Archives for May 2015

Inflation and The Bigger Short

Posted on 05.31.15 |

By Steve Blumenthal, CEO, CMG Capital Management Group

Steve Blumenthal, CEO, CMG Capital Management Group

“Negative-yield bonds now account for some €1.5 trillion of debt issued by governments in the euro area, equivalent to almost 30% of the total outstanding. Many expect even more of the global bond market to fall into negative yield territory. Half of all government bonds in the world today yield less than 1%.” – John Mauldin

My personal view is that zero to negative rates will continue to drive money into risk assets. What does a European do with negative rates, a sovereign debt crisis, bank risk and lost confidence in government authorities? Smart money moves to where it is treated best and that is likely to be U.S. equities. So the aged and expensive cyclical bull can grow to be even more aged and expensive. But the snow is deep and mountain unstable. Which snowflake trips the next slide has yet to be determined.

3 Questions Your Clients Want Answered Today

Posted on 05.28.15 |

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

Differentiation is more important today than ever before. The speed of technology demands that you constantly adapt and adjust. You can only create real value for your clients by understanding what is important to them.

Think for a moment. What are you doing to position your business as a special, distinctive and compelling solution for your clients and prospects?

Here are 3 critical questions you might want to craft answers to.

1) Why should I do business with you and your company?

Unfortunately, many companies don’t currently have a good answer to that question. Is it because they don’t have a shared mindset or is it because the leadership has not communicated their vision to their employees? If you think about it, how can any company outperform if their own employees can’t articulate why clients and prospects should do business with them? Is your message clear? If not, craft an answer and set yourself apart.

Facing the Perils of High Yield

Posted on 05.28.15 |

ETF.com 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

Posted on 05.26.15 |

CMG Capital Management Group CEO Steve Blumenthal on theStreet about high yield bonds

CMG Capital Management Group CEO Steve Blumenthal stopped by theStreet in New York today to chat with Gregg Greenberg about the coming opportunity in high yield bonds. Catch the (3.25 min) segment here: How to Profit From the Coming Washout in High Yield Bond ETFs. Summary of the segment:

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.

It’s An Acey Deucey World Says Blumenthal in Proactive Advisor

Posted on 05.26.15 |

Are we living in an Acey Deucey world? asks Steve Blumenthal, CEO, CMG Capital Management Group CMG Capital Management Group CEO Steve Blumenthal has published a provocative investment analysis piece called Are we living in an “Acey Deucey” world? in Proactive Advisor Magazine.

Proactive Advisor Magazine is dedicated to providing a look at important active investment management topics. Distribution reaches over 100,000 financial professionals who advise clients on investments and portfolio management. Proactive Advisor’s mission is to provide leading-edge content that informs investment advisors about the benefits of dynamic, risk-managed investing

Excerpt from the story:

Remember the card game called Acey Deucey? You are dealt two cards and you split them. The dealer would then flip a third card. If that card number fell in-between your two cards, you’d win the pot. If you lost, you’d have to double the amount of money in the pot and the turn would move to the next player. The best combination was an Ace and a 2 (or deuce). This gave you the best odds to win but nonetheless a risk it was and nerves were tested – especially the bigger the pot grew.

It kind of feels a bit like Acey Deucey today except we are holding a 5 and a 10. As much as I know about global currency flows, valuation, supply and demand dynamics, and human behavior, I can’t help but wonder what it is that I don’t know. We live within a highly complex system with many moving parts.

See the full story Are we living in an “Acey Deucey” world? (starting on page 4) in Proactive Advisor Magazine.

Blumenthal in Forbes: High Yield Opportunity

Posted on 05.25.15 |

Forbes 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

Posted on 05.20.15 |

Stephen Blumenthal, CEO, CMG Capital Management Group

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.

Mach 1 Financial Group Locked In

Posted on 05.20.15 |

By Steve Blumenthal, CEO, CMG Capital Management Group

“Anyone in investments should know that when you add together a number of uncorrelating returns, something magical happens.” – David Harding of Winton Capital Management

David Lee (left) and Kyle Alexander (right) of Mach 1. Steve Blumenthal (center), CMG Capital Management Group

I was in Northwest Arkansas last Wednesday to speak at the Mach 1 Client Event hosted by David Lee and Kyle Alexander. David is a retired Air Force pilot and served in Iraq. I’ve watched their advisory business grow from $5 million in AUM to $20m to $65m in three short years. These two men are locked in.

What I believe they are doing really well is captured in the quote I shared above. They build portfolios by combining together a number of uncorrelating strategies in a way whereas Harding says, “something magical happens.” It is unique, requires skill and they communicate it in a way that their clients get it.

Like many advisors, David and Kyle outsource their money management to third party money managers so that they can focus on their high income activities. Execution of money management is time-consuming and requires focus and discipline.

Valuations and Forward Returns

Posted on 05.19.15 |

By Steve Blumenthal, CEO, CMG Capital Management Group

Steve Blumenthal, CEO, CMG Capital Management Group, on theStreet Let’s take a look at current market valuations (high) and what they are telling us about probable 10-year forward returns (low). The stock market has had an outstanding five year run. With that, I believe, many individual investors have misguided expectations. The market is overvalued, over-believed and over-margined yet trend evidence remains positive and Don’t Fight the Fed an important theme. For now.

One of my favorite valuation measures is median PE. It is based on actual reported earnings (not Wall Street’s oft over-inflated forward estimates). This first chart shows median PE to be 21.5 (price times earnings) on April 30, 2015. The 51 year average median PE is 16.8.

Why Your Success Is An Inside Job

Posted on 05.18.15 |

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

One of my favorite words in the dictionary is success. In each human being there are many possibilities. Success is finding out which of these will be right for you. You select your values, your work, the person you marry, how you raise your children, the church you attend, the food you eat and the hobbies you pursue. How you choose and what you do with your choices are the road signs of your journey.

When I read, I’m constantly looking for material that can impact the lives of others. Oftentimes, a simple story can be the spark that empowers you to improve. I’d like to share one today that I ran across in my files.

On March 30, 1858, the United States Patent and Trademark Office granted the first ever patent for a modern day pencil with an eraser attached to it. Hymen Lipman created the wooden pencil that we have become accustomed to using for writing and drawing. Interestingly, manufacturers decided to paint the first pencils yellow because the color was associated with royalty and honor. This led people to assume that yellow pencils were the best type. What a brilliant marketing strategy.