I am a regular connoisseur of Barry Ritholtz’s work both in print and digital. Barry writes for his own site The Big Picture in addition to columns at Bloomberg and The Washington Post. A few years ago Barry began work at Bloomberg on a podcast series called Master in Business (MIB). The premise behind the show is centered on having conversations with some of the brightest and most talented people both inside and outside of the realm of finance and business.
This past week Barry reached a milestone, his 100th podcast, and fittingly it featured Jack Schwager. Jack is the author of the Market Wizards series of books that are a must read for people within the investment industry. Barry credits Jack as being part of the inspiration behind Master in Business which follows a similar format to how Jack wrote the Market Wizards books.
Below is a curated edition of my favorite MIB podcasts. If I could only listen to a few, it would be conversations with Scott Galloway, Ken Feinberg, Michael Mauboussin, and Howard Marks. They are in order by date and I have underlined the guest. The conversation topic is in bold. The best way to access the podcasts are through iTunes but they can also be reached here at Blomberg.
Congrats Barry and thanks for the continued sharing of knowledge.
- August 2nd 2014 – Michael Mauboussin, Head of global financial strategies at Credit Suisse; the role of luck in investing
- October 4th 2014 – Jack Schwager, author of Market Wizards book series; ideas that shape markets
- November 8th 2014 – Mark Cuban, owner of Dallas Mavericks (NBA), co-founder of Broadcast.com, and regular on ABC’s Shark Tank; modern day entrepreneurship
- January 11th 2015 – Patrick O’Shaughnessy, asset manager at O’Shaughnessy Asset Management and author of Millennial Money; millennial generation and their investments
- February 15th 2015 – Jim McCann, founder of 1-800-Flowers.Com; innovative thinking and the impact of motivational speeches
- February 21st 2015 – Cliff Asness, co-founder of AQR Capital Management; quantitative approach to investing
- Mar 15th 2015 – Brad Katsuyama, President and CEO of IEX Group; high frequency trading, dark pool, and the Michael Lewis book Flash Boys
- Mar 21st 2015 – Meb Faber, co-founder and CIO of Cambridge Investment Management and author; quantitative approach to finance
- Mar 28th 2015 – Charlie Ellis, author of several books including Winning the Loser’s Game; investment management business
- May 2nd 2015 – Anthony Scaramucci, founder and co-managing partner at Skybridge Capital; culture of Wall Street
- June 5th 2015 – Scott Galloway, Clinical Professor of Marketing at NYU Stern School of Business; greatest innovative companies of our time
- June 13th 2015 – Richard Thaler, Director of the Center for Decision Research, co-director of the Behavior Economics Project at the National Bureau of Economic Research, and author of several books; behavioral economics
- June 20th 2015 – Nick Hanauer, co-founder of venture capital firm Second Avenue Partners; state of venture capital
- June 27th 2015 – Ed Hyman, Chairman of Evercore ISI; econometric modeling
- July 4th 2015 – Leon Cooperman, Chairman and CEO of Omega Advisors; hedge funds
- July 19th 2015 – Howard Marks, Chairman of Oaktree Capital Group and author; defining risk and investing
- August 21st 2015 – Nate Silver, founder and editor in chief of FiveThirtyEight; sports, politics, and statistics
- October 9th 2015 – Ken Feinberg, Special Master of the Federal September 11th Victim Compensation Fund of 2001; grief and compensation
- January 8th 2016 – Michael Covel, co-founder of TurtleTrader.com and author of Trend Following; rules of turtle trading
- March 24th 2016 – Helaine Olen, columnist at Slate and author of Pound Foolish: Exposing the Dark Side of the Personal Finance Industry and The Index Card: Why Personal Finance Doesn’t Have to be Complicated; personal finance and the shortcomings of financial literacy and advice
- April 1st 2016 – Tom Dorsey, co-founder of Dorsey, Wright & Associates and author of Point and Finger Charting; a playbook for stock mark success
- April 22nd 2016 – Robert Johnson, President and CEO of the American College of Financial Services; financial service education and certifications
- June 24th 2016 – Wesley Gray, CEO and CIO of Alpha Architect and a former captain in the U.S. Marines; quantitative analysis
- July 1st 2016 – Ross Buchmueller, President and CEO of the Pure Group of Insurance Companies; risk and the insurance industry
- July 15th 2016 – Richard Haass, President of the Council on Foreign Relations, current state of foreign affairs
- July 22nd 2016 – Jack Schwager, author of Market Wizards book series; the 100th MIB Podcast
So how many of you are still enjoying the relative low gas prices? Summer road trips are still considerably lower than they have been in years which means you might be able to spend more money elsewhere.
One of the questions that finance folks have been asking over the past few years since the initial drop in oil has been where are all of the savings going to? The graph below from Societe Generale details out just where spending has been increasing and/or decreasing since 2007 and June 2014 when oil prices began to plunge.
This set of data at least confirms what many individuals have been thinking which is that people are indeed savings a good portion of their energy savings. Most financial analysts expected a surge in consumer discretionary spending with the drop in oil prices but that idea never really came to fruition.
Those who read my columns/posts on a frequent basis know that I have been talking about a corporate revenue drought that has spanned the past 5 quarters. This trend in weak revenue has given me concern because without higher revenue, profits will eventually have to decline as well. The increased savings rate on the surface could be a telling reason as to why U.S. companies have not seen an increase in their revenues.
Interestingly, the data does show an increase in spending since 2014 in food service (dining out) and recreation. However, health care spending has increased at almost the same amount. This is also another area that I have highlighted when it comes to inflation. Although the government statistics have shown little to no inflation over the past few years, those that spend money on healthcare (which is most Americans) and those trying to pay college tuition bills have seen a steady level of inflation.
So where does this leave us. If gas prices continue to stay low, meaning the lower side of $2 per gallon, consumers will likely begin to spend more or continue to spend more on discretionary items such as dining out and entertainment. Notice that spending on furnishings, household items, and clothing have been on the down trend as well since people are into “experiences” rather than material items. Nevertheless, the more people can manage to save, there is the possibility that we could see a shift in the retail sectors and see some actual revenue growth there as well.
While it does not always pay to be a contrarian, there are enough retail sector companies that have been decimated over the past one to two years that look attractive on a fundamental basis. If their technical attributes can show some sign of strength, it may be a good time to add to your asset base. Especially those with a propensity to grow an existing dividend and buy back shares.
In my weekly post that I generally have a section called “What I am Reading.” The past few days my readings have been focused on the Brexit vote and the questions around what happens next and what could this mean?
I have come across four really excellent articles on this Brexit topic. Three of the four articles have been written by Barry Ritholtz who I personally follow on a regular basis. Barry publishes content on his own blog The Big Picture, in addition to a weekly column at The Washington Post, and a daily column at Bloomberg.
I was able to see several of my clients over the weekend and while most if not all were very calm about the downturn in the markets last week, they did ask if the situation posed a buying opportunity. My response, as it has typically been throughout my asset management career, is that at times these situations can offer buying opportunities by enabling me to add to existing positions or bringing new positions into the portfolios. However, in most of these situations, the best decision is typically to wait patiently on the sidelines which was the path that I chose to take during the Brexit turmoil.
I have always kept a list of stocks that I would like to own in my client portfolios at a specified price and none of those companies have dropped to where my price targets are set. It is futile to try to time the markets so know what you want to own, why you want to own it, and in general what price you want to pay allowing for some flexibility. Sometimes you just have to wait patiently for the right pitch which is easier said than done.
A couple of bad days in a row of market performance should not damage your wealth management plan or blow up your investment portfolio. If it does, then you likely have a more serious problem with your investment plan or investment adviser.
What I am Reading
Eight Things to Know About the U.K. Vote (Bloomberg)
The Frightening Global Rise of Agnotology (Bloomberg)
The real risk in the market is staying out of it (The Washington Post)
Brexit FAQs: What Happens Next? (The Atlantic)
Last week I talked about some of the ways to find an adviser and some key items to look for when selecting an adviser. Ironically this past week, news broke that yet more high profile and wealthy athletes were victims of investment fraud.
Former New York Jets quarterback Mark Sanchez and major league baseball pitchers Jake Peavy and Roy Oswalt were defrauded out of about $30 million, according to a recently unsealed U.S. Securities and Exchange Commission lawsuit in Dallas federal court. These professional athletes said they were cheated out of millions of dollars in a Ponzi-like scheme orchestrated by an investment adviser who appealed to their Christian faith.
Even though a potential adviser may come to you through a trusted resource or friend, you still have the responsibility of vetting the potential adviser yourself. After all, it is still your own financial life. When going through the vetting process of a potential adviser, beware of the following:
- Flattery, whether extreme or mild, be very perceptive around someone who is telling you exactly what you want to hear in order to have you hand over your money;
- Guarantees, if something appears to be too good to be true, it likely is. There are no guarantees in life especially in the world of investing;
- Complexities, some people/advisers want you to believe that investing is too complicated for a lay person to understand. It’s not. If an investment cannot be explain in a few bullet points/sentences then it is likely dangerous for both your actual and financial health;
- Defensiveness, if the potential advisor becomes defensive, agitated, or combative when you ask questions surrounding investment style or financial management process, this could highlights underlying issues/concerns.
While not fool proof, here are a few points that could help you protect yourself:
- Make sure that your spouse or partner meets with your potential adviser at least once prior to you moving forward. If you are single, invite a trusted friend to come along with you. An unbiased viewpoint may be able to alert you to details that you have overlooked;
- Request a meeting with your adviser at least annually or whenever you need further explanation regarding your investments or strategy. A trusted adviser should always be able to respond to your needs and questions in a reasonable time frame. If you feel that your adviser is avoiding you, that could be a red flag;
- Understand how much you are paying in fees and how those fees are being deducted from your accounts;
- Review your financial statements on a consistent basis (quarterly should be sufficient), be on the lookout for fees or transactions that seem out of the ordinary, investments that you are not familiar with, or that do not align with your financial plan.
Know your values and what is important to you, how you decide to manage your finances/investments says a lot about who you are.
Searching for a financial adviser who is the right match for you takes a lot of work. While automated or “robo” advisers have increased in popularity in recent years, they aren’t set up to handle every aspect of your financial life. Try asking one of them if you should buy or sell a house and the impact that it may have to both your short-term and long-term financial and lifestyle plans?
Financial relationships dive into some of the most private and complicated affairs that someone will likely have during their lifetime. A trusted adviser is someone who will help you build that bridge from where you are today, to where you want to be in the future. Although finding the right adviser for you can take a lot of work, it is one of the most important financial management decisions you’ll ever make.
Over the course of the past 5 years, TAMMA has grown based upon the endorsements and recommendations of our existing clients. Clients simply discuss their experience in working with TAMMA during every day conversations with family, friends, and co-workers that have led to new client introductions. Begin your search with those closest to you, they may already know someone that you should know.
- Prepare a standardized list of questions for them that center around the following: Capability, Process, Fee Structure, Discretion, and Interaction.
- Email the advisers on your list and ask them to send back a signed copy of their answers.
- Google an adviser’s name and that of his or her firm looking for lawsuits and customer disputes.
- Enter the advisers name on BrokerCheck, a website run by investment regulators; which could highlight issues.
At TAMMA, we communicate the following common threads that we believe help to create and build strong relationships:
- Capability, we are a registered investment adviser (RIA) in the State of MI and hold the Certified Financial Planner (CFP®) and Charted Financial Consultant (ChFC) designations. These credentials should give you confidence that you are working with a professional.
- Process, most mutual funds tend to underperform the markets while charging a fee on top of any fee that your adviser charges. We personalize an investment strategy utilizing stocks and bonds to match your risk/reward profile without paying excess fees. In addition, because of our independent structure, we are able to manage all of a client’s investable assets including 401(k), 403(b), SEP’s, IRAs, etc.
- Fees, most advisers charge a percent of the assets they manage. Fees can range from 1% to 2% depending upon the size of your portfolio. Typically, advisers charge more to manage a smaller asset base than a large base. At TAMMA we charge 1% regardless of your asset base.
- Discretion, we clearly define the client’s investment strategies and provide them with peace of mind that their assets are being managed based upon their risk/reward profile and agreed upon wealth management goals. Giving TAMMA discretion means we make daily investment decisions and perform transactions on the client’s behalf so you don’t have too.
- Interaction, at a minimum we meet with clients for an annual face-to-face review in addition to quarterly communications. Clients should feel empowered to contact us any time that they have a question regarding their account or investment plan.
The most important aspect of having an adviser is maintaining an open and trusting relationship. You should feel that your adviser listens to you, has your best interests in mind, and empowers you to make better financial decisions.
It takes time, focus, and knowledge to manage investment assets. If you don’t feel comfortable handling this important responsibility on your own, then you should seek out an expert adviser.