Archive for August, 2010

A Message to My Family,Friends and Associates

Thursday, August 26th, 2010

Dear Family, Friends and former Associates,

When attorneys and other busy professionals expressed a willingness to barter their work for my ideas on  ETFs, I began to realize my work for myself also held value for others.

– An ETF ( Exchange Traded Fund ) is a basket of stocks and or bonds which trades as one stock –

When people convert a 401K to an IRA…., six or eight canned investment choices suddenly become thousands of investment possibilities. Most people just don’t have the time, background or inclination to involve themselves in the labor intensive process of portfolio selection and management. Like me, they probably want to avoid their Bank’s Investment Advisor Desk and lack confidence in broker and analyst recommendations.

Fortunately, my last employment contract as President and then Chairman of Saati Americas provided for six years of declining hours of weekly involvement. I used that extra time to see whether,as a private investor, I could actually earn a living by investing my own money, doing my own research and making my own decisions.

The existing wisdom at the time was to buy great stocks and hold for the long term.

I soon realized that ” long term ” requires a lot more patience than I possess and did not create the feeling that I was earning a living. Cashing in at least twice each year was much more suited to my temperament.

Although I love the valuation process, I also discovered that individual equity investments and a bottom up investing approach were not for me. Too much specific risk, too many unknown unknowns and too much insider information waiting to be used against me. The process was warping my personality and too often had me muttering……what am I missing ?

I found mutual funds to be too expensive, too inflexible and too susceptible to industry abuse.

Finally, it was very gratifying to see the almost sacred ” buy and hold ” strategy be totally discredited during the 2008 draw down as the S&P 500 index returned all the way to its 10 year starting point.

By process of elimination, what was left for me as an individual was an investment philosophy that was top down ( not bottom up )…., based on timing ( not buy and hold ) and, finally,…. based the analysis of transparent macro economic trends.

If I could intelligently select ETFs ( instant diversification ) for tradable market trends ( 3 months to 1 year ) I would have an excellent chance to make above average returns with very little exposure to financial industry mischief.

For me the present market theme is Faltering Recovery + Congressional Uncertainty = Go to Cash.

And, that’s where I’ve been since May 17, 2010. And, where I expect to be at least until after the 2010 elections in November.

And then came my birthday, August 18 and with it a gift from my nephew Rick Waters who is a leading Web Site / Search Engine developer in South Florida with a passion for collecting / trading / developing domain names. His gift to me ….my own personal domain name… And that triggered the thought that via this page, with just one effort I could tell the people I know about my investment journey and present an idea that could be win-win for them and me.

For most investors ” Go to Cash ” means preserving cash by parking it in a bank or brokerage money market account. And, in this low interest rate market…. that means earning almost nothing.

For me, ” Go to Cash ” means purchasing fixed income ETFs which provide a combination of yield, price appreciation and safety far superior to that offered by money market funds. I am aiming at a total return for my 4 name ETF portfolio of 7.5% ( 3 x 10 year treasury note which is presently +/- 2.5% ). And that is with very little interest rate risk, credit risk and inflation risk.

If you wish, you can do the same. Here are the 4 symbols: LQD (15%), VCIT (15%), BSV (35%) and VCSH (35%). These can be bought through your broker as if they were stocks. Just divide your investable money market cash into 4 parts (as shown in the percentages above) and buy as many shares as you can with each part….. Then send me your e-mail address.

When the current market theme ” Go to Cash ” ends I’ll advise you via e-mail to SELL through your broker. I will also alert you to the new market theme and ( if you wish ) supply you with a portfolio of up to 12 new ETF symbols which should be bought as a portfolio and held until you get a SELL signal from me.

Always feel free to phone me or e-mail me to discuss any part of this. Underpinning this whole idea is for me to reconnect with my past and to use my post SAATI experience to help create a winning situation for you. Use your broker…I don’t want any of your investment funds and I don’t open any accounts. I will be at your side …investing a substantial percentage of my liquid net worth in the same symbols.

Then, if you are satisfied with how this is working , at some point I’d like to hear it.

Thanks for your attention and know that I am very,very happy with what I am doing with my time and can’t wait to see each morning arrive.

Richard M Gore
Cell: 914-980-0437
Fax: 914-422-2543