I want to share with you some lessons from the 100’s of conversations I’ve had over the past few months as well as some perspective that might help as we navigate this market turbulence.
LESSON ONE: It Always Hurts
I don’t care how long you’ve been investing or how often you meditate, whenever you see your net worth drop (even for a short period of time) it’s painful.
Even those with longer time horizons and the ability to “buy more” during the dip, it’s still painful.
LESSON TWO: Guaranteed Income > Monthly Expenses = More Sleep
Anecdotally, for the families that we’re currently guiding through retirement (taking income), they feel better when their monthly expenses are covered by guaranteed income sources, rather than relying on their investment portfolio to cover the load.
For those families with social security, a pension, and annuity income covering their monthly expenses, the market gyrations tend to mean less to them.
LESSON THREE: Process Matters
For the families that we’re guiding toward retirement, but not quite there, we’ve allocated five years’ worth of portfolio income in short-term low-volatility fixed-income securities to help us weather situations just like this.
Recent events should not change your ability to retire and stay retired as we have planned for these market corrections.
We have set aside the money that you may need over a 60-month period without having to sell our ownership in companies.
LESSON FOUR: Diversification Matters (Usually more so in the moments we don’t think we need it)
During 2024, we were constantly bombarded about NVIDIA, AI, and the incredible returns of the MAGNIFICENT SEVEN.
They seemed unstoppable, but how quickly things changed. These stocks and thematic investment ideas have been hit hard.
International stocks have underperformed U.S. stocks for a LONG time.
Nobody was talking about that paradigm changing any time soon.
Yet in 2025, international stocks are dominating their U.S. counterpart.
In addition, boring dividend paying stocks fell out of vogue during recent years, but many have held up well compared to the high-growth names that were deeply entrenched in our minds recently.
Staying diversified means diversifying across multiple sectors and not just loading up on AI, Healthcare, Tech, or whatever the hot sector of the day may be.
Diversification always matters.
LESSON FIVE: Markets cannot be timed. The economy cannot be consistently forecasted.
Nobody knows what will happen next.
CLOSING THOUGHTS
When you have questions, concerns, or trying to process how/if this affects me, please reach out.
My grandfather always said, “never borrow trouble.”
I’m going to follow his advice in times like these.
While the reasons for market turbulence may vary, the result is always the same.
Companies will innovate and figure out how to work the problem.
They will steward their resources towards profitable endeavors and do everything in their power to grow earnings, dividends, etc…
Capitalism can feel ugly: Layoffs, no raises, no promotions, no bonuses, etc…
However, I remain optimistic in the long-term outcome of owning a low-cost diversified portfolio of enduring companies.
Stay disciplined. Work the plan.
–Nic
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.
Investing involves risk including the potential loss of principal.
