Market Alert December 4th, 2017: Dow 25k, Here We Come!
Our two goals for our clients is to give them financial peace of mind and to help them have their money last as long as they do.
Our investment philosophy of Buy Hold and Sell is designed to give us unlimited upside with a tolerable downside.
- Senate Republicans approved the most sweeping rewrite of the U.S. tax code in thirty years.
- The way things are going, we believe we may reach our Fearless Forecast of Dow 25,000 before year end!
- The U.S. faces a partial government shutdown after the money runs out on December 8 if Congress can’t agree on a spending bill by then.
- The worst recessions and bear markets throughout history have been caused by too much debt.
Senate Republicans approved the most sweeping rewrite of the U.S. tax code in thirty years.
The 51-49 vote was achieved by closed-door deal-making with dissident senators. President Trump has promised to sign tax-cut legislation before the end of 2017.
Until the final legislation is signed, we are going to refrain from analysis or commentary regarding how it will affect us individually. However, we can say that it is our belief that the market will receive it well. We saw a hint of that when the market went up 300 points last week simply because John McCain said that he would back the bill.
The way things are going, it is possible that we may reach our Fearless Forecast of Dow 25,000 by year end!
The momentum in the market seems to be so strong that the Michael Flynn scandal and North Korea testing weapons again have had no effect on the upward trajectory. Investors seem to be single-mindedly looking at corporate valuations increasing due to the tax cuts, and they are ignoring everything else for the time being.
Look at the chart below: what do you think is going to happen next?
The first drop that you see was the bear market of Y2K. That was a 49% drop that was preceded by 100% gain. The second drop you see was the bear market of 2008. That was a 57% drop that was preceded by 100% gain.
The rise from the low in March 2009 until today is over 280%.
In our view, the best time to prepare for the worst is when everything looks great. For most of you, your portfolios are probably at new all-time highs just like the market is. There is an old adage that says “it’s not how much you make that counts; it is how much of it that you keep that does.”
As you know, our strategy signaled to sell in October 2000 and also in November 2007. We have every confidence that it will signal when it is time to sell this next time.
If you are retired or retiring soon we had these questions for you to consider:
- How do you protect your retirement from the next market crash?
- Do you know if you have enough money to retire on?
- What are the 5 strategies that you can use to reduce your income taxes?
- How do you plan for your retirement cash flow?
- What should you do to maximize your Social Security benefits?
- Are you properly diversified?
We would love to review your entire financial plan, analyze what you have and see if we can help you. If we can, that’s terrific, if not that’s fine too. Either way, there is no charge or obligation, and we will part friends!
The U.S. faces a partial government shutdown after the money runs out on December 8 if Congress can’t agree on a spending bill by then.
Given that the tax bill needs to make its way into law to give the Republicans a legislative win, we also believe that they will make money available by next Friday to keep the government going and not have a shutdown.
As financial planners, we find it unconscionable when we see our government having no fiscal plan and having to borrow more money just to keep the doors open.
The worst recessions and bear markets throughout history have been caused by too much debt.
When governments have borrowed so much money that they no longer can finance their operations or deal with bad economic times the resultant recessions and bear markets have been the most damaging. The recessions and bear markets that went with them in 1929, 1982 and 2008 were caused by too much debt. In all three of those recessions the bear markets were savage and the damage to the economy long-lasting.
The global economy has now borrowed $170 trillion. There are 7.4 billion people in the world. This translates to $24,000 of debt for every man, woman, and child that walks the earth.
With the market near all-time highs, this is no time to be complacent and assume that the market only goes up! The best time to plan ahead for the next market crisis is now!
As you can see in the chart below, the market can turn around very quickly and very unexpectedly. The 2008 bear market wiped out 12 years of gains in just 17 months. Many of you participated in that bear and the one in Y2K.
Clients who followed our lead were out of the Stock market during the great market crash of 2008.
We do not want to see crippling losses happen to anybody. It is why I write this email; it is why our advisory firm exists, it is why I do my radio show and why we have our seminars. I want to help as many people as possible not to become poor and to have peace of mind.
I would like to invite you to come to one of our seminars. They are designed for those of you who are retired or retiring soon, and they are free.
At the free retirement seminar we will answer these burning questions:
- How do I avoid the three basic “pitfalls” of retirement distribution planning?
- Am I on track to be able to retire?
- When should I take Social Security? 62? 66? 70?
- Am I diversified properly?
- How much can I afford to spend during my retirement?
- What is the best investment I can use to fight inflation with?
- How do I determine how much risk is appropriate for me?
- Do I take my pension or a lump?
- How do I avoid having 85% of my social security being taxed?
- Should I rollover my 401(k)?
- How do I reduce my income taxes in the future?
There is nothing more important to us than that. It is our singular goal to keep our clients from becoming poor. Preserving the wealth that they have built is job number one for us. I encourage you to join the Money Matters family!
I believe that avoiding large losses is the single most important thing that we should be concerned about as investors.
Perhaps you were given a package by your employer. Perhaps you sold an asset and want to know how to properly invest the proceeds. Perhaps you inherited money and want to keep it safe and grow it if you can. Perhaps you just want a second opinion. These are all reasons for you to take advantage of all of the resources that we at Money Matters have to offer you.
We want to help you to achieve your financial goals.
Thank you for subscribing to this newsletter. I hope it finds you and yours in good health and spirits.
Ken Moraif, CFP®, MBA