Noted financial writer, Jeff Miller, talks about his Felix ETF Model and “A Dash Of Insight”
John Nyaradi: I’m John Nyaradi, Publisher of Wall Street Sector Selector, a financial media site specializing in exchange traded funds, global markets and economic analysis. Today, I am really pleased to welcome our special guest, Jeff Miller who is the author of A Dash Of Insight, a widely read market commentary. Jeff, welcome to Wall Street Sector Selector.
Jeff Miller: Thank you. Nice to be with you, John.
John Nyaradi: Jeff is the author of A Dash of Insight, a widely read blog and market commentary. He’s a former university professor at the University of Wisconsin, has worked at the Chicago Board Options Exchange and he is the founder of NewArc Investments, a registered investment advisory in Illinois that manages both institutional and individual accounts. He’s also #1 in the Economy Section of Seeking Alpha.
So, Jeff, let’s start with A Dash of Insight. It’s one of my favorites. On a weekly basis, you focus on a couple of things that are not widely followed, the first being the St. Louis Financial Stress Index. Can you just talk about that a little bit?
Jeff Miller: Sure, I would be happy to. I started Dash about six years ago and what I tried to do was write as if I were speaking to one of my clients right in the room with me and so that’s how I write. And it turned out that quite a number of people have liked it, including other financial advisers.
What the team at the St. Louis Fed did was study 18 different indicators ranging from financial markets to credit spreads. They’re all measurable things for markets. They’re not government estimates or revised data of the sort that we sometimes worry about. And if you look at the chart on their site, you can see how well this has captured the peak moments of financial stress in the past. So, this is a way, I think, of staying well-grounded and not being carried away by the headlines and I actively use this as a way of monitoring the real risk that my portfolio has faced.
John Nyaradi: Another thing that’s really intriguing in your work is the Felix ETF Model. Tell us what Felix is about.
Jeff Miller: The Felix Program basically asks what is the best ETF to be in over the next three weeks. But we don’t buy that ETF and hold it for three weeks. We ask the question everyday. So, the answer to the question of the best ETFs for the next three weeks changes, it’s slightly different each day and we usually buy the top three.
So, we might make 35 trades a year in that approach. Now, there is a companion approach called Oscar and so Oscar and Felix both approach the questions of what’s the best for the next three weeks but Oscar is a little bit more exuberant, shall we say, and Felix is a little more cautious. So, at the moment most people seem to prefer the Felix approach and that’s the one that I generally feature.
John Nyaradi: The third thing I really like is the C-Score recession indicator that is another kind of unique look at things. Can you just brief us on that?
Jeff Miller: You know, this is one of the joys of being involved in the internet and being a blogger and doing commentaries, you wind up meeting people you would never meet otherwise. You know, I’ve gotten to go to the Kaufman Conference of leading economic bloggers. It’s been a good experience. And a couple of years ago I also was on an online panel with several other internet commentators. One of them was economist Bob Dieli and we enjoyed each other’s contribution.