industrials or oil companies.
Matthew: We don't have we don't want tech carrying us through everything.
Joshua: We want more broad returns
Matthew: exactly A
Joshua: healthier market exactly and I do think that like you see historically as well with interest rates coming down I think this is one positive to take from the expectation that interest rates are coming down is that that can help Some of those companies that you're mentioning, right?
Joshua: Absolutely. I think that rates being hired doesn't affect those bigger companies, like those big tech companies you're talking about, as much as kind of the newcomers, those mid to small cap companies. So I think that's one thing that if we're looking for kind of opportunity or, you know, some optimism from the market is that some of these smaller and midsize companies will get a little bit of a break and maybe have a lot more opportunity for investors.
Brent: Do you see that healthcare or those other indices oil, are they even set up to have that type of growth over the next decade?
Matthew: Yeah, potentially. I mean, the baby boomers are aging. We're not drilling a ton of oil anymore, but it's still very impactful on the economy. I mean, so those, you know. Could be two industries that boom along with all the advancements in AI to improve, not just the productivity of tech companies, but the productivity of every company.
Matthew: So I think we could be in a really good spot for a lot of businesses.
Joshua: What do you think, Brett?
Brent: I don't think that they can grow the way tech has. I think tech just has so much potential over the next decade. You AI is having on our business. You look at the AI, what impact AI is having to everybody soon.
Brent: I mean, it's going to be on your phone. So I think tech is and should be set up to grow, but you hear these other sides where there's so many layoffs in the tech industry and they're the first ones that are being impacted the most right now.
Matthew: You know why they're laying people off? It's because they're the first with all the good AI applications.
Matthew: So they need less people working.
Brent: Yeah. Yeah. And that could trickle downhill and
Joshua: they're just expecting even more slow down. True. Yeah.
Brent: For the last, I would say what, two years we've been talking about interest rates and, and we, we rode this thing all the way up with them raising rates. And then now we're starting to see.
Brent: There's this different stance. The numbers are changing. The economic data is changing based on the current position of the federal reserve. Why have they left it and decided to not change them yet? And is that change coming?
Joshua: Oh, they've hinted, right. They're hinting that potentially in this next fed meeting that they are going to start to cut rates.
Joshua: And I think this is, you know, in my opinion, one thing that was a little bit Why the market overreacted over that Friday, Monday that we just saw was that the federal reserve came out and said they weren't cutting rates. And then we got the poor economic data on that Friday. And I think a lot of the expectation was, was that they were going to cut rates and then it was piggybacked by some bad data, really kind of causing this overreaction.
Joshua: So Matt and I talked about it on the last podcast, where they may be a little bit behind this, maybe they should have already cut, but I think they do have plans to cut and they still can do that, you know, going forward. I think that there's still an opportunity for them to hopefully lessen the effects of this, you know, kind of slow down in the economy.
Matthew: I'm so bored of this topic as we've been talking about it for a long time. The Fed hasn't done anything. You know what it reminds me of? It reminds me of like. When there's a player on like one of your favorite teams, it's, you know, it's going to get traded or that's in trade rumors all the time. And it hasn't happened yet.
Matthew: It's just lingering and lingering and lingering. Like, that's what this reminds me. It was just lingering. It's
Joshua: Brandon. Yeah, it's
Matthew: a, you know, it's a top athlete getting traded in, you know, sports centers talking about it all the time.
Joshua: And they need a story. I feel like, yeah, they, they need a story right now.
Joshua: Cause that's, it's what we talk about consistently. Every time we turn on the TV, that's what they're talking about as well. And everyone's trying to time these like rate cuts. And especially when we see like, and talk to the real estate industry, right? They're all trying to time these rate cuts and plan about the future of real estate and rates coming down, whether if it's mortgage or housing.
Joshua: And I agree with you though, I'm, I'm really tired of the topic.
Brent: Jeremy Siegel, who's an American economist and is somewhat frequently on CNBC was saying that the fed should come in and do an emergency rate cut. Do you think that one Friday when things really started to go south, that was necessary. So the feds came in and done that.
Joshua: No. And the reason why is because look at how the markets reacted since then. Right. We're still up over 14 percent year to date. And I think that, you know, looking back at it, That might've looked like the right decision maybe to cut in that meeting or emergency rate cut. But the data wasn't that poor, right?
Joshua: I think we're expecting it to be even worse than it was. And I think that's also why the markets recovered. So in my opinion, no.
Brent: If you're an investor, how do you prepare for possible changes in the federal reserves monetary policy?
Matthew: Well, look, there's not much you could do, right? In general, it's not going to impact you that much and where it could impact you, you know, one area is let's say you took out a mortgage, a 30 year mortgage.
Matthew: Anytime within the last two years, you could be looking at doing a refund finance, right? So that's one area that could impact you. But outside of that, unless you're a business owner or you're financing everyday items, this really doesn't have much of an impact on you at all. You know, it's just really a non story.
Brent: We saw what happened in Japan. They had that flash crash and then there's been all this sort of impact that's happened in the U S market because of the global markets. We know global markets are tied in obviously so closely with the U S markets, but now you have this tension that's being escalated in the middle East, what are the potential impacts that that can have on global markets that lead into art?
Joshua: I think just we're so globalized now, we're so connected that if the rest of the world does go into this kind of predicted global recession, it's going to bleed into every other country. You're talking about oil import export. And, you know, I think that's the big concern with everything we're talking about is a global recession.
Joshua: And even with these conflicts that are going on, you You know, compounding that situation and making it even worse. Cause we know that we are just so connected. So it is a, you know, obviously it's a concern, but I think that there's a lot of good ways to mediate that, that risk.
Brent: What can, if so, if that does happen or there is escalation, what can investors do to protect their Paul, their portfolios in times of instability,
Matthew: diversification, diversification is your free lunches doing it now
Brent: or doing it
Matthew: Now, yeah, you got to be diversified now and that'll help shield you from the downside.
Matthew: Hopefully all your assets aren't correlated. So they move in opposite directions, you know, gold bonds, stocks, Bitcoin, global stocks, you know, have it all, or whatever it is you like from that, that flavor and build a portfolio that could withstand some economic turmoil. And it's possible to do that.
Brent: How has the strengthening of the Yen though impacted the global markets?
Joshua: Really? Because Japan's market really depends on their export business there. And so you're seeing a lot of tension around their dollar increasing and getting stronger. And. That is affecting their not only overall market, but their business globally as well.
Joshua: So you're seeing things like interest rate arbitrage and investment and fleeing for like even safer assets or safer security. So again, since we are so globally connected this story and them increasing in their dollar or, you know, their monetary system getting stronger, that's going to affect not only their neighboring countries, but even us.
Brent: Can you explain the concept of the yen and wine trade and its implication for global markets?
Matthew: Yeah, so the, the yen carry trade is interesting. It's actually not an old, a new trade. A lot of people think like, oh, this is some new story. This has been going on for decades. And what it is is Japanese rates are at 0%.
Matthew: And what people do is they go borrow yen. And this isn't like everyday people, right? I'm talking sophisticated investors, hedge funds you know, institutional type investors. So they borrow yen. From Japan, they bring it back to other countries and they invest that money in higher rates or other securities that are earning more.
Matthew: So you're basically getting an interest free loan in Japan, levering it up, taking it to another market where there's better rates of return and investing that money.
Joshua: And this is being done on a scale of billions of dollars.
Matthew: Yeah. I thought, I thought, I thought I saw trillions. Wow. But, but this is nothing new.
Matthew: I think it's unwound three or four times in my career. You know, unwinds and then people put the trade right back on. And, you know, the bank of Japan moving rates to 0. 25, I don't think it makes that big of a difference of trades probably still happening for the, for all the big hedge fund managers and stuff.
Brent: I think the big question then really becomes is how do we, as investors. As advisors or just people who are out there managing their own portfolios. How do you manage your own emotions to avoid making poor market decisions? Because our investment decisions, because I look at when the market was going down and it had this, this correction.
Brent: Over the last four weeks, it was getting really tempting to think that this thing was going to really get to the negative this year. I mean, it was bad for about a 10 day stretch and you, I don't, like I've always said on this podcast, I don't look at my portfolio when it's down, but it was starting to get real nasty out there.
Joshua: I think you need to turn the screen off, take a deep breath because if by the time you're reading this news or you're watching it on TV, It's too late to do what we've talked about to prepare for these types of events. There's really nothing to do. What are you going to sell when the market's crashing?
Joshua: When you're going to buy back in, right? I think now is a good time in a lesson, learn that if you were having those feelings or you were experiencing too much volatility, then you can handle. Now's a good time to go rebalance that portfolio.
Brent: How long does it take for a market though to recover after it has a significant drop like that?
Matthew: So I mean it could take years Or it could take days and right now we're at we're in the day stage, right? It's you know, this market dropped about a week and a half ago And since then it's recovered most of the drop already. We're almost back to all time highs
Joshua: last five days are up over four and a half Percent.
Matthew: Yeah, there you go. So it's already halved it The drop was eight. We're up four and a half percent. So now we're only down, you know, a couple of percentage points from the high. I think the Dow Jones industrial average hit an all time high today. So, you know, that's talking, there's less tech in the Dow, like we're talking about tech's getting rotated away from you know, the longer bear markets, right?
Matthew: 2022, that took a while. Right. That was pretty painful. 2008 was painful. But most of the times these corrections people don't notice 'em. And actually, I was talking to quite a few of my clients personally, and a lot of 'em didn't even notice. I guess I alerted quite a few of them that there was a correction going on.
Matthew: So, you know, my bad on that, which people were enjoying their summer.
Joshua: S and p wasn't in a correction, so don't scare people. , ,
Brent: I mean, do you think about buying when a market's dropping at that rate? Of course,
Joshua: I think we should always be thinking about buying, right? But especially in those periods, good news is, is like so many of my clients now, you know, through our planning and even that I talked to you, you're doing, you're practicing that through your 401k contributions of your dollar cost dollar cost averaging into the market.
Joshua: So continue to do that. I mean, you can even now it's so fast through technology that the market had started going down on Friday. And by your next paycheck, you could have increased your 401k contributions to put even more money in the market. If you didn't have cash to get it.
Brent: Yeah. I think that if you're so many of our clients and it's what we talk about here all the time, that you should be dollar cost averaging, you should be putting money on a regular basis that's scheduled.
Brent: It's automatic into your portfolio, into your 401k, and that takes the decision making out of it. It takes the emotion out of it. Oh, I don't know if the market's going to keep going down. I don't want to. You know, catch a falling knife. I don't, I'll wait till it starts going back up again. You take all of that out of it.
Brent: And you just keep it on an automatic rotation and that leads to a higher expected than outcome. Absolutely. How can diversification though help you protect an investment portfolio during market volatility?
Joshua: Well, it's just reducing systematic risk. I mean, that's the whole principle idea. And if you're concerned about, you know, the tech industry, or you're concerned about healthcare or even the geopolitical events, you know, diversification, Has been proven to reduce that risk, no matter what is going to happen.
Joshua: So it's just the simple idea of you're not putting all of your eggs in one basket, and then you take diversification even a step further. I know we talk about stocks cause they're exciting. But you know, making sure you have that right blend of bonds to where you're not subject to that stock market volatility that we keep talking about.
Brent: What tips Matt, do you have for assessing and managing risks during this market?
Matthew: So I was, I was a little disappointed when the market started going down. Cause Brent, you and I talked a few weeks prior to the turndown in the market and we both said, Hey, it's getting a little too easy to make money in the stock market.
Matthew: Maybe we should sell some stuff from, from our personal portfolios. You know, more of our trading portfolios, not long term portfolios, but personal portfolios. Is this a
Joshua: private conversation?
Matthew: You were out, you were
Joshua: out
Matthew: having a baby. Yeah. So, you know, Brent, we had that conversation and then this downturn started, I'm like, why didn't I sell?
Matthew: I could have taken a little bit off and had some spare change to buy on this. Pullback. So I, I think for most people, the answer is don't look at it. Right. That's what Josh said. And for other people. I think the answer is by stocks, right? Like when they're on sale, you want to be buying. And when, when things get overheated, when you start feeling elated, when you're checking your balance every day and you're like, wow, I had a million dollars, now I have 1.
Matthew: 3 million, I'm making so much money, this is easy. That's probably a sign of pullback is coming. Whenever it starts to feel easy, when you start to get extremely, extremely happy and confident about your account balance. Usually it's when we get some kind of correction or pullback
Joshua: when everyone's talking about buying the video shares.
Matthew: Yeah. That's usually a sign that the top is near.
Brent: It was getting too easy. Matthew and I were looking at the market. We were watching it. We knew it was running hot. If we didn't have the capital gains impacts of selling positions, I would have completely just dumped everything at that point. We probably would have missed the high point by about, I don't know, three to five days, Matt, would you say?
Matthew: Yeah.
Brent: And then you saw it came crashing down and we probably would have started buying right back in. But you can never time it perfectly. And that's not a good strategy. The strategy is dollar cost averaging. Just put money in monthly. Let your advisor do the work on what they're buying, let them go to work with it, and then it takes that emotion out of the investor's hand.
Joshua: I think what you explained too, is just a really good story of like how hard it is. It's that is extremely hard to time to do that. You guys are talking about it and watching it. Your story is great. And you know, still could miss it, right? It's not easy.
Brent: Okay. So if the market continues to rally and recover, you know, I think it's status quo for the year.
Brent: We know in election years, the market has a greater chance of going up. It's up 84 percent of the time in an election year. We have almost a hundred years of election year data. Yeah. So stay the course. But you know, there are some warning signs out there that a recession could be looming. So as investors, you know, we're always watching these closely, but like I said, I mean, let your advisors do the work, take the emotion out of it.
Brent: And that obviously provides hopefully a better outcome. Let's get into everyone recommends Matthew. You want to go first?
Matthew: I do want to go first, Brent. All right. So I've been looking at adjustable dumbbells since COVID and they were sold out during COVID.
Matthew: But I mean, they're obviously back in stock now cause you know, that was 40 years ago, but I really wanted to pair during COVID. I kind of like put it off and just bought a few single weights. But I recently purchased adjustable dumbbells. They are amazing. If you like working out, I highly suggest getting, getting a pair of them.
Matthew: It's, it's made it so easy. You just, you know, click them in place, get the weight you want, put them back, click the weight you want. Very easy, very enjoyable to work out with.
Brent: They were out of stock for a very long time though, huh? During COVID. I felt like it was like two years, even after COVID, like he was hard to even get those.
Matthew: Yeah, they were, they were hard to find. And, you know, finally I've been trying to lift weights a little bit more to get healthy. And I had kind of peaked on my current weight. Like I was ready for a little bit more. And so instead of buying individual ones, I just went all in and went adjustable.
Brent: Love that for you.
Matthew: Me too.
Brent: What do you have for us? Josh?
Joshua: I'll recommend what we're watching. I know it ended a couple of weeks ago, but my wife and I watched the season of house of dragons. You guys watch that?
Matthew: Yeah, I do. I'm a dork too.
Joshua: It's the prequel to They can't think of it. Game of thrones drew a blank there. So the prequel to game of thrones, it was the second season.
Joshua: I will say it was very underwhelming. And especially the finale, I think the storylines are still good. I'll still watch it when it comes back, I think in two years. But if you're a game of thrones fan and haven't watched it and didn't know that there was a prequel. I do recommend it. It's entertaining.
Matthew: You know what I heard? I don't think you told me this. I think my brother told me this. So if you told me this, I'll just stop talking. But what my, what I heard was that they actually cut two episodes. It was supposed to be 10 episodes, but because of budget, they cut it down to eight because all the streamers are struggling.
Joshua: I didn't tell you that, but I did hear that.
Matthew: And that's why that last episode felt so weird.
Joshua: And rushed.
Matthew: Yeah, exactly.
Joshua: Yeah. But it is like, it's still interesting, so I'll still watch it, but it wasn't like 10 out of 10.
Matthew: I agree. It was like seven.
Brent: Yeah. Yeah. I'll recommend, I'll stay on the theory of what we've been talking about.
Brent: I'll just reiterate again. My recommendation is if you have money building in your savings account, yes, I know interest rates are high in savings account, but being able to put that and get invested properly long-term can provide a very much better outcome than just letting it sit in savings. Obviously you want to keep money for emergency purposes, but investing that can be very helpful longterm.
Brent: I will say. I hear from a lot of clients people getting into people's bank accounts, credit cards, tapping into their, their bank accounts. Be very mindful of that. Watch your statements, watch your credit cards. I will tease a story. I have a story about an incident with my credit card and I'll, I'll have to tell that story on the next podcast.
Brent: All right, so let's get out of here as advisors, our passion lies in assisting others.
Brent: It's the very reason we've chosen this path. For those of those, for those out there who are interested in meeting with us, please go to evermont. com and book a complimentary consultation. Additionally, if you, we invite you to download our ebook directly from our website and that gives you offerings of, of insight and guidance for access to the show's notes.
Brent: Please head over to retirement plan, playbook. com as always. Thank you for listening.
Thank you for tuning into the retirement plan playbook. If you enjoyed today's episode and want to stay updated, please click the subscribe button for notifications on new episodes. For personalized financial guidance, or to connect with our team, you're welcome to call us at 909 296 7977, or visit www.evermont.com for a complimentary consultation. Your journey towards a successful retirement plan continues, and we are here to help every step of the way. Until next time, keep building your future. The information covered and posted represents the views and opinions of the guest, and does not necessarily represent the views or opinions of Evermont Wealth.
The content has been made available for information and educational purposes only. The content is not intended to be a substitute for professional investing advice. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.