Technology at EJ
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Man, you gotta love the American English language. We’ve butchered so many different languages to make up our own. It’s a beautiful thing.
foot - No, you would have just told your clients that the new guy coming in doesn’t know squat. You would have told them that you have so many different options now than you did while you were with Jones. You would have convinced them that Jones is an evil place just out to make a buck. They would have moved with you. And the ones who didn’t, you really didn’t want anyway.
foot - No, you would have just told your clients that the new guy coming in doesn’t know squat. You would have told them that you have so many different options now than you did while you were with Jones. You would have convinced them that Jones is an evil place just out to make a buck. They would have moved with you. And the ones who didn’t, you really didn’t want anyway.
Spiffmeister- The beauty of the situation is that I don't respond to clients when told that they receive a call or an invitation, etc... I just listen and then smile. I don't need to convince anyone that Jones is evil because I don't think that at all. The truth is now after almost two years of independence from Jones, that he looks foolish continuing to contact clients that have no interest in him or Jones. Hopefully he'll see the light someday. Your continuous sarcasm (some would refer to it as rightous indignation) is a true signal that you can't be objective. You just automatically think if we say something you can't agree with, we must be the enemy. For the record...I thank Edward Jones for the training. I generated almost 2.6M and received 1M so they made 1.6M on my efforts (this was during the 8.5 years I was there). They got theirs and now I am taking what I learned and benefiting my clients and my family. Peace brother.... PS. Anyone but Putnam......Spacehead, Wow! You have a short fuse. Has that served you well in life? I have posted in the past but since I moved my book to an independent practice I dropped out for awhile and my ID was deleted from the system. Based on the number of times you post I can understand why you haven’t had time to realize that there are more than 8 fund families available for you to choose from. Congrats on the T1. I know Jones offices that were still on the dish two years ago so I don’t know how you define long ago but hey good for you! As far as the Morningstar thing, if you have access to the hypo system you have access to only about 10% of what the full Morningstar suite can do. I use it to measure the historical correlation of assets to one another. I realize you may not have had time to learn about such things so I can understand in how in your frustration you have resorted to name calling. As far as Hedge funds are concerned I am pleased to let you know I did not use any Smith Barney Hedge funds. I did however get some clients in with Jim Simons and company last year when they opened again to new investors. Since you likely don’t know who he is here is a link: http://www.bloomberg.com/news/marketsmag/mm_0108_story1.html So, grab yourself a big glass of the green Kool-aid you love so much and spend some time learning about life away from the Cult. Rent the movie Falling Down and get some heavy therapy and meds. Good Selling!
SPACE- so a diversifies port of ETFs would be “retarded”? Seems that all those folks who had an FA that “guessed wrong” on Putnam between 1999 and 2007 sure would be better off in indexes. Now they have to pay a new load to guess on the next active manager! What a system… and the ETFs have an exp ratio of .20 and almost no taxable surprises! Pretty retarded…
Spiff defines a long time as about 18 months. That’s when I left Jones and my office was still on the dish and we were early in the transistion process because my office was in the same town as the RL. So Jones HAS NOT been on T1 a LONG TIME! Spiff, you’ve gotta get your times straight. But other than that, most of your comments are spot on for a koolaid drinker.
Maybe cause of the video they run over it?
Or the DOS green screens are pulling down a lot of bandwidth . Sorry Spiff, couldn't be completely slam free.[quote=CIBforeveryone] Maybe cause of the video they run over it?
Or the DOS green screens are pulling down a lot of bandwidth . Sorry Spiff, couldn’t be completely slam free.[/quote]
I actually thought DOS was dead…it was nostalgic to see it in use again. But I must say that it is a lot more convenient this time around with out having to insert and load the 5.25" floppy disk to boot up MS-DOS!!!
wired - I don’t typically have a short fuse. I usually take more than I give around here. You are just one more in line of people who for some reason feel it necessary to talk poorly about your former employer. So, your post caught me at an odd moment in time.
The hypo system we use doesn't just run historical performance numbers. It does everything we need it to do. So we get the MPT stats that all of you people who are obviously much smarter than the average Jones guy probably use all the time. I'm sure all of you know how much alpha your chosen money managers are adding or, if you are using ETFs, how much alpha you are adding. Wait, I'm a Jones guy, why do I need to concern myself with meaningless things like that. N/N - It's easy to pick on Putnam and compare them to a well diversified portfolio of ETFs. But, to answer your question, in my opinion, yes moving to an all ETF strategy would be dumb. ETFs are fine investments if you want to take a passive approach to investing. If you truly believe that you can't beat the indexes over time, then you should absolutely be working with ETFs alone. The problem I have with them is that the portfolio can only be as good as A) The indexes that make up the portfolio and B) the FA who is managing the portfolio. Most FAs don't have the time, knowledge, or desire to make tactical decisions on the markets and make changes to the portfolios as needed. They can't possibly do the amount of research necessary to truly understand what is going on in all of those markets. So, what happens is that they build a portfolio that by design is destined to be average. After all, how do you beat the average if the investment you are using IS the average? Then you charge the client a fee every year to manage said average portfolio, thereby guaranteeing that that portfolio is going to underperform the average. There are some instances where ETFS might be appropriate. For instance, a client wants to invest in gold. He can by a Gold Index ETF or he can buy Krugerands. He might lose the Krugerands. He won't lose the ETF. I'm sure there are many more examples, but that's just one off the top of my head. On my desk I have a bunch of pencils held together with a rubber band. About 50 of them. When clients ask about ETFs I hand them that stack of pencils. I tell them that the pencils represent the S&P 500. We can invest two different ways. I can buy them the ETF that they asked about which would be like buying the entire stack of pencils. There are some good pencils in there, but there are also some really bad ones. Maybe even some defective ones. Or I can go through the pencils, cull out the bad ones, replace them with new ones that are better and then we can buy that stack of pencils. And, if in the future one of the ones we left in gets broken or we find out later that it was bad, I can replace that one too. It's up to you. Which way would you rather go? See, with indexes you don't just get the good ideas, you also get all of the bad ones too.So I guess with your pencil theory, all your clients beat the averages after fees and taxes?
Spiff,
Many firms use tactical re-allocation with their ETF porfolios. Sort of like the way Goldman runs their allocation funds. In this way, you have managers (i.e. the firm) deciding on tactical allocation, as opposed to a bottom up, research-driven approach by the fund managers. I don't think it's simple enough to just compare an ETF to it's index. You have to look at a balanced ETF portfolio and compare it to another type of allocation model (i.e. managed mutual funds). If you strip out some of the components of funds you use (I.e. I like CAIBX), the individual pieces are not necessarily exceptional. So with CAIBX, look at just the bond component, then just the international component, and finally, the large cap domestic value piece. If you looked at each of them versus their actual benchmark, they might be just OK (I've never actually done this, so I don't know the actual numbers). What American Funds does well is manage the mix in CAIBX very well, thus reducing volatility and maintaining good returns. It's like owning CWGIX, BNDFX, AIVSX and Cash individually, managed for the proper mix. I don't necessarily like using ETF's, as I feel very comfortable with active management, but it does not diminish the fact that good tactical ETF allocations can bring reduced risk, adequate returns, and alpha versus ANOTHER portfolio (obviously there is no alpha versus the asset-weighted benchmarks, but you aren't intending to beat the benchmarks). And most of the ETF programs will auto-rebalance based on pre-set criteria (i.e. models). And they can be more tax efficient for taxable accounts. This may not affect you and I as much, as I am guessing (like me) much of your accounts are in tax-deferred accounts.[quote=NOLA_Advisor] [quote=Indyone]
I hoped to pass that one off, but you blew me out of the water...sh*t!!!
[/quote]Sorry to out you like that...I should have let it ride for a bit!
Well the 'legend' of the F-bomb came from the Anglo-Dutch wars. When in bivouac, and to boost morale, the King ordered that a special tent was to be erected and reserved for soldiers to have 'conjugal' visits. In order to distinguish this tent from the rest of the encampment, a sign was posted reading, "Fornication Under Consent of the King"; or as the soldiers called it, the F.U.C.K. tent.[/quote] That too is urban legend!
Yes, flawed in may ways. I see many, many cracks in spiffy’s armor…I’m just one loud voice, but I think we should pull the offer of Independence off the table for Spiff. Not sure he would be what we want on our side…All in favor say I…
spears - thanks. That's one less decision in my life I have to make. Now that I don't have the option of going independant, I can focus on becoming a GP with EDJ. If they're serving kool aid I'd rather be the one making it than drinking it.
Like I said before, I don't think ETFs are bad investments. I have no doubts that if there is a strategy in place, like Goldman's tactical approach with their strategy funds, the returns are going to be decent. But, when I see ETFs in portfolios, they usually aren't using them as a strategy by themselves. The FA has just decided to build the portfolio using ETFs in addition to some other investments. So he throws in 4 or 5 of them and calls it a day. That'll be 1% a year, please. They might rebalance. They might not. I just don't see the efficient, tactical approach that B24 is talking about used with most people.[quote=Spaceman Spiff]
spears - thanks. That's one less decision in my life I have to make. Now that I don't have the option of going independant, I can focus on becoming a GP with EDJ. If they're serving kool aid I'd rather be the one making it than drinking it.
Like I said before, I don't think ETFs are bad investments. I have no doubts that if there is a strategy in place, like Goldman's tactical approach with their strategy funds, the returns are going to be decent. But, when I see ETFs in portfolios, they usually aren't using them as a strategy by themselves. The FA has just decided to build the portfolio using ETFs in addition to some other investments. So he throws in 4 or 5 of them and calls it a day. That'll be 1% a year, please. They might rebalance. They might not. I just don't see the efficient, tactical approach that B24 is talking about used with most people. [/quote] That's because we are seeing the clients that are unhappy or not getting service from their brokers, and probably have crummy portfolios (you're right - a few funds here, a few stocks there, and some ETF's). I have a friend at A.G.EDWACHOVBANK Securities, and he showed me what he is doing with ETF portfolios in their CAAP program. I have to say, it is pretty slick (at least the way HE is using them). I still don't know that I would use the strategy in a NQ account (because frankly, I like my actively managed portfolios), but in a qualified account, I would probably use this strategy for a client with tax issues, rather than individual stocks or actively managed funds.icecold is right on-and he didn’t even mention the uundisclosed MF trading costs. Look at CWGIX-- a big Jones INTL play. it’s 5 year return is a bit LESS that the ex-USA (truly intl, not global) index ETF. But that is really just an example. the bigger point is being able to TRULY manage/rebalance etc since you know EXACTLY how much is in each of the asset categories. So ANCFX beat “the market”? That’s what Am Funds says in their lit. what a joke-- it is similar to two ETFs: large cap value and Intl combined. The ETFs do just as well, but MUCH better after taxes. (your pencil deal is Jonesspeak–the key is CAN you pick the right pencil? Do you KNOW that AF is not the next Putnam? ) I was at Jones, I know the drill. I also know that in 2006 my mentor could not tell me what an ETF was. And 3 months ago when I left, my RL said “what is an RIA?” --------very well trained over 16 years!
Exactly what index are you comparing CWGIX too?
Total Return % +/- MSCI EAFE NDTR_D +/- MSCI World NDTR_D % Rank in Cat 1-Day 0.63 --- 0.16 22 1-Week 1.28 --- 0.20 32 1-Month 2.63 --- -0.92 69 3-Month 3.43 --- 0.79 35 Year-to-date -2.29 --- 1.54 20 1-Year 6.01 --- 7.91 14 3-Year Annualized 17.96 --- 5.43 10 5-Year Annualized 21.07 --- 5.83 6 10-Yr Annualized* 11.87 5.21 6.85 4MSCI ACWI ex-USA is 22.75. CWGIX is 21.1 (5 year), with it’s 5th largest holding being Microsoft. My point, again, was that while these comparisons are imperfect, great reurns are possible with tthe passive approach. Especially without loads and taxes and trading costs. Spiff was perfect in his Jonespeak, saying how much better folks are in active management. Almost no other firm agrees, but only jones gets around 50% of its net income from rev sharing kickbacks from active managers. These active managers visited my jones office to tell me how they “beat the market”. the fine print on their fancy brochures explained how loads were not included, and neither were taxes.
That is exactly what I mean by imperfect. I am saying that jones calls this the portfoilios “intl” piece, and I am saying that it is not exactly that. The index IS exactly that. I prefer the precision of exact. to each his/her own. The jones way is easier to sell and service, but is not for me. To me, the intl portion of a great portfolio should be exactly the intl portion. if I want Microsoft or bonds or cash, I know how to get it—and it ain’t by buying more “intl”!