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Cold Call with Bob Whalen

Cold Call with Bob Whalen

The executive vice president of Brewer Investment Group talks about managed accounts.

Registered Rep: Why do you focus so much on managed futures?

Bob Whalen: Managed futures are an important part of our diversification strategy. It should be part of a portfolio especially if you are adopting a directional investing approach. Managed futures is a non-correlated asset class and it may create a balance to a stock and bond portfolio, and including futures has the potential to reduce risk, better manage volatility and enhance overall portfolio diversification. Most of the institutional investors have known this for years, and I believe that many advisors who serve retail clients have had to learn this the hard way over the past few years.

RR: Aren't managed futures somewhat expensive for the client (i.e. fee wise)?

BW: In some cases, managed futures products can have higher fees, but we believe that the fees should be put into the appropriate perspective. Lower fees are not going to help if the client is losing money and clients need to focus on alpha and risk appetite. For example, some could say S&P index funds were inexpensive in 2008, but at the end of the day, were they versus their losses?

RR: What book are you reading right now and why?

BW: On the Brink: Inside the Race to Stop the Collapse of the Global Financial System by Henry Paulson. I am always looking for ways to learn from the past in order to maximize on the future opportunities.

RR: Who is your investing idol and why?

BW: From an individual investor standpoint, I have always admired Warren Buffett. From a CEO point of view, it would be Steve Jobs. He has not only made great investment decisions for Apple, but his vision and philosophies have impacted many industries and our culture as a whole.

RR: Are commodities in a bubble of their own these days?

BW: According to our Chief Market Analyst, Jim Hyerczyk, there is no bubble in commodities. His opinion is based on the recent trading action in the gold and crude oil markets. Both of these markets corrected substantially after the dollar started to rise in early December 2009. This relieved the overbought condition that had been developing. Conditions exist now which could trigger stronger demand based on the developing political turmoil without causing a bubble.

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