Jim Niedelman:
Time now for another valuable discussion for your money with David Nelson, CEO of NelsonCorp Wealth Management. Great to see you, David.

David Nelson:
Thank you, Jim. You as well.

Jim Niedelman:
One of our major themes of 2021, the instances of price inflation we continue to see that are unlike anything we experienced in years. What is the latest update there?

David Nelson:
This has certainly been a hot topic that we’ve been pounding into the ground now for several months. Inflation is real. People have kind of blown it off because we haven’t seen it since, well, about the time I started as far as in this industry, back in the very early ’80s and the latter part of the ’70s.

David Nelson:
I brought along a graph here that I think will give a good visual of just one example of what’s taking place as far as in the inflation arena. And what we see here is that it’s a chart illustrating as far as used auto sales. And this topic, again, kind of dry, dull, and boring, but it’s quite, quite important I believe, and that is that if we look at the far right, what we see is that blue line has spiked up considerably. It’s up over 50%.

David Nelson:
What that’s illustrating is that used cars, you can’t even hardly find them anymore, on the bottom it’s showing that we’re hitting all-time lows as far as the number of units, what have you, versus sales of new, and the top is illustrating as far as the number of used car sales that have taken place. And what it’s illustrating, I think, is a really important point is that inflation is real, and it’s exposing itself in a lot of different areas. This is just one of them, and we think a very, very important one, where we’re seeing this tremendous demand as far as in the space.

David Nelson:
Inflation is a very simple concept. It’s supply versus demand, and what we’re illustrating in this particular chart is that demand is really, really off the charts.

Jim Niedelman:
You do see that stark difference between supply and demand in that graph. How similar would you say this is to other periods of inflation we’ve seen in the past?

David Nelson:
Yeah, so similar, but not really close. In the ’70s and in the early ’80s what we saw was inflation, runaway inflation, 15, 16, 17% as far as back then. You saw farmers borrowing money at 21%. Most of this derived from the oil supply issues that took place. We had a big crunch as far as back in the ’70s and the ’80s. And that certainly magnified itself as it broadened out as far as in the economy. We needed oil, and there was a shortage issue. And, again, this was a big, big item. So supply and demand that’s taking place today compared to back then, this is supply and demand primarily coming from the pandemic that took place, not like back in the ’70s and ’80s as far as oil.

Jim Niedelman:
Those of us old enough to be around in the ’70s and ’80s certainly do remember those inflationary periods. What do you see as the broader implications for investors with this?

David Nelson:
Well, I think that the biggest issue here is that most folks that are out there that are listening to this probably have never invested in this type of environment. I’m not saying we’re going to get back to 15, 16% interest rates, not saying that at all. Don’t know for sure, but imagine that probably is not going to happen, primarily because of demographics, and I think the other as far as if we look at the internet. The internet has, I think, put somewhat of a lid on expenses going up too high because the efficiencies of being able to shop various places as far as to get lower and lower prices.

David Nelson:
But the reality is we are in a period of time where inflationary-type investments have really worked. You look at [inaudible 00:03:47] as a whole, you look at gold, you look at what are called TIPS, they’re a treasury index, so they adjust to inflation. They’ve done quite well as far as in this environment. Don’t know for sure about tomorrow, but the tendency does seem to be and the trend does seem to be as far as going forward that this is going to probably be worth considering as far as for individuals to look at as maybe an ongoing theme. Don’t know for sure, but it kind of has that feel to it.

Jim Niedelman:
David Nelson, great perspective as always. Thank you.

David Nelson:
Thank you, Jim.

Jim Niedelman:
And if you missed any of this discussion, we have that available for you online at OurQuadCities.com.