#106 – Why Perspective Matters When Markets Get Loud

Jeff Lloyd [00:00:13]:
What a week, what a year. And we’re not even a full month into 2026 and we’re already saying, what a year.

Wes Moss [00:00:22]:
And this week I would love to go to Davos. I’ve never done that. The World Economic Forum. It would be very, very cool to be in Switzerland during dav.

Jeff Lloyd [00:00:32]:
When I’m watching those interviews and I see that background, take me there.

Wes Moss [00:00:36]:
It is. It looks like an incredible place. And the, there’s just so much news that came out of Davos this week, the big nervousness. And I just, I, I know folks have been nervous about it. I think the world is nervous about it. What are we going to do with Greenland and what does that mean for the un? Where are we going to use military force? That was a suggestion by the administration that had not been taken off the table. The market really didn’t like it. Monday, the Dow was down almost a thousand points, 2% on the S&P 500.

Wes Moss [00:01:11]:
So there was real nervousness going into the president’s speech on Wednesday. It was Tuesday. Monday was a holiday. So gold was up 3 or 4% the same day, stocks were down. The phone calls I got were, what’s to happen? Where are we? Do we get into fight with the European Union? The United nations are. We’re going to put tariffs on the eu and then in one speech, it was somewhat taken off the table. And then you saw markets rally pretty much immediately for the next couple of days. And it was this sigh of relief that, oh, okay, okay.

Wes Moss [00:01:49]:
This is another super, super bluster to get what the administration is really looking for. Very similar to what happened with tariffs. 100% tariffs. Where do they settle? 12 to 15%. What are we going to do to get Greenland? We’re going to. Maybe we’re going to take it. Maybe we use military. We’re not going to do that, but we’re going to have a deal to have a military presence there and participation with the Golden Dome, which, by the way, is something that we haven’t talked about a whole lot.

Wes Moss [00:02:19]:
But that is a massively expensive project to protect the United States from the top. We’re protected east and west. We’ve got big oceans. But the United States now has refocused in on protecting from the north over the Arctic Circle, and that’s why it’s become such a huge piece of the geopolitical conversation. They don’t want to be occupied by the United States, but the United States wants to have a presence there. And we’re getting a framework here. And I think that we’ll continue to hear exactly how it’ll shake up. But the markets had a sigh of relief after that.

Jeff Lloyd [00:02:52]:
Yeah. And there was a little bit of uncertainty before you saw the bounce back. And this is the second time we’ve been talking about military intervention. You saw a couple weeks ago, you saw Venezuela. Now you’re seeing a lot of talk what could happen in Greenland. Ultimately, cooler heads prevailed. Different headlines were coming out Monday and Tuesday. You saw different headlines Wednesday, Thursday, market was able to digest.

Jeff Lloyd [00:03:15]:
But like you said, you got a couple of questions and phone calls about, hey, what’s going on? Maybe they saw a headline that said markets have their worst day since October of 2025. Yes, that’s a negative headline. You as a financial advisor, look, well, hey, that’s our worst day in three.

Wes Moss [00:03:31]:
Worst day since. Which seems like decades, but no, is worst day since two weeks ago. The other thought here is that when we go into a crisis and markets react like they did on Tuesday before we got the rebound on Wednesday, is that financial issues do scare me. 2007, 2008, that scares me. That was a true financial crisis. When you see markets sell off because of the positioning or a statement, you know that that can be corrected with another statement. So those sell offs really do not make me worried. I know that they’re worrisome.

Wes Moss [00:04:11]:
And depending on where you are in the political continuum, you can say there’s been damage done. You can say this was a good thing. You can say it’s a terrible thing. But we’re not here to debate that. We’re here to talk about markets. And this is going to continue to be one of those years. We’re in a midterm election year. We had a wonderful conversation this week with one of our political strategy partners out of Washington, and we turn to him every time the world gets complicated.

Wes Moss [00:04:42]:
And there’s a lot of layers here. The explanation of really, why is Greenland that important? Why is it now such a big deal? And there’s a lot of layers to that. It’s talking about defending the United States. What is happening in Venezuela? Is that a hub for our enemies? If you really get underneath the surface, you can start to understand the machinations of what’s happening geopolitically. You may dislike it or you may like what’s happening, but it’s going to continue to create volatility because election years or Midterm election years are always the most volatile out of the four year cycle. You layer on top that natural volatility, you layer that on top with the climate that we’re in today. And this is going to be, this can be a choppy year on the other for markets on the other side of the equation. I think what the conversation we had this week with, with our strategy consultants thinking about what’s happening out of Washington economically, I don’t think we’ve stressed this enough.

Wes Moss [00:05:48]:
We’ve talked about extra stimulus, we’ve talked about tax refunds. But if you put all the pieces together that are, that are essentially coming out of Washington, I think we’re underestimating, or most folks are underestimating the economic shock and awe that’s just started in 2026. That should continue for most of this year. And when I say shock and all, I mean stimulus. We have, as you start to add it up, it gets close to a trillion dollars of stimulus in 2026. That sets up. 2026 is a very powerful, very policy driven growth burst. And we know that administrations, every time there’s a midterm election year, they try to goose the economy.

Wes Moss [00:06:34]:
That’s nothing new. It happens every single midterm election cycle. But we have fiscal stimulus. It’s directly to the consumer and directly to business owners. 150 billion in extra tax refunds that’s coming starting essentially in a week or two in February, that’ll go through April. That’s an extra incremental over normal seasonal refunds. $200 billion in business tax incentives, $200 billion aimed at investments, that’s property and capital expenditures, research, development. That’s a massive, massive incremental gain.

Wes Moss [00:07:10]:
Just those two, that’s 350 billion. Then you’ve got to add in all the other monetary stimulus the Fed has. They were draining liquidity out of the system. Now they’re putting liquidity back into the system. So that quantitative tightening that the Fed has been doing, that pressure is fading. The rate cuts that we saw last year, they don’t really take effect until this year. Not to mention we have, we have Federal Reserve meetings coming up late in, late this year. Jeff Lloyd, where’s our list for Federal Reserve meetings?

Jeff Lloyd [00:07:43]:
Yeah, so there’s a Fed meeting next week on the 27th and 28th. Then you have another one in mid March, late April, mid June, late July and then mid September, late October, in December.

Wes Moss [00:07:58]:
Right. So, okay, so we have more likely rate decreases coming. Then you look at the Fed expanding its balance sheet to the tune of $50 billion a month. $50 billion a month. And that’s the plumbing of the financial system. And the more liquidity there is, the more we can see banks lend and open up their wallets to some extent. And then you have to layer on top of that financial deregulation. And if financial deregulation for the banks continues to happen or happens in earnest in 2026, that is very much like stimulus.

Wes Moss [00:08:35]:
There may not be an exact dollar amount on it, but our strategy partner in Washington puts that at hundreds of billions and says, look, you put it all together, 2026 is a trillion dollars approximately of economic stimulus. And that’s why I would not be underestimating the strength of this economy in 2026. So we’re going to see the bumps in the road with geopolitics, the threat of new tariffs, the flare ups. Maybe we have another flare up coming, let’s say in the Middle east with Iran. But the backdrop, and I think this is what’s important for investors in 401ks, is that the stimulus in 2026 is really massive. And I think that’s a good thing. And that makes me not worried about this economy. Doesn’t mean we’re going to have an amazing stock market year and we’re going to have some drawbacks like we normally do.

Wes Moss [00:09:34]:
It just means the backdrop is really, really strong. And I think we’ve perhaps underemphasize that over the last couple of months. Then you go back and you look at what’s happened since 2020. Jeff Lloyd, you pulled a chart of drawbacks really since the Great Depression. We don’t need to go back that far. But just in the last five years we’ve essentially had three bear markets in five years. 2025 we were down almost 20%. We’ll count that.

Wes Moss [00:10:03]:
That was the tariff temper tantrum. 2022 down 25%. 2020 down 33.9%. Those are bear market numbers. However, over that five year period, total return S&P 500 133%. So there’s been a lot of pain and consternation that has come with that. But I expect that to continue. Both drawdowns where we’re going to get nervous.

Wes Moss [00:10:32]:
Folks are going to look at the news and say what’s happening to the world? I can’t believe this. I maybe I should put my money under the mattress. And we’re here to remind you that that is the normal. Whether it feels good or not, that is the normal course of being an investor over time. We have to deal on. That’s the tough part. And that’s why everybody doesn’t do it. That’s why it is, that’s why not everyone saves 20% and that’s, that’s why not everyone has compounded returns of 8, 9, 10% over time.

Wes Moss [00:11:05]:
Because it’s, it takes, it takes a lot of discipline and then thinking like a tomorrow investor. Last week we talked about zooming out and looking at what markets have done and earnings have done over the course of decades. So much easier to zoom out and see the progress really hard in any given day or any given week or any given month because the progress can seem as though it could be stifled at any moment. Now, one of my favorite headlines that came out of Davos is coming from Jensen Huang, CEO of Nvidia, argued very effectively that AI is not a job destroying machine, but a job creating machine. And he, he says, look, we are now in the midst of the largest physical and digital infrastructure build out in human history. He said, look, think about the massive investments in these data centers and chip fabrication plants, power generation, cloud networks, advanced manufacturing and all that requires people. And these are not necessarily PhD level jobs, but they’re high six figure paying jobs. Plumbers, electricians, steel workers, construction crews, network technicians, data center specialists.

Wes Moss [00:12:22]:
And he talks about how so that’s more evidence more Americans have the ability to be in that upper middle class with the change of what’s happening with AI. And then he talks about Jevons Paradox. When technology makes something more efficient, we often end up using more of it, not less, meaning the service that is made more efficient. And you look no further than healthcare. And you can now you would say, wait a minute, does AI make it so that we need less doctors and nurses? I don’t think so because there’s so much inefficiency and it’s so hard to get to the doctor and be seen and really have time that if AI now makes their jobs quicker, more efficient, they’ll have more capacity, so we’ll have more people to get better health care, which means we may not have enough doctors and nurses. So he makes the point that we may have a labor shortage over the next five years, not a decline in employment, but of a huge increase. And he makes a really strong case, continues to benefit folks moving from middle class to upper middle class and beyond. And that’s an economic story in 2026 that I love.

Wes Moss [00:13:40]:
More Money Matters. Straight ahead, here’s your retirement to do list. Analyze market history, track interest rates, understand AI’s impact watch midterm election volatility, plan out income, manage tax rates, evaluate healthcare and time Social Security correctly. Sound exhausting? Well, you could just work with capital investment advisors and let our team handle all of it for you. If you’re nearing retirement, don’t manage all these decisions alone. Visit yourwealth.com that’s y o u are wealth.com Davos always brings a little bit of tension in the air because there’s so many CEOs speaking and politicians speaking. The market was very nervous early in the week around what we were going to do with Greenland, what we were going to do with NATO. Does that, what does that do to the United States? And then there’s a huge sigh of relief when the president said, look, we’re not, we’re not going to take this place over by military force.

Wes Moss [00:14:42]:
That’s really all he needed to say for markets to breathe a sigh of relief. But it’s a classic example, Jeff Lloyd, of how geopolitical headlines not just again, there’s so many risks to the market. There’s credit risk and there is economic risk and there’s specific company risk and there’s geopolitical risk. Well, what does that mean? Well, it means anything that around the globe politically can destabilize or make people very unsettled. And this is a great example of that and one of the few where you saw a really negative reaction followed by a positive reaction, all within, call it 24 hours. It leads me, though, back to where do you go for safety? And the questions I got this week were, well, should I be going to gold? Should I be going to cash Treasuries? Are US Treasuries the place to go? Should I just stick it in a money market and not even worry about U.S. treasury bonds? And those are all very fair places to have money for higher degrees of safety. Gold isn’t necessarily going in that category.

Wes Moss [00:15:50]:
It just happens to be really not correlated to stocks. It’s not a one to one correlation, which would mean two assets move in the same direction. It’s not a negative correlation. So it’s not as though stocks go up, gold went down or vice versa, which by the way, did happen this past week. It’s just a zero correlation. And over time it’s an unstable correlation. Doesn’t make it a bad asset class. In fact, it makes it a good asset class as a compliment or a piece of an overall portfolio relative to stocks, relative to fixed income.

Wes Moss [00:16:22]:
But the one thing that I go back to, if someone asked me, where would you Stash your money for safety. I feel very, very comfortable with really good companies. And I know that anything that’s investing wise might sound risky, but I feel very comfortable if the world goes into disarray owning utility companies and owning energy companies and large profitable institutions. To me, that actually does provide a really high degree of safety. It doesn’t mean that the price of some of those companies, it doesn’t have an impact, doesn’t mean they don’t go down. But when you look at a really healthy business in a consumer staple or something that’s vital to the economy like energy and power, oil, gas, financial services, healthcare, and you find a company in that space, then to me that is a high degree of safety, even though it is technically the stock market, which is known to be, quote, risky. And that’s just a perspective I think I wanted to bring here on a Sunday morning after a really volatile week, I think investors can find peace of mind and some sleep well at night. As long as you’re investing in high quality businesses that you know will grow over time or have a high probability at the same time.

Wes Moss [00:17:49]:
We know that weeks like this, Jeff Lloyd create great chaos and they lead to poor investor returns. And we get that from a company called, there’s a company called Dalbar that does a report every year, qaib, quantitative analysis of investor behavior that shows how investors really do. They’ve been doing this for a long time. The core issue is that the emotion that we get because of market volatility, that is what impacts investors.

Jeff Lloyd [00:18:24]:
Now, Wes, you have been doing this a long time and I have a question for you. In terms of the emotion associated with investing these days, particularly this year, last year, the last couple years, comparing it to when you first started now, and we Talk about the 247 news cycle that we live in these days, we can get instant news on our phone, we can get instant news from Davos. Honestly, on CNBC.com, you can get minute by minute updates. Now, how does that compare for an investor mentally being able to get all these minute by minute updates on the stock market and the economy, how does that compare to when it was 10, 15, 20 years ago because you didn’t have as much readily access to stock market information and news coming out on, like I said, a minute by minute basis.

Wes Moss [00:19:18]:
This is the moment when I officially feel old because it’s the first time anyone has ever asked me about the long arm of history and what it was like back then. This is a big moment. Jeff Lloyd, and I appreciate you doing that to me. So it’s the first then now of probably many.

Jeff Lloyd [00:19:39]:
But I’m just looking for some wisdom.

Wes Moss [00:19:43]:
I remember when we started Money Matters towards the end of the financial crisis. It was late 2008 or it was early 2009. And I’d say those were the darkest days when it comes to economic sentiment and market settlement. That probably since close to the Depression. The reason they called it the Great Financial Crisis is because it was very akin to the Great Depression. There was a period of time we felled it at the time. And then looking back on it, we were right that we were close to the brink of full economic collapse. Almost every big bank almost went out of business.

Wes Moss [00:20:26]:
And the Federal Reserve, some did. Federal Reserve had to come step in. Warren. Guys like Warren Buffett actually stepped in. I remember him loaning money to. He did a preferred stock deal with bank of America that injected a ton of capital into that company. Also. I think he got a ton of stock at a really low price and that’s turned out great for him.

Wes Moss [00:20:46]:
But that period of time was. That’s when I get. When I think about, well, this is bad. You think about times when the global financial system is on the brink. And that perspective does really help. That was a lot worse than the tech crash. The tech crash was a valuation problem. Bunch of companies borrowed a bunch of money and didn’t do any revenue.

Wes Moss [00:21:10]:
In retrospect, it makes sense that the valuations are crazy. So the crises that we face today, they’re all very real. And it’s not as though they’re not negative for the market, but they’re not systemically worrisome like a 2007, 8, 9. As far as the information flow, I think it’s not that different. I think for me. And I think if you’re in the financial community 10 years ago and 20 years ago, you were still glued to CNBC. You were still glued to Bloomberg. I remember listening to Bloomberg every morning on Sirius Satellite Radio.

Wes Moss [00:21:50]:
There was such a flow of information back then. If you were tuned into financial media today, probably more people outside of the financial community are getting financial news whether they want to or not because of a headline and an alert on a phone. If you just happen to have the CNB app, you’re going to probably get a CNBC alert or a Bloomberg alert. I think it’s. It’s crept more into the mainstream. But I don’t remember ever feeling as though there was a dearth of information. And that. That probably goes back to the minute the Internet really happened.

Wes Moss [00:22:27]:
Is the minute we all had kind of up to date, minute by minute information. And I think that if I look at these QAI numbers, the qaib, the quantitative analysis of investor behavior, I remember this report from 20 years ago and looking at it five years, 10 years later and five years later, and now this is the first time I’ve looked at it in a long time. I had kind of forgotten about it, but it came up when I was writing the Retire Sooner method that’ll be coming out this year. But it just made me do a deep dive into a lot of things I’ve talked about over the history of money matters in my career. And the most up to date report that I had to buy very this was very expensive by the way, to get this QAIB report. It is, it says the same thing that it’s always said, which they are measuring in their own proprietary way, how money flows in and out of funds. And if you can track money going in and money coming out, then you can track the average investor’s result, if you will. Just because a fund is up 10% doesn’t mean the investors in the fund all got 10%.

Wes Moss [00:23:44]:
Some came in late, some left early, some left at the wrong time. And it’s measuring fund flows that can help you then derive what the actual experience is. And if you look over the past 10 years, and this was their 2025 report that ended in 2024 market data, the markets averaged over that period of time. If you were 100% S&P 500, a little over 13%, the average equity fund investor, 9.8%. So this is not a decision of are you in stocks or not? This is a decision that the stocks that you own, funds that you own, the average. Now this does, some people did better than this, some people did a lot worse than this. But the average individual investor did over 3 percentage points or 30% less good than the market itself. And that applies to folks in their 401k plans, et cetera.

Wes Moss [00:24:48]:
For fixed income, it’s even worse. If you look over time, fixed income over a 20 year period. As an example, Bloomberg Aggregate Bond Index has averaged a little over 3%. Still not great. The average fixed income Investor, negative negative 0.25. So the Dowbar through QAIB is measuring well, you’ve only got a couple choices in your 401k. Two of the big ones are US equities and fixed income. Yet by measuring fund flows, when people are in or out of these, it shows that people lose patience and you can really See that in the fixed income.

Wes Moss [00:25:29]:
I think that one makes even more sense to me because we’ve had some rough years and some drab years with fixed income. So people just get fed up and give up and then what happens? Last year, fixed income was up 6,7%. I didn’t mean to make it. That was not a 6,7 reference. It really was. So that’s the reality. It’s there. There’s a real emotional toll.

Wes Moss [00:25:51]:
It’s a. And it’s completely human and completely normal that the market is tugging you, pushing you, pulling you, throwing you at, oftentimes that then derail you from experiencing the very returns that you’re investing in to begin with. It’s an advertisement for patience, persistence, discipline, and that’s so much of investing. The US, of course, has stopped minting new pennies. Pretty sure we still use pennies. I haven’t been able to pay in cash, so anytime in the recent history. So I haven’t seen a penny for a little while.

Jeff Lloyd [00:26:31]:
So they’re not minting pennies anymore. They’re not producing any more new pennies. They’re still in circulation. And last week I was at a gas station and they still had a need a penny, take a penny. Have you seen those little coin bricks?

Wes Moss [00:26:46]:
Yeah, it’s been a long time.

Jeff Lloyd [00:26:47]:
I used it. I actually paid with cash.

Wes Moss [00:26:49]:
And you gave a penny?

Jeff Lloyd [00:26:50]:
I gave a penny.

Wes Moss [00:26:52]:
You brought up a story during the break that I thought was important because I wanted to talk about dividends around Procter and Gamble.

Jeff Lloyd [00:27:00]:
Yes.

Wes Moss [00:27:00]:
So last week they were not Buy Sell, not a Buy Sell hold, not.

Jeff Lloyd [00:27:03]:
A Buy Sell hold recommendation. But last week they declared their quarterly dividend, and they declared a quarterly dividend of 1.0568. So a dollar and five cents and.

Wes Moss [00:27:18]:
Six, six tenths of a percent and eight one hundredths of a percent.

Jeff Lloyd [00:27:25]:
I don’t remember seeing dividend announcements that go out to the hundredth of a penny.

Wes Moss [00:27:29]:
No wonder nobody talks about dividends is they’re literally in. They’re not just in cents, they’re in fractions of cents. So they get short shrift. But by the way, that was the 69th year of a raise. And this week we had been focusing in on again, if you look down the list of companies that have paid for decades and decades, it’s a very long list of companies that have paid for seven decades and 68 years and 69 years. Coca Cola more than 60 years, Johnson and Johnson more than 60 years, et cetera, where they’re not just paying a dividend, they’re raising a dividend. And that’s the story that we’re going to have to go into more next week. But the first part of that, I think is the interesting table study that we did.

Wes Moss [00:28:19]:
Historically, going back to 1994, if you just took your dividends and you just lived off those and just spent those and you started with a million dollars back in 1994, you would have had about $28,000 worth of dividends. So it makes sense. S&P 500 yielding about 2.8%. You get 28,000. The next year you ended up with 29,000, then 31, then 33, then 34. Because there is a very persistent dividend growth history in the United States. We’ve had a few years where they’ve gone down a little bit. But by and large, companies, once they announce dividend, they want to keep it and they want to raise it.

Wes Moss [00:28:55]:
And that’s exactly what we see over the course of history. If you started in 1994 and you took your dividends on $1 million by 20, let’s go in 10 year increments, by 2004 you would have had about $41,000 in dividends. If you go out to the year 2014, $84,000 in dividends. Go to 2004 another or 2024, $158,000 in dividends. If you had been spending and taking money just from the s and P500. Now of course, there’s a challenge here today because The S&P 500 yield is low. It’s only about 1.1%. This if you’re a dividend investor, you’ve got to look a little higher, a little farther to find sectors that include utilities and energy and consumer staples financials in order to have higher dividend yields.

Wes Moss [00:29:58]:
More on that next week right here on Money Matters. Jeff Lloyd, thank you for being here and thank you for tuning in. You can find me and Jeff Lloyd easy to do so at your wealth that’s y o u r your wealth.com have a wonderful rest of your day.

Mallory Boggs (Disclaimer) [00:30:18]:
This is provided as a resource for informational purposes and is not to be viewed as investment advice or recommendations. This information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. The mention of any company is provided to you for informational purposes and as an example only and is not to be considered investment advice or recommendation or an endorsement of any particular company. Past performance is not indicative of future results. Investing involves risk including possible loss of principal. There is no guarantee offered that investment, return, yield, or performance will be achieved. The information provided is strictly an opinion and for informational purposes only, and it is not known whether the strategies will be successful. There are many aspects and criteria that must be examined and considered before investing.

Mallory Boggs (Disclaimer) [00:31:06]:
This information is not intended to and should not form a primary basis for any investment decision that you may make. Always consult your own legal tax or investment advisor before making any investment, tax, estate or financial planning considerations or decisions. Investment decisions should not be made solely based on information contained herein.