Transcript
Hello, and welcome to our weekly Market Alert video for the week ending December 30, 2021—our last video of the year! I want to wish everybody a fantastic Happy New Year, and we’re going to talk a little bit about planning for 2022 in this segment. Let’s dive right in. First, I want to thank you for watching, we have had almost 300,000 views which is remarkable. Thank you for your support and I encourage you to share this video with as many people as you’d like. Hopefully we can help them attain what we want for you—financial peace of mind that your money will last as long as you do, and most importantly, that your retirement is your second childhood without parental supervision. We want you to go play, have fun, and enjoy yourself in the coming year.
Every year we have our fearless forecast, and last year our forecast was for Dow 35,000. Surely enough, it came true. Next week, we will have our new fearless forecast for 2022, and it’s going to be the best one yet.
So, let’s talk about what could happen next year. One of the most important entities that we should watch every year is the Federal Reserve. We should observe what their actions are, what they say they’re going to do, and what they actually do. As we look back at history, we can see that many of the worst bear market recessions were caused by Federal Reserve mistakes. The Feds are not infallible, and they are trying to project what’s going to happen and act accordingly. As you may know, the Feds are going to raise interest rates three times next year. In addition, they’re also going to be tapering even faster than before. We’re going to talk about all of that, but first, let’s go back into history and look at the last “Big Bad time” that the Federal Reserve raised interest rates and what happened afterwards.
Just before the Great Depression, the Federal Reserve raised interest rates as the economy was suffering. The logic back then was that if interest rates go up, then people will get more interest on their money, and if they do, they’ll have more spending power to stimulate the economy. They thought, “This will get us out of this terrible recession.” However, the opposite happened. While interest rates were higher for people who had cash, the rest of the economy got slammed. As many historians look back, they blame the Federal Reserve for causing the Great Depression because increasing interest rates when the economy was not good was essentially pouring gas into the fire.
Because we’re raising interest rates in an economy that appears unhealthy, you may be wondering “Are we going to have a Great Depression next year?” Our answer is no—In fact, it’s the opposite. The economy seems to be healing. The numbers are looking better each time we get reports about unemployment. All of those are showing us that we’re healing from the pandemic, and we’re hopefully getting back to some semblance of normalcy which should bode well for companies to make profits. We believe that profits drive prices and prices drive the stock market, so we still see the future as being bright.
Next week, I will have my fearless forecast for you. However, our forecasts are not always accurate and sometimes are wrong. As always, we believe that having a strategy to protect ourselves from the unknown and from the things that could come out of the blue that we did not expect is paramount, especially for those of you who are retired or retiring soon. This is why we have our Invest Protect Strategy™ ready to be implemented, should this ever happen. Our investment protection strategy is there to help us to mitigate the downside as we did last year, years prior, and in the future.
Lastly, I want to wish everyone a very, very happy new year. Thank you for being a client and thank you for watching these videos. I want to express to you the gratitude from everybody at RPOA—for all that you’ve done for us, you are fantastic. You’re the greatest gift we could ask for, and our goal is always to give you a peace of mind. If we’re doing that, then hopefully we’re giving you something in return that you value. Thank you and we will talk next year.
MMWKM Advisors, LLC (d/b/a Retirement Planners of America ) (“Retirement Planners of America”) is an SEC registered investment adviser with a primary business location in Plano, Texas. Past performance may not be indicative of future results. All investment strategies have the potential for profit or loss. References to the “invest and protect strategy” (the “Strategy”) and recommendations made under the Strategy from 2007 through 2009 refer to strategies collectively employed and recommendations collectively made by Retirement Planners of America’s principals while employed at Eagle Strategies, LLC., and also at Cambridge Investment Research Advisors, Inc. Four of the five principals remain as principals today, including the Retirement Planners of America’s founder, Ken Moraif, and Chief Investment Officer, Eli Dragon. Retirement Planners of America has been employing the Strategy since its inception in 2011. Therefore, any references to Retirement Planners of America’s performance or its investment advisory recommendations predating 2011 generally refer to recommendations made by Retirement Planners of America’s principals at the respective other firms described above. Like all investment strategies, the Strategy is not guaranteed. It is possible that it can incorrectly predict a bear market (generally accepted as a 20% drop in a market index), which has, in-fact, happened before at Retirement Planners of America and affected its clients accordingly. When the sell / “protect” portion of the Strategy is implemented, affected investors will incur transaction costs and taxable accounts will incur tax consequences. However, when implementing that portion of the Strategy, Retirement Planners of America generally believes that the benefit of avoiding bear markets outweighs the burden of these transaction costs and tax consequences.