This week on The Money Puzzle Podcast we talk about the current market. We are seeing changes in the market that we haven’t seen in years! Join us to see our take on the market at this time.

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Speaker 1 [00:00:02] All right. Welcome back to the Money Puzzle. I’m Chris Vaughan. I’m here with Eric Douglas today. We are we’re going to do this a little bit differently because all of our other compatriots are out of town on vacation. It is. We’re filming this going into 4th of July weekend. So they’re out enjoying themselves. And Eric and I are here holding down the fort along with my producer back here.

Speaker 2 [00:00:24] I’m just going to call them lazy, but okay.

Speaker 1 [00:00:26] I was trying to be nice, but yeah, lazy works.

Speaker 2 [00:00:28] Taking time out of the office. How dare they go on vacation with their families?

Speaker 1 [00:00:32] That’s. That is horrible.

Speaker 2 [00:00:33] Horrible.

Speaker 1 [00:00:34] Yeah. What, what we thought we’d talk about today was because we’re recording this on July 1st. As of yesterday, the first half of the year is officially over and it was epically bad.

Speaker 2 [00:00:48] Well, right. It was interesting. So.

Speaker 1 [00:00:50] All right.

Speaker 2 [00:00:51] So I’ve seen things happening the first half of the year, this year.

Speaker 1 [00:00:54] I’ve had in the last several months, as I’m going through performance with my clients, all but a couple of them have said, I know it’s bad. I don’t want to look.

Speaker 2 [00:01:04] Right. That has been that has been interesting because I’ve had the same experience with a number of clients, great clients, and it’s almost to their credit where they’re like, you know what, I get it. It’s it’s not a great year. I just don’t really care what performance is. He’s like, I trust you.

Speaker 1 [00:01:19] Right? And yeah, I’ve heard very similar things, but I think it is important that we do discuss what is actually going.

Speaker 2 [00:01:27] Oh, we’ll definitely get into it. So I’ll tell you a funny story. I had a client meeting yesterday and I get to the point where, you know, we normally would talk about performance and I said, okay, I had the tab up. Do you want me do you want to see the number? You want to see the number? They’re like, Now we’re okay. And I said, It’s better than others. It’s not as bad as you probably think it is. But but, but yeah, it was just an interesting anecdote where just see where it’s interesting to see where people’s heads are at right now, considering this really is one of the worst markets we’ve had I mean, definitely in my lifetime, definitely since O8 anyway. And there’s there’s some there’s some market differences between 0809 and what we’re experiencing right now, which we’re obviously about to get into right now.

Speaker 1 [00:02:05] Yeah, well, let’s go ahead and dove into that. So when we say this was just a horrible opening to a year and we’ve heard this thrown around on the news that it was coming. Right. Well, now we’ve got final numbers. And so compared to previous first half’s, just how bad was this?

Speaker 2 [00:02:23] So the fourth worst year ever in the history of the market, the first.

Speaker 1 [00:02:27] Half of the year.

Speaker 2 [00:02:27] The first half, this is the worst first half of the year or the fourth worst first half of the year. Say that five times fast. Right. But in 1940, we had a -20.9% drop to start the year in 1970. This is the worst year since 1970, 52 years ago, by the way, where, you know, 1970, there was a 20.2% drop. And this is in the the S&P 500. Okay. As of yesterday, the S&P was down a little over 20%. It was 20.6% down through the first half of the year.

Speaker 1 [00:03:03] So that’s worse than 1970, right?

Speaker 2 [00:03:05] So that’s worsened. It’s between 1970 and 1940. Yes. The worst drop to start a year was in 1932. And you probably know, right?

Speaker 1 [00:03:13] Great Depression.

Speaker 2 [00:03:14] Sure. Great Depression. Yeah. And the that year started off with the -44.5% return in 1932. Wow. Now so so that’s the bad, right. And what do we always talk to clients about? Right now, we’re what do we make sure that we want to make sure that they’re doing well?

Speaker 1 [00:03:33] We want to make sure that they’re not panicking, not because that’s the first thing.

Speaker 2 [00:03:36] Not panicking, staying the course. Yeah, making sure everything still fits. Making sure their financial plans are still in order and we’re still on path. Right. So that’s always very important. But I want to back up. Okay. What happened in the rest of the year and some of these other years? Because I think this is really good for providing some context to make sure we think about, okay, yeah, I’m sitting here telling you how horrible the beginning of the first half of the year was, and we’re only talking about the equity markets. We’re going to get into the fixed income markets as well because that’s honestly why the year has been so bad. It’s not because I agree with the market, but so in 1970 we had a 20.2% drop 52 years ago. Once again, we haven’t had this bad of a drop in the first half of the year since 1970. The market dropped 20.2% in the first half of the year. What do you think the market returned in the second half of the year?

Speaker 1 [00:04:26] I don’t know.

Speaker 2 [00:04:27] We got 25.3% up up for the second half of the year. So basically at the end of the year, because if it draws if it comes down 20, it has to come up 25% to get back to.

Speaker 1 [00:04:38] Even catch.

Speaker 2 [00:04:39] Up. So basically at the end of the 1970, we had a market return of 0%, right? In I mentioned 1932, the market dropped 44% to start the year. The second half of the year, it returned 53%. So the year to date number when you got to December 31st was, you know, the market was down about 14.8%. Certainly nothing to cheer about. Right. But it definitely wasn’t down 44% at the end of the year. 1962 market was down 26% to start the year. 20% return for the second half of the year.

Speaker 1 [00:05:15] So in all of those cases, they didn’t catch up to where they were at the beginning of the year, but they started approaching it. It was not the end of the world.

Speaker 2 [00:05:23] You had you had as you had a good second half of the year, you had a positive price return or positive market basically for the second half of the year. Because what did we always say? Okay, you go down. You know, what do you never want to do when you’re at the bottom of a market? You never want to sell out, right? Because then you miss the initial run up. In most of these cases and every in every one of the years that we’ve had a worse start to the year than this year, there was a positive, positive price return for the second half of the year. So it’s this year sucks. I don’t know. I mean, you know, I don’t know if that’s a technical no way around area, but the first half the first half of this year, I was talking to a client, the same client I just mentioned, I was talking to a client yesterday about this. And there’s not really any way to spin the market this. You know, it’s just been a it’s been a nasty start to the year we were due. We had record returns in 1920 and 21. Just an unbelievably insane market for the last three years. Well, on average, the market is going to get you, you know, for every three positive years, you’re going to get one negative one. Well, we had the three biggest, most positive years the last three years. Guess what we’re having this year, right.

Speaker 1 [00:06:31] You know, and I think that’s where a lot of people they kind of forget that. Yeah, they we’ve been in a bull market for so long that they have forgotten that this is part of the natural cycle and the people who have been ready to, you know, jump off the cliff over all this, I just don’t understand what’s happening to my money. Well, we were due for this. And the longer that we had to wait, the worse it’s going to feel. Right. And then to your point, the last three years prior to this were epically good, right? They were fantastic years. So the higher up you go when you do fall, it’s a further fall. It’s more painful. Yeah. And I, I think people forget that sometimes.

Speaker 2 [00:07:11] Yeah. And I think it’s important to, to remember as well. I mean, what are we talking about most specifically? Right now? We’re talking about the equity markets, the stock markets, and I’m using the S&P price returns because that’s typically the most common commonly notated index, right, that we use for the stock market. Either that or the Dow Jones Industrial, the Dow Jones Industrials actually a very not.

Speaker 1 [00:07:34] It’s only 30.

Speaker 2 [00:07:34] Companies. It’s really not even that great of an index to quote but but the S&P is a little bit know a little bit better little bit more common but we haven’t touched on bonds and in the equity market sucks don’t misunderstand. The real problem this year has been with the bond market.

Speaker 1 [00:07:51] Yeah. All right. So let me kind of tee that one up for you a little bit. The reason why the bond markets have been the problem this year is, you know, normally when the equity markets go down, you move into more of an income position because that’s that’s the safe haven if there is such a thing. Right. But we haven’t been able to do this this year. The bond markets have been arguably worse than the equities markets. Right. Why is that?

Speaker 2 [00:08:18] Well, to be clear, that the bond market, this is the worst bond market since we started tracking the aggregate bond index. Yep. In the early seventies it might have been 19.

Speaker 1 [00:08:27] Said something like that.

Speaker 2 [00:08:28] Yeah. It was the early seventies somewhere. I don’t remember the exact year, but this is literally the worst year for bonds on record, right? You know, the aggregate bond is down 12% through the first two quarters of the year. An unheard of. Right. I mean, and once again, you go to bonds for safety, right? When your equities are going to zig, you want your bonds to zag. Right. Or at least to stay put, stay flat and still produce that steady stream of income.

Speaker 1 [00:08:56] Right. And you think, you know, 12% down on the AG versus 20% down on the S&P? Well, that’s not as bad. But the bonds are supposed to be the more stable side of the portfolio. Right.

Speaker 2 [00:09:08] So if you’re if you’re equities are down 20%, well, your bonds are not supposed to be down be down a few percentage points, but you’re still getting that regular income. Well, when your bonds are down ten, 15% and as I said, the aggregate bonds. Right, corporate bonds are down more than that. Yep. International bonds are down more than that. High yield bonds. So, I mean, when we say fixed income, I mean, just like equities, when you look at the stock market, you have small caps, you have mid-caps, you have large caps, you have international, you have emerging markets. You have so many different types of sectors, you know, industrials, utilities, energies, financials, right? There’s so many different sectors of the stock market in different types of companies that you can invest in. So it’s dangerous when you hear about, you know, the the stock market as a whole because it’s really hard to say. The stock market is the Nasdaq, which is much more growth and tech heavy. Right? Well, that’s. Down 30% here today, 20, I think 28.9 or something like that. That’s down even worse than the S&P 500. So if you’re a little bit more tech heavy, your growth heavy, you’re probably down far more than 20%. Right. But, you know, going back to the bond market, there is a ton of diversity in the bond market as well. So I’m just quoting you kind of the aggregate bond performance. But a lot of bonds are down even more.

Speaker 1 [00:10:24] They’re much worse.

Speaker 2 [00:10:24] So so, you know, what’s supposed to be zigging in your portfolio is not doing so. Right. A number of different reasons for that. But primarily, it goes back to Fed policy, Federal Reserve. And so what they’re trying to do to fight inflation is they’re trying to raise rates.

Speaker 1 [00:10:49] It’s the only tool that they have.

Speaker 2 [00:10:51] It’s the only tool we’ve talked about. It’s the only tool that the Federal Reserve has is, you know, the interest rates. And the interest rates that we’re talking about is basically they set the Fed Fed funds rate or the federal funds rate, which is the rate at which banks borrow money. And we’ve talked about this for sure, that banks borrow money from one another overnight because banks have to have so much money in reserves and they have you know, they have access money in reserves. They’ll loan it to another, you know. Right. Because they need you know, they need to make sure that they’re maintaining money. But whenever banks have money for themselves, that they’re borrowing from other banks, let’s say if a bank is borrowing money at 2%, they’re going to turn around and loan it to you. And I own a mortgage or a car loan or something else for 3%. Right.

Speaker 1 [00:11:29] That’s that’s where they make their money.

Speaker 2 [00:11:31] Their money spread. Right. So when the Fed starts raising interest rates in response to high inflation, because interest rates have been so, so low for so long, that’s been great when you want to get a mortgage, not been great when you’re trying to invest in bonds and get a return. Right. Regular stream of income on on your bond investments. But they’ve raised rates so fast, so much up so quickly. We’ve gone from what was a 0.25% and now we’re we’re already over 2%. Yeah. And they’ve already indicated that they want to raise rates to well over three and a half percent, maybe even 4%, depending upon what inflation does in response to the raising of the rates. Right. But you have to remember the way the bonds work.

Speaker 1 [00:12:16] And they’re doing it in big chunks, too. They’re doing 75 basis points at a time, things like that. Well, they.

Speaker 2 [00:12:20] Originally were talking about doing 50 basis points at a time, and they’ve already indicated they’ve already made one change where they made a 75 basis points increase instead of 50. And they have already indicated in July they’re probably going to do another 75.75 basis points as .7.7 5%.

Speaker 1 [00:12:36] Right.

Speaker 2 [00:12:37] So but you have to remember the way the bonds work, bonds have an inverse relationship between value and income yield. So if the price of a bond is X, you know, ideally you’re going to have a spread or the yield that a bond returns is going to be kind of in line. Or if the price of a bond increases, the amount of income or yield that you receive on a bond decreases right in return when rates go down, you know, the yield goes up, right. Well, interest rates have gone down so or have gone up so fast that prices or values of bonds have decreased so significantly, so fast. Yeah, that’s what’s happened in the bond market this year when we’ve had just an absolute record year, not in a good way with bonds, they’re down in double digits pretty much across the board. So you’re looking at balanced portfolios, moderate portfolios. I’m reading a lot of stuff. If you’re an industry nerd like we are, you’re reading a lot of articles right now about, oh, the 6040 portfolio is dead. And yeah, well, that’s probably taking it to an extreme. It’s certainly having a bad year. But but yeah, it’s that, that, that is why this market has sucked this year. The equity markets are always going to do and you always know that you’re taking a risk in the equity insurance. Your safe haven has not been safe this year. And that’s what’s made our life difficult. That’s what’s made it difficult for new retirees or recent retirees that have balanced portfolios. We’re talking about conservative portfolios here that are not performing the way that they’re supposed to perform. And it’s industry wide. You know, it’s everyone you talk to in our business is having these same issues.

Speaker 1 [00:14:20] So yeah, agreed. So go back to what we were talking about at the beginning. You know, people are worried, they’re panicked. The first thing that I would say and we’ve talked about this on the show before, if your if your work if if you’re doing your investments with the intention of getting a return, if that’s the goal is I want to get to 6% or I want to get, you know, whatever number you come up with when the markets go down, it tends to make you panic a little bit. Right. And unfortunately, a lot of financial advisors out there, that’s the way they do their business. I’m going to get you a good return. Right. That. That’s the reason we’re big advocates of financial planning officer because the clients that have financial plans are the ones that are saying to us, I know it’s bad this year. I don’t want to look right. I know it’ll come back. I just need to be patient. Right. Because they know that the plan is is designed to handle this kind of thing. So go back to what we were talking about at the beginning. You know, those those other major cycles where we had huge downturns in the first six months of the year. What causes that big upswing in those years past to almost catch back up? And how can we expect that this year, if we can?

Speaker 2 [00:15:41] Well, to understand how we might recover from this, we need to understand better probably what caused us. Yeah. Cause this to occur. And this is where, you know, depending upon political affiliation, this is where we might wade into territories that might upset a few people.

Speaker 1 [00:15:58] But I don’t think it’s possible to have this discussion and be honest and not talk politics if we have to.

Speaker 2 [00:16:04] And unfortunately, the world that we live in and this is honestly, as a result of O8, the world that we live in, the markets and political policy have become so intertwined over the last several years. It’s really, really I mean, we’re sitting here talking about what the markets are doing in response to what the Federal Reserve is doing. Correct. The Federal Reserve is a branch of the government. Right. Okay. So it’s really hard to differentiate between the two sometimes, and especially right now when things are just so intertwined. But what happened in 08092 cause 0809 there was an economic catalyst to it. So we had banks and lenders, mortgage lenders that were giving out way too much money. We were, you know, we were in a really good time economically. We were recovering from the dotcom bubble and, you know, the early 2000. So we had lenders giving out too much money to people that really couldn’t prove their income, couldn’t prove their assets. I mean, anybody anybody that was in the mortgage business, you know? No, no, doc. No, you know, no doc loans. Yeah. Or remember the low doc loans, things like that, you know, basically you didn’t need, you know, you didn’t need bank statements or any as long as you had a decent credit score, you can pretty much get anything you want. People that were borrowing 125% of their home’s value. Right. Just ridiculous loans. So obviously, you started having a record number of mortgages begin to default.

Speaker 1 [00:17:24] To default.

Speaker 2 [00:17:24] Right. So you had lenders that were losing money, banks that were losing money. You know, it was a domino effect. So it started with the banks and, you know, it started with home values. Went home values started coming down. Realtors, you know, construction and anything in the construction age. I saw a stat recently where about 25% of our economy is depending on real estate. Yeah, you know, the homes, basically residential real estate. Just when you talk about contractors and construction and, you know, painters and, you know, appliances and everything, right. There’s 20, 25% of our economy comes back to residential real estate. And so, you know, you had basically an extreme drop and 25% of the market basically in 0809. Well, the response in 0809 was government intervention, right? If anyone’s familiar with what, you know, busted back into the TARP bailout, it was the most unpopular bailout ever in the history of. Yeah, I think I heard something. It was like it was like the worst pulled political piece of political, you know, the worst political bill that was ever in the history of polling at that point. But, you know, you bailed out all these banks that were losing money hand over fist. But what that did was it set up the expectation that when the markets drop, the government is going to intervene.

Speaker 1 [00:18:43] They’ll step in. Right.

Speaker 2 [00:18:44] What happened in 2020 when we well, the government instituted lockdown, so we had a government induced lockdown. So the government. And do these lockdowns basically tried to shut down the economy, which you never want to shut down an economy. It’s a, you know, for many, many reasons. And as we’re living through them right now, but they shut down the economy, government induced. And then as a response to that, the government printed literally trillions of dollars and gave money out as handouts in the form of child tax credits, you know, all sorts of stimulus money. Well, what happened was people were sitting at home. They weren’t going out. Yeah, maybe they were spending more money on Amazon, but they weren’t spending money on gas or travel or experiences or all kinds of other things. So we had record savings rates. People were starting to hoard that money that caused it. When things started to open back up a little bit, you know, we had an economic boom for the end of 2020 and 2021. Well, chickens come home to roost at some point. The result of all of that government intervention, all of that money printing inevitably was always going to be inflation. Yeah, we had record low inflation for about eight years prior to this year, so kind of going back. Record numbers, you know, the record numbers in the stock market and, you know, good versus bad year. We were due for some inflation problem was we printed so much money so quickly that we had all.

Speaker 1 [00:20:11] The inflation and all the.

Speaker 2 [00:20:13] Inflation at once. Right. And and there wasn’t really anything. You couldn’t avoid it. Right. I mean, you had record low interest rates. Well, what happens with record low interest rates like we had, you know, was it did anybody how many how many of you all refinance your home in the last couple of years? Right. I did. I got a 2.75% interest rate on my loan, on my mortgage. That’s ridiculous. That is a stupid low amount of money that I’m paying to own my home. Right. And money was cheap when money was so cheap, that also increases the amount of money supply. Right. Because people are borrowing more and more money. Most most of the time, it is attached to an asset. But still, you have record numbers of people borrowing money at really, really low rates. Right. So in order to combat inflation, this is it’s amazing how this.

Speaker 1 [00:21:05] This is where the Fed policy comes.

Speaker 2 [00:21:06] Down. Big circle, right? It’s amazing how it’s all in, you know, correlated. But now the Fed policy has come in and they’re raising rates because they want to fight inflation. Right. And they only have one tool in the toolbox. It’s the interest rates there go up. They go down. So interest rates were ultra low. So they had to raise rates to try to reduce the amount of money supply. People, you know, they had to make that a little bit more expensive so people wouldn’t take out as much debt. Right. That stunts growth by by definition, that stunts economic growth. Yeah. I mean.

Speaker 1 [00:21:41] And how do we get out of the inflation problem growth? That’s how you solve the problem is with growth.

Speaker 2 [00:21:46] Yeah. And so we’re we’re literally in a position right now and it sounds so counterintuitive to most people that don’t really follow this on a day to day basis. But the Fed is in a position where they’re almost trying to cause a recession in order to fix inflation. Right. It’s really that we really the only way to fix inflation. Honestly, the only way to fix inflation. The money’s already out there. The money’s been printed. The money is in the supply.

Speaker 1 [00:22:08] People are not going to give it back.

Speaker 2 [00:22:10] People aren’t going to give it back. Right. You know, so it’s not like they’re going to burn it. Right. The money’s out there. So because we’ve printed the government created the problem, really the only way to solve the problem is government intervention. And I won’t say government intervention. That’s the wrong government policy.

Speaker 1 [00:22:27] Right.

Speaker 2 [00:22:29] Reducing the amount of money supply, opening things back up for growth, you know, maybe raising rates at a more reasonable level as opposed to what they’re doing this year, where they’re just taking, you know, taking a fire hose and, you know, instead of turning the faucet on, they’re turning on the fire hose. Right. And trying to fix inflation all at once. Um, you know, we, we heard an analogy yesterday, you and I, when we.

Speaker 1 [00:22:52] Were at a symposium last.

Speaker 2 [00:22:53] Year where a symposium last night shout out to First Trust. They’re a great partner of ours. But, you know, they were talking about how the Fed is trying to basically a typical business cycle lasts about, let’s say, seven years. Right. You got, you know, growth hypergrowth, right. And then, you know, it comes back down. You know, you think about a bell curve, it goes up and then it comes down. And then, you know, once it comes down, it starts back up again. That’s kind of a typical business cycle. Well, basically what the Fed’s trying to do is shorten the business cycle from seven years to maybe three or four years. They’re basically trying to cram all of this.

Speaker 1 [00:23:30] Into a very small with.

Speaker 2 [00:23:31] Very small window, basically. So we’re almost trying because we’ve had such, you know, record numbers of growth the last several years, really the last decade, to be perfectly honest, but the last several years specifically. Well, now they’re trying to basically hurry up, get through this recession, get it here, get it over with, and move on to the next growth phase, because ultimately what they want to do is start lowering rates again because then, you know, if you if you if you raise rates to cause the recession to get into a recession, ultimately what that means is you can come in and play the hero start start lowering rates again and you’re going to see the market rebound.

Speaker 1 [00:24:10] We had an I mean, there was an economist at that symposium last night. He had one of the best analogies I’ve ever heard. And Eric and I were both laughing about it when he said it. He said that if you look back at history, when the Fed is raising rates rapidly, they keep doing that until they break something, which at that point in time was when we started laughing. And that’s when they jump and they become the heroes by lowering those rates. And that’s where that recession word comes in.

Speaker 2 [00:24:36] It goes away. The government fix the problem.

Speaker 1 [00:24:38] Yeah, government created the problem. Government fix the problem. And you and I were talking about this before we started recording today. The most terrifying words in the English language. I’m from the government and I’m here to help. Right. I think that was Ronald Reagan was the one who originally.

Speaker 2 [00:24:52] I would argue it’s somebody to do something.

Speaker 1 [00:24:55] Yeah, I actually that was kind of the point that I was wanting to make is we have a tenant. See as a society to say, Hey, Mr. or Mrs. elected official, do something about this. That’s usually the worst possible thing they can do. You ride out cycles like this. You leave them alone. They will naturally work back into an efficient system. If you get out of the way.

Speaker 2 [00:25:19] And it’s yes, it really does. You know, having to go through these business cycles of, you know, just negative growth. You know, no one likes it. No, of course not. To live through a recession. But. But, yeah, I mean, we had, you know, everybody wanted the government to do something, right. You know what they did when COVID hit? Well, they they they locked everything down. Okay, well, now they locked everything down, and people were losing their jobs. Somebody do something. Okay, well, here’s.

Speaker 1 [00:25:46] Here’s some money. Yeah.

Speaker 2 [00:25:47] Okay, well, there’s a stimulus money that’s going to have unintended consequences on this side where. Okay, now we have record inflation. How do we fight record inflation? Somebody do something about this. Record inflation. Okay, we’re going to. It’s this vicious cycle that keeps happening. Okay. Now we have record inflation and we’re going to raise interest rates really, really, really quickly. Okay, great. We’re going to and we’re in we are, in fairness, starting to see signs of I don’t want to say disinflation, but there are definitely sectors of the economy where we’re starting to see maybe a peak in inflation, which is fantastic.

Speaker 1 [00:26:22] Yeah, absolutely.

Speaker 2 [00:26:23] But, you know, once again, you take your fire hose and sprayed on everything. You know, you’re bound to hit something. But, you know, it’s also coming along with. But what’s going to be interesting in the next couple of weeks is we’re going to find out whether or not we’re in a recession right now.

Speaker 1 [00:26:37] Right as the numbers start coming.

Speaker 2 [00:26:39] Out. You know, we already you know, that’s two negative quarters of or two, two consecutive quarters of negative growth. I tend to think we are probably there. If we’re not, we’re.

Speaker 1 [00:26:49] We’re headed there.

Speaker 2 [00:26:51] Yeah. But my guess is we probably are in a recession and usually the stock market is a fantastic leading indicator of a recession. This is where it’s always interesting. You know, everyone’s saying, well, the stock market’s going to react if we’re in a recession. Stock markets already assuming we’re in recession. If numbers come out in a few weeks and we find out that we’re not in a recession, we’re going to see a pretty good bounce, unfortunately. But that’s also going to lead the Fed to do is they’re going to continue to raise rates because they’re going to say the market or the economy is healthy enough to withstand some additional rate increases so we can continue to combat inflation. So it’s it’s it’s always be careful what you wish for.

Speaker 1 [00:27:31] Yeah, exactly. Yeah.

Speaker 2 [00:27:33] In some ways, you almost want the recession to come. You want the news to be bad so we can continue to bottom out. Right. And once we bottom out, we can maybe take a little more healthy, proactive approach to fixing the problem.

Speaker 1 [00:27:44] But and and I would add this this to this, as we start to wrap this conversation up, you know, we have a tendency recession is such a dirty word, right? We say it like, you know, through our teeth because we hate that word. We did a podcast on this several weeks ago. Recession is it is what it is. It’s not the end of the world. We’ve had how many recessions we had in the last hundred years. It’s it’s quite a few of them. People think of the big ones, the oh eight and they think of the 1970s. They think of the 1930s depression. Recessions happen. A lot of you pull it up.

Speaker 2 [00:28:24] I was I was literally Googling that right now because when you actually look at the number of recessions, it’s far higher than most anyone would ever assume. Yeah.

Speaker 1 [00:28:35] I want to say it’s in the twenties or thirties that we’ve had in the last hundred years. It may be higher than that.

Speaker 2 [00:28:40] 48 recessions dating back to the Articles of Confederation.

Speaker 1 [00:28:43] So right since the beginning of the country, right?

Speaker 2 [00:28:46] Yeah. But, you know, going back and this is probably too much for me to absorb right away. But I mean, the fact that I’m scrolling through this list of recessions to figure out what the total number is, I mean, we’ve had quite a few. Yeah.

Speaker 1 [00:28:59] And that’s kind of my point.

Speaker 2 [00:29:00] It was it was like it’s about 25 or 26 in the last hundred years.

Speaker 1 [00:29:03] There you go. Yeah, that’s kind of a point recession. Like we said, we say it like it’s a dirty word. It is part of the natural business cycle. We will come through this one. You know, whenever it does happen, it seems to be inevitable. We will come through it. We’ll be fine. Right. But I think my point I know you agree with me on this is the less government is involved, most likely we’re going to recover more rapidly and more healthily. Is that a word? Healthily? It is. Now, I’ll go with it.

Speaker 2 [00:29:33] Sure. So it is now.

Speaker 1 [00:29:35] So anything else we want to talk about, just kind of wrap this up because. Well, you know, the most fun conversation.

Speaker 2 [00:29:41] Yeah. So you go back to, you know, the dot com bubble in early 2000, you know, 0809 on the season, the two most recent major events because those you know, but recessions always seem less important in the rearview mirror.

Speaker 1 [00:29:58] Right?

Speaker 2 [00:30:00] Right. Bad news when it’s in the rearview mirror, it’s like, oh, you know, yeah, that that sucks. But, hey, we’re here.

Speaker 1 [00:30:05] We look. Yeah, we made it.

Speaker 2 [00:30:06] But we’re in the middle of one, right?

Speaker 1 [00:30:07] When you’re looking at it through the windshield, it’s.

Speaker 2 [00:30:09] A little bit painful. You know, when you know, I’ll use, you know, this this might not be a good analogy, right? But my dad had cancer when I was in college and, you know, had, you know, went through some radiation and chemo, obviously, and it sucked and we were going through it. Yeah, but we got through it and so we look back at it and this was 20 years ago now, 20 plus years ago now. And it’s, you know, it’s in the rearview and we kind of look back at it. Oh, yeah, that did. Yeah, that was not a fun time. Right. But he’s healthy today. He’s totally fine. We’re all good. We got through it. When we look back in five, ten years, we’re going to look back at this moment in history. In 2022, we’re going to look at it and say, Yeah, there was a lot of bad. It was not a fun year. But yeah, we got through it. The markets rebounded. It’s really hard to think about that happening right now when you’re in the middle of the downturn and you know we’re at the bottom, maybe we’re not at the quote unquote bottom right now. We’re definitely close to the bottom in the top, though. And, you know, I don’t know if this is the ideal buying opportunity where people talk about buying the dip. But you know what? In six years, if you bought now and the market goes down another five or 10%, that it recovers, are you going to know you know, are you going to.

Speaker 1 [00:31:23] Remember that exact date? Yeah. Yeah.

Speaker 2 [00:31:26] And no one knows no one know anybody telling you that they’re going to predict this? No, nobody. We do not know. It’s funny, we had these conversations on a daily basis where we’re watching the market and you and, you know, we’ll look at each other like, what in the heck is going on?

Speaker 1 [00:31:39] Because it makes no sense what they’re doing. Yeah.

Speaker 2 [00:31:41] Yesterday is yesterday’s a perfect example. What did the market open yesterday? Down two and a half percent or something like that. And then it finished. It was still negative, but it came really close to getting positive.

Speaker 1 [00:31:53] Yeah, it was it was almost at break even at one point. But yeah.

Speaker 2 [00:31:56] But there was no economic news that came out really. There was no anything super negative that came out. It was just no you know, people were feeling kind of bearish. There’s a lot of fear in the market right now and that makes people do irrational things. Yeah. And so that’s that’s what we’re dealing with right now. But I think when once again, when you look at historically speaking and all we can ever do is look at history, right? Historically speaking, when we had a horrible starts to the year, the second half of the year historically has always been positive. Yeah, it might not always fully recover by the end of the year, but the second half of the year has always been positive.

Speaker 1 [00:32:35] You’ll feel a little bit better, yeah, by the end of the year than we do now.

Speaker 2 [00:32:39] So the market look at history. If the market’s down 20%, maybe it doesn’t rebound 20%, but if it rebounds 10%. All right, that’s fantastic.

Speaker 1 [00:32:47] Absolutely.

Speaker 2 [00:32:48] What we don’t want to do is overreact, do something irrational today that’s going to cause us to miss out on that potential increase in the rebound in the market for the second half of the year.

Speaker 1 [00:32:57] Absolutely. All right. So thanks for listening. Watching Eric is much, much better at liking and subscribing and all the rules there. So if you’ve got questions about the markets, how they impact you, you’re worried about what’s going on with your portfolio, your financial plan, whatever the case is, give us a call. Reach out to us at 5022005210. Or you can go to our website at f p partners dot com. I think my producer is probably going to throw that up on the screen for us if you’re watching. But Eric, I’ll let you sign us off and we’ll see you next week.

Speaker 2 [00:33:32] Thanks for watching on YouTube or wherever you might be viewing our content. Thanks for listening via whatever podcast.

Speaker 1 [00:33:40] Whichever one it is or channel.

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