Mullooly Asset Management

We recently had the pleasure to catch up with Jessica Baguchinsky of Paychex.  Jessica is a sales superstar, and if you are trying to grow your business, increase your sales or you’re looking to learn how to pull your business (or yourself) up, you ought to listen to this podcast. We titled Episode 181: “Never […]

We recently had the pleasure to catch up with Jessica Baguchinsky of Paychex.  Jessica is a sales superstar, and if you are trying to grow your business, increase your sales or you’re looking to learn how to pull your business (or yourself) up, you ought to listen to this podcast. We titled Episode 181: “Never Quit, Even if Homeless” because for a period of time Jessica was homeless due to Superstorm Sandy. Yet Jess continued to plow ahead, setting and surpassing sales records throughout her homeless period.

 

How this fits in with financial planning: some of the basic building blocks in financial planning involve knowing how (financially) to recover from a major event, like suddenly becoming homeless, or starting out from scratch with no experience, and starting without a safety net.  Jessica Baguchinsky is a great example who through hard work, determination and perseverance has succeeded.

A very inspiring story and well worth a listen!

 

Transcript:

Thomas Mullooly: Hello and welcome to the podcast. My guest today is Jessica Baguchinsky, better known by her friends as J. Bags. Say hello J. Bags.

J. Baguchinsky: Hello Mr. Mullooly.

Thomas Mullooly: I invited you onto the podcast as one of our pioneer guests, because I think you’ve got a pretty good story to tell. And hopefully, we can share it. The microphone is actually turned on this time.

J. Baguchinsky: Helpful.

Thomas Mullooly: For our listeners, this is actually our second time through this, because we went though the entire podcast the first time without even realizing that the microphone was turned off. That was my fault. So, let’s start. Fill us in on the J. Bags story. How did you get started, and just kind of take us from the beginning.

J. Baguchinsky: Sure, well, I guess college. You know I grew up in New Jersey, went to the University of Delaware for college, and I graduated with a degree in education.

Thomas Mullooly: Blue Hens.

J. Baguchinsky: Fighting Blue Hens.

Thomas Mullooly: There you go.

J. Baguchinsky: Mm-hmm (affirmative). So it was a great four years, definitely, kind of, I would say paved the way for the next chapter in my world. When I started college, studying abroad wasn’t really something that interested me. While I loved traveling, and had done some amazing trips with my family. It was not so much of a burning desire let’s say. But throughout some great experiences in college, I think it’s really kind of shaped the path that my world has taken.

Thomas Mullooly: One of the reasons why I invited Jess onto the podcast today is because, in my opinion, she is probably one of the best examples I’ve seen in the sales industry. She’s a superstar, rockstar. She does a lot of things right, and it’s interesting how … Do you think sales people are born or made?

J. Baguchinsky: I think a little bit of both. I think it’s definitely, I think my approach is I was sort of born into this. I was raised by a family of entrepreneurs and sales people. And I lived that world. Work hard, play hard, and manage your own schedule. And if you manage it well, you get to where you want to be.

Thomas Mullooly: But when you came out of school, you didn’t go right into sales.

J. Baguchinsky: Not quote/unquote sales. I went into teaching, which is right up there.

Thomas Mullooly: It’s sales, no matter what you call it. That’s great. How do you think that got you prepared for what you’re doing now?

J. Baguchinsky: I graduated from the University of Delaware with a degree in education and a minor in English. Like I said, the travel bug bit me in college. So I actually, when I graduated, moved home, worked hard for that summer, and then was fortunate enough to be able to take a two-month road trip with two of my absolute best friends still to th...

We recently had the pleasure to catch up with Christopher Gannatti, Associate Director of Research with WisdomTree.  Based in New York City, WisdomTree Asset Management is the seventh largest ETF provider based on AUM (Assets Under Management).  Christopher was gracious to spend time answering our questions about the market, about the economy, BrExit and other […]

We recently had the pleasure to catch up with Christopher Gannatti, Associate Director of Research with WisdomTree.  Based in New York City, WisdomTree Asset Management is the seventh largest ETF provider based on AUM (Assets Under Management).  Christopher was gracious to spend time answering our questions about the market, about the economy, BrExit and other topics of interest to investors.

As a frequent writer, please be sure to check out Christopher’s work, which can be found at the WisdomTree blog: www.wisdomtree.com/blog.

TRANSCRIPT:

Tom: Okay, welcome back to the podcast. Our guest today is Christopher Gannatti. Christopher’s the associate director of research at Wisdom Tree Asset Management. Christopher began at Wisdom Tree as a research analyst in 2010, he worked directly with Jeremy Schwartz, the director of research. Christopher is out there communicating Wisdom Tree’s thoughts on the markets, and analyzing existing strategies and developing new approaches. Prior to Wisdom Tree, Christopher was at Lord Abbett, where he worked as a regional consultant. I’d also mention that he received his MBA in quantitative finance, accounting, and economics from the NYU’s Stern School of Business, and is a graduate of Colgate University as well. Christopher, welcome to the podcast.

Christopher G.: Tom, thanks for having me today. It’s a real pleasure.

Tom: Well we’re glad you could join us and Christopher you’re also a CFA, so I’ll kick off with this one. With all your experience now on Wall Street, have you ever seen a market that’s so baffling to so many?

Christopher G.: Tom, I appreciate that because, you know, it’s that time of the year where those charter holders and not quite yet charter holders are getting those books out and studying. I certainly remember my own journey and process there. Looking at the markets, we’re in a strange reality where you can point to these distinct events where prior to the events happeningyou would say unequivocally if this happens the market absolutely will go down. We can go … Let’s talk about Brexit. Basically almost a year ago at this point, Brexit happened, within a couple weeks market goes up. We look back at the Donald Trump election. At the time it, even though the polls were close leading up to it, we look back in hindsight and view it as a shock what happened. Maybe the markets went down in the overnight, but then ultimately went up.

The Italian referendum in December, markets went up. It seems each event that happens these days, the markets react to it and then proceed to go ever higher. A lot of people find that perplexing because it’s not as though it’s only been a year or so that the markets have been going up. The markets, especially the U.S. market, has been going up for the better part of a decade, and until more recently the U.S. market has, more or less, been outperforming most other markets out there, leading a lot of people to say, “Why would I own anything but the S&P 500 Index given ultimately what has transpired?” It created, what we feel, to be a lot of interesting opportunities, but you’re absolutely right. At times, getting some of that political commentary in there, it feels downright perplexing.

Tom: Talking about perplexing and baffling, I forget if the old adage is, is it two steps and a stumble, or three steps and a stumble? The Federal Reserve’s been on the sidelines for such a long period of time and now they finally started raising rates. There are so many opinions out there about this is, you know, they’re moving too fast or they’re behind the curve. What, in your opinion, will Yellen and her team have on equity prices at the rate they’re moving now?

Christopher G.: It’s a phenomenal question because we all can r...

In episode 179 of the Mullooly Asset Management podcast, we ask if the new Trump Administration will let the Department of Labor Proposed Regulations Go Through?

The DOL Regulations — will they go through?

Proposed Department of Labor (DOL) regulations are slated to go into effect in April 2017.  Will this actually happen?

The DOL began working on these regulations (“fiduciary regulations”) back in 2010.

Six years later, the rule was set in motion with an enactment date of April 10, 2017 and full enactment by January 2018.  But there now seems to be some question whether the new incoming Trump administration will allow the DOL regulations to see the light of day.

The proposed regs are forcing many in the investment community to reexamine their current business practices.  the biggest issue is firms cannot “roll the dice” and hope the Trump administration will terminate it, scale it back or delay it.  That’s a risky bet.

Here are some time spots in the podcast episode 179.  Feel free to skip to different spots to pick up the conversation:

2:45 Thanks to @ritholtzwealth for their very pithy way of explaining the role of a fiduciary!

3:15 Explaining a difference between brokers and advisors

4:45 Potential challenges for 401k accounts and IRA accounts

5:40 Some proposed changes under DOL

Thank you for listening to our podcast!

If you enjoyed episode 179 of our podcast, please share it using the social media buttons you see nearby.

Also, please leave a review for the Mullooly Asset podcast over on iTunes. Your ratings and reviews help us and we appreciate it! They do matter in the rankings of the show, and we read every one of them.  Now, if you have any questions, just get in touch with us! You can call us at 732-223-9000, or email us at [email protected].

By the way, if you subscribe to the podcast on iTunes, you will get automatic updates, each time we add a new episode.

 

It’s important to remember that eliminating one type of risk almost always results in assuming another when it comes to investing. There are no returns without some degree of risk taking. You’d know that to be true if you were tried out litecoin to bitcoin margin trading: highly lucrative but also highly volatile. Floating rate […]

It’s important to remember that eliminating one type of risk almost always results in assuming another when it comes to investing. There are no returns without some degree of risk taking. Floating rate bond funds are a great example of risk elimination actually being a risk trade.

Floating rate bond funds significantly reduce one of the biggest worries of fixed income investors, interest rate risk. It’s pretty commonly known that when interest rates go up, bond prices go down. Bond rates and prices are negatively correlated. Floating rate bond funds differ from traditional bond funds because their interest rates aren’t fixed. They’re periodically adjusted based on a floating reference point, such as LIBOR or the Fed funds rate plus a built in spread. It’s typical to see these rates adjust to reflect changes every 30-90 days. Since their rates adjust to current yield conditions, their prices are not affected in the same way most bond funds are when rates rise.

A bond fund with little to no interest rate risk? Sounds too good to be true!

Let’s return to the concept of there being no returns without some degree of risk taking. What’s the catch with floating rate bond funds? In return for muted interest rate risk, these funds assume far more credit risk. Credit risk refers to the possibility that the loans making up the bond fund will not be repaid in a timely fashion (or at all).

Floating rate bond funds are notorious for serving as a source of financing for companies with poor credit. Think of smaller or midsize businesses whose credit is not good enough to issue their own bonds. This means that the loans held in floating rate funds are significantly more likely to default than those held in higher quality fixed income products. In fact, returns on floating rate funds are most highly correlated to high yield (junk) bonds.

If you’re relying on a bond allocation to lower your portfolio’s overall volatility, you may want to think twice about investing in floating rate bond funds. When credit spreads widen, these funds are at a higher default risk. This is likely to be poor timing for your bond investments to become riskier. According to Morningstar, in 2008 the average bank-loan fund lost 30% while the average intermediate term bond fund lost 4.7%. This all occurred while the S&P 500 index dropped by over 40%. If your reason for owning bonds is to diversify and have a lower overall portfolio volatility, floating rate bond funds failed pretty miserably at providing that in the last real crisis we saw.

Many investors have misused these funds in the last few years as a way to express their prediction on the direction of interest rates. Just look back to the 12 months preceding June 30, 2013 for an example: Assets in floating rate bond funds increased by more than 70% seeing inflows of $45 billion. Those numbers include the infamous taper tantrum. We’re still waiting on the great rising rate environment, and I’m not smart enough to predict when we’ll see it. If somebody knows exactly when and by how much rates will rise…by all means, take advantage and pile into floating rate bond funds for their decreased interest rate risk. Just make sure to know when rates will stop rising too so you can time you exit from them.

Investors would do well to remember that they’re always trading one type of risk for another when it comes to investing. In the case of floating rate bond funds, the trade is accepting higher credit risk for lower interest rate risk.

Sources:

https://pressroom.vanguard.com/content/nonindexed/9.2013_Floating_rate_bond_funds.pdf

http://www.wsj.

Individual investors and investment advisors alike can benefit from keeping a portfolio journal. Having a handwritten record of past thoughts can be invaluable to our decision-making process in the future. Making financial decisions isn’t easy, and neither is giving financial advice. That’s why we should all be keeping a portfolio journal no matter what our role is in the […]

Individual investors and investment advisors alike can benefit from keeping a portfolio journal. Having a handwritten record of past thoughts can be invaluable to our decision-making process in the future. Making financial decisions isn’t easy, and neither is giving financial advice. That’s why we should all be keeping a portfolio journal no matter what our role is in the portfolio management process. Here are some of the reasons I think we could all benefit from doing so.

To Know Yourself Better

A great way to begin a portfolio journal is with an investment policy statement. Whether you’ve worked with an advisor to create one or have come up with your own, it’s important to get this information recorded. Some of the subjects you’ll want to make note of are your investment goals and objectives. It’s important to define why you are investing, why you are choosing a particular strategy, and what your expectations are.

It’s also crucial to note your risk tolerance at the beginning of a portfolio journal because, due to recency bias, our risk tolerance often ends up answering the question, “What has the market done over the last 6 months?”, instead of, “How much volatility am I willing to endure in my portfolio?”.

Once this information is recorded, it will be there to remind you why, when, and how you began the portfolio. You need to get to the core of why you are investing and stay accountable to those reasons.

To Keep Track of Changes

It’s not a great idea to change your personal investment policy statement frequently, but over the course of a lifetime, things will change. A portfolio journal will be an excellent place to keep track of these big changes. People get married, divorced, buy houses, have kids, and more all the time. As we say, that’s life. Big life changes might mean changes to your goals and objectives. When something big changes, it’s important to reassess where you’re at and where you’d like to go. Is it the same as before or has it changed? If it’s changed, why and to what degree? Making note of any changes in your life that affect your investment goals and objectives is crucial because it will help you definitively remember if and when you implemented the corresponding changes to your portfolio. By knowing this you’ll be able to assess how those changes have affected the outcomes since then.

To Vent

One of the best reasons to keep a portfolio journal is to vent. Journaling your emotions can serve multiple purposes. It not only lets you clarify your thoughts, but also provides a therapeutic release. Additionally, it can help save you from hindsight bias. When you look back at your own handwriting on paper, it has a funny way of making you own up to whatever decisions you made.

The best time to break out your portfolio journal will be at the extremes. Make sure to write down your feelings when you absolutely love a part of your portfolio. Be twice as sure to write down your feelings when you absolutely hate a part of your portfolio. We are most vulnerable at the extremes and this is precisely why you should want a record of your feelings from these moments. Keeping track of these emotional patterns might shed some interesting perspective on your investment philosophy.