Rising Interest Rates, Inflation, and Overvalued Markets: The Triple Threat

By Dean Barber

August 26, 2021

Rising Interest Rates, Inflation, and Overvalued Markets: The Triple Threat

Key Points – Rising Interest Rates, Inflation, and Overvalued Markets: The Triple Threat

  • A History Lesson of Humbling Financial Hardships
  • Bonds: A Wild Ride or a Walk in the Park?
  • Seeking Simpler Times: The Low Inflation Average Era of 1992-2001
  • 23 minute read | 38 minutes to listen

With rising inflation, rising interest rates, and market valuations at all-time highs, it’s critical to be aware of what could lie ahead due to these financial threats. Dean Barber and Bud Kasper have proclaimed this as the triple threat, and they want you to be prepared for it. Join them now to educate yourself on these important issues.

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Article: Owning Bonds in a Rising Interest Rate Environment

Rising Interest Rates, Inflation, and Overvalued Markets: The Triple Threat

Dean Barber: Thanks so much for joining us here on America’s Wealth Management Show. I’m your host, Dean Barber, along with Bud Kasper. Bud, you got a son dropped off at college last week. How’d that go?

Bud Kasper: It went well. I’ve done this three times before, so that was not the real question. The question was how he was going to react to it and all that. It’s always a little bit sad that you know that one of your favorite people in the world is no longer going to be under your roof, but he’s made the adjustment well, and I’m sure he’s going to do quite fine.

Dean Barber: It could be temporary, though. I mean, he could come back.

Bud Kasper: Sorry. That’s a one-way door.

Dean Barber: I’m glad he’s adjusting okay, and you’re adjusting okay.

Bud Kasper: Thank you.

The Trifecta of Concerns

Dean Barber: Today, we’re going to talk about three things, but it’s all going to come down to what’s going on with bonds. Right now, what I think we have is almost a trifecta of concerns that are all very legitimate. If they all come to fruition, it could create a total mess for our markets, and create an ultimate mess for people who aren’t prepared for the trifecta of what we see out there today. Now, first, we’re not ringing alarm bells. We’re not saying the sky is falling or anything like that. What we’re saying is the observation and the data that is in front of us today is very clear that three things are going on.

Number one, inflation is in some fashion coming back. How long it’s going to last? We don’t know. How hot it’s going to run? We don’t know. We do know that we are seeing inflationary pressures. It could be transitory, like the Fed says, but we don’t know. It’s one of those things where it’s an unknown. We can’t predict the future. With the threat of inflation also brings the threat of rising interest rates. As we speak, we have the 10-year treasury hovering around 1.25% to 1.3%. It’s been bouncing in that area now for the last several weeks. The third piece of this is you’ve got market valuations at all-time highs.

So, what happens when the next market correction or bear market comes in and you have an inflationary period, you have a poor market, and you have rising interest rates? That happened in the late ’70s, early ’80s. They called it stagflation, right?

Bud Kasper: Right. Triple threat.

Terrifying 10-Year Treasuries

Dean Barber: It was a triple threat that absolutely murdered the markets. At that point in time, your bastion of safety was treasury notes because remember you could get 10-year treasuries at 12, 15%, at their peak. That was your safety net. But today, you’ve got treasuries yielding 1.25, 1.3%.

I just want to do a little historical step back here. When we go back and look from 2000 to 2019, if a person retired in 2000, they had $1 million, started taking 5% per year, and then increased that 5% per year, every year, to keep up with inflation. That would have been what we could have considered one of the worst times to retire: January 1, 2000. Why? Because we had 2000, 2001, and 2002 that were horrible in the market. It was a cumulative loss of over 42 or 43%.

If you look at the 10-year treasury, if you had a 60/40 portfolio, the 10-year treasury in 2000 returned 17.25%. In 2001, it returned 5.4%. And in 2002, the 10-year treasury returned 15.5%. But, yields on the 10-year treasury at that point were well over 5%.

A Glance Back at The Great Recession

Dean Barber: When we went into the recession, interest rates dropped, which caused bonds to buoy in value, which then took the sting out of what happened in the market. It’s mathematically impossible for treasuries today to provide that same bastion of safety that they provided during The Great Recession in 2008, when treasury has returned 20.5%. They can’t do it.

If they can’t do it, we get inflation, and the markets are overvalued. That’s where the question comes in and we’re getting it from all sides – why should I own bonds right now? We have to talk about that because there is a legitimate reason why you should have bonds in your portfolio. The types of bonds that you should have in your portfolio is a whole other discussion.

The Tight Rope of Tapering

Bud Kasper: The only way that interest rates on bonds could go up is if they start to taper more, meaning that interest rates will rise. What’s that going to do to the stock market if that were to occur? This is walking the tight rope.

Right now, we have a high degree of consumer confidence. Even with all the exogenous things that are going on with Afghanistan, etc., we do see people that feel wealthier than they did a year ago, five years ago, 10 years ago. Why was that? Because we had an approximate 10-year stretch of a bull market, interrupted by a historically quick bear market, and then back to a bull market that we’re enjoying now.

Now they’re feeling like Teflon. They don’t feel that they can be hurt at all because things just keep moving in the same direction with little sacrifice in terms of value of portfolios from that person.

Dean Barber: There’s no question about that. We’re going to go into what we call recency bias. That’s really when you start thinking about what’s happened lately and what should happen in the future. We’re going to take a little bit of step back in history so that you can see that.

I want to encourage you to do a couple of things before we take a quick break. We’ve got a great article written by one of our CFP®, Jason Newcomer. He’s also our Director of Financial Planning and the title of the article is, “Owning Bonds in a Rising Interest Rate Environment.”

A History Lesson of Humbling Financial Hardships

Today, we’re talking about the trifecta—the three things that are threatening the financial security of millions of people across the country. We’re talking about overvalued markets, the threat of inflation, and the threat of a rising interest rate environment.

Those three things combined could cause equities and bonds to decline simultaneously. When you couple that with an increased cost of living through inflation, it can really spell disaster. The last time we had that was in the early ’70s and it continued until the early ’80s.

Bud Kasper: Our retirees today should remember that period. They probably don’t remember how they reacted, though, because they were in the accumulation phase of their life, and just putting money in on a monthly basis if you had the privilege of having a 401(k) or a type of investment.

The reality is today that we’re at some pretty lofty levels, both stocks and bonds are at all-time lows, and we’re entering a period where we will really have to question whether the strategy that we’ve used in the last several years will continue to create opportunity in the future.

Taking a Trip Back to 1973-1992

Dean Barber: Let’s go back in history because we need to do that for people to get an understanding of the magnitude. If those three things occur simultaneously, what can it do? The period that we’re going to go to is 1973 through 1992. It’s not the 1981 to 1992 that’s the bad part of this; it’s the 1973 to 1981.

We’re going to go back again and give an example. If someone had $1 million in 1973, they put that money—60% in equities, 40% in 10-year treasuries—and the average annual return over that 20-year period is 11.49%.

Bud Kasper: Sign me up.

Dean Barber: It’s a great return, 11.49%. Yet, if that individual would have started taking income in the amount of 5% per year, one would think that he’d have a lot more than the $1 million at the end of the day.

Bud Kasper: Sure, because it’s twice the amount of distribution.

The Wake-up Call

Dean Barber: What we’re not taking into consideration, though, is when you retire, you want your standard of living to stay the same. If you have inflation and things are getting more expensive, you need more money each year to buy the same things that you bought the year before.

Let’s run through that ’73 to ’92 period, and we’ll explore what happened. By the time you got to 1981, to buy the same thing that $50,000 purchased in 1973, we’re only eight years down the road, and you have to have $107,000 a year to buy the same thing that $50,000 would buy just eight years prior.

Bud Kasper: That’ll wake you up.

The Lost Decade

Dean Barber: We also had a stagnating economy. We had a bad market. They called the ’70s the lost decade. That was the first loss decade since the 1930s. Your market value of your $1 million is all the way down to $689,000 and you’ve got to take $106,000 or almost $107,000 out? Nobody’s going to do that.

They won’t do that because they know that that’s unsustainable. So, what will they do? They will reduce their standard of living, and they won’t go broke, but they’ll live like they’re broke.

Tapering Troubles

Bud Kasper: Exactly right. The issue that people see front and center now—and if you haven’t, you’re just not following what’s going on—is the big fear of tapering. We know what happened in 2013 when Ben Bernanke had to suggest tapering was necessary. If you’re not familiar with the term tapering means, it simply means that we’re going to start letting interest rates rise again.

Remember, the Federal Reserve has created a mandate for themselves to keep interest rates as low as possible. What does that do? Because inflation is so low, it gives us a lot of extra spending power. And, with COVID-19 and people sitting at home, what did we see? There were lot of people doing things to their homes. They couldn’t get out and spend money, but they wanted to spend money, so they did it on things that are important to them around their house with that.

As we enter this period, the markets are starting to anticipate that tapering is going to be in the future. They use the word transitory, that simply means short-term, that that could be happening sooner or later. Everybody’s going to be viewing what’s going on with Chairman Powell as he makes these statements.

Everybody hangs on every word to see where that might take us in terms of, is he going to taper? Is he not going to taper? I’m going to tell you, he is. At what point in time, I can’t tell you at this point. It could be this year or very well be in the first quarter of next year. When that happens, that is not going to bode well for the stock market. Bonds at these low interest rates are going to be difficult and almost impossible to do what they did back in the ’70s, as Dean was illustrating earlier.

Determining a Strategy for Success

So, what’s an investor to do? What’s a retiree to do? You need to get together with your advisor, and you need to understand some of the things we’re talking about to find out how it could impact you individually, and what strategies are necessary to do it. By the way, it could possibly be that you need to reduce your spending during this period to save yourself later if things go in a very bad way. That’s not what we’re suggesting.

Dean Barber: Not at this point. When they say taper, how are they keeping interest rates down? They’re buying. The number is $700 million a month of treasuries and mortgage-backed securities equally. So, when they say taper, they’re going to reduce the amount of bonds that they’re buying every month. When you got money flowing in like that, that can force those interest rates to stay down. And, it’s providing liquidity in the mortgage-backed securities market.

Bud Kasper: It’s the whole point for the economy to grow.

Slow and Steady Wins the Race

Dean Barber: Exactly. When they slow those purchases, I’m not saying they’re stopping them, so what we’re talking about as a less loose monetary policy. I don’t like to consider it as tightening because I don’t see it that way. I’m saying this is a less loose policy. They’re far away from stopping the bond purchases altogether and then raising the interest rates on the Fed funds rate.

Bud Kasper: There’s also an overlying factor here because all we’re doing is we’re adding more debt to the nation. Then, you add what’s going on with the COVID crisis and everything else, and it kind of compounds the issue. It puts the Federal Reserve in a rough place because they want to do what’s going to be right for the economy, but do we pay a price in the end?

Dean Barber: So, we’ve had rates rise this year. Correct?

Bud Kasper: Mm-hmm.

Dean Barber: All right. So, let’s just measure it. We started the year with a 10-year treasury at 1%.

Bud Kasper: Whoopee.

Dean Barber: As I said at the beginning of the show, the 10-year treasury is now hovering around 1.25%. So, we’ve had a 25% increase in the 10-year treasury. What has happened to fixed income this year? If you look at the bond aggregate, it is a negative by 0.82%. If you look at the 20-year treasury, the total return on that is a -4.5%.

Bud Kasper: Effectively no return.

Breaking Down the Differences in Bonds

Dean Barber: Or you’re losing money. This is where you have to understand that not all bonds are created equal. Your mortgage-backed securities are positive by about 5.5% this year, which is where they should be based on what’s been happening. The mortgage-backed securities got hit last year.

Bud Kasper: Yeah, but they finished OK.

Dean Barber: They finished OK. Last year would have been the perfect example of how you have to have diversification in your bonds. Just like you have to have diversification in your equities, you need diversification in your bonds. There are many, many different types of bonds out there. The bond market is much larger than the stock market, but people don’t think about bonds that way. They think of that traditional thing, “Well, if interest rates rise, bonds lose money.” Well, not all of them will. That’s where it’s important to understand what types of bonds should you have within your portfolio.

The Optimum Mix

As we talk about all this, what people do when inflation’s rising, how do you take care of all that? That’s exactly what we designed our Guided Retirement System to allow people to do is to have clarity, look forward, and stress test for higher inflation, higher interest rates, and for bear markets. Go through all the what-if scenarios that could derail a person’s ability to do what they want to do in retirement and live the life they want to live.

Then we know, “Here’s the alternatives, how we fix it, and what we do. This is our plan.” When you have that, that provides confidence that you can go into retirement, or you can stay retired and keep your standard of living the way that is. There’s an optimum mix that everybody has.

Bonds: A Wild Ride or A Walk in the Park?

Bud, what just happened in the first quarter of this year? If you owned the 20-year treasury in the first quarter of this year, the 20-year treasury lost 13.92%. It subsequently recovered 7% in the second quarter and then another 3.67% so far in the third quarter, but it’s still negative 4.5% on the year. That’s not a wild ride that people expect out of bonds.

What Are the Experts Saying?

Bud Kasper: It’s not supporting what bonds are supposed to be doing in this timeframe if they reverse directions and start to go back up again in terms of yield. It’s important that people understand that as we’re looking at these issues on a daily and weekly basis, we’re having discussions among ourselves with our subject matter experts.

Our CERTIFIED FINANCIAL PLANNER™ Professionals, analysts, etc., are trying to say we need to anticipate this for our clients. We need to have a game plan preset so that we have ways of addressing issues that we know are going to be important to our clients. One way or another what the Federal Reserve is going to do is going to impact us, whether it’s going to be favorability to stocks or favorability to bonds.

Taking A Trip Back to 2013

Now we have this word called taper coming back up again. If we take you back to 2013, that was the big issue. Ben Bernanke started suggesting that what they’re going to have to do now. Instead of doing the stimulus, they were going to start raising the rates, and it turned out a price was paid because of a change in policy by the Federal Reserve at that time.

Dean Barber: In 2013, you’ll recall the 10-year treasury declined by 8.5%.

Bud Kasper: That’s significant.

Dean Barber: But remember, in 2013, we had a little bit of a hiccup there in the market, but markets wound up having a good year.

Bud Kasper: What you saw was a shift in direction of the assets, but that’s not necessarily true. What I’m saying is if interest rates are rising, now people are saying, “Why am I taking the risk of the stock market when I can go over here and secure these bonds because interest rates have gone up at that particular point?” But that’s backward thinking.

Opening Our Imaginations

Dean Barber: Imagine an environment where a person could get a 5% CD. Imagine an environment where a person could get a 10-year treasury yielding 5.5% or 6%. What they always say the risk-free return is is the yield on the 10-year treasury. That’s considered your risk-free return, 1.2%.

We know that inflation is running higher than 1.2%. That means our purchasing power on that money that we have in treasuries is going down each year. If that risk-free return were to increase to 5%, people might say I’d love to have a 5% 10-year treasury. I’d love to have a 5% CD.

If that happens, people will move money out of the stock market because the stock market has literally been the only alternative that people have to get any kind of return. They can’t get it in the bank, and they can’t get it on longer-term treasuries like that. So, they’re going to the stock market, where you’ve got a yield on the S&P 500 that’s about the same as the yield on the 10-year treasury. But, you have the hopes for maybe some appreciation in that S&P 500.

If that happens, money will come out of the market and it will flood into treasuries. Do you know what happens when that happens? The market declines.

Bud Kasper: Yes, it will.

Interest Rates: How Low Can They Go?

Dean Barber: If yields are rising, bonds are going to decline too. That’s what we’re talking about here. There’s the threat because we don’t have an environment now where we’ve got yields high and the markets fall, so the interest rates drop. That normally happens when you go into recession. Interest rates go down, but how much lower can they go?

Bud Kasper: Right. You’ll remember this, Dean. I’m going back in my mind, 1982-83… You joined in the business 1987?

Dean Barber: Yeah.

Bud Kasper: At that time, where were interest rates? By golly, interest rates were high. I can remember vividly putting people into municipal bonds at 7%. I want you to think of it from the sense of the stock market, because a logical person would say, “That’s great. I’ll take the 7%. I don’t want the risk of the market. And, by the way, the market doesn’t give me a guaranteed 7% return.”

Dean Barber: We were going into a falling interest rate environment. Remember what had happened is that the Fed had jacked interest rates up through the roof to stop the runaway inflation of the late ’70s.

Bud Kasper: Which was Volcker and necessary.

Dean Barber: It was necessary. Consequently, in 1982, the 10-year treasury total return was 39.57%. In 1984, it returned 14.87%; in 1985, it returned 29.85%; and in 1986, it returned 21.35%. You could have doubled your money.

Bud Kasper: Who needs the stock market?

The Teeter-Totter Effect

Dean Barber: Exactly. But that’s what was happening because interest rates were so high, and then they were coming down. It’s the teeter-totter effect. Now we have just the opposite threat with ultra-low interest rates, the threat of inflation, rising interest rate environment, and you couple that with overvalued market.

People need to have a plan right now. They need to understand how these different asset classes play together and the different types of bonds that are out there that could thrive during a rising interest rate environment, as opposed to getting killed.

Bud Kasper: If you look at TIPS, Treasury Inflation Protection Securities, you might say, “Is that a good place at this time?” Well, if inflation keeps picking up, it could be a good place to park some money. I don’t think it’s going to be necessarily anything that would be high single digit returns, but it was an alternative in the bond space, which has a higher degree of safety than what you would have historically speaking in stocks.

Dean Barber: Remember what bonds are supposed to do with your portfolio is they’re supposed to be the ballast.

Bud Kasper: The stabilizer.

Dean Barber: They’re the stabilizer that holds your portfolio up during tough times. From a historical perspective, especially when we come out of the high interest rate environment of the late ’70s, early ’80s, and then we start going onto low interest environment, that was a great spot to be. We don’t have that today, so we have to look for alternatives in the bond space.

Your Yield to Maturity

Think of it this way. If you had $100,000 that you wanted to buy in bonds, and you bought 10 individual bonds—putting $10,000 apiece in individual bonds. When you do that, you can look at the price you’re paying for that bond, when it is going to mature, and how much will you get for it when it matures, and then the interest that you’re going to receive between now and then. Then, you get what you call your yield to maturity.

That yield to maturity is your actual return if you hold the bond to that period exactly what you make. If you can buy bonds at a reasonable price, which there are some out there that you can, you can come and say, “All right, I’ve got my fixed-income portfolio that’s going to give me a 3.5% or 4% yield to maturity, something like that.” Then, you go through these environments, and you go, “OK, I know that that piece is fixed.”

A Quadruple Threat?

Bud Kasper: There’s one boogie man that’s in the background there, and that’s Uncle Sam. What does he have? Taxes. When you take the tax consideration into the bonds, that’s why I was going back to in the ’80s. Municipal bonds paying as high as they did back then with Uncle Sam not in your pocket was a beautiful thing.

Dean Barber: Taxes is another subject we’ll get into here again in a few weeks. That’s coming around the corner too.

Bud Kasper: Yes, it is.

Dean Barber: So, maybe we got four things threatening us right now. But the three that are really threatening the financial markets are the threat of inflation, which causes a threat of rising interest rates, and then the over valuations in the market.

The only way you’re going to attack this is to have a good, solid financial plan. We use a system called a Guided Retirement System. It’s proprietary. What it’s designed to do is to give you clarity on where you’re headed. If you’re 10 years out from retirement, it’s a perfect time to start. If you’re close to retirement, let’s get started. Let’s have a conversation.

Seeking Simpler Times: The Low Inflation Average Era of 1992-2011

To discuss the impact of the importance of sequence of returns and the importance of factoring inflation into your plan properly, I’m going to take you back again to the period from 1973 to 1992. Over that 20-year period, inflation averaged 6.27% per year. Fast forward from ’92 to 2011. Inflation averaged just 2.5% during that period.

Bud Kasper: Much more reasonable.

Dean Barber: During that period, you had an average annual return of 8.78% per year. And during the other period, ’73 to ’92, you had an average return of 11.49% per year. Yet the difference in the amount of money that you had left over, if you were taking 5% the first year and then keeping up with inflation, would have been $3.7 million with an 8% return. That was the ’93 to ’11. In the ’73 period, you only had $68,000 left at the end of that 20 years.

Bud Kasper: Wow.

Dean Barber: You had almost 3% per year better average annual return, but inflation was 6.25% versus inflation of just 2.5%. There’s a big difference there.

The Holistic Approach

Bud Kasper: I wrote an article that talked about the sequence of returns and the impact it can have on retirees. It’s a significant read for people to understand, but even with that, I didn’t have the inflation factor that needs to be brought into the equation. That is, as we would say in the business, the holistic approach. Quite frankly, most people, and I have no real evidence to say this but I’m going to say it anyway, are not working with an advisor who has the capability of looking at all these nuances that can so incredibly impact the net result of their retirement.

Dean Barber: I don’t want to diminish the good CERTIFIED FINANCIAL PLANNER™ Professionals that are out there that really do a good job at that. But you and I both know, and we’ve been in this business long enough to witness multiple times that most people that call themselves financial advisors are just investment advisors.

In a lot of cases, I would just call them financial salespeople. There are too few really good CERTIFIED FINANCIAL PLANNER™ Professionals that are taking that holistic approach and sitting down like our CERTIFIED FINANCIAL PLANNER™ Professionals do with the estate planning attorneys, the CPAs, and the risk management experts, who are all in the same office.

Taking Advantage of The Guided Retirement System

They’ll all meet with the client, and for the first time, that the client can say, “Here’s my vision. Here’s my goals. Here’s what I want to have happen. OK, team—collaborate and figure out how to make this happen for me in the most tax-efficient manner possible with the least amount of risk possible. That’s what the Guided Retirement System that we have today does.

Bud Kasper: Yesterday, me and the other CERTIFIED FINANCIAL PLANNER™ Professionals with the firm went to the financial planning meeting yesterday. Michael Kitces, who’s well-known in the industry for understanding almost everything about our business associated with how to improve and get the best results for clients, etc. The comment he was making was looking demographically at what’s available for investors out there in the marketplace.

People are starting to realize, and this is a growing number, that there’s a lot more to this than just the investments. They have really no conception as to the other factors that need to be totally understood before you can feel confident about your retirement.

Being Agnostic on Investments

Dean Barber: The first time that we got validation on this was when Morningstar came out and wrote that article called, “Alpha, Beta, and Now … Gamma.” They clearly illustrated with being agnostic on the investments. What they were doing was just assuming a 60/40 portfolio, like what we’ve been talking about here today, agnostic of investment.

In all situations, you’re going to have the same investment, but then they started applying different financial planning techniques. What they discovered was that the proper application of all the financial planning techniques can increase your income by as much as 22.6% year over year. That’s a huge number.

Bud Kasper: That’s a great paper. It explained and gave us numbers for a change in terms of how you increase the probability of success through understanding that concept.

Dean Barber: That’s what we’ve been doing in our Guided Retirement System for years, but that paper that Morningstar put out validated exactly what we were showing in our financial planning process.

Teamwork Makes the Retirement Dream Work

Bud Kasper: In the discussions that the CFPs have in our firm with each other, that’s a fun time because we’re really challenging what we’re doing, how do we improve, and what are we missing? Then, we bring in the CPAs, and they point out things to us that perhaps we had missed or didn’t dive deep enough into to really understand how we can positively impact the outcome for our clients.

Dean Barber: There’s also a copy of that article that Bud wrote out there and a copy of the article most recently written by Jason Newcomer, one of our CERTIFIED FINANCIAL PLANNER™ Professionals. He’s also the director of financial planning. It’s called, “Owning Bonds in a Rising Interest Rate Environment.”

There’s a ton of great education out there. That’s what we’ve tried to do ever since the inception of this show, which is almost 20 years ago now, is to educate people so that they can make more informed and intelligent decision when it comes to their money.

Bud Kasper: And you haven’t changed one bit, honey.

Dean Barber: I know it. Maybe I got a little bit less hair, maybe some of it’s turning gray on me.

Bud Kasper: The makeup doesn’t hurt.

History Doesn’t Always Repeat Itself, But It Oftentimes Rhymes

Dean Barber: And you know what? It’s fun to share these facts with people. It’s fun for us to be challenged in times like this, to get out there and find the alternatives that are going to work. We’re running into a scenario that hasn’t occurred in you or I’s career, so it’s forcing us to go back and study history a lot more. As you like to say, Mark Twain’s quote, “History doesn’t always repeat itself, but it oftentimes rhymes.”

Bud Kasper: That’s right.

Dean Barber: We’ve got to go back in and study those high inflationary periods. We’ve got to look at different asset classes and how they performed during those rising interest rate and inflationary periods. We need to understand what is the best mix of a portfolio with the least amount of risk to get people through this next phase, which could look very closely like what we saw with that high inflationary period in the late ‘70s.

Preparing for the Challenges Ahead

Bud Kasper: You look at things like dividend yields 20 years ago. What does that look like compared to today? When you look at the S&P 500 and you think about it in its inception, I believe it was 1956, they broke the market up into eight distinct asset classes. At that time, technology represented maybe 4%. Today, it’s 30%. Look at these types of evolutions that are going in terms of returns.

Dean Barber: It’s going to be challenging in the future. There’s zero question about it, but it’s nothing that’s insurmountable if you have the right plan. And that plan has to be regularly monitored and reviewed directly with you, along with your CERTIFIED FINANCIAL PLANNER™, your CPA, estate planning attorney, risk management specialist, etc. It’s got to be consistent.

The Triple Threat Is Real

This threat is there. Is it imminent that we’re going to have a bear market? No. It’s going to happen at some point. We don’t know when. There’s still a lot of good things happening in the economy, but these threats are real, and you need to start planning for them now.

Bud Kasper: Look how short the one was we just had.

Dean Barber: One of the shortest in history.

Thanks for joining us here on America’s Wealth Management Show. I’m Dean Barber, along with Bud Kasper. We’ll be back with you next week, same time, same place. Everybody, stay healthy and stay safe.

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