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KLEINSCHMIDT: EXCLUSIVE STRATEGY TRANSCRIPT

February 5, 2016

CONSUELO MACK: This week on WEALTHTRACK, swimming against the tide with deep value investor Robert Kleinschmidt. The Tocqueville Fund’s long time portfolio manager finds his best investments in rough seas others flee. His contrarian ideas are next, exclusively on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.
U.S. bears are coming out of hibernation. Despite the fact that the U.S. economy is still chugging along, “slow but solid” as exclusive WEALTHTRACK guest Ed Hyman described it a few weeks ago, the markets are showing increasing signs of stress.

According to this week’s guest the signals have been there for months. Contrarian value investor Robert Kleinschmidt has been tracking what he considered to be an unsustainable divergence between the global decline in commodity prices, which signal economic slowdown and world stock market behavior.

Kleinschmidt notes that in the U.S., the majority of stocks in the S&P 500 are already in a bear market, having declined more than 20% from their recent highs. Were it not for large market cap stocks like McDonalds, AT&T and Google parent, Alphabet, the damage in the index itself would be far greater. It already is in many overseas markets. According to a recent count by Bank of America Merrill Lynch at least 33 out of 45 major country stock indexes are in bear territory.

These conditions mean more opportunity for this week’s exclusive guest. Robert Kleinschmidt is the President and Chief Investment Officer of Tocqueville Asset Management, a value oriented wealth management firm devoted to capital preservation for its global high net worth clients and institutions. A small portion of its $11 billion in assets are in its Tocqueville mutual fund which Kleinschmidt has been managing since January of 1992. The fund has delivered average annualized returns of nearly 10% since then, beating the S&P 500 in the process. However it has lagged the market in recent years. I began the interview by asking Kleinschmidt why commodity prices, above all other indicators are key to understanding the global economy and markets.

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ROTHMAN: PERSPECTIVE ON CHINA TRANSCRIPT

December 11, 2015

Consuelo Mack: This week on WEALTHTRACK, is the Chinese dragon losing its fire? Long time China hand Andy Rothman, Investment Strategist at Asian mutual fund pioneer Matthews Asia takes China’s political, economic and investment temperature next on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.
When was the last time you saw a positive headline about China? They are few and far between these days. The once unquestioned bullish case for China, that the Chinese century was at hand and that the Chinese juggernaut would dominate the world economy is now being challenged. “China’s Reckoning” as a recent Wall Street Journal headline put it came to a head in the summer when China unexpectedly devalued its currency the renminbi…
It’s benchmark Shanghai Composite Index experienced a sharp correction in a matter of days, after soaring to new peaks in June.
And the correction occurred despite a two month government led stock purchase program, totaling $200 billion dollars to prop up the market. That was followed by the detention of top officials from several investment firms for possible insider trading, market manipulation and spreading market rumors.

For a while the Chinese government seemed out of control in its reactions and actions.

Perhaps one of the most dramatic examples of Chinese policy gone awry is its one child policy which it recently eased after 35 years. It’s been a disaster on two counts. One, because it cut the birth rate so dramatically that the younger generation is not replacing the older. China’s working age population, ages 15-64 years is drastically shrinking. According to the United Nations, the 65 plus population will jump 85% to 243 million in 2030.

Another social cost, yet to be calculated is the millions of males with little hope of finding a mate and starting a family. In 2008 the one child policy had resulted in the birth of 120 boys for every 100 girls, that number decreased to 116 boys to 100 girls by 2014, but it is still far below the World Health Organization’s natural rate of 105 to 100.

Is China’s much heralded economic miracle over? How bright or dark it’s future?
This week’s guest is an experienced China hand. He is Andy Rothman, Investment Strategist at Matthews Asia, a U.S. pioneer in Asia focused investing. Rothman oversees the firm’s research on China’s economic and political developments as well as providing in-depth analysis on Asia.

Prior to joining Matthews in 2014, Rothman had spent more than 20 years in China, most recently working in the private sector as a macroeconomic strategist and before that in the U.S. foreign service, including a posting as head of the macroeconomics and domestic policy office of the U.S. embassy in Beijing.

Given the government’s intervention in Chinese markets and their recent turmoil, I asked Rothman if investors should just stay away. Continue Reading »

ZWEIG: DEMYSTIFYING WALL STREET TRANSCRIPT

November 20, 2015

CONSUELO MACK: This week on WEALTHTRACK, award winning financial journalist Jason Zweig takes on Wall Street jargon with his latest book, The Devil’s Financial Dictionary. What is the true meaning of Wall Street lingo? How devilish is its intent? Find out next, on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.
At various times in our history the financial industry, Wall Street in particular, has been demonized as a monstrous machine of avarice and greed. This caricature typically occurs during and after market busts. As we have discovered in recent manias in internet stocks, housing prices and emerging markets, few complain when prices are going up. It is only in the pain of the fall that the old suspicions, distrust and political and public uproar re-emerge.

Following the market crash of 1929 social commentator and humorist Will Rogers wrote in a letter to the editor of The New York Times: “Sure must be a great consolation to the poor people who lost their stock in the last crash to know that it has fallen in the hands of Mr. Rockefeller, who will take care of it and see that it has a good home and never be allowed to wander around unprotected again.”

Rogers went on to say: “There is one rule that works in every calamity. Be it pestilence. War or famine, the rich get richer and the poor get poorer.”

Great nineteenth century humorist, satirist and author, Mark Twain wrote of investing:

“October: this is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February.”

In the aftermath of the last financial crisis, there are many Americans who agree with both gentlemen’s sentiments, which is one of the reasons this week’s guest Jason Zweig wrote his latest book “The Devil’s Financial Dictionary.” The book is modeled after the original “Devil’s Dictionary” which was published in 1906 and authored by Ambrose Bierce, a then wildly popular satirist and contemporary of mark twain whom few of us have heard of today.

Zweig, a highly respected financial journalist doesn’t usually do satire. He writes “The Intelligent Investor” column for The Wall Street Journal. He is the author of several serious books including Your Money and Your Brain and is the Editor of the Revised Edition of Benjamin Graham’s The Intelligent Investor.

Why did he decide to write a financial devils dictionary, populated with definitions for words like “Synergy, n. Often, the only thing one company gets when it buys another”, or “Rumor, n. The Wall Street equivalent of a fact” and then pepper the book with quotes from fictitious but plausibly sounding Wall Street characters? That was the first of many questions I asked him.

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BHANSALI & HARTCH: IDENTIFYING INVESTMENT VALUE TRANSCRIPT

November 13, 2015

CONSUELO MACK: This week on WEALTHTRACK, two top ranked mutual fund managers carve their own trails to find value around the world in off the track places. Ariel Investments’ Rupal Bhansali and Brown Brothers Harriman’s Tim Hartch lead the way next on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.
Warren Buffett is celebrating his 50th anniversary at the helm of Berkshire Hathaway this year. As a recent cover story in Barron’s pointed out he is still going strong at 85 and so is the company.

As he told shareholders at his most recent annual meeting: “First and definitely foremost, I believe that the chance of permanent capital loss for patient Berkshire shareholders is as low as can be found among single-company investments. That’s because per-share intrinsic business value is almost certain to advance over time.”

Well tell that to Wall Street. Berkshire Class A shares have been underperforming the S&P 500 recently as they have in occasional periods over the last 50 years. As Barron’s pointed out Berkshire can’t possibly replicate its’ 20 percent plus annualized performance over the last 50 years but it’s doing just fine. This week’s guests are both admirers of Warren Buffett. They both own Berkshire Hathaway in their portfolios. They both invest in quality companies selling below their intrinsic value. And in doing so they each buy businesses that are out of favor.

Rupal Bhansali is the Chief Investment Officer of International and Global equities for Ariel Investments. She is also Portfolio Manager for two mutual funds she launched at Ariel at the end of 2011. The five-star rated Ariel International Fund, which is in the top percentile of its Morningstar Foreign Large Value Category, with 12% annualized returns over the last 3 years and the four-star rated Ariel Global Fund whose double digit 3 year returns place it near the top decile of its World Stock Fund category.

Timothy Hartch is the Co-Manager of Brown Brothers Harriman’s Large Cap Core Select equity portfolios including the four-star rated BBH Core Select Mutual Fund which he has managed since 2005. Core Select is in the top 3% of its Large Blend Category over the last 10 years with 10% annualized returns. Although it’s impressive 3 and 5 year returns put it in the middle of its category peers. Hartch was nominated for Morningstar’s Domestic Stock Fund Manager of the year in 2012. He launched a BBH Global Core Select fund in 2013 which is still too new to be ranked by Morningstar. I began the interview by asking what being a value investor means to each of them. Continue Reading »

MCMAHON: BUILDING INCOME TRANSCRIPT

November 6, 2015

CONSUELO MACK: This week on WEALTHTRACK, star Portfolio Manager, Brian McMahon of the Thornburg Investment Income builder fund is searching for growing income streams in many out of the way places. Where is he finding income in a yield starved world? That’s next on Consuelo Mack WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack.

Finding investment income is not getting any easier. The Federal Reserve’s most recent decision to hold firm and keep short term interest rates at record lows means there is no relief in U.S. bond yields yet. The Fed’s decision has been pushed out to the upcoming December policy meeting which will be the seventh anniversary of what’s called its zero bound range.

The situation is not any better in most overseas markets. Less than 10% of Europe’s investment grade bonds yield more than 1.5%, compared to 95% which did so in January of 2012.

Meanwhile many professional and individual investors looking for income have turned their attention to dividend paying stocks for current income and future growth. It’s become a popular and in many cases increasingly expensive choice as more investors pile in. And the yield on the S&P 500 is hovering around a mere 2% .

Well this week’s guest has found another route to income. Looking overseas where dividend yields are generally higher and dividend paying cultures are stronger. Here’s a sampling of estimated yields for various country indices next year: Canada 3.4%, Emerging Market Latin America 3.7%, the U.K. 4/7%, Europe ex the U.K., 3.9%, China 3.7% and Australia 5.7%.

Our guest is Brian McMahon, CEO and Chief Investment Officer of Thornburg Investment Management where he manages the firm’s Global Equity Portfolios including the Thornburg Investment Income Builder Fund which he launched in late 2002. The fund, which is rated 4 star by Morningstar and is one of its World Allocation Fund favorites has delivered nearly 8% annualized returns over the last 10 years, beating its benchmark and the vast majority of its peers. McMahon has also run the five star Thornburg Global Opportunities fund since its 2006 inception. Thornburg is a WEALTHTRACK sponsor but McMahon is here because of his strong long-term track record. I asked him where he is finding income in this income challenged world? Continue Reading »

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