Founder & Chief Executive Officer, CMG Capital Management Group
The CMG Opportunistic All Asset Strategy
The CMG Opportunistic All Asset Strategy is a relative strength-driven process that evaluates approximately 100 different ETFs, including large-caps, mid-caps, small-caps, value and growth, sectors, various fixed income, international and emerging markets. It can be 100% allocated to equities or fixed income and can defensively position in cash. The objective is a diversified portfolio that invests in the ETFs mathematically demonstrating strong market leadership.
PLEASE NOTE THIS IS NOT A RECOMMENDATION TO BUY OR SELL ANY SECURITY. We see this Strategy as a percentage weighting within the “liquid alternatives” portion of a total portfolio. Sizing depends on an individual investor’s risks, needs, goals and investment time horizon. Please consult your financial adviser to discuss sizing and suitability.
We run several strategies here at CMG. In one of our strategies, we invest in a low-fee large-cap S&P 500 Index ETF on “B” buy signals and we switch to BIL (a short-term Treasury Bill ETF) on “N” sell signals. We also run a long/short strategy based on the same signal. Further, when the indicator is in a sell signal, it helps us identify periods where we should be more mindful of hedging our long-term focused equity holdings. At such times, out-of-the-money put options on an ETF, such as SPY, may be prudent.
Separately, we run several ETF tactical strategies (the CMG Opportunistic All Asset Strategy and the CMG Tactical Rotation Strategy). We are often asked if the CMG NDR Large Cap Momentum Index is used within these strategies. It is not. Our tactical equity strategies look at relative strength that compares stocks, bonds, sectors, cash, etc. and seek to position in the assets showing the strongest price leadership.
Such strategies tend to move away from areas of greater risk (like equities) to less risky areas (like bonds and cash) and do so based on the rules built within each strategy. On occasion, the CMG NDR Large Cap Momentum indicator may be in a sell signal, yet our tactical equity strategy may be overweight exposure to equity-oriented funds or ETFs.
As markets don’t typically tsunami overnight (though that can happen), historically, they tend to peak and change trend over months, not days. Most corrections are in the 5% to 10% range while the -20%, -30%, -50%, -60% corrections tend to occur during periods of recession.
We believe that portfolios should be broadly diversified to include a number of potential return drivers (let’s call each one separately a risk). Thus, in our view, portfolios are a collection of various different and diverse sets of risks (we hope each to make money over the next five or so years but do so in entirely different and low-correlating ways… otherwise known as “diversification”).
Volume Demand vs. Volume Supply
The process looks at a smoothed total volume of declining issues versus a smoothed total volume of advancing issues using a broad market equity index. The performance below is when Volume Demand is above or below Volume Supply. More buyers than sellers or more sellers than buyers. This is a relatively slow-moving indicator.
Similar to the 13/34-week EMA trend chart, we don’t use Volume Demand vs. Volume Supply in any of our investment processes. Personally, I like to note if there are more sellers than buyers or buyers than sellers, as it is ultimately supply and demand that moves prices in all things. Looking at this measure gives me another data point to get a feel for the level of potential risk. This is an indicator I have reviewed each week for many years.
Don’t Fight the Tape or the Fed
The indicators that comprise this reading are a combination of NDR’s Big Mo and the 10-year Treasury yield. It highlights just how important Fed activity is to market performance.
This data shows the historical risks and rewards that come with being in line with Fed activity and market trend. I use it to help me assess the level of market risk (high, low or neutral). You can see what the returns were like, historically, based on the reading of the indicator. To learn more about this indicator, please refer to a piece I wrote entitled, “Watch Out For Minus Two.”
The Zweig Bond Model
The Zweig Bond signal is one of my favorite processes to identify when to shorten high-quality bond maturities and when to lengthen maturities. ETFs can be used to position into short-term exposure (e.g., on Sell signals: favor “BIL”) or long-term bond market exposure (e.g., on Buy signals: favor ETFs such as “TLT,” “LQD” and “AGG”).
Please note that this is not a specific recommendation to buy or sell any security, as I have no information or understanding of your personal financial situation.
IMPORTANT DISCLOSURE INFORMATION
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by CMG Capital Management Group, Inc. (or any of its related entities-together “CMG”) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
Certain portions of the content may contain a discussion of, and/or provide access to, opinions and/or recommendations of CMG (and those of other investment and non-investment professionals) as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current recommendations or opinions. Derivatives and options strategies are not suitable for every investor, may involve a high degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Moreover, you should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from CMG or the professional advisors of your choosing. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. CMG is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, have not been independently verified, and do not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods. Mutual Funds involve risk including possible loss of principal. An investor should consider the Fund’s investment objective, risks, charges, and expenses carefully before investing. This and other information about the CMG Tactical All Asset Strategy FundTM, CMG Global Equity FundTM, CMG Tactical Bond FundTM, CMG Global Macro Strategy FundTM and the CMG Long/Short FundTM is contained in each Fund’s prospectus, which can be obtained by calling 1-866-CMG-9456 (1-866-264-9456). Please read the prospectus carefully before investing. The CMG Tactical All Asset Strategy FundTM, CMG Global Equity FundTM, CMG Tactical Bond FundTM, CMG Global Macro Strategy FundTM and CMG Long/Short FundTM are distributed by Northern Lights Distributors, LLC, Member FINRA.
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
Hypothetical Presentations: To the extent that any portion of the content reflects hypothetical results that were achieved by means of the retroactive application of a back-tested model, such results have inherent limitations, including: (1) the model results do not reflect the results of actual trading using client assets, but were achieved by means of the retroactive application of the referenced models, certain aspects of which may have been designed with the benefit of hindsight; (2) back-tested performance may not reflect the impact that any material market or economic factors might have had on the adviser’s use of the model if the model had been used during the period to actually manage client assets; and, (3) CMG’s clients may have experienced investment results during the corresponding time periods that were materially different from those portrayed in the model. Please Also Note: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance will be profitable, or equal to any corresponding historical index (e.g., S&P 500 Total Return or Dow Jones Wilshire U.S. 5000 Total Market IndexSM) is also disclosed. For example, the S&P 500 Total Return Index (the “S&P”) is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. S&P Dow Jones chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The historical performance results of the S&P (and those of or all indices) and the model results do not reflect the deduction of transaction and custodial charges, nor the deduction of an investment management fee, the incurrence of which would have the effect of decreasing indicated historical performance results. For example, the deduction combined annual advisory and transaction fees of 1.00% over a 10-year period would decrease a 10% gross return to an 8.9% net return. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet, his/her investment objective(s). A corresponding description of the other comparative indices, are available from CMG upon request. It should not be assumed that any CMG holdings will correspond directly to any such comparative index. The model and indices performance results do not reflect the impact of taxes. CMG portfolios may be more or less volatile than the reflective indices and/or models.
In the event that there has been a change in an individual’s investment objective or financial situation, he/she is encouraged to consult with his/her investment professionals.
Written Disclosure Statement. CMG is an SEC registered investment adviser principally located in King of Prussia, PA. Stephen B. Blumenthal is CMG’s founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy. A copy of CMG’s current written disclosure statement discussing advisory services and fees is available upon request or via CMG’s internet web site at http://www.cmgwealth.com/disclosures/advs.