Transcript:
Easan Arulanantham:
You know, what is the complete stock market cycle? And you know, how do you tell what part of the cycle you’re in?
Tom Vaughan:
Yeah, so a complete stock market cycle is kind of from the bottom, up to the top back to the bottom again. So for example, I think we hit a bottom from the 2000 downturn, about 2002, maybe early 2003, I can’t remember exactly right now. But then we ran all the way through till October of 2007. And we hit a top, and then we came down all the way till October 2010, that sorry, march 2010. And that is a full cycle. So where you had this kind of big run up, we had a very big run up, that happened after the 2000 downturn, got all the way back and then fell, and ended up actually in that particular scenario with the second biggest downturn and you know, in the last 100 years, second only to the Great Depression. I think market cycles or most, for me, market cycles are most important to determine, you know, how I’m doing? Because, you know, how do I do on the upside? And then how do I do on the downside? And if you can do well, at both, wow, that’s really, really great. Because a lot of times, super conservative people do really well, the downside, and then do terrible on the upside compared to the market. And then super aggressive people do just the opposite, they do really well on the upside, and they get hammered on the downside, right?
And so, you know, can you maintain a rate of return that is commensurate with the market or are better than the market? And then on the upside, and the downside, that’s a really, that’s a really big challenge. And so and that’s one thing I think we want to look at with your advisors personally, you know, how do they do throughout the different market cycles and total across those arenas, and our average clients been with us for 22 years. So, you know, they’ve got a chance to kind of see us through a lot of different cycles, and it’s something I pride myself on, you know, I’m sitting in front of these six screens, right now, as I speak, you know, and markets go and and I tried to keep track and I worked on really, really hard to try to deal with both cycles, you know, how do we how do we do well, both. I’m not perfect at it. It’s difficult, but it’s, it’s a fun process. But that’s, that’s what a cycle is. And I think that’s what its importance is also just to be careful of just analyzing yourself or your advisor in one of those cycles, because they could be not so good and the other ones and you still end up losing out. So, you know, that’s important as far as that goes.