Market Alert February 19th, 2019: The Market Can Remain Irrational

As a firm that specializes in Retirement Planning, our two goals for you are:

  1. For you to have Financial Peace of Mind and
  2. For Your Money to Last As Long As You Do.

Our investment philosophy of Buy, Hold, and PROTECT! is designed to give us Unlimited Upside with a Tolerable Downside.

Risks Mount and Market Goes Up anyway.

Two large Chinese borrowers missed payment deadlines this month, highlighting the risks piling up in China’s credit market, which is having the most company failures on record, according to Bloomberg.

We have been reporting to you our worry that it is the world’s increasing debt that we worry will create the next financial crisis and this certainly fits into that narrative.

The list of influential economic thought leaders who worry as we do now includes Nobel Laureate Paul Krugman who said that the US economy might be heading into a recession and the Federal Reserve may have no good policy response as they have shot almost all of their ammunition combating the Great Recession.

Retail sales have fallen. Consumer confidence has fallen. We could go on, but it does not matter, the market seems to want to go up regardless of rationality. John Maynard Keynes famously said, “The market can remain irrational longer than you can remain solvent.”  What we are witnessing may be that thought in reverse.

We are trend watchers, and it could be that the trend becomes too strong to ignore; but for now, we are still out of equities.

Look at the chart below:  what do you think is going to happen next?

I would like to invite you to come to one of our seminars. They are designed for those of you who are retired or retiring soon, and they are free.

At the free retirement seminar we will answer these burning questions:

  • How do I protect my retirement from the next market crash?
  • How do I avoid three basic “pitfalls” of retirement distribution planning?
  • Am I on track to be able to retire?
  • When should I take Social Security? 62? 66? 70?
  • Am I diversified the way I should be?
  • How much can I afford to spend during my retirement?
  • How can I fight inflation?
  • How do I determine how much risk is appropriate for me?
  • Do I take my pension or a lump?
  • How do I avoid having 85% of my social security getting taxed?
  • Should I rollover my 401(k)?
  • How do I reduce my income taxes in the future?

Click here to reserve your spot at the next free retirement planning seminar

Do not get complacent.  Overconfidence is dangerous when it comes to investing.

As you can see in the chart below, the market can turn around very quickly and very unexpectedly. The 2008 bear market wiped out 12 years of gains in just 17 months. Many of you participated in that bear and the one in Y2K.

Clients who followed our lead were out of the Stock market during the great market crash of 2008.

Source: Standard & Poor’s

We believe that the risk that we have today is different than anything we have had in history.

The hundreds of trillions of dollars of global debt put a significant strain on government’s ability to do anything about the next recession. In fact, we see all of this debt exacerbating the effects of an economic slowdown. The worst recessions that we have had around the world have mostly been the results of governments taking on too much debt.

If you are not a client of Money Matters, we want to visit with you!  Let us worry about all this so that you don’t have to. 

Over 50? Schedule a free retirement consultation with one of our financial advisors. We will help you to make the important financial decisions needed to create your personalized retirement plan.

  • Do you know if you have enough money to retire on?
  • Do you have a plan for what to do when the next market crash comes?
  • What are 5 strategies that you can use to reduce your income taxes?
  • How do you plan for your retirement cash flow?
  • What should you do to maximize your Social Security benefits?
  • Have you diversified the way you should be?

We would love to review your retirement plan with you and see if we can help you. If we can help you, that’s terrific, if not that’s fine too. Either way, there is no charge, there is no obligation, and we will part friends!

We are thankful that we have a sell strategy.

Our strategy enables us to participate in the upside as long as it lasts; it is also designed to get us out with tolerable losses when the trend changes.

And we all know that the trend can change quickly and precipitously.

Click here to listen to this week’s podcast and hear the following topics:

  • Possible Recession With Little Fed Wiggle Room
  • How Much Risk Should You Take With Your Retirement Savings?
  • Social Security Filing For Married Couples
  • Kiplinger Article On Cash Flow Planning
  • Estate Tip: Power Of Attorney Documents

There is nothing more important to us than that. It is our singular goal to keep our clients from becoming poor. Preserving the wealth that they have built is job number one for us. I encourage you to join the Money Matters family!

I believe that avoiding large losses is the single most important thing that we should be concerned about as investors.

Perhaps you were given a package by your employer. Perhaps you sold an asset and want to know how to properly invest the proceeds. Perhaps you inherited money and want to keep it safe and grow it if you can. Perhaps you just want a second opinion. These are all reasons for you to take advantage of all of the resources that we at Money Matters have to offer you.

We want to help you to achieve your retirement goals.

Thank you for subscribing to this newsletter. I hope it finds you and yours in good health and spirits.


Ken Moraif, CFP®, MBA