The Dow dropped to 14,758 from 15,112 on June 20, 2013! Ho – hum. Really? Should I be concerned???
Typically when people have money invested in their portfolios, this kind of a drop can be quite detrimental… however not a single client of ours lost money. The reason being is that we are not “invested in” but rather, “Linked to” the market.
So when the market is up, so are you, but when the market falls, the link breaks and you do not fall with it. And you’re protected against any and all losses.
Once the market is up again, you “re-link” automatically, and resume your gain with the market. Essentially, you ALWAYS WIN and NEVER LOSE!
Here’s the news about the recent “downward market activity.” (End of June, 2013)
Market Indexes Ended the Week Flat After Two Days of Losses, Interest Rates Higher
At the close of trading on Friday, June 21, 2013, the major broad indexes were relatively flat, with the S&P 500 posting a gain of .24%, with the Dow gaining .28%; the S&P 500 weekly result was a loss of just over 2%. Many expected the markets to surge on Friday after a two-day loss of almost 4%, but that did not materialize despite some officials from the Fed making statements trying to “calm” the markets. Meanwhile, the yield on the 10-Year Treasury increased again, ending the week at 2.53%.
As commented on last week, the market’s fall at the end of the week is not a crash, nor even a significant correction (yet); it is further evidence that the underlying fundamentals of the economy are not strong enough to warrant the continual gains in stocks, and that the Fed “pumping” $85 Billion weekly into bonds is the primary driving force of the market. As we saw last Wednesday, all it took to send the markets tumbling was an announcement by the Fed that thinking -about-eventually-maybe decreasing their monthly stimulus at some point in the next year. Expect to see continued bouncing up and down, probably with bounces going a bit lower each time leading ultimately to a significant correction, but again, we are not there yet. What this means to life and annuity policyholders: It is the beginning of the light at the end of the tunnel for the interest rates that support these products, and it is likely the latest sign that a significant market correction is coming. Don’t expect this to happen fast. If it does, it won’t be good for anybody. While no one really knows, many prognosticators are expecting a reduction in, but not an end to, Fed stimulus in the last quarter of 2013. The Fed needs to let rates rise, but will make every effort to do so slowly to avoid shocks to the overall system. For our clients and prospects, this is another indicator, a very strong indicator, that they need to seriously consider moving some of their money to safety.