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Visit yamava.com/palms to discover more. Buckle up, ladies and gentlemen. Today I'm going to tell you how to respond when markets crash. ♪ Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Josh Rasheeds. I am your host, and today, well, bumpy road in the stock market, bumpy road in the crypto markets, bumpy road in real estate. What do you do when markets crash? Let's talk about it. ♪ As I record this podcast today, it is Monday, May 9, 2022, and across the board, it is a rough go in terms of declining prices.

For today, I just pulled up the numbers for today. S&P 500 down 3.2% to close today at 3,991 points. NASDAQ down 4.3% to close at 11,623 points. Gold down 6.2% to close at $1,852. Let's pull up Bitcoin. Bitcoin, USD, the exchange ratio between Bitcoin tokens and U.S. dollar tokens, 31,054 U.S.

dollar tokens to Bitcoin. What do you do when markets crash? Today, I want to help you think through that, and I'm going to give you the answer right now. Let me turn off the music, so I'll give it to you right now, and then I'm going to expand on that answer with some specific applications.

What do you do when markets crash? Well, the answer is you respond to the market crash according to your pre-existing strategy. That's it. There's the show. You respond to the market crash according to your pre-existing strategy. Whatever your strategy is with regard to your investment portfolio, then you follow that strategy that you have created during times that were not emotional, during times that were not filled with fear or euphoria, and you follow that strategy based upon the numbers that are being presented to you.

You say, "But Joshua, I don't know how to respond according to that strategy." Well, there is your problem. I'm not saying that to be glib or to try to rub it in, but there is your problem. You must respond to market changes based upon your pre-existing strategy. I'm going to give you in today's show a wealth of examples to drive this home, and I hope that by the end of this recording, you will have some idea of what to do.

By the way, to the sponsor of today's show, internationalescapeplan.com. One of the ways that internationalescapeplan.com can be useful to you is providing a component of your overall strategy of how to even do things like save money during times that are difficult. I've told this story many times, but I want to repeat it.

Years ago, I had an interesting experience where I had a client of mine who ran a drywall company. The time that I met him, it was 2010, and he had been in the construction industry in South Florida. The construction industry in South Florida had utterly collapsed in 2008, 2009, 2010, and he had no business.

What was interesting, I came along as a financial planner at the time, wanting him to work with me. It turned out that I didn't have very much to offer him, but he had a whole lot to offer me. His comment to me was, he said, "Joshua, this has been," I forget, "my third or fourth recession, "and I've learned a little bit along the way "of how to respond to recessions." And so what he had done in his business was he had parked all of his trucks, he had laid off all of his employees, he had one part-time administrative staff member who was answering the phones when they rang, and he had pulled everything back to the bare minimum, and he was going fishing every day.

And he didn't borrow any money from anybody, he was completely debt-free, he had no overhead, and he had plenty of cash reserves, and so he went fishing every day. He said, "I've learned over the years "that it's easier to make money "when you just simply follow the markets, "and it's easier to take a vacation "rather than worrying about how do I make money "in a dead market?" And he'd actually bought a brand-new fishing boat from some guy who was in over his head and he bought a $100,000 boat for 40 grand or something like that, I don't remember the exact numbers, and he was going fishing and enjoying his lifestyle.

And over the years, I've thought of him again and again and again, and I've realized that life is easier when you don't fight against the tides. If you've ever gone out and rowed a boat, rowed a canoe or something like that, and figured out that if you have to fight against the current or fight against the tides, it's really difficult.

But if you simply time your life in accordance with the tides, then things can work really, really well. How does this relate to internationalskateplan.com? There are times in your life at which it might be better for you to just leave the country. Now, I talk a lot about doing that in times of emergency, right?

Maybe you are facing hyperinflation like they're facing in Argentina or Turkey right now, and you decide, "You know what? "I'm gonna get out for a while, "and I'm gonna go somewhere else "where I don't have to deal with this hyperinflation." Maybe, though, it's just simply business is dead and, "You know what?

"I'd like to go ahead and just take it easy for a year." Well, now, all of a sudden, renting out your house so that you cover your mortgage payment and going to a cheap country that you had already decided that you liked might be useful. Internationalskateplan.com is much more intended to help you prepare for an acute situation when you have to leave because the cops knocked on your door and said, "Were you in this place at a certain time?" and you're not so sure if you really want to answer that or whether you want to have your lawyer answer that while you are on the other side of the world.

Or you're just not sure about whether it's safe to be in your country right now and you might want to be in a country that's safer for a period of time. But if you would like to have an international skate plan and you would like to know how to build it in a simple, sensible, non-freak-out, non-dumb way where you don't overcommit to something and you just systematically build up your ability to live freely if things don't go great in your home country, go to internationalskateplan.com and sign up for that course.

I promise, well worth the money. So let's go back to markets. How do you respond to a market crash? I gave you the answer, right? You respond according to your pre-existing strategy. And again, my goal is not to embarrass you by saying that but to say that if you're not responding according to your pre-existing strategy, therein lies your major mistake.

Market crashes in every market everywhere are inevitable. That's what markets do. Now of course that word crash is very subjective. What does it mean? Does it mean a 5% change in markets up and down? Does it mean a 25%? It's not a defined term. We have good technical definitions that we use for bear markets and bull markets.

We have good technical definitions that we use for recessions and depressions. But crash is just one of those evocative, scary words that doesn't actually give you any ability to respond. So I'm using it to evoke the emotion without getting into the details because the details don't matter. The point is before you ever invest money, you should have some kind of plan and some kind of system.

So where's your starting point? Well, the starting point is to say, "Am I a long-term buy and hold investor or do I have a trading strategy of some kind?" I think the best, most sensible way for people to invest their money is to be a long-term buy and hold investor.

Now that applies whether you're investing into mutual funds or stocks in your retirement account. That applies whether you're investing into real estate. That applies whether you're investing into Bitcoin. All of these can work well for a long-term buy and hold investor. How do you know if you're a long-term buy and hold investor?

Well, the way you know that is you look at the investment asset that you're buying and you ask yourself, "Do I believe that this investment asset is a quality asset for me to hold for a long time?" And you should know that somewhat intuitively. If I point across the street and I show you a good, solid three- or four-bedroom house, two or three bathrooms, couple cars, couple car garage on a nice residential street with good, big, mature trees, you know it's safe, you see some children playing here and there, you see some nice cars parked in the driveway, and I ask you, "Do you think this is a good asset for you to own?" The answer should be fairly obvious, fairly intuitive.

You look at it and say, "Yeah, I think this is a good asset for me to own." Why? Why do you think that's a good asset for you to own? Well, the answer is it's always the kind of asset that's going to be in demand. If you look and you can see a nice house that you yourself would be willing to live in, then it's easy to imagine that other people would also want to live in that house.

It's obvious that, "Hey, you know what? "If I would live in that house, "somebody else would probably live in that house, "and people need a place to live." Now, compare that to my taking you outside of town, wrong side of the railroad tracks, old, run-down, broken-down house, and I say to you, "Is this a good investment?" Well, you would look at that and you would say, "I'm not so sure if it is.

"Maybe it could be made a good investment. "There might be some speculation available. "Maybe I could buy that old house, "and I could fix it up, "and I could rent it to somebody "who doesn't mind living on the wrong side of town. "Maybe something's going to change "that's going to make this the right side of town.

"You know, there's going to put in a new highway, "or there's going to put in a new housing development, "or something's going to happen. "They're going to get rid of the railroad tracks, "and now this dividing line is no longer there." That's a speculation. That's a trade. That's where you're looking at it and you're saying, "I could own it until." This is the basic difference that I see, just put in very simple terms, between somebody who's a long-term buy-and-hold investor versus somebody who wants to trade it.

If you look at an asset that you own, and you say, "I think this is a good, high-quality asset," then chances are that if you buy it, things are probably going to work out. Think about that house. Think about all of the market crashes that you've lived through in real estate.

If you bought that house, it's a good-quality house in a good part of town, on a good, safe street, with trees growing up, etc. If you bought that house, can you think of any time at which you would have lost your shirt on that investment if you held it for a few years?

It's hard to think of any. Even in the most vicious real estate markets, declines, etc., generally speaking, if you can have at least a few years to hold on to a piece of property, you can always sell it and get your money out. Wait a few more years, you can usually sell it and get a bigger profit.

Usually, that house is in high demand. Now, the same thing doesn't occur with that more speculative house, the more run-down, ramshackle house. With there, your speculation, "Eh, I'm not so sure. Maybe this part of town is really dead. Maybe this city is really dead and falling apart. Maybe the country is really dead and falling apart." But if you buy quality houses in virtually any town, really in virtually any country, good chance they're okay, they're quality.

Now, what about the businesses that you own? Because that's fundamentally what you own if you own stocks or if you own shares of, portions of stock within your mutual fund. What about those businesses? If I bring you to a high-quality, old, well-run business in your town, and I say, "Hey, would you like to be an owner of this business?" What would you do?

You'd look around and you'd say, "Well, do we have customers? Do we have business? Do we have employees? Do we have facilities? Do we have plants and equipment? And if so, then yeah, I'd probably like to be an owner." Now, we don't know exactly the terms, but a good, high-quality business is the kind of thing that you want to own.

And so, if I say, "And if you buy that business, can you imagine, in most cases, that business not being worth what you paid for it in a few years?" Certainly, some businesses can be in the decline, but if you own a business that's a high-quality business, then, generally speaking, you're going to want to keep owning it.

Because even if you can't sell it for as much as you'd like to sell it for today, in a few years, you'll be able to sell it. At least get your money out, in most cases. So, how do you... So now, if we flip it around, like, let's say that I take you across town and I show you some brand-new business that's more of a speculation, brand-new industry or brand-new concept, brand-new idea, maybe a brand-new business manager, brand-new staff, something like that.

Or, in an industry where it's kind of questionable, and I say, "Do you want to just buy this and own it and put it away for the next 10 years?" You're not so sure. So, that's more of a speculation, more of a trade. Whereas the first one, you're well-suited, just buy and hold.

And although I'm kind of thoughtful about wanting to take it to the crypto markets, this is basically the argument that people make about the difference between Bitcoin and some other competing currencies. Is that, do you want to buy something that is stable versus do you want to buy something that is more speculative?

And I'm going to try to minimize my conversation there, but I wanted to mention it because, of course, massive declines recently and big down prices in many of the crypto markets. So, if you're a buy and hold investor, what is the basic thing you need to know about your investments in order for you to be comfortable holding them during times of fluctuation?

You need to know that they are good quality investments. You need to know that you bought a good house. Yeah, it might need a new roof, but at its core, it's a good house, it's got good bones. You need to know that it's a good company. Yeah, we might have to tweak management a little bit or tweak our product line, but fundamentally, it's a good company.

It's not just some fly-by-night operation. It's a good company. Now, most of us are not out just buying individual houses or just buying individual companies, although that can work fine. If I myself owned a portfolio of two or three high-quality companies, publicly traded companies, the stocks, I mean, the stocks of these companies, I could sleep very well at night.

Now, of course, people worry about that. They say it's not enough diversification. At its core, I've always been a little skeptical of that. I really have been. Are you going to tell me that if I own shares in a high-quality company, that that's not enough diversification for me? If you think about in the modern world what company ownership represents, you pick your favorite company.

It can be an old, traditional company. It can be a new, modern tech company. You pick your favorite company and think about what that company owns. Well, if it's something that's on your radar screen and if it's a publicly traded stock that's easy to buy, there's a good chance that company has thousands and thousands of people that work for it.

Those thousands and thousands of people have a lot of really smart people among them who come to work every day trying to figure out how do we make this company grow? How do we make it more profitable? How do we serve our clients better? The company probably has income from across the world in lots of different currencies.

They have operations in many different countries. They own equipment. They own real estate. They own trucks. They own trains. They own planes. They own equipment in all kinds of different countries. And that company fundamentally is a really, really solid thing. I always find it funny, or I still find it funny, when a guy with one job and just little savings comes along and says, "Well, it's risky to have one stock." Now, I grant the argument.

Having just one stock of one company is a bit risky for my taste. But at its core, owning stock in one company is far less risky than having only one job. Especially if we're talking about a big, publicly traded company. Yeah, there might be big fluctuations in price, but imagine the biggest crash, and you go from a 50% crash in the stock value.

It's still a lot easier to lose a single job. So what do you do? Well, you diversify your investments if you're a buy-and-hold investor. You purchase more than one company's stock. Maybe it's three. Maybe it's five. Maybe it's ten. Ten is a really good benchmark. Having no more than 10% of your assets invested in any one company or any one thing is a pretty good, useful benchmark to work towards.

Maybe it's literally thousands. Most of my listeners will own mutual funds. Many of those mutual funds will have ownership in hundreds, in some cases thousands, of different companies. Thousands of companies. So take everything that I said about a great company and multiply that times hundreds of different scenarios. You have hundreds of different markets, hundreds of different industries.

Now you're not just dependent on one industry, but now you have hundreds of industries represented. And then all of those same multiplier effects that I mentioned in terms of operations in hundreds of different countries in the world, markets, hundreds of little markets, hundreds of different kinds of currencies that we're accepting as payment for our business, hundreds of different pieces of real estate in dozens of countries, thousands of workers spread all around the world.

So we're pulling from the best global talent in the world. And now you see the world of modern business. It's spectacular. It's utterly spectacular in terms of the simple and easy access to high-quality companies, the best companies of America and the world available to you for mere pennies. And your ownership in those companies represents a tiny fractional share in the current and future profits and dividends of those companies.

That's what it reflects. If any of this resonates with you, then you'll know what to do as a buy-and-hold investor. The answer is you go forward. Now what gets a buy-and-hold investor excited? The answer is to be able to buy high-quality assets that are on sale. So if there are things that you want, right?

Imagine that really nice house across the street. It was listed for $600,000 a few months ago. Didn't sell, didn't sell. They dropped the price to $550,000. Now they just put a sign out and said $475,000. Well, man, you get pretty excited, right? You start working the numbers. You say, "Can I buy that thing for $475,000?" Imagine that you had a company that you were excited that it was on sale previously at $20 a share.

Now it's down to $18. Now it's down to $15. Now it's down to $13.50. What do you do? Well, you round up as much money as you can. You buy as much as you can. Imagine you were excited about Bitcoin at $50,000 U.S. token coins per Bitcoin. Well, now it's down to $30,000.

You look around and you say, "Can I scratch around? Can I come up with any loose change and pick up a little bit more?" That's the mentality that you should have if you're buying quality assets. You buy quality assets and you buy as much of them as you can when they are on sale.

Why? Because if you're buying quality assets, it's hard to imagine that in the coming years other people won't see the same value that you see in those quality assets. Five years from now, 10 years from now, 50 years from now, the idea is you'll still own those assets and you can sell them at any point along the way that you want to sell them.

That's the basic fundamental logic of being a buy-and-hold investor. A buy-and-hold investor should stay the course during times when markets are down and that buy-and-hold investor should buy as much more as he possibly can during times when markets are down. When high-quality assets are on sale, buy as many of them as you can.

We'll get to trading in a moment, but you say, "Joshua, I'm not so sure. Why are all the high-quality investments down in value? Why? What's going on? Why do other people not see what I see? Why are they willing to sell me their $600,000 house for $475,000 today?" In the case of the individual house, you walk across the street and you ask them, "Why are you selling the $600,000 house for $475,000?" They'll usually tell you, "Well, we want to do this.

We need the money because of that. We don't care about it because of this." People have all kinds of reasons to sell. "I'm getting divorced. Dad died and we're just selling the house. None of us want it. We really want to buy a business that we think is going to make us $475,000 a year and we'd rather trade our $475,000 house out quick so we can buy this business." Any number of reasons.

Or, "We just want to move. We don't like the house anymore and we don't need the money. It's not a big deal. It's not worth hanging on. We're tired of it. It's got termites. Who knows?" What about big-scale markets like the stock market that's hard to figure out? Well, the answer there is you've got millions and millions of people making independent, different decisions as to why they think they're willing to sell you these assets that yesterday were priced at $20 a share and today they're willing to sell it to you for $15 a share.

Some of those reasons can be personal. "Need the money. Got to sell. Just got to sell." Some of those reasons can be based upon their trading strategy. "Got to cover an option that I wrote," or "I got to figure out some way to pay for my kid's college." But the point is that you have to recognize that there's really no way to know.

The Wall Street Journal will report every day, or All Things Considered will report every day, and will say, "Markets moved down because of fears of inflation," or "Markets moved down because of interest rate risks." There's certainly probably some predictive factor to that, but overall it's completely unknowable. The market is literally just an approximation of the net results of millions and millions of different decisions.

Remember that for every seller there's a buyer. For every buyer there's a seller. And so for everyone who sold, somebody bought. And those prices just kind of wander around. And some days you can think you know why those prices are what they are, and some days you can't know.

Some days it makes sense to you, some days it doesn't make sense to you. But you just stay the course. So if you're a buy-and-hold investor, then your strategy is simply to try to buy high-quality assets and hold them for a really long time, preferably forever, and buy more of them when they're cheap.

So how do you buy more of them when they're cheap? Well, this is usually known as dollar-cost averaging. One of the basic things that you can do is you just say, "Hey, every month I can afford to invest $2,000 a month. So I'll just buy $2,000 a month." And when things are expensive, you naturally buy a little less.

If stocks are $20 a share, you can't buy as much as you can when they're $15 a share. And so if you invest the same amount of money over time, then you are able to buy more. What if you're not so sure of the value of your investments? We'll come to that in a moment.

Now let's talk about trading. When it comes to trading, there is an infinite variety of different strategies that you can follow as a trader. There are traders that own stocks for a few nanoseconds. There are traders that own stocks for a few minutes, few hours, few days, few weeks, few months.

With real estate, there is an infinite variety of different trading strategies that you can use. You can fix places up and sell them. You can flip contracts, all kinds of things that you can do. So as a trader, what you're looking for is trades that meet your parameters. It's hard for me to talk about trading in any kind of useful way when I speak about it in a general way.

What you need to simply remember is that traders can use strategies that work for them when markets go up. Traders can use strategies that work for them when markets go down. You can make money in any direction on a move. And so a trader has to understand his specific strategy and then follow it as the actual opportunities emerge.

I can't cover that in a generalized way, but if you're a trader, you already know your plans. If you put a stop loss on your stocks because that was your trading strategy, then those stop losses were triggered. If you are following some kind of short-term holding pattern, you follow your indicators.

You can't look at the general market. You follow your indicators for your specific strategy. I think at least 80% of people will be more naturally well-suited to being buy-and-hold investors than to follow any kind of trading strategy. It's not that trading strategies, in my opinion, are bad or wrong or flawed, but rather that most people just aren't interested enough to follow it.

I have known this about myself for a very long time. I really enjoy finance. I love finance. I am bored silly with the idea of trading. I'm temperamentally suited to be a buy-and-hold investor, to buy good quality investments and hold them forever. When I need money, borrow against them, then pay off the debt and just keep on holding them.

As they grow in value, take a little bit of the value, spend it, and just hold it forever. It fits my temperament, fits my goals, and so trading strategies have just never, ever been an interest of mine. I acknowledge it can work, but if they're an interest of yours, follow that.

But there's a lot of people who think that they should all of a sudden switch from being a buy-and-hold investor to being a trader just because they somehow perceive something different. People have been sounding all-- Let's go back to the safety of what if things have changed? What are the concerns that people have right now?

Well, a big concern is inflation. But what's actually changed about inflation in the last year in terms of the predictions versus not? We've got real numbers, but the predictions on inflation have held pretty true over the last year. So time will follow through. And so you don't have--as far as I can tell, you don't have any unique insight on the situation.

I don't have any unique insight on the situation. We're all in it together. It just kind of presses forward. And so the markets are going to wander around, but is the bottom really going to fall out? I think a lot of people have a lot of significant fears that they think are really impactful but they're the only ones who see.

Now, I've been a doomer in times past. I no longer am. But I've worked through a lot of those things and I realize they're just not the case. First, most of my audience is based in the United States. And Americans have a strong impulse to overestimate how shaky their position is.

This happens in the government. This happens in individual citizens, etc. I myself have been a significant critic of the United States of America. But I'm here to tell you, it's not going to fall apart today. I promise. It's not going to fall apart today. I'll get to an answer in just a moment of, "Okay, what if it does fall apart?" Because I believe in planning in case it does fall apart.

But it's not going to fall apart. This is not the end of America. Notice I said earlier hyperinflation around the world. There's hyperinflation all around the world right now. It's not just Venezuela. It's not just Russia. It's more normal places. Argentina, which has hyperinflation about every three months. Sorry, Argentinians.

It's Turkey right now. There's just significant inflation all around the world, in many places. But these countries don't collapse. And what you see is you see everyone rush to safety. And where is the safest economy in the world right now? United States of America. Safest stock market in the world right now?

American stock market. It is so huge and so vast and has so many of the great global brands available in it that while there can be interesting opportunities in other markets and other places, and while I think that there are many other markets that could provide... I'm trying to parse my words carefully.

There are many other markets to provide a lot of things that the US market doesn't. At its core, the American stock market is still king. It's powerful. It's easy. It's wonderful. And the United States of America is powerful. It's so good. When you think about all the risks that face countries around the world, and having been a big proponent of internationalization myself, I've studied a lot, I often just come back and reflect on how good the United States of America is, especially when measured on a global metric, in terms of everything from fresh water, food supply, industrial opportunities, stability of government, stability of currency, powerful workforce, educated workforce, abundant workers available.

It's just on so many metrics, it continues to be the leader in the world. And so while I think that significant challenges are coming in the coming decades, and I think there will continue to be wonderful international opportunities, don't freak out thinking that, "Oh, the United States of America is here." It's not.

Rest and follow your strategy. At its core, I believe that most people should do exactly nothing during times of great fear and during times of great greed. If you avoid taking a big action during times of great fear and times of great greed, you will most likely make the right decision.

If you think about your lifetime, and you think about how different things can be in a mere year from the event that you're most concerned about, or three years from the event that you're most concerned about, or five years from the event that you're most concerned about, it's probably going to be better three years, five years, ten years from now.

Let's talk through a few. Today, of course, we have inflation fears. But let's go back a couple years, beginning of the pandemic. Markets down. Inflation fear is significant. We're printing extra trillions of dollars to pay money that we don't have in the United States. Global situation. Just think how different things are today, two years later.

Most of those fears, a few realized in a very small measure. Most of those things, dead and gone. Pandemic, it was bad, deadly. Not as bad as we feared at that time. Markets corrected quickly. Went on to have a major increase in market values. Go back to 2008, 2009, within working memory of most of us.

Major fears. And yet, what followed? Incredible times of profitability. Incredible times of growth. In real estate, stocks, so many things. And so, while I want to be slow to say that stuff always goes up, because that's not necessarily the case. If you bet on stuff going up, and on things getting better in the future versus things getting worse, in most cases, history has proven you to be right.

So, what do you do? What can you do? First thing that you can do is you can practice good personal financial planning. We have a tendency to overlook the importance of the basics. For example, when I was a financial advisor, I would tell people, "Don't invest money in the stock market that you think you might need in the next five years." You've heard that so much, it sounds trite.

It sounds stale. It doesn't sound like good advice. It sounds like old advice. And yet, there's a tremendous amount of wisdom in it. If today, you have money in the stock market that you need for an expense that is important to you, that you're planning to spend six months from now, there's a good chance that you're not very comfortable right now.

But, in hindsight, the time to take that money out of the stock market would have been, say, four and a half years ago, or three and a half years ago, or two and a half years ago, etc. Because as that expense is approaching, you become more susceptible to market volatility.

And there was any number of opportunities where you could have sold and taken the money and gone and prepared for that expense. So, I think that this is a good reason for you today to sell something, even when prices are down. If in your personal financial planning, you have an expense coming up that you need money for, then that is an appropriate reason for you to sell your investments and set the money aside.

Not to say it's without risk. You might be selling when things are down. They could be higher in the future. You have to judge for yourself. But, if you have an expense coming up that you need money for, you know the date and time of it, then that's a good reason for you to sell investments.

Good personal financial planning is how you answer that. You have savings, and you plan ahead for expenses, selling investments when you need to, to cover those expenses. We teach this most and most effectively when we talk about retirement planning. Making sure that you always have money set aside to cover your retirement expenses.

But it applies at every stage along the way. What other rules of personal financial planning can be followed? Well, this is why we focus so much on conservative cash flow needs. If you don't need a ton of money to cover your personal expenses, then you can be more flexible with selling investments.

Generally speaking, stocks have a higher return than the cost of things like mortgage debt. So, it's crazy to ever sell stocks or invest less money in stocks so that you can pay off your mortgage faster, from a general financial perspective. And yet, lots of sophisticated, smart, wealthy people make that decision.

Why? The answer is, there's a real value in minimizing uncertainty. And there are times in life in which you happily take a lower return in order to maximize certainty and maximize flexibility, maximize freedom. So, in your personal financial planning, keeping your personal outlay low can allow you to respond to market conditions very effectively.

You can say, "Hey, I believe in the value of my assets long term, but I don't want to get in a situation where I have to sell my investments quickly." So, good personal financial planning seeks to maximize your personal safety and to maximize your flexibility, because those are things that you can control while you're not able to control the fluctuations and the random wanderings around of markets that reflect the opinions of millions and millions of other people.

A good reason to sell investments when they're declining in value is that you need the money to cover some personal expense. That's a good reason. Another good reason to sell investments when they're declining in value is if you have an alternative investment that you really believe is better or better for you.

See, what I'm trying to do here is simply articulate a few reasons why I think you should sell investments so that you don't think that guys like me are just always saying, "Ah, don't sell stocks." You can sell your stocks if you have a trading strategy that involves your selling stocks.

You can sell your stocks and feel good about it when they're down, if you have to cover a personal expense. And you can also sell stocks when they're down and feel good about it if you have an alternative investment that is really exciting and that you think will beat what you're currently invested in.

It's a fallacy to think, "Hey, I bought a good investment. It's just always going to go up." From time to time, you may have bought a good investment, but then you may come across another better investment that you want to invest money into that you think is going to be better for you.

And at that point in time, that's a good reason for you to sell the first investment and move on to the second one. You don't have to think about this like some kind of emotional thing. If you genuinely have a better investment that you are excited about, then go ahead and pursue it.

Go ahead and move into it. Some of the best times to make those transitions from an okay investment to a better investment come when things are falling apart. So be open to that. Be aware of that. Beyond that, it's hard for me to think of a good reason to sell a high-quality investment during a time of market decline.

Market decline is a good time for you to work, to make as much as you can to buy high-quality investments when they are on sale. I'm so concerned that this just sounds trite. Okay, Joshua, we know that. I get it, but that's it. If I think of most scenarios that people would propose, I think that those two reasons, especially with the comment on trading strategies, that, hey, if you've got a trading strategy that you created before the decline, follow it.

Great. Go for it. Lots of people have strategies that say, "I'm never just going to sit tight while my stocks go down." Sure, go for it. That's fine. Just make sure you decided that before this happened or before this is happening. Otherwise, your reasons for doing it are going to come down to, number one, I need the money, and number two, I've got a better investment.

See, that's the problem, right? You've always got to know what you're going to invest in. Are you just going to sell your investment and sit in cash? I think today, actually this time around, with inflation concerns, people are much more open to the danger of just doing that. It's not usually the danger of inflation that causes the problems with that strategy.

Usually, it's the danger of just sitting on it and not getting in before it all goes up. It happens to so many people. We sell out, then we sit and we sit and we sit, and we say, "All the reasons I sold are all the reasons that I'm still out of the market," but you just sit and sit and sit, and, hey, it never goes up.

Sorry, it goes up before we get back in. But, so cash is not a great thing to have. It's better to have an asset, and if you tell me, "Joshua, right now, you could have a million dollars of cash or a million dollars of stock. Unless I've got a great alternative investment that I can quickly turn the cash into stock, I want to own the stock," or into whatever the other investment is.

It can be anything. "I want to own the stock. I want to own something that's an actual investment, especially during times of turbulence, unless I need the money for a personal expense." So that's it. So, in conclusion, if you are concerned right now about the market decline, fine, great.

So ask yourself, "What's my strategy?" For 20% of people, you already have a trading strategy. Go, follow it. For most of us, it's just buy and hold. Buy good quality assets and hold them forever. That's it. Simple as that. So ask yourself, "Is this a good quality asset?" If it is, then keep it.

You don't have to sell it. You don't sell your house just because the market value goes down 15%. You don't freak out and do that. So just keep your good quality assets. Look at your personal financial planning, and then say, "Hey, you know what? I got this personal financial needs over here to take care of." And then, if you have a better investment, consider selling for that to buy the better investment.

But at its core, those are the only reasons you should ever sell an investment. It should not be due to a most likely temporary decline in a stock market index or whatever thing you're currently following. There are black swan events that can occur. Those black swan events are probably best solved with good personal financial planning and with good preparedness planning.

This is why I'm an advocate of good financial planning and why I'm an advocate of good prepping. Why do I have a course called internationalescapeplan.com? Well, because there are things that could happen in a country that are genuinely so catastrophic that you're better off to go out. But you aren't any better if you sold your investments and you have all the cash in that country if you've got to get out.

So you put in place an international escape plan. There's things that can happen to food supplies, but you're not going to sell your 401(k) to buy food. You just need to have a little bit of extra food so you can get through a temporary famine. Things that can happen that can wipe out your local area.

A storm can come through. A tornado can wipe you out. So you need to make sure you have good homeowners insurance. You could get hit in a car accident today and be injured, so you make sure you have good disability income insurance. You could have a heart attack and die, so you make sure you have good life insurance.

So a good combination of financial planning and prepping solves for most of those big worst-case scenarios, not selling your stocks. That's a separate conversation. If you have a better investment for your stocks, go for it. If that means a different country that has better demographics or better finances, go for it.

But at its core, don't freak out just because markets decline and then go and sell. You will regret it. Buy high-quality assets and keep them, or follow your trading strategy. That's it. Hope this is helpful, useful. Internationalescapeplan.com. Internationalescapeplan.com. I'll be back with you very soon.