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Richard E. Deam, CFP®, CWS®

Deamoak’s Newsletter Winter 2020

Do you remember when people were joking in 2008-2009 during the “Great Recession” that their 401(k) had become a “201(k)”? It was not so funny to those who watched the bottom fall out of their retirement accounts. As I watch the economic horizon, I am concerned that we are about to experience a significant market adjustment that could have a similar impact on retirement plans and other investments.

What are the indicators that lead me to believe this?  In addition to my instincts developed from watching the market cycles for many years, I see three especially troubling trends:

  1. Trade Tariffs – tariffs do not foster free trade, instead they constrain trade on both sides and typically cost both countries much more than they seem to gain.  Usually, the extra cost of the tariff is actually paid by the citizens of the country imposing the tariff because it is added to the cost of the product. Our many bankrupt farmers can tell you the impact of the current trade war with China.
  2. Environmental Protection Rollbacks – As these issues continue to spiral out of control, I expect that oil and gas will take a beating. What part of our economy is not touched by the oil and gas industry?
  3. Federal Reserve Rates – A significant strategy in preventing the “Great Recession” from becoming another Depression was the reduction in Federal Reserve rates.  This was important in the implementation of programs to shore up the failing banks and the economy. 

On October 30, 2019, the “NY Times” reported -

 “The Federal Reserve cut interest rates on Wednesday for the third time this year,            reversing nearly all of 2018’s rate increases as uncertainty from President Trump’s trade     war and slowing global growth continue to pose risks to the United States economy.” ¹

On January 14, 2020, the “Financial Times” stated in an article –

“…U.S. consumer prices grew at the weakest pace in four months in December…”²

In my opinion, the Federal Reserve rates are too low to allow for the financial cushion      that our banks and financial markets have come to count on in tough economic times.

I have been evaluating strategies that could help to preserve our clients’ capital and offer* protection to the value of their qualified retirement portfolios.  Please give me a call so that we can review your needs and the strategies that could work for you. 

Richard E. Deam  

*Any guarantees or principal protections are dependent on the claims paying ability of the underlying insurance company.                                                     

  1. NY Times – 10/30/2019      
  2. Financial Times  1/14/2020
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