Gary Determan:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research, Inc., a broker dealer, a member of FINRA, SIPC, investment advisor representative Cambridge Investment Research Advisors, Inc. A registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program. Well, it is not the first Wednesday of the month, but we are going live with Dave Nelson today. Good morning, Dave, how are we doing?
David Nelson:
Great, Gary. Thank you. How about you?
Gary Determan:
Not too bad. I see you out riding your bike so I know you’re out there getting some exercise.
David Nelson:
Yeah exactly. I haven’t put the time in, the years go by pretty quickly as we all know, and the importance of staying as fit as possible. I’d like to say that I did more than what I do, but I’m three miles a day as far as walking and then as far as the bike, it’s usually 18 miles per day. And the combination of the two is keeping me on the right side of the grass, so that’s a good thing.
Gary Determan:
Well, that is a good thing. Now I know you coach basketball at Prince of Peace and the summer is a good opportunity for the girls to work on their skills. How has that been able to go?
David Nelson:
Yeah, so to make a very long story short, I’ve spent literally zero time with them. My line of work, we’ve had little contact with clients, but the amount of contact we have with clients is crucial. And I work as the older clients, so as I’ve conveyed to the kids and I’ve conveyed to the school, is that somebody else is going to have to do this off season stuff, I just can’t take a chance of being a carrier as far as the virus and exposing my clients. So we’ve communicated, I’ve had some nice conversations with the kids, and this is one time Gary, that you can truthfully say the difference, I hope, of having a group of kids that you coached for years and not being able to get to them.
David Nelson:
It’s business as usual, as far as what we’re going to be doing next year. They know that, they know the routine, what they need to do. And my understanding is that they’ve been working really hard as far as in the gym and as far as on the streets trying to stay in shape and so we’ll see how things transpire. I mean, this is the year, the last year I was hoping to do some tremendous damage as far as with this group of kids. I mean, we’re heavy laden last year with juniors and a few sophomores that put in big minutes. And we had a good season, don’t get me wrong, but we were obviously hoping for more, and having a heavy senior class this year and a couple really good juniors, we should be really, really tough.
David Nelson:
So I hope we get to play, I mean, that’s still a question Mark, as we all know. And as we’ve heard, as far as what’s happening in Iowa, the numbers are increasing. And so just like today we figured, I think it was a couple months ago when you and I were chatting about, it won’t be long, we’ll be back in the studio hopefully, and we just got to play it safe. So I hope we have a good speed, which I guess is the bottom line. I hope we have a season, if we do, I hope we have a really good season, because I’ve got a great, great group of kids. And I’d certainly like to see them have the success.
David Nelson:
They’ve had to put up with me for several years and trying to mold them into a successful program. And again, as those that have been in sports realize, you don’t wave a wand. It takes time and energy and effort from not only the coaches, but you’ve got to have players that buy into it, you’ve got to have parents that buy into it. And so we’ve been blessed with that, I just hope the reward they’re able to enjoy this year and play basketball and have a good season.
Gary Determan:
As you’re can hear we’re visiting with Dave Nelson on today’s program. Again, we’re going to be going to the bottom of the hour. Dave, it certainly has been uncertain since March when all of this came to the forefront. I mean, how do you handle the uncertainty, Dave?
David Nelson:
Yeah, it’s a great challenge, always. And this one is so unique, everybody says it’s different and it almost never is different, but I really believe this one is. This wasn’t a recession caused by slow down as far as in the economy and what have you. This was some virus obviously that came to the United States and now we’ve had deal with it, and the impact that that’s had. I was watching this morning, Delta CEO was on TV, and I would listen to the interview as far as he was talking about, we went from basically full planes to literally overnight, in a matter of two weeks, he said, we went to 10% of what we had two weeks earlier. And then it got even worse than that, it went down to 5%, but he says, the sheer shock of that. And then now you either start cutting people as far as to stay afloat or you have to, you just make radical changes.
David Nelson:
So the uncertainty of tomorrow is, our line of work, and again, I know this sounds very negative, but we tell people every day that we’re not paid to tell them what can go right, or what can go wrong. And where we stand right now, we think is a really important juncture. We’ll get to it certainly in the second half moreso of the show today. But we’re getting back to close to as far as, depending on what index the person looks at, all time highs. And this has been driven by the federal reserve coming in with hundreds of billions of dollars. This has been the Congress and the president signing off on massive trillion dollar stimulus programs, another trillion being negotiated as we speak, literally as we speak.
David Nelson:
And so the uncertainty of that basically centers around, is it going to happen? And in all likelihood something is going to happen, the question is what’s going to happen? And the concern that we have, and again, what keeps us awake at night, plenty of things this go around, but the markets are pricing in virtually perfection as we speak. And that’s what keeps us awake at night because we’re not going to see perfection, and that’s going to translate into, there’s going to be another dip down. And again, we don’t know the magnitude of that at this point in time, but we think it’s going to have more teeth than what people realize. The government can only do so much, but the economy has to get going. It’s kind of like putting kids back in school, everybody’s saying, Well, should we? Shouldn’t we? At the end of the day, it’s going to be the parents that make that determination, and whether parents are going to allow the kids to go back into the schools.
David Nelson:
And again, at this point in time, who knows? And I don’t want to sound like, again, the world’s coming to an end, but this is serious, and we need to approach it in a very serious mode. And I don’t think many of our leaders out there have really viewed it that way. And the tune is changing recently, and we see it again, locally in Iowa here as far as the numbers have increased, so we’re concerned about that. And again, the impact, the ripple effect.
David Nelson:
I won’t beat people over the head with that as far as, it’s more with what I think people want to hear, it’s what’s this going to mean as far as to my account balance? And nobody knows for certain what it’s going to mean to their account balance. But what we do know is that perfection has been priced into the market. And again, that’s telling me that the downside is growing every single day. And certainly we want to help prepare people and try to give them good, helpful advice. Not trying to predict, because again, we can’t, we’ve got some great tools that can help people make better decisions. And certainly that’s what we want to do on the show today.
Gary Determan:
Again, visiting with Dave Nelson. Dave, you kind of touched upon this, and I know your wife is a teacher. What are her thoughts about maybe opening up the classrooms at school? We’ll be getting underway next month.
David Nelson:
The abbreviated version is she put in her resignation about a week or so ago because the word came out that, again, we’re going back in the classroom. And she’s just at this point in her life, and she’s on a medication that makes her a little more vulnerable, and she just says, I’m just not going to do it. Well, then the school basically put together a nice package for her, where she can teach from home. So she is back in the ranks, she will be doing a limited schedule. We’ve got a couple folks, I think, that recently retired as far as through the public, that are going to be tag teaming and doing some of it.
David Nelson:
But yeah, she’s like many of her friends that you see on the news constantly, as far as individuals that are really terrified as far as about going in the classroom. And terrified of what? Terrified of something we can’t see, and that’s just mind boggling to think about, but it’s the reality. And so there’s a lot of people that we’re really thinking about at this point in time. People, the kids, the teachers, the custodians, all these individuals. And again, this can’t go on forever, we’ve got to get back there, but the question is when? And my vote is clearly as we get a vaccine. Now I’m more apt to take some additional risks, but at this point in time, not so much.
Gary Determan:
Financial Focus presented by NelsonCorp Wealth Management. Again, we are going to have the program continue to the bottom of the hour. We’re visiting with Dave Nelson. Dave, what about a vaccine? If somebody comes up with that, what’s that going to do to their stock?
David Nelson:
Yeah, it’s staggering as far as the few companies that have had early stage, positive results, the stocks have just blown up massively. And that’s the real, the gold at the end of the rainbow as far as what everybody’s hoping for. We’ve got it, the battle going with the United States versus China, and we see some stuff overnight that took place there. A lot of it’s built around, as far as the theft, or the supposed theft, whatever the case may be, none of us know. But certainly that’s what we’re pointing a finger at them, as far as some of the research that we’re compiling as far as, is being stolen by the Chinese. So again, right, wrong or different, it’s really, really important as far as to get this, and just the psychological advantage of being the first one to have the winter.
David Nelson:
It’s fantastic. Again, looking at it not only from an individual stock perspective, but looking at it from a stock market perspective, this could be really, really big. And Oxford university as they were about a week or so ago, they came out with what appears to be probably the front runner at this point in time. So yeah, everybody would love to have that. If you look at some of the stocks and the companies, there’s 130 plus that are working, as far as the companies, are working to try to solve this problem. And there’s going to be a few winners that are going to come out of this, and the rest of them the stocks will probably inflate some and then deflate like crazy, as far as when somebody else strikes gold.
Gary Determan:
That’s interesting. 130. I didn’t realize the number was that big.
David Nelson:
Yeah. Yeah, it is. And the problem is that massive, and the federal government, this warp speed, the approach that we’ve taken. I mean, there’s been money flooding into, if you go back about two months ago, a lot of the talk was that we don’t have vendors that can actually produce the vials. So we get the solution, the vaccine, we don’t have vials for us, in which to put it. There’s been a couple of companies that have been basically empowered through infusions of cash from the government, to try to make sure that the vials are available.
David Nelson:
And it sounds like now most of these companies, they figure within, the front runners, are within a year, a year and a half, that they would be able to provide not only the product, but also the vials in which to put it in. So exciting stuff. When you think about it, you’re talking about, in the States 300 million plus, and then globally, you’re talking about billions. That’s pretty numbing as far as to think about one, just getting the answer, and then number two, being able to deploy the answer and get it to the people that need it the most first. And that’s just a massive undertaking as far as we’re looking at as the government.
Gary Determan:
Yeah. That is so interesting. I would think it’s almost like maybe trying to bet on a horse, as to see who’s going to come out in this.
David Nelson:
That’s a good analogy, Gary, that really is. And again, it’s the insight. I talked to people, whether it be this or whether it be, Tesla’s in the forefront these days as far as what’s happening there. And so people are constantly trying to get a little extra insight. And I said, the reality is, as far as the average person on the street getting the upper hand as far as some information, is really difficult.
David Nelson:
You’ve got so much money out there as far as people, high net worth people, institutions that manage money, that basically are doing this research, and they’re struggling with it. So the average person, it’s really, really tough. We’re in the mode of saying, basically for those individuals that might consider something like that, think in terms of a broad based mutual fund, that’s in the healthcare and biotech arena, and/or potentially ETF that’s in that space. The odds are that they’re going to have probably better results, I guess, at the end of the day than what a person’s going to have buying a stock of one or two companies that they’re hoping to strike gold with.
Gary Determan:
Again, visiting with Dave Nelson, continuing to the bottom of the hour, we’ve got about nine minutes left in today’s program, Dave. So what else you got for us today?
David Nelson:
Yeah, I think that probably my focus today, and again, this is going to sound negative, but some interesting stats. So people I think are familiar, they hear the DOW, as far as most of my clients would probably call that the mark. And the DOW is the one that’s typically on the newscast and whatever, it was up this many points today or down this many points. The Dow is 30 stock. Okay? So it’s a very broad, and it is viewed by many to be a pretty good proxy as far as for what markets did. And then you’ve got the S&P 500, which is obviously 500 stocks, and you’ve got the NASDAQ, you’ve got the New York Stock Exchange. You’ve got these various indexes out there that people can invest in. The one that draws the most attention as far in periods of time like now, is the NASDAQ. The NASDAQ is, and I’m talking in very general terms now.
David Nelson:
The NASDAQ is primarily technology. Home Depot’s in there, is that a technology company? Not really, but it’s in there. But most of the companies that are in there are in the tech space. And if we go back and we think about the year 1999 leading into the new decade, the new century of 2000, we had this massive run up in a lot of companies that had behind their name, .com. Back then, that was new. We are not only concerned about going into the new century, whether the computers would work, but we had all this excitement built around these companies that were the breakthrough. No longer the old smokestacks, we got all these tech companies. And the market exploded on the upside. I mean, it was up 90 plus percent in 1999.
David Nelson:
And so fast forward to 2000, 2000 things didn’t go horribly by any means, but as the year progressed, it started getting rougher and rougher and rougher. And so you had an index, the NASDAQ, this again, proxy for technology companies, was down North of 80%. And so it slowly started recovering over a period of time, and I’ll be doggoned if this year we didn’t get back to all time highs. Now, again, we’re talking the year 2000, and now we’re in 2020, is hitting all time highs. And if a person was to look at this, it’s a big U. So 2000 high, if you can visualize it, then a big dip down, and it stayed down, and then it starts moving up. And so the top of that is, again, being hit, the NASDAQ has hit all time highs. The NASDAQ 100, I should say more specifically. And so the NASDAQ 100 is at all time highs. And if we look at the volume of trading that’s taking place today, it’s actually exceeding what took place near 2000, 1999 and early 2000.
David Nelson:
That’s shocking because that hasn’t happened. The amount of options that are being traded, as far as on this, and people don’t need to understand all the details of options, and certainly we don’t have the time here today, but I just want them to understand the concept. This is to some degree, basically going to bet that something is either going to go off or going to go down. And so what these bets that are taking place have also hit all time highs as far as the bets on the upside. So people are really speculating in this area today. And again, it’s different, supposedly, and maybe it will turn out to be different. But at the end of the day, this is a really concerning, not alarming yet, but concerning speculation that’s taking place. I don’t think it’s investing, I think we’ve gone to speculation.
David Nelson:
And so we just want to caution people not to get stupid as far as when it comes to, just betting the ranch as far as in this area. And again, the sad part of all this, Gary, centers around most people probably didn’t start jumping on this bandwagon two years ago, they jumped on the bandwagon two weeks ago or two months ago, and things were already getting inexpensive at that point in time. So our point would be the blue chip, boring type stocks that most people, if you ask the average person to rattle off some names, they rattle off maybe like Pepsi or DuPont that was in town, or EDM, stocks like that. They’ve done okay, but if you look at the high tech, and not even the Microsoft’s and the Googles or whatever, included in that NASDAQ 100 as well, but a lot of companies people have never heard of, and these stocks are selling at such massive premiums.
David Nelson:
And so we look at it and say again, everything has to go perfectly, or that type of multiple to be justified for that stock trading at the level that it’s trading. And again, it could still go higher. We go back to the days, even prior to Bernanke, so we’re going back to Greenspan, that was the Federal Reserve share. And three years prior to the top of the market in 2000, in ’96, ’97, he made the comment that is the rational exuberance had taken place as far as in the market. Well for three years he looked like an idiot, but eventually he was right.
David Nelson:
And so, I don’t know if this thing’s going to turn over tomorrow or the next day. We’re certainly not predicting that, we’re not making any predictions, we’re just stepping back and telling people to put on their common sense cap, and make common sense decisions with that cap on. And I think they’ll come to the conclusion, there’s a lot of other type of investments out there that aren’t nearly as expensive. And I probably have a better chance of winning there versus winning as far as in some of these high flyers that people have been drawn to over the last six months, give or take.
Gary Determan:
Dave, we’ve got a couple of minutes left in the program. Because we’re doing it live today, our next live program will not be in six weeks on September the second. And it’s really hard to say what is going to take place over these next six weeks.
David Nelson:
It really is Gary. And that leads into what I think would be helpful for many of your listeners out there. We’re doing a call in tomorrow, we’ll have a lot of clients that are… Or not tomorrow, on Monday. And if anybody’s interested in listening to me yap for 45 minutes, give or take, and talk about these types of issues, you can certainly tune into that. You can call our office here 242-9042, and what we’ll do is we’ll address some of these issues. And again, what’s going to take place as far as tomorrow and the next day, it’s tough to predict. But some of the tools, again, that we use, and some of the smart people that we hire, as far as we buy research from, it gives probably people better insights that they’re going to be able to do as far as on their own.
David Nelson:
And we want people to succeed, whether they work with us or not, Gary. It goes back to the last crisis in ’07, ’08, we were yapping about this thing rolling over months ahead of time. And telling people that, Hey, you should probably take some steps as far as to protect some of your capital. Many of the listeners, as far as don’t work with us, but by them losing money, we all understand that’s going to negatively impact our area as far as restaurants, and any business as far as in the area. So we’re doing the same thing here. Again, not predicting, we’re just saying common sense says be cautious. And so we’re going to do is we did some, a few months back, we haven’t done any for a while. We think the time is right, as far as this coming Monday. They can get the handouts that we’re going to be sending out to individuals, either electronically or hard copy, depending on how comfortable they are with that.
David Nelson:
But we want to talk to people in a very common sense way, and try to help them make better decisions. And that helping them doesn’t mean sell all your stocks buried in the backyard. It does mean we want to use our common sense part of our brain to say, What should we be doing at this point in time? So again, the phone number, if you want to listen, we’re going to have two of them on Monday, ones during the day. I don’t remember the times, and one’s going to be early evening. I think noon-ish, one, two, somewhere in there. And then the second one, six o’clock-ish, I believe. And you can tune in, dial in, we’ll get you the information. It’ll be a phone call, and I’ll be yapping, and other people will be listening. And you’re welcome to tune in, and hopefully we can help you all out there, make a little better decision as far as pertaining to your money.
Gary Determan:
As always, great to hear from you, Dave. You be safe, and we’ll talk to you down the road.
David Nelson:
You too, Gary. Thank you very much.
Gary Determan:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA SIPC. Investment advisor, representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information visit our website at www.nelsoncorp.com.