Like the majority of today’s investors, you’re someone who dabbles in the markets. This often (but not always) means you leave a bulk of your portfolio construction and management to an online or Main Street financial advisor or in a retirement account managed by corporate programs. These groups offer preset portfolios you select based upon your “risk profile”—i.e. Conservative, Moderate or Higher Risk.
Likely Getting the Standard Treatment
99% of the time, your “personalized” risk profile is nothing more than your age profile: the older you are the greater the percentage of bonds allocated to your portfolio; the younger (i.e. the more “risk tolerant”) you are, the greater the percentage of stocks allocated to your portfolio.
And voila: a “custom portfolio.”
These advisors/programs then charge anywhere from .3% to 1% of your investable assets to build you a conventional and age-appropriate portfolio, which is reviewed once or twice per year as you receive monthly or quarterly performance reports and billing statements.
Standard Diversified Portfolios…
Conventional portfolios are built around a time-tested faith in diversification, which essentially means a diversified slice of bonds (Treasuries, Corporates, and Municipal Bonds) and a diversified slice of stocks (Large Cap Stocks, Small Cap Stocks and Mid-Cap Stocks), with perhaps a few smaller slices of emerging market and other developed market (i.e. foreign) securities, alternative investments (Real Estate/REITs, Actively Managed Mutual Funds, 40-Act Funds) and inflation hedges (typically in the form of broad commodity baskets and TIPs).
(And by the way, if some of these terms seem like Greek to you right now, we’ll walk you through ‘em in no time at The Market School.)
A typical “moderate” portfolio, for example, would have an asset allocation that is "70/30" or "60/40" stocks and bonds in a semi-creative blender...
The asset of choice in these portfolios is rarely a specific list of stocks or bonds, but an ETF (or “Exchange Traded Fund”) which bundles individual securities of like type (i.e. small cap stocks bundled within a “small cap ETF” or corporate bonds bundled into a single “corporate bond ETF.”)
A Little Dabbling On the Side
After building such a diversified portfolio of mostly ETF vehicles, you (or your advisor) are likely keeping some money on the side which you might actively trade on your own.
Toward that end, you may be reading Barrons, the Wall Street Journal or surfing the web looking for good “stock ideas.” Or maybe you are being tempted by mass emails or internet “pop-ups” promising you quick fortunes in gold mining stocks, crypto currencies or unknown bio-tech stocks. We know, because we get ‘em too…
If this profile seems familiar, then how can Signals Matter help you?
We Here's Our Take
We See Things Differently and Charge More Fairly than the Bulk of the Financial Advisory Industry
We are hardly about to “poo-poo” the entire RIA or “Registered Investment Advisory” community—from your local Main Street advisor to the Private Wealth Management teams at banks like Morgan Stanley or Goldman Sachs.
In fact, we come from these places and respect/recognize the solid efforts so many advisors in such places offer their clients. Nevertheless, we also recognize some obvious shortfalls, conflicts and problems within this industry and solve them as follows:
A. We’ll Tell You When to Go to Cash, Your Advisors Won’t.
Financial Advisors, whether across town or across the web, get paid on “invested assets,” which means they will almost always recommend that you stay out of cash and fully invested regardless of market conditions.
They’ll tell you that no one can time market moods or changes and so its therefore wiser to just be fully invested through all cycles by enjoying the good times and patiently waiting out the bad times.
We, however, want to avoid rather than “wait out” those bad times, largely because we think “the bad times” ahead are going to be much worse than in the past.
And though we agree that perfect market timing is impossible, that doesn’t mean we can’t provide good market timing…We’ve built a system that sees the rain clouds coming and will signal when you need to go to cash rather than suffer another “Great Recession” in which half (or more) of your wealth can disappear—and then not reappear-- for years, even decades.
And how can we get away with being defensive so bluntly? Very simple: we don’t charge based on your invested assets; we have no conflict or problem objectively telling you when to go to cash and protect yourself.
Our Recession Watch tool, updated monthly, along with our weekly Market Signals and Trend Watch will give you a massive head start in knowing when to get out of harm’s way, regardless of what your advisor is telling you.
B. Your Buy and Hold Model Won’t Work in a Recession, Our Signals Will.
Furthermore, we don’t ascribe to the conventional view held by most advisors or independent dabblers that “buy and hold” works.
Instead, we are taking a very specific and contrarian stance by asserting that post-08 markets have been so distorted by Central Bank stimulus that when the next market crisis comes (and it will come), the US Central Bank (along with the other central banks of the world) will not have the dry powder (i.e. money) to re-inflate markets the way they did in the post-08, “V-Shaped” recovery paid for by quantitative easing (QE) and zero-percent interest rate policies (ZIRP).
When the next crisis comes, if you lose 50% or more of your money, it won’t be coming back for a long, long time. Can you afford to wait possibly decades to crawl back from such a loss? Our aim is to give you the tools to never get caught in such a market slide.
C. We Don’t Think Bonds Are Always a “Conservative” Allocation.
We also don’t fully ascribe to conventional portfolio theory. Specifically, we don’t consider today’s bonds as safer than stocks (in some ways, they’re actually more risky), and therefore don’t believe the so-called safer/conservative bond weightings in conventional portfolios is either safe or conservative.
Our Blog includes extensive discussions on bond market distortions, risks and bubbles of which ordinary advisors aren’t seeing or warning. We think that’s a big problem, and we think you’ll soon agree.
D. We Offer the Tools to Pick Stocks Screened by 100’s of Technical and Fundamental Filters.
Whether or not you stay with your advisor, or have your own side account for personal trading, our weekly Market Signals will give you a one-stop shop to select your securities with confidence, and frankly, greater expertise.
Furthermore, using our Subscriber Watch tool, we are happy to receive your personal stock picks and put them through our own scrutiny for a rapid assessment.
Gone are the days of staring doe-eyed at your advisor, scouring newspapers, questionable email recommendations, TV pundits or internet pop-ups to decipher smart picks from risky picks.
Once you subscribe to Signals Matter, you’ll come to trust the substance behind each recommendation, and enjoy calm rather than confusion as to when to enter and exit those recommendations.
E. We Provide You the Themes and Straight-Talk to Be More Informed and Thus Better Equipped to Engage Your Advisor.
Again, and if nothing else, our weekly Market Signals and Trend Watch, coupled with our monthly Recession Watch will arm you with outstanding data and clear summaries of current and looming investment themes which you can present to your advisors, and if necessary, even override their standard recommendations. After all, it’s your money and future, and you sure as heck have the right—even responsibility—to speak up.