Stock Talk - Market Timing – Are You That Good? Stock Talk Update July 3, 2026

Starting point is 00:00:00 Everyone, thanks for joining us here on Stock Talk. It's July 4th weekend, and I hope you're having a great weekend. So this week, the title, market timing, are you really good at that? And so there are two quick takeaways here. First, geopolitical events grab headlines, but earnings and interest rates ultimately drive long-term stock prices. History shows that investors who sell during geopolitical prices often miss powerful recoveries. Timing both the exit and re-entry is extraordinary difficult. The biggest risk isn't enduring temporary market declines. It's missing the recovery that often begins while the news is still overwhelming. So everyone, it's happy 4th of July weekend, our great nation's 250-year birthday.

Starting point is 00:00:45 I wanted to follow up on a topic that came up during our second half market outlook live stream last week and address one of the questions we hear most often from retirees. That is, should I sell because of what's happening in the world? Russia, Ukraine, Iran, Israel, China, Taiwan. The headlines are always frightening. Markets become volatile short term. And the temptation that many retirees have is to wait until things settle down to invest or fight the urge to go to cash and try to market time. But tonight I want to ask you one simple question. Are you really that good at market timing? Do you have a history of successfully executing this strategy?

Starting point is 00:01:23 Because timing the market isn't making one correct decision. It's making. to. You have to know when to sell and you have to know when to buy back. History says that much harder than most people believe, and all we have to do is look at two recent examples over the last few years. The first example, Russia invades Ukraine. On February 24, 2022, Russia invaded Ukraine. Markets immediately feared a European recession, a global energy crisis, they feared runaway inflation, and they feared higher interest rates. They feared a global slowdown here in the U.S. and overseas. Many investors concluded that stocks had nowhere to go but lower. Initially, they weren't entirely wrong. Over the next eight months, the SEP declined 18.4%. But here's the important point.

Starting point is 00:02:12 The war wasn't the primary reason stocks fell. The largest drivers of stocks going lower that year were the Federal Reserve raising interest rates at the fastest base and decades. That, and it was an earnings recession as corporate profits temporarily declined due to tough post-COVID reopening comparables. Those fundamental factors, not that geopolitical headlines ultimately determined which way the market was going. Now, fast forward to today, Russia is losing the war and a few in the media are focusing on the conflict anymore. And since that invasion began, the S&P 500 price return was 73.3%. percent. Total return with dividends re-invested over 84%. Annualized return of approximately 15.5% with dividends re-invested. Think about that, investors. The news from Ukraine has remained tragic, yet investors who stay

Starting point is 00:03:05 invested have been rewarded with outstanding long-term returns. The headlines stayed negative. The markets eventually looked forward. Okay, the second example, closer, the Iran-Israel conflict. Let's look at much more recent. Early this year, tensions between Israel and Iran escalated dramatically. Financial TV quickly filled with predictions of the same thing. Higher oil prices, persistent inflation, a global recession, a couple people called another bear market. What happened? Markets did become more volatile. The SP 500 briefly corrected down almost minus 10% in the first border. Many investors once again considered moving to cash. And today, the S&P 500, remains approximately 10% higher than where it began during the period. Once again, markets proved an important lesson. Shorter from investors and traders initially priced uncertainty, but over time they return to pricing earnings. Corporate earnings have continued moving higher throughout 2006, significantly higher, in fact. The lessons headlines move markets over shorter time periods. However, earnings drive markets over longer time periods. That's a huge difference. Geopolitical

Starting point is 00:04:16 events can absolutely create market volatility. They can create sheer. They can create short-term uncertainty. Investors, most of the time, they don't change earnings that much. Time and time again, the markets eventually refocus on two questions for companies growing earnings and what are happening to interest rates. Those fundamentals determine where stocks go over years, not days. So back to the market timing problem. Let's assume someone sold after the Russian invaded Ukraine. What exactly were they supposed to buy back? When? After inflation peaked, after oil prices fell, after the Fed stopped hiking, after the economy recovered, after earnings improved. By the time many investors felt finally comfortable, the markets had already recovered. That's the challenge. Market bottoms rarely occur when the news becomes good. They usually occur while the news is still terrible. Often six months before the economy turns. Go ahead and look back at the great financial crisis, or even more recently the COVID closures. The same challenge exists today. If someone sells because of geopolitical fears, what event tells them it's finally safe to buy again? History suggests there usually

Starting point is 00:05:28 isn't one. What history suggests is events, initially the reaction, long-term outcomes are better. Investors, the lesson here isn't that markets ignore wars. They don't. The lesson is that markets eventually price something else. They price in future earnings. They price in future cash flows, future economic brooks. So let me leave you with one more final thought. Every geopolitical crisis feels different while you're living through it. Every headling feels urgent, every correction feels permanent and like the end of the world. But history reminds us that investors are generally rewarded for patience, not their emotions. Can someone to successfully time the market around geopolitical events? Certainly they can. Someone always does. The better question is, can they do it

Starting point is 00:06:14 consistently or better yet? Can you do it consistently? History says that very few can. That's why your investment philosophy remains unchanged. Stay disciplined, stay diversified, stay focused on your financial plan with your advisor, while our investment team stays focused on earnings and long-term fundamentals, not simply the headlines of the day. Because when it comes to market timing, the question every investor should ask is, am I really that good? Thanks for watching, and I'll see you next week and have a great July 4th weekend. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other

Starting point is 00:06:59 sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.

Stock Talk - Market Timing – Are You That Good? Stock Talk Update July 3, 2026

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