Ep 17: Planning Through Volatile Markets

On This Episode

We talked last time on some of the financial impacts the Coronavirus had caused, but now we will discuss how to plan to get through tough times and market downturns. John and Nick will talk about a few suggestions they have when they see situations like this and how to withstand a volatile market.

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PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.

Here is a transcript of today’s episode:


Speaker 1: Hey everybody, welcome in to this edition of Retirement Planning Redefined with John and Nick from PFG Private Wealth. And boy, guys, welcome into yet another week of bizarro world. What’s going on? How are you?


Mark: Hey everybody, welcome into this week’s edition of Retirement Planning Redefined with John and Nick of PFG Private Wealth. Here today again to talk some more about the, well the coronavirus, like we can’t not talk about it. It’s the only thing going on in the world it seems like. And we’re going to talk about retirement planning for this volatile market.


Mark: So guys, welcome in. How are you this week? I’ll start with Nick. How’s it going bud?


Nick: Oh pretty good. Just trying to be a voice of reason for people during this crazy time.


Mark: Are you doing your part, staying safe, staying home, all that good stuff?


Nick: Yep, I [crosstalk 00:00:32].


John: So let me jump in here. Nick’s been doing his social distancing for the last three years so he’s pretty good.


Mark: Good stuff. How about you John?


Nick: For at least three weeks, at least three weeks.


Mark: At least three weeks? Yeah.


Mark: How you doing John?


John: I’m good, I’m good. I’m more upbeat today. I feel rejuvenated. I’m ready to roll.


Mark: Well that’s good. And that’s tough, that’s a challenge we’re all going to face because a lot of us have been doing this for about three weeks already and we’re looking at another month going through April at the time we’re taping this. We’ve still got a few weeks to go, so we’ll see how it plays out. But there’s news every day, it’s changing all the time. So we’ll see how this plays out. But we thought it’d be worthwhile to at least go through some conversation about retirement planning through or during this volatile market. So let’s just kind of jump in and talk about the overall importance of a strategy. Nick, I mean we talked about it long before this downturn happened and more than ever I think that it benefits to work with an advisor because it’s a little bit easier some would say when markets are up and things are good and everything’s going swimmingly well, than it is during downturns. And if you don’t have that roadmap, it certainly can make things more cloudy.


Nick: Yeah, it’s been interesting. John and I both started in the industry in about ’06, ’07, so right at the kind of onset of the recession. And after we kind of got through that period of time, people were still afraid of it and what happened in that period of time for three, four, five, six, seven years. And since the markets have been going up for so long, planning has become more prevalent and people have understood that it’s an important thing to do. It seems like some have done it almost because, okay, well this is what we’re supposed to do, so we’re going to do it.


Nick: And now the feedback that we’ve gotten from clients is that it’s really kind of clicked to them how important the planning is and how much peace of mind kind of re reviewing it and understanding parts that maybe they didn’t quite get when we first set up the plan or in the first couple of reviews, realizing the importance of the plan as we move through times like this after having kind of a smooth sailing decade really. So we can’t emphasize enough the importance of clarity and even just helping to avoid rash and unsmart decisions we can kind of put it that way. So the confidence level that we’ve seen for people that have a plan versus those that don’t, from the standpoint of we’ve been introduced to new clients and we’ve gotten referrals kind of through this period of time and it’s definitely a drastic difference.


Mark: Yeah, definitely.


Mark: Well John, let’s talk about some of the things that the plan determines. Let’s go through a few things to consider in there.


John: Yeah. We like to say the plan determines what type of investments you should be going into and what strategy within those investments. And that’s where Nick and I really try to focus on, “Hey, let’s get an understanding of what your needs and goals are. What are you trying to accomplish?” And once we determine that, secondary always comes the investments and one of the things that with the investments go, we try to curtail or develop a comprehensive strategy for each individual person because everyone’s different, everyone’s risk tolerance is different. But the plan really dictates how much risk you should be taking.


John: So we’ve had scenarios where basically we’re doing a plan and the person when we first meet they’re pretty aggressive and then when we do the plan it’s, “Hey your plan works very strong at four to 5% rate of return, so why are we taking all of this unnecessary risk?” So really when you do something like that, you could be putting more scenarios where failing happens in the plan because there was a pullback. So we really have the plan dictate how much risk you should be taking, which with our clients, if we see it working around four or 5%. Not that we just aim for that, but we kind of scale back on the risk we’re taking. Which I’ll tell you right now, some clients are appreciative of that strategy, of just saying, “Hey let me gear what I’m trying to aim for a rate of return based on my plan.”


John: Other things that we really look at is someone’s risk tolerance, which I think in the last month or so people’s risk tolerance kind of shifted a little bit because they saw some real volatility because we’ve been almost in that 10 year bull market with not a lot of pullback. So we really try to figure out, “Hey, what’s someone’s risk tolerance and how much can they mentally afford to lose?” There are some scenarios where we might stress test the plan and that’s a case by case depending on the individual. But it’s important that you kind of take a look and just stress test it to figure out exactly how will my plan work with any type of market pullback? And then we’re going to touch on this later in the next session next week, but importance of kind of building the right asset allocation in your overall investment portfolio.


Mark: Well Nick, a lot of people had the question, especially with the heavy downturns, it came so fast, obviously in response to the virus and so on and so forth. You have people saying things like, “Why don’t you just close the market?” Right? They want you to shut it down or whatever. And we thought, well we closed it a little bit during 9/11 but that was a little bit of a different scenario. But you’re effecting liquidity by doing that and that’s another key component to an overall plan is understanding liquidity as part of the strategy.


Nick: Yeah. So the speed at which this happened, one article that I read had pointed out that this bear market happened in half the amount of days as the one during the great depression, which was kind of an eye opening sort of thing to think about where it really only took us about 21 days to get here. And so the speed at which that happened, literally when you think about it, in between the time that people get their monthly statements, they’ve lost a significant amount of money. So to tie into the planning, and this is something that we’ve tried to reemphasize with clients as something that we take into consideration, but I think it’s also helped maybe shed a little bit of light on us spending a little bit more time talking about it with clients as we’re putting together the plan is having a liquidation order and a liquidation strategy.


Nick: And so what we mean by that is, people tend to look at their money as one pot of money and they don’t necessarily think about it as, some people refer to it as the bucket strategy and a lot of times that makes the easiest way to understand, where we have short term, mid term, long term money and in understanding that even if you are two years from retirement or in your first couple of years in retirement, et cetera, we still have a long time horizon. And we don’t just shut things down from the standpoint of the overall investment strategy and shifting the cash and those sorts of things.


Nick: So we try to review and make sure when we have clients that are taking monthly withdrawals, we usually look to set up six to 12 months of expenses, dependent upon the client, dependent upon what they’re comfortable with from a risk standpoint. Set up six to 12 months in their account of cash so that they know they have that income. The emphasis that we’ve made with clients on keeping a cash reserve where some feedback that we’ve gotten over the last few years, “Hey, interest rates are so low. This money’s just sitting there. I hate not having it do anything for me,” et cetera.


Nick: And we’ve kind of tried to hold the line and tell them, “Hey, we understand but that money will come in handy.” And really the peace of mind that people have when we go through it and we kind of walk them through. It’s like, “Hey, look at between the money that you have in cash in your bank account and the money that we have sitting in cash to be sending you your withdrawals, we have a year to two years worth of income without you having to sell any of your other holdings, which gives your money time to bounce back and not realize these losses that we’ve seen,” really starts to help people understand the importance of having that liquidation order and liquidation strategy.


Nick: And then also, from the standpoint of having the big broad based game plan, having a premise or an idea of when we’re going to start social security, but then understanding that, “Hey, when things change like they are right now,” saying, “Hey, let’s look at the numbers. Instead of us waiting another year and a half to start social security, let’s go ahead and get it fired up now. Let’s have that income start to come in that way you have a little bit more peace of mind, you have additional income coming in, we have to take less out of your investments.” And as difficult as it is for people to think in the way of, “Hey, now’s a good buying opportunity from the standpoint of your investments. Let’s let that money work for you and try to get as much bounce back as we can over this period of time.” So that liquidation order and how it fits into the broad based game plan has become really evident and important to a lot of people.


Mark: Well, and speaking of importance too, one of the things that we’re doing is we’re all hunkering down in place and staying safe, staying home, all these things that we keep hearing now, but we can’t just hunker down on our plan through this time period and just say, “Well I’ll get to it after things start to get better.” Right John? You want to revisit, you still want to have these conversations even during volatile periods.


John: Yeah, and one thing we’ve tried to do during these last few weeks is really reach out to clients, especially the ones that are retired or are knocking on the door of retirement and revisit their plan and just let them know that, “Hey, even with this pullback, this is kind of where you still stand.” And for the majority of them, they’re still in a good situation. Again, partly because we had some strategies in place for a downturn in the market saying, “Okay, well now that the market’s down, we have these other buckets, whether it’s cash or whatever it might be, where it’s not tied to the market and you can access it and let your investments recover.”


John: So I’ll say in our reviews, when we show people their plan still works, it actually really provides a lot of peace of mind and it helps them make better decisions not to cash out where it’s basically like, “Okay, you know what? Even though it’s dipped, the S&P’s dipped 20, 30% over this time frame, my goals are still going to be achieved so let’s go ahead and stay the course.” So that’s where it’s really nice just to have the plan in place. It’s something you can always take a look at and say, “Hey, I know that the market’s doing this, but how am I doing? And how is this going to affect my overall goals?” And when you evaluate it and say, “Hey, you’re still okay,” I think people feel a bit better about what they’re doing.


Mark: Yeah, I agree. And I think it goes a long way towards anything we’re doing whether you’re getting inundated with news every day on the virus and it’s driving you nuts and you need a reprieve or you’re getting inundated with market volatility or whatever. Sometimes having some clarity, having a calming voice, having someone to kind of talk you through some of these pieces certainly goes a long way. So it applies to your health, it also applies to your wealth. So reach out to the guys if you’ve got questions or concerns. That’s going to do it for this week on the podcast. We talked a little bit about, again, how to plan through this volatile market. We’re going to talk some more strategy on the next session. So make sure you subscribe to us on Apple, Google, Spotify, iHeart, whatever platform you choose.


Mark: You can find them by simply typing in Retirement Planning Redefined, if you’re using one of those apps and you enjoy a particular one versus another, just type that in the search box and you’ll find it. Retirement Planning Redefined. Or go to their website, pfgprivatewealth.com, that’s pfgprivatewealth.com and you’ll see the podcast page there. You can subscribe that way and get all the episodes as they come out, check out past episodes. And of course, as always, before you take any action, if you have questions or concerns, please check with a qualified professional like John and Nick before you do so, and you can reach them at 813-286-7776 at PFG Private Wealth. 813-286-7776. Guys, thanks for your time this week, I appreciate you, for John, for Nick. I’m Mark and we’ll see you next time on Retirement Planning Redefined.


Nick: Thanks Mark.


John: Thanks.







Market Volatility in Perspective

Financial markets have been roiled recently amid fears over the impact of the fast-spreading coronavirus. These near-term disruptions to economic activity are the result of efforts to contain it. We see a downshift in 2020 global growth, with uncertainty around the size and pace of slowdown. While there are always unplanned risks, we do expect a rebound in activity once the disruptions dissipate and don’t see it derailing the U.S. expansion at this time.

What are key takeaways for investors? First, we encourage investors to keep things in historical perspective. Second, know the importance of staying invested and avoid reacting in ways that could derail long-term financial goals. 

Keep things in perspective

To provide historical context, the table below illustrates how the stock market responded during other past growth scares and bear markets. It also shows the period of positive market performance in the 12 months that followed these crises.

Stay invested

The chart below shows how a hypothetical $100,000 investment in stocks would have been affected by missing the market’s top-performing days over the 20-year period from January 1, 2000 to December 31, 2019. An individual who remained invested for the entire period would have accumulated $324,019, while an investor who missed ten of the top-performing days during that period would have accumulated $161,706.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. 

This material represents an assessment of the market environment as of the date indicated; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding the funds or any issuer or security in particular.
©2020 BlackRock, Inc. All Rights Reserved. BLACKROCK is a registered trademark of BlackRock, Inc. or its subsidiaries in the United States and elsewhere.
All other trademarks are those of their respective owners.
Prepared by BlackRock Investments, LLC, member FINRA. This material is provided for educational purposes only. BlackRock is not affiliated with any third party distributing this material.

Not FDIC Insured • May Lose Value • No BankGuarantee

Navigating A Market Correction

Corrections are anxiety-provoking.

They make us wonder if we got it wrong. If we’re going to be ok.

If this time is “different.”

After all, the S&P 500 plunged “at unprecedented speed,” and this was the “worst point drop in history.”1

Should we give in and get out? Sit on the sidelines until it all blows over?


Market corrections are completely, boringly normal.

Whether it’s an epidemic, geopolitical saber-rattling, natural disaster, or a financial event, corrections happen regularly. They’re a natural part of the market cycle.

Here’s the historical take: Markets experienced 26 corrections between 1946 and 2018. On average, markets declined 13.7% and took four months to recover.2

To a long-term investor, a correction is a speed bump.

We can’t predict how long or how deep this correction will be, but we’ve been here before.

And markets have recovered.

Corrections are not something to panic about. Even when panicky headlines are everywhere. The 24-hour media cycle is all about stoking fears to draw eyeballs and shares.

The biggest mistake a long-term investor can make right now is to give in to the fear and make a big change in response to the selloff.

Emotional reactions to markets — whether it’s euphoria during a rally or anxiety during a correction — are deadly to long-term success as an investor.

It’s easy to answer a risk tolerance questionnaire and commit to a strategy when the market’s up.

It’s much harder to stick to the strategy when your portfolio drops. When it’s gut check time.

But you can’t reap the rewards of long-term investing if you don’t take the bad days along with the good.

We created your strategies to withstand turbulent markets. To pursue your long-term goals in all market environments.

We’re watching markets closely and will communicate with you if calculated changes to your portfolio are necessary.

Right now, we’d like you to do 3 things:

  1. Take a deep breath and remember that you’ve got a team of professionals behind the wheel.
  2. Trust the process. Remember the conversations we had about your goals and the reasons behind the choices we made together.
  3. If you’re experiencing anxiety, turn off the news, stay off social media, and go do something fun.

If you need a pep talk or to discuss your investment strategy, please reach out to your advisor. We’re here for you and happy to talk.

PFG Private Wealth Management, LLC



Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only. The S&P 500 is an unmanaged group of securities considered to be representative of the stock market in general. Indexes are not available for direct investment. The performance of the index excludes any taxes, fees and expenses. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.  Insurance products and services are offered and sold through Perry Financial Group and individually licensed and appointed insurance agents.

S&P 500 Performance During Epidemics

After weeks of headlines about the coronavirus outbreak, markets have been caught in a volatile pattern of surges and retreats. Here’s what you should know:

Why are markets so volatile?

Disease outbreaks are hard to predict and come with a great deal of uncertainty that can make investors nervous—particularly after a period of record market gains.

As the epidemic spreads beyond China, investors worry that it could cause serious disruptions to trade and the interconnected global economy.

How long will the volatility last?

It’s hard to say. Though the human cost of an outbreak like Coronavirus is tragic, it’s unclear how

widespread the economic fallout will actually be. We can’t predict what markets will do, but this isn’t the first time we’ve grappled with market reactions to an epidemic.

Here are some examples from previous outbreaks:

Chart source: CNBC, Yahoo Finance

Though the past can’t predict the future, we can see that historically, markets reacted to epidemics with panic selling but recovered after the initial outbreak. However, epidemics don’t happen in isolation; the underlying economic and market fundamentals will influence how investors react long-term.

Pullbacks and periods of volatility happen regularly, for many reasons.

Whether the cause is an epidemic, geopolitical crisis, natural disaster, or financial issue, markets often react negatively to bad news and then recover. Sometimes, the push-and-pull can go on for weeks and months, which can be stressful, even when it’s a normal part of the market cycle.

The best thing you can do is stick to your strategies and avoid emotional decision-making. Why? Because emotional reactions don’t lead to smart investing decisions. The biggest mistake investors can make right now is to overreact instead of sticking to their strategies.

We’re keeping an eye on how the epidemic may affect our clients and will be in contact if adjustments to your strategies need to be made.

Have questions about your personal situation? Don’t hesitate to call our office at (813) 286-7776.


Chart Source:

S&P 500 performance during outbreak:
S&P 500 performance six months after outbreak: Yahoo Finance. 6-month performance between open of first trading day of the month after end of outbreak to adjusted close of final trading day of the sixth month.
SARS: April 1, 2003 – Sept 30, 2003
MERS: Dec 3, 2012 – May 31, 2013
Ebola: March 3, 2014 – Aug 29, 2014
Zika: March 1, 2016 – Aug 31, 2016

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. 

Should Investors Worry About Impeachment?

Tweets and speeches don’t drive the stock markets – numbers do

It’s now clear that the investigations into President Trump are likely to continue through the 2020 elections. What’s still uncertain is the impact that these investigations will have on the stock market.
After rallying since Trump’s election victory in November 2016, the S&P 500 Index has done pretty well, but it has stumbled at times too:

• Ending 2016 up 9.54%;
• Zooming up 19.42% in 2017;
• Dropping 6.24% in 2018; and
• Up more than 18% so far year-to-date at the end of the third-quarter in 2019.

Although stocks have rewarded investors with healthy returns, investors seem more nervous that Trump will be impeached because not only will his pro-business agenda be stalled, but the chaos could send the markets into a tailspin. At least that’s the worry.
And although no one has a crystal ball to tell us how the Trump investigations will end, investors would be smart to tune them out. Here are a few reasons why.

Economics Matter More than Tweets

Economics and numbers matter way more than politics to the stock market. Trump’s tweets and speeches get all the media attention, and while the market might seem to react a little bit at times, the reality is that boring economic numbers drive the markets one way or the other. And consider these numbers:

• Unemployment is at 3.7%, one-tenth of a percent from the lowest level in over 50 years.
• We have seen 107 consecutive months of job growth, the longest streak ever.
• Wages have risen 3.2% this year, the strongest year in over a decade.
• Inflation has run below the Fed’s intended longer-term 2% target for most of this 10-year expansion and core inflation has averaged 2.1% so far this year.
• Consumer spending came in much higher than expected with a 4.7% annualized growth number, the highest gain in 4 years.

Impeachment is Unlikely Anyway

Investors should remember that impeachment is very unlikely as no U.S. president has ever been impeached and kicked out of office.
Andrew Johnson and Bill Clinton were both impeached, but they were acquitted in the Senate, where a two-thirds majority is required for conviction. Richard Nixon avoided impeachment and conviction only by resigning office.

Earnings Drive Stock Prices

What should investors worry about? Numbers. Specifically, corporate earnings.

It’s an investing adage that earnings are the lifeblood of the stock market. Stocks move in response to real or perceived earnings changes. If you are thinking of owning individual stocks, the trick is to find those whose earnings growth is strong, and should remain strong.
In aggregate, however, investors should worry about the upcoming earnings season as we head into the fourth quarter of 2019. Because according to research firm FactSet, as of September 27, 2019, 113 of the S&P 500 companies have issued EPS (earnings-per-share) guidance for the quarter.

And of these 113 companies, 82 have issued negative EPS guidance and 31 companies have issued positive EPS guidance. For perspective, the number of companies issuing negative EPS is above the 5-year average of 74.

Ignore Tweets and Speeches

Again, Trump’s tweets and speeches will continue to get all the media attention. But if you intend to own publicly-traded companies, make sure you read annual reports and earnings releases, not tweets.

PFG Private Wealth Management, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. This material and information are not intended to provide tax or legal advice.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.