One of the great things about being in Europe is the difference in time zones. Given that France and Italy are six hours ahead of New York and eight hours ahead of Denver, there was plenty of time each day to rest up, see some amazing sights, learn about history, and yet still have a moment or two to ponder the big picture of the stock market and the strategies we employ.

Unlike last year’s Ireland adventure, where the markets were in turmoil and our trading systems required a great deal of attention, this year, the market gave me a break while my wife and I were exploring Nice, Eze, Cinque Terre, Santa Marghareta, Florence, San Gimignano, Sienna, and Bologna. In short, stocks went up every day but one while I was across the pond, which, again, allowed me some time to think.

While I had several big-picture epiphanies while on busses, planes, and trains (train travel is indeed a must-do experience in Europe), perhaps the biggest was the confirmation of my basic belief system about how best to manage money in the markets.

Read the rest of the report…

David Moenning

Direct: 303-670-9761

email: Dave@HeritageCapitalManagement.com

www.StateoftheMarkets.com

www.HeritageCapitalManagement.com

David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.

For up to the minute updates on the market’s driving forces, Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

Positions in stocks mentioned: none

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Following are highlights from the meeting

1. Backup when away from the office – Approach another solo advisor and ask them to trade-off
2. Outsourcing -Solo Advisors tend to spend money in terms of man-hours.  Your time is valuable! Tips on outsourcing for compliance, technology, investment management and sales and marketing.
3. GIPS Compliant - What is it (Global Investment Performance Standards) and why would I want it
4. Marketing Strategies - Social Media, E-Marketing, In-bound Marketing and other lead-generation ideas
5. Staffing -Tips for working efficiently with less people or none at all
6. Use of 3rd Party Resources - look to NAAIM members to help you find vetted resources and inside experts

 Solo Advisors Meeting Notes

 Wednesday, May 15, 2013 at 4:15 p.m. EDT

The reflexive perception that ETFs cost less, simply based on their low expense ratios, and are more cost-effective than mutual funds, is not entirely true. In addition to an expense ratio, there are additional considerations that investors should consider when making an informed choice between ETFs and funds-including spreads and commissions.

Please join us for a live webcast on  Wednesday, May 15, 2013, at 4:15 p.m. EDT featuring Carl Resnick, Director of Rydex Funds Distribution, as he discusses the true cost of ownership of no-transaction-fee (NTF) mutual funds and ETFs – with a focus on active investing strategies.

• Understanding the complete cost of ownership for ETFs and NTF mutual funds
• How active trading strategies affect the cost of ETF and NTF mutual fund ownership
• Ownership considerations-rules of thumb for determining the most cost-effective investment vehicle

REGISTER USING THE LINK BELOW:

TRUE COST OF INVESTING

_________________________________________________________________

About Carl Resnick

Mr. Resnick joined the firm in 1998. He has served as national sales manager of ETF and Institutional sales, where he was responsible for managing ETF distribution resources. He began his career as a variable trust wholesaler and has worked in a national sales manager capacity for specialty sales distribution, managing the sales of the variable trust funds available through 401(k)s and managing variable annuity and 401(k) partnerships.As head of Rydex Funds distribution, Mr. Resnick leads a dedicated sales team around the firm’s beta exposure sector strategies, broad market benchmarks and leveraged and inverse exposure products. The Rydex Funds business is a leading provider of tradable mutual funds offered to the tactical investor community. It offers benchmark-based and leveraged and inverse products with unlimited trade privileges.

I spent the better part of the last four days at NAAIM’s (National Association of Active Investment Managers) annual “Uncommon Knowledge” conference, which was hosted in my hometown of Denver this year. While the conference agenda was chock full of strong presenters such as Keith McCullough of Hedgeye, Martin Pring, Tom McClellan, and Ian McAvity, the real benefit to attending a conference like this is getting to spend time chatting with more than 100 active money management professionals.

In case you’re wondering, the term “active management” runs the gamut of everything from periodic reallocation of tactical and/or strategic investing strategies to trading in and out of various markets on a daily basis. In short, the managers at this conference engage in a wide variety of investment methodologies. However, the common thread is that ALL believe in doing something other than the old buy, cross your fingers and then hope approach. While we may disagree on whether a trend-following, black-box model, or mean reversion approach is better/smarter, one thing we all agree on is that buy-and-hope is an outdated concept – unless, of course, you are able to implement such a strategy when there is blood in the streets. But then again, isn’t that too an “active” approach?

But I digress (as usual). While there is a contingent of managers within NAAIM that I would call “quants” who manage money based solely on the readings/rules of their mathematical systems, there are also a great many “active” managers who look to keep their clients in the right place at the right time using their experience and brains as a guide. And it was this crowd that I enjoyed talking to as the opinions on the outlook for the markets were all over the map.

I talked to advisors (a manager must be an RIA – Registered Investment Advisor – to be a member of NAAIM) who felt that the world was in sorry shape at the present time and that the piper would most certainly have to be paid at some point given the state of China, Europe, etc. What was interesting (well, to me anyway) is that some of these managers were younger and had only been in the business during the current secular bear market, while others were grizzly veterans who have seen it all since the 1970′s. As such, I can’t say that the folks I talked to were simply fighting the last war due to their frame of reference.

On the other side of the macro view, a smaller group of managers were borderline giddy about the outlook for the next couple of years. They cited the action on the chart, the Fed, BOJ, ECB, et al as well as the idea that the stock market tends to look forward and not back. Therefore, this group argued, if the market can find a way to not succumb to the “sell in May” season this year, stocks – specifically U.S. stocks – are the place to be.

While it isn’t terribly surprising to have heard both bullish and bearish arguments from this crowd of investment professionals, the one thing that unites the crowd is the insistence on employing a risk management strategy. When asked, “What if you’re wrong on your view?” the answer was universal. While the actual words chosen to offer a response varied, the overriding message was, “That’s easy – we will follow our sell discipline and get the heck out of the way if things get nasty.”

This is the message I will leave you with on this fine Thursday morning as I’ve got to pack a bag in a few minutes and start brushing up on my French (my goal is to not completely embarrass my wife in the restaurants this time around). While the approaches, strategies, methodologies, and time frames vary widely amongst the members of NAAIM, the common theme is the each and every manager has an exit strategy for their positions. And frankly, it is this one simple concept that separates the pros from the public.

While the public has a tendency to drink the Kool-Aid of the day being pushed by the financial media and their commission-based “advisors,” most of the managers within the NAAIM organization get paid for “getting it right” when things go wrong. And this is why I so enjoy the gatherings because in short, I’ve found my people.

Read the rest of the report…

David Moenning

Direct: 303-670-9761

email: Dave@HeritageCapitalManagement.com

www.StateoftheMarkets.com

www.HeritageCapitalManagement.com

David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.

For up to the minute updates on the market’s driving forces, Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

Positions in stocks mentioned: none

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

For more information contact:

Dave Moenning
2013-2014 NAAIM President
888-261-0787
info@naaim.org

NAAIM Releases Industry White Paper to Bring New Perspective on Active vs. Passive Investing

~ Industry report finds that the key to investor success is combining active management with behavioral finance and financial planning

Denver, CO.  April 29, 2013.  The National Association of Active Investment Managers (NAAIM) released today a groundbreaking new white paper designed to showcase the advantages of active investment management and the limitations of the debate related to active vs. passive investing.

The report, “Three Fundamentals – Using Active Management, Behavioral Finance and Planning to Reach Client Objectives” defines the fundamental reason for portfolio management is to meet client’s objectives—rather than beat the market. The white paper highlights the need for using behavioral finance to keep clients’ emotions in check and help them avoid making decisions that will inevitably limit their ability to meet those objectives. As part of that process, the report focuses on the role and benefits of active management in portfolio diversification.

“For years the industry has been locked in a debate about whether active or passive management is better,” said Dave Moenning, NAAIM Vice President.  “With this new report, NAAIM is documenting that there is more to the discussion than just picking one approach.”

According to the report, “It’s not about beating the market. Simple arithmetic tells us that most investors will not consistently beat the market. This discussion is fundamentally about enabling clients to meet their financial objectives, which involves allowing them to stay comfortably invested in all market environments.”

“At NAAIM, we contend that active management is an important tool in meeting that goal and provides additional diversification—enabling investors the opportunity to improve performance and smooth market volatility,” said Moenning. “It’s not an all or nothing proposition.” The report provides a balanced view on the benefits of both active and passive strategies, contending that a combination of the two can provide added diversification to help manage client emotions during volatile markets.

According to the report, “When active and passive strategies are mixed they can provide a better overall experience for the client.  Active management strategies and the value they can bring enhance advisors’ ability to add performance, help respond to changing market conditions, and side‐step losses. When combined with more passive strategies, active strategies provide an extra level of diversification, to vary not just asset class, but also holding time frame.”

In today’s more volatile markets, there is a growing use of active investment strategies being deployed by financial advisors, with nearly 50% incorporating a tactical strategy into client portfolios, according to Cerulli.

The “Three Fundamentals” white paper was released at the 35^th NAAIM Uncommon Knowledge conference, held in Denver, CO April 29-May 1, 2013.  To obtain a copy of the report, download it here:  “The Three Fundamentals”

About NAAIM
The National Association of Active Investment Managers or NAAIM was formed in 1989 as a non-profit association of registered investment advisors who provide active money management services to their clients, in order to produce favorable risk-adjusted returns as an alternative to more passive, buy and hold strategies. Originally called SAAFTI and comprised of a small group of successful, passionate firms, NAAIM has grown to include roughly 200 member firms nationwide, managing over $30 billion. NAAIM’s purpose is to promote the common interests of those investment advisors who provide active investment management services to clients.  NAAIM’s membership ranges from small regional firms to large national firms with over $1b AUM, including hedge fund managers, mutual fund companies and a variety of other firms that provide professional services to RIAs.  www.naaim.org.

NAAIM is pleased to announce that Chris Krueger, Managing Director and Senior Policy Analyst at Guggenheim Securities’ Washington Research Group, will open the NAAIM conference as our Keynote Speaker on Monday, April 29, in Denver, Colorado.

First, in the long term we have broken out above the “double top” formed in 2000 and 2007 but have pulled slightly back below the 2007 all time high. As you can see on the first chart, the market spent about 260 days on average in a 10% range of its high points. So far, we have spent 167 days in that 10% range. If we accept that the future will be range bound and that that history repeats itself, we could spend another 90-100 days bound in this area.

Read The Rest of the Report

Have a great day,

Bill

Bill Barack

Direct: 440-623-0775

email: bill@lindsifarneinvestments.com

www.Lindisfarneinvestments.com

Dr. Bill Barack, a past president of NAAIM, formed Barack Capital Management, a portfolio management company, in 2000. Prior to that, he worked for 30+ years in engineering. He served as the Engineering Manager for Calphalon Corporation, consulted with various Fortune 500 companies for Morrison Knudsen, and spent 20 years with General Electric designing products from jet engines to light bulbs. He currently stays involved in the business world, serving on several Boards for manufacturing companies. Bill lives in Cleveland, Ohio where he enjoys long walks by Lake Erie with his wife Susan and their two golden retrievers.

No surprises here this week. As we suggested last Monday, stocks continued to weaken (down the most in five months but just 2.12% in the scheme of things on the S&P) as they hit a short-term top, while gold bounced off the bottom put in place last Monday.

Looking at our strategies and indicators, some of the shorter term that did short stocks ahead of last week’s sell off have turned more bullish, and our bond models also tend to be looking for higher prices.

Yet caution is still necessary as we are in a very volatile earnings season, and pre-earnings expectations were not good. So we continue to see some strategies lightening up or moving to more defensive positions.

Read the rest of the report…

All the best,

Jerry

About Jerry Wagner

Trying to gauge the message from the market action has been more difficult than usual over the past month. Beginning on March 19th the S&P 500′s close flip-flopped from green to red and then back again each day for a record breaking fourteen consecutive days. After that, the bulls gained possession of the ball for three additional days (chalking up four straight green finishes in the process) and closed April 11th at an all-time high. But unfortunately, it’s been largely downhill from there as we were then treated to two big down days, a big up day, two more scary down days, and then Friday’s pop higher.

As far as price progress goes, the S&P finished Friday at almost the exact same spot it closed on March 11. Thus, I guess we could say that the market has been treading water and trying to make up its mind about what to do next for the past 29 trading days as the better-than-expected theme may have morphed into another spring swoon. Can you say, sideways… or how about, uncertainty?

Speaking of a market that has no memory and a habit of flip-flopping; I’d like to offer up a possible explanation for the action. However, before I begin I should disclose that this is just one man’s opinion of the way the market might be working these days.

Read the rest of the report…

David Moenning
Direct: 303-670-9761
email: Dave@HeritageCapitalManagement.com
www.StateoftheMarkets.com
www.HeritageCapitalManagement.com

David Moenning is the founder and chief investment strategist for StateoftheMarkets.com, a website dedicated to investor education and portfolio analysis. Mr. Moenning is also President of Heritage Capital Management, a privately owned, investment management firm. Founded in 1989, Heritage is focuses on risk management and an “own the best and ignore the rest” equity selection strategy.

For up to the minute updates on the market’s driving forces, Follow Me on Twitter: @StateDave (Twitter is the new Ticker Tape)

Positions in stocks mentioned: none

The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM’s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

2013 NAAIM Wagner Award winner Dave Klein Shares his Secrets for Achieving consistent Outperformance while Mitigating Risk

Littleton, CO – April 18, 2013 – The National Association of Active Investment Managers (NAAIM) announced today that Dave Klein is the 2013 first-place winner of the NAAIM Wagner Award for Advances in Active Investment Management for his paper “Equity Sector Rotation via Credit Relative Value”.

In its fifth year, the NAAIM Wagner Award is designed to expand awareness of active investment management techniques and the results of active strategies.

Of Klein’s paper, Greg Morris, the Chairman of the Award Committee, writes “Mr. Klein provides a rotation strategy that selects sector ETFs based upon their relative performance to option adjusted spreads for BoA/ML US High Yield B index. He provides various levels of analysis in that the basket of ETFs is varied to assess the risk statistics. The process is rebalanced once a week and if an ETF does not have a fair value greater than market value, then the allocation goes into cash equivalents.” Morris is Chairman of the Investment Committee and Chief Technical Analyst at Stadion Money Management, LLC.

Dave Klein is partner and co-founder of Capital Context LLC, a market strategy consultancy. Prior to founding Capital Context, Dave was a Senior Research Analyst at Credit Derivatives Research (CDR). Hired as CDR’s first employee, Dave focused on the interplay between the credit and equity markets leading CDR’s capital structure arbitrage and equity-focused research efforts. In his role as Manager of CDR’s credit indices, Dave designed the first exchange-traded credit derivative futures contract for the CBOT (now part of CME Group). Prior to completing an MFE at UC Berkeley’s Haas School of Business, Dave spent fourteen years in software development in roles including developer, project leader, and founder/Chief Technology Officer.

In 2012, Dave was also the only Honorable Mention recipient since the award’s inception.

In his award-winning white paper, Klein outlines a long-only sector rotation strategy using highly liquid ETFs that achieves admirable results in back-test. At its heart, the strategy makes use of relative value across the corporate capital structure to rank sectors and judge when entry and exit are recommended.

As a general rule, equity values drop as credit risk rises and vice versa. With good proxies for credit risk, one can use this relationship to judge relative value between the credit and equity markets. Dave Klein’s strategy utilizes this relationship at the index level. The intuition is that if credit risk rises (falls) among a suitably-chosen basket of companies, then equity values will drop (rise) in an equity index.

A panel of investment professionals selected by the Wagner Award committee reviewed entries and award the prizes. The criteria used in judging the papers are: practical significance to practitioners of active investing; quality of exposition; analytical rigor; and novelty of results. In addition to Morris, the panel included Jerry Wagner of Flexible Plan Investments, Ltd. ; John Ehlers of Mesa Software; John McClure of ProfitScore Capital Management; and Bill Barack of Lindisfarne Investments LLC. To find out more about the judges panel, follow this link: https://naaimwagneraward.wordpress.com/judging-team/

With 20 entries this year, the 2013 Wagner Awards attracted an international response with authors from Italy, the United Kingdom, New Zealand, Austria, Australia, and Sweden and from nine states across the United States. Receiving second place in the competition was Tony Cooper from Double Digit Numerics of New Zealand for his paper “Easy Volatility Investing + Abstract ”. Z. George Yang of Flexible Plan Investments (2012’s third place winner) was awarded the third place prize again for his paper “Filtered Market Statistics and Technical Trading Rules”. Second and third place winners will receive $3,000 and $1,000, respectively.

Top papers are published on the NAAIM website at http://www.naaim.org/resources/wagner-award/ . First Place winner Dave Klein will be presenting his winning paper at the association’s April 29-May 1, 2013 annual conference in Denver, CO at the Westin Denver Downtown. For more information or to register for the annual conference, visit the NAAIM website http://www.naaim.org/events/annual-conference/.

About the Wagner Awards

In honor of the vision and work of NAAIM founding member and president and CEO of Flexible Plan Investments, Ltd., Jerry Wagner, the Wagner Award for Advances in Active Investment Management annually awards $10,000 to a first-placed paper providing evidence of the validity of an active investing approach using a trading system that outperforms the market by some well accepted metric such as risk-adjusted return, annual return or drawdowns. Second-place and third-place winners are awarded $3,000 and $1,000, respectively. Previous winning papers and entries can be found at: NAAIM Wagner Award.

The top prize in 2012 went to Gary Antonacci, Principal, Portfolio Management Associates of Sarasota, Florida for a thought-provoking methodology outlined in his white paper entitled, “Momentum Success Factors”.

About NAAIM

The National Association of Active Investment Managers (NAAIM) is a non-profit trade group of nearly 200 registered investment advisor firms that collectively manage over $31 billion in assets. NAAIM member firms provide active money management services to their clients to produce favorable risk-adjusted returns as an alternative to more passive, buy-and-hold investment strategies. NAAIM publishes the weekly Survey of Manager Sentiment, the NAAIM Active Mutual Fund (AMF) Index, and sponsors the annual Uncommon Knowledge conference along with smaller conferences on managing portfolios, trading techniques for various instruments and markets, regulation and compliance, and other topics of interest to its membership. For more information, visit www.NAAIM.org.