Episode Transcript
Speaker 1 00:00:05 This is annuity straight talk since 2008. Your host Brian Anderson has helped clients nationwide navigate the complex market for annuities with Brian's assistance. Hundreds of clients have achieved a profitable and secure retirement. I would know because Brian has answered many of my questions concerning annuities and retirement planning so that you can benefit as well. Let's get started. Here's Brian
Speaker 2 00:00:48 Hello and welcome everyone to the annuity straight talk podcast. My name is Brian Anderson, founder and creator of annuity straight talk, welcome to 2022. This is our first episode. I apologize. I took a few weeks off getting the website finished couple of technical reasons. I couldn't really post anything to it as it was being lifted over from old to new. So I was lazy and I decided not to record anything and just took some time with family, a BS with my good buddy, John, quite a bit. And we've got them again for a fourth times. Is the fourth time, John?
Speaker 3 00:01:22 Yes, it is Brian happy new year,
Speaker 2 00:01:26 The new year. I'm excited about it. I got to get the creative juices flowing and get back in the game. And I'm planning on popping this stuff out once a week, all year long. Should that be a new year's resolution? Get 52 of these out this year.
Speaker 3 00:01:41 It could do it. I think that's great. You know, why not?
Speaker 2 00:01:45 Well, so, so John, I'm going to tell you, like, we kinda like, we start recording. We pretend that we just started talking, oh, Hey, John, we've been bullshitting for about an hour.
Speaker 3 00:01:56 Right?
Speaker 2 00:01:58 I took my dog for a long walk and got them all worn out. And then John shows up late it's Sunday. So it's like, there's really no schedule.
Speaker 3 00:02:08 It is Sunday, Sunday fun day, or ready to do this podcast. Get some great information out to your listeners and then we'll go from there.
Speaker 2 00:02:18 Yes. And by special request, I put the rifle back in the window, just a toy. It's not a real one. And John, you came up the other other day we were talking about now actually. I mean, some of the is we've had some good success referring people to you who are looking for annuity alternatives and whatnot. Haven't we
Speaker 3 00:02:33 That's right. That's right. We have some great success over the last year to six or so months. And I think a lot of it has to do with the content that you provide to your listener. So my hats off to you.
Speaker 2 00:02:46 Okay. Well thank you. And I appreciate your contribution to that. It's been great. I've had a lot of really good feedback from people. And again, if you like the podcast, subscribe to the podcast platform or on YouTube, get notified. When an episode comes out, we'd love to have some comments so we know how to improve and what else we can add. You can always give annuities straight talk and call at (800) 438-5121, or schedule a call using the, uh, appointment button on the new website, which I'm pretty excited about. Don't know if you've taken a look at it, right John?
Speaker 3 00:03:16 Yeah. Brian is a nice refresh for the new year, but it's definitely did a great job. So congrats to you on that. It looks great.
Speaker 2 00:03:25 Well, thank you. I appreciate it. And when we were talking last week, we've got a couple of cases that we decided to work together on and actually one of them. And we can talk about that later. I think it would be a great case study for people we're talking about performance and fees and stuff like that would be a good topic, but you had an idea cause you were talking. I think it was toward the end of the last week. I think it was Thursday or Friday. You were kind of watching the market. John's the investment professional on the annuity guy and it's a pretty good team. I think we've got, but yeah, just kind of tell me where your head's at there and why don't you introduce the topic to everybody?
Speaker 3 00:03:58 Yeah. As we've kind of rolled into the new year, we had a great end of the year in the markets. And obviously this is for informational purposes and educational purposes only don't take any specific recommendations unless you consult your advisor, Brian or myself. But yeah, we had a great, great 2021, the finished, they are fairly strong. Despite some of the fears that we had from the Alma Cron virus, we did start to get a spike in interest rates. And the tenure note was something that we really want to pay particular attention to.
Speaker 2 00:04:33 Where did the 10 year rate finish up? Wasn't it in the 1 46 or 7 46
Speaker 3 00:04:39 On 47. And as a Friday, we're close to 1.7. So we had the first week of the year got out of the gates, just got hammered in a lot of the technology area that the NASDAQ QQQ or the NASDAQ 100 just really took a beating. We had a really quick and fast spike in rates, hopefully that levels off. But that begs another question here is, are we going to have a year like we did last year or in 2021, that's up to the market gods to decide. But I think we're in a really precarious position in a few of the indices. And I'd love to share some charts with your audience and let them make their own decisions on that.
Speaker 2 00:05:23 Yeah, that'd be great. Well, why don't you share your screen and we can continue talking while you do that and get ready for it. But you mentioned this is not investment advice, not by either one of us and it's not for me as an annuity guy. Obviously I like him. I think everybody should have some money protected. I think annuities are a great way to do that, especially where rates are at right now, threatening to go higher. They're low right now. You want to leverage them. But the biggest thing is we're not trying to scare people because if short-term events cause you to change your plan, then you didn't really have a great plan to begin with. So we want everybody to be ready for this. The point of doing a prudent planning, especially in retirement, is that the short-term events don't affect you in the long run. And certainly don't keep you up at night. So the point is just to educate you and talk to you about what could be on the horizon, the types of things to look for, right?
Speaker 3 00:06:12 Absolutely.
Speaker 2 00:06:14 If you're not prepared for it, then that's, we're not trying to get you to do something that you probably should have done before. If it worries you.
Speaker 3 00:06:21 Yeah, I'd agree. I think I always ask clients, are you investing for next week? Are you invested for the next, you know, five or 10 years? And that's an important question, but you always want to be aware of what's going on. If you can sidestep some nasty dips with the proper planning, you know, I encourage people to do that. They have the ability and the knowledge to do that. It's never fun trying to come out of a 20% downdraft in the market. Quite frankly, February and March of 2020, it was very different. We had the fed pump, what two, $3 trillion into the economy. There was so much liquidity sloshing around the market's just had a V recovery. I just don't think that's going to be possible with inflation right now, running so hot.
Speaker 2 00:07:05 No, that's true. And they did just fail to pass a big spending bill right at the end of the year. And there was a big Democrat spending bill. The build back better king Biden was putting that out there. So there's not going to be, sounds like that thing's dead. Doesn't sound like it doesn't look like there's going to be any excess federal spending at least in the near term. Would you agree with that?
Speaker 3 00:07:26 Yeah, I would agree.
Speaker 2 00:07:28 So it's quite a bit different situation than like you said.
Speaker 3 00:07:31 I think so. Yeah. You know, a lot of the things that the fed will do the S and P 500, it looks like the fed has really reacted to the markets. Once the S and P 500 really kind of comes down to the 200 day moving average. And that seems to be like a theme with, uh, chairman Powell. But, you know, we'll see, I'll share a couple of charts to do a little, we'll start with the Dow Jones, industrial average. Let me see if I can share this with you. Okay. So you can see if I zoom in here, you can see that we actually, this is the weekly chart on the Dow Jones, industrial average. We had, you know, the Alma Crohn's scare here. And then in December we finished actually really strong. This is the weekly chart, and you can see this average here is the 50 day moving average.
Speaker 3 00:08:18 So we bounced off the 50 day moving average right after Thanksgiving, and then just finish the year really strong. But what I'm looking at right now is this weekly candle. And I don't know if you can see that really well. It's this candle right here. I'm going to, I'm going to actually going to take a picture of it. I'm going to zoom in on it. So this candle right here, let's see what we call a spinning top. That's a pretty bearish weekly candle, particularly on a drop in volume for the week. You know, you normally see like new year, start off, you have a lot money being put to work. It was a pretty precarious position that we're in, in the markets. But what I want to show you is the NASDAQ 100 and I kind of drew this here. We finish the year pretty strong, but we can already see it.
Speaker 3 00:09:09 We had a really bad week to start the year and we're already back down to mid November level, right? Broke the 20 day moving average. I would assume that if we bounce off this, we could have, what's called, you know, you have a lot of resistance right here up at this level here. If you can see that blue line, it's a lot of resistance here. So I would assume that this week, if the 10 year note levels off and interest rates, don't continue to spike that we have something that is going to look like if I can draw something here, it's going to look like something like this and it probably going to hit resistance here. And then I think we kind of taper off down here. You're going to have some support here at the 50 day, but we're in a really precarious position in terms of the markets.
Speaker 3 00:10:04 The one thing that we really saw last year was a lot of technology that had really run up during the pandemic sold off. We had a lot of the stay-at-home names just really get crushed off, you know, anywhere between 40 and 80%, the DocuSign's of the world does the zooms, the Zillows, the Twilio's of the world. Uh, Shopify, a lot of those stocks have really sold off, but you haven't seen that real huge sell off in the, in the major indexes. And that's because of the Facebooks, the Amazons, the apples, the Netflix they've all seemed to be a safe Haven for investors, or a lot of the proceeds from, from sales of other stocks have gone into those. So it continues to prop up the major indexes. If we do see a roll over in the apples, the Amazons and the Netflixes or the Googles of the world, we're in for a pretty sharp draw down, in my opinion, that's to say that that's going to happen.
Speaker 3 00:11:04 No one has a crystal ball, but I think that could be the setup. It less. We have something we're going to have to raise interest rates. The fed has already signaled the NRAS interest rates about three times in the next year. And it could be four. So what does that mean? That they want to take down the notch of inflation, where inflation is running really, really hot right now. And it's really hurting the middle class and the lower class. It's a huge tax on. People. Think about the people who have a job. They have a couple kids at home and they've got to go fill that tank up with gas. And I don't know what you pay up there, but here in California and paid north of five 50 a gallon, holy cow, it's a big concern. So you have that. And then you also have the small cap index, which has really run.
Speaker 3 00:11:53 I used the IWM, which is the Russell 2000. I'm sorry. The I w am, which is the Russell 2000. You can see here on the chart, we've kind of been in this range for quite some time. And for the last 11 months, we did try to break out in early November out of this came right back down and we're continuing to be in this channel here. I think a close below two 10. There's not a whole lot of support down here in this area. The next moving average here is the 100 days that's at one idiot. That's a pretty steep drop from two 10 all the way down here. So it could be a pretty precarious market. If you start getting some sell orders, there's a couple of other things that we pay attention to as well. But go ahead.
Speaker 2 00:12:41 I mean, you, you talked about some of these trends is I think it was the first one you did with us. When we talked about, when will the market crash. It was probably last September. You actually, he actually called it pretty well. Cause as soon as it came out, then we had like a little a short-term correction in the prices, but pretty interesting stuff, I think. And you see definitely with that big run-up and a 2020, it was end of 2020 is where that big steep run-up comes. And then essentially it's just kind of been bouncing around and resisting it's the top, like you said.
Speaker 3 00:13:10 Yeah, it has been been in this trading trend, interest rates, spiking. We know that the, the fed has to do something to curb inflation. There's just a lot of different factors going on. I don't even want to get into the geopolitical things what's going on around the world with China and Taiwan and Russia and Ukraine. But those are some things that could have some serious implications on global markets. So it's just something to consider. There, there is one other thing that we kind of really take a look at, and if you don't mind me sharing, see if I can pull it up again, let me show you this. So, so one thing I really pay attention to is margin debt. And if you can see this chart here, can you see that margin debt?
Speaker 2 00:13:57 I can see it. Yeah.
Speaker 3 00:13:59 Okay. So I've highlighted, this is mark the margin debt balance, uh, in the S and P 500. This is from advisor perspective. This is a, an advisor website that I use quite often, but this kind of measures the margin debt over time. That going all the way back to 1997, and you can see the blue line is actually the S and P 500. And the red line is the margin debt balance in margin. Debt means, you know, if I buy a stock at a hundred dollars, my broker, whoever it might be, Charles Schwab fidelity, TD, you know, many of the other big brokers on the street might let me borrow another $50 for another hundred dollars so I can buy more of that. So I'm actually borrowing to buy stock. The problem that we encounter is that when a stock starts to fall and it's all good when the stock is going up, when the stock starts to fall, you get what's called the margin call. And what happens is that most people don't want to send money to their broker to support a losing position. So the broker will technically sell out that position automatically. And that triggers a cascade of selling. And you have a lot of people who trail their, their stock, their indices, or their investments with, uh, with a trailing stop loss. And if you get a wash in the market, fast enough, you're going to start hitting those sell orders or those stop losses what's trigger. You know, it's like selling begets more selling
Speaker 2 00:15:28 The acceleration of it.
Speaker 3 00:15:30 Yeah. It starts to really accelerate to the downside. You can see exactly the same thing. Here's 2000 margin balances were super high, kind of peaked with the S and P 500. Then we had the.com crash. We kind of came back up the S and P 500 was really attempting to recover back to let's say, July of 2007 margin balances were at also an all time high. Again, we had the great financial crisis, huge recession took us about what three and a half years, four years to get back to breakeven on the S and P 500 here, you can kind of see, uh, January of 2018, we had a pretty significant correction. We had very high record margin belts, had a nice correction in the market. And then you had, you know, the scare from 2020 when we had the COVID-19 virus come out and you can see right now where all time record high margin balances, as we are all time record high with the S and P 500. So to me, that's an indicator that, you know, could we be set up for a pullback? I don't know, it's something to be cautious about. It's something to keep in mind. It's a level of interest that we want to be, be very aware of when we look at our portfolios,
Speaker 2 00:16:53 Right? So yeah, you can see in 2007, will, that was, it was a debt crisis and that's margin debt crossed over and went above, came, crashing back, and it doesn't seem like those two stay, uh, right next to each other for very long.
Speaker 3 00:17:09 No, it doesn't, but you can see, I mean, there's sort of a trend there and you want to make sure that you're aware of what the trend is. You know, every time you get a peak in those margin balances, you get a pretty significant pullback. I'm not saying that that's going to happen this time, but it's definitely something to keep in the back of your mind as the market plays out. Now, I would say, you know, in the next couple of weeks, this could be, there could be some potential for some increased volatility. We did see that beginning of this week, and we'll probably continue to see it, uh, throughout the course of the year.
Speaker 2 00:17:42 Well, and that's always been mine. I think there's a lot of people that'll just kind of, they'll just say, oh, the market's going to crash. Right. And it never, it doesn't just crash and stop. I mean, it goes somewhere, it goes up, it goes down. And I always thought, that's what, the way this was going to work. Just because you look at, you know, the big money, like the hedge funds and institutional stuff, there's guys buying deals. I always felt I'm going to, we're going to see a little bit of pain, but it's just going to kind of be up and down. It's going to be a little bit all over the place, but it was always my, my gut instinct. Really?
Speaker 3 00:18:16 No, I follow a lot of the fun flows. And what I see is particular environments like this. And we saw a lot of it in March and April of 2020 is when the algorithmic hedge funds or the high-frequency hedge funds get involved, they just push the market around it will. And their fundamentals don't matter. At that point, it does seem that we do have some fundamental cases for investments in energy investments in more value oriented. I think we're, we are rotating from technology, those high valuation sectors like real estate technology. We are seeing a rotation more so than we did last year into some of these high, high valuation names, uh, value stocks there there's, you can pick individual stocks. I like to pick sectors that might be able to kind of shield me from significant drops in the market, but it's all about having a diversified portfolio, not having your, all of your eggs in one basket, but when you're really trying to protect yourself on the downside, get it, you're winning by not losing. So if you don't have to crawl out of a huge deep hole, you're able to kind of get back in the saddle, as you would say, and continue the ride. Once you get bucked off the horse,
Speaker 2 00:19:32 Uh, or have some cash available to buy in low.
Speaker 3 00:19:36 Right? Absolutely. Absolutely.
Speaker 2 00:19:38 Talk about how to beat the market within an annuity. I'm going to run that one here in the next week or two. So not to change the subject, you know, steal your thunder by any means. But I think these are all good things that people should pay attention to. And again, the point is that you would have had a plan in place where you can, that kind of mitigates the effects of this. So it doesn't damage your portfolio too much, but if you haven't, that's why you reach out to us. Happy to talk to you about protecting money, myself, annuity, straight talk.com, schedule a call or call (800) 438-5121. If anybody wants to get ahold of John, you get ahold of me and I'll put you in touch with him. But, um, I'm the gatekeeper though, but he's a hard man to get into. Yeah, he doesn't return phone calls till Sunday.
Speaker 3 00:20:23 It happens. Sometimes
Speaker 2 00:20:24 There's a big hitter in LA. Anyway, I think that's great information. And I think it's a good indicator for people to look at, especially kind of starting the new year, any specific ideas that you have for people for how to handle this aside from just knowing what, what could happen right here.
Speaker 3 00:20:40 I would say if you work with an advisor, reach out to that advisor. If you're not getting sound advice from that advisor, go ahead and reach out to Brian. Brian can get you in touch with me, or we can work as a team who definitely would love to review your portfolio. See if there are any gaps in it, see where there are levels of concern or areas of concern that we could help you with. And it would definitely give you a second opinion on stuff like that
Speaker 2 00:21:05 Sounds good. And that's what we're here to do. We're here to help people. I feel phone calls all the time. It's not about just making money. It's just making sure everybody doesn't get caught in the wrong position. Makes good decisions for retirement. The point is to help people. Well, we got dogs, that'll hunt at times, but not all of them do. So, like I said, we'll make money. That's not the concern here. The idea is to help people figure it out. So I don't know. I think I'm looking forward to 2022 and I don't necessarily want to see tension in the markets. I don't want to see people lose money. I don't want to see people be stressed out. I want people to be prepared for it. And this is about playing on offense. I always say offense in retirement, not defense. And that's where some of our ideas come from. And that's why it's good to have John, because he keeps an eye on all these other little things while I'm a busy on the annuity side with people. So be prepared, right?
Speaker 3 00:21:56 Yeah, absolutely. Always be prepared. You never know what the next trading week or the next month we'll bring you particularly in the, in the world that we live in today.
Speaker 2 00:22:05 Yeah, well said, I think that's about perfect. But anything else you want to add before we call her for the day?
Speaker 3 00:22:11 Yeah. That's it. Brian, appreciate you having me on again. It's always a pleasure, really, uh, have gotten a lot out of your content and I've shared a lot of it with my clients. So keep doing what you're doing
Speaker 2 00:22:22 The best is yet to come from both of us. And we'll have John back here in a couple of weeks. Again, if you want to get ahold of him, you can, uh, send me an email. You can schedule a call. You can call me at (800) 438-5121, subscribe to the podcast. If you'd like to be notified when they come out and we'll have you back, we're going to talk about, but maybe we'll just give it a few weeks. We'll have you back to say, I told you, so how about that?
Speaker 3 00:22:46 Well, we'll see how it plays out, but we'll definitely want to keep our eye on the market. If you have any questions between now and then feel free to give Brian a call, we'll get you in touch with me. We'll go from there.
Speaker 2 00:22:57 So this one, and this is, uh, we're recording on Sunday. The 9th of January. This is going to come out on the 14th, 13th.
Speaker 3 00:23:06 Yeah.
Speaker 2 00:23:07 We'll get out there to everybody in a few days. And like I said, we'll be back next week with another episode. Don't know if John's going to do that one, but we'll have him back soon. So thank you for, uh, joining me, John, and appreciate what you had into the business this year or that you've done. And I'm looking forward to, uh, a good partnership this year as well.
Speaker 3 00:23:24 Yeah, me too, Brian. I appreciate it. Thanks so much. Have a great Sunday.
Speaker 2 00:23:28 Okay. Hey, you as well, everybody. Thank you again for joining us. Have a great day and we'll see you next week. Bye
Speaker 1 00:23:46 You've been listening to annuity straight talk. The proceeding is for informational and educational purposes only and does not represent tax legal. The views expressed by guests on this program are their own and do not necessarily reflect the views of the nerdy straight talk or no information presented today should be acted upon without meeting with the licensed professional. It is important that you read all insurance contract disclosures, carefully making a purchase decision guarantees are based on the financial strength and claims paying ability of the insurance company.
