​Cole Stoneman: Hi everyone. My name is Cole Stoneman, Certified Financial Planner and Retirement Plan Advisor for your 403B plan with Lincoln Financial Group. And welcome to this episode. We're going to be talking on a couple timely items, one, tariffs, trade, and your investments, how to stay calm through market noise.

And that's kind of the idea that I wanted to touch on is just how to tune out some of the noise that you're experiencing. Now, remember, those that are on the radio or news, they are trying to catch your eyeballs and get your ears, and that's pretty normal. And I wanted to just provide a little context into what trades are, where the US economy was prior to this, because this has been self-inflicted, whether good or bad, whether it turns out to be a really positive thing or not, it's still self-inflicted.

But really the US economy has been really strong. The labor force is really, really, strong. It's been at 4.2% for unemployment rates. The average unemployment rate is 6%. So we're far below that. And you're going to hear the recession word quite a bit in the next coming months probably. But look at their labor numbers. And we typically don't have a recession with strong labor markets, and so pay attention to that.

But first off, what is a tariff? So a tariff is essentially a tax on imported goods. So for example, if the US puts a tariff on steel coming from another country, that steel becomes more expensive for US companies to buy.

So the goal is to make domestic goods more competitive and to encourage really more consumers to buy more American made products. So why are we doing this right now? Has been part of the question I've been kind of tossing around myself. And so lately there's been renewed attention on tariffs due to global competition, particularly with nations like China and the US government uses tariffs as a tool in trade negotiations. So especially when there's concern about unfair trade prices or practices, intellectual property issues potentially, or, trade imbalances. And the hope is that applying tariffs pressures other countries to make concessions or change behavior.

It can also be about protecting key domestic industries like semiconductors, steel, clean energy from I think really being undercut by cheaper imports. But tariffs can create market volatility. You have all experienced it probably. Maybe what we feel though isn't reality.

I was speaking with someone just yesterday and she had said, made the comment, I just want to get out of everything. We're just losing all kinds of money. And I calmly said, you're, you're actually positive year to date. And she said, really? I said, yeah, just, because you see the market go down, really what sector is going down?

Coming into this international funds inside of target date funds of the Vanguard international Index, you know, it was up about 10%. It's come back down to probably around 6%. I don't know where it's at today, but tariffs can rattle markets because they introduce something that we don't like personally as people or markets don't, and that is uncertainty. So investors don't like it, companies don't like it, CEOs don't like it. And that means that companies could potentially face higher costs, trade volumes might fall, economic growth can slow, or at least in the short term at least. 

So tariffs can rattle markets because they introduce uncertainty which investors don't like. Companies may face higher costs, trade volumes might fall, and economic growth can slow, at least in the short term. And I guess really the main question is, should that affect your long-term retirement strategy?

And that's what I want to talk about next, is how to manage volatility as a long-term investor and if you've heard long term and you are 65 and you say, I don't have the long term as I did when I was 40. There's still some long term that you that we still need to focus on. And the good news is, and in your 403B plan, most of you are in what's called a target date fund, which is an investment that is tied to your age of 65.

So if you are 65 now, you're in most likely a Vanguard 2025 fund. Which means that you have a large portion of your money invested into bonds, which are doing great this year. And so we want to stay focused on the long-term goals even if you're 65. Okay. One of the things we want to avoid though is timing the market.

Timing doesn't work. A study by JP Morgan found that if you stayed fully invested in the S & P 500 from 2003 to 2022, your investment would've averaged an annual return of 9.8%. But here's the kicker, if you missed just the best 10 days in the market during that period, your return drops to just 5.6% per year.

And here's the kicker. Seven of the best 10 days occurred within two weeks of the worst days. So the absolute worst thing to do is to get out of those investments that have just gone down. Because remember, seven out of the best 10 days occurred within two weeks of the worst days. So when the markets really go down, they go down really hard and fast, and when they come up, they go up really hard and fast. So in other words, the market's best recovery days often come right after big declines. So if you try to time the market and jump out during volatility, you risk missing the rebound. Case in point, I was speaking with another lady yesterday and in 2020, during COVID, if you all remember that, the markets were down maybe 30% I believe, in just one month.

And it was quite an aggressive downward market. And she got completely out, and didn't take the advice of staying in because she didn't need this money for quite a long time. And the market ended up being positive that entire year. She missed the entire upside of the market.

She got really emotional and let those emotions determine how she was going to invest. Which as you all know, if you're in relationships or investing, never let your emotions get the best of you. And if you're thinking about trading, maybe just pause on that and wait a couple days. We're here to help if you need us to help guide some of that direction as well.

So what do we do? Stay the course. How do you navigate uncertain, times like this? One, stick to your plan. Your 403B is built for long-term growth. It's broadly diversified, which is international stocks, domestic stocks. It's invested in bonds, so fixed income. So, you're broadly diversified, which has really been a lifesaver for a lot of people.

The other thing is keep contributing. Volatility during this time can actually help if you're buying investments at lower prices. So your new money that is going in and being invested every payroll, you could even think about having this be an opportunity and maybe buying something a little more aggressive.

Things are on sale, and so we like getting our stocks on sale. I like getting my clothes on sale. But we like getting our stocks. Anything on sale is good. And so in stocks, though, most of us don't think like that. We are buying things really expensive and then we're getting out when they're really low.

And we want to change the psychology around how to think of uncertainty like this. And if we could change that to having the opportunistic mindset of this could be a good opportunity to get into the market, you'll be much, much better off in the future.

The other thing is ask for help. If you're unsure, that's why I'm here. My team's here. We are happy to go through and everything's not rosy. We don't have a filter that makes everything look pretty. There could be some pain that's felt. It's just what's best practices. We're history buffs here.

We understand markets. I started my career in 2008 and that was a great time to learn, really what not to do. And then we've gone through some other downturns, since then as well.

Closing thoughts. Tariffs and market headlines will come and go, but your retirement is a marathon. It's not a sprint. The most important thing is to stay focused, stay calm, and stay invested. If you tend to get emotional when you look at your investments, just don't look at it. If you ever have questions about your 403B, your risk tolerance, what's going on in the market, don't hesitate to reach out, please. Hopefully you enjoyed this commentary and if you have any questions, once again, feel free to call the office (505) 327-5090 and thanks for tuning in. Until next time, stay safe, stay smart, and invest with confidence. Thanks.