Do you agree with the pundits who predict a global market crash?
Douglas Goldstein, CFP®, director of Profile Investment Services, Ltd., and Joe Saul-Sehy, host of the Stacking Benjamins podcast, discuss what should take priority: planning for retirement or planning for potential economic disaster?
Should your estate plan include a trust?
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Watch Are You Prepared for the Next Market Crash? on YouTube.Read the Transcript
Interview With Joe Saul-Sehy 021217
Douglas Goldstein and Joe Saul-Sehy talk about the market. With all the doomsday conversations going on, should you prepare for a market crash?
Douglas Goldstein: I'm really excited to be broadcasting today from the studio of The Stacking Benjamins Show. Joe, the last time you and I spoke, we spoke about teaching kids about money. I asked my kids to listen to the show and they couldn't believe some of the things they heard. They said, "Dad, your father gave you a credit card? You never gave us one."
Joe Saul-Sehy: That's why you can't let kids listen to the show.
Is The Market Headed For Spooky Times?
Douglas Goldstein: It is true. This is adult content. Seriously though, let’s talk about the current market situation. You know how, on the Money Tree Podcast when you and I talk, our dear friend Linda P. Jones often comments to us, "This is the second longest-running bull market in history." What she's really saying is that people should watch out for the huge explosion at the end. What's your take? Is the market headed for spooky times?
Joe Saul-Sehy: You have a choice. Information flows in and you can either choose to be optimistic or pessimistic about it. Personally, I prefer to think that the economy will continue and that I won't need to just go and buy a bunch of canned goods and freeze dried packets.
Douglas Goldstein: What's wrong with canned goods? I love canned goods.
Joe Saul-Sehy: Nothing wrong with them. I just don't want to be building my doomsday shelter, but that's that. I think you should always be wary of a downturn, don't you?
Douglas Goldstein: I'm not talking about a downturn. Let me give you an example. A man called Jim Rickards has written a book called The Road to Ruin, and he talks about 2008 and how that was just child’s play compared to the amount of leverage. They used to talk about too-big-to-fail banks, and he said, "Those same banks are much bigger today, with huge leverage." When professionals like us say, “Well, there's ups and downs and volatility in the market,” that's not what he's talking about. He's talking about utter collapse. In other words, guns and ammo and running to the hills.
Joe Saul-Sehy: I'm a member of a men's group on Facebook, and there was recently a discussion where people were talking about getting ready for doomsday. They were saying the first rule to getting ready is, you don't tell anybody that you're getting ready. If you do, people will come running for your shelter when you need it.
Douglas Goldstein: Hold on. Let me write that down. That's an interesting strategy. Don't tell anyone.
Joe Saul-Sehy: Yes. I think that I have a choice, which is to think that the economy will continue. We were afraid of the year 2000. We've been afraid of so many different events during my lifetime. We were talking about Halley's Comet recently on one of our long morning runs, and about that group of people who were sure that that was going to be the end of the world.
Douglas Goldstein: That was a huge disappointment because it was supposed to be big in the sky and it was just a little tiny dot.
Joe Saul-Sehy: What people aren't used to is the scale. Sure, the banks are bigger, but there's a ton more people.
Douglas Goldstein: What does that mean?
Joe Saul-Sehy: When you look at the huge amounts of printed money that are out there, and the size of the banks and the number of people that are their customers, we're working on scales that we haven't seen before. Is there fear in the market? Are there things that we could be afraid of, that we maybe should be afraid of? Yes. Am I building a doomsday shelter? No, I'm not.
Should People Be Preparing For The Collapse Of The Markets?
Douglas Goldstein: Don't you think that people should be preparing for some total collapse in the currency and the markets? Everything collapses and there's darkness and gloom. You're going to buy a loaf of bread and give someone a piece of gold and say, “Well, lucky I collected gold because now I've got money.” Is that really what people should be thinking?
Joe Saul-Sehy: I can't imagine that place. I'd be telling people that the worst thing to do is prep for the end of the world that's happening next year, five years, ten years from now, with money that you should be saving for your retirement. I would hate to have people that have to live in their doomsday shelter because they invested all their money in that instead of investing in, what if the world continues? If I'd have to choose between having a lovely retirement and gloom and doom, I'm going to take a lovely retirement option.
Douglas Goldstein: I spoke to a few people before the election who were a little bit afraid that it might not go their way. These people sold out completely. Then President Trump was elected and they said, "See, I told you. Now everything is going to fall apart." Then of course the market hit new highs and they said, "Oh, but I missed out on everything." I think the point you made is exactly what we witnessed here. People love talking about doom and gloom and there are so many stories about it, but if they miss making a profit, then I'm not interested in that story anymore.
Joe Saul-Sehy: We have a guy in our show, Len Penzo, on our Friday roundtable discussions. Len has predicted successfully, nine of the last four market downturns. What's sad about Len is he's missed so many big runs because he saw doom and gloom. I'm not into Len's numbers. I'm not sure exactly what Len's numbers are, but I'm absolutely positive they could have been way better had he just realized that markets are big. We don't understand why the market moves the way it moves all the time, like the market in aggregate. We understand individual companies, we don't understand the market. We should be afraid, but on a lot less of a level than what you're talking about. We should always be afraid that we think we know where the market is going tomorrow. I fear whenever somebody tells me what's going to happen next and I believe them; that's my biggest fear.
Douglas Goldstein: The book I’m reading is by Jim Rickards. He's a bright guy and he's definitely done a lot of his research, but sometimes you go back and see what it is that these people predicted in the past to see whether that stuff came true. In the past, many of them were pessimistic. It could be they were writing that stuff 30 years ago and it didn't happen then. It didn't happen again, and it didn't happen again, and then you find, maybe one day they'll be right. Then they'll get to claim that they were right, but they missed it so many times.
The Folly Of Trying To Predict The Future
Joe Saul-Sehy: There was a guy back in 1999 called Harry Dent Jr. That was when the market was really on that big technology tier. He wrote a book called The Roaring 2000s and in that book he said, just when the first downturn hit in 2000, when it was barely starting to go down, he said, "This is halftime at the Super Bowl. It's not going to go down anymore." Of course as you know, it went down a ton after that. Harry disappeared for maybe four, five years, and then he came right back, and he's continuing to tell us stuff that is probably wrong about tomorrow.
Douglas Goldstein: We'll have to bring him back onto The Goldstein on Gelt Show because he's also a former guest of the show here. Tell me in the last few seconds, how can people find out how to get into the basement and be safe with you?
Joe Saul-Sehy: Well, The Stacking Benjamins Show is a show based on the science of play, meaning that we have a really relaxed show talking about money topics, where a lot of shows are the type of show where they want to be the last word on what you learned about a topic. We just want to get you interested, so that you want to learn more about a wider range of different things. We have a lot of different voices and a lot of different topics. Monday, Wednesday, and Friday, wherever you listen to podcasts - The Stacking Benjamins Show.
Douglas Goldstein: The Stacking Benjamins Show is right up there with the Money Tree Podcast that Joe and I do together.
Joe Saul-Sehy: Right now on iTunes, we're side by side; very close at the top of the chart.
Douglas Goldstein: Joe Saul-Sehy, thanks very much for being a guest today.
Joe Saul-Sehy: Thanks a ton Doug.