Financial Opportunities Uncovered: A Keeler & Nadler Family Wealth Podcast

When 'Bull Markets' need a break: Understanding today's market correction

• Andy Keeler

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After two years of exceptional market returns exceeding 24%, volatility has returned with the S&P 500 entering correction territory—down approximately 10% from recent highs. But before you hit the panic button, our panel of financial experts offers invaluable perspective that might change how you view this downturn.

Did you know the average intra-year market decline is actually 14%? That's right—in a typical year, the market drops 14% at some point, yet still finishes positive 75% of the time. What we're experiencing now isn't just normal—it's below average volatility. This "detox downturn" follows what host, Andy Keeler, calls the "cocktail party" of unsustainable returns we've enjoyed recently.

For those with balanced portfolios, there's even better news. After a challenging 2022 when both stocks and bonds declined, bonds are finally doing their job again as portfolio stabilizers. Clients with 65/35 allocations (stocks/bonds) have seen minimal impact compared to the broader market's decline. As one client aptly put it: "The thing to remember is stay calm and be patient."

Our panel shares compelling evidence for staying invested through market turbulence, including a startling case study of a client who missed a 15% market gain in just three days by trying to time their exit and re-entry during the 2020 COVID crash. Even more reassuring: if you had the terrible luck to retire in January 2000—right before two 50% market crashes—a well-diversified 60/40 portfolio would have provided $1.8 million in income while still being worth over $1.5 million today.

Remember Warren Buffett's sage advice: "For 240 years, it's been a terrible mistake to bet against America, and now is no time to start."    Join Andy, Abby, Jessica and Mark for this timely discussion on navigating market volatility with confidence and perspective.



The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations.

It is only intended to provide education about finance, tax, retirement and related planning topics. To determine which investments or strategies may be appropriate for you, consult your financial, tax or legal advisor prior to implementing. Any past performance discussed during this program is no guarantee of future results.

Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

Keeler & Nadler Family Wealth is a registered investment adviser. Advisory services are only offered to clients or prospective clients where Keeler & Nadler Family Wealth and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Keeler & Nadler Family Wealth unless a client service agreement is in place.


Andy Keeler:

What is a detox downturn? Volatility has returned to the stock market. To help us deconstruct the market's recent declines, on this special edition of our podcast, we welcome back the brain trust of Keeler and Nadler Family Wealth, Abby Rose, . Hultberg of our regulars, mark Beaver Mark Hello, volatility has returned to the market. Are we hearing from clients?

Abby Rose:

I think we're hearing from them less than you would imagine, which is, I think, a positive. We have these conversations with folks, you know, and we send out blast emails like we have more recently, but we have these conversations with folks ahead of time saying here's what we think could happen, and we've been talking about this potential volatility return for a while now. So I think we do a good job preemptively talking with our clients and educating them on these situations so that, surprisingly, a lot of people aren't reaching out when we send these blast emails. A lot of the feedback is I know you've got us covered. Thanks for the information. We trust you guys.

Jessica Hultberg:

Yeah, I'll chime in a little bit. I'll go home and you have family and friends like are you guys getting so many calls? You must be swamped at work. And I'm like actually we haven't gotten a ton. We've probably gotten a handful of them. And then we sent out that blast email that Abby mentioned and I actually got more responses for them appreciating what we said. One person said thanks for sending this. It's good to hear a logical voice of reasoning, with all of the headlines being everyone's focus. And then one of our more experienced clients. She's just been around for a long time. She's worked with us. We've had these conversations. She's been through 2008, 2015, 2020. She said thanks so much for your reassuring note. The thing to remember is stay calm and be patient.

Andy Keeler:

I mean a client is saying that yeah, that's good stuff.

Mark Beaver :

No, I've seen very similar response before our email went out and we wanted to be proactive in reaching out and keeping people informed and just letting them know that we're along, along in the ride with them. You know they're they're not alone in this process. Nobody likes it, you know. No one wants to see their account balances go down. But, we have a plan and we want to stick to that plan, and so sometimes people just need to hear that.

Jessica Hultberg:

Definitely.

Mark Beaver :

Like I know the answer, but I'm going to ask it anyway. It feels good to hear it from my advisor, yeah, and then I got the okay. There it is. Yeah, we're good, we can kind of go go back to our lives here but yeah, there's there's a lot of emotion swirling around right now. So it's, it's understandable if someone's feeling a little bit tense. Yeah.

Abby Rose:

The biggest question I think people when they ask is what do we do, what, what should we be doing? And our response, I think collectively, has been nothing. W e're prepared for this. This is part of the long-term plan. And I think people think, oh okay, I'd rather not be overreacting or underreacting one way or the other. So I think they actually feel comfort for that when we say we don't need to do anything because we prepared for that.

Mark Beaver :

In some cases we've seen some new clients come into a situation like this or not just now in other past market downturns, and maybe they worked with an investment firm that had a very active approach. They're constantly trading in the account and it sounds really great like, oh my gosh, they have this really great trading. And then we see their results through these kinds of periods and it's it's not good, frankly. You know so that that overactivity might sound fun, like wow, they're really taking charge. They're they're taking charge, I guess, but they're not really earning anything from doing that.

Andy Keeler:

You've just heard from Mark Beaver, Abby Rose and Jessica Hultberg. Together, we will deconstruct the market's recent declines, so I think it's important that we kind of set the stage here for the recent market volatility with some perspective. We had meteoric returns in 2023 and 2024 of over 24%. We had meteoric returns in 2023 and 2024 of over 24%. The 16-year average in the stock market is about 15%, and yet the long-term average is closer to 10%. So, Mark, where do we stand as of now?

Mark Beaver :

Well, as we speak, we're right around correction territory, which in our lingo means a drop of 10% or more in the market.

Andy Keeler:

From the peak.

Mark Beaver :

Yep. So we went up a little bit to start the year and we've given a lot of that back here in the last roughly three or four weeks. So S&P is down somewhere around 5% to 10%, but from that high point we're down about 10%. Some other specific areas of the market, things that did really great last year, have fallen even more than that. So growth stocks, tech stocks, things that are in the NASDAQ, for example, have fallen even further than that. So some notable ones that we've seen were pretty popular stocks last year. Tesla is down quite a bit, Nvidia down quite a bit, so it's been a pretty sharp sell-off here.

Andy Keeler:

So, as Mark said, we're down about 10% from the peak, but we had really good years the last two years. We're actually up, I think 12% from over the last 12 months.

Abby Rose:

Because I think that's important to tell people. You know, the market is where we were last September. We're not where we were three years ago, for example. You know we have given back some of the growth, but only a couple months difference from where we were in the market in September.

Andy Keeler:

And a 24 to 26% rate of return just isn't sustainable. I like to call that kind of funny money. I find that at the end of a bull market cycle, typically the last year or two, you see these meteoric returns, We'll talk about some quotes later but euphoria is a word that we use.

Abby Rose:

And the detox downturn really is something we needed to take us down from the cocktail party that we saw last year. They were all just kind of gains on paper. I feel like we tell people, if you don't sell it, you don't actually realize the cost of it. So there are a lot of what we just call paper gains, what looks like on your statement. It's not necessarily a hundred percent. You know what it's worth because you're not selling it that day.

Mark Beaver :

So and it might still be a bull market in a way, and I know that feels weird to say when I just said there was a correction, but there's lots of corrections in bear markets 2022 was.

Andy Keeler:

You know, as I said, the 16-year average is 15%, but in there was 2018.

Abby Rose:

Yeah, 2018 and 2022 and 2020.

Andy Keeler:

Yeah, covid down 34% and yet we still had a return that was 50% higher than the long-term average. So we all have to kind of keep that in perspective that where we've come from might have been a little too good to be true and now we're experiencing the volatility that's a little more typical. So, from year to year, what kind of volatility is normal for people to expect?

Jessica Hultberg:

Well, we do have average intrayear declines of 14%. We've not really gotten those the last couple of years. So we've actually really been telling clients that we are waiting for a correction in the market because of those four. I think we were down 8% at one point last year. So those four, I think we were down 8% at one point last year.

Andy Keeler:

And then this 10% the year before that 10% the year before.

Jessica Hultberg:

So really I mean with Andy saying the average returns now being 16% over the last 16 years, 15% over the last 16 years.

Jessica Hultberg:

Yeah, and it's only 10%. I mean that's telling right there. You know double digit returns year after year I mean 2020, for as low as we went, and to end double digit returns that year. It's just that kind of seems to be the trend that we're seeing more and then mix that in with what we know now and planning for the future and really sticking to that long term goal that we have with our clients and keeping everybody invested.

Abby Rose:

Well, I'm no mathematician but if you have a couple of years less than 14 percent, you need to get back to an average of 14. I think every once in a while you have to have more than a 14% dip to kind of get back to the average. So we're saying we've had three or two years of below 14. I don't think it's unheard of to have 14 or maybe even a little bit more, potentially to get us back to that average. Reversion to the mean.

Andy Keeler:

Right exactly, and a question we'll attempt to answer is well, what will that decline be? And we don't have a crystal ball, but we can talk about some of the indicators. You know, the theme so far in the podcast really is that we had a couple of really outstanding years of over 24% and, as Warren Buffett would like to say, be fearful when others are greedy and greedy when others are fearful. So I was getting calls last year about buying Bitcoin, about buying Nvidia. These are both securities that were up thousands of percents and again it's the cocktail party has to come to an end or slow at some point. So we're going to shift gears a little bit to kind of some of the current economic indicators. We heard from Dr Kelly at JPMorgan Chase earlier today and what he was talking about.

Andy Keeler:

The question that people are bound to ask is -- what are the effects of the current administration on the economy and what is the outlook? And more or less what he's said is things are definitely slowing from where they were, and that's what we've said so far about the market. Softening light vehicle sales, so people aren't buying as many cars. Increasing trade deficits so that means that our imports are higher than our exports, and that's not usually a good thing. One of the measures of the economy is gross domestic product, or GDP. Typically that number is 2% to 3% or something along those lines that we would be happy with. Right now we're running in the first quarter. It looks like we will be in the zero to maybe negative one GDP.

Andy Keeler:

You know, the question that we want to try to answer is but where do we go from? Is all lost, or is the future bright? And it kind of depends on what the administration does from here on out, as Dr Kelly said. What the administration does from here on out, as Dr Kelly said, we've simply downshifted into a lower gear, and I really like that. We're still moving ahead. As Mark said, we could still be in a bull market. The inflation numbers are encouraging. Business travel is off as a result of companies kind of scratching their heads trying to figure out what they're going to do with respect to their expansion plans. So again, Dr Kelly's analogy downshifting to a lower gear how does that relate to what you're seeing or what you're feeling in terms of what you're seeing in client portfolios and kind of the rhetoric that we're hearing?

Jessica Hultberg:

So in 2022, the Fed raised rates very aggressively, so the value of bonds went down because of their inverse relationship. So it was really tough when clients were coming in and they had more conservative portfolios and they were wondering why their accounts were down so much. And so we had, you know, get out our charts and show them that this is not a normal thing. Bonds actually, I think their average intrayear decline is closer to 3% and we were down 13% to end of the year in 2022 with bonds and at one point we were down 17%. I mean, that's like S&P 500 returns that we're looking at. So that was pretty hard to have that conversation with clients who thought that they were positioned to be more conservative. So what we were telling them as rates are getting cut, the value of those bonds are going to go up. The dividends and coupons yields on these bonds are going to be getting more attractive.

Jessica Hultberg:

So being in bonds is not a bad thing. We don't want to get you out of the bond. So we kept saying that and saying that and it took a while to become true. Finally, here we are. I'm sitting with clients. I met with one the other day. The market the S&P 500 at that time was down 5% year to date and their 6535 portfolio was only down 1.8%. That's really good.

Jessica Hultberg:

Yeah, they were really excited, they said. Actually, before they came into our meeting that day, they looked at their accounts and were happily surprised that they weren't down as much as they thought they did or were. So I got to explain that to them, which was bonds are finally doing what they're supposed to do again. We don't need to have these double digit returns all the time. We should be happy with four, five, 6% getting those from bonds utilizing money market funds while we're going through this volatile time.

Abby Rose:

I had a conversation with a client yesterday and he said my accounts are negative and I said, well, let's dig into that because it's roughly a 50-50 allocation. And I said you're actually flat on the year. He said, but the S&P is down, you know 10 percent. And I said, well, you have that buffer of the stocks, you know, from the stocks being in the bonds and some cash position. I said but you have to remember the first couple weeks of the year were actually very positive, so it's not that one week makes us negative 10% from the get-go. We did have some upside beforehand. So he was happy to hear that it was flat, which I know is not the most prized return. But when we're talking about the volatility, sometimes the lack thereof of returns is kind of a positive with these short period of volatility.

Andy Keeler:

Jessica, you mentioned that on average within a calendar year, we see a 14% intra-year decline. So that means that at some point, maybe in October, sometime between January and December, the market declines 14%. And yet we also know from experience that the stock market finishes positive about 75% of the time. Yep, that's right 14% decline for the last couple of years. In theory, the market could see another five or even 10% decline. It wouldn't be that out of the ordinary.

Mark Beaver :

We often will cite averages. You know long-term market, depending on your start date, averages whatever 8%, 9%, 10%, depending on the period you're looking at. But very rarely does the market return the average you know 7%, 8%, 9% rate of return. You don't actually see that number very often. I often will cite that the S&P over the last 100 years has gone up 20% or more over a third of the time. So you have these very large return years, like we saw the last couple, and then you see some more muted returns as well, but it's not usually the average, and the same applies to the volatility that we see. So sometimes you have less volatile years, like we saw last year, and sometimes a little bit more. But the average helps guide us to say this is unusually low amount of volatility or unusually high amount of volatility gives us some perspective on what's going on in any current period.

Andy Keeler:

So let's switch to the T word.

Abby Rose:

Tariffs.

Andy Keeler:

Because that's on everybody's mind. Ronald Reagan, a president that I had a great deal of respect for, he called tariffs economic poison. So we're not going to second guess our current president, but right now the average tariff across all countries is about 9.1%. Under his previous administration he was at about 3%. 9.1% is the highest tariffs have been since 1946. And what they have an impact on is both growth as I mentioned, the gross domestic product is estimated to be possibly zero to negative one for the quarter. It also has an impact on inflation because, as we've heard time and again, these companies plan to pass those additional costs on to the end consumer. So it's something for us to be aware of. If we kind of stay where we are and some of the threats never come to fruition, we feel pretty confident that things can stabilize and we can progress forward.

Andy Keeler:

Lot of people ask less so about the tariffs, though border crossings, illegal border crossings are way, way down, which is, I would say, a good thing. It's never good for people to enter our country illegally. Visa applications have not changed, which is also a good sign. What we wouldn't want to have happen is a decrease in legal immigration, because then we're going to have a problem finding labor as folks age out of the labor force, and to keep a strong economy you need to have people able to do the work. We saw what happened during COVID, when unemployment was very high, so that drove wages up. Wages tends to have an inflationary effect. And then, in terms of recessions again, if the rhetoric cools from the tariff standpoint, we might be able to avoid a recession. But we've been through many recessions and we've recovered.

Andy Keeler:

So you know the R word isn't necessarily the death of all financial markets either.

Mark Beaver :

What stands out a little bit this time around isn't so much that we had a market correction. Like we said, we've seen them a bunch of times. Statistically they happen quite frequently. Like you said, we're not getting into politics and we stay extremely neutral on all that stuff, but no matter which side of things you're on, there's just a lot of tension. So I think when you pair that tension with market volatility, it just feels even worse. You know it magnifies it even more. So that's just what I've noticed this time, where you know when you, when you have a little bit less of that dynamic happening, maybe people are okay, you know markets down a little bit, it'll be all right. You add in that everybody's sort of at each other's throats and that's happening. It just gets a little bit scarier, you know, all around.

Mark Beaver :

So just something that I've noticed with this one and I think you know ultimately, you know we've had a lot of things that we've talked to over the years of how you know the market should be separated to some degree, even from the economy sometimes and from policies in Washington and things like that. It's easy to say that. It's not as easy to really live that, but when you think about it maybe a different way. When we have market volatility and you think about if you owned a business and this business was growing, it was increasing revenue and increasing profit and it was just generally a good business to own and you kind of saw that in real time.

Mark Beaver :

If there was an economic slowdown, so that you know things just temporarily went down in the stock market, dropped in value, but you still saw the day to day of this business and you said this is still a good company, it's still going to make profit and revenue, would you sell that business just because things were a little bit sketchy in the stock market? And most people say no, I mean, this is a great business. Why would I sell that? This is, you know, really, really good. That's the same thing that's happening with stocks. I think sometimes we distance ourselves from that reality that you own these businesses when you own stocks because you just see numbers going around on a screen, but you own shares of these businesses that are growing their revenue and they are going to find a way to be profitable tomorrow. You know that's what's happened over, you know, hundreds of years here and it's going to keep happening. So I think if we can change that perspective a little bit and think you know, I own these businesses, they're still good businesses.

Abby Rose:

I've been using this analogy with folks not to compare it to COVID, because it's not the same as COVID, but a lot of the conversations we were having with folks were kind of similar during that time where there was not really indicators in the market showing that it should have been down 34 percent during COVID. Yes, it made sense that the market was down, but a lot of that also came from emotional reactions to the market and everything and headlines and what was going on. There's no toilet paper on the shelves. You know that kind of stuff, the shelves, that kind of stuff. So it kind of feels like we're maybe entering that territory a little bit where, yes, it makes sense that we're getting these corrections, but we don't want it to go too far just because we're being overly emotional about it. And again to Mark's point, it's very difficult to separate that, but there's just not a huge indicator saying that we should be down. You know 20 to 30%.

Andy Keeler:

So Mark mentioned, we try to avoid politics, and I would go back to 2024. Mid year folks were asking you know what's this president or that president going to do for our economy or the stock market? And I would say, I don't care who's in the White House. We're going on year two of 24% plus returns. We haven't had that 14% decline. So whoever lands in that seat is the hot potato, and it just so turned out that that has happened, but it could have been anyone.

Andy Keeler:

The COVID reference is a good one. You could use COVID. You could use the Great Recession I mentioned. Late in a bull market cycle, you have this euphoria and greed. Early in the market cycle, you have pessimism.

Andy Keeler:

So what you tend to see is, after a market declines, maybe 20%, that's when people start to say you know what I want out, I'm close to retirement and I can't take it anymore, and so that emotional, that fear, drives the market below its fair value. To Mark's point you know long-term earnings expectations of these companies. Will tariffs have an effect on earnings? Perhaps Will they pass some of that, though, on to consumers and we'll end up paying for it in higher prices, perhaps. But the point is, is that the market? I use it as if it's a living person. The market reevaluates the values of companies every day and it's based on knowable information. It's not based on emotion. It's based on future earnings. And so someone as smart as Warren Buffett, when the stock market peaked at $14,400, and that's the Dow Jones, not the S&P we haven't cracked that yet. But when the Dow went from $12,000 to $14,400 back in 2007, Warren Buffett said -- you know some of these dividends I'm getting? I'm going to let them accumulate in cash because I think the stock market is a little euphoric or greedy at the moment, so I'm going to keep that money aside.

Andy Keeler:

Market starts declining 2007 into 2008. It goes from a high of $14.4-ish down to about $9,500. And Warren Buffett starts buying. And what happens next? The market goes even lower because he's a bean counter and he says these companies are worth X and I'm willing to pay 9,500.

Andy Keeler:

They're on sale from where they were, but Joe the plumber that's out of work and Nancy that lost her house next door they're saying I can't take any more. And they drive the market, the Dow Jones, from 9,500 to its bottom of around 6,500. And that's the point at which people are like it can't go any lower and they get back in the market, it bounces really rapidly and then it diddle-dottles along for three, five years just doing its normal. It's not 10% every year, but it's averaging that 10%, nothing crazy. And then after five years of that, joe the plumber is like now I want to get back in and Ronnie said he bought Bitcoin, joe said he bought Ford and everybody's buying at the absolute peak in the market, and so you see these kind of euphoric and meteoric rises at the very end, and that often doesn't end real well.

Jessica Hultberg:

I actually have a good client experience to bring all that together client experience to bring all that together. So one of the things that one of the sayings that we go by and tell clients is that it's not about timing the market, it's about the time in the market, and this is going to relate a little bit to the emotions that Abby was talking about. And then the you know, really believing in a company and staying invested with them in the long term in a company and staying invested with them in the long term we have had it was in 2020 specifically I had we had, you know, a handful of clients who were getting really worried and they'd want to get out of the market and we'd talk them out of it and then a week later, things were still going on and they still didn't like it. So they'd call again and we'd have that conversation. And you wonder how many more of those conversations you're going to have with the client until you just say, okay, like we, we have to do what you say, or you put your foot down and tell them not to and hope for the best, obviously. So we had a client and you know we do a pretty good job of keeping everybody invested.

Jessica Hultberg:

I would say it's very uncommon that people get out of the market after they've talked to us a couple of times this one couple, I think. They had a bad experience back in 2008 as well, so it wasn't helpful. But I had those conversations with them over and over again at my house during COVID, which is unique. But we had several conversations and they were like I want out. So I said okay, fine, so we did it. We pulled them out March 23rd I think it was don't quote me exactly, I think that's close to it, but March 23rd we sold and then three days later they wanted back in. In that three days there was a 15% gain in the S&P 500.

Andy Keeler:

Yeah, I remember that client.

Jessica Hultberg:

So the 2020 return for the S&P 500 was 16%. Their return was negative 0.4.

Mark Beaver :

Yeah.

Jessica Hultberg:

Just because they pulled out those three days in the market .Three days makes a big difference.

Abby Rose:

Yeah.

Mark Beaver :

I had one that was on the positive side of that. It was a relatively younger client, so I think that was kind of their first big market shock where they had real money, you know 2008,. They probably didn't have much to see drop. But we had that conversation and I said if you got out and the market went up 10% tomorrow, how would you feel about that? And he said, yeah, I would not feel good about that, let's just leave it alone, no joke. The next day the market went up 10% and I was like, please etch this in stone.

Mark Beaver :

This will never happen, you know to be right, I was just joking, but kind of like not joking, but I didn't think it would actually do that.

Andy Keeler:

But some of the best days happen after the worst days, immediately after which you cannot time

Mark Beaver :

But I think the drive for that is probably just a human thing of I want to be in control and it feels like I'm out of control when I see numbers declining. I need to do something. I need to get attached and take control of the situation, and we know that those kind of emotions are not good investor emotions and there's Warren Buffett quotes to that investor emotions and you know there's Warren Buffett quotes to that. And one that I love from Jack Bogle, who's the founder of Vanguard, is don't just do something, stand there. So we switched up the phrase to say activity is not your friend. In situations like this, when you see volatility going crazy generally, you know those kinds of actions are going to hurt you more than they help, you know. So it's hard, it does not feel good, you know.

Mark Beaver :

I think all of this conversation where we're trying to support, you know, staying invested, we also recognize this is not fun. We don't like seeing account balances go down. We have account balances that go down too. It is not a fun thing. We do it because we know it's the right thing to do, it's the right mindset to be in that we are long term investors and and to the point, I think, jessica you were making earlier of when we're looking at client portfolios and they're down, you know, 1% year to date and it feels like, oh, that's it. I thought it would be five to 10% or whatever. So it's a little bit surprising sometimes and we say there's a reason why your account was positioned that way and this is it right. This, this kind of situation, is why we had you the way we had you. We didn't have you in extremely aggressive investments, because we know you're retired and you have income that you need to continue to get. Even if we have a huge down market, you still need that income.

Mark Beaver :

So, we've designed your portfolio to deliver that income, no matter what happens over the next several years.

Andy Keeler:

Jessica, you mentioned a few minutes ago that bonds are finally doing their job again. 2022 wasn't a great year for bonds, and you also mentioned the client had a 65-35 portfolio. So for listeners, what that means is 65% of their portfolio is in stocks, 35% in bonds or cash. So, mark, back in 2022, which was a really bad year for bonds and a really bad year for stocks. What were people saying about the 60-40 portfolio?

Mark Beaver :

It's inevitable every five years or so that there's going to be a bunch of headlines that say the 60-40 portfolio is dead. It's dead, and then that's when you know that it's about to work really well. So that's what it was the 60-40 is dead. You brought that up because something that we did back in 2020, when the market shock happened with COVID is we had some clients that just had retired beginning of that year or about to retire later that year, and they were like, ooh, I just made a huge mistake, cause you think, what if I retire in the market? Just tanks, if I have the worst luck? Y ou know that's what people are fearful of.

Mark Beaver :

And so we took some, we did some illustrations and ran back and said well, what if you did? What if you had the worst timing of you know? So we can look at that and we can say what if you retired in January of 2000, the-dot-com bubble happens right away and you're in the stock market, goes down 50%. That's pretty bad. Then it goes up a little bit and then in 2008, it goes down 50% again. So only the second time in history that the S&P had a 10-year period that was negative was the start of your retirement.

Mark Beaver :

In this scenario, that's again, that's the S&P, the stock market. But if you took a boring 60-40, well-diversified portfolio, retired January 2000, right in front of all of those disastrous first 10 years, you took your income out and I just used the example of 5% year one and inflated that every year. You start that with a million dollar portfolio. You start that with a million dollar portfolio. You fast forward to today, 24, 25 years later. You would have taken out something like $1.8 million of the portfolio and it's still worth over one and a half million dollars. And that's the worst time I could find to retire so.

Mark Beaver :

I doubt it's going to be that unlucky. So again, we don't want to belittle how these periods feel and we do look at it. We obviously are paying a lot of attention but if we do the right things and we stay diligent, we rebalance, we have diversification. You can make it through what is one of the worst possible start dates for retirement there is.

Mark Beaver :

So I think that's reassuring, hopefully to folks that are currently retired or about to retire that I don't think you'll have that bad of luck, and even if you do, I think most people would take that outcome.

Andy Keeler:

So at the end of last year it was either November or December the Fed cut rates one last time in 2024. And they more or less signaled with their narrative that they would be unlikely to lower rates this year and they left the possibility of actually hiking rates, maybe once in 2025, on the table. That's changed a little bit in the last few weeks. It appears the market's pricing in possibly up to two rate cuts, but it's important to understand. For those that don't quite understand how bond yields and prices work, 2022 was a really bad year because the Fed was raising rates aggressively. If they keep rates the same, or lower rates, bond prices are likely to increase a bit. Not that we want to expect a huge rate of return from price changes in bonds. It's really the yield that we're after. But the good news is that many of the things that we own that own bonds, etfs and mutual funds they've locked in bonds with longer terms, higher yields. So that's all very good.

Andy Keeler:

Mark, Abby, Jessica, thanks for giving us peace of mind and, as Warren Buffett once said, for 240 years it's been a terrible mistake to bet against America and now is no time to start. As always, we thank our listeners. I'm Andy Keeler and this is Financial Opportunities Uncovered brought to you by Keeler and Nadler Family Wealth. If you have any questions on anything you heard in this episode, find out more on our website