This stock market have you depressed? Learn why railroaders shouldn't be that glum.
Welcome everyone to another edition of the Highball Advisors Railroad Retirement Whiteboard. My name's John McNamara of Highball Advisors, and today we're going to talk about the markets for the year, right? We're in 2022. Okay, they suck. All right, there you go. Turn off the tape. That's all you need to know. It's a very bad year. All right? Nothing goes up in a straight line, so we're going to talk about it as railroaders, how we want to navigate these difficult market conditions. And things you want to be thinking about. Right? Taking the step back, big picture, those type of things. All right? Let's talk as railroaders, right? We have our railroad retirement annuity, right? That's going to be our foundation for retirement. All right? That's our building block, and it can't be taken away, guaranteed income. We have a tier one, tier two, right? Assuming you have a lot of years, that's a really good base.
Maybe some of you might even have a pension thrown on top of that. Okay? Maybe a spousal situation also. You could throw a spousal tier one, spousal tier two in there also. Fantastic. Maybe they might have a pension also. Really great. That's your guaranteed retirement income. Okay? Now, if you can keep your expenses inside of that, okay, we're not going to worry about so much about the market turns currently, right? I like to say, if you could keep spending within 80% of guaranteed retirement income, that's great. Then you can do, draw down your nest egg in your 401k, and your other accounts throughout the rest of your life. But this is your building block, all right, that you really want to be focused on. Let's just talk about some big picture things about the markets as we walk down memory lane. All right?
Bear markets on average lose 36% on the year. I mean, that's a lot. I mean, during the whole bear market. I shouldn't say a year, during the whole bear market, right? That's a lot. Okay? Bull markets, however, gained 114%. All right, well, I like the bull markets, right? Since 1928, 26 bear markets. All right? 27 bull markets since 1928. All right? That's about equal, but look at the gain, right? 114% versus 36%. That's huge. All right? Bear markets last a little less than a year, 289 days. Well, I'll tell you on a bear market every day feels like a year sometimes, that's for sure, when it just keeps dropping. But it's 289 days is the average bear market. Right? Some are higher, some are lower. Can't say, "Oh, it's 290 days, John, you should have told me." No, it's 289 days, but bull markets, look how long these last, 991 days. That's a little less than three years.
That's a long run. All right? Obviously the trend, and you can pull up all the charts and things like that. The trend over time is continuing up, but it's never a straight line, it's up and down. Right? And then this is, I thought was very interesting. 50% of the biggest gains in the market occur during a bear market. Right? A lot of people say, "Oh, I can't take it. I capitulated." And then the market will have those big gains. What I'm trying to convince a lot of you railroaders of is, think about the big picture. "Hey, is everything taken care of? Are all my expenses being taken care of with that guaranteed retirement income?" Think about that first. Say yes, okay? While this isn't great news, let's just put that, not to the side, but it won't affect our day to day living. Right?
This is the big stuff. Now, remember, I'd like to put a caveat on that. If you see yourselves, "Oh, I've got big expenses coming up one to three years," you should never ever be in the market to begin with. All right? That's a fool's error because you just don't know. Right? Because you could be a part of the downturn here and you need that money. You don't want to be in the market for that. But if you have time, right, you've got your guaranteed retirement income, over time you should do all right. Right? Obviously past performance doesn't guarantee future success. I feel like I had to say that. All right, so I hope you found this helpful. Give you something to think about, give you a chance to take a step back, catch your breath, that type of thing. All right?
Feel free to reach out to me, go through the boarding for railroad retirement assessment. I'll show you what this building block looks like. Okay? We can go through this other part here also, to really understand, to put you at ease on what retirement will look like. All right? Subscribe to my YouTube channel please, getting close to 5,000. Very excited about that, going to have a big party, just not sure where it is. Click on the notification bell to get the latest videos. Until next time, everyone, please stay safe, stay on track and take care. So long everybody. Bye.
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.