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Speaker 1: Hi, I'm Stacey Hyden.

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I'm back with another episode
of Better Financial Health in 15

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Minutes or Less, and what I'd
like to talk about today is

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should you worry when the market
dips or should you just chill?

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And the short answer is most of
the time you should just chill.

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Like, for example, this year
started out bad, it's recovered,

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now it's gone back again.

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You know we call it the tariff
tantrum, but I think what's

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important to look at is, in most
years there is a drawdown, and

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history says that the market
corrects down about 10% every

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one and a half years, but that
doesn't mean that the markets

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were actually down that much in
any particular year, and so we

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call that 10% a correction.

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If markets are down 20%, we
tend to call that a bear market,

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and so and they can be scary it
feels terrible.

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I'm not even going to pretend,
but, like I said, in most years,

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even though there is a
correction, or in every other

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year, there's a correction, most
of the time the markets don't

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wind up a year down.

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If you kind of look at history,
it's about two in 10 years are

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going to be negative and the
rest are going to be positive.

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I also think it's interesting
to note that the market has

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averaged around 10%, and when I
say the market, I'm talking

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about the S&P 500 has averaged
about 10% all the way back

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through the Great Depression,
but there's never been a year

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where the market has returned
exactly 10%.

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So that's the average, but some
years it's up 30%, some years

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it's down 20.

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Some years it's up three.

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It's all over the place.

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You just have to be patient.

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So what I would cause you to do
is, when you're feeling stress

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around these market pullbacks,
just take a second and check

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yourself.

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Is it your plan?

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Hopefully you have a plan, or
is it just the headlines causing

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you to become nervous?

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Because if your time horizon
hasn't changed, if your risk

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tolerance hasn't changed and you
don't have a need for the money

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that you're investing in the
next three to five years,

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nothing has changed to cause you
to take action.

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Sometimes that's the hardest
thing that we do as advisors is

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telling people the answer is to
do nothing.

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I actually had that
conversation with a client

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yesterday.

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We are not going to change
anything.

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You are appropriately allocated
for your risk tolerance.

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We have some stuff that does
well in an up market.

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We have some stuff that does
well in the down market and we

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have some other strategies that
help kind of protect all along,

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but they are giving up upside
for that protection because

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there's this behavioral trap we
tend to project what has

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happened most recently into the
future.

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So if markets are up and
they've been up 20%, 30% we tend

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to project that forward.

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If the markets are down, we
tend to project that forward.

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So it's real easy to do that.

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But neither of those is correct
.

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The markets are going to go up
and go down.

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So what should you do instead?

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Stick to your plan or tweak it.

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You know we have been sending
out risk questionnaires to

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clients and I would be willing
to bet a lot of money that right

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now clients are much more
realistic about what their risk

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tolerance is, because they know
what they felt like with this

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anxiety with markets turning
back.

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So we have had some clients
that said you know, if it's not

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going to hurt me, I'd rather
take a little less risk, and

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that's a valid answer.

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But then there's some where,
like you really can't afford to.

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You need to take that risk and
you can get through it.

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They were actually surprised
their account was up for the

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year and you should not check
your accounts every day.

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Even if they're up, you tend to
peg your account to the highest

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value you've ever seen, and so
the pain of those losses is

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magnified.

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So I want to give you some
information about 2020.

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So from January 1st 2020 to
February 19th, the market was up

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4.81% Great start to the year.

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Month and a half up almost 5%.

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But from February 19th to March
23rd, when the market bottomed

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during the COVID pandemic,
markets dropped 34%.

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It was awful, but if you look
at the S&P 500 from January 1 to

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the end of the year, it's
actually up 18%.

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I remember having a conversation
with a client during that time

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wanted to sell out of everything
.

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They're like, stacy, we're
going to lose it all.

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I'm like I promise you you're
not, you're good, we've got the

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money that we need to send you
for your lifestyle this year.

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Let's just sit tight.

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And since you can't travel, can
we reduce what you're sending?

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They said, sure, so guess what?

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We didn't do anything.

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Their account recovered, they
made money.

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They were kind of shocked.

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So when it came time the next
year, we're like okay, as soon

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as you can travel again, where
do you want to go?

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Because we have all this extra
money that you didn't expect to

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have.

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So that's why some of the best
advice we can give is to not do

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anything or to get into some of
the crazy investments that

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people have been asking us about
lately.

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So one of my favorite things to
say is the market is not a mood

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ring.

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You have to stay focused.

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It doesn't change day to day.

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You have to just be patient and
invest for the long term and

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make sure you've got enough safe
stuff to get you through the

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inevitable down times.

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Thanks for tuning in.

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This has been another episode
of Better Financial Health in 15

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Minutes or Less.