THE BLOG

30
May

Fuse 2017 Profile: Bill Winterberg

Fuse 2017 Profile: Bill Winterberg

In today's spotlight of the Fuse 2017 judge panel, we look at what four-time returning judge Bill Winteberg is looking forward to seeing at this year's event.

The post Fuse 2017 Profile: Bill Winterberg appeared first on Orion Advisor Services.

25
May

See the New Rep Portal and Join the Compliance Conversation

Watch today's Weekly to get up to speed with our Compliance Conversation webinar series, and see new app updates like the Rep Portal and Billing upgrades.

The post See the New Rep Portal and Join the Compliance Conversation appeared first on Orion Advisor Services.

23
May

How to Personalize the Orion Rep Portal

Orion Rep Portal

We’ve released a new Orion Rep Portal so you can personalize the Orion experience for your reps and give them the data they need.

The post How to Personalize the Orion Rep Portal appeared first on Orion Advisor Services.

19
May

Complacency, Lunacy, and the Cure for Both

Content provided by Grant Engelbart, CFA, CAIA, CLS Portfolio Manager

Volatility is at its lowest levels in decades, consumers are feeling confident, unemployment continues to fall, and markets continue to grind higher. This type of environment can be great for investors, but it can also be dangerous. The lull can create complacency and encourage excessive risk taking or vice versa.

A prime example of this is the recent filing of a 4x leveraged ETF. Yes, you read that correctly, an ETF that delivers 4x the return of the S&P 500 on a daily basis (key). Not only are investors becoming complacent, they could potentially have a tool to feed into that complacency and blow themselves up. There was also a filing for a 4x inverse version for the fearful to use (and ultimately lose.) Luckily, these approvals are on hold for the time being, but bears watching.

As coaches in the investing game, we have to keep investors in check. Of course, telling them not to use leverage is a great first step, but there are other cures. Knowing how much risk we are taking and measuring that risk is the hallmark of what we do at CLS. It can be tempting to think “what if I was a higher (or lower) Risk Budget,” but that can prove dangerous. It is up to us and our advisors to keep investors in check. Think about it: Even if we were crazy enough to use the aforementioned 4x ETF, a 100 Risk Budget investor could only own 25% in their portfolio, and the rest would have to sit in cash (assuming a Risk Budget of 400, which is likely too low).

Second, stay diversified. Yawn, right? We preach it constantly. But guess what? Since the beginning of 1999 (inception of the index), the MSCI Emerging Markets index has outperformed the S&P 500 by 230%! And ironically if you used a 3x or 4x S&P 500 ETF that return gap actually widens substantially, as evident in the chart below. It seems wild that the long-term return of a 4x product could be so low, but during this time there were 13 days of returns lower than -5%.  Multiply those by four, and you have a bear market in one day, 13 times over.

The market can stay at these levels of low volatility and grind higher for months, if not years. Take advantage of that appropriately by ensuring your Risk Budget is in line with your long-term goals. Keep an understanding that volatility is part of investing; we’ve just been spoiled lately. There is a cure for complacency, and even lunacy: Risk Budgeting and good old-fashioned diversification.

2582-CLS-5/18/2017

18
May

Get to Know the World-Class Adventurer Highlighting Ascent 2017

Learn how to set Orion Social as your Orion Connect landing page, and find out about the world-class adventurer highlighting Ascent 2017.

The post Get to Know the World-Class Adventurer Highlighting Ascent 2017 appeared first on Orion Advisor Services.

17
May

The Best of Berkshire

Content provided by Kostya Etus, CFA, CLS Portfolio Manager

May is a momentous month for Omaha. Value investors from around the world make a pilgrimage to see the “Oracle of Omaha,” Warren Buffett, and his partner in crime, Charlie Munger, and to hear their words of wisdom at the annual Berkshire Hathaway Shareholders’ Meeting. It draws such a huge and diverse crowd that it has been uniquely nicknamed the “Woodstock of Capitalism.” For many of us investment professionals, it is almost a sin not to attend the meeting because the knowledge gained is priceless. Here are some brief highlights that stood out this year.

  • On the Wells Fargo scandal: Buffett warned managers and business owners to be careful of what they incentivize; it could unknowingly be bad behavior. He also noted the CEO caught wind quickly and acted. Buffett compared his response to that of the CEO of Salomon, a financial firm taken down by a bond trading scandal in the 1990s that was ultimately righted by Buffett. Salomon’s CEO never acted to correct the bad behavior in the company — an omission, Buffett said, that was almost more important than the transgression.
    • AMAZING QUOTE #1: Munger likes Ben Franklin’s old quote: “An ounce of prevention is worth more than a pound of cure.” But, Buffett added: “A pound of cure applied is worth more than a ton of cure delayed.”
  • On choosing a great business: Buffett had three points to consider. 1) Five to 15 years into the future, does the competitive advantage persist? 2) What kind of management is at the helm? 3) Finally, what’s the price?
    • AMAZING QUOTE #2:  Buffett’s idea of a great business to buy: “An economic castle with a moat and a great knight to ward off marauders [competition].”
  • On fixing the unfixable: Buffett and Munger both said they have learned a lot from their mistakes. Many of their early investments were in failing companies, which they tried to recover. That was a big mistake, they said, as the companies were unrecoverable. They learned to avoid such companies and focus on higher quality investments.
  • On finding value: Munger said it used to be a lot simpler to find undervalued companies and lower hanging fruit (“Shooting fish in a barrel,” Munger mentions). Now, they have to reach for higher branches.
    • AMAZING QUOTE #3: I’m paraphrasing Munger here: “Rule 1: Fish where the fish are. Rule 2: Don’t forget Rule 1. We have gotten good at fishing where the fish are, but there are a lot more boats on the lake.”
  • On intrinsic value: Buffett predicted over the next 10 to 20 years, market value will not be dependent on the economy or presidents, but on interest rates. At current rates, the value is not as high as it has been over the last 10 years. If anyone thinks rates can’t stay low for too long, he said, they just need to look at Japan.
  • On Berkshire’s advantage: Buffett and Munger disagree on something, a rare occurence. Buffett says Berkshire is a great company, but if investors don’t want to worry about money or whether they’re invested the right way when their neighbor is making a ton of money on a hot stock, nothing beats the S&P 500 Index. Munger says Berkshire is still better!
    • AMAZING QUOTE #4: Munger says: “Others are trying to stay brilliant; we are trying to stay rational. This is particularly important when gambling.”
  • On technology: Buffett said it’s very hard to predict how technology will change. Berkshire made huge mistakes by not investing in Amazon or Google, but instead investing in IBM, he said. As for their investment in Apple, they view it as more of a consumer products company.
  • On the top five companies: The largest companies by market cap all have low capital intensity. They don’t need capital and they have no tangible assets. No additional reinvestment is needed to grow. This is a huge change from not too long ago when companies made money to build new plants in order to grow. Today, Google charges every time a human clicks a mouse, much different from taking months to search for the right site for a new manufacturing plant. This trend will continue, but of course not everyone will win.
  • On Berkshire’s value to the world: Companies under Berkshire are able to operate without fear of being bought by someone else. They have easier access to credit and funding for new projects. CEOs of the companies are freed up from calls with banks and analysts, and can focus on operations. In addition, Berkshire teaches the public about the importance of corporate honesty and the benefits of well-run companies.

I leave you with my two personal favorite things from the meeting:

  1. An opening video featuring famous actors, as well as Munger and Buffett that only attendees could view. It will never be available for distribution, and it was quite entertaining.
  2. Munger randomly started chomping away on peanut brittle into the microphone while Buffett was speaking. Hilarious!

2578-CLS-5/17/2017

16
May

Enhance Your Orion Experience with the New Portfolio Audit Dashboard and More Software Updates

portfolio audio dashboard

The Portfolio Audit app has a new dashboard to streamline how you view information, and you can now set Orion Social as your Connect landing page.

The post Enhance Your Orion Experience with the New Portfolio Audit Dashboard and More Software Updates appeared first on Orion Advisor Services.

15
May

Higher Calling: Chuck Bigbie, Woodland Wealth Management

CLS sits down with Chuck Bigbie, Woodland Wealth Management, where he describes one special relationship he had with a client couple and how he was able to help them be financially successful.

15
May

Extend Your Capabilities with Cloud-based Trading

cloud-based trading

A trading platform is as powerful as the technology behind it, and Orion’s cloud-based trading is scalable and upgradable at a moment’s notice.

The post Extend Your Capabilities with Cloud-based Trading appeared first on Orion Advisor Services.

12
May

Higher Calling: Brigid Mulroy, Star Wealth Management

CLS sits down with financial advisor Brigid Mulroy, Star Wealth Management, where she describes the relationships with her clients and how she learns their goals on both a financial and personal level.