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The 2024 Fearless Forecast

Hello, and welcome to our very first market alert video for 2024. Wow. Love the New Year, Happy New Year, everybody. I hope you had a terrific time over the holidays. And now it’s back to the real world again, I know that what I did was I partied too much, ate too much drank too much and gained six pounds in the process that I didn’t want. And so this January, what I’m doing is I’m on a, what they call a dry January, okay, which means no alcohol, not even a glass of wine for the whole month. And I’ve already lost three of those six pounds just by doing that here in the first four or five days of the year. So it actually, it’s amazing. I think that alcohol is actually the main reason why you gain weight. But anyway, many people apparently when they do dry January find themselves invigorated, they sleep better, they feel energized. And they feel so good that they decide I’m done. I’m not going to drink alcohol for the rest of the year. We’ll see if that’s me. I doubt that one. I like a glass of wine here and there. So we’ll see what happens. But that’s my goal. January is going to be dry. So I hope you’re well. You know, I actually debated whether we would have a Fearless Forecast for 2024 at all. And the reason why is because last year our Fearless Forecast was so bang on. I mean, it was practically 100% Correct. We nailed every part of the inflation, the interest rates, the market, what it was going to do that, you know, that’s a hard act to follow. You know, and maybe we should just quit while we’re on top. But no, we’re gonna have our Fearless Forecast nevertheless. So here we go. This year, we’re calling it the year of the bond. Okay, and as you guys know, we’d like our bonds shaken and not stirred. You know, a lot of those other people financial advisory firms out there, they stir their bonds can you imagine? Terrible! Anyway. And here’s the reason. As you guys know, we’ve, we’ve chronicled this for you over the last a year or longer, as the Fed raised interest rates at an unprecedented amount from practically zero to over 5%. And they did it in such a short period of time, that what happened was that we had the worst bear market in bonds, maybe ever. And so the bond market, the aggregate bond market went down by 23%, which is for the bond market, just a mind blowing amount. So if you think of the rubber ball that you throw down from a high place, and it hits and then it bounces, usually it’ll bounce back pretty high from that. And that’s the case normally in bear markets, when they end the bounce back is pretty significant. So why would this happen? Well, there are two scenarios, there are three scenarios that we see. One is that inflation heats back up again, interest rates go back up a lot. And if that happens, then everything I’m about to say will be wrong, okay. But we’d give that a very small probability. And therefore we’re not going to talk about that. The other two scenarios are one, that the effect of all of those interest rate hikes turns out, we haven’t felt the full effect of it, the real estate market could collapse. And you know, we could have all kinds of terrible things happen. And if that were to be the case, and we have a bad recession, then what will happen is the Fed will lower interest rates so as to combat the recession. Well guess what bonds do if you lower interest rates, they tend to go way up. So that would indicate a rapid rise in bonds. The other scenario, which is the one we think will happen, is that there will be a what they’re calling a soft landing, meaning that we don’t go into a terrible recession, we don’t have massive unemployment, and inflation continues to go down. That being the case, the Fed will say, You know what, we don’t need to keep interest rates as high anymore, and we might start lowering them because of that. And if they do that, then bonds will benefit from it. So in the case of a bad recession, or the case of inflation is under control. In both of those scenarios, bonds will benefit from lower interest rates in our view. So we bought back into bonds and at the end of last year, in anticipation of exactly that. Now, it’s not gonna be a straight line. Obviously, things don’t go up just in one direction, there’s going to be fluctuations and volatility along the way. But we believe that bonds are going to outperform stocks in 2024. Wow. And there’s precedent for that it actually happened in the 80s. When the same sort of dynamic as we see now happened, the Fed had raised interest rates to fight inflation and then started lowering them after that. So the Fearless Forecast, don’t really have a percentage gain for bonds for you. That’s kind of a tough one. But we believe that bonds will do very, very well this year and will outperform stocks. It’s kind of a vague Fearless Forecast, but that’s what we’ve got. Okay, so we’ll keep you posted on it. We do think that the stock market in the soft landing scenario where the Fed lowers interest rates because things are okay, will do very well as well, we’re not discounting that the stock market will do well, but we’re saying bonds will do better. Okay, so positive year on both sides of the equation, which will be a difference that we’ve seen in three years. So that’s going to be interesting and hopefully a lot of fun. So thank you for watching this video. I hope you are well. Happy New Year. Share it with your friends, your family, we want to help as many people become SCWPerS as we possibly can. Those of you who are already members of SCWPer Nation, yay, congrats. And those of you who are still working on it, we’re here to make sure you get there. We want you to have that second childhood without parental supervision. So again, happy New Year. Thanks for watching and we will 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