Jim Niedelman:
It is For Your Money time. We’re talking with CEO of NelsonCorp Wealth Management, David Nelson. Great to see you, David.
David Nelson:
Thank you, Jim, you as well.
Jim Niedelman:
So the stock market seemed to respond fairly positively to the recent data regarding the development of vaccines for the Coronavirus. How should people at home watching consider these recent gains?
David Nelson:
Certainly, it’s welcome news. The vaccine effectiveness is certainly a great news. But it’s important, as we tell people all the time, to not view one thing only. And so, there’s a variety of things that have come together as far as to move this market. I think the election, we talked about the volatility as far as increasing around election, it certainly did. It’s plummeted lately with, I think, most people believing elections are behind us and that’s certainly helped stocks. The vaccine is a major driving force. Underneath the surface we’ve certainly seen some pretty remarkable shifts that have taken place.
Jim Niedelman:
What do you see as one of the more interesting dynamics in all of this?
David Nelson:
Well, I think that the big thing is to understand that there are massive winners, as far as with this COVID event that we’re going through, as far as markets are concerned. And there’s big time losers. Tech was the winner, clearly, and pretty much everything: energy, retail, finance, have been the losers.
David Nelson:
I brought along a chart that’s kind of illustrating this. And it’s looking at small versus large. And so, the Russell 2000, when we see this, the Russell 2000 is small cap stocks. And then the Nasdaq is representing here, primarily large cap and primarily technology type large cap. What we see is those blue dots that are all over there, kind of showing trend lines. And this is one day of trading as far as the market. And we’ve highlighted in yellow, we’ve got that towards the top left, one dot there, that circle is far as in yellow. And what that’s illustrating is that the Russell 2000 did something about two weeks ago that’s never been done before. And it outperformed the Nasdaq 100 by over 5%; just unheard of. We’ve never seen anything like this before. So what we have seen is this massive shift from the old stuff that was working, which is primarily technology, to pretty much everything else that’s working the last couple of weeks.
Jim Niedelman:
So explain what this means for investments going forward?
David Nelson:
Well, depends on if it lasts. So, we’ve had a couple of head fakes that have taken place, certainly over the last probably year or two, as far as value stocks, trying to get a little push upward. And the growth stocks, primarily technology stocks, that were underperforming. A couple small events that have taken place, but it’s never lasted. This one’ll be a test to whether it lasts. So we’re talking to people in terms of rebalancing portfolios. This seems to have legs. As far as this time, we think the vaccine is making people believe that we’re going to move forward. Subsequently, rebalancing some from growth to value type stocks is probably a great move right now.
Jim Niedelman:
David Nelson, great perspective. Thanks for your time.
David Nelson:
Thank you, Jim.
Jim Niedelman:
And if you missed any of this discussion, we have that available for you online at OurQuadCities.com.