22 November 2011

Should you stay or quit when your Fund Manager changes jobs?


20 November 2011

Trading Derivatives? - READ THIS FIRST!

For the moment we advise all readers to stop trading in US futures markets. The regulatory regime has become so uncertain, is riddled with perverse side-effects and is rigged to the disadvantage of honest participants that the only logical conclusion can be to avoid any active involvement. Bankruptcies are administered by extremely expensive agents that are under little or no supervision and appointed by a bureaucracy that is dominated by insiders or political appointees that are incompetent. Anyone who is surprised by our strong recommendation should read this.

16 November 2011

MF Global: How to get rich from bankruptcy

The trustee that oversees the liquidation of MF Global is charging $891 against the assets of the failed broker while customers have to wait for news about when and how much of their money will be returned to them. Confidence in paper assets will be damaged by this regulatory failure and demand for real assets such as precious metals and property can only be increased.

Regulators are no guarantee

Most Financial Markets these days suffer from a severe dose of over-regulation. But it is in many cases the wrong sort of regulation. Agencies and financial firms are stuffed full with box-ticking bureaucrats but they are quite useless in spotting accidents before they happen. The recent case of the MF Global bankruptcy illustrates that too many regulators can leave serious gaps in the safety belt that is supposed to protect investors from fraud and malpractice. A mature financial market such as the USA still has not been able to construct a fail-safe system of investor protection and the preoccuption of the presidential hopefuls - war and tax cuts - gives little hope that there will be an improvement soon.

Thinking of buying 'Structured Products'?

If you are thinking of buying a so-called 'structured' investment product you could do worse than having a look at this court judgement. It deals with the case of a rich individual and his experience with 'barrier' notes or 'reverse' convertible notes that he bought from one of the major providers of private banking services. Readers should remember that there is no free lunch in the investment world. If they are not able to dissect the intricate mathematics behind the construction of such investment vehicles they are at a disadvantage vis-a-vis the providers and their salesmen. Even the experts often disagree about the correct valuation of the options that are packaged deep inside and as a consequence a lay investor stands no chance to value such securities correctly or - even more importantly - assess the inherent risk that he is asked to assume.

4 November 2011

10 commandments for protecting clients

A banker from Switzerland's Baumann & Cie has published an admirable list of ten commandments (in German) that a client advisor should adhere to in order to put the client's interests above any internal pressure to generating fees. These ten commandments are admirable as a declaration of intent. But how can a client be sure that they are adhered to? Trust is good but control is better and an independent advisor will make sure that this checklist (and additional precautions regarding risk, performance measurement and fees) is followed.

1 November 2011

How safe is your money?

We are here not talking about how your investments do but whether or not your investments, your money, are still safe in an account where they are supposed to be. Very few readers will store their fungible wealth at home, in a safe or buried in the back garden. While property should be reasonably safe - at least until governments confiscate it or tax it away - most other assets are nothing else but book entries in some computer and linked to an account with a bank, insurance company, investment fund or asset manager. News that one of the major exchanges did not detect that the regulations about segregation of customer assets were not followed by MF Global is a warning sign. Investors must not be seduced by posh offices, glossy marketing brochures or gregarious personalities into neglecting the more boring - but essential - aspects of money management.