FRAM oil filter ran a series of commercials in the 1970s and 1980s with the tag line, “Pay me now, or pay me later.” The message was clear. You could spend a few dollars today to change your oil filter or put it off and pay thousands to repair your engine. Small actions today can have significant implications for tomorrow.
As global stock and bond markets fall, investors are making short-term moves that could impact their financial future. Liquidating your holdings may feel good in the near term, but is it a wise move? A client recently capitulated and moved their assets to cash, and, as a result, their long-term success rate for retirement dropped below 30%, meaning there is a 70% chance they could run out of money.
Since 2000, the Dow Jones has averaged 8%, despite trading in negative territory 30% of the time. The index fell 37% in 2008, 22% in 2002, and it’s down 18% this year. It also soared 32% in 2013 and 2019. If you sell during the down years, you could miss the up years. My job would be easier if stocks and bonds always went up, but it’s not how markets and capitalism work. To enjoy significant gains, you must endure a few years of pain. In fact, most investors build generational wealth during bear markets.
The market is unpredictable minute to minute, hour to hour, and day to day, but it has climbed higher over decades. Time wins, and staying put is a superpower. Our superpower is the financial plan because it gives us the confidence to provide advice rooted in facts, not opinion or emotion. During times of duress, we routinely scan our client’s financial plans to ensure they are still on track to meet their short and long-term goals. Despite the recent volatility, their plans are still standing strong.
Emotions run hot when stocks fall, and media outlets stoke the fire of fear. In my office, I have CNBC playing in the background, and despite more than thirty years in the business, I sometimes want to curl up into a little ball and hide under my desk because they make it sound like the end of the world is near.
The US Index of Consumer Sentiment recently touched 50.2, the lowest print in 70 years! Investors are more worried now than they were during the Great Recession, the Tech Wreck, Desert Storm, Black Monday, the 1970s inflation spike, Watergate, Vietnam, the racial riots in the 1960s, the assassinations of JFK and MLK, the Cuban Missile Crisis, the Korean War, and the Cold War. Are things that bad? I don’t believe they are, and since 1952, the Dow Jones has risen 10,980%![1]

Here are a few suggestions to help you navigate the market.
- If you need money in one year or less, buy T-Bills.
- Establish an emergency fund to cover nine to twelve months of expenses.
- Buy stocks if your time horizon is three to five years or more. And, if you retire at age 65, you may live for another thirty to thirty-five years. One of my mom’s aunts recently passed at age 103!
- Create a written financial plan outlining your hopes, dreams, and fears. A financial plan will keep you focused on your future.
- Ignore experts pontificating about the future of stocks, bonds, interest rates, or inflation. No one knows what’s going to happen tomorrow.
- Get outside, take a trip, volunteer, visit a friend, start a hobby, mentor a child, because this too shall pass.
However, no one knows the day or hour when these things will happen, not even the angels in heaven or the Son himself. Only the Father knows. ~ Matthew 24:36
June 18, 2022
Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management, located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.
Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.
[1] YCHARTS