People Who Don’t Listen to Me

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This job comes with its fair share of criticism but rather than complain I reserve the right to remind everyone when I called the shot.  I didn’t specifically see this week coming because I prefer the casual approach.  I thought it would be more consistent and gradual and have only been hinting at it for the last couple months.  And you never know, it may not be over yet.  When a ten year bull market runs into a black swan event like Covid-19 the results have the potential to be much more violent than anything we’ve ever seen.

Safe is cool about every ten years and it was about time to see it again.  This week I got an email from a longtime reader of this weekly post.  The message was simple, “Damn if annuities don’t look pretty awesome right now.”  Yes they do, and it goes beyond not losing money.

For the last few months many people have constantly been in search of something better.  “Sure I’d like to protect some money, but I’d better get near market returns or I don’t want it.”  After a 30% annual yield, expectations are high.  It’s as if that happens every year but we all know better.  2019 presented a special opportunity.  It honestly moved millions of people into a completely different financial realm.  But those who want all of the market sure as heck got what they asked for.

So the first thing I’ll say is don’t worry because you’re right back where you started.  You didn’t really lose money.  You never had it in the first place because you have to sell the asset first.  Stocks and bonds aren’t money.  Trading may be a great way to get money but there’s a transaction that needs to take place before you can buy a sandwich.

I feel for people.  I care about what I do and am happy to know that as bad as things may seem, most of the people I have talked to are still just fine, even if a bit bruised for the time being.  Rather than rub salt in the wounds I’m going to remind everyone of something I’ve been recommending for the past year.  Not everything lost big this week.  Bonds made a little money and one stock in the S&P 500 is actually up 8%.

There may be a few other bright spots but I want to show everyone what happened with my top recommendation.  It’s not a contract, rather an index.  It was up steadily all last year and it didn’t beat the market but continued higher at a more modest pace.  It wasn’t good enough for some people but those who took it will be happy they listened to me.

The good news:  S&P 500 is still up 6.1% from one year ago.  You all have more money than you did a year ago.

The bad news:  S&P 500 is down 8.56% year-to-date.  Many of you have less money than you did two months ago.

Life isn’t so bad, right?

My top recommendation from the past year has been the S&P MARC 5 Excess Returns index.  Basically it’s a blended index with a combination of securities, commodities and fixed assets.  It is managed to move to safety when volatility is high and toward growth when volatility is low.  It works really well to produce steady returns and puts a 5% average yield well within reach.  A lot of people said, “no, I don’t want that.”  My favorite response is, “I’m busy and don’t have time to deal with this right now.”

The good news:  S&P MARC 5 is up 13.74% from one year ago.  That wasn’t looking too special a couple months ago but we’re talking about annuities and protecting money is what’s important.  Good yield is a bonus.

The bad news:  S&P MARC 5 was down a little this week too, but it’s still up 2.46% year-to-date.  Oh wait, that’s not really bad news.

And you can get it with a 90% participation rate and no cap.  A lot of you know that because I already told you but with rates changing it won’t be there for long.

I’ve always been into scoring as many points as possible.  My version of the old sports adage:  the best defense is a good offense. You need to understand things are not yet all that bad and if you want to protect money you can still make money at the same time.  With fixed rate yields sure to drop along with treasuries, it puts bonds in a precarious situation and good luck finding safety and yield anywhere else.  There has literally never been a better time to do it right.  It doesn’t matter what you did, it’s what you do now.

You can listen to me or not.  That’s up to you.

Bryan

800.438.5121

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4 replies
  1. Bob Mason
    Bob Mason says:

    Hi Bryan. I have written to you before with the one problem I can’t get past for any index annuity: that the insurance company that issued the annuity can unilaterally change the rates, terms and conditions of the contract without my consent. They also do not allow an annuity owner to cash out without a large fee, even if the terms and conditions change for the worse. Your numbers for the S&P MARC 5 look great. But doesn’t any company issuing an index annuity using the S&P MARC 5 have the unilateral right to change participation rates and other factors to drastically reduce your return, even reduce it to 0%, during difficult market times like this?

    Reply
    • Bryan Anderson
      Bryan Anderson says:

      Bob,

      Some people can’t get past the feeling that the insurance company is out to screw them over and if that’s you then nothing I can say will change your mind. There are fundamental reasons for surrender fees and rate adjustments. I’ve seen rates go up and down at renewal and if the right contract is used then you’ll see much less variability.

      There’s a lot I can say about your question so maybe the best thing to do is make it a subject of a post. Stay tuned in the coming weeks and I’ll expand on all these points.

      thanks!

      Reply

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