Market Alert January 5th, 2019: Each New Low Has Been Lower Than the Previous One

As a firm that specializes in Retirement Planning, our two goals for you are:

  1. For you to have Financial Peace of Mind and
  2. For Your Money to Last As Long As You Do.

Our investment philosophy of Buy, Hold, and SELL! is designed to give us Unlimited Upside with a Tolerable Downside.

  • China is Slowing Down.
  • Jobs “Blowout” Expectations.
  • Federal Reserve “Not on a Preset Course.”
  • Warning: Each New Low Has Been Lower Than the Previous Low.

China is Slowing Down.

On Thursday, January 3, 2019, news that the Chinese economy was slowing down faster than at first thought helped drive the Dow down by more than 600 points.

Many of the emerging economies in Asia are dependent on the Chinese economy for their growth. If China falls into recession, it is very likely that it will take down many countries with it.

Given that the global economy seemed to be slowing down already, this was a very disturbing data point in our view.

Jobs “Blowout” Expectations.

According to the Labor Department, the U.S. economy added 312,000 jobs in December 2018. This was far greater than the 148,000 jobs expected by a survey of economists by Bloomberg.

While strong jobs numbers are almost always good news, they are a lagging indicator. You may remember that the jobs numbers looked pretty good in 2007, when we hit our sell signal. Employment tends to peak just before a new recession.

Federal Reserve “Not on a Preset Course.”

Federal Reserve Chairman Jerome Powell said he’s “flexible about future monetary policy moves.”

In his remarks about the economy and monetary policy, Powell attempted to calm the financial markets by saying that the Fed wasn’t going to push interest rates higher or shrink the balance sheet regardless of the cost.

Monetary policy “was not on a preset course,” he said.

His efforts succeeded as the S&P 500 Index and the Dow went up after his pronouncements.

Warning: Each New Low Has Been Lower Than the Previous Low.

If you look at the one-year chart of the S&P 500 index above, you will note that since October 2018, each new low has been lower than the previous low. This is classic bear market behavior.

We shall see where all of this goes over time, but the trend is down despite the very attention-getting up days that we have seen. We must remain cautious and not let what happens on a single day cause us to overreact.

If you are still interested in equities, we encourage you to come in and visit with us, and discuss whether or not you are taking on too much risk.

Over 50? Schedule a free retirement consultation with one of our financial advisors. We will help you to make the important financial decisions needed to create your personalized retirement plan.

  • Do you know if you have enough money to retire on?
  • What are 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 diversified the way you should be?

We would love to review your retirement plan with you and see if we can help you. If we can help you, that’s terrific, if not that’s fine too. Either way, there is no charge or obligation, and we will part friends!

We Are Thankful That We Made Our Sell Recommendation on December 17, 2018.

Our strategy enabled us to participate in the upside as long as it lasted, and it also got us out of equities with tolerable losses when the trend changed.

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 savings?
  • How do I avoid 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 the way I should be?
  • How much can I afford to spend during my retirement?
  • How can I fight inflation?
  • 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 taxed?
  • Should I rollover my 401(k)?
  • How do I reduce my income taxes in the future?

Click here to reserve your spot at the next free retirement planning seminar.

Click here to listen to this week’s podcast and hear the following topics:

  • Jobs, Jobs, Jobs. What Does It Mean?
  • 18 Risks Faced In Retirement #17: Timing Risk
  • Social Security Questions Answered: Social Security For My Spouse
  • Your Strategy Said Sell, Do You Worry That It Is A False Alarm?
  • Estate Tip: Gift Tax Roles 2019

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 the resources that we at Money Matters have to offer you.

We want to help you achieve your retirement goals.

Thank you for subscribing to this newsletter. I hope it finds you and yours in good health and spirits.


Ken Moraif, CFP®, MBA