Hello, my name is Chad Taylor, managing partner with MDT Financial Advisors here in Houston, Texas. Today is Wednesday, March the 12th, 2025, and I wanted to get on again and record a little video about what's been going on. The markets have still been pretty volatile this week, mainly down, but there have been some rallies in there as well. And by the time this comes out, we did record a video earlier this week that talked about last week in all the price movements and there was a few slides that we wanted to talk about, our pages that we wanted to talk about. And so I was going to bring Nick Renfro and Dante Milanesi back on with us to cover some of that. What's gone on so far this week? All this stuff from last week has kind of spilled over into this week. There's the headwinds the markets have of the potential global tariff for weakening labor market and the administration's attempt to lower government spending.

Now, with all of that said, we are still predicting, and this is in part the reason of our predictions, and when I say our predictions, I'm talking about the Wells Fargo Investment Institute, but we still see growth of the economy coming in at 2.5% for this year, which is a sustainable growth or a good growth in the economy. That was on the heels of the second half of last year that was pretty robust. And so it's slowing down a little bit because of all these headwinds is not unexpected and probably is expected, but we don't think you can extrapolate that into having a recession. So we're still saying that we should have an economy that grows at 2.5% this year, and if that in fact is the case where we don't see a recession in the economy, we should see the stock market find a bottom here.

And that's in fact what one of the discussions Dante and Nick are going to talk about is these markets, and we always forget me included, that these pullbacks normally happen once a year. The bigger pullbacks, the 20% or more happen once every three to four to five years. But these 10% pullbacks happen quite often. And what we are noticing this year versus 2022, which was the last time we had a meaningful pullback in the market where it was down more than 20%, the bond market this time is cooperating and doing what bonds normally do, which are helping the portfolios not be quite as volatile if you have bonds in those portfolios. And so I'll get Dante and Nick to talk about this, but as of this point, we think a lot of this is it's headline news. The markets had run up quite a bit the last couple of years, even after the little blip that we had last April of 2024.

But it is pulling back right now at this point, unless something changes, which it always can, and you need to make sure we're looking at your plan specifically each person specifically, but we do think this should pass. I just don't know when. And in fact, the research, the Investment Institute is saying we should be using these pullbacks as buying opportunities and specifically this pullback as a buying opportunity. Now, most clients that are fully invested, that's hard to do, but if you have new money, this is the time to use it as a buying opportunity. But it should give you comfort that at this point we still, if it's a buying opportunity, that means we probably are not suggesting anyone make wholesale changes to their asset allocation unless things have changed, unless you need the money sooner, unless your investment objectives have changed more unless your investment plan has changed or it is keeping you up more at night. So in those cases, yes, making a change may be the right thing to do, but making a change, not making a change may be the right thing to do.

Okay, so again, I had in the last video, I've got Dante Mil and Nick Renfro on with us today and they were going to cover a couple of topics from a report. The title of the report is Why Own Stocks and it's a long report and if you'd like a copy of it, we of course can get you that. But there was a couple of things that I thought were interesting in kind of what we're going through right now. And so let me share my screen and I'll get Nick to start off and then Dante can come on and cover the next page. So good. I think that's sharing it now, Nick, on the volatility. So if you could take me from there.

Yeah, sure Chad, and I think that's a question we're probably asking ourself a lot right now is why own stocks? Because obviously we've had quite a bit of volatility with the markets over the past couple of weeks with the tariffs and all that news that's kind of come to fruition. So this report that Wells Fargo put out a number of years ago called Why Own Stocks is kind of one of my favorite reports to refer back to. When we go through times like this specifically on this volatility page, we can look at the s and p 500 and what that's done over the past a hundred years or so. We've got really three types of corrections, right? We've got dips, which we can define as declines of 5% or more. We have corrections which are declines of 10% or more, right? That's kind of what we're seeing right now across the major indices, the nasdaq, the Dow Jones Industrial, the s and p of 500.

And then of course we have bear markets which are declines of 20% or more. Those are the scary ones. And so going back to 1928, we've seen dips of 5% or more, 329 times, that's about 3.4 times per year. And that indicates to me that this is a normal thing, 10% or more. We've seen about 103 occurrences going back to 1928, which is about 1.1 times per year. And then of course we've had 27 bear markets declines of 20% or more going back to 1928, which happens less frequently, but one every 3.6 years. So the takeaway from these numbers, because I always think it's helpful to put some numbers behind our talking when we go through times like this, the takeaway here is that volatility is inevitable If you're a long-term investor, it kind of says it good at the bottom of that page there, market declines, they're unsettling, right? Nobody likes to be down. I hate it just as much as everybody else, but the reality is if you're a long-term investor, it's a normal occurrence. We're going to go through pullbacks now in the future. This won't be the first or the last pullback for long-term investors. So what does all this mean? It kind of sums it up there in the right hand column. We're going to have multiple pullbacks. Pullbacks can be opportunities, and I think that's what Dante is going to talk about in his section. And so

That's it.

Yeah. So in general, what we're going through right now normally happens about once a year is what the report is saying. And last year it was April and I remember it was, I don't remember what it was about. I'm sure we have a video kind of going back to that time, but it was something in the markets sold off and then found a bottom and worked their way out. Thanks Nick. So I wanted Dante now to talk about pullbacks can be opportunities. And we've seen, we've probably had this report or this chart on our videos a number of times through the years, but it's always great to revisit it because in a picture format can show you what we could be going through right now and that it is fairly normal. It never feels normal. It always feels different every time we go through it, but it is something that is not out of the ordinary. So Dante, if you'd kind of cover this for us.

Excellent. So as far as what we were going to look at here on this specific page is that pullbacks can be an opportunity to buy. Since 1980, stocks have dropped an average of about 14% during those calendar years. Now 33 of the last 43 times they dropped, they had risen back and actually eclipsed or met the 10% mark in terms of a return. And what this chart is showing is you can see each of these gold diamonds here at the bottom. Those show the downturn that specific year. And in 2024, you can even see last year around the April timeframe, we did experience a slight correction and we were down about 10% on the stock side, but we ended the year positive. Now when we go to 2020 and we were down 34%, those are the times that are scary. Now, fortunately at this point in time, we don't see that in the market. Now things can always change, but at the same time, we want to lean on our research, lean on our retirement plan and make sure if it is a buying opportunity, we can make the most of it

Good. And so you can see it's very normal. I mean, those gold stars drop as Dante said, the ones that really scary are like 2008, 2020, 2001, 2002. Those are the things that you really worry about. And at this point, unless something changes, we just don't see that in the economy or the markets right now. But as Dante said, it can change. And that's why it's always good for you to think about it, talk about it, see if anything's changed in your situation, and then we may want to make a change there. So let me stop sharing our screen here. So great. So that's what we wanted to cover today. If you think of anything, if you have any questions, I know we've all been on the phone quite a bit the last couple of days with different folks, and I've always found that's the best thing to do If you are nervous, if you want to talk, that's what we're here for. Please, please don't hesitate to call in and we'd love to hear from you. I hope you have a great day. Thank you.