Hello, and welcome to our Market Alert Video for today, which is August 11, 2023. And I want to wish every one of you a wonderful, wonderful day and weekend, you may notice that the background is blurred because I’m actually in Colorado as I record this, and according to the forecast, the high today is going to be 71 degrees. I don’t know how I’m going to take it. The good news is that my grandson is going to be joining us up here in tomorrow as a matter of fact, and so I’m looking forward to seeing him he’s gonna be turning two in about a month. So he’s starting to be quite a little character. So I’ll keep you posted on that. But we’re having a little bit of a family reunion in Colorado.
So I want to talk with you about what happened this week. And of course, the big thing was that we got the inflation number, the CPI came out. And as we told you, it would, we said that we thought that inflation had bottomed in June, and would start to pick up and of course, the number we get in August is for July. And so it went from the 3.0 to 3.2% inflation. So it’s starting to trend back up just as we thought it would. And so it helps to validate our view that inflation is going to continue to trend upward through the end of this year. And probably and in our view start to get closer to 4%. Before the year end, what’s driving that are three things, basically one of them is the math of it, how they calculate inflation. And we’ve gone we’ve shown you that calculation in the past on these videos. And the math of it is that inflation is going to go up because we’re comparing it to the month to month change from a year ago. But also there are two main drivers more importantly, that are causing it in our view, one is housing, housing prices are starting to go back up again. And, of course, housing is one of the major components of the inflation number. The other thing that’s happening is that wages are remaining very high. And of course, that’s very inflationary also, that the so two very large components of the inflation number are remaining stubbornly high. And so therefore, we think that inflation will continue to rise through the end of the year, and the Federal Reserve’s job is not done.
Now, that is counter to what it appears many people think they think that inflation, you know, mission accomplished, inflation’s come to heel. And not only that, but the Feds gonna start lowering interest rates in the second half of this year. We don’t think any of that is the case. In fact, we don’t think the Fed is gonna be lowering interest rates until next year.
So what does that all mean to us? Well, it means that we’re, we may have what we’re branding now, as an inflation shock, okay. So if we see inflation pick up again, in August and September, then people are going to start saying, Oh, my gosh, maybe we were wrong. And if that’s the case, they may sell and take some profits. And that could cause what’s called a correction, which is a drop in the market of about five to 10%. These are not unusual, they happen very frequently. And they’re also very short lived. And so we think that if it does happen, it won’t last very long. Because there’s a large number of people that are wishing they had gotten in, they’re like I missed out, and I want to go back in but the market keeps going up. And I’m, you know, I want to wait for the opportune moment. And so because of that they haven’t gone in, so you get a correction, and they’re like aha opportunity. So they’re gonna, in our view, they’re gonna buy in, and when that happens, that correction will correct itself. And so that’s our view is that we will be higher at the end of the year today, at the end of the year than we are today on our stock portfolio. And on the way, we may have a five to 10% drop in the stock market, that will rebound quickly. So make sure you’re wearing your seatbelt, but we will get to our destination.
Now the other side of the equation is the bond side. And if our view is correct, then bonds will continue to lose money for the rest of this year as they have during the first half of this year, which continues to mean why we should not be in them. And as you guys know, we have not been in our bond portfolio since last April of last year. Now we’re still not there. So we’re in our money market fund with the money that normally would be in bonds, and it’s paying over 5%. So we’re getting paid to wait and be patient and so we’re gonna keep doing that. And we don’t think we would be getting into our bond portfolio until probably next year. So that’s where we are.
Want to give you a quick update on our basic conservative we’re working hard to get that ready. We’re Developing a cash alternative strategy. So if you have cash sitting in savings not making very much and you want to look at an alternative, we should have that for you soon. So stay tuned for that. So I’m excited about it. And we think we’ve got something that you might be interested in. So we’ll be launching that here in the next month or two.
So overall, things are going the way we thought they would inflation starting to go back up, inflation shock to come, not to be overly concerned. And it will be higher at the end of the year than we are today. Having said that, thank you for letting us worry about all this boring financial stuff for you.
We want you to be out there being a SCWPer, which is your second childhood without parental supervision. And if you’re not a SCWPer, yet, because you haven’t retired yet, our job is to get you there. So we’re going to work with you to get you there and make it as fun as possible along the way. So thank you for allowing us the privilege of being your retirement planner. You cannot even imagine how grateful we are from the bottom of our hearts. We are so thankful that you have chosen us and that you have the trust and confidence in us that you do. So again, share this video with as many of your friends recommend us to everyone that you can. We want to help as many people as possible to become SCWPerS. So thanks again for watching this video and we’ll talk soon!
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 MMWKM Advisors LLC (d/b/a Retirement Planners of America). ©Copyright 2023