Announcer:
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 Incorporated, a broker dealer, member of 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. Now here’s today’s Financial Focus program.
Gary Determan:
Well, good Wednesday morning. It is the first Wednesday of the month. So Dave Nelson joins me live. We’re going to go to the bottom of the hour. Good morning, Dave.
David Nelson:
Good morning, Gary. How you doing today?
Gary Determan:
Real good now. You were on the road last night to Central City, and I was watching my grandson wrestle the other night out North Lynn. We went by Alburnett. You guys have got some travel in your league.
David Nelson:
Yeah, we do.
Gary Determan:
My goodness.
David Nelson:
Yes. Yes. The new conference that we’re in, a lot of the teams are the general area of Cedar Rapids and north. And it’s certainly unique when the local conference kind of busted up and [Camanche 00:01:26] and Northeast went one direction. And shortly before that, we had North Cedar that jumped ship. And then it was every man for themselves as far as trying to find a conference to play in. And so we ended up in this conference and it’s basically two parts. One that’s more localized, and then you’ve got the other side that’s more in the general Cedar Rapids area. But you go over there as far as early in the season. And we typically have four, five or six games as far as in that part of the conference. And then the other as far as is closer to home with LV Marquette and teams like that.
David Nelson:
So yeah, it’s a lot of travel and it’s really a long trip when you don’t have good results. The girls last night, we had another pretty dismal outing, and the guys got a nice W last night. But the girls not so much. Turnovers and not finishing around the basket continue to plaque this group. Again, as I probably say in almost every team that I coach is I’ve got some really great kids. I’ve got really smart kids when it comes to a lot of experience. The people that come back that had experience basically were more role type players as far as where they didn’t have to have the spotlight on and now they do have the spotlight on them. And then the other ones that weren’t even part of the so-called program, just really lacking as far as amount of AU type basketball, off-season type stuff. And unfortunately it shows, and it shows primarily as far as with us.
David Nelson:
We have a tendency to look at somebody and then in a slow, deliberate type manner, we’re going to pass them the ball. Well, it’s too late. The defense takes it, and they go the other direction for layups. So it’s too challenging to say the least. Again, it’s hard to get too ticked off because again, we don’t have a lot of people that their goal in life is to play college basketball and/or even at a higher level. The academics are emphasized, and that needs to be emphasized, and it will continue to be emphasized not just at school, but it also by the coaching staff. But at the end of the day, I believe that both can come about as far as that you could have good results.
David Nelson:
Last year, sending down the road six seniors to a program our size was a big loss. We knew it. But did I underestimate as far as how big a loss? Yes, I did. Some of this is on me and again, we just got some making up to do as far as over Christmas break, is going to be really, really crucial for us to try to make up some, for the lack of experience that we have and see if we can’t make something happen then.
Gary Determan:
Well, we are going to have the opportunity to see the Irish this Friday, when you play host to [Macoken 00:04:20] Valley is of course going to be a girl/boy varsity double header. And I happened to see Andy Eisenhower at church on Saturday, and he was telling me, “Macoken Valley. Why you going to do that game?”
David Nelson:
Yeah. Exactly. We both are thinking the same way. And again, we’re not packing it in as any means, but it’s one of the best teams as far as last year in the state. I mean, they’re really good. Granted they graduated three really good players. Sent them down the road. They won’t be nearly as stacked as they were last year, but nor will we. We played them top last year for probably three quarters. And I don’t know, I’m going to say, I’m going from memory, but give or take 15 points it ended up being. And one point as far as early on in the second half, we actually had the lead. A good program. Good size girls physically. They have a lot of 5″9′ girls with shoulders probably broader than mine. And we’re saying, “What the heck?” But we hung tough last year.
David Nelson:
I think the girls played really good basketball, but yeah, they’re a really tough team. I can’t tell you about the guys. The guys last year were down as far as Macoken Valley boys, and our guys look pretty good, but this year, I don’t know. Again, we graduated on both programs a fair amount of talent. And as far as backfilling as far as some of those spots has been kind of tough for us. And I think MERF has experiencing the same thing on our boys program.
Gary Determan:
Again, visiting with Dave Nelson. We’re going to continue to the bottom of the hour. So what are some of the things we’re going to be talking about today, Dave, on the program?
David Nelson:
Well, I think the biggest thing is just the increased volatility. And I know we spend time talking about the upside versus the downside. And I don’t want people to think the only thing that again, and that comes out of our mouth is always talking about what could go wrong. But the reality is we had 1,000 point drop not too many days ago as far as on the Dow. Now again, 3%, 4%. And it’s the another variant as far as of COVID that the markets are concerned with. And we see oil prices plummeting, which again is basically saying travel’s probably going to be less. It looks like the airlines are going to have a less headcount as far as on the airlines as far as going forward. We have shutdowns as far as around the globe where countries are basically saying, “We don’t want anybody coming here from X, Y, Z country.” And the impact that that could have not just on the oil markets, but with impact that could have as far as in the stock market.
David Nelson:
Volatility continues to be a real challenge. Today we’re up a couple hundred points. Yesterday, again, down pretty hard. The day before that, up. The day before that was the 1,000 point drop. Again, this volatility is really, really starting to ramp up. And as always, as far as what typically comes out of my mouth is always addressing the issue of risk, and people understanding what risks they’re taking and wanting to understand as far as how much downside that they can potentially have as far as what they own. And a lot of us, I think a lot of folks out there have just ignored that because things have worked. And at some point here, the government is dialing back, which again we had Chairman Powell basically make the comment as far as from the Federal Reserve that we’re probably going to accelerate the reduction.
David Nelson:
So in other words, speed up the reduction, and the bond market didn’t like that and had a big sell off as far as that day. So anyway, a lot of that type of stuff, Gary. To most people, again, boring, but I think it’s really, really important when it comes to your net worth statement far as it’s really key as far as for folks and not to ignore as far as the risk. We’ve had an ubelievable run as far as over the last 10 years. It’s not going to continue as far as forever, and people need to be thinking about that as far as what’s my strategy to protect these nice gains that I made as far as over the last 10 years.
Gary Determan:
Before we take a break for the weather, I know in previous programs and through the years, we’ve always talked about how it’s become such a glow global market now. It’s just not concentrated on the United States of America, but it’s Europe, it’s China, it’s Japan, it’s worldwide. And now with this global pandemic, my goodness. That really has to play a part in how things are going, Dave.
David Nelson:
It really has. It’s unbelievable as far as the impact that it’s having. And we see the emerging markets, which again, China is part of the emerging market index, and year to date that’s still in the negative territory as far as by a pretty good margin, 20% give or take. And so it really has, Gary, and it will continue to. We see Europe as far as it a little quicker as far as to try to pull back as far as on people coming, as far as into the various countries. Again, I don’t know the answer. I don’t want to get into the political aspect of this, but the reality is yes, the impact that the United States can have on others and vice versa is magnified as far as in the crises that we find ourself in today.
Gary Determan:
All right, well, let’s go and take that break for the weather. There will be more of course with Dave Nelson on the other side. Our update brought to you by Dan Dolan.
Andrew Stutzke:
We’re tracking some light rain showers on the radar this morning. That’s quickly going to get out of here though. Revealing some sunshine for the afternoon and still expecting a warm day too. You got a southwest breeze that’s going to help those temperatures into the upper fifties today. We’ll be down into the mid-forties tonight with a couple of clouds. And we’ll keep some clouds around for Thursday, but still expecting some near record high temperatures. Highs will top out about 63 degrees. The record for the day 65. So coming awfully close. Still warm on Friday, mostly sunny skies and highs in the upper fifties. The weekend though, well, it’s going to start on a colder note. We’ll see partly cloudy skies on your Saturday with highs back in the low forties. With your Storm Track 8 forecast, I’m meteorologist Andrew Stutzke.
Gary Determan:
Thank you, Andrew. Still generally overcame. Temperature now 43 degrees. Winds now more out of the south averaging at about 10 miles per hour. Again, upper fifties today. Right now, 43. Our update brought to you by Dan Dolan.
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Gary Determan:
First Wednesday of the month. So we continue to the bottom of the hour with Dave Nelson on Financial Focus. Dave, just real quick, the temperatures have been above average. You’ve been getting out there on the bike?
David Nelson:
Yes, absolutely. I was just going to bring that up. Today, what a great day. I just had a few sprinkles early this morning. Try to get on the bike about 5:30, still dark. I got a great light, and the temperatures this morning I think when I hit the bike was 33, 34, somewhere in there. Yesterday, it was 28. Again, you get bundled up. It sounds terrible to most people as far as, but I’m telling you, it’s terrific. It’s great exercise. The air feels great. I think it’s really healthy for you as far as those cold temperatures and what have you. But yeah, it’s been great. Have you hit the road yourself?
Gary Determan:
A little bit. This is a couple years ago, but I can remember I was running on Pershing, and this guy on a bike just went right by me and he said, “Hey Gary.” It was you.
David Nelson:
Yes, yes.
Gary Determan:
You go pretty fast on that thing.
David Nelson:
Yeah, it’s terrific. And I’m fortunate. I mean, I’ve got a really good bike and again, this time of the year, I’m pretty much, I go on Second Avenue South, and I just work my way all the way down all the way by back. And that seems to be a pretty safe path as far as early in the morning. When I saw you again, I’d like to do late afternoon type rides. Now that’s out. That’s not part of my vocabulary now with basketball being in season. But so I do it in the morning, but yeah, it’s for me, I love biking. I never got into running like yourself.
David Nelson:
I don’t know. Something about it to my body, whatever, just that doesn’t seem to work. And I’m taking advantage of every day that I can that there’s not snow on the ground as far as … I’ve got a gym as far as at my house. And I got a lot of equipment, what have you, but boy, it’s just boring as far as to go inside, run on a treadmill or something like that, it just bores me to tears.
Gary Determan:
Yeah. I know. People always ask me if I’ve ever ran on a treadmill. And I said, “No, not really.” I could not enjoy doing that.
David Nelson:
Yeah. It’s just terrible. It’s awful. I hate it. But anyway, I do it occasionally as far as when I have to.
Gary Determan:
Yeah. Again, visiting with Dave Nelson. We were talking little bit about the effects of the pandemic, the global aspect of the economies. So what are you guys looking at right now, Dave?
David Nelson:
Yeah, the biggest thing, Gary, really centers around as far as … The estimates are within two weeks, this was probably now four days ago, give or take, that the experts were saying we’ll have a better feel as far as whether the vaccines that are currently out there are going to be doing the job. And it’s been really interesting as far as to watch the main entities that have created the vaccine, so Pfizer and Moderna as far as the stock prices. And again, we’ve got J&J as well, but the amount of distribution that they’ve had in comparison to the other two is trivial. Stocks really haven’t been ramping up or getting crushed. So those stocks, if you go back and look 12 months ago to now, I mean, it’s just been demands if a person was lucky enough to have purchased them as far as back then. But in recent times the volatility’s been both directions.
David Nelson:
We’ve seen big, big moves up, and we’ve seen big, big moves down. We’re talking, 8% and 10% type moves as far as in a day. So again, the speculation is that are the current vaccines going to be the umbrella as far as to protect us, as far as from any of these new variations. And bottom line, we don’t know yet. And so that’s that two-week window that the experts are trying to test this stuff and see, is it going to be able to fight off as far as this new variant or not? And so the stocks have gyrated based on every day when somebody whispers that it may be working and what you see is the stocks go up and vice versa.
David Nelson:
It’s going to be really, really crucial as far as to see what happens there. That’s front and center as far as making these decisions. Then you look at Washington and say as far as what’s going to take place as far as out there. Supposedly we’re going to get the stimulus packages as far as the infrastructure, et cetera, et cetera. And again, there’s still a lot of question marks as far as whether a good percentage of this stuff is going to be able to get pushed through. So again, some of those stocks have been generating up and down depending on what direction the wind is blowing on that given day. And that’s what’s troubling as far as when we’re looking at this stuff by the minute as far as what’s going to take place.
David Nelson:
When people invest, we want to think in terms of long term. And so again, unlike what’s happening recently as far as with some of these individual stocks that could be massive winners, or they could be a total bust. We’re boring in that regard as far as that we like to gravitate to companies that aren’t totally dependent upon one little thing taking place as far as propellant. Now, again, having said that, I want to give the other side of it so that the good news is probably pretty obvious. That those companies have been around for a while are probably going to be around a while. Some of these other ones, again that we’re not as enamored with could be some massive winners. Amazon at one time, nobody had heard of it. And then everybody has heard it now. And if a person was lucky enough to get on towards the very beginning, I mean, you’re swimming in money today literally.
David Nelson:
We can’t totally ignore it, but for the core position, the people that we work with have. It’s not dependent upon one particular thing taking place as far as for us to either make it or break it. Clients we work with generally come in here generally speaking are 50, 60, 70 years old, some 80 years old, some 40, but the bulk are going to be 50, 60, 70 years old. And those individuals, again, it’s probably obvious to anybody that’s listing right now, worked really hard as far as to get the money that they have, and they don’t want to tinker around with it. They don’t want to gamble with it.
David Nelson:
Maybe they’ll peel off a percent or 2%, and go play with that and have some fun as far as some speculative type stock. But their core money that they bring into us is designed and must be approached with the idea that they need this money for a long, long time. We cannot gamble with this money. It needs to be proven type strategies that will get them through the good days and the bad days. And that’s basically what we do. And again, some people, man, that’s boring. Well, boring to most of the people that we work with is exactly what they want. They do not want something too sexy that can blow up in their face as far as with their hard earned money, their retirement money. They don’t want to have to go back to work. And we understand that and invest accordingly.
Gary Determan:
Again, Dave Nelson of NelsonCorp Wealth Management. We’re of course talking on the first Wednesday, which happens to be the first day of the month. So we’ll not talk to you again for five weeks. Looking ahead to 2022, with all this going on. How cloudy is your ball right now, your crystal ball?
David Nelson:
Yeah, probably again, the biggest thing centers around tax issues as far as what’s going to take place there. And what’s the Federal Reserve going to do? If I had to pick one, I’d say the Federal Reserve is probably the most crucial right now. The Fed again, simple terminology, as far as for folks out there. We went into the tailspin as far as a year and a half, two years ago, what have you, the early stages of COVID. And so what the government basically does in periods of time like that, the Federal Reserve, I should say, essentially is trying to stabilize things. And when we have shutdowns of things of that nature, and again this is not a political statement. This is just what took place. Whether I agree or disagree doesn’t matter. It just is what happened. And when that happens, people lock up, and they don’t spend any money.
David Nelson:
And all of a sudden that creates tremendous problems as far as for stock markets and investments and things of that nature. What the Federal Reserve does in those situations is they basically start backfilling, and they start pumping money from the Federal Reserve into the system, buying bonds, primarily high quality type bonds. Historically, that’s all they bought. They tweak it as far as in this crises. But buying bonds, pumping money into the system as far as into the market, across the board, the various markets. And so that part that’s taken place for now a month after month and after month, and we’re not talking about thousands of dollars. We’re talking about billions of dollars monthly. And so those billions of dollars, there have been people arguing for quite some time now that the economy is on decent footing, and we need to stop doing that.
David Nelson:
We’re pumping too much money into the system, which is creating inflation. It’s creating some bubbles. Again, whether you agree or disagree as far as with the concept of pumping money in the system, it already happened. And now they’re basically saying we’re going to cut back. Literally a few days ago, the Federal Reserve chairman, Chairman Powell made the statement that he was planning on accelerating the pulling back of the money as far as going in the system. So it was going to be more gradual that we were going to dial things back and not pump as much in the system. Now, he’s basically making the argument that we could probably accelerate that and cut down the purchases much quicker. The market briefly, the bond market in particular, briefly did not like that at all, because it was a change that was taking place, and stock markets and bond markets typically don’t like change.
David Nelson:
And so that change caused the market to drop pretty dramatically. So as far as interest rates are concerned, what that translates into, they popped up. They went up pretty significantly in a very short period of time. Again, people say, “Well, is that bad news?” Well, yeah, that’s the way it was viewed as far as bad news, because now borrowing money’s going to cost more. For many of our listeners, that would be good news to see. I mean, they’re begging for interest rates to go up instead of getting their paltry 0.1% on their money market and checking account type accounts. They’d like to see that back to one and two and three and 4% instead of this. So that’s probably the biggest thing, Gary, as far as that if the fed continues to dial back these amount of purchases and the money that they’re putting in the system. That could cause more gyrations as far as in the market.
David Nelson:
But I think most of that now after this statement that he made has been priced in, which translates into we’re going to see less intervention all likelihood. And that should help clarify some of this grayness that you were referencing earlier as far as what we see as far as going into 2022. We’re short term. We’re really cautious right now. We think next to year, that it’s going to be a real challenge as far as for markets to do well. We’re talking about primarily stocks as far as in that context. Bond market, again, if we were looking into our crystal ball, the tendency would be that interest rates are probably going to be moving up, which again, for some of our listeners is good news. If you’re not borrowers, that’s probably good news. For borrowers, that’s going to be probably pretty tough news. And for the stock market, that’s going to be pretty bad news as well.
David Nelson:
We’ll see. Again, we’re always focused on risks, and we’ll continue to focus on risk because again, people have their coal pile, they want to keep their coal pile. And again, the only way you do to that is you have to want acknowledge that there’s risks out there always, not just now, but always. And then we have to plan accordingly as far as how are we going to deal with those risks. And again, we take a non-traditional approach to it. And that is that we believe in hedging. We believe not just stocks and bonds. They’re going to make a portfolio. But people need more creative in the world that we exist in.
David Nelson:
Bonds historically, Gary, have been 40 to 50% of most people that are probably listening out there, their portfolio. Those bonds used to pay pretty routinely 5%, 6%, 7%. Today, those bonds are paying one and a half percent. It’s pretty tough to take half of your money and put it at one to one and a half percent interest and expect to be okay in retirement. That’s not going to get the job done. So again, we’ve got to be creative. We’ve got to find other alternatives. And that’s basically our problem, not our client’s problem.
Gary Determan:
Got about a minute left in the program. It’s always great catching up with you. But of course it is the holidays. And I know you guys are continuing with your food and toy drive.
David Nelson:
Yeah, we are. As a matter of fact, it’s easy, kind of strange that we’re chatting today. We have our big event that we do every year as far as up at Eagle Pointe Park. And again unfortunately with the potential risks that are out there, we basically decided to do what we did last year and that’s the drive-through. And we’ll be handing out some nice gifts as far as to people as they come through. But part of the deal is we really encourage people. They don’t have to, but we encourage them, please bring a toy, please bring some canned food. And then again, we’ll be handing those off as far as tomorrow, as far as to some of the non-for-profits as far as in the area. But I want to emphasize because now beat on me as far as to make sure that I remember to do this. We will still be accepting as far as any and all of the gifts as far as that folks will be so generous to offer. We’ll collect them here, and then we’ll get those distributed even after tomorrow.
David Nelson:
This will continue to go on. We’re happy to support it. And we’ll do our part as far as in that. We’ll make sure that the right people, as far as get the food as well as the toys.
Gary Determan:
All right. Very good. We’ll see you Friday at the Joe O’Donnell Sports Center, Dave.
David Nelson:
Sounds great, Gary. Thank you. Have a great day.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in the 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 representatives 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.