Announcer 1:
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 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. Now, here’s today’s Financial Focus program.
Gary Determan:
Well, it is the, no fooling, the first Wednesday-
David Nelson:
Yes, that’s right.
Gary Determan:
… first Wednesday of the month, we got Dave Nelson in studio with his… You are doing so well for yourself, and I was asking you about some of your clients.
David Nelson:
Yeah.
Gary Determan:
And it was interesting because you were at Clinton High School.
David Nelson:
Sure.
Gary Determan:
Then you worked at Eagles, delivered papers, and you say you got a lot of these folks as your customers.
David Nelson:
Yes. It was great. Thank goodness for that, because they kept me afloat as far as in a time of need. And again, didn’t have big budget as far as to go out and promote yourself. So, it was just past contacts. And so these people entrusted us, and had some really great relationships. So, what we were chatting about is some of the past school teachers as far as that I’ve worked with, what have you. Some live in the area yet, some don’t live in the area. And yeah, it’s been great. And again, it’s kind of different as far as the days of sitting there in the classroom while they’re upfront, and now kind of I’m upfront and talking to them. So, good stuff. And again, you take care of people, they take care of you. We’re very, very blessed as far as to have some really good human beings. Not just good clients, but good human beings. And it makes the job a lot more exciting, and fun, and rewarding.
Gary Determan:
You’ve got a great work ethic, and I would imagine it was established first of all by your parents, certainly. But I mean, you delivering papers and then working at Eagles. I mean, you know what it’s like to be on the front line.
David Nelson:
Yeah. The detasseling corn, that was a lot of fun. I used to mow a lot of grass. I lived kind of out by the Erickson Center and we would get on the bike once a week and drive down to Comanche on the bike as far as to do. We had two mowing jobs down in Comanche. So that was always a fun experience as far as to try to go on some of those roads, on your bike. But you do what you got to do. And mom and dad, I’m very… At the time I didn’t appreciate it, but now I appreciate it, that there was no real handouts to speak of. You went out and you earned it, and so you got that work ethic. Detasseling corn, absolutely stunk. I hated that job, but I did it for two seasons as far good money. And it was just a tough job. If people have ever done it, it’s no fun going out there and-
Gary Determan:
You’re going to get wet in the morning.
David Nelson:
Yeah, exactly. Fortunately, Jim Croiman, I would get in the back of the pickup truck and you’d freeze as you’d drive out in the country. And in the back of the pickup truck, if you can imagine that in today’s world with seatbelts.
Gary Determan:
Yeah. I don’t think that’s under the law anymore.
David Nelson:
Yes, yes. So anyway, no, it was great, and made relationships. I had several people that when they would come into the office, they’d say, “Are you that guy that used to run through the store?” So when there was a price check, they need the number, and everybody’s waiting as far as in line for this price to come back. So, I wasn’t one of those people that just dog it and walk to the back. I was just the exact opposite. And that comes from dad. When he needed a screwdriver, a hammer or something, I mean, you better move to get that sucker and get it back quickly. And so that was the backdrop of that quality. So yeah, all of them were great jobs and they taught me a lot. And we were just chatting about Captain’s Galley as far as Behind Eagles over there. And I was pretty much full time as far as by time I was 16, as far as out there.
And so sports were a part of my life, but they disappeared rapidly as far as around that age, just simply because the job, it was either the job or you’re going to play sports. So yeah, it was interesting times to say the least.
Gary Determan:
Oh, and you’re doing a different kind of running right now, Dave. I mean, things are pretty interesting out there in the world of finance.
David Nelson:
They are. And we’re in tax season, so we’re trying to finalize that type of stuff, help people out as far as in that area. And as far as finance is concerned, yeah, it’s really interesting as far as what’s happening. It’s impossible as far as to say for sure as far as what’s next, as far as what’s going to take place. Markets reacted, as many clients probably are aware, had a pretty significant update yesterday after, I think we’re now four weeks, maybe even five weeks that things were down. One of the worst quarters to start the year that we’ve ever had. And so you put it all together is a pretty tough start for many individuals.
The good news, Gary, from our standpoint, the folks that we work with, we ended up making a lot of sales. In other words, getting out of heavy dose of ownership stuff. In other words, real estate and stocks, and finding our way into short-term bonds and into cash type type accounts. So that’s really, really shielded our clients from a lot of downside movement as far as in their accounts. However, a day like yesterday, we don’t look so smart because the market was up and we’re up incrementally, but again, we’re still ahead of the game. I think we’re north of four to 6% depending on the client situation as far as in comparison to the markets.
Again, bad proxy, I think for a lot of people, the market’s up 1% or it’s down 1%. People really, if they have good allocation, shouldn’t be that focused on those type of details. That’s our problem, not their problem. But at the end of the day, it’s certainly a challenge right now as far as trying to figure out as far as are you going to play offense? Are you going to play defense? And again, obviously you can’t do both at the same time, so it’s a tough decision.
So, we’re still in the defensive camp. I can kind of get to it maybe in the second half here as far as the different steps that markets go through as far as when you recover. And yesterday was a good indicator. The first phase is down, which we’ve experienced as far as pretty significant drawdown. Many of the largest companies out there, I mean, we’re talking about big, big companies that were down on the doorstep of 30% from the peak. They rallied yesterday pretty significantly. So we’re in phase two, which is basically an uptick, and that uptick can last a long time, or it can be quick, and kind of a head fake. So, we’ll drill down a little bit as far as on more details on that as far as in the second half here.
But it’s a healing process, I guess, that markets go through, and we want to make sure before you go charging back in and assuming that everything’s a go now, it’s not necessarily a go for sure. So, we’ll be watching things rather closely the next couple of weeks.
Gary Determan:
Again, visiting with Dave Nelson of NelsonCorp Wealth Management on Financial Focus. Through the years visiting with you here on this program, you’ve always talked about diversification. And I would imagine, is that pretty important right now?
David Nelson:
It’s really important now, Gary. The problem sometimes when we talk about diversification, a lot of people assume, and I was one of those back my first five, 10 years as far as in the industry, is that if you spread it out, you can never really get smashed. And what’s everybody’s fear out there is that, and it hasn’t come up in years, it’s kind of strange, but years ago it come up, but what if things all go down and more or less we go to zero? Well, to go to zero, you have to have these mega companies go to zero. The banks have all gone broke. The insurance companies have all gone broke. It won’t matter as far as where your money is if that event would take place. So, really what people were asking, but they just worded it differently is, “Can I lose a lot?” And so for most individuals, again, you have to find, what does a lot mean?
Well, depending on a person’s age, and depending on how much money they need as far as to make ends meet, that may be 5%, that may be 20%. But most people are in that range. And so the key is to assemble a portfolio that basically can at certain points in time play heavy defense. And unfortunately, we’re in an industry that basically has conditioned people that you invest, you close your eyes, and over time you’ll be fine. And that’s not always the case. And we have example after example of situations where that didn’t take place.
And so history says that markets have gone up. History also says that you’ve had a couple periods of time, I think two to be exact, where you had 15 years you were below water. Now, if I just retired and all of a sudden I got a 15-year period of time that I’m below water as far as with my investments, oh, and by the way, I got to eat, and I got a car payment, or I got whatever. I need some money from this block of money. You’re cooked. I mean, game over. You’re going back to work. So that’s what people are trying to make sure that that doesn’t happen to them. And that’s part of, I think, the financial advisor’s job, is to help guide people. And spreading the money out into all these categories doesn’t assure people that that won’t happen, because when markets go down, they pretty much go down in unison. When they go up, it’s fragmented, which is what we want, but when it goes down, it’s a lot tougher as far as for that event to take place.
Gary Determan:
Just real quick, you talked about categories. How many categories are there?
David Nelson:
Oh, boy. It’s a boat load, because just like bonds as a generic category, you’ve got short-term bonds, long-term bonds, international bonds, municipal bonds. There’s just a whole bunch of different categories and stocks even more so. So it’s probably, I mean, if you really broke it down into realistic categories, probably 50. So, we work from there.
Gary Determan:
More than I could handle. Looks like the sun’s come out. Let’s check our weather brought to you by S. Kelly’s Designs.
Announcer 2:
Grab your umbrella and keep it close by today, as we’ll see occasional bouts of rain and cooler temperatures as well with some gusty winds. Highs today will only reach up to near 50 degrees. Rain will continue at times on and off, especially early. Overnight lows will fall into the upper 30s. With your Storm Track eight weather impact forecast, a meteorologist, Andrew Stutzke.
Gary Determan:
Seeing a little sun out there, temperature holding, however, at 40 degrees and those east winds still up around 15 to 20 miles an hour. Our update brought to you by S. Kelly’s Designs.
Announcer 3:
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Gary Determan:
Well, we get to continue to the bottom of the hour with Dave Nelson of NelsonCorp Wealth Management on today’s Financial Focus. So here we are the first quarter of the year completed.
David Nelson:
Yep.
Gary Determan:
We’re getting ready for our second quarter. What are you looking at?
David Nelson:
Well, I think for most individuals out there, what they should be focused on is, again, their tolerance for pain, because again, this could go a while. I mean, I know that we’re hearing that we’re going to wrap this up in a week or two, but let’s be realistic as far as if we can’t get oil through the various waterways as far as in the Middle East arena, this is going to impact the globe. Yes, we as Americans don’t use as much as many of the other countries do because we have a fair amount of energy as far as that we produce here, but the ripple effect is still going to be there.
One thing that maybe people aren’t aware of, I suspect people probably know this that takes place, but I don’t know if they know the magnitude again of this, and that is plastics. Plastics, as much as we don’t like them, I mean, they’re a big part of our life, and plastics come from oil. And the bottom line is that if the volume of oil that’s coming as far as for those companies that produce the various plastic items, they don’t have the energy that they need as far as for that, again, we’re going to see some increases there. So we’ve got threats today coming from two directions, and I’m talking about the world that I exist in, ignoring the human aspect of what’s going on, but is there going to be a runaway inflation that’s going to take place? Well, that’s a real possibility depending on how long this takes, but also recession is in the cards.
Pretty rare event. Generally you have one or you have the other. You don’t generally have things pulling in both directions. But if this economy were to slow down dramatically, we could find ourself in a recession. I don’t think we’re talking depression, but I certainly think recession is in the cards as a potential. But also inflation is going to be a very difficult thing as far as to kick to the side of the road, because again, we have a shortage.
I’m not saying again, and I won’t get into the political aspects of it, was this a good decision? Was this a bad decision as far as what’s taken place? I’m not smart enough to know that. I don’t think anybody’s smart enough to know that. We got all kinds of people that really are, “Yeah, it was perfect,” or, “No, this is the dumbest thing we’ve ever done.” Again, there’s arguments both directions. But again, the ripple effect of this for the average person out there is going to be greater than what people think. And our job is to try to do the best we can as far as in the money world to help those individuals make good decisions with their money. And I think in periods of time like now, being cautious is probably good advice, because again, this is not just going to disappear tomorrow. I don’t care what human being says that game over. Game’s not over. We’ve got a lot of obstacles that are ahead of us, and again, we need to be aware of them.
Gary Determan:
How have things changed in what you’re close to 40 years now of doing this, Dave?
David Nelson:
Yeah.
Gary Determan:
I mean, we’ve talked before in the past what it is a global economy now, is just now what’s centered right here in the United States of America, and it certainly has become more of a worldwide picture now.
David Nelson:
Really has. I mean, when you talk about emerging markets as an example, that’s China, that’s Brazil, being the big horses as far as their Russia falls into that category. So again, were they major, major players going back 30 and 40 years ago? The answer is no. Are they today? Yes. And so yes, that’s probably the most obvious change. Then you’ve got the frontier economies that are now flexing some muscle as well. Those being probably some of the easiest ones to pull out that people be familiar with, would be some places in Africa, Middle East, as far as many of the countries there, Saudi Arabia.
Again, it’s probably for most individuals something that’s not in their vocabulary as far as from an investing perspective. But I assure you, if you’re diversified and you have international type investments, some of these are in your portfolio. Probably a pretty small percentage to this day, but again, who would have dreamt of investing as far as in some of these places?
The second-largest economy in the world for years was Japan. And Japan today is still a big force, but it’s much smaller percentage wise than what it was say 10, 15 years ago. United States, if you look at the all cap world index, which is a index comprising of pretty much the entire global type investing world, used to be a higher percentage than it is today. Today we’re still over 50% of the overall, but in comparison to where we were, it was in the 70% as far as going back, give or take, 10 years ago.
So yeah, things have changed quite a bit. Opportunities glow as far as around the globe. Again, volatility is typically one of the things that people fear the most, but volatility, again, cuts both ways. If you look at investing in India as an example, India, we told people this probably about 10 years ago, if you could only invest in one place for the next 20, 30 years, it’d probably be India. They’ve got the demographics that everybody yearns for. I mean, look at the United States. We’re getting close to what’s taken place as far as in Russia. Russia’s not having enough babies to offset the number of people that are dying. That’s been the case for quite some time now. Germany’s in that category, same thing. They don’t have enough being born to replace the people that are dying.
Japan, same situation. China is really close behind. They had the one child policy for years. That’s going to bite them at some point. And the United States, we’ve had decent growth as far as in that area, as far as more people being born than are dying. But that’s changing, because of primarily centered around immigration. And immigration is… There’s so few companies that really… Countries, if I said companies, countries that have a immigration issue. And where do people want to live? And you don’t have people running to Russia, you don’t have people running to China. You have people running to Australia, to Canada, to the United States. Those are the main areas as far as that historically have seen population growth. And if you don’t know already, and I haven’t made it clear yet, population growth is key to our world as far as making money, because you’ve got to have consumers.
And if you have more dying that are being born, eventually that’s going to be a real problem as far as for you selling your whatever it is that you’re selling. Automobiles, computers, I don’t care what it is, you need bodies to be able to buy it. So, it’s an important piece, and it’s not the most important one, but it’s way up there as far as priorities are concerned as far as, again, where do you want to invest your money over the long term? And India would certainly be in that category.
Gary Determan:
You know what struck me when you were talking there? You mentioned the United States and of course, geographically, I mean, we’re big.
David Nelson:
Yes.
Gary Determan:
And Japan, which geographically is small.
David Nelson:
Yes, exactly. Very much so.
Gary Determan:
But they were right there.
David Nelson:
Yes.
Gary Determan:
But no mention of Europe.
David Nelson:
Europe is viewed, and continues to be viewed, kind of in a backseat type of position. They at one point were the big dogs, and this is the concern that people have as far as looking over generations as far as all great world powers. At some point, basically, just kind of got fat and lazy, and didn’t continue on. And they were passed by somebody. They’re taking over, they were passed whatever the case may be. United States has been in this enviable position for quite some time. We’re the currency of the world. And again, that doesn’t mean anything to most individuals that are out there, but it’s really, really important. It’s really, really important as far as finances are concerned.
And so if we were to lose that position, and I don’t see that happening in the next 10, 20 years, but down the road, that’s very possible. So, we’ve got to continue to innovate. We’ve got to continue to be a leader as far as globally, a place that people want to invest, a place that people want to live. And if for some reason that we’re not willing to go down that path, we’re looking at probably for my grandkids a totally different world, the United States, than existed before.
Gary Determan:
Oh, very interesting. So, as we close out the program, what are you going to be looking for, Dave?
David Nelson:
I think the biggest thing for most individuals today, most people, I mean, percentage-wise, we’ve got a lot of our tax returns that are done. We’ve got some good clarity, I think, in the tax arena, that there’s not going to be a lot of change. So we now go to the other areas that need attention, and that certainly is the investing world, helping people through this period of time. Again, I like to say that it’s all clear sign, and we’re going to move up, but that’s not the case. There’s going to be bumps as far as along the road, and people are going to be needing a little handholding as far as to help them through some of the days ahead.
We’ll get through it. Again, we’re here for our clients. We’re here as far as in this type of forum to try to, as best we can, give guidance to a lot of people out there that, again, may not be clients of ours, may not have the resources as far as to be able to hire somebody, but they have a few dollars and they care about it and they’d like to make good decisions.
So, don’t be a hero at this point in time, folks. I’ll continue to rattle that Sabre as far as to the importance of protecting the capital that you have. Don’t be crazy at this point.
Gary Determan:
Well, five Wednesdays in April, so we’re not going to be talking to you for a while. We’ll get into the month of May, of course. Major League Baseball is underway. I see where the River Band is about ready to begin their season. And it won’t be long. Folks will be down at NelsonCorp Field.
David Nelson:
Yes. Yeah, looking forward to that. We’re going to be down there a couple games as well as far as hosting a lot of our friends and clients as far as… And it’s a really important thing. And again, as I’ve reiterated to folks, that’s a really important luxury that we have in this community, that the showboat, we need to support them. Please get out, support the two organizations. It’s not putting any money in my pocket by any stretch of the imagination. It’s basically supporting something here that it’s made other cities would love to have.
Gary Determan:
Did you play junior baseball at Jones Field?
David Nelson:
Jones Field, yeah.
Gary Determan:
Okay. So I mean, you were right in the shadow of Riverview Stadium, so you know the importance of having that there.
David Nelson:
You bet. Yes, yes, absolutely.
Gary Determan:
Thank you so much.
David Nelson:
Thanks, Gary.
Announcer 1:
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.