Staying the Course: Long-Term Investing in Turbulent Times | AWM Insights #199

In this episode of AWM Insights, we dive into the intricacies of data-driven, long-term investing amidst market volatility. Hosts Justin Dyer and Mena Hanna demystify the noise of today's markets, focusing on strategies that prioritize staying the course, supported by historical data and rigorous analysis. With insights into current market conditions and practical applications for investors, this episode offers invaluable advice for maintaining a disciplined investment approach over time.

Key Highlights:

• A review of current market conditions and the impact of recent headlines on investor sentiment.
• The importance of distinguishing market noise from valuable data when making investment decisions.
• An explanation of data-driven investing and how it provides a framework for enduring volatility.
• Practical strategies such as staying invested, diversifying, and avoiding emotional reactions in turbulent times.
• The role of diversified portfolios in cushioning against market downturns.

Quotes:

• "Noise is real. Noise is scary... But that is just one point in time." – Mena Hanna
• "Staying invested, sort of like showing up to work every single day, is one of the most impactful things you can do." – Mena Hanna

Creators and Guests

Host

Justin Dyer

Chief Investment Officer and Chief Operating Officer at AWM Capital

Host

Mena Hanna

Senior Investment Analyst at AWM Capital

What is AWM Insights Financial and Investment News?

A bite sized discussion on timely financial news and investment topics, to help you maximize your net worth and wealth for the next generation with Justin Dyer and Mena Hanna of AWM Capital.

Hey everyone.

Welcome back to another
episode of a WM Insights.

Uh, plenty going on in the markets.

We just had a a month end.

Always bring some, some new headlines.

So, uh, kinda without further ado,
we're just gonna jump right into it.

Um.

Talking today about data-driven,
long-term investing, that's

the most interesting title.

We'll, we'll work on, uh, our creativity
and, and title creation there, but,

uh, it's just an important, important
reminder, um, here that we wanted to

focus on, given what's going on this week.

All the volatility, it was
trump's, uh, first a hundred days.

Um, and it's just a good moment to
talk about data-driven, long-term

investing and, and how to really make
those decisions remind everybody about

focusing on the long term when there
is a lot of, a lot of noise here.

So, um,

it's a noisy world.

We want to cut through that
and, uh, start, I guess with

highlighting some of the noise.

So, Mina, take it away.

What, what happened in
the markets this week?

Let's le let's level set.

That give a foundation of
what we're talking about.

Yeah.

And the markets have been recovering
this week, and that's been a general

trend since the beginning of the month.

At the start of April, things
looked very, very bleak.

You, we had some positive trade
news come out that, uh, created a

little bit of a rally, and now we're
getting some more economic, favorable

economic metrics that are coming out.

On the earnings front, a little bit on
the economic activity front as well.

Uh, that's a little bit
more of a mixed bag.

But, uh, the, as, as of today,
we had some positive Microsoft

and meta earnings, which really
eased, incent, uh, investors just.

Paranoia over the past month and it
prompted a little bit more of a rally.

So just some, some favorable news, some
tailwinds, um, that have reversed a lot of

the, uh, the skepticism and the negativity
that we saw earlier in the month.

Yeah, it's worth also noting, I think
most people probably would've seen

the GDP headline that it was negative.

That was, I think we've talked about it
in a couple of the previous podcasts.

That was a lot of front loading.

Um, so there's.

Uh, let's call it devil's
in the details on that.

Um, was it a bad data point?

Yeah, I mean, it does show some
contraction contracting in the economy,

but I don't think we've seen the, the
full, um, the full impact or brunt

of some of these tariffs quite yet.

And, you know, hopefully it's all solved
and we, we don't really see those in

the data, but it's a perfect example.

Like, that's noise, right?

GDP was negative headlines everywhere.

There was some positive headlines, right?

Noise can be good and bad.

What?

Why do we need to, to have
this conversation and, and.

And even talk through some of these
data points, but then take a step back

and remind people, Hey, this is noise.

This can really derail you.

Don't let this, uh, get in your way.

No, and noise is real.

Noise is scary.

You know, you look at your
portfolio on April the eighth and

it's down, you know, 10 to 15%.

That's, that's scary.

Um, but that is just one point in time.

And if we've learned anything from
markets over long periods of time, it's.

Riding those waves, you know,
going through these downturns.

Is it, it's, it's always going to happen.

You're always going to have
market pullbacks, but getting to

the other side of that is where
your benefit really, really lies.

We were having this conversation,
I believe last week.

If you're a baseball pitcher and
you're in a slump, you're not going

to change your mechanics, right.

Uh, because you don't have, you know.

A good couple days,
you're gonna ride it out.

You're going to focus on
potentially other things.

Believe in your process, believe
in your preparation, and you

should come out in a better spot.

Um, probably a lot better off than
you would be if you just totally

changed all of your mechanics,
your process, your warmup.

Um, so I think, I think there are
parallels there where riding the

volatility and just believing in.

The foundations and the fundamental of the
market fundamentals of the markets can,

can really benefit you over long term.

Yeah, and it's a, it is
a great analogy, right?

You, you, you don't want to
change something in your, in your

routine just because you, you
run into a couple bumpy days.

You don't want to have a knee
jerk reaction with investing

because of some, uh, some present
day, uh, volatility, right?

There's a temptation there is this.

This, uh, visceral reaction.

But we know from, from history, from data
that doing that, you know, nine times

outta 10 or whatever the vast majority
of the time, if not every time is a bad,

bad, uh, leads to bad outcomes, really.

Um, and missing out on, on recoveries.

'cause when they happen, they happen fast.

Um,

so.

We've talked a lot about what's
going on currently, why you

wanted to tune out the noise.

We, I teed it up to talk about,
uh, uh, data driven investing.

Like what is that?

We'll just take a quick step back
and talk through what actually

is the, is data driven investing.

Put a little context to it
and really simply, it's.

Looking at data, obviously it's in
the title, historical Trends and

applying much more rigorous statistical
analysis, um, to, to guide investment

decisions as opposed to just this
like gut feel or a knee jerk reaction

to, to, to present day noise.

We, we know it's very, very difficult to
predict the future markets are efficient.

So they're incorporating
all this information.

And so if you don't have this data driven
approach ahead of time, when those periods

of volatility come, uh, come to reality.

'cause they always do.

You are, you're not set up
to deal with them properly.

You want to acknowledge
that that's gonna happen.

'cause the data shows that happens
historically, but you want to

have a, uh, uh, a framework to
deal with these periods of time.

Based on historical data.

So we know volatility happens,
we know we don't wanna react

to it in a, in a knee jerk way.

Um, and we, we want to rely on what,
you know, the research, the academic

research, the, the ins, uh, uh, the um,
uh, industry research, et cetera, uh,

tells us, um, over, over periods of time.

It is not to say we don't, uh, using
our good old friend Brian Kane's, um,

uh, model of reflect and refocus, right?

We're always asking ourselves a question.

We don't wanna say, is
this time different, right?

'cause the data doesn't really favor
that mindset, but we do want to reflect

and refocus and, and, and say, is there,
is there additional, uh, data that is

available now that informs us us to make
better decisions, better portfolios?

Uh, and really a better
investing outcome overall.

Um, so that's the, the simple definition.

Why don't you give us some, some
daily applications of data driven

investing and how we think about it.

Yeah, and the first one you hit on it
is staying invested, not bouncing in

and out of the market because of short
term noise, because of, you know, your

emotions, what might be happening.

Staying diligent, staying invested,
sort of like showing up to work every

single day, even if you don't feel great.

Um, and if you don't know, if you know
that you're not gonna have a great day.

Uh, just, yeah, staying
disciplined and staying on course

is one of the most impactful.

I think the data really shows.

It's probably the most impactful thing
that you can do over the long term.

Not, yeah, so not timing markets.

Uh, diversification is, you know,
a lot of people say it's the

only free lunch in, in finance.

Having your assets spread across a
lot of different investments that

move in different ways with different
market environments, that's critical.

You know, this latest downturn, if you're.

If you're a client, you could see
potentially US markets were dropping a lot

more than international emerging markets.

And then the bond portion of your
portfolio remained pretty stable.

So even though you saw a sell off
in, in some regions, it wasn't

as, you know, sharp in all areas.

And you also had the benefit of,
you know, equity and fixed income

diversification on that end.

So.

Staying invested, diversification,
not stock selecting, not stock

picking, um, and thinking that you
know better than everyone else.

I think especially in a time like
this that could be really, really

hurtful and really damaging.

We've seen.

Sharp sell offs and Nvidia and
a lot of the positions that

people were really bullish on and
there was a lot of hype around.

So not, not stock picking
because you know, things can

change really, really quickly.

I think those are.

Potentially the three most
important data-driven strategies

that you can implement.

Yeah.

That's awesome.

So, um, we'll, we'll
go ahead and wrap here.

Try to keep this short and
digestible for everybody, but a

couple quick takeaways, right?

We really wanna focus on long-term
goals, not the, not the short term

noise that's really always present,
both good and bad, like we talked

about, and rely on, on data, right?

That's our role, that's what
we're doing for you, our clients.

Um, and really.

Um, making informed decisions,
having portfolios that are, that are

constructed using a very rigorous
data-driven approach instead of just

emotional reactions to, to what's
going on in the world around diversify

and focus on what you can control.

Like that is something that, that we
say a lot and, and certainly focus

on 'em day to day from a, uh, an
actual implementation standpoint.

Right?

We can't control the markets, but hey,
if markets are down, we can, what do

what's called tax house harvesting, right?

It's kind of making a.

Lemon, uh, lemonade out of lemons.

Um.

And then market volatility is normal.

We know it's going to be there.

We don't know exactly
when it's gonna be there.

But having this data driven mindset
and application from the get go

is, uh, is, is a way to help stay
the course and stay disciplined

through times that are uncomfortable.

I mean, it's, there's no, uh.

No sugarcoating that.

Um, so it's a, it is just a good time
to reflect and refocus on this, uh,

this past week and how a data-driven
approach can really help us and, um,

just don't let emotions get in, in the
way really is the, the quick takeaway.

So hopefully this was a, a good reminder.

Uh, you know, it's a topic that you
probably can't talk about enough.

Um, and, uh, these reminders
really, really, really should.

Give you co uh, comfort and, um, and,
and, uh, appreciation, I guess for,

for the current market environment.

So, uh, with that we're gonna
wrap, own your wealth, make an

impact, and always be a pro.

See you next time.