Excel in Retirement

Does Your Portfolio Have To Crash With The Market? Ep. 107

David C. Treece Episode 107

In my twenties I loved riding and racing bicycles! Most of my races were on a closed circuit that was less than a mile long. The race would go around the closed loop for anywhere from 45 minutes or an hour.

This kind of racing gets fast! My strategy was to stay in the front third of the group of racers and then in the last lap sprint to the finish. 

During that hour leading up to the finish it’s a fight to survive and not crash. Every race was an adrenaline rush, but a few of them stand out as extra memorable. The races I won are enjoyable to reminisce about, but that’s only half of the picture. Unfortunately, the ones I crashed in tend to be stamped in my mind due to the physical pain they induced.

Many of these races were in downtown settings as they naturally had turns and were easy to create a circuit. My friend Phillip and I had driven to downtown Roanoke, Virginia, for a race one summer. I was hanging in the top third of the racers. Everything seemed to be going my way until I made a turn to the right and my pedal scraped the ground. This sent me to the ground with a big thud. 

Normally, if you can get to the wheel change area, you can get back in the race when something like this happens. Fortunately, I wasn’t injured and was able to get back in the race. I ended up  placing eighth in the sprint finish. 

Some people in the market have had it going their way until this year, but the market has made a turn. Some savers have been beaten up a little, but they may be okay if they have enough time to recover their losses. At this point they may feel like they can stay in it and live to see another day. But if they’re taking income off their positions they may be really hurting in this down market.

Later in the year Phillip and I traveled to downtown Salisbury, North Carolina, for a race. It was close to where I grew up so my parents came out to watch. They were standing just beyond the finish line. This race course was like a figure eight where on both ends of the course we navigated a small city block and then there was a wide-open stretch in between each square to race back and forth to. This allowed the race to generate a swift pace because it was essentially a sprint to each corner.

I had just upgraded to a more advanced level of competition and this race was fast! I found myself not meeting my goal of staying in the top third of the riders.  A few laps into the race I was on the outside of the road to the right. We were turning left. 

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.

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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.

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Welcome back to episode 107 of the Excel in Retirement show. I appreciate you taking a few minutes to listen in, and we are always happy to get your feedback and would love to hear from you. You can email us at connect at clients excel or give us a call. We'd love to connect with you. In my 20s, I loved riding and racing bicycles. I have always liked riding bikes and did that a lot as a kid. I would spend hours in my backyard as a kid making rides. ramps to jump my bicycle off of. And when I started racing these bicycles, a lot of the races were on a closed circuit. They were called criteriums. And a criterium is less than a mile long and the race would go around a closed loop. So there would be no traffic on the course. And these can last anywhere from 30 minutes to an hour or so typically. And a lot of times they're in a downtown setting because it's easy to block off roads and they have natural turns in them. So And they're also spectator friendly. This kind of racing gets really fast. And my strategy was always to stay in the front third of a group of racers. and then to try to sprint to the finish line at the end. And during the last hour leading up to the finish, it is a fight to survive and not crash. Every race was an adrenaline rush, but a few of them stand out as extra memorable. Now, the races I won are enjoyable to reminisce about, but that's only half of the picture. Unfortunately, the ones I crashed in tend to be stamped in my mind due to the physical pain they induced. And so we were going to a race, Phillip and I, my friend, he was a little bit more advanced than I was and would give me insight and told me how to stay in the front third of a group. He had been experienced and I was able to train with him and get a lot of good training just riding with him because he was so much better than I was riding bicycles. And Phillip and I had driven to downtown Roanoke, Virginia for a race that summer and everything was going my way. I was hanging in the top third of the racers. Everything I I was just going my way. It was a nice course. It had a chicane in it, which is like an S curve in the road, and it made it really interesting. And I was going around a curve to the right. I was turning to the right, and I just leaned over a little bit too much, and my pedal scraped the road, and this sent me over... to the side. I fell. Luckily, I did not slide. I just crashed. The worst thing is to slide across concrete or pavement, but I just fell with a big thud. Normally, if you have a flat tire in a race like this, you can get back to the wheel change area or if you have a mechanical or a crash or something like that, if you can get back to the wheel area, you can get back in the race. Fortunately, I wasn't injured and I was able to get back in that race and ended up 8th in the sprint finish at the very end. So I was pretty happy with that given the fact that my leg didn't feel good, but it wasn't really traumatic or anything like that. In our newsletter this week, I put a picture of that race in the newsletter. So you should be getting our newsletter so you can see those pictures. Some people in the market are have had it going their way for a long time. That is until this year. But the market has made a turn, as we're all aware. Some savers have been beaten up a little bit, but they might be okay if they have enough time to recover their losses. And if we're taking income off of our positions, or if these folks that have lost money are taking income off of their positions, they may be really hurting in this down market because it's like a double whammy when you taking income off of your accounts, and they're depressed. At this point, though, many people might feel like they can stay in it and live to see another day. That's kind of where the market is in a nutshell right now, I'd say. Well, back to racing. Later in that year, Phillip and I traveled down to Salisbury, North Carolina for a race. It was about 30, 40 minutes from where I grew up, so my parents came to watch. They were standing just beyond the finish line, and this race course was like a figure eight where on both ends of the course there was a there was a city block a small city block to navigate and then you would sprint to the other side of the course which was another city block to navigate around so between each square uh there you you raced back and forth and so it was almost like a sprint with every lap to get back to the corner to slow it down to go around those two city blocks and this allowed the race to generate a very swift pace because of this sprint sprint that you had with each loop. I had just upgraded to a more advanced level competition and this race was very fast. I found myself not meeting my goal of staying in the top third of riders. I was drifting a little bit further back than I normally would or wanted to. The competition was a lot more fierce. A few laps into the race, I was on the outside of the road to the right. So I was on the right side of the pack and we were turning into the left. We were going to the left and there was temporary metal barriers that were, I'd say, probably four and a half, five feet tall that were heavy. And that was designating where the race course was at. And these metal barriers were placed on the road temporarily. And I was maybe a foot to 18 inches off of the barrier to my right. So the barrier was on my right. So I was on the far end of it. And we were turning to the left. Well, another racer came up on my right shoulder and cut across my front wheel and And it didn't affect him, of course, but it sent me crashing. It was just where my parents were standing and my poor mom saw it all transpire. It must have been a horrific looking crash. Having children now, I can't imagine the panic she probably felt. The paramedics were over to me before I could even move. I had hit the left side of my head and cracked my helmet and I had road rash down the right side of my leg. I had mentioned to the paramedic that I could not turn my head because of the way I had pretzeled in the crash. I quickly figured out that was the wrong thing to say. I got strapped onto a hard backboard and transported to an ambulance. When I got to the ambulance, the two paramedics took up two IVs. They told me I needed two IVs in my arm because this was trauma. And so they had two veins and insisted on trying to give me morphine also. And of course, I resisted that at first. I'm not good at taking medicine. I'm not a good medicine taker. But they convinced me on the ride to the hospital that it looked like my wrist was broken because of the massive swelling. I hadn't even thought about my wrist at that point, but my wrist was swollen up and was quite large. And they told me that it was going to be very painful if it needed to be set. And so I capitulated and took the morphine. We made it to the ER and I had x-rays and tests and they cleaned and scrubbed that road rash. Fortunately, I didn't break my wrist and my head was okay because I had a helmet. I had to have extensive chiropractic help to help get the range of motion back in my neck. For a couldn't look behind me too well. And the subsequent weeks of road rash healing was the most painful thing. It took weeks, it felt like, for that to heal up. And that was certainly painful when skin's regrowing, not to be too graphic. I finally recovered, though, and I tried to race a few more times that year, but I was timid because of the fresh road rash and my sore neck. When I raced, I ended up just sitting in the back of the group of riders because I didn't want to crash. Recency bias ended my season effectively. If the market continues this downward trajectory as it has this year, it may cause some retirees to crash from a financial point of view. The last thing you want in retirement is to be waiting on your money to make up its losses. The money you keep in retirement is more important than the money you make. We may be able to lessen this financial trauma because who wants to be in a position where we are picking up the pieces of a situation? We want to lessen the potential for financial trauma. A better approach, though, instead of just risking all of our money in the market and having no hedges is to create some hedges so that we're less impacted by major market sell-offs like we're having this year. So the question today is, have you created hedges in your portfolio? the type that may earn a return even in a down market and ones where you're not going to lose. If you'd like to learn more about how we help our clients proactively plan for market downturns like we're having this year, we'd be happy to speak with you. You can reach us at 864-641-7955. Again, I appreciate you listening and look forward to having you back

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Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC. A.E. 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