What Happens When the Markets Are Down?

Hello everyone and welcome to this month's edition of The Big Question. This month we discuss every talking heads' favorite topic, down markets. And more specifically, what we will do when the markets are down significantly. And we get this question a lot for good reason. Markets don't move in straight lines. They never have and they never will.

And while most everyone enjoys being a part of the up market, the great returns, the splashing headlines, new highs being made daily, the more important question from our viewpoint is what happens when they're not. Because when markets are down, which we know is inevitable, how you are prepared going into and how you behave within those moments matter nearly as much as anything else within your financial plan and financial picture.

That's why at Presilium, we don't wait to be in those moments to start planning. We intentionally talk about and prepare for them ahead of time. And not in any dramatic way or to drum up fear, but because being able to discuss these big moments in a more matter-of-fact way with far less emotion before they show up tends to lead to better decisions in those moments.

When portfolios are down 20 or 30%, seeing the decrease in your portfolio is only part of the challenge. The bigger challenge is how it feels. And unfortunately, that feeling, that emotion, is often what pushes people to react, to abandon the plan, or to take action that no longer serves their long-term goals.

So, the work we do today is twofold. First, we talk about what we're doing today to best prepare. For example, why we never chase performance, optimizing returns only for a moment or this moment in time. And secondly, we talk about what we will do in the moment. For example, if Roth conversions are part of your plan or you have a sizable cash position on the sideline or the optionality to become temporarily more aggressive in your portfolio, these can be great moments to execute on strategies like these.

These are the types of questions, however, that we don't want to try to answer in the moment when emotion and uncertainty is at an all-time high. We want to have discussed these and gone through these thought exercises to know exactly what we'll do when the market's down 20% and if or when it reaches 30%, what adjustments will we make then? And so forth.

This is yet another reason we place such an emphasis on regular quarterly reviews with our clients. So, it's just to keep you updated on what's happening in the present moment or over the past few months. It's to ensure that as it relates to planning in the markets, that we are consistently out on our front foot rather than finding ourselves in a reactionary position. By doing so, we found that we greatly increase the likelihood of exceptional outcomes, especially over many wonderful years working together.

Thanks for joining me everyone. Until next month.