Redrick Terry:
4 Your Money time now we’re joined by David Nelson, CEO of NelsonCorp Wealth Management. David, welcome back.
David Nelson:
Thank you Redrick, appreciate it.
Redrick Terry:
Absolutely, glad you’re here. So much has changed obviously since this pandemic started and a lot more change to come as well. You’ve been thinking a lot about a particular area that’s still trying to work things out. What is that?
David Nelson:
So, we’re always on the hunt as far as for opportunity, but we also want to keep people in tune as far as what’s going on. I would say probably the biggest area right now that’s going to be affected is higher education. And if you think about it, as far as the higher education, as far as the concentration of bodies, as far as in small areas, whether it be in the housing, whether it be in the classroom, whether it be in dining, this is going to be a real struggle as far as for higher education as far as to overcome this.
David Nelson:
You’ve got competition that is enormous coming from online options as far as out there. You’ve got an economy that up until recently was doing actually quite well, and so you had a whole bunch of individuals that were graduating from high school that had to make a decision whether they wanted to go into the marketplace and go to work or whether they wanted to go the higher education route. So those are big, big items.
David Nelson:
One other side note, as far as on the online is California State universities have all said that they will be all online come the fall semester. That is a big, big item. And so again, that’s going to put a lot of pressure as far as on other universities and as we’ll get to here shortly, as far as on many of the stocks that invest in that own those type of businesses, as far as that are in this space.
Redrick Terry:
And since we are talking about money, in what ways could this impact the economy?
David Nelson:
Well, the biggest thing is probably going to be enrollment. The estimates are that enrollment will be down anywhere from 10 to 30%. And the ripple effect from that it could be very significant. The universities that depend solely on tuition versus having big endowment funds are going to be under a lot of pressure. Services, if you look at services, as far as that supplies as far as many of the universities, whether it be meals, whether it be cleaning, those type of services, they’re going to be under a lot of pressure. So this is a big, big item and, again, something that people should be paying attention to.
Redrick Terry:
Well, let’s talk about the investment impact of it. Are there things that could be avoided or the opportunities to be had there?
David Nelson:
So I think slide three will give you probably the best visual as far as of this. And the slide that I brought along today is in blue, which you’re going to see here, is this is looking at the housing for colleges, Housing Type Index. And if folks can see there to the far right, it’s basically showing that that index is down very significantly, 20%. It’s down a lot more than that, several weeks back, but it’s still down 20%. Now, the other two we’re looking at other indexes as far as in that space, not real estate, but the actual companies, private type companies that are making their money, that a lot of it’s derived as far as from college campuses. And again, both of those have been under a lot of pressure and will continue to be under pressure depending on what unfolds as far as going forward.
Redrick Terry:
That’s something to keep watching, going forward. David, as always, we thank you for joining us today.
David Nelson:
Thank you, Redrick.
Redrick Terry:
And if you missed any part of our discussion, we’ll make it available to you at OurQuadCities.com.