Market Alert December 29th, 2018: Is It Safe Yet?


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.

Those that followed our strategy were out of equities from November 27, 2007, through June 12, 2009, and avoided much of the carnage that ensued.

  • We Are Still Recommending to Our Clients That They Stay Out of Equities.
  • As We Reported to You, We Got The Up Week That We Expected.
  • What Does History Tell Us?
  • If This Turns Out to Be a Bear Market and We Don’t Have a Recession, Expect This Bear Market to Last Seven Months, According to Ned Davis Research.

As We Reported to You, We Got the Up Week That We Expected.

As we reported to you two weeks ago, we expected that there would be a bounce from the lows. We thought it would be last week, but it happened this week. It is too difficult to tell at this point whether or not the rallies that we saw in the S&P 500 index this week are for real or not.

What Does History Tell Us?

When we hit our sell signal in November 2007, the S&P 500 index rose for ten days in a row. As you can well imagine we got very nervous as it approached our buy signal. The last thing we wanted was to sell and then buy back in two weeks later.

The S&P 500 index got very close to our buy signal, but retreated from there. We may be seeing this same sort of phenomenon again. This is unusual behavior, which is why we don’t wait after our sell signal to sell.

Some additional history to put all of this in perspective, on page 71 of Ken Moraif’s book Buy, Hold, and Sell!, You will find a chart that shows the top 20 best trading days of all time, as well as a discussion of historic up days and down days.

What you will see is that, of the top 20 best trading days of all time, ALL of them happened during terrible bear markets. Most of them happened during the Great Depression, Y2K, and 2008.

The thousand point up day on the Dow this week did not qualify as one of the top 20 percentage gain best days of all time, but it does make the bottom of the list of the best 20 trading days since 1985. Since 1985, 19 of the 20 best trading days happened during the bear markets of 1987, 1998, Y2K, and 2008. (Source: S&P 500 Index.)

Interestingly, the reverse seems also to be true. Since 1985, 19 of the 20 worst trading days happened during those same terrible bear markets. Christmas Eve 2018, you may recall, was the worst trading day on a Christmas Eve in history, according to MarketWatch.

So what is this all tell us? History is no guarantee of future, of course. However, the evidence seems to be compelling that when you have historically large trading days, up or down, you are in a bear market. Additionally, the evidence seems to show that you are in a particularly bad bear market.

If you are not a client of Money Matters, we would like to visit with you!  Let us worry about all this so that you don’t have to. 

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?
  • 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, there is no obligation, and we will part friends!

We Are Thankful That We Have a Sell Strategy.

Our strategy enabled us to participate in the upside as long as it lasted, and it got us out 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 getting 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:

  1. What All This Craziness Means
  2. 18 Risks Faced In Retirement #16: Unexpected Financial Responsibility
  3. Social Security Questions
  4. You Are A Long-Term Investor, So Don’t Worry About It!
  5. Estate Tip: New Year Checklist

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 to 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