PODCAST EPISODE 253 – Should You Sell Now?




      • 00:00 – Episode begins Paul welcomes listeners
      • 02:10 – Setting up the topic – “What do I do with the market”
      • 03:25 – 1$ Million investment scenario
      • 09:20 – Stats on a one year lookahead
      • 16:20 – Reviewing downturns
      • 21:05 – Your investing experience
      • 27:53 – Episode ends, thank you for listening


[Tweet “In a one year lookahead, statistically, if you were to have invested on any given day, 75% of the time the market is higher the following year. #YourBusinessYourWealth”]

[Tweet “If you get in and out of the market, your playing like a blackjack player, but when you stay in the market, your playing like blackjack dealer. #YourBusinessYourWealth”]

[Tweet “Since 1979, the Market has ended on its high (relatively) 14 times. While it has never ended at its year low.#YourBusinessYourWealth”]



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Full Episode Transcription



Hello and welcome to your business your wealth. My name is Paul Adams. We are jumping straight into it today which leaves me barely enough time to introduce you to the man who is as unflappable as a tarp that has been super glued to the ground. My friend, Corey Shepard. Today we’re going to talk about should you get out of the market?


Oh, hold on a second. I can’t. You can’t just step over that tarp. Like I just think about you. staying up at night like trying to fall asleep thinking about the next thing. I’m gonna How am I going to choose quarry next. I just also need to give a disclaimer. I’m not drinking beer while we’re recording, although I just had a great idea for another.


Yeah, we should do an evening live stream where we’ve had at least two drinks before we start.


That’s right. But we are having our water heater replaced. So I actually have no water run in the house right now. So we do have alcohol free beers for my wife.


Oh, let’s go ahead and get a sponsor show the whole thing.


So okay, everybody listening. Groovy. This is the best zero alcohol IPA that I’ve ever had. I will just drink it. Like a beer like It tastes amazing. A lot of other ones that I won’t name the names. Kind of tastes like act like regret. I don’t know. It’s good. This is amazing. What’s the


name of the quarry? Groovy. Groovy. Let me go ahead and read our advert for that groovy. Groovy for alcoholics that aren’t quitters. Okay, so now let’s talk about the market. It’s kind of your fault for bringing up a non alcoholic beer on the podcast, you had to know


make it you had to know a lesson. You’re teaching me a lesson.


I think it’s like a lot of things like when something goes wrong with me. And I just tell my wife, it’s probably because you didn’t see me headed to do that and warned me not to. So with that said, we’re talking about investing in the market. The idea being is should I get out or should I invest? Right now? It is a question. It’s coming up a ton. You have a whole bunch of market prognosticators out there on the internet saying, oh, internet, MSNBC, CBS, Fox, CNN doesn’t matter. everybody’s eyes matter. Some version of the sky is falling. Now, I realize that not too many kids today are as familiar with Aesop’s Fables as I would love them to be just like not enough people today learn to play chess. But the idea is, is that somebody runs around and says the sky is falling, the sky is falling, and everybody reacts to this person’s overly emotional response to the sky is falling. And not enough people question it. Everybody starts looking for why it’s falling, when in fact, it’s not falling at all. Now, in this case, we’re talking about the market. And should we invest now? Or is it going down further? Should you get out of the market? Maybe for just a little while? And if you did, would it work? There for our quick case study? All right. So let’s take a look. First, at let’s say, right now, somebody’s 45 years old, and they have a million dollars investments. And their aim is they would like to have a total of $6 billion of capital at work at age 65. So there, again, review, they’re about 45 years old, they’ve got a million dollars currently invested in an 8020 portfolio. And what they hope is that the market is going to go down another 10%. And they’re going to get out of the market to avoid that 10% downturn. Okay. Now, I’m also going to say, most people who say, I think I should be out of the market. Cory, would you say anybody’s, when people bring it up? Have they thought that far ahead of like, how much of a loss they’re even thinking of avoiding?


There’s it’s usually a one way strategy at the moment, meaning I gotta get out, but there’s no back in. Yeah, and I’m trying to time the market is it’s really a three decision process. It’s choosing when to get in, when to get out. And when to get back in.


Yes. No. Yes. So. So people are saying I need to get out of the market, but they’re not really fully thinking through. So just for our thought experiment here, let’s just say that if you got out of the market, and that allowed you to avoid a 10% downturn, that would be a win for the market timing strategy. Okay, so you guys, everybody, imagine that somebody’s worried there 1 million that’s already gone down somewhat this year. Our 8020 portfolio is down 17% year to date as of the recording In this podcast, so they say I don’t want to lose any more, I think it’s going to go down 10% More, I want to avoid that I’m going to take my money out, go to cash, and I’m gonna get back in at a future date when it’s not so scary, which is a fairly subjective term. Okay. So let’s first look at what does this person have to do, just for their million to get up to 6 million. So I’m going to call it bring your attention to this little calculator


right here and remind us why we’re picking 6 million.


Just this particular case study, this person wants to have 6 million capital works that they can take 4% off a year, which would give them $240,000 A year of income. Perfect. Good. Here, we have a million dollars, all they have to do is add about 60,000 year and I’m trying to be a little more conservative Korea on the return. So I’ll just call it a six and a half percent and 20 years that gets them to exactly $6 million. Okay. And so they’re saying to themselves, I want to preserve that million dollars, I’m gonna get out of the market for just a little while. And then I’m gonna go back in when it’s more stable so I can avoid this loss that’s coming that I think is coming, or that prognosticators tell me is coming. Okay. Now, let’s say you got out and avoided the 10% downturn. How big of a difference is it? Well, we’re going to just move this first calculator, we’re going to see right behind it, we’re going to see this $900,000 with the exact same amount of money being added every year, at six and a half for 20 years, which gets the person of 5,650,000.


This is the Do Nothing strategy, like I’m in it for the 10% downturn that maybe is coming. And it happens.


And remember, this is totally hypothetical. We’re saying somebody thinks that 10% downturns happening part one, we’re also saying that 10% downturn actually happens, and that the person got back in the market while it was still 10%, down to Corys thing about being right three different times. Then they get back into the market, and it grows. And even though it worked. They actually stayed in good investor behavior.


Now from an arrest on the IRS,


yeah. So Cory, if somebody does have like, it’s funny, I was talking to a client earlier today. And I realized, in 25 years of doing this, I’ve never had a client pull money out of the market thinking it was gonna go down. And then it worked out for them, meaning they ever got back in the market in a time where they could get the rebound. In fact, almost every one of them stayed out of the market long enough that the market went up, and they didn’t catch it.


Which means in this hypothetical case, study, the person nails the 10%, they see it happen. And now it’s time to get back in. But usually the sign that it’s time to get back in is they’ve noticed the market going back up, which if it was yesterday that that was happening, the market went up two and a half percent. So they actually didn’t avoid the 10% loss, which is kind of their gain, it was a lot less it was less than eight. Yeah, let’s


say which, by the way, somebody who’s Doom saying somebody’s saying, I avoided the 10% downturn, think about what your psychology is doing. Your psychology is telling you, it’s going down, you are proven right? When it ticks back up, do you say to yourself, oh, my gosh, this isn’t getting more stable, or you go? No, no, this is just another little flirting. Before the knife really falls? Well, of course, you gravitate toward what you’ve predicted in the future because as human beings we don’t want to be wrong. Even if it’s us making us wrong. We’ll avoid it at all costs


are in the psychology would say it went down 10. I saw it go back up by two and a half. Now I’m going back in um, aren’t I glad that I saved myself that 10 Except losing out you don’t say I lost out on the two and a half. You just ignore that half of the equation,


not to mention the taxation etc. And here’s the stats, you know, I’m going to show you guys this is a white paper. We’re going to link in the description of the podcast in the description a YouTube video. But this is just watching the standards and Poor’s 500. And this is a one year look ahead. Okay, one year. And if you took even a prior market high, mean the market was super high. It’s 80% more likely to be higher the following year. But then the crazy thing is that 75% The time you pick any day, no matter its level in the market, and you say, what’s it going to be a year from now? 75% of the time it is going to be higher than when we put our money in. Now, here’s what that looks like now. That means you guessing it’s going to be lowered a year, you’ll be wrong 75%. And I like to gauge this


to an even incline flip. Yep, that’s not even as good of an odds as a coin flip.


Yep. Now I’m at a, we’ve never done this before. This is a podcast for Miranda, could you unmute yourself? Oh, that’s awesome. I just saw her on camera. She took a huge buy. I’m not going to show you on camera. Just I want your audio. I think I can hear your audio in the podcast, I’ll be able to. Actually, I don’t even know if we can hear. So I’m going to just call him Cory. I am here. Yeah, we got your good bit. Our audience can hear you. So Miranda, when you walk into a casino, what are you doing? If you’re if you’re gaming? What are you doing? Gambling, gambling, okay. The casino is in the same place you are? Are they gambling? Nope, no. Exact right quarry? Why? Are they not gambling the casino?


Well, because they actually are setting the odds for all players. And they know they don’t need to win any one game with any one player because over time, they are going to win more games than all players.


Very good. Now, Miranda, I’m gonna have you chime in again. Is the game rigged against the gambler? Yes or no? No, it’s not? Isn’t a gambler, always statistically likely to lose? Well, I wouldn’t say it was rigged. I think it’s an assumed risk that yes, it’s taking on? Yes. And sometimes they fool themselves. With that assumed risk. They say I have a system. Right? Right. Okay, they think they outsmart the odds. That’s right. Now, the odds are in favor of the house. So if you play the game, like we’re looking at here, in this white paper that says 75% of time the markets higher than it was a year ago, no matter what the market is. If that’s the case, then if you get in and out of the market, you’re playing like a blackjack player. But if you stay in the market, you’re playing like a blackjack dealer, because you will win more than half of the time. And significantly more than half of the time. Which is why the dealer


is playing every single hand. They don’t they can’t get up and walk away. Right.


And let’s say you want a contest, Cory, and you were just I don’t know, you walked into some Casino. There are 5 million customer, we’re gonna let you be the dealer at the blackjack table. And you go, that’s awesome. How long do I get to do that? And they’re like, as long as you can stand it. Like how long do you think you could stay on your feet dealing carts?


Do I bathroom breaks or No? No. I mean, like


you get books 12 hours lease, okay, at least at least. And you would play for as long as you can. Well, that’s our investing careers. And then it’s going to be higher most of the time in a future year from all reliable past data we can have. And in fact, I would challenge anybody, please. And I mean this if you’re a podcast listener, if you’re a financial advisor, if you’re a CPA, or if you are just an individual investor with a super great commitment to market timing. Send us the academic evidence. You see on this podcast with our clients, we don’t offer our opinion. We offer mountains of data. I’ve been in this industry alone for a quarter of a quarter century. And my philosophy, our firm’s philosophy is built on 25 years of experience in research, not to mention the 1000s of years collectively of research from the people from whom we pull. Right, Cory? He’s been in this business for a long time. Like we’ve all been around a while and never seen it work when people market time. So this is the thing if you’re right, and somebody somebody said to me earlier today, well, what if I’m catching a falling knife if I invest right now? I said fine. Find me by that very visual, like, Ooh, that sounds like it would. But this is the thing. It might be scary, but then find me the academic evidence. We would love to see it of like when these market factors are present if you get out of the market, and then I don’t know, you wait until a solstice and then get your money in. It’s always a 5% gain. We want to know if it’s right we’ll One minute for every one of our clients. But


silly metaphors kit here. Let me take it. Let me take him further.


Paul Paul, I like this.


Well, cuz cooking as much as I do, like my dad gave me a lesson from professional kitchens where he’s like, they’ll just like a new chefs just they just push the knife off the table, like watch it fall. And they just like, watch it fall on the floor, like to train you to not go to grab for it. Dropping a knife on the ground. Have you ever seen a knife ruined by falling on the ground? Like, that’s great. Again. That’s right. So


and by the way, have you ever seen a portfolio ruined? That was academically allocated globally diversified consistently rebalanced where the investor was both patient? And had it invested for a volatility level that was appropriate for them? Have you ever seen that fail? No. Same as me. So what is the injury you get is if you try to catch the falling knife, so don’t just invest. So I got more here, I want to talk about Cory. So let’s think about this for a moment that if you did it, remember, we just talked about it, it makes a very, very small difference. You instead of having 6 million have 5.65. Now, if it worked, but if it worked, you know what else you’re probably going to do, you’re going to try it again, you’re going to try it again, when you’re older, you have more money. If you try it again, when you’re older, and you have more money, you make a mistake, and you cost yourself significantly. Over my 25 years, I saw people do that when they were too old. For the housing bubble for the tech bubble for we saw somebody dirt do it during COVID. Like just cost themselves hundreds of 1000s of dollars, right when it mattered most because their discipline gave out. They didn’t take courage from the downturn. And that’s why I’m going to show you guys next here are the downturns. Right? Like we’ve got the highs and the lows every single year here. Every one of those lows turned into one of those blue highs sometimes in the same year. And when that happened, that’s a chance to build courage, that builds intestinal fortitude that allows you to get through the next one. And so here we are today. And we’re down. I don’t know exactly where the s&p 500 is right now, but are at 20 portfolio down 17% As of today. Well, let’s see, did the market ever end since 1979 at its low point for the year? Let’s check the lollipop chart. Each of these little yellow lollipop looking things show where the market actually ended that year. And funny enough, there’s several times that the market ended on its high note since 1979.


I mean, depending on how much of a nubbin you’re willing to accept it may be as many as 14 times since 1979. That basically the market high for the year was where it ended.


Yes. And Corys you’re quickly glancing at that. And you’re clearly a quick counter. How many DSC were you would have been? It ended as low as 00. So let’s say we’re low right now for the year. What better time to invest than when it’s discounted? You were investing in January. This is all the same companies all the same stocks nothing’s changed. All the companies in the portfolio are exactly the same. The only difference is they’re 20% Less expensive today. Ish. 20% ish. If you had you’re collecting Ford Mustangs, and they were down 20% value, you wouldn’t go to your garage or Ford Mustangs be like Gosh, was it? Let’s get them all in the penetrator. Do they have that anymore? Any offer I remember people used it, whatever it is. See, that’s the great thing about this beard quarry. The longer it gets, the greater my fuddy duddy sets in I’m on whatever these kids are doing. I want to go back to the Thrifty Nickel and Uncle Henry’s


for me. Anyway, so the like people bring real estate as an improper comparison to the stock market lots of times so I’ll do it right now, like real estate be the same, like if I think it’s a proper one with if real estate had just gone down by 20%. Would someone call that a bad time to go buy a house?


Who or would it be a good time to sell the house? Right. I’m really trying I’m really trying to cut down on my cursing core. Because I feel like it’s a good chance for me to mess up my testimony as a Christian. I really like cursing, but I’m cutting back. That’s why I just mouthed curse words now. So that’s a good reason. If you’re listening to podcasts if you’re watching YouTube, you’ll see all the cuss words I almost said so we don’t end on a down year and the earliest we haven’t. And so if we’re being statistical, what would my feelings be? Well, your feelings would be more justified if you said the markets probably gonna be higher in the year I should stay invested. Now, one other thing we did, and we won’t bore you guys with it, because just a deep Excel spreadsheet, we look back at returns to an allocated portfolio all the way back to 1978. And a 7030 portfolio did not have two years negative in a row. So you got a negative year already, next year supposed to be positive. In fact, every time it was down double digits, the following year, it was up over 20%. How’s that affect your feelings? I want to tell you guys, it doesn’t. This is this is the truth of this whole thing. And I’m going to just talk directly to you guys here for a minute. With Cory, I mean, both of us talk to you. But I mean, we’re not going anywhere. So here’s here’s what we want to communicate is that you can’t tell when to be in the market when to be out of the market. None of us can. And to have a good investing experience is not going to come from how it feels right now. Having a good investing experience only comes from looking in the rearview mirror after you’ve forwarded these waters. After you put yourself in the position that you look dead at the downturn, and said, That looks scary. But because you’ve done it in the past, it doesn’t look so scary for you. And one of my favorites is client to talk to who’s in her 70s has several million dollars invest with us and talk to him for months, I said How you doing with this market stuff. She’s like, Oh, honey, I’ve been around long enough to know that it’s not going to shake me or matter. And it’ll go back up that I’ve been through this a lot of times because she’s been investing and saving consistently, and has never faltered. But also never put her head in the sand when markets were down. And that’s what all of you have the ability to do, you can look at this market. And you can make rocket fuel out of it to leave you more disciplined, leave you better able to allocate your decision. And what’s a good time if you’re if you’re a client of ours, and you’re feeling unsure, then ask your advisor to go through this data with you because you’re just in a mood, it’s not your fault, you’re just in a mood.

It is yours that catch the catch all of us. But here’s a mood a mood is an automatic ungrounded assessment about how you think the future is going to go. And you can’t get out of a mood by just thinking happy thoughts, one of the best ways to get out of the mood is to ground it. Like Wait, is there really good grounding for me being so pessimistic about the future, and you try to find that data like you’re proving to somebody else about why you’re in the mood you’re in. And when you can’t find that data, you might just be in a mood that’s weak, weak compared to what you need in order to meet your aims. And what that is going to take for everybody listening. Whether you invest in the stock market, or your real estate and cash only person, it doesn’t matter, you know what you’re gonna have to you’re gonna have to save a lot of money. A person we looked at can’t just sit on their million, no matter what they have to save money. And if you miss one market downturn, that might turn you into somebody that tries to exercise that muscle at a time later in life, when the consequences are higher, the time is shorter, and the capital is larger. So what you can do instead, is hold strategy. If you’re a client of ours, call us anytime. And we will help reground you argue with us if you want point to other evidence, that’s how you work out a differing of opinions. And you get to a solid philosophies, you talk about the different opinions. If you’re not a client of our firm, and you have no idea what’s going on, or you feel like you get nothing but platitudes, you don’t get strong data from the person that’s working with you and your money, give us a call, we’re more than happy to chat with you about what you’re up to. And maybe put you in a position where you don’t even move your money to be a client of ours. But you might be, we might be able to point you to some back episodes of ours that will give you the intestinal fortitude that you need to get through this and be able to build a successful future that you want to have financial independence for you and your family. Without all of the risk of going in and out of the market. And frankly, all the cognitive load risk of getting in and out of the market. I’m going to make one more statement. If you time the market and you’re wrong. And let’s say you’re in your late 50s And you’re real raw and you lose a lot of money. And the amount of money you lose puts you in a position where you’re not able to reach financial independence. I’m dead serious about this. How do you think your marriage goes for the next 15 years? People are getting divorced over this stuff because they ruin their financial life. And what ruined it was the influence of all these network news and prognosticators and the people that say buy gold, all that. And not just simply being disciplined in this one area of life. That’s investing. Challenge your advisor, give them the opportunity to prove the philosophy to you. And if you can’t prove your philosophy, not just to them, not somebody taking your opinion, but if you can somehow figure out a way, like this is how I feel the markets gonna go. And here’s my evidence for it. That maybe you should listen to the advisor. That’s bring you the evidence. Cory that. That ends my soapbox, thank you for letting me just run. Anything you want to make sure everybody gets left with today?


No, that’s I think that’s a good, a good end. Well, yes, info at SFG way.com. shoot us a note, if you have any questions about this one, I look over any data have some other data you want to send to have us look at and we’d love to


love to talk. Yeah. And here’s the thing, y’all. I, I know sounds silly. But there are times that people freak out about their money and want to get out of the market, we talk to a lot of people like that at the depths of COVID. This, we don’t usually get this gift that was just 2020 we don’t usually get the gift of something so recently, that we can point to that people weathered the market and it worked out. But we love rescuing people from the decision of wanting to get out. But I do have to tell you, when we do it, we we kind of don’t take pleasure in it’s a little bit like tackling somebody right before they’re hit by a dump truck where we’re happy, nobody got hurt. But we don’t necessarily feel super good about running full speed and putting our shoulder in your ribs and knocking you down to avoid the threat. So we’re hoping that by being a little more straight in this conversation, maybe we don’t have to be the straight with you when we’re talking to you. And we just communicate the principles this way. Because it’s not fun for us to keep people from getting hit by the garbage truck. But we will do it every single day. And even if you’re not a client of ours and you’re super worried about the market, reach out. You may not even be appropriate for you to be a client of ours but promise we can point you in the direction of some materials that will help you be a more confident investor and more reliably able to produce the financial independence you and your family want for the future. And with that Corey would like all of you to know that we hope


this has contributed to you being able to design and build a good life.


So you guys next week



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