Make your best guess on who said the following, and when…
(Scroll down for the answer after you read this paragraph.)
“In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country’s own experience with tax reduction… has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”
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It was President Kennedy, in an address to the Economic Club of New York n 1962. The focus of the speech was on increasing employment, strengthening the economy and our country’s defenses.
A reader submitted the following to question to the Minneapolis St. Paul Star Trubune, and was published in 2001…
Q: “I will be 61 soon. I am healthy and energetic, but not employed. I have $420,000 in three IRA accounts, down from $800,000 in January 2000.
I am with a full-service broker. A money manager handles each IRA, and I am paying 2 percent for the service…”
What a terrible situation. It appears this person may be in retirement, but at the rate his or her nest egg is declining, they may not be for long! During the timeframe the question was submitted, the S&P 500 was undergoing an approximate 50% decline. That period was one of two periods of significant market declines since 2000, and is someday likely to happen again. He or she may have ended up going back to work, or reducing their lifestyle!
Perhaps the broker on this person’s account advised them that an Investment Posture would be just fine. An Investment Posture is the positioning of investments with the belief that they will not be worth less by the time they are needed. Many advisors follow this approach by citing statistics reflecting the stock market’s positive performance over the long term. Investors are told not to worry – that when the market goes down, it always comes back. Investors in the Japanese stock market may beg to differ – their market has been down since 1989! (see graph below of the Nikkei)
An Investment Strategy that seeks to protect assets follows a plan for what one will do if things go right, and what one will do if things go wrong. Instead of watching one’s account fall by 50%, an alternate approach is to begin coming out of the market in the early stages of a decline in order to avoid the large losses. While no investment strategy can guarantee success, having a plan can help one to sleep well at night!
Are you near retirement, or close to retirement? Do you have an Investment Posture, or an Investment Strategy? Perhaps it would be prudent to assess your plan for asset protection if the market begins to fall from the current all-time high.
Graph produced by Dorsey Wright and Associates. The postings on this site are my own and do not necessarily represent Dorsey, Wright & Associates positions, strategies or opinions.
My goal for this blog is to provide information and help as many people as I can to have a successful retirement and to make informed financial decisions for retirement.
The opinions expressed on this site are those solely of Danny Holder and do not necessarily represent those of Capital Retirement Planning, LLC, or Capital Retirement Insurance Planning, LLC. Danny Holder is registered as an investment advisor and licensed as an insurance agent in Texas. Capital Retirement Planning, LLC is registered as an investment advisor in Texas and only transacts business in states where properly registered or licensed, or is excluded or exempted from securities registration requirements. This website is intended for informational and educational purposes only and does not constitute a complete description of the investment services or performance of CRP. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. A copy of CRP's Part II of Form ADV and privacy policy is available upon request. This website is in no way a solicitation or an offer to sell securities or investment advisory services. Mr. Holder and CRP disclaim responsibility for updating information. In addition, Mr. Holder and CRP disclaim responsibility for third-party content, including information accessed through hyperlinks. No graph, statistic, or market condition described can be used to make an investment decision. An investment decision should only be made after a consultation with a qualified investment advisor.
