Transcript: Well, as you know, we have two goals for you. The first one is we want your money to last as long as you do, and so we want your money to be there to support the lifestyle that you want to have during your retirement, and so part of that, of course, is to get out of harm’s way when we see harm coming. But then, also when we see the trend positive then we want to participate, and so that’s why we’re going to be buying in, as you know, over the next few months.
Now, we wanted to make this video for you because Part 2 of our goals are to have you have peace of mind. OK? So, we want to kind of go over with you what you should expect, both
emotionally on your part and then also strategically on our part.
Basically, there are four scenarios that could happen going forward. Now, there are variations within those four scenarios, of course, but the four main scenarios are:
Number 1: equities go straight up from here. OK? So, all we see is every buy is lower than the previous one and it keeps going up, and that’s great. Well, that is great and you know over time we will be happy with that, but we might get the emotion. There are two that could come into play. One is well, why didn’t we go all in? We missed out on all this opportunity. We’re buying in slowly. You know the market’s going up. We’re missing out on that. Or, there might be the opposite of that, which is wait a minute, we bought in twice. It’s gone up a lot. I don’t want to buy anymore. We’re at an all-time high. Stop. You know it’s going to go down from here. So, you could have either one of those emotions and they could come to you.
The second scenario is that equities go straight down from here and they just keep going. It turns into a bear market. So, of course this would not be a good scenario because each buy that we made is going to be lower than the previous one, and then when we’re done buying it keeps going down. If this happens that wouldn’t be good, but keep in mind that it is better than buy-hold because somebody who bought and held would have been in all the way rather than buying a little bit, and they would have no sell strategy on the other side of that and we do. So, I’m going to get into the strategic in a moment, but even in that scenario, which is a bad scenario, we should be okay. All right, so just to set that there.
The third scenario is that equities go down from here and then go up after that, and our research shows us that that is the most likely event. So, why is that? Well, the reason is because to get to our buy point, the market had to have gone up to reach that point, and so what usually happens is that there’s kind of a period after that where it kind of settles back before it goes back up again, and if that happens, then as the market’s going down, we’re going to be buying on those lower points, which is a good thing if it goes back up after that because we got really good pricing on our buys.
Now, emotionally that’s not going to be very comfortable because, you know, few people like to buy in a declining market. We want to buy when things are going up, even though in your logical brain you know that you don’t want to buy when things are going up. You want to buy down. You want to buy low, right?
So, our job is going to be to manage your emotions during that process because as it’s going down, we want to stick to our discipline and buy in because on the other end our goal is for that to go up after that. OK? So, emotions that you could have there is it’s scary, you know, and we bought last month and it’s gone down, and now I’m losing money on that buy. I’ve lost money on the second buy. You know you could have all those kind of emotions
Then the other side of it of course is, yay, the market’s going down. We’re getting a lower price. This is good. What are we waiting for? Let’s do more. So, you know, we get those kind of things on both sides from clients, and so you may be one of those people, and we just want to make you aware of the emotions that you’re going to be feeling potentially.
The fourth scenario is that equities go up from here and then go down after we’re done buying, and of course this is the worst-case scenario, because what that means is that each buy we made was higher than the previous one, and then it falls into a bear market and of course that would not be the good thing. Again, we have our sell signal on the lower side of that to help us in that regard. So, while this is not the best scenario, it’s the worst-case scenario, but that’s still not going to cause you to, in our view, be unretired or not be able to retire or cause massive damage to your portfolio because we do have our strategy in place to adapt to that. OK?
So, those are the emotional sides that you’ll feel there, and you know, one of the things that we want to do for you is to worry about all this stuff for you so that you don’t have to. Our goal here with this video is to kind of walk you through the various emotions that you might feel and now that you’ve understood those, set them aside and go enjoy your second childhood without parental supervision. Okay? Don’t worry about it. Let us do it. Our investment committee has over 130 years of combined experience. We’ve been through this multiple times over that last few decades, and you know we know what we’re doing and we’re going to do it for you, and you don’t need to worry about it.
But, if you are a worrywart and you do want to worry about it, then here’s what we worry about, and I’ll give it to you so you can worry. I don’t want you to, but if you insist, here it is. OK? So, one of the things that it becomes always a challenge is, you know, if the market’s going down we want to be looking at what is the news that is driving that. Okay, and so do we want to keep buying or not? Do we want to accelerate our buys? We may want to do that. We may want to just stick to our schedule. We may want to stop altogether. So, you know, all of those scenarios. If the market keeps going up, do we want to accelerate our buys because now the news that is coming out is actually telling us it’s time, you know, to take advantage of that.
Our investment committee does meet very frequently, at least once a week, to go over our strategic moves and what we should be doing about all of these things, and so again we want to worry about this so that you don’t have to. I’m just telling you this so you know what we’re worrying about. Now, the one thing that our strategy, everything that we do is designed around is to have unlimited upside meaning that if the market wants to go, you know, to the moon we want to ride it as long as possible, but then when the trend turns the other way and it goes negative, we want to get out with tolerable losses. OK? No investment strategy can guarantee you no losses at all. So, basically what we want to do is make it that since it’s a given that in all strategies there are going to be times when you lose money, we want to make sure, to the extent that we can, that when we do lose money that the damage to your financial security is not so great that it changes your life.
When we do have losses, in most cases, you know, they should be painful. It’s a punch in the arm. It left a bruise. It hurts, but it’s not an arm amputation. That’s our goal is to keep you with just bruises, and if we can do that for you then I think we’ve done our job. So, once again, this video is just to level-set our expectations so you have some view of what the future should hold and also what we’re going to do about, how you’re going to feel about it, and I hope that it helps you to settle those emotions aside, settle those anxieties aside, and let us worry about it so that you don’t have to. OK? So, thank you for you watching this video, and we’ll talk soon.