Geopolitical Strife and the Stock Market – Episode #325

As an international conflict unfolds, creating global uncertainty, what lessons can be learned about how markets reacted to similar events in the past? Join the Dentist Money™ Show for a roundtable discussion on the crisis in Europe and how those events may affect markets. When things seem to be unraveling, hear the rationale behind Dentist Advisors’ investment strategy.

 

 

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Podcast Transcript

Ryan Isaac:
Hello, everybody. Welcome back to another episode of The Dentist Money Show brought to you by Dentist Advisors, a fiduciary, no commission, comprehensive financial advisor just for dentists all over the country. Check us out at dentistadvisors.com. Today on the show, we have a special show edition format that we’ve never done. We have a round table with Matt and I as usual, we have Jake Elm, advisor with Dentist Advisors, and Rabih Dimachki, who you will hear in future content, who is in charge of our trading and portfolio operations, day-to-day operations on all of our clients accounts.

Ryan Isaac:
Today, because of a lot of questions and just the urgency of talking about the Russia and Ukraine issues that are going on, and the questions that are coming in, a lot from clients, we kinda just wanted to address some of this stuff right now, and as we do in the beginning of the podcast, I want to reiterate now that we are being highly respectful of the fact that this is a very sensitive issue that affects probably millions of people, it is human lives, and we are talking about a subject that is not as important as human lives, how this affects money and investments and portfolios, but it is an important subject that people worry about and wonder about, and it does have an effect on people. So that’s why we wanted to address it in a more urgent matter while it’s still timely.

Ryan Isaac:
And so that’s if you’re listening later in the future you’ll know, that’s why we did this, so if you have any questions for us, feel free to go to the website dentistadvisors.com and schedule a chat with one of our advisors. We’d love to chat with you. So thanks for being here, let us know if you have any questions, and enjoy the show.

Announcer:
Consult an advisor or conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors, a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show, where we help dentists make smart financial decisions. I am Ryan Isaac, and I’m here today on a special episode of the show where we are coming to you with a panel of our team and advisors. Today, of course, this wouldn’t be what it is without the Hollywood mountain, Matt Mulcock. So we got Mattie here.

Matt Mulcock:
Yo, Ryan.

Ryan Isaac:
We have advisor extraordinaire and blogger extraordinaire, Jake Elm.

Matt Mulcock:
Hot Take Jake.

Jake Elm:
Let’s do it.

Ryan Isaac:
We’re excited. You might know Jake from such episodes as… And then it’s like The Dentist Money Show thing, or the Facebook thingy or the… As Seen on TV.

Matt Mulcock:
As Seen On TV. As seen on Facebook lives.

Ryan Isaac:
And we have the best for last, Rabih Dimachki, who oversees our whole investment operation and trading operation, smartest person in this Zoom by not even… It’s not even remotely close.

Matt Mulcock:
Not even close.

Ryan Isaac:
Rabih, thanks for being here, buddy. Good to see you.

Rabih Dimachki:
Thank you guys for having me. It’s an honor.

Ryan Isaac:
Yes. Rabih will be… This is the first time you’ll hear Rabih, but you will hear him soon on other episodes of the show where we interview him in our upcoming webinar. So, very cool. Team, we wanted to do this format, this is a format we’ve never done, a round table with some of our advisors who are involved with content. Matt, you write a blog called Money Matters, M-A-T-T matters.

Matt Mulcock:
I do.

Ryan Isaac:
I’ll never not call out how great that name is. Jake, your blog… You’ve been writing for longer, over… Are you a year into it now?

Jake Elm:
Almost two years. Almost two years.

Matt Mulcock:
Over a year. Yeah, almost two.

Ryan Isaac:
Okay, name of your blog. Where’s that found again?

Jake Elm:
It’s called Money Talks.

Ryan Isaac:
Money Talks.

Jake Elm:
Yeah.

Ryan Isaac:
Okay. And all these are found at dentistadvisors.com. Today, we wanted to talk about… So this is… What day are we in? We’re February the 25th, 2022. We are at the beginning of the Russia/Ukraine events that are taking place right now that probably has been boiling for a couple of weeks, and it’s officially come to a head recently. Like anything of this scope and subject matter, nobody knows how these things will play out. Things like this feel different than when there’s serious news, let’s say about inflation or recession, or interest rate scares or something that’s just purely economical, these things are very, very human. They’re completely unpredictable, even though they happen throughout history all the time.

Ryan Isaac:
It reminds me a lot about when we were trying to message through COVID in the beginning, two years ago, which is crazy it’s been that long. And I guess the point of saying all this is we wanted to just bring some thoughts to the table from questions we’re getting from clients and other dentists around the country about portfolios, investing, what happens during times like this in the markets, and how to react and how to think about it. And then also just say, we totally respect that we have no idea how this will play out. This is a very human and delicate and sensitive situation, and that’s it. I kinda just wanna say that first. The topic, though, is your portfolio, your investments, things like this, like this Russia/Ukraine thing that are happening that will happen in the future, that have happened in the past and just how to think about them in terms of your overall plan, your overall investment plan.

Ryan Isaac:
And so again, we’ve got Matt, we’ve got Jake and we’ve got Rabih to discuss these things. The first thing I’ll do before we jump into anything is just ask if anyone has any high-level things they wanna say, maybe repeat some questions they’ve been getting from people about this matter lately.

Matt Mulcock:
Yeah, I think you said it perfectly, Ryan, that some things feel more serious than others. Global pandemic is one of them and that was a really stressful time for all of us, still are some remnants of stress from that. I know the dynamics of it have changed a lot, but we’ve talked about this before, that March 2020 was the most stressful part of I think… I know, Ryan, you and I said this, like the most stressful month of our careers, and really the most stressful year, ’cause there was a different level of seriousness, and then obviously war falls into that as well. For me, and…

Matt Mulcock:
There’s some… What feels like more… It’s dumb to say “personal connection”, that’s not true. But my wife and her family are Russian, they were born in Moscow. So my wife is very emotional about this, it’s very serious for her, she’s really beat up about this and really going through some stuff. So there’s a different level of seriousness for this, and I just wanna reiterate that we are very sensitive to that and we wanna talk about obviously what you can control, what you can do with your investments and how you should be responding with your investments, but we also wanna mega-acknowledge the seriousness of this.

Ryan Isaac:
Totally.

Jake Elm:
Yeah, I was on Twitter yesterday, which is a double-edged sword during crazy times like this where you wanna get on…

Matt Mulcock:
Yeah, don’t do that.

Ryan Isaac:
Always is.

Jake Elm:
But it might be nice just, you just wanna be in the know. You wanna see what’s going on.

Matt Mulcock:
Sure.

Jake Elm:
But there was a lot of people on there saying, “Oh my gosh, how could you even think about your money or your portfolios right now? That’s very insensitive. There’s real-world consequences and people dying, and this is a very serious thing”.

Matt Mulcock:
Totally.

Jake Elm:
And it can feel, I guess, insensitive or inappropriate to be like, “Okay, what does this mean for me and my future financial goals?” But I just think it’s important to keep perspective. Investment losses, they can be recovered over time, we’ll talk about that today, human lives can’t be. I think it’s important to keep that perspective. But I also, with that being said, I think it’s a valid and a very human response to be like, “What does this stuff mean for me and the future of my family and my financial goals that are tied to my investment portfolio?” So, just echoing what you guys are saying, we understand the duality of this.

Ryan Isaac:
That’s a good thought, I’m glad you guys bring that up. And I don’t think that people wondering how this should affect what they do with their money is insensitive, I don’t think anyone would say, “My investment portfolio is more important than human life.” I don’t think anyone would say that, to your point, but it is a question people get, and we’ve been getting a lot of questions about this when things like this happen. So the first thing I guess I wanted to start with is something that we talk about all the time, and it’s just data. When we talk about market corrections… I mean, as we’re recording this, I’m actually getting a text from a client about the market, really, right now, and it’s really interesting. Well, of course, I’m not gonna read any about who this is or anything like that, but the text is just asking like, “Looks like stocks are taking a hit today.” And it’s a really interesting thing because stocks are not taking a hit today. [chuckle] Today, stocks actually took a gigantic leap upward today.

Matt Mulcock:
I was gonna say, I thought they were actually recovering a little bit today.

Ryan Isaac:
So that is just to say that this is on people’s minds and it’s a very dynamic fluid situation that is moving minute by minute. So let’s just begin with something we say all the time for perspective and context, purely, and that is just the historical data, and this is just US market S&P data for the last century. And the data tells us that it answers the questions, “How often do markets go down?” And we love talking about this ’cause this is just perspective and it sets expectations. So we have what we call a correction, which is a 10% drop in a market, in the month of January, if we’re measuring from January 1, 2022 until now, I believe we might be right back out of correction territory, so we’re just under 10%, but we were in it a few days ago, and this kind of…

Jake Elm:
But I think we’re at 14 again. We’re recording this on Friday, for context, I don’t know when it’s gonna come out, so maybe before people get this, I think it’s 14%-ish from highs, from the all-time highs, which started last year, what they were. So, yeah, still in that correction territory.

Ryan Isaac:
Still in that, yeah, from highs. So this is…

Matt Mulcock:
Rabih is questioning your data right now.

Rabih Dimachki:
Yeah, I was just looking at this and…

Matt Mulcock:
In a data fight, I’d take Rabih.

Jake Elm:
Yeah, I would take him.

Ryan Isaac:
In a data fight? Yeah, that’s fair.

Rabih Dimachki:
Ryan can check it, but I think we were in correction territory yesterday and before yesterday, it’s a drop to 11.85 at its lowest. But now we’re in the 8%-ish zone, so we snapped out of the correction. Interesting times. I know we’re gonna talk about this, but that’s the number I have.

Ryan Isaac:
Yeah, I mean, these are just… This is what data nerds talk about, and it is entertaining, but this is to say that… Oh, yeah. Go ahead, Matt.

Matt Mulcock:
I would say, Ryan, just really quick, one thing that you’ve alluded to on the podcast a few times recently, and even on the webinar, which is spot on, we tend to use this arbitrary date of the beginning of the year, as if markets…

Ryan Isaac:
Why does January 1st matter?

Matt Mulcock:
Start and end from calendar year, which is… So what Jake’s saying is like, 14% from the highs of last year. You can pick any data range that you want, and tell…

Ryan Isaac:
And call it good or bad.

Matt Mulcock:
Call, whatever story you want to tell.

Ryan Isaac:
Paint whatever picture, zoom in or out and paint whatever picture you want.

Matt Mulcock:
Exactly.

Ryan Isaac:
So this kind of an event, a 10% drop, called a correction, is happening on average for the last century about every year, it’s actually about every 11 months, but it’s happening annually. What we would call a bear market, which I believe I saw news that the NASDAQ had entered a bear market yesterday, that’s happening on average every four to five years, and this is just US market data for the last 100 years. So bear market every four to five years. And then something we would consider a crash probably a 30% drop or more is happening on average about once a decade. Now, averages don’t mean clock work, of course, but they mean over long periods of time, that’s kind of on average what’s happening. We set the stage with that, something we always talk about, just purely to say that as… Not in reference to the event, the horrendous events that are taking place, but just in reference to market reactions, that’s just how often things are happening from a volatility standpoint, so we just kinda wanna open with that.

Ryan Isaac:
Matt and Jake, on some of your writing that you guys have done this week and coming up next week, you guys have written about this. Kinda cool that you had other things planned to be released and then you pivoted last minute to go, “Let’s write about current events.” And I think that’s cool, ’cause that’s what people wanna hear about. Let’s get in, let’s start with Matt and get into a few points that you made from your article that came out today, and then we’ll hit Jake. Before we go to Matt, really fast, Rabih, do you have anything you wanna say about the history of corrections or anything before we jump into Matt’s article on this subject?

Rabih Dimachki:
Sure. What you touched upon, Ryan, is very accurate. It’s part of the business cycle, it’s part of how investors re-price securities. This happens often. To just highlight the difference, and in reference to the text that you received, why the market is not down as it’s up? What’s going on? There is something very inherent in the market, which is what people expect volatility to be in the future versus to what actually happens. And in many cases, and we see this in the data, that markets usually tends to be on the side of what’s the worst case scenario or in that range group, like really bad scenarios. And as insensitive as this might be, maybe the market was pricing in a harsher war, a harsher attack where more lives might be lost, where more impact on commodity prices, oil prices, the SWIFT, the whole sanction things. They expected it might be much worse, and the reason why it might have bounced back in the last 48 hours is because people are re-adjusting their expectations.

Ryan Isaac:
Yeah.

Rabih Dimachki:
So not only there’s the cycle, there is, what did we predict versus what actually happened.

Ryan Isaac:
And we saw this during COVID, where news comes out, we price-in, the market price-in, millions and millions of people buying and selling against each other, basically, price-in what they expect is gonna happen, and then when something new… When new information enters the market, it’s immediately adjusted for. So like you said, we don’t know why, but the sharp uptick increase could have something to do with the market, liking the news about the sanctions imposed, or some other early results that are coming out of the area. Who knows, right? But your point is, market are constantly pricing in future events as best as they possibly can and then adjusting as new information enters the market space, and millions of millions of very savvy, smart people who do this 24/7 are driving the prices. And that’s kind of what makes it a human market. That’s what makes it a market and gives us our return. So thanks for that. Matt, let’s jump to some of the points you made in your Money Matters blog that came out today on this subject.

Matt Mulcock:
Yeah, just as you alluded to, I had another post set to go, ready to go, and then yesterday, all day in talks with clients and not even just yesterday, really throughout the week, and obviously things were developing with this whole Russia and Ukraine thing, I felt a little bit odd, posting something that was just completely separate from what’s happening in the markets and obviously with this whole crisis. So I, last night, at like 8:30, hopped on my computer and just wrote out a new post, nothing really detailed around… I don’t claim to be any expert in geopolitics or war or obviously anything like that, so it has nothing really to do specifically with what’s happening. It is more just about trying to remind people to zoom out, and I alluded to the numbers that you just referenced, Ryan, you already hit on them perfectly in regards to, this is very normal, this is very… We see this. We’ve seen this so many times.

Ryan Isaac:
The market fluctuation is normal, is what you’re saying?

Matt Mulcock:
Yeah, yeah, yeah, sorry. In the context of market movements and the frequency of market movements, it’s very, very normal. I’m not claiming that wars and invasions are normal. So the context of this is, what really finally sparked me to do this was, I got a… Same thing, I got a text from a client who was really stressed and was like, “Hey, what should I do? Should I sell or should I be getting out right now?” And this has been a long time client. And one thing I thought about is, man, as much as people listen to our content, as much as we obviously with our clients, are having these conversations all the time and putting out tons of content on it, when it really comes down to it, it’s really difficult. And I make this point in the post that it’s really easy to agree with, focus on the long term and just forget the news, forget the media when times are good. So pretty much, up till about March 2020 for that decade, it was really easy to have that mindset, and a lot of our listeners don’t even know what a real market correction feels like.

Ryan Isaac:
Or like a sustained bear market or something?

Matt Mulcock:
Or a sustained bear market.

Ryan Isaac:
It’s been a long time. Yeah.

Matt Mulcock:
And I’ll be honest, neither do I.

Ryan Isaac:
Sure.

Matt Mulcock:
I was in college in ’08-’09. For me, March 2020 was by far, again, the hardest or the most experience I’ve had with that. So anyway, client texts me, he says that, I respond back with just a funny [chuckle] I’ll be honest, kind of a funny GIF of William Wallace in Braveheart yelling “Hold”.

Ryan Isaac:
Yeah, hold it.

Matt Mulcock:
And he laughed at it and we had a good laugh and I was trying to provide some comic relief, obviously, but I also was very sincere. And then he and I got into a conversation about it. So what I alluded to in the piece was first of all, there are reasons to sell, there are reasons to sell. None of them have anything to do with external market events or market anxiety. They all have to do with your personal life, what’s happening in your life. So for example, your goals change, you need money. You’re in retirement and you actually need money. It would be a reason to possibly sell. The last one I said is “You’re rebalancing your portfolio.” So that’s why we have Rabih here to talk about the technicalities of that. So there are legitimate reasons to sell, but just market turmoil or anxiety would not be one of them.

Ryan Isaac:
Fluctuations are not one of those things. Yeah, that’s a really good point. Thanks for walking through that. I wanna pause and actually go back to Rabih. Rabih, do you wanna give any, maybe insight to history of geopolitical problems, wars, things like this and markets? I guess, I think what people wanna know is, how does this affect, and it’s not that I’m not being insensitive asking these questions, it’s just a real question. How does this affect everyday lives for people around the world with maybe oil prices or the other things we’re dealing with already with inflation and rising rates and other stuff? COVID is still affecting the world in some ways. So I guess those are the questions on people’s minds when things like this happen. Do you have anything you wanna say or provide context about that?

Rabih Dimachki:
Yeah, sure. It’s very interesting, because once you start thinking about situations where people are in a panic, there’s a threat to their life, and money is some of the stuff that you want to think about last, you start thinking about all these events, whether it’s like 9/11 or what’s happening now, or even the baby boomers with the world wars that they’ve been through. So usually what happens there… It’s very simple. It’s more human behavior than what the market makes it look like, it’s really human. When you’re in a threat, you fled to safety, and sometimes you lose the stress in the financial system. Sometimes you’re like, “But I don’t know if the company I’m invested in will actually be able to keep selling,” which is counter-intuitive if you want investment returns, but that’s a different conversation.

Ryan Isaac:
Yeah.

Rabih Dimachki:
But what usually happens is that people will fled to safety and they will go after real assets. Which means gold will increase in price. Oil, because it’s very important in our lives, everything runs on oil. If you’re in a war zone and you need to get to a hospital, you need to fill your car with gas. This is the logic for why real assets go up in price. Silver, gold, all these commodities in a sense, go up in price because at the end of the day, assume, we go back to being cavemen, this is what is gonna really matter and people will transact with. However, this is usually not as an extreme of a case as I’m trying to exaggerate it here.

Rabih Dimachki:
So what happens is that we see commodity prices go up, and that’s why in some circumstances, for some investors, and I highlight that, those are important diversifiers in a portfolio when liquidity is important. But beyond that, we know that we go back into the civilization that we’ve built for three past centuries, companies keep doing what they are doing, our well-being, the quality of life keeps improving, and we find investment returns to be better in our modern capitalism of companies producing new products improving our lives.

Ryan Isaac:
I like… Two things I wanna reiterate that you said, I think are important there: One is the human reaction of flight to safety. There’s probably not a more primitive thing in our brains than fleeing to safety when we’re in a perceived situation of danger, and we do that financially. The second thing I think was the caveat to that, which makes the flight to safety… So someone getting out of stocks and going to cash bonds, gold or something, physical assets. Rational, like doing that is rational when, you said, there’s a need for short-term liquidity. And which is very different than someone who’s mid-career who still has 20 years when they really need the money, who just gets scared and sells stocks and buys some gold or sits on some cash until it feels better, that’s not the appropriate logical reaction. But you made the caveat, which I just thought was really important, the person, the situation that actually requires some short-term liquidity, that “flee to safety”, that’s when it logically makes sense. Otherwise it’s just human reaction and probably not logical or helpful. And you said that’s what… It’ll eat away your returns long-term, if you’re constantly doing that every time there’s a perceived threat and you’re fleeing to safe assets or “safe” assets. So, thanks for that perspective.

Jake Elm:
Ryan, I have some data just on historical stock market data that, I don’t need to get into all of it, but just what happens during times of war, like historically what has happened. Just like looking at the, again, the S&P 500, the US market, just as a whole, if you go back to World War I, World War II, the Korean War, when troops were sent to Vietnam, the Cuban Missile Crisis, during all of these geopolitical scary events where real lives are at stake, there’s usually a couple-week period where the market gets scared and, just like what we’ve seen, there’s a small minor correction, but none of these events have ever changed the trajectory, the long-term trajectory of the stock market.

Ryan Isaac:
Right.

Jake Elm:
During World War I and World War II, the stock market was actually up a combined 120% during those two wars, while that’s going on. And so it’s like, it’s scary, every war feels like, “Oh my gosh, this is gonna change the trajectory of everything.” That this one could, who knows, but historically, that just hasn’t been the case.

Ryan Isaac:
If you don’t need the money short-term, then there’s not a reaction to be made here, other than if we do have times in the market that are down, that’s how you get… Keep saving money. If you’ve got extra cash, and you don’t need it, that’s a great time to save money because it’s discounted. We always say the stock market is the only thing people never wanna buy on sale, but you should, if you have the chance. And if you just have a monthly savings plan or a weekly or bi-weekly, with your paycheck, savings plan, that’s just as… When these things happen throughout your whole career and even the 30-plus years after you’re retired, these are the chances to add money, rebalance and constantly buy cheap stuff when you have the chance. ‘Cause it’s not always cheap, there’s years and years when it’s expensive and it doesn’t take a breath, the market doesn’t slow down at all.

Matt Mulcock:
Well, that’s a great point, Ryan, and this is why I think we try to hit so hard with people and reiterate to people, the more you can make this systematic and automatic and something you don’t have to think about, meaning you set it up, you have an advisor or an accountability partner, and you try to systematize as much as you possibly can, and then try, keyword being try, not to think about specifically your investments in cases like this. I was actually thinking, ’cause Jake made a good point and we all were hitting on it, about the seriousness of the situation, and Jake was mentioning that people on Twitter have made comments around how it’s insensitive to even talk about…

Jake Elm:
Which is Twitter, right? You can’t say anything on Twitter without getting backlash.

Matt Mulcock:
Which is Twitter. I think it’s valid. You could argue that there is some validity to that. However, this is even more so why you’d want to make… If we’re saying, “Yeah, you should be thinking about the real lives at stake,” I agree. And not be thinking about your investments. You should have it set up, systematic, your money going in on a regular basis, and then think about the seriousness of what’s actually happening. Be donating money to causes to help people. Do what you can to actually help and not be thinking about your investments.

Ryan Isaac:
Yeah. Yeah, totally.

Jake Elm:
I have another data point just to support that, which is, again, this is counter-intuitive, like you said, Ryan. Where we just mentioned at the beginning of this podcast, you went through the market goes to… Has a correction usually about once a year, and then there’s crashes and… There’s regular draw-downs all of the time in the stock market, and there’s always scary events.

Ryan Isaac:
Yeah, all the time.

Jake Elm:
The crazy thing is even with those regular draw-downs, since 1980, the US stock market is up almost 8,000% since 1980. So even with all of these draw-downs, there’s regular stuff, it’s crazy how it still just chugs along. It’s basically just like human nature keeps going, the economy keeps expanding.

Ryan Isaac:
Yeah, I can’t even comprehend that. Jake, I assume some of these things are probably from the post you wrote, is there anything else that you wanna bring out in the thing you wrote… I think that comes out Monday.

Jake Elm:
Yeah, I just wanted to hit on…

Ryan Isaac:
Well, it will come out even before this episode even comes out.

Jake Elm:
Yeah, I mean, that’s a lot of the data and stuff, which again, we can hit to death at long-term, “Just stay in long-term, it’ll work out,” right? We can just beat that dead horse. That’s obviously easier said than done, right? I think we all acknowledge that, where it’s like, this is so counter-intuitive to do… It’s funny, I was just thinking about it as I was writing. If you just ask anyone, “Hey, are you fine with a 20% drop in your portfolio, knowing that you aren’t gonna need that money right away, there’s a 20% drop at… Likely that it will recover… ” If you just ask someone, “Are you okay with that?” It’s like most people, long-term investors will say, “Yeah, sure, that makes sense.” Because in their minds…

Matt Mulcock:
So, they’re in it.

Jake Elm:
Yeah, yeah. In your mind, you’re thinking, “Okay, so I’m just projecting out to some unknown future where everything is the exact same as it is today, the stocks are just 20% cheaper.” It’s like, “Oh, that sounds like an opportunity in that hypothetical scenario in your head.” But what actually happens is the reasons market fall, as there’s a pandemic or a recession and you lose your job, or there’s a war starting out, or a terrorist attack, or inflation is the highest it’s been in years and there’s no end in sight. And when you’re actually in it, in these moments, it doesn’t feel like an opportunity, when there’s all of these crazy things going on here, so much it’s like, “Oh, this actually sucks and this hurts, right? To have this happen.” Morgan House who has an awesome quote, which Morgan House, a friend of the pod, we quote them all the time, right?

Matt Mulcock:
He’s listening.

Ryan Isaac:
He’s “a friend of the pod”, I like they feel of that, as if…

Matt Mulcock:
And actually we need to add him on Twitter, by the way. We need to.

Jake Elm:
It’s basically just to sum up this point where he says, “All past declines look like opportunities, and all future declines look like risks.” It’s just kind of its heart, its soul. It’s just the irony of investing.

Ryan Isaac:
As you’re saying this, I’m pulling up my stocks app, and I’m just scrolling through the headlines on my stocks app… We talk about this all day. This is why this is so difficult. One article talks about how the DOW rallied, oil cooled and what else happened in the stock market today. Right below that is the best performance since… For multiple years, a best day since 2020 was today. Why? I mean, right? Yeah, go ahead.

Matt Mulcock:
Could I say one thing, just on that, Ryan? Yeah, one of my biggest pet peeves with these stupid headlines… What a lazy headline to say, “highest… ” and/or “lowest since… ” And they just throw out some arbitrary, stupid thing.

Ryan Isaac:
Some random, some… Yeah.

Matt Mulcock:
I hate it. And they usually use it as like a 08-09 thing like, “This has been the lowest one-day drop since 08-09.” It’s like, they’re trying to, again, scare you or create some connection in your mind, it’s so lazy. I hate it.

Ryan Isaac:
So there’s a few positive ones right below that is how inflation is destroying your 401k and what to do about it. Here’s an article about what to do starting Monday morning for your trading. Here’s one…

Matt Mulcock:
Rabih, you like that one? [laughter]

Ryan Isaac:
Here’s one…

Rabih Dimachki:
I’m on mute, but I’m laughing loud. [laughter]

Ryan Isaac:
I’m literally just reading these. These are today’s article titles.

Matt Mulcock:
We’re live tweeting this.

Ryan Isaac:
Here’s one about how markets are good, but this probably signals something bad coming…

Matt Mulcock:
Of course.

Ryan Isaac:
On and on, anyway, it’s just… Scroll the headlines and it just contradicts each other, back and forth and back and forth. So to your point, Jake, yeah, so hard, it’s so hard to get this right. That’s why systems and processes and basic philosophies and principles that are sustainable over long periods of time are what get all of us through all of these things, whether it’s stocks or business cycle or health and fitness, because life and everything around it is constantly volatile. Constantly. So…

Jake Elm:
Yeah, I know sometimes it doesn’t sound cool to be an optimist, I feel like all the pessimists sound really smart and cool…

Ryan Isaac:
Not on Twitter.

Jake Elm:
But, I just thought, as I’m listening to you guys talk is, it may feel like the world is unraveling at the moment, and there’s gonna be other times where it feels like the world is unraveling, and who knows how long this is gonna last, or where the future will take us. But just… I just have a feeling, ’cause this is historically how humans work, is that some day, it’s not gonna feel like that. Some day where it’s not gonna feel like things are going bad. And just hopefully you have an investment strategy or plan in place that you can be happy with when it doesn’t feel like the world is unraveling, when you eventually get to that point, sometime.

Ryan Isaac:
Closing remarks, anybody? We’ll go… Let’s go back to Rabih.

Rabih Dimachki:
Closing remarks, I often get this question a lot because I trade portfolios on daily basis, when the S&P is down 3%, and it’s like, “Do you wake up and put all these trades and prepare something different?” And my question is, “No, because our investment philosophy is discipline, and we have trust in the processes that we do for ourselves, our own portfolios, and our clients portfolios. And if your investments philosophy makes sense on an economic level, on a historical/statistical level, then your conviction should not be moved by news that are happening each time.” So closing remarks for me would be sticking to the process and doing what we do best, which is investing for the long-term.

Ryan Isaac:
Love it. It’s kind of what Matt was saying earlier. Matt, do you wanna say anything? Matt or Jake, before we wrap up?

Matt Mulcock:
Yeah, as Jake said, we’ve… And Rabih just said very well, we could continue to reiterate that, we can continue to fill stats and numbers and all the data. Again, we acknowledge that it’s really a lot easier said than done when you’re in the heart of this and you’re…

Ryan Isaac:
Totally.

Matt Mulcock:
Nervous and scared, and you’re seeing your portfolio drop, we acknowledge that it’s really nerve-wracking, we’re not at all downplaying that. I think a practical piece of advice I can give, and we’ve used this a lot, and we’ve talked about this a lot, and I say this to people all the time, in one-on-one meetings with clients is, if you truly have this idea of… I’m on… We hear this all the time, right? Where I’m just gonna get out and let things calm down a bit. Right? I hear that a lot. First of all, not gonna happen.

Matt Mulcock:
Ever, right? ‘Cause if it’s not Russia invading Ukraine, if it’s not inflation, it’s always something, right? It’s never gonna calm down a bit. I actually saw a funny meme on… Totally separate, but on parenting, and it was like, parenting is basically just saying, “It’ll calm down next week,” until your kids move out…

Ryan Isaac:
And then it doesn’t when they move out.

Matt Mulcock:
Or until you die.

Ryan Isaac:
Yeah, that’s more like it.

Matt Mulcock:
I just… I was like, “Oh, that’s so perfect.” And…

Ryan Isaac:
Yeah.

Matt Mulcock:
And it, obviously, also parallels this very concept, is… Again, if you were saying, “I’m gonna get out till it calms down.” Not gonna happen. So I think a piece of practical advice is if you ever actually think… Have that thought cross your mind, I think a really good defense against that is ask yourself two questions. So you’re at a place where you’re saying, “Okay, I’m gonna get out. I’m gonna let things calm down.” You have to answer two questions here. You have to say, “Okay, when is the right time to get out?” So it’s down 8% now, yesterday it was down 10%, next week it might be down 15%. But when…

Ryan Isaac:
By the way, as of today, it’s up about 16% for the last 12 months. So…

Matt Mulcock:
Okay. But if we’re using the arbitrary date of January 1st, 2022…

Ryan Isaac:
Yeah, January 1st. Right. January 1…

Matt Mulcock:
We’re now down 8% for the year. I’m gonna wait until it hits whatever. You have to know when to get out, and then even worse or even harder, you have to know when to get back in. So you should just go through that exercise in your brain every time that thought crosses your mind of saying, “I’m gonna get out and let things clam down.”

Ryan Isaac:
It’s hard.

Matt Mulcock:
If you can answer those two questions with any level of confidence or precision, go for it. All you and you don’t need us. But if you can’t, and be honest with yourself, then move on with your life and focus on other things.

Ryan Isaac:
It’s really tough. And to that point, and we talk about this all the time too, you might set a target in your head at 10%, then I’ll get back in, I’ll start investing. But the news, negative 10% is not good news. It’s still bad news. If you’re looking for confirmation that being down 10% is the time to get in, you’ll pull up the news, you’ll pull up Twitter, you’ll talk to your friends, and the news won’t confirm that until it’s back up 500% again, and then the news will finally be like, “Oh yeah, it’s been a good run for the last three years. Sorry, we forgot to mention that when it started.”

Matt Mulcock:
Oh, dang.

Ryan Isaac:
When it began. Yeah, the news will always trail… It’s always negative anyway, but it’ll always trail anything that ever starts to be good. I remember when our business started in ’08, and we went through that for a couple of years, but the news was still so negative. Multiple years into that raging crazy bull market, it was still so negative. And I just always remember thinking like, “How would you pick a target and then feel good at all about getting back in?” Because even if you were really disciplined and you were sticking to your targets, the news wouldn’t confirm that. Your friends wouldn’t confirm that. The world, Twitter, social media, nothing would confirm your decision to get in at that time. And so, yeah, such good points, Matt. Jake, anything you wanna say to close this out here?

Jake Elm:
One, just quick thing, I think this is why… We’ve been talking about investments this whole podcast. But this is why it’s important to do other types of financial planning, making sure you have enough cash reserves that’s appropriate for your situation, an emergency fund, if owning your practice, you have enough cash in your practice, and just these other things that apply where hopefully you have a stable enough financial situation or proper financial plan, that is solid enough that you don’t have to dip in these investments or worry when things go down a little bit. I just think that’s super important. It’s never fun when stocks go down, it sucks, I get that. But that’s just kind of the price of being a long-term investor. That’s kind of the contract you signed up for, is that you’re gonna get volatility in the short term.

Ryan Isaac:
I’d rather see a dentist micro-manage their P&L and their profitability and try to win back that 1%, 2% and 3% hit they’ve taken on their profitability than worry about this stuff for sure. Alright. Matt, Jake, Rabih, thanks for doing this first ever round table. Again…

Matt Mulcock:
Yeah, this was fun. Love it.

Ryan Isaac:
This was really cool, super helpful. If anyone listening, thanks for joining us, by the way, if you have any questions, you can reach out and you can post questions in our Dentist Advisors discussion group on Facebook. You can schedule a chat with our advisors on dentistadvisors.com. And again, I think to reiterate, we’re trying to be respectful of the fact that we have no idea what this means tomorrow in the world and the conflict and how serious these things are. So thanks for sharing these principles and these philosophies, guys, I think this was really helpful. Thanks for everyone tuning in. We’ll catch you next time in another episode of The Dentist Money Show. Bye bye now.

Behavioral Finance