Don’t be confused. The stock market has only just begun its downward correction. Many of you know me as a journalist and author, but I also have had a career extending now over more than a quarter-century in which I created two broker-dealers to work with financial institutions around the nation to market mutual funds and annuities to the retirement savers and investors who were customers of the bank.
The securities and insurance licenses I have held for 25 years are still current today, as I continue to hold active life and health insurance licenses in New Jersey, as well as property and casualty licenses. I am presently actively registered with FINRA with securities licenses that include licenses as a financial principal, a municipal principal, and an options principal.
Special: Tell Washington “No More Red Ink”
This does not mean that I am always right, but today my analysis of the nation’s financial system forces me to conclude the Federal Reserve’s policy of buying U.S. federal government debt has led the stock market to be a bubble that will inevitably burst, just as the Dot-Com bubble burst in 2001 and the real estate market bubble burst in 2008.
Those of you who listened to my warning last week got out of the stock market in time to avoid any further risk to losing your investment capital.
On Friday, Jan. 31, 2014, the Dow Jones Industrial Average, DJIA, closed at 15,698.85, losing -149.76 points, registering a 5 percent loss in the value of the DJIA in January, making January 2014 the worst start to a year since 2009 and the second worse since 1990, in other words, January 2014 was the second worse January in 24 years.
This is not a good way to begin 2014, not if you are a retiree with retirement IRA or 401(k) funds invested in the stock market, either directly in the stock market or through mutual funds that invest in the stock market.
Over the past few weeks and months, I have warned Tea Party Loyalists repeatedly that if the Federal Reserve decided “to taper” its purchase of federal debt by another $10 billon a month at the Federal Open Market Committee meeting that concluded Wednesday, the bond market would experience an increase in yields reflecting rising interest rates and the stock market would take a nosedive.
As anticipated, the FOMC stayed on course, announcing the Federal Reserve in February would purchase $10 billion a month less in federal debt for the second month in a row, bring the level of Quantitative Easing under former Fed chairman from $85 billion a month to $65 billion in February.
If the Fed continues to reduce QE by $10 billion a month until later this year when the Fed is no longer buying large amounts of U.S. debt monthly, WND anticipates the stock market bubble will burst, resulting in a major downward market correction that will punish retirement savers with IRA and 401(k) investments in stocks.
More stock market losses ahead
Whether a person saving for retirement invests in the stock market directly or in the stock market via stock market mutual funds, the risk is the same: when the stock marked corrects downward, the retirement investor most likely will take losses in accumulated retirement savings.
Depending upon the severity of the downward correction, it may take years for the retirement investor to recover the losses suffered in a major downward correction such as that experienced in 2009, when IRA and 401(k) investors lost principal from their retirement savings accounts when the Dow Jones Industrial Average fell from a closing high of 14,164.53 on October 9, 2007, to a recent closing low of 6,547.05 on March 9, 2009, as the housing market bubble burst.
Fidelity Investments estimated, for instance, the average 401(k) fund balances on the approximately 11 million accounts Fidelity manages dropped 31 percent to $47,500 at the end of March 2009, from $69,200 at the end of 2007.
With the DJIA going over 16,000 in the extended rally since 2009, most IRA and 401(k) investors have registered substantial gains, but that situation could change for the worse in the next few months.
Get out of the stock market now!
The solution for Tea Party Loyalists remains simple: Get out of the stock market now. If you own an IRA or a 401(k), you can contact your financial advisor and direct that any mutual fund money you have in stock market mutual funds be moved to an investment alternative within the same family of funds that invests in bonds or money market funds.
Typically, you can make the move from one investment option within a mutual fund family of funds to another investment option without paying a fee or penalty.
There is no need to close your IRAs or your mutual funds. Just be sure none of your IRA or 401(k) retirement funds invested in the stock market fund options of the mutual fund family or families you own.
With your retirement money out of the stock market now, the worst you will lose is some additional upward gain if the Obama administration and the Federal Reserve find a way to increase the level of buying U.S. debt to the $85 billion a month that the Fed was “pumping” into the economy under the while Ben Bernanke was in charge.
If you keep your IRAs and 401(k)s in stock market investments too long and the stock market does adjust dramatically downward, as I expect it will, then you could take substantial losses now that may require years of patient waiting for the stock market to restore over the next few years as the stock market recovers.
Obama’s retirement savings grab begins
Make no mistake about it: The Obama administration is desperate to find ways to sell federal government debt, fully expecting President Obama will continue running federal budget debts in the range of $1 trillion a year until he leaves office.
This desperation was obvious in President Obama’s State of the Union address last week to Congress, when Obama proposed this new “My-RA” as a savings vehicle that would allow low income workers to hold beginning IRA investments.
The catch? Simple, Obama will require the “My-RA” to be invested in U.S. Treasury debt.
Only a fool would follow this advice.
- To begin with, Obama lacks the authority as president to create a new tax-preference without Congress first passing a law.
- Second, with U.S. Treasuries paying almost no yield, why would any retirement saver want to put their retirement funds in government debt?
- Third, bonds can lose value when interest rates go up, and the prospect of rising interest rates appears to be on the horizon in the forecasts of many top economists.
Obama is risking pushing the United States in the direction of Argentina by this first effort to grab retirement savings to demand a large proportion of those retirement savings must be invested in government debt to retain a tax preferred status.
Just say “No” to Obama now!
I want to conclude this by stressing that I remain very concerned with the continuing emphasis President Obama continues to place on using executive orders to control the market – the subject of my last three editorials for Tea Party loyalists on this website.
President Obama wants to grab our rights every bit as much as he is itching to grab our retirement savings.
Washington needs to know that Tea Party Loyalists intend to win – either now by impeaching Barack Obama for his back-door attack on America’s financial markets, and/or by throwing at the ballot box in November 2014, and again in November 2016 any and all incumbent members of Congress – Republicans and Democrats alike – who do not stand with us in the defense of our nation.
TeaParty.org has developed a special fax blast called “No More Red Ink” campaign named for the insane spending of Congress, and designed to allow Tea Party loyalists to communicate to Washington a message that is designed to send a powerful message to Congress demanding they get our financial house in order.
The message is hot and blistering. It is designed to be sent to all 100 Senators and 435 members of the House of Representatives – for a total of 535 faxes to the Washington establishment in Congress.
Send a powerful fax blast and you will be making a important fax statement to Congress that supports Tea Party loyalists in our drive to preserve our financial strength.
We’ve seen the threat to our financial stability. Now Congress needs to see how Tea Party loyalists feel in return.
Washington needs to know that Tea Party Loyalists intend to win – either now by impeaching Barack Obama for his back-door attack on the U.S. economy, and/or by throwing at the ballot box in November 2014, and again in November 2016 any and all incumbent members of Congress – Republicans and Democrats alike – who do not stand with us in the defense of our financial freedom.
Dr. Jerome Corsi received a Ph.D. from Harvard University in Political Science in 1972. He is the author of two No. 1 New York Times nonfiction bestsellers, “Unfit for Command: Swift Boat Veterans Speak Out Against John Kerry” (with co-author John O’Neill) and “The Obama Nation: Leftist Politics and the Cult of Personality.” In the past 5 years, Dr. Corsi has written 5 New York Times Bestselling non-fiction books. Dr. Corsi is the Senior Commentator for TeaParty.org.
See original at: http://www.teaparty.org/corsi-get-stock-market-now-33919/
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