RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:00:00]
BRIAN: All right, welcome to SAFER Retirement Radio. I’m your host, Brian Decker. We’re gonna get right into it and cover quite a bit of information. We’re gonna talk about the economy, unemployment numbers that just came out. We’re gonna talk about gold and precious metals. We’re gonna talk about the dividend strategy, how that’s being used, how that’s being changed dramatically. That’s a favorite of retirees. We’re gonna talk about earnings estimates of the stock market. Nobody knows where earnings are gonna be coming in. It’s a guess.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:00:31]
BRIAN: We’re gonna talk about debt, the debt of the country, debt of corporations, debt of individuals. We’re gonna talk about taxes and tax free income, all in about 15 minutes. So, we’ll get started. There is a statistic that is so stunning. I want to lead the radio show with this. And that is when it comes to unemployment, we’ve had 36 and a half million unemployed since March, 36 and a half million.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:01:02]
BRIAN: Now, to consider how huge that number is, the largest week of unemployment claims, before that, was 695,000. If you multiply that by 52 weeks, you get 36.1 million. We just had 36.5 million unemployed. That changes a lot of things. That changes the fed policy. That changes the debt that’s being issued. That changes the stock market. That changes what gold and silver… That changes… That key is what changes so many things that we’re gonna talk about right now in the next few minutes.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:01:43]
BRIAN: So, let’s start with gold. You’ve gotta be right with gold because when it comes to precious metals, if you held gold from 2008 to present, do you know that you made almost nothing for 12 years. You have nothing to show for it in 12 years. But, if you owned gold from 2000 and, I think it’s 2000 to 2008, that, you multiplied your money dramatically. I think it was a 3X move.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:02:21]
BRIAN: So, you need to be in gold when gold is gonna move. Now, what moves gold? Not disasters. In 2008, we had a financial disaster and gold was down, oh, silver was down double digits. Gold was up hardly at all. I think it was four percent. So, don’t think that disasters move precious metals. They typically don’t. They typically move off the move of the U.S. dollar. Why do we think the U.S. dollar is going down, because, if the U.S. dollar does go down, then gold and precious metals, all commodities typically go up in price?
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:03:03]
BRIAN: Why do we think there’s a big move in gold? One is the amount of debt that’s forcing interest rates lower. This is a chain reaction, like dominoes that fall. Lower interest rates bring the U.S. dollar down. U.S. dollar going down moves up commodity prices. So, we think that gold prices should be doing well. Now, how much should you buy in gold in your portfolio? If you have an asset allocation pie chart, which in retirement, we hope you don’t have, usually it’s 10 percent.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:03:40]
BRIAN: Our clients at Decker Retirement Planning, the risk managers that we have can elect to go into gold if gold and silver are going up. If gold and silver are not going up our managers, that are computer trend following managers, will not own them unless they’re trending higher. Or, if gold and silver is trending down, we have one manager for gold, one manager of silver, they can make money as gold and silver prices go down.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:04:15]
BRIAN: How are you hedged for that precious metals? Are you gonna get stung if you’re hurt? This is a big deal, and by the way, I’m gonna bring this up a few times. We’re quite different at Decker Retirement Planning on how our risk managers work. We think that if gold and silver prices, that things are lining up for gold and silver prices to move much higher, but, since these are computer models and trend following, if gold prices do trend higher, we can do very well for our clients.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:04:50]
BRIAN: But, if gold and silver prices are not gonna go up, but, in fact go down, we don’t take that hit. We can make money if gold and silver prices go lower. How is that possible? This is a point where if you want to see how computer trend following models have done for years, they made money in 2008. They made money in the fourth quarter of 2018 when the markets dropped 20 percent in six weeks. They made money in 2020 in February and March.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:05:24]
BRIAN: It’s worth checking out. Give us a call at 833-707-3030 and we will send you the fact sheet so that you can see third party verified numbers of the managers that we use. They’re very, very good. We go through the databases to make sure we’re using the best managers we can find. Then we look on a net of fee basis. But, when it comes to gold, we do expect some upside, for the next five, 10 years.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:06:00]
BRIAN: What does the government shut down of the economy mean for the most popular retirement strategy, and that is the dividend strategy where, quote, I don’t care what the stock markets do, I just let the dividends roll right in. Well, the two biggest contributors to the dividend strategy is energy and real estate. Has energy been affected by the government shut down? Yes, never in history has a contract on oil gone minus 20 dollars like it did a couple weeks ago.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:06:39]
BRIAN: Yeah, we have several firms that, Chesapeake just declared bankruptcy. There’ll be others that declare bankruptcy and there’ll be many others that have to cut their dividend. So, if you think that you’re safe and insulated from energy, one of the biggest contributors to the dividend strategy, you’re putting yourself in danger, in our opinion. And real estate is the other contributor. How many strip malls, just drive in and look at the strip malls or go into your neighborhood mall, when they open and see how many are no longer, have people inside, or even have their banners up.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:07:21]
BRIAN: There’s a lot of leases that are not being paid right now, so the real estate investment trust, or the REITs, have taken a huge hit. The two biggest contributors to the dividend strategy are on difficult times right now and will see large dividend cuts. So, we want to give you a heads up that there’s a much better way in retirement to have your money at risk and in the last 20 plus years, the dividend strategy is more at risk now than it’s been for many, many decades.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:07:59]
BRIAN: I want to talk about earnings estimates because earnings estimates drive the stock market. In fact, there’s three or four things that cause the stock prices to go up. One is lower interest rates. That’s been a tailwind for 40 years. Since interest rates peaked in ’82, interest rates have been declining and we expect them to go pretty close to zero. Right now the 10 year treasury is at .6. It doesn’t have very far to go. We’re almost at zero. So, what used to be a tailwind is now a headwind because the stock market no longer has declining interest rate to benefit.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:08:40]
BRIAN: The second has to do with the fed. Is the fed pumping money? Yes, and like the patient that gets more and more adrenaline, the effect on the patient diminishes. So, the ability for the fed to be a huge boost to the stock market, we have seen the effect go lower and lower as the fed has their influence in the market will be diminishing. So, there again, what used to be a tailwind is going to more and more be seen as neutral at least, or maybe even a headwind when the knowledge becomes available to anyone that the effect of the fed has been diminished.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:09:26]
BRIAN: The third is corporate earnings. When it comes to corporate earnings, corporate earnings peaked out in 2016, four years ago. The hit on corporate earnings this year, it’s just guess work. So, the market has taken a big bounce up recently from their lows of a 30 percent dip, which happened in just three weeks. And now where will stock prices settle in? Well, corporate earnings are down dramatically.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:09:59]
BRIAN: Do we expect a V shaped recovery? That’s what it looks like. That’s what a lot of people are looking like. But, math says otherwise. There’s many corporations that are not gonna come back full throttle. There’s many corporations that are gonna be slow to recover and rehire. The next one I want to talk about is the amount of debt, because the amount of debt, 23 trillion, that our country has taken on and the three trillion that we’ve just recently added to that is going to require higher tax rates.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:10:41]
BRIAN: Higher tax rates means that tax free revenue streams are more valuable. Do you have a tax free revenue stream? Well, you’ve got two options, one is municipal bonds. Municipal bonds, like real estate, like energy and like the dividend strategy has not been more endangered or riskier for decades because of the amount of debt that’s been taken on by the municipalities. They’re all affected.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:11:15]
BRIAN: So, we hope that you don’t go the route of municipal bonds because of the credit risk, number one, which is the risk that that bond is not gonna pay and two, the risk of the interest rates being so low. You’re just not getting paid for the risk that you’ve got. I’m gonna give you a teaser here and this is huge. There is such a thing that is principal guaranteed and it acts like a ROTH.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:11:48]
BRIAN: It grows tax free. It distributes income back to you tax free and it passes to your beneficiaries tax free and its principal guaranteed and the index historically, the ones that we use, are averaging returns net of fees for clients that are starting at age 60 and they die at age 85 or 90, the tax free returns are in the eight percent level.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:12:19]
BRIAN: This is something that I hope you do come and see us about, learn about, because tax rates, I believe, are going to go higher and this is a valuable income stream that can come back to you. There’s three key points that I brought up in this radio podcast. One is about gold and silver, that we expect a very good run in the next five to 10 years. Two, is to be very careful of the dividend strategy that has worked for generations. Now it’s high risk because of dividend cuts that are happening in the energy and in the real estate market.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:13:03]
BRIAN: And third, because of the debt levels and the amounts that they’ve increased, we believe that tax rates will be going higher and tax free revenue streams are extremely valuable and we hope that you see us. Call Decker Retirement Planning at 833-707-3030. Reference that you want to see a principal guaranteed account, where the returns are, yeah, we’ve seen eight percent. But, anything six percent or higher, those are good numbers. And so, find out about this.
RR S4 E3 ECONOMY, UNEMPLOYMENT & THE DIVIDEND STRATEGY [00:13:39]
BRIAN: It might be a great fit for your plan. So, this is Brian Decker signing off SAFER Retirement Radio as your host. Hope you have a great rest of your day.
