30 posts tagged “financial planning”
IMHO, US Treasuries are the next financial bubble to burst.
- The Fed has been buying Treasuries bonds in an effort to lower borrowing costs and end the worst U.S. economic downturn in 70 years. Its holdings of Treasuries edged up to $759.80 billion from $757.77 billion last week. However, the Federal Reserve's program of buying Treasuries will end in October.
- Even the Chinese, one of the largest buyers of Treasury securities, are buying fewer treasuries. They are buying gold with their US Dollars.
- Yet investors are making huge bets on bonds. In the last six months they have allocated double the amount of new money to bond mutual funds as they did over the entire four years from 2003 through 2006! All academic studies agree that poor market timing decisions are the rule rather than the exception among mutual fund investors.
- Besides that, the federal government actually needs high inflation down the road. Why? So they can pay off this low interest debt with cheapened dollars. Debtors gain during inflationary times.
- It's not just me questioning the current price of treasuries.
Looking at the next 18 months, I see higher yields on the
10-year and the 30-year. Bond prices fall when interest rates rise. With
fewer buyers and a falling US dollar, higher rates are inevitable. Get into TMV or TBT while they are on sale! My earlier posts on bonds should help you.
Thinking of chucking it all and retiring early, long before you start getting a pension or Social Security, and before you have ready access to your 401k and IRA?
Better run through this calculator and get a dose of reality. http://www.firecalc.com/
We all have seen the real estate bubble unfold because banks, brokers, buyers, regulators, and Wall Street all looked a blind eye. Less conspicuous, but just as damaging, was the greatest financial crime in history. Today I will attempt to document how governments, regulators, brokerage firms, and foreign banks are crushing the retail investor.
- Deutsche Bank is liquidating the PowerShares DB Crude Oil Double Long ETN (DXO). Deutsche Bank said: “Limitations imposed by the exchange on which Deutsche Bank manages the exposure of the Notes have resulted in a “regulatory event” as defined in the terms of the Notes, which has caused Deutsche Bank to redeem the Notes.”
- In an effort to stem the effect that the seemingly inevitable regulation will have on futures-based commodity funds, multiple ETF issuers have halted share creation. Thus, these securities trade at huge premiums to the underlying commodity (market distortions).
- FINRA announced that it would be increasing margin requirements for leveraged ETFs as of Dec. 1. These changes will require margin for leveraged funds to be "commensurate" with the degree to which they are leveraged. FINRA's warning set off a domino effect as firms like Edward Jones, Ameriprise, and UBS ceased selling leveraged funds to investors.
- Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the USA. U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities have put Switzerland’s traditional bank secrecy at risk.
- Canada's Royalty Trusts are similar to U.S. master limited partnerships in that they generally pay out a substantial portion of their cash flow in the form of monthly distributions. The Canadian government wants a piece of that. In 2001, in what has come to be known as the "Halloween Surprise" for its announcement on October 31st, 2006, these trusts will have to change their structure and their payouts or face huge tax consequences.
Wizetrade
The projections of the Wizetrade software are almost identical to charts of moving averages. Moving average data is free and up to date on Yahoo finance while Wizetrade charges almost three grand. I haven’t spoken to one serious trader that relies on this type of software to manage a successful portfolio.
InvesTools
Prices start around $1000 and can go up to $10,000+. They try to keep the cost a secret until you attend one of their workshops, then you get the hard sell According to their SEC filings they have graduated over 320,000 and only about 1/3 (98,000) are still Investor Toolbox subscribers. Huh?
Bottom Line
The only people that make money from these are the people that sell them to you. If you can afford $3, I'll link you to the scientific approach to trading the market. It takes all the emotion out of buying and selling, and teaches you bankroll management. What have you got to lose? Oh yeah, thousands of dollars on software that doesn’t work!
Leveraged funds such as Direxion Daily Financial Bull 3X(FAS Quote) and Daily Financial Bear 3X(FAZ Quote) as well as ProShares Ultra Short Real Estate(SRS Quote) have also sparked the ire of regulators, skeptical of sales practices. A number of firms, including UBS and Ameriprise, have halted the sales of such products to their clients. The scrutiny of these funds has been led by the Financial Industry Regulatory Authority (FINRA).
Just more nanny government and "prudent man rule" garbage. Every investor should have a good understanding of what they are buying and regulators are supposed to enforce existing rules.
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Unemployment was reported as 9.5% today. The number is actually 16.5%. I'm using the broadest measure of unemployment - U6
U1: Percentage of labor force unemployed 15 weeks or longer.
U2: Percentage of labor force who lost jobs or completed temporary work.
U3: Official unemployment rate per ILO definition.
U4: U3 + "discouraged workers", or those who have stopped looking
for work because current economic conditions make them believe that no
work is available for them.
U5: U4 + other "marginally attached workers", or those who "would
like" and are able to work, but have not looked for work recently.
U6: U5 + Part time workers who want to work full time, but can not due to economic reasons.
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CNBC stock pickers are saying we will continue to have deflation because of high unemployment. They ignore 3 issues:
- Commodity prices will rise as countries with the largest populations (China, India, Indonesia) will strive to consume at levels Americans have in the past
- Inflation is an increase in the money supply, and the FED has increased M1 by 16% since 2008
- There is no causation between high unemployment and deflation, look at Zimbabwe - 80% unemployment and 10,000% inflation!
