Transcript

Hello, I’m Ken Moraif, founder and Senior Retirement Planner at Retirement Planners of America, and this is our weekly market alert video update, and this is for the week ending January 17.

So, another strong week for the equity markets. The S&P and the Dow look like they’re still in a good mood even after the new year has started, a follow on from last year. And as we have described in our last week’s video – when we talked about our fearless forecast for this year – we still think that we’re going to see the Dow at 31,000 this year. And the way that it’s running right now, I’m concerned that we might see it by the end of next week, and then what? But be that as it may, our fearless forecast is that this year we will see the Dow at 31,000. And, of course, we’re basing that on one statistic, which, we tend to look at history, and we look at odds of things happening, and in an election year when January’s up, as goes January, so goes the year 82% of the time according to MarketWatch. So, January so far looks to be an up month, and therefore, the likelihood is, if history holds, 82% that this will be an up year.

Now, other data that came out this week, according to the Commerce Department, retail sales were very good for the last week of Christmas. Apparently, there was a surge at the end of the year in buying from retailers. Consumer confidence is at the highest level it has been in 20 years, according to the Michigan Consumer Confidence survey. And as you guys know, 70% of our economy is consumer spending, so if consumers are engaged, that’s a good sign for stock prices since they’re usually a reflection of profits. And if consumers are spending, we should have profits.

Also, the survey of home builders is also the strongest confidence since 1999, so 20 years there as well. And the thing that’s really good about home building is that it brings with it a variety of other tangential businesses that come into play. So, it’s not just the home builders, it’s also the appliance manufacturers, the carpet layers, the painters, the architects, all the service people that go into building a home and servicing it afterwards, banks and the lending that they do. So, it is so many things involved in a house getting built, and the fact that the home builders are positive in that regard bodes well for the strength of our economy, and therefore, for our confidence in Dow 31,000.

Now, we also just had the signing of the Phase 1 of the China deal. Now, we’ll see where that leads us. President Trump said that no tariffs are coming off of China until after the elections. Apparently, he wants to take that off the table in the negotiations that they are having. So, we’ll see how that plays out, but we still believe that there will be a big China deal with the tariffs being removed around election time just in time for President Trump to claim victory and ask you to vote for him, to re-elect him. So, we think that’s a likely scenario, and it should help the market drive upward when that happens. And so, we’re still looking at Dow 31,000.

Now, having said all of that, the run we’ve had over the last 3 months has been extraordinary, and if you annualize the run we’ve had, the S&P would rise at 48%. Now, we don’t think that that’s a likelihood, so either we see the equity market slowing down, and then we have what’s called a sideways correction, meaning that we don’t make any money for several months as the market catches up, or an actual full-fledge correction which would be a drop, and a correction is a drop of 10% or more. So, we view that as a likelihood here, but not a reason to panic, not a reason to sell. We don’t believe that that’s the case because of what I mentioned with regard to the strength of the economy and the consumer, etc. So, expect a correction here soon. We view it as a buying opportunity. Dow 31,000.

Now, as our name implies, Retirement Planners of America, we specialize in working with people who are retired or retiring soon. So, if that’s you, we’d love to visit with you and see if we can help you build your retirement plan. And you can do that by clicking on Meet with an Advisor on our web site, RPOA.com. And we’d love to sit down, see if we can help you. And if we can, great, and if not, that’s fine too. No charge or obligation either way.

So, thank you for watching this video, and we will talk soon.