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ETF Stats For August 2015 – Assets Fall As Trading Jumps

ETF industry assets dropped 5.4% in August as trading surged 33.5%. Product count increased by only four because the 24 launches were nearly overshadowed by the 20 ETF deaths. The month closed with 1,768 active listings, consisting of 1,574 ETFs and 194 ETNs. The actively managed fund count held steady at 133, although their assets moved 2.0% higher. Assets shrunk by $115 billion for the month as negative market action swamped the less-than $3 billion of cash inflows. The setback puts overall assets at just a little over the $2 trillion mark and the year-to-date asset gains at just 1.0%. Actively managed funds fared better than passive funds in August as assets increased to $21.2 billion, which represents a 2.0% gain for the month and a healthy 23.1% year-to-date jump. The quantity of ETFs with more than $10 billion in assets slipped from 54 to 52, and these 2.9% of the listings control 56% of the assets. Funds with more than $1 billion in assets declined by 4 to 259 and they hold an 84.7% market share. The average ETF has $1.18 billion in assets, but average does not imply typical. Only 228 products are above average when it comes to assets, while the other 1,540 (87%) are below average. The median asset size across all products is about $75 million. August is often a sleepy month for trading activity as summer vacations tend to put a damper on market volume. This August was far from typical, as ETF trading activity surged to its second-highest monthly level in more than four years. The total dollar volume of ETFs and ETNs was $2.12 trillion for the month. This was a 33.5% jump from July and a whopping 178% surge from August 2014. As usual, the vast majority of the trading was concentrated in relatively few ETFs. 14 products averaged more than $1 billion per day in trading activity, and this elite group captured a 61.1% market share. At the other extreme, there were 1,419 products that failed to muster $10 million in average daily trading. Even though they represent 80% of the products on the market, they accounted for only 2% of the trading action. Realizing how tough it is to succeed in the ETF space, industry leader BlackRock (NYSE: BLK ) closed and liquidated 18 iShares ETFs. 2 of the closing funds had more than $30 million in assets, which is above the $25 million limit for ETF Deathwatch inclusion. So far this year, 11 products with more than $25 million in assets have closed. It may be time to raise the threshold. Currency hedging remains the dominant theme for new launches. 12 of the 24 new ETFs released in August boast a currency-hedged strategy. Deutsche Bank (NYSE: DB ) had some early success with this approach, and it now appears to be the firm’s primary thrust for its X-trackers product line. 10 new Deutsche X-trackers ETFs employing currency hedging arrived in August. Additionally, Deutsche closed 9 of its unhedged funds this year. Of the 32 X-trackers listed for trading in the US, 24 use currency hedging, 3 use interest rate hedging, and only 5 are unhedged. August 2015 Month End ETFs ETNs Total Currently Listed U.S. 1,574 194 1,768 Listed as of 12/31/2014 1,451 211 1,662 New Introductions for Month 24 0 24 Delistings/Closures for Month 20 0 20 Net Change for Month +4 0 +4 New Introductions 6 Months 145 4 149 New Introductions YTD 179 5 184 Delistings/Closures YTD 56 22 78 Net Change YTD +123 -17 +106 Assets Under Mgmt ($ billion) $1,993 $25.3 $2,019 % Change in Assets for Month -5.5% +1.5% -5.4% % Change in Assets YTD +1.1% -6.0% +1.0% Qty AUM > $10 Billion 52 0 52 Qty AUM > $1 Billion 252 7 259 Qty AUM > $100 Million 765 35 800 % with AUM > $100 Million 48.6% 18.0% 45.3% Monthly $ Volume ($ billion) $2,040 $80.8 $2,120 % Change in Monthly $ Volume +33.7% +31.0% +33.5% Avg Daily $ Volume > $1 Billion 12 2 14 Avg Daily $ Volume > $100 Million 102 7 109 Avg Daily $ Volume > $10 Million 337 12 349 Actively Managed ETF Count (w/ change) 133 +0 mth +8 ytd Actively Managed AUM ($ billion) $21.2 +2.0% mth +23.1% ytd Data sources: Daily prices and volume of individual ETPs from Norgate Premium Data. Fund counts and all other information compiled by Invest With An Edge. New products launched in August (sorted by launch date): Virtus Newfleet Multi-Sector Unconstrained Bond ETF (NFLT), launched 8/11/2015, is an actively managed ETF with a main objective of providing a high level of current income and a secondary objective of capital appreciation. The ETF will rotate among various global bond market sectors at times the managers believe they will outperform. Yield information is not currently provided. The expense ratio will be capped at 0.80% until 8/10/16 ( NFLT overview ). Deutsche X-trackers MSCI All World ex US High Dividend Yield Hedged Equity ETF (HDAW), launched 8/12/2015, is designed to invest in non-US companies with higher-than-average dividend yields while mitigating exposure to fluctuations between the value of the component currencies and the US dollar. Equities can be selected from both developed and emerging markets, with the largest geographic exposure currently being the UK at about 33%. Current yield is 4.4%. HDAW has an expense ratio of 0.45% ( HDAW overview ). Deutsche X-trackers MSCI EAFE High Dividend Yield Hedged Equity ETF (HDEF), launched 8/12/2015, invests in non-US companies with higher-than-average dividend yields while offsetting value changes between the component currencies and the US dollar using forward currency contracts. Equities are selected from among the MSCI EAFE universe, with the largest geographic exposure currently being the UK at about 40%. Current yield is 4.4%. The ETF sports an expense ratio of 0.45% ( HDEF overview ). Deutsche X-trackers MSCI Emerging Markets High Dividend Yield Hedged Equity ETF (HDEE), launched 8/12/2015, is designed to invest in emerging market companies with higher-than-average dividend yields while mitigating exposure to fluctuations between the value of the component currencies and the US dollar. China leads the way with about a 31% country allocation, and the current yield is 4.1%. The ETF’s expense ratio is 0.65% ( HDEE overview ). Deutsche X-trackers MSCI Eurozone High Dividend Yield Hedged Equity ETF (HDEZ), launched 8/12/2015, invests in European companies with higher-than-average dividend yields while offsetting value changes between the euro and the US dollar using forward currency contracts. The largest geographic exposure is Germany at about 24%, with France coming in next at about 19%. Current yield is 4.2%. Investors will pay 0.45% annually to own this ETF ( HDEZ overview ). Guggenheim S&P 500 Equal Weight Real Estate ETF (NYSEARCA: EWRE ), launched 8/13/2015, is designed to provide an investment option composed of the companies in the S&P 500 that are included in the real estate sector, excluding mortgage real estate investment trusts (REITs). The holdings are equally weighted and will be rebalanced quarterly. EWRE has an expense ratio of 0.40% ( EWRE overview ). Deutsche X-trackers Japan JPX-Nikkei 400 Hedged Equity ETF (NYSEARCA: JPNH ), launched 8/19/2015, will hold 400 Japanese securities that are selected based on qualitative and quantitative measures such as return on equity (ROE), cumulative operating profit, and market capitalization. The ETF then hedges its currency risk between the US dollar and Japanese yen with forward contracts. The expense ratio is capped at 0.45% until 10/1/16 ( JPNH overview ). Deutsche X-trackers MSCI Australia Hedged Equity ETF (DBAU), launched 8/19/2015, invests in large- and mid-capitalization Australian stocks while utilizing currency forwards to minimize fluctuations between the Australian and US dollars. The ETF currently holds 70 securities, with over 50% representing the Financials sector. The ETF sports an expense ratio of 0.45% ( DBAU overview ). Deutsche X-trackers MSCI EAFE Small Cap Hedged Equity ETF (DBES), launched 8/19/2015, is designed to give investors access to small-cap, developed market equities outside of the US while mitigating exposure to currency fluctuations. There are over 2,000 holdings representing 21 countries. The ETF’s expense ratio is 0.45% ( DBES overview ). Deutsche X-trackers MSCI Italy Hedged Equity ETF (DBIT), launched 8/19/2015, is currently invested in 26 large- and mid-capitalization Italian equities. DBIT uses forward contracts to minimizing the value fluctuations between the US dollar and the euro. Holdings of Intesa Sanpaolo and Eni combine to be about 25% of the fund. Investors will pay 0.45% annually to own this ETF ( DBIT overview ). Deutsche X-trackers MSCI Southern Europe Hedged Equity ETF (DBSE), launched 8/19/2015, selects large- and mid-capitalization equities in Spain, Italy, and Portugal while minimizing the value fluctuations between the US dollar and the euro. The underlying MSCI Index excludes Greece, which lies further south than the three constituent countries. Sector allocation is heavy in Financials at nearly 42%, while 56% of the 55 holdings are in Spain. DBSE has an expense ratio of 0.45% ( DBSE overview ). Deutsche X-trackers MSCI Spain Hedged Equity ETF (DBSP), launched 8/19/2015, is currently invested in 25 large- and mid-capitalization Spanish equities. DBSP utilizes forward contracts to minimize the fluctuations between the value of the US dollar and euro. Financials leads the sector allocation at nearly 42%, with Banco Santander the top holding at 17.2%. The ETF sports an expense ratio of 0.45% ( DBSP overview ). Direxion Daily Homebuilders & Supplies Bear 3x Shares (CLAW), launched 8/19/2015, is designed to return a leveraged daily return of -300% (inverse) of the Dow Jones US Select Home Construction Index. The Index includes a variety of companies that provide home building services and products, such as builders, home improvement retailers, and suppliers of building materials and fixtures. The expense ratio will be capped at 0.95% until 9/1/17 ( CLAW overview ). Direxion Daily Homebuilders & Supplies Bull 3x Shares (NAIL), launched 8/19/2015, has a goal of providing a leveraged daily return of 300% of the Dow Jones US Select Home Construction. The Index includes a variety of companies that provide home building services and products, such as suppliers of building materials and furnishings, builders, and home improvement retailers. The expense ratio will be capped at 0.95% until 9/1/17 ( NAIL overview ). Direxion Daily Regional Banks Bear 3x Shares (WDRW), launched 8/19/2015, seeks to provide a daily return of -300% (inverse) of an index reflecting the 50 largest regional banks in the US. The banks are selected based on their free-float market capitalization and then equally weighted. The expense ratio will be capped at 0.95% until 9/1/17 ( WDRW overview ). Direxion Daily Regional Banks Bull 3x Shares (DPST), launched 8/19/2015, attempts to provide a 300% daily return of the Solactive US Regional Banks Total Return Index. The Index selects the 50 largest regional banks in the US based on free-float market capitalization and then equally weights the holdings. The expense ratio will be capped at 0.95% until 9/1/17 ( DPST overview ). Market Vectors Oil Refiners ETF (Pending: CRAK ), launched 8/19/2015, invests in the largest and most liquid companies in the global oil refining segment. It currently holds 25 companies that produce gasoline, jet fuel, fuel oil, naphtha, and other petrochemicals. The US accounts for about half of the geographic allocation, with the next largest being Japan at about 10.9%. The manager will cap expenses at 0.59% until 5/1/17 ( CRAK overview ). O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI), launched 8/19/2015, invests in large- and mid-capitalization companies in Asia Pacific that pay dividends. Holdings are selected based on several factors such as liquidity, high quality, low volatility, and dividend yield. The largest country represented is Japan at 43.9%, and the sector allocation is relatively even with six over 10%. OASI has a 0.58% expense ratio ( OASI overview ). O’Shares FTSE Europe Quality Dividend ETF (OEUR), launched 8/19/2015, invests in large- and mid-capitalization, dividend-paying European equities. Holdings are selected based on several factors such as liquidity, high quality, low volatility, and dividend yield. The UK has the largest country allocation at 43.1%. Health Care and Consumer Goods lead the sectors at about 19% each. Investors will pay 0.58% annually to own this ETF ( OEUR overview ). Compass EMP International 500 Volatility Weighted Index ETF (NASDAQ: CIL ), launched 8/20/2015, invests in up to 500 large-cap equities in developed stock markets, excluding the US. The ETF’s selection process starts with screening for companies with net positive earnings for four consecutive quarters. It then selects the largest 500 and weights them based on their daily standard deviation (volatility). Countries with more than a 10% allocation include Japan at 20.5% and the UK at 12.7%. The expense ratio is capped at 0.45% until 6/30/17 ( CIL overview ). Compass EMP International High Dividend 100 Volatility Weighted Index ETF (NASDAQ: CID ), launched 8/20/2015, selects the 100 highest dividend-paying equities from the CEMP International 500 Volatility Weighted Index and weights them based on their daily standard deviation (volatility). The UK tops the country allocation with 19.5%. Australia is close behind at 17.5%. The expense ratio is capped at 0.45% until 6/30/17 ( CID overview ). O’Shares FTSE Asia Pacific Quality Dividend Hedged ETF (OAPH), launched 8/25/2015, is a fund-of-funds seeking to invest in Asia Pacific large- and mid-capitalization equities that exhibit relatively low volatility and high dividend yields while reducing the impact of changes between the value of the underlying currencies and the US dollar. The ETF holds O’Shares FTSE Asia Pacific Quality Dividend ETF (OASI) and then hedges against the currency risk. The ETF’s expense ratio is 0.68% ( OAPH overview ). O’Shares FTSE Europe Quality Dividend Hedged ETF (OEUH), launched 8/25/2015, is a fund-of-funds investing in large- and mid-capitalization equities across the European region that exhibit relatively low volatility and high dividend yields while minimizing the impact value fluctuations between the underlying currencies and US dollar. The ETF holds O’Shares FTSE Europe Quality Dividend ETF (OEUR) and then hedges against the currency risk. It sports a 0.68% expense ratio ( OEUH overview ). Vanguard Tax-Exempt Bond ETF (NYSEARCA: VTEB ), launched 8/25/2015, offers diversified exposure to the investment-grade US municipal bond market. Its objective is to provide moderate current income in a long-duration portfolio with high credit quality. Yield information is not yet provided. VTEB has an expense ratio of 0.12% ( VTEB overview ). Product closures/delistings in August: AdvisorShares Accuvest Global Long Short (NYSEARCA: AGLS ) ETFS Physical Asian Gold Shares (NYSEARCA: AGOL ) iShares FTSE China (NASDAQ: FCHI ) iShares MSCI All Country Asia Info Technology (NASDAQ: AAIT ) iShares MSCI All Country Asia ex-Japan Small-Cap (NASDAQ: AXJS ) iShares MSCI Australia Small-Cap (BATS: EWAS ) iShares MSCI Canada Small-Cap (BATS: EWCS ) iShares MSCI Emerging Markets Growth (NASDAQ: EGRW ) iShares MSCI Emerging Markets Value (NASDAQ: EVAL ) iShares MSCI Emerging Markets Eastern Europe (NYSEARCA: ESR ) iShares MSCI Emerging Markets EMEA (NASDAQ: EEME ) iShares MSCI Emerging Markets Cons Discretionary (NASDAQ: EMDI ) iShares MSCI Emerging Markets Energy Sector (NASDAQ: EMEY ) iShares MSCI Hong Kong Small-Cap (NYSEARCA: EWHS ) iShares MSCI Singapore Small-Cap (NYSEARCA: EWSS ) iShares Asia Developed Real Estate (NASDAQ: IFAS ) iShares North America Real Estate (NASDAQ: IFNA ) iShares Financials Bond (NYSEARCA: MONY ) iShares Industrials Bond (NYSEARCA: ENGN ) iShares Utilities Bond (NYSEARCA: AMPS ) Product changes in August: Goldman Sachs discontinued issuing shares of GS Connect S&P GSCI Enhanced Commodity Total Return Strategy Index ETN (NYSEARCA: GSC ) on June 9. It is now a broken product without a functioning share creation and redemption process. Buyers, sellers, and holders beware. The Forensic Accounting ETF (NYSEARCA: FLAG ) became the WeatherStorm Forensic Accounting Long-Short ETF ( FLAG ) effective August 7 . The underlying index changed from the long-only Del Vecchio Earnings Quality Index to the WeatherStorm Forensic Accounting Long-Short Index. The new index is constructed with a 130% long and 30% short (130/30) equity exposure. Fidelity Investments made changes to its commission-free ETF lineup by adding iShares MSCI All Country World Minimum Volatility (NYSEARCA: ACWV ) and iShares Short Treasury Bond (NYSEARCA: SHV ) effective August 24. It also removed iShares MSCI Emerging Markets EMEA ETF ( EEME ) as of August 24 and will remove iShares U.S. Real Estate ETF (NYSEARCA: IYR ) effective October 31. WisdomTree renamed thirteen of its ETFs effective August 31. Changes included “Dividend Growth” to “”Quality Dividend Growth”, “DEFA” to “International”, and “Equity Income” to “High Dividend”. Announced Product Changes for Coming Months: The iShares iBonds Sep 2015 AMT-Free Muni Bond ETF (NYSEARCA: IBMD ) is scheduled to mature and will cease trading after the market closes on September 1. The iShares MSCI USA ETF (NYSEARCA: EUSA ), a capitalization-weighted fund, will undergo an extreme makeover on September 1, becoming the iShares MSCI USA Equal Weighted ETF ( EUSA ). The iShares Japan large-Cap ETF (NYSEARCA: ITF ), based on the S&P/TOPIX 150 Index, will undergo an extreme makeover on September 4, becoming the iShares JPX-Nikkei 400 ETF ( ITF ). Deutsche X-trackers Regulated Utilities (NYSEARCA: UTLT ) and Deutsche X-trackers Solactive Investment Grade Subordinated Debt (NYSEARCA: SUBD ) will close with September 9 being their last day of trading. State Street will forward split ten of its SPDR industry ETFs effective September 10. VelocityShares 3x Long Crude Oil ETN (NYSEARCA: UWTI ) will have a 1-for-10 reverse split and VelocityShares 3x Long Natural Gas ETN (NYSEARCA: UGAZ ) will have a 1-for-5 reverse split effective September 10 . ProShares UltraShort Telecommunications (NYSEARCA: TLL ) will close with September 14 being its last day of trading. Van Eck Global will close its four international quality ETFs with September 18 being the last day of trading for QEM, QDEM, QXUS, and QDXU. Shareholders that do not sell prior to the delisting will have to wait nearly six weeks (to October 28) to get their money . PIMCO will close three ETFs with September 23 being the last day of trading. Affected funds are PIMCO 3-7 Year U.S. Treasury Index ETF (NYSEARCA: FIVZ ), PIMCO 7-15 Year U.S. Treasury Index ETF (NYSEARCA: TENZ ), and the actively managed PIMCO Foreign Currency Strategy Active (NYSEARCA: FORX ). Direxion will perform reverse splits on six of its leveraged ETFs effective October 1 (originally scheduled for September 10). Van Eck Global plans to acquire Yorkville MLP ETFs ( press release ) and hopes to close the transaction in the fourth quarter. Previous monthly ETF statistics reports are available here . Disclosure covering writer: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

For The Love Of The Game: How To Keep Learning In The Market

Summary This is a philosophical piece intended to help young aspiring analysts. I will share my mistakes and lessons learned on the buy side. I will briefly discuss Cheniere Energy. This is a philosophical piece with two goals in mind: To inspire young aspiring analysts, and to share the multitude of career mistakes that I made. With the benefit of hindsight and reflection, I know others can benefit from my self-inflicted missteps. Given the significant amount of time I spend engaged on the Seeking Alpha website, I am noticing more and more talented authors. For some of the folks more junior in their careers ascents or for aspiring analysts trying to make it into the research arena, I think my experience and unique observations may benefit them. So, in the spirit of trying to help others, I sincerely hope to pass the baton and impart some insights that may benefit them as they progress in their careers. The Power of Mentors For context, I will provide my brief background and relevant professional investment research experience. During my undergraduate days, I attended the Isenberg School of Management at the University of Massachusetts at Amherst. I was passionate about investing since middle school, as my dad sparked my intellectual curiosity. While at UMass, I gained access to an alumni list and then emailed as many people in the industry as possible. After getting a response, I would then call them, usually early in the morning, before their hectic day’s beginning. So here I was talking quietly in the dorm room hallways (trying not to wake up my floor at 7 am). As I had virtual no industry contacts, this was the best strategy. However, long on confidence, I was convinced that I was the next up-and-coming star analyst and I only needed to be discovered. From that point, I would land a junior analyst role. Not only I was incredibly naïve, but I had an exalted sense of self, which was unwarranted and unhelpful. However, nice alumni looked past this misplaced arrogance and focused on my passion. Through these calls, I was able to connect with many smart and talented UMass alumni who were actual market participants on the buy side. One individual was, and still is, a portfolio manager at prestigious Wellington Management. He is piercingly bright, very generous with his time, and passionate about helping UMass alumni learn about investing. Although I haven’t been in as close contact with him lately, he was extremely influential in my progress and evolution as an investor. I have one other mentor, whom I originally connected with on LinkedIn in 2004. This was a period between jobs, and I was still questing for that elusive foothold on the buy side. This individual is currently an equity portfolio manager at Alpine Funds. Yes, he has the shiny credentials of a top MBA and CFA, but more importantly, he is a great investor and extremely hardworking. He and I have been friends through email since 2004, and we constantly trade investment ideas via email. Over the course of thousands of email exchanges, my writing and thought process continued to improve. Specific investment lessons from these two mentors For context, my mentor at Wellington is a portfolio manager at Wellington, and manages international equity growth funds with approximately $4 billion in assets under management (AUM). Over the course of our friendship and multiple email exchanges, he explained (using the Socratic method) how growth stocks work. He said that the only thing that matters is consensus earnings estimates. In order to take a position in any equity, you need to qualitatively and quantitatively understand how the market arrived at current consensus estimates. If, and only if, you deeply study the company and build your high-level models that capture the major drivers of revenue and earnings can you have an opinion. Never, never, never have a strong opinion on a stock unless you have really done the work. The fastest way to get dinged during an interview on the buy side is to come across long on opinion and short on analysis. It is always better to say “Here is what I have read, and here is how I think about it, but perhaps I am missing certain angles.” It is much better to informed and humble than arrogant and overly confident, especially when speaking with actual market participants. He then taught me that many people fall into the trap that a stock is overvalued because it has a high P/E ratio compared to the market or its sector. With the supercomputers of today, crunching ratios is a waste of time, as it is fully reflected in the stock price, given that the market is very efficient at incorporating actual events. Again, you have to understand consensus estimates better than the Street. If your model and work are materially different from the consensus, only then should you make a bet. For a concrete example, over the course of a few emails, he walked me first-hand through why in mid-2003 Research in Motion, now BlackBerry (NASDAQ: BBRY ), was his largest holding. I think BBRY’s stock ultimately ended up increasing by 5,000% from 2003 to 2007. If any reader cares to do some searching on Google, they will find that the vast majority of then-leading experts thought BBRY was going to zero. They saw that they were losing money and also saw the company’s cash burn, and erroneously assumed that BlackBerry had nothing noteworthy in its pipeline. Now, my mentor will freely admit that he happened to have met with management (that is a major advantage of being a professional money manger – access to management teams to kick tires). During his visit to BBRY’s corporate HQ, he was able to work out first-hand how technologically advanced the company’s products were, and envisioned their appeal to chief technology officers in the Fortune 500. He also understood the huge addressable market, the potential margins on the handsets, the security features of its product, and that BBRY was really a great software company. Had I known then what I know now, I would be retired at age 35 if I had put on a concentrated long bet on BBRY and simply held it for four years. Clearly, I wasn’t wise enough to understand that I was handed a lottery ticket with winning numbers on it. (click to enlarge) My mentor from Alpine Funds has also taught me a great deal. Once a new investor gets up to speed on the core blocking and tackling, like being able to read financial statements and the basics of accounting, the best way to make money is to develop a great imagination. Stock prices will rise or fall past on their future cash flow and revenue growth relative to consensus estimates. For another vivid example, in 2004, this mentor of mine walked me through his largest holding in his personal account, Silver Wheaton (NYSE: SLW ). If I recall, SLW was then a $4 stock. He explain to me that he was very bullish on silver, and that this was the best vehicle to participate in silver’s ascent. He explained how silver was a by-product, and mining is extremely CAPEX-intensive, so producers who are targeting gold or copper are willing to sell their silver by-product production (or silver streams) for an upfront payment and then for a low price of $4 per ounce. The producers would then use the upfront payment to fund their CAPEX. Silver Wheaton eventually traded as high as $50 in May 2011, though it was a bumpy ride, with the stock dropping down to $2.50 during the 2009 equity crash. My mentor also emphasized the importance of being willing to take a contrarian stance if you have enough conviction in your idea. When he was traveling the hedge fund circuit, as he had two stints as a hedge fund analyst, he learned the importance of managing your downside risk, but also that betting big when the risk/reward was greatly in your favor. Although he was capable enough, he determined that the hedge fund world didn’t suit his personality and investment process. This is my long-winded way of stating that mentors are invaluable. They will encourage you, push you, and if you put in the effort, they will help you become a better investor. I am still in constant contact with my friend at Alpine Funds. I distinctly remember when he once told me, “My wish for you is that you greatly surpass my as an analyst.” That illustrated to me that he was invested in my success, and he was humble enough and had had the benefit of mentors while he was in his formative stages. Don’t get into fights with your boss My next piece of advice is that if you do make it to the buy side, know your role and keep your ego in check. Although the barriers to entry are very steep, just because you made the team doesn’t mean you can’t get cut. Despite an insatiable curiosity and undeniable passion for investing, my ego and poor semantics while expressing my investment ideas wrote proverbial checks that I couldn’t cash. The collective bill came due when I couldn’t meet the proverbial margin call. My five years of solid performance and exemplary annual reviews were marred by aggressive and arrogant interactions with senior analysts. No one want to be told they are wrong and that their thesis is wrong, especially from a 29-year old. You can’t tell your boss that you think you are a better investor than him. This is a career-limiting move, trust me. So the takeaway is that if you can surmount the incredibly high barriers to entry, take it slow, listen, observe and ask questions. Investing isn’t like the NFL, it isn’t a pure meritocracy. You have to work hard, learn, be likeable and keep your head down. If folks sense that you are not a team player (however misplaced this label may be), your career at that shop is effectively over. Know yourself Beside the fact that I didn’t have the right temperament for Liberty Mutual, you have to know yourself. Reflecting upon my five years at Liberty, I probably knew it wasn’t the right cultural fit in year three. However, don’t do the impulsive Jerry Maguire letter and then quit, as this is terrible career mistake that has to be explained away in future interviews. There are exceptions, but the buy side generally requires a CFA, Ivy League education (at least on the equity side), lots of networking, and even more luck to find your foothold. Although I made it into the industry, I only advanced to the bottom rungs of the ladder. There is an alternative pathway. There are excellent open source sites like Seeking Alpha, and different ways to make a living. However, this is the path less traveled, and it will invariably take years of building your brand, developing a portfolio of great research as evidence, and getting the marketing aspect right. There are members of the Seeking Alpha community who have successfully done this, so they would be a much better resources. I only write articles in my free time as a hobby. The Power of Redemption Moving along, let me power down my philosophical side of my brain, and let’s talk about one of my recent investment ideas written here on Seeking Alpha that seems to be playing out. I want to specifically highlight two investment pieces that I wrote recently on Cheniere Energy (NYSEMKT: LNG ). The point of bringing this up is that through the comments section of my first article, the Seeking Alpha community inspired me to improve upon my first article that some labeled incomplete. I viewed this as constructive criticism and an opportunity to dig deeper and write a follow-up article. Incidentally, my original thesis seems to be playing out, as Mr. Chanos disclosed a new short position in shares of Cheniere. However, I am not spiking the football on the one-yard line, as the stock has now become a battleground stock between the bulls, including investing greats like Seth Klarman and Carl Icahn, and the bears, like Jim Chanos. I have done a lot of research on the company and have shared my bearish view on the site. Again, I’m not writing to gloat, but simply suggesting that if we are passionate about our craft, we can make good investment calls. Of course, the buy side has its advantages of access to management team and access to many research publications. However, with the power of Google and some intellectual curiosity, you want produce compelling work. I can’t tell you the last time I read a sell side report. As a general rule, I completely ignore sell side research, as I like to do my own research. Moreover, when an idea finally works and it gets recognized by the market, it brings a great feeling of satisfaction and even redemption for hobbyists like me. To sum up Mr. Chanos’s bearish arguments: There will be massive global overcapacity in the LNG space. LNG is priced based on Brent prices, and Brent has collapsed from $110 to $50, so incremental new long-term supply agreements will be less lucrative. The industry is plagued by massive cost overruns (look at Chevron’s greenfield projects). Cheniere’s contracts aren’t sacrosanct. The company is way too promotional and has yet to sell any LNG. Its capital structure and executive compensation polices leave much to be desired. Concluding Thoughts Investing is more of an art than a science once you understand the fundamentals. For aspiring analysts: Find great mentors, don’t get in fights with your boss and know yourself. Investing is an extremely humbling pursuit; therefore, savor your victories, because they can be fleeting. Good luck, and thanks for reading. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Less Volatility And Still No Inflows

By Jeff Tjornehoj For the fund-flows week ended September 9 the widely watched Dow Jones Industrial Average lost 98 points and saw just 390 points separate the week’s maximum high and low closing prices-much less volatility than the previous week’s 596-point swing and the 1,324-point swing the week before that. Equity mutual fund investors made net redemptions of $2.5 billion this past week, while equity exchange-traded funds (ETFs) saw net outflows of $13.6 billion as investors backed out of SPDR S&P 500 ((NYSEARCA: SPY ) , -$10.1 billion ) , PowerShares QQQ ((NASDAQ: QQQ ) , -$732 million ) , and iShares MSCI UK ((NYSEARCA: EWU ) , -$489 million ) . The $6.4-billion Select Sector Industrials SPDR ((NYSEARCA: XLI ) , +$228 million ) led the weekly net inflows list. Bond mutual fund investors, like their equity counterparts, took a risk-off attitude as they redeemed shares. Overall, taxable bond mutual funds saw net outflows of $1.0 billion for the week, while bond ETFs saw $4.6 billion of net inflows. Investors had singular views about credit risk; Lipper’s Loan Participation Funds (-$115 million) and High Yield Funds (-$160 million) classifications both experienced net outflows. The week’s biggest bond ETF net withdrawals occurred at SPDR Barclays Short-Term Corporate ((NYSEARCA: SCPB ) , -$58 million ) , while iShares 1-3 Treasury Bond ((NYSEARCA: SHY ) , +$559 million ) led the net inflows charge. Municipal bond mutual fund investors pulled $125 million net from their accounts, and the funds now have a three-week losing streak. Money market funds saw net outflows of $11.8 billion, of which institutional investors pulled $12.2 billion and retail investors added $432 million. Share this article with a colleague