Navigating Market Volatility: A Conversation with David Rath and Pat Kalish

Q1: What is driving the current market volatility?

There are active hostilities in the Middle East involving Iran, and the situation is moving fast. Over the weekend, things looked one way; by Monday morning, President Trump announced a pause on attacks to bring Iran to the table, and markets reacted positively to that news. That tells you everything about how sensitive investors are right now. Beyond the market impact, there are real lives being lost, and everyone is hoping for a swift resolution. But in the meantime, uncertainty is driving volatility, and uncertainty is the thing markets hate most.

Q2: How does oil fit into this picture and why should I care beyond gas prices?

Oil is the most important commodity in our daily lives because it impacts everything—not just what we pay at the pump, but also manufacturing costs, transportation costs, and input costs for production. When oil prices go up, it acts as a precursor to market stress and volatility. And you see gas prices every few miles on your way to work. It's the most front-and-center measure of inflation people have, even more than grocery store prices. But the ripple effects go far beyond your weekly fill-up.

Q3: Why are interest rates rising and what does that mean for me?

As oil prices increase, they push inflation higher. And when inflation goes up, interest rates tend to follow. Why? Because bonds pay fixed future cash flows, and if inflation is eroding the value of those future dollars, investors demand a higher interest rate to compensate. We've already seen mortgage rates tick back up in recent weeks, and credit card rates can follow. Some listeners might remember the late 1970s and early 1980s when 30-year mortgages were 15 to 18%. That sounds ridiculous today, but it's exactly what happens when inflation gets entrenched.

Q4: What's happening with gold? I thought it was supposed to protect against inflation.

It's not that simple. Gold is a non-interest-bearing investment—you never get a dividend or coupon payment. So when interest rates rise, the opportunity cost of holding gold becomes much more stark. Why hold something that pays zero when you could hold something paying a higher yield? That creates short-term selling pressure. On top of that, gold had an unsustainable run—at one point in January it was up over 25% year-to-date after two great years already. When an asset gets that hot, it often needs to cool off and shake out the excess optimism before it can make another meaningful move higher.

Q5: How should I be thinking about my portfolio during all this headline noise?

Stop watching the news. Seriously. The major headlines will find you. What matters more is looking at what prices are actually doing—that's the truest form of data we have. And more importantly, have a predefined process for managing risk before the chaos hits. If you're a buy-and-hold investor, understand what risk you're actually taking: the risk of withstanding a multi-year, maybe decade-long, period where stocks and bonds both struggle. That happened in the 1970s. It can happen again. And if you're a retiree, you only get one shot at this—you don't have the luxury of waiting out a lost decade without it fundamentally changing your retirement lifestyle.

Q6: What's the one thing I should do right now?

The time to prepare was before things hit the fan. But here you are, in the middle of it. So here's what matters: don't panic. Don't make investment decisions based on how you're feeling in this moment. If you start making adjustments because markets are going down, chances are you're going to make a mistake. And then you'll make another mistake trying to fix the first one, and suddenly you've compounded a problem that didn't need to exist. Stick to your plan. Stick to your process. When things calm down—and they eventually will—that's the time to sit down and honestly evaluate whether the risks you're taking still match what you're comfortable with.