Balance and Sustainability

Episode Transcript

Speaker 1 (00:02):
Thirteen ten w U, I, b A and Ask the Experts.
Joined this morning by Tom and Nathan Blum. They come
to us from Wisconsin Capital Management Online whizcap dot com.
That's Wi s cap dot com. Hope you've had a
chance to check out the website. If you haven't been
there yet, definitely head on over. You can learn more
about Tom, Nathan and the whole team. You can also
start a conversation right online, no pressure, no obligation, Just

(00:26):
go to wizcap dot com. You'll see a little chat
bubble there and from there you can start that conversation
ask any type of question you may have. Again, that's
wizcap dot com. That's Wi scap dot com. As mentioned
Joined this week by Tom and Nathan Plump. Tom is
a chartered financial analyst. Nathan is a Certified Trust Financial
Advisor within an executive MBA. Tom, how you doing this morning?

Speaker 2 (00:49):
We're doing very good, though it has got a little
frigid at Madison, Wisconsin.

Speaker 1 (00:54):
Yes it has, although I saw later this week the
chance for rain, which I'm like, that just doesn't That
kind of makes me a little nervous, but we'll see
how it plays out.

Speaker 3 (01:04):
Nate, how are you doing this morning doing well. The
Badger women's volleyball team had a big victory over Texas
last night, so it's said about that, But I, like
my dad, I'm kind of thawing out and highly like
the rest of Madison thinking about you know, googling trips
to Florida and you know, Phoenix and places like that

(01:25):
right now.

Speaker 1 (01:25):
Or even better, googling real estate right as we talked
this morning with Tom and Nate plumb up Wisconsin Capital Management.
If you don't like the cold, one of the ways
you can avoid it is planning properly, and you can,
of course look at real estate in those warmer markets
for these cooler months. We're going to talk this week
about Wisconsin capital management and balance and sustainability. And I

(01:46):
know Wisconsin Capital Management often called balanced, balanced account manager,
and if we talked about different ways that folks are
looking at their investment plans to build and maintained financial success.
But of course, as you think about those things, any
good plan requires some good investments to be successful. Nate,
let's talk about how Wisconsin Capital Management works to find

(02:09):
those right investments to implement a plan.

Speaker 3 (02:13):
Yeah, we're very unique in that we actually look at
the individual stocks and bonds to put in client portfolios.
And we feel that gives us a tremdvendous advantage. It
brings tremendous transparent to your client and you know, kind
of hopefully gets you some the lowest fee possible. So
a lot of people don't do investments. They just kind

(02:35):
of what we call kind of paint the boxes. So
they say, oh it need sell me a large cap grows, well,
got value, a little international, a little of everything, and
then you're diversified. We think that is just a real
kind of disservice to clients overall that you're just kind of,
you know, just throwing everything in. But if you can

(02:57):
actually look and you're paying someone to actually do real
stock analysis for you, you can you know, give it
potential to do higher get higher returns. And you know
our truck record that is that we have, you know,
we've gotten roughly s and P five s and P
five hundred returns with a third of the risk.

Speaker 1 (03:16):
So wow, that's pretty amazing. As we talked this morning
with Nate and Tom Plumb of Wisconsin Capital Management online
wiz cap dot com that's wiz w i s c
ap dot com for Wisconsin Capital Management can start a
conversation right online. Ask any questions you may have. Get
to know the team at Wisconsin Capital Management again, all
on the website wizcap dot com. It's w i s

(03:36):
c ap dot com. So, Nate, as we talked then
about uh, you know, long term potential. What are some
of the things when it comes to to investments, what
are what are you kind of looking for there?

Speaker 3 (03:48):
Yeah, just for what that does balance actually mean? So
the balance the growth part of the portfolio, the one
that you want to have beaten inflation. Usually the best
investments that we find our stock investment and are common equity.
If you look up the textbook example, you're actually a
minority of these firms. When you invest a few shares
into Microsoft, you are actually a minority owner of Microsoft.

(04:11):
So stocks are a little bit volatile, right if you
can bidle out, probably eight of the ten years are
going to be really good and maybe two will be
kind of downside risks. With the investment selection process we have,
we try to minimize those. Overall market risks. Stocks have
a much greater potential for gain, but also you have
to watch with losses, Like if you pick one of

(04:32):
these pennies stocks that they could go to zero pretty quickly.
So you know, that's why fundamental research. We look at
dozens of different financial metrics. We look at how the
management teams are centivized, to the proxy statements, We look
at you know, even websites like Glassdoor and Reddit. You know,
we had to have a full encompassing picture of a

(04:53):
company to figure out, you know, what type of investment
you exactly have and know it in great detail.

Speaker 1 (04:58):
It's funny and never in a million years today I
think we'd be referencing Reddit for what's going on in
the stock market. But it's been nate, it's been kind
of It's an interesting realm, isn't it.

Speaker 3 (05:09):
Yeah, it's a new world. And there's you know, and
there's like websites like class store that kind of look
at employee satisfaction. So there's a lot of things you
look at. We have this huge checklist that I interned
and I made, and yeah, it's it's a little bit
different for each company now that each company is the same.

Speaker 1 (05:26):
Yeah, I was gonna say, you're probably not going to
hear many folks mention the fact that they're that they're
keeping an eye on these things, and it's really important too,
and we talk about things like employee satisfaction and other
things really can help establish and understand kind of the
overall health of a business. And I think one of
the big things I know you've talked about, Nate in
the past, is that the importance of diversification. And that's

(05:48):
something that's really important with you guys at Wiscon's Capital Management,
isn't it.

Speaker 3 (05:52):
Yeah. So we've found having stocks that are about thirty
thirty five socks, you really kind of match most this season.
You're diversified enough where you're diversified, and then you're also
focused on investments, so we actually know what you own
and that brings a lot of peace of mind to
our clients. So we're happy to bring.

Speaker 1 (06:12):
That talking this morning with Nate and Tom Plum. Of course,
they come to us from Wisconsin Capital Management. Right here
on thirteen ten WIBA. You can learn more online whizcap
dot com. That's wiscap dot com. Not only can you
get to know the guys and the whole team at
Wisconsin Capital Management, you can also listen back to this
previous shows podcast right there. The greatest feature though, as
an opportunity to start that conversation, click that chat bubble,

(06:35):
you can ask questions, you can of course get to
know the guys, and of course no obligation, no pressure
at all, just head on over to wizcap dot com.
That's wis cap dot com. And Tom, we think about
as Nate there was talking about things like doing the
research and the importance of diversification. It's really a balance
is kind of a key to all of this as well,
isn't it, Tom?

Speaker 2 (06:56):
Well, as Nay was saying, the big issue, of course,
is to make sure that you don't have a permanent
impairment of your capital by buying something that could go
to zero if it's not a high enough quality, if
it's not a company that has a future. But the
other thing that happens when you own common stocks is
there's volatility. And one of the ways that you can

(07:20):
moderate the volatility, we believe is to have a balance
of fixed income, high quality fixed income investments, and those
actually have the ability to moderate that volatility and allow
you to become a long term shareholder of a business
that we think has great fundamentals. So you know why

(07:42):
does that work? Well, Not only are bonds in general
not correlated with stocks, but they sometimes during economic stress,
they're actually negatively correlated. What we mean by that is
that in the times when the econ me is weak
and anxiety is that this maximum the stock market is

(08:05):
going down. What we often find is that the Federal
Reserve Bank and government policies come in to push down
interest rates to try to build back up the economy
and the value of your stock portfolio. Well, when they're
pushing down interest rates, there's an inverse relationship. So if

(08:25):
you own a five percent bond and they push interest
rates down to three percent, your bond actually goes up
in value at the same time, possibly when the stock
market's going down. So we've actually found that over time
and time usually being about ten years, that you can
have an ability to have less volatility, less risk in

(08:49):
your portfolio of a certain amount of stocks and bonds.
Usually it's under forty percent bonds. You can actually have
less volatility than one hundred percent bond portfolio. And that's
that's really significant because it really allows you to become

(09:10):
a long term investor in good quality equity investments are
common stocks.

Speaker 1 (09:15):
Talking this morning with Tom Plumb and Nathan Plumb, of
course they come to us from Wisconsin Capital Management online
wizcap dot com. That's wys cap dot com. Hope you've
got a chance to check out the website. If you haven't,
definitely do that first thing when you get into the
office this morning, or maybe you've got the morning off
and you're enjoying coffee listening to the program. Head on
over to wizcap dot com. That's wiscap dot com. Get

(09:39):
to know Tom, gets to know Nathan, of course, get
to know the whole team at Wisconsin Capital Management. Also,
great opportunity right from the website to start that conversation.
It's no obligation, no pressure, just heading over to wizcap
dot com. That's wis cap dot com. Start that conversation.
We're going to talk a little bit about bonds of
course or not without risk. We'll get some of the
details from Nat. We'll talk with natean Tom Moore. Next

(09:59):
at asked the experts with Wisconsin Capital Management. Continues right
here on thirteen ten WUIBA thirteen ten wi b A
and asked the experts with Wisconsin Capital Management talking this
morning with Tom and Nathan Plumb of Wisconsin Capital Management.
Tom is a chartered financial analyst and Nathan is a

(10:21):
certified Trust Financial Advisor with an executive MBA. Of course,
they both come to us from Wisconsin Capital Management. That
website whizcap dot com. That's wiscap dot com. Hope you
get a chance during the break to visit. If not,
definitely at your earliest convenience, stop on, buy, learn more.
It's a really, really great, great firm, and I've got
a very low bar to entry as well. You hear

(10:42):
some of these folks talking about hundreds, if not you know,
six figures, seven figures at Wisconsin Capital Management, they are
for everybody. Again, you can learn more about them at
wizcap dot com. You can also start a free no
obligation conversation right at the website as well. Talking this
week about balance and sustainability, and just before the break,
talked a little bit about about bonds and some of

(11:03):
the things that happen when, for example, when interest rates
come down, what happens oftentimes with bonds and Nate, I
think some people hear that stuff and like, well, it
must be all all roses and and bubblegum, and it's
There are some risks though with bonds, as with everything
in life, aren't there?

Speaker 3 (11:19):
Yeah, there's no no risk investments out there, so no
matter what you have, there's always some risk and understanding
those risks is really really key. So just to recap,
we're a balance investors. So again, uh, part of that
is stocks and bonds against stocks. Being minority ownership and
a company and you know, have been kind of alto
as most people know what the markets. Bonds people think

(11:42):
are really safe, and you know that's kind of a misnomer.
The bond market is very different from the stock market.
Usually companies issue debt, they have a big promotion and
then they're completely forgotten that no one really follows them.
There's no real analysts on bonds usually like that. But
it's an absolutely huge market. So you can have bonds
and many many different things. The way that we use

(12:04):
bonds is we kind of use them as a shock
absorber for the stock market. So we do that in
two ways. So when you invest in bonds, what against
a bond is an obligation for a company, So you're
not a minority owner, right, You're essentially kind of being
the bank to a company that you can take two
types of risks. One is called credit risk and the

(12:26):
other is called interest rate or duration risk. So the
credit risk is just how good of what's the greatest
ability that you have to pay someone back? Right, So
they give a rating system triple A being the best
you know, C and D being the worst, and just
like how good of you know? Are you investing from
the bank, are you investing from your uncle Rico? Right,

(12:48):
So there's a big difference, and so we really want
to have people that pay us back. The jargon that
we use is investment grades. So that's one way that
we mitigate the risks and keep the bond fairly like
a shock coper as I said. The second thing is
your duration risk, like how long do you have this bond?
So is this bond going to mature in one year?

(13:09):
Is going to mature in ten years? Is it going
to mature in thirty years? So typically the further you
go out from one to thirty years, so the three
year bond is going to be much more volatile than
the one year bond because the volatility is lessons the
shorter as the bond matures, and so we look at
that as well. So those are two ways that you

(13:30):
can really look and invest in bonds and how you
get to moderate the volatility. We kind of go depending
on the eield curve for the that my dad mentioned,
and you know typically for corporate bombs, you're kind of
looking at something within the five seven range and if
the market gives you opportunities, then you can be flexible.
So again, being bounced means that you're investing in stocks

(13:51):
for us, that's you know, growth companies, and then it bonds, right,
you're investing in people that pay you back. And then
also that we keep iteration type of short that usually
creates that shock absorber that everyone likes during volatile markets.

Speaker 1 (14:07):
Really good job explaining. I think sometimes folks hear about
stocks and bonds and wonder about like bonds, what exactly
are you doing there? That's a really really good explanation
from Nate Plum. Of course, talk this morning with Nathan
and Tom Plum up Wisconsin Capital Management Online wiz cap
dot com. That's wiz wiscap dot com all one word.
So if you've got structure, you know, to modify volatility,

(14:30):
reduced risk, Tom, you'll still have to find of course
good equity investments and of course when it comes to
things like compounding and those type of areas, what makes
then a good quality investment.

Speaker 2 (14:43):
Tom Well sean, you know, people talk about the stock market,
but as Nate was pointing out, we really talk about
a market of stocks. We're looking at individual investments because
individual investments, we believe, is where you can make money.
You don't make money by buying just the world or
the economy or the GDP. You make money by having

(15:07):
a good investment. So what does it take for something
to be a good investment. Obviously it has to be
a company that's selling something that people are willing to buy,
and sometimes they're defining a new market. They have to
show innovation, sustainability, and they have to be able to
differentiate their products. But what do we mean by sustainability. Well,

(15:34):
you know, basically a business has to have some form
of self financing. Just as we like to be very
careful when we're buying bonds that we are comfortable that
the company is going to be able to and willing
to pay us back. It also means that some companies
who rely on borrowing the money a lot have to

(15:56):
have a lot of people like them every day. When
they don't, it becomes very difficult. So you want companies
that have basically a solid business plan that looks like
they can generate revenue because they have a product or
a service that people are demanding, they can do it profitably,

(16:18):
and they can reinvest in their company to make sure
they stay relevant. They have to balance the interests of
their clients, their employees, and their shareholders. And when they
do all three of those, they still then have to
be able to adapt in the future.

Speaker 1 (16:35):
Really good perspective this morning as we talk with Tom
Plum and Nathan Plumb, of course of Wisconsin Capital Management
Online wizcap dot com. That's wis cap dot com. A
lot of great information this week and every week in
the program. Don't forget if you miss any part of
the show, you can always listen back at wizcap dot
com to the podcast that's wis cap dot com. Also,

(16:56):
while you're there, great opportunity to start a conversation, no obligation,
no sure whatsoever. Just head on over to wizcap dot com,
click on that little blue conversation bubble to chat and
you can start that conversation right online at wizcap dot com.
That's wiz wiscap dot com. And Nate. Let's talk then
about about some of the great investments and some of

(17:16):
the things that that currently and then kind of historically
and kind of put this all in perspective for us.

Speaker 3 (17:23):
Yeah, just to keep in mind that you know, companies
are not static. You know, just you know, as you
know in your own life, you know, life changes, right,
and sometimes it happens slowly, and sometimes it happens quickly,
like there's a little different stubfunctions in your life. Right,
The same thing goes for companies. The best companies are
able to adapt and execute, and publicly traded companies give

(17:43):
off quarterly updates on their earning calls and they have
updates on their business and you just foril to watch
very quickly what are the trends that they're seeing, whether
issues up they're trying to solve, and you know, sometimes
the company takes has to take a very big pivot.
So you know, just to use big companies that people
have heard of, like Amazon right just started selling books.

(18:06):
The guy was Jeff Bezos was had doors as desks
because he was just so broke, and uh yeah, he
pivoted it got into the marketplace and then actually that
business kind of stalled too, so then he's like, well,
I need the next driver, and then he decided to
go into cloud computing and made aws and you know,
they're continuing to evolve Microsoft as well. Remember you always

(18:27):
had those Windows updates that you had to put that
would just crash your computer all the time. Right now
it's just they charge you monthly for that. So they
updated their model and they also went into the cloud too.
And then even Berkshire Hathaway, they had like a failed
stamp company and you know, just their businesses that were dying,
and then you know they end up buying Geico and
that really changed the trajectory of that company. And there's

(18:49):
so many different stories of that. Hed in Netflix, remember
the CDs or DVDs they are getting the mail like
they pivoted. That was a hard pivot, and they went
to streaming services and now they're you know, right now
they're buying out all the big boys, traditional big boys
of the business. So you know, you always had to
keep watching. So once you have a stock that goes up,
you think, oh, I'd never have to think about it again.

(19:10):
You know a lot of things go up and they
had to go down. Said they don't pivot. You know,
they're at the Ciscos of the world, are there? You
know some of these stocks that just don't adapt into
the new world. So by listening to this calls, they
give you updates and you can give your best educated
guests on which ones are following the macroeconomic trends that
you can really ride that wave and you know and

(19:32):
can you grow your portfolio in the best way possible.

Speaker 1 (19:35):
Parts of doing all that research and collecting all that
data and being in and understanding all those calls. That's
a great thing about working with Tom and Nathan the
whole team at Wisconsin Capital Management. They are working for you.
They are watching these things day in and day out.
Of course, the goal at Wisconsin Capital Management finding the
right investments for you their clients. And of course it
all starts with the conversation. You head on over to
whiz cap dot com. That's Wi scap dot com. You

(19:58):
can do just that starting at the website whizcap dot com.
No pressure, no obligation, not gonna cost anything to start
that conversation again, just head to the website whizcap dot com.
That's Wi s cap dot com. It's always great chatting
with both of you. Tom Nate, you guys have a
fantastic day and we'll do it all again, real soon.

Speaker 2 (20:16):
All right, take ca on, have great holidays.

Speaker 1 (20:18):
You do the same and again. That website whizcap dot
com that's Wi s c ap dot com News comes
your way next here on thirteen ten Wi B A