Q:      What is the relationship between SCM and "The Spear Report, Consensus of Leading Analysts?"

A:      Spear Capital Management Inc., (SCM) is an affiliate of Independent Investor, Inc., the publisher of The Spear Report, formerly known as Independent Investor Digest. Independent Investor, Inc. also publishes The Spear Report, Professional Edition; Spear's Security Industry Analyst; and The Options Professor. Gregory Spear is the Editor of The Spear Report and supervises all the investment decisions for SCM managed accounts. Both corporations are owned by Spear Holdings, Inc. Mr. Spear and his wife own all the outstanding stock of Spear Holdings, Inc.

Q:      Does SCM's investment strategy follow the strategy described in The Spear Report or other Spear publications?

A:      Our backtesting research may suggest that changes to our managed style strategies are necessary before similar strategy changes are reflected in the pages of The Spear Report or other Spear publications. SCM can help you determine which management style is most appropriate to your financial situation and risk tolerance. Please see the Management Styles section of this website for more information.

Q:      Who will have custody of the funds in my account?

A:      All accounts currently managed by SCM are held in custody by either Fidelity Institutional Invesments or thinkorswim, in the case of options accounts.

Q:      Can margin be used as part of the SCM strategy in managing my account?

A:      No. For technical reasons, we cannot currently trade and manage accounts using margin. Although none of our current strategies employ margin, they are designed to provide outstanding absolute and risk-adjusted expected returns when compared to standard equity benchmarks. We may employ margin  in some of our more aggressive strategies in the future and all existing clients will be notified of such a change before any proposed changes are implemented.

Q:      Can I use stock or other securities to open a management account at SCM or must I use cash?

A:      To open an account to be managed by SCM, you can:
   (1) Write a check,
   (2) Wire funds from another brokerage or bank account,
   (3) Transfer stock or other holdings from another brokerage account, or
   (4) Transfer an entire account.

Q:      I do not live in the U.S.A. Can I still open a management account at SCM?

A:      Generally, we are able to manage accounts of foreign nationals, depending on your local government regulations and policy at the brokerages we use. Your nationality and the current location of your funds does not usually have any impact on your ability to open a management account at SCM. 

Q:      Do you have a "wrap fee" program?

A:      A "wrap fee" program is one where you do not pay commissions on trades in addition to the asset management fee. The management fee and the commissions are "wrapped" into one flat rate or one performance-based fee that does not vary according to how many trades are made in the account.

          Spear Capital Management, Inc. does not currently offer a wrap fee program. Clients pay a management fee to SCM and a deep-discount brokerage fee to the broker. Both fees are deducted directly from your account for your convenience.

Q:      How should I decide between your flat-fee and your performance-based fee?

A:      The Securities and Exchange Commission (SEC) requires that you be an "accredited investor" to qualify for our performance-based fee. In general, if you have either a net worth of $1.5 million or at least $750,000 under management with Spear Capital Management, Inc., or if you meet certain income requirements, you will qualify for the performance-based fee. With our performance-based fee, you will pay higher fees if we do very well, and lower fees or no fees at all if we do not do well in your account. The break-even point between the two fee systems is approximately a 20% gain in your account.  If we do better than 20% per year, you will pay a higher fee with the performance-based system than with the flat-fee system. If your account gains less than 20% per year, you will pay less with the performance-based system than with the flat-fee system. With the performance-based fee, if we sustain a loss in one year, that loss will carry over to subsequent years for the purpose of reducing your fee in the subsequent years.

          In general then, if you are primarily concerned about paying a fee if your account does not make gains, then you should opt for the performance-based fee. If, on the other hand, you are more concerned with not paying high fees, even if performance is excellent, then you should opt for the flat-fee system.

          It is very important to note that the SEC considers performance-based fees to incur more risk because they may provide the manager with an incentive to take more risk in your account. Also, in good years, you may pay a high fee, but in years where losses occur, the fee is not reduced below zero, although any losses are carried forward to reduce your fee in subsequent years.

Please see the ADV Part II brochure and the SCM Asset Management Agreement before committing to our asset management services.