Enhanced Modern Portfolio Theory Archives

CMG’s Total Portfolio Solution Whitepaper Free Download

Posted on 07.06.16 |

CMG Capital Management Group AdvisorCentral Total Portfolio Solution Whitepaper In this whitepaper, we describe a total portfolio solution—a comprehensive approach to building resilient investment portfolios for individual investors.

Modern portfolio theory (MPT) tell us it is possible to construct optimal portfolios offering the maximum possible expected return for a given level of risk. We believe it is important to emphasize that risk is an inherent part of higher reward. You can’t get something for nothing, the saying goes. The price for higher returns is greater risk. However, we believe investors can mitigate risk by sticking to a common-sense discipline.

The New Enhanced Portfolio

Posted on 11.21.14 |

The traditional 60/40 buy and hold portfolio is dead, CMG Capital Management Group CEO Steve Blumenthal told InvestmentNews in the story Investment Managers ditching 60/40 portfolios in favor of more liquid alternatives

Enhanced Modern Portfolio Theory is what Blumenthal calls it. It’s not that Modern Portfolio Theory (MPT) is wrong, rather that it’s time to question whether 60/40 remains the best way to optimize the risk-reward relationship. This asset mix is simply too narrow in the current low-dividend-yield, low-inflation, low-interest-rate environment.

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.

Don’t Trust the common 60/40 Portfolio Allocation

Posted on 02.21.14 |

Steve Blumenthal, CEO of CMG, on Portfolio Allocation

Steve joined Gregg Greenberg at TheStreet.com once again for a discussion on the overvaluation of the market after last year’s rally and how to optimize a portfolio allocation to accommodate for the ever-changing market conditions.

He said it before and he’ll say it again – Steve believes a better way to allocate assets is 33% in stocks, 33% bonds and the final 34% in a tactical trading portfolio. Due to the overvaluation of the equity market, Steve might even up the tactical portion to a 40% allocation – resulting in a 30% allocation to equities and 30% to fixed income for now. This “three bucket” concept – one we have termed Enhanced Modern Portfolio Theory, represents a balanced portfolio allocation that is better built to withstand market cycles.

Forward projected returns for equities are smaller than what we’ve experienced so expecting what happened last year is unrealistic…and you’ve got fixed income at near-historic lows. Look at expanding portfolios to include what endowments and foundations have done for years – add to the tactical space.

To see the interview on TheStreet.com, click here.

CMG Launches Tactical Investing Portal

Posted on 02.14.14 |

Today we launch CMG Capital Management Group‘s AdvisorCentral, a portal for the latest news, commentary and analysis of tactical investing strategies. In this blog we will also address marketing and practice management issues that advisors face. We will also cover other topics that can help you make informed decisions about constructing diversified portfolios and building your practice.

We understand that advisors now have a broad range of investment options. Advisors have access to fairly sophisticated trading platforms and independent research. The financial media is also offering more data and analysis that can be helpful in making investment decisions.

Is the 60-40 Asset Allocation Model Doomed?

Posted on 01.19.14 |

Steve Blumenthal was interviewed by MarketWatch columnist Charles Passy for the story Is investors’ favorite strategy doomed to fail. Why the 60/40 asset allocation model may no longer work.

This is a favorite topic of Steve’s. He’s a proponent of what he calls Enhanced Modern Portfolio Theory (EMPT). EMPT is an alternative to the traditional 60/40 stock/bond alocation model. Today, advisors and investors can access a broad range of investment options to build diversified portfolios. See Financial Advisor: The New Modern Portfolio Theory.