Payne Points of Wealth Podcast

The Worst Sell-Off Ever, What To Do Now? Ep#63

By December 8, 2021No Comments

Wow! Black Friday 2021 saw the worst stock sell-off ever! It came after the announcement of a new COVID variant that is supposedly sweeping the globe. But here are the facts most people don’t know about the stock market on Black Friday. It’s only open half of the day and computers are running the show based on algorithms. That means what you SEE happening in the market on that day isn’t a clear indication of what’s really happening. Everybody who knows what’s going on is out shopping and dealing with their turkey hangovers instead of working. We’ve got an assessment of the situation and some clear steps for you to take at year-end to move your wealth plan forward. It’s all on this episode.

You will want to hear this episode if you are interested in…

  • What are we to think of the biggest sell-off ever, this past Black Friday? [0:58]
  • Coronavirus announcements have had an impact, but not in a lasting way [4:44]
  • Why it’s crazy to bet against economic growth right now [6:11]
  • The Tipping Point: The pro moves you can use at year-end [9:12]
  • Hidden Facts of Finance [17:44]

The Black Friday sell-off was going to happen, with or without a new variant

We’re all hearing that the announcement of the new COVID variant is what caused the sell-off on Black Friday, and sure, it has some influence on what happened. But in reality, here’s what history teaches us. Earnings seasons push a bull market forward and we were due for a pull-back anyway. When people are bullish the market tends to sell-off. But something else happens when people are bullish: the market goes up. The dynamics of our current economic situation haven’t changed, Our PMI numbers are good, consumer spending is good, and the economy appears to be going just as strong as it was before Black Friday. Betting against the market in a situation like this is not a good idea. People are going to figure out a way to thrive even when bad news comes.

This week on the tipping point: End of the year wealth factors

As the end of the year approaches there are a handful of things savvy investors do to save their hard-earned cash.

  1. Harvest tax losses. Take profits if you are over-weighted in growth stocks. You can bank your losses against gains to save in capital gains taxes. Rebalancing your portfolio is important to do when the wind is at your back.
  2. Roth conversions are powerful for creating tax-free income. With 10 years of tax-free growth, you’ll break even on your money and everything that you earn on top of that goes into your pocket tax-free. Retirement accounts are a ticking time bomb. You have to pay taxes at age 72. If there’s a lot of money in those retirement accounts, that’s a lot of taxes. If you are in a low tax bracket now, pay the tax now on some of those retirement funds and put that money into a Roth to avoid higher taxes later.
  3. Take distributions from your retirement plan and give to the charities you care about directly from your IRA (up to $100,000). If you have appreciated stock, you can donate that to charity as well.
  4. If you are in a high-deductible health plan, look into health savings accounts. You can get triple tax-free benefits moving forward.

This week’s hidden facts of finance

  • Dec 2nd: the 20th anniversary of the Enron bankruptcy (the largest in history at the time)
  • Only half of Americans have the funds to retire at 70 and maintain living standards
  • Pfizer, Inc. was founded 172 years ago (a good example why you want to diversify)
  • The world’s youngest billionaire lives in Germany

Resources & People Mentioned

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