Brandy Auterson-Hurst:
4 Your Money is brought to you by NelsonCorp Wealth Management. It’s now time for 4 Your Money. We’re joined by James Nelson, Financial Planner at NelsonCorp Wealth Management. Welcome back, James.
James Nelson:
Thanks, Brandy.
Brandy Auterson-Hurst:
So we keep hearing that markets don’t like uncertainty, so what are you keeping an eye on about that?
James Nelson:
Yeah, that’s right. Markets like confidence, they like clarity. At times of uncertainty that can really weigh on stocks. And we’ve got a chart here that helps illustrate this. The chart shows, the top line there is the S&P 500, the blue line’s the S&P 500 over the last 25 years. And then the red line is the 100-day average of the Economic Policy Uncertainty Index. And I know that sounds kind of strange, but what that index measures is it measures the words like economy, uncertainty, policy, things like that. How many times are those used in articles, and it basically spits out a formula. And you can see down at the bottom there where we cross through that dotted yellow line, that’s typically when we have softer stock performance, and it coincides with that blue line at the top there. So, whenever we cross over that dotted line, there’s usually some turbulence in the stock market.
Brandy Auterson-Hurst:
So, how should investors deal with this uncertainty?
James Nelson:
Yeah. So this is just one indicator, but it is a pretty good predictor. So, investors should be pretty cautious right now. Things are a little bit uncertainty, we’ve had an election this past year, there’s a fair amount of uncertainty right now. So being cautious and being prepared for some volatility is the big thing right now.
Brandy Auterson-Hurst:
All right, James, thanks for your time today.
James Nelson:
Thank you, Brandy.
Brandy Auterson-Hurst:
So if you missed any of our discussion, we’ll make it available for you on Ourquadcities.com.
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.