How Today Compares to the Dot-Com Boom and the Great Recession

In this episode of Motley Fool Answers, Alison Southwick is joined by Robert Brokamp and Andy Cross, chief investing officer of The Motley Fool, to take a look at what's happening in the market and what lessons from the past can help us. Which industries are getting hit and which are thriving? Also learn how you can manage your portfolio during downturns and much more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 13, 2020.

Alison Southwick: As we are coming to you in the studio, it is Friday of what's been, gosh! darn-it! just a heck of a week, and so we have Andy Cross. [laughs]

Robert Brokamp: Golly gee willikers.

Southwick: [laughs] Golly gee willikers! We've got Andy Cross.

Andy Cross: I have other words to add to "golly gee willikers."

Southwick: We have Andy Cross, chief investing officer of The Motley Fool, in studio. So we're going to talk about what happened, and then also, we're going to take a trip down memory lane and talk about, sort of, some lessons that you, Andy, learned while you lived through both the dot-com boom and bust and the Great Recession.

So first, though, let's talk about what happened this week. Well, I know, [laughs] we're overall doing the fill your cheeks up with air and just like, whoof! So yeah, we're in a bear market.

Cross: Officially. Officially in a bear market, you know, when the market falls down more than 20% from its highs. The last one we saw, we almost were there in 2018, so close, I mean. Again, never to be flippant about this, but the true last bear market was 2008-2009, when stocks fell 20%, and then, by the way, they went on to fall another 45% after hitting that bear market.

The difference this time, obviously, it's the coronavirus and it's the COVID-19 and the impact that it's having on citizens of the world, governments, countries and businesses. But how fast this happened --

Southwick: ... everything is falling apart --

Brokamp: The fastest ever. Sixteen days. And the previous record, you know when it was, it was like 40-something-days, set in 1929.

Cross: So which, 1929, if memory serves, another not-good time to be an investor. So this happened so fast, much faster than 2008, much faster than even 2018, which was pretty fast, I mean, when the stocks fell almost 20%. That happened over the course of 40 days or so.

So we saw this really quick reaction. And then the difference, of course, is we just -- there's so much uncertainty with what the impact of all this is going to be. And this week, we saw governments, citizens, people, schools close here in the U.S. Italy basically shut down its country, and we're starting to see that now play into the psychology of investors and institutions, by the way, too, not just individuals, institutions, actually more institutions, and just the impact this is having on the markets.

And we're seeing the small caps were down more than 20% just this week. Just this week, they were down by 25%, so really, we had a nice bump on Friday, but a lot of volatility in the markets right now.

Southwick: Yeah. So Bro, we've been doing the show for about five years, and so that means, for about five years, you've been saying, "You know, this bull market, it's, you know, there's going to... " "I mean, how often do we get a bear market? Every four to five years. So we've been due, right." So are you happy now, Bro? Are you happy, finally you got your bear market?

Brokamp: [laughs] I'm not happy. Here's what I am proud of, that it's a message that's been from The Motley Fool as well as this podcast, and that is, these times do come. You may not want all of your money in the stock market, especially in terms of having an emergency fund and any money you need in the short term if you're retired, to have an income cushion. I'm thinking mostly these days about the emergency fund. And thinking of all those people whose jobs will be affected, all the people at restaurants, in the travel industry who worked at the sports arenas, all these people who are going to see a significant disruption to their income, and I hope they have an emergency fund, and I hope the government steps in to help them as well.

Cross: Yeah, unfortunately, I think the stat, Bro, is that there's a significant amount of population that is paycheck to paycheck and barely has a few hundred dollars into that savings account or emergency fund. So hopefully a lot of listeners, over the years, 5 years, and 25 years at The Motley Fool, as we've been talking about how to think about saving and investing, hopefully they have followed along. So this will help cushion the blow a little bit.

Southwick: Yeah, over at The Ascent, they did some research, and they found that 80% of Americans aren't confident they could miss three paychecks. I mean that just hurts. You really feel for them.

Cross: Well, it's scary also, because now then the number is about an 80% likelihood of a recession sometime globally in the next few months. So it is going to be, as Robert said, very disruptive to so many lives, especially those that are more tied to the gig economy, not necessarily a W2 but much more of a 1099.

Brokamp: Yeah. I'll just point out, too, that we actually devoted a whole episode to having an emergency fund. It was early in 2019, when the federal government shut down. We talked about the importance of an emergency fund and then where to turn once your emergency fund is gone. So if you are in that position where you've run your bank account down, look for that episode, and we have some backup ideas.

Southwick: Yeah. So no one, I don't think, had global pandemic in their office pool as to why the bull market would come to an end. Why would -- isn't that crazy?

Cross: Bill Gates has been talking about it for a while, but he can afford it, he can probably afford it. I think he's going to be OK.

Brokamp: Warren Buffett actually wrote about it back in 1987, so he also is someone who eventually got it right.

Cross: He is a long-term investor, he's a long-term thinker.

Southwick: All right. So briefly here. Sort of, what stocks and industries are getting hit the most, or is just everything just getting pulled down?

Cross: Well, certainly there are those that are tied to travel and leisure that are really getting disrupted and smoked in the near term. Airlines, the cruise industry is just getting decimated, so you're seeing very high-quality companies, Booking.com, that I personally own, which is the old Priceline, down significantly. But really, it's just the past week-and-a-half has been the entire market, and it's very hard. With the exception of maybe some of the companies that are benefiting from working remotely and working from home. So the likes of Zoom, Slack came out with their earnings last week that were a little bit weaker than analysts expected, the stock got hit. But you do have companies that are much more collaborative, developing collaborative tools, and will benefit as we spend more time huddled at home working.

So distributive working tools like Zoom, Atlassian is one we've talked about too, which owns and operates Trello and a few others. But anything tied to travel in general, like the airlines, cruise ships, shipping industry has been really hit over the past month or so.

Southwick: Yeah. So I was reading Matt Levine over at Bloomberg, he has a column, and basically, I was enjoying his column, because he was talking about how when the market starts to tipple a little, other things can start to really topple. Particularly, talking about leverage and debt and how a lot of these companies are maybe fine in a bull market to take on that much debt, but now that things are going to be a little bit more precarious, is this going to be just a big domino effect where, yeah, consumers are going to hurt and then companies are going to hurt and then they're really going to hurt, because they're already over-levered?

Cross: Absolutely, Alison. Actually, the beginning of the week is what; the oil market set this all off when the Saudis and the Russians couldn't come to an agreement from OPEC on the amount of production to pull out of the market. And the Saudis just basically, "We're going to flood the market with cheap oil," and that really set oil prices down.

The companies in the oil patch, especially some of the very pure play drillers. Some of those are extremely levered, and you've seen those stocks just get totally hammered, because there's a real risk they may go out of business if oil prices are going to be the sub-$30, down to $20, maybe even lower than that for some projections. That can really hit these businesses that do carry a lot of leverage, because they can't service that debt.

The amount of debt that has come onto the market and the amount of corporate debt that has to be refinanced over the next, say, three or four years, a significant amount of that is tied into junk status. So these are companies that are not your financial fortitude, they're not your AAA companies, and they have to revolve and carry over that debt and refinance it. It might be expensive for them to do that, they might not have the option to do that, and that could actually take those businesses completely down, so there's that risk of how that might start to impact the general economy from the debt picture. So Matt is clearly right.

Brokamp: Yeah, and it could be affecting your portfolio if you have bond funds, because you might have bond funds that are very diversified, which own some of this corporate debt. And there is a large portion of the investment-grade debt market that was just one notch above junk, and with a recession or anything happening to those companies that could tip those bonds into junk territory. So surprisingly, in the last couple of days, the bond market has been very volatile. If you look at the Vanguard Total Bond Market ETF, it was down, like, 3%, 4%, 5% yesterday because people are even selling off Treasuries.

So if you do have a bond fund and you're looking for that to be something that holds up while the stocks go down, take a look at what's in that bond fund, because it may not be as high quality as you hope.

Cross: That's a very good point, Bro. And of all the predictions, of all the predictors, the forecasters and those with the crystal balls, the bond market has been about as right as any of them out there. The bond market has basically been talking about -- just the pricing in the bond market, and as bonds continue to go up and up and up and the yields go down and down and down, the bond prices do very well. That's basically where we're heading right now. As we saw the Fed come in a couple of weeks ago with an emergency cut, this week we'll see what they actually do in the market and decide to adjust interest rates.

And we saw some exceptional behavior last week in the bond market because of some of the changes in the Treasury market over the years. There's not enough people to actually buy the treasury bond. So there's been a real liquidity crisis, which is why the Fed announced that they're going to be buying a bunch of short-term Treasuries.

Brokamp: Yeah. Bottom line there is, any money you want to keep absolutely safe in the next one to three years, cash is really your best bet.

Southwick: Andy, when did you start with The Motley Fool?

Cross: 1996.

Brokamp: You were employee number what?

Cross: I was employee No. 19.

Brokamp: And now we're up to over 400.

Cross: Yes. And there's only a few, including Tom and Dave, maybe only three who are now who are still employed here at The Motley Fool.

Southwick: Yeah, you outlasted all of them, didn't you?

Cross: No, not all of them, not all of them. We got a few there.

Southwick: We'll get Todd out of here. No, Todd, don't go anywhere. Yeah. So you've been with The Fool a while, which means you've survived the dot-com bust and the Great Recession here at The Fool. So we wanted to bring you into the studio to provide a little bit of historical and personal perspective about this current market, which is rough.

A lot of our listeners, I think this is probably the first -- this is, for me, the first major downturn that we've experienced in my household as an investor. So yeah, you're here to provide some context.

Cross: I should be interviewing you. How are you doing?

Southwick: I'm doing OK. We're doing fine. I mean, I think we're more nervous about what we're going to do with our kid when she's out of school for the next month.

Brokamp: [laughs] And she's a wonderful kid, by the way.

Southwick: She's a wonderful kid, you know, so I think we're not looking at our 401(k) statements and freaking out. We could, but we're not going to.

Cross: Yeah. Robert talked earlier about how over the years we've been trying to use data and education and take our long-term investing approach and put it with some perspective backed by real numbers and historical context. And so, we're seeing this now all play out. We know that markets fall 10% every year or so, 15% every two years, more than 20% every four, five years. So we're right in that zone; it's been a while since we had one. And then, once a decade, maybe 30%. And then, even more infrequently, they fall 40%, 50% once in almost a lifetime, really.

So 2008-2009, the markets fell 56% over the course of a year and a half maybe from October 2007 to 2009. So we're here. Who knows from now, will it fall another 30%? It may rebound very quickly. But from the investing perspective, I always like to think about just core Motley Fool principles, which is: Capital you need in the next two to three years, cash you need, don't have that in the stock market, because the stocks can always be very volatile, and we're seeing it now. So take a real long-term approach. Know why you are investing. Do you need that capital sooner? Can you let it be invested in more growth opportunities that have maybe more of a 5- or 10-year period? So I think these questions you have to ask yourself as an investor are very important to make sure you have pretty good answers for during this volatile time.

Southwick: Yeah. Well, let's take it back to the dot-com bust. Do you remember, a couple of years ago, Bro, we had Morgan Housel on the show, and we dedicated a separate episode to some of the bigger drops in history. So for those of you, they were good listens. I went back and listened to them. August of 2017, we did a four-part series, so I'd recommend our listeners go back and listen, because it's pretty fascinating.

So dot-com bust. This was right around 2000-2001. And The Motley Fool -- this story is personal, right? Because we were part of this whole narrative as coming up as one of these companies that was really -- I mean, really, you read stories about the dot-com boom, and we are right there, right next to Webvan and Pets.com or whatever.

Cross: [laughs] We outlasted them.

Southwick: Wasn't that an exciting time? I mean, it had to have been a great time to work at The Fool, so much exuberance.

Cross: There was a lot of excitement, a lot of exuberance. I mean, this was real. We were on the vanguard of, really, three things, when I think about back then. One is the use of discount brokers, with online discount brokers. So well, I guess, just online, in general, we are on AOL and then we are on Keyword Fool on AOL, then we went to The Motley Fool and started the website, and then that eventually just took over to the business.

But, so online, using online discount brokers and pushing down transaction and commission fees, right, which, I think when I was buying my stocks in the late 80s, early 90s, I think it was, like, $50 to $100 a trade. It was very expensive. You had to have a lot of capital just to make that return back. So pushing commission cost down. Talking about long-term investing in real growth companies. And David and Tom talking about AOL, Amazon.com, eBay. So these investments we're making, not all of them worked out. We certainly had some of the flame outs and some of the ones eventually went out of business.

Southwick: Iomega.

Cross: Iomega, which really put us on the cover of Fortune magazine.

Brokamp: AOL, big on AOL in the beginning there.

Cross: Well, that was huge, and from David's first investment, AOL, the return, even holding all the way through that acquisition with Time Warner and the merger with Time Warner up until wherever it ended up, it was a massive return for David. Same with Amazon, all the way up, it went all the way up at the peak, all the way down to $3 or $4, I think, per share. So those trying to help individual investors understand, "Hey, you can invest," and we'd get back to The Motley Fool Investment Guide. So that was exciting.

Of course, when the rug got pulled out from underneath our feet, that was very painful, and our company went through a very, very painful time of layoffs. Our business basically was completely disrupted and changed, and our revenues basically, which were all advertising at the time, literally almost vanished overnight.

Brokamp: I think what was hard about that is, it wasn't just one year, and it gradually got worse. So 2000, the market was down 9%; 2001, down 12%; 2002, down 22%; and 2003 it didn't start off so well either, although it eventually rebounded, and the market was up by, like, 28%. And in the middle of all that, you have the September 11 attacks. So it just felt like, "When is this going to end?" And that was No. 1. No. 2, am I still going to have a job at the end of it?

Southwick: Right. Make it doubly worse. Well, now, I think you bring up a good point that not only is this excitement about the internet and the future of tech, but also it allowed a lot of people to start investing. And even, like, a not-good part of this was day trading. And amateur day traders who had no business doing it, they weren't listening to The Motley Fool, they were chasing some other path, and it hurt. There was just a lot of dumb money that just flowed into these companies. [laughs]

Cross: Yeah, dumb, individual money that just ended up becoming, as you mentioned, chasing -- we had our thriving message board community, which we still have today, but you have those, like, I think, it was Silicon Investor, Raging Bull, Yahoo! Finance Board, so there's just a lot of chatter around there trying to find penny stock investments, investing, pumping and dumping those stocks, and a lot of day trading. Which, again, this is before zero. We have zero commissions now, this was, we still had commissions that were pretty high. So that was very expensive practice to take on.

Southwick: Yeah. And there really were so many companies to invest in and that don't exist anymore, right? Like it was, all of these tech companies that were taking in all this money that they don't exist anymore, but there were some that survived, and you did very well if you made sure you were investing in those ones. [laughs] But it took a lot --

Cross: Yeah, right. And took a lot -- even for the, I mean, just take a company like Microsoft or Amazon. From the peak to the trough and then even back to make up that peak, for some of those companies, for Microsoft, I think it took more than a decade to come all the way back to the --

Brokamp: Yeah, well more than a decade. Yeah.

Southwick: Okay. So the dot-com boom and bust, it was a long, prolonged, painful thing. Our next big decline, though, was the recession in 2008. Essentially a housing bubble that kind of spilled over into the stock market, and then everything just fell apart. [laughs] And credit dried up. And this is one of those, like, we talked about at the top of the show, where it's just all these dominoes starting to topple.

Cross: It started really in 2007. Well, I guess, it really started from coming out of the depths of the previous bear market. And as housing and as interest rates were starting to become lower and the housing market really started to pick up and then it hit that peak in 2007-2008, and that's when some of the financing and some of the credit default swaps and some of the, a little bit less-than-rigorous checking, underwriting and of loan writing and loan making. So Alison, I think that's right, you just start to see this topple. And then you had some real financial plumbing problems when funds and other businesses basically couldn't pay their bills and write their checks, and that just became very problematic and eventually it just hit that point where we needed bailout and the Feds stepped in.

Brokamp: Right. And, famously, Ben Bernanke, before he was the Fed Chairman, had testified that we didn't have to worry about a nationwide drop in home prices, because it never happened before. And then, sure enough, it happened. Not only did it happen, but when you look at historically what happens during a bear market in stocks, housing prices hold up pretty well, but this was the first time when both really went down significantly.

Southwick: Yeah. And for you being an employee of The Fool, this was, I imagine, less of, "I'm going to lose my job, and the markets are plummeting," and more of just "markets are plummeting." Was it bad, was the recession easier on you than the dot-com boom and bust?

Cross: Yes, I think it was. I mean, The Motley Fool handled it very well. Of course, we had a membership business. And I remember, I just became, I think, advisor of Income Investor, an old dividend service we had. So it was like I was just starting to really get to help members and talk constantly about this. So we didn't have tools like Zoom, we didn't have a podcast, we didn't have Motley Fool Answers. So we didn't have everything we have now to be able to communicate better. We had message boards, and we were very active on those.

The Motley Fool as a company, we made some really tough choices, but we preserved jobs and that was the thing, but we made some big cutbacks in expenses, I think, in our 401(k). So we did some things that helped make sure we were on very solid footing. But from the employee perspective, The Motley Fool surviving did very well. And it allowed us to really set us up to try to strengthen both the membership business and the way that we communicate advice, which I was very proud of.

Brokamp: Yeah. In the end, there was only one calendar year where the stock market dropped, and that was 2008. It was the worst year since the Great Depression, but still it was over pretty quickly. The thing is, while it's happening, you don't know that it's over. So the anxiety about it all lasts, and there were plenty of discussions. You know, the market bottomed in March of 2009, and it ended up making, I think, 23% that year, but there is plenty of talk about this as the classic dead cat bounce. We're not out of this yet, the market is going to go down. And so, when you go through it, you only know that it was only that one year in hindsight. So the anxiety lingered for a while.

Cross: Yeah, I mean, 2008. The fall of 2008, and this is really between September, October, and November, when this is really hitting. And there were legitimate concerns that you're going to have these massive financial bankruptcies in the financial, we won't be able to get our money, and there's going to be runs on the bank. I mean, there were real financial concerns that I didn't feel in 2001-2002, the dot-com bust, so there are real financial concerns with, "Oh, my gosh! what is going to happen with my money?" And you just saw these days of 8%, 9%, 10% down and up days. So the volatility that we're seeing, kind of, now, does remind me about a little bit of back then more so than during the dot-com bump.

Brokamp: Yeah, I agree.

Southwick: Now, was it during the recession that you, Robert Brokamp, in the background of Tom and David being on CNN, decided to form a cong -line, is that right?

Brokamp: [laughs] That was the dot-com. So CNN would film from The Fool every Monday, and it was right in front of my desk. And when the market started going down, we thought we'd portray that we're celebrating because things are -- better prices. So I just started a conga line. So I don't know if it was Tom or Dave that was on CNN, and we're all doing a conga line. [laughs]

Southwick: Do you regret that now?

Brokamp: No, I'm quite proud of that. Thank you very much. I wish I had the footage of it.

Southwick: Yeah, I've never seen the footage, I've just heard of it. So like, on the one hand, yes, you can conga line, and we can talk about this more when we get to, kind of, the lessons you learned, but for our listeners and anyone out there in the world who's in retirement or very close to retirement, to conga line -- they're not conga lining, and rightfully so.

Brokamp: No. And, you know, I was 30 then.

Southwick: Oh, yeah, no, right, like, yeah, you were conga lining, because that's what 30-year-olds should do.

Brokamp: Right. And as was everyone else at The Motley Fool. I don't really think that we had anyone in their 40s at that point. But there's no question about it. And especially now that I've been writing RYR [Rule Your Retirement] for the last 15 years, and now I'm getting closer to retirement age now that I'm 50. I mean, I have been checking my 401(k). It is quite something to see this money that you've built up over 20 years just kind of go down and down and down. I feel very confident I'm going to start buying some stocks right after we get off of this.

Southwick: Which is still blowing my mind. You said this before we started the show, and I'm still amazed that you're doing this.

Brokamp: Well, we can talk about that. I mean, here's the bottom line for me. So you decide on a certain allocation. And, for me, you don't make a decision on whether to buy or sell based on whether you feel like something is over or not. For example, let's say you decide you want to have 10% of your portfolio in cash -- that's a pretty standard rule of thumb around here at The Fool, 5% to 10%. Well, if you started the year off with that, because the market has gone down so much, you now have 12% to 15% of your portfolio in cash. That's my situation. So I am going to rebalance to where I think is a reasonable allocation. I am more confident than not that I am getting in too early, but I don't want it to be left to my gut instincts, I want it to be left to a system where I'm saying, "Okay, I have now more cash than I think is ideal for someone in my situation. I'm going to use that cash." Is that reasonable for you, Alison?

Southwick: That sounds more like Bro. No, that definitely sounds more like you rather than, "I'm going to go buy some stocks on sale." Like that's not Bro. But you being like, "Well, I need to rebalance my portfolio, because my cash position is too overweight." I'm like, "Okay, now you made it boring." [laughs]

Cross: Boring, but very effective and very smart.

Brokamp: We did, I think it was back in May, where I led one of our episodes with "Rebalance in May and go away," because you shouldn't really rebalance more than once every few years unless something significant happens. Like, last year we had such a great market, you should rebalance. This year, things have gone, so now you can rebalance. But someone emailed us, not too long after that, because I think if you did rebalance in May at that point, then you were probably early, and you missed out on what happened to the rest out there, they were kind of like, "Ha ha ha, you told them to rebalance too early." Now that the market is back to where it was in 2017, small-cap stocks are back to where they were in 2013, rebalancing looks pretty smart. Thank you very much.

Southwick: [laughs] Drop the mic. All right, Andy, let's move on and talk about some of the rules for investing that you've learned through surviving a few market downturns and what our listeners should think about going forward.

Cross: Well, I think thinking about how the market evolves and grows over time, we've talked about this for years and years that GDP grows, stocks increase, they generally go up into the right. Stocks increase at three out of every four years generally. However, when I think about what we went through this week, I'm reminded of the John Templeton's line that says, "Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria."

And stocks were at a record just about maybe two and a half, three weeks ago. So just the fact that we understand market psychology, in that, markets do fall 10% every 11, 12 months; and they fall 20% every four or five years. So I think it's important that as investors are going through this, whether you've been through it before or whether this is your very first time, you have to understand, this is how markets have acted over years and years, and they will continue to act like this going forward.

Southwick: All right. So you have a few rules here to follow. First one, we've mentioned this already, don't have any money in the stock market that you need in the next one to three years.

Cross: Anything that you need in the next one to three years, I would make sure you have it safely tucked away in cash that you can access very quickly.

Brokamp: So let me ask you this, though, what if someone didn't have that? Do you think that they should now go ahead and sell to create that cash?

Cross: I was thinking about it this week, Bro, and for the past week and a half or so, because we've gotten some questions about this. And I think so. I think that if you are a person that can tap into a little bit to raise some cash, that's not a bad thing to do, especially if you think about your portfolio, or maybe there are some stocks that you just don't really want to own any more, even if they're down a little bit or down, if you don't want to own those or don't believe in them and you want to raise some capital or raise some cash for that, you know, go ahead, I think.

Certainly, if you need it in the next year or so, I would do that. I certainly wouldn't move all the cash. I think that's for your portfolio, that's not a thing to do, but if you do need a little cash, I think it's OK to sell some.

Brokamp: Yeah, I would agree. Just having that cash cushion emergency fund, income cushion, if you retire is important. And if you're doing it a little later than you wish, that's just part of the game, I think it's still. And you can look at it in terms of doing a little tax loss harvesting right now. So there are ways to do it a little smarter. Maybe you own some actively managed funds that haven't been doing very well, now is as good a time as any to get rid of them.

Cross: That's actually what I've been doing. I've been pulling from some mutual funds, my 401(k), moving into cash that I can invest.

Southwick: Yeah. All right, next rule. Don't get suckered into margin with low broker rates.

Cross: Yeah. We're starting to see some questions come up with, like, interest rates are down, it's very cheap to borrow, I can go on margin, juice my returns. I do advise that for 99.9% of the investors out there, don't mess around with those margin opportunities. Don't get enticed by that.

Southwick: Obviously, you already mentioned this, but don't cash out entirely. [laughs]

Cross: Yes, don't cash out. I think it's very important. Again, especially if you just started over the last few years to have a plan of investing. There's different approaches to investing. Lump sums versus what's called dollar-cost averaging. You guys have talked about that before, we talked about it at The Motley Fool for a long time. And there's some different data that one works better than the other.

But I think, for most investors, having a plan of investing on a rhythm, so don't feel you have to either go all in and all out. And I actually wouldn't think about cashing all out, selling now, waiting for the bottom to come. That's just a bad approach to take, so. And don't do it with everything. And I think, in general, don't try to find that bottom, because as Bro was mentioning, you're just not going to.

Southwick: Yeah, no one's that smart. All right. We are long-term investors here at The Motley Fool, so of course, if you are going to invest, plan to hold it for a long time.

Cross: Absolutely. So we think five years from these businesses that you're investing. The stocks that you buy today, they could be down 20% [laughs] next week, next month, next year, they could go up. And every day is basically a coin flip whether your stock is up or down. But over the course of a year, it improves a little bit. Over the course of five years, the chances of, if you own a wide index, 80% of the time, that's probably positive.

So I think the further you have your time horizon set, and you invest in businesses and give them, the leaders of those businesses and those businesses the ability to create solutions and help people's lives and grow revenues, earnings, cash flows that the businesses can use is just -- that's the approach you want to take, and you really want to focus on that now. What I am starting to feel and see for some people is that, "Wow! stocks are down so far, I'll buy anything, or I'll buy it and I'll wait for it to just pop up a little, 10%, 12%, 15%, when one of those days, when the market jumps back up and I'll sell out." A bad way to think and a bad way to invest.

Cross: Yeah, I think it's just important to keep your real time horizon in mind. For most people, that time horizon is retirement. So first of all, think how long it is going to be until you're 65 or 70, because that's about when people should be thinking of retiring. But even then, you're only going to need a portion of your portfolio, you're going to leave most of it invested for when, and then there's a portion you're not going to touch until you're 70, and there's a portion you're not going to touch until you're 75, there's a portion you're not going to touch until you're 80. So for a large portion of your portfolio, unless you're 80 years old and listening to this, you have decades ahead of you. And what happens this year really is not all that important.

Southwick: Yeah. So, Andy, I don't think you're losing any sleep at night unless, of course, it's because you are constantly talking to our members, because I think you are. [laughs] That's probably the only reason you're losing sleep at night. But do you anticipate that at some point, you're going to be like, "Okay, now, even I'm stressed out." And will you let me know?

Cross: Alison, I mean, I'm stressed out not so much for me or for my family, just because of the way that I think I've built that portfolio. And I've, in the past week and a half, I've bought probably 10 stocks. And so, for me, not so much, but for our members, our listeners, for people, especially -- it's been a very nice time to be an investor for the past 10 years, since the Great Recession, as that last bear market. And there's been a lot of mostly tranquility in the market, with the exception of a few hiccups here and there.

So for investors who always thought the markets, every year, every day, every month or so, always go up, they just don't, they don't. And now there are times when you see these massive drawdowns. And if you're not ready for them or you haven't experienced them, even if you have experienced them, they still hurt. So for the listeners and for our members, really helping them think about the best ways to set themselves up not just for today and for this market, but to take advantage for the next decisions they make today and this year for the next 5, 10 years is really what I'm focused on.

And that is kind of all-encompassing for all of us at The Motley Fool.

[...]

Southwick: Well, before we go. You know, you could spend all day watching TV and reading the latest headlines about what the market is doing and how we are all suffering in this current crisis and pandemic, but if you'd like to take a break from that, we thought we would offer up some recommendations of things you can do and enjoy if you need, you know, some joy in your life. Uh, I don't know, that's not a great segue. I'm sorry.

Brokamp: That was good.

Cross: Joy in your life, everybody needs joy.

Southwick: Yes. So we're going to offer up some recommendations. Who wants to go first with their recommendation for this week that does not involve freaking out over your 401(k)?

Brokamp: Why don't you go first, because I can piggyback on yours.

Southwick: Oh, you're going to piggyback on mine. Okay. Just really enjoy washing your hands, that's my piece of advice. Just enjoy it. Boil your hands every five minutes and then we'll be good. No, my advice is to pick up a hobby, which would be either learning guitar or ukulele or something easy like that. And so, I have two app recommendations.

So my recommendation which is, I did with ukulele, not guitar, is to use Yousician, which does little tutorials that you can do, it's on your phone, and it'll walk you through different tutorials for how to learn to strum and pick and all that stuff. And then also Chordify, which will take any musical YouTube video and basically karaoke you through what chords to play. And so, it's a great way to learn a new instrument. And that can take up tons of time.

Cross: That's awesome. I played the piano as a kid, and I want to get back into playing the piano. Will that help me?

Southwick: That's a great question. I know one of these does piano.

Brokamp: I started taking piano lessons in October. And we haven't mentioned it in this show yet, but now The Motley Fool is, we're all working from home now, not currently, because we are in the studio, but we're always -- my first thought was, I'm going to get a lot more piano practice in, but let me just encourage anyone who does want to do that, hire a piano teacher for two reasons. First of all, it's accountability, like I practice much more knowing that I have to confront Daphne every weekend.

But also, talk about people. You talked about whether you're anxious, I'm not anxious about my portfolio, I'm anxious for all the people who are going to see a significant drop in their income. And I think of people who work on an hourly basis, like music teachers, and unless they say this place is closed down, I'm going to keep going, because I think it's important to support the people who do work on this sort of this basis, where it's just I personally would not be able to stand that type of anxiety, not knowing what my income would be from week to week, especially at a time like this.

Southwick: So your advice is get a teacher?

Brokamp: Yes, that's my advice to if you're going to do lessons, that's not my recommendation for what you should also do. So my other recommendation of what you should do is get outside. It's finally nice here in the Washington, D.C., area. It's probably all over the country. My Florida relatives are enjoying nice weather for a while. But, I mean, there's actual evidence that shows that if you get outside, it's better for your mental and physical health. There's a website called Park Rx America, because there is this rising trend of doctors actually prescribing getting out in nature. So if you need to be convinced of the health benefits, go there. The site is actually run by a doctor in D.C. You put your zip code and it shows you the parks in your neighborhood. It's not quite nationwide yet, but regardless, get outside. Walk around the lake, go do a picnic, go for a run. You're going to be a lot happier.

Cross: This is actually a brilliant question, Alison, because of all of the sports withdrawal that so many people aren't going to go to, you don't get all, I mean, there are real economic consequences to that, but we will be looking for things to do, because of how much -- I guess, we can stream a lot of Netflix and Amazon Prime movies. We'll probably be looking for things to do.

I've been reading novels again. I mean like, I am right now in the middle -- I went through a little George Orwell phase a couple of weeks ago, before the market craziness, and now I'm reading some James Joyce. So my suggestion, and I'm really actually enjoying it, it pushes me to think up differently than I do every day, to think, actually, in general, which is a good thing. But these are novels that I never really read as a kid.

So I encourage people to actually read some fiction, read some real novels, get outside the headlines, get away from your -- I read them in book format, but if you want to read them in the Kindle, fine, but read novels, and especially if you can, read some very high-quality novels.

Southwick: Yeah, and some libraries will let you check stuff out just automatically through your phone. So I just do that. I'll be like, "Oh, I'm at the airport, I could use a book." I just go on to Libby and I find our library and I just download it. It's great.

Cross: Yeah, I love libraries and I'm bummed that I won't be going to any in the next few months. So Libby, which is the online library, access is really good. Yeah, they have that for Montgomery County too.

Southwick: Yeah. Rick, what's your recommendation?

Rick Engdahl: I think I'm just going to pile on to what you guys are saying. First of all, I was going to talk about guitar lessons and doing that stuff online. But I'll just add one of my favorite online YouTube guitar teachers. If you've searched YouTube guitar teachers, you've probably come across Justin Sandercoe, that's JustinGuitar.com. The guy is great. He's got millions of followers, if you're, especially as a beginner, I don't think you'll do better for online courses than to go to his website and go ahead and pay the $9 or whatever and sign-up. He's just really that good.

Outdoors. I was going to say, Alison, you can commiserate. In addition to working mostly from home now, we also find ourselves in the position of being homeschoolers. Yay!

Southwick: Yes. Hannah is out of school for the next month at least.

Engdahl: So we are teachers as well. And so think about all the things that you'd like your kid to be doing instead of playing video games. Do those things. Get outside. I just ordered a number of yard games from Amazon so that we can have some stuff to do during recess as we homeschool, so, anything like that to get outside. And books. Justin's books were mentioned. I'm just going to throw a plug out there to my friend Jenn Reese, who's an author. I've known her since high school, she's awesome. She has a trilogy called Above World, is the first book, check them out. It's young-adult stuff that's about mermaids, but it's also sci-fi tech sort of thing. It's pretty cool. She's got a new book coming out, called A Game of Fox and Squirrels. I don't know what it's about, but I think it's getting good reviews.

So yeah, JennReese.com, or just go to Amazon and search for her, Jenn Reese. Great author that you may not have known about otherwise.

Cross: Do you guys do Kiwi crates or Koala crates?

Southwick: I used to do Kiwi crater, those were great.

Cross: Yeah, we must have seven or eight of them stacked up in the garage, so we'll be able to finally plow through those.

Brokamp: What are those?

Cross: They're basically monthly subscription boxes, literally boxes you get, and each one has a theme. So light or it's something more around, like, science and maybe physics or chemistry, biology. So each one has a theme. And then there are, like, three crafts you basically do tied to that theme. And they're actually pretty cool. It's like, one time it was "make a vacuum," and one time it was like, the levers, the whales suck the little spongy, like, softball kind of thing. So everyone has -- the kids, and there's a little book that teaches you about the science behind it and then a little bit of fun story, they have a cartoon. They're pretty slick.

Southwick: Yeah. All right. So there you go. Hopefully, listeners, that's enough to get you through the next five minutes of what has been some stressful time here in our nation and in our world. Andy, thank you so much for joining us. We really appreciate you making time for us. I know you're so busy.

Cross: Well, hey, it's five years of you guys doing this. Thank you for having me, and I really applaud you for being out here trying to help people understand how markets work and how they can better use the markets for their benefit and personal finance. So thank you for doing what you all do.

Southwick: Awww... All right. That's the show. It's edited contagiously by Rick Engdahl. Our email is [email protected]. I think we're going to have Jason Moser in the studio for our next mailbag episode, if you want to send him some questions. For Robert Brokamp, I'm Alison Southwick. Please stay Foolish, everyone! Don't do anything stupid.