Management Secrets of the NFL

I wouldn't say that this WSJ article reveals anything that already bright professionals know about managing people or running an orgainziation that they wouldn't already know.  However some times stating the obvious is a good thing because people do tend to forget.

This article is just as applicable to a fortune 500 company as it is to an NFL team, or small business owner.  Continuity tends to be a big driver of success along with home grown talent.

Full piece here with bullet points below

• MEDDLE MODESTLY
• LIMIT OUTSIDE HIRES
• STOP FIRING PEOPLE
• DON'T HIRE NORMALLY
• FORGET YOUR BUSINESS TRAINING

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A Mutual Fund Master, Too Worried to Rest

Head of Vanguard and legendary mutual fund manager John Bogle, sat down with the NYT to discuss all issues related to the current investment scene, fiscal cliff, and why he still believes in his strategies.

Full article here

• “It’s urgent that people wake up,” he says. Why? This is the worst time for investors that he has ever seen — and after more than 60 years in the business, that’s saying a lot.
• “The economy has clouds hovering over it,” Mr. Bogle says. “And the financial system has been damaged. The risk of a black-swan event — of something unlikely but apocalyptic — is small, but it’s real.”
• “We’ve really got no choice. We’ve got to fix this system. All of us, as individuals, need to do it.” That’s the message of his latest and 11th book, “The Clash of the Cultures: Investment vs. Speculation” (Wiley & Sons, $29.95). It offers a scathing critique of the financial services industry and updated guidance for investors. “A culture of short-term speculation has run rampant,” he writes, “superseding the culture of long-term investment that was dominant earlier in the post-World War II era.”

How Not to Blow It With Financial Aid

For those soon to be college student parents out there this is a very important post specifcially for you.  Compliments of Rachel Ensign of the WSJ, Ms Engisn has put together this excellent piece regarding the ins and out of the financial aid process.  If you currently have a junior level high school child this is especially important as there are things that you can do yet this year to improve your financial standpoint.

Full article here, highlighted bullets below

• The Free Application for Federal Student Aid, which determines your eligibility for federal help and aid from many schools, is based on your family's tax return for the year before the child enrolls in college. In other words, if your child plans to start college in fall 2013, schools will look at your return for 2012—the base income year.
• take any big windfalls, such as capital gains or the sale of a property,before the Jan. 1 when your child is a high-school junior, says Mark Kantrowitz, publisher of financial-aid website finaid.org. If you own a business, you may want to defer compensation or take a lower annual salary.
• A child's income and assets count heavily against their potential aid. Every dollar a child has in assets—that includes bank accounts or trust funds—cuts their possible award by 20 cents. Every dollar a child makes in income above $6,130 (the limit for 2013-14 aid) cuts their possible award by 50 cents.
• Money held in a 529 belonging to a student or custodial parent reduces the student's eligibility for financial aid only up to 5.64%—meaning an account with $10,000 could knock off a maximum of $564 in aid.
• When figuring out where your child will apply, don't just guess what schools might offer in aid. Colleges make it easy to figure out how much they're likely to give, with net-price calculators on their websites.
• Colleges can figure out when top-flight students are using them as safety schools; these kids' grades and SAT scores will be significantly better than those of the average student who enrolls. With less scholarship aid available at most places, some midtier schools are less willing to offer high-performing students merit money if they think it's unlikely they'll enroll, says Alex Bickford, senior manager of college finance at College Coach and a former financial-aid officer at Southern New Hampshire University.
• In the heat of the application process, some affluent families don't apply for aid because they assume they're not eligible. Nearly 30% of high-income families didn't fill out the FAFSA last academic year, according to a recent Sallie Mae survey.  That's usually a big mistake since affluent families may qualify for at least some aid.
• Most schools have their own format for these offers, but one constant is the expected family contribution—a gauge of how much your family can expect to pay each year out of pocket. The catch, which often isn't immediately obvious, is that the expected contribution often isn't all you're paying.
• If you do plan to take out loans, be wary of ones from private lenders that boast good-looking interest rates.
• In many cases, colleges will increase your aid package if you appeal it. But you'll have to know what information to put forward to convince them.
• Once your child's freshman aid package is set, remember that you'll have to go through the process again with a new FAFSA each subsequent year, and that the results may well be different, even if your financial picture doesn't change in your new base income year.
• One more thing to bear in mind: Even if your child didn't receive any aid in the first year of college, keep applying in subsequent years. If you have a change in your family situation—say, another child goes off to college or your family income goes down—you could become eligible for aid.

Week 48 Performance.....It's all about the Fiscal Cliff

Although all for major stock market indices were up this week, their actual performance varied quite a bit between them.  The lowest returner of the week, the DJIA was up 0.5% while the Russel 2000 finished the week with the largest gain posting a 1.8% return.  The DWCM Fund finished somewhere in the middle up 0.9%.

But what really drove the markets each and every day this week were the politicians from Washington.  It seems as though any time any one of them started to talk the markets would start to move up or down.  This extreme shortsightedness is rather concerning as we now just flip the calendar to December and are left with a whole month of this drama left to play out. 

The stakes will continue to ramp higher as every day passes without some type of conclusion brings more uncertainty to the markets.  The last scheduled working day for both the House and the Senate is December 14th, which is two weeks away.  Expect continued grandstanding by each party and if a deal does come together don't look for it until the final hours, in which case plenty of back office deals are likely to be made which won't likely benefit most Americans.

So what are investors supposed to do for the next month?  Some have suggested taking an extended Holiday break but we don't see that as being very fruitful.  We believe this back and forth game of chicken could result in some excellent buying opportunities....if you are patient.

We have always stressed the importance of knowing and having both a short-term and long-term investment strategy.  In conjunction with having your own investment strategy, we have always advised people to have a watchlist handy at all times.

You have to look beyond the noise of the current fiscal situation and debate.  Is this so called cliff going to affect the earnings or cash flows of specifics companies?  In some cases yes and some cases no.  Right now it is about deciphering the winners and the losers of this drama and putting together a game plan to start picking companies that fit your strategy either in the short or long-term.

With that said, we at DWCM have always posted our own watchlist on our site.  But behind the scenes that last few week we have been working to improve our processes and procedures of how we develop our own watchlist and make it available to readers and clients.  Our newly developed watchlist will include the following;

1. Our own proprietary DWCM rating of company.  At DWCM we perform all of our stock research ourselves and select assets for the DWCM Fund and client portfolios on our own.
2. Support/Resistance levels, these technical indicators help aid in the process of determining entry and exit points for stock positions.
3. Brief notes on what we may see going on within the stock or company.
4. Ownership, we have a fiduciary responsibility to disclose what position we own in the DWCM fund along with what positions we may own in client managed accounts and our own personal accounts

In some cases each week the list will not contain 100 positions which will likely be the norm rather than the exception.  However, the list will never contain more than 100 different equity positions as this is our tipping point for being able to balance all required research that we believe is necessary to follow a company.

We expect to have this new watchlist posted to the site here by mid next week.

The Week Ahead

As we will likely state each week until the end of the year, the fiscal cliff will be the absolute main driver of our equity markets.  This week however we will see the release of some key economic data and probably none more followed and watched than the monthly jobs reports due out this Friday.  There is also a lot of manufacturing data to be released which could have some impact upon the direction of the markets.  We will keep our eye out on Tuesday for the vehicle sales report.  We see this as a big indicator as to the health of the consumer.

• Mon - PMI Manufacturing Index, ISM Mfg Index, Construction Spending
• Tue - Motor Vehicle Sales
• Wed - ADP Employment Report, Productivity and Costs, Factory Orders, ISM Non-Mfg Index
• Thu - Challenger Job-Cut Report, Jobless Claims
• Fri - Employment Situation, Consumer Sentiment, Consumer Credit

Have a Great Week!

DreamWorks Capital Management

If you are currently trying to develop your own investment plan or are seeking the help of a professional investment advisor we urge you to give us the opportunity to show you what DWCM can do for you.  No matter what stage in life you are currently at, DWCM can help you plan for your ever changing needs.

DWCM can you help you with any of the steps in your wealth management journey including;

• Addressing emergency fund needs
• Developing a retirement plan
• Sending a child to college
• Looking at various investment options
• Determining how to involve philanthropic passions as apart of your planning process

With our "SMART Principles", we can help you develop your unique goals and create a focused customized plan to achieve your financial and lifestyle goals.