Announcer:
It’s time now on KROS for Financial Focus brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only, and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly.

Announcer:
Registered representative, securities offered through Cambridge Investment Research Incorporated, a broker-dealer, member of FINRA/SIPC, Investment Advisor Representative, Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice.

Announcer:
Now here’s today’s Financial Focus program.

Gary Determan:
Good morning, five minutes past the hour as we continue to keep our social distance. We have on the phone with us this morning, Dave Nelson. Good morning, Dave.

David Nelson:
Good morning, Gary.

Gary Determan:
Hey, now the weather has been beautiful the last couple of days, so people are probably trying to get out. Have you been able to get out at all, Dave?

David Nelson:
Yeah, I live on the outskirts of town, so it certainly allows me a luxury they don’t have in New York City and places like that where there’s millions of people. So, yeah, I do my routine as far as with my dogs yet, and I enjoy it. I try to get in a little bike ride as far as when the weather’s nice, as well as getting the walks in. So we’ve got to take care of ourself.

Gary Determan:
Yeah, well, certainly not routine is what the health of the world and also the health of the markets so fill us in on what’s going on, Dave.

David Nelson:
Yeah, so I’ll try to give you the abbreviated version. We primarily are looking at the same things that we look at in the good times, as well as the bad times and certainly we’re in a weird period of time right now. The world economy as a whole has basically been shut down and small business owners are suffering, individuals are suffering that have lost their jobs. Again, our role is to try to help people make informed good decisions pertaining to their money.

David Nelson:
What we’re looking at is, again, basically three main categories. Market action, which essentially is looking at the trend of the market, it’s looking at momentum, it’s looking at participation. A lot of boring things that really matter. People have probably heard me say before, “The trend is your friend,” and so it is as far as investing. If the trend is up, generally speaking the market has a tendency, more often than not, as far as to go up, and so we’re certainly in a trend right now where things are trending down.

David Nelson:
I mean, today, yesterday, yesterday we had a pretty good part and then by the end of the day, essentially it was flat and just slightly down. So the trend is still your friend and the trend basically, the base is, the market action again is primarily down.

David Nelson:
Next big item is the macro. The macro, big fancy term for primarily looking at what is the federal reserve doing. What’s happening with interest rates? Are they going up, are they going down? What are we looking at as far as there and trying to help that weigh-in as far as making decisions and that is kind of in a neutral position. We have a fed quite friendly towards the market, but interest rates aren’t doing exactly what they should be doing at this point in the market cycle.

David Nelson:
Which again, as we share with individuals all the time, everybody focuses on the stock market, what we focus on is the bond market as well, and the bond market is generally a pretty good indicator as far as where stocks are going to go.

David Nelson:
And so this particular area in the bond market is still like a question mark. The last one is investor behavior and that’s looking at what are people actually doing and how do people feel. And I’m guessing you can probably imagine how people are thinking these days, Gary, and feeling these days and that is, it’s not real, the people aren’t really excited about the way things are happening and so that one actually is a contrary indicator and it’s when people are pretty negative on things generally that’s when markets have a tendency to go up. I’m not saying that people make bad decisions, I’m saying their emotions oftentimes get in the way of their making the correct decision. And so that one right now is basically leaning in a very positive way.

David Nelson:
If we put them all together, unfortunately what we come up with is not the answer that I think people want to hear and want to see and that is that the market is ready to take off. When you have this much damage that’s been done to the market, and I’m not pointing fingers at anybody, I’m just using the term damage in primarily from the coronavirus, it’s going to take some time as far as to recover.

David Nelson:
We’ve shared on numerous occasions as far as I’m on your program here about individuals as far as looking at during the recessions as far as how much markets have a tendency to drop and typically what you’re looking at is the high thirties, high 30%. We didn’t quite get there, we got pretty close to that as far as a few weeks back, but if you look at some of the extreme cases and the extreme cases is ’07, ’08, ’09 in most recent history the people would be familiar with, that one was on the doorstep of 60% and the NASDAQ was on the doorstep up 80% during that draw down. Now if you look at the way this thing is tracking and you overlay as far as what took place in ’07, ’08, ’09, what you find is that this is tracking quite similarly from the standpoint of what’s happening as far as the ups and the downs.

David Nelson:
We’ve gotten a few updates. We got an update, give or take, a week or so ago. I had three really nice days, it hauled that pretty much back. We had a nice day two days ago. Yesterday look like we’re going to have another nice day. We gain all that back. Today we’re up, give or take. It was up 150, 200 points, I think, when we came on, we’ll see as far as at the end of the day. Again, I’m hoping that things eventually turn, but I’m also a realist trying to share with individuals that this type of thing, these B shape corrections that people are hoping for, in other words, a big hard down and then a straight up is not going to happen in the cycle. I’ll just tell you that. I don’t know exactly what it’s going to look like, but what I do know is that’s not going to happen.

David Nelson:
It’s probably going to be a W as we discussed before. You drop, you rally some, you get it all back and more, and then you start taking off from there. But it’s anybody’s guess and we continue to be in the camp of be very defensive at this point in time. If you’ve sold, don’t be in a big panic as far as to get back in, if you haven’t sold, again, that’s going to be a really tough position because again, if our tools are right, we got another dip down and probably lower than we did the last time.

David Nelson:
Our advice to many individuals back in ’07, ’08, ’09, and I brought this up as far as fairly recently, I haven’t told people since then to not even open their statements and many individuals out there have done nothing offensively and their advisors have done nothing as far as to try to do some of this and we sold. We’re sitting on a lot of cash and a lot of conservative-type investments. Again, we wish we would’ve sold everything, but bottom line is we’re down at this point roughly a third to a half of what the market is and we’re going to hold up pretty well as far as if this thing dives even more, but individuals need to be careful at this point in time. This is not a time to be diving in and trying to buy necessarily the opportunities.

Gary Determan:
Again, thanks so much for your time, Dave Nelson. We’ve got a couple of minutes left in the program. So what are you doing for your clients right now, David?

David Nelson:
So what we did back in the 14th so a couple months back was our first sale, so we sold a piece before things started coming unglued. Again, our crystal ball wasn’t exactly correct as far as [inaudible 00:08:22], but it was telling us it’s time to take a little bit off the table. But I would say that was a brilliant, in hindsight, a brilliant move. The next ones were good, not great, but good, and so we’re sitting, depending on the individual, we’re sitting on really conservative-type stuff, probably in the neighborhood of 70 to 80%. Most individuals are probably 20% equities at this point in time and what we’ve tried to do is to buy the equities that hold up the best as far as these type of conditions.

David Nelson:
So it’s tough and folks, again, one thing that I guess I’ll wrap it up saying is that bear markets like this don’t end quickly. So you’ve got to be patient and it’s worth the short-term pain that you’re going to go through for the long-term benefit. I don’t want people to be too discouraged. You got enough other stuff to worry about as far as where the crises that we’re going through, as far as the corona crisis, this stuff will through time you’re going to be okay but the bottom line is again, do not do anything really bold at this point in time. There’s still a fair amount of downside. And it may take weeks and it may take months as far as for some of these things to unfold, but all likelihood, again, no guarantee, I got to get my disclaimer in, but the bottom line is, all likelihood, this thing’s going to take another pretty hard dive as far as on the lower side.

Gary Determan:
And you know, as they always say, it’s not a sprint, it’s more of a marathon and this looks like to be a marathon, Dave.

David Nelson:
Yep, absolutely, Gary, I agree.

Gary Determan:
All right. Hey, thank you so much for your time. Maybe we’ll catch up with you again next Wednesday, Dave.

David Nelson:
Sounds good. Thank you, Gary.

Gary Determan:
All right.

Announcer:
Financial Focus is a production of NelsonCorp Wealth Management and Clinton and Davenport. The opinions voiced in this show are for general information only, and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly.

Announcer:
Registered representative, securities offered through Cambridge Investment Research Incorporated, a broker-dealer, member of FINRA/SIPC, Investment Advisor Representative, Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.