Facts, Framework & Approach
Your guide to staying grounded through market swings.
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This discussion is with Vector advisor and COO Jason Ranallo.
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Summary
In times of market swings, it’s easy to feel like you’re being swept along by a wave of headlines and data points. At Vector Wealth, we believe that while facts, like market prices, are important, they only tell part of the story. Sound investment decisions come not just from knowing the facts, but from having a framework that gives those facts meaning and direction.
In our latest podcast episode, Facts, Framework & Approach, Jason Ranallo walks through the current state of the market and economy. Then we follow up with our views and perspective:
📉 This week markets brushed up against bear market territory, declining nearly 20% from February highs. We have seen some recovery since the low.
🧮 The S&P 500 index whipsawed this week after on-again, off-again tariff talks were paused — though not without caveats.
📊 Unemployment is at 4.2% — up, but still within a historically normal range.
📉 The Fed Funds rate is holding steady at 4.33% after a series of cuts that started in September 2024 when the rate was 5.33%.
🛒 The inflation rate has cooled to 2.8%, down significantly from its 2022 peak and down slightly from its year-to-date average.
These key investment frameworks shape our approach:
1. Time Horizon – Time in the market is more effective than timing the market.
2. Real Returns – Wealth is built by outpacing inflation.
3. Diversification as a Discipline – Prepare for multiple outcomes & uncertainty.
4. Compounding of Growth Assets – Given time, returns effectively earn returns.
Two key tenets of our bucket-based approach include:
Planning for 2–3 years of assured income to avoid becoming a forced seller of long-term assets in a down market.
Staging growth assets for the long term to isolate the potential volatility of stocks into later buckets to position for compounding growth.
Our view is that by maintaining this diversified stance, clients will be better prepared for what comes next. As always, we’re here to help you make informed, confident decisions about your financial future.
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These discussions aim to spark dialogue about enhancing retirement readiness and making more informed financial decisions. If someone you know is seeking clarity on their financial life, please make an introduction to your team at Vector.
Transcript
(adapted for readability)
At Vector Wealth, we believe there’s a difference between having the facts and having a framework. Facts tell us specific truths. A framework helps us understand what matters.
In this podcast we’ll share the facts as we see them, provide some frameworks for understanding, and then offer up tenants to our approach.
First off, the facts. Markets are down from the highs set in February 2025, led largely by trade war discussions. We brushed into bear market territory with a nearly 20% stock market decline. What’s always remarkable is how quickly markets can move. In the past handful of days, we have seen the market’s daily close down 5%, down 6%, then down around 2%, only then to snap back with an over 9% up day.
Next fact: The US unemployment rate is currently 4.2 percent. This is within the historically average range.
Next, inflation. The Consumer Price Index (CPI) is now at 2.8 percent. The Fed’s stated target is around 2 percent. We are likely in that zone now.
Next, the Fed Funds rate, the referenced rate for short term borrowing, is at 4.33%, down from 5.33% in September.
Let’s switch gears now to frameworks. We’ll define frameworks as “we believe” statements or more broadly as foundational ways of understanding the world specific to investing and markets. Here are some of our frameworks at Vector:
The Time horizon Framework
We believe that time in the market is more effective than timing the market – the past 5 days are a great case study – big down days are commonly clustered near big up days. This tenant emphasizes patience over prediction, anchoring the growth-focused segments of portfolios in long-term goals.
The Real Returns Framework
We believe that wealth is built by outpacing inflation. Understanding the difference between nominal returns and real (after-inflation) returns keeps the focus on long-term purchasing power.
The Diversification is a Discipline Framework
Diversification helps us prepare for multiple outcomes, and importantly, uncertainty. It also provides access to different sources of return. This year, for example, US stocks are negative, while international stocks, bonds and commodities like gold, are positive.
Next up, Compounding of Growth Framework
We believe that scarce, productive assets like stocks tend to grow in value over time. Given time those returns effectively earn returns.
With a clear grasp of the facts and frameworks, we now turn to our approach.
This first tenant is the most important: Assured income. People living off their portfolio need to have some certainty, especially in the short term. This assured income segment is especially useful during periods of market decline as we are not forced to sell long-term investments to fund income needs.
Tenant two. Staging growth-focused assets within longer term buckets. By segmenting the portfolio in this way, we isolate the potential volatility of stocks into later buckets to position for compounding growth.
Every day, we’re presented with data points—facts telling us which market indices rose or fell and trade war updates. These facts are measurable, reportable, and often the first things we see in the news. They matter — but they don’t tell the whole story.
We recognize that seeing markets drop 10-15- or even 20 percent over a couple months can feel jarring. It is. For some, this feeling can show up as a flight response. “Will it be like this forever? Is it time to sell?” For others, the question comes up: are markets on sale? Is it time to buy?” Both of these are normal and ok feelings to have – your financial life is yours and it’s personal.
We can’t control the facts. We don’t get to choose the interest rate environment, the unemployment numbers, or the inflation data. But we can control how we respond.
Frameworks and a disciplined approach help us move beyond reaction toward thoughtful action. At Vector, we pair your financial goals with an approach that endures.
Thanks for listening, as always, we’re here to help.
Regulatory
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.
Information expressed does not take into account your specific situation or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment adviser to determine whether any information presented may be suitable for their specific situation.
Investments involve risk and unless otherwise stated, are not guaranteed.
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