Dubious Financial Gurus

The media have no problem in finding and profiling financial gurus. They never have to work hard at it because their reports are often public relations placements.

As for gurus, there are so many would-be experts, you are bound to find “experts.” You merely dispense with the many more losers.

One classic example: There are at least 100,000 individuals in the U.S. giving financial advice. If you had any 100,000 folks flipping coins by groups of two, heads or tails, someone in each group would win the toss, going on to the next round. With only a 50/50 chance of winning each round, each winner would go onto the next contest.

After 18 or 19 head or tail flips you will find a genius who had won the toss every time. He or she will then probably write a book about the expertise. With a 50/50 chance to fail to guess the toss the next flip.

The same with the genius 100,000 or so giving securities advice. ( See the Earl J Weinreb NewsHole® comments.)

Financial Media Opinions

The financial media always offers its opinions on securities. How do you know they are probably wrong?

Whenever you are told to buy a specific investment without you having to consider your personal risk conditions, your age, family situation, and finances, as they relate to that advice.

I don’t care how smart or how much of a guru he or she purports, or is considered by the masses to be. That advice is tainted. ( See the Earl J Weinreb NewsHole® comments.)

Repos and Bank Securities Analysts

Repos are supposed to be very short term loans, even over-night. To get troublesome assets off the books they were treated as sales, and then taken right back, as loans, after the accounts were noted as sales.

We hear, for example, how they may have contributed to the financial problems at Lehman Brothers and Citi Bank. We find out everything from media reportage after the problem occurred.

Much of the bookkeeping details that would have tipped off repo use would have been helpful if picked up in time by bank securities analysts.

Why didn’t bank analysts at least have asked banks how repos were being reported?

Federal regulators certainly failed to do so. ( See the Earl J Weinreb NewsHole® comments.)

Trading in Currency

Currency trading is speculative and requires special information and attention. It’s not for the average investor. Yet many non-pro, small investors are fascinated and getting involved because of the profit potential. A potential because of the highly leveraged aspect of forms of commodity-type and option trading.

However, you often get similar benefits of currency trading and currency diversification by types of overseas equity investment, but without the extreme risks. ( See the Earl J Weinreb NewsHole® comments.)

CBOE Market Volatility Index or VIX

The CBOE Market Volatility Index or VIX represents a strategy indicator for some traders.

When it shows a high, it means volatility that permits heavy trading. Lower VIX can also mean activity doldrums with ensuing lesser trading.

Lower VIX readings provide further possibilities to some observers in the financial community of a recession. This happened in 2008. This observation brings up the question of poor market psychology again. ( See the Earl J Weinreb NewsHole® comments.)

The Social Security Trust Fund Scam

Social Security trust funds don’t exist. The money for payments will be exhausted, by the latest, 2037; probably much, much sooner.

The Social Security trust fund is a figment of a government politician’s imagination that the dutiful media repeat over and over again.

Money taken from present-day workers goes into general funds, in effect, to pay for current Social Security outlays.

It’s a Ponzi scheme, despite pious denials. It’s not comparable to a reserve-investment or a private insurance company program. The same private, “big-business” plans that politicians love to demonize to suit their populist purposes. ( See the Earl J Weinreb NewsHole® comments.)

The Death Tax Scam

The American Family Business Foundation wants repeal of the death tax on estates; Professors Christophe Chamley and Ken Judd have done studies on the subject.

Not only does the federal estate tax produce little revenue, it causes economic mischief by forcing families to sell businesses and farms to meet the imposts.

The big pro-tax lobbyists include life insurance companies, because policies are used to help pay the burden. Not everyone is insurable and insurance can be expensive.

That’s not all the damage; research also shows that the rich may overspend in haste to avoid taxes, instead of using the funds more wisely. ( See the Earl J Weinreb NewsHole® comments.)