Buy High, Sell Low? | Series 7.2

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Welcome to the Enjoy More 30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families. By hitting on the financial topics

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that tend to weigh on us, stress us out, and distract our focus

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from simply enjoying life.

Joseph Okaly: 00:00:16

Hello, and welcome to the 2nd episode of this

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Raising Your Investment Mindset series. This series we're

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wanting to help you reframe how you may view the scary unknown

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out there that is known as investments, and therefore be

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able to utilize them in a more constructive way, better reach

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your goals, and make life more enjoyable.

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As always, if you do like what you're hearing, please please

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please make sure to subscribe, follow us on Apple podcasts.

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Wherever you listen clicking the stars leaving the reviews, it

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really helps us reach literally millions of other young families

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out there.

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Last week, we discussed how we don't want to ask if our

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investments do good. We want to ask if our investments are 1) on

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the path that get us to a specific goal and 2) are they

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doing so effectively when compared to their peers? So if

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you haven't checked out that episode yet, definitely do that

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soon. Today's episode is titled Buy High Sell Low, which is an

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easy self explanatory title really, but something way too

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many people are actually doing out there. We don't want to buy

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high and sell low. The goal for today's episode so the if you

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can say this at the end of the episode, then you have succeeded

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statement is "I now better understand what normal is for

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how often downs do occur and I'm better equipped to not

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emotionally sell low when that happens."

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Recently, my son Noah being the lovely boy he is was not

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listening and was pulling away to go play in the mud. And as he

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did this, his elbow popped out. So this quickly became super

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scary and stressful as your two year old is not able to move his

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hand or his arm, is crying hysterically and looking at you

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for help as you try to soothe him, calm him, as you freak out

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on the inside, shouting you know, "oh my god, what am I

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supposed to do?" So we take Noah to the pediatric urgent care

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right away all panicky, they take him in and in about five

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seconds, pop it back. They say it's called nursemaid's elbow

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and since he's so young, the ligaments aren't, you know, set

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enough, but he'll grow out of there. Here's a lollipop, we'll

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see you later. It was one of those, well, I really wish that

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somebody you know, told me about this ahead of time that this

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could happen, like, hey, if this happens, and the elbow pops out

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for a two year old, don't worry about it, bring him to the

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doctor, it's okay, they'll pop right back in, he'll be on his

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way. And you know, knowledge is power, right? If I knew that

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ahead of time, it would have made the situation much less

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stressful. For so much of what we do that is the case.

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If you think about your kids or your job or some other

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experience in your life, you can likely think of where it was

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maybe stressful at the time but now with the knowledge that

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you've learned, it's really not a big deal anymore. It's easy.

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This is the same thing when it comes to investments. This is

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the 'why didn't anyone just tell me that' kind of a thing. So

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here's the knowledge, investments go up and down, they

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will always go up and down. Do not expect your investments to

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never go down. Unless you are parking all your money in a bank

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account, basically guaranteeing little to no real return after

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inflation. Ups and downs should be part of your expectations

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from the start. And statistically, and this may be

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surprising to hear, you should expect a correction meaning a

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10% or more decline in the stock market every 18 months on

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average. So if you are listening to this right now as a 30 year

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old with maybe 30 years ago until retirement, that means you

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should expect roughly 20 10% drops over the course before you

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get to retirement and then when you're in retirement is going to

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keep happening. So maybe another you know 40-50 10% drops in your

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lifetime. Just like the kids getting you know nursemaid's

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elbow, this would be the normal thing to happen along the way.

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The problem that most people have is that they either are not

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told that this is normal, or despite knowing it's normal,

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they say this time is different. And they sell during the drop.

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They bought high, then they sell low out of fear. And I get it I

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really do. I mean you see your hard earned money declining in

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value. You see your goal is getting further away. But at the

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same time declines are normal and you should absolutely expect

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them to happen and mentality and emotionally prepare for that to

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occur. Remember recoveries whether they take six months, 12

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months, 18 months, that's also normal.

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So again, if we go back up to the top, if you expect your

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investments to never go down, then we're saying that something

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that should have happened another 50 times on average

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throughout the rest of your life would never happen again,

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supposed to on average happened 50 more times, but would happen

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never again. So again, that it doesn't add up right the

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knowledge that it that the normal is what we should be

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Finally, this is why we have talked about diversification

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before, so not owning just one or a few individual stocks, but

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rather having a professional advisor or at the very least

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using an Allocation Fund, as mentioned in the last episode,

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to spread your money out across many areas of the market to try

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and smooth out those rides. Likewise, having funds invested

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for when you need them. So money needed in six months should not

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be invested kind of thing.

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As we move to the end of this episode, let's circle back

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around to the goal statement. If you can say I now better

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understand what normal is for how often downs do occur and I'm

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better equipped to not emotionally sell low when that

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happens, then you have succeeded in the main takeaway from today.

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Thanks for tuning in today and join us for next week's episode

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called The Stock Market Doesn't Care About Political Parties,

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where we're going to speak to one of the main items that seems

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expecting.

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to drive peoples' sentiments and investment decisions, despite

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long term evidence pointing against it even being considered

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a factor.

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So overall, if you're able to implement what we cover today,

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then that's fantastic. You have less to worry about than before.

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Go out, focus more on enjoying life. Do something fun today. If

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you're wanting help with these things, though, if you have

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questions you need help in answering, check out the ASK JOE

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section on the show's website. EnjoyMore30s.com That's

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EnjoyMore30s.com and you can also connect with me directly by

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visiting my wealth management firm's site. New Horizons Wealth

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Management at nhwmllc.com. Until next week. Thanks for joining me

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today and I look forward to connecting with you again soon.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax, or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer, or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS Securities, Inc., and TFS Advisory Services an SEC

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Registered Investment Advisor, Member FINRA/SIPC.