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Redrick Terry: It’s now time for 4 Your Money, we’re joined by David Nelson of CEO of NelsonCorp Wealth Management. David, welcome back.
David Nelson: Thanks [Redrick], appreciate it.
Redrick Terry: Absolutely and last week we talked about what stock markets were doing so far this year. Are those big gains due to an improving economy?
David Nelson: It really is and and one of the slides that I brought along today that I think will, will illustrate this, a lot of moving parts here, folks, so try to hang with. The top is looking at the S&P 500 and this is the All Cap World Index and we’re going back to the year 2014 and we’re moving forward to current levels as far as where we are here.
We see a big divergence as far as from the two. S&P 500, nice big moves as far as the All Cap World Index during this particular window, really haven’t seen much. The action that I want to point out to people is on the bottom. And this is where, again, it can get maybe a little difficult as far as the C. The blue line is looking at what we call the composite leading index and basically what this is doing, is these indicators are trying to give us a heads up as far as when markets, when the economy may be rolling over. And this is looking at a business cycle and so what we see here, during this particular period, as it starts dropping in 15. The corresponding returns up here in 15 were pretty pathetic and so now we troughed, now we start pulling out of it and we see some fantastic returns.
Now look at the tail end here, as far as the, what’s taking place. We’re really hitting levels as far as the concern that’s out there, as far as lea- and these leading indicators and yet the market has been, been really rolling as far as so far this year. So what it’s telling us is this is probably troughing and we’re going to see this move up and so that to to very specifically answer your question, as a general thumb, we look like we’re in a pretty good position as far as, not just the United States, but as far as the global, the red is Asia and the t-, the tan color here is Europe and all of them seem to be troughing at roughly the same time, which I think is gonna be very good news as far as the market.
Redrick Terry: Certainly and we’ve discussed prices and the economy, are there other factors that you would look at to give you a better sense of risk as far as these markets go?
David Nelson: So inflation’s big, interest rates are really big as far as to pay attention to. And so individuals out there, again, we try to tell them, last week we spoke about a 200 day moving average, it’s technical analysis, trying, again, to help people protect capital. This is looking at business cycles and trying to again, try to draw conclusions. But interest rates are really important, if interest rates take off here in the foreseeable future and or inflation takes off, some of this stuff is going to be reflected as far as in the prices and we could certainly see things drop if those two events were to take place.
Redrick Terry: Certainly sounds like we need to keep an eye on data as always-
David Nelson: Absolutely.
Redrick Terry: Thanks we appreciate you coming in.
David Nelson: Thank you [Redrick]
Redrick Terry: Absolutely and if you missed any of our discussion, we’ll make it available for you on OurQuadCities.com
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