Gary Determan:
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.
Gary Determan:
Registered representatives, 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:
It is the first Wednesday of the month so we welcome Dave Nelson into the studio. Before we get into things going in your world, [crosstalk 00:00:51] we’re going to talk a little basketball because I know you love to do that. Bellevue, Marquette [inaudible 00:00:56] conference, they open up quarter final play today at the girls’ state basketball tournament. Great atmosphere when you go out there. You were out there not too long ago.
David Nelson:
Sure. Loved it, want to get back. Certainly, expectations are high as far as going into next year, as far as for us. Key is, can we deliver it, can we make our way to Des Moines. We should have the talent as far as to be able to pull it off. We went down to watch Marquette. It’s been a interesting rivalry as far as through the years. When [inaudible 00:01:25] took over, he took over in my third year, my first go round as far as coaching. I coached against another gentleman and ended up at Dubuque senior. I can’t remember his name right now.
David Nelson:
Anyway, so it’s been a great rivalry. Again, the early years they dominated us. We just didn’t have much experience. Probably the bulk of the midsection as far as when I, again, the first time coaching, we did a pretty nice job as far as owning them. We were rolling, they weren’t rolling as much. Then it was kind of tit for tat as far as for the last couple of years as far as where we exchanging and trying to defend home court at a minimum and hoping to pick up one on the road.
David Nelson:
Anyway, so not a lot of love as far as probably, it would be a pretty mild way of putting that, but the last couple of years it’s been kind of changing as far as their mindset towards us and ours towards them. We brought the girls, the girls wanted to go. They’re going to play Burlington Notre Dame. This was two weeks ago, give or take, as far as down at PV. Instead of having practice, we brought the kids down to the game and cheered on Marquette. They got a W, we shared with them as far as we played Burlington Notre Dame in the off season down at Saint Ambrose and knew they were beatable.
David Nelson:
Again, their strategy against Marquette was to try to run them and to play and press them because their guards clearly are the weak part of Marquette’s team. They have five bigs of 5’11” and up. I mean, I don’t know any small program, probably even any big program that has five people that are basically in girls’ basketball, high school basketball at six feet, give or take, and up. Anyway, so their style of ball was to pound it inside and try to dominate the boards. Ultimately they did and got the win.
David Nelson:
Now as you say, they’re playing I think this afternoon, if I’m not mistaken, as far as out in Des Moines. What a thrill, for anybody that really enjoys basketball. I’m not joking. I mean I love basketball and I love watching. I don’t watch pro as much as I used to, but college ball, high school ball, just so cool. Even the lower levels. It was the first time I’d ever done it as far as since our boys at [inaudible 00:03:44], I guess it was [inaudible 00:03:47] I think back then, went to state.
David Nelson:
I brought my basketball team out there two years ago. We sat and we watched for a day and a half of basketball. Boy, it was a riot. I just can’t recommend it enough to people as far as how enjoyable it was and how terrific it is and to see some of the different levels of basketball that exist. I’m saying girls or boys, either one, you’re going to have a great time if you really enjoy basketball. It’s a perfect venue as far as to have it and it’s certainly you’ve got good talent as far as that’s out there, so certainly want to to look into that.
David Nelson:
I’m hoping they get as far as Saturday, which would be the championship game because I actually am available that day and I think I’m going to jump in the car and go out and cheer them on hopefully. [inaudible 00:04:35] is going to be a handful. They’re there at state pretty much every year and they’re a contender pretty much every year. I don’t know what they’re doing, but they’re doing something right.
Gary Determan:
Something we’ve talked about is the life lessons that you get from sports. Not only basketball, but all sports, but certainly in basketball because the last night I was at [inaudible 00:04:56] gym, North defeating Dubuque senior on an in bounds play with less than a second to go. North Scott advancing. They have a three point goal at the buzzer to move on. You have the thrill of victory, the heartbreak of the loss, but they teach you lessons either way.
David Nelson:
Yes, no question.
Gary Determan:
It’ll lend when you get to be an adult.
David Nelson:
Agreed. We talk about it all the time. One of the things I did this go around when I came back coaching, this was my third year, so three years ago it was, we talk money and we talk money before practice. I want them to understand mutual funds and taxes and social security and a lot of this stuff that people talk about in my office on a regular basis that they need to teach this stuff in school. I said, “They do to some degree.” The problem is when you’re 16 and 17 years old, oftentimes you don’t want to hear it.
David Nelson:
It doesn’t make sense to you and you don’t want to look stupid. We break it down and again, I can speak about it from firsthand in talking to clients and I share this with the kids as far as that part of it. The other part of it is, we spent a lot of times with quotes. We spend a lot of time with stories, success stories of people that had nothing and somehow made a good life for themselves. It isn’t amassing money necessarily. Most of them aren’t. It’s somebody that made a difference in the world and oftentimes minorities, oftentimes women.
David Nelson:
Again, I’m coaching women’s basketball and I want them to hear this stuff as far as people that didn’t have a rosy start, but they’re able to do something with it. Several of the kids that we work with and that we coach haven’t had rosy starts. They’ve had a lot of turmoil in their life. Again, trying to let them see other people that have succeeded, that have been in a similar situation and found a way to get the job done. Yeah, it’s great. I enjoy it. Again, I know you and I have chatted about this so many times over the last 15 years, but when’s the end, and I really thought the end was four or five years ago I said when I came back this go around that it would be four years and I would be done and I still think that’s going to be the case.
David Nelson:
I have lots of grandchildren now and I want to spend more time, but boy, will I miss it. It’s just I’ve got great kids that I coach and I got kids that will bust their can to try to get the job done, whatever we ask. It’s fun. It’s just a great, great opportunity. We were just chatting this morning with a couple of folks in the office prior to coming up here about the girls program, as far as at Clinton High and the success that we had last summer as far as playing against them and what have you, and making both teams better. That’s what we want to do this year.
David Nelson:
I want Clinton High program, I want my program, I want both programs to really, really turn a corner and see what we can do as far as in this area and again, potentially at a state level. Both programs have lots of good teams to contend with, but bottom line is we want to make each other better. I really think Kathy there, is going to be a great addition as far as to to our area. We’re going to do everything we can as far as to try to help her and she helping us. It’s just a great relationship that we have.
David Nelson:
Again, through the years there’s been some rivalries there and some venom hostility, which is just crazy. Let’s make each other better and that’s certainly what we’re going to do this off season.
Gary Determan:
Yeah. Your niece was a pretty good ball player for Clinton High [crosstalk 00:08:22].
David Nelson:
Oh, wasn’t she? Oh, exactly.
Gary Determan:
A couple of them actually.
David Nelson:
Exactly.
Gary Determan:
I know you’re at Prince of Peace, your wife teaches there, your children went to Prince of Peace, you’re a graduate at Clinton High School.
David Nelson:
Yep.
Gary Determan:
Of course the referendum, my goodness, a pass by a 75%.
David Nelson:
Isn’t it great?
Gary Determan:
That is.
David Nelson:
Isn’t it great? It’s a happy day here. I mean I get chills just thinking about it. Seriously, as far as the programs that we have and we got to get the word out and we got to … Again, everybody that has ever listen to me realizes I get tired of all the negativity. Only in Clinton would you have roads this bad, only in Clint would you … I said, “Obviously you don’t travel very much because it’s everywhere. Okay? It’s not like every city has all this extra money sitting around and their roads are perfectly terrific and everything is good.”
David Nelson:
I mean, again, we’ve got a lot of good things going in town here. We got to find and focus on the positives and if we do we can make it a better place. I think it is a great place, but I think we can even make it better.
Gary Determan:
First Wednesday of the month so we continue to the bottom of the hour. Well, things certainly interesting in your world as far as the business goes. The Coronavirus is just amazing to me how that can play into such a role.
David Nelson:
It has and it’ll continue to. If you look at past, SARS is probably the one that’s gotten the most attention in the comparisons as far as to to what we’re going through right now. As I listened to a gentleman on Bloomberg TV, probably, this was maybe two weeks ago, he said, “I think this is going to be the worst thing I’ve ever witnessed in my career.” He’s probably 65 years old and he wasn’t necessarily talking about the markets, I don’t believe.
David Nelson:
I think he was talking about the event that this thing could become so huge. We look at it as far as we’re trying to do everything we can as far as globally to try to mute some of this, but the comparisons that I think are better would be the Towers being hit as far as in New York City. When that took place, many people, most people were paralyzed. The country was paralyzed. We were concerned about traveling. We were concerned about doing pretty much anything. If you look at this, look what’s happened as far as the airlines. Look what’s happened as far as to hotels.
David Nelson:
I mean, the bookings have just fallen off the face of the earth, I mean as far as the amount of damage that’s been done as far as the travel industry is concerned. The other comparison I guess that people have tried to say that it could parallel, I think is also somewhat valid, and that is the tsunami in Japan. When the tsunami hit in Japan, basically what it did is it disrupted that the flow, the chain of the parts, all the various things that go into producing, like the Apple iPhone. You just look at that and I saw kind of a nice, kind of almost like a spreadsheet of where everything comes from and the various countries that come into play to make a stupid iPhone.
David Nelson:
It’s not one country. I’m getting this part from this country, this part from this country, et cetera, et cetera. With the tsunami, you had so much disruption and it didn’t last a day or a week. This lasted months. This lasted probably even you could argue, maybe a couple of years. What’s happening with this is the same thing. The supply chain disruption that’s taken place is dramatic. It’s fed into the markets. We saw the market sell off in a pretty significant way, peak to trough depending on, again, whether you look at year to date or from the very peak to the very bottom. I mean we were on the doorstep of 15% depending on what index you look at.
David Nelson:
If you look globally, it was even more, but bottom line, that’s a pretty significant drop in a very short period of time. It’s recovered some. We’ve had this volatility today when I came up, the futures were up 700 points. I don’t know exactly where we are, but the bottom line it’s just this volatility is at a extreme level right now. If it continues as far as this level, again, it could cut either direction. I think politically we can maybe chat about that last night, having Biden win more than what Bernie did.
David Nelson:
Wall Street, for whatever it’s worth, and again, this isn’t a political statement folks, so I’m not taking sides here, I’m just saying as far as if you look at the investing public out there as a whole, they would prefer to have a more known person versus an unknown person. Subsequently you’re usually going to have better returns as far as with that, just knowing the individual potentially that could be in the White House. Yeah, it’s a really interesting time. It’s no reason to panic, but as we tell people, there’s no assurance this thing’s going to turn and go right back up.
David Nelson:
I mean, we have people, “Oh, do you think it’s short lived?” No, I don’t think it’s short lived. I think this thing’s going to be months and maybe a year before this thing corrects itself. The bottom line is, again, the importance of having good defense as far as to help protect you during these potentially continued to have violent experiences as far as in the market.
Gary Determan:
So I shouldn’t take my money, put it in a mayonnaise jar and bury it in the backyard.
David Nelson:
The impulse is to do that by many people. I’ll put it that way, Gary. If that’s the case, you’re not alone. There’s times that I think that sounds okay, but yeah, definitely don’t want to do that.
Gary Determan:
The Federal Reserve made a move yesterday to talk about that.
David Nelson:
Yeah, it’s kind of a preemptive thing. For those that don’t know what took place, is the Federal Reserve is basically they set interest rates on the short end. In other words, like T-bill type rates, all of this stuff is derivative from where interest rates are. What the Federal Reserve did yesterday was they lowered interest rates by a half a percent. That never happens. I mean I think it’s only happened two or three times in the last 20 years. Generally you’re looking at 10 basis points, so like 0.1% to a quarter percent. That’s generally the rule of thumb that takes place.
David Nelson:
Obviously the Federal Reserve believes that this thing is really, really serious. The question comes down to, is it going to have any impact? Am I going go out and spend more money now because of a half a point cut in interest rates knowing that I’m afraid of what might happen with this Coronavirus, et cetera, et cetera? Will that have point do anything? Yesterday I think the market basically sent a message to the Federal Reserve, ho-hum. We don’t care about that half percent. Subsequently things sold off after it was announced. It rallied for about 10 seconds and I exaggerate and stuff like this. I don’t know, maybe it was a half an hour or something like that.
David Nelson:
Then it fell and it fell pretty significantly. Today we’re up pretty significantly. Again, is that election related? I don’t know as far as what took place, but the bottom line, it kind of appears to. We’re at this point right now, I mean maybe you know this, maybe you don’t, Gary, and I’m guessing many of the listeners out there don’t know, if I were to go buy a 10 year government bond rate now in the United States, I’m getting just a tad bit under 1%. I said that right, 1%. You’re going to tie up your money for 10 years to get 1% per year rate of return on your money.
David Nelson:
Now, as awful as that sounds, go over to Germany, go over to most European countries, go over to Japan, and the way it works there, their 10 year bond, they call it a bun there, but their 10 year bun in Germany is paying negative 0.46% as of a day or two ago. That kind of puts things in perspective as far as globally what’s happening. It’s the race to the bottom. The theory is that if we keep lowering interest rates, it’s going to spur people on spending more money, which will help the economy and everything’s going to be great, but it’s not. The bottom line, that’s why we keep reminding people, watch the bond market as much as you watch the stock market. The bond market generally leads.
David Nelson:
The bond market today, putting things at 1% doesn’t mean we’re afraid of inflation. It means we’re afraid of deflation like much of the world has. It means we’re afraid of recessions that are probably going to come our direction in the next 12 months. That’s what the markets are basically telling us they’re afraid of, not inflation but deflation and a big, big difference between the two.
Gary Determan:
Visiting with Dave Nelson. Got about five minutes left in the program. It’s obvious you have a passion for what you do, just listening to you across the table there and pounding on the table. At times like this, does it just get a little too much sometimes for you, Dave?
David Nelson:
The quick simple answer is, no. To the average person, that’s probably true. I’m kind of weird. I’m not patting myself on the back. I’m basically saying just the exact opposite. I tell people this, it’s a calling. I don’t say that lightly. I don’t say that flippantly. It’s true. There’s a lot of people out there in need of help and there’s a lot of bad people that want to worry about their own pocket book and not necessarily the individuals, but their pocket.
David Nelson:
Because of that, I have a burden that I carry that I really believe that we want to really make a difference. We do through this forum and have done it for, I don’t know, close to 30 years, I’m guessing give or take, because we care. The bottom line is it’s a free service that we provide as far as for the public, as far as to try to inform them and try to give them a little edge. We do this stuff on TV as far as in the news for a reason now. Channel 4, if you don’t know it, Channel 4 News on Tuesdays, we’re on there two times on Channel 4 and we’re on Fox one time. We’re talking about concepts that are important to people.
David Nelson:
We’re not rattling off the stock market was up or it was down. Who cares? That’s already something that’s already taken place. What we want to bring to the table are ideas to help people increase their net worth. We want to bring to the table ideas that can help people reduce the tax liability that they’re paying. We want to bring to the table more certainty as far as for individuals in retirement. The only way to do that is you really got to buy into it. Yeah, 30 plus years ago I bought into this. What I bought into is that it’s a lifetime commitment to make a difference. Again, we are making a difference and we want to continue to make a difference.
David Nelson:
Yeah, there’s a lot of stress. There’s no doubt about it. I mean when the market’s dropping a thousand points as far as in a day, you don’t really see that very often. Again, we’ve got to keep things in perspective. We got to understand the importance that we talk about all the time as far as here, that you don’t get lulled to sleep and the market’s going to continue to go up forever and I’m going to get wealthy, blah, blah, blah, blah, blah. Nope, we got to make sure that we’re taking care of the downside, just like we talked about at the beginning here in basketball,
David Nelson:
You don’t win basketball games by just playing offense. You win basketball games by understanding the importance of defense and offense. That’s basically what we do as far as when we help clients. It’s important and we’re passionate about it. Not just myself, many others down there and for a reason, because this is serious stuff we’re talking about here. This is people’s futures. When individuals retire today, on average when they retire, they have 23 years that they’re going to need that coal pile, that money that they’ve amassed and put together, to stay together to give them income so that they aren’t standing in the food line as far as trying to get money. That’s a huge responsibility and we take it very seriously.
Gary Determan:
I would think so. Now time of year of course taxes, April 15th is approaching. Be here before you know it and of course you do now offer the tax service.
David Nelson:
Yeah, a really important part of what we do, it’s a separate company, but it’s really integrated as far as with what we do as far as on our side, the financial planning side, the investing side, taxes are a really important item. They’ve gotten simpler with the change in tax law, whether people like it or not as far as what took place roughly two years ago now, but for most individuals out there it’s probably a really good thing. It helped them tax wise.
David Nelson:
Having that little reassurance as far as from the accountants, as far as doing your tax return for many people is still the right answer, as far as to go in and just double check stuff and make sure that that you’ve got things done correctly. Yeah, taxes integrates so beautifully as far as with what we do, estate planning integrates, all this stuff needs to be pulled together. I know when I started, Gary, and I’ll say it’s north of 20, it’s times two almost now, but anyway, it was very separate.
David Nelson:
You had the attorneys over here, you had the financial people here, you had the tax people over here, all separate locations, all separate businesses. There was very little interaction as far as between the three services. Today it’s a different world and the interaction is imperative. That’s why we love to have it all in house, to make it a lot easier as far as for individuals out there.
Gary Determan:
As always, a pleasure and a lot of fun to have you in, David. Thanks so much.
David Nelson:
Thank you. Gary.
Gary Determan:
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 representatives, 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. For more information, visit our website at www.nelsoncorp.com.