Ken Moraif: Hello, I'm Ken Moraif. I'm a certified financial planner. I've been practicing here in the Dallas area now since 1988, and for those of you who've listened to my show, you know I've been on the air with my show, "Money Matters with Ken Moraif," for the last 14 years. One of the most important things that I talk about on my radio show and that I talk about with clients, and it is foundational to the philosophy of our firm, and that is that it is important to have an exit strategy with your investments. I think it is very, very important that you don't just ride the market down and lose tons of money because buy and hold is the way to do it. So we have a strategy in our firm where if the market goes down to a certain point, we get out, and then if it rises to a certain point, we get back in.
I want to show you how our strategy would have worked had we employed it. Now, this is the S&P 500 index for the decade from 2000 to 2010. Now, the S&P 500 is an index; therefore, you can't invest in it directly. You have to go to a mutual fund or an ETF, and there might be some fees if you did that. These are not reflected here. Also, we're going to talk about buys and sells. I don't talk about taxes here. I just want to show you how our strategy, when the buys and the sells would have happened. Your individual situation might have been different than this, but I think you'll get the idea.
So, here's the S&P 500, and you can see that during this decade, the market was actually down for that 10-year period. It ended the year, after 10 years, down. Now, had we employed our strategy, what would have happened here is we would have hit our first trigger point right here, October 12th of 2000. So had we sold right here, then what would have happened is... You see how the market went well down right there? For two and a half years, the market went down and down and down.
Now, had we employed our strategy, we actually would have then hit our buy point right here on April 23rd of 2003. So what would have happened is... We're going to assume here that while we are out of the market, we are sitting in a money market fund, and we're going to assume that's cash, and we're going to assume we made zero during that whole time. We didn't make a single penny return. So what happened was this line right here is us. We would have stayed right where we are.
Now, our buy point right here, we would have bought right here. Now, the market rose during this time. So therefore, because we bought back in here, we would have risen, as well. So what would have happened is that we would have seen the rise there.
Now, our exit strategy comes into play again, and on November 27th of 2007, our strategy told us that it was time for us to sell. So here's where we told our clients to sell from their investments. Now, at that point, the market right here had generally come pretty close to a peak, and you can see what happened after that. The market went down dramatically in 2008. Many of you may remember that.
Now what happened was it turned around, and right here, in June of 2009, June 12th of 2009, that's where our strategy told us it was time to buy back in. So now, we're up here, right? We're not down here anymore, so we would have stayed at zero during the bear market, assuming again we made no returns. We made zero. So we're sitting right here instead of down there. So far, so good, right?
Now what would have happened is the market would have risen. The market rose right here, and because we bought here, what would have happened is we would have risen right with it. So what would have happened was that instead of being here, we would have been right there. Big difference. So during that time, we actually had two major bear markets, and you'll notice that we would have done this instead of that and that. That is very, very important.
Now, we work primarily with retired people, and protecting principal is job number one. We don't want to see any of our clients lose half their money in a bear market. That is not something that we want to have them experience.
Now, the strategy is not perfect. It has flaws, and in fact, I've made another video that you can go to our website and watch where you will see that it does not work every single time and it does give false alarms. So it will explain that to you, but you know what? If I can have a strategy that'll help me to avoid things like this, then you know what? I will take the flaws. But watch the video on the flaws, and you'll see that it is not perfect.
Now, if you agree with my philosophy, that in the good times, participating, but in the bad times, not being in the market, having a sell strategy to get out, if you think that makes sense to you, then I would invite you to come to a seminar that we have coming up. The seminar is designed for those of you who are over the age of 50, who are retired, or who are retiring soon.
If this is you, then you need to be at our seminar because we're going to be talking about how to maximize your social security benefits, when to take them. We're going to talk about what to do with your retirement plans at work, if you have 401ks and those kinds of things. We're going to talk about your IRAs. We're going to talk about how to invest so as to beat inflation, which I think is the most important enemy that we have. We're also going to talk about how to reduce your income taxes, how to get income. We'll talk about our exit strategies and lots, lots more.
So if you're over 50, make sure you go to the website, MoneyMatters.net, and on our website, you can sign up for our next seminar. I'll look forward to meeting you in person.
That's it for this video. We have a disclaimer that's going to scroll up across the screen. I want you to read every single word of that because it's very important that you understand that our strategy is not perfect. OK? Thank you for your time.