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BRIAN: Welcome to Safer Retirement Radio where you get the transparency you deserve. With over 35 years of experience in finance and investing, we help you stay up to date on market news and retirement strategies. I’m Brian James Decker, owner and founder of Decker Retirement Planning and host of Safer Retirement Radio. With me is my co-host and one of the advisors here at Decker Retirement Planning, Clayton Bradshaw.
RR S4 E22 ELECTION YEAR MARKET VOLATILITY [00:00:24]
CLAYTON: Welcome back, we’re excited to be here. Today, we want to take kind of a detour from what we have been talking about, but it’s still very applicable because in the last few weeks, we’ve had a presidential debate, and at the time of this recording, we have a VP debate tonight, so by the time this airs, the VP debate will have happened. So, we’ll maybe do a little bit of speculating from a neutral standpoint, but also more in the effect of talking about the volatility that comes along with what I feel are pretty polarizing candidates.
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CLAYTON: Regardless of what side you are on, it seems like you either love one and hate the other or vice versa. So, as we get into it today, I just want to let everybody know we actually have a resource page on our website, Decker Retirement Planning dot com, where we’ve got some books you can download, some e-books, as well as some guides, and one that specifically applies to the topic we’re going to be covering today is navigating market volatility. So, we hope you take a minute, you go to our site, jump on there, download that, take a read through ‘cause I think it will help kind of add to the conversation today as we talk through the different effects.
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CLAYTON: We’re going to kind of speculate here on what outcomes could happen and how that’s going to affect or could affect the market. We’ve seen something, I mean just in the last day, Brian, I’ll let you talk a little bit about this but we saw… Trump came out and he said, “I’m pulling the COVID relief talks. I’m going to put a stall to that,” and the markets immediately took a dive, and they were trending in a positive direction yesterday, but then this morning, he came out and said, “Well, I’m open to some aspects of it,” and the market’s popped back up.
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CLAYTON: And with that, it seems like he’s been able to kind of make these comments to push the market in one direction, so in your opinion, Brian, as we get closer to the election, as people kind of get a little more set and we get these polls and these opinion polls that come through, what do you think is going to happen if Trump or Biden gets elected?
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BRIAN: Okay, so let’s take the names off the candidates. There’s one candidate that’s viewed more market-friendly than the other. We’ll just leave that up to your imagination. But this is factually how it works, so whatever the most stock market and economic-friendly candidate, if the expectation in the stock market is that that candidate is going to win, the markets will be trending higher into November third. Is it November third?
Or is it November fourth? Anyhow, I think it’s November third, yeah.
RR S4 E22 ELECTION YEAR MARKET VOLATILITY [00:03:08]
BRIAN: Okay, but let’s say that there’s bad debate with this candidate, there is, watch how quickly the markets will respond. Markets will be anticipating… By the way, the markets are genius. Here’s a stat question for you. I was in a statistics course at the University of Washington and the margin of error if one person looks into that candy jar and guesses how many jelly beans are in the jar, the range of error is huge, but if you put a thousand people in there guessing how many jelly beans are in the jar, the standard deviation narrows quite a bit.
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BRIAN: You have the stock market, with billions of people around the world, processing information and making decisions on their investments, based on that information, constantly, 24/7. So, the markets are digesting information tonight from the vice-presidential debates based on whether that candidate that is market-friendly, rose or declined in status with the American voter.
RR S4 E22 ELECTION YEAR MARKET VOLATILITY [00:04:30]
CLAYTON: Sure, and I think it’s important is we watch this to keep in mind, again, as retirement planners our goal is to help our clients successfully navigate their retirements. So these are the kinds of things that we watch out for, because it’s not a matter of which side you’re on, it’s a matter of making sure that your investments are lined up in such a way that you can navigate that market volatility if the market takes a 30 or 40 or 50 percent dive, which it has in the past, and it hasn’t necessarily been a political thing, it’s been… We had the real estate bubble, right? We had the tech wreck that happened in 2001 and ‘02.
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CLAYTON: And so as our clients go through retirement, we want to make sure that the plans are set up in such a way that it’s not really going to really matter what the reason behind it is, or how angry somebody is at somebody else over something that was said politically, but that they can enjoy their retirement, they can feel confident in what they’re doing and that’s how we, as fiduciaries focus on setting up our accounts for our clients. With all the research that goes into it, and all of the data and analysis that we put in to making sure that we know where the best investments and options are for our client’s plans, that’s really what the focus of this is.
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CLAYTON: And so, in talking through kind of the potential issues that can arise because as one candidate gets more favorable, like you mentioned, you’ve got one that can be perceived as more of a business-friendly and the markets are going to respond positively when they are viewed in a favorable light, and vice versa and we’ve seen that over the last few weeks. So, as you’re planning at your retirement, you’re considering kind of how you should lay things out, I hope you look at those resources on our website, again Decker Retirement Planning dot com.
RR S4 E22 ELECTION YEAR MARKET VOLATILITY [00:06:18]
CLAYTON: We’ve got the e-books on there, we’ve got the guides, again, the one that we’re, that’s kind of a supplement to today is navigating market volatility, and Brian, you’ve been doing this for well over thirty years at this point. What have you seen works best when it comes to navigating market volatility? What are kind of, not necessarily the best investment options, but just generally the best strategies that you’ve seen?
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BRIAN: The best strategy is to have a plan. Having a bunch of statements is not a plan. Having a pie chart is not a plan. A plan is, if the markets go up, you participate, and if the markets go down, you’re not damaged. So, for example, our clients have principal guaranteed accounts that produce their income, they draw income from that. So, if the markets go up, they participate, but if the markets go down, they don’t take that hit. Now, on the risk portion of their portfolio, we use computer trend following models, and by the way, that’s jargon.
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BRIAN: I know you crack me on this, but these are separate. We use 6 different managers where if the markets trend higher, our clients participate, but if the markets go lower, these are computer trend following models, they are rules based, they’re not emotion, they’re not human, they will automatically take protective measures to either go to cash or switch into inverse funds that allow us to make money as markets go down.
RR S4 E22 ELECTION YEAR MARKET VOLATILITY [00:07:53]
BRIAN: Our clients have a plan, and can I throw something out regarding what I personally, this is total speculation, but I think when I tell you what I’m going to say, I think you’ll agree. I think that the reason for the markets to be highly volatile isn’t between now and the voting time. I think it’s after November third.
BRIAN: If it gets thrown into the courts, markets hate uncertainty, and I think that’s when we’ll see a lot of market volatility. If we don’t have the votes counted and we have disruptions in counting the votes.
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CLAYTON: And there’s probably some truth to that ‘cause I think that when you look at different periods, so we’ll use… was it last year that President Trump and Kim Jong Un kept threatening each other with a bigger missile, that if you’re gonna blow me up, I’ll blow you up, but bigger? And that uncertainty caused the markets to dip rapidly. And I think that same thing can happen, and it’s happened. Maybe it hasn’t been a political comment, but it’s been something.
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CLAYTON: I mean, if you look at an individual company, if they’re uncertain about if the CEO says something in their quarterly report, that affects what the shareholders view and it can drop the stock or increase the stock if it seems like a favorable outlook. So, as you’re setting up your portfolio, and you mentioned, Brian, that you want to make sure that your income in retirement, this is important, your income in retirement is coming from a stable source, so this is out of an account that cannot lose value.
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BRIAN: This is rule number one in income planning.
CLAYTON: Right, to make sure… so that’s what we focus on with the income side of the portfolio and it’s akin to, it’s one of the transitions that we see people go through is in their working years, their 20s, 30s, and 40s, they’ve got money in the market through their 401k, typically, or their IRA or their [rof?] accounts. But then their income is coming from a somewhat stable source in their profession, in their employment, their paycheck every month or every quarter or every two weeks, however you get paid, but that’s where that stable source of income is coming from and so the transition in retirement…
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CLAYTON: And when you’re drawing out of a fluctuating account, that is where you running into issues in retirement, where you have to retire from retirement, which we don’t want our clients to see, so I hope for all of you that are listening that you go to our website, check out Decker Retirement Planning dot com, we’ve got our books and useful guides. Again, we’ve got a bunch of stuff on there for you to download and review. We hope you check it out, but specifically the one, navigating market volatility.
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BRIAN: And also, I would add that they should ask for our facts sheets for our managers that are those two-sided strategies that I referred to.
CLAYTON: Yeah, if you want to learn more about those, we’ve got a way on our website, or you can give us a call 833-707-3030. We can get a free fifteen-minute call scheduled with you to go through those fact sheets. Again, we’ve got a lot of content, we just want to help make sure that retirees know about all their options, that they’re well educated before they make their decision on what they’re going to do. So, feel free to go to our website, Decker Retirement Planning dot com.
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CLAYTON: We’d love to hear from you, if you have any feedback about the show or want to learn something else, we’d love to go over that. Feel free to reach out to us. All of our contact information is on our website. But we’re excited to see how the debate goes tonight, so we’ll follow up on that next week and talk a little bit more about kind of the market and the volatility that can accompany these things. So, we look forward to having you join us next week.
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CLAYTON: Investing involves risk, including the potential loss of principal. Any references to protection, safety, or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims-paying ability of the issuing carrier. This radio show is intended for informational purposed only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. Decker Retirement Planning is not permitted to offer, and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained by sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Decker Retirement Planning.