Transcript

Hello, I’m Ken Moraif. I’m founder and CEO of Retirement Planners of America and this is our weekly market alert video. And this one is for October 28, 2022. And we’ve got a lot to talk about. I’m titling this video, “Would you prefer when you’re driving down the highway to be looking out the front windshield, or watching the rearview mirror as you’re driving down at 60 miles an hour?” I think the answer is I’d rather be looking forward through the windshield than looking at the rearview mirror, because if you’re looking at what’s going on behind you, while you’re driving down the highway, it’s very possible that you could crash into something. And I’m going to explain why I’m asking that question here just a moment.

Before I do, I want to share with you that last Saturday was my birthday. For my birthday, my wife took me to my daughter’s best friend’s wedding. So, there’s my birthday present. As it turned out, they had a live band, they had awesome food, everybody wore a tuxedo. We knew everybody there because we’ve known the bride since she was 12. So, actually what happened was I got a big birthday bash, and I didn’t have to pay for it. It was great. So, it appealed to the cheap guy in me.

So why do we title this video “The windshield versus the rearview mirror?” Well, because this week, we got GDP numbers, which tell us “Is the economy growing? Or has it grown?” And the GDP numbers were solid, the economy continues to grow. Well, is that a rearview mirror? Or is that a forward looking? In our view, in our opinion, it is looking in the rearview mirror because the GDP report is what the economy has already done. It’s not telling us anything about where the economy is going. So, rather than the rearview mirror, let’s look through the windshield and let’s look forward, let’s look at Amazon. Amazon just said that they are going to have the worst Christmas shopping season ever. Not in a few years, EVER. Okay. And they’re the biggest retailer in the United States. That’s not a very good sign looking forward. Intel is laying off 1000s of people.

A good friend of mine is a big wheeler dealer in the real estate market, does big deals. And he said that he is rescinding all the offers that he’s made on any of the properties that he wants to buy, because he thinks that three to six months from now, he’s going to be able to go back to those very same deals and do them for 20% less than he could do them now. Wow. So, the real estate market is going bad. I said, “Why is that happening?” He says, “Well, because banks right now are really pulling in their horns, they really don’t want to lend money to anybody. They don’t know where interest rates are going to go. And if banks lend at this rate, but interest rates go to that they’re losing money. So, they want to be sure that they’re setting the right price for when they lend money.” Also, if we’re heading into a big bad recession, they don’t want to lend money to people because these people may not pay it back. So, until they have more clarity, banks are starting to dry up the money. Real estate is 25% of our economy. So, as you look through this forward windshield, rather than the mirror of the GDP of what happened before, what does this tell you? It doesn’t look good.

Our biggest trading partner is Europe, what’s happening over there? They’re headed into a terrible recession. So, if our biggest trading partner’s going to have problems then what happens to our companies in United States that trade with them? They’re going to experience some loss of profits. So, we’re not as optimistic about the future of where the stock market, the S&P, and the Dow go as what we’ve seen here in the last couple of weeks.

And remember, back in July, we saw a massive 15% rise in the market because of, we’re not in a recession, the Fed’s not going to raise interest rates, the economy’s good, the labor market is good, and jobs are plentiful. It’s all good. No problem. Don’t worry about it. And then the Fed came out and said, no, we are going to raise interest rates, we are going to probably have a recession, there probably will be pain. Read my lips.

And so, we think the Fed is going to do that again here in a couple of weeks. And so that being the case, we’re not as optimistic as this market seems to feel that it is, and we think the markets looking in the rearview mirror.

So, my question to you would be if you are over 50, if you are retired, retiring soon, then can you afford to lose more money than you’ve already lost? And is this perhaps an opportunity for you to take shelter from the storm? As you may know, we told our clients to sell all their stocks and all their bonds back in April. And so, we’ve been in cash since then. It’s cash/money market fund. And what does that mean? Well, as the Fed raises interest rates, guess what happens to the interest rate that the money market fund pays? It goes up to. So, we’re getting paid to wait out the storm. To me, that’s a good place to be.

You know, a lot of times I’m interviewed on television, and they all want me to talk about sectors, which sector do you like? Which stocks do you like? Well, guess what I think cash is a sector. It’s a kind of investment. And right now, I think cash is king. And that’s what we’ve done with our over 6,000 families that we work with across the country.

So go to our website, it’s RPOA.com. There you can visit with one of our Retirement Planners, one of our advisors at no charge or obligation if you’re over 50, we want to help you to retire when you want to or stay retired if you’re already retired. As you know, we think of your retirement as your second childhood without parental supervision. We want you to play and have fun and not worry about all this boring financial stuff. So, thank you for watching this video and share it with as many friends as you’d like. We’d love to help as many people as we can. Okay, so thank you for watching this video and we will talk soon.