CMG AdvisorCentral

Tactical investing news, views and resources for financial advisors

China Flashing Red

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Confucius

Confucius

PJ Grzywacz President, Chief Compliance Officer, CMG Capital Management Group

PJ Grzywacz
President & CCO
CMG

“I hear and I forget.  I see and I remember.  I do and I understand” – Confucius

Confucius was full of wisdom.  The ancient Chinese philosopher and scholar continues to impact society today with his aphorisms and proverbs, the most famous of which is the “Golden Rule” which most of us learned as children (his version read “Never impose on others what you would not choose for yourself.”)

The quote above reflects man’s inability to learn from hearing or seeing – only by experiencing an event, does man understand.  This teaching is particularly relevant to financial markets:  business cycles, debt cycles, financial crisis, economic policies and investor behavior.  Despite a wealth of financial history at our fingertips, in aggregate, investors tend to repeat the same mistakes over and over again, always thinking “this time is different”.

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Is the European Economy Turning Japanese?

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PJ Grzywacz President, Chief Compliance Officer, CMG Capital Management Group

PJ Grzywacz
President & CCO
CMG

“I’m turning Japanese, I think I’m turning Japanese, I really think so.”

The English band, the Vapors, was an 80s one hit wonder with the song “Turning Japanese.”  I was never a fan but the tune seems to be getting renewed airplay with a very narrow audience these days: central bankers and economic policy makers.  The song has little to do with Japan, or Asia for that matter, aside from a clever oriental riff (it’s actually about love).  That hasn’t stopped policy makers from taking the chorus line at face value: namely the risk of their economy “turning Japanese”.

Turning Japanese in today’s macroeconomic environment means that your country (or block of countries) is at risk of deflation and if action is not taken quickly and decisively, that risk can turn into a 20 year battle, just like in Japan.

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Tepper Tantrum

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PJ Grzywacz President, Chief Compliance Officer, CMG Capital Management Group

PJ Grzywacz
President & CCO
CMG

The market had a Tepper Tantrum last week. We all know what a taper tantrum is after the Fed backtracked on tapering its bond buying program last year. But what is a Tepper Tantrum?

David Tepper, aside from being a fellow Carnegie Mellon alumnus, is one of the most well-known money managers in the world. His firm, Appaloosa Management, manages more than $20 billion.  More importantly, Mr. Tepper has been right about equity markets.

Since the financial crisis, few investors have matched Tepper’s track record. His ability to read the tea leaves of Fed policy has made him a market sage.  So when David Tepper speaks, the market listens. It didn’t like what it heard last week, namely, that it’s time to take some chips off the table.  Mr. Tepper didn’t really say anything new; many market observers (ourselves included) have been highlighting the elevated risk at these equity market levels, but investors like winners, and Tepper’s winning calls have made him the highest paid hedge fund manager over the last two years.

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Defining Tactical Investing

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PJ Grzywacz President, Chief Compliance Officer, CMG Capital Management Group

PJ Grzywacz
President, Chief Compliance Officer
CMG

In February, we launched CMG AdvisorCentral with our white paper titled “Understanding Tactical Investment Strategies.”  The paper was our endeavor to define tactical strategies in a constantly evolving industry.  Financial innovation, while providing investors better ways to build portfolios, has created a need for education and the clear classification of strategies, benchmarks and peer groups.

The growth of the mutual fund industry and the increased participation of retail investors, in the 1980s in particular, drove a need to educate investors and to help them sort through the various mutual funds.  The 80’s bull market for stocks and bonds drove investors’ demand for funds as well as their demand for information.

It was in this environment in 1984 that Joe Mansueto decided to start selling the Mutual Fund Sourcebook, Morningstar’s first product.  The next year, the company debuted the Morningstar Rating for mutual funds.  Fast forward 30 years, Morningstar has broadened its mission: it is now the largest provider of independent investment research in North America, Europe, Australia and Asia.  Morningstar provides data on over MorningStar-logo400,000 investment offerings, expanding well beyond the 400 mutual funds featured in the original sourcebook.

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Is Europe Late to the Party?

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PJ Grzywacz President, Chief Compliance Officer, CMG

PJ Grzywacz
President, Chief Compliance Officer
CMG

È tempo per un po ’di QE? Nein danke. Vielleicht?

TRANSLATED:  Is it time for a little QE? No thank you. Maybe?

Although Mario Draghi, President of the European Central Bank (ECB), announced that the Bank’s governing council is prepared to take emergency action if inflation falls too low, it may be a case of too little, too late.  By emergency action, he of course means quantitative easing, which to this point has been anathema to German policy makers.

Each of the EU’s competitors has acted with some form of stimulus, loose monetary policy or unconventional quantitative easing in an attempt to stimulate growth.  In the U.S. we have gone through every monetary tool in the bag.  In the UK, the Bank of England is so pleased with its QE, it is considering whether it needs to make “any adjustments” (read “any” as in “any, ever”) at all to its bond buying programs. Read More >

The Ukrainian Butterfly Effect

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PJ Grzywacz President, Chief Compliance Officer, CMG Capital Management Group

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.

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CMG Launches Tactical Investing Portal

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Stephen Blumenthal, CEO< CMG Capital Management GroupToday 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.

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