Pinney Presents: Van Mueller Newsletter for September 2018
We look forward to the Van Mueller newsletter every month. It's chock-full of sound bites, sales tips, and eye-opening statistics. Here are our favorite parts of the September 2018 edition. We're sharing the full introduction, and 2 of the 7 monthly sales ideas. If you like what you read, we encourage you to click here and become a subscriber.

Reprinted with the author's permission.

September, 2018 – 7 Ideas and Views Newsletter by Van Mueller

Van Mueller

It is always disconcerting to me when prospects and clients and yes, even agents and advisors tell me how great the market is doing. If they are not in the stock market they feel like they are missing out. If they are in the stock market they are very reluctant to leave for fear they will miss out on higher returns. Customers and agents and advisors do not wish to suffer the indignity of missing out on those gains.

If any of this is true, why are there so few people in our country who have enough to retire? How many of our clients experienced 1987, 1990, 1994, 2000 to 2002 and 2007 and 2008 and now have no memory of what that felt like or what that did to their assets? How many agents and advisors in our industry adhere to “buy and hold” strategies without understanding who put that idea into their heads and why it doesn't work? When will we all return to the basic fundamentals, we had to learn to pass and qualify for life and securities licenses?

Does anyone recall the time value of money? A man and a woman each start out with $100,000 at age 40. The man experiences a 50 percent loss in the market in a 4-month period. By the way, that is how much time it takes to loses 50 percent on average when these economic bubbles burst. Now the man has $50,000 and the woman who was more protective still has $100,000. They each average 7 percent return for the next 30 years. Why did I choose 7 percent? Not because I believe the markets will average 7 percent, but it is an easy number to explain the accounting Rule of 72. If each averages 7 percent for the next 30 years, their money will double approximately every 10 years. It is an easy way to explain the “time value of money” and why it is imperative that you never lose any money.

Here are the results:

Man Woman
Age 40 $50,000 $100,000
Age 50 $100,000 $200,000
Age 60 $200,000 $400,000
Age 70 $400,000 $800,000

Did the man make a $50,000 mistake or a $400,000 mistake? If you really pay attention you will see the argument that the “buy and holders” make. Even though the man lost $50,000, because he didn't leave the market, he still ended up with $400,000 which is four times more than he started with. However, he is not even close to the woman's $800,000 an she earned the exact same return he did but did not experience any losses. Can we do that for people? Of course, and I will explain later.

However, I would like to continue with this train of thought we are currently working on. I am very concerned that most Americans are truly unaware of the very real and serious danger that lies ahead for them.

I am very concerned that most Americans are truly unaware of the very real and serious danger that lies ahead for them.

In general, as I am writing this, the Dow Jones Industrial Average is around 26,000. I will be more accurate in the examples I will share later. Please remember, it usually only takes three to four months for the stock market to lose 50 percent or more when bubbles burst, such as the Dot Com bubble or the housing bubble or the Nasdaq bubble, etc.

If that occurred right now, the Dow would lose around 11,000 points. That would take it back to around late 2007. That means most investors would lose over a decade of returns in a very short amount of time.

I would also not be so quick to believe that they would know when to get out of the market. Were they successful at doing that during the last major downturns?

And, has anybody thought of this? When everybody does decide to get out of the stock market where will all the mutual fund companies get the money for redemptions if no one is buying stocks? And don't mutual funds and ETF's have the authority to defer redemptions if that is required? Ask your prospects and clients what they would feel like if they had to watch their money going down and there was nothing they could do about it? Please ask them. Don't assume they know any of this because they don't. Shouldn't they, at the very least, be offered the opportunity to reject your reasoning?

Our industry, for the most part sells against our competitive advantage. Study after study after study reveals that Americans are much more concerned with loss than they ever are concerned with missing out on a gain. And yet, we continue to strive to talk about how much gain our products can make instead of emphasizing that they never experience loss.

We think we must do this because we feel we are in competition with the investment returns of the stock market or the real estate market or gold.

Real estate, for the most part, has never been considered that great of a long-term investment. It seems to only perform well during bubbles which are artificially created by ridiculously low interest rates or even more ridiculously loose underwriting standards. I have articles from The Wall Street Journal comparing CDs from banks to real estate or home ownership and the CD destroys home ownership.

I have articles from The Wall Street Journal comparing CDs from banks to real estate or home ownership and the CD destroys home ownership.

Why then do you think home ownership is such a great investment? The powers that be, know that home ownership is an integral part of our economy and therefore promote its importance ad nauseum with misrepresentation and misleading information. Am I saying people shouldn't own homes? Of course not. We should own them for quality of life, security, foundation. But, are they a good investment? NO. And they will get worse not better in the future because of the loss of tax benefits previously afforded home owners.

Then, you have all the gold people. It is astonishing to watch the countries of the world work overtime to manipulate the price of gold. Gold is very interesting. It is an investment: It is not a currency. There is not enough of it for the masses to use. It doesn't pay dividends.

Here is some interesting information about gold. The current price of gold on August 30, 2018 is $1,209 an ounce. If you would have bought gold August 30, 2000 the price of gold was $273. Per ounce. You would have averages 19 percent average annual return over the last 18 years. Why wouldn't you have bought gold then? Wasn't the stock market doing amazing things? Weren't interest rates higher? Gold doesn't pay dividends.

If you would have bought gold August 30, 2007 you would have paid $666 per ounce. Your average annual return over the last 11 years would have been approximately 7.4 percent. Could I have gotten the same return with a bond or an annuity without any volatility? Finally, the alltime high for gold was $1,918 per ounce on August 22, 2011. If you would have bought gold then, your average annual loss would have been -8.4 percent.

We were always taught that gold was an alternative investment to stocks as an example. Yet, if you pay attention to gold now it usually goes up when the stock market goes up and it goes down when the stock market goes down. THAT IS NOT SUPPOSED TO HAPPEN. That is one of the clear revelations of the manipulation of these markets by government, Wall Street and the banks.

That is one of the clear revelations of the manipulation of these markets by government, Wall Street and the banks.

What about 10-year U.S. government bonds? They were a great investment for 35 years. Why? Because interest rates were declining. Look at this information:

10 Year U.S. Government Bond:
July 1, 1981: 15.84 percent
October 1, 1985: 9.00 percent
January 1, 2000: 6.00 percent
April 2, 2007: 5.00 percent
July 1, 2016: 1.61 percent

That, by the way was the lowest rate in the history of our country for a 10-year U.S. Government bond. They paid higher interest rate in the early years of our country. Don't you see? We were almost giving the money away for free. That is a manipulation. That is a stimulus. That is why everyone was building, even if they didn't have the money. Why? Because they could get the money for almost no cost.

These bonds were a spectacular investment because when interest rates go down, the value of bonds goes up. With the interest rates declining from 15.84 percent to 1.61 percent that is a 1423 percent increase. Over those 35 years bonds increased by 1423 percent. Here's the rub: Now bond interest rates are increasing. The current interest rates on a 10-year U.S government bond on August 30, 2018 is 2.86 percent. That means you have lost 12.5 percent if you had bought when the interest rate was 1.61 percent. Are interest rates increasing or decreasing? Doesn't that mean if the 10-year U.S government bond interest rate increases to 5.61 percent from it's low of 1.61 percent in July of 2016 you would have lost 40 percent of the value of your bond. That only measures interest rate risk and does not include market risk.

Here is the real scary part. If the market were to crash soon, the Federal Reserve would only have 286 basis points to use to lower interest rates from their current 2.86 percent rather than the 500 basis points that were available when the market crashed in 2007 when interest rates were 5.00 percent. That is why the Federal Reserve is racing so hard to raise interest rates. They are trying to build tools they will need to deal with the next crash and recession.

Now, let's talk about the stock market; let's start with the Dow Jones Industrial Average. There are only 30 stocks in this index and yet it is considered an important barometer of the stock market.

The Dow closed today on August 30, 2018 at 25,987. The Dow was at 13,930 on October 1, 2007 which many consider to be the beginning of the mortgage crisis. If you would have stayed invested your average annual return would have been 7.87 percent going from 13,930 on October of 2007 to 25,987 on August 30, 2018. Those were very good numbers, but nothing that should cause us to feel gypped. Watch how we can manipulate these numbers. Most people that are trying to get you into the market use the bottom of that market. March of 2009 the market fell to around 6,500. So, if you use that number as your starting point, the average annual return for those 8.5 years increases to 35 percent average annual return. Amazing! This is how Wall Street talks out of both sides of their face. They tell you to buy and hold and yet they give you examples using numbers that assumed you got out at the top of the market and you re-entered at the exact bottom of the market.

If you go back to January 21, 2000 the Dow Jones was at 11,252. The average annual return was 7.08 percent. I could have sold you an annuity that guaranteed that rate without all the upset and by the way, I did.

If you go back to January 21, 2000 the Dow Jones was at 11,252. The average annual return was 7.08 percent. I could have sold you an annuity that guaranteed that rate without all the upset and by the way, I did.

The Nasdaq is hotter than a pistol right now. It set new highs on August 30, 2018 of 8088. March 10, 2000 the Nasdaq was 5,049. During the Dot Com crash it fell to 1,100 by 2002. An enormous crash. So, people like to share that since 2002 the Nasdaq has increased from 1,100 to 8,088. By 2002 most people who were in the Nasdaq didn't have any money left. Many lost it all. If you use the 5,049 number from March 10, 2000 to the present 8,088 on August 30, 2018 the average annual return is only 3.25 percent.

Ask people when they feed you the misinformation they've heard if they have ever done the math.

Here's another easy question. If the Dow Jones falls back to what it was on October 1, 2007 (13,930) wouldn't their average annual return be zero? There are many analysts who believe the Dow could drop to between 6,000 and 10,000. Wouldn't the average annual return then be negative? What would that do to the financial and retirement futures of the American people?

One final example. In the 1980's the Japanese Nikkei reached almost 40,000. It has never even come near to that number again. In 2000 the Nikkei was 20,000. In 2015 the Nikkei was 20,000. As of August 31, 2018, the Nikkei is at 22,800. Essentially this market has made nothing for an extremely long time.

Why did I take you through this process? Because so many analysts misrepresent this information so absurdly you must be able to ask our prospects and clients if they have ever “done the math” on these claims. You cannot tell people to buy and hold and then use the bottom of the market to illustrate massive gains. Over long periods of time stock markets return around 7 percent after tax. In order to return to their “mean” returns, they will have to suffer substantial losses in the years ahead. Ask your prospects and clients these questions: “Where is it written in finance that I have to lose 30 or 50 or even 70 percent of my money in order to make money?” “Why do people do that?” “How many more times will you let this happen to you before you say enough is enough?” Why should Wall Street always screw up and then be bailed out? How many times have you been bailed out by the government? None! Then don't you think you should develop a strategy that guarantees you will never lose money again? But that's not good enough either. Because if we don't make you any money you will never achieve your financial or retirement goals. Here's the best part: What if every time these negative stock market events happen in the future, not only will you not be hurt by them, what if you could take advantage of them? Wouldn't that be amazing? If you knew that was true when would you want to get started? Before, or after the next downturn?

What if every time these negative stock market events happen in the future, not only will you not be hurt by them, what if you could take advantage of them?

Please remember that the keys to success in our industry involve simplification not complete elimination of focus on us and 100 percent focus on the prospect and client. I have written about this in the last two newsletters and I am going to review this again with all of you.

My sales presentations can, for the most part, be reduced to three simple concepts.

  • Mr. & Mrs. Prospect are you AWARE some bad things could happen if you don't plan? Higher taxes, lower benefits, inflation, volatility and longevity are examples. Social Security, healthcare costs and long-term care are a few more. You get their attention with questions about these issues. They will not buy if all you do is scare them.
  • What if you didn't have to be hurt by any of these issues, wouldn't that be amazing! How can you develop a strategy that will protect you from these challenges for as long as you live? Then you fall on YOUR sword. That's not good enough. Because if we don't make you any money, you will never achieve your financial or retirement goals.
  • Here's the most important part of the strategy. Not only will you not be harmed by these challenges, what if you could actually take advantage of them every time they happen again for the rest of your life? Wouldn't that be the ideal strategy?

Our prospects and clients buy opportunity. They do not want to miss out on opportunity that other people get to take advantage of. They don't buy bad news.

Our prospects and clients buy opportunity. They do not want to miss out on opportunity that other people get to take advantage of. They don't buy bad news.

Please think about this. It is truly almost impossible to push away someone who is really trying to help you. Prospects and clients will see you are truly interested in them when you ask a lot of questions about them instead of talking about you and your products. Most of you are so close to the success you desire. You instinctively know this is the right way to help people buy yet you continue to try to be sales people. Try the questions. Your life will change almost immediately for the better.

Two more things before we start the ideas.

My friend, David McKnight, who wrote the book, The Power of Zero has two major events about to happen. He is allowing me to participate in one of them.

First, an updated version of a wonderful book, The Power of Zero, is about to be released with all the new updated information as it pertains to the new tax law.

I tease David all the time that I have been doing the power of zero for 25 years, but he wrote a wonderful book about it four years ago. David is one of those important people whose information you should know.

Here's a surprise: David has co-produced a movie called The Power of Zero which will be released to the public shortly. It is 75 minutes long and has spectacular information that is shared by David, Ed Slott, Tom Hegna, Don Blanton, Alan Auerbach, David Walker, Professor Kotlikoff and I even get several minutes to share important information in the movie. Watch for it. It will help you to understand better the challenges Americans will face in the future and it will be something you will want to share with prospects and clients.

Also, I will be attending and speaking at the National NAIFA convention in San Antonio, TX on September 14th to the 16th. I will be sharing ideas on the 14th at 12:30 pm. I will have a couple of great ideas to share. I also have my own session on Saturday morning the 15th. Power Session Live can be heard even if you do not attend the convention.

Finally, don't forget to invest in your career. Please purchase the new CD or MP3 of Modern Techniques For Success at We have received dozens of emails and texts and phone calls from agents who say this is the best information we have ever shared. One agent shared that he had his best production month in his 16-year career using ideas from the CD. Don't miss this opportunity to advance your career and help a lot of people while you are doing it.

We're passing on two of the newsletter's monthly sales ideas - every issue of the newsletter contains 7 ideas, plus one idea for the Canadian market. Subscribe to get them all.

Idea #3: How to Provide Positive Retirement News

When I meet prospects who are planning for retirement, I ask them a few questions that go like this: “What is the best way to save for retirement? Is it an IRA or Roth IRA? Is it a 401k or a Roth 401k? Is it life insurance, an annuity, stocks and bonds, mutual funds, gold, savings accounts, CD's or real estate?” I then say, “Did you know the answer is yes to all of them? Because of things like fake news, and arguments over what is the best method to save for retirement, nobody saves anything because they don't want to make a mistake. They don't know who is lying. They don't know who is telling the truth and so for the most part they take NO ACTION. All of this conflict has already made our task more difficult than it should be.

We cannot get people to take action by telling them we have a great policy or a great investment. We must ask them questions that help them go through a process of discovery that will allow them to reason out the best way for them to save for retirement. We make the terrible mistake of assuming our prospects and clients have thought this all out when in reality they don't even know where to begin. Your questions create a process that allows them to stay in control of their decision.

You are so valuable to the American people right now it is almost impossible to measure that value. Don't give away that value by telling prospects and clients things. Ask them questions in an organized way that puts things in proper perspective for our customers. They will almost always choose you to help them because you will be the only one respecting THEIR opinions.

This challenge must be overcome for Americans to achieve their retirement goals.

Title: Why Conflicting Retirement Advice Is Crushing American Households (Forbes, August 17, 2018)

Idea #4: When Should We Worry about Social Security? Now!

According to the Wharton School of Finance at Pennsylvania University, the insolvency date for Social Security is not 2034 as the Social Security and Medicare Trustees recently reported, but 2032. The trustees did not take into consideration the rising debt which dramatically reduces resources available for the private sector. This effectively reduces the wage base that finances Social Security and Medicare.

Remember, neither the Trustees nor the Wharton School of Finance take into consideration what would happen to the insolvency date if we have the serious economic downturn we are all expecting. The insolvency date could drop to somewhere in the 2020's when this recession finally hits.

Here is the most important information! None of this means Americans won't get their Social Security. The number of voters this affects is staggering. So, everyone WILL get their Social Security.

The impact will come from higher taxes, printing more money and less or no cost of living increases. For younger people full retirement age might rise to 70 or 72 or even 75 years old.

So, even though they don't take your Social Security they make it less effective employing the tactics raised above.

Ask prospects and clients how they wish to deal with this before it happens. This is a really big conversation starter. How do you maximize you Social Security Mr. & Mrs. Prospect?

Title: Social Security Will Go Broke Faster Than You Think, Wharton School Says (Financial Advisor, August 13, 2018)

Title: Growing debt will expedite Social Security's insolvency, Wharton economists say (benefits PRO, August 14, 2018)

Title: Social Security Is In Worse Financial Shape Than Officials Estimates Show, Penn Researchers Warn (Forbes, August 8, 2018)

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Did any of these ideas resonate with you? Have you used any of them in talks with clients? Tell us in the comments!