Latest / The Jon Sanchez Show / The 20% Test: Could Your Portfolio Survive A Bear Market?
Transcript
- Jon G. Sanchez: Afternoon, too. Welcome to the John Sanchez show on News Talk 780KOH. Pleasure to be with you as we wrap up the week. And this is one of those trading sessions that I'm gonna put I think about five exclamation points past my TGIF. It was a tough day today, specifically on the Nasdaq side. A little bit weakness Jim P: A little bit of Jon G. Sanchez: on the SP, the Dow, not all that bad. But I tell you what, folks, this market is trying to tell us something, and my job is to help interpret what that something is. I've titled today's show. Jim P: They show the twenty Jon G. Sanchez: The 20% test. Could your retirement portfolio survive a bear market? And remember, a bear market's defined as a 20% correction from its highs, most recent highs. Not saying we're going to go there, but my job and my responsibility for you, for our clients, et cetera, is to always be peering into the future, trying to predict what happens if. You see, we have this very significant rotation that's going on right now. And I I was thinking before the show, it's like, how's the best way that I could I could summarize this and and visualize it for all of you? And I think the best way is this. We're at this crossroads, right? We just come to a four-way stop. Do we go left, right? Do we go back to where we were, or do we move forward? And that's really what this market is trying to tell us at this point. You see, we're in an AI rotation, as I've been discussing day after day after day. And I gave you a lot of warnings about this coming. And today everything kind of came together. But I'm going to tell you right from the get-go of today's show. I'm going to keep the car in park. I'm not going left. I'm not going right. I'm definitely not going backwards. And I'm not going to go forward. Because it's too soon to know. You know, if you invest in technology, we have been you've seen this game before, right? We've been there, done that, as the saying goes. We've seen many times in the past where all of a sudden we wake up, my famous saying, we wake up one day and everybody hates the market or the traders hate the market. Well, we can say that about technology and A AI specifically, not really tech, but I'm just gonna say really focused in on the AI side. Because we we find ourselves in a situation where again, as we've been talking about over and over and over again, the the concern about the AI spend, right? The cost of data centers, the delays of data centers. remember Oracle, geez, what's it been two, three, four weeks ago, something like that? When when they they issued the notice saying, you know, this thing may not to their investors, hey, this this data center in New Mexico, it's gonna be it could potentially be delayed, and we're not responsible for it. That those type of warning shots have been coming across the bow. So today kind of culminated all that, and we're back to not only the AI concern, but now we're back to the oil concern and the bond yield concern is really starting to diminish. We become very accustomed to this ten year note sitting right around, you know, five percent plus. It behaved itself today. Matter of fact, for the week I was shocked when I calculated the numbers as far as what it did for the week. It was actually a decline. But if we have to, you know, make out our as investors, you you have this responsibility. You have to make out a worry list. What is the market worried about right now? And I'll make it really, really simple for you. It's AI, oil, and when I say oil, I'm gonna put some subcategories. Potential mil military conflict escalating between the Houthis and Saudi Arabia, and B the military escalating between the US and Iran. And today the oil traders said enough is enough and they bid up oil big time. $3.48 gain on oil to $101.40 a barrel. Now remember, it was just this time last week when the president came out and said he struck this great deal with Russia, indicating oil, Russia's gonna sell us a bunch of diesel. And boy, diesel prices and oil prices and everything are gonna come down on this. And I was very critical about it. Listen to the podcast from last Friday. I said, This is not a good deal. And it really means nothing. And so throughout last weekend, and then definitely throughout this week, oil analysts and energy traders, et cetera, have said the exact same thing that I said to you last Friday. It's not a good deal, both from a humanitarian standpoint and also just the pure economics of it. It it it is nothing. But I tell you, the president has unfortunately ruffled a lot of feathers both on both sides of the aisle. And it scares me coming this close to midterm elections. That people are going to remember this. But enough of the political side. This isn't a political show. But this is what happened with the oil traders today. They're like, there's too many things going on. And and they bit it up. They bit it up strong. That, of course, has a negative impact on the stock market. So back to our worry list. Number one, of course, is the AI rotation. Is it for real? Is it temporary? Is this something that's gonna continue for quite some time and then drag the rest of the market down? Or is it just a temporary blip? Like we've experienced before, where we'll go two or three days, but this one's been a little bit longer of rotation. a couple days ago, I can't remember exactly what it did, probably Wednesday, I think it was. I I did a significant amount on the show about core weave, right? You've probably read about them. and I and I touched on the very important point. Again, I spent a lot of time on this. So please, you know, pick up the podcast if you missed it. And I went into detail about how, again, back to my analogy of the the shots being fired across the bows, warning shots, how they're Bonds, which are rated, you know, basically junk. I mean, they're just about there, triple B minus. how the yields shot up. Again, the the bond trader saying, We don't think this company is going to be able to to to pay their debt. Well, then of course Jensen Wong, the CEO of Nvidia, comes out that same day and says, This company is fine. They've got a lot of business, they're great. And he basically did the same thing today, except he said he broadened it out a little bit. He said, Look at this, this, you know. Volatility, this rotation that we're seeing going on in the market, this will pass. This will pass. I mean, you can't argue with a guy, probably knows better than anybody. So I hope and pray that he is absolutely correct. But we need to always be prepared, right? It's kind of like it's wildfire season out there. We always got to be prepared. And we have to be prepared in our portfolios. So that's why I thought today would be a good time to, again, be very clear with you. I am not predicting that we're going to go into a bear market at this point. I don't see it happening. but again, this is a very obviously fluid market, no pun intended, and things can change very, very rapidly. you know, the military buildup that we're doing and and again the the concerns between Saudi Arabia and the Houthis and and so on and so forth. I mean, my biggest fear right now is if we have something escalate over the weekend or, you know, anytime in the very near future, and then you see those oil prices really take off, and then you know, you're not gonna see so much the Dow and the SP holding up. Now, I want get to that point real quickly before I forget. So let me tell you what the numbers did today. Again, wasn't all that bad by any means. This kind of a normal day on the Dow and and well Dow specifically. SP was a little bit worse than normal. But here's how we finished. So the Dow only 175. You know, again, percentage-wise, it's nothing, 0.34%. What was interesting is we stopped at the 52,000 mark, right? That support level there, 52,002. So once again, from a technical standpoint, if we start to see The Dow break that 52,000, we could accelerate onto the downside. The SP lost 85 points, 1.09% to close at 7,659. And the Nasdaq, this was where the problem was, it was a 2.15% loss, down 573 points to a close of 26,140. Matter of fact, the SP had its worst week dating all the way back to June. So we were starting to get into, again, a little bit of dangerous territory there. But again, once again, as you see, the Dow side, not all that bad. Now, why is that? That's the question you should be asking yourself. Why did the NASDAQ have such a problem? SP kind of middle of the road, but the Dow again, just a 0.34% loss. It's pretty simple. When we have experienced in the past, just to kind of remind everybody, when we've experienced in the past this rotation out of AI, the money's got to go somewhere, right? Is it going to go to the bond market? Yes. And that was indicative by, as I'll tell you later in the show. What the bond market did on the yields for the week. We have the proof there. but it's not gonna all go into the bond market, right? People got to invest in the stock market, stay ahead of inflation, and for all the various reasons that people invest in the stock market. But what we're seeing is a rotation, we're seeing a rotation into names that that frankly are kind of boring, right? It they don't by any means have the excitement of AI, but this acts as a safe haven. So when the market gets choppy. People go, okay, let me get out of that choppy area. It may be semiconductors, it may be AI related names, as I said. Who knows what it is? But they rotate into, again, kind of the the the boring names, the the Walmarts of the world and in, you know, areas such as that. And I'll give you a a prime example. I'm gonna bring up my Dow thirty list here. So Chevron, no surprise here with a big strength in oil prices today. It was our top percentage performer. But second best in the Dow up two point zero seven percent was Coca Cola. Had a dollar ninety gain to 93.90. Travelers, which had a good earnings report this morning, it was the third best performer percentage-wise, up 1.47%. $5.65 gain. let's see, fourth best was Procter and Gamble, right? Names that people don't really get excited about, except when they're looking for a bit of a safe haven. So that's that rotation we're seeing. Now, can that obviously reverse and head back into AI? You better believe it. You better believe it. There's nothing fundamentally wrong at this point with AI. I just want to get that right on the table. It's the perception that there could be, right? And remember, always remember this, especially if you're new to the stock market. The stock market is a forward-looking indicator. It tries to predict the future. The bond market is more what's going on now. So the stock market is always trying to, again, be the be the first one to leave the party for say if there's going to be problems. And that's why we saw some of the significant weakness today in the likes of Core Weave and advanced microdevices and micron and so on and so forth. So I'll continue that rotation discussion, then I'll get started on my topic. The 20% test, could your retirement survive a bear market? Welcome back to the John Sanchez Show on News Talk 780K, which happy Friday to all of you. Glad the market is closed. That was a tough one today on the Nasdaq side of things. And I'm trying to help you understand this. The 20% test: could your retirement survive a bear market? If it happens, not saying again that it is, but if it does, here's some things I want you to be thinking about. All right, once again, here's our damage of the day. The Nasdaq was the trouble child, down 573 points, 2.15% loss to 26,140. Dow lost 175, just 0.34%, closed at $52,002, and the SP lower by 85 points, 1.09% to close at 7,659. Oil was the strong one. I'm gonna go into some more details of what happened with oil today. $3.45 rise. Now $100 and $101, excuse me, $101.40. gold up $11.20, $4,180.90. And over to the bond market, like I said, that bond market yield has now moved down. the worry list. we're at a yield, close at a yield of 510 on the 10 year. That was up one basis point. But as I said, I was shocked when I did the calculation, lost 14 basis points for the week. So that was that was pretty significant. Down 14 basis points on the 10 year yield. But let's go back to the oil side of things and then that'll probably take me to break and then I'll come back and start fresh with the 20% test. So, you know, I talk about WTI WTI, West Texas Intermediate Crude, when I touch on the oil prices. That's the most common Quoted one. But remember, we have we have Brent crude, right? That's what the institutions look at. Well, I want to tell you, Brent today touched $110. And that is a price that it has not been at in a long, long time. Did you know that oil prices are up 75% for the year? I just want to throw that little stat in there. So Yeah, $110 a barrel. We closed at $109.86, a gain for the day of three point seven percent. once again, this is a a level we have not been at in quite some time on the on the on the on the WTI. So it it's just it's a it's a tough one. It really is. Now I want to I want to share with you a story I came across as I was preparing for the show. It's very interesting. and again, this some of the oil traders are saying this was one of the reasons we got a Kind of a mid trading session uptick in oil prices. And that is many you know congressional members are now trying to stop the president from that deal that he announced last week with Russia. So this is a group of House Democrats, no shock there. One Republican, they introduced new legislation today to block the president's diesel deal. Now passing the bill, which would likely require overcoming a Trump veto if it does reach his desk, would be difficult, they're saying. Ukraine has brought support on Capitol Hill. Republic controlled Congress is out of town until the midterms. Wow. And GOP leaders have not signed on to an effort to reign in the president. So Representative Greg Meeks, the top Democrat on the House Foreign Affairs Committee, introduced the legislation prohibiting certain investments in Russian energy and nullifying the existing and future licenses issued by the Treasury for Russian energy sales. Now remember, President announced last week they're lifting all those bans on Russia, all those you know licenses and things. They they Putting everything back into place. That's what really got everybody. Meeks accused the president in a statement of quote, cozing up to Putin and handing him millions of dollars to continue slaughtering Ukrainian civilians with impunity. Trump continued to defend the agreement today. He said, quote, they'll release some diesel out, so it's a nice thing to have. That's what he told reporters at the White House. retired Republican Don Bacon of Nebraska, who has exonerated Trump on the president's diesel deal with Russia and compared him to Neville Chamberlain, co sponsor of the bill. and article just goes on and you know talks more about it. But that's what I'm saying. Who knows what will happen, you know, from a Washington perspective if if they get any any traction. But there's a lot of people, like I said at the beginning of the show, a lot of people on both sides of the aisle that are not happy with that deal whatsoever. So, you know, this hundred and ten dollar oil, like I said, been a long time. Matter of fact, it's been since May that we've been at these levels. So, we'll see what happens. You know, we'll see if things calm down over the weekend or it I don't know. if it's my imagination, but it tends to be the Houthis tend to attack Saudi Arabia more on the weekend versus the week. So God willing we will see that nothing hopefully nothing happens you know, over the weekend. Okay. So you know what, with that said, I'm gonna get an early start on my topic. Once again, the 20% test. Could your retirement survive a bear market? So let me ask you this question. If your investments lost 20% over the next several months, would it just frighten you? Or would it materially change your life? So absorb that for just a moment. Think to yourself what your overall stock market, retirement account, 401k, all that aggregate value is. Multiply it times 20% and ask yourself: would it just scare me or would it change my life? Because remember, technically a 10% decline, that's what we call a correction. A 20% decline is defined as a bear market. Well, again, as I shared with you a moment ago, you know, we we lost 2.1% just in the Nasdaq today. So I've said this many, many times to people and to the clients, to you, the my radio audience. In today's fast moving trading world with algorithms, et cetera, a 20% correction can can happen very, very quickly. It's not like the old days where You saw it coming, you could take defensive actions and things. I mean, you know, it could really happen in a matter of days. Not saying it's going to, but it can. Because tech stocks, folks, they're the ones leading the decline. NASDAQ's taking the brunt of the damage. As I said, we're in the middle of this rotation right now. Will it last? Only time's gonna tell. But I don't want to spend today predicting whether Monday's going to be green, whether it's going to be red, whether we're going to hit a 20% correction, 10%, or whatever. I don't want to spend today doing that. I want to talk about you. I want to ask a much more personal, important question. What would you do if the market fell 20%? Not what would Wall Street do? What would you do? Not what the Federal Reserve would do. What would you do? I mean, simple math, right? If you have $100,000 invested and your account falls at to $80,000, would you keep contributing? If you had a half a million and suddenly you see four hundred thousand dollars on the statement, would you begin selling? If you have a million and you watch two hundred thousand disappear on paper, would you postpone retirement? Cancel the vacation? Yell at your advisor? Would you move any everything into cash? Or would you do, as many people do, absolutely nothing? Because the 20% market decline is not technically described as a correction. A decline of that magnitude is the bear market. And bear markets, I like to say, they don't send invitations. Like I said earlier, the old days we could see them coming, not anymore. They don't ask whether you're emotionally prepared. They don't wait until your retirement plan is finished. They don't wait for anything. It just happens. But here's an important distinction. A 20% market decline does not affect every investor the same way. And this is what I'm going to focus on when we come back from the break. Because if you're 35 years old, contributing to your 401k, you've got decades to recover. You're purchasing new shares at a low price in your 401k. 60-year-old planning to retire in the next few years? Yeah, a little bit more serious problem. Or a retired person whose Social Security and pensions cover their essentials may be able to wait patiently. However, another retired couple with drawing. Say 80% annually from a heavily invested portfolio slanting towards the the technology side, may have to sell their assets while the prices are down, right? Sell low buy high. So that percentage decline may be the same, but the consequences are not. Back to the John Sanchez show on New Talk 780 KOH. All right, our discussion today, just getting started, the 20% test. Could your retirement survive a bear market? Once again, we finished down 573 on the NASDAQ, 2.15% loss to a close of 26,140. Dow gave up 175.34% and the SP lower by 85 points. All right, once again, I just want to recap briefly what I touched on before we went to break. defining a bear market and a a correction. So remember Correction is a 10% decline from its previous high. Bear market is 20%. And if you just joined us, again, I'm not saying this is going to happen. I just want you to be thinking about this. Again, technology starting or AI specifically starting to roll over a little bit. We don't know. It's way too soon to know if this is something that's going to last or just a you know a short-term rotation. Only time's going to tell. No one knows. But I did some math during the break, and I want to share this with you because here I'm saying, okay, 20% correction, 10%. You probably be asking yourself, well, geez, John. Where where are we right now? Right off of our highs. Where do we sit at this point? So did some math. Actually, AI did some math for me. All right. So the Dow closed again at 52,000 two. Our 52 week high was not long ago, August the 5th, when we hit 54,349. So if we do the math, that's a decline of 2,347 points or 4.32%. Okay. See how quickly this happens? S P five hundred. Closed today at 7,659. Record high was not too long ago, August, or excuse me, October the 6th, when we closed at a record of 7,845. So we've lost 185 points on the SP, about 2.36%. But the ever so important NASDAQ closed today at 26,140, as I said, 52-week high, which was a record, 27,599. That was hit on October the 6th. We've lost 1,460 points on the Nasdaq or 5.29%. So say we're a little over halfway to a correction on the Nasdaq side. Once again, I this is a great learning lesson for all of you that that may be new to the market. This is how fast things happen, right? That's why you need to look at charts, see where we are, do the calculation because psychologically it's you know, and I'll just fast forward. If If we hit a correction, that ten percent pullback, let's just focus on the Nasdaq. So yeah, we've got what, four point Seven something, whatever. My brain's too fried to think about. It's too tired. so let's just say five percent. If we hit a five more, five percent more. As I've covered it with you many times over the years when we've hit these, it's a it's a back to my analogy at the beginning of the show, it's a crossroads, right? It's another four-way stop. The traders will then say, Do we have the momentum to continue to drive this lower to that 20% correction mark? Or are we gonna use it as a support and bounce off of it? So it's always important when you hit that 10%. And remember, folks, historically, what's our number? I think three times a year on average, we hit a 10% correction. We just we forget about it, right? Because things have been so good lately. But that's your next line in the sand if you are invested heavily in the technology side of things. If we hit a 10% decline in the in the NASDAQ, that's where you want to be paying very close attention. Cause my experience is, and I don't have the data to to back it up. I'm just going off of memory here. When we break through that 10% on the NASDAQ, pretty good likelihood that we're probably going to go to a 20% correction. or at that point, bear bear market. So just keep those those those thoughts in mind. Now let's go back to you. So, you know, when when we open a new investment account for a client, you know, as we get into discussions about their goals and their income needs and whatever it may be, you know, all the situations in their life, we always have to ask this question by a lot. What kind of investor from a risk tolerance standpoint do you consider yourself? And you've heard me say many times, I hate the standard industry answers. Are you aggressive? Are you moderate? Are you conservative? Are you aggressively moderate? We have to do it, but I don't like it. I like to put it in what I'm about to do with you in dollars and cents terms. Because this gets to your heart, right? If you have a million dollar portfolio and I say, Are you aggressive, moderate, or conservative? I'm moderate. Okay. Could you handle a a a 10% correction. God, no, no, no, no, I can't do that. Well, then you're not moderate. You're really slanting towards more on the conservative side. So if you put in dollars and cents with yourself and say, what really is my risk tolerance? And remember, look at it today, not when you opened your brokerage account or your 401k years and years ago. Your life is it's like estate planning. Your life has changed. It changes all the time. Your risk tolerance changes all the time. So I always love it when an investor, you know, when they're a new investor with our firm and And you know, markets are setting record levels, and then everybody's aggressive when you talk to them. What's your risk tolerance? I'm aggressive. Are you really? Could you handle a 20% fluctuation? absolutely not. Then you're not aggressive. But it's human nature, right? We all want to be in the game when it's good, but boy, boy, I don't want to lose anything. Well, that's not it can't happen in the stock market. So I like to take say this your actual risk tolerance is revealed. It's truly revealed. When you open up that statement or you log into your account, and let's say again you have a you know a million dollar plus account and you see a six-figure loss in there. And then on top of that, every financial headline tells you that conditions could get worse. Remember, folks, it's too soon now in this market decline for all the headlines to come out on Fox News and CNBC and Bloomberg and all the major financial channels. They're not coming out yet and saying the sky is falling. Hit that 10, 12% decline, now the sky's gonna be falling. And they just again remember, bad news sells, bad news sells that you always have to tell yourself when we get into choppy market conditions. All right, so now let's get down to the 20% test. Okay. So I'm gonna go through some things, but I want you to kind of prime you a little bit here. Think about this as I get into the test. Could you continue paying your bills if you suffered a 20% correction? Could you maintain your retirement withdrawals? Would you be forced to sell? Is your portfolio diversified or is it dependent upon the same handful of technology names, the Apples, the Googles, the Metas, the Microsoft's of the world? Do you have enough cash on hand to avoid selling investments at the worst time, which is during a decline? And perhaps the most important thing: do you have a written plan for what you will do, or will your emotions make that decision for you? This is back to my natural disaster scenario, right? You need a written plan. Please use this weekend, since we're kind of in this flux right now, use this weekend. Write down where's my line in the sand? Here's how much I'm willing to succumb to losses. And then this is what I'm gonna do if I hit it. Have that plan written because trust me, I've been through I can't tell you how many market declines and long-term market declines, short-term ones, etc. And the human emotion is when things are going down, again, the sky is falling, it's never gonna come back. This is only going to go down further, on and on and on. And that's where you hear me behind this microphone say, folks, this is one of the best buying opportunities you've seen in the last, whatever, two years, three years, whatever it may be. So it just depends upon your attitude and how you're looking at things. But don't let your emotions, when we get into market turmoil, make those decisions for you. If you don't have a written plan, create one. I'm also going to tell you exactly what I would do, if time permitting, I'm running real fast here. If the market fell 20%, and what I absolutely would not do. So I hope I can get to that, but I probably am not going to. So, you know, i again, back to you. So let's say you had a hundred thousand bucks, go through a twenty percent decline. Okay, now you have eighty thousand. Half a million, you just lost a hundred thousand, now you're at four hundred thousand. To get up in the in the you know the seven digit area, that's when it becomes painful. Got a million dollar portfolio, twenty percent decline, you just lost two hundred thousand, now you're down to eight hundred thousand. And what I've seen is there's that psychological cushion when we are above a million dollars. The minute you break that, and it may be literally 999,000, it feels like you just suffered a massive, massive blow to your net worth. Even though, again, it's just a few dollars difference psychologically, which you know, again, emotionally, people make investment decisions. Got a half a million or a 500, or excuse me, a five million dollar portfolio, 20%, a million bucks. Now you're down to four hundred or four million. So you get my point. It depends upon how much you have, but also it depends upon where you are in your life. Welcome back to the John Sanchez Show on News Talk 780 KOH. All right, we're talking about the 20% test. Could your retirement survive a bear market? So, because I'm already down to my last segment, I've got just a few minutes, I'm actually going to jump to my conclusion because I think it's probably some of the most important advice I can give you if you're starting to get a little bit nervous about things. So here's my advice of what I would do as a portfolio manager if the market fell 20%. Okay, first of all, you have to do your homework. And determine what actually fell. Was the entire diversified portfolio down 20%, or only maybe the stock index, right? Just because I tell you, you read, hey, the NASDAQ's down 20% or the Dow's down 20%, whatever it is, that doesn't mean your portfolio is down 20%, right? Those are just indexes. They're just barometers. Again, this is the time you start focusing on you, your goals, your risk, and your money. So was the entire portfolio down? Or maybe just a handful of my stocks were down. Which holdings in my portfolio declined the most? Was it tech? Was it this? Was it that? You have to identify the problem. Did bonds or cash provide the stability like they're designed to do? Remember, don't think, don't, don't those days of having guarantees that bonds will save you in a declining stock market. Sometimes they work, sometimes they don't. The old days, they always worked, right? Market got volatile, we'd shift over to bonds for defensive strategies. It's not the case anymore. So you have to pay very close attention to that. All right. So that's what I would do. I would determine what actually fell for all those reasons. Number two, what I would do. I would compare the portfolio with the financial plan. Has the long-term plan changed or only the current prices? Does the retirement income strategy still work or not work? Right. That's why going back to the financial plan and say, here's why I'm investing, here's what I need, here's my goals, here's my risk. Stick to you. Don't listen to the headlines. Look at what your money's doing, what your life is doing, your goals, your risk, et cetera. It's time to get selfish. Number three, I would review liquidity. Liquidity provides a sense of comfort and relief in market turmoil. Do you have enough cash on hand for upcoming expenses? Which, if you did, then you would not be worried about selling depressed investments. Once again, psychological. Remember, folks, a market correction. Whether it's a bear market or a correction, whatever it is, let's just call it a market decline. It's all a psychological game. Remember, Wall Street wants you to panic. I've told you this a million times over the years. Wall Street wants you to panic. They want you to sell at the worst possible time. They want to scoop up your shares that you're selling at the bottom, and then they'll ride them back up to the top. Cause those institutions, they're the ones that can turn this market around or they can bring it down. It's not you or I. It's the big boys, you know, the ones moving billions or trillions of dollars. So ask yourself, what's my liquidity? Do I have enough cash for upcoming expenses? Again, am I going to be forced to sell something at the worst time? If the answer is yes, build out that liquidity now while things are still okay. Number four, I would examine my concentration. Has one company, one industry, AI related names, whatever it may be, has it become an excessive portion of the portfolio? I always remind you when we get towards the end of the quarter, you know, institutional portfolios. They have to do what I call window dressing, right? They rebalance the portfolio. They may have a what we call a 60-40 mandate, 60% in stocks, meaning the equity markets, 40% in bonds. But if you had a good quarter, that 60% may have risen to 70%, and that 40% in the bonds may be, you know, down to to a lower number. It things change all the time. You need to do the same thing. Are you over concentrated in any one certain area? Remember, there's nothing wrong with taking some of your profits. Be tax cognizant, of course, if you're you know investing in a taxable account. but there's nothing wrong with taking some profits when things get choppy. Not at all. But this is a great time to say, my gosh, I didn't realize that. I've got 60% of my portfolio in technology. Is that comfortable for you? If not, make some changes. Number five, I would rebalance very carefully because the decline may cause the stock stock stock allocation that you have to fall below your target, right? That you have in your plan. But remember, Rebalancing may involve purchasing stocks at lower prices, using assets that held their value, but only if consistent with the plan. Notice how I keep coming back to the plan. Number six, this is one of the hardest things. And if you have a good advisor, they will be doing this for you. Look for tax opportunities. You see, taxable investors may be able to realize losses and replace investments appropriately while maintaining their strategy. We did this a lot in 2022 and clients were like, what the heck are you guys doing? Well, it turned out knock on wood to work out pretty well. So we sold individual stock names that were down during that market correction. And we took the tax loss. But then we turned around and bought similar names. So just use an example, purely an example. Let's say if we owned Intel and Intel was down whatever, 20%. We sold that and then turned around, took those proceeds and bought AMD. We weren't giving up on the market. We weren't giving up in the semiconductor space, but we just wanted to take that tax loss. And remember, that's falls under what we call the wash sale rule. Remember, the wash sale rule says you cannot buy back that exact investment for 30 days. We we like to say 31 to be on the safe side. So be very careful. And again, I'm talking only in a taxable account. But look for tax opportunities. Even now, you know, with again down 5% on the Nasdaq off the highs. You may have some positions that are like, hey, you know what? I can take this tax loss. Remember. Losses offset gains dollar for dollar. So look and see what gains you've made, realized gains this year. Take the tax loss. If you want to redeploy the money back into the market now, great. Buy something like you said in the or I said in the in the similar category. But if not, park in some cash for a while. Just don't buy back that same investment within 30 days, or that loss will be disregarded by the IRS. Number seven, I would revisit my spending right now. A little bit reduction and some discretionary spending, not a not a bad thing to be doing anytime, but especially if you're seeing the portfolio go down. Once again, I'm trying to play some psychological games with you. If you cut back on spending, let's say it's like, hey, you know what? We're going out to eat way too much, or we're doing this way too much. Cut back on a little bit. It'll feel good and get you through the tough times. Number eight, communication is the name of the game. Fear grows in silence. A good advisor. Is gonna explain what happened to you, what has changed, whether any action is justified, his or her opinion on what's going on in the market. Is this gonna be a long term downturn? Is it gonna be short term? What opportunities are there? Communication is the name of the game. Kind of the guiding principle, respond to the plan, not the panic. Now, actually, I'm doing pretty good on time. I got, I think, a few seconds left. What would I not do? I would not sell everything because of one frightening week like we've just gone through. I would not permanently move to cash after stocks have fallen. I would not attempt to identify the exact bottom because no one can. I would definitely not borrow money on margin or from my home to buy investments. I would not double down on any failing company merely because the prices dropped. I would not assume every fallen stock is a bargain. I would not cancel retirement without running the numbers and meeting with an advisor. I would not change the long-term strategy based upon social media or news headline predictions. I would not confuse, quote, doing something with making progress. And I would not pretend that every investment is going to react identically. Back to my point I said earlier. Just because the market's down 10%, 20%, whatever the case may be. That doesn't mean your portfolio or your holdings are. So hopefully this gives you a little peace of mind going into the weekend. God bless. Have a great weekend. I will be back with you on Monday. Take care. Jim P: John Sanchez is a registered investment advisor and the opinions expressed by