Jeff Voudrie’s Weekly Stock Market Commentary – Oct. 20th, 2014

Jeff Voudrie’s Weekly Stock Market Commentary – Oct. 20th, 2014

Jeff Voudrie’s Weekly Stock Market Commentary – Oct. 20th, 2014

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Jeff’s Weekly Stock Market Commentary:

We in America are facing multiple serious threats simultaneously; each of which has the potential to destroy our ability to maintain our standard of living. The stock market is at bubble levels not seen since the Tech Bubble of 2000. A significant stock market crash may already be underway.  But there are several other high-probability threats that can be potentially catastrophic to our way of life—threats that are economic and geopolitical in nature, but will directly impact what happens financially.

National debt has grown exponentially with growing dependence on potentially hostile nations for funding. Every additional dollar we borrow increases their dominance while decreasing ours. The United States of America enjoys tremendous benefits as a result of its currency having ‘reserve’ status. Should that, status be lost the ability of our economy to sustain itself is greatly impacted.

The US Dollar is at risk globally. Russia, China, Brazil and many nations in the Middle East have established a banking system that will now compete against the banking system imposed and run by the United States. This competing system is not based on the U.S. dollar and further threatens USD dominance.

Foreign nations have cyber warfare capabilities that could wipe out financial markets directly impacting you and your ability to remain retired. For instance, the USA Today reported on Monday that “Officials warn 500 million financial records hacked… over the past 12 months, essentially breaking into banks without ever entering a building.” Few are aware that Russia and China recognize the U.S’s vulnerability to cyber-security threats. China has entire military divisions of computer hackers that have already penetrated the most secure systems of (reportedly) virtually all of America’s major corporations.

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I am not highlighting these threats to scare you. Instead, I am focused on identifying and developing a plan of action so that my clients can be better prepared to safely navigate through them.  In early November, I will be one of only 15-20 financial advisors from across America that will be meeting with leaders such as Kevin Freeman, Lt. General (ret) Jerry Boykin, Frank Gaffney and Governor Frank Keating.  Our purpose is to review potential economic and national security threats we face and develop proactive strategies.  As part of the founder’s class, I will be part of a professional financial organization called the National Security Investment Consultant Institute and look forward to providing further updates.

Regarding the markets…

Don’t be lulled into a sense of complacency by the relative calm in exhibited in the stock market the last few days. The imbalances that led to the declines over the last weeks and months are still there and it is likely that the markets have further downside ahead—possibly a lot more. The S&P 500 is still up 2% for the year-to-date as of last Friday, but it has fallen 5.76% since September 18th. The Russell 2000 growth index (symbol RUT) is down 6.81% for the year through last Friday. It has declined 9.6% since the all-time-high it set on July 3rd, 2014.

The relatively mild declines in the major indexes mask the devastation that is happening in individual stocks. According to recent research, 62% of the stocks that make up the Russell 2000 index have CRASHED. In other words, over 1200 of the 2000 stocks in the Russell 2000 index have plunged over 20% from their recent highs. Yet, still, the Russell 2000 index is still hugely overvalued.

For those that haven’t followed the advice that I’ve been giving the last weeks and months to reduce their equity positions and increase their bond holdings, I suggest you use the up days in the market as an opportunity to reduce your stock/equity positions. I wouldn’t necessarily suggest moving the proceeds of those sales directly into bonds right now because there has already been a big move in Treasuries. I suggest keeping the funds in cash until yields move back up to around 2.30% on the 10-year.

Have a wonderful and Blessed week!

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