Don’t Let Headlines Distract You (Radio Interview)

January 9, 2020

On The Ride with Mac & Chad, Karl Eggerss discussed the stock market volatility due to the Iran retaliation.  News events like that shouldn’t cause investors to change their allocation.  Karl explains.

Mac:                                    We’re playing Rush because Karl Eggers, with, I texted him and said, “Hey dude, you got a favorite band?” He said, ‘Rush’. A couple of things out of Canada that they can have Justin Bieber back. We’ll keep Rush and we’ll call it even from there. Karl, how you doing man?

Karl Eggerss:                      I am good. How are you guys doing?

Mac:                                    Doing great, bro. Just cruising through on a hump day, man.

Chad:                                   We’re glad you survived World War III.

Mac:                                    Yeah,yeah!

Karl Eggerss:                      I guess nobody was alive in 1990, ’91, ’92, right?

Chad:                                   Right. I guess so,yeah.

Mac:                                    You’ve declared yourself safe from World War III, right?

Karl Eggerss:                      I have a 18 year old son and I was showing him Y2K the other night on YouTube. All the funny stuff going on around Y2K.

Mac:                                    Oh, dude…yes!

Chad:                                   Every computer was going to shut down, yeah.

Mac:                                    I had started in…I had been in radio for like two years by then. But you would go to the store. It’s completely empty; bread, milk, eggs, all that stuff. People fighting over a man…

Mac:                                    An old lady, Chad, would hit you on the top of the head with a thing of onion buns because it was the last one, dude. No kidding.

Mac:                                    Hey Karl, what are the sanctions? President Trump spoke earlier today and he talked about sanctions on Iran and all that.

Karl Eggerss:                      Right.

Mac:                                    What does all that mean for a guy like me and am I going to see again, I’ll ask you the question cause it matters, oil and..but what is it…oil and gas and all the other things, man.

Chad:                                   Right, natural gas and all that.

Mac:                                    Yeah. So what are we looking at? How the state of all this?

Karl Eggerss:                      Well, it’s really interesting. When we talked a few days ago, I said probably the biggest impact to our listeners is going to be oil prices going up and gasoline prices, outside of that, I don’t think we’ll see a big anything with the stock market or anything else.

Karl Eggerss:                      Well lo and behold, we saw last night after the retaliation, in air quotes, we saw that oil prices initially jumped like 4%. And then when the President’s tweet came out and we didn’t have any casualties, it was interesting because oil kind of subside a little bit. It was still up this morning, but what’s was fascinating was oil finished the day down, almost 5%.

Chad:                                   Wow.

Karl Eggerss:                      So a big, big drop in oil and again, to me it points to the fact that we still have an abundance of oil and it’s because of all the, the work, so to speak, we’ve put in in the last few years as far as getting energy independence.

Mac:                                    Yeah.

Chad:                                   And Karl I saw..[Crosstalk 00:03:20].

Karl Eggerss:                      We have plenty of oil.

Chad:                                   And Karl I saw with the Dow too, I think the Dow was up at about 198 points at that point in time. I’m not sure where its finishing at, but the Dow was up on the day at the time.

Karl Eggerss:                      Yeah. And the interesting thing is, probably you guys don’t do this, but I’m watching the markets other than when I’m sleeping pretty much 24/7.

Chad:                                   Right.

Karl Eggerss:                      And so last night when this all came out, the Dow Jones after market; they trade the futures in the aftermarket and the pre market, but we get an indication of where things are, they were down 400 points. And then, here we finished up almost 200 points today and it was up almost 300 at one point. So, we had about a 600 point swing, about 2%, which isn’t monumental or anything, but it’s a good decent move.

Karl Eggerss:                      But it shows you that, remember nowadays your 401ks, your portfolios, a lot of them, it is controlled and the trading’s controlled by computers and algorithms. And so what happens is, when the headlines cross, regardless of what it is, if it’s negative, all of a sudden these computers start selling large shares of stock.

Karl Eggerss:                      And so you see a really quick knee jerk reaction and then sometimes cooler heads prevail and go, okay, wait a second. That was a little too much. And you see some bind. So it’s interesting to watch over the last 24 hours. But my thought on it, initially was this is interesting. It’s a way for them to puff their chest…

Chad:                                   Mmm-hmm.

Karl Eggerss:                      …and say we’re not going to let this happen. But at the same time knowing they probably weren’t going to kill anybody. We probably knew it was coming to a certain extent. And that seems to be what’s happened. And again, y’all handle that side of the conversation …

Chad:                                   Right.

Karl Eggerss:                      ..on the financial side. But really, when I saw that, I thought about that because I thought, I can’t imagine this market, stock market continued to cascade down if that’s the case. And that’s how it ended up being. And so again, we saw the stock market going up and it’s interesting because if you look at oil prices, that’s probably something that we really do need to watch because all prices have been around $60 a barrel. And if they go up too much, that’s what does hurt our economy to a certain extent. Because we have obviously gasoline prices. We have trucking companies using that. We have airlines…

Chad:                                   Plastics…

Karl Eggerss:                      plastics …”Go buy plastics, son.”

Karl Eggerss:                      People are too young to know what that quote means.

Speaker 4:                          What does it mean? Go buy plastics?

Karl Eggerss:                      It’s from The Graduate.

Mac:                                    Oh see I got… Chad is looking at me like I’m an idiot. I’m sorry man. I got…now we’re going to watch The Graduate. All right. Hey Karl Eggers with We’re talking about the economic side and things that are happening at war and as you’re talking bro, I can’t help but think about in the forties man, the greatest generation where they’re talking about how you had to turn in all your, basically they needed to melt down any metal, anything you had to help out the servicemen and make ammo with all these different things.

Mac:                                    The economy, you don’t really think about, I mean, Ryan, you’re a young dude, our producer Ryan, how old are you?

Mac:                                    Twenty…

Speaker 4:                          Twenty-three.

Mac:                                    And then we got the intern, Chad sitting here, he’s 24. You guys, do you think about how the war impacts the economy at all?

Speaker 5:                          I mean, I do, but I’m also, Chad’s [crosstalk 00:00:06:23].

Mac:                                    You’re a political nerd, I know.

Karl Eggerss:                      Well, you know what’s interesting, if you go back and look at the Gulf war and you go back and look at World War II, certain periods, the stock market actually was doing better. You think about the tanks that were made though the ammo that was made, it actually juices the economy. And we mentioned that a few days ago when we were talking and it’s kind of counterintuitive, but sometimes it actually sparks. This is too small to do that. But defense spending will increase the economy in a big way. And we saw that; we actually saw the stock market do pretty well during some of those periods as well.

Karl Eggerss:                      So you don’t always look at the headlines and say, Oh, we’re doing this [crosstalk 00:07:00] therefore I’ve got to go sell my stocks. And it’s a good lesson for folks. You have to have a portfolio that you can sleep at night with that you’re not going to have knee jerk reactions and make wild moves with your portfolio because you could’ve woke up this morning, panicked, sold a bunch of stuff, and then totally regretted it by the end of the day.

Chad:                                   Yeah,

Karl Eggerss:                      There’s just no way to invest.

Chad:                                   And Karl before we wrap up the segment, early in 2020; we’re now into 2020, any early advice for investing this year as we go through this year, that’s coming up?

Karl Eggerss:                      I would say, whenever we see the clock change in the calendar change, nothing new really happens, right? But at the end of the day we do say, okay, it’s a new year. I’m going to go lose some weight. I’m going to do these things.

Karl Eggerss:                      I would sit on a little game plan. If you have a job, you kind of know what’s what money’s going to be coming in on a pretty regular basis. You pretty much know what your bills are going to be, Figure out what that savings should be and where it’s going to go. And there’s going to be some hiccups along the way, like a emergency room visit or things like that. But kind of name those dollars because if you know where they’re going to go, you’ll stick to it and automate as much as possible in your life. You have to automate. If you’ve got that money going away in a savings, whether it’s a 401k or a mutual fund or brokerage account, then you’re free. When you do go spend, you don’t feel so bad because you already know you got your savings, is taken care of. So yeah, I would say it’s a good time to do that. For sure.

Mac:                                    You know we talked about when we first had the conversation with you man, I actually made the comment of play in the stocks and it was funny cause he’s like, Oh that’s a lot of people don’t like well if you are well versed in the area, you don’t like the play the stocks. But so I don’t say that anymore brother. Thank you.

Chad:                                   I’ve got actually already… Look at the market in the ’90s, look at the market in the 2000’s, look at the market now. Over time, don’t panic, just invest. Just yeah, just hang on for the ride. Yeah.

Karl Eggerss:                      we’re at all-time highs all time. So that means anybody that ever sold anything has been wrong because by definition, we’re at all-time highs through Wars, through recession, through all of that. So it’s all about timeframe. I can’t tell you over the next couple of hours what’s going to happen. I can’t tell you the next couple of days or even a couple of months. It’s pretty confident over the next five years, in 10 years, what’s going to happen because I’ve got hundreds of years on my side.

Mac:                                    Right? Every, Hey Karl Eggers,, brother thank you very much. We appreciate it, man. That website there, You get a lot of traffic there as you should, bro. You’re a professional man. I appreciate you.

Karl Eggerss:                      Hey, thanks guys. Appreciate it.

Mac:                                    You got it. We’ll talk to you soon.