ONLINE TRADING: IT’S NOT FOR EVERYONE

No less than the Chairman of the SEC has indicated, changes in the cost and ease of trading stocks should not lull investors into a false sense of security or encourage them to trade too quickly or too often.  He also recommended the use of limit orders rather than market orders when submitting a trade […]

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MARKETS, VOLATILITY AND MARGIN

Recent volatility in the markets shouldn’t cause most investors to question the benefits of long term investment in a diversified portfolio.  Bradley Skolnik, former Indiana Securities Commissioner and former president of the North American Securities Administrators Association indicated that, “Market gyrations like we’ve seen lately are more troublesome for traders than for investors.  Day traders […]

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DANGERS OF EARLY WITHDRAWALS

A Business Week article recently described predators that prey on early retirees. Many retirees and pre-retirees are woefully unprepared for the shift from “wealth accumulation,” or saving and investing, to “wealth distribution,” or drawing down those assets throughout their golden years. If the Me Generation isn’t careful, it could become the Poor-Me Generation. Over the […]

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WHERE ARE THE CUSTOMER’S YACHTS?

“An out of town visitor was being shown the wonders of the New York financial district.  At the Battery, one of the guides indicated some handsome ships at anchor.  He said, ‘Look, those are the bankers’ and brokers’ yachts.’  ‘Where are the customer’s yachts?’  asked the naïve visitor.”       In 1940, Fred Schwed, Jr. published […]

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HOW TO TELL AN ADVISOR FROM A SALESMAN

It can sometimes be difficult to tell and advisor from a salesman.  The fastest growing channel in financial services these days are those advisors who operate both as registered investment advisors and as affiliates of licensed broker-dealers.   Advisors who are dually registered may (in theory) sell both fee-based advice and commission-based products.   This conflict has […]

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INVESTMENT ADVISORY AGREEMENTS – WHAT TO LOOK OUT FOR

What Are Investment Advisory Agreements? An investment advisory agreement outlines the legal relationship between a financial advisor and a client. There are two kinds of advisory agreements: discretionary and non-discretionary. Discretionary agreements allow financial advisors to make decisions on the client’s behalf. Non-discretionary agreements require the client to okay decisions before they are made. Clients […]

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WHY OVER-CONCENTRATION IN THE OIL & GAS SECTOR IS IMPROPER

Avoiding sector over-concentration and maintaining a diverse portfolio is one of the most basic principles of prudent investing. Unfortunately, when the oil and gas sectors were booming in recent years, many unscrupulous advisers encouraged an over-concentration of investments in this one area. Eventually, those sectors went into decline, and investors experienced out-sized losses exactly because […]

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WHY LEVERAGED ETFS ARE DANGEROUS

      Leveraged ETF’s can be dangerous to retail investors.  Exchange Traded Funds (ETFs) were created to create a more liquid market in sector funds. However, leveraged ETFs were designed to be tactical trading instruments, specifically not for “buy and hold” investors. Because of strict leverage requirements, even if you are correct about the direction of a market […]

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PONZI SCHEME MADOFF RECOVERY MAZE

Low interest rate environments are the breeding grounds of Investment Scams and Ponzi Schemes.  What many of these schemes have in common is the breach of trust, and victims “holding the bag”.  In some cases, a partial recovery of the investment may be possible against a licensed investment professional.  In others, a small benefit may […]

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PONZI SCHEME ROUND-UP: 3 STORIES OF FAMOUS PONZI SCHEMES

Ponzi Scheme: What Is It? – We hear the term “Ponzi Scheme” a lot in the news, but do you understand what it means? A Ponzi Scheme is a type of investment fraud that promises investors a substantial profit with little risk. New investors generate returns for older investors, and so on, and so on […]

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