Are you within five years of your retirement, or within the first five years of your retirement? If you are, then you’re in the most important decade of your entire financial life in our view. And the reason why is because there’s a kind of risk that you may not be aware of. It’s called sequential risk. If you look it up, Google it, what it’ll tell you is, is that if you take large losses during that decade, the likelihood of your ability to retire when you want to or stay retired once you have retired is significantly diminished. So, we want to talk about making sure that you protect yourself because growth is important, but protection of principle is even more important. Retirement Planners of America. Rpoa.com so Jeremy, you know, when we’re talking with prospective clients and when we’re taking care of existing clients, you know, one of the most important things for us, we always say, is we want your money to last as long as you do, right? So, we want to build a plan that is going to support their lifestyle for the rest of their lives. And a big part of that is making sure, to the extent that we can that, especially in the first five years of their retirement, or the five years before they retire, that they don’t take, you know, big losses, because, you know, there’s a risk called sequential risk, and that kind of risk talks about how when the timing of when you take a loss and early in your retirement is the worst time, because then it dragged down the amount of money you have, and now the amount that you can draw from it has been reduced. So, you know, that’s why we have our invest and protect strategy to, you know, to help to address what we think is the largest risk that people who retire are about to retire face. So with that strategy, how did you come up with it, or what? What was the genesis of it? Okay, well, if you want to talk about that, then we have to go back to 1945 Okay, a little bit before you were born. Yes, I know, I know it’s a shocker to you, but yes, it is before I was born. Yeah, so this is actually when my mother was 21 years old. And so, when she was 21 years old, she inherited from her uncle. She had a rich uncle. She inherited, in today’s dollars, $250,000 and she was 21 years old, and she decided in that moment that she knew this was going to be the money she was going to use for the rest of her life to support her, so she actually became very, very interested in investing. And so, she studied it, and she nurtured it, she invested that money. And if you look at the life of my mother, you’ll find and she actually also said, I never want to be dependent on a man. So this was in 1945 Yeah, that was kind of radical, so she was ahead of her time in terms of that kind of thing, but she, at that time, decided, and so what she did was she, over the years, she was an accomplished investor. She studied it constantly. She was always going to classes. And in fact, when I was a young boy, and maybe the reason why I’m doing what I do now is because of that, she used to take me to Financial Planning and Investment seminars. Oh, that sounds like a lot of fun for a kid, yeah, especially a 16 year old, yeah, you know. I mean, so imagine a 16 year old at a bond swap seminar, you know, or a no money down real estate seminar. Well, that was me, okay? And so, you know, a lot of times it was really boring, you know. But every once in a while, the speaker was engaging, you know. And I actually pay attention. But I think through osmosis, I kind of absorbed all of that, you know. So I think even though I didn’t want to listen, I was, I was learning, well, so eventually, you know, and I won’t go into the family history with my dad and everything else, but they split, right? So my mother was basically, she took me and I was with my mom, and what was supporting us was her money. Yeah, now she never worked the rest of her life in a job because she needed the money. But she was always working. She taught bridge. She was a ski teacher. You know, she was a tennis teacher. She was always, she liked to teach, and she was always engaged with her investing. But what, what supported us was not that those were not high paying jobs. What supported us was her investments, which she nurtured and grew for, many, many years. So now you fast forward to 1973 74 now you’re probably young to remember, 7374 you were a twinkle in your mom’s eyes, but 1970 374, was the year that the Saudi Arabians got really mad at us, because, you know, there was some political intrigue that happened, and they decided to basically cut off the oil supply to the whole world, just as a punishment. It’s now, today, it’s called the oil embargo. Yes, right. So the oil embargo, the oil embargo of 1973 74 caused the stock market to crash. And the reason for that is because, you know, at that time, way less than today, but at that time, the entire world’s economy was dependent on oil, and oil prices were a very big component in everything. And so when oil prices spiked and they held the chokehold for a long time. Our economy was on its back. The stock market crashed. Well, I saw that happen to my mom because this was her security blanket. This was the money that was keeping her independent. This was what she was supporting me with and our lifestyle with. This was everything. And, you know, she lost 35% in short order. You know, the thing about bear markets is they’re like storms. You know, they come really fast, and the damage is done up front. Now, the aftermath takes years to recover from, but the damage is done right up front, and, bam, that thing happened. Nobody knew the Saudis were going to do that. So at that point, she was very scared, right? And she was my mom. She was my rock. She was, you know, who I looked up to for security and support, and, you know, she was my mom. And so what I saw when that happened was how devastating a bear market can be right, you know. And technically, you know, I don’t remember how old she was when I was 15, but she wasn’t. She was retired, if you think about it. She was living on the money she inherited for that whole time. And so for her, her nest egg, her security, had been just taking a big, big punch in the gut. And so that planted a seed in me that that’s, you know, this whole thing. And she was a buy and holder, you know, she believed you buy good quality investments, you hold them forever, and, you know, you never sell them because they’re good quality. You know, she always bounced back. It’ll always come back. Yeah. Well, the problem with that, of course, is what happened. And so I witnessed that I was a young kid, and it scared me, you know? I guess I was 15 years old at the time, and so I was kind of scared too. And so I thought, you know, this whole thing, and so I planted that in my head. So let’s fast forward now, into the future. And when I started doing this, and I started working with people who were retired or retiring soon. Then what happened was, I started, I kind of remembered what happened to my mom, yeah, and I was thinking, I don’t want that to happen to my clients, you know. And so as I, as I started this company, you know, many, many years ago that was really heavy on my mind. I wanted to develop a strategy to protect my clients from what my mother had experienced and what I felt as her son. And so I kind of had my radar on, you know, and my antenna up for anything that dealt with bear markets, that dealt with how to handle those strategies, that you know you can apply all that kind of stuff. And so I was at a financial conference in Las Vegas, and this was, you’re probably again, too young to remember this guy, but it was, it was put on by Louis Rukeyser, okay, does that name mean? It means nothing to me whatsoever. Well, he used to do a very popular show every Friday called Wall Street week, okay? And it was on PBS, and I never missed that show every Friday. You know, we didn’t have DVRs or anything back then, so you had to be at seven o’clock on a Friday, you had to be there in front of the TV. And he had a large following. And then he had these conferences that he did in Las Vegas, and so I went to it. And, you know, when you go to a conference, they have like, all these breakout sessions, yes. And so, you know, you look at the agenda and it says, you know, this breakout session is going to talk about X, and this 1y etc., and one of them was going to talk about bear markets. And so I thought, wow, that is really interesting. So I want to go to that. So I went to that, and we’re sitting in the room, and he’s doing, and this was back before we had PowerPoint. So, he was putting up, you know, he had one of those projectors where you get a plastic, uh huh, the transparency. So the overhead projectors, yes, yes, yeah. Remember that? Okay, he takes the transparency off and put a new one on. Yeah. That’s so funny. Now, you know. But anyway, so he was putting up, he went back, and he was looking at all these different bear markets, and it was very disappointing, because what he was actually doing was describing a bear market, okay, it’s kind of like saying, you know, tornadoes are caused. By, you know, heat and cold converging, and then the winds start to spin around, and it goes 150 miles an hour, and you got this spot in the middle that does this, and it causes all this devastation. And I was saying, Okay, well, okay, great. It’s good to know your enemy, okay, I understand that, but, but he didn’t have anything about what to do about it, really. And so it was kind of disappointing. But slide after slide that he put up there had on it a measurement of the momentum of the market that really stuck with me. I was every slide that put up I said, Wow. Every time we have a bear market, that metric triggers. And as I looked at it, I thought, hmm, maybe that’s my answer, yeah. So I came back to Dallas and from that, and again, this was before the internet. So I went down to the Dallas Public Library, and I photo copied the closing price of the of the stock market every day, going back, going back to 1920 1920 so something like 19,000 closing it was page after page. You know, I was photocopying all these different pages off of that, off of that book that had all the closing prices in it. And then what I did was I took all those numbers and I entered them into lotus, 123, now you don’t know what lotus, no idea. Man, are you making me feel well, I think some of our viewers and our listeners are know what Lotus? 123, Lotus, 123, was the precursor for Excel. Okay, in fact, I think with all due respect, but I think that’s probably where Excel came from. Was, was Lotus 123, but Lotus 123, was the original spreadsheet that you could use on a computer. And so I was entering all these things in the computer, and my wife and I were driving, and I forget the name of that, that road that that goes along the coastline in California. Is it the a one, a or the A one, or something like that? Anyway, it drives, it’s a curvy road that drives all through the coastline. And I had a little IBM laptop, and it had the little eraser head in the middle that was like your mouse pad, yeah. So I had one of those, and I was going to enter because I wanted to recreate the metric that he had on his slides. And it’s mathematical, so I wanted to do that. And so what I did was I put every single one of those closing prices into the Lotus 123, spreadsheet. So 19,000 entries. And while my wife was driving, we’re on vacation, I was sitting there just entering all these things. Now the interesting that thing, I had the laptop plugged in to the cigarette lighter, right, of course. And so I’m sitting there, typing away, typing away, and then all of a sudden I’m smelling like burnt plastic, oh no. And I’m like, what is that? And then all of a sudden I see the center the keyboard start to, like, fold in, and smoke is coming out. And I’m like, Oh, crap. And so again, you probably may remember these, but we had those big floppies, paper floppies. This thing had a big paper floppy in the side, so I had to back up all my work immediately and pull the floppy out, because it’s paper, you know, the thing was made out of, and I was worried it was going to burn up. So I didn’t finish the project on the road because I mounted the stupid laptop. But anyway, I got back to Dallas after our trip. Got back to Dallas again, and I finished it, and I put it all in, and then I tinkered with, you know, where on the momentum line that metric would work best, and that was kind of the genesis, the, I guess you’d say the first draft of the invest and protect strategy that we use today with our clients was to look at the behavior of markets, the momentum of markets. And if you think about bear markets, they always go down right. By definition, they always go down right. And so that momentum is very measurable, and all this information was widely available to anyone, and no one else had really come up with, and nobody mainstream at least had come up with or thought of, hey, this is what we should do if this happens. Well, I’d like to take complete you know, I was a genius that invented the whole thing. Now, you know, it’s kind of like when you’re studying things, you’re seeing what other people are doing, of course. And so our strategy is kind of an amalgamation of things I learned, you know, studying other people who had built strategies around protecting from bear markets, yeah. And so we developed the strategy. And I remember, so this was around so, so by the time I had a fully baked strategy, this was around 1995 ish, somewhere in there. And so around when y 2k hit. And, you know. Y, 2k was a very interesting bear market, because it was, it was one of the worst in history. It was the, I think the third worst bear market now ever. The stock market went down 49% and it lasted about two and a half years. So it was a bona fide, big, bad bear. You know, it was. It was a terrible time for many, many people. And I had, I developed the strategy, and I was itching to use it, yeah, you know. And so I had a set of clients, you know, we’d built a nice business at that point. And so when y 2k came along, I wanted to implement the strategy. I wanted to try it. And this was a lot like, you know, the guy who invented the parachute, you know, when he jumped out of the airplane for the first time. He’s like, he’s like, okay, here we go. I really think this is going to work. You’ll be remembered, or you won’t, right? So, fortunately, the parachute worked, and he you know. But anyway, so the strategy, and we’d never used it before, but I was very convinced that it was the right thing and that it would work. And so when y 2k came along, the strategy, based on the configurations that we had back then, said, Sell in October of two of 2000 Okay, so this wasn’t at the bottom, but it was near, I’m sorry, not it wasn’t at the top, but it was near the top, yeah, you know, because the major crash happened in 2001 and 2002 right? And so I went to my adventurous clients. Okay, I had my, I’ll say, my most conservative, my most adventurous clients. Because, again, this was a parachute, yeah, never been used, you know, we’d never used it before, right? And so it could, you know, it could be wrong, right? And some it could not work the way we wanted it to. So I went to the clients that I thought would be open to the idea, and I told them, okay, here’s the strategy, here’s all the back testing I’ve done on it. This is all the stuff. And I really think that it’s, it’s time for us to get out and, you know, at that time, in October, 2000 the market had gone up and down and up and down and up and down a lot of times. And every time it went down, it was a buying opportunity, right? You know. And everybody on TV was like, hey, you need to buy now. This is, you know, the dot coms are wonderful opportunity. You’re buying them on sale. You probably heard that, right? The market’s down. It’s all on sale. You got to buy it 10% off. And so people were buying, and it would bounce back, but this time, our and none of those previous one triggered the metric that that I had at that time and so but finally it did, yeah, so I went to those clients and I said, I think it’s time to sell. I think we’re headed into a bad bear market. And so you’re going to be my guinea pigs, if you’re open to the idea. And so I got a about 20. 25% of our clients at the time said I’ll do it. That’s correct. Yeah, I’m in. So we can’t really say we got our clients out in October, 2000 because it wasn’t all of our clients. It was just a subset. But as it turned out, that bear market really took went down badly. And as I said, the market went down 49% from peak to trough, and then, yeah, it recovered. But it took two and a half years before it did, right? And so, you know, if you think about somebody who is retired during that, you know, and you’re taking money out while you’re watching your events, your investments drop, you know, 3040, 50% right in front of your eyes in a short period, yeah, you know, it was four or five months before the market had already gone down significant. Significantly. And so, you know, if you can just imagine the terror, I would say that people were feeling, and I experienced it with the other 75% of our clients who were freaking out. You know, they were like, What should we do? Shouldn’t we be doing something? But based on that experience, we decided that the strategy was, was Bonafide, yeah, proof in the pudding, yeah, yeah. And so at that point, that’s when we said, that’s, it’s going to be our strategy. We’re going to do that now. We’ve refined it in several ways since then. You know, we don’t ever sit on our laurels and, you know, accept that we’ve figured it out. We made several enhancements that I think are significant to that original strategy that we haven’t been that we use now, but 2008 that came along right. So fast forward now, from 2000 the bear market from that. So now it’s, you know, it’s seven, eight years later. It’s not a long time, well, but people have short memories. They’d already forgotten about why 2k just like people have forgotten about 2008 now, if you talk to them about it, oh, what? When was that? Wait, yeah, that was like lifetime again. Wasn’t that last century? So when the. Strategy once again in November 27 to be precise, of 2007 said that it was time for us to sell. And because of the experience we had with the Y 2k test, if you will, we said, You know what? We’re going to get all of our clients out, and we had been prepping clients for this, because after the Y 2k experience, we felt very confident that this was a strategy we were going to use. And if you’re a client of ours, we want you to let us do that for you, because we think this is going to protect you. And so what we did was we prepped our clients and we told them, you know, if we get to that point and they’re aware of it, then we’re going to go. And we need all of our clients to be on board with us, because otherwise, you know, why would you be with us if you’re not going to let us do what we do? Right? And so the our clients were all on board. You know, we’d gotten sign off from everybody, and so when we hit that signal, we sold. And so that was in November of 2007 and if you go through what happened next, over 2008 of course, you know, that’s when the s, p, the stock market went from peak to trough. It went down 57% which was, you know, second to the Great Depression only. So we had, we had the second worst and the third worst bear markets within a decade of each other. So what happened to those companies that didn’t adapt to kind of that bear market where you sell at a certain point? What happened to let’s say, let’s say you were with an investor that said buy and hold during the.com and then they still said, Buy and hold during the 2008 financial crisis. What happened to the theoretically, I guess, what happened to those people, those investors that had money. You mean the people who had their money invested and their Bond held through that whole thing? Yes, yeah. Well, if you, if you look at that, that decade, if you start in January of 2000 and you go through the end of 2008 Okay, so basically, what is it? Nine years? 10 years, nine years. So if you look at that, what you’ll find is that those people, if they were invested in the stock market, the S, p5, 100 index, let’s say yes, they would be down about over 20% I think the number is 26% and that’s after almost 10 years. Wow, wow. So you, you’re told buy and hold. You’re told to just hold through the.com and you So you hold that. And after two and a half years, you get about to maybe where you were previously. No, no, no. It took till 2007 Oh, wow, to get back. That’s actually very interesting. So our strategy, you know, there’s, there’s two sides to the coin, if you have a strategy like this, like the ones we use, right? So you have to have a cell at first, in our view, but then you have to know when to buy. You can’t stay out forever. Yeah. So we also had a buy signal, which was, you know, a different metric. And the buy signal said to buy in June of 2009 so the market had gone significantly down from its peak back in January of 2008 or November of 2007 to where we we our signal said to buy. But if you had, if you had just stayed in the whole time, right, you would have gotten back to even you would have had the same money that you had at the beginning of 2000 if you were in the stock market, right, hypothetical, right? You would have the same money in 2007 that you did at the beginning of 2007 years later, and that’s if you’re not using any of that money, and that’s if you’re if you’re retired, if you’re not using any of that money. As a key point, yeah, but the other, and I want to get back to that, but the other thing that that happened is that, yeah, finally, you know, buy and hold says, Stay the course. You know, it’ll the market always comes back. And so these people, you know, that rode through that bear market, they saw the value. If they were again invested all in stocks, they would have lost, you know, seen their investments dropped potentially by 49% in the y 2k, thing, they’re sweating bullets. Can I retire? Can I stay retired? Oh my gosh, oh my gosh. But it came all the way back seven years later. Oh, thank goodness. Buy and hold work. Look at that. Seven years later. You know, I was 65 when I retired. I’m back to even now, when I’m 72 Yes, well, then 2008 came along, and boom, the market went down. This time, 57% and now it wasn’t until 2013 Yeah, that the market got back to where it was in January of 2000 Wow. So if you string those two together, it actually took 13 years, wow, to get back to even. And the problem with that is, well, there’s two things. One is, how did you field during all of that? You know, one of the things we say is, we want you to have financial. Peace of mind. How much financial peace of mind are you having when that’s happening to you? You know, there were people that I met, people who literally were so stressed, so full of anxiety. You know, during all those times we were doing seminars and we’re talking to people, they were scared to death. They were in panic mode. They didn’t know what to do, you know? And so it’s just the pure trauma of having to deal with that kind of thing. But then to your question, you got back to even in 2013 or 2007 you know, along the way, but that assumes, as you just said, that you weren’t living on the money. Yeah, because if you were taking money out, you know, while, while all that is happening, let’s say you’re taking 4% out every year, the prescribed 4% over 13 years, you took 52% of your money out. And this is while the market went down like that, and then went down again. You know, we’ve done studies on that, and it’s very easy for somebody who retired and took money out during all of that, for them to run out of money, yeah, because, you know, if you’re taking money out while your investments are losing value, you know, farmers call that eating your seed corn, right? And if you eat enough of your seed corn, yes, growth season could come, but you’ve got nothing left to plant Yeah, and that’s a problem Absolutely. So, yeah, the market always comes back. Has, but, you know, there’s an old expression that says the market can stay irrational far longer than you can stay solvent. Yeah, yeah. So, so while you’re waiting for it to bounce back, the key thing is, you got to stop spending money. You got to stop taking any money out of your investments, to let it come back and with our clientele, there are very few clients that can do that. So, Ken kind of going off of what you just said. What does someone do without a more disciplined protection or a sell strategy? How do you keep from making rash decisions about your investments as you watch them plummet? You know that is one of the most difficult things. I actually the reason why we have a disciplined strategy is because we want to take the emotion out of those decisions, you know, it’s, it’s like tornadoes or hurricanes, or any of those kind of things, you know you want to have a plan before they get here, of what you’re going to do when they do and the emphasis there is on when they’re going to right. We know we’re going to get tornadoes, we know we’re going to get hurricanes. We know we’re going to get bear markets. You know. You know, when we do our seminars, we ask people, between now and the rest of your life, what do you think the chances are we’re going to have another major bear market? And you know, pretty much everybody says 100% Yeah. So we say, well, okay, well, if you think there’s 100% chance that this thing is going to happen, doesn’t it make sense to build a plan into your retirement planning, into your investments, to address it? I mean, are you just going to, like, take a beating and not even plan ahead for that? So planning ahead takes a lot of the emotion out of it. It doesn’t completely, I’ll tell you, because, you know, even though we’ve had this strategy for many years now, and we’ve used it multiple times, it’s still a very emotional time when the time comes, you know, because you’re always thinking, oh my gosh, we’re going to sell or we’re going to buy, and, you know, it’s an emotional time for clients and us, because we’re making a big move. But in our view, it’s always the right thing to do to protect. You know, one of the things that I’ll tell you is another story. No, another story from Ken, yeah, yeah, I’ll tell you another one. But I was, this was after, this was in 2009 nine ish, yeah, it was early 2009 and I was coming back from a convention I went to in New Orleans, and I was on the airplane, and this young man was sitting next to me. And, you know, when you’re flying, you know, you kind of get in a conversation, and, you know, what do you do? What do you do, right? And so he says, he says, So you’re a financial planner. Wow. You must have been going through hell this last year you know, because 2008 and all the carnage that that created. And I said, well, actually not, you know. I said, we’ve, we’ve actually been out of the market now for, you know, almost two years. And he’s like, what? So you’ve been out, out of the market? I said, yeah, yeah, the clients have followed our advice, you know, they’ve been out. And he goes, so explain that. And I said, Well, we have a strategy that kind of, you know, tells us, you know, the momentum, it’s not always right, but you know, it is very we have a lot of confidence in it. And so when, when it trigger, we say to our clients, it’s time to get out. And that’s why we did. And he goes, so this is kind of like a tornado siren. A tornado warning, a financial tornado warning. And I was like, Wow, do tell, this is radio show material. This is, you know, at the time I was doing my radio show, I was like, Man, this is perfect. I was like, do tell. What do you mean by that? And this guy, he was from Oklahoma, yeah. Okay. And so he said, you know, we have a tornado shelter. And I said, and he goes, you know, and when the when this and so when the siren goes off, we go into the tornado shelter. And so it sounds like that’s what you have. It’s like you have a tornado shelter. And when the siren goes off, you put all your clients money in the tornado shelter, in the in the financial shelter. And I said, you know, that’s actually really cool. I like that. I’m going to use that, I told him, and he goes, it’s yours. So then I said, Okay, well, let me ask you a question, what would happen if, you know, the siren goes off and you take your family down into the tornado shelter and the tornado doesn’t hit you, you know, it turns around, goes the other way. And he said, Well, I guess we played cards, didn’t we? I said, Okay, so you go back up and the siren goes off again. Now what do you do? He goes, Well, we go back in a tornado shelter. And I said, What happens if the tornado doesn’t hit you the second time played more cards. What about a third time played more cards? And I said, so you’ll go down into the tornado shelter every single time the siren goes off. Is that right? And he goes, Yes. And he said, and this stuck with me, because I say it to everybody now. He said, Because I cannot afford to be wrong once my family is important to me, and when that siren goes off, I’m not ignoring it. So that’s the same thing with our strategy. You know, we’re always nervous about it. It’s kind of like the tornado warning. The siren goes off, you’re going to be a little scared, even though you’re going into the shelter. Into the shelter. But for our clients, we always will enact that. And so that’s why, you know it gives us and you know, if you get out, and there have been times over the last 1015, years where we’ve gotten out, and we might have been better off not getting out, because the market rebounded quickly, but in our view, it’s like that. It’s like that tornado story. Yeah, I could have been out enjoying the outdoors and not been stuck in a tornado shelter, but it was the right thing to do, right, right? And our clients are our family, and so it’s the right thing to do for our family. But more to the question that you asked with regard to, what do you do if you don’t have a plan, if you look at studies of investor behavior, what they do is they tend to hold on hold on hold on it’s going to turn around. It’s going to turn around. It’s going to, you know, please, please turn around at the bottom. And then they usually reach a point where they just can’t take it anymore, and then they sell. And that’s called capitulation. That’s when the market that last point in a bear market, where the market just falls off a cliff. It’s that last big drop, and unfortunately, that emotional moment when people finally can’t take it anymore. You know, studies have shown that tends to be when the bear markets over, so they sold at the bottom. And so that’s why, you know, buy and hold came along, which, I think, and that is, you know, you don’t want to sell at the bottom. You don’t want to panic and sell. You should hold on and get through because it’s true. If you if you bought and held, you would be better off than selling at the bottom right. And then you’re sitting there waiting to get back in, and it turns around and you’re still not sure. You’re still scared. You’ve lost so much money. You know, I met so many people that even after the market rebounded two years later, they still hadn’t gone back in. Yeah, you know, they were so upset and anxiety and all that they couldn’t get themselves to go back in again. It was too painful. And so they missed out on the huge gains. So, you know, making decisions based on your emotions is, in our view, really a bad idea. We think you should have a game plan in advance to address the things that you’re worried that could harm you, and that way you’re prepared in advance. Yeah, is there? So one of the things that’s human nature, right to make decisions essentially based on that emotion. If somebody not just during the downfalls, but during certain having optimism for when things are going just right, it looks perfect. It even imagine on a stormy day, you see a glint of sunlight come through. You’re like, well, it can’t be all that bad, right? Are there certain, I guess, emotions, or these studies you’re talking about? Do they kind of go through a gambit of different steps in those emotions that really have proven out that’s what kind of what people do, yeah, yeah. Actually, it’s a very predictable curve of emotions. So you have capitulation, which I just described. And that’s when, and usually, if you, if you look at the curve of the stock market in big, bad bears like Y, 2k, in 2008 and 73 as I spoke, about 80. Seven, you know, going all the way back to the Great Depression. If you look at those emotional curves that investors went through, there were studies on that, at that bottom period where Pete, where capitulation happens soon after that, there’s this, this point where, you know, I’ve dubbed it as hope, yeah, you know, where it’s like, is the storm over? You know, has it passed? There’s just kind of this, maybe, maybe it’s okay, you know? And so there’s this little moment of hope. And then after hope, the market continues to rise, and people start gaining a little confidence, and so they get confident, and that’s when the market starts to go up, yeah, and it starts to go up a lot because now people are like, Oh, it’s time to buy confidence. So hope is, you know, there are some early adopters, right? There’s early people that buy in on the hope cycle. But the confidence cycle is when the market really starts to go up, yeah. And eventually it starts going up so much that people become, you know, overconfident, and they get into, you know, hubris and euphoria, you know. And so now the market really starts going. And then at this point, they’re ignoring everything. It doesn’t matter that. There’s no fundamentals to this. This doesn’t make any sense. You know, the dot coms. People were buying those, even though these companies had no business plan, they weren’t making any money. It didn’t matter. These are dot coms. You got to buy them. You’re missing out. And so there’s this fear of missing out, you know, this whole energy starts to build, and people are just driving the market higher. And the higher it goes, the more people buy. And it’s like it’s just feeding on itself. And then you get to a place where Alan Greenspan, I think, is who coined the phrase, but it’s he called it irrational exuberance, where now people don’t they throw caution to the wind. They’re like mortgaging their houses, yeah, you know, to put money into the stock market. I think Rockefeller, you know, this famous thing where he was talking to shoeshine guy, and that guy had borrowed money to go into the stock market. He said, That’s the time to sell. Yeah, you know. So at some point the euphoria, the euphemism, the irrational exuberance, takes hold, and that’s usually when you’re at the top of the emotional cycle, yeah. And then what happens is it start, it peaks, right? And it starts to come back down again. And as it comes back down, there’s this moment of, wait a second, what’s happening here, you know, I thought this thing was going to keep going up forever. How can it start to go down? And so then you start having, you know, a little bit of anxiety, a little bit of, you know, lack of confidence, and you start feeling a little insecure, you know, should I stay in or not? You know, maybe, maybe I should sell. You know, what’s, what should I do now? And then it starts to go down more. And then all of a sudden, anxiety really sets in, and then it keeps going down. And then fear starts to set in. You know, where people are actually scared, but they’re being told by hold by hold by hold by hold, don’t do anything. You got to stay the course. Everything’s going to be fine. So they’re scared to death, but they’re okay. But then they see their investments going down so far, they can’t take it anymore. And then they panic and they sell, and we have capitulation, and then rinse and repeat. And that’s the cycle. It just kind of repeats itself over time. Now, sometimes it happens really fast, that cycle, and sometimes it happens over a protracted period, but that’s why Warren Buffett, I think, is famous for saying, when everybody’s a coward, I’m brave, and when everybody’s brave, I’m a coward, he’s talking about, what I just described is, if everybody’s brave, you’re probably in that period of that euphoria, that irrational exuberance. And if everybody’s panicking and everybody’s a coward, then you’re probably at the capitulation point. And maybe it’s time to buy but our belief system is that you shouldn’t be doing any of those things, right, right? Our belief system is, you should have a strategy that when it comes back down, and it starts to go down, you know, you can, there are metrics that we use to measure the momentum of the market, and you know if, and obviously, you have to have confidence to pull the trigger as well, which, by the way, is one of the most important things, I think, in this whole process is not just having a strategy. You know, as Jerome Seinfeld said, you know, you took the reservation, you just didn’t keep the reservation. Do you remember that? So it’s great to have a strategy. You had a sell strategy. You just didn’t sell, right? You know, there’s an important component there. And again, because of the emotions, yeah, it’s very difficult. I mean, everybody can say, Oh yeah, you know, I have the strategy, and when it triggers, I’m going to sell. Yeah, yeah. You know, most people don’t have the willpower to implement their strategy consistently. And then on the on the reverse side, when the market has come way down, and now it’s time to buy back in right? That’s scary. Yeah, you’ve been nice and warm. You know, you’ve been sitting in cash. You know, in 2008 into 2009 we were sitting in cash for almost a year and a half, and in June of oh nine, our strategy said it was time to buy. Yeah, so when we sold, our clients are cheering us. Good job. Way to go. We love you, man. You know, high fives where they’re heroes, you know, they love that. And then we said, Okay, it’s time to buy. And they’re like, we’ve been in this nice, warm, cozy bed. We’ve been in cash, you know, it’s so nice here, you know, we don’t want to buy. It’s that’s cold water. What if it goes down after we buy? You know. So even though we were doing it for our clients, we got pushback, yeah. So I think, you know, somebody that’s trying to do this by themselves, without professional help, I think it’d be very difficult for an individual. It take a tremendous amount of discipline to set your emotions aside and sell when, when, when your strategy tells you to and buy when you’re straight. The buy side is especially traumatic, you know, because right after you buy, it could go down absolutely and no, there’s no guarantee, you know. So if it does, you may say that was a bad decision, but in our view, it’s the tornado story. Yeah, if it goes down right after that, you know, after you bought, it doesn’t matter. It your strategy told you to do that. You have to have the discipline to do it, and over time, you know, we have a great deal of confidence that our goal for our clients is to, you know, have their money last as long as they do, and to avoid major losses, we think it is an important component of that. So, what happens if you don’t have a strategy? Well, yeah, if you don’t have a strategy, you should at least think about that. You know, you should, you should think about there are a variety of strategies you can use. You know, professional traders use stop loss strategies. You know, our view is that whenever you buy an investment, you should already know when you’re going to sell it. You should already have set the parameters when you’re going to sell it on the downside and the upside, because that way you already have a strategy. So, if you buy it at 100 you say, if it gets to 120 I’m going to sell it, if it gets down to 90, I’m going to sell it, right? So you, once you buy, you have that now, if you get to the 120 your strategy says to sell now you know, you can reevaluate, sure you know at that time, but at least you have something that triggered in you, it’s time to sell now, you may override that. I don’t recommend it if you have a strategy, but you know, it gives you the opportunity to do that. I’ll quote Warren Buffett again. You know, he said that I have never lost money when I left money on the table, yeah? Meaning that he is, he’s never sold, and then it went up after that, and then and not sold at a profit. You know, think about that. Usually, you don’t want to sell when you’re up, because you think it’s going to go up more, right? And so, he’s done a lot of selling in times when it had gone up and it went up after he sold, yeah, but he said, I’ve never lost money. You know, selling, you know, when I left money on the table? Absolutely, yep. It’s the taking that decision making kind of out of your hands, having someone else pull that trigger kind of reminds me of like a roller coaster. How many people if you were to determine whether or not you went over that crest, how many people are getting off of that ride and walking back now? Me, yeah, me too. I don’t want to like that anxiety that builds up over that. I hate that clickety clickety clickety clickety clickety. And you’re like, oh my gosh, here it comes. Here it goes. And then having someone else, though, being that determining factor, like, no, this is what we should do, even though there’s anxiety. This is, this is how it’s built. This is what it’s made for. Yeah, you’re safe. It’s okay. Well, you know, Safe is a relative term. There’s no guarantees, but that decision making is out of your hand, yeah, and, you know, there are, there are also many studies that, and this is, you know, I’m selling here for my profession, which I don’t think there’s anything wrong with that, but there are many studies that have shown that people who use a financial advisor have much better outcomes than people who do it themselves. And I think a big reason for that is that if you’re working with somebody, you know, it’s not their money, you know, right? It’s the old thing. You know, you don’t want to be your own surgeon, because, you know, you got a lot of emotion about this, absolutely, you know, it’s better to have somebody who’s done it a bunch of times and basically just met you and they’re going to, like, operate on you. And, you know, they’re not emotionally involved in the whole thing. You know, I wouldn’t want my wife to operate on me or my daughter for a variety of reasons. You had a bad argument the night before. You don’t want no because, you know, it’d be too I wouldn’t want to operate on my wife. If I was a surgeon, it’d be too traumatic. I’d probably make a mistake, because I don’t want to make a mistake, and so having somebody else whose objective does not have a personal involvement, I think is really important. So, I would say, you know, two things. One is, have a strategy, you know? And there are you can look up. There’s lots of different things you can do. Like I said, a stop loss strategy is a very good one that most professional traders use, and most retail. All investors don’t, which is interesting to me, but also work with a professional to help you with that. The major takeaway for today is that when you are within five years of your retirement, or you are in the first five years of your retirement, that decade, in our view, is the single most important decade of your financial life. It doesn’t matter. You know, you could have made 20% every year for the last 20 years. You’re the greatest investor that has walked the earth. In fact, there’s a bronze statue of you on Wall Street, and all the traders, as they’re walking by, rub your foot because they want to get you know, whatever the magic that you have is, and that’s how good you are. Warren Buffett, in fact, calls you for advice. That’s how good you are. And you’ve accumulated this massive fortune. And then 2008 Y, 2k the Great Depression, when the market went down 90% something that like that hits you. Let me tell you something it will impact you, and probably you won’t be able to retire when you want to or stay retired after. So, the importance of having a strategy to protect against a downside. Again, growth is important, but protection of principle is even more important. That’s the takeaway. Thank you for watching today. I hope you enjoyed this. This content. I encourage you to subscribe to our channel, and we’ll talk soon, Retirement Planners of America, rpoa.com.