Coastwise CEO Scott Kyle Talks Investing in the New Year


Amidst struggling economy, successful millionaires offer investment advice for 2012. Read Scott's complete article here..

coming soon

COMING SOON

home

Keep up to date on Scott Kyle by visiting the news section.

Scott Kyle serves as the CEO/Chief Investment Officer for Coastwise Capital Group, a high-end money management firm named top La Jolla Financial Advisor in 2009 and Five Star Wealth Manager in 2010, 2011, 2012, 2013, and 2014 . Investing in public and private companies for over 20 years, Mr. Kyle offers a solid combination of Wall Street analyst, public market, private equity, and hedge fund experience, invaluable when it comes to sophisticated and effective money management. During that time he has executed billions of dollars in securities trades/investments. Mr. Kyle has been using options strategies to hedge equity positions and to generate income since the early 1990s, while developing proprietary trading/investing models and techniques.

Mr. Kyle co-founded and was a principal source of early stage investment funding for the publicly traded The Active Network, Inc., (ACTV), named for three
consecutive years one of the fastest growing companies in North America by Inc Magazine and for four years one of the fastest growing companies in North
America by Deloitte & Touche (Fast 500). Mr. Kyle served as CFO and as Board of Director for Active from its founding in 1998 until 2002. Today, Active has over
3,000 employees worldwide.

In 1997, Mr. Kyle purchased an interest in and became CEO/Publisher of Triathlon Group North America, LLC, the parent company to the world's largest triathlon publication, Triathlete Magazine. Post acquisition, Mr. Kyle led a team for the subsequent year which returned the magazine to profitability. Mr. Kyle served on the company's Board of Directors until November 2003 when he sold his interest.

From 1993 - 1997, Mr. Kyle was the Publisher at Dearborn Trade and the Director of Dearborn's International Division. As Publisher, Mr. Kyle was responsible for managing a group of over 60 people and a budget in excess of five million dollars in sales. Mr. Kyle served on the parent company's Board of Directors from 1996 until the company was sold to the publicly traded Washington Post Company for over thirty-six million dollars in 1998.

From 1989 - 1991, Mr. Kyle was a Financial Analyst at Chemical Bank (now JP Morgan/Chase) where he conducted analysis and due diligence on Fortune 1000 Companies.

Mr. Kyle is the author of The Power Curve: Smart Investing Using Dividends, Options, and the Magic of Compounding. Additionally, Kyle is the creator of the Power 100® stock index. Read more about the book here.

Mr. Kyle holds Bachelor's degrees in Economics and International Relations from Tufts University (Magna Cum Laude, Phi Beta Kappa), a General Course Degree in International Relations from the London School of Economics, and an MBA from Harvard University. Mr. Kyle is a two time world and nine time national champion in sailing, an Ironman triathlon finisher, and a 3rd degree black belt in Shaolin Kempo. As part of Coastwise's philanthropic efforts, Mr. Kyle founded the Coastwise Prize® for Investing Excellence, an annual scholarship prize for high school students. Additionally he created the Coastwise Mile®, an annual running event and festival benefiting the San Diego Humane Society and SPCA as well as the Scripps Park Project. Mr. Kyle lives with his family in La Jolla, California, has served as a Board of Director on over fifteen companies and non-profit organizations, and acts as Board Trustee for The Children's School.

 

 

Find Scott on

aboutcoastwise


Headquartered in La Jolla, California, and founded by CEO/Chief Investment Officer Scott Kyle, Coastwise Capital Group is a high-end money management firm offering superior investment services and expertise to affluent individuals, families, and institutions worldwide. Coastwise offers customized portfolios by way of separate accounts which are carefully tailored to meet the current and evolving needs of its clients. Coastwise manages many account types including:

  • Individual accounts
  • Retirement accounts
  • Trust accounts
  • Organizational accounts
  • 529 plans

Within each portfolio, Coastwise utilizes a combination of:

  • Stocks
  • Options
  • ETFs
  • Mutual Funds
  • Bonds

and other securities to meet each client's unique financial goals.

With the goal of educating existing and prospective clients and giving back to the community, Coastwise has founded The Coastwise Mile®, the Coastwise
Prize®, and the Power 100® stock index. Coastwise has also been the recipient of the various awards including:

  • 2010, 2011, 2012, & 2013 FIVE STAR: Best in Client SatisfactionSM - Wealth Manager
  • 2009, 2010, 2011, & 2012 Best Financial Advisor – Best of La Jolla Poll conducted by the La Jolla Light
  • 2010 2011, & 2012 Best Financial Advisor - Readers Choice Awards conducted by the La Jolla Village News
Learn more about Coastwise Capital Group, LLC at www.coastwisegroup.com
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Phone: 858.454.6670
 

 

BOOKS & NEWSLETTER

 

The Power Curve: Smart Investing Using Dividends, Options, and the Magic of Compounding

“The Power Curve offers an independent, objective, and unbiased approach to managing money the right way. The book is a complete roadmap to beating the market that should be required reading for every professional and amateur.”
- Michael Steelman, Director, Bank of America

In the immortal words of Albert Einstein, "compounding is the most powerful force in the universe." In his book, The Power Curve, professional money manager Scott Kyle explains in entertaining and understandable terms how to tap into this ultimate strength to improve one’s stock market returns. From the fundamental to the technical to the psychological, Kyle covers everything the beginning investor needs to know to avoid common investment pitfalls and provides advanced trading techniques that will help improve performance of even the most experienced investors.

To learn more, CLICK HERE

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Forever Young

Forever Young is Indiana Jones meets National Treasure meets The Da Vinci Code - with a sexy, original twist. Four stars worth of action, romance, adventure and suspense.
- Jon Larson, Hollywood Producer

Forever Young is a fresh, fast paced romance adventure that reads like a Hollywood movie. Part Da Vinci Code, part National Treasure and part Indiana Jones, Forever Young follows the life of Frank Young. A seemingly average guy, Frank falls in love at first sight with a gorgeous and mysterious woman, Jackie, as their plane survives a crash landing on the way to Frank’s ten year college reunion. Separated during the chaos of the emergency landing, Frank fears he will never see Jackie again. At his reunion the following night, Frank discovers he may have a power that could change his life – and the women he encounters – forever. Soon beautiful A-listers who want to tap into his newfound power throw themselves at Frank who instead desperately wants to reconnect with Jackie. Meanwhile, Frank’s start up business is struggling, so when billionaire Ari Kousakas approaches Frank with a proposition that includes funding Frank’s fledgling travel company in exchange for tapping into Frank’s power, he becomes intrigued. As with many of the characters in Forever Young, there is more to Ari than meets the eye. Frank soon finds that the people he loves most are in grave danger when he refuses Ari’s demands. As the power Frank thought of as a gift quickly becomes a curse, Frank decides to return to the place where he thinks it all began. Frank makes a harrowing journey that takes him half way around the world and puts his very own life at risk – all for love. Along the way he must make all but impossible choices that test his character as well his abilities for survival. Forever Young delves deep into issues of love, morality, greed, and the universal quest for eternal youth.

To learn more, CLICK HERE

 
 
 

 

power100

The Coastwise Power 100® stock index, calculated by Coastwise Capital
Group, LLC, is an annual list of companies that meet strict financial criteria.
The Power 100 index measures and tracks the performance of a well diversified
group of companies selected based on various financial measures and criteria.

To learn more, CLICK HERE.

 

 

 

 

news

August 21, 2012Tale of Two Cities Redux-The Cisco Kid

Since last month’s newsletter warning about the dangers of owning certain bonds (longer term Treasuries to be specific), some interesting events transpired.  The rate on the 20 year Treasury increased about 40 basis points (bps) to around 2.55% from approximately 2.15%, a change of 18%.  So to put in plainly, the yield – the amount of income generated by the 20 year Treasury - increased just under 20% in under 30 days.  What happened to the price of the 20 year?  In looking at the TLT, the ETF (Exchange Traded Fund) representing the bond, it declined in price approximately 8% to around $120 as of yesterday’s close from over $132 in late July.  That means the holders of TLT who were willing to lock in an income rate of under 2.2% a month ago just suffered capital losses worth the equivalent of nearly 4 years of income (the rise in interest rate caused the price of the bonds to drop by nearly 4 times of the amount TLT was paying in income).  This clearly demonstrates the risk to principal in owning anything but very short term Treasuries.

Let’s compare this outcome with that of Cisco Systems (CSCO).  This past week, CSCO increased its yield (via hiking its tax advantaged dividend) by 75%, the stock now yielding around 3% (materially higher than the 10 or even 20 year Treasury bond).  How did the market react to this massive spike in ‘yield’ of CSCO?  It cheered enthusiastically, of course, and the stock price increased nearly 25% over the same period (approximately the last month) that TLT was dropping the equivalent of about 1,000 points in the DOW (which would have caused a few headlines).

If an 18% increase in the payout of the 20 year Treasury caused the principal to drop nearly 10%, imagine what a 75% rise (the amount CSCO increased its yield) in yields would have done to bond prices….

This is the point I have been making the last month or two as interest rates have hit historical lows – I don’t know if rates will be up materially tomorrow or 3 years from now, but if you have a 5+ year time horizon, a basket of stocks like CSCO and others, which we discuss regularly and which have very strong balance sheets, abundantly positive cash flow, and thus an ability to continue to raise their dividends (and in many cases yields already in excess of the 10 and 20 year Treasuries) will likely outperform many bonds over the long term.  Will the ride be bumpy along the way?  For sure, but the same will be true of so-called ‘safe’ Treasury investments as witnessed by an 8% drop in the price of the 20 year in under a month.  And when the dust settles 5–10 years from now, between capital appreciation and hefty dividends (if you own the right stocks), a well-diversified basket of dividend paying equities will likely leave your wallet fatter than their bond brethren.

An Alternative For Your Consideration

On the way home from work the other night, I heard a show – which I am sure was in fact an infomercial – on why the price of gold was headed straight to $5,000 in the next 12 – 18 months.  Putting aside the obvious issue that it amazes me it is legal to make such proclamations, the solution the announcer (in his sophisticated South African accent) strongly suggested to take advantage of this certain occurrence was to buy gold coins.  While holding a certain amount of alternative asset classes (i.e. investments beyond the “Big 3” of stocks, bonds and cash) can be a sound part of a well-diversified portfolio, there are more prudent ways to profit from the rise in commodity prices than buying gold coins or oil rigs. 

There are several advantages in gaining exposure to commodities and other alternative asset classes through publicly traded securities versus owning these assets directly.  These advantages include: 1) Cost.  It can be very expensive (not to mention risky) to hold commodities such as gold directly.  While perhaps not quite as sexy as having a collection of American Eagle coins to show off to your friends at parties, owning a publicly traded security that rises and falls in price along with the price of the underlying asset eliminates costs and risks associated with storage, insurance, etc.  Also, transaction costs (commissions, spreads) can be exceedingly high when trying to buy and sell commodities directly, at times exceeding 5% or more versus a typical stock trade commission being in the range of 0.1% (one tenth of one percent, or 50 times less than the commissions associated with selling real property for example).  These “hidden” costs alone – steep commissions to sell for example – can eat away at any profits.  2) Liquidity.  With exposure to commodities via stocks, you can sell with a click of the mouse.  If you own certain commodities via structures like oil rigs, jewelry, real estate, etc. it can take you long periods of time to sell the asset.  This can lead to lost profits if prices are falling just as you are attempting to sell.   3) Ability to hedge.  While many real estate owners are learning the term “short sale” the hard way, in reality you cannot directly profit from shorting (selling high and buying low) real property or most other asset classes.  Such a market for shorting simply doesn’t exist.  Similarly, it is difficult or impossible to hedge most other assets classes.  When gaining exposure to gold via ETFs traded on U.S. stock exchanges, for example, you can short the ETF if you feel the price of gold is due for a decline, or hedge your position through selling calls, buying puts, or both.

Bottom line: having a certain percentage of your portfolio in assets that may do well if and when inflation rises (and bond prices fall) can be a wise investment strategy; approach these investments in an intelligent way that gives you a lower cost, more flexible means to profit if your thesis is right versus attempting to own the commodities, etc. outright.  When that TV announcer points to a big pile of gold coins and proclaims how you will become rich if you will only buy the metals he is peddling, don’t fall prey to the false glamor of owning the asset directly, do the rational thing and find a good ETF as a means to make your investments.

 

 

Cable’s Corner

Start Early And Never Worry

There are many things we do at Coastwise which bring us great joy and satisfaction. Perhaps one of my personal favorites is working with some of the younger set. I occasionally get to sit down with the children of clients or spend some time speaking to high school classes about the importance of starting an investment plan as early as possible. I find that the time spent on this in most education curricula is woefully inadequate or not covered at all.

There are many “a-ha” moments that tend to take place when the mental wheels are set in motion. Very few things bring my wife and me more solace than knowing that our 18 and 20-year-old children have been setting aside a significant portion of their earnings toward investments that will provide for the day when they no longer “need” to work. We teach our children, just as I teach others, that they can set aside up to $5000 per year of earned income in a Roth IRA (that amount will increase per IRS rules as time goes on). They are set up on automatic withdrawals from the paychecks they receive from their jobs. This money is invested automatically at Coastwise and I go over the details of how and why the specific investments are chosen. They watch their portfolios grow by accessing their accounts on their laptops and smart phones. This is a great way to instill the discipline of saving and the concept of “out of sight, out of mind”. Most importantly, it gives them the confidence of accomplishing something on their own.

When I show these young adults a chart that explains how compound interest does its magic over time, and the effects of say a 5% versus a 9% return, their eyes really light up. For example, assume they just invest $5000 one time, at age 18; at age 72 that one time investment will be worth $69,693 with a 5% return. A 9% return would yield a whopping $524,809 on that same $5000. If that same individual were to invest $5000 every year instead of just the first year, the results can be truly staggering. At 5% the result is $1,358,563 and at 9% it would be… (Drum roll please) $6,295,459! Ah, to be young again. While I haven’t figured out a way to turn back time, I can at least revel in the fact that I have steered many on the right course to a very bright future. Some more icing on the cake is that under current tax law, no tax will be due when they go to take the funds out of a Roth IRA down the road. Do keep in mind that it must be earned income that goes into a Roth IRA. The comfort for both parents and their children of such a plan is very exciting. It turns out this investment stuff can be pretty cool after all Dad!

 

September 26, 2012A Tale of Two Cities Redux-The Cisco Kid

Since last month’s newsletter warning about the dangers of owning certain bonds (longer term Treasuries to be specific), some interesting events transpired.  The rate on the 20 year Treasury increased about 40 basis points (bps) to around 2.55% from approximately 2.15%, a change of 18%.  So to put in plainly, the yield – the amount of income generated by the 20 year Treasury - increased just under 20% in under 30 days.  What happened to the price of the 20 year?  In looking at the TLT, the ETF (Exchange Traded Fund) representing the bond, it declined in price approximately 8% to around $120 as of yesterday’s close from over $132 in late July.  That means the holders of TLT who were willing to lock in an income rate of under 2.2% a month ago just suffered capital losses worth the equivalent of nearly 4 years of income (the rise in interest rate caused the price of the bonds to drop by nearly 4 times of the amount TLT was paying in income).  This clearly demonstrates the risk to principal in owning anything but very short term Treasuries.

Let’s compare this outcome with that of Cisco Systems (CSCO).  This past week, CSCO increased its yield (via hiking its tax advantaged dividend) by 75%, the stock now yielding around 3% (materially higher than the 10 or even 20 year Treasury bond).  How did the market react to this massive spike in ‘yield’ of CSCO?  It cheered enthusiastically, of course, and the stock price increased nearly 25% over the same period (approximately the last month) that TLT was dropping the equivalent of about 1,000 points in the DOW (which would have caused a few headlines).

If an 18% increase in the payout of the 20 year Treasury caused the principal to drop nearly 10%, imagine what a 75% rise (the amount CSCO increased its yield) in yields would have done to bond prices….

This is the point I have been making the last month or two as interest rates have hit historical lows – I don’t know if rates will be up materially tomorrow or 3 years from now, but if you have a 5+ year time horizon, a basket of stocks like CSCO and others, which we discuss regularly and which have very strong balance sheets, abundantly positive cash flow, and thus an ability to continue to raise their dividends (and in many cases yields already in excess of the 10 and 20 year Treasuries) will likely outperform many bonds over the long term.  Will the ride be bumpy along the way?  For sure, but the same will be true of so-called ‘safe’ Treasury investments as witnessed by an 8% drop in the price of the 20 year in under a month.  And when the dust settles 5–10 years from now, between capital appreciation and hefty dividends (if you own the right stocks), a well-diversified basket of dividend paying equities will likely leave your wallet fatter than their bond brethren.

An Alternative For Your Consideration

On the way home from work the other night, I heard a show – which I am sure was in fact an infomercial – on why the price of gold was headed straight to $5,000 in the next 12 – 18 months.  Putting aside the obvious issue that it amazes me it is legal to make such proclamations, the solution the announcer (in his sophisticated South African accent) strongly suggested to take advantage of this certain occurrence was to buy gold coins.  While holding a certain amount of alternative asset classes (i.e. investments beyond the “Big 3” of stocks, bonds and cash) can be a sound part of a well-diversified portfolio, there are more prudent ways to profit from the rise in commodity prices than buying gold coins or oil rigs. 

There are several advantages in gaining exposure to commodities and other alternative asset classes through publicly traded securities versus owning these assets directly.  These advantages include: 1) Cost.  It can be very expensive (not to mention risky) to hold commodities such as gold directly.  While perhaps not quite as sexy as having a collection of American Eagle coins to show off to your friends at parties, owning a publicly traded security that rises and falls in price along with the price of the underlying asset eliminates costs and risks associated with storage, insurance, etc.  Also, transaction costs (commissions, spreads) can be exceedingly high when trying to buy and sell commodities directly, at times exceeding 5% or more versus a typical stock trade commission being in the range of 0.1% (one tenth of one percent, or 50 times less than the commissions associated with selling real property for example).  These “hidden” costs alone – steep commissions to sell for example – can eat away at any profits.  2) Liquidity.  With exposure to commodities via stocks, you can sell with a click of the mouse.  If you own certain commodities via structures like oil rigs, jewelry, real estate, etc. it can take you long periods of time to sell the asset.  This can lead to lost profits if prices are falling just as you are attempting to sell.   3) Ability to hedge.  While many real estate owners are learning the term “short sale” the hard way, in reality you cannot directly profit from shorting (selling high and buying low) real property or most other asset classes.  Such a market for shorting simply doesn’t exist.  Similarly, it is difficult or impossible to hedge most other assets classes.  When gaining exposure to gold via ETFs traded on U.S. stock exchanges, for example, you can short the ETF if you feel the price of gold is due for a decline, or hedge your position through selling calls, buying puts, or both.

Bottom line: having a certain percentage of your portfolio in assets that may do well if and when inflation rises (and bond prices fall) can be a wise investment strategy; approach these investments in an intelligent way that gives you a lower cost, more flexible means to profit if your thesis is right versus attempting to own the commodities, etc. outright.  When that TV announcer points to a big pile of gold coins and proclaims how you will become rich if you will only buy the metals he is peddling, don’t fall prey to the false glamor of owning the asset directly, do the rational thing and find a good ETF as a means to make your investments.

 

 

Cable’s Corner

Start Early And Never Worry

There are many things we do at Coastwise which bring us great joy and satisfaction. Perhaps one of my personal favorites is working with some of the younger set. I occasionally get to sit down with the children of clients or spend some time speaking to high school classes about the importance of starting an investment plan as early as possible. I find that the time spent on this in most education curricula is woefully inadequate or not covered at all.

There are many “a-ha” moments that tend to take place when the mental wheels are set in motion. Very few things bring my wife and me more solace than knowing that our 18 and 20-year-old children have been setting aside a significant portion of their earnings toward investments that will provide for the day when they no longer “need” to work. We teach our children, just as I teach others, that they can set aside up to $5000 per year of earned income in a Roth IRA (that amount will increase per IRS rules as time goes on). They are set up on automatic withdrawals from the paychecks they receive from their jobs. This money is invested automatically at Coastwise and I go over the details of how and why the specific investments are chosen. They watch their portfolios grow by accessing their accounts on their laptops and smart phones. This is a great way to instill the discipline of saving and the concept of “out of sight, out of mind”. Most importantly, it gives them the confidence of accomplishing something on their own.

When I show these young adults a chart that explains how compound interest does its magic over time, and the effects of say a 5% versus a 9% return, their eyes really light up. For example, assume they just invest $5000 one time, at age 18; at age 72 that one time investment will be worth $69,693 with a 5% return. A 9% return would yield a whopping $524,809 on that same $5000. If that same individual were to invest $5000 every year instead of just the first year, the results can be truly staggering. At 5% the result is $1,358,563 and at 9% it would be… (Drum roll please) $6,295,459! Ah, to be young again. While I haven’t figured out a way to turn back time, I can at least revel in the fact that I have steered many on the right course to a very bright future. Some more icing on the cake is that under current tax law, no tax will be due when they go to take the funds out of a Roth IRA down the road. Do keep in mind that it must be earned income that goes into a Roth IRA. The comfort for both parents and their children of such a plan is very exciting. It turns out this investment stuff can be pretty cool after all Dad!