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, Inc., a broker-dealer, Member FINRA/SIPC, Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. 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, Dave Nelson in studio with us, and I’m sure you were in Iowa City on Sunday.
David Nelson:
Yes, yes. Didn’t want to miss that. Fortunate enough as far as to have some tickets, and what an exciting game. Watching the Iowa women basketball team, it’s exciting times. I keep seeing Caitlin Clark break another record. Pistol Pete Maravich, for those that don’t know, she surpassed his record and-
Gary Determan:
I didn’t know they called her Ponytail Pete.
David Nelson:
Oh yeah, exactly, exactly. Kind of an interesting little handle to put on her. Yes, exactly. Yeah, just watching this gal play basketball, and again, being a basketball kook that I am, just love the game and watching somebody with the skill that she has, it’s just outscoring. I mean, she’s got all the tools. She rebounds, she certainly is an assist, just magician as far as with the ball in her hand, and it’s just fun. Again, not coaching this year has allowed us to be able to go to the games and what have you. Don’t get me wrong, I don’t want to say that in a negative way. I really enjoyed coaching, so nobody twisted my arm as far as to coach. But being out of it now for a couple years and heading out and watching the Iowa women play, it’s just been really, really exciting.
The atmosphere out there, we did something, and I won’t belabor this point too much. So I have five kids, and my wife and I went out there with all five. This was the first time ever we’re thinking in 14 years that it was just the seven of us that spent time together. There was no spouses and there was no grandkids, it was just our kids and my wife and myself, so that was cool. People said, “You had such a great game to watch.” I said, “As much fun as the game was, just riding in the car like the old days as far as with the kids-”
Gary Determan:
Did you get the station wagon?
David Nelson:
Exactly.
Gary Determan:
Wood paneling on the side?
David Nelson:
Exactly, yes. Old school. Good stuff. Yes, exactly. So yeah, it was fantastic. So we had a great time, loaded up, and went out there, and it was just fun to watch. Everybody that watched the game, they realized how exciting it was, and getting Ohio State back was really, really important. So they did a nice job.
Gary Determan:
We were able to, of course, carry the games and have carried a lot of the Iowa women game, and we will have them as they go up to the Big 10 Conference Tournament. But we had the senior day recognition afterwards, and interestingly, it was emceed by Holly Rowe of ESPN.
David Nelson:
Wasn’t that great? Yeah. Yes.
Gary Determan:
I would imagine you stuck around for that.
David Nelson:
We did, yes. Yes. We were hoping to get an update. For those that don’t know, one of the Iowa Hawkeye players went down, and so she came out in a wheelchair as far as to get her recognition, what have you, and so we wanted to see as far as how she was doing. I guess there’s been a report that she’s not done for the year. I don’t know if she’ll be back as far as for the Big 10 Tournament.
Gary Determan:
Yeah, we had Lisa Bluter on her Hawk Talk Monday night, said did not tear the ACL. Definitely going to be out of the Big 10 Conference Tournament, but possibility she might be back for the NCAA tournament.
David Nelson:
Wow, that would be fantastic.
Gary Determan:
That would be great. Yeah.
David Nelson:
Thanks. I did not know that.
Gary Determan:
Yeah.
David Nelson:
So at the end of the day, just a terrific, again, environment; terrific as far as to be there, as far as for that recognition, as far as the ceremony that they had and the place went nuts, as far as for all the players. Kate Martin, Gabbie who’s come around, as far as, she’s one of our little shooters that sits in the corner and tries to knock down threes and does a really nice job. So yeah, it was fantastic. We had a great time.
Gary Determan:
Again, visiting with Dave Nelson. Of course, money is your thing.
David Nelson:
Sure.
Gary Determan:
Talk about the impact that Caitlin Clark has made on the University of Iowa women’s athletic program. I would imagine the basketball program is giving a lot of money to some of the other women’s sports.
David Nelson:
Yes. So through the years, as many people probably know, football’s kind of carried as far as a lot of universities, as far as from a financial perspective. You know golf, what does that generate as far as revenue is concerned? And track, and many other sports. And I’m not putting them down by saying that. It’s a reality as far as that they don’t.
So the football program, years ago, I got data, so this is probably now six, eight years ago, but it was like a $90 million surplus from football, as far as what came in the door, what went out the door for that sport. So again, that went around to a lot of the programs as far as to support them. Now, the women’s program, holy cow. Go out there, just look at if you’re inside, you see as far as people have no regards for the money that they’re spending. Buying ice cream cones for what? Six bucks or something.
It is not even the good old-fashioned hard stuff. It’s the stuff they pump a whole bunch of air into, literally. So the Carver Cone as it’s called, and a bottle of water, $6, $8, I don’t even know. It’s just craziness. And then the T-shirts and all that fun stuff, people can probably visualize that.
But yeah, we’re hoping it continues. As far as once Clark goes to the WNBA, as probably everybody’s aware by now, it’s been all over the news. We will see as far as can they sustain this and keep it going, but the revenue’s coming from every direction. If you look at it as far as the sponsorships that they have out there, a lot of money coming in the front door, and a fair amount of it’s going to be going out the back door. For those that don’t know, we’re going to be playing USC, as far as this is the Big 10 is now welcoming of the USC, UCLA and what Washington, I believe, if I’m correct on that. And so there’s going to be a lot of airfares that are going to be taking place and a lot of money on that.
Gary Determan:
You can go from coast to coast.
David Nelson:
Coast to coast, Big 10.
Gary Determan:
Big 10, Rutgers-
David Nelson:
Exactly.
Gary Determan:
… all the way over to California.
David Nelson:
Yeah, it’s just wild. And again, the expense; you look at it again for the basketball team that’s generating some money. Maybe not that big a deal, but now you’re sending your golf team, your swim team, whatever, as far as from here to the coast. I think we’ll be pretty lucky. I can’t imagine Rutgers when they play USC. I mean, just think about, what are we going? Two days ahead of time now, maybe. Probably have to. So yeah, it’s going to be interesting, but it’s money related as everybody knows. And these schools coming into the Big 10, I forget the amount, but I think they each got a hundred million as far as to join the Big 10. That’s what kind of money’s in play with the TV rights and all that good stuff. So anyway, it’s just kind of crazy.
Gary Determan:
Just before we take a break for the weather, of course, this is all being driven by TV and football primarily. In your line of work, is there someone or something that really kind of drives the market?
David Nelson:
Yeah, so probably the biggest thing as far as if there was one thing that you had to bring it down to, it would be basically the Federal Reserve as far as what they’re doing, that would be probably number one. Number two is just looking at what’s the market doing. We talk about, there’s all kinds of sayings in this industry, but you stay with the trend and the trend clearly right now is still up. Even the last few days have been kind of rough; today, I think we’ve been recovering. But the Federal Reserve, all eyes continue to be on the Fed. What’s the Fed going to do? Are we raising rates? Are we cutting rates? What are we going to do? And a lot of decisions being made based on that. Right or wrong, they’re being based on that, as far as a lot of people out there.
One of my segments that I’ve done recently as far as, and we have this on our web page, basically centers around the perception versus reality, as far as what takes place. And so many times, people are making decisions based on something that unfortunately really doesn’t matter. So stay focused as we tell people. Have a plan, be disciplined, stay with that plan>
Gary Determan:
First Wednesday of the month, so we’ll continue on to the bottom of the hour. Our weather update, brought to you by Frary Lumber.
Announcer:
Our Wednesday will be starting off on a cloudy note, but I am expecting some sunshine to return at times today, and that means a warmer day. We’ll have temperatures into the mid and upper fifties this afternoon with a light east breeze tonight. Cloudy skies will drop to the mid-thirties and for Thursday, more clouds highs in the upper fifties. With your StormTrack 8 forecast, I’m meteorologist Andrew Stutzke.
Gary Determan:
Right now, we do have sunshine, current temperature 41 degrees, our update brought to you by Frary Lumber.
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Gary Determan:
Going to continue now to the bottom of the hour with Dave Nelson. You mentioned things primarily up for the market. It’s been a couple of rough days. Take a look. How is it looking so far?
David Nelson:
Yeah, I mean, depending on, again, what people look at as far as kind of their proxy for being able to compare. If you look at the NASDAQ, which is getting more attention these days than pretty much anything else as far as the Dow or the S&P 500. So the NASDAQ, again, year to date, it varies from day to day. Yesterday was kind of a rough day, but you’re somewhere in the neighborhood of four to 5% already. We’re in March and we’re four to 5% to the good. Now, it doesn’t mean we’re going to continue to hold onto that, but it’s a really nice start. The S&P has been the best performer. That’s up maybe a percent higher than that as far as year-to-date. And then the Dow has been the lagger, as far as you’re probably talking three four, as far as there. So it’s been a good start.
What’s interesting, and again, I can bore people with all kinds of stats and statistics and whatever. But at the end of the day, I think what happens after we’ve had a run like we’ve had – and I’m not just talking about the beginning of this year, I’m talking about the tail end of last year, too – I mean, the market is up 10-15%, again, depending on what index you look at in a very short period of time. And so when people see that, oftentimes the instincts are to say, “Is this going to continue? Should I take some money and run?”
Ironically, when the market hits all-time highs, it generally hits other all-time highs, as stupid as that sounds. It’s the momentum, as far as what comes into the market. When you look at momentum stocks, and those would be probably the big household names that people are probably fairly familiar with, as far as your Microsofts and entities like that; they’ve run really, really hard, and they’ve run hard for quite some time. Again, people want to know, is it done? Is this AI, artificial intelligence, is this the real deal and will this continue? And again, nobody knows for sure, so I got to get all my disclaimers in here as far as that we don’t know. We really don’t. But the reality is it’s already impacting you and I every single day. And it’s going to continue to, and so I don’t really see an end to that for quite some time. It’s kind of like the internet when it started. There was a lot of skepticism as far as around that. But we all know that without the internet today, our lives would be a lot different. The one that I still can’t get my arms around is these cryptocurrencies, and I got to talk again generically about this, is that they’ve just gone from literally nowhere to this massive amount in a several-month period of time. It’s crazy as far as what’s taken place there.
Again, momentum is a really powerful thing, and if you get enough people believing in something, and, “I don’t want to be left behind, so I better invest today,” and you have a whole bunch of people thinking that way; the bottom line is you can get some of these gargantuan moves.
Again, I’d like to talk more specifically about it, but the regulating bodies don’t allow it to. So again, generically a lot of the cryptocurrency stuff, I’m not as well-informed. What I do know is that what’s happening now can’t continue, and the bottom line is that people need to be prepared. I don’t know how long it’ll last, but at some point there’s going to be a drawdown, and we’ve gone from nothing to a whole high big number in a very short period of time.
Gary Determan:
You look good in stripes.
David Nelson:
Yeah, I don’t want those type of stripes on.
Gary Determan:
Yes, you don’t want those type of stripes. Just before the weather break, we were talking about the Federal Reserve. Let’s take a look in the rearview mirror just a little bit, because they wanted to control recession. Didn’t really look like we went into a recession, though.
David Nelson:
So it depends on how you define a recession. So many people that we listen to have said, we’ve been in a rolling recession, so it’s hit different sectors at different points of time. And so it’s been there, but it hasn’t been, again, just across the board in its entirety, as far as taking the entire market down with it. But reality is the Fed came in, for those that remember; we came out of COVID, and then once we’re out of COVID, now people are spending money like crazy as far as wanting to buy this, that, and everything under the sun. And so it put a lot of pressure on the system as far as to be able to have that, in furniture, appliances, et cetera, et cetera. And so we couldn’t basically have a big enough supply of this stuff, so the prices kept going up, up, up.
And then what started happening is the Fed saw this happening and said, “We need to slow this down.” And the perceived, and again, I don’t want to say that it’s the perfect solution, but I think it’s the best solution that they were able to come up with, is that you increase interest rates to put more pressure on people as far as spending. So if they want to spend money and borrow, instead of paying yesterday maybe 3% today, they’re going to pay 5%, 8%, 10%, whatever the case may be. So they’re not as apt to spend and want that stuff.
So again, in theory, it slows the economy down. Well, no longer is it theory; it’s worked as far as slowing things down, slowing it down pretty dramatically. From inflation, running 8%, 10%, down to probably in the neighborhood of 3% depending on who you listen to, it’s come down pretty quickly. And again, the Fed increased interest rates quite dramatically in a very short period of time as well. So it worked. Now the question is, can we get to the level that they want? The level they want is a 2% inflation rate, and again, inflation isn’t just measured with one tool that most people think it is, the consumer price index; there’s several different indexes that they look at.
So point being, we’re getting closer, and it’s been really good in that regard as far as trying to slow down the economy, get prices under control. But now the talk is that the gouging that’s taken place as far as many of the big corporations, as far as increasing the pricing just out of basically greed, we’re going to start being more aggressive with them as far as the politicians are talking about doing that, again, to try to get things prices down. Is this a political stunt? I don’t know. It is way over my head as far as my pay grade, but the reality is there’s been a fair amount of that, and it’s probably a pretty good idea. Will it work? Don’t really know. But the bottom line is, at least talking about it, I think, makes sense in itself.
Gary Determan:
Again, visiting with Dave Nelson of NelsonCorp Wealth Management, it is obviously a political year.
David Nelson:
Yes.
Gary Determan:
Don’t want to get too political, but it seems like the economy is going to be a big talking point among Joe Biden and Donald Trump.
David Nelson:
It is. You’ve got the border that supposedly, if you listen to the experts that say, that’s front and center. Next, is the economy stupid? Can we keep this economy moving? And again, what’s interesting is perception versus reality. I had somebody in yesterday that we were chatting with. “This thing is a mess, what’s happening out there.” I said, “The economy hasn’t been this good in 25 years.” And so again, it’s perception versus reality. “Well, what do you mean by that?” I said, “Look at the unemployment rate right now. The unemployment rate is basically nonexistent, as far as what’s happening there.” You look at as far as the ability for people to be able to buy and to be able to, it’s being manufactured that I can get. I mean, the economy is chugging along at a rate that we haven’t seen in 25 years. So again, it’s perception versus reality.
Now, having said all that, now you have to go to the other side and say, “Yes, but look at the prices of stuff today.” That’s true. Grocery costs have gone up more than inflation has gone up. Now, the question is why has that taken place? Are we going to get aggressive with these people, these people meaning corporations and the CEOs of these corporations to try to, again, get them to recognize as far as the greed factor.
Now, having said that, I think most people like as far as looking at their account balances today as far as their 401(k)s, et cetera, et cetera. So as those prices went up, the corporations are making more money. As they make more money, the price of their stock goes up. That stock happens to be in your mutual fund. That’s in your 401(k) so net-net again, are people… I’ll put it this way. People that have some money and have some investments, they haven’t suffered nearly like those individuals that haven’t, because they had the buffer of their investments going up as prices went up. Those that don’t have those investments, they’ve been hit alongside the head and they’ve been hit pretty hard, and so you feel for those individuals, and that’s, again, where I think the politicians can use some influence as far as to try to see what they could do as far as to try to get these prices under control.
Gary Determan:
Of course, it is tax time. I get to work at about a quarter to 5:00, and I can look down at your parking lot, and there’s always one car down there.
David Nelson:
Yes, I know who it is. Mike’s there pretty early.
Gary Determan:
Mike is there early. I asked him one time, I go, “I get here about a quarter to 5:00 and I see your car there. What time do you get there?” “At around 4:30.” So he doesn’t beat me by a whole heck of a lot, but how are things looking on that front?
David Nelson:
Yeah, we’re making good headway. We’re way ahead of where we were last year as far as the numbers are up, as far as the number of tax returns that we’ve done so far, and a lot of new faces as far as showing up. I think people are starting to recognize the fact, and we’ve been, I guess, beating this drum in a pretty significant way, as far as the idea of how often does your investment people get together with your accounting people, and why is that important?
Well, as I explained to clients, I said, “Every decision we make with your investments either today or tomorrow is going to be impacted in your tax return.” In other words, if we say, “Hey, let’s put some money into a deductible IRA,” if they were eligible for that, “this is going to show up in your tax return today. You’re going to see your taxes go down today.” Okay? So do we need to discuss that as far as with your accounting people, as far as in that regard? Or no, we’re going to do the Roth IRA, and that is a deductible today, but it’s going to come out to you as far as down the road. Which one makes more sense? Should I be putting more in my 401(k), et cetera, et cetera. All of these come back to your tax return at some point.
So getting people to recognize that and understand that now basically as we put it, necessitates the importance of having that stuff coordinated. We’ve worked really, really hard, as far as to try to bring this stuff. There’s a lot of rules and regulations as far as having accounting along with investment people, and we’ve been able to work through those details to be able to have it in-house. And so having all that in-house, essentially we’ve had a ton of crossover as far as clients that work on the accounting side that work with us and vice versa. And it’s making a difference, because we do a lot of what we call tax planning, and the tax planning takes place in September, October versus what most people do, and that is tax preparation. They round up all their stuff at the end of the year, they hand it off the accountant, and the accountant tells them how much they owe. And so rather than doing that, what are some proactive things that we can do in advance as far as to try to minimize that tax liability that people have to endure?
So it’s made a big difference and it’ll continue. We’ve added a few other areas as well, as far as some estate planning type discussions we’re having with people, in addition to the Medicare-type discussions, all of which come back to the tax return is the middle of all of this. That’s the sun in the universe, and individuals that need to coordinate all this other stuff, and that’s what we’re attempting to do as far as these days compared to, again, five, 10 years ago. So it’s new to my knowledge. Nobody else as far as in a hundred-mile radius is trying to pull this off. I think we’ve done it, and again, it’s been a real benefit to a lot of our clients.
Gary Determan:
Yeah, I mean, what a great move on your part to do something like this. Before on the program at this time, you would always have Jackie who would come in and do the program with you, but now everything’s in-house.
David Nelson:
Yes, makes a big difference. Clients love it because when they come in to do their taxes, we’re typically lining up a meeting as far as either before or after, that we’re meeting with them on the wealth management side. So we’ve got this coordination as far as what should we be doing? We chatted as far as with the joint clients in September, October as far as to put together a roadmap for those individuals.
So yeah, it’s added a tremendous amount of value. I guess I’ll wrap it up. I know we’re about out of time here. But as we tell our clients all the time, there’s more value to doing that tax planning than focusing on the rate of return. The rate of return is nice, don’t get me wrong. We’re certainly going to fight there, but there’s going to be more value that your financial people can add as far as basically focusing on that income tax return. It makes a big, big difference.
Gary Determan:
Great to have you and appreciate it.
David Nelson:
Thank Yes, you betcha. Thank you.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in the 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, Inc., our broker-dealer, Member FINRA/SIPC, Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.