Jim Niedelman:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. David, great to see you as always.

David Nelson:
Thanks Jim.

Jim Niedelman:
So, stocks recently rallied from their lows of late March, however, they remain a lot lower than when they were to start the year. Do you see this as an opportunity, people worried about more, another downside for another bottom potentially?

David Nelson:
So today’s segment, we basically categorize as finding a bottom and finding a bottom as a process. As I think probably many people know out there. The process oftentimes it’s months, it’s not days, it’s not weeks, it’s months. So, I think people need to be prepared for that. And again, it’s very, very crucial that people understand it. The first slide that I brought along, Jim, I think will give people a little bit of a nice visual as far as one of the key items that we look at as far as trying to make some of these decisions. And if people focus on the far right, what they’re going to see over there is a line spiking up and what this is, is a fear index. It’s called the VIX, and what we see is that this index at an 83 on the far right. That’s higher than it did even back in the crisis in oh seven, oh eight, and oh nine.

David Nelson:
That’s significant because again, this is trying to judge as far as how people are viewing the next 30 days as far as stocks either going up or going down, very significant. Now the good news is that it’s not at 83 today. The good news is it’s backpedaled significantly. We’re back somewhere in the neighborhood of 40, as we speak today. That’s a good sign. Now, having said that, let me go back to oh eight, October oh eight, to be exact. If we look to the middle of the chart, what you see is its around 40 as far as in October of oh eight. That’s five months before the market actually bought them back in oh nine. So again, this is one indication that things have improved some, but it’s also basically telling people don’t get too greedy at this point in time.

Jim Niedelman:
I’m sure people would like to hear the optimistic side of things. I know you like to look at things from different perspectives. What else are you watching to help confirm when the worst might be behind us in terms of those stock prices?

David Nelson:
So we have a saying around the office, it’s the weight of the evidence. I’m sure folks that have watched prior segments are getting tired of hearing that term, but it’s a really important term. We don’t want to make decisions based on one item and so the VIX is one item. The second slide that I brought along today is going to help people look at what are called correlations and correlations relating to individual stocks and how they react as far as to the S and P 500 as a whole. And historically there’s correlation there obviously, but it’s not that tight. But anytime you go into a tailspin, like we’ve gone into the last few months, correlations tighten up, which is again a fancy way of saying that they come together and that’s not generally a very good sign as far as for individuals that again are looking at trying to make a decision as far as going in or not in. So the correlations are important. The VIX is very important as far as people making good decisions. Again, the advice, look at the weight of the evidence, the weight of the evidence says it’s probably too early as far as to be deploying a significant amount of money at this point in the cycle.

Speaker 2:
Always good information. David Nelson, NelsonCorp Wealth Management. Great to see you. In case you missed any of this discussion we have that available for you on OurQuadCities.com