WEBVTT - Crashes, Corrections, & Your Reactions #473 0:00:00.120 --> 0:00:02.520 Welcome to How the Money. I'm Joel and I and 0:00:02.720 --> 0:00:06.760 Matt and today we're discussing crashes, corrections in your reaction. 0:00:26.440 --> 0:00:29.000 That's right. And from the title of this episode, you 0:00:29.200 --> 0:00:31.160 may have gathered that we are going to talk about 0:00:31.200 --> 0:00:33.840 the stock market. There's been a lot of news lately. 0:00:33.840 --> 0:00:35.920 There's been a lot of movement in the market recently, 0:00:35.960 --> 0:00:38.560 and so we're going to dedicate an entire episode to 0:00:38.880 --> 0:00:43.199 investing specifically. Yeah, and just kind of when things are haywire, 0:00:43.360 --> 0:00:46.280 like how do we react? And um, I'm sure a 0:00:46.280 --> 0:00:49.040 lot of our listeners are are kind of wondering, well, yeah, 0:00:49.080 --> 0:00:51.519 when the stock market is tanking, like what should I 0:00:51.520 --> 0:00:54.800 be doing or how should I even be thinking about investing? 0:00:55.080 --> 0:00:57.320 And so we got a lot to cover today. That's right, man, 0:00:57.360 --> 0:00:59.560 But first I wanted to share with you. I want 0:00:59.600 --> 0:01:01.320 to here with all of our listeners as well, just 0:01:01.360 --> 0:01:04.080 a quick curb Alert score that I picked up the 0:01:04.080 --> 0:01:07.400 other literally yesterday. So this happened yesterday. Okay, You're always 0:01:07.400 --> 0:01:09.840 finding weird stuff, so I'm curious, and so I mean 0:01:10.200 --> 0:01:12.800 here's literally I'm never on Facebook except for if I'm 0:01:12.800 --> 0:01:15.360 looking to sell an item. Kate's rarely on there, as well, 0:01:15.360 --> 0:01:16.959 but I guess she has some sort of alert set 0:01:17.000 --> 0:01:19.000 up so she knows when there's something that's going to 0:01:19.080 --> 0:01:21.840 be free. That is what we're looking for. This happened yesterday. 0:01:22.200 --> 0:01:25.120 So one of our daughters, ever since she kind of 0:01:25.200 --> 0:01:28.440 graduated and moved up from like the toddler bed, she's 0:01:28.440 --> 0:01:31.959 just been sleeping on a mattress on the floor. And we, 0:01:32.120 --> 0:01:34.199 you know, a few months ago, even has to here like, hey, 0:01:34.280 --> 0:01:36.520 you know, do you want like a real, real bed, 0:01:37.000 --> 0:01:38.640 And she was like, no, I like it on the 0:01:38.640 --> 0:01:40.520 floor because she kind of just like rolls out of 0:01:40.520 --> 0:01:42.400 the bed and like plays with the toys, rolls back 0:01:42.400 --> 0:01:46.440 into bed um. But honestly, lately it's kind of been 0:01:46.480 --> 0:01:48.200 a problem because she just has a lot of stuff 0:01:48.360 --> 0:01:50.960 just kind of scattered all around her bed, all on 0:01:51.000 --> 0:01:52.840 her bed as well, and so we've been keeping an 0:01:52.840 --> 0:01:57.000 eye out for a new bed. One came up on Facebook. 0:01:57.000 --> 0:01:59.280 It was free you know, side of the road deal 0:01:59.320 --> 0:02:01.200 that somebody was giving away and so I will know 0:02:01.200 --> 0:02:04.040 where they're picked it up. Specifically, it had drawers underneath 0:02:04.040 --> 0:02:05.720 the bed as well as like a headboard with some 0:02:05.760 --> 0:02:08.640 shells built into it as well. And so that's all great, right, 0:02:08.680 --> 0:02:10.840 I'm sure you're probably down with that. Here's where it 0:02:10.919 --> 0:02:13.840 gets a little bit hairy. There's also a mattress that 0:02:13.880 --> 0:02:16.600 came with it, and so I wasn't planning to walk 0:02:16.639 --> 0:02:18.280 away with that as well, but I threw it in 0:02:18.360 --> 0:02:20.280 the van and brought it home. I want to know 0:02:20.320 --> 0:02:22.480 from you, do you feel that it is frugal or 0:02:22.520 --> 0:02:24.359 cheap to pick up a free mattress on the side 0:02:24.400 --> 0:02:25.680 of the road, And so I'm done the same thing 0:02:25.800 --> 0:02:29.480 I have. And I literally actually just gave away a mattress, 0:02:30.080 --> 0:02:33.320 h an old mattress because I upgraded finally from used 0:02:33.360 --> 0:02:36.720 mattresses for my kids to like a new mattress for 0:02:36.760 --> 0:02:38.480 the first time in a long time. Or you finally 0:02:38.480 --> 0:02:40.600 gave for them. I think you finally gave away old 0:02:40.600 --> 0:02:45.519 bedbug mattress they were still but and yes, just gave 0:02:45.520 --> 0:02:47.720 it away to sweet neighbors who are who are very thankful. 0:02:47.960 --> 0:02:50.880 But um, yeah, no, I am not against old mattresses, 0:02:50.880 --> 0:02:54.080 and I know some people would be, but I distinctly 0:02:54.080 --> 0:02:57.880 remember getting a used ikea bed with the mattress for 0:02:57.960 --> 0:02:59.959 my daughter. You know, I don't know two years ago 0:03:00.000 --> 0:03:02.640 out and there's a recurring pattern here. It seems like 0:03:02.680 --> 0:03:04.560 other people aren't willing to do this, but it's something 0:03:04.560 --> 0:03:07.519 that you and I are totally willing to do. In fact, 0:03:07.680 --> 0:03:09.440 I was with you when we saw that bed on 0:03:09.480 --> 0:03:10.840 the side of the road. We're getting ready to go 0:03:10.880 --> 0:03:14.520 to a future islands, right, and we hadn't gotten far 0:03:14.560 --> 0:03:17.560 from your house, pulled over through all of the boards, 0:03:17.600 --> 0:03:19.840 the bed, all of it on top of were we 0:03:19.880 --> 0:03:21.720 in my car, like the old station wagon with with 0:03:21.800 --> 0:03:23.160 like the wrap. We threw it on top of the 0:03:23.160 --> 0:03:26.760 car and like reverse it back to your house, took 0:03:26.800 --> 0:03:29.079 it inside before we hear I mean, really like everybody's 0:03:29.120 --> 0:03:30.680 got to draw their own line when it comes to 0:03:30.680 --> 0:03:32.800 frugal achieve right, And so so I think some people 0:03:32.800 --> 0:03:36.320 are gonna say I would these are discussed used mattress, 0:03:36.400 --> 0:03:39.040 you know, like mattresses or something that you spend you know, 0:03:39.080 --> 0:03:41.280 eight eight hours a night on, like you know, a 0:03:41.280 --> 0:03:44.240 third of your life is essentially spent on that mattress 0:03:44.280 --> 0:03:46.960 more if you're a kid, your percentage wise, yeah, exactly, 0:03:47.160 --> 0:03:49.200 And so I get it. But at the same time, 0:03:49.680 --> 0:03:51.720 I think you're still sleeping on a used mattress. You 0:03:51.760 --> 0:03:54.400 and Kate are right totally hand me down. We finally 0:03:54.440 --> 0:03:56.560 upgraded to a Costco mattress I don't know, a year 0:03:56.600 --> 0:03:58.880 and a half, two years ago, and it's been lovely. 0:03:59.520 --> 0:04:02.040 But I say, our hand me down used mattress was 0:04:02.160 --> 0:04:04.440 totally fine. And also, yeah, well that's the thing. I mean, 0:04:04.600 --> 0:04:06.240 I'm not I wouldn't. I think it would be cheap 0:04:06.280 --> 0:04:08.760 if I was not willing to do it to myself, 0:04:08.800 --> 0:04:10.960 but I did it to my kids. That's the thing, 0:04:11.040 --> 0:04:12.360 Like we want to be able to make some of 0:04:12.360 --> 0:04:14.680 these upgrades. But like in our case, like you and 0:04:14.720 --> 0:04:17.440 Emily were like, you know what, we're growing up enough, 0:04:17.640 --> 0:04:19.719 we're big kids. Now we're gonna we're gonna buy a 0:04:19.720 --> 0:04:21.920 new mattress. And we bought one of the online phone 0:04:21.960 --> 0:04:24.640 mattresses that shows up yeah puncture the bag and it 0:04:24.960 --> 0:04:27.880 you know, inflates or whatever. We did not like that mattress, 0:04:28.000 --> 0:04:29.919 and so we tried it for a few weeks until 0:04:29.920 --> 0:04:32.320 finally I said, babe, we're gonna pull down the mattress 0:04:32.360 --> 0:04:34.960 that we shoved up into the attic. Uh. And I'm 0:04:35.000 --> 0:04:37.120 so glad that we did, because I wasn't totally sure 0:04:37.600 --> 0:04:39.599 if if we're going to keep that phone mattress. I 0:04:39.640 --> 0:04:41.880 was like, you know, I don't really, I'm not completely 0:04:41.920 --> 0:04:44.520 convinced because it's a lot firmer. Obviously, it's not contort 0:04:44.560 --> 0:04:46.360 to my body like this one, like the old one is, 0:04:46.400 --> 0:04:48.039 since we've been sleeping on it for so long, and 0:04:48.279 --> 0:04:51.600 I guess whoever's body was is baked into that mattress. 0:04:51.640 --> 0:04:54.920 Now anyway, Well, I'm glad you feel the same way. Still, 0:04:54.920 --> 0:04:56.360 I didn't know if you had, you know, moved on 0:04:56.400 --> 0:04:58.960 in your ways. But obviously, like we looked at the mattress, 0:04:59.040 --> 0:05:01.440 there weren't any gross stains on it. It hadn't rained 0:05:01.520 --> 0:05:03.760 or anything like that, and it was a neighbor as well. Still, 0:05:03.880 --> 0:05:05.799 like I picked it up off the side of interstate 0:05:05.880 --> 0:05:08.080 or something like that, I've forgotten run over a couple 0:05:08.080 --> 0:05:09.839 of times. That might be a different story, for sure. Yeah, 0:05:09.920 --> 0:05:12.320 you definitely wanted to make sure that it's still supportive 0:05:12.600 --> 0:05:15.280 and that it's not completely disgusting or something like that. 0:05:15.400 --> 0:05:18.440 But yeah, I'm okay with used mattresses and um and yeah, 0:05:18.680 --> 0:05:21.240 not everyone has to follow suit, but in our book, 0:05:21.320 --> 0:05:23.320 it is frugal. I'm glad you're done with it. Yeah, 0:05:23.360 --> 0:05:24.960 all right. Alice mentioned the beer that we're having on 0:05:24.960 --> 0:05:27.640 today's episode. This one is called a Force for Good. 0:05:27.880 --> 0:05:30.320 It's an Imperial brown ale by Creature Comforts and Sierra 0:05:30.440 --> 0:05:33.960 Nevada donated to us by listener Nathan. So Nathan thinks, 0:05:33.960 --> 0:05:35.640 so it's right. We'll give our thoughts on this one 0:05:35.640 --> 0:05:38.680 at the end of the episode. But onto the topic 0:05:38.720 --> 0:05:40.360 of hand Matt. This one, we are talking about tick 0:05:40.360 --> 0:05:42.680 it off, the stock market crashes, corrections, and how we're 0:05:42.680 --> 0:05:46.599 supposed to react in kind of turbulent times. And yeah, 0:05:46.600 --> 0:05:48.000 I was as I was thinking about this episode and 0:05:48.000 --> 0:05:50.159 made me think about that time. Um, you remember this 0:05:50.200 --> 0:05:51.960 a few years back when I got hit by a 0:05:52.000 --> 0:05:53.719 car when I was on my bike. I do remember. 0:05:53.720 --> 0:05:56.480 That is uh kind of frightening. I haven't actually really 0:05:56.480 --> 0:05:58.120 thought about it. We can laugh about it now, but 0:05:58.520 --> 0:06:01.400 at the time, remember Emily in particular, I mean I 0:06:01.440 --> 0:06:02.599 was upset. It was not I was like, oh no, 0:06:02.680 --> 0:06:05.040 but she was definitely a little worried about you. Yes, yes, 0:06:05.040 --> 0:06:07.560 for sure. But one of my good friends recently relayed 0:06:07.720 --> 0:06:10.839 that he actually got hit on his bike with his 0:06:10.920 --> 0:06:13.279 son on the back. Fortunately, I just dropped my kids 0:06:13.320 --> 0:06:15.160 off at school and my kids were not on the 0:06:15.200 --> 0:06:17.719 bike when I got hit, but I I dropped my 0:06:17.760 --> 0:06:19.920 kid off as well, because that's back when we were 0:06:19.920 --> 0:06:22.400 doing the bike car pool and luckily both of our 0:06:22.480 --> 0:06:24.560 kids were off of your bike. Exactly I would have 0:06:24.600 --> 0:06:28.640 been pissed and so not my fault. But but here's 0:06:28.880 --> 0:06:31.240 basically he, you know, my friend, he didn't get hit 0:06:31.320 --> 0:06:33.560 terribly hard, but I I got I got smacked a 0:06:33.600 --> 0:06:35.800 little bit, and um really just had like some shoulder 0:06:35.839 --> 0:06:38.200 damage for a couple of months, but I'm okay now 0:06:38.240 --> 0:06:41.240 and no long lasting damage. But what it made me 0:06:41.279 --> 0:06:44.800 think is is that like the lesson you take away 0:06:44.880 --> 0:06:47.479 from an incident like that, like, what is it? Um, 0:06:47.880 --> 0:06:49.800 is it that I should never ride my bike again? 0:06:49.960 --> 0:06:52.839 Because there's a chance circle now there there's a certainty 0:06:52.880 --> 0:06:54.479 that I did get hit, but there's a chance that 0:06:54.480 --> 0:06:58.320 could happening in no. Mostly what I took away was like, 0:06:58.360 --> 0:07:00.880 helmets are great, and bike safety isn't worton, and that 0:07:01.040 --> 0:07:03.920 accident has happened sometimes, right, And so it's just that 0:07:04.000 --> 0:07:07.279 actually getting into that accident made me I had that 0:07:07.320 --> 0:07:10.640 firsthand experience now, right. And so yeah, this recent bout 0:07:10.680 --> 0:07:13.560 of stock market volatility, it might have some of our 0:07:13.640 --> 0:07:15.880 listeners stocking away more money for their future, but I 0:07:15.880 --> 0:07:17.920 think it's been unnerving for others. And I think it's 0:07:18.120 --> 0:07:21.720 important folks if they're if they're especially younger, and they 0:07:21.720 --> 0:07:25.000 haven't experienced some of these bouts of market volatility, they've 0:07:25.080 --> 0:07:27.080 kind of seen the stock market just kind of going up, 0:07:27.120 --> 0:07:29.520 it's been on its hair. Um, it's important for us 0:07:29.560 --> 0:07:32.600 to hopefully give them some reassurance, give them some guidance 0:07:32.880 --> 0:07:34.800 in the wake of kind of what's been happening, um 0:07:35.000 --> 0:07:37.880 at least you know since the beginning of January this year, 0:07:38.160 --> 0:07:40.040 that's right. Yeah, so we're gonna give our thoughts on 0:07:40.080 --> 0:07:43.560 how to react when the market is experiencing this extra turbulence, 0:07:44.000 --> 0:07:45.680 because yeah, you know, the same can be true when 0:07:45.680 --> 0:07:47.560 it comes to investing in the stock market. Like we 0:07:47.680 --> 0:07:50.920 know that occasionally they're going to be corrections, but until 0:07:50.920 --> 0:07:54.440 we actually experience those downturns ourselves firsthand, just just like 0:07:54.480 --> 0:07:57.200 you didn't by getting hit with a car firsthand, and 0:07:57.240 --> 0:07:59.360 we're not totally sure how we're going to react until 0:07:59.360 --> 0:08:01.560 we're faced with us situations. Uh. And so, just like 0:08:01.560 --> 0:08:02.960 when it comes to biking, we know that there's a 0:08:03.040 --> 0:08:05.760 chance we could get knocked off our bikes or run 0:08:05.800 --> 0:08:08.360 off the road by a driver, but it's a completely 0:08:08.360 --> 0:08:11.640 different thing to go through an ordeal like that ourselves 0:08:11.680 --> 0:08:15.000 just our emotions are feelings, they are a really complex 0:08:15.040 --> 0:08:17.920 side of our humanity, and we never quite know when 0:08:18.040 --> 0:08:21.040 fear is going to rear its ugly head, causing us 0:08:21.040 --> 0:08:25.080 to potentially doing something that we wouldn't normally consider. Oftentimes, 0:08:25.160 --> 0:08:27.480 when we're not in those situations, we know the right 0:08:27.520 --> 0:08:29.520 things that we should be doing. But again, when we're 0:08:29.520 --> 0:08:33.400 thrust into those situations, when the quartosol levels spike, when 0:08:33.440 --> 0:08:36.200 we feel stressed and our emotions run rampant, that's when 0:08:36.240 --> 0:08:38.120 we can make those poor decisions, right, Yeah, I mean, 0:08:38.160 --> 0:08:40.520 I guess there's the there's the philosophy, the old school 0:08:40.559 --> 0:08:42.600 philosophy of getting right back on the horse after it 0:08:42.640 --> 0:08:46.000 knocks you off right. And I actually felt really similarly 0:08:46.040 --> 0:08:48.440 about getting on back on a bike really quickly after 0:08:48.480 --> 0:08:50.960 my accident. I was like, the longer I wait, the 0:08:50.960 --> 0:08:53.200 longer I let it linger in my brain, the more 0:08:53.280 --> 0:08:55.120 fear is going to build up. And I think the 0:08:55.160 --> 0:08:57.199 same is true for all for all of us, really, 0:08:57.240 --> 0:09:00.440 is that we have to when we experience something you know, difficult, 0:09:00.440 --> 0:09:03.199 potentially even traumatic, it's usually best to get right back 0:09:03.240 --> 0:09:05.880 on the horse so that we can mentally get accustomed 0:09:05.880 --> 0:09:08.920 to the reality that that you know, bike accidents don't 0:09:08.960 --> 0:09:10.920 happen every day, and so yeah, well, how do we 0:09:10.920 --> 0:09:13.440 get past this? Well, part of it at least is 0:09:13.760 --> 0:09:16.440 we would say looking towards the past. You know, just 0:09:16.640 --> 0:09:19.520 like one bike accident doesn't determine how I think about 0:09:19.520 --> 0:09:21.199 the role that my bike plays in my life. I've 0:09:21.200 --> 0:09:25.400 had many hundreds of great bike rides since then. Neither 0:09:25.520 --> 0:09:28.240 does the last month of data, right, just the most 0:09:28.280 --> 0:09:31.560 recent sample size, right, because it's it's too small of 0:09:31.559 --> 0:09:34.480 a sample size to make decisions based on. And this 0:09:34.559 --> 0:09:39.280 is a cognitive psychology term, and it's called recency bias. Basically, 0:09:39.320 --> 0:09:42.839 when we're overly focused on what has just happened as 0:09:42.840 --> 0:09:46.480 opposed to looking at longer term historical facts, reality on 0:09:46.520 --> 0:09:49.440 the ground for decades. We have to take in more 0:09:49.520 --> 0:09:51.600 data and we have to look at what else is true. 0:09:51.960 --> 0:09:55.080 That's a crucial element to not letting headlines and just 0:09:55.240 --> 0:09:58.640 incredibly recent market moves literally what happened in January right 0:09:58.640 --> 0:10:01.080 send us into a panic. To in the fuller picture, 0:10:01.360 --> 0:10:04.800 not just this shortened time frame is really key. It's 0:10:04.800 --> 0:10:08.080 really crucial to helping us make better decisions. Yeah, it's right, 0:10:08.120 --> 0:10:10.200 you can't just look at that truncated timeline. And when 0:10:10.240 --> 0:10:13.280 it comes to investing, oftentimes, what this looks like is momentum. Right, 0:10:13.679 --> 0:10:15.760 we see the market on a t hair it's climbing, 0:10:15.760 --> 0:10:17.840 and we think it's never gonna stop, and so you 0:10:17.880 --> 0:10:20.439 continue to invest because you expect it to continue to 0:10:20.480 --> 0:10:22.280 go up. Or on the opposite side of the coin 0:10:22.320 --> 0:10:25.120 as well, if you see the market tanking, you think, okay, well, 0:10:25.320 --> 0:10:27.120 I'm definitely not gonna invest now because the market is 0:10:27.120 --> 0:10:29.360 only going to continue to drop, and so we might 0:10:29.360 --> 0:10:31.959 be hesitant to get started investing. But once we are 0:10:31.960 --> 0:10:34.480 doing something, that momentum can cause us to continue to 0:10:34.559 --> 0:10:37.319 make decisions that may not be the best and this 0:10:37.600 --> 0:10:41.320 also can look like investing with our hearts instead of 0:10:41.360 --> 0:10:43.439 investing with our heads. Right, when we let our emotions 0:10:43.480 --> 0:10:46.160 control our decisions, that's when we're bound to make more 0:10:46.200 --> 0:10:49.800 mistakes compared to when we use knowledge and data. So 0:10:49.880 --> 0:10:51.760 let's get specific here, Let's talk about some of the data. 0:10:51.920 --> 0:10:54.720 Let's look at what history has to teach us, because 0:10:54.760 --> 0:10:56.960 the short term it couldn't be more different than the 0:10:56.960 --> 0:10:59.480 long term. When we're talking about the stock market downward 0:10:59.520 --> 0:11:03.160 moves of five or timber actually happened almost every year 0:11:03.280 --> 0:11:05.600 in the stock market. And seriously, a market that's down 0:11:05.800 --> 0:11:09.760 five percent from it's high that happens in of all 0:11:09.840 --> 0:11:13.440 years almost always literally, yeah, it literally almost always. Uh, 0:11:13.440 --> 0:11:17.040 and a tim percent drop that actually happens of the time, 0:11:17.400 --> 0:11:20.319 and so this is at least heartening. Downturns like what 0:11:20.360 --> 0:11:24.079 we have recently experienced actually occur pretty regularly. We shouldn't 0:11:24.080 --> 0:11:26.560 be afraid of those. Yeah, I think that is a 0:11:26.640 --> 0:11:30.920 really important thing to recognize. Is well, okay, it is 0:11:30.960 --> 0:11:33.319 it's an aberration. Is this something something that's not normal 0:11:33.360 --> 0:11:35.600 that I'm experiencing. If so, I feel like I'm at 0:11:35.760 --> 0:11:38.160 greater risk. But when we know that this is a 0:11:38.200 --> 0:11:41.280 normal thing that happens regularly, almost every year, it can 0:11:41.280 --> 0:11:43.520 be really helpful from a mental standpoint. And man, I 0:11:43.600 --> 0:11:46.000 liking it to kind of uh, maybe let's say you're 0:11:46.040 --> 0:11:47.720 going in to get a shot, or you're taking your 0:11:47.800 --> 0:11:49.760 kids into get a shot. A you're getting the pep 0:11:49.760 --> 0:11:52.480 talk ahead of time that hey, this shot is gonna hurt. 0:11:52.760 --> 0:11:55.520 So when they go in knowing that this shot is 0:11:55.559 --> 0:11:58.720 going to hurt, it's helpefully. It's supposed to help them 0:11:58.760 --> 0:12:00.840 to freak out less, right, like give them kind of 0:12:00.880 --> 0:12:03.480 like here, here's here's the scenario. Here's how it's gonna happen. 0:12:03.720 --> 0:12:06.160 Here's where you're gonna get the shot in your left 0:12:06.280 --> 0:12:09.240 arm right here, and like it's gonna be painful for 0:12:09.320 --> 0:12:11.560 just a minute and then it's gonna be over. You're 0:12:11.559 --> 0:12:15.240 preparing them for this scenario. And if you just like 0:12:15.320 --> 0:12:18.640 sat them down and you didn't prepare them and you 0:12:18.720 --> 0:12:20.640 just jabbed a needle in their arm, though there's a 0:12:20.720 --> 0:12:23.400 there's a whole lot more likelihood of like an insane 0:12:23.400 --> 0:12:25.319 freak out right, And it doesn't mean that there's not 0:12:25.360 --> 0:12:28.120 gonna be tears, even though you've kind of um, you've 0:12:28.160 --> 0:12:30.160 told your kids exactly what's going to happen in this 0:12:30.160 --> 0:12:33.920 scenario and hurt. Yeah it is. And so but that 0:12:34.000 --> 0:12:37.920 warning and knowing the context for forgetting that shot is 0:12:38.320 --> 0:12:40.000 is gonna help. It's gonna be helpful, and it's gonna 0:12:40.000 --> 0:12:43.760 prevent potentially even worst damage of of a kid freaking 0:12:43.760 --> 0:12:46.320 out by getting a shot in their arm without knowing 0:12:46.320 --> 0:12:47.880 what's coming. I don't want to think about that, like 0:12:47.920 --> 0:12:49.400 if you were to jerk your arm away like when 0:12:49.440 --> 0:12:52.920 you saw the needle, like getting ready to Yeah, I 0:12:52.960 --> 0:12:55.640 want to freak people out right to be some bad 0:12:55.640 --> 0:12:58.280 side effects. I guess the one thing is is if 0:12:58.280 --> 0:13:00.440 that if you were there and you can force your kids, right, 0:13:00.480 --> 0:13:02.040 if they're freaking out and you can force them. But 0:13:02.080 --> 0:13:04.400 here's the thing. We are all adults. We have control 0:13:04.480 --> 0:13:07.280 over our own holdings in our own portfolios. There is 0:13:07.360 --> 0:13:11.080 nobody there necessarily to hold you down and keep you 0:13:11.120 --> 0:13:13.640 from from clicking that cell button. Right. Yeah, but I 0:13:13.640 --> 0:13:18.160 think that knowing that stock market drama is normal. Right, 0:13:18.280 --> 0:13:20.959 It's as normal as for as it being painful when 0:13:20.960 --> 0:13:23.559 you get a shot, but quickly painful. And so yeah, 0:13:23.600 --> 0:13:26.959 as as we're looking at this historical data, right, as 0:13:27.000 --> 0:13:29.160 we as we know the truth going in to to 0:13:29.240 --> 0:13:32.680 get that shot, it's gonna help us better absorb the shot. Well, 0:13:32.800 --> 0:13:35.160 I think it's gonna better be able to help us 0:13:35.200 --> 0:13:37.760 absorb something like what happened in January, where we saw 0:13:38.120 --> 0:13:40.920 stock market experience a whole lot of valatility um and 0:13:40.960 --> 0:13:42.840 we saw, you know a lot of people saw their 0:13:42.880 --> 0:13:45.760 their overall stock holding stop by something like ten percent, 0:13:45.840 --> 0:13:49.040 maybe more, depending on how heavily they were invested in 0:13:49.120 --> 0:13:53.000 let's say um tech companies, right, and so yeah, that 0:13:53.280 --> 0:13:55.760 was them getting a shot like it was painful, and 0:13:55.760 --> 0:13:57.800 it does happen from time to time. But having that 0:13:57.880 --> 0:14:00.000 knowledge and knowing that this is for your ultimate good 0:14:00.000 --> 0:14:02.400 good is what you need to remind yourself of. Just 0:14:02.480 --> 0:14:04.600 like when we see these corrections, we know that ultimately 0:14:04.679 --> 0:14:06.480 these you know, this is going to turn around. Yeah, 0:14:06.480 --> 0:14:10.080 these corrections don't last forever, right, And so some some 0:14:10.240 --> 0:14:12.360 of sometimes we do have a prolonged bear market. We 0:14:12.400 --> 0:14:15.080 might have multiple years in a row where the stock 0:14:15.120 --> 0:14:18.720 market is actually not gaining ground, where where you've actually 0:14:18.720 --> 0:14:21.600 lost money in your investments for multiple years on end. 0:14:22.040 --> 0:14:24.640 But most of the time, much of the time, we 0:14:24.720 --> 0:14:27.440 see these corrections being actually fairly quick. I mean, take 0:14:28.360 --> 0:14:30.400 for instance, we see that I saw that drop in March, 0:14:30.720 --> 0:14:32.920 and how quickly did a rebound that was a V 0:14:33.000 --> 0:14:36.400 shaped recovery, and that was that was almost instantaneous, and 0:14:36.440 --> 0:14:38.600 so I I yeah, But looking to that history and 0:14:38.640 --> 0:14:40.840 seeing what's happened over the past decades, I think can 0:14:41.000 --> 0:14:43.080 can help you realize when you zoom out and look 0:14:43.120 --> 0:14:46.120 at the bigger picture, we can't expect the stock market 0:14:46.160 --> 0:14:49.360 to continue to go up even though there are setbacks 0:14:49.400 --> 0:14:51.120 on the way, That's right. Yeah, And so we share 0:14:51.160 --> 0:14:54.320 this because past is prologue, right, These historical markers and 0:14:54.600 --> 0:14:57.320 data that we can glean from the past, they inform 0:14:57.400 --> 0:14:59.880 what we do today. Knowing the past, it can help 0:14:59.880 --> 0:15:02.280 you understand the present, and it helps us to make 0:15:02.320 --> 0:15:04.840 better choices. Uh, you know, while we're here in the 0:15:04.880 --> 0:15:07.520 here now. But simultaneously, you know, it is important to 0:15:07.560 --> 0:15:10.200 take that with a grain of salt, because who knows 0:15:10.240 --> 0:15:12.600 what the actual future is going to hold. Uh. This 0:15:12.680 --> 0:15:16.080 is why on any prospectus that you see or any investment, 0:15:16.280 --> 0:15:18.960 they always say that past performance is not indicative of 0:15:19.000 --> 0:15:22.240 future results because there's no promise, there's no guarantee that 0:15:22.280 --> 0:15:24.760 your investments will continue to grow at least at the 0:15:24.840 --> 0:15:26.440 rate that you have seen them grow in the past. 0:15:26.760 --> 0:15:29.520 But we are able to make informed decisions with the 0:15:29.520 --> 0:15:31.520 information that we have, and so we're actually going to 0:15:31.600 --> 0:15:35.280 talk more about making these informed decisions in the here now, 0:15:35.320 --> 0:15:37.480 and we're gonna get to that right after this break. 0:15:46.640 --> 0:15:49.240 All right, now that we have some factual information about 0:15:49.280 --> 0:15:51.800 the past, now that we kind of see that these 0:15:51.840 --> 0:15:55.480 corrections are regular, they happen almost every year, and that 0:15:55.760 --> 0:15:58.160 a ten percent drop in the stock market like what 0:15:58.240 --> 0:16:00.840 happened in January, that's not that's an not abnormal, and 0:16:00.880 --> 0:16:03.760 in fact, that is more normal than not. Now that 0:16:03.800 --> 0:16:05.520 we have seen kind of some of what happens in 0:16:05.520 --> 0:16:07.920 the past, I think that can help us better assess 0:16:08.000 --> 0:16:11.120 what's happening in the present. You know, we we believe 0:16:11.160 --> 0:16:13.720 that a big part of making wise decisions is just 0:16:13.880 --> 0:16:16.680 being informed. It's hard to make a smart decision if 0:16:16.720 --> 0:16:19.040 you don't have much information on your side. Right, That's 0:16:19.040 --> 0:16:21.680 where you can get lucky, But that is not a 0:16:21.680 --> 0:16:25.200 solid model or basis for continuing to make smart decisions 0:16:25.200 --> 0:16:26.600 in the future. Right. It makes me think about a 0:16:26.600 --> 0:16:29.400 recent dish washer purchase I had to make, and it was, 0:16:29.760 --> 0:16:32.040 you know, my my old one failed on me. And 0:16:32.320 --> 0:16:35.560 I went to Consumer Reports, which does a great job. Basically, 0:16:35.600 --> 0:16:38.120 they just gather a ton of data from a bunch 0:16:38.160 --> 0:16:41.120 of people and then they provide rankings based on all 0:16:41.160 --> 0:16:43.560 this data they gather. And so it was clear to 0:16:43.600 --> 0:16:47.640 me reading the Consumer Reports rankings that a Bosch dishwasher 0:16:48.160 --> 0:16:50.280 was clearly the way to go, because they rank like 0:16:50.360 --> 0:16:52.520 out of the top twenty. I mean, they're like ten 0:16:52.600 --> 0:16:55.040 of the units basically like the top ten, right, And 0:16:55.040 --> 0:16:56.600 so I was like, well, clearly, this is what I'm 0:16:56.600 --> 0:16:59.040 gonna go with and so, um, yeah, once you have 0:16:59.360 --> 0:17:02.000 some of that data, once you are informed, you can 0:17:02.080 --> 0:17:04.560 make a better decision because if you're flying blind, you know, 0:17:04.640 --> 0:17:07.119 you might pick the worst dishwasher on the shelf and 0:17:07.200 --> 0:17:09.480 it might break in two or three years, um. And 0:17:09.520 --> 0:17:11.119 so yeah, to that end, we're going to define some 0:17:11.200 --> 0:17:14.159 terms real quick, because we try to avoid jargon on 0:17:14.200 --> 0:17:16.520 the show as much as possible. But it's gonna be 0:17:16.680 --> 0:17:19.679 helpful to know just a few things since they're going 0:17:19.720 --> 0:17:22.440 to come up quite a bit in this episode. And yeah, 0:17:22.480 --> 0:17:25.040 it can also be helpful to know some of these 0:17:25.119 --> 0:17:28.760 terms because we will most definitely experience all of these 0:17:28.800 --> 0:17:32.320 at some point during our investing lifetimes. So, for example, 0:17:32.320 --> 0:17:34.520 if you don't know what a bear market is, then 0:17:34.560 --> 0:17:36.680 you might hear that term being thrown around and you 0:17:36.760 --> 0:17:38.199 might think it's the end of the world. You might 0:17:38.240 --> 0:17:41.200 be truly frightened or panics because you hear that term 0:17:41.240 --> 0:17:43.760 not knowing what it actually means. Or or you might 0:17:43.800 --> 0:17:47.400 hear someone say that the stock market is crashing, but 0:17:47.960 --> 0:17:50.800 in reality, what you're experiencing is just a correction. And 0:17:50.840 --> 0:17:53.560 so it might be other people misusing terms and knowing 0:17:54.200 --> 0:17:56.480 what these terms actually mean. Is going to help you 0:17:56.840 --> 0:18:00.800 to filter out the noise from what's actually real exactly. Yeah, 0:18:00.800 --> 0:18:02.520 it can help you to create your own narrative as 0:18:02.520 --> 0:18:04.520 to what is truly happening. And so, yeah, Je, you 0:18:04.560 --> 0:18:07.080 mentioned corrections, So let's start with that. That'll be our 0:18:07.119 --> 0:18:10.040 first term. Uh, And this is when the market drops 0:18:10.040 --> 0:18:13.320 by at least ten percent, that is a correction. Once 0:18:13.359 --> 0:18:16.120 it hits that down by ten percent point, folks say 0:18:16.119 --> 0:18:19.200 that the market has entered into correction territory. That tend 0:18:19.280 --> 0:18:22.200