Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA, SIPC, investment advisor representative Cambridge Investment Research Advisors, incorporated. A registered investment advisor Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate. I got James joining me this morning. Hard to believe April is winding down very, very rapidly. I know the kids were talking already. They got the countdown for a number of school days left and it’s in the 20s, so it’s getting close.
James Nelson:
I was going to say, once you get into May, it goes pretty quickly.
Nate Kreinbrink:
It goes really quickly during that time of the year. So again, we got one more week of till we get to that point. But again, hard to believe we’re doing that. We had Andy Ferguson with NelsonCorp Tax Solutions on last week, day after the first tax deadline, the big smile that was on his face and that sigh of relief to again, get their bearings again, catch their breath and kind of move forward. So kind of entering in a new transition, a new period as far as timeframe. Weather’s starting to turn. Hopefully one of these days will turn and stay turned. I know you’re coaching a lot of soccer now. We got little league, softball, baseball, all these programs going on. It sure is nice being able to get out there when the wind’s not blowing 40 miles an hour and it’s cold and all that fun stuff. Yeah, I was.
James Nelson:
I was going to say, I hope May brings a little bit better weather. I want those 75 degrees.
Nate Kreinbrink:
We got spoiled for one week. It was like 80s and was perfect and you’re like, “Ah, this is what we’ve been waiting for. But then back to reality.”
James Nelson:
Yeah exactly. It’d be nice to get back to that.
Nate Kreinbrink:
And I think that kind of segues right into our program that James and I were kind of talking about on the way up here is markets have shown some of that continued unpredictability coming into the first of the year. We had a nice little positive start to the year. We’ve still seen some of that volatility and obviously as of late we’ve continued to see that. We’ve seen a new batch of corporate earnings been coming out.
We’re seeing inflation been a little bit stubborn right around the levels where it has, which has again caused the fed to continue to watch what they’re going to do moving forward with raising interest rates. Are we going to be done? Are they going to do it another month? So again, all those factors that kind of brought us through there. We’re still seeing them. We are seeing a little bit of a slowdown in the economy, which again, as you mentioned too when we were talking as far as it’s what the fed wanted all along, now they’re kind of getting that maybe not to the degree that they want, but you’re seeing some of those signs play themselves out in the markets.
James Nelson:
Yeah, I mean we’ve seen some of the headlines here recently with some of the giant employers, a couple of them in this area actually that are starting to layoffs. And we talked about the feds kind of get in their way with that. That’s what they were attempting to do is to slow everything down, try to get the economy slow down, get inflation and come back down to earth. And that was really the thought process behind all the interest rate hikes. It sounds like May will be the final interest rate hike of maybe a quarter percent. At least that’s what markets are kind of pricing in right now. So we’ll see where that goes.
But it sounds like the fed would like to wrap up with that final increase in May and then see where things go. But like you mentioned, Nate, inflation’s been a little bit stubborn. It hasn’t come down as quickly as we all want it to. It is still trending in the right direction, it’s trending down. But again, we like to get back to that 2% to 3% target that they’ve continued to talk about the last year and a half, but we’re not quite there yet.
Nate Kreinbrink:
And I think everyone saw inflation be that straight line increase over the last 12 months, peaking back in July of last year at 9.1%. Everybody was thinking that straight line fall was going to happen as it would come back down. And that obviously has not been the case. It’s been more of a bungee cord kind of effect where you’ve seen it come down and then a little bounce up and then come down, a little bounce up and before we get it settled down to those levels like they were talking to, and again, it’s playing itself out. I had a guy in the other day talking about who works in the retail sector as far as with that and some of the improvements that they’ve seen from 12 months ago. But yet some of the ongoing issues with still some just their ordering and deliveries and still not being able to get everything that they want to get in when they can get it in, which has caused supply chain issues and continuing to keep prices maybe a little bit more elevated than what the normal would be.
James Nelson:
No doubt. I mean a lot of the supply chain issues have kind of worked their way out, but not all of them. And the other thing is consumer spending’s been so strong. I mean people are still spending a ton of money. Consumers are out there still buying things and that’s kept the demand way up. So again, the whole thought process is to bring up interest rates and cool all of that down. People stop spending as much as they were. But again, that’s just taken a little bit longer than I think we all expected and it’s going to continue to take some time.
Nate Kreinbrink:
And I think you look at then big picture wise is how that plays out in markets and in markets and especially with people’s investment accounts, whether it’s through your 401ks at work, IRA accounts, Roth accounts, just an individual savings account, that investment account that you have continuously see and looking for opportunities to do that and still remaining disciplined to making those contributions, continuing to put a priority on saving. When markets come down like this, prices come down usually in general with that, being able to remain disciplined, continuing to put that monthly amount into it and being able to take advantage of these lower prices because again, everything comes down, everything will go back up hopefully. It’s just a matter of how long this takes to do it and that kind of maybe will play itself out.
You mentioned the fed raising rates again at the May meeting, will that push us officially over the limit where they can at least say that we are in a recession? That’s been one of the headlining terms over the, again, you can probably go the past year, are we going to go into the recession? Is it going to be a soft landing? What they have hoped at from the very beginning. But looking at that and if we do go into a recession, look back historically and see what that has meant for markets. And then as far as our path moving forward.
James Nelson:
And this is the time. I mean we hear it once in a while, Nate, from clients that, “Hey, I don’t want to put money into my 401k because things just keep going down.” Well, really this is when that new money kind of coming off the sidelines, new contributions, cash coming into those investments, this is a good time to be buying. And like you said, staying discipline in a rough period of time is the key. Because when we’re buying, while things are down, when things do bounce, you’re going to have that many more shares of whatever position you own or positions that you own. And that can really pay huge dividends long term. So it’s a time where people tighten up a little bit, don’t necessarily want to be taking any extra money out of the checking account, savings account, 401K contributions. I’d rather not put it in. But we’re all wired backwards. This is really when you should continue making those contributions. And if anything, maybe try to add to it.
Nate Kreinbrink:
And I think it goes back to just the psychological side of the way people look at investing in general. And I think if anybody would walk into a store and whatever they were going to be buying is on a 20% to 30% discount, they would be very happy to go ahead and make that purchase as far as doing that. Well essentially that’s kind of the same thing that kind of played itself out in the markets again, where if you’re looking at the Dow, the S&P, the Nasdaq down 20% to 30%, again, being able to continue to invest, get that discount when you buy in, should be that same excitement and looking at it the correct way as far as, hey, this is an opportunity. And again, it’s different mindsets for those people still working, still getting a paycheck, still contributing versus those people that have transitioned into retirement and are using those accounts as income stream.
Again, different conversations a little bit to be had, but again, in the long term, and that’s how you should be looking at investing in general is just that long term kind of approach. The marathon, not the sprint type of philosophy. And again, looking at, we are going to have market downturns. We’ve had them in the past, ’08, ’09, 2000, 2001. You can go on and on and on. We will have them in the future. It’s just how do you navigate that? How do you minimize the losses during those time periods and position yourself in a great way in order to take advantage of this thing when it does rebound?
James Nelson:
And I think we’ve all kind of been spoiled the last several years up until 2022 when we did have a rough year, but markets were pretty smooth sailing before that for quite some time. So I think a lot of people have forgotten about some of the volatility, kind of forgotten about when accounts have been down. But now this is kind of more back to reality and more normal times and markets don’t just go up forever. And having that mindset and understanding that there’s going to be good days and bad days is certainly worthwhile in the long term.
Nate Kreinbrink:
And I think too, I mean just looking at opportunities, I mean, not all spaces in the markets move the same way. I mean there’s opportunities when you look at the different sectors, when you look at the different area. I mean US versus international, small cap versus large cap emerging market. I mean, you go on and on and on and there’s different markets. I know there’s always the one chart that I look at occasionally that shows the breakdown of sectors in that flow chart to see, okay, maybe one year it was up this year it was down. And looking for those opportunities. And again, having the flexibility to be able to position yourself is going to put you in a much better position than what you would if you would just throw it in and close your eyes and hope that it’s going to going to do what you want it to do.
Before I run out of time, did want to mention that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of April will be donated to the Juneteenth celebration, which is sponsored by Living Peace 365. James, I appreciate you joining me this morning.
James Nelson:
Absolutely.
Nate Kreinbrink:
Again, Nate and James with NelsonCorp Wealth Management, bringing you this week’s Financial Focus. Thanks again for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA, SIPC, investment advisor representative Cambridge Investment Research Advisors incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.