This month we feature Jeff Miller who is the President/CEO of NewArc Investments; a registered investment adviser based out of Naperville, Illinois.
- Describe your current role and what you do?
[Jeff] I am an investment manager, working primarily with individual
accounts. We have a small team, so we all play various roles. I am in
charge of overall strategy, most stock analysis, business development, and
more. I do quite a bit of writing. This helps me to develop and focus my
investment themes and increases our overall visibility.
- How did you get into the finance game?
[Jeff] During my first career as a college professor I had a standing offer
from two different options trading firms in Chicago -- friends and former
students who had done well and thought that my quant methods would be
useful. My hope had been to combine teaching with public service in
Wisconsin. At some point, the policymaking there in taxing and spending
took a turn away from objective analysis. I wanted to use data to improve
results, so it was time for a change.
- Describe your trading/investment strategies and why it works for you?
[Jeff] We currently have five different investment strategies with a range
of risk/reward profiles. Our bond ladder is much better than a bond mutual
fund. Our Felix ETF model trades pretty frequently, and can get out of the
market or short if needed. We have two long only stock programs. Our Great
Stocks method emphasizes value on an adjusted P/E basis and changes
regularly according to my ideas about the best current themes. The process
goes from theme to sector to stocks, with strict screening. Our new
Aggressive Stock Program includes ideas that have high risk and even higher
reward. You would not bet the ranch on any one of them, but a basket makes
sense. Finally, our Enhanced Yield program targets an annual 9% return with
much lower risk than stocks. We do this by choosing relatively safe
dividend paying stocks and writing near-term calls against the positions.
This has beaten the target for two years, mostly from the call sales. It
does not rely on a climbing market. This is a good anchor for most
- Who are some of the people you admire or look up to in the investment
[Jeff] Warren Buffett would be #1. I am generally more impressed by those
who have sound, long-term judgment than those who constantly pitch their own
products -- especially the crowd that does only fixed income.
- What best piece of advice would you give the Scutify community?
[Jeff] Try to remain open-minded and receptive to different approaches. No
pundit knows your personal situation, so beware of strident advice --
especially scare tactics. Do not treat your investing as a poker game,
trying to time the market with all-in and all-out moves.
- What is your #1 investment book that you swear by and why?
[Jeff] I like The Essays of Warren Buffett: Lessons for Corporate America,
Second Edition by Warren Buffett and Lawrence Cunningham, a collection of
his letters to shareholders. I also like Jeremy Siegel's Stocks for the
Long Run. These books are more helpful for most people than technical works
on stock-picking or systems.
- Most memorable moment in your investing/trading career?
[Jeff] There have been many key moments where standard methods and rules
might not apply. You cannot always depend upon your models or on a few past
examples. If I had to pick one, it would be the 1998 Long Term Capital
Management crisis. There was a lot of counter-party risk and no one knew
what would happen. The Fed rounded up the big Street banks and twisted arms
to buy out the LTCM positions. Jimmy Cayne refused to go along for his
"share" which may have affected attitudes toward him later.
This was much different from the recent financial crisis. Here those who
made mistakes -- including Nobel prize-winning experts -- lost their money.
The bailout was privately funded and eventually profitable.
Jim Cramer incorrectly predicted a market crash, saying it was like 1987.
My own models said to sell everything. If I had followed this advice, I
would have been out of business, selling at the bottom and starting over
with new clients. Instead, I reduced position sizes to control risk, and I
captured the very significant rebound with most of my holdings.