Edwin Mays discusses market risk

In this episode of Influential Entrepreneurs, Edwin Mays from Mays Group Advisors joined to talk about the critical topics of market risk, bear markets, and the pitfalls of overconfidence in investing. Edwin shared his personal journey into the financial services industry, which was sparked by a desire to help others avoid the mistakes he witnessed with his parents’ retirement portfolios.

Began by defining what a bear market is—characterized by a 20% drop from recent highs—and discussed the average decline of 38%, emphasizing the long recovery time required to break even. Edwin highlighted the common misconception that a 20% drop means a simple 20% recovery is needed, explaining the more complex reality of market recovery.

The financial landscape is inherently unpredictable, characterized by cycles of growth and decline. Among these cycles, bear markets stand out as particularly daunting events for investors. Defined as a market decline of 20% or more from a recent high, bear markets occur approximately every five and a half years, with an average decline of 38%. The implications of such downturns are profound, particularly for retirees and those nearing retirement. As discussed by Edwin Mays in a recent episode of the podcast “Influential Entrepreneurs,” careful planning is not just advisable but essential for navigating the treacherous waters of bear markets.

One of the primary challenges during a bear market is the psychological response it elicits from investors. Many individuals, driven by overconfidence, believe they can ride out the storm or even capitalize on market dips. This mindset, however, can lead to disastrous consequences. As Mays illustrates, the common misconception is that recovering from a 20% loss simply requires a 20% gain. In reality, the math is far more complex: a 38% drop necessitates a staggering 62% gain to return to the original investment value. For retirees, who may not have the luxury of time to wait for the market to recover, this reality can be devastating.

The emotional toll of a bear market can lead investors to make impulsive decisions. Mays notes that when individuals see their account balances dwindle, they often feel compelled to invest more money in a desperate attempt to “catch up” to their previous levels. This instinct to recover losses can create a vicious cycle, where the pressure to act quickly leads to taking on additional risk, ultimately resulting in further losses. This phenomenon underscores the importance of having a well-structured financial plan that prioritizes safety and income stability over aggressive growth strategies.

To mitigate the risks associated with bear markets, Mays advocates for a focus on income planning and safe money strategies. By prioritizing investments that provide steady income and are less susceptible to market fluctuations, individuals can create a financial buffer that allows them to weather downturns without the need to panic. This proactive approach to financial planning is crucial, as it empowers investors to maintain their financial stability even in the face of market adversity.

In conclusion, bear markets are inevitable, and their impact can be profound, particularly for those nearing retirement. The psychological challenges of overconfidence and the instinct to react impulsively can exacerbate the situation, leading to further losses. However, with careful planning and a focus on income stability, investors can navigate these turbulent times more effectively. As Edwin Mays emphasizes, the key to surviving a bear market lies in preparation and a commitment to prudent financial strategies. By adopting a long-term perspective and prioritizing safety, investors can not only endure bear markets but also emerge from them with their financial health intact.

Edwin shared: “Just to get back to where you were before the bear took place, you need a 62% gain. And that usually takes close to seven years. And so, you know, most retirees, they just don’t have seven years to wait and hope for the market to come back.”

About Edwin Mays

Edwin Mays is a Chartered Retirement Planning Counselor-CRPC™ – MaysGroup Advisors is an independent financial services firm, specializing in helping individuals and families prepare for, plan, and live in retirement. Their approach focuses on tailored retirement planning strategies and insurance solutions to provide our clients with guaranteed lifetime income, asset protection, and achieve tax efficiencies in support of a holistic approach to their finances.

With over 30 years in the financial services industry—including leadership roles at firms like Thomson Reuters, Merrill Lynch, Smith Barney, and Transamerica—Edwin Mays brings deep institutional experience and unmatched insight to every client engagement. As a Chartered Retirement Planning Counselor™ (CRPC), Edwin specializes in designing retirement strategies that guarantee lifetime cash flow and protect against the most serious threats retirees face today: market risk, longevity, and rising costs.

At MaysGroup Advisors, Edwin’s mission is simple: replace uncertainty with strategy and give clients the confidence to retire on their terms—with income they can count on, no matter what the market does.

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