Click below to listen to Episode 109 – Investing During Turbulent Times

Investing During Turbulent Times

Do you let your emotions get the better of you during bear markets?

In this episode, Bob and Shawn discuss all of the emotions that we go through when the market isn’t exactly doing what we want (i.e usually a bear market). However, just because there are turbulent times in investments doesn’t mean we need to forget everything that we know and panic. In fact, this is the exact time that we need to sit back and trust that all of the decisions that we have made up to this point have prepared us for turbulent market times.

The stock market and investing always has ups and downs. It’s part of what makes investments both a risk and a benefit. Volatility is part of the natural cycle of a stock market, and while it’s okay to be a little nervous, it’s not okay to act based solely on emotions. Bob and Shawn cover various scriptures that may help bring us wisdom and peace during these turbulent times and how to best combat these emotions.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters

Mentioned In This Episode

Christian Financial Advisors
Bob Barber, CWS®, CKA®
Shawn Peters

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EPISODE TRANSCRIPT

[INTRODUCTION]

Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.

[EPISODE]

Bob:
Welcome to our 109th podcast. Wow.

Bob:
There’s something in here today. I can’t tell what it is. It’s all these cameras.

Shawn:
Well, yeah, this is our 109th episode and we figured let’s take the lens cap off, you know? I know. This whole time has been audio only.

Bob:
The lens cap has been on all this time.

Shawn:
I know. And you told me that you took ’em off, and it took us 108 episodes to realize that they were on the whole time. So, anyway, welcome to our first actual video. Not just audio, unless of course you’re currently listening to the video or the podcast.

Bob:
Yeah. So if you’re listening to the video, get this, you can go see really two good looking guys. Yeah.

Shawn:
And we are super humble about it.

Bob:
So, got a good subject for today.

Shawn:
All right. Hit me with it.

Bob:
Investing during turbulent times.

Shawn:
Does that ever happen?

Bob:
I don’t know. Is it happening right now?

Shawn:
Well, it depends on when someone’s watching or listening to this, but as the time of this recording, most would probably say yes, we’re in some turbulent times.

Bob:
We’re in some very turbulent times.

Shawn:
Not just in the markets, but as a whole. Seems a little crazy.

Bob:
As we’ve shared so many times in Ecclesiastes, it says there’s a time for this. There’s a time for that. I mean, there’s all different types of times and there’s gonna be good times and bad times, there’s gonna be times to heal. There’s gonna be times that you’re gonna get hurt. I look at everything from a perspective of when it’s bad, it’s gonna get good. Yeah. But when it’s good, you gotta be prepared for when it’s gonna get bad.

Shawn:
Well, everything goes through cycles, whether it’s the stock markets, the real estate markets, which I wonder if there’s anything going on with that right now.

Bob:
Oh my goodness.

Shawn:
Everything goes through cycles. There are times of growth, and there are times of decline.

Bob:
We’ll talk about that real estate market here in a little bit. So, today’s podcast is called investing during turbulent times. And these are very turbulent times and I think it’s good to talk about what’s causing these turbulent times first. We’ve got a good outline in front of us to help us keep along.

Shawn:
Our first one, we got the Ukraine-Russia war. Yes. There’s the fear of escalation, possibly the use of nuclear hypersonic missiles. I mean, there’s a lot going on with that. There’s all the stuff with the Nord Stream 2 Pipeline, or Nord 2 for the pipeline. Billions of dollars have been invested in this, and now it’s just completely halted. Yeah.

Bob:
That is a very big concern. And as anybody knows that’s been watching the news, Putin is kind of a madman. He’s just very unpredictable. So, that is definitely causing turbulence in the markets and is causing turbulence in our own lives. The second thing of course, you can go to the grocery store, you can go take your car to to the gas station. I mean, it’s record high inflation. That was really caused by all of this government stimulus.

Shawn:
Yeah. Well, we had the artificially low interest rates. There was the government spending – let’s just throw more money at it. It’s not like it would cause a problem.

Bob:
Too many dollars trying to chase too few goods.

Shawn:
Good. Exactly. What would you say is a healthy inflation rate. It’s around the 2 to 2.25%, right. Isn’t that what the fed usually targets?

Bob:
Well, yeah, but I don’t mind an inflation rate that’s around 3-4% myself. Where we are today, 7-8%. And I think if you go really compare what you paid for things a year ago, it’s more like 15%.

Shawn:
And especially for people who their income has not been increasing by 10%+ per year that can really start to hurt.

Bob:
We’ve got the fear of the higher interest rates right now, too. The tighter money supply. And what I mean by that is the federal reserve. they’ve knocked these interest rates down so low to extreme lows. I mean, just up to about three months ago, you could get a mortgage and be it a 3% rate.

Shawn:
For a 30 year.

Bob:
I looked at it this morning for a 30 year. I couldn’t believe my eyes. I was seeing 6-6.5%. It’s double what it was just two or three months ago. And then the fed was buying. They were putting 130 to 150 billion dollars into mortgage backed securities and buying all that. They haven’t even raised rates but one time.

Shawn:
So just by reducing that amount that they’re buying back, as well as what was a half percent, right? Or a quarter percent? The actual artificial change to it? Just between those two things is what has been causing all these changes, right?

Bob:
Yeah. And the mortgage market is tighter now. Yeah. So, it’s a lot tighter than it than it was. There’s the fear of those higher interest rates and a tighter money supply and what it could do to the economy and the markets really overreact. You’ll see the markets, and you’ll hear this – never fight the fed. The feds, for a long time, has been saying we’re gonna raise interest rates. Well, now they’re actually doing it.

Shawn:
Wait, what? You’re doing the thing you said you’re gonna do?

Bob:
Exactly. And now, there’s a real concern amongst many, including myself, of a major real estate bubble pop. That bubble’s just gonna pop.

Shawn:
Well, that goes into the interest rates. It’s a matter of interest rates and price and that relationship where if your average interest rates are going up, it’s just math. The prices will drop.

Bob:
Well, the reason a lot of this is cause I just want you to think of something. When we were at a 3% interest rate just a couple months ago. On a hundred thousand dollars, the interest is 3000 a year. Okay. 3%. Yeah.

Shawn:
Easy. Just real simple interest.

Bob:
Now we’re at six. Yeah. The interest of $3,000 at 6% is 50,000. 50,000 times 6% is 3000.

Shawn:
Or you’ve gotta jump to 6,000 a year in interest.

Bob:
So here’s what’s happened. What’s happened is the purchasing power of 70-75% of the buyers in this country has gone down by half. So, what is this gonna do to the economy?

Shawn:
So all those people who were planning on a certain payment that they were comfortable with, if all of a sudden the interest rate has gone from 3% to 6%, it’s drastically reduced the end price that they can afford at that same payment.

Bob:
There’s only one thing that can happen – either interest rates have to come back down, which they’re not gonna do, or the builders are gonna have to lower their prices.

Shawn:
As well as other homeowners who are trying to sell.

Bob:
Yeah. And I would’ve not wanted to buy a home a couple months ago because now you’ve bought at a peak. Okay. You like my fifth one?

Shawn:
Yeah. Political leaders that seem incompetent to do their job. Which, in my opinion, also doesn’t really seem any like anything new. . But more so right now.

Bob:
That is a real cause of concern and the markets don’t like it. There’s also the computer chip shortages that continue.

Shawn:
Takes a while to rebuild.

Bob:
By the way, the Ford Explorer I ordered back in December. It finally came in. It’s about to be in in a week or two.

Shawn:
#NotSponsoredByFord

Bob:
Yeah. Well, that’s true. That’s true. But I’ve been waiting forever. But that’s one thing that people really notice. I mean, you go by all the car dealerships and you just see very few cars.

Shawn:
And for most people, the purchasing a car. That’s typically the second largest purchase most people make after buying a home.

Bob:
Exactly right.

Shawn:
With the chip shortage, most companies have been trying to ramp up their production in domestic, but building that manufacturing back up when it hasn’t been in place, that takes time. So even though we’ve been needing to make a change, it’s not like a light switch. You can’t just turn that on. Once we get that up and running, however much longer that’s gonna take, it’ll be great long term for us domestically for the economy, but it’s not a quick fix.

Bob:
So we got the computer chip shortage. And then the seventh thing – a real concern right now, of course, is the continued supply chain disruptions that are coming about.

Shawn:
Yeah. Which is still continuing to be exacerbated with countries like China. They made these weird changes where the ships that would come in, to say our main ports like LA, a lot of times these semi trucks, they would be coming in with say an empty container and they would swap. So the empty container would go back on the ship and the full container would go on and then they leave. Well, what’s been weird is that China is not allowing the empty containers to come back. I guess it was with COVID or whatever. They just didn’t want to bring stuff in. And so, what’s happening is the truck drivers have to basically offload those empty containers and then get in line to actually get a full one. It’s basically causing unnecessary, extra time wasted. And on top of that, it slows the supply chain, because we’re still trying to catch up.

Bob:
Let’s get to last one because I’m feel like we’re depressing people by now, but we wanna point these out.

Shawn:
We do have some good news.

Bob:
We do. Of course we do. There’s also been the shortage of workers to fill the vital positions in the marketplace, even with unemployment at record lows. I heard just about a week ago, week and a half ago – I’m just on the news all the time – that there was about 50,000 more jobs than could be filled. That’s a real concern. So what do you do during all this? How do you invest during these turbulent times? Because they’re turbulent. By the way, I think people have short memories because turbulent times come along every couple years. It was just a couple years ago when we were going through COVID and we went through a two or three month major turbulent time in the markets there. It was back in 18 we had some turbulence, of course we know 2008 was major turbulence, but there is turbulence. Turbulence is normal and will come along into markets every couple years.

Shawn:
You could argue it’s part of a healthy market that those things happen. You have times of growth, you have times of pull back. That’s just normal. And even Solomon said it first. There’s nothing new under the sun.

Bob:
Exactly, exactly.

Shawn:
All the way back then.

Bob:
We’re gonna go through about eight or nine points here, and we’re gonna try to zip through these pretty quick. The first thing is look at what you’re investing in. Are the companies you’re investing in, are they needed to sustain a normal lifestyle? I look at things like, do they produce food or are they in the grocery business or clothing, shelter, technology, energy, utilities, healthcare, transportation? All those things that we use on a daily basis.

Shawn:
They’re not really going anywhere. It’s kinda like back in 2020 when COVID hit and everything was crazy and the markets dropped 30-40%, depending on what you’re looking at, and shortly after that, within a few months, but there was a lot of areas in the market, especially technology sectors that had popped back up. And yet, for a considerable amount of time, energy was still vastly undervalued compared to what it was. We’re using electricity to film this. Like we still even then, and now, we need energy. So those are great examples of things that they’re not going anywhere, even though they might fluctuate some.

Bob:
Things that you gotta have. Now, do you have to have streaming for your television?

Shawn:
No, but it’s nice.

Bob:
Well, we all know about a certain company just within the last week or two, depending on when you’re listening to this, they’re down 30-40% in just the last six months. So, you don’t have to have TV streaming, but you do have to have shelter. You do have to have clothing. I hope. Sometimes, your son doesn’t think that, by the way.

Shawn:
Well, it depends. Hey, if you’re a surfer. I mean, a pair of shorts is about all you need.

Bob:
I’m just talking about the grandson. He is just so funny. Shawn is my son-in-law. That’s why I give him a hard time.

Shawn:
Yes. My son has a habit of clothing optional.

Bob:
Another thing is during turbulent times, you really wanna have a well thought out investment process.

Shawn:
So strategy, if you will.

Bob:
Exactly, and we have that. We have our seven strategies on our website. Website, by the way, Christianfinancialadvisors.com. But I’m amazed at how many people don’t have an investment strategy, Shawn. I mean, they just don’t have one. So we have one that’s laid out and thought out and it’s not based on emotion. You don’t base this on emotion. Number three is understand that turbulent times are nothing new. They’re always gonna come along every two to three years, but it always feels like when you’re in the middle of it. Right before you came on today, you had a call from an older client and all of a sudden, they’re just like, I want out. And this has only been going on for two or three months. And the average bear market lasts…

Shawn:
11 months.

Bob:
Right. So we’re already four months into it.

Shawn:
As of this year, it was the last 73 years. Average bear market is about 11 months, but we had one as short as, what was it? Was it two or three months?

Bob:
Oh, that was during COVID. Yeah. It just came right out out of that. Do you like my number four? I mean, that is really big.

Shawn:
Yes. Keep emotions and feelings out of investing, which is exactly what we’re talking about with the plan. You need to have a plan that you can stick to and execute, not just when things are going great, but when you’re starting to panic.Don’t let your short term emotions and panic or fear dictate your long-term strategy.

Bob:
Emotions should have nothing to do with investing, bottom line, not a thing to do with it. You just have to keep your emotions out of it.

Shawn:
I know for us, we usually have to pray for that. Like, let’s just stop for a second. Let’s pray.

Bob:
And we have the emotions chart that, by the way, we have on our website too. The emotions chart that helps remind us when you’re getting real emotional and you think it’s doomsday and it’s just time to throw the bag in. You know what, a lot of times, that’s the very best time to invest some more. But number five behind this emotion, because there are people that just, they prey on it. They prey on these emotions and that’s professional doomsdayers, doomsayers – however you wanna say that. You can say doomsdayers or doomsayers.

Shawn:
I think it’s doomsayers is the official word. It’s doomsday.

Bob:
Exactly. But they they’re out there, and they make a living from selling fear. They take advantage of people during these turbulent times.

Shawn:
Yeah. And if you’re watching this in 2022 near the time of this recording, it is when the sharks and the predators really start to come out because people are scared. If you’ve been in a couple months or so in the markets and things haven’t been going up, they’re like, oh, well let me dangle this fruit in front of you. I have the solution for you. All you have to do is buy now.

Bob:
Yes. That’s the truth. They just take advantage. They’re selling high commission products like gold and silver and high fee indexed annuities. Or even subscription based newsletters that you have to subscribe to, so these professional doomsayers are all over social media. They’re all over the internet. They’re in television and they’re melling out thousands of seminar invitations right now. I’m getting them.

Shawn:
Those free steak dinners to try to lure you in.

Bob:
There’s a free steak dinner. Come see us. And you know what, to put on one of those seminars cost thousands. They’ll send out like 10,000 invitations. There’s $10,000 right there. And then, they’re buying all the free steak dinners.

Shawn:
Of the 10,000 people, they had a couple hundred, maybe a hundred people, if that. Maybe 30 that show up. But they show up. They caught a few.

Bob:
But still, there’s possibly another $2000-3000 in food they’re gonna have to pay. So now they got $13,000-14,000 sitting in that seminar.

Shawn:
And they only need what one or two to sign up. High commission. If you sign now, you get a bonus. Like, no, the person selling it to you gets a bonus. And you’re stuck with someone for 10 plus years. You can’t touch it.

Bob:
Yep. So let’s get on our sixth point. Our sixth point is during turbulent times, instead of looking at it like a time to get out, hey, let look at it like an opportunity. This could be a great opportunity. You have to go against your emotions. Like today, it’s a pretty big down market, and I’m looking at it closely, but I’m thinking it could be a bigger down market in a couple weeks when they actually do raise rates that they’re talking about in May.

Shawn:
But part of that is the strategy, too. See, our strategy allowed us to move some of the capital that would have been in, say, equity, move some of that to cash into fixed income. So, when we get that strong buying opportunity, we actually have some capital to do it.

Bob:
And the reason we did that is because back in September and October when emotions and everybody wanted to get in. Buy, buy, buy, buy. That was the time I said, you know what? We need to take some off. So in our moderate accounts, we went from a 60 to 65% exposure in equities and stocks down to 35%. And then we entered about 6% or 7% in a couple weeks ago, and I’m looking for entering in another 6-7%. I’m looking at that as an opportunity, not a time to sell, but a time to buy.

Shawn:
What’s that phrase that you say it’s the pigs get fat and hogs gets slaughtered.

Bob:
That’s true. Yeah. That was during the up times. So, just keep that in mind. Look at it as an opportunity. So yeah, when we had that one client call today and they’re in a panic say, oh, you wanna invest more?

Shawn:
Yeah. We kind of use those calls when people are thinking like, “I think I need to get rid of everything.” You and I are looking that as, Hmm. Might be on the verge of some good buying opportunities. When most people are starting to panic, that’s a good sign. Might be a buying opportunity.

Bob:
During these turbulent times like this, you gotta stay cautious. This is our number seven point that we wanna make. Stay cautious of the tendency to chase returns. Because even during times like this, there’s some things that are way up. Energy is way, way up. It’s not the time to get into energy now. Not when it’s way up.

Shawn:
You missed the time to get into energy.

Bob:
So, there’s that point of wanting to chase it. And that’s just a normal tendency. You hear somebody else is doing so great. But be careful buying high. Don’t buy high. Buy low.

Shawn:
It’s that the grass is always greener somewhere else, except it’s not, usually.

Bob:
That’s what cows find out, isn’t it? They get on the other side of the fence. They’re like, I think I want back now. Number eight.

Shawn:
Stay patient. Stay patient. Stay patient. It is not a time to panic.

Bob:
That’s exactly right.

Shawn:
If anything, if you’re thinking of panicking, like we said in the previous one, it’s probably a good time to buy.

Bob:
The fruits of the Holy Spirit are love, joy, peace, patience, kindness and gentleness and self control. Patience is a good thing. And this is something you really gotta exercise during turbulent times is stay patient. We’ve said that a lot of times now, so we’ll go to the next point.

Shawn:
So number nine is think long term, like 3 to 10 year increments, not 3 to 24 months.

Bob:
Yeah. See, so what’s happening right now. We see some panic going on. It’s been going on for three or four months.

Shawn:
They’re thinking, well, this is the new normal, it’s just gonna continue to go down.

Bob:
Yeah. Right. It’s never gonna come back again. Yeah.

Shawn:
Never again. Yep.

Bob:
If Jesus wants to take me back today, I’m ready to go though.

Shawn:
It reminds me of, I talked to with a client about a week ago, and they were asking me like, well what about the economy? Like, what about if we lose all of our currency and the government collapses. My first thought was, well, then what does the money and the investments matter anyway. Like, I mean, do you have canned goods and a bunker? I mean, because that’s gonna be a whole lot more useful than buying a bunch of really heavy, pretty metal like gold or worrying about whether or not the currency’s gonna be useful.

Bob:
And what did Paul say in Philippians? I’ve learned to be content in all things., whether well fed or hungry. The contentment comes in Christ, and it’s not gonna come in anything else. And so, I hope you’ve enjoyed this today talking about investing in turbulent times. We want you to know that Shawn and I are here, along with our staff, to help get you through these turbulence times. They’re tough right now. Feel free to give us a call at (830) 609-6986, or go to our website. There’s a lot of good resources going to the education center under articles. And you’ll see a lot of great commentaries. We had a webinar we did about a month or so ago, and those are time proven principles and a lot of great charts that you’ll wanna see.

Shawn:
Plus, as of now, the other 108 podcast episodes on various topics. So, those are free, also.

Bob:
Go to Christian financial Perspectives.

Bob:
There you go. Don’t you love it. The sign right behind us. By the way, those that are listening by audio don’t see that.

Shawn:
There is a sign. Bob’s motioning towards a sign, but one thing I’d like to say, too, that we would use here is, “Hope that Jesus is coming back tomorrow, but plan like he’s coming back in a thousand years.”

Bob:
Huh? You know who said that?

Shawn:
No, who said that?

Bob:
Chuck Swindoll. Thank you. That’s all for today.

[CONCLUSION]

That’s all for now.

We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.

[DISCLOSURES]

Investment advisory services offered through Christian Investment Advisors Inc dba Christian Financial Advisors, also known as Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.