Announcer:
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 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.

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, James joining me again this morning and we were talking on the way up here this morning, James that this will technically be you and I last show for 2019. It’s very, very hard to believe that we’re already to that point. I know Amy’s going to step in next week and do the show and we’ve got Christmas and we’ve got New Year’s Eve and then we’ve got the live show the first Wednesday. So it’ll be maybe about a good month or so until we’re back up here.

James Nelson:
Yeah. I think everybody’s going to miss us. We’re not going to be up here for quite some time. So yeah, last show of the year, the 2019 year flew by.

Nate Kreinbrink:
It definitely did. Another thing I want to definitely miss is that white stuff we got out there again today. I know we were supposed to get a little bit, but definitely a little covering out there, that makes it a little slick with that light stuff kind of getting packed down and slick. If you’re out there just please drive carefully. It is a little slick in some spots.

James Nelson:
Yeah, no doubt. I don’t think we were supposed to get this much.

Nate Kreinbrink:
As we look back over the last basically 12 months of our shows, James and I were talking as far as all the topics and everything, that kind of headlined 2019. A lot of it, the political side, again take that out of it, but just national events that don’t necessarily in and of themselves drive the market, but collectively when you put them together with a lot of other things have an impact on the market. We definitely want to make sure that we’re keeping an eye on some of that. We thought today we’d do a year in review and talk about a lot of that.

Nate Kreinbrink:
The first thing was that drives it from the market standpoint was interest rates. Interest rates with the Fed has been something that has been fluctuated throughout the course of the year. Is the Fed going to raise rates or are they not going to raise rates? Understanding that if they do lower rates or if they do raise rates, what that does to your current holdings that you may have and what it potentially do. Now as we look over the last one with the Fed holding rates steady, what that means to markets and going from it. Interest rates has been a big thing, James, as we go into it and probably will continue to be as we transition into 2020.

James Nelson:
I was just going to say that. That’s been the story for 2019, probably going be the story for 2020. The Fed has been anxious to try to… Their verbiage as of a year ago was to get interest rates back up to normal levels, whatever that means. It’s three to four percent is what a lot of people are anticipating. The administration was pretty tough on Jerome Powell and the Fed this year and they kind of caved and decided to cut rates. Maybe things were as rosy as they thought. Interesting year, two rate cuts, maybe another one early next year. Who knows? Time will tell. Interest rates, I think, are going to be the story for quite some time. As we’ve seen rates slowly, the last 30 years, come down and as soon as we say they can’t go lower they do, and they keep ticking lower.

James Nelson:
Another big topic for this year was the Chinese trade dispute. We’re over two years into this thing. Deadlines have been pushed back several times. Progress has been made and then halted and back and forth, so that’s created quite a bit of uncertainty in the stock market. People just trying to get an idea of where things are going to go, what’s the end game? I don’t know if anybody knows that yet. It’s still in the works and hopefully something resolved there come next year. Just like interest rates, it was the story this year. It’s probably going to be the story next year because as far as we can tell we don’t see a deal anywhere in sight.

Nate Kreinbrink:
Right. I think that’s important to understand the headlines, how that drives it. Because if you look back over the past few months, it seems the markets have had a little bit of fluctuation with early morning headlines where a deal’s going to get done, markets kind of react favorably. A deal’s not going to get done so much, markets kind of react negatively to that. There has been a lot of intraday swinging with some of those headlines, but I think it’ll be important to understand it and to see how this plays out, not just immediately, but over the next few months or end of 2020. Again, if the tariffs that were already put in place, they’re not going to impact businesses, companies, the consumers, immediately. It’s going to be months down the road or whatever until that actually hits the company’s bottom lines, their earnings reports, things along those lines.

Nate Kreinbrink:
Again, you’ve seen it in some of the companies already, as far as having to adjust and react to the higher tariffs that are putting on some of the materials and the products that they’re using, and vice versa that they’re selling to overseas. Again, it’ll be interesting to see how that continues to shake out and you look at different ones, a deal at some point to get done. Optimistically you hope that happens. Again, until something is actually signed and put into place, it’s hard to tell. Again, you look at a trading, you look at tariffs, whether it’s just China, but worldwide, I think this is really going to have a huge impact not only on the U.S. Economy, but global economy as well.

James Nelson:
No doubt. This has been the promise for quite some time and I think it’s going to continue. Maybe the most concerning thing from our standpoint is the threat of additional tariffs, not only on China but other countries. That really could throw a wrench into things and disrupt markets a little bit, if we get to that point.

James Nelson:
Another topic that I wanted to bring up is Brexit. That’s been in the news a lot more this year. I think some people still don’t know what the term means. In a nutshell, it’s basically half of Britain’s population saying we can leave the European Union, we can go to the United States and Mexico and China, negotiate our own deals. Then the other half of the population saying, no we need to stay in the European union. That’s why it was created. All of us countries have a lot more buying power than just one of us on our own. That battle has been taking place for the last couple of years in Britain. It’s going to be interesting to see how that’s going to play out. The deadline was this fall. That too has been pushed back, just like everything else. That’s going to be a 2020 discussion, hopefully resolved at some point. Nobody really knows what direction things are going to go. That’s been an ongoing obstacle and again, creating more uncertainty, not just in European markets, but a lot of that trickles over to the U.S. markets. We’re such a global economy. There is no doubt we’ve felt some of those impacts.

Nate Kreinbrink:
Right. I think the biggest thing to take away from that is just the volatility that has been present throughout the whole year. Again, we’ve mentioned a number of these topics. They do have an impact on it, but again, the market continues to march on. Whether that’s positive or negative, it continues to march on. There’s always going to be tomorrow and that’s not anything new to 2019. We’ve seen that in 2018. We’ve seen in 2017. Again, it’s just something that you need to make sure that you understand fully, as far as any of the holdings that you have, any of the investments that you have, how you’re positioned, what any of this news does to potentially your account and what do you have to do to counteract some of that and have your assets and your allocations in your 401ks and your IRAs and your Roths and all these things that we’ve talked about. How are they positioned and how are they going to be impacted? Again, the volatility was present. There was volatility that was present in 2018, and you go back through all these years. Again, we need to understand the risk that’s out there, what some of this stuff has gone on and how your accounts may react to it and be able to counteract it whenever necessary.

James Nelson:
I think that’s the most important takeaway, is just knowing what you own. Whether it’s the interest rate discussion, you need to know what type of bonds you own inside your 401k or IRA or wherever. A lot of people don’t. I had a client in the other day that said that they weren’t worried about Brexit or the Chinese trade deal because, “I don’t own any international possessions.” Well, it doesn’t really work that way. You know what I mean? It’s a global economy, like I said. We’re all intertwined in some way. The fact of the matter was, this person owned a target date fund that had about 25% of the position allocated to international exposure. So yes, you do have international exposure, you just don’t know it. Again, it just comes back to, it’s not anybody’s fault, it’s just understanding what you own and where the allocation is at, can make a big difference, if you’re trying to plan for any of these events that could take place next year.

Nate Kreinbrink:
Right, and all very, very important parts. Again, as we had said, it goes back to understanding, not that you have to know exactly everything, but have an understanding as far as potentially looking at what questions I should be asking. If you don’t know, ask for help. It really is that simple because again, when we start talking about people’s 401k plans, we start talking about their IRA, their savings, this is harder and money that these people have put away to let just blow in the wind by something that they don’t necessarily understand or don’t want to understand. They’ve worked too hard, they save too much, they sacrificed too much to be able to put this money to work for them in retirement.

Nate Kreinbrink:
They’re going to get to that point, and James, we’ve seen it enough where they get to a point where they say they want to retire, but they’re not going to be able to because of account balances. They’re going to have to continue to work, not because they want to, but literally it’s just honest truth, because they have to. That’s not a good decision and not a good a conversation that we have with people. A little planning along the way, understanding that investing, and we talk about it all the time, it comes down to just simply fear and greed, and how greedy do we want to get and how fearful are we of the markets. Understanding that there are opportunities out there throughout the course of the year, and how is your portfolio positioned to be able to take advantage of those.

James Nelson:
The other thing for people to keep in mind, in most cases, this is the largest account balance you’ve ever had. We’ve had a 10 year bull market with the wind that are back. Balances are as high as, in most cases, as high as they’ve ever been. It’s time to protect that and hold onto those gains and like you said, don’t just let things fly out in the wind and close your eyes to the risks that are out there. It’s time to take a look at that and protect a what we built up the last several years.

Nate Kreinbrink:
Again if you have any questions, give us a call. I’d be happy to sit down with you. I did want to mention that from James, from myself, the rest of NelsonCorp team, a very happy holiday season to everyone out there, to you and yours. Hopefully you can spend it with those friends and family, enjoy a little relaxing peaceful time. I’m also wanting to mention that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of December will be donated to the Children’s Therapy Center.

Nate Kreinbrink:
James, thanks again for joining me on the snowy Wednesday morning.

James Nelson:
Absolutely.

Nate Kreinbrink:
Again, Nate and 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 Nelson Core Wealth Management in Clendenen, 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 representatives, securities offered through Cambridge Investment Research Inc., a broker dealer member, FINRA SIPC, investment advisor representative Cambridge Investment Research Advisors Inc., 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.