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:
Thanks, Brandy. Appreciate it.
Brandy Auterson-Hurst:
So the stock market is behaving like it isn’t too worried about an economic slowdown. Do you believe this optimism is justified?
David Nelson:
Well, yeah. The stock market is a forward-looking mechanism and often does a decent job of predicting as far as the economic trends, but can be volatile and can overreact at times. But we often say that the real smart money is in the bond market as it has historically been a better forecasting tool. One key that we use is looking at corporate bond spreads, and I’ve got a chart today that’s looking at this and what it’s basically attempting to illustrate here is looking at the lines, the blue line, the red line, they’re different bond markets, so the high quality bonds versus the corporate bond market and how the two interact as far as with each other. When we see the gap between them increasing, that’s generally a pretty worrisome type period. When we have a period of time like we have now where the two are actually quite low and they’re pretty close to each other, that basically is the bond market telling us that they feel comfortable that we’re not looking at a recession.
Brandy Auterson-Hurst:
Okay, so what does this mean for investors going forward?
David Nelson:
Well, no signal is foolproof as far as looking at trying to predict as far as tomorrow, but this is a pretty good indicator as far as historically and is really telling us, I think that market gains going forward, we could see some additional market gains. Pretty exciting. As far as for investors, it’s been a good year and it looks like it’s going to wrap up being a good year as well.
Brandy Auterson-Hurst:
All right. David, thanks for your insight today.
David Nelson:
Thank you.
Brandy Auterson-Hurst:
If you missed any of our discussion, we’ll make it available for you on ourquadcities.com.
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This video includes a paid appearance.