Stay Calm & Invest On: Avoiding Panic in a Volatile Market

MMWM 2-14-25 Full Show.mp3: Audio automatically transcribed by Sonix

MMWM 2-14-25 Full Show.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker1:
Any examples used are for illustrative purposes only, and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment, and is not a solicitation or recommendation of any investment strategy.

Speaker2:
Welcome to Money Matters with Mike, with your host, Mike Zeno. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you too. So now let's start the show. Here's Mike Zeno.

Speaker3:
Welcome to Money Matters with Mike, the show where we dive into the strategies, insights, and tools you need to secure a confident and stress free retirement. I'm Mike Zeno, and my mission is to help you protect your nest egg, outsmart retirement risks, and live the life you've worked so hard to achieve. Whether you're nearing retirement or already enjoying it, we're here to guide you every step of the way. Because peace of mind starts with a solid plan. On today's show, we're going to talk about protecting your retirement from market uncertainty. And as always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you today, sir?

Speaker4:
I am doing great, Mike, here on this wonderful weekend. Uh, really? Do you know, always enjoy getting together? But I think this discussion we're going to have today is super important, especially given what we know we've seen kind of of late in the markets. Right.

Speaker3:
Right. I mean, we never know what the market is going to throw at us. It can be great one day and then the next day and then it's like, isn't that roller coaster ride really fun? Um, not necessarily, unless you have a plan for it. Right?

Speaker4:
Right. There's a reason they call, uh, you know, that, uh, roller coasters have names like the Scream Machine and that kind of stuff because, you know, it's kind of scary. So, you know, if that's your thing, sure. Ride the Wall Street roller coaster, but otherwise you want to be well balanced as far as the risk and the safety and all of that. That's all stuff we're going to go into here today over this next half hour. A lot of stuff to get to and great info to take away. So do not go anywhere. Um, but thank you so much for listening to the show. As, uh, Mike always says, wherever you're listening, whether you're listening on the radio or if you're listening on the podcast, thank you so much. Because without you, we do not have a show at all. And you can always listen to previous episodes of Money Matters with Mike on the website. That's Money Matters with mike.com or your favorite podcast app. Yeah, wherever you subscribe to podcast you can go there. Please leave us a nice rating. Subscribe to the show. We would really appreciate that. Subscribe to the YouTube channel as well. Just search Money Matters with Mike on YouTube. We've got weekly highlights. We've got more special content there on the YouTube channel, and don't hesitate to hesitate to reach out to Mike Zeno with your questions because he wants to help you. Mike, that's what you do every single day for folks.

Speaker3:
It is. I would absolutely love to have a discussion with you. I'd love to meet with you, discuss how we can help you reach your retirement and financial goals. We can help you with any aspect of planning, whether it's risk management, estate planning, and a whole lot more because building sound financial plans, folks, well, that's what I do best.

Speaker4:
That is absolutely right. And you can just go to Money Matters with Mike comm on the web. That's Money Matters with mike.com. And click the contact page there and reach out to Mike Zeno with any questions or to set up an initial consultation. We'll get to more information on that as the show goes along as well. You can also call him (700) 456-0157 three. That is 704 560 1573. All right. So we're going to get to a lot of discussion About, you know, the volatility that not only we've seen lately in the market, but that we've seen historically in the market kind of put things in perspective on the show today. We'll ask the question to are we due for a correction this year. A market correction. Because, you know things have been kind of flying high. So are we due for a big dip in the markets? Well, we'll have what some economists are concerned about, a brief history of those stock market crashes, as I mentioned, and kind of understanding sort of the natural ebb and flow of the markets and the market cycle as well. So a lot of great info coming up. But first, let's get some inspiration for our conversations. It's our quote of the week.

Speaker5:
And now for some financial wisdom. It's time for the quote of the week.

Speaker4:
And this week's quote comes from the Oracle of Omaha himself, Mr. Warren Buffett, who said, this risk comes from not knowing what you're doing. I think it's just as simple as that, right?

Speaker3:
I love Warren's quote. Okay. We use a lot of Warren Buffett's quotes. Uh, folks, he's the most successful investor in the history of investing, so why not, right? He spits a lot of wisdom.

Speaker2:
Hungry for something to chew on? Here's some meat on the bone.

Speaker3:
I like this one specifically because we've talked about, you know, climbing Mount Everest before, right? If you just leave your job or your house today and go out to Mount Everest and start climbing, chances are you're gonna die, okay? And that is risky. And what these folks do is they if they have that as a goal, they plan, they train, and they just go all out so that they have a better chance of success. And so if they're not planning not only for the ascent, the climb, but also for the descent, um, then they're in trouble because most of the deaths when climbing Mount Everest folks don't actually occur on the way up, but instead on the way down. So if you don't know what you're doing from a financial standpoint, you could die a financial death in retirement and have to live off of the government. And I know that none of us wants that for you.

Speaker4:
Yeah, that is absolutely right. I mean, you know, you don't want to be caught, uh, in your retirement years going into retirement without a solid plan that has accounted for whatever could potentially happen. And there are ups and downs, as you say, in the market, that can be big swings. They can be small, you know, just little bumps in the road. But it's definitely not a straight line. You know, there are different cycles to the market. And so understanding those cycles can really help you stay calm and help you make smarter decisions when it comes to your investments. So there are four phases here, Mike, of the market cycle. So let's talk about number one first. And that's really like the accumulation phase of the of the market cycle.

Speaker3:
Yeah, this this particular phase happens right after the market hits rock bottom. And so large institutional investors, they see opportunities to start buying shares at lower prices. Those rock bottom prices. And those prices may fluctuate but remain relatively stable. And so smart investors start accumulating shares but do so very very cautiously.

Speaker4:
Yeah. And then the market tends to head into the markup phase, which is the second phase that we're talking about here.

Speaker3:
It is the market begins that steady climb as people get a lot more confidence in investing in it. And so more investors, including those who were a little hesitant, maybe, you know, standing by on the sidelines, well, now those folks are jumping in. And so you start to see prices rise rapidly and the market optimism continues to grow. And that phase often sees the biggest gains in the shortest amount of amount of time.

Speaker4:
Yeah. And then, you know, on your on your climb up mount Everest in this particular, uh, scenario, uh, the market cycle we're talking about, uh, is the distribution phase as you reach the peak, right. That's the peak of the cycle is the distribution phase.

Speaker3:
Exactly. And this is the time to start taking some chips off the table, okay. Investors begin selling some of their holdings as prices level off. And then you see the market sentiment begin to be mixed. And some people expect continued growth and other people anticipate a downturn. And really nobody knows what the heck's going to happen next.

Speaker4:
Right. And then, you know, number four is called the markdown phase. I kind of like to think of this one, you know, as the big scary hill on the roller coaster, right?

Speaker3:
Yeah. This is the the decline, uh, beginning as more investors start freaking out, right. They're panic selling. Fear spreads. That causes the downward momentum. Everybody is losing their stomach as the the roller coaster plummets off of the cliff. The market falls sharply, sometimes due to external triggers like geopolitical events or maybe some economic shifts.

Speaker4:
Yeah, and we've seen that of course, happen several times in history. And we're going to actually run through the kind of the biggest ones here momentarily. But you know, Mike, if people say, okay, what does that really mean for me and my investment portfolio. Right. If I if I am invested in the market, if I'm, you know, trying to plan for my retirement or my financial future in general, and part of that is being invested in the market. What does that mean for me this cycle?

Speaker3:
I think understanding that every market cycle includes both ups and downs and being prepared can help you avoid those knee jerk reactions or much worse, emotional decisions that can impact your future in retirement. So if you, out there listening, are not prepared for that next cycle shift. Well, then we can help you build a plan. That stands strong and includes guaranteed lifetime income, regardless of what the market conditions are throwing at you. All you have to do is pick up a phone call (704) 560-1573. And again, that's (704) 560-1573. Or you can visit us at Money Matters with Mike. Com.

Speaker4:
Yeah. When you go there to the website just click on the contact page and you can reach out to Mike Zeno and get things going for a better financial future for you. All right. So I teed this up a second ago and we're going to go right into it. And this is you know we talked about the market's ups and downs. There are a lot of places and times that we can look back in history and just see that, you know, having happened in uh in real time. Right. So you know, market downturns are are to be expected. History really does show. Mike, though, that they're temporary. So as we look at these historical market corrections or big downturns, um, but we'll keep that in mind starting with 1929. Yeah, that that year certainly rings a bell. It's when the Great Depression started.

Speaker3:
Yeah. The Great Depression. The Dow itself lost nearly 90% of its value over three years. Uh, I would not have wanted to live through that. My grandparents lived through that. Excessive speculation, a lack of regulation. All the things played a major role 90% over three years in the Great Depression.

Speaker4:
Yeah. And a lot of the regulations that we have now are in place in response to the Great Depression. Uh, because, you know, Washington looked at it and said, okay, we're going to try and prevent this from ever happening again. And, you know, luckily, something that bad hasn't happened, I think, due in large part to a lot of the regulations and the checks and balances that are kind of in place now. Um, we did have more big drops, though. I mean, you look, in 1987, it was Black Monday.

Speaker3:
Yeah, that I actually remember that as a young adult, seeing, you know, videos of people jumping out of high rises because a one day, 22.6% drop triggered by computer driven trading and investor panic, people freaked out. Um, then that is something actually to kind of freak out about, right? A 22% drop in a single day. Wow.

Speaker4:
Yeah. I mean, that's just you're watching money just just fly away at that point. And then, of course, you know, one that, uh, I really, really remember, um, because it just happened. It just happened pre 911. I remember I had started working in news at that point and, um, it was something that I covered and talked about. This was the.com bubble. It it burst in a big way.

Speaker3:
It absolutely did. And you saw those overvalued tech stocks just absolutely collapsing. And it actually erased $5 trillion in market value. That was a pretty big one too.

Speaker4:
Yeah, absolutely. And then we go fast forward now to 2008 with the Great Recession. Um, this one is is the one that I think a lot of people will listening right now will remember feeling the most pain from.

Speaker3:
Yeah. I mean, that was only 17 years ago. And people have forgotten because, you know, after that, basically we had this great bull run, but a housing and banking crisis that led to over 50% of the market dropping and erasing people's retirements in just one year. So a lot. I mean, imagine somebody who retired in 2007 thinking that they were going to coast through the easy life in retirement, and they were exposed to that risk and then lost half. Most of them had to go back to work. Matt.

Speaker4:
Yeah. And that is not a situation you want to find yourself in having just retired and then the most recent big drop in the market happened just a few years back. Now in 2020. It was the Covid 19 crash.

Speaker3:
Yeah, those five days right March 5th, sixth through 11th. Rather you saw the market lose $6 trillion in five days 34% drop. But then five months later, we also saw one of the fastest recoveries in history. It wasn't the flat L shape that 2008 was. In fact, it was much more V-shaped than five months later, in September. We were in all time highs.

Speaker4:
Yeah, it was just a quick bounce back from that, uh, really big crash there of 34%, as you said. And so I think, you know, dealing with the risk of the markets, because we never do know what's going to happen is one of the reasons, I think, that people should meet with a financial professional to help them navigate through all this, because we don't know when the next Covid 19 crash is going to happen. We don't know when the next, you know, God forbid, Great Depression is going to happen or anything like that, any of those events we just went through. But, you know, you got to get a plan in place so that it's good whatever happens, right? And so that's at least one reason why you should meet with a financial professional. What are some others to kind of share with folks?

Speaker3:
Yeah. I mean, if you're listening right now and you don't have a formal retirement plan, if you don't understand the risks that you're taking with your individual investments, a lot of folks just invest in their 401 s, and they have no idea what their money is actually doing. Well, a financial professional can explain all that, optimize all that, and put you in a much better position than those who don't consult the professional. If you don't know how much you're paying in fees, if you don't understand how to maybe manage risk on your own in your portfolio, especially as you get older, a lot of folks have many different accounts spread out all over the place, and you're creating a nightmare scenario. If, God forbid, you pass away and have to leave that responsibility to a spouse or to your To your children. So a lot of folks like to simplify and get things basically under one umbrella. I mean, it's as simple as if you don't know whether or not you should pay your house off. Okay. You might want to speak with somebody who has the answers to all of those different questions.

Speaker4:
Right. And so contact Mike Zeno this week for a complimentary retirement and financial consultation. And that a way that you can get in touch with him. One of the ways is Money Matters with Mike comm. Click on the contact page there. Money matters with Mike comm or you can call him (700) 456-0157 37045601573. Is that number that you can call. And he will actually answer. So that that's one thing that I can guarantee. And if he doesn't he'll call you right back. All right. So, um, here's the thing. You know, nobody knows what's going to happen in the markets, right, Mike? But a big question that people might be asking right now, especially with some volatility that we've seen in the years so far, is are we are we due for another market correction here in 2025?

Speaker3:
Yeah. I mean there's this big idea because of the increase in volatility. And analysts are very, very closely watching the economic indicators to determine whether or not a correction is imminent this year. And while no one can predict what the future is going to do with certainty, there are several warning signs that people should be paying attention to. Um, that suggests that we could be due for another correction. So, you know, there are some economic warning signs, things like inflation pressures, uh, geopolitical uncertainty, corporate debt levels, earnings reports, market valuations, consumer spending. Right. And we can break all of those down. Um, a little bit more in detail if you want to. Matt, what do you think?

Speaker4:
Yeah, let's let's do it. Let's go into some of those here and um, you know, kind of look at I think we have to go into inflation much because people are very familiar with that at this point. Know what that can do to the economy? Geopolitical uncertainty there. Mike, I think that there's a lot going on, uh, on that front right now that, uh, we should probably highlight.

Speaker3:
Yeah. I mean, think about tariffs. That's been like the word of the last, uh, you know, six weeks. Whether or not tariffs are going to be opposed, how is that going to, uh, you know, cause trade disputes, international conflicts, and then just overall political instability. Well, that can create market uncertainty and drive the volatility that we've been seeing.

Speaker4:
Yeah. Right. And then you know, you said you mentioned corporate debt levels. And people might be thinking, okay, why should I be concerned about that. Because you know if they've got debt that's their problem. But that could become a lot of people's problem right?

Speaker3:
No, absolutely. Because so many companies have taken on significant debt in the low interest rate environment of the past decade. And now, unfortunately, as rates rise, debt servicing becomes much more expensive, which could lead to financial stress and market sell offs.

Speaker4:
And then that is going to be a lot of people's problem, as I said. And then some trends to watch here in 2025. You mentioned these earnings reports. Um, those have actually you know, we've been through uh, earnings season here recently on Wall Street and a lot of earnings, especially the big companies I feel like have been pretty positive, uh, so far. So at least that's a good sign. Um, you know, at least from my view, looking from the outside in. But, um, you know, at the same time, corporate profits could be down and that could indicate an economic slowdown that could impact investor sentiment as well. So something to watch. Also market valuations. Uh, you mentioned before, why is that important to think about, Mike.

Speaker3:
Well, I mean some stocks and particularly in that tech sector they remain at historically high valuations, which raises concerns of that potential bubble. Look at Nvidia. Nvidia was the darling over the past you know several years. I mean the growth was exponential. But then it kind of had a, you know, a come to Jesus meeting here, you know, in the past couple of weeks. And that freaks people out.

Speaker4:
That absolutely does. And then, you know, consumer spending, um, is really something to watch this year I feel like. And a lot of economists agree in our in our research here for the show. A lot of economists agree. Consumer spending big big deal to watch this year.

Speaker3:
Yeah. It's a critical indicator of economic health. If people are out there spending money like there's no tomorrow, then the economy is awesome, right? They have all this discretionary income, but any downturn in spending could lead to reduced growth. And then you see the market kind of contract, right.

Speaker4:
Absolutely. And so then, you know people are probably asking listening to the show. Mike okay, what can I do? Um, with all of these, you know, sort of concerns in these things to watch. Maybe some strategies that folks need to implement or take into account, or speak with a financial professional like yourself about.

Speaker3:
Yeah. I mean, so first thing, I'm always going to say diversify your portfolio. Everybody knows that one. But having a mix of stocks maybe include some fixed indexed annuities that only participate in the gains and none of the downturn in the market volatility and can create a guaranteed lifetime, um, stream of income, as well as some alternative assets, maybe real estate or a little bit in maybe gold or crypto. Right? Not a lot. But you know, that can help you mitigate some of that risk. And I think it's really important for folks to maintain the long term perspective and to avoid those knee jerk or panic selling during downturns, because historically, markets recover over time.

Speaker4:
Yeah, that's the thing to keep in mind here, because, you know, we, um, as we have been through here, the market happens in cycles, right? It goes up, it comes down, it goes up, it comes down. And so that is something to to keep in mind. It's just the normal kind of ebb and flow. Yeah. The ebb or the flow may be bigger than it has been recently, but it happens. So avoid those emotional, um, you know, investing decisions as we'll talk about momentarily. And then also, you know, consider some defensive investments. Right. Some things that are, uh, those types of investments that tend to perform better when the market is volatile.

Speaker3:
Yeah. So things like utilities, like healthcare, consumer staples, all of those definitely tend to perform better during times of market volatility. And so, you know, if you're not in any of those you may want to consider that as well.

Speaker4:
Right. And then of course something to keep in mind at all times, especially as you get older and closer to retirement, is to keep your risk tolerance in mind. Right. Write and review that. Make sure that you know you're not taking too much risk for your particular situation or your given age, right?

Speaker3:
Yeah. No doubt. I mean, goals and risk, comfort levels go hand in hand when somebody is 20 years old, man. Like let's risk it, all right? Because you still have 60 plus years for the market, you know, to rebound and for your money to grow. But now when you're in your 50s or 60, you don't have as much time to rebound. And then it becomes critical to make sure that you're allocated, uh, in a way that aligns with your risk tolerance levels.

Speaker4:
Right. And, you know, market volatility, that is a natural part of the cycle. But being prepared with a strong, diversified investment strategy can really help protect your retirement savings against significant downturns. So the question is what is your game plan for 2025? You know, don't wait. You got to take control of your retirement right now. And to do that, I would suggest you reach out to Mike Zeno. He can help you wade through the the rising waters of financial uncertainty. Money matters with Mic.com is the website that's Money matters with Mic.com. Click on the contact page there or give them a call 704 560 1573 704 5601573. And you know, Mike, we talked a lot there about avoiding sort of the panic selling or panic buying even or anything dealing with emotions. We can't emphasize this enough. Do not be an emotional investor.

Speaker3:
Yeah. Because if you do it's going to lead to potentially costly mistakes. And we recommend implementing a very smart plan. There's this psychology of investing right. Fear and panic selling. We talked about that a little bit earlier. When markets decline people freak out. They sell their holdings and they go into cash to avoid any further losses. Says. But history shows that those markets tend to recover. And if you do that, you've just locked in your loss because now you're in cash and you missed the best days of the market rebounds.

Speaker4:
Yeah. There's also, you know, a little bit of greed uh, as well. No, no. You're telling me there's greed on Wall Street. No. Um, and then there's also FOMO, fear of Missing Out. That sort of will rear its ugly head for people too.

Speaker3:
Greed is good, right? From what? The movie Wall Street back in the 80s. Uh, it is good some of the times. It is not good all the times. And so during bull markets, investors may rush to buy stocks. The problem is there it inflated prices driven by that excitement instead of logic. Right. Buying high often leads to disappointing returns when the market actually corrects. And then there's also this thing called recency bias. Investors tend to overemphasize recent market trends and believe they're just going to continue on indefinitely. And they ignore long term market history in the long term market trends. And so all of that can lead to you having less money in your pocket, not more.

Speaker4:
Right. And which is just, of course, the exact opposite of what you want to happen. What are kind of the biggest common mistakes that people make when those emotions take over?

Speaker3:
Maybe chasing hot stocks, right. Investing in stocks simply because they're popular or they're hot or Cramer has this tip buy buy buy. Um they can lead to significant losses when that trend reverses. Things like market timing and trying to predict the market's highs and the market's lows. It's nearly impossible because you have to be right. You know multiple times on the buy on the side a sell. And most of us can get one of those right. Very few including money managers get them all right. And then this is a big one that we've seen recently over reacting to news headlines. Um, the news likes to sensationalize these stories, and that can cause investors to make just impulsive decisions. So staying informed is important. But reacting emotionally to short term events can lead to unnecessary changes in a portfolio strategy. My suggestion is don't only listen to one type of news. Listen to the left news. Listen to the right news. Listen to the British news reporting on what's going on in America. At least you get a much more well-rounded view, and then you can make your own conclusions based on what you're hearing.

Speaker4:
I like that advice there, Mike. And you know, one big thing here for folks to remember is diversify. That's we mentioned that earlier. Diversification is so, so important. That includes a mix of stocks, fixed index annuities and other assets, as you said, because these cycles they're inevitable. But that balanced strategy can help smooth out the ride and in just the last minute or so of the show. Run through just a couple of strategies here, Mike, to avoid emotional investing.

Speaker3:
Yeah. Number one, you want to stick to a long term plan. You got to have a long term investment strategy that's based on goals, on risk tolerance, on time horizons. That is going to help you weather those market fluctuations. Consider using dollar cost averaging. So no matter what the market's doing you're buying all the time. Instead of trying to time the market, make sure you rebalance your portfolio at a minimum. Once a year. You should be having annual reviews with your financial professional so that your, you know, portfolio itself remains aligned with those long term objectives, rather than being dictated by short term emotion. Um, and the one I absolutely think is paramount consider professional advice. Okay. Working with a financial professional can help remove emotional biases from those investment decisions, it can help you keep your, uh, long term strategy on track. And you're focusing on fundamentals, not noise.

Speaker4:
Well, that does it for this week's show. Mike, it has come and gone quickly here, but thank you for each and every bit of wonderful knowledge and all the things that you bring to the table every week, and we'll talk to you next time.

Speaker3:
Sir Matt, thank you for everything. You bring in the production quality as well, but most of all, I say it every single show. Thanks to every single one of our listeners, whether you're listening in your respective markets, on the radio or at your leisure, on a beach or in the mountains somewhere on podcast without you guys, we do not have a show. So whatever you're doing this weekend, I hope you enjoy it to its fullest extent and as always, make it a great day.

Speaker2:
Thanks for listening to Money Matters with Mike. You deserve to work with a licensed financial and insurance professional who can offer strategies for protecting and growing your hard earned money. To schedule your free, no obligation consultation, visit. Money matters with Mike. Com or pick up the phone and call 704560 1573. That's (704) 560-1573. Not affiliated with the United States government. Mike Zeno does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness, or the results obtained from the use of this information.

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