The Rollercoaster Ride

Our 2 Cents – Episode #115

The Rollercoaster Ride

We’re back again on the Our 2 Cents podcast! Gabriel and Steve are putting a different spin on talking about recent market behavior by sharing some do’s and don’ts when considering your options. Next, they’re drawing comparisons between the world of retirement planning and America’s favorite sport to watch: Football.

  1. The Rollercoaster Ride:
    • What options are available to you as we ride out this rollercoaster market ride?
      • Do nothing?
      • Abandon your plan?
      • Let your emotions drive your decisions?
      • Try to buy the winners and sell the losers?
      • Look at non-market options?
    • There are pros and cons to every approach when handling difficult markets, we’ll discuss some main points to consider if you are ready to take action.
  2. Calling the Plays – Getting Into Victory Formation:
    • The ‘Retirement Red Zone’ and why this time is critical that you don’t get tackled for a loss.
    • Does the coach make a difference? Why you should find one who fits your needs and your investing philosophy.
    • Victory formation: Not taking unnecessary risk when you’ve already won the game.

Tune in now to join us for this discussion!

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Podcast Transcript

Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, building wealth for life. Steve Lewit is the president of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest in financial news, trends, strategies and more.

Gabriel Lewit: Good morning, everybody. Welcome to Our 2 Cents. This is Gabriel Lewit along with Steven Lewit-

Steve Lewit: The other cent.

Gabriel Lewit: And we are here in October, already. Welcome the fall.

Steve Lewit: The trees are turning yellow.

Gabriel Lewit: Yellow, reddish. Still mostly greenish as I see them out the window. But yeah, we’re excited to talk to you today. And speaking of fall, I was out at a little pumpkin fest near my house over the last weekend. It was packed.

Steve Lewit: It was a mob scene. I drove past there and I knew you guys were headed there and I said, “Good luck to you.”

Gabriel Lewit: Yeah, there was quite a lot of people there, rides. My son and I went through a corn maze, which is kind of cool because he’s small and the cornstalks were tall. And yeah, had a lot of fun.

Steve Lewit: Excuse me. Do you remember Gabriel when you grew up in Vermont?

Gabriel Lewit: I did grow up in Vermont.

Steve Lewit: And isn’t that the most beautiful change of season in Vermont when the hills are on fire?

Gabriel Lewit: Mm-hmm.

Steve Lewit: I think it’s the most beautiful thing ever.

Gabriel Lewit: Yeah, you just see rolling hills of red, orange, yellow. I mean it’s gorgeous and certainly if you’ve never been out there for fall foliage season-

Steve Lewit: Make a trip.

Gabriel Lewit: Yeah. Head on out there.

Steve Lewit: Make a trip.

Gabriel Lewit: You could also go in winter, do a little, what’s it called?

Steve Lewit: Snowboard-

Gabriel Lewit: Maple syruping.

Steve Lewit: …. Snowboarding.

Gabriel Lewit: Maple syruping. Yeah. Where you tap the maple trees, make the syrup, heat it up. Yeah it smells good.

Steve Lewit: Delicious. Delicious.

Gabriel Lewit: Okay, well anyways, moving onto little show.

Steve Lewit: Little nostalgia here, never hurt.

Gabriel Lewit: Yeah. Yeah. So hope you guys are doing well. We’ve got a couple things lined up to talk to you about here today. Number one on our list is we’re going to focus a bit on the market and some of the updates that are occurring there. And if you’ve been following, maybe you haven’t been following, either way, we want to just talk to you about what it’s doing. So last week of course was a bit of a challenging week in the market.

Steve Lewit: Roller coaster.

Gabriel Lewit: Roller coaster is in full display mode here this year. And it has recently, in the last week, I don’t have the exact date in front of me, reached the S&P for example, reached its low on the year. And that was lower than as prior low back in June where it had already been down around 22, 23%.

Steve Lewit: Yes.

Gabriel Lewit: And so, people out there are wondering again, when is this bear market going to end? We are now in October. This market has been sliding now for almost eight, sorry, 10 months.

Steve Lewit: That’s correct.

Gabriel Lewit: And people rightfully are like, “Okay, I get it. It’s down. When’s it going to end? Go back up.”-

Steve Lewit: Yeah, I’ll tell you-

Gabriel Lewit: … And so there’re questions out there, what should you be doing right now that it’s been 10 months?

Steve Lewit: Or yeah, you just read my mind. I was going to say, people want to do something. It’s like-

Gabriel Lewit: They’re waiting and seeing.

Steve Lewit: … “I got to do something about this.”

Gabriel Lewit: Right, “I got to do something.”

Steve Lewit: Right. “I got to fix it.”

Gabriel Lewit: Well, and so we thought it would be a good thing because we talked about the market a couple times throughout the year in particular on the show. And as we’ve reached new milestones, if you will, on the year, we thought, we’d continue to bring up topics around what to do, how to think about it, how to approach these kind of markets. And so right now I think it’s really an interesting time because people are at this point where they’re ready to take action. And I’ve gotten some questions from listeners as well, which I’ve not saying the actual question, but actually talking about it here conceptually is part of what prompted this topic. And people are asking things like, “Okay, should I buy something completely not in the market right now? Is it going to continue to go down further for the next year or two?” I had one client in particular say, “I’m really concerned, Gabe, you’ve got China out there, you’ve got this Russia, Ukraine thing still. You just had another fed rate announcement. You’ve got”-

Steve Lewit: Sounds like me.

Gabriel Lewit: … “You’ve got hurricanes out there, you’ve got”… And just went on and on and on. And I said, “Well look, we got to talk about what do you want to do. If you want to stay in the market, that comes with pros and cons. If you want to do something else, that comes with pros and cons. And if you want to do this, that has some pros and cons.” And so that’s what I wanted to talk about today is what are options that people have with their money today as it stands. And we’re just going to cover a range of different options and we’re going to talk about those pros and cons.

Steve Lewit: Okay. I’m in.

Gabriel Lewit: Sound good?

Steve Lewit: Yeah, I’m good. I’m good.

Gabriel Lewit: All right. So that was our introduction into what we’re going to cover here. Okay. So option number one, you’ve got a portfolio today. Well, let’s talk about the easy option. You could do nothing.

Steve Lewit: No, I think that’s the hardest option actually.

Gabriel Lewit: Well, easy conceptually to talk about.

Steve Lewit: Easy to say, hard to do.

Gabriel Lewit: Hard to do. Now why is that hard to do? Well, funny, I have a new piece I put together, which I used on a meeting with the client and I’m happy to send it to you if you’d like it. But in our industry there’s all these images that talk about the roller coaster of emotions of being in the market. And I thought I would use one of those examples on the show here to explain why it’s hard to do, to just do nothing. Okay. So I’m going to that, if you’re following along here, I’m going to go to, I think it’s page four.

Gabriel Lewit: Okay, so you can’t see the graph I’m looking at, so I’ll do my best to explain it. But let’s go back to say the end of last year when the market was still trending up, the first thought, and this was a study done by Credit Swiss on the psychology of investing, and so this is a great graphic that you can see. And there’re comments as if what’s going through your mind, what’s playing through your mind at different points in the market. So towards the tail end of last year, what, according to this image here, the first comment going through your head might be, “Ah, I see a trend going upward. I should continue to watch this market to see is this trend going to continue?”

Gabriel Lewit: And then the market continues to go up. So you say, “Woo, if I wait any longer, I’m not going to profit. I better buy now.” You don’t want to miss out. The trend is looking up. And then the market then starts to level off and go down. And then your brain says, “Thankfully I didn’t wait to buy because it’s continuing to go. Maybe just,”… Sorry, I was looking at the wrong part. It was going up still. So you say, “Thankfully I didn’t wait to buy. I got at the right time.” And you’re very happy with yourself at that point in time because you bought in a little bit lower and the market continued to go up.

Steve Lewit: Well, there’s enthusiasm. The market is high, it’s going up. Everybody’s excited. In the back of your mind you’re saying, “Well, it could go down, but look, everybody else is doing great.”

Gabriel Lewit: Yeah, exactly.

Steve Lewit: I can do great.

Gabriel Lewit: FOMO, I don’t want to miss out on some bigger gains here.

Steve Lewit: Yeah, it’s like, “This is good. This is really good. I’m going to stick in there.”

Gabriel Lewit: Okay. And then the very first sign of rockiness occurs in your portfolio, goes down a little bit. And you don’t know yet if this is going to continue. Is this a small trend? Your brain says, “You know what? This is a better price now than it was when I just bought maybe six months ago or five months ago. You know what? I’m going to buy more. I’m going to buy more because I believe in long term.”

Steve Lewit: No, Gabriel, let’s get clear here. So you’re talking about buying and selling decisions, not somebody that has a portfolio and they’re not actively buying this.

Gabriel Lewit: Yeah. Correct. If someone just has a portfolio they do very little with this will won’t be as applicable.

Steve Lewit: But the same things go through their mind, this positive feeling, “Oh this is great, I’m making money, I’m going to leave it alone. I’m not going to do anything.” We don’t get calls, “Steve, I’d like to review my portfolio. It’s doing so well.”

Gabriel Lewit: Right. Well, so okay, now on this graph, the graph is now declined to lower than where it originally started. And the comment and thought of someone at that point is, “Wow, now it’s really on a good deal. I better buy some more since I like this before and I bought it at a higher price, I could continue to buy more of this stock at this price.” And as the market continues to slide, now the comment on the chart is, “I can’t believe it. The prices now half, this must be the bottom.” Right?

Steve Lewit: Yes. It must be.

Gabriel Lewit: Must be. And then finally it gets down to what’s in this graph actually the bottom. And someone says, “Enough is enough. I should sell this darn stock and never look at stocks again. I’m going to sell it now.”

Steve Lewit: Yeah, I really got hurt.

Gabriel Lewit: I really got hurt.

Steve Lewit: I knew that was going to happen.

Gabriel Lewit: I knew that was going to happen. And then it goes down a little bit further and your brain says, “Oh good thing I sold everything.” Because it’s still going down. And then it goes up and down a bit and you’re like, “Okay, what’s going to happen? What’s going on here? Is this up? Is it down?” And then it starts to finally recover and you say, “Okay, I knew all along that it would recover.” And then it recovers more. And you say, “Okay, finally it’s time to buy again. At least it was cheaper than last time.”

Steve Lewit: But you still don’t know. You’re always saying to yourself, “Well I wonder if this is temporary, if it’s going to come down?”

Gabriel Lewit: So, I wanted to share-

Steve Lewit: It’s like yesterday the market was way up, right?

Gabriel Lewit: Yeah. Buy more. Sell.

Steve Lewit: Should I buy more? Is that temporary like it was on Thursday or Friday? I don’t know. I don’t know.

Gabriel Lewit: Now you’re spot on. This is mostly in the world of someone that likes to trade and that feels like they should be doing something consistently. This is the mindset that’s going to be most prevalent for you. And then you look at some of the stocks this year, this is why, you see, and I had a list here that we were researching of stocks that are down this year. Now the market we just talked about, the S&P is say down 22% on the year. Well, some individual stocks are far worse than that. We’ve got FedEx is down 40% and just went through a 20% drop after they revised their earnings projections on the year. The biggest drop in the history of FedEx.

Steve Lewit: But that’s never happened before.

Gabriel Lewit: Okay. Meta’s down 59% on the year. That’s Facebook. CarMax is down 47%. Nike. So we’ve got cars, online technology, shipping. Nike’s down 50%, that’s clothing retail. Adobe, which is computer technology, 51.5%. Ford minus 46.1. Cruises, Carnival minus 65.1. And then AMD, which is computer chips and technology, and big reason why cars are supposedly so expensive right now because of the chip shortage you think they would be positive is minus 56%. So you look at all these and then you try to look at the market and you say, “Should I be buying yet? Should I be selling yet?” And even if you don’t do that on an individual stock basis, if you have this mindset, you tend to apply that even to your mutual funds or to whatever else it is that you own. And that’s what makes not doing anything so difficult.

Steve Lewit: Yeah. And there’s another piece to that, Gabriel, that I think is important, is that when the market goes down, we’re talking about the market going down, but when you own individual stocks, you don’t own the market. You own individual stocks. And what you’re saying to myself is, “Okay, I lost 51% in this stock,” or whatever it is, “and when the market recovers, that stock will recover the 51%.” The problem is when the market recovers, the stocks that lose going down aren’t necessarily the ones that recover when the stock goes up.

Gabriel Lewit: You just don’t know. And so I think the point here of going through that emotional cycle there that is very common is that what most people end up doing is they sell about halfway through the market downturn.

Steve Lewit: As soon as their euphoria turns to soon grief.

Gabriel Lewit: As soon as they start to get to-

Steve Lewit: Got to fear.

Gabriel Lewit: … To fear, right. As soon as they start to worry that this is persistent, that this is going to continue, they then typically sell. And that might be about where we are right now. Which is part of why I wanted to bring that up. Because we don’t know if we’re at the bottom. If we’re halfway through. Is this a 10 month bear market? Is it going to be a two year bear market?

Steve Lewit: Well, you’re losing. It’s a natural human reaction. “Hey, I’m losing, I think I’m going to lose more because things are not looking good.” Because that’s what I hear. I hear it from the news, I hear it from the pundits, I hear it from… “Oh this is not looking good and I’m losing. So why don’t I ease my pain by going to cash?”

Gabriel Lewit: And you say, “If the market is going to”… Like this, one client I talked to said, “Well what if I think there’s going to be five years of negative or flat growth, shouldn’t I sell now and just sit in cash?”

Steve Lewit: Well, if you knew that to be… Hey wait, there’s a big difference between what if and-

Gabriel Lewit: That’s exactly right.

Steve Lewit: … I know what’s going to happen.

Gabriel Lewit: If you knew, yes.

Steve Lewit: Yeah, if you knew, yeah. Go for it. But you’re saying what if?

Gabriel Lewit: And so that’s so important because so many people out there are acting as if they know what’s going to happen just because they have a strong feeling about things have been bad for a while and they still look bad out there. So the market must continue to go down. It seems like such an easy one, two, three equation that you can count on. And so your brain says, I should probably sell this and prevent any more losses.

Steve Lewit: Exactly. So there’s another list here you gave me Gabriel, which I think is fantastic, if I can find it. In all the papers you gave me this morning. This is what you can do and what you can’t do.

Gabriel Lewit: Oh yeah. So that was part of this because we’re talking about things you can or can’t or should or shouldn’t do. And this was by our money manager, Savant has put this piece out and I do think it’s a good list. So if we can talk about that if you’d like.

Steve Lewit: Yes. So-

Gabriel Lewit: If you have a-

Steve Lewit: … So what can I do? What can’t I do? I can’t abandon my plan. I don’t want to do that. I have a plan to get from A to B and I want to keep going from A to B. But what I can do is go to my plan and stick to the fundamentals of the plan. This is how I can offset that feeling of abandoning in the plan. All right? What I can’t do is wait until the dust settles because we don’t know.

Gabriel Lewit: Just weed it out.

Steve Lewit: Yeah. We don’t know what dust is going to settle.

Gabriel Lewit: How much dust? How long will it take to settle?

Steve Lewit: Exactly. So you can look at the historical evidence and data. And this folks, Gabriel and I have been through so many of these kind of markets to us… Remember we talked about the child, your first kid that skins their knee and you’re like, “I remember when you”… You weren’t my first kid though.

Gabriel Lewit: I was not. The second.

Steve Lewit: But when Christopher, the first time he skinned his knee-

Gabriel Lewit: Third kid.

Steve Lewit: … it was like, “Oh my God, let’s take him to the emergency room, let’s get the medical.” It’s a little scratch on his knee.

Gabriel Lewit: That’s why you ignore me, because I was a third kid.

Steve Lewit: You’re number three. Well what about number five?

Gabriel Lewit: Just kidding.

Steve Lewit: Lucas skinned his knee. And I say, “Well get up kid.” And we’ve been through this so many times. It’s like, “Yeah, oh hum.” Not really oh hum. But kind of oh hum. Like, “Yeah, it’s okay. We’ve been down this road before.”

Gabriel Lewit: And also, it’s interesting because I have personally seen and heard stories from so many clients that have attempted to do something really active or really different or radical in a bad market and have firsthand witnessed that they end up way behind than other clients.

Steve Lewit: Oh, I could-

Gabriel Lewit: Story after story. So part of this comes from personal experience as well. But the other thing on this list here, you can’t know what the markets are going to do and you can’t let your emotions drive your actions.

Steve Lewit: Can you say that again?

Gabriel Lewit: You cannot know what the markets will do.

Steve Lewit: Folks, and I’ll be brutal on that. I don’t care how you’re feeling or what your intuition says or what your second sense says or what your gut says. You don’t know. We don’t know. Our money managers don’t know. The pundits don’t… Nobody knows.

Gabriel Lewit: So, when you get that advertorial, which we were talking about the other day on a podcast, advertorial that says, “Does your advisor tell you to just stick with your portfolio? Shouldn’t they be telling you to do something?” So there’s an entire group of advisors out there that are trying to pick on the fact that some advisors tell you not to do much. If you have a good plan and a good portfolio, that’s key. And by saying that you can, and should and they have the magic crystal ball that if you just follow their picks and recommendations, you can avoid the losers and pick the winners and come out ahead. And that’s why I think people feel like they should do something because they say, “Well there should be something I can buy that would make me money right now. Let’s just buy that.”

Steve Lewit: There might be there. Go find it.

Gabriel Lewit: Right. And so that’s so speculative, isn’t it? Trying to believe you can sell the losers and buy the winners and do that consistently enough to-

Steve Lewit: Its what speculation is. I am speculating on the future. And you can’t speculate on the future because the future is unknown. It’s unknown in our entire lives. We don’t know what’s going to happen tomorrow.

Gabriel Lewit: Yeah, exactly. And so the other thing to then consider is imagine we are using this example, you’re halfway down and then you do sell. Let’s say you go to cash, you say, “Well I’m just fed up with this whole thing.” Well, here’s what then happens. You wait until the market goes down a bunch and then maybe starts to come back and it gets about to where you were before when you first sold on the recovery side. And you say, “Okay, oh, I’m not sure if this is over yet. I’m going to wait till it gets a little bit higher. So I’m really sure that we’re in recovery mode.”

Gabriel Lewit: And then you buy back in at a higher point when you’re sure that you’re in recovery mode. And what happens, Well you went past where you’ve initially sold and you bought back in at a higher point. So you sold low and you bought high and you lost a bunch of money. Because what happens, and what most people won’t admit is that if they do sell and go to cash, they’re going to be really reticent to step their feet back in the pool until they’re absolutely sure that they’re not going to lose more money. And at that point in time, you are now much further behind than you would’ve been had you done nothing.

Steve Lewit: It’s easy to get out. It’s easy to get out. “Hi Steve, sell everything.” “Okay.” I won’t say okay, but okay, we sold everything. Now what’s the next conversation? How do [inaudible 00:19:15]-

Gabriel Lewit: You call me up me up-

Steve Lewit: Should I buy back in now? I don’t know.

Gabriel Lewit: Well, I didn’t think you should have sold.

Steve Lewit: Right. Two months later, should I buy back in now? My answer, I don’t know. Because there’s never a good time to buy in and to get out.

Gabriel Lewit: And if you purposely sell to buy back in on a short term, let’s say you’re selling so you think you can buy in lower, this is the definition of market timing and speculation. And it’s just an even more risky approach to investing. Which is-

Steve Lewit: That’s gambling. To me, that’s gambling.

Gabriel Lewit: So, as you look at your option, do you say, “Okay, well what else can I do?” And I think this is the key. If you have a well created plan, well designed plan, you have an efficient, diversified, well-built portfolio like you do if you’re clients of ours, you have a plan, you have a great portfolio, you have a good advisor helping guide you through things. Most of the time the best option to make any emotional changes.

Steve Lewit: Unless, you know Gabriel, if someone came in and said, “Steve, the market’s down, we’re losing money. I understand because I invest in the stock market. I know there’s a point I’m going to lose money.” Let’s say someone actually understands that. “But I want to reassess my plan. My goal was 8% a year, 7%. I want to reassess, I think I’m ready to go more conservative.”

Gabriel Lewit: Well, it is really, it’s interesting you mentioned that and it’s part of what prompted me to want to talk about this on the show. I mean I had a meeting with a client last week that had up till this point when we met and did their plan originally two years ago in the midst of a very strong bull market, they were very market minded. And this year we just had a review two weeks ago and they said, “Okay, we think this is maybe more volatility we wanted in our plan, do we have any other options?” Now this is where there are other options. And before we were talking about market options. Now we could talk about non-market options. And one of the things that we looked at for them was a five year very short term growth annuity. And we can talk about what are non-market options. There’s a few of them that will have zero downside risk and a cap on the S&P 500 of around 10%. I’m just using a round number. So you can average over say seven to 10 years six, 7% with no risk.

Steve Lewit: Exactly.

Gabriel Lewit: And they said to me, “I think we’d rather have that.”

Steve Lewit: Now did you get a note signed that said if we go into another bull market that they’re okay not making as much as they could have been?

Gabriel Lewit: Well, that’s the other part. That’s the other part. You get a little upside cap for zero downside risk, but then you do cap that upside.

Steve Lewit: Yeah, you cap it so you sacrifice a little upside. You know why? Because folks, your wellbeing, your holistic wellbeing is more important than making more a few extra points in the market. And if it comes down to that, well take care of yourself.

Gabriel Lewit: And then there’re other options which I was talking to a client, he said, “Well what are our options?” Okay, so here are our options. We can stay in the market, we can get out of the market, we can use annuities instead of bonds or annuities instead of even equities, if we just want safe growth. We can also look at a buffered, what’s called a RILA, registered index-linked, also an annuity, but it’s a little different. It’s got a much higher or even untapped S&P on the upside. But they have buffers on the downside of either minus 10%, minus 25%. So you can get some higher growth, but still downside protection of either 10 or 15 or 25%.

Steve Lewit: Explain what that means.

Gabriel Lewit: Well, it depends on if it’s a buffer and a floor. And that’s a little more beyond the scope of this.

Steve Lewit: Well basically you’re protected on losses on-

Gabriel Lewit: Yeah, you’re protecting up to a certain downside amount where it, where you won’t lose money if the market goes down only 25% and you have a floor that protects any losses up to 25%, then you wouldn’t have any losses.

Steve Lewit: That’s correct.

Gabriel Lewit: Okay. So that’s an interesting option for people. You’ve also got life insurance. Fixed index, universal life insurance can be a market replacement tool.

Steve Lewit: Which would tie into a tax-free strategy.

Gabriel Lewit: Yep. You’ve got, with interest rates rising, one of the advantages, you got fixed rate MIGAS right now. 5% guaranteed for five years.

Steve Lewit: Amazing.

Gabriel Lewit: Okay. If you’re saying-

Steve Lewit: Just how long ago, eight months ago it was-

Gabriel Lewit: It was 2% for five years.

Steve Lewit: … 2%, 3%.

Gabriel Lewit: So, you get 5% guaranteed now for five years. Zero risk. Some people really like that idea. And so now other people say, “Well shouldn’t I wait for the market to recover before I do anything different?” Well, you might be waiting a long time. Well, if we knew exactly what the market would do and when it would do it, that could be a good decision. But again, we don’t know. And so we always want to look at what is it that we’re worried about? Are we comfortable with our plan? In our plans we do bucketing for folks. So most people aren’t worried because of their buckets. But ultimately there are options. If you’re really looking for options, we just got to figure out what is the right choice for you. The only option we tend to strongly discourage is market timing and believing that there’s people out there that know the future and can make all the smart buys and avoid all the bad buys. That’s really just playing into your emotions.

Steve Lewit: And I think Gabriel, that ties into the next topic that you have for us, which is what if we look at this… Excuse me folks, I got a frog in my throat… If we look at this, where are you in relation to your retirement? Are you close to retirement? So in football terminologies, are you in the red zone?

Gabriel Lewit: Are you stealing my transition?

Steve Lewit: I am. I am.

Gabriel Lewit: You just stole my transition.

Steve Lewit: I did.

Gabriel Lewit: I do the transitions.

Steve Lewit: I know, but I wanted to… I That’s too violent. I was going to say pull the trigger.

Gabriel Lewit: Don’t do that.

Steve Lewit: Don’t do that. I wanted to move along.

Gabriel Lewit: Oh, okay. You could have just kicked me under the table.

Steve Lewit: Yeah. But I don’t know, I just, I felt the need to lead the way. But I’m ready. I’m ready to-

Gabriel Lewit: Okay, lead.

Steve Lewit: No, no. I’m ready to-

Gabriel Lewit: Forge ahead.

Steve Lewit: No, no, you’re the transition guy, so I’m ready to give up the reins.

Gabriel Lewit: Well, we were both implying here that with football season in the air and those Bears going well, two and two, we could talk about some football analogies.

Steve Lewit: It’s going to get a lot worse than that.

Gabriel Lewit: You think? I think so too.

Steve Lewit: Yep.

Gabriel Lewit: And you had mentioned the red zone, something the Bears don’t see a lot of. I’ll pick on them. They’re my team, I can make fun of them. So the red zone is the last 20 yards before you get to the end zone. So you’re basically you’re so close to your goal. And the worst thing you can do is mess it up and throw a turnover in the red zone. And it’s similar with your retirement. And this actually ties into maybe any moves you should make is, are you in the retirement red zone? Are you right approaching your retirement goal, next year, the year after? And is it a key time for you to avoid making any further mistakes or fumbles or interceptions in this most critical time of the game?

Steve Lewit: Well, you know, the plays change. Mid field, you have one set of plays. If you are right next to the goal line, there’s a whole different set of plays that your coach is going to call. So the same thing with us. For you, if you’re in retirement, if you’re a year away or two years away or you’re six months away, you need different set of plays then you did 10 years ago or five years ago. And that’s where a plan comes in. That’s where you might make some changes. Not reacting to the market, but making the market fit your place on the football field.

Gabriel Lewit: Yeah. Well another analogy that I really like about the red zone is do you think there are certain plays that you run and you practice them a few times and there are certain plays you run over and over and over and you really prepare for because you know how important they are. And those are usually the plays in the red zone, right? Because those are the ones that get you the score. And so my point there is that when you’re in that spot, you’re close to retirement or just about to retire, it’s so much more important to be prepared and to talk about what you’re going to do there. You don’t just never prepare for it. Get down there and then just chuck the ball up into the end zone. That doesn’t work out as well. So there’s a lot that we can do to prepare to be really successful at that point in time.

Steve Lewit: I have a new client that just came on board. They just retired and for the past eight months they’ve been drawing 70 grand out a… I’m sorry, I going to say 70 grand a month.

Gabriel Lewit: It’d be nice.

Steve Lewit: It’d be nice. About 20 grand a month… They happen to be wealthy people… out of the market. Selling while the market is going down so they could live. Now that is a poor plan. That’s like being in the red zone and scoring nothing. In fact, moving backwards. Moving back-

Gabriel Lewit: Tackled for a loss.

Steve Lewit: … tackled for a loss. Exactly.

Gabriel Lewit: Well, yeah. So many things there that are important. Another thing that can be important, things that football teaches us about financial planning. Would you agree with this sentence? And you’ll know where I’m headed on this. Does a good or bad coach make a difference to the success of the football team?

Steve Lewit: You know what I’m going to say. Yeah man. Absolutely.

Gabriel Lewit: Of course. You know where I’m headed with that, right?

Steve Lewit: I sure do.

Gabriel Lewit: Yeah. So-

Steve Lewit: So, like this. If you’re climbing Mount Everest, do you go it alone or do you have a guide, a Sherpa? What do you do, Gabriel? You know the answer to this.

Gabriel Lewit: Well, I’m trying to stick to our football analogy, Mr. Lewit.

Steve Lewit: Well, sports. [inaudible 00:29:20] bring other things in.

Gabriel Lewit: Okay. You have a head coach vacancy and you have two options. You can choose the young head coach that’s never done anything and that is unproven and that might or might not work out. Or you can choose the guy that has won six Super Bowl rings, coaching his team, that’s been through all types of adversity and challenges and good seasons, bad seasons, different teams, blah blah blah. Which one would you typically choose? The problem is most Super Bowl winning coaches don’t become available. But which one would you choose if you could? You’re probably going to choose the one that’s got that expertise. Has done it before.

Steve Lewit: Surely. But would hire a football coach that is great at baseball?

Gabriel Lewit: I’m not sure that makes a… I’m going to pick on you a little.

Steve Lewit: No, no, just-

Gabriel Lewit: I don’t know if that makes sense.

Steve Lewit: … Just-

Gabriel Lewit: I mean, no, obviously I wouldn’t pick a football coach that plays baseball.

Steve Lewit: Right. So the coach has to have the skills.

Gabriel Lewit: But then he wouldn’t be a football coach if he played baseball.

Steve Lewit: But a retirement coach is very different than the generalist coach. I mean they’re both dealing with money, but one is coaching baseball and one is coaching football.

Gabriel Lewit: I’ll use a different one. What if you wanted-

Steve Lewit: I thought that was… It wasn’t great.

Gabriel Lewit: … if you want an offensive minded team, do you hire a defensive head coach or an offensive minded head coach?

Steve Lewit: It wasn’t great, but it was good. It was okay. All right. It wasn’t very good.

Gabriel Lewit: Well, I think I will use mine. If you want a certain type of team, then you hire a certain type of coach.

Steve Lewit: That’s better.

Gabriel Lewit: Okay.

Steve Lewit: That’s better.

Gabriel Lewit: Yeah. As you’re looking at interviewing coaches or advisors, make sure you find one that fits your philosophy, I think is a very key-

Steve Lewit: And where you are in life. People that are 50 years old have very different needs than people are 63 And thinking about retirement.

Gabriel Lewit: Yeah. Okay, I’m going to do one last one because we’re almost out of time. So we got to go quick. Victory formation. Have you heard of this in football?

Steve Lewit: Yes.

Gabriel Lewit: It’s something the Bears don’t do much of.

Steve Lewit: I’ve never seen it.

Gabriel Lewit: Sorry, I’m just going to continue because I’m tired of them losing for 10 years.

Steve Lewit: They need a quarterback.

Gabriel Lewit: They need offensive linemen, center most importantly. Victory formation, this is when you know have the game one, you just either run the ball safe and securely or you just kneel down because you know you have the game won and you don’t worry about scoring more points because why? You’ve got the game won. Now what does this mean for you? If you have the retirement game won and you don’t need massive yardage chunks that risk in completions or interceptions, then maybe you just do safe and steady like running the ball and you don’t fumble it. And the point in retirement is maybe you don’t need to take tons of risk, aka risk of interceptions, to get huge gains, aka big yardage plays. Maybe you just can take victory formation and relax.

Steve Lewit: Yeah, I don’t get it.

Gabriel Lewit: Win the game.

Steve Lewit: I have clients that come in. New, prospective clients, I run their numbers then I said, “Man, you’re in great shape. You’ve got this game won.” Those are the words that I use.

Gabriel Lewit: I know you do.

Steve Lewit: And they say to me, “Really?” And I say, “Look at the numbers. I mean, I don’t think you could mess this up.” “All right, so listen, we want to be very aggressive in the market.” And then I show them what aggressive means. “So are you very aggressive? In a year like 2008, a very aggressive portfolio lost 50%. So if you have two million in the market, are you willing to take the risk that at some point in time you may look at that two million and it’s worth onr million?” And they, “No, I don’t want to”… And so, “Why do you want to do that?” “Well, we’re going to be missing all the growth.” You got the game won.

Gabriel Lewit: Take victory formation.

Steve Lewit: Victory formation. Take it easy, go out and spend-

Gabriel Lewit: Don’t risk the interception.

Steve Lewit: Go learn how to spend the money instead of making more of it.

Gabriel Lewit: So that’s where we’re going to end folks. Let’s help you get into victory formation. We can do it here at SGL Financial, 847-499-3330 or go to or you can email us info at Any questions? We’ve got one or two I think that have trickled in. We’ll answer those on a next episode. But thank you so much for tuning in. I hope you enjoyed our discussion on the markets. If you have any questions about the market, what to do, what’s going on, options alternatives, call us and we are here to help.

Steve Lewit: We are. Everybody stay well.

Gabriel Lewit: Stay well. We’ll talk to you on the next one.

Steve Lewit: See you soon.

Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at 847-499-3330 or visit us on the web at And be sure to subscribe to join us on next week’s episode.

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