Sales of poorly understood, non-conventional investments tend to increase in low-yield environments like the present. Reverse convertible notes are an example of this dangerous trend, says Jeff Benjamin in his recent InvestmentNews article, “Reverse convertible notes warrant sales scrutiny.”
Bond exchange traded funds carry hidden risks. In a recent Wall Street Journal article, Sam Mamudi cautioned investors seeking safety in bond exchange traded funds to be aware of hidden risks that can magnify the losses and limit the gains in such investments. See “Bond ETF Buyers Must Stay on Guard for Hidden Risks,” March 1, 2010.
Continue reading "Hidden Risks Exist in Bond Exchange Traded Funds (ETFs)" »
The Wall Street Journal reported that the Securities and Exchange Commission will begin examining the marketing of retirement products known as target-date mutual funds. “SEC to Examine Marketing of ‘Target Date’ Funds,” Feb. 6, 2010, by Fawn Johnson.
Sellers of exchange traded funds are pandering to the latest investment fad and putting investors at peril, according to David K. Randall in his March 1 Forbes article, “Rearview ETFs.”
They are taking advantage of an unfortunate quirk of human nature, which leads investors to chase last year’s hot sector in an effort to replicate eye-popping returns. This phenomenon is so well-known that it even has a name: "recency," the tendency to assume the near future will look a lot like the recent past. Unfortunately, recency often leads investors to climb into hot sectors just as they're cooling, according to the article.
Continue reading "Beware the Hidden Risks of Exotic Exchange Traded Funds ("ETFs")" »
What is an exchange traded fund? John Waggoner explains in his Feb. 12 column in USAToday, “What the heck are ETFs? It’s complicated.” Waggoner is USA TODAY's investing columnist, and formerly was senior editor at The Independent Investor, then the nation's third-largest investment advisory newsletter.
Continue reading "What Are Exchange Traded Funds?" »
Ordinary (i.e., unleveraged) exchange traded funds or ETFs are supposed to be lower-risk cousins of closed-end mutual funds, but some of them are just as risky as closed-end funds, and for the same reasons, according to a recent Wall Street Journal article by Eleanor Laise, “Risks Lurk for ETF Investors.”
Continue reading "Exchange Traded Funds ("ETFs") Can Carry Hidden Risks" »
Brokerage industry lobbyists and SEC Chairman Mary Shapiro are trying to change draft legislation to water down duties owed by brokers to customers. Specifically, they are trying to persuade the Senate Banking Committee to eliminate provisions in a draft bill that would require brokers who provide investment advice to act in the best interest of their clients – that is, to act as fiduciaries. See Sara Hansard’s Feb. 7 InvestmentNews article, “Consumer groups say brokers may dodge fiduciary requirement.”
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• The Dow Jones Industrial Average opened the week at 10,067 and, on Monday jumped 118 points.
• On Tuesday, the Dow Jones Industrial Average rose 111 points.
• On Wednesday, the Dow Jones Industrial Average dropped 26 points.
• On Thursday, the Dow Jones Industrial Average plunged 268 points.
• On Friday, the Dow Jones Industrial Average rose 10 points and closed the week at 10,012.
Continue reading "Page Perry's Market Monitor - February 5, 2010" »
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• The Dow Jones Industrial Average opened the week at 10,173 and, on Monday rose 24 points.
• On Tuesday, the Dow Jones Industrial Average fell 3 points.
• On Wednesday, the Dow Jones Industrial Average jumped 42 points.
• On Thursday, the Dow Jones Industrial Average plunged 116 points.
• On Friday, the Dow Jones Industrial Average fell 53 points and closed the week at 10,067.
Continue reading "Page Perry's Market Monitor - January 29, 2010" »
According to Don Schreibner Jr., they have. See his Jan. 3, 2010 InvestmentNews article, “It’s time to sell municipal bonds.” Mr. Schreibner is president and chief executive of WBI Investments, a money management firm.
Continue reading "Have Municipal Bonds Become High Risk Investments?" »
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• The markets were closed on Monday for Martin Luther King Day.
• On Tuesday, the Dow Jones Industrial Average opened at 10,610 and soared 116 points.
• On Wednesday, the Dow Jones Industrial Average dropped 122 points.
• On Thursday, the Dow Jones Industrial Average fell 213 points.
• On Friday, the Dow Jones Industrial Average plunged 216 points and closed the week at 10,173.
Continue reading "Page Perry's Market Monitor - January 22, 2010" »
The President of the North American Securities Administrators Association, in testimony before the Financial Crisis Inquiry Commission last week, continued to blast the SEC and FINRA for dropping the ball. Denise Voigt Crawford said there is an "oversight gap" resulting from Congress stripping away substantial state regulatory oversight of brokers and advisors when it enacted the National Securities Markets Improvements Act in 1996. She urged Congress to return to the states all of the authority taken away by that law. If Congress acted on her request, the states would once-again have concurrent authority with the SEC over large investment advisers, like Bernie Madoff. She also urged Congress to return to the states power to oversee private placement offerings.
Continue reading "State Securities Commissioners Need More Authority to Fight Investment Fraud" »
The Wall Street Journal reported on January 15th that the major US banks are set to pay their employees record bonuses of approximately $145 billion for 2009. This staggering amount represents an 18% increase over bankers’ 2008 salaries. Wall Street tries to justify these huge bonuses by pointing out that there was an increase in bank revenues. The Journal projects that the top 38 banks and hedge funds generated about $449.6 billion in revenue for 2009, a 25% jump since 2007. Of course, Wall Street wouldn’t be earning any profits or revenues if not for government bailouts and capital injections. The Obama administration has paid attention to these record payouts and President Obama announced his proposal for a bank tax.
Continue reading "Does the Proposed Bank Tax Adequately Compensate Taxpayers for the Risks?" »
How short their memories. Wall Street firms on the brink of failure until rescued by a controversial taxpayer bailout continue to show their unabashed greed by claiming entitlement to massive amounts of money earned on funds "invested" by American taxpayers. Without those bailouts, most, if not all the Wall Street firms would be bankrupt or teetering on failure. Nevertheless, undeterred by the rising anger on Main Street and the populist backlash in Washington D.C., and flush with record revenues of $449.6 billion, Wall Street firms are on track to pay over $145 billion in bonuses for 2009, according to the Wall Street Journal.
The first public hearings by the Financial Crisis Inquiry Commission were notable for what did not happen. The well-prepared Wall Street bankers faced the cameras with apparent humility, parried Commission clunkers with their own platitudes, and left pretty much unperturbed. Those who expected the reprise of the 1930s Pecora hearings must have been disappointed. “Pecora’s revelations enraged the public and stampeded Congress into creating the SEC and separating commercial banks from investment banks,” according to Paul Wiseman in his USA Today column, “Depression-era star muckraker shapes Wall Street inquiry.” He added: “In public hearings, Pecora squared off against the elite financiers of the age, pointing at them with his cigar and coaxing them into what [Senate historian Donald] Ritchie calls ‘startling admissions of wrongdoing.”
Hiring a financial adviser is a very important decision for investors. On January 5th, the Atlanta Journal-Constitution ("AJC") published an article giving several suggestions about hiring a financial planner or financial adviser. The article recommends that the investor stay focused on the goals he or she has set out and to hire an adviser that can give proper advice relative to those plans.
Continue reading "A Few Basic Considerations in Hiring a Financial Adviser" »
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• The Dow Jones Industrial Average opened the year at 10,428 and, on Monday, the market soared 156 points.
• On Tuesday, the Dow Jones Industrial Average dropped 12 points.
• On Wednesday, the Dow Jones Industrial Average gained 2 points.
• On Thursday, the Dow Jones Industrial Average rose 33 points.
• On Friday, the Dow Jones Industrial Average moved up 11 more points and closed the week at 10,618.
Continue reading "Page Perry's Market Monitor - January 8, 2010" »
"Signs and wonders" are pointing to a new bubble brewing in corporate debt and investors should be wary. According to a January 6 Bloomberg article by Bryan Keogh and Shannon D. Harrington (“Treasurers Embrace Pay-in-Kind Bonds as Ghost of Lehman Fading”), companies are (i) issuing bonds that pay interest in new debt rather than cash, (ii) using the proceeds to pay dividends to their owners rather than for operations or expansion, (iii) asking their lenders to change the terms of their existing debt agreements to permit this, and (iv) increasing the amounts of offerings if investors want more. Such risky offerings have not been seen since 2007, before Lehman Brothers declared bankruptcy and the credit markets froze.
Continue reading "Exotic New Junk Bonds are Fraught with Risk" »
There have been various developments over the past several weeks which investors may consider relevant in allocating their resources or evaluating alternatives that are available to them. Some of the more significant developments include, but are not limited to, the following:
• The Dow Jones Industrial Average opened the week at 10,520 and, on Monday, the market rose 27 points.
• On Tuesday, the Dow Jones Industrial Average dropped 2 points.
• On Wednesday, the Dow Jones Industrial Average gained 3 points.
• On Thursday, the Dow Jones Industrial Average fell 120 points and closed the year at 10,428.
• On Friday, the markets were closed for New Years Day.
Continue reading "Page Perry's Market Monitor - January 1, 2010" »
So many investors have lost money in investments mis-marketed under assurances the investment was “principal-protected,” or “capital guaranteed,” that the Financial Industry Regulatory Authority (FINRA) has found it necessary to issue a notice (Notice to Member 09-73) reminding brokerage firms of their sales practice duties when recommending investments such as so-called Principal Protected Notes. These securities are structured products that are typically comprised of a zero-coupon linked to the performance of some other asset. That asset might be, for example, a derivative product based on a stock index or a basket of securities as obscure as the Brazilian Real-U.S. Dollar exchange rate and the price of copper.
