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Common Sense Retirement 1-4

Jan 4, 2014|

Tony and Phillip

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Automatically Generated Transcript (may not be 100% accurate)

Well welcome. To -- since retirement planning the very first show 2014. Sorry I'm -- dale with my partner Philip Allen and we are going to talk a lot. On the program today about what. The experts see coming in 2014 and our economy and in especially as it affects you. For me retirement standpoint in everything we -- was about that. We of course always welcome you calls at 2329673. Tiered -- -- 57496. And three Spartanburg. And you can call me ask this question we'll do our best to answer them keeping in mind that Philip and I -- securities license we were to capital investment group. Member of Finland Citic and therefore in the end we would give you on the race will be very general. We can give you very specific detailed. Recommendations when you come and meet with us in a free consultation that. Still -- -- try to do that we also of course always I try to keep in the forefront of everything we do. Biblical stewardship principles and therefore we start off the show with something from the Bible. And welcome today. -- of a cold day. But. Wanna give me today is scriptural inside on a state planning. And it's from proverbs thirteen twenty to set a good man leaves an inheritance to his children's children. And the wealth of the center. Is stored up for the righteous. Actually I've I've used it proverb is an illustration of the stretch higher hint hint -- -- there's actually a very -- clearly than you do you do -- the facility just what. -- proverbs talking about might also from proverbs. And I think in light of what you're going to hear today I think is this is very apropos. Trusting your money and down -- But the godly flourish like leaves in spring as proverbs 1128. We were going to share a lot of interest in predictions today. But being a meteorologist. And I just a form the urologist should say. And one that was talk watching this whole global warming nonsense taking shape fifteen years ago. I'll I have to share -- headline just. And they do bring to bear on him talk about. Minnesota worst deep freeze in twenty years. Killer -- snow totals are unbelievable. Man burns down house trying to ball -- With a blow dryer. Americans in seven and a half billion fighting global warming in. Other countries and Arctic ice shelves melt the lowest ever recorded. And the new. Antarctic rescue ship that was sent out to. Rescues the one that was after studying global warming has now gotten stuck itself and now -- -- freeze wind chills seventy below them that the football playoff game. Between Green Bay and San Francisco they're saying that the wind chills -- could -- be the one below zero could be the coldest football game ever. Owner Sam Cisco's looking forward -- -- -- -- -- KE YI I I did have were these ties in the knowledge you can lead all but. -- When you have this type of winter and is still early on the coldest part of the winners still had us. It means people are spending tremendous. Amounts of money on energy to stay warm. Well if you're gonna see when we talked today one of the greatest challenges in the coming year for the stock market and for the economy in general is going to be consumer spending. So on top of the -- MacWorld things that we will talk about today I want you to keep in mind if we have. -- record cold winter it means record high cost people are going to be Payne just -- they keep themselves warm. And that is going to be money they can't go out in -- and at Wal-Mart. And they -- -- spending more for health care. They're going to be spending more for taxes. Pretty soon your tax. Is going to be you know 11 postcard -- believe in this going to be what did you make in this and be -- and -- here. Another thing that's coming that Jack realizes that congress has given. You know car launched basically to raise the debt ceiling as much as it needs to be raised. And Tony and I are gonna try to give you an idea of of where we're headed next year. But I saw this Tony ended in the will. Go from there but it's a little bit dated but I and you know it's I just liked the way they lay this out you know you hear numbers like tax revenue of two. Trip you know tree and 170 million dollars a year Fayette -- 3000000800. You know 3000000000820. Bay and yet that doesn't make sense to people. But they said let's just take all that and take 80 is a way and assume. That the government is a family budget. Says the -- annual family income is 21700. Dollars. The money the family -- it was 38200. The new -- on the credit card is 161500. Dollars. And the outstanding -- on the credit card is a 142710. Dollars. And the budget cuts so far is 38 dollars. You know big you know if you saw family like that you'd say this family is hated for what bankruptcy. Now this -- Stanley happens be able to print money. But how long can that last that I like the weather since that you got it well here's another way to look at it let's say you come home from work and there's been a sewer backed up in your neighborhood. And your home has sewage all the way to the ceilings. And what do you think you should do. Raise the ceilings or remove the crap. Congress said they should raise the ceiling -- half half. That is -- roots mean. Okay well since since you brought aren't dead in their foolish government let me let me just share a couple things we can never talk about some predictions. The federal government went on New Year's and this is from. CNET news. The federal government on a New Year's being changed adding -- -- Hundred in 25. Billion dollars to its total that in one day December 31. That equals approximately. Thousand. In 88 dollars and sixty cents for every household in the United States and overall during the first quarter of -- fourteen. The total bit of the government jumped -- and it which ended of course. Between thirteen and 613. Billion. That's an and an additional 5336. For every household. In during that period. Congress -- threw it Treasury Secretary -- is asking treasury. To use extraordinary measures to prevent a debt from XP and statutory limit which is what field was talking raising the ceiling. Well guess what it isn't just us. There's a paper now. From. Two of the best economics expert in the world they wrote a book and if you wanna read -- really get a feeling for what's happening from historical respect you go read the book. This time it's different eight centuries financial folly by Reinhardt wrote off for these two economists have written the paper for the International Monetary Fund and this is what they're saying. The western world is so broke that it will require defaults. Government imposition of the saving tax on private wealth and other harsh measures to recover from the worst perilous economic times in modern history. The magnitude of overall dead facing advance economies is difficult to overstate. The current central government debt. In advance economies is approaching 8200. Year. High watermark. And the -- solutions so far. Or many none of them are more -- dressing and essentially one of the things are talking about is just automatically taking money that you save raiding pension funds and this sort of thing. Now listen this is is interest in government gross debt to GDP. Ratios and 2014 forecast to be 95%. Debt to GDP that's -- -- that in the Euro zone. US 109%. In the coming year. And here's what I find interest. In emerging economies it's only 33 point six there's a bond fund Philip and I used to Barca. Liquid assets and for a lot of our clients. It was remember one point -- bond fund in the world and that's what they do they invest in this sort of emerging market day. One of the things that them. I've got an article here in -- is an address -- -- said that. The stock market has officially entered crazy town territory. And when you look at the investors' psychology cycles. You know you go from. When the market you get -- on the market starts Goodell bit anxiety than you get in denial fear. Desperation. Then panic. Mean capitulation to despondency. But then it starts back -- Depression. -- relief optimism and excitement 30 but now we're in the euphoria stage. And it made it just it is just incredible that people think that this is gonna continue to. -- One of the great philosopher Sanchez had those who failed to learn from history are doomed to repeat it. Back before the big tech stock crash. Alan Greenspan. Warned that we were entering a period of what he called irrational exuberance so let me just. Give you some definitions of the word first. Not endowed with reason affected. By a loss of usual normal mental clarity incoherent. Inconsistent with reason logic of server to. Lacking the facility to reason deprived of reason lacking sound judgment not controlled are governed by reason. This is where we arrived. So. I'm gonna try and Philip is going to try to -- to give you some reasons to stop and take stock of what's actually going on and and not listen to that happy talk coming to you from Wall Street so I'm starting with the -- from the Wall Street Journal. This is the bearish called wind all bearish calls and what may be the bearish call of all for 2014. A fellow by the name of Walter Zimmermann is calling for the Dow Industrials. To drop by as much as 90%. Now. A minute start backwards on this one because there's something under way it's that you should pay attention to listen clearly it is. Warren Buffett. Who has been cheerleader for US stocks is dumping at a huge rate. Now this is something -- properly 70% of the economy is dependent on consumer spending. He's dumping consumer stocks fast as he can't and so was John Paulson another billionaire hedge fund guy. -- fourteen million shares of JPMorgan Chase their entire position and Family Dollar in Sara Lee. George Soros -- briefly so all -- bank stocks including JPMorgan Chase Citigroup Goldman Sachs. And more than a million shares. So why. It gets back to what I'm telling you this this is this fellow Robert wiedmeyer. He is an economist -- New York Times best seller book the aftershock. In 06. He in a team of economists accurately predicted the collapse of the US housing market equity markets and consumer spending. At that time. Column as the Dow Jones said this was one of those rare finds that not only predicted the sub prime credit meltdown well in advance that offered main street investors a winning strategy. Well here's what he is saying. That we are going to see. Possibly. Of an uptick in the market of four more percent or thereabouts in the early part of the year. But once this thing starts to to draw he believes that you could see. All three major indices. Tanking by astounding seventy to 90% numbers now. If he is even half. You should be paying pretty darn close attention to it. And that goes to the old saying what's the best time to get off the Titanic you know is it when they let the lot closed down or. You wanna crawl out of port hole when it's already 500 feet under the water. You know it's always better get off on their letting the lifeboats downside of now would be a good time to look at locking in your games. From zero -- it's at every asset that depends on cheap abundant credit housing bonds and stocks is didn't. And so what -- stocks bonds and housing although down together why it was such an outrageous thought even occurred to me. It said four words financial as the nation's. Democracy and diminishing returns the entire global economy developed and developing nations like is now dependent on cheap abundant credit for everything. For growth of an asset inflation ultimately the Central State deficit spending which props up all the car tales. -- -- All the wheels fall off the entire. Financial lies democracy wagging once -- wagging -- wire again. Once yields rise there's nothing mysterious about it now and in the four easy steps. As interest rates yields rise all existing bonds paying next inept and plummet in market day. As mortgage rates rise there's nobody left who can afford housing bubble 2.0 prices so home prices fall off a cliff. Once she -- 5% plus shield on cashing in few people are willing to risk capital in the equity markets in hopes they'll concern. More than 5% yield before the next crash wipes out about 40% of their equity. As asset classes declined lenders are wary of loaning money against these assets. If the collateral for the loan real estate bonds stocks etc. are in it waterfall decline no sang Lander or risk capital on a bit of collateral be sufficient to cover losses should the bar to follow. And what ends up happening housing bonds and stocks although down at the same time. -- That's sobering and well this is from national review online. Politics of the US economic under performers now this is this is -- -- -- -- here. Brad -- Said that. We are going to see some major changes your racist. During the two business cycles and proceeded -- seven and -- downturn the economy's real per capita GDP grew at 2% average annual. Indeed for a century or so of the economy's real GDP growth -- groups at that rate or better. So US output. Is now seven years or 14%. Below the level that was reasonably expected in 07. And there's nothing on the horizon that would return the US economy to or even mere. Its growth path before the 2008 financial crisis -- Indeed. If there is constellation it is that Europe and Japan are doing considerably worse. US economy's annual per capita underperformance. In between fourteen -- -- amount to 9000. Dollars. That means 9000 dollars per person. In consumer durables and not purchased. Vacations not taken investments not made and so forth. By the end of 2014 cumulative per capita waste from this crisis and its aftermath will be in total 60000. Dollars. If you project that forward. With nothing visible to restore. The US to its pre 2008 growth -- The annual real discount rate of 6% that we apply to equity earnings. The future cost DNR a 150000. Per capita. And if we use the one point 6% annual discount rate. At which the US treasury can borrow -- thirty year inflation protected treasuries. The future per capita cost jumped to -- staggering 550000. Dollars. Each per person. And if we combine the cost of all idle workers and capital during the downturn and the harm done to the US economy future growth path. The losses now reached three and a half to eighteen years of total US economic output. That is a higher share America's productive capabilities in the Great Depression subtracting. And the US economy is sixteen times larger than it was in 1928. So. Unless something and will lead to be something major. Return is the US to its -- 2008 growth trajectory. Future economic historians will not regard the Great Depression is the worst business cycle disaster of the industrial age. It will be us who are living through at worst case scenario. When looking at reasons to lock in your games this year and we really do not expect we expect the market there'd be a major correction in the near future. We have to let go overseas as the article saying in the first play issue that is China and China Tony is that if Wal-Mart had a recall China so well in his article about it that Wal-Mart recalled a bunch of meat in China they recalled their donkey meat. Because they had found out that in their donkey meat that they were -- in China. They were showing up a lot of fox -- -- and I don't think that's ever happened in the united. But that's true you like Google Earth but that's a staggering though as their -- teammate is being recalled. But on a serious note. When we're looking at what's happening in the world economy. Out of Bloomberg which I'll consider very conservative. Web side at all. It talks about a financial drama is unfolding mrs. January the second a financial drama is unfolding in -- the new year median last week for the second time in six months. Interest rates in the critical Interbank lending market spiked about 10% prompting fears of liquidity crisis that would trigger man ST files in cripple the world's second largest economy. Western investors largely ignored the cash crimes and failed to get. Gas that's the forty and -- grass is potential significance. Although the situation has largely eased after the People's Bank of China hastily injected at least 55 billion into the market that isn't the end of the story these repeated crisis is. Our science that the foundations of China's investment driven growth model are crumbling and unsettling implications for the rest of the global economy. If you go on -- details wine what's happening is this basically is bad day it. Is -- the implications of this ruins former bigger than meaning global investors realize China's credit fueled investment and has been a driver of metal prices and machinery exports China has become the world's largest automobile market is the largest coal importer and the largest buyer of gold. Although foreign banks have relatively little direct exposure to Chinese financial markets capital flows into and out of mainland -- potentially larger net. To have a significant impact on asset classes not normally associated with China. A financial train -- would send tremors through the global market -- -- China's runaway train is running out of track. That's -- just like that movie unstoppable has tonight's it's a real image for you. I think I I mentioned George Soros earlier Philip I read that I've got in my -- that you're someplace. George Soros. Gave a big warning on China last week on that very thing and he says he's you know he's not investing in China lets them -- thinkable Gemini and appreciate your patience how are you doing. And divides -- -- you. They're here and just for the record I am Clark sort of -- it's obviously thank you -- the right that our general question. I understand everything that's coming. And I have it or want to work with limited options and unfortunately. I can't get the money. And as -- and I'm still imported. But the only options or bond and stock mutual funds. So how do you figure out what's -- crashed her bonds stocks or is it even possible. Well one question need to ask is with your bond fans are their no money market fixed account alternatives at all. -- -- There will pay based they're listed as income -- when you go look at the holdings there it's it's -- -- When it's very limits. We ask you this do you have any emerging market bond funds. I'm the only thing I have or international forums but we're still pretty small arms there are heavily Japan and you're in the -- small emerging market. It's that I had never heard of that. 41 K it has no money marketer cash position. Is that where I would recommend you you know that you would. Dave you're concerned about a downturn goes right to go to. Sidelines and cash in until things are -- -- use facts that this -- your house is kept calling herself she shoot early and we'll talk about it you know. Off the year if you like to an Internet search affects me passionately what you have -- -- mean look at it in Indian. And you know we can talk about. Ordinarily the answer we would give you is if you have a money market option. Would -- be this year. Lock in your -- move your money to the money market and then this year just accept the match that they -- you on the new money you're investing and be more returned. Be more concerned. Of return of principal than return on principle for the next twelve months. Do we see what happens with this market which you need to have some type of principal protected option and if you don't that he gets kind of is it's a more difficult situation so we'd like to see what all your options are and then you have a conversation with you about it. Yeah did she meet junior's staff next week you know looking. Out there aren't happy new year -- here who aren't. Yeah it is it is a dilemma. Such as investors have never faced before because he I was looking you know I've been Pimco bill grosses. Made some bad it's been crow code did not has not really done well. But we've had a long long run in -- in emerged it -- in in developed world bond. -- And part of what Phil was just talking about it that article and one of the things you need to be concerned about his. You know the safe haven bond that go to bond historically has been in the US treasury in right behind it's the Japanese did in European debt. Those -- the countries that are -- getting ready I think to suffer the most. And this is a true story but at the table before the break we would likely to come and talk with us and let us show you what the really great options for retirement planning a war. And don't assume that you know what they are because it's a very complicated subject we live in very complicated times we give us a call at 100. 6876768180687676. Say. And is so complicated Tony that I had someone asked me last week and -- got an article on it whether she should invest in those are not. And that a powerful -- just and I -- know you can invest in Noah's Ark but apparently you can and album we come back from break. Owner -- take little bit about that you know people are looking for ways to make money. And now. They're one when I was asked that I thought she was joking with me but she wasn't so there's an article here Bloomberg about it we'll tell you about investing in and Noah's -- when we come back. Okay you keep the umbrellas and you already all right. Listen again and number 806876768. It's a complimentary consultation -- coming get a second opinion. I'm Tony -- with Philip -- we have much more to tell you about what's coming in 2014 so stick around we'll lay it all out for you. Right after the news. 86760. So. Welcome back to common sense retirement planning on this cold Saturday morning this Philip Allen with my good friend and co host Tony day off. My New Year's resolution was pictures as more and I'm feeling pretty good about that I've only missed three day so far. And that's pretty good for a whole year and hopefully that out that that track record will continue. I talked to you before LA after that. Noah's -- risked collapse without bond buyers by February this is an article in Bloomberg. -- a Kentucky thing park to be built around a full scale replica of Noah's -- makes think unless investors purchased about 29 -- and unrated municipal bonds by February the sixth. The northern Kentucky city of -- -- in December issued taxable bit for affiliates of answers in Genesis they Christian nonprofit. Company. Data compiled by Bloomberg show notes. Now answers in Genesis is a wonderful organization with the creation museum and people just love it. That they want to build another thing park built around a full size replica of Noah's -- well they haven't been able to raise the money that they need. We still need these are supporters who were able to purchase our bonds that club losing. To prayer fully consider purchasing in a secondary bond delivered the level they had indicated to us. We police step out in faith with us will. If you do this year really gonna have to step out in faith because. Industrial development bonds are considered the riskiest in this little bit because they account for the large proportion defaults and three point seven trillion in this -- market Williamson issue the bonds without a rating. Making the prospect of repayment even less clear. The first phase is estimated cost 73 million about fourteen million had been raised the for the bond sale which disposed to make up the difference. Now the reason and should -- this was. -- it just it made a lot of sense -- felt I was really worried about the lady you ask me about whether she it and should invest in and those are or not. And that are realized -- that it really was a legitimate thing even though it may be an extremely risky venture. But the one thing that we know about Noah's -- The people were warned and what Tony and I are trying to. Do with you today thing is warn you that the rains are coming. And you know what in noah's day he had never -- before so it was a surprise to the people so he had a lot harder sale. But it apparently. Most people in the United States has forgotten that it's. Never -- before the United States we've never had a market collapse we never had a 2008 that there was a 40% decline. In savings or 2001 and 2003. We act like the market has never gone down we have such short memories. And the last thirteen years if he would have been taking to withdraw 4% -- you'd probably. Getting close to being broke right now because of the strain volatility that we had folks the rains coming again. What you need to do is figure out a way to lock in those games. But just like when Noah's -- I'm very few people listen to the warning that was giving. In the news so much every day you probably this point almost -- of obamacare fatigue. Of hearing about it. -- is like the horror story be sure. Of Obama. If you -- that. You're not a lot of people are thinking about what is going to be the overall economic. In the end that's going to occur we understand. It's going to affect their health care cost on a personal level but we shouldn't think about. He's read this I don't have them the paper with me but I remember stance essentially was articles talking this very thing. And you may know I mentioned it earlier that 70% of our economy is consumer spending. So there was a study done to find out to reject well how much. Consumer spending might be affected by this. Well it turns out that 40% of all consumer spending. Is done by how souls. Making 100000 dollars -- more you have the you have the the peace in their program. Anyway. So so think about this for second if that is true 40% of all consumer spending that 70% of our total economy. Is in house rules. A 100000 now that that could be just two couples making 50000 dollar hardly rich. These are the people who are going to get hit this year. Which two major problems. Because of obamacare the first is going to be a dramatic rise in their health care cost I mean you can just go on the Drudge Report pick up a newspaper listen. You stories are coming out every day about just my jaw dropping increases in people's. Cost for insurance and that these this size of their deductibles. So there so that is disposable income it's going away in 2014. Secondly. There are. So many new taxes. That are going to come into effect because of obamacare. There are also going to be affecting those same people the higher your income is the worst attacks by our new. And all of this is nothing but what income redistribution. Taking from owners giving to people who are in the lower. Socio economic groups many of whom have. Existing. Conditions and problems social and in effect what's happening here is obamacare is taking from the healthy in the wealthy. Giving to the sick and the poor would you like it with you don't and if forget the philosophical aspect of it for me surely economics standpoint. In an economy that we have that is by most measures in a terrible position. Anything you do to slow the economy down cannot be a good thing well. This obamacare is going to be one of the biggest hit wings were going to face. The stock market has nothing to do with the not economic reality. But that divergence kits can only -- happen for so long eventually reality will ketchup. With the stock market and somebody will yell out hey. The king has no clothes you know and then everybody else is gonna start hollering at the same time. Obama care. And I have your goals on the -- that. This money that the United States is training we're sending it off to China you know one thing that we cannot rely on is that. People pay it back well if China gets in trouble they may not be able to pay in you know we may now be able to pay them. But the one number one day it at the United States is student loans. And you know and they are just giving student loans away to people encouraging take student loans. And they want to give you a student loans seeking to get a degree so you can get a job. And so. This is out of main street. This week. Student loan write off surged. Equal fax one of the nation's three major credit bureaus along with experience in training and had found a steep rise in the right off a student loans this year. Between January and August of 2013. Lenders -- off thirteen point six billion in student loan and it. Private and federal a 46%. Increase from the same period in 2000 wailed at the peak and and that -- a man out at any point during the last eight years according to equal effects data. Here's what happens with student loans and I'm Tony this is this'll happen once the once people start hearing that some people are not paying their student loans. What do you think's gonna happen to all these other young people. Who are sacrificing. And not getting to go out and not getting the car they want and not getting that the calls they're paying their student loans. And bankruptcy is so easy in this country right now. And you know. The government. Not only is facing -- the situation where they may not get these loans paid back. On you know greater and greater. Proportion but they end with interest rates going up the cost of the day -- they have outstanding is getting more and more expensive. And so. How are they gonna handle this. They're gonna handle it. Back higher taxes everything that Tony's talking about but what we're trying to warn you about today is. Don't think that 2014. Is going to be another 2014. In the stock market. You need to lock in those gains and if you don't know how blocking your gains if you don't understand what retirement plan is give us a call at 1800. 6876768180687676. Say. But if I was a student had a big -- now now is finding out that most people are paying them back in note. If I didn't have some kind of moral compass. Part of the chances that these loans are going to be paid back I mean what are the chances time. Well if I might give you a parallel because the it is indeed the exact parallel this same template. Can you say Fannie Freddie. And no interest loan that this is what exactly what was the precursor to -- -- -- if a factor. In the crash of most of generally exit then. The -- we're talking about -- -- we're talking about was more pitched. And the government supposedly was going to back at one now the government has taken over the student loan business. Either would you realize what a big complete component of our total. Even what we have as a nation when you look at business you have debit and credit to you have assets. And you have things that you well the biggest. Asset. Do we have bigger than treasury did -- 44%. Of our national asset it is student loan debt in other words. Accounts receivable -- what if you don't receive them what happens what is exactly the scenario field just projected -- What happens is you get a cascading negative feedback loop just as we did with -- seven and only. When people quit paying their mortgages because he couldn't and jingle mail started coming -- that's -- sending the keys to their house and injured walking away from the long. And what followed. Was the crashing of the stock market. Because that was all star park was built on this house of cards. Call -- called mortgaged. And that rising economy. Which. Is amazing to me we sat right here at this microphone. A year or better before that crash occurred in cold people. Here's what's common here's what's coming be careful be careful. And what do you do any young person that wanna pay is still a long back you know they say well you can't declare bankruptcy on -- -- on the student loan. Well there's no better prisons in the United States I mean you could garnish their wages or something like this admit that they ever have. Because you have a president who's gonna do everything he can't he's even -- remember he's the guy. They've got the government to take over student loans and he did it on purpose because that's who I believe. This is a prediction in this upcoming election you're going to see the left offered. Just like they're trying to do with extending unemployment benefits. For him to ride off student -- we think that'll do the economy. And talking about drags on the economy next year. This is like a hiker who has overlooks several danger -- -- he had signs the Obama administration's stepped back suddenly last week delaying the individual mandates for those. With cancel policies the reversal came in response to complaints from middle class shoppers on the Obama care exchange you found themselves on the wrong side of the -- subsidiary clear. And this is from investors business daily by the way for those earning more than four per 100% of the poverty level about 62000. For two adult households. Obama care provides no premium subsidies. That's -- -- minor issues. -- primary rationale for obamacare insurance reforms limiting age rating and precluding pricing based on health status has been to ensure people be able to afford health care when they needed most. It is hard to argue that the law measures for those who earnings but Obama care -- just out of reach. An investor's business daily announced fassett middle class households -- late fifties and sixties could spend 25%. More or 25% or more. On their income on health care before their deductible is exhausted you know. One of the things also in health care -- our rise further you know the average person at least 25%. And then the young people are gonna take it out to star point. So where is the consumer spending growth coming for a all right let me share this this is an interest in peace from the blaze that -- Glenn Beck's website and this is something worth taking at five things you could go wrong 2014. Number five. Rising interest rates possibility that sharp rapid move in interest rates while improving economy should be able to withstand. A higher rate involvement initially in the long run it could have a very deleterious effects. Number force slowing profit growth and this ties into what we were talking about earlier consumer spending these companies are not going to have profits to report if people are buying the goods and services of the -- -- it. And those stocks are going to begin to suffer. Earning seasons just getting underway in the middle of January and this will be your first test. -- stocks and we are already getting it is at this point some some some rumblings that they -- rulings aren't looking real good. Inflation and other concerned it is printed four trillion dollars and so as they step away from quantitative easing at what point does inflation kicking. And you have Philip mentioned earlier the debt ceiling debate as number two that can pick up steam in coming weeks. It could be a political dynamite. And get people worrying again about all of this stuff is removed for the middle of the year and finally there are geopolitical risks there are some huge. Overseas threats. There's what's happening in the Middle East with Iran in Israel and Syria and Lebanon and there's also Saber rattling and -- big order going on in the Pacific China Japan and Korea. Are starting to grumble one another. These are all things that can have a tremendous impact. On us in the coming year and there's no. Knowing when these will occur the why we are we telling you this watch. Why did all of this dire. Prediction. Is very simple. We are retirement planners. Our goal is to protect people from the three big risks they -- which market risk inflationary risk and longevity risk or. Running out of money in your report latter years. So everything we do is built around safety. Protection. Asset protection we we do not want people to lose many Phillips is so well earlier. We are more concerned about return of principal than return on principle now and and I'm not saying we don't get return on principle we do. The strategies we use indexing strategies have worked very well but. The point days. If if you have done well when you've got yourself back to where you close to or maybe even little -- where you were before the that was a 57%. Drop in the S&P you know 757%. You may be back now because we've had a good run up since that. Now's the time to take your assets off the table and go into a situation where you can. Put a zero stop loss on your exits. Track an index. And haven't annual caps lock in of whatever you. When you go to junior rock there's a 500 foot waterfall. And when you go down to the waterfall in the top that there's a sign in now is. Get a kick out this and I'll say is this cross this line. -- your life. Okay fat and -- only if he talked to a young person or some like that you know they must say you know teenagers and so all and down there ID field. But all you have to do is slip one time. And he'll be hurt you get killed when you go over 500 foot -- -- you're approaching retirement. And you make a mistake and go through a major market correction like we had in 2008. There's people who made the mistake and went through that correction in 2008. And they just again -- little bit they're going broke now they lost their retirement. There one precious retirement savings got killed because they still had to take withdrawals even though. You know the market was down. So don't you know don't cross that line. You know what we wanna show you is how to turn your savings into a retirement plan how to turn. A spending plan how to turn -- in the mailbox money. So to speak that's what's important going forward is money that she came out -- -- -- locking your gains on an annual basis won't show you how to have. How are potential rates much higher than they need to get in CD's. We will show you how to have your principal guarantee get off that roller coaster. Guaranteed lifetime income you Kahne -- but these dire warnings. Hate town in our zone most positive people in the world. But the Bible says a prudent man -- evil coming in pads and sales. And we know it's coming we see it in front nervous. But for some reason just like the gambler in Vegas when things are going really good nobody can pull him away from that table -- Well there's a there's a multi billion dollar industry here. Called the investment industry. I called the investment industrial complex. And their minions in the mainstream financial press. Who spend all their time trying to convince you to stay invested keep taking risk don't. -- market always comes back over time don't worry about a thing that I've used the analogy before -- -- -- one. If if you think about it. From a boating standpoint from a sailing. By the way if I might I got to recommends it. All is lost and news Robert Redford film one of the best films I saw this year and asked them that this whole movie is about this blown sailor out there by himself. And stuff starts going wrong and how he deals with it in the middle of the Indian Ocean and -- -- and so forth. So here's an analogy he investment industry would tell you. That it's gonna be fair weather all the time so therefore you can run up all the sale he won on your. Just -- its goods in the girls up on the Ford Clinton Sunday sit in the cockpit have a -- And just enjoy the right is is going to be ages with fierce weather sailing in heaven. Then all of a sudden. In the distance you see these clouds roaring -- you when you call your friendly sailboat salesman told the vote and you asking say hey listen you told me that you did -- it only deduce from assailant. -- kind of -- money in anything more icy storm -- should I change my strategy here do some different. No no no just keep on sailing it's going to be fine the market always come back over time did it feel regret doing. You do that. And you in everybody aboard that boat has a good chance to die. Because what you need to do in the storm is drag all the sale offer that would give everybody below batten down patches turning into the wind or do whatever and as. You'd change your tactics -- you go to a completely defensive protected. Well that is what we can show you had to do it doesn't mean you stop making headway doesn't -- -- moving forward in the boat it means you do more safely. And we're trying to encourage people not to take a risk we're telling you the opposite of what. Some of these clowns and were telling you on the mainstream press only to love lead expensive commercials you'll see on TV for all these advisories for him. So give us a call 806876760. As the number. Again 806876768. You can also by the way go to our website. Tony dale info dot com Phillip island. Either way at least avail yourself. Of a different perspective. Usually in traditional. Asset allocation. Retirement funds that you used to junior for one care thing they'll have a you know you have your bond funds which are considered last tree just in the in the your stock funds right now the bond funds are not less risky because -- the interest rates situation and if interest rates go up bonds are gonna be killed and may not be protecting you at all. In one particular type of bond said underfunded pension plans are causing widespread. Right I have can't read today widespread problems for cities and states around the country. One issue is that pension payments eat up a growing share of state and municipal revenue. Local government and services face reductions. So we're talking about municipal bonds. This is happening in too many cities and towns across America socialists services because they can be cut market. Because pigeons in bonds are constitutionally cannot be -- They're the protective class you're going to see a real issue of neighbor against neighbor in these very issues Illinois faces a large pension shortfall. In pages now gobble up 20% of the State's revenue. Says the median pension funding totaled 69%. Last year the median. Middle. Only funded their pension plans six dollars out of -- dollars. And what's gonna happen is you're not only gonna see these fallen value you're gonna start seeing defaults. Especially if these interest rates continue to rise and we have a stock market clips you know what these pigeons are doing in order to shore up their finances. They're going always end to the stock market in this year it helped so they're sitting there with -- all their money in the stock market. Taking enormous amounts -- risk because that's the only way they think they can dig themselves out of this problem. And what's gonna happen is they're gonna still be invested when the market turns around. You're right attack -- review the de -- that Illinois has is under -- to the tune of forty. Only 40% funding and -- south Carolina's underfunded the beer is going to be. A pension crisis yet in -- -- what it's interesting. If you you can see -- in nature you can see it in team history. That -- and one -- in big event occurs. It's connected. To other means everything now is interconnected and the way it's never been connected before. So what. Can occur in we've already seen it in our own just in the last fourteen years that the dotcom bust in the the real estate collapse in the last collapsed. It's what's called negative feedback. One thing happens it feeds into another. Sector. And pretty soon it affects the next and so forth like a domino effect. And in an Indy starts to feed on itself just as just as the tornado would do and and creating negative what's called a negative feedback. And you get these. Rolling crashes. They go on and on and we still. I mean we've we've shared so much information about the the underlying economy. On this program over the years that clearly demonstrates that that we never. Actually recover from the recession there's all kind of these bogus nonsense that comes out of Washington tried happy talk make you feel better is not true. Stock market being up does not mean that there are not the hot and highest number of people. Not working. We've had since this seventies. We we are facing a difficult period and if you are going to survive all I left them demographics. This is happening at a time when the largest demographic group in the country baby boomers are retiring. Don't ever lose sight of the fact that they are the ones that created the market for -- 82 to 2000 when we were put money in our -- case -- We're retiring now 101000. For the next twenty years. Don't destroy your life savings people tell -- live. I'm about did well in 2013. And I'll take my money out you know if they started the mark star turn around I'll get my money out. Probably the mass vast majority of people won't have learned this from experience what happens is. You lose 5% your money you take your money out no you know people say well I'll wait till I get my 5% back then they get their next statement they're down 10%. And there's -- one I can't get apples on timbers and now wait till it comes back and and the next thing they're 20% down McCain tell their wife. And then when they come and see me they've lost 40% of their money and they destroyed their life savings. And are really don't have anybody in between I have people coming now that are blocking in their games. Or have in the past and then once this happens once people is about four and cannot stand it any longer. They'll come Timmy in the end what sandy is a lot of people once they loss 40% last time. They didn't come to someone reputable they went to things like Carolina investors -- you know ball the silver scanner and then lost the rest of the money. You know it's a very dangerous thing you have to you need to locking your gains while the markets. That's when you make the decision so please give us a call 18068767681800. 687676. Say. It's kind of like what you're talking about pension funds doing people out there trying to -- desperately to make up for all they lost. And they're doing a lot these trading. Schemes and stock trading systems and all this -- I make a fortune in -- jump in here and do not realize the risk that they're going to take and listen here's the thing you don't. Ask. To get return you don't. You come to see yes. It is. It for a team meeting all we do sit down and we ask you some questions about what you're doing and look at your statements in the step he brings his snapshot of kind of where you war. Talk about where you wanna go where you wanna bees. And then we put together some ideas and shall -- if you like for me to them if you don't you don't it's that simple. There's no pressure deal going on with us but -- give us a race. The number again 806876768. Saying you take your call in and and set up an appointment with one of us and -- well we'd love to meet you. Yeah I think you enjoyed meeting is certainly enjoy it with Phil feasible for any human being on the planet. But give us a ring 180687676. We thank you for your business -- thank you for the people that came in last week or new clients in 2013. We look forward to 2014. Gobble us.