Market Volatility and Finding Value: Why Our Defensive Approach Works

In today’s volatile market environment, many investors watching broad market indices tumble may be wondering how to better protect their retirement savings. On this episode of The Financial Hour, Tom Dupree and Mike Johnson discuss why their value-focused, dividend-driven investment approach helps clients weather market volatility with greater stability.

Market Update and Investment Philosophy

[0:00-4:45]

The episode begins with a sobering market update:

S&P 500 down 1.65%

Dow down 1.7%

NASDAQ down over 2%

Russell down 2.78%.

Despite these significant drops, Tom notes that their clients’ accounts are “holding up significantly better” due to their investment style.

“We kind of invest for stuff like this because we think it’s going to happen and we try to build a greater margin of safety in the things that we buy.”

– Tom Dupree

The hosts explain that most people invested in 401(k)s or savings plans are concentrated in broad indices that have risen over recent years. However, “recency bias” causes investors to forget how quickly markets can turn—a particularly dangerous situation for those approaching retirement age who may be drawing from their portfolios rather than contributing.

Value vs. Index Investing

[4:46-10:20]

Tom and Mike contrast their targeted approach with the passive index investing that dominates many retirement accounts. They emphasize looking for well-capitalized companies with reasonable valuations—especially those that have been oversold by the market.

“People sometimes think the investment world is just a thing that I plug into… there’s no thought given to value, to looking for the right time to get in, to the right things to get into that are going to reflect value better than other things.”

– Tom Dupree

The Power of Dividends and Valuation

[10:21-16:30]

The discussion shifts to the importance of dividends and valuation in their investment strategy. Rather than trying to time the market (which they acknowledge is impossible), they focus on company fundamentals, balance sheets, and attractive valuations. When they find companies where valuations look appealing with good dividend yields, they see an opportunity.

“You can get growth and income together if you buy a dividend-paying stock cheap enough.”

– Tom Dupree

Risk Management Through Value

[16:31-21:50]

A key insight emerges about risk management: by focusing on value, investors can avoid the “FOMO” (fear of missing out) that drives many market bubbles. Tom references the historic tulip bubble of 1637 to illustrate how speculation disconnected from underlying value can lead to permanent impairment of capital.

“When you focus on value, what that helps prevent is FOMO, fear of missing out.”

– Mike Johnson

The Simplicity Advantage

[24:30-28:15]

In the final segment, Mike advocates for simplicity in investment approach, contrasting their dividend-focused strategy with more complex options or trading strategies:

“When you’re a long-term investor and you see days like today or months like December or years like 2022, and you’re doing fundamental analysis and you see things that are attractive, it’s a buying opportunity. And especially if these companies are paying dividends, you’re getting paid while you wait.”

– Mike Johnson

Defining “Enough” in Retirement

[28:16-32:45]

This episode is concluded with a thoughtful discussion about what constitutes “enough” money for retirement. it is noted that some of Dupree Financial Group’s wealthiest clients (in terms of life satisfaction) aren’t necessarily those with the largest accounts, but rather those who have aligned their lifestyle with their resources.

“Some might think their amount of money is not as much as you would think. And they figured out how to live their life within those constraints. And I call those some of the wealthiest clients we’ve got, and it has nothing to do with how much is in their account.”

– Mike Johnson

Are you concerned about market volatility affecting your retirement plans? Join us for our upcoming seminar on “Producing an Income Stream” on Tuesday, February 25th at 6:00 PM. Call our office at 859-233-0400 for more details or schedule an appointment directly on our website at dupreefinancial.com.

The information presented is for educational purposes only and does not constitute investment advice.

 

#Finance #Investing #ValueInvesting #WealthManagement #MarketTrends

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