Archives for May 2016

Blumenthal’s Notes From #SIC2016

Posted on 05.30.16 |

Steve Blumenthal (r) and Lacy Hunt @ 2016 Mauldin Global Investment Conference

Steve Blumenthal (r) and Lacy Hunt @ 2016 Mauldin Strategic Investment Conference

Over the next several weeks, I’ll be sharing with you my high level notes from the Mauldin 2016 Strategic Investment Conference (#SIC2016). Think big picture macro-economic trends and ideas on how to capitalize on them. The consistent theme was debt and deflation. There were a number of good investment ideas.

Of particular interest to me were the insights around the challenges facing the Fed and the, alleged, February détente agreement between the Fed, the Bank of Japan, the ECB and China. Recall the stock market sell-offs last August and again this past January. The driver was the surprise Chinese currency devaluation. Jefferies’ David Zervos and my friend Jim Rickards call it the Shanghai Accord. The big four central banks met in Shanghai in February and a currency peace of sorts was struck. The system has stabilized for now. The issues, though, remain.

Extreme Pessimism Could Be ST Bullish

Posted on 05.29.16 |

CMG Capital Management Group Inc. Sentiment is reading extreme pessimism in a number of the investor sentiment indicators I favor. Such pessimism tends to be short-term bullish for the stock market.

The idea with investor sentiment is to go with the flow until an extreme is reached – then a change in short-term trend is probable. This is especially true at levels of technical support.

With that in mind, I’m watching for pessimism to trough and begin to improve.

CMG Adopts GIPS Standards Verified By Ashland Partners

Posted on 05.25.16 |

CMG Capital Management Group, Inc. has adopted Global Investment Performance Standards (“GIPS”) for investment performance calculation and reporting. CMG has chosen Ashland Partners & Company LLP to verify its GIPS policies and procedures.

“With all of the discussion regarding fiduciary standards, we believe it is only a matter of time before the GIPS® standard is adopted industry-wide,” said CMG President, PJ Grzywacz.

“The verification process is very robust. We didn’t want to just implement GIPS policies and procedures – we wanted to be verified by the industry leader, Ashland,” said Andrew Elkin, CMG’s COO and Chair of the firm’s GIPS committee.

Third party verification brings additional credibility to a firm’s claim of compliance and requires robust review of performance composites and thorough testing of policies by the independent party. CMG chose Ashland Partners, an industry leader with eight offices worldwide, for verification because of their long history as a GIPS service provider. Since its founding in 1992, Ashland’s sole focus has been on providing GIPS compliance and verification services to the investment management industry.

See the full press release.

(GIPS® is a registered trademark owned by CFA Institute)

Blumenthal on Tactical Investing in IBD

Posted on 05.22.16 |

Investor's Business Daily CMG Capital Management Group CEO Steve Blumenthal was featured recently in the Investor’s Business Daily story Investing Tactically In A Shaky World Doesn’t Mean You Bet The Farm. Steve was asked a series of questions about the markets and investing.

IBD: What does tactical investing mean to you?

Blumenthal: We view tactical two ways:

The Virtue of Patience

Posted on 05.22.16 |

CMG Capital Management Group Market Analysis I believe forward 10-year returns will be in the low single digits and the ride will be bumpy. Speaking of looking forward. Here is Bill Gross from his recent post titled “Culture Clash”:

“Prepare for renewed QE from the Fed. Interest rates will stay low for longer, asset prices will continue to be artificially high. At some point, monetary policy will create inflation and markets will be at risk. Not yet, but be careful in the interim. Be content with low single digit returns.”

On my worry list is the China debt mess (far larger than the subprime bomb that exploded in 2008), a sovereign debt crisis in Europe, political inaction, geopolitical event risk, a coming pension crisis (overpromised, underestimated and significantly underfunded) and negative interest rates across much of the developed world.

Trade Signals: Extreme Pessimism

Posted on 05.20.16 |

Sentiment is reading extreme pessimism in a number of the indicators I favor. Such pessimism tends to be short-term bullish for the stock market.

The idea with investor sentiment is to go with the flow until an extreme is reached – then a change in short-term trend is probable. This is especially true at levels of technical support.

With that in mind, I’m watching for pessimism to trough and begin to improve.

The overall idea with risk management is to hedge equity exposure at times of extreme optimism, especially when the market is aged, overvalued, overbought and over-believed. At such times, risk is highest. This is where we find ourselves today.

Notes From SALT

Posted on 05.15.16 |

Steve Blumenthal, CEO, CMG Capital Management Group, with T. Boone Pickens

I was at the SALT Conference in Las Vegas last week. A quick in and out to listen to Michael Bloomberg, Leon Cooperman, Paul Brewer, Kyle Bass, T. Boone Pickens, Sam Zell and Ken Griffin, to name just a few, share their thinking on fiscal policy, central banks and investment implications.

There was also the private equity great, David Rubenstein (Co-Founder & Co-CEO of The Carlyle Group) interviewing former Treasury Secretaries Robert Rubin and Larry Summers. Speaker Boehner stepped to the stage for a one-on-one discussion with Democratic activist Steven Rattner. Rattner didn’t hold back.

Trade Signals: Market Remains Range Bound

Posted on 05.15.16 |

CMG Capital Management Group Inc. I was in Las Vegas last week at the SALT Alternatives Investment Conference. I share some high level notes on the Conference in the latest “On My Radar.”

Trade Signals: The market remains range-bound. Sentiment has improved, meaning investor sentiment is nearing the extreme pessimism zone. This tends to be short-term bullish for the markets. However, equity valuations remain high and thus risk is high. The Zweig Bond Model remains bullish on bonds. High yield remains in a sell signal — there is modest price improvement from the recent lows.

Valuations Matter

Posted on 05.08.16 |

CMG Capital Management Group Market Analysis At the beginning of each month, I like to look at equity market valuations. The stock market moved higher in April, yet for the fourth quarter in a row, corporate earnings were down. The good news about market valuations is that they can tell us a great deal about the annualized returns we are likely to get over the coming 10 years. The bad news is they tell us little about returns over the coming two years.

Buy low — sell high, they say. Pretty simple actually, but not many can actually do it. This is where valuations can help us get centered. Below I provide examples from several periods – low valuations in February 2009 and the great gains since.

CMG Equity Trade Signals Neutral

Posted on 05.08.16 |

CMG Capital Management Group Inc. Trade Signals is Steve Blumenthal’s “risk on – risk off” call on market volatility and adjusting portfolio positioning for the market conditions. Steve illustrates his outlook on a weekly basis through the use of Sentiment Charts. The most recent Trade Signals:

With the 50 point S&P 500 Index sell-off has come a decline in investor optimism. Additionally, selling volume is once again stronger than buying volume putting the Supply/Demand indicator back in a sell.

Equity Trade Signals: