Newsletter - May 2018  Issue #36

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President's Welcome Message

Greetings! Welcome to the 36th issue of the CFA Society Pittsburgh's Newsletter.   With this newsletter, we usher in a new design thanks to Lisa Brignoni’s work with the CFA Institute. We hope you like the revised format and the thematic nature of the newsletter: this issue focuses on financial literacy.   The CFA Society Pittsburgh is an international leader in financial literacy. The work that the financial literacy committee is doing, under the leadership of Gene Natali, is nothing short of amazing. Thank you to the approximately 50 volunteers who make it possible for us to reach well over 100 high schools with our efforts.    As I near the end of my second, two-year term as President, I want to thank you for all the encouragement and support you have offered during my time as a President. This organization is truly amazing, and it’s been a privilege to serve such an incredible group of individuals. George Emanuele will be assuming the position of President starting in July - and he will do a fabulous job moving us forward. I also offer my congratulations to Jody Madala and Brad Jones who will be joining the board in July. A big thanks to Cale Grove who will be leaving the board at the end of his term in June. Cale has done an incredible job heading up the membership area these past four years!   The primary goals of the newsletter are to keep members and supporters of the Pittsburgh Society informed about the society's activities and foster greater community involvement by all members.

Sincerely, Dr. Greg Filbeck, CFA, FRM, CAIA, CIPM, PRM CFA Society Pittsburgh

Upcoming Events

June Luncheon: Using Lumber and Gold to Actively Manage Stocks and Bonds Michael A. Gayed, CFA, and Charlie Bilello, CMT, of Pension Partners, LLC co-authored two award-winning papers in 2014, and also won the 2015 Wagner Award for their paper documenting how Lumber and Gold can be used as signals for managing investment portfolios. This eye-opening paper focuses on the predictive power of two seemingly unrelated commodities which provide important information on the economic cycle, and risk-seeking behavior in various assets. Join Michael A. Gayed, CFA, co-author of these papers as he presents the research and provides practical ways of active tactical asset allocation using the signaling power of Lumber and Gold. When: June 13, 2018 11:45 - 1:00 Where: Omni William Penn Cost: Members - $20, Non-members - $40 Sign up Here

Recent Events

Scouts Day Financial Literacy Badge The Society sponsored another sold-out session for Boy Scout Personal Management Merit Badge, and coursework in the Girl Scout Financial Literacy-series. In this co-ed class, young men and women in Junior and Senior High learned how to budget and plan for a major purchase, in this case, the appropriate new car given life’s realities (spouse, family size, budget). Attendees tracked their spending habits for 13 weeks, and learned basic investment concepts such as: stocks, bonds, compound interest, borrowing, APR, credit cards and credit scores. Coursework also included time management skills and behavioral finance issues, charitable giving of time and money, and one’s potential future job. CFA Society Board members Lisa Brignoni, Jim Herrington, and Gene Natali were instructors for the event.

CFA Society Buffalo Financial Literacy Launch On Tuesday, April 24 th , the CFA Society Pittsburgh helped the CFA Society Buffalo launch their first ever financial literacy campaign with Jason Pettner, a recent Penn State Behrend graduate, serving as the keynote speaker. Copies of the “Missing Semester” were distributed. May Luncheon: New Networking with Sameer Somal, CFA, CFP In May, Sameer presented to our members, teaching us how introverts and extroverts alike can sharpen their skill sets and expand professional opportunities.

6th Annual Endowments & Foundation Conference On  May 16, 2018,  the CFA Society Pittsburgh hosted the 6th Annual Endowments & Foundations Conference for the benefit of our 175 registered guests, a new record size. Leaders from regional endowments and foundations, investment consultants, money managers, and subject experts participated in a full-day, interactive, educational conference, covering critical investment and governance issues. The conference concluded with a 90-minute cocktail and networking reception.   This year's speakers and panelists included: John R. Chisholm, CFA, Co-CEO and Co-CIO – Acadian Asset Management Jeffrey Mortimer, CFA, Dir. of Investment Strategy - BNY Mellon Wealth Management Ian Toner, CFA, Chief Investment Officer – Verus Matt Hougan, Global Head of Research – Bitwise Asset Management Mark. A. Macpherson, CFA, AIF, Managing Director – Manning & Napier Susan N. McDermott, CFA, Chief Investment Officer – Pavilion Advisory Group Tim Walters, Senior Consultant – AndCo Stephen DiGirolamo, CFA, Vice President – Wilshire Associates Mary Phan-Gruber, Executive Director – Jefferson Regional Foundation Ed Grefenstette, President, CEO and CIO – The Dietrich Foundation Ed Kolano, CPA, CIO and VP of Finance – The Heinz Endowments John R. Luthi, CFA, Director of Investments – Bucknell University Many thanks to board members Joe Lantz and Jim Herrington and Carmen Herrington for organizing this successful event.

Focus: Financial Literacy

CFA Society Pittsburgh’s Financial Literacy committee is comprised of 45 member/student volunteers. As a group we are working with 124 high schools and 16 colleges across our region. Our primary objective is to help students better prepare for the money choices they all will make. Candidly, many of them already are. Our second objective is to meaningfully increase awareness of the CFA® designation in the communities where our members live and work.   Before diving into a summary of this past school year, I want to personally recognize and thank our entire committee. The outreach that we do as a society, would not be possible without the dedication and passion of our volunteers. THANK YOU SINCERELY! Gene Natali, Jr., CFA Financial Literacy Committee Chair

Building Trust Through Financial Literacy: A Perspective from CFAI Robert Stammer, CFA Director, Investor Engagement Financial literacy and investor education are becoming increasingly important within the network of CFA Institute member societies. In fact, many societies within North America have initiated foundations, programs, or educational activities in their local communities to increase the financial capability and inclusion of various audiences. However, providing financial education to the public should not be considered purely altruistic, but instead as enlightened self-interest, where persons who act to further the interests of others, ultimately serve their own self-interest. One organizational belief of CFA Institute is that “Financial markets are more effective when participants are knowledgeable”. Since trust is the foundation of the financial ecosystem that allows it to operate effectively, increased financial knowledge, which results in greater trust and confidence in the system, should motivate greater savings and capital market engagement. Since the purpose of finance is to increase societal wealth and well-being, financial literacy efforts and a more financially knowledgeable public should result in benefits that accrue to both the financial industry and society.

High School Outreach Our high school outreach program is presented in classrooms and covers budgeting, debt management, and investing, centering on 3 maxims: let your savings dictate your spending; less debt equals more freedom; and save early, save often. We keep the conversations fun and at a high level. They often become interactive and our simple message is that each individual, regardless of career path or income, is in control of his or her financial future. Pilot efforts for this program began in 2013 and early feedback was incredibly positive from both teachers and students. For the 2015-16 school year, we committed to growing the program by adding volunteers and modifying the presentation. We now have over 20 volunteers on our High School Speaking sub-committee. It is common to give multiple presentations during a day at a school, and on a few occasions, we have presented to auditoriums of 800+ students. Our goal is to reach as many students as possible by continuing to grow our school base. We have an incredible volunteer team that is committed and passionate about financial literacy. If you share this passion, we are always looking for volunteers!

Annual ACT 48 Approved Continuing Education for High School Teachers For the past 3 years, we have held a financial literacy conference for high school teachers, guidance counselors and curriculum directors. The program agenda can be found on the financial literacy section of our website. Speakers include society members, industry experts, state representatives, university faculty and college students. The event is held in partnership with The Missing Semester and Allegheny Intermediate Unit. We have reached 124 schools through these efforts and will be announcing plans for continued growth in 2018-19. One component of the ACT 48 program is handing out classroom posters to each of the participating schools. CFA Society Pittsburgh posters are now hanging in classrooms at over 100 unique high schools. Members of our speaking committee regularly see these posters when giving talks. Below is this year's poster:

Financial Literacy Program Research CFA Society Pittsburgh President, Dr. Greg Filbeck and Jason Pettner recently concluded the second year of our research efforts measuring the efficacy of teaching financial literacy in the classroom. In conjunction with the high school presentation efforts, we have been conducting a survey of students involved with our financial literacy programs. With the help of the teachers, we asked students to take surveys before and after to analyze the effectiveness of financial literacy education in four major areas: financial behavior, subjective financial knowledge, objective financial knowledge, and self-esteem. Throughout this school year, we had 53 schools sign up to participate and 512 student survey responses. Excitingly, students showed statistically significant improvement in all four areas tested! The significant improvements show that our financial literacy efforts help students learn and greatly improve their chances of financial success!  Participating teachers also receive a school specific factsheet. This fact sheet measures overall improvement as well as areas of greatest and least improvement. We are looking forward to continuing these research efforts in the fall. The 2018-19 school year will mark the 3 rd year of this ongoing study.

4th Annual Collegiate Financial Plan Competition The 2017-18 Collegiate Financial Plan Competition was the largest and most competitive to date. 261 students from 13 colleges and universities submitted a plan for review. For those unfamiliar with the competition, we ask college students to develop a 1, 3- and 5 year financial plan for their time after college. The top plans usually weave a fair amount of creativity into their life stories, and include forecasts of salary, living expenses and savings. The Financial Literacy sub-committee started their work in the Fall with a complete review of the competition's scoring. Scoring methodology included metrics such as: consideration of risks and taxes, realistic projections of income and expenses, clear statement of goals, and overall creativity. With help from professors at the participating schools, the original list of 261 submissions was narrowed to a top 27 (each participating professor submits their top 1-2 plans into the formal competition). The sub-committee ranked these top plans to determine the Top 10. The final round of scoring involved 16 graders reading and scoring all ten plans to determine the winner. The quality of this year's top 3 plans is clearly evident, as their final average scores were all within 2 points. For the second time in three years, the winner was a non-finance major, and notably, she was also our second pre-med student winner. We look forward to next year's competition where we hope to break the 20 school mark, and invite any Society members who are interested to join our team! Congratulations to this year's winners! Olivia Hillal, University of Pittsburgh David Yesilonis, University of Pittsburgh Olutomiwa Aiyegbusi, University of Pittsburgh Nicholas McClure, Grove City College Chelsea Paddock, Clarion University Kayla Van Holten, Clarion University Bre Lent, Grove City College Matthew Smith, University of Pittsburgh Ale Gamble, Thiel College Gabrielle Sliwinski, Robert Morris University

The CFA Society Pittsburgh would like to thank all of the financial literacy committee volunteers

Gene Natali (Committee Chair), Al Trezza (Co-Chair), Susan Middleton (Co-Chair), Darren Wilson (Co-Chair), Reed Natali (Co-Chair), Dave Immonen (Co-Chair), Haoyu Zhou, Josh Armstrong, Dina Muth, Manohar Sukhwani, Erik Olson, Kendall Hill, Drew Haley, Eric Harlovic, Shane Nickolich, Shawna Aufman, Jing Xie, Brian Seelinger, JM Ruscetti, Eric Velasco, Mark Luttringer, Barb Happel, John O'Toole, Ryan Lennie, Alex Meles, Philip Bartels, Kendall Hill, Eric Fencil, Zac Klensch, Brian Taylor, Jason Pettner, Evan Turman, Ben Lowery, John McDermitt, Bryce Livingston, Vily Kolesnichenko, Tim O'Brien, Sarah Macchione, Michael Suriano, Zipporah Wanyoike, Angie Bucci, Irene Stephan

Stockpickers' Contest

On February 14, 2018 we kicked off our annual Stockpickers' Contest where we ask 5 society members to share their 3 stock picks that they believe will outperform this year. This year, we only had 4 participants so we included a holiday-themed portfolio to commemorate the start of the contest. Starting prices used are as of close on February 14, 2018 and the contest runs until December 31, 2018. So far this year, Bob McGee takes the early lead with an average return of 5.37% as of April 30, 2018. Last year's winner, Malcolm Polley will have some catching up to do in the 2nd quarter and it looks like there's no room for love in this year's contest. We'll continue to update the leaderboard in each newsletter.

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