Archives for March 2014

Hard work, meet will!

Posted on 03.31.14 |

Michael F. Sciortino, Sr. Executive Vice President, Managing Director, Head of Distribution, CMG Capital Management Group

Mike Sciortino
Executive VP, Managing Director, Head of Distribution
CMG

“The will to win, the desire to succeed, the urge to reach your full potential…these are the keys that will unlock the door to personal excellence.” – Confucius

The word is “COMMITMENT”. It requires hard work. It’s the same now as it was when he said it.

Commitment is the consistent trait among successful advisors.

You know phrases like ” iron will” and ” the will to win” and ” where there’s a will there’s a way.” Well the dictionary defines ” will” as:

the faculty by which a person decides on and initiates action; exertion of control; making something happen by exertion of mental powers- as in, ” he willed himself to….”

Make no mistake about it, behind all great successes there is a “will”! Then this is usually followed by hard work.

Refusal, Rejection and Failure are all facts when they occur but then the clock ticks and there’s a new and different minute.

The Pain of Discipline or the Pain of Regret

Posted on 03.27.14 |

Mike Sciortino
Executive VP, Managing Director, Head of Distribution
CMG

The Choice is yours (or your client’s)…

In our industry, we are a disciplined bunch. I would like to discuss today’s topic from two unique perspectives: yours and your client’s.

Let’s begin with yours: Webster defines discipline as “training that corrects, molds or perfects the mental faculties or moral character; control gained by enforcing obedience or order”. Simply put, it requires you to exercise self control. Often times the challenges or problems we face force us to grow and become more capable in our practices. A wise mentor I had early on used to tell me, if I don’t act, something significant wont happen; how right he was.

Now, from the client’s perspective: Every recommendation you make should be made after you’ve asked yourself this important question, “How can I present this to be in their own best interest?” Your consistent encouragement is the fuel on which their hope of achieving their goals runs. Your role is to implement the positive steps “as if” the hoped for results will become reality. As an advisor, you have a tremendous platform to deliver life changing impact. Years from now, with your guidance, your clients will be able to say, “I’m glad I did” vs. “I wish I had”. On an ongoing basis, you can inspire your clients by presenting them with a practical and attainable positive vision for their future. With your help, your client’s compelling dreams will generate the necessary obedience to push them past their fears and reach their meaningful goals.

Considering Risk in a Portfolio

Posted on 03.25.14 |

Capital Management Group, Inc., Mike Hee

Michael Hee
Managing Director, Investment Research
CMG

What is risk?

At its most basic level, risk can be defined as the extent to which actual investment performance may deviate from expectations. Defining and establishing appropriate expectations is a critical aspect of a financial advisor’s business.

Prior to joining CMG Capital Management Group, while working as a consulting Actuary; I made a living by putting a price tag on risk. Insurance companies need to be reasonably convinced that the premiums they charge their clients will be sufficient to cover future claims, administrative and operating expenses, and provide profit while constantly maintaining a competitive premium level in order to attract and retain clients. This is a complicated endeavor which involves more than a bit of science as well as art. Having a sound understanding of risk is critical to being able to quantify it.

Here at CMG, we often spend time discussing risk with financial advisors to help them appropriately allocate their clients’ portfolios. Often what appears to be a well diversified portfolio from an asset allocation perspective turns out not to be well diversified from a risk perspective.

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The Ukrainian Butterfly Effect

Posted on 03.20.14 |

PJ Grzywacz
President & Chief Compliance Officer
CMG

Before the recent events in the Black Sea, few investors, financiers or market commentators would have been able to place Crimea on a map, much less appreciate its impact on the global financial markets, investment portfolios and stock market risk. The events of the past several weeks in the Ukraine and Crimea have captured everyone’s attention as hot headed media analysts talk of a new Cold War and Putin’s annexation of Crimea. The truth is much more complicated than that and the impact of these events is much more subtle than the headline grabbing sanctions against Russian oligarchs seeking to fill their shopping bags in New York or London.

The Ukraine has been at a crossroads of east and west, Europe and Asia for hundreds of years and ethnic boundaries are rarely as easily drawn as the maps we use to find these distant lands. Elections over the past several years have worn out these historic fault lines – the east pulling towards Russia and the west aspiring to join the EU. Historically, the Russians, the Poles, the Austro-Hungarians and the Ottomans (to name a few) have battled and controlled these lands at various points in history pulling the country, its borders, its culture and religion in different directions. During the second world war (or the Great Patriotic War as the Russians and eastern Ukrainian’s refer to it), these tensions were strained further as fascist resistance to communist forces moving west made a hero out of Ukrainian Insurgent Army leader, Stepan Bandera (to western Ukrainian’s) (in 2006 a statue was erected in the central square of Lviv.) While not the majority of protesters, members of the extreme nationalist right wing who were involved in driving President Yanukovych out, draw much inspiration from Bandara’s fascism and rumors are rampant about the extent to which right wing protesters were involved in scuttling the compromise, which ultimately lead to the departure of Yanukovych and then subsequent Russian action in Crimea.

Secrets of Effective Time Management

Posted on 03.19.14 |

Hint: It’s really all about the basic blocking and tackling.

What do Bill Belichick and Nick Saban have in common?

Championships? Yes
Rings? Yes
But how did they reach the pinnacles of their profession? By executing a well thought out Game Plan.
Why did a Game Plan work? It kept the players focused, laid out the path to success and eliminated distractions.
Will a Game Plan work for you? Absolutely! This helps you focus on your best talents and strengths.

To help you put together your own time management Game Plan, I offer the following helpful insights:

When you do the things you don’t want to do when you don’t want or feel like doing them, the day will soon come when you can do the things you want to do or feel like doing when you want to do them. You ask, how does that apply to you?

Going forward let’s start with your own Game Plan. Make it a weekly habit of sitting down Friday afternoon or sometime over the weekend and plan out your upcoming week, weeks, and months. This is a fluid process. Like a snowball rolling downhill, it will take a little while to build momentum. Then, watch out! You are on your way. Whether you use a laptop, iPad, iPhone or a good ole legal pad, engage in the world’s oldest and most highly paid profession, thinking. Then, regularly use the following steps:

Strategic Patience is Smart for Investors

Posted on 03.13.14 |

I was reading a story by Condoleeza Rice in the Washington Post titled Will America heed the wake-up call of the Ukraine? In the piece Ms. Rice counsels U.S. politicians to adopt a policy of “strategic patience.” This is also excellent advice for investors today.

What do events in the Ukraine and other trouble spots in the world mean to you and your clients portfolios? We have received a number of calls that go something like this – “with the threat of war, should I make any changes to my portfolio?” Or in other words, what they are asking is should they get out of the market, raise cash or hedge?

This is what I shared with an advisor client recently and I share it with you today.

7 Ways to Nurture Your Client Relationships

Posted on 03.12.14 |

You’ve probably heard the old saying, ” People don’t care how much you know until they know how much you care.” Well, the most successful advisors I know have an innate ability to regularly demonstrate their caring to their clients. They do it consistently with what appears to be little effort. In reality, their approach is well planned and targeted to grow their practice. Below is a list of 7 ways to nurture client relationships.

1. People want to feel special, valued, respected, and cared for. Your customers are dear and valued friends who have trusted you and valued you. Reciprocate by letting them know what they mean to you on a consistent basis.

S&P Over/Under Valuation Price Targets

Posted on 03.07.14 |

In the following chart, we look at the median price to earnings ratio (PE) to get a sense of current valuation. Are U.S. equities, in general, inexpensively priced or expensively priced? If we buy an inexpensively priced asset, there is greater future return potential. Stating the obvious, if we pay too much, our return potential is more limited. Not a problem if you have a 20-30 year time horizon and the ability to stay the course when turbulence hits (2002, 2008, etc.). It is a problem when a major correction occurs just prior to your retirement.

There are many ways to measure valuation. I favor median PE for it is a mathematical process based on ACTUAL earnings. History has shown that Wall Street analysts tend to over-estimate future earnings. The challenge for those who favor forward earnings estimates to calculate PE is that there is a long pattern of those estimates subsequently being revised lower. Thus, this is too much of a moving mark for me.

The Art of the Referral (Part II)

Posted on 03.04.14 |

Last week I began sharing various referral strategies with you. As you recall, there are three strategies to cultivate referrals:

1. Passive
2. One at a time
3. Proactive

Last week we covered #1. Before I proceed to strategies two and three, I must share one final passive idea with you. I received a 2014 calendar from an advisor friend at year’s end. On the envelope flap was placed a 2” gold circle sticker that read, “Oh by the way…I’m never too busy for your referrals.” This advisor is extremely successful because he never passes up an opportunity to ask for a referral.

Inflation and Leadership

Posted on 03.03.14 |

Within our CMG Tactical Rotation Strategy we allocate monthly to the top two out of the following six ETFs: SPY (S&P 500 Index), EFA (Developed Market Stocks), VNQ (Vanguard REIT), BND (Treasury Bonds), DBC (Commodity ETF) and Cash. We look to identify and lock onto leadership. Positions are then held for at least one month. Since price momentum tends to do a good job at identifying market leadership, the positions are typically held for a number of months.

The point to note here is that noticeably absent from the strategy has been an allocation to DBC. The last meaningful and consistent exposure to commodities was in 2007 and 2008. I’m watching carefully for a change and will post if a trend towards higher commodity prices develops. In hindsight, and appropriately, the strategy has been largely SPY, EFA and VNQ.