About this episode:
In this episode of UB Insider, Derek Overstreet, host of KSL’s More than Money radio show and owner and investment advisor at New Millennium Group, talks making smart choices in a rollercoaster economy and branching out to talking about his craft on radio. Subscribe or download this episode on iTunes and Stitcher.
Lisa Christensen: Hello and welcome to UB Insider. I’m Lisa Christensen, online editor at Utah Business magazine. Today I’m talking to Derek Overstreet, owner and investment advisor at New Millennium Group as well as the host of More Than Money, a weekly radio show that airs on KSL.
Derek Overstreet: Thank you for having me.
Lisa Christensen: Yeah, welcome. So Derek, what brought you into the financial industry?
Derek Overstreet: I started about 27 years ago. Growing up in Draper, Utah, there wasn’t a lot of people that had a lot of money. We were kind of farmers and hillbillies. So, I had an uncle in the business in Philadelphia. I called him and said, I don’t know what you do, but I’d love to come out and empty trash cans and kind of learn the business from you. He told me he didn’t have anything available in Philly, but would I move to Chicago? So that’s where I started. I moved back here to Utah in ’99. This was supposed to be kind of retirement for me, but it hasn’t turned out to be that.
Lisa Christensen: Yeah. You’ve been pretty busy. Your radio show is pretty popular. How did you make the transition from working with investments and the financial group to radio? Did you have a love for it?
Derek Overstreet: I never wanted to be cold or hungry, so maybe that was the basis for it. Moving back to Utah in 1999, I had kind of this vision of working with 25-30 families and helping them manage their wealth. I had done that for several of my business clients that had sold their business and then they needed help managing the resources. So those kind of people are more interested in safety as opposed to trying to grow their wealth. And that’s what we excelled at.
We became pretty good at what we did. So, we started about a year, a year and a half ago on KSL with More Than Money. That’s what we talk about, things that we feel are really important. And it has nothing to do with what the world tells you that you should have. You shouldn’t really worry about having $1.7 million or $2.8 million. What you should worry about is, do I have time to spend time with my loved ones, my children, my grandchildren, creating memories. So that’s kind of what the show is about.
Lisa Christensen: When you set out to do the radio show, when you pitched the idea and started crafting it and then you actually got into it, what did you find in the reality of the radio show that you might not have expected in those early planning stages?
Derek Overstreet: I actually thought that radio would be a little bit like we could talk, and if I messed up, we could turn off and re-tape it. But oftentimes it’s not really like that. You really need to know what you’re saying. Your brain needs to be on 24/7, tuned up a notch or two and really be able to take really good questions from people and then answer specifics. It’s hard to do because we are regulated by the Financial Regulatory Authority, so we always have to put out disclaimers. When we talk about a stock, don’t rush out and buy this. These are just educational ideas.
Lisa Christensen: You weren’t doing the radio show when the economy was really at its wildest a few years ago, but you still were in the financial industry. And a lot of the sectors within the financial industry that were hit the hardest were some of the ones that it sounds like your clients were most concerned about. Social security, retirement, housing. What was it like trying to weather those times? What did you learn from it?
Derek Overstreet: Well, a lot of people…What I found is that a lot of people don’t really know and understand that they don’t have to watch their 401k go up and down and up and down. For instance, if you feel like the markets are going to go down or there is going to be a correction, most 401k’s have what we call a “safe harbor” provision that you could move your money, even you. You could move your 401k into a money market. So if you felt like the market was going to go down, you could just log online and move your money to cash. If things do go south, you’ve saved a lot of downside. If the markets keep going up, so you gave up 5% or 10%.
What we find, I guess my biggest love is working with people in education. And I had two really important teachers. My second grade teacher Mrs. Brown at the old Draper Park Elementary who taught me how to read and how to find answers to things. And then my third grade teacher. I hated math until Mrs. Taylor helped me understand the concept of that. So especially with teachers, they want safety. They want security. So during that downturn, if what we really did was work on capital preservation, which we did a pretty good job of that, then when the markets turned up we were able to take advantage of some of the big upswing in the market. We tended to be more on the safe side of things.
Lisa Christensen: The market has, thankfully, recovered quite a bit since then. But it’s still a volatile area. What do you think is the biggest concern for people right now?
Derek Overstreet: Well I think there’s a lot of uncertainty in the markets right now. And typically in an election year, the markets are supposed to go up. But would you say that this is a normal election year? It’s crazy, crazy, right? So if it were me, I’d want to just kind of be out on the sidelines not doing anything. I’d rather just see what happens and then see where we can go from there. This is probably the craziest time I’ve ever seen. People not knowing what to do, wanting to keep money in the banks. And I don’t think at 0.0 rate of return, I don’t think that’s a good idea. There are vehicles that exist that you can get 2%, 3% or 4% safely. And so those are the things we try to help people with.
Lisa Christensen: So you’ve been working in finance for your entire career.
Derek Overstreet: Really my whole life.
Lisa Christensen: Yeah. How does that affect the way that you look at the world versus the way that people outside of the industry look at the world?
Derek Overstreet: You know what, actually it’s given me quite a twisted view. And it really is. I think most people believe that the market is rigged. Back in ’08, ’09, when the government took over all the banks, do you remember that? I used to have an account with Washington Mutual and from a Friday night to a Monday night, Washington Mutual just became JPMorgan Chase, like over the weekend. So that’s really how the financial industry works.
If I like you, Lisa, and I don’t like John, and I just give you all of their business, and say, oh by the way, I’m going to fine you like $20 billion. But don’t worry, Lisa, it doesn’t come out of your pocket. All you have to do is raise the rates on all of your depositors. What we’re going to do is we’re actually going to crucify the banks, right? But we won’t use your name in any way. So you won’t go to jail. You’ll just write these checks to us. Will that work for you? That’s kind of a pessimistic way of looking at it, right?
I think that’s kind of even, today’s election cycle is kind of like that. Why are two opposing forces so popular? It’s because Americans, we’re sick of what we feel is to be a rigged game. I kind of have felt that in my career and seen different things. And so those are the kinds of things that we try to change. That was probably more than you wanted to know, isn’t it?
Lisa Christensen: With your career in the finance industry, I’m sure that people come up to you and ask for tips or hints or takes on things. What’s the most common question that your neighbors or people in the grocery store ask you?
Derek Overstreet: Well, a lot of people will ask about specific products. Is a mutual fund good? Or is an annuity good? Or is this good? And I say that they are neither good nor bad. What I would ask back is what are you trying to accomplish? If income is what you want to accomplish, well then let’s create a plan of attack for that. Most advisors typically will do real estate only or mutual funds only or annuities only or life insurance only. And I’m saying, why not a little bit of each? Why not have some risk capital in the markets? Why not have some rental income? Why not have three or four different areas? And be safe with your money.
People always go, I want 10%, 15%, 20% rate of return every year. Well that’s not realistic. It’s realistic if you’re Bernie Madoff and you’re running a kind of a scam. But there are going to be up years and bad years. So what we try to do is have you…Back in ’08, ’09, if you had owned a rental house and you were getting $1,500 a month in rent, would it really matter to you that the market value went from $250 to $150 on the house?
Lisa Christensen: I guess not.
Derek Overstreet: No. I get my rent check in every month. So those are the things I try to look at. I love, for instance, I would call them toll booth companies. I don’t have a choice in who I buy my gas from, meaning for my house. Do you?
Lisa Christensen: No.
Derek Overstreet: It’s Questar. So recently Questar was bought out by a company called Dominion Resources. Well Dominion would not have bought out Questar if they didn’t think they were getting a good deal, would they?
Lisa Christensen: No.
Derek Overstreet: So why not use Dominion’s research department, say hey, I want to own Questar because I want a dividend. But I want to buy them cheaply so I’d rather just buy the parent company. In fact, just today, Microsoft bought LinkedIn. So why would you pay like $27 billion for a company that earned $300 million? Microsoft must feel like they’re getting a good deal. So those are the kinds of things that I try to look at. I try to see what’s going to go wrong. You know, hey, if Dominion buys Questar, where could I lose? Let me try to blow that up. And if I can’t blow that up, then I usually want to back up the truck and own those kinds of things. Does that seem more like a logical approach rather than…
Lisa Christensen: Yeah. Are you saying that companies like Dominion or like Microsoft are looking at the potential of the companies that they are buying? Or at the companies with those, you know, monthly rent checks?
Derek Overstreet: I like both. It depends on what you want to accomplish. Many of your listeners will receive a pension. Most won’t because pensions are becoming extinct. So what we want to do is we want to create income. And maybe for you it’s, if I had $5,000 a month and no bills, I’m in great shape. So if I can get some rental income through owning rental properties. Now I’m not saying that you should go buy the house next to yours and climb up on the roof in the winter when it’s leaking. Professionally managed real estate that sends you a check. Do you really…I don’t have the heart go kick a renter out if they’ve missed a payment. Do you?
Lisa Christensen: I don’t think I could do that either.
Derek Overstreet: I’d go, alright. You’re divorced, you’ve got four kids, alright. Next month. And then the next month comes along. I’d rather have professional managers do that and then have them just send me the check every month. So I want a little bit of real estate income. I want some dividends like a Dominion, like a Questar type of thing. And then maybe very little at risk. A lot of people, again, want that 15%, 20% upside. I would submit, I’d rather you be safe and get 4%-6% and just not lose money. So that’s kind of our whole philosophy at our firm. It’s safety first.
Lisa Christensen: What do you think the outlook is like given the volatility of the economy…What do you think that the outlook is like in the next few years?
Derek Overstreet: It’s going to be up and down. Just teasing you. It will. It will be both. And by the way, right now, oil has gone from $105 a barrel down to $30, and then it’s back up to $50. So companies like Chevron and BP, and by the way, don’t rush out and buy these. But wouldn’t you want to own dividend paying stocks? Do you think Exxon is going to ever go out of business?
Lisa Christensen: Not until we…
Derek Overstreet: Use up the last drop of oil, right? Those relationships that they’ve had for 150 years aren’t going to go away anytime soon. So when they go out of favor, I want to buy them. And in ’08 and ’09 when banks were literally almost put out of business, that’s a good time to buy them. So just look for opportunities and buy things that might be undervalued. That’s what the very best investors in the world do. But don’t invest the money that you need to pay next month’s mortgage.
So, some advice I would give you is save all that you can. If you have a 401k at work, take all the free money that you can possibly get. If you’ve got to put in six to get four, put the six to get four. And then another vehicle I would use is called a Roth IRA. And a Roth IRA is after-tax money. But when it grows and you take it out, it becomes tax-free to you. So imagine down the road, you’re retired. Of your $5,000 of monthly income, if $1,000 of it was tax-free, you’d be high fiving me saying hey, great advice you gave me.
The biggest thing I hear when we take on a new client is where were you five years ago? Where were you ten years ago? And so that’s really the thing that I like about radio. I’m able to share that message with so many more people. If I can help one or two people not make the mistakes that others have made and my parents even, have made, then I will consider that a success.
Lisa Christensen: You mentioned earlier people asking about, you know, mutual funds or IRAs or real estate…and then with people saying, where were you five years ago? What do you think can or should be done to help improve people’s financial literacy?
Derek Overstreet: I think that big companies really should bring people in like me and others that will literally educate their employees. CEOs, their big fear is being sued. You know, at your company, Media One, I’m sure the CEO is like, we better not put that out. We’re going to be sued. What if 30 years from now, you and your spouse, are you married?
Lisa Christensen: I am.
Derek Overstreet: You and your spouse ran out of money and you were able to come back and say wow. The Media One 401k had the highest fees and the lowest rate of return of all 401k’s and you guys decided to sue the company. Those are the things that CEOs, that if they’re not thinking about it, they should be thinking about it. And if it were me, I would bring in two or three companies and vet them. Make sure that they’re not just selling a product. Come in and educate you.
For instance, if I sat down with your whole team here and said, look, you tell me what you think. Do you think that the markets are going to go down? If they are, let me show you how we can move your 401k to safe. And if you think they’re going to go up, let me show you how to move it from safe to this or give you some ideas. And if the CEOs actually vetted two or three or four different firms, and said, look, we’re not saying that we endorse them or that they’re good. Having a fiduciary between you and a lawsuit is a good thing. So if, in this scenario of you and your spouse suing the company, if they say well you went through New Millennium Group, at least you could sue us first. Or Fidelity or somebody and have a few layers of defense. That would be the big thing I would tell an employer today. Get your people some great education. Because most of us, we start work with a company, we just assume that HR is doing everything right. For the most part, they do. But they can’t really give you guidance, because if it’s wrong then they get sued. So spend more time on your retirement than you do planning this year’s vacation. That would be the advice I would give you.
Lisa Christensen: Alright. Well thank you so much for coming in and speaking with us Derek.
Derek Overstreet: Awesome. Thanks for having me. I hope you have me back.
Lisa Christensen: You can find out more about New Millennium Group at utahsfinancialplanner.com, and Derek’s show airs every Sunday from 1-2 PM on KSL.
Derek Overstreet: Yeah. 102.7 or go to our website, utahsfinancialplanner.com.
Lisa Christensen: Thanks to Pat Parkinson for production help on today’s episode, as well as to Adva Biton. Give us your thoughts at firstname.lastname@example.org or on our social media sites.