Ann Sterling:
It is now time for 4 Your Money. We are joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thank you, appreciate it.
Ann Sterling:
At a time we really need some expert advice.
David Nelson:
Yeah, it’s a mess out there, to say the least, chaotic mess. And, hopefully today, we can make a little sense out of it, as far as for the listeners out there.
Ann Sterling:
And that’s what we need to do today because it was another roller coaster ride with financial markets. What really stood out to you besides the federal interest rate plummeting, again?
David Nelson:
Yeah, so what we’re seeing, the Fed is stepping in and trying to do everything they can as far as to stop the bleeding, as far as the stock market. But in addition to that, and probably the bigger issue they’re focusing on the bond market. The bond market has been disrupted in a big, big way.
David Nelson:
I brought along a chart here, as far as I think will help the folks out there. And what we’re illustrating here is we’re going back to the ’70s, and this is looking at treasury yields. And we go back to ’80, ’81 when I began, as far as in this vocation, interest rates were 15%, which is hard to imagine. And today, we’re hitting all time lows as far as literally we are under 1% as far as for 10 year commitment to buy a government bond you’re getting under 1%. You want to sign up for a 30 year you’re going to get about 1 1/4 to 1 1/2% depending on the second of the day, so there’s a lot of chaos as far as in the bond market to say the very least.
Ann Sterling:
Not all bonds though are created equal. Government bonds, you’re saying, are a good thing right now?
David Nelson:
Government bonds it’s been a terrific thing as far as for individual [inaudible 00:01:26]. Corporate bonds, it’s just been a disaster as far as that’s taken place. It was last week we were looking, as far as at the open, a long-term corporate bond fund. So, high quality bond fund that owns corporate bonds was down 5% at the opening in the morning. It rallied to North of 10% gain, and by the end of the day it was down over 10%. I’ve never seen anything like this as far as in my career. So, this is a big, big concern as far as out there today and, again, this just kind of illustrates it as far as right here.
Ann Sterling:
Any other good opportunities you see out there?
David Nelson:
Well, I think there are, as far as people need to be very selective. Part of the process that we go through as far as in markets here is you have tests and retests as far as the market going up and down, trying to find a bottom. That also is the case as far as in the bond arena. But mortgages seem to be maybe a limited opportunity that people could have out there as far as going into that. There’s agency mortgages, that’s the specific ones. It’s not any recommendation, I’ve got to be real careful as far as how I word stuff as far as compliance is concerned. But yeah, there could be a nice opportunity for individuals to take advantage in the mortgage agency area specifically.
Ann Sterling:
So, as a person that’s looking for a home or may be already in a home, you’re saying refinance the home?
David Nelson:
Oh, definitely. That’s a good point. And individuals with interest rates, like we’re seeing as far as today, if you haven’t refinanced in a while, take a look at it. You’re looking at mid probably twos as far as on a 15 year mortgage today. And they may even get lower, depending on how things unfold over the next week or two.
Ann Sterling:
David Nelson, thank you for joining us.
David Nelson:
Thank you, Ann. Thank you very much.
Ann Sterling:
We appreciate your advice.