Episode Transcript
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Speaker 1 (00:03):
Thirteen ten w i B and ask the experts with
Wisconsin Capital Management. Great website if you haven't a chance
to check it out today. Is the data head right there,
wizcap dot com. That's Wi s c ap dot com again,
whiz cap dot com. Get more information about Wisconsin Capital
Management what makes them so unique? Can learn more about
(00:24):
the folks, whether it's Tom Plum, Nathan Plumb, the whole
team at Wisconsin Capital Management. You can also the best
feature sign up an appointment to rite online.
Speaker 2 (00:32):
Again.
Speaker 1 (00:32):
That's at whizcap dot com. That's wiz wis capcap dot com.
Wiz cap dot com. Who are Tom and Nathan Plumb? Oh,
they're on with us right now. We get to know them.
Tom Plumb, chartered financial analyst with Wisconsin Capital Management. Tom,
how are you doing this week?
Speaker 3 (00:49):
We're doing great, Sean, thanks for having us and Uh,
it's great to be with you today.
Speaker 1 (00:54):
It's always great to chat with you and Nathan. How
have you been?
Speaker 2 (00:57):
Hey? Sean doing great as Juel and good.
Speaker 1 (00:59):
Happy It's good to have you both along. Of course,
Nathan Plump certified Trust Financial Advisor also with his executive MBA.
And this week we're going to be talking about a shutdown,
and as I look at our show notes for this week,
folks aren't for a really good and really informative show.
But before we get to all the really good information,
something were talking about before the show, Tom, which is
(01:21):
trying to answer the question about what exactly is a
shutdown and more importantly, what exactly is this shutdown. It's
not as simple as people might think.
Speaker 3 (01:31):
No it's not, because when you do a little bit
of research and check back, sometimes they say there's been
ten shutdowns since nineteen seventy six, and some of the
sources say there's been twenty two or twenty three, that
this would be the twenty third one. So what they
mean by a shutdown is basically, some part of the
(01:51):
government does not pay its bills. And that could be
where it just wasn't authorized at one point to make
certain type of a payment, or it might be something
more broad in general, and this one that we're in
right now is a broad in general one where there
are some entities that are still being paid. The government's
(02:12):
still paying interest on its debts. For example, it's still
paying the Social Security so far, although we don't know
if they'll continue to do that in October, and there's
a number of other what they call non essential items
that are being either furloughed or shut down, such as
(02:33):
the national parks for example.
Speaker 1 (02:35):
As we talked this morning, and it's fascinating, it's kind
of what is in the past, counted, what did it
and who you ask and those type of things, And
you know, it's fascinating to me. Is obviously government government business.
It affects all aspects of life, and certainly when it
comes to investments and other things, of course, there is
something for everything there. And as we look, Tom, you know,
(02:59):
we think about what's been going on in the last
couple of weeks in the news, a lot of the
headlines have been about that anxiety about the federal government
shutdown now started first of this month and looks like
it's probably not going to be reconciled anyway anytime soon.
So as we talked this morning with Nate and Tom Plummer,
going to get some details and Tom, let's talk a
little bit about the reach of a government shut down
(03:21):
in this one in particular.
Speaker 3 (03:24):
Well, again, it's thousands of government employees are going to
be furloughed, some of them are asked to come to
work but there's no assurance that they'll be paid. Today.
The government says that they're going to pay the military,
but again there's some question about whether or not they
can pick and choose some of the things that aren't
(03:45):
directly authorized. One of the things that causes us considerable
amount of frustration among taxpayers is that the congressional members
are still being paid.
Speaker 1 (04:00):
That is that is uh, that is insult to injury
there for sure, Tom, and you know Nate, when we
when we look at this stuff and kind of discuss this, Uh,
it's funny because when you hear politicians talk, and I
don't care what side of the isle on they're on, uh,
they all seem to think that this is They all
say that this is unacceptable. But it seems to be
(04:21):
one of the very rare things as far as statements
that we have bipartisan support on. Yet here it is.
It's happening. We are in a government shutdown, aren't we.
Speaker 2 (04:29):
Yeah, I mean, you're exactly right. So obviously, you know,
probably most people think that running the government is a
good thing, and I think, uh, you know, both sides
agreed to that. But again, when you look at the
details to how things are set up in our government.
These type of things are in the Senate are subject
to us called the Bird rule, and that means that
you need to have sixty votes in the Senate as
(04:50):
opposed to a simple majority. This rule of courses the
parties to have to work together, which obviously is uh
sometimes a difficult thing. And that's why that these deck
crisiss are not really about the debt. It's just these
all political posturing and this is the event that forces
these right now two parties to really hammer each other.
(05:11):
So unfortunately, even with this debt crisis over, this is
it's going to rear his head over and over again.
So this won't be the last one either.
Speaker 1 (05:18):
Yeah, Unfortunately, as we as we kind of look at
kind of how things have played out here in America
and of course in Congress as well, it does. Yet
it does not seem unfortunately. I think you're right on
with that, Nathan, that this is not going to be
the last one of us. We talked this morning with
Nathan and Tom Plumb of Wisconsin Capital Management the website
whizcap dot com. That's wiscap dot com. Don't forget if
(05:39):
you miss any part of the show, you can always
listen back on the website that the podcasts right up
at wizcap dot com. Also great opportunity. As you listen
to the show, you get this great information, make sure
you're sharing it with your friends and family. You hear
a particular topic that might be of interest to them,
you can always, of course share right from wizcap dot com. Also,
while you're there, you can set up an appointment right
online again, that's wis see ap dot com and Tommy
(06:02):
think about the people that are directly impacted, whether they
are currently furloughed, or however they're they're phrasing it, or
whether there is the potential for them to do it. Obviously,
that has a very direct impact. But there's also those
who are part of that political football who may not
have that direct impact on their lives. But there are
some pretty far reaching consequences for everyone, aren't there.
Speaker 3 (06:26):
Definitely, Sean. Initially you feel for the government employees and
their families, and no one likes to be called a
non essential employee, but you know, it does affect the
general economy, first of all in information because the government
is the main source of how we understand what's happening
(06:48):
to the prices, consumer prices, for example, and other economic activity.
And as this uncertainty continues, then it starts to have
a broader impact throughout a wholy economy, not just in
information that's available, but in the information that's necessary to
make decisions. So it definitely starts to affect the broader economy.
Speaker 1 (07:12):
Let's talk then, Nate about about the effect on GDP
and the growth. What are we what are we seeing
there as far as some of the numbers and some
of the some of the uh, some of the information
in that area.
Speaker 2 (07:23):
Yeah, the reason that you just don't see a hue
whole scale downdraft is that actually there's kind of a
have a delayed and needed effect when this happens. So
some estimates suggest that each week is a shutdown subjects
uh sob track, I'm sorry, so tracks one tenth of
one percent of analyzed GDP. So you know our if
(07:45):
our anal GDP growth runs about three percent, you know,
a three work a three week shutdown could already reduce
some economic activities. So it's kind of a muted effective first,
and then it grows bigger and bigger. And then the
thing that you have to remember is that the private
sector tries eighty five percent of the economy, so we
(08:09):
the people, the consumer still drive the economy. So that's
why you don't see any huge sell off in the
stock market and things that see and counterintuitive, you know,
the government only effects about fifteen percent of GDP, so
that's why you're seeing, you know, things that react the
way you think you would they would.
Speaker 1 (08:28):
And that was that's been surprising to me in a
good way. I always like when when you know these
these pleasant surprises about about the stock market other things.
But Tom, Uh, the stock market maybe not so much.
The bond market, on the other hand, there is something
we can we can see there isn't there, Tom.
Speaker 3 (08:47):
It has historically, you know, when you look at the
stock market, Uh, there's been different effects. But on the
bond market in general, what we call a flight to safety.
A lot of people start buying bonds, and interest rates
actually go down modestly during the past shutdowns, and that
(09:08):
may seem in counterintuitive. Here the government's not paying their bills,
so I'll go and buy their debt, but historically they
continue to pay that debt. And again it's what they
call risk off, where a lot of people start to
get concerned about what it might mean for the overall economy,
(09:28):
and so they flow into safer investments, and bonds are
typically considered safer than stocks, and government bonds are considered
safer than corporate bonds. So you start to see a
lot of money flow in there. And historically rates have
dropped almost a half a percent during any prolonged shutdown.
Speaker 1 (09:49):
That is fascinating, as we talked this morning with Tom
Plumb and Nathan Plumb of Wisconsin Capital Management Online wiz
cap dot com that's wys dot com, really interesting when
you look at some of the historical data, and of
course what you'll often hear folks say is, well, this
time is different. I think Mark Twain says history doesn't
repeat itself, but it does rhyme. We'll get the details
(10:12):
from natan Tom about this time. Is it truly different?
Is this warnings of maybe something bigger? Is this something
that maybe folks are overreacting? And we'll find out how
this time may or may not be different from previous
shutdowns with the details from Tom and Nathan. Next in
the meantime been the website. Head on over to wizcap
dot com. That's wiscap dot com. That's where you learn
(10:34):
more about Wisconsin Capital Management, learn about Tom, you can
learn about Nathan and everyone at Wisconsin Capital Management. Most importantly,
there though, it's an opportunity to make an appointment. All
I gotta do is head on over to whizcap dot com.
That's wiscap dot com. We're going to continue our conversation
with Natan Tom. We will do that next as Ask
the Experts with Wisconsin Capital Management continues right here on
thirteen ten wui b A thirteen ten wui b A
(11:03):
and asked the Experts. Hanging out this morning with our
good friends Tom and Nathan Plumb of Wisconsin Capital Management.
Tom chartered financial Analyst, Nate of course a certified Trust
Financial Advisor with an executive MBA. And of course they
come to us from Wisconsin Capital Management. You can learn
more about Tom and Nate on the website whizcap dot com.
That's Wi s cap dot com. You can get to
(11:25):
know the guys. You can also get know Wisconsin Capital Management.
Best feature, though, is an opportunity to set up an
appointment right at whizcap dot com. That's Wi scap dot com.
You can also listen back to this in previous shows
podcasts as well, talking this week about how the government
shutdown affects investors. And one of the things that I
have noticed, especially when it comes to politics, is things
(11:46):
that that have happened before. Every time they happen again,
folks automatically say this time it's different, this time it's unique.
Folks will say, well, we've been through it before, we survived,
we persevered, maybe we've come out stronger. People say, well,
this is different, this is different. And we hear that
warning about about some kinds of bubbles in the economy
and other things. How Nate is is this time different?
Speaker 2 (12:11):
Yeah, this site is a little bit different because uh,
we have This is something that you've probably heard about,
is this AI theme that's really kind of dominated the markets,
and so you know, trying to think about what AI
does for you, but what it does for the stock market,
what you've seen is that it's really making a lot
of these companies more productive. So you know, if you
(12:33):
are one of these people out there using chat GPT,
right instead of writing a letter that took you ten minutes, right,
might only take you like a minute or two. So
just think of that at scale at huge companies. So
that's the uh, the savings of productive productivity and time
is the different thing this time. So well, there are
a lot of things that could happen right now. But
(12:55):
so the market code could stay flat, it could go up,
it could go down. So the case being flat is
that you know, the stock market's at all time high.
You know, the price levels up or but still are
relative price levels, especially when you have a service based economy.
So that's one say and think all those things are
you know, are good and things will probably just level off.
(13:15):
That's a plausible possibility, right. And then if you're thinking
they're they're going up, right, they fed just lowered interest
rates on September twenty five basis points and actually raised them,
are lowered them by one percent over the last fifteen months.
So that's a huge stimulation to the economy. And so
that's the case that you could actually, boy, this kind
(13:36):
of could really go up and still have a very
rational argument. And then lastly, you know it down the
downloads get a lot more pressed, but it's usually unlikely
in stock markets. So you know, I think about the
S and P five hundred every every rolling ten years,
you can expect it to go up, you know seven
and a half eight times out of ten, right, so
(13:56):
the downcase is usually not the case. But you know,
there's a lot of called issues out there that are
not in a vacuum, right, and especially this trade uncertainty
that that's something and daily announcements of you know, we
don't like this country and you know vice versa. You know,
that's definitely creating a dragon world economics. And so that's uh,
(14:17):
a very plausible point for the bears out there.
Speaker 1 (14:20):
That is interesting, Nate when you mentioned you know, I
see sometimes some of these headlines and I would think
traditionally here shut down that would cause the markets to
to adjust and drop down or rise up, whereas it
seems like certain statements and certain things tend to really
have that effect these days. And and Tom and you
kind of bring you into the end of the conversation here.
(14:43):
Complacency is is is there as well, isn't it?
Speaker 3 (14:47):
Well, when we talk about a stock market being near
at an all time high, there is a certain amount
of complacency built in there, and there's expectations. So historically
when we've had a shutdown and the market in the
first few was shutdowns during the forwarded Carter years, market
(15:08):
actually went down. Then the next few times it actually
seemed like it was more sanguine and the market didn't
do much. The last time in twenty eighteen, and which
was so far the longest shutdown, the stock market actually
went up ten percent in a month. So you get
(15:28):
people start to think that this shutdown is a non event.
And historically after a shutdown, the stock market has gone
up and its average going up double digits over the
next twelve months. But this time you wonder, because Nate
was mentioning there's some very strong potential fundamental issues, but
(15:51):
they're already built into the stock market. So again that
creates this short term and short term meaning idiot where
we are right now impact where you are very uncertain
and you're very concerned because we've seen that the market
can be very volatile on some just potential short term
(16:16):
news item one night might drive the stock market down
track dramatically. On last Friday, we saw the stock market
go down almost three percent in certain segments.
Speaker 1 (16:28):
As we talked this morning with Tom and Nathan plumb
off Wisconsin Capital Management, the website whizcap dot com. That's
wizcap dot com and Nate I. Tom just mentioned there
that word uncertainty and you think about things of you know,
whether it's trade and tariffs, those type of things. Those
are really one of those one of those things that
that investors do pay quite close attention to, don't they.
Speaker 2 (16:48):
Yeah, you know, honestly, being and madis Wisconsin are surrounded
by a lot of the farming community and a lot
of these commodity prices really get fluctuated by global tree raid.
So you know, so historically Wisconsin, if you grew soybeans,
one of your major export markets was was China, and
(17:09):
now that's disrupted. So but you can't really pivot and
plant a new field, uh, you know, every two months
just on these different commodity prices. So it definitely has
uh you know, it hurts people light in the local area,
and so that's something that you always have to be
be conscious of. So usually once you kind of define
(17:31):
the rules, I mean, if you don't like the rules,
at least everyone knows has a playbook to play by.
And that's what usually corporations like so you know, So
that's so people have kind of built a forecast for
this type of you know, range and their uncertainty and
their quote unquote flexing their supply chains like trying to,
you know, make sure that we keep their prices lower
(17:51):
going to the consumer. But uh, you know, it's it's
a lot of stress when you're you're not focusing on
actually operating your business, you're worried about your supply chain.
Speaker 1 (18:00):
I always feel like markets are kind of like as
a passenger in the car, you want the driver to
be decisive. There is nothing that makes you a little
more uneasy than riding around with somebody that's driving a
car and my wife is gonna is perking up right now.
There's nothing that drives me more crazy than indecisiveness when
it comes to making decisions on the road. And it
seems like the stock markets kind of perceive things the
(18:22):
exact same way. Talking this morning with Tom and Nathan
Plumb of Wisconsin Capital Management online wiz cap dot com.
That's wiscap dot com. So obviously, shutdown has real potential
when it comes to short term implications and of course,
depending on how long this lasts. I got to ask you, Tom,
what if any potential long term implications may there be.
Speaker 3 (18:44):
Well, one of them, of course, is potential is a
healthcare sector. Because the impasse seems to be about the
medical subsidies and the government's role in healthcare. So however
that is resolved, will have some profound act on that
sector of the economy. And we're trying to understand the
impact on drug price controls that were just announced last week.
(19:09):
So as all is, there's going to be some winners
and some losers, and it's going to be based on
how volumes change and the profit incentives that are going
to be allowed once the government deals with these issues.
Speaker 1 (19:23):
Nate, you know, one of the things that I know
I saw in the notes and obviously I pay attention
to the news flow working at news talk station. Uh,
the news the news flow does have, does have, does
have an impact here, doesn't it.
Speaker 2 (19:38):
Yeah, Well, the the the news flow definitely affects, you know,
just how you know, the general people feel, you know, psychologically, right,
so either it kind of kind of gets you way
up or way down, especially on what you're watching social
media these days. But the key thing is actually go
back to your analogy of driving a car, right, So
when you're hearing all these news flows, you feel like
(19:58):
you're hesitating and kind of get from type of gets stuck,
and uh, I guess my dad and I were kind
of like formulae and uh race drivers. So we're driving
fast and making decisions. Not that all our decisions are
as correct as those Formula one drivers, but you were
taking We're finding, you know, opportunities, We're finding disruptive technology
and things that you can invest in and hopefully kind
(20:19):
of moderate your volatilely at the same time with our
with our process, so we have a dynamic balance process
that uh that we're always looking at, always adjustering, always tweaking.
And so we're not stop being complacent either. We're we're
very active and you know that's the formula that's worked
for us. And you know, anyone that's been complacent eventually
(20:42):
there's entropy and things will erode away. No matter what
you do.
Speaker 1 (20:45):
End up getting past getting lapped, that's for sure. And
that's one of the great things about starting a conversation
with Tom and Native Wisconsin Capital Management. You can do
just that at wiz cap dot com. That's w i
s c ap dot com. You can talk with with
Tom Nate and find out if your investment plan is
set to meet your needs and goals again, and all
I got to do is head on over to whizcap
(21:05):
dot com start that conversation about your investments again. The
website whizcap dot com. That's wiscap dot com. Tom, great
talking to me this morning. You have a fantastic day.
Speaker 3 (21:17):
Oh thanks, Sean. And as Nate was saying, yeah, yeah,
it's really important that you have a dynamic view of
what your asset allocation is and things. And you can't
just follow some old time formula, but you have to
be able to adapt using these principles and the same
fundamental foundation reasoning. But you have to be able to
(21:40):
adapt to the current environment as well as understand what
the longer term potential is.
Speaker 1 (21:46):
Love the perspective, Nate. It's always great as well. Hear
from you. You enjoy this fantastic.
Speaker 2 (21:50):
Day, all right, see next we Sean news
Speaker 1 (21:52):
Comes your way next right here on thirteen ten, Wiba
Thirteen ten w i B and ask the experts with
Wisconsin Capital Management. Great website if you haven't a chance
to check it out today. Is the data head right there,
wizcap dot com. That's Wi s c ap dot com again,
whiz cap dot com. Get more information about Wisconsin Capital
Management what makes them so unique? Can learn more about
(00:24):
the folks, whether it's Tom Plum, Nathan Plumb, the whole
team at Wisconsin Capital Management. You can also the best
feature sign up an appointment to rite online.
Speaker 2 (00:32):
Again.
Speaker 1 (00:32):
That's at whizcap dot com. That's wiz wis capcap dot com.
Wiz cap dot com. Who are Tom and Nathan Plumb? Oh,
they're on with us right now. We get to know them.
Tom Plumb, chartered financial analyst with Wisconsin Capital Management. Tom,
how are you doing this week?
Speaker 3 (00:49):
We're doing great, Sean, thanks for having us and Uh,
it's great to be with you today.
Speaker 1 (00:54):
It's always great to chat with you and Nathan. How
have you been?
Speaker 2 (00:57):
Hey? Sean doing great as Juel and good.
Speaker 1 (00:59):
Happy It's good to have you both along. Of course,
Nathan Plump certified Trust Financial Advisor also with his executive MBA.
And this week we're going to be talking about a shutdown,
and as I look at our show notes for this week,
folks aren't for a really good and really informative show.
But before we get to all the really good information,
something were talking about before the show, Tom, which is
(01:21):
trying to answer the question about what exactly is a
shutdown and more importantly, what exactly is this shutdown. It's
not as simple as people might think.
Speaker 3 (01:31):
No it's not, because when you do a little bit
of research and check back, sometimes they say there's been
ten shutdowns since nineteen seventy six, and some of the
sources say there's been twenty two or twenty three, that
this would be the twenty third one. So what they
mean by a shutdown is basically, some part of the
(01:51):
government does not pay its bills. And that could be
where it just wasn't authorized at one point to make
certain type of a payment, or it might be something
more broad in general, and this one that we're in
right now is a broad in general one where there
are some entities that are still being paid. The government's
(02:12):
still paying interest on its debts. For example, it's still
paying the Social Security so far, although we don't know
if they'll continue to do that in October, and there's
a number of other what they call non essential items
that are being either furloughed or shut down, such as
(02:33):
the national parks for example.
Speaker 1 (02:35):
As we talked this morning, and it's fascinating, it's kind
of what is in the past, counted, what did it
and who you ask and those type of things, And
you know, it's fascinating to me. Is obviously government government business.
It affects all aspects of life, and certainly when it
comes to investments and other things, of course, there is
something for everything there. And as we look, Tom, you know,
(02:59):
we think about what's been going on in the last
couple of weeks in the news, a lot of the
headlines have been about that anxiety about the federal government
shutdown now started first of this month and looks like
it's probably not going to be reconciled anyway anytime soon.
So as we talked this morning with Nate and Tom Plummer,
going to get some details and Tom, let's talk a
little bit about the reach of a government shut down
(03:21):
in this one in particular.
Speaker 3 (03:24):
Well, again, it's thousands of government employees are going to
be furloughed, some of them are asked to come to
work but there's no assurance that they'll be paid. Today.
The government says that they're going to pay the military,
but again there's some question about whether or not they
can pick and choose some of the things that aren't
(03:45):
directly authorized. One of the things that causes us considerable
amount of frustration among taxpayers is that the congressional members
are still being paid.
Speaker 1 (04:00):
That is that is uh, that is insult to injury
there for sure, Tom, and you know Nate, when we
when we look at this stuff and kind of discuss this, Uh,
it's funny because when you hear politicians talk, and I
don't care what side of the isle on they're on, uh,
they all seem to think that this is They all
say that this is unacceptable. But it seems to be
(04:21):
one of the very rare things as far as statements
that we have bipartisan support on. Yet here it is.
It's happening. We are in a government shutdown, aren't we.
Speaker 2 (04:29):
Yeah, I mean, you're exactly right. So obviously, you know,
probably most people think that running the government is a
good thing, and I think, uh, you know, both sides
agreed to that. But again, when you look at the
details to how things are set up in our government.
These type of things are in the Senate are subject
to us called the Bird rule, and that means that
you need to have sixty votes in the Senate as
(04:50):
opposed to a simple majority. This rule of courses the
parties to have to work together, which obviously is uh
sometimes a difficult thing. And that's why that these deck
crisiss are not really about the debt. It's just these
all political posturing and this is the event that forces
these right now two parties to really hammer each other.
(05:11):
So unfortunately, even with this debt crisis over, this is
it's going to rear his head over and over again.
So this won't be the last one either.
Speaker 1 (05:18):
Yeah, Unfortunately, as we as we kind of look at
kind of how things have played out here in America
and of course in Congress as well, it does. Yet
it does not seem unfortunately. I think you're right on
with that, Nathan, that this is not going to be
the last one of us. We talked this morning with
Nathan and Tom Plumb of Wisconsin Capital Management the website
whizcap dot com. That's wiscap dot com. Don't forget if
(05:39):
you miss any part of the show, you can always
listen back on the website that the podcasts right up
at wizcap dot com. Also great opportunity. As you listen
to the show, you get this great information, make sure
you're sharing it with your friends and family. You hear
a particular topic that might be of interest to them,
you can always, of course share right from wizcap dot com. Also,
while you're there, you can set up an appointment right
online again, that's wis see ap dot com and Tommy
(06:02):
think about the people that are directly impacted, whether they
are currently furloughed, or however they're they're phrasing it, or
whether there is the potential for them to do it. Obviously,
that has a very direct impact. But there's also those
who are part of that political football who may not
have that direct impact on their lives. But there are
some pretty far reaching consequences for everyone, aren't there.
Speaker 3 (06:26):
Definitely, Sean. Initially you feel for the government employees and
their families, and no one likes to be called a
non essential employee, but you know, it does affect the
general economy, first of all in information because the government
is the main source of how we understand what's happening
(06:48):
to the prices, consumer prices, for example, and other economic activity.
And as this uncertainty continues, then it starts to have
a broader impact throughout a wholy economy, not just in
information that's available, but in the information that's necessary to
make decisions. So it definitely starts to affect the broader economy.
Speaker 1 (07:12):
Let's talk then, Nate about about the effect on GDP
and the growth. What are we what are we seeing
there as far as some of the numbers and some
of the some of the uh, some of the information
in that area.
Speaker 2 (07:23):
Yeah, the reason that you just don't see a hue
whole scale downdraft is that actually there's kind of a
have a delayed and needed effect when this happens. So
some estimates suggest that each week is a shutdown subjects
uh sob track, I'm sorry, so tracks one tenth of
one percent of analyzed GDP. So you know our if
(07:45):
our anal GDP growth runs about three percent, you know,
a three work a three week shutdown could already reduce
some economic activities. So it's kind of a muted effective first,
and then it grows bigger and bigger. And then the
thing that you have to remember is that the private
sector tries eighty five percent of the economy, so we
(08:09):
the people, the consumer still drive the economy. So that's
why you don't see any huge sell off in the
stock market and things that see and counterintuitive, you know,
the government only effects about fifteen percent of GDP, so
that's why you're seeing, you know, things that react the
way you think you would they would.
Speaker 1 (08:28):
And that was that's been surprising to me in a
good way. I always like when when you know these
these pleasant surprises about about the stock market other things.
But Tom, Uh, the stock market maybe not so much.
The bond market, on the other hand, there is something
we can we can see there isn't there, Tom.
Speaker 3 (08:47):
It has historically, you know, when you look at the
stock market, Uh, there's been different effects. But on the
bond market in general, what we call a flight to safety.
A lot of people start buying bonds, and interest rates
actually go down modestly during the past shutdowns, and that
(09:08):
may seem in counterintuitive. Here the government's not paying their bills,
so I'll go and buy their debt, but historically they
continue to pay that debt. And again it's what they
call risk off, where a lot of people start to
get concerned about what it might mean for the overall economy,
(09:28):
and so they flow into safer investments, and bonds are
typically considered safer than stocks, and government bonds are considered
safer than corporate bonds. So you start to see a
lot of money flow in there. And historically rates have
dropped almost a half a percent during any prolonged shutdown.
Speaker 1 (09:49):
That is fascinating, as we talked this morning with Tom
Plumb and Nathan Plumb of Wisconsin Capital Management Online wiz
cap dot com that's wys dot com, really interesting when
you look at some of the historical data, and of
course what you'll often hear folks say is, well, this
time is different. I think Mark Twain says history doesn't
repeat itself, but it does rhyme. We'll get the details
(10:12):
from natan Tom about this time. Is it truly different?
Is this warnings of maybe something bigger? Is this something
that maybe folks are overreacting? And we'll find out how
this time may or may not be different from previous
shutdowns with the details from Tom and Nathan. Next in
the meantime been the website. Head on over to wizcap
dot com. That's wiscap dot com. That's where you learn
(10:34):
more about Wisconsin Capital Management, learn about Tom, you can
learn about Nathan and everyone at Wisconsin Capital Management. Most importantly,
there though, it's an opportunity to make an appointment. All
I gotta do is head on over to whizcap dot com.
That's wiscap dot com. We're going to continue our conversation
with Natan Tom. We will do that next as Ask
the Experts with Wisconsin Capital Management continues right here on
thirteen ten wui b A thirteen ten wui b A
(11:03):
and asked the Experts. Hanging out this morning with our
good friends Tom and Nathan Plumb of Wisconsin Capital Management.
Tom chartered financial Analyst, Nate of course a certified Trust
Financial Advisor with an executive MBA. And of course they
come to us from Wisconsin Capital Management. You can learn
more about Tom and Nate on the website whizcap dot com.
That's Wi s cap dot com. You can get to
(11:25):
know the guys. You can also get know Wisconsin Capital Management.
Best feature, though, is an opportunity to set up an
appointment right at whizcap dot com. That's Wi scap dot com.
You can also listen back to this in previous shows
podcasts as well, talking this week about how the government
shutdown affects investors. And one of the things that I
have noticed, especially when it comes to politics, is things
(11:46):
that that have happened before. Every time they happen again,
folks automatically say this time it's different, this time it's unique.
Folks will say, well, we've been through it before, we survived,
we persevered, maybe we've come out stronger. People say, well,
this is different, this is different. And we hear that
warning about about some kinds of bubbles in the economy
and other things. How Nate is is this time different?
Speaker 2 (12:11):
Yeah, this site is a little bit different because uh,
we have This is something that you've probably heard about,
is this AI theme that's really kind of dominated the markets,
and so you know, trying to think about what AI
does for you, but what it does for the stock market,
what you've seen is that it's really making a lot
of these companies more productive. So you know, if you
(12:33):
are one of these people out there using chat GPT,
right instead of writing a letter that took you ten minutes, right,
might only take you like a minute or two. So
just think of that at scale at huge companies. So
that's the uh, the savings of productive productivity and time
is the different thing this time. So well, there are
a lot of things that could happen right now. But
(12:55):
so the market code could stay flat, it could go up,
it could go down. So the case being flat is
that you know, the stock market's at all time high.
You know, the price levels up or but still are
relative price levels, especially when you have a service based economy.
So that's one say and think all those things are
you know, are good and things will probably just level off.
(13:15):
That's a plausible possibility, right. And then if you're thinking
they're they're going up, right, they fed just lowered interest
rates on September twenty five basis points and actually raised them,
are lowered them by one percent over the last fifteen months.
So that's a huge stimulation to the economy. And so
that's the case that you could actually, boy, this kind
(13:36):
of could really go up and still have a very
rational argument. And then lastly, you know it down the
downloads get a lot more pressed, but it's usually unlikely
in stock markets. So you know, I think about the
S and P five hundred every every rolling ten years,
you can expect it to go up, you know seven
and a half eight times out of ten, right, so
(13:56):
the downcase is usually not the case. But you know,
there's a lot of called issues out there that are
not in a vacuum, right, and especially this trade uncertainty
that that's something and daily announcements of you know, we
don't like this country and you know vice versa. You know,
that's definitely creating a dragon world economics. And so that's uh,
(14:17):
a very plausible point for the bears out there.
Speaker 1 (14:20):
That is interesting, Nate when you mentioned you know, I
see sometimes some of these headlines and I would think
traditionally here shut down that would cause the markets to
to adjust and drop down or rise up, whereas it
seems like certain statements and certain things tend to really
have that effect these days. And and Tom and you
kind of bring you into the end of the conversation here.
(14:43):
Complacency is is is there as well, isn't it?
Speaker 3 (14:47):
Well, when we talk about a stock market being near
at an all time high, there is a certain amount
of complacency built in there, and there's expectations. So historically
when we've had a shutdown and the market in the
first few was shutdowns during the forwarded Carter years, market
(15:08):
actually went down. Then the next few times it actually
seemed like it was more sanguine and the market didn't
do much. The last time in twenty eighteen, and which
was so far the longest shutdown, the stock market actually
went up ten percent in a month. So you get
(15:28):
people start to think that this shutdown is a non event.
And historically after a shutdown, the stock market has gone
up and its average going up double digits over the
next twelve months. But this time you wonder, because Nate
was mentioning there's some very strong potential fundamental issues, but
(15:51):
they're already built into the stock market. So again that
creates this short term and short term meaning idiot where
we are right now impact where you are very uncertain
and you're very concerned because we've seen that the market
can be very volatile on some just potential short term
(16:16):
news item one night might drive the stock market down
track dramatically. On last Friday, we saw the stock market
go down almost three percent in certain segments.
Speaker 1 (16:28):
As we talked this morning with Tom and Nathan plumb
off Wisconsin Capital Management, the website whizcap dot com. That's
wizcap dot com and Nate I. Tom just mentioned there
that word uncertainty and you think about things of you know,
whether it's trade and tariffs, those type of things. Those
are really one of those one of those things that
that investors do pay quite close attention to, don't they.
Speaker 2 (16:48):
Yeah, you know, honestly, being and madis Wisconsin are surrounded
by a lot of the farming community and a lot
of these commodity prices really get fluctuated by global tree raid.
So you know, so historically Wisconsin, if you grew soybeans,
one of your major export markets was was China, and
(17:09):
now that's disrupted. So but you can't really pivot and
plant a new field, uh, you know, every two months
just on these different commodity prices. So it definitely has
uh you know, it hurts people light in the local area,
and so that's something that you always have to be
be conscious of. So usually once you kind of define
(17:31):
the rules, I mean, if you don't like the rules,
at least everyone knows has a playbook to play by.
And that's what usually corporations like so you know, So
that's so people have kind of built a forecast for
this type of you know, range and their uncertainty and
their quote unquote flexing their supply chains like trying to,
you know, make sure that we keep their prices lower
(17:51):
going to the consumer. But uh, you know, it's it's
a lot of stress when you're you're not focusing on
actually operating your business, you're worried about your supply chain.
Speaker 1 (18:00):
I always feel like markets are kind of like as
a passenger in the car, you want the driver to
be decisive. There is nothing that makes you a little
more uneasy than riding around with somebody that's driving a
car and my wife is gonna is perking up right now.
There's nothing that drives me more crazy than indecisiveness when
it comes to making decisions on the road. And it
seems like the stock markets kind of perceive things the
(18:22):
exact same way. Talking this morning with Tom and Nathan
Plumb of Wisconsin Capital Management online wiz cap dot com.
That's wiscap dot com. So obviously, shutdown has real potential
when it comes to short term implications and of course,
depending on how long this lasts. I got to ask you, Tom,
what if any potential long term implications may there be.
Speaker 3 (18:44):
Well, one of them, of course, is potential is a
healthcare sector. Because the impasse seems to be about the
medical subsidies and the government's role in healthcare. So however
that is resolved, will have some profound act on that
sector of the economy. And we're trying to understand the
impact on drug price controls that were just announced last week.
(19:09):
So as all is, there's going to be some winners
and some losers, and it's going to be based on
how volumes change and the profit incentives that are going
to be allowed once the government deals with these issues.
Speaker 1 (19:23):
Nate, you know, one of the things that I know
I saw in the notes and obviously I pay attention
to the news flow working at news talk station. Uh,
the news the news flow does have, does have, does
have an impact here, doesn't it.
Speaker 2 (19:38):
Yeah, Well, the the the news flow definitely affects, you know,
just how you know, the general people feel, you know, psychologically, right,
so either it kind of kind of gets you way
up or way down, especially on what you're watching social
media these days. But the key thing is actually go
back to your analogy of driving a car, right, So
when you're hearing all these news flows, you feel like
(19:58):
you're hesitating and kind of get from type of gets stuck,
and uh, I guess my dad and I were kind
of like formulae and uh race drivers. So we're driving
fast and making decisions. Not that all our decisions are
as correct as those Formula one drivers, but you were
taking We're finding, you know, opportunities, We're finding disruptive technology
and things that you can invest in and hopefully kind
(20:19):
of moderate your volatilely at the same time with our
with our process, so we have a dynamic balance process
that uh that we're always looking at, always adjustering, always tweaking.
And so we're not stop being complacent either. We're we're
very active and you know that's the formula that's worked
for us. And you know, anyone that's been complacent eventually
(20:42):
there's entropy and things will erode away. No matter what
you do.
Speaker 1 (20:45):
End up getting past getting lapped, that's for sure. And
that's one of the great things about starting a conversation
with Tom and Native Wisconsin Capital Management. You can do
just that at wiz cap dot com. That's w i
s c ap dot com. You can talk with with
Tom Nate and find out if your investment plan is
set to meet your needs and goals again, and all
I got to do is head on over to whizcap
(21:05):
dot com start that conversation about your investments again. The
website whizcap dot com. That's wiscap dot com. Tom, great
talking to me this morning. You have a fantastic day.
Speaker 3 (21:17):
Oh thanks, Sean. And as Nate was saying, yeah, yeah,
it's really important that you have a dynamic view of
what your asset allocation is and things. And you can't
just follow some old time formula, but you have to
be able to adapt using these principles and the same
fundamental foundation reasoning. But you have to be able to
(21:40):
adapt to the current environment as well as understand what
the longer term potential is.
Speaker 1 (21:46):
Love the perspective, Nate. It's always great as well. Hear
from you. You enjoy this fantastic.
Speaker 2 (21:50):
Day, all right, see next we Sean news
Speaker 1 (21:52):
Comes your way next right here on thirteen ten, Wiba
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