WEBVTT - Timing the Stock Market #037 0:00:00.080 --> 0:00:02.960 Welcome to How the Money. I'm Joel and I'm Matt, 0:00:03.160 --> 0:00:25.319 and today we're discussing timing this stock market. Joel, you 0:00:25.560 --> 0:00:27.920 and I got to go on a double date recently 0:00:28.000 --> 0:00:31.120 with our wives. It never freaking happens in our wives. 0:00:31.120 --> 0:00:34.080 We've been kind of busy past few weeks and our wives. 0:00:34.200 --> 0:00:36.160 Uh surprised this a little bit at our local group 0:00:36.240 --> 0:00:39.600 hub wrecking bar. That was so sweet, man, that was awesome. 0:00:39.680 --> 0:00:41.680 We we neither of us knew. I don't think until 0:00:41.720 --> 0:00:43.640 a very last second. I thought we were just kind 0:00:43.640 --> 0:00:45.720 of having like a dinner hang at our house. Yeah, 0:00:45.920 --> 0:00:49.479 and uh, and I got home and my wife surprised me, 0:00:49.520 --> 0:00:51.280 like last second, like, hey, we're doing We're doing this. 0:00:51.320 --> 0:00:53.680 We're going out, all four of us, and we're hiring 0:00:53.680 --> 0:00:56.160 a babysitter, which we don't normally do because babysitters are 0:00:56.200 --> 0:00:58.760 crazy expensive. That kind of expensive. But it was so 0:00:58.840 --> 0:01:00.640 worth it, man, it was so to get past that. 0:01:01.240 --> 0:01:02.520 It took me a second as well. I was just like, 0:01:02.680 --> 0:01:05.520 we're doing what I was like, and we're going out? 0:01:05.680 --> 0:01:07.840 Is it in the budget? I don't know, but yeah, 0:01:07.840 --> 0:01:09.560 that was totally worth it. We had a blast. It's 0:01:09.560 --> 0:01:11.680 fun to like reconnect as as adults, you know, like 0:01:11.959 --> 0:01:14.360 we've talked about before, how you guys, how we each 0:01:14.360 --> 0:01:16.240 have a date night. And so one night, you guys, 0:01:16.319 --> 0:01:17.440 you and Emily will go out and then I come 0:01:17.440 --> 0:01:20.080 over and babysit your girls and vice versa. Next week 0:01:20.160 --> 0:01:22.000 will be me and Kate and we go out. But 0:01:22.080 --> 0:01:24.080 it's rare that we Yeah, like you said that we 0:01:24.120 --> 0:01:27.240 all get to get together all for adults and get 0:01:27.240 --> 0:01:29.120 some good hangs in, you know, have a have a 0:01:29.160 --> 0:01:31.200 couple of beers and talk about life and kind of 0:01:31.240 --> 0:01:34.440 catch up without feeling like we have to attend to 0:01:34.440 --> 0:01:37.360 the children right away. It's nice, man, Yeah, man, seriously, 0:01:37.440 --> 0:01:39.880 so great. Loved it. By the way, I wanted to 0:01:39.880 --> 0:01:41.800 tell you that I was like pulling out of work 0:01:41.840 --> 0:01:44.800 the other day on my bike. Uh. And the weirdest 0:01:44.840 --> 0:01:47.560 thing about riding my bike to work is that the 0:01:47.600 --> 0:01:50.240 only place to park at work is this giant, enormous 0:01:50.280 --> 0:01:52.240 parking garage and I have to go through three gates 0:01:52.680 --> 0:01:55.640 in order to like a normal car. Yeah, exactly, it's 0:01:55.640 --> 0:01:57.760 so weird. And uh, I was pulling out the other 0:01:57.840 --> 0:02:01.080 day and taking taking my bike down the amp and 0:02:01.800 --> 0:02:04.000 I pulled up next to a guy in his car. 0:02:04.640 --> 0:02:08.480 Uh one of the sales guys at work, and he said, uh, Joel, 0:02:08.600 --> 0:02:10.560 I don't know if you heard this, but they actually 0:02:10.600 --> 0:02:12.960 make cars now. Um, just like kind of making fun 0:02:12.960 --> 0:02:14.880 of me. Was he joking at all or was he 0:02:15.000 --> 0:02:16.959 just kind of was he actually giving a hard time? 0:02:17.080 --> 0:02:18.280 I think a little bit of both. You know, It's 0:02:18.320 --> 0:02:21.359 kind of one of those jokes that I kind of 0:02:21.400 --> 0:02:24.079 wanted to say something. I just sped off because he 0:02:24.120 --> 0:02:25.800 had to wait for the lift gate to go, but 0:02:25.880 --> 0:02:27.560 I kind of wanted to say something about the fact 0:02:27.600 --> 0:02:29.720 that he Yeah, I kind of wanted to say something 0:02:29.720 --> 0:02:31.720 about the fact that he would be sitting in traffic 0:02:31.720 --> 0:02:33.880 for quite a while wait home. Well, I was completely 0:02:33.919 --> 0:02:36.120 avoiding it, but I did not. I was hoping that 0:02:36.160 --> 0:02:37.799 he would have sped off first, and then you would 0:02:37.840 --> 0:02:39.639 have ridden up and just like punched a slide view 0:02:39.639 --> 0:02:42.640 mirror off, like zoomed off off the sidewalk or something 0:02:42.639 --> 0:02:44.560 like that. I'm not against a little bit of social 0:02:44.560 --> 0:02:47.600 disobedience here and there, but that probably wouldn't be cool 0:02:47.600 --> 0:02:49.720 to a co worker. But I just, you know, I 0:02:49.760 --> 0:02:53.120 wanted to say that not everyone has to be into biking. 0:02:53.200 --> 0:02:55.200 That's totally cool, and I know the guy was probably 0:02:55.240 --> 0:02:57.720 pretty much joking but no offense taken, right, But like, 0:02:58.280 --> 0:03:00.800 you don't have to be into biking, but you know what, 0:03:01.320 --> 0:03:04.400 instead of knocking it, give it a try, think about it. Uh. 0:03:04.400 --> 0:03:06.720 And that was again, Matt, that was the first episode 0:03:06.760 --> 0:03:09.080 we ever recorded, because you and I think biking is 0:03:09.200 --> 0:03:12.000 really important. We think it's important because it's good for 0:03:12.360 --> 0:03:15.320 your health. It's good exercise, right, it's good to get 0:03:15.400 --> 0:03:17.320 you out there in your town. There's like so many 0:03:17.360 --> 0:03:20.600 reasons that biking is a social community aspect of it. Yeah, 0:03:20.840 --> 0:03:22.600 you're more connected with your neighbors. And of course it 0:03:22.639 --> 0:03:24.840 saves you money as well. The cost operate a bike 0:03:25.040 --> 0:03:27.760 as compared to a car. You can't compare the two 0:03:27.760 --> 0:03:30.800 bike contests. Bikes are way more affordable as far as 0:03:30.840 --> 0:03:35.600 that goes. Man, I hope he's listening right now, buddy. Yeah, 0:03:35.640 --> 0:03:37.160 I just I wanted to get that out there. You 0:03:37.200 --> 0:03:39.040 don't have to be a bike lover. But if you're 0:03:39.040 --> 0:03:41.560 not currently riding a bike or and you haven't thought 0:03:41.600 --> 0:03:43.960 about it in a while, and you haven't listened our 0:03:43.960 --> 0:03:47.120 first episode, maybe you're a more recent listener to the show. 0:03:47.160 --> 0:03:49.840 You just kind of started listening. Consider listening to episode 0:03:49.840 --> 0:03:53.040 one and thinking about how great bikes are, because I 0:03:53.320 --> 0:03:55.240 gotta say, I just kind of felt bad for him 0:03:55.240 --> 0:03:56.560 that he had to sit in traffic on the way 0:03:56.560 --> 0:03:59.880 home in this box that like makes your back hurt 0:03:59.880 --> 0:04:01.880 and stuff like that and you kind of hate life. 0:04:02.160 --> 0:04:04.000 And for me, I mean, I was getting fresh air 0:04:04.200 --> 0:04:06.920 and enjoying this ride home without sitting in traffic. And 0:04:06.960 --> 0:04:08.760 so I just want to let people know, think about 0:04:08.800 --> 0:04:10.640 listening to episode one if you haven't heard it yet. 0:04:10.760 --> 0:04:13.400 What if he was driving to his gym to sit 0:04:13.480 --> 0:04:17.280 on a bike station, Like, what's what's the fancy exercise bike? Now? 0:04:17.320 --> 0:04:20.560 You see guys peloton? Yeah, I think it's like folks 0:04:20.560 --> 0:04:22.279 are getting them up for their houses now. It's like 0:04:22.279 --> 0:04:24.680 the new It's like the bow flex of the twenty 0:04:25.240 --> 0:04:27.719 or something like that. But you know, I would be 0:04:27.760 --> 0:04:30.000 willing to guess that maybe half the people from your 0:04:30.000 --> 0:04:32.880 building are leaving too, and maybe going to drive somewhere 0:04:32.880 --> 0:04:34.600 to go work out, going to a gym, or going 0:04:34.640 --> 0:04:36.640 to do cross fit, even which is great, it's awesome, 0:04:36.880 --> 0:04:39.400 but still you're driving there. Why not combine the two 0:04:39.640 --> 0:04:42.679 and save money and do something that's better for your city? 0:04:42.800 --> 0:04:44.719 All right, Matt Beer for the day that you and 0:04:44.760 --> 0:04:46.880 I are going to be drinking was sent in from 0:04:46.920 --> 0:04:50.040 a listener. Kevin in North Carolina sent us a few 0:04:50.120 --> 0:04:52.960 awesome beers that I'm super excited to try, and the 0:04:52.960 --> 0:04:56.320 one that we're drinking on this episode is Heist Brewery 0:04:56.720 --> 0:05:02.200 Uber Quenchal imperial I p a Quenchell quench All. All right, 0:05:02.240 --> 0:05:06.400 so let's keep it a crack, hey, Kevin. Two things, 0:05:06.760 --> 0:05:10.640 First of all, you rock, And second, shoot me a 0:05:10.680 --> 0:05:12.440 message on Twitter to let me know how many beers 0:05:12.480 --> 0:05:14.760 you sent Joel to make sure he doesn't like save 0:05:14.880 --> 0:05:17.920 three or four of these in his beer seller is 0:05:17.960 --> 0:05:20.800 the only one he said. Sorry, yeah, I believe that. 0:05:21.560 --> 0:05:23.479 But bhil, Kevin, thank you so much. We really appreciate it. 0:05:23.480 --> 0:05:26.760 We're gonna enjoy this as we talk about timing the 0:05:26.800 --> 0:05:29.080 stock market. But we're gonna save our tasting notes for 0:05:29.120 --> 0:05:31.360 the end, so stick around for that. That's right, Matt, 0:05:31.400 --> 0:05:34.080 So timing the stock market. The first thing I thought of, 0:05:34.120 --> 0:05:36.120 Matt when I was thinking about timing the stock market 0:05:36.480 --> 0:05:39.960 that timing the market is like the equivalent of being 0:05:40.080 --> 0:05:43.360 a Miami Marlins fan. And you're gonna have to explain 0:05:43.400 --> 0:05:44.920 the sports to me, buddy, because you know, I want 0:05:44.960 --> 0:05:46.960 to watch soccer, So all right, I got you back here. 0:05:47.040 --> 0:05:49.760 So the thing is that Miami Marlins have been essentially 0:05:49.880 --> 0:05:52.240 terrible pretty much got their whole history. They were an 0:05:52.240 --> 0:05:55.040 expansion team that launched in like the nineties, and they 0:05:55.080 --> 0:05:58.280 won a World Series in and I think in two 0:05:58.279 --> 0:06:00.880 thousand three, So they've won two Worlds areas randomly, but 0:06:00.880 --> 0:06:03.440 they're these like super random occurrences. Other than that, they've 0:06:03.480 --> 0:06:05.680 just been really bad and they are always every time 0:06:05.720 --> 0:06:07.839 they do have a good team, they essentially sell off 0:06:07.880 --> 0:06:10.280 all their good players the very following year. And so 0:06:10.400 --> 0:06:12.520 being a Miami Marlins fan, let's say you're jumping on 0:06:12.560 --> 0:06:14.279 the bandwagon, you don't know when to route for them 0:06:14.480 --> 0:06:15.800 because you don't know if they're gonna be good that 0:06:15.880 --> 0:06:17.160 year or not. You don't know if you're gonna pick 0:06:17.200 --> 0:06:20.359 that random good year where they're actually gonna do something meaningful, 0:06:20.839 --> 0:06:22.960 you know, in the sport, or if you're just gonna 0:06:22.960 --> 0:06:25.440 be are along for that terrible ride of many years 0:06:25.920 --> 0:06:28.800 where they're just completely awful. Yeah, So what you're saying 0:06:28.839 --> 0:06:32.080 is that it's completely random, uh, and you can't plan 0:06:32.200 --> 0:06:34.080 for it, right. I guess what I'm trying to say 0:06:34.160 --> 0:06:35.839 is you don't know who the man, what the management 0:06:35.839 --> 0:06:37.640 of the Miami Marlins is gonna do. You don't know 0:06:37.680 --> 0:06:39.120 if it's gonna be a good year or it's gonna 0:06:39.120 --> 0:06:41.360 be a bad year, And so you have to be 0:06:41.440 --> 0:06:43.560 you can't just be a bandwagon fan. And just like 0:06:43.560 --> 0:06:46.040 with the stock market, right, it's really hard to decide 0:06:46.080 --> 0:06:48.040 I'm gonna jump in now. Now is the time? Right? 0:06:48.360 --> 0:06:50.040 So we're gonna kind of go through a thought process 0:06:50.040 --> 0:06:53.320 of why timing the market is actually ultimately more harmful 0:06:53.360 --> 0:06:56.200 to your portfolio. And just like being a Marlins fan, 0:06:56.240 --> 0:06:57.279 you kind of have to be in it for the 0:06:57.279 --> 0:06:59.920 long haul, through thick thin to catch those good years, right, 0:07:00.160 --> 0:07:01.440 And the same thing, you don't know when they're going 0:07:01.440 --> 0:07:04.280 to show up, exactly stock market, similar kind of thing. 0:07:04.440 --> 0:07:06.599 And we'll get into more reasons why all it is 0:07:06.600 --> 0:07:09.080 that our friend Patrick got himself on Marlin's hat when 0:07:09.080 --> 0:07:11.080 they rebranded and kind of did that whole sort of 0:07:11.080 --> 0:07:12.800 South Beach to look with the new colors. Has he 0:07:12.840 --> 0:07:15.160 burned it yet? Was that like five six years ago? Yeah, 0:07:15.160 --> 0:07:17.680 something like that. Had they been good since then? Okay? 0:07:18.040 --> 0:07:20.200 Because I'm pretty sure I remember that year because I 0:07:20.200 --> 0:07:22.800 watched some baseball back then, but I remember there being 0:07:23.080 --> 0:07:25.640 reports and shots from the stadium and it was like 0:07:25.680 --> 0:07:29.000 completely empty. Yeah, that's not about right pretty much. They're 0:07:29.000 --> 0:07:31.120 one of the worst attended teams in all of sports. 0:07:32.200 --> 0:07:34.600 So the stock market is actually kind of like the 0:07:34.640 --> 0:07:37.400 opposite of the Marlins though right Like, so essentially, the 0:07:37.440 --> 0:07:39.720 stock market does well most years and there are only 0:07:39.760 --> 0:07:42.080 a few bad years where the Marlins, right, that's the 0:07:42.080 --> 0:07:44.360 exact opposite. And the question right now is, well, the 0:07:44.360 --> 0:07:47.080 stock market is up, and a lot of people are 0:07:47.080 --> 0:07:49.760 wondering if if it's time to sell, or like it's 0:07:49.760 --> 0:07:51.360 too hot, should get out of the kitchen? And the 0:07:51.400 --> 0:07:53.680 other question people are asking is how can I put 0:07:53.720 --> 0:07:55.600 more money into the stock market because it's had a 0:07:55.600 --> 0:07:59.160 fever pitch and they can only see things continuing to 0:07:59.320 --> 0:08:01.320 go up at the same I'm right. And so another 0:08:01.320 --> 0:08:03.680 reason we're talking about this as well is because you'll 0:08:03.760 --> 0:08:06.080 hear in the news how we're entering this long period 0:08:06.080 --> 0:08:08.040 of growth that the stock market is seen. And what 0:08:08.160 --> 0:08:10.520 you've heard is that we're in a bull market where 0:08:10.560 --> 0:08:12.760 the market has been growing. And so it might be 0:08:12.800 --> 0:08:15.680 worth mentioning to the difference between a bear market in 0:08:15.720 --> 0:08:18.480 a bull market. A bull market means that stuff growing, 0:08:18.520 --> 0:08:21.440 stuff doing awesome, prices are going up. It's a good 0:08:21.440 --> 0:08:25.240 time to own stocks in a bull market, whereas a 0:08:25.280 --> 0:08:28.200 bear market it means things are taking things are going down. 0:08:28.640 --> 0:08:31.160 And the reason behind that too is is they say, 0:08:31.480 --> 0:08:33.640 is that like when a bear fights, like he's got 0:08:33.640 --> 0:08:36.000 the call out, the close up, and he's like swiping down, 0:08:36.240 --> 0:08:38.959 whereas the bowl like lifts up with the horns. There 0:08:38.960 --> 0:08:40.520 we go. So that's like, I guess that's how you're 0:08:40.520 --> 0:08:43.280 supposed to remember it. That's some nice insight. That's why 0:08:43.280 --> 0:08:45.040 I keep you around here, buddy. That's pretty good. It's 0:08:45.040 --> 0:08:48.520 pretty bo bull market versus bear market. Yeah, so people 0:08:48.520 --> 0:08:50.280 have been thinking, right for a few years now at 0:08:50.320 --> 0:08:51.920 this point, and we've been in this bull market, and 0:08:51.960 --> 0:08:53.600 match just explain to you what that is. It's just 0:08:53.679 --> 0:08:56.280 essentially this rise in stock prices, and we've been in 0:08:56.280 --> 0:08:59.760 one of the longest prolonged bull markets in US history. 0:09:00.080 --> 0:09:02.360 But yeah, the longest as of a few weeks ago. Yeah, 0:09:02.360 --> 0:09:04.599 so it's been like ten years almost tonight and a 0:09:04.600 --> 0:09:07.240 half years, and so people are thinking, well, they can't 0:09:07.280 --> 0:09:09.560 markets can't keep going up like this, can they? So 0:09:09.679 --> 0:09:12.040 maybe I should sell or on the other side, there's 0:09:12.080 --> 0:09:16.160 this boundless optimism that what goes up must keep going up, 0:09:16.280 --> 0:09:19.640 which is not scientifically possible. And so the answer is no. 0:09:19.760 --> 0:09:23.200 Corrections are always inevitable. But the answer to whether or 0:09:23.240 --> 0:09:26.640 not you can time the market is also no. And 0:09:26.679 --> 0:09:29.520 so let's go into that. Here's a quote from Peter Lynch, 0:09:29.679 --> 0:09:32.400 uh really savvy investor who worked for Fidelity for a 0:09:32.440 --> 0:09:34.839 lot of years. He said, far more money has been 0:09:34.880 --> 0:09:38.920 lost by investors preparing for corrections or trying to anticipate 0:09:38.960 --> 0:09:42.760 corrections then has been lost in corrections themselves. And I 0:09:42.800 --> 0:09:44.959 think that's really a stoop point. So if you are 0:09:45.040 --> 0:09:47.320 in that place where you're thinking, man, I think things 0:09:47.320 --> 0:09:51.079 are about to drop, and so I should position myself 0:09:51.120 --> 0:09:53.320 a little bit differently in order to time the market 0:09:53.360 --> 0:09:55.920 well so that I can then reallocate after the dip 0:09:56.320 --> 0:09:59.600 and do even better right with my investments. Well, I 0:09:59.600 --> 0:10:01.960 think or Lynch's advice here is something we should all 0:10:02.000 --> 0:10:05.000 take into account that preparing for a correction or trying 0:10:05.000 --> 0:10:08.200 to anticipate one and getting in and out of investments 0:10:08.280 --> 0:10:10.840 is actually going to be a place that will ultimately 0:10:10.880 --> 0:10:14.240 hurt us in all likelihood as opposed to help us. Yeah, 0:10:14.280 --> 0:10:16.719 Man and Peter Lynch. He used the fund manager for 0:10:16.800 --> 0:10:22.000 Fidelity of the most successful mutual fund in the history 0:10:22.040 --> 0:10:24.960 of the world, where for thirteen years he'd be a 0:10:24.960 --> 0:10:28.080 big deal. Yeah, that's huge man. For thirteen years that 0:10:28.080 --> 0:10:31.760 fund was earning over So this guy, he knows the stuff, 0:10:31.800 --> 0:10:33.640 he knows what he's talking about, and even him and 0:10:33.679 --> 0:10:35.320 that's the cool thing. You know. We're gonna refer to 0:10:35.400 --> 0:10:37.640 Peter Lynch and we're gonna refer to Warren Buffett in 0:10:37.679 --> 0:10:40.520 this episode. And those two guys, two of the most 0:10:40.559 --> 0:10:44.360 successful investors of all time. They seem to say the 0:10:44.440 --> 0:10:46.640 same thing about timing the market and about a lot 0:10:46.640 --> 0:10:49.679 of other investing strategies, but in timing the market, they 0:10:49.720 --> 0:10:52.959 both seem to say, no, it's not a good idea. 0:10:53.200 --> 0:10:55.240 That's right, man, you can't time on the market. And honestly, 0:10:55.280 --> 0:10:59.120 that's the opposite of typical behavior. Investors are attempted to 0:10:59.160 --> 0:11:02.280 buy more as the market rises. They'll do that thinking 0:11:02.280 --> 0:11:04.240 it will continue at the same pace. Like we mentioned, 0:11:04.240 --> 0:11:09.200 there's a sort of a fear of missing out fomo effect, 0:11:09.559 --> 0:11:12.400 and this leads to an opportune buying and selling and 0:11:12.679 --> 0:11:16.400 almost always ends with a bad result. So that makes 0:11:16.400 --> 0:11:18.000 me think of this Matt. Back in two thousand nine, 0:11:18.040 --> 0:11:20.520 one of my co workers was super nervous about the 0:11:20.520 --> 0:11:23.120 stock market. Right, we were pretty much bottom of the barrel, 0:11:23.559 --> 0:11:25.839 and oh yeah, things have been taking for for years. 0:11:25.840 --> 0:11:29.120 Completely we lost the stock market had lost its value. 0:11:29.160 --> 0:11:31.599 That's called a bear market, yes, And so my co 0:11:31.720 --> 0:11:34.560 worker was super worried, even though he's relatively young, right, 0:11:34.600 --> 0:11:37.160 he was in his late thirties, and he was nervous 0:11:37.559 --> 0:11:39.920 that what am I gonna do? Man, all my you know, 0:11:39.960 --> 0:11:42.840 investment portfolio. You know it's halfway gone. What am I? 0:11:42.880 --> 0:11:45.320 What should I do? And you know, I told him, 0:11:45.400 --> 0:11:47.680 stick with it, You'll be fine, and we'll post a 0:11:47.679 --> 0:11:49.760 link in the show notes to a graph that kind 0:11:49.760 --> 0:11:51.800 of helps you actually see and visualize. It was really 0:11:51.800 --> 0:11:55.480 helpful for me. The history of bowl markets and bear markets, 0:11:55.800 --> 0:11:59.240 and the bowl markets are usually pretty long with lots 0:11:59.240 --> 0:12:01.559 of growth in the bear markets are usually pretty short 0:12:01.920 --> 0:12:05.319 with you know, certainly an impactful amount of losses, but 0:12:05.360 --> 0:12:08.080 they don't usually occur for all that long, and the 0:12:08.120 --> 0:12:10.599 losses aren't nearly as steep as the gains are in 0:12:10.640 --> 0:12:12.400 the bull market. But so I talked to my friend. 0:12:12.400 --> 0:12:14.959 I was like, no, listen, stick with it. You'll be fine. 0:12:15.080 --> 0:12:17.319 This is a long term play. You know, you shouldn't 0:12:17.320 --> 0:12:21.160 reallocate any investments right now. He didn't listen. He sold 0:12:21.160 --> 0:12:24.239 a fair amount of his equity of his stock investments 0:12:24.240 --> 0:12:28.080 and decided to go into cash. And the tough thing 0:12:28.080 --> 0:12:29.920 about that is you don't know when to put it 0:12:29.920 --> 0:12:32.080 back in as the stock markets going up. Are we 0:12:32.120 --> 0:12:33.640 out of the bear market? Are we in the bull 0:12:33.679 --> 0:12:36.000 market now? I don't know, because it's easy to see 0:12:36.040 --> 0:12:38.840 now right where we what happened, But it's really hard 0:12:38.840 --> 0:12:40.839 in the middle of it in two thousand nine to 0:12:41.040 --> 0:12:44.679 know when to put things back. And so ultimately that 0:12:44.720 --> 0:12:46.040 came back to buy him, and he missed out on 0:12:46.080 --> 0:12:47.920 a lot of the run ups of the bull market. 0:12:48.200 --> 0:12:50.120 And if you pulled out at the bottom, I'm sure 0:12:50.160 --> 0:12:52.240 he was afraid to, like you said, buy in, and 0:12:52.280 --> 0:12:54.520 so he was probably missing out on a huge gains 0:12:54.559 --> 0:12:57.040 and huge growth over the next couple of years. Yeah, completely, 0:12:57.080 --> 0:13:00.280 And just missing out on a few months or even 0:13:00.320 --> 0:13:03.080 a couple of days in a bull market can have 0:13:03.200 --> 0:13:06.640 long term adverse effects on your investment portfolio. And that's 0:13:06.640 --> 0:13:08.760 why we think timing the market is such a bad idea. 0:13:09.120 --> 0:13:11.800 It just has these adverse consequences really if you eat, 0:13:11.920 --> 0:13:14.520 dabble in it, or try it at all. Yeah. Man, 0:13:14.559 --> 0:13:17.160 it makes me think of the thing that like mutual 0:13:17.160 --> 0:13:19.600 funds have to say where they say, like past performance 0:13:19.679 --> 0:13:23.480 is not indicative of future results, because that's the mindset 0:13:23.600 --> 0:13:27.040 that consumers, well I say consumers, but investors. But maybe 0:13:27.120 --> 0:13:28.760 we are kind of going into it with like a 0:13:28.760 --> 0:13:32.640 consumer mentality. But you see something taking or you see 0:13:32.640 --> 0:13:34.800 something skyrocketing, and you think, oh, that's just what's gonna 0:13:34.920 --> 0:13:37.600 always happen, you know, But again, yeah, that's not the case, 0:13:37.600 --> 0:13:40.000 and you can't time it. Warren Buffet has got an 0:13:40.000 --> 0:13:44.080 awesome quote where he says, my favorite time frame is forever. 0:13:44.800 --> 0:13:47.360 And that is so incredibly important to keep in mind, man, 0:13:47.360 --> 0:13:49.880 because we're not just looking for the performance of our 0:13:49.880 --> 0:13:53.360 portfolio of our retirement savings to boost in a particular 0:13:53.440 --> 0:13:55.600 year or like just this year or just next year. 0:13:55.640 --> 0:13:57.839 But we're looking at it with a long view. Our 0:13:57.880 --> 0:13:59.719 goal is for the long term, and what we want 0:13:59.720 --> 0:14:02.400 to see is our overall portfolio and our overall wealth 0:14:02.440 --> 0:14:04.760 to increase. But you know, if there's months here and 0:14:04.800 --> 0:14:08.079 there and even years where there's a decline that's not 0:14:08.200 --> 0:14:10.160 something that you want to try to manipulate and take 0:14:10.160 --> 0:14:12.720 advantage of necessarily because you just don't know what the 0:14:12.760 --> 0:14:14.840 market is going to do. Yeah, Matt, that's great. So 0:14:14.880 --> 0:14:17.320 we've kind of established the fact that we think market 0:14:17.320 --> 0:14:20.040 timing is bad. There's this fear of missing out effect 0:14:20.040 --> 0:14:22.680 that people get, and so they decide, all right, i'm 0:14:22.680 --> 0:14:24.800 gonna try it right, I'm gonna sell or i'm gonna buy, 0:14:24.880 --> 0:14:27.600 or i'm gonna do something. Goofy, Now let's do it exactly. 0:14:27.760 --> 0:14:30.160 So if that's not the answer, what is the answer, 0:14:30.240 --> 0:14:40.760 we'll get into that right after the break, all right, man, 0:14:40.800 --> 0:14:42.720 So well back from the break. So then the next 0:14:42.760 --> 0:14:44.400 thing that we want to talk about is what to 0:14:44.520 --> 0:14:47.280 do next. And the number one thing you can do 0:14:47.640 --> 0:14:50.280 is to not pay attention to the financial news when 0:14:50.280 --> 0:14:52.920 they're talking about the stock market because it doesn't matter. 0:14:54.000 --> 0:14:56.720 The crazy thing is they want to make it seem 0:14:56.800 --> 0:15:00.000 like the stock market and what's happening with earnings or 0:15:00.000 --> 0:15:01.840 it's and all these things they matter and see how 0:15:01.880 --> 0:15:04.640 to exact stay tuned. There's a seven news cycle for 0:15:04.920 --> 0:15:07.320 investment news now you know, Well that's their product, you know, 0:15:07.320 --> 0:15:08.800 and I understand that, like that's what they have to 0:15:08.800 --> 0:15:12.240 push and to them that's important. However, to you, as 0:15:12.280 --> 0:15:14.600 an investor at home, that is not important. And instead, 0:15:14.840 --> 0:15:17.400 what we would recommend that you focus on doing is 0:15:17.480 --> 0:15:20.840 something called dollar cost averaging. If you're not familiar with 0:15:20.920 --> 0:15:23.880 dollar cost averaging, it is an investment technique of buying 0:15:24.080 --> 0:15:27.880 a fixed dollar amounts of a portfolio investment, so either 0:15:27.920 --> 0:15:30.400 a stock or a mutual fund or a bond, but 0:15:30.480 --> 0:15:33.200 to do that on a regular schedule, regardless of the 0:15:33.200 --> 0:15:35.480 share price. And so what that means then in the 0:15:35.520 --> 0:15:39.000 long term is that your dollar purchases more shares when 0:15:39.000 --> 0:15:42.240 prices are low, and then fewer shares when prices are high, 0:15:42.600 --> 0:15:46.080 effectively averaging out the cost. Pretty straightforward, right, Yeah. And 0:15:46.080 --> 0:15:48.600 the great thing, Matt, is that dollar cost averaging actually 0:15:49.000 --> 0:15:52.440 works out most easily for most people. So for most 0:15:52.440 --> 0:15:55.000 of us that get a paycheck through an employer, we 0:15:55.120 --> 0:15:57.280 can have a certain amount taken out of our paycheck 0:15:57.360 --> 0:16:00.000 every two weeks and we can choose the investments inside 0:16:00.040 --> 0:16:01.360 to the four oh one k that we, you know, 0:16:01.400 --> 0:16:03.560 want our money to go into, and we go into 0:16:03.600 --> 0:16:06.200 that just a little bit more. In previous investment episodes, 0:16:06.520 --> 0:16:10.040 in particular, retirement investing is simpler than you think. But 0:16:10.120 --> 0:16:12.720 dollar cost averaging is actually kind of the default easiest 0:16:12.760 --> 0:16:14.760 thing for most people to do, even if you don't 0:16:14.760 --> 0:16:16.680 have a four oh one K through your work, setting 0:16:16.720 --> 0:16:20.680 up a roth IRA through an individual low cost brokerage company, 0:16:20.840 --> 0:16:22.880 and that's pretty simple too. And the easiest way to 0:16:22.880 --> 0:16:25.240 go about contributions to something like an IRA or roth 0:16:25.320 --> 0:16:28.360 ira is to have it automatically deducted from your checking 0:16:28.360 --> 0:16:31.560 account once a month. So, in effect, your dollar cost averaging, 0:16:31.600 --> 0:16:33.600 whether you're getting it taken out of your paycheck or 0:16:33.640 --> 0:16:35.560 whether you're getting it taken out of your checking account 0:16:35.600 --> 0:16:38.280 once a month, you're essentially doing that. You're buying shares 0:16:38.320 --> 0:16:40.920 at the same time every month or every two weeks, 0:16:41.120 --> 0:16:43.440 and so there's no need to overthink it. Your dollar 0:16:43.440 --> 0:16:46.960 cost averaging right there by default, right Definitely. One of 0:16:47.000 --> 0:16:49.680 the benefits of being employed by the man is having 0:16:49.720 --> 0:16:54.080 a steady paycheck. One huge downside being self employed is 0:16:54.120 --> 0:16:57.000 that with income being variable, I can't do that because 0:16:57.240 --> 0:16:59.640 we might have what with my worry being more seasonal. 0:16:59.640 --> 0:17:02.160 There's periods of time, there's months where I'm you know, 0:17:02.160 --> 0:17:05.000 we're raking it in and there's periods of time where 0:17:05.760 --> 0:17:07.840 I don't have hardly any money at all, and so 0:17:07.880 --> 0:17:09.760 it wouldn't really work out if I had an auto 0:17:09.800 --> 0:17:11.720 draft set up. But what I do know is that 0:17:11.760 --> 0:17:14.159 our goal for the year for retirement giving is eleven 0:17:14.160 --> 0:17:18.119 thousand dollars each and so I know that if I 0:17:18.119 --> 0:17:20.280 take that eleven grand and divide it out by twelve months, 0:17:20.359 --> 0:17:23.720 that's n sixteen dollars that we are setting aside. And 0:17:24.480 --> 0:17:26.600 but we still have to manually do that. That's the 0:17:26.880 --> 0:17:29.160 big downside, right, It's it's more of a mental sort 0:17:29.200 --> 0:17:32.000 of step. You know, there's something about actually having to 0:17:32.760 --> 0:17:35.639 make that purchase right as opposed to it automatically happening. 0:17:35.640 --> 0:17:37.879 There's like there's a mental hurdle there that you have 0:17:37.960 --> 0:17:40.239 to overcome. Yeah, you know, somebody who has a four 0:17:40.359 --> 0:17:43.320 one K that they automatically contribute to via their employer. 0:17:43.440 --> 0:17:45.520 They don't have to overcome that mental hurd They just 0:17:45.520 --> 0:17:47.879 have to do it once, essentially, set it up and 0:17:47.960 --> 0:17:50.040 make sure that you know, they're contributing enough to get 0:17:50.080 --> 0:17:52.680 at least the match and hopefully more, and after that 0:17:53.080 --> 0:17:55.080 it's done right. It just happens every two weeks and 0:17:55.080 --> 0:17:56.840 they don't really have to think about it. That's the 0:17:56.960 --> 0:17:58.879 that is the beautiful thing of of the four oh 0:17:58.920 --> 0:18:01.439 one K, And I feel bad for people that are 0:18:01.440 --> 0:18:03.000 self and bloy. It takes a little more discipline to 0:18:03.040 --> 0:18:05.320