April 22, 2025 • 8 mins
In this video, I break down 3 strategies to help you navigate a market downturn:
1) The market always comes back – History shows us time and time again that corrections are normal and the market recovers. The key is staying invested.
2) Tax loss harvesting – This is a powerful tool to offset gains and reduce your tax bill. I’ll show you how to do it the right way.
3) Over-allocated in stocks? It might be time to diversify. If you're too heavy in the market, consider investing in alternative assets you actually understand.
Want to take control, invest in what you know?
Head over to DirectedIRA.com – where you can diversify your IRA and 401k into alternative assets like real estate, private companies, and more through a self-directed retirement account.
Need help with tax planning and legal strategies for your LLC or investments?
Go to KKOSlawyers.com to get expert planning that actually helps you build wealth.
- Grab my FREE Ultimate Tax Strategy Guide HERE!
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome everyone to the Main Street Business Podcast
.
This is Matt Sorensen, yourhost for today.
Please enjoy.
The stock market has beencrashing in recent days and a
lot of investors are asking thequestion what should I do?
Should I be selling right now?
What strategic decisions shouldI be making for my wealth and
my future?
The S&P 500 itself is down 10%.
(00:21):
Your $100,000 account is nowonly worth $90,000 right now.
In today's video, I'm going tobreak down three important
considerations you need to takeinto account when the stock
market drops.
Now, the first thing I want tosay is the market always comes
back.
Just look at the S&P 500 itself.
In the last 20 years, we've had26 corrections in the market
(00:42):
where it went down and came back.
The most recent one in 2022,27%.
The stock market went down andcame back.
Now that was over 282 days.
This was fear of inflation,rising rates, the Fed tightening
all that stuff coming back, andso we have corrections Every
year.
I'm just looking at the charthere.
(01:03):
The market goes down more than5% and there's a correction
period, but it always comes back.
It's just a matter of when.
So the first thing I want tothink about is we want to stay
invested.
We want to stay the course.
Don't go out and go into cash.
Okay, I want you to stayinvested.
The worst thing you can do ismiss the rebound.
Okay, you want to buy low andsell high.
(01:24):
Right now, if you're a sellerin the market and you're going
to cash, you're selling low.
That's the opposite of what youshould be doing here.
But there's really two criticalconsiderations you should do
that are going to add morewealth into your pocket when the
market goes down.
Now, one of the most strategicwealth building strategies you
can do when the stock marketgoes down is something called
tax loss harvesting.
(01:44):
Strategies you can do when thestock market goes down is
something called tax lossharvesting, and what you're
doing here is you're sellingyour stocks or index funds at a
loss and you're using that lossto offset other gains you might
have in the stock market.
So, for example, let's say youbought the S&P 500 fund and you
bought $300,000 worth of it.
So you had $300,000 purchaseprice of an S&P 500 index fund
and right now, let's say it'sdown 10%, which it has been and
(02:06):
now it's a value of $270,000.
If I sell now, I'm going tohave a loss of $30,000.
I can use this loss to offsetother taxable gains I might have
in my stock portfolio.
That helps me in the future.
But I don't want you to sit outof the market, so I want you to
repurchase other securities soyou stay in the market.
(02:29):
Okay, typically a savvy investorisn't going to stay out of the
market.
They're just going to go buysome other stock or index fund.
There's a critical rule you gotto understand and it's called
the wash sale rule and what thatsays is you can't sell and take
a loss and then immediately goback and buy the same fund.
So, for example, if you own theindex fund, the S&P 500 SPY,
(02:50):
and you sell that here for 270grand, you can't go back and buy
it tomorrow for $270,000 andclaim the loss.
But what you can do is, let'ssay again, you own the S&P 500
fund, you sell for a loss, youcan buy a total market index
fund P500 fund.
You sell for a loss, you canbuy a total market index fund,
you can buy the NASDAQ, you canbuy other index funds or stocks
(03:13):
and you will be able to avoidthe wash sell rule.
So you can lock in the loss.
So at the end of the day, here.
I've got a tax loss I can useto offset other income.
I've replaced my security.
I'm in a different index fundor set of stocks again that you
believe in.
You want to make goodinvestment decisions on what
you're replacing it here with.
And now you're actuallybenefiting from the stock market
going down because you'verepositioned your assets.
You're still in the market,still in a good fund that's
going to track and haveappreciation and growth over
(03:35):
time.
But you've got a tax loss alongthe way that you're going to be
using against other gains thatyou're going to have on your tax
return.
Now, if this was in your IRA or401k, don't worry about the tax
loss harvesting.
You don't pay taxes on thegains or there's no losses to
take.
So this is in your brokerageaccount, of course, where you
would use this tax lossharvesting strategy.
And for anyone new to thisstrategy, this is something you
want to think about as themarket goes down, because it can
(03:57):
be an opportunity to lock in aloss.
Now the final point here, andprobably the most critical when
the stock market goes down, is Iwant you to look at your
current investments.
Too many Americans are overallocated in the stock market
All of their IRA, their 401k,their personal money, is in the
freaking stock market.
Okay, that is not what wealthypeople do.
(04:18):
That is what lazy people do.
Okay, it's easy to just go buya stock or an ETF or a mutual
fund.
But you want to know what thewealthy do.
They are not fully invested inthe stock market.
There's a great statistic herethat Ernst Young did on wealthy
Americans and where theirinvestments lie.
Now, the mass affluent inAmerica, those are people with
about a million dollar net worth.
86% of that is invested in thestock market.
Only 14% is in quote, unquotealternative assets like real
(04:42):
estate, oil and gas, privatefunds, private equity, venture
capital.
Okay, 86% is invested in thestock market.
But then you take people thathave a 10 million or greater net
worth.
They only have 19% of theirportfolio in the actual stock
market.
81% of their net worth is inreal estate, private funds,
(05:05):
private companies, startups,private equity.
The wealthy just do not put allof their money in the stock
market.
They are investing in otherassets that can drive better
returns and higher value.
So if you're someone annoyed bythe stock market roller coaster
, let's have a wake up callabout where all your money is.
Are you, too, allocated intothe stock market?
And no, you should startlearning about these other
(05:26):
private assets and alternativeinvestments that the wealthy are
investing in, and I want you tothink about this, not just for
your personal dollars, but foryour IRA.
Our company Directed IRA hastwo and a half billion in assets
invested in non-publicly tradedassets private companies,
private funds, real estate,crypto.
These are actually assets evenyour IRA could own.
So you want to start opening upyour eyes to the opportunities
(05:50):
outside of the stock market.
It takes a little more work,but it is what the wealthy do,
and these alternative assetshave proven an ability to drive
greater returns than beingtotally reliant on the stock
market.
Jp Morgan, the most Wall Streetof all institutions out there,
did a report themselves.
Stock market.
Jp Morgan, the most Wall Streetof all institutions out there,
did a report themselves and theysaid the typical portfolio that
a financial advisor recommended, which was 60% stocks and 40%
(06:13):
bonds, that is out the window.
And they said you know what welike to do 30% to alternative
assets, 40% to stocks and 30% tobonds or fixed income.
And what they found was, whenthey allocated a little bit more
money, 30% to alternative orfixed income and what they found
was, when they allocated alittle bit more money 30% to
alternative assets, theirclients had greater returns and
less volatility.
So if you have not done that, ifyou are fully invested in the
(06:35):
stock market alone, I want youto consider investing in
alternatives with your personalfunds, or even with your IRA or
401k using a self-directed IRA,which what we do at our company
Directed IRA.
Now, if you're like Matt I'venever heard of an IRA owning
non-publicly traded assets likereal estate or private funds or
private companies well, book acall with our team, get to our
website at directediracom.
We're here to help educate youand show you the options that
(06:58):
are available to you.
Well, I know it's stressful asyou look at the stock market and
see it going down.
This is our hard-earned moneythat we're investing and trying
to grow for long-term wealthbuilding.
Just stay the course.
Keep in mind these strategicalternatives, the tax loss
harvesting option and alsolooking at diversifying your
wealth into alternative assets.
Thanks everyone for listening.
I hope this episode was helpful.
Now, if you want to get intothe diagrams and some of the
(07:20):
numbers I was writing down as Iwas going through this, get over
to my YouTube channel, wherethese videos are as well.
Thanks for listening.
We'll see you next time andthank you everyone for listening
.
Speaker 2 (07:28):
A quick disclaimer and reminder this presentation
does not constitute an attorneyor CPA client relationship and
it is always in your bestinterest to consult competent
legal and tax professionals whenconducting your own personal
transactions.
Speaker 1 (07:44):
We also want to make sure you know this is not
investment advice or financialadvice.
We're just trying to give youeducation, ideas and strategies
you can take to yourprofessionals or conduct your
own research on.
We'll see you next time.
Welcome everyone to the Main Street Business Podcast
.
This is Matt Sorensen, yourhost for today.
Please enjoy.
The stock market has beencrashing in recent days and a
lot of investors are asking thequestion what should I do?
Should I be selling right now?
What strategic decisions shouldI be making for my wealth and
my future?
The S&P 500 itself is down 10%.
(00:21):
Your $100,000 account is nowonly worth $90,000 right now.
In today's video, I'm going tobreak down three important
considerations you need to takeinto account when the stock
market drops.
Now, the first thing I want tosay is the market always comes
back.
Just look at the S&P 500 itself.
In the last 20 years, we've had26 corrections in the market
(00:42):
where it went down and came back.
The most recent one in 2022,27%.
The stock market went down andcame back.
Now that was over 282 days.
This was fear of inflation,rising rates, the Fed tightening
all that stuff coming back, andso we have corrections Every
year.
I'm just looking at the charthere.
(01:03):
The market goes down more than5% and there's a correction
period, but it always comes back.
It's just a matter of when.
So the first thing I want tothink about is we want to stay
invested.
We want to stay the course.
Don't go out and go into cash.
Okay, I want you to stayinvested.
The worst thing you can do ismiss the rebound.
Okay, you want to buy low andsell high.
(01:24):
Right now, if you're a sellerin the market and you're going
to cash, you're selling low.
That's the opposite of what youshould be doing here.
But there's really two criticalconsiderations you should do
that are going to add morewealth into your pocket when the
market goes down.
Now, one of the most strategicwealth building strategies you
can do when the stock marketgoes down is something called
tax loss harvesting.
(01:44):
Strategies you can do when thestock market goes down is
something called tax lossharvesting, and what you're
doing here is you're sellingyour stocks or index funds at a
loss and you're using that lossto offset other gains you might
have in the stock market.
So, for example, let's say youbought the S&P 500 fund and you
bought $300,000 worth of it.
So you had $300,000 purchaseprice of an S&P 500 index fund
and right now, let's say it'sdown 10%, which it has been and
(02:06):
now it's a value of $270,000.
If I sell now, I'm going tohave a loss of $30,000.
I can use this loss to offsetother taxable gains I might have
in my stock portfolio.
That helps me in the future.
But I don't want you to sit outof the market, so I want you to
repurchase other securities soyou stay in the market.
(02:29):
Okay, typically a savvy investorisn't going to stay out of the
market.
They're just going to go buysome other stock or index fund.
There's a critical rule you gotto understand and it's called
the wash sale rule and what thatsays is you can't sell and take
a loss and then immediately goback and buy the same fund.
So, for example, if you own theindex fund, the S&P 500 SPY,
(02:50):
and you sell that here for 270grand, you can't go back and buy
it tomorrow for $270,000 andclaim the loss.
But what you can do is, let'ssay again, you own the S&P 500
fund, you sell for a loss, youcan buy a total market index
fund P500 fund.
You sell for a loss, you canbuy a total market index fund,
you can buy the NASDAQ, you canbuy other index funds or stocks
(03:13):
and you will be able to avoidthe wash sell rule.
So you can lock in the loss.
So at the end of the day, here.
I've got a tax loss I can useto offset other income.
I've replaced my security.
I'm in a different index fundor set of stocks again that you
believe in.
You want to make goodinvestment decisions on what
you're replacing it here with.
And now you're actuallybenefiting from the stock market
going down because you'verepositioned your assets.
You're still in the market,still in a good fund that's
going to track and haveappreciation and growth over
(03:35):
time.
But you've got a tax loss alongthe way that you're going to be
using against other gains thatyou're going to have on your tax
return.
Now, if this was in your IRA or401k, don't worry about the tax
loss harvesting.
You don't pay taxes on thegains or there's no losses to
take.
So this is in your brokerageaccount, of course, where you
would use this tax lossharvesting strategy.
And for anyone new to thisstrategy, this is something you
want to think about as themarket goes down, because it can
(03:57):
be an opportunity to lock in aloss.
Now the final point here, andprobably the most critical when
the stock market goes down, is Iwant you to look at your
current investments.
Too many Americans are overallocated in the stock market
All of their IRA, their 401k,their personal money, is in the
freaking stock market.
Okay, that is not what wealthypeople do.
(04:18):
That is what lazy people do.
Okay, it's easy to just go buya stock or an ETF or a mutual
fund.
But you want to know what thewealthy do.
They are not fully invested inthe stock market.
There's a great statistic herethat Ernst Young did on wealthy
Americans and where theirinvestments lie.
Now, the mass affluent inAmerica, those are people with
about a million dollar net worth.
86% of that is invested in thestock market.
Only 14% is in quote, unquotealternative assets like real
(04:42):
estate, oil and gas, privatefunds, private equity, venture
capital.
Okay, 86% is invested in thestock market.
But then you take people thathave a 10 million or greater net
worth.
They only have 19% of theirportfolio in the actual stock
market.
81% of their net worth is inreal estate, private funds,
(05:05):
private companies, startups,private equity.
The wealthy just do not put allof their money in the stock
market.
They are investing in otherassets that can drive better
returns and higher value.
So if you're someone annoyed bythe stock market roller coaster
, let's have a wake up callabout where all your money is.
Are you, too, allocated intothe stock market?
And no, you should startlearning about these other
(05:26):
private assets and alternativeinvestments that the wealthy are
investing in, and I want you tothink about this, not just for
your personal dollars, but foryour IRA.
Our company Directed IRA hastwo and a half billion in assets
invested in non-publicly tradedassets private companies,
private funds, real estate,crypto.
These are actually assets evenyour IRA could own.
So you want to start opening upyour eyes to the opportunities
(05:50):
outside of the stock market.
It takes a little more work,but it is what the wealthy do,
and these alternative assetshave proven an ability to drive
greater returns than beingtotally reliant on the stock
market.
Jp Morgan, the most Wall Streetof all institutions out there,
did a report themselves.
Stock market.
Jp Morgan, the most Wall Streetof all institutions out there,
did a report themselves and theysaid the typical portfolio that
a financial advisor recommended, which was 60% stocks and 40%
(06:13):
bonds, that is out the window.
And they said you know what welike to do 30% to alternative
assets, 40% to stocks and 30% tobonds or fixed income.
And what they found was, whenthey allocated a little bit more
money, 30% to alternative orfixed income and what they found
was, when they allocated alittle bit more money 30% to
alternative assets, theirclients had greater returns and
less volatility.
So if you have not done that, ifyou are fully invested in the
(06:35):
stock market alone, I want youto consider investing in
alternatives with your personalfunds, or even with your IRA or
401k using a self-directed IRA,which what we do at our company
Directed IRA.
Now, if you're like Matt I'venever heard of an IRA owning
non-publicly traded assets likereal estate or private funds or
private companies well, book acall with our team, get to our
website at directediracom.
We're here to help educate youand show you the options that
(06:58):
are available to you.
Well, I know it's stressful asyou look at the stock market and
see it going down.
This is our hard-earned moneythat we're investing and trying
to grow for long-term wealthbuilding.
Just stay the course.
Keep in mind these strategicalternatives, the tax loss
harvesting option and alsolooking at diversifying your
wealth into alternative assets.
Thanks everyone for listening.
I hope this episode was helpful.
Now, if you want to get intothe diagrams and some of the
(07:20):
numbers I was writing down as Iwas going through this, get over
to my YouTube channel, wherethese videos are as well.
Thanks for listening.
We'll see you next time andthank you everyone for listening
.
Speaker 2 (07:28):
A quick disclaimer and reminder this presentation
does not constitute an attorneyor CPA client relationship and
it is always in your bestinterest to consult competent
legal and tax professionals whenconducting your own personal
transactions.
Speaker 1 (07:44):
We also want to make sure you know this is not
investment advice or financialadvice.
We're just trying to give youeducation, ideas and strategies
you can take to yourprofessionals or conduct your
own research on.
We'll see you next time.
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