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This time now, on Morning Focus, for our Financial Advice lot.
I'm joined as ever by Tommy Corbett from Carey Corbett Financial Solutions.
Tommy, how are things?
Morning, Ellen.
Good morning to you.
And last time you were with us, of course, you took us through the markets.
And an appropriate enough topic for this week,
because market volatility and why you shouldn't make rash decisions
with volatility in the markets, because there's a certain someone who,
depending on what he does or doesn't do, or does or doesn't say, or doesn't think.
Or tweet.
Or tweet.
They can change drastically, so a very apt topic to talk about.
Yeah, it's something that's supposed to be coming across quite a bit now,
maybe with clients in relation to queries in relation to what it should cash out.
Or, you know, and maybe certain clients maybe a little bit anxious
in relation to their investments and pensions and that kind of thing.
And I think we've all the stairs here and that, you know,
investments or pensions are a long-term saving vehicle.
And, you know, it's very important that you don't panic in times of volatility,
because I suppose I came across a line actually there last week.
I thought it was quite good.
It's basically market volatility is the price of admission for
long-term investment growth.
So you have to put up with it, basically, and not panic.
And panic does study in the times, and basically you need to write out the storms,
basically.
Yeah, you're always urging people who have investments to take a long-term
approach and not be irked or scared or spooked by events in the here and now.
Because believe it or not, better times do lie ahead at some points.
To do, yeah.
And even if you, again, it's something I think I might have mentioned here.
Even if you look at the last 10 years, if I said to you, Alan,
and you're 10,000 invest 10 years ago in 2016, I said,
well, what's going to happen on the next 10 years is we're going to have
Donald Trump.
We're going to be elected and cause havoc for four years.
Not to mind the second time.
We want to have Britain leaving Europe.
We're going to have a pandemic that's going to last for two or three years.
We're going to have huge interest rate hikes.
We're going to have huge inflation.
We're going to have war in Europe.
We're going to have war in the Middle East.
She wouldn't have given that thing.
You know what I mean?
You wouldn't have invested.
And yes, you're, you know, in the normal 60, 40 portfolio,
you would probably have double Germany.
You know, so that is the, I suppose that's the kind of context we're kind of talking about today.
I'm talking about living in the here and now, Tommy.
I suppose not many of us take that moment to take a step back and view the last decade.
And when you say it like that, my God, it's, it's a, it's an eventful to say the least.
Absolutely.
And if you take the decade before that, sure, we had a financial crisis before that.
We had a calm bubble and all that kind of stuff.
So there's always something going to happen.
And I suppose really it's just kind of, I suppose, to take account of that and not panic.
Okay.
And to help people, you have 10 evidence-based or backed points that they should keep in their mind
before doing anything drastic to their pension or investment portfolio.
So take us through those times.
Yeah, and even though we haven't really had a correction, yes, you know, due to what's
happening in the, in the Middle East, there's a lot of volatility around there and that kind
of stuff.
So as far as market corrections are normal and frequent, basically market corrections generally
happen once every two years.
A market correction is where it's a decline of 10% or more, you know, so they are normal.
Since 1928, we've had 27 bear markets.
That's their declines of 20% or more in the markets.
You know what I mean?
You know, that means we've had a lot more bull markets, which are increases in prices rather
than decreases in prices, you know, so they're normal and frequent, basically, that's number
one.
And number two, stocks have delivered positive returns of vast majority of times.
So 78% of the time in the last 100 years, markets have been in positive tertiary.
Now, that means that 22% of the time they haven't been, so you have to, you know, one fifth
roughly of the time markets will go down, you know, so one every five years you're going
to have a bad year and that could be a little bit more frequent, depending on what's
happened around the world.
But the average annual return on the S&P 500, which is the American stock market since 1926,
has been over 10%.
So again, if you did nothing on leave your money in the S&P for the last 100 years, you
would have had a return of over 10% per annum, but that again doesn't take into account
all the bad days you would have to endure as well.
So you do have to endure those that market volatility, as we said.
Okay, and you were touching on the point about the frequency of bull markets compared to
bear markets.
Yeah, and I suppose the bear markets are relatively shorter than bull markets in general.
So again, bear markets, again, where you have a correction of 20% more, you know, the
average length of time they have lasted for about 9.6 months or 289 days to be very specific
whereas bull markets last around 988 days, which is, you know, almost two and three quarter
years.
So basically markets go up far longer than they go down.
So and that's, you know, if you look at bull markets of average, around 112% gains while
bear markets have average, average losses of around 35% again, that's in the last 100
years.
So again, you know, the math strongly favors those that endure those who endure the downturns
rather than flee them.
And they're the ones who probably keep in mind that even in the dark times, the markets
always bounce back.
They will always recover and they always have every single time.
And I suppose the recent one really is your COVID-19 crash in 2020, which is all the S&P
500 fall over 33% in just 33, trading there.
So it was a massive decline.
However, it was fully recovered within about four months.
So again, if you had 100 grand investment, the S&P was down to 67,000 at its lowest point,
all within four months of that fully recovered.
And that's in a once in a century pandemic.
Absolutely.
And even if you go back to, you know, we were talking a lot here in relation to the likes
of the financial crash in 2008, 2009, they're all kind of fully recovered by about the
markets that fully recovered by about 2012.
We weren't even bailed out by the IMF at that stage.
That's a very, very good point.
What else from people to keep in mind?
Yeah, missing the best days, devastates, long-term returns, again, seven of the ten
best days in the last 20 years accorded in two weeks of the ten worst days.
What does that mean basically?
When you have a really, really bad day, you can probably expect a really, really good
day, very sharply afterwards.
So, you know, if you were to miss those ten days, it absolutely devastates your returns.
So we'll say if you had invested in the S&P for the last 20 years, we'll say between
2004 to 2025, you know, 10,000 Euro would have returned about 71,000 Euro over that time
period.
If you had missed the best ten days, that 10,000 Euro would only have returned to 32,000.
You know, so trying to time the market and we'll get on to it later, but trying to time
the market a few times.
And I guess whatever misery or heartache people might experience during the bad days,
that would be compounded if you get out of the game pronto and then the best days come
soon after you leave and that that would make you feel even worse.
Oh, absolutely.
And I've come across a lot of people and again, we'll come on to later on that we'll
say back in 2008, 2009, their investment or their pension went down, their panic, their
moves that into cash and did nothing for maybe seven or eight years and they missed all
the growth.
You know what I mean?
That cost them an absolute fortune by actually that panic and not getting advice really,
you know?
But listen to that more.
That's what I mean.
That's what I keep saying to my wife.
Stay invested in the Tommy Corbett market to miss his Corbett for a long term.
What else should people be aware of?
Yeah, panic setting, Laxia and Laxia permanently.
So again, if you've 10,000 invested in, you know, there's a 10% correction and it goes
down to 9,000 and you come out of it, you've actually compounded the last 10 by doing
that.
You know, so basically temporary Laxia's, you know, only become real.
If you sell it in the downturn, so basically don't panic.
Okay.
Why is Eurocost averaging important in relation to investments or pensions?
Yeah.
So Eurocost averaging, what that basically means, it means investing on a regular basis.
So for instance, if you're investing 100 yours a month today and markets go down, it
means that you're buying in cheaper so that when the bounce comes, you're going to
get it and it brings down the volatility in the downturn.
Again, it's not for everyone, but again, some people may be a little bit apprehensive
in relation to about investing in lump sum.
So most companies I will allow you to actually invest over maybe a six or 12 month period
that if you feel that maybe there's a little bit too much volatility there for yourself
at the moment, that you can basically hit the market a number of times over the next six
to 12 months.
Okay.
And you were talking there about people who panic and move to cash and they regret it
when the best days come, but what other negative consequences could there be from moving
to cash?
Yeah.
Well, over time inflation erodes the purchasing power of your savings.
So basically if you have money in cash and inflation is at 3% and you're getting zero interest
rates, basically the power that your money has, the purchasing power that your money
has has been eroded over time.
And yes, cash is very important for as a short-term vehicle and emergency fund as a buffer,
but I don't think that you're not going to use in the next five to 10 years or more you
need to be investing and you need to be able to, you know, you need to be willing to take
that little bit of volatility in order to make a return.
Okay.
Timing the market.
I'm sure there are plenty of people who think they have it sussed, but they don't.
Yeah.
And again, we said this earlier, Timing the market is basically impossible.
Again, what we said 7 of 10 best days, according to two weeks of the worst days.
So waiting for the perfect moment to sell or reinvest is never, never works.
And also by the time you feel confident of to reinvest, you basically have probably missed
the bounce.
So basically timing the market, no one knows what's going to happen.
I don't know what's going to happen next week, not the way next year.
So basically trying to find that market is virtually impossible.
Even though Tommy doesn't know what's going to happen next week, never mind next year planning
and getting advice from a gentleman such as Tommy is still a good route to go down.
Isn't that right?
Absolutely.
Well, the one thing I always say it's very easy to give advice and very easy meet clients
where markets going up under investment is going up 10% in the last year and draw
happy.
It's when the ups that happens and, you know, they're suffering losses and investments
are going down.
That's really when you need to kind of hold their hands and I suppose offer a little bit
of reassurance.
And that's why I always say get advice, make sure that you have a diversified portfolio.
You're not locked into one kind of an asset class and rebandanced periodically.
What does that mean?
Maybe as you get closer to retirement, maybe as you get closer to needing funds that you
might, you know, switch a little bit out of more aggressive, I suppose, investment portfolio
into probably a defensive strategy.
That kind of thing.
I would say seek professional advice at every corner.
Okay.
What other advice do you want to give to people?
Nothing really.
Just, I suppose in turbulent times, sit back and relax, let the markets do their thing.
And if you have any questions, you know, don't be afraid to pick up the phone to your local
advisor.
And if you have any questions, you can go out and give us a call as well.
Okay.
Speaking of questions, we'll finish with a few of those.
If I'm getting close to retirement, should I be reviewing my pension and de-risking?
Well, first of all, you should be reviewing your pension.
You should be doing that probably once a year.
Should you be de-risking?
That's a very interesting question because it really depends on what you're going to be
doing after retirement.
So most people will probably be going back into the markets post retirement.
So should you be actually coming out, you know, there's an opportunity cost by coming
out as well.
But maybe you might do risk a little bit, but again, it depends on your, I suppose,
for volatility and risk and that kind of thing.
So again, I would say seek advice.
We know there's, you talked about how much has happened in the last decade.
If we boil that down to 2026 so far, there's been a hell of a lot happening in less than
three months and someone might be wondering, is now a good time or a bad time to invest
giving what's happening geopolitically and the fuel markets and so on.
So to vest this, when you have money that you won't need for the next five to ten years
and don't try and time the market, we've talked about it already.
Even with all the volatility that's there at the moment, markets are still just about
even or up year to date.
So is it a good time to invest?
I don't know as I said, what's going to happen next week or next month?
So you can predict that it's a good time to invest if you don't need that money for
the next five to ten years.
Okay.
And we're talking about fuel there.
Why does the price of oil and gas have an effect on the markets?
Yeah.
Because even though we're kind of, we're not as reliant on faster fuels like oil and
gas as we were back in the 1970s, I suppose it still fuels our economy in relation to
the dry industry and that can think so basically when oil goes up and price everything, it has
an outcome effect to food prices, to energy prices, et cetera.
So basically when energy prices and fuel prices and all that kind of stuff feeds into the
economy, then we've less money in our pockets, if we've less money in our pockets, basically
we've less money to spend, which hasn't an outcome effect on basically the companies
and the markets that we invest in.
Okay.
A real domino effect there, Tommy.
Thank you very much.
Thanks a lot for joining us as always.



