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 indexes 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 NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Gary Determan:
Well, it is the first Wednesday of the month, so the program is live and expended to the bottom of the hour. Once again, joining us by phone is Dave Nelson of NelsonCorp Wealth Management. Good morning, Dave.
David Nelson:
Good morning, Gary. How are you doing today?
Gary Determan:
Real good. How about you?
David Nelson:
Oh, fantastic. Got a little precipitation on me this morning on my bike ride, but I made it. Looks like an overcast day, at least part of the day, so nice to get out, good temperature. Yeah. People need to take advantage of it.
Gary Determan:
We had Bill Misiewicz in the studio. We’re going to have a replay of the 1998 trip that the River Queens made to state. Of course, you’ve taken a girls’ team out to state as well.
David Nelson:
Sure.
Gary Determan:
But I know the summer months are so important in getting a squad together and ready. How’s it been going?
David Nelson:
Yeah. We’ll see. I don’t know what’s going to be … We’ve communicated with the girls and what have you. We just have no immediate plans as far as starting the practices. I don’t know what’s going to take place on a state level, what have you. The good news, Gary, I mean, the whining that you’ve heard come out of my mouth through the years about the kids being young, I can’t whine about that anymore. My core, clearly juniors and seniors. And this is the year. What that I think does is it gives us a little bit of an advantage on the standpoint of off season. I mean, we’re not teaching necessarily any new offenses or anything like that, in bounds plays. We’re focusing on conditioning and getting better, as far as on the court. So we’ll see whether that unfolds. And you’ll see the unrest around the country, and we wonder, as far as are things … Are we going to have new breakouts and what? And will that push some things back? I don’t know.
David Nelson:
But yeah, I certainly hope it takes place. These kids have paid a huge price through the years. They call me Easy Going Dave, which is a joke anyway. But they go through a lot and we put them on the road a lot. We play a lot of off season ball. During the season, I mean, our practices are typically going to be at least a half an hour to 45 minutes longer than most teams do. And again, I think there’s a few secrets in there. We do a lot of mental work. The physical part, we certainly have to tend to as well. But we spend a lot of time talking to them about being better as a human being, being better as far as a ball player, being better as far as a classmate, and life lessons that I think are going to take them somewhere.
David Nelson:
Just saw a little update on one of my prior players and trainer for a year. Dodd is the last name, Samantha Dodd. And she’s finishing up her master’s degree, and just couldn’t be more proud of her. So academics clearly are number one. But we don’t poo poo sports. We think they’re very important. They’re very important for guys and gals, but in particular girls, it’s really, really important. There’s been all kinds of studies showing as far as the impact that can have on them as far as the positive impact the rest of their life. So yeah, we’re hopeful that it takes place. And we’re hopeful we can get in a decent off season and try to improve.
Gary Determan:
Yeah. I saw that article as well on Samantha. In fact, I think you’ve coached a couple of girls who are now doctors. Right?
David Nelson:
Yeah. We have. We got two of them in recent history that have completed. And just we’ve got a lot of nurses that have come out. Some went up, played ball up in Dubuque. We’ve had a few that go out to Coe College. We’ve got a couple that graduated recently down at Ambrose. So yeah, it’s just great to see. People don’t realize that having been in sports, I think the old approach of screaming, hollering, it’s all about winning type thing is not accurate. And again, the way most programs I believe are being handled today, and certainly the program that I’ve overseen now for, what is it, 16 years I believe as head coach, it’s academics come first. Through the years, Gary, I think this is again another statistic I’m probably most proud of.
David Nelson:
I had one girl for a two week period that was ineligible. I don’t know how many kids. I’ve never totaled up how many I’ve coached. But that’s pretty impressive. And again, we’ve got pretty high academic standards that they have to exceed in order to be eligible as far as to play sports. And so that goes back to I think year two as far as when I was coaching. So the kids know I’m not screwing around. I’m very serious about the academics. Again, the second go round of me coaching, I did something. The first go round, every night we would have, the girls called it story time, and I would bring in an article about some inspirational figure. This may be a minority. This may be a female. It could be whatever. It just was something inspiring. This go round, we’re doing some of that. But what we’re spending more and more time on is talking finance.
David Nelson:
And not that they’re going to become an expert in basically a 15, 20 minute session before each practice, but I want them, as I told them, to be able to get out in the real world and to be able to understand some of these concepts. They understand social security, they understand already taxes. They understand as far as what a mutual fund is, what a stock is, what a bond is. We spend a lot of time talking about that stuff, and then we get to basketball. And early on, they’re a little skeptical as far as that. But I truly have, and I’ve had great groups of kids as far as human beings. This is clearly the best. And I mean, every kid on that team, I really, really enjoy being around.
David Nelson:
And in the past, I’ve usually had one or two that I can truthfully say that was a little bit of a pain at times. But anyway, this group is terrific. And I want to, in all likelihood, and again, it’s not for certain, but all likelihood, this’ll be it as far as for me. I really want to send these kids out to Des Moines. I mean, that’s why I came back. I really think we have a shot, and time will tell, so we’ll see here shortly.
Gary Determan:
Again, we’re visiting with Easy Dave Nelson.
David Nelson:
Easy Going Dave.
Gary Determan:
Easy Going Dave Nelson.
David Nelson:
Yeah.
Gary Determan:
And it hasn’t been easy going lately, has it, for you, sir?
David Nelson:
No. It’s been interesting to say the least. I mean, markets have been … I’ve got a few data points I’m going to share as far as in the second half here as far as to help people hopefully make some better decisions. But the one thing we’ve always spoken about as far as, and I say always, always is an exaggeration. For 20 years, I’ve spoken about as far as this, and that is that you can’t just buy something like maybe 50 years ago you could and hold it pretty much the rest of your life. Today, with the advent of the computer and the ease and the low cost of trading stuff with hedge funds, as far as being so dominant in the marketplace, with mutual funds sloshing around as many billions of dollars, as far as that they do on any given day. Just buying something and thinking that you can hold that thing the rest of your life, my opinion, my humble opinion is that’s nonsense.
David Nelson:
And so what we do is we do active management. And that is when the wind starts blowing in our face, we don’t ignore it. We basically act. And certainly back four or five months ago, it was blowing in our face. And most people, again, just sat there and took it and said, “This is part of it.” Well, I disagree and I think there’s a better approach. When people truly understand, Gary, that when you lose 40%, which is basically what the DOW dropped, when it drops 40%, you need to make 66% rate of return just to get back to where you were. So this idea that you’ve got to just ride it out is nonsense. There are things that you can look to, and there’s things that you can do as far as to try to mute that and take the 40% drop and keep it to a 20% drop, or maybe even a 10% drop if you’re lucky. And that makes it much easier as far as on the recovery period.
David Nelson:
And again, then people go on and say, “Yeah. But if you miss the 10 best days in the last X number of years, blah, blah, blah, here’s what your returns would’ve been.” What they all forget to include in that analysis is: If you could’ve missed the 10 worst days, where would you be? And so again, it’s this what’s best for Wall Street, not what’s best for the individual. And what’s best for Wall Street is for people to put their money in, fall asleep, and just trust us. We’ll do okay. Well, we saw what the trusting did back in the financial crisis in ’07, ’08, ’09. We saw what it did in 2000, 2001. And the bottom line is that’s not a good approach. That philosophy was applicable 50 years ago. It’s certainly not applicable today.
Gary Determan:
Dave, some interesting numbers you were throwing out there.
David Nelson:
Yeah. Again, most people don’t like to think about it. It’s not a pleasant topic to discuss. Markets don’t always go up. Sometimes they go down. And trying to, again, I use the term mute. There’s not way to time the top. There’s no way to time the bottom. And that’s what people always want to talk about. It’s impossible to time the market. I guess I would basically push back in a big, big way and challenge that concept. One way, and certainly what’s happening today, is Warren Buffett. And Warren Buffett has had a pretty tough year as far as this year. He’s down I think 17%, 18% as we speak. The market’s gone down that much.
David Nelson:
But here’s the important point I want to make. Pretty bright guy, I think everybody would agree. The guy’s a billionaire and he’s done it through investing, so on and so on. But he’s sitting on $37 billion today in cash. And so again, why doesn’t he have it deployed? Why isn’t it invested? I don’t know exactly, but I think a little common sense, you could probably come up with an answer. And that is that things in his opinion seem to be probably a little expensive right now. And you say, “Well, how can they be expensive as far as when the market has dropped like it has?” The problem is when the market dropped, earnings also dropped dramatically.
David Nelson:
And so if you look yesterday, yesterday being before this took place, things were expensive. You certainly can argue they’re just as expensive today as far as if you primarily focus on the big daddies, the FAANG stocks, F-A-A-N-G, so that’s Facebook, Amazon. You’ve got Google chucked in there. You’ve got Netflix chucked in there, so they call it the FAANG stocks. Those stocks have been just on fire as far as over the last 10 years, and they continue to be on fire. Up until very recently, we kind of had an interesting data point, I guess, that’s kind of popped up, and that is that as of two or three days ago now, we have 90% of all stocks traded in the US that are now trading above their 50 day moving average.
David Nelson:
Now why is that important? Well, once stocks, if you have a very narrow advance, which is what we had, so the market from the bottom to where we are now, it’s rallied pretty aggressively and pretty hard, pretty fast. Fastest, just like we had the fastest bear market on the drop ever, we had the fastest bull market from the bottom ever. And a bear market is usually defined as a 20% or greater drop. And a bull market is 20% or greater rise. So fastest drop, fastest increase. Well, again, that was primarily driven by a very, very small group of stocks. Those stocks were primarily technology stocks, and they were on fire.
David Nelson:
Well, recently, a couple days ago, again, we had this breakthrough. And we have now better participation. In other words, we’ve got more stocks traded on Wall Street that are now participating. It was just a limited number before. Now we have 90% that are above their 50 day moving average. That’s a really important statistic probably telling us that this thing could be sustainable over an extended period of time. Not saying it’s going to continue to go straight up at the same rate. By no stretch of the imagination do we believe that. But we do believe that this is a healthier market now that we have better participation coming from a whole bunch of stocks instead of just a few.
Gary Determan:
The pandemic has not only been a part of the United States, but certainly worldwide, and it is a worldwide economy now that we have, Dave. So how are things looking on that front?
David Nelson:
So the global front is looking much better as well, Gary. It’s a really important point. And we’re interwoven, whether we want to throw stones at various countries, whatever, and we do. And some, it may be justified, again, not smart enough to understand all those details. But what we do know is that Europe as a whole is stabilized, and it seems to be advancing. Again, nothing like the US. The US, and people probably get tired of hearing me say this, but it’s kind of a term that’s used a fair amount today as far as in Wall Street jargon, that the US is the cleanest dirty shirt. You’ve got to stop and think that one through, the cleanest dirty shirt.
David Nelson:
So we all have issues. We all have problems. But at the end of the day, the US is in better shape that Europe, certainly, better than Japan, better than most of the emerging economies, the Chinas, the Brazils, the Russias, or Africa for that matter, as far as we go over there, as far as some of the tradable places as far as there. But we, in the rear view mirror, has been better. But again, if I were a better person and you look at another really important point is the dollar is no longer stabilizing. It’s starting to drop, and pretty significantly. What that generally means, if I have money abroad, so I have money in Europe, let’s say, and if the dollar drops, the currency as far as in Europe, goes up. And what that translates into is some magnified returns that people can enjoy. Assuming the stock, let’s say, went up 10% and the currency went up two, you just picked up a couple percent additional because the exchanged rate difference.
David Nelson:
And so again, really important stuff, but don’t get bogged down on that. The average person shouldn’t get bogged down on it. You want to diversify. You want to focus your investment money that you have, big, small, doesn’t matter, in areas that are working. What you don’t want to do, and again, this is Wall Street jargon, is you want to own everything. And the idea by owning everything is now you can hide behind the fact that well, I know you got the heck beat out of you over here with this, but you had this one little … You got 2% in this investment over here that did really well. Well, who cares? Because that 2% meant nothing because the overall portfolio just got smashed.
David Nelson:
So again, it’s sorting through stuff that matters. We have people all the time, they’ll come in, first time we’ve met. What is it exactly you do? And I know I’ve talked about this on this program many, many, many times. I said, “First and foremost, we’re risk managers. Our job is to assess risk and help people make good, informed decisions based on the amount of risk that exists out there.” We don’t have people that come in and say they’ve got an extra half a million or a million dollars, that, oh, well, if I lose it, I lose it. They don’t walk in our door. I don’t know if they exist. So we understand risk.
David Nelson:
The other part of it that is very crucial as well is we tell people that we’re the filter for you. We’re going to help filter through stuff that matters versus a whole bunch of stuff that doesn’t matter. There’s a lot of talking heads out there that are basically blowing about something that in the big scheme of things means nothing to the average person. What we do, we call it tested in the trenches, proven in the trenches. And what that basically boils down to is we’re not just yapping about it, we’re jumping in the boat with our clients. And so we want them to succeed because the more they succeed, the more we succeed. And so it’s a whole different approach. It’s a whole different mindset. We think it’s better, and we think it’s better from the client perspective as well as ours. It is truly a win-win scenario.
Gary Determan:
Again, visiting with Dave Nelson, coming down the home stretch. Got about four minutes left in the program, Dave. I know since mid March, it really has been a little bit crazy. How are you clients doing? And what is your approach to them?
David Nelson:
So we’re visiting with a whole bunch of them. I mean, we’ve got real comfortable with all the technology. I’m still a face to face guy, I have to admit. I really like seeing everybody face to face, but it’s not happening. And so what we’ve got to do is, the phone is getting a lot more use, Zoom, the electronic stuff where you can pull people up. It’s okay. It’s not great. It’s not as good as face to face, but we have to make it work. And the key with all of this, I had people, “Oh, you must be overwhelmed with phone calls,” and we service 1500 people between the Quad Cities, Clinton and Dubuque offices. And that’s a lot of people that their future is predicated on us helping them make good decisions.
David Nelson:
And so these individuals, as a whole, are not picking up the phone and calling. I think we had six people that week that things just collapsed, six people that checked in. How are things going? Because they know that it’s our problem to do the worrying for them. That’s what they’ve hired us to do. So the communication is key, Gary. You’re exactly spot on. We have to do that. Do we prefer workshops and educational events and face to face in our office? Yes. But they’ve been pushed back, and they’ll probably be pushed back for a while yet until we can safely do this. We’ve got a lot of older clients. We don’t want them to feel uncomfortable with it, so we’ll just keep banging them out as far as over the phone.
Gary Determan:
All right. Very good. Now we’re going to be visiting with you on the 1st of July. I hope to have you in the studio at that time.
David Nelson:
Yeah, sure. I think that’ll work. Absolutely. Looking forward to it myself.
Gary Determan:
I know you’re a face to face guy. Yeah, so we can do that.
David Nelson:
Sure.
Gary Determan:
But what should be our focus here in the next four weeks?
David Nelson:
So to us, it’s people should be, again, this isn’t specific advice, but in general terms. The market has broadened out. If I were looking at it and saying, “Where would I want to put some money for the foreseeable future?” Small cap stocks have underperformed badly compared to large cap stocks. And again, there’s opportunity out there, folks. There always is opportunity. Warren Buffett is right on that too. He points that out. If you miss this opportunity, there’ll be another one coming around the corner at some point, so be patient. I’m saying, again, small cap stocks, international investing are probably two of the sweetest spots. Don’t necessarily jump on the bandwagon of something that has worked and has basically made those particular, that particular area of the market overpriced. Start looking at other opportunities. And clearly, they’re out there.
David Nelson:
One real quick thing, we’ve got a little story coming up here. We’ve coordinated here. We’ve gotten Valerie in the office, kudos goes out to her. She’s done all the work. It was conceptually her idea and my idea kind of combined, where we’ve been raising money from financial institutions, the big boys out there, and the banks and whatever. And we’re going to have an announcement that’ll be coming up here real soon as far as some funding for off season, as far as making sure that we get people fed as far as in this area. And I think we’ve accomplished a whole bunch. And again, I think this’ll be an announcement here coming, the specifics of it. But we’re really excited about it, and we’ve been able to raise a whole bunch of money, and hopefully going to make a real difference, so anyway.
Gary Determan:
Yeah. You guys do such a great job all year round of helping out the community.
David Nelson:
Thank you.
Gary Determan:
Appreciate that, Dave. Thank you so much. And we’ll talk to you July 1st.
David Nelson:
Sound great. Thanks, Gary.
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 indexes mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer, member FINFA 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.