Too Much Investment Information?

                       

The average investor has been bombarded with information about the securities markets from the media and ads purporting to offer more and more data that will assure investment success.

                       

All the research I have done on investment strategy and discipline and on the markets has shown that the more information an investor gets, the less essential knowledge and discipline will prevail.

                       

Constant market chatter helps trading volume and Wall Street operatives, but does little for the individual investor’s accurate decision-making and bottom line. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Severe Securities Markets Meltdowns

                       

Short-term, in-and-out, frenzied trading by the pros is what aggravates financial meltdowns. It is the segment of Wall Street that I always avoid in good times. Imagine what can happen in dangerous markets.

                       

                       

This is precisely what aggravated the 2008/2009 market sell off, aided and abetted with mark-to-market and short-selling. True, erratic markets create opportunities for professional traders, particularly those I call inside players. But not the vast majority of investors. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Avoiding Cheaper Bank Services

                       

The media has been reporting that more and more Americans are avoiding bank account transactions in order to avoid transaction fees which banks have been imposing to offset costs that have arisen thanks to added government regulations.

                       

Unfortunately, the use of thus newly implemented financial instruments, such as pre-paid debit cards and small loans, entail fees that often are greater than those charged by those “greedy” banks.

Another instance of the public refusing to evaluate simple dollar and cents everyday financial options. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Collecting Celebrities’ Signatures

                       

I would like to comment on autograph collections and manuscripts that show famous signatures.

                       

Content is a factor. Letters and manuscripts are worth more than signed photographs.

                       

And, apart from all-important rarity, originality is essential. You must be certain the signature is genuine,  that it’s signed by the famous person and not a secretary, or underling or by a machine.

                       

In this regard, provenance is a factor. How did the signature come about and can the source be trusted for proof of being genuine? (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Art Collecting With Price Tags

                       

I have written extensively on the subject of original prints. Too many would-be art devotees have no clue of the value of art, or what may constitute value in art. They certainly have no idea that original art, by definition, can come in multiple copies.

                       

As a result, they buy their art by price tag. The more expensive the item, the higher the value the collector will impute to them. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Yield Curve Investing

  

                       

One of the strategies suggested in the financial media is the “yield curve.” This has to do with the difference in yields of the different maturities of U.S. Treasury bills, notes and bonds.

                       

There is usually a normal difference in return, depending on years to maturity of the security. But this can change, depending on economic conditions and influences, including fiscal activity of the Treasury and monetary action by the Federal Reserve,

                       

But playing yield differences is a timing, short-term exercise which is tough enough for pros to succeed at. It’s best that average investors forget about this strategy.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The More Imagined Than Real AIG Panic

Human error was instrumental in the financial meltdown of 2008/2009,and

various bubbles that we have had in the past.

                                           

In each case, there has been finger-pointing, usually by anti-business politicians and by bureaucrats whose immediate impulse is to blame big business and bankers; the usual scapegoats. That is the litany of criminalization in left-wing lexicon.

                       

I have always blamed human error. Whether it be loose monetary policy of the Federal Reserve, in inflating currency, or inappropriate accounting rules for normal securities market situations, actions that hasten the ruin of investment liquidity.

                       

In the case of AIG, the value of its derivative insurance coverage was also being determined on the basis of fictitious existing market value. This time, not on possible claims in the future, at the maturing of company obligations, but at supposed current valuations.

                       

That produced a condition that induced premature bankruptcy, in a panic venue; a rush to judgment when cool heads and hands ought to have been the hallmarks of expertise. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

           

Use of Credit Default Swaps

                       

Just a few years ago CDS, or credit default swaps, were considered by some politicians to be the cause of the financial meltdown 0f 2008-09..

                       

Politicos conveniently forgot the real cause of the financial meltdown, which would have pointed to much of their past political activity. That financial debacle owed much more to Washington antics and influence than it did to Wall Street.

                       

Credit Default Swaps are needed in a burgeoning market by a number of industries, particularly big banks.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                       

TIPS and I-Bonds

                       

I have to repeat what I have been saying for years; TIPS and I-Bonds are not a panacea to avoid inflation risks of the market place, one of many varieties of risk that beset the investor.

                       

You get the secure return that the U.S. Treasury provides and an inflation cover. But you can get risk mitigation with ordinary corporate bonds provided you use the wise principle of “duration” I describe in my writing, And with diversification, using low-cost mutual funds.

                       

Risk avoidance does not mean an avoidance of secure wealth accumulation over the years.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Too-Big-to-Fail Banking is Growing

                       

The Glass-Steagall Act, created under the Banking Act of 1934, was terminated during the Clinton administration. It had separated regular banking from investment banking activity.

                       

However, it’s easier to talk about the separation of investment banking and ordinary banking, than accomplishing its implementation.

                       

The question of proprietary trading arises. Both regular and investment banks had executed such trades, ordinary banks to a lesser extent. Moreover, such trading generally represented a very small, insignificant amount of activity and income.

                       

Furthermore, the definition of what is a proprietary or “prop” trade is hard to delineate.

                       

The result, with all our populist politicians, we have bombast, finger-pointing, and economic panic and damage.

                       

We wound up with Dodd-Frank, a complex maze of regulations that has, as one of its missions, an attempt to separate commercial and investment banking. And preventing banks from getting too big to unwind as failures.

                       

The result so far: Banks are getting bigger and the risk of failing is ever-larger. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                       

CEOs Earn Too Much?

                       

They may if they earn commissions and options of hundreds of millions a year. But who is to say what is too much? Some politician or bureaucrat.

                       

Do baseball players also earn too much money?

                       

They certainly do, if they earn up to $30 million a year for playing a kid’s game. And which many amateurs do for nothing, but just a little less efficiently. The real difference in their ball-hitting capability is not learned the hard way but in their luck in having eyes to see the ball.

                       

Do gymnasts deserve more than they earn?

                       

They get practically no income despite all the incurred pain, and years of training and practice, and the need to overcome initial physical fear. Unless there's media hype in an Olympics.

                       

From my personal experience with all three practices, it is difficult to see how bureaucrats and politicians  are so ready to damn CEOs  for making “too much” money while other genuinely overpaid groups are left to make their fortunes politically undisturbed.

                       

And ballplayers are indirectly being financed by bailout funds of their bosses’ subsidized ballparks. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Teachers’ Prejudices and Slants

                       

I did it in graduate school. I followed what my instructors or professors said were financially or politically correct, while knowing the correct version I had wanted to express.

                       

Unfortunately this is the case too frequently in all our schools and universities, When instructors are found, by survey, to overwhelming follow only one political slant, it affects all ideas they convey to students.

                       

Not only effects on political slants but also interpretations of financial problems and their remedies. This is very evident today with the economy and the huge ongoing budget deficits.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                       

A Bond Solution to a Poor Common Stock Future

                       

There is a possible solution to the quandary of a possibly poor future common stock market. It concerns the use of the corporate bond market and proper implementation of duration, to suit the investor’s personal investing and retirement horizon.

                       

But be sure you invest in a low-cost bond mutual fund where dividends earned are automatically reinvested in shares of the same fund each month.

                       

Corporate bonds can help overcome inflation and the dearth of income and potentially limited growth from stocks. Estimated earnings can well be at least 6% on a net, net, net basis, if strategy is wisely used. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)