099 - How to Survive a Bear Market Without Sabotaging Your Portfolio

Are we in a bear market, a correction, or just a panic spiral?

We break down exactly what you need to know to not sabotage yourself during a volatile market. With personal losses of 3 years’ worth of gains in just 3 weeks, we know how this feels—and we’ve got the data and strategy to help you stay the course.

We cover:
🔹 What actually happens in corrections and bear markets
🔹 Why panic selling is a guaranteed way to lose
🔹 The psychology behind loss aversion and herd behavior
🔹 Historical data you NEED to know
🔹 Why staying invested matters more than timing the bottom
🔹 What to expect—and how to survive—what’s next

Whether you're a new investor or a seasoned one feeling the pressure, this episode is your reality check + recovery plan.

Want FREE weekly market updates, Tim's top 10 dividend picks, and our portfolio updates delivered right to your inbox? Subscribe to our email list.

Stay connected. Follow us on social!

**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

Episode music was created using Loudly.

Transcript

Welcome to roaming returns a podcast about generating a passive income with dividend stocks so you can secure your finances and liberate your life. 

Based on the panic we’re seeing on Reddit and in the markets, a lot of people are on the verge of doing something dumb—like locking in losses they’ll regret later. 

And trust us, we get it, we lost 3 years worth of gains in the last 3 weeks.

So In today’s episode, we’re breaking down exactly what to do—and not do—during a bear market or potentially a recession. 

From historical data to behavioral traps, this is the episode that could save your portfolio.

Welcome to the shit show Welcome to the implosion nuclear bomb skis. It Like I was looking back through the emails that I had sent out I'm like, I pretty sure I discussed this in December and I was sure enough there was a December email where like the terrorists were just bad and they're gonna cause a problem and the probability of a recession was higher so not to be happy about being right, but Yo, yeah, sometimes it sucks when you're when you're right I called I called a recession just looking at all the stuff and like the probability of recession now after just reading what I was Reading is like 60% and like majority of aren't we in it? We're no we do though the Nasdaq went into a bear It was a recession bigger than a bear Recessions like when you when your GDP growth contracts for two quarters allegedly That's it has nothing to do with the bear No, like what a bear is is when you're like 20 where you're 20% lower than the last high So the last high was in beginning of the year and like we're 20% below that. Okay, so we're bear and recession probably I see a high probability of a recession I Was hoping that it was gonna be mild I said mild recession but like looking at how things are looking it could be a full-blown recession No, I don't think it'll get to depression level because there's too much influence on The political realm of things by people that have lots of money and I don't think they want to get to a depression So I think it'll be a recession.
They're projecting six. Like I said 60% from JP Morgan You you SBC or whatever saying 55% So like all the big people that like do this for a living like they run more numbers and I have The capabilities to get are projecting a higher probability of a recession than they're not being one So like there's a pretty good chance that there'll be a recession That's why we were going over things previously and we're saying make sure that your portfolio is defensive where you have like dividend paying stocks and dividend growers and Not a lot of risky assets because when that happens, it's like everyone panic sells. That's just how it is I'm looking through like I leaf through reddit on a daily basis and I'm and Facebook and All these other things and I'm seeing people are like they're terrified right now, which is understandable, I guess Yeah, cuz our portfolio has gone.
We went we went from like a hundred and eleven thousand. We're down to like 87 now I'm pretty sure by the end of tomorrow will be like 84 ish All the retirement portfolio went from like 182 down to 151 That'll probably be like 140 ish by the end of the week Like this is gonna be so we are in the same boat like last week Thursday and Friday were really bad. I'm trying to piece together why it's bad to simplify it Everyone knew there was going to be tariffs, but they were hoping that they were gonna be 10% tariffs when they came out with this outstanding mathematical equation that basically broke the tariffs down by like our Imports divided by the exports was the tariff percentage that Basically was way more than 10% like across the board.
That's a trade deficit That's not tariffs But like we won't get in like we're not and gonna get into the political things like you you should know how I feel about I think they're fucking retarded but like that's not they're here. So now it's Your thoughts and your perceptions are not really relevant. What's relevant is the day that you're acquiring now Yeah, how do you navigate the situation as it is? panic selling or letting the motions get the best of you will lead to the only the only one thing that I can find where People are like a hundred percent agreeing on is if you panic sell you're locking in losses.
Yeah, you're guaranteed that loss 100% period I had a stop because I was just tinkering around with the stops and Schwab and I had like a 10% stop loss on like of just a little portion of my Trinity and it and then trailing stops Which we had somebody on one of the socials tell us about trailing stops I always thought that that would make a better idea But I didn't realize you could go in and actually do that because you said it's kind of hidden, right? It's really hidden in Schwab so what you can do is a trailing stop versus a stop loss because we do not believe in stop losses we've talked about this a couple of times trailing stops allow you to put a percent based on the But even the trailing stopped it. So what the trailing stop number I put in it stopped it sold at less Yeah, because it was such a decline on Friday. It went down like 5% So my trailing stop was actually probably 19% and not 10% just based on really? Yeah, cuz like the market like literally just shot straight down on what should do in a day No, I just had good to can't good to good to cancel.
Huh? That's interesting They're not supposed to do that from what I understand. That was just a tinkering. I was just tinkering with that So that's the only thing I've actually sold I've been picking up shares of stuff here and there like Pepsi and some more of the fat PHT, FATBP, which is a preferred share of the fat company.
So I've been picking up a few shares of that I've been dumping other stuff into THTA and I'm gonna have some THTA like I'm When we went over this prior like I said I'm dumping all my cash into THTA and if you remember when I said what THTA is They like they move in a bull market in the sideways market the bullet shares and THTA kind of move together There's not a lot of volatility but because THTA is basically using treasuries to write options on the S&P So when the S&P is down 10% to a THTA went down like 8% so if you're in THTA don't even worry about just Accrue the dividends because that's going to be like when when it turns around it's gonna turn around fast That's generally what happens We'll get to like some of the some of the details of that in a little bit But I'm gonna continue to add to my THTA position because I like what they do. I like the Treasury backed options on the S&P But I think we do need to correct what we had previously said that if you need it to be Like your principal to stay. I don't think THTA is actually a good option I think you said the bullet shares have barely moved at all during this.
So I think they'd actually be the better option For that well, I guess yes, I mean like that's like again That's like one of the things you have to know about when you need access to the money What makes investing hard from what I'm gathering from like my personal experience and like all the reading I do What makes what makes investors panic sell is when they're using money that they can't afford to lose That's when they let emotions get the best of them So like we can afford to lose a couple hundred dollars in THTA until it turns around because we're not really gonna be using that but if you were if you're using THTA is like your high yield savings and you need like Six months from now, you're gonna need to replace a deck or something like that Then you should be in bullet shares because that's just it has less volatility I think you need to rephrase that because using money you can't lose or investing money. You can't lose You shouldn't be in the stock market You shouldn't be in the stock market because the stock market is never like a consistent price But the thing with that is it's more a time horizon thing. So like Money, you can't lose because you need it by X date I feel like that's an oversimplification But then again if you're using it from the dividend approach like money you invest really should never come out ever anyway In my philosophy.
Yeah, it should just be the dividends that you're pulling out people have a different Yes, if you're using the traditional investing strategy, then that's where you I think that makes it more confusing and hard And I think that's more stress-inducing So I just wanted to put that out there But that's why we went over like investing and Dividend growers because they should in theory be able to handle a quarter or two that are rough and they'll keep growing the dividends or at Least keep the dividends consistent Variable dividends like the yield maxes. They're gonna they're gonna be shit. Yeah, like we last CONY. That was terrible this is how about how it's how it is gonna be because the variable dividends going to It's based on different metrics and if they have less cash coming in they have less less certainty about what they can pay out so the variable dividends are gonna Be kind of shit for the next short term And when we say short term like I mean obviously short term generally means like for most humans is like one to two or three weeks But like short term and the markets like one year like anything like less than a year short term That's why when you go to sell like you're short I would actually say three Short-term losses or gains are like within a year and then your long-term start after a year So when I mean when I'm talking about stock market stuff short-term means anything within 12 months Well, I said like the only thing that every everyone agrees on right now is panic selling and letting your emotions it's the best view is going to stop is going to lock in losses and like There's nothing in the stock market That's certain So the fact that most most people and experts and everybody are a hundred percent certain if you panic So you're gonna lock in losses that should like open your eyes up a little bit Okay, that's like these people can't agree on shit any other time.
They're all agreeing on this thing It's not the time to sell the time to sell would have been in February if you look at like a historical data about market drops and market corrections and Bear markets and shit like that like by the time you get to the fearful point where you're gonna sell most of the losses have Already taken place Yeah, and then when that rebound factor hits you miss you end up getting back in higher than you got out So like I was looking at the futures the futures are saying this market could drop like up to 4% again tomorrow So like say you okay you pet you had enough you panic sold you sell it So you've lost the 10% last week, but you saved the 4% and maybe like 2 or 3 percent But you'd like the majority of the losses have already occurred So selling now is not time to sell this time to sell would have been previously but that goes back to like the site of a psychological components that we've Like that was one of the reasons I set this up the way I set it up where we talk about Psychology a lot because there's a lot of psychology that goes into investing that they never like address They just say you have money in the brokerage buy or sell it seems pretty easy, but there's a lot of psychology It's all psychology and like the markets in freefall not because the fundamentals of drastically changed people are panicking So they're actually the ones creating the market decline people have a perception that the businesses are gonna be losing money and losing revenue So they're all scared and there's a lot of uncertainty about like are these tariffs like here for like a long term? are they here for short term are they like a negotiating tactic But whatever the yeah, what did we say before? We said that the market the current market values or the current market behavior is actually people's projections of what they expect to happen in Future it's like a future projection. It's not a real or a pastime. So it's it's a very interesting animal So when you go into your brokerage, you can pull up any chart that charts going to be past Most of the data is like the last 12 months So like that at that moment in time you have the data from that moment in time to 12 months previously Anything that's forward-looking is within the next 12 months like that It's just a snapshot in time in that in a 24 month period based generally It's what it is 12 months in the past 12 months in the future.
I have no idea what you're referring to, but okay Whatever I was looking back over Market corrections and bear markets and I found this this this chart by the Carson group. It was actually pretty well Pretty well illustrated according to them. There have been 48 market corrections and 12 bear markets since World War two What year was that? World War two was in the 40 41.
I think okay. I just wanted an actual number because I'm I'm tarted this data suggests the probability of the current correction leading to a bear market is only 25% So like we're past that like it's like we're pretty sure it's gonna be a bear market across all four set all four indexes And I said I said, I don't know about you, but for 25% still seems a little bit too high So like I don't like how they presented that. Okay, it only happens 25% of time.
But like you should This comes down to portfolio construction You should always in the back of your mind be thinking about that 25% Probability, even though majority of time it's not going to come into play and in this case like the 25% is coming to pass So if you just prepared for the 75% of the time when it's a correction it goes down 10% But it doesn't go down 20% that only works three-quarters of the time Then what about the one time when it drops below the 20% that's like so that like but it's an interesting read basically, their whole thing is don't be Scared like it happens a lot more than you think and that's like that's a high like if you think about 40 41 to 25 is what 59 69 70 74 years. So in 74 years, there's been 48 corrections in 12 bear market So that's 60 instances of where there's been a pretty significant drops in 70 some years. Yeah, that's like one a year.
So like The moral of it is this shit happens a lot, but I do think it's been less frequently So I think a lot of people have forgotten because of that short-term memory thing that happens with a lot of people and I think A lot of the people that are in the market from the younger generations The last time some serious shit went down was COVID but because COVID It was only like a bear market for like a month and then it shot back up like that's that's not normal Like even slightly like the last one was an 09 2009 to 2008 2009 with with the Great Recession When that happened it took About two years for it to bounce back up above where it was prior to going into the recession so that's that's generally how it is because generally the average bear market lasts about a year and a half and it has an Average loss of about 41% during that time. That's according to Raymond James. So it means other places you look it'll say 1.5 1.3 years So I just said 1.5 like a year and a half is generally the average bear market The average losses were anywhere between like 37% and 50% So I went with 41 because that's kind of what my my data was showing me.
So we've lost already What do we lose like 15% so far in 2025 already? Maybe 20% like I know in the Nasdaq we've lost like 23 and I know in the Russell we've lost like 27 So like that's what I'm saying Like the majority of the losses in those two in this Indexes that are already in the bear market have already passed So we are definitely headed if not, so like the small caps is that a 27 28 percent drop from its previous highest So it only has like 13 if it sticks to the average. I mean granted that's average. There's obviously gonna be higher Higher and lower and I kind of feel like this is an extenuating So it's still even then even if it's like a 28% even if it went down to 50% You've still already lost the majority of like you already lost more than you're gonna lose during all the way to the bottom.
Yeah According to Rutter's a router. How do you say that Reuters says that right? I think it's Reuters Reuters since in 1929 corrections on average resulted in an average peak to trough decline of thirteen point eight Percent as opposed to an average decline of thirty five point six during bear markets again I'm just putting numbers out there like but the bulk of the losses are already behind us What happens is there's a huge rust to sell everything and that's when the institutional investors get out when they determine Oh, we're going into bear the institutional investors are like, you know, 90% of the market So like the last 10% are like us normal people that can invest were the ones that like sell at the bottom Generally speaking and what happens is once you lock in those losses you have such a pain You have said it's like touching a hot stove You've been burned so hard that you sit on the sidelines when it actually Corrects and you wait too long and you either never get back in because you've been burned so hard and decide to give up on It entirely which is not a good thing because honestly like wealth is built through investing And if you do get back in that's how you get in above. It's not that people intentionally buy high sell low It's these types of situations that cause people to do it because of fear Because if you think like in that an institutional investors, they have computers So there's no fear the computers are doing all the like all the processing to say.
Oh we better sell Let's go about to do this. They have algorithms stuff like that. They've hordes of people doing Normal people are just looking at our broker saying oh shit I better get out and like we have no like rhyme or reason to it.
Generally speaking I mean obvious there's obviously some people out there that have formulas they use whenever they invest but generally speaking the average investor It doesn't have all that. They just go based on gut feeling I think the best thing to do during a bear is to just not look at your portfolio just keep putting money in if you were incrementally sticking it in and just having it like now the good news is The RAND group they have a slide that shows that since 1974 the S&P 500 returns Over 24% on average following a correction and that's been pretty consistent throughout all the research I just use the RAND group because they had a pretty slide Generally speak like most of the data suggest shows that it's above 20% following a correction. Oh It's less than that it's about 18 13 to 18 percent depending on the route on the source that after a Bear market that goes up the following year once the once the bottoms in So like if you go back to our previous in previous data There it shows like 41 percent to the bottom or 36 percent to the bottom if we're already at 27 percent So are you willing to trade the 24 percent gain for that additional 17 percent loss? I'm not I'd rather just collect dividends and reinvest the whole way down and then when it shoots up it shoots up and I have A lot more shares of dividend paying stocks The problem that you may encounter is if you recall back when COVID happened There was a lot of companies that just suspended dividends until things got right.
That is a possibility That's one of the things we were just discussing that I'm not sure What to do and that we're really not sure what to do in that case because if you sell it you're selling at a loss But you're not getting any dividend Reinvestments on the way down. So like what's the point of riding it the whole way down at this point? We've already had but I'm I'm leaning you don't know when or if they're going to either, right? You don't but they like I think for the most because the like because the fundamentals haven't changed and the businesses are still making Revenue and this is just like people scared because there's a lot of uncertainty I wouldn't think the dividend cuts wouldn't happen until like the Economic data started coming in from like their quarterly reports like hey We only made like 30% of what we made the previous quarter. So we're going to suspend the dividends I think it'll take a couple months probably three to six months before you start seeing the dividend cuts or dividend suspensions altogether So that amount of time a lot of things can happen And if we look back at what happened during COVID a lot of what did you say? 6% of the companies didn't cut their dividends, but everybody else did it was so it was a high it was in the 90s Yeah, like that many percent, but then they turned them back on Extended ways like and that was a different set of circumstances.
So that was a pandemic But it was kind of a crisis situation, which I kind of think these tariffs are they're not reading something similar Even though it's not obviously in the virus realm. I don't know I feel like the pandemic can probably was supply chain problems with the pandemic and there was People couldn't leave their house Like it was a different set of circumstances that led to all that all that stuff going down We can still leave our house. We can still work.
We can still make money. We can still eat out We can still shop people don't do it at such a high Volume, that's why when I when I was discussing terrorists and how I thought they were bad and it's gonna lead to inflation people Like you're crazy. It's not gonna lead to inflation There's shit data out there showing that Tariffs don't lead to inflation and it's like but if you look at the context of what we got going on we have a higher inflation now with a bunch of people spending money and people are gonna continue to spend money and What's going to happen with the companies is their goods and services? They're just not gonna make as much So you're just gonna be a supply and demand It's gonna be like you're still gonna have people that want a TV But there's gonna be less TVs out there.
So the price of TVs will go up. They're not gonna go down and There's a lot of people that believe that's not how they'll know that the price of a TV will go down because no one's buying Stuff it's like no, that's basic economic people are still gonna want the TV They're still gonna want the car. So these prices are going to go up because there's gonna be less Supply and demand like stuff like corn and lima beans I could see possibly like it not being a huge deal because there's not a lot of people out there with a high demand for Lima beans But like you maybe but for like big-ticket stuff or like cigarettes or alcohol even stuff like stuff They get every day milk eggs I could see the price is going up because there's gonna be we already saw what happened with eggs They'd like skyrocketed when there was a shortage Yeah, just think about that But that's a standard of poor is another one I was looking at in this if you're not familiar standard poor like they have this really cool almanac that gives you like the winter projections But they actually also have economic stuff, but I really like the winter on winter almanac But standard pores they show their dead their data since World War two It takes about five months to reach the bottom of a correction and the average recovery time for for a correction To reach its previous like like when we say with two for a correction to correct that means like you have a price would it like up not like a So the highest price the highest started to go down when I started and it went down It takes four months to get back up to back up to that that even point where it was That's what I can if you're not familiar like when you time like their people are talking about a correction or a bear market or a recession they're starting at the highest point of Before it fell off a cliff, right? Yeah, so like it's been gradually going up through the years and now our high points at a higher a higher point But like it before to get back up there to that point generally takes four months for a correction.
It takes about a year and a half for a Bear market. So if the S&P stays out of bear market territory, it's just a huge correction It should take four months But if it if it goes further down, which I like think it will into bear market territory It generally takes a little bit longer But it in the context of your investing lifestyle a year and a half is not really them that much No, but that's me The only people that'll be really impacted are the ones that are like at retirement point. They shouldn't be in stocks They really shouldn't be or they should be full-blown in the dividends.
I mean that gets that could still have a major impact Yeah, I feel like I feel bad for the retiree, yeah You're like, oh, I'm two years from retirement You just retired in your first year like this is what they're talking about If you're using that 4% rule your first year into your retirement is a really bad year. It completely screws your Longevity of those 4% payouts being able to sustain the lifestyle. It's really really really bad So I go like we're doing this like I'm sorry I just yawned but we're doing this a little bit later I had a lot to like process in my brain Like I I didn't want this to be a rant on terrorists because again, they're fucking retarded, but it doesn't change anything.
They're here. I Want to give you the best like data I could for you to stay and stay in your investments So like it was just a yeah to not panic sell the grind Oh the Hartford funds is um, not if you're not from the Northeast, you're probably not familiar with Hartford fund but like They actually gave a pretty good presentation of why P you say invested during downturns They found that 42% of the S&P 500 index strongest days in the last 20 years occurred during a bear market when 36% of the markets best days took place in the first two months of a bull market So like what they're showing is if you write it down You have a higher probability of being part of the best days and like there's data out there showing if you just if you Invested in like I think it's 10 or 12 of the market's best days You'd be a millionaire with a hunt like with a $10,000 brokerage account if you just invest is that like trying to time it? Yeah Their illustration if you if you could Perfectly timed, the 12 best days the stock market had, you'd be a millionaire on $10,000. And what the Hartford's saying is you're gonna miss out on almost half of the best days of an S&P if you sit out because you're scared and you panic sold. And the fact that you have a higher probability of having more S&P strong days in a bear market as opposed to in a bull market just blew my mind when I read that, I was like, that can't be right.
But double-checked, it's right. When you also can't predict what every stock is gonna do, we were looking over our portfolio the other day and we're like, is anything green? What was the company that, oh, it was Pepsi? Pepsi was green and IIPR were green. The weed stock, that's hilarious.
The REITs actually did quite well the last two days. I mean, it's hard to say losing 4% or 5% is quite well, but considering everything else was like 10% to 15% or 20% and the REITs were only at like 3% to 5%, they did pretty good. That's not bad.
Financial stocks got just decimated. Crypto's getting decimated tonight. Consumer stocks did okay, depending on the consumer stock.
Like there was some, like Home Depot didn't do that great in the last two days, but consumer stocks like Pepsi or Procter & Gamble with shampoos and shit like that, they did quite well. So again, you had to be, what this is going to turn is if you collect your dividends and cash, complete sidebar, if you collect your dividends and cash, you're going to have the pick of the litter. Yeah, you are like, honestly, the problem for us is not having enough free cash to like pick up everything that's on sale.
And again, I think we've said this multiple times, but millionaires are made in bear markets because when you buy stuff that is so undervalued, it Xs your entire portfolio. Like that's how Warren Buffett, like he loads up on cash and then he jumps in when everybody else is fearful. Well, that's what he was doing.
Like Berkshire Hathaway was collecting cash the last two years. Now he has like $400 billion and he's gradually buying up stuff. Like everything's on sale.
Like, I don't know if you've actually looked into like, not beyond your portfolio, but looked into like good quality companies that are just like ridiculously on sale right now. It's like, holy crap. Yeah, the cool thing about bear markets and stuff is like you can get stocks at prices that were like 20 years ago.
Well, that's what we did during COVID. Like everyone else was panic selling during COVID and I was just picking up like ABR and IIPR and other things like that. That's how we got like, that's how our cost basis price is so low is because I bought like a lot of this shit I bought during the COVID crash.
So I plan on doing it again. I'm hoping we get the condo done so we'll have more money to dump in. Yeah, that'd be nice to have like 100,000.
I'll pick up a lot of shit on sale. You have to be like, you have the pick of the litter but you have to like be reasonable about it. Like some things may not survive a depression.
That is true. So you have to look at the financials, like your metrics, make sure they're making good choices during it. Generating cash.
Because this will also show you which companies were like held up on smoke and mirrors and which ones actually know what they're doing. So this is also a really good like thing to experience because it gives you a lot of awareness of like what's going on with the company. And like because corrections are so frequent, even though people don't think they are, they actually do have, like I said, it's 60 instances of a correction or a bear market out of like the last 70 some years.
That's like one a year. People should know how to react when the market drops like it has been. But people have the emotions.
And when the market drops a lot, a vast majority panic. So like I think the first thing you have to understand in yourself is why are you panicking? There are two main psychological reasons why people panic sell. A loss aversion and herd mentality.
A loss aversion, if you don't remember, is where losses feel more painful than gains. So like you've been riding up the S&P, you're getting like 20% per year and you're not as happy as you are sad that you've lost 15% in the last like four or five days. Like that stings you more than the gains.
So loss aversion is a huge reason why people panic sell because they just go crazy like, oh, everything's falling to hell and everything. And then the second one is the herd mentality, which like it's just like it sounds like when everyone else is selling, you're like, what am I missing? Am I missing? Like maybe they know more than I do about how the market's gonna react. Maybe.
So instead of actually figuring it out for yourself, you just default to what everybody else is doing. But I think I've seen everything from 90% of people who invest lose and 99% of people who invest lose. So do you really wanna be part of that herd? I don't.
You don't wanna be part of the herd because like the people that are going to be all right in five to 10 years are the people that are gonna be buying during this downturn. Yep. If you want different results than the pack, you need to do something different.
And like, I mean, you won't be able to actually identify like what hedge funds and which ETF people or which closing funds are buying until like the 13Fs come out of the next earnings report. But I'm pretty sure there's a lot of those people are buying quality dividend stock, quality stocks that are down like 10, 12, 15% the last couple of days. Even if they drop another 10%, you're still getting them at a steal compared to like what they should be.
I would think too that the dividend growers, the ones that have like the longer year streaks would probably be the least likely to cut dividends. They're gonna try to keep it as much as possible to keep that status. They'll probably take on debt.
Yeah, they'll probably take on debts to hold it. Yeah, but still, even if they bump it a penny, bump it a penny, like if you're looking at it from the dividend perspective of cutting dividends, those would be probably the safest ones from the dividend cut component. But this is kind of just part of the process.
And that's the reason I was bringing up the dates was like I said, if you pull things out, you look at a correction is five months, a bear market's one and a half on average. That seems like an attorney when you're going through the shit storm that we're going through. But if you like look at it from a long term, if you're investing for 40 years, like a year and a half is not a lot at all.
It's a blink of an eye. It's like a vampire. Like it's a drop in the bucket.
But the problem that we've had since COVID is everybody is just so used to their account going, their brokerage account going up every day. So like they're not used to seeing like huge red amounts. And they don't know how to react when their account goes down and goes down hard.
So, but even with that, like to set your mind at ease, if you pull out any chart in your brokerage, anything that you currently hold and you pull it out to a 10 or 20 year timeframe, you'll see that it's still actually going up even with the huge down. Every book I've read is a 10 year. You look at the 10 year scope.
And at that point, it's always in the up. I mean, unless the company is- So what I did to illustrate this, I went to the past 20 years. We've seen 15 market corrections the last 20 years and two or three bear markets depending on which resource you use.
We have the Great Recession. We have the COVID recession. And some say that we had a, I'm sorry, a bear market, the Great Recession bear market, the COVID bear market.
And some say in 2022, we had one. Some don't. They don't like depending on what metric you use.
So we'll say whatever. Anyway, if you look at that, the S&P was at 1,220 years ago. The NASDAQ was at 3,320 years ago.
And the Dow was at 16,520 years ago. So even after all these corrections and the two or three bear markets and all the chaos, the S&P, at the time I typed this up, it was at 5,650. I think it's like 53 now or whatever it's at.
The NASDAQ was at 17.7. I think it's at 16 something now. And the Dow was at like 40,000-ish around. It was 42 when I did this.
I think it's at 40,000 now. So those are still good gains of 371 in the S&P, 436 in the NASDAQ, and 155 in the Dow. Now they're not, like the NASDAQ and the S&P are good.
That Dow's kind of shit. That's only like 8% per year, but. So obviously- Well, the average, the average gains are 10% a year, so.
So obviously, individual holdings may or not have performed as well as just an index fund. But even through all the doom and gloom, the markets, they've actually returned really good results, even through all the chaos of, what did I say? 15 market corrections and two or three bear markets. So we might just be in another bear market, but if the returns will come, it'll be fine.
You cannot time the market. That's one thing that I want to seriously stress. Don't even try to time it.
If you think, oh, the bottom's in, the bottom's probably not in. Yeah, the bottom's usually in when people are jumping off buildings. When people lose all hope that it's ever gonna turn around, that's usually when it finally turns around.
But so what I want to illustrate with this point is you're either in the market or you're out of the market. Don't half-ass it. But again, guaranteed, if you were on the sidelines, you are not gonna make any gains.
Just as much as you sell to lock in losses, 100% guaranteed losses, if you are not in the market, you get zero gains. Oh yeah, you'll miss out on some losses. And you'll have losses due to inflation.
You'll miss out on some of the losses because you sat in the sideline, but you're definitely missing out on the gains. And like I said, 42% of the best days in the market are during a bear market. So dollar cost averaging, that's what everybody's talking about, where you get in incrementally and you just literally, and Tony Robbins in his book, Money Master the Game, he has a whole chart that's broken down that literally takes people who, I forget exactly how it was, but then the one was just the person that steadily invested the same amount every month for like a big 20, 30 year span.
And the person that did that had the best growth of the whole thing. It was the timing thing, I think it was. You can't time it.
You can't time it. It's been proven repeatedly through different studies. You're better if you just literally average it through, average it out.
And that's what's so nice about the dividend investing approach, because you can just turn drips on and it automatically dollar cost averages. Drip, drip, drip, drip. Drip, drip, drip.
Goes the water. The reason that you can't time it, if you want to know it, is because the turnaround time from correction or bear back to bull is so short, like it's impossible. It can seem like you, oh, well, yesterday was down like 5%, so it should be going up on Tuesday.
You can try to do that, but ultimately it's gonna fail. It's like trying to do a market order or a stop loss. You miss it and you get further down.
Same thing when it goes up. When it spikes up, it shoots up so fast you can't even get, you miss. So just stay invested, stay the course.
It's painful to see the portfolio drop. Very painful. And it's gonna be even more painful if they start cutting dividends, which we highly suspect.
So we've even just been discussing alternate plans of- We literally, in the last three weeks, we lost, I want to say, three years worth of principal gain. In three weeks. In three weeks.
So let that sink in, guys. And I'm not out. I don't want more money to put in, but that's me.
So just continually add to positions. When the market was going down, she, like Carm said, cost averaging. And maybe even initiate new positions.
It's like, obviously you want to add to your better positions, but even initiate new positions. Like if something's super duper on sale, like I'm imagining, what if I just saw one, I was like, I can't believe it's that cheap. I think it was some bank stock.
I was like, holy crap, that's on sale. I mean, the dividend was only 3%, but you know that when the market turns around, you're going to get like 30 or 40% in principal appreciation. Yeah.
And that's when you get those gains with the dividend payout. And I love doing that value investing thing in conjunction with the dividend investing, because you get both sides of it, which is nice. But it takes time.
It's like planting a tree. It takes time for it to bear fruit. And then if you continually, like if you're continually looking at your brokerage, you're going to think the losses are catastrophic.
But if you actually do the math, like it's generally, on average, it's 14% during a correction and 36% during the bear market. So what do you think that you make during a bull run? Since 1928, the bull market has returned 115%. So even if you lose 30%, you're still making like 80%.
So it's like, so why would you get out? I'd rather take 80% without the stress of trying to time something then. But. Honestly, that's the most stressful part is like when I do the investing or he has me go in with the thing, the timing is the most stressful piece.
Like it's so much easier to just be like. 75% of the time, the first half of a bull market outperforms the second half. So that's a huge disparity.
Like the first year of a bull market generally will outperform the last year of a bull market quite significantly. I mean, you could just go back in history and look at the charts. When it corrects, the slope is so much steeper in the beginning.
The first month of a new bull market, on average, gained 14% in the first three months of a new bull market gained 25. That's a lot, guys. A lot.
So like if you're a gambler like I am, like when the odds, the probabilities are in your favor, like they are whenever you're in a downturn, even though it fucking sucks. The odds are pretty much stacked in your favor to just pick up good dividend paying stocks and you're gonna be gaining like within, we'll say two years, you'll be gaining 25% in the first three months. Plus 115% for the entirety of the next bull market on average.
That's crazy. That's crazy good probability in your favor. And that right there is how those millionaires are made.
The wealth is made during bear markets. Those turnarounds. People who are willing to like set the fear aside, look at it logically, look at the past, know what's gonna happen, and have the balls to get in and buy stuff when it's on sale.
Now there's two things that I think I need to address that are gonna seem like redundancy. The first is gonna be know your budget. Like if you can't afford to invest because like stock prices went up so much or you're at risk of losing your job or whatever, like obviously investing seems counterintuitive to everything.
We've said it before. If you do not have an emergency fund set up, you should not have money in the stock market. And the second thing would be to make sure your emergency funds topped off.
So like say you had six months, but you used a little bit of it, make sure that you have your full six months or your full 12 months of the emergency fund is like your fail safe so you don't have to touch your investments. Yes, because when you have to touch your investments at an inopportune time, AKA a bear market, that's when you get screwed. But know your, like the reason I say know your budget, like so know like say, for example, you're a coffee drinker.
We're not, but say you are. Tim's a Bobo (Bobelo) drinker, so just use that. Rather than spending $6, $7, what's coffee cost, $7? I'm gonna say $7.
I would say $7. Rather than spending $7 at Starbucks or at Wawa's or Sheetz or whatever the hell, to adhere to your new budget, why not just get coffee you make at home and you just take it with you? It might cost a little bit more in like the first couple of weeks, but like overall it's going to help your budget to the next few months. Like that's what I mean when I'm saying know your budget, like know where you can make cuts, but not like a loss of your lifestyle, whether it's eating out, like instead of eating out.
Being more frugal, like that is the definition of being frugal. It's actually making, investing. It's again, it's the exact same concept.
You're investing in something that's actually gonna give you dividends later. You're investing in a coffee machine that's gonna save you money every time you drink coffee in comparison to what you'd be spending going out. So rather than eating out, why not talk to all your other people that live around you and just have like a- Potluck.
Like a potluck or have a grill out, like one weekend, one family grills out, one weekend, another family grills out. That way you're still- You rotate it. Eating out, but you're not eating out like you do at a restaurant.
Cause if you remember when we were discussing that, like that's like, that's probably like 20% of people's budgets that they could actually, they're, what is that? Yeah, and they've gone up huge. They've gone up huge. But even eating out is gonna go up.
Coffee's gonna go up. Like, so if you're a coffee drinker, you'd be stupid not to get a coffee maker because 99% of our coffee is imported and the import tariff's gonna be 30 to 50%. So your coffee's gonna go up 30 to 50%.
So it makes more sense to just buy a big ass jar of it and make it yourself than drinking at the convenience stores or the Starbucks because the costs are gonna go up. I know that there's this belief that the cost on us won't go up. That's just a fallacy.
Like, I don't- If you look at it from a business standpoint, if the business can get away with transferring the tariff costs to the consumers, they're going to. And then Tim said something that was absolutely something that I don't think anybody really reflects on. But if you have local companies or companies that have local products sourcing- This has been shown in research multiple times.
So I stand corrected on that. But if you have two companies, company A imports their stuff and company B does not, even though they could potentially not increase their prices, if company A- So you have Starbucks and a mom and pop coffee maker. Mom and pop, they grow their own coffee beans.
Starbucks imports their coffee beans, which they do. Starbucks is gonna raise their coffee bean, their coffee prices to cover the tariffs. What the mom and pops is gonna do is say, hey, Starbucks raised their prices 50%.
We can raise our prices 40%. We'll still be below Starbucks. So we're still a cheaper option.
We'll get more business. That's been shown through so much research time and time and time when dealing with tariffs. They call it price gouging, but it's not really price gouging.
It's the opposite of the race to the bottom. It's just smart business. If I have something that people want to buy- That they're willing- It's that anchoring bias too.
Because once that's anchored in, they do that comparison thing where they see that the other company is still the cheaper option, but they're not reflecting on how much it was before. Yeah, it's very insidious. Is that actually shrinkflation? No? No, I don't know what it's called.
I forget what it's called. Okay. So if you know what it's called, let us know in the comments.
The only thing that I can see prices going down in would be real estate. Why is that? Because if there's less people buying houses, they're gonna do more deals. We'll cut you a break on your interest rate or we'll knock off this much on your closing costs.
Oh, and you know what else they would do too? So if these builders have actually already built all these houses and people aren't buying, they have the holding costs. So they're gonna want to try to- So the only thing that I can see going down in the next year would be real estate, really like a lot. And I think part of this whole shit is because we have a real estate person in the White House who wants to buy up real estate.
And part of it is because he wants the interest rates lower. Like that's- Yeah, we were actually wondering if he was, if this was literally a power play to just get power to reduce interest rates, like to purposely tank the markets. But you can't.
I wouldn't be surprised at this point. He can't. I know.
I'm just saying. Okay, so he wrote like he reduces the interest rate like half a point. What happens if the shit really gets bad and they like, he wants them to reduce the interest rates to like 1%.
If the shit gets really bad, we're not gonna be able to lower the interest rates anymore. And that's when we get depressions because we can't do anything to combat anything. So like the Fed is actually for the, you'll hear me say this rarely.
Rarely. The Fed is actually doing the right thing by not adjusting the interest rates. Because that's the- And we have been pounding them.
That's the only ammunition they have when the shit gets really bad is, okay, the shit's so bad that we can lower the interest rates and like make it easier for people to borrow money. To encourage people to buy. But I wouldn't think a depression would be around the corner because the unemployment's still at four point, the last report was four point two and they were still adding jobs.
And I mean, inflation's gonna be like, anybody that looks at economics knows inflation's gonna be above 4% if this shit carries on. So it's a very odd situation. And because we have somebody who's so erratic making the calls right now, it's gonna be just the, we have to pivot as things come out.
So you have to use your crystal ball. What's gonna be good in a higher rate interest environment? What's gonna be better in an environment where everything costs so much? I mean, I hate to bring up- This would be the basic staples, right? I hate to bring up iPhones, but are people not gonna buy iPhones? They're still gonna buy iPhones. That's my problem with all of this is people are still gonna buy iPhones.
Even if Apple moves a plant here, does iPhones here are gonna cost more than the ones that we import with the tariffs? Because we have labor laws and we have safety laws and we have local taxes and state taxes. So they're still going to cost more. So I don't understand what the point of that is.
And it takes years upon years upon years to build factories and warehouses and stuff like that. So Trump will be dead before most of these factories he claims are coming back to America will be built. So the point of it is something nefarious.
So you have to just- Either something nefarious or incompetent or something is gonna come out of left field that we don't know about. So I don't know. It could be a combination of all three.
So the only thing that you can do is stay in the market. You can invest in American companies if you want. Like we kind of like, when we went over this in December, I brought up a lot of things that were mainly like in the sectors that I thought would be better with the current environment that were American companies.
Because I kind of- This is something we definitely said at the beginning of the year. Tim- I kind of saw that- Went into this- Like foreign companies were gonna get hit pretty hard. We got out of foreign oil.
We got out of a couple other things. It's like oil companies- We definitely prepared for it. Because Tim did make the comment in December that he thought it was a possibility of a recession for this year.
And I'll be damned. A lot of people made fun of me. I know, I'll be damned.
Here we are. So that's that. So this is gonna go up on Tuesday.
So there's gonna be a bloodbath on Monday again. I was gonna say, so this is Sunday night when we're recording this. The, what is it? The futures? Futures look bad.
They're already down, what'd you say? 2,000 points? No, they were down 1,500, but they came back up to like 1,000. But it's still gonna be like another 5% loss tomorrow. I'll be surprised if it's not.
But yeah, usually futures indicate market sentiment for the- And that, this is going up. And then we're gonna record our Coney video right after this one. That was a shit show too, so.
But what I did find out is that fiat's doing quite nice. Yeah, so we, had we been able to do it again, we would've gone half and half, like we talked about in that other episode with the YieldMax half and half for the long and the short position. So we should've done that, but we didn't.
And it's just a matter of- Come on, Thursday- The experiment taking way longer to- Thursday, everything in our account was down but fiat. Yeah. Huh? That's actually really funny.
Isn't that nice? Everything's down, but stay the course. Don't look at your portfolio every day. Yeah, like if you can't handle it, just don't look.
Or if you're gonna look, look on weekends when you can't do any trades. And just keep on keeping on, I guess. Dollar cost averaging.
Keep investing money in. Yeah, keep investing when they go down below. The only way that like us little people can make any money is through the stock market.
And I think the rich cats know that, and the overlords know that. And their goal is to get as much money- As much money from us little cats as they can. So if they crash the market, they can get like all the people that are scared, all their money out of it.
Don't be one of those people, be like, have the rich mentality of- No weekends. I have like 10 years from now that I'll be rich because I've stayed in and I bought while the market was down. That's like my advice is ignore the noise and just keep on keeping on.
Stick to the course, stick to the metrics. Okay. And if dividend cuts happen, it's kind of the nature of the beast during a bear market.
They will bring them back when they can. Sometimes you gotta shift plans when unexpected things happen. So we're gonna be pivoting a little bit for us.
So we'll be doing less indulgent things. But then when it turns, we'll probably be in like gravy boat. I think next week I'm gonna try to come up with American companies that are super undervalued.
Like just give like a list of like 20 or 30 super undervalued investments that would be good to dump money into. I don't know. I was gonna- I planned on doing that email this week on Friday, but all hell broke loose.
So I had to change, I had to pivot. So I'm hoping that next week I'll have that done and it'll be pretty good. Because there's a lot of people, like a lot of good companies.
Like I just read an article on Skyworks that was trading at its 52-week low. And that's a really good company. Yeah, and we bought it before when it had a big drop.
I imagine it came down a lot more since. And like IIPR is another one that's like at sort of around its 52-week low. That's a really good company.
So there's a lot of really good companies out there at their 52-week low, which will be lower by the time I get around to constructing the chart that have a pretty decent dividend for the time being. Yeah, the dividends will go up as the prices come down. So that's how I'm hoping that's next week.
If not, it'll be something really cool. But I'm hoping that's what next week's podcast is about. If not, it'll be the week after.
It will, it'll be coming soon, yeah. All right, guys. Hopefully you're not freaking out.
It's okay to freak out. Well, just don't act on it. Yeah, just don't act on it.
Don't panic sell. You can freak out all you want. I've been freaking out for fucking days going this is horseshit.
This is bullshit. This guy's incompetent. Blah, blah, blah, blah, blah.
I haven't sold anything. Yeah. So you can freak out all you want.
This is true, this is true. Maintain your emotions when it comes to hitting stuff. Hitting the button, pushing the buttons.
Yeah. Thanks for listening and keep making them divies.