Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by Nate Kreinbrink, financial planner at NelsonCorp Wealth Management. Welcome back Nate.
Nate Kreinbrink:
Thanks again for having me.
Brandy Auterson-Hurst:
So, while we have seen strong returns in most financial markets recently, not everything is doing well. What are some of those areas that you think are worth watching?
Nate Kreinbrink:
Well, this is a theme that we’ve been following now for quite a few years, and that’s the dominance of the US and the global financial markets. Now, there’s a lot that goes into this, such as the dollar being the World Reserve currency, and US markets tending to be favored a little bit heavier towards technology companies. So it hasn’t been a huge surprise to see the US outperforming the rest of the world in the last few years.
Now, with this most recent rally that we’ve had over the past two or three months, we have started to see certain parts of the world begin to participate, maybe more so than what they have in the past. Now, one area that does remain sticking out to us is the Chinese stock market, which has continued to struggle during this same time period.
So this chart is showing the MSCI US Stock Index in the red Line and the MSCI China Stock Index, which is the blue line. You can see US stocks have been up 17% over the past three years, compared to Chinese stocks being down 59%. This has led to a staggering difference of 75% just in the past three years compared to US stocks and Chinese stocks.
Brandy Auterson-Hurst:
So how do you think this could impact viewers’ investments?
Nate Kreinbrink:
Well, I still think it’s important to understand what it is that you own. And this is especially true when it comes to retirement accounts such as 401k plans that use target date funds that lump everything together into one single fund. With China being a large part of the world GDP, it does remain heavily weighted in these type of funds. So understanding what you own and controlling your risk is extremely important.
Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.