Securities Adviser Qualifications

                

The financial media provides many financial advisers with imprimatur, as a veritable storehouse of all valuable knowledge. The media invariably deems to put forth commentaries on advisor suggestions.

                       

Somehow, the media manage to find these pundits from over 100,000 who ply the trade in the U.S. alone.(I don’t want to get into the subject of how these advisers manage to get selected for quotes in the media.)

                       

But there isn’t advice from these sources that cannot be often questioned, especially when it comes to bonds, The quoted financial expert, for example, invariably never  discusses the principles of duration when it comes to these investments. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

TIPS Investing

                   

The financial media tells about how TIPS funds can legitimately inflate yields. It’s easy to be hoodwinked into believing you are getting more than you are, while enjoying benefits of inflation protection.

                       

I have never been a fan of TIPS. I have always explained its shortcomings on the return you get and its tax bites. And how you can instead avoid inflation’s effect on fixed income investments with proper use of duration principles.

                                           

The problem: Most investors and those in the financial media are in the dark about the use of duration principles. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets)

Securities Market Signals

             

I have found many scores of securities market signals in my investigation of strategies. However, those usually described in the media  are not as sensitive as others.

                   

The short treasury bill rate has always been an important one, until the Federal Reserve decided, in recent years, to keep money at basically zero cost. When they do decide to raise the rate, there will be an indication of actionable policy change.

                       

There is always that question of sensitivity. For instance, look at the Misery Index, That is the addition of inflation and unemployment rates. Great for psychology but not overly sensitive for quick market action decisions.

                       

I have seen the “Crack Spread” or refinery profitability- range index. But that’s seasonal and hard to gauge for investment strategy. An even less sensitive investment strategy indicator is the Baltic Dry Index or BDI. This calculates the cost of moving bulk raw materials across oceans and involves mainly those companies involved with ship rentals. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets)

The Fed and Ordinary Investor Savings

                                

Ordinary, average, Main Street savers and investors, who normally are seeking safe havens for their savings and funds, have been ripped off by Federal Reserve policies over the past few years.

                   

Unfortunately, when they see how little they can earn on their money, if risk avoidance is their concern, these investors place the blame on everyone but the guilty. It’s the Fed that’s primarily responsible.

                   

And this will continue with the mistaken notion that Fed policy, that in effect is inflating the currency while attempting to stimulate the economy, will actually produce financial disaster.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Regulating Hedge Funds

                  

More hedge funds are now subject to SEC regulations. However, regulate them too severely, and they will no longer be considered hedge funds in the true sense. Not by the definition of what an investment hedge fund does for an investor.

                       

Hedge fund managers need secrecy in order to trade. If they divulge their intentions in advance, as stricter regulations promote, their efforts and objectives will be neutralized. Other investors will be able to counter strategy, to make any proposed hedging worthless or even dangerous.

                               

Hedge fund activity had little to do with the financial downturn of 2008. Over-regulation is another instance of jousting at windmills for no real purpose, other than catering to an anti-business, anti-finance industry constituency. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)

Bad-Mouthing Derivatives

                    

Politicians love to point fingers at derivatives as bad, and a major cause of our past financial distress. But derivatives perform an important function as a financial instrument.

                                           

Timothy Geithner, the former Secretary of the Treasury, overlooked meetings, monitoring trading of derivatives, when he headed the New York Federal Reserve. So, the mysterious workings of derivatives should not have been so foreboding, dangerous, and deadly with regard to the 2008 financial meltdown.

                       

Derivatives trading now have tougher regulations. I can see having more transparency, but derivatives make financing cheaper in the long run. (See the Earl J. Weinreb dNewsHole® comments and @BusinessNewshole tweets.)

Life Insurance Planners

                     

Be careful buying life insurance from estate planners. It is their job to sell life insurance. They usually sell other financial products as well; various types of annuities and mutual funds. But their options are limited and thus yours become restricted.

                       

Planners may know their products, but they may present a conflict of interest. If they are tied to one life insurance company, you are not shopping prices and terms.

                       

When they are selling mutual funds, you are probably not getting the lowest cost selections. The latter have to be higher cost to warrant compensation for salesmen. Lower cost mutual funds are to your benefit, no matter what the sales pitch may be on past or future “performance.”

                       

If you need substantial estate advice, see a non-salesman accountant or lawyer, specializing in the field. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole tweets.)