We are back in the middle of housing bubble 2.0. Today we cover recent market corrections, investor psychology, and the importance of perspective when managing investments. We talk recent market downturns and real estate. Including the concerns over rising FHA mortgage defaults, government intervention artificially propping up housing prices, and the potential for a significant correction if foreclosure backlogs are released into the market. Today we discuss...
- The U.S. stock market recently declined about 10%, marking an official correction and triggering investor anxiety.
- Many investors struggle with perspective, reacting emotionally to short-term losses rather than focusing on long-term strategy.
- U.S. markets have outperformed international markets for the last 20 years, but history suggests this trend may reverse.
- A 30-40% market correction would simply bring valuations back to historical norms, not signal economic collapse.
- Financial success means little if it comes at the cost of personal well-being, stress, or strained relationships.
- Ray Dalio’s phrase "cash is trash" is context-dependent, as cash can be a valuable asset in volatile markets.
- Holding cash during downturns can significantly improve investment positioning when markets recover.
- The housing market faces risks due to a high FHA mortgage default rate, currently at 14%, one of the highest in history.
- Government intervention has kept foreclosures from hitting the market, potentially propping up home prices artificially.
- An estimated 400,000 foreclosures are backlogged due to government support, posing a risk if policies change.
- If government mortgage relief ends, housing inventory could rise sharply, leading to potential price corrections.
- Media outlets prioritize sensationalism over useful financial insights, making independent research critical.
- The economy remains fragile, and regardless of leadership, structural issues could lead to economic challenges.
- A correction in housing prices could trigger more foreclosures and increase rental market pressure.
- Cryptocurrencies like Bitcoin and Ethereum remain volatile but are still significantly up from past lows.
- Investors must adapt to bear markets, as different strategies are required compared to bull markets.
- Real estate affordability issues stem from government intervention and prolonged cheap credit policies.
- If housing supply increases rapidly, sellers could panic, leading to a sharper market decline.
"Cash is not trash... Cash is King" - Kirk Chisholm
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Today's Guest: Kirk Chisholm
Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group, an independent Registered Investment Advisor located in Lexington, MA. He has been providing wealth management services to individuals, executives, entrepreneurs, and their families since 1999. He is an outside the box thinker, risk manager, inflation expert, blogger, podcaster, and all-around interesting guy. Kirk is dedicated to developing lasting relationships with all of his clients and their families. One of the benefits of working with Kirk is his patience, empathy, and his ability to provide clear and easy-to-understand explanations to complex financial topics.
Kirk developed a unique philosophy for the wealth management industry called Risk Management First. The medical field has a similar way of thinking of “first do no harm”. This philosophy focuses on risk management for clients in all aspects of their lives in ways the industry does not address. Risk management does not stop with investments. It also requires working closely with other professionals to address areas of their financial lives not currently being met.
In 2008, Kirk co-founded Innovative Advisory Group to address the needs not being addressed by the wealth management industry. It started with specializing in alternative assets held in retirement accounts (i.e. self directed IRAs/401ks). Then the company expanded into the specialization of college funding (i.e. planning, strategy, and paying the least possible for a high quality education), Risk Management First, exit planning for business owners, advanced planning (estate, tax, etc), and providing practice management and leadership training to other financial advisors, accountants and attorneys.
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Today's Panelists
- Kirk Chisholm | Innovative Wealth
- Douglas Heagren | Pro College Planners