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 representative securities offered through Cambridge Investment Research Incorporated. A broker-dealer, member of FINRA, SIPC. Investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Gary Determan:
First Wednesday of the month. First Wednesday of the year.
David Nelson:
Yes.
Gary Determan:
So are you ready for 2024, Dave Nelson?
David Nelson:
Oh, already, you bet. Hope everybody else out there is too. Again, we made another year. Last year was unbelievable as far as the markets are concerned. Stocks had a really nice year following up after a horrible year as far as in ’22. So good opportunities that existed last year, and now the question is what’s this year going to hold and time’s going to tell as far as in that regard.
Gary Determan:
How does the year play out for you? Of course, we’re here in the Midwest and you have the change of season, so a lot of people gauge what they’re going to be doing by the change of the season, but what about a financial planner?
David Nelson:
Yeah, so we used to be much more seasonal than we are now, just simply because of the size as far as what we’re dealing with and the complexity as far as the stuff that we’re dealing with. Back in the day, as far as in the early stages, it was pretty much just investments and we bought mutual funds and life was a lot simpler as far as back then 30 years ago, give or take. But we’ve added a lot of people. We’ve added complexity from the standpoint of the type of planning that we do. We do very comprehensive planning. I know you hear people talk about that all the time. You hear people talk about money management. And again, without putting people to sleep out there, there’s a big difference as far as with a typical approach of let’s buy five, six mutual funds and hope that things work out versus actually being proactive and making some proactive decisions.
Sometimes they work, sometimes they don’t. So that’s the downside. And there’s people that make arguments that you just put it in and you forget about it. And over time, I mean, look at what the markets have done and life is good. The reality though is that during this period of time that people are referencing, we’re kind of trivializing as far as the emotional experience that people would’ve gone through. I mean, just the 10-year period from 2000 through 2010, you had two periods of time that the market was down, literally. And I’m talking about the S&P 500 now, the S&P 500 being a broad base, looking at the investing world as a whole, it’s a nice big broad index. But from 2000 through 2002, it was down 47%. The Nasdaq, which is more of a high-tech driven index, was down over 80%.
So fast-forward. So that’s 2000 through 2002. Fast-forward to 2007, the end of the year through the beginning of ’09, so roughly two years, March 9 to be exact of 09′, we bottomed. And that was a 58% drop and an 82% drop as far as for the Nasdaq. So for me just to chuck money someplace and say, oh, life will be good and I’ll be okay is just nuts because you’re ignoring. So my last coursework that I did at the John Kennedy School of Government at Harvard, the professor as I’m leaving said, “David, never forget that an extra quarter percent means nothing if people can’t sleep at night.” So bringing it back to that period of time, my explanation to clients is my job’s to make you money, you’re going to have to deal with the volatility. And the guy pretty much slapped me around and said, you’re a complete idiot, and tried to give me some good advice, and that advice was you’ve got to recognize that it’s not just the monetary part, but the emotional part is so key to the way people kind of approach money.
And so because of that, we overhauled things and we now take a totally different approach. You take an average retiree, if they’re down 50% and they’re taking withdrawals, I assure you they’re going back to work not because they want to, but because they have to. Those are the individuals that we work with. So as we discussed with them, we’ve got to temper the downside and grab as much of the upside as we can get, but we’ve got to make sure that the downside, we never have a 20 and a 30 and a 40% drawdown, let alone a 50, 60, 70%. And oh, by the way, the 82% drop that took place in 2000 through 2002, it took you 16 years to get back your money. So when people just kind of poo poo this stuff like it’s no big deal, you’ve just got to write it out, they basically should be talking to a 20-year-old, not to somebody that’s 60 or 70 or 80 years old. The 60, 70, 80-year-old will be working at the Superwash because they have to, not because they want to.
And again, nothing against that if that’s what people want to do, but most people that are in retirement want to stay in retirement. And we run these goofy commercials as far as around the football games and whatever, and our tagline is helping you retire and stay retired. And as meaningless as that may seem to some people, that is a lost art I think as far as for many people out there because we have people come in on a regular basis that haven’t been able to stay retired because again, they took somebody’s advice, chucked their money into something, fell asleep for five-year, ten-year period of time, and watched a lot of their money disappear, and now they don’t have enough capital to generate enough income so they’re going back getting a part-time job.
Gary Determan:
Getting busy with Dave Nelson, Nelson Corp Wealth Management. The market report talking a lot about the Santa Claus rally, and you were pointing out to me that it’s really just maybe five trading days.
David Nelson:
It is. Most people when they hear that, it sounds like, oh, it’s leading up to it as far as the month of December, something like that. And it’s kind of this big period of time, which is not the case, and it’s the end of the year, and it’s the first several days of the new year. And so when we look at that, and again, for people that were paying attention to it, and most probably out there aren’t and that’s okay, is that yesterday we got roughed up at a pretty decent level, and today we’re getting roughed up at a pretty decent level. And we had a big, big run last year, and there’s probably a tremendous amount of profit taking that’s taken place this year. So you need to open your eyes, you need to make some tough decisions. Should I be protecting some of the gains that I got last year and anticipating that the Santa Claus rally doesn’t hold true?
Now there’s another… Well, there’s several other things that people look at, like the first trading day of the year, what does that do? The first week, what does it do? And there’s patterns that you can look to. And oftentimes they play out, not always, but oftentimes they do. And when you have a beginning of the year that’s rough, generally speaking the year is rough. And so we’ve been kind of in that camp now for a while saying we probably were overpaid last year in particular as far as the last two, three months of the year. I mean, the market really rallied hard if people again aren’t aware. And to give some of that back is probably believable. And yesterday it started and today it seems to be continuing. We’ll see as far as going forward. We’ll do our best that we can legally as far as to share some ideas as far as through this type of medium, as people may or may not know out there, we got a lot of restrictions as far as what can come out of my mouth in this type of form and what can’t.
Gary Determan:
Not to oversimplify things, but how does this occur, Dave?
David Nelson:
As far as the compliance issues or the-
Gary Determan:
The volatility,
David Nelson:
Oh, the volatility.
Gary Determan:
Yeah.
David Nelson:
When you look at it as far as the market, I think what people just misunderstand, they try to make it more complex than it really is, but the market is nothing more than a big auction. I mean, you have buyers and you have sellers. And so when you have more buyers as far as wanting to acquire stuff, which is clearly what we had last year, and it was all about AI, so artificial intelligence for those that don’t know, and all this new stuff that’s coming about and the impact that it’s going to have as far as supposedly making things better for all of us. And it probably in many ways will, it’s also going to create problems as we’ve probably already seen politically, as far as some of the fake stuff that’s being created.
Just like my voice right now. I mean, this AI can basically take my voice and cut and paste and whatever and come up with something and you got crazy stuff coming out of my mouth. And so it’s a scary thing in some ways, and it’s a wonderful thing in some ways, but clearly last year, that’s what drove the market and the volatility is going to be… So yesterday obviously there’s more sellers than buyers, and today it looks like more sellers than buyers as far as the market today as well.
Gary Determan:
All right, let’s continue on. We’ll take a break for the weather brought to you by Morrison Community Hospital.
Morgan Strachbein:
Happy Wednesday. Should be a fairly quiet day today, although we’re not going to see as much sun. We’re going to see a lot more clouds continue to hold throughout the day today. Temperatures similar to yesterday in the mid 30s for us. And we’ll continue to keep a chance for a few flurries on the board throughout the afternoon. Tonight, those clouds will begin to clear out. Temperature is expected to be cool by tomorrow morning with lows in the low to mid 20s, and then more sunshine expected for Thursday. I’m Storm Track 8 meteorologist Morgan Strachbein.
Gary Determan:
Skies remain overcast, 33 degrees. We do have light Northwest winds. Our update brought to you by Morrison Community Hospital. Colder weather can bring about ear infections and sore throats. Dr. Thayne Cody of Morrison Community Hosptial specializes in the surgical and medical treatment of ear, nose, and throat for both adults and children. Dr. Cody has extensive experience and expertise in the treatment of head and neck cancer and thyroid tumors. He provides diagnostic and therapeutic treatment of acute or chronic conditions. Dr. Cody is currently accepting new patients. To make an appointment, call 815-772-5590 of Morrison Community Hospital. Pleasure to have Dave Nelson in. Dave, I don’t know if Val told you, but you’re coming in for Men’s Day also at the end of the month.
David Nelson:
Okay, you’re right. Val runs my life, my schedule. Sounds good. I’ll be happy to be here.
Gary Determan:
So it’ll be Friday, January 26.
David Nelson:
Got you.
Gary Determan:
And that’s always a fun show because we talk a little shop, but we also get a little bit more into your personal life. And I know you’re now a big Hawkeye fan and you were out in Iowa City last night. How far out was Caitlin Clark when she made that?
David Nelson:
Well, it was quite a distance. We’re in row 22. We’ve got a nice view of the court, what have you. And the game, we were talking earlier as far as the number shot attempts that she had as far as during the game, and she’s making a good percentage, not a phenomenal percentage, but a good percentage. We’re lacking some balance clearly as far as in the team, we’ve got to have more than two or three people scoring. And there was, but two points and three points really in the big scheme of things doesn’t matter when you’re playing at this level. But anyway, it was just a mess. I don’t know. Did you watch it?
Gary Determan:
No.
David Nelson:
Okay, so it was a cobble up mess. They had it in Hannah’s hands. She’s the gal from out around Cedar, Rapids area. I don’t know exactly what school she went to. Nice player. And she was getting, I used the term mauled, so they got multiple people around her and the ball’s loose and it’s getting tipped and whatever. And just somehow Clark came out of this mess with the ball, does her patent step back shot. And I mean, the place erupted. I don’t know, you see this footage on TV and I’m not big into going to concerts and whatever, but you have some of these superstars and you have all the hands in the air where people are screaming and they’re loving the music. And as I looked out as far as the ball goes through with literally point something seconds to go in the game and all these hands go in the air, the place erupted. And you’ve got a bunch of square older people as a whole that are watching this, me being one of those. It’s just such a wonderful environment.
And yeah, you brought up the Men’s Day. A lot of times as far as in the past when some of these things come up, we’ve got homecoming and whatever, so I rarely could make it because I’m at the gym acting like an idiot trying to get the crowd kind of fired up, charged up, whatever. And now I don’t have that as of last year and this year and being able to go to some of these basketball games. Not some, all of them. We got season tickets as far as for the women’s basketball games. It’s thrilling. And what I love most about it, and I mean this sincerely, is the joy that it brings to so many other people. So I have a brother-in-Law that passed away a few years ago, and he could give a hoot less about sports his entire life until literally the last couple of years. And he got into watching the Bulls and he really enjoyed that. This is a person that doesn’t dig sports, but he kind of opened up his mind to it a little bit and watched.
And I’m looking around here and you just know a lot of these people weren’t athletes as far as back in the day, but they just love coming to this and it’s such a fun atmosphere. And folks, if you get a chance to go, you really need to do it because again, it’s different. And I love football, so I’ve got to qualify that now. But going to a football game, you’ve got a lot of beers being poured on you, and it’s just kind of a mess. And again, I’ve gone to them and I enjoy going to them to some degree, but this environment, it’s so different. It’s so special. And it’s not just one player that’s created that, it’s the coach that’s also impacted that. She gets the right type of players that you just love to cheer for. They’re not the big names as a general thumb, but somehow they mush together and they come out with a win and it’s just a pretty, pretty, pretty, sight. So yeah, last night was exciting.
Gary Determan:
You referenced Kobe Bryant, and he was one of those. He always felt that the shot was going to go in. It didn’t matter if he’d missed 10 or 12 in a row, he just had a feeling that the next one is going in. You’ve got to have that mentality.
David Nelson:
Yes. And you can look down on the floor and realize that she’s the only one on either team that wants that. One of the most famous shots that she’s made was against Indiana and we’re down two points. This was last year. And everybody in the gym knows that… And it was point something seconds to go, and somehow we’ve got to get her the ball. Well, she’s got 15 girls hanging on her. She’s not going to touch the ball. Somehow she got the ball. She’s falling out of bounds. She’s a mile away from the hoop. And the dang ball goes in and we’re all sitting there saying, there’s one person in this entire gym that wants the ball, and she’s the one. She’s like Kobe. She believes it’s going in. Her shooting percentage last night wasn’t that great, but at the end of the day, I got to take the big shot and we need this one to go in.
And it would’ve gone into overtime if you’re not aware, folks, it was a tie game. So unlike the Indiana game, we were down. And so the coach of Indiana, this I find kind of humorous because I’m a little bit intense myself. Anyway, the ball goes in, she smacks the scores table, the Indiana coach. She ends up breaking her hand. We’re at the Big 10 tournament a week later, and she’s got her hand in a cast. What the heck happened? Well, she smacked the table she was so ticked off. And so it happens, folks, you’ve got a great player like that. And man, again, we don’t know how long our Michael Jordan is going to be here as far as [inaudible 00:16:20]. So if you get a chance, go out and check her out.
Gary Determan:
Getting busy with Dave Nelson. We’re going to continue for a few more minutes here. You talk about the emotional aspect and the Indiana coach breaking her hand. I know you’re not supposed to be emotional, but do you get emotional sometimes about your business?
David Nelson:
Yeah. Yeah, very much so. And it’s a dangerous thing and for years I had a great experience, and again, I share this with people because it does matter. Wrote a massive check, a bigger check than I’ve ever written to go listen to a gentleman that was in his late 70s, early 80s, this was in Chicago, and this gentleman is one of my heroes. Most people have heard of the Wall Street Journal. Some people have heard of the publication Investor Business Daily. So it’s a newspaper like the Wall Street Journal. The difference is, in my opinion, it’s far better and it’s far better because it gives you stuff that you can actually use. So it’s a very, very important piece. Well, the gentleman that started that has an unbelievable track record as far as managing money, literally right up there with Peter Lynch, who’s one of the all-time greats.
And these two, if you look at their performance, was actually better than Buffett. So anyway, just to kind of put things in perspective, and this guy’s up there and he’s talking, and I’m probably 30 years old at the time, and I’m kind of a little full of myself. I’ve done a fair amount and look at me, look at me type stuff. And he’s up there in front of the room and we’ve got probably 50 people in attendance and he’s pounding the podium, smacking his hand against the podium, saying, “When you’re down 30 and 40 and 50%, you can’t think straight.” And he just keeps pounding this table. And I’m thinking, oh man, I can think straight being down 30, 40%, until it happens. And when it happens, emotions kick in. And so the point being that you have to have, and this was the premise of what he was going through here, is you have to have a rule set.
You have to follow rules, and the rules have to be put in place when you can think logically, not at the time of crises, because you’re going to do something stupid at that point in time. And so I’ve made plenty of stupid mistakes early on in my career, and you learn from that. And the bottom line, the good news for clients is most of those were made by me because I didn’t put them into anything that I didn’t own myself. So yeah, that was extremely important. Emotions get in the way. They still have a tendency to slide in, but you go back to the rule set and the rule set says we’re doing this. And almost always that rule set is going to be right. And being a disciplined investor is really, really key.
Gary Determan:
You had mentioned you put a lot of money out to listen to this gentleman when you were younger and you were just recently talking about you were somewhere else.
David Nelson:
Yes.
Gary Determan:
All this time, the continuing education.
David Nelson:
Yeah, it’s absolutely crucial. There’s a lot of really smart people out there, and as it was explained to me years ago, the day you think you have all the answers is when you need to pack it in because the rules are changing. This AI stuff, artificial intelligence again, is changing the world. And so now we’re competing with computers and what have you that we’ve been competing with as far as along the way, but at a different level now than what we’ve ever seen. And so again, it’s really crucial as far as for the average person out there to be able to look at their situation in a holistic manner, in other words, everything, to try to make informed decisions that aren’t just being made for the next 10 minutes, but for the next 10, 20, 30 years. We do a lot of multi-generational planning that even gets more complicated.
And again, the people that we’re working with, most people don’t plan on spending, even though they’ll say it, oh, my kids said to spend all the money, blah, blah, blah, enjoy it, blah, blah, blah, blah, blah. Hear that from about every other client that we work with. But the reality is mom and dad plan on passing something down. Now the question is how are we going to pass it down and what’s the most effective way of passing it down? The best for mom and dad, the best for the people inheriting the money, typically kids in this situation. So it’s a complex world, and the problem with the AIs of the world is it doesn’t factor in all the variables. It can look at a problem, give you an answer to that specific problem, but it can’t look at the robust, at least at this level, the robustness of some of the decisions that need to be made and factor it in. Again, some of the emotional side.
There’s not a client that walks in today and says that again, I’m comfortable losing 40, 50% of the money. It’s only temporary and it doesn’t happen. People that bring up, it’s only temporary. I look at them and say, can you define what temporary is? Is it two years? Is it 10 years? Is it 16 years like the NASDAQ was to get back your money? Are you okay with that? And heck no, nobody’s okay with that, but that’s the reality as far as what took place. And our job is to coach people, not just in the good times, but primarily in the bad times as far as holding the hand and getting them through those periods of time.
Gary Determan:
Here we are at the start of 2024, and I know the tax people down there are getting ready to get really busy.
David Nelson:
Yeah, it’s going to be crazy busy again. It’s a nice problem to have Gary, but the reality is it’s a very short window. I wish they never really thought about it until we had the business, but it’s such a weird business where everything is done in essentially like a three-month period of time. It’s just kind of nuts. But anyway, we’ve had a lot of preparation. The people that run the behind-the-scenes stuff of the operation down there have had meeting after meeting after meeting, prepping and getting stuff in place so that it runs like it did last year smoothly. If David was doing that, it would be a chaotic mess. So I know my skill set is not behind-the-scenes, it’s more interfacing with clients and doing that type of stuff. So we’ve got some great people down there and things should go pretty smoothly, I believe.
Gary Determan:
You’ve got to surround yourself with good people, Dave.
David Nelson:
You have to. Yes, exactly. That’s been what’s really… People say you’ve done really, really well. I said, I’ve done really, really well with a whole bunch of other people, real quality people. And again, to me, honorable people, honest people, people that care about other individuals, not just themself. And because of that, again, we’ve enjoyed, fortunately, thank you folks out there, we’ve enjoyed a really nice seeing our business grow substantially over the years because of I think what we’ve accomplished 20 years ago that’s now coming through as far as for many people out there,
Gary Determan:
With the expansion that you have had, do you do the hiring? How does that work?
David Nelson:
Very little of the hiring is me these days. We’re in the midst. I mean, we’re multiple people short as far as what we need as far as this point in time. We have people coming in all the time with applications and whatever as far as wanting jobs. So we don’t have to really go out and do a lot of hunting per se. But at the end of the day, we’ve got some other people that know the right questions to ask and whatever. The people that I’m attracted to, typically as far as people I hire, have skill sets similar to mine. We don’t necessarily need that. It doesn’t make a lot of sense.
So we let the experts do it I guess is the bottom line. I may come in and just ask a question or two and just get a feel for the personality. And usually it’s the third meeting as far as when I show up, not meeting one or meeting two. But yeah, we’ve been lucky. We’ve got good people. No, we don’t have good people. We’ve got great people. We’ve had a few people retire here. We’ve been able to handle that as far as internally with some other people that are advancing through the ranks. And so it’s been just a fun run the last give or take five, 10 years. It’s been unbelievable as far as the growth that we’ve seen.
Gary Determan:
Well, we’ll continue this conversation on January 26 when you come in for Men’s Day.
David Nelson:
I look forward to it.
Gary Determan:
Thank you so much.
David Nelson:
Thanks, Gary.
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 Incorporated, a broker dealer, member of FINRA, SIPC. Investment advisor representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.