Ken Moraif, Laos, Better Business Bureau discussed on Money Matters with Ken Moraif
Guy. When stocks go. Hi. Dan. And we are back. This is money matters with Ken moraif. And of course, I am your host Ken moraif on KFI AM, six forty. Spouses, go back. If Laos is go back to their spouses when their stock goes down, then boy two thousand and eight must have been a lot of family reunions. Anyway, sorry about this. I know it's very silly. And not actually very funny because people suffered in two thousand eight now. Before I go step further. Let me make sure you know, who I am. I am Ken moraif. The host of money matters. With Ken moraif. I've been a certified financial planner professional for the last twenty marvelous wonderful and very exciting years. And all of the ideas that we talk about on this show. These are the very same ideas that we talk about with our beloved and most valued clients, and we now serve clients in forty three states, and we're very blessed to be able to do that. And for the second year in a row. Our firm moneymatters is was named as a finalist and in two thousand eighteen winner of the Better Business Bureau ethics award. They have this award that they call the torch award for ethics and we wanted in the large companies category. And this is in the North Texas Better Business Bureau, and that is a while. I was very very I didn't know I got, you know, they don't tell you. They tell you. You're you're a finalist, but they don't tell you you one they forced you to go to the thing. And you dress up. And look nice and take your spouse. And then they found out we found out that we want. It was very very nice. And ethics. We believe is the most important thing your reputation and your ethics all walks of life. Not just if you're a financial adviser, but in particular now because we specialize in retirement planning, we work primarily with people who are retired or retiring soon. And so our focus is on preservation of what you spent your lifetime accumulating. Okay. So you've worked you save. You put money away you've done all that. And now you want to retire. You wanna have your second childhood without parental supervision. You want to go play and have fun, and you don't want to lose half your money or something like that and caused yourself issues. So I wanna talk with you. This is actually write a blog for kiplinger. And there was a the last one I wrote was on cash flow planning for retirees. Okay. And basically, I want you to think of your investments as you would the company that you worked for that gave you your wages. Okay. So once you retire if you need money from your investment investments to supple. Lament your your your cost of living to provide you with income to support. To pay for your cost of living. Then thinking of it as a wage that you're getting from your company, I think is very instructive. So your investments are a company you're running this company, and this company is generating profits, and it pays you a wage. So you invest your money. It gets you dividends and income and capital gains, and you and you distribute that to to supplement your retirement. So you're running this company. All right. So you're the CEO you're the president of this company, and this company has one customer that represents forty percent of your revenue, okay, which is bad planning on. But there are a lot of companies that that's the case they have one customer that is a vast majority. It's you know, it's the biggest customer they have by far. So you have one customer that represents forty percent of all the revenue that your business provide gets, and this business is giving you the wages that you live on. Now, this customer leaves you they go to competitor. And you lose forty percent of your revenue. What do you do? Mr. Mrs CEO, what do you do? Now. This question was asked when I was an MBA school by this guy name of salmon's who is a billionaire. He came and talked a bunch of NBA students and he asked that question. You lose your best customer forty percent of your revenue gone. What do you do? And all these smart kids. You know, we're in there, we say, well, you get your salespeople out on the street and you start beating the drum right? Bang on doors. You increase your advertising, and he was like. Nope. Nope. You create a new marketing strategy a new sales strategy. Nope. Nope. And we went through it. All no one can figure out what you're supposed to do. And you said, you know, what you do you cut your expenses? First thing you, do you gotta stop the bleeding. If your revenue went down by forty percent, you gotta cut your expenses commensurately because if your if your expenses continued to level they were before, and you don't have the revenue supported you will go out of business. That's. Same philosophy is what I believe is the case when you are retired your investments generate the income for you to live on if you lose forty percent of your revenue forty percent of the machine that's giving you that as in in a bear market where the average drop according to Ned Davis research is thirty seven percent, then you have to reduce your expenses commensurately when that happens. Okay. So when the next bear market comes God forbid, you lose forty percent of your money. Yes. Now what you have to do. If you want to be a good business person and manage the business that is generating for you, your retirement income you need to cut your expenses by that same forty percent. And you don't increase your expenses again until your revenue gets back up to where it could support that forty percent that you lost you get that new customer again. So can you do that could you reduce your cost of living, and you know, bear markets come quickly in the blink of an eye pretty much, and when they come quickly are you able to now cut your expenses by twenty thirty or forty percent? I don't know if you can't so there, and I don't even want you to. Okay. That's the big point. Here is I don't want you to have to. And so therefore in our firm when we manage money for our clients, we have a strategy that we call by hold and protect okay? And this strategy is where tells us that when the trend has changed, and we don't like it anymore. And we believe the risk on the downside is greater than the upside. We tell you to get out of investments that represent that risk. So for example, in November in late November of two thousand seven we told our clients to sell all of their equities all their stock. Investments sell all of that get out now, and we told him to stay out for all of two thousand eight didn't say to buy until June of two thousand nine okay? So for a year and a half almost we were counting our clients to be out. And we saw the risk is being too great to participate, and we know the S and P went down fifty seven percent, not forty. I'm using forty an example. So it was even more damaging for many people in two thousand eight so the important thing and right now for for those of you who don't know we have counseled our clients to not be. Be in the stock market. And I know it's been going up, and it's all this stuff recently. But that's not unusual behavior in a bear market. Okay. So just because it's been going up does not give us any change in our viewpoint. We told our class to sell actually in December of last year. So my advice to you is that if you are retired or retiring soon. Go on our website, moneymatters dot net, moneymatters dot net. And when you're there you can learn about our beholden protect strategy..