The Daily Mission
By Greg Saurenman
Independent, straightforward take on life mission, life planning, financial planning, investing, the psych of money, communication around finances, things that troll Ye Olde Wall Street. By: Mission Advisory Group, a fiduciary-led Registered Investment Adviser, not beholden to any big bank or advisory firm. Relevant. Knowledgeable. Contrarian. Quant meets Qual. Algos. Humans. Access for all. This is not investment advice. For more information and to see disclosures, please visit:
Dual Hurricane Forces
There’s another hurricane that is strengthening. In the form of a global economic downturn. It’s affecting our shores and moving up in Cat strength. Prepare wisely for this one because its looks to be a Category 5 storm, the effects of which could last the next 4 quarters. Unfortunately, the industry hasn’t prepared you for this. Big banks, financial media, the inexperienced social media personalities, even the Fed, Treasury, and White House. It’s been disappointing. You will see green on the screen, as these long down cycles are interspersed with bear market bounces. We’ve already had several this year. In the 2000-2002 tech bust, there were about 15. Each setting lower highs and lower lows. We’ve talked about this many times, but it’s important to repeat. What worked for the last 12 years is not working now, and we’re not going back to that scenario. We can’t tell you what to do, because that could be deemed advice and we don’t know your particular situation. What we can say is that preparing for hurricanes to strengthen can be helpful. We’re not in the business of trying to time the market. That’s a fool’s game and has wrecked hedge fund managers and retail investors alike. It’s not about being entirely in cash, because there’s always a place to invest. But, sometimes it’s nice to have some cash ready, or as we say”raise cash” during times of high volatility and increasing economic concern. Volatility is high right now, as measured by the VIX. When it’s over 30, as a rule, we don’t try to be heroes trading anything. We’re not all cash, but we did start raising cash positions at the turn of this year, increasing to present date. We think the future market situation is going to call for a different allocation that what we’ve been accustomed to for the last 12 years. Stay tuned as we’ll be doing some special content, episodes, and live talks on cash management. It looks to be worthwhile, maybe even fun again to consider how you can manage cash positions in different ways. Until then, be vigilant, and take care of your hard-earned assets. Disclosures: This is not financial advice. We don’t know your individual or organizational situation. Consult a professional if you are looking for guidance. We seek research from many institutional sources, work to make sense of it, find patterns, compare date points, and put perspectives together that the public can understand. These views may influence the manner in which we manage assets for clients of our firm. This podcast is produced by Mission Advisory Group, an independent Registered Investment Adviser. If you like this content, please subscribe, and give a rating. For more info on who we are, please visit followthemission.com. For other timely and insightful, professional content, connect and follow us on LinkedIn. You can that link easily our website at followthemission.com.
September 28, 2022
THE RISK YOU DIDN’T KNOW YOU HAVE
THE RISK YOU DIDN’T KNOW YOU HAVE Move over FANG. The new crew is AMATA. Remember “FAANG?” Facebook, Apple, Amazon, Netflix, and Google? They were the talk for quite some time. But, things always change. Netflix and Facebook dropped out of the top 5, Google changed its name, and Tesla became the new darling of the market. The new crew, let’s call it AMATA, is Apple, Microsoft, Amazon, Tesla, Alphabet. These 5 stocks compose: 42% of the NASDAQ 100 22% of the S&P500 That is a high and concerning # from our perspective. That’s called concentrated risk. Everyone owns them. Institutions, hedge funds, the bulge bracket firms, the big banks, individual accounts at Fido, Schwab, TD, Robinhood, WeBull, et al. Some people unwittingly own index funds or ETF’s with high exposure PLUS owning individual stock positions. Everyone owns these 5. Even to some extent unwittingly large exposures via index funds and ETF's that replicate these indices. The S&P500 Index is the most widely owned equity-exposure index. Retirement plans are a major driver of this, as is the decade + long wave of money moving from active management to passive (index funds & ETF's). This means that you're largely at the whim of how these 5 companies perform, and how the remainder of assets in your accounts is risk-managed. You're also at the whim of what large institutions and hedge funds decide to do with their long positions in these 5. Now, can you determine some of the most common characteristics of these 5? And determine what their course will look like over the next 3-5 years? Is this "diversified"? In 1999 just before the dot-com crash and extended bear market in tech, 3 of the 6 largest companies by market cap were Microsoft, Cisco, and Intel. After a massive run-up in stock price in the late 90’s, all three of these companies crashed, and returns were fairly flat for the next 8 years leading into the Global Financial Crisis of 2008. That’s not to say that the AMATA crew will experience the same. But, we are in a transitioning economic environment globally. And when you’re considering risk and diversification, having this much exposure to these 5 is a caution flag for us. Knowing what you own is important. This podcast is for educational purposes only. Nothing mentioned here should be deemed financial advice. Consult a professional if you’re looking for guidance. This podcast is produced by Mission Advisory Group, an independent Registered Investment Adviser. If you like this content, please subscribe, and give a rating. For more info on who we are, please visit followthemission.com. For other timely and insightful, professional content, connect and follow us on LinkedIn. You can that link easily our website at followthemission.com.
September 26, 2022
Markets are not in good shape. A quick update for week ending Fri, Sep 23rd
A quick & relevant update on markets for Fri, Sep 23rd None of what you see happening right now is a buy signal. The dollar is ripping higher. This is not good for the global economy. Yields/rates are soaring, with a high rate-of-change. The downside/low-end mathematical range for equity markets is dropping. You must understand the importance of bonds and currencies in determining what's happening in equity/stock markets. This is something you won't often hear, won't be taught by media. Volatility is jumping higher. And, confusing the signals further, some major banks/advisory firms are under scrutiny for manipulating the VIX (a standard measure of market volatility). When the VIX goes over about 30-32, it's a no-fly zone for trading, at least for us. The higher the VIX goes, the more trouble equity markets are going to see. This is a hard-and-fast rule baked into our process. We can’t say this enough. The cost of capital is going up. Think of that as the cost of borrowing, of leveraging up. Whether you are a commercial real estate developer, a corporation looking to secure more funding, a hedge fund, a residential home buyer. Anything and everything that touches money is affected by this. Inflation remains high. And the chances of more geopolitical disruption are high. Do not look for a Fed "pivot". As we said at the end of July, anyone interpreting the Fed as being dovish or stepping back from their intentions on raising rates was going to set themselves up for a fall. 12 out of 19 members of the Fed committee expect the Fed Funds Rate to be between 4.50% and 5.0% by the end of 2023. It continue to be a crazy time for markets and risk. Everyone talking about, waiting on, looking for a return to "normal" in our economy & markets is looking in a rear-view mirror. We are not going back to what drove markets for the last 12 years. Equally as hopeful, intrigued, and engaged as I am short-and- intermediate-term concerned. We're already in a different time for considering how portfolio management is carried out, overall. And the time is developing now where an entirely different analysis of risk and approach to planning/terracing/managing cash is in play. We haven't been in a time like this in decades. *We cannot give financial advice broadly. This message does not specify positioning. We don't know your situation. Please seek guidance if in doubt.
September 23, 2022
There’s No Shame In Your Money Game
Shame has no place in personal finance. This goes for individuals, and especially couples. The moment that shame starts to emerge, we wreck it. It is antithetical to our process. Our work is to align and help redirect. Align in that we understand perspectives. Redirect as in helping people to rethink and rewrite their story. Who of us has not made money mistakes? Most of us were not equipped with proper money tools. Families don’t understand. Schools don’t teach financial literacy. Or at least haven’t until recently. I think that’s partially by accident, partially due to other reasons. People make great impulsive consumers and debt junkies, until the cycle is broken through education and practical application. Also, how much you earn does not correlate with better decisions. In fact, it can be the success in position and increasing income that can fool us into a form of false security. We’re all on a path of continual improvement.
September 22, 2022
7 things you CAN control right now with respect to your money and the longer term effects of inflation
1. Make household budgetary changes. It’s not easy, but it can be done. In other words, save more. Spend less than you’re earning. Self-discipline. Cash-flow planning. Think like a business. Create more margin. 2. Adjust risk in your investment portfolios. What worked for the last 12 years is not what works now. 3. Look for opportunities to ask for a raise. Or if you’re in a business development / sales role, you know what to do. Work smarter and harder. 4. Look for ways to improve your skill set to lead toward higher earnings 5. Start a cash flow business on the side, or if you are cash-strapped pick up a side hustle to earn some extra cash in the interim while we go through this transition. 6. Look for the current and coming opportunities for managing cash. 7. Look for ways to be more resourceful. Think with a thrifty mindset.
September 22, 2022
What is The Daily Mission Podcast?
A quick description of The Daily Mission Podcast.
August 25, 2022
The time is now. Get efficient. Don’t wait.
It’s time to get efficient. Don’t wait. Current caution flags, and ideas on improving your financial situation.
August 19, 2022
Sometimes you just need to disconnect (and we're all better for it!)
Sometimes you just need time and space. The Daily Mission is back from the wilds of the Sangre de Cristos to reengage with the world and all of its noise.
August 17, 2022
Stacks On Stacks. The Good, Bad, and the Fugly (of cash).
Let's talk about cash, inflation, and some ideas this year.
August 03, 2022
Dolla Dolla Bill (is a wrecking ball, y'all)
The US Dollar. Yankee Fiat. cash, bills, paper, greenbacks, moolah, scratch, dough, bread, cheddar. dead prezzies. No matter what you like to call it, that dollar dollar bill is a wrecking ball, y’all. It's in high demand, globally. And that can create some pretty big problems in the short term. Let's talk about why in short order.
August 03, 2022
Why you should probably think like a strategist, rather than a tactician
What you think “should be” versus what “is” when it comes to investing, and why you should probably think more like a strategist and less like a tactician.
July 30, 2022
How did hedge fund managers become so rich? (and how the conditions to support this are changing)
Two factors more than any other supported the growth of the hedge fund titan era: Easy money for leverage, and getting paid under the carried Interest loophole. But both of those factors are in the process ofd changing. And quickly.
July 30, 2022
Thoughts on inflation, markets, and the Fed for the last week of July 2022
It's been a crazy week in markets. Get the storyline you're not likely to hear from mainstream financial media.
July 30, 2022