SMI on Facebook Live: The Market's Wild Ride (video/audio and transcript)

Mar 26, 2020
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SMI executive editor Mark Biller offered a market update yesterday via Facebook Live, joining hosts Rob West and Steve Moore for a special video edition of the radio program MoneyWise Live.

Despite the big rebound this week, Mark warned investors to "set appropriate expectations" regarding where the market will go from this point.

You can watch here. Or listen to the audio below.

Here is the transcript.

Steve Moore: Mark Biller joins us now. He’s the executive editor at Sound Mind Investing, where they always put God’s financial principles into practice. I think he’s with us now by phone all the way from Louisville, Kentucky.

Rob West: Yes, he is. Mark Biller, good afternoon!

Mark Biller: Hey guys, good to see you here.

Rob West: I know we don’t normally, we just hear you. This is a lot of fun.

Mark Biller: Yeah, I agree.

Rob West: Well, I know you’ve been working hard today. I think a new issue of the SMI newsletter actually came out today, isn’t that right?

Mark Biller: Yeah, that’s right about noon today. We posted the April issue. Obviously, it’s been quite a month for everybody. But a lot of good content in there and certainly a lot to talk about today.

Rob West: Yeah, well we sure do. And we’re going to dive right in, Mark. Normally, well at least the last couple of visits we’ve had, it seems like we’ve been talking about markets that were free falling. It’s a little bit more enjoyable to have you on when we’ve got two consecutive days with positive territory and some decent volume behind that. So, I guess the question on everybody’s mind is, "Have we hit bottom?"

Mark Biller: Yeah. Well, that’s a great question. And you just mentioned the two back-to-back positive days. I think, if I’m not mistaken, that’s the first time that’s happened in six or seven weeks for the Dow — that we’ve put two consecutive positive days together. So I have to admit when we’ve had that type of market for an extended period of time, it does make me a little bit nervous talking about the bottom when we’ve barely been able to put back to back positive days behind us.

But we never know. And, really, you have to go into any discussion about this at this point with the caveat that this bear market has been unique. It has not followed the historical patterns. So a newsletter like ours — we’ve been talking about what to normally expect from a bear market. Well, we haven’t been getting what we would normally expect from a bear market to this point. So we have to be very careful in looking at what should we expect now going forward, given the fact that this one is kind of outside the box.

Rob West: Yes. Well, it’s outside the box in terms of how we got here — obviously, the quickest period of time going from an all-time high to a technical bear market, and now we’re seeing a lot of volume in this short, but perhaps short-lived, recovery. We’ll just have to see.

When is the right time — you know, so many of our listeners are asking when the right time to move money into the market will be. And I know that really is predicated on having a plan, not trying to time the market, being systematic. But what do you say to those who perhaps have had some money on the sidelines? And they’re considering now moving back into the market?

Mark Biller: Well, first I would say good for you for having some money to move in at this point! A lot of people have ridden this all the way down and they’re just waiting for a bounce like we’ve had these last couple of days.

You know, some of this, Rob, gets to the individual investor and their own temperament — because from a place where we are today, again looking at the historical precedent, we would normally say that in a severe bear market, you’re likely to have a number of these very sharp countertrend rallies along the way. So, for example, in 2008, there were six separate rallies that were between 8% and 27% rallies all the way along on the way down throughout the year in 2008. So we have to be careful.

Now, someone who has a longer time horizon and a relatively high risk, a threshold — a capacity for risk — someone like that may feel fairly confident saying, "You know what, I’m going to nibble a little bit here, maybe put a little bit in, and then maybe if the market goes down further, I’ll keep adding."

And one idea for a person like that would be to just set some levels. Like maybe, "I’m putting a quarter of that money in today. Maybe I put another quarter in. If the market is down 30%, maybe another quarter, if it gets to 35%." You know, something like that that’s systematized and they have a plan. Again, you mentioned having a plan is always a good idea. Of course, we’re following a little bit different approach with our newsletter if someone wants to be more involved with that. But someone doing this on their own can still do it in a relatively simple way in that fashion.

Now, someone who’s a little bit more conservative, they may want to see a little bit more confirmation before they are willing to start putting money in. But a lot of that, again, gets back to what’s your timeframe? Someone who’s got 20 years ahead of them, when they look back 10 years from now, whether they’re putting money in today or six months from now, even if the market’s down 20% further from here, that’s gonna look like a bullet on the long-term chart from 20 years out.

Now from two or three years out, that’s going to look a little bit more significant. And so the shorter the timeframe, maybe the more cautious, more careful, maybe waiting for a little bit more confirmation before you’re loading up the truck would be appropriate.

And again, this is in the context of we’ve really only seen two good days. So it is always possible — you can’t rule anything out — it’s possible that the market could fall 35% in one direction, hit the bottom, and then bounce straight back up. But it’s never really happened that way before. So we would be breaking all the precedents if that’s how it played out this time.

Rob West: Well, I think at the end of the day there is one silver lining in this two-day rally, even if it is short-lived. And that is we’re reminded of the fact that the market hasn’t forgotten how to go up!

I think the market is poised — and really when we say the market, investors are poised to rush back into the market, assuming we get good news, and there will be good news along the way. The stimulus is good news. We will start to see the numbers roll over around the world and here in the U.S. on this virus. And the economy, Lord willing, we’ll be poised to recover.

But I think it provided some much-needed encouragement, even if, as you said, we see numbers lower than we are now before we ultimately move higher. And that should refocus us on why we should stay the course and not deviate from our plans.

Mark Biller: Yeah, that’s exactly right. And I hate coming on on a day like today and being a little bit "Debbie Downer." But one thing we always try to do with our newsletter is set appropriate expectations. And so knowing some of these historical patterns I think helps us not panic if things do turn and if we do retest these lows or even have lower lows — just to know this is not outside of, of what is normal, of what we see from history. And yet we know that every past bear market has ended. And, as you say, things do ultimately come back. As bad as 2008 was, it came back, and a few years later we were at new highs. And the same thing will happen again this time. It’s just a matter of time frame.

Rob West: That’s exactly right. Mark, as we think about what’s coming — I mean we recognize there’s going to be news, there’s going to be economic indicators that will be coming out every week, and the market is anticipating some of these numbers being very bad. We’ve started to get a picture of how drastic the downturn was on the number of people buying homes. That’s just the beginning. Tomorrow we’re going to get a key unemployment number. Every week is going to have its own set of data.

The market’s trying to predict what’s going to happen, but invariably we’re going to get it wrong, right? Because we’re in uncharted waters. And so that’s gonna create more volatility along the way, both up and down, depending on how severe the downturns are. Correct?

Mark Biller: Yeah, that’s exactly right. And I love that you pointed that out. Volatility cuts both ways. And this is very typical bear-market behavior that we have the sharp downturns — which is what we normally think of as volatility — but [also] days like these last two days with the spiking volatility to the upside. And of course we welcome that kind of volatility.

But, yes, the big issue and the thing that makes it hard for investors is we know there is going to be bad news at times ahead. The question is how much has the market already discounted that bad news? So for example, this unemployment report that’s coming tomorrow, everybody knows that this is going to be one of the worst unemployment reports we’ve ever seen. The market isn’t necessarily going to respond to the fact that it’s a bad number tomorrow morning because it could be a bad number but if it’s not as bad as what the market has been expecting, you could actually see a bounce — you could see the markets go up on what would otherwise be a horrible number.

So there is this weird balancing act of figuring out what is the market’s expectation, what are investors expecting? And kind of wrapping around to our original topic of when do you put money back in, one of the things that I wrote today is, unfortunately, I still feel nervous about the fact that so much attention seems to be focused on what’s the right place to get back in because that’s really typical bull-market mentality. And we’ve been conditioned over the last 11 years to think every time there’s a drop, we buy back in and we get rewarded for that. And unfortunately with the deeper bear markets — I’m talking about 2000 again, 2008 — the market really didn’t bottom until people kind of gave that up. They got cured so to speak of thinking when is the right time to buy and then it was time to buy.

So it is tough. It’s, it’s a tough thing for investors to figure this out. And that’s why, again, we always come back around to having a plan. Hopefully, you have one already. If you don’t have one already, it’s not the best time to create one. But it’s better than not having one. And so that, you know, that’s something that we can help with at Sound Mind Investing if someone doesn’t have a plan and feels like they need to get one in place.

Steve Moore: Mark, we know that a lot of our listeners are also subscribers to your newsletter. And I’m wondering — and I’m sure your phone’s been ringing off the hook — is there any one question that most people are asking, or have they kind of been across the board, or have you hidden your phone number from view?

Mark Biller: That would have been a good idea! No, you know, you would be surprised, actually, Steve. It’s not that we’re not getting any calls. We are getting some, but we’re getting a lot less than you would think. And I think a lot of that is that we stress all the time, have a plan personally. But then beyond that, the strategies that we use are essentially the advisor version of what we’re telling our people individually to have their own plan and our strategies are rules-based mechanical strategies.

So they know that on days like we’ve had either last week or these last two days, it’s not about Austin [Pryor] and I sitting in some cave figuring out now’s the time or you know, making these big calls. We’ve laid out in advance how our strategies are going to respond. And then we’ve communicated that to our readers, so they kind of know. And so it really is a matter of us communicating with them throughout the crisis, reminding them of what the plan is, how the strategies work. And for the most part, they’re reading about it online, they’re reading our articles, but they’re not really blowing up the phones very much.

Steve Moore: And so as you were prepared to mail out the newsletter, which I think you did, what was it today, did you say?

Mark Biller: Yes. we posted it online today.

Steve Moore: You weren’t, I’m presuming you weren’t running around like crazy over the last three or four days making adjustments or pushing back the process of getting it out because you guys know what you believe, you’ve been doing it for a long time. And that’s what "steady plodding" is all about. It’s not reacting to a virus that shows up on your doorstep. Right?

Mark Biller: Yeah, that’s right. Really the only change for us is of course when the markets are moving so fast like they have been, we want to have the very latest information, so there’s a lot of kind of updating at the last minute to make sure things are current and accurate. But you’re right. I mean, most of the articles we’ve been writing for weeks and working on as things have unfolded. And the actual strategy recommendations, the most important piece, that’s all happening by predetermined course, by these mechanical processes.

Rob West: Yeah. Good for you, Mark. Let me ask you, we’ve got some folks that have written into us over the last couple of weeks that have said, "All right, I realize now that I was too aggressive. I perhaps got caught up in the bull market watching these numbers maybe felt like I was missing out and whether it was my 401(k) or my IRA, I should have been more conservative. And now I’m feeling the pain from that. And so I’m wondering here at this point, should I go ahead and adjust my allocation or should I wait for a recovery if I’m able to do that and then make that adjustment."

And let’s answer that for the person five years out from retirement, and maybe that person who’s right on the cusp of retirement.

Mark Biller: Yeah. That’s probably the most difficult question out there right now, in my opinion. Because you’re already have suffered some of those losses. And now the question is, "Do I lock those in or do I wait for a rebound?" And I would say to the person who really cannot afford to lose more, that as painful as it is, making that change in allocation now is still probably the right move. And I say that based on the fact that we cannot at all rule out the possibility that there will be more losses ahead before this bear market is over. So if you have a very short time frame and you really cannot afford to wait out a recovery that could take two, three, four years, then I think it’s important to get your allocation, even at this late point, in line with what your year season of life and your risk tolerance can actually afford.

Now, for the person who has that little bit longer time frame — maybe five years or beyond five years — the situation shifts a little bit because now we’re less concerned about immediately stopping the pain and we’re taking a little bit longer view of, "Do I have time to let this come back?" Now, again, no guarantees that we’re not heading lower before we, before we ultimately turn higher. But someone with a longer timeframe has a little bit more wiggle room to say,"Yeah, this hurts, but I’m not going to lock in these losses. I’m going to ride this out. I rode it down, I’m going to ride it back up." The person with a shorter time frame doesn’t have that luxury.

So kind of a nuanced answer depending on which side of the timeline you’re on.

Rob West: Yeah. Very good. Now let me ask you a question that came in by email last night — this one is from Andre. He says that my father passed away and left me insurance money. I was using it to pay for college. Life has changed so fast. Should I instead invest it?

Mark Biller: Hmm. Yeah, always tricky without knowing a little more detail, but if this is money that they’re going to want to continue to use for college —and they’re in college — then I would say the risks of having that money diminish over the next couple of years probably offsets whatever gains they would hope to get in the short term from investing that money. Now, if they’ve decided I’m not going to go to college or, you know, the situation has really changed like that, where they don’t need that money for something else, then yeah, I mean if you liked stocks a month ago or two months ago, you should love them today because they’re, they’re down 25 or 30%.

So if you’ve got the long timeframe, again, even if you’re not nailing the bottom here — which is really a totally irrational expectation to begin with — but even if you’re just buying them on sale here, with a long timeframe with new money, then I think you’re going to do pretty well.

What I’m trying to caution against, and hopefully being clear, is just somebody thinking that the bottoms in, it’s going back up and, and kind of throwing caution to the wind. Because I’m certainly not ready to, to make that call yet.

Rob West: Yeah, very good. Go ahead, Steve.

Steve Moore: I’m Mark, we have a question here from someone involved in ministry — and I know in the past you’ve been involved, privately certainly, with ministries and churches over your lifetime. So interesting question here. It’s from Dawn. She says, "Any thoughts or encouragement for ministries or nonprofits? We’re being asked to help in many ways now. Yet we rely on donations that aren’t coming in."

Mark Biller: Yeah, that’s a great question.

Steve Moore: It is a hard one.

Mark Biller: Yeah, it is a hard one. You might actually have some good insights from the experiences over the years with the radio program and the radio ministry.

You know, I think that whether it’s a ministry, whether it’s a business, whether it’s a family there are a lot of parallels. Not everything is the same, but the ideas of having a budget, a starting point, a spending plan — and then trying to build in a margin of safety around that. Of course, on MoneyWise we talk all the time about having an emergency savings, about paying off debt and being out of debt, those types of things. It is hard for a ministry because they are at the mercy of the contributors, and you know that the contributors are under stress and so those contributions are going to be under stress.

So I think that as much as possible, trying to plan and respond with that in mind, that this may not be —we’re all hoping that this is going to be a V-shaped down and back up very quickly, kind of an episode, But we don’t know that — and so trying to maintain that, that generous outreach spirit that every ministry is trying have, but also balancing that against what if this does drag out longer than expected? What’s our plan then? Well, what contingency do we have?

Rob West: You know, I would just add to that — I think that’s great counsel, Mark — and you know, as a leader of an organization, I think it’s really critical, especially in a season like this where there’s uncertainty to really think about how you’re communicating with your constituents. This is a time I believe to be communicating more frequently. Let them hear from you. Connect your vision to what’s actually happening right out there in the world right now. And I think it’s an opportunity to challenge donors with capacity to really step up and perhaps do more than they were planning — out of a recognition that others just won’t be in a position to do that. And so I think if you lean into that from a communication standpoint, and recognize in many respects the world has changed. And we’re not going to go back to business as usual or ministry as usual overnight, even if the economy begins to recover in the market.

Just think about the implications of ministries that were really dependent upon gatherings of large groups. You know, churches are in this position. where they’re having to reinvent themselves overnight. I read an article that I’d encourage you to check out from Praxis Labs — Andy Crouch, who was with the Christianity Today and now with Praxis, a really good thinker on this. You’ll find it at

He was talking about really the need for ministries, Christian ministers in particular, to set aside the current playbook and really write a new one that honors their mission and the communities they serve, but to make the most of the organization’s assets — which is their people, their financial capital, their social capital, really leaning on relationships and trust. And it’s really going to change a lot, Mark — including the way we think about our investments. And in many respects it’s an opportunity for the Lord to get our attention where perhaps we had misplaced trust. Wouldn’t you think?

Mark Biller: I definitely agree with every bit of that. And I think that for a lot of us, you know, the home quarantine, the time away from work has been exactly that — has been a chance to kind of refocus on some of those things that do get lost in the everyday busy-ness of life.

So hopefully, you know, Christians are taking that to heart. Hopefully we are listening and seeking, and making the most of the time and not grudgingly passing it or wasting it. Cause we’re in it — whether we want to be in it or not — so we may as well get what the Lord has for us out of this.

Rob West: Yeah. Mark, one last question related to investing. So many of our listeners had really subscribed to a passive investment strategy for a long period of time — using indexes, which as we’ve talked about many times on MoneyWise Live have grown dramatically in their popularity. For somebody like you who sits in the seat of a mutual fund manager, as well as somebody making a decisions for individual investors, how would you counsel people, investors as it relates to perhaps the new normal moving forward — where we’re in a market now where clearly the overall market is taking a hit, but there are clearly sectors that have been beaten up more, and is this a time to perhaps shift to more of an actively managed strategy?

Mark Biller: Yeah, well it would probably feel kind of self-serving for me to say, "Yes, you should!" But, you know, really, just stepping back, one of the things that we’re proponents of is actually diversifying between strategies — so not just your typical stock/bond, or different types of stocks, different types of bonds. That’s the typical asset allocation that everybody does. But we’ve long been proponents of diversifying between strategies. And so it’s not inappropriate to have a slice of your portfolio allocated to indexing, but then also have other slices of your portfolio allocated to other approaches.

And we’ve been concerned because so many new indexers have come on board that train over the last decade. And we’ve then interested to see how that will play out, because we’ve got so much more money being index to them we ever have in a bear market before. Time will tell on some of that and on how some respond. And, again, if this is a quick V-shaped type thing, it probably isn’t going to move the needle on that a whole lot. If this turns into something longer and deeper, we may have a totally different story.

But we’ve been well-served at SMI by having different approaches that are moving differently based on different factors. So one strategy moved early, another one hasn’t moved at all yet. And so we have these different things happening, which I think does help break up that feeling of, "Man, all my eggs are in this one basket." And I think that makes it a little bit easier to accept the risks that are going to be inherent and being invested in the market — if at least you know you’ve got a couple different things that are hopefully gonna help cue you in if there’s trouble ahead, maybe some different ways of taking protective action.

Steve Moore: If you’re just tuning in, let me let you know who you’re listening to. I’m Steve Moore. Our host, as always is Rob West. And our guest today is Mark Biller from You really ought to check them out online. They do great work. They put out a fantastic newsletter.

And are there any headline articles in the newsletter that just went out that our listeners and viewers might avail themselves of today or maybe tomorrow, Mark?

Mark Biller: Yeah, I think there are several actually that will be be very helpful because this issue was constructed in this crucible that we’ve all been going through this last month. So we have some things that are pretty broad. We’ve got an article on how to determine how much emergency savings is appropriate for a family. So that’s one end of the spectrum. Then we’ve got kind of some general biblical and market counsel in this month’s editorial that I think would be very helpful and encouraging for people that are maybe a little bit discouraged about where we are.

And then we go all the way to the other end of the spectrum with the more technical stuff, where I wrote a piece that really is dissecting what we’ve seen in the bond market this last month because that really has not played out according to the traditional script. A lot of people have expectations from bonds that were different than what we saw, especially on some of those biggest market panic days.

So we’ve got, we’ve got seven or eight articles in there this month. Those are just a few, but definitely check it out. About half of those are free to anybody to read. So come on in and, and check out some of these articles.

Steve Moore: And when my issue arrives in the mail and I get my own personal issue, would you recommend I wipe it down? Have you guys touched them all or anything?

Mark Biller: Well, I didn’t sneeze on it before it went out. But you can’t be too careful. I don’t know where it’s been since it left our offices.

Steve Moore: Well, that’s what I when Rob said to me, "Why don’t we try to get Mark on the program?" And I said, "Well, Rob, you can’t be too careful."

Rob West: Hey, Mark, we appreciate you appreciate you stopping by today, my friend. Let me just encourage those of you watching — and when you share this, and perhaps you’re not watching live, but you’re watching a replay of this — checkout These are wonderful folks that love the Lord. They know the counsel of Scripture, but they also can really help you navigate your financial life from investing to financial planning and the rest. So Mark, always a joy to have you along with us, my friend.

Mark Biller: Well thank you, guys. I really appreciate those kind words. Stay safe!

Written by

Joseph Slife

Joseph Slife

Joseph Slife has been a news writer for the Associated Press, a college instructor, and a radio host. He and his wife Joye have three grown sons.

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