Hello, and thank you for watching this our market alert video for today, which is Monday, May 9, 2022. You may have noticed that the S&P 500 index had another dismal day. One of the important things that happened today is that the S&P closed under 4000. That’s an important point because 4000 has been what many investors call a resistance level, meaning that the market and we saw throughout the year so far is that when the S&P, the market went down, it bounced back from that 4000 level. In fact, Bank of America even said that if it crosses under that 4000, that we could see it go to the next resistance level, which is 3000. So, if it goes from 4000 to 3000, that would be a 25% dropped from here.
Now Bank of America is one of the more pessimistic forecasters, but you’ve also seen Goldman Sachs and JP Morgan and others come out and saying that we haven’t seen the worst yet. This is only the beginning. Here’s another thing to consider, and that is there’s an old expression that says, “Don’t fight the Fed”. What the Fed is doing right now is they are at war with inflation, they want to tame inflation. What is inflation? Inflation is when you have high demand, and low supply of products and services. So, if you want inflation to go down, you must reduce the supply, or rather the demand or increase the supply, well, we can’t increase the supply of services and goods in our country, we have supply chain issues on that side. There’s only so much that you can do to an economy our size. So, the Fed most likely and it appears, wants to reduce demand. If they reduce demand, they do that by raising interest rates. If they do that, and demand goes down, and you’re a company that’s selling products and services, and you have the demand go down for what you’re selling, then you could see your profits go down too. So, the Fed is basically pushing down that side of it.
The other side of the equation is bonds. Well, if you’re a student of investing, you know that as interest rates go up, generally speaking, bonds tend to go down. So, normally bonds are a safe haven against the stock market craziness, right now with the Fed raising interest rates, they’re hurting stocks, and they’re hurting bonds at the same time. So, finding a safe place to go right now, you know, is difficult, and perhaps cash is king. So right now, we have a situation where if you’re within five years of your retirement, or you’re already retired, I would ask you, you know, what’s your plan? What are you going to do to protect your retirement? Now our belief system is that you don’t plan for the best and hope the worst doesn’t happen. Our belief system is as you plan for the worst and hope the best happens. So, if you’re a buy and hold or right now, you probably are falling in the camp of planning for the best and hoping that the worst doesn’t happen. We don’t think that’s the most prudent strategy.
So, what I would encourage you to do is to help us to help you. How would you do that? Our website is RPOA.com. If you go there, you can click on meet with an advisor, we can sit down with you look at your risk profile, explain to you our invest & protect strategy. This is the strategy that told us to tell our clients to get out of all equities in November of 2007 before the great stock market turmoil we saw in 2008. It also told us to sell literally the day before the pandemic was announced. So, our strategy is designed to mitigate or minimize the amount of downside risk. As you know, our philosophy is that growth is important, but protection of principal is even more important. If you’re within five years of retirement or you’re already retired, I think you understand what we’re talking about. So, I encourage you to go to our website and meet with one of our advisors. We will do it in no charge or obligation. We want to help as many people as we possibly can to have a successful retirement and we can’t do it if you don’t let us help you. So thank you for watching this