June 27, 2014
By Steve Blumenthal
Wishing you a wonderful 4th of July holiday weekend. I share the following in this week’s (shortened) On My Radar:
- CBS’s 60 Minutes – Steve Kroft reports on the alarming state of the federal disability program
- What is Tail-Risk Hedging?
- Trade Signals: Sentiment Remains Extreme – 07-2-2014
CBS’s 60 Minutes – Steve Kroft reports on the alarming state of the federal disability program
This short clip from 60 Minutes is about gaming the federal disability system. It is about billions paid to lawyers by the U.S. Government for work helping their clients gain approval to collect federal disability compensation. It is about a secret welfare system – a system ravaged by waste and fraud.
As Senator Tom Colburn M.D. said on 60 Minutes,
“This just shows you how broken it is. You take a good concept that’s well meaning and then you don’t manage it, you don’t monitor it, and congress does not oversee it.”
This piece is about “getting on the check”. You certainly wouldn’t run your business without the right measures and safeguards in place. We believe that the government will run their affairs in a disciplined way. Unfortunately, that isn’t always the case. I wonder what the deeper social consequences might be. Are we holding people down vs. creating incentive and education structure to empower to create? I firmly believe we must take care of our people who are in true need but I see the concerning picture in the mismanagement of good intentions and the absence of structural processes.
Watch the 13 minute clip from 60 Minutes here (and grab some Tums).
What is Tail Risk Hedging?
I am often asked what I mean when I use the term “Tail Risk Hedging”. The quant goober in me just can’t seem to get out of the way sometimes. Tail risk hedging is simply putting in place some relatively inexpensive form of portfolio protection. The idea is to always have in place protection that can cushion your stock exposure from the severe declines that come during market crisis events. Think of it like the fire insurance you have on your house. If done correctly it is a nominal expense compared to the protection it provides. We wrote briefly about it this week (here).
Trade Signals: Sentiment Remains Extreme – 7-2-2014
The cyclical trend remains bullish for both the equity and fixed income markets. Investor Sentiment remains convincingly in the extreme optimism zone.
Click here for a link to Wednesday’s Trade Signals.
Conclusion
Have a wonderful weekend. I’m looking forward to some needed down time with my beautiful family.
With warm regards,
Steve
Stephen B. Blumenthal
Founder & CEO
CMG Capital Management Group, Inc.
Philadelphia – King of Prussia, PA
steve@cmgwealth.com
610-989-9090 Phone
610-989-9092 Fax
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