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The Retirement Architect - LIVE in Studio

February 27, 2019


I was thinking back to just October, November and December the sky was falling. Market dropped 20% in about two months, and I want to talk about that today. This is David Reyes, your Retirement Architect, here every weekend. Thanks for listening. If you want to reach out to me personally, you can call me at 1-800-611-1967.


So my, how things change so fast. We have basically gone nowhere for, oh, about a year and a quarter. So, I don’t know, 15 months. We have had 10% corrections in the last year and a 20%, basically, a bear market correction, a down market. We have come up 16% from those lows, so we have kinda gone nowhere. We are still under water a few percentage points from our all-time highs.


And I want to talk to you about this because we have short-term memories and, you know, it’s like the further and further we get away from 2008 those types of times – 2000 – we get a little complacent. And most of you that I see weekly, that listen to my shows or you that come to my workshops, you’re not that way. You are coming to me because, “David, I want to protect my capital. I want to maximize my income. I want to reduce my risk.” All the things that we do.


But, even so, because I remember money over between October and December and I had clients that were losing hundreds of thousands dollars. New clients transferring their assets from their old firm to our firm because the market was so bad. And I want to remind you a little bit of this. I took some of my notes, this was back when I was giving talks in October, November – really November and December. And I will give you some statistics.


The Dow lost 6.8% in a week. It was down 1655 points. It was the worst percentage drop since October 2008. The Nasdaq lost 8.3% a week. It was the worst ever for the Nasdaq. The S&P lost 7%, that was down 17.8% from its record highs. The Dow and S&P are both in corrections and on track for their worst December performance since the Great Depression. I mean think about that for a minute. Just three months ago, that was the night the market was falling, significantly. One of the worst drops ever. And by one measurement, the worst since the Great Depression.


And now, you’ve seen the market rally significantly from that bottom, it was December 24th, Christmas Eve Day, and I’m already seeing people, seeing you be more complacent. “Well, David, the markets come back. It’s coming back.” It’s called a FOMO Market and it’s Fear Of Missing Out. So people start wanting to buy stocks as the market goes higher, and not the opposite. The only thing that we want to buy that’s more expensive. We don’t want to buy stocks on sale. Everybody is selling when the market goes down. People aren’t buying.


Risk in the market is still there. Right now, the market is the most overvalued as it’s been since 2016. The problem we have is earnings. So we had earnings peaked, some of the highest earnings ever in 2018 and, now for 2019, we are going to have negative earnings. Into January, December of last year, there was projections we would have like 3% earnings growth. Now, they are talking about -2.7.


73% of the companies that have reported, which is almost all of the companies, for the S&P for this last quarter have negative earnings guidance. What all this means in English, is the fact that, the underpinnings of the stock market are still not good, and yet you’ve seen this massive rally. And why is that? Well, the biggest reason is the Federal Reserve has stepped in and stopped raising interest rates, which this is the first time it has ever happened since, well, ever inside this kind of bull market.


This is the longest bull market ever that we are in. Usually the Federal Reserve will raise rates, slow the economy down, the market will correct and we go on to the next bull market.


So one of the things that I talk about is risk a lot with clients. And part of our process for what we do is second opinions that we offer to all of our listeners, and those of you that tend our workshops, is a risk assessment. So we do a couple of things. First off, we’re going to do a risk assessment for you. We will do a fee analysis. We will talk about fees today because most of you overpay in fees. #3, we are going to do a retirement plan for you, a written retirement plan. And those three things combined are, basically, you could walk out the door and say, “Here’s my plan.” Now, implementing that plan maybe difficult on your own but I’m going to give you all that information.


So risk is a big one. Most of you are walking around with what I call a “30% number” – 30% risk – meaning that if we go through another 2008 or 2000, you would lose about 30% of your money, or about $300,000 per million. And I know most of you are not that aggressive. But your portfolios are invest differently than you are.


So if you want to take advantage of our second opinions, have me do a risk assessment of your portfolio, have me do a fee analysis – show you how I can reduce your fees – do a written retirement income plan. Again, our second opinion – I don’t charge for it, as long as you’re a listener and/or you attend one of our workshops. You can reach us at 1-800-611-1967.  Or go to


So, right now, I think is a great time to reassess because if you’ve been fortunate enough to ride this market up, down and then, now, up again right now, it’s kind of a gift. So it’s a great time to look at your portfolio right now. It’s better to look at today, than when the market is down 20%. So I always tell clients, “That I’m managing your money for today,” that are coming over to our firm I say, “You’re fortunate because we are now moving money in a positive up market right now, which three months ago you’d been down 20%.”


So risk is a big piece what we will look at. So what I want to talk about is, in addition to that, is fees. I want to talk about investments that we don’t like as much as others in the sense of mutual funds vs. exchange-traded funds vs. stocks, those types of things. So before I do that, I want to get into, one of the things that I talk about when I sit across from you, or I am doing a talk or on the radio today, is I talk about the 7 Rules for Retirement Security. So this is important. Pay attention to this.


The 7 Rules for Retirement Security that I came up with. This is experience time, over time you get to distill things down to their essence when you do something, whether you are a doctor or a lawyer or a teacher. We can create, hopefully, bite-size pieces of information to better articulate those. And one is, again, the 7 Rules for Retirement Security, something to start with, these will probably have to go into the next segment with this, but this is important.


So Rule #1 is avoid large losses. I call it the 5-10% Rule. We want to stay within a maximum loss, if we can and we can if we do proper planning, is let’s say no more than a 10% loss, 5-10% loss. I always ask the question, “How much do you want to loss in retirement?” What are you going to say? Zero. Well, your first thought you’re not positioned that way with your portfolios. And that’s not possible unless you had 100% annuities in your portfolio, which is the only way you can get 100% guarantees by the insurance company, based upon their claims paying ability.


So we want to design portfolios, which we will talk about, so we can mitigate the losses into the 5-10% range because if you can do that, it’s better to avoid these large losses than make the big gains. Because if you make the big gains, you’re going to participate in the big losses. So we just can’t afford to that. So avoid large losses, Rule #1.


Rule #2, minimize fees. This is a big one. People don’t realize the impact. You don’t realize the impact of fees on your portfolio and it’s something that we pay a lot of attention to. Part of our analysis for you, as I talked about, is #1 is we are going to do a risk assessment. How much risk are you taking? You’re talking on too much, I can tell you. #2 is a fee assessment and where the most hidden fees are is in mutual funds. And whether you have a 401k plan – 401k plans are expensive. Most 401k plans hold what for investments? Mutual funds. So you’ve got the 401k fees, you got the mutual funds fees – we will talk about what those are.


So you have a lot more expenses than what you believe that you’re paying. And I’m looking at some statistics here and, basically, 71% of Americans believe they pay no fees whatsoever for their 401k plan. But 92% admit they have no idea what fees they are paying. That’s about accurate.


So how about if I enlighten you on that. So, again, we are talking about the 7 Rules for Successful Retirement for Retirement Security. Rule #1, avoid large losses. Let’s stay in the 5-10% range. We’ll talk about some ways that we do that. Minimize fees, which we are discussing now. In the next segment, I will talk more about that because there is a lot of hidden fees, especially mutual funds, planned administration fees that you’re unaware of.


So this is part of what we do, if you want to take advantage of our second opinion, it’s complimentary. It’s something that I can charge $5000 to do, it takes probably 10 hours of work between meetings and preparation time, but we decided many years ago that it’s better just to do a complimentary. And if you go through the process, there’s probably a good probability we’ll work together, if we like each other and we believe in the same things, philosophies.


But, again, we will do three things for you. #1)  We will do a risk assessment, make sure you’re not taking on too much risk. #2)  We’re going to do a fee analysis and show you how to cut your fees. Sometimes in half. And then 3)  We’re going to do a written retirement income plan. So you want to take advantage of the second opinion, give me a call, personally, David Reyes, 1-800-611-1967.  Or go to our website at



The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments may be appropriate for you, consult with your financial advisor.
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