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Roaming Returns
Most nomads just relocate their hustle—freelancing, content grinding, or trading time for money on the road.
We’re Tim & Carmela, the Income Investing Nomads.
On Roaming Returns, we break down how to build hybrid income streams—dividends, value investing, strategic flips, and tax-smart strategies—that decouple your time from your income.
So you can fund your freedom, travel full time (even in a van), and stop deferring your life.
No hype. No one-size-fits-all dogma. Just real numbers, tested strategies, and honest conversations about how to make work optional.
New episodes drop every Tuesday.
Roaming Returns
062 - How To Keep Your Cool When The Stock Market Gets Volatile
When fear comes a knocking, people start to panic sell. The beginning of August was a red bloody mess and that scared a lot of people away.
But savvy investors saw it as a great buying opportunity for so many stocks. Then the markets rebounded pretty much to where they started.
Fearful investors lose in times of high market volatility, but you don’t have to be one of them.
So today we’re going to discuss the things you can do to prepare yourself and your portfolio for when the stock market starts getting erratic.
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**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.
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Welcome to Roaming Returns, a podcast about generating a passive income through investing so that you don't have to wait to retirement to live your passions.
When fear comes a knocking, people start to panic sell. The beginning of August was a red bloody mess. And that scared a lot of people away.
But savvy investors saw it as a great buying opportunity for so many stocks. Seriously, when was the last time you could pick up Nvidia at $85 a share? So the markets rebounded pretty quick to pretty much where they were at at the start. People lose in times of high market volatility, but you don't have to be one of them.
So today, we're going to discuss the things you can do to prepare yourself and your portfolio for times of high volatility. All right, guys. We're back this week.
If you've been paying attention to the markets, you will see the absolute crazy volatile fest that started with August. Well, August, like the first three trading days of August, there was... So three or two? I think it was the first two. There was two on August 1st and August 2nd both went down.
And then August 5th, it tanked. So you're, okay, through the weekend. So there was three days.
What happened was it was like the perfect storm. People got nervous about a recession because of the economic data coming in. The Bank of Japan raised its interest rate.
And a lot of people are doing something called a carry trade. I mean, I read up on it. Basically, it's where they borrow money in the Japan market because it has a low interest rate.
And they invest it in a U.S. market that has a higher interest rate so they can make money off the U.S. bonds. But the Bank of Japan raised its rates and the Federal Reserve in America is going to start lowering rates. So people like wigged out.
So that whole carry trade wasn't a possibility. And then Berkshire Hathaway dumped like half the Apple shares they had. So that caused people some problems.
Was it Berkshire or was it Warren? I heard... It was Berkshire Hathaway. Warren Buffett did it, but it's his company. Okay.
So I saw the news that Warren Buffett was the... So like what happened was there was like people were trying to identify what happened last Monday as like a one-off thing because of the data that came out on Monday morning. And that's partly true, but it's kind of misleading because it was just a combination of just everything that happened like the last four or five days prior to Monday. But that brings us into our topic today because that's not going to be a one-off.
You're going to be probably going through multiple days like that the rest of the year. If I had to guess, I'd say that. So I was just thinking about market volatility and a lot of people panic during market volatility.
So we're going to discuss... And when people panic, volatility gets worse and it's kind of like a self snake eating the tail type deal. So we're going to discuss a couple things about that today. So it's going to be super awesome.
Well, should we reiterate now that what we said last year, August is typically a break-even month. August and September are generally the worst times to be in the market. So if you're not in the market, you're listening to the podcast and you're like, oh, maybe I'll pull the trigger and something.
I wouldn't pull the trigger till mid-September. I said that before. And I'll say it again.
If you're not in anything, I would wait until the dust clears. I mean, put stuff into like a worthy or short-term treasuries or something like that. If you really want to start getting your... What about bullet chairs? Oh, you can do bullet chairs.
If you really want to start, do something like that. Don't put it in the stock market until we get a better understanding of what exactly is going to happen with the interest rate cuts and with the election because there is an election. I'm sure everyone knows that coming up in November.
And that does kind of skew the monthly data. The markets and most people that talk about the markets seem to think Trump would be the better candidate for your investments. But there's a good possibility that he doesn't win.
So there's going to be a lot of volatility in reference to the election if that comes to pass. So you might want to hold off the election and just put it in bullet chair. It's up to you.
Just know that August, September suck for investing generally. But that's a good time to watch stuff on your watch list. And when you get around the mid of September, that will be the better time to get in at the low because there's usually an end of year Santa Claus rally that happens.
October, November, December are generally like the best quarter to invest in. So if you can... I hate saying time the market because it's impossible to do. But if you can time... But there are patterns.
If you can time your entry into the market to follow like a drop or two in September, you should benefit greatly from that. Because August or October, November, December generally are super awesome. So... Okie dokie.
So then... So what we're going to... Market volatility is... It's always present, but people don't really see it. And that's why they're like... Until it's crazy, crazy. Until it's crazy, crazy.
That's why every like brokerage or financial thing that you go on, like Yahoo or CNBC or whatever it is. CSNBC. Some like whatever... They always have a beta score.
We had a podcast about beta aeons ago. Beta is like... One beta is moving perfect harmony with the S&P. You want like... So because market volatility is always present, that's why they basically have that beta score there.
So you can see... Okay, well, this is a lot less volatile than the actual overall market. Or this is more volatile than the overall market. But it's not really a problem until all hell breaks loose.
And then people are like, Oh my God, market volatility. And then they panic. What I've actually... I know what I do.
I just don't even pay attention. What I was reading and it made sense is... I'm going to tweak it to in my own words. If you get wigged out when there's volatility in the market, that means you haven't done a proper risk tolerance or risk assessment test of your portfolio.
And you don't have a plan that you're sticking to. You're still planning to use emotions as your emotional training. Because if you wig out, that means your investments are too risky for your tolerance.
Actually, that's a good indicator. So this is like what I'm going to discuss. I'm going to give you nine points to stuff to do before super volatile periods.
So when we're in a lull, you might want to... Come back to this episode and actually edge season. Print this out and just stick it on the wall. The first thing you should do in a lull in the market when there's minimal volatility is you should assess your risk tolerance and your risk capacity.
Which you should have did in general before you started. Before you put any money in the market, you should have done this. But we've brought this up before.
If you're a person that gets real nervous when you look at your portfolio balance and it's down, you probably want to be in different investments than stocks. Yeah, probably less risky things. And there's all sorts of things on the interweb where you can do risk assessment tests of your portfolio.
Yeah, I'll have to figure out what episode that is. I'll link it in the show notes. Or you're investing your investment risk tolerance, stuff like that.
But you should know what category you fall into. Conservative. If you're literally going to be somebody that just invests in CDs and treasuries, that's fine.
That's perfectly, if that's what you're comfortable with, that's fine. You can still make income from that. It's just not going to generate as much income as we've been talking about.
But it'll mesh with your risk tolerance if you invest in those as opposed to investing in what we're talking about. You should definitely stick with what works for you because it'll work long term. Which means you'll profit.
So how I put this. Every time I buy something, I kind of envision what if it drops like 25%? Would I still be comfortable holding it? And if I'm not in that hypothetical situation, if I'm not still comfortable holding it, I won't buy it. Because there is always a possibility that your shit's going to fall 25%.
Your investments are going to fall 25%. Look at one of our longest holdings is Icon. That dropped like 70%.
But I looked at that and I'm comfortable holding it before I bought it if it went through a massive decline because I like what they do. And I like the company. I like what Carl Icon, he's kind of an a-hole.
And he's just like, you're doing stuff wrong. We're going to put our own people in. I like all that stuff.
So I was comfortable with that falling 25%. Now 70 is a bit excessive. Yeah, it's a bit excessive.
And it wouldn't have been as bad had we not been over allocated in it. But that's a prime lesson. Live and learn.
Okay, that was bullet point one, assess your risk. Bullet point two is you need to know your time frame for every holding you have in your life. Know your time frame for holding every investment you own.
Some will be for years and some may be for a year or two. But you need to have a plan in place for each investment you own. I'm reading from my... Yeah, that sounded robotic.
Rephrase. Know your time frame for holding every investment. Some are going to be long term.
Some are going to be short term. Yes. But you need to have a plan in place for every investment that you own.
Not your portfolio as a whole, each individual stock that you're investing. You have to have a time frame, a plan in place for each of them. Like for example, we have a bunch of stocks in our Roth IRA that we think are going to be long term growth holders like EXAI and SoFi.
SoFi, EXAI, PLTR, NVIDIA, Chipotle. Like all those are going to be like 20 or 30 year holds because I know they're going to be... NVIDIA, we just picked up because they hit such low numbers with this panic sell that just happened. And we're like, screw it.
Those are long term holds because... But you don't hear about those. You don't generate any income. Don't generate income.
They're not for income investing, but we have a plan. So we don't really pay attention to those. But like with ICON, I planned on holding ICON for many, many, many years.
Many moons. It was a long term hold. Like Trinity Capital, that one's going to be a shorter term.
It's going to be like a three to five year hold probably. But I'd like I go through like we have between the van life and the retirement for her mom, which there's probably like 70 stocks that we hold. But I have a plan in place for each of them.
And I actually have a spreadsheet where I have like... Yeah, we get nerdy. My ideas. But if you're going to have a portfolio of 10 stocks, you need to have 10 different plans.
You can't have a plan for what you're one portfolio. You literally have to break. You have to go beyond that to every individual.
It can be not necessarily the length of time holding. It can be like when it gets into a certain price range, that's when you're getting out or you're getting in. Right.
Because sometimes things will happen sooner than you expect. Right. But like if you look at what we're talking about volatility, if you have a plan in place, you're going to hold, say, ABR for 20 years or 30 years, it's going to be a long term hold.
Well, what goes on the volatility doesn't matter because your plan is your plan. If your plan is long term hold and it's paying dividends, you just pick up more shares when it dips. And there's other points to like these nine points here and you'll see why here, why the like the plan is feasible and volatility. We'll get to it in a second. Point number three is to diversify your portfolio.
I know there's a lot of talk about diversifications for people that don't know what they're doing and they're actually full of crap. And I'm saying that about Warren Buffett. Because he has a very diversified portfolio within his Berkshire Hathaway holdings.
So when he talks shit about people having like too much diversification, over diversifying is a bad thing. If you have say 500 stocks and you have an equally balanced like 2% each stock, well, your winners aren't going to generate as much money as you're like your bottom losers. So like you don't want to over diversify, but you need to diversify.
By diversify, we mean you can have like precious metals and you can have oil and you can have REITs and BDCs and stuff like that. And tech funds are closed into funds. I'm not saying diversify, don't have like seven REITs and like two BDCs.
Just because you have seven different stocks, if they're all the exact same like area, sector or whatever, that's not diversification. You have to diversify your sector as well as your stocks. You actually should start with picking sectors that you want to invest in and finding the best one or two stocks within each of those sectors.
So if say there's six sectors that you want to invest in, well then go through and find like the best one or two or three in each sector. That way your maximum will be 18 holdings. Okay.
But you would be diversified across six sectors. So that's the proper way to diversify. And it gets a little fuzzy when you start getting funds that kind of diversify within themselves.
And then yeah, index funds will basically do it for you. Closing the funds will do it for you. But even within closing the funds like you- You got to be attentive to not overlapping.
There's AI closing the fund. There's a tech closing the fund. So like if you hold say Apple, you like really like Apple, you have Apple, but then you have three closing the funds like USA.
What's another one? I know USA holds Apple. Well then you've actually- You wouldn't buy Apple in itself. You're not as diversified as you think you are because you have three closing the funds that have Apple and NVIDIA.
I mean, if you hold Apple and NVIDIA, then you're actually over- Over diversified. Over diversified. Or excuse me, over allocated in the same assets.
Yeah. Okay. Point number four is to have a financial plan.
I mean, we brought it up point two. Okay. So stock plan and financial plan.
By this, we mean know when you need the money from your portfolio and have a plan in place to provide the need of funds. So that goes hand in hand with the time horizon thing. That is a time horizon thing.
So if you know that you're going to be say sending your kid to college in 12 years, you know you're going to need to pull money out of your account in 12 years. Well, that's greatly going to change your- Investment strategy. Investment strategy and your willingness to take crazy volatile years because you'll be wasting a year of your portfolio.
You only have 10 years to recoup the losses that happen in crazy times. So if you have like a 10 year horizon, you have to invest accordingly with like more conservative investments as opposed to stocks. That's all that means.
Number five. Now this again, this just in a lull before there's high volatility. Remember, that was the premise of my checklist.
Number five is to rebalance your portfolio. Too much exposure to one sector or one stock can lead to some really nice gains. I mean like NVIDIA, for example, you gain like 200% in NVIDIA.
But if you have like 75% of your portfolio in NVIDIA, NVIDIA tanks from like 137 down to 95 where your portfolio looks like shit now. But when volatility is present, this can lead to some huge, huge losses. So you should rebalance your portfolio.
My general rule of thumb is I don't like to have more than 5% of my portfolio in any investment. Talking like the present value, right? The current value. Yeah.
So what they recommend in a lot of the investing books that I read, the way to get around buying high, selling low, like you don't pay attention to it from that perspective. You just check in on your portfolio, say once a quarter, once a half year, once a year, and you rebalance. And rebalancing, what you do is you take anything that has the higher percent and you bring it back down to your plan's basic datum point where it was.
And you invest that difference into the stuff that's lower in percent than it should be. And you're automatically buying low, selling high if you're using that methodology. And that's essentially what all investors and those experts mean when they're talking about rebalancing.
I think it's a better way to look at it, kind of like an intentional savings plan or an intentional spending plan versus budgeting. It's just that little slight tweak, but it's essentially the same thing. That's deep.
Do you have a six? Number six is mitigate risk by having some defensive assets in your portfolio. Defensive assets- Yeah, I was going to say, what the hell is that? Are, depending on who you ask- Bonds? Like bonds, precious metals, commodities, CDs, treasuries, things of that nature. Utilities? I think utilities fall into the defensive, but some people don't.
That's what I would- Consumer staples like- The stuff that people would buy regardless of whether you're in a recession. I think we talked about this before. You never know when a high volatility is going to strike.
And in the same token, you never know when we're going to go into a recession or a market correction, so it's good to have- Or a raging bull. Your ducks in a row before it happens. That's why you want to mitigate risk by being in some.
I don't have a set percentage, but if you look at our portfolio, it's about 35% defensive with utilities and oil and stuff like that. Well, I think we've talked about this. What Tim essentially does, because he takes the market pulse so frequently, he kind of understands the rhythm of things, and he can change his diversification percent based on what is expected to be a better play, so it does change and fluctuate over time.
And that'll come with experience. But when you're starting in the beginning, keep it simple and stick to your process. Number seven is probably to me is the most important aspect of any investing, not just with market volatility, but it is the research and knowing your metrics, knowing your valuations.
We had a walkthrough where you could see how we evaluate different stocks, and we determine if the valuations are good or not. You need to know your metrics. The reason you need to know them is so you know whether an investment is undervalued.
Say you're looking at- You have the same token. When you know your metrics, if you find a gem, you can put it in a watch list, and that's point number eight, is have a watch list. So if you know your metrics and you're looking at, say, I was looking at ARLP years ago, and I was like, well, I like what they're doing.
It's coal. I know coal's a dirty word, but I like what they're doing. I like their evaluation, but it was too high at the time, so I put it on my watch list, and I said, if it ever falls below, say, $73, I'll buy it, and once it fell below $73, I'd bought it because I had it on the watch list.
I didn't care what the market was doing, like with the volatility, if it was going down, if it was a downward trend, or if it was a bull market, an upward trend. I don't care because my evaluation said that if it's below $73, that's a good entry price for ARLP, so I got into it. If you know your metrics, it makes navigating volatility so much easier because you know what you're looking at.
You know when something goes on sale. If it's a value buy or not. You basically know when something goes on sale, and that's the beauty of that whole thing.
You have all your research done when your emotions are low, and then as soon as that price drops into your buy range, you can set your phones up through different apps. I had one. I think it was Seeking Alpha, or I forget which one it was, but you basically can let them give you notifications when certain stocks hit certain price points, and then you don't have to pay attention to it as much.
And then number eight was have a watch list, so I did mention that. Number nine is invest regularly, both during the good and the bad. Dollar cost averaging.
This will help your cost basis average. Yeah, that's what that means. That means pick an interval.
If it's weekly, if you get paid weekly, if you get paid bi-weekly, you allocate that percent towards investments. You do it religiously. It's tied directly into your watch list.
I'm not saying, say you want to do $100 a week, but nothing on your watch list is in the buy range, well, you obviously wouldn't spend $100 on stuff that's overvalued. That's just stupid. That's not what I'm saying.
You only buy the stuff that's undervalued. If it's a bull market, there's going to be times where stuff that's on your watch list will be in the buy range no matter if it's a bull market, and if it's a craziness like Monday, then pretty much everything is going to be in your price range. That was so hard because we were like, man, we don't have a lot of dry powder.
What the hell do you buy at that point when everything's on sale? You have to make choices. I think that's even harder than having onesies, twosies. So that is everything.
That's my checklist to do before all the shit hits the fan. So if you do that beforehand, you'll rest easy because you'll know your risk tolerance. You'll know what type of investor you are.
You'll have a watch list of things ready to go. You'll have your foundation buyout in basically. Right.
So now there's eight bullet points. For during. During.
So here's the list for the during volatility. On Thursday, Friday, and Monday when all hell broke loose, number one is do nothing. Literally do nothing.
Yep. Do not make emotional decisions. Either grab a bag of popcorn, sit and watch, or actually the best time, best thing to do is to honestly shut your computer.
Turn that app off on your phone. What I found interesting, though, because we. And go do something else.
We were off work and shit was going down and she was on Twitter and just like the conversation. Oh my God, it was so funny. Actually took your mind away from looking at like your portfolio or looking at Yahoo Finance.
Just listen to these people like. Tweeting all over the place. Everything's down.
Does anything up today? Does anyone have anything that's up today? I mean, that was entertaining. So that's something that like if you're on social media, rather than look at your portfolio, like, oh my God, I'm down like $4000 today. Just go on social media and, you know, laugh with everyone else's pain.
Just be a big group of people that are upset. But mainly do nothing. Don't do anything.
Don't make any rash decisions that that's the worst possible time to sell. And probably if you don't have a watch list and evaluations in place, it's probably the worst time to buy because you like would be like, oh, well, this is down 20% today, but you've done no research on it. There will might be that it's down 20% for a reason.
It had nothing to do with the market. Yeah. Which we did end up buying.
I did. After we took some time. OK, the second point to do during of all during when all hell breaks loose is to you need to have a conversation inside your brain or like to have a conversation with your significant other or one of your friends or whatever.
But you at this point, you need to emphasize the long game. Yep. It is a long game.
Like if you pull out the actual chart of the S&P 500 and you look at every time it had super volatile days where it was down like four or five percent in the law and the long game scheme of things, it doesn't matter because it's still like a ridiculous upward trend. I think the quote is if you pull out to a 10 year viewing block on an actual like market chart, you'll see an uptrend. Like generally every 10 years or rolling 10 is up.
The market's up. And like Japan. But even I mean, we can even do a shorter term.
You can do a year to date. Yeah. And you can look at like in 2024, you can look at, oh, my God, the S&P was down like four percent or the NASDAQ was down six percent.
But if you pull out year to date, which at this point was not even eight months, you'll see that it is still up 10 and 12 percent or 10 and 15 percent. So the long game you have to like, I don't know if you need to talk to someone. I mean, whatever you need to do to get that in your mind.
It's the long game. It's not about these short little micro corrections. Don't worry about it.
The third one's going to seem odd. I can't wait to hear this. But there is like a lot of empirical evidence about this.
Do not buy during the first and last hours of the trading day as they are the most crazy volatile on that is fact. So say something falls into your like what you have. You have cash laying around and something falls into your buy zone.
Don't buy it until like noon. If you buy it at 930, you're not going to get the price you're going to get at noon. I mean, if you put your lemon order and you might be fine.
But if you do a market order. Like the market makers are trying to match so much stuff. There's so much volatility in the morning and in the evening before close.
So that's just that's an interesting, an odd thing there. But that's something that there's plenty of empirical evidence on that. Shit is crazy the first hour and the last hour of crazy days.
Point number four is one of the reasons that we beat the drum about bullet shares so much is so that you have dry powder to use whenever there are deals. And that it's making yield. And the reason that we recommend bullet shares as opposed to CDs or treasuries is because bullet shares, you literally can sell right away, have the cash in your brokerage.
Like it takes a minute or two minutes and you can buy something else. Whereas a CD, there's no guarantee you'll even be able to sell it. And a treasury or bond, it takes like it takes a while.
It takes like bonds like generally the next day. Bullet shares because of the high liquidity. Period.
End of story. Okay. Point number five to do during when all hell's breaking loose is verify with your watch list investments that what you're thinking about buying is undervalued.
I know you've done it in point number eight of the first section. But even when it's all hell's breaking loose, I want you to double check and to re-verify that what you're thinking about buying is still in the buy window. Like you mean a metric evaluation? Yep.
Make sure it's still a good company, still a good this, still a good that, and that it's actually undervalued. Yeah. Point number six kind of ties right into point number five, which is do not try to time the market.
I mean, other than the not like the first hour and the last hour, you can kind of time that because you know it's going to be crazy. But do not try to time the market. Rather stick to your metrics and entry prices.
So say you wanted Intel at 1915. Well, you go in and you'd say, I want to buy X amount of shares of Intel at 1915 as my limit. And you hit that.
You don't. That's what you do. Don't try to like don't try to get cute.
Like, oh, the Intel is going down. I can get it for like 19 or like you might not get it. And then if you might if you don't get it and say it bounces off its resistance and shoots up your 1915, you would have got.
But because it bounced off and went up, now you're going to be paying 1930, 1950. So don't try to time it. Just put your entry, your entries in your limits in and just do it that way.
Yep. Walk away and just let the volatility of the day do its thing. It'll eventually hit it.
OK, point number seven. Shelve the emotions. Every year there are periods of big down market days or weeks.
I feel like that should be the banner. You cannot get emotional every time these happen. Like if you get emotional every time shit goes crazy, you're going to die.
I'm going to die at like 40 or 50 or 60. However old you are, it's going to be like 65 isn't usually for the heart attack crap. Yeah.
Stress eating you alive. We've been over this ad nauseum, like you can't be emotional and be a successful investor. That goes doubly during high volatility periods.
I really, really think if you just think of the stock market as a game and having your strategy in place, like if you ever play those RPGs and you have all the stats and metrics and stuff, stick to your plan and it'll work out. OK. And the point number eight.
Don't let fear divert you from your plan that you've established. Fear has no place in investing. We've mentioned that previously.
Is fear an emotion? It is an emotion, but like I'm just reaffirming. Like beating. This is how individual investors lose and the institutional investors always win.
Institutional investors have no emotion. They have literally programs and computers. Yep.
So basically when you're panic selling, they're in there like vultures. They're picking up the scraps. They're computer saying, oh, we got all these people panic selling.
So we're getting up all this stuff at a good price. Whereas you could be one of those people getting in there with. And they might also be the people pumping the doom and gloom news that's causing the emotional tweakery that's causing people to dump shares.
So think about it from that perspective. That's the eight points that like on when Monday when shit hit the fan. That's the eight points we had.
Ideally, you would do nothing. You just wait till Tuesday to just reenter your portfolio and look. OK, we'll look at the carnage from yesterday.
What's on sale? What's not? But if you really feel the need to get deals on the day of craziness, well, then you have to stick to your metrics and you have to have a plan beforehand going into it. You know exactly what stocks you're looking at. Look at the price point and buy when they're in your actual acceptable window.
If none of the other crazy was going down. OK, so the next section I have is after like a high periods of volatility. Like are we in a low right now? No.
OK, so they're still on pins and needles because there's some inflation data coming out. It'll restabilize. It always does so.
But like say you're in a period where there's not a lot of volatility, which will probably be like September, like the end of September and like middle like like a month between the mid-September to mid-October should be less volatile. At this point, you need to go into your portfolio and you need to rebalance. Some things most likely will have shifted by that.
Like some things may have popped off because say you were in a gold company and because everyone was panicking and trying to get the gold, your gold thing may have popped off. Now it's over your whatever your threshold is. Ours is 5 percent.
Yours might be 4 percent. So now your gold company is over the 4 percent threshold you have. We have to rebalance that, bring it back down to the 4 percent and put that cash into bullet shares and wait for the next sale.
And whatever else it's in. Most people don't do that. They only rebalance like once a year.
And I find that stupid. I was just going to ask you about that. Like how often you said quarterly, right? The minimum would be quarterly.
I do it. I do it monthly, sometimes biweekly. I just go in to verify.
Then you do it when it's like 1 percent over that threshold or do you wait until it's a couple percent over that threshold? No, like right now, Hercules Capital is pretty close. It's at like 6 and a half. And like a month ago, Queertip was at like almost 7 percent.
I didn't rebalance at that point. I was close but I was like, eh. So you hesitated when it was 2 percent over and then it actually pulled back? Pulled back a little bit, yeah.
But I'm not worried about it because it's a preferred. It's like it's 53 percent undervalued preferred. Well, that's the thing.
Sometimes it's hard to determine when to let your winners run, how often to change stuff. And then it's like if you're not in something that's a retirement account, like you'll get capital gains taxes and your dividends will get taxed if you – it's just – again, it comes with experience. It comes with timing and then knowing, sticking to your plan or having a plan.
And then point two to do after the volatility has subsided and everything's calm is to make sure that you are diversified still. During crazy times, certain areas will perform better than others. So your diversification may be off now.
Like sometimes – Well, that may change with macroeconomic shifts too, right? Sometimes like companies will fold or they'll sell and then you might actually go from like say you were an automotive company and they sold to a tech company. Well, now you're like over diversified in tech because the tech company bought the automotive company because they want to make like, I don't know, computer cars or something like that. Computer cars.
Like it happens. So like you just have to verify that your diversification is still – like if you want to be in six sectors, verify that you're still in six sectors and that you're not in five sectors with like a high percentage in like one sector. Just verify that you're diversified how you want to be.
Point number three is to revisit your plan. Are you still on pace for what you need? So like all hell broke loose. You're in the low.
So revisit your – both your financial plan and your investing plan and your risk plan. Like verify that you just need to look at all that. Like okay, am I still in a risk area that I feel comfortable with? Like that didn't seem that bad or was I still a little bit nervous? So I'm still a little bit risky in my portfolio.
So I need to cut some things and rebalance or put it in something else as well as your financial plan. Like the volatility periods like could be a month. That could be a year.
Like so if you have like a five-year horizon and you spend – like it's been a year of volatility where you only have four years left. Are you on track to fulfill your plan that you set in place with only four years now instead of five? And it's so much easier with dividends. And what was so cool about this last like volatility period, like yeah, we lost six – what was it? Six percent, six grand in like a day or two.
Our dividends went up. Like we've consistently been at $1,500 for three months and then we had a $1,700 a month and that was like – our $1,500 was our first goal and we nailed it and that was like – our portfolio dropped down again below $100,000. I think our low was $94,000.
Was the bottom it hit on that Monday or Tuesday? Yeah, it was $94,000. So it dropped like a crap ton. Dropped $8,000 in like three days.
That doesn't affect our dividends and we're going to go back to what we preach all the time. Using the dividend approach that we talk about, it is not about the value of your portfolio except maybe from the allocation and diversification standpoint. But the performance standpoint is all based on the dividends.
Well, I didn't mention that during thing. I should have mentioned it during the do nothing thing because you just brought up a very good point. It's not like – if your portfolio, our portfolio went from almost $103,000 down to like $94,000 or $95,000 or something like that.
So it dropped a pretty good percentage. Had we panic sold, that would have been a loss. Yep.
But because it's – Because we would have lost dividend payouts. But we would have lost dividend payouts but we would have lost our principal. It would have been like an 8% loss.
But because we did nothing, we didn't lose anything. And if we had any dividend reinvestments, it bought it the dip. So that's like – I mean when people panic sell, they are actually locking in their losses.
You lock in your losses and you're usually too scared to get back in which is – the rebound is usually a significant amount of growth versus going back to the datum and then growing from there. And that's like point number four is keep on investing. Even though you went through a period of the crazy, crazy, crazy volatility, you need to keep on investing because you never want to stop doing what you need to be financially independent.
And then like the only – there's only a couple of ways to become financially independent. The only one that I know of that an average person can do is through dividend or investing. I think – what did they say? Like the wealthiest and the people who become like legacy rich, investing is like the key difference.
So if you're not investing, you're literally leaving like passive income, compounding, financial freedom and independence on the table. And point number five is to do – then you're going to need to go do a deep dive in all each of your investments in your portfolio. You need to verify that the financials are still in a good place, that the EPS is still in a good place.
The revenue is still good. They didn't take on too much debt during like the period of volatility and that you're comfortable with the current valuation. And as – after you do the deep dive, then you have to go back to – I brought it up before.
You have to go back and say, would I be comfortable losing 25% in this company as it currently is? So it's like portfolio hygiene? Yeah. Makes sense. You have to do that.
Like you have to like – Because you do have to see too like companies go through growing pains, right? You have to make sure that they're functional. If not, you got to lop off the limbs, the bad limbs. Yeah.
And then point number six is prepare for the next period of volatility. This whole process will repeat itself time and time and time and time and time again. So – And don't think about volatility as a bad thing.
Like volatility is literally what makes people profits because the scared people jump ship and give you sales and you can be the person to swoop in there and – Like that's my checklist if you want. If you want to print that out, awesome. Just have that next to your computer or whatever and make sure – like if you make sure that you do all the – like if you prepare for a volatile market in the way that I recommended there, you'll be a lot less sane whenever there is a – A mostly reactive.
A super volatile market. And then if you prepare and you revisit and you just do some maintenance after the fact, you'll be fine. I mean it's stuff that we've said time and time and time again.
But like I mean I thought it was necessary to revisit it because – I think we should revisit it since it's being so volatile and people tend to forget. They get sucked into the emotional reactivity. All hell broke loose.
It's easy. It happens. But the ironic part was that even with the 5% or 6% sell-off on Monday, the markets ended the week almost even.
Yeah. So they gained the 5% back. Yup.
And historically, August is a break-even month. So even if markets start – August started off with negative whatever 7%. So it's like it's just a game of – it's the long game and if you can master your emotions, that's why we went through – The people who master their emotions win the best.
That's why we went through all that behavioral finance stuff so that you guys could actually identify the different things that you're doing when you're investing so that you could correct them. But the main point of all this is literally if shit's hitting – if shit's going crazy, do nothing. It's better to sit, wait, let the emotions process.
And if you have to look at it that day, wait till markets close. No, I'm not saying like say it's a very volatile day and then you're holding Company X and Company X reported its earnings and they were a shit show. I'm not saying, oh, don't do anything at that point.
Obviously, use common sense. Like if they went from like a profitable company that was making $2 million a year to a company that's now losing $10 million a year, well, their financials are fucked. So you probably should think about selling at that point.
Yeah, but that's like a normal earnings report. Like that falls into earnings report season and not necessarily into the volatility category. They're two – kind of two separate things, but they can overlap at the same time.
They can. I'm just saying like I had to verify – like I just had to put that in there. I'm not saying literally on the day when the market is down 5%, don't do anything.
If you have your portfolio, you should know – each investment in your portfolio, you should know when they report earnings. They report earnings and it was a shit show. Well, then obviously, you need to do something.
But like in general, if there's nothing – there's no catalyst for your holding to drop 5% other than it's a mass sell-off day, well, then don't do anything. But if – And I'm sorry. When we're talking about doing something, like did you see the news that Intel's shareholders are suing because they completely cut the dividend? Don't care.
I picked up. I thought that was so funny. I picked up.
It was essentially the same predicament that ICON went through and like they went to set the sue stature like what? Intel makes too much money to not like – So we bought the dip. Not to put a couple of shares into the portfolio. We figured out the very least will make a 10%, 20% gain.
We were just literally discussing SoFi. SoFi is another one. It's making too much money and it's doing everything that it needs to do.
Every news article that comes out is so good, so good, so good and it's not moving the needle at all. It's that one's a long-term game. Intel is short-term when we get that 20% or maybe – did you say 30? I might hold that bitch forever.
I don't know. Like it's Intel. Yeah, for sure.
We'll see. All right, guys. So that's this week.
Next week, I have no idea what we're doing yet. We've been kind of – we've been tossing some ideas back and forth. Yeah, we need to regroup still.
We've kind of been – Once we get on the road, we're going to have like a much more structured podcast thing where like the first podcast of the month is going to be a review of the previous month and the last podcast of that month is going to be a review of our dividends and our payouts and our expenditures and everything. So like that's once we get on the road. But like until then, it's just going to be what it is.
Whatever pops into Tim's head. All right, guys. Hopefully, that helps you with the whole volatility thing.
Hopefully, you didn't lose – hopefully, you didn't – Reactively emotional trade. Reactively emotional trade during that crazy stuff. You only lose if you sell.
True, true. True, true, especially if it's not worthy of the sale. I mean I can't – like nobody – And hopefully, you had the balls to jump into something on your watch list at a discount.
I was buying whatever I could. I was like, what can I sell? What can I get rid of? He's like, what can I sell? What can I get rid of? What can I – what can I turn the fat on? And then I felt so guilty for not having the condo done and not have like the extra money to invest because that would have been like seriously – Because if you look at like – Real quick, the reason that I was like that is not because I'm like a sociopath and I enjoy the pain. It's not that.
It's that there are only like a handful of days that are super volatile like that, that provide – So many buying opportunities. Such a buying opportunity. Like when you see that, your eyes should get big like, oh my God, everything is on sale.
Yeah. Like when you start seeing volatile negative markets like this as buying opportunities, you know you made it. If your eyes get big, you're like, oh my God, my portfolio is going down.
That's the wrong big eyes. If your eyes get big and you're like, oh my God, everything is on sale. You're like, oh my God, what can I buy? That's when you know.
And that was when we bought bonds because when everybody – like bonds were all tanked and Tim was like, oh my God. He's like, this is probably an opportunity of bonds that won't happen for another 10 years. It's like Christmas literally or blue moon, blue mooning.
Blue moon happens more frequently than people know. Once a year. Isn't it Christmas once a – well, I don't know.
It's the same thing. But it's like probably like – I think it's like once every – It's like a leap year birthday. It's like once out of 7 to 10 years, there's like a chance to get bonds at like 80 cents on the dollar.
Let's go with a leap year birthday. We'll go with that. All right, guys.
Hopefully that helps you. We will see you guys next week. Next week.
Have fun. Keep it real, homies. Keep it real.