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public0

FILL THE GAP EPISODE EIGHTEEN, WITH RUSTY VANNEMAN, CMT, CFA

Listen above, or subscribe on your favorite podcast service and never miss an
update!

SUMMARY

Thirty year veteran of the financial markets, decorated investment manager,
leader of investment teams, and communicator of investment strategies joins us
this month for a chat amongst old friends.

Classmates at Babson and former colleagues at both Thomson Financial and
Fidelity Investments, Dave and Rusty can practically end each other’s sentences,
so this month’s discussion and debate takes us in many directions, including:

* Why do investors of high-performing portfolio managers fail to achieve the
same returns as the fund?
* Why is communication of the strategy so critically important, and how can it
be done better?
* Does “Value” work? And, what fundamental drivers help value shares outperform
in inflationary regimes?
* Why is this Radiohead tune Rusty’s chosen walkout song?
* Competitive Stationary Rowing is a real thing?

Rusty is a host of Orion’s The Weighing Machine podcast and authored the book
“Higher Calling: A Guide to Helping Investors Achieve Their Goals.” He also
serves as the Chief Investment Strategist for Orion Advisor Solutions.

Rusty was such a fun guest to interview because he is always candid, full of
energy, and has delivered excellence in every stage of his career. Currently,
Rusty delivers relevant market-and platform-related content that supports
deeper, more engaging conversations with advisors and investors. He is
passionate about educating investors to help deliver more favorable outcomes.
And as a successful fund manager himself, Rusty excels in identifying new
investment offerings to meet growing marketplace demand.

RESOURCES

1. https://www.clsinvest.com/about/
2. Rusty’s Walkout Song: https://youtu.be/vOa–Dhu11M (I might be wrong –
Radiohead)
3. The Higher Calling:
https://www.amazon.com/Higher-Calling-Helping-Investors-Achieve/dp/B0898Z769B
4. The Weighing Machine Podcast w.s.g. David Lundgren, CMT, CFA:
https://podcasts.apple.com/nz/podcast/mastering-your-investment-style-with-dave-lundgren/id486850755?i=1000527957064
5. Contact Rusty on Twitter @RustyVanneman or Linkedin here.

TRANSCRIPT

Tyler Wood 0:13
Welcome to fill the gap, the official podcast series of the CMT Association
hosted by David Lundgren and Tyler Wood. This monthly podcast will bring
veterans market analysts and money managers into conversations that will explore
the interviewees investment philosophy, their process and decision making tools.
By learning more about their key mentors, early influences and their long
careers in financial services Fill The Gap will highlight lessons our guests
have learned over many decades and multiple market cycles. Join us in
conversation with the men and women of Wall Street, who discovered engineered
and refined the discipline of Technical Marketing.

Good afternoon, David Lundgren and welcome to June 2022, and episode 18 of fill
the gap, the official podcast of the CMT Association. How’re you doing? My
friend?

David Lundgren, CMT, CFA 1:21
I’m doing well. Tyler, I can’t believe we’re on episode 18. Already, this has
been a fantastic run.

Tyler Wood 1:25
Well, I think it’s all about our guests. Right? We’ve been lucky enough to have
some serious experts, legends in the field and some lesser known folks who have
a ton to contribute to the conversation.

David Lundgren, CMT, CFA 1:35
Yeah, for sure. You know, this month is Rusty Vanneman, who is very accomplished
investor on many fronts. Having been in the business for about 30 years. I’ve
known him since the early 1990s. It’s always great to connect with folks that
that have you I’ve known over the years and just have evolved as investors and
just kind of reconnect with them and have a conversation around that. But it’s
usually in the in these discussions prior to to the actual episode you asked me?
What was my key takeaway from the discussion. But as you know, again, since I’ve
known Rusty forever, I’d be really interested to hear what your key takeaway was
are was from our discussion with Rusty.

Tyler Wood 2:12
For our listeners, this next hour is jam packed. And clearly the two of you
share a friendship but also a real kindred spirit around how you think about the
markets and really pick things apart in terms of process and tools. So for me,
Rusty’s book, the Higher Calling, which can’t give enough praise to was really
sort of the backbone and and for rusty to share with us his evolution from an
investment manager to really more of a communicator and the leadership qualities
that he has with his team, I think really stuck out. So in his role at Orion
Advisor solutions, he’s talking with folks about how the strategies work periods
of drawdown notwithstanding, how do you stick with a discipline? How do you
approach your investing in a repeatable and disciplined way that sort of sticks
with the process that you identify that that works. And so leading teams and
creating groups in either an investment team or elsewhere that really have great
analytical minds and don’t fall into the status quo? I think for me, the
takeaways from Rusty were pretty universal. So it wasn’t just about the
technical tools that he uses, but even how he communicates their strategies
within the team and to clients that really stood out to me.

David Lundgren, CMT, CFA 3:25
I’m really glad that that was your key takeaway, because that was the same for
me as well. In fact, you and I have discussed this very topic several times,
either together or with prior guests on this podcast, and in the notion that you
can be the best investor on the planet, you can have a rock solid process, and
you can have even have great performance. But if your clients don’t understand
the strategy as well as you do, during those periods of drawdown, it’s going to
be very difficult to keep them engaged with the process if they don’t have the
same confidence level that you do. We talked with Ian McMillan, which I thought
was great. I forget what episode it was. But he talked about how every new
client has to sit down with them for an hour and get debriefed on what they’re
doing. So they fully understand what’s going on. We talked with Bill Miller in
Episode 17 and a half, which was the the live production of the podcast at the
symposium. And I asked Bill, what he thought about how to communicate with
clients so that they are they don’t lose sight of the long term in terms of the
strategy during drawdowns, and he said it was just as important for them to
understand the strategy as well as you do it to have proper expectations around
that. And then and then we get to Rusty and he wrote a book on on the concepts,
you know, the higher calling and for our listeners, I mean, I’m assuming that
many of our listeners are portfolio managers or analysts. I’m hoping that there
are is a growing number of RAAs that are out there listening as well to the
podcast, but to the extent that you’re an RA out there, managing clients money
and trying to get them engaged with strategies, highly recommend this book, take
take a look at this book. It’s basically written for you and it is about keeping
your communications in proper tune with you clients in terms of the strategy and
expectations and long term success of the strategy and you know, kind of
navigating through in weathering those short term ups and downs.

Tyler Wood 5:09
Absolutely. And I think it was unique to have a guest like Rusty who actually
had exposure to technical analysis very early in his career really sees the
markets from lots of different perspectives. And I think had rusty ended up in
any other field, aviation, aeronautics, healthcare, whatever, he would have been
an exceptional asset to any team in part because the rigor that he brings to his
process and then the way that he communicates it is really, those are universal
lessons. So Dave, without any further ado, let’s dive into Episode 18 With Rusty
Vanneman CMT CFA. Fill the gap is brought to you with support from Optuma, a
professional charting and data analytics platform. Whether you are a
professional analyst, Portfolio Manager or trader. optimate provides advanced
technical and quantitative software to help you discover financial
opportunities. Candidates in the CMT program gain free access to these powerful
tools during the course of their study, learn more at optuma.com.

David Lundgren, CMT, CFA 6:20
Well, welcome to fill the gap, the official podcast of the CMT Association, and
episode 18. We are joined by Rusty Vanneman, Chief Investment Strategist at
Orion Advisor solutions. Rusty is a dual CMT and CFA charter holder. He’s the
host of the excellent podcast, the weighing machine, author of a gem of a book
called The higher calling. And we’ll have to talk about this a bit more. But
he’s also a certified brand strategist. And he received his certificate in
blockchain and digital assets from the digital assets Council of financial
professionals. That’s a mouthful. I’m sure there’s a good story there. But of
course, I’ve known rusty for years. And he is on an individual level, always
super active, very competitive, whether it be hiking, snowboarding, and if I
recall, he actually achieves a level of success in national stationary rowing
competitions, if I remember. So we’ll talk about that, too. We’re digging deep
here. But like I said, I’ve known rusty for about 30 years, this guy’s always
high energy, and he’s tough to keep up with. So with that, Rusty Vanneman
Welcome to fill the gap.

Rusty Vanneman, CMT, CFA 7:33
David, it’s great to be here. It’s I mean, it’s actually really humbling to be
here because I have listened to all the prior podcast and there have been so
many legends and rock stars on there. I’m lucky to be here.

David Lundgren, CMT, CFA 7:43
You’re too humble because you’re You’re a legend and a rockstar in many, many
ways. So it’s we’re honored to have you here, not just as a good friend, but
also as a significant contributor to the community. So it’s great to have you on
I can’t start this podcast without torturing you the first question you ask
everybody on your podcast. I don’t don’t take this personally. But I’m going to
ask you for your walk up song. Not your wake up song. Because I listened to
Radiohead. I might be wrong and dude, I was falling asleep. This is supposed to
energize me what’s your Give me something better than that.

Rusty Vanneman, CMT, CFA 8:18
I’m sticking to it. So I it is the first question on my podcast. And by the way
on my podcast, I think that is the one question that all my guests spend the
most time preparing for. But my walk of song is called I might be wrong. And
it’s by Radiohead. It’s just the first 15 seconds of it’s pretty cool. That is
what I need is kind of the implied message because I could be wrong, but I also
could be right.

David Lundgren, CMT, CFA 8:41
Tyler, what would be your walk up song Tyler

Tyler Wood 8:44
off the cuff, I would say While My Guitar Gently Weeps. But it’s the last 45
seconds of the Hall of Fame induction, where Prince, my hometown man, we have
this superhero comes out and just shreds the end of that song. I could listen to
that guitar solo 100 times and not get sick of it.

David Lundgren, CMT, CFA 9:04
Yeah, Rusty, tell us a bit about your background. I mean, you you know I mean,
you can go back as far as you want. I mean, ranching and all kinds of stuff.
Something led you to technicals. I was at Tech Data in Boston when you joined.
So that’s how we first met despite both of us actually going to Babson College
The same year, we both graduated the same year. Although as small of a school as
it was we never met I would contend it because I was always in the library. You
are always in the pub. That’s that’s what I want to give our listeners a little
bit of perspective on Rusty Vanneman

Rusty Vanneman, CMT, CFA 9:33
it’s for how much time do I have again, now I so I’ve been in the industry for a
while. So I’ve been now over 30 years managing investment portfolios, investment
teams and investment messages. But how I got started it really the big break was
technical data, which is now part of Thomson Reuters and I already was into the
markets at that point in obviously Babson College. I emphasized finance and
investments, particularly the investment side. I am originally from Nebraska and
so obviously there’s always that influence of Warren Buffett, you know that I do
recall the very first text I ever read was in high school. And I’m not saying
this was a great text, though probably still has some slight influence on me.
But the author’s name was RC Allen. And he did this moving average crossovers of
like four, nine and 18 time periods, which I’ve never used professionally. But
the moving average concept was planted, I was very interested in at Babson
College. And, you know, I was fortunate to We were fortunate to hear Sir John
Templeton speak back then. And it was just always stuck. In my mind, I wanted to
be an investment manager. So at Thomson Reuters technical data, it was what an
awesome experience that was, you know, all the talented people that were around
us, you know, people gone on to do so many great things. It was fast paced. I
mean, we were working early in the morning, late at night, on weekends, it
didn’t even seem like work. It was just so much fun. And we learned so much. So
that was really my start.

David Lundgren, CMT, CFA 10:53
I love it. You know, over the years, of course, you’ve you’ve held some some
marquee positions, lead lead portfolio manager, I think you’ve had a five star
Morningstar rated fund. So kudos for that, because that’s obviously no easy
task. But I know, over the years, you haven’t been a pure technical investor. So
obviously, your style and your philosophy has has morphed over the years, but
you always, to a certain extent leaned on elements of technicals. So maybe take
a couple minutes to just walk us through your philosophy, how you think about
investing today, and then how technicals help you through that process?

Rusty Vanneman, CMT, CFA 11:23
Well, I guess I can talk about the evolution. And, you know, the evolution
really was really about, you know, where I was that and what my mandate was, you
know, professionally, managing other people’s money, usually inherent situation.
So, you know, back in the technical data days at Thomson, you know, I leaned
heavily on the work of Welles Wilder, I mean, we had technical data, we had a
tool that was basically based off of Adx, you know, we call the trend intensity,
and, you know, didn’t really didn’t fight that. And so going with the trend was
always really important concept. But over the years and picking up, you know,
managing, you know, a lot of money over time, it’s we basically had to manage
money that in a way that people expected it. So what are some of the things that
really became how I still look at the markets, I mean, I lean heavily on looking
at prices, and also looking at sentiment. And when it comes to prices, that kind
of the what I like to look at is, and we still actually produce this is looking
at relative valuation charts going back over time. Now, I just want to say
something about valuation. So I remember you and I actually had this argument
years ago, but I always say, you know, fundamental analysis is really the study
of fundamentals. So how does a company make money? What is their business model?
A technical analysis is the study of supply and demand with the ultimate
expression as price and value investing is the combination of the two it is, you
know, it is price divided by the fundamentals. And so I’ve always thought about
doing value analysis was obviously strongly related to technicals. And so I like
to look at relative valuation charts. And I also like to look at relative
performance charts, those are produced internally weekly, where I’m at. So I
still look at those all the time. And I also love looking at investor sentiment.
So obviously, that’s not price, but it is another expression of you know, supply
and demand. And those all factor into how I think about building portfolios,
managing money, and also what I’m writing about. And when I’m talking about

David Lundgren, CMT, CFA 13:28
them, when you say valuation charts, do you is that to imply that? When I think
about that, I’m thinking that perhaps the way the the way in which valuation
being reversed over time? And then do you just look for levels within that mean
reversion? Or do you actually apply technicals to the valuation chart,

Rusty Vanneman, CMT, CFA 13:43
so I can tell you about kind of the charts I like to look at on a regular basis.
So the relative valuation chart is really just about 2025 years of history,
looking at a composite of various valuation metrics, try not trying to optimize
it just simply equal weighted, so kind of looking at a long term average over
that time and on the Charter, the one standard deviation around it. And so I
kind of know what’s expensive, what’s cheap, and then I look at level and
trends. And so obviously, if the trend is above or below a standard deviation,
that’s saying something that is, that’s an area to think about fishing in. And
that is probably an area that we we don’t want to fight it in the sense that
let’s say something’s really, really expensive, doesn’t mean we’re going to be
shorted. But it probably means we’re not going to be overweighted either. And
then we look at the trend of that relative valuation over time. So that’s the
relative valuation chart, I can talk about the relative performance chart, I
guess, later on, but that is basically how we look at it. And you know, one
thing when it comes to investment philosophy and managing other people’s money
is I think, a couple considerations. And these aren’t numbers that necessarily a
lot of clients ask for, but it’s one is how active is your strategy? So there’s
expectation of how often you’re going to make a trade or change in a portfolio?
Is it going to be weekly, monthly, quarterly, is it gonna be over a year and
There’s also like how much conviction you’re going to have in those those
trades. So in another fancy expression called tracking how much your returns
deviate than a benchmark, there’s active shares, how much your portfolio
holdings deviate from the benchmark. And I really think those are key
characteristics. A lot of people could talk an active game, but there don’t take
any tracking. So there’s really no conviction or, you know that and I think so
when you kind of have that idea of this is our philosophy. This is how we’re
building portfolios. But this is how often you’d expect traits. And this is, you
know, this is how our performance can deviate from benchmarks. Those are really,
really important, because it isn’t just about manufacturing, that rate of
return, it’s also about communicating and setting the expectations. Because
ultimately, we all want to beat the benchmarks. But you know, really, that at
the end of the day, we want our end users to have a great experience. And if
they’re always buying our strategies after they’ve been hot and sell them after
they’re cold, then that isn’t quite working. Right. So I think you had a prior
podcast, which is a number of which I forgot about was the Peter Lynch number,
which, you know, we both also worked at Fidelity and Peter Lynch, obviously a
legend there. But you know, I think the average return over his time was 30% per
year, but the average investor was 10%. You know, that’s kind of a miss. And so
I think it’s setting expectations are huge, and then delivering against those
expectations. I just said a whole bunch of stuff. Where do you want to go now?

David Lundgren, CMT, CFA 16:23
You actually did just touch on a whole bunch of things that we will talk about,
and I want to try to keep them in order. Because I know you and I have to keep
you wouldn’t want to. But so for our listeners, I would just quickly say that
Rusty’s book, the higher calling, that’s what the whole books about managing
expectations. And, you know, Tyler’s heard me talk about that very topic. So
many times in this podcast, because it’s so critical, it’s actually not enough
for you, as a portfolio manager to have a good strategy to believe in what
you’re doing. And to execute it. Well, you can do all those things. But if the
client doesn’t feel the same way you do, and have the same level of
understanding and the same, to use your word, Rusty expectations about what the
strategy will do in any given time, through a cycle, you can have situations
like Peter Lynch, who delivered one of the best public track records in history,
but the average shareholder in the fund was 10%, because they kept buying high
and selling low. And that comes from that not having the right set of
expectations. So that’s definitely a worthy part of this discussion. But before
I go on to what I just want to maybe drill down a little bit more on what you’re
managing today. So you, if I remember, it’s not it’s not just equities, but it’s
asset allocation. So it’s obviously across regions within equities, but it’s
also precious metals and commodities, etc.

Rusty Vanneman, CMT, CFA 17:33
Well, first of all, I’m gonna do one quick aside in your prior comment, because
it ties into, again, my experience with fidelity. And I was doing a presentation
one time to Gary Burkett, who was in charge of FM Marko, in charge of all the
portfolio managers and analysts, and the presentation, I got a chance to ask,
ask him questions. And he I, of course, you know, always trying to learn and get
better. But I said, What makes a good portfolio manager or an analyst, and he
says, you know, obviously, you gotta manage money, but kind of the underrated
thing is to be able to communicate it, if you’re a portfolio manager can’t
express how your portfolio is going to behave. Or if you’re an analyst, who can
get your foot in the door and sell your idea succinctly to a portfolio manager,
it doesn’t matter how good your recommendations are, you’re just not going to be
a good portfolio manager. So that’s just a quick fidelity anecdote, but but in
terms of managing money, so I’ve done a bunch of different things. And so
currently, my role at Orion portfolio solutions, were at Orion portfolio
solutions, we actually work with financial advisors. So there’s 2500 firms we
work with. And so there’s over 50,000 financial advisors, so we don’t manage
money directly for investors, but really, for financial advisors who are
outsourcing and the way we manage money is multi asset class. My role has
changed in recent years. So I was the chief investment officer of all of Orion,
but it’s, you know, we are actively growing, and we’re very involved in mergers
and acquisitions. And so, on the investment management side, we bought a firm
out of Philadelphia, so they basically kind of became the lead on a lot of the
investment portfolios. My job as a strategist is kind of like your conventional
strategist, I’m talking about the investment strategies available on our
platform. This isn’t just our proprietary there’s over there’s like 600
strategies on our platform. So I have to speak to them, how they behave, how
they actually blend together, because advisors are always asking how to blend
these different strategies together. And I’m also talking about the markets, you
know, thing about this role is it is helping advisors it’s helping investors is
helping salespeople kind of understand and have confidence in putting things
together, and I hope ultimately helping the investor returns as well. You know,
actually used to kind of make fun of strategist being a money manager, but you
can really actually help a lot of people. And you know, as an investment
manager, even when your numbers are hot, somebody is still calling up and saying
somebody’s hotter, and actually I still kind of liked that part of the job, but
anyway, As a strategist, that’s what I’m doing working with strategies and the
markets.

David Lundgren, CMT, CFA 20:03
And I know you have a team that works with you on the strategy side. And you
know, one of the things that I’ve always admired about you in terms of one of
the things you bring to the table is the ability to build enduring teams, but
also to be a great mentor to those folks on your teams. And so you talk to me
about that. How important is that in building an organization and building a
team, like I said earlier, you’re very competitive person. So you’re always
coming up with contests and pools and things like that, to try to drive
competition on a team talk talk about that, and how important that is to you.
Obviously, it’s a big role in a big way of how you think about the world.

Rusty Vanneman, CMT, CFA 20:34
I love this topic. I think that recruiting and managing and mentoring and
managing are just so crucial to having a high performance team. And so I have
recruited a lot of people over the years, and I have so many talented people,
it’s almost people might say, I’m a good manager, but I don’t know if I can,
because I’m, everybody I’m hiring is just really passionate, and really into it.
So this isn’t work to him, you know, everybody is fired up. And everybody’s
ambitious. So I think that’s really critical is finding people who are
legitimately into the markets. And then beyond that they have good energy,
they’re achievement oriented. And every hire is a little different. Because you
know, every time you’re looking for kind of a slightly different skill set, and
you just want to kind of round it out, in one time I had my team was 16 was 17
people, including the admin assistant, but of those 17 people, you know, like on
the Myers Briggs Personality Test, there’s like 16 different options, we had
every single one of them represented. I mean, that’s really fluky, but it does
kind of show that every time we are looking for somebody a little bit different.
And as for building the team, it’s and is just always just pushing everybody all
the time. And you know, a lot of those people now become directors of research
chief medical officers, portfolio managers, so I’m definitely proud of that. I
know another thing is, you know, we did have a lot of contests, a lot of
reindeer games, because I wanted people to make decisions all the time. So
fantasy football might sound kind of silly, but it is making decisions and in an
uncertain world, and people can duke it out. And people can get emotional and
all that sort of stuff. One of the things I like to do on a monthly basis, I
always called it my my favorite meeting. I wanted everybody to make forecast.
And obviously everybody was making their investment recommendations. But I
wanted to talk about the markets too. And I would have an award called the
maverick award. I think this was important because we looked we quantified in
three different ways. One, you had an opinion. So did you like or dislike it.
And if you were neutral, that wasn’t necessarily a good thing. I know you could
be neutral, but we wanted you to have a decision. Secondly, we wanted you got
awarded if you’re outside of the team’s consensus. So if everybody like
technology, and you did it, you got points for that too. And the third thing,
because one of the most difficult things for people to do in the industry, which
by the way is a great benefit of technical analysis is a lot of fundamental
people when they make a stand on something they can’t change their mind. Be and
like technicals will force people to know when you’re right or wrong. So if they
change their mind, so if you change your mind, you’re out of consensus, you had
a view, you got the maverick award, and it was our most highly esteemed award on
our team. And if you were the completely the reverse, you had a trophy on your
desk. That was the WIMP award. So we just wanted to make sure. Sure, yeah, we
want to make sure people were making decisions.

David Lundgren, CMT, CFA 23:17
Yeah, I’m thinking that the WIMP award would not be allowed in today’s corporate
culture. I’m just saying,

Rusty Vanneman, CMT, CFA 23:23
Well, it depends on the kind of team you’re building, you know. So

David Lundgren, CMT, CFA 23:27
it’s hard to balance that, isn’t it the electronic trying to have trying to
build resilience and competitive nature in trying to balance it in this world
where you can’t have the wimp award anymore?

Rusty Vanneman, CMT, CFA 23:37
Well, I think I don’t know. I think in arena, you’re probably right. But I think
that’s what the team is a little bit like, I guess, a sports team in and I’d
always say like, look, when we’re in our research meetings, we are practicing
and butting heads, and we’re competing for every idea. But when we walk out the
store, we’re a team now, so I want us to duke it out. But when we walk out of
the door, we have to be unified.

Tyler Wood 24:02
That’s great management philosophy. Russell, you mentioned in your intro of
titles that you are in part investment strategy communicator. And then you also
mentioned that at Babson you and Dave, we’re able to learn from Sir John
Templeton. So for our listeners, Sir John Templeton is very famously quoted for
saying bull markets are born on pessimism, grow skepticism, thrive on optimism
and then die on euphoria. So the fundamental investors out there who’ve been
looking for bottoming since early March, and the idea of making a contrarian
view from your process and combining fundamentals and technicals. Right,
everything’s looking much better now from a fundamental basis from a valuation
metric than it was even the last few months. What are the technical tools you
use to actually find successful entry points in a market bottom?

Rusty Vanneman, CMT, CFA 24:50
Well, I mean, it’s a question of whether the market bottom or not, you know,
there’s, you know, some sentiment indicators obviously, are clearly bearish and
knowing not thing else I would expect above average returns, you know, six to 12
months out, but I’m not so sure there’s a bottom, there’s this what people say.
And that’s what people do. And the flows really haven’t been super negative yet.
So it feels like there could still be a flush there. But in terms of how to find
stuff, it’s I mean, the relative valuation chart pack that I just talked about
earlier, that’s, that’s kind of a place where to fish, you know, it isn’t
necessarily, you know, catching the fish probably at a more better timing tool.
And something that I’m looking at is relative performance charts. And in the
relative performance charts, we do look at absolute performance. But I have to
admit, I really love relative performance, because I have, you know, be
invested. And when it comes to relative performance, I have a standard chart
that I love. And first of all, it’s a chart so you get the visuals of, you know,
the highs and the lows, which I think are crucial to look at. But it has five
other things you can glean out of it. And I like to look over three years. And I
remember one is I love looking at three year relative performance, because three
year relative performance tends to revert. So you know, if you actually just
kicked butt over the last three years, you know nothing else, you’re probably
gonna underperform over the next three years. I’ve studied this internally
multiple times outside work, and you just see it all the time when people fire
managers hire managers. So I never whenever an analyst would come to me say I
love this idea. And it’s like, it’s been the top performing thing over the last
three years, I’m not touching it. Now, the one year timeframe is a good thing,
if you’ve outperformed the last year, that’s a plus. And then we also looked at
a quarterly moving average. So we did 63 days annual moving average 252 days,
and then the relationship between those two. So that was like five different
data points that we’ve looked at. So if you think about it, that isn’t really
fast, because a lot of the money we’re managing moves a little bit slower. So
our average holding periods tended to be, you know, two to five years. So we
want to things a little bit slower. So you kind of that technical setup is a
somebody might like something looking at relative valuation and say, This is the
area I want to be in. But the technicals haven’t really turned around yet, they
might actually start dipping their toe in it, but they’re not going to have
conviction in that trade. Until the trends on the relative valuation, the
technical condition starts to look better. That’s kind of an example.

Tyler Wood 27:11
That’s a fantastic answer. I think for the record. I mean, there’s a lot of
people who look too early for bottoms and get snapped up in those bear market
rallies. Dave had a great post the other day, it’s like good cop, bad cop.
Somebody comes in and gives you a little relief. You really want to fall in love
with that bear market rally too fast. So same question, Rusty the Sir John
Templeton, how do you communicate to those advisors who are holding the hands of
their clients trying to get them? You know, eventually, when that bottoming
process takes place? How do you combat the human psychology, right investors,
the end investor wants to get involved at the point of maximum euphoria and the
point of maximum risk. And they don’t want anything to do with, you know, risk
on investing at a point of maximum return. When there’s blood in the streets.
How do you communicate that,

Rusty Vanneman, CMT, CFA 27:57
I guess, kind of one of the tricks of my trade is I will look at sentiment
surveys, you know, just a really easy one to use. And, you know, a lot of people
can quibble with it, I do too, but it’s weekly, it’s free. It’s just the
American Association of individual investors, you can just play with that data,
just download it. And so if it is that extreme, it will influence what I’m
communicating and writing about. So let’s just say people are really, really
bearish. Like now I will go out and try to find more positive stories try to
keep people balanced and centered, and on their plan that their financial
advisor, whatever portfolio, they put them in, they don’t want them to be
disruptive, because there are emotional extremes. So I kind of look at the
sentiment and I find another story to go with it. And it kind of goes back to my
training and technical data with Dave and it’s like, I remember it, we had to
write commentary that was fundamentally based talk about economics, the advice
was come up with your technical picture, and then find the economic story to
match it. So really, the technicals was the discipline. And that was a lesson
was giving you that you know, that that action that you could provide that you
could have conviction in but you found the story to go with it. So my one thing
is, is I look at the sentiment first, and that is for probably 20 years that has
influenced almost every one of my monthly commentaries.

Tyler Wood 29:09
And have you seen the environment change? So I’ve heard that story before. The
discipline is technical, but find the fundamental reason why we can tell people
this is a good opportunity. Have you seen the appetite for some technical or
sentiment driven commentary? Is there more appetite for that today amongst the
advisors in your network than there was a 10-15 years ago?

Rusty Vanneman, CMT, CFA 29:09
Good question. Is there more appetite for it. Well, I could sort of Taichi this
a little bit and say there’s clearly more appetite for Behavioral Finance type
stuff. I’m fortunate to work with Dr. Daniel Crosby, who’s fantastic and people
just eat his stuff up. So but when it comes to more specific sentiment, you
know, there’s always been kind of difficulty of saying like, everybody’s really
bearish. They’re really really scared. So therefore and you’re scared to so you
should be buying the market. So a lot of people you have to address kind of the
emotions emotional side So that’s reason why in that particular case is I will
try to give, you know, again, the more fundamental or more long term outlook and
just try to give them some data in that case dependent, encourage them to stay
on plan.

David Lundgren, CMT, CFA 30:10
This is a good spot to to jump in a little bit and talk a little bit more about
your blog, you know, the book is the Higher Calling, I actually have two copies
of it, neither one of, nice, by the way. On the site on Amazon, where the book
is displayed, just a quick excerpt says investors rarely earn as much as they
could in the marketplace, not because the markets are rigged casino style, or
they haven’t made their bets on the right stock. investors don’t earn as much as
they could, because they don’t stick to their plans. So that’s the essence of
the book. But you obviously didn’t dive into the strategies in your experience
around that, you know, you talk about the three steps to closing what you refer
to as the behavior gap. Explain them are how the markets work, develop an
appropriate risk budgeted portfolio and build trust, three critical pillars to
that closing that behavioral gap. Can you talk a little bit about each one? So
explain how markets work? How do you mean by that? What do you mean by that?

Rusty Vanneman, CMT, CFA 31:03
So in terms of how the markets work out, one tool that I like to use source is a
slide that talks about how often the stock market is up over a trailing 12 month
time period and the data I have go back 1871 It’s the Robert Shiller website, I
got a good story about Robert Shiller if you want one, but going back to 1871. I
like those free websites, lots of data, just in case somebody wants to play with
the data themselves. But anyway, how often is the market up to positive over 12
months, and I’ll ask like a roomful of investors or advisors. And usually, they
guess a much lower number than it really is. So the markets up over 70% that
time over one year timeframe. And then of course, I’ll build out the slide and
say how often is three, five and 10 years. And of course, that number gets
better, basically, to the point is that there’s a strong positive expectation to
the market. But the other point is, on the one year timeframe, the market has
like a double digit return over 50% of time is negative about 30% of time. So
it’s sort of that typical Wall Street forecasts the markets up like five or 10%,
it rarely happens in a one year time frame. So the markets much more volatile
than people expect, but also has a much stronger positive expectation. So that’s
sort of the base case. And then of course, I can take it like what about the
markets expensive? You know, what are the chances of a bear market and the
numbers don’t really change that much, though, the average return does drop when
the valuations are higher. So that’s sort of like how markets work. That’s kind
of an example of something I’ll start off with, when it comes to risk budgeted
portfolio, kind of the idea is that a lot of advisors build portfolios,
obviously, think about financial objectives, unique considerations. But there’s
usually a risk target that’s associated with it. Some people might use an equity
target, generally speaking, over time, we think a risk target is better, because
just an example of 60-40 portfolio if you have blue chip bonds, and T bills, a
lot different than the 60-40, a small caps on high yield bonds. So we actually
like to focus on risk. And so a lot advisors will then try to design a portfolio
that is has an appropriate risk level given somebody’s objective. So let us have
we actively managed it over time, that the market expectation, and what’s really
nice about kind of that risk budget is let’s say you have a portfolio based off
of your goals and objectives that you should be taking half the risk of the
market. That’s also a great way for a lot of investors to kind of understand the
performance when they’re looking at their statements over time. Because a lot of
times that people like I’ve even heard people, our own industry, who are pretty
high ranking who let’s just say the market is up 20%. And they say I cannot
believe my portfolio is only up 12%. It’s like until you’re like 50% bonds, you
had a great return. I think that risk target for a lot of investors really goes
back to where we’re talking about managing expectations.

David Lundgren, CMT, CFA 33:39
Yeah. And the third point is that build trust, which that’s where you’re you’re
building expectations, but you’re also trusting each other that you’ll follow
through on both sides of the the relationship, right?

Rusty Vanneman, CMT, CFA 33:50
Yep, that comes to conversations and obviously building relationships. But from
an investment management standpoint, it is being as transparent as possible, and
doing exactly what you say you’re going to do. Having actually analyzed a lot of
portfolio managers over the years. You know, one of my classic questions is just
to ask them about when times were tough, sometimes you can tell when there’ll be
SEO. So you need to be transparent. You need to be as authentic as possible and
describing your investment process. And I think that builds trust over time,
because every strategy, no matter how good you are, you’re gonna underperform at
times. And you just have to address that upfront.

Tyler Wood 34:24
Right. I would like to make one edit to my earlier comment. I think my new
choice walk up song is by Chumbawamba. I get knocked down. But I get up again, I
think your point about every strategy is gonna go through a down period. I think
that that should be our theme song for all traders and investors around the
world.

David Lundgren, CMT, CFA 34:42
Consider changing that for the podcast title. Yeah, somebody else in the CMT
association. So we’ll make that happen. We’ll we’ll definitely provide links to
that book. I do think every RIA in frankly, every investor should read this book
because it’s really it’s really that important, but another significant
contribution that you’ve made over the years. I don’t know what year you’re in
now, but it’s your third year with a weighing machine.

Rusty Vanneman, CMT, CFA 35:05
Yeah, well, it’s something like that it kind of it’s kind of been around longer,
but it’s gone through a couple of different formats.

David Lundgren, CMT, CFA 35:10
Yeah. Yeah. And so the way machine of course, we all I know what that what the
reference is, but explain it to the to our listeners, what does the weighing
machine mean? What does it mean to you?

Rusty Vanneman, CMT, CFA 35:19
Yeah, well, first of all, in hindsight, the weighing machine, it’s it’s one time
I had a guest on when they promoted it, they call it the weighing machine, WA ng
wa ng is a weighing machine. So it’s not actually the references to the classic
quote that Warren Buffett talks about the customer, Benjamin Graham talks about
in the short term, the market is a voting machine. In the long term, it is a
weighing machine. And really, the whole concept is just trying to stretch
people’s timeframes out longer. I mean, we all love the short term in the
information. And but for a lot of investors, we just want to kind of just
stretch it out. So the emphasis on the on the podcast is the whole world listen
to it. But I guess I really focus on financial advisors who might be driving
down the road, or mowing the yard or on the treadmill. And they’re just looking
for things they can add to their script to talk about the markets in particular
investment strategies.

David Lundgren, CMT, CFA 36:11
So I can’t claim that I’ve listened to every single episode. But I’ve listened
to a lot of I have listened to a lot of them. Many of them I remember the
October 21 episode with Jeremy Siegel, I remember, as I was thinking about
getting ready for this conversation, I remember that he just such a good
conversation. It was unfortunately short, because it was recorded live, but one
of your conferences and it was just when you were wrapping it up, I’m like,
Wait, you can’t you can’t stop now. Because I’m sure you had so many more good
questions for him. But I have to say I, you know, remembering that it was such
an important podcast episode, I went back and listened to it prior to this
current conversation just to kind of refresh on it. And I actually forget how
good it was. I mean, he made some amazing calls with respect to white socks,
we’re about to do bonds, inflation going up, I think he said 7%. So he missed it
by a percent. But we’ll forgive him that over the next several months is what he
called for. But he also called for the the implosion of growth versus value and
all these other things, and it’s all hinging on this changing regime of
inflation, etc. So fantastic episode, I would highly recommend folks go back and
listen to it, but in your mind as a allocator, across assets that are affected
by all of these things, especially these days, when you look at that forecast,
and you look at what has moved since then, do you feel we’ve moved enough to
reflect that change in regime? Or do you think there’s more to come to play out
in those trends?

Rusty Vanneman, CMT, CFA 37:27
First of all, I’m Jeremy Siegel. One one big takeaway from that, too, is it just
goes to show that even though we’ve been doing this stuff for 30 years, we’re
only mid career, you know, we got so many more years to go. So that’s what that
was one thing that was really great, I feel as if it could go a lot farther. And
probably the simplest way to explain is if you look at relative valuation
charts, again, we actually put them on our website. So I can put that in the
show notes. So people can check it out. You can move from a period of being
undervalued and and then obviously, the trend is in your way. And then it
doesn’t just go back to average, usually usually overshoots it, you know, some
of the things that are happening else such as value versus growth. I mean, that
could have a lot farther to run. I mean, obviously, you can have zigs and zags
and, and stuff. But I would if I had to guess right now that’s going to play out
for a lot longer.

David Lundgren, CMT, CFA 38:14
You said that you’d listen to our recent episode with the middle of the fourth,
which we recorded at the CMT symposium just recently. And one of the concepts
that we discussed and he agreed with was this notion that value per se doesn’t
work, like stocks don’t go up because they’re cheap, they play a significant
component role in the outcomes if the stock does start to work, but you’re just
starting from such a base level of valuation that the compound effective and
expanding valuation just makes the story or the outcome even better, but stocks
don’t go up because they’re cheap. They go up because valuation. I mean, because
the fundamentals change, it become a catalyst to unlock that cheapness of the
stock, otherwise, it remains a value trap. So I get the idea that we’ve been
selected regimes, I think we can point to all kinds of evidence in that regard.
The question is what what is the fundamental reason for why value will continue
to work going forward? It’s and it’s not just because they’re cheap. What’s the
fundamental driver that’s going to make value do better than growth going
forward?

Rusty Vanneman, CMT, CFA 39:06
I guess you’d say the easy answer on that would be they tend to do better in
inflationary environments. And so if inflation just stays sort of above average,
that would be a kind of a fundamental catalysts or value stocks to outperform.
And I agree to your your notion, just, it isn’t just a but that’s why I like
relative valuations more. So. You know, for instance, we were long technology
for years. But you know, it was a handful years ago that, you know, technology
tends to trade at that time, over the prior 20 years, tended to trade at a 50%
premium to the market, but it was that it dropped to a 10% premium. So
technology wasn’t a value, a stock, I mean, but it was on a relative valuation.
It was cheap. And so we liked it. And as the same thing about large caps, we
were actually in some portfolios, we we shorted the Russell 2000 We’re actually
we’re just underweight small caps. We were short are small caps. And it was all
based off relative valuations. And so it’s really the relative valuation the
starting point. And then ideally, you just want to see it obviously start to
trend back the other direction, hopefully and answer the question.

David Lundgren, CMT, CFA 40:12
It kinda does part of the answer. And it’s not just your answer, but it’s every,
every time I get asked this question, I get a similar, it’s because of
inflation. But I, I still have a hard time translating that into, you know, you
use the formula V equals P divided by f, right? The one I use is p equals F
times v. But it’s the same formula. It’s what I love about it. Right? So same
exact formula just rearranged in at the end of the day, you know, I guess it’s
inflation part of the F. And if it is, does that translate into better
fundamental underlying economic conditions for industrials than it does
technology and why I’m a pure technician, so I’m long what you’re supposed I
feel like I’m lying, what you’re supposed to be long right now, which is things
that are working, and whether it’s cheap or not, but I’m just trying to ask as
many people that are smarter than me to outline in detail, the fundamental
reasons for why value is going to work going forward, because again, it’s not
going to be because they’re cheap,

Rusty Vanneman, CMT, CFA 40:59
you know, a lot of companies are, you know, lower quality. So just in servicing
their debt, it’s, you know, their debts a certain level, and, you know,
inflation’s, you know, normally raising everything it becomes cheaper to finance
or debt is another theory behind it. But this is my technical analysis, man,
what are you talking about this fundamental stuff? Yeah,

David Lundgren, CMT, CFA 41:20
yes, that’s right. fill the gap between the point so how about this one of the
charts that was presented at the symposium from Jim Bianco, he presented a chart
in the symposium where he showed the the 40 year downtrend and rates and every
time we have this massive spike in rates in the context of that ongoing
downtrend, Something blew up as a consequence of that spike in rates. And we
just had another spike in rates again, up to 3%. We’ve seen what happened to the
dollar yen. I mean, that’s incredibly aggressive move, seeing what’s happening
in the commodity space. So do you think about those things at all as being
potential catalysts to unlock some, some sort of a blow up that’s, you know,
leveraged to those asset classes? I mean, these are significant large asset
classes. And when they move so quickly, unexpectedly, they can cause
ramifications down the road.

Rusty Vanneman, CMT, CFA 42:05
Yes, in fact, I had a conversation just this morning. So it usually it it, I
mean, that usually happens after a while. So once you get kind of that market
stress, usually something shows up afterwards. So as we record this, I am
concerned something like that could happen or could happen, you know, months
quarters down the road, particularly there is more market stress. I mean, right
now, as we’re recording this, there, there seems to be some signs of
stabilization. You know, interest rates, you know, yields have come down the
dollars, there’s the safe haven dollar hasn’t as lost its strength, commodities
haven’t broken in new highs, at least not yet. So I think there are some signs
of stabilization. But I think that, but nonetheless, that’s still a concern that
I have I remember back 10 Well, 2008, you know, kind of felt like we had enough
big things that happen that were sort of flushed out, but they just kept coming
in. And obviously they just kept pushing the market lower.

David Lundgren, CMT, CFA 42:58
That’s the point is that is it as a consequence of that March to August, big
aggressive moves, the Fed mishandled the situation, the government bailouts,
mishandled some situations, and of course, the whole thing came on glued, and
then it was just basically selling into an a hole of apathy, and just, you know,
have no idea when it’s going to end. You know, I wouldn’t say we even need to
position for something like that right now. But to your point, it’s hard to
tell, you know, if there is something that’s kind of lurking in the dark corners
of the other markets that might eventually blow up. But, you know, just
something to think about,

Rusty Vanneman, CMT, CFA 43:26
you know, related to that my message, you know, personally is just, you know,
just globally diversified isn’t just about going into international stocks,
which I do think look more attractive relative valuations, and technically as
well. But it also got another asset classes, including alternative strategies,
which by the way about perform fixed income, and like every relevant timeframe
going up 10 years now, or real assets, such as commodities seems like an easy
call. But you know, what a lot of money is still not necessarily flowing that
way. Some advisors have embraced that, but no flows this year, from what I see
is still really, really hasn’t embrace commodities or alternatives yet to
diversify portfolios. And if anything, it’s there’s been a lot of strong
preference still for growth stocks. And this is anecdotally looking at, you
know, some of the platforms I look at and some of the data I look at, you know,
I think some of that is going to change something that just happened a few weeks
ago, and has happened. And I think this is one thing that’s gonna be interesting
is that commodities now, in the three year timeframe, remember, I think the
three year timeframe is the one number that probably influences the most money
in our industry. It’s not just individual investors that everybody talks about
its financial advisors, it’s investment committees, it’s the financial press,
think about in our industry investment proposals show like the three year
historical number that changes that impact so much money, but so the commodities
just passed up the stock market or three year timeframe, including growth
stocks, and actually today as we record and this does depend on the indices you
look at, but value just past growth on the three year timeframe. When you look
at the Morningstar indices. I don’t think it’s the case and Russell, I haven’t
looked them all. Now that just happened coming into today. Right now just think
what’s going to happen at the end of this month when so all of a sudden
proposals, investment proposals gonna look better, they’re not gonna look as
good with the growth things everybody’s been using, they’ll look better with
value. And it’s wait till it’s if it happens at quarter end, the value is still
ahead of growth, I think that’s going to do forget all the fundamental things
going on. But just thinking about how a lot of money flows in the markets, you
know, a lot of you know, narratives are going to change and investment proposal
is going to look a lot different. And so

Tyler Wood 45:26
That’s the hearding principle. That’s what piles investors into this same trade
and then creates the long duration move.

Rusty Vanneman, CMT, CFA 45:34
Exactly. Those would be arguments why those trends could persist right now that
we’re seeing in value in real assets. Still,

Tyler Wood 45:39
I don’t want to give anybody whiplash but to bounce to another subject for a
second, the destruction of value with the Terra Luna collapse couple weeks ago,
60 billion in that specific instance, but estimated maybe a trillion dollars of
value lost across crypto assets. Do you see any corollaries? I mean, obviously,
there’s there’s dislocations happening in the market. And even a little bit of
pressure can can cause a big collapse in something that’s so highly levered. Do
you see any corollaries between that and the housing market crash of oh eight?
Do we look for more destruction? Before that’s over? I know you’re now a
certified digital asset strategist, something something something they’ve
mentioned. Talk to us a little bit about, about what you’ve seen there. And if
it’s an opportunity now, when folks are so pessimistic on the whole space?

Rusty Vanneman, CMT, CFA 46:27
Well, I would suspect they’re probably because of some of the stuff that’s going
on in crypto, that the again, that’s gonna put pressure, perhaps on some hedge
funds and some short term players. I’m not super crazy concerned on it
otherwise, because, you know, if you look at sort of the demographics of
generally who owns crypto or digital assets, it isn’t it isn’t really the same
demographic as who’s the traditional investors right now in stocks and bonds. So
I think there’s a difference. And also, the size of the crypto market still just
pales in comparison to housing and the stock market and everything. So the
assets concern, but I wouldn’t necessarily put a scale of one to 10 to 10, I
have to imagine a lot of hot short term money is, you know, they’re playing
volatility, or volatile asset classes, and I’m sure some people got burned.

David Lundgren, CMT, CFA 47:18
I’ve actually been to Warren Buffett’s annual shareholder meetings over the
years, and I’m a huge fan, but yourself being from Nebraska, I know that you’re
a huge fan as well. And when I think back in his investment, investing history,
I can think of one time and that I’m aware of where he made an investment was
wrong, said he’ll never do it again. Did It Again, lost money again. And that
was airlines. And I was shocked when he bought them the second time, and then he
went on to lose money again, which just goes to show you that we’re all human.
But I will say this him and Charlie Munger for five years at least have been
saying bitcoin and cryptocurrency is a weapons of mass destruction, they have no
value, I will never buy them yet on his latest report, and he talked about how
he sold the old intermediary tech financials like Visa and MasterCard, which
he’s had for a very long time did very well would be sold them and put about a
billion dollars in this new bank in Brazil, which is basically a direct play on
crypto. So if you’re looking for a contrarian signal to to get out of crypto
now, I just want to tell you that Warren Buffett just double down.

Rusty Vanneman, CMT, CFA 48:18
Yeah, it’s a great point. It really is. So I actually felt that even though I
was at the shareholder meeting. And by the way, that’s always great. And I
always encourage people to go because you never know when the last one is going
to be. It is amazing. It is so much fun to hear them speak and just the energy
that is that it’s in town at the arena, it’s it is really cool. And those guys
are still getting it done. You know, the maybe they’re a nanosecond slower. And
I still think there’s probably something besides Diet Cokes, and peanut brittle.
They’re eating keep them up for six hours because I but they are they are, you
know, nothing about Buffet two goes back to a point we’ve already made a billion
times is, again, just a year ago, they were old and lost it yet again. And now
you look at their trailing returns in virtually every timeframe versus the
market. And again, he’s a genius right. Now when you go he wasn’t.

So are you allocated to crypto assets in any form or digital assets in any form?
And if so, how are you advising others to be involved in? Are there any like
specific ways that you find it best to get allocation or exposure to that area?

I believe in multiple asset classes. So I am involved and have been well
actually have been for quite some time. The volatility is pretty crazy. And I do
believe in rebalancing it too. And so I’ve been able to rebalance it and I still
have exposure to it in terms of sort of the guidance on it is, you know, kind of
goes back to the advice that Rick Adelman gives out and I just give him a shout
out he was not only behind that credential, but he just came out with a book as
well and it’s, you know what, he just lays it out straight and you know, he goes
through You know the concerns but why he believes in it, but it really, it’s
like cayenne pepper, you don’t need much in your portfolio. I mean, like low
single digit exposure for investors probably makes the most sense.

David Lundgren, CMT, CFA 50:11
Over the years, we’ve always shared back and forth our reading lists. I’d be
curious what your what you’ve picked up lately. What do you what are you reading
these days to kind of run what you’re thinking?

Rusty Vanneman, CMT, CFA 50:19
That’s a good question. So I mean, I am reading a lot of stuff, but actually
have a market book next to me. So let’s see here. It’s right behind me. This
just happens to be because where I’m sitting right now, but it’s, it’s the soul
in the game, as it came for the Berkshire Hathaway shareholder meeting from
Batali I’ve never said his last name before out loud, this person was saying and
I’ve seen in public, katznelson, is spent solid two thirds of the way through
it. He’s kind of jumping all over the place. But hey, you know, I like that. And
it’s been a good read.

Tyler Wood 50:47
If you had the time machine, not the weighing machine could go back and tell
young Rusty Vanneman, where to go digging? First, what would be your advice to
yourself 30 years ago?

Rusty Vanneman, CMT, CFA 50:56
Well, one of the classic advice when it comes to the markets I just sat down
with young men last week is you have to read it, and you have to be in the
market. So if somebody’s interested in the markets in Yeah, obviously, you
should be reading. And there’s a couple of books. Of course, we I think
everybody loves Market Wizards, I still think it’s a great tax I still handed
out last week, also just get some money in the markets. And even if you’re going
to manage money long term, you should get a taste of different types of
investments. So you’re going to win some, you’re going to lose some, you have to
get that feeling as soon as possible, what it’s like when you think you’re
really good, you have to know what it feels like when you think I maybe I’m not
cut out for this, you just have to kind of go through that process. Because
you’re ultimately going to be managing money. For other people on origami
yourself, you kind of need to desensitize yourself to a lot of those different
things. We also think that people coming into the industry, there’s sort of that
expression, it’s about learning power and not earning power, is you really want
to get into situations where you can just learn as much stuff as possible. And
I’m still old school, I don’t think you want a nine to five job necessarily, you
want something that’s going to be demanding you an x plus one type situation. So
you got to fulfill what you need to do. But you need to keep learning. I mean,
David, I went through that at Thomson, I mean, we just never shut off. It’s
always about learning. And quite frankly, even as we’ve been in the industry for
30 years, it’s still always about learning and growing and and performing at a
high level too it isn’t just about, you know, putting facts in your brain is
that you do have to maintain your energy. You know, we’re all basically
athletes, and it is about performing at a high level. And it’s not like what it
used to be once upon a time where you get four hours asleep. I mean, that sort
of thing. I mean, you we really have to take care of ourselves to perform at a
high level, because it isn’t just about us. I mean, we’re managing money for
other people. And I think

David Lundgren, CMT, CFA 52:44
that’s really important. Was that right about the stationary rowing
championship?

Rusty Vanneman, CMT, CFA 52:48
So I am a Nebraska native and I went to school at Babson College in
Massachusetts, as earlier said and then I worked in Massachusetts until I
basically came home to CLS investments not part of Orion, which is based in
Omaha. But when I moved from Marblehead one of the greatest cities on earth as
you know, Dave towns on Earth, is when I moved away from there, I when I first
moved back to Nebraska, what I did is I bought an indoor rowing machine, and I
would row and watch surfing videos, because I moved away from the water. And so
I did that enough that I actually competed in something called the crash B’s,
which is the World Indoor rowing championship. I only did it once. It was I
mean, it’s it was hard. And it really is people from all over the world came to
it. And you know, there were people speaking or somebody from Asia on one side
and somebody from Europe on the other they had their little fan clubs speaking
and all their different languages. It was kind of a cool experience. And I still
do row but I just haven’t competed in a while.

Tyler Wood 53:46
That’s awesome. That’s a great way to unplug from the markets and take care of
your physical mental health

Rusty Vanneman, CMT, CFA 53:51
and also do a lot of hiking so every year usually gone. David I have hiked in
years past and it was affectionately called the death march and I still need to
do some hikes now which are like 30 miles and top 10 Most Dangerous hikes in
America so I do that every year that somehow convinced my wife even to do them
and so so that’s

Tyler Wood 54:13
not a lot of 14 years in Nebraska rusty not sure it’s probably

Rusty Vanneman, CMT, CFA 54:18
got to travel gotta travel. This Lake Tahoe this year it was it was let’s say oh
my two years ago it was it also in California was at Palm Springs and you’re not
supposed to do that hiking or the tram. It’s 10,000 vertical. Don’t do it in
July. We did it in July and it’s right COVID So you couldn’t take the tram down
so we actually hiked another eight miles over the backside so and then we did
Glacier National Park last year. So anyway, do that till I do that. So the
rowing

Tyler Wood 54:44
amazing, man amazing.

David Lundgren, CMT, CFA 54:46
This has been phenomenal. It’s great to see you. I Like You know that I have a
whole lot more stories that I could have actually taken this conversation
towards but I also know better to do that because you intend inflict our
listeners with stories about me so I will not do that. But I think we kept it
within the rails and I appreciate is this great conversation? We’re going to
provide links to your book, your what your website and things like that. How
else can our listeners stay in touch with you? I mean, you you’re, like I said,
you’re very active. So how else can they stay in touch.

Rusty Vanneman, CMT, CFA 55:12
So again, we’ll provide the links to it. But at orionportfoliosolutions.com. And
again, we’ll have the link to it. There’s the Resource tab, there’s all the
material that I’m doing links to podcasts, videos, commentaries, I am on
LinkedIn at Rusty Vanneman and then Twitter’s at Rusty Vanneman as well. So a
lot of different ways to get a hold of me. And I do actually have a question for
you guys and a favor because I used to say something once upon a time about my
CMT credential. So I am number 256. And listening to your podcast with John
Bollinger. He said he was a first CFA CMT. I used to like to say I was in the
first 10 But I have no idea if that’s even true. I haven’t said in a while. But
I’d like to know like, who were the first CFA CMTs. I think I might have been up
there. I got my CMT and ’99. That’s back when you had to do a paper when I
submitted my paper, I want to say like a 96 or seven, but there was such demand.
And then you had to grade that can you imagine grading all those papers? So took
a couple years for it to get graded. But

Tyler Wood 56:12
I’ll tell you this Rusty, there were a heck of a lot more CFAs that joined the
CMT program in 2001 than in ’99.

Rusty Vanneman, CMT, CFA 56:19
I bet no doubt

Tyler Wood 56:20
People rescale in 2001 – 2009 and now here in 2022 We’re at all time record
highs but I’ll find out exactly which numbers CFA CMT dual charter holder you
are awesome. Look at that in the show notes.

Rusty Vanneman, CMT, CFA 56:35
There I can brag about

David Lundgren, CMT, CFA 56:37
thanks so much for taking the time and and spending your afternoon with us.
Appreciate it.

Rusty Vanneman, CMT, CFA 56:42
A lot of fun. Thank you guys.

Tyler Wood 56:43
Thanks so much Rusty See you soon. fill the gap is brought to you with support
from Optuma. In addition to candidate study of the official CMT curriculum,
Optuma provides a full video course on all of the material that candidates need
to know for each level of the CMT exams. Each course is broken up into modules,
ranging from 15 to 45 minutes, depending on the complexity and length of the
topics being covered. Learn more at optuma.com

Transcribed by https://otter.ai

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CONTRIBUTOR(S)

RUSTY VANNEMAN

Rusty Vanneman serves as Chief Investment Officer for Orion Advisor Solutions.
In his role, he is responsible for leading CLS’s Portfolio Management Team and
overseeing all investment operations at CLS, including investment philosophy,
process, positioning, and performance....

TYLER WOOD

Tyler Wood is the Managing Director of Global Business Development at the CMT
Association. In collaboration with CMT Association members and charterholders,
Tyler has presented the tools of technical analysis around the world to
investment firms, regulators, exchanges, and...

DAVE LUNDGREN, CMT, CFA

Dave Lundgren, CMT, CFA is a 30-year investment industry veteran, with a focus
on technical analysis strategies, particularly momentum and trend following. He
has held both analyst and portfolio manager positions at several major
investment firms, including Wellington...

Striving to further the profession with diverse opportunities in continuing
education, advocacy, ethics awareness, and networking.

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