Wealth Podcast Post

Market Cycles with Matthew Murawski

George Grombacher June 15, 2022

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Market Cycles with Matthew Murawski

LifeBlood: We talked about how to understand market cycles, why it’s important to recognize what part of a cycle we’re in, how to think about and handle inflation, and why recessions are the end of the world with Matthew Murawski, Financial Advisor and Partner with Goodstein Wealth Management.

Listen to learn why fear isn’t a strategy!

You can learn more about Matthew at GoodsteinWM.com, Facebook, Instagram, Twitter and LinkedIn.

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Our Guests

George Grombacher

Matthew Murawski

Episode Transcript

Come on blood blood. This is George G. And the time is right welcome. Today’s guest struggle powerful. Matthew murasky. Matthew, are you ready to do this?

Matthew Murawski 0:19
I’m excited. Yes. Let’s go. All right, let’s let’s go.

george grombacher 0:22
Matthew is your financial advisor with Goodstein wealth management. He’s helping people create the futures that they want. Matthew, tell us a little about your personal life some more about your work and why you do what you do.

Matthew Murawski 0:36
Well, I’m a transplant here in Los Angeles. I’m a buckeye. You know, from the great state of Ohio. We’ve been in California for 17 years now. And you know, Scott my starred in venture capital in the bay and moved down found my passion, managing money for for families, business owners, things like that, here in Los Angeles, and part of an RIA was called Registered Investment Advisory for good new wealth management where a partner in that firm and

the succession partner, so it’s myself and Alan, and he’s the one that brought me into the business and kind of taught me what I know today and helped me get started to be able to build my own book. And so I’ve got my family, I just had a little baby boy, three weeks ago. So Luca was brought into the world and April, something, I got a two and a half year old and two Cavalier King Charles, who I love more than life, and I think I’ve got the best job in the world, I get to wake up and help people. I get to be successful by helping people be successful in return in retirement. So I, you know, I get to do what I do and get to watch the markets. And there’s always some new challenge or something new every day, which keeps me on my on my toes. I appreciate all that. Congratulations on on Luca. Thank you. Thank you. Awesome. All right. So new challenges every day, we’ve we’ve been living through a time where it seemed like the market just went up and up and up and up for like, 500 years at this point feels like it’s been a long time. But now we’ve got new words in our in our vocabulary, like recession and inflation, and depending on what you’re reading, or paying attention to, that can be the scariest things in the world. Certainly a lot of uncertainty. How do you think about those two things? Maybe start with maybe start with recession? Sure, you know,

the word recession has been given a bad connotation i because of the Great Recession, and the fact that most millennials, that was their first kind of introduction to the job market was roughly around that time, you know, going into Oh, 6070809 and you know, it my clients right now are everybody’s worried about, Well, should we be doing something different? Because Oh, you know, are we are we going to have a recession and the, I wish I could take some of the connotation away from the word because the recession is a natural part of every cycle. And when you have a run, like we we’ve had, and then economy that’s expanded in the way that we’ve had it, it’s a natural, necessary part of the process of the cycle. And so and I was we could be, it’s also something that you can only recognize looking back. So for example, we’ve already had one quarter of economic slowdown, if we have another one, all recession, technically is two quarters of the flow now. So we could, we could look back, you know, three months from now and look back and be in a recession right now. It’s just slower economic activity. And after the amount of pull forward a demand that we’ve had, because of the pandemic and everybody the amount of cash the consumer has. It would, it would be a natural part, it’s coming. It’s like the next, like fall, you know, it’s coming after summer, we just don’t really know how long summer is in the term of the market. So it’s really tough to time it or anything like that. But it’s gotten a really bad name, but it’s kind of like the common cold, you’re going to get it every so often it’s going to come on a cycle, because you can’t just have this, this upward cliff of just growth, growth, growth growth, there’s always a plateau little decline a little you know, it’s a gradual chart upwards, and that’s what you really want. Because if it was just a steep climb upwards, something’s really wrong and something that something’s not not quite right, because that’s just not the way the world works.

george grombacher 4:49
Yeah, I appreciate that. So just having a better understanding or recognizing the market does go through cycles, and perhaps this has lasted a little longer than we expected.

But it’s going to this is something that’s going to naturally happen. And to your point it makes for a more healthy market versus everything just going straight up, because then theoretically speaking, it comes straight down and be a lot more painful.

Matthew Murawski 5:14
Yeah, exactly. Because you want to have, you don’t want to have these cataclysmic drops, where all of a sudden, you know, a 40 to 50% Drop in the market is not, not your average two to three year kind of cycle, right? Roughly, it looks like every eight to 10 years. Now, if you look over the past, you know, about about 2030 years, you get one of these big events via the.com, then you had the financial crisis, then you had COVID, you know, so things that are related, they all wrote all very different circumstances. But roughly, you know, it shouldn’t be something you don’t want to just climb straight up. Otherwise, you get these crazy drops in the market. And it really hurts the average investor, because money is so emotional. It’s more emotional than anything else. And people. I just told a client this yesterday, I’m like, fear is not a strategy. Being afraid of what’s coming is not a strategy. I said, you know, the lady was 62 and, and she’s in great health, and her parents lived into her 90s. And I said, there’s every bit of evidence that you probably anything can happen, but you have to plan for almost another 40 years of like, you won’t, you’re not going to believe how many market downturns you’re gonna see in, you know, and booming market, I was like you have it, you have a long time ago, where most likely so. So getting used to part of the roller coaster ride, the part that we don’t like, and getting people used to that idea to expect it is is kind of, like preventative medicine.

george grombacher 6:52
Yeah, I appreciate them. And the next thing that we’ve all been stressing about and not knowing how to handle or how to think about is inflation. How are you thinking about that?

Matthew Murawski 7:05
Well, I don’t know what the pumps are, like in Arizona, where you’re at George, but here in LA, I drove by one yesterday, it was 769. And so, you know, first of all inflation, though, we were at 40 year peaks of inflation. And it makes it really, really tough. For people that are that are making 50 60,000 Here in California, you know, 40 5060, I mean, my heart goes out to those people, because that’s what hurts most, you know, you know, and when you’ve got inflation at such a booming peak, and I think you’re starting to see signs of it, peaking. But there’s there’s parts of inflation that will never go away. Once labor inflation goes up, doesn’t come back down. Once certain prices go up, they might come down a little bit. But you know, everything is leveling up a bit. And, and you’re having payrolls, you know, people are getting paid more on average s going up as well. But inflation is really tough, because it puts investors we’re in a weird, weird cycle that that kind of that most advisors, myself included, have not been through, which means you’ve got a rising interest rate environment, the Fed that’s going to come out today and say, supposed to say that they’re going to raise 5050 points. And we’re going to have successes 50 Point rate hikes, and at the same time, you’ve got inflation at double digits. And I would guess, to say, it’s actually even higher than that, based on the thing the CPI doesn’t include into their reading. And so if you’re an investor, where do you go, right? So real estate, great hedge against inflation, not everybody has a couple $100,000 to put down on a fixer home here in Southern California, right in cash flow to do that. So real estate’s a great hedge against inflation, real assets. So when we say real assets, we’re talking about stock and when they say stock, I try to get program people out of thinking, Oh, that the the gambling machine in the market, you take stock, you want to you want to be an owner, you know, you want to be an owner and as many companies as many great companies as you can, because those companies are the ones that are able to pass on that pain, that burden of inflation because they’re going to raise prices, as well. So you have to be positioned where you can at least keep pace with inflation and have a chance of surviving it and right now, with bond yields still so low and bonds facing a massive cliff with interest rate hikes coming. Real Estate and stocks are real The you know, ownership and companies that have cash flow, that create thing is really kind of the best hedge against inflation.

george grombacher 10:10
Now, obviously, the answer to a question from a good financial adviser is, it depends. How are some of the best ways that you found are most effective ways to get exposure to stocks? Is it buying individual companies? Is it buying broad based ETFs?

Matthew Murawski 10:28
Yeah, I like to do both. For me personally, I have the risk tolerance of like a mountain goat, though, I moved across the country in the middle of January in a Dodge Neon with $300 in a sleeping bag, and I put in my car, you know, 17 years ago, slept in my car. So I like like along the ad. So I have the risk tolerance of I can handle quite a bit and it doesn’t the things don’t, don’t stress me out. For for the average investor. broad based ETFs, I think are the best way to go. Because because you can diversify the risk and, and picking stocks. I don’t care what they say on TV. I like to add in stocks for clients where it’s appropriate individuals that can handle it. But even even the safest parts were considered the safest parts of the market by your commentators and the financial news, that would be your Apple, Google. You know, basically kind of like the thing Microsoft, I mean, Google’s down, I don’t know what, roughly 14 to 16% Amazon down 25 Apples down I believe 13 or 14% You know, so So even in the highest quality of names, you could go in and buy on individual stocks and be just obliterated, let alone if you if you like things like zoom, which is a great company, we’re on zoom right now if you’d like things like TelaDoc peloton most of the NASDAQ names are down 70 to 80%. So when you’re talking about buying individual stocks, I think they’re they’re kind of like if you’re building a house, I’d like to think of it as building foundation with your with your diversify diversification. That way it protects some of that single stock risk. And then I viewed single stocks for most investors as kind of like the scuzzy on the back porch, the moon lights on the top things that aren’t necessary to have if you’re if you’re not a relatively sophisticated involved investor, but things that can add you know, kind of like that extra bump in the portfolio if you do it right. But if you don’t, and choosing individual stock is is not an easy game. Then it’s for most people it’s better to stay stay diversified just because you’ll get that long term market average and overtime it’s rewarded people and I don’t expect that to change the

george grombacher 13:12
I think that’s a great a great way to think about everything and I was just looking like his Netflix the end and Fang and that certainly has not done very well as of late so that’s evidence right there you mentioned that those other big names have have gone down exponentially and certainly Netflix has fallen off and absolute Cliff so you just never know yep the Dodge Neon make it all the way across the country Matthew

Matthew Murawski 13:37
You know, you know it did but but realistically I’ll tell you it’s only because that I I kind of helped myself through school as a mechanic so I had rebuilt the entire car. The lady sold it to me put a new motor transmission everything into it and then when it needed breaks she didn’t want to do break so i i bought it from her and and put brakes on it and that was my ride and lasted a whole year out here before it exploded on top of the hill.

george grombacher 14:06
Okay, nice like full carbecue kind of a deal.

Matthew Murawski 14:09
Yeah, it just you know if those hills up in Northern California, I lived up on top and Bryn right across the Golden Gate Bridge and one day just finally finally had enough smoke steaming out it was you know it did everything I ever needed it to do and that by far that was one of my favorite cars. You know

george grombacher 14:31
so well there you go. served its purpose. I love it served its purpose. Well, Matthew, the people are ready for difference making tip. What do you have for them?

Matthew Murawski 14:41
Difference making tip is is realize that that fear is not a strategy no matter what if it’s your business, if it’s your if it’s your investments, if it’s your kids, whatever it is in your life, fear is not a strategy. That’s my theme for the week with what we’ve gone through the last two Fridays and Fear is not a strategy and realize that that most things in life are a cycle at some point. So what you know, realize no matter whether things are going great, or things are going really bad, or things really boring at the time, that that things are a cycle and that you’ll, you’ll go through the same cycle over and over and over again. And not to be afraid when you’re at the part of the cycle like we might be in now. You know, in the markets where things look really ugly. It’s usually the time where you have the most opportunity.

george grombacher 15:34
Was it good? That is great stuff that definitely gets caught. That’s it. Thank you so much for coming on. Where can people learn more about you? How can they engage with you?

Matthew Murawski 15:44
You know, I love Instagram. It’s it’s my favorite platform. It’s murasky.mj. So me you are a WSKI that MJ is my Instagram tag. I tried to put up content that I just think is interesting. Just not trying to sell anything. Just stuff that I think is interesting. So hope I found that other people do and you can find us. Our website is Goodstein, wealth management.com. And it was a pleasure being here with you and George.

george grombacher 16:14
I appreciate it. Yeah, it’s great talking with you as well. If you enjoyed as much as I did show Matthew your appreciation and share today’s show with a friend who also appreciates good ideas go to Goodstein wealth management.com. And then find Matthew on Instagram. His handle is moraski dot m JMURAWSKI dot m j. Now let’s do all that and then go to the show. Thanks. Good Matthew. Hey, thank you, George. And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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