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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. welcome back, David.
David Nelson:
Thank you. I appreciate it.
Eric Zizich:
Great to be here with you.
David Nelson:
Thank you.
Eric Zizich:
Now, you’ve talked a lot about the risks you see in the market over the past couple of months, and there seems to have been a surge in the headlines, as we’ve seen, calling for a recession recently. Is an economic downturn inevitable?
David Nelson:
Well, eventually, yes. We don’t think in the foreseeable future that that’s the case. We have a saying in the office about being right or making money, and they’re not always the same. What people have a tendency to do is we have biases. Maybe you talked to an individual and their bias is they think the market’s going to go up. Other people think it’s going to go down, and we don’t want to listen to the other information. We’re big into the weight of the evidence, making sure we look at all the angles, as far as looking at what’s going to take place hopefully tomorrow.
David Nelson:
The first slide that we have here or the chart that we’re going to look at here is looking at several items here, retail sales, corporate profits. What we find towards the tail end is that actually they’ve done remarkably well over the last several years. Now, what I want to point out is over here, as far as the highlighted area, we’ve got a recession that’s highlighted there and then right here recession. What we noticed is that during the recession they’re either flat-lined, as far as the the profits and/or the the retail sales, or they’ve absolutely dropped. Again, we’re not in that mode right now. These are looking pretty good. Again, we’re not anticipating anything in the short term at least, as far as any recession.
Eric Zizich:
Some of the concerns you’ve shared are more of the leading type, and so do any of those have a positive outlook?
David Nelson:
The second chart is going to walk us through that. This is actually looking at the stock market, and the stock market, if we look as far as over the last 10 years, has been on a tear. It’s just been absolutely a huge run that we’ve had. If we look at this, we come to conclusion. The stock market itself is the best leading indicator, as far as where stocks are going to go, as bizarre as that sounds. If we were to draw conclusions, we would say that it’s going to continue to go up. But, again, if we look at the recessionary periods, they’ve been pretty harsh. On average, the stock market peaks seven months prior to a recession, and number two, it drops roughly 10% as far, as before the rush recession starts. Now, that’s the start. The overall moves, as far as down, have been close to 50%, that a little bit less than 50 and this greater than 50%. So, these are big, big moves.
Eric Zizich:
Some good and bad news there.
David Nelson:
Yes. Exactly.
Eric Zizich:
Is there anything else that you’d want viewers to know?
David Nelson:
I think the big picture is that people need to know, as far as that where they are and how they could be impacted, as far as if we go into a recession. Number two, another saying that we have around the office, dead fish can can go with the flow and go downstream, but you have to have a live one to swim against it. We’ve been in a mode for 10 years where it’s just been remarkably easy. That’s not going to continue. We’re probably in the later stages, as far as the upward move, and people need to be careful.
Eric Zizich:
Definitely. Well, that’s great wisdom, David. Thanks so much for joining us.
David Nelson:
Thank you. I Appreciate it.
Eric Zizich:
If you’ve missed any of our conversation, we’ll have it available for you. It’s up on OurQuadCities.com.
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