Announcer:
It’s time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management.

Announcer:
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.

Announcer:
Now here’s today’s Financial Focus program.

Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus, brought to you each and every Wednesday morning right here on KROS. This is Nate, got James joining me again today, James, once again remotely. Obviously uncertainty as far as how long that will continue, so we continue to adapt. I know we talked a little bit about uncertainty. Some of that kind of was answered this week as far as the final announcements that the school would be canceled for the rest of the year for the students in Iowa. And that also brings about spring sports day and everything that goes along with that, James. And we usually talk about tubs and all that kind of thing this time of year. Definitely different time that we’re going through here now.

James Nelson:
Yeah, exactly. And you got to be pretty anxious to talk about your Reds baseball after they’ve made some big-time trades this off-season.

Nate Kreinbrink:
Who was to figure they’d finally make some moves and hopefully there’s some [inaudible 00:01:41].

James Nelson:
Yeah, yeah. They’re interesting times, and it doesn’t sound like we’re out of the woods yet. So yeah, who knows what the future holds here the next month or so?

Nate Kreinbrink:
Yeah, and keep obviously as any indication of everything else that’s going on, keep an eye on some of that stuff. Something with the markets, and James and I kind of talking a little bit as far as what we are going to talk about this week. We kind of dove in a little bit to the CARES Act last week, talked about how some of those provisions may impact people, and what people can do and should be looking for with that.

Nate Kreinbrink:
We kind of wanted to look a little bit more big picture today as far as the approach that we’re going to talk about. And obviously this week volatility has returned. It’s been present for the past month or so in the markets, and then due to a lot of different things. This week we kind of had one big driver to a lot of that, and that was the energy sector and the prices of oil and how that is.

Nate Kreinbrink:
I don’t know, James, if you want to kind of talk about that a little bit, and how that directly kind of had an impact, and some of the other things out there driving the volatility currently that we’re seeing in the markets?

James Nelson:
Yeah, well, oil sure has completely collapsed the last couple days, and it’s created a ton of uncertainty in all the markets. People ask how can oil go negative, or how can it go as low as it’s gone the last week or so? And there’s a couple big drivers for that. Number one, OPEC said that they were going to curb some of the volume that they were pumping out of the ground and reduce supply. And that doesn’t really look like that’s happened. And this isn’t obviously the first time that OPEC says they’re going to do something and they don’t. So there’s a huge supply out there. Costs have come down.

James Nelson:
The storage has been another huge issue as far as… Since 2014 oil has been on the decline, and we have seen some low levels over the last 12 months. So when we see those big drops, the tankers and the storage pipelines and whatnot are filling up. At previous times when we’ve had very low levels, and now this time we hit really low levels, and there’s nowhere to really put it. It’s kind of crazy to think about it.

James Nelson:
There was a period of time yesterday and the day before where oil went negative, which they were paying to get rid of their oil, which seems absolutely nuts. But they just have nowhere to put it, and they can’t totally shut down the supply.

James Nelson:
So there’s a couple ways that we look at that. First of all, there’s the energy companies, like the ExxonMobils and the Chevrons, that have totally been destroyed the last 12 months. I mean, their stocks are down 80%, 90% overall, just like about every other energy company.

James Nelson:
And then you look at oil itself in the futures contracts and where that pricing’s at, and that’s been what we’ve seen the last week or so, the collapse there. We look at the pipelines and we look at the storage, and basically it’s a bad scenario across the board. I mean, it all hit. It’s been moving this direction, but it really hit this week.

James Nelson:
And as far as how that translates into the markets, the supply is way down. We don’t have many flights being made. Airlines are a huge driver as far as the oil market. They’re obviously using far less oil. We as individuals are using far less oil as we’re trying to stay home and limit our day-to-day travel.

James Nelson:
So all of that has created a lot of uncertainty. And it just goes back to what we talk about all the time, Nate, is having an investment plan. And in times like this, it’s absolutely crucial to have an investment plan, so people aren’t making irrational decisions or panicking at the worst time.

Nate Kreinbrink:
Right, and I think that that really goes back to one of the key things that we talk about, David talks about all the time on his shows, is just that emotions that come into a lot of these decisions that individuals make, whether it’s this great time that we experienced from ’09 to just recently or the volatility that we go into, and just that fear and that greed and just all the emotions that kind of go along with a lot of that.

Nate Kreinbrink:
And I was reading an article the other day. It’s talking about social security. And then we’ve talked a lot about that as far as the different claiming ages, different strategies, the importance of looking at… ensure social security benefit is kind of longevity insurance rather than the old adage of, “I need to take it to get my money back,” and then things like that.

Nate Kreinbrink:
But it was talking specifically about like the spikes, and people, individuals claiming their benefit at age 62, and how the drastic spikes in 2001, 2008 to 2009, and probably how it’s probably going to relate again this year. Just those individuals, whether it’s for need and they need income coming in, which is a whole different opinion and understanding as far as people need money during these times. They lose their job, their job gets cut, the hours get cut, things along those lines. We get that as far as how that impacts individuals.

Nate Kreinbrink:
But a lot of times people just see that social security benefits. And whether it was a plan that they had to delay it to full retirement age or try to delay it and get that 8% increase passed every year past their full retirement age up until age 70, talking about that during good market times, now all of a sudden we get to a little volatility, and then that plan just goes out the window.

Nate Kreinbrink:
And then they just think they have to take this benefit at 62, lock in that low rate. And then all of a sudden now, that is the benefit they’re going to get for the rest of their life, which impacts the amount that they’re going to have to maybe draw out of their other accounts later on down the road because they locked in such a lower benefit rate during volatility times that we’re going through right now.

Nate Kreinbrink:
And I think it’s, again, as you mentioned that plan, James, having a plan, knowing that, okay, there are volatile times that have happened in the past, in 2001, ’08/’09, what we’re going through right now, and it will happen again in the future. So again, having a plan, being disciplined, knowing that someone is helping you through some of those steps, I think is extremely important to try to take a lot of that emotion. Because again, you read the news, you read all this stuff that’s going on, and there’s a lot of it out there that definitely scares people, and rightfully so, because that’s all they’re saying. But again, understanding some of these things, why they’re happening, how it impacts them, and what they can do as far as their plan moving forward.

James Nelson:
Well, you’re exactly right. I think this go-around could be worse. I mean, you gave the examples of 2001 and ’08. those are the last drawdowns that we’ve seen in recent times, and the big spike and people drawing social security. And like you said, there’s some legitimate reasons for people to do that. If they lose their job or are forced to retire, those are all legitimate reasons.

James Nelson:
But there’s also a strong argument that people just panic, and they see social security as a sure thing. And like you said, they abandon the whole plan because the investments took a hit temporarily. And that’s what we’re trying to avoid. And you’re right, I mean, this drags out much longer, you can totally see those numbers spiking again. They already have and continue to go higher.

James Nelson:
So again, sticking with the plan, don’t… It’s hard to take the emotions out, but people need to try the best that they can, and times like now to stick to the plan, and understand the decisions that they’re making now is really going to affect them down the road.

Nate Kreinbrink:
It is. And as we always say, I mean, it’s not easy sometimes making those decisions. But again, being disciplined and knowing that decision that you make now, how are they going to impact these individuals, not just right now in the immediate term, but five years down the road, 10 years, 20, 30 years down the road? How will decisions now will impact that going forward?

Nate Kreinbrink:
I think if people don’t necessarily look past just a simple decision of, I’m just going to take it now to have some cash flow coming in, but how that’s going to impact them negatively down the road I think is the part that’s overlooked.

Nate Kreinbrink:
So again, you have questions on any of that type of stuff, how these things are impacting you, thinking about doing something, don’t know if you should or not, feel free as always, give us a call. Definitely be able to give you a quick phone call and talk about some of the decisions and the impacts that are going to go through that. And we will try to help you make the best decision, not only for now but for the future.

Nate Kreinbrink:
So James, appreciate you joining me again today, remotely, over the phone, whatever way we have to continue to get the show on like we have been in the past, so.

James Nelson:
Absolutely.

Nate Kreinbrink:
Again, wanted to say real quick that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of April will be donated to the Clinton Public Library Summer Reading Program.

Nate Kreinbrink:
James, great having you on again. One of these days we’ll be able to do it live again in studio, which I cannot wait for, and get back to normal, as so many other people are. But until then, we’ll continue to do it this way. Stay safe, James. Thanks for joining me again. This is James with NelsonCorp Wealth Management bringing you this week’s Financial Focus. Thanks for tuning in, and have a great rest of your week.

Announcer:
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 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.