The three major indices (^DJI, ^GSPC, ^IXIC) are a mixed bag today. The markets aren’t moving much after a rather crazy week driven by China’s currency devaluations.
“Larry Kudlow asks Lee Munson to spend a half hour on Saturday morning to discuss various topics like China, oil prices, and if doubling the capital gains tax is good for his clients. The interview starts 57 minutes into the podcast. “As always, I enjoy spending my Saturday morning drinking coffee and chatting with Larry. It’s even better when thousands of listeners nationwide can listen in,” comments Munson. While Larry and Lee discuss what could happen with the presidential election, everyone agrees that it is too early to have an impact on portfolios. “It’s fun to guess about what could happen and people want to know what we think,” says Munson.”
Albuquerque financial expert and founder of Portfolio Wealth Advisor is asked his opinion on the recent downturn in media stocks on Fox Business Networks top rated show – Risk & Reward with Deirdre Bolton. “If we are going to get outside our disciplined index strategy for the few hundred million we manage for retired baby boomers, you have to give me a deal. Right now is not close to ugly that draws the value investors,” Munson said after the interview. Munson also commented that “this was my first time Deirdre’s show. She has a flow that you don’t find on other financial shows. She gave me the opportunity to quickly flesh out an idea rather than focus on a single sound bite. I definitely plan on coming back and bringing the awesome.” To learn more about how we help baby boomers manage their financial lifestyle, call us at 505.884.3445
Albuquerque financial expert and global market commentator, Lee Munson, tells Stuart Varney that he is not a fan of twitter. Here are the post interview comments from Lee Munson, Chief Investment Officer for Portfolio Wealth Advisors:
Today I was asked to go on Stuart Varney’s Fox Business network show, Varney and Company. He’s got a great British accent, knows how to ask questions, and understands how to create a good tempo. These are all things that makes doing interviews early in the morning a heck of a lot more fun.
The topic we got to discuss was Twitter. It’s at a 52 week low and Wall Street analysts are stomping all over themselves trying to make sense of the situation. Stuart asked me a basic question, he said, Lee, a lot of people think that everybody needs a little bit of Twitter in their portfolio because it could be the next big thing, or that it’s simply going to be important going forward. Well, I told him straight out you don’t need to own it; but he was right in one way. Everybody needs to own a little bit of everything to create a globally diversified portfolio. However, the context of the interview was if individual investors, or just people looking to create a retirement portfolio, need to purchase this particular stock outside what’s held in broad based Index funds. Still, that answer remains no.
You could probably stop reading right here. But if you want to know why I think this, because in the past I used to pick individual stocks. It was a game of luck; much like gambling. My issue with Twitter is that it’s not like Facebook or LinkedIn, where both parties have to agree they want to be connected to each other. Twitter’s a great news feed because anybody can follow anybody, but in that way, it’s not truly a social network like Facebook is to our personal life or LinkedIn is to our professional careers. In that sense, the thing that Wall Street analysts want to see the most right now, which is huge user growth, is never really going to happen. Let’s be honest, why do most people want to sit around reading everyone else’s pithy comments trying to be as witty as possible with no true connection? There’s no true community. In that sense, if you’re looking for a social media company, this isn’t it. On the other hand, why do we really want to try to pick the next Facebook when the possibility of owning the next My Space is far more likely?
Lee Munson was noted in CFAs book review of “Keyne’s Way to Wealth”. Click on the image about to read the full review.
Fed’s reluctance to raise rates hurting the economy?
by Fox Business Videos 8:06 mins
Trading Advantage Senior Market Strategist Scott Bauer, RDM Financial Group CEO Ron Weiner, Bluestone Financial Institutions Fund’s Jason O’Donnell and Portfolio Wealth Advisors co-founder Lee Munson discuss the 1Q contraction in the U.S. economy and offer their picks on where to invest in the market.
Albuquerque Financial Expert and Chief Investment Officer of Portfolio Wealth Advisors was asked his opinions about the strong US dollar and his outlook for stocks this year. “You can’t stop capitalism” was Munson’s response when asked how policies in Europe will affect their slowly recovering economy. “Just look at the huge relative performance of international stocks to the US and the ask why investors dumped these well performing securities last year.” Diversification is designed to make portfolios less risky and better performing, Munson says. Kudlow agreed with Munson that the strong dollar isn’t going to wreak the market. When asked his expert opinion about international markets Munson told Kudlow that a strong focus on value is key. “Over the long term, if you buy cheaper stocks with reasonable valuations versus overpriced securities, you have a better chance at success.”
We’ve heard the story more than once: A young, swaggering stockbroker finds he has a knack for the business, makes more money than God, gets caught up in the libertine excesses of Wall Street’s glory days, then finds himself questioning the morality of his chosen profession. He retreats from the life and emerges later as a reformed broker, shining a light on the dark corners of Wall Street and finding a new mission to put the interests of clients first, preach against the commission model, and embrace the job of independent, fee-only investment advisor.
But not all have ridden that pendulum like Lee Munson. In 2001, he was a 25-year-old Bear Stearns broker profiled in a New York Observer article as a prime example of Wall Street’s boom years gone bad. Full of outrageous quotes, overly confident braggadocio, and references to Prada, Gucci, BMWs and Nobu, it’s a portrait so over the top (“If I ripped my skin out, you know what would flow out?” he asked. “Bloody cash, baby. Money! Rip it out, it’s gold!”) even his wife claimed he should not be taken seriously.
Months later the Twin Towers fell, and Munson moved to New Mexico, where he evolved into the exact mirror opposite of the young player profiled in the Observer. He decried the commission model and joined NAPFA. He started his own RIA, Portfolio Wealth Advisors. And he published a book, Rigged Money: Beating Wall Street at Its Own Game, in 2011, about how the financial system is stacked against Main Street investors.
But there is a third act to this story. In short, Munson says now that there is a place for commissions, NAPFA is a “cult,” and despite what some financial-planning purists may think, it is okay to make a lot of money in this industry.
“I was a NAPFA cult member—if it wasn’t fee-only, it was evil,” Munson says. But he found his new firm wasn’t really able to offer the kind of holistic financial planning that he intended. “I realized that I wasn’t really hitting the mark with people. I wasn’t really able to do anything other than manage stock and bond portfolios. It just wasn’t satisfying to me, and it certainly wasn’t satisfying to a lot of our clients.”
Offering insurance, he felt, was a big way to close that gap. He partnered with Tracy Ann Miller, a chartered life underwriter who specializes in insurance consulting and financial planning, in January 2014.
So after denouncing the commission model for years, he did an about-face, ditching the fee-only mantra in order to make money on the insurance side. Insurance now accounts for about 10 percent of their business.
“The fee-only thing is a real disservice,” Munson says. He compares it to Alcoholics Anonymous; financial planners are basically saying they cannot be trusted to engage with any financial product that pays a commission. “I have a problem, and I can’t control myself. So I have to join this cult called NAPFA, and I have to tell everybody, ‘I’m not allowed to drive because I’ll get drunk and crash.’”
In fact, Munson was doing some insurance work for clients while he was fee-only, but not getting compensated for it.
“Basically I do all this work, but somebody else is getting a big fat check,” he says. When he asked other NAPFA members how they did it, they suggested he charge an hourly fee for the work, which Munson considers “double-dipping.”
“Economically, I don’t play these little shenanigans. Economically, this money is being generated; it’s going to somebody. Have it go to the person who’s actually doing the work.”
‘I’m Not Giving Up The Money’
Portfolio Wealth Advisors, with some $250 million in assets, still doesn’t have a broker/dealer affiliation, but since the change, Munson says clients are more satisfied, and it’s more of a pure business.
And more lucrative. “Everything last year just went like clockwork,” he says. “I personally never made more money. The firm’s never been more profitable.
“I think in our business, we always pretend that we’re not highly compensated. We always pretend, ‘Oh, I didn’t just buy that Ferrari. I’m not spending my weekends in Taos skiing.’
“It’s like, goddamn straight I did. There’s a quote from Mark Cuban that says, ‘If you feel like your customers own you, it’s because they do.’ This is very stressful. It dominates my life. It ruins my marriage. It takes time away from my kids. It’s highly paid. Do you hear surgeons going around saying, ‘Oh, I’m so sorry. I really just make $50 grand.’ You don’t.
“We got into this business because we wanted to make money. You stay in the business because you realize that people need help. If not, I’d be a stockbroker still. I got into the business as a stockbroker, so that should tell you something: I like to make money. But I changed to an RIA. Why? Because as I got older and started a family and started to think about who I was as a person, I thought, ‘You know, I’m not giving up the money. What I will do is give up being an ass.’”