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 Nate Kreinbrink, financial planner at NelsonCorp Wealth Management. Welcome back, Nate.
Nate Kreinbrink:
Thanks for having me again.
Brandy Auterson-Hurst:
So as we wrap up what has been a pretty surprising year in financial markets, is there anything in particular you are watching going into next year?
Nate Kreinbrink:
Well, it’s definitely been an interesting year, and as you mentioned, I think the strong performance in the financial assets seem to catch many by surprise. Now, it may seem a little bit counterintuitive, but with financial markets, it’s not just as simple as things go up when fundamental data is good, or things go down when fundamental data may not be as strong. And what is equally as important to this data is the expectation of investors regarding this data. So their market sentiment.
Now, one way that we can look at this is by an index that’s put out by Citibank, and I think we have a chart that kind of goes into this a little bit. This index is comparing the official economic data releases to the average forecasted values. So when actual values come in better than forecasted, you’re going to see a number that’s greater than zero. When the data comes in lower than expected, you’re going to see a result that values below zero.
Now, there’s two things that we need to look at. Over the past year, you can see that we’ve been pretty solidly above that zero mark, meaning that values have came in better than expected. However, if you look at the far right, you can see that we’re starting to trend back down to that zero mark. And if that continues, the upside surprises, the trend that we’ve been seeing may have run its course.
Brandy Auterson-Hurst:
So how can viewers use this information?
Nate Kreinbrink:
So just because we’re getting back down there doesn’t necessarily mean terrible news. It just may mean people aren’t as surprised by the positive trends. But again, this is one thing people need to look at the big picture when determining the risk inside of their investments.
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.