Navigating a Record Bull Market Before Retirement - Ep 51

To get the full RFL experience, watch the episode here at https://youtu.be/N0C9lTmfK6A

We unpack why stocks can soar while hiring stalls, and how that split shapes real retirement risk. We weigh the 60/40’s bruises, explore bond behavior since 2022, and outline practical hedges like fixed annuities without abandoning growth.

• market strength versus economic softening
• unusual labor signals and job concentration in healthcare
• wealth gap effects on younger workers and retirees
• bond-stock correlation shifts since 2022
• rebalancing flows and demand for bonds
• role of fixed annuities and cash ladders
• staying diversified and avoiding market timing
• watching tariffs, AI, and margins as risk signals

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Transcript

Welcome And Setup

SPEAKER_01 0:00

Retirement from life. Your passport to a comfortable and confident retirement. The confidence that's equal parts education and entertainment. Where we break down the retirement into the natural fund and a heap of wisdom from your host, Christian Steers CPA, the passionate retirement specialist, and president of Steer Financial Wealth Advisors, the independent registered investment advisor specializing in the AIM retirement system.

Market Wins And Recent Returns

SPEAKER_02 0:31

Welcome back to another episode of Retirement for Life. Today we're going to talk about what's on our mind, and it's a lot. I think a lot of clients are talking about what's going on in the stock market. People are curious. I've been on record in the last 17 years, the stock market has been up 15 of 7. Did you know that?

SPEAKER_05 0:48

Oh, yeah.

Outlooks And Possible Corrections

SPEAKER_02 0:49

15 in the last 17 years, that's an 88% win rate, which is like very unheard of. Uh it has happened before, but you can honestly say it's a once in a generation event. What's even more crazy? The last three years, 23, 24, 25, guess the number. What percent has the SP total return been up? I'll save you the trouble. 85%. That is even more unprecedented. Okay. Yeah, I listened to my friend Tom Lee, who I just says I think is fantastic, and he says 2026 is going to be up another 10%. Choppiness. He said we're going to see a 20% correction in uh this year, 2026. But don't worry, it's going to be fine. So let's talk about the market. What do you guys think about what's going on here?

Economy Versus Market

SPEAKER_03 1:40

Well, I think which way the economy goes will really play the biggest role in what the stock market does. And obviously we're in a very uncertain time right now. There's been, you know, tariffs. We're not sure where that's going to end up. I think a lot of companies are kind of in a wait and see type of mode. And that really comes out in the labor market. We've seen an unemployment rate kind of hover around where it's going to be.

SPEAKER_02 2:04

What's going on in the labor market?

SPEAKER_03 2:06

So the unemployment rate's been around 4.4%.

SPEAKER_02 2:10

Which is supposedly pretty good.

SPEAKER_03 2:13

Yep. It's been that way for the last several months hovering around that area. But what's weird is that, you know, in the labor market, we see some underlying factors that are different than what you would expect just based on this steady unemployment rate. Like I said, we were kind of in a wait and see mode. So companies are are doing a couple of things. Usually, you know, you'd see this unemployment rate steady hiring, steady firing, you know, people quitting their job, but you're not really seeing changes to that. Companies have an all-time low hires rate. So the amount of people that they hire, it's at around like 3%, uh, which is really low. And you know, if we were in a recession, that would be fairly normal. But right now, that's that's kind of unprecedented, and typically you'd see a a much higher unemployment rate go along with that.

SPEAKER_04 3:03

That's interesting.

Hiring Freeze And Quit Rates

SPEAKER_03 3:04

So I think and I think there's two reasons for that. One of them being um people are just kind of staying at their jobs. The quit rate is extremely low. No one wants to take a chance, and you know, hiring is very low.

SPEAKER_02 3:17

No, but that means you can't quit.

SPEAKER_05 3:19

Go ahead. And the pool, the pool of people that uh being hired from, it seems like it's just so small.

SPEAKER_03 3:26

Yeah, people are kind of just like staying in their current position for a long period of time. So that's why we're seeing the stagnant number. But I, you know, the underlying things at play are are pretty important to to look at. If we see layoffs pick up, I think that'll uh really send unemployment higher.

SPEAKER_02 3:43

So the labor market's interesting to me. I saw something the other day that the payrolls are steady, like you said, and the jobs we see are being added to the you know 150,000, 200,000 jobs a month. But it's the type of jobs that are being added. It's the quality of the labor market. Yes.

Job Quality And Sector Skew

SPEAKER_03 4:05

So last year, um, just the you know, addition to jobs. Outside of a recession, which you know, recessionary periods are kind of they literally go off the charts in in some ways. But outside of a recession, jobs added last year in 2025 are the lowest they've been since 2003, which I thought is really interesting. And really when you look at the actual jobs being added, it's it's almost all healthcare and really nothing else. Everything else is flat. So that's a little concerning. Um, but again, people aren't being fired or you know, leaving as quickly as they were either.

Generational Strain And Wealth Gap

SPEAKER_02 4:40

I think what's happening, and I hate to say this, but it's true, the separation of classes continues to have a greater divide amongst it. I saw the other day back in the eighties, the average age of a first-time home buyer was twenty-something. Today, for the first time, it's up to 40. Jeez. Okay. I can't remember the number. It was like one-third of children between the ages of eighteen to thirty. They're not children, they're obviously adults, but one-third of that that age range, 18 to 35, are still living at home with mom and dad.

SPEAKER_04 5:14

Mm-hmm.

SPEAKER_02 5:15

And uh those jobs that are being added, you know, you see a typical I mean, think about people that you know in your circle of friends. A lot more younger people, instead of having like this wonderful, fantastic job, benefits, overtime, bonus, salary, all that great thing. They're kind of nickel and diming two or three kind of side gigs and parsing them together into what is enough to pay the bills. Yeah.

SPEAKER_05 5:44

Um, yeah, I was just talking about that with uh with a client. The the gap has just continued to grow and it's almost like the stock market and the real economy that we feel has had such a dis dislocation. It's two different worlds. In in the last even five years now, you can say. And and it doesn't doesn't feel like we've ever come come back close again, you know. No, and there's certain things that are just I feel really strongly about this.

SPEAKER_02 6:10

So the people that we work with, uh thankfully for them, have gotten over the hump. Yeah. They've made their nest egg, they've worked hard, and now we're investing their money in a lot of diverse places. But just one example, Google. Google's earnings come out, and all these companies' earnings are coming out, and they're just making more money than they ever have.

SPEAKER_04 6:30

Yeah.

SPEAKER_02 6:31

But it's not because they're high in in some cases, they're firing people, yeah. And they're investing in in this technology and these things that are making more money, but our labor market is maybe not as strong underneath the surface.

Preparing Portfolios For Softening

SPEAKER_03 6:43

Right, right. Yeah, it's like the dispersion between lower income and and higher income folks is is getting wider. The wealth effect from the stock market has been big for a lot of our clients, you know, being 60 plus. But then those postgrad um college kids that try to find a job, it's becoming very hard. And I think part of that is probably AI playing a factor, but it's a very long-term thing that I think will continue to play out. So, you know, I keep an eye on, like I said, w what jobs are out there, hiring, firing, all of that, because any move in that, in those pieces, I think could make a huge difference in the overall economy and potentially lead us into a recession.

SPEAKER_02 8:22

So we're guarding for this market's been up. Supposedly it's gonna go up again this year. At some point, we're starting to see some softening in different areas, which is why I think a balanced portfolio is important. So if we're not investing in stocks, we also have to invest in some bonds too. And those are safe, aren't they, Ian? Supposedly.

SPEAKER_05 8:41

Yes, supposedly.

SPEAKER_02 8:42

Right? I'm a bond safe.

SPEAKER_03 8:44

Yeah, I just read a Bank of America article about you know, why do we use bonds? Because they're supposed to be sort of a hedge against stocks when the stock market goes up. You can rely on the bonds to sort of protect your portfolio. But, you know, ever since 2022, we saw the opposite of that. In 2022, you know, very unprecedented bonds and stocks both went down. And since then, we've seen the same thing, but in the other direction. You know, the last three years, stocks and bonds have moved positively in the same direction. So there's a couple things, you know, when we're talking about a diversified portfolio, bonds really aren't as good of a headphone. Not a diversified portfolio.

Alternatives And Annuities

SPEAKER_02 9:25

By the way, before you get going on this, I have to say bonds broke my heart in 2022. Yeah. Yeah. I mean, they just when you think the world is right, when you think you know somebody, and bonds were like one of my best friends. And then they just they just tore my heart right out.

SPEAKER_05 9:42

I think I think it's um lost a lot of confidence for people too. Uh their 401ks talk about you know the the stock market boom here. But in 22, they got a big scare, most people with with a big big lump in their 401k as their nest egg. Uh when when everything went down, it wasn't even if they had some sort of balanced portfolio, i you had to be very careful in those times.

SPEAKER_02 10:06

Aaron Powell So 2008, the stock market goes down 38 percent, bonds were up, right?

SPEAKER_05 10:11

Yep, exactly.

SPEAKER_02 10:12

But the average bond portfolio in 2022, when the stock market was down, I think it was down like some 15 percent. So that has the correlation changed? Is it gone?

Stay Balanced Not Tactical

SPEAKER_03 10:21

Well, so when we're yeah so what the article was about is it's basically saying let's talk about it like a typical retirement portfolio, maybe 60, 40. A moderate person invested 60 percent equities, 40 percent bonds. Well, you know, just thinking about it intuitively, when the stock market has risen as much as it has, what do we do on our end? We rebalance those portfolios and we maybe take that equity that's grown to 70% and knock it back down.

SPEAKER_02 10:49

Bad bonds.

Patterns Across Years

SPEAKER_03 10:51

AKA, you know, selling stocks and buying bonds. So I think it was somewhere around, you know, like 40,000 of money in a million-dollar portfolio was shifted from stocks to bonds every single year for the last three years. And so what that did is really ramp up the demand for bonds. Obviously, selling stocks, it didn't affect the stock market, continued to go up, but that demand for bonds over the last three years accounted for over 20% of the new issue bonds.

SPEAKER_02 11:23

Wow.

SPEAKER_03 11:24

Which is a lot higher than it has been historically.

SPEAKER_02 11:26

Wow.

SPEAKER_03 11:27

So, you know, what that did is it it made that positive correlation between stocks and bonds. The higher demand made, you know, bonds look really good. So I think if we're talking about a a world in the future where maybe the stock market moderates a bit and we see a little bit slower growth, maybe that demand for bonds tapers off a bit and we see bonds become a better hedge, you know, in the future for for stocks.

SPEAKER_02 11:51

I hope so. Or we have to find a different a different hedge. Any ideas for a different hedge? What are we gonna do? If bonds aren't the hedge to stocks anymore, I don't know. I mean, fixed index annuities play a part sometimes. I love that answer. That's exactly right.

SPEAKER_03 12:05

Yeah, yeah.

Team Reflections And Close

SPEAKER_02 12:06

Fixed annuity rates I love that you know, look very we we were just talking in the last podcast about what you can do uh with your taxes. The other thing, too, is right now, if the market has gone up 85% in the last three years, if you are 65 on the eve of your retirement, here's an idea that probably is not gonna be a bad idea, and I wouldn't suggest this. But if you put your entire portfolio into what Ian just said, probably gonna get about five percent. Like, what's the best just flat up, not index anew? What what do you get in on in annuities these days? Like a Maiga over five.

SPEAKER_03 12:42

Yeah, probably like five and a half or something.

SPEAKER_02 12:43

You could just you know, and I'm not saying to do this, but one idea that's not going to kill you if you've saved money and you have done a good job saving and you are on the eve of retirement, is just park it in a guaranteed five percent account. No, that's a good alternative. And then you can rely on that too. Very interesting. Huh. Okay. So so now that we have that settled, do we just drop everything and get out of the stock market, or we just continue on and and have a balanced, diversified portfolio?

SPEAKER_03 13:14

Yeah, I think keeping some protection in the portfolio is important. It's you know, you could have said two years ago, sh wow, the stock market is at an all-time high. Should we jump out?

SPEAKER_02 13:25

I did say that two years ago. You talked me out of it.

SPEAKER_03 13:27

Yeah, you could say that every year, I think it's still important to maintain some safety, but also keep a diversified portfolio.

SPEAKER_05 13:34

Yeah, definitely. Um think about 22, what we just talked about. If if we would have put all our eggs in one basket, everyone thought bonds were gonna go up if the market faltered. And I mean, e every expert said so. And look what happened. So you have to keep it diversified. Yeah. Just just so you save save any any uh unexpected event.

SPEAKER_02 13:54

Aaron Powell Aren't you glad we don't do tactical investing anymore, Ian?

SPEAKER_05 13:57

Yes, yes.

SPEAKER_02 13:59

You used to talk me out of the ledge off often. Now Emma talks me off the ledge. Yeah.

SPEAKER_05 14:05

Yeah. Speaking of that, um we we all want to know when the market's gonna go down. So um I was just looking uh at at the market and just a broad picture of the market over over the course of 2024 and then a broad picture of the market over 2025. And it's amazing how correlated they are. The peaks and troughs. Uh it's it's really it's really amazing. And I mean, we're not trying to time the market or anything, but it would be interesting to see if some of those turning points are similar turning points to this year.

SPEAKER_02 14:37

Aaron Powell Yeah, because both of those years, if I recall correctly, there was a dip like in the first quarter of both of those years.

SPEAKER_05 14:44

Yeah, and and we blamed it on tariffs in 2025, but in 2024 we had a dip as well. So it could be more related to data than we want to admit.

SPEAKER_02 14:54

Now, Emma, you used to trade bonds. Mm-hmm. Not trade bonds, buy bonds, would you say?

SPEAKER_03 14:59

Yeah, follow bonds, yeah. I wasn't an actual trader, but yeah, I followed a lot of So do you miss that?

SPEAKER_02 15:04

Like your your missed bond.

SPEAKER_03 15:06

It's definitely different. Um, yeah, like following companies and being very in-dailed into their financials is definitely a different um day-to-day than I have now. But I don't I don't necessarily miss it.

SPEAKER_02 15:19

I mean, I'm s I'm not I'm not sure what you love to do, but like do I want to buy bonds all day for an insurance company? Or do I want to walk and and talk with like really dynamic 60-year-olds who have been pilots who have been um rocket scientists? Do who have yeah.

SPEAKER_03 15:37

Nobody said bonds were the most exciting thing.

SPEAKER_02 15:40

Sure is okay, but it's good to have somebody on the team that knows about so much about bonds.

SPEAKER_05 15:44

Yeah, but sometimes the least exciting thing is the most important. I mean, look at Roth conversions. That's not exciting to most people, you know, but it's important, very important.

SPEAKER_02 15:55

All right, so uh I'm gonna go around. I'm gonna go first, one sentence summary on what we just said here. I'm gonna say uh stock market seems to be still okay. More risk going forward, perhaps. Watch the underlying softening of things like the labor market. What would you say? How would you summarize this wonderful podcast?

SPEAKER_05 16:22

Keep a diversified portfolio for some unexpected terrain this year.

SPEAKER_02 16:28

And don't look into an annuity.

SPEAKER_05 16:30

Yeah, yeah, there you go. If you're really scared about it, there's there's more than that.

SPEAKER_02 16:34

Well, we mix and match, right? We together. What would you say, Emma? What would you summarize what we just said?

SPEAKER_03 16:39

Keeping an eye on like the structural changes in investing and how our clients' portfolios are performing, and then also a close eye on really all of the economic indicators that we have. That's all we can rely on. Because I do think any one small thing, you know, negative change could could affect our our portfolios.

SPEAKER_02 17:00

It's going to be some interesting conversations towards the end of 2026 as we go forward and look at some of these metrics and what we do uh to to analyze our portfolios. That's it for Retirement for Life Podcast, Brooke. What number do you think this was? I don't even know. Um It's in the 40s.

SPEAKER_05 17:18

Yeah. I uh it might be 51, actually.

SPEAKER_02 17:21

It's in the 50s.

SPEAKER_05 17:22

Yeah.

SPEAKER_02 17:23

Oh my gosh. It's an honor. That's a milestone. Yeah. Ian, you're a great addition to that. And uh we're gonna have to bring Andrea back too because people I can just see the text.

SPEAKER_03 17:32

Where's Andrea? Where's Andrea? She can care less about me.

SPEAKER_02 17:36

You know, and I think what we're gonna do is I'd love to have a new environment here. So, Brooke, can we work on that? Yep. Let's get some couches in here.

SPEAKER_05 17:43

Yeah, I was promised a couch, Brooke.

SPEAKER_02 17:46

All right, we'll see you guys on the next Retirement for Life podcast. Thanks for tuning in today. Take care.

SPEAKER_00 17:52

Investment advisory services provided by Sear Financial Inc., SEC Registered Investment Advisor. All content on this podcast is for information purposes only and should not be considered investment, legal, or tax advice. Material presented is believed to be from reliable sources, and no representations are made by our firm as to another party's informational accuracy or completeness.