Gary Determan:
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:
And we are on the phone this morning with Dave Nelson and good morning David.
David Nelson:
Good morning, Gary. How are you doing today?
Gary Determan:
Real good. Nothing I guess has been settled yet in the presidential race. How will that affect the stock market?
David Nelson:
Yeah, we get the question a lot from folks as far as what they believe this means, and the reality is the President really has very little impact as far as in the markets long-term, shockingly to many people. But it is a fact again, what we try to do as far as anything that we do is, not just blabber about something, but be able to back it up. And the reality is that very little impact. To break it down a little bit further, I guess I would say if you just looked simply at the White House and you said, “All the years that the Democrats were in the White House and all the years that Republicans were in the White House, which party did the stock market do best with?” And the answer is Democrats. So that kind of surprises people too.
David Nelson:
But if you break it down a little further than that, you see that the Great Depression was mostly on Hoover’s dime, being a Republican, that peak to trough drop was an 89% drop as people may or may not remember. So the bulk of that went onto the Republican ticket. And then if you fast forward to 2007, 2008, we had a drop as far as in stocks, as far as under W, Bush W, and so that was a significant drop as well. The whole thing, it didn’t end until March of ’09, so part of that is on Barack, on the democratic ticket, I should say. But the bulk of that drop that took place was under Bush. So again, doing the math, you put it all together, you say Democrats, historically the stock market has done better. However, you can break it down a little bit, come up with any number that you’ll want, and manipulate these numbers any way that people want, but that’s reality.
David Nelson:
But if you take out the two really bad periods of time, then Republicans win, as far as in that particular battle. Now we could transition to the House and Senate. I think there’s a lot more impact as far as there that we see, as far as who’s in Senate. Is it split? Is it both parties that control? What we find is as far as the Senate is concerned, is that the stock market has done better under Republican control. So again, it’s just, I tell people, we had a few calls, we didn’t have a whole lot, but a few calls saying, “We think this person’s going to win. What should we do?” And the reality is, as we told clients one after the other, “If you’re laying awake, worrying about this the night of the election, as far as the impact it’s going to have on your money, you’ve taken on too much risk.”
David Nelson:
And so we’ve kind of gotten caught up in this, I think. And as far as the hype, and again, we want to just step back and look at this stuff logically. What we’re going through right now as you know Gary, and I think everybody out there knows, this is normal. Elections don’t end at midnight. Elections go on in many states, and particularly this year with the millions, what was the final number? I think 96 million, I believe of mail in ballots. Most states don’t have, or I shouldn’t say most, the states that were pretty much in play, many of those states couldn’t open the balance until yesterday and some of them until the polling closed. So that makes it impossible as far as to come up with those numbers. So we’re battling it out, I mean, Wisconsin’s was in play yet, I believe. I think they’re close to announcing as far as that. Michigan is certainly in play.
David Nelson:
You look at Pennsylvania, that seems to be leaning a little harder at this point, as far as to the Republican side. Georgia’s still somewhat in play, but probably going Republican. So, I mean, this is going to be a battle right down to the very end and when the end is going to be is what everybody wants to know. And I think we still have a day or two as far as before we see this concluded. I think Nevada is announcing tomorrow. You wouldn’t take Nevada with the six, seven, eight electoral votes over there as if that would be that big a difference, but it really is. Just like in Nebraska, as far as broken out, as far as the Democrats got one electoral vote there, they lost, I guess you’d say the state as a whole, but they cut it up as far as the Nebraska and that one electoral vote, may be the difference. So time will tell, as far as what’s going to take place,
Gary Determan:
Well, you certainly have done your homework, Dave.
David Nelson:
Yeah. I stayed up until I think 2:30 is when I dozed off and before four, I was up, so a little wired right now, and I’m not a coffee drinker, so it’s the anticipation of this. And this is, from a client perspective, they just want to feel like, somebody’s paying attention to it and that’s our job. And what impact is it going to have? Obviously nobody knows exactly what’s going to take place, but we’re in a pretty comfortable place believing that our clients are situated as far as the allocations and the proper mix of stocks, bonds, real estate, et cetera. And a week or so ago, we saw two, three, four days there where the market was really, really catching it’s lunch.
David Nelson:
I mean, we had significant draw downs as far as I think from the peak in September. I think we touched 12% as far as the market, the S&P now being the market. I hate these terms, but it’s terms, I think people can kind of relate to and understand. So the S&P would be the benchmark that I’m looking at or referencing here. And that was, I think peaked about 12. If you look the last three days, things have really rallied hard on an upward mode. And so, we haven’t gotten back to where we were, but we’re certainly a lot closer. And if you look here today, it’s been an okay period of time. A lot of stress out there for people, as far as we’re going to have a new President, what’s the tax law going to look like, et cetera, et cetera.
David Nelson:
There’s still a lot of things that need to be decided upon, but I’m saying this country is not going to flip, 180 degrees from what we’re doing currently to where we’re going to. So I think people need to take a deep breath. We need to relax and we need to certainly work together. I can get on my soapbox on that one. I think when I started really paying attention to politics in a more serious way, was when W was in the White House. I was stunned in the number of people that came in here and, he’s a complete idiot or the guys close to God himself. And then I noticed the same things that have taken place as far as with Barack and things have taken place as far as with Trump.
David Nelson:
And quite honestly, I think it’s idiotic, firstly. All of them have some good qualities. All of them have some bad qualities. And to think that, again, I know this really irks a lot of people, but I’m not one that is just going to blindly vote for everybody in the Republican ticket or everybody on the Democratic ticket. I think that’s wrong. I think we should look at the people and what they can do to make the world a better place. I’ve had people say you should run for office. I said, “I never could, because the difference is I’m going to tell people the truth.” When we talk about lower taxes, everybody wants lower taxes. I’d like to pay lower taxes, but I’m also wise enough to know that there’s bills that have to be paid and I think we take for granted as far as all the stuff that happens around us, that’s being paid by our taxes.
David Nelson:
So I don’t know how to do it. And the idea is we need to cut or the idea is we need to raise taxes and we need to do both. We need to be adults and we need to look at the facts of the situation and make good decisions. Not for the next 10 minutes. Not for me personally, as far as my own pocketbook, but for the good of the country. I mean this country, for all of us that live in this country, we’ve been blessed. I mean, look at all the places around the world that we could be living, but we’re here and we’ve got flaws. But again, we’ve got to realize and my opinion is to look beyond our own checkbook and make decisions that are going to be best for the country.
Gary Determan:
Well, Dave, we’ve already gotten to the time for our weather break. We’ll have more, of course, as it is the first Wednesday of the month with Dave Nelson. Our 1545 weather update brought to you by the Clinton Midas.
Eric Sorenson:
Certainly within the margin of error to get some record high temperatures later on this week. Good to be with you. I’m meteorologist Eric Sorenson. Our forecast for today, mostly sunny temperatures in the low to mid seventies. Overnight tonight, we drop down to 50. Sunshine tomorrow, 73. 74, Friday and mid seventies for the weekend. Wow, amazing that this is November. However, a reminder, 40’s will be highs by the middle of next week. Our weather continues now. Wqad.com. Have a great day.
Gary Determan:
Thanks so much, Eric. Right now, fair skies, sunshine. Southwest winds at about 10 to 15 miles per hour, 60 degrees. At this time, we’re looking for highs today, low to mid seventies. Our update brought to you by the Clinton Midas. The Clinton Midas is on Lincoln Way will be offering Black Friday savings in November. Black Friday savings all month long. Right now you can take $100 off instantly on four select tires and you are going to want dependable tires heading into winter. Also, during Black Friday November at the Clinton Midas, a free battery check and save $20 off a new battery purchase. And they feature Interstate batteries. Don’t miss the Black Friday savings in November at the Clinton Midas 1432 Lincoln Way. Open by appointment, call 242-2511, trust the Midas touch.
Gary Determan:
First Wednesday of the month. So we continue to the bottom of the hour with Dave Nelson. Dave, this weather has been incredible. Have you been able to get on the bike or walk the dogs? What’s been going on?
David Nelson:
Yes. Actually I have a little bit. I have a little back issues again. And so the bike rides have been shortened dramatically, but boy, does it feel good. I’m sure you’ve been outdoors as well and enjoying it. I know the one dog I had to put one down unfortunately, she’s 12 years old and big dog and it was her time, unfortunately. But, yeah we’re outdoors the last, so anyways, enjoying it to say the least.
Gary Determan:
And on Monday, basketball practice starts.
David Nelson:
Yeah. We’re looking forward to that as well. If somebody would’ve told me we’d be playing basketball, as far as in this environment, a few months ago, I’d say, “You’re nuts.” But we’re going to and we’re taking every precaution that we can for the kids. And certainly, for myself, my parents they’re still with us fortunately, and up there in the mid high eighties and long story short, I don’t want to be dragging anything to them, so I got to be real careful. So I’ll be one of the nerds walking around with a couple of layers on as far as trying to protect the body from contracting it and then potentially passing it on to somebody. Certainly don’t want to go through it myself, but I do not want my parents to have to, and we delivered my daughter now, our 10th grandchild as well. That was about a week or so ago.
Gary Determan:
Well, congratulations.
David Nelson:
[crosstalk 00:12:36] Thank you. So I want to spend time with them too, and that’s the coaching, we’ll see as far as, hopefully we can get through the season and keep everybody healthy. But yeah, we’re one of the top states as far as with the coronavirus and for some people, it hasn’t been too bad. Other people it’s just been horrible and I don’t want to find out myself and I want to keep my distance. So you as well, I’m assuming?
Gary Determan:
Oh yeah, I’ve been doing fine. Thank you.
David Nelson:
Yeah. Good, good.
Gary Determan:
So what are we else covering here as we go to the bottom of the hour Dave?
David Nelson:
Well, to me, I thought probably again, a lot of these theories and concepts. So, that the beginning of it is basically to remind people that you’re going to be okay. All right. And the country’s going to be okay. And as far as your investments are concerned, they’re not going to radically change. Whether there’s a Democrat or Republican in the White House. It’s more the companies that we’re investing in that we’re interested in. And certainly policy from the government can impact that. But we’re talking about a pretty small thing that in the population, if Biden were to get in and he was able to get things passed, it’s going to affect a very, very small percentage of America, probably people making 400 grand and above. We don’t have a whole bunch of those, as far as in the state of Iowa. The coast probably do with the standard of living, it’s much different.
David Nelson:
But anyway. So again, relax. If you have assembled and put together a good portfolio, you need to be flexible. It needs to be adjusted on a regular basis. We tell people like in the olden days, when you wet your finger, you’d put it in your mouth and then try to tell where the breeze is coming from. That’s very similar to what we try to get people think in terms of as far as with the investments. And that is that if the wind is blowing in your face, you probably need to tweak some things, or should have probably before that took place. But at a minimum, you should be thinking about that and vice-versa. And so it’s one of the pitfalls we believe as far as in this industry is that the people then coach to the idea that you fill out some stupid questionnaire today and it’ll tell you what type of risk taker you are.
David Nelson:
And as I tell people, the way you answer those questions is based on how you feel today. If the market were to go up 20% tomorrow, and I gave you that same test, I’m guessing the answers are going to be tweaked a little bit. And just like if it was went down 20%, 30%, 40%, and I hand you that same quiz. I’m guessing there would have been some different answers. The idea that we’re going to give you this, and we’re going to put you in this portfolio and you’re forever going to be in this 60/40 portfolio, 60% stocks, 40% bonds, it’s just in our opinion, just total stupidity. So let’s take it a little further as far as the impact. So again, my goal with all of this, as far as when we talk, as far as once a month, is to hopefully bring some value to the table for people, to maybe clarify some things, but also have to look at some opportunities that may be out there.
David Nelson:
So let me just give you a couple of points there. And again, this isn’t politically driven by any means. I told you I don’t vote for one party, I’m just talking facts here. The facts are that if you look at what’s taking place over the last week or so, you’ve seen the bond market go up quite dramatically as far as interest rates. So what does that mean? That means that the bottom line, if you own bonds and you have those same type of bonds and your government bonds, you’ve lost money as far as over the last week or so, okay? That’s not a big deal and it’s not a big percentage, but why am I bringing this up? Because what the bond market is basically anticipating is a Biden win, so we’ll see if that happens or not, it’s going to be really close regardless.
David Nelson:
But it’s anticipating a Biden win, hence the money being spent in a pretty significant way, as far as for infrastructure, things of that nature. He’s spoken about it, he wants some big plan as far as to go out. Now, again, he’s got the Senate he’s going to have to deal with. So it’s going to be muted, but that’s telling us something there as far as the bond market is trying to look ahead, it’s trying to anticipate, and interest rates have moved up. One other area, the dollar has dropped pretty significantly over the last several weeks. What’s that telling us? Again, what that’s looking at is trade and what that’s looking at is that we in the United States are going to be able to sell more goods abroad when the dollar weakens. Now, again, if you read into this, as far as from a political perspective, you come to the conclusion that this is also anticipating a Biden win and then again, what do I do with that information, David?
David Nelson:
It doesn’t do me any good, just knowing those facts. How do I capitalize on that? And again, I’m not giving any advice there. I’ve got to get all my disclaimers in to make sure that the attorneys don’t come running after me for saying the wrong things. But the general concept is if the dollar is dropping in value, it means that investing abroad, because as the dollar drops, other currencies are then going up, it’s the teeter-totter concept. Just like in the bond market, when interest rates go up, the value of your bond goes down and vicea-versa.
David Nelson:
So if this happens and it takes place and the dollar weakens, and interest rates tick up some, what that’s basically setting up for is a pretty nice buying opportunity abroad. Now abroad gets pretty vague, David. We’re quite partial generically now, because I’m not getting any invites, but generically that’s emerging markets would be probably one of our favorite spots, as far as abroad. Not to say the US, there’s not going to be a ton of opportunities and there still will be, but again for those individuals that have very little exposure as far as abroad, this is worth considering adding a little bit more emerging market exposures to your stuff, to your buckets, as far as that you have. Did I make sense Gary?
Gary Determan:
Yeah. Well, I’m trying to follow along with you, Dave. You’re way above my head most of the time.
David Nelson:
That’s all right. Again, for most folks out there, the big thing is, what’s this going to mean to me financially? I’m saying if President Trump wins, you probably want to keep more and the dollar realm, that’s going to be one of the key ingredients too. If the dollar rallies, you have your money overseas. As the dollar goes up in value, the other currencies are going to go down and that’s going to drag down some of your investments, as far as abroad. We think, again, people need a diversified portfolio, we also believe nobody can time the market exactly. But what we’re attempting to do is to try to take advantage of some opportunities that are out there and the opportunities that are out there, if you look at the US market by any measurements, now I’m talking about the stock market, by any measurement, the US stock market is probably dramatically overpriced right now.
David Nelson:
And people say, “Well, but interest rates are so low, we can justify these higher priced earnings ratios, the higher stock prices.” Well for a while. At some point, that gives and when interest rates go up, that’s going to really, really raise cane as far as with that strategy. So again, it’s being somewhat nimble. It’s not trying to be a genius and pick the day. It’s trying to find the big trend as Warren Buffet says. Many people out there probably know him, Warren Buffet, brilliant man, a billionaire and what’s Warren Buffet basically said, “Find a trend, then get in front of it.” And I think the trend probably going forward is we’re going to see a lot better returns overseas than we probably are as far as the US. That hasn’t been the case for the last 10 years. That probably is going to be in the case as far as going forward for an extended period of time.
Gary Determan:
David, as always, we appreciate your time. We’re getting to the last couple of minutes of the program. And of course, Thanksgiving now just 22 days away, we’ll be getting into December and the holidays. I know in years past, Nelson Corp Wealth Management and your clients, your customers, have been so generous. What are the plans for this year?
David Nelson:
We’re still ironing them out. We’re going to do probably two pretty significant things, as far as in the area. We’re trying to figure out how to incorporate clients into the equation. Valerie Hill is working really, really hard as far as on that, trying to figure something out. Our normal Christmas party that we would do, that we would have a whole bunch of people show up and hang out with us, is not going to take place this year. And so we’re trying to think, “Okay, how do we do this then?” That’s our way of saying thank you to people. They’d come to the party. We have a great time. The other part of that, that they do, is we make contributions as far as to the food banks, so people bring along canned food. And the other thing that they do is they typically bring along a gift, a wrapped gift, as far as unopened gifts is probably a better terminology as far as free for some youngster, some toy, boy, girl, whatever.
David Nelson:
And then we get that stuff to the agencies, as far as in the area and they get that stuff distributed. And so we really dig that and we’re going to do something again. You look at the period of time we’re in right now, there’s a lot of people that because of COVID are now underwater in a more significant way than maybe they were before. That’s unacceptable. We got to help. We got to do something. And those that have been given so much, which we have as far as my family, the company that I work with here, that it’s imperative that we make a difference and we’re going to, and we’ll continue to do it. And again, hopefully Valerie will have something ironed out. She’s got it kind of narrowed down. Within a week or so, we’re going to know as far as what we’re doing there.
Gary Determan:
All right, I’ll wait to hear from her and then we’ll help you get the word out as well.
David Nelson:
Sounds great.
Gary Determan:
All right. Well, hope to see you in the basketball court sometime as we get into the season and you take care, okay?
David Nelson:
Sounds great, Gary. Thank you. Appreciate it. Have a great day.
Gary Determan:
You as well. Financial Focus is a production of Nelson Corp 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 Nelson Corp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.