Sinkorswim

To read more about financial fraudsters and how they are targeting the elderly, click http://yhoo.it/9ZKVIX

To read more about this event being held at the Coral Reef Yacht Club in Coconut Grove, click http://bit.ly/bHZRKk

     When Goldman argues in front of the US Congress that it’s perfectly legal and proper for them to manufacture a product designed to implode, encourage their clients to buy it, and then bet against them, doesn’t it make you want to retch?

      We applaud Arianna Huffington’s Move Your Money campaign, but think it ought to be taken a step further. The campaign focuses on encouraging Americans to remove funds from the “Too Big To Fail” banks into more responsible regional banks and credit unions that are more likely to support the local communities and encourage rebuilding the economy through traditional conservative banking. There is a strong moral overtone to the movement capitalizing on the revulsion most of us feel for the giant banks role in the catastrophic melt down of 2007-2008.

     But, why stop with banks? What about the investment banks and brokerage houses? A number of the large mega institutions are simultaneously corrupt, incompetent, and insolvent. They have proved without doubt that not only cannot they be trusted to provide investment advice to you, they can’t even manage their own portfolios.

     In the overall financial reform debate, at least one serious question remains unanswered: Should a securities professional be required to offer objective advice exclusively in the best interest of his client, or is it alright for a stock broker or Registered Representative to offer advice that is tainted and compromised by profit motives of the salesman and his employer? Congress punted on the issue.  But, you don’t have to.

     A registered investment advisor (RIA) works exclusively for you and is required to place your interests first while offering totally objective advice. This is a core value of the fiduciary standard. Why would you consider anything less?

     Presuming that you agree that you deserve the best advice your advisor is capable of, there is a clear and simple solution: Move Your Money to a Registered Investment Advisor that will sign a fiduciary oath. They are readily recognized because they don’t have FINRA or Registered Representative anywhere on their cards or letterheads.

     You can find one by visiting www.PaladinRegistry.com  or the National Association of Personal Financial Advisors, www.NAPFA.org. Come to the light.

Market Review by Frank Armstrong, CFP®, AIFA®

June 2010

     Global markets retreated broadly over the quarter reflecting investor concerns on a broad array of issues. It was an ugly month and quarter. Volatility was high and 200 point gyrations on the Dow were not at all unusual.

     You can hear any kind of prediction you like in the media ranging from double dip recession or deep depression all the way to soaring recovery. In a similar manner, we can choose to believe in either rapid inflation or deflation. Take your choice; there is commentary to support either direction. Predictions like this are all just noise, and certainly nothing to build an investment policy on. One sure thing about predictions, the most dire, dismal and negative get an outsized amount of coverage from the talking heads, and make the most impression on the public at large.

     We remain steadfast in our belief that the world will not end, capitalism is a good thing, and that the value of the world economy will grow over time. We also believe that predictions, especially about future events are generally unreliable. I personally have predicted that the world will not end for my entire 37 year career in the securities business, and I have a perfect record of being right 100% of the time. I suppose I should issue the standard disclaimer that past performance is not indication of future performance, but if the world ends, you may have more pressing issues than refuting my prediction.

     The mess in Euro land is still not resolved, with Germany not quite committed to bailing out their less responsible partners. Meanwhile, austere measures imposed on the so called PIIGS (Portugal, Italy, Ireland, Greece and Spain) will certainly cripple their prospects for future growth. Returning to a sound financial footing will be painful for those countries, but lay the foundation for future sustainable recovery. Meanwhile, the left is throwing Molotov Cocktails and making lots of noise in the streets of Athens.  

     As the Euro plunged in value against the dollar, the value of foreign holdings fell in direct proportion to the rise of the dollar. So, you will notice that foreign holdings did somewhat worse than domestic during this time period. A reduced growth assumption in the Euro zone coupled with a more expensive dollar translates into a smaller demand for American products and services. It’s never good to see your trading partners stumble.

     The American recovery is real, but it has been tepid at very best. The debate over stimulus versus fiscal restraint has both sides shouting past one another and Washington in apparent stalemate. No one argues that huge deficits going on forever are a good thing. They are clearly unsustainable. But there is plenty to be said for short term stimulus as long as it ends when the economy mends. The problem is that many projects develop a political life of their own and are impossible to kill once initiated. So, both sides may be right, but they refuse to hear the other’s concerns. The impasse does no one any good.

     Next year’s tax policy is a total mystery, making it impossible to do appropriate planning for individuals or businesses. Even a bad tax policy is better than uncertainty. It’s a national disgrace and Congress should be ashamed. It’s not like they didn’t know about the various sunset provisions in the income and estate tax codes.

     The economic impact of the oil spill in the Gulf can’t be measured. We know it’s not good.  But it’s having an effect on people’s confidence that the government can do anything right. In a scenario eerily reminiscent of the securities crash, regulators were totally sleeping on the job (or worse, snorting crystal meth, watching porn, taking trips to the Super bowl on oil company aircraft and allowing the vessel operator to fill out his own inspection report.) Seemingly without warning a low probability, but disastrous event occurred, and when it hit the fan we found ourselves totally unprepared to cope. Then we had to get the guys that caused the problem to try to solve it. This is not a situation that inspires a lot of confidence.

To read more about Statement 159 and its affect on earnings for banks click http://bit.ly/dACyao

For more on the federal budget and its shortfalls click http://yhoo.it/9wRfQp

Frank was quoted by Chuck Jaffe in MarketWatch. To read that article, click here.

Frank was interviewed by the Director of Personal Finance at Morningstar at this Years Investment Conference. To see the whole interview click http://bit.ly/bCDsr3

“In contrast to many Wall Street fund managers, the Marshall Islands Social Security Administration’s fund manager, Investor Solutions, provides a clear and easy-to-read statement…”  To view the rest of The Marshall Islands Journal’s article, click here.

Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits. To read more about the potential risk with state pensions, click http://yhoo.it/a2wSbz.