Market is Down. What Can You Do? Ep. 105

Our idea of successful retirement planning is creating a proverbial space suit for our clients that insulates them from twitches in the financial markets that we can’t control.

We create a buffer that allows our clients to know that they have a stable bucket of money available to them for income and expenses. This bucket of money is productively growing and can be drawn down over ten years.

After we have our income and expenses bucket of money taken care of, we use another bucket of money to participate in the stock market. 

If the market has a correction like this year, our client’s have the benefit of having ten years to recover. The market has always come back, but that does not prevent short-term pain. With our first bucket we lessen the pain of market losses. 

When the hard times in the market happen we begin hearing pundits preach about how it’s a unique period or this has never happened before. I normally don’t give that train of thought consideration but I recently read a compelling rationale for this actually being a unique correction. 

Peter Mallouk is an author and CEO for a financial services firm that manages north of $210 billion. He said in a recent interview, “I think it’s a more complicated time than normal,” noting key differences between this year’s market downturn and the past four bear markets.

 “‘These were four very scary bear markets but they all had one thing in common: They all had a single cause,’ Mallouk said, citing the tech bubble, 9/11, the 2008-09 financial crisis and the 2020 coronavirus pandemic.”

“In the past four bear markets, the Federal Reserve ‘was on the investor’s side’ and pumping money into the system, Mallouk said. Now, given high inflation and low unemployment, ‘this is the first bear market in a long time when the Fed is on the opposite side and wants the market to cool down,’ he added.”

Our goal as a company is to insulate our client as much as possible so that they can be less affected when things are haywire. 

If we are only using one or two financial tools for retirement planning we may be disappointed when the hard times in the market come. We strive to be holistic and comprehensive in our approach to allow our clients to have the greatest opportunity at success.  

 Whenever you’re ready to learn more about our process, please give us a call at 864.641.7955. We’d be happy to share with you our unique Excel in Retirement process. 

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

Transcript

SPEAKER_00: 0:00

Welcome to the Excel in Retirement Show, where financial planning becomes understandable. Your host, David C. Treese, is a licensed financial advisor who specializes in retirement income planning. David's desire for each of his clients is to have financial confidence, protection and growth. We believe this is achievable with the right plan in place. Thanks for listening. Now to the show.

SPEAKER_01: 1:00

All right, welcome back to episode 105 of the Excel in Retirement show. My name is David Treese, and I really appreciate you listening in today. We value your feedback and would love to hear from you. A study was published last year that found that of the 2 million podcasts in Apple's podcast library, 26% have only produced one single episode. That was in the Morning Brew newsletter this morning, and I found that really interesting. Those 26% of people created a podcast and only developed one episode. Made me feel pretty good about having 105 episodes we've produced since 2020. Our goal is to produce one a week, and we are pretty militant about that. We are even more militant about making sure that our clients are communicated with on a weekly basis through our newsletter. Our clients hear from us at least once a week on Wednesday mornings in the form of our newsletter, and we would be happy to put you on that list. All you need to do is go to clientsexcel.com and look for the podcast and newsletter tab, and you can put your email in, and you'll get our newsletter every week. We really value ongoing communication with our clients and friends, and so we would be happy to put you on that list. Well, we have a newborn baby. She is, I guess, what is it, three months old or so? She was born back in April. And you cannot hold a baby all the time. If one thing is true, that is true. You cannot hold a baby all the time. And so sometimes I will lay Ansley, our newborn, down for a few minutes. And so I iron my clothes for the next day each night. And Ansley sometimes sits on the bed while I iron. And out of the corner of my eye, I'll see her body twitch or jerk and of course I'm panicked immediately and I quickly look to see what happened. Of course my mind rushes to the worst case scenario like she fell off the bed or worse, but her body has uncontrolled movements because newborns have what Google calls an immature nervous system. Their legs and arms will involuntarily twitch for a few months as their body grows. And at times, these movements prevent her from going to sleep. So sometimes you'll see us if you were in our house, which you wouldn't be in our house. That's awkward. But sometimes we'll just be holding her legs down, sitting there watching TV or sitting there trying to get her to go to sleep in the recliner or whatnot. And you just kind of hold her legs down to keep her from twitching away waking herself up. It's got to be a better way, right? So I guess this is where swaddling came from. Mallory, my wife, though, has never liked the idea of containing the baby's arms in a swaddle. Her thought is that if the baby rolls over to the corner of the bassinet after you put her down, maybe she could right herself if she could use her arms. I can't really argue with that, but what do you do to prevent the blasted twitching that wakes her up and then nobody gets to sleep at night? Well, going back to Google, they always have a solution, right, Mr. Google? Mallory found a thick suit for Ansley to wear when she sleeps. She looks like a baby astronaut. She's ready to launch off into space with this outfit on. At least that's the way it looks to me. We call it her space suit. It's a weighted and quilted suit, and she doesn't startle as much, and she cannot flip herself over when she wears this suit because it's so thick and so forth. but it helps her fall asleep and stay asleep. Frankly, I would pay triple what we paid for it because extra sleep is priceless. Have you ever been in a situation where you couldn't go to sleep? When you can't go to sleep or you're having trouble getting sleep, Sleep is priceless. So I would have paid triple for what this little spacesuit cost. And we put some pictures in the newsletter this week of her wearing it. Now, our idea, though, of a successful retirement plan is creating a proverbial spacesuit for our clients that insulates them from twitches in the financial markets that we can't control. We create a buffer that allows our clients to know that they have a stable bucket of money available to them for income and expenses This bucket of money is productively growing and can be drawn down over 10 years or maybe 7 years if that's your preference. After we have our income and expenses bucket taken care of, we use another bucket of money to participate in the stock market. If the market has a correction like it is this year, our clients have the benefit of having 10 years to recover. The market has always come back, but that doesn't prevent those short-term pain that we often feel when we're just in equities or just in one investment. With our first bucket of stable money that cannot go down in value, can only go up and we're using it for expenses, we lessen the pain of market losses by using that. That is the goal to lower the risk exposure for our clients in retirement. Because remember, our clients are either in retirement or getting very close to retirement. When the hard times come, When the market happened, we began hearing pundits preach about how it's a unique period of time where this has never happened before. Admittedly, I normally don't give that train of thought much consideration, but I recently read a compelling rationale for this actually being a unique correction this year. Peter Malook, he's an author and CEO of a financial services firm that manages north of$210 billion. Now, he's out in the Midwest. He said in a recent interview, quote, noting the key differences between this year's market downturn and the past four bear markets. He said these were four very scary bear markets, but they all had one thing in common. They had a single cause. Now, he cited the tech bubble and then 9-11, then the 2008-2009 financial crisis, and the 2020 coronavirus pandemic. So those all had a single cause. reason for why the market corrected. And he goes on to say, That is very telling. The market has been accommodated by the Federal Reserve, this is my opinion, for the last 10, 12 years, since 2008, 2009, with keeping interest rates ultra low. And so the government, by keeping interest rates ultra low when things were going really well, hurt us with this inflation situation, and we lowered rates even more during coronavirus and created money out of thin air, and infuse that into the economy, and that's why we have this inflation problem. And so we can blame it on supply chain issues or Russia and all of that, but that's topical compared to the underlying problem that the Federal Reserve has created for us. Our goal as a company, though, is to insulate our clients as much as possible so that they can be less affected when things like this cause it to go haywire. If we're only using one or two financial tools for retirement planning, We're probably going to be disappointed when the hard times in the market come. We strive to be holistic and comprehensive in our approach to allow our clients to have the greatest opportunity for success. We want our clients to be empowered to avoid pitfalls that stand between them and a successful retirement. Whenever you're ready to learn more about our process, please give us a call at 864-641-7955. We'd be happy to share with you our unique Excel in Retirement process and how we help our clients. Hope you have a great day. We'd love to hear from you. You can connect with us also by emailing us at connect at clientsexcel.com.

SPEAKER_00: 9:48

Investment advisory services offered only by duly registered individuals through AE Wealth Management LLC. AE Wealth Management and Clients Excel are not affiliated companies. Investing involves risk, including potential loss of principal. Any reference to protection, safety, or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims-paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It's not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program