The endless summer is ending, and on this episode of PFLN, Dave ponders this fact from his patio in Ocean View, DE. We also learn about his pickleball performance at the Maryland Senior Olympics, which was eerily similar to the stock market in August-weak and seemingly lifeless. Steve points out some interesting “glass half full” points about the future of the stock and bond markets, and there’s a passionate discussion about what retirees are really worried about these days.

Steve (00:03):

All right. Welcome to plan for life now. Episode number 94, Dave. Welcome.

Dave (00:12):

Thanks. Well, I’ll tell you what for our special end of the summer podcast.

Steve (00:17):


Dave (00:19):

Uh, which was all set up. If you want to know, how did, where did the whole end of the summer podcast special? Where, how was it derived? It came from, oh, we have to do a podcast.

Dave (00:31):

So we haven’t done one in a while. Yeah. So I’ve made it the special end of the summer podcast. And I’m sitting on my porch and, uh, in the, at ocean view where I’ve been for most of the summer, but that’s gonna end soon. So I figured it’d be good to do a beautiful day. Another beautiful day. The weather’s been spectacular here for the last couple weeks. So you think it happened if, if somebody comes by Dave what’s up, I’ll just say I’m doing a podcast.

Steve (01:02):

<laugh> um, okay, well, I’m I’m sure no one will be that disrupted. And for me, if my dog starts barking, I’ll just tell him I’m doing a podcast, man.

Dave (01:15):

I’m just a podcast.

Steve (01:17):

Kind of tilt his head at me. Like he’s trying to understand what I’m saying.

Dave (01:21):


Steve (01:23):

Um, okay. So you’ve spent, I mean, you’ve spent the whole summer pretty much at the beach. You didn’t do any other traveling,

Dave (01:30):

Uh, side. No, I’ve been at the beach PR from July 4th, with the exception of going back home to get for the, uh, senior Olympic pickle ball debacle, which we’re not gonna waste too much time on

Steve (01:44):

It. Oh, come on. Now, now that you introduced that we have to waste some time on it.

Dave (01:49):

<laugh> we’re

Steve (01:50):

Gonna be of great interest to people.

Dave (01:53):

All right. Fast forward. If you want financial information, you know how to do it with these podcasts. But so, so basically I started playing pickleball here at the beach when they built a court, I didn’t know what it was. So I’m like now I play almost all doubles, but I played singles and I’m still in pretty good shape for a 60 year old. I mean, I can run around. So the Maryland national senior games were to qualify for the, the senior Olympics, which are in Pittsburgh next July. Um, so I go to, to that as a 3.5 rated it’s like tennis ratings and I rated myself 3.5. I could have either tried for 3.0 or below, but that’s not the goal or 3.5 and above. And the bottom line is I just got, I just got my butt kicked <laugh> in that 3.5 and above I was arguably I didn’t play in the other division. They broke us into two sets of sixes, arguably the worst player there. Not that I’m bad, but, and I did okay against other three point fives, but there are other, there are four point OHS and above there, there are national champions there and local champions and

Steve (03:09):

I will

Dave (03:10):

Vouch experience.

Steve (03:11):

I will vouch. I mean, even though I’m a much, much less experienced pickle ball player, I will vouch for you to say that you are not a terrible player. You know, in fact, you,

Dave (03:21):

No, I’m not a very much

Steve (03:22):

Player me, you know, with no problem, one arm tied behind your back.

Dave (03:27):

Nah, that’s not true, but that doesn’t really matter. The bottom line is in these ratings. I, I rated myself a 3.5, but against this competition, even if it was all just 3.5, it would’ve been very difficult. So I signed up for Delaware because I’m kind of like a dual resident person. I signed up for Delaware, um, for that was 10 days later. And in day three of my training for that one, I sort of strained the cap and hamstring. Oh, just trying to, so the bottom line is I had to withdraw from that one, that one would’ve been a better tournament for me. It was all three point, but nobody cares about this. The bottom line is I

Steve (04:07):

Think they actually do

Dave (04:08):

<laugh> okay. Well, here’s, here’s the bottom line. It is good. Here’s how it relates to what we do as you do. As you’re retired, wrongly recommend as an older person myself. Now having turned 60 in January, do stuff that you enjoy. Mm-hmm <affirmative> and it doesn’t hurt to really have, try to do things that weren’t your job or my case. Aren’t my job that are you’re really into. Um, and this is good for me because I can keep going. Do you know in singles, forget about singles. If you never played singles pickle ball, it is, Steve will ATEST to this. It’s a workout. It’s not

Steve (04:45):

Like, oh yeah. <laugh> I mean, doubles, pickle ball. You, you know, you’ve gotta have some hand eye coordination, but you’re not running all over the court nearly as much singles singles.

Dave (04:57):

It’s workout and you’re running. Yeah, it’s a workout. So you’ve played it. And Steve, you grew in the 80 forget about the 60 to 64 men’s division one in the Maryland senior Olympics. There were like six guys signed up for the 80 to 84.

Steve (05:15):


Dave (05:17):


Steve (05:18):

Division. Did you stick around and watch them play for a while

Dave (05:20):

Or no, they were at a different time than I was. I didn’t get to see anyone, but I did see some of the, uh, before my stuff was going on, I did see some of the 65 to 69 guys.

Steve (05:31):

Okay. Who

Dave (05:31):

Were, and they were terrific. Just terrific players. I mean, I was watching them and I’m like, oh, oh, I already knew I was in trouble. I did my research. I already knew I was playing these great players. So I knew I had really that much of a chip. But when I watched the 65 to 69 guys, I’m like, oh my God, this is the shape I have to be in at 65 to 69. <laugh> this is like challenging. But again, to me, that’s what it’s all about. Whether you’re hobby or whatever you think you might be good at, or really like to do it, doesn’t have to, obviously it might not be singles, pickle ball, but it’s all these other things do that, pursue that, get into all that stuff.

Steve (06:11):


Dave (06:12):

Do it. It’s fun. I mean, you know, and you have more time, so,

Steve (06:18):

All right. Well, I like you, you kept saying nobody’s interested. I think people will love that part of it. Um, and my summer, let’s just say, I am very glad that my kids are now back in school and they’ve got something <laugh> to occupy them all day long, which I think everybody knows how that feels. Um, all right. Let’s get down to talking about the investment world. So when we last checked in, in July, we were talking about, um, how the second quarter, second quarter ending the end of June, that was one of the worst quarters for stocks in the history of investing in stocks. And, you know, when I say one of the worst quarters to put it exactly, it was the 16th worst quarter that you’ve ever seen for investing in large cap us stocks. And if you expanded beyond that and you went into other asset classes, you talked about the NASDAQ, you talk about small cap stocks, all of that pretty, pretty darn bad now.

Dave (07:30):

Right. And when you put that in real perspective, we’ve had about 400 quarters over the last 100 years,

Steve (07:35):

Right? Yeah. Good point. So, yeah. And we’re, we’re talking about not a sample size of 50 and saying, okay, it was the 16th worst. You’re right. We’re coming up on, you know, just short of 400 there. So, um, you know, one of the things, and this might be kind of repetitive if you’ve done a review, um, you know, if you’re one of our clients and you’ve done a review with us recently, um, but one of the charts that we’ve been showing to people, and I’m, I’m sure everyone’s seen similar things like this before. Um, but showing them one of these charts that basically says after a really bad quarterly stock market performance, what’s the return on average one year later, three years later, five years and 10 years. And I show people the whole chart that shows, you know, all of these terrible quarters, but the averages tell us that on average, after that bad quarter, stocks are up 18.6%.


One year later, almost 40%, three years later, 65%, five years later. And so on. So the big picture takeaway here is after bad stock market quarters, historically you have pretty good returns in the next, you know, 1, 3, 5, and 10 years. Now, that’s not a guarantee. You know, every situation’s a little bit different and you know, our current situation could be that stocks, you know, maybe they are negative a year later. Maybe they just kind of tread water. You know, I, I sort of think that’s what we’re gonna see are these up and downs. You know, where stocks are, for instance, in July stocks were up 9% in August. They were back down 4%. And you know, as of today, September 1st, they’re getting off to a pretty lousy start today. So, you know, my prediction is basically stocks are gonna do this for a while. You know, you’re gonna have a good month, a bad month, you know, maybe a couple of bad months, a couple of good months. And they’re just gonna, you know, be very choppy up and down for a while. And it’s really not gonna be until we start to see some inflation readings come in much lower. We start to see corporate earnings being solid throughout, you know, the inflation, not having, you know, the inflationary pressure on them. That’s when we might actually start to see, you know, some sort of recovery there.

Dave (10:12):

Yeah. You know what I’m gonna, as part, I’m gonna interrupt you. It’s part of our please


End of summer special as I’m sitting out here on my porch. So I’ve had this summer a chance to talk to so many retirees. Yeah. Virtually with the exception of a couple who live down here virtually all of whom are not our clients <laugh> and the reality is it goes in and this is, you know, we’ve been through what a million times we say it. But when you talk to people, it’s, it resonates so much better. The notion of by the time you’re retired, you better have a good retirement income plan put together there. Right. That makes you feel confident because, and part of what I’m gonna say is, is a credit to other advisors who do the same thing that we basically do. And when I say the same thing, I don’t mean necessarily with all particular investments, but they look at their clients who are retired and say, you have to feel confident that the combination of your social security, whatever pension you have, if you have any and what we’ve put together, mm-hmm, <affirmative> makes you feel good about what you’re spending every month.


So you don’t have to panic when the, when the stocks are down. Yeah. And, and everybody has lip service that notion since 2010, basically, or 2011, when things started to go back up again or 2012. Yep. If you’re gonna say I, I got over the 2008 hangover by 2012, then it’s been a decade of things basically going up. And that lesson of retirement income fading as every year, past 2008, went on. So now when you look at, at some advisors who put together, this is from, this is anecdotal from me being here, what they put together, some of them are, are plans, which sound good, but don’t, you know, haven’t hit the mark now that we’re actually having, it’s been a lot of, since that height of this market.

Steve (12:13):


Dave (12:15):

It’s been a lot of podcasts since S and P was almost at 4,900

Steve (12:20):


Dave (12:21):

So, and now what you’re seeing, what I’m seeing in real time with real people is I’m worried about the market. Yeah. But, and I’ll say, you know, the look at all the things you say, all the, the stuff you put together, which is extremely compelling, Steve, all you’re about, and even look at this last quarter and how things are gonna come back. But what if they don’t? And I say to myself, cuz we’ll get into this, talk with these people. And then the end of the talk is I don’t want to get to the end because I know that their advisor is not put together any kinda real retirement income plan for them. Right. And I know from the conversation, they don’t have a pension, so I’m not going there cause I’m not interested in, uh, I’m not well because in getting involved in their client advisor related, that’s your issue friend.

Steve (13:16):

I mean, end of that, the end of that talk is just gonna be, well, I hope it comes back in time. You know, I hope that everything recovers in time, um, which is probably going to be true, but it, it’s not, it’s not definitive enough.

Dave (13:38):

Exactly. Exactly. It’s not definitive enough. You, they haven’t had that conversation or that spec, you know, specific game plan. Right. You know, that says, this is why exactly. You just don’t have to worry about it. You got X, X, and X coming in every month. This is how much money you have. That’s not, you know, all inequities. And regardless of what happens down the road, we don’t have to play that game of panicking with real, you know, specific examples in your portfolio versus ever getting into the nebulous. Well, you know, it’s gonna come back now. How do I know?

Steve (14:19):

You know, as, as you’re talking about this, I mean, this is, <laugh> the next thing I had on the show notes here was to talk about the bond market. Um, because I, I think that a lot of investors and certainly a lot of advisors have gotten used to this idea that whenever stocks go down, bonds will go up. And if we went back and we looked at that over the past 10 or 15 years, that’s probably, you know, if not a hundred percent, you know, very, very highly true, you know, most of the time that’s correct stocks go down, bonds will go up. And that is not at all what we’ve seen so far this year. Um, you know, just to put some numbers to it as of, uh, August the 30th, I have this or day or two old, the Barclays aggregate bond index down 10.4%, the us corporate bond index down 13 and half percent and the global Barclays aggregate.


So outside the us down 15 and a half percent year to date. So for people who have said, oh, well, we’ve got you diversified, we’ve got you in stocks and bonds. And you know, what, if the stocks go down, we’ll just take money out of the bonds there. Um, you know, this is where, this is where I think we’ve really differed from a lot of advisors where we have in incorporated things like annuities. Um, you know, and we don’t want to go down a whole annuity discussion right now, but there’s a bunch of different types of annuities, whether they’re variable annuities or fixed index annuities, or they have guarantees for principle or guarantees for income. But I mean, that’s, you know, right here, this is a great case of saying, Hey, bonds are getting hurt now. Hopefully, you know, most of our bonds aren’t down nearly as much as that, because we’re much shorter term bonds. Um, but that’s, that’s a great case to go back and say, Hey, this is why we hold annuities. Um, because we’ve got some sort of guarantee whether it’s income, whether it’s principle, um, that’s not subject to, to the same swings that bond. Right.

Dave (16:42):

And, and I just wanna throw out, cause it’s on my mind and it’s always during different times where you and I, and this is in the weeds of what you and I do. So we read everything. Mm-hmm, <affirmative>, it’s always in better times that you’ll start to get into the nuance of these arguments amongst advisors who are basically, you know, I in no circumstance whatsoever, when I ever use an annuity versus advisors who are just open to whatever’s out there, what fits the client, right? The best way versus the products we can do. And, and the argument as you start to break down, just like with the people I talk to at here, going from the dominoes start to fall, right? The dominoes are falling with a long bear market in stock. The dominoes might be following follow or falling with, you know, even bonds aren’t doing well right now. So you get to, well, what happens to a year like this? And they say, well, in that year, this is the, you know, we’ll say people who would never, who would just say they are blanket. I hate annuities as their stance, right? In those years, clients will have to spend less.

Steve (17:49):

Right. That’s

Dave (17:50):

Now you read it.

Steve (17:51):

That’s not a very satisfying,

Dave (17:53):

But you, and I’ve read, this are like, wow. I mean, you can write it now in 2019. And if things are great, you can write that. Right. And only people like you and I are reading it amongst our other fellow, but in the real world. Oh, okay. Well I guess in 2022, you’ll spend less. Huh? <laugh> it’s interesting how inflation didn’t get the memo.

Steve (18:18):

Yeah. Well, I, you know what I would say when we talk about, you know, bonds, just this carnage in, in the bond market, um, you know, I would say, and like I said, even in the shorter term bonds, you know, there’s been some pain there, but the silver lining for bond investors is that yields are actually reasonable on bonds now. So, you know, <laugh> just as an example a year ago, right now, if you wanted to get a one year government bond. So you said, you know what, I’m gonna put my money with the government for one year, you got a 10th of a percent in interest, a one 10th of 1%. So basically you were getting nothing. Now you put your money with a, in a one year government bond, you’re getting 3.3% interest. So this is actually a really good thing when we talk about, okay, we’re, we’re gonna have much better interest going forward on bonds had to put up with some pain in the short term. Now, you know, hopefully you had short term bonds, like, you know, we’ve talked about, um, but the yields on, on bonds are just gonna be so much better than we’ve seen in the past. You know, a lot of people we’re putting up with one and a half percent yield on a, a short term bond fund now,

Dave (19:49):

As long as you’re okay. But as long as you’re, <laugh>, let’s say the years of pain are 22 and 23, as long as you don’t have to panic about what you’re doing and you, you slash your advisor, know what you’re doing. There’s always a silver lining to the pain. As you just described, you just gotta get through the painful period in a non panic, uh, non-emotional mode,

Steve (20:13):

Right? No, you’re, you’re right there. <laugh>, there is always, you know, for every action, an equal opposite reaction applies to the investment world too. So, um, but you’ve gotta make it through to that, to that less painful time. Um, and if you don’t have a, a good plan set up, if you don’t have the, you know, good, uh, financial plan overall, you’re just not gonna get there. So the other thing that, that I wanted to touch on here has been, um, this really this big shift in the, the stock market investing in growth versus value. And we’ve probably talked about this a couple times in the last year or so, but this really has been, the biggest shift is the past decade or so growth oriented investing. So think about Facebook, Amazon, Netflix, Google Tesla, all of these growth companies that has really dominated versus the more boring value oriented investing.


Um, and that’s totally flip flop this year. And you know, it, it looks like that’ll probably continue for a little while, but I always caution people. Let’s not get overly enamored with one or the other. Like let’s not sit here and fall in love with value investing because value investing is held up better this year than, than growth, because those things tend to be very cyclical. They tend to flip flop very quickly. And all of a sudden you’re, you’re saying, well, gosh, you know, that growth, those growth stocks, they, they were on a big discount and I should have bought those. Um, so I, I think that’s something that tempting for people to, to try to play that timing game. But I, you know, I think your better strategies just to be broadly diversified, have exposure to both of those things and not try to try to time that. Right.

Dave (22:18):

And you remember, I mean, you and I remember, so I remember vividly saying, Hmm <laugh> whenever you start in our circle, start reading articles is value investing debt.

Steve (22:29):

Yeah. Yep.

Dave (22:30):

I always put in a question because no one would’ve the guts to say value investing is dead

Steve (22:35):


Dave (22:35):

But instead they say is value investing debt. And then they put all this evidence out there. You’re like, wow, that was compelling. But I do know from my past history of following this, that when they say is value investing debt, it’s not

Steve (22:48):


Dave (22:49):

And then, you know, come, I’m gonna say for everybody out there, when you read financial articles or watch political channels, whatever being put into a question is value investing dead. Right. Don’t just assume the question is the answer.

Steve (23:04):

<laugh>, that’s a, that’s a very good rule of thumb because, you know, why are they raising it? Well, they got a lot of air time to fill. They’ve gotta come up with a, a compelling topic. And you know, when, when an asset class is getting beaten down, it’s easy to pile on, right? I mean, it’s easy to say, oh, growth investing really just overvalued. Everybody fell in love with the tech sector, and this is the next tech crash and blah, blah, blah. Um, it’s easy to pile on and make that case when it’s beaten down. But then all of a sudden, if it snaps back, you know, you’re, you’re not doing a special about that. And just <laugh>, you’re just not gonna talk about it.

Dave (23:48):

Right. And then in our business, it’s like, what’s the evidence, not just after a while. I mean, you, they were coming up with evidence. It was pretty good 10 year numbers, right. But when you start to look at the evidence beyond that, which is what we’ve always done 15, 20, 25 years, and you see how tight value and growth is

Steve (24:08):


Dave (24:08):

Over that type of historical outlook, you know, the, the one part of your brain says that was compelling, but let’s see what plays out.

Steve (24:18):

Hey, along those lines, one, one last thought I had on here, because I, I got an email about this, um, from a client and, uh, they, they sent this email about this strategist, Harry dent. Um, I I’m sure we’ve talked about this guy at some point in the past. You know, when people bring up somebody like this, you know, I always tell them, I said, listen, they’re probably three or four guys who are always predicting a crash of a lifetime that I could rattle off, off the top of my head. Um, you know, Harry den, Peter Schiff, uh, this guy, Jim, what’s his name, Jim Rickels and they’re always crash of a lifetime is coming. And, you know, once again, they go through all of this as to wow, everybody’s, you know, bid up all these risky assets. And so everything’s gonna come down 86% before this is over.


Well, that sounds so specific that it it’s almost like, gosh, 86%. That must be true because, you know, if he was just guessing, he would say 80% or 90%, no, 86%. Um, I, I subscribe to, you know, we haven’t mentioned Barry hols in a while, but Barry hols has this take on people who make big market predictions like this. Yeah. And his take on this is that, that anybody who’s gonna make crash of a lifetime kind of predictions, they get a lifetime punch card where their lifetime punch card has five opportunities to call these big, huge crash of a lifetime things. And once they’ve punched that off five times, they can’t do it anymore. That’s it? You’re done. Right. And, and I think if, if this guy Harry dent had to, to do the punch card, I think he would’ve been done punching that card probably about 25 years ago. Um

Dave (26:17):

Right. But when they hit, when they hit, they’ve hit the lottery of what they’ll be sending to of course their social media.

Steve (26:25):

Right. And this is, you know, this is the expression. I I’m sure I stole this from somebody somewhere. Um, cuz I, I don’t think I could have come up with it, but it’s uh, you know, if somebody stands outside long enough screaming that it’s going to rain, eventually they’re gonna be right. Right. I mean eventually sure it it’ll rain or you know, maybe they’re screaming there there’s a hurricane coming. Eventually they will, it

Dave (26:51):

Should be Delaware. The last two weeks or weather, it’s been outstanding. Only one piece of rain over the evening. This has been over the last couple weeks, but I, I digress.

Steve (27:04):

<laugh> um, alright. I think we end things right there. Don’t listen to the people that, that have these, you know, wild predictions there. Um, you know, the stock market is a collective consciousness of everyone’s thoughts and feelings on, on where the market is and, and what’s fair value right now. Now can it overreact on the upside or downside? Absolutely. I mean, we’ve all seen plenty of examples of that. Um, but I, I, you know, these things where people say, oh, it’s going down 86%. I mean, that’s just being provocative, just throwing out some ridiculous number. Um, you know, either to, to try to be that person, that nails it and, and gets that one in a million thing, right. Or more cynically. I think they’re usually trying to sell you something, you know, whether it’s a newsletter, whether, you know, sometimes these people are selling precious metals or, you know, God knows what, all right, thanks for joining us. Uh, hope, uh, hope everybody stays safe and healthy and hoping, uh, the rest of the year is, is better than it’s been so far.