In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss one of the biggest sources of investment risk hiding in plain sight for people nearing retirement: a portfolio that has grown large thanks to a handful of Magnificent 7 stocks, and what that means once a paycheck is no longer coming in. They walk through a real conversation with a new client whose accounts had grown substantially through stocks like Nvidia stock, Tesla, and Amazon, and why the retirement investment strategy that builds wealth is not the same one that should carry you through spending it. If you’ve ever wondered whether your risky investments have quietly become too large a piece of your retirement portfolio, this episode breaks down how to think it through without giving up the gains you’ve earned.

Listen in to learn about the numbers behind the Magnificent 7 run-up and the very real stock market risk that comes with it, including the 2022 pullback most investors have already forgotten. Radon and Murs unpack sequence of returns risk, why retirement risk management looks completely different once withdrawals begin, and how their three bucket strategy is built to protect retirement savings while still allowing room for growth. Whether you’re actively planning retirement, working through a retirement checklist, or simply thinking about how to retire comfortably without one bad year undoing decades of work, this conversation lays out a retirement income strategy built for exactly that moment.

In this episode, find out:

• Why the Magnificent 7 stocks grew so dramatically since 2020, and the specific 2022 declines (Tesla, Meta, Nvidia, Amazon, Alphabet, and Microsoft) that most investors have already forgotten about
• The math behind why a 50% loss requires a 100% gain just to break even, and why that matters so much more once you’re living off your retirement portfolio
• How the accumulation phase and the retirement phase call for two completely different approaches to risk, and why what worked to build your wealth can work against you once you retire
• A breakdown of the three bucket strategy, including how the cash, growth, and safety and income buckets work together for real retirement portfolio diversification
• Why you don’t have to sell your winning stocks to build a secure retirement financial plan, and how to keep a piece of the growth you’re proud of while protecting the rest

Tweetable Quotes:

• “What gets you up the mountain won’t get you down. It’s a different type of physicality that we need to be able to deal with.” — Radon Stancil
• “There’s ways to invest when you’re growing your assets, and then there’s ways to invest when you’re trying to have your assets generate and preserve them.” — Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

First, we’re going to talk about a big topic that I think is becoming more and more prevalent as we 

see these big returns that’s been going on in different parts of the markets. 

But really what this topic is, where it came about, let me just kind of tell you what happened. So 

this week, actually, I had a new client coming in and basically, she laid out her portfolio and 

she says, I have done a fantastic job growing the accounts. 

And she basically said, I know how to pick stocks. I’ve just done a great job. And let me just say 

this so I don’t take away from what she said. She has done a fantastic job. Her portfolio has done 

well. But when she talked about what’s in her account, it was what we refer to as the Mag 7 or the 

Magnificent 7 stocks. So basically, she got into these stocks. We’re going to explain what that is. 

And they’ve done really, really well. And the portfolio has done really well. And she’s been doing 

this for the last few years. But here’s where she sits. She’s got her and her husband have 

considerable size accounts. And now retirement is here. And the reality is now she said, 

I want to keep. I want to keep these earnings and protect them. 

So, we said, okay, well, we’ll talk about how to do that. And then very quickly, 

she said, but however, I don’t want to give up my seven stocks that have done so well. I mean, look 

at them. They’re up to 200%, 300%. And I said, well, we can’t really diversify you and do that if we 

don’t make any changes. And it was just really emotional. So, I thought, let’s talk about this idea 

of stocks that have run up and done really well. But what does that mean and how do we transition 

into retirement on that? So, Mercer, if you don’t mind, just for our listeners, could you kind of 

explain from your perspective what the MAG-7 is, kind of what we’re talking about when we say 

that? Yeah, and I agree with you, Radon. I think it is a very common thing that we are seeing, you 

know, the… handful of stocks that have just done really well and now it’s like what do you 

do but also, they got me here so how could i abandon them, but you know what happened is the 

pandemic happened in 2020 and things shut down and a lot of companies suffered uh during that 

period of time but there were a handful that really kind of stuck together and actually had 

tremendous growth during that period of say 2020 to say you know really to now and if you think 

about the reason as to why, well, what was working during the pandemic was the large companies that 

had a lot of cash so that they could sustain themselves, any technology-based companies that were 

keeping the world running, and then anything that was getting stuff to people’s doorstep, 

right? During the pandemic, people didn’t want to leave their houses, didn’t want to go to the 

grocery stores. And so, we relied heavily on companies like Amazon to get stuff to our front door. 

And so that kind of coined the phrase of the Magnificent Seven years ago of we’ve got these seven 

stocks that have really just kind of kept the market afloat, that have really driven the results of 

the markets for the last five, six years. And they are such a massive piece of the market that, there’s also some concerns that have come out of that but the magnificent seven are names that 

most people know alphabet is one of them amazon apple meta which is also known as Facebook,  

Microsoft , NVidia a very highly talked about one today and tesla as well These companies, 

you know, had tremendous growth in a short period of time. And so, when you have that, everybody 

wants to be a part of it. And the thing about the stock market is if more and more people are 

buying it, the stock just tends to keep going up. And they just had this tremendous run. 

Not to say that they don’t have a good product. Amazon, you know, the whole delivery thing was 

huge. Tesla had a big run when we went for the shift into. electric vehicles and then them having 

one of the better products out there. Google and Facebook and Instagram and all of these internet 

-based companies’ kind of kept us connected to our other peers and friends and family throughout the 

pandemic and all of that. So, it makes sense that they did really well over that period of time. To 

throw some numbers at our listeners, 

the NVIDIA, for example, has grown over 24,000% in a, 

you know, in a 10-year period. That’s an astronomical number. 3,200% growth for Tesla in a short 

period of time. So, a lot of people have reaped the benefits here in a short period of time. 

And as you know, I’ve heard the same story that you just described, Raiden of like, man, I picked 

some good ones and I… I can’t abandon them. I don’t want to abandon them. But I also know that 

there is some risk that I’m carrying here because what was once a smaller part of my portfolio has 

become 90% of my portfolio in seven stocks. And so that’s where the concern comes into play. 

I’ll ask you, Raiden, you know, I know you’ve looked into this as you think through this scenario 

of these magnificent seven stocks. And, you know, while they’ve had tremendous returns, 

all stocks tend to go down at some point. And we just call that volatility that comes with the 

comes of the game. So, let’s just talk a little bit about the numbers that you’ve seen and pulled on 

some of these stocks. Yeah, so just in 2022, which was not even that bad of a year. 

It was when we had an inflation spike. Tesla was down 65%. Meta was down 64%. 

NVIDIA was down 50%. Amazon, 50%. Alphabet, down 39%. 

Microsoft, about 25%. So, here’s the thing. Somebody might go, yeah, 

but I made so much money. And that is the thing that I think is so important that people realize. 

And if I wanted to talk about the very best return somebody could make, is you buy a lottery ticket 

for a dollar or whatever they cost, and you make $100 million, $10 million. 

I don’t care what it is. That is an overnight sensation. But would you now go take your $100 

million, $10 million, $20 million, and go just buy a bunch of other lottery tickets saying, well, I 

won once, so should I win again? We wouldn’t do that. So, the reality is what’s occurred is that we 

have actually had these stocks grow. And that is fantastic. But now let’s imagine. 

So, let’s just say that you hit NVIDIA at perfect timing or Apple at perfect timing. 

And you want to sit and tell me today, hey, guess what, man? I invested $50,000 and now it’s worth 

a million dollars. Fantastic. I did that a long time ago. 

It’s now worth a million dollars. If I now lose 50% of my million. and I’m retired and I need 

money out of the account, I’ve only got access to $500,000. So, the mentality has to change. 

What got you here cannot sustain you through retirement. What got you here is a different method 

than what’s going to take you through retirement. And so that’s the whole thing that we talk a lot 

about with our clients. Are we saying that you shouldn’t own NVIDIA? No, we own it. Our clients’ 

portfolios own these things, but they own them in such a way that if NVIDIA… 

to drop, and we’re going to talk about this a little bit more, by 50%, it’s not going to take my 

account down 50%. So, we talk about this quite a bit, 

but how do you talk to a client or a person about the difference between this accumulation phase 

and then this retirement time? Yeah, I think there are two major phases to really understand from a 

financial perspective, you know, the numbers of it, but then also from the emotional perspective, 

too. You know, when you’re working, earning and saving in that accumulation phase, all you can 

think about is how can I put more into these buckets of investments, right? The 401ks, 

IRAs, the brokerage accounts, and I’m working, which means I’ve got a paycheck coming in. And I’ve 

got my expenses covered through my paycheck. And so, I’m not as concerned, 

especially if I’ve got, you know, 10, 15, 20, 30 years out before I even consider the idea of 

retirement. I’m not as concerned about what the stock market does. Yeah, nobody likes to lose 

money, but I have this thing called time horizon or the ability to ride out the markets if there 

are issues. So, you know, there’s if the NVIDIA was to have a 50 percent decline and I’m in my 30s 

and I really like the company. I have the time to make that decision to say, yeah, 

I like the company. I know it just fell a lot, but I believe in it. I’m going to give it the chance 

to come back. It’s a little bit different when a 65 year old has that experience and they say, 

oh, man, I’m down a lot and I’m retired and I don’t have the time. And so, it’s a different type of 

stress that happens. But in the accumulation phase. big picture is we can handle much more 

volatility. And in fact, sometimes it becomes advantageous to us. This idea of buying when the 

market dips is only possible if you have new money to put into the market when the market does dip. 

And that’s that idea of dollar cost averaging in. But when we switch into this retirement phase of 

life, now we have to be very methodical about how we’re going to do things from an investment 

perspective, but also just from you know comfort and stress and anxiety uh because now that 

paycheck is no longer coming in I’ve made the decision to retire and now I’ve got what I’ve got man 

the number of times we hear that phrase I’ve got what I’ve got, and I need it to last and and I 

needed to generate me a paycheck for the next you know 30-some-odd years and oh i want to leave 

some money behind too um that’s where it’s it becomes a big shift and the idea of putting going 

all in on a magnificent seven per se uh and the amount of risk that comes with that it could be 

detrimental to a retirement plan or an income plan or a withdrawal strategy just like you said if 

it you know if it’s if you got 50 000 in the magnificent seven when you’re in your 30s and it falls 

50 you know it hurts but no big deal if you got five million in the magnificent seven it falls 50 

that’s two and a half million dollars of loss while that money could come back, what are you going 

to do along the way when you need to pull $5,000 to $10,000 a month out of the portfolio? And 

that’s where, you know, what we try to teach on a little bit more and more is that there’s ways to 

invest when you’re growing your assets, and then there’s ways to invest when you’re trying to have 

your assets generate and preserve them. And so, you know, I think… the end of the day, 

we just have to have those conversations around this transition. And it’s a tough one for a lot of 

people. A lot of people are scared of starting to withdraw on their nest egg that they built for 30 

some odd years. But, you know, I touched a little bit on the emotions here, 

but I know you’ve got some more that you may want to add to this. Raiden, what do you think about 

what I just said? Yeah, I think that, you know, it does come down and this is not being a negative, 

but I mean, there’s a part of it that’s pride there. And the person goes, man, I was smart 

enough to years ago buy this and now look at what it’s done. So, it’s pride. 

You know, I’m proud of it. I always tell people you did a fantastic job. So be proud. Be proud that 

you took an investment and turned it into what you got today. The other one people have is a fear 

of missing out. They’re like, oh, man, what if I got what if I did sell off some of these stocks? 

And I went over to something a little bit more conservative, but then they continue to go up and I 

missed out on it. Well, that’s possible. And then the other one is I may never find this 

opportunity again. And that’s very possible. And so, I think when you think through those things, 

it is a thing that you’ve got to emotionally deal with. But I’m going to tell you this. If you 

don’t do that. The worst emotion out of them all is the one that says, 

I wish I had gotten out of this. I wish I had made a change. Because what was going 

to be a fantastic retirement is now turned into a very stressful time. 

Because let’s just say, Merce, if your person grows to $3 million, $5 million, 

I don’t care what the numbers are, $1 million. And let’s say that 50% of their money is tied up in 

these stocks that could be volatile. And then they lose. 50% of it. Their entire portfolio is down 

25%. We always talk about the factor that if a person loses 50%, they got to make 100% rate of 

return to get back on that. That’s the danger that people are dealing with this. So, I think 

we’ve kind of made the point here. You have to do something. But I think, Murs, if you were talking 

to somebody and you said, hey, yeah, you’ve done a fantastic job, but let’s look at it a little bit 

different. Can you kind of walk through how we walk through this idea of diversification through 

our three-bucket strategy and what that looks like and why does that work so powerful? And you can 

still hold on to your mag seven. You can still hold on to some of them. But if we do it the right 

way, you can live through the volatility. Yeah, I’ve got a quick little story about it. 

uh investment strategy meeting that we did not too long ago with a New York client of ours and he 

was the epitome of this podcast story of you know he hit NVidia perfectly and something went 

from you know uh tens of thousands of dollars of an investment into the millions category and 

and my concern going into that meeting was a little bit of man is he going to want to divest of this 

this stock now luckily for him it was in his IRA Which means if we sell that stock, 

there’s no capital gains in impact, whereas we have to be way more careful if it’s in a brokerage 

account, which is a great strategy for today. But no, his opinion was what we tend to 

say is, hey, you know, there’s a phrase in Vegas, which is to take some chips off the table. 

Right. It’s been good for us. Let’s get out while we’re ahead and start to diversify and start to 

think about other asset classes that are known to make some good money, too. But to us, you know, 

diversification is really we don’t want everything to be highly correlated and moving in the same 

direction because if everything’s moving in the same direction, but I have 100 different stocks, 

but they all move the same way. I’m really not that diversified. So, we talk about the buckets 

all the time. You have your cash. which is really kind of that emergency fund that operational 

money you know just cash available in the bank it doesn’t need to earn much it’s just there for 

safety and convenience and cash flow and then our investment buckets are we split them into two 

categories of growth means that we’re also going to carry risk of loss and a lot of times 

that that category is stock market-based investments like those Nvidia stocks and the Mag 7, 

but also, other types of strategies that we can blend in there as well. So, we’re not just relying on 

a handful of stocks to run the growth for the portfolio. But then we can also use some specialized 

types of strategies like… private investments that’s a big topic of conversation today that hey 

the markets are overvalued and where else can I go to get true diversification and non-correlation 

away from the markets and the private space is if you qualify for it and it makes sense to you and 

you understand it can be a tremendous place to go for good growth but differentiated growth and 

then when we talk about the safety bucket that third bucket, We need some element of risk offset. 

Traditionally, what most people would do is say, hey, I’ve got some stocks, let me buy some bonds, 

and that’s going to be my risk offset. Well, with the way that the bond environment has been over 

the last five years and with the way the interest rate environment has been and the rates going up, 

rates are going down, we’re constantly hearing about that since the pandemic. Bonds are subject to a 

lot of interest rate risk. And so, they don’t carry the safety that they used to carry. 

And so, in the safety bucket, we want whatever is going to be in there to be using these words, 

which are our principal protection. I need this bucket. I know that it’s not going to go down if 

the markets go down. And I also need it to make a decent return. And so, we call it a bond 

alternative. And there’s a lot of different avenues there. 

It can provide safety, but also some elements of return. When we blend these three buckets together 

though, that’s where we find that if I like that stock that got me to where I am, 

I can still have a portion of it there and I still get to see it in my account, but I’m not 

overexposed to it anymore. I’ve made that more prudent type of investor decision to say, 

let me start to spread some of that back out again. Now that I’ve hit my goal, I’ve retired and I 

need to be way more aware of risk today than when I was in my 30s. And then that risk offset of the 

safety bucket, that bucket itself is going to provide a lot of cash flow. We tend to call it a 

safety and income bucket because it can provide that cash flow that we need, that three, that five, 

that $7,000 a month comes to us from a place that cannot be affected by the stock market. 

So, we blend all that together. We do believe that that’s kind of where you get peace of mind from. 

You know, I don’t think sometimes people do just get worried that they’re going to lose the 

physicians or the investments that got them to where they are. And I think there’s plenty of 

flexibility in building out these plans to where you’re not going to give them up. You’re just in a 

place where we need to be a little bit more responsible about what we have and how we want to 

allocate all of that. So, I’ll kind of give it back to you, Rayden. Any kind of final thoughts on 

this? I know we beat it to death a little bit, but that is what people are asking. They’re like, 

oh, what do I do? These stocks have run away and they’re well, but I’m getting nervous that I’ve 

got too many of them. Yeah, I think that the way we can sum it up is this. What gets you up the 

mountain won’t get you down. It’s a different type of physicality that we need to be able to deal 

with that. So, what we say and who we really attract to us are individuals who say, 

I want to get a good return rate. I just can’t stomach losing a big chunk of my money right 

now. I don’t want to see 50% of this money that I have worked hard and planned for to get me into 

where I’m at and to take it away. So, we’ll be close with this. Any questions you’d like to talk to us, 

feel free to go to our website, pomwealth.net. Go to schedule a call. Our calendar comes 

right up and we’d be glad to hop on a call with you and talk to you a little bit about your own 

portfolio. Thank you very much for listening. We’ll talk to you again next week.