Category

Geopolitical Affairs

Mar 16
1

How Big Events Like Ukraine Can Impact Your Retirement

By | Geopolitical Affairs, Retirement

World events can impact your retirement, but you can be prepared!

The past few years have shown us that big world events can impact our lives at any moment. Sometimes we see them coming. Other times, we don’t have the ability to prepare and buckle in for the turmoil ahead.

The COVID-19 virus is one of the best recent examples of major world events impacting the economy. Now, the Russian invasion of Ukraine appears to be taking an immediate toll on Americans financially. It begs the question, can we prepare for these types of events so that we can, at least, soften the blow to our futures?

Well, the first step toward answering that question is knowing what to look out for when these major moments strike. Here are five ways big world events can impact your retirement:

  1. Market Shifts

Reactions to global events often shift the market, and in times of crisis, that shift is typically negative [ An article from ThinkAdvisor said a global recession because of a negative supply shock is now “highly likely,” especially when you tack on the fact that the world is still recovering from the spread of the COVID-19 virus[1].

Market downturns often hurt retirees, especially if they have to withdraw money from accounts like mutual funds, stocks or bond funds for retirement income while account values are down. For those in or approaching retirement, the situation can be difficult if they have no other sources of income and have to keep taking money out of dropping accounts, especially at the beginning of their retirement (known as “sequence of returns risk”). In fact, many people on their way into retirement during the Great Recession were forced to remain in the workforce when they lost everything[

It’s also worth noting that market crashes can actually help younger investors because they have a long time-horizon to retirement and can “buy and hold” bargains. In other words, if younger people are able to invest when the market bottoms out, it might be an opportunity to buy low in order to accrue higher long-term gains.

  1. Inflation

Inflation can have a profound impact on finances, and those taking the brunt of the blow might be the ones who are no longer stockpiling resources. Inflation isn’t a new concept, but when your retirement money doesn’t go as far as you hoped, it can put your plans for your golden years in jeopardy. Over the course of the pandemic, the United States sent stimulus checks to qualifying Americans three different times. With more money in the pockets of consumers, prices rose, and they didn’t fall after people spent their stimulus checks. In fact, they continued to rocket upward. The Washington Post reported that inflation reached 40-year highs at the time of Russia’s invasion, posing major questions for the U.S., the Federal Reserve and retirees stretching their financial resources to their limits[4].

  1. Gas Prices

This one is no secret. In fact, if you drive past a gas pump when supply is short, your jaw might drop. As the Russian invasion of Ukraine wages on, CNN reports the biggest jump in gas prices since Hurricane Katrina[8]. Russia is not the only supplier of oil, but it is Europe’s largest, producing 10% of the global demand. The U.S. imports just 8% of its oil from Russia, but energy is a global commodity, meaning that a rise in one part of the world causes a rise in another part of the world[10]. Bob Doll, the chief investment officer of Crossmark Global Investments, spoke to ThinkAdvisor to discuss the effects of the Russia-Ukraine war. He noted, several times, that oil prices can devastate the economy. He said the price surge is why the war should be investors’ chief concern in 2022. Doll went on to say that inflation is likely still yet to peak because of rising oil prices[2].

You might be wondering what that has to do with your retirement. The spike in oil costs and inflation drastically affect the purchasing power of a dollar, which could be most impactful to those living on fixed incomes. If you’re in retirement, it could force you to spend more at the pump, taking away from valuable dollars you may need for other expenses.

  1. Shifting of Retirement Ages and Plans

Uncertainty in markets, inflation and other results of a global crisis can also upset retirement plans decades in the making. In 2021, CNBC reported that 35% of Americans changed their retirement plans because of the pandemic[6]. 68.5% of those who changed their plans said they moved their retirement expectations back by up to 10 years. Some did report that they planned to move retirement up, but the uncertainty forced others on the brink of finishing their careers to table their hopes and remain in the workforce to continue collecting paychecks.

  1. General Panic

Major events, especially ones that have negative impacts on people, markets and finances, can cause panic. Common wisdom says to never make decisions in a panicked state, but it is easy to see how you might want to unload certain investments or liquidate assets out of fear that things might get worse. In his ThinkAdvisor feature, Bob Doll said advisors shouldn’t be recommending any major risks right now, arguing that investors have seen the market during wartime, and it typically bounces back[2]. Oftentimes, approaching the situation from a more measured perspective could actually provide an opportunity. A Kiplinger article used The Great Recession as a teacher for retirees in a crisis, citing one investor who remained patient, even adding to his investments as stock prices hit the basement[9]. He later said he was headed toward an early retirement and squashed his fear of volatility. With a calm, steady approach, retirees can take steps to fight market downturns.

If you have questions about how you can protect your retirement plans and weather global economic storms, please give us a call. You can reach Bulwark Capital Management at 253.509.0395.

 

Sources:

  1. https://www.thinkadvisor.com/2022/02/25/roubini-6-financial-economic-risks-of-russia-ukraine-war/
  2. https://www.thinkadvisor.com/2022/03/07/bob-doll-10-talking-points-for-advisors-investors-amid-russia-ukraine-war/
  3. https://www.nytimes.com/2022/02/23/business/economy/russia-ukraine-global-us-economy.html
  4. https://www.washingtonpost.com/us-policy/2022/03/02/powell-testimony-inflation-fed/
  5. https://finance.yahoo.com/news/russia-ukraine-crisis-what-can-prevent-150-oil-prices-112747924.html
  6. https://www.cnbc.com/2021/10/12/pandemic-has-disrupted-retirement-plans-for-35percent-of-americans-study-says.html
  7. https://www.aljazeera.com/news/2022/3/3/how-much-oil-does-the-us-import-from-russia
  8. https://www.cnn.com/2022/03/04/energy/gas-prices/index.html
  9. https://www.kiplinger.com/slideshow/retirement/t047-s004-5-retirement-lessons-learned-from-great-recession/index.html
  10. https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_a.htm
  11. https://www.diva-portal.org/smash/get/diva2:727314/FULLTEXT01.pdf
  12. https://money.usnews.com/money/retirement/articles/2011/10/31/the-recessions-impact-on-baby-boomer-retirement

Investment Advisory Services offered through Trek Financial LLC., an (SEC) Registered Investment Advisor. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed, and past performance is no guarantee of future results. For specific tax advice on any strategy, consult with a qualified tax professional before implementing any strategy discussed herein. Trek268

 

Feb 17
2

Zach Abraham Featured on Fox News

By | Geopolitical Affairs, In The Headlines, On TV, Social Security

Zach Abraham, Chief Investment Officer and founder of Bulwark Capital Management, recently appeared on Fox News to discuss the recent stock market furor over Reddit retail investors.

Here is a brief summary of some of Zach Abraham’s comments:

Hedge funds have been making money for 20 years by betting on potential stock market losses. Now retail investors—like the recent Reddit investors in GameStop—have the same capability.

Zach encouraged Schwab, TD Ameritrade and the SEC to step away and let the market work itself out. “It will build more faith in the markets,” he said.

 

Watch the segment—Zach starts at 1:53 minutes:

https://www.fox5dc.com/video/894564.amp

Feb 10
0

Silver Gets the GameStop Treatment: MarketWatch and Morningstar Feature Zach Abraham

By | Geopolitical Affairs, In The Headlines, News, On TV, Stock Market

Silver rallied by as much as 13% on Monday, February 1st to their highest intraday level since 2013, as a buying frenzy attributed to a post on Reddit last week suggesting a short squeeze on the precious and industrial metal continued. Silver futures for March delivery climbed to as high as $30.35 an ounce on Comex.

MarketWatch covered the rally on silver. They spoke with Zach Abraham and several others familiar with what was taking place. Here are Zach’s comments:

 

The moves for the metal are “incredibly unusual — fair to say it’s unprecedented,” Zach Abraham, chief investment officer at Bulwark Capital Management, told MarketWatch.

“But we need to see if it can be done again. Remember, GME [GameStop] was a deeply undervalued and unique situation,” he said.

So far, what’s happened to silver in the last few days is “not even close” to what happened with the Hunt brothers, said Bulwark Capital’s Abraham, referring to the brothers who famously tried to corner the silver market four decades ago. During the Hunt brothers’ accumulation of the silver, prices of silver bullion rose from $11 an ounce in September 1979 to $49.45 an ounce in January 1980.

“In addition, they don’t control anything,” he said, referring to the Reddit crowd. “I think for this reason alone, going after a commodity like silver is futile.”

Still, many analysts had already been touting upbeat prospects for silver even before the Reddit-induced frenzy.

Abraham said his company invested in silver on expectations that a short squeeze in silver would occur, and didn’t take the Reddit WallStreetBets forum into consideration when investing.  

“Silver is still cheap. Not a bad idea to buy some for the long haul,” he said. “Might make sense to buy silver miners as well. Just know both can be extremely volatile.”

He believes that $100 silver prices aren’t out of the question during the next run for the metal. “Silver is horrifically undervalued, on a historical basis, compared to financial assets.”

 

Original article links:

https://www.marketwatch.com/story/silver-gets-the-gamestop-treatment-rallies-by-as-much-as-13-11612203674

Feb 01
0

The Inauguration’s Effect on the Stock Market: Zach Abraham Featured in Newsweek

By | Geopolitical Affairs, In The Headlines, Investments, On TV

In an article published on January 19th, 2021 in Newsweek, “Stock Market on Best Election Day to Inauguration Run Since World War II,” Bulwark Capital Management Chief Investment Officer, Zach Abraham, gave his insights into the Biden presidency along with the Federal Reserve’s policies and their potential future effect on the stock market.

He was featured along with analysts from Goldman Sachs, the chief investment strategist at CFRA in New York, and the U.S. Chief Economist at S&P Global Ratings.

Here are Zach’s comments:

“I think the stock market will continue to go higher, perhaps much higher.”

“The only two times we’ve had valuations anywhere close to this were in 1929, when the markets dropped 85% over the next two years, and 1999, when the Nasdaq dropped 85% over the next two years,” he said. “I don’t think a selloff that dramatic is going to happen again because of the underwriting by the Fed and the US government.”

Last year, the Fed’s action and stimulus spending approved by Congress injected about $8 trillion into the economy,” Abraham said. “The amount of cash that’s been poured into this market is mind-boggling.”

But to be clear, it’s the Fed that’s driving the market, he said.

“If the Fed continues to do that, stocks will keep going up. If it stops doing that, they won’t,” Abraham said. ” All that money injected into the system last year had to go somewhere. Part of it ran headlong into a stock mania that had been 13 years in the making, since the financial crisis of 2007-2008. It’s just gone ballistic.”

Read the full article here:

https://www.newsweek.com/stock-market-best-election-day-inauguration-run-since-world-war-ii-1562707

Dec 09
0
President Elect Biden

Zach Abraham Discusses Biden Presidency with Investment News

By | Geopolitical Affairs, News, Stock Market

Financial advisors are navigating the uncertainty of Biden’s impact on markets and the economy, scrambling to prepare portfolios and client expectations amidst a cloud of uncertainty regarding taxes and economic growth prospects.

Several advisors weighed in with Investment News, including our founder and chief investment officer, Zach Abraham. Zach summed up the unprecedented environment by saying, “The stock market is really confusing a lot of people right now.”

“There is unequivocally a massive separation between the performance of financial assets and the underlying economy,” he added. “The markets started celebrating after the election because one party didn’t sweep it, there wasn’t a blue wave, and there wasn’t a Trump reelection that would make the cities burn.”

But, going forward from here, Abraham said the financial markets are expecting mountains of government stimulus to carry the economy until it can get past the COVID-19 pandemic and back to standing on its own.

“It is structurally impossible for this economy to perform at the level of 2019 at any point in the near future and asset prices will reflect that new reality without stimulus,” he said. “It will take some bumpiness in markets to wake up the politicians, but those guys aren’t afraid of spending.”

While some advisers are trying to help clients navigate the unknown of higher taxes, others are wondering if clients are becoming too complacent with a stock market that continues to defy gravity.

From a pure stock market perspective, most data show that U.S. presidents typically get too much blame for down markets and too much credit for up markets.

An analysis compiled by John Bernstein, founder of Bernstein Financial Advisory, which measured stock market performance in two-year election cycles dating back to 1928, found that the political party in power was only responsible for about 2% of the stock market’s total performance.

Read the full story here: “Financial advisers navigate the uncertainty of Biden’s impact on markets, economy.”

 

 

 

Aug 04
0

Zach Abraham In US News & World Report: “It Might Be A Good Time To Explore European Equities”

By | Geopolitical Affairs, On TV, Stock Market

Fixed-income investors looking for yield are struggling in the near-zero interest rate environment in the United States. According to Zach Abraham and other financial industry experts interviewed in US News & World Report yesterday, there may be opportunities in European equities.

When considering European stocks that pay dividends, it’s important for fixed-income investors seeking an income stream to remember that many European companies pay out their dividends only twice a year, instead of quarterly as many American companies do. Also, the fluctuating exchange rates between countries can impact dividends for American investors.

To decide whether any dividend-paying stock is a good investment, it’s important to analyze the business and make sure it has a reasonable valuation. “For dividend-paying stocks, the best place to start is looking at a company’s balance sheet to see if the company can sustain the dividend,” says Zach Abraham, principal and chief investment officer at Bulwark Capital Management in Tacoma, Washington, just outside Seattle.

Zach says that when comparing European companies’ valuations versus those in America, here “we have record valuations, record corporate debt levels, yet you have valuations in the stock market that suggest to you that everything is humming along,” Zach says. In the U.S. in particular, corporate debt levels are rising, and Zach Abraham recommends looking at a company’s debt obligations when evaluating them. “The higher the debt on a company’s balance sheet, the more likely that company is to cut back or suspend that dividend,” he says.

He warns investors that there’s never been a period in America where stock market valuations have been this detached from the underlying economic fundamentals. “In the U.S., the Nasdaq is up in a year where we’ve sustained the biggest economic shock in our history.”

European markets have also been hit by the pandemic; however, Abraham says that “they’re far from trading at record high valuations. Due to the damage the valuation spread has done to the economy, European equity prices are attractive with more upside,” Zach says.

 

Read the whole story here:

https://money.usnews.com/investing/articles/investors-searching-for-yield-in-euro-stocks

The article also appeared on WTOP News.

Jun 15
0

Zach Abraham Featured by Business Insider

By | Geopolitical Affairs, Market Risk

Zach Abraham was one of the industry experts quoted in the recent Business Insider story, “The European Union’s $826 billion stimulus plan to battle the coronavirus is ‘too small and too late.’”

Zach Abraham told Business Insider that the EU fund is a mere “stop gap” plan of action.

“While the EU relief package will certainly help things in Europe, it appears to be more of a stop gap measure and pales in comparison to actions taken by the US government,” said Zach Abraham, chief investment officer at Bulwark Capital Management.

In its current structure, Abraham said, the EU cannot survive. What will likely happen is that Germany will back down on European Central Bank guidelines that restrict quantitative easing and other forms of monetary stimulus, and countries such as Italy and Spain will be forced to leave, he said.

Other comments from the article

While analysts at Bank of America believe the EU fund is a decent starting point to negotiations, they say it is “too small and too late” for urgent economic needs. Compared to the Franco-German proposal, Bank of America analysts called the EU’s latest recovery fund “tentative good news.”

Goldman Sachs analysts praised the plan as more “ambitious” than the Franco-German proposal valued at €500 billion. Analysts said that it was “close to the Franco-German proposal, but somewhat more ambitious on the loan-based mechanisms for investment.”

Read the whole article here:

https://www.businessinsider.com/what-eu-826-billion-covid-19-stimulus-package-means-2020-5

The story was also republished by MSN Spain and Libertatea, a top-tier publication in Romania:

https://www.msn.com/es-es/dinero/economia/el-plan-de-est%C3%ADmulo-de-750000-millones-de-euros-de-la-uni%C3%B3n-europea-contra-el-coronavirus-es-demasiado-peque%C3%B1o-y-llega-demasiado-tarde-dicen-los-analistas/ar-BB14Oh1r

https://www.libertatea.ro/stiri/ce-se-intampla-lume-era-covid-3019159

 

 

Jun 04
0

Zach Abraham Weighs in On the EU’s Historic Coronavirus Stimulus Package

By | Geopolitical Affairs, Investments, Stock Market

Zach Abraham’s comments on the historic European Union’s $826 billion coronavirus stimulus package (750-billion-euro) were recently featured on both Bezinga.com* and Yahoo! Finance.

 

The European Union is proposing a ($824 billion) coronavirus recovery plan to assist the bloc with its recovery. The funds, as well as targeted reinforcements to the long-term EU budget for 2021-2027, will bring the total financial firepower of the EU budget to 1.85 trillion euros, according to the European Commission.

EU Must Evolve To Survive, CIO Zach Abraham Says

“While the EU relief package will certainly help things in Europe, it appears to be more of a stop gap measure and pales in comparison to actions taken by the U.S. government,” said Zach Abraham, chief investment officer and principal at Bulwark Capital Management.

“Although we are keeping a watchful eye on all ECN and EU relief measures, we are far more focused on recent comments by Macron and Merkel that point to a willingness or at least an openness to a tighter fiscal union.”

In Abraham’s view, the EU cannot continue as it is structured today.

“Either Germany will have to relent on ECB guidelines which restrict the central bank from applying unilateral QE and other forms of monetary stimulus (currently the ECB can only apply monetary stimulus evenly across all member countries) or more countries, specifically Italy and Spain, will be forced to leave.” This issue is far more critical to the economic prospects of the EU as a whole, the professional investor said.

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Interestingly, Germany announced it was seeking a fresh $112 billion coronavirus stimulus package, just days after the EU launched its historic $826 billion plan: https://markets.businessinsider.com/news/stocks/germany-economy-112-billion-coronavirus-stimulus-rescue-plan-2020-6-1029271636

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You can read the original articles here:

https://finance.yahoo.com/news/european-union-sets-750-billion-192730975.html

https://www.benzinga.com/news/20/05/16115773/european-union-sets-out-750-billion-euro-coronavirus-recovery-plan

* With an estimated unique monthly visitor count of almost 1.5 million, Benzinga is a news and analysis service that focuses on global markets. It provides original, accurate and timely global financial content and features articles from industry experts and experienced analysts.