We’ve been getting a lot of questions about what’s going on with the economy…
Many people are wondering if we’re headed for a recession—and what they can do to prepare if we are.
The good news is that even if we face economic uncertainty, it won’t be anything new…
In this episode, we cover what past economic crises can teach us about how to weather difficult economic times.
Mentioned in this episode:
Transcript
April Schoen: Hello, everyone, and welcome to another episode of The Secure Retirement podcast. My name is April Schoen. And I'm sitting here today with John Curry.
John Curry: Hello, April. Hello, everyone.
April: So glad you guys could join us today. So John, I know you and I were just talking that we've been getting a lot of questions here lately about, you know, what's going on with the economy? Are we in a recession, right? Or is this so-called recession coming our way? What should people be thinking about or planning for considering the landscape we're in today? So I'm excited for us to kind of just jump in and talk about that topic today.
John: Me too. And I'm excited about it. Because folks, there's no script in front of us. We're going to, I've got about four bullet points here that I want to follow. But I want to start, April, by simply saying, this is not our first rodeo. I've been doing this for 48 years. You've been doing it for 13 years. There's not a whole lot that people can throw at me that I haven't seen. I got a little bit more experienced than you.
April: Yeah, a little bit.
John: But I want to throw some other stuff out there before I started relating some of the things that I have seen personally, during my career. First of all, there's a whole lot of arguing going on in our country. We're very divisive. People talking about age issues, whether it be the age of the President, the age of people in Congress. And I'm 70, I'll be 71 in December. I don't worry about the age so much as I do worry about your ability. We all will reach a point that we are unable to do things we did before.
So I like to think in two words. Ability and disability. Doesn't mean I'm disabled and can't do anything, it simply means I can no longer do what I could do before. My amputation is a good example of that. There were things I can't do now. Okay, I can do a lot more today than I could two and a half years ago when it first happened. But I want to talk about that. Also the political environment, because that does impact the stock market. It doesn't affect our 401k's, our IRAs.
And also, we'll talk a little bit about what I've experienced with inflation in the past and the recessions. And I want us to touch on 2008 a little bit, and '09, because I think people have forgotten that. People have gotten a little bit complacent and have forgotten what happened back then. So I'm gonna touch on that some if we have time. I know we're trying to limit this to about 20 or 25 minutes today, but that's what I want to cover.
April: Absolutely. So let's talk about that a little bit. I love that you brought that up first. Like this is not our first rodeo. And, you know, I think most of you listening to this too, it helps you to realize that we've been through this before. We've seen whatever this is. It could be we're seeing think about 2022 and how volatile the stock market was, right? Where you had the S&P down almost 20% and bonds down 10%. I mean, that's a bad year in the market, by all accounts.
John: Any way you cut it.
April: Any way you cut it. And it was a very unique year, right, in that we don't typically see something like stocks and bonds both being down at the same time. So it's only happened a handful of times.
John: It's not supposed to happen.
April: It's not supposed to happen. You're right, you're right, it's outside the norm. But realizing that we've been there before, and that we're also going to be there again. So whatever this is, whether it's we're talking about recession, or we're talking about having some volatility in the stock market, that we're gonna get through this. And it's also going to happen again, in the future.
John: A friend of mine, Eddie. Good friend. He said it's not the first time, not the last time.
April: Not the last time. That's right.
John: And if you're naive enough to think that it's not going to impact you, then you're gonna get hurt.
April: And I know we'll touch on this too. But that's when you really want to make sure that you have a plan for times like this, that you have a plan for tough times or if there is some sort of crisis that's going on that you account for that because we know it's going to happen. So let's have a plan for it.
John: In our world folks would call that planning for unplanned life events. Sounds strange, doesn't it? How do you plan for something that's unplanned? Well, the way you plan for it is you get your act together. And you have a plan that you have confidence in that no matter what is thrown your way you can deal with it. I don't play poker anymore. But when I did like poker, the attitude was real simple. You had to play the hand you were dealt. And you had a choice. You play that hand or you fold. Real simple.
And if you've played that hand, you played the game, then you draw more cards, you might be better off, you might be worse off. And it's the same thing and dealing with the economy. But people who plan first, and they have an understanding of what could go wrong based on past experience. We've helped 1000s of people over the years. So it's easier for us to coach and guide you, because we've seen it. We've seen it. Been there. And I'm getting excited. And I'll talk about some things that happened when I came back from the Air Force in 1974.
April: Absolutely.
John: But I'll take control here.
April: I think, you know, I was thinking about some clients we worked with last year. And when we first met with them, you know, one of the things that they were concerned about is if one of them lost their job. You have to think back early in 2022. And, you know, for, I would really say, since COVID, we've had all of these fears around a recession, and what's going to happen to the job market and what's going to happen to unemployment.
So we had some clients who, he works in the software engineering world, and yes the tech world was very volatile last year, right. So he was very concerned about losing a job. So we put a plan in place for him. Okay, great. Let's play this out. What happens if you lose your job? Let's make sure that you financially can take care of yourself, no matter what happens, right? And fast forward, guess what happened? He lost his job.
And he was out of work for about six months, but we had planned for it. And what's great is that, while it's not great, he lost his job. But what was good is that we knew we thought that could happen, we planned for it. And so they did not panic, they were not scared. They were not worried because they had set aside resources to be able to prepare for that.
John: And that is called being proactive. Instead of saying, well, whatever happens happens. No, do the best you can with what you've got. And then when it comes, you're done and prepared.
April: That's right. So John, why don't you take us a little trip down memory lane. You know, you said you've been doing this for 48 years. You came into financial services in the 70s. There's a lot of people today that say, economically, what we're going through today is mirroring what we went through in the 70s.
John: I believe it is. So let me tell you my background. When I came here, to Tallahassee in 1974. First, I was in the Air Force 1970 to '74. My last base for a year at a time was in Thailand. So in April of '74, I came back to the states and I go to North Carolina, Seymour Johnson Air Force Base. And when I get there, I'm greeted by this long line of cars to buy gas because of the oil embargo. Okay, so I'm like, what's happening here?
And I ran out of gas. So a couple of guys helped me push my car up to the pump to fill it up. So we had a big recession. Okay, oil embargo, a lot going on. We were in the Vietnam War, beginning to wind it down. But we had a lot of political strife, just like we have today. We had a president who resigned. In shame. So we had a lot of political strife going on. A lot of divisiveness going on. Does that sound familiar?
April: Yes.
John: And where, if you fast forward when I got out of the Air Force in October '74, I came to Tallahassee. I worked at Borden's Dairy loading milk trucks for not quite a year. And then I had time to go to law school, go to FSU, then law school. And then I got into, back then it was just life insurance. The insurance and investment world. And when I came to Tallahassee and got in business in the financial services, we had a recession.
We had big projects in this community that if I named them people would remember them that came to a halt. I mean construction just stopped because of the recession. And interest rates zoomed up. Toward the end of the 70s and early 80s. Interest rates for mortgages got over 13%. My house that I bought in 1982, 13% mortgage.
April: And we think they're high today.
John: And they're not high today. Today is more of a normal number, but we forget that. And that's why I was excited about doing this podcast because I think that we need, all of us need a whack upside the head with that proverbial two by four to make us understand, hey, we're going through some of the same stuff. So don't panic. Don't let people scare the hell out of you and make you do things you shouldn't be doing. Just take a deep breath. Okay, assess where I am, and then build a plan. And then I'm gonna jump back to the 80s for a second.
In the 80s we had the biggest market crash since the Great Depression. We had inflation the highest it had been, ever. And mortgage rates are the highest. So that's to me, the end of the 70s and early 80s is almost a parallel of where we are today. High interest rates. Today, I think prime is eight and a half today. And then you take a look at mortgage rates. The last time I looked last week, I think that the 30 year rate was 7.3. I think, for a fixed rate mortgage.
So we're living in a similar environment. So, you know, people your rates haven't lived through that, like I have, and your parents, and others that are in their late 60s and 70s. And then something that really scared the heck out of all of us was the Y2K scare. Now, some people say, well, that was a, that was an absolute fluke, the way that worked. And I say because we had this fear about it, companies re engineered some things. And that's why we didn't have the world collapse because of Y2K. And they learned some stuff from it.
And hopefully we learn all the time. You mentioned 2022, a while ago. I want to talk about the 2000s in the sense of this. I'm gonna be negative for a minute. In 2000, the market was down. 2001 it was down, 2002 it was down. That's three years in a row. Now you and I are geeks about this. You more than I am. But we take a look at you go back all the way since the Great Depression. We had four years in a row the market was down. And then there's only been, I think, three, you correct me if I'm wrong, but I think there's only been three periods where we have three years in a row with the S&P 500 being down. So overall, it's positive.
But what happens is if we panic, and we pull our money at the wrong time, it could hurt us big time. So my advice to anybody and everybody who listens to this. Any money, you're investing in the market, whether it be S&P 500, or whether it be ETFs, or you're buying individual stocks, that should not be your grocery money. Or your rent money. That should be money that you put aside, and you take the mindset, I know it's gonna be up and down.
And I know that it can be down at a bad time, and I need it and I'm gonna get hurt. I've experienced it. I've taken money out when the market was down. And I knew, okay, I've got the loss to deal with today. And that money is no longer there to grow for the future. But that was a conscious choice. So don't risk the grocery money and the rent money.
April: That's right, the milk and bread money. You know, John, I think yesterday, I was speaking with a client, and something came about the stock markets and things that she's doing. And she asked me if it was a good idea about what she was gonna do. And I said, well, that depends. What's going to happen with the stock market? And she goes, well you tell me. I said, is the stock market gonna go up or gonna go down. And she's like, well, you tell me what you think. And I said, well, okay, I'll give you an answer. It's gonna do both. It's gonna go up, and it's gonna go down. We just don't know when it's going to do those things.
John: And if we could tell you exactly when we would be billionaires. Make a few other people billionaires, right. We don't have that power. We don't have that ability.
April: But we can plan around it. And we know it's gonna go up, we know it's gonna go down. So there are definitely some things that you can do to protect yourself from that.
John: Well, you've done a great job of helping our clients on the investment side. I lovingly call April our investment geek, but she's good at it. Let me tell you where she's good at it. She is good at doing the research and listening to money managers, when they're doing workshops. And she's learning what's happening. I don't do that anymore. April is our investment expert. So she takes care of that.
But if you have a passion for it, as you do, and you love talking about it, and you have the ability to coach and guide people to where you say, look, I don't agree with you, this is too aggressive for you. How about we back off. Whereas a lot of advisors, oh, go for it. Take more risk. We don't work that way. We don't work that way. Let's talk about 2008 for a minute. Because something's happening in our economy that bothers me.
I'm not an economist. I don't profess to be one. I read a lot. I still read a lot. I'm looking at my bookcase. I see books, back in the 80s about the savings and loan associations going through their turmoil. A book written by Sheila Bair about the FDIC crisis. But in 2008, we had this great recession and a lot of things that led up to that is we consumers. We the people, started using the equity in our home like an ATM machine. We spent spent spent, because you had this everything's going great. And all of a sudden the world collapses. Because it wasn't just the U.S., this was a worldwide collapse.
There's lessons to be learned from that if we will pay attention. And sadly, I think most people have either forgotten, or they never knew about it. Because of your age then. So I want to kick that around for a minute. Based on what you know, what advice would you offer anyone today who says, oh, my God, I think we're about to have this big recession. Maybe this could be another great recession. Give us your thoughts on it.
April: You know, the first thing that popped into my head when you said that John was recessions actually create opportunities. You know, you think about what companies were created and started in times of us having a recession or depression. The innovation that comes out of those times. So I think it's important that we don't necessarily have this downward spiral, this like negative thought pattern around what's going on.
Because sometimes we need to look for the silver lining. What is the opportunity that's available to us, right. Because even if the market is going down, even if we're in a recession, companies are still making money. People are still making money, you just got to make sure that you're positioned properly for that. You got to make sure that you're doing all the right things to protect yourself, to protect your balance sheet, to protect your cash flow, to really make sure that you're in a strong position, no matter what happens, right.
And I don't want to say that you don't care what happens in the stock market, because that's not true either. But that you aren't as tied to it. Your decisions aren't as emotional at that point when you have a plan in place, when you have structure, when you know exactly what you need to be doing and when. When you have that system in place, because you have a protocol to fall back on in those tough times.
John: Absolutely. I can tell you that for me, I went a long period of time that other than my annuities, and my 401k, I had no money in the market. I just didn't like it. It was too risky. And I even had a period of time where I said, you know, with all the money I have in cash value life insurance policies, that give me the peace of mind and security, why even bother investing. But there's something called inflation. And we have to have the ability to at least keep pace with inflation, hopefully outrun it.
So I then took the mindset, okay, I'm gonna be a little bit more aggressive with my investment side, because I have that ability. So I would simply say that if we do a good job of saving money, and we have our life insurance in place to take care of our families in the event of our death, but also to take care of us as we age, because my cash values now are there for me. To take care of me if I need that money for care. Or if I just want to increase my income in retirement.
That also gives me a tremendous peace of mind, and a permission slip that if I see something happening out here, I can take my savings money and go buy a particular stock. And you're right. A lot of people have become wealthy, during bad economic times. There are opportunities there. And you're right about the creativity, and people saying, hey, we've had some adversity, let's work around it. Let's be creative. But I think, I really believe in my heart that if people will take a few minutes, just come see us, let us help you review your plan, and decide what is right for you. And then follow the plan.
April: Absolutely, you know, when we're sitting down meeting with people, and yes, you know, we talk about, you know, planning for these unplanned events or planning for these crises if they come up. But you know, what's interesting about that is once you do that planning first and you get all those things out of the way, then we can then shift gears and really talk about what's possible. We can plan for opportunities and all the good, all the fun things, you know, as we like to call it sometimes. Because as long as we plan for all those things first, then it really frees us up to really be able to focus in on someone's future and their goals and what do they really want their financial world to look like in the future?
John: Well, my way of saying that is I'm going to plan for the worst and then I'm going to work for the best because I don't care who we are. We could die today. You could live to be 100 years old and outrun your, outlive your resources. So I think you have to be realistic and simply say, wait a minute, I have got to assume that I die too soon. And no matter when I die, it's too soon. I live too long. Or I could become disabled and cannot work, or I might need cash and I got to have liquid where I can deal with it.
And I was taught that in 1975. There are four financial hazards though that are the most important. Dying too soon, living too long, having an emergency with no cash, or becoming totally unable to work, and not have income coming in. And nothing's changed. Half a century later, it's still the same. It's still the same.
April: Yeah, we talk all the time about how our planning process these sound financial principles is something that we've been teaching. I'm gonna say we, it's a collective we, we've been teaching for decades. You know, and it's not different. It's somewhat different today. But the sound principles are all the same that they were in the 70s, 80s, 90s, and today.
John: That's why they're called principles. Principles last forever.
April: That's right.
John: Ideas and concepts, maybe not.
April: We just have to adapt to whatever new is going on in the world today, whether that's new tax law changes, or.
John: May I challenge you?
April: Sure.
John: We don't have to do anything. But those of us who choose to do it will do just fine. Just fine.
April: So John, as we're kind of wrapping up here. If someone's listening to this, and they are worried about what's going on in the economy today, or just the world today, what are some things you would leave them with to help give them some confidence and maybe some of the things that they should focus in on?
John: Well, number one is, I would say, sit down with someone like us. It could be us or it can be someone else. But find someone that you can have a conversation with. That's a true conversation. It's not someone lecturing you or trying to sell you. It's just a conversation. We're to a point in our lives, we want to help as many people as we can. We do that with podcasts, webinars, seminars, books. You know, find somebody that you want to get to know and you develop a relationship with, based on trust, respect.
But don't go to somebody that just wants to sell a product. Find somebody that is willing to talk with you first. No investment required, have a conversation. If it feels right, work with them. And if you're listening to us, and you're already a client of ours, come in for review, come and have a cup of coffee or a soda with us. And let's just look at your stuff again. And make sure that in today's environment that your concerns are met. And then I think is, take action. If you see something's not right, and you have the financial wherewithal to fix it, fix it. Don't talk about it, take action.
April: The worst thing you can do is be like that ostrich and have your head in the sand.
John: Yes. Because your butt's sticking up in the air.
April: Yeah, that's the worst thing you do is just ignore and just pretend it doesn't exist out there.
John: And I want to make this comment because I can't remember. It's been within the last month. We were meeting with someone and they said they didn't want to come in for a review, because they were embarrassed about some of their financial behaviors. They had spent quite a bit of money on stuff. And why would you feel embarrassed? When you come in here, you're in a safe room right here where we are. What happens in here stays in here.
To paraphrase that ad about Vegas. I would say number one, find someone that you can have a conversation with, that you enjoy talking with. And then sit down, build a plan, stick to your plan. If something changes to where you gotta modify the plan, great, but as much as you can stick to your financial roadmap.
April: Oh, that sounds great. Well, thank you guys for joining us today. And we look forward to talking to you guys again soon. We've got some great ideas for some future podcasts. And also stay tuned for our future webinars too.
John: There's gonna be good stuff coming, folks.
April: All right, have a good day.
John: Goodbye.
Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities LLC, and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com. Or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian or North Florida Financial and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address 3664 Coolidge Court, Tallahassee, Florida, zip code 32311. Phone number 850-562-9075. Securities, products and advisory services offered through Park Avenue Securities. Member FINRA and SPIC. April is a financial representative of the Guardian Life Insurance Company of America. New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.
2023-161597. Expires November 2025.