Category Archives: Wealth Management

Business Articles, Index Investing, Investing, Value Investing

Index Investing is More Art Than Science

I am about to share some Value Investing information that will make your jaw drop. If your anything like myself and the gang of us on Twitter who are Value Investors? You are a Junkie for information so you can put your research to work for the purpose of outperforming your latest Investment Portfolio’s compounding unrealized gains. Today’s Post is special for Investment Professionals.

You know that S&P 500 Growth Index your about to invest in? It’s likely there is a better index option with higher returns. FACT! By the way THIS IS NOT A SALES PITCH. NOR INVESTMENT ADVICE.

Hear me out! Thank you. I would like to introduce a well known Investment Advisor who has focused his career on Institutional Investing in the North East, and for the last 10 years has lived and practiced in Tucson Arizona, I listen to his fantastic Podcast while I work at night driving around town listening to his Podcast, “Money for the rest of us“.

Mr. Stein has a gift explaining complex and sophisticated Financial Products, and Investing Topics that make it very easy to compute. Furthermore one of the Episodes he recorded recently was fundamentally explosive for me as a fellow Investor. He went on to explain that not all Index Investing is created equal. Now I do see this will begin to shift opinions with what I am about to share. But before I begin addressing the Questions you may have about this Morally Hazardous Claim. First I have to share why we came to this conclusion.

Data Mining Index Markets on to a Software Application

Mr. Stein and his small Investment Team and a few Software Developers and Architects of Digital Computer Programs recently released a secret project that details charts and tons of Data of Index’s across the globe in different Markets. They measured different ETF’s, Value Index’s, Growth Index’s, Growth ETF’s, ETN’s, Japan Index’s, UK Index’s, US S&P Index’s and tons more.

What did they find?

They found that not all Index Investing is the same. A very valid argument for Investment Advisers and Money Managers can be made that with this new DATA? The old practice of Value Investing is very much alive and out performing it’s counter part of Growth Funds. This post is general findings I heard on the podcast. However I suspect if you listen to the exact episode I listened to you will find it fascinating all the data and inflection points to that Index Investing is a Art not a Science. The following points of interest and listed topics will keep you on topic as you listen to Mr. J. David Stein share some incredible Data about “how to make your Index Research interesting? And how you should begin looking at data with his latest Software Application for Investing. This is what you will learn?

Index Providers divide the stock universe into large and small, growth and value.

The Difference Between the price to earnings ratio and earnings yield and which is better?

How earnings volatility can impact annual earnings growth and what to use to estimate future earnings?

How value stocks often grow earnings faster than growth stocks

How value has outperformed growth in the last three years?

Click the Photo below for Access to the Episode about Asset Camp and the Points and Topics shared above.

If your like me and would like to see these Data and Research Points? I would recommend sign up for the Data Suite Software for Investment Advisors and Sophisticated Professional Investors Asset Camp

Listen to the Episode with J. David Stein

https://moneyfortherestofus.com/443-surprising-stock-index-insights/

Thank you for reading, I am very happy to share this. You will learn a few amazing topics that make Value Investing hard to beat as a Investor.

Godspeed
JS

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Business Articles, Wealth Management

“Basic Asset Allocation For Portfolio Management”

What is Asset Allocation? How do Portfolio’s take shape with investment choices? And how do Investment Advisors, CFP’s, and Wealth Management, Asset Managers, Fund Managers use Asset Allocation? All good questions! Todays article is for you. This is a very broad topic. And there are many moving parts. This post is meant to give you a better top down view into how “Financial Advisors, and Asset Managers Allocate Assets to Fictional Portfolios. And the process” This post should not be used as personal or professional Investment Advice.

Interestingly I am learning a ton as I continue to study the fine art and processes of Wealth Management, and earning my License as a Independent Financial Advisor. One of the latest Youtube Channels I have been listening to is Family Office Club, they do touch on Asset Allocation and so do several Podcasts I have listening to in my spare time.

Investment Advisor Podcast

Back to me listening to Podcasts. One of the Podcasts I highly recommend is Money for the Rest of Us. Hosted by experienced Institutional Investment Advisor J. David Stein. In all this content you can be sure to hear Tax Optimization, Retirement, Investing Smart, and Asset Allocation for large and small family portfolio’s and a ton more. In todays article I am going to demystify a bit “How Financial Advisors grow, protect, and leverage investment opportunities while deciding “How much and where to Invest their Capital?”

Another Podcast which is a Favorite? My Friend Andy Flattery who is a CFP in Kansas City who operates Simple Wealth Planning. His Podcast? “The Reformed Financial Advisor”

Blackstone Investment Choices For Investment Advisors

Before I continue, I would like to introduce Blackstone’s Investment Vehicles for Investment Advisors Clients. Blackstone Alternative Investments for Investment Advisors Clients Portfolio’s is a very smart choice. Blackstone’s investment products and Investment Vehicles continue to produce above normal returns. And this fact is one of several reasons why Blackstone is my go Alternative Investment Product list.” Here Joan Solotar to share more about why Blackstone’s Portfolio Investment Vehicles just makes since.”

“How do Financial Advisors Allocate Capital For Investments?”

If your reading my article? I am positive I know what your thinking? “How do Financial Advisors Allocate Capital and make Investment Choices?” This is where working closely with a Licensed Financial Advisor starts to pay dividends.

Maybe your a Entrepreneur that has had a recent liquidity event? Maybe your a Executive that has had a Exit Opportunity moving towards you on your professional Horizon? Or Maybe? Your a NFL, NBA, or a Music Artist who needs to know your options and what comes next? And you have questions. Well this post should help you with your questions, and will delve into “How Financial Advisors Manage, Grow, Diversify, and Protect your Portfolio. For the Sole Purpose of Preservation of Wealth”.

First what we would generally do? Meet face to face and learn more about each other. Maybe play golf, go on a Offshore Fishing Trip, or Ski Trip, or even you invite us to travel with you as you continue to work. After your thoroughly acquainted with the advisor of your choosing and have interviewed several other Advisors? You decide who you can trust and who is capable of protecting your assets while giving you room for growth and let’s not forget providing concierge style of extraordinary service.

Later after we begin to explore what are the most important things? Here are some questions that get us heading in the right direction. Usually we would sit down and talk about a list of questions to consider. Examples? Do you have any appetite for risk? On a scale of 1-10 “How important is preserving your principle?” On a scale of 1-10 do you require Income from your Capital? On a scale of 1-10 are you seeking to grow your capital? “What is the time horizon we need to consider?”

“Financial Advisors & Client Objectives and Recommendations”

Did you know? “Financial Advisors develop a Plan based on your goals and objectives? It’s how we begin to develop a plan as Fiduciary’s and how we consider Suitability of Securities and Investments.

Allocation of Capital

Most Investment Advisors have a list of Investment Opportunities they can allocate capital to for your Portfolio. This list is sort of unique to each Financial Advisor. Because they have done their due diligence on the offering or security. This list is unique and usually is one of the many reasons “Why” High Net Worth Families and Individuals have sought out the services of a Investment Advisor. In order for a Allocation of Capital to Happen? Financial Advisors first need to finish the financial plan to get you and your Assets into a Portfolio that has a purpose and objective. In simple terms? “We look at it like placing you into a car and getting you from Point A to Point B. We must have a financial destination.” And this is where our list of Investment Vehicles comes into the picture.

“Portfolio Asset Allocation”

Ok once we have asked Hard Questions and developed a Plan we can now begin to allocate capital to investment vehicles that have specific goals and objectives.

BONDS & CREDIT MARKET SECURITIES

Example: We may allocate 40% of your capital for Municipal or Corporate Bonds after we have carefully considered your Tax Bracket. The main reason we would use Bonds? Is because they offer a excellant opportunity to generate Income as an Investment Vehicle. Make sense? Excellent.

STOCKS

Another Example of making a Asset Allocation in our fictional Portfolio? If we have had a conversation about introducing an Equity portion into your portfolio with calculated Risk? We would begin to carefully consider using Stocks as an Investment Vehicle. Meticulously making sure we are using tools that could minimize risk of big swings in market volatility to your Stock positions. Yes we have tools that can do this. However if we are properly diversified? This can be a fantastic way to use Growth Stocks as investment vehicles to grow your Portfolio and capital.

Investment Vehicles Used For Asset Allocations By Investment Advisors

Since Asset Allocation is a complex subject. We honestly do not have enough time to write about all the Investment Vehicles and Securities we use for Client Portfolios. However here are some additional Choices we use for Asset Allocation. CDs, money market accounts, high-yield savings accounts, government bonds, and Treasury bills, Real Estate Investment Trusts, Mutual Funds, Index Funds, Exchange Traded Notes, Investment Funds by Direct Participation Programs, and much more.

Asset Management Goal? Preservation and Capital Growth

Bottom line up front, I genuinely hope you learned a few things during todays Post of Asset Allocation? Todays post was meant to give a brief view for anyone who was curious how Financial Advisors and Wealth Managers divide up capital and build a fictional portfolio. This is a very general topic. Not in depth. The width of this topic is very wide. But if you ask me? One constant should always be placed a the forefront of Asset Management. “That is the Preservation of Capital” In the Grand Scheme of Investing? That is all that matters. I do hope you learned and discovered a few things today. And please reach out if you feel I could be helpful.

Thank you
JS

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