Do not rely on Regulation!

Regulators are beholden to to politicians who in turn are beholden to the industries they are supposed to regulate. Banking regulations were loosened substantially in the United States towards the end of the last decade. The current crisis of confidence is to a large extent due to wrong policies pursued by regulators and the Federal Reserve Bank. The situation in the Eurozone and the UK is not much better. 

Lesson for all Investors: diversify your banking relationship and if possible invest in assets that are not dependent on a healthy bank.

Private Banking Advisory is happy to analyse risks contained in your investment holdings.

How Silicon Valley Bank skirted Washington's toughest banking rules

Don't blindly rely on Robo-Advisers for downside protection

If you think that investing with a Robo-Adviser solves all your investment problems once and for all you may be in for a surprise when the next Bear Market arrives.
How can I get downside risk protection with robo-advisors?

Banks and Asset Management - do they mix well??

Many years ago the standing joke in the world of Investment Management were the captive Mutual Fund subsidiaries of the major banks. They were often used as dumping ground for the new bond or share issues that the parent bank found difficult to place.
Ever since PBA has been suspicious of Asset Management firms that were part of a financial conglomerate. While the regulation and prevention of conflicts of interest (Chinese Walls) has improved enormously it still pays to keep an eye on this potential problem. An independent assessment of costs (fees) and risks will prevent that your investments suffer from any conflicted advice.

Don't think Safe Deposit Boxes are safe

Thieves and Tax authorities are a threat to Safe Deoposit Boxes, whether they are in your home or in a bank - not sure which one is worse!
Greek Authorities To Launch Mass Confiscation Of Safe Deposit Boxes, Securities, Homes In Tax-Evasion Crackdown

Leveraged ETFs - only if you can handle high Risk

SEC May Regret the Day It Allowed Leveraged ETFs

Hedge Funds not as bad as Warren Buffett claims

Comparing an Index (S&P 500) with Funds of Hedge Funds also compares apples and organges, though it is near impossible to invest in a Hedge Fund Index, though that would be the appropriate benchmark
Does Warren Buffett Not Understand Risk-Adjusted Returns? - Bloomberg View

Behavioural Finance Questionnaire

Here there is a head-scratcher for you, from one of the largest UK Fund Managers (Schroders): but when they asked me about soup or salad (yes, it is true) in their income questionnaire I gave up. Maybe some Private Banking firm will ask you to sit with a Psychotherapist to find your innermost feelings about money and risk. Good Luck with that!

The only way to hold Euro-denominated Bonds

Whatever you make of the latest measures taken by the ECB to 'boost the economies' of the Euro-zone do keep in mind one key rule for your financial survival: Do not hold any bonds denominated in Euros unless they are backed by the full-faith and credit of Germany. As the interest rate on many of those bonds is now turning negative it probably is advisable to give them a miss as well and stick to cash. At some stage some members of the Euro-zone may default or leave the Euro-zone and the value of their obligations will nose-dive. So buying Italian or French bonds just because they return a measly 1.5 percent is akin to picking up pennies in front of a steamroller. Index-hugging fund managers playing with other people's money in the big investment institutions will continue to play this game of Russian Roulette and you should make sure that you avoid them if they play this dangerous game.

9 financial risks everyone should understand

Useful summary of key risks that every investor must bear in mind when devising an investment strategy (MarketWatch)

What happens if your Financial Adviser goes bust?

The Credit Crisis and ensuing market crash might already be a distant memory. But one of the key lessons that could be learned was the fact that even financial firms with a century-old pedigree could go under. So investors are well-advised to check their financial arrangements and ask themselves if they are protected in the case their financial advisory firm goes out of business.

How are Investment Bubbles created?

Highly paid 'experts' working for Brokerage firms or Investment Managers tend to be chasing price momentum when making investment recommendations or investment decisions. No one blames them for being wrong as a consequence of following consensus opinions but missing the boat is a big career risk for these experts. In addition their actions can deviate from what a reasonable private investor would do as their own money is usually not at risk.

Safe Deposit Boxes are not 'safe'

Most ordinary and law-abiding citizens have no idea how much an unaccountable clique of professional politicians has already undermined all notions of justice and freedom. So just consider a few facts about a raid on safe deposit boxes that took place in London in 2008. Given that Britain is still a country whose legal system is held in high regard you may just imagine how your assets may be treated in other countries.

Aside from those three dozen or so people found guilty, the vast majority of the 3,500-plus box owners have turned out to be innocent. Yet their money was confiscated, and in many cases is still being held, by the Metropolitan Police or the Inland Revenue. The owners have spent nearly three years and thousands of pounds in uncompensated legal fees having to justify why they kept their personal belongings in safety deposit boxes and how they came by them in the first place. Worse still, when people have had their belongings returned, in some cases cash and jewellery has been missing. (London Evening Standard)

So readers should be careful about where they keep their wealth. We always advise to diversify holdings as much as possible with respect to geographical location and custodian.

Keep your Investment Approach simple!

While this article is written with institutional investors in mind the lessons that can be learned from it apply to the Individual Investor as well. Keep your investments simple, make sure your risks are properly monitored and your management fees are kept as low as possible.

Should you listen to the Experts and Investment Analysts?

When two reputable investment experts have diametrically opposed views on the same day (here, here)you have to wonder whether or not you should pay any attention to their opinion. News media as well as brokers and investment advisors constantly have to fight for the attention of current and prospective customers and can also rely on the fact that after a few days hardly anyone will remember what they said on a given day. Investors therefore are advised to stick to a well-thought-out investment philosophy based on their personal circumstances and requirements. They should focus on eliminating any avoidable risks as well as containing the annual costs and fees associated with managing their wealth.

CoCo's are NoNo's

One would have thought that the main lesson of the Credit Crunch and Financial/Economic Crisis is the danger that can be created by newfangled and little-understood financial 'innovations'. The need for banks to raise additional capital has led to the design of 'Contingent Convertible Bonds' (CoCo's for short). These bonds lure investors with relatively high nominal interest rates that make them appear attractive to those who are desperate to get some positive return on their investments. Even so-called sophisticated investors in large financial institutions get tempted. Partially because they do not play with their own money or they will long have moved on to other jobs or positions when the proverbial s*** hits the fan. They may also not be as sophisticated as their clients (pensioners, mutual fund savers and private clients) assume. It will be interesting to see how regulators treat these securities if they become more of a mainstream investment option. They will have to decide whether their role is to protect the banking establishment or the investors. We know on which side they should be and we are definitely siding with the investors on this issue. Dangerous bets such as CoCo bonds should not be in any investor's toolkit but should be strictly reserved for regular visitors to casinos and betting shops. Not for nothing the link above talks of a ticking time-bomb with respect to these securities.

Closing Banks restores Confidence? - Nuts!!

Alert Investors the world over will see through the explanations (CNBC) of the 'experts' that claim that keeping bank closed in Cyprus will 'restore confidence'. What confidence is left in politicians and regulators has been shredded to pieces in the farce surrounding the rescue of Cyprus and/or its banking system. Every investor should have a 'Plan B' to prepare for similar episodes in other financial centres - or get one ready if he has not already done so.

Is it a tax? is it theft? - Lessons from Cyprus debacle

The implications for any alert investor must be clear: analyse carefully where you hold your assets, which country and which financial institution can you still trust? Are you sufficiently diversified so that - apart from the nightmare scenario of a socialist world government - you are not likely to be fleeced by desperate governments that have hit the buffers - intellectually and finanically?

How to find a safe haven for your money

Shocking news about the Cyprus money grab by the Eurocracy and assorted unelected bureaucrats demonstrates the need to have unbiased expert advice when looking for a safe haven for your hard-earned savings. All-too-often 'advisers' in established financial institutions have a vested interest in the status quo and try to lull clients in a false sense of security. Thus they avoid that funds that are under their management are moved to a safer and/or cheaper location or institution.

ETF Gold does not equal Gold

Many Investment Pundits recommend Gold as the ultimate protection against currency depreciation. So investors often are tempted to buy Gold-themed ETF's as they are convenient to buy and sell. But apart from fine differences between all the available ETF's that are linked to the price of Gold investors should also be aware of possible pitfalls (The Market Oracle) that are inherent in the way some of these ETF's are structured.

EU Banking 'Union' threatens your Savings

The proposed EU Banking 'Union' which would centralise the regulation and supervision of banks in the EU (or at the very least in the member states of the Euro zone) would be a threat to the savers in the countries with more stable financial systems. The guarantee of banking deposits would also be administered on a centralised basis. This could lead to the situation were the savings of citizens in, say, Germany or Austria, are used to bail out savers in banks in Spain or Italy.