Jim Neidelman:
Time for this latest installment of 4 Your Money. John Nelson financial advisor at NelsonCorp Wealth Management joins us for a conversation. Great to see you again, John.
John Nelson:
Happy to be here, Jim. Thank you for having me.
Jim Neidelman:
Anytime. Now we certainly have seen the stock market have a couple of bumpy days recently in terms of performance. Do you think the rally going on since last year could be in jeopardy?
John Nelson:
Certainly risks always with the equity and bond markets for all those investors who are participating. But if we look back this year, especially the last month or so, Jim, has been a pretty smooth and steady increase, which is always great for equity investors to be able to realize. Earlier this year, I’d say volatility was a little bit higher. And again, we’re at elevated levels. We’re well aware of that, but the trend and the momentum behind the market right now is quite good. We look at things through a lens where price movement, investor behavior, and the economic conditions, and overall between a lot of those measures, as well as what our analysts are looking at, things look quite solid, but investors should be aware, of course, of where we’re at in this economic cycle.
Jim Neidelman:
What example, if any, do you have that puts some context about where we are now and how that compares to other periods?
John Nelson:
Sure. The chart we have today is a little bit different than normal. We’re used to showing price movement type charts, but this is just illustrating how far we’ve come and how things have been, and quite solid for some time. So if we look, this chart is just illustrating how many days the S&P 500 has grown without a 5% decline, all the way to the right there, that’s present market.
John Nelson:
We’re the second longest streak in 10 years. Second to only the middle of the graph there obviously, much larger triangle there. That’s the stretch between 2016 and 2017, where we saw 300 straight days of market without a 5% decline. So right now, just for context, we’re at 170 days, the market has gone without a 5% correction. So, pretty solid. Again, this is tough for a lot of the value type investors that are always looking for the sell offs, buy low, sell high. This dynamic is tough for them, when the trend is certainly working to the upside and new highs are reached often, but that’s exactly where we are today.
Jim Neidelman:
Interesting graph. Definitely. Now, what would you tell investors who might be nervous because this rally lasted so long?
John Nelson:
You know the old saying in our business, Wall Street always climbs a wall of worry, there’s a lot of truth to that. We see the increases. Again, the value investors, that’s tough. We’ve seen a big shift too, Jim, between value type stocks that performed well early in the year. Growth stocks were struggling during that same period of time. That has shifted dramatically.
John Nelson:
Growth stocks have really picked up. Value stocks have underperformed, where the disparity between the two that was very significant, 15 plus percent earlier this year, has closed significantly. So understanding what you own, where you’re positioned. Again, for those that are looking for bargains, this isn’t really the market or the period of time. Maybe that day is coming. But right now the trend and the momentum of the overall market is really continuing to bring us new highs routinely.
Jim Neidelman:
John Nelson with NelsonCorp Wealth Management. Thanks for the perspective as always, John.
John Nelson:
Thank you, Jim.
Jim Neidelman:
And if you missed any of this discussion, we have that available for you online at ourquadcities.com.