CMG is committed to investor education and setting a high standard for ETF Strategists. We created AdvisorCentral to keep advisors informed about investments, the markets and the economy. Every week we post analysis and market insight into tactical investing from CEO Steve Blumenthal, backed by the CMG research and portfolio management team. Following is a sampling of some of the stories from 2015. Want to get an email every Monday morning with the top stories from AdvisorCentral? Sign up here.
Blumenthal in Bloomberg on Junk Bonds
CMG Capital Management Groupo CEO Steve Blumenthal is quoted in the Bloomberg story Creditors Bawl: How Investors Ignored Risk of Junk-Bond Rout.
High Yield Bonds Are Breaking Down
The HY bond market has a good history as a leading economic and equity market indicator. As Jeffrey Gundlach pointed out today, “They’re falling apart.” Our high yield model triggered a short-term trade signal (sell) several weeks ago. Safely positioned in cash or Treasury Bills, we believe a better opportunity is ahead of us.
Let’s take a look today at a long-term trend chart (13/34 Week Moving Average measure), a weekly chart and a daily chart.
Junk Bond Defaults Growing
Junk-Bond Defaults Growing as Pressure From Commodities Persists http://t.co/9SHLSNFwRw via @business @askcmg
— Stephen Blumenthal (@SBlumenthalCMG) June 15, 2015
Facing the Perils of High Yield
CMG Capital Management Group CEO Steve Blumenthal published a column for ETF.com today called A System For Facing Perils Of High Yield. The story begins:
“The high-yield bond market has been one of the great recovery stories since the scariest days of the financial crisis. It could become scary again when the Federal Reserve begins raising rates and investors should think through the coming challenges.
“Looking back, junk bonds became one of the emblems of that crisis, with prices of the index that underlies the iShares iBoxx $ High Yield Corporate Bond ETF (HYG | B-64) dropping 31.77 percent in just six months from June 1 to Dec. 1, 2008, according to data from Morningstar.
“Not many people had the guts to buy at the bottom, but those who did have more than doubled their money—an annualized return of 14.06 percent from Dec. 1, 2008 through April 2015. This rivals the S&P 500 Index’s annualized total return of 16.55 percent over the same period.” Related ETFs: HYG, JNK, BIL, SJB. See the full story in ETF.com.
Blumenthal on theStreet – Tracking High Yield
A default wave will soon be hitting high yield bonds and investors better be prepared for it, says Steve Blumenthal, CEO of CMG Capital. Still, Blumenthal says there is a bright side to the coming washout in junk bonds. ‘The good news is that the selloff will create one of the greatest buying opportunities of a lifetime in the not too distant future. Remember the 20% yields on high yield bonds in 2008? My two cents is that the coming opportunity will be even better,’ says Blumenthal. Blumenthal says tactical trend analysis enables investors to identify the primary movements in high yield bonds. His strategy is to stay invested during the up trending cycles and shorten maturities when the trend turns down. In other words, buy the iShares iBoxx High Yield Corporate Bond ETF (HYG) or the SPDR Barclays High Yield Bond ETF (JNK) when trends are turning up.
Blumenthal in Forbes: High Yield Opportunity
In the May 20 Webinar of the CMG High Yield Strategy Steve Blumenthal references an article he wrote in Forbes called Junk Bonds Are The Investment Opportunity Of A Lifetime, Just Not Yet. The Webinar was an interactive elaboration of the observations of the article. Below is an excerpt from that article:
High Yield Webinar Replay
We had an excellent turn out today for the Webinar on the opportunity to position and protect a portfolio with a high yield bond strategy. There were several questions about how high yield fits in a portfolio, and its historic returns and volatility.
Access the 45 minute Webinar here: CMG May 20, 2015 High Yield Webinar.
In this video Webinar, CMG Capital Management Group Head of Distribution Mike Sciortino hosts Steve Blumenthal to discuss the CMG Managed High Yield Bond Program. The Webinar was an interactive follow-up to Steve’s Forbes piece titled, Junk Bonds Are The Investment Opportunity Of A Lifetime, Just Not Yet.
High Yield Webinar
Wednesday May 20 CMG Capital Management Group CEO Steve Blumenthal joins Head of Distribution Mike Sciortino for a timely video Webinar on high yield bonds. You can sign up here: CMG Managed High Yield Bond Program Webinar.
The Webinar is an interactive follow-up to Steve’s Forbes piece titled, Junk Bonds Are The Investment Opportunity Of A Lifetime, Just Not Yet.
Steve is going to present ideas about how to position high yield in your portfolio to participate in further gains and risk protect in a way that puts you in the favorable position to take advantage of a coming once in a lifetime buying opportunity.
Any high yield questions you would like Steve to address during the Webinar? Email firstname.lastname@example.org
Blumenthal’s 2015 Investment Preview In Forbes
By Steve Blumenthal, CEO and portfolio manager, CMG Capital Management Group
I wrote often throughout 2014 about the danger signals flashing from an excessive run up in debt and derivatives. We have a repeat of the scenario we suffered in 2008, only much worse (Watch Junks Bonds For Early Warnings Of New Financial Crisis). The budget recently passed by Congress put taxpayers on the hook for a 2008-like derivatives failure. The potential losses could exceed the previous financial meltdown as other world market conditions exacerbate a bad situation.
As a risk manager, I need to acknowledge and plan to mitigate these big, macro risks. At the same time, as a tactical manager, I acknowledge that right now the weight of evidence points to a continued positive trend for this mega bull market.
In a world of excessive debt and unprecedented Central Bank intervention, where is a global investor to go? For now, the best place remains in U.S. equities.
Global debt continues to be the #1 concern going into 2015. A sovereign debt crisis looms on the horizon yet for now the creativity of global central bankers has kicked that can down the road. It is desperation time in Japan and the Eurozone is not far behind. A number of factors favor the U.S. dollar and U.S. equities through mid-2015.
Read the rest of Steve Blumenthal’s 2015 investment preview in Forbes Looking Ahead To The Year That Interest Rates Will Finally Rise