Market Alert January 8th, 2018: Dow 25k! Now what?
Our two goals for our clients are for them to have financial peace of mind and for their money to 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.
- Global debt reaches a record $230 trillion posing a grave threat to the world’s economy.
- The Dow reached 25k early in 2018, as we forecasted, and set records along the way.
- Manufacturing had the best year in 14 years.
- Consumer comfort in the U.S. advanced in 2017 to a 16-year high.
- The economy added fewer jobs than expected.
- We continue to stand by our Fearless Forecast of Dow 26,500 by the end of 2018.
Global debt reaches $230 trillion.
Global debt rose to a record $233 trillion in the third quarter of 2017, a gain of $16 trillion higher from a year earlier, according to an analysis by the Institute of International Finance. Private non-financial sector debt hit all-time highs in Canada, France, Hong Kong, South Korea, Switzerland, and Turkey.
The United Nations calculates the global population is 7.6 billion; this means $30,000 for every man, woman and child on the planet earth. We believe that this is the greatest threat to the world’s economy and will exacerbate future financial crises.
It is why we are thankful that we have a strategy in place that is designed to help us to mitigate the damage when the next financial storm comes.
We believe that the risk that we have today is different than anything we have had in history. The hundreds of trillions of dollars of global debt put a significant strain on government’s ability to do anything about the next recession. In fact, we see all of this debt exacerbating the effects of any economic slowdown. The worst recessions that we have had around the world have all been the results of governments taking on too much debt.
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.
As you can see in the chart below, the market can turn around very quickly and very unexpectedly. For many investors, the 2008 bear market may have wiped out 12 years of gains in just 17 months. Many of you participated in that bear and the one in Y2K.
Source: Standard & Poor’s
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 protect my retirement from the next market crash?
- 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?
The Dow reached 25k early in 2018, as we forecasted, and set records along the way.
The S&P 500 index was up every day last week and set a new all-time high each time. According to Sundial Capital Research, no year has ever begun with consecutive daily half percent gains that all set new all-time highs.
The month isn’t over, of course, but there is an adage that says “as goes January, so goes the year.” If it holds this year, we could have a pretty good year.
Manufacturing had the best year in 14 years.
Manufacturing grew in December at the fastest pace in three months, and had the strongest year for factories since 2004, the Institute for Supply Management said Wednesday.
Consumer comfort in the U.S. Advanced in 2017 to a 16-year high.
According to the Bloomberg consumer comfort Index, consumers were more upbeat in 2017 than at any time since 2001. They view the economy, their finances, and their optimism about purchasing more favorably than they have 16 years.
Since consumers represent 70% of our economy, it is usually a good sign when confidence is high. If consumers are buying, corporate profits should rise, and that normally leads to higher stock prices.
The economy added fewer jobs than expected.
Employers added 148,000 workers, compared with the 190,000 median estimate of economists surveyed by Bloomberg, held back by a drop in retail jobs, according to the Labor Department.
While this normally would seem to be bad news, it is actually good news for the stock market because it implies less aggressiveness by the Federal Reserve. If jobs are not being created at the rate that the Fed wants, they probably will be less inclined to raise interest rates. Therefore, weak jobs data means more cheap money and the stock market loves cheap money!
We continue to stand by our Fearless Forecast of Dow 26,500 by the end of 2018.
Because of all of the above, we feel confident that there is no recession in sight and therefore we see the Dow continuing to rise to new all-time highs.
Look at the chart below:
- 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!
- Dow 25K!
- Twelve Mistakes Of Investing
- Social Security Benefits For Spouses
- Buy Hold Myth #5: You Don’t Want To Miss The Rebound
- Estate Tip: New Gift & Estate Taxes For 2018
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