July 2009
Ken Mahoney’s Q&A with Jim Schier, CFA Portfolio Manager, RydexSGI Mid Cap Value Fund
Ken: Why do you like Mid Cap Value versus other asset classes?
Jim: Value stocks are low expectation stocks that offer better downside risk protection. Mid-caps are generally representative of companies that are large enough to have some scale and competitive advantage yet small enough to have above average growth opportunities.
Ken: What are some opportunities that you are looking at?
Jim: While we do not comment on companies that we are currently researching or working a ticket for, recent additions have been select electric utilities that are priced at a discount to peers and have above average growth via investments in higher return Federal Energy Regulatory Commission (FERC) regulated interstate transmission projects that tie wind farms to an interstate grid. We've also
Ken: How do you pick stocks for the portfolio?
Jim: The ideal stock is priced at a discount to the market and lower than usual versus its peers or has a history of being inexpensively priced for transitory and correctable reasons. The company also would have sufficient competitive stature to have strategic attraction and staying power in their industry. The company would have the ability to earn higher return on capital in the future.
Ken: Is there an area that you are over weighing or under weighing? And why?
Jim: Historically, we have had difficulty finding companies that appear to offer the ability to earn higher return on capital in financial and consumer discretionary. Therefore, we are underweight in those sectors.
Investors should consider the investment objectives, risks, and charges and expenses of the mutual funds available under the RydexSGI Funds carefully before investing. You may obtain a prospectus that contains this and other information about the mutual funds by calling 800.820.0888. You should read the prospectus carefully before investing. Investing in mutual funds involves risk and there is no guarantee of investment results.
The opinions expressed are those of Jim Schier, not those of RydexSGI or its affiliates. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or strategy.
Investments in small and/or mid-sized company securities may present additional risks such as less predictable earnings, higher volatility and less liquidity than larger, more established companies.
Rydex Distributors, Inc. distributes the Rydex funds, which are managed by Rydex Investments, and Security Distributors, Inc. distributes the Security funds, which are managed by Security Global Investors. Rydex Investments, Security Global Investors, Rydex Distributors, Inc., and Security Distributors, Inc. are subsidiaries of Security Benefit Corporation (Security Benefit). Security Global Investors (Security Global Investors, LLC and Security Investors, LLC) and Rydex Investments (PADCO Advisors, Inc. and PADCO Advisors II, Inc.) make up the investment advisory arm of Security Benefit.
The funds are distributed by Rydex Distributors, Inc. (RDI). Security Global InvestorsSM is the investment advisory arm of Security Benefit Corporation (Security Benefit). Security Global Investors consists of Security Global Investors, LLC, Security Investors, LLC and Rydex Investments. Rydex Investments is the primary business name for PADCO Advisors, Inc. and PADCO Advisors II, Inc. SGI and RDI are both affiliates and are subsidiaries of Security Benefit.
This newsletter and its contents is neither a solicitation nor an offer to buy/sell any financial product(s). Information about financial product(s) provided herein may not be suitable for all investors. Moreover, the information contained herein has been obtained from sources believed to be reliable; its accuracy and completeness cannot be guaranteed.
Which baby boomer investor are you? By Ken Mahoneyhttp://www.thesmartinvestors.com/
There is dissention in the ranks of your own generation. Obviously, not everyone is the same. So, what one baby boomer has in mind may vary greatly from another. It does seem though that boomers fall into one of five categories: empowered, wealth-builders, leisure lizards, anxious idealists, and those who feel stretched and stressed.
Empowered: These boomers are ready to take on retirement. No matter how they plan to spend their time, they are ready to make their choices, cutting back where they need to stretch their dollars, and they have a positive outlook on everything working out one way or the other.
Wealth-builders: This group of boomers is still looking to grow their wealth. Investing-whether it be financial investments or real estate-in their future to create more of an income stream is their main focus.
Leisure lizards: Leisure is the name of their game. What they define as leisure may vary greatly-reading, playing golf, or volunteering-but these boomers are looking to slow the pace on money earning activities and ramp up on fulfilling activities.
Anxious idealists: Ahhhh….the ultimate optimists. This group is suffering anxiety over the possibility of a dismal financial future, but knows somehow, someway everything will work out for the good. Their nerves are shot, but their heart is open to what the future may bring-and they think it's a prize winner.Stretched and stressed: On the other side, you have the ultimate pessimists. Their money is stretched to the breaking point and their stress levels are high. They are living day-by-day and know that their money may expire long before they do.Which baby boomer are you? Depending on how you answer, you'll find hints, tips and tricks on how to make it through your retirement years scattered throughout the book. You may even find suggestions that you never thought of before. Be open-minded. Open your mind and your heart to new outlooks on life. You never know what you may come across.IMPORTANT CONSUMER INFORMATION:
(1) This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.
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(3) An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor's state securities law administrator.
SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUEThis information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Securities-related services may not be provided to individuals residing in any state not listed above. The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates--so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Management does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences
Money Maturity = Financial Nirvana
By Ken Mahoney
www.thesmartinvestors.com
Many of us (even some in the field of finance) grow up thinking of money as this mysterious entity that has only to do with numbers and formulas. Some of us are even convinced that if we have enough money, we are guaranteed happiness for the rest of our lives. Others have no concept of money.
The concept of “money maturity” is a relatively new one that is meant to describe how “mature” one acts psychologically and spiritually in relation to money. The phrase has been popularized by George Kinder, a financial planner and Buddhist teacher, in his book, The Seven Stages of Money Maturity: Understanding the Spirit and Value of Money in Your Life. According to his philosophy, someone who is “immature” monetarily may spend his entire paycheck as soon as he gets it or may pinch every penny, thinking that he will go bankrupt if he spends as much as one dollar on something that is not a bare essential. Many of these detrimental practices are often a result of one’s upbringing.
In contrast, someone who is “mature” has achieved balance on both sides of the coin. He knows when it is time to save, and when he can let loose and spend some of the money he has earned. And he can even give some of it away on his own good nature without fear. According to Kinder, there are seven psychological stages of “money maturity” through which one must progress before he can be fully enlightened in a financial sense.
The first two stages are “innocence”, which is knowing nothing about money; and “pain,” the heartbreaking realization that one must work in order to earn money, which yanks one out of the “innocence” stage. These are what Kinder deems the “immature stages,” as people in both stages exhibit a myriad of behaviors that are counterproductive to their financial well-being.
However, there is hope. From there, the first stage of maturity is “knowledge,” where one learns how to save properly and is introduced to the basic concepts of investing, such as stocks, bonds, and mutual funds. The theory here is that by investing money, one helps to set a concrete goal for his/her savings so that the “angst” they have over it is lessened somewhat.
Stage Four is that of “understanding.” This stage involves recognizing how one’s emotions play a major role when it comes to all things money-related. The principle behind this stage is that when one recognizes his/her emotional connection to money, they will not allow these emotions to overtake them when making decisions related to their financial well-being, as even the most savvy of us are prone to do.
From understanding is said to stem “vigor.” This is one develops the energy to apply newfound understanding of one’s emotions in reevaluating financial goals and taking the steps to reach them.
The sixth step, “vision,” involves the application of “vigor.” Here, one uses the knowledge gained in the previous steps to use their financial savvy to help others, perhaps by starting a business intended to provide a useful service to the community at large. The final step, “aloha”, is when one uses that same savvy to help others, but for altruistic purposes. Examples may include founding a non-profit organization.
While we are not attempting to plug Kinder’s book, we do believe that this concept we have described carries a great deal of truth and merit. Many people spend countless hours worrying about money when they have a great deal of it. Conversely, many spend frivolously past the point where their expenses outweigh their net income. By taking a few minutes to learn about “money maturity,” we believe that anybody can outgrow those behaviors that may be plaguing their financial well-being.