Hello, and welcome to our market alert video for today, which is November 18, 2022. And in keeping with the theme of modeling our swag, this is our vest with our logo on it. And, again, the question you may ask is, “How do I get that Ken?” Well, I’ll just say that becoming a client is maybe a way that that might help in that regard. But I’m glad you’re watching this video. I want to give you a quick update. I know we want to dive into the week and the market what’s happened. And I know that’s all very important, but I have got to give you an update on what’s going on with my grandson, who came to visit last week. The first thing that happened was that, you know, the guy crawls all over the place, right? He’s like, he’s like, out of control. And he’s like, getting into everything. And my wife is like, “Okay, we have to babyproof the house.” And I’m like, “No, we are not baby proofing the house. This is my house, my rules. If he wants to be in my house, he has to abide by my rules. So, we’re not babyproofing the house.” And she goes, “Well, look at him. He’s getting into the cabinet over there under the kitchen sink where all the chemicals are going to stop him.” And I’m like, “No, I’m not going to, he needs to drink some Drano and learn that you don’t get into the chemicals. It’s the only way he’ll learn. Okay, that’s what you got to do. You learn by doing.” So, needless to say, the house is going to get baby proofed, we’re going to put all those electric plugs everywhere, we’re going to have the locks that you put on the cabinets, I’m not going to be able to use anything in my house without having to figure it out. I’m not smart enough to use that baby proofed stuff.
Anyway, let’s talk about the week that was, and as you know, this week, we had an up and down kind of nowhere week. And that’s after last week, the week before this one, where we had a massive rally in the market. And so, what are we looking at and what’s going on? Well, there are several things that we believe tell us that we’re not out of the woods yet. The first one is, is that real estate now has set a record for the number of months in a row that we’ve seen a decline in real estate activity. And the thing about real estate is it represents about 25% of our economy. If you think of all the tangential businesses that are connected to the real estate market, there’s carpets, and appliances, and roofs and paint and all those other things, and all the people that work doing that, that is declining, and we think will continue to decline. The other thing also is we got the forward economic indicators. And they for the eighth month in a row have shown that the future is declining economic activity. So those two things tell us we may not be out of the woods yet.
The other thing also in our view is that the Fed has raised interest rates dramatically over the last few months. And yet the economy has not really slowed down yet. So, we haven’t seen the effects of this massive rising of interest rates. And the Fed many of the voting members this week came out and said the job isn’t done, we are going to raise interest rates some more. And now they’re raising what they call the terminal rate. That is the highest rate that they’ll get to. Now they’re talking about over 5% when before it was around four, so it keeps getting raised. And so far, what we’ve seen over the last almost a year is that when the Fed raises interest rates, we’ve seen bond prices fall, and we’ve seen the stock market go down. And we expect that that dynamic will continue. And so, if they’re going to continue raising interest rates, in our view, that doesn’t bode well for stocks, it doesn’t bode well for bonds. But guess what it bodes well for, in our view, cash, money market fund. And that’s where we’ve been since April of this year for our clients out of stocks out of bonds as well, our Invest & Protect Strategy told us it was time to be out. And as the Fed raises interest rates, we get a higher interest rate on our money market fund. So, the Fed is our best friend. They’re paying us to be safe. They’re paying us to sit out the storm. And that’s what we’re going to do.
So, for the time being we’re still out of the markets. And we encourage you to get a second opinion if you are still in this market. And if you still are in the 60/40 or you’ve got bonds or stocks, we think that there’s significant downside Still ahead, and it isn’t over yet. And so, we encourage you to visit with one of our retirement planners, our website is RPOA.com. Retirementplannersofamerica.com. And if you go if you visit with us, we’ll build a retirement cash flow plan for you. We’ll look at social security decisions. We’ll look at where you get your money when you’re retired. We’ll help you to calculate if you have enough money to retire. We’ll do all of that for you. If you’re over 50, no charge, no obligation and will part friends regardless of what happens. So, we wish you well, we think there’s still a lot of danger out there. We want to protect as many people as we can. So come in and visit us and help us to help you as the movie once said. So again, thank you for watching this video, share it with as many friends and business associates as you wish, and we’ll look forward to meeting you one day. So, thanks again and we’ll talk soon.
Please note: Transcript has been modified after the time of recording.