Transcript

Hello, this is our weekly market alert video for the week ending September 18, 2020, and we hope this video finds you sane, and it finds you healthy, and that all is well with you and yours, and thank you for watching it. Another important week this week. The Federal Reserve said that they are now planning on not touching interest rates, most likely, until 2023, so before, it was 2022, so they’re extending that out. In our view, it may even be longer than that, because the other thing that you may recall we reported to you is that they said that they are not going to touch interest rates until they feel that there’s an average of 2 percent inflation in the future. Before, it had to be cast in stone. Now, it’s an average, which means it could be four, it could be two, it could be one. As long as it’s an average in their view, then all is well, which means they have leeway to leave interest rates untouched for even longer than we might expect. From that standpoint, it’s a good thing from the stability and the ability for companies and people to plan on what interest rates are going to be and what the cost of money is going to be. That creates stability, that creates a confidence about the future in that regard, and that is always helpful for investors. Now, the other side of this is what should we worry about.

Now, a lot of you have asked us about the elections and what do we think about that, so let’s talk about the possibility of Joe Biden being president first. So, if Joe Biden gets elected, right now, the stimulus package that we’re talking about, or that Congress is talking about, the Democrat package is approximately $3 trillion. President Trump said $1.25 trillion. So, they’re not arguing about whether there’s going to be a package, it’s more the size of the dollars of the package. So, if Joe Biden is elected and has a majority in the House, then the likelihood is that he’s going to want to pass a $3 trillion package. So, let me ask you, what do you think the stock market would do if there was a $3 trillion package announced. In our view, the market will like that. Investors will say, “Oh, great. More stimulus, more money, let’s go.” So, we think that that is actually going to cause the market to go up, at least in the short run. Now, if President Trump is elected, then we already know what that means, so in our view, that would be a whole-hum event. It would not be a big sell-off, a big buy opportunity. We’d just go on as usual. So, for that reason, the elections are not what we’re really concerned about. As we reported to you, the stock market, the SMP 500 Index is up here, the Dow, they’re setting new highs.

Of course, this last week, we’ve had some selling, but in general, it’s up here, and the economy is down here. So, why is that huge disconnect? Well, the reason, in our view, is that 70 percent of our economy is made up by consumer spending, and even though we have tens of millions of people who are unemployed, those people have been getting, up until July 31, money from the government to continue their spending, and because of that, the economy has not collapsed as of yet. However, that all stopped July 31, and now we’re headed into where people, I think, have been living on what little savings they had, and so that could come to an end unless there’s another package. So, the real thing that we concern ourselves at this point is whether the Democrats and the Republicans will come together on a package, and right now, it’s not a matter of will we have a package, it’s a matter of the size of it, it seems, and the timing of it. We believe that by the end of this month, there should be a package. So, we’ll have to wait and see on that, but we believe that’s the risk. Now, once a packaged is announced, we think that there’ll be renewed confidence in consumer spending, the health of the economy, and we believe, therefore, that investors will start investing again and drive stock prices up. So, because of that, we remain bullish but, of course, we’re dependent on the politicians right now for that, so that’s always a risk.

The other thing that’s coming up, of course, is the fiscal cliff, which means they’re going to talk about raising the debt ceiling, and of course, we’re going to have a package, we’re going to need to do that. So, stay tuned for lots of drama. Now, there’s another thing, and this is going to make this video a little longer than normal, but I want to share with you this. Have you gotten this yet? If you plan to vote by mail, have you gotten that in the mail yet? So, I was looking at this, and I think we’re not going to know who the President of the United States is until probably February of next year because, I mean, first of all, have you looked at the instructions here on what you’re supposed to do to be able to vote? It’s like you got to go to USPS.com/votinginfo, you got to request your ballot, they’re going to send it to you, you got to follow the instructions, you got to add postage maybe. Oh my, and then, we got to send it in. So, there’s going to be a deluge of all those ballots being sent in, and they got to count it all, and when it comes in the mail, it gets counted manually. There’s no counting it, I don’t think, electronically. So, there’s going to be lawsuits. There’s going to be Supreme Court involvement. We won’t know who the president is until February.

If you’re a small business person or you pay your taxes quarterly, as we do, then we paid our taxes, our estimated taxes, in June, and the check hasn’t cleared yet, and I was getting concerned about that because maybe they didn’t get their payment and there may be penalties and all that. So, we investigated. They did receive the check; they just haven’t cashed it. If you go on their website, the IRS is actually saying that they’re so backed up, they’re not even cashing checks in time. So, I’m thinking, if there’s one thing the government is good at, it’s cashing checks. So, if they can’t get around to cashing checks, I’m just dubious about their ability to get around to counting ballots. Anyway, we’ll see where this all takes us. It’s going to be a crazy period, but again, keep your eye on the debt ceiling, and keep your eye on the package. If those two things pass, we think that we’re in good shape, we’re okay. All right. So, again, thank you for watching this video. I hope that you are doing well. We always tell you to enjoy your second childhood without parental supervision. Right now, COVID has you grounded, so you’re not allowed to go out, so your parents are still there, it’s just COVID right now, but we believe things will turn around soon and all will be well. So, I hope you’re well. Thank you for watching this video. Thank you for allowing us the privilege of being your retirement planner, and we will 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.