Why Bear Markets Matter
Key Points – Why Bear Markets Matter:
- Stock Market Valuations at Near-Record Highs
- Why Bear Markets Matter More Than You Think
- Risk Tolerance & Asset Allocation
- Advanced healthcare directives
- 24 minute read | 37 minutes to listen
You know a lot of people say that asset allocation will take you through any bear market. Not so fast. Join Dean Barber and Bud Kasper as they discuss why bear markets matter more than you think. Especially those of you that are nearing retirement or in retirement.
Why Bear Markets Matter
Dean Barber: Thanks so much for joining us here on America’s Wealth Management Show. I’m your host Dean Barber, along with Bud Kasper.
Happy Fourth of July
Today, not only are we celebrating the independence of the United States of America, so happy 4th of July to everybody out there, everybody. I hope everyone stays safe and not too hot.
Bud Kasper: Yeah, right. And celebrate folks. Celebrate living in the country that we live in.
Dean Barber: The greatest country in the history of the world. No question about it. Thankful to be here and part of the United States.
Stock Market Valuations at Near-Record Highs
You know, we’ve been through some pretty crazy things here, Bud, over the last, let’s call it, 15 months or so since COVID hit in 2020, and something has happened. And we find ourselves in a scenario where we have stock market valuations near-record highs, depending upon how you want to measure those valuations.
Bud Kasper: Agreed.
Dean Barber: If we look at the Cyclically Adjusted Price-to-Earnings Ratio called the CAPE ratio, that has us priced about where we were in the late part of 1999.
Bud Kasper: Okay, that has led to the Dot Com Bubble.
Dean Barber: It did lead to the Dot Com Bubble.
Traditional Investment Wisdom
Let’s talk about what happens because traditional wisdom and people in the investment world want to tell you to build a good portfolio and have good asset allocation and just set it and forget it, right? Rebalance once a year, and over the long-term, you’re going to be just fine.
While that might be true for someone in their accumulation years, especially people that are dollar-cost averaging by adding to their 401(k)s and their IRAs, et cetera, that’s great. But what if you’re doing the opposite of that? What if you’re reverse dollar-cost averaging? What if you’re taking money out of your account to live on because you’ve decided it’s time to retire?
Bud Kasper: Right, which almost every retiree is.
Reverse Dollar-Cost Averaging
Dean Barber: Yes. That’s what happens. If you had retired at the end of 1999, the industry considered a 6% withdrawal rate a safe rate. Today, they’ve changed that to say, well, maybe 4% should be more along the lines. So if you started in 1999, January 1st of 2000, taking 6% off of a balanced portfolio, chances are you’re pretty close to out of money right now.
Bud Kasper: Yeah, substantially lower, that’s for sure.
Dean Barber: Yeah. Well, what we did, Bud, we went through a 10-year period where we had no return in the market, right? Now, we had some excellent bull market runs there, but the bear market of 2000, 2001, or 2002, and then the bear market of 2007 and ’08 just crushed people’s ability to retire.
CAPE Ratios and Market Returns
Now, the CAPE ratios are almost as high as they were then. When we look at the CAPE ratio today, it’s about 37. And to put some meat on that CAPE ratio of 37, if you look at 10-year returns going forward with a CAPE ratio around 35, your best ten-year scenario was about a four and a half percent return on an annualized basis. Your worst was a negative four and a half percent over ten years.
Bud Kasper: So what’s the mean? Flat?
Dean Barber: Flat? Yeah. And you look at 20-year periods, a best 20-year period with a CAPE ratio where it is today; it was about three and a half to 4% over 20 years. The worst-case scenario was about 1%.
Bud Kasper: If we go back to 2008 to 2009, we refer to that as the Great Recession. Investors had lost over $2 trillion in their retirement savings. I want to go from there up to where we are now, and I want to go back to the COVID crisis.
The Market Recovery During the Pandemic
We had a great market before COVID and the year before. So we go into COVID, we’re up about 4.8% by the time we get to March 30th, something like that. Then the news comes out, okay, and the market starts to drop.
We set a record in terms of how quickly the market fell, at that point, from high to low. 4.8% on February 19th to the low, which was minus 30.75% on March 23rd. Now that was fast.
Dean Barber: That was fast.
Bud Kasper: That was fast. And, of course, people are saying, “Well, what should I have done in that situation? Hold on and let it repair itself?” And the answer is, no one knew what quite to do at that time. I had spoken with a client of mine who’s an epidemiologist, trying to find out how serious he thought this was going to be. And his report to me was, “I think this is going to be one of the worst.”
So with that in mind, and we see this decline that we had, the thing that took everybody off guard was the recovery. Because in a matter of three days, we erased 8% off of that 30.75% drop. And now you’re asking the question, is this for real?
The Dead Cat Bounce
We used to say in the business a “dead cat bounce.” The market came down, and then it usually just bounces back up, but then it falls again. I wrote an article at that time, which I called Who Do You LUV? In the process of that, we’re looking at what probabilities exist for markets to be able to repair themselves. The reality is we got to recover. It was unbelievable.
Dean Barber: It came on the heels of all of the stimulus that the government put out, and it was at record speed, too.
Bud Kasper: Absolutely, it was. So as we started to see this recovery coming back into play, the question is, have we seen it all? We talked about shapes of recoveries; everybody wants a V, okay? You and I, because of our length of time in the business, what it said, a W probably would have made sense. We go down; we come back up, retest the prior low, when’s the last time you heard that statement, and then back up again.
Dean Barber: Right. That didn’t happen.
Bud Kasper: It didn’t happen.
Stress Test Your Retirement Plan
Dean Barber: So we find ourselves with valuations at extremely high levels. In our Retirement Plan Checklist, question number 10 is: “Has my retirement plan been stress tested to consider the possibility of poor market conditions at any point in my retirement?”
It has to be, right, and we’ve got to do that consistently. And when you do that, you can figure out how to make it work.
Why Bear Markets Matter More Than You Think
So, let’s talk about why bear markets matter more than you think they do.
We try to pay special attention to overvalued markets. The main reason is that we understand that when you’re in the retirement phase of your life, or when you’re in that last maybe five years of work, a bear market can destroy your ability to retire the way you want to retire. Or it can ruin your ability to stay retired and continue to get the same income that you want to get.
Bud Kasper: Right
Dean Barber: Right? And so when we use our Guided Retirement System™. What we want to do is we want to go to question number 14 on our Retirement Plan Checklist. The question asks: “Does my retirement plan allow me to have the highest probability of achieving my goals and do so with the least amount of risk possible?”
Dean Barber: Okay. So when we fully understand your goals, income needs, and resources, we then try to construct a portfolio specific to you and what your money needs to do. And accomplish that with the very least amount of risk possible because we understand that risk is ever-present and risk is real.
We never want to take on more risk than what it will take for you to do all the things you want to do. In other words, we don’t want to get greedy, Bud.
Bud Kasper: Right. Well said, Dean. I think the other thing that people need to realize in our profession, we can measure probabilities of what might happen if we go into a bear market. We must have a conversation with our clients, so you understand that we’re going to have these periods we’re going to go through.
Risk Tolerance & Asset Allocation
So what we’re trying to find out is what your tolerance is? Some people can tolerate a 10% decline. Some say, “I couldn’t tolerate a 5%, and that’s individual, isn’t it. So we’ve got to have that conversation, so we understand how we might be constructing your portfolio to achieve those levels of decline.
Dean Barber: Another approach is to say, “Look, the money that I’m going to need to live on for, say, the first five years of my retirement, I need that to be in something safe. Something that doesn’t have a lot of fluctuations.”
Bud Kasper: Common sense.
Dean Barber: “Then I can have money that I know that I’m not going to be using for 10 to 15 years. I can invest that like I’m 10 to 15 years younger, and I could have those fluctuations with that particular bucket of money. Then, all of a sudden, I can look at it and say, “Okay, I have my income bucket. I have my income in the medium term, right? Five to 10 years. Then I have my income bucket that’s ten years plus out. As my one grows on the 10-year, I can come back and refill my one to a five-year bucket. So I’ve always got money.”
Bud Kasper: It’s a beautiful thing.
Dean Barber: “I always have money in an account that I know is relatively safe, as little fluctuation, trying to get maybe a 2% to 3% to 4% rate of return.” We’re not trying to knock the cover off the ball. We want to be safe there.
Managing the Buckets for Risk
Bud Kasper: Right, and hopefully generating some income in the process of that. And so right, Dean. If your third bucket, using your scenario, is the one that you’re not managing for risk because you know there will be reward with risk, but you got to be able to live through it. And this allows clients to be able to do that.
There will be a recovery. We know that history tells us that very clearly. So you have to be very intelligent about how you’re managing your assets in these times, especially when we’re at all-time highs.
Dean Barber: Yeah, putting this together and driving income in retirement or protecting yourself in those last five years before retirement is critical, especially where we are right now with the markets.
The Guided Retirement Show™ Educational Episodes
Dean Barber: But another thing that we’ve done is we’ve got The Guided Retirement Show, which is a podcast. And I want to get people to listen to the podcast because I have a couple of guests. One of them happens to be your son, but I talk with David Mitchell of AllianceBernstein, and we talk about overvalued markets, understanding supercycles, and avoiding emotional investing. That’s The Guided Retirement Show episodes, 17 and 43.
Then, Brad Kasper, we talk about the economy and the marketplace, things to know before building your portfolio, assessing risk in the portfolio, and building better, more predictable portfolios. That’s all with Brad Kasper. Those are episodes 10, 11, 15, and 41.
You’re going to learn an awful lot there. Get a glimpse into the heads of people who have been in this industry and understand what to look at in times like these.
By the way, season five of The Guided Retirement Show™ premieres on Tuesday, July 6th. So find it on your favorite podcast app or YouTube to subscribe today.
Bud Kasper: Yeah, it’s so true. And you know, there are so many learned people out there and from our perspective, because we’re sponges, you know, we don’t think we know it all, but we want to hear what everybody has to say so we can make appropriate assessments for the benefit of our client.
So we’re not alarmists at this particular point. We just realize that valuations are a little bit stretched at these levels. And after your 35 years and my 38 years, we’ve come to know, yeah, we’ve been there before, we understand what is necessary.
But again, I go back to the statement I made in the prior period, and that was, understand where your risk is.
Target-Date (Lifecycle) Funds
Let me go into 401(k)s; how many people are using these lifecycle funds? I want people to understand that those lifecycle funds blend between stocks, bonds, and cash, just to make it easy. Okay.
Our issue is, you better know how much your stock exposure is in that lifecycle fund because you might be thinking that you’re safe, when in fact, you might have exposures at 60, 65%.
Dean Barber: Yeah, no. And if you’re in those last few years before retirement, that is probably too much.
Bud Kasper: Yeah, and we witnessed it, did we not in 2008?
Today’s Economic Growth
Dean Barber: Now, here’s the thing. If you look at the economy today, take our eyes away from the stock market for a little bit. We just look at what’s happening from an economic perspective; you and I could easily say that “Man, it looks like for the next two to three years, we’re going to have some pretty robust economic growth.”
So if we don’t look at market valuations and we only look at economic growth and what’s happening, we could say, “Man, that should be, really, really good for the stock market.”
What I think is that we can keep our valuations high for an extended period. We’ve seen valuations stretched for a long period. However, I think people have to step back and say, “That doesn’t necessarily mean that I’m going to continue seeing the types of returns that we saw last year and in the first six months of this year.”
Bud Kasper: Yeah. Don’t you agree, though, Dean, that the anticipation was that we wouldn’t recover from this COVID crisis as quickly as we did. I can tell you; I most certainly did not think that.
Since we did that and we had a great year last year, and we’re doing okay this year as well.
What’s the Catalyst?
But the reality is, the valuations are so freaking high that you’ve got to ask yourself, what’s the catalyst? What’s going to take us to the next level? Well, I’ve got the answer, it’s the Fed Reserve. You know, they got it right. We’re going to stimulate the Dickens out of that.
Dean Barber: Oh yeah.
Bud Kasper: Well, ladies and gentlemen, we had an issue back in February where the Fed Reserve was trying to keep the interest rates on the 10-year pegged to 2%. And it went to 2.5%, what did that do?
Dean Barber: It went to 1.5% on the 10-year, yeah.
Bud Kasper: One, I’m sorry, yeah.
Dean Barber: Yeah.
What About Bonds?
Bud Kasper: So as we’re looking at that, we’re saying, “Oh, whoa, this wasn’t supposed to happen.” They’re keeping interest rates down, which does what? It makes stocks more attractive because you don’t want the poor returns of the bond market.
Dean Barber: Right.
Bud Kasper: And with the rise of the interest rates that now cause bonds to contract a little bit, and now you’re questioning whether or not you’re right to be in bonds.
Dean Barber: It’s a different time.
Bud Kasper: It is.
Dean Barber: It’s a different time. When valuations were this high back in the Dot Com Bubble, interest rates, Bud, we’re up in the 5% range. You know, it was 5, 5.5.% On the 10-year treasury back then, right?
Bud Kasper: Yeah.
Dean Barber: So we had an alternative; we had a place to go.
Bud Kasper: With a reasonable return.
Dean Barber: Exactly right.
There is No Alternative
Dean Barber: I think that one of the things that will keep these valuations up for some time will be that there is no other alternative.
Bud Kasper: Yeah. When we did the show back in 2008 and watched what was going on, how many conversations did we have? People don’t understand their risk.
Dean Barber: Right.
Bud Kasper: Well, I’m going to echo that again.
Dean Barber: It’s true.
Bud Kasper: If you don’t understand your risk now, you know, you might have some consequences to pay.
Dean Barber: Well, and the good thing is that we can see the valuation stretched, and we know where we’re at. This is the time when people really should be saying, “All right, let’s stress test this portfolio through these different market conditions. And let’s see how it would impact my ability to do the things I want to do.”
A Story of a Bear Market Destroying Someone’s Retirement
Dean Barber: Okay. I’ve got a great story for you. I’ve got a great story. And this goes back to the last time we saw the cyclically adjusted price-earnings ratio as high as today. This was late 1999, actually coming into January 1st of 2000.
At that time, a man, who was about my age, had received a buyout package from one of the big telephone companies. And you and I had worked extensively with Southwestern Bell, AT&T, Lucent, and all those. And that’s when Lucent was still around.
So this guy retires in ’97, and what was going on in 1997, 1998, and 1999 was this dot com craze. You could start a website called walkmydog.com. I’m facetious, but it would sell for just crazy multiples. You end up making no money, and yet the money’s pouring into these stocks.
Well, by January of 2000, this guy was not listening to me about having a diversified portfolio. He didn’t want anything to do with anything fixed income. He didn’t want anything to do with anything brick and mortars. And by the time January 1st of 2000 rolls around, he’s 97% in technology and telecommunication stocks.
“You’ve been really lucky, but you have to stop.”
I called him up, and I’m like, “Look,” I said, “You’ve been really lucky, but you have to stop. We need to take all this money that you’ve made, and we need to take it out, and we need to put it into fixed income. Then we need to take the rest of your money, and we need to get diversified.”
He’s like, “Are you kidding me?” He goes, “I got this figured out.” Okay. And I’m like, “No, you don’t.” And he’s like, “Seriously, not only am I going to do that, I want to take more income.” And I’m like, “Hmm. Don’t, that’s not a good idea.” And I said, “So you got to sign something that says, this isn’t my idea.”
Bud Kasper: Right.
Dean Barber: Two and a half years later, he had lost 80% of his money.
Bud Kasper: Yes.
Dean Barber: 80%, had to go back to work.
Bud Kasper: Unbelievable.
The True Definition of a Bull Market
Dean Barber: Right? And so my point is, look, it may feel like this is easy, but you know the true definition of a bull market?
Bud Kasper: Give it to me.
Dean Barber: It’s a random market movement that causes the average person to mistake themselves for a financial genius.
Bud Kasper: That’s the truth, Dean.
It’s Not Too Late to Adjust
Dean Barber: But you and I have witnessed it. Remember back in 2008, when we were talking about, “Hey, look at these valuations. They’re overdone. Look at this subprime crisis that’s coming.” And we were talking about it on the radio, saying, “Look, pay attention to what’s happening.”
But Bud, by the time people came into us at the end of 2008, the pain was so great, and people had lost so much money that it was too late. What I’m seeing is right now is not too late. We can see these things. We can see the writing on the wall. It’s time to understand what the actual risk is in your portfolio. It’s not after we have the downturn, and it’s going to happen. You and I don’t know when it’s going to be, but it will. You don’t have valuations this elevated without it going down.
Bud Kasper: Well, and I think that the timing of this show is pretty darn good if you ask me. We’re halfway through the year, trying to discover what’s going to happen in the second half. And of course, people remember the great recession that you’re referring to in 2008 when we had a 47% decline. What did people say, “Oh my God! My 401 turned into a 201. Right?”
That was not funny for people who were retired or near retirement and exposed themselves to too many equities. If you go back during that period, Dean for just a moment, ’95, ’96, ’97, ’98, ’99, what did we have? Double-digit returns.
Dean Barber: Four years in a row.
Bud Kasper: You’ll also remember in 1996, Alan Greenspan stepped before Congress, gave his twice-a-year report on the federal reserve, and he made a statement. Do you remember what that statement was?
Dean Barber: He said there was “irrational exuberance in the stock market.”
Bud Kasper: I believe the market has experienced irrational exuberance, and the market hated him for that.
Dean Barber: They did.
Bud Kasper: “What are you trying to do, ruin this gravy train that we’re on right now?” Did anybody listen? Very few.
The reason was, and I’ll be a little bit off on this, because after the speech, the following year it was up 31%, then 26%, then 19% in 1999. And then, of course, what happened, the Dot Com Bubble. As you had talked about earlier, the valuations on these dot coms were out of sight, but fundamentally no earnings.
Dean Barber: Right.
Bud Kasper: Now, but everybody believed that technology would be the way of the world, and they were right. But you can’t let that fever get up to a point where it now becomes detrimental to your money. And the question is, is that where we are now?
Stock Picker’s Environment
Dean Barber: Well, yes, there’s no question. There’s the question. But think about what did well in 2000, 2001, and 2002, actively managed value portfolios. Just because the market itself is overvalued doesn’t mean all stocks are overvalued. So I believe that we’re going to go into a period, Bud, where we could be into more of a stock picker’s environment.
Bud Kasper: It very well could be. It could be even getting down to maybe three sectors where you want to invest in, to be quite frank. I don’t have the answers for that at this time. But I’ll tell you what, Dean and I are forever exploring.
I think our commitment to you, our audience who have graciously listened to us for all these years, is education. We’re learning all the time. We’re trying to share information with you to be better prepared mentally about what possibilities are in your retirement investing.
Reassess the Risk in Your Portfolio
Dean Barber: What we do know is when these prices are as elevated as they are right now, it’s time to take a step back and assess the risk that you’re taking right now.
Bud Kasper: I want to go back to the Retirement Plan Checklist because that checklist has become so important. We’ve revised the checklist a few times over the years to stay up-to-date.
Dean Barber: Yes, we could leave it alone if Congress would quit messing up the tax laws.
Bud Kasper: Right. Oh, well, I’m glad you brought that up because now this is the other factor. After all, if the market’s not going to be in our favor, we better make sure we’re getting all the tax consequences we can that are favorable to retirees.
Investments are the Last Piece, Not the First
Dean Barber: Well, so when you’re putting together a good retirement plan using our retirement system, the first thing that you’re going to do, is you’re going to look at the resources that you have.
You’re going to look at maximizing that Social Security. You’re going to look at minimizing taxes when you’re getting the income that you need. And once you’ve built that entire plan, then you can go with the asset allocation. How should your money be invested?
Now I know that we’re talking today about market risk. Still, we won’t discuss how your money should be invested until we take you through our planning process. Because what we need to answer is: what does your money need to do for you to do all the things you want to do in retirement? And once we know that, we can design the portfolio, but we’ll only know that by using the guided retirement system.
Bud Kasper: Exactly right. And you mentioned before about stress, and in the stress, we need that understanding before we can go forward.
The Lost Decade
Dean Barber: Bud, the last time we saw the CAPE ratio as high as today, we went through a decade that we refer to as the lost decade.
Bud Kasper: The lost decade. Right.
Dean Barber: 2000 through 2010, two major bear markets through that period, both above 40% drops. You had some fantastic bull runs. I mean, that bull run from mid-2002 through mid-2008 was enormous. That six-year period was an excellent total return.
Bud Kasper: It was. Now that raises a good point, Dean, because if we are talking about the possibility of being overvalued at this time and possibly needed to change allocations, to be able to protect money further, some people are going to say yes. Still, I’ve been told not to move anything for the simple reason that there will be a bull market after the bear market.
Retirement Security and Bear Markets
Vanguard recently wrote a paper called Implications of a Bear Market for Retirement Security. It’s a good read. And as we are functioning under an educational theme here for our program, it wouldn’t hurt you to have a look at that. It goes back 138 years and shows some pretty good evidence of how markets reacted during those periods. Of course, what do we want from that? We want to learn from it. That’s why we’re sharing with you our experience over all these years.
Building a Plan Around Necessary Risk
Dean Barber: So let’s go back to how we analyze this, Bud, because I think this is critical for people to understand. We’re going to look and build your plan. Okay? So the first thing we want to know is what is it you’re trying to accomplish? What are your goals, your dreams, and what are the resources that you have? And we identify what your money needs to do. Then we say, all right, let’s take the portfolio that you have today. And let’s pretend like it was January 1st of 2000, and this was your retirement date.
Bud Kasper: Right.
Dean Barber: Position it that way. What would have been the result? Would it have worked? And if the answer is yes, then we’re going to go, “Hey, you know what? We don’t need to worry about this.”
We’ll stress test it through the Dot Com Bubble. We’ll stress test it through the ’08 Financial Crisis, 1987, and the 1929 Great Depression. If you’ve got a portfolio that you could get through those periods and still accomplish your objectives, you don’t need to do anything different.
Bud Kasper: Right.
Dean Barber: But if you see a crash and burn, then you can step back and say, all right, I need to make some adjustments here.
The Importance of Stress Testing
Bud Kasper: Yeah. And the word that you use is the appropriate one. And that is stress test. Now let me add one more thing. And there is not a plan that we don’t stress-test the current portfolio of a client if it happens to be a new client, so they can see the actual results they would have experienced during those difficult timeframes.
It will show them alternatives to see if that would be a better solution for them. The old saying is a word to the wise is sufficient thereof. We’re trying to give you the word so that you can be wise about this. And one of the other things associated with this, not just stressing for bear markets. It’s stress testing bear markets with distributions which is another part of the negative compounding.
Dean Barber: Right. And it is critical. So how often do we stress test? Twice a year.
Bud Kasper: Right.
Dean Barber: Twice a year, right?
Bud Kasper: Yes.
Dean Barber: If we start getting into weird scenarios, sometimes we might do it more than that, but a minimum of twice per year, we’re going to sit down and stress test this right in front of you, so you’re going to be able to see.
Rebalancing Your Portfolio
Look, we’ve got excess. Bud, we talked about that really in January of this year, we talked about it mid-year last year, we talked about it in January of last year. I think we’re mid-year here this year. Let’s talk about it again. And that is rebalancing.
So if you wanted to have a 60/40 portfolio and started January 1st of 2020, 60% equity, 40% fixed income, and you didn’t do anything, you just said, okay, that’s my allocation. Well, by the time you got to the end of March when COVID hit, you didn’t have a 60/40 portfolio anymore. You had more fixed income than you did equity, right? You’re out of whack.
So, let’s rebalance. Go back to 60% equity, 40% fixed income. People would go, well, why? You’re buying into something that’s falling. No? You’ve got to keep that allocation right. You get to the end of the year. If you did that, you had a better result than if you didn’t rebalance.
Bud Kasper: Right. I think the only debate that ever comes up in rebalancing folks, this is true of us who have been in the business for this long period, and that is how often do you rebalance? Because you can rebalance to the point that it negates the rebalancing.
I’ve seen people that said, “Well, you should rebalance based upon what market conditions are at that time. If the markets are up, well, certainly take the profits, rebalance back into a safer position. If you’re lower in your equity positions and things are down, that might be a good time to be going back the other way.”
Buy and Hold?
Dean Barber: The point here is that we wanted to talk about why bear markets matter more than you think. They matter more than you think, especially if you buy into the philosophy that the buy and hold strategy is what you should do, right?
Do your asset allocation, rebalance only once a year, and just leave it alone. Or you hear people talking about the fear of inflation, well, when you have a fear of inflation, then you start worrying about, well, what’s that going to do to bonds?
So I don’t even want to own bonds right now. I’m not saying that I don’t want to own bonds. I’m saying that’s what’s in people’s heads. And so maybe they are way overexposed to equities at this point, Bud.
Today’s Bond Market
Bud Kasper: Right. And you look at bonds specifically, and you’re going to have to ask the question, how are they being impacted during this period?
Dean Barber: It depends on which bond you’re talking about.
Bud Kasper: That’s right. And there is a menu of bonds that are out there that react differently.
Dean Barber: Some bonds are doing great this year.
Bud Kasper: Yeah.
Dean Barber: Right? And some are not doing well at all.
Bud Kasper: Right. Again, this is why we have a job, folks. This is our profession. This is our need, if you will, to express to you as clearly as possible that we have your best interest in mind when we’re having these discussions.
The Rising Tide
Dean Barber: Well, we have to, Bud. And when everything is good, like Warren Buffett says it the best, “The rising tide lifts all boats, it’s not until the tide goes out that you see who’s swimming naked.”
Bud Kasper: Right.
Dean Barber: Okay? And that’s a Warren Buffett quote, not a Dean Barber quote. Suppose your advisor isn’t stress testing your portfolio for the possibility of a bear market, rebalancing. In that case, if they’re not saying what’s the least amount of risk that you can take to accomplish all of your objectives, especially with valuations where they are right now, that might be the guy that’s caught standing naked when the tide goes out.
Bud Kasper: Yeah. That’s right.
Dean Barber: And that’s not where you want to be.
Bud Kasper: You don’t want to be caught that way. Right?
Dean Barber: I want you to get a copy of our Retirement Plan Checklist here. And click here to schedule a complimentary consultation with a CFP® at Barber Financial Group. We’ll take you through our Guided Retirement System™.
Bud Kasper: Yeah. That program is so unique, and it has so many great interviews. You need to go there and find out what it’s about, but remember what we always say, it’s educationally based.
Dean Barber: Yep. And that’s what it’s all about. So we appreciate you joining us here on America’s Wealth Management Show. I’m Dean Barber, along with Bud Kasper. We hope you all enjoy the rest of your holiday weekend. Stay healthy, stay safe. We’ll be back with you next week same time, same place.
Bud Kasper: God bless America.
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The views expressed represent the opinion of Barber Financial Group an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Barber Financial Group does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.