“Despite what some are saying, I don’t think our economic hard times are over. In fact, some are saying online that the ‘experts’ are hiding how big our problems really are. Some think the whole world is on the brink of bankruptcy. If that’s true, how safe is any investment?”

In a New York Times column in 2009, Dennis Dutton reminded readers of the big Y2K panic…remember that scare just over 23 years ago?

Supposedly, computers—due to a programming oversight—wouldn’t be able read dates beyond 1999. Therefore, when the clock struck 12 a.m. on January 1, 2000, the world was going to plunge into chaos. 

People were bracing for “aircraft to fall from the skies,” wrote Dutton. They feared that “electricity grids, water systems and telephone networks would be knocked out… nuclear power plants would be subject to meltdown. Savings and pension accounts would be wiped out in a general bank failure.”

Many expected “vast shortages of food and medicine, which would, in turn, produce riots, lawlessness and social collapse. Even worse, ICBMs might rise from their silos unbidden, spreading death across the globe.”

In his column, Dutton concluded that the Y2K fiasco was less about technology and more about humanity’s “morbid fascination with end-of-the-world scenarios.” According to Dutton, for many people, it’s always the end of the world as we know it.

Back in the 1970s, my father read books like How to Profit from the Coming Economic Disaster. He was concerned enough that he bought enough freeze-dried food to feed us for six months!

Fortunately, we never had to eat dehydrated broccoli. Instead, we got fodder for teasing Dad for years to come.

All this prompts a question: Why do we love doomsday predictions so much? Here are three possible explanations:

• They offer us entertainment. They’re like reality TV. Reality TV is just cheap entertainment (in more ways than one). It’s alluring precisely because it is staged to look so…real. We can picture ourselves in that same scenario (living for a month, trapped in a house with 10 super models…you know… reality). 

Imagining a worldwide economic collapse is somehow entertaining to us, in the same way that we pay to watch movies that scare us out of our seats.

• They offer us distraction. Life can feel boring and mundane. Often, the things we need to do to be successful are not exactly exciting. Disaster scenarios can give us the feeling of being a part of something urgent and exciting…even if it would mean the end of life on the planet.

• They offer us simplification. Real life is complex. And the solutions to big problems are usually difficult to figure out and enact. Plus, it may take years to see a positive outcome. Disaster scenarios, on the other hand, typically offer a clear villain, an obvious problem, an unmistakable hero, and a victim that’s easy to spot (often you and me!). 

To be sure, evil does exist (see: Hitler) and disasters do occur (see: Hurricane Katrina). 

But like the economist who predicted 20 out of the last three recessions, an excessive focus on disaster can distract us from dealing with actual realities.

Get obsessed over a hypothetical “end of the world” and you’ll be ill-prepared for the actual world that keeps going.

To help you alleviate financial fears, I’ve written a short book called How to Put Financial Worries in Your Rear View Mirror. It’s free if you’d like a PDF copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

For many of us, the day was full of family, feasting, football and Friday…endless advertisements about Black Friday and the “don’t you dare miss this” sales that go with it. 

One of my family’s simple traditions is to go around the table during the Thanksgiving meal and each share (at least) one thing for which we are thankful. Over the years of doing this, Melinda and I have heard everything from the silly and trivial to the profound and meaningful. 

For me this year, my “thankful” was “for hope in hard things.”

Hard things are part of life. But if you’re like me, you really hope you won’t experience those hard things. 

Let me admit it. I hate hard.

But in a way, I also love it. But always and only afterward. Never during.

This year’s financial markets give us a picture of the pain and yet the productivity of hard. 

When the Fed raised interest rates so severely, not only did the stock market give up the ghost, but so did the bond market. Most of the time, bonds are a useful ballast to the volatile nature of stocks. When stocks go down, bonds have historically held their value or even gone up.

Not this time. This time bonds fell almost as much as stocks did. In fact, this was the worst year for combined stock / bond performance in a generation. 

This market has been…hard.

Yet, in the midst of this hard market season, the seeds of hope for tomorrow have been sown. When markets decline, pencils sharpen and companies tend to regain their focus. The strong tend to survive and the weaker, less profitable companies are plowed under. For the broadly diversified investor, these “bear” markets create a distinct survivorship bias, automatically sending our capital to enterprises better able to steward it. 

It isn’t a pretty or a perfect process…in fact, it’s downright hard. But for those with eyes to see, it is a thing we can be thankful for…eventually. 

There’s something else I’m thankful for this year.

My daughter lives in New York City. When the COVID-19 pandemic hit in spring 2020, New York City was dubbed “the epicenter of the worldwide pandemic.” Struggling to find an appropriate response, Elizabeth and her friend Audrey Elledge turned to their artistic tool of choice – words. 

What began as a simple offering to their church became a newly published book, Liturgies for Hope – Sixty Prayers for the Highs, the Lows, and Everything in Between. 

Elizabeth’s book is about hope in the hard things of life. Hard things like doubts about God, doubts about yourself, fears, broken relationships, career disappointments, financial setbacks, health struggles or paralyzing self-consciousness. 

Life is hard. And I won’t lie – I hate that part.

But in my more reflective moments, I’m also thankful that life has woven in with the hard times, reasons for hope. And in that hope, paths to healing.

My advice this week is pretty simple – get Elizabeth’s book Liturgies for Hope. Either you or someone you love needs to know there is hope in the hard.

Let me know what you think.

If “hard things” describes your financial life, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Just email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

This line (or one like it) shows up in every sappy Hallmark movie I watch with my wife. 

I can’t imagine worse advice to give someone—whether in the area of romance, parenting, career advancement, or finances. 

Our hearts feel all sorts of things. And while we should acknowledge those strong feelings, we should never govern our lives based on sudden whims.

Emotions just aren’t reliable. They come and go, changing quicker than the weather. Oftentimes they have no correlation with reality! So, in giving in to a momentary but powerful feeling, we can actually be inviting long-term misery! 

A case in point:

I was having a conversation with someone about today’s tumultuous financial markets. The stock market is in bear territory. And the bond market (often a reliable balance to stocks) is down as well. This has created real angst for investors.

“I feel like I should just sell my stocks and stick my money in the bank right now,” my friend said with obvious concern in her voice.

I understand my friend’s powerful desire to want to protect her money and safeguard her future. That’s a normal instinct—especially in an era when social media and news outlets inundate us with scary information 24/7. But letting a strong feeling effectively dismantle your financial plan is unwise.

In fact, history suggests such a “feelings-based” financial decision might actually be a major mistake. Sure, you’d avoid any big stock market dips—but you’d also miss out on any bull markets.

During my lifetime the broad stock market (as measured by the S&P 500) has fallen by 25% at least seven times. The average return one year later was a 15% increase. Five years later the average total return was over 80% higher. And the 10-year results were over 200% higher, on average.  

Will that happen again? There are no guarantees in financial markets. Markets have a mind of their own. Actually, since a market represents the average opinion of all its participants, you could say a market has a million minds of its own. 

Listen to your heart? Just go with your feelings?

Leave that terrible advice to the romance movies. 

When it comes to your finances, you need more than a good feeling. You need a wise, fact-based plan.

Here’s what I suggest. Sit down with a financial planner you trust. Find someone who will tell you what you need to hear, not just what you want to hear. 

Together, create a plan.

Then put that plan to work. This will involve you doing a lot of things that don’t necessarily “feel’ good. In fact, they might feel uncomfortable. 

You’ll have to resist the urge to overspend—and live by a budget. You’ll have to save money when you’d rather be driving a new vehicle…buy insurance when you’d rather go on a fancy cruise…ride out bear markets, when you’d rather sell your stocks at a loss and stash your money in the bank.

But as you put your plan to work and keep at the task, you’ll experience something much deeper and more enduring than a good, short-term feeling. You’ll have the long-term security and satisfaction of seeing a smart plan come to fruition.

If you’d like more help thinking through such issues, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

A year ago, the stock market, as measured by the Dow Jones Industrial Average, closed at 34,390. Today (I’m writing this on September 30, 2022) the Dow stands at 28,725—about 17% lower! 

Meanwhile, the S&P 500 has been falling since early January!

A year ago, an economist wrote, “We believe inflation peaked in second-quarter 2021. Average core CPI inflation will likely slow from 5.5% in 2021 to 2.7% and 2.5% in 2022 and 2023, respectively.”

I bet that woman wishes today she hadn’t written those words. (I won’t be so cruel as to name her.) Clearly her optimism was misplaced; however, she has lots of company.

Rather than slowing, inflation has soared! This, in turn, prompted drastic action from the Federal Reserve Bank.

The Federal Reserve, or Fed, has as its mission, per Congress, “maximum employment, stable prices, and moderate long-term interest rates.” I heard an official from the Dallas Fed say once, “You can always count on the Fed to be like a bull in a China shop, late to the party and late to leave.” 

Timing and “gentleness” aside, no one should doubt Fed Chairman Jerome Powell’s commitment to bring inflation under control. Under his leadership, the Fed began aggressively raising interest rates in an attempt to put the brakes on inflation. 

But hiking interest rates 3% in just six months has been painful medicine—leaving the bond market in shambles. 

Bonds work like this: When interest rates go up, the value of a bond goes down. You don’t have to be a math whiz to realize that when investors have the choice between a bond paying 4% and another paying 1%, that 1% bond is going to have to be sold at a pretty steep discount for anyone to buy it. 

Okay, that’s enough looking backwards. 

What’s ahead? What can we expect a year from today? (Be forewarned! My powers of prognostication are only rivaled by my ability to grow hair!)

With the financial markets in bear territory (i.e., having fallen 20%), the question everyone is asking is, “How long will it take to recover all these losses?”

You won’t be comforted to hear me to say, “I don’t know.” 

But I don’t know. No one does. 

Some folks get attention (and make a nice living) announcing when the markets will bounce back; others by insisting they never will. History, I should note, is on the side of those who believe the markets will rebound. But as to when that might happen, don’t be fooled. No one can say for sure.

It’s worth pointing out that, historically speaking, the average bear market lasts a little less than a year. Maybe this time we’ll be so fortunate. 

What we do know is that the financial markets are the intersection of buyers and sellers all haggling over the value of the best run companies in the world. There is a built-in “survivorship bias,” meaning that, in markets, the strong companies endure. That’s to our advantage. 

What was true a year ago—and will still be true a year from today—is that financial markets, despite their uncertainty, remain one of surest, and most accessible methods for ordinary Americans to build and grow wealth over time. 

Bear markets are the price we pay to keep the financial markets healthy, pruned and productive. 

If you’re anxious about what all this means for your future, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

He and his buddy Patrick regularly solved all the world’s problems during their noon workouts. On this day, the conversation had turned to personal finance.

“Dude, the stock market is HORRIBLE!” Jordan said emphatically as he set his dumbbells down with a clang.

“Exactly!” Patrick exclaimed. “And down markets are the time to invest. Especially when you’re our age.”

“Oh right!” Jordan smirked. “I’m supposed to buy stocks when everyone else is selling…and prices are plummeting? That’s crazy!” 

“Who cares what prices do tomorrow or even next week?” Patrick countered. “What matters is what those investments are worth when we retire in 30 years.”

He continued, not giving his friend a chance to respond, “My cousin is a financial advisor. A couple years ago she showed me this really cool chart. It was for someone about to retire in 2020. A person who only started investing when they were in their mid-30s.”

“Like us?” Jordan asked.

“Like us,” Patrick agreed. “Want to guess what the stock market was back then?”

“You mean, like, the Dow?” Jordan asked.

“Yeah,” Patrick said. “It’s a good general indicator of how the markets are doing.”

“Dude, I don’t know. I think the Dow is around 30,000 today. So, 30 years ago? Hmm, I’ll guess 20,000.” 

“Try 2,600,” Patrick shot back. “Meaning, every dollar you invested back in 1992 would be worth about $10 today. Not too shabby, right?”

Jordan’s eyes got big.

“And guess what the Dow was in 2000?” Patrick continued.

“No idea. 20,000?”

“Nope,” Patrick said. “By 2000 it was only around 10,700. And it took a nose dive right after that. Remember the dot-com bubble?”

“Vaguely. Dude, we were barely in high school. We weren’t exactly focused on stocks,” Jordan said, reaching for his dumbbells.

“You’re not getting it,” Patrick chided. “Let me try this way: Think back to when the pandemic hit and all the gyms closed. Remember how you and I tried to buy some weights for your garage, but prices had gone up, like 5x? Well, now the gyms are back open, and you can buy a barbell for a reasonable price again.

“It’s like that with stocks. You don’t want to buy when everything is super high. You want to invest when prices are low. But the only time that happens is when the economy stinks and the markets go down. THAT is the time to buy.”

Jordan set his dumbbells down slowly. He looked up at Patrick and said, “Dude, you’re saying THIS is the time to buy?”

Patrick grinned, “Earth to Jordan. There’s no way to know the perfect time. But prices are down so yes. THIS is the time to buy.” 

“But what about all those YouTube videos warning we’re on the verge of an economic doomsday?” 

Patrick patted his friend on the shoulder, “I remind you there are YouTube videos of guys telling people, ‘Just rub my special protein-infused ‘power cream’ on your biceps and your arms will see MASSIVE gains overnight!’ Jordan, I don’t think we need to be taking financial advice from random people on YouTube.”

“Okay,” Jordan sighed. “Investing, even when things are rough, will probably pay off one day. But still, don’t you get depressed listening to all the bad economic news?” 

“I turn it off.” Patrick said. “And I go work out instead.”

Jordan nodded. “That sounds like a plan.”

If you’d like some help “working out” a retirement plan, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

For me, that was a time of pimples, polyester clothes, bad hair, trying to impress girls, and Mrs. Lawrence’s English class. All not-so-fun experiences—a lot like investing is for most people right now.

For millennials and generations X and Y, this is the first experience with rampant inflation. Rising prices have been followed by the Federal Reserve’s predictable response of raising interest rates. Even our booming stock market couldn’t survive this one-two punch. 

The bond market has repriced itself. Bond prices this year are down over 10% in the U.S. 

Since higher interest rates tend to dampen corporate profits, and since inflation typically causes consumers to spend less, the equity markets have been spooked too. They’re down over 20% in the first six months of 2022 (as measured by the S&P 500 index). 

The only solace I can offer? If you’re like most readers of this column, you didn’t buy into Bitcoin hook, line, and sinker. That cryptocurrency is down over 60% this year!

Back to junior high. Eventually, the pimples, polyester, and greasy hair went away. (The hair eventually went completely away). My awkwardness with the opposite sex also diminished once I stopped looking at my shoes and started looking girls in the eye.

As far as, Mrs. Lawrence’s English class, I hated it! It was hard, and most junior high boys don’t like hard things. 

Today, however, I will rise up and call that woman blessed. By the time I finished 7^th and 8^th grade English, I was a grammar ninja. I could diagram a sentence, conjugate a verb, and spot a dangling participle at 50 paces blindfolded. 

Here’s my point: Investing right now is a lot like being in Mrs. Lawrence’s class. It isn’t fun. Living through a bear market is agonizing. We just want it to be over.

I would remind you—whatever generation you belong to—that this is not the first time markets have tumbled into bear territory. 

I don’t own a crystal ball, and my predictive abilities aren’t worth much. But I can read history. 

According to the Wall Street Journal, we’ve had a dozen bear markets since 1950. In every case (excluding our current situation), the market has recovered its losses and gone on to new highs. The only question is…how long does it take?

Here’s what history shows: In nine of the twelve bear markets, average investors have recovered their losses in one year or less. Not only this, but the median return one year later was over 20%.

I have written in this space that bear markets are the economy’s way of “pruning” itself. Weak and/or weedy entities get “pulled.” They don’t make it. And even healthy entities get “cut back.” This is how the strong get stronger and become more fruitful. It is a painful, but necessary process.

Kind of like junior high.

Both require time and patience. 

So here’s to persevering, and to the confident hope that the future will be brighter. 

To help you think through such issues, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

In late December, 2005, quarterback Drew Brees of the San Diego Chargers suffered a severe injury to his throwing shoulder. Many experts believed his NFL career was over. 

But after surgery and months of grueling rehab, Brees signed with a new team: the lowly New Orleans Saints. His presence changed the culture of the franchise. In 2009, he led the team to a Super Bowl championship. When he retired in 2021, he owned a number of NFL all-time passing records.

The moral of these stories? Sometimes big setbacks create opportunities for better things. 

That’s not always the case, of course. But it’s always smart to look for opportunities in and behind the problems we encounter. 

Case in point: The runaway inflation we’re facing now 

While pundits assign blame and recommend cures, the Federal Reserve is trying to put out this “economic fire” ASAP. Raising interest rates is the fire hose they are using. By dampening economic activity, they hope to stop inflation. 

It’s a tricky, delicate task. The markets are skittish. Higher interest rates increase the possibility of a recession. Recessions lead to lower corporate profits, and investors don’t like that.

So…we have a problem, which presents us with a choice:

1. We can bemoan the problem. (Not exactly helpful since we can’t now go back in time and prevent it; nor can we look into the future and see when it will end.)  

2. We can ignore it and do nothing. Assume the crash position, hold our breath and wait. Or…

3. We can look for surprising opportunities amid the smoke and embers.

Savvy long-term investors prefer option three. They realize there may be some long-term bargains out there. When markets fall, good judgment often flies out the window. All companies in a sector are often treated the same, even though they aren’t all equal in value. 

This means long-term investors may have an opportunity to get a bargain on good stocks that were a bit too pricey yesterday.

Investors who want income from their portfolios may also be staring at a silver lining. When the Fed raises rates, it means better returns for savers and fixed income investors. 

In short, even though the economic news feels bleak, smart investors could be looking at some great opportunities! 

Still, it’s important to be a careful shopper in this environment. In fact, now is a good time to enlist some professional help.

Don’t mishear me. I am not minimizing disastrous fires or making light of serious injuries. Nor am I dismissing the impact of huge financial shakeups. 

I’m saying that when problems strike you should control what you can and accept what you must. And never stop looking for opportunity. 

To help you think more clearly about your finances, I’ve created a free tool. It’s a comprehensive checklist of pre-retirement questions for people who are 60-something. Email me at bmoore@argentadvisors.com if you like a copy. I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

“Like what?” I asked.

“This economy,” he continued. “You know, inflation. Debt. The stock market.”

“You’re worried about the stock market?” I asked.

“Aren’t you?” he responded.

“Do you remember when COVID-19 first appeared?” I asked. “In late February 2020, the stock market fell about 30% from its peak. By August the market had hit bottom and recouped all its losses.

“If you had invested $100,000 in the market the day before everything fell back in early 2020, know how much you’d have now?” I asked.

“$80,000?” my friend guessed.

“Actually, about $115,000. I’m not including taxes or fees you paid,” I explained. “Nor am I saying that what you have in the stock market might not go down further from this point. No one knows.”

“But here’s what I do know,” I said. “Historically, the US stock market as measured by the S&P 500 or the Dow Jones Industrial Average dips about 10% about every two years. Every five years or so, it goes down about 30%. And once every generation or so, we’ll see it drop 50% or so.”

“And it can go down more than that, more frequently than that,” I continued. “That’s just been the history over the last 100 years or so.”

“So, why does it seem so different now?” my friend asked.

“Two reasons,” I said. “First, because it’s now, and ‘now’ always feels more real than ‘back then’.”

“Yeah, I get that,” he said.

“Second, because you’re older, you likely have more money than you’ve ever had. Before COVID, the last ugly bear market we had was the financial crisis of 2008. Remember how old you were then and how much money you had?”

He laughed. “I didn’t have two nickels to rub together in ’08.”

“Right,” I said. “But now that you’ve actually got some money, you’re experiencing what it feels like to be in the markets. It hurts to see your account values decline. But if you want to reap the benefits of market participation you’ve got to take some risk…and learn how to process the pain of volatile markets.”

“And investing can hurt,” I continued. “From 2000 to 2002 we experienced a bear market that started with the bursting of the big tech stock bubble. Those three years of pain seemed like forever.”

“But again, if you’d invested $100,000 in the S&P 500 right before it tanked in 2000—say March 1, 2000—want to guess how much you’d have today? Again, I’m not trying to calculate your taxes or fees.”

“$150,000?” He was getting the idea.

“Try $340,000.”    

“Oh wow!”

“There’s an old saying that history does not repeat itself, but it does rhyme,” I said. “I am terrible at predicting the future, but I read history. And the history of markets reveals certain realities. Risk is real. Declines are inevitable. Some pain is the price of admission to reaping the rewards that market participation can bring.”

“What do you recommend then? Just do nothing?”

“Absolutely not. I recommend two things. 

“First, get a financial plan that guides you to the amount of market risk that’s appropriate for you. And once you have that plan, review it regularly so you can recall why you’re doing what you’re doing.”

“Second, read history. It has a lot to teach us about the present.”

To help you deal with market uncertainties and evaluate the design of your own plan, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Just email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

On the bright side, if you had money to invest, you could get a 5-year CD at your local bank for 12% interest!

Never slow to a party, the financial industry designed products that would flourish in a high-interest rate environment.  

I remember being at one such presentation. I was a young man in a room full of older faces. 

“By a show of hands,” the speaker said dramatically, “does anyone in this room seriously believe we will EVER see interest rates below 10% again in our lifetimes?”

No hands went up. The audience laughed, so I did too, unsure why this fact seemed so certain to everyone else.

Of course, that period of hyperinflation didn’t last. That’s because economic conditions are in constant flux.

Case in point…

Like you, in recent weeks I’ve been paying $4 per gallon of gas—and grumbling. But do you remember just two years ago when crude oil was trading at -$37 a barrel! Thanks to COVID-19, no one was traveling, and nothing was open. For a brief time, owners of crude oil had to pay someone to take it off their hands!

My point is…things changed. 

They always do. Interest rates change. Inflation rates change. Tax rates change. The circumstances of your life change. Your health changes.

There’s a word for the mental trap we fall into when we see things going in a direction and assume they will continue in that direction forever. That word is “extrapolation.” 

Depending on its direction, extrapolation can lead either to overconfidence or extreme pessimism. In today’s market conditions, we’re seeing a good bit of the latter.

“My account is down 15% this quarter. If this continues, I’ll NEVER be able to retire!”

This is the flaw in extrapolating. It forgets that financial trends come and go. 

Concerning the markets, a review of history shows that markets typically trend in a direction…until they don’t. The overly optimistic investor fails to see the inevitability of occasional market corrections. The overly pessimistic investor panics on every down day.

Better to save and invest regularly and let market volatility work in your favor. How? By consistently putting a percentage of your earnings into your company’s 401(k) plan, you can benefit from market prices going both up and down. When prices are up, the steady dollar amount you invest buys fewer of the more expensive shares. When prices are down, your monthly investment buys more of the less expensive shares. 

To recap: The long-term direction of the modern age is progress and the creation of wealth. But that upward trend is anything but stable in the short-term. The pendulum swings both ways. And it does so unpredictably.

That’s why planning is so critical. Balance and risk mitigation are key components of any plan that participates in the financial markets.

While participation in the financial markets can bring great rewards, it can also exact a dear price on the poor soul that thinks that what goes up will never come down (not even temporarily).

I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

Bad timing for a magazine called “Smart Money.” This headline was on the cover of the October 2008 issue—immediately before an epic financial crisis and market meltdown. 

In early October 2008, the Dow Jones Industrial Average stood at about 10,800. Over the next 18 months, it would plummet to about 6,500. 

I think of the poor souls who retired that year, relying on the market to give them income from portfolios that they assumed couldn’t possibly fail. 

Sadly, there have always been people who make that mistake.

Consider Bob & Meryl. One day in 1970, Bob announced to Meryl, “I just got a message from God that the stock market is going to average a 14% return for the rest of the 20^th century!” he said. “We’ve got it made! Let’s retire now!” 

Hmmm. Investment tips from the Almighty? (This was before CNBC). Bob and Meryl did have investment assets of $1 million, which was quite a sum at the time. With 14% returns, Bob figured they could withdraw 10% or $100,000 each year from his million-dollar nest egg and live large. They’d never run out of money.

Too bad Bob didn’t listen more carefully. Instead of “stock market annual returns will average 14%,” what he (thought he) heard was, “the stock market is going earn 14% every year for the rest of the century.”

Small difference in words. Huge difference in meaning and outcome. 

The stock market did just what the Voice said. Annual returns were on average a little more than 14% for the last 30 years of the 20^th century. It was an amazing ride. For the long-term, accumulation-oriented investor, it was glorious. 

But Bob and Meryl weren’t looking for long-term growth. They needed regular income. And Bob had assumed that if their investment accounts earned 14% each year, they’d be fine. And they would have been fine…if that’s what had occurred.

But that isn’t what happened. The way the market delivered that average 14% return was through a succession of up and down years. The first three years were fantastic. Bob’s investments earned 9%, 10% and 18% respectively. “This is awesome!” Bob said.

But then a bear market hit, and Bob and Meryl’s accounts took a beating. They dipped 13% one year and another 24% the next. Suddenly, their million-dollar account was worth about half its original value! Since Bob and Meryl had gotten used to their $100,000 lifestyle, they held on and hoped for the best.

Fourteen years into retirement, they were broke.

I have witnessed assorted versions of this story through the years. Each one is uniquely sad.

As Yogi Berra wryly noted, “It’s tough to make predictions, especially about the future.” 

And timing, as they say, is everything. (Everything but predictable.)

Bob’s younger brother Bill is a great example. Bill retired only five years after Bob—in 1975. He too had $1 million in investments and also planned to withdraw $100,000 a year to fund his retirement. 

Solely because of the timing of things, Bill never ran out of money. His $1 million nest egg grew to over $10 million in value during his retirement years, despite his $100,000 annual withdrawals.

The fact that predictions are impossible makes preparing for hard times necessary. 

I can’t tell you what year would be most ideal for you to begin your retirement (the batteries on my crystal ball are running low). But I can help you prepare for a variety of situations at retirement. 

I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Just email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

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