Kristen Scholer: Nancy Daoud. She’s private wealth advisor at Ameriprise Financial. Nancy, welcome to the show.
Nancy Daoud: Thank you for having me. It’s so exciting to be here.
Kristen Scholer: Yes, it is indeed. And what do you make of today’s market action?
Nancy Daoud: Well, you know, expectations are very high, and Q3 earnings turned out pretty well. But there were a lot of ups and downs, so it ended up being kind of flat. But it feels like it’s always up when you’re on the New York Stock Exchange floor. I know there is a lot of momentum down here.
Kristen Scholer: Absolutely. For sure. I want to talk to you about earnings and expectations heading into this earnings season, and what the benchmark really is for companies.
Nancy Daoud: Well, the benchmark changes, obviously. And actually, historically, estimates are always estimated downwards during the quarter. But more recently, they’ve been estimated up. And in fact, they do actually materialize. Not only are they meeting expectations, but they’re also exceeding expectations. In fact, in 37 out of the last 40 quarters, earnings were exceeding expectations. So that’s kind of why you’re seeing the market the way it is.
Kristen Scholer: And we should note the market pretty much flat today as this earnings season officially kicks off in earnest. The big banks always do the job there. We’ll hear from other companies, of course, over the course of these next few weeks or so. Where are we at with valuations, as the major indices do still hover near record highs?
Nancy Daoud: Well, I think that makes investors a little bit nervous. You know, when valuations are this high and they just keep going higher, people start getting nervous about, well, when is the shoe going to drop? Well, the reality is, really watch earnings. You know, if earnings are this good, then I think we should be okay, and it will continue. And in fact, everything else will be very much downplayed. However, you know, there are many things looming ahead of us that could change that overnight, practically. And we do have to be cautious.
Kristen Scholer: As a private wealth advisor, what are you advising clients now, in this final quarter of the calendar year?
Nancy Daoud: Well, I think we’re going to have a very strong quarter after we get through the drama of the midterm elections, of course. But I think the best advice is to rebalance. You know, stocks have done so well that they’ve taken up a much larger piece of the pie than maybe necessary for individual risk appetites. And so this would be a good time to take some profits, rebalance, and make sure you stay within your range of appetite for risk.
And then, more importantly, if you need cash in the near term, in the next one to three years, what a great time to take it off the table, so that you don’t get caught in some black swan event, you know, in the event that it happens.
Kristen Scholer: Are there sectors that look attractive to you, and ones that you might be cutting exposure to in this market?
Nancy Daoud: Well, I think we’re broadening more. You know, AI has not just been tech-specific. The rest of the industry has really taken off with that, because every company in every industry has to engage with AI or they become a dinosaur, essentially. So I think broadening and diversifying has been a very, very good tool to offset a little bit of those ups and downs that we’ve been having lately.
Kristen Scholer: The Fed has indicated that it could raise rates another time this year. What could be the impact on stocks?
Nancy Daoud: Well, it could have an impact, obviously. But as long as earnings are this strong, there will be a little bit of drama or an emotional reaction, and then it all reverts to the mean in the end, because the math is the math.
Kristen Scholer: All right. Nancy Daoud, private wealth advisor at Ameriprise Financial, thank you so much for joining us here.
Nancy Daoud: Thank you. Thank you for having me.
Kristen Scholer: Absolutely.
