Announcer:
It’s time now on KROS for Financial Focus, brought to you by Nelson Corp 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 FINRA SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated. A registered investment advisor, Cambridge and Nelson Corp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.

Gary Determan:
It is the first Wednesday of the month, so a pleasure to have Dave Nelson in studio with me. Of course, before we get into business, and that’s going to be interesting.

David Nelson:
Yeah, exactly.

Gary Determan:
We’ve got to talk a little bit of basketball, and of course, your nephew, Bryan Petersen, now at South Dakota State. You said you had a chance to visit with him.

David Nelson:
Yeah, it was really nice. He was on the road out in this neck of the woods, his old neck of the woods. He was down in Des Moines at a big tournament as far as there and then made his way the following weekend into Chicago to recruit. There were some massive tournaments in there. It’s kind of interesting. My daughter, number two daughter, who’s roughly Bryan’s age, so they’re cousins, recently married a coach from in around Chicago, so he has a couple good players. Anyway, so Bryan was coming out to this big tournament regardless, but anyway, there’s some negotiating going on. They’re trying to get a couple of the high school kids as far as some scholarships.

David Nelson:
But anyway, he’s having a ball. I had to give him a little static about the travel budget. It’s probably a little different today than it used to be, and so he was flying from here to here to here, so I gave him a little heat about that. They’ve had a great program up there well before he got there, and he hopes to enhance it. He’s really good at recruiting, so I know that’s a big part of the … the gentleman offered him the keys. This was the second time that he was offered the keys up there. The first time, he turned it down. This time, he grabbed it, so yeah, he’s taken it. It’s absolutely fantastic. Again, hoping to see him in the tournament, the big dance at the end of the year for those basketball fans, March Madness, so that would be really cool and exciting. No, he’s pleased. He’s glad he’s there, to say the least.

Gary Determan:
Yeah, that is great. Just about an hour ago, I had Dave Lottiehoff in studio …

David Nelson:
Oh, yeah, sure.

Gary Determan:
Dave graduated Clinton High in 1988, physics and science teacher in Illinois and doing great has cross country and track as the coach. Drake University, it’s amazing the people that have come through Clinton high school and I know you’re a big advocate of local things.

David Nelson:
Yep. No doubt about it. I was speaking to a gentleman, a that’s just moving back here from up in Michigan. He’s going to be a neighbor. Talking about local, he brought it up as far as the stadium is concerned. “Hey, is that you? That’s your name on the stadium?” I said, “Yeah, again, it’s one of these things that we do because it’s really, really important as far as to have,” and so having some of our successful individuals depart and go on and be a big success elsewhere it’s exciting to see.

David Nelson:
Obviously, many of these we would love to see going forward today in our own backyard. But again, it’s an exciting time as far as … that is fantastic to hear. I didn’t hear that particular interview but yeah, it’s, it’s great to see. Bryan’s clearly one of those individuals that had success at the high school level went on and, and has, has had great success as far as in college and now in the coaching ranks. So we’re thrilled for him to say the least.

Gary Determan:
David, not yet in our athletic hall of fame, but I’m sure he will be for Clinton High School and of course your two older brothers, Steve and Ken were outstanding athletes at Clinton High School.

David Nelson:
I noticed you didn’t say me. I’m just kidding. Everybody that knows me. my wife’s comment is, so Steve’s 6’3 roughly, Ken’s roughly 6’2-6’3. Then David rolls around and I’m 5’9. So the big joke at the family gatherings years ago is I was the one that was thrown in the dryer too long, so I shrunk. Anyway, but yeah, nice athletes. Steve went on, played a college ball, quarterback, down at Western and Ken up to Platteville and had some nice success as well. It’s good to see. Again, it comes back to a situation. We’ve had a good foundation here and it’s just wonderful and we want to continue to have that good foundation here. Subsequently some of the positive things that are happening in the area, just can’t say enough good things about some of the folks at the regional development, some contacts that they’ve made and whatever and trying to drum up some business and get some employers, a good size employers as compares to come to our area.

Gary Determan:
Yeah, that’s interesting. Do you visit with Aaron Cole? Do you talk to Andy Sokolovich? Do you visit with the regional people? I

David Nelson:
Yeah, I love to go to the meetings and we get our updates and what have you. Again, they realize as far as what we’re trying to do and that is expand and what have you, got new office going up in the quad cities, but the hub is still here and this is where the hub will be. We’ve got offices from Hawaii to north of Chicago that we either own and/or oversee. It’s all here.

David Nelson:
Years ago I could care less about going to some of these meetings and finding out, I was just so preoccupied with, probably at that point staying afloat. But now it’s a situation, “Hey, what’s happening? Do we have some good prospects,” and whatever. I’ll do whatever I can as far as if there’s any impact as far as trying to, again, not just put a positive spin on things that something bad, but try to state facts as far as what’s actually taking place. I think some real positive things are here.

David Nelson:
I think we got some great people. The folks you just mentioned earlier, very, what do I want to say? I don’t want to say just upbeat because that can be kind of phony, but they’re real positive people and I think they’re realistic people. They’re out, there hunting, and other people are hunting, and again, we’re turning the tide here as far as in Clinton, the population dropping, that’s enough. We need to move forward. Hearing this couple that I spoke to this morning, there’s a lot, they’ve been out there with a big backhoe and whatever, and I swung over there.

David Nelson:
I was on my bike just ready to take off. They’re moving from Buffalo is it? Trying to remember, but it’s Michigan, just around the corner from Chicago about an hour, hour and 15 minutes from Chicago. They moved back here. Her family’s back this neck of the woods and gonna be a big house and going to be Iowa taxpayers. We’re really happy to hear that. Again, positive things, one at a time. I’m kind of selfish. I would like to see a big employer, but hearing things like that are really, really positive.

Gary Determan:
Before we take a break for the weather. You brought up two words that I think are so important, positive but yet realistic.

David Nelson:
Yeah, exactly. Again, you have people that walk around in life and just try to put a positive spin on everything when it’s just not reality. In reality is that things, I think we bottomed and I think we’re going to be in growth mode. Again, we want to try to do what we can as far as to impact that. But having your head in the clouds doesn’t get anything done. Being realistic about it, looking at the facts makes a big, big difference. I think these folks as far as at the Clinton Regional Development have, and I think the chamber is realistic, so hopefully we can get some employers back here.

Gary Determan:
Things do change. You and I grew up at a time in Clinton where Clinton corn was doing great. DuPont, the railroad was exceptional. Downtown, things are much different. You had the JC Penney, the Sears, Montgomery Wards.

David Nelson:
Exactly.

Gary Determan:
Jupiter McClellan’s little store. It’s a totally different world.

David Nelson:
Totally different. Again, we can find faults and throw stones and whatever or we can basically get to work and try to find opportunities. Again, it a dream that I have that consumes me? No. But is it a really important dream in my life as far as to to see something similar to that come back to this area? Yes. We see the growth just a few miles away. I mean we’re putting up our new office in the quad cities. Just absolutely booming down there, and again, it can happen here. We just need to work together and if we work together and we use everybody’s contacts and we put out a good product here, we’ve gotta have qualified individuals as far as to work, we can land some of these employers. There’s employers that are looking to make a jump and a certainly we’d like to see it here.

Gary Determan:
More with Dave Nelson. Our 1545 weather brought to you by the Clinton Midas.

Eric Sorenson:
Good morning everybody. We’re waking up to with some warm temperatures again. We’ll go up around 90 this afternoon. Isolated thunderstorm, mainly to the north of the Clinton area. We’ll look forward tonight’s low down to around 67 degrees. A cold front actually comes through mainly dry for us. 85 back to sunshine tomorrow. Only 80 or so for Friday. Heading into the weekend, sun filled sky Saturday, low 80s. Mid 80s on Sunday with more thunderstorms. We need the rain fall. Today’s chance slight and only to our north. Our forecast continues all the time at wqad.com I’m Storm Track Eight meteorologist Eric Sorenson. Sunshine right now. We’ve made it to the mid 70s right now. Looking for the upper 80s. Our update brought to you by the Clinton Midas.

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Gary Determan:
It is the first Wednesday of the month, so we continue our conversation with Dave Nelson to the bottom of the hour. You had mentioned something about the growth to the quad cities and of course you’re getting an office down there. They of course are right on Interstate 80 and there’s always this talk about four laning, Highway 30. of course it’s four lanes out to Dewitt and then it shortens down to two lane.

David Nelson:
Correct.

Gary Determan:
They have done a lot of four laning, you know past Cedar Rapids and then there’s another segment of just two lane and then you get out near Tama. So it’s how critical?

David Nelson:
I think it’s significant. Again, through rotary, through chamber, through the Clinton Regional Development Corp. This topic has come up for 20 plus years that I’ve been listening to it. gain, I don’t think anybody’s ready to throw in the towel. Supposedly the money was allocated years ago on the Iowa side, but we couldn’t get the Morrison over there, as far as to swing around the town. Morrison’s concerned about that as far as the traffic not coming through town. That sounds logical. It’s kind of like the bypass here. I know some of the businesses on the north end did not want that. Again, kinda change, but we’ll see if it takes place.

David Nelson:
Clearly any of the discussions that we have with the Regional Clinton Regional Development folks, the four lane is front center to the employers. I mean it just, we’ve got to have access as far as to that. Part of the discussions that have taken place as far as in this area is that they’ve actually toyed with six lanes as far as the Interstate 80. That’s the one that seems to have more potential now than the four lane as far as a Highway 30. I don’t know where it’s going to go. That was probably about two years ago data.

David Nelson:
I don’t know if it’s changed, but locally here we had one of the gentleman, the actual person that was the head of the DOT, as far as the board. He didn’t work there day to day, but he was the head of the board, I believe was the current term that I’m using here. He was pushing really hard, but there’s like eight people that are on the board, and I think four or five of which are on Interstate 80 and so the votes were for 80 not for 30. There was only, I think two of the, the people that were on that committee that were there. Dave Rose, you obviously know Dave Rose. He pushed hard and again, I don’t know. It would sure be nice because again, we’ve got the river, we’ve got railroad, we’ve got an airport out there, small but nevertheless airport, and now to have four lanes, it’s a slam dunk. But unless we have the four lane the whole way through heading towards Chicago and the other direction, I think we’re going to be pretty limited as far as on some of these employers that we would like to get.

David Nelson:
I think they’ve got a couple. Again, Regional Development Corp has put out a few things. I haven’t pried but one employer’s doing some pretty nice adding heads. Again, we’re not talking about hundreds of jobs I don’t think, but I think it was 25 to 50 so they’ve got a couple of those hot leads that are working and again we just keep our fingers crossed. We had a big capital campaign a few years back to help fund some of these things that are being done, trying to bring in some international money as well as domestic money. So some some really cool things I think that that are close.

Gary Determan:
Getting busy with Dave Nelson. Let’s go from local to global, because obviously at global end, we’ve gotta bring up China.

David Nelson:
Yeah, China’s just front and center as far as what’s taking place. Again, I don’t get into the discussion. I’ve had people, “What do you think?” And I said, “Nobody really knows.” You know? I mean, if somebody believes or knows that this is a good decision, they’re a liar because none of us really know. It’s kind of like politicians weighing in on some of this stuff. Again, it’s a best guess is basically what’s taking place now. I’m not saying it was right thing, I’m not saying it’s the wrong thing. I simply don’t know.

David Nelson:
What I do know is short term, the impact has been pretty significant. I mean we’ve seen the markets sell off pretty aggressively as far as a couple of days ago 400 points, yesterday up 300, to today we were down 550. As far as early, when I came in here, I think it was 500, is all down. Yeah, this is significant. The type of stuff we look at is what’s called the VIX index. It’s a volatility index and the volatility index is in the mid-20s right now. At its peak about two years ago, it was on the doorstep of 50. Point being the volatility has increased, but it’s certainly not telling us that it’s imminent that that we’re going to have this massive drop off.

David Nelson:
The other things that we look at, and this is I think off the radar for most people, and that is interest rates. Interest rates are really an important variable as far as coming into play here. What we look at is the proxies, the 10 year US government bond. The 10 year US government bond for the last several years has been hovering around 2% a little above, a little below, but give or take 2%. This morning, it pierced 1.6%, so in other words it’s dropped and dropped pretty significantly. Now if you’re a saver, that’s not good news. If you own bonds, that’s really good news. That’s fantastic. Now the issue is, again, we’ve had stocks that over the last several years have really powered forward and it didn’t matter what was going on and they kind of chugged along at a pretty decent pace. But yet at the same time you had bonds, interest rates as a whole dropping.

David Nelson:
Now to most people, again, they’re not connecting the dots yet. What’s this guy’s point? The point is when interest rates typically drop, that’s almost always kind of a recessionary type vibe. That’s dropping, but yet the stock market has been doing great, so these two are incompatible. They can’t continue to move in the same path, that same direction for long. We’ve been telling people typically almost always the bond market is right. The bond market today is telling us not such good news. Stocks just in the last week have started to show that not so good news. Now, is it all China? I would say probably 75% of this is China, but there’s plenty of other things out there that you can look to that are contributing to part of this.

David Nelson:
But the big picture is again it’s one of the, one of the guys we listened to that’s that that manages, I think this is a true statement, more bonds than anybody. He’s from a mutual fund complex and this gentleman said, “The 30 year bond,” this was about six months ago that he made this quote, “The 30 year bond,” which today’s roughly 2%, “is going to zero.” I mean my jaw just dropped. It’s just hard to imagine that we’re going to drop that much.

David Nelson:
Now having said that, and I know I brought this up in prior shows, but it’s worth repeating. Germany, if you own a 10 year government bond in Germany, they call it a bund the 10 year bund over in Germany, your rate of return is a -0.41% negative. Japan, of you buy a 10 year government bond, government bond guaranteed by the government, negative returns. Germany, Italy, most countries in Europe, they’re negative rates of return today. Again, what’s that saying? That’s not saying something in a positive way. That’s saying really bad things, as far as that we have to get interest rates to this level.

David Nelson:
Point being and people say all the time, “Well why would somebody put their money into something like that?” I said, “Fear.” Okay, look at the Japanese stock market in 1989, 30 years ago it was almost 40,000, it was 38,000 and change, round it up to 40. Today it’s 20. That’s why people put their money. 30 years later, it’s 50 cents on the dollar of what it was 30 years prior. That’s why people are buying these bonds that have negative returns, not they might have negative returns, they have negative returns. You put 100 grand in, and 10 years later you’re not getting back 100 grand. You’re getting back less than 100 grand. Somewhere in the neighborhood of, for most countries it’s going to be roughly $95,000.

David Nelson:
That’s just stunning. And yet people are buying it. There’s trillions of dollars in negative yielding bonds globally. Trillions. Again, are we going to get to zero? We sure could. Looking at the 10 year bond this morning, touching 1.6% this morning, is telling us something that there’s probably some bad news. If we haven’t already seen it, there’s probably more bad news coming down the pike.

Gary Determan:
You know, August used to be a month where not a lot happened. It doesn’t seem like that anymore, David.

David Nelson:
Right. If you look at the statistics last 10 years, August is the worst month as far as to be invested. That that backs up exactly what you just brought up. Not only is there more volatility and the volatility increases primarily because again, if you look at Europe, August is heavy, they don’t call it vacations, but a holiday. So their holiday. In the US, you’ve got a lot of people in August that it’s holiday or they’re on vacation. That adds to the volatility because you have smaller players involved and so things start swinging. This isn’t smaller players. This is big time stuff that’s taking place now. Not saying run for the hills, but I am saying like I said last month that things aren’t quite right and that you need to be cautious right now in the idea of putting your money in and saying a quick prayer and hoping that it works out probably is not a good plan.

David Nelson:
A good plan is probably to work with somebody that looks at the facts, not what they want to be the facts, but the facts, and the facts are that things aren’t as rosy today as they were maybe six months, a year ago. With your important capital that you have $50 grand, $2 million bucks, I don’t care what you have, it’s probably a good time to take a look at it and try to make some proactive decisions as far as how you might want to think about protecting those assets.

Gary Determan:
I shouldn’t go into the backyard and dig a hole and put my money in there?

David Nelson:
I know a lot of people like to do that, but the rate of return on that is pretty weak as you probably could imagine.

Gary Determan:
Again, great to have you in on the program. I just do want to mention the fact that you just wrapped up your school supply effort. Always something great that you folks do.

David Nelson:
It’s terrific for the area. It’s important. I won’t get on my soapbox too long, but again, as you brought up earlier, when we grew up, as far as back in the day and back in the day, you didn’t have kids. One of my favorite stories is over in Illinois. We try to support all these little charities and the every month we have a drive and then we do other things as far as behind the scenes.

David Nelson:
The drive is to try to find a small group and many of them are charities, some are quasi charities, just a whole bunch of people at care and they haven’t done the formalities of creating the charity. Anyway, but these ladies over there came to us and said, “Yeah, this could be a big help.” They told us the story and basically in a simplistic way it was for milk. A lot of these kids don’t get milk for lunch, so the bottom line it was for milk. Here’s these 8 or 10 women, you know, begging basically for a few bucks to get milk for other people. It’s just stunning to me. Things have changed, you’re right. It’s a different world that we exist in and doggone it, we’re going to do what we can as far as to try to impact that.

David Nelson:
That school drive we had a lobby that was impressively, not full to the max, it’s a pretty big area, but a lot of stuff there. It was handed off I think give or take a week ago. It’s going to be distributed as far as to a lot of kids in need and we’re thrilled about that. We would just remind people, and I know got about one minute here, so I’ll be really quick. Remind people that if you still have some goodies that you’d be willing to share, you can drop it by the office, because what we found out several years ago is what’s handed out now, sometimes of some of these kids that need it won’t get it, and what happens sometimes is some of these family situations are so volatile that the kids oftentimes, in the middle of the night, leave and they’ll go somewhere else as far as for safety. Then they go to the other place and they don’t have their supplies that were at the other house or the other apartment, what have you.

David Nelson:
Again, the folks at where we hand this stuff off said, “Year-round, we can use stuff.” I’m saying giddy up, we’ll do what we can, keep the word out there, if you’d be kind enough to do it. We match everything, so the bottom line is make us cough up a few extra bucks ourself and we’re happy to do that. Thank you for everybody that contributed, and we appreciate it. We’ll do it each and every year.

Gary Determan:
Thank you, David.

David Nelson:
Thanks, Gary.

Gary Determan:
Financial focus is a production of Nelson Corps 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, FINRA SIPC, Investment Advisor Representative, Cambridge Investment Research Advisors Inc a registered investment advisor, Cambridge and Nelson Court. Wealth management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.NelsonCorp.com.

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