Wealth from Wisdom

Is Any Upside Left ln The Market … Worth the Downside Risk?

April 29, 2017
Wealth from Wisdom
Is Any Upside Left ln The Market … Worth the Downside Risk?
Chapters
Wealth from Wisdom
Is Any Upside Left ln The Market … Worth the Downside Risk?
Apr 29, 2017
Carson Wealth
Show Notes Transcript

Is there any upside gain left in the market? And if so, is it worth the downside risk at this stage of the game? Join Ron Carson as he discusses where to find value with markets at all time highs!

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions voiced and welfare 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 Cwm LLC, an sec registered investment advisor,
Speaker 2:
0:31
Doug 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 205 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is now a whole new ball game. It's loaded with challenges, obstacles, the 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. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson.
Speaker 2:
1:15
Hi, I'm Ron Carson and welcome to wealth from wisdom with my cohost today, Paul West. Paul, welcome to the show. Hey Ron, do you remember how you felt on March 9th, 2009 you may not remember the specific date, but I bet you're not going to forget the pit you had in your stomach on that day. It was in fact the bottom of the financial crisis when the Dow hit a 12 year low of 6,547 a matter of fact, at that very time, there's all kinds of newsletters floating around saying how Dow 1000 was coming. They even went as far as to say what different companies were going to be worth and why. Trillions of dollars in wealth evaporated, and it was a punch gut for every American that invested in the stock market. Many people believed at the time the markets would go up forever. Do you remember the phrase, this time is different?
Speaker 2:
2:19
I do. Everybody's sitting on CNBC. All the pundits were saying, yeah, but yeah, but remember, Butsa greater racer, everything you know that is, is a before the butt is erased. But greed, greed as it so often does got the best of a lot of people. Even those who were passively invested in retirement counts, he had got absolutely hammered. And consider this, when you think about the risk and what can happen as I'm starting to hear this again, Paul, that well because of him, because of this, it can't happen. Let's go back in history for just a, the market lost 85% of its value between 20 1929 in 1932 and lost over 50% between 1972 in 1974 crash abruptly in 1987 I was in the profession then I remember where I was lost over 50% in 2000 2002 and again, again, five years later between 2007 to 2009 and you may have even forgotten because by now we were immune to all of the movement but in a less memorable 20% decline in a 2011 and since I was at a Schwab impact conference in Chicago when that happened and what we're going to talk to today, um, really isn't about timing the market, the Dalles we're speaking right now has recovered, uh, and, and set records over the last eight years.
Speaker 2:
3:56
It's a second longest bull market in history, but many investors are super nervous that this party is finally coming to an end. Matter of factors, so nervous. So many investors. I've never participated. They've sat in cash. If sat on the sidelines, they've been afraid. This, the conversation we're going to have today is not about trying to time the market. That's a fool's game. It doesn't work every year. You can look at the Barron's roundtable, the brightest minds in the world can't time what's going to happen in the short term, but here's a couple of things that we want you to be thinking about your nearly 10 years older since the last major stock market correction. That also means you're 10 years closer to needing this money. I he retirement, we call it financial freedom and the question is, is are, is the remaining upside in the market worth the downside risk?
Speaker 2:
4:48
Are you needlessly taking on more risks and you need at this stage of the game and have you readjusted your portfolio to match your risk tolerance level. Coming up on today's show, we're going to talk about the state of the market, potential consequences of not having a game plan and many, many strategies to help you protect your money and really your quest for financial security. Paul, there's a lot there and I feel their since seems to be, you know, as we sit here today, the markets just made another record, Nasdaq an all time record territory again and there's just a ton of complacency out there right now. Yeah. I think about short term memories. So let's go back almost 10 years and you're talking about the low in the beginning of 2009 I can distinctly remember in 2008 you know, we've all worked with many financial advisers over the career and especially the fall of 2008 I was at an event at a conference and so many advisors thought the world was going to end and what they were going to do and how they were going to change their businesses to make sure something like this never happened again.
Speaker 2:
5:57
So now let's fast forward.
Speaker 3:
5:59
Nine years is a long time. You are nine years closer to everything else. And has your adviser actually made those changes both for their business offering but also for you and your family and made the adjustments to make sure you're not taking on too much risk. And why? What I see happening today. I think this is interesting, just this weekend, um, we're all competitive in nature. I know you're competitive, Ron. I'm competitive. I was watching a track meet this weekend and this reminds me of people that run multiple lap races. So let's take an 800 meter race. So that's two laps around the track. So there's always those people that go sprinting out of the gate and they ha they run that super fast. First 400 also know they're exhausted and they end up in the second lap, not winning or they fall way behind because those people that pace themselves correctly, and I look at retirement planning the same way, is the people that pace themselves, they took the risk, they direct themselves.
Speaker 3:
6:57
He said, I'm not, I don't need to win this first lap. I need to win in the long run. And I look at the market where it is today. I mean, people forget a 5% correction happens every seven months in the market and we haven't had one in a while. Right? And so how are you de-risking yourself or worrying about that? And I think that's something everybody needs to look at. You do when you say, I got to share this story. That's funny, but it relates to what we're talking about. So this last weekend I was with some friends, we went down to Lexican to Kentucky and we went to Caitlin where the horse races are going on right now. And I love a grown up with horses my whole life. And, and so we actually, we knew one of the horses actually running the race and it was the biggest race of the day.
Speaker 3:
7:39
It was a stakes race. And everybody in our group had had a wagered on this particular horse. And it was, it was the long shot in the field and the race was actually one and a half mile. And if you go a lot of times or six for loans, you know they're not that long, but one and a half is really a long, long race. Right. So number 11, was it as the chocolate something was the name of the horse and the people in our group, I don't think realize cause we're sitting right at the finish line that they had to go around pass and then go around again. And uh, that horse actually was at the lead and the first time and they thought they would go. It was a long shot. And so do you think of one right? You realize that? Let's think about, we've talked about longevity a lot on the show.
Speaker 3:
8:27
You know, if you're sitting her going, man, I've arrived or I've one, um, I was on the, I was on the Grand Canyon with um, uh, Jj Abrams father who actually did star wars. Really? I did a piece on Forbes if you want to Google it. And he said, well, I finally won the war. What do you mean? He goes, I finally have enough resources. I don't have to worry about it. I said, well, how did you arrive at that? It's someone tell Ya. And he goes, no, I just did my own calculation. Well a bit. It would be a big mistake, you know, to fashion
Speaker 2:
8:56
pass the finish line. I think the, the race was over and you got to go a whole other lap. And the source by the way ended up getting last place. I wondered if that fatigue first the last. Yeah. So as in life, we need to really plan and allocate our resources effectively. So when we cross that finish line at the end of our life, um, that we, we have, have something left in the tank. I mean, you don't have a lot of resources. You don't have a comfortable margin because if you're really pushing it to the limit, you're not going to enjoy your financial freedom years. We retirement years that much. Yeah. One, as we think about, you may be in first place right now, you may be doing wonderful. And what is wonderful mean? So most people use the market as the s and p 500 drawn.
Speaker 2:
9:39
So if they look at the market, it hasn't even over the last 10 years performed 8%. It's just slightly below that in the sevens. So most people think, oh my gosh, we've done incredibly well. Well they have, but it's not instrumental. Well, so now that you're in first and maybe you've been performing right along there and that's what level of risk you're willing to take. But what are the next five years is down 20% you're no longer probably going to be in first place. You may move into close to last. Well we're going to talk about some strategies. What can you do to protect yourself? And you don't have to just wave the white flag and say I'm going to go into cash or bonds and get no return. Cause that's also equally as bad, almost as bad, not quite as taking on too much risk in having a large decline.
Speaker 2:
10:21
Yo and I want to, I'm going to go back, I'm going to share a few stories here. I'm in, this is my 36th year in this great profession and I remember the 1987 crash and a in literally a few months after that. And I remember being in Lincoln doing a continuing education class and I had a guy on there telling me, you know, I didn't invest in the market until August. My very first investment. I finally put my four o one k or my ira out of IRA or cds into the stock market. He actually is shared with me. He bought the Fidelity Magellan Fund. You've heard me talk about this before. And then the market crashed and then he sold out immediately and he says, I will never do that again. Well if you had a hold on, just think 1987 with that would have been worse worth. Um, so he got sucked down right at the short term top.
Speaker 2:
11:08
We had a big correction God out and said, I will never make that mistake again. The mistake was just guessing, making a random decision. And we're going to, when we come back in our next segment, we're going to talk about some very specific strategies, how you can keep from falling victim to that kind of emotional move. Show me someone who's complacent, show me someone who's blindly contributing without regularly updating their investments. And I'll show you someone who's vulnerable and needlessly putting their life savings that were she was about to gentleman just talked about. It's possible you're taking on way more risk than you need to at this stage of the game and it's possible you could potentially get a better return for a lot less risk. Let us prove to you how we can make the most out of every dollar you save for retirement.
Speaker 2:
11:53
It start with a simple conversation. Does it cost you anything so you have absolutely nothing to lose? If you've saved 100,000 call to schedule your initial analysis right now at (888) 419-8513 lord, let's learn how we could limit your downside risk. Let's make your money go further and give you peace of mind. Eight eight (841) 900-8513 (888) 419-8513 today, many investors are rethinking stock market risk and is a potential upside really worth the downside. Coming up next, we're going to talk about strategies and how you protect your money. I'm Ron Carson with Paul West and you're listening to well from wisdom.
Speaker 4:
12:47
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.
Speaker 2:
12:59
Come back. I'm Ron Carson with Paul West and thanks for joining us today on wealth from wisdom. The stock market has been on an absolute tear over the last eight years, the dowels broken record after record and now it's a question of risk versus reward if you're invested in the stock market, is any remaining upside worth the downside risk here we've had two 50% draw downs, a literally in recent history and it can happen again. Are you taking on way more risk than you need to at this stage of the game? Coming up on this segment, we're going to talk about the state of the market and the potential consequences of not having a proper plan and some strategies that can help protect your money and your financial freedom and retirement. Paul, you know, you sit in lots of our clients and sometimes we throw a lot of terminology around, but I do think not to get real deep here, but there's a few, a few that get used a lot and people should have a basic understanding of what,
Speaker 3:
14:05
yeah, I think Ron, we hear all these terms that people are watching CNBC also and they this here standard deviation and volatility and excess return and sharp ratio and it just, it just starts to fly around as jargon at that point for everyone. So I think some of the critical terms that you should be aware of, and I think it's important that your advisor spend as much time educating you about your investments as they do actually managing them. And they certainly need to be just as good at both. But Beta is such a concept of Beta really means the volunteer futility compared to that investment benchmark. So one is always the standard. If the investments you're in are above one, you're taking more risk than other people for that same benchmark. If you're less than one in Beta, you're taking on less amount of risk compared to that market.
Speaker 3:
14:52
So if you're in, by the way, just so people know, that's a backward looking number indicates that it may or may not be true in the future, but it's the best piece of information you have. And that's such a great point. So almost every number you deal with a financial professional is backward looking. Very few can be a leading indicator because we have to look at all of the different things happening in the market, but we can't control what happens in a, certainly the political market, the Geo political, the overall economy. Um, but we can do as look backwards. So I think Beta and understanding that simply. And so certainly if your returns are performing where you want them to and your Beta is lower, you're getting better risk adjusted return on behalf. And I think that's something you need to be looking for from your advisor.
Speaker 3:
15:36
Because when we've heard so many people call us up on the show or um, ask us as an advisor or an a perspective client meeting Paul, I did 9% last year. Isn't that great? Well, compared to what? Compared to what, and I have no idea what levels are levered. Unlevered, did you borrow money to do it or was it all of the, you just talk to me that they'd, hey Ron, they were in for stocks for stocks and they had several hundred thousand dollars and I, and I said, Paul, I did great. I'm like, yeah, you just, you call me back in three months and if the market goes 20%, let me know how you're feeling and when you shouldn't. And realize these are basic concepts. Here is Beta relates to an individual security but also to the overall portfolio. So one of the strategies to lower, you can have high Beta ingredients and your portfolio, but if you have stuff that doesn't move together that there's a teeter totter effect or non correlation, there is no correlation.
Speaker 3:
16:29
You can dramatically, while you can have some high Beta volatility pieces in your portfolio and you mix them with other things, you could get an overall, that's why we always counsel our clients to look at the overall level of fluctuation of their portfolio, not to individual pieces of the portfolio. Yeah. So another education term to help him and Ron as volatility because I love, I hear this all the time. Oh my gosh, this market is so volatile. Well actually recently it's not been all at all. We're actually very low on volatility. But volatility is not bad. No either. Yeah. So think about volatility. It's the amount of uncertainty or risk about the sizer change in a securities value. So the best way I can describe volatility, um, I like to use the roller coaster example. Ron. Some people like a very smooth, slow moving roller coaster and they don't want to think at all.
Speaker 3:
17:20
They want it to be flat. Others are okay with, they want the biggest, sharpest drop cause that's where they get all the speed that they get a lot of enjoyment about going up to that top hill. Well. That's a little bit about your portfolio. If you've got a lot of volatility, you got the sharp declines in the steepest sense and that goes along with it and you have to be comfortable to be able to handle that based on what your portfolio, do you know what kind of volatility I love is like driving my car from Omaha to Denver. You don't even realize you've gone up and you've climbed 4,000 feet. Yeah, that's a never know. You just never know. Another one it's very helpful to know is historical value at risk and this is based on a worst case scenario over a period of time.
Speaker 3:
18:00
One on one of the core beliefs I have is if you protect the downside, the upside will take care of itself. If you can accept a worst case scenario and you don't, behavior was what drives success or lack thereof and so as long as you're not emotionally doing something that doesn't make any sense, like the gentleman 1987 I will never invest in the market again. And he had a whole experience of about three months, but true is worse three months. He could have picked bad timing trying to time the market again, but evaluate what your overall downside risk of your overall strategies portfolio put together. And then from that say, and when things are calm and there's not the press talking in your ear of all the noise, Eh, can I accept that level without doing something that's not in my best interest? And that's I he just throwing in the towel and giving up on the plant.
Speaker 3:
18:52
Yeah. So Ron, I think a lot of times it's not people's brains and knowledge that caused them to make bad decisions, but it's emotion that it really is a big driver. So I mean there's a lot of common fears that you can have or what are emotions that can cause you to make bad decisions. I just wanted to share some of them here. So yes, anxiety, anxiety can make you make because you just, you want to get rid of that anxiety, jealousy. So you want to keep up, you heard your neighbor made 12% return last year, so you're willing to take more risks than you should have cause you want to get. That's a Biggie, by the way. I mean, you don't care if you're not out performing a particular index, but you want to keep up with your friends, right? Friends, and by the way, not your friends, but other people's friends don't always tell the truth, right?
Speaker 3:
19:36
Yeah. So I would say I would love, love to be able to verify what people say because they do. They pull something out and it's good cocktail chatter, but it's not the reality of the overall portfolio. You only hear about their winters. You don't hear about everything else that's going on. So other feelings though, our guilt. Did I do what's right or wrong? You feel overwhelmed. And Ron, I can't tell you how much this happens and maybe a recent story to share. Let's think about the election that just happened in November. People were actually feeling overwhelmed or concerned or some scared, some anxiety about who is going to get elected. I can't believe Ron, how many people I've still talking to that have come to us for a second opinion that pulled all of their money out of the market right before the election and now they're emotional because they don't know what to do. They're trapped there in all sorts of stages of fear, concern. I don't want to say depression, but it's, it's a real thing and if they just would've stayed the course, they would have been okay. Or if they would have de-risking some of their portfolio besides just going all the cash, they thought there was going to have a big opportunity to buy on the cheap. The market will always do whatever it needs to do to prove the largest number of people wrong in any given moment. You should have. We should
Speaker 2:
20:48
have all seen it coming from a mile away because a lot of people were saying, hey, when he gets elected, if either way the market's going to go down because we're going to have, you know, buy the rumor by the fact. Just to remember, soon as it becomes obvious, it never is. One of the things we talk about Paul, to his overconfidence. People have overconfident that a, I know what I'm doing. I had some success. Um, grant, my son just went to the casino with his grandmother yesterday and he won $200 and I said, grant, I just rarely happens. And he, he's not a big gambler. Campbell. The very modest means. So he may suffer from overconfidence and next time he plays blackjack. The other one we see as anchoring, you know, that you pick an investment or something that you own and you remember what it's absolute high price was.
Speaker 2:
21:34
And until it gets back to that price, you feel like you've been a loser. Even though it may have doubled in price. That's also a really bad can be valued destroyer within a portfolio. All these emotions, it's why it's imperative. Have an overall game plan so you don't get sucked in and making terrible decisions based on emotions. Yeah. So the overconfidence one, Ron, I just, I can't think of more, I mean, I think about professional athletes. I think about gambling when people don't do well or they make mistakes is you can't have the vision to see where your blind spots are and overconfidence couldn't be a bigger one. And a big concern I have about that Ron is, so there's this big movement of having transparency of fees and being straightforward with fees. And I think your advisor should be telling you exactly what the fees are and how they work, but people are avoiding making decision because they're afraid of fees or costs.
Speaker 2:
22:25
And we were actually just talking about this this morning. You made a good point on the investment you make, you need a return on it, but it's okay to pay money and fees or costs because if you're getting a return on it, that helps you. That's a really good thing. So don't be overconfident that paying a fee isn't worthwhile. Well, yeah, but paying a fee for someone to guess a not adding true value. I agree. I mean with buffet and what they say, you might as well do absolutely nothing. You know we're going to talk about in the next segment, you know how to really measure, you know, what it is that your family needs. When I'm talking about the family index number, cause that's really the only index you need to be paying attention to and how it'll keep you from getting those other emotions weighing in or influencing you to make a terrible short term decision.
Speaker 2:
23:10
Well we've been talking about on this last segment, any sever investor knows, knows that trying to time the stock market is an absolute impossible fool's errand and nobody ever wins at that game. But this has been the second longest bull market in history. The market's been on a tear for more than eight years and it's just a matter of time. Not, not if, but when we have another correction and quite frankly another bear market and um, uh, I would also guess we're going to end up with another 50% drawdown. Central banks are doing a lot of crazy things around the world right now. Just a premium on having, you know, hedge positions. We'll talk about that as well. The question you need to ask yourself right now is the upside or the downside. At this stage of the game, we can show you just how much downside risk you have. We can also help you determine your own family index number and there's no cost for this. If you've saved 100,000 call to schedule an initial analysis right now at (888) 419-8513 the sooner you get started, the better off you're going to be. (888) 419-8513 that's eight eight eight four one nine to 85 or 13 you're listening to wealth from wisdom with Ron Carson and Paul West.
Speaker 4:
24:26
He's a published author and has been featured in Forbes Investment News, the Wall Street Journal.
Speaker 2:
24:31
They see him more now back to wealth from wisdom with hands.
Speaker 4:
24:35
Same Advisor, Ron Carson, welcome back. I'm Ron Carson with my cohost Paul.
Speaker 2:
24:40
Awesome. Thanks for joining us today on wealth from wisdom. The stock market has been on a tear for the last eight years. The Dow has broken record after record and it's the second longest bull market in history, but has run up in the stock market completely throw your plan out of whack. Does your portfolio mirror your risk tolerance level? So often we see that it doesn't or is it possible you're taking on way too much rest and you need to at this stage of the game coming up on this same or we're going to talk about the state of the market today. The potential consequences of not having a diversified portfolio and some strategies can help you protect your money and your retirement. Paul, you and I to break, we're talking about dollar cost averaging. I mean this is a great sign. If you have an advisor that has no clue of what they're doing is dollar cost averaging is, it's like, I don't know, so let's just, let's average it in and I guess over a long period of time, dollar cost averaging effect of you have just a little bit of money, you're making a little bit of money and that's all you have.
Speaker 2:
25:41
But if you already have a portfolio, making sure the strategies do what they're supposed to do is that's, that's, that's what's important. Not saying I have no idea. Salicious dribble it in over a long period of time. Yeah, it makes complete sense in your retirement plan, for those of you saving in your 401k are other plans. That makes great sense. Keep putting that money in every month. But as you're making your investment allocation at your advisor knows what to do. So let them provide you the guidance because the end of the day, we all can see clouds on the horizon are, we can see the brightest blue sunny sky in the world. Uh, but we can't control what the market's going to do there. But we can control the level of risk you take and run. One of our favorite phrases to use with everyone is the family index number, right?
Speaker 2:
26:24
Yeah. I mean, it's one of the best things we can help people with. So I had a client, so let's talk about the family index number. They came to me, uh, in the, in the mid, mid real really early nineties, 90 91 92 and they were very, very scared of the stock market. Just it always been CD investors but course you know, returns on that had been coming down and they came in and said, Ron, if we could get a seven or an 8% return we will be happy. And in those days we actually had a form that we had people authorized to say this was my objective. Here's how much downside risk I can stand. A lot of you have talked about the upside. I spent a lot of time talking about the downs. Like if you can stay on that you're going to be a successful and your wealth accumulation plan.
Speaker 2:
27:06
And so we far exceeded that. They're modest expectation. We had a family, they actually needed to return about 3% cause a family index number was going through comprehensive planning. What are your goals and objectives, what's all the resources you have, what's the number we need to hit in order for you to attain all those goals and objectives? So they were well ahead of the game having a great life and, and they were both retired. So towards the end of 1999 they were like, we want to take on more risk. And I'm like, why? And that particular year, the strategy they were in was up 34 plus percent. Nah. And I read more, read more, more. And I'm like, what? Let's just walk through this. If your portfolio goes down a lot, what's going to happen? While we would be really upset. And I said, well, what if it, what if instead of next year, you know, making 10% you made 50% how's your life going to change?
Speaker 2:
28:00
It's not going to change. So you're telling me you want to take on more risk, but it's not going to enhance the quality of your life at all. But if the market goes down a lot, then you're going to be uncomfortable and you're going to be beating yourself up. And he said, yes. So I talked him out of doing anything and, but before the year was up, they literally came back in and they had a son are, it was actually a grandson that was doing some trading and buying an internet stocks and making a lot of money and they're like, we've decided bonds are boring bonds or boy went on to own any bonds in the portfolio. I said, well, if we go out with the growth in income, we only have growth and aggressive growth. I had them sign off on the fact that they could say in a 50% decline and they never got it, came close to that, but they didn't elevate their risk level.
Speaker 2:
28:45
They did have a bad thing happened the mark and went down and they beat themselves up forever, you know, for doing that. It's like why you had no upside in the quality of your life and all kinds of downside. Yeah, I mean I look at the family and next number Ron us. That's the rate of return for you and your family to live life the way you want to. So it's really simple actually. It's, it's the anti keeping up with the Joneses, it's just taking care of yourself. So why would you want to take a commensurate out of risk? Just because you can say at a cocktail party or a backyard barbecue that you made 10% and the market did eight when the reality is, is to live life the way you want to. Most people, we talked to her in that five to 6% range. That's where they're comfortable. That's where they're good at. So why not help set up their portfolio to help them live how they want to. Sure. There's some extra dollars if they exceed that and that's great and they can figure out what to do with it then. But the pain of not hitting that if so severe and not on the pocket book,
Speaker 3:
29:42
but more importantly the psyche. Ron, I mean, I think that's what we see the most people. And I can't tell you how often one of our clients comes up, doesn't says Ron. I love the idea that I know my number and the fact that you know, a particular bad year, um, or bad period of time really doesn't change it very much. And that's the interesting thing is you can recast it and say, okay, based on what happened in 2008, my number went up a half a percent and if you've invested properly, have the rice route, right risk budget you're able to take on. And we did for clients and oh nine we did because things were so cheap that we said let's increase the level of risk and client portfolios because dividend yields because we're buying at a fraction of what good company sold for him. By the way, buying quality always makes sense because high quality companies will trade at deep discounts through extreme times of uncertainty like we had had in uh, 2000 2002 and then the um, oh seven eight nine time period as well.
Speaker 3:
30:37
Yeah. All right. I think you're dead on. I think it's the recency effect with everything. Right? So actually I wanted to share a quote from one of our portfolio managers here said, we are watching the market today and we're realizing that consumers are bouncing back and forth in the order of either one. The fear of missing out is more powerful than the fear of losing. So when the market's going up, you're afraid, you're gonna miss out, and then when the market starts to go down, the fear of losing becomes more powerful than the fear of missing out. And I think that's dead on. But what happens in both those, you're doing them too late because you're concerned about that at the wrong point in time. And so we actually would help with most people think about the fear of losing and helping protect you from that fear is more powerful than the fear of missing out on that extra one or 2% and that's why you have a family index number and there's no better feeling Rono just we had a family in last week and we help them go through the family index number and they were so fearful that it was going to have to be all market level and when they came in and it was a little over 5% and they realize that they didn't have to have full exposure to the market, they could have other asset classes that made sense.
Speaker 3:
31:44
We showed them the power of how we protect on the downside first and how what that will mean to them. So if the market does move down lower and that feeling on their faces. Ron, I know we've talked earlier about some of the negative emotions of anxiety. I'm feeling overwhelmed over confidence. They had none of that because they knew exactly what they need to do return. And I would challenge everybody out there is to ask your financial, your wealth management team to model out what is your worst case scenario. Now's a great time to do it. Uh, when things are up. And if you can, if you're saying, hey, I'm comfortable with that, then keep the risk on. If you're not now with markets at all time highs, now's the time to make those adjustments. Not when you've had the daylight scared out of you. Because we've had a major, major correction in the market. Yeah. And Ron, if they tell you, oh, we'll get it figured out. Well let's trick when that time comes, we'll make the adjustment for you. Guess what? That's guessing that con, I mean, there's the, they might get right once and they may get right it a second time, but them to doing that,
Speaker 2:
32:40
that's more rest than I'd want to take on for my family. Yeah. It's absolutely impossible. You know, buffet, he's so smart and he has so many great, you know, Buffalo Isms that I've learned, uh, over my, over my career and one that keeps coming back and we see it play out in real life time and time again as our Marcus relocate wealth from those that are patient from inpatient to patient. And I always like to say better put relocate well from the those that the have a plan from those that don't have a plan. So really having a plan that's going to be critical. Our wealth from wisdom advisors all across the country, we have more than 50 locations. We work with people that have lots of money and some that just have modest means, but the common theme, all of our high net worth clients has as they want to know how to optimize their social security.
Speaker 2:
33:27
Think about it. Over the last decade, you've contributed hundreds of thousands of dollars of social security and now you want your money back. Even if you made a modest income, you've probably contributed six figures. So social security and that kind of money will go a long way by claiming your benefits. It's a complicated process and it's riddled with all kinds of trap doors. You make one mistake and you can leave a lot of money on the table, tens of thousands of dollars, maybe even more. Learn how you can get every penny you deserve. Through our customized social security analysis. It's going to show you precisely how and when you claim benefits. Also, are you eligible for additional benefits? In addition to that, how you can pay less taxes on those benefits. And this is all complimentary. If you have $100,000, be one of the first callers to get your customized analysis at eight, eight, eight four one nine to 85 13. That's eight, eight eight four one nine 85, 13 (888) 419-8513. The Dow has broken record after record over the last eight years. Another one just this week. And it's not a matter of if, but when the party, we'll take a correction or even go into a bear market harbor, Nate hibernation. Um, coming up next, we're gonna talk about many more strategies on how you can protect your money for your retirement. I'm Ron Carson and you're listening to wealth and wisdom.
Speaker 4:
34:47
Is it possible you could pick 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 Ryan Carson
Speaker 2:
35:01
with Paul West and you're listening to wealth from wisdom. We see this scenario play out every single day. A new client comes in for their initial review and they have a bundle of statements in hand. Iras, 401k is all kinds of personal investment scattered all over the place. The problem is there's no rhyme or reason as to how it all fits together. They've made a random series of decisions throughout their life without having common game plan. They don't even have a family index number. And more often than not, they're taking on way more risk than they should. Or they even realize if your needle see taken on way too much risk, why at this stage of the game you need to know exactly how much risk you should take and what your number is. And this segment, we're going to talk about the state of the market, but also potential consequences of not having a good game plan and some strategies that can help you protect your money and your retirement. And Paul, we keep coming back to this all the time, is what's your number, what's your number, what's your number? And then are you comfortable with that amount of risk? It could be that you're a number means you're taking on more risk than you're comfortable with, which means we need to Redo the plant. You need to work longer. You need to have less things you're going to spend money on in retirement.
Speaker 3:
36:18
Yeah. Uh, this makes me think about Ron, about a family that we've been talking to recently. Do you actually had a chance to meet and have dinner with them? And I know there's a couple of months ago, but it's still relevant is don't confuse a bull market with what you've done for me and I, and I think about that, especially when you said you're going to do for me. And it was just, it hit both of us between the eyes because he said Paul and Ron, what I really enjoy about working with firms like yours and the advisers you all work with is you protect the downside first and you came up with a strategy and approach called irreplaceable capitol. And so he's like, my, my current advisor didn't do that for me. And they're like, oh, I'm going to get you the best return possible. So I can challenge everyone listening today if you're first call is, hey, what's the return that you can get from me?
Speaker 3:
37:05
When you call an advisor and they don't understand your full situation and all they do is talk about how much return they can get for you. You're not, you're not protecting the downside. And in current markets like we've already been talking about in previous segments are on, I mean it's been a while since we've even had a 5% correction and those happen all the Times in 11 was the last time we had a 20% movement, which you know, that's a long time as well. Yeah, well people forget the first what a 40 some days of last year we were down over 10% that seems like an eternity ago for most people. So I think Ron, one of the things I'm thinking about downside protection is, and this happens a lot, so either our place of employment is a publicly traded company or our family bought a stock a while ago.
Speaker 3:
37:49
So we bought it 10 years ago, 15 years ago, 20 years ago. So we have an emotional thing, we want to keep it, but probably a lot of people, there's concerned about paying the tax man that comes along with it. So let's say you bought the stock in and you know, 2002 so you got in at a really good time and now you've held it for a while and say you now you own $100,000 worth of that stock. But I don't want to sell it because I don't want to pay taxes. And, and often that's the worst decision is because you're not doing any investment research on it. You're not sure where it's gonna go. But what if the, what if we do have that 20% downturn in that 30% downturn or worst yet at 50% downturn and that stock participates paying the tax person has. Okay. If it means you're making gains, and I love when I hear CPA say that because it means the truth, but take some risk off the table. You made money, that's a good thing. Yes. And so de risk it at some point and sure you can look at, okay, what's my break even in terms of if the stock goes down by x dollars and I got to pay that much taxes. But why even go through that emotional thought process and instead help get those decisions off of your plate.
Speaker 2:
38:58
I agree. Yeah. I mean, if you're not taking on more risk because of concentrated stock positions, just makes absolutely no sense. But the opposite is true, is not taking on enough risk that's appropriate for what you're trying to do. And it reminds me of two brothers, they sold their business. They really never had much money ever invested and the their business closed going into the end of 2008 what a great time, um, to have money to invest. And I remember in sitting in the conference room and January of [inaudible] nine and all they wanted to buy was short term bonds because you know, we're talking about, you know, the Dow's it 6,000 what, 562 I think and, and all these news letters. And they had one of those, the Dallas going to 1000 and they're like, we're not going to do anything. And I said, you know, if these great companies go to zero, if Merck goes to zero and Johnson and Johnson goes to zero and we went through and list, you know how many companies in the s and p 500 if they really truly go out of business, do you think your money in a bond or in a bank for that matter, if we have a complete wipe out of the greatest companies in the world.
Speaker 2:
40:09
And so they were very emotional and of course they never did anything but invest in short term bonds. But having a plan and then having some understanding of what you own and what would have to happen. Because the other point is people are going to continue to live in her drive their cars or turn electricity they're going to eat. There's lots of things that have to happen in the economy even if things get bad.
Speaker 3:
40:32
Yeah. So when I think about our business owners who are listening, what are many of us do we stress test our business? So we look at what if something bad happened in our business line and what's your break even point? And where are you going to be comfortable? Where do you go below that and all of a sudden you're not making money? What are you doing the same for your overall investments in your portfolio? I mean, we stress test our portfolios for our clients so that we know how we're managing their risk on. The downside actually is going to pan out if something does move quickly in the market so that they truly are protected.
Speaker 2:
41:04
We do and we, we measure risk all the time. We got very sophisticated ways for modeling out lots of different scenarios. We know by strategy, we know when we can put those strategies together. You know what the downside risk is. I mean, one of the things that we do here at the Carson group is we make the complex simple. But we do that by giving people clarity as to what they own. Um, we, most of our strategies, especially at you're replaceable capital or continuously hedged, we do focus on quality. We don't have any leverage. We don't believe in borrowing money to leverage into investments and then stay flexible. You know, having things that are liquid that you can move most of the portfolio anyways that you have complete flexibility on and that complex. Making the complex simple is really the key to influencing investor behavior and influencing, influencing investor behavior is what really drives success in the longterm.
Speaker 2:
41:58
Yeah, so I mean, Ron, one piece of advice for everyone is if the markets start to sour, don't panic. If you got a plan in place, you're going to have no need to panic. If you don't, then you're turning this into a guessing and it's too late. Yeah, you're start to panic. It's two lanes left. I'm trying to think back, when's the last time you knew when you or somebody you knew panicked and great things came as a result of that panic? It probably just doesn't happen. You're the most recent headlines from money magazine is half of Americans don't know if they can afford to retire. Half of all Americans is probably generous in our estimation based on our experience. The headline might read, most Americans don't know if they can afford to retire and you know why? Because most Americans have absolutely no game plan.
Speaker 2:
42:41
They've made a random series of decisions. They have no family index number. Do you? Do you have a game plan? One of the things we pride ourselves on is our ability to take what's complicated. Make it simple and easy to understand. Imagine how you would feel if you had all your questions answered around knowing exactly how much you can afford to spend in retirement. How long that money would last, how you could save more money on taxes, the most efficient way to withdraw the money from your account and how you could get every single penny out of social security and so much more. Having the plan changes everything. Let us show you with our retirement master plan. This will show you exactly how you can make your money go further in retirement. The initial analysis won't cost you anything. You've got absolutely nothing to lose. If you've saved 100,000 call to schedule your initial analysis right now at eight eight (841) 900-8513 that's (888) 419-8513 I'm Ron Carson, heroin. Paul West. You'll listening to wealth from wisdom and we'll see you next week,
Speaker 5:
43:58
Huh?
Speaker 6:
44:03
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:
44:17
Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth and 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, 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 Cwm, LLC and SEC registered investment advisor.