Posts Tagged ‘MW Investment Strategy’
Bloomberg printed a very well-researched article yesterday on the sequence of events that led to September’s surprising departure of “bond king” Bill Gross from the Newport Beach firm he founded.
To anyone who paid close attention, there had been trouble brewing at PIMCO for some time, evidenced by the sudden departure earlier this year of co-CIO Mohamed El-Erian. My own concerns date back to 2010. As an investor whose client accounts were heavily allocated at the time to funds under Gross’s management, I grew concerned by the ballooning of Total Return’s assets and the increasing use of derivatives in PIMCO’s flagship fund. PIMCO’s decision that year to enter the equity business, having been a bond-focused shop since its start, raised yet more red flags for me. And then, performance at Total Return started to lag. As I wrote in this 2011 article for Advisor Perspectives, the under-performance did not appear to be a blip but more likely indicative of the larger systemic problems that had been building over time. We steadily reduced our allocations to PIMCO’s Total Return from a peak of more more than 10% of assets under management in 2009 to less than 3% by the start of 2014.
Bill Gross demonstrated for more than two decades that he is one of the most astute managers of fixed income on the planet. It will be interesting to watch whether he can rediscover his “mojo” at Janus. Given the advantages available when investing with a very small start-up asset base, it would not surprise me to see Gross score big right out of the gate. What is less certain, as assets under management start to grow again, is whether Gross can routinely add “alpha” over the benchmark as he once did. The odds of this, judging from the records of other “star” managers who lost their footings and attempted to start over, is not encouraging.
2014 has been a good year for us and for our clients. I hope that we all remember to share our good fortunes with those in need, or with those who may be less fortunate. For our part, MW Investment Strategy is making our traditional year-end company contributions to food banks serving the following communities where our clients reside:
- San Francisco/Marin
- Alameda County
- Contra Costa County
- Redwood Empire
- Napa County
- Santa Clara County
OUT OF STATE
Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.
-W. Edwards Deming
see also Ken Blanchard’s Raving Fans, the book that inspired me back in 1997 to start an advisory business that actually put the clients first.
“Where, Oh Where, Is Ferdinand Pecora?” – my Op Ed on the fifth anniversary of the financial crisis – is published in Advisor Perspectives, a leading interactive publisher for Registered Investment Advisors, wealth managers, and financial advisors.
I had the opportunity to talk about the use of new technologies and the financial advice business with the local NBC News folks, courtesy of NerdWallet. Boy, do I hate watching myself on video…
At first, it looks like I am being served up as the “old guy” outrun by a new generation of tech-savvy twenty-somethings.
If the video doesn’t appear below, click here to view on the NBC website.
MW Investment Strategy is featured as one of the initial participants in “Ask A Financial Advisor,” a new service of the consumer finance website Nerdwallet. Check out our page and new videos(!) here. Nerdwallet received a lot of very favorable media attention several months back for their credit card comparison tool.
A new website dedicated to helping organize the essential financial planning tasks that everyone should be aware of. Many will be able to do this financial planning yourselves, without professional intervention, by following the simple step by step program offered by Getyourshittogether.org. Link from this NY Times article brought to my attention by a client.
This chart from JP Morgan shows the clear range-bounds of the US equity market since 1997, a fact we have repeatedly stressed in our long-term outlook. Money can be made (or lost) by catching these waves up or down, even if exact timing is impossible. Valuations, specifically (trailing, not forward) market PE ratios and Shiller’s PE 10, are our own guides to making judgments about where to add, or subtract, risk.
Fixed income has been doing the heavy lifting for most portfolios the last 10-plus years, as interest rates moved steadily downwards, and bond prices moved steadily higher. At some point, this paradigm of range bound US equities and climbing bonds will change. Far brighter minds than I have been predicting this, incorrectly now, for at least two years.
Chart pointer The Big Picture