Market Volatility Call, Feb. 24, 2016

Social Purpose at Super Bowl 50

Social Purpose at Leigh Steinberg's Super Bowl PartyOn Saturday I had the pleasure of attending Leigh Steinberg’s Super Bowl Party at the San Francisco Metreon City View. I continue to be impressed by the way sports, business and charity intersect. At the event, Leigh Steinberg and Cosmo DiNicola presented Humanitarian awards to sports leaders who had demonstrated exceptional off-the-field charitable and humanitarian works during the year. Cosmo DiNicola, very successful entrepreneur, is a proponent of what he calls ‘Cause-Based Marketing.’ This is where a product or service is marketed by emphasizing the personal or social cause that is being solved by or related to the product or service.

Leigh Steinberg and Cosmo DiNicola presented awards to:

  • Dee and Jimmy Haslam, owners of the Cleveland Browns, for their work with the Boys & Girls Clubs, United Way.
  • Kevin Demoff, Executive of the Los Angeles Rams, for his work with Demoff’s Dreamers & CEO’s Fighting Cancer.
  • Jack Del Rio, Coach for the Oakland Raiders, for his work with the Del Rio Foundation helping Bay Area underserved youth.
  • Hue Jackson, Coach of the Cleveland Browns, for his work with underprivileged kids.
  • Anquin Boldin, Retired NFL Player, for his work with the Boldin Foundation granting scholarships to high school students.
  • Jack Brewer, Retired NFL Player, for his work with the Brewer Foundation providing international relief with food, medical supplies and water.

Philanthropy has begun to turn to entrepreneurship to solve social causes as well. An example of this is the Not For Sale Campaign’s program to ease exploitation in South America by starting a company that makes a healthy beverage from natural ingredients, bringing a measure of economic prosperity to one region. Jeremy Affeldt, who just retired from the San Francisco Giants, was an essential contributor to the creation of this REBBL Juice company. Exploitation thrives when people are poor and vulnerable. This is called Social Entrepreneurship.

I spent time at the Super Bowl Party talking with Leesa Clark-Price, Executive Director of the Responsibility Foundation, who is working to bring the Statue of Responsibility to the West Coast. The Statue of Responsibility is to be placed across the Country from the Statue of Liberty. Inspired by the writing of Victor Frankl (Man’s Search for Meaning) the Statue of Responsibility complements the Statue of Liberty as an artistic statement that Liberty + Responsibility = Freedom. Liberty without Responsibility does not create Freedom.

In the Preface to Man’s Search for Meaning Victor Frankl writes:

“And so it is both strange and remarkable that — among dozens of books I have authored — precisely this one [Man’s Search for Meaning], which I had intended to be published anonymously so that it could never build up any reputation on the part of the author, did become a success. Again and again I therefore admonish my students both in Europe and in America: “Don’t aim at success — the more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s dedication to a cause greater than oneself or as the by-product of one’s surrender to a person other than oneself. Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long run – in the long run, I say! – success will follow you precisely because you had forgotten to think of it.”

Social Entrepreneurship and Cause-Based Marketing, the merging of social and business purposes, with social purpose as the core, is a formula for success. I am thrilled to see these trends emerging and expanding. I have always run my business with the assumption that if I focus first and foremost on helping people, helping others achieve their financial goals, then I will be successful as a by-product of that. This is why the tagline for Union Financial Partners is ‘Committed to Your Success.’ I have found this practice to be both rewarding and successful.

PACC SF Chapter Launch

PACCJust in time for Super Bowl 50, PACC – the Pro-Athlete & Business Network launched its 4th Chapter – in San Francisco. The mission of the PACC is to provide an environment of prosperity and success through quality business relationships between vetted business professionals, nonprofits and pro athletes for networking, strategic partnerships, career and educational opportunities.

I had the pleasure of spending time with John Bronson and other PACC Members for their launch event last night in the exclusive Microsoft VIP Lounge at the Westfield Center.

Founded by John Bronson, former NFL Arizona Cardinals Tight End, PACC is designed to serve as a resource hub to connect current and former pro athletes with high quality business professionals vetted for their integrity.

I’m happy to bring Union Financial Partners to an organization like this because of my commitment to helping people, including Professional Athletes, live better, bigger and joyful financial lives. I found the people at PACC dedicated to building profitable businesses, doing good works for society, and wanting to improve the lives of others.

The January Effect – Real or Hype?

I don’t have to tell you that it’s been an interesting start to the year. With just weeks weeks of trading completed, many major markets have entered correction (<10%) or bear (<20%) territory. Markets like the US, UK and Germany are in correction territory while China, Hong Kong, and Brazil are in bear territory. Not exactly what we were hoping for after back-to-back sluggish years of investing in global markets.

I just found out recently (from CNBC of course – see here) that there’s something called the January Barometer. It says, “As January goes, so goes the year.” They found that … in the past 35 years, the S&P 500 followed January’s direction 25 times, or 71 percent of the time. And, while January is only one of 12 months of the year, history shows that it tended to predict the year’s direction quite accurately.

It’s funny how this type of information can mislead investors into thinking January should give them information about the future direction of markets. To the untrained eye, 71 percent is a high number, and suggests really good odds. To the skeptic, there’s more than meets the eye.

First, markets have been positive more than they have been negative. If you look at the Distribution of US Market Returns, you will see that the CRSP 1-10 Index (a US equity market benchmark) was positive 75% of the time from 1926-2014 (67 years), thus negative only 25% of the time (22 years). Maybe the above number in CNBC’s article is a bit distorted by equity markets having positive returns.

Second, we thought we should run our own test to get down to the bottom of this. We looked at different indices for the longest common start date (1999), and we even looked at the S&P 500 Index as a standalone going back to 1926. The simple test was:

  • True/False: If January is negative, is the return for that year negative.
  • True/False: If January is positive, is the return for that year positive.

That simple test helps us determine whether or not the January Barometer is a good measure for the next 11 months. As you’ll notice below, from 1999-2015, the S&P 500 Index was negative 9 times in January (56% of the time), but only ended the year negative 3 times. Only 33% of the time when January was negative did the year follow suit. If we look at a longer period, from 1926-2015 the data tells the same story. The S&P 500 Index was negative 34 times in January (out of 89 years or 38% of the time). Only 47% of the time was the year negative when January was negative.

We can also look at the instances where January is positive and the year is positive. From 1999 – 2015 January was positive 8 times, with 7 of those years ending with a positive year. The index was positive for the year 88% of the times that it was also positive in January. From 1926 – 2015 the index was positive 55 times and the year followed positive 85% of those times.

Don’t be swayed by an interesting story; there is usually more to the story than meets the eye.

The January Effect