Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thank you very much, Brandy.
Brandy Auterson:
So back in July, you talked about the market’s winning streak and recently stocks have hit a new milestone. Could you share your thoughts on that?
David Nelson:
Yes, clearly the last quarter of last year, phenomenal returns. The early part of this year have been great to say the very least. We seem like we’re setting records every week up until recently. Things have calmed down. I brought along a chart to show folks, as far as what you’re referencing, as far as a quite a milestone. We’ve had a 100% gain.
David Nelson:
In other words, we’ve doubled in a 354 day period of time. The fastest since WWII, since World War II. Normally you get a market that doubles in 1,000 trading days. So you can see that this was about a third of the normal time. COVID obviously contributed to that. We had this big drop, and we’ve rallied off of that, that bottom. But nevertheless, this is really, really good news.
Brandy Auterson:
David, what advice do you have for investors who are worried that maybe the best could be behind us?
David Nelson:
Well, clearly, the last 12 months have been very impressive, but I want to remind folks of what we talk about on a fairly regular basis on the show. And that is returns are typically better when markets are hitting all time highs. As crazy as that may sound, that’s the way it typically works. Contrast that to hitting all time lows and then again trying to get the bottom.
David Nelson:
There’s certainly things that can get in the way. I don’t want to act like it’s going to go straight up because it probably isn’t. But the fed and Congress creating a lot of liquidity for the market and staying out of the way as far as in the past, inflation could be another big, big concern as far as going forward, and then the virus itself. That’s been a real problem to say the least.
Brandy Auterson:
So are there strategies that can be used to help address those concerns?
David Nelson:
Yeah. There’s obviously trade-offs always. When individuals are looking at some of these concepts, there’s good and there’s bad to it. There’s no sure thing, but historically some of these ideas have worked pretty well for individuals trying to protect capital. One is the diversification. I think that’s pretty common. Bonds and real estate as well as stocks, as far as in one’s portfolio.
David Nelson:
Then trend following, and trend following is something that again not always works, but as a general thumb is a way to look at what the market is doing and then adjust based on that, and finally define risk. And define risk is certain instruments out there that can help be in place as far as when the market starts turning upside down. Three ideas that historically have done okay for individuals. There’s no guarantees, but it’s certainly something that people should be considering.
Brandy Auterson:
All right, David, thanks for joining us. We do appreciate it.