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I realize that during the Holiday season it seems like everyone wants to relieve you of your money from Black Friday sales to multiple charities. So forgive me for jumping on the band wagon! But I am on the board of a wonderful charity, Homefull, right here in Dayton. Homefull not only provides housing for otherwise homeless people, but works to secure meaningful work opportunities to permanently end homelessness. Besides, who couldnt use a little tax deduction for their tax return next year!

#givingtuesday #SpreadtheGood #homefullgt



Defensive investing in a Bull Market

Building equity portfolios in a bull market is hard. Clients get caught up in the exuberance and reckon the more stocks they own, the better diversified they are. Protect your stock enthusiasts with a diversified portfolio built on low correlation, low-beta equities, and the appropriate number of asset classes. Your clients will thank you when their mania wanes.

Article posted on July 10, 2014.

Horsesmouth _ Defensive Investing

If it’s Spring…It’s Time for Golf!

With good weather finally here golfers’ throughout the Miami Valley are breaking out their golf clubs for a little exercise and fresh air. What could be better? Golfing, exercise, fresh air…and doing it for a great cause!

I’m involved with two organizations that have organized golf outing fund raisers in the next few weeks. If you would like to participate I’ve included sign-up information, or just drop me an email or call me at the office. If you’d like to golf, but don’t have a foursome just let me know. I still have a spot to fill in my foursome for both events.

First up is an outing on June 2 at Heatherwoode Golf Club in Springboro sponsored by Homefull. Homefull is a local non-profit organization that provides housing and community support for the homeless in Dayton. I am on their Board and a member of the finance committee. Homeful is a very cost effective organization that stresses personal responsibility. For more information you can go to or give me a call.

Next up is the Centerville Lacrosse Boys Lacrosse Team Classic. The Classic is also held at Heatherwoode on June 22. The proceeds will go to the Centerville High School Boys Lacrosse Team. With school budgets being slashed, parents are being asked to pay more and more in pay to play fees and in additional fundraisers to support their teams. By raising additional money we can keep the player fees down so that all boys who want to participate can, and no one is left out for financial reasons. My son’s been a two year Captain for the High School team and will continue to play in college at DePauw University. Unfortunately he is a much better lacrosse player than golfer! But if you’d like to come out and play we would appreciate the support. For more information or to sign up you can go to and click on the Centerville Lacrosse Classic link.

Monday’s News

The debate on the economy has been whether the slowdown we’ve seen is cyclical or just a temporary pause due to the unusually harsh winter in the Midwest and Northeast. I’ve been of the opinion that weather has played a huge role in the slowdown and have kept our accounts close to fully invested.

Today we had some economic news to support my position. From marketwatch, “Builders continued to be affected by poor weather and difficulties in finding lots and labor,” said Kevin Kelly, NAHB’s chairman.

What’s interesting about this is the comment that builders are also having a hard time finding labor. With unemployment in the mid-teens for those with a high school diploma or less it’s hard to rationalize this labor shortage. However, to the extent it exists, this is the kind of push the labor market needs to see an increase in wages at the lower end.

Also today we saw Industrial production revised up for January and a solid .6% gain for February.

Also an index of manufacturing in New York rose to 5.6 from 4.5 in February.

Bottom Line: Stay the course with your investments. Stocks may be bumpy in the near term, but the outlook for the economy is looking very positive for this year.

Market Posts

I contribute regularly to a subscription-only site, that is a site for financial advisors. Mt articles usually fall in the investing, market, and economy categories. While access to the site is blocked for subscribers, I do post most of the articles under the Library tab here on the blog.

If you’re interested in checking them out you might want to start with this post that was rated as “Best of 2013” by other advisors at Under Investment Theory and Strategy: Advisors Top 5 Picks for 2013 my article “How to Take Advantage of the Fear of Rising Rates” was voted the #5 for the year.

Covestor and MarketWatch Articles

The following article was just posted at Don’t Fight the Bank of Japan: DeShurko and Lessons for Investing in Bond Funds was just posted at MarketWatch.


Quoted in Wall Street Journal

Below is a copy of a Wall St. Journal article where I was asked about our usage of online investing site
To view the original article requires a subscription, so the article is reproduced below.

You can also follow our investment model performance at CoVestor Ltd. here

Learning to Embrace Online-Advisory Providers

Some advisers see online rivals as friends, not enemies

By Murray Coleman

Growing competition from discount brokers and fund companies is leading many financial advisers to embrace developers of online-advisory sites, often considered a threat to their existence.

“If you don’t take advantage of some of the more innovative advisory services online, you’re basically burying your head in the sand,” says Ross Almlie, president of startup TCI Financial Advisors in West Fargo, N.D., with $37 million in assets.

As more players such as Fidelity Investments and Charles Schwab Corp. push into offering financial advice, traditional full-service planners need to look for better ways to get word out about their skills, says Bill DeShurko, president at 401 Advisor in Centerville, Ohio, with $50 million in assets.

“People appreciate the fact that we’ve learned to work alongside online service providers to create a better investing experience,” he says.

Mr. DeShurko, who says he has been in the business for 26 years and has watched closely the advance by online advisers, is partnering with Covestor Ltd. The Boston-based firm offers online portfolios run by professional money managers that individual investors can follow and invest alongside with.

It’s a service that allows advisers with strong track records of running private accounts to bring their portfolio strategies to a larger audience, Mr. DeShurko says. He has blended a few of his existing account strategies to develop portfolios at Covestor that require minimum investments of between $10,000 and $20,000 each.

“Instead of turning away business from people with smaller accounts, we can put them into our Covestor managed accounts,” he says.

Since starting to charge for its asset-management services in 2010, Covestor says about 80 of its 139 portfolios are managed by registered investment advisers. The others are hedge-fund managers and professional traders. All are screened by Covestor, says Asheesh Advani, the firm’s chief executive. On the company’s board is James Cornell, a former president of Fidelity’s private wealth-management unit and John Sinclair, ex-research director at Fidelity.

Mr. Advani says Covestor tracks hundreds of different portfolio managers and invites the top performers to be a part of its online marketplace. It splits fees with managers, who charge anywhere from 0.25% to 2% a year to run their portfolios.

Ex-mutual-fund manager Barry Randall has decided to use Covestor as his main avenue to market a technology stock-focused investment strategy. Now, he serves as the chief investment officer at Crabtree Asset Management in St. Paul, Minn., which manages about $800,000 in assets.

“I had experience managing portfolios, but no real background in marketing,” Mr. Randall says. “So this is a perfect match. It lets me focus on what I do best.”

Instead of setting up client accounts through larger players such as Schwab or Fidelity, Mr. Almlie of TCI Financial Advisors has decided to take much of his business to another new company, Motif Investing.

The online advisory service has built some 120 different baskets of stocks and exchange-traded funds that focus on different themes–from companies that can profit from health-care reforms to stocks trading with less beta, a measure of volatility.

Such bundles of securities can be molded to almost any investors’ personal preference. For example, Mr. Almlie says he has a client who is passionate about investing in drug companies that helped her to overcome breast cancer.

“She wanted a broad-based portfolio with a slice of cancer-fighting biotech stocks, but we couldn’t find the right combination through a traditional mutual fund or ETF,” Mr. Almlie says.

Each motif comes without management fees. Instead, those using its portal can buy a basket of securities for a flat $9.95. They can also add or delete individual stocks or ETFs inside each portfolio for $4.95 a transaction.

“We act as an online broker and provide the technology to let investors build their own portfolios around any theme they’d like to target,” says Hardeep Walia, the firm’s chief executive and founder.

Starting early next year, Motif Investing plans to offer a service that will let advisers build securities baskets for clients using their own existing trading and back-office systems.

“They’ll be able to use their own software to custom design portfolios and to control whether their motifs are made public or not,” Mr. Walia says.

Write to Murray Coleman at

The FInancial Media and You

With the turmoil in Washington have come several calls and emails from concerned clients. Not surprising considering the circumstances. But the one troublesome common thread has been the affect that the media has had on investor psyche. Most callers have questioned what will happen to their portfolios when (not if) the government defaults. Since my position has been pretty consistent that we will not default – no politician wants to campaign on the fact that they caused the latest financial crisis and recession, I’ve pressed our clients about why they are so concerned. In all cases that brought us to the financial media. The news is full of catastrophic domino affects that will happen should the U S default. The trouble is, opinions have been all over the map, mainly because no one really has a clue as to how events will unfold should the debt ceiling not be raised by the end of the month. Sure many things can happen, and there is no shortage of interviewees willing to throw out their version of what a default means. The reality is the talk is meaningless. No one really knows. A U S default has no precedence.

This brings me to a story I heard back in the very early 1990’s regarding the financial media. A little history lesson here. Prior to 1987 there was no financial specific national media. During and after the October crash, CNN noticed that their ratings skyrocketed while they covered the crash and what it meant for investors. I believe that this was when they started CNNfn, a second station dedicated to financial news and thus the birth of the financial media. Remember, at that time there was no internet media. Financial news came monthly from Money Magazine. Publications like Kiplingers and Smart Money came after the ’87 crash.  TV financial news was a new frontier. I think a competitor to CNN started a financial network at that time – so a total of two national cable media outlets in the early 1990’s.

I was at a conference at the time, and one of the speakers was Dr. Bob Putnam (Dr. Bob), appropriately the spokesperson for the Putnam Mutual Fund Company. Dr. Bob was a very good speaker and was in demand at such conferences and made regular appearances on the cable news stations. He related the following story.

Dr. Bob has an early 6 AM interview (I’m guessing here) on CNNfn. Which he pointed out required him to get up at 4 AM to make his appearance on time, so he was a little grumpy. During the interview he was asked “Do you think the Fed will raise interest rates today at 11:00AM or wait until the end of their session at 4:00 PM?”  Dr. Bob was taken off guard by the question and replied, “I don’t even know whether the Fed will raise rates, let alone whether they will do it at 11 or 4!” (Could you imagine such honesty today?)

After the show was done, he felt bad about snapping a bit at the interviewer and approached her to say as much. “I’m sorry for snapping a bit at your question, but really that was a pretty stupid question”.  And here (finally) is the punch line, her response:

“I don’t care whether my questions are good or not. I have 24 hours of airtime to fill. I just need an answer!”

Again, for perspective, this was the infancy of financial media. There were only two cable networks competing for content and no internet news to speak of. Today there are at least 4 national 24 hour cable financial news networks. Another half dozen+ of main stream financial news web sites, dozens of blogs and other miscellaneous financial news sites, and while declining players, the paper editions of The Wall Street Journal and Investor’s Business Daily.

 In other words, magnitudes of more content is needed to fill space today then was necessary at the time of Dr. Bob’s interview.

Remember the financial media does not exist to provide good, valuable and actionable information. It only exists to provide content, any content to fill time and to boost their ratings. Period.

As humans we have a psychological weakness to only “hear” information that conforms to our views. Contrary information is either subconsciously ignored, or twisted to be conforming. May I suggest that the next time you are watching your favorite cable news channel; you actively listen for stories that counter your current predisposition. I think you’ll be amazed by how many times, in the same day you will hear completely opposite opinions on the same subject.

This is not to say that there is no useful information in the media. It’s just to say that due to the need to fill very large amounts of time and space, the media has no filter to discern good from bad information. Just because it is a story on the news does not imply accuracy, or necessarily warrant an action. It is what it simply is – content to fill air time.

Market Perspective

While the global and economic headlines scream volatility, the market has actually been fairly calm. The S&P 500 is still trading well within its bull market rally channel. In other words, the recent drop has been very normal, and what one would expect, without the troubling headlines.

At this point I would be cautious committing new investment dollars until the situation in Syria plays out. For those of us in the market, an exit plan should be a planning priority.

While the market and global effects of U S action (or non-action) in Syria are unpredictable, we can focus on events at home.

Once again in October the U S government will reach our limit on the amount of debt the country can have. The President naturally wants to lift this ceiling, but needs congressional approval to do so. Of course Congress will use this as a bargaining chip and negotiate spending cuts in return for an increased ceiling. Pundits will cry that such budget cuts will throw the country back into the throes of recession. Democrats will talk of starving babies. And Republicans will predict financial Armageddon without the cuts. The markets will be “volatile”.

As an investor, we need to focus on the longer term and what really matters to our portfolios – and that is growth of corporate earnings. How will the wrangling impact businesses? To put this into perspective let’s look at the numbers.


 Based on the sequester spending cuts of 2011, when you put the budget into numbers a normal person can understand, the cuts don’t look so “draconian”. Seriously, we really won’t miss the money. Of course politicians will cut the most visible services and programs to make their point, but in reality the cuts are fairly meaningless. I think many of us have cut far more than the equivalent of $1155 from a $114,600 budget during the financial crisis.

Bottom line? The consequences of the headlines are never as bad, or as good as the talking heads would have you believe. Of course anything can happen. And sometimes it does. But if you are constantly expecting the worse, you will get nowhere. A better strategy is to expect the best, but be prepared for the worse. So far there is no sign that the current bull market is over, only that it has taken a natural and expected pause.

The key we will be watching is earnings announcements for the third and fourth quarters of this year. Third quarter announcement should start in mid-October. Until then, expect the market to hold its gains, but be prepared if we get unexpected bad news.


U.S. News and World Report Article

I was quoted in the article, 5 Mistakes New Investors Often Make • 937.434.1790

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Charles H. Dow Award Winner 2008. The papers honored with this award have represented the richness and depth of technical analysis.