Crony Capitalism in Current Politics

                  

I often provide definitions of crony or state capitalism and advise folks to look into the career of Benito Mussolini, to see how he applied the principle in fascist Italy of the 1930s and 1940s.

                       

However, many today will look at economic/political “isms” and reinterpret the significance of their observation. They look with postmodern-style “relative truth” and interpretation which overlooks  fact in order to confirm their own political slants.

                       

They’re perfectly happy confirming what they continue to believe is acceptable, as it had been in the past U.S. system. If they ignore history they do so at their and the country’s peril. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Transferring Credit Card Balances

                  

When you make too many credit card transfers it appears you may be applying for fresh credit each time. That hurts your credit card score.

                       

Therefore, when you get offers from credit card companies to transfer your current outstanding balance to another card account, think it over carefully. You may be hurting your credit score, should you take the bait. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Currency Investing

                

Investing overseas is not only for investment diversification, the benefits of growth opportunities are to be gained globally.

                       

Currency moves are always complex. Will the dollar be getting stronger or weaker? If the dollar gets weaker, such investments become more valuable as translated currency will then work in favor of the U.S. investor.

                       

However, should the dollar get stronger, the reverse will become true. The investments become less valuable, when translated into dollars. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Credit Card Usage

              

It may sometimes be necessary to take down the maximum amount your card permits, but it does not help your credit score. Do so only in an emergency.

                       

It’s nice to know that your credit permits you spending liberties, but don’t let that take you on extreme spending binges.

                                           

If you don’t use your card at all, or only occasionally, you may be dropped or the maximum available credit line may be reduced. Credit card companies are sensitive about account activity. So, use credit cards intelligently.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Securities and Exchange Commission Politics

                  

if your company’s common stock is worth more than $75 million dollars, shareholders are allowed to vote once every three years on whether they like or dislike top management pay scales. But the company does not have to act on the voting results.

                       

With all the problems the SEC has to face, this is an endeavor not worth their regulatory efforts. As few stockholders care. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Computers and Stock Market Fears

                     

Extremely fast computers have had glitches in the electronic handling of the stock market. The media’s handling of the problem has scared the small investors even more than they have the pros, who now make up  over 85% of the market.

                       

As a result, the small investor has been scared of the market. But small, average investors should not be in the market, where they buy and sell individual securities. I have written extensively on the subject.

                       

Non-professional investors have always been better off with low-cost indexed mutual funds and ETFs, which adequately handle the fast computer markets. (See the

Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Money Management Expense

                   

Readers of my comments are fully aware of my consistent stand against the use of investment managers for investment tasks that can be easily mastered by the average Main Street investor.

                       

The chief reason for this avoidance is the enormous bottom-line expense of the advisory service. That 11⁄2% or so fee will work out to 25%, 30% and even more of annual income or returns.

                                           

However, some individuals who suffer poor health may not be able to attend to personal financial matters. This is a basic family matter that is only indirectly or slightly related to serious investing.

                       

In such instances, family members are usually of help. Where such aid is not available, daily money managers are on hand. But caution: They are not cheap.

(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Usual Economic Cycles

                     

Here’s a fact that the media generally fails to acknowledge for its own reasons and politicians flub in order to fool the voting public. Going all the way back to the inception of the United States, the sharper a recession, the faster and more energetic the rebound.

                       

That was even true after the 1929 stock market crash and its economic effects. The depression took hold with New Deal taxation and regulation, despite the spending. Government meddling is hurting the same way now. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Managed Mutual Funds or Indexes?

                   

Experience and research show that the “best” managed mutual funds in any year are achieved mostly by chance.

                       

In any category of mutual funds, only a small percentage of active managers beat the performance of indexes or un- managed funds. Furthermore, those who have distinguished performance in any one year, generally cannot repeat their performance the next, or on any consistent basis.

                       

Few managers can outperform indexes over a few years time, and if they do, it is pure luck, not ability. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Financial Stimulus Failures

                     

Interest rates normally adjust to supply and demand  and thereby adjust economic events. However, whenever the government imposes stimulus proposals to lift the economy, the system becomes disturbed and distorted.

                       

This unbalances the economy and does the exact opposite of what has been intended. It’s a lesson politicians wantonly overlook to suit their election goals.

                       

Ludwig von Mises wrote fully about the phenomenon in the 1920s but the economist in fashion during the 1930s recession was, unfortunately, John Maynard Keynes. He became the political icon of that recovery attempt.

                       

The Keynes government pump-priming thesis used prolonged stimuli that actually deepened and helped induce the Great Depression. Nevertheless, it is usually the premise of failed current policy. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Shadow-Insider Trading Accusations

                  

One reason for frequent insider trading accusations is the use of what is called “shadow” or “specialist research” by brokers, compared to general research. But this is for specific, larger clients.

                       

The problem is that the information may get too close to the companies involved. Remember: Lots of corporate data is proprietary and restricted for dissemination by corporate employees for outsiders seeking information. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Questionable Wall Street Insider Trading Scandals

                    

It’s tough to predict the securities markets or what is going to happen on Wall Street. But you can be sure there will be inside trading prosecutions,whether the accused is innocent or guilty. Because the law is so vague as to what constitutes insider information. Moreover, judges and juries are equally in the dark. (See the Earl J Weinreb NewsHole® comments and @BusinessNewshole at twitter.)   

Bank Regulators’ Accomplishments?

                 

The Federal Reserve has well over 1,800 operatives who work on a bank premises, while the Comptroller of the Currency has over 500. They were on the job all the time the banks were having heavy losses. Yet, the politicians complain we need more bank regulation. What have the regulators been doing all along?

                       

Remember too, that the major Ponzi artists we heard about were given passing grades by SEC audits. Obviously, regulation is not a panacea. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Imagined Market Timing Expertise

                 

In-and-out traders always feel they can get out of stocks at highs and in at lows because of their gut feelings or imagined expertise.

                                       

There are many reasons why they’re wrong and statistics attest to them. One example is how companies who buy back their own stock in the open market generally do a poor job at the procedure, buying at highs. And they have the benefit of genuine, legal inside information. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Bad Investment Habits

                   

I have written tomes about poor investment habits. You can look up the commentaries. My sources of original research and studies are always available.

                       

The question is whether an investor is prepared to break bad habits. I realize it takes lots of free will to counter the constant chatter and advice from the next media- cultivated expert who comes along.

                       

Investors also have to counter what is known as “confirmation bias.” Folks avoid getting rid of set beliefs, or are selective in their choice or retention, despite evidence. Confirmation bias can be corrected to a considerable degree by looking at independent research. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Evaluating Securities?

                

I remind investors not to bother to evaluate companies when buying securities; they will never get all the cogent facts, not from the companies, nor from the analysts whose work is to get at the facts. There is no chicanery involved; it’s impossible to do the job for the purpose of knowing everything an investor must have. That’s why I recommend index funds.

                       

The problem of evaluation is even tougher with bank securities because it’s impossible to determine value of much of the essential underlying assets. They’re simply not available or determinable. Examples are derivative holdings and what make up much of what is considered “level 3” bank assets. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Short-Term Trading of Securities is a Loser

                     

Tests after tests by scientists indicate that investors have a natural tendency to stay with their newly-bought securities only a short time. Their impulses dictate that they sell and then opt for something else. The media chatter and what acquaintances buy and sell have a major influence.

                       

As a rule, this hurts investors.

                       

I repeat: I have said countless times, based on my evaluation over the years of over 1,600 investment strategies. Discipline is most important. You should buy every investment with a firm goal and you sell only when that goal is definitely not attainable. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)