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Eric Zizich:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Good to have you, David.
David Nelson:
Thank you Eric. I appreciate it.
Eric Zizich:
Absolutely. So as we approach the final quarter of the year, stocks are still up, but volatility has risen, and it seems like there are a lot of investors who are uneasy. David, what can you do to get a read on things?
David Nelson:
So the best method of reading as far as where things are going to go, is to weigh out many different sources. Today I brought in some slides talking about sentiment. The first one is absolutely terrific. Again, there’s a lot of moving parts on here. I’ll explain it as briefly as I can, as accurately as I can. This is looking at weekly data. The top is looking at equity, so in other words, that’s a fancy term for stocks. As far as inflows versus outflows per week, and we’re looking at just 19 here, 2019. On the bottom, we’re looking at bonds. And what we draw the conclusion from, is there’s not a lot of negative entries here, there are here. It’s been a very volatile year, as you said.
David Nelson:
Now the flows for the year. This is the shocking one. This has never happened before. If this trend continues, stocks somewhere in the $51 billion range as we speak, bonds 90 billion and above. So if this continues, bonds will actually have the biggest year, as far as in comparison to stocks that it’s ever had. This is very significant, and again it’s basically saying that people are cautious.
Eric Zizich:
How about that. And is there more information that we can see in the fund flows?
David Nelson:
Yes. And that’s slide two, and this one is also very good, because what it’s going to point out to individuals as far as, we’re going to drill down just into the stock part of it. So we’ve got energy, materials, industrials, healthcare, tech, utilities, financials, real estate. You get the idea as far as on the left here folks. And what we find over here is the flows, and what we find is that the positive flows are coming from the very conservative sectors of the market.
David Nelson:
Consumer staples this boring stuff that when things are working, people don’t want to touch. But in periods of time like now, people want to touch it. We’ve got real estate, we’ve got utilities as far as that are up, and we have technology. That’s probably the only big surprise here, is technology during a period like this. Stocks are up pretty significantly this year, and it’s coming primarily from some of the more conservative areas, not necessarily from the high volume, and the more giddy uptight type approaches. It’s from the dry, dull and boring sectors.
Eric Zizich:
And when it comes to the flow data, is there anything else that viewers might find interesting as they [crosstalk 00:02:38]?
David Nelson:
Yeah, I think so, because again, this is not designed to be the end-all, this is just one of the pieces to the puzzle that we talk to people about. And what this is essentially saying is that the tendency as far as for 2019, is to sell a lot of stocks and buy a lot of bonds. We don’t know if that trend will continue, but there’s a really good chance that it probably will for the foreseeable future. So don’t be a hero at this point in time, as we spoke about in prior programs.
Eric Zizich:
That’s great wisdom. Absolutely. Well, David, thanks so much for joining us.
David Nelson:
Thank you Eric, I appreciate it.
Eric Zizich:
And if you’ve missed any of our conversation, we’ll have it all up on our website. That’s OurQuadCities.com.
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