May 4


Are You Throwing in the Towel Too Early?

I was reminded about something this week. You guys have it really tough.  By “you guys” I mean folks like you who are nearing retirement or retired.  You have it much tougher than my generation or your parent’s generation.

You are in a very scary and challenging situation.

Many of your parents went to work straight out of school and stayed at the same employer their entire lives.  As soon as they retired, a pension check started showing up, which continued to appear every month for life, guaranteed).   Your parents lived on a social security check, a pension check, and found themselves on a “fixed income.”

Easy.  Simple.  Understandable.  No need for anxiety.  You knew exactly what you could spend safely.

Now your generation is a whole different story.  You have probably worked for several employers.  A few of you have a traditional pension.  You may have 401k’s and IRA’s filled with investments that seem uncertain and risky.

You are being bombarded on a daily basis by the “financial media machine” who has realized over time that the best way to hook you in is to continually scare the heck out of you.

So, here you are, relying on a Wall St. institution for your financial security that you don’t really understand or trust –  sick with worry because it seems as risky as a roulette wheel in Vegas.

I want you to know that if you feel this way, you are not alone.  Nearly every single person I meet with is experiencing the same feelings.

I’m sorry you have to go through this, and I hope that in some small way I am able to give you some relief and perspective.

On that note.  It’s time for another history lesson.  For obvious reasons, recently I’ve heard, repeatedly,  “Dave, I understand that if the stock market goes down, it will recover, in time.  But I don’t have time!  I’m in my 60’s now.  I don’t have time!”

Having an anxious personality myself, I know that feeling of dread.  So I am making it my mission to help take away some of your financial worries.  How?  By showing you that things may not be as bad as you think!  Using history!

Take a look at this:

The point I’m trying to prove is this:  Markets rebound quickly.  Even if you’re in your seventies or even eighties, you have time to recover.

From 1939-1941, during World War II, we witnessed a market loss of about 23% in total.  Over the next four years, the market increased by 98%.

When Pearl Harbor was attacked in World War II, the market went down 7% in four days.  One year later, the market was up 15.8%.

During the Cuban Missile Crisis in 1962, the markets went down 10% over a couple of months.  One year later, the market was up 41%.

When Richard Nixon resigned, the market went down 13.4% in August of 1974.  One year later it was up 30.2%.

During the oil crisis in 1974 (which could be considered the worst economic period since the Great Depression), markets were down over two years by 40%.  In the following two years, you saw the markets increase by 60%.

In 1987 we saw a stock market crash in October, where the S & P 500 dropped 31% in a single day.  One year later it was up 27%.

After the U.S. invaded Iraq in 2003, the market was down 2%.  One year later it was up 35%.

When the housing bubble burst in September of 2008, the market dropped 39% over the next two months. One year later it had increased 49 years from it’s lows.

You are never too old to invest.  The old adage that you should become ultra-conservative as you get older makes no sense to me.  If you are 80 years old and your account goes down by 20%, it could be argued that it would have less of an impact on your life.

If you are 60 years old and the market has a few bad years right after you retire, it could affect your long term cash flow.  If you are 87 years old, and your portfolio drops from $500,000 to $400,000, I don’t see how it affects you as much.

Being ultra-conservative as you get older just means you are going to lose money (not keep up with inflation).  Plus, if you are in your 80’s, the reality is that your kids are going to end with the money.  Shouldn’t you invest it in a way that helps them- more than yourself?

Stocks and bonds work.  They are resilient.  They are based on human-spirit, innovation, and sheer determination.  Don’t sell yourself short- no matter what the age.

Be Blessed,


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