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Should We Sell Stocks And Buy Bonds?

Hello and welcome to our Market Alert video for today, which is August 30, 2024 I’m so glad you’re with us. I want to say a special hi to SCWPerS Nation out there. I hope you’re out there SCWPering your tails off. And those of you who don’t know what SCWPerS means, it’s your second childhood without parental supervision. We want you to enjoy that. And for those of you who are not SCWPerS yet, we are going to do our darndest to get you there. We have a lot to talk about. I want to answer a question that I’ve been getting, pardon me, from several clients, regarding, should we since since Ken you’ve been saying that the bond market is going to do well and better than stock. Should we reduce our stock exposure and all of that? I want to answer that question, but before we do that, I want to tell you that I’m videoing here. I’m in Colorado right now. I’ll be back tomorrow, so I’ll be back in the heat of Texas right after that, but for the time being. And you know, one of the things here in Colorado that’s really cool is that there are a lot of very fit people. And a friend of mine, he’s 84 years old, and he goes hiking every day. He rides his bike 50 miles every day. He’s an amazing person. And so he and I decided we’re gonna go on a hike, and we hiked up a mountain together. It’s a three mile hike. It’s a mile and a half up, and I’m not exaggerating when I do this, it’s pretty much straight up, and it’s a mile and a half back down again. And as we were going up, he paused, and he looked at me, and he goes, do we need to slow down the pace for you? And I was like, Oh, come on, you. You want one of these? Are you kidding me? Some 84 year old telling me, Well, actually, yeah, we did. It was a little hard for me, I have to admit it. So anyway, let’s talk about the bond question. And you know, I get why people ask the questions that they do when you watch this video, we don’t have a crystal ball, so we have to be very careful that you take what I say these videos too literally and assume it’s going to happen exactly as I say it. But I get why you might think that. I mean, after all, we did say to get out of stocks and bonds in April of 2022 and of course, bonds had the worst bear market in history, according to Bloomberg, during that period, stocks went way down after that because of the inflation shock, and we’ve gotten back into bonds in December, which is turning out to have been a good move. We said that the Fed wouldn’t be lowering interest rates until the second half of this year, when many of the major banks were saying they were going to lower it in March, starting in March, and we said, No, that’s not going to happen. And we correctly said that. We said bonds are going to outperform stocks in the second half of this year. And so far, the bond aggregate has done very well. It’s up 5% versus, you know, the the S&P, so it’s done better. So I can, I can see why you would say, you know, whatever Ken says we have to do. But let me just kind of first of all put things in perspective. The bond market is already it’s too late now to make a change like that, okay, in our view. And the reason why I say that is because the bond market reacts on the rumor, on the anticipation of the Federal Reserve lowering interest rates. So as I said, the bond aggregate index is already this just in the last three months, up about 5% and so a lot of the upside has already been baked in. So we have to extend out our time horizon, if you will. So over the next four or five months, yeah, it’s possible that bonds will continue to outperform stocks, but once that dissipates, we think the stock market over the next year, a year from now, will have done better than bonds. So we don’t want to try to time this. We don’t want to start trying to get out of stocks and move in more into bonds, or do those kind of things at this point. We want to stay invested in the allocation that we think is the most valuable one for you, and so I hope I’m answering that question. The other thing, though, is that we, we do have, we do think that bonds might be a better place for money market or cash kinds of things because of what I just said, if the Fed is lowering interest rates, then the interest rate you’re going to get in cash equivalents will go down with it, money market funds, savings accounts, that kind of thing. But Bond values should do better in that environment. So if that were to happen, that might be something for you to talk with your retirement planner about. If you have money market or cash money, that might be an appropriate strategy for you to consider. But we don’t think reducing your stock exposure to increase the amount you have in bonds would be a good idea at this point. So there you have it. Next week, we are going to have a special edition on our forecast for how the elections will affect our investments. So make sure you tune in next week for that. The other thing also is that, you know, we always say that if you miss these videos, you do it at your own peril. You know our strategy did predict, did tell us to get out of the market in November of 2007 before the stock market crash of ’08. And we did say we’re getting out of bonds before major damage was done after that, and same with stock. So make sure that if you have friends or family that are not clients of ours and you want to help them, that you forward this video to them. You forward our email to them, hopefully we can help them as well in the process. So thank you for watching this video. I certainly hope it reaches you healthy, wealthy and wise. And again, all you SCWPerS out there, I hope you are enjoying your second childhood, and for those of you who are not, we’re going to get you there by hook or by crook. We’re going to make it happen. That’s our job. So again, thanks for watching, and we’ll talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023 

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