Welcome to Keen on Retirement, a show dedicated to helping you thrive before and during your retirement years. If you are looking to grow and protect your wealth and want to meet the second half of your life, the best half, then listen in as well as advisor Bill Keen and his host sort through the key issues that you need to know in a lively and candid way. Hey everybody, Bill here. I wanted to take a moment to wish you a happy and prosperous 2019 and to introduce our podcast today.
We have a special treat in that we recorded our recent 21st annual Holiday Breakfast that we held in Overland Park, Kansas in early December. Now these breakfasts have become a real tradition around Keen Wealth in that we get together each December on a Saturday morning and we discuss our outlook for the upcoming year in the markets and the economy. We also have a nice breakfast, lots of fellowship and some really good holiday entertainment as well. The event proves to be a wonderful event each year that we've conducted it and it seems to be getting better each year as well.
So we've put together this in audio form for you in this podcast. This particular podcast is my presentation where I always like to kick off the event and discuss perspective. We also have Matt Wilson's piece, the Chief Investment Officer of Keen Wealth in a second podcast as well that's being released this same day. He gets more into the detail of what's happening now and where he sees things going next year.
So I hope that you'll check out his as well. Now there's two ways to check out this data. One is to listen to this podcast that you're on now. That can work, but even better it would be to go to KeenOnRetirement.com and watch the full high quality video of the presentations that actually have the slides inserted as well.
It's much easier to reference slides when you hear us talking about data than just listening to the audio. So it's great if you listen to this, but I would say the preferred method would be to go to KeenOnRetirement.com and watch those videos if you have an interest. So whether you were at the event with us and you would like to just have a refresh on what we talked about or you were unable to make it and just want to see what we did discuss, I think that you will find these very helpful. Now before I let you go, I wanted to mention we had a little off script interaction between Matt and I related to a birthday present that he and my team surprised me with.
Now it's a short video at the KeenOnRetirement.com website that I thought you would like to see. So we had some fun with it and posted it there with the other videos I mentioned today. I hope you enjoy our presentations and we'll talk to you soon. We started this program.
I know it says 21 years because we went back and said, actually when was the first one we did? And it's 21 years ago, but I think we had maybe 65 folks, something like that was a nice intimate gathering and we talked about what we thought the markets were going to be doing, had a little entertainment. It was just seemed like a nice thing to do. Well I got a lot of good feedback from that first event.
So we did another one and then another one. And then somewhere around the fourth year we started talking and what I was seeing happening was a community was evolving around that event. And it was a financial firm. We're not necessarily in the event business, but what we saw was that the folks that we worked with all have similar values and similar interests and a lot of folks that work from the same companies.
And at some of our events we're seeing that this is the place where people see each other at one time a year. So a real community was coming up around it. So I made a commitment back then to yes, I'll do these events and we'll stick with it. Now here we are 21 years later and I look around the room and I'm going, wow, I'm full of fully committed here.
So it's good though. And I just would like to say we love doing it. We love doing it. And in heading everyone together, especially this one, we'll be bringing in the holiday season.
I also wanted to mention my financial planners because we have Ray, we have Max, we have Jesse, we have Eric. The firm has grown, but we have very solid credentialed financial planners on the team that allow Matt and I to really focus on the things that we need to be looking for and focusing on and researching as well. So I'm very grateful for that team as it's growing and building. And then we have my front table here, my wife Carissa here and my mother-in-law Beverly, my uncle Jim and some friends at our table here which we're very grateful to have in the house today as well.
But I especially wanted to thank someone else and that someone else is you all. The theme this year for me, personally, and sometimes when I have a personal theme I bring it out to others. But my theme this year is relationship. It's relationship and it's gratitude.
And I want to let you know that it is not lost on me or our team, the seriousness of the things that we do for you and with you. We have had marriages this year, we've had graduations this year with you all. We've had many retirements which is a wonderful thing to see. We've had grand babies born, we've had children born.
We've seen a lot of fun things. We've seen wonderful trips being taken to, by the way, by those retirees that I just mentioned. And it's a wonderful thing for us to get to see and walk through with you. We also have seen things like illness and the loss of a loved one.
And maybe not a retirement on purpose, but a retirement by downsizing of a company. Other factors that are difficult things to walk through. And for us and me and the culture will always be at this firm. It will always be about relationship.
We will never reduce our clients and friends of the firm to numbers. That's a commitment that I make. It's what I want when I interact with other professionals. If I can see that I've been reduced to a number to another professional that I hire, I'm out the door.
And that's the same thing that I want to bring and will continue to bring to this. And everyone that joins Keenewell understands that's a core value of our firm, it's relationship and it's gratitude. So if I could, I just thank you for allowing us to be a part of your lives. We do not take it lightly.
And we're honored and it's a privilege. So in the spirit of gratitude and in the spirit of service, I thought it would make sense to say a few words today in honor and acknowledge our 41st President at George H.W. Bush. And as many of you know, we're probably everyone that he passed away about seven days ago.
And interesting things come out about him and quite a ceremony that we probably saw on TV here recently that occurred and a pretty awesome, pretty awesome man of service. But I looked around for quotes. I wanted to find some quotes to maybe one really elegant quote that he had to share with you. And I thought, you know what, I found something that just spoke to me that I thought was better than a quote, better than maybe taking a few words that a script writer or a speech writer wrote for him that he repeated publicly in a speech, something that shows a little bit behind the curtain what he was like.
And so I found a letter that he wrote to President Clinton on inauguration day in 1993. And come with me on this, I want to read this to you. This speaks to the man's character. January 20th, 1993.
Dear Bill, now this is Bill Clinton. Okay. When I walked into this office just now, I felt the same sense of wonder and respect that I felt four years ago. I know you will feel that too.
I wish you great happiness here. I never felt the loneliness some presidents have described. There will be very tough times made even more difficult by criticism you may not think is fair. I'm not a very good one to give advice, but just don't let the critics discourage you or push you off course.
You will be our president when you read this note. I wish you well. I wish your family well. Your success now is our country's success.
I'm rooting hard for you. Good luck. President George H.W. Bush.
Pretty cool, huh? Pretty cool. We see on the news press that we're so divisive and so polarized to see these are the things going on behind the scenes that are happening, especially at tribute to this gentleman. Now I did a little more research as well on this tradition because Ronald Reagan started this tradition just four years earlier in 1989 by writing a letter and leaving it in the Oval Office on an Augustian day.
By George H.W. continuing this tradition, it solidified that tradition. Each president since then has participated in this leaving a handwritten note in the Oval Office on an Augustian day. Pretty neat.
Pretty neat. We're talking Washington, DC. Matt and I had an opportunity to go to Washington, DC here in September and some of you might know about this trip because if you, it's funny because there's a contingent of you all that listen to our podcast, Keynon retirement, that we brought out three years ago now, three years ago, and some of you that aren't tech savvy, some listen to it on your computer, some listen to it on your phones, and some of you just read the blogs, the actual write-ups. You don't have to listen.
But, and it's, we've been doing it long enough now that we slowly are getting converts to it. But the neat thing about the podcasting is it's like radio on demand and our blogs that we put out every week. And we literally just share what we're thinking in the practice. So it's a great way for us to communicate with you all on what we're thinking.
Can you plug in? There's a topic that you like to plug into it and if not, that's okay too. But we did a, we did a podcast on our Washington, DC trip. And so, come September, Matt and I departed downtown Kansas City and we flew over into Manassas, which is an airport just west of the Reagan airport.
Going into Washington, DC airspace, very busy. It made sense for us to go just, just west. I think the Uber ride was like an hour into the city as opposed to trying to navigate the airspace and air traffic control over Reagan or Dolas. We landed and we were able to go in with this group that we're involved in.
And you know, we share a lot with you that we're out. I put myself in groups of folks that I say raise my standards or think tank groups. People that I hope are smarter than me and Matt. People I can be around it that allows me to see what's happening out there in the world, in the community, in business, not only financial advisors, other financial advisors, but also other business people as well.
And so this event that we attended was put on by one of those groups. We had special access into the capital building on this trip. We actually stayed at the Willard Hotel. And the Willard Hotel is right next door to the White House.
It was just being in the Willard Hotel itself was pretty amazing. It's the hotel where the lobbyist actually was coined, the term lobbyist. People would meet in the lobby there in the Willard Hotel and chat about things they needed to chat about. And that term was coined there in the 1800s.
But we spent a day, we had a day and a half, and we spent a day in the capital building. We got to meet with the assistant secretary of the treasury. We got to talk about the tax bill that he ushered in. We got to talk about the future of that tax bill and what he thinks might happen.
And we were in a group, a small group, but believe me, when I had the assistant secretary of the treasury there available for us, Matt and I pulled him aside at the end. And we peppered him as long as we could until his handlers brought him out. So because I'm looking for information that affects you all. And we wanted to get that information.
We also were able to meet with two members of Congress. And we set this up so that we could get a freedom caucus Republican, Morgan Griffith from Virginia and Mark Tacono from California, who's a Democrat. We got those two gentlemen to meet with us in a private room underneath the halls of Congress. No phones, no cameras, no reporters.
And we let them speak. And we got to ask them anything we wanted to ask them. And in the spirit of civil discourse, much like the President Bush's letter to Clinton, we were inspired. These two gentlemen, they agreed on more than they disagreed on.
And frankly, they were surprised. The sad thing about it though is they had never met. So we have congressmen that have never met. And that was something that they mentioned to us was a problem.
Was that we don't know each other personally. It's all about conflict. And we asked, we're here and we're in Washington to vote on some issues today. And by the way, the things they were voting on that day, they just asked each other, had you voted the same.
These two guys had voted the same. And so it was interesting for us and it was encouraging to see these two politicians that could be considered polar opposite, agreeing on more than they disagreed on. Now, just before we went down to the, underneath, to the halls of congress, we were able to go to this area and we thought it unique. Not that Matt and I are, you know, the type that want to break rules or anything like that.
But you'll notice these signs. Notice which side of these signs we were on. So I put this slide together. If you've read the blog in the podcast, you'll see this.
This won't be new to you. This was in there. And I had this text line underneath. Matt and I shortly before we arrested, kidding.
We had the realization. We held down into the halls of congress for that meeting with those congressmen, which was pretty cool. And I even have it. I don't know if we don't have our live feed on today.
But I was given on that trip, these cufflinks that were only given to congressional members. And they allowed each one of our group to have these. So it's pretty special. I wore them today in honor of George H.W.
Bush. So I thought this would be interesting to share with you. Now one last piece on that DC trip. It just so happened to be the day of the Kavanaugh hearing.
So here Matt and I, two guys from Kansas, Missouri, however we look at it, we're over in Washington DC in the Capitol building on Capitol Hill while Kavanaugh is testifying. And the sad thing about it was we couldn't go into the hearing. We were there, but we couldn't go in. So I was having my wife text me what was happening.
I'm here. I'm going to have to go home and watch it on TV. I'm here. But that's okay.
They didn't let us in. And that was fine. But it was an interesting day to be there, nonetheless. And I can tell you we were ready to get back to Kansas.
But we were ready to get back to Kansas after that day. But I do appreciate the work our politicians do, even though sometimes it can be pretty confusing at times what we see on TV. So before I turn it over to Matt, my next speaker, if you've heard me speak at all over the years, you know that I always talk about perspective. And yeah, perspective.
What does that mean? We want to know what's happening now. I get that. And we'll talk about that.
But I also have to take a step back and talk about how did we get to where we are today? Most of you are participants here are the ones of you that are retired or retired because you participated in the Capitol markets. And what I mean by the Capitol markets is you own some semblance or some combination of stocks and bonds in your life that did well enough for you. And you saved enough and you lived within your means enough to be able to have enough money, enough enough dollars, enough resources to be able to retire.
And you know, that's from where I came from, sitting on my dad's couch at 10 years old, wondering where his unemployment check was going to come in the mailbox. And many of you, most of you, I think, started pretty much on your own building up from nothing. Even the idea that at some point you wouldn't have to work, that you could live on the resources that you've built, sometimes you have to pinch yourself, don't you? That's even possible.
It's amazing to me. And I'm proud. I'm proud of the work that you've done to get yourselves in those positions. Proud to be involved in it with you as well.
But here, this is, you've seen this before, but I wanted to set the stage with this. This is a chart that just simply goes back to 1926. And it shows us that if you put a dollar in in 1926, you went through the Great Depression, you went through all the turmoil of what we've gone through in the last, call it 90 some years, your dollar was worth $37,000 if you own small company stocks. If you own large company stocks, it was worth $7,300.
If you own government bonds, it's worth about $143. It's interesting, isn't it, the difference between stocks and bonds. It will blow you away over time, the difference in wealth building in stocks compared to bonds. Bonds are really just a store of value.
Treasury bills very little and inflation itself was $14. Now, we see this. We see this. We understand this and we can say, wow, look at that.
We've been participants. Most of you participated in this. You've experienced it. It's not just a theory.
You've experienced it. But still, you say, and this, I don't say this because I haven't heard it. You say, yeah, Bill, we don't have 90 years. Going forward, this is a wonderful chart, but we don't have 90 years to live.
We need to worry about the next 10, 15, 20, maybe 30, maybe a little longer, some cases. So here, let me pull it back to this. Let's say that you were the worst luck of anyone in America. And you received an investment, you received some assets to be able to invest in the equity markets.
And you just put that money into the market at the worst possible time that you could have, January of 2008, just before the financial crisis. We saw markets pull down basically 50% from their highs, 50% from their highs. This is what it looked like. Now, you'll see this chart and you'll see all of the text and the text.
I counted them last night. There's 60 different things. Maybe give or take a couple on this chart that would have tell you, and at least in headlines we're telling you that the world was coming to an end. And each of these headlines came out.
This would have been a reason for an alarmist to sell everything and go to cash potentially, trying to just avoid whatever it is we're afraid of with these downturns and the recessions Matt will be talking about today, understanding how these things work and play out. But a $10,000 investment at the worst possible time in January of 2008 ends up being $25,000 today as we stand despite the 60 plus headlines of world coming to an end. And there's some pretty serious ones in there. Look at the power of the equity markets.
This isn't dollar cost averaging in over time. This is one investment at the worst possible time. You look up and you say, oh my goodness, it's up two and a half times. And then this debt kind of blows me away.
The average annual total return of the S&P 500 index for this time period is just under 9%. You've got to be kidding me. I invested it the worst possible time. How do I look back at 10, 11 years and say, I made 9% annualized?
It's because of the power, the compounding. The timing. Now you say, no wait, the timing does matter. You tell us all the time.
The timing matters. Wherever time will pull you out. Timing matters of the returns. And it does if you're pulling money out.
It doesn't if you have enough money outside of the equity markets to not be forced to sell it a bad time. That's the key to it. We have to have a plan. And it's individualized for each person on what they're pulling out.
So you're not taking money out at a bad time. You wouldn't have wanted to take money out when it said the tarp was passed there in 2009. That would have been a bad time to pull money out of stocks. So you don't have money in the equity markets you're going to need back.
Typically we say within five years or so. That's really a starting point for us to be secure. That's how we've gotten many of you through these things these last 15, 20, 25 years. And we look up and we have positive returns through what feels really difficult.
Now I know they tell us, oh don't look back. Don't be fearful of the past. Don't be regretful of the past. Don't be fearful of the future.
Live in the now. The now is where we should be. They say the now. They say it's a gift.
That's why they call it the present. That's fine. But when it comes to financial issues, we have to look back. We have to get perspective.
And then we have to do this to get confidence in the future. That's why we do this. Matt will talk about the now. He will.
Matt's going to talk about the now. I know most of you here want to hear about the now. But I appreciate you allowing me to talk about some of the perspective because it's so important. This next chart I want to show you.
This is my last chart. This is the history of the US bull and bear markets since 1926. So we say, what is it that we're afraid of? We're afraid of the bear markets.
We're not afraid of the bull markets. The bull markets are fun. Well, do we have any idea the magnitude of each and what it is we're working with? I think it makes sense to know.
This chart spoke to me. The first one I showed you goes up over 90 years and it's up and you've probably seen that before and the guys telling you long term, long term, don't worry about it. I know you've seen that chart a lot. This one you haven't seen before I would suggest.
And factually because I hadn't seen it before until I saw this. Really spoke to me. That's why I wanted to share it with you. Going back to 1926.
These are the times the market off the bottom rose and continued to rise until it peaked. That's a bull market. A bear market is defined as any time a market comes down 20% off its high. So it's going along.
It's setting all time highs, which by the way, the market sets all time highs all the time. That's what it does. And then it does take a breather. It's three steps forward, two steps back.
It's got to breathe. In fact, breathers are healthy for the market. Breathers shake out the speculators. Breathers shake out some of the algorithmic trading.
Breathers shake out some of the people that are leveraged to do things in derivatives traders. We're investors here. We're not borrowing money to buy securities. We're not speculating.
We're in long-term investors. Someone who's a speculator has a totally different outcome in sense. It's weird because we're all doing it in the same market. So it's confusing.
Do you watch CBC? You don't know. Are this guy a trader or is he an investor? Well, most of them are traders that you see on CNBC.
They're speculators. I saw something recently. We had a 10% pullback of the broad markets. And I saw this on YouTube.
I pray you will never see me doing this video on YouTube. There was an investor, a company. He was a speculator. His primary operation was using options, which are derivative securities that are called leverage securities.
Over the course of just a 10% correction, which is pretty normal and natural that Matt will talk about, he wiped all his clients out. They lost everything. No, they lose everything. They owed money.
So he had an FAQ section on his video. He was criticizing to his clients in mass in the YouTube video. I'm sorry I've lost everyone's money. And nice enough guy and everything.
But he said, you will get a notice from your company, the custodian that says you owe money. And it is true. You do owe more money. That's speculation.
Now that's completely different than what we're doing and what I'm talking about here. But here we see these are the increases in the bull markets since 1926. Look at the magnitude of these. 13.9 years, 15 years.
Circle the few, 13 years, 12 years. Right now we're nine years in the bull market. And look at the magnitude of the increases. 800%, 900%, 800%.
Think about that. It's not 800%. 800%. This is where wealth gets built.
Remember that that was at 200 in 1950. We talked about that last year here. But you say, Bill, we're afraid of the next recession and the next correction. We're afraid of that.
And I get it. We pay close attention to that. But let's just give it a scale. What do the, this looks great.
Looks great, Bill. Lots of up. Good. So, what were the part that we're trying to miss?
Here were the pullbacks. These were the bear markets. Anytime the market came down more than 20% from its all time high. Six months, six months, six years, 1.8 years, three months, two years, one year.
These are the things that we're trying to help you avoid. Now you understand, we do want to avoid these. But remember, no one knows exactly when this is all happening. So the people that get out completely to avoid the orange bars, they miss all the blue.
The blue is what got most people sitting here retired. So we have to come up with a sense for how do we keep things allocated? How do we keep enough money out of the equity markets to get us through the orange parts on this chart? And frankly, not have to worry about it.
And I know most of you are with us because you don't want to have to worry about it. You trust us and you've delegated the task to us. And we're on top of this like you wouldn't believe every single day. And we're honored to be able to do it for you.
So I hope this was helpful. Again, it's a perspective look and it's a perspective exercise. But I thought it was important to come back and bring you up further with some of this information, especially where we sit today in the marketplace and some of the volatility that we've seen. The opinions expressed in this podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security.
It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for a comparison are unmanaged and cannot be invested into directly.
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