Wally Nichols (00:00):
Hi, Wally Nichols with asset guidance group market alert for a day, September the second 2020. I have two points for you. Number one, the VIX is pricing and volatility at record prices. Number two, the forward price earnings multiples on the S and P 500 have now hit 25 X. Let me go to number one. Okay. So number one is that the price of volatility is so high coming through this next election in November. So the, the butterfly trades have priced in at a debit of a seven point spread. Okay, so that’s what happened yesterday. So this volatility investors are expecting in November is because the election is gets so close. Imagine what happened in 2000. So 20 years ago, you had Gore versus Bush went all the way the United States Supreme court to settle the election and decide who became president. Okay.
Wally Nichols (00:55):
Uh, not very far fetched to see a lot of, uh, uncertainty and, and, and, and a lot of premium for risk floating around this year, this election for 2020. All right. That being said, well, and I won’t bore you with the technical details of the butterfly. Basically, you’re looking at buying futures for September and November, and then offsetting those by selling a futures in October, and they offset the premium layout. And that’s still the most expensive that it’s been essentially since 2000. Okay. What’s even, even, even considers these kind of spreads through the last two financial crises. All right. And, and now let’s go to the 25 X price earnings, multiple historically that hasn’t happened since–it hit that yesterday–hasn’t happened since you guessed it 2000. Okay. And then that I was followed by the DotCom burst.
Wally Nichols (01:55):
Okay. So that bubble burst back then. Now, are we in the same spot today? Um, we aren’t sure yet. Okay. We don’t know yet, we got to keep an eye on things. This is my point because we already know the fed has given instructions that, Hey, they’re going to keep interest rates low. So it’s 25X on a forward price earnings multiple for 2020. Now that, uh, overvalued, um, all the technicals say that the markets are overbought right now. Uh, but whether or not we can go higher, uh, is a function of the Fed’s involvement right now. So it’s difficult times at some certain times, uh, you’ve got to be watching this. I’m watching this be careful out there. Okay. If you are currently contributing to a 401k plan with your employer, we can provide you ongoing advice in that. Okay. It’s a nominally priced service.
Wally Nichols (02:44):
If you’ve got less than 250,000, it’s, it’s $25 a month. I mean, you could lose thousands in one day, if you, if you’re not ready for a market shift, okay. We give you two pieces of advice. We give you advice on what to do with your, with your existing allocations. And then what are you doing? Every paycheck you’re making future contributions, right? So the second point of advice that we’re giving you this what to do with those future contributions. Okay. So two pronged approach on the, on the, on the ongoing plan confidence 401k advice plan. All right. Secondly, if you’ve got out of service money that you just need that, that’s your, that’s your investing out, um, on your own? Um, yeah, you may need help on that. If you need help on that, schedule an appointment with me, we’ll talk about bringing it into our platforms and our models.
Wally Nichols (03:33):
And, uh, we did have a very good track record so far of managing through these financial crises. Um, this could happen, uh, you know, you gotta, you gotta be careful out there. You gotta watch things happen quickly. And so we need to manage this our way through this. And, um, if you need that, then click on the appropriate links below the one for the 401k advice, uh, for your in-service plans, clicking on that link. Then if you need to schedule an appointment with me to discuss going forward with other out of service money that you’ve got invested in these uncertain times, schedule an appointment with me, be glad to help you out. All right, that’s the end of this update, this alert. Okay. The smart alert when they happen, I try to get right on it and get right with you to let you know what’s going on this Wally, stay happy and healthy out there until next time.