If the past few months have reminded us of anything, it’s that market volatility is constant and unpredictable. With the spread of information accelerating faster than ever, global volatility now matches that of the market in (seemingly) real-time.
So it’s no surprise that such upheaval takes a toll on our psyche as investors. But if there’s one thing we can predict, it’s that volatility isn’t going anywhere and we have to prepare for it, financially and mentally.
Although it sounds like an oxymoron, there are ways to prepare for the unpredictable. And there are ways to protect yourself psychologically, even if those protections go against popular financial advice.
This week, Doug and Greg discuss how to combat the psychological strain of volatile markets, why the market reacts the way it does to world disaster, and what the yield curve tells us about a recession in 2022.
Key Takeaways
[00:21] - Why taking time to travel (with your spouse) is important.
[06:50] - Why major world downturns have a positive impact on the market.
[11:29] - How to deal with “flash crashes” and overall market volatility psychologically.
[17:26] - What the yield curve means for an upcoming recession.
Quotes
[14:38] - “The level of volatility and equities just improves the use case for direct indexing and custom indexing. Basically what that means is instead of owning the S & P 500, you own the component parts.” ~ Doug Stokes
[15:48] - “For people that do potentially need a portion of their assets, from a psychological standpoint those assets over a defined period of time shouldn’t be invested in the markets. Because if you have your next month’s living needs in the market and you’re watching this kind of thing it can really be difficult from a psychological standpoint.” ~ Greg Stokes
[23:37] - “The general rule here is, you anticipate recessions are going to occur over a lifetime, multiple recessions, and you design a portfolio in accordance with that sort of logic.” ~ Doug Stokes
Links
Covid lethality trends
How Americans spend their lives
Why travel is the best way to spend money
The worst thing you can spend money on
Why keeping cash is good for your psychology
Yield curve inversion explained (part I)
Yield curve inversion explained (part II)
Yield curve inversion explained (part III)
Yield curve inversion explained (part IV)
Alibaba
JD.com
Stokes Family Office: April 2020 Market Update feat. Patrick O’Shaughnessy
Understanding Inflation and Countercyclical Indexing with Cullen Roche
Connect with our hosts
Doug Stokes
Greg Stokes
Stokes Family Office
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LagniappePodcast.com
Disclosure
The information in this podcast is educational and general in nature and does not take into consideration the listener’s personal circumstances. Therefore, it is not intended to be a substitute for specific, individualized financial, legal, or tax advice. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a final decision.
