1 00:00:00,080 --> 00:00:02,320 Speaker 1: Welcome to How the Money. I'm Joel and I and 2 00:00:02,440 --> 00:00:23,360 Speaker 1: Matt and today we're discussing what to do when markets decline. 3 00:00:25,000 --> 00:00:28,720 Speaker 1: Schedule markets declining. It is inevitable, right, It's not a 4 00:00:28,720 --> 00:00:30,800 Speaker 1: matter of if that happens, but it's more of a 5 00:00:30,800 --> 00:00:33,319 Speaker 1: matter of when that happens. So during this episode, we're 6 00:00:33,320 --> 00:00:35,479 Speaker 1: gonna talk about some things that we can do before 7 00:00:35,520 --> 00:00:37,640 Speaker 1: that happens. We're gonna talk about how to respond to 8 00:00:37,800 --> 00:00:41,040 Speaker 1: those changes as they're happening in regards to our investments, 9 00:00:41,040 --> 00:00:44,120 Speaker 1: but not just our investments, are personal finances as well. 10 00:00:44,120 --> 00:00:47,000 Speaker 1: We're going to cover a variety of little topics here. Yeah, 11 00:00:47,040 --> 00:00:50,159 Speaker 1: when Marcus declined, it has far ranging impacts and not 12 00:00:50,240 --> 00:00:53,000 Speaker 1: just on how much money you have in your investment portfolio, 13 00:00:53,080 --> 00:00:55,600 Speaker 1: but it has wide ranging economic impacts. And so there's 14 00:00:55,760 --> 00:00:57,840 Speaker 1: all sorts of things we have to take into consideration 15 00:00:58,160 --> 00:01:00,360 Speaker 1: when markets do decline. And so yeah, we're and get 16 00:01:00,360 --> 00:01:03,000 Speaker 1: into a bunch of that today, dude. But before we do, 17 00:01:03,120 --> 00:01:05,880 Speaker 1: let's talk about Airbnb because it has been a minute. 18 00:01:06,360 --> 00:01:08,959 Speaker 1: If you remember, it was episode one thirty seven, that's 19 00:01:08,959 --> 00:01:11,200 Speaker 1: when we kind of announced that I had my Airbnb 20 00:01:11,319 --> 00:01:13,000 Speaker 1: up and running and it had been going for a 21 00:01:13,000 --> 00:01:15,240 Speaker 1: couple of months at that point, and even before that 22 00:01:15,400 --> 00:01:17,840 Speaker 1: was it episode three that we talked about like should 23 00:01:17,880 --> 00:01:20,200 Speaker 1: we host an airbnb? We've been talking about it for 24 00:01:20,200 --> 00:01:22,360 Speaker 1: a long time, way back in the day. Well, a 25 00:01:22,480 --> 00:01:25,160 Speaker 1: reason I think we've been fascinated with airbnb is because 26 00:01:25,200 --> 00:01:26,679 Speaker 1: some of the appeal of it is that it's a 27 00:01:26,720 --> 00:01:28,680 Speaker 1: way to make some money on the side. Was something 28 00:01:28,880 --> 00:01:30,560 Speaker 1: potentially that you already have, right if you have the 29 00:01:30,600 --> 00:01:32,840 Speaker 1: space in your home. But specifically, one of the ways 30 00:01:32,840 --> 00:01:35,640 Speaker 1: that it's different from these different gigs like driving for 31 00:01:35,800 --> 00:01:37,800 Speaker 1: lift or uber is that it's something that you can 32 00:01:37,840 --> 00:01:42,039 Speaker 1: do without much time or effort put into it right completely, Well, 33 00:01:42,040 --> 00:01:45,440 Speaker 1: turns out that's not the case. It So we had 34 00:01:45,440 --> 00:01:47,680 Speaker 1: our airbnb up and running for you know, for a 35 00:01:47,680 --> 00:01:50,680 Speaker 1: lot of last year, and I tell you what, dude, 36 00:01:50,800 --> 00:01:53,280 Speaker 1: I really enjoyed it. I really enjoyed getting to meet 37 00:01:53,280 --> 00:01:56,280 Speaker 1: all the different folks, get inviting folks into the space 38 00:01:56,280 --> 00:01:58,360 Speaker 1: in our home that we had specially set up for them. 39 00:01:58,760 --> 00:02:01,600 Speaker 1: Basically playing host, drinking alcohol in the front lawn with 40 00:02:01,640 --> 00:02:05,320 Speaker 1: people at an ungodly hour in the morning. Well, that 41 00:02:05,360 --> 00:02:08,400 Speaker 1: happened one time, and it was when they're leaving and 42 00:02:08,480 --> 00:02:09,679 Speaker 1: do you wanted me to have a taste of the 43 00:02:09,720 --> 00:02:12,359 Speaker 1: special liquor from Scottland. I think of Scotland. It wasn't 44 00:02:12,360 --> 00:02:15,160 Speaker 1: a scotsh but it was from Scotland. That will be 45 00:02:15,200 --> 00:02:18,440 Speaker 1: one of my more memorable moments as an Airbnb host. 46 00:02:18,760 --> 00:02:20,600 Speaker 1: But as much fun as all that was, it still 47 00:02:20,680 --> 00:02:23,920 Speaker 1: took a lot more time than we realized, starting with 48 00:02:23,960 --> 00:02:26,520 Speaker 1: communicating digitally with folks when Kate handled all of that, 49 00:02:26,639 --> 00:02:29,480 Speaker 1: but to meeting them in person, showing them the space 50 00:02:29,840 --> 00:02:33,000 Speaker 1: all the way to flipping the space and cleaning it. 51 00:02:33,000 --> 00:02:35,000 Speaker 1: It was more like a part time job, which is 52 00:02:35,040 --> 00:02:36,720 Speaker 1: not what we were hoping for. We were hoping that 53 00:02:36,720 --> 00:02:38,680 Speaker 1: it would end up being something a little more hands off, 54 00:02:39,160 --> 00:02:41,520 Speaker 1: and yeah, that just wasn't the case for us. Yeah, 55 00:02:41,560 --> 00:02:44,520 Speaker 1: you're really getting into kind of the hospitality industry. It 56 00:02:44,639 --> 00:02:48,079 Speaker 1: seems from the outside looking in, just completely different than 57 00:02:48,520 --> 00:02:51,160 Speaker 1: a full time, annual least sort of rental that we 58 00:02:51,200 --> 00:02:54,480 Speaker 1: are typically set up on. You're like charting new territory, 59 00:02:54,720 --> 00:02:57,240 Speaker 1: getting into new waters with the airbnb, and yeah, it 60 00:02:57,240 --> 00:02:59,360 Speaker 1: did seem to suck up a lot more of your 61 00:02:59,360 --> 00:03:01,200 Speaker 1: time than you thought it would. Like you just mentioned 62 00:03:01,200 --> 00:03:03,440 Speaker 1: a traditional lease, that is what we found to be 63 00:03:03,480 --> 00:03:05,720 Speaker 1: the solution, right, And so we were looking for a 64 00:03:05,760 --> 00:03:09,120 Speaker 1: way to eliminate all of the additional time that is 65 00:03:09,160 --> 00:03:12,320 Speaker 1: involved with every single guest that came and stayed out 66 00:03:12,320 --> 00:03:14,960 Speaker 1: our place. Well, with the traditional lease, you don't really 67 00:03:15,000 --> 00:03:16,440 Speaker 1: have to do much of that because they take care 68 00:03:16,440 --> 00:03:17,720 Speaker 1: of the place. They know that, you know, they know 69 00:03:17,720 --> 00:03:18,960 Speaker 1: how to get in. You don't have to show them 70 00:03:18,960 --> 00:03:21,880 Speaker 1: where to park like all those things, and so that, yeah, 71 00:03:21,880 --> 00:03:23,959 Speaker 1: that's that's the solution. So right now we've got a 72 00:03:24,000 --> 00:03:26,800 Speaker 1: guy down there for two months, and let me just 73 00:03:26,840 --> 00:03:29,960 Speaker 1: tell you how great that that has been. Right not 74 00:03:30,080 --> 00:03:32,720 Speaker 1: having to, you know, worry about meeting new guests that 75 00:03:32,760 --> 00:03:34,200 Speaker 1: are showing up, and you know, for Kate to not 76 00:03:34,280 --> 00:03:35,960 Speaker 1: have to worry about flipping the space and making sure 77 00:03:35,960 --> 00:03:37,520 Speaker 1: that it's ready on time for the new guests to 78 00:03:37,520 --> 00:03:40,200 Speaker 1: show up, and added this additional sort of level of 79 00:03:40,240 --> 00:03:42,560 Speaker 1: stress that we realized we weren't willing to take on 80 00:03:42,680 --> 00:03:44,520 Speaker 1: in our lives. I will say though, that there is 81 00:03:44,520 --> 00:03:47,000 Speaker 1: a trade off. We aren't making quite as much money 82 00:03:47,040 --> 00:03:50,000 Speaker 1: as we were when we had it listed on Airbnb. However, 83 00:03:50,440 --> 00:03:53,600 Speaker 1: it is worth the pay cut. Yeah, you know, it 84 00:03:53,600 --> 00:03:55,360 Speaker 1: made me think about the episode that you and I 85 00:03:55,400 --> 00:03:58,600 Speaker 1: did about calculating your hourly wage and knowing kind of 86 00:03:58,640 --> 00:04:01,480 Speaker 1: what you're worth in that regard, And it did seem like, 87 00:04:01,520 --> 00:04:04,400 Speaker 1: with all the hours you were pouring into Airbnb, you're 88 00:04:04,480 --> 00:04:07,960 Speaker 1: devaluing your time because it was taking so much more 89 00:04:08,000 --> 00:04:11,160 Speaker 1: time than you thought it would. You basically became a 90 00:04:11,200 --> 00:04:14,320 Speaker 1: host and a cleaning person and a communicator, and all 91 00:04:14,360 --> 00:04:15,880 Speaker 1: the hours you put into it, if you were to 92 00:04:16,080 --> 00:04:19,920 Speaker 1: factor in the additional you make over kind of instead 93 00:04:19,960 --> 00:04:22,719 Speaker 1: going for short term leases of a couple of months, 94 00:04:22,960 --> 00:04:24,600 Speaker 1: I think you're going to find that what you were 95 00:04:24,680 --> 00:04:27,600 Speaker 1: actually making in running the place. And this differs from 96 00:04:27,640 --> 00:04:30,680 Speaker 1: city to city, circumstance to circumstance. Some people can make 97 00:04:30,720 --> 00:04:33,160 Speaker 1: a killing doing airbnb, or if you do it at 98 00:04:33,160 --> 00:04:35,280 Speaker 1: a bigger level and you've got multiple airbnbs and you've 99 00:04:35,279 --> 00:04:37,520 Speaker 1: got a system in place, then you can do really 100 00:04:37,520 --> 00:04:41,119 Speaker 1: really well. But sometimes just doing one can be really 101 00:04:41,120 --> 00:04:43,880 Speaker 1: really hard. Um, and it does seem like you weren't 102 00:04:43,880 --> 00:04:45,839 Speaker 1: making enough money to make it worthwhile. I mean, we 103 00:04:45,880 --> 00:04:47,800 Speaker 1: did calculate it, and that's why that's why we made 104 00:04:47,839 --> 00:04:51,120 Speaker 1: that decision. Basically, we clearly identified that this is not 105 00:04:51,240 --> 00:04:53,960 Speaker 1: worth our time, and we could have automated check in 106 00:04:54,040 --> 00:04:56,000 Speaker 1: and we could have gotten a cleaner, but all that 107 00:04:56,040 --> 00:04:57,920 Speaker 1: eats into your costs, right, and that would have brought 108 00:04:57,920 --> 00:05:02,080 Speaker 1: the net income from the airbnb down substantially. And so 109 00:05:02,160 --> 00:05:04,000 Speaker 1: I think I mentioned on the episode where we talked 110 00:05:04,000 --> 00:05:06,719 Speaker 1: about hosting the airbnb when it was finally up and running, 111 00:05:06,760 --> 00:05:09,720 Speaker 1: that those previous two months we had made a little 112 00:05:09,720 --> 00:05:12,600 Speaker 1: over sixteen hundred dollars a month, which was pretty solid. 113 00:05:12,800 --> 00:05:14,760 Speaker 1: But last year there were also some slower months where 114 00:05:14,760 --> 00:05:18,280 Speaker 1: we're making closer tow and so on average it came 115 00:05:18,279 --> 00:05:21,040 Speaker 1: out to be about fourteen hundred dollars a month, and 116 00:05:21,240 --> 00:05:24,040 Speaker 1: we currently have the basement rented out for twelve dollars 117 00:05:24,080 --> 00:05:26,039 Speaker 1: a month, and so we're making two hundred dollars less 118 00:05:26,080 --> 00:05:29,279 Speaker 1: a month. But like I said, man worth every penny. 119 00:05:29,400 --> 00:05:31,040 Speaker 1: We have our life back. It's not something we have 120 00:05:31,080 --> 00:05:32,719 Speaker 1: to worry about, and so Joel, the reason I wanted 121 00:05:32,760 --> 00:05:34,960 Speaker 1: to mention this is because if you are hosting an 122 00:05:34,960 --> 00:05:38,039 Speaker 1: Airbnb and maybe you're feeling burned out a little bit, 123 00:05:38,200 --> 00:05:42,200 Speaker 1: well consider not necessarily a full on traditional lease where 124 00:05:42,200 --> 00:05:43,880 Speaker 1: someone is gonna be there for a year. In our case, 125 00:05:43,920 --> 00:05:45,640 Speaker 1: I'm not sure if somebody would want to be there 126 00:05:45,680 --> 00:05:47,160 Speaker 1: for a full year because we don't have a full 127 00:05:47,240 --> 00:05:49,880 Speaker 1: kitchen that you know, it's not quite completely set up 128 00:05:49,920 --> 00:05:53,040 Speaker 1: to be a super long term rental, but it's perfect 129 00:05:53,040 --> 00:05:55,240 Speaker 1: for someone in town for a little bit working on 130 00:05:55,240 --> 00:05:58,000 Speaker 1: a project anywhere between two three or four months something 131 00:05:58,040 --> 00:06:00,520 Speaker 1: like that. And for us, it has been a fantastic 132 00:06:00,560 --> 00:06:03,719 Speaker 1: decision to kind of put the airbnb on hold. Yeah, 133 00:06:03,720 --> 00:06:05,679 Speaker 1: and you gotta be willing to pivot in a moment 134 00:06:05,720 --> 00:06:07,400 Speaker 1: like that, right where you kind of start to get in, 135 00:06:07,440 --> 00:06:09,320 Speaker 1: you kind of start to see how it's working and 136 00:06:09,360 --> 00:06:11,200 Speaker 1: you realize it's just not working out the way that 137 00:06:11,279 --> 00:06:13,760 Speaker 1: you wanted it to. And I think we mentioned on 138 00:06:13,760 --> 00:06:17,440 Speaker 1: the episode Matt about hosting an airbnb how potential government 139 00:06:17,440 --> 00:06:20,240 Speaker 1: shifts and policy can change whether or not you're able 140 00:06:20,240 --> 00:06:22,279 Speaker 1: to even rent an airbnb. So if you're going to 141 00:06:22,279 --> 00:06:24,080 Speaker 1: start hosting an airbnb, you kinda have to be ready 142 00:06:24,120 --> 00:06:27,919 Speaker 1: to shift anyway because of the potential changes in regulations 143 00:06:27,960 --> 00:06:30,040 Speaker 1: where you live. But at the same time, I think 144 00:06:30,080 --> 00:06:32,039 Speaker 1: you need to be willing, just like you did, to 145 00:06:32,120 --> 00:06:33,920 Speaker 1: shift if it's just not working out for you in 146 00:06:33,960 --> 00:06:35,800 Speaker 1: the way that you had hoped. So I think, yeah, 147 00:06:35,839 --> 00:06:38,080 Speaker 1: hosting an airbnb works out for you know a good 148 00:06:38,120 --> 00:06:40,200 Speaker 1: many people, but also just doesn't work out the way 149 00:06:40,240 --> 00:06:41,920 Speaker 1: a lot of people wanted it to. And you really 150 00:06:41,920 --> 00:06:43,960 Speaker 1: have to think about it as getting into the hospitality 151 00:06:44,000 --> 00:06:47,600 Speaker 1: industry and being a landlord of a longer term lease 152 00:06:47,720 --> 00:06:49,960 Speaker 1: is just so much simpler really in the day to day. 153 00:06:50,080 --> 00:06:51,720 Speaker 1: But I'm glad for you guys getting all that time 154 00:06:51,760 --> 00:06:53,520 Speaker 1: back in your life. And you know what, a couple 155 00:06:53,560 --> 00:06:56,320 Speaker 1: hundred bucks totally worth the trade off? Yeah, exactly. Do 156 00:06:56,320 --> 00:06:57,920 Speaker 1: I mean the way we have it currently set up 157 00:06:58,200 --> 00:07:01,160 Speaker 1: completely sustainable or is Airbnb? It just felt like it 158 00:07:01,279 --> 00:07:02,760 Speaker 1: was something that we were not going to be able 159 00:07:02,760 --> 00:07:04,680 Speaker 1: to keep up with at least, you know, in this 160 00:07:04,720 --> 00:07:07,400 Speaker 1: stage in our life. Turns out adding a part time 161 00:07:07,480 --> 00:07:09,720 Speaker 1: job to our full plates in addition to a new 162 00:07:09,760 --> 00:07:13,560 Speaker 1: baby doesn't really fly and not a recipe for success. Exactly. Yeah, 163 00:07:13,600 --> 00:07:15,640 Speaker 1: all right, Matt, Well, let's mention the beer that we're 164 00:07:15,640 --> 00:07:18,360 Speaker 1: having on the show today. We're fortunate enough to have 165 00:07:18,680 --> 00:07:22,560 Speaker 1: a beer called Bretta Weiss from Firestone Walker Brewing Company, 166 00:07:22,760 --> 00:07:25,440 Speaker 1: and this one was given to us by our friend Josh. 167 00:07:25,840 --> 00:07:28,080 Speaker 1: Cannot wait to share this one on the show today 168 00:07:28,120 --> 00:07:30,400 Speaker 1: with you, my friend, Yeah, man, And this is our 169 00:07:30,440 --> 00:07:32,840 Speaker 1: fourth and final beer, and this one in particular is 170 00:07:32,840 --> 00:07:35,360 Speaker 1: going to be really good. I said this one for last. Yeah, 171 00:07:35,440 --> 00:07:38,240 Speaker 1: I'm excited about a buddy. All right, Well, um, we'll 172 00:07:38,240 --> 00:07:40,120 Speaker 1: give our tasting notes on this one at the end 173 00:07:40,160 --> 00:07:42,920 Speaker 1: of the episode. But Matt, let's get onto the subject 174 00:07:43,000 --> 00:07:46,280 Speaker 1: at hand. We're talking about what you do when markets 175 00:07:46,320 --> 00:07:49,680 Speaker 1: are declining. And it's true markets decline from time to time, right, 176 00:07:49,680 --> 00:07:52,600 Speaker 1: we're talking about stock markets, the general economy. There are 177 00:07:52,640 --> 00:07:56,760 Speaker 1: cycles of expansion in cycles of contraction, and when Marcus decline, 178 00:07:56,840 --> 00:08:00,280 Speaker 1: it's a normal occurrence. But it doesn't feel normal. When 179 00:08:00,320 --> 00:08:03,680 Speaker 1: the headlines start to turn dark and gloomy on us, right, 180 00:08:03,720 --> 00:08:06,080 Speaker 1: we start to feel as if we should be changing 181 00:08:06,160 --> 00:08:08,840 Speaker 1: something in our lives anything. All the talking heads on 182 00:08:08,880 --> 00:08:12,200 Speaker 1: TV begin to proclaim more difficulty in the future. And 183 00:08:12,640 --> 00:08:14,680 Speaker 1: we're not like those guys, Matt. We're not here to 184 00:08:14,960 --> 00:08:17,120 Speaker 1: predict a recession or anything like that. And we would 185 00:08:17,160 --> 00:08:18,920 Speaker 1: say that you should be reticent when you hear anyone 186 00:08:19,280 --> 00:08:23,040 Speaker 1: making specific market predictions or saying that they know something 187 00:08:23,120 --> 00:08:26,080 Speaker 1: is coming. But we will see a market decline at 188 00:08:26,120 --> 00:08:28,880 Speaker 1: some point. It's part of the natural cycle of things. 189 00:08:29,120 --> 00:08:31,960 Speaker 1: And so what should we do when that eventual market 190 00:08:31,960 --> 00:08:34,560 Speaker 1: decline arrives. Where should our head be and what sort 191 00:08:34,559 --> 00:08:36,720 Speaker 1: of actions should we be taking? Well, that's what we're 192 00:08:36,760 --> 00:08:39,760 Speaker 1: gonna talk about today. Yeah. Well, the reality is is 193 00:08:39,800 --> 00:08:42,400 Speaker 1: that the stock market is at an all time high 194 00:08:42,720 --> 00:08:46,000 Speaker 1: currently right. In addition to that, we've also seen the 195 00:08:46,040 --> 00:08:49,120 Speaker 1: prices of real estate like they've boomed over the last decade. 196 00:08:49,160 --> 00:08:50,959 Speaker 1: We you know, we recently talked about how a lot 197 00:08:51,000 --> 00:08:54,160 Speaker 1: of folks have likely never experienced the value of their 198 00:08:54,160 --> 00:08:56,640 Speaker 1: homes dropping. A lot of our listeners have never seen 199 00:08:56,679 --> 00:08:59,120 Speaker 1: the value of their four own case go down. This 200 00:08:59,200 --> 00:09:01,839 Speaker 1: is a little really siding, right, And unfortunately, I think 201 00:09:01,920 --> 00:09:05,440 Speaker 1: that most folks overall sentiment is that things will always 202 00:09:05,480 --> 00:09:08,640 Speaker 1: be better tomorrow than they are today. Yes, over the 203 00:09:08,679 --> 00:09:11,800 Speaker 1: long term, values will increase, but we need to be 204 00:09:11,840 --> 00:09:15,720 Speaker 1: a little wary when everyone around us is overly optimistic. 205 00:09:15,760 --> 00:09:18,360 Speaker 1: It reminds me of a warm Buffet quote where he 206 00:09:18,360 --> 00:09:21,520 Speaker 1: says to be fearful when others are greedy, and be 207 00:09:21,679 --> 00:09:25,520 Speaker 1: greedy when others are fearful. These are wise words from 208 00:09:25,679 --> 00:09:28,560 Speaker 1: the He's currently the fourth richest man in the world. 209 00:09:28,679 --> 00:09:30,760 Speaker 1: That's not too shabby. Yeah, And so if we want 210 00:09:30,760 --> 00:09:33,000 Speaker 1: to do well with our money over time, we need 211 00:09:33,040 --> 00:09:36,480 Speaker 1: to think about how we can stomach a market decline 212 00:09:36,679 --> 00:09:39,880 Speaker 1: before it begins. Yeah, and so again, we're not predicting 213 00:09:39,960 --> 00:09:42,240 Speaker 1: anything's coming or around the pike, and we don't trust 214 00:09:42,240 --> 00:09:44,880 Speaker 1: people that do say that. That kind of stuff that's 215 00:09:44,920 --> 00:09:48,960 Speaker 1: headline making material, that's panic conducing stuff that just doesn't 216 00:09:49,040 --> 00:09:53,120 Speaker 1: fit into a personal finance podcast that is all about 217 00:09:53,200 --> 00:09:55,960 Speaker 1: helping people make wise decisions. But it's also important to 218 00:09:55,960 --> 00:09:58,280 Speaker 1: talk about kind of the history of market cycles and 219 00:09:58,280 --> 00:10:01,240 Speaker 1: and the fact that these sorts of corrections do occur 220 00:10:01,679 --> 00:10:04,679 Speaker 1: on a fairly consistent basis. So statistically, Matt, let's talk 221 00:10:04,679 --> 00:10:07,480 Speaker 1: about the good news. First, stock markets rise on average 222 00:10:07,760 --> 00:10:10,560 Speaker 1: seventy seven percent of the time. That's good news, right, 223 00:10:10,600 --> 00:10:13,920 Speaker 1: I like his odds. Yeah, how often do bear markets 224 00:10:13,920 --> 00:10:16,640 Speaker 1: come around? Though? A bear market is, if you're not familiar, 225 00:10:17,400 --> 00:10:21,400 Speaker 1: decline in stock prices, and those happen roughly every three 226 00:10:21,480 --> 00:10:24,720 Speaker 1: point six years, so three times a decade you're going 227 00:10:24,760 --> 00:10:27,400 Speaker 1: to experience a bear market. The great thing about bear 228 00:10:27,480 --> 00:10:29,400 Speaker 1: markets when you look at them statistically, is that they 229 00:10:29,640 --> 00:10:32,280 Speaker 1: really only last around ten months overall. And that's great 230 00:10:32,280 --> 00:10:35,960 Speaker 1: news too. So if we at least know that, on average, 231 00:10:36,000 --> 00:10:39,000 Speaker 1: we're going to experience a bear market every three to 232 00:10:39,080 --> 00:10:41,280 Speaker 1: four years and then it only lasts ten months. It 233 00:10:41,320 --> 00:10:44,000 Speaker 1: kind of can help us get that mental preparation going 234 00:10:44,280 --> 00:10:46,680 Speaker 1: to be able to endure it before it actually happens. Yeah, 235 00:10:46,679 --> 00:10:48,720 Speaker 1: and a little more history for folks. While there have 236 00:10:48,840 --> 00:10:52,959 Speaker 1: been twenty five bear markets, since there have only been 237 00:10:52,960 --> 00:10:57,440 Speaker 1: fourteen recessions. They happen about half as frequently, although they 238 00:10:57,480 --> 00:11:01,360 Speaker 1: represent obviously a bigger decline and worse economic conditions. But 239 00:11:01,559 --> 00:11:04,680 Speaker 1: knowing these numbers and knowing this history, it's really helpful. 240 00:11:05,040 --> 00:11:08,240 Speaker 1: By familiarizing ourselves with the historical outcomes, this can help 241 00:11:08,280 --> 00:11:11,400 Speaker 1: us to get through these tougher economic times. You know, 242 00:11:11,440 --> 00:11:14,600 Speaker 1: this is a perfect example of where knowledge is power. Yeah, 243 00:11:14,640 --> 00:11:17,440 Speaker 1: it's important to acknowledge also that going through a bear 244 00:11:17,559 --> 00:11:21,720 Speaker 1: market or even a recession doesn't just impact the amount 245 00:11:21,920 --> 00:11:24,360 Speaker 1: of money that you have in your investment accounts, in 246 00:11:24,360 --> 00:11:26,640 Speaker 1: your four oh one k R i R. A unemployment 247 00:11:26,679 --> 00:11:29,160 Speaker 1: often goes up. Most of us tend to find ourselves 248 00:11:29,200 --> 00:11:32,240 Speaker 1: on more unstable ground no matter where we're at financially 249 00:11:32,280 --> 00:11:35,320 Speaker 1: currently or where we are in our careers. So after 250 00:11:35,320 --> 00:11:37,120 Speaker 1: the break, we're going to talk about how to handle 251 00:11:37,160 --> 00:11:39,200 Speaker 1: your investments in the case of a market decline, but 252 00:11:39,280 --> 00:11:42,040 Speaker 1: also how to think about your job and your personal 253 00:11:42,080 --> 00:11:53,640 Speaker 1: finances to all right, Joel, we're back from the break. 254 00:11:53,720 --> 00:11:56,040 Speaker 1: Let's talk now about what to do when markets decline 255 00:11:56,360 --> 00:11:59,640 Speaker 1: in regards specifically to your investments, the money that you 256 00:11:59,679 --> 00:12:03,040 Speaker 1: have invested in the market before the market declines. You 257 00:12:03,040 --> 00:12:05,640 Speaker 1: want to make sure that you have your plan written down. 258 00:12:05,960 --> 00:12:09,080 Speaker 1: An investment plans so important despite what the market is 259 00:12:09,120 --> 00:12:11,920 Speaker 1: doing right now and where your emotions are currently. If 260 00:12:11,920 --> 00:12:14,360 Speaker 1: you have a plan that you can stick to, it's 261 00:12:14,360 --> 00:12:17,000 Speaker 1: gonna help you to stay the course. So you should 262 00:12:17,000 --> 00:12:19,640 Speaker 1: take the time now to set some realistic goals for 263 00:12:19,720 --> 00:12:23,000 Speaker 1: how much you can sustainably contribute and the allocation you 264 00:12:23,040 --> 00:12:26,120 Speaker 1: feel comfortable with. Just be careful of being overconfident and 265 00:12:26,120 --> 00:12:29,319 Speaker 1: picking an unsustainable strategy right Like, for instance, you might 266 00:12:29,360 --> 00:12:32,920 Speaker 1: be able to right now invest thirty of your paycheck, 267 00:12:33,160 --> 00:12:35,720 Speaker 1: and while that is amazing, you know, will you be 268 00:12:35,760 --> 00:12:38,680 Speaker 1: able to stay that course, especially once things get harder 269 00:12:38,920 --> 00:12:41,959 Speaker 1: and so answering some basic questions about when you'll need 270 00:12:41,960 --> 00:12:45,080 Speaker 1: that money and how uncomfortable you would feel if you 271 00:12:45,160 --> 00:12:49,160 Speaker 1: experienced a thirty decline in the value of your retirement 272 00:12:49,160 --> 00:12:51,480 Speaker 1: funds like those are things that you need to consider, 273 00:12:51,760 --> 00:12:54,560 Speaker 1: and you know, Joel, actually writing it down will help 274 00:12:54,559 --> 00:12:56,680 Speaker 1: you to stick to that plan no matter what the 275 00:12:56,720 --> 00:12:59,640 Speaker 1: market conditions are. Yeah, Matt, and you mentioned the percentage 276 00:12:59,720 --> 00:13:01,960 Speaker 1: of your income that's going towards investments, and that's definitely 277 00:13:01,960 --> 00:13:03,840 Speaker 1: a consideration that needs to be a part of any 278 00:13:03,880 --> 00:13:06,200 Speaker 1: investment plan that you write out. But at the same time, 279 00:13:06,240 --> 00:13:08,599 Speaker 1: you also need to think about what you're invested in 280 00:13:08,600 --> 00:13:11,160 Speaker 1: in your retirement accounts. And we have no problem with 281 00:13:11,480 --> 00:13:14,680 Speaker 1: younger individuals who are in the wealth building phase of 282 00:13:14,679 --> 00:13:20,480 Speaker 1: their life being exposed to the stock market in equities, 283 00:13:20,840 --> 00:13:23,360 Speaker 1: but there are also a lot of people that would 284 00:13:23,360 --> 00:13:27,720 Speaker 1: see their stomach turn if they had a thirty portfolio drop, 285 00:13:27,960 --> 00:13:30,160 Speaker 1: and so those are the kind of people who need 286 00:13:30,200 --> 00:13:33,920 Speaker 1: to allocate their money differently inside their investment account. They 287 00:13:33,920 --> 00:13:37,440 Speaker 1: need to be looking instead into a more balanced approach 288 00:13:37,480 --> 00:13:40,439 Speaker 1: to their investments. But it's so important to ask those 289 00:13:40,520 --> 00:13:43,559 Speaker 1: questions ahead of time, to put your mind there as 290 00:13:43,559 --> 00:13:46,240 Speaker 1: to what kind of behavior you think you might exhibit 291 00:13:46,480 --> 00:13:50,080 Speaker 1: were the market to experience like severe losses to that extent, 292 00:13:50,440 --> 00:13:52,400 Speaker 1: and having that written plan is just so useful in 293 00:13:52,440 --> 00:13:55,199 Speaker 1: guiding you forward when you do get into the middle. 294 00:13:55,280 --> 00:13:58,480 Speaker 1: The heart of more difficult circumstances. Yeah, well, let's talk 295 00:13:58,600 --> 00:14:01,160 Speaker 1: now about modifying your plan, right, And so this is 296 00:14:01,400 --> 00:14:03,360 Speaker 1: sort of more of a pre emptive step as well. 297 00:14:03,400 --> 00:14:06,160 Speaker 1: But if you're no longer in the growth stage of investing, 298 00:14:06,400 --> 00:14:09,720 Speaker 1: you might want to consider shifting to more conservative investments. 299 00:14:10,440 --> 00:14:13,559 Speaker 1: And so, in the simplest terms, this means having less 300 00:14:13,559 --> 00:14:16,920 Speaker 1: of your invested assets in stocks and more in bonds 301 00:14:17,320 --> 00:14:20,240 Speaker 1: or even cash if you have an immediate need of 302 00:14:20,280 --> 00:14:22,880 Speaker 1: those funds. So this smooths out the ride and will 303 00:14:22,880 --> 00:14:26,800 Speaker 1: make wild market swings less impactful on your portfolio. This 304 00:14:26,880 --> 00:14:30,480 Speaker 1: approach will allow you to comfortably whether a downturn and honestly, 305 00:14:30,520 --> 00:14:32,440 Speaker 1: Jill like an even easier way, like if you want 306 00:14:32,440 --> 00:14:34,160 Speaker 1: to hit the easy button, just look to the different 307 00:14:34,200 --> 00:14:38,400 Speaker 1: target date retirement funds because they automatically shift your money 308 00:14:38,480 --> 00:14:41,800 Speaker 1: towards more conservative investments like bonds. Yeah, and even if 309 00:14:41,840 --> 00:14:44,200 Speaker 1: you start seeing headlines like the SMP of our hundred 310 00:14:44,360 --> 00:14:48,520 Speaker 1: or the Dow Jones industrial averages down, you know over 311 00:14:48,560 --> 00:14:52,080 Speaker 1: a year period, because we're in this massive recession, your 312 00:14:52,120 --> 00:14:55,800 Speaker 1: portfolio is not sustaining those losses because you are more 313 00:14:55,840 --> 00:14:58,840 Speaker 1: widely diversified and more of your money is put into 314 00:14:59,000 --> 00:15:02,200 Speaker 1: conservative investment like cash and bonds, and that's just gonna 315 00:15:02,200 --> 00:15:03,920 Speaker 1: make it much easier to sleep at night if you 316 00:15:03,960 --> 00:15:06,720 Speaker 1: need ready access to those funds in the very near future, 317 00:15:07,000 --> 00:15:09,760 Speaker 1: because yeah, I can't imagine a whole lot of worse 318 00:15:09,840 --> 00:15:13,040 Speaker 1: financial scenarios than being super close to retirement and needing 319 00:15:13,040 --> 00:15:15,240 Speaker 1: that money and seeing your balance drop like a rock. 320 00:15:15,640 --> 00:15:18,320 Speaker 1: And basically, if you're not super close to retirement, you're 321 00:15:18,360 --> 00:15:21,560 Speaker 1: not thinking about preserving your money and keeping that nest 322 00:15:21,640 --> 00:15:24,240 Speaker 1: egg intact, and you are in the wealth building phase 323 00:15:24,280 --> 00:15:27,040 Speaker 1: of life. We would say, basically the way you should 324 00:15:27,040 --> 00:15:29,880 Speaker 1: think about a market downturn is that the stock markets 325 00:15:29,920 --> 00:15:32,120 Speaker 1: on sale, and when you find yourself in a bear 326 00:15:32,200 --> 00:15:35,600 Speaker 1: market where values are dropping like crazy and you are 327 00:15:35,640 --> 00:15:38,400 Speaker 1: in that stage of life, it's time to buy. And 328 00:15:38,400 --> 00:15:40,800 Speaker 1: this is easier said than done, especially in the moment. 329 00:15:40,800 --> 00:15:43,040 Speaker 1: We have a hard time thinking like this right as 330 00:15:43,240 --> 00:15:45,960 Speaker 1: as all the headlines predict doom and gloom. But it's 331 00:15:46,000 --> 00:15:47,880 Speaker 1: all the more reason to include this in your plan, 332 00:15:48,280 --> 00:15:50,920 Speaker 1: and you call out specific numbers. If the SMP five 333 00:15:51,280 --> 00:15:54,560 Speaker 1: does dip into bear market territory, let's say, maybe that's 334 00:15:54,600 --> 00:15:57,640 Speaker 1: a trigger for you to pop in extra money into 335 00:15:57,680 --> 00:15:59,560 Speaker 1: your roth Ira or your four ow and k at 336 00:15:59,600 --> 00:16:02,320 Speaker 1: work to bump up the percentage that you're investing, and 337 00:16:02,360 --> 00:16:05,360 Speaker 1: then if things dip even lower, maybe that is caused 338 00:16:05,360 --> 00:16:07,920 Speaker 1: for you to invest even more. Yeah, Joe, what we're 339 00:16:07,920 --> 00:16:12,000 Speaker 1: talking about here is basically being opportunistic, right, Looking for 340 00:16:12,040 --> 00:16:15,640 Speaker 1: a deal isn't a bad thing. In every other area 341 00:16:15,640 --> 00:16:17,600 Speaker 1: of our life, we get excited about finding a great 342 00:16:17,640 --> 00:16:20,600 Speaker 1: deal when things are on sale, like we pounce on it. 343 00:16:20,640 --> 00:16:23,479 Speaker 1: But for some reason, with the stock market, the opposite 344 00:16:23,560 --> 00:16:25,360 Speaker 1: is true. When we see it dropping, we tend to 345 00:16:25,360 --> 00:16:27,160 Speaker 1: like run the other way and we're afraid to put 346 00:16:27,200 --> 00:16:29,360 Speaker 1: money in because I guess we're afraid that we're gonna 347 00:16:29,360 --> 00:16:31,200 Speaker 1: lose all of our money, but we know, based on 348 00:16:31,280 --> 00:16:34,080 Speaker 1: historical data that that is not the case. Yeah, Black Friday, 349 00:16:34,120 --> 00:16:36,320 Speaker 1: we get pumped about the TV sales, and then you 350 00:16:36,360 --> 00:16:38,120 Speaker 1: don't run the other way when you see a good sale, 351 00:16:38,200 --> 00:16:42,640 Speaker 1: like around Thanksgiving, Right, yeah, exactly, You're you're participating, You're um, 352 00:16:42,680 --> 00:16:44,520 Speaker 1: You're thankful for the lower price. But when it comes 353 00:16:44,560 --> 00:16:47,000 Speaker 1: to stock market investing, usually we have the opposite reaction 354 00:16:47,200 --> 00:16:49,080 Speaker 1: freak out. Yeah, and especially for in it for the 355 00:16:49,080 --> 00:16:51,480 Speaker 1: long term, we do have to have that markets are 356 00:16:51,480 --> 00:16:54,400 Speaker 1: on sale mentality, and it's time for me to hopefully 357 00:16:54,880 --> 00:16:57,680 Speaker 1: if we have the fundamentals in place in our personal finances, 358 00:16:57,960 --> 00:17:00,880 Speaker 1: the ability to up our contribution level. And so what 359 00:17:00,880 --> 00:17:02,880 Speaker 1: we're talking about here is making sure that we behave 360 00:17:03,000 --> 00:17:06,640 Speaker 1: according to the plan that we've created. Right, we want 361 00:17:06,640 --> 00:17:09,240 Speaker 1: to make sure that we shure up our natural behavioral 362 00:17:09,240 --> 00:17:13,240 Speaker 1: tendencies in order to stay the course. These dips are temporary, 363 00:17:13,280 --> 00:17:16,359 Speaker 1: and so the idea is to keep ourselves from making 364 00:17:16,359 --> 00:17:19,040 Speaker 1: bad moves during these downturns. And I think a lot 365 00:17:19,080 --> 00:17:21,919 Speaker 1: of times we know this knowledge, like this isn't a 366 00:17:21,960 --> 00:17:24,200 Speaker 1: matter of like do I know the right thing to do? 367 00:17:24,400 --> 00:17:26,320 Speaker 1: Like we know the right thing to do, we just 368 00:17:26,760 --> 00:17:28,919 Speaker 1: don't do the right thing in the moment. Yeah, And 369 00:17:28,960 --> 00:17:31,720 Speaker 1: I think, yeah, just like having the knowledge of the 370 00:17:31,840 --> 00:17:34,560 Speaker 1: history and what a typical bear market looks like going 371 00:17:34,640 --> 00:17:37,240 Speaker 1: into it with that in our brains, it can be 372 00:17:37,320 --> 00:17:40,600 Speaker 1: really helpful and instrumental in helping us stay the course well. 373 00:17:40,640 --> 00:17:44,880 Speaker 1: Knowing ourselves, knowing our behavioral tendencies is key to So 374 00:17:45,119 --> 00:17:47,320 Speaker 1: just being aware of the fact that we might freak 375 00:17:47,359 --> 00:17:50,000 Speaker 1: out if we saw our four oh one k balance 376 00:17:50,040 --> 00:17:53,480 Speaker 1: take a nose dive. That alone can stop us from 377 00:17:53,480 --> 00:17:56,200 Speaker 1: making some sort of a knee jerk reaction. We can't 378 00:17:56,240 --> 00:18:00,159 Speaker 1: create necessarily a realistic simulation, but trying to imagine what 379 00:18:00,240 --> 00:18:02,480 Speaker 1: it would be like and mentally kind of putting ourselves 380 00:18:02,480 --> 00:18:04,919 Speaker 1: in that place can be really helpful for us to 381 00:18:04,960 --> 00:18:08,240 Speaker 1: assess whether we can handle it or not. That ability 382 00:18:08,280 --> 00:18:11,640 Speaker 1: to kind of know ourselves and our tendencies, our personality 383 00:18:11,640 --> 00:18:13,640 Speaker 1: type probably has a lot to do with that can 384 00:18:13,720 --> 00:18:16,480 Speaker 1: really influence how we allocate our funds and then how 385 00:18:16,520 --> 00:18:20,360 Speaker 1: we actually react when the market does experience a downturn. 386 00:18:20,640 --> 00:18:24,000 Speaker 1: And Man, I think another major behavioral influence on us, 387 00:18:24,119 --> 00:18:27,119 Speaker 1: especially during these sort of times that we've hinted at 388 00:18:27,160 --> 00:18:30,200 Speaker 1: it is the media and hype culture. They're so prevalent 389 00:18:30,240 --> 00:18:32,720 Speaker 1: in this day and age, right, they have this insane 390 00:18:32,760 --> 00:18:37,080 Speaker 1: ability to make something bad look like doomsday is here, right, 391 00:18:37,080 --> 00:18:39,680 Speaker 1: and especially when it comes to financial news. So tune 392 00:18:39,680 --> 00:18:42,360 Speaker 1: that stuff out. It's not helpful, and in all likelihood, 393 00:18:42,359 --> 00:18:44,560 Speaker 1: the more you tune into it, the more you're gonna 394 00:18:44,600 --> 00:18:47,399 Speaker 1: be likely to make moves that you shouldn't based on 395 00:18:47,480 --> 00:18:49,520 Speaker 1: everyone else losing your heads. You want to be able 396 00:18:49,560 --> 00:18:52,040 Speaker 1: to stick to your plan, and part of that is 397 00:18:52,080 --> 00:18:54,639 Speaker 1: the ability to tune out the people on TV that 398 00:18:54,680 --> 00:18:56,960 Speaker 1: are freaking out. Yeah, man, we need to take those 399 00:18:56,960 --> 00:19:00,760 Speaker 1: steps to remove ourselves from becoming obsessed with what the 400 00:19:00,760 --> 00:19:02,879 Speaker 1: market is actually doing. You know, we don't need to 401 00:19:02,880 --> 00:19:05,600 Speaker 1: look at our account statements while the market is in 402 00:19:05,640 --> 00:19:08,560 Speaker 1: that decline. And this might even sound crazy to some folks, 403 00:19:08,600 --> 00:19:12,240 Speaker 1: but maybe even consider changing your password and letting your 404 00:19:12,280 --> 00:19:15,880 Speaker 1: partner or a you know, highly trusted best friend keep 405 00:19:15,920 --> 00:19:18,800 Speaker 1: that information for you. Just anything to keep you from checking, 406 00:19:18,880 --> 00:19:22,600 Speaker 1: from obsessing in worst case scenario, keeping you from making 407 00:19:22,720 --> 00:19:26,000 Speaker 1: a bad decision that could have a disastrous effect on 408 00:19:26,080 --> 00:19:28,199 Speaker 1: your finances for the long haul. Yeah. Matter, if you're 409 00:19:28,200 --> 00:19:30,520 Speaker 1: getting paper statements, toss them straight in the recycling bin, 410 00:19:30,560 --> 00:19:32,680 Speaker 1: don't open them up. Well before that, you should probably 411 00:19:32,680 --> 00:19:35,280 Speaker 1: be enrolled in paperless statements anyway, right, sure you don't 412 00:19:35,320 --> 00:19:36,920 Speaker 1: need that paper in your life. Yeah, either way, either 413 00:19:36,920 --> 00:19:39,240 Speaker 1: way you go, but you you should be not opening 414 00:19:39,240 --> 00:19:41,919 Speaker 1: the emails or just straight up deleting them or tossing 415 00:19:41,920 --> 00:19:45,040 Speaker 1: those paper statements in the trash either way, like opening 416 00:19:45,040 --> 00:19:47,280 Speaker 1: those statements, you're gonna hear around the water cool or 417 00:19:47,280 --> 00:19:49,360 Speaker 1: you're gonna know markets earned decline. But if you can 418 00:19:49,400 --> 00:19:51,280 Speaker 1: tune out the media for the most part, not look 419 00:19:51,320 --> 00:19:54,440 Speaker 1: at your statements unless you're checking. The less you're thinking 420 00:19:54,440 --> 00:19:56,400 Speaker 1: about it, and the more likely you are to stay 421 00:19:56,440 --> 00:19:59,159 Speaker 1: the course. Yeah, by putting yourself on an information diet, 422 00:19:59,200 --> 00:20:02,920 Speaker 1: basically you're you're hopefully able to keep yourself from panicking. Right, 423 00:20:03,160 --> 00:20:04,800 Speaker 1: Like we said, the worst thing that we can do 424 00:20:05,200 --> 00:20:07,960 Speaker 1: is to freak out and you know, start selling at 425 00:20:08,000 --> 00:20:10,959 Speaker 1: the exact wrong time. So, you know, earlier we mentioned 426 00:20:10,960 --> 00:20:12,800 Speaker 1: how maybe a lot of our listeners, how they haven't 427 00:20:12,840 --> 00:20:15,639 Speaker 1: experienced a huge downturn in the market. I'll say that 428 00:20:15,680 --> 00:20:18,480 Speaker 1: I'm one of those people. I didn't start seriously investing 429 00:20:18,560 --> 00:20:20,800 Speaker 1: in the market until about ten years ago, and that 430 00:20:20,840 --> 00:20:23,200 Speaker 1: was after the housing crash. And so while I had 431 00:20:23,359 --> 00:20:25,800 Speaker 1: dabbled a little bit in investing up until that point, 432 00:20:25,960 --> 00:20:27,920 Speaker 1: I didn't have tens of thousands of dollars, right, I 433 00:20:27,920 --> 00:20:30,200 Speaker 1: didn't have hundreds of thousands of dollars on the line. 434 00:20:30,680 --> 00:20:32,240 Speaker 1: And so while I would like to think that I 435 00:20:32,240 --> 00:20:35,280 Speaker 1: would do the right thing, Well, the markets haven't put 436 00:20:35,320 --> 00:20:37,680 Speaker 1: me to the test. Yeah, not yet, but it's gonna happen. 437 00:20:37,720 --> 00:20:40,200 Speaker 1: I mean, statistically, it's going to happen at some point. 438 00:20:40,400 --> 00:20:42,040 Speaker 1: And until we just have to be ready for that. 439 00:20:42,200 --> 00:20:44,240 Speaker 1: And yeah, Matt, I was in the workforce, and I 440 00:20:44,320 --> 00:20:47,040 Speaker 1: was an investor, I mean not a robust investor. I 441 00:20:47,040 --> 00:20:49,240 Speaker 1: didn't have tons of money. Well, I was working, but 442 00:20:49,280 --> 00:20:52,080 Speaker 1: I just definitely was not investing my money yet. But 443 00:20:52,160 --> 00:20:54,040 Speaker 1: I just think they remember having these conversation with a 444 00:20:54,040 --> 00:20:57,360 Speaker 1: coworker who while the market was in steep decline during 445 00:20:57,400 --> 00:21:00,600 Speaker 1: the great recession of last decade, and he told me, 446 00:21:00,680 --> 00:21:02,760 Speaker 1: you know what, I'm I'm taking a lot of money out. 447 00:21:02,720 --> 00:21:04,520 Speaker 1: I'm I'm pulling it off the table. And I can 448 00:21:04,560 --> 00:21:06,520 Speaker 1: tell he was just freaked out, he was shell shocked, 449 00:21:06,760 --> 00:21:08,680 Speaker 1: and we talked for a while, but he just wasn't 450 00:21:08,680 --> 00:21:12,199 Speaker 1: willing to to change course, and he ended up pulling 451 00:21:12,200 --> 00:21:15,000 Speaker 1: money out when, you know, as we were approaching kind 452 00:21:15,000 --> 00:21:18,000 Speaker 1: of the bottom of where the stock market ended up. 453 00:21:18,400 --> 00:21:20,560 Speaker 1: And when you do that, it's so hard to know 454 00:21:20,880 --> 00:21:23,080 Speaker 1: when to put that money back in. And so many 455 00:21:23,080 --> 00:21:25,679 Speaker 1: people did that at the height of the downturn and 456 00:21:25,680 --> 00:21:27,600 Speaker 1: then missed out on so much of the run up 457 00:21:27,640 --> 00:21:30,439 Speaker 1: of the gains in the following years in you know, 458 00:21:30,480 --> 00:21:33,000 Speaker 1: two thousand ten, two dozen eleven, two dozen twelve, and 459 00:21:33,040 --> 00:21:36,640 Speaker 1: so yeah, I mean basically every year since then, right, exactly, 460 00:21:36,840 --> 00:21:40,040 Speaker 1: and so yeah, I remember that conversation distinctly and kind 461 00:21:40,040 --> 00:21:42,040 Speaker 1: of the way panic can set in, how it can 462 00:21:42,080 --> 00:21:44,639 Speaker 1: become so hard to stay the course, and especially if 463 00:21:44,640 --> 00:21:46,520 Speaker 1: you don't have a plan to rely on, or or 464 00:21:46,600 --> 00:21:48,400 Speaker 1: knowing the history of the market at the same time. 465 00:21:48,600 --> 00:21:52,520 Speaker 1: But yeah, panicking and panic selling is is truly the 466 00:21:52,560 --> 00:21:55,120 Speaker 1: worst thing that you can do. You're baking in your 467 00:21:55,160 --> 00:21:59,360 Speaker 1: losses and you're not exposing that money towards the future upside. 468 00:21:59,440 --> 00:22:01,920 Speaker 1: That's around the corner when the recovery begins, and you'll 469 00:22:01,960 --> 00:22:04,120 Speaker 1: market downturns. They don't just affect the amount of money 470 00:22:04,200 --> 00:22:07,240 Speaker 1: that you have invested in the market for retirement. It 471 00:22:07,280 --> 00:22:10,480 Speaker 1: has implications into other areas of our lives, like employment 472 00:22:10,840 --> 00:22:13,199 Speaker 1: and other aspects of our personal finances as well. So 473 00:22:13,200 --> 00:22:16,280 Speaker 1: we're gonna get to those right after the break. M 474 00:22:24,840 --> 00:22:27,560 Speaker 1: all right, Matt, we're back in when markets decline. I mean, 475 00:22:27,600 --> 00:22:29,440 Speaker 1: there are a lot of things that happened, and so 476 00:22:29,480 --> 00:22:31,600 Speaker 1: many of the things that do happen are out of 477 00:22:31,640 --> 00:22:33,479 Speaker 1: our control. You know, we just talked about having an 478 00:22:33,480 --> 00:22:37,400 Speaker 1: investment plan, and that's something that you have full control over, right, 479 00:22:37,720 --> 00:22:41,600 Speaker 1: is how you're going to treat your investments when markets 480 00:22:41,600 --> 00:22:43,560 Speaker 1: are hurting. But then there are other things that we 481 00:22:43,600 --> 00:22:47,040 Speaker 1: just have less of an ability to change, And a 482 00:22:47,119 --> 00:22:50,359 Speaker 1: lot of things in particular happen in the employment market 483 00:22:50,680 --> 00:22:53,439 Speaker 1: when the overall economy isn't doing so hot, and so 484 00:22:53,520 --> 00:22:55,560 Speaker 1: it's important to kind of discuss that and the implications 485 00:22:55,560 --> 00:22:58,920 Speaker 1: that it can have for us as employees. So if 486 00:22:58,920 --> 00:23:00,760 Speaker 1: you're like most folks and you work for a company, 487 00:23:01,000 --> 00:23:03,320 Speaker 1: hard times might be ahead and it's something that you 488 00:23:03,359 --> 00:23:07,359 Speaker 1: have to think about now before we get into that situation. Yeah, 489 00:23:07,400 --> 00:23:11,560 Speaker 1: it's good to be prepared and declining economic conditions, raises 490 00:23:11,760 --> 00:23:15,119 Speaker 1: will likely be few and far between, not that they've 491 00:23:15,119 --> 00:23:18,760 Speaker 1: been great even in a strong recent economy, but you 492 00:23:18,840 --> 00:23:22,640 Speaker 1: might see wage increases completely freeze, and if you get 493 00:23:22,640 --> 00:23:26,120 Speaker 1: paid hourly, you are likely looking at fewer hours as 494 00:23:26,200 --> 00:23:28,919 Speaker 1: your boss or your manager is looking to keep the 495 00:23:28,960 --> 00:23:31,480 Speaker 1: numbers in the black. So even if you don't lose 496 00:23:31,520 --> 00:23:34,679 Speaker 1: your job, your paycheck could be smaller. Yeah, man, I 497 00:23:34,720 --> 00:23:37,520 Speaker 1: feel like to when we're talking about what things look 498 00:23:37,560 --> 00:23:40,480 Speaker 1: like in the office. Typically in an economic downturn, there's 499 00:23:40,520 --> 00:23:43,640 Speaker 1: lots more grumbling, like the overall work environment can start 500 00:23:43,640 --> 00:23:45,720 Speaker 1: to go south and it and it might even become toxic. 501 00:23:46,119 --> 00:23:48,760 Speaker 1: So just like kind of right now, as the stock 502 00:23:48,760 --> 00:23:51,240 Speaker 1: market is at all time highs, there's a lot of 503 00:23:51,240 --> 00:23:55,120 Speaker 1: oftentimes excitement about the potential. There's there's more hires coming in, 504 00:23:55,280 --> 00:23:57,520 Speaker 1: there are more projects on the line. People are more 505 00:23:57,560 --> 00:23:59,880 Speaker 1: optimistic about what the company is up to, and people 506 00:23:59,880 --> 00:24:02,760 Speaker 1: are spending more money because they're optimists. Yeah exactly, Yeah, 507 00:24:02,800 --> 00:24:04,760 Speaker 1: they're they're pumps. They see their four own k and 508 00:24:04,800 --> 00:24:06,680 Speaker 1: they just think they can spend more of their paycheck 509 00:24:06,720 --> 00:24:08,760 Speaker 1: in the here and now. But the grumbling kind of 510 00:24:08,760 --> 00:24:10,480 Speaker 1: starts to take over and not gonna have an effect 511 00:24:10,720 --> 00:24:13,359 Speaker 1: in a workplace environment. And then ultimately, in a really 512 00:24:13,359 --> 00:24:16,639 Speaker 1: tough economy, your company might start looking to downsize and 513 00:24:16,800 --> 00:24:19,920 Speaker 1: it's impossible to fully plan ahead for losing your job, 514 00:24:20,200 --> 00:24:22,640 Speaker 1: but it's really important to be aware that that's a possibility, 515 00:24:22,960 --> 00:24:25,600 Speaker 1: and so yeah, don't be blindsided by that completely. But 516 00:24:25,720 --> 00:24:29,680 Speaker 1: because of all these possibilities of raises being cut off 517 00:24:30,000 --> 00:24:33,960 Speaker 1: and even at the worst possible potential of becoming unemployed 518 00:24:34,400 --> 00:24:36,639 Speaker 1: in an economy that's not doing so hot well, that 519 00:24:36,720 --> 00:24:38,520 Speaker 1: leads to a lot of things that we need to 520 00:24:38,520 --> 00:24:41,520 Speaker 1: do individually in order to get prepared for a potential 521 00:24:41,680 --> 00:24:43,920 Speaker 1: market decline, right, Matt, Yeah, Joe, And you know, when 522 00:24:43,920 --> 00:24:46,200 Speaker 1: you are employed, these are things you don't have a 523 00:24:46,200 --> 00:24:48,159 Speaker 1: ton of control over. Like, obviously, this is not the 524 00:24:48,200 --> 00:24:50,359 Speaker 1: time to be slacking on the job, right, Like you 525 00:24:50,359 --> 00:24:52,800 Speaker 1: want to show initiative, you want to work hard, but 526 00:24:52,800 --> 00:24:54,440 Speaker 1: there's only so much you can do at your company. 527 00:24:54,640 --> 00:24:57,480 Speaker 1: I mean, I should stop slacking now, Yeah, stop slacking, 528 00:24:57,520 --> 00:24:59,760 Speaker 1: work harder, Okay, make sure you don't get fired. That's 529 00:24:59,800 --> 00:25:03,720 Speaker 1: kind vice. And so we were talking earlier too about news, right, 530 00:25:03,800 --> 00:25:06,400 Speaker 1: and what media that we are allowing into our lives, 531 00:25:06,760 --> 00:25:09,960 Speaker 1: and so you know, it doesn't mean completely ignoring the news, 532 00:25:10,200 --> 00:25:14,000 Speaker 1: but it does mean maybe considering to proactively do the 533 00:25:14,040 --> 00:25:16,600 Speaker 1: exact opposite of what everyone else is doing in order 534 00:25:16,600 --> 00:25:18,640 Speaker 1: to prepare. I like that idea, man, I like doing 535 00:25:18,640 --> 00:25:21,040 Speaker 1: the exact opposite of what everyone else is into. And 536 00:25:21,320 --> 00:25:23,200 Speaker 1: you know, if you think, like Warren Buffett, you want 537 00:25:23,200 --> 00:25:25,720 Speaker 1: to zig while everyone else is acting. Yeah, that's definitely 538 00:25:25,880 --> 00:25:28,120 Speaker 1: that's definitely true. So I think, yeah, if we're talking 539 00:25:28,119 --> 00:25:30,760 Speaker 1: about that, what do we do to kind of supercharge 540 00:25:30,800 --> 00:25:34,320 Speaker 1: our personal finances to withstand a tougher economy when markets 541 00:25:34,320 --> 00:25:36,800 Speaker 1: turned decline? Well, I think one of the main things 542 00:25:37,000 --> 00:25:41,080 Speaker 1: is to increase our savings right, and specifically increase how 543 00:25:41,200 --> 00:25:44,840 Speaker 1: much we're allocating towards cash on hand that's easy to 544 00:25:44,880 --> 00:25:48,000 Speaker 1: tap and minimally that means to have a fully stocked 545 00:25:48,000 --> 00:25:51,480 Speaker 1: emergency fund, and having that sort of cash on hand 546 00:25:51,600 --> 00:25:55,080 Speaker 1: is is huge, specifically in hard times, because let's say 547 00:25:55,160 --> 00:25:57,680 Speaker 1: you do lose your job, it doesn't matter how much 548 00:25:57,720 --> 00:25:59,800 Speaker 1: money you have in a four oh one K that 549 00:25:59,840 --> 00:26:03,560 Speaker 1: you can't tap until your late fifties. What matters is 550 00:26:03,680 --> 00:26:05,639 Speaker 1: how much you have on hand to be able to 551 00:26:05,680 --> 00:26:08,320 Speaker 1: pay rent and buy groceries. And so the more cash 552 00:26:08,400 --> 00:26:11,720 Speaker 1: that you have stored away for a rainy day when 553 00:26:11,840 --> 00:26:13,919 Speaker 1: markets are in decline and when the economy is in 554 00:26:13,920 --> 00:26:17,960 Speaker 1: turbulent times, that's hugely important when we're talking about personal finances. Yeah, 555 00:26:17,960 --> 00:26:19,480 Speaker 1: and Joel, you know, we're not talking about just having 556 00:26:19,560 --> 00:26:22,960 Speaker 1: enough cash on hand to get by, but looking to 557 00:26:23,000 --> 00:26:25,240 Speaker 1: find deals like we talked about earlier, you know, when 558 00:26:25,280 --> 00:26:27,359 Speaker 1: the stock market tanks, Like what if you had a 559 00:26:27,400 --> 00:26:29,720 Speaker 1: lot more cash on hand to be able to put 560 00:26:29,760 --> 00:26:32,119 Speaker 1: into the market while it's at its lowest peak in 561 00:26:32,160 --> 00:26:34,320 Speaker 1: five years or something like that. If you're someone who 562 00:26:34,400 --> 00:26:37,199 Speaker 1: has study employment, whether you're self employed or working at 563 00:26:37,240 --> 00:26:39,720 Speaker 1: a company and you can use the extra cash on 564 00:26:39,760 --> 00:26:42,040 Speaker 1: hand to funnel towards investments when things are in declined. 565 00:26:42,040 --> 00:26:43,719 Speaker 1: That's the way to go, and just think about the 566 00:26:43,720 --> 00:26:46,800 Speaker 1: amazing financial position that that would put you in. It's 567 00:26:46,800 --> 00:26:49,840 Speaker 1: also really important to mention that we should be decreasing 568 00:26:50,359 --> 00:26:53,639 Speaker 1: our debt levels. If you're at your your budget brink 569 00:26:53,920 --> 00:26:56,040 Speaker 1: right in good times, well then where will you be 570 00:26:56,240 --> 00:26:59,600 Speaker 1: when hard times arise? So put extra energy towards paying 571 00:26:59,680 --> 00:27:02,840 Speaker 1: off your debt and doing so quickly. Yeah, more cash 572 00:27:02,880 --> 00:27:05,439 Speaker 1: on hand, less debt in your life. That's a recipe 573 00:27:05,600 --> 00:27:09,000 Speaker 1: for success when you know the economy is struggling and 574 00:27:09,040 --> 00:27:12,600 Speaker 1: that too. Diversification of income can be super helpful when 575 00:27:12,600 --> 00:27:14,240 Speaker 1: we talk about how we weather a storm like this 576 00:27:14,320 --> 00:27:17,840 Speaker 1: and inside hustles, they're really great. Expanding our network is 577 00:27:17,880 --> 00:27:19,720 Speaker 1: another way that I think we need to think about 578 00:27:19,760 --> 00:27:22,600 Speaker 1: this ahead of time. If you're living paycheck to paycheck 579 00:27:22,640 --> 00:27:25,760 Speaker 1: and you're hoping that your employer, whether it's an economic storm, 580 00:27:25,760 --> 00:27:28,240 Speaker 1: well well then it doesn't mean that you are actually 581 00:27:28,280 --> 00:27:30,879 Speaker 1: prepared for this. You need to take some steps now 582 00:27:31,160 --> 00:27:34,040 Speaker 1: to make sure that you can handle your employer's turbulence 583 00:27:34,359 --> 00:27:37,199 Speaker 1: well on your own. And even if you don't have 584 00:27:37,240 --> 00:27:39,679 Speaker 1: the desire or the time to have another source of income, 585 00:27:39,720 --> 00:27:42,080 Speaker 1: to get a side hustle, to have kind of this 586 00:27:42,240 --> 00:27:45,240 Speaker 1: other way of making money. Even if let's say your 587 00:27:45,280 --> 00:27:48,520 Speaker 1: main job was to go away, well, it's really important 588 00:27:48,520 --> 00:27:51,359 Speaker 1: to at least be connecting with people in your network now, 589 00:27:51,800 --> 00:27:55,639 Speaker 1: talking to people in your field, maintaining those connections that 590 00:27:55,640 --> 00:27:58,639 Speaker 1: can pay real dividends in the case of an economic downturn, 591 00:27:58,680 --> 00:28:01,480 Speaker 1: because maybe your employ ere is ends up in a 592 00:28:01,560 --> 00:28:04,160 Speaker 1: rough spot, but other employers are able to weather things 593 00:28:04,160 --> 00:28:06,360 Speaker 1: well and they might still be hiring even though things 594 00:28:06,400 --> 00:28:09,359 Speaker 1: aren't rosy in the overall economy. And because you've maintained 595 00:28:09,359 --> 00:28:11,760 Speaker 1: those network connections, then it just makes it that much 596 00:28:11,760 --> 00:28:14,199 Speaker 1: easier for you to reach out and ask for an 597 00:28:14,240 --> 00:28:17,440 Speaker 1: introduction in order to find that next job when things 598 00:28:17,440 --> 00:28:19,719 Speaker 1: go south that your current one. Yeah man, And so 599 00:28:19,800 --> 00:28:21,760 Speaker 1: not surprisingly, a lot of what we're talking about in 600 00:28:21,760 --> 00:28:24,960 Speaker 1: this episode are things that we talk about all the time, right, 601 00:28:25,080 --> 00:28:27,399 Speaker 1: but I think hopefully there are some key takeaways and 602 00:28:27,440 --> 00:28:31,640 Speaker 1: some key things that are especially relevant when markets are dropping, 603 00:28:31,880 --> 00:28:34,080 Speaker 1: when you do feel that you know potential panic to 604 00:28:34,080 --> 00:28:36,080 Speaker 1: pull your money out of the market at the exact 605 00:28:36,160 --> 00:28:38,440 Speaker 1: wrong time. These are all things that you want to 606 00:28:38,480 --> 00:28:40,320 Speaker 1: make sure that you keep in mind so that you 607 00:28:40,360 --> 00:28:42,600 Speaker 1: are able to weather the storm, not only just weather 608 00:28:42,640 --> 00:28:44,360 Speaker 1: the storm, but maybe even come out the other side 609 00:28:44,360 --> 00:28:47,280 Speaker 1: in slightly better shape. Yeah, And I think when things 610 00:28:47,360 --> 00:28:51,120 Speaker 1: are at their best is a great time to walk 611 00:28:51,160 --> 00:28:53,160 Speaker 1: through some of these scenarios for yourself to come up 612 00:28:53,200 --> 00:28:55,760 Speaker 1: with that investment plan, right, you want to plan ahead, 613 00:28:55,760 --> 00:28:57,640 Speaker 1: plan for the future, and you want to run through 614 00:28:57,680 --> 00:29:00,800 Speaker 1: some of these scenarios before the hearts off starts to hit. 615 00:29:01,040 --> 00:29:02,960 Speaker 1: And I think that is ultimately what's going to lead 616 00:29:03,000 --> 00:29:07,280 Speaker 1: to preparation and the ability to, yeah, hopefully succeed, like 617 00:29:07,320 --> 00:29:09,280 Speaker 1: you said at the end of the day, even after 618 00:29:09,440 --> 00:29:12,640 Speaker 1: some rough market conditions, you know, maybe hit us for 619 00:29:12,720 --> 00:29:15,800 Speaker 1: ten months like an average bearer market, or potentially even longer. 620 00:29:16,000 --> 00:29:18,680 Speaker 1: But we want to be prepared as individuals. We don't 621 00:29:18,720 --> 00:29:20,480 Speaker 1: want to be the kind of people who just cross 622 00:29:20,520 --> 00:29:22,560 Speaker 1: our fingers and hope that everything is gonna be okay. 623 00:29:22,760 --> 00:29:24,800 Speaker 1: Most deaf man, All right, let's go ahead and take 624 00:29:24,840 --> 00:29:27,280 Speaker 1: it back to our beer. This episode, we are drinking 625 00:29:27,800 --> 00:29:30,680 Speaker 1: bread of Vice and that's spelled with a W, you know, 626 00:29:30,720 --> 00:29:33,320 Speaker 1: like W E I S S E, but you pronounced 627 00:29:33,320 --> 00:29:35,640 Speaker 1: it like a pro and you say it vice. I 628 00:29:35,680 --> 00:29:37,120 Speaker 1: don't think I did that at the beginning of did 629 00:29:37,120 --> 00:29:39,440 Speaker 1: you not Know? I think I pronounced it like a 630 00:29:39,600 --> 00:29:42,400 Speaker 1: W like an idiot. Bread of vice. You can say 631 00:29:42,400 --> 00:29:44,760 Speaker 1: it however, breada Weiss either way. But this is a 632 00:29:44,800 --> 00:29:48,280 Speaker 1: Berliner style wheat beer from Firestone Walker, donated to the 633 00:29:48,280 --> 00:29:51,840 Speaker 1: show by our friend Josh Joel. What were your thoughts 634 00:29:51,840 --> 00:29:54,480 Speaker 1: on this beer? Oh? Man, this one was so good. 635 00:29:55,120 --> 00:29:58,760 Speaker 1: It was definitely higher on the sour scale for me. Yes, 636 00:29:59,040 --> 00:30:02,240 Speaker 1: it was very tart, It was funky, It was oaky, 637 00:30:02,480 --> 00:30:06,000 Speaker 1: a little fruity mixed with a high level of tartness 638 00:30:06,080 --> 00:30:08,360 Speaker 1: and acidity. It just kind of was this like kitchen 639 00:30:08,400 --> 00:30:10,400 Speaker 1: sink of a wild ale in my opinion, because it 640 00:30:10,440 --> 00:30:13,560 Speaker 1: had all these incredible elements, and so much of that 641 00:30:13,720 --> 00:30:16,040 Speaker 1: is due to kind of the work of the yeast 642 00:30:16,040 --> 00:30:19,040 Speaker 1: in this beer that really contributes so much to the 643 00:30:19,080 --> 00:30:21,600 Speaker 1: overall flavor profile. Man, you can tell they put a 644 00:30:21,640 --> 00:30:23,560 Speaker 1: lot of thought, a lot of care. This one was 645 00:30:23,640 --> 00:30:26,120 Speaker 1: absolutely delicious. What was your take on this one? Because 646 00:30:26,160 --> 00:30:28,040 Speaker 1: I know this is like one of your all time 647 00:30:28,040 --> 00:30:31,520 Speaker 1: favorite styles. Yeah, this might actually be the best example 648 00:30:31,520 --> 00:30:33,719 Speaker 1: of the style I've ever had in my life. Like 649 00:30:33,720 --> 00:30:35,440 Speaker 1: you said, it's a sour beer for sure. It was 650 00:30:35,520 --> 00:30:37,840 Speaker 1: really bright and acidic, and it did have a touch 651 00:30:37,880 --> 00:30:40,840 Speaker 1: of the funkiness maybe from the barrels when they do 652 00:30:40,920 --> 00:30:44,280 Speaker 1: agent and barrels. It gives it that additional level of complexity. Also, man, 653 00:30:44,320 --> 00:30:46,000 Speaker 1: I felt like there was a touch of sort of 654 00:30:46,000 --> 00:30:48,320 Speaker 1: like pineapple flavor to it. I feel like it had 655 00:30:48,320 --> 00:30:50,840 Speaker 1: some touches of that bright, tropical fruitness, but at the 656 00:30:50,880 --> 00:30:54,240 Speaker 1: same time without being overly sweet. Yeah. I totally got 657 00:30:54,240 --> 00:30:57,680 Speaker 1: that too, And it really added just this nice other 658 00:30:57,800 --> 00:30:59,880 Speaker 1: element to all the other stuff going on in it. 659 00:31:00,080 --> 00:31:02,440 Speaker 1: And so weiss or vice you know, that means wheat, 660 00:31:02,560 --> 00:31:05,360 Speaker 1: and so this is basically a wheat, a sour wheat beer. 661 00:31:05,640 --> 00:31:07,400 Speaker 1: And I decided that if I was going to rename 662 00:31:07,440 --> 00:31:10,120 Speaker 1: this beer, I would call it wheat tart instead of 663 00:31:10,120 --> 00:31:12,680 Speaker 1: a sweet tart. That would be my dumb name for it. 664 00:31:12,720 --> 00:31:14,360 Speaker 1: All right, Well, we can write to the folks at 665 00:31:14,360 --> 00:31:16,480 Speaker 1: Firestone Walker and see if they're up for name suggestions. 666 00:31:16,520 --> 00:31:18,400 Speaker 1: But I don't know if they're gonna take that one 667 00:31:18,480 --> 00:31:21,840 Speaker 1: or not. Sorry, bread device is pretty solid. Yeah, awesome beer. 668 00:31:21,920 --> 00:31:23,920 Speaker 1: Glad to get to enjoy this one with you, my 669 00:31:23,960 --> 00:31:26,440 Speaker 1: friend and thanks again to our buddy Josh for sending 670 00:31:26,440 --> 00:31:28,360 Speaker 1: this one in our way. All Right, Matt, that's gonna 671 00:31:28,400 --> 00:31:30,840 Speaker 1: do it for this episode. Everyone out there listening. If 672 00:31:30,880 --> 00:31:32,600 Speaker 1: you want the show notes for this episode, you can 673 00:31:32,640 --> 00:31:35,480 Speaker 1: find those on our website at how to money dot com. 674 00:31:35,680 --> 00:31:37,800 Speaker 1: And if you're a listener and you haven't yet done this, 675 00:31:37,880 --> 00:31:39,840 Speaker 1: we would be incredibly thankful if you head it over 676 00:31:39,880 --> 00:31:42,800 Speaker 1: to Apple Podcasts, where you could rate and review us. 677 00:31:42,800 --> 00:31:45,440 Speaker 1: Regardless of where you listen to our podcast, we would 678 00:31:45,440 --> 00:31:47,120 Speaker 1: love for you to subscribe so that you don't miss 679 00:31:47,120 --> 00:31:50,120 Speaker 1: an episode. Joel, that's gonna be it for this episode, buddy. 680 00:31:50,200 --> 00:32:00,160 Speaker 1: Until next time, Best friends Out, Best Friends Out, m 681 00:32:00,440 --> 00:32:01,840 Speaker 1: m M