Transcript

Hello, I’m Ken Moraif, Senior Retirement Planner and Founder of Retirement Planners of America, and this is our weekly market alert video for the week ended February 7. And it started off with a real bang — finished with kind of a whimper — but overall, last week was a good week. The S&P being up, and of course, the big news that happened last week, (there were several actually), the acquittal of President Trump, which I think came as a surprise to no one, but also the jobs numbers that came were very strong. The unemployment rate now is down to almost 50-year lows. The number that we look at more than any other though is the labor participation rate, and that is the percentage of people of working age that are working. Because if those people don’t want to work, then they’re not unemployed. So, as people come into the workplace that before didn’t want a job, that actually can increase the unemployment rate. But if you look at the job participation rate, you’re looking at the true number in our view, and that number is at a near 7-year high. 2013 was the last time it was where it is today, which is at about 63%. So, it’s edging upwards, and we believe that to be a good thing for the economy. As people have jobs, they have income, and as they do that, in theory, they spend. When they spend, profits come from that, and stock prices are normally a reflection of profits that companies make. So, it’s a virtuous circle, and we think that bodes well for the markets.

The other thing, of course, that happened this week was the acquittal of the President. And as we said, it was a non-event. I think no one was surprised by that, and therefore, neither were the markets. So, it was a non-issue there. I think the surprise on the other side would have been dramatic, but that wasn’t going to happen. I don’t think anybody thought that.

In addition, of course, we have the coronavirus. And as we’ve been discussing over the last several weeks now, we don’t believe the coronavirus is going to escalate into a pandemic, although in the short run it is going to affect negatively the profits of companies that source from China or that depend on China for their economies. So, right now, China is essentially being quarantined by the whole world, and they’re not happy about it. If you’ve seen their press releases, they’re actually angry at everybody for quarantining them, but I believe it’s the right thing to do at this point without knowing how bad this can get.

Now, as we’ve said, if this does become a full-fledged pandemic, meaning that we have millions of people that are being killed by this virus, obviously that would create all kinds of terrible things in the economies around the world and would precipitate recessions and bear markets. We don’t see that however, and so therefore, we’re not having that dooms day scenario. And so, we still think that our fearless forecast of Dow 31,000 is in the works. Obviously, along the way there’s going to be bumps and new things that come along. They’re going to scare the markets and cause ups and downs, but overall the trend we think is towards that 31,000 number on the Dow.

Now, the big thing, of course, on the horizon — the risk on the horizon is, of course, the elections, and we’re going to save that discussion for the future. We have definite thoughts on that, but for the time being, we’re going to let that one — we’ll tease you with that. We’ll have our view on that as we head into full-fledged election season. So, for now, as you know, uncertain as it may seem, the markets are at all-time highs — the Dow and the S&P. And we think we’re going to see more all-time highs on the way to that 31,000, and we’re optimistic.

Now, our firm, we specialize in retirement planning, and so what we look at for clients in view of this optimistic forecast is what percentage of your money should you have in equities. And that percentage is basically determined in our view by the amount of risk that is appropriate for you, and that number is different for everybody. So, there’s no casting stone. Everybody needs to take this amount of risk with their investments and should have this amount of their money in the stock market or the bond market, etc. So, despite the fact that we have a positive outlook, we are not encouraging you to go and put 100% of your money in the stock market and ride the wave to 31,000. We’re not saying that. But it is a time to be thinking if you’re not invested to be so in the markets, but only at the level that is appropriate for you. And we have a core value, an investment core value, that says that we only want to take as much risk as is appropriate to achieve your financial goals. So, if we can achieve your goals with very low risk, then we want to do that. There’s no reason for us to go for high returns and take the risk associated with that if you’ve already won the game.

So, our website is RPOA.com, and we have a lot of other videos with regard to the SECURE Act — for example, Social Security — that you could watch, and I encourage you to do so. And even better, visit with one of our retirement planners if you are so inclined.

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