One of the most common visual metaphors used to describe the stock market is a roller coaster. It’s very accurate, and if you look at a stock market graph from early 2018 to the present, you’ll realize this coaster ride has been as crazy as anything Six Flags has to offer. You may also notice something else. Even though the Dow Jones Industrial Average and S&P 500 have both achieved new record highs this year, market growth since early 2018 has ultimately been unsteady and relatively minimal. On Jan. 26th a year ago, the S&P closed at 2,872, and the Dow closed at 26,616. In early July of this year, the S&P finally broke 3,000 and the Dow surpassed 27,000, but in the 18 months between, the market experienced bouts of higher than normal volatility. In the midst of all these ups and downs, some of the market’s losses were far greater than its gains. On December 16, 2018, the Dow closed at 22,407—down more than 4,000 points from the year’s high of 26,604 on January 21, 2018. As of this writing, on September 20, 2019, the Dow closed at 26,935—just 331 points higher than that record-high close over a year and a half earlier. By contrast, in the 14 months between Donald Trump’s election and the start of 2018, the market climbed rather steadily. In fact, in 2017 it set an all-time record for low volatility. So, what changed? Well, a number of factors emerged in early 2018 to trigger fear and uncertainty among big investors. They include the ongoing trade war between President Trump and China, signs of slowing economic growth, and the Federal Reserve’s continued efforts to influence long-term interest rates—efforts that have helped create an inverted yield curve and increasing worries about a new recession. The point is, while the stock market is always a roller coaster, for the past year-and-a-half it’s been an unusually wild one, resulting in relatively minimal growth for investors who’ve hung in. In a way, it’s been like a miniature version of a long term secular bear market cycle, which experiences extreme volatility over many decades only to bring buy-and-hold investors right back to where they started, resulting in zero-net portfolio growth. That’s why making the switch from growth to income-based strategies is so crucial in a long term secular bear cycle like the one we’re in now. The market’s slowed growth and extreme volatility is a likely sign that big investors have “one finger on the trigger,” ready to pull out as soon as the next major sustained market correction kicks in. I believe it is possible we may experience another major correction and this next correction may be as steep as 70%. That means even if the market were to add another 10% or 20% before the next drop hits, that gain would be minimal compared to the potential loss. To put it in perspective, think of it this way: if you walked into a casino and discovered a game that paid you $10 if you won but cost you $70 if you lost, would you play it? Probably not!
Income Specialist of the Month
JEFFERY SMALL, Financial Advisor, Speaker, Author
Each month we profile one Retirement Income Store®-affiliated financial advisor who specializes in income-based strategies. This month we present…Jeffrey Small!
Jeffrey Small is President of Arbor Financial Services, Inc. with an office in Melbourne, Florida. He is also a Bestselling Author, highly sought-after market analyst, and periodic guest host of The Income Generation on Newsmax TV.
Jeff’s book, Turning Financial Planning Right-Side Up, is an Amazon Bestseller that has helped thousands of readers master “the inside game” of investing, as well as avoiding the Wall Street bias that pervades so much of the financial media. It reveals exactly how and why Wall Street, many stock market-based financial advisors, and the media often steer investors into poor and expensive decisions. He also prescribes proven alternatives that can help investors protect their retirement savings and use it to generate the income they need to meet their retirement goals.
Dedicated to helping his clients reap the rewards of a well-planned retirement, Jeff is a popular speaker who appears regularly on the nation’s top financial news shows on stations such as CNBC, Fox News, Fox Business News, and Bloomberg Radio. He has also been featured in publications such as Space Coast Business Magazine.
Although he works with a range of clients, Jeff specializes in helping those who are retired or within 15 years of retirement. He has personally helped thousands of clients protect their hard-earned retirement savings and use it to establish renewable income they can depend on throughout retirement.
News You Can Use
PREPARING A FINANCIAL DISASTER KIT
If you live anywhere along the East Coast, you’re well aware that it’s hurricane season. However, natural disasters can strike anywhere at any time, from hurricanes in the East to tornados in the Midwest and earthquakes on the West Coast. Sometimes, evacuations are necessary, and when fleeing a natural disaster, you rarely have time to think about to what to grab.
With that in mind, many advisors recommend creating a “financial go-bag”, or disaster kit, that includes copies of important records and documents connected to your accounts and investments. Such items should be stored in a portable bin that’s always easily accessible and ready to be packed in the car in case of an emergency. As for what to include, financial advisors recommended the following in a recent MarketWatch article1 :
IDS, MEDICAL DOCUMENTS AND WILLS – The IDs would include your driver’s license, obviously, but also passports, Social Security cards and birth certificates for all household members. Health insurance cards should also be included, along with anything else you normally keep in your wallet, including credit cards. Medical information is also important, including copies of prescriptions, medicine lists and contact information for doctors. To prepare for the worst, you should also include copies of estate documents such as your will or power of attorney.
CASH – It’s a good idea to keep a bit of cash in your kit since it is the most reliable form of currency in a disaster. When power outages occur, many businesses can’t accept credit cards. Also, banks may have to remain closed for some time, and ATMs may be damaged depending on the severity of the disaster. With cash on hand, you can overcome these obstacles.
PROOF OF ASSETS – Advisors recommend creating and keeping a “vital document locator”, which is a simple document that details a summary of your financial life in the event of a sudden loss.
INSURANCE POLICIES, DEEDS TO ANY PROPERTY AND VEHICLE TITLES – Also include bank and investment account statements, information regarding any outstanding loans, tax returns from recent years and any paper stock certificates or bonds.
PROPERTY ARCHIVES – A USB drive with videos of any property is also a good idea in order to archive the property’s condition and contents before the disaster. This should be updated regularly, since it will serve as resource when assessing any damages. The photos and videos can also be uploaded to a cloud service like Dropbox or Google Drive.
PASSWORDS – We all have so many passwords for so many different things these days—including our financial accounts—that it’s impossible to remember them all, so many people write them down. While it’s important to have access to all your passwords in an emergency, keeping them on paper can be risky. A better option is to save them on an encrypted Microsoft Excel spreadsheet or a password-protected USB drive, and keep that in your financial go-bag!
Retirement Income Store® Media Center
Each month we recommend a book to our Retirement Income Store® customers. This month’s selection is… “The Retirement Income Stor-E” by RIS Founder David J. Scranton!
The Retirement Income Stor-E, the new book by Bestselling Author and TV host David J. Scranton, is about to shatter many of the myths that Wall Street bankers have promoted and protected for decades. Myths like: “Over the long run, the stock market always outperforms other asset classes,” and, “In order to increase the income generated by your investments, you must increase your risk”
The simple truth is that investors born in 1969 or earlier can’t afford to ride out another catastrophic stock market drop like the one that started in 2000 and took nearly 50% of their portfolios, or the one that started in 2007 and took nearly 60%. In his new book, David Scranton outlines what he has proven is a much better and safer method of planning and saving for retirement. His approach doesn’t involve taking on more stock market risk. In fact, most investors are able to reduce—and sometimes even eliminate—their exposure to the stock market, all by switching their strategic focus from portfolio growth to retirement income.
The Retirement Income Stor-E presents a viable and proven solution that can help both advisors and their clients break the stronghold Wall Street has on the way Americans plan and save for retirement.
Demystifiying common investment myths and identifying a safer and more effective way to achieve their goals for retirement, the book:
• Introduces the Income Model and the Retirement Income Store® and explains how they can help you protect your retirement savings and establish renewable streams of retirement income
• Describes why investing in bond mutual funds, ETFs, and mutual funds in general, can lead to one of the worst financial mistakes a retiree can make
• Explains why the equation TR=I+G could make all the
difference in your quality of life during retirement
David J. Scranton is the founder of Sound Income Strategies, the Retirement Income Store® and Advisors’ Academy, the host of The Income Generation on Newsmax, and author of the Amazon Bestseller Return on Principle: 7 Core Values to Help Protect Your Money in Good Times and Bad. His new
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