Modern Outlook

The Simplest Way to Invest During Uncertainty, and What to Avoid

March 23, 2022 Eddie Thomas
Modern Outlook
The Simplest Way to Invest During Uncertainty, and What to Avoid
Show Notes Transcript

Times are always uncertain for one reason or another. In this episode we dive into the mentality behind constant uncertainty, what to avoid, and how to invest during these times. 

Eddie Thomas:

Welcome to the life finance and in between podcast. I'm your host, Eddie Thomas. And this is brought to you by wealth management services here in Hershey, PA. And today, let's talk about the simplest way to invest during times of uncertainty, and what to avoid, and the potential pitfalls that come with that. But again, breaking down the simplest way to do so for ourselves. And the reason you can make this podcast topic whenever you want, there's never been one time where everything is completely certain. And everything's going exactly how, in the ideal world, it would go. And I'm not naive down, I don't think anyone elses, I think we all know that there's pretty much always some sort of uncertainty or disruption in the world. And to prove that, I looked up before, recording here, the biggest issues of 2012. So according to Business Insider, that was written December 12 2012. And I'll just take a couple from this list. The environment was one, I think that sounds very similar to what we are now in 2022. The national debt was another another major issue. Now Social Security was another, that's another one that we have prominent, prominent now, gas prices were another, I can't think of another I can't think of a better time than right now at roughly $4.40 A gallon where gas prices don't come up. And that that kind of rounds out the list. That's the equivalent of what we're seeing now. And so the reason I wanted to do that, and the reason I want to share that first is because it shows you that, although times are different, it's a decade later, there's been a lot that's happened in the world in that decade, things still remain the same with the same theme. If you told me in 2012, that in 2022, we're gonna have our major issues still be along the same themes, I would hope you were lying. But now that we're sitting here a decade later, I'm not very surprised. And I wouldn't be super surprised if a decade from now we're seeing the very same issues that we're seeing today. And so they kind of rear themselves in different forms. And it's not exactly a one for one. But the themes stay the same, that the major issues we see are going to be the major issues, we continue to see until there's some serious changes that hopefully, one day come. And with that. Let's get into the podcast. So this is going to be a blog too. Because I think this topic itself is actually very important. As far as investing goes and for investors that are trying to navigate these times. I don't in recent history, there hasn't been a crazier time than the past two and a half years combined between obviously a global pandemic that we've seen that we're still going on with our hopefully on the other half of but by no means Can you can you disregard that putting a serious disruption in the world that I don't think any of us have ever seen before. And now Russia invaded Ukraine, and there's a war happening. They're always changing political landscape. It's not the first time we've seen the political landscape. It's not the first time we've seen war, but combine those in with the political landscape and global pandemic and war together. And this might be the first time we've seen this in a long time, this combination of things. So yes, the past two years have been incredibly uncertain. And there's always been a reason to be negative. And it's been hard to be optimistic at times. Undoubtedly. However, there's there's a path forward, both personally and then professionally, well, as far as investing goes. And so the first thing you'll see, and I'm sure if we rewind the clock back in beginning of COVID 2020. And I'm sure if I search for one now, I would see something very similar. But every time you have these changing uncertain times first. Obviously, as we all know, the media picks it up, it starts getting traction, it starts moving like a freight train. And then you start to hear the noise and then there's more and more buzz and now your friends are talking about it. Your colleagues are talking about whatever the hot topic of that day is. And then from there, it's just how do we react? How do people react? What's going on? It's it's panic, it's, it's worrisome. And seemingly, if you listen to the news, there's no light at the end of the tunnel. And that's never true. There always is. But, I mean, viewers, they got to get some viewers right. So from that it trickled its way through personal life, but then that trickles its way to investing that buzz, that kind of paranoia that sets in and not knowing what's next, the worry, that always kind of trickles its way to okay, what happens to my money now, what happens to me what happens to my money, what happens to my investments. And so a lot of times, you'll see these people kind of come out of the woodwork. And say, this is, this is unlike anything we've ever seen before. This is exactly how we should invest for this exact scenario. And this is how we're going to do it. And then you fill in as to whatever this is, you fill in the blank. And the reason I'm saying that is because it's always something like a specular, seemingly speculative investment, whether it's you have to jump into this sector right now, or this penny stock is about to do really well, or this momentum trading strategy is going to do phenomenal, or this option strategy is going to do phenomenal. And the reason I'm saying these things, and I'm talking in generalities, but my point is, it's always pitched as of as this is the perfect time to enact this specific strategy that we'll never see again, and there will never be a better time for this option. And this is the perfect time and you have to do it or you won't get a bunch of money. And almost always, almost always. It's just a line of a sales line for these people. And I'm not saying people haven't made money from, from taking these kind of steps. But I'm also not saying that people don't lose a whole lot of money. And so that's what we have to kind of take with it right. And it's funny, because the pitches you'll hear, and whether it's online or some ad that says that the best day trader of all time, or this person that crack the codes and how to beat the stock market every year and all these things. They tell you this investment strategy, they told you this investment approach, but they nearly never tell you what the strategy is to unwind from these positions. So you take on this position, and then something changes and it's like, Okay, now what, and you're waiting for this, for it to know, you're waiting to know how to change it and how to get out of it, and how to how to do something different. And you'll be sitting there forever, because that wasn't the point. The guy on the first part, the guy on that first clip I'm listening in, and then there's no strategy as to what's next. And so the ultimate point I'm trying to make is having a sound set strategy that remains similar from 2019, when there was no pandemic to now 2022 when we've gone through a pandemic, and we're there's a war in Europe and Well, between Russia and Ukraine, and we have a very volatile political landscape that's always changing. You need to have a strategy that remained somewhat consistent through that time. And what I mean by that is, in the simplest way to invest is you just need to find a blend of growth stocks of value stocks of domestic international stocks, and then marry that with both bonds and money market account, investments, and then cash as well. If you need a little more safety, and you need to find the blend that's right for your in the portfolio portfolio that's right for your risk level. And there's nothing shiny to it, it's the it's probably the oldest way to invest in the book. But it's also the most efficient, and it's something with if done with the proper strategy and goals in mind, it's going to get you through these crazy times of uncertainty that we're seeing. So it's not going to be this big speculative investment, and it's not going to tax your money overnight. 2020 extra money overnight, and you're not gonna see these ads for these people pitching, hey, let's just keep doing what we've been doing. Because that's not very sexy. As far as an investment goes, right? It's, I mean, sure, it's exciting to take on those other bold, potentially exciting to take on those other approaches, but it sure isn't sexy to go ahead and say, Okay, well, I'm just gonna keep my 60% stock, 40% portfolio and 40% bond portfolio and keep moving from there. I'll make some adjustments inside that as I see fit. But for the most part, I know I'm going to be set for this. And unfortunately, while that unfortunately, while that isn't the sexiest thing in the world, it's also the most efficient thing in the world. Which is funny, I mean, it's just funny that the most efficient the simplest way is also the least amount of excitement and it but it also gets you what you need in the long term and gets you to the goals and what you need long term on on that side of things which is ultimately financial, peace of mind and wellness and and happiness on that side of things. So, with that, my point being is that there's never really a magic bullet and changing times. And I'm filming this now as of March of 2022. And I guarantee, if I look back in six months, and same year and six months, there's going to be some new issues that come up, and there's going to be new conversations that are had and times are going to change once more. And there's always going to be something to worry about. And the other thing to kind of think about on this side of things is, there's always something to worry about. And it's much easier to be negative for media personalities, and people kind of trying to predict the stock market, then easily, then it is easy to be positive. And the reason being is because you could be negative forever. And then if someone says, Well, hey, the stock market's up, you said I was gonna go down, you could just say, alright, well, let's just wait and see and see what happens. And you could just push that off forever, it's much easier to be that way than it is to be positive and say, Hey, I think the markets gonna have a really good year, and then it doesn't. And then you look like an idiot. Be like, wow, well, you were wrong. And say, guy, well, the other guy was wrong, too, for the last three years, but he just said, Just wait, so how about we just wait on my approach. And so you see what I mean, where it's a little bit easier to get that negativity bias, and it is the positivity bias. And I was reading a study from Hartford, and it said, that when people see down like down pulls in their down pulls in their account, the the negative numbers stick four times as much than the positive number. So you feel four times as emotion towards a negative number in your account than you would, should it be a positive number. And it just shows you how our brains kind of conditioned to seek if something's negative, and then cling to that, and then want that to change immediately. And investing is not really that kind of strategy. When you have a proper investment strategy, and you have a proper path forward that has your goals, and your ambitions outlined. And whether that's whether that is one year from now, or two years from now, or 510 15 years, 20 plus years from now, my point being is you should have a strategy that is going to check off each of those on that list. And you have investments that are dedicated and oriented with those goals in mind, it isn't gonna have to react to the changing landscape of everyday news, it's, it's nearly impossible to chase those trends, you'll be doing it forever. But if you have something that you're confident in over time, it doesn't matter what happens in three, six months, it doesn't matter if the market pulls back 10% Like we've seen the start the year, because you know that our goals are already met for the first 13123 years. And then anything on top of that, we're just going to trust that the market does its thing over the course of time, like it has historically and it performs well. And that brings the five and the 10 and the 15 year goals into the forefront. And we get those accomplished over time with a solid strategy of investing in a bounce portfolio between stocks and bonds that you are comfortable with that we are comfortable with as investors, that gets us to that to where we need to be at the end of the day. And so guess if I took anything, and I wanted to wrap this up in one kind of statement, it would be yes, there's always going to be two things that happen in the changing times of uncertainty, there's always going to be the next best greatest thing that no one's ever thought of. But this is why you should do it because you're going to make tons of money. And more often than not, that doesn't end up to mean true. And then there's all it's always always going to be easier to be negative in these times and cling to the bad news than it is see the positive and things and just see it for what it is as short term volatility and short term noise that will ultimately turn into long term gain in the long term there. And the ultimate strategy to get through these kind of changing, changing times. And major uncertainty is just to have a very modified and personalized portfolio that you're comfortable with, that we're comfortable with investing in and having a strategy to get through these times to get us to the next times, and to get us to our goals down the line. So that's kind of that guys, we're always gonna see some uncertainty, we're always gonna see time changing times are always going to be different, but the themes always stay the same, or at least tend to stay the same. And the investing principles within them tend to stay the same as well. So thanks for listening guys. Stay happy, stay healthy, and I'll catch you on the next one. Securities offered through securities America Inc. Member FINRA slash SIPC. advisory services offered through securities America advisors Inc. Wealth Management Services and securities America are separate entities. The opinions and forecasts expressed are those of the author and may not actually come to pass Zimmerman Meishan is subject to change at any time based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan past performance does not guarantee future results