Transcript

Hello, it’s time for our weekly market alert video, and this is the one for August 14th, Friday, 2020; and I wanted to devote this particular video to many questions we’ve been getting regarding the elections and how that might affect our investments and what our game plan is and all of that. So, let me start off by saying that I am not a political being, and I do not want to go into politics; however, I can tell you that it is fun being me because our clients, you, are political beings in many cases and we have clients who are liberal. We have clients who are conservative and everything in between. And so, just to put things in perspective, I remember when President Obama was elected, I had many conservative clients saying that they were going to leave the country and go to Australia; and they wanted to sell everything because the economy was going to crash and the stock market was going to crash, sell everything, put it all in cash; and I had that worry. And then, you fast forward to when Trump was elected, and I had many of my liberal clients say the same thing. I’m leaving and I’m going to Australia. Sell everything. Trump is going to destroy the economy and destroy the stock market. So, the lesson of that is that the stock market has done well under Obama, under Trump, under Bush. It is not about who the president is necessarily. It’s more about what are the profit situation, what is the state of the economy and those kind of things drive the stock market far more than whether it’s a Democrat or a Republican in office and who the president is. So, that’s kind of to put things in perspective.

We’re living in a world right now that is very different than in the past from the standpoint that the rules don’t really apply that much anymore given the pandemic. And, what I mean by that is that there were times in the past such as 2008 where if you had 10 percent unemployment, the market would be down 57 percent; and that’s not the case today. You would have time in the past where if you had massive bankruptcies and you had the economy basically stalled out and GDP dropping by 32 percent, one would be in a great depression economically and the stock market might be down 90 percent like it was during the great depression; but that is not the case today. What’s the difference? The difference is that two of the most powerful bodies when it comes to the economy and the stock market and the bond markets are the Federal Reserve and the Congress. And, they actually may have more power to direct how the economy does than the president does. The president has limited power over those kinds of things. And so, what we’re looking at is that the Federal Reserve continues to say that they will do everything it takes, pump as much money, buy up the entire bond market if necessary to help stabilize interest rates and stabilize liquidity and stabilize the bond market. On the consumption side, the government hasn’t come to a deal as I record this yet; but we anticipate that they will come to their senses we hope and have a stimulus package for unemployed people. But, assuming that, then the ability of people to continue to make their mortgages, to buy food and all those kind of things will be there; and, therefore, the consumption side will in theory remain strong or at least keep the economy going.

In fact we saw this morning on Bloomberg where they said that the retail sales numbers had actually returned almost to where they were prior to the pandemic in many cases and even restaurants and those kind of things have seen an increase in business. So, it looks like the money that is going to unemployed people is keeping spending going and keeping the economy going. So, as long as we have those things, we anticipate that the effects of the election will be muted. Now, another thing that we should take into account is that the stock market is future thinking, meaning it’s looking into the future 6 to 9 months at all times. It’s kind of like the deer that looks in the weeds for that. Any movement in the weeds causes the deer to think oh my, is that a lion. And, the stock market and investors tend to be the same way. They’re always looking for what could hurt them, what could harm and react accordingly. And so, right now the polls, it’s early of course.

The election isn’t for another 3 months or so; but the poles are looking like at this time Biden is in the lead. So, how has the market reacted to that? Well, as far as we can tell, it doesn’t seem to care; and the reason is because in our view it is primarily about what the Fed is going to do and what the Congress is going to do with stimulus packages. If those are in place, then we anticipate that the market should play through the elections. Now, the other thing to think about is that we may get gridlock, and the markets historically, the stock market, has loved gridlock. So, even though Biden may be president or Trump may be reelected, if we have gridlock then not much can get done; and many times in history markets like the fact that the Congress can’t do anything and change anything because uncertainty and change tend to be something investors don’t like. Now, having said all of that, if the markets do turn badly because of the elections, then we always have our fallback of our sale strategy, our investment protect strategy that should help us to mitigate the downside losses should that occur.

So, overall right now it does not look like the elections are going to be a big player in what the markets do. Of course, we’ll keep our eye on it but most likely it’s going to be what the Fed does and whether we get a stimulus package out of Congress which we anticipate that we will. When is the question, but we think it’ll eventually happen. These things seem to go that way. So, in the meantime we hope that you are staying sane. We hope that you are staying healthy. We hope that you are letting us do the worrying for you so that you don’t have to; and we want you to have your second childhood without parental supervision even though we understand that right now the virus has you grounded and you’re not allowed to have your second childhood yet. But, we believe time will take care of this and the pandemic will pass; and hopefully we’ll be able to go out and enjoy our lives again. So, thank you for watching this video. We so appreciate that you allow us the privilege of being your retirement planner, and we hope that, again, you are sane and that you are healthy; and we will talk soon.

MMWKM Advisors, LLC (d/b/a Retirement Planners of America ) (“Retirement Planners of America”) is an SEC registered investment adviser with a primary business location in Plano, Texas. Past performance may not be indicative of future results. All investment strategies have the potential for profit or loss. References to the “invest and protect strategy” (the “Strategy”) and recommendations made under the Strategy from 2007 through 2009 refer to strategies collectively employed and recommendations collectively made by Retirement Planners of America’s principals while employed at Eagle Strategies, LLC., and also at Cambridge Investment Research Advisors, Inc. Four of the five principals remain as principals today, including the Retirement Planners of America’s founder, Ken Moraif, and Chief Investment Officer, Eli Dragon. Retirement Planners of America has been employing the Strategy since its inception in 2011. Therefore, any references to Retirement Planners of America’s performance or its investment advisory recommendations predating 2011 generally refer to recommendations made by Retirement Planners of America’s principals at the respective other firms described above. Like all investment strategies, the Strategy is not guaranteed. It is possible that it can incorrectly predict a bear market (generally accepted as a 20% drop in a market index), which has, in-fact, happened before at Retirement Planners of America and affected its clients accordingly. When the sell / “protect” portion of the Strategy is implemented, affected investors will incur transaction costs and taxable accounts will incur tax consequences. However, when implementing that portion of the Strategy, Retirement Planners of America generally believes that the benefit of avoiding bear markets outweighs the burden of these transaction costs and tax consequences.