“Market sell-offs attract headlines, making stock markets look important. Sound bites from purported experts fill the airwaves. Though it is understandable to think that all the front-page attention, extra column inches, and pundit pronouncements can offer guidance through the crisis, at best, these seem merely to offer a daily dose of fresh narratives that can be relayed to worried clients. These stories may be well-intentioned, but they are fiction.” — Colin McLean, writing for the CFA Institute’s Enterprising Investor blog about the dangers of reading too much into news reports about the market. Read the full article.
“Volatility is typically far lower during an uptrend than a downtrend so investors start to believe that the markets are easy and that risk has been extinguished. The painful reminders that this isn’t the case come very quickly and often without warning.” — Ben Carlson, explaining in A Wealth of Common Sense why bear markets are so painful. Read the full article.
Watching and preparing for a bear market
“If it looks like one, walks like one, growls like one, then, yeah, we better assume there is one.” — Jim Stack, president of Stack Financial Management, telling MarketWatch that he believes stocks are now in a bear market. Read the full article.
“If you are early in retirement, a lengthy bear market is your worst-case scenario. It exposes your assets to damage that can’t be recovered in your lifetime. It’s happened before, and it could happen again. It could even be happening now.” — Darrow Kirkpatrick, author of the Can I Retire Yet blog, recommending that retirees maintain a cash account, from their retirement portfolio, totaling three-to-ten years’ worth of the annual withdrawals they’re counting on. Read the full article.
Controlling what you can to make retirement savings last
“Simple decisions we make about our personal spending will have a greater impact on our long-term security and standard of living than anything we can say or do about the condition of the world and its markets.” — Scott Burns, Dallas Morning News columnist, writing about one of the key factors that governs how much money retirees can safely withdraw from their portfolios. Read the full article.
“Much of retirement writing focuses on the unpredictability of market returns, but unpredictable spending is a greater risk. The most you can lose of your savings is 100% of your portfolio, but you can have unexpected expenses far greater than your savings—a medical catastrophe, for example.” — Dirk Cotton, author of The Retirement Café blog, writing to encourage people to build contingencies into their retirement plans to pay for crisis spending. Read the full article.
The ‘most underrated’ investment strategy
“It takes full advantage of high stock returns, turns the annoying volatility of stocks into a benefit, and gets an additional lift from compound interest over time.” — Eric D. Nelson, writing on ServoWealth.com about the benefits of dollar-cost averaging. Read the full article.
College students failing basic finance
“The lack of literacy about the personal finances of going to college is almost certainly leading some students into decisions that they later come to regret.” — Elizabeth Akers and Matthew Chingos, in a Brookings report about how little today’s college students know about their student loans. Their report, described in a February 2016 Bloomberg article, found that only 38% of students with loans knew how much they owed. Read the full article.
Matt Bell is Sound Mind Investing's Managing Editor. He is the author of five biblical money management books and the teacher or co-teacher on three video-based small group resources. His latest book, Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management, will be published by Focus on the Family and its publishing partner, Tyndale House, in April of 2023. Matt has spoken at churches, universities, and conferences throughout the country and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.
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