EDJ Field Foundations- My Experience thusfar
272 RepliesJump to last post
Why not just go to 100% cash two years ago ? Everyone saw a 40% decline coming !
Always keep 10-30% in cash depending on valuations. We use parameters that we ALWAYS follow. Discipline!
ALWAYS. Even if you don’t have all of their money. Clients think in terms of accounts. If their accounts with you are not down as much as they are everywhere else… well, you get the picture. Once again, it’s not a prediction. It’s planning!
That’s what people like to call themselves right? Financial PLANNERS? Shoot Ron, don’t you get paid on cash at the bank? Guys at Jones have it a little tough, but surely you can see the sense in leaving something in cash ALWAYS to take advantage of opportunities.
And before you say it. You KEEP your threshold. If you have to sell something to keep that threshold, then you sell something. This is how portfolios are grown.
Personally, I never went 100% cash. I wish I had that kind of foresight. But when you’ve had a bull market for five years and valuations are ridiculous again? Go slightly heavier in cash. You won’t miss so much of the upside and you’ll protect yourself on the downside.
Add money where you see opportunities (Banks, anyone?).
Morean, I understand your argument. You are correct, his original money has not recovered completely. We added fresh cash to a depressed market, which helped amplify the DOLLARS in his account (the gains, not the principle). But that's the same as saying "hey we were 80% cash, so his portfolios was only down 10%", when in reality, his equities were down 35% and his cash was neutral (don't call me on the numbers, I'm just throwing them out there). I'm saying that I MADE THE CALL to add to his positions at the bottom (not really the bottom, but...), so he is better off than he would have been just leaving the money in cash (when I made the call to add). I am NOT saying that the cash he added counts towards his recovery, just the GAINS on that fresh cash.So you are taking credit for money he already had? So, adding it in March (this wouldn’t be an attempt at market timing would it?), he pays 3.5% (or maybe you added it to advisory solutions?) to add HIS $50k.
I’m truly not trying to bust your balls, I think maybe I’m not understanding what you are saying. It sounds like you are saying that he used HIS money (on your advice of course) to recover his $30k loss and add $20k to it. Because in order for 70k (even with the 50k added to it) to turn back into 100k, you would need at least a 25% return. Have any of the American Funds done that?
B - I agree that the Gains on the fresh cash are because of you. But if the account is in cash (CD’s are still considered “cash” instruments at Jones. Or MMKT, that money is still earning a little interest. Or in our case, Government Bonds. Anyway, yes the equity portion of the portfolio MAY be down. But if you are being strategic, and selling when valuations get too high, then you don’t have to worry about it being down (or at least not down 35%.
[quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote]Shut up retard
[quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote] I study economic indicators and company valuations myself. Then I pull people in and out of the market to capitalize on these studies. I also watch CNBC and go by what they say.[quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote] Because if they wanted their advisors to be proactive about using strategies other than straight asset allocation and "long-term investing" that would take valuable doorknocking time off of their calendar.[quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote] It's the difference between FA and IR. Eddy J guys only recently changed their designation to Finacial Advisor. Many of them are still in the Investment Representative mind set. Their model was to sell sell sell and they practically perfected it for their target market segment. Now, with the changes in the industry, most clients are wanting more and more options. Big E.Jones is just changing slower then others.[quote=B24]Morean, I understand your argument. You are correct, his original money has not recovered completely. We added fresh cash to a depressed market, which helped amplify the DOLLARS in his account (the gains, not the principle). But that’s the same as saying “hey we were 80% cash, so his portfolios was only down 10%”, when in reality, his equities were down 35% and his cash was neutral (don’t call me on the numbers, I’m just throwing them out there). I’m saying that I MADE THE CALL to add to his positions at the bottom (not really the bottom, but…), so he is better off than he would have been just leaving the money in cash (when I made the call to add). I am NOT saying that the cash he added counts towards his recovery, just the GAINS on that fresh cash. [/quote] as close as you could get to it? Or did they just happen to be on your call llist for that day? Unless you are investing money just as fast as it is available you are timing the market in some degree otherwise why would you wait if you buy and holders know in twenty years the market will be higher?
Not trying to pick you out of the crowd B-24 but I also need to ask if the money you invested was from the check you told the client to attach to the brick he finally decided to throw thru your window after the piss poor year you warned him of four years ago?. An Eddy Jay vet told me that anology one time.DeBolt, first off, don’t make assumptions about how I manage clients because I work at Jones. No, I don’t use the stupid brick analogy. And in fact, I was telling several clients NOT to invest while we were scraping bottom. I had no idea whether we were headed up or heading for Armaggedon, but I didn’t want to be responsible for losing more money. But as we started to see some light, I felt it was time to start moving back in. Could have backfired on me…who knows. For my conservative clients, I am moving back into the market VERY cautiously, if at all. I am still not convinced about a full-blown recovery.
I have a strategy with all my clients, I don't play the call-list-for-a-bond game like people think everyone at Jones does. I am not saying my strategy is awlays right, or the best, or anything. I simply have a clear strategy, and that has helped my prevent my clients from "fleeing the scene", and protected assets better than many of my counterparts (both inside Jones and elsewhere). And I never said I was a "buy and holder" for 20 years. Most of my clients don't have that time horizon (most of my retired clients will be dead in 20 years), and I truly believe in re-balancing and strategically allocating (around a core) depending on the economic/market conditions at any given time. For instance, I have overweighted emerging market equities and small caps in most accounts right now. I overweighted high-yield and investment grade corporate bonds earlier this year, but have now scaled back on those. I got out of US Govies earlier this year in favor of TIPS. Not sure if this will pan out or not, but it's a safe bet at minimum. My core equity holdings are generally global in nature, with a recent emphasis being international. But I tend to use "global allocation" funds as my core, as I am not a stock or equity-segment picker, and feel that global funds like First Eagle, Blackrock, American CIB/CWGI, MFS, etc. are better equipped to make those decisions. But if you want to believe that I can't POSSIBLY make a good decision because I work at Jones, that's fine.Where in the market are you putting conservative clients right now? We're trying to stay away from equities for the most part and looking for pure "opportunities" for them right now, like senior bank loans, corporates, high yield munis...something that historically won't have long term fluctuation but is SEVERELY undervalued coming into this year. Luckily its worked so far the past 4-5 months and we'll ride the wave through January and then see where we are. I'm just not that sold on equities for conservative clients at this point yet. I'm mentally preparing myself for a 10-15% market correction over the next month or so.For my conservative clients, I am moving back into the market VERY cautiously, if at all. I am still not convinced about a full-blown recovery.
[quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote] This is frustrating to me as well. The short answer is no, most major firms do NOT encourage taking money off the table. Most have similar guidance to Jones. It's not that any of these firms don't know what's going on, it's more about liability. They don't want to be responsible for a "bad call", so it is easier to follow a MPT asset allocation strategy, and simply adjust allocations periodically. On top of that, guidance would be different for every investor - what you do for a 58 year-old geting ready to retire may be vastly different for a 38 year-old or a 68 year-old taking income. So they all revert to this one-size-fits-all approach. I mean seriously, does it REALLY matter if Consumer Discretionaries are 9% or 11% of your portfolio? Or if cash is 6% or 8%? Or if International is 22% or 25%? I watch the guidance of all the major firms and it often seems like they are just re-arranging the kitchen chairs (or re-arranging the deck chairs on the Titanic last year!). This is why I emphasize to many of my colleagues that you CANNOT take Jones' (or anyones') guidance at face value under all conditions. You MUST think for yourself. In addition, you have to be very critical of your clients risk-tolerance assumptions, and tone down the risk several notches from where they THINK they are. Most people are "aggressive" until they lose money. Like the Doctor's Hipocratic Oath (first, do no harm), our mantra should be "don't lose client's money".Where in the market are you putting conservative clients right now? We're trying to stay away from equities for the most part and looking for pure "opportunities" for them right now, like senior bank loans, corporates, high yield munis...something that historically won't have long term fluctuation but is SEVERELY undervalued coming into this year. Luckily its worked so far the past 4-5 months and we'll ride the wave through January and then see where we are. I'm just not that sold on equities for conservative clients at this point yet. I'm mentally preparing myself for a 10-15% market correction over the next month or so.[/quote] Ironically, I am sprinkling in Emerging Markets (no more than 5% for conservative investors), and the value-based equities I am using for conservative investors tend to be REAL conservative, like Mutal Discovery (DEEP value, heavy cash positions, real conservative). But I always seem to fall back to First Eagle Global as well. I am not using any closet-index funds right now (large cap domestic growth or value), as they tend to load up on the common names (GE, MSFT, P&G, etc.) which I think will ebb with any market fluctuations. I am counting more on the expert managers to pick the deep value opportunities with less downside right now.[quote=B24] For my conservative clients, I am moving back into the market VERY cautiously, if at all. I am still not convinced about a full-blown recovery.
[quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote]This is a great question!
If I was a financial advisor from 2007-2008, I would have been offering my clients DJIA PUT options. You could buy these at a 10% drop for a few cents. At a 20% drop they cost about a penny; especially in the short term.
Balance this with some covered calls and it doesn't cost the client a cent!
Plus, if they insist the market will decline, let them put their money where their mouth is...Sell covered calls close to market price and buy double their portfolio in DJIA put options. Where ever the market goes, you win!!!
oh, wait...I'm sorry, EDJ doesn't sell options....please ignore the previous advice and lose all your money...buy & hold is best!
[quote=Still@jones] [quote=Borker Boy]I’m curious as to why EDJ doesn’t spend more time looking at indicators instead of just telling everyone they should stay invested through the market’s ups and downs.
Do other big firms encourage taking money off the table during downturns?[/quote]This is a great question!If I was a financial advisor from 2007-2008, I would have been offering my clients DJIA PUT options. You could buy these at a 10% drop for a few cents. At a 20% drop they cost about a penny; especially in the short term. Balance this with some covered calls and it doesn’t cost the client a cent!Plus, if they insist the market will decline, let them put their money where their mouth is…Sell covered calls close to market price and buy double their portfolio in DJIA put options. Where ever the market goes, you win!!!oh, wait…I’m sorry, EDJ doesn’t sell options…please ignore the previous advice and lose all your money…buy & hold is best![/quote]
It’s amazing, you didn’t even make it to an office or to PDP from what I’ve read and you are bashing Jones. It’s just hilarious that when you had a job with Jones, you loved them. Now that you couldn’t stay employed by them, you crack jokes at them. Interesting. I suggest to try and hold a job first, then worry about what you’ll have people invest in. I’d venture to guess that you are the guy who spends all day preparing for a portfolio review, that wasn’t even confirmed.
Ronnie said it as well as I could have. Still@jones when you sell something you can say something.
c’mon…can’t a guy tell a joke…
The Edwards Jones philosophy is right, options are a zero-sum game and are not appropriate for individual investors. I wouldn’t have worked for them if I didn’t agree with this.
But, if I had a $1MM client in the market, I’m sure compliance would have no problem with me making a $25,000 option order (plus $2,500 commission) when its only purpose was to hedge AUC.
[quote=Still@jones]c’mon…can’t a guy tell a joke…
The Edwards Jones philosophy is right, options are a zero-sum game and are not appropriate for individual investors. I wouldn’t have worked for them if I didn’t agree with this.
But, if I had a $1MM client in the market, I’m sure compliance would have no problem with me making a $25,000 option order (plus $2,500 commission) when its only purpose was to hedge AUC.
[/quote]
But here’s your dilemma. You never will get that client now that your unemployed.
And this board is for investment professionals. You are no longer one. Be a gentlemen and resign.
[quote=svm21]
But here’s your dilemma. You never will get that client now that your unemployed.
And this board is for investment professionals. You are no longer one. Be a gentlemen and resign.
[/quote]
Professionals??? c’mon!
Do you even read some of the crap that’s posted here???