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Keep Your Eye On Profits

Hello and welcome to our Market Alert video for today, which is Friday, April 5, 2024. I hope that this video is reaching you guys in SCWPer Nation in the best of health and spirits. I hope you’re out there SCWPering in your little tails off, and we actually, you know, we’ve we’ve decided we’re actually going to create a SCWPer tail cleanup crew, their job is going to be to go around the country and pick up SCWPer tails everywhere because you know, we don’t want to be litterbugs, after all. And for those of you who are not members of SCWPer Nation yet, guess what it is our job to get you there. Apparently, there were some clients of ours who met one of our employees wearing an RPOA shirt, and they said, Oh, you’re RPOA, we were clients. We’re working on becoming SCWPerS. So we’re still clients. So that was great, awesome, wonderful. So that’s our goal, we want a bunch of SCWPerS out there. And if you don’t know what that means, SCWPerS is the acronym for a second childhood without parental supervision. We want you to go play and have fun and enjoy. That’s what we want. So let me go over with you what we’re going to talk about today, we had the jobs numbers come in, and they came in hot. So this is very interesting, because in the end the stock market as I record, this is up quite a bit. So the question is why? I mean, more jobs, higher employment, more inflation, that should be a bad thing. Why isn’t the market like tanking? Well, as we have described in previous videos, the attention now has switched from the Fed, inflation, recession to profits. Why? Because the Federal Reserve came out. And they said before we were so heck bent on fighting inflation that if we created a recession, so be it, but then they changed their stance. And what they said is, if we think we’re headed into a recession, we will lower interest rates. So now recession has been taken off the table. And if that’s not on the table anymore, then why do we care whether jobs are higher or not? I mean, that’s not a bad thing. It’s a good thing. Why is it a good thing? Well, presumably, if companies are hiring, it’s because their demand for their products and services, if there’s demand for their products and services, that should create profits. And as you guys know, we believe that profits drive stock prices, the example we’ve used is, you could have a terrible recession, everybody’s losing money. But you have one company that’s doing phenomenally well, their profits are rising. What do you think their stock price will do? Right? So profits drive stock prices, in our view, so therefore, if employment numbers are looking good, that’s good for profits. That’s why we think the market is up as we see it right now. So what does that tell us about the future? Well, for the rest of this year, we continue to believe for the reasons stated here in this video, that the stock market should do well, this year, we’re not concerned about it at this point. What could be the fly in the ointment could be if inflation heats up, and the Fed is now forced to go back to raising interest rates. And now we have the specter of another recession. And that could cause the stock market to go down. But we give that a small probability this point, next week, we’re going to get the inflation numbers and it should give us should shed a lot of light on that. Now I want to talk a little bit with you about our bond portfolio. As you guys know, we bought back in on in the middle of December. And since then, bond prices have gone down. So that may cause you some concern we bought those bond prices have gone down, we’re losing money. Well, that’s actually not the case. Because when it comes to bonds, there are two components that drive what we call the total return of a bond, right. So the first is yes, the price if the price is coming down or going up, that’s part of it. But the other part is what’s called a dividend or the interest that the bond is paying, you have to add the two together to get the total return. And so far, even though the price has come down, the interest that we’re earning the dividends are more than compensating for that. So we’re in good shape in our bond portfolio. We view we still view that in the second half of this year, the Fed is going to lower interest rates. If they do that we could see a significant appreciation in the price of the bonds, which means that we’ll get that plus the dividend and we think that should work out very well for us. So we’re still optimistic. We still think we made a good move, but it hasn’t harmed us significantly by being in bonds so far since we bought in. Okay, so just want to give you an update on that too. So I hope this video finds you in good health and spirit. And please share it with as many of your friends and associates as you possibly can bring them to us. We want to invest and protect, help people become SCWPerS. That’s our mission in life and we can’t do it if you don’t send us people and people don’t come to us. So please do. Thank you 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 RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023