Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money, we’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Pleasure to be here.
Brandy Auterson-Hurst:
So, there’s been a lot of buzz around these new massive IPOs hitting the market recently, do you think they might have any impact on the overall market?
David Nelson:
It’s a great topic to discuss, and for about two decades now we’ve been in a mode of going the other direction as far as the concept of scarcity, and companies have been buying back shares, and so we’ve basically been in an environment where there’s been more leaving versus coming. The chart that I have today illustrates that nicely and attracts something called, basically the net issuance as far as stocks are concerned. It’s going back to 1980. It essentially is measuring the difference between the new shares that are coming into the market, versus those that are going out. And as you can see, the measure has spent a lot of time below zero in the past, meaning that there’s been more shares taken out of the market than adding to it.
But on the far right, it’s a different scenario, and this is very recent. What we see here is a positive for the first quarter loan, $390 billion of new issuance above what has been taken off. So, the past, they basically, companies have bought back shares, current, there’s a lot of companies coming out with these IPOs, meaning that there’s more shares available out there.
Brandy Auterson-Hurst:
Okay. So, what’s the takeaway for investors at home?
David Nelson:
Well, the market better be big enough to absorb the new issuance, and if not, basically there’s two scenarios. That is that we’re going to see prices either drop, or we’re going to have enough entities that are going to be buying them up. So, it’ll be interesting to see, certainly we’ve got a lot that has come on and a lot that’s going to be coming here shortly.
Brandy Auterson-Hurst:
Definitely. All right. Well, thank you, David, for joining us today.
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Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.