Market Alert November 3rd, 2018: What Could Cause The Next Bear Market?

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.

  • We Are Proud to Have Won the Torch Award for Ethics from the Better Business Bureau of North Central Texas in the Large Company Category!!
  • Three Things That Could Cause the Next Bear Market.

We are very proud to have won The Torch Award For Ethics from the Better Business Bureau of North Central Texas in the Large Company category!!

To quote the Better Business Bureau website “The Torch Awards for Ethics (TAE) recognize companies who display an outstanding level of ethics and integrity in all of their business dealings. These companies generate a high level of trust among their employees, customers, and their communities.

The Better Business Bureau is not determining our skill as a financial advisor nor are they endorsing us.

All of us at Money Matters consider ethics and integrity to be of the highest importance, and we are very proud to have received this award.

If you are not a client of Money Matters, we want you to be!  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?
  • Do you have a plan for what to do when the next market crash comes?
  • 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!

Three Things That Could Cause the Next Bear Market.

The three things that we view could cause the next bear market are 1) the Federal Reserve overshooting, 2) a trade war with China, or 3) the midterm elections.

The Federal Reserve has been blamed for almost every recession that we have had in the United States in the last 50 years. As the Fed raises interest rates, it slows down the economy. If they raise interest rates too much, they end up slowing the economy down to the point of recession. Where we are right now, we do not see this yet. The very good jobs numbers that came out on Friday will most likely give the Fed more reason to raise rates again this year.

The midterm election results could represent change, and generally speaking, the Stock Market is change averse. If the Democrats gain the majority in Congress, that will represent change, and the market most likely will not like that in the short run. We believe that much of the volatility we have seen is because buyers are waiting to see what will happen, and when the traders are mostly sellers, the market can move quickly.

In our opinion, the trade war with China is the most likely to cause a bear market, if it happens. The trade war would officially begin in January since that is when the Tariffs on 100% of all the goods coming into the US from China will go into effect. We do not believe that it will come to that, however. From the pronouncements that we have heard in the last few days, it appears that negotiations are beginning in earnest. Only time will tell, of course.

Look at the chart below:

All we have to say is we are very thankful that we have our sell strategy! It sure helps us to sleep well at night.

Without it, we would find it very difficult to justify investing in the stock market at this time. We believe there is still upside, but we also believe that when the downside comes, it could be very bad.

Our strategy enables us to participate in the upside as long as it lasts; it is also designed to get us out with tolerable losses when the trend changes.

And we all know that the trend can change quickly and precipitously.

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 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.

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 mostly been the result of governments taking on too much debt.

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

  1. 3 Things That Could Cause A Bear Market
  2. 18 Risks Faced In Retirement #19: Interest Rate Risk
  3. Social Security Question Answered
  4. Buy Hold Myth#4: Diversify And You Are Done
  5. Estate Tip: Living Trust

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 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.

Cheers!

Ken Moraif, CFP®, MBA