Q3 2020 Creative Newsletter

Q3 2020 Creative Newsletter

October 14, 2020   ·   By   ·   Comments Off on Q3 2020 Creative Newsletter   ·   Posted in Q3 2020 Creative Newsletter

Dad Jokes
One of our portfolio managers was talking to his daughter recently when she remarked about how much anxiety she had given everything going on in the world. Being a master of homespun wisdom and humor, he quipped “I deal with my anxiety by not worrying about it.” Like most dad jokes, this fell flat until his wife responded with “Maybe because you lost your dad at 19 years old, had to work your way through college, and then came out on the other side in a pretty good position, you have a perspective that things will work out?” He quickly admitted she had made a very good point in hopes the vestige of his bad joke had dissipated into his wife’s searing epiphany. We share this vignette to drive home how important perspective is when it comes to dealing with the news of the day. The 24-hour news cycle seems to constantly shade the events of the day with a negative hue. Certainly, with items like Covid-19, wildfires, unemployment, and violent protests continuing we definitely understand anxiety and worry. However, as history buffs we realize there is always something to fear as one tries to move in a positive direction.
On that note, please forgive our bias, but we are strong believers in the power of humankind to improve its collective destiny. Sure, societies will make mistakes, but as we work together over the long term we can achieve a lot. For instance, 100 years ago the death rate in children under 5 was 32% and now it is under 4%. Air quality in major cities has improved by 30% since 1977. Some may say this isn’t enough, and we get that, but others may argue modern society also suffers from “prevalence induced concept change” which boils down to “The more progress we observe, the greater the remaining injustices appear.” We certainly understand these individual points of view, but there is a collective trend we must also weigh. Improvements like life expectancy increasing by 30 years since the 1900’s or the fatality rate at work dropping by 30% are significant in our opinion. In other words, life is still pretty decent even against a backdrop of Covid-19 and through adversity we oftentimes come out with vast improvements.
To the end, we have noticed some very significant and positive trends recently in healthcare and technology. For instance, teleworking and telemedicine has accelerated to the point we think there is no turning back. Further, the push to use digital technology for monitoring, diagnosis, and alerts has increased and should continue with additional support via artificial intelligence and personal care management. All of this should also increase proactive well-care and ease of access to healthcare versus the model of reactive sick-care with less access. Of course, gene and cell therapy and Crispr technology had already started the movement towards precision medicine years earlier, speaking of proactive well-care. Finally, the easing of regulations and the sharing of technology between private and public entities seems to be creating a new normal within the medical industry. All of this cooperation and change may create stress in the short run, but over the long haul we are encouraged by the progress.
All of the positive trends aside, we realize words on a piece of paper do not remove worry and fears about current events. Know that we are here to chat about anything on your mind whether it is a fear or a hope. Given where the stock market was earlier this year, we are encouraged with returns. They could always be better, but given the level of risk we encountered in March we haven’t felt the need to ratchet risk higher. It is also part of the reason you have seen us take gains, raise cash, and introduce gold to portfolios. The areas of the market that are cheap carry secular risks such as energy and finance, typical “value” areas of the market, so not many want to add that “value” risk to their portfolios. Of course, as Warren Buffett always said “You can’t buy what is popular and do well”. We are here to help discern what is a positive long
term trend versus a passing fancy and to do well for you. Please call with any questions and to let
us know what we can do better to continue doing “well” by you.
P.S – We know that many have asked questions about the election and we get those every
four years. Oftentimes, every four years we encounter the most important election of all time and
while we encourage all to vote as it is vitally important to our country, it typically doesn’t impact
the markets as dramatically as one would think. We have shared stats in our “Wisdom
Wednesday” calls that show the differential in returns between a Democrat and a Republican are
historically minimal. To that end we found a new statistic the other day we felt was worth
sharing, from 1933 to 2019 the average annual return of the S&P 500 during Democratic
presidents was 10.2% and during Republican presidents was 6.9%. Nearly all of the Democratic
average outperformance advantage can be explained by the boom years under Clinton and the
subsequent dotcom bust and Global financial crisis under Bush. If you exclude those two
presidencies the difference in returns is practically zero. We share this to try and help keep
perspective on this year’s election.
P.S.S – Hopefully, we don’t have to explain the concept of “Dad Jokes” (hint, it rhymes
with bad). However, if you need us to explain, we have several experts on site that can help.

Q2 2020 Creative Newsletter

October 14, 2020   ·   By   ·   Comments Off on Q2 2020 Creative Newsletter   ·   Posted in Q3 2020 Creative Newsletter

Risky Business

We alluded to risk in the last quarterly letter and how “This too shall pass”. The good news is that the bleak uncertainty in March seems to have passed, but the bad news is that risk still remains. The point that we didn’t emphasize last quarter is that risk is always present. Of course, with risk also comes opportunity, but it is critical that we all distinguish between fear and danger when it comes to risk. Fear is an emotion; it’s the risk we perceive. As an emotion, it’s often blind to the facts. For example, you are more likely to die from a vending machine falling on you than a shark attack in the United States. However, you never hear anyone yell “Vending Machine” on the way to get a snack in the office. Danger, on the other hand, is measurable and is therefore the part of risk we focus on. For instance, there were 273 Covid-19 deaths on June 28th, 2020 which was down 84% from the peak of 1,733 on April 19th, 2020. On average 2,353 people die of heart disease every day. We are in no way diminishing the fear present in a virus with no herd immunity or vaccine. We are instead trying to drive home the point that life presents us with risk every day and how we handle it defines us.

                For instance, in the 1918 flu pandemic that killed between 17 and 50 million people, the use of the telephone rose significantly as people adapted to a world full of new risks but still needed to communicate. Keeping perspective, imagine the dangers experienced during a time period including a pandemic and the First World War. Prior to 1918 phones were considered a convenience of the well-to-do. Similarly, many businesses such as Creative Financial Group, are using video conferencing more to keep in close contact with clients and to telecommute. Telemedicine has finally taken off, as well, so you can see a doctor without sitting in a lobby surrounded by a bunch of sick people. Curbside pickup has also grown to the delight of some and the detriment of others. It seems that some companies with the ability to adapt will exit this pandemic stronger, while others may weaken and even disappear. Unfortunately, life is filled with stories like that. We learned this the first time we heard an adult say “Life isn’t fair all the time”. As adults, we know this and must act accordingly. It is why we save and invest instead of hiding underneath our beds and living from paycheck-to-paycheck. It is also why we can swim at the beach without high levels of anxiety. Certainly macro concerns enter the economic picture as we are all intelligent people who pay attention to the world around us. However, in today’s 24-hour news cycle, we realize it can be difficult to not get caught up in our emotions. Facts can help with this.   

                On that note here are some important facts not highlighted in the 24 hour news cycle. The Federal Reserve has increased their balance more in two months than it did in five years of quantitative easing from 2010-15. You can see the correlation between the Fed Balance sheet and the S&P 500i at the following link: https://fred.stlouisfed.org/graph/?g=HfT. Inflation is not a problem now but M2, one of the broadest measures of money supply, has increased 351.9% from a year ago. Inflation impacts assets in different ways, but we know it is negative for fixed income. As a side note, in order for returns in fixed income to be as good as they were the past ten years, rates would have to fall to -3%. Another fact is that the average return in an election year is positive. Time will tell whether or not 2020 ends up being positive, but when the Federal Reserve pumps liquidity into the market, the chances improve. This, by no means, omits the challenges presented with high unemployment, business shutdowns, pandemics and civil unrest. However, once we make it through this period of increased volatility it sure seems as if investors will want assets like, commodities and stocks that historically do well in the face of inflation.    

                On a topical note, we continue to make use of funds that will hold cash and other assets that allow flexibility to be in and out of the market when volatility spikes. Additionally, we have begun adding a commodity, gold, to portfolios as a hedge against inflation and volatility. This is not something we have done in the past, besides choosing a fund that would hold gold as a hedge, but we felt the upside/downside potential was attractive given the level of money printing. If this is an investment you are against, then please let us know as we are working our way through accounts. Additionally, if you see us selling to raise money for the gold purchase, you may notice we are harvesting some gains in large capitalization growth funds as they have significantly outperformed other sectors of the market. We like to say that growth stocks have performed as if Covid-19 never occurred, and value stocks have performed as if we are near the “end times”. Growth has now outperformed value for 13 years and by many metrics has not been this expensive since 1999, and we know how that ended ten years later.

                Of course, we started this quarterly on the topic of risk so it only makes sense for us to end on it. Investing is a business that tries to quantify risk and return and provide an investment with a comfort level commensurate with your desired risk and return. If you feel your risk profile has changed, then please give us a call. On that note, we like to say that we serve our clients best by being consistently good, not just occasionally great. However, this is harder to accomplish if we don’t know how you are thinking. So, again, please call with any questions.

General Compliance Disclosures

Statements made via this letter are the opinions of Creative Financial Group (“CFG”) and its advisors, and are not to be construed as guarantees, warranties or predictions of future events, portfolio allocations, portfolio results, investment returns, or other outcomes. None of the information contained is intended as a solicitation or offer to purchase or sell a specific security, mutual fund, bond, or any other investment. Readers should not assume that the considerations, suggestions, or recommendations will be profitable, suitable to their circumstances or that future investment and/or portfolio performance will be profitable or favorable. Past performance of indices, mutual funds, or actual portfolios does not guarantee future results. Future results may differ significantly from the past due to materially different economic and market conditions; investments in securities or other financial products involve risk and the possibility of loss, including a permanent loss of principal. Investments are not FDIC insured and have no bank guarantee.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to

January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.

Investment products and services provided by Synovus are offered through Synovus Securities, Inc. (“SSI”), Synovus Trust Company, N.A. (“STC”), GLOBALT, a separately identifiable division of STC and Creative Financial Group, a division of SSI. Trust services for Synovus are provided by Synovus Trust Company, N.A. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested.

Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank and Synovus Trust.  Synovus Trust Company, N.A. is a subsidiary of Synovus Bank.

Pursuant to rules adopted by the U.S. Securities and Exchange Commission governing federally registered investment advisors, we request that you take time to compare your account balances and statements issued by National Financial Services, who acts as the custodian for your account(s).  We request you contact us immediately if you do not receive these statements or if the values reflected are materially different.

Cost basis reporting

If you buy and sell a security in a taxable account on or after the effective date, NFS will report cost basis for the sold security to you and the IRS on Form 1099-B. If you have a mix of covered and uncovered positions in the same security, NFS will report cost basis to you and the IRS for any covered position that is sold. NFS will apply the FIFO (First In, First Out) default method unless you inform us of a different method. Your cost basis method for all transactions must be final by settlement date. If you choose to change the default method, you can do so by notifying your Financial Consultant.

Use of Indexes

iThe investment return and style information and comparisons employ a variety of popular indices, and the index contents and strategies are the property of their respective companies (e.g., Dow Jones, Standard & Poor’s, Morningstar, Barclay Capital, Russell). Although the data is believed to be reliable, CFG makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability, or reliability of the information, which is represented here for informational use only and should not be considered investment advice or recommendation. None of the indices can be invested directly, and the return figures for these various securities indices are reported without management fees, trading costs, or other expenses subtracted from the returns, and are shown on a total return basis that assumes reinvestment of applicable capital gains and dividends. Components of indices may change over time. Small capitalization stocks are represented by the Russell 2000 Index. Mid Capitalization stocks are represented by the S&P Mid Cap 400 Index. Foreign stocks are represented by the MSCI EAFE Index and emerging markets are represented by the MSCI Emerging Markets Index.

Richard Raby’s Update on Robo Advisors

October 18, 2019   ·   By   ·   Comments Off on Richard Raby’s Update on Robo Advisors   ·   Posted in News, Q3 2020 Creative Newsletter

Richard Raby, Portfolio Manager at Creative Financial Group, discusses some recent updates on Robo Advisors and why he thinks human advisors will continue to be around.


Video courtesy of
Metro Atlanta CEO.

CEO Buzz Law on Bunching Your Charitable Contributions

August 14, 2019   ·   By   ·   Comments Off on CEO Buzz Law on Bunching Your Charitable Contributions   ·   Posted in News, Q3 2020 Creative Newsletter

President & CEO Buzz Law discusses the recent changes in standard deductions and the benefits of bunching your charitable contributions.


Video courtesy of
Metro Atlanta CEO.

The Georgia Entertainment 100

April 12, 2019   ·   By   ·   Comments Off on The Georgia Entertainment 100   ·   Posted in Q3 2020 Creative Newsletter

Georgia Entertainment Event,

We are excited to announce our first event of 2019 – The Georgia Entertainment 100. This invite only affair will be held on April 24th in Atlanta. We have selected the corporate headquarters of Creative Financial Group to host the event. As part of Synovus, Creative Financial Group offers wealth management and financial advisory services to business owners and executives in the entertainment industry. They have a beautiful office situated in a new building overlooking the Braves stadium.

(We will have three additional events this year – Savannah, Columbus and another in Atlanta.)

With so many legal, tax and production issues at play right now, this will be our most important event yet. If you would like to support this event, please contact us here.

Enjoy today’s edition. If you have comments or questions, please contact us.

The team at Georgia Entertainment News

Reaching thousands of professionals daily as Georgia’s most widely read source of news, analysis and information about the entertainment industry. (Our story.)

Recent Coverage
New York State Sen. Rob Ortt wants to end NY Film Tax Credits- GOP New York State Sen. Rob Ortt called for Gov. Andrew Cuomo and the Legislature to remove the Empire State Film Tax Credits from the fiscal year 2020 budget and shift its $420 million cost to fund health, education, direct support and veterans’ needs. …

Fitness Experts to Speak at Georgia E-sports Championship- Three of Atlanta’s leading health experts will share E-sports player fitness tips during the Southeast’s largest intercollegiate E-sports tournament April 6 in Atlanta at Georgia State University’s Sports Arena. …

Jackie Jones Joins RIAA As VP, Artist & Industry Relations- “Jackie is a welcome addition to our strong industry relations team, with deep ties to Nashville and an established track record within the artist and label community that make her a perfect fit for this role. We are lucky to have her,” said RIAA Chairman and CEO Mitch Glazier. …

Film Industry Producer of the Year Award presented to Sue Ann Taylor at Pinewood Studios Event- Taylor currently has several films in development including Etowah Ridge, Shelter (by Michael Sloan, The Equalizer), Baby Girl, Maybe Something Beautiful, and Diary of the Dragon’s Daughter. …

Craig Miller Productions: Graphics Reel 2019- We love showing reels made in Georgia, by our very own talent. Here is a reel for your examination from Craig Miller Productions, Take a look. …

Dean Cain Blasts Hollywood ‘Bullies’ for Threatening Boycott of GA Over ‘Heartbeat’ Bill- Actor Dean Cain called out Hollywood “bullies” after dozens of TV and film workers threatened to boycott working in Georgia if a controversial abortion bill is signed into law in the state. …

Georgia Southern students win awards at the Uni-Fest Student Film Festival- Uni-Fest is an annual film festival for students in Georgia to show their film-making skills, receive feedback on their films and network with professionals. …

Film tax credit already luring movie makers back to New Jersey- State and local officials joined an array of film and television industry leaders at the Diversity in Film and Television Production Forum last month in Newark to discuss both upcoming opportunities and the importance of diversity when enlisting talent and crew from New Jersey. …

World Box Office: Far from spectacular launch for ‘Dumbo’- This modern version follows more or less the same story-line as the old one, with the titular big eared flying elephant striving for acceptance and trying to gain his freedom from an exploitative circus owner, played this time by Danny DeVito. …

Copyright © Georgia Entertainment News, All Rights Reserved.

Q3 2018 Asset Management Letter

October 8, 2018   ·   By   ·   Comments Off on Q3 2018 Asset Management Letter   ·   Posted in Asset Management Letter Archive, News, Q3 2020 Creative Newsletter

Ten Years After

We bring up the rock band “Ten Years After” famous for its performance of “I’m Going Home” at Woodstock not to show off our vast historical knowledge base, but as a framing technique for our quarterly letter. As much as many financial journals would like to forget it, 2008 did happen. Soon ten year returns will omit the fact that from September 17th, 2008 the S&P 500i fell 46% over the next six months. Of course, that also means the best time to invest in the broad market in the past twenty years was arguably March 2009. Now think back to how it felt to invest then. Many wanted to take their figurative ball and “go home” during that time period. Warren Buffett wrote an article, “Buy America. I am” in November 2008 and many didn’t care because we were told he was different and not comparable to their situation. Jeremy Grantham wrote a similar article March 2009 called “Reinvesting when terrified” which by his own admission was to encourage him to invest when it was most bleak. His timing turned out to be spot on, but no one knew for certain and many didn’t heed his advice. With the gift of hindsight many reference how great the S&P 500i returns are. To us, this is like driving a boat while looking at the wake behind you.

What we are emphasizing is that there is a behavioral side to investing and oftentimes the safety of “groupthink” is a falsehood. Many times when sentiment is the most positive and all looks rosy, the tide is beginning to turn and you may not know it because you are looking back at your wake and checking who is in the boat with you, instead of looking at the horizon. We remember articles in 1999 like the New York Times “What’s killing value Managers” or “Value Investing: Can it rise from the Ashes” and how well value outperformed for the next 8 years. We also know that value has outperformed growth 3% annually since 1926. However, because of the recent outperformance of growth, the price to sales ratio of growth stocks is as high as it has been since 1999. Said another way, growth stocks are as expensive as they were in 1999. By the way, in this same “diversified” Russell 1000 Growthi index 27% of capitalization is tied up in five stocks. We continue to mention these stats and hearken back to ‘99 and ‘08 because recency bias is a very strong human tendency. It was an important trait when we were cave-dwellers as it allowed us to live longer than our less inclined “cave-mates” but, when it comes to investing, it causes us to overemphasize recent data and oftentimes make incorrect assumptions about the future. Behavioral finance justifiably pinpoints recency bias as a significant factor that contributes to poor financial decision making. Couple it with herd mentality and, in our mind, you are delving into one of the greatest arguments against efficient market theory and passive investing available. Jeremy Grantham and Warren Buffet’s articles in 2008/2009 would be exhibit “A” in the case supporting recency bias and herd mentality, in our view.

To that end, it’s our opinion that herd mentality is currently fostering the environment where momentum stocks are outperforming diversified portfolios.  International and emerging markets are down even though, at current estimates, tariff talks may impact gross domestic product (GDP) by .2%. Value stocks have significantly underperformed growth stocks but are still positive for the year while being arguably cheaper on a historical basis. The Barclays Aggregate Bond Indexi, or the proxy for fixed income investing, is down 1.64% YTD but our bond funds have drastically outperformed that number. However, when you look at Morningstari Moderate Target Portfolio that is only up 2.20% you might be disappointed. We, of course, focus on the Morningstar Moderate portfolio because it is most similar to our client base. Our clients are not 20 year olds who can endure 60 more years of returns to make up for a year like 2008. Thus, when the media quotes double digit rates of return we hope that you don’t fall prey to their groupthink and call up wanting to buy the hottest growth stock du jour. We instead hope you call us with a strong recollection of the past ten years gone by and a frame of reference that keeps a realistic perception of what the future holds. As a hint, we think value will start to outperform over the next ten years.

However, if you are all in on the concept of safety and groupthink, please, as a last reminder, think of Woodstock and the four hundred thousand people on Max Yasgur’s 600 acre dairy farm in the rain, sleeping on the ground and being told to not eat the brown acid. We are all for artistic expression but we are not sure the ones in the audience had as good of a time as the performers or documentary makers. In fact, we have a feeling that many wanted to “go home” with Ten Years After but didn’t have a quick and easy escape route. That being said, they were also not near retirement so they may have had a different expectation regarding risk tolerance and therefore, may have had a different recollection of their experience. Sometimes it is all about the level of expectation and we want to make sure we set the proper level moving forward with liquidity being removed by the Federal Reserve and an expensive bull market that is 9 years old and counting.

 

General Compliance Disclosures

Statements made via this letter are the opinions of Creative Financial Group (“CFG”) and its advisors, and are not to be construed as guarantees, warranties or predictions of future events, portfolio allocations, portfolio results, investment returns, or other outcomes. None of the information contained is intended as a solicitation or offer to purchase or sell a specific security, mutual fund, bond, or any other investment. Readers should not assume that the considerations, suggestions, or recommendations will be profitable, suitable to their circumstances or that future investment and/or portfolio performance will be profitable or favorable. Past performance of indices, mutual funds, or actual portfolios does not guarantee future results. Future results may differ significantly from the past due to materially different economic and market conditions; investments in securities or other financial products involve risk and the possibility of loss, including a permanent loss of principal. Investments are not FDIC insured and have no bank guarantee.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.

Investment products and services provided by Synovus are offered through Synovus Securities, Inc. (“SSI”), Synovus Trust Company, N.A. (“STC”), GLOBALT, a separately identifiable division of STC and Creative Financial Group, a division of SSI. Trust services for Synovus are provided by Synovus Trust Company, N.A. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested.

Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank and Synovus Trust.  Synovus Trust Company, N.A. is a subsidiary of Synovus Bank.

Pursuant to rules adopted by the U.S. Securities and Exchange Commission governing federally registered investment advisors, we request that you take time to compare your account balances and statements issued by National Financial Services, who acts as the custodian for your account(s).  We request you contact us immediately if you do not receive these statements or if the values reflected are materially different.

 

Cost basis reporting

If you buy and sell a security in a taxable account on or after the effective date, NFS will report cost basis for the sold security to you and the IRS on Form 1099-B. If you have a mix of covered and uncovered positions in the same security, NFS will report cost basis to you and the IRS for any covered position that is sold. NFS will apply the FIFO (First In, First Out) default method unless you inform us of a different method. Your cost basis method for all transactions must be final by settlement date. If you choose to change the default method, you can do so by notifying your Financial Consultant.

 

Use of Indexes

iThe investment return and style information and comparisons employ a variety of popular indices, and the index contents and strategies are the property of their respective companies (e.g., Dow Jones, Standard & Poor’s, Morningstar, Barclay Capital, Russell). Although the data is believed to be reliable, CFG makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability, or reliability of the information, which is represented here for informational use only and should not be considered investment advice or recommendation. None of the indices can be invested directly, and the return figures for these various securities indices are reported without management fees, trading costs, or other expenses subtracted from the returns, and are shown on a total return basis that assumes reinvestment of applicable capital gains and dividends. Components of indices may change over time. Small capitalization stocks are represented by the Russell 2000 Index. Mid Capitalization stocks are represented by the S&P Mid Cap 400 Index. Foreign stocks are represented by the MSCI EAFE Index and emerging markets are represented by the MSCI Emerging Markets Index.

Q2 2018 Asset Management Letter

August 31, 2018   ·   By   ·   Comments Off on Q2 2018 Asset Management Letter   ·   Posted in Asset Management Letter Archive, News, Q3 2020 Creative Newsletter

Working Capital

We recently listened to a TED talk called “The Meaning of Work” and we couldn’t help but think about our recently retired colleague Janet Medlock and the parallels to our team at Creative Financial Group. In particular, Margaret Heffernan speaks to truly robust and dynamic firms building social capital, a fancy word for trust, over time. In contrast, a hyper-focus on performance leads to a lack of candor and support, whereas the compounding effect of a team with strong social capital gets better over time. We like to think our team at Creative has been like this for years and with our recent additions, Helen and Torey, we feel our crew will only get stronger. Of course, we are fully aware that Janet brought a lot to the table. However, given as many as Janet helped with their retirement, it was time for her to practice what she preached and we are happy for her. Rest assured though, our team remains focused on what Aristotle called the telos of what we do at Creative. Telos is defined as “our inherent purpose” and many from Aristotle to Frankl have pointed to it as something that pushes us all to higher and higher levels of performance. We would point to the concept of telos and the environment full of social capital as to why we constantly question and persevere.

For example, in a candid group like we have at Creative, one can question the sage wisdom of elite institutions since we consider our clients’ concerns paramount to any fear of ridicule from the ivory tower. For instance, private equity, like real estate in the 2000’s and technology in the late 90’s, is one of the hottest investments around currently. The industry touts 1990 to 2010 annualized returns of 14.4% and the diversification benefits of private equity, but leaves out the valuation argument while some of its proponents refer to it as “a superior form of capitalism”. Please remember there is always logic behind each asset bubble, a set of ideas that form the foundation of consensus thinking and it should be questioned. Regarding private equity valuation, returns quoted from 1990 were based on investments made at four to six times earnings with debt of three to four times whereas new offerings trade at a more elevated 11 to 13 times earnings along with dangerously more debt of six to seven times earnings. Simply put, you are paying a great deal more for an illiquid asset while incurring more debt. Debt used judiciously is okay, but more of it always introduces more risk. Interestingly though the pundits point to the reduced volatility as reason to own private equity.

Let’s take the reduced volatility argument a little further. How can an asset class that is increasing debt loads from the companies it buys at elevated levels, tout reduced volatility? Herein lies the clue to the “superior” claim of private equity. In the private equity market, accounting firms often employed by the same private equity firm determine the prices of the firms they own. Consider that from December 2012 to September 2015 energy prices crashed by over 50% but private equity energy funds from the 2011 vintage were marked up 1.1 times higher during that same time frame. In a recorded phone conversation, the CIO of the Public Employee Retirement System of Idaho, refers to this “smoothing” effect as the “phony happiness” of private equity. In fact, a study by a George Washington University professor showed that if private equity firms adopted fair value accounting standards then the reported volatility of private equity would double. In conclusion, the perceived safety of private equity feels shaky at best to us and at worst, deceptive. Given our “telos”, we will continue to shy away from investments that sound too good to be true.

Finally, we come around to the diversification argument used by private equity firms although this is somewhat tied back to the internal reporting issue we noted earlier. David Swensen at Yale adds a prestigious voice arguing the point about the long term and diversified nature of private equity where money is illiquid, for five to ten years versus the public market. Of course, we wholeheartedly agree with this sentiment. If you are forced to hold your investments between five and ten years, while you receive questionable but comforting pricing reports, then we believe your returns will be much improved, compared to the public market. Variable Annuities fall into this same bucket, in our opinion, if you can’t get to your investments easily, oftentimes the performance is better.

We realize we went down a rabbit-hole on private equity this quarter, but it was our intention to highlight how our team continues to compound and work our social capital. We also continue to question the massive inflow into passive vehicles like ETF’s and index funds 9 years into a bull market while, as we stated last quarter, we are still able to find funds that beat their relative index on a risk/return basis since inception. To that end, in a Barron’s interview with Jack Bogle, considered the father of index investing, we noted that from 2005 to 2017 the average investor earned 5.5% in ETF’s and 7.2% in active funds. Meanwhile Berkshire Hathaway, Warren Buffet’s prestigious firm (Symbol BRK.B), is down 5.36% while the S&P 500 is up 2.65% as of 6/30/18. We say this facetiously but you could argue that one of the smartest guys in the world could use some private equity auditors before all of his money flows into an index.

Circling back to the theme of work, we close with the thought that robust companies succeed because conflict and candor is safe within their organization; because scratchy and impatient people are determined to think for themselves. We encourage that behavior on our team so we respect it with our clients and friends. Please, candidly, call us with any questions and concerns as we are here to think through this journey with you.

 

General Compliance Disclosures

Statements made via this letter are the opinions of Creative Financial Group (“CFG”) and its advisors, and are not to be construed as guarantees, warranties or predictions of future events, portfolio allocations, portfolio results, investment returns, or other outcomes. None of the information contained is intended as a solicitation or offer to purchase or sell a specific security, mutual fund, bond, or any other investment. Readers should not assume that the considerations, suggestions, or recommendations will be profitable, suitable to their circumstances or that future investment and/or portfolio performance will be profitable or favorable. Past performance of indices, mutual funds, or actual portfolios does not guarantee future results. Future results may differ significantly from the past due to materially different economic and market conditions; investments in securities or other financial products involve risk and the possibility of loss, including a permanent loss of principal. Investments are not FDIC insured and have no bank guarantee.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.

Investment products and services provided by Synovus are offered through Synovus Securities, Inc. (“SSI”), Synovus Trust Company, N.A. (“STC”), GLOBALT, a separately identifiable division of STC and Creative Financial Group, a division of SSI. Trust services for Synovus are provided by Synovus Trust Company, N.A. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested.

Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank and Synovus Trust. Synovus Trust Company, N.A. is a subsidiary of Synovus Bank.
Pursuant to rules adopted by the U.S. Securities and Exchange Commission governing federally registered investment advisors, we request that you take time to compare your account balances and statements issued by National Financial Services, who acts as the custodian for your account(s). We request you contact us immediately if you do not receive these statements or if the values reflected are materially different.

Cost basis reporting

If you buy and sell a security in a taxable account on or after the effective date, NFS will report cost basis for the sold security to you and the IRS on Form 1099-B. If you have a mix of covered and uncovered positions in the same security, NFS will report cost basis to you and the IRS for any covered position that is sold. NFS will apply the FIFO (First In, First Out) default method unless you inform us of a different method. Your cost basis method for all transactions must be final by settlement date. If you choose to change the default method, you can do so by notifying your Financial Consultant.

Use of Indexes

iThe investment return and style information and comparisons employ a variety of popular indices, and the index contents and strategies are the property of their respective companies (e.g., Dow Jones, Standard & Poor’s, Morningstar, Barclay Capital, Russell). Although the data is believed to be reliable, CFG makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability, or reliability of the information, which is represented here for informational use only and should not be considered investment advice or recommendation. None of the indices can be invested directly, and the return figures for these various securities indices are reported without management fees, trading costs, or other expenses subtracted from the returns, and are shown on a total return basis that assumes reinvestment of applicable capital gains and dividends. Components of indices may change over time. Small capitalization stocks are represented by the Russell 2000 Index. Mid Capitalization stocks are represented by the S&P Mid Cap 400 Index. Foreign stocks are represented by the MSCI EAFE Index and emerging markets are represented by the MSCI Emerging Markets Index.

Q1 2018 Asset Management Letter

August 31, 2018   ·   By   ·   Comments Off on Q1 2018 Asset Management Letter   ·   Posted in Asset Management Letter Archive, News, Q3 2020 Creative Newsletter

Ubuntu

Boyd Varty, a wildlife tracker and author from South Africa, recently wrote a book, “Cathedral of the Wild”, where he regaled the reader with the “Art of Tracking”. To paraphrase him, tracking an animal requires a relentless attentiveness to everything around you, stepping into the unknown to pick up clues, and a discipline within the uncertainty. The parallel to what portfolio managers do in their day-to-day pursuit of value in the marketplace is quite appropriate, in our view.

We bring the metaphor of tracking up for a reason. In contrast to 2017, it is natural for the market to go down, and when it does, value presents itself. When the Federal Reserve holds interest rates down the environment doesn’t react normally and a false sense of security can ensue. In an artificial setting, a passive index with the lowest costs based on market capitalization would probably be the investment du jour. However, in a natural setting, one could encounter risk and uncertainty that causes irreparable harm. The generic investment in a basket of stocks and the safe harbor of a well-trodden path have similarities. Uncertainty promotes discipline, whereas security can breed complacency. It’s our job, in an unnatural environment, to remind our clients about the need for discipline and try to prepare them for potential dangers lurking ahead.

Given the media’s tendency to publish a story and follow the ratings, we feel there is a logical basis for groupthink inherent to journalism. To that end, we understand the financial media’s attention to the passive versus active debate and the popular conclusion that the S&P 500 Index outperforms the average active manager over the long term. However, data shows that managers with low fees, low turnover, proper incentives, an experienced team, and a differentiated portfolio have historically been more likely to outperform both the index and the average active manager. For instance, funds with low fees and high investment in their own funds have outperformed in 89% of all rolling ten-year periods. Of course, this same herd mentality couldn’t be wrong three times in the past twenty years. There was great safety in the all-growth, all technology horde in 1999, right? And, of course, that same group didn’t misguide anyone in 2006/07 with the collective fact that real estate had never ever declined nationwide. These examples of the downside of herding are not meant to cause mental discomfort. They are meant to foster reflection and stillness. It is in this attentive state when trackers are most attuned to their environment and most aware. The noise of the market can remove one from this stillness and is what leads to the investing style of “passive, passive, passive”, in our opinion. We think a relentless pursuit, like investing, requires a well-planned strategy and active tracking of the market’s animal spirits.

On a topical note, our active fixed income managers outperformed their benchmark in the first quarter but more importantly continue to outperform the aggregate bond index over the five and ten year time frame on a risk adjusted basis. The core of our active portfolio managers outperform on a risk and return basis over the past ten years or since inception. Some may slip over the shorter time frame, but over the long term and a full market cycle, they tend to outperform. Finally, and most relevant to this point in time is that active and passive management outperformance moves in cycles like all natural patterns. Historically, active outperforms in negative and low return environments and with the S&P 500 more than doubling in the last seven years, and also not correcting by more than 20%, the setting seems better suited for active management, in our mind.

Please keep in mind, though, we have and will always make use of index funds in asset classes we feel are cheap, so we are not dogmatic regarding the active versus passive debate. Like a good tracker, we are relentlessly remaining fluid and attentive to the signals the market sends us. This “connected” state logically leads to the African value called “Ubuntu”, which means “I am because we are”. To paraphrase Boyd Varty, we experience the deepest parts of life because of our relationship with others. To that end, our relationship with you mirrors the values of Ubuntu and is deeply significant to us. Please contact us with any questions or stories of your relentless pursuits.

 

General Compliance Disclosures

Statements made via this letter are the opinions of Creative Financial Group (“CFG”) and its advisors, and are not to be construed as guarantees, warranties or predictions of future events, portfolio allocations, portfolio results, investment returns, or other outcomes. None of the information contained is intended as a solicitation or offer to purchase or sell a specific security, mutual fund, bond, or any other investment. Readers should not assume that the considerations, suggestions, or recommendations will be profitable, suitable to their circumstances or that future investment and/or portfolio performance will be profitable or favorable. Past performance of indices, mutual funds, or actual portfolios does not guarantee future results. Future results may differ significantly from the past due to materially different economic and market conditions; investments in securities or other financial products involve risk and the possibility of loss, including a permanent loss of principal. Investments are not FDIC insured and have no bank guarantee.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.

Investment products and services provided by Synovus are offered through Synovus Securities, Inc. (“SSI”), Synovus Trust Company, N.A. (“STC”), GLOBALT, a separately identifiable division of STC and Creative Financial Group, a division of SSI. Trust services for Synovus are provided by Synovus Trust Company, N.A. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested.
Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank and Synovus Trust. Synovus Trust Company, N.A. is a subsidiary of Synovus Bank.

Pursuant to rules adopted by the U.S. Securities and Exchange Commission governing federally registered investment advisors, we request that you take time to compare your account balances and statements issued by National Financial Services, who acts as the custodian for your account(s). We request you contact us immediately if you do not receive these statements or if the values reflected are materially different.

Cost basis reporting

If you buy and sell a security in a taxable account on or after the effective date, NFS will report cost basis for the sold security to you and the IRS on Form 1099-B. If you have a mix of covered and uncovered positions in the same security, NFS will report cost basis to you and the IRS for any covered position that is sold. NFS will apply the FIFO (First In, First Out) default method unless you inform us of a different method. Your cost basis method for all transactions must be final by settlement date. If you choose to change the default method, you can do so by notifying your Financial Consultant.

Use of Indexes

iThe investment return and style information and comparisons employ a variety of popular indices, and the index contents and strategies are the property of their respective companies (e.g., Dow Jones, Standard & Poor’s, Morningstar, Barclay Capital, Russell). Although the data is believed to be reliable, CFG makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability, or reliability of the information, which is represented here for informational use only and should not be considered investment advice or recommendation. None of the indices can be invested directly, and the return figures for these various securities indices are reported without management fees, trading costs, or other expenses subtracted from the returns, and are shown on a total return basis that assumes reinvestment of applicable capital gains and dividends. Components of indices may change over time. Small capitalization stocks are represented by the Russell 2000 Index. Mid Capitalization stocks are represented by the S&P Mid Cap 400 Index. Foreign stocks are represented by the MSCI EAFE Index and emerging markets are represented by the MSCI Emerging Markets Index.

Q4 2017 Asset Management Letter

January 22, 2018   ·   By   ·   Comments Off on Q4 2017 Asset Management Letter   ·   Posted in Asset Management Letter Archive, News, Q3 2020 Creative Newsletter

New Day and New Year

One of our portfolio managers was watching the Golden Globe awards with his daughter recently when Oprah Winfrey made her rousing “New Day” acceptance speech. From a father/daughter perspective, the determined tone of her words was very uplifting to say the least. Similarly, the market’s performance last year was also highly encouraging. Who would have expected the S&P 500i to be up 21.38% last year, given the headlines we experienced? Keeping with the “Golden” theme, the Hollywood Foreign Press honored Oprah and the foreign markets bestowed investors with even better performance than the S&P 500i (Emerging Markets were up 37% and International ex-Japan was up 25.03%). Couple this information with the small business index near a 35 year high and there is a definite luster to the market right now.

We highlight these observations because with great hope can also come great disappointment. The optimist in us wants tax cuts to spur the market even higher, but the skeptic in us wonders about the market last year where the S&P 500i was up every single month, a feat never before accomplished. A market where liquidity will be reduced as the balance sheet of the Federal Reserve shrinks from 4 trillion to 2.5 trillion over the coming years and the fed funds rate may increase by ¾ of a percent. Not to mention, one of the most reliable recession indicators is an inverted yield curve and if the fed funds rate continues higher without the long bond rate going up, then we are dangerously close to an inverted yield curve. In addition, the new chairman of the Federal Reserve, Jerome Powell, will have to navigate all these uncertainties with no guidebook, as there isn’t one for the grand experiment called quantitative easing.

In our opinion, a timely example of lofty expectations leading to poor results is cryptocurrency, such as Bitcoin. We have seen this before with the popular sentiment in 1999 of “all growth stocks, all the time” and in 2006/07 with the “real estate never goes down and they aren’t making any more”. Currently, there are over 1,400 cryptocurrencies and many were up triple digits in 2017. Yet this asset class operates in a decentralized environment with no discernible cash flow. We realize there is value in decentralized public ledgers, censorship resistance, and being off the grid, but there needs to be an identifiable expectation of future cash flows at a reasonable rate of return in order for it to be considered an investment or it is debatable whether one should part with their savings. However, with none of that in sight, cryptocurrencies had more money flow into them in 2017 than mutual funds and ETF’s. To be clear, we do not mean to impugn cryptocurrencies as there is merit to much of its design. It is our intention to refine the difference between investing and trading for our clients. There is a self-fulfilling cycle to investing and optimism that we do not see in the speculative world of trading.

It is with our fundamental foundation we continue to invest. When growth stocks have outperformed value stocks the past eight years, we lean into value stocks since they have outperformed growth since 1927. When domestic stocks have outperformed international over the past eight years and earnings have increased significantly for international stocks, we shift more into international. When sectors like pipelines that do not have a strong correlation with oil follow oil down but not up, we look there for possible gains. These are the types of moves we are making because the fundamentals look promising, not because they are the investments du jour.

We realize we spent a great deal of this letter dancing around the dangers of unbridled optimism, but we think that is part of our role as a risk manager for you. Please do not label us as cynics. To paraphrase Helen Keller, we feel nothing can be done without hope and confidence. However, we are also aware that hope oftentimes makes an asset class a poor investment as returns are a function of the price paid, not sentiment. When sentiment is high, there is a greater chance of mean reversion than sentiment continuing to march higher. Our job is to make sure your realistic expectations are met, so you can foster a “New Day on the Horizon” full of hope for others. Please call with any questions.

General Compliance Disclosures

Statements made via this letter are the opinions of Creative Financial Group (“CFG”) and its advisors, and are not to be construed as guarantees, warranties or predictions of future events, portfolio allocations, portfolio results, investment returns, or other outcomes. None of the information contained is intended as a solicitation or offer to purchase or sell a specific security, mutual fund, bond, or any other investment. Readers should not assume that the considerations, suggestions, or recommendations will be profitable, suitable to their circumstances or that future investment and/or portfolio performance will be profitable or favorable. Past performance of indices, mutual funds, or actual portfolios does not guarantee future results. Future results may differ significantly from the past due to materially different economic and market conditions; investments in securities or other financial products involve risk and the possibility of loss, including a permanent loss of principal. Investments are not FDIC insured and have no bank guarantee.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to
January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.

Investment products and services provided by Synovus are offered through Synovus Securities, Inc. (“SSI”), Synovus Trust Company, N.A. (“STC”), GLOBALT, a separately identifiable division of STC and Creative Financial Group, a division of SSI. Trust services for Synovus are provided by Synovus Trust Company, N.A. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested.
Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank and Synovus Trust. Synovus Trust Company, N.A. is a subsidiary of Synovus Bank.
Pursuant to rules adopted by the U.S. Securities and Exchange Commission governing federally registered investment advisors, we request that you take time to compare your account balances and statements issued by National Financial Services, who acts as the custodian for your account(s). We request you contact us immediately if you do not receive these statements or if the values reflected are materially different.

Cost basis reporting

If you buy and sell a security in a taxable account on or after the effective date, NFS will report cost basis for the sold security to you and the IRS on Form 1099-B. If you have a mix of covered and uncovered positions in the same security, NFS will report cost basis to you and the IRS for any covered position that is sold. NFS will apply the FIFO (First In, First Out) default method unless you inform us of a different method. Your cost basis method for all transactions must be final by settlement date. If you choose to change the default method, you can do so by notifying your Financial Consultant.

Use of Indexes

iThe investment return and style information and comparisons employ a variety of popular indices, and the index contents and strategies are the property of their respective companies (e.g., Dow Jones, Standard & Poor’s, Morningstar, Barclay Capital, Russell). Although the data is believed to be reliable, CFG makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability, or reliability of the information, which is represented here for informational use only and should not be considered investment advice or recommendation. None of the indices can be invested directly, and the return figures for these various securities indices are reported without management fees, trading costs, or other expenses subtracted from the returns, and are shown on a total return basis that assumes reinvestment of applicable capital gains and dividends. Components of indices may change over time. Small capitalization stocks are represented by the Russell 2000 Index. Mid Capitalization stocks are represented by the S&P Mid Cap 400 Index. Foreign stocks are represented by the MSCI EAFE Index and emerging markets are represented by the MSCI Emerging Markets Index.

Q3 2017 Asset Management Letter

October 16, 2017   ·   By   ·   Comments Off on Q3 2017 Asset Management Letter   ·   Posted in Asset Management Letter Archive, News, Q3 2020 Creative Newsletter

Stormy Weather

Perhaps William Faulkner described hurricanes best when he said it was like “looking down upon a world turned to furious motion and incredible retrograde”. This hurricane season has been remarkable for its level of devastation and tragedy. However, at the same time the response of everyday people put in extraordinary situations has been nothing short of heroic. Consider NFL player, J.J. Watt, setting out to raise $200,000 for hurricane Harvey victims and raising over 30 million dollars at last count. Think of the linemen from all across the country who worked tirelessly to restore power from both hurricane Irma and Harvey. Finally, the first responders in Puerto Rico, some from as far away as New York, who were still providing support weeks later after hurricane Maria hit. Truly, if you have ever met personnel headed towards a natural disaster, then you know how encouraging the human capacity to help their fellow man, woman and child can be.
We bring this setting to the foreground of this month’s quarterly letter for two reasons. One is to pause over what matters most, expressing sympathy for all that have been caught in harm’s way. Two is to draw a parallel to investing. We realize there is a little leap of faith on this subject, but bear with us on this one. We consider “value” investing to be similar to picking up the pieces and getting back to work with what you know. When others are lost in a depressed state, the “value” investor is rebuilding their construct brick-by-brick because they know their intrinsic value deep down inside.
Having this “value” perspective has typically led to outperformance over the long haul (at least dating back to 1977 vis-à-vis the Russell 3000 Value and Growth indices), but there have been shorter time frames when “growth” investing has done better. We lean towards the value tilt given its historical outperformance, but we do invest in growth names as well. For instance, our growth managers are up between 14 to 27% thru 09/30/2017. However, the purchases of items like biotech and healthcare that were beaten down at the end of 2016 and are now up 25.95% and 20.79%, respectively, are the type of “value” moves you will continue to see us make. Financials are a similar area you have seen us add to over the past 18 to 24 months that rewarded significantly in 2016, but slowed down a bit this year as the sector is only up 13.44% YTD. However, we are still very comfortable with the upside potential of our financial sector holdings. Finally, our international positions have also rewarded significantly as our names are up between 20 and 32% for the year.
Of course, with a market up 14.24% this year, it is becoming hard to find cheap sectors. There are specific stocks within sectors that look cheap, but picking those names require significant skill and is usually best done with an active manager. We, of course, use several of those managers and think they are poised to outperform in a market rally that is nearly eight years old and facing the threat of rising interest rates. We will continue to use passive strategies in markets that appear cheap, but with many of these opportunities disappearing you will see us recommending more active strategies until the market corrects significantly. This goes for fixed income, as well as equities.
We hope this quarterly inspires you to remain steadfast against any and all “furious motion” outside your door, both figurative and literal, and, of course, reminds you of your intrinsic value. The weather of the past several weeks and the violence in Las Vegas have heightened our need to encourage others. Investing oftentimes requires optimism in the face of adversity so we certainly understand the need for support. Of course, investing is not just in stocks and bonds. It is also in people. Therefore, we find great solace in the heroes from the hurricanes or something as simple as the blood donors from Las Vegas that stood in line for three or more hours. The parallel to “value” investing is not wasted on us and we hope it resonates with you as well. Please know we value you and your relationship greatly.
______________________________________________________________

Compliance Disclosures

Statements made via this letter are the opinions of Creative Financial Group (“CFG”) and its advisors, and are not to be construed as guarantees, warranties or predictions of future events, portfolio allocations, portfolio results, investment returns, or other outcomes. None of the information contained is intended as a solicitation or offer to purchase or sell a specific security, mutual fund, bond, or any other investment. Readers should not assume that the considerations, suggestions, or recommendations will be profitable, suitable to their circumstances or that future investment and/or portfolio performance will be profitable or favorable. Past performance of indices, mutual funds, or actual portfolios does not guarantee future results. Future results may differ significantly from the past due to materially different economic and market conditions; investments in securities or other financial products involve risk and the possibility of loss, including a permanent loss of principal. Investments are not FDIC insured and have no bank guarantee.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to
January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank.

Investment products and services provided by Synovus are offered through Synovus Securities, Inc. (“SSI”), Synovus Trust Company, N.A. (“STC”), GLOBALT, a separately identifiable division of STC and Creative Financial Group, a division of SSI. Trust services for Synovus are provided by Synovus Trust Company, N.A. The registered broker-dealer offering brokerage products for Synovus is Synovus Securities, Inc., member FINRA/SIPC. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested.
Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank and Synovus Trust. Synovus Trust Company, N.A. is a subsidiary of Synovus Bank.
Pursuant to rules adopted by the U.S. Securities and Exchange Commission governing federally registered investment advisors, we request that you take time to compare your account balances and statements issued by National Financial Services, who acts as the custodian for your account(s). We request you contact us immediately if you do not receive these statements or if the values reflected are materially different.

Cost basis reporting

If you buy and sell a security in a taxable account on or after the effective date, NFS will report cost basis for the sold security to you and the IRS on Form 1099-B. If you have a mix of covered and uncovered positions in the same security, NFS will report cost basis to you and the IRS for any covered position that is sold. NFS will apply the FIFO (First In, First Out) default method unless you inform us of a different method. Your cost basis method for all transactions must be final by settlement date. If you choose to change the default method, you can do so by notifying your Financial Consultant.

Use of Indexes

iThe investment return and style information and comparisons employ a variety of popular indices, and the index contents and strategies are the property of their respective companies (e.g., Dow Jones, Standard & Poor’s, Morningstar, Barclay Capital, Russell). Although the data is believed to be reliable, CFG makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability, or reliability of the information, which is represented here for informational use only and should not be considered investment advice or recommendation. None of the indices can be invested directly, and the return figures for these various securities indices are reported without management fees, trading costs, or other expenses subtracted from the returns, and are shown on a total return basis that assumes reinvestment of applicable capital gains and dividends. Components of indices may change over time. Small capitalization stocks are represented by the Russell 2000 Index. Mid Capitalization stocks are represented by the S&P Mid Cap 400 Index. Foreign stocks are represented by the MSCI EAFE Index and emerging markets are represented by the MSCI Emerging Markets Index.


Copyright © 2011 Creative Financial Group
All rights reserved.

Creative Financial Group (“CFG”) is a division of Synovus Securities, Inc (“SSI”), member FINRA/SIPC. Prior to January 1, 2011, CFG was a separate registered investment adviser affiliate of SSI. Investment products and services are not FDIC insured, are not deposits of or other obligations of Synovus Bank, are not guaranteed by Synovus Bank and involve investment risk, including possible loss of principal amount invested. Synovus Securities, Inc. is a subsidiary of Synovus Financial Corp and an affiliate of Synovus Bank. You can obtain more information about Synovus Securities, Inc. and its Registered Representatives by accessing BrokerCheck