Stock Market Volatility – January 24, 2022

After mostly ignoring bad news through the latter part of 2021, the market’s mood has shifted since the start of the new year. Volatility jumped significantly in the past week, sending major indexes into a downward spiral. A combination of factors is fueling the drop, including potential conflict between Russia and Ukraine, actions from the Federal Reserve, and ongoing uncertainty about the U.S. economy.

Hi, Josh Bretl here with FSR Wealth Strategies. It is approaching 3:00pm on Monday, January 24th 2022, and I tell you this timing because the day and time is actually important.

And this is the 2nd video I’ve recorded today to send out to you guys. I was all ready on the first one and, boy things change real quickly here.

And the purpose of this video is to talk about market volatility. There’s two things I want to address.

First, I want to look back historically at what we’ve seen in the market.

The volatility that we’ve really been talking about with you for the last year, two years, three years – It’s here!

It showed up this last week, it’s not the first time we’ve seen it, but we’re actually starting to get some phone calls now on it, so we wanted to spend some time talking about that.

And then we wanted to address how you should be thinking about this and some things that we’re doing internally as well as some things that you should be doing as well.

So let’s look down at the screen here and get my face out of the way. And let’s take a look at some history here.

The Dow Jones Industrial average is what we’re talking about, and this is on Google, this is just Google reporting this. But over the last five years, so January 24th, looking backwards five years to January 24th five years ago, the market is up 68%!

That’s ridiculous. That’s over a 12% / year annualized return. It’s just a crazy, crazy, crazy performance.

So that’s really, really good. If I look back here though over the last one year, so January 24th one year ago, the market’s up over 9%. 9% year over year – That’s really good! We’re really happy with that.

But let’s look backwards here. Let’s look backwards over the last month.

Going backwards over the last month, we’re actually down almost 7%. So at one point in time over the last year, the market was up this 9%. And it’s already plus that 6%.

So we were up almost over 15% for the year. And today we’re only over %9. But this big drop here, a lot of it has occurred in the last five days.

The last five days, the market’s down a little over 5%. That’s a pretty big drop. It’s 1800 points in the Dow.

Now earlier today, we were all meeting to start our Monday morning and we were going over everyone’s positions and what was going on. And the market was down 600. And then we looked again and the market was down even further.

At one point we looked when I first recorded this video, the market was down about a 1000 points, and we’re getting ready to record this video to send some things to you guys in order to give you some tips of what’s to do. And all of a sudden I’m getting ready to write the email up and look at what just happened.

The market’s about to close in about four minutes and the market has actually turned slightly positive.

It’s kind of a crazy thing, and this is the true volatility.

So in a day we went from a low of down a 1000 up to just barely positive for the day. The volatility is here. We’re going to see things like this, especially over the coming year.

And it’s not comfortable. It doesn’t feel good, it’s not fun. But if you’ve worked with us and if you’ve been with us for awhile, we should be taking this into consideration.

Your portfolio should be set up in such a way that it can withstand this volatility. It should be set up in such a way that it’s not going to negatively impact your retirement.

Remember, we think over the long-term that there’s some assets that are longer term like a waterfall. And those assets we’ll take more risks, with those shorter term assets that you’re going to spend now, because you’re retired, we’re going to take less risk with us.

That was step one, being set up to withstand that volatility.

The second step is to think about tax considerations.

There is nothing better than a Roth conversion when the market’s down.

When the market goes down, it’s nice to convert some of those IRA funds to Roth IRA funds, so when it comes back up, it comes back up in a tax-free account.

Those two scenarios making them so it’s timed out and we have the Roth conversions, they have to work together. They have to work hand in hand.

But if we’ve been working with you for a while, please know, we are actively thinking about both of those things.

For those of you that Roth conversions would be good right now we will start reaching out and being prepared for them.

So if we see another day where we have a big drop, or if we have a continued drop, we will start looking at more Roth conversions.

If you’re not a client of ours and stuff like this is not being done in your portfolio, and you’d like to talk more about that, we are always looking forward to taking on new clients and helping with your retirement planning from an income perspective, as well as taxes and making sure that your risk is how you want it.

So with that, I hope you guys had a wonderful Monday, January 24th. And if we can be of any assistance, please reply to this email and I will be happy to help in any way I can. Thanks.