May 16, 2025 • 37 mins
Recent headlines and market swings have left many investors feeling uneasy. In this episode, Brian Graff and Chief Investment Officer Dave Lytle discuss how to navigate turbulent times with confidence and clarity. They cover practical strategies like diversification, rebalancing, and managing risk - plus the common pitfalls to avoid when emotions threaten to derail your long-term plan.
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Intro/Closing (00:03):
Welcome to the Real Talk Retirement Show, where
we explore the financial sideof retirement and beyond.
Whether you're currentlyretired or planning for the
future, we offer real, relatableconversations about money and
personal finances.
Most importantly, we dive intoall these topics using Real Talk
.
Now, let's get real about yourmoney and your retirement.
(00:23):
Now, let's get real about yourmoney and your retirement.
Brian Graff (00:28):
Hello everyone and welcome to another episode of
the Real Talk Retirement Show.
I'm Brian Graff, a retirementeducator, here with Conrad
Siegel.
Now our loyal listeners, whichwe have.
Many, know that I am joinedevery episode by my colleague,
Tracy Burke.
However, we're going to giveTracy an episode off I promise
(00:48):
it wasn't for bad behavior oranything like that and in his
place we do have a very specialguest.
Today I am joined by Dave Lytle.
Dave is our Chief InvestmentOfficer here at Conrad Siegel.
He's a partner in the firm,leads our investment research
team and consults with many ofour valued clients.
So, Dave, welcome to thepodcast.
Dave Lytle (01:10):
Hey, thanks for having me on, Brian.
Really appreciate it and lookforward to trying a new format
for us to have these discussions.
Brian Graff (01:15):
Absolutely.
We're going to have a good time, Dave, I promise Sounds good.
But, dave, we brought you intoday specifically to tackle the
elephant in the room at leastmost of the rooms that you and I
visit these days which ismarket unpredictability.
Now we could replace that wordunpredictability with a much
stronger, maybe less friendlyword, but let's stick with
unpredictability as we dive intothings.
(01:37):
So, dave, can you start us offby discussing what's going on
right now?
And to timestamp this, rememberwe're in early 2025.
But what's going on right now?
And to timestamp this, rememberwe're in early 2025.
But what's going on now thathas investors panicking a bit
and unsure what to do with theirretirement investments.
Dave Lytle (01:54):
Yeah, absolutely so.
Right now, anything investmentrelated, I mean you have the
normal earnings, interest ratespop up, but tariffs I mean
tariffs is the key word that'scoming up constantly.
And very smart to timestampthis.
I've been saying that.
You know, with the market moveswe've seen both up and down.
The volatility data is goingstale, incredibly quick.
So we are doing this recordingearly May.
(02:16):
Things you know could changequickly, but we do think that
we'll give you an update onwhere the markets kind of stand.
But the steps we're going totalk about of you know, think of
market volatility.
How do you invest through it?
How do you kind of go to sleepat night, those kind of hold in
all situations.
So, starting off kind of whatwe're seeing right now, you know
tariffs have been big reallythe whole year.
(02:36):
President Trump was very directon you know he was going to use
tariffs, got back into officewhen he was campaigning, came
back into office in January andhe has held true to that
campaign promise.
So really the first, you knowJanuary and February and March
markets were down.
A lot of that was on tariffstress.
So you know it started withtariffs on Canada and Mexico and
(02:57):
China and then some moretargeted ones on sectors like
metals and autos and Q1.
Ones on sectors like metals andautos in Q1.
So markets were already alittle stressed about tariffs
and the idea of you know okay,you know, tariffs get paid when
products come into the US.
How's that going to impactpricing?
How's that going to impactconsumer confidence and spending
?
Is there going to be a businessshift because of that?
(03:18):
Are companies going to spendless or we'll have kind of
economic slowdown?
So market was already kind ofkeyed on and kind of stressed
about this.
But then we got a big shift onApril 2.
So there was a big announcementafter markets closed.
President Trump was in the RoseGarden and they kind of rolled
out these reciprocal tariffs,what they were labeled.
So everyone was very keyed intothis address.
It got a lot of attention andwhat we saw come out of it was
(03:40):
actually very different thanmarket expectations.
So reciprocal tariffs everyonewas thinking the idea was going
to be okay, well, if you have atariff of 5% on the US, we'll
put a tariff of 5% on you.
We actually got something verydifferent where it was based
much more on trade surplus.
So the idea was that it wasn'tnecessarily tariff driven.
But if we buy more stuff fromyour country than we send to it,
(04:02):
we're going to give you atariff, thinking this wasn't a
fair trade practice.
So to give you an idea of kindof the scope of it leading into
this, tariffs were about 2.5% onaverage for US imports and this
had actually ticked up inrecent years with some levies
put in place by Trump and Bidenboth their administrations so
everyone's thinking, okay, youknow 2.5, the average tariff for
(04:25):
the US on our exports is aboutfive, maybe things will double
here.
Actually went up to 25 percent,so increased by a factor of 10.
So market was not ready for thatand we saw a huge sell-off
those next two days, on Thursdayand Friday.
So it wasn't a big one-day movehistorically, but the two-day
move we saw actually got put inconsideration of the biggest
(04:46):
since World War II.
So the flash crash we had backin the late 80s great financial
crisis or dot-com type moves.
It was up there.
Markets were obviously verystressed and there started to be
discussions about will thiscause a recession, how big a
recession, how quickly, is goingto come in?
The market was very anxioushere and the market also got
(05:09):
very volatile to think, okay,maybe these are negotiations
versus long-time policy.
We got some different you knowfeedback from administration on
what that was, where they'recertainly open to negotiations
and have more fair trade, but atthe same time they're saying
you know, these are here to stayand they're going to drive a
lot of revenue.
So market wasn't quite surewhat to make of it.
And then again, just a coupleof days later, the following
(05:31):
Wednesday, we got a 90-day pauseto a lot of these bigger
tariffs and the market reactedjust shot skyward.
Brian, you and I were actuallyin the office together, if you
remember, and I had apologizedat the time.
I had my phone on the table.
Now it's just hitting refresh,because we were in that type of
environment where I wanted tosee what was going on.
I wanted to keep tabs on it.
I definitely remember that day,dave, yeah, and you know things
(05:52):
were choppy and we're kind of.
I was giving updates once in awhile, just watching it then and
we left that meeting.
I do a couple things around theoffice and I went out to drive
home in the parking lot.
I pulled up the app one moretime just to see where it was.
Markets had shot up I mean six,7%.
At the time I actually sat inthe parking lot.
I'm like what the heck happenedin the past 20 minutes from when
I put my phone away that I gotin the car and it turns out we
(06:14):
had this pause and ended upbeing one of the biggest days
ever for the S&P 500% gain, justastronomical gains across
pretty much all industries, allstocks Just astronomical gains
across pretty much allindustries, all stocks.
What's interesting here is that, looking at this, we were
paused.
The biggest tariffs, thosetariffs on Canada and Mexico and
China were still in place.
The 10% base on all importsstill hold.
(06:36):
So we're actually at a muchhigher level than we were at the
start of the month, even whatexpectations were.
But it wasn't as bad and itgave hope that a lot of these
might be negotiated.
They might change.
The markets took that very,very, you know, favorably.
Brian Graff (06:50):
Yeah, investors were just looking for a glimmer
of hope, kind of right, dave,correct.
Dave Lytle (06:53):
Like it.
You know it's not good but it'sso much better than where we
were that that was all theexcitement.
And you know that's somethingwe talk about.
You know, historically, gettinginto that larger picture, we
see that a lot when we lookthrough past market stress,
where these best and worst dayshappen really closely together.
And doesn't you know it's truein a lot of times, these market
events, that the rebound's veryswift.
(07:15):
But even on the way down you getthese times where, hey, maybe
things are oversold or maybewe're in a type of environment
right now where things are goingto change, and you get these
huge rallies and there's somegreat charts out there by a
bunch of providers that you knowhow impactful it is missing
these great rallies.
And you know if you sold outafter Thursday and Friday, it's
(07:36):
hard to say that.
You know you weren't lookingand making up a stressful
scenario.
There was a lot of stress inthe markets.
There was real world concernsthere, man, but if you missed
that Wednesday, if you went tocash or sold out a lot of your
equity holdings before that day,really could have long term
impacts on your portfolio.
Brian Graff (07:54):
For sure.
Dave Lytle (07:56):
So, looking at that, you know the idea of, you know
investor sentiment, like what dowe really expect and how do
investors really kind of handlethis?
So you, you know, looking atwhat we saw in those early April
, you know it's hard to seethose dollar losses and I know
you mentioned this speech, brianto your people say that like I
looked at my portfolio and Ilost X dollars of those two days
.
Like we are seeing thosecomments a lot.
Brian Graff (08:17):
Yeah, we see them all the time and you know I try
my best to remind investors that.
You know it's really only onpaper, right, we're on online
and I guess you might say thesedays too.
But until you make that saleand you know, get out of the
investment, you have to reallyconvince yourself that.
You know, I still have the sameamount of units or shares in
this investment that I had theday before.
(08:37):
The value just happens to be alittle bit down.
So it's a psychological gamewhich we've talked about in some
other episodes.
Dave Lytle (08:44):
Yeah, and you know it's so fluid that if you think
of you know 23 and 24, I meanthere was just fantastic gains
in the equity markets Investorsreally benefited.
So yeah, I mean you did, yourportfolio is worth less than it
was earlier.
There's no way getting aroundthat.
But you're right, you knowyou're essentially giving back
some of those great gains youhad earlier and if you do sell
out you lock in that loss.
(09:04):
If you stay invested, then youknow that loss and gain can
easily be fluid, kind of movingforward.
But you know it's hard to seethat dollar loss and there's a
natural instinct like I need toput a floor on it.
Yeah, I might have lost thismuch but I don't want to lose
more.
But when you know we talkedabout, you know those rallies
happen and they happenunpredictably and I mean to be
(09:25):
honest with you a lot of thegains we've seen in april.
It's hard to really reconcilethem sometimes because these
concerns, these long-termproblems or hurdles or
difficulties, were talked aboutin early of april.
They're still there.
They haven't been resolved.
we haven't gotten more certaintyaround them yeah so I mean,
that's the whole idea, is thatyou know, if you say you sold
out and you're like you know I'mdone, I'm going to kind of wait
(09:47):
until this resolves the problemis, you might not have any more
dollar losses, but thatopportunity cost, the idea that
you know, if I had stayedinvested, I would have gotten
that, you know, 8% rally on thatWednesday.
So, yeah, I didn't lose anymore dollars, but, like, what
opportunities did I lose bymaking kind of those short-term
moves?
So, like, I think it's alwaysgood to think about that cost
(10:08):
too.
Yeah, huge part of the equation, for sure.
So, you know, looking at thecurrent environment, I think
it's really important to thinkabout the idea that you know
sentiment is important to themarkets, obviously, that you
know whether people areoptimistic or they're
pessimistic, it can move themarkets.
So there's something to that.
But in this current environment,to you know sentiment is so
(10:28):
fluid.
You think of some of those pastbig crisis.
You think of, you know, thecovid crash, um, the great
financial crisis.
There was this external shockthat was trying to be understood
, couldn't really be controlled.
I mean, we had to work throughit and kind of figure it out.
Um, you know this is.
This tariff is definitelyexternal force coming in,
impacting the markets, but, um,the level of control is very
(10:51):
different.
So the administration has putthese tariffs in place and
they've shown themselves to bevery nimble and fluid and you
know making pauses, makingexceptions, you know shifting
and you know maybe if we gettrade deals they'll remove them
and they could.
If we don't get trade deals,they could get changed in a
different way.
Now we've seen with China theirtariffs have increased a lot,
(11:13):
as China's responded, given sometariffs on US goods, I think.
Currently it's standing about145%, which is almost an embargo
.
If that number were to comedown, if we had some real
progress with China, it could bea huge shift in market
sentiment and performance.
So I think in this situation,with the control the
administration has, it's one ofthose things to know that
(11:34):
sentiment can really turn on adime, and we've seen it do it
there too.
So just one more thing to bethinking about as we kind of try
to navigate this situation.
Brian Graff (11:44):
Yeah for sure, dave .
It's crazy, and you know youthink about the last two times
we had like this.
You've got the pandemic right,which is one totally separate
thing, way different thantariffs right?
So the event that caused thismarket stress and the volatility
, where you know, tariffs versusa pandemic two completely
different things, but really thereactions to investors and the
(12:05):
uncertainty, that's what's sosimilar, and we've seen it
before in history with othertypes of events.
We're going to see it again.
So this is nothing new, atleast.
The volatility, the uncertainty.
So I think the logical nextthing for us to talk about, dave
, would be whether we're talkingabout early 2025 or maybe three
(12:26):
years from now, in 2028, ifsomething happens again, what
are some practical steps we cantake?
What are some things we can doas long-term investors to kind
of protect ourselves from makingbad mistakes with our account,
to feel a little bit more atease with the market environment
.
And I think the first thingI'll bring up is something that
we say all the time here atConrad Siegel be diversified
(12:49):
within your portfolio.
Don't put all your eggs in onebasket.
Have exposure to severaldifferent asset classes and
market categories, which reallyhelps ride out the storm in
difficult times.
Can you talk a little bit aboutthe importance of
diversification in a portfolio,dave?
Dave Lytle (13:04):
Yeah, absolutely.
You know shouldn't comesurprised to your listeners that
you know the things we're goingto talk about.
Aren't these really cuttingedge, exotic strategies?
They're kind of those tried andtrue investment principles, but
they can be really impactfuland you know they're not always
easy to do in stressful times.
So the first is diversification.
It's the idea that you know,yes, the US equity markets have
really had a rough run in April,but that's a good thing to
(13:26):
think of is, you know, werecommend a diversified
portfolio.
So you're going to have, youknow, fixed income, domestic
equity and foreign equity.
And you know, looking back, themonth of April actually turned
out to be not that bad.
The idea of you know S&P 500ended down, I think, less than
1%, so it had a huge rally inthere.
But you know, fixed income wasup 0.4%, foreign equity was up
(13:50):
3.6%.
So the idea that you know, ifyou had all your exposure to the
domestic equity market, youfelt all the pain, all the huge
drops we saw going on.
If you actually had somediversification, you had your
fixed income, you had yourforeign equity, which have been
out of favor in recent years.
We kept saying it's okay,there's a reason to keep them.
They're going to help indifferent market environments.
(14:10):
We saw that play out and if youlook at some intramonth data it
plays out much better.
So on, you know, before the bigrally we had with the pause we
saw from their peak levels, s&pwas down 19%.
About Small caps, us are downcloser to 25.
So you know we always say abear market's a loss of 20%.
(14:31):
S&p 500, I think intraday itmight have got there.
Small caps were firmly in that.
So you had that big sell-off.
Bonds were down a little bit.
Foreign equity is down about10%.
So they had losses, but notnearly as big.
So there's a realdiversification kind of benefit
you can see there.
If we actually step out year todate, you can see that we're
(14:53):
coming through a little bit more.
So we mentioned this tariff talkis really ramped up in April
but it's been present prettymuch for all of 2025.
So I'm showing that.
You know, in 2025, s&p 500still down about seven and a
half percent and other portionsof the market.
You know maybe mid value orgrowth style equities could be
down even more.
You know, at the fixed income'sup over 2.5% and foreign
(15:16):
equity's up close to 5%.
So there you kind of see thatdiversification impact and I
know some of our clients havebeen pleasantly surprised when
they see their kind of recentperformance and they're only
down 1% or 2% and they're like,oh, that's actually not that bad
considering what we've gonethrough.
And part of it has been theidea we stayed invested.
We saw that rally in the secondhalf of April.
(15:38):
But the other part is weweren't all in on domestic
equity.
We had exposure to these otherbuckets and it really did add
some value.
Brian Graff (15:45):
Yeah, for sure, dave.
So diversification, you can see, really mitigates some of that
downside risk that we're takingas investors.
We also talk about the idea ofrebalancing a portfolio as well.
Some comments on that, dave.
Dave Lytle (15:57):
Yeah.
So rebalancing again not a veryfancy or cutting-edge idea,
it's just the idea that if youhave a long-term target, you
should be going back to it,selling the things that have
done well and buying the thingsthat are down low.
I will say, for a lot ofinvestors, rebalancing and up
markets is much easier.
I will say, for a lot ofinvestors, rebalancing in up
markets is much easier.
It's much easier idea that, hey, you know the stocks have stock
(16:19):
markets on great in 23 and 24.
I'm going to lock in some ofthose gains and buy bonds.
That's a much more natural kindof reaction.
Rebalancing when equity marketshave done bad is not as easy,
but it's just as impactful.
You kind of do both sides ofthe coin here to get the full
benefit.
So there the idea is that, okay, things really sold off the
(16:39):
first half of April.
If I had a 60-40 portfolio,maybe my stock exposure is lower
than I want it to be.
You know what?
I'm going to sell some bondsand I'm not saying it's going to
be the market bottom right now.
There's no call on that.
But the whole idea is thingsare much less expensive than
they were just a couple weeksago.
I'm going to get back to mytarget, try to buy low, and you
(17:02):
know there's a lot of things inthere that you know buying low
is really impactful and even ifthe market does go down more,
just kind of doing that constantapproach and capturing those
when things are a little bitlower, have more exposure there.
When you do have rallies goingforward, it can be really
impactful.
So we recognize that there'sbeen a big rally.
(17:22):
There's still a lot of marketrisks out there, but it's a good
practice to have at all times.
And at the same time too, withrebalancing, it's impactful that
if you had that great 23 and 24, if you didn't rebalance at all
during those years, you weregoing to be overweight equities
coming into this.
So that would be a little bitof extra pain too.
So you know, if you were, youknow, very regimented,
(17:44):
rebalanced in late 24, maybeearly 25, you came into the
sell-off on overweight equitiesand then you maybe had an
opportunity here to add some toequities when things had sold
off and kind of get a littleextra boost to your portfolio
from that technique as well.
Brian Graff (17:58):
Yeah, dave.
I think it's good to point outtoo that a lot of retirement
plans kind of have built intools like automatic rebalancing
within their portfolios.
That way, you know every threemonths, just without you having
to do anything as an investor.
The system you know willautomatically, you know, kind of
sell and buy to get you back toyour original portfolio
(18:19):
objectives.
And when you add, like one ofthose automated tools, in this
case, it kind of prevents theagain, keeps the emotions out of
it.
You're not trying to time themarket, it's just the mechanism
of those portfolios.
I think that's very helpful aswell if offered through your
retirement plan.
Dave Lytle (18:32):
Yeah, it has a disciplined approach where it's
like, hey, I'm going to do it,I'm making this decision once,
and then it kind of is done foryou.
Brian Graff (18:39):
Happens automatically.
Okay, good.
So that's our tip number oneJust make sure, kind of going
into these market environments,you are properly diversified,
You're rebalancing yourportfolio, either on occasion or
through an automated tool.
I think the next thing that'ssuper important, Dave, for all
investors, is to make sureyou're taking an appropriate
amount of risk within yourportfolio so you know how you
(19:02):
invest your money.
Early in your career versus themiddle of your career, versus
pre retirement should beprobably different for most
people, and you know somebodythat called me in panicked a
couple of weeks ago when themarket was not behaving very
nicely.
You know if they were, you know, a year or two away from
retirement, but they were takingyou know, appropriate amount of
(19:23):
risk.
They were a lot more confidentabout where things stood than
the 65-year-old.
That was still maybe 90% or100% equities right, Because
they were taking an appropriateamount of risk for their age.
So risk comes into play quite abit, Wouldn't you agree, Dave?
Dave Lytle (19:40):
I agree it's like you said earlier that those
losses get locked in when yousell.
And if you're looking at aretirement plan or even a young
investor, if you're in your 30s,realistically you might not
need to sell if that money issaved for retirement.
So you can kind of ride downthose ups and lows and have a
higher equity exposure.
Now if you're closer toretirement or you know you're a
(20:00):
young person who's putting moneyaside for a house and you're
like, okay, I'm going to have tokind of liquidate this
portfolio near term horizon,then it's a very different you
know strategy.
So I agree that you know idea tokind of ride out
underperformance and stayinvested for long terms versus
no, I need these funds for otherthings.
They need to be sold out andused is very impactful and I'm a
(20:22):
component of always having somefixed income in a portfolio,
especially with yields beinghigher.
Now I think they can offer somecompetitive total return.
But I think that, as we talkedabout diversifying and
rebalancing, I think alwayshaving some fixed income really
allows you to do those thingsbetter.
And then, certainly, as you gothrough the risk of early mid
retirement or short-term savings, that's when you really factor
(20:45):
in that risk and allocationbecomes really impactful.
Brian Graff (20:48):
Absolutely.
So those are some things youshould do, we think, as a
prudent investor Diversify,rebalance, visit your risk
profile, make sure you'reinvested appropriately for where
you are in your career and yourretirement goals.
Maybe we can now talk aboutsome things you might not want
to do, Dave, as a long-terminvestor, and maybe try and
avoid some common mistakes thatwe see all too often.
(21:09):
So the first thing we'll talkabout here is and I mentioned
earlier, timing the market.
We recommend for most peoplereally trying to avoid market
timing, constantly trying topredict when the market's about
to drop so you sell out of yourriskier investments and let's
say you get that right.
Then it's trying to also buyback into the market before it
(21:30):
goes back up.
So you have to be right twiceto be an effective market timer.
And again, we don't think thatthat's a great idea for
long-term investorsno-transcript.
Dave Lytle (22:09):
You know, I think the market's really bottomed out
there in late March of 2020,when the Fed came in with some
pretty unprecedented and verylarge policies to support the
market.
We all lived through COVID.
It didn't bottom out in Marchof 2020.
It was very impactful, impactedour lives, our abilities to
travel, spend money, do businessfor much longer after that, and
(22:31):
that kind of plays outthroughout history where the
market bottoms well before theactual event gets better.
So it makes it very tough totime and I kind of also
recognize, though it's humannature you feel like all this is
going on, like I need to dosomething.
I can't just sit here.
So, brian, I know we both enjoysome sports.
I'm a big hockey fan.
(22:51):
I'm enjoying the NHL playoffs,right now.
It's playoff season, there's nofighting.
But then when you do fight,here are things you have to
follow.
So you know, we kind of say thesame way with market timing
Okay, don't time the market.
If you're going to time themarket, here are some things to
(23:13):
think about how you're going togo about doing it.
So the first thing I think ofis that the idea that you know,
maybe think about overweight andunderweight.
So a lot of times I think ofinvestors.
If they're nervous about themarket, they go to cash.
Or if they're really bullish onmaybe something happened,
they're like oh, I'm going 100%equity and that's really a very
(23:34):
aggressive swing that can bereally impactful, both good and
bad, and the bad can wipe outagain any good you might have
done.
So the one thing I really thinkof here is the idea of
overweight and underweight, andI see here a lot of
institutional investors like thebig fund shops, the big banks,
talk about it, and maybe youhave a 60-40 portfolio and
you're thinking, hey, I havereal concerns about equity
(23:56):
markets.
Maybe valuations are high, ormaybe this crisis is going on.
You think it's going to getworse.
Maybe you drop down to 50-50.
You make kind of thatincremental change.
So obviously our first line isalways don't time it.
But then just things to thinkabout if you're going to time it
.
Another thing is that don'tstop contributing if you're
saving, whatever it is, whetherit's retirement plan towards a
(24:18):
house, anything like that.
But maybe you're strategicabout how you walk in new money.
Again, don't sell out what youhave.
But you can kind of think, hey,I'm gonna keep contributing,
but maybe I'll let it sit in amoney market for a week or two,
then I'll put it in Again.
If you're going to take steps,it's something reasonable to do.
I think the one that's actuallyprobably the most healthy we
(24:38):
talk about with comes to timing.
The market is rebalancing.
So you got your portfolio andyou know, maybe you saw things
really sell off with the umannouncements of tariffs.
Rather than going 100 equity,you could say, hey, I'm going to
a special rebalance, I'm goingto take my equity port right
back up the target now kind ofoff cycle.
So I think it's one thing isthat you know, don't rebalance
(25:01):
because again, sorry, alwaysrebounds.
Don't time the market If you'rewrong once it can be so
impactful.
But if you're going to kind ofmake some of these decisions.
Where you think you need to dosomething, do small, incremental
things.
Don't make those big swingswith.
You know, I think Tracy has agreat saying don't make
short-term decisions withlong-term money.
Brian Graff (25:20):
I think that really holds through here.
And baby steps.
That's a term I use all thetime too, Dave.
Take baby steps when somebody'spanicked on the phone and
they're really nervous aboutwhere the world's headed.
I don't want to tell them allthe time, just don't do anything
, Just forget about it.
But maybe if you're going tomake a move, just do it small.
Make a small adjustment now.
Dave Lytle (25:48):
Revisit again for six months a year from now and
maybe look at changing somethingagain, but avoid those big
drastic changes in your account.
Yeah, I agree, and I said tooand we talk all the time that if
you're at 100-0 and you'rereally nervous about the equity
market, it might be a good timeto think too should I be 100-0?
Because this is kind of extremecircumstances.
But you should have kind ofthat allocation that lets you
sleep at night and not think youhave to market time to be
positioned for what's happeningright now.
Brian Graff (26:07):
Yeah, yeah.
Hey, dave, shifting gears alittle bit, but I don't want to
forget to ask you this whatabout the old, the notion of
let's buy gold?
You know I get that a lot nowtoo.
Anytime the market's verystressed and people are worried
about the direction of the world, inevitably I get callers that
say I'm just, what do you thinkabout selling off my stocks and
just buying gold?
What do you think about that?
Dave Lytle (26:26):
Yeah, it's one of those things like the whole idea
of like chasing returns is kindof factors right now too,
because gold has been on quite arun.
I mean it's delivered some verybig returns.
You know you can talk aboutinflation hedges or you know
kind of concerns of the stockmarket.
Gold prices have justskyrocketed.
So I think idea of buying goldmight even be getting more
headlines right now just becausepeople have kind of seen what
(26:48):
it's done.
We're not big gold fans herepersonally, just because we
recognize it's a store of value.
People think it's been aroundfor thousands of years.
A lot of currency used to betied to the gold standard.
What we don't necessarily likeabout gold is that there's no
dividends, there's no interest.
It's just kind of holding thatphysical commodity and the whole
(27:09):
idea is that that's only reallyworth what someone's been
willing to pay it for you in thefuture.
So that can be up, that can bedown, but if you hold a bond
you're promised to get back thesame amount plus interest.
There's always a default riskbut that's pretty low if you
hold high quality bonds.
So our thinking is that youknow some people want some
exposure there, but we thinkit's really a good long-term
(27:31):
investment because it's allbased on price change.
There's no idea of, you know,owning a business that has some
earning stream or owning a bondthat's going to promise you
interest payments.
So it's something that we tendto encourage you know investors
to stay away from.
Or, if you're going to have asmall holding, have it be a
small allocation, don't have itbe, you know, a big kind of
center portion of your portfolio.
Brian Graff (27:53):
Right yeah.
So avoid chasing those returnsof gold or any other hot stock
or mutual fund component andmost important thing we say it
all the time, Dave, I think isto really stay invested.
Another saying at Conrad Siegelhere is that it's not about
timing the market, it's moreabout time in the market.
So try to avoid exiting themarket just because of your
(28:15):
emotions.
Don't be overly aggressive whenyou're close to retirement, but
don't be overly conservative inthe early part of your career
either.
We want to make sure we'remaximizing our returns, but
really just stay true to yourobjectives.
Be in the market and,historically speaking, things
have always worked out okay.
Dave Lytle (28:34):
Yeah, I think it's a good thing to think of too, and
the whole idea, too is investin a way that lets you stay in
the market too.
I think coupling those twotogether is a really strong tool
that stay in the market and beinvested in a manner that lets
you do that without you knowfinancial hardship or a lot of
extra stress portfolios andthings maybe to not do within
(29:02):
their portfolios, you know,based on circumstances.
Brian Graff (29:04):
But as we kind of wind things down today, I'd
always like to go over someaction items, some practical
steps people can take, or maybesome tips that we can pass along
, and I'll start off by sayingthis one's a huge one for me.
We may have touched on it alittle bit earlier as really
trying to avoid checking yourretirement account balances
every single day.
Try and avoid checking yourretirement account balances
(29:28):
every single day.
Most 401k or 401k type plansout there are daily valued, so
technically, you could log on toyour provider's website each
day and see your account eitherwent up or down, depending on
how the market performed.
But it's really frustrating.
I don't know how people havethe stomach to do that.
Dave, and you know, something Ihear all the time from people
that do check daily is well, youknow my neighbor, joe.
He lost $100,000 in 2020 whenCOVID hit, and my normal
(29:49):
reaction to that is you know,did Joe really lose that money?
Did he sell everything and notbuy back in, or was it just a
short-term?
You know, paper loss because hewas looking at his website
every day, went down $100,000,but you, but he forgot to
mention that it went right backup a few weeks later.
So you agree, dave, checkingbalances every day not
necessarily the best thing to do.
Dave Lytle (30:09):
Yeah, I think too.
You think of like you could saylost or like gave back some
gains, which I think you couldsay certainly right now in 23
and 24.
And yeah, I agree, I mean Ikeep a very close watch of the
markets with my job here, andeven intraday I'm looking at the
markets too.
But I tend not look at the ideaof, well, how many dollars is
my account up or down.
So I think that adds like extraemotion to it.
(30:31):
That's probably not helpful.
So I think absolutely beinformed if you want to be
nothing wrong with beingwell-read, understanding what
markets are doing.
But I agree, like puttingdollar terms on it on a real
frequent basis, I'm not surethat adds investment value.
I know it does definitely addstress.
Brian Graff (30:47):
Yeah, 100%.
So know what you have in there,know how you're invested.
But again, the daily checkingmaybe not the best thing.
Something else I talk toretirement savers about all the
time is really trying to avoidpulling money out of your
retirement account, Like I know,sometimes it's.
People think that if themarket's not doing very well,
why am I in the market?
(31:07):
I could use this money to payoff other debt.
I'm just going to pull it outof my account.
Enough of this already.
I always like to warn peopletoo.
When you take early withdrawalsor distributions from a
retirement account, not only isthat money you're giving up on
in terms of compound interestand market returns, but there's
tax implications there.
A lot of times you do face a10% early withdrawal penalty if
(31:30):
you're under age 59 and a half.
So unless it's a real emergency, we do typically recommend that
people avoid taking money outof their retirement accounts.
Dave Lytle (31:41):
Yeah, I think you're right.
The power of compound interestis a strong one, so keeping it
in and let it accumulate overtime can make a real difference.
Brian Graff (31:53):
Yeah, and again, going back to the risk thing,
that's another action item.
If you haven't thought abouthow risky your portfolio is,
it's never a bad time to revisitthat.
Take a risk quiz if yourprovider offers one, or talk to
a financial advisor.
You know, especially when youget closer and closer to
retirement, a good financialadvisor is certainly worth their
weight in gold.
So, going back to the goldreference, so you know you do it
on your own, talk to aprofessional and just make sure
(32:15):
you are taking the appropriateamount of risk now to achieve
your future goals.
Dave Lytle (32:20):
Yeah, I think it's a good thing to think of too is,
you know, it's not justage-based.
You know that certainly is aportion of it.
But you know, if you're someonegoing into retirement and you
have a large pension, you have alarge social security, you know
, maybe you don't need as muchfrom your investment so you can
be more risky in the next year.
What should I invest in?
(32:41):
My response is money market orshort-term bonds, like a
one-year time horizon, where youplan on taking everything out.
That doesn't really line upwith equities.
Even if you are in your 20s orearly 30s, that's still a
mismatch.
So I do think it's good to takea risk quiz and it's good to
think too.
It's not just how aggressiveyou are, it's not just the idea
(33:01):
of how old you are, it's theidea too of, like, what are the
circumstances?
What else do we have going onin the picture and that can make
a difference.
Brian Graff (33:09):
Yep, great point.
And then, once you take thatrisk quiz or that assessment,
then make sure that your currentinvestments, that you have in
your retirement plan we alwayslike to focus on retirement here
make sure it lines up with yourrisk quiz results and your
long-term goals.
So again, we go back to assetallocation.
Diversification, dave, huge,huge factor in all this, I agree
(33:29):
.
And then, a very importanteverybody keep saving.
I know.
Again, we talk about humannature, we talk about emotion.
Why would I want to save in amarket that's acting really
wonky I'll use that verytechnical term wonky why would I
do that?
But remember, when you continueto save for retirement, making
regular contributions, you'reusing dollar cost averaging,
(33:52):
which we talked about inprevious episodes.
You're kind of softening theblow.
When the market's down, you'rebuying some of these investments
at a discounted price.
Is that all?
Would you agree with that, davetoo?
I mean, keep saving.
Dave Lytle (34:07):
Yeah, I think keep saving is really important, just
because you know if you skipthose months of saving now, it's
pretty hard to do extra savingin the future.
It's much easier to have itbudgeted, be consistent, keep
those savings going in, you know, whether it's to, you know, a
house fund or retirement fund.
It's good to kind of keep thatdisciplined approach.
And I agree you know everyonewas good investing in 23 and 24.
Those prices were much hot,especially late 24, much higher
(34:28):
than they are now.
And certainly I can say too, ifyou look at you know different
valuations, portions of themarket are less expensive now.
Some portions are still have ahigher price tag.
But we've seen too is we don'tknow where the market's going.
So I think that dollar costaveraging is good to lean into
and by having that approach,yeah, you're not going to time
the market perfect, but you'realso not going to be wrong.
(34:49):
You're doing a very, you know,tried and true, consistent
approach.
That you know, will you be thebiggest winner?
No, but will you have aprobability of success going up?
Yes, and that's kind of ourapproach of like let's make sure
we're doing everything we canto meet our goals versus let's
have the best score up there.
Brian Graff (35:07):
Yeah, great point, dave, and yeah, thanks.
This has been, I think, a veryproductive session.
I hope there were some thingsthat Dave and I talked about
today that really resonate withyou.
But if you know, even aftertoday's podcast, you still have
concerns, you have questions,just remember we are here to
help.
That's what we do at ConradSiegel, so you can email us at
(35:28):
podcast at conradsegelcom,please.
We always like to mention atthe end of these podcasts if you
liked what you heard.
Please give us a good review,subscribe to the podcast, tell
your friends, family members,colleagues where you found us,
and we'd love to have as manylisteners as we can get to help
as many people as possible,because that's what this is all
about.
So, dave, before we sign offfor today, any final comments or
(35:50):
words of wisdom to ourinvestors out there.
Dave Lytle (35:53):
No, I mean I would say that April has been a roller
coaster.
If you feel kind of stressedand tired of keeping up with it,
that's not a wrong reaction, Alot of people are sharing it but
, yeah, just keep that long-termapproach, make incremental
changes and be invested in a waythat meets your goals, helps
you weather the storm and Brianthanks so much for having me on
and doing my first podcast.
Brian Graff (36:15):
It's been great, Dave.
I'm sure it won't be your last.
We'll definitely have you onhere again in the future.
And, Tracy, we miss you.
Uh, get, come back to us soonhere, which I'm sure you will.
And you Come back to us soonhere, which I'm sure you will.
And for now, we will go aheadand sign off and thank our loyal
listeners and just tell youthat we'll see you next time on
the Real Talk Retirement Show.
Take care everybody.
Intro/Closing (36:35):
Thank you for tuning into today's show.
The Real Talk Retirement Showis created and produced by
Conrad Siegel, an advisory firmthat specializes in helping
people prepare for retirementand beyond.
If you want to learn more aboutour work or meet the team, you
can visit conradsegelcom.
Information on this show is foreducational purposes only and
(36:57):
should not be consideredpersonalized investment tax or
legal advice.
Before making decisions, youshould consult with the
appropriate professionals foradvice that is specific to your
situation.
Welcome to the Real Talk Retirement Show, where
we explore the financial sideof retirement and beyond.
Whether you're currentlyretired or planning for the
future, we offer real, relatableconversations about money and
personal finances.
Most importantly, we dive intoall these topics using Real Talk
.
Now, let's get real about yourmoney and your retirement.
(00:23):
Now, let's get real about yourmoney and your retirement.
Brian Graff (00:28):
Hello everyone and welcome to another episode of
the Real Talk Retirement Show.
I'm Brian Graff, a retirementeducator, here with Conrad
Siegel.
Now our loyal listeners, whichwe have.
Many, know that I am joinedevery episode by my colleague,
Tracy Burke.
However, we're going to giveTracy an episode off I promise
(00:48):
it wasn't for bad behavior oranything like that and in his
place we do have a very specialguest.
Today I am joined by Dave Lytle.
Dave is our Chief InvestmentOfficer here at Conrad Siegel.
He's a partner in the firm,leads our investment research
team and consults with many ofour valued clients.
So, Dave, welcome to thepodcast.
Dave Lytle (01:10):
Hey, thanks for having me on, Brian.
Really appreciate it and lookforward to trying a new format
for us to have these discussions.
Brian Graff (01:15):
Absolutely.
We're going to have a good time, Dave, I promise Sounds good.
But, dave, we brought you intoday specifically to tackle the
elephant in the room at leastmost of the rooms that you and I
visit these days which ismarket unpredictability.
Now we could replace that wordunpredictability with a much
stronger, maybe less friendlyword, but let's stick with
unpredictability as we dive intothings.
(01:37):
So, dave, can you start us offby discussing what's going on
right now?
And to timestamp this, rememberwe're in early 2025.
But what's going on right now?
And to timestamp this, rememberwe're in early 2025.
But what's going on now thathas investors panicking a bit
and unsure what to do with theirretirement investments.
Dave Lytle (01:54):
Yeah, absolutely so.
Right now, anything investmentrelated, I mean you have the
normal earnings, interest ratespop up, but tariffs I mean
tariffs is the key word that'scoming up constantly.
And very smart to timestampthis.
I've been saying that.
You know, with the market moveswe've seen both up and down.
The volatility data is goingstale, incredibly quick.
So we are doing this recordingearly May.
(02:16):
Things you know could changequickly, but we do think that
we'll give you an update onwhere the markets kind of stand.
But the steps we're going totalk about of you know, think of
market volatility.
How do you invest through it?
How do you kind of go to sleepat night, those kind of hold in
all situations.
So, starting off kind of whatwe're seeing right now, you know
tariffs have been big reallythe whole year.
(02:36):
President Trump was very directon you know he was going to use
tariffs, got back into officewhen he was campaigning, came
back into office in January andhe has held true to that
campaign promise.
So really the first, you knowJanuary and February and March
markets were down.
A lot of that was on tariffstress.
So you know it started withtariffs on Canada and Mexico and
(02:57):
China and then some moretargeted ones on sectors like
metals and autos and Q1.
Ones on sectors like metals andautos in Q1.
So markets were already alittle stressed about tariffs
and the idea of you know okay,you know, tariffs get paid when
products come into the US.
How's that going to impactpricing?
How's that going to impactconsumer confidence and spending
?
Is there going to be a businessshift because of that?
(03:18):
Are companies going to spendless or we'll have kind of
economic slowdown?
So market was already kind ofkeyed on and kind of stressed
about this.
But then we got a big shift onApril 2.
So there was a big announcementafter markets closed.
President Trump was in the RoseGarden and they kind of rolled
out these reciprocal tariffs,what they were labeled.
So everyone was very keyed intothis address.
It got a lot of attention andwhat we saw come out of it was
(03:40):
actually very different thanmarket expectations.
So reciprocal tariffs everyonewas thinking the idea was going
to be okay, well, if you have atariff of 5% on the US, we'll
put a tariff of 5% on you.
We actually got something verydifferent where it was based
much more on trade surplus.
So the idea was that it wasn'tnecessarily tariff driven.
But if we buy more stuff fromyour country than we send to it,
(04:02):
we're going to give you atariff, thinking this wasn't a
fair trade practice.
So to give you an idea of kindof the scope of it leading into
this, tariffs were about 2.5% onaverage for US imports and this
had actually ticked up inrecent years with some levies
put in place by Trump and Bidenboth their administrations so
everyone's thinking, okay, youknow 2.5, the average tariff for
(04:25):
the US on our exports is aboutfive, maybe things will double
here.
Actually went up to 25 percent,so increased by a factor of 10.
So market was not ready for thatand we saw a huge sell-off
those next two days, on Thursdayand Friday.
So it wasn't a big one-day movehistorically, but the two-day
move we saw actually got put inconsideration of the biggest
(04:46):
since World War II.
So the flash crash we had backin the late 80s great financial
crisis or dot-com type moves.
It was up there.
Markets were obviously verystressed and there started to be
discussions about will thiscause a recession, how big a
recession, how quickly, is goingto come in?
The market was very anxioushere and the market also got
(05:09):
very volatile to think, okay,maybe these are negotiations
versus long-time policy.
We got some different you knowfeedback from administration on
what that was, where they'recertainly open to negotiations
and have more fair trade, but atthe same time they're saying
you know, these are here to stayand they're going to drive a
lot of revenue.
So market wasn't quite surewhat to make of it.
And then again, just a coupleof days later, the following
(05:31):
Wednesday, we got a 90-day pauseto a lot of these bigger
tariffs and the market reactedjust shot skyward.
Brian, you and I were actuallyin the office together, if you
remember, and I had apologizedat the time.
I had my phone on the table.
Now it's just hitting refresh,because we were in that type of
environment where I wanted tosee what was going on.
I wanted to keep tabs on it.
I definitely remember that day,dave, yeah, and you know things
(05:52):
were choppy and we're kind of.
I was giving updates once in awhile, just watching it then and
we left that meeting.
I do a couple things around theoffice and I went out to drive
home in the parking lot.
I pulled up the app one moretime just to see where it was.
Markets had shot up I mean six,7%.
At the time I actually sat inthe parking lot.
I'm like what the heck happenedin the past 20 minutes from when
I put my phone away that I gotin the car and it turns out we
(06:14):
had this pause and ended upbeing one of the biggest days
ever for the S&P 500% gain, justastronomical gains across
pretty much all industries, allstocks Just astronomical gains
across pretty much allindustries, all stocks.
What's interesting here is that, looking at this, we were
paused.
The biggest tariffs, thosetariffs on Canada and Mexico and
China were still in place.
The 10% base on all importsstill hold.
(06:36):
So we're actually at a muchhigher level than we were at the
start of the month, even whatexpectations were.
But it wasn't as bad and itgave hope that a lot of these
might be negotiated.
They might change.
The markets took that very,very, you know, favorably.
Brian Graff (06:50):
Yeah, investors were just looking for a glimmer
of hope, kind of right, dave,correct.
Dave Lytle (06:53):
Like it.
You know it's not good but it'sso much better than where we
were that that was all theexcitement.
And you know that's somethingwe talk about.
You know, historically, gettinginto that larger picture, we
see that a lot when we lookthrough past market stress,
where these best and worst dayshappen really closely together.
And doesn't you know it's truein a lot of times, these market
events, that the rebound's veryswift.
(07:15):
But even on the way down you getthese times where, hey, maybe
things are oversold or maybewe're in a type of environment
right now where things are goingto change, and you get these
huge rallies and there's somegreat charts out there by a
bunch of providers that you knowhow impactful it is missing
these great rallies.
And you know if you sold outafter Thursday and Friday, it's
(07:36):
hard to say that.
You know you weren't lookingand making up a stressful
scenario.
There was a lot of stress inthe markets.
There was real world concernsthere, man, but if you missed
that Wednesday, if you went tocash or sold out a lot of your
equity holdings before that day,really could have long term
impacts on your portfolio.
Brian Graff (07:54):
For sure.
Dave Lytle (07:56):
So, looking at that, you know the idea of, you know
investor sentiment, like what dowe really expect and how do
investors really kind of handlethis?
So you, you know, looking atwhat we saw in those early April
, you know it's hard to seethose dollar losses and I know
you mentioned this speech, brianto your people say that like I
looked at my portfolio and Ilost X dollars of those two days
.
Like we are seeing thosecomments a lot.
Brian Graff (08:17):
Yeah, we see them all the time and you know I try
my best to remind investors that.
You know it's really only onpaper, right, we're on online
and I guess you might say thesedays too.
But until you make that saleand you know, get out of the
investment, you have to reallyconvince yourself that.
You know, I still have the sameamount of units or shares in
this investment that I had theday before.
(08:37):
The value just happens to be alittle bit down.
So it's a psychological gamewhich we've talked about in some
other episodes.
Dave Lytle (08:44):
Yeah, and you know it's so fluid that if you think
of you know 23 and 24, I meanthere was just fantastic gains
in the equity markets Investorsreally benefited.
So yeah, I mean you did, yourportfolio is worth less than it
was earlier.
There's no way getting aroundthat.
But you're right, you knowyou're essentially giving back
some of those great gains youhad earlier and if you do sell
out you lock in that loss.
(09:04):
If you stay invested, then youknow that loss and gain can
easily be fluid, kind of movingforward.
But you know it's hard to seethat dollar loss and there's a
natural instinct like I need toput a floor on it.
Yeah, I might have lost thismuch but I don't want to lose
more.
But when you know we talkedabout, you know those rallies
happen and they happenunpredictably and I mean to be
(09:25):
honest with you a lot of thegains we've seen in april.
It's hard to really reconcilethem sometimes because these
concerns, these long-termproblems or hurdles or
difficulties, were talked aboutin early of april.
They're still there.
They haven't been resolved.
we haven't gotten more certaintyaround them yeah so I mean,
that's the whole idea, is thatyou know, if you say you sold
out and you're like you know I'mdone, I'm going to kind of wait
(09:47):
until this resolves the problemis, you might not have any more
dollar losses, but thatopportunity cost, the idea that
you know, if I had stayedinvested, I would have gotten
that, you know, 8% rally on thatWednesday.
So, yeah, I didn't lose anymore dollars, but, like, what
opportunities did I lose bymaking kind of those short-term
moves?
So, like, I think it's alwaysgood to think about that cost
(10:08):
too.
Yeah, huge part of the equation, for sure.
So, you know, looking at thecurrent environment, I think
it's really important to thinkabout the idea that you know
sentiment is important to themarkets, obviously, that you
know whether people areoptimistic or they're
pessimistic, it can move themarkets.
So there's something to that.
But in this current environment,to you know sentiment is so
(10:28):
fluid.
You think of some of those pastbig crisis.
You think of, you know, thecovid crash, um, the great
financial crisis.
There was this external shockthat was trying to be understood
, couldn't really be controlled.
I mean, we had to work throughit and kind of figure it out.
Um, you know this is.
This tariff is definitelyexternal force coming in,
impacting the markets, but, um,the level of control is very
(10:51):
different.
So the administration has putthese tariffs in place and
they've shown themselves to bevery nimble and fluid and you
know making pauses, makingexceptions, you know shifting
and you know maybe if we gettrade deals they'll remove them
and they could.
If we don't get trade deals,they could get changed in a
different way.
Now we've seen with China theirtariffs have increased a lot,
(11:13):
as China's responded, given sometariffs on US goods, I think.
Currently it's standing about145%, which is almost an embargo
.
If that number were to comedown, if we had some real
progress with China, it could bea huge shift in market
sentiment and performance.
So I think in this situation,with the control the
administration has, it's one ofthose things to know that
(11:34):
sentiment can really turn on adime, and we've seen it do it
there too.
So just one more thing to bethinking about as we kind of try
to navigate this situation.
Brian Graff (11:44):
Yeah for sure, dave .
It's crazy, and you know youthink about the last two times
we had like this.
You've got the pandemic right,which is one totally separate
thing, way different thantariffs right?
So the event that caused thismarket stress and the volatility
, where you know, tariffs versusa pandemic two completely
different things, but really thereactions to investors and the
(12:05):
uncertainty, that's what's sosimilar, and we've seen it
before in history with othertypes of events.
We're going to see it again.
So this is nothing new, atleast.
The volatility, the uncertainty.
So I think the logical nextthing for us to talk about, dave
, would be whether we're talkingabout early 2025 or maybe three
(12:26):
years from now, in 2028, ifsomething happens again, what
are some practical steps we cantake?
What are some things we can doas long-term investors to kind
of protect ourselves from makingbad mistakes with our account,
to feel a little bit more atease with the market environment
.
And I think the first thingI'll bring up is something that
we say all the time here atConrad Siegel be diversified
(12:49):
within your portfolio.
Don't put all your eggs in onebasket.
Have exposure to severaldifferent asset classes and
market categories, which reallyhelps ride out the storm in
difficult times.
Can you talk a little bit aboutthe importance of
diversification in a portfolio,dave?
Dave Lytle (13:04):
Yeah, absolutely.
You know shouldn't comesurprised to your listeners that
you know the things we're goingto talk about.
Aren't these really cuttingedge, exotic strategies?
They're kind of those tried andtrue investment principles, but
they can be really impactfuland you know they're not always
easy to do in stressful times.
So the first is diversification.
It's the idea that you know,yes, the US equity markets have
really had a rough run in April,but that's a good thing to
(13:26):
think of is, you know, werecommend a diversified
portfolio.
So you're going to have, youknow, fixed income, domestic
equity and foreign equity.
And you know, looking back, themonth of April actually turned
out to be not that bad.
The idea of you know S&P 500ended down, I think, less than
1%, so it had a huge rally inthere.
But you know, fixed income wasup 0.4%, foreign equity was up
(13:50):
3.6%.
So the idea that you know, ifyou had all your exposure to the
domestic equity market, youfelt all the pain, all the huge
drops we saw going on.
If you actually had somediversification, you had your
fixed income, you had yourforeign equity, which have been
out of favor in recent years.
We kept saying it's okay,there's a reason to keep them.
They're going to help indifferent market environments.
(14:10):
We saw that play out and if youlook at some intramonth data it
plays out much better.
So on, you know, before the bigrally we had with the pause we
saw from their peak levels, s&pwas down 19%.
About Small caps, us are downcloser to 25.
So you know we always say abear market's a loss of 20%.
(14:31):
S&p 500, I think intraday itmight have got there.
Small caps were firmly in that.
So you had that big sell-off.
Bonds were down a little bit.
Foreign equity is down about10%.
So they had losses, but notnearly as big.
So there's a realdiversification kind of benefit
you can see there.
If we actually step out year todate, you can see that we're
(14:53):
coming through a little bit more.
So we mentioned this tariff talkis really ramped up in April
but it's been present prettymuch for all of 2025.
So I'm showing that.
You know, in 2025, s&p 500still down about seven and a
half percent and other portionsof the market.
You know maybe mid value orgrowth style equities could be
down even more.
You know, at the fixed income'sup over 2.5% and foreign
(15:16):
equity's up close to 5%.
So there you kind of see thatdiversification impact and I
know some of our clients havebeen pleasantly surprised when
they see their kind of recentperformance and they're only
down 1% or 2% and they're like,oh, that's actually not that bad
considering what we've gonethrough.
And part of it has been theidea we stayed invested.
We saw that rally in the secondhalf of April.
(15:38):
But the other part is weweren't all in on domestic
equity.
We had exposure to these otherbuckets and it really did add
some value.
Brian Graff (15:45):
Yeah, for sure, dave.
So diversification, you can see, really mitigates some of that
downside risk that we're takingas investors.
We also talk about the idea ofrebalancing a portfolio as well.
Some comments on that, dave.
Dave Lytle (15:57):
Yeah.
So rebalancing again not a veryfancy or cutting-edge idea,
it's just the idea that if youhave a long-term target, you
should be going back to it,selling the things that have
done well and buying the thingsthat are down low.
I will say, for a lot ofinvestors, rebalancing and up
markets is much easier.
I will say, for a lot ofinvestors, rebalancing in up
markets is much easier.
It's much easier idea that, hey, you know the stocks have stock
(16:19):
markets on great in 23 and 24.
I'm going to lock in some ofthose gains and buy bonds.
That's a much more natural kindof reaction.
Rebalancing when equity marketshave done bad is not as easy,
but it's just as impactful.
You kind of do both sides ofthe coin here to get the full
benefit.
So there the idea is that, okay, things really sold off the
(16:39):
first half of April.
If I had a 60-40 portfolio,maybe my stock exposure is lower
than I want it to be.
You know what?
I'm going to sell some bondsand I'm not saying it's going to
be the market bottom right now.
There's no call on that.
But the whole idea is thingsare much less expensive than
they were just a couple weeksago.
I'm going to get back to mytarget, try to buy low, and you
(17:02):
know there's a lot of things inthere that you know buying low
is really impactful and even ifthe market does go down more,
just kind of doing that constantapproach and capturing those
when things are a little bitlower, have more exposure there.
When you do have rallies goingforward, it can be really
impactful.
So we recognize that there'sbeen a big rally.
(17:22):
There's still a lot of marketrisks out there, but it's a good
practice to have at all times.
And at the same time too, withrebalancing, it's impactful that
if you had that great 23 and 24, if you didn't rebalance at all
during those years, you weregoing to be overweight equities
coming into this.
So that would be a little bitof extra pain too.
So you know, if you were, youknow, very regimented,
(17:44):
rebalanced in late 24, maybeearly 25, you came into the
sell-off on overweight equitiesand then you maybe had an
opportunity here to add some toequities when things had sold
off and kind of get a littleextra boost to your portfolio
from that technique as well.
Brian Graff (17:58):
Yeah, dave.
I think it's good to point outtoo that a lot of retirement
plans kind of have built intools like automatic rebalancing
within their portfolios.
That way, you know every threemonths, just without you having
to do anything as an investor.
The system you know willautomatically, you know, kind of
sell and buy to get you back toyour original portfolio
(18:19):
objectives.
And when you add, like one ofthose automated tools, in this
case, it kind of prevents theagain, keeps the emotions out of
it.
You're not trying to time themarket, it's just the mechanism
of those portfolios.
I think that's very helpful aswell if offered through your
retirement plan.
Dave Lytle (18:32):
Yeah, it has a disciplined approach where it's
like, hey, I'm going to do it,I'm making this decision once,
and then it kind of is done foryou.
Brian Graff (18:39):
Happens automatically.
Okay, good.
So that's our tip number oneJust make sure, kind of going
into these market environments,you are properly diversified,
You're rebalancing yourportfolio, either on occasion or
through an automated tool.
I think the next thing that'ssuper important, Dave, for all
investors, is to make sureyou're taking an appropriate
amount of risk within yourportfolio so you know how you
(19:02):
invest your money.
Early in your career versus themiddle of your career, versus
pre retirement should beprobably different for most
people, and you know somebodythat called me in panicked a
couple of weeks ago when themarket was not behaving very
nicely.
You know if they were, you know, a year or two away from
retirement, but they were takingyou know, appropriate amount of
(19:23):
risk.
They were a lot more confidentabout where things stood than
the 65-year-old.
That was still maybe 90% or100% equities right, Because
they were taking an appropriateamount of risk for their age.
So risk comes into play quite abit, Wouldn't you agree, Dave?
Dave Lytle (19:40):
I agree it's like you said earlier that those
losses get locked in when yousell.
And if you're looking at aretirement plan or even a young
investor, if you're in your 30s,realistically you might not
need to sell if that money issaved for retirement.
So you can kind of ride downthose ups and lows and have a
higher equity exposure.
Now if you're closer toretirement or you know you're a
(20:00):
young person who's putting moneyaside for a house and you're
like, okay, I'm going to have tokind of liquidate this
portfolio near term horizon,then it's a very different you
know strategy.
So I agree that you know idea tokind of ride out
underperformance and stayinvested for long terms versus
no, I need these funds for otherthings.
They need to be sold out andused is very impactful and I'm a
(20:22):
component of always having somefixed income in a portfolio,
especially with yields beinghigher.
Now I think they can offer somecompetitive total return.
But I think that, as we talkedabout diversifying and
rebalancing, I think alwayshaving some fixed income really
allows you to do those thingsbetter.
And then, certainly, as you gothrough the risk of early mid
retirement or short-term savings, that's when you really factor
(20:45):
in that risk and allocationbecomes really impactful.
Brian Graff (20:48):
Absolutely.
So those are some things youshould do, we think, as a
prudent investor Diversify,rebalance, visit your risk
profile, make sure you'reinvested appropriately for where
you are in your career and yourretirement goals.
Maybe we can now talk aboutsome things you might not want
to do, Dave, as a long-terminvestor, and maybe try and
avoid some common mistakes thatwe see all too often.
(21:09):
So the first thing we'll talkabout here is and I mentioned
earlier, timing the market.
We recommend for most peoplereally trying to avoid market
timing, constantly trying topredict when the market's about
to drop so you sell out of yourriskier investments and let's
say you get that right.
Then it's trying to also buyback into the market before it
(21:30):
goes back up.
So you have to be right twiceto be an effective market timer.
And again, we don't think thatthat's a great idea for
long-term investorsno-transcript.
Dave Lytle (22:09):
You know, I think the market's really bottomed out
there in late March of 2020,when the Fed came in with some
pretty unprecedented and verylarge policies to support the
market.
We all lived through COVID.
It didn't bottom out in Marchof 2020.
It was very impactful, impactedour lives, our abilities to
travel, spend money, do businessfor much longer after that, and
(22:31):
that kind of plays outthroughout history where the
market bottoms well before theactual event gets better.
So it makes it very tough totime and I kind of also
recognize, though it's humannature you feel like all this is
going on, like I need to dosomething.
I can't just sit here.
So, brian, I know we both enjoysome sports.
I'm a big hockey fan.
(22:51):
I'm enjoying the NHL playoffs,right now.
It's playoff season, there's nofighting.
But then when you do fight,here are things you have to
follow.
So you know, we kind of say thesame way with market timing
Okay, don't time the market.
If you're going to time themarket, here are some things to
(23:13):
think about how you're going togo about doing it.
So the first thing I think ofis that the idea that you know,
maybe think about overweight andunderweight.
So a lot of times I think ofinvestors.
If they're nervous about themarket, they go to cash.
Or if they're really bullish onmaybe something happened,
they're like oh, I'm going 100%equity and that's really a very
(23:34):
aggressive swing that can bereally impactful, both good and
bad, and the bad can wipe outagain any good you might have
done.
So the one thing I really thinkof here is the idea of
overweight and underweight, andI see here a lot of
institutional investors like thebig fund shops, the big banks,
talk about it, and maybe youhave a 60-40 portfolio and
you're thinking, hey, I havereal concerns about equity
(23:56):
markets.
Maybe valuations are high, ormaybe this crisis is going on.
You think it's going to getworse.
Maybe you drop down to 50-50.
You make kind of thatincremental change.
So obviously our first line isalways don't time it.
But then just things to thinkabout if you're going to time it
.
Another thing is that don'tstop contributing if you're
saving, whatever it is, whetherit's retirement plan towards a
(24:18):
house, anything like that.
But maybe you're strategicabout how you walk in new money.
Again, don't sell out what youhave.
But you can kind of think, hey,I'm gonna keep contributing,
but maybe I'll let it sit in amoney market for a week or two,
then I'll put it in Again.
If you're going to take steps,it's something reasonable to do.
I think the one that's actuallyprobably the most healthy we
(24:38):
talk about with comes to timing.
The market is rebalancing.
So you got your portfolio andyou know, maybe you saw things
really sell off with the umannouncements of tariffs.
Rather than going 100 equity,you could say, hey, I'm going to
a special rebalance, I'm goingto take my equity port right
back up the target now kind ofoff cycle.
So I think it's one thing isthat you know, don't rebalance
(25:01):
because again, sorry, alwaysrebounds.
Don't time the market If you'rewrong once it can be so
impactful.
But if you're going to kind ofmake some of these decisions.
Where you think you need to dosomething, do small, incremental
things.
Don't make those big swingswith.
You know, I think Tracy has agreat saying don't make
short-term decisions withlong-term money.
Brian Graff (25:20):
I think that really holds through here.
And baby steps.
That's a term I use all thetime too, Dave.
Take baby steps when somebody'spanicked on the phone and
they're really nervous aboutwhere the world's headed.
I don't want to tell them allthe time, just don't do anything
, Just forget about it.
But maybe if you're going tomake a move, just do it small.
Make a small adjustment now.
Dave Lytle (25:48):
Revisit again for six months a year from now and
maybe look at changing somethingagain, but avoid those big
drastic changes in your account.
Yeah, I agree, and I said tooand we talk all the time that if
you're at 100-0 and you'rereally nervous about the equity
market, it might be a good timeto think too should I be 100-0?
Because this is kind of extremecircumstances.
But you should have kind ofthat allocation that lets you
sleep at night and not think youhave to market time to be
positioned for what's happeningright now.
Brian Graff (26:07):
Yeah, yeah.
Hey, dave, shifting gears alittle bit, but I don't want to
forget to ask you this whatabout the old, the notion of
let's buy gold?
You know I get that a lot nowtoo.
Anytime the market's verystressed and people are worried
about the direction of the world, inevitably I get callers that
say I'm just, what do you thinkabout selling off my stocks and
just buying gold?
What do you think about that?
Dave Lytle (26:26):
Yeah, it's one of those things like the whole idea
of like chasing returns is kindof factors right now too,
because gold has been on quite arun.
I mean it's delivered some verybig returns.
You know you can talk aboutinflation hedges or you know
kind of concerns of the stockmarket.
Gold prices have justskyrocketed.
So I think idea of buying goldmight even be getting more
headlines right now just becausepeople have kind of seen what
(26:48):
it's done.
We're not big gold fans herepersonally, just because we
recognize it's a store of value.
People think it's been aroundfor thousands of years.
A lot of currency used to betied to the gold standard.
What we don't necessarily likeabout gold is that there's no
dividends, there's no interest.
It's just kind of holding thatphysical commodity and the whole
(27:09):
idea is that that's only reallyworth what someone's been
willing to pay it for you in thefuture.
So that can be up, that can bedown, but if you hold a bond
you're promised to get back thesame amount plus interest.
There's always a default riskbut that's pretty low if you
hold high quality bonds.
So our thinking is that youknow some people want some
exposure there, but we thinkit's really a good long-term
(27:31):
investment because it's allbased on price change.
There's no idea of, you know,owning a business that has some
earning stream or owning a bondthat's going to promise you
interest payments.
So it's something that we tendto encourage you know investors
to stay away from.
Or, if you're going to have asmall holding, have it be a
small allocation, don't have itbe, you know, a big kind of
center portion of your portfolio.
Brian Graff (27:53):
Right yeah.
So avoid chasing those returnsof gold or any other hot stock
or mutual fund component andmost important thing we say it
all the time, Dave, I think isto really stay invested.
Another saying at Conrad Siegelhere is that it's not about
timing the market, it's moreabout time in the market.
So try to avoid exiting themarket just because of your
(28:15):
emotions.
Don't be overly aggressive whenyou're close to retirement, but
don't be overly conservative inthe early part of your career
either.
We want to make sure we'remaximizing our returns, but
really just stay true to yourobjectives.
Be in the market and,historically speaking, things
have always worked out okay.
Dave Lytle (28:34):
Yeah, I think it's a good thing to think of too, and
the whole idea, too is investin a way that lets you stay in
the market too.
I think coupling those twotogether is a really strong tool
that stay in the market and beinvested in a manner that lets
you do that without you knowfinancial hardship or a lot of
extra stress portfolios andthings maybe to not do within
(29:02):
their portfolios, you know,based on circumstances.
Brian Graff (29:04):
But as we kind of wind things down today, I'd
always like to go over someaction items, some practical
steps people can take, or maybesome tips that we can pass along
, and I'll start off by sayingthis one's a huge one for me.
We may have touched on it alittle bit earlier as really
trying to avoid checking yourretirement account balances
every single day.
Try and avoid checking yourretirement account balances
(29:28):
every single day.
Most 401k or 401k type plansout there are daily valued, so
technically, you could log on toyour provider's website each
day and see your account eitherwent up or down, depending on
how the market performed.
But it's really frustrating.
I don't know how people havethe stomach to do that.
Dave, and you know, something Ihear all the time from people
that do check daily is well, youknow my neighbor, joe.
He lost $100,000 in 2020 whenCOVID hit, and my normal
(29:49):
reaction to that is you know,did Joe really lose that money?
Did he sell everything and notbuy back in, or was it just a
short-term?
You know, paper loss because hewas looking at his website
every day, went down $100,000,but you, but he forgot to
mention that it went right backup a few weeks later.
So you agree, dave, checkingbalances every day not
necessarily the best thing to do.
Dave Lytle (30:09):
Yeah, I think too.
You think of like you could saylost or like gave back some
gains, which I think you couldsay certainly right now in 23
and 24.
And yeah, I agree, I mean Ikeep a very close watch of the
markets with my job here, andeven intraday I'm looking at the
markets too.
But I tend not look at the ideaof, well, how many dollars is
my account up or down.
So I think that adds like extraemotion to it.
(30:31):
That's probably not helpful.
So I think absolutely beinformed if you want to be
nothing wrong with beingwell-read, understanding what
markets are doing.
But I agree, like puttingdollar terms on it on a real
frequent basis, I'm not surethat adds investment value.
I know it does definitely addstress.
Brian Graff (30:47):
Yeah, 100%.
So know what you have in there,know how you're invested.
But again, the daily checkingmaybe not the best thing.
Something else I talk toretirement savers about all the
time is really trying to avoidpulling money out of your
retirement account, Like I know,sometimes it's.
People think that if themarket's not doing very well,
why am I in the market?
(31:07):
I could use this money to payoff other debt.
I'm just going to pull it outof my account.
Enough of this already.
I always like to warn peopletoo.
When you take early withdrawalsor distributions from a
retirement account, not only isthat money you're giving up on
in terms of compound interestand market returns, but there's
tax implications there.
A lot of times you do face a10% early withdrawal penalty if
(31:30):
you're under age 59 and a half.
So unless it's a real emergency, we do typically recommend that
people avoid taking money outof their retirement accounts.
Dave Lytle (31:41):
Yeah, I think you're right.
The power of compound interestis a strong one, so keeping it
in and let it accumulate overtime can make a real difference.
Brian Graff (31:53):
Yeah, and again, going back to the risk thing,
that's another action item.
If you haven't thought abouthow risky your portfolio is,
it's never a bad time to revisitthat.
Take a risk quiz if yourprovider offers one, or talk to
a financial advisor.
You know, especially when youget closer and closer to
retirement, a good financialadvisor is certainly worth their
weight in gold.
So, going back to the goldreference, so you know you do it
on your own, talk to aprofessional and just make sure
(32:15):
you are taking the appropriateamount of risk now to achieve
your future goals.
Dave Lytle (32:20):
Yeah, I think it's a good thing to think of too is,
you know, it's not justage-based.
You know that certainly is aportion of it.
But you know, if you're someonegoing into retirement and you
have a large pension, you have alarge social security, you know
, maybe you don't need as muchfrom your investment so you can
be more risky in the next year.
What should I invest in?
(32:41):
My response is money market orshort-term bonds, like a
one-year time horizon, where youplan on taking everything out.
That doesn't really line upwith equities.
Even if you are in your 20s orearly 30s, that's still a
mismatch.
So I do think it's good to takea risk quiz and it's good to
think too.
It's not just how aggressiveyou are, it's not just the idea
(33:01):
of how old you are, it's theidea too of, like, what are the
circumstances?
What else do we have going onin the picture and that can make
a difference.
Brian Graff (33:09):
Yep, great point.
And then, once you take thatrisk quiz or that assessment,
then make sure that your currentinvestments, that you have in
your retirement plan we alwayslike to focus on retirement here
make sure it lines up with yourrisk quiz results and your
long-term goals.
So again, we go back to assetallocation.
Diversification, dave, huge,huge factor in all this, I agree
(33:29):
.
And then, a very importanteverybody keep saving.
I know.
Again, we talk about humannature, we talk about emotion.
Why would I want to save in amarket that's acting really
wonky I'll use that verytechnical term wonky why would I
do that?
But remember, when you continueto save for retirement, making
regular contributions, you'reusing dollar cost averaging,
(33:52):
which we talked about inprevious episodes.
You're kind of softening theblow.
When the market's down, you'rebuying some of these investments
at a discounted price.
Is that all?
Would you agree with that, davetoo?
I mean, keep saving.
Dave Lytle (34:07):
Yeah, I think keep saving is really important, just
because you know if you skipthose months of saving now, it's
pretty hard to do extra savingin the future.
It's much easier to have itbudgeted, be consistent, keep
those savings going in, you know, whether it's to, you know, a
house fund or retirement fund.
It's good to kind of keep thatdisciplined approach.
And I agree you know everyonewas good investing in 23 and 24.
Those prices were much hot,especially late 24, much higher
(34:28):
than they are now.
And certainly I can say too, ifyou look at you know different
valuations, portions of themarket are less expensive now.
Some portions are still have ahigher price tag.
But we've seen too is we don'tknow where the market's going.
So I think that dollar costaveraging is good to lean into
and by having that approach,yeah, you're not going to time
the market perfect, but you'realso not going to be wrong.
(34:49):
You're doing a very, you know,tried and true, consistent
approach.
That you know, will you be thebiggest winner?
No, but will you have aprobability of success going up?
Yes, and that's kind of ourapproach of like let's make sure
we're doing everything we canto meet our goals versus let's
have the best score up there.
Brian Graff (35:07):
Yeah, great point, dave, and yeah, thanks.
This has been, I think, a veryproductive session.
I hope there were some thingsthat Dave and I talked about
today that really resonate withyou.
But if you know, even aftertoday's podcast, you still have
concerns, you have questions,just remember we are here to
help.
That's what we do at ConradSiegel, so you can email us at
(35:28):
podcast at conradsegelcom,please.
We always like to mention atthe end of these podcasts if you
liked what you heard.
Please give us a good review,subscribe to the podcast, tell
your friends, family members,colleagues where you found us,
and we'd love to have as manylisteners as we can get to help
as many people as possible,because that's what this is all
about.
So, dave, before we sign offfor today, any final comments or
(35:50):
words of wisdom to ourinvestors out there.
Dave Lytle (35:53):
No, I mean I would say that April has been a roller
coaster.
If you feel kind of stressedand tired of keeping up with it,
that's not a wrong reaction, Alot of people are sharing it but
, yeah, just keep that long-termapproach, make incremental
changes and be invested in a waythat meets your goals, helps
you weather the storm and Brianthanks so much for having me on
and doing my first podcast.
Brian Graff (36:15):
It's been great, Dave.
I'm sure it won't be your last.
We'll definitely have you onhere again in the future.
And, Tracy, we miss you.
Uh, get, come back to us soonhere, which I'm sure you will.
And you Come back to us soonhere, which I'm sure you will.
And for now, we will go aheadand sign off and thank our loyal
listeners and just tell youthat we'll see you next time on
the Real Talk Retirement Show.
Take care everybody.
Intro/Closing (36:35):
Thank you for tuning into today's show.
The Real Talk Retirement Showis created and produced by
Conrad Siegel, an advisory firmthat specializes in helping
people prepare for retirementand beyond.
If you want to learn more aboutour work or meet the team, you
can visit conradsegelcom.
Information on this show is foreducational purposes only and
(36:57):
should not be consideredpersonalized investment tax or
legal advice.
Before making decisions, youshould consult with the
appropriate professionals foradvice that is specific to your
situation.
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