Turner Capital FAQ's
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Q: Are your investment strategies tax efficient?
A: The simple answer is no. We do not manage capital invested in the stock market for tax purposes. We do not strive to, or believe in buy and hold, therefore we do not let the time that we hold a stock have any impact on when we sell. Our objective (which is not a promise) is to generate profit for our clients regardless of tax consequences.
Q: Can I switch strategies if I decide I want to in the future?
A: Yes, switching strategies is easy! All you need to do is give us a call and we will have your account(s) switched to the strategy that you select.
Q: Can I use my IRA to follow your strategies?
A: Yes, you can use your IRA.
Q: Do you ever short stocks?
A: We do not short individual stocks, but once a down-trend has been established we will invest in inverse ETF’s
Q: Do you have 10, 15 and 20 year performance histories?
A: Our oldest portfolio is Tactical Growth, and it was started in 2016. We post the past performance of all strategies in our weekly “Client Letter”. However, we have back-tested all of the algorithms used in the management of our strategies for several decades. It is important to remember that past performance does not guarantee future returns.
Q: Do your larger clients get better trade executions than your smaller clients?
A: All clients pay exactly the same for shares purchased, regardless of the size of the clients’ account.
Q: Do you get compensated in any way from any of the investments you put your clients in to?
A: No, we do not get any compensation from any investment we place our clients in. 100% of our income comes from client fees. The better the client does, the better Turner Capital does.
Q: How much are you willing to let me lose in the next bear market before you move me to cash?
A: This is a question that all asset managers should be asked. Most asset managers do not have a go to cash strategy (much less a bear market growth strategy), which can leave you with the potential for nearly unlimited downside risk. We utilize stop loss settings on every holding in every account. Stops are, typically set at a price just below each holding’s normal volatility level. Each week, we provide our clients the total potential draw down based on all holdings hitting their stops. We are not afraid to go to cash when the market gets oversold, overbought or is transitioning from a bull to a bear market (or vice versa).
Q: How much will it cost me if I want to take my money out of your management?
A: There are no redemption fees at any time. The money we manage for you is always 100% under your control. You can start or stop Turner Capital from managing your capital at any time. There is never a cost for you to take your money out of our management.
Q: How does a managed account work?
A: A managed account is an account in the client’s name where the client has complete control of the account. Turner Capital only has the limited authority (of which the client can revoke at any time) to make trades in the client’s account and deduct management fees.
Q: How do I know which model works best for me?
A: If you would like to know what model works best for you, contact us at 1-855-678-8200 and we will go over your financial situation, your risk tolerance, your investment goals and your financial objectives. Then, we will explain the workings and investment approach for each of our portfolio strategies so that you can decide which of the strategies makes the most sense for you.
Q: How do I become a client?
A: The process is very simple; We first determine your financial situation and your risk tolerance. The next step is determining which of our strategies you want to follow. Next, we will need to know what type of money you plan to invest, such as IRA, Roth, taxable, joint tenant, trust 401k, etc. The minimum combined account size is $100k, but some strategies allow a smaller account size, and some strategies require a larger account size. Once we have this information, we will send you, via DocuSign, account opening forms, client profile, risk disclosure, and our regulatory compliance documentation.
Q: How do you know when to have a bullish investment bias and how do you know when to have a bearish investment bias?
A: We have developed extensive quantitative analysis algorithms that measure the trends of markets, sectors, stocks and ETFs. From the results of the analysis of these data by our software programs, we are provided with high-probability conclusions regarding the bullish, bearish or neutral conditions of the markets, sectors, stocks and ETFs. Based on these algorithmic conclusions, we know when the odds favor a bullish, bearish or neutral investment bias.
Q: How do I know you’re not just another Bernie Madoff?
A: Each of our client accounts are under 100% control of the client. We do not have the ability to move money out of one client account into another client account. Funds are never comingled. We are limited by contract and by regulatory compliance, and by the custody firm TD Ameritrade to perform only two functions in client accounts; make trades in client accounts and assess management fees. It is impossible for Turner Capital to execute a Bernie Madoff or any type of Ponzi schemes.
Q: How do you set stop losses?
A: We set stop losses based on one standard deviation of normal volatility of the stock which is called an expected move (EM). Different models use different numbers of EM’s based on the risk tolerance, or lack thereof for the model. We also have rules in place for different market conditions that can affect how many EM’s we are using as our stop loss.
Q: Is this a mutual fund?
A: No, the Turner Capital strategies are managed under a “managed account” structure where the client’s money is always in the client’s account and under his/her total control. None of our strategies are mutual funds.
Q: If your strategy is so good, why doesn't everyone do what you do?
A: Most asset management firms utilize a business model that focuses on mutual funds and the asset management firm relies on the mutual fund managers to make buying and selling decisions that best benefit the mutual fund performance. The asset management firm often receives a bonus or commission from mutual funds when the asset management firm invests its clients into those mutual funds. This income is generally substantial and often more substantive than the management fee collected from the client. In addition, most asset management firms ascribe to the “modern portfolio theory” which promotes a buy-and-hold strategy that is well diversified. This removes the burden of making decisions about moving into and out of the market from the asset management firm. Basically, it is financially more advantageous for asset management firms to buy-and-hold mutual funds for their clients than to move into and out of the market via individual stock equities. Finally, most asset management firm managers are not trained in active management. Indeed, most asset managers are, in reality, marketing managers more than they are money managers. The primary reason that more asset management firms do not ascribe to methodologies similar to Turner Capital’s active management investment methodology is the asset management firm takes on lower risk of getting into and out of the market at the wrong time, and it obtains a higher return for the asset management firm from commissions and kick-backs that are not disclosed to their clients, but their clients pay for indirectly through lower returns from the mutual funds that pay the commissions and kick-backs.
Q: In addition to your fees, how much will I pay in trading commissions?
A: There are no trading fees or commissions involved in making trades in client’s account.
Q: I want you to manage some of my money, but I want to manage some of my money myself. Can I get access to your tools so that I can use the same routines you do?
A: Unfortunately, at this time, we do not offer that option.
Q: My current advisor does not use stops. He says you don’t need stops if you buy and hold the right companies in your portfolio. Why do you use stops? Are you not buying the right companies?
A: We use stops on all our portfolio holdings in order to avoid major losses in bear markets; or, when we are in a bear market, to avoid major losses in our inverse ETFs when the market bottoms.
Q: My current advisor says buying for the long haul is the right thing to do and it is the same strategy that all the big investment firms use. Why do you disagree with this strategy?
A: While the buy and hold methodology assumes “the market will always come back”, the average bear market can last upwards of two decades or more and the time It takes for the market to come back averages 14 to 19 years. We do not ascribe to buy-and-hold. We believe our client accounts should hold bull-trending equities in bull-trending markets and, depending on the strategy, inverse ETFs in bear-trending markets. That way, our client accounts have positive growth potential in both bull AND bear markets.
Q: My current advisor never goes to cash, even in down-trending markets. Do you?
A: We are never afraid to go to cash during down trending and transition markets.
Q: What makes Turner Capital different from other financial advisors?
A: At Turner Capital we rely on our quantitative analysis algorithms and rules. We have a rule for every known market condition and only make decisions based on what the rules and algorithms support. We never guess when making trading (buying and selling) decisions on what to do with your money, and we are not afraid to go to cash during transition markets.
Q: What is the smallest account you will manage?
A: Some of our strategies permit an account size of $50,000 or less, but the minimum aggregated account size to work with Turner Capital is 250k.
Q: What is Turner Capitals approach to investing?
A: Turner Capital uses a market directional methodology that is unique to us. We are bullish when the market is bullish, bearish when it is bearish, and we are not afraid to go to cash during transition markets.
Q: What does “Draw-Down” mean and why should I care?
A: Draw-Down is the amount of money you could potentially lose when all stops are triggered in a portfolio.
Q: You keep saying you know how long this current trend will last. How can you say that if you are a fiduciary?
A: As a fiduciary, regulatory compliance prohibits us from making unsubstantiated claims. When we make the statement that we know how long the trend will last, we are referring to the fact that the current trend in the market will last exactly until it doesn’t. We do not know when a trend will end in the future, but we will always know when a trend has ended, by measuring the historical trend of the market, of the stock, of the sector, of the ETF, etc.
Q: What is a fiduciary and why should I care?
A: A fiduciary is a person or organization that acts on behalf of another person or persons to manage assets. Essentially, a fiduciary owes to that other entity the duties of good faith and trust. The highest legal duty of one party to another, being a fiduciary requires being bound ethically to act in the other's best interests.
Q: What is an inverse ETF?
A: An inverse ETF is an exchange traded fund (ETF) constructed by using various derivatives to profit from a decline in the value of an underlying benchmark. Investing in inverse ETFs is similar to holding various short positions, which involve borrowing securities and selling them with the hope of repurchasing them at a lower price.
Q: What is the difference between leveraged and non-leveraged ETFs?
A: Non-leveraged ETFs are funds that contain a basket of securities that are from the index that they track. For example, ETFs that track the S&P 500 will contain the 500 stocks in the S&P. Typically, if the S&P moves 1%, the non-leveraged ETF will also move by 1%. A leveraged ETF, on the other hand, uses financial products and debt that magnify the gain or loss and index. Leveraged ETFs have goals (not promises) of 2-times or 3-times the movement, on a daily basis, of the underlying index. The extent of the gain is contingent on the amount of leverage used in the ETF. Leveraging is an investing strategy that uses borrowed funds to buy options and futures to increase the impact of price movements.
Q: What happens if Mike Turner retires or has a heart attack?
A: We have an ongoing succession plan. But it is important to remember that we are a rules-based investment firm. We have made the rules, but the rules make the trades. While Mike Turner plays a particularly important role in the company, the company is structured to continue operations whether or not he is actively involved in the company.
Q: Why do you have so many strategies?
A: We have various strategies so that we can serve clients that have different financial situations with different goals and varying levels of risk tolerance.
Q: Why do some strategies outperform others?
A: Each of our strategies are unique and provide distinctly different approaches to trading, including the types of equities held, the stop loss settings used, the relative volatility of each holding and the diversification algorithms used to keep each strategy balanced according to the rules associated with each strategy.
Q: What is an investment bias?
A: An investment bias is an indication of whether to be bullish with bull-trending investments or bullish with bear-trending investments (i.e., inverse ETFs) or whether to be neither and move into a cash position in transition-type markets.
Q: What is the difference between realized gains and unrealized gains?
A: Unrealized gain is the amount of money or percent that you have gained in a stock while you still own it, realized gain is how much profit you have gained after selling the stock.