Redrick Terry:
It is now time for, For Your Money. As always we’re joined by David Nelson, CEO of Nelson Corp Wealth Management. David, welcome back.
David Nelson:
Thank you appreciate it.
Redrick Terry:
Absolutely. It is election day in a year that really has been like no other. We’ve seen volatility pick up again in the weeks leading up to today, but we’ve also seen some improvements in economic data, like the recent GDP release. What do you think the markets are focused on as every place their votes?
David Nelson:
Well, as you said, volatility is clearly up. What we’ve seen is October is the worst month we’ve had since March of this year. That isn’t necessarily what we want to see. I think most of it stems from… The rally that we saw was the stimulus. The pullback that we’ve seen is that we’re not getting the second round of stimulus, I think is where we can direct that to. What’s also interesting is September is the peak that we’ve seen so far. Recently we’ve certainly put the brakes on this as we noticed the last a week or so that things have really pulled back. I think that stems from the markets are tired of Washington nonsense as far as the bickering back and forth. What you brought up was the third quarter. The really important point of the chart that I have here is going to visually show folks, as far as what this looks like. The third quarter was the best quarter for the GDP that we’ve ever had. The chart is showing year over year change over the last 50 years. Even after this huge rebound that we’ve had, we’re still 1.8% below where we were a year ago. That’s concerning to say the very least. We’re at a level that we last saw in 08 and 09 at the peak of the crisis as far as back then. Not stuff that we want to see Roderick.
Redrick Terry:
Pretty dramatic, just seeing it on the charts. In terms of recovery, what are some of the key areas that can make or break it?
David Nelson:
I think the biggest is corporate bankruptcies. Corporate bankruptcies have been front and center and continue to be. Government spending is strange, that we talk about government spending, being so vital as far as here. If we go overboard, we can have problems as well. GDP, 20% of the GDP, is government spending. Now with government spending, as far as being negotiated as far as in Washington, again, time will tell as far as the impact that it has as far as on tax receipts. Tax receipts so far, in other words the taxes that people are paying, are down sharply.
Redrick Terry:
Absolutely. What final thoughts do you have concerning investment portfolios and the election?
David Nelson:
I hope people have heeded the advice that we’ve spoken about as far as in the past. This isn’t about markets going up and down. It’s about understanding what you own and if it’s appropriate. If it isn’t appropriate, you’ll know tonight when you go to sleep, because we get questions from people from all around, as far as, is this a good mix? Is it going to really change as far as with a Democrat or Republican in office? That’s a big item. There’s a lot opportunities that are shaping up right now and people want to take advantage of that. There’s many great companies in the US that will exist tomorrow. People hopefully can rest tonight, but they need to understand what they own as always.
Redrick Terry:
Absolutely, time will tell for sure. David, as always thanks so much for joining us we appreciate it.
David Nelson:
Thank you, Redrick.
Redrick Terry:
If you missed any part of our discussion, we’ll make it available to you at ourquadcities.com.