Wealth from Wisdom

Surviving the Next Major Market Correction

October 14, 2017
Wealth from Wisdom
Surviving the Next Major Market Correction
Chapters
Wealth from Wisdom
Surviving the Next Major Market Correction
Oct 14, 2017
Carson Wealth
Show Notes Transcript

The market has surprised everyone by breaking record, after record, after record. And many investors have made the dangerous assumption that this market … is unstoppable. Join Ron and Paul as they discuss ways you can help yourself survive the next major market correction.

Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SEC registered investment advisor.
Speaker 2:
0:31
The stock market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement. Today is a whole new ball game. It's loaded with challenges, obstacles, and trap doors, but you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of Fame Advisor Ron Carson, and forward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson. There was a famous Warren Buffett quote, be fearful when others are greedy and be greedy.
Speaker 3:
1:16
What others are fearful for eight plus years. Now, the stock market has been on an absolute tear. It's broken record after record after record. In fact, it's the second longest bull market in history, but I'm telling you something right now. Please listen. Please listen while everyone has become complacent, while everyone else is expecting the stock markets go on like this for ever. This is when, as buffet said, you should be fearful. In fact, this is when you should take action to protect yourself because if you don't, you could be putting decades of hard work and sacrifice at risk and at this stage of the game may not be able to recover. I want you to think back the.com meltdown. I want you to think back the financial crisis and want you to think back just how devastating markets can be. Cruel as they can be, but they don't care.
Speaker 3:
2:25
You're the one that has to take the action. And I'm not the boy crying wolf here. Every bull market has a bear. It's just a fact of life. It's not a matter of if it's a matter of when and how big that market correction will be. Nobody knows could be a bear market. It could last me give you some stats here. Paul are going to talk about this today, but the question is, the only question that matters is how's it going to impact you individually? What action are you taking today to protect yourself? So Paul, I to talk about all the different ways that you can protect yourself. What are the proactive things you individually can do to better position your investments, things that you can do today to protect the downside, easy things that you can do to ensure that you have a higher probability of having the kind of retirement or financial secure future that you want. Paul, thoughts on this?
Speaker 4:
3:22
Yeah, Ron, I think it's so important for us to look at because the market has always continued to gain, but it gains in a very periodic manner. So I think about Ron the first time the Dow crossed 10,000 everyone was super excited. I can't believe now it's in five digits. And then they're like, oh, but if it goes back down below, I'm getting out. And then it slowly gets to 12 and then it slowly gets to 14 but then it goes down quickly and then it's 1618 2022 and I are not 22 yet, but I was talking to someone the other day, I said, Paul, once the Dow goes below 21,000 I'm getting out. And I said, well, why are you getting out just, well that's just a number on how in the world can we pick a single number and saying it's a point in time. Yeah. Well that was my question. What does that, why does that number have significance? So I don't know. It's an even number. I just think if it goes down there. So I think what we've got to help share with people today is there's strategies and approaches where you don't have to make those finite decisions where you're drawing line in the sand based on a hunch or an emotion rather than, yeah,
Speaker 3:
4:24
logic that goes along with it. When when you think about returns, portfolio returns, and we deal with a lot of people that are prepping for retirement or actually in retirement and the sequence of those returns are super important because matter of fact, you could have the same return over a period of time, but if the sequence of returns could be an issue because having losses early on, for example, if you're thinking about if you're within five to seven years right now of retirement, the sequence of returns can be terrible, especially if you're taking more risk than you want and you have the first two or three years that you're entering this phase of taking income distributions. You have that decline that and then you continue to have to pull money out of that to live on. That has a devastating impact where if those declines come in the back end, let's say a of a 10 year period, you're getting about the same return, but where those returns come from are really, really super important.
Speaker 4:
5:30
Yeah, I mean, so Ron, everyone looks at the number of $1 million is, hey, I crossed this threshold or I'm getting near there. I'm past there. Am I able to retire? But I like to use the analogy. If you're at $1 million, and like you just said, Ron, I'm five years from retirement, but imagine a year from now, so it's 2018 and you're at 800,000 just because the market's moved that direction. What then just happened to your retirement plan? Did it get extended
Speaker 3:
5:58
further? Or what I fear is, are people going to take on additional risk because they've been complacent now we've been just moving slowly, Ron. I mean, everyone's like, oh, the market's really volatile, and I know we've talked about that on the show, but it's not. It's actually really low. So people, they're getting comfortable and think about all some of the lowest volatility we've ever experienced. Fall. Yeah. But people don't think that way because all they see is the flashy numbers or this CNBC or CNN scrolling lines, bright red, bright green. And it's influenced our emotional feelings about the market. And so what do we do? We're becoming numb and complacent. So we're just not making any changes or we're not thinking about what could happen in the future. And you have to remember as part of your life plan, you got to look forward. You can't look backwards anymore.
Speaker 3:
6:46
And I'm one of my favorite phrases you use around his head today is the first day of the rest of your life. Well, your, your plan and your investment strategy has to be set up that way. In 1987 Paul, I was down in Lincoln doing some continuing Ed for my securities license and I was in a class and it was actually December of 1987 in October the market had crashed. And there was a gentleman there that owned his own business and he said, you know what? And he wasn't in. He was this, he was, he was happened to be passing through. He knew somebody that was in a class, but he owned his own business there in Lincoln. He said, well, you know what? I put, I don't trust. I don't trust the market. I'm never going to invest in the market again. I go, what happened?
Speaker 3:
7:24
He goes, well, I put money in an August and I pulled it out during the crash here. A guy had waited. We had one of the biggest bull markets in history. He says, I will never go back into the market again. That was 1987 and actually the severity of the loss is important, but the recovery is also important and buffet and a famous investor, one of the most famous in history, famed a mutual fund manager, Shelby Davis said, you make most of your money in a bear market, so you need to be able to keep powder dry. What we're going to talk about today too is irreplaceable capital strategies using options, things that you can do to protect your downside is still participate in some of the upside. But it reminds me of that dinner we had with someone that had joined the firm and he had fired bank in New York and we said, why did you come with us?
Speaker 3:
8:18
And he said, they asked the same question, how on earth could you fire us after we made you so much money? He said, please do not confuse the bull market with doing what you said you were going to do when I hired you. I wanted very specific downside protection. The fact that I matched the market told me I was probably taking too much risk and when I dug in I was, and so that's something you need to do is have a downside assessment of how much risk you're taking. I've never in my 35 years in this profession, I've never had a client walk in and say, I'm upset Ron, you made me more than I expected. Never had. I've never, I've just telling you guys never happened. But the risk always has been, always will be people doing the wrong thing at the wrong time, locking in a permanent loss cause they didn't know how much risk they were taken.
Speaker 3:
9:05
And we've talked about this time and time of wealth from wisdom. Investor behavior is the single most important factor. Not what you own but how you react with what you own at different times in its history. And so Ron and to that fact though is this complacency feature. So what happens with most people, they go to an advisor and then they don't make any changes or worse yet, they don't understand what their advisors actually put them in. And so they get their quarterly reports or they log in and see their information and what do they look at? Am I up money or am I down money? And they don't look at risk adjusted return or they don't look at, Hey, maybe what my advisor put me in five years ago, seven years ago, 10 years ago was right at that time. But it was in a bunch of mutual funds.
Speaker 3:
9:51
And now maybe I need to make some adjustments to that. But okay, because this market has gone up over the last quite a few years, Ron, and slowly people think, ah, it's fine. I just keep going up so I'm just going to leave it alone. And that's where I know many of you listening today, you've had this thought about should I be making a change or should I be making adjustment? But because there's been no pain for you, there's been no harm to your account going down that you haven't done anything about it. And so you need to do something because what's going to happen is when something does move in the market, either up or down, you're going to be upset that you kept saying to yourself, I want to make a change. Knowledge is power. Understanding. And if you're okay and you go in and say, I'm okay with the level of risk, I'm okay with this level of downside, I know me and I'm not going to do something stupid.
Speaker 3:
10:40
When something bad happens, then that's fine. But doing an assessment, hugging your risk budgets right now, truly knowing what your downside risk is. You'll, so we had 1987 we had the.com we had the financial crisis. It just happens. And what happened, there's a great quote from buffet, he talks about being, being greedy when everybody else's fearful. I remember in 2008 in January, uh, two brothers that sold their business, they were listening to the noise saying, well, these markets could go down another 50% when in fact it was the lowest risk time that you could have invested. So not having a game plan, not understanding how the economy works in certain businesses will continue to do well, is really critical. And one of the best ways to avoid that complacency or just not knowing is really working and having an effective game plan for the even after you're gone.
Speaker 3:
11:31
So a lot of times we focus Paul on accumulation, investment risk in the market. But some of these things are so simple to do and they have nothing to do with what the market's gonna do. And that's a state planning. Paul, you and I, we have kids. That's the real priority in our life, right? Absolutely. Nothing more important than that, and so I want to make sure you want to make sure that our kids, our spouse, those that we love are taken care of when we're gone. Because if you don't have an effective state plan, everything you own, your house, your cars can be tied up in courts, probate, we see costs could be double taxation on the some of the, some of the investments that you have. We've put together a great report. It's our latest report, estate planning simplified. It's a short 10 page report. It's easy to read and it's jam packed full of actionable strategies. The best news is it won't cost you a dime if you saved 100,000 for retirement, be one of the first callers to get your report right now at (888) 419-8513 that's (888) 419-8513 call now, eight eight eight four nine 85 13 how could you protect yourself from the next looming correction? What are things you need to do right now to take decisive action? Paul West and I, Ron Carson are going to continue talking about this on wealth from wisdom.
Speaker 2:
12:52
How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson. Is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here and right now on wealth and wisdom with bear and taller boom advisor, Ron Carson. Welcome back. I'm Ron Carson [inaudible] with
Speaker 3:
13:14
my cohost Paul West and thanks for joining us today on wealth from wisdom. If you believe the stock market won't go up forever, if you believe that a market correction is inevitable, then the question I have to ask yourself right now is what am I I not somebody else? What am I doing about it? What am I I you doing to protect her investments and everything you've worked for coming up. We're going to continue to talk about taking less risk or understanding the risk or the level of risk that you have in your portfolio. They consider this debt for the average consumer has returned to pre 2008 levels. Paul, think about that. Total household debt climbed to 12.7 3 trillion in the first three months of this year. And this was according to the Federal Reserve Bank of New York. This represents 149 billion increase from the end of 2016.
Speaker 3:
14:11
Today's debt level is higher than the 12.6 8 trillion p kit in 2008, if not only higher. It's accelerating very fast. And most of this is in their car loan and consumer credit area, not mortgages. This a stuff consumer credit is the empty calories on a diet, right? You're just out. You're buying stuff. It makes you feel good. So that's something to be aware of. Yeah, well, I mean, as we watch consumer spending, Ron, and it's an important indicator of the market. It's good and it's bad, right? It's good because take a car dealerships, automobile industry, they love it when consumers are more and more.
Speaker 4:
14:52
Uh, it also has positive maybe for the net impact of the economy, but it does create debt levels to go there. So I mean, we look at it all the time. Hey, we all make mistakes, Ron, where we all get a place. And like I look at me personally, the last three weeks I think we've been talking, we've been on everywhere on the road, you and I in different locations between California and Las Vegas and New Mexico and Portland and everywhere. And when you're going that hard, it's sometimes hard to stay disciplined to your eating, to your diet, to your exercise. I know you're really good at it, but like for me, I looked at, man, it's been a tough three week stretch here, but it's been good. But if I get complacent at all on it, that's not a good thing. So I got to think about the same way.
Speaker 4:
15:32
If I look beautiful. Well thank you. [inaudible] the last time I saw it was 12 days ago. It was a good workout this morning. So, but anyways is we think about our own portfolio. What happens? I get complacent and I hear that all the time for people. And we'll probably the one of the most frequent ways I see complacency is people not making adjustments to the future. And one of the ways they don't do this run is inside their retirement accounts. So they, many people want it to grow as fast as they can so they take risk. And so they maybe left a company and they roll their four zero one k into an IRA and they take a lot of risk and now they get closer to retirement. They haven't de-risked it. So what do we help people do? Or what we want people to think about is how do you de risk that appropriate amount and have the right allocation for you. And we've come up with a term I think is a very powerful for people think about is irreplaceable capital. What does that amount of capital that you cannot stomach that if it went down significantly. So, and then how do you still have upside possibilities with it. But you're more concerned about protecting the overall capital that you have there. And I think for our clients and many people across the country, you got to figure out stopping at the place that it, when's the time to shift over into that investment? Yeah, an
Speaker 3:
16:47
approach I love and I use it all the time now when I'm speaking to investors about the speeding analogy, cause you, you, you pointed out most people are comfortable going 10 to 15 miles an hour over the speed limit. You know, the car's not out of control, they balanced that. What they're probably not going to get a ticket but if they do it's going to be manageable. One, they can pay a lot of points off their license. And so you ask people when they come in, you know, how fast are you comfortable having your portfolio go beyond your risk budget? And I think most people answer the same thing. You know, the equivalent to driving 10 or 15 and you say, well how would you feel if you knew you're going 250 miles an hour is I think the level of risk people are taking is we can run these analysis, these analytics for you.
Speaker 3:
17:31
We can show you for sure based on past and what has happened, how far your portfolio would decline and that's no guarantee that it's going to be exactly that amount, but it's going to give you a good idea of the level of risk. For example, if you thought it was going to decline five and it's going to decline 50 if we're right and it's 52 or 48 it really doesn't matter. You're taking on 10 times more risk than you thought you were taking. This is happening a lot because of zero interest rates. People have shifted, they've bought expensive equities. Bonds could be super expensive in here if, especially if you go on out long term could be, you notice I said me, what if the economy gets week interest rates go down, but you need to know what three or four different scenarios if they play it out, what would that mean to your portfolio?
Speaker 4:
18:17
Yeah, so let's go on a different angle here, Ron. So how many people have you talked to or listening on the show today that are just sitting in cash because they had an event happen in their life or they got scared from the election last fall or from two years ago that they were concerned. And so they're sitting in cash and they're complacent in terms of what do I actually do with that? And now their complacency is turned into our next emotional word. Fear. Yeah. So they're afraid to get back. Mark and I was actually on the phone, uh, yesterday with a family and their Saint Paul, we don't know what to do. We've been holding this money for two years, is now the right time to get in. And what they need is an irreplaceable capital approach. They need the comfort that they can participate in the market but not fall dramatically because their biggest fear is, and then he shared this with me was Paul, if I put this money in for the market, goes down 20% I won't be able to sleep well at night. And, and, and so I get where he's coming from.
Speaker 3:
19:18
You said something, Paul, which can I just hold on? You said if the market that's different than his investments going down 20% right? Right. The question should be are you comfortable with your portfolio going down by x percent? That's what you have to focus on. Then we can plug in the market going down 2030 40 50 and show you the corresponding what we believe your overall strategy would decline. That's what you need to know.
Speaker 4:
19:40
Yeah. Well I think it's funny though, Ron. Everyone wants market based returns, but they don't want to take the risk that goes and so there's gotta be the right balances. We were talking about who knew that in this, what was it, November of 16 that the market was going to continue to grow up and we're going to have this Trump rally happen, but imagine all of the you and there's probably still some of you out there that decided to not be invested in your allocation or in the market and now you're wondering, okay, it's gone up. You know, and it keeps going up a little bit, but I'm sure as heck not going to get it now because it's going to go down. Well it may, but if you're hedged appropriately or you've got the right allocation, the market could still go up another 10 15 20% over the next 12 months. We don't know, but what we do know is is what smart investors do is allocate their money properly based on their plan and having a personalized game plan for the future on and part of that is is they're not going to keep sitting and waiting. They put a plan and make it happen. It's like the weight loss. You put a plan, you make it happen. I think about everyone out there with our homes, all of us have that to do list, right? And to do list, you
Speaker 3:
20:48
finish one room of remodeling or you get the backyard in a setting that you like. Well, you always can think about something else and it feels so good. I know actually watch you with your sharpie when you cross something off your list. Yeah, it feels great. Then you get a move on to the next thing. That's the power of not being complacent is actually crossing these things off and feeling comfortable with. So let's give our listeners some very specific types of things they should do. One is go in and talk to your financial advisor, find out, and if he can't run analytics on this, and, and by the way, if he's just guessing you need to, you need, you probably need to go somewhere. It doesn't have to be out and go somewhere to get a second opinion on that. But do they have irreplaceable capital strategy?
Speaker 3:
21:29
They have thing designed that really don't care whether the market's going to go up and go down. Another thing that's been really popular is writing covered calls on position. So it doesn't really protect the downside, but you bring that income in and it gives a buffer because you get to keep that income off the portfolio regardless. Another favorite in it's an incremental move out of cash or de-risking the portfolio, move into a short term Muni, if it's, if it's uh, a non qualified money, if it's qualified money, like an IRA 401k look at moving it into a corporate short term bond ladder and you don't have to know whether rates are going up or going down. If you get a short term, it'll be about the same. You can get a decent yield right now in that. And then alternative strategies, um, you know, long short credit, event driven things that are they that really, again, don't care what the market is actually going to do.
Speaker 3:
22:23
I think so often people are, um, they just want to have the, you know, they're used to the s and p or the use of just passive. And we, we believe in passive. We believe in active. I mean, in certain strategies, active management provides a heck of a lot of incremental return and can and does if, if you're using it properly. But then passive makes sense. If you're just trying to, I just want to go on. I just want to match whatever the s and P is doing. I think that's a, this is a pretty bad time to just want to be passive and only focus on doing it as an inexpensive way because we really going to care that you saved, you know, a half of 1% if the market goes down or your portfolio goes down an extra 15% yeah, I think you're dead on Ron, and so what a lot of people do, how do we do our research?
Speaker 3:
23:07
They listened to shows like this are they most likely go to Google and you're going to go Google something and you're going to go find an article that you like that's going to help you with your rationalization of your opinion and keep you complacent in what you're doing today. You would say, oh, I'm fine with risk or I'm fine what I'm doing. You need to go to a professional. There's a reason why for taxes and complicated tax situations, you'd go to a CPA. There's a reason why you need legal work. You go to an attorney, you need to go to professional, you need to help. Google is a great thing and you can find out a lot of information. But we are consumer behavior is, is to make irrational decisions to make ourselves feel better. So Paul, you and I talked about, you know, getting an estate plan.
Speaker 3:
23:44
That's something you can do has not market driven. You know, we want you to really pay attention to the risk in your market. But there's other things that you could do with the market. Makes a new high sat, won't at least take control and do some things at a biggie as claiming social security benefits. You know, we see us all the time. People claim too early or too late and they throw off those benefits for life. And these rules around this, these days, they're all over the place. There's tons of red tape. There's thousands of different combinations of how you can, you can claim. But the, the sad news is we're talking about market losses. Here's a $10 billion amount that goes unclaimed every single year because people aren't informed with what they can do. You make one little mistake, you don't do it right. You don't have that much time to go back and Redo it.
Speaker 3:
24:29
It can have a devastating impact. We've got a report and it is the social security analysis. It's quick. It won't cost you a dime and it will literally save you thousands of dollars if you've saved at least a hundred thousand for retirement, be one of the very first callers to get this complimentary customized, and that's why we limited it is customized. So we're going to give this to the first 10 callers right now at (888) 419-8513 get your customized report. Call (888) 419-8513 don't be one of those that leave $10 billion on the table. Call (888) 419-8513 Paul and I are going to continue to talk about ways to protect yourself and be just aware of the elevated risks that are in the market today. I'm Ron Carson with my call. How's Pope Paul West? And you're listening to wealth and wisdom.
Speaker 2:
25:21
He seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with Barron's hall, the same advisor, Ron Carson, he's a published author and has been featured in Forbes Investment News, the Wall Street Journal, CNBC, and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor Ron Carson. Welcome back. I Ron Carson with your cohost Paul. Oh Wow.
Speaker 3:
25:44
So you're listening to wealth from wisdom. Could you name the investments in your four o one k and your IRA? What is the last time you really updated a rebalance the investments in these retirement accounts? The truth is many people are taking on way too much rest and if you don't take action to protect yourself now, you could be setting yourself up for decades of hard work went down the drain just in a moment of bad decision making because of emotion, because of a decline in the market. And Paul talking about 401ks. I remember the days Janis funds, Putnam funds, I mean they all had different names, but they all hold help for the most part. Top Holdings, the same stuff. So someone thought, well, I'm diversified. He just didn't realize they're only diversified in name, but they weren't diversified and holdings. And why is now an important time?
Speaker 3:
26:31
Stocks are not cheap. We're not saying the market's going to go down. No one can call or time. The market just doesn't work that way. But here's something you should know. One of the most popular evaluation tools out there is a Shiller PE ratios. At Current, the ratio is 29. The value of the valuation of the s and p 500 is very high compared to historical levels. Give you an example. Um, the, according to Forbes, the average since 1881 the Europol was born is six, something like that. 1675, they average since 1970. Um, is 25.4 now stands at close to 30. So it's not astronomically high, but it's higher. Average PE ratios based on trailing earnings for the s and p dating back to the 1950s has been 16 and a half. Today it's 21.3 so you'd see a 30% correction to bring it back to normal levels. And Margaret never tends to correct back to the average. It over corrects on the upside over corrects on the downside. So I think mentally you have to be prepared for the possibility of even a bigger decline in that. Yeah,
Speaker 4:
27:37
I think about the investing public is many of them have retirement plans through their employers. You know, the world's changed from defined benefit pension plans to defined contributions. So we as stakeholders have to contribute money. And so we have a 401k or maybe we work for a school. So as a hospital we have a four o three B plan. Those are called, maybe you have a simple plan or a set plan. And there's a lot of different types of retirement plans and we won't go through all those in today's show. But there's a lot of mistakes that are made in there. And I want to kind of walk through some of the major ones for each one of you, and specifically it's actually the last time you've logged in and looked at it. I mean, it's amazing the statistics they track on these websites to show that if people are very rarely logging in and what happens is they set their initial allocation and then they forget it. Now. If you're in a target date fund, that's okay, that's better, but it doesn't always mean it's best for you.
Speaker 3:
28:31
When you say look at it, Paul, how do you mean that? I mean do I might just looking at what the name is, where am I looking at what the name is, and then figuring out what the holdings really are and then looking at how did it operate, how did it react and the next month,
Speaker 4:
28:46
no, we're only looking at one thing, the number, the number. Okay. Yeah. You're not talking about doing real research beyond that. Well, I may go see what does that for my rate of return, but that's if I could find it and it's visible on my former k plan site without multiple clicks. So here are some common mistakes that you may be making when he 401k I'm one not factoring in your allocation to all of your other assets. That's a big mistake people make because guess what, you may own all of these ETFs inside of there are s and p 500 funds. But if you own that also in your current investment advisory accounts, you're, you're on the same track there. So is that the right thing for you? A second mistake people make Ron, he is, what do they go look at past returns? So they go look at the list of all of their available choices.
Speaker 4:
29:33
And usually for most retirement plans you have a finite amount of choices. So where do they go do, oh, what did well last year? Okay, I'm going to go put my money in that. And we've shared this all the time. We go look at some of the top asset level funds of all time. And I know we've even talked about Fidelity Magellan Fund on this program before that Bi. By the way, can I just share something? I was out at the Napa valley wine auction. Guess who I met? Uh, on Saturday? I don't know. Fidelity Magellan wasn't Peter Lynch because I manage the, I go, how do I know you your name? He goes, well I manage the Fidelity Magellan Fund. I thought it was incredible. So he's off. He owns a resort in uh, this particular gentleman in um, in Puerto Rico now. I thought it was interesting. So did you ask him why the average investor actually lost money verse he said it's investor behaves.
Speaker 4:
30:19
We actually did talk about did you go crazy how people, the short, the short term mentality or people buy stuff and they don't really understand what they're buying. They're buying the name and what you just said, Paul buying the past, we can all become trillionaires buying the past if we get to have the past in the future. But it doesn't work that way. You got to buy where the puck is going, not where the puck is. Well, this is actually the next mistake. Number three. Ron is avoiding no name funds. So people have the tendency to go after and go select the largest name fun. So a fidelity, a pimp, co of vanguard, but little do you know sometimes in retirement plans, the other names are built specifically for the retirement fans that you may have a cit, a collective investment trusts or other vehicle inside of there that was designed is actually better for you from a cost perspective.
Speaker 4:
31:11
But Oh, I recognize the name, fidelity, vanguard, Pimco, whoever's Putnam, whoever's in there. So you select that cause that makes you feel comfortable, but that may not be the right decision for you. So another mistake people make in their retirement plans, if your company allows you to buy your own company's stock. So we see this all the time. We've talked about on shows before, be very, very cautious about how much money you put in your company's stock. And I know we're all passionate, we love what we do and you and I love working at the Carson group run. But there's a point where you can't put too much of an allocation in there. So if you have that option, just be careful on what the total amount. Another thing that you have to be careful about is sticking with your default contribution rate. So how many of you out there have you actually changed your contribution rate?
Speaker 4:
31:57
Why didn't you change it? Oh, I'm just going to get to that. I'll get to that later. Guess what? Life happens and you don't make that change. So if you get something that showed today and you want to make that change, go actually make it happen. We'd love to hear from you and say, I did that. I feel better, I made my change and you're changing maybe higher. You know what? It may be lower. The last mistake we see made, and it's made too often around on this and actually makes me sad, is confirming that your beneficiaries are correct in your 401k or your retirement plan or your four zero three B because you set it up initially and then you never look at it again. And guess what unfortunately is not quite visible on your retirement plan website. So with that, make sure and we recommend this to people annually, just double check that it's correct. It's going to make
Speaker 3:
32:40
you feel better because the consequences of it not being correct are more severe than you ever want to imagine. The message here, the message we want everybody to hear today is be proactive, take responsibility and I think consumers are getting better. They have more information. We go in, we take responsibility for our health care because it's important really we have to deal and live with it every day. Take that same vigor, that same accountability to the decision making. Work with your, if you're doing it yourself, measure your downside risk, understand what you own. The same mistake that we make, feeling comfortable with big brands. We also am people buying individual companies. I remember clients come in and buy and merch right before they had the big scare that's drug he own. The stock was down 50% and they bailed out of it because they didn't understand what was behind Merck.
Speaker 3:
33:32
They were just buying a name. And so just buying a name, name brand without really understanding why you own it is going to lead to bad behavior. And look if the Dalbar studies bad behavior leads to bad performance, bad performance normally doesn't come from what you own. It comes from how you react to what you, yeah. And with all of these mistakes around, I'm talking about retirement plans, that doesn't mean I want you to go in and just go make a change to your allocation cause I said so you need to have some serious thought about it and plan for what that looks like. So we want you to make changes but with a plan in mind. So really the message, Paul and I want you to take away today as, yeah, the market is not inexpensive. We're nicely, it's going to go down tomorrow, but it is in a big bull market.
Speaker 3:
34:14
The second longest bull market in history, eight plus years. And it's normal. These things go up and down. If you've been around for awhile, you know it won't last forever. Every bull market is followed by a bear. Just like every sun rise is followed by what Paul. A Sun set 100% of the time, at least all is it. You're good loose all the time. I've been here on this earth and we see absolute complacency today. Uh, everyone, almost everyone you talk to, I was just out of Napa was the Zion. Everybody talked to expect some market just to continue to go up because Trump's in or there's this or there's that and yeah, I hope it does, but it's not going to. At some point it's going to go down. So I encourage you to take action, interview a handful of advisors, get a second opinion from those advisors, but do something please.
Speaker 3:
35:03
If you'd like a conversation with us, we'd love to help you. We have our five step retirement master plan. This will help you get every penny you can and be as prepared as you possibly can. Take the five step master plan, take it to advisors that you're actually are interviewing in this. We'll do an analysis for you. It won't cost you a dime if you saved 100,000 for retirement. Call to schedule your initial analysis right now at (888) 419-8513 that's (888) 419-8513 call now, (888) 419-8513 a final segment, Paul and I are going to continue to talk about the single things you must do should do to better position yourself for the eventual downturn in the market. I'm Ron Carson, but Paul West and you're listening
Speaker 2:
35:48
to welcome trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom. We're there until the fame advisor Ron Carson, he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC and more. Now back to welfare. Wisdom with Barron's hall of Famer Advisor Ron Carson. Welcome back. I'm Ron Carson with my co host,
Speaker 3:
36:14
Paul West, and you're listening to wealth from wisdom. There's a famous Warren Buffett quote, be fearful when others are greedy and be greedy when others are fearful and we love buffet. He is a, he's an absolute genius. He's an amazing human being and he has lots of other great quotes. Paul. Another one of my favorites is he says our capital markets or relocation centers, they relocate well from the inpatient to the patient. I like to use a one. Yeah, I love the one that the market's relocate. Well from those that don't have a plan to those that do have a plan and I think he's saying the same thing. Patients, right? If you have a plan, you understand how it fits and we're in a period right now, one of the longest bull runs in history. People are totally complacent. They're not really expecting a downturn. It happens.
Speaker 3:
37:08
You need to be prepared for a matter of fact, buffet and Shelby Davis both say, and we've seen it with their own clients, bear markets where you make your money, you'll keeping your powder dry today in the last thing we talked about, irreplaceable capital strategies, some short term bond ladders. Thanks. You can do so then when things are extremely cheap and you're fearful, that's exactly when you need to be investing in the market. I mean you can buy companies with dividend yields a five six 7% I remember we able to buy Muni bond funds trading at a discount with a 20% yield. I had a hard time getting clients don't want to do it. Well, what have they go to 25% I'm like, boy, can you imagine what you would do with a 20% yield today tax free and you could buy the dollar for 75 cents that's what was happening in the@thepinnacleoffearintheseclosedinbondfundsduringthefinancialcrisisandorthe.com meltdown.
Speaker 4:
38:06
Yeah. People wouldn't believe you today, Ron Harris. No, there's, they can't even fathom that. So interesting. I love the buffet quote about patients, but we've been talking about complacency, so now I'm trying to think what's the difference between patients and complacency and for me, I'm sitting there thinking about it is when I'm patient, I'm comfortable with my patients and I don't worry about it. When I'm complacent, I want to, I feel like I'm being patient, but there's something bothering me behind the scenes. I want to make a change but not causing me to make that right.
Speaker 3:
38:37
I like, I like, I like where you went with that. So for me patients is this, I know I've done, I've prepared, everything is set exactly the way it needs to be and I just got to just wait for things to happen to come my way. Or complacency is, yeah, everything's going to be okay. I'll get around to US someday. Everybody's doing it. So it must be okay. And then with patients, shit hits the fan. I'm allowed to say that on radio. All right, good. And versus the complacency when that happens, when the stuff hits the fan, I don't know what to do where patients, I sit back and go, I'm in great shape. That's the difference.
Speaker 4:
39:14
Yeah. And so I think of complacency and there's many people out there that are listening today, Ron, and it's okay, you're not alone by the way, that have gone through life and they've been complacent. And one of the ways we've seen this is not related to the market but related to your own family's plan that don't have a basic will or trust set up. So again, if you get something out of today's show, if we can help inspire you to go get that done, I cannot tell you how much better you're going to feel by completing this. So there's so many people as part of their personalized game plan, we help them with an allocation, we help them with cashflow, but we also help them with the legal and infrastructure. And there's many people out there that haven't completed that. And I really think you need to just stop for a moment, put it together. But when you work with a firm that puts together a comprehensive game plan for you, they're going to have that on the list. So you won't have to worry about,
Speaker 3:
40:12
here's some stats, Paul, and I think, and I've shared these before, but it's part of history. That's a fact. These are not, as Trump says, alternate facts. These are actual facts. The market loss between 85% of its value from 29 to 32 I think there's not a gender, no one around really recalls that time period, but it happened. It lost 50% between 72 and 74 and then I already talked about the crash in 87 it lost about a third of it's value no matter of a couple of days and then again 50% in 2000 to 2002 and did that again. Another 50% loss in 2007 2009 and then we had the less memorable 20% decline in 2011 you talked about last year already we had a 10% decline and all of that, but the biggies, if the two fifties and the 85% crash and we had actually three 50s and an 85 stocks were dirt cheap, but people in, even if you would have bought them when they were 40% down to 35 would have still been a great time to come in if you had patients had a plan. We're not complacent. So today, understand what is your risk budget? What is the downside risk? And go in and say whatever. I don't personally elevate to market's gonna go down 85 but you're curious what about a 50 we've had three 50s or a relatively short period of time. Ask whoever on your portfolio is, if the market were to go down 50 what would that mean for my portfolio? What would that mean for my financial future? What does that mean for my ability to take income out in retirement?
Speaker 4:
41:50
Yeah. And where are you going to have to replace your capitol, Ron, in terms of your living expenses? Because what are you going to keep spending on your home, your physical needs, all of your food. Healthcare. So one of the mistakes we see people make is not budgeting properly for the increase costs of healthcare. So if there is a downturn and they haven't properly prepared, you're not going to want to give up your healthcare and your prescriptions and your medicine and everything else that you have. So you have to think about that as part of your overall plan.
Speaker 3:
42:21
So you and I, Paul, and by the way, Paul is a partner here at the Carson Group. When we have 52 partner offices around the country were consumer advocate group. We believe in total transparency, putting the client's interests ahead of our own accountability. Really bringing are massive. We call it MTP or massive transformative purpose is to bring, is to bring to be the most trusted in financial advice. And we really have partners around the country committed to doing that. And we also have, and you're a partner, uh, in consulting group that we have, we consult with. We've been doing this since [inaudible] 93 Carson groups are at an 83 in our coaching group. Consulting group started in 93 and we had 700 plus advisors in Vegas. We bring them together twice a year for a big meeting. And my opening monologue, I said I've got some very disturbing news for you.
Speaker 3:
43:15
I mean our profession, like almost every segment of our economy is going through massive change right now. But disturbing scares most people. And most of the people you could have heard a pin drop when you sold that. I thought it was bad news, disturbing, just different. And so I think you have to wake up and say, hey, there's a lot shifting right now beneath the surface and if we're defending the past, what we're comfortable with, what we know, you're probably going to make you and your financial advisor and make some big mistakes has we're on. We are, we're in the beginnings of some of the most massive movements and changes and you can either prosper or be disturbed in a negative way by some of that. And you know, I just want you to know the fastest way to make your money work harder just to understand some of these changes that are going on.
Speaker 3:
44:05
But also we've talked about things you can do today. Estate planning focus on it makes a difference. Also, social security don't leave 10 billion on the table. And finally, investment fees by lowering those investment fees, you could have a dramatic impact on your returns starting today, not tomorrow. And as nothing to do with whether the market goes up or goes through a cracks in, but right now you're probably paying a lot in additional fees and this is part of what our profession has changed. There's been a v Oh pinkness they've not been transparent with fees. There's been a lot of district cost. Pockets are still are out there and you need to be aware of what those are and we can show you. We have a report called the true cost of investing and will cost you anything. You've got nothing to lose to get this complimentary report. Be One of the first callers, first 10 to call us at (888) 419-8513 that's (888) 419-8513 start today. Take action. There's proactive things you can do. We've got this report for you. The true costs of investing. (888) 419-8513 it's been a great show. Thank you. My cohost, Paul West, I'm Ron Carson and you're listening to wealth from wisdom
Speaker 2:
45:15
risk, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
45:30
Okay. And here's the legal Mumbo jumbo. The opinions voiced and well from wisdom with Rod Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged, I mean not be invested into directly investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.