How to survive the market crash

I'm Maddy and as always, I'm in some very good. 

Maddy: [00:00:27] Company with my co-host Sophie.

Sophie: [00:00:28] Heller Mads. Tonight we're drinking a little negroni we. [00:00:31][2.6]

Maddy: [00:00:31] Love it my. [00:00:31][0.4]

Sophie: [00:00:32] Favourite let's coming to a clink. [00:00:33][1.1]

Maddy: [00:00:33] Is it sounds so good. [00:00:35][2.4]

Sophie: [00:00:38] Negroni is like my favourite drink What's your favourite cocktail? [00:00:40][2.3]

Speaker 3: [00:00:41] Margarita. [00:00:41][0.0]

Maddy: [00:00:42] Oh, to. [00:00:42][0.4]

Speaker 3: [00:00:43] You this is delicious. [00:00:43][0.9]

Sophie: [00:00:44] I know you said you didn't like it too much, but it's feel like it's a nice winter. Kind of spicy little number. Yeah, that's good. Well, I'm really glad you guys now know our favourite cocktails. [00:00:54][9.8]

Maddy: [00:00:56] We should talk about. [00:00:56][0.5]

Sophie: [00:00:57] Investing instead meds today. I actually wanted to start off with a tik tok trend. Said we might be a bit behind on the times. I feel like I miss out on like TikTok trends come and go so pick. [00:01:09][11.8]

Maddy: [00:01:09] Which one is. [00:01:09][0.5]

Sophie: [00:01:10] It's the one where it's like. [00:01:11][0.8]

Maddy: [00:01:11] He's a ten oh oh. I like it. Let's try it. [00:01:14][3.8]

Sophie: [00:01:15] Well, the other day I went on TikTok and there was this tik tok of, you know, other ones where it's like you're walking around the house during the day and it's like in a minute and out, and it was always. [00:01:22][7.7]

Speaker 3: [00:01:23] Going to have that. [00:01:23][0.3]

Maddy: [00:01:23] Stuck in my head. It was. [00:01:24][0.9]

Sophie: [00:01:24] All these different sounds. [00:01:25][1.0]

Maddy: [00:01:26] I've never heard, Oh my. [00:01:27][1.4]

Sophie: [00:01:27] God, I've been off TikTok for two weeks, and this is what. [00:01:29][1.7]

Maddy: [00:01:29] Happened. Yeah, well. [00:01:30][0.5]

Sophie: [00:01:31] Anyway. [00:01:31][0.0]

Maddy: [00:01:31] All right, what have you got for me? [00:01:32][1.1]

Speaker 3: [00:01:33] I'm excited. [00:01:33][0.2]

Sophie: [00:01:33] Okay, he's a ten, but when he goes to the library to study, he takes off his shoes and socks. [00:01:39][5.8]

Maddy: [00:01:40] Oh, yeah. No faffing. No, I'm actually, like, physically cringing. I was trying to think of things that you don't like. I'm going to say a fall for that. Oh, God. Awful. I'd give him a straight zero. Okay, I'm going to call that. Let me think of one. He is a nine, but he he's got four. [00:02:04][24.2]

Speaker 3: [00:02:04] Different super accounts. [00:02:05][0.7]

Maddy: [00:02:07] Oh, like knowingly. Yes. [00:02:10][2.8]

Speaker 3: [00:02:12] He's too lazy. He just doesn't care. It's not a priority. Yeah. [00:02:14][2.4]

Sophie: [00:02:14] He's, he goes down to like a good, good girl. [00:02:16][1.7]

Maddy: [00:02:17] Five of four. Yeah. It really upsets me. Yeah. [00:02:20][2.9]

Sophie: [00:02:20] If he knows about it and does want to change it, that's when it's like, come on, dude. Like, how are we going to have a great financial future together. [00:02:26][5.3]

Maddy: [00:02:26] If you go, Oh my God. I said, Get rid of him. That's I got. [00:02:32][5.2]

Sophie: [00:02:33] Mine. Okay. Minus. So different deals. He is a ten. Yeah. No, actually it will give him over his in his net, but when the plane lands he. [00:02:43][10.5]

Maddy: [00:02:44] Claps and it's like, it's like a flight from Melbourne to Sydney. Oh you know like you've gone through turbulence or you like like where it's genuinely scary. Yeah. Oh I just he's, I can't. [00:02:59][15.2]

Speaker 3: [00:02:59] I can't be with him. [00:03:00][0.8]

Maddy: [00:03:00] Okay, there's all right there. All right. I've got one more for you. [00:03:06][5.6]

Speaker 3: [00:03:08] He's an eight, but he calls his parents. [00:03:10][2.4]

Maddy: [00:03:11] Mummy and Daddy. Oh, no, I hate pet names, but I don't really. I actually had a moment there. I was like, do them do that if I could. Is this going to be really awkward? No, I am not a pet name person. Like, Oh, I just can't. [00:03:26][14.8]

Sophie: [00:03:26] I'm not good with it. [00:03:27][0.7]

Maddy: [00:03:27] And if it was Mummy and Daddy. [00:03:28][1.2]

Sophie: [00:03:30] It's actually funny. I did this to Sam yesterday on the phone. I wish I had recorded it. [00:03:34][3.8]

Speaker 3: [00:03:34] So I'm Sophie's partner. [00:03:35][0.7]

Sophie: [00:03:35] Sam's cheating in my partner, and he was like, I told him a couple, and then I said to him, She's a ten, but like she doesn't get along with your mama or sisters. And he was like, none. [00:03:46][10.5]

Maddy: [00:03:47] Zero. That's how I draw the line. But the fake one, he was finally salivary feet. Strange. Why the odd last one. Okay. She's a two. Oh, but inflation. No, I actually love that, I think. Did you. [00:04:04][17.0]

Speaker 3: [00:04:04] I know Sasha put that on her. Instagram produces that and I actually saw it and laughed so. [00:04:09][5.2]

Maddy: [00:04:10] So what is she are. [00:04:11][1.6]

Speaker 3: [00:04:14] Like plus 7%. [00:04:15][0.7]

Maddy: [00:04:15] And if you're oh you're getting. [00:04:16][0.9]

Sophie: [00:04:17] So technical. [00:04:17][0.2]

Maddy: [00:04:17] I was expecting to be like ten juvederm. Yeah. Okay. Ten whatever the inflation rate is it the environment limit? Well, speaking of high inflation, right. What a chance. Good, good segue. Right, that we really. [00:04:33][15.8]

Speaker 3: [00:04:33] Wanted to have a chat today, I guess, about what is going on in the market more broadly, not getting into specifics about sort of why, but more about how we are responding and how we're feeling. [00:04:44][10.6]

Sophie: [00:04:45] You know, it's really funny. I went to look up on the podcast to be like what to wear to invest in the bear market in 2022. [00:04:52][7.0]

Maddy: [00:04:53] And the first thing that came up with our podcast but because we did the ASX gave you. No. Any different perspectives? Well, I feel like it is clear to them that we did not win the ASX game. No. [00:05:07][13.7]

Speaker 3: [00:05:08] In fact we did quite poorly, but it was still a good episode. I feel like. [00:05:11][3.2]

Maddy: [00:05:11] We lost quite a lot. [00:05:12][0.7]

Sophie: [00:05:13] So obviously the moment the markets are down. Quick rundown, what is a bear market? What does that actually mean? [00:05:18][5.0]

Speaker 3: [00:05:18] Yes. So I guess a good place to start is by pointing out that Australia is not actually in a bear market yet. Hopefully we'll avoid it. But the US is and what it means is a fall by 20% or more from its most recent rise. And right now the US is down about 20% from its January peak. But I guess a couple of weeks ago I think it was down about 25%. So that is sort of the technical definition of a bear market. And whilst Australia isn't in one, we do tend to trend in the same direction as us. So obviously our share market is down as well. Yeah. [00:05:52][34.5]

Sophie: [00:05:53] And I think for a bit of context, over the past couple of years we've seen a bull market which is kind of the opposite, which is that massive. [00:05:58][5.4]

Maddy: [00:05:59] Run. [00:05:59][0.0]

Sophie: [00:06:00] Of yeah. Of growth and I think the bear market is kind of happening. You might also hear it in correlation of the word like correction because it's kind of the market after this big long bull run being like, Oh, hold on a minute, we've had way too much growth here. We've had all this economic stimulus pumped into the economy of people buying more stocks. And so I guess like when you look at the companies, they're kind of correcting to what their true like fundamental value kind of is. [00:06:23][23.1]

Speaker 3: [00:06:23] Yes, I think it's good to bring a little bit of perspective to this conversation. So I am just going to go into rating mode for a second because I do think these facts are quiet. [00:06:32][8.6]

Sophie: [00:06:33] Give me the. [00:06:33][0.3]

Maddy: [00:06:34] Facts. [00:06:34][0.0]

Speaker 3: [00:06:35] So helpful for me personally. [00:06:36][1.0]

Sophie: [00:06:36] They were helpful for me as well. [00:06:38][1.1]

Maddy: [00:06:38] I like that. [00:06:38][0.3]

Speaker 3: [00:06:39] So over the past few decades in Australia we have seen a bear market that has lasted just over two months and a bear market that has lasted almost 18 months. So according to an analysis. [00:06:50][10.0]

Maddy: [00:06:50] According to analysis, who we go to rating according to. [00:06:55][4.9]

Speaker 3: [00:06:55] Analysis done by a fund manager, Zurich ASX shares have seen 11 bear markets since 1970 and the average duration of these bear markets was about 13 months and the average loss was about 35%. [00:07:09][13.5]

Sophie: [00:07:10] So it's kind of saying that, you know, these these are really common bear markets are really common. I think ones that we've, you know, you might know of in your lifetime is the dotcom bubble, which happened around the 2000, also happened global financial crisis. Yeah. Now during COVID, it's a really normal part of the stock market. [00:07:27][16.6]

Speaker 3: [00:07:27] And if you are interested in learning more about why we're in the situation we are in at the moment, how we sort of got to this position, I would really recommend going back to our episode on interest rates. In that one, we really dive into like basically the perfect storm that is 2022 and how things have gone so badly for market. [00:07:46][18.3]

Sophie: [00:07:46] So do you know why it's called a bear market? [00:07:48][1.6]

Speaker 3: [00:07:50] I do. And it's because when bears attack. [00:07:53][3.2]

Sophie: [00:07:54] They go they more their prey is what. [00:07:57][2.8]

Speaker 3: [00:07:57] I thought it was like bigger up onto their hind legs and then they're like. [00:08:00][3.2]

Maddy: [00:08:00] Come down on t. [00:08:01][0.7]

Sophie: [00:08:02] Oh that makes sense. Who I. [00:08:03][1.4]

Maddy: [00:08:03] Is. Bulls. Yeah, I think that's right because whereas bulls have their horns and they like go up and don't want to auctions here for those who are listing along, you know. [00:08:11][7.6]

Sophie: [00:08:12] Because I thought, okay so that definitely makes sense, totally taking you out for that one. And I was googling and it was like, yeah, because a bull. [00:08:18][6.4]

Maddy: [00:08:19] A bull, a bear mauls its prey. [00:08:22][2.9]

Sophie: [00:08:22] And I was like, good scenario that we're the prey. But then I was like, Doesn't a bull do that as well? Because I see like videos of them running around the Spanish festivals and like they are not happy. No. So why is the bull going? But you always make sense. Thanks for clarifying. [00:08:36][14.0]

Speaker 3: [00:08:38] It's very easy to feel really great when the share market is up and to invest in lots of different things and when the investments going really well, you know, you feel positive about it, you feel like you're in a good place. But I think, you know, Warren Buffett has that quote that says When the tiger is that, you say who's swimming naked? And I think. [00:08:56][18.4]

Maddy: [00:08:57] Why have you never heard one? Oh, no. I think I said it right. I heard it. So something along those lines. But I think what I. [00:09:09][11.8]

Speaker 3: [00:09:09] Have really been reflecting on recently is, you know, now that my portfolio is quite red, I'm kind of looking at some of a couple of my investments and being like, What was I thinking? Whereas when those investments were doing really well, I wasn't thinking twice. [00:09:22][12.9]

Sophie: [00:09:22] So why don't we jump into some confessions? [00:09:24][1.6]

Speaker 3: [00:09:25] Confessions of a fast time bear market investor. [00:09:28][2.5]

Maddy: [00:09:28] That's us. That's us. Oh, we'll be giving you advice. [00:09:31][2.4]

Speaker 3: [00:09:31] We did we did invest in the bear market of 2020. And it's technically not a bear market, but I like the name. [00:09:37][6.2]

Sophie: [00:09:37] Okay, so what is your number one confession? Is this does a confession is it like a bad thing? [00:09:43][6.2]

Maddy: [00:09:44] Like he says? No, it's a learning. [00:09:45][0.9]

Sophie: [00:09:45] It's a learning. Okay. So what's like you're one learning or you're going, well, what's your one confession from this bear market thus far? So many in the months to come. [00:09:55][9.4]

Speaker 3: [00:09:56] I think for me, it would have to be Zeke. Okay. [00:10:00][4.5]

Sophie: [00:10:01] Quick, little rundown. Anyone who doesn't know what zip is. [00:10:03][2.1]

Speaker 3: [00:10:03] Yes. So zip is a buy now, pay later company? Sort of. I feel like it was second in line to Afterpay was the second biggest one. And it's down 90%. [00:10:13][9.2]

Maddy: [00:10:14] That's a good solid run. [00:10:16][1.9]

Speaker 3: [00:10:17] Solid. So I think my thinking. [00:10:19][2.3]

Maddy: [00:10:19] Did you short it or did you might my confession if I started it? [00:10:24][4.2]

Speaker 3: [00:10:24] I did quite well off my Afterpay shares last year. You know, it did raise money, made a bit of money when they got sold to square. And I think when that when I didn't have Afterpay my portfolio anymore and things are still very positive about buy now, pay later, I was like, I want to get more exposure to buy now, pay later. So I started buying that shares. And I do my research and I, you know, I liked the company, but it's funny now that it's doing so poorly, I'm like. [00:10:49][24.1]

Maddy: [00:10:49] Do I. [00:10:49][0.3]

Speaker 3: [00:10:49] Like this company? Like, doesn't really. I think with buy now, pay later, I can really respect and appreciate what the they have done as an industry like they have created a really interesting product that really took off. Yeah. But then there's the other part of me that's like, is it actually from like the financial well-being point of view is a good product. [00:11:09][20.1]

Sophie: [00:11:10] What was the, you know, when you did buy it at its peak? What was the one thing that kind of got you across the line of being like, yep, this is a good investment? [00:11:16][6.6]

Maddy: [00:11:17] Yeah. I mean, now that you ask. [00:11:18][1.3]

Sophie: [00:11:19] Because I think that's the thing, right? Because when you when this has happened, I think for me I've been like, oh, I did that because someone told me or whatever we can get into it. But like it's like it's funny to reflect on what the differences are between why then invest in it now when it's really cheap. Yeah, potentially, I don't know, 100%. [00:11:34][15.0]

Speaker 3: [00:11:35] And I think the fact that I can't feel that way because in a lot of my other shares, I do feel that way. Yeah, it's a real like it's a red flag. I think when I was buy it I was just more pro buy now pay later I had rose coloured glasses on and I was like, This is a good business. I still think like I'm not selling it, put it that way. I still think that the business has potential. But yeah, I'm just really having second thoughts about my original investment. [00:11:59][24.2]

Sophie: [00:12:00] So your confession is that maybe going forward when you are buying something, regardless of the price, you understand the fundamentals of what's behind the company. Because at a time like this, maybe you don't feel so confident about holding it when it's so low. [00:12:13][13.4]

Speaker 3: [00:12:14] I think what's not sitting right with me really is the ethical side of it. Like, I don't I actually don't feel so good about the buy now pay later space anymore. And I think that's why I'm not so confident. [00:12:23][9.4]

Sophie: [00:12:24] Fair enough. [00:12:24][0.3]

Speaker 3: [00:12:25] What about you? What are your confession? What's your confession? [00:12:26][1.6]

Sophie: [00:12:27] Yeah, honestly, my confession is actually probably quite similar. My confession is that I took a stock tip from a friend a year or so ago to buy Pointsbet, and he knows what he's doing in a sense. Like, he's pretty good at investing. Yeah, I trusted him. And there was, you know, covered more people gambling. And it's so ethically wrong. [00:12:48][21.1]

Maddy: [00:12:48] In my mind for me. Yeah. Just for no. [00:12:50][2.1]

Speaker 3: [00:12:51] Shame. Yeah. It's your own personal view. [00:12:52][1.5]

Sophie: [00:12:52] No shame at all. But it's gone completely down and I've lost a lot of money, so I think it's similar to you. It's like I'm sitting here now being like, I only invest in that because someone told me to. And now that it's gone down, I don't really know why it's going down and I can't see the future for it. So I think my confession is the best. Learning in a bear market when things are going badly is like invest in what you know, invest in what you love, invest in what aligns with your values and understand the companies you're investing in. [00:13:21][28.9]

Speaker 3: [00:13:22] I think that's the thing. I think when you say invest in what you love, you really hit the nail on the head because I get so excited about following pretty much all of the companies in my portfolio and reading about them and researching. And I think that's where I personally get most of my joy out of investing and like knowing that it's setting me up financially as well and has all those other benefits, but it's actually just following the companies themselves. And I think when you find companies that you really believe in and that you like, it's easier. [00:13:49][26.8]

Sophie: [00:13:49] It's easier to research. And then I actually read a quote, I didn't hire I heard it caught on a podcast the other day that said Drink, golf advice, golf education. And it kind of stuck with me exactly with my confession because I was like, that is so true because I went off advice. Yeah, totally. [00:14:02][13.0]

Maddy: [00:14:03] Unsolicited advice is no a financial advisor. [00:14:05][2.0]

Sophie: [00:14:06] And I, you know, I wasn't educated, so now I have no idea why it's down. I mean, I've looked into it now, but, you know, I didn't understand it. So it's like, do you do you research this what bear market is telling me? Thank you, Mr. Bear. [00:14:16][10.1]

Speaker 3: [00:14:17] I have a fun community confession for you. Okay, great. Got to a community member. I love. [00:14:22][5.1]

Sophie: [00:14:22] This. [00:14:22][0.0]

Speaker 3: [00:14:22] This confession is about a cryptocurrency Cardano. And when I asked her, do you know what this crypto actually does? And I was like, I'm asking. I'm just like, I have no. [00:14:34][11.9]

Sophie: [00:14:35] You had no idea. [00:14:35][0.4]

Speaker 3: [00:14:35] Yeah. And she said legit, had no clue. [00:14:37][2.1]

Maddy: [00:14:39] And I was like, cool. [00:14:39][0.6]

Speaker 3: [00:14:40] And she said, but it was a recommendation for my brother's friend. I bought in at $2,000 and I should have sold it when it got up to $10,000. Oh, she said in brackets, and my parents told me to sell it to. Of course I didn't do that. And now it's worth at a mere $64 lol. [00:14:57][17.5]

Maddy: [00:15:00] I think that's a lot of people are feeling that pain. [00:15:02][2.4]

Speaker 3: [00:15:03] Especially with crypto. [00:15:03][0.8]

Maddy: [00:15:04] Yeah, especially with crypto. [00:15:05][1.1]

Sophie: [00:15:06] I'm super keen to get some. We've done a bit of writing, a bit of research, gone to the experts at this one who have gone through some bear markets before to get some tips and advice on how and where to invest your money during a bear market. But before we do that, we're going to take a quick break. Great. A quick gripe. [00:15:23][17.1]

Maddy: [00:15:26] A quick break. I was going to say great tease out, but you've really lost me now. [00:15:29][3.3]

Sophie: [00:15:30] Quick break for our sponsors. Okay. So obviously we're feeling a little bit like, oh my God, it's a bear market. And so I think you're going, what do I do? We landed on an article we have. And what does this article tell us? [00:15:43][13.1]

Speaker 3: [00:15:44] Tips for surviving and thriving, not just out of. [00:15:47][2.8]

Maddy: [00:15:47] That in. [00:15:47][0.2]

Speaker 3: [00:15:48] A bear market and the articles by Bank of America. So pretty trusty source. Yeah, like that. So tip number one is avoid a knee jerk reaction. [00:15:56][8.0]

Sophie: [00:15:58] I like this because if you think about it, you've been told, right, you're at summer camp, you're in the woods, you come across a bear, you don't knee jerk and run away. You have to stand still. So that makes sense. [00:16:13][14.9]

Maddy: [00:16:13] Then you tend to any. [00:16:14][0.9]

Speaker 3: [00:16:14] Come across. [00:16:14][0.1]

Maddy: [00:16:15] Bear I've. [00:16:15][0.3]

Sophie: [00:16:15] Never come across them, but that's what you're told to do. [00:16:17][1.4]

Maddy: [00:16:17] You know. Told to rise. [00:16:18][0.6]

Sophie: [00:16:19] You meant to like fight. [00:16:20][0.5]

Maddy: [00:16:21] Fight. I don't fight your bear not fight, but like. [00:16:24][3.7]

Speaker 3: [00:16:25] You may fight or flight not flat. [00:16:26][1.3]

Sophie: [00:16:27] No, like you're meant to stand there. [00:16:28][1.5]

Maddy: [00:16:29] It's like in the phrase, have. [00:16:30][1.4]

Sophie: [00:16:30] You not, Nick? I'll make it Australian version. Okay, what about a snake? What do you do when you say a snake face? So there we. [00:16:36][5.3]

Maddy: [00:16:36] Go. Got it. Got it. [00:16:37][0.9]

Sophie: [00:16:37] So like this. [00:16:37][0.5]

Maddy: [00:16:38] I mean, market is big a slippery snake right now. I myself well, I say that I think for. [00:16:44][6.6]

Speaker 3: [00:16:45] This one I have actually given myself a three business day buffer, three business days, talk to my friends and just kind of have that sounding board before I make any decisions. Okay. [00:16:55][10.4]

Sophie: [00:16:55] So if you're going to invest. [00:16:56][0.5]

Maddy: [00:16:56] Well. [00:16:56][0.0]

Sophie: [00:16:57] So if you're going to invest in a stock like will be like I'm going to lightly stock. I'm just going to talk some people get some opinions, leave it a couple of days and then invest. [00:17:05][8.0]

Speaker 3: [00:17:05] And on the flip side as well, I considered selling a couple of my holdings that I didn't believe in anymore. Talk left it for business. I didn't. [00:17:12][6.9]

Maddy: [00:17:12] Sell. [00:17:12][0.0]

Sophie: [00:17:13] You actually did speak to me about. [00:17:14][1.2]

Maddy: [00:17:14] Yeah, I know. [00:17:14][0.3]

Sophie: [00:17:15] And I gave you some tax texts. [00:17:16][1.1]

Maddy: [00:17:17] Unsolicited tax advice. Number two is think. [00:17:22][5.0]

Speaker 3: [00:17:22] About rebalancing your portfolio. [00:17:23][1.5]

Sophie: [00:17:24] Yeah, this is one that I have read about and heard about so much, and personally, I had no idea what rebalancing your portfolio actually means. And also in practise, it's like I'm doing this, you know, I'm investing kind of passively on the side. Like, am I the type person that needs to rebalance my portfolio? Right. [00:17:41][17.1]

Speaker 3: [00:17:41] Yeah, I think in my mind, it's just something that like massive institutional investors do in less sorry, something that way too. But what have you been reading? [00:17:48][6.4]

Sophie: [00:17:48] So I've read that for rebalancing. It's kind of like you're readjusting your portfolio to suit, I guess, like your risk tolerance and your goals during these times. So you might feel that you're over allocated in equities or in stocks. So you might pull back and say, you know, I'm not going to invest so much in stocks at the moment. Not that we're saying this is the right or wrong thing to do, but it might just be aligned to your risk. So I'm going to, you know, with my savings check put warned into the bank because I know that, you know, interest rates are going up and I might be able to make some more money on my cash. [00:18:18][30.0]

Speaker 3: [00:18:19] Yeah, I think this risk tolerance point is a really good one. You know, we have been fortunate enough to be going to a few companies recently and doing live events. We do this kind of chat about how to start investing, how to get yourself set up if you if you want us to come to your employer. And but one of the things that we do talk about is trying to get an idea of what your risk tolerance is when you start. And I think right now, like you're going to. [00:18:45][25.9]

Sophie: [00:18:45] Know teaches you, yeah. [00:18:46][0.9]

Speaker 3: [00:18:46] If you are feeling super uncomfortable about your portfolio right now, that's possibly saying something that you might want to reflect on whether you can stop maybe investing in less risky things. If you can maybe start reallocating, like you said, some of your money out of stocks. [00:19:00][13.6]

Sophie: [00:19:01] Yeah. And I feel like personally, I've even felt that at the moment. So if you've been listening to this podcast for a while, I have always said that I've invested in like growth stocks. A lot of tech and tech is so down at the moment. And for me, my rebalancing and my readjusting is, yeah, I'm putting a bit more into cash, but I'm also putting more into ETFs and blue chips because I got so on board if there is, you know, high growth stocks. But my rebalancing is going okay, we've got way too much satellite going on. Let's focus on the cool nice. [00:19:28][27.1]

Speaker 3: [00:19:29] I think the other way that you can think about rebalancing your portfolio is through diversification, which is investing in different industries, in different countries, in different sized companies. There's all sorts of different diversification. But I think there's this great chart that talks about how one year, you know, one sector of the economy, maybe U.S. shares might be the worst performing and the next year it might be the best performing, whereas emerging markets so developing countries, economies investing in that area might be the worst performing or the best performing in the next year might be the worst performing. So I think this is a great time to really reflect on how diversified your portfolio is. There's a great stat that I and I'm going to butcher it, but it's like Australia is 3% of global markets. Yeah, it's tiny. So maybe it's time to think about whether investing in international shares, whether even just be adding an ETF to your portfolio that's giving you exposure to the US or to Europe. All of these are really easy ways to think about diversifying your portfolio. [00:20:26][57.5]

Sophie: [00:20:27] Yeah, and I think on that just too rounded out. When I've read about rebalancing, it's kind of like the whole premise of it is like you sell. Not that. SL But you know, what they say is you sell what's doing well right now and put it into what's doing badly. So you're looking for things that are lagging and that's how you kind of re balance out. Because if you're doing well in something, it's kind of sitting at that point where it's like, Yeah, got my returns and I'm going to put it into that, you know, I don't know emerging markets, I don't have a lot there and it's doing really poorly at the moment. And potentially that's something that's going to grow in the future. Not that I think that that's the case. I'm just saying that's the premise of rebalancing. [00:20:58][31.3]

Speaker 3: [00:20:59] I feel like that's a great example for a really large investor. Yeah, I think and that like illustrates the idea really well I think right now. I mean, probably none of us have things that are doing really well, but I think that's the exact idea that sort of going for is just sort of right. [00:21:17][18.1]

Sophie: [00:21:18] Yeah. Well, if you've got a whole bunch of cash, it's doing really well. [00:21:21][2.5]

Maddy: [00:21:21] You know. [00:21:23][1.9]

Speaker 3: [00:21:23] As interest rates are rising. [00:21:24][0.8]

Sophie: [00:21:25] What's the next tip that you've got? [00:21:26][1.6]

Speaker 3: [00:21:27] Tip number three is look for or find strategic opportunity. [00:21:30][3.8]

Sophie: [00:21:31] Now, I hate this when people say this like buy something that's super cheap. Like, what does cheap mean? [00:21:37][5.5]

Speaker 3: [00:21:37] Yeah. And how do you find it? [00:21:38][1.0]

Maddy: [00:21:39] And yeah. Is there a website? Well, well, well, well. Now that you say that. [00:21:45][6.3]

Speaker 3: [00:21:45] I was recently rating the raw and straight capital investor letter, we were both writing about both having a chat about it the other day, and this is a big fund manager I think they're based over in the U.S.. Yeah, they wrote a letter to investors about I think it's the five companies that they think are going to outperform for the next ten years, or maybe two companies that are going to outperform for the next five years. I can't remember, but I want to go into rating mode again just for a second, because I think at the start of this letter, they really bought some great perspective sort of what we're feeling and what we've been talking about in this episode so far. They say the past few quarters have been difficult for old growth investors and certainly for and straight partners. COVID reopening inflation, threat of rapid increase in interest rates as well as the war going on in Europe, all contributed to a very rapid market rotation out of growth stocks, which were the darlings of 2020 and 2021 time period. These types of rotations are normal and to be expected from time to time. [00:22:45][59.2]

Sophie: [00:22:45] Yeah. And I think what I really took out of this letter was that they run through a couple of different stocks and we can link in in our show notes as well. But what the real premise of finding a strategic opportunity is like looking at what the share price almost is now and assessing whether you think that's cheap or not. So the metrics I personally still find really difficult to understand, but a really good way that I thought that, like they have put it in the letter is like, let's take Spotify, for example. If you Google right now on your phone where you're listening to Spotify stock price, you'll see a little graph and you take it to the five years and you'll see that there's this massive rise up through 2021 and it's completely drops now prior to the pandemic. So just imagine COVID didn't exist for a moment. Its share price was sitting around 130, $740. That's where it's sitting. And that's where the market was. Valuing this company out during COVID, went ballistic, went up to $340. They're about even a little bit more. [00:23:44][58.4]

Speaker 3: [00:23:44] And that's where my brother bought. [00:23:45][0.8]

Maddy: [00:23:45] It under the bus. [00:23:47][1.9]

Sophie: [00:23:48] So crazy valuation. People went berserk in COVID. You know, it's not really it's true fundamental value, but right now it's sitting back down at $100 actually below its price prior the pandemic. And what I find really fascinating about this is that the company has still grown over those two years, like their subscribers have grown, their revenue has grown. So like why before COVID, it was valued at 130, but now it's at 100. But it's, there's growth in the company. [00:24:16][27.8]

Speaker 3: [00:24:17] Yeah. I mean, it's because of the bear market, but users are up 74% and sales have been growing 2.2 times every year since 2020. So like you said, massive growth that we're seeing and yet share price is not reflecting that. And I think these are the kind of things that when you are looking for something that so-called cheap, these are the kind of things that you can look at is the share price actually reflecting what the companies results are. [00:24:42][25.2]

Sophie: [00:24:43] And then any other kind of metrics. I know metrics are a little bit yeah, but like any other things that you kind of look at during a bear market or you've read that, you know, good things to kind of anchor you when you're looking at a stock to buy. [00:24:55][12.3]

Speaker 3: [00:24:55] Yeah, I think I definitely recently have been investing much more in large companies that have, I want to say that have a strong balance sheet. But when I say that I don't actually look at their balance sheet, I more just know that they're big companies. They've been around for a long time. They're profitable. Yeah. I mean, I think cash, like having a lot of cash is really valuable in a time like this. Yeah, but I mean, I have to admit, I'm not going on and looking at balance sheets and saying how much cash I have because I think it would mean all that much. [00:25:25][29.6]

Sophie: [00:25:25] Yeah, well, I agree though, in the sense that what I've been hearing a lot is look at cash because at the moment, debt is really expensive. Yes. So our interest rates are going up if. Companies are learning money from the bank. They're paying a lot back to have that debt. So you've got to make sure a company kind of has that kind of cash to be able to survive during a period like this. At the end of the day, we said at the beginning, a bear market could go for a couple of months or go for a couple of years. So when you're investing in something, have a look and make sure you think it can sustain. And I know it sounds like a little bit of work, but like take the time. You know, it's a bit of a journey. [00:25:58][32.7]

Speaker 3: [00:25:59] Tip number four is be consistent. And I think this is something that I have been reflecting on a lot and kind of putting a bit of pressure on myself, to be honest, because my biggest gains from my investing journey so far, which is a couple of years from what I was investing in during that covered bear market. I think that that really taught me a lot in terms of confidence during a market downturn, and I've definitely changed what I'm investing in, like I'm investing in quite, you know, so-called safe things. But I'm really trying to be consistent at the moment and buy in when prices are down. [00:26:33][33.5]

Sophie: [00:26:33] Yeah, I think everyone keeps I keep hearing people be like, I'm going to buy the dip and like I'm going to buy at the lowest point. And I. [00:26:38][5.3]

Speaker 3: [00:26:39] Actually yell at people. [00:26:39][0.6]

Maddy: [00:26:41] Like, Darn. [00:26:41][0.2]

Sophie: [00:26:42] Well, that's the thing. Like, no one knows when the bottom is. And if you consistent, you might catch the bottom, you know, and I think you're really funny caught Sallie Krawcheck, who's the CEO of L Ellevest and she's actually the woman who does the beginning of our podcast that the best career advice. [00:26:59][16.7]

Maddy: [00:27:00] I didn't know that. [00:27:01][0.9]

Sophie: [00:27:01] The best career advice you're not getting is doing this anyway. She said that everyone out there, there's obviously so much noise around investing and everyone thinks they know when the bottom is going to be or when like what's going to happen in the markets. But in today, no one knows. And if you've got someone you're listening to today or the radio or the podcasts and they're saying to you, I knew this market, it was going to happen. So I know in the bottom is going to be and they were saying that, you know, all of last year that there's going to be a dip. That means for 51 weeks of the year, they were wrong. They were wrong that the dip was bound to happen. [00:27:33][32.0]

Maddy: [00:27:34] They were telling you all of last year the. [00:27:35][1.3]

Sophie: [00:27:35] Dip was happening. They were wrong. 51 weeks until it dipped. [00:27:37][2.2]

Speaker 3: [00:27:38] I think my favourite stat about investing my whole out of all of the stats they are is a Bank America study or Bank of America study which says back to 1930. If you missed the ten best days each decade whilst investing in the top 500 U.S. companies, you would have a total return of 28% versus if you held steady through all of the ups and downs, your total return would be 17,715%. So you do not try and hold the market table. [00:28:08][29.7]

Maddy: [00:28:08] And when. [00:28:08][0.1]

Sophie: [00:28:08] Mary says you miss the days that you've been holding off and you haven't. [00:28:11][2.9]

Speaker 3: [00:28:12] Invested your money in the market yet because. [00:28:14][2.1]

Sophie: [00:28:14] You're trying not to invest. So it's just one of those things. It's like, stick to your routine. You know. [00:28:18][3.7]

Speaker 3: [00:28:19] Final tip is to maintain perspective, and I. [00:28:22][3.6]

Maddy: [00:28:22] Think that's a good one. [00:28:23][0.7]

Sophie: [00:28:24] Yeah, I saw a quote the other day that said, Investing is four days. So. [00:28:28][4.6]

Maddy: [00:28:29] I mean, are you a day trader? [00:28:33][3.6]

Sophie: [00:28:33] I mean, dojo investing is for decades, not days. There we go. And I think it's so true and I honestly can tell you so honestly, like this downturn has taught me that, you know, I know that we've been doing this for 18 months, but I think when this kind of stuff happens, that's when your perspective really kicks in. And if you do have time on your side, like this is when you can make that much. I don't say that. And if you do have time on your side, it's one of those things. It's like, this is going to be a part of your journey and it's probably going to happen a couple of times if you're a long time investor. [00:29:02][29.3]

Speaker 3: [00:29:03] So like I said, so far we have been reading lots, we have been listening to lots, but I think it's probably only fair if we share some recommendations at the end of this podcast. So what? It doesn't have to be bear market or even investing related, but what have you been listening to or rating recently that you would like to recommend? [00:29:22][19.1]

Sophie: [00:29:23] Okay. I'll give you a couple one bear market related one. [00:29:26][2.8]

Speaker 3: [00:29:26] Not nice. Okay. [00:29:27][0.8]

Sophie: [00:29:27] So my first recommendation is a bear market one, and it's actually a shameless plug of the AM network. It's a commodity inverse economist, not how not to get mauled in a bear market. [00:29:36][9.1]

Maddy: [00:29:37] It's very visual title. [00:29:39][2.1]

Sophie: [00:29:39] Thomas is actually an economist, so he really understands the fundamentals of this stuff. They kind of speak about it for 10 minutes or so. It's not too long. [00:29:46][6.7]

Speaker 3: [00:29:47] Because I'm actually a comedian. [00:29:48][1.1]

Sophie: [00:29:49] I mean, don't ask him that. And I feel like they just kind of break it down. Really simple. And it was a good one to get some info from its more info. And then my other one was How I Built This by Guy RAZ with Jemmy Fallon. [00:30:02][13.2]

Maddy: [00:30:03] Oh, totally. [00:30:04][0.9]

Sophie: [00:30:04] Unrelated. But Jimmy's voice, number one, is really soothing. And number two, it's an hour long. I know that's a really long podcast, but I literally just was laughing the whole time, like, he's a comedian, but it's just kind of short his back story, and I think it's one that everyone will really enjoy. It's a real good feel good one if you need something to turn off from inflation. [00:30:22][17.6]

Speaker 3: [00:30:23] I love that. [00:30:23][0.2]

Sophie: [00:30:23] Definitely. What do you what do you been listening to that you haven't. Have you can give me something original that you haven't. [00:30:28][4.8]

Maddy: [00:30:28] Sent me because you send me some recommendations. No, I'm not sorry. [00:30:33][4.3]

Speaker 3: [00:30:34] I. My First Amendment was actually sent to us by Sam from The Daily Cause. It was a great episode on 7 a.m. all about the Reserve Bank of Australia and how it's actually structured and how it works. Super interesting episode. I really had no idea about who the people on the RBA are and I guess how they actually make decisions about interest rates, which super relevant moment. [00:30:57][23.7]

Sophie: [00:30:58] It's like one of those things that it's like, oh yeah, you've seen the RBA do this like cool. [00:31:01][3.1]

Maddy: [00:31:02] Yeah. [00:31:02][0.0]

Speaker 3: [00:31:02] And this article kind of, I mean, this episode kind of rips them apart a little bit. It's a bit savage, but it's very interesting. [00:31:08][5.3]

Sophie: [00:31:09] I mean, the title, I'm pretty sure. [00:31:10][1.1]

Maddy: [00:31:10] The title is like Why the RBA is wrong or something. [00:31:12][2.6]

Speaker 3: [00:31:13] The RBA doesn't know what they're doing. [00:31:15][1.8]

Maddy: [00:31:15] Yeah, yeah, yeah. You can expect that it's going to be a little bit savage. [00:31:18][2.8]

Speaker 3: [00:31:19] And the other one is a diary of a CEO episode. Such a good podcast if you don't know it. But this one is with Reshma, who is the founder of Girls Who Code. This episode is just remarkable. She tells all sorts of really incredible stories about being a child of immigrants and moving to the US and trying to find her place, how she founded this company and how she really had just this strong drive to want to change the world and really have an impact. Honestly, I sent it to so many people. I sent my housemate. She absolutely loved it. It is a great episode and it's super inspiring, so I would very much recommend that one. It is called How I Taught Millions of women the most important skill Girls Who Code and it's episode 149. [00:32:03][44.3]

Sophie: [00:32:05] Well I guess men's that kind of wraps up how little negroni. [00:32:07][2.2]

Maddy: [00:32:07] Chat sometimes. [00:32:08][0.5]

Speaker 3: [00:32:08] You get another reckon. [00:32:09][0.9]

Sophie: [00:32:10] Is when it's in dinner. [00:32:11][0.7]

Maddy: [00:32:11] Yet thank you very much for. [00:32:15][3.2]

Speaker 3: [00:32:15] Tuning in today's episode as always, if you have any questions, we would love for you to send us a jam on Instagram or JC Podcast. We will have a thread going in the Facebook group All Things Bear Markets Why I say invest in podcast discussion time. [00:32:28][13.6]

Maddy: [00:32:29] And. [00:32:29][0.0]

Sophie: [00:32:30] If you're sitting still listening to this, could you please just send it to one friend and Mike just send it across, get our name out there. We would love that. If you've got a friend that wants suicide investing, send them our summer series and you can leave us a review also if you're enjoying. [00:32:44][14.0]

Maddy: [00:32:44] Thank you so much more catch you next week guy. [00:32:46][1.8]