There is an old saying in the world of Wall Street “Sell in May and walk away” Well it seems it has come true again and if you didn’t already sell you might want to take a look at your position and decide if you are going to ride this one down or if you think it is going to be okay.
I personally don’t hold any positions in the market because I believe that it is rigged against me and I also know that I suck at picking stocks. So if you ask me it’s time to sell and run like hell!
However, I never get tired of reading the articles and some of the comments that people like to add to financial news stories, especially the ones on CNN Money. Today they had an article titled “Fear is back on Wall Street: Dow falls 200“. Click here to see article. This is a day after the S&P 500 crossed the 1900 mark for the first time. The article goes on to talk about the “fear and greed index” and how it is at the “extreme fear level” which is an index that is made up by CNN Money. Then it goes on to say that it is Wal-Marts fault, because their earning numbers are poor and then Wal-Mart blamed that on the weather and the government shutdown last fall that slowed the tax refunds.
Wow, all of that stuff is effecting the stock market where you keep your retirement money? The funniest part of the article however is reading the comments. Of course you have the people that are going to blame all the moves of Wall Street on Obama and then you have the ones that blame the GOP, I personally like to skip over these and read the ones of the people that are of course stock market professionals. Like the guy that said he is out until the Dow hits 13,000 or another genius that is going to buy after the 15% drop that is coming. Sometimes I wish I had a crystal ball like the people that comment on these articles. However you will always have the die hard stock jockeys that just keep saying that they are in it for the long haul, you have to “buy and hold”, keep it for 10 years at least.
Here is what I have to say to this whole thing. First off if you have to hold a stock for 10 years to possible make money and you don’t know how much or little money that it will be. Then all the paperwork that is associated with the stock market with all the pretty graphs of how it has preformed end with “Past performance is no guarantee of future returns”. Why not just buy a 10 year annuity with a guaranteed rate of return, know what you going to end up with in 10 years and get a good night sleep? I personally like sleep!
Have you ever heard about “The 4% Rule”? Well let’s start with the fact that it is not an actual “Rule”, it is just a “rule of thumb”. It is the recommended value that you should take out of your retirement portfolio every year and hopefully not run out of money before you die.
I don’t know about you, but that doesn’t sound too promising. It is what you “should” be able to take out of your portfolio and “hopefully” not run out of money? I guess by calling it a “Rule” makes it sound like something you should believe in.
For many years now financial professionals have been using “The 4% Rule” while helping their clients set up a retirement income distribution plan. Well unfortunately times have been a changing and with the last recession “The 4% Rule” may be too aggressive. Another problem with using “The 4% Rule” is that we are living longer in retirement, so we need the money to last 30 or 40 years.
The new studies that are coming out are suggesting that the rule should be changed to 3% or even 2% to be “safe”. Safe being that you only have a 5 to 10 percent chance of running out of money. So now your retirement income will be half if they use the 2% rule to be safe instead of “The 4% Rule”.
This is where using the proper annuity can help you. If you are looking to retire sometime in the next 20 years and you want more than 2% of your portfolio for retirement income. Using a properly structured annuity can get you an income stream of 5% or more and guarantee that income will never run out of money while you are still living.
It is not too good to be true it’s just “common cents financial advice”.
The Bull Market is now 5 years old and some people want you to believe that it is going to continue for a while yet to come. The S&P 500 if up 177% since March of 2009 where it hit its low during the Great Recession and some are thinking that it will go up another 20% comparing it to the Bull Market of 1982 to 1987. I don’t know about you, but I was alive during that Bull Market of 82 to 87, I was actually going to college at the University of Pittsburgh at the time. I can tell you that the world was very different then. My friends were graduating college and jumping into middle management jobs with major corporations, walking around with that big brick of a cell phone and everyone was driving a Porsche 944 turbo. Well maybe not everyone, but I don’t remember my friends saying that they are moving home with their parents because they can’t find a job, or working at the mall just to make ends meet.
The continuance of the Bull Market is coming at a cost like none that I have seen in my lifetime. The media will tell you that there is no inflation to worry about. I guess they don’t go to the grocery store or put gas in their car. I have read articles that people have no money left at the end of the month to save for retirement and the average 401K balance is $10,000. If things are so great why are we all not feeling it? I can’t remember a time when the price of goods actually went down and things became more reasonable. Even during the Great Recession the only thing that went down was the value of your home, where you had you equity stripped from you and got to take it on the chin.
Jeffrey Kleintop, chief market strategist for LPL Financial says that the market will continue to go up because of all the people on the side lines jumping back in and this Bull Market could last another 10 years. However that reminds me of a quote from Warren Buffet, “Be fearful when others are greedy and greedy when others are fearful.” So what if Buffet is right and the people on Wall Street and in the media are wrong and the Bull Market ends, and the market experiences a major pull back? I am not a market predictor but if I was up a over 175% in my portfolio over the past 5 years. I would probably take some of my winnings and put it in an annuity, which is contractually guaranteed not to lose money in the event of a market pull back.
If you have nay question or comments about this article please don’t hesitate to contact me directly and don’t forget to share.
Even thought it is cold outside it’s getting hot in the kitchen. I’m however not talking about the kitchen in your house I am talking about the kitchen on Wall Street. Let’s face it the stock market has been HOT and last years we had all kinds of new highs and new records were set. For those of you that are in the market, you must be happy with the way your portfolios have performed. Some of us on the outside of the market might look a little jealous, but on the inside are happy to know we are not at risk of a pull back.
“Pull back you say? What pull back, this party is going to last forever!” I wish it was that easy but we all know that someday the market will correct itself as it always does. Even the people on Wall Street will tell you that the market is cyclical and they are saying that they do not think that this is going to be a great year. Who knows when the correction will be 2014 maybe 2015 or even 2016. I am not here to be all doom and gloom and try to tell you that the end is near, it is not fear I am trying to instill, it is just some common sense.
For all of the people reading this that think they are going to let it ride until they see something change and then get out, let me ask you this. Have you ever had a friend that won big in Las Vegas? Did you ever ask them how they won? I am not sure how the whole conversation went but I am sure it ended with “and then I got up and cashed in my winnings.” Well the S&P 500 is up over 100% since 2009, that means you should have doubled your money if not more. Now might be a good time to “get up and cash in your winnings”, because they are not yours if you don’t take them off the table.
Look to annuities to help you keep some of your wealth, with so many options out there I am sure we can find something to help you keep your winning safe. Leave me a comment and let me know what your ideas are for the 2014 investment year. I hope it doesn’t get too hot in your kitchen.
Why would anyone want to buy a car? First off you don’t even know how they work, when was the last time you changed a spark plug or set the timing? Then just think about how much they cost, they are very expensive and when you’re done with them they aren’t worth anything. Sure they might be a little more dependable and easier to use than public transportation, but then I am sure that you could figure out how to get from point A to point B without a car.
Why would anyone want to buy an annuity? First off you don’t even know how they work, when was the last time you heard of a lifetime income rider or long term care rider? Then just think about how much they cost, they are very expensive and when you’re done with them they aren’t worth anything. Sure they might be a little more dependable and easier to use than the Stock Market but then I am sure that you can make your retirement money last from point A to point B without an annuity.
Seems a little silly but I know that most of the people that are reading this own and drive a car, maybe it is time to test drive an annuity.
Leave me a comment and let me know what you think of the new blog!
