What The Hell Is Going On (And What Should You Do)?

It's totally stressful and fatiguing to follow along, and it's not just as simple as tariffs on equals bad; tariffs off equals good. If there was a reliable tariff plan, even if it was a very bad plan, at least businesses would know what to expect, and the big movers and shakers on Wall Street could plan accordingly. What's really driving all the market turbulence is uncertainty, and it doesn't seem like that's gonna end anytime soon.

So I thought I'd take a minute to acknowledge a question lots of people might be thinking: what the hell is going on and what should I do? I wrote a blog post with that title a few weeks ago when the current administration was brand new, I'll link to that blog post in the show notes, but you can keep listening and get the gist of it here. So let me get this outta the way right now. I got totally burned out on sharing my views about politics in public during Trump 1.0. So I don't do it anymore.

I think that shouting political opinions into the void of social media is a waste of time. Plus it makes me feel bad. So I don't do it and I'm not gonna do it here either. I'll just acknowledge that my political beliefs are in opposition to the current administration, and I will move on to the topic of the day.

so, yeah, the stock market isn't doing great and lots of people are probably wondering if they should get out now before it gets worse, and then wait until it's air quotes safe to reinvest. It's an understandable sentiment. Things feel bad right now, which makes people worry, which makes people want to do something. And in terms of scratching the, I need to fix this right away, itch, selling all of your investments sure feels a lot like doing something.

But is that an effective approach to getting what you want? Here's my perspective. Selling your investments when the market drops and waiting until it feels safe is a terrible idea. I'm gonna discuss two reasons why I believe that to be the case. The first is that selling investments because you're worried about what happens next is a recipe for failure.

And the second is that there are other more pressing things that you can do to improve your financial health before you even think about changing your investments. Okay, so on the tip of selling when you're worried: pretty much across the board in any situation, it's a bad idea to make really big consequential decisions when you're stressed out or in a heightened emotional state, like if you're going through a divorce or a friend just died, that's a really bad time to make important decisions.

And let's be honest here, watching your investment accounts lose 10% in a week is really stressful. So right out of the gate just don't make any radical changes when you're emotionally vulnerable. Okay? Additionally, study after study after study shows that no one is any damn good when it comes to trying to time the market.

Do a Google search for what If you miss the 10 best days in the stock market and you'll see lots of results showing that if you miss even 10 good trading days in a 20 year period, that's 10 days out of 20 years, it can cut your returns in half.

So, even though anyone can get lucky once in a while with a well time trade, no one, not me, not you, not the talking heads on financial media, have a clue about what is gonna happen in the markets or in the world the rest of this year, this quarter, this week, even tomorrow. So don't try to time the market by selling now and waiting until it feels good to get back in. It's a losing game. Please don't try to play it.

Okay, onto my second point, which is that there are other things you should do to prepare for uncertainty and dare I say, recession before you change your investment strategy. And what I wanna do is think back on a crisis or two from recent history for some guidance for how to prepare for a potential crisis in the future.

If we could go back in time and prepare for the pandemic or the 2008 09 housing market bubble, I wanna propose that selling your investments was a bad idea and that changing your investment strategy was not at all the top priority. First, hindsight being what it is, we know that the smart move in the pandemic, the housing market crash, the Dot Com bubble, and pretty much as far back as you want to go was to just stay invested the whole time.

That doesn't mean it felt good when it was happening, but it was the smart move. Again, that's because no one knows when the market will go up or down, and if you get the timing wrong, by just a few days, your returns will be dramatically worse. So what should you do instead? If I could redo the months leading up to the pandemic, you know what I do? I would leave my investments exactly as they were, and instead I would start saving a bunch of cash.

Whether that's in your checking account, your savings account, or just under your mattress, having a bunch of extra cash adds so much stability when the shit hits the fan. You'll feel like a total genius if you have that money available when you need it. The next thing I would do is eliminate as much high interest debt as possible. If the economy fails and people start losing their jobs, having a bunch of high interest debt becomes a real problem.

And that's because with high interest debt, like credit cards, you can pay the monthly minimum and it doesn't prevent them from spiraling out of control, which is a huge liability in a crisis. Even though term-based loans like auto, student, or home loans come with big price tags, those kinds of debts will eventually be wiped out exactly on schedule as long as you keep paying the monthly minimum that you agreed to when you took the loan out. That is not the case with credit cards.

So the first thing I would prioritize to prepare for a crisis is to save lots of extra cash. And the second thing is to eliminate as much high interest debt as possible. If you have those areas covered, you're already doing great. And if you do those things and you're still feeling itchy, now we can look at your investments.

I already said that the best move is to stay invested through a crisis, and the last thing I want you to do is to turn all of your investments into cash, but it still feels pretty bad to watch your account balances drop. So what could you do? Instead of thinking in binary all or nothing, I'm in or I'm out kind of language, I want you to choose investments that you can own for the rest of your life through good times and bad.

And part of that equation is making sure you have a mix of stocks and bonds that matches your risk tolerance and your timeline. If that means your portfolio isn't optimized at all times, so what? It's better to have a good plan you can stick with for a long time than a theoretically better plan that stresses you out. Stocks tend to be more volatile in the short term, which a lot of people associate with risk, but they tend to have more growth in the long term.

Bonds, on the other hand, tend to be more stable in the short term with less growth in the long term. And by aligning the mix of stocks and bonds with your risk tolerance and your timeline, you'll be more likely to have a portfolio you can stick with for the long haul. And staying invested for a long time is every investor's superpower.

That's because compounding growth, which works exponentially and is hard for our brains to understand, only works if you let it happen for a really, really long time. So you need to prioritize investments that you can own for a really, really long time. Does that make sense?

So if you're feeling jittery, and you've done all those other things I just mentioned, this is an excellent opportunity to revisit your current mix of investments to decide if you'd like to dial back your risk exposure by shifting some money out of stocks and into bonds. Again, don't turn your investments into cash in a panic. Instead, downshifting to a lower volatility mix that helps you stay invested for the long haul is a very smart move.

Okay, the final point I wanna make today is for all the people who are lucky enough to be sitting on more cash than they strictly need at this point. I want each and every one of you to keep a safety net of cash in a savings account at all times, which is typically in the ballpark of three to six months worth of expenses. But if you have more than necessary sitting in cash and want to put that money to work, a market downturn is a great opportunity to do that.

Keep in mind that when you buy stocks or stock funds, you're not just parking your money somewhere and waiting for it to magically grow. That's what a bank account does, and that's why bank accounts don't pay very high interest rates. When you're investing in stocks or stock funds, you're buying shares of companies, which are tiny slices of ownership in sometimes hundreds or thousands of companies, and that's valuable because all of them are trying to turn a profit.

And your ownership of those shares means you get a slice of those profits. Does that mean every company, every year will have awesome profits? No. Lots of factors are beyond the control of those companies, like tariffs, for example. But all of those companies have the goal of making money for shareholders. So think of buying stocks or stock funds as buying a valuable thing that you expect to generate money or get more valuable, or both over time.

You're not just putting your money somewhere and waiting for it to grow. You're buying ownership in companies that are trying to make profits and pass those profits onto you. And now because of the drops in the market the shares in those companies are on sale. Let's make it a little less abstract for a minute, and think of some tangible thing that is valuable that you might wanna own for a long time, like maybe jewelry or a vintage guitar, or a fancy watch. Do you have something in mind?

You picturing it right now? Whatever that thing is, I want you to imagine that it suddenly costs 15% less than it did at the start of the year. It is the exact same thing. It has all the same qualities that it did a few months ago, but now it's cheaper. It seems to me that the price going down makes it a good opportunity to buy, even if you previously bought the same thing at a higher price in the past. Does that make sense?

Even if you already bought stocks or stock funds at a higher price, the recent drops represent an opportunity to buy the exact same thing at a discount. It's classic buy low, sell high type stuff. The price goes down, you're getting a better deal. So will the stock market go down more in the future tomorrow, next week? Who knows? I certainly don't, and neither does anyone else, but lots of people will talk your ear off about how they do know.

And candidly, between you and me, those people are full of shit. Some of them know that they're making it up, some of them don't. But being confident about outcomes that you can't possibly control is nonsense. What I do know though is that trying to time the markets by selling now and waiting until it hits the bottom to buy back in is stupid. It's a waste of time and money. There's no reason to think that anyone can do it.

And just to keep banging the same drum, if you don't get it exactly right, you'll be much worse off than if you had just left your investments alone. So here are my key takeaways for today. Number one, don't sell your investments out of panic. Number two, before you even get to thinking about investments, prioritize saving more cash and paying off debt. That will be more important if we actually are facing a recession.

And my final takeaway is that when the stock market tanks, it means you can buy something valuable at a discount compared to what it cost just a few weeks or months ago. Oh, that's a lot to take in. I hope I didn't use too much jargon. I hope it wasn't too technical. Hope it all makes sense. But please drop me a line at podcast@iselerfinancial.com. If you have any questions.

Or if you have a money or finance question you'd like me to answer in a future episode, you can fire that over to the same email address podcast@iselerfinancial.com. And of course, Iseler is spelled I-S-E-L-E-R. I'll link to that in the show notes as well. All right. It's time for some disclosures. The thing we never talk about is for educational and entertainment purposes only. It's not legal, investment, or tax advice. Alright?

People on the show, including yours, truly may have interest for or against any investments discussed. So do yourself a favor and don't make any decisions based on what you hear on this or any podcast. If you like what you hear, please subscribe to and like the show wherever you get your podcast. And you can give my insights on money and more delivered directly to your inbox by subscribing to my Keep It Easy newsletter at Iselerfinancial.com/newsletter. Thanks for listening. I appreciate you.