Photo (in bad light) and article by Mary Alice Murphy

Silver City – Grant County Chamber of Commerce Director Romeo Cruz introduced Vladimir Gnilozubov, Edward Jones Financial Advisor, to the chamber members at the monthly luncheon on April 6, 2023 at the Grant County Veterans Memorial Business and Conference Center.

Gnilozubov said he knows people have concerns about stocks, market inflation and potential recession. "I saw that as a need for what I do. Value is what I do. I know time is value, and I don't want to waste time for people who come in to see me."

He said his office helps its clients with all their financial issues from beginning investments to estate planning.

"Things have been painful the past two years," Gnilozubov agreed. "They include inflation, the rapid rise of interest rates, wars around the world. It all comes from 2020. It comes down to money supply. The country was printing money with no balance. The money supply increased by 40 percent."

He noted that when Richard Nixon was president, he took the United States money supply off the gold standard.

He said the Federal Reserve last year had to start raising interest rates to head off inflation brought on by the excessive printing of money. He talked about the main stock market and the main indexes. The Dow Jones index represents only 40 stocks. The Nasdaq is heavily weighted in tech stocks. He said the S&P gives a better picture of the state of the market, because it is diversified.

"Last year, the market was down 20-25 percent," Gnilozubov said. "So far this year we've seen an increase."

He noted this past March was a pretty good month, with markets starting to go up. The low unemployment rate also helps. "70 precent of the economy relies on consumer spending. And consumers are spending."

"We're not done yet with the pain," Gnilozubov said. "There are a lot of uncertainties. Although inflation seems to be moving lower, we still need to go through some volatility especially with interest rates going higher. The markets prefer the interest rate when it's below 6 percent. It will be choppy over the next few months, but the second half of the year should be better. We see inflation coming down, but not enough. To have a sustainable market, we need inflation to come down. I think in May, the Fed will raise 25 basis points. The markets were expecting in February that the Federal Reserve would raise a total of 100 basis points for the year."

He noted that CDs might be a good way to save in the short-term because they are showing higher interest rates.

"Markets are always looking ahead," Gnilozubov said. "Usually about 9-12 months ahead. While they say we're not in a recession, most markets are already pricing in a recession. The market is looking at earnings estimates and pricing in that they will come down for the next few quarters. Last year, the market went down about 25 percent, but the recovery is expanding, but the market is pricing in an economic slowdown. I don't think treasuries and CDs will be the way to go long-term, although today a CD is at 4.3 percent, but yesterday it was 5.3 percent, so short-term it's OK."

He said the economy cannot always grow. "It's like a spring. Sometimes it needs to rest. The case is for staying invested in the market. Don't try timing the market but ride it out."

On a bit of history, he said on March 26 or 27, 2020, the market bottomed out. But the next three days, it grew by 15 percent.

Gnilobuzov said he recommends at least two buckets of available funding. Bucket # 1 is the checking account. Bucket #2 is an emergency fund of 3-6 months-worth of cash that can be easily gotten to in an emergency.

He noted for a nurse or a teacher, it's always easy for them to find another job, but for others, they need to know was is comfortable for them in their emergency bucket. "The Bucket # 3 is the investment bucket. If you're going to need the money within the next couple of years, then a CD is best. A CD is not good for saving for 5-10 years or lonoger, because interest rates go up and down. If rates are down, the market is likely to be going up."

Bucket No. 4 is money jail, such as the IRA, where you can't start taking money out before the age of 59½ and then you have to pay taxes on the withdrawals.

"What are your goals?" he asked. "When I work with you, I want to connect money to your goals."

He opened the session for questions.

Azima Forest asked about a national digital currency.

Gnilozubov said he wasn't sure it was going to happen. "There's not enough information out there for me to advise on."

Bruce Ashburn asked if Gnilozubov recommended keeping an amount of cash in one's house outside of the bank.

Gnilozubov said it could be emergency cash, if kept in a safe or secure location. "Whatever you are comfortable with."

Cruz asked if he thought more bank collapses would occur after the Silicon Valley Bank crash.

"A lot of people are comparing it to 2008," Gnilozubov said. "Some may go bankrupt. The reserve requirement for banks is to keep 10 percent of its deposit for liquidity. That was waived in 2020. Silicon Valley Bank saw an increase in receipts, but they lent to start-ups, which are always high-risk. They thought the federal rates wouldn't rise and they locked into long-term treasuries at 1 percent. When rates go up, the value of bonds goes down. So, they had to sell bonds at a loss. They didn't expect a run. It was poor management by people thinking the financial system would not fail."

Ted Presler asked what sectors are leading right now.

Gnilozubov said the only sector that made money last year was oil and the energy section. "Technology was the worst sector last year, because they rely on interest rates when they borrow, and they had to borrow at a higher rate. Now tech is the best. It is up 17 percent this year after losing 24 percent last year. The health care sector also went down last year. When times are tough, the best sectors to be in are essentials, like food, health care, utilities, things that people use every day."

Presler also asked about Bitcoin.

"I don't recommend anything I don't do myself," Gnilozubov said. "But it would be wrong to say no. Putting 5 percent of liquid assets into something risky is OK. Personally, I don't do it."

Forest asked about precious metals. Gnilozubov said it was wise to invest in precious metals during a recession, "but I don't recommend having all of your investments in them. Physical gold, for instance, people might not accept. You have to sell the gold, and that usually involves a commission and fees."

He recounted a story of a person he heard about who had $100,000 of gold in his IRA. When he hit 73, he had to do required minimum distributions. At the time he had to sell it, it was worth $1500 an ounce, but he had bought at $4000 an ounce. "It's a good diversification, but precious metals do not pay dividends."

With no more questions, Cruz announced that the Tour of the Gila is looking for host housing for the bicyclists coming in from all over the country and world.

"Next week, we will start taking applications for the parade and vendors for the Fourth of July celebration, which we want to make bigger than ever," Cruz said.

During announcements, Lori Rogers told a story about a six-year-old who was acting out and having trouble with his numbers. "We don't think about the home environment. But he was in a home care situation, and when the owner of the home started using clean cleaning ingredients without all the chemicals, using natural substance,s the kid got better and quit acting up. A lot of things that are sold as natural, aren't. There are good cleaners and not so good." She promoted her Shaklee products.

Karen Beckenback of Grant County Community Concerts Association announced that April 11 would feature Seraph Brass, a group of women brass players. She also asked people to remember that May 21, an event sponsored by GCCCA, Western New Mexico University, the American Legion, the DAR and the Fort Bayard Historic Preservation Society, would feature the 1st Armored Division Band out of El Paso at a concert at Bataan Memorial Park.

Cruz noted that a few days after the meeting would be April 9, the anniversary of the beginning of the Bataan Death March.

Presler announced the Southwest Work Festival was holding an event that evening featuring Michael McGarrity. He also reminded folks of Give Grandly on May 6, from 9 a.m. to 2 p.m. "Bring money."

Another event he mentioned was the First Friday art event on April 7.

A member mentioned the New Mexico Solar Group, which is one of the only local companies to provide solar installations to local residents.

Crus said the next luncheon will take place on the first Thursday in May.