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Speaker 1: So today, I'm very aware that we're supposed to be hearing from Leslie, a woman who survived abuse. However, this last week, actually, because I know this is a podcast and you will listen to this, who knows when. I am talking about what happened the week of August 13th, 14th, 15th, right in there in the year 2019. All right, everybody. So, this market has been crazy. It's been kind of abusive in its own right. And I know because I'm reading the emails that I'm getting, you are totally freaked out. You're like, what is this inverted yield curve? What are you talking about? What's going on? What should I do? And you have no idea. So, in today's podcast, I am going to talk to you about what's going on. A lot of these thoughts I am repeating, but you have to hear it over and over again in case you didn't hear the other podcasts where I talked about this. So, we will hear from Leslie next Sunday.But for this Sunday, it's all about the financial chaos that's going on right now. So, let's start. I know, I know you are all freaked out. You are all freaked out because the market's going up, the market's going down. You've heard me say this before, and now you just don't know what to do. And now you're just all over the place and you keep hearing this word, the “inverted yield curve.” What is that and why is that causing the market to go down? So, let's go to Suze School so you can understand. You all know what a recession is. You all know that, you know, when you're in recession, everybody starts to lose jobs, earnings pull back. Everything starts to go wrong in the economy and it's just not good. And when things start to seem like it's going to go into a recession, that's when stocks and companies and businesses all start to freak out because they think, oh, you're not going to be spending money anymore. And if you're not spending money anymore, they're not going to be making money. And if they're not making money, then their earnings are going to go down. And if their earnings are going to go down, then the price of their stocks will go down. And so, everybody starts to sell right now before that happens. And again, everybody is blaming that on something called the inverted yield curve. So, let's talk about this.You have certain investment instruments known as Treasury bills, bonds and notes. Let's just talk about notes for a second. There is a two-year Treasury note and a 10-year Treasury note. The term two-years and 10-years simply means that if you purchase a two-year Treasury note, you are guaranteed a specific interest rate, also known as a yield, for all those two years. And then after two years, the note will mature and you get all your money back. In 10-years, the same is true. You are going out longer. Two years is shorter than 10 years. So therefore, if you buy a 10-year treasury note, your money is locked up for 10 years. Of course, you can sell these on the open market, but normally, your money is locked up for 10 years where you are guaranteed a specific interest rate or a yield. And in 10 years, your money matures and you get it back.A Treasury note, bill or bond, by the way, a bill is even shorter. It’s usually up to nine months. A bond is like 20 years, 30 years, it's longer term. A treasury is the only investment, the only investment, I am underlining only investment, that is guaranteed. It is guaranteed by the taxing authority of the United States government. The government is borrowing money from you because you are buying one of these things, these treasuries, so that they can use this money to do whatever they need to with it. And they guarantee that you will get your money back and they have the right to raise taxes to be able to do that. It is the only investment that a financial advisor can use the word guaranteed in every possible way with you. OK?Now, stick with me here. The longer that you are willing to tie your money up, usually the higher the interest rate or the yield that the government will give you, because it's harder to tie your money up for 10 years than it is for two years. It's harder to tie your money up for 20 years than it is for 10 years. And even though these instruments trade where you can sell them, the truth of the matter is, if interest rates go up, the value of these investments will go down. If interest rates go down, the value of these investments will go up. So, you never know, are you going to get back less or more if you sell them before the maturity date? So, most people simply purchase a treasury to make sure that their money is 100% safe and secure and nothing can ever happen to it. And that they usually hold it till it matures. Normal people like you and me, although I wouldn’t actually say I’m so normal, but that's beside the point! We don't trade treasuries, you buy them and you wait for its maturity.When people start to freak out, foreign governments, everybody, they put their money into what? The Treasury notes in the United States of America. And when you put your money into it, the price of the instrument usually goes up, but the yield will go down. So, we are in a situation right now where typically a two-year Treasury note would pay less than a 10-year Treasury note, because that just makes sense. But the other day, it wasn't true. The other day, a two-year Treasury note paid more than a 10-year Treasury note, and that's called an inverted yield curve. So, as you look out at it, rather than the curve going from low up to high, in terms of the yield that it's giving you, it goes high down to low. And that's not how it's supposed to be. Every time that there has been an inverted yield curve in the past 50 or 60 years, it has been followed by a recession, every single time. And that recession usually happens within about a year or two after this event has happened.Also, even though the economy usually goes into recession, as I just said, one year to two years after an inverted yield curve, the truth is, the market also after there is an inverted yield curve, goes up significantly before that. So, you will see that this market will not just only go down like 800 points like it did the other day, but it will go up 200, 300, 400 points and then continue up. Who knows? It will go up and down before the recession starts, if the recession even does start. Because just because this happened in the past, doesn't mean it will always again happen in the future. I know, I know. It's complicated. So that's what's going on. You couple that with the trade wars, the tariffs, everything that's happening in the United States of America. I have mentioned this to you before. What's going on in Hong Kong that absolutely affects everything here as well, because Hong Kong, Asia, China, we're a global economy now. So, it is important that you understand it's not like it used to be years ago where we were also insular. We're now a global economic economy and everything that happens in the world affects us here. So that is a very short Suze School on what you need to know, as to why this is happening. Now again, many of you write to me and you go, Suze, I'm so afraid I don't know what to do. And again, I'm going to be repeating myself here. If you have 10, 20, 30 years, years until you need your money that is invested, and you know that your money is invested in a really good mutual fund, you have diversification, you have a variety of stocks and the future of those stocks look great. Then just stick with it, I've told you that before. I've also told you, that's why if you invest in dividend-yielding stocks that have a secure dividend, then at least you're getting 4%, 5%, 6% in some cases being paid to you while you are waiting. Because here is the problem. Interest rates are low and the chances of interest rates going higher are almost nil. You've listened to the president. You hear him saying he thinks that interest rates are still too high. So, if now interest rates start to go even lower before you know it, they could go to zero percent, half a percent.In Germany today, there's what's called a negative interest rate. And again, I've said this to you, but I'm going to repeat it. This is where if you put money in a bank, you have to pay the bank for them to keep your money for you. Is that possible that this could happen here in the United States? Oh, you betcha it is. Absolutely. So, if interest rates really go down to almost zero, where do you put safe money? What do you do? Because the problem is, all right, you’re getting half a percent, you're getting 1%. You all were so happy when CDs and savings accounts were paying you to 2.5%. That's all going to start to go away sooner than later if interest rates continue to go down, as President Trump wants them to. And for whatever reason, the head of the Fed is listening. I don't know why, they should be absolutely separate, but that doesn't seem to be happening right now. So, then you're either going to be forced to go into the stock market to get high dividend-yielding stocks to at least pay you something and just go through the ups and downs of the market. But at least because you're getting money, meaning a dividend, or you're just going to sit there with your money doing absolutely nothing for you. But then again, for many of you, that's not going to be a problem because you have a mortgage on your home that you need to pay off. All right, if you're afraid right now, and you’re paying 3.5%, 4.5%, 5% on your mortgage, and you know you're going to stay there. Now, I don't care what age you are, are you better off putting that money towards the principal of your home to at least pay down the principal knowing that you're saving yourself 3.5%, 4.5%, 5% in interest? Same thing with credit cards. How can I guarantee you a 12% return on your money? An 18% return? Pay off your credit card debt. Pay off your car loan at 6%, 7%, or 8%. Pay off your student loan at 6%, 7%, 8% or even higher if you have private student loans. If you are afraid and you don't know what to do right now, get rid of your debt. Just remember, the goal of money is for you to be secure. And if you are not secure, you're going to buy at the wrong time, you're going to sell at the wrong time and you're not going to know what to do. And I know if you're listening to me that you do, you have debt. You have debt, most of you. So, if you're afraid of the stock market, change what you are doing with your money, and start, rather than investing it and keep doing something that's making you afraid, even though that's maybe what you should be doing, get rid of your debt. If you are in a situation where you need this money to be safe and sound, safe and sound to do what? To generate income for you? For you to be OK in three years or four years, you've retired, this is what you're living on. That is not money that belongs in the stock market unless it's in the stock market, in dividend-yielding paying stocks that can give you something. So, this is very complicated right now. And so many of you are writing me and saying, I don't know what to do, please, I'm afraid, Suze, I'm in retirement. What should I do? What should I do? Again, if you are really, really afraid, OK, you can always go to cash. But then what? Because here's something I need you to think about. If this money is not in a retirement account and you listen closely to me right now. If this money is not in a retirement account, you just have your money in stocks, you have your money in mutual funds. And it has gone up and up and up and up and now you have a significant gain. And now you go to sell, it is possible in your situation that you may owe 20% or even a little more in capital gains tax if you haven't held it for at least a year. And one day, you are going to do what? You're going to owe ordinary income tax on it, so you're going to automatically see 20% or more be lost to taxes. Do you think that the companies that you currently own, or the mutual funds that you currently own, are going to go down another 20% from here? You have to ask yourself that question, because if you sell now, you may be feeling so proud, look, I got out of the market. And then you owe taxes on your gain. So just remember that you've got to take all of these things into consideration and you don't have to be an all-or-nothing investor. You don't have to sell everything that you have or sell nothing that you have. You could, if you wanted to, sell half, sell a quarter. You might want to look at the stocks and mutual funds that you have outside of retirement accounts, and see which ones do you have losses on, that you could sell now to offset the ones that you have gains on, so that you don't owe any income tax. But that's only if you're deciding you don't want to be part of this.Again, the market will go up, the market will go down. Maybe it will come back, maybe it won't. I don't know what it's going to do next year. And I have said repeatedly that 2019 and 2020 were going to be seriously difficult years in the market, and it is coming to pass. So now is the time for you to keep a cool head, for you to look at your investments, look at your time horizon, look to see if you have time on your side. And if you do, do not make the mistake of stopping dollar cost averaging into your retirement accounts to continue to buy things, such as the 500-index fund, or individual stocks, or whatever it may be that you're purchasing right now. Because again, as these markets go down, your dollars buy more shares, and over time you're going to be fine because your dollars, the cost of the shares will be average, and you will make money in the long run. But the long run could be five years or 10 years from now. Remember this as well. When something goes from 100 to 50, that is a 50% decline. But for something to go from 50 back to 100, that is a 100% increase. So, it is important that you know that, if things go down, it could take a long time for it to come back. But then I want you to think again back to 2007, 2008 and everything that started in 2009 and look what happened. Things are going to be different in the future. The way we invest in the future may be different, but for now we're not in the future. For now, you have to look at your money and to be strong and smart and secure and make the right intelligent decisions from it. If you're emotional, you are not going to make the right decision from it. So just sit back. At least this time you now know what everybody is talking about when they talk about an inverted yield curve. So that's what I think is going on. That's what I think the majority of you should be doing. And only time will tell. Again, next week you will be hearing from Leslie, who is a survivor of domestic abuse. So, tune in to hear that. Thanks for listening. 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