Hello, and welcome to our market alert video for today, which is June 10, 2022. And we’re entitling this one, “Prepare yourself, the market could lose another 20%.” And why do we say that? Well, because we think that the Dow will see 25,000, which is about a 20% drop from where we sit today.
Now, why do we say that? Well, one of the things that has happened really, since 2008, is that governments, including our own, and central banks, including our own, around the world, have been infusing in trillions of dollars into the global economy. And that’s why we’re calling this the global infusion bubble. And that bubble has inflated the stock markets around the world, and we’ve seen this massive rise over the years. What really exacerbated it was the massive amount of infusions that we’ve seen, since the pandemic. In our country, $9 trillion was injected into the economy, just unbelievable amounts of money. And when you put that much money into the system, those dollars are chasing after a limited supply of products and services. And when you do that, that’s called inflation. And that’s where we sit today. It’s finally come home to roost. And this government infusion bubble in our view, is popping if it hasn’t already.
So, to get us back to where we were before the pandemic and the $9 trillion, that they put in, that created all this inflation, the Federal Reserve essentially has to suck out that money from the system. And the way they do it is by raising interest rates, which causes money to become more expensive. Inflation causes people to have to spend more to get the same dollar, the same amount of goods and services. And that is their way of taking that money out of the system.
To get us back to where we were pre pandemic, the Dow would be at 25,000. And that’s why we think that that’s a likelihood right now. So, the question that I would encourage you to ask yourself is what are you doing to protect yourself from what could come? And let me give you some additional data to, we think validate why we see the Dow going down so much more before this is over.
Consumer debt is rising at a record level. The consumer in our country, unfortunately, has gotten used to the stimulus checks that they were getting, that enabled them to enjoy a certain lifestyle. Well, they don’t want to give that up. But the stimulus checks have run out, and the money that they got is dwindling away. And they want to keep that lifestyle going. So, consumer debt is the answer. They’re borrowing money. But if you think about it, they’re borrowing money at an ever-increasing interest rate. So not only is that putting a squeeze on them from the debt they’re taking on, but that debt is becoming more expensive as we speak. In addition, new home purchases, applications are down 40%. That’s the biggest year on year drop in applications ever, oh I’m sorry, since 2006. And guess what happened after 2006, we had the 2008 credit crisis, because the real estate market collapsed.
Now we don’t see the real estate market collapsing like that again, but it is definitely a massive, massive slowdown there. And all the jobs and all the businesses that are tangential to that: carpets, air conditioning units, you name it, all those people, all those jobs are going to be impacted by that negatively. The other thing, of course, as you probably read in the news is that diesel is becoming scarce. Price of diesel is going way up. And that’s what almost all the trucks use. 70% of everything that goes to into the stores is delivered by trucks. And if their truck if the truck drivers and the truck companies see increased cost, they’re going to pass that on. And that’s going to cause the price of just about everything that you buy that we buy, to go up as well.
We have the war in Ukraine. And we have Ukraine is the breadbasket of that of that side of the world. 40% of that side of the world’s grain and wheat is produced in Ukraine, it’s not being produced now. In fact, the Russians are stealing it. So, what’s happening there is we could see global famine, we could see millions of people living in starvation, that causes political unrest. And if we have political unrest, that could be destabilized. And again, that’s those are our customers.
Also, we’re selling them our stuff, if they’re in the middle of all of that they’re not buying our iPhones or any of our other products either. So that creates a big issue there. I could go on. I don’t want to get too pessimistic here.
The important thing though, is that in our firm, we believe that growth is important, but protection of principle is even more important. That is an investment principle of ours. And what we do is we manage our clients’ money around our core investment principles, that being one of the most important and our Invest and Protect Strategy is a strategy that told us to sell in November of 2007, before the credit crisis crash. It told us to sell in March of 2010, 2020 rather, which was literally the day before the pandemic was announced.
And so right now we are looking at protection mode. And I would encourage you to visit with one of our retirement planners if you haven’t, if you don’t have a plan to protect yourself, then you’re going to be subject to the vagaries of this market. And we don’t think it looks very good. So, I’m sorry to be such doom and gloom. But I’m of no value to you. If I don’t tell you what I think if I don’t tell you like it is, you know, as Jack Webb said back in the Dragnet show if you’re old enough to remember that you’re old. Only the facts, ma’am. And that’s what I’m giving you is the facts as we see them.
So, this government infusion bubble we believe is a great deal of threat and to take action to protect yourself from that we think is extremely important. Go to our website, rpoa.com, visit with one of our retirement planners, and we’ll walk through with you what we think you should do given your circumstances and how we do business. I think you’ll find it to be a good fit. In the meantime, I wish you well. I wish you peace of mind I wish that your money will last as long as you do. And we will talk soon.