Diamonds as an Investment?

                  

Unlike many other valuable commodities, you cannot buy diamonds in the form of shares or an ETF fund, or as a conventional commodity. Diamonds have to be bought as is.

                       

Because you can pack lots of value in a tiny item, the diamond can be highly valuable in an emergency, for someone who has to leave his country or salvage assets in a dire emergency. But how does it shape up as an investment?

                       

Not very well for a number of reasons. Importantly, quality determination and value require expertise. There is also the danger of loss and/or theft. And the difference between cost and sales figures can vary greatly because of unestablished markups.

                       

Remember also, diamond supplies have to be controlled for values to be stable on a global level, especially when artificial diamonds can be so close to the real thing in appearance and usage. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Bank Credits and Loans

                     

Banks may not be making sufficient loans to small business, even when they have the ability to do so. The fact is, they make more money these days, with far less risk, by borrowing cheaply from the Federal Reserve and investing in government bonds.

                       

Also, there is political regulatory meddling and strict bank supervision adding to the bank-lending-resistance picture.

                                           

Many thriving businesses are genuinely seeking loans from banks with funds. But, too many lenders are hesitant about extending loans they once more readily made. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Error-Prone Federal Reserve Actions

                    

We unfortunately use Federal Reserve edicts as gospel, even though they often are proven wrong. This has been the case in almost half the decisions we have gotten under the auspices of the past governorships of Alan Greenspan, Ben Bernanke, and now, Janet Yellen.

                       

We have to remember that economists are fallible, even when they direct the Federal Reserve. In the past, those in the Fed worried we may have deflation; they therefore inflated the economy, and added too much currency. In fact the Fed, almost automatically, has been on the side of promoting inflation, in an attempt to prevent deflation.

                       

Thus, the Fed has been a major culprit in causing bubbles which invariably lead to busts and eventual recessions.

                       

And today is aiding and abetting future inflation with its loose- money policy. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Investment Strategy Back-Testing

                                       

Wall Street financial models  often resort to what is known as data mining. Information on various investing strategies of the past. They are collected and tested on a “what if’ basis for the future.

                       

This is also called back-testing; the strategies of the past are used to see what would happen, hypothetically, when projected into the future.

                       

All this is based on many assumptions that the mathematical models are supposed to predict.

                       

After my decades-long investigations of investment strategies, I can tell you: There are some worthwhile concepts as well as gibberish in all. But no panacea exists. I would say that most of the data mining is therefore useless, except for their marketing of investment management services.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Pocketbook Economics

                    

You don’t have to go to college to understand economic basics that will help compete for a job or career, to enable you to separate political gibberish from fact, and see to it that you and your children can live your lives to maximum advantage.

                       

The teachings of fundamental economics is readily available from internet searches. You can learn about them all, from Adam Smith to Milton Friedman to Friedrich Hayek. And John Maynard Keynes, who is the little- understood guru of free-spending politicians. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Reverse Mortgages

                    

You may be seeing and hearing ads about reverse mortgages for those over sixty. Be careful, should you consider one, as the step would be similar to taking home equity lines of credit.

                       

Larger banks no longer make reverse mortgages because of inherent problems, many from the homeowner’s point of view. Remember to be aware of all the provisions, including the fact that you have to continue to pay your real estate taxes and insurance on the property. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Selecting Securities by Type?

                  

Stocks selection often has to do with their business types or style. Whether they are considered growth or value stocks, or if they can be classified by corporate size or by industrial group.

                       

Over the longer-term these types and styles really mean little. Favored industries and groups of companies often see change in their market-favored positions. Reacting to them incites useless market-timing. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

No Percentage in Timing the Market

                                       

Timing the securities market does not work. I have frequently given the results of past research of this technique.

                       

Some individuals may do well with longer-term trends, as opposed to the short-term, but most timers are inclined to be the in-and-out types. And the odds are usually well against them. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Seek Mutual Fund Long-term Performance

                  

Most mutual fund management isn’t around long enough, so past records may not be responsible for future performance. That is, if managers of funds are ever able to consistently beat the indexed averages.

                       

Besides, as I have always pointed out, low cost of mutual fund operations is more predictable of future performance and is thus important. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Importance of Mutual Fund Cost

                 

Amidst media chatter regarding the selection of mutual funds, there is one factor that usually gets minimal attention. That’s because the choice is so evident and yet so simple.

                       

However, that choice is often neglected; the media has to rely on advertising and most advertisers don’t offer the lowest-cost funds.

                       

Evidence is clear that the only predictable advantage for selecting a future mutual fund is its cost of operation. The next is indexing because experts hardly ever beat performance of indexes. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Split Up Big Banks?

                  

The big banks, the ones supposedly too big to fail, are actually composed of smaller, varied banking units. One may be in the retail business which has a value of its own. Another may be in the investment banking business that has a value in its own right. Another section of the bank may do trust and advisory work. And so on.

                       

Theoretically, each of the bank’s sections or subsidiaries can be made into an independent bank, operating on its own. The value in each case will depend on the sector’s profit reliability and also risk factors.

                       

It’s been estimated that the total market value of each subsidiary of a typical giant bank will produce a market value greater than what currently exists for the bank.

                       

So why not divest some holdings on behalf of stockholders? While separating out risk that can have a domino effect on the overall bank and the entire economy? (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Municipal and State Bond Safety

                   

The safety of municipal and state bonds, often referred to as tax-exempts, will depend to a great extent on the type of bond involved.

                       

Safety is not a major problem for general obligation bonds issued by those entities, as safety is a factor for revenue bonds, where the payment of interest and principal must come from revenues backing the bonds. Sooner or later, general obligation bonds will have to be paid by higher taxes or from savings from cutting expenses. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                   

           

Choosing Annuities

                    

Annuity salesmen often compare benefits with the investing risks that attend stocks and bonds. They mention all the hazards of securities markets and the possibilities of market loss. But these salesmen often overlook downsides of their offering.

                       

Annuities do have negatives; they are not for everyone. They have an insurance factor which may not be needed or are available elsewhere. And if not required, why pay for it?

                       

There are annuity management fees, contrary to some sales pitches,  and also early termination charges.

                       

Then there are fixed or variable annuities to select, that further complicate the picture. Fixed annuities have set returns which means the buyer has no protection from any future inflation. Variable annuities tie in securities markets but not as much as you may desire.

                       

So always be alert to the annuity sales pitch; (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Undisciplined Investments by Professionals

                 

I have documented over 1,600 investment strategies used by professionals, and have looked at strategy pros and cons.

                       

While there is no perfect strategy, the chief pitfall in their usage is usually the lack of discipline employed to follow through, not the strategy itself.

                       

Additionally: I discovered why markets can be so rash and erratic. When institutional investors account for over 80% of trades, why should the markets behave so erratically?

                       

Actually, Wall Street "wizards" invariably act in an undisciplined, mob-like manner; not as true experts. Their investment results speak accordingly. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)