Have We Seen The Bottom? | Ep 196

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What You’ll Get Out Of Today’s Show What’s in your talent stack? Inspired by content discovered over the last four years while producing ChooseFI, Jonathan

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Big ERN from Early Retirement Now joins the show to share his take on the current market situation.

  • The US economy is seeing a large portion of GDP be slashed in a matter of weeks. With that comes millions of lost jobs. However, the market seems to be recovering well in recent days.
  • Big ERN speculates that there will likely be a recession. But the scope of the recession and the speed of recovery has yet to be seen.
    Unlike the global financial crisis of 2008, the current economic recession was a coordinated effort. Big ERN hopes that with a similarly coordinated restart of the economy, it will be a relatively quick recovery.
  • Big ERN compared the damage being done to the economy to the potential damage done in Mount Everest's death zone. When mountaineers get to the death zone, they make their final ascent to the peak quickly and return back to safer altitudes as soon as possible. As long as the mountaineer returns to safer altitudes quickly, the damage to their health is minimal. In the economy's case, shutting businesses down leads us into the death zone. The hope is that when businesses are able to reopen, the damage to the economy will not be permanent.
  • There are three different recovery shapes. The first is a V shape with the most optimistic rebound. Big ERN thinks this is likely with a slightly slower tilt in the recovery. The second is a U shaped recovery in which we would bump around at the bottom for a while. The third possibility is an L shape in which the economy doesn't recover for the next several months or years due to prolonged shutdowns.
  • This recession is more difficult to predict based on traditional leading economic indicators because it is a government-mandated shutdown. The unprecedented nature means that it is difficult to make predictions.
  • It never makes sense to time the market. Although you can and should rebalance your portfolio based on market swings, you should never make an all-in or all-out move at one time.

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Have We Seen The Bottom?

Jonathan: All right, everyone, have we seen the bottom?

I'm just going to be upfront with you and let you know I have no idea. None, no clue, but there's a lot of highly qualified guessers out there and we thought we'd just go ahead and throw ours into the mix here. And not even so much to make a prediction, but just to talk through our perception of what's going on in the economy and in the markets. And go through why they're just not really matching up right now. It doesn't really seem to make any sense.

So we're going to have Big ERN join us on the show. He is uniquely qualified for this episode, not only because of his incredible ultimate safe withdrawal series, but also his background working as an economist for the Federal Reserve. He can provide some insights at a macro level that we just simply couldn't on our own.

So to help me with this, I have my cohost, Brad, here with me today. How are you doing, buddy?

Brad: Hey, Jonathan. I am doing quite well. And yeah, to your point, ERN is uniquely qualified. He's the person that we lean on when we're looking for this real in-depth technical analysis. And he's been on this podcast numerous, numerous times and I just cannot wait to talk to him about this.

And with that, really what I want to do from a personal level is talk through something that I just cannot seem to square, which is when we're recording this, this is April the 14th, the stock market has recovered dramatically in the last five to seven market days.

And it doesn't square with what I'm reading, which is you hear one-third of renters are not paying, you hear that mortgages are nearly impossible to get. You need a 20% down, a 700 plus credit score. JPMorgan is worried that people are not going to pay and there are going to be massive defaults. There are tens of millions of people out of work. Even Boeing, 300 planes were just canceled for them. 90% of some of these industries like hotels, cruises, airlines, they're gone right now.

So I am just trying desperately to square this, which is I am seeing cataclysmic lead bad news in essence. And then I'm seeing the stock market go up by thousands upon thousands of points. And again, ERN is the person we lean on.

So I'm just fascinated. I cannot wait to hear his thoughts on this.

Jonathan: All right, and with that, Big ERN, welcome back to the ChooseFI Podcast. How you doing, man?

Big ERN: Excellent. Thanks for having me on the show.

Big ERN's Hot Take

Jonathan: You are welcome.

So, yeah, Brad just laid out this pretty apocalyptic forecast for the next six months or so. And it's not hyperbole to say that 90% of hotel staff are on the unemployment lines right now. There's a lot of crazy stuff going on there. To add some flavor to that, if the used car market is entirely dried up, what does that mean for the new car market?

If all elective healthcare are being waylaid, healthcare in America makes up probably close to 20% of GDP. And when you look at the secondary and tertiary markets that are attached to healthcare, it's probably in far excess of that. It is a massive, massive percentage of GDP. The only portion of healthcare that's working right now are the ICU floors. Everything else has been stalled out.

What does it look like when your economy contracts 30% and how do you have the best week in the stock market ever and have a 30% contraction in the economy? It doesn't mesh up. So, ERN, give us your hot take, man.

Big ERN: Well, there's certainly an apparent contradiction between the economy and the stock market. So if we look at the economic forecasts… And again, we can't really trust any forecast here because we are totally flying blind. This is a totally unprecedented economic conditions, unprecedented recession. This will probably be a deeper recession, no, not probably, will most definitely be a deeper recession than the global financial crisis.

It could be a recession that is maybe not quite as deep as the Great Depression, but maybe half as deep as the Great Depression, if you look at the fall in GDP, top to bottom. And then at the same time, the stock market drops by… between February and March, by about 33% top to bottom. And now we have recovered again.

So as of yesterday, we were down 14% year to date, 18% from the peak. And why do we have this contradiction, very bad macroeconomic news versus the market holding up relatively well? Why are we not down by, say, 55%, which was the drop during the global financial crisis, October 2007 until March 2009, or why are we not down by 80%, which was the drop in the stock market during the Great Depression?

And the consensus view seems to be that as bad as the economy is going to look like in the short-term, this is going to be a short-term phenomenon. So once people realize that we can reopen the economy again, it's obviously going to be a bumpy start, but it will be a start.

So this recession is likely going to be different from other recessions. For example, in 2009, the misery, the malaise, where people said, “Oh, nothing will ever be as before,” and we have no idea if even our banking system is going to survive this. And the restart of the economy was really bumpy because everybody was looking over the shoulder, “Well, are you starting to invest yet? Are you starting to hire yet? I'm waiting for everybody else to start, and I'm not starting if you're not starting.”

Whereas, at least this is what I hope is how it's going to work out in this episode. The shutdown was perfectly coordinated. March 16th, everything shut down. And once we started reopening, of course, it will not reopen as quickly as it shut down. But hopefully, economic activity will come back again quicker than after the global financial crisis.

For example, I used to live in San Francisco. And then San Francisco was actually one of the places that came out of the global financial crisis relatively quickly. But you walked through Market Street in San Francisco in 2009, obviously, by 2010, 2011, you saw empty storefronts, you saw no construction cranes anywhere in San Francisco. And so there was this holdup. Nobody tried to dare step out of line and start investing, start building new condos, somehow that probably contributed to the housing shortage in San Francisco during the whole rally in Silicon Valley over the last decade.

So the hope is at least, and this is what the market seems to prize in it, I'm not sure if it's right, but you can rationalize it that way with saying that this as horrible as it will be… And we're going to see some really, really awful, awful quarterly and monthly numbers coming out. As horrible as it will be, it will be only a short-term effect. And again, there's no hope that by the end of the year, we'll be even close to where we were at the beginning of the year. But it's already enough. If, say, April, May is going to be the bottom of economic activity, and June, July, August, we are already starting slow steps of coming back. That would already be counted as growth.

So the end of the recession is not when we reach a new all-time high again, just like the end of the bear market is not reaching a new all-time high. The end of the bear market is you reach a trough and then from there it goes up again substantially. So the same is going to be true in this recession probably, just going from really awful to only moderately awful is already an improvement. It's like somebody hits you on the head with a two by four, and then they hit you on the head only with a two by two, and that's already an improvement, and that's already considered growth, and that hopefully is going to be not too far in the future.

So the same is going to be true in this recession probably, just going from really awful to only moderately awful is already an improvement. It's like somebody hits you on the head with a two by four, and then they hit you on the head only with a two by two, and that's already an improvement, and that's already considered growth, and that hopefully is going to be not too far in the future.

And you already see some countries in Europe opening up very, very cautiously. In Austria, they started opening schools and smaller stores, they will start opening even restaurants and shopping malls later in May. And then thinking that we are maybe a few weeks behind some of the European countries that were hit a little bit earlier with the Coronavirus, that could be in store for us.

And then again, I'm not saying that it will be. And by the way, if it's not, then definitely the market will take another leg down because… So the way I described the economy right now is that we are in the death zone.

If you're interested in mountaineering and you watch some documentaries about people climbing Mount Everest, you climb over 8,000 meters, that is considered the death zone, and that means your body will die at that altitude. Forget about avalanches and rockfalls and people falling down, just physiologically, your body will slowly die at that altitude. If you were to set up a Four Seasons Hotel on the peak of Mount Everest and you do take out all the risks from mountaineering out of the equation, just the altitude is going to kill you there. So that's why we will never have a hotel at the peak of an 8,000-er.

And so the reason why people still go up there, and it seems to be there are some people that did already multiple times, you do it very quickly. You go into the death zone, you hope that you don't do too much damage while up there. You don't try to stay overnight. You get up there and down back to your camp four or camp three. And if you keep it as short as possible, you cross your fingers that you don't do too much damage to your health.

And this is how we probably have to think about the economy. We can obviously shut down the economy for a short enough time. In fact, we shut down the economy every year and it's called December 25th, Christmas day. The GDP on Christmas day is probably pretty darn close to zero. Banks are closed, stock market is closed, Costco is closed, probably Walmart, a lot of things are closed. I guess airlines are still operating on Christmas day. It's a very light travel day, by the way. It's a good day to fly. But we do shut down the economy if it's short enough, but then we reopen it again on December 26, no harm done at all.

If we do it for a week or two weeks or three weeks, yeah, we will have damage. And there will be some permanent damage, and this will be bars, restaurants, cruise lines, and airlines, and hospitality industry. All of that will probably come out of this and it will never be the same and there will be some permanent damage.

I have a tough time understanding why the presence or the awareness of a virus is going to change people's preferences for buying a new car next year. I can see how people have less appetite going on a cruise ship next year, but I don't quite see… I can certainly see that people are not lining up at the car dealerships right now. But that may just delay people buying… People will still buy cars, they will just buy more later.

So if we keep this short enough and we keep this death zone experience short enough… And sadly, we don't know what is the right length and what is the safe length of staying in this death zone. I guess on Mount Everest, there's some guidelines. I don't think you would want to spend more than a night up on Mount Everest. If you do more than that, you're probably going to die, just you fall asleep and you never wake up. But we don't have any good data for how the economy's going to respond to this very extended and very deep shutdown.

And obviously, the first-round effects is that a lot of bars, restaurants, hotels, casinos, cruise lines and so on will hurt, some will go out of business. But again, if we keep this death zone experience short enough, we may just keep the damage to the economy and the stock market small enough and contained enough.

But then again, if we keep up the shutdown too long, then obviously even some other business sectors and industries will feel the pain because they rely on customers buying cars. And if we have a huge wave of bankruptcies and mortgage foreclosures and all of that stuff comes through again. So that would again hamper the restart of the economy.

A Bumpy Start

Big ERN: Again, think back in 2009 and '10, why was that such a bumpy start? We still had millions of people with houses that were underwater. Your mortgage was underwater. You can't sell your house. You're stuck in a mortgage that is worth more than your house. You can't sell it. And so that definitely hampered the recovery. There were some people that lost their house to foreclosure. Their life savings were gone, their down payment is gone.

So this is the optimistic scenario that we're looking at. Yeah, we will have some pain, but the pain right now is… Yeah, there are going to be a few million people, probably tens of millions of people that have maybe two or three, four months worth of living expenses on their credit cards. And that will take some time to get out from that. But it's not as extreme as, say, the housing crash in 2008, '09.

So at least that's the way I think about it, how I would rationalize the horrible economic data releases that are going to be around the corner. We have six million unemployment claims and that's a weekly number. So six million, that is 4% of the labor force. So we lost that two weeks back-to-back. And then there was a week before that where we lost three million. So that's just absolutely mind-blowing. And so that's what I mean by the death zone. This is not sustainable. We cannot keep this up for much longer. But apparently, the market believes that this is not going to last that much longer.

Shapes Of Recovery

Jonathan: Well, that belief, I want to talk about that because when you're talking about a recession, the recessions have characteristics. They have shapes that are attached to those based on how quickly they bounce back. And many of us, the optimistic ones in this audience, I think it's going to be a V-shaped recovery, goes down, comes right back, we're good to go, let's move on with our lives. But there are other shapes, and I'm just curious if you could talk to our audience about what those other shapes are, and how we would slip into a different one of those categories.

Big ERN: Yeah. So the U-shape, that is a little bit of what I described earlier, that was basically the recovery out of the global financial crisis. So, again, you find a bottom and the bottom was the second quarter of 2009. So June 2009 was declared as the end of that recession. But the recovery was very bumpy. And that could be in store for us.

Again, we had a coordinated start of the recession, and there might also be a coordinated start of the recovery again. And then again, if we didn't do as much damage to the economy and as much damage to, say, the plumbing of financial markets as we did, say, during the global financial crisis, the large financial institutions going under like Lehman Brothers, AIG almost going under, Bear Stearns almost went under, had to be sold, again, with this death zone analogy, I think there is some hope that we might have a V-shaped recovery.

And then I'll give you that. I absolutely believe that the V-shaped does not mean we go from a level of 100 in February 2020 to a level of 80 or 85 at the bottom in April, May, or June depending on where the trough is and then back to 100 again with that same slope going up. I could see that where it is basically a bit of a tilted V, where the recovery is maybe not quite as fast as the drop, and I can also see that there will be some permanent damage. So we go from $100 in February, $100 GDP to 80 or 85 in May, and we might get back only to 95 by December. I think that would still be a huge success if it were to work out that.

And then it doesn't look like a V anymore. So the second leg of… It is still a relatively swift recovery, but it doesn't recover all the way and it doesn't recover quite all the way to the top. And then obviously, a U would be, we far from 100, we go down to 80 or 85, and then at the bottom, we're basically just bouncing and bumping just sideways for a while before we go up again. And then the question is how long is that bottom of that U, could that last into the end of the year? Could that last for multiple years? I don't think it's going to last for multiple years.

And then, of course, the other recovery… Basically, no recovery at all. So there would be an L shape. We go down very steeply and then we're just stuck there. And again, that would be the scenario where we stay in this shutdown for the next six months, 12 months, 18 months. There are some epidemiologists, they say, “Oh, yeah, forget about opening anything until next year. So we're never going to beat the virus now. There's going to be another virus season around the corner in the fall, and then we might just keep the shutdown all the way until next year, until next summer or next fall.” And yeah, if we do that, absolutely, that is going to be not just an L-shape, that is just an I-shape. That's just a total meltdown of the economy and expect levels of the Great Depression. And so that would be extremely bad news. I hope it doesn't come to that.

But again, so the hope is that, as I said before, you will still be under the all-time high of economic activity, but just bouncing back and say you go from 100 points to 85 points at the bottom, and then you recover slowly over the next six to nine months to even a level of 95, then would already be tremendous news for everybody. I could rationalize that with the stock market only dropping by a very small margin.

So the analogy I would want to use there is, suppose you own a stock and it's valued $100, and it pays a dividend every year of $5. So the current year dividend is $5. So only $5 of that $100 stock price is really the current year dividend. And then the other $95 is the discounted value of all the future dividends going forward, not just for 20 years. It's not just 5 times 20 is 100, but it goes up until eternity. But because there's a discount rate, it just adds up to exactly $100.

And now, that company gives an earnings call and they say, “Oh, by the way, this year we are not going to do a dividend because we screwed up and we can pay you the $5 today.” In normal times, that stock price would go down by a lot more than $5 because everybody thinks, “Oh my God, what other skeletons do they have in the closet?” If they messed up this year, that stock price is going to fall by $50. $5 is due to the actual news of we don't pay $5 dividends today, and the other $45 drop comes from, “Oh my God, what else is up there in the future? Will this never come back?”

Whereas if they could credibly make the case, “Look, we got penalized to completely unfairly and externally by $5 this year and we can't pay the $5 dividend this year,” well, in that case, you could say, “Well, maybe stock price is not going to drop by $50. It's going to drop by certainly the $5 which is the drop in the dividend.” And you could say, “Well, yeah, there's a chance that in the future that might happen again.” We hope not.

So it might drop by another $5 for the second year, and it might drop by a little bit more because we don't know yet. Maybe they're just lying to us and they do actually have some skeletons in their closet. So this would be the equivalent to what is going on with the stock market. We are down only 15% for the year, and yeah, maybe the stock market is really only discounting the now and not the future.

And so that was the difference between now and the global financial crisis. Global financial crisis, “Oh my God, the banking system is never going to be the same. We have to be afraid. Lehman Brothers went under, who is next?” That's when people discount, not just the present, but all the future is going to get a haircut of 50%. And that hasn't happened yet.

And that's why probably even with this gnarly, atrocious macronews that's going to come out, people still have some hope that it will be bad in the short-term. There might be some long-term effects, but the long-term effects are only going to be a few additional percent. But overall, the economy is going to recover eventually.

What Factors Does An Economist Look For

Jonathan: All right, Karsten, got two to three more questions for you, and I know Brad wants to hop in with this being earning seasons and this is affecting dividends and all that sort of thing. But before I do that, we'll be right back.

Brad: All right, Karsten. So just hearing you talk through this, it sounds like a lot of this uncertainty has been priced based on, “Okay, is this going to be maybe a month or two, maybe three at the most of this shutdown?” Like you said, obviously, millions of people and we're not making light of this by any means. This is pain for millions of people, but they can put living expenses on a credit card for a couple of months. It's not as catastrophic as when I set this up at the beginning, as I'm hearing it, when I'm reading these pieces of news. And again, nobody wants to put living expenses on a credit card. But if we're talking a month or two, that death zone is short enough.

So we've seen somewhere in the vicinity of 15 million unemployment claims like you said in the last three weeks, what are we looking for going forward to know when we've reached that tipping point, if you will? And again, clearly, I'm not looking for this. I'm hoping that this death zone period as you describe it is extremely short and we come back.

But if the health experts say we are going to have 12 to 18 months of these rolling shutdowns, or we hit 30 million unemployment… I'm just making up stuff here. But what are you looking for as an economist? What would change your mind from saying like, “Okay, I understand this is a 15% to 20% drop in the market, this makes sense to me intuitively?” What would change either to the good or the bad that would make you look at this differently?

Big ERN: Oh, I mean, to the bad, obviously, if unemployment claims keep running at six million for another few weeks, I think that would be probably worse than expected. If employment numbers for industries that shouldn't be directly impacted by the virus, if they start cutting people… So there's nothing that the virus should do to banking and finance. But if loan default rates go up and banks have to cut down their staff, so now we're going to have second round and third round effects of this virus.

And yeah, there's definitely some additional downside potential. My personal estimate is that we're going to have at least a 15% drop in employment and probably 10% to 15% drop in GDP. And when I say 10% to 15% drop in GDP, I have to make sure that would be the quarter over quarter number.

So the way GDP is reported when they report the quarterly growth rates, that's actually the annualized growth rate of the quarterly number. Just all the GDP numbers that we put out, they are always put out at annual frequency. So when they say GDP was $20 trillion this quarter, well, it wasn't, it was actually only about $5 trillion, and you multiply the 5 times 4 to make an annualized number.

And you do the same thing with the growth rates. If GDP goes up by 0.5%, quarter-to-quarter, it will be reported as roughly 2% growth because the half percent annualized would be 2%. So when I say 10% drop GDP top to bottom, that would then be reported as a minus roughly 35% number of GDP growth. The compounding works the opposite way for negative growth rates. So four quarters of minus 10% growth is actually not quite as bad as minus 40%, is only minus 35%. But yeah, there are going to be some really bad numbers.

And yeah, so what I look for on the negative side is… Yeah, obviously, this hits industries that should not be directly impacted by the virus. Because the way people get these estimates for how many jobs are we going to lose, they're going to go industry-by-industry. They're going to see leisure and hospitality minus 80%, this industry minus 50%. Probably, McDonald's, they might not cut 100% because you still have the drive thru and delivery. Once this hits also other industries like finance and healthcare, then I would get really worried that this is not just the initial 15% to 20% job losses, this could be even more than that.

On the other hand, the funny thing is… I'm an economist and I used to look a lot at leading economic indicators. And so what are usually the best leading economic indicators out of the recession? Well, the leading economic indicator is the stock market. It would be financial indicators because they are the fastest to move. But that would be a little bit of a circular argument.

As an investor, I'm afraid about the economy ruining my equity investment. As the leading economic indicator for the economy, I use the stock market to forecast the economy. So that's a bit of a circular argument. The problem is that there are no really good indicators for this particular recession. Because in normal recessions, what normally happens is that things like durable goods and residential housing, construction, they are normally leading economic indicators to get you out of the recession. If people start being interested in buying refrigerators and cars and houses again, that would be good in forecasting a recovery.

But this recession is so different. All bets are off because it's a government-mandated shutdown. So you might be looking for an indicator that normally forecasts the end of the recession. But well, guess what, by some government mandate, they are not allowed to reopen that part of the economy.

So it's very hard to do a true leading economic indicator analysis, “Well, this is what I'm looking for to get us out of this.” Obviously, I would keep monitoring the weekly unemployment claims, and yeah, the stock market, what would obviously be… But again, subject to the constraint that this is a bit of a circular argument.

Timing The Market

Jonathan: Yeah, I want to hop in and actually go back to the clickbaity title of this episode, have we seen the bottom? And tie that again to this idea of the practicalities of actually timing the bottom in a world where all bets are off anyways.

If someone out of fear pulled every single dollar they have out in the market and maybe early March. They just went full panic mode, “I need to make sure nothing happens, I'm freaking out,” they pulled it all out, and now their modus operandi was this sucker is, “We're going straight down from here and I'm going to find the bottom.”

And so now, the market has not done what they expected it to do. They were certainly happy that they got out before maybe March 20th-ish. But now, they were like, “Well that's just it.” And then went up like, “Well that's just rebalancing. It's going to go down again. The next leg down is coming. The S&P 500 it's going to be going down to 1500, I can feel it. And we're going to keep that money on the sidelines.”

And now, the market just went straight up, had the best week ever, their money still on the sideline. Now, they're not figuring out what to do with their next contribution, but their entire net worth is tied to this decision, and they just don't have a forecast for this. Now, your decision carries a lot more weight as opposed to what am I going to do with my next contribution, or what small adjustments am I going to make? You're really all in on what happens and you have no idea.

Big ERN: Right. So I actually have a good example for that.

A friend of mine asked me, “Hey, I got completely out of stocks.” And that was when the market was down about 10% from the peak and got all out and haven't heard from him since, because there was a lot of volatility. If he had gotten out at the time when he said he would, the Monday after that, the market rallied by 5%.

Of course, after that, it went down even more and then we were all the way down to minus 33% on March 23. So the problem with timing the market right, getting out is that you have to time it right twice. You have to get out at the right time and you had to get back in at the right time.

And yeah, if you had sold equity… Of course, if you are really smart, you would have sold at the peak on February 19. Of course, nobody was that lucky. Maybe some people were lucky. But imagine you sold when the market was down by 10% and now you see the market go down all the way to minus 33% and you feel really smart that you got out. But now, the market has recovered again by 20%, and now we are down to maybe minus 18% as of the 13th of April. I think today we're up another 2%. So we're almost getting back to that level that we had in early March.

So what do people do in that case? Do they buy in now for fear of missing the rally? Do they stay out and they hope that everything unravels? I hope that people are not that defeated and say, “I hope the market goes down again and goes down even below that low on March 23rd yeah. But again, so the problem is if you try to time the market, you have to get it right twice. And so a lot of people get… what do you call… whipsawed by making these big moves and going all in or all out. So what I normally recommend is you don't do this all at once. You don't do these kinds of moves all at once.

There's the concept of dollar-cost averaging that hedges the risk of going either all in or all out, all at the wrong time. I would normally recommend, even if you feel that the market was really overvalued in February, well, don't sell everything. So you do it in stages. You maybe just do some rebalancing. You notice in February or March, “Hey, my 60-40 portfolio has now become a 65-35. I'm overvalued equities. Well, I sell equities because they take up more space in my portfolio that I had planned.” And the same thing you do at the bottom when you face that kind of decline that we had in March. Probably your target asset allocation called for you to shift out of bonds and into stocks because stocks were beaten down so much and bonds had rallied.

So I would never recommend doing an all-in or all-out move. And yeah, do the rebalancing. For example, I used to work in asset management. We did a lot of these kinds of tactical asset allocation decisions. We would never have done an all-in or all-out move. This is all about making small moves, looking at small percentage-wise moves in asset allocation decisions. And the reason is that you never have that kind of precision where one day you were 100% equities and then the next day you suddenly go from 100% or 0%. That doesn't make any sense. And that exposes you to a lot of risk.

It could go really well in some cases, or it could just blow up in your face in other cases. And then you might make some additional irrational decisions going over time where you got all out of your stocks and then the stock market rallies again, and then you get back in again and then it falls again. And so that's why you never want to make these kinds of decisions as an all or nothing. So they should all be done in a piecewise fashion.

Jonathan: Big ERN, thanks for this conversation. Very valuable, very timely, but there's really only half of the content that we wanted to cover with you. Will you join us on the show? And what I want to cover in this next episode is, all right, we've got our retirement portfolio, this is for retirees. Forget early retirees, forget traditional retire… It's just retirees. You're living off your income.

And now with the benefit of what we know is going on in the market, you're feeling maybe increasingly uncomfortable or uncertain. And the question that's been rolling around in your mind is, should I make adjustments to that portfolio? I want to just talk through the mechanics of that with you. You want to join us on the show for another episode?

Big ERN: Yeah, definitely.

Jonathan: Awesome. Well, we'll record that as well and we will release that episode next Monday. All right, everyone. Thanks for joining us. Now, if you've been living under a rock and you have not yet checked out Big ERN's website and his fantastic resource, The Ultimate Safe Withdrawal Series, probably one of the more valuable resources you could find right now, definitely go check that out. You can find Big ERN and that Safe Withdrawal Rate Series at earlyretirementnow.com, that's earlyretirementnow.com. There'll be a link in the show notes. Big ERN, thanks for joining us on the show.

Big ERN: Thanks for having me.

Jonathan: To everyone listening, I hope you got value from today's episode. Please subscribe, please subscribe if you have not yet already. It just lets us know that you're enjoying this concept, and you want us to produce more of it, and we will do so. If you're getting started on your own path to Financial Independence, just go to choosefi.com and look for the financial resilience toolkit on the homepage. It's a list of resources that we have pinned there to help you during this trying time. Thanks so much for joining us, and we'll see you next time as we continue to go down the road less traveled.

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