Episode #110: “Bears, Bulls, and Market Moods: What It All Really Means”

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Transcript

SPEAKER_02 0:01

Welcome to the Fiscal Physical Podcast. Join us this week as we sit down with the founder of Alchemy Wealth Management and author of your Fiscal Physical, Ryan Nelson. Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Defining Bull And Bear Markets

Aaron Hoisington 0:33

Welcome everybody. This week's episode of the Fiscal Physical Podcast. My name is Aaron. I am here with Ryan Nelson, the uh founder of Alchemy Wealth Management here. And uh Ryan, uh, what are you up to today, man? How are how are you doing? I am doing well. I'm doing well. How are you doing today? You know, cannot uh complain too loudly. Uh somebody, I don't know if I've mentioned this before, but I have a uh a boss at work who sometimes I'll I'll ask him every time we pop into a meeting, like, oh, how you doing? He said, he said, ah, I can't complain. No one listens anyway. And like that's like his classic like line for it. And I'm like, nice. And so like everyone. What'd you say? Yeah, yeah, yeah. Sorry, what was that? Yeah, yeah. Like the the good I couldn't hear you very well, having some technical issues, but uh uh but anyway, Ryan, today I am actually excited. I'm very excited to kind of d dive into this topic here. Um it's about market moods, uh, you know, a bear market, a bull market, like what it all really means. Um, you know, we've we've I think we've thrown out like you know different things on this podcast. You've probably heard like a bear or a bull market, and um, but I'm really curious to see if you can kind of break down into more details what the indicators of what those actually, when people throw it, say, oh, it's a bull market. What does that mean? And you know, how does it affect investors, the economy, all that good stuff is uh is kind of some some insight behind the curtain there. So um you think that's uh doable? If not, if not, it's gonna be a pretty short episode. So Yeah, let's go straight to the personal section. Exactly. Let's just dive in there.

Emotions Versus Long‑Term Strategy

What Drives Each Market Cycle

Time In The Market Over Timing

Ryan Nelson 2:03

But uh awesome, man. I'll turn it over to you. Yeah, so so bull and bear markets, right? That's what you're defining as a market mood. Um, so the market's gonna have patterns over time of going up, going down, right? And investors often describe these patterns as moods. The two main moods are gonna be bear and bull markets. So a bull market is gonna be this general mood of optimism. So prices are oftentimes rising over a longer period of time. Investors feel confident and they buy more, like more excited to buy more, the economy can feel strong. Um, typically, this is defined as like a rise of about 20 cent or more from a recent low, would be considered a bear a bull market, although I've seen different things for that as well. Um, whereas a bear market is gonna have this general root of mood of pessimism. Um, prices are gonna be falling over the the this period of time. Investors pull back and become cautious. Um, news can feel negative and headlines or you know, exaggerate the fear. Um this is oftentimes um defined as a you know uh 20% drop from the recent high. So bold optimism, fair gonna be pessimism. Um so why this really matters, they do shape how the everyday investor feels. Um so bold markets, as I said, typically the you know, the average investor is gonna feel more optimistic. Um, they're gonna be more inclined or want to invest. Whereas during bear markets, people are usually more nervous and want to wait it out before they invest. And so the, you know, there is a a challenge that our feelings can pull us in a certain direction or make us want to make a certain decision that isn't always wise for our long-term goals, right? So I'd say maybe just put a pin in that and say, hey, let's be aware that just because we feel cautious or we feel a little nervous or we feel confident, um, that that may not be the best way to make investment decisions. Right. And I think as all of us hear this and as I say that, that probably feels obvious and we'd all say, yeah, of course, yeah, our our emotional like nervousness or excitement isn't a good way to make investment investment decisions for our long-term retirement goals. But also, if we actually, you know, look ourselves in the mirror and take an honest look at how we make investment decisions, there might be more of an that might have more of an impact than we would care to admit. So something to be aware of there. Um so a bull market. What causes like this to happen, right? So oftentimes company earnings are gonna be stronger. There's lower unemployment rates in the market, maybe some rising rising consumer confidence, um, lower interest rates, positive economic momentum. All of that can sort of lead to these bull markets, whereas bear markets are often going to be recessions, higher inflation, um, interest rate hikes, global conflict potentially, maybe maybe a major financial shock, um, so some sort of shock to the system could all result in a bear market. Um the reality is though, these market moods are temporary, right? None of them last forever. So if you zoom out far enough, both bull markets and bear markets are just part of the normal cyclical nature of the economy and of investing and of the market. So, you know, long-term like long-term results are gonna come from staying invested in not predicting these different moods, right? So I think last week we talked, um, you know, we talked a little bit about staying in the market and right, it's time in the market, not timing of the market. The same exact thing is gonna apply here today. Time in the market is gonna generate those long-term consistent returns, not timing of the market and trying to determine, oh, I think the market's gonna continue to go down or I'm nervous or I'm hearing these bad headlines. Um, you know, if we can remove ourselves from that, remove the emotion and um have a practice-disciplined approach to long-term investing, I think we'll probably have um a more positive investing outcome and a more positive experience while investing. An interesting kind of thing to note is over the long term, markets have historically trended upwards. Oh, yeah. So that also means that bull markets are often measured in years, where bear markets are often measured in months. Oh, that helps put things in perspective as well. Um, you know, bear market, you know, just again, historically speaking, bear markets have been shorter than bull markets, hence why over time the markets have trended upwards, right? So as you're thinking, if you if you feel like you're currently in if there's currently a bear market and you're hesitant to invest, putting that in you know perspective can help um and say, oh, maybe now's actually not a bad time to be investing. Maybe maybe while the market's lower is the best time to be investing. And this is just cyclical and we're gonna head into another bull market. And the same thing if you're currently in a bull market, and you know, it could be, hey, yeah, I'm excited to invest now. Um, but no, yeah, investing, there's gonna come be a bear market again eventually. Um, but that doesn't mean it's any reason you shouldn't be still investing and having that disciplined long-term strategy.

Perspective: Durations And Cycles

Aaron Hoisington 7:13

No, I think that makes that makes great sense there. Uh and I also I I kind of think, and maybe this isn't the best apples to apples comparison, but I also kind of I think about it like when people talk about like the real estate market, like people are like, oh, it's a buyer's market, it's a seller's market that has certain things. And like honestly, if you're waiting to like time that specific thing, if you are wanting to buy a house or you know, wanting to own property or whatever it is, like to wait for that, like, oh, now it's like the buyer's market. Like sometimes you can just be end up waiting a long, long time, like, and maybe you don't get and your you know your goals change or whatever. But I kind of think about it like with this of if you're trying to wait until it's like, okay, cool, I can see that it's gonna be a bull market here. Now I get in, like, like you mentioned, it's it's it, you know, you're not trying to time that. And you might be you could try, but you know, overall, it's like, hey, does it I I remember the episode we did with like uh all the characters like Larry the Lingering and uh I can't that's the only one that really stands out to me, but like it's like hey, cool, like you invested on the worst day of the year, yep, but you're still like over time most likely going to make more money than if you just like don't do it like at all. So um it's an it's an interesting piece, and I I I love that you keep calling that out about like the timing, time in the market versus timing the market. I think that should be like a tattoo that people get. Sure, yeah, yeah, yeah. You first yeah, me first, yeah, of course. Yeah, I'm the guilty of that for sure. I just like put it on my forearm to where I'm just like, hey, you know what? Oh, nope, nope, we're good there. But um no, it's it's super interesting to like because you hear about bull and bear and like cool, like this they didn't they didn't build a statue of a bear outside of Wall Street, yeah, yeah, yeah.

Ryan Nelson 8:54

Um yeah, so one one maybe analogy that could resonate with a few people, and this maybe will close us out, is you can think of the market like seasons, right? So there's gonna be more bar there's gonna be a bunch more bull markets, there's gonna be a much bunch more spare markets, there's it's gonna be cyclical, right? And just like our seasons, there's gonna be a much more bunch more winters, there's gonna be a bunch more summers. Um, but we don't think like when when winter comes around, we don't panic just because it gets cold, right? We plan, we prepare and we plan for it, and we know that there's gonna be another summer, right? Um so spring and summer are just kind of around the corner, and so it's gonna be the same idea. Um during a bear market, we don't necessarily need to panic because there's a bear market. We knew we're gonna plan for it, we're gonna prepare for it, and we're gonna know that there's a bull market coming, you know, down the road. And so just keeping in mind that this is all cyclical and temporary and both bull and bear markets, both are cyclical, both are temporary, neither are gonna be around forever. But again, historically, we have more or we have longer bull markets. So again, the market still trends upwards long term. So if we zoom out, you don't really care if you're putting money in during a bull or bear market. You just know it's gonna be one of them. Who cares? Right. You're zooming out, and over the longer term, you're you're taking advantage of the long-term, you know, effectively benefits of compounding interest over decades. Sure. Yep.

Real Estate Analogy And Behavior

Aaron Hoisington 10:20

I think that that really that really helps to paint that picture without a doubt of like, hey, that long-term approach is probably the best. And also probably, I mean, if you have the time to do it, it's also probably the least stress. Oh, for sure. I think about that. I'm sure. I I just I can't imagine like for myself, like I've mentioned it a few times on this podcast. Like, I rarely check like my statements because I I when I first started investing with alchemy, I was like, oh, cool, like you know, checking like weekly and these certain things. And like after a while, I was like, I can't do this. Like, are you kidding me? Like it's so it's like I check them like once or twice a year when we have like our annual meeting, and I'm like, yeah, you know what, it's gonna go up, it's gonna go down. But over the long term, like time has shown like you have all this data of like, you know, normally over the course of you know five, ten years, a year even, things are just it's it's going to go up if you're in the right stuff, I would say. So at least that's the the attitude I take on it. So yeah, absolutely. I love it. Awesome, man. Uh, anything else to uh break on this one before we uh pause for a little bit here? Nope, that'll do it. Awesome. Sounds good. Everyone, hang tight.

SPEAKER_02 11:22

And now to put the personal in personal finance.

Aaron Hoisington 11:29

All right, everybody. Thank you for joining us back on the personal section of the uh fiscal physical podcast. So uh um, Ryan, I am gonna ask you a question, and it actually it's it's a funny kind of thing. I don't know if it's ironic or what the actual term is, but I can't remember if we've done this question before. But it's possible. But the question I have for you is what is your earliest memory that you have? And as I was writing this, I was like, oh my God, like maybe I don't have that great a memory. Because like I was like, I don't know if I we've already covered this or not. So if we have, please hold us accountable, let us know. But I'm curious what you what's the earliest memory you have. I'm trying to remember.

Ryan Nelson 12:07

Do I know what I had for lunch? Yeah, yeah. Um I have some vague recollection. I don't, I mean, the first like vivid memory, I have no idea. Uh I have some like vague recollections of like preschool, uh like the playground in my preschool. Um, but yeah, I mean theirs are like fairly vague at that point in time. But that would be like, I don't even know, but like age three or four or something like that, maybe five. Um so I suppose, yeah, three, four, five, somewhere in there would be like my first memories that I cemented enough for me to recall or remember. What about you?

Seasons Analogy And Compounding

Personal Segment: Earliest Memories

Aaron Hoisington 12:41

Yeah, no, I'm I'm right in that kind of same time frame. I think like five or six, I can kind of start to remember like certain things. Like, um, you know, I remember us like uh I remember going to like a baseball game with my dad when I was like five or six, and like I just remember like there was like a uh in a really great play, and there was a roar of the crowd, and I remember it being so loud. Oh yeah, like and I was like, oh my gosh, this is the loudest like thing I've ever experienced. And like even like I was like holding my hands over my ears, yeah, and it didn't matter. Like it was like we were just like reverberating and shaking, and it was just like so that's like one of the earliest ones I have, but it's really interesting. I have a two-year-old, and we talk about like, oh, let's take him and experience these things, and like and bless my wife's heart, she's really and she's like, Oh, it's gonna be so much fun for Arthur. I was like, he's not gonna remember that. Like and so I'm like, but do we need to like spend all this money or do all these extravagant things for this like two-year-old like who's never gonna remember it? And I think that she painted a pretty good picture. It's like how you feel when you do those things. I think that you can start like you start having those feelings and those emotions like earlier. So it's not really the memories, but it's like the like the the feeling of how you felt during that. And so yeah, I gotta imagine there's impacts outside of just the raw memory. It's like oh, yeah, absolutely. So I I think that those kind of things, because I remember even like that memory of it being like uncomfortably loud, it was still a great memory because I was with my dad, I was watching this baseball game, I got to be part of these certain things. So um, it is just very interesting. Like the memory piece of it overall is fascinating to me about like, hey, you're not gonna remember this, but yeah, maybe I shouldn't do that because even just because you're not gonna remember it. Yeah, I don't know, it probably still could have some negative consequences or positive, hard to say. So um awesome. Well, I uh appreciate it, Ryan. Hope everybody uh enjoyed this episode. Please let us know what your earliest memory is. I'd be really curious to see what kind of uh information and uh feedback we get there. But uh um Ryan, I'll leave it to you to uh to end this here, man. As always, stay the course.

SPEAKER_02 14:46

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening. And as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealth.com. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode. And consider leaving us a rating and review on your favorite platform. This helps other listeners like you find this job. For more resources, you can visit Alchemy Wealth Management's website at www.alchemywealth.com or find your physical physical, the book on Amazon. We'd be remiss if we didn't mention the personal finances just that. First of all, please don't take anything we say as advised. The printed content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal, or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.