"Hey Mike, I know I should be in the stock market, but I can’t get myself to go in since I think it’s going to crash. Is this normal? What else is there?
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Episode Transcript
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Mike (00:05):
Welcome to How to Retire On Time, a show that answers
your retirement questions. We'rehere to move past that
oversimplified advice you'veheard hundreds of times.
Instead, we're gonna dive intothat nitty gritty. So as always,
text your questions to (913)363-1234 anytime during the
week, and we'll feature them onthe show. Just remember, not
financial advice.
This is an educational show.David, what do we got today?
David (00:28):
Hey, Mike. I know I should be in the stock market,
but I can't get myself to go insince I think it's going to
crash. A, is this normal? B,what else is there?
Mike (00:38):
K. So multi layered question. Is this normal? What
was the second one?
David (00:43):
Yeah. Is it normal, and what else is there? Maybe are
they asking, like, what else isthere to invest in, or what are
they missing?
Mike (00:49):
Strategies. Okay. So first off, let's talk about is this
normal? I don't know what thegeneral consensus is of the
financial services space, but Ican speak for myself. And I
would say, yeah, it is normal.
It's kinda like in thewintertime, you put on a few
pounds, and in the summertime,you shed a few pounds. Like,
there's this natural phenomenaor whatever you wanna call it
David (01:13):
Yeah.
Mike (01:14):
To where we grow, grow, grow. We invent, we invent, we
innovate, we create, we'reindustrious, and then at some
point, we kind of overdo it. Andwe get excited, maybe a little
too excited, and then themarkets are overbought, and
they're over evaluated, and andthen we have to kind of digest
it. The hour after Thanksgiving,all the regret you have for
(01:35):
eating too much. Maybe you'remore self controlled than
others, but it's a very normalthing.
And people blame the tryptophanor whatever on that Thanksgiving
turkey. Yeah. It's not thetryptophan. You ate too much. So
in my mind, that's kinda likethe market.
So let's use a case study. Inthe eighties, this thing was
invented called the personalcomputer.
David (01:57):
I I'm familiar.
Mike (01:58):
Yeah. Have you ever used one before? Yeah. They're wild.
And then this other thing cameabout with the Internet, which
connected all the personalcomputers together.
I'm being a little facetioushere. We all know what a
computer is, but at the time, doyou remember how cool this I
remember the day we got ourMacintosh computer in. Wow. We
plugged it in, and then we went,what's next? And then there was
(02:20):
this floppy disk.
It's floppy. I use that loosely.We could plug it in and do this
thing called American online.And it was amazing. You could
block out all incoming callsbecause of, what, 56 dial up and
all these things, and you couldlog in.
And then what? We were kindalike, okay. What do you do with
the Internet? What's a website?Are they trustworthy?
(02:44):
Yeah. It was this brand newthing, and it created all of
these really cool ideas, and wegot very excited. And then the
nineties boomed. Microsoftboomed. Apple boomed mostly.
I mean, had its own journey. TheInternet, Cisco boomed. All
these massive boom existed, andthen it was overpriced. And if
you look at it from more of atechnical standpoint or
(03:06):
fundamental standpoint,whichever way you wanna
interpret this, you could arguethat the price earnings, so the
price of a stock versus theearnings of the company, was not
in proportion. So, like, I'm nota nutritionist, but there's
probably a healthy percentage orsomething like that of fat to
muscle, body weight, orsomething.
(03:26):
Sure. There's probably a healthyrange where you might be a
little bit too lean or you mightbe a little too obese, and
that's not supposed to bodyshame anyone. That's just
reality. Right? There's a healthspectrum here.
There's a health spectrum instocks or any asset class that
the price of it may not beappropriate.
David (03:44):
Give us an example of a company that where it's
imbalanced. Like, yep, they'remaking good profits, and they're
priced accordingly.
Mike (03:51):
Yeah. So Microsoft, for example, the price of the stock
was significantly higher thanthe earnings that was
rationalized, what the companywas actually earning, because we
were expecting it to continue togrow at exponential rates. And
so we just thought, oh, I wannaget in early. The company will
continue to grow, and itrationalizes its price. That was
(04:11):
the idea.
And then 2000 comes along, andwe start to lose momentum, and
then we start to digest whatthis thing was. Because we
didn't really know what theInternet was for a long time.
Okay? Then 2000 o one and o twofrom top to bottom at the S and
P, that's like 50% decline inthe market. The QQQ or the
(04:32):
Nasdaq 100, so it's it's a 100stocks more tech focused.
Those were all newer companies,by the way. It's a different
version of QQQ today. But thatwent down, I think, like, 80% or
something In
David (04:43):
the early years. To bottom.
Mike (04:45):
That's a pretty big drop. And then people figured things
out. Right? Amazon figured outwhat they were doing. A lot of
companies, they figured out whatthey're doing.
Cisco never really recovereduntil twenty five years later.
But Microsoft recovered andfigured this. So that's very
normal in the markets, thatthere's a new industry, a new
(05:05):
bubble, a new something thatgrows, grows, and then it
digests. It's we grew too fast,too much. Right now, we've got
the AI, and and you know it's abubble when you're getting your
groceries, and the clerk,whether it's the 18 year old
clerk or the 80 year old clerk,is telling you, yep.
(05:26):
Those AI companies, that's allyou need in your portfolio that
because it just grows, and it'sgonna keep growing. Well, maybe
not. So there's a metric outthere called the Schiller CPI
index. So basically, they takethe CPI, they back in inflation
and make it more realistic.
David (05:41):
This is consumer price index?
Mike (05:42):
Consumer yeah. It's it's inflation. So, like, the price
of a stock twenty years agoisn't really the same equivalent
of a price of a stock todaybecause inflation has adjusted
that price, which by the way,stocks are a great way to hedge
against inflation among otherassets.
David (05:58):
Because they'll appreciate faster and keep up
with inflation?
Mike (06:01):
Yeah. Inflation's basically the economy is running
too hot. So if the economy isrunning too hot, what is the
economy? Well, a lot of it'syour companies. And if they're
growing too fast, then the pricewould increase as well.
Okay. It's an inflation hedge.But going back to the Schiller
consumer price index adjusted,basically, his metric Okay. For
this. What he found was that thestocks if you look at the price
(06:26):
earnings with the Schillerconsumer price index, the only
time we've ever been higher wasat 2,000.
So not 2,008, not 1966, not allthese other market crashes, and
the markets crash every seven oreight years or so. We are in a
very unique time, not 2020, not2022. We're in a unique time
(06:47):
where the markets are, bydefinition, overvalued. So if
you put your money into themarket today, there's a high
chance you're actually gonnalose money in the near future.
So why would you do that?
Yeah. Herein lies the conundrum.In the mid nineties, people had
the same argument. I know manyfinancial professionals, mostly
(07:08):
brokers that were in thenineties, who had told me the
stories about how they weresaying, yep. These stocks are
this is, like, '93, '94, '95.
These stocks are overvalued.They're overvalued. Let's buy
consumer staples. Let's buyboring stocks. Let's buy bond
funds.
Let's buy other things becauseit's overvalued, and it's going
to drop. And then it didn't.
David (07:30):
And so they were they missed out. Is that what
Mike (07:32):
you're saying? Best gains ever in market history. Some of
the best years ever were in thelate nineties. And, yeah, it
eventually crashed, but youcannot time the market. You
can't do it.
And so instead of trying to waitfor, oh, well, I wanna wait
until the markets crash, thenI'm gonna buy in. That might
(07:52):
work, but it might not work. Andit takes a certain amount of
humility to to acknowledge that.And so if you have that
understanding, then you can pullback a little bit and say, what
are the right investment andproducts that are appropriate
for me? Okay?
I'm gonna ask you kind of afunny question, but because
you're pretty handy.
David (08:13):
Oh, thank you.
Mike (08:14):
I I know you've got a lot of tools, so I assume you're
handy because have a lot oftools.
David (08:17):
We have some tools. Yeah. We've accumulated some.
Mike (08:19):
Have you ever not had the tool that you needed and tried
to use a different tool to makeit work?
David (08:24):
Yeah. And it didn't work. I've been there. Like, oh, I can
sort of make this work, and no,it didn't. Can I tell you a
Mike (08:30):
quick story about boxcar derby?
David (08:32):
Okay.
Mike (08:32):
You know, the the boy scouts. So my son wants to carve
a boxcar, and I don't have theright tools for this. I don't
have like, growing up, we hadthe saw that was really thin,
and you could like carve it allout. Yes. We didn't really have
that.
So what I did was, and thankgoodness he was four years old
when we did this, so he didn'treally understand what
aesthetics meant. Uh-huh. I Itook the only saw I had, and I
(08:55):
cut off just like a diagonalthrough it. Not balanced at all.
Looked horrible.
And then I took the drill, and Ijust tried to do a bunch of
drills into this wooden block,and then I took a flathead, and
just tried to chisel it off sothe car kind of was what it
should be, and then we kind ofsanded it down. Frankenstein
(09:15):
looked beautiful compared tothis thing that we have. And
that's kind of like trying tohave stocks figure out all of
your retirement needs. If youuse a tool inappropriately,
you're going to get hurt. Ishouldn't say that
promissorally, but there's ahigh probability that you're
going to get hurt.
If you use just stocks in yourportfolio or equities to fund
(09:38):
your whole retirement plan rightnow when we're at a market top,
You're probably gonna get hurt,so the sentiment of this
question, I think, is valid. Butit doesn't mean you should put
your assets then in cash andjust try to wait and time it,
because now you're losingagainst inflation. And I know
what the inflation numbers justcame out, and I know that
(09:58):
inflation is historically low.It's low until it's not. The
markets are going up untilthey're not.
So going all in on a particularinvestment or product may not be
the best thing. So here's acouple of strategies or a couple
of things to consider. Firstoff, you could you could invest
(10:20):
in short term, let's say, CDs,treasuries, not treasury funds,
not bond funds, though you maydo that as well. That's a
different conversation. Butsomething that's fixed, but is
gonna become liquid at somepoint so that you're beating
cash returns.
And I'm not saying you shouldput all of your assets into
something like this. Not at all.But maybe you put some of your
(10:40):
assets so there is protection,so that if the markets go down,
you have a safer place to pullincome from in retirement if
you're retired. And maybe youalso put a little bit extra into
something like this so that ifor when the markets do crash,
you can then buy at the bottom,but you were still growing your
assets. Maybe you put a part ofyour assets into more indexed
(11:01):
products, buffered ETFs, and youcould do buffered ETFs that
reset quarterly.
If you don't know what abuffered ETF is, basically,
there's a downside buffer. So ifthe markets go down, you don't
get all the downside hit. That'show it works. You don't get all
the upside, but you're bufferingout some of the downside risk.
That's a way that you may beable to hedge against this
downside risk and then buy in ata better rate.
(11:24):
This is a clever one. You couldbuy a fixed indexed annuity as
long as it allows the five yearperiod certain at any point. So
it basically turns into a fiveyear CD ladder. Okay. At any
point, that's maybe got, I don'tknow, seven, ten, whatever.
It has upside potential. Nodownside risk. Markets crash,
(11:44):
it's near the low, maybe it'sdown twenty, thirty, 40%, and
then you turn it on. Now you'vegot five years of income and
dollar cost averaging into themarket when it's down. The bear
market, which is the downmarket, bad news bears, really
is the opportunity for those whoprepare.
(12:05):
And those who just buy the stockmarket, you're basically walking
into a fight with your handstied behind your back, hoping
that you can just withstand theblows that could be coming.
That's kind of rough spot to bein. You wanna avoid that. My son
does Krav Maga. Oh.
And I'll tell you what, there'sno way I'd wanna get in a fight
with any of those people, eventhe teenagers that are training
(12:26):
there. Uh-huh. Because I haven'ttrained in Krav Maga. That's
Israeli street fighting forthose who are unaware of the
term. Uh-huh.
But you got to understand theenvironment that you're walking
into. You've got to understandthe appropriate use of certain
investments and products. Youhave to have strategies for if
the markets go up or down, andyou have to understand how to
(12:46):
take advantage of thosesituations for better or for
worse. The problem I feel isthat people just know how to
build a portfolio that can growwhen markets are good, when
times are good. That's not howit works.
You don't play chess going justall out for the king and leaving
yourself exposed. You don't playrisk just going having one army
(13:08):
and just going all out. Like,life takes strategy. It's not
getting boardwalk in monopoly.You don't go all in on one
strategy.
You have multiple strategies.Now how much of your portfolio
would go to each strategy? Thatdepends on your lifestyle and
legacy goals and how your planlooks. You first run the plan.
(13:29):
Well, first off, you shouldfigure out what do you want your
life to look like.
That's kind of an importantthing. Your money serves you.
You don't revolve around, oh,well, this is my income, so I'm
gonna make it work. No. You planyour life first, then you do
your financial plan, which hasnothing to do with investments
or products.
You're first looking at the cashflow, the flows, the ins and
outs, the growth projections.You're looking at it from a high
(13:51):
level, then you explore thestrategies, then you pick the
investments and products tosupport those strategies and
that plan. Too often, peoplewill just solve it by saying,
here's a strategy. I'm going allin on that and calling it good.
Not how it works.
Design your lifestyle, puttogether your plan, figure out
your strategies for what marketsare good or bad, and then put
(14:13):
together your portfolio withwhatever investments or products
work, and there are so many outthere. But to answer this
person's question, yoursentiment is valid. It makes
sense. That does not mean you goto cash and wait for the other
shoe to drop. You need tooutpace inflation.
You need to make sure thatyou're growing your assets.
Maybe you have some stocks, butyou don't need to touch it for
(14:35):
over ten years. Maybe you've gotother assets that have growth
potential that can provide youthe income you need for the
first couple of years. Divideand conquer. I cannot emphasize
that enough.
That's all the time we've gotfor the show today. If you
enjoyed the show, considersubscribing to it wherever you
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(14:57):
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(15:21):
www.yourwealthanalysis.com todayto learn more and get started.
Welcome to How to Retire On Time, a show that answers
your retirement questions. We'rehere to move past that
oversimplified advice you'veheard hundreds of times.
Instead, we're gonna dive intothat nitty gritty. So as always,
text your questions to (913)363-1234 anytime during the
week, and we'll feature them onthe show. Just remember, not
financial advice.
This is an educational show.David, what do we got today?
David (00:28):
Hey, Mike. I know I should be in the stock market,
but I can't get myself to go insince I think it's going to
crash. A, is this normal? B,what else is there?
Mike (00:38):
K. So multi layered question. Is this normal? What
was the second one?
David (00:43):
Yeah. Is it normal, and what else is there? Maybe are
they asking, like, what else isthere to invest in, or what are
they missing?
Mike (00:49):
Strategies. Okay. So first off, let's talk about is this
normal? I don't know what thegeneral consensus is of the
financial services space, but Ican speak for myself. And I
would say, yeah, it is normal.
It's kinda like in thewintertime, you put on a few
pounds, and in the summertime,you shed a few pounds. Like,
there's this natural phenomenaor whatever you wanna call it
David (01:13):
Yeah.
Mike (01:14):
To where we grow, grow, grow. We invent, we invent, we
innovate, we create, we'reindustrious, and then at some
point, we kind of overdo it. Andwe get excited, maybe a little
too excited, and then themarkets are overbought, and
they're over evaluated, and andthen we have to kind of digest
it. The hour after Thanksgiving,all the regret you have for
(01:35):
eating too much. Maybe you'remore self controlled than
others, but it's a very normalthing.
And people blame the tryptophanor whatever on that Thanksgiving
turkey. Yeah. It's not thetryptophan. You ate too much. So
in my mind, that's kinda likethe market.
So let's use a case study. Inthe eighties, this thing was
invented called the personalcomputer.
David (01:57):
I I'm familiar.
Mike (01:58):
Yeah. Have you ever used one before? Yeah. They're wild.
And then this other thing cameabout with the Internet, which
connected all the personalcomputers together.
I'm being a little facetioushere. We all know what a
computer is, but at the time, doyou remember how cool this I
remember the day we got ourMacintosh computer in. Wow. We
plugged it in, and then we went,what's next? And then there was
(02:20):
this floppy disk.
It's floppy. I use that loosely.We could plug it in and do this
thing called American online.And it was amazing. You could
block out all incoming callsbecause of, what, 56 dial up and
all these things, and you couldlog in.
And then what? We were kindalike, okay. What do you do with
the Internet? What's a website?Are they trustworthy?
(02:44):
Yeah. It was this brand newthing, and it created all of
these really cool ideas, and wegot very excited. And then the
nineties boomed. Microsoftboomed. Apple boomed mostly.
I mean, had its own journey. TheInternet, Cisco boomed. All
these massive boom existed, andthen it was overpriced. And if
you look at it from more of atechnical standpoint or
(03:06):
fundamental standpoint,whichever way you wanna
interpret this, you could arguethat the price earnings, so the
price of a stock versus theearnings of the company, was not
in proportion. So, like, I'm nota nutritionist, but there's
probably a healthy percentage orsomething like that of fat to
muscle, body weight, orsomething.
(03:26):
Sure. There's probably a healthyrange where you might be a
little bit too lean or you mightbe a little too obese, and
that's not supposed to bodyshame anyone. That's just
reality. Right? There's a healthspectrum here.
There's a health spectrum instocks or any asset class that
the price of it may not beappropriate.
David (03:44):
Give us an example of a company that where it's
imbalanced. Like, yep, they'remaking good profits, and they're
priced accordingly.
Mike (03:51):
Yeah. So Microsoft, for example, the price of the stock
was significantly higher thanthe earnings that was
rationalized, what the companywas actually earning, because we
were expecting it to continue togrow at exponential rates. And
so we just thought, oh, I wannaget in early. The company will
continue to grow, and itrationalizes its price. That was
(04:11):
the idea.
And then 2000 comes along, andwe start to lose momentum, and
then we start to digest whatthis thing was. Because we
didn't really know what theInternet was for a long time.
Okay? Then 2000 o one and o twofrom top to bottom at the S and
P, that's like 50% decline inthe market. The QQQ or the
(04:32):
Nasdaq 100, so it's it's a 100stocks more tech focused.
Those were all newer companies,by the way. It's a different
version of QQQ today. But thatwent down, I think, like, 80% or
something In
David (04:43):
the early years. To bottom.
Mike (04:45):
That's a pretty big drop. And then people figured things
out. Right? Amazon figured outwhat they were doing. A lot of
companies, they figured out whatthey're doing.
Cisco never really recovereduntil twenty five years later.
But Microsoft recovered andfigured this. So that's very
normal in the markets, thatthere's a new industry, a new
(05:05):
bubble, a new something thatgrows, grows, and then it
digests. It's we grew too fast,too much. Right now, we've got
the AI, and and you know it's abubble when you're getting your
groceries, and the clerk,whether it's the 18 year old
clerk or the 80 year old clerk,is telling you, yep.
(05:26):
Those AI companies, that's allyou need in your portfolio that
because it just grows, and it'sgonna keep growing. Well, maybe
not. So there's a metric outthere called the Schiller CPI
index. So basically, they takethe CPI, they back in inflation
and make it more realistic.
David (05:41):
This is consumer price index?
Mike (05:42):
Consumer yeah. It's it's inflation. So, like, the price
of a stock twenty years agoisn't really the same equivalent
of a price of a stock todaybecause inflation has adjusted
that price, which by the way,stocks are a great way to hedge
against inflation among otherassets.
David (05:58):
Because they'll appreciate faster and keep up
with inflation?
Mike (06:01):
Yeah. Inflation's basically the economy is running
too hot. So if the economy isrunning too hot, what is the
economy? Well, a lot of it'syour companies. And if they're
growing too fast, then the pricewould increase as well.
Okay. It's an inflation hedge.But going back to the Schiller
consumer price index adjusted,basically, his metric Okay. For
this. What he found was that thestocks if you look at the price
(06:26):
earnings with the Schillerconsumer price index, the only
time we've ever been higher wasat 2,000.
So not 2,008, not 1966, not allthese other market crashes, and
the markets crash every seven oreight years or so. We are in a
very unique time, not 2020, not2022. We're in a unique time
(06:47):
where the markets are, bydefinition, overvalued. So if
you put your money into themarket today, there's a high
chance you're actually gonnalose money in the near future.
So why would you do that?
Yeah. Herein lies the conundrum.In the mid nineties, people had
the same argument. I know manyfinancial professionals, mostly
(07:08):
brokers that were in thenineties, who had told me the
stories about how they weresaying, yep. These stocks are
this is, like, '93, '94, '95.
These stocks are overvalued.They're overvalued. Let's buy
consumer staples. Let's buyboring stocks. Let's buy bond
funds.
Let's buy other things becauseit's overvalued, and it's going
to drop. And then it didn't.
David (07:30):
And so they were they missed out. Is that what
Mike (07:32):
you're saying? Best gains ever in market history. Some of
the best years ever were in thelate nineties. And, yeah, it
eventually crashed, but youcannot time the market. You
can't do it.
And so instead of trying to waitfor, oh, well, I wanna wait
until the markets crash, thenI'm gonna buy in. That might
(07:52):
work, but it might not work. Andit takes a certain amount of
humility to to acknowledge that.And so if you have that
understanding, then you can pullback a little bit and say, what
are the right investment andproducts that are appropriate
for me? Okay?
I'm gonna ask you kind of afunny question, but because
you're pretty handy.
David (08:13):
Oh, thank you.
Mike (08:14):
I I know you've got a lot of tools, so I assume you're
handy because have a lot oftools.
David (08:17):
We have some tools. Yeah. We've accumulated some.
Mike (08:19):
Have you ever not had the tool that you needed and tried
to use a different tool to makeit work?
David (08:24):
Yeah. And it didn't work. I've been there. Like, oh, I can
sort of make this work, and no,it didn't. Can I tell you a
Mike (08:30):
quick story about boxcar derby?
David (08:32):
Okay.
Mike (08:32):
You know, the the boy scouts. So my son wants to carve
a boxcar, and I don't have theright tools for this. I don't
have like, growing up, we hadthe saw that was really thin,
and you could like carve it allout. Yes. We didn't really have
that.
So what I did was, and thankgoodness he was four years old
when we did this, so he didn'treally understand what
aesthetics meant. Uh-huh. I Itook the only saw I had, and I
(08:55):
cut off just like a diagonalthrough it. Not balanced at all.
Looked horrible.
And then I took the drill, and Ijust tried to do a bunch of
drills into this wooden block,and then I took a flathead, and
just tried to chisel it off sothe car kind of was what it
should be, and then we kind ofsanded it down. Frankenstein
(09:15):
looked beautiful compared tothis thing that we have. And
that's kind of like trying tohave stocks figure out all of
your retirement needs. If youuse a tool inappropriately,
you're going to get hurt. Ishouldn't say that
promissorally, but there's ahigh probability that you're
going to get hurt.
If you use just stocks in yourportfolio or equities to fund
(09:38):
your whole retirement plan rightnow when we're at a market top,
You're probably gonna get hurt,so the sentiment of this
question, I think, is valid. Butit doesn't mean you should put
your assets then in cash andjust try to wait and time it,
because now you're losingagainst inflation. And I know
what the inflation numbers justcame out, and I know that
(09:58):
inflation is historically low.It's low until it's not. The
markets are going up untilthey're not.
So going all in on a particularinvestment or product may not be
the best thing. So here's acouple of strategies or a couple
of things to consider. Firstoff, you could you could invest
(10:20):
in short term, let's say, CDs,treasuries, not treasury funds,
not bond funds, though you maydo that as well. That's a
different conversation. Butsomething that's fixed, but is
gonna become liquid at somepoint so that you're beating
cash returns.
And I'm not saying you shouldput all of your assets into
something like this. Not at all.But maybe you put some of your
(10:40):
assets so there is protection,so that if the markets go down,
you have a safer place to pullincome from in retirement if
you're retired. And maybe youalso put a little bit extra into
something like this so that ifor when the markets do crash,
you can then buy at the bottom,but you were still growing your
assets. Maybe you put a part ofyour assets into more indexed
(11:01):
products, buffered ETFs, and youcould do buffered ETFs that
reset quarterly.
If you don't know what abuffered ETF is, basically,
there's a downside buffer. So ifthe markets go down, you don't
get all the downside hit. That'show it works. You don't get all
the upside, but you're bufferingout some of the downside risk.
That's a way that you may beable to hedge against this
downside risk and then buy in ata better rate.
(11:24):
This is a clever one. You couldbuy a fixed indexed annuity as
long as it allows the five yearperiod certain at any point. So
it basically turns into a fiveyear CD ladder. Okay. At any
point, that's maybe got, I don'tknow, seven, ten, whatever.
It has upside potential. Nodownside risk. Markets crash,
(11:44):
it's near the low, maybe it'sdown twenty, thirty, 40%, and
then you turn it on. Now you'vegot five years of income and
dollar cost averaging into themarket when it's down. The bear
market, which is the downmarket, bad news bears, really
is the opportunity for those whoprepare.
(12:05):
And those who just buy the stockmarket, you're basically walking
into a fight with your handstied behind your back, hoping
that you can just withstand theblows that could be coming.
That's kind of rough spot to bein. You wanna avoid that. My son
does Krav Maga. Oh.
And I'll tell you what, there'sno way I'd wanna get in a fight
with any of those people, eventhe teenagers that are training
(12:26):
there. Uh-huh. Because I haven'ttrained in Krav Maga. That's
Israeli street fighting forthose who are unaware of the
term. Uh-huh.
But you got to understand theenvironment that you're walking
into. You've got to understandthe appropriate use of certain
investments and products. Youhave to have strategies for if
the markets go up or down, andyou have to understand how to
(12:46):
take advantage of thosesituations for better or for
worse. The problem I feel isthat people just know how to
build a portfolio that can growwhen markets are good, when
times are good. That's not howit works.
You don't play chess going justall out for the king and leaving
yourself exposed. You don't playrisk just going having one army
(13:08):
and just going all out. Like,life takes strategy. It's not
getting boardwalk in monopoly.You don't go all in on one
strategy.
You have multiple strategies.Now how much of your portfolio
would go to each strategy? Thatdepends on your lifestyle and
legacy goals and how your planlooks. You first run the plan.
(13:29):
Well, first off, you shouldfigure out what do you want your
life to look like.
That's kind of an importantthing. Your money serves you.
You don't revolve around, oh,well, this is my income, so I'm
gonna make it work. No. You planyour life first, then you do
your financial plan, which hasnothing to do with investments
or products.
You're first looking at the cashflow, the flows, the ins and
outs, the growth projections.You're looking at it from a high
(13:51):
level, then you explore thestrategies, then you pick the
investments and products tosupport those strategies and
that plan. Too often, peoplewill just solve it by saying,
here's a strategy. I'm going allin on that and calling it good.
Not how it works.
Design your lifestyle, puttogether your plan, figure out
your strategies for what marketsare good or bad, and then put
(14:13):
together your portfolio withwhatever investments or products
work, and there are so many outthere. But to answer this
person's question, yoursentiment is valid. It makes
sense. That does not mean you goto cash and wait for the other
shoe to drop. You need tooutpace inflation.
You need to make sure thatyou're growing your assets.
Maybe you have some stocks, butyou don't need to touch it for
(14:35):
over ten years. Maybe you've gotother assets that have growth
potential that can provide youthe income you need for the
first couple of years. Divideand conquer. I cannot emphasize
that enough.
That's all the time we've gotfor the show today. If you
enjoyed the show, considersubscribing to it wherever you
get your podcast. Just searchfor how to retire on time.
Discover if your portfolio isbuilt to weather flat market
(14:57):
cycles or if you're missing taxminimization opportunities that
you may not even know exist.Explore strategies that may be
able to help you lower youroverall risk while potentially
increasing your overall growthand lifestyle flexibility.
This is not your ordinaryfinancial analysis. Learn more
about Your Wealth Analysis andwhat it could do for you
regardless of your age, asset,or target retirement date. Go to
(15:21):
www.yourwealthanalysis.com todayto learn more and get started.
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