Transcript

Hello, and welcome to our market alert video for today, which is August 26, 2022. And we’re going to talk about what the Federal Reserve Chairman Jerome Powell said today, and how that impacts our view of the world and what it means to your retirement, your investments, all that kind of stuff.

So, we’ll get into that. But before we do, I got to share a story with you because I think many of you who have dogs may relate to this. We have a 75-pound dog, okay, she’s a Schnauzer Poodle blend called a Schnoodle. Her name is Noodle. And one of the things about Noodle is she has a very delicate constitution, which means that you change her diet, or what she ingests a little bit, and you pay the price very quickly and a lot, if you know what I mean. So, Noodle, just got some new medication, and oh, my gosh, I actually had to buy one of those personal fans, you know, the little fans, that you and I just pointed at her, and it just blows the biological warfare weapon away. So, I told my wife, we’ve got to figure out an answer for this because this is impossible.

But anyway, let’s talk about the Federal Reserve Chairman Jerome Powell. What happened today is a reaffirmation of what we’ve been saying for several weeks now that people have not been taking the Federal Reserve, and what they’re going to do seriously. In fact, last week, we said, if you don’t fear the Fed, you’re doing it at your own peril. And so, Jerome Powell, today reaffirmed guys, we’re not joking around here. We are going to do everything to fight inflation as job number one. It’s enemy number one. And if that puts us in a recession, we accept that. That’s what he said. So what? Why would he do that? Well, you know, the, the question I would ask you is, would you prefer to get cancer or the flu? So, inflation is a cancer to the economy to our country, in fact, and you know, one of the things that I think people misunderstand about inflation is not that prices have gone up. That’s not what inflation is. Inflation is a reflection of how poor you become.

Okay. So, if you think about the Latin American countries like Argentina, when we had very low inflation, and they had very high inflation, they can’t afford to buy anything, because it’s so expensive, it’s harming their economy, it’s harming their country, we don’t have that inflation, so we can buy. So, if they want to buy our cars, they can’t afford them. But we can’t. All of a sudden, inflation comes here. And now we can’t afford cars, we can’t afford houses. So, what does that mean, we have become poorer as a nation. And if inflation takes hold and becomes a long-term deal, we just keep getting poorer and poorer and poorer, that will affect the dollar, it’ll affect the economic health of our country. And eventually, it could turn into some very serious things like what happened in Germany, in World War I and what’s happening in Latin America with Argentina and Venezuela, where their countries are basically now poor. So that’s cancer. That’s inflation.

Recessions are things that happen a lot. We’ve been through a lot of recessions, you know, and they last about six months to a year, we get over them. Yeah, there’s pain, there’s unemployment, there’s all kinds of stuff. It’s terrible granted, but we get over it. It’s like the flu, the flu is awful. Nobody wants the flu, okay, you’re miserable you fever aches and pains, you’re out of commission, you feel awful, but you get past it. So that’s why the Fed given a choice of cancer, inflation, or flu recession is choosing to attack cancer. And what they’ve said is they’re going to do whatever it takes. So, what is the recession? Well, recessions usually come with bear markets. They come with unemployment, they come with a lot of economic pain to our country, and to corporations and profits. And so therefore, as we’ve been saying, all along here for several months now, we believe the risk on the downside right now is way higher than the potential on the upside. And when that equation exists, we don’t play. So right now, as we have been telling you for several months now, our clients, we’ve counseled them to not be in any stocks or any bonds. Bonds, not any bonds, but certainly longer-term bonds. And the reason why is because as the Fed raises interest rates, bonds tend to be hurt by that, especially longer-term bonds. And then if they’re going to potentially induce a recession, then stocks are going to be hurt by that, and therefore they’re at risk as well. So, because of that, we don’t believe either one of those are appropriate.

We believe there are investments that we think are appropriate that the Fed is actually helping. And we’d love to talk to you about that. And so, what I’d encourage you to do is visit with one of our retirement planners. And we’ll go over building a plan for you taking into account inflation, you know, what’s going on, how to adapt to it, how to protect against further downsides in the market, and all of that stuff that we think is so important.

So, our website is rpoa.com. And if you go there, click on meet with an advisor and we’d love to sit down with you either virtually or in person. Now, share this video with as many people as you’d like your friends, your family, we want to help as many people as we possibly can. Okay, so thanks for watching this video and we’ll talk soon.