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Hello and welcome to our weekly Market Alert video for the week ending January 14, 2022. Half the month is over already—gosh, it felt like New Year’s Eve was a day ago. One of the things that we said that would happen this month was a lot of volatility. Sure enough, that’s what we’re seeing. We’re going to call this “indigestion.” We think that investors are having a hard time getting their arms around the Federal Reserve and what they’re doing. This is whether the Feds are going to cause issues and if it’s a good idea if they are overstepping, or understaffing. This digestion of what the Fed is doing now is slowly taking its place and taking effect. Based on the news that’s coming out, we see the markets, the S&P, and the Dow going up and down. This week for example Monday and Tuesday were big up days, Wednesday was a flat day, and then Thursday and Friday were down days.

As you guys may know, we always look at corporate profits to help us diagnose which way we think the markets will go—and we’re going into ‘profit season’ right now. We’re going to have a lot of companies report their earnings for the last quarter very soon, and we believe that it should generally be a good picture from that standpoint. One of the concerns on Friday is that retail sales in December missed the mark. A big reason for that was because the consumer was concerned about the supply chain issues and had already started their shopping in October. There was a lot of shopping for the Christmas season being done in October and November so when December came around, there was very little. People were anticipating shortages by buying in advance, but according to the Department of Commerce it was the best shopping season ever. Consumers spent money—$200+ billion dollars.

So, what’s the big picture? Our fearless forecast of Dow 40,000? 40,000 is a big number, but it’s still on the table and we think we’re going to get there. However, this is going to be a very bumpy ride along the way. Why should we be able to get there? As previously mentioned, the Omicron variant seems to be milder and should start to fade. Also, we think that profits should be good, and the supply chain issues should abate. We think that most of the inflation we see is generated by the pandemic and supply chain issues. As these things resolve themselves, we think inflation will come down. That will also help profits for companies. The picture is muddled and hard to digest. Overall, we think we’re moving in the right direction, and we should see new highs later this year. However, as you know, what we think could be quite different from that of the market, and so we always have to prepare for the worst.

This is why we have our Invest and Protect Strategy™ in place to help protect and mitigate the downside should a bad bear market happen. What could cause a bear market right now are three things that have potential: China invading Taiwan, Russia invading Ukraine, or maybe both of those happen at the same time and we go to war. Also, there is potential for stagflation to occur. Stagflation is when you have inflation at the same time as a slowing economy. With the Federal Reserve raising interest rates at a time when the economy starts to slow down stagflation is certainly a possibility this year— and that could cause a bear market. These are things we give a low probability to but could happen. This is all the more reasons why having a strategy to address bad times is a good idea. As a client of ours, we think we have that plan for you so that you have peace of mind. We hope that all is well with you, and that you’re enjoying your second childhood without parental supervision. Thank you for watching this video, take care, and we’ll 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.