We all get hooked at times, but you just don’t stay there. Nothing rattles you for any length of time. This state of mind allows you to be a leader, not a follower, to be the chess player, not the chess piece to be one of the few who do not the men who talk hi.
I’m Richard Bradley editor in chief of worth magazine and host of the unshakable podcast. I’m here with the world’s leading life and business strategist. Tony Robbins, Tony’s been named twice to the worth power 100, as one of the most influential people in global finance along his side is Peter Mallick, CEO of the wealth management, firm, creative planning and the only man in history to be ranked.
The number one financial advisor by Barron’s three years in a row Tony, the idea of being unshakable is clearly more than money, but in this context, what does it truly mean to be unshakable? It’s, a state of mind.
It relates to money because most people, when they’re, trying to figure out how to create financial freedom, create more stress for themselves, worrying about what’s going on and when you’re truly unshakable.
You have the mindset where you understand how the market works. You understand that real estate can go up or down, stocks can go up or down, but your family can still do well. Unshakable is a bear, market can come, a correction can come and there’s, no fear in you or if there is a little fear, we’re all human.
You don’t stay there. You find a way to break through you find your Center, and when you have that Center, you do what’s right to be able to take care of yourself and your family. So we live in a world right now, where most people don’t even believe they can achieve financial freedom anymore, because there’s, so much volatility, I mean think about it.
We have negative interest rates and 5,000 years, Richard banking. We’ve; never in our history had a place where I gave you my money and I paid you to hang on to it. I give you my money to a bank. You pay me for interest, I make money off of it and then they loan it to someone else.
We’re living in times that are crazy. Toyota right now has a bond that they’re selling for 0.001. That’s, your return for giving the money he’ll. Take you 69 thousand years to double your money. I’m. This has never happened in history and I was interviewing about a year and a half ago.
You know the former Fed chair Alan Greenspan, who, for 19 years the most powerful man in finance in the world under four different presidents, spent five hours with him about three privately and two on stage and from her group and one of my final questions to him.
When we talked about all this crazy change and all this volatility and how do people get things together, I said: look if you were back head of the Fed today. What would you do and there’s? This long pause, he paused a pause and they leaned in he said Tony.
I’d resign that did not build much confidence in me or anybody else. You’d, be watching, and yet, in the midst of all that, as you well know, there’s, a few unicorns in the financial market very few. These people that have found a way to do well over all the decades in good times and in bad, and they know what it takes to be unshakeable and it isn’t just guts or confidence.
It’s, understanding certain facts that when you know them they for you. The metaphor I give people is that you know if you go yeah most of us have heard the old Sufi metaphor. Ever you know, the man is walking along in the middle of the night and he sees a snake and freaks out runs away and he comes in in the morning.
And what does he see? It was a rope, and so once you know it’s, a rope, you know you can be there in the middle of night, you’re, not scared. Again, this book unshakable is this. It’s. Really a financial freedom play book for anybody.
It’s, the real essentials about how to go from where you are to where you really want to be about how to do it with peace of mind, how to do it, even when things are volatile and enjoy yourself, and I’M really proud that we’re, also donating a hundred percent of the profits, as we did with money master the game to feed another 50 million people.
We’re gonna feed. I’ve, fed 200 million people in the last two years with feeding America’s. My partner, I’m gonna feed a billion people, and this is part of that. So this book is something that can change.
Somebody’s life and, while you’re doing it really take care of other people that are in need. We & # 39. Ve got 45 million people in this country. They don’t know where their next meal is coming from 17 million or children.
While you’re changing your own life, we want to make a difference for them too. You mentioned money master the game. You wrote that book two years ago and in the two years since it sold over a million copies incredibly impressive.
So why another book now? Why? Why did you write on shake? I’m, really proud of money, mastered the game and I hope people will still pick it up and read it, but it is 670 pages. You know what I did. As I said, I saw what happened in 2008 and I said this can’t, be I have the good fortune of having coached Paul Tudor Jones, one of the top 10 financial traders in the history of the world for the last twenty four years And he hasn’t lost money in those 24 years that I worked with him.
So as a result of that, I & # 39. Ve learned a lot as you might imagine. He’s literally emails me each day. We measured these elements for two and a half decades, but at the same time, when 2008 half and I saw people losing their homes, I saw people losing half their net worth overnight and I knew what was the trigger because I was working with Paul.
So I thought what if I wrote a book where I interviewed the smartest financial people in the world, the people you and I both have the privilege interact with now and I interviewed 50 of them, not people from the lucky sperm Club, but people who literally started With nothing and built something at that scope and they did it through investing and what I learned were the strategies that could change anybody’s life.
So I put that in the book and – and I was gratified that it became number one New York Times – bestseller and she said – sold a million copies and hardback. But in addition to that, what was really cool was people’s.
Lives were changed by that book, cause it wasn’t me. It was the best investors in the world, sharing it with you, and so I don’t, like writing books. I you know rather pull out my teeth. Quite frankly – and I hadn’t written a book for 20 years and Steve Forbes said it was you know if there was a Pulitzer Prize for an investment book, this one would win hands down.
So I wrote this great book so answer your question. Why another one, because in the last year and a half these crazy changes were talking about with feds all the world are happening, volatility has increased.
No one is clear where the world is going. I was talking to Howard Marks of oaktree capital and he wrote he manages a hundred billion dollars and he said to me so Tony you know. If you’re, not confused.
You don’t know what’s, going on it’s. If that’s the world that we’re in, so I thought I want to do three things with this book. I want to write a short book. I want to find a book that you can hold in your hand, that lift weights with it and that you could read in a weekend, or you know a walking day if you’re, really committed to and give you all the essentials that can Change your life, but the second reason I wrote it besides a short book that anybody can get through and use is I really wanted to write a book where we can dispel the fear where we could take that you know snake and turn it into the rope That it really is so that you can begin to understand that there’s.
No reason to fear these things and you can participate in this tremendous opportunity in the market for people to grow and even take advantage of the worst times. Because I know you know that the greatest time for someone to leapfrog from financial survival to financial freedom is, during the toughest times things burn down faster than they grow.
The opportunities are extraordinary at that time and we’re, going to talk about that and our next podcast to give people some real specifics. But it is your opportunity to really leapfrog from where you are to where you want to be, and you want to be prepared.
So you don’t get hurt and you want to take advantage because that’s, where the greatest opportunities are. You know you you listening to somebody like Warren Buffett. I had the privilege of interviewing and his whole approaches.
I want to be absent to take advantage. I want to be in a position when everyone else is afraid. I want to be greedy whenever he was greedy. I want to be afraid, and so this book really showed you that and then the third and final reason I wrote this is the financial industry is a is made up of good human beings, very talented banks, but this incentives in that system are not to take Care of you as the investor, these are corporations.
They’re multi-billion almost some of them approaching a trillion dollars over decades of revenue that they’re generating and their number one focus is to take care of their shareholders. Well, the way you do that is more fees and the fees are so hidden that most people know the Obama administration this last year, at least on the fall one case, I try to pass some rules that look like they may just get ejected now under the Trump administration, but it’s because 17 billion dollars and fees are being taken from people.
You know 1 % in fees, just 1 % more than you need to pay, because of compounding will cost you 10 years of income in retirement. It could be the difference between retiring broke, having money for a few years or having for as long as you live.
So I really want to take care of people and protect people, and so those three things write a short book. You can absorb right now that anyone can use whether you’re, a millennial just getting started, and you’ve all this debt and think you’ll, never get free or whether your baby boomer think you started too late Here’s, the financial playbook to really get you where you want to go so Tony folks here listening, the podcast can’t hear this, but sitting alongside us here is Peter Mallick talk a little bit about how the two of you Connected and how Peter came to be the co-author with you of unshakeable well.
First of all, I have unbelievable spec for Peters. We’re partners and he’s become a dear dear friend of mine, but it’s. Kind of interesting I wrote my name after the game I dug in and pulled out all of the abuses that I thought had happened in the system.
You know we went out and kind of freed people from this and they’re, able to put ten years sometimes 20 years have them come back in their pocket. But then I got a call from Peter and I had actually been really focused on what’s called the fiduciary standards, a big word, but what it really means is most financial people that you go to most people that you consider to be a Financial consultant or a supporter or whatever you want to call them.
They’re brokers, 90 % of brokers, nothing wrong with a broker, but a broker does not have to put your needs ahead of their own. It’s, crazy. All they got to do is give you an investment that’s called suitable, which means they think it’ll work for you that’s it, but there’s less than 10 % of the 300,000 people.
In the financial industry, the ones that aren’t brokers, these independent registered investment advisors are called fiduciaries. They are responsible to legally put your needs ahead of their own. If you they say by Apple this morning, and they buy it themselves for themself this afternoon and they get a better deal a lot of requires.
They give you their stock that’s. How strong the laws are, but it’s, a real small subset of groups, so I was promoting fiduciaries and I even recommended a series of like ten different firms and Peter & # 39.
S. Firm was one of those because his firm and Peter himself, as you said earlier, he’s, the only firm and he’s, the only individual financial adviser to be named by Barron’s three years in a row as The number one financial advisor in the country, so his track record was extraordinary.
So when he called me up and said Tony, I know you care so much about people. You’re trying to protect them, but there’s. Some dead bodies. You need to see out there there’s, some there’s, ways of manipulating the system, even for people to call themself fiduciaries and he flew out on a weekend.
I was doing a seminar. He never leaves in the weekend with his family ever respect him for that, but it was the only time we could meet travel, though that way we sat down and he dropped this set of insights on me and I was devastated.
Quite frankly, I was angry. I was pissed off, I mean like how could people do this? Take advantage of people, and also because I’m trying to people in the right way, and I found some of these individuals.
These organizations who I really like in order to try to survive and make enough money they have adapted some interesting approaches that we’re going to talk about here, but Peters want to free that and when I sat there at the end of it, I was like Peter, I said you know what you’re doing here.
You he’s created a home office for people. You know you know: billionaires have home offices, they have a dozen people, seven, eight, nine people whose entire focus is every aspect they’re, not just putting together a portfolio they looking at, protect your risk.
They look at your taxes. They look at estate planning, look at everything to take care of you and you know, usually got to be a billionaire to do that. He started doing that for millionaires. You know for her small businesses, which is the backbone of this country, and I said to him: I said what if we partnered, but I said if we partnered, I would love to join your board.
I would love to you, know, step in and really help. You understand, by being maybe the chief investor psychology, how investors thinks that we meet their deepest needs even more so, but he’s already managing now twenty two billion dollars a year number one I said, but would you be willing to do this for People with a little as a hundred thousand dollars so that the average person just beginning the journey, someone who’s early in the journey could still do this.
They & # 39, ll have to be a millionaire, a billionaire to do it, and he went back talked to his team and came back and said we can set up another division and do this so we became partners, and so now I’m.
I’m partner with him in this and the firm I’m on the board of directors partners in writing the book – and I just want to get this message out and Peter’s, one of the smartest guys and He’s, the guy that navigated 2008 to 2009.
During that time, the Big Bear – and you know one of the greatest economic challenges in our history and wants to talk a little bit later about how well they did quite extraordinary Peter. I think a lot of people would be reluctant to reach out to Tony Robbins and say: hey Tony.
I love the book, but I got to tell you there’s. Some things you need to know talk a little bit about what prompted you to to reach. Out to Tony I read the book, I mean a lot of my clients had read the book.
They’d, come in with the book in their hand, and they say talk to me about. Are you a fiduciary at all and I loved it because most of it spoke directly to what we were already doing, and I could tell from reading it that he had really tried to navigate all of this that somewhere along the way he got pissed off about Something I found out later: it was his 401 k plan and he decided he was just gonna figure it out, and this book was an incredible attempt at that me interviewing these 50 50.
I’ve, never seen I don’t. Think it has ever been done where you have that many successful people at investing with different points of views, but very common thread through most of them, and he’s, bringing all those ideas.
But he had a couple things that really stood out. That were the same thing. We talk about creative planning. You should have a fiduciary. You should be sensitive to fees. You should be sensitive to conflicts.
Don’t. Try to market time. Don’t waste. Your time trading stocks all day in your pajamas at home, these are the core message really matched up with us, so I thought: hey. I’m at least gonna offer this and I’ve.
You know, frankly, I did not expect you know Tony to call me back and be willing to listen. To only was he willing to listen like he said, he asked me to come back out, come out there and meet with him, and when I did, I was went there and of course he’s.
He was in the middle of an event and he had budget. He broke out some time for me and he said: hey we & # 39, ve only got an hour or 45 minutes or something like that, and I I talked for ten minutes and Tony I mean he was really like.
Looked at the other people in the room, his advisors, like I can’t, believe some of what I’m hearing, and I said that’s. Really all I got and he goes. Are you serious and I said yeah? I left, and he called me he was the next day or a few days later and said, wow we looked at all that and I’m learning, something new.
Let’s, keep talking and and I’ll. Tell you what I love about Tony that matches the firm, because a lot of people have seen me in the media. Maybe one 1,000 for the time you see Tony, but stylistically and physically hurt pretty different people right, but we have some things in common yeah.
If you think about the title, the book unshakable what he came up with that he said what do you think of that? I thought that’s, absolutely perfect, because whenever you’re at a party – and you hear somebody say – I lost everything which you and I have heard the crowds me running here that all the time people were worth a hundred thousand worth Zero or they’re worth 20 million and they’re worth you know, half a million and they go was Oh a tour that 9/11 or the tech bubble.
Well, it’s impossible to have lost money through those. If you were invested even halfway right and didn’t make a mistake and what you really find is people they get in their own way and because they’re shakable right.
They most people react negatively, and why are they shaking well? Why do they make those mistakes because of uncertainty, whereas the uncertainty come from fear? What? Where’s, the fear? No education? What does Tony do for a living just with money, but everything else? He tries to compress the learning curve for people help them figure out exactly.
You know how to think about things and give him a road map. Well, that’s. What we’ve tried to do at creative planning, and we very successful at it were one of the top independent firms in the country.
We’re very proud of everything we accomplished. You know before the partnership, but when I write a letter it’s, not gonna be written by as many read by as many people as when Tony does. I wrote a book.
Tony’s, book said, sold twenty times more copies, and I’ve, been in the business for 20 years right. So what a wonderful opportunity to put a megaphone on what we’ve been trying to do, which is to educate and empower people.
So if they have that certainty, so they’ve become unshakable, and if your unshakable, then you’re gonna, have a better investment outcome. It’s. It’s that simple, so his messaging and what he was trying to do.
It really matched up perfectly and it’s been a great great ride ever since then, and I wanted to in this book the reason I asked Peter to co-author it with me was: I wanted to cover not only the psychology, and I want to Bring all these other investors, but I really wanted to your people up so that when the inevitable Corrections and the inevitable bear market comes, and we’re right now approaching eight years, the second-largest.
You know bull market in history when that changes, and it always does. I wanted people protected, and I want to not only protect it. I wanted him to thrive, not just survive, and I had all this great information for all these individuals, but Peter had taken his firm and grown it geometrically with virtually no advertising because he got such unbelievable results in the midst of the worst downturn.
You can imagine you you guys grew from what to what do you remember this 500 million in a couple billion and inside that two years in two years and during the worst economic time everybody gravitated to them, because everybody else is freaking out, and here are these People getting great results so in the book the specifics about what to do in a bear market, the specific plans and so forth are really Peters playing.
So I’m, also, not a financial, legal, financial planner. My expertise is psychology, synthesis taking the very best and then communicating away. Someone can act on it because I always say to people. Knowledge is not power.
You know, knowledge is information, its potential power. What’s? Real power is execution. You know execution Trump’s, knowledge every day of the week, so I want to write something short, quick brief, but with a real plan that’s proven so that you can literally be more fearless or what we call in Jacob Peter.
I know you’ve. You contributed to the book. You wrote some of that real plan talk a little bit about your contribution in the book and and what kinds of advice you’re, giving people well. I think like if you look at the financial services industry of conflict, but then you have polar opposites and advice on the one end.
You you have let’s. Go in the market. Let’s, go out of the market. Let’s, trade stocks all the time. A lot of evidence it doesn’t work for most people, whether you hear that from you want to believe Buffett when he says it or Bogle.
When he says it or I when I say it there’s, a lot of people would say that doesn’t work, but those people tend to be buy and hold. Do nothing ever buy these eight things and don’t ever do anything, and I think that’s, a real big mistake, and so one of the great opportunities to be able to write a little more specifically in the book was hey.
Look yes, some of this. You know the crazy day trading in your pajamas isn’t, probably gonna work out for you very well most hedge funds. You have access to are probably not going to work out for you well and here’s, the evidence right.
We don’t just say it. We show the evidence, but hey you. Don’t have to just settle for holding all the time it’s in the bear market. Is that’s the opportunity? And so we outlined in the books you some of the things that we did with our clients to take advantage of that opportunity so that we’re.
We’re, not doing nothing, but we’re, not doing things that great damage. Either we’re trying to stay in the game, get the upside, but when bad things happen, that’s, the chance to really get ahead of the marketplace.
So Tony it’s unusual, to launch a book and do a podcast at the same time. Why’d? You decide to do this that way. I just think that people are having a partner, an audio partner. In some cases, video partner, like this people, can use net time.
You know no extra time, they knew when they’re driving their car. They can do it when they & # 39. Re working out, they can listen to it and reinforce it. You know, obviously the podcast doesn’t go to the depth of the book, but I wanted to get some of that core information out there I mean the bottom line is neither one of us are taking a dime from this book.
I wrote this book so we can feed another 50 million people. I’m gonna match that so we feed another 100 million people on the way to the billion that I’m going for. But I also want to just be able to provide something that people really use, and I think, if you combine audio with the written word, I think you got a chance to read it’s all about accessibility.
Is it really is make it as easy as possible for people to get real results, so lots of people have massive fears when it comes to the stock market. Their emotions are in overdrive whenever the talking heads are calling for the next big crash, and that seems like it’s happening every other time, but early in the book you guys cover seven freedom, facts which are some pretty mind-blowing facts about market behavior.
That, when you people understand them, they’re sure to help free them from being their own worst enemy and being so fearful about participating in the stock market and and when to make decisions. Let’s, go through them.
Let’s. Talk about freedom! Fact number one on average Corrections have occurred about once a year since 1900. Now that a lot or a little well, you tell me, I think, most people, you know they’re, all worried about a correction, and when you see that, literally at 115 years of 1900 2015, we’ve averaged one a year.
It can allow you to say I don’t need to react to this. This is natural, looks like a season. Winter comes every year. You know you know if you react the winter and freak out you’re gonna be stressed out all the time, as opposed to be prepared for winter take advantage of winter.
Some people freeze to death. You want to be well supplied, so you can ski snow, more beauty or family and friends, and hopefully do well enough. You can help those that didn’t plan right that’s, really what it’s about.
So if you think about it, it on the average correction last 56 days so less than two months last year was a perfect example. 2016, if you remember January the first, what was at 9 or 10 days of the month was the worst nine attendings in the history of the stock market.
Openings a you know, opening of years – and I remember at the time people are freaking out you’re. The market drop well poni points. Was it the one day? Was it settled under yeah yeah? No, the one day, almost 500 yeah five, six six and I’m, not positive, but you know people were freaking out.
Everybody was in Davos, you know all the wealthiest people in the world, they went there, they put Ray Dalio on. If you don & # 39, t already know us, he’s. The largest hedge fund, I’m, a successful hedge fund guy in history right.
This is a man who’s. You know you had to have a five billion dollar net worth and give him a hundred million dollars ten years ago to take money. Now I won’t, take your money, no matter who you are, and he had taught me and is in the first book when he mastered the game.
His formula and I shared that formula and helped a lot of people. He got up on camera and people said: what do we do? The world’s marking down the end is coming and he said well, Tony Robbins wrote this book.
You know how to pick it up and in the chapter he explained some ways to do this, so it was really gratifying, see that that would make such a difference for people. But what really makes a difference is to realize it.
Didn’t last. The year and we broke all kinds of records last year, and but it looked so dark it looked like it was the end, and so it’s really important for people know. This is on average 54 days less than two months.
It happens every year like clockwork now here’s. What you got ta know, though, in the last hundred years the average drop was 13 % little more than 13. Now, in the last 30 years, the average drop is in 14 %.
Well, when you & # 39, re, lose 14 % released on paper, pretty hard for most people to hang on, and so what do they do? They sell in exactly the worst time right and they take those losses and make them permanent.
The stock market never took money from anybody only you can do that by your decisions right, and so, if you understand that this is normal, this is winter, winter always comes, some are more severe than others.
Some are shorter, some are longer, but they come every year. Then, all of a sudden, your brain, starts to go. I don’t have to overreact, and what makes you successful is to stay in the market and there’s, a lot of very, very smart people that you they can know.
All of this, and they’re still gonna react negatively. They have to be really empowered with information and the reason is sometimes there’s, a kernel of truth. Sometimes there isn’t and usually there’s, a narrative like if you look at what Tony was referencing early in 2016 January February, oil prices were plummeting OPEC said they’re gonna.
Let let oil float and now we & # 39. Ve got the US. They’re. Talking about recession. Eight of the ten major banks, the United States, said oil was going to go even lower, so you haven’t. You have a narrative, it’s, not like it’s randomly happening, but we know this story.
It’s. Kinda like going to a Sandra Bullock movie, we kind of know we’re gonna laugh. We’re gonna cry, but use even if you someone tells you the whole story in advance. There’s. Gon na be a point where you’re supposed to be crying, and I’m gonna look over at my wife and she’s.
Gon na be crying right, I mean so we’re humans. We react when we’re going through it, even when we know what’s gonna happen, and I think the key is you have to not only know what’s going on like Tony’s.
Talking about, but you got ta, take it a step further and be excited about. It actually say this is. This is an opportunity. I only get this opportunity like Tony said about once a year now. I now is the time to go into action, and once you’ve made that shift.
You know you’ve, you’ve arrived you’ve, truly. That first step is the first step to being unshakable and it’s based on a pattern of facts. What’s? Another pattern? Another pattern is okay, this, how do I know this is a correction just to clarify for everyone, a correction, a bear market, as you know, is 20 % drop from its peak right, so anything below that you know, and the 10 % range or above is going To be a correction, and so most people are afraid, is this correction? First of all, most people think of a correction as a bear market.
They don’t, make the difference. Yeah right. They don’t, see this as temporary. They don’t, see as normal. They think. Oh, my god, the world is ending, and so then they make these dumb decisions. Unfortunately, that can destroy your financial future, but if you know that these Corrections happen every year and that less than 20 % of them ever grow into a bear market, which means you know one in five, so one in five years, that’s.
Really what we’re talking about, then, if 80 % of time it’s, not gonna get worse, then maybe I’d – have to take advantage of this. Maybe I, when everybody else is afraid that is your greatest opportunity, that is Warren Buffett’s number one.
You know totem, that’s. Motto is take advantage during those times, so that’s. Freedom fact number two that let’s. Some 20 % of all Corrections will ever actually turn into a bear markets right right.
Let’s. Talk about freedom, fight number three! Nobody can consistently predict whether the market is going to rise or fall well. I think this is interesting because there’s, so much so many advisers that’s, what they’re selling right, and so this is what’s interesting about the profession that they can’t Predict yeah that they’re selling.
Hey, I can predict, I can navigate this. I mean there are different words for it: downside, protection or exit strategy. You know things like that, but they’re all generally related to forecasting, and I think what’s problematic with that is people are trained when you go to a professional.
If I go to a doctor, if I go to an architect or an engineer or CPA, my expectation is there’s, some industry standard based on academic evidence, and you’re gonna advise me and put me in a better spot That’s, couldn’t be further from the truth.
In the financial services profession of the time you’d, be better off, not hiring a particular advisor, and this would be one group to be concerned about is to me it’s, a great litmus test. If you’re sitting down with somebody – and you say, hey tell me how you’re gonna help me they go well.
I’m gonna look at indicators and tell you and eggs at the market that you can stop the meeting right there get up and as Tony talks about it as well. Amongst these go go, find somebody else. It’s. A great lip mask uestion know: Bogle said I’m.
Not only never seen anybody can do it. I’ve, never met anybody who met anybody that can do it and I’ll, say a creative planning with 15,000 clients. I’ve, been doing this about 20 years. I am never in my career ever seen a client exit the market and get back in even moderately close to the right time.
I mean forget about getting it right now, not even remotely close. Then you get in transaction costs, taxes, the outcomes very, very negative. So if you don & # 39, t want to take the time to dig through all the academic evidence that it doesn’t work.
We talked a little bit about in the book. Why this is not a fantastic strategy for you and why it’s, not predictable, and once you realize it’s, not predictable. It’s easier to have a philosophy to take advantage industry.
As you all know, people get up every single day and grab your eyeballs on the television to tell you, the horrible thing is coming or the good thing is coming, but nobody statistically has been able to consistently do that.
There’s, been a few of these guys that you really aren’t accessible to you, Ray Dalio, uh, Paul, Tudor Jones, somebody a bat nature that have been able to go 20-plus years, making money in all these different markets, but their Funds are closed, so you’re, not going to be able to get into them.
So anybody who’s promoting that either either. They believe what they’re saying and they’re wrong or they do it. Long enough, until they’re right, I mean we talk about. We show examples in the book of people that there’s, one man who predicted 2008.
The only problem is, he’s incorrectly predicted 2002 2003, the greatest investors. Many of the great semesters of all time, don’t believe in market timing. So Buffett is not a market timer! You don’t, see him, leave the market and go to cash.
You see him. 99 % invested all the time and when the market is correcting, he looks for value. He doesn’t, try to time it. He buys he waits. He says I don’t have to matter. If he’s, gonna wait a month or two years, eventually, the stock price will match the value of that company.
So you can be at one of the greatest investors of all time whether you’re, JP Morgan, who wouldn’t ask you know what’s, the stock market gonna? Do he said it’s? Gon na fluctuate right. So you look at JP Morgan.
You look at Buffett greatest investors of all time. They’re, not market timing. So if you’re, like a 42 year old guy working with an advisor down the street in Walnut Creek California, who’s telling you we can market time and forget it, it’s.
Just as that scenario is not gonna work for you just move on so that’s, a great segue to freedom fact number four, which is, I think, something that that people forget or don’t know and is extremely reassuring.
The fact that, despite short-term setbacks, historically, the stock market rises over time the markets up three out of four years, so seventy-seven percent of the time, but that’s over one year over three years.
It’s up about ninety percent of the time over five years, it’s up more than 95 percent of the time over ten years, its 98, a half percent of the time so in the short run like tony, was mentioning earlier.
Incredibly unpredictable in the long run it’s extremely predictable. We know what the markets gonna do over time, not just the stock market but the bond market. Over the long run. We have an expected return that that comes about that that we can count on at least with a reasonable amount of probability and plan and plan towards right, but for some reason people don’t easily think about the long term.
Well, I think that’s, what the shredder, I think, part of its this, this myth that people believe they here the market goes up and down that’s, not true. The market goes up. What it has is. It has intermediate periods where it’s down it’s, kind of like inflation, goes up and down right.
Sometimes a candy bar goes down in price. Doesn’t happen very often, but sometimes it does. Maybe you stock up on candy bars, then, but over time we all have the expectation as reasonable people that ten years from now a coke is gonna cost, more candy bars gonna cost more a house is gonna cost more.
If you believe that, then you should believe that about the stock market, because part of the returns just inflation, but Tony part of this is about psychology right, sometimes for some reason, we focus more on the negative events than we do on the long-term positive ones.
So, even though – and I think this is freedom fact, number five – that historically bear markets only happen every three to five years. For some reason they seem to make in an over large impression on an investor psychology.
Well, I don’t care. You know I was talking to Jack Bogle who started a guard. You know three trillion dollars in assets and he said I said what do you do in America? Mark Wright goes. I read all my books and remind myself not to sell anything cuz it’s, it’s.
Yes, it happens. Look let’s just say the figure, so everybody understands it since 1900. So 115 years we’ve had 34 bear markets. Since 1947, we’ve had 14. So overall, in a hundred and fifteen years it’s averaged every three years.
In the last you know, 50 years, or so it’s, an average about one every five years, but the problem is that the average drop is 33 % right and you know roughly a third of the time. The market drop is 40 % or more well.
When you lose at least on paper in your head, that’s, still the part of our brain that allows us to go into fight or flight. That survival mechanism is triggered by money issues. They’ve done MRIs and shown it is if you or literally your life was being threatened, and so, when that happens, unless you train yourself to be unshakable, unless you know hey look, this happens every three to five years and if I try to Get out as we’re gonna show you in a few moments I’m gonna have the wrong timing.
I just need to stay in and we won’t lose anything you’ll. Look like I’ve lost, but over the long term. If I want to stick with it, I can make it happen, because we know what the returns are afterwards.
We know how the market jumps after we’ve, taken this hit in a bear market. Everybody members, where were we in 2009? Where are we today, but what’s really important to know is that in the midst of all this, these bear markets.
Last, on average, a year there’s a few times in there a couple of years, but usually on average, it’s a year, so a year really is any other business. If you could get a Ferrari for 50 % off, you would be pretty excited right, but my assistant stock markets, the only place in the world when things go on sale, where people freak out and what you want to be is the unshakable when everyone else is In turmoil you want to go, this is the greatest opportunity of my life.
Let me get these things now, because they’re gonna go back up and value, because, historically, that’s. What & # 39? S happened in the US markets for 200 years, two centuries, no matter what you do. American business seems to find a way to resolve and become more profitable.
Whatever you do, part of that is, our population grows, part of that is inflation, and so the combination of these factors and our increased productivity as a society which keeps growing, especially with technology, allows these markets to continue to grow.
So it’s. Gon na happen every three to five years: it’s, gonna be a 33 percent drop a 40 50 percent drop, but what we’re gonna show you in this book is how to set up a portfolio how to diversify. So that when that happens, you don’t take that kind of a hit you’re still in really great shape, but more importantly, as Peter proved, with all of his clients.
During that time, let’s, go in and let’s. Take it advantage of this. This is the chance to leapfrog from wherever you are financially to where you really want to be, because this is where you’re gonna see the greatest growth I don’t.
Remember the exact number I apologize, but I remember when I was doing research. It remembers Jack Kennedy, obviously but Joe Kennedy, his father. I can’t member, the exact number I apologize. I have to look it up, but he his level of wealth was sizable was like three or four million, if I remember correctly in 1929, but by 1932 was more than a hundred million, and the reason is because, when things melt down, that is the opportunity.
When everybody is scared, that’s, Warren Buffett, that’s, all the greatest investors in the world, and you can free yourself from the fear when you go this. Is it there’s, a big winter, about every three to five years, but winter doesn’t last forever? What always follows winter is springtime right, this incredible growth that’s.
Really the essence of this. So let’s. Actually let’s talk about springtime, which it brings us to freedom fact number six, and I think this is a fact that is often forgotten in the midst of those bear markets.
When you’re, seeing that 30 40 percent paper loss it’s hard to remember that bear markets become bull markets and pessimism becomes optimism. Yes, that’s. What happens? Not 90 percent of the time, but 100 percent of the time, and I think that’s, the hard thing for people to grasp you know Tony was talking about the frequency of bear markets.
There’s. There’s. Two things that make that particularly troublesome for a lot of investors and one is it happens every three to five years, but not necessarily spaced out like that right. Sometimes you have a tech bubble and then 911 and you’re going geez.
I just went down 40, whatever percent I recovered, I’ll, get hit again 40 something person I’m, just not doing this anymore. Well, that’s. Obviously a spectacular mistake because we know what & # 39. S happened since then: the markets up 10,000 plus points same thing with Oh 809.
If you look at March 9 of 2009, the market bottomed firm, then it was up 65 percent over the next few months when it turns it turns very rapidly. So I think I think part of it is this that they’re, not the bear markets.
Don’t space themself out. Sometimes they come so fast. They freak people out, sometimes 5 years, passes and like right now, many of my clients, some of my clients, will say well, we’re due for a bear market.
What doesn’t work like that? There have been periods in history. Oh 10 or 15 years we just don’t know what’s going to happen? Is it gonna be terrorism? Is it gonna be an industry bubble? Is it something we’re? Not we’re, not thinking about that’s.
Gon na drive those those things but guard list. The economy is resilient. People have this perception that capitalism is fragile and the economy is fragile and it’s. In fact, it’s, it’s, quite the opposite and and the market is a function of dividends which we get paid in bear markets.
Still it’s, a function, a little bit of inflation and then of over time, rising profits, and so what & # 39? S happened in every single bear market of history is those things have prevailed and the markets gone on to a new high.
So let’s say you’re, the worst investor in the world. You put all your money in the market the day before the crashing in late, Oh seven that starts in late. Oh seven, you put all your money in before nine eleven or the tech bubble.
Well, we were talking about the average bear market being 33 %. These happen to be three of the worst bear markets of all time and they’re fresh on everyone’s minds. Well, if you put all your money, a hundred percent in stocks, then well today, your infinitely wealthier right.
So it’s that hard to screw up. If you & # 39, re educated and you have the discipline and you take advantage leverage – you’re, given the game and stay in the game, that’s, the biggest challenge for people, of course, that’s right and I think that that brings us to a fact that I I think, is incredibly important and that people really don’t realize or appreciate or just plain forget your freedom fact number seven.
The greatest danger is actually being out of the market now. This is totally counterintuitive right because everybody says: look, the ideal would be you get in at the right time and go up and then you get out before it goes down.
But you know no one & # 39. S ever been able to predict that of the best of the best of the world, but here’s, the fact that’ll blow your mind. Jp Morgan did a study and Schwab both independently did Studies over 20 year periods of time.
So in 1996, the 2015 and they found that on average, if you and the sp500, you have an eight point. Two percent return, which compounding it over time, is extraordinary for people who helps you get to that wealth.
But in those twenty years, if you just missed the ten best trading days ten days out of twenty years – and you return with me four point – five percent – it would literally almost be cut in half just by missing those two days.