Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thanks, Brandy. Appreciate it.
Brandy:
So the stock market has had a pretty good run over the past several years. What are you seeing when you step back and you look at the bigger picture?
David Nelson:
Yeah, it’s important to do that and not get caught up emotionally as far as what’s taken place, but what really stands out is just the number of years that we’ve had recently that have exceeded 15% as far as rate of return for the year. So the chart that I have today does a nice visual as far as looking at it over an extended period of time. And what we’re looking at here is, again, 15% or higher returns in a seven year period, seven year rolling period. That’s historically a normal pattern as far as for the market. And normally what you see is maybe two, maybe three years as far as that you exceed that. As you can probably get a decent feel here, we’ve had many more than that. We’re in the six category right now, six in the last seven years, which is just unheard of.
And again, people say, “Okay, so what does it mean at the end of the day?” Well, nobody knows for sure, but we’ve certainly blown through as far as historical patterns here. The only other times that’s been close to this has led up to pretty significant drawdowns, the dot-com being probably the best example.
Brandy:
Okay. So what does a run like that mean for investors as we look ahead?
David Nelson:
Well, I think, again, the chart that we saw just a second ago basically illustrates that it’s rare. I would really caution people as far as not to get overly excited. We said that now a year or two in a row, but we’re at levels that it just unheard of and the pricing of the market today is on perfection and the odds of that taking place are probably pretty slim. So be very cautious right now.
Brandy:
All right, David, as always, thanks for joining us.
David Nelson:
Thank you.
Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.