Episode 100: Volatility is Still Not Risk

Transcript

Hello and welcome to the Balanced Wealth podcast. My name is Gavin DiStasi and today is a special milestone for us—and for all of our listeners—because this is our 100th episode of the Balanced Wealth podcast.

When I think back to that very first episode, which we recorded a few years ago, I’m both humbled and amazed that we’ve reached this number. We started with a simple goal: to provide practical, down-to-earth advice on a range of financial and occasionally non-financial topics, in order to help people navigate the often-confusing world of investing, planning, and wealth management. But beyond that, we wanted this podcast to reflect a philosophy that runs through everything we do here as advisors: helping people live balanced, thoughtful, and intentional lives.

For that first episode, I chose a topic that still feels just as relevant—and maybe even more important—today: the idea that volatility is not the same thing as risk. It’s a topic that remains foundational, not just to how we view investing, but to how we approach financial planning as a whole.

So, to celebrate our 100th episode, I want to revisit that very first conversation, take a fresh look at what’s changed, what’s stayed the same, and what new lessons we’ve learned along the way.

In the world of finance, the terms “volatility” and “risk” still get thrown around interchangeably, and—just like I said in that first episode—it drives me a little crazy. Volatility is often portrayed as something dangerous, something to avoid, while risk is treated like some abstract, all-encompassing threat. But the truth is, they’re not the same thing.

Volatility is simply the movement of prices—both up and down—over time. Markets rise, markets fall, sometimes sharply. That’s normal. It’s the heartbeat of investing. Risk, on the other hand, is the possibility of permanent loss—of not being able to meet your financial goals because of poor planning, bad decisions, or pulling out of the market at the wrong time.

In fact, I’d argue that volatility is not only not risk, but that it’s the very reason investors earn a return over the long run. Without volatility, without that inherent unpredictability, there’d be no risk premium. You wouldn’t get the 7%, 8%, or 9% long-term returns that have historically come with owning stocks.

If you’ve been paying attention to the markets since that first episode, you know we’ve been through quite a ride.

Think back to early 2020: the COVID-19 pandemic triggered one of the fastest market crashes in history, with the S&P 500 dropping more than 25% in just a matter of weeks. But then, as quickly as it fell, the market roared back—posting one of the fastest recoveries ever. Now that’s volatility.

Then, in 2022, we saw another sharp downturn, driven by record inflation, rapidly rising interest rates, and fears of recession. The S&P 500 dropped nearly 20% that year, and bonds—which are usually the “safe” part of a portfolio—also suffered big losses. For many investors, it was one of the toughest years since the great recession nearly two decades ago.

But here we are in 2025, and what do we see when we zoom out? Despite all the noise, despite the headlines and fears, the market has continued to reward those who stayed the course. Those folks who reacted to the volatility—who sold during the lows of 2020 or 2022—are the ones who turned temporary declines into permanent losses.

One thing I emphasized in that first episode, and that I believe even more strongly today, is that volatility is an opportunity, not a threat.

Particularly for younger investors, or anyone still in the accumulation phase—market downturns should be viewed as a blessing. When prices fall, you get to buy more shares for the same amount of money. It’s like buying stocks on sale.

I often tell clients that they should hope for bear markets while they’re still building wealth. It’s a chance to accumulate assets at lower valuations, which sets you up for greater long-term returns. In fact, I still believe what I said in our first episode: the Great Recession of 2007-2009 was probably the greatest buying opportunity of most of our lifetimes. And for those who stayed invested during the 2020 drop or the 2022 bear market, the rebounds that followed have proven the value of staying disciplined.

Even for retirees or those who aren’t adding money anymore, volatility can still work in your favor—if you have a systematic rebalancing strategy. When certain assets drop while others hold up, rebalancing allows you to sell high and buy low, maintaining your target allocation while taking advantage of market swings.

So if volatility isn’t risk, what is?

As I said back then, and as I’ve seen time and again in my work, real risk comes from behavior—selling at the wrong time, chasing trends, or trying to outsmart the market. The greatest risk most people face is not that the stock market will “go to zero” – it won’t, by the way, and if it does, we’ve all got much bigger problems than what happened to our investments- the greatest risk for most is that they will outlive their money.

Inflation, especially in the past few years, has reminded us of this risk. When inflation was hovering at 7% or 8% in 2022, it became clear just how damaging rising prices can be to a retirement portfolio. Sitting in cash might feel “safe” because it avoids volatility, but over time, cash guarantees a loss of purchasing power.

Long-term exposure to the stock and bond markets—despite their volatility—remains one of the best ways to keep pace with inflation and preserve your financial independence over a lifetime.

One thing that hasn’t changed since that first episode is the media’s obsession with fear. Headlines like “Markets in Turmoil” or “Worst Day Since…” are still everywhere whenever markets experience down days. It’s designed to grab your attention, but it also triggers a fight-or-flight response.

That’s why it’s so important to remember that volatility is not only normal but expected. As Nick Murray once said—a point I shared in that first episode—investors should expect an intra-year drop of 10-15% every single year, and drops twice that big about once every six years. That’s just part of how markets work.

Looking back on 100 episodes, I’m proud that we’ve kept this podcast focused on the same core principles we started with. Whether we’re talking about retirement planning, tax strategies, or behavioral finance, the message is always the same: good financial decisions are made by focusing on the long term, staying disciplined, and understanding that volatility is your ally, not your enemy.

We can’t control what the markets do. We can’t control inflation or interest rates or what happens in Washington. But we can control our reactions. We can control how we invest, how we plan, and how we adapt when things get tough.

So, as we mark this 100th episode, I want to leave you with the same reminder I gave back in Episode 1: Volatility is not risk. In fact, without volatility, there is no growth, no reward, no wealth-building potential.

If there’s one thing I hope you take away from listening to this podcast over the years, it’s that successful investing isn’t about predicting the future or avoiding downturns. It’s about having a plan, sticking to it, and using volatility to your advantage.

Thank you to all of you who’ve listened, shared your feedback, and supported this show over the past 100 episodes. Here’s to 100 more.