We have seen ups and downs in the stock market over the past few months and years, so it is difficult to predict what will happen next.

Because this can be an important part of your retirement planning, we asked Triston Hasty-Grant of Waterstone Private Wealth Management to join News On 6 to put it in perspective.

Dave: So let’s start with the basics. How does what we see in the stock market and the news relate to our investments? If we have 401(k) Roth IRAs, how do they relate to what we see?

Triston: That’s a good question. And the answer is that it’s kind of related to when people talk about the stock market, they’re probably talking about the S&P 500 data or the Dow Jones. And that’s just a collection of stocks that gives you more or less an average of how all these different big companies are doing.

Dave: So if you’re in 401, K IRA, you have more sources. It’s more of a portfolio.

Triston: That’s right. That’s your specific subscription or your specific recipe for the entire stock market, so to speak. But you are not the stock market as a whole. You have a very narrow portfolio.

Dave: So let’s talk about market volatility again. So what is market volatility? What does it mean when we talk about it?

Triston: That’s another really good question. Market volatility is all about the ups and downs of these indices as a whole. So the more volatility there is, the higher highs, the lower lows, and the faster we swing between them.

Dave: This graph here, the big black line, that is the Great Recession.

Triston: This is the great financial crisis of 2008.

Dave: So after that we saw a lot more volatile days. Tell me, more black means more volatile days.

Triston: Dave, if we look at this chart, we can see that the higher the bar, the more volatility we’ve seen this year. That’s a 20% swing.

Dave: This corresponds to a fluctuation of about 20%.

Triston: Those are days that are over 20%. So that’s the volatility index, the “VIX.” So that’s an average of the stock market and its volatility. But as you can see to the right of the line, the bars are higher, we’re seeing more volatility historically and more volatility today than ever before. And there are a lot of factors contributing to that. You know, algorithmic trading, AI, all these things that are making stock trading even faster, making markets move even faster.

Dave: So, fewer human traders can contribute to this…

Triston: There is more human involvement, but these AIs and these algorithmic portfolios are moving fast.

Dave: They even put together a timeline. Another one. I love these charts. We’re talking about a historical timeline here. It goes back 120 years to show… what’s the point of this chart? Because we see every single world crisis you can imagine, from the Suez Canal to the 100 Day War to the great financial crisis and beyond. What’s the point of this chart here?

Triston: Dave, this is the overall market as we’ve discussed and you see on this chart some of the most horrific headlines we’ve ever seen, particularly on the geopolitical front. So people remember the Cold War. People remember Black Monday in the ’80s, the tech bubble, 9/11, all of those really horrific times were probably world wars. Yeah, it probably felt like the end of the world. And you know, those things are scary and real, you should take them seriously. But this chart just shows that over time the market always finds its way up, not that there aren’t bad days or years, but we have to invest for the long term.

Dave: So you believe in the current market that we are in? Describe what you see and I mean, how long could this continue?

Triston: Yeah, so if everybody’s crystal ball worked, I’d be out of a job. But I say this in jest, but we still see a strong U.S. consumer. We still see a strong U.S. economy. And all of that is the average bull market, which I think you have a graph of here, where historically we’re in a short bull market, which just means that this positive market is young. The average bull market lasts 61 months, and we’re about 20 to 22 months into that bull market right now. So, you know, history is obviously no guarantee of returns, but that said, from a historical perspective, there could be more legs in this thing.

Dave: The bull market we’re in is all the way to the right, right, yes. And then we’re talking about the bull market of 1990. That was 114 months. In 2009, it was 131 months. So one more question. I couldn’t let you go without asking you about interest rates. Jerome Powell, the chairman of the Federal Reserve, says it’s time to cut interest rates. What’s your take on that?

Triston: I think that’s great news. We’ve talked about how this bull market is young and it could really provide relief to the U.S. economy, which is slowing. And it’s important to point out that lower interest rates will help the big companies that we invest in to continue to do business efficiently. So if Jerome Powell says this clearly and unambiguously, it’s time to change his policy. He hasn’t done that in almost 24 months. So needless to say, the stock market is pricing in cuts and so cuts will be important in September, but whether the Federal Reserve does 25 basis points or 50 basis points, who knows? But cuts will be important, we’ll know what happens in September.