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Artificial Intelligence Is Helping Create High Alpha

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Artificial intelligence (AI) has recently proven successful in the money management business.

Artificial Neural Networks can absorb massive amounts of data, think faster and learn from subtle changes faster than a human can.

Large companies have invested vast sums in( AI) to achieve high alpha results. If they have been successful it has not made the news.

You have seen IBM’s ad showing its artificial intelligence system named Watson. Amazon is using artificial intelligence to dominate consumer markets. Salesforce.com uses AI to help its clients dominate competition.

Abaris Investment Management LLC. an innovative investment management firm in Michigan  is showing to be a unique and disruptive competitor. Abaris does not manage money for its own clients but acts as a sub advisor for other advisors. Once client prospects find out about Abaris it will be very difficult for ordinary advisors to market asset allocation and traditional ETF or index fund management.

Advisor’s Capital Investments Inc now uses Abaris research.  You need to see the results in all kinds of markets to recognize that this AI manager is truly a disruptive competitor.  Of course past performance is no guaranty of future results. New accounts may encounter loss instead of gain over any time period.

I have over 40 years of experience and I have never seen anything like this.

Ask us which managers are now using Abaris. Accounts can be managed at Fidelity’s broker dealer, Schwab, TD Ameritrade LLC., Interactive Brokers LLC., Trust Company of America or SEI.

At the very least you should make certain your advisor finds out about this.

 

A Winning Strategy For A Stock Market In A Trading Range!

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Famed Billionaire Investors Have Turned Very Negative Recently! 

 

  • Bill Gross
  • Carl Icahn
  • George Soros
  • Stanley Druckenmiller
  • Sam Zell

Should You Be Concerned?

You Have Many Choices:

  • You can hold cash and make a minimal return.
  • You can buy gold and put up with the short term risk and volatility.
  • You could develop a plan to benefit from a high risk, range bound market.
  • You could continue to do what you are doing and hope for a better result.

I choose the third option.

Stocks have been in a trading range for the better part of the past two years.

There have been violent moves down to 1810 on the S&P 500 index and rallies up to 2135, The trading range has been the opportunity.

I believe a continuation of this trading range is likely with the outside possibility of a severe decline if the worldwide debt bubble bursts.

What Should You DO?

Buying index funds or a diversified portfolio of ETF’s is not working.

Focusing on leading growth stocks purchased at the low end of their trading range is working.

What is desirable ?

A portfolio of the best stocks purchased at the low end of their trading band.

We need income generation and a plan for risk control.

Executing this strategy is like having your own personal hedge fund.

We can help you do this!

Your Personal Hedge Fund

This type of account is managed in an individual brokerage account. It requires margin privileges, options and may be an IRA. Generally, the size of the account must be over $200,000 in order to provide proper diversification and allow for option writing.

This type of account invests in quality stocks, ETF’s and uses options to generate immediate income and reduce risks. The account is hedged by using S&P 500 put options and uses inverse funds when risk is deemed to be at its highest. Generally these inverse funds are used on a temporary basis while the S&P 500 options are used longer term as a hedge against the volatility of long stock holdings.

A key to this portfolio is discipline in making stock purchases.

Stocks are purchased at or near stock channel lows. Put options are often sold to buy stock at a discount or to generate additional immediate income.

This is a focused portfolio meaning that when fully invested stock holdings are fewer than thirty positions. Covered calls are written against profitable positions when the stocks are at or near their channel tops. If a position with a call written against it is performing poorly a call with a higher strike price is purchased at a nominal cost and the underlying stock is immediately sold. If a stock performs well and the option sold rises in price we may purchase another 100 shares of stock and if it continues to rise we will sell another out of the money call at a yet higher strike price.

All stock positions are sold if they decline by 15%.

Stocks that are under-performing in the portfolio are sold or put options are purchased to limit risk. Stocks are sold if fundamentals change negatively or if legal or accounting issues arise. Large insider sales may also be a reason to exit a position.

This type of account is designed to reduce negative volatility and we believe will be more likely to provide reasonable returns in a difficult market environment. It should be more comfortable than traditional  portfolio’s during periods when markets are declining.

Stocks are selected based on forecast earnings growth at a reasonable price. Securities used come from a database of Dow stocks, the Disciplined Equity Portfolio Stocks, the higher priced Zack’s #1 for timing stocks and industry leading stocks in market sectors. Both leading foreign and domestic securities are used.

Stocks are actually purchased based on buying at discount prices near channel bottoms.

Of course past performance is no guarantee of future results. Over any given time frame accounts may experience loss instead of gain.

We have other tools to define exactly when to buy or sell naked puts at strike prices below the low after a turn to the positive.We Buy a stock when it goes above the lower trading band and sell call options at or above the higher band when the stock price loses momentum .

Some stocks will not work out. For this reason you need a stop sell order or your own system of daily price control.

I use long term monthly charts to understand the long term trend, daily charts to determine the zone to buy and 15 minute charts to determine the hour to buy.

You are welcome to see how this portfolio works by viewing our portfolio and our decision system on a go to meeting webinar. Pictures are more easily understood than words. Please call the number below or email me at rkmann@aol.com to set up a meeting.

All investments have risk. Past performance is no guarantee of future results. This type of investing is not suitable for everyone. Call me at 860-963-0722 and I will answer your questions. This is not personal investment advice. This is published for informational purposes only.

The Customer’s Man is Nearly Extinct!

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Back in the 1900’s retail stockbrokers were called “ customer’s Men. “ The logic was that they served the customer’s needs first before the firm’s needs. I am not arguing that they did not make mistakes but the ethic was that they served the customer. If a firm desired to develop a new service they asked the customer’s man first.

Today the customer’s man is called a registered representative, a financial advisor or a vice president. Today’s stockbroker is primarily a salesman not a money manager. A retail salesman today generally sells the firm’s mutual funds perhaps on a wrap fee basis, asset allocates using ETF’s and buys firm recommended stocks. He also sells packaged products like annuities . The firm trains their salesmen to asset allocate, rebalance and generally hold assets longer term.

New DOL regulations are likely to put more restrictions on what is recommended, perhaps lower costs and  generally will result in a lot more paperwork and fewer innovative solutions.

We can see the direction financial services is moving by looking at retirement plans like 401k and 403b plans. They have fewer choices made up of larger funds that correlate too closely with each other. Costs are being reduced and the main logic of investment is buy and hold, asset allocation and perhaps rebalancing.  There is no customer’s man to aid the participant to reduce risk in difficult times or to add risk at low risk times. In fact the sponsoring funds often deny the participant this opportunity by limiting his ability to make changes over a short period of time.

Dalbar,s Investment Survey’s Results

30 year composite results 2.47%

30 year Equity Funds 3.79%

30 Year Asset Allocation Funds 1.78%

Considering that inflation has averaged 2.70%

These results are not attractive.

Unfortunately this investment logic is pervasive in investment offerings today.

Asset allocation, buy and hold index investing and reallocation are techniques that seek average results especially for the average investor.

Today the newest offerings to investors include reducing fund costs, using low cost ETF’s and now using asset allocation devices called robo investing.

Why? Primarily because these services do not require the cost of active investment managers and because it is difficult to manage large amounts of money for small investors in an active fashion.

Mutual funds today look very much alike because they hold so many stocks. The largest ones cannot move assets quickly for a number of reasons. They invest to compete with their peer group in performance as opposed to seeking the highest nominal return. They generally keep minimal cash balances.

Compare Results With A Smaller Active Manager Seeking Excellence

  • A focused portfolio of a maximum of 20 stocks generally paying dividends.
  • Concentrating on leading stocks in the top performing industry sectors.
  • Concentrating on securities with high earnings growth.
  • International as well as domestic issues.
  • Only purchasing securities that the metrics allow for the expectation of a 30% rise in price.
  • Risk control designed to sell any issue that declines by 15%.

Compare the Results:

We call this portfolio The Disciplined Earnings Growth Portfolio.

It has audited results since 2007.

This is an individually managed account not a mutual fund.

The Disciplined Earnings Growth Portfolio

This portfolio strategy has an audited track record and creates wealth with lower risk than most mutual funds. I particularly like it in combination with option writing and option protection at high risk points.

$500,000 to $4,300,000 in 8 years.

No big down years since 2007.

Of course past performance is no guarantee of future results

 

The Dalbar survey results over 10 years in an equity account earned 5.26% per year. If an account with $400,000 earned 5.26% per year it would grow to only $667,872.63. Of course the sequence of returns might make the total much lower. The DEGP account had no significant down years where in 2008 the Dalbar calculations most likely had substantial losses.

This is the difference between seeking excellence verses accepting the average. Of course past performance is no guaranty of future results. You may see the audit and the historical performance of the DEGP upon request.

It does make sense that focusing on the best up trending stocks while eliminating the losers would work better, especially in rising markets rather than holding  a large number of both rising and declining stocks.

Look at the charts of a great many name brand funds and you will see a correlation between the movements  of the fund prices. You may own a lot of them but you are receiving a similar result.

Today markets are high and risks are great. I believe you need someone like a customer’s man to serve you. You need a plan for risk control. This cannot be done by large service providers.

Advisor’s Capital Investments Inc. is Setup to Be Your Customer’s Man.

  • We are independent.
  • We do not hold or have access to anyone’s money.
  • We are small enough to provide daily account monitoring to all of our clients.
  • We have large company partners to serve our clients unique needs.
  • Our clients have access on line to their accounts daily.
  • We execute transactions through discount brokers like Interactivebrokers LLC.  We have access to using Fidelity for accounts preferring Fidelity through Capital Markets IQ.
  • We use Trust Company of America for trust services at very low cost.
  • Through our holding company we have access to the top insurance companies for the most competitive annuities and insurance contacts.

 

We refer clients to larger advisors who manage far larger assets than we manage who offer specialized services like:

Advisor’s Capital Management              www. advisorscenter.com

Horter Investment Management          www. horterinvestment.com

Capital Markets IQ                                  www. capitalmarkets.com

I partner with these firms in order to remain independent while leveraging my ability to serve the unique individual needs of my client.

The portfolio manager managing the Income and Growth portfolio at Advisor’s Capital Management is Dr. Charles Lieberman. He holds a B.S from M.I.T. and a PhD in economics from the University of Pennsylvania.

Dr. Lieberman joined the Federal Reserve Bank of New York as head of its monetary staff. In 1986, he joined Manufacturers Hanover Bank as chief economist and head of research and held that position through mergers with Chemical Bank and Chase Manhattan. In 1999, Dr. Lieberman co-founded Advisor’s Capital Management. DR Lieberman has a very sophisticated trading capability.

Horter Investment Management LLC. is one of the fastest growing R.I. A. firms in the U.S. They specialize in Tactical Asset Management and in helping retirees to preserve capital with less volatility. They manage over 1 billion dollars and are growing very fast based on their consistent results.

Finally, Capital MarketsIQ is a sophisticated advisor that offers specialized services to institutions and individuals.

You will find information about their star advisor, Dr. Robert Schreiber at my website www.retirementadvice.us. He has had exceptional performance working at Morgan Stanley and UBS.

He began working for Capital Markets IQ in 2010. What I like about Bob is that he has had no down years before fees since 2007. In 2008, when the S&P 500 declined by over 36%, he had a positive return. The actual numbers of his own account performed several times the gains of the S&P 500 with about half of the risk. Of course past performance is no guarantee of future results.

Over any given time frame accounts may experience a loss of principal.

For clients who have sophisticated tax and estate needs I work with a top group of specialists nationwide.

What is required from you?

We are only looking for clients who take responsibility for the choices they make. We do not want uneducated clients who do not desire to learn or participate in how their account is managed. Ultimately, you are responsible for the management choices that are made.

Our responsibility is to listen to you in order to learn about your financial situation, your risk tolerance, your experience and your goals. We are a fiduciary as an investment advisor and have been for many years. We offer you well researched solutions that we believe will fit your needs. We explain the risks, rewards and volatility component you need to accept to properly utilize a given solution. You give us your ideas, we offer our ideas. You make choices and we put together a plan for your use. We can help with paperwork. We can execute and monitor a given solution for you  or we can refer you to a manager to do this for you.

We monitor, advise and continually keep you updated to make sure the plans you have put into practice are working correctly even if another advisor is managing your funds.

We are one of the last of the customer’s men. You are the one we serve and we do not have to serve any other master. Our mission is not to grow big but to achieve excellence for our clients benefit.

Making decisions may seem difficult at first but we are patient and have experience making complex ideas understandable. Before you make any decisions we will make sure you understand and are very comfortable with the decisions you make. We use visual aids that are very easy to understand.

We allow our clients to start slow and be comfortable and secure before they make larger commitments.

We intend to earn your respect and your trust.

The Power of Tax Free Compounding.

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Have You Heard Ben Franklin’s Story?

When Benjamin Franklin died in 1790, he left $1000 to each of the cities of Boston and Philadelphia. His bequest came with some strings attached: Specifically, the money was to be invested in stocks and could not be touched for 100 years. At that point each city could withdraw up to $500,000 for designated public works. Any remaining monies could not be touched for another 100 years. Finally, 200 years after Franklin’s death each city would receive the balance – which in 1990 amounted to $6.5 million, with no money having been added over all of the years.

This story was told in the book “ Money Master The Game”,  by Tony Robbins

How Did It Grow? Through The Magic of Tax Free Compounding.

Today, if you are in a high tax bracket and have to pay 55% estate tax after the death of your spouse you would be shocked at how little your money would grow in comparison to Ben Franklin’s money. Between State, Federal and for some people even city taxes, compounding is drastically reduced.

This is why Bill Gates, Warren Buffet and many others set up foundations.

IRA’s, 401k’s and Profit sharing plans are helpful but taxes eventually are paid and for wealthy people can wipe out over 70% of the capital. Often estates have to liquidate IRA’s to pay estate taxes creating additional income taxes that are not deductible from estate taxes.

How can you harness the power of tax free compounding?

We call it a Tax Alpha Portfolio

To qualify for a Tax Alpha Portfolio you generally need to be younger than 60 years old and in good health. The exception would be for people who are older and wealthy seeking to enhance their estate free of taxes. They still must be generally healthy.

We have two different plans:

One for people and companies that have over $5,000,000 in invest- able assets to qualify. Once they are qualified, they must invest a minimum of four annual payments totaling at least $500,000 over the period

See www.MyTaxAlphaPortfolio.com

A second plan is for people who can invest $15,000 or more over a five year or longer period.

To learn more about the second solution, ask me for the book entitled, “ My Family Financial Miracle”. You may e-mail me at rkmann@aol.com or call me at 860-963-0722.

I have personally benefitted from the solutions described above. I was able to compound monies tax free and even access my principle without taxes during my life. There is no more powerful tool you can use if you start early enough.

Sincerely,

Robert K. Mann

Advisor’s Capital Investments, Inc.

The Moderate Risk Disciplined Earnings Growth Portfolio Has Recently Been Audited

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The DEGP IS MY FAVORITE EQUITY STRATEGY FOR — USE IN A MODERATE RISK IRA ACCOUNT.

 

  • The Results Are Extraordinary from 2007- 2015.
  • No Down Years from 2007-2014. ( Even in 2008. )
  • The Maximum Draw Down from the Highest High to the Lowest Low Has Been -16.92%.
  • Recovery Time to New Highs Has Been a Maximum of 5.4 Months.

 

Compare The Stats to Your Own Equity Portfolio, Mutual Fund or Index Funds. Of course past performance is no guaranty of future results. Accounts may have losses instead of gains in the future. Check out the audited report and all the disclosures to more fully understand the nature of this account.

The reason I like it so much is because of its daily asset risk control and its method of reducing risk in declining market conditions.

Let’s look at what this manager is doing that sets him apart from most mutual funds and other types of managed accounts:

  1. The portfolio is focused on stocks in leading sectors that have high earnings growth and may be purchased at a value based price.
  2. The portfolio is intended to be fully invested with a maximum of twenty stocks.
  3. Each stock must rise 10% before purchase.
  4. Most of the stocks are large cap and pay dividends.
  5. The portfolio often includes international as well as domestic equities.
  6. Analytics target a minimum of a 30% growth in value prior to purchasing a stock.
  7. Each stock is monitored daily. If it declines by 15% it is sold.
  8. As a portfolio stock approaches the 30% target the sell trigger is lowered to as low as 5% below the current price.
  9. The portfolio holds cash balances when stocks cannot be found that meet the defined standards necessary for purchase.

The results show that this logic and discipline have had great value.

In today’s slow growth environment a portfolio concentrated on high earning companies with a plan for risk control has an advantage over index funds and highly diversified mutual funds.

You may read more more about the DEGP and it’s manager Dr. Robert Schreiber by reading blogs at http://www.retirementadvice.us. For a comprehensive analysis of the audited results send me an e-mail request at rkmann@aol.com.

It is possible to modify the risk by using the stocks selected by Dr Schreiber and writing options on the portfolio. It can be done using covered calls or option spreads.

Many of the selected stocks have powerful moves on the date of their earnings releases. In a slow growth market these periods of price acceleration may be a good time to take short term gains.

What are the negatives?

Active management may result in more short term gains and thus a higher tax rate. The cost of commissions and slippage also will be greater. We recommend using the lowest cost brokers who do not give trades to traders in exchange for kickback commissions. We also recommend using this strategy in an IRA or Roth IRA.

Capital Markets IQ will provide the trading signals to Advisors and Hedge funds in exchange for a 50 basis point annual fee or share it’s fee with  fully disclosed advisors who refer accounts.

As an advisor I pay fees to Capital MarketsIQ for accounts I manage using their strategy. I also receive compensation for marketing this strategy to other advisors and hedge funds based on fees paid by them to Capital Markets IQ. Capital MarketsIQ is an SEC registered investment advisor.

I depend on investors like yourself to help me spread the word about this very specialized strategy.