Well! Hi everyone, and welcome to another wise money tools video. Glad you could join me today. You know, it's funny how just a little market turbulence really wakes people up, and it even gets politicians fired up as well. Over the past few days we've seen some pretty significant drops in the market yesterday, October 2, we saw about a 500 point drop in the Dow. So what I wanted to do real quick is just put a little perspective on this whole market thing. First off, if you've already been jittery and wondering if getting out of the market is a good time or maybe you think it's reached its all time highs which by the way, it has Maybe capping off those gains is a good idea.

Then my first question is, why are you still in? Right? If and when you get concerned, maybe you even don't sleep at night, you're wondering if there's a safer and more predictable way to build your wealth. And these things are, you know, constantly in your mind, well, then that kind of is a sign, maybe you're losing that, that risk tolerance to stay in. So inevitably, you're probably right, particularly if all you're doing is speculating on mutual funds, and hoping that you pick the right one. So if this kind of describes you and what you're feeling, then you probably be should be sitting on the sidelines.

And by the way, don't feel like you're alone either. Arguably the greatest investor of all time, Warren Buffett is pretty much sitting on the sideline. He has over $110 billion. He doesn't really want to be Neither. And one thing that he does all the time, is what I call flip the script, or Charlie Munger, he calls it, invert the story. And what that means is to take the opposite viewpoint, try to make an argument for the other side, so to speak. Then whichever holds enough water for you, is probably the situation that you should be in. If one side dramatically wins the argument in your mind than the other, then I would take the side that's winning, so to speak.

Now, I hate to say that emotion should not play a part in the decision. It really shouldn't. There should just be some factors and some things that are going on in the market, the evaluations, some calculations and so forth. That's really what should be determining your decision. Maybe it's time, maybe it's retirement, maybe it's, you know, you need to start accessing your funds. Those things are very critical to assess, try to keep the emotion out of it, although it's really hard. The truth is, if it's turbulence, the unknown, the fear of not having your money there when you retire, if that's an overwhelming an ongoing concern. Well, you've got to pay attention to those feelings to no one wants to lie awake at night, perspiring with fear over the future of your money.

So for some, that perspective of the market and the way it's tumbled over 1000 points. It may seem awful, I mean, 1000 points in just a few days. It got to be horrible right. Now because of this, you hear all kinds of doom and gloomers come out of the woodwork, and what I call the financial peddlers, using just the past few days as gimmicky ways to sell and manipulate the situation. You're gonna hear if you haven't already, politicians. Now claiming, you know this is it, economy's on its way down time for a recession should have never had those tax cuts or whatever they want to peddle from their own particular grandstand. But let's kind of see what this really means.

Now, when calculated, and as a percentage, yesterday's 500 point drop equates to .04%. That's less than one half of 1%. Now, suddenly, it doesn't sound so awful when you put it in that perspective. Back in 1987, kind of my first market drop when the market dropped 500 points in one day. Now, because of where the Dow was that equated to a 22% loss. And one day, the Dow was at 2200. At the end of that fateful day, it was down to 1700. Now that is horrible, right? Now remember it kind of like was yesterday. Again, I was like my first real day of seeing what the market today could do to go against you a 500 point drop a one day. Well, now that the Dow is at 26,000, 27,000. 500 point drop really is nothing to have an equivalent drop of the doubt that would equate to what happened in 1987.

The Dow would need a one day loss of 5700 points. Okay. So with that said, I'm certainly not suggesting that the market is perfectly priced. And we're not gonna see a drop like that. Actually, for a few years now, I've been saying that this market needs a significant correction. I said that most people won't see the gains that they've gotten these past few years in reality. Because they're simply gonna hold on and be in the market when it corrects and wipes out several years growth. So for those who are looking at their current statements, as if this is going to be their money. I think they're going to be really disappointed when this market finally corrects. Now, could this be the time? I've got no idea. But recessions and corrections have always come, always will. It's a part of a really healthy market.

Since the vast majority of those in the market are what I call speculators. They're hoping they pick the right mutual fund. And since they have no idea what the numbers look like, on the investments that they hold themselves, then that's what gets us into trouble. Now, how do I know they don't know these numbers? Well, let me just ask you a couple questions about your stocks or your stock funds. Number one, do you know if the companies you own are profitable, and have a sustainable market? Do you know who their competition is? And is the competition gaining? or losing ground against them? Is the stock price of those companies overvalued based on their revenue, their cash flow, price earnings and so forth?

What's their competitive advantage? Do you know what that is? Do they have solid management is the management and running a company with honesty and integrity? And as far as management and the company goes, are they doing stock buybacks right now? And if so, what kind of price are they paying? And if they are doing stock buybacks, is this good for you? Or is this good for management? I mean, I could ask any one of these questions to 99% of those who have mutual funds or a 401k. And they really don't have a clue. That tells me that they're speculating or crossing their fingers that the mutual fund manager will look out for them. A little bit of a wake up call for you right now. Okay. Mutual funds will never get out of the market. Okay, they have to stay invested.

Even if they see a train wreck coming, they have to stay on the train and have that they just don't die. Mutual fund managers are not looking at the market and asking the question, should we even be in? They look at the market and they say, what else should we buy? You have very little if any downside protection in a mutual fund, unless you yourself, pull the trigger and get out completely. This is why I say that the majority will simply ride the roller coaster down and hope that they come out okay, in the end. Those that have had gained through the last 2 or 3 or 4 years may never see those in reality because they could be wiped out.

Okay, so to wrap this up, I don't know if we're on the edge of a cliff looking down and someone's behind us ready to push us over the cliff. Or if this market could drop like a rock or free could possibly still climb for another year to. What I do know is that if you're worried jittery, and don't really know what's going on inside of your portfolio. If you're not keeping up, you probably should look at some alternatives that are that give you greater control. The financial peddlers are always gonna be out there. The politicians are always gonna be out there. Gloom Doom, as you probably know, and all the bad news sales so much easier. If this turns around, you're likely never going to hear a peep. If it continues to drop. It's gonna be on the news every 15 minutes.

I want you to be comfortable where you're at, that you have a plan or a process. That you understand your investments and you understand why you're in them that you're as safe as your risk tolerance requires so that you sleep at night. There are better ways than just buying mutual funds and crossing your fingers. And better ways that put you in charge and more in control of your money. So if you ever want to talk about some of those ideas, and how to be a better investor, feel free to click on the time trade link below. Schedule a few minutes with me and we'll have a conversation. Until then, make sure you subscribe. Never miss a video. And if you have any questions, shoot the questions at wise money tools.com. I'll answer them just as quick as I can.

In the meantime, don't get too panicked about what's going on in this market. Be panicked, that you may not be in the position that you're comfortable and that's what's most critical. When we come to these times where, you know, our heart starts to pound wondering, what am I going to do if I lose X number of dollars, that's what you should be concerned about. Well, that's it. Until next time, hope you have a great week. I will talk to you next week. Take care.