Episode Transcript
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Speaker 1 (00:03):
Thirteen ten wib A and Ask the Experts, joined this
morning by chartered financial analyst Tom Plumb. Tom comes to
us from Wisconsin Capital Management the website, and I hope
you get a chance to head on over there today.
Whiz cap dot com. That's wi scap dot com. Again,
that's whiz cap dot com. Tom. How you doing this week?
Speaker 2 (00:24):
Oh? Doing very good? Sean doc markets head new record
bond markets seems to be a stable What could be better?
Speaker 1 (00:33):
Yeah?
Speaker 2 (00:33):
In Wisconsin? When do we get a warm nice days? Yeah?
Speaker 1 (00:37):
We live living great times. Yeah, I gotta love the
summer month. And real quick you we just recently had
a chance to do a little bit of traveling. You
were out east, and I know that's one of the
things as folks think about, you know, working with a
financial planner, one of the things I think a lot
of folks would love to do is travel more. And
that's one of the cool things. You get to help
people do those type of things, don't you.
Speaker 2 (00:58):
You know, that's one of the great things about this
job or help any people with their financial security and
their financial dreams and letting them know that what they
can do, what will be challenged to do, and what
things are impossible for them to do. Some of my people,
I tell you have enough money to do anything, but
(01:19):
you don't have enough money to do everything.
Speaker 1 (01:22):
Well, that's that's good to hear. It's great to think
about too, as folks think about, you know, kind of
achieving those goals and dreams. And you know, this week
we're going to be talking about the framework when it
comes to acid allocation and one are the approaches you
know that for folks as they approach excuse me, retirement
and then get into retirement. Let's talk a little bit
about that about that time kind of how that how
(01:43):
that goes into place at Wisconsin Capital Management and really
thinking about how that allocation starts out as you're getting
ready for retirement and do things change as we kind
of move through. Let's kind of get an overview on that.
Speaker 2 (01:54):
Tom Sure, you know, showing a lot of wealth manager
financial advisors tell people as your approach retirement, you need
to get much more conservative. And remember last week we
talked about the fact that the Social Security Department tells
you that if you hit sixty five years old, there's
a very good chance that you're going to live to
(02:16):
eighty five. If you're a man or eighty seven if
you're a woman, or that a couple, one of you
is going to live to ninety on average. So that's
a long period of time, and risk and returns and
inflation all changed with the time frame.
Speaker 1 (02:34):
So we're going to break down each one of those
areas of talk risk, return, and inflation as we kind
of break through that. Let's obviously get to the first
one this morning, Tom, which is of course risk and
nothing comes without risk in life, does it.
Speaker 2 (02:47):
Oh, that's for sure, Sean, But you know, you do
need to differentiate between risk and volatility. Risk is really
a permanent loss in your capital, and that can come
from obvious some type of investment going bad and going
down to zero, or it can come from your timing
if you're required to sell something and the market is adverse.
(03:11):
So you need to make sure that you're understanding the
difference between volatility. In other words, today, if I want
to sell something, I might get a different price than
if I waited and tried to see what the market
would give me over time. Or if you end up
with types of investments that imply that they reducing your risk,
(03:34):
but actually they're reducing your volatility. Because we look at
private equity or insured products, those types of things, even
real estate. They actually moderate your volatility, at least your
perception of volatility, unless you have to sell it. And
then you'll find out if that volatility that you've been
(03:56):
avoiding is really hiding risk because those assets could be
worth a lot less than you think.
Speaker 1 (04:02):
Tom, I want to ask you about insured products for example,
and I hear I, you know, I see the I'll
be watching One of the nice things about about my
job is I have some daytime free time, so I
get a chance to kind of turn on the tube
and I'll be watching some of the some of the
game shows and other things, kind of a guilty pleasure.
I'll see commercials pop up with things like some of
these some of these insured products, and I think sometimes
(04:25):
you watch them and you're like, oh, well that sounds
that sounds really really nice. It's like it's like I've
got my own almost like my own pension. What are
some of the things folks need to maybe understand a
little bit more when it comes to that that type
of type of product.
Speaker 2 (04:38):
Well, well, Sean, I think the main thing that they
need to understand is the financial structure of the product.
So give you, for example, are guaranteed a certain rate
of return, but then you need the money before the
maturity gate there could be substantial penalties. A lot of
them hide what their commission structure is by actually taking
(05:01):
it out of an expense ratio for a number of years.
But then if you want to sell it before that
expense structures advertised, you could really aid hit.
Speaker 1 (05:11):
Talking this morning with Tom Plumb, chartered financial analyst with
Wisconsin Capital Management. You can learn more about Tom and
the team all on the website Wisconsin whizcap dot com.
That's wiz wiscap dot com. Whiz cap dot com. Talking
this week about some things to address important things when
it comes to acid allocation. We're talking risk, return time,
and inflation and of course, as we're working our way
(05:33):
through risk, real estate and I know real estate is
something some people are very very heavy on. There are
some warnings and some things to think about and that area.
And I know in one of the notes you had
mentioned some Florida real estate just as a bit of
an example, Tom.
Speaker 2 (05:48):
Yeah, exactly. Yeah. So real estate, like other operating entities,
if you're having income coming from it, then you can
feel somewhat comfortable that you may have some protection in
your act, but if you own real estate that's adversely impacted,
for example, by hurricanes in Florida, as I'm well aware
(06:10):
that real estate could be worth a lot less than
you thought it was just because of the inclinations of people.
If you're own real estate in farmland in northern Wisconsin,
for example, you may go years and years and even
decades before you can actually make a profit on that property.
So real estate is location, location, location, and it's whether
(06:34):
or not you have a carrying cost or if you
have a positive cash flow from it.
Speaker 1 (06:39):
Really other enterprises, It's interesting you say that one of
the things I've I've got to witness over the years
is seeing you know, a lot of you know where
I am down here in Rock County is there's a
lot of farmland, and I've seen a lot of farmers
find ways or hope to find ways to maybe sell
that off to developers and others, And some of them
(07:00):
I've known for fifteen twenty years now still are sitting
with that farm land that you know, in some years
not doing any work on it. So kind of having
that understanding of kind of those markets is really important.
I'm going to ask you too. You started this part
of this conversation talking about the difference between volatility and
risk and when can volatility become a risk?
Speaker 2 (07:21):
Tom, Again, volatility can become a risk when it's a
fundamental issue because something is actually going down and perceived
and actual economic value. And it can become a significant
risk when you have to sell in their birth markets.
So real estate may have been a great investment over
(07:42):
a long period of time, and for example Florida or
real estate can be a great investment over a long
period of time. But I know that on some of
the barrier irons in Florida right now, they're trading twenty
to thirty percent less than they work two years ago.
So again, if you have the ability to go through
that cycle, you may say, well it was a volacle time.
(08:05):
But if you needed the cash or you needed to sell,
that's real risk.
Speaker 1 (08:10):
Talking this morning with Tom Plumb with Wisconsin Capital Management.
The website whizcap dot com that's wi scap dot com.
Of course, Tom is a chartered financial analyst with Wisconsin
Capital Management. Well, you get a chance to head on
over the website learn more about Tom and the team
and a little bit about them a chance to make
an appointment as well. That website again, whiz cap dot com.
That's wi s cap dot com. Let's dig into that
(08:34):
second part then then Tom, let's get to the I
think this is the fun part to talk about the
return part. Let's let's get into that a little bit.
Speaker 2 (08:41):
Well, you know, over time you can see what returns
have been, and it depends on your measurement time period.
When do you start where are you finished? If I,
for example, were to buy a four year four percent
CD for example, and was good and mature and one year,
I can tell you what my return is going to
be in that one year, but I can't tell you
(09:02):
what my expected return is going to be for the
rest of my lifetime. Historically, we can tell you that
college stocks measured by the S and P five hundred
have had an average return of almost ten percent or
six and a half percent after inflation, but no one
can tell you what that return is going to be
next year or even beyond in the future. Today, the
(09:26):
United States Treasury will pay you almost five percent for
the next thirty years, and historically bonds of average like
that four to five percent and basically one to three
percent over inflation. So real estate, as we said, depends
on where and what. But a lot of private equity
in real estate has matched and sometimes exceeded the return
(09:49):
of the average stock. But it's again, operating companies have
a better chance of maintaining their value than just taking
some type of a fixed contract.
Speaker 1 (10:01):
And Tom, what about the liquidity of real estate is
you know, obviously it's I think for a lot of
folks investment properties and others, probably not the worst thing
to have available. But if it comes time to sell,
you're kind of at the mercy of the market there,
aren't you.
Speaker 2 (10:17):
Oh yes, you are, Sean, And of course you have
commissions that may be involved, and you have the length
of time that it's going to take. Again, just looking
at Barrier Islands in Florida, on average they're sitting there
almost four hundred days before they're being sold. So that's
a lot of time if you needed the money for something.
Speaker 1 (10:39):
Talking this morning with Tom Plumb, of course chartered financial analysts.
Of course, Tom comes to us from Wisconsin Capital Management.
You can get to know Tom, you can get to
know Nathan as well, the whole team at Wisconsin's Capital Management.
On their website whizcap dot com. That's wiscap dot com.
That's whizcap dot com. We'll get a chance to head
on over to the website this morning when you get
into the office, or maybe you're listening to the podcast,
(11:01):
you can always head on over to wizcap dot com
to learn more. We continue our conversation with Tom. We're
going to talk about that final piece, which is two parts,
which is time and inflation. We're going to put those together.
We'll wrap up our conversation with Tom Plum of Wisconsin
Capital Management. We'll do that next as Ask the Experts
continues right here on thirteen ten wuib A thirteen ten
(11:25):
WIBA and Ask the Experts talking this morning with Tom Plumb.
Of course, Tom comes to us from Wisconsin Capital Management.
The website Wisconsin whiz cap dot com. That's wiz cap
dot com. And Tom, I love the website. It's funny
because I always want to be like Wisconsin Capital Management
dot Com. That's a long thin time in whiz cap
is super super convenient, wiscap dot com. And before we
(11:47):
get into get into time and inflation, let's talk a
little bit about getting to know you and for folks
that have been listening to the program, have enjoyed what
you've had to say, want to learn more. The website's
a pretty good starting point.
Speaker 2 (11:58):
Isn't It is a starting point, But a conversation, UH
really can help you get to where you need to
be and talking to us about your specific personal situation.
So we'd like you to get some idea of who
we are where we are. But Nathan and I can
sit down with you talk about your personal situation and
(12:21):
apply the investment advice and investment expertise that we have
to you individually.
Speaker 1 (12:28):
And Tom, that's one of the big things. You use
that word personal, and I think that for a lot
of folks that's important. You know, we spend our lives,
you know, working very very hard. We build a little
next nest nest egg, and we really want the best
for what we want to see it grow. The one
thing I think that that makes us feel better is
having somebody that that we have a personal relationship with,
(12:50):
that we have an understanding of of, you know, personalities
and goals and how everything meets and that I think
for I mentioned this on a previous show. Remember the
first a you and I sat down and I was
kind of talking about Wisconsin Capital Management, and I was
getting to know you, and right away I could tell
there was something there is there is I don't know
if it's a gennes sequa or what the kids would
call it these days, but there is a real passion
(13:11):
that's very apparent early on with that and having that
personalized touch is really important, folks, isn't it, Tom?
Speaker 2 (13:18):
Oh, it is, and someone has to really take pleasure
in your success. And that's what makes us feel like
every day we come into the office, we're very excited
that we're helping somebody reach their financial success, their financial
serenity by having a plan and acid allocation that works
(13:39):
for them.
Speaker 1 (13:40):
It's really great stuff. As we talked this morning with
Tom plumb off Wisconsin Capital Management, make it personal. He'd
love to get to know you. You can get to know
Tom and Nathan and the whole team at Wisconsin Capital
Management again, just head on over the website whiz cap
dot com. You can set up an apployment, start that
actual person to person conversation. A great place to start
is learning more at whiz cap dot com. That's wisc ap.
(14:00):
So we talked about risk, we talked about return, and
then the third point for this weekend. It's an important one,
which is time and inflation. So let's kind of break down.
You mentioned some of some of the numbers and some
of the statistics for life expectancies and others. The time
and inflation can both. Obviously, one can work for you,
one can work against you. And you really want to
(14:21):
be managing these forces, don't you, Tom?
Speaker 2 (14:24):
Exactly? Sean, you know what you think about it. Inflation
is real. When I moved to Madison, Wisconsin in nineteen eighty,
the consumer price index, so I said eighty. Now it's
at three hundred and twenty one. Well, so that means
that four times the costs to find and purchase the
exact same things I thought forty five years ago. That's
(14:48):
a to protect against inflation is one of the significant
long term goals that every one of our clients have.
And you need to think about inflation. It may not
sound like much from we're talking about, oh are we
had two percent or two and a half percent, But
I can tell you that over time that e roads
(15:10):
your purchasing power and you need to be able to
come in and address that with a portion of your assets.
Those portions that are meant to support you in the
long term.
Speaker 1 (15:22):
What about I hear a lot of folks talking about
about gold, the virtues of gold and other things. What's
kind of your take on having gold in your portfolio?
Speaker 2 (15:31):
Tom, oh, You know, what we call real acids or
hard assets like gold are often highlighted as being an
inflation hedge. And gold has had a really nice run
over the last two years, so it's basically double and
by double them, it's now thirty three hundred. But in
nineteen eighty when I moved to Madison, Wisconsin, January of
(15:55):
nineteen eighty, gold hit eight hundred dollars, So in other words,
it had been double in the last two years to
be an inflation hedge to match the consumer price debts.
Speaker 1 (16:08):
That's it. That is well, that's a little eye opening,
you know, when you frame it that way, you're starting
to realize that is uh, that is a very very
fascinating As we talked this morning with Tom Plum of
Wisconsin Capital Management, again the website whiz cap dot com.
That's Wi s c ap dot com. So kind of
breaking that, kind of breaking that down a little bit
more as we go through go through some of these
(16:32):
these numbers, and of course talked about We talked about
inflation and time. Let's talk about then we kind of
apply time in the S and P five hundred, Where
does where does those where do those numbers and kind
of we go through time, what's the trajectory there?
Speaker 2 (16:45):
Look like Tom Well again, Sean, just going back to
these forty five years, the s K five hundred, which
is the major US DOT was at one hundred and
twenty seven back in January of nineteen eighty. It's over
sixty three hundred rank howur up almost or nearly fifty times,
(17:08):
and it's paid amount of skill is it dividend at
that time? So when you think about it, high quality
operating companies have been a very good long term protection
against inflation, erosion of your purchasing power. The companies that
generate positive cash flow, high quality companies. You can always
(17:31):
lose money on an individual stock, and there's many stocks
over that forty five years that have gone by the wayside,
But in general, good quality operating companies have come to
the top, just like cream, and that has allowed the
average person to have significant protection against the erosion of
(17:53):
purchasing power that inflation has.
Speaker 1 (17:56):
Let's talk it. Oh god, oh I'm.
Speaker 2 (17:59):
Sorry, So, Nick and I what we like to think
of is you have to have a portfolio strategy that
has basically buppets. You need to have that liquidity for
those types of expenses you're going to have over the
next eighteen months to two years, because nobody can tell
you that the stock market is going to be up
(18:20):
or even at what the interest rates are going to
be two or three years from now. Then you have
the intermediate term, where you should probably consider two to
seven years, where you know that you want to have
some growth because inflation is significant, but it won't erode
you that much in that period of time, and you
(18:42):
need a bucket that probably has some more balance to it.
But then as you go towards your longer term, how
you're going to protect your family, yourself from the ravages
of inflation. There you probably need to have some type
of an equity. We've been happy with the public. We
traded equities that have rows to the top tier, and
(19:06):
we spend a lot of our time analyzing those companies
to make sure that we have the right runs for
our clients.
Speaker 1 (19:13):
And Tom, I'm going to take a guess here. When
you break down those those three areas. I'm guessing that
it's not equally split across the three. That you really
want to fine tune percentages of what as far as
your investment's looking towards short term, mid term, and long term,
and that that's a that's a real art to formulate that,
and then of course breaking down inside of all of
(19:35):
those those buckets, what you actually have in those to
achieve those goals.
Speaker 2 (19:39):
That's is that really the stage the fact that we
talked about a little bit last year, that's last week.
I'm sorry if that's The buckets are determined by what
your actual expenses are, and you need to have some
real honest analysis and what you're going to spend your
money on, what you are spending your money on and
(20:00):
but you will be spending your money on in the future,
and that is one of the key determinants for how
much money has to be in each one of those buffets.
Speaker 1 (20:09):
Talking this morning with Tom Plump, chartered financial analyst with
Wisconsin Capital Management, head on over the website this morning
whizcap dot com. That's wiscap dot com. Whizcap dot com.
Do free can listen back to this in previous shows podcasts.
Also on the website wiscap dot com. Also on our
website WIBA dot com. It's always informative talking with Tom again.
(20:30):
You can learn more the website whiskcap dot com. Tom,
it's always fantastic to see you. You enjoy this great Dan
and we'll do it all again in one.
Speaker 2 (20:37):
Week, bet Sean, and you have a great morning.
Speaker 1 (20:40):
You do the same. News comes your way next right
here on thirteen ten wib A
Thirteen ten wib A and Ask the Experts, joined this
morning by chartered financial analyst Tom Plumb. Tom comes to
us from Wisconsin Capital Management the website, and I hope
you get a chance to head on over there today.
Whiz cap dot com. That's wi scap dot com. Again,
that's whiz cap dot com. Tom. How you doing this week?
Speaker 2 (00:24):
Oh? Doing very good? Sean doc markets head new record
bond markets seems to be a stable What could be better?
Speaker 1 (00:33):
Yeah?
Speaker 2 (00:33):
In Wisconsin? When do we get a warm nice days? Yeah?
Speaker 1 (00:37):
We live living great times. Yeah, I gotta love the
summer month. And real quick you we just recently had
a chance to do a little bit of traveling. You
were out east, and I know that's one of the
things as folks think about, you know, working with a
financial planner, one of the things I think a lot
of folks would love to do is travel more. And
that's one of the cool things. You get to help
people do those type of things, don't you.
Speaker 2 (00:58):
You know, that's one of the great things about this
job or help any people with their financial security and
their financial dreams and letting them know that what they
can do, what will be challenged to do, and what
things are impossible for them to do. Some of my people,
I tell you have enough money to do anything, but
(01:19):
you don't have enough money to do everything.
Speaker 1 (01:22):
Well, that's that's good to hear. It's great to think
about too, as folks think about, you know, kind of
achieving those goals and dreams. And you know, this week
we're going to be talking about the framework when it
comes to acid allocation and one are the approaches you
know that for folks as they approach excuse me, retirement
and then get into retirement. Let's talk a little bit
about that about that time kind of how that how
(01:43):
that goes into place at Wisconsin Capital Management and really
thinking about how that allocation starts out as you're getting
ready for retirement and do things change as we kind
of move through. Let's kind of get an overview on that.
Speaker 2 (01:54):
Tom Sure, you know, showing a lot of wealth manager
financial advisors tell people as your approach retirement, you need
to get much more conservative. And remember last week we
talked about the fact that the Social Security Department tells
you that if you hit sixty five years old, there's
a very good chance that you're going to live to
(02:16):
eighty five. If you're a man or eighty seven if
you're a woman, or that a couple, one of you
is going to live to ninety on average. So that's
a long period of time, and risk and returns and
inflation all changed with the time frame.
Speaker 1 (02:34):
So we're going to break down each one of those
areas of talk risk, return, and inflation as we kind
of break through that. Let's obviously get to the first
one this morning, Tom, which is of course risk and
nothing comes without risk in life, does it.
Speaker 2 (02:47):
Oh, that's for sure, Sean, But you know, you do
need to differentiate between risk and volatility. Risk is really
a permanent loss in your capital, and that can come
from obvious some type of investment going bad and going
down to zero, or it can come from your timing
if you're required to sell something and the market is adverse.
(03:11):
So you need to make sure that you're understanding the
difference between volatility. In other words, today, if I want
to sell something, I might get a different price than
if I waited and tried to see what the market
would give me over time. Or if you end up
with types of investments that imply that they reducing your risk,
(03:34):
but actually they're reducing your volatility. Because we look at
private equity or insured products, those types of things, even
real estate. They actually moderate your volatility, at least your
perception of volatility, unless you have to sell it. And
then you'll find out if that volatility that you've been
(03:56):
avoiding is really hiding risk because those assets could be
worth a lot less than you think.
Speaker 1 (04:02):
Tom, I want to ask you about insured products for example,
and I hear I, you know, I see the I'll
be watching One of the nice things about about my
job is I have some daytime free time, so I
get a chance to kind of turn on the tube
and I'll be watching some of the some of the
game shows and other things, kind of a guilty pleasure.
I'll see commercials pop up with things like some of
these some of these insured products, and I think sometimes
(04:25):
you watch them and you're like, oh, well that sounds
that sounds really really nice. It's like it's like I've
got my own almost like my own pension. What are
some of the things folks need to maybe understand a
little bit more when it comes to that that type
of type of product.
Speaker 2 (04:38):
Well, well, Sean, I think the main thing that they
need to understand is the financial structure of the product.
So give you, for example, are guaranteed a certain rate
of return, but then you need the money before the
maturity gate there could be substantial penalties. A lot of
them hide what their commission structure is by actually taking
(05:01):
it out of an expense ratio for a number of years.
But then if you want to sell it before that
expense structures advertised, you could really aid hit.
Speaker 1 (05:11):
Talking this morning with Tom Plumb, chartered financial analyst with
Wisconsin Capital Management. You can learn more about Tom and
the team all on the website Wisconsin whizcap dot com.
That's wiz wiscap dot com. Whiz cap dot com. Talking
this week about some things to address important things when
it comes to acid allocation. We're talking risk, return time,
and inflation and of course, as we're working our way
(05:33):
through risk, real estate and I know real estate is
something some people are very very heavy on. There are
some warnings and some things to think about and that area.
And I know in one of the notes you had
mentioned some Florida real estate just as a bit of
an example, Tom.
Speaker 2 (05:48):
Yeah, exactly. Yeah. So real estate, like other operating entities,
if you're having income coming from it, then you can
feel somewhat comfortable that you may have some protection in
your act, but if you own real estate that's adversely impacted,
for example, by hurricanes in Florida, as I'm well aware
(06:10):
that real estate could be worth a lot less than
you thought it was just because of the inclinations of people.
If you're own real estate in farmland in northern Wisconsin,
for example, you may go years and years and even
decades before you can actually make a profit on that property.
So real estate is location, location, location, and it's whether
(06:34):
or not you have a carrying cost or if you
have a positive cash flow from it.
Speaker 1 (06:39):
Really other enterprises, It's interesting you say that one of
the things I've I've got to witness over the years
is seeing you know, a lot of you know where
I am down here in Rock County is there's a
lot of farmland, and I've seen a lot of farmers
find ways or hope to find ways to maybe sell
that off to developers and others, And some of them
(07:00):
I've known for fifteen twenty years now still are sitting
with that farm land that you know, in some years
not doing any work on it. So kind of having
that understanding of kind of those markets is really important.
I'm going to ask you too. You started this part
of this conversation talking about the difference between volatility and
risk and when can volatility become a risk?
Speaker 2 (07:21):
Tom, Again, volatility can become a risk when it's a
fundamental issue because something is actually going down and perceived
and actual economic value. And it can become a significant
risk when you have to sell in their birth markets.
So real estate may have been a great investment over
(07:42):
a long period of time, and for example Florida or
real estate can be a great investment over a long
period of time. But I know that on some of
the barrier irons in Florida right now, they're trading twenty
to thirty percent less than they work two years ago.
So again, if you have the ability to go through
that cycle, you may say, well it was a volacle time.
(08:05):
But if you needed the cash or you needed to sell,
that's real risk.
Speaker 1 (08:10):
Talking this morning with Tom Plumb with Wisconsin Capital Management.
The website whizcap dot com that's wi scap dot com.
Of course, Tom is a chartered financial analyst with Wisconsin
Capital Management. Well, you get a chance to head on
over the website learn more about Tom and the team
and a little bit about them a chance to make
an appointment as well. That website again, whiz cap dot com.
That's wi s cap dot com. Let's dig into that
(08:34):
second part then then Tom, let's get to the I
think this is the fun part to talk about the
return part. Let's let's get into that a little bit.
Speaker 2 (08:41):
Well, you know, over time you can see what returns
have been, and it depends on your measurement time period.
When do you start where are you finished? If I,
for example, were to buy a four year four percent
CD for example, and was good and mature and one year,
I can tell you what my return is going to
be in that one year, but I can't tell you
(09:02):
what my expected return is going to be for the
rest of my lifetime. Historically, we can tell you that
college stocks measured by the S and P five hundred
have had an average return of almost ten percent or
six and a half percent after inflation, but no one
can tell you what that return is going to be
next year or even beyond in the future. Today, the
(09:26):
United States Treasury will pay you almost five percent for
the next thirty years, and historically bonds of average like
that four to five percent and basically one to three
percent over inflation. So real estate, as we said, depends
on where and what. But a lot of private equity
in real estate has matched and sometimes exceeded the return
(09:49):
of the average stock. But it's again, operating companies have
a better chance of maintaining their value than just taking
some type of a fixed contract.
Speaker 1 (10:01):
And Tom, what about the liquidity of real estate is
you know, obviously it's I think for a lot of
folks investment properties and others, probably not the worst thing
to have available. But if it comes time to sell,
you're kind of at the mercy of the market there,
aren't you.
Speaker 2 (10:17):
Oh yes, you are, Sean, And of course you have
commissions that may be involved, and you have the length
of time that it's going to take. Again, just looking
at Barrier Islands in Florida, on average they're sitting there
almost four hundred days before they're being sold. So that's
a lot of time if you needed the money for something.
Speaker 1 (10:39):
Talking this morning with Tom Plumb, of course chartered financial analysts.
Of course, Tom comes to us from Wisconsin Capital Management.
You can get to know Tom, you can get to
know Nathan as well, the whole team at Wisconsin's Capital Management.
On their website whizcap dot com. That's wiscap dot com.
That's whizcap dot com. We'll get a chance to head
on over to the website this morning when you get
into the office, or maybe you're listening to the podcast,
(11:01):
you can always head on over to wizcap dot com
to learn more. We continue our conversation with Tom. We're
going to talk about that final piece, which is two parts,
which is time and inflation. We're going to put those together.
We'll wrap up our conversation with Tom Plum of Wisconsin
Capital Management. We'll do that next as Ask the Experts
continues right here on thirteen ten wuib A thirteen ten
(11:25):
WIBA and Ask the Experts talking this morning with Tom Plumb.
Of course, Tom comes to us from Wisconsin Capital Management.
The website Wisconsin whiz cap dot com. That's wiz cap
dot com. And Tom, I love the website. It's funny
because I always want to be like Wisconsin Capital Management
dot Com. That's a long thin time in whiz cap
is super super convenient, wiscap dot com. And before we
(11:47):
get into get into time and inflation, let's talk a
little bit about getting to know you and for folks
that have been listening to the program, have enjoyed what
you've had to say, want to learn more. The website's
a pretty good starting point.
Speaker 2 (11:58):
Isn't It is a starting point, But a conversation, UH
really can help you get to where you need to
be and talking to us about your specific personal situation.
So we'd like you to get some idea of who
we are where we are. But Nathan and I can
sit down with you talk about your personal situation and
(12:21):
apply the investment advice and investment expertise that we have
to you individually.
Speaker 1 (12:28):
And Tom, that's one of the big things. You use
that word personal, and I think that for a lot
of folks that's important. You know, we spend our lives,
you know, working very very hard. We build a little
next nest nest egg, and we really want the best
for what we want to see it grow. The one
thing I think that that makes us feel better is
having somebody that that we have a personal relationship with,
(12:50):
that we have an understanding of of, you know, personalities
and goals and how everything meets and that I think
for I mentioned this on a previous show. Remember the
first a you and I sat down and I was
kind of talking about Wisconsin Capital Management, and I was
getting to know you, and right away I could tell
there was something there is there is I don't know
if it's a gennes sequa or what the kids would
call it these days, but there is a real passion
(13:11):
that's very apparent early on with that and having that
personalized touch is really important, folks, isn't it, Tom?
Speaker 2 (13:18):
Oh, it is, and someone has to really take pleasure
in your success. And that's what makes us feel like
every day we come into the office, we're very excited
that we're helping somebody reach their financial success, their financial
serenity by having a plan and acid allocation that works
(13:39):
for them.
Speaker 1 (13:40):
It's really great stuff. As we talked this morning with
Tom plumb off Wisconsin Capital Management, make it personal. He'd
love to get to know you. You can get to know
Tom and Nathan and the whole team at Wisconsin Capital
Management again, just head on over the website whiz cap
dot com. You can set up an apployment, start that
actual person to person conversation. A great place to start
is learning more at whiz cap dot com. That's wisc ap.
(14:00):
So we talked about risk, we talked about return, and
then the third point for this weekend. It's an important one,
which is time and inflation. So let's kind of break down.
You mentioned some of some of the numbers and some
of the statistics for life expectancies and others. The time
and inflation can both. Obviously, one can work for you,
one can work against you. And you really want to
(14:21):
be managing these forces, don't you, Tom?
Speaker 2 (14:24):
Exactly? Sean, you know what you think about it. Inflation
is real. When I moved to Madison, Wisconsin in nineteen eighty,
the consumer price index, so I said eighty. Now it's
at three hundred and twenty one. Well, so that means
that four times the costs to find and purchase the
exact same things I thought forty five years ago. That's
(14:48):
a to protect against inflation is one of the significant
long term goals that every one of our clients have.
And you need to think about inflation. It may not
sound like much from we're talking about, oh are we
had two percent or two and a half percent, But
I can tell you that over time that e roads
(15:10):
your purchasing power and you need to be able to
come in and address that with a portion of your assets.
Those portions that are meant to support you in the
long term.
Speaker 1 (15:22):
What about I hear a lot of folks talking about
about gold, the virtues of gold and other things. What's
kind of your take on having gold in your portfolio?
Speaker 2 (15:31):
Tom, oh, You know, what we call real acids or
hard assets like gold are often highlighted as being an
inflation hedge. And gold has had a really nice run
over the last two years, so it's basically double and
by double them, it's now thirty three hundred. But in
nineteen eighty when I moved to Madison, Wisconsin, January of
(15:55):
nineteen eighty, gold hit eight hundred dollars, So in other words,
it had been double in the last two years to
be an inflation hedge to match the consumer price debts.
Speaker 1 (16:08):
That's it. That is well, that's a little eye opening,
you know, when you frame it that way, you're starting
to realize that is uh, that is a very very
fascinating As we talked this morning with Tom Plum of
Wisconsin Capital Management, again the website whiz cap dot com.
That's Wi s c ap dot com. So kind of
breaking that, kind of breaking that down a little bit
more as we go through go through some of these
(16:32):
these numbers, and of course talked about We talked about
inflation and time. Let's talk about then we kind of
apply time in the S and P five hundred, Where
does where does those where do those numbers and kind
of we go through time, what's the trajectory there?
Speaker 2 (16:45):
Look like Tom Well again, Sean, just going back to
these forty five years, the s K five hundred, which
is the major US DOT was at one hundred and
twenty seven back in January of nineteen eighty. It's over
sixty three hundred rank howur up almost or nearly fifty times,
(17:08):
and it's paid amount of skill is it dividend at
that time? So when you think about it, high quality
operating companies have been a very good long term protection
against inflation, erosion of your purchasing power. The companies that
generate positive cash flow, high quality companies. You can always
(17:31):
lose money on an individual stock, and there's many stocks
over that forty five years that have gone by the wayside,
But in general, good quality operating companies have come to
the top, just like cream, and that has allowed the
average person to have significant protection against the erosion of
(17:53):
purchasing power that inflation has.
Speaker 1 (17:56):
Let's talk it. Oh god, oh I'm.
Speaker 2 (17:59):
Sorry, So, Nick and I what we like to think
of is you have to have a portfolio strategy that
has basically buppets. You need to have that liquidity for
those types of expenses you're going to have over the
next eighteen months to two years, because nobody can tell
you that the stock market is going to be up
(18:20):
or even at what the interest rates are going to
be two or three years from now. Then you have
the intermediate term, where you should probably consider two to
seven years, where you know that you want to have
some growth because inflation is significant, but it won't erode
you that much in that period of time, and you
(18:42):
need a bucket that probably has some more balance to it.
But then as you go towards your longer term, how
you're going to protect your family, yourself from the ravages
of inflation. There you probably need to have some type
of an equity. We've been happy with the public. We
traded equities that have rows to the top tier, and
(19:06):
we spend a lot of our time analyzing those companies
to make sure that we have the right runs for
our clients.
Speaker 1 (19:13):
And Tom, I'm going to take a guess here. When
you break down those those three areas. I'm guessing that
it's not equally split across the three. That you really
want to fine tune percentages of what as far as
your investment's looking towards short term, mid term, and long term,
and that that's a that's a real art to formulate that,
and then of course breaking down inside of all of
(19:35):
those those buckets, what you actually have in those to
achieve those goals.
Speaker 2 (19:39):
That's is that really the stage the fact that we
talked about a little bit last year, that's last week.
I'm sorry if that's The buckets are determined by what
your actual expenses are, and you need to have some
real honest analysis and what you're going to spend your
money on, what you are spending your money on and
(20:00):
but you will be spending your money on in the future,
and that is one of the key determinants for how
much money has to be in each one of those buffets.
Speaker 1 (20:09):
Talking this morning with Tom Plump, chartered financial analyst with
Wisconsin Capital Management, head on over the website this morning
whizcap dot com. That's wiscap dot com. Whizcap dot com.
Do free can listen back to this in previous shows podcasts.
Also on the website wiscap dot com. Also on our
website WIBA dot com. It's always informative talking with Tom again.
(20:30):
You can learn more the website whiskcap dot com. Tom,
it's always fantastic to see you. You enjoy this great Dan
and we'll do it all again in one.
Speaker 2 (20:37):
Week, bet Sean, and you have a great morning.
Speaker 1 (20:40):
You do the same. News comes your way next right
here on thirteen ten wib A
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