Investment

Jonathan Citrin
Founder and CEO, CitrinGroup

Covering stock to real estate, Jonathan Citrin's Investment blog offers an engaging look at various assets that could add to your portfolio.


A New Perspective: Dollars, Not Democracy


As I ponder the separate, but related, trajectories of America and China, I have noticed a profound and fundamental difference that puts into jeopardy the longstanding economic and geopolitical advantages of the United States. Specifically, our standing as the world superpower is at risk.

Since World War II, the U.S. has known no real competition from any other country. We have enjoyed the sole position of superpower — economically, and therefore politically and militarily — over a period that in no significant way put into question our place atop the world. Colleagues may point to the Cold War, but reality shows U.S. governance over the international community has been ...

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Keep it Simple: Buy Low, Sell High


Part 1: Sell High

“Most of the fundamental ideas of science are essentially simple, and may, as a rule, be expressed in a language comprehensible to everyone.” —Albert Einstein

It would be easy as an industry insider to wax poetic about financial topics using big words and acronyms to sound intelligent. It would yield tremendous credibility to wield verbiage such as contango, earnings multiple, candlestick, and backwardation. (Yes, candlestick is an investment term.)  It would be fun to write of personal predictions for markets and inflation — being the guru and preaching my prophecy. And, let's be clear, even the best of us is likely to exercise our financial vocabulary and show-off a bit ...

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The Intellectual Void


As Founder and Executive Chairman of CitrinGroup, I reach out relative to the recent and ballooning behavior of many in our world. As always, I am very appreciative of your continuous support of our firm, including the trust you instill in myself, CEO Tim Mrock, and the entire staff. Without your reverent backing, our formidable journey as an institution for the betterment of both portfolio performance and market behavior would be significantly more daunting. Plainly, the financial industry in under attack. In fact, it has been for many years and the battle continues in earnest as we now combat the exacerbation of matters due to the additive of technology (i.e. smartphones and social media.)

To be clear, technology itself is not our enemy. It has, and ...

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Time Heals All Wounds


What is fascinating when reflecting on the great recession has little to do with bank leverage or sub-prime mortgages. Nor should one be distracted by the controversy of government bailouts — though this topic promises to occupy economists for some time to come. Rather, it is precisely the human capacity for irrational behavior that is to be focused on. And, while there was severe panic that bloomed during the downturn in 2008 — when the Dow and all other major market indices collapsed — it is the activities of investors that are beginning today which should be highlighted and studied.

There are a rare few, if you look closely enough, that stomached loss in such a way that they will never psychologically recover. But this constitutes a mere ...

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The Real Cliff


As the end of the year approaches, far too many reflect with top 10 lists, headline highlight reels, and even pictorial flashbacks at what was the past 12 months. Interestingly, what may top many a review has yet to fully unfold.

The "fiscal cliff," I have been told, occurs when the clock strikes midnight on New Year’s Eve.  And, though no one can be certain of the ultimate outcome, one can be assured that the cliff and its lead-up are a stellar example of what is wrong with financial markets — and more importantly their participants — us. There is plenty of blame to go around. We can fault media, republicans, democrats, and more. But, those truly responsible are us — the market participants who let the crazy hype and ...

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"Dear Mr. President:" A Letter to Barack Obama


November 26th, 2012

Mr. Barack Obama
President, United States of America
c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Mr. Obama:

Re: "Fiscal Cliff"

The United States of America is at an impasse. For many years, this country has maneuvered quite a path relative to the booming gross domestic product (GDP). And along the journey, the country managed to banter and borrow itself into a full economic mess. Notwithstanding, the GDP of your country is at its highest nominal value ever, now a hair over $15 trillion. But your country is also over $16 trillion in debt, making the very large elephant in the room a government debt-to-GDP ratio of 103% (notably the ...

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In Finance and Politics, Greed Isn’t Always Good


Barack Obama and Mitt Romney will square off Wednesday night in the much anticipated first presidential debate of the 2012 election cycle. This confrontation has been hyped for weeks, months even. Media is big business, and the boon provided by a race for the highest office in the land comes around but once every four years. Certainly it must be taken advantage of, leveraged properly.

As such, the precursors to the evening’s event have been countless journalists and pundits continually highlighting which tactics each side must execute if they are to consider their respective performance a victory. There has been no shortage of content — everyone is on the bandwagon, from Charlie Rose to The View, Bill Maher to Bill O’Reilly, and ...

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Portfolios and Politics


This morning I woke early to make my usual French-press coffee, turn on Beethoven, open every window possible to let in the crisp Michigan air, and watch the sunrise while catching up on the night’s events in international markets. For some reason, today I was compelled to think about my investment advisory firm, CitrinGroup, and more specifically our portfolios, global markets, and the closely contended presidential election taking place domestically.

As I sipped slowly and took every breath deeply, I thought long about what success – for which I have had much exposure to in my fortuitous life – means to my portfolios and our society. It certainly holds different value to everyone. On contemplation, I realize today's markets and ...

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Financial Theory: Undoing the Mistakes


I have heard it said, “We spend our entire childhood being taught the way to do things, and the rest of our lives trying to undo all that we learned.” This is particularly accurate in portfolios — investors failing to grasp the root of today’s volatility, incapable of determining a better strategy than the rote, myopic style they learned in years past. Many behaviors which prevail during portfolio construction are unfortunately grounded in faulty lessons from our "youth" — we incessantly create performance pain through approaches that are improperly deemed reasonable. However, with honest effort and a little guidance it is possible to purposefully unwind the many mistakes of our earlier portfolio management — replacing ...

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Second Thoughts on Facebook’s IPO


The upcoming and much anticipated Facebook stock offering promises to live up to its hype.  Analysts will pontificate, investors will gobble-up as many shares as possible, and the official listing of this Internet giant will mark a significant moment in finance — the most formal acceptance yet of social networking as a mainstay in our markets and economy. It is an exciting time for the Internet, venture capitalists, the technology sector, and business in general. Notably, this event also highlights a major theme in trading that threatens the very existence of portfolios universally. A theme that has been present in the past, and sadly appears to be gaining in momentum despite the lessons we should have learned over the last few years.

...

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Confidence or Contemplation


After being in the finance industry for many years, beginning my practice at a major Wall Street brokerage, starting my own firm, investing millions and millions of dollars through the worst markets in decades, teaching portfolio management at the university and graduate levels to hundreds of students, traveling throughout the world, conversing with countless contemporaries, attending many on many conferences, having a wide range of investment professionals work with and for me, and dedicating myself to studying my craft, I have realized only one essential truth: It is better to have contemplation than "confidence."

Finance is an immense field with millions of individuals working within and around it. There are investment advisors and investment ...

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Resolutions and Portfolios: Creating Habits toward True Improvement


As a new year begins, many use this time to draft resolutions and envision a different future for themselves. Often, such personal promises revolve around fitness, occupation, relationships, and finance. For one, this annual process brought an odd realization about wardrobe, and implications for life.

On a much warmer than usual December afternoon in urban Michigan, I took a break from a few errands and activities to clear my head via a long walk. I use my walks to meditate — particularly about finance. I did not reach for an iPod or mobile device. Instead, I finished what I was doing and headed straight for the door.

Getting into my exercise, and deeper into thought, I assertively focused my mental energy on what had just transpired. Prior ...

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Living By Steve Jobs' Script


We spend so much time and energy worried about what other people think and how the world expects us to behave. And though we all desperately want to get off the hamster wheel, life seems to have a predetermined script for everyone that can frustrate and stifle the brilliance and creativity in any of us. It is a sick game we play living the life we subconsciously think others want us to live, and behaving in ways we don't even enjoy. This is a cycle that has gone on for many years, and perhaps is only getting worse in today's world of reality TV and Facebook posts. How many people curb their true thoughts for something "more appropriate"? How many people go to meetings they would rather not attend? How many people go out with friends they have no ...

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But, What is Our Government Really Saying?!


In Washington, our political leaders argue constantly over spending and taxes — a fight that will no doubt make headlines in the weeks ahead. We will hear speeches, the media will be on attack, and congressional leaders and the President will be a fixation of CNN, Fox News, and more.  Both sides of the aisle will proclaim a better plan that is essential to the economic future of this country. But, what is our government really saying?!

As it pertains to fiscal policy (i.e. the government using taxation and spending to control the economy), one side wants to increase taxes and increase spending (Democrats). The other wants lower taxes and lower spending (Republicans). While this is indeed convenient that one party is screaming for ...

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A Single Focus and Resounding Success: What Greatness Can Mean For the City Of Detroit


I was recently nominated and chosen for Crain’s Detroit Business “40 under 40” award, honoring “the best and brightest in Southeast Michigan who have made their marks in business before age 40.” Humbled by the others who accompany me — recipients of the award span twenty years of remarkable entrepreneurs and business leaders — I took time to reflect on my professional accomplishments and what they mean for my clients and colleagues, and my home city of Detroit. As with most of my better thoughts, this personal reflection took place on many long walks over various days. Ultimately, I was certainly honored, but also troubled.

I was chosen for the award based on multiple criteria, one being my "biggest ...

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Unquestionably Unpredictable


In markets, randomness abounds and prediction is impossible. Nonetheless, many buy or sell based on an analyst's recommendation or a personal deduction. Investors try to account for and anticipate all factors — an already futile feat becoming increasingly more difficult in a globalized, ever more connected world. Ironically, what never seems to be accounted for in portfolios — whether one believes markets are random or not — is that which is unquestionably unpredictable.

Some say the mortgage crisis and resulting Great Recession could be forecast; analysts were able to both detect and correctly anticipate the black swan of 2008. Undeniably, many conversations have tested my endurance and manners as I listen to "experts" tout their ...

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For Your Portfolio, Less Is More


In 1933, the United States Congress enacted the Glass-Steagall Act (GSA). The Act, along with a later addition known as the Bank Holding Company Act, drew a very thick line between commercial banking, investment banking, and insurance underwriting. The resulting effect, other than prompting years of dispute (and many upset bankers), was a separation of services within the finance industry. Completely separate institutions primarily handled banking, investments, and insurance.

While industry and political debate continued for many years over the necessity and effectiveness of GSA, patrons became used to the idea of having a different banker, broker, and insurance agent. With many downsides, the system certainly wasn't perfect, but lasted until 1999 when Congress ...

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The Most Powerful Force in the Universe


It has been said that compound interest is the most powerful force in the universe. This mathematical concept is talked about often in investment circles, and even had its magnificent power famously declared by Albert Einstein (albeit the scientist’s actual words are still debated). Without doubt, compound interest has its place as a force to be understood, respected, and utilized. Yet, those with perspective know and admonish that compounding interest actually pales when compared to its stronger alter ego.

As an occasional optimist, I can understand the fascination — from many a perspective, compound interest shows its muscle daily for the benefit of investors, financial officers, economies, and even history. However, the realist in me cannot overlook ...

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Inflated Prices and Inflated Certainty


Few topics of economic concern have driven recent markets as much as inflation. Quantitative easing, extended Bush-era tax cuts, a historically low federal funds rate, global food shortages, and the appreciating cost of oil have all played a role. The promise of mass inflation is on the front page of almost every investment publication, and in the mind of almost any investor. The U.S. Dollar is depreciating, with no end in sight.

It is indeed logical that investors and portfolio managers are scrutinizing the greenback — running from it and anything related. But this making of an absolute and unwavering prediction is all too familiar; advisors and their clientele grasping to the most popular scenario as if they had a secret, a proprietary crystal ball.

...

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The Most Vulnerable Generation


Call it irony, fate, or just plain bad luck, the baby boomer generation can now also be known as the most vulnerable. A group of Americans born out of World War II, and once yielding enough power to change the course of an entire country, now yield less than 4 percent in annual retirement income. Currently, as a result of underfunded entitlements, they have simultaneously jeopardized the future of a country, and had theirs jeopardized by that same nation, which they helped build.

Technically defined as someone born during the birthing boom from 1946-1964, the first of this generation reached age 65 this year (2011). This timing — their retirement commencing just after the Great Recession — has put an entire generation on alarm, creating a monster ...

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