4 Seasons Podcast

Market Volatility: Staying Calm in Financial Storms

• Jeff Bingham • Episode 13

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Let's Revisit Market Volatility - How Concerned Should I Be?

Market volatility can trigger powerful emotional responses, but reacting to every headline might be the surest way to damage your long-term financial health. In this illuminating conversation, Jeff Bingham, President of B&H Wealth Strategies, offers a masterclass in maintaining perspective during market turbulence.

The episode dissects the recent market rollercoaster of 2024, where April's sharp 10% decline gave way to complete recovery and new all-time highs by June's end. This pattern exemplifies why emotional market timing – selling during downturns and buying back after recoveries – creates a "rinse and repeat" cycle that destroys wealth rather than builds it. As Jeff notes, even the professionals trading on the floor of the NYSE don't attempt to time market entries and exits perfectly.

What truly matters, Jeff explains, is constructing a portfolio that aligns with both your financial needs and your personal risk tolerance. This careful balance creates a strategy that can weather market storms without requiring dramatic adjustments based on political winds, economic forecasts, or geopolitical events. Minor tweaks may occasionally be appropriate, but major changes should primarily reflect shifts in your personal circumstances rather than reactions to market headlines.

Whether you're feeling anxious about recent market movements or simply want to strengthen your financial resilience for future volatility, this episode provides the perspective and practical wisdom needed to stay on track. Schedule your free 20-minute consultation today by calling 423-247-1152 or visiting BHRetire.com to discuss how these principles can apply to your unique financial situation.

To learn more about B&H Wealth Strategies visit:
https://www.BHRetire.com
B&H Wealth Strategies
423- 247-1152

Speaker 1:

Welcome to the Four Seasons Podcast brought to you by B&H Wealth Strategies, serving Northeast Tennessee and Southwest Virginia since 1966. Here we guide you through the ever-changing seasons of your financial journey, offering insights to help you grow, protect and enjoy your wealth. Ready to turn your financial dreams into reality, dare to dream. And now here's your host. President of B&H Wealth Strategies, jeff Bingham.

Speaker 2:

Market swings can make even the most seasoned investors uneasy, but how much should you really worry? We're revisiting market volatility, what's causing the current shifts, how to navigate uncertainty and whether it's time to adjust your financial strategy. Welcome back everyone. Skip Monaco producer, back in the studio with Jeff Bingle, president of B&H Wealth Strategies. Good to see you, jeff. How's it going?

Speaker 3:

I'm doing great Skip how are you?

Speaker 2:

I'm doing just fine. I'm a little nervous with what's going on in the market right now and not real certain about what I need to do about it. So I'm sure it's on everybody's mind as well, in addition to me. So let's break it down and help our listeners stay grounded in their financial plans.

Speaker 3:

Tell us how concerned should we be about market volatility?

Speaker 1:

That's the first question. Really, yeah, sorry.

Speaker 3:

It's an easy answer to that. No, again, I can't tell people not to be concerned about market volatility, and that's not what I'm going to tell people or tell my clients or anybody that I'm ever talking to. But I think you just have to. You got to separate the news from the noise and again and consider what news is. Which news noise is always trying to give you, which is trying to create chaos, which is always going to give you the worst. I don't care whether it really doesn't matter whether you're inclined to watch Fox Business or CNBC Business or just the national news. Wherever your choice is to go find your news, it's angled and driven to create emotional responses, and money is a very emotional thing. When we're investing our money and so you can find money already having the emotional connection that it has with us individually, with news that then is there 24-7, all the time, and you can go to Twitter and you can go wherever to Facebook or wherever you're going. It's a wonder that people can keep their wits about them. Sometimes it really is, and what I've always tried to do, and I learned this years and years ago working with my dad and Norman, the two founders of this business, is that it is our job to be the stabilizer in this conversation, to kind of be clients' insurance for making really bad mistakes with their money.

Speaker 3:

A properly constructed portfolio, in my opinion, would be one that you're not going to eliminate losses. You're also not going to hit home runs all the time. You're not going to eliminate losses. You're also not going to hit home runs all the time. But a properly constructed portfolio that suits the client's financial needs as well as their comfort zone needs should be something that doesn't really have to be changed very often, based on the movement of the market, either up down or sideways, it doesn't mean you don't do anything. But if you're making big changes, then you're not properly constructed. You have either misread or misrepresented if you're doing it on your own or misrepresented what you can take on. As far as risk is concerned, we go through quite a process that is both there's art and science to profiling a risk what we call a risk assessment for a client and then so we match their financial needs and their comfort zones needs. And if you do that and we do that well and the client is constructed well and is given that information appropriately properly, if you will then you should have a portfolio that's going to survive both the up and the downsides and the sideways, as I said.

Speaker 3:

Sorry that was a long-winded answer to that, but the other thing is that when we talk about volatility, we think it really just cuts one way. We automatically think volatility to the downside. Our minds immediately go big sell-off going down, losing money can't go down. Volatility is just, and in my opinion, volatility to the upside like big moves to the upside with very little downside for longer, for pretty long periods of time is just as as dangerous. It's just as scary not to the client, because client sees count counts going up, but on my side of it and sitting in my seat, that's a scary thing because it doesn't go straight up. And so we know when we see years like coming out of 2022, we see 2023 and 2024, the S&P 500 goes up in excess of 25% with very little downside movement in either one of those years uninterrupted to 25% on the upside, two back-to-back years Hadn't happened since 1991, or I think 1991 and 92 or something like that. So it's been 30 plus years since we've seen something like that.

Speaker 3:

And so when we moved into this year with, in some ways, I think, the economic hopes and the movement and the exuberance from the Trump election towards the economic cycle and everything that was going on, the market began to move up again quickly. And then he unleashed the tariff. On April the 2nd he unleashed the tariff idea and he dropped the mother of all bombs and the tariff. And so on April 2nd he dropped that and for a week the market sold off. I won't get the numbers right, but you know we were, we were off, I think, at that low for the year at that point in time, on April the 9th, and so this won't be exactly the right number about 10%, let's say, on the S&P 500. And from a peak to trough. Because in February the market again I said we were rallying in early and then the market began to drift off of that high in mid to, let's say, mid-February-ish, and so we really were off about 20% almost, which is characterized as a bear market, close to that at that April 9th low. I think April 9th was the low. So compliance don't hold me to that date too tightly, but give or take right there. And but since that point in time, right there, the market has turned around and we just finished the first half of the year the market is up between. The S&P 500 was up between 5% and 6% for the first half of the year. The bond market which again one of the fears of the tariffs and there's going to be high inflation and interest rates are going to go up and actually interest rates have gone down since then and the bond market has had its best total return in a number of years and inflation has subsided too bad. So that doesn't mean that it won't go the other way.

Speaker 3:

But you think about the point that I'm making. There is that the knee-jerk reaction of listening to the news and watching what the market did for for, let's say, a week or so, right, which, which is just enormous sales, Multiple thousands of points, sales Percentage points, Ed. I don't know we were off what. The first day or two of it. It sold off nearly 10% in a day. I think they had some DNA. 8% during one day. I don't know if that's exactly right, but roughly that that's a huge number on a sell-off right and that is enough to scare the living daylights out of people.

Speaker 3:

But again, you and I talked about this on the air. I talked about this with clients. I dropped a quickfire video on it. You said hey, again, be patient, because your instinct is I want out. I don't care what you tell me, I don't care that I'm diversified, I don't care that it's going to come back. I don't, I'm afraid I'm going to lose all my money. Right, I'm afraid I'm going to lose all my money.

Speaker 3:

So you sell out and you move to cash. Cash is not an, is not a, is also a place. And when I say cash, I'm talking about interest-bearing cash. So in today's world, in the kind of 4 to 4-ish percent interest rate we were 5 this time last year, about 4 this time this year but risk-free, it's not unattractive. Several years ago you weren't making any money. So you can go park and cash. Right, I can make 4% of my money. It's not losing. So the instinct is to do that. But the problem is, if you move to cash at the right time let's say you also got to be right again when are you going to go back in? So you're going to move out and you're going to come back in.

Speaker 3:

Okay, so the market rallied. If you would have done it during the sell-off, between April the 2nd and April the 9th, if you'd have done it in there, or even from February 19th until April the 9th, somewhere in there, you'd have moved out of the market. Would you have gotten back in at any point in time between April the 9th, when it started rallying, back to June 30th or to the end of the end of the first half of the year? Would you move back in then? Probably not. Or would you move back in now, as the market has now at all time highs again? Right, the S&P 500, the NASDAQ closed at all time highs yesterday, once again, you know or the day before, maybe, I think yesterday as well, but maybe the day before. We sold off a little bit yesterday, but not much.

Speaker 3:

So I'm saying, like what do you and not the best of the best, not those that we were talking about in a previous episode that I, where I go, and I see traders that that are on the New York, the floor of the New York stock exchange, the best of the best. They don't get it right, they don't try to time the market, they don't jump out and get back in. They sell and they move and they manage money, but they're not going 100% to cash, they're not good enough to do it. How in the world do you think that you as a client, as an, are good enough to make those decisions right there. Because, again, think about it, If you waited till the end of the quarter, if you jumped out, even if you got it maybe right, you know, or even close to right on the sell, now you got to decide when to get back in.

Speaker 3:

You're like it looks pretty good right now. So you jump back in now, after the markets rallied back up, and let's say this bill gets delayed or God forbid, it doesn't get passed, Right, it doesn't make it through, it gets voted down. It's possible, and I can assure you that's not going to be good for the market. And if you jump back in because the market's moved back up oh, it looks good, the momentum's there and the big beautiful bill is going to get passed, I feel confident that's going to happen you jump in and it doesn't, or it just gets delayed, and now you go down again. So you lost money, you lost momentum on the way out, you didn't get to participate in the rally back to June 30th and it goes down again. That's the rinse and repeat, right? We used to say if you do that on a regular basis, that's a way to manage to go broke. Right, that's how you go broke is trying to move in and out of the markets.

Speaker 3:

Long-winded question to volatility. But if you're going to be an investor and you're going to own assets that I think that most people need to own, which is growth, which is have growth in their portfolio to outpace inflation, which is going to be stocks US stocks are the best place to be, bar none, in my humble opinion, Doesn't mean you don't have some diversification internationally and that kind of thing, but US stocks have proven over and over again that they're the place to be. They might go down in value, but they've always come back. When markets go down, they always go back to new highs and again low on April 9th to the high in the new records that we've set as we closed out the quarter and we moved early into the third quarter of this year.

Speaker 3:

Build a portfolio, stay the course Doesn't mean you don't do things right. And then, yes, you tweak portfolios all the time. Use the right tools that are comfortable for you, Unless your plan has changed, unless your circumstances have changed. It is not often a good idea to change your portfolio based on the changing winds of Washington, the economics, the geopolitical scene.

Speaker 1:

You try to do that.

Speaker 3:

You're not going to make the kind of money you ought to be making as an investor, right? So it sounds to me like.

Speaker 2:

Your advice is stay the course, stay calm, don't necessarily react to what's on the news and stay the course.

Speaker 3:

Absolutely. I was thinking and I'll do this real quick, I know we don't have a lot of time left but sharing the story with you off air about what happened in here yesterday morning with the flood and the ketchup and in the moment of chaos and panic when that was happening down there it looked like I was like everything's going to fall through the floor, it's going to fall at the basement. This water's never going to stop. It's not ever going to stop. He was away, he had a water issue here in the office and it was just filling up and the panic that was there that I had of that and then.

Speaker 3:

But once the water gets cut off and you evaluate the situation, you put it back together. You know that's a but that, if that makes sense that's the volatility of that moment is what you want to react. It's horrible, it's going to. The world is coming to an end in that regard. Yet we have the right tools, we have insurance in place, we have all the right tools, we have all the right people that we know that came in, cut the water off, got the drying going on, put the floor back together. That's that's, that's life, that's investing. But all like they all look the same. You have to be calm, make sure you have the right tool set in place, the right strategy for you. Unless your strategy changes or your situation changes, your needs, etc. Your portfolio should have been constructed in a way that can get you from where you are to where you want to be in a manner in which you want to get there.

Speaker 2:

Awesome, Jeff. I can't thank you enough for your insights, which today are invaluable, and I want to thank you for helping me and our listeners for navigating, to help us navigate market uncertainty with some clarity clarity and to our listeners. We'll see you next time with Jeff for more financial strategies to keep you moving forward. Jeff, have a great rest of the week and a great fourth.

Speaker 3:

Thanks, you do as well. God bless Skip. Thanks, and God bless America. God bless America, brother.

Speaker 1:

Thanks for tuning into the four Seasons Podcast brought to you by B&H Wealth Strategies, where your financial success is our priority. Schedule your free 20-minute consultation today by calling 423-247-1152 or by visiting bhretire retirecom. Take the first step toward making your financial dreams come true. Until next time, remember, every season is the right season to plan for your future securities and registered investment advisory services offered through silver oak securities. Member finra, sipc, bnh. Well, silver Oak Securities Inc. Are not affiliated.