Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
This is straight talk from the house with sort of
fine financial planner Tracy Aton right here on thirteen ten
wi b A. Of course, Tracy comes to us from
Tanton Investment House, a fee only fiduciary. You can learn
more about Tracy and the team online the website Tanton
Investment House dot com. That's t A N t O
N investment House dot com. Great website to learn more
about Tracy. You can also listen back to this in
(00:22):
previous shows podcast Again that all available to you at
Tanton Investment House dot com telphal number six oh eight
five zero one, fifteen forty nine. That's six oh eight
five zero one, fifteen fort nine. And joining us this
morning is certified financial planner Tracy Andton.
Speaker 2 (00:35):
Tracy, how you doing this week?
Speaker 3 (00:36):
I'm doing great, Sean, how about you?
Speaker 1 (00:38):
I'm doing really, really good and I'm ready for summer.
I'm even ready for spring. Some days it feels.
Speaker 3 (00:43):
It's time here, ready for it all.
Speaker 1 (00:45):
Yes we are, Yes we are, and we've got a
fantastic conversation ahead.
Speaker 2 (00:49):
What are we going to be talking about this week, Tracy, Well.
Speaker 4 (00:53):
It's on the tips of everyone's client this market volatility,
and today we're going to talk about some tips on
you know, how to keep things in perspective and you
know what what are some coping tech techniques and also
you know how to look at portfolios. So you know,
market volatility can be hard, and so you know, I
(01:13):
empathize with that, and you know, we all experience it,
and we all experience it in a different way. So
you know, I just want to say it's really normal,
you know, markets ups and downs are a normal part
of investing, you know, and it can be unsettling, but
it's important to remember that they don't last forever, and
it's it's really natural to feel uneasy during a decline,
(01:34):
but history has shown that the market has always be
bounce back really over time. And although the dips feel
different in the moment like Okay, this is different because
and we know why, but it've happened before and they
will likely happen again. So basically, understanding that volatility is
a regular part of the market really can help ease
(01:55):
your worry and prevent from making a rush decision out
of fear. And so today I also want to talk
about like, you know, how how do you know when
to move and what would be the reason why you'd
want to do that.
Speaker 1 (02:09):
Really timely and important information as always from certified financial
planner tracing ant don should be a good one.
Speaker 2 (02:14):
Definitely want you to sit tight.
Speaker 1 (02:16):
Of course, if you do miss any part of the program,
or if you want to listen back to it or
share it with somebody online, you can always head on
over to Tanton investment House dot com.
Speaker 2 (02:24):
That's t A N t o N investment House dot com.
Speaker 1 (02:27):
I we've got, of course links to the podcast as
well as more information about tracing and the team that
all available to you at Tanton investment House dot com.
So let's kind of look back at history and what
has it told us about market declines Tracy, Well, basically.
Speaker 4 (02:40):
Market drops are more common than people really realize. So
since nineteen fifty four, the S and P five hundred
has seen declines of five percent or more twice a year,
usually lasting about forty six days, and the bigger drops
happen less often obviously, but the clients of ten percent
and more actually happen about every eighteen months, and typically
(03:01):
they last about one hundred and thirty five days. So
even though larger declines of fifteen percent happened roughly every
three years right and last about two.
Speaker 3 (03:10):
Hundred and fifty six days.
Speaker 4 (03:12):
The most severe drops of twenty percent or more show
up about every six years and tend to last over
a year. So these downturns can feel really unsettling, but
the key takeaway is that they've been a regular part
of the market's history, and recovery has always followed. And
so I noticed that when people are brand new to
(03:32):
me and say, you know, they just got invested right,
so they've missed a lot of.
Speaker 3 (03:38):
The up, and they go, okay, you know.
Speaker 4 (03:41):
I'm ready to be invested, Well, the hard part is
is we've missed a lot of the up. So if
you're investing closer to the top right, then you're likely
to have declines. And so the hard part about is
I know, or the good part about it is I
noticed that as people have been with me for longer
and longer period, they don't tend to sweat it quite
(04:02):
as much, which I totally understand because once we've been
through it one time and another time another time.
Speaker 3 (04:08):
No good or bad.
Speaker 4 (04:09):
I mean, you say to yourself, I've been here before,
and I understand that you know it doesn't last forever,
even though in the moment it feels like it.
Speaker 3 (04:19):
Yeah, this time is different. They don't tend to last forever.
Speaker 1 (04:24):
Let's kind of then help perspective on this stuff, Tracy,
How can you kind of understanding that right perspective really
help folks stay calm during volatile times.
Speaker 4 (04:34):
Well, it's easy to get caught up in the headlines
or focus too much on recent market drops. But again,
keeping a long term perspective can make a big difference.
Speaker 3 (04:43):
So people often overreact.
Speaker 4 (04:45):
And you know I'm in that camp too. So we
often overreact as humans to short term events and forget
that markets have a history of bouncing back. So even
though during the tough times like the downturns of nineteen
thirty nine in nineteen seventy four, which were probably the
worst ones, the market recovered and delivered strong returns over
(05:06):
the next ten years after those lows. So the S
and P five hundred averaged more than fifteen percent annually
after both of those So again, looking at the bigger picture,
from nineteen thirty nine through the end of twenty twenty three,
the average return over every ten year period was about
ten point nine to one percent. Even though we had
(05:28):
those major declines in that stretch. If you look at
the history from nineteen thirty nine through the end of
twenty twenty three, the average return again over every ten
year period was about ten point nine to one percent
ten point nine one percent, so almost eleven percent.
Speaker 3 (05:45):
So again the shows I think that.
Speaker 4 (05:48):
Staying invested through ups and downs has historically paid off.
Speaker 3 (05:51):
Of course, not guaranteed.
Speaker 4 (05:53):
I'm not saying it's guaranteed, right, we don't know. However,
really trusting the long term strength of the market can
help bring peace of mind during uncertain times. And again
I would stress here, you know, understand your portfolio, really
take a deep dive. So sometimes I see people have
knee jerk reactions to well, I'm this much in stacks,
(06:17):
I'm you know, I'm eighty percent in stacks or I'm
seventy percent stacks and that that feels scary. But I'm
really understanding your portfolio is very important, and understanding how
well diversified you are, and taking a deep dive into
looking at what you own, how much you own, and
what sectors you actually are in and what markets you
(06:37):
could be all in. You know, some in the US,
some international, so there's a lot of things to look at.
Speaker 3 (06:43):
With your portfolio.
Speaker 1 (06:44):
You know, one of the things I start to notice
right now is with kind of seeing with some of
the volatility, start hearing people talking about maybe timing the market.
I mean, is trying to time that market? Is is
it worth it or what is what's kind of the
data there?
Speaker 4 (06:57):
Well, it sure could be tempting actually when prices start dropping,
but it often does more harm than good. So research
has shown that people feel the pain of losses almost
twice as strongly as they enjoy gains. Now, I've often
wondered how do they measure that.
Speaker 3 (07:14):
But I'm not going to ask.
Speaker 4 (07:16):
But basically, you know, by feeling that so strongly, you
it's you can actually drive yourself to make those decisions
more so because you're emotionally driven so much more so.
It's like pulling out of the market during the downturn
because you feel it so strongly. But jumping out to
(07:36):
avoid losses might mean missing out on that recovery. So again, historically,
that's all we can kind of look back. Every major
s and P five hundred drop of about fifteen percent
or more since the nineteen thirties has been followed by
a recovery, and those rebounds have often been very powerful.
So in fact, after the five biggest market declines since
(07:59):
nineteen twenty nine and the S and P five hundred
gain between thirty six and one hundred and thirty eight
percent in the first year alone, so averaging in a
pretty impressive seventy point ninety five percent. So again, over
the five years following each low, investments more than doubled
on average. So again, while no recovery is guaranteed, right,
(08:21):
trying to predict the perfect time to get back in
is really nearly impossible, and being out of the market
during those key rebound moments can seriously limit long term returns.
So again, staying invested even when it's rough, you know,
has historically been a better strategy than trying to time.
Speaker 3 (08:40):
The ups and the downs, and so.
Speaker 4 (08:42):
I just you know, stress that it's better to kind
of hang in there. And I think we see that
with this kind of volatility up one day down one day,
up one day one you know, and so having a
better plan or strategy in place with your allocation between
stocks and bonds would actually be better.
Speaker 1 (09:00):
Talking this morning, I was going to say it was
a just jump in real quick to mention. Of course,
talking with certified financial planner Tracy Anton here on thirteen
ten WIBA.
Speaker 2 (09:07):
So we talked with Tracy.
Speaker 1 (09:08):
Don't forget get more information online the website Tanton investment
House dot com. That's t A N t O N
investment House dot com. The toeph number six oh eight
five zero one fifteen forty nine. That's six oh eight
five zero one fifteen forty nine. So Tracy, I just
kind of a little bit of a reminder, Well, let's
kind of look back at some of those big declines
between nineteen twenty nine and twenty twenty three. What is
(09:30):
kind of the takeaway from that and what occurred in
the years following those those declines.
Speaker 4 (09:35):
I guess in the first year after each draft, the
S and P five hind delivered strong gains, averaging nearly
seventy one percent.
Speaker 3 (09:42):
So if you look sean.
Speaker 4 (09:43):
Over that full five year period, the average annual return
was twenty three point one five percent, with most years
showing positive results. So if you took just even a
hypothetical ten thousand investment at the market low, that would
have significantly grown in each case, often more than doubling.
So again this shows how staying invested through downturns can
(10:06):
lead to really meaningful long term growth.
Speaker 1 (10:09):
What about Tracy's we hear I know a lot of
us here and we talk we've talked here on the
show and quite a bit about diversification, and you know,
of course we hear a lot about diversified portfolios. How
does that play a role during market volatility?
Speaker 4 (10:22):
A diversified portfolio doesn't guarantee profits or even protect against losses,
but it can help reduce risk. So by putting money
into different types of investments, investors can kind of soften
the impact of market ups and downs. So this approach
usually doesn't give the highest returns like a single top
performing investment might, like all in growth funds for example,
(10:45):
for the stretch that growth outperformed, but it also avoids
the biggest losses. So again, also a mixed also fixed
income sean.
Speaker 3 (10:55):
Would be good.
Speaker 4 (10:56):
Like bonds, they can help bring balance to your portfolio.
While stocks are a key part of that portfolio. Bonds
are useful right because they often don't move in the
same way as stocks. Now, both stocks and bonds can
fall at the same time. It's not that it doesn't,
but typically when stocks go down, bonds often go up.
Or and they stay steady, they produce an income for example, example,
(11:20):
like intermediate bonds are paying about four and a half
percent in interest. That's helpful, right, And looking at your
portfolio from a perspective of how much income is this
portfolio creating even if stocks don't go anywhere, right, and
so how much income can I do I need from
this portfolio? And how much is it already creating? And
(11:42):
those bonds also.
Speaker 3 (11:43):
Help with that.
Speaker 1 (11:44):
And Tracy obviously working in the news business, you know,
it's hard to hard for me to avoid hearing and
seeing this stuff.
Speaker 2 (11:52):
It can really affect your emotions. Anything. Any kind of
tips and.
Speaker 1 (11:55):
Kind of helpful perspective for folks when it comes to
kind of staying the course and tuning that stuff out.
Speaker 4 (12:01):
Yeah, I think it's you know, it's good to just
turn off the news for a bit because sometimes we
can overly focus on it, and I know it's difficult,
but sometimes you just kind of need to step away.
And then the other thing I would just again accentuate,
is that focusing on what is your portfolio and is
it you know before all the volatility started, wasn't you
(12:24):
know you most likely had a very good plan and
you you thought through that plan, typically with an advisor,
and there was reasons why you did a certain allocation
between stocks and bonds and cash, and I would just
I would just say, you know, sometimes we can get
really short sighted in our timeline. But the reality is
(12:45):
is that you know, again, Marcus, don't stay on forever,
and you most likely had a very good plan between
the stocks and bonds and and focusing on what that
portfolio really looks at looks like. And so I think
that will really help because I've talked to clients this week,
and you know, some are in major life transitions, and
(13:07):
so it is hard when you're in a major life
transition or that transitions coming up within the next two years.
You know, those are the times where it's very difficult
when we do have market volatility, but it's often that
you know, there's also opportunities in this. You know, I
also want to stress that, you know, were you thinking
(13:28):
about a Rath conversion, Well, maybe keep watching the market
and think about that. You know, are you thinking about
you know, I have some extra cash on the sidelines.
Maybe it's a good time to get some of that
cash invested. You know, those are also opportunity times, but
I would say just turn off the news, talk to
your advisor, get to know your portfolio, or review why
you chose what you chose. Most likely you have an
(13:49):
excellent plan. If you have, if you've done some you know,
thought about it and and now it's in the time,
Probably not to change anything if your plan is in place.
Speaker 1 (14:01):
Talking this morning with certifined financial planner Tracy Anton right
here thirteen ten WUIVA Fantastic Advice, and Guidan says always
of course you learn more from Tracy online Tanton Investment
House dot com tel pH number six eight five zero one,
fifteen forty nine. That's six eight five zero one fifteen
four nine. So let's talk about some of the data
on how investors react when it comes to volatility.
Speaker 2 (14:20):
Tracy Well data.
Speaker 4 (14:22):
Shows that how reacting to the market and missing out
just on a few best days can really hurt investment returns.
So if someone invested one thousand in the S and
P five hundred from nineteen ninety to twenty and twenty
four and stayed fully invested, their money would have grown
to thirty four thousand, but missing out just on a
single best day would drop that to thirty thousand and
(14:43):
missing on the best twenty five days would leave them
with only seven thousand dollars, which is crazy comparatively. So
this shows how important it is to stay invested instead
of trying to time the market. Even missing it just
a few good days can really make a huge difference.
Speaker 1 (14:57):
What about strategies then, to be be coping with with
market volatility? I know there's some things folks really should
be paying attention to it some things they probably shouldn't
be paying attention to right now.
Speaker 4 (15:07):
Yeah, exactly, well, you know, again, try not to get
up get too caught up in the headlines news stories.
They often are designed to grab your attention and not
offer sound financial advice. So instead of reacting to short
term noise, stay focused on what is your long term goals,
you know, and how many dollars are you going to
need between you know, even if you're needing income today,
(15:30):
how many dollars is that? And how how long will
your dollars last? Like, let's say you have it in
a bond or cash account, how many dollars is that?
And then recognize that your portfolio likely is creating an
income as well, you know, through dividend income or bonds,
So you know, focus again on long term and what
is it that you.
Speaker 3 (15:50):
Really need versus what you have.
Speaker 4 (15:52):
It also helps to remember that market declines they are normal,
it's a normal part of the economic cycle. So history
has shown that recovery tend to follow the downturns and
even if it takes some time. So again, keeping a
diversified portfolio, it's another smart move since different investments often
perform differently depending on the situation. So diversification can help
(16:14):
reduce overall ups and downs in your portfolio. And like
I've said stressed on this show, you know, we at
the Investment House have done more. You know, our our
portfolios lean towards the value and have for over a
year now because we recognize growth has been pretty frothy. Well,
value is actually outperforming the growth. So you know, it's
a good strategy to have income producing investments in your portfolio.
(16:38):
And also international stocks are less expensive. You know, have
a portion in international stocks as well. You know, remain diversified.
Even if you feel like you know this is this
is a particular area that's better. Make sure you understand,
you know why why a diversified portfolio is actually better
than all in one or two sectors.
Speaker 1 (16:58):
Are there some other things of trace folks can do,
investors can do to cope with with market volatility.
Speaker 4 (17:03):
Well, the big thing I would say is revisit your
allocation between stocks and bonds and cash and have it
really an in depth discussion with your advisor if you
have one, about your time horizon, and have them explained
like why did they recommend the allocation that they did,
and does that still match your long term goals? So
your portfolio, you know, it might have experienced style drift
(17:26):
for example, where you know you have one kind of
investment that you have more dollars in that than you
originally had intended to, or you have more stocks than
what you originally intended because stocks have done so well
in the last five years, so maybe you need to rebalance.
So you know, I'm telling everyone, you know, I would
(17:47):
stay the course and I wouldn't sell out, and I
still believe that. But at the same time, if your
allocation was say seventy thirty seventy percent stocks and thirty
percent bonds, but due to markets doing so well the
last five years, you're now seventy five to twenty well
twenty five, you know, it's not a huge difference. You
got five percent, but maybe that five percent also is
(18:09):
important to make sure. Yeah, I'd still want to go
another five percent because that buys me another year of say,
markets being down, and I can I can pull from
the bonds. And you know, revisit was a seventy thirty
appropriate at that time? Is it appropriate today? And do
I need to reallocate if I haven't? If I haven't rebalanced,
A lot of people have. Right, We've been working hard
(18:31):
at making sure everyone's rebalanced. But you know, every once
in a while you find somebody who's like, no, they
never rebalanced in their four one K, you know, so
you want to revisit that. So I would just say,
stay in touch with your financial advisor if you have one.
They really can offer great perspective and they can help
you focus on what's really important and guide you away
from some emotional decisions that really can derail your long
(18:53):
term strategy. And again, do your financial plan see where
are you? Because you might be in much better situation
than you realize because the five your numbers are still
incredibly good.
Speaker 1 (19:04):
Pretty great guidance as always from certified financial planner Tracy
Anton right here on thirteen ten WIBA don't forget. You
can learn more about Tracy and the team all on
the website Tanton Investment House dot com. That's t A N.
T o N Investment House dot com. Telph number six
oh eight five zero one, fifteen forty nine. That's six
oh eight five zero one, fifteen forty nine. Tracy, it's
(19:25):
always great chatting with you with such great advice. As always,
you have a fantastic day.
Speaker 4 (19:29):
Thanks Sean. Take care,
This is straight talk from the house with sort of
fine financial planner Tracy Aton right here on thirteen ten
wi b A. Of course, Tracy comes to us from
Tanton Investment House, a fee only fiduciary. You can learn
more about Tracy and the team online the website Tanton
Investment House dot com. That's t A N t O
N investment House dot com. Great website to learn more
about Tracy. You can also listen back to this in
(00:22):
previous shows podcast Again that all available to you at
Tanton Investment House dot com telphal number six oh eight
five zero one, fifteen forty nine. That's six oh eight
five zero one, fifteen fort nine. And joining us this
morning is certified financial planner Tracy Andton.
Speaker 2 (00:35):
Tracy, how you doing this week?
Speaker 3 (00:36):
I'm doing great, Sean, how about you?
Speaker 1 (00:38):
I'm doing really, really good and I'm ready for summer.
I'm even ready for spring. Some days it feels.
Speaker 3 (00:43):
It's time here, ready for it all.
Speaker 1 (00:45):
Yes we are, Yes we are, and we've got a
fantastic conversation ahead.
Speaker 2 (00:49):
What are we going to be talking about this week, Tracy, Well.
Speaker 4 (00:53):
It's on the tips of everyone's client this market volatility,
and today we're going to talk about some tips on
you know, how to keep things in perspective and you
know what what are some coping tech techniques and also
you know how to look at portfolios. So you know,
market volatility can be hard, and so you know, I
(01:13):
empathize with that, and you know, we all experience it,
and we all experience it in a different way. So
you know, I just want to say it's really normal,
you know, markets ups and downs are a normal part
of investing, you know, and it can be unsettling, but
it's important to remember that they don't last forever, and
it's it's really natural to feel uneasy during a decline,
(01:34):
but history has shown that the market has always be
bounce back really over time. And although the dips feel
different in the moment like Okay, this is different because
and we know why, but it've happened before and they
will likely happen again. So basically, understanding that volatility is
a regular part of the market really can help ease
(01:55):
your worry and prevent from making a rush decision out
of fear. And so today I also want to talk
about like, you know, how how do you know when
to move and what would be the reason why you'd
want to do that.
Speaker 1 (02:09):
Really timely and important information as always from certified financial
planner tracing ant don should be a good one.
Speaker 2 (02:14):
Definitely want you to sit tight.
Speaker 1 (02:16):
Of course, if you do miss any part of the program,
or if you want to listen back to it or
share it with somebody online, you can always head on
over to Tanton investment House dot com.
Speaker 2 (02:24):
That's t A N t o N investment House dot com.
Speaker 1 (02:27):
I we've got, of course links to the podcast as
well as more information about tracing and the team that
all available to you at Tanton investment House dot com.
So let's kind of look back at history and what
has it told us about market declines Tracy, Well, basically.
Speaker 4 (02:40):
Market drops are more common than people really realize. So
since nineteen fifty four, the S and P five hundred
has seen declines of five percent or more twice a year,
usually lasting about forty six days, and the bigger drops
happen less often obviously, but the clients of ten percent
and more actually happen about every eighteen months, and typically
(03:01):
they last about one hundred and thirty five days. So
even though larger declines of fifteen percent happened roughly every
three years right and last about two.
Speaker 3 (03:10):
Hundred and fifty six days.
Speaker 4 (03:12):
The most severe drops of twenty percent or more show
up about every six years and tend to last over
a year. So these downturns can feel really unsettling, but
the key takeaway is that they've been a regular part
of the market's history, and recovery has always followed. And
so I noticed that when people are brand new to
(03:32):
me and say, you know, they just got invested right,
so they've missed a lot of.
Speaker 3 (03:38):
The up, and they go, okay, you know.
Speaker 4 (03:41):
I'm ready to be invested, Well, the hard part is
is we've missed a lot of the up. So if
you're investing closer to the top right, then you're likely
to have declines. And so the hard part about is
I know, or the good part about it is I
noticed that as people have been with me for longer
and longer period, they don't tend to sweat it quite
(04:02):
as much, which I totally understand because once we've been
through it one time and another time another time.
Speaker 3 (04:08):
No good or bad.
Speaker 4 (04:09):
I mean, you say to yourself, I've been here before,
and I understand that you know it doesn't last forever,
even though in the moment it feels like it.
Speaker 3 (04:19):
Yeah, this time is different. They don't tend to last forever.
Speaker 1 (04:24):
Let's kind of then help perspective on this stuff, Tracy,
How can you kind of understanding that right perspective really
help folks stay calm during volatile times.
Speaker 4 (04:34):
Well, it's easy to get caught up in the headlines
or focus too much on recent market drops. But again,
keeping a long term perspective can make a big difference.
Speaker 3 (04:43):
So people often overreact.
Speaker 4 (04:45):
And you know I'm in that camp too. So we
often overreact as humans to short term events and forget
that markets have a history of bouncing back. So even
though during the tough times like the downturns of nineteen
thirty nine in nineteen seventy four, which were probably the
worst ones, the market recovered and delivered strong returns over
(05:06):
the next ten years after those lows. So the S
and P five hundred averaged more than fifteen percent annually
after both of those So again, looking at the bigger picture,
from nineteen thirty nine through the end of twenty twenty three,
the average return over every ten year period was about
ten point nine to one percent. Even though we had
(05:28):
those major declines in that stretch. If you look at
the history from nineteen thirty nine through the end of
twenty twenty three, the average return again over every ten
year period was about ten point nine to one percent
ten point nine one percent, so almost eleven percent.
Speaker 3 (05:45):
So again the shows I think that.
Speaker 4 (05:48):
Staying invested through ups and downs has historically paid off.
Speaker 3 (05:51):
Of course, not guaranteed.
Speaker 4 (05:53):
I'm not saying it's guaranteed, right, we don't know. However,
really trusting the long term strength of the market can
help bring peace of mind during uncertain times. And again
I would stress here, you know, understand your portfolio, really
take a deep dive. So sometimes I see people have
knee jerk reactions to well, I'm this much in stacks,
(06:17):
I'm you know, I'm eighty percent in stacks or I'm
seventy percent stacks and that that feels scary. But I'm
really understanding your portfolio is very important, and understanding how
well diversified you are, and taking a deep dive into
looking at what you own, how much you own, and
what sectors you actually are in and what markets you
(06:37):
could be all in. You know, some in the US,
some international, so there's a lot of things to look at.
Speaker 3 (06:43):
With your portfolio.
Speaker 1 (06:44):
You know, one of the things I start to notice
right now is with kind of seeing with some of
the volatility, start hearing people talking about maybe timing the market.
I mean, is trying to time that market? Is is
it worth it or what is what's kind of the
data there?
Speaker 4 (06:57):
Well, it sure could be tempting actually when prices start dropping,
but it often does more harm than good. So research
has shown that people feel the pain of losses almost
twice as strongly as they enjoy gains. Now, I've often
wondered how do they measure that.
Speaker 3 (07:14):
But I'm not going to ask.
Speaker 4 (07:16):
But basically, you know, by feeling that so strongly, you
it's you can actually drive yourself to make those decisions
more so because you're emotionally driven so much more so.
It's like pulling out of the market during the downturn
because you feel it so strongly. But jumping out to
(07:36):
avoid losses might mean missing out on that recovery. So again, historically,
that's all we can kind of look back. Every major
s and P five hundred drop of about fifteen percent
or more since the nineteen thirties has been followed by
a recovery, and those rebounds have often been very powerful.
So in fact, after the five biggest market declines since
(07:59):
nineteen twenty nine and the S and P five hundred
gain between thirty six and one hundred and thirty eight
percent in the first year alone, so averaging in a
pretty impressive seventy point ninety five percent. So again, over
the five years following each low, investments more than doubled
on average. So again, while no recovery is guaranteed, right,
(08:21):
trying to predict the perfect time to get back in
is really nearly impossible, and being out of the market
during those key rebound moments can seriously limit long term returns.
So again, staying invested even when it's rough, you know,
has historically been a better strategy than trying to time.
Speaker 3 (08:40):
The ups and the downs, and so.
Speaker 4 (08:42):
I just you know, stress that it's better to kind
of hang in there. And I think we see that
with this kind of volatility up one day down one day,
up one day one you know, and so having a
better plan or strategy in place with your allocation between
stocks and bonds would actually be better.
Speaker 1 (09:00):
Talking this morning, I was going to say it was
a just jump in real quick to mention. Of course,
talking with certified financial planner Tracy Anton here on thirteen
ten WIBA.
Speaker 2 (09:07):
So we talked with Tracy.
Speaker 1 (09:08):
Don't forget get more information online the website Tanton investment
House dot com. That's t A N t O N
investment House dot com. The toeph number six oh eight
five zero one fifteen forty nine. That's six oh eight
five zero one fifteen forty nine. So Tracy, I just
kind of a little bit of a reminder, Well, let's
kind of look back at some of those big declines
between nineteen twenty nine and twenty twenty three. What is
(09:30):
kind of the takeaway from that and what occurred in
the years following those those declines.
Speaker 4 (09:35):
I guess in the first year after each draft, the
S and P five hind delivered strong gains, averaging nearly
seventy one percent.
Speaker 3 (09:42):
So if you look sean.
Speaker 4 (09:43):
Over that full five year period, the average annual return
was twenty three point one five percent, with most years
showing positive results. So if you took just even a
hypothetical ten thousand investment at the market low, that would
have significantly grown in each case, often more than doubling.
So again this shows how staying invested through downturns can
(10:06):
lead to really meaningful long term growth.
Speaker 1 (10:09):
What about Tracy's we hear I know a lot of
us here and we talk we've talked here on the
show and quite a bit about diversification, and you know,
of course we hear a lot about diversified portfolios. How
does that play a role during market volatility?
Speaker 4 (10:22):
A diversified portfolio doesn't guarantee profits or even protect against losses,
but it can help reduce risk. So by putting money
into different types of investments, investors can kind of soften
the impact of market ups and downs. So this approach
usually doesn't give the highest returns like a single top
performing investment might, like all in growth funds for example,
(10:45):
for the stretch that growth outperformed, but it also avoids
the biggest losses. So again, also a mixed also fixed
income sean.
Speaker 3 (10:55):
Would be good.
Speaker 4 (10:56):
Like bonds, they can help bring balance to your portfolio.
While stocks are a key part of that portfolio. Bonds
are useful right because they often don't move in the
same way as stocks. Now, both stocks and bonds can
fall at the same time. It's not that it doesn't,
but typically when stocks go down, bonds often go up.
Or and they stay steady, they produce an income for example, example,
(11:20):
like intermediate bonds are paying about four and a half
percent in interest. That's helpful, right, And looking at your
portfolio from a perspective of how much income is this
portfolio creating even if stocks don't go anywhere, right, and
so how much income can I do I need from
this portfolio? And how much is it already creating? And
(11:42):
those bonds also.
Speaker 3 (11:43):
Help with that.
Speaker 1 (11:44):
And Tracy obviously working in the news business, you know,
it's hard to hard for me to avoid hearing and
seeing this stuff.
Speaker 2 (11:52):
It can really affect your emotions. Anything. Any kind of
tips and.
Speaker 1 (11:55):
Kind of helpful perspective for folks when it comes to
kind of staying the course and tuning that stuff out.
Speaker 4 (12:01):
Yeah, I think it's you know, it's good to just
turn off the news for a bit because sometimes we
can overly focus on it, and I know it's difficult,
but sometimes you just kind of need to step away.
And then the other thing I would just again accentuate,
is that focusing on what is your portfolio and is
it you know before all the volatility started, wasn't you
(12:24):
know you most likely had a very good plan and
you you thought through that plan, typically with an advisor,
and there was reasons why you did a certain allocation
between stocks and bonds and cash, and I would just
I would just say, you know, sometimes we can get
really short sighted in our timeline. But the reality is
(12:45):
is that you know, again, Marcus, don't stay on forever,
and you most likely had a very good plan between
the stocks and bonds and and focusing on what that
portfolio really looks at looks like. And so I think
that will really help because I've talked to clients this week,
and you know, some are in major life transitions, and
(13:07):
so it is hard when you're in a major life
transition or that transitions coming up within the next two years.
You know, those are the times where it's very difficult
when we do have market volatility, but it's often that
you know, there's also opportunities in this. You know, I
also want to stress that, you know, were you thinking
(13:28):
about a Rath conversion, Well, maybe keep watching the market
and think about that. You know, are you thinking about
you know, I have some extra cash on the sidelines.
Maybe it's a good time to get some of that
cash invested. You know, those are also opportunity times, but
I would say just turn off the news, talk to
your advisor, get to know your portfolio, or review why
you chose what you chose. Most likely you have an
(13:49):
excellent plan. If you have, if you've done some you know,
thought about it and and now it's in the time,
Probably not to change anything if your plan is in place.
Speaker 1 (14:01):
Talking this morning with certifined financial planner Tracy Anton right
here thirteen ten WUIVA Fantastic Advice, and Guidan says always
of course you learn more from Tracy online Tanton Investment
House dot com tel pH number six eight five zero one,
fifteen forty nine. That's six eight five zero one fifteen
four nine. So let's talk about some of the data
on how investors react when it comes to volatility.
Speaker 2 (14:20):
Tracy Well data.
Speaker 4 (14:22):
Shows that how reacting to the market and missing out
just on a few best days can really hurt investment returns.
So if someone invested one thousand in the S and
P five hundred from nineteen ninety to twenty and twenty
four and stayed fully invested, their money would have grown
to thirty four thousand, but missing out just on a
single best day would drop that to thirty thousand and
(14:43):
missing on the best twenty five days would leave them
with only seven thousand dollars, which is crazy comparatively. So
this shows how important it is to stay invested instead
of trying to time the market. Even missing it just
a few good days can really make a huge difference.
Speaker 1 (14:57):
What about strategies then, to be be coping with with
market volatility? I know there's some things folks really should
be paying attention to it some things they probably shouldn't
be paying attention to right now.
Speaker 4 (15:07):
Yeah, exactly, well, you know, again, try not to get
up get too caught up in the headlines news stories.
They often are designed to grab your attention and not
offer sound financial advice. So instead of reacting to short
term noise, stay focused on what is your long term goals,
you know, and how many dollars are you going to
need between you know, even if you're needing income today,
(15:30):
how many dollars is that? And how how long will
your dollars last? Like, let's say you have it in
a bond or cash account, how many dollars is that?
And then recognize that your portfolio likely is creating an
income as well, you know, through dividend income or bonds,
So you know, focus again on long term and what
is it that you.
Speaker 3 (15:50):
Really need versus what you have.
Speaker 4 (15:52):
It also helps to remember that market declines they are normal,
it's a normal part of the economic cycle. So history
has shown that recovery tend to follow the downturns and
even if it takes some time. So again, keeping a
diversified portfolio, it's another smart move since different investments often
perform differently depending on the situation. So diversification can help
(16:14):
reduce overall ups and downs in your portfolio. And like
I've said stressed on this show, you know, we at
the Investment House have done more. You know, our our
portfolios lean towards the value and have for over a
year now because we recognize growth has been pretty frothy. Well,
value is actually outperforming the growth. So you know, it's
a good strategy to have income producing investments in your portfolio.
(16:38):
And also international stocks are less expensive. You know, have
a portion in international stocks as well. You know, remain diversified.
Even if you feel like you know this is this
is a particular area that's better. Make sure you understand,
you know why why a diversified portfolio is actually better
than all in one or two sectors.
Speaker 1 (16:58):
Are there some other things of trace folks can do,
investors can do to cope with with market volatility.
Speaker 4 (17:03):
Well, the big thing I would say is revisit your
allocation between stocks and bonds and cash and have it
really an in depth discussion with your advisor if you
have one, about your time horizon, and have them explained
like why did they recommend the allocation that they did,
and does that still match your long term goals? So
your portfolio, you know, it might have experienced style drift
(17:26):
for example, where you know you have one kind of
investment that you have more dollars in that than you
originally had intended to, or you have more stocks than
what you originally intended because stocks have done so well
in the last five years, so maybe you need to rebalance.
So you know, I'm telling everyone, you know, I would
(17:47):
stay the course and I wouldn't sell out, and I
still believe that. But at the same time, if your
allocation was say seventy thirty seventy percent stocks and thirty
percent bonds, but due to markets doing so well the
last five years, you're now seventy five to twenty well
twenty five, you know, it's not a huge difference. You
got five percent, but maybe that five percent also is
(18:09):
important to make sure. Yeah, I'd still want to go
another five percent because that buys me another year of say,
markets being down, and I can I can pull from
the bonds. And you know, revisit was a seventy thirty
appropriate at that time? Is it appropriate today? And do
I need to reallocate if I haven't? If I haven't rebalanced,
A lot of people have. Right, We've been working hard
(18:31):
at making sure everyone's rebalanced. But you know, every once
in a while you find somebody who's like, no, they
never rebalanced in their four one K, you know, so
you want to revisit that. So I would just say,
stay in touch with your financial advisor if you have one.
They really can offer great perspective and they can help
you focus on what's really important and guide you away
from some emotional decisions that really can derail your long
(18:53):
term strategy. And again, do your financial plan see where
are you? Because you might be in much better situation
than you realize because the five your numbers are still
incredibly good.
Speaker 1 (19:04):
Pretty great guidance as always from certified financial planner Tracy
Anton right here on thirteen ten WIBA don't forget. You
can learn more about Tracy and the team all on
the website Tanton Investment House dot com. That's t A N.
T o N Investment House dot com. Telph number six
oh eight five zero one, fifteen forty nine. That's six
oh eight five zero one, fifteen forty nine. Tracy, it's
(19:25):
always great chatting with you with such great advice. As always,
you have a fantastic day.
Speaker 4 (19:29):
Thanks Sean. Take care,
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