• In this video, we answer your questions after last week and also talk about where things could go from here, given some history on what’s happened in the past when we’ve had tariff increases by the United States.
• We have gone intro protection mode right now because we want to preserve your money so that you can retire when you want to and stay retired, and not experience large losses that could delay your retirement for years.
• The first question is, why do we wait so long to sell?
• On paper, selling faster may sound good, but a lot of times, if you sell too much too soon, then there can be a problem and you can miss out on returns.
• We give the market time to wiggle around before we hit our sell signal.
• Looking back, even during multi-year uptrends, the market recalibrates to find its footing before going up again.
• On average, the market recalibrates every year to every 18-months.
• The next question is, when do we sell the other 50%? What happens if the market goes down another 30% from here?
• The S&P 500 is already down around 17%, so to go down another 30% would be the fourth worst bear market in history.
• We are in a very defensive position right now to protect from that and what clients experience could be around 9%.
• Nobody wants that, but it’s not going to cause someone to have to unretire.
• In addition to that, we have a third in cash earning interest, and another third in bonds, so that should help offset what the stock market does.
• What about people who do not have our Invest and Protect Strategy?
• They could experience 30% losses, the kind of tragic losses that we saw in 2008 and y2k.
• Our strategy is designed for an unlimited upside and a tolerable downside, and by being in such a defensive position, we feel that we are in a position to effectively navigate the downside.
• If we look at our round trip from when our strategy said it was time to buy to now it saying it is time to sell, starting in February of 23 to now, the S&P 500 is up 25-30% from entry to exit.
• If we rinsed and repeated that over and over, we’d be in good shape!
• Over the last 70 years, we’ve had three instances when the US has increased their tariffs.
• Looking at the mid-50s to early-60s, a bear market of around 28% came with the tariffs.
• The next time came in the early-80s, and got another bear market of around 27%.
• As we record this, we are at a 16-17% drop.
• Most recently, when President Trump had his first term, he raised tariffs.
• The market reacted, but it wasn’t a bear market because the market only went down 19%.
• The market needs to go down 20% to be a bear market.
• For these tariffs, we don’t know how far the market will go down, but it could go down another 10% before it is said and done.
• The good news is that we went into protection mode and should the market go down another 10%, we are in a very defensive position, which is what our strategy is designed to do.
• We hope that gives you peace of mind.
• Please share this video with your friends, if they are scared right now, maybe you can throw them a lifeline and have them come onto the boat with us.
Ken Moraif: Hello everyone, and welcome to our Market Alert video for today, which is April 7, 2025. Second, one in a row. It’s in three business days, or two business days, actually. And so we wanted to answer questions that we got after the video we sent out last week. And so we’re going to devote a lot of attention to answering your questions, and then also we’re going to talk about where we think things could go from here, given a little bit of history on what’s happened in the past when we’ve had tariff increases by the United States and what happened in the stock market, and maybe we can draw some inferences from that. So thank you for watching. I hope everybody in SCWPerS Nation is SCWPering your tails off and you’re having more fun than a human being should be allowed to have letting us worry about all this boring financial stuff. I think my hair has turned another shade of gray. I was just noticing. Man, it’s I’m getting grayer by the day. So thank you for letting me turn gray so that you don’t have to. And for those of you who are not SCWPerS yet, you’re not ready to go out there and enjoy your second childhood without parental supervision, you’re working towards your retirement. Our goal is to get you there. And one of the reasons why we have our strategy to protect and as you guys know, we are in protection mode right now. We’ve gone very defensive to protect you. And the reason why we have that is because we want to preserve your money so that you can retire when you want to, and not experience large losses that could delay your retirement for years. So thank you everybody for watching. I have with me once again, our Chief Investment Officer, Jordan Roach and Jordan, it’s good to see you again. We’ve been seeing a lot of, yeah, a lot. And ladies and gentlemen, let me tell you, you think meeting here doing these videos? No, we’ve been we, in fact, we talked Sunday night, right? We for about an hour, and we’ve been talking every day practically. So when stuff, when times like these, happen, it’s our job and it’s fun. I enjoy it. I hope you’re enjoying it too. So let’s talk about questions that we’ve gotten. So one of the questions is, you know, why do we wait so long to sell? You know, it’s like, man, the market went way down, and then we finally sold. And couldn’t we sell sooner? So can you give us a little bit about what we’re doing right now to address that?
Jordan Roach: Yes. So, I mean, you know, along with kind of the sanity check research that we went through over the last, you know, six to 12 months, we have been looking to ways to speed up the actual decision to sell. Um, but obviously that’s a process. Because, you know, on average, if you if you want to sell faster, that does sound good on paper, but a lot of times you sell too much too soon, and then that’s a problem. So we, but we try to speed that up, but we’re not quite ready with rolling that up, with pairing with the sanity checks. Um, we hope that’s to come. We are thinking through it, but we’re just not quite ready to say we feel really good about this decision. It’s all baked out. Yeah, and like you said, it sounds good on paper, let’s sell sooner. Let’s get out faster. But the problem with that is that it can create a lot more times that you get out, and those could be ones that maybe you shouldn’t have gotten out. Right, right? And in fact, I want to refer everybody to a chart here that I’ve got for you. And so this one, and just to kind of tell you what you’re seeing on this chart, the blue part this, this is y2k so this is the bear market of y2k and then the aftermath leading up to November of 2007 and so what you can see here is the white part is where our strategy says to be out, to be protected in protection mode. The blue part is where our strategy says to be in right, to be invested in invest, invest mode. And so what you can see right here is that during this period here, from, from essentially May of 2003 all the way through November of 2007. Okay, when it turns white again, because that’s when our strategy said to sell, before the 2008 credit crisis market crash. So tell us about this period in here, Jordan. What are you seeing in there that that would help to illustrate? why? You know, we give the market the tolerance to to squiggle around before we hit our sell signal. Yeah. I mean, you’re what you’re seeing is a multi year uptrend, where to maintain that uptrend, the market, on several occasions, had to recalibrate, had to sell, probably because it was digesting new news, new scares, all sorts of things. You go under the 200 day, the market finds its footing and it resumes its upward movement. And we saw that you said, 12346, times, six times in a period of three and a half years where the market’s selling off, you know, 10 to 12% finds its footing, goes up again.
KM: Yeah. And as you can see on that line, the the red line is the 200 day moving average. The black squiggly line is the stock market. And so during this period there were, as you said, there were six times when the market got way down below the 200 day moving average, but did not reach our sell signal. That’s right. And so if we just said we want to sell sooner, we might have sold during those periods. And if that would have happened, then, you know, getting back in and the whole thing that that would have happened, we would have missed we would have missed out on returns that we would love to have. Now, of course, this one up here that was in November of 07, and that’s when, you know, it broke through and it got to our sell signal.
JR: That’s right, and that’s the important thing, why we have those tolerance level relative to the to the 200 day average, is because, you know, we do know the market, on average, every year, every 18 months, is going to have something that’s going to have to reprice, it’s going to have to recalibrate. So we have to allow tolerance for that.
KM: Yeah, yeah. And so, and the lane that we let the market, you know, wiggle around in, is not by accident. It’s, you know, it’s a lot of research went into how much tolerance do we want to give the market to go up and down? But as Jordan said, we are working, and we think we’ve found a way to get out sooner that would help us in the future. But it’s not fully baked yet, so you’ll have to stay tuned for that one. We’ll be announcing that one hopefully soon. So that’s the first question. Why don’t why do we wait so long to sell. Well, that’s that’s the big reason. So the next question that I want to answer for that clients ask us is, okay, so we sold 50% and so when do we sell the other 50% and we had a little bit of a discussion in the previous video about where we are now, and after our sell, most of our clients should be about a third in stocks, a third in cash, a third in bonds. And so, you know, the question is, well, what happens if the market goes down another 30% from here? You know, oh my gosh, you know, we’ve still got 50% in am I going to lose all my money and become destitute, right? And the answer is probably not, right.
JR: It’s almost out. It’s, you know, in some ways, maybe counter intuitive, at least to our client base, is that you think the market’s going to go down another 30% and, you know, as we stand, you know, at least on Friday, because that’s, you know, the markets down let’s call it 17% you know, big US companies, S&P500. So to go down another 30% I mean, we’re talking about a 47 percenter. That is not a that’s a big, big, big loss. If it went down 47% it would be the fourth worst bear market since the Great Depression, that’s right, including the Great Depression, actually, so it’d be the fourth biggest period, okay? And so, I mean, it’s a big one. And so you think that, okay, by the time you’re down 47% like, percent, like, it’s all wrong, we need to be selling but actually, you know, going back and looking at, you know, all these big bad bears, it’s you’re probably, by the time you’re down 40% you’re probably closer to a buy signal, really, than a sell signal, yeah, at that point.
KM: So let’s look at this chart here. And this one is, what is this one? This is Y2k, all right? And so you can see the market peaked right over here in September of 2000 went down. Our sell signal came right here. Our strategy would have said to sell right there. And from peak to trough to the very bottom here, that was a 49 percenter, right? So basically, what it means, and what Jordan’s talking about, is that if we, you know, if the market goes down another 30% basically we’re talking about being right over in this range, right here, right? And so saying, Okay, I’m going to sell the other 50% there would be a big mistake, because, you know, at least in this bear market, you practically be at the bottom when you’re doing that.
JR: You’re at the and that’s and that’s a hard thing for for, you know, because we are in a very defensive position right now, to experience losses, you know, really, really bad, bad losses that all of our clients would be worried about, that we’re worried about. But for that to happen, the market would have to be down almost that point anyways, and it wouldn’t even be that. But by that point, the market is probably bottoming, and we probably need to be buying.
KM: Right, yeah, and so, you know, as we talked about in the last video, you know, even if the market did go down 30% which would put it at a 47% peak to trough, the additional 30 think about it if you have a third of that in the stock market, then theoretically, and I could blow through that, or it could be less, no guarantees here, but it could be somewhere around 9% which nobody wants, but it’s not going to cause somebody to not be able to retire or to have to unretire, if that was the case, right, right?
JR: That’s exactly, I mean, that’s, that’s not fun. We don’t want that at all, but that those types of losses are the ones that you know that causing, you know, oh, eight for everybody to unretire, to not be able to retire, right?
KM: And then in addition to that, we have a third in cash, right? And that’s earning interest, so that’ll offset what the market does, the stock market. And then we have bonds. And normally, not always, but normally in the bond market. If the Fed lowers interest rates because we’re in a recession or whatever, the bonds should go up. So yeah, it could be 9% and it could be more, but let’s just for theoretical conversation, that that would be a third that went down that much, but the other two thirds could go up to offset that. And so yes, we don’t want that. It’s unpleasant. But you know from the standpoint of, are you now not going to be able to retire when you want, or are you going to have to unretire or cut back on your standard of living? Most likely not. And in fact, if it does get that low, it’s probably a buying opportunity rather than a sell absolutely and at the same time, keep in mind, we’re talking about losses that are relatively tolerable. But think about other people who don’t have our strategy. What about them?
JR: Well, at that point, let’s just say market goes down. You have 40 plus percent. You take, you know, 50 to 70% of that, depending on, you know, people’s outside holdings or equity position. I mean, we’re talking about 30% losses, yeah.
KM: And these are tragic losses. These are kind of things that we saw in 2008 and y2k where people were beside themselves. You know, I met a lot of those people. They were suffering literally, physically, mentally and financially. It was, it was horrible, right? So now I want to show another chart here. And this is the chart from 2008. Okay, so the same thing here, if we start up here at the peak, and we go down 47% ish, we’re kind of around in in this area, right in here. And so it’s not the bottom, because that was a 57 percenter, right? But it’s near the bottom. It’s so it’s much closer to the bottom than is where you think there’s, you know, more and more pain ahead, right? So it’s the same type of you know discussion is that most likely you’re closer to where the market’s going to find its footing, it’s going to bottom, it’s going to start an uptrend, then you are worried about, at that point that that loss is going down another X amount of percent, right? So one of our investment principles is we want our strategy. Unfortunately, we haven’t figured out the perfect strategy. I wish we did, but our strategy is designed to give us a tolerable downside. And tolerable doesn’t mean not painful. It does hurt, right, right? But it means that it’s not going to, like, destroy your finances. So it’s designed to give us a tolerable downside, but unlimited upside, right? There is no limit to how high the market can go that we will track with it. But what we want is we want to have a tolerable downside. And so by right now, being in such a defensive posture, we feel that the downside again, it’s painful. I get it. I’m feeling it too. I’m investing right along with everybody else, but it’s not going to cause us to to, you know, fall, fall out of bed, type of thing. That’s right, we feel like we’re in a position to navigate, you know, the ups, the downs, the sideways that absolutely could play out over the next weeks, months. Okay, all right, so let’s, let’s, we’ve answered that question. So let’s, let’s talk about something that probably people are not asking, clients are not asking, but I think we should ask, yeah, you know, there’s an old expression that says that if you don’t toot your own horn, ain’t nobody going to do it for you. Okay, so let’s look at, let’s look at the trade. I’ll call it a trade because, you know, it’s a round trip, right? So when our strategy says time to buy and then time to sell, that’s a trade. It’s a round trip. Sometimes it could be years. You know, our buy in April of 03 took until November of 07. So it was like four years before that trade, you know, wrapped itself around. But this one started in February of 23 so you can see on the chart right here where it turns blue, that’s where the buy signal came. And if you follow it all the way up till this is Friday, then you can see that it was a pretty good rise. There wasn’t it? Yes. I mean, if you’re looking at, you know, big US stocks, so S&P 500. I mean, we’re talking about a roughly, you know, 25 30%, you know, entry point into the exit so I would say that if we rinse and repeated that over and over again, that would be okay. Wouldn’t it be good shape? Yeah. Now something interesting about this chart is, you know, going back to that first question about, why don’t we sell sooner, you actually noticed this before I did so, Jordan, I’ll let you take the credit. What did you notice on this chart with regard to, you know, the question of, why don’t we sell sooner? We do.
JR: We don’t sell sooner because again back here. And I remember this very well, this one right here on the chart. I mean, you you had two points even in the last two years of being in the market, where the market sold off, you know, 10 to 12% based on different variables, that is putting resume uptrend. So if you go back to March of 2023, and this is, you know, basically a month after we re entered the market, yeah, I hate that when that happens. That’s that’s not always fun, and the market’s always jittery right after that anyways. But you had two banks go down, and the market got really scared very quickly sold off within a month, and we got within roughly 1% of our sell. Yeah, we got close. Market stabilized. Resumed its uptrend resumes up.
KM: And then August of 23 comes along, and all of a sudden we go, oh no
JR: We got inflation prints running high again. Everyone thinking what the Fed was going to do in terms of holding rates is off the table again. We’re going higher and higher. Market didn’t like that very much, no. And it went all the way down three months, yeah? And I remember that that was vicious. That was a vicious one, yeah, it was an absolute vicious and it bottomed in October, end of October of 23 but again, it did not reach our sell, our sell signal, no. Close again. And those are, you know, some big events off of hard data that caused the market to have to react, yeah. But again, this is where you can’t make a trade off of belief, off of what could happen. You have to trade on what is happening, because in both these scenarios, there was bad things happening. The market had to find its point where it thought it was a fair price for the market, and then it resumed. Yeah, and you don’t know what the market’s going to say is significant, significant or not, right?
KM: So again, this was it a good trade. I would say, I would say so. And if we could rinse and repeat that over and over again, I think that would be okay. So let’s talk now about what happens next with all these things. There’s a little bit of historic well. Over the last 70 years, we’ve had three times when the US has increased their their tariffs, right, right? So we had 1955 let me see if I can find my piece of paper with those dates on it, man, you can help me go ahead.
JR: Yeah, I think it was, you know, the mid 50s to the early 60s, yeah. And what happened during that, when the they raised tariffs, and we had a bear market that came with it, right? Yeah, we raised tariffs, you know, it, it was a for on a relative basis, probably like a 30% raise on average price of tariffs. So the number wasn’t as big as today, but the relative nature was big. And you did. You had a bear market. The market had to sell off. It’s corrected a few times in like a seven year span. The worst period is about a 28% I think so.
KM: We had a 28 percenter, right, right? And right now we’re, you know, as we record this, we were sitting at 16 17, okay? And then the next one came, when in 1980
JR: think that was in like 1980 Yeah, right in there, right?
KM: And so between 80 and 82 we raised, we raised tariffs again, and we got another bear market, another bear market. And that one was, what a roughly about 27 I think, yeah.
JR: So right in that same line that we saw. And this is where markets tend to rhyme. You know, they play. And then you had the most recent one, when, when President Trump had his first term.
KM: First term of President Trump, 2017 through 19. And we had, we had another one. This wasn’t quite this wasn’t a bear market, right? Because that one only went down 19% and 20% is a bear market, right? And again, what we’re talking about these downs, what we’re talking about is the stock market, the S&P500 index, yes.
JR: And there’s obviously other things that are causing this. But nonetheless, if you just look at tariffs in those times and leading the market declines, yeah, you know, you gotta almost 20% here in 2018 that point was largely us against China. That one, though, in many respects, was it was like a 50% relative increase across trade, yes. China, yeah. So the absolute percentage is not as big as today, but it was a relatively big increase. Market went down 20% Yeah.
KM: So in the last three times that the US raised their tariffs, in the last 70 years, we’ve seen a 28% a 27% and a 19 percenter, right? And this one, we don’t know. We don’t know. But so far, you know, if averages hold, we could see this market go down another 10% before it’s said and done
JR: absolutely could. We don’t know. But you know, again, history is the guide tariffs being the guide. Pretty good overlay. We could, you know, we could see a little bit more pain ahead. Yeah.
KM: So the good news, ladies and gentlemen, is that we did go into protection mode. We are very, very defensive right now. And should it go down another 10% or, gosh, you know, let’s hope not, but maybe it goes down another 30% we are in a very defensive position, and that’s what our strategy is designed to to do. And I hope that it gives you the peace of mind of knowing that you have that to backstop. And so please share this video with your friends. If you have any that are scared to death right now, maybe you can throw them a lifeline and have them come onto the onto the boat with us. And so share this video with them. Please like and subscribe this video, it really helps us a lot with all the stuff you know, with technology that I don’t, that I know nothing about, but I’m told to tell you, and so I hope this video has found you healthy, wealthy and wise. I hope we answered your questions for you, and of course, we’ll keep you posted, and we’ll talk soon.
Hello, everyone, and thank you for watching our Market Alert Video. It occurred to us, with all the stuff that’s happening and how quickly it happens, that we need to create more content for you more frequently. And so case in point, we have a podcast for you that we made with regard to how tariffs work and how businesses and countries may react to that, and more importantly, how your investments and consumers, which drive our economy, may react to it as well. So click on the link in the description so you can watch that and thank you for watching our podcast.
Please note: transcript has been modified after the time of recording.
Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023