Episode Transcript
[00:00:03] Speaker A: Gold. Gary Gold. Gold always goes up, right. It never goes down. It's impossible for Gold to do anything but go up. Right Scenario.
[00:00:10] Speaker B: We should clarify. We should clarify for compliance that.
[00:00:13] Speaker A: That.
[00:00:13] Speaker B: Sarcasm.
[00:00:14] Speaker A: Yeah, they know me well enough to. Yeah, I think everybody's treated that one out.
[00:00:24] Speaker B: All right, welcome to Lancepedia. I am Garrett Lille, as always, with Lance Browning of Income Solutions Wealth Management in Tyler, Texas. Lance just rightfully pointed out to me that I apparently butcher the name of your firm in every episode. So my apologies, man. Next time, you just got to tell me that before the tenth episode, and I'll get it right.
[00:00:46] Speaker A: But I'm a forgiving guy. I really am a forgiving guy. So I had to. Had to raz you this morning. Well, good morning, man. How are you?
[00:00:53] Speaker B: Good as always, man. Good to see you. And so from the. From the slideshow that you sent over, it sounds like we're going to talk about some. Let's call it, geopolitical instability in the world. And. And that's a nice one.
Okay.
[00:01:07] Speaker A: Absolutely. So, yeah, so try to be as
[00:01:10] Speaker B: politically correct as I can be once in a while.
[00:01:12] Speaker A: Right. Yeah, yeah, we're known for that down in Texas. Yeah, you are.
[00:01:16] Speaker B: Yeah, for sure.
[00:01:17] Speaker A: Yeah, man. Given. So. Welcome to Lancepedia, episode 10, Garrett. 10. You believe that?
So time. Yeah, so time flies when we're having whatever it is we're having around here. So. I'm Lance Browning, Income Solutions Wealth Management, coming to you live from troopcom here on Troop Highway, Tyler, Texas. We just want to talk a little bit about what's going on in the world, Garrett, you know, unless you've been, you know, under a rock for the last four or five weeks, you've seen kind of what's been going on in the world, what's been going on the market, and we really want to take just a little time. This morning, we're going to make light of a few things, but please understand we're not joking about, you know, people losing their lives and all these things, but trying to make a little bit of light the situation, but everything kind of into perspective and kind of. Let's put some data with the narrative, because the narrative is pretty scary right now. So we want to kind of talk about that. So, Garrett, we always have to show our age. That's one of the ground rules here to Lancapedia. And this is a great sitcom from the 1970s. You probably recognize Red Fox here called Sanford and Son. It was a dad and father and his son. They lived in a junkyard. And Fred Sanford Red Fox's character here was always pretty melodramatic. And whenever it was like a stressful situation or he would agitated, he would always, I'm coming, Elizabeth. I'm going to talk about his wife, that he passed away. I'm coming, Elizabeth. This is the big one. This is the big one.
[00:02:47] Speaker B: I got interjection, by the way, because I was a huge Sanford and Sons fan when I was a kid. I loved watching that. And I actually just saw it the other day on like Amazon prime or something and I was like, oh man, I forgot about Sanford and Sons. I watched a couple episodes. Awesome show.
Anybody who happens to be watching this, if you have not watched Sanford and Son, please go check out a couple episodes. Great show.
[00:03:06] Speaker A: Do that. You're robbing yourself of a blessing. Absolutely. Fred would always just kind of over dramatize this thing. It was a big part of the show and the comedic relief probably that, that was needed in that moment. But I kind of want to give you a little bit of perspective, Garrett. We kind of want to look at this. So from the tariff tantrum last year that the market had February, March, halfway through April, to the all time highs in the market at the end of January, remember, again, let's look at the facts here, not the narrative. We were at the highest levels we'd ever been in history in the market at the beginning of this year. Okay. So from the tariff tantrum last spring to January of this year, the market rally, the S and P rally, 38%. We went up 38% from those highs to, let's say Friday of last week, the market had dropped 9%.
So Garrett, if you want to give me $38 today and then tomorrow take back $9, I'll play that game as long as you want to. Okay. And so we've got to take that into consideration. We'll get into past history. Okay, so we've got data on this. We're not reinventing the wheel. Wheel with, with, with what's going on in the world geopolitically right now. So we act like we are, but we're not. And so another thing I want to kind of give you some perspective. So so called safe haven assets, we'll look at those. So gold, from the all time high to close of business Friday, gold had dropped 19.73%. Okay. We're wringing our hands and we're doing the Fred Sanford thing because the market's down 9% from its height. Gold's down almost 20. Okay, this is where it gets real, Garrett. Silver from its all time high on January 29 to last Friday had dropped 42.3%.
Bitcoin from its high last October to Now has dropped 47.4%.
So investors flocked to these so called safe haven assets of gold, silver, bitcoin because they were afraid the market was gonna crash. Well, guess what?
Silver and bitcoin crash. Gold has gotten clobbered. Silver and Bitcoin negative 40 something in a very short period of time. That's a crash.
That's a crash. So gotta put all this into perspective here. And so another ground rule we have here for Lancapedia, we do not provide political commentary here on this podcast on these shows. Okay? So we, we are going to leave it to you again to decide. Orange man good, Orange man bad. All right, but the thing I want to point out, these are some Time magazine covers. All right, Going back bottom right down there, we're going into February of 1979. Okay, Garrett, we were kids, right?
I was a kid. I distinctly remember this as a kid cause I was somewhat of a political junkie even back then. And so February 1960, 79 is when things really started to get bad over in Iran. And so just, just as a perspective here, and you can see these, these magazine articles, these, these covers and, and there's a lot more that can kind of go with this. But this is not a new problem. This problem was, it existed for 40 something years before the big orange man ever came on the scene. So this is, I, my point is this is not new. We're not reinventing the wheel here. We have data on this. Okay? This is not a new problem.
Okay? This has been going on since I was like fourth grade, right? So that's been a while. Right? Now let's talk about this, okay? And we talked about in one of our previous episodes where if I looked at the market over a period of time, imagine a guy, imagine a person climbing a mountain here. While they're climbing that mountain, he's playing with a Yo Yo. So he's climbing the mountain. Here's the trend. But the yo yo is doing this. What does the media, who has to compete with other media formats for eardrums and eyeballs? What do they want to focus all of our attention on? The Yo Yo. Right? We've had the yo yo here in the last four or five weeks. For sure. I can go back into the 20s. So you actually can go back into the Depression. Germany invading Poland, 1939. You can go into Pearl Harbor, Korea, Suez Canal, Cuban Missile Crisis, six day War, Yom Kippur war, Iranian revolution, which happened in 1979 again, Iraq, Saddam invading Kuwait, 9 11, Russia, Putin invading Ukraine, Hamas attacking Israel back in October 2023. So you see these other events, these, these gloom and doom things going on, and guess what, the blue line, what did the market do yet? Some pink. These pink lines are what we call bear markets, going up and down vertically. So these are bear markets. Bear market means the market went down at least 20% sometime during that year, and that happened. There's some bad stuff in here. There's Great Depression, there's 73, 74.
There's the tech bubble, there's OA, there's Covid. A lot of gloom and doom on here that we can find pretty easily. But what's the trend? What's, what's, what's the guy, as he's climbing the mountain? What's it doing? What's he doing? What's he doing? He's going up. Right?
And so the thing, again, I just want to point out that this is not new. Let's go to our next slide, Garrett. We're going to talk about market impact. So we see the overall trend, the guys climbing the mountain, Right? But we want to look at the impact of all of these events.
What happened with the market, and then where the market was just a little bit further out following that event. Okay, so if you look at that far left column, you see these events. I mean, just, just this litany of disaster.
And this is going to look a lot like the previous slides of these events. You've got Pearl Harbor, North Korea, Cuban missile crisis, Kennedy assassination, Gulf of Tonkin, Six Day War, Tet Offensive, Yom Kippur, Saddam invading Kuwait, 9 11, Boston Marathon bombing, Saudi Arabia, Aramco drone strike, Russia invades Karain, Israel, Hamas, war, all these things. So you see the date, you see the event. Next column, over the right, you see the date that this began, that this calamity began. Okay?
And you're gonna see next column, one week later, one week from that event, what the market had done. Okay? And you see that all the way up and down the page.
So one week later, on average, again, on average down there at the bottom, the market's down about 1.31%. 1.3. That's all for all of our hand wringing and I'm coming, Elizabeth. And everything else we've got going on, the market historically is down about 1.3%. All right, now we are from peak to trough, down about 9, like we talked about. So not that, that's good, but this is normal. And we'll talk about that a little bit more in just a second. But scoot our times right now a little bit here, Garrett. So let's look six, six months later from the event, six months later. And you see what the market had done all the way up and down the page.
And you see down at the bottom, on average, six months later, six months from the event, the disaster, the gloom and doom that the media wants to focus us on. The market after six minutes was up about four and a half percent, 4.56%. So it recovered. Yeah, we had the bad news, but guess what? It recovered. We focused on the yo yo. Let's focus on history, on the data.
Now here's the kicker. 12 months later, 12 months, one year later. You see all these all the way down the page here.
The market had averaged after one year, had recovered by 11%. So you had a 1.3% average drop after the gloom and doom after the yo yo.
So six months later, you were up four and a half percent. A year later you were up 11.
Like I was saying earlier, if you want to give me $38 and take back nine, I'm in. So if the market wants to take $1.31 away from you and then a year later, give you back $11, take that bet. Take that deal. Okay? The math works there. That's in your favor. Okay? And this is kind of my favorite one right now. I talked about this in the halftime report. I've talked about this maybe a couple times so far. Just this year in 26, even though we're still kind of first quarter going into second quarter. But this, this is one of my favorite slides of JP Morgan. It talks about annual returns in the market in intra year declines, intra year declines. So I start the year here. I end the year, year, overwhelmingly over time. Historically, that's a positive number. But during the year from point A, January to point B, December, you've seen some significant intra year decline. Sometime during the year, you've seen some pretty good drops in the market. And I'll take you back to.
I'll take you back to 2008. Okay, go down there, kind of the middle of it, and you can see your dates, your years at the very bottom down there between 05 and 00:10. That's obviously gonna be 2008. That was great Depression stuff. That was Wile E. Coyote again showing her age. That was Wiley Coyote going off the cliff. Right? That was bad stuff. Right.
So the market in 08 finished down 38%. That's bad. Okay, that's bad.
Sometime during that year, though, of 08, the market was actually down 49%. That's half. That's bad. Okay, flip the next year over. If you look, that's 2009.
Intra year in 2009, the market dropped 28%. During 2009, that would've been first quarter.
But even though it was down 28% sometime during 2009, sometime in that year, at the end of the year, Garrett, the market was up 23%.
You see that with COVID here. Go out to 2020, you had a 34% decline.
First quarter of 2020, when Covid hit.
And honestly, Garrett, that was within six months, six weeks. Excuse me, that was from about Valentine's Day to the end of March. I mean, that was quick. 34% drop. End of the year, the world's ending, sky's falling, we're doomed. But what happened for the year at the end of 2020? By the end of 2020, the market was up 16%.
You even go back to the tariff tantrum, what I call the tariff tantrum. Last year, February, March, halfway into April, the market was down 19% in for a year, but we finished the year up about 15%.
So this is where we've got to take some time, use a reasonable timeframe, and just really look at history. So here's the numbers. If you don't look at the average, okay? And this is from the top of the slide there. Despite average entry year drops of 14.2% on average, sometime during the year going back to 1980, the market will drop expected 14.2%.
Okay.
But over time, it's also up. That's the yo, yo. We've gotta learn to live with that. That's what I would call the price of admission. Okay. You didn't know me back then, Garrett, but back when I was.
Back when I was young, dumb and skinny, my prior career, I was in retail. Right Now I'm older, dumb and less skinny, if that helps. Right? But we had to say, because it is really stressful, really fast paced, a lot of long hours. The money wasn't good and hard work. And we always had this sort of inside joke. We would talk about. The beatings will continue until morale improves. So that was our joke. The beatings will get you. Morale improves. I'm going to say right now, in this market environment, the beatings will continue until oil improves. If I could kind of put things into perspective. But your next slide, really, really, I Think just really illustrates what we're talking about as far as having just a reasonably long enough time horizon to evaluate data. Okay, so we're going back from 1996 all the way out to 2015. So pretty good data set there. Some good stuff, some bad stuff along the way there. But we want to look at average returns for these various investment vehicles because these various asset classes. Okay, so far left, that gray bar going up vertically on this bar chart. REITs. I didn't see that one coming, by the way. REITs over that time period, over that 30 years were up about 11% a year, annualized. I didn't see that one coming, to be honest with you. That's pretty stout. But real estate is what we call a really long duration asset. It's really, really hard to make money quickly in real estate. That, that, that cycle takes a little while. The s and P500, the stock market up 8.2%. Okay.
Bonds going about 1, 2, 3, 5 lines over. Bonds were up about 5.3%. Gold, Garrett. Gold. Gold always goes up, right? It never goes down. It's impossible for gold to do anything but go up. Right? That's scenario we should clarify.
[00:17:22] Speaker B: We should clarify for compliance that, that. Sarcasm?
[00:17:25] Speaker A: Yeah, they know me well enough. Yeah, I think everybody's figured that one out by this point. But gold was up 5.2%.
Okay.
Even through all the gloom and doom, gold was up 5.2%. I'm not saying don't own gold, that's not what I'm saying. But you gotta look at the numbers, you gotta look at the data. Not just the emotion, not just the narrative. Oil or homes. Okay, we'll look at houses. Homes up 3.4%.
Okay.
Oil, 3.3%.
Inflation over that 30 year period averaged about 2.2%. Okay? So you can see, going back about 30 years, you can see some really, really good, strong returns for all of these various investment vehicles. Okay, so given this environment, given this information, this data, how do you think the average investor in these various investments, how do you think they came out?
[00:18:24] Speaker B: Sure. Somewhere between 2% and 10%, I would imagine. Yeah, good to be some blend of those.
[00:18:30] Speaker A: Yeah.
2.1%. Far right, you see that little orange bar? 2.1%.
How in the world, in this environment where real estate made 11%, S&P made 8%, bonds made 5.3. How in the world, over 30 years do you only make 2.1%?
How is that even possible that you didn't even, even though you were taking risks, you didn't even outperform inflation over 30 years.
How is that? What, what, what, what, what's causing that? Okay, I. I have some theories, of course. All right, so the. Garrett, I think I've been doing this almost 30 years. Don't let the boyish good looks fool you.
[00:19:15] Speaker B: Right?
[00:19:15] Speaker A: I've.
But I think the most dastardly, low down, terrible, awful thing that our industry has done for its customers, I'm going to say, ever, it wasn't Bernie Madoff, it wasn't that sort of thing. The worst thing we did to our investors, to our customers, is give them 24. 7 online account access.
Okay?
So you get these calls and, I mean, we can see data, we can see on our screen how often you log into your account online.
And that's usually going to tell me why you're calling. Okay, Just heads up. All right, so, yeah, my account's down $700 this morning. Okay, well, I get it. I get it. And we're not saying please understand. I'm not saying don't stay informed, don't valuate and don't look at and monitor what you're doing financially. You have every right to do that. That's good stewardship. You need to do that. But not every day.
And the question I always want to ask people is, okay, that's fine. If you don't look at your stuff online, you don't do that regularly, daily or whatever, that's fine. But let me ask you, do you go on to Zillow and look at the value of your home every day?
[00:20:32] Speaker B: That's exactly the analogy I was going to use. That's what I used to tell clients all the time, is that you don't. If you got a statement every month that told you how much your house was worth, you'd freak out if you
[00:20:41] Speaker A: looked at it every day after. Yeah, yeah, my house is down $2,000 in the last week. I better sell it before it goes to zero, right? I'm gonna go sell it and live under a bridge, you know? Cause it's gonna crash, right? And so that's one of the things, I think that was really bad that we did. The other thing I'm gonna say is our media culture, where you gotta understand, all right, Used to, you had Walter Cronkite, you got. He told you what you needed to know late afternoon, early evening, and you were good.
Now we've got cell phones. Now we've got tablets, smart devices, TV, radio, podcasts, right?
And that cycle is now 24 7. You don't get a Break from the news cycle. And all these media formats, whatever they are, are competing for eyeballs and eardrums. They're competing for advertising revenue on those eyeballs, those eardrums. What do you do? We show explosions right now. All right, Explosions are scary. I get it, okay? The market going down 9% in five weeks is scary. I get it. I was really smart until the end of January, Garrett. And then from the end of January, or really the last five weeks or so, I've just been eaten up with the dumb because of the market. Right, I get it. I know that works. But I'm not saying don't get informed, but take the data as it is. But you gotta focus on the guy climbing the mountain, not the yo yo. And so you don't go online and look at the Kelley Blue Book value of your car every day, that would depress you. Okay? You'd ride a bike. That would depress you. But, yeah, you don't do that. But we do that with our investments. We do that with stock investments, particularly stock market type stuff that needs a longer period of time to work. So just be careful there.
Don't be blissfully ignorant, don't stick your head in the sand, but don't look at this stuff every day, Garrett. I wouldn't look at this stuff every day if I wasn't legally required to.
[00:22:47] Speaker B: Okay.
[00:22:47] Speaker A: I really would have. All right.
[00:22:49] Speaker B: Yeah.
[00:22:49] Speaker A: Does not healthy, not good for blood pressure. So let's look at our last slide. And so what can we do?
What can we do? And we talked about in episode one when we talked about sequence of returns, risk.
It's helpful to have a guide through some certain things. Okay. And this is, this is from Vanguard. Okay. This is 2025 Vanguard report the issue on these generally every year, but I think it's really, really interesting. So Jack Bogle, we know who he is. Bogle, as we know who he is, was the king, the pioneer in do it yourself direct or indexed investing. Do it yourself. Do it yourself. You don't need an advisor. Do it yourself. Invest in the market, long term, you make money. And he was very, very successful. And Vanguard is a very, very large enterprise. They have a lot of money that they manage and that's great power to them. But here's something they are going through and talking about in the top left there, clients and their advisors thriving together for 25 years. Okay. And this is from their ann that they call Advisor Alpha. Alpha is terminology we use kind of, kind of tradecraft language we use in our business, Garrett. Alpha is Risk adjusted return. So I'm getting better return for less risk. So I'm getting good risk adjusted return.
And it's highlighted in black there. It says advisors can potentially add up to or even exceed 3% in net returns yearly by using the Vanguard Advisors Alpha framework. So that advisor, they're saying, Vanguard's claiming that advisor can get you an extra 3% a year in returns. Okay, I'm not guaranteeing that. I'm not saying every investor, I'm not saying I could get you an extra 3% and beat the market by 3% every year, but on a risk adjusted basis. There's a lot of data out there. There's a lot of data from people that don't recommend having an advisor Vanguard. There's a lot of data out there saying the opposite. There's a lot of data out there saying we're worth our weight, we're worth what we do, we're worth what you pay us for. That reason, to get you out from behind the screen and looking at things in a better, longer term perspective. And that's one of the things we really, really try to do around here.
[00:25:18] Speaker B: Awesome stuff. And yeah, I agree, obviously 100% there. I think that especially when you look at that previous chart of average investor returns, I mean, I can be honest, it's almost mathematically, it's mathematically very difficult to underperform every possible asset class you could have chosen from.
That's a challenge.
[00:25:37] Speaker A: So anyway, I don't know how you could do that on purpose, man.
[00:25:42] Speaker B: Yeah, seriously.
[00:25:43] Speaker A: That's the data, that's the numbers.
[00:25:45] Speaker B: I mean, it's like a guy that. Well, I'll give you a good story of that. Last year.
We're coming up on a year, a year anniversary of this. So there's a golf simulator place that I go to about, you know, five, 10 minutes from my house here. And they do a big masters thing where you play your round and then they pair you, you pair yourself with the pro of your choosing. You combine the two scores and whoever has the lowest wins. I think I tied for first in the amateur division of that.
But. And I'll in. The funniest thing about this is I spent hours analyzing the stats from the first three rounds to pick my pro, to pick the one who was going to be the most steady, the most reliable, the one that just. I didn't want somebody that was going to blow up on the back nine and ruin my chances. So I took the safest bet that I could and he shot two shots worse than the next worst player on Sunday. And I sat there and I thought, you know, it is mathematically darn near impossible to pick to go to that much trouble to pick the absolute worst out of 50 or 55 choices.
So it's just very ironic. So. But that kind of reminds me a little bit of the average investor sometimes in that it's. It's hard to do it, but we can do it.
[00:26:54] Speaker A: Yeah, you pulled it off, man. You pulled it off for sure.
[00:26:57] Speaker B: Yeah, well, it's always a pleasure, man. So for listeners, viewers, anyone out there, how can they reach you at Income Solutions Wealth Management in Tyler, Texas?
[00:27:08] Speaker A: Yeah, so, yeah, come see us troop calm here. 3200 Troop highway here in beautiful Tyler, Texas.
Direct office line 903-787-898909. I hadn't had my coffee yet. 903-787-8909 or www.lance browning.com. and these podcasts are posted on my website at www.lancebrowning.com as well.
[00:27:37] Speaker B: Awesome. Lance. Well, good to see you as always, brother. Enjoyed it. This will probably not be out before then, but for us, happy Easter. I hope you have a great weekend. You too, man. Enjoy your weekend and we'll talk to you soon, bud.
[00:27:48] Speaker A: Right on. Appreciate it.
[00:27:49] Speaker B: See ya.
[00:27:53] Speaker C: Lantopedia is for entertainment and educational purposes only. The views and opinions express breasts in the show are that of Lance Browning and are not guaranteed to come to fruition. If you have questions about your investments or your financial plans, you should seek a financial professional or give Lance a call at 903-787-8916. We thank you again for watching or listening to the podcast. We'll see you next time.
