Transcript

Hello, this is our weekly market alert video for the week ended March 26, 2021, and this week we want to address all the angst, the anxiety, the handwringing, the teeth gnashing of all the people that are so worried about, “Oh my gosh, the economy is going to start growing again,” and, “Oh no, we could have inflation,” and, “Oh no, we could have higher interest rates.” Well, guys, this is what happens when you have a growing economy. Inflation is going to heat up and what happens is the feds going to raise interest rates to combat that, and if you look at previous bull runs, previous growth periods in the economy and stock markets, most of the time inflations rising and interest rates are rising at the same time to combat it. This is not new. But yet everybody seems to be so excited about it right now and so worried and so concerned. Our view is that, yes, it is something to be concerned about if we continue to borrow at the rates that we are at, if we continue to stimulate the economy as much as we are, and if that continues, it could overheat and it could bring with it problems. However, when will that happen is the question.

We’re not arguing with the if, we do believe that there’s going to be in the future a big market correction if we keep borrowing like this. We do believe the fed will raise interest rates that could cause some anxiety and volatility in the stock market and the bond markets. All of that we believe. It’s not an if, it’s a when in our view. So, when. In the short run, we have $1.9 Trillion that the checks are about to go out, and there’s a lot of studies that have looked at how much of that is actually going to be put into the stock market, and some estimates are $30 Billion will go into the stock market of that $1.9 Trillion. So, that could drive prices up. But more importantly, people will have money that received those checks, and they’ll be able to spend that, which keeps the economy going. If anything, it helps it to grow. The vaccines and herd immunity are seeming to start now to create a situation where people are going to be going back to normal spending and that kind of thing.

The middle class to a great degree has not been harmed by the pandemic. The people that have been harmed mostly by the pandemic are people that work in industries where social distancing is an issue. So, in the middle class we have the highest savings rate in the history of our country. We have a lot of pent-up demand. People can’t wait to go back out and start spending money. We saw what happened in Florida over spring break. Boy howdy. And, so those people, along with everybody else who has the stimulus, is going to start spending in our view, and what drives the stock market over time is profits. If companies are showing profits, then people invest in them, drives the price up, those companies become more valuable. So, in the short run, with $1.9 Trillion, vaccines, pent-up demand, savings rates, all of that, we think the markets are going to drive higher from here. However, it’s going to be a sugar rush in our view because that spending can’t continue at that rate forever.

Eventually, those savings will be spent down, the stimulus money will be gone, and we’ll get back to hopefully a more normal spending rate, and when that happens, we’ll come from an up here profit level to a down here profit level, and we could see a pretty good-sized correction from that. But we don’t see that happening at least through the end of this year. So, what does that mean? It means there’s still a lot of risk. We still need to be always careful. We always have to be concerned about the downside. Growth is important, but protection of principle is even more important, you know we feel that way. And so, having our invest and protect strategy in place to help us with that regard is always there, and we will always act on your behalf should we need to. But right now, we don’t think we will. We think we’re going to see new highs because of all the reasons that I mentioned.

So, thank you for watching this video. I hope you will let us do the worrying about all this stuff for you so that you don’t have to, and you go out and enjoy your second childhood without parental supervision. And hopefully if you’ve been vaccinated or you’ve had COVID and you had the antibodies and all that, you are feeling more free to go outside and start doing stuff and enjoy life. So, again thank you for watching 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.