Announcer:
It’s time now on KROS for Financial Focus, brought to you by Nelson Core 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 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:
We got Dave Nelson in studio with us. Of course, it is the first Wednesday of the month. So here we are, we’re entering the summer. I don’t know nearly as much about markets as you do, but I keep hearing how markets are doing great and you wonder, how is this happening with all that’s going on in the world?
David Nelson:
It is shocking. I mean, when you step back and you see if just we’ve got tariffs, we’ve got a war. We can’t forget about Ukraine as far as what’s still taking place there. There’s just a lot of big, big items.
And markets, it’s interesting, Gary, if you look in again, the history books, when you have events like this, historically the markets will react, have an aggressive reaction to it. Then markets recover and then it’s ignored.
I don’t know how you can knowing the amount of money that’s been spent and potentially going to be spent as far as going forward. But the reality is, again, the justification right now, just to forget about the historical aspects today, why are the markets going up?
The markets are going up primarily because it’s driven around AI, artificial intelligence. The companies that are in that space have money flooding in from every direction. So there’s lots of money coming in the door. People want to get the advantage as far as an AI.
We’ve got to stay ahead as far as this is the verbiage or this isn’t me, this is the verbiage. We got to stay ahead of the Chinese. And so subsequently we need to keep pumping money into it. And so the money that’s going into it, we see the companies that are out there, profit margins are off the charts in a really good, good way.
And supposedly that’s all that really matters right now as far as profit margins relating to stocks and subsequently the stocks are reacting to it.
The other day we saw a big bump with, again, I got to be careful folks and I think you can probably figure out the company, but this big company that creates in our area, a lot of tractors, their stock yesterday was up, I think, 6% and it’s primarily because of a reduction as far as in the tariffs that are going to apply to steel and how that ripple effect goes to this company.
So anyway, it’s been a pretty narrow market, which is another way again of saying not a lot of stocks are participating. So you have a very small number of stocks that have been carrying this market and the concern that we have always is, we’re always looking at what could go wrong because people entrust us with their money, so we’re trying to head things off.
But when you have a narrow market like this, it’s pretty common as far as when you have run ups, but it’s also quite scary. And so bottom line, at some point things are going to turn and when they do turn, it could get pretty nasty, pretty fast.
In particular with a lot of these high flying stocks that are up so much. I mean, again, one of the companies that’s in the, when you do a search, you go online, that company folks, that stock just went out and they basically are raising another $60 billion as far as for them.
It’s the first time they’ve done it since they came to market 20 years ago. And it’s just unbelievable as far as the money that’s being tossed around right now.
So we’re certainly liking when we look at our statements as far as clients, as far as what they’re doing, but at the end of the day, folks, I wouldn’t get bolder at this point. I’ll just put it that way.
If anything, I would probably start taking a few dollars off the table as far as in some of the buckets that you have that have done really well. There’s going to be some tougher days ahead.
Gary Determan:
We’re visiting with Dave Nelson, of course, first Wednesday, so we get to go to the bottom of the hour. You’ve been doing this for some time and I know you do gauge what has happened in the past with what may be happening in the future, but does this area that we’re in right now, has there been anything similar to it?
David Nelson:
Quite similar and that is the ’90s as far as if you look at the ’90s, you look at ’95, ’96, ’97, ’98, ’99, we had this big run up. However, during that period of time, it’s similar in that regard that you’re having this blow-off top as it’s referred to as far as in our industry.
But what’s different this time is we haven’t had any 20% corrections, even though 1995, ’96, ’97 right in there. I mean, it was a massive move up. If you had dot com, if you think back folks, dot com behind the name of your company, the stock went up 5% a day. It was just ridiculous as far as the run ups.
We’re seeing something very similar to that. But the difference is that during the ’90s, you had a couple decent drawdowns as far as that took place. In other words, drops some 20%, pullbacks as far as in the market. We haven’t had any of that.
I mean, I think we’re now at nine or 10 straight days as far as the market being up. And if you look at on a weekly basis, we’ve had just week after week after week as far as up. And so again, that’s just not normal to say the least.
But we are going through what people are saying today is a greater revolution than we saw as far as backup with the railroad, what we saw as far as with telephones, what we saw years ago as far as the automobile.
This is massive and it’s going to change all of our lives, hopefully in a better way as far as most of us. Job losses is front and center as far as concerns as far as from many groups out there that are concerned about AI and potentially what can take place.
If I’m a plumber, I’m probably quite safe. If I’m a white collar guy, as far as that’s in an office of a job that a computer might be able to handle going forward, I may be in trouble.
But again, we’ve had revolutions before like this. Certainly the internet was a big, big item that took place and we made it through that. I mean, life’s changed pretty dramatically. This one’s going to be probably more dramatic and again, just be prepared.
And from again, my world, the investing side of it, it’s been a lot of fun as far as watching the things go up as quickly as they have, but also don’t be naive, I guess, and believe that this is going to continue for the foreseeable future because it’s not and there will be some pretty substantial drawdowns.
Gary Determan:
So learn a trade-
David Nelson:
Yes.
Gary Determan:
… that’s what you’re saying.
David Nelson:
It’s amazing. I mean, truthfully, AI is going to replace. I mean, whether we like it or not, it is going to replace a lot of jobs out there. Engineers, legal people, I mean, it’s a big, big item. Our industry could be radically affected as far as, well, we don’t need you to do the thinking. We got this fancy program that can do that.
So again, people will be able to judge on their own as far as what works and what doesn’t work. But at the end of the day, for most individuals out there as far as that or laborers, they’re probably in a pretty nice spot.
As far as individuals that are more white collar driven type jobs, those are the ones that are going to be under the microscope as far as do we need these going forward?
Gary Determan:
You know what interests me about NelsonCorp and the way you have developed your business is that you have some really high end accounts, but you also deal with people like myself.
David Nelson:
Yeah. It’s interesting. I mean, again, years ago when I first started out, I think I’ve probably shared this in the past. I worked at Eagles not too far from here. I was making a decent income. I left that job making $22,000 a year in 1981 and in ’83, at the end of ’83, my income for that year was 6,000. So it was quite a jolt to say the least.
And back then I was interested in working with anybody that could fog a mirror, as I said. And then through time, what we’re able to do is we could dictate to some degree as far as who we wanted to work with.
Again, a typical person that works with our office is somebody that has worked 30 years probably at one, maybe two jobs. They’re individuals that are not basically, I’m illustrating here, rolling some dice and are interested in gambling with their money.
We’ve got pretty conservative people that come aboard.
The range is pretty wild as far as, I mean, probably if you looked at an average, it’s somewhere around a half a million. We’ve got plenty of people that are north of 100 million. We’ve got other people that have 100,000 as far as with us, and 10,000, and 50,000.
But what’s nice is we’ve been able to create and this is, I think, quite unique as far as to our industry. I know we got a break here, so I’ll try to wrap this thing up, but quite unique from the standpoint of the way we manage our biggest account, which is a billionaire, he’s out in Wyoming, is the way that we manage almost every single client that we work with.
If it’s a really, really small account, we can’t, but if it’s a medium to small account, just small, bottom line, we can. So as I share with clients all the time, “Your portfolio looks almost identical to a portfolio that we have with a billionaire.”
And so the returns have been spectacular the last several years. And again, our job is getting more difficult day by day as the market goes up and gets scarier and scarier. So we got to do our job and do it well.
Gary Determan:
But I think with that kind of an attitude, that’s the reason you’ve been able to do so well.
David Nelson:
I hope. Yeah, I think it has. Again, we tell clients nobody cares about your money as much as you do, but we’re a really close second because our income is tied to your account balance. If you do well, we do well. If you suffer, we suffer. So nobody wants to suffer. So we work really, really hard in that regard.
Gary Determan:
More with Dave Nelson, let’s take a break for the weather brought to you by Kelly Heating and Air Conditioning.
Commercial:
Abundant sunshine continues. We will see readings this afternoon in the mid 80s with very little humidity. Tonight, mostly clear skies will drop back down one more time into the upper 50s. With your Storm Track 8 weather impact forecast, I’m meteorologist, Andrew Stutzke.
Gary Determan:
There’s guys, sunshine, we’re at 70 degrees Southeast winds just under 10 miles an hour. Our update brought to you by Kelly Heating and Air Conditioning.
Commercial:
Why do customers trust Kelly? Kelly Heating and air conditioning goes above and beyond with a maintenance service agreement. For one low annual cost, you can save 5% on repairs, have priority scheduling and no overtime fees.
Plus, it helps avoid costly future repairs. And if you need a new Bryant whole home comfort system, Kelly Heating and Air Conditioning has many different financing options to get you up and running, whatever it takes.
Kelly Heating and Air Conditioning in Clinton, your Bryant factory authorized dealer.
Gary Determan:
First Wednesday of the month, so we get to go to the bottom of the hour with Dave Nelson. Always great to have him in studio. Always very interesting. I’m sure glad they don’t hear what we talk about when we’re not on microphones.
David Nelson:
Exactly.
Gary Determan:
Yes. So Dave, what are we going to focus on here in the second half of the program?
David Nelson:
I think the big thing, and I know a lot of this stuff is very difficult for people to relate to. I mean, I have clients in the office all the time. We talk about money and whatever and I said, “There’s no dumb questions.”
So that I try to get out upfront because there’s a lot of people that they want to ask something, but I think they’re a little apprehensive thinking that, “Hey, it’s going to look like I’m really stupid.” It’s a complicated world and it gets more complicated day by day.
Again, we talk about AI as far as the impact on various things, the amount of information people can get just instantly, type it in through AI and in most situations it’s accurate. That’s part of the problem. I emphasize most, not all but most situations.
And so with one’s retirement, people that come in again, typically they’re walking out of a job, let’s say from Kleiser, one of the factories as far as in town would be a good example or farmer that wants to slow down whatever and they’ve got a pile of money that they’ve accumulated and they’ve worked really hard as far as to get it.
And now it’s a situation of, “How do I benefit from this? How can I get some income from it? How much income can I get from this without blowing it up?” And then again, “How much do I get to keep as far as from a tax perspective?” It can get very complicated.
And for years we struggled with trying to illustrate this stuff, trying to make it easier for people to comprehend.
More tangible as far as so that they could relate better as far as to it. And fortunately through technology, there’s been a lot of competition in our industry as far as developing programs to try to take this complex world and try to simplify it as best possible and more or less in trying to lay out a financial plan.
And in the past, financial plans basically consisted of pretty much focusing on rate of return was pretty much the extent of it. That’s my gripe with a lot of the companies that have maybe the big investment firms in the world that have that plan and they have these calculators as far as online that you can go in and if you load in a realistic number of say five or 6% compounding over a period of time, I’m okay with that.
Like a lot of people do is you look in the rear view mirror the last five, 10 years and say, “My stuff is average 10, 12%,” and you load that in with, by the way, no down years, the bottom line is they’re doomed.
If they relied solely on that, they’re doomed because all it takes is one bad year in there folks that basically can knock the train right off the tracks.
So this technology that we use allows us to be able to not only look at rate of return issues, but it allows us to be able to look at estate planning issues and probably for most people, more importantly, income tax issues.
So it factors pretty much their entire financial life as far as into a program and trying to illustrate that going forward five years, 10 years, 20 years down the road to give them a realistic picture of what might take place. That didn’t exist five, 10 years ago. The calculator did, but the calculator only focuses on one thing and that’s a rate of return. And so this stuff has been very, very helpful.
And again, getting back to when folks walk in every day we probably got one, maybe two new people that we’re visiting with and it’s getting back to the basics. And making sure that you don’t talk over their head, that you speak at a level that they can relate to.
It’s not that we’re smarter than them, it’s that this is an area that we focus on and they don’t. They had an expertise in some other area that I don’t have the foggiest idea and probably take me years as far as to try to figure that out if I had to and the same way in our business.
So creating that bond, creating that relationship, creating that win-win attitude as far as that SA succeed, we succeed with them and vice versa when they suffer, we’re going to suffer with them. People dig it, they like the approach and again, coordinating this stuff as far as with the tax people, really, really important to long-term success.
And oh, by the way, as we tell people too, “You’re going to have stress in your life either while you’re working or when you’re in retirement, where would you rather have it?” And everybody always says, “While I’m working, because when I get in retirement, I don’t want to go back to the drawing board and have to start all over again.”
So it’s really important to try to focus on not only what can go right, but really focus on what the heck can blow this thing up. And so that’s our problem to make sure we convey that in a way that people can relate to.
Gary Determan:
Again, visiting with Dave Nelson, listening to you talk at that time, it seems to me communication is such a key. What I want to ask you is what about the communication in the office? Because I mean, you each have your own area of specialty, but you still work together.
David Nelson:
Yep.
Gary Determan:
So do you guys get together every morning? How does this work?
David Nelson:
Yeah, it’s every week and every week we’re discussing something a little bit different. This morning I departed early to come up here. 8:00 AM is typically when we get together, we’ll go for an hour and we’ll have somebody assigned as far as to the topic as far as that day, somebody that this is their expertise area.
So today it’s Mike S, as far as Steigerwaldt in the office, he led today’s segment, which was Medicare. So we had five people in the room plus me. I’m not licensed as far as in that area, but I want to know a little bit more about it so that I can at least handle the simple questions as far as that clients may have.
But we had all the five licensed individuals, certified individuals as far as in the room and it was strictly focusing on Medicare. Changes as far as that are coming down the road as far as Medicare, Medicare premiums as far as that are going to be out here shortly as far as for the upcoming year, what are they going to look like?
Is the Plan D, the medicine as far as that people, I mean, are we communicating with those people? Because that’s the type of stuff as far as that changes more on a regular basis. That people have options and a lot of flexibility there.
As I said, I brought up this morning and I haven’t discussed something like this forever, but when Jean and I first started years and years ago, he wouldn’t have made it had it not been for me and I probably wouldn’t have made it had it not been for him.
The importance of having multiple brains communicating together, he’s good in this area, I’m not so good in that area and vice versa, that was very, very helpful as far as back in the day. It’s been very helpful as far as going forward.
And as I shared with the other five people as far as that were in the room, I said, “None of us would be here had it not been for this partnership as far as that we had back in the day.” And that was again, not only for expertise, different areas of expertise, but also the ability just to communicate with somebody.
Because we’re making a lot of really important decisions and being able to bounce those, what you think are going to be decisions, off somebody else, to have them hopefully pick holes in which you’re talking about and maybe going to propose to somebody, is quite helpful.
So it helps you get the job done better as far as from the standpoint of versus me being the know it-all and knowing everything that that person’s going to need, hey, it’s nice to be able to bounce it off somebody else and again, get their input good or bad.
And being not thin-skinned where when somebody says, “Hey, you’re a big dummy, that was a stupid idea,” being able to take that. And so today again, these guys are, geez, probably the average tenure would be maybe 10 years as far as with us.
And I said, “You guys don’t know this, but back 40 plus years ago, here’s how it started and came together.” And I said, “Again, none of us would be here if Jean and I were separate individuals, probably both of us would have been a big flop.” So in other words, the office wouldn’t exist, but it’s nice.
I mean, I think our head count’s now at 26, if I’m not mistaken, as far as in the offices, as far as in this area and really, really important pieces to the puzzle and every day we strive to do a better job than we did the prior day.
Gary Determan:
And I think it goes to your coaching experience. Every player has a role to play on a basketball team. Who’s going to be the scorer who’s going to distribute, who’s going to rebound, same thing.
David Nelson:
Yes, very much so. And again, in that line of coaching that you referenced, it takes the right person receiving it, but the person dolling it out needs to understand.
And again, I’m not going to sit here and pound my chest, but I was good at coaching because of what you brought up and that is that you’d convey to people, you’d realize back when I played, I always brought this up, I was a role player.
I wasn’t the star of the show as far as the big time score. There was other people. My job is to get the ball down the floor safely and get it to these other individuals.
And so it is in the business right now. We have a lot of people as we describe it that are the horses out in front. I just happen to be one of the lucky ones as far as that’s up on top here, but without those horses doing their job, David, it doesn’t matter. So a good team and a good communicator is important and we’ve been pretty lucky.
Stumbled along the way plenty of times, but we seem to have found a mix that people enjoy and it’s been very helpful as far as for a lot of people. Literally I think I forget now, but I mean, we’re on the doorstep of thousands of individuals that we support these days as far as clients and it’s really important to do the job right.
Gary Determan:
Yeah. I would imagine sometimes you just sit back and go, “Wow.”
David Nelson:
Yes, occasionally. Yeah.
Gary Determan:
From where you started to now, you just got to go, wow.
David Nelson:
Yeah. A lot of luck, Gary. A lot of luck, yes.
Gary Determan:
Well, I’ve always said the lucky ones are the good ones.
David Nelson:
I’ll take it that way. Yeah.
Gary Determan:
Always seems to be that way.
David Nelson:
Yes.
Gary Determan:
Well, here it is. It’s summertime.
David Nelson:
Yes.
Gary Determan:
People are going down to NelsonCorp to watch a ballgame.
David Nelson:
Yes.
Gary Determan:
They want to know why the popcorn’s not hot.
David Nelson:
Exactly.
Gary Determan:
So they come to you.
David Nelson:
That’s right. Just real briefly, folks, what he’s referencing is we’ve had a few phone calls down there. For whatever it’s worth, we write a check to have our name on the building to support the area here primarily. And we’ve had a few individuals through the years that have called.
The first call that was the most interesting was, “The flag is torn and ripped. You guys need to replace that, not us.” And then the two or three that came after that where, “The hot dogs were cold.”
We’ve got nothing to do with that either, but we’re thankful. Yeah, it’s this Thursday, it’s tomorrow. We’ve got 400 and some people that’ll be coming out to the ballpark as far as-
Gary Determan:
Oh, okay.
David Nelson:
… our gathering. I think I’m right. Yeah, I think it’s tomorrow. I just show up. I’m lucky folks.
But anyway, again, just here’s David’s commercial as far as for not NelsonCorp, but for the area, the importance of having the ballpark down there. I grew up shagging balls and whatever down there. It’s really an important piece to me.
I wasn’t the big time star on that field either, but yet again, my role was to get the balls and get them back in back in the day when you shagged them outside the facility. So it’s important to me as far as having that. It’s important to me having the showboat as far as in town here.
That’s why both of them, we write big checks every year as far as to support. We’ve been very lucky as far as in our business. Subsequently, we feel a strong need and desire as far as to try to make a difference as far as in the community.
So we’re here. We’ll continue to. We love the ballpark and we hope that everybody else come down and enjoy what we have down there. It’s quite special.
Gary Determan:
Enjoy having you in. Always a pleasure. Always very interesting. Thank you.
David Nelson:
Thanks, Gary. Appreciate it.
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 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. For more information, visit our website at www.nelsoncorp.com.