February 7, 2013
By Steve Blumenthal
Not since February 2000 (not a typo) has more money raced into equity funds until this past January 2013. I hear Sir John Templeton whisper in my head, “Sell when everyone else is buying”. He also advised to, “Buy when everyone else is selling,” though that isn’t evident today. Both are emotionally difficult to do in real life.
In this week’s On My Radar I post two links: The first is Hussman’s latest: Present market conditions match six of the worst market conditions in history and the second is a link to John Williams ShadowStats research website noting our government deficit wasn’t the $1.1 trillion we heard from Washington, it was $6.6 trillion in 2012. We spent $6.6 trillion more than we took in tax revenues. Oh my!
Following are the links:
A Reluctant Bear’s Guide to the Universe – John Hussman
Present market conditions now match six other instances in history: August 1929 (followed by the 85% market decline of the Great Depression), November 1972 (followed by a market plunge in excess of 50%), August 1987 (followed by a market crash in excess of 30%), March 2000 (followed by a market plunge in excess of 50%), May 2007 (followed by a market plunge in excess of 50%) and January 2011 (followed by a market decline limited to just under 20% as a result of central bank intervention). These conditions represent a syndrome of overvalued, over-bought, over-bullish, rising yield conditions that has emerged near the most significant market peaks – and preceded the most severe market declines – in history: Click here to read the full article.
GAAP-Based Federal Budget Deficit Hit Record $6.6 Trillion in 2012 – data from ShadowStats.com
- Five-Year Average Annual Shortfall at $5.2 Trillion
- Web-page: http://www.shadowstats.com/
I subscribe to John Williams’ Shadow Government Statistics newsletter service because I feel he has a keen eye on how government reported data has been changed over the years. John asks, “Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences?”. The problem lies in biased and often-manipulated government reporting. John has an excellent piece on inflation. Please know that I am simply a subscriber as I appreciate his work. I have absolutely no financial connection in any way with John should you become a subscriber.
Pediatric Cancer Fundraiser
I lost my father to prostate cancer about two years ago. Way back in 1982, I danced in a 46 hour dance marathon at Penn State University to support a charity for children with cancer. I certainly couldn’t dance very well but I remember fondly playing catch with my dad as he stood in the stands and tossed me a football – a great memory. Alive and energetic with a great cause on our minds, we did what we felt was something important.
If you live in the northeast, you’ve probably dropped a few dollars into the charity cans of Penn State students parked out at various busy intersections. Last year they raised $10.68 million for children battling cancer.
The Penn State Dance Marathon (THON) is a year-long fundraising effort for pediatric cancer that culminates February 15-17 with a 46 hour, no-sitting, no-sleeping dance marathon. Childhood cancer is the number one disease killer of children in the U.S. – more than asthma, cystic fibrosis, diabetes and pediatric AIDS combined.
THON’s mission is simple: to conquer childhood cancer by providing outstanding emotional and financial support to the children, families, researchers and staff of The Four Diamonds Fund. THON is the largest student-run philanthropy in the world.
My daughter, Brianna, is loaded with energy and is serving as THON Chair for her organization, Kappa Alpha Theta. There are many great causes; this is one I financially support and I share it with you should you find it is something that resonates with you.
You can give online at www.THON.org by clicking donate now and crediting Kappa Alpha Theta organization #14. ** THON is in just a few days and all funds need to be in before February 15.
“One day we will dance in celebration, until then we dance for a cure.”
Click to view THON’s 2013 Promo Video: http://www.youtube.com/watch?v=_l4eA3Vmfuk
With warm regards,
Steve
Stephen B. Blumenthal
Founder & CEO
CMG Capital Management Group, Inc.
steve@cmgwealth.com
610-989-9090 Phone
PS: When I look at the world, I try my best to view it from a probability perspective. I read endlessly and have access to some outstanding hedge fund and independent investment research. Fortunately, if you dig deep enough, you have access to a great deal of information on the internet. This certainly wasn’t the way it was in 1984 when I started in the business.
I believe we are in a challenging low return environment and that most individual investors hold higher return expectations; those expectations will not be met and investors will seek a better solution. In this, I see an unprecedented opportunity for you to grow your advisory business.
With this piece I try to share some information that I have found to be important. To me the evidence is clear, but I most certainly could be wrong.
Whether I am correct or incorrect in my thinking, my overriding belief is that you can create and manage successful portfolios for the period ahead. This environment requires more work (mixing a diverse set of risk drivers and more active beta hedging) than exists in a secular bull market cycle, but also offers you the ability to separate yourself from the 98+% of your competition that is heavily weighted in the old 60/40 stock/bond construction model.
The good news is that the investment opportunity has been greatly expanded and solutions exist. While risk is an inescapable companion in the investment process, I believe it can be quantified and minimized by expanding the asset classes you include in your portfolios.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by CMG Capital Management Group, Inc (or any of its related entities-together “CMG”) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
Certain portions of the content may contain a discussion of, and/or provide access to, opinions and/or recommendations of CMG (and those of other investment and non-investment professionals) as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current recommendations or opinions. Derivatives and options strategies are not suitable for every investor, may involve a high degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Moreover, you should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from CMG or the professional advisors of your choosing. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. CMG is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, have not been independently verified, and do not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods.
CMG Absolute Return Strategy Fund and CMG Tactical Equity Strategy Fund: Mutual Funds involve risk including possible loss of principal. An investor should consider the Fund’s investment objective, risks, charges, and expenses carefully before investing. This and other information about the CMG Absolute Return Strategy FundTM and CMG Tactical Equity Strategy FundTM is contained in each Fund’s prospectus, which can be obtained by calling 1-866-CMG-9456. Please read the prospectus carefully before investing. The CMG Absolute Return Strategy FundTM and CMG Tactical Equity Strategy FundTM are distributed by Northern Lights Distributors, LLC, Member FINRA. NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
Hypothetical Presentations: To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually mange client assets; and, (3) CMG’s clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Please Also Note: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance will be profitable, or equal to any corresponding historical index. (i.e. S&P 500 Total Return or Dow Jones Wilshire U.S. 5000 Total Market Index) is also disclosed. For example, the S&P 500 Composite Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor’s chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The historical performance results of the S&P (and those of or all indices) and the model results do not reflect the deduction of transaction and custodial charges, nor the deduction of an investment management fee, the incurrence of which would have the effect of decreasing indicated historical performance results. For example, the deduction combined annual advisory and transaction fees of 1.00% over a 10 year period would decrease a 10% gross return to an 8.9% net return. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet, his/her investment objective(s). A corresponding description of the other comparative indices, are available from CMG upon request. It should not be assumed that any CMG holdings will correspond directly to any such comparative index. The model and indices performance results do not reflect the impact of taxes. CMG portfolios may be more or less volatile than the reflective indices and/or models.
In the event that there has been a change in an individual’s investment objective or financial situation, he/she is encouraged to consult with his/her investment professionals.
Written Disclosure Statement. CMG is an SEC registered investment adviser principally located in King of Prussia, PA. Stephen B. Blumenthal is CMG’s founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy. A copy of CMG’s current written disclosure statement discussing advisory services and fees is available upon request or via CMG’s internet web site at (http://www.cmgwealth.com/disclosures/advs).