I’ve been banging the drum about the stimulus package for months now. Why do I believe it’s so important to the market and our economy?
Many Americans do not have large amounts of savings. In fact, The American Payroll Association’s 2020 “Getting Paid in America” survey found almost 69 percent of working Americans would be in trouble if their paychecks were delayed for a week. In other words, there are a lot of people living paycheck to paycheck. If those people don’t have the money to purchase goods and services because they’ve lost their jobs, that could have a detrimental effect on companies’ profits and stock prices.
In my view, the longer Americans go without a stimulus package, the more it will hurt. Without it, I believe fewer people will be able to make their rent or mortgage payments and more small businesses will go under. And those people and business owners vote. When the mid-term elections come along, they’ll remember who didn’t pass the badly needed stimulus package (or delayed it for political purposes). And that is why I’m going to go out on a limb and say I think we’ll see a deal this year. I think a package is coming.
In the meantime, we have other good news. The market jumped when Pfizer announced it has formulated what appears to be an effective vaccine against COVID-19. If the vaccine news continues to be good and we get a stimulus package, I think we could see record highs in the market.
So we’re bullish right now. We’re fully invested here at RPOA. We don’t see any reason to get out of the market at the moment, but that doesn’t mean we’re not keeping an eye on the situation. The market can change its mind in the blink of an eye, which is why we stand behind our defensive investment strategy. Our Invest and Protect™ strategy is designed to help grow your savings when market conditions are favorable, but also protect them from the threat of a bear market. We believe our number one job is protecting our clients’ retirement savings. If you’d like to learn more about our philosophy of financial planning for retirement, we’d love to talk to you.
Ken Moraif, CFP®, MBA
Senior Advisor at Retirement Planners of America