Hello, and welcome to our market alert video for today, which is July 15, 2022. And we got some terrible, terrible economic news this last week, which is, of course, as you I’m sure know, inflation has hit 9.1%. It’s terrible and very concerning because the high cost of everything is going to affect the consumer negatively consumers represent 70% of our economy’s consumption. And if they are shutting down or spending less on non-essential stuff, because their cost of food and rent and utilities and all those kinds of things are so high, that they don’t have discretionary money to spend on these other things, then those companies could see their profits fall. And as you guys know, we believe that stock prices are a reflection of profits. And if those profits fall, then those stock prices will likely go right with them. So, this is not a good picture, it actually strengthens our Fearless Forecast that the Dow will go to 25,000 before this is over, which we still believe is highly probable. And that would be a 20% drop from here. So not a small amount from here.
The other thing that’s also happening is that the Fed is raising interest rates, or they’re going to probably raise interest rates, three fourths of a percent this month. And what that does is it causes the cost of money to go up. And when the cost of money goes up, companies who borrow money to buy inventory, hire people build plants do all that kind of stuff, they find the cost of money more expensive, they do less of all that stuff. And therefore, we see them grow less rapidly. It can be a vicious circle that feeds on itself with the consumer, and then the companies and all those kinds of things. And we could see if stagflation hit us and as you know, from previous videos, we view stagflation as a cancer for the economy where recession is like the flu. So, if stagflation is like cancer, hopefully, we’ll just have a recession out of this. But be that as it may, we believe the picture is ugly as we head into earnings season.
And several companies have already preannounced the news is so bad, they wanted to get it out right away, and essentially rip the band aid off. But we think the earning season is going to be ugly. And so once again, it feeds into what we think, which is, we can still see a big drop from here.
So, if you’re over 50, if you are retired or retiring soon, our view is and as you know, we have our Invest and Protect strategy. And we’ve actually been out of all stocks and out of all bonds for quite a while now. And we believe that that’s still the place as we think cash is king right now. And with the Fed raising interest rates, cash should be paying a higher interest rate soon. And so that also helps us. You know, there’s an old expression that says don’t fight the Fed. And usually, it’s meant in a good way, which is the Fed is trying to improve things. And so don’t you know, don’t go against them don’t think it’s going to get worse when they’re trying to make it better, because they always win. Well, guess what? The opposite is true right now. They’re intentionally trying to make things worse to get inflation down. And so, if you stay invested, you’re fighting the Fed in our view.
And so, we think cash we believe is king and encourage you to visit with one of our retirement planners and discuss your retirement plans. If you’re over 50, we believe this is a time to really look at protecting what you’ve got. So, if you want to share this video with your friends and family and business associates, we encourage you to. We’d like to try to help as many people as we possibly can. So please visit with one of our retirement planners and hopefully we can help you as well. Thank you for watching this video and we’ll talk soon.