This Is Your Captain Speaking #148

Market volatility can feel a lot like hitting turbulence mid-flight—unsettling and unpredictable. In this episode, host Josh Nelson offers practical advice on how to stay calm and confident when markets get bumpy. He shares why staying the course matters, how to manage the anxiety that comes with uncertainty, and what it takes to ride out the storm until conditions smooth out. 

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Transcript

Wiser Financial Advisor – This is Your Captain Speaking
Hi everyone, and welcome to the Wiser Financial advisor. I'm your host, Josh Nelson, Certified
Financial Planner and the founder and CEO of Keystone Financial Services. We are an
independent wealth management firm and we deliver comprehensive financial planning by
meeting with you, understanding your situation and using our skills as Certified Financial
Planners to help you get through not only the planning process but also the journey along the
way.
Today we are explaining market volatility, which we happen to be experiencing right now. We’ll
use the familiar experience of air travel as our metaphor, because what’s happening in the
market is a similar situation, right? Imagine you're on a flight, cruising along at 35,000 feet and
suddenly the plane hits unexpected turbulence. Sometimes turbulence is expected. Sometimes
it’s reported forward by other pilots. But when you hit turbulence, the seatbelt sign comes on
and the captain’s calm voice reassures you, “This is your captain speaking. We've encountered
some turbulence, but there's no cause for alarm. Please remain seated with your seatbelt
fastened.” And that's it.
Recently my family and I came back from spring break. While landing in Denver, which is often
a turbulent landing experience in the best of circumstances, we hit some air pockets and it was
bad, bad to the point where it was a scary landing. The kids were pulling the puke bags out. I've
been on a lot of flights, hundreds of flights over the years. But in that situation of turbulence, it
feels a lot like market volatility.
Sometimes you get extreme market volatility, which is what we're experiencing right now. Even
though we kind of expected normal turbulence, it was more than that and it was
unexpected—for us certainly, and for the other passengers. And so it was unsettling. It was
scary, but obviously we're still here, and actually, that is a normal part of the journey. Turbulence
is part of the flying experience, and just as pilots anticipate and navigate through that turbulent
air, seasoned investors, professional investors, people with the experience to get through
different types of markets successfully, understand that market fluctuations are inevitable no
matter what you do.
We want to plan accordingly, but no matter how well thought-out your plans are, market
fluctuations will be part of them.
Using our metaphor here, let's talk about the flight plan, which is analogous to your financial
strategy. Flight pilots are professionals, and they have a comprehensive strategy including filing
a flight plan before they get to the aircraft. They've plotted out their route and the altitude
contingencies. Maybe there are thunderstorms in the forecast. Maybe there are situations where
there's been turbulence that other pilots have reported. They want to know that going into the
flight, even if it's clear day. In other words, you have to have a plan.
Similarly, a well-thought financial plan serves as your personal flight plan, guiding you toward
your financial goals. We've all got financial goals. We all want to accomplish something, but if
you do that without a plan to execute what needs to be done to get there, you're just leaving it to
chance. So, the plan that we want to build with you takes into account your current financial
situation, your future objectives as well as your risk tolerance—which is our jargon for how much
turbulence you can tolerate within your time horizon. It's critically important to plan for when you
will need the money, because when you buy investments you buy and then at some point in the
future you sell. The price that you sell is important, and the price you buy is important. But if
you're in a situation where you're forced to sell, whether it's an RV or a boat or a stock or a

piece of real estate, you're not in a very strong situation Also, leaving it to chance might get you
bad prices when the market goes down, not because of something you did, but because of the
market.
We want to make sure we've got a plan that takes into account saving, investing, managing
debt, and all the different factors that come into your financial life. This helps prepare for
potential market turbulence, ensuring that you have a course of action when volatility strikes,
which it will. That’s guaranteed and there aren’t a lot of things we can guarantee. If you are an
investor, that's one thing guaranteed: you will have market volatility.
So let's talk about turbulence in the air. I have friends who are pilots, both commercial and
private pilots, and I've been able to ask them questions over the years about turbulent
situations. And it's been interesting to find out that it doesn't really bother them because they're
so used to it. They know how to react to it. They know what it is. So although turbulence doesn't
really bother pilots, it sure does bother the passengers. Turbulence in the air can be caused by
various factors which we get in Colorado. We can we experience that a lot because of the
unsettled air with the mountains and so forth. The weather patterns and air currents can mean
we’re apt to run into unexpected obstacles.
In the financial markets, volatility can arise because of lots of different things, usually
uncertainty. The market does not like uncertainty. It could be because of economic indicators. It
could be because of geopolitical events. It could be because of war. It could be because of
tariffs. That's what we're experiencing right now. The market does not like all the uncertainty
around trade policy changing. It could be shifts in investor sentiment. It could be things that are
completely unpredictable, like a terrorist attack or a pandemic. How do you predict those things,
right? How do you build that into your investment plan?
The International Monetary Fund has warned that the geopolitical tensions we're experiencing
now and for quite some time, can lead to significant market sell-offs, much like sudden
turbulence during a flight. When you hit air pockets all of a sudden with no warning, boom! On
our recent flight coming into Denver, the plane suddenly dropped 1000 feet. That's
uncomfortable. Sometimes we go to amusement parks and we get that experience deliberately,
but when you're not expecting it and you don’t want that as part of your flight experience, it
doesn’t feel very good.
Those fluctuations can be very uncomfortable and it's essential to remember that they are a
normal part of the market’s behavior for riskier investments like stocks as a category. That's why
the rates of return are so much higher on average when you look at long periods of time. The
price that you pay is that uncertainty, when you own something that doesn't have a guarantee,
like a stock or a mutual fund or even a piece of real estate. If you go buy a rental property,
there's nothing guaranteed about that either. That's partly what you're accepting, is that
uncertainty.
Going back to pilots: During turbulent times, skilled pilots’ experience and demeanor are crucial
because we're relying on them. You know, at this point most aircrafts are still landed by pilots.
Maybe there will be a day in the future when that doesn't happen. Maybe it'll all be automated. I
don't know that anybody will get on one of those commercial aircraft if there's no pilot in the pilot
seat; at least I won't be the first one, that's for sure. Pilots are relying on their training, their
instruments, and their technology, especially in newer aircraft, to navigate safely. Your financial
journey can be navigated by similar principles.

We always recommend you work with a Certified Financial Planner, the gold standard when it
comes to the financial industry. A trusted financial advisor can serve as that skilled pilot for you,
especially when things are not smooth. When there's a lot of uncertainty, that's when it's crucial
to have somebody who is skilled and experienced and has a planning process. Most
importantly, what do we actually do? What do we actually execute? Or in some cases, NOT
doing something is the right move. As a trusted Certified Financial Planner, your advisor helps
you stay focused on your long term objectives. We talked about time before. That's critical as far
as what your real time horizon is for your money. Your advisor can provide guidance and
reassurance when market volatility tempts you to make impulsive decisions.
If you're old enough, you probably remember the financial crisis of 2008, 2009. I believe the
market dropped over 50% from top to bottom. It was ugly and in fact, there were a lot of
warnings. I remember waking up to check the news. Major financial institutions were going out
of business or being forced into marriages with other bigger financial institutions. For a while
there, especially in October of 2008, it was very ugly and scary. So it's important to have
somebody to remind you that historically markets have weathered a lot of stuff, really bad stuff.
When we went through 9/11, they actually closed the stock market for a few days afterward
because it was so bad. So, thinking about the long term is critical, and thinking about what your
true time horizon is. That will help investors, and I'm an investor too.
It's important to remind ourselves of the long term and what the money is for. We need to stick
to the plan, but sticking to the plan doesn't mean we don't make adjustments. We do need to
remember that there is a plan and we have a much longer time horizon than just what's
happening right now. Having discipline during market fluctuations is critical. When a plane
encounters turbulence, passengers are advised to stay in their seats with seatbelts fastened
and not to panic or demand that the pilot change course or get us on the ground or something
like that. Similarly, during trade market downturns, it's vital to remain disciplined and adhere to
your financial plan.
It’s fine to make course corrections just like a pilot. Sometimes they change the plan because of
going around a thunderstorm or changing altitude. But reacting emotionally as an investor is
probably your worst enemy that I can think of. Reacting emotionally to market fluctuations, such
as selling your investments during a downturn, can derail your entire long term financial plan,
which could lead to permanent losses. You could be making a decision that's deadly for your
long term financial plan. You gotta remember that turbulence is temporary, but abandoning the
5-year plan can have lasting consequences.
I saw some of that for sure, especially in the financial crisis, because it was so bad, lasted for so
long, and was so scary. I saw a few people lose perspective, right? Obviously, I told them not to
do it, but there were people that cashed out at that time, near the bottom of the entire market.
What happened afterward was actually quite good, through the 2000 tens. And on the way to
2020 was a pretty good decade. As long as people were diversified, most recouped their losses.
So if you had cashed out, or if you bailed, unless you got lucky and got back in before too long,
you probably never recovered.
There are plans for what pilots should do and how they will react to certain situations or
emergencies. Every flight has emergency procedures, and the entire staff, the flight attendants,
everybody is trained for various scenarios. There are exits, not because they're expected to be
used. In financial planning, having an emergency fund and a diversified portfolio acts as your
contingency plan. An emergency fund is critical because it provides you with liquidity during
unexpected events. That reduces your need to liquidate investments at inopportune times. May

not guarantee it, but we do recommend that you keep anywhere between 3 - 12 months’ worth
of living expenses and cash in the bank, meaning in something pretty darn safe and liquid. That
way, you have something ready if you have an unexpected emergency, so that you're not forced
to sell. Most people, even if you're retired, have got a monthly deposit going in, and so even if
you are selling, it's just little pieces over time. You still may be selling stuff, but having
diversification will spread that risk out across a lot of different asset classes. Depending on your
risk level, you probably do have some more conservative things in your mix right now, like bond
funds, which often do hold their value and sometimes even go up during bad markets. You want
things that can act as a balance in your portfolio. Definitely not as exciting as far as rates of
return over time, but really useful as far as reducing volatility and reducing risk in your overall
portfolio, preparing for a smooth landing.
The good news on our flight into Denver is that it was a smooth landing. Even though it was
super scary, the pilots still put the aircraft down and we still pulled into the gate. Everybody
walked off. We were nauseous, probably for a good 30 minutes. But we reached our destination.
We made it home. As the pilots began to descend, they adjusted for weather, air traffic, and
turbulence. That's expected even when turbulence hits unexpectedly. They know how to react.
So. as you approach your financial goals, whether they are about retirement, purchasing a
home or funding college education for yourself or for somebody you love, it's essential to adjust
your financial plan to align with your evolving needs. That's why this is a financial planning
process, not just a financial plan.
In conclusion, market volatility is not fun for anyone. It's an inherent part of the investment
journey, much like turbulences is to air travel. You can react well by having a solid financial plan
and working with a trusted financial planner—and again, we recommend a Certified Financial
Planner, which is the most experienced in our industry. That's the gold standard. I want the best
pilot flying my plane. I don't have a plane of my own, just to be clear; I’m speaking of the
airplane that I get into as a passenger. I want to make sure there’s a skilled pilot who knows
what they're doing, one with a lot of experience who will maintain discipline during those
turbulent times, one who knows what to do to get us on the ground safely. And navigating
through market fluctuations is part of being an investor. Staying on course toward your financial
goals is key.
Thank you for joining me on this episode of the Wiser Financial Advisor Podcast. If you have
any questions or would like to discuss anything in your personal financial plan, please feel free
to reach out to us at our website, which is www.keystonefinancial.com . You can also e-mail us
at communications@keystonefinancial.com . Also, if you're on one of the podcast websites, it
helps us to give us a rating and also give us feedback.
Until next time, this is your captain speaking. Stay the course and enjoy the journey. Have a
great week and God bless.
We love feedback and we'd love it if you would pass it on to media directly at
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The opinions voiced in this episode of the Wiser Financial Advisor with host Josh Nelson are for
general information only and not intended to provide specific advice or recommendations for
any individual. To determine what may be appropriate for you, consult your attorney, accountant,
financial or tax advisor prior to investing. Investment advisory services offered by Keystone
Financial Services, an SEC registered investment advisor.