Monthly Archives: August 2011

The Economic Impact of S&P Downgrade

That, is a bad sign!!

 

The world we live in has just come to the realization that America is not as strong as she once was. Spending $2 trillion more than we are taking in annually and our massive debt exceeding $14 trillion are crippling our economy. The rest of the world isn’t helping either, with the European bailouts of Greece, Italy and Spain by the European Central Bank, raising concerns of the financial stability of the European Union.

The headwinds our U.S. stock market is facing are so strong that the market has now turned, and we are heading for a double-dip recession. Remember just a few years ago…

2007                                                                     2011

National Debt: $9 Trillion                              $14 Trillion

Treasury bonds rated AAA                             Declined to AA+ negative outlook

China – largest buyer of U.S. Bonds             U.S. – largest buyer of U.S. treasuries

Low unemployment                                         High unemployment

Your home had equity                                     Lost home equity

Home prices rising                                           Home prices still falling

The market was strong/rising                       Level and now falling

People were spending                                     People are saving

Banks paid respectable interest                    Try living on the interest today

Social Security paid COLAs                           Gone for the past three years

Lower taxes                                                       Higher taxes coming

Individual healthcare                                      Government healthcare coming

Easy credit                                                         Difficult to get credit

May 1st of this year the Dow was at 12,876; today the Dow is at 11,379 (as I type this) and falling. The Dow has already dropped 14% from its high this year. I believe the Dow will fall to below 8,000 within the next 6 months. This would mean a possible 40% loss to your portfolio if you stay in the market unprotected.

Protection from the market’s volatility has become increasingly important as a result of the headwinds we are facing. In 1978, Jimmy Carter announced that the Dow made history because it shot up in one day more than it ever had before. It rose 35 points that historic day. Today that number pales by the wild swings of our current market.

Today’s record increase in a single day is 936 points, and the greatest decrease in a day is 777. The recent flash crash actually erased 1,000 points in 1 hour and 45 minutes but then recovered most of the loss by the end of the day. Protection of principal from volatility in this unprecedented era is critical to your financial well-being.

Do you remember what it felt like in January 2009 when the Dow was at 7,000 and the market had lost 50% of its value from its high in October 2007? Did you tell yourself that if you could just recover some or much of what you had, you would never let this happen again? Well, you have recovered much of what was taken and now the market is poised to take it again for the third time in just over a decade. The American dream of retirement cannot be supported by a volatile market if you don’t have downside protection. Rmember, the market dropped by 49.5% in 2000. It dropped again by 50% in 2008-09. And now in 2011, it’s dropping again perhaps by 40% or more for the third time in approximately ten years.

Warren Buffett said that what we learn from history is that we don’t learn from history. If we allow our principal to be reduced by 50% again, it could easily take a decade or longer just to get back to what you have today. Instead of waiting till 2021 to have the same amount you have today, we offer a safe strategy that, independent from the market, is guaranteed to double your money within the next 10 years.

Fixed indexed annuities have a flawless track record of safety and offer returns that are both respectable and guaranteed. When you never lose principal and each year’s interest is credited to the largest amount you have ever had, not only can you double your account over the next ten years, you get to sleep at night with tremendous peace of mind in some of the most volatile times you and I have lived through.

You may think, “Wow, a fixed indexed annuity can double my money in ten years? I’ve always been under the impression that annuities don’t earn much, but the stock market is the place to be instead.” Consider this: According to a study just released in March of this year by J.P. Morgan, the S&P 500 has delivered annualized gains of 7.7% for the past 20 years –not 10%, or 12%, but 7.7%. The average investor, however, did not earn 7.7%. Due to bad timing and emotions, along with taxes and fees, the average
investor, according to J.P. Morgan, earned 2.6% annually.  Numerous other independent studies come to a similar conclusion. So you put up the capital, take the risk and then earn far less than a safe guaranteed annuity that will double in ten years. At 2.6% it would take 27 years to double.

Don’t delay; the market is making decisions for you right now – decisions that will likely require you to work much longer than you had planned. Stay in control by calling me right now and see how simple it is to get safe and double your safety by doubling your nest egg over the next ten years.

I appreciate the opportunity to answer questions!!  Have a great Wednesday.

Aaron J. Clark


Nightmare On Wall Street

If you are our client--- the caption in this picture applies to you!!! If you are not, please call me so we can make this caption apply to you!

I read this article a few minutes ago and I wanted to get it out to you as quickly as possible.  During this time of global economic
instability/uncertainty many individuals are making decisions about their current portfolios.  I would be grateful for the opportunity to visit with you and show you how/why none of our clients are experiencing any losses now (or ever) due to the rollercoaster ride on Wall Street.

Please read this article and about mid-way down you will see the volatility in action as a chart shows the recent swings in the market.  As you enjoy retirement or consider retiring, I can imagine this type of volatility is not acceptable to you as you have worked hard your entire life to accumulate your nest egg.

http://money.msn.com/market-news/post.aspx?post=4f026107-2e48-4da7-a938-4b0fc3b9fd34&GT1=33009

In addition, I saw on the news last night an individual being interviewed and he said something to the effect, “the problem is… I don’t know where to put my money where it can be safe but still have the opportunity to grow”.  I wish there would have been a way for me to jump into the TV at that very moment and air my impromptu commercial because I would have said, “WE HAVE THAT STRATEGY—-don’t wait another minute, call my office and book an appointment to come in and learn about it”.

I’m certainly not suggesting that anyone make any radical decisions right now as it relates to their money.  However, the market is
a wicked place to be right now.  Wouldn’t it be nice if you could learn how to utilize “Plan B” if your “Plan A” makes you even the least bit nervous?

Although the losses are referred to as “paper losses”, it is real money that is disappearing from your savings.  Did you work hard your entire life to experience any losses, paper or realized?  I invite you to come in and learn why our clients are protected from this Armageddon on Wall Street.  Whether or not you choose to implement the strategy is up to you—but, you will be better off by learning it now rather than having to invest in a parachute to slow this market free fall.