24 December 2011

MF Global Trustees fighting over customer funds

This pathetic spat between the US and British trustees in charge of administering the MF Global bankruptcy demonstrates that even the seemingly simple procedure of segregating customer funds poses a tremendous challenge for management, auditors and regulators. If you take money from Uncle Bill, to make an example that even these 'experts' can understand, and put it into an account you open in the name of XXX favor Uncle Bill it should be obvious for anyone who the money belongs to. Otherwise it must be apparent that all parties involved pay not the blindest bit of interest to the protection of investors.

22 December 2011

Dangerous Swiss Cheese

Swiss authorities and banks have thoroughly capitulated in their battle to preserve the interests of their banking clients. In an age where the appetite of politicians and pressure groups to lay their hands to the citizen's savings seems to know no boundaries it was maybe too much to ask for a more resolute defense of citizen's rights for privacy. All the countries that want a piece of the action - and Pakistan of all countries is the latest arrival - and claim their share of the funds their citizens have entrusted to the once safe haven of Switzerland - had it in their remit to construct a wall around their countries and prevent citizens from sending their money abroad. That way it would have become obvious what their understanding of civil liberties really was. The much larger danger lurking ahead is an even larger crisis engulfing the Eurozone and its banks and the risk that this would lead to capital controls and even confiscation of all savings and investments in a desperate attempt to shore up tottering welfare states. We can only advice all readers to diversify their asset in terms of geographical location and asset classes. Transactions that leave an audit trail should be kept to an absolute minimum.

4 December 2011

Do not put to much trust into Pension Plans

News that another EU member state has expropriated some pension fund assets in order to pay for irresponsible state expenditures should be a warning sign for savers. We suggest that tax-enhanced saving in pension plans is only undertaken after careful consideration. Legislation can be changed at the stroke of a pen, is not subject to proper democratic supervision and leaves the saver open to arbitrary decisions by politicians.

3 December 2011

FT Investor Dashboard

This table gives a quick overview of major risk factors affecting the possible performance of an investor's portfolio. It contains some interesting information but the main problem the average investor faces is not really addressed. Unless someone wants to be his own hedge fund manager he or she relies on the advice and performance produced by whoever manages the portfolio(s). Therefore it is past and future performance data that alone is relevant for someone's financial situation. While the value of past performance may be subject to dispute it is the only hard evidence and investor has at his disposal when choosing an investment adviser.