AWM Insights Financial and Investment News | Markets Don't Only Go Up: Protecting Your Wealth in a Downturn

In this episode of AWM Insights, Chief Investment Officer Justin Dyer and Portfolio Manager Mena Hanna break down the realities of market cycles and the dangers of investor complacency. Together, they explore why markets don’t always move “up and to the right,” discuss the risks of extended drawdowns, and share practical strategies for protecting what matters most, across your family’s wealth journey. With firsthand market experience and clear, candid conversation, Justin and Mena offer a timely reminder: preparing for volatility is a cornerstone of multi-generational wealth. Tune in for insight you won’t hear from alarmists—just seasoned advice designed to set your family up for the long game.

Chapters
(00:00) Market Realities and Recent Trends
(02:00) Predictions Versus Uncertainty
(04:00) The Risk of Complacency
(05:00) Protecting Core Priorities
(08:00) Diversification and Permanent Loss
(11:00) Investing to Achieve Life Goals
(13:00) Preparing for Long-Term Downturns

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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.

Mena Hanna: If you're an investor
who is ultra-concentrated in tech,

think the Nasdaq-100, you bought in
at the absolute height of the dot-com

bubble before it actually burst.

You were down 83% from peak to trough.

It took you 16 years to actually
break even and get that money back.

That's why you don't over-concentrate.

If you were a little bit diversified,
instead of the nasdaq-100, you invested in

the S&P 500, instead of 83%, that was 49%.

And instead of 16 years, it took you 7.2

years to actually recover.

Justin: Hey,

everyone.

welcome back to another episode of

AWM

Insights.

It's your

host, Justin

Dyer,

chief investment

Officer

here

at AWM Capital, joined as always

by Mina Hana,

our

portfolio manager

here at AWM.

And today,

w-we're gonna talk, in a way, it's kinda

like your your, your regular

public service

announcement

and/or

reminder,

uh, that markets don't

always

go up.

Um, a-and maybe

that

comment

is,

isâ¦

news to listeners, but
we've been in a period,

generally

speaking,

if you extended over, uh,

the last

five, even ten years, even beyond
that in some cases, where markets

have

been relatively

well-behaved.

There

have been some periods,

COVID

being one of those,

um, uh, amongst others where, where
there's been a little bit of volatility.

But

for all intents

and

purposes, either that volatility's
been a little concentrated

in certain parts of the

market,

um,

or it's been

kinda short-lived.

And So

just, just

talking

through

that,

um, almost for

our benefit just

as much as your-yours, you all

listeners to, uh

just remind ourselves,

" Hey, markets don't

on-only go up and to the right.

Volatility is is a real thing.

And especially

given where things are priced today,
I think it's a, just a, a good

conversation for us all, uh, uh, to
have here, and, and you can get a

little bit of insight into how Mina
and I, um, think about this internally.

So a little bit of the,
uh, inside baseball

take, if you will, pun
intended on that one.

So now, without further
ado, Mina, as we always do,

um, Let's, let's

level set.

When, when we, we say, you know,
when I say markets have been

fairly well-behaved, um, you know,

go into that a little bit.

But even, uh, further, you know, part of,
part of why we decided to talk about this

today was, uh, we're at the middle of the
quarter, or excuse me, middle of the year,

starting to see some refreshes of, um, uh,

predictions or price levels where, uh,
certain analysts and banks are expecting

the year, the markets to end the year.

Um, you know, it's a great time
to refresh that type of stuff.

And, you know, some of them think
we're gonna have a, a, uh, a drop from

here, and then there's a a few that,
that see us continuing to run up.

I will say we have to take all of
those with a, a grain of, uh, salt

and, and know that it's very, very
hard to get these things right.

And that's why there is such a
wild distribution when you look

at, you know, the-- I think we're

looking at ten or so different

predictions Um, but Yeah just,

just

let,

let's start with kinda again,

first principles level set.

Where, where are we within

markets right now?

Mena Hanna: markets have just
been doing extremely well.

If you look at sort

yearly data,

like over over a season, we have just had

such a

long winning streak.

Twenty twenty-three was an amazing year,
so was 'twenty-four, so was 'twenty-five,

and this year is also looking

it's a great year.

I know

we're

halfway

through the

year.

If you kind of evaluate

what

Wall Street and all of
the analysts out there

are, are pricing

in for the rest of the

year,

they're

also

pricing in

That this is gonna be, you know,

anywhere between

a fifteen to twenty percent

year, which is, which

is, abnormal On

average, Yeah.

Yeah.

so having three or four
of those in a row is,

is definitely atypical.

And, and it's not like we're ringing the

alarm

bells

and, and saying that,

you know

the

market's overpriced.

There

going to be

sell-off at some point.

We're definitely not taking that position,

but-

Justin: I

will say

that

is a possibility,

but

we're not

out there to your,

to your point saying like,
this is what we're predicting

we don't play that game So

I just- Yeah.

For sure â¦ wanna be

abundantly

Mena Hanna: don't play
that game, so- Yeah,

For sure â¦ Yeah.

have to, we have to just factor in the
fact that it i- it is a possibility,

and unfortunately, sometimes

when

things are rosy and people
forget that sell-offs

can

potentially happen,

that's when they get overextended.

There's just over-optimism in the
market that happens, and if markets

do kind of

reverse course

and sell off like

we've seen

historically, that's when
investors could get really hurt.

we obviously love the fact

that markets are doing well, but

also are,

uh, not

forever

optimists or realists and,

and we have to

be prepared for the other side

of that

which, which

has happened

recently.

It's happened over

really

short periods of time.

You know, even

2020 was actually a positive market
year, even though we saw some indices,

you know, shed 30% during,

during that COVID

month.

We, we

just have to be

aware

that

sometimes

these

drawdowns

aren't short.

They don't just

go away when

things open up or the Fed kind
of steps in to, to solve issues.

We could

have,

you know, a

couple, A couple years

of,

of drawdowns where investors lose money

and, and

don't recover

it for a

Justin: couple

years.

Yeah, and I think th-those-- there's
a few points in there I would-- I

just wanna highlight for everyone.

One is

what, what-- in a way, what we're

most concerned with are those

long drawdowns because,
you know, CO-COVID,

it s-

it was terrible.

It was

pretty-

It was

Extreme,

but it was quick.

Yeah.

Um, and

when things happen quickly,

you know, in a way,

it's like it's

too fast for

us to

react one way

the other to, or, or,
or individuals act one

way or the other too.

The

long extended

drawdowns

really

where,

where i-if you're--

you

get complacent,

you kind of,

change

your

assumptions and

believe that markets can't do
this don't do this anymore, that's

where you

really get

yourself

into

hot

water.

and

what

we are most

concerned with when we're

constructing portfolios

for clients, we

wanna make sure

the most important things in

client

or priorities in

our

client,

client's lives

in, in that journey

f-for the 100-year family or, or

um, to to fulfill the

journey of the

100-year family are

protected.

Because

when they're not,

and when

the inevitableâ¦

It is,

will say this, I, I think
I can say this side of

it from a compliance perspective,
the inevitable market

correction or, uh, whatever

frame-framing you want to

put on it,

markets will go down

at some point in time.

They

will.

And you

need

to be

protected

for

the most important

things

your life,

whether

those be a

tax payment or living

expenses or

other

things that that you

have framed and

classified,

uh, as being incredibly important

you.

Those need to

met, 'cause if

you

have to

sell assets

a depressed,

Value.

you're-- that is

losing money, right?

That is that is the

true risk

that's out there.

Extending this even to a further example,

we were talking internally
the other day about, you

know, on the

real estate side of

things, real estate developers, et cetera.

They use a ton of leverage,

And not protecting

the simple

payment

fund that

leverage or the loan

wrecked a ton of

people around the time,

of, time of COVID, 'cause there was
that complacency, that assumption

that, oh, prices just go, go up and

up.

People are gonna pay their
rent, so, so on and so forth.

And

it was a

perfect

storm

that happens

when you

kind of

least expect it So again, this isâ¦

We're

not predicting

the future,

we're not ringing alarm bells.

It is kind of this pause of,

um, and, and reflection and
reminder that markets don't

only

go up, and you

need to have

that plan in place.

and

and it's why

you don't

overextend.

It's why

you don't

get

complacent and,

and, reassess.

and say, "Oh, this time is
different and, and whatnot, right?

those are some of the most dangerous

words

Mena Hanna: out

there.

Yeah, and perfect

storms

do happen.

it's

important

to just

kind of take a step back and

realize that

perfect storms happen.

How often they happen,
they should be rare, and

they should be rare

when you do all the right things,
when you diversify, when you have

plan in place.

But

at the end of the day,

there are going to be prolonged

periods

of these perfect storms.

I'll take

kind ofâ¦

You know, I know

we were talking about fear-mongering on

the last episode, but

I'll, I'll

fear-monger a little bit.

If you're an investor who is
ultra-concentrated in tech, think

the

Nasdaq-100, you bought in at the absolute
height of the dot-com bubble before

actually burst.

You were down 83 from peak to trough.

It took you 16 years
to actually break even

and get

that

money

back Why it's- Thatâ¦

Yeah.

First of all, that's why you
don't over-concentrate it.

If you were a little

bit

diversified, instead

of the of the

Nasdaq-100,

you invested in

the S&P 500,

so a little bit

diversification.

Instead of

83 that was 49 so, so better.

And instead of 16 years, it took you 7.2

years to

actually recover.

You can see here

that's, that's

the diversification piece.

But

either way, in any

way

you slice and dice it,

that's a long time to be without your

your

capital and to be selling a

dollar for, you

know, potentially seventeen cents.

That's not what you want to do.

That is a permanent
impairment of capital, And you

need to have

other

other capital that's

hopefully worth

dollar, if not

close to a dollar,

there

to actually

meet

your, your

needs your priorities So you

don't

have to

either completely and
drastically change your life.

You know,

we always have

that wedding example.

If you're getting married in two
thousand and one in a situation like

this, your three hundred-person wedding

just turned into

a sixty-person wedding.

Have fun explaining that to

your soon-to-be wife.

Um, so we don't wanna do that.

the other thing that

we also don't wanna do is

keep the $300 wedding,
but now it's five times

more expensive from kind of a household

net

worth standpoint.

So that is, that

is why you

wanna protect your portfolio and,

and build it

strategically.

These

storms will happen.

They're few and far between,
hopefully, if public markets function

efficiently.

Uh, but if

if you don't prepare for them in times
like this, you can actually get wiped out.

And that's, that is the biggest risk here.

I would say

that is a

bigger

risk

than

missing a percent

two on the year.

Getting wiped out is

something that you just
can't come back from.

100%.

Justin: that you just

can't come back from.

One hundred percent, and I think that's
a, uh, a differentiation between AWM

and a lot of other, um, firms like
ours out there in the world where

w-we're prioritizing your

priorities.

We're saying

money is a tool to do
exactly what you just said.

It's not

tool

second-guess yourself,

go chase

the Mag Seven, even though
you already are diversified

and you have exposure to them

and, and they're benefiting you right now.

Because,

you know

let's say the dot-com

bubble repeats itself.

It's not gonna be exactly in line with it.

but you know, history
repeats or it doesn't

repeat, it rhymes kind of thing.

Like,

could that happen right now?

mean, some people are saying

there's similarities

to that dot-com bubble in
certain parts of the market.

And So,

uh,

f-reframing how to-- how
we are investing money.

You're not investing money to chase hype.

You're not

investing money

for the fear of missing

out.

You're investing money

accomplish

your

priorities and protecting those priorities

is what we do every single day in

times

where markets

have just gone

up and to the right withâ¦

Again,

there's been

volatility.

It's been

I think

relatively sub-subdued
over the last ten years,

certainly, versus, you

know, twenty-plus, going
back to dot-com, The

great

financial crisis, The

early

2010s

aught, whatever they call it.

Like,

that, that was an interesting

period in the markets.

experienced that and so kind of have the

battle scars

to,

uh, to to tell

those tales.

And

it's painful.

It happens.

and You need to protect against those,

Giving

the extra

one or two percent so you can
accomplish what is absolutely

most important to you in life and
have that, that-- hopefully, that

peace of mind.

it's a it's a different reframing.

It is, the uh

that

that concept.

Money is a

tool

to accomplish what's
most important to you.

This is how you

should

invest

do that,

right?

This is

how

you should invest

accomplish that

over the

short term and over that
hundred-year journey that we talk

about

Mena Hanna: a

bit.

Yeah.

And you sort of

highlighted this,

uh,

briefly, but it has been an

extremely long period of time.

Like, I forget that 2008

was eighteen years ago.

It's

sort

of shocking when you,
when you say it out loud.

That,

that is a long time ago.

There

are people that

just

forget

the the historical lessons
and, and the financial

call

it fundamentals

and,

and physics when things stretch

out that far.

I would say that is a big

differentiator in

how we, how we approach things.

We wanna be ready for that, you

know, five-and-a-half-year drawdown.

We wanna be ready for

the seven,

the ten-year drawdown

that happens.

Because

you're not and

it's

it's a ten-year drawdown

and you have to dip into it, like youâ¦

we've we've said,

it is an impairment of capital
that you just can't come

back from.

that is, that

is definitely

a different philosophical approach.

Um, but yeah, it is something

that prevents, call it

cat-catastrophe.

Yeah.

Justin: Yeah, Totally.

And, and

it really impacts

you listeners, all of us,

accomplishing that goal of

the, the 100-year family.

So, um, we'll wrap

there,

hopefully.

just again,

a kind of helpful conversation,

a little bit

of back and forth between Mina and myself,

um,

uh, on what we're always keeping in

mind when

we're, we're, constructing
portfolios and even

having conversations,

uh, both internally and

externally.

Um, right?

It's a, it's a, it's a reframing, if you

will, and,

and

really, really important to

reiterate the, the,

the idea of

protecting

what is truly most important to you
so you can accomplish that goal of the

100-year family.

Um, but yeah,

hopefully, hopefully the
conversation is helpful.

Um,

n-no ringing of bells

or anything like that.

Uh, we don't know exactly what the future
will, uh, will, will, unfold or how it

will

unfold, but

it's always

a a

healthy reminder

check

yourself, right?

To, to,

potentially mentally

prepared, to have that

plan ahead of

time.

and

and we

do.

We're protecting your assets,
your priorities in, in, this way.

So,

uh, if you have any questions,

shoot

Mena Hanna: us

a text.

Six two six, eight six
two, zero three five five

Justin: And until next time,
own your wealth, make an impact,

and always be a pro.

Thanks for listening