How to Use Money Managers

                       

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.

                       

Remember, do not use them as expensive investment advisers. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

                       

Economic Cycles The Media and Politicians Forget

                       

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.)

Pick Mutual Fund Management or Go With 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.)

       

Poor Financial Stimulus Attempts.

                       

Interest rates normally adjust to supply and demand forces 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 movement.

                       

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

   

Wall Street Inside Trading Scandals Are Questionable

                   

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 more 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.

                   

But another reason is the use of what is called “shadow” or “specialist research” by brokers, compared to general research. This is for specific large 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.)

Bank Regulators Are Not Doing The Job

                   

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

Why Try Market Timing Strategy?

                                                   

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

                   

There are many reasons why they’re wrong and statistics attest to it. 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.)