Who will arrest the investment police? May 17, 2009
Posted by Jeff Nabers in : real estate, Self Directed IRA Solo 401k , add a comment
An unsurprising story surfaced a couple of days ago… SEC attorneys are under investigation for insider trading!
If you can’t truly value that exclamation point I just used, let me help you. The Securities & Exchange Commission (SEC) is a government organization that was formed to convince us that investing in the stock market was safe. Part of their role is to make sure people don’t use their non-public knowledge to make profitable investments in the stock market (yeah, right). This is called “insider trading”. In business, this is known as “doing business”. In real estate, non-public knowledge can turn a peon into a mogul overnight. But in the stock market it is a crime and we give the SEC billions of our dollars to make sure it doesn’t happen.
But, whoops, SEC attorneys are doing it themselves. And a lot. One of the two SEC attorneys currently under FBI investigation made 247 stock (more…)
Was Madoff a Better Investment Than Your Mutual Fund? February 25, 2009
Posted by Jeff Nabers in : Self Directed IRA Solo 401k , add a comment
Blogger, owner of the Dallas Mavericks, chairman of HDNet, and billionnaire Mark Cuban poses the question:
Was Madoff a better investment than your mutual fund. Surprisingly, his answer is yes. To see why, read his post.
The Top 5 Investing Myths of 2008 January 5, 2009
Posted by Jeff Nabers in : Money, Personal Enjoyment, Personal Productivity, real estate, Self Directed IRA Solo 401k , add a comment
2008 was a very interesting year to say the least. Possibly the most productive outcome of the year was the restless message of “rethink things” coming from the little voice beckoning each of us in our minds.
Myth #1… The SEC keeps investment information honest and accurate
The Securities and Exchange Commission (abbr “SEC”) should be done away with. The Madoff debacle along with the dozens of other securities frauds that draw less (or no) attention every single year should be evidence that the SEC is failing. It is tasked with making investments safe and transparent and is having the opposite effect. When an investor or fund manager is considering a particular investment, they believe that the investment is truthful, transparent, and honest because the SEC is supposed to regulate it into such a position. The result can be decreased due diligence because of reliance on the SEC. This leads to disaster when the SEC ends up not doing its job very well. If we didn’t expect the SEC to be “keeping investing safe and honest” then investors and asset managers would take a closer look at investment opportunities which would result in better thought out decisions. I’m not saying the SEC should be doing a better job – I’m saying we shouldn’t expect regulation to create investment safety in the first place.
I believe the SEC does more harm than good by offering a false sense of security.
Myth #2… Financial planners give good investment advice
Something very interesting happened in the last 15 or so years: Stock brokerages spent millions of dollars convincing the American public that securities salesman had become “financial planners”. That move alone shifted the perception of almost every American and the magnitude of Wall Street’s success (theirs, not yours). A “stock broker” is to securities as a car salesman is to cars… but a financial planner sounds a lot like somebody whose job it is to plan your finances. What actually changed to make stock brokers become financial planners? (more…)
Our free(ish) market becomes less free with the ban of short selling October 2, 2008
Posted by Jeff Nabers in : Money, Self Directed IRA Solo 401k , add a comment
A couple of weeks ago, the SEC illegalized a type of investing that makes a market what it is – short selling. Simply put, a person can bet on the market going up by “going long” and buying securities in hopes of selling them for a higher price at a later date. Long positions can be leveraged by margin. A person can bet on certain stocks going down by selling them if he already owns them. The leveraged way to bet on the market going down is to “sell short” which is simply selling stock on margin.
Going long makes prices go up. Selling short makes prices go down. This is part of “price discovery”. Most people don’t even know about short selling or they’ve been convinced to not do it. Securities brokers don’t want people to know about investment strategies that will make market valuations go down because their commissions are tied to market valuations. Their entire system is a mechanism of inflating values to further inflate values.
SEC temporarily bans short selling of companies whose price will go down
Read the official SEC action here. They are, by force of law, inflating the value of the stock market. They are also prohibiting (more…)
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