<To the tune of “It’s Beginning to Look a Lot Like Christmas…>

It’s beginning to feel a lot like February.

The market’s pulling back.

You’re going to want to freak out,

But there’s really no reason to pout,

It will all beeee okaayyyyyy!


Let me tell you a story… and let me warn you, this is a long one, but I wouldn’t skip it.  Even if it means keeping it in your inbox and waiting for a time when you can sit back and relax, if you never read another one of my articles, I really wouldn’t delete this one.  I promise only a story and absolutely zero nerdiness this time (I’ll save that for my upcoming series next month that I’m going to call “Nerdvember”).

So grab a comfy couch, your favorite blanket, sit back and enjoy…

There once was an individual who always dreamt of a long, fulfilling career, followed by a relaxing, stress-free retirement, filled with travel and time with their extended family.  She worked hard – and I mean sweat, tears, and all that!

Further, she was a great saver.  She put money away for herself, her family, she saved a good portion for college education and helped put her kids through school, and now even her children are wildly successful.

She finally hit a point in her career when it was time to hang up the gloves.  She’d saved right around $1,000,000 in her retirement accounts and it was time to start enjoying some “me time” while she was still healthy and able to do so… so she walked away and began her first day of retirement in June of 2018.

It was an anxious time, as it always is.  Retiring isn’t easy.  Many people define themselves partially by what they do for a living.  Some worry they won’t know what to do with all their time.  But everyone – and I mean everyone worries about whether or not their retirement savings will last long enough to get them through the last day of their lives.

Just when she was starting to get into the groove of things, the worst happened.  Or at least, that’s how she felt.  She would login to her retirement accounts relatively often and always enjoyed looking at her investment statements to see how things performed.  Her money was invested in a moderate growth investment model and things had gone pretty well for the first few months, but now things were changing.  Over the course of five weeks’ time, her retirement savings fell from $1,000,000 to $860,000 and she started to freak out…

“How low could it go?  What would happen if it went to zero?  What if I have to go back to work?  Should I sell everything and walk away?”


This is a hypothetical story that could be told by a woman, man, a couple, or a business owner (with regard to their company’s 401k) and I cannot count the number of times I could re-tell the exact story in so many different voices because it’s perfectly normal to feel this way when the market starts to become erratic and volatile.  Frankly, I think it’s one of the biggest reasons the retirement planning and investment management industry even exists!

The number one, biggest factor that decides the success or failure of an investor’s retirement plan is….

The investor.

It’s not the stock market, the bond market.  It’s not when you start saving or where you choose to retire.

The single biggest factor that determines whether or not that investor will succeed throughout retirement is the behavioral psychology and emotional control of the investor and their ability to stick to a well-written retirement plan.

Stay with me here for a second.

Let’s say you’re headed to Italy for a well-deserved vacation and you’ve planned it all out.  You’re taking a United flight to Chicago O’Hare, which will then fly direct into Rome.  You have hotel rooms booked and your plan is to visit:

  • Rome,
  • Florence,
  • Milan,
  • Venice,
  • San Marino, and
  • Pompeii

…before heading back to Rome for your flight back.

Now just think – what if you get to the airport and the weather is bad in Chicago, so you decide that you’d feel safer if you changed your trip and re-booked a Flight on Delta to Rome through Atlanta.  But when you get to Atlanta, you realize just how much you fear flying, and going over the Atlantic is giving you a sick stomach – so maybe it would be better to take a cruise ship?

Then, after cancelling your flight and while waiting for your cruise ship somewhere on the coast of Georgia, you discover during some light reading that the volcano in Pompeii has shown some signs that its dormancy is ending, so you start to think that maybe it would make more sense to visit Naples instead.

Are we having fun, yet?  Ugh…  This sounds horrible!

Retirement planning takes work.  We need to discover:

  1. Where you’ve been
  2. Where you are,
  3. Where you want to go, and then
  4. What gaps there are so that we can fill them with solutions that make sense.

Sounds a lot like planning a trip, doesn’t it?

As we fill those gaps, we figure out how much you can spend, travel, adjust it all for inflation and determine how much you need to earn so that you never run out of money at, say… 95 years of age.

We might pull some levers and adjust some variables as we finalize this plan, but in the end, the process is complete when we have a “travel plan” for the remaining years of your life.

Is it going to be a perfectly smooth ride?  Definitely not.  There will be occasional:

  • Traffic on the roads,
  • Airline delays,
  • Turbulence when flying,
  • Rough seas when cruising,
  • White-out winter storms,
  • Hurricanes & Tornadoes,
  • Fender-benders,

…and all sorts of scary situations and stories, which you’ll more than likely live to tell your kids and grandkids!

But no matter how conservative or aggressive you are when it comes to your investment management, there is “the plan,” and then there is reality…

Nothing ever works out perfectly.  The market experiences a “pullback” roughly three-times-per-year on average.  Three times!

Taking this a step further, you can expect the market to go through a “correction,” defined as a drop of anywhere between -10 – 19%, once-per-year, on average!

Said another way, the market will “breathe.”  It always does and it always will.

At our firm, we consider ourselves trend-followers, but we are not trend-predictors.  No one can predict what the market will do tomorrow, next week, next month, or in a year from now.

We protect our clients’ money against catastrophic risk by following a rules-based, trend-following strategy that aims to avoid severe market crashes… but not pullbacks or corrections.

Corrections like the one we’re living in right now are perfectly healthy in the long-term and you, too can live through them without scars (it’s true)!  After all, the market can’t go up in a straight and flat, diagonal line without stopping to take a breather from time to time.

But I will tell you, these “breathers” are perfect times to turn off the radio and TV, spend time with your family and friends, go to a movie, read a book, but whatever you do, stay away from the NOISE… because that’s all it is.  Noise.

If we go back up to the woman in our story, let’s put aside the fact that her portfolio is only down -14% ($1,000,000 –> $860,000).  There’s another lesson here, by the way – never refer to your short-term gains or losses in terms of dollars and cents.  Always think of them in terms of percentages, especially when you’ve saved a large sum of money!  Point being, in the grand scheme of things, this -14% temporary loss is nothing compared to:

  • The 1972-74 Crash (down -48%),
  • The fall of 1987 and Black Monday (down -33%),
  • The Dot-Com Bubble (down -47%), or
  • The Great Recession (down -58%)

In the short-term, sure things might seem scary, but looking at the long-term, this market still looks like it’s got some legs before we see the next catastrophic crash.

With all that being said, if the current market correction turns into something that starts to look like an imminent crash, then I’ll continue to sell the weakest investments in our clients’ portfolios until the last one is standing.

But at this moment, that’s not what I see through my long-term lens, and one of the biggest mistakes an investor can make is to “anticipate” where they think the market is going!  We have our rules and we stick to them.  If they are broken, then we take the appropriate measures to sell – and then find another, better investment for our model portfolios.  If there’s nothing in an uptrend, then that portion of the retirement portfolio remains in money market (i.e. – cash/savings) until the coast is clear and the market landscape looks safe.

However, I can’t reiterate more, while the market will crash again someday, I don’t see a crash coming yet.

And if you keep reading these articles over the next month, “Nerdvember” will prove to be a truly educational month, filled with pictures, charts, and hopefully a little fun!  But for those who are just dying to hear some reasons why I’m still optimistic about the market going forward, here’s the Cliff’s Notes version:

  • The S&P500 is still trying to hold the June lows (support) which also formerly represented the April highs (you need to get out a chart for this one).
  • It’s also still holding above the February and April lows.
  • It’s also holding well above the AVWAP (Anchored Volume Weighted Average Price) from the Feb. lows, which is a level at which the big money likes to play.
  • The 50-day trend (moving average) is solidly above the 200-day trend, which is very much unlike 2015-16 or 2011.
  • I’m starting to see some potential upside divergence in momentum starting to build, which is what I expect to see if this market continues back to all-time highs.
  • Some longer-term rankings between asset classes that we follow still put U.S. stocks solidly at the #1 position with international stocks at #2, Commodities at #3, Bonds at #4, and Cash/Money Market at #5. Said another way, the long-term, rank for “cash” isn’t even trending toward a higher ranking than U.S. stocks.
  • Severe market crashes are typically preceded by a 4+ month negative divergence in breadth as defined by the NYSE Advance-Decline (A/D) line. We have not seen this divergence this year.
  • Whenever the NYSE A/D line does not diverge against the market, the drops are typically much less severe (less than 20%).

Again, if you want more details, please be on the lookout for all my articles in November, which will be themed “The Nerdvember Series.”  I promise to keep it as simple as possible, but I do plan to dive head-first into some nerdy charts and technical analysis, and welcome any and all questions!

Stay away from the financial noise and have a fun weekend with your family.  We’ve got your back!

Till next time…


* Adam Koos, CFP®is a CERTIFIED FINANCIAL PLANNER™ Professional, as well as president and portfolio manager at Libertas Wealth Management Group, Inc., a Fee-Only Registered Investment Advisory (RIA) firm, located in Columbus, Ohio.

 The opinions mentioned in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial adviser and strongly consider interviewing a fee-only financial advisory firm, prior to investing. Past performance is not guarantee of future results. Economic forecasts set forth may not develop as predicted. The views and opinions expressed in this commentary are those of Adam D. Koos, CFP® and do not represent the views of TD Ameritrade Institutional and its affiliates. Investing involves risk including loss of principal.