Where NOT to invest, Some What TO do's?

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Re: Where NOT to invest, Some What TO do's?

Postby admin » Thu May 23, 2013 7:59 am

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Rare Fancy Colored Investment Diamonds, Are They A Good Investment?

by Clinton Beck - President of Beck Gold & Diamond Brokers

I frequently get asked if I would recommend an investment in rare fancy colored diamonds. My initial reaction when you use the word investment and diamonds in the same sentence would be a resounding "No, it is not a good investment."

My reasoning for coming to this conclusion is that diamonds fail the basic criteria of any good investment.

Problem 1: Price
Diamonds are only a good investment if you can buy them low and sell high, like any good investment. The biggest problem is that the companies that are selling these investment grade diamonds are selling them at a mark-up similar to what a jeweler would mark up a piece of jewelry. The mark-up is substantial, meaning it is unlikely that anyone who purchases a diamond would be able to liquidate the stone and find a profit.

A 1 Carat Fancy Yellow Diamond is being sold for $20,000.00. The wholesale market price for the stone is $10,000.00. The investor has already lost half his investment the second the transaction is complete. Comparably an investment in stocks or bullion will cost an investor only a small commission of say 5%, not 50%.

Problem 2: Holding Time
The time needed for the investor to turn a profit with diamonds is huge. The figures I have seen on websites promising huge returns are pure speculation and questionable. Diamonds have never moved in history anywhere near what is being speculated. All the experts I have talked to agree that it is pure hype and speculation with no basis in reality. The only people that may be able to turn a profit are the investor's grandchildren.

Problem 3: Carrying Costs
An investment in diamonds will require insurance. This will again add to the cost making it more difficult for the investor to recover the initial investment.

Problem 4: Liquidity & Selling Costs
This is the biggest problem with a diamond investment. If someone decides to liquidate the investment, you need a market to sell it and there is no market for diamonds that an investor can access. A diamond broker like Beck Gold & Diamond Brokers is going to want to purchase the diamond below wholesale. That way I can sell it at wholesale and make a small profit. An investor will lose at least half his or her investment if they choose to sell in the near future.

An investor will be required to Auction the diamond and again be hit with commissions usually in the 25% range.

The other option will be to sell it privately. This will be extremely difficult if not impossible.

Diamonds are not a liquid investment. They would be considered the opposite, illiquid. Any investment with liquidity problems should be considered very high risk.

Problem 5: Risk
Investing in diamonds must be considered the most high risk investment there is. Most investment specialists that I talk to agree that because of the reasons outlined, Rare fancy colored diamonds must be considered pure speculation. Most investment advisors don't recommend investments of this nature. This is the type of investment for the super sophisticated investor and not the average person. One should never invest more than 3% of their portfolio in an investment this risky.

Most investment professionals and diamond dealers and appraisers that I have talked to agree that if you want to take a crap shoot on an investment savings, than fancy colored diamonds may be for you.

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Re: Where NOT to invest, Some What TO do's?

Postby admin » Mon Apr 15, 2013 2:37 pm

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The Canadian Press - ONLINE EDITION
New bank regulations create 'Wild West' consumer complaints system, say critics
By: Terry Pedwell, The Canadian Press
Thursday, Apr. 11, 2013 at 12:24 PM | Comments: 0

OTTAWA - New regulations aimed at helping Canadians resolve disputes with their banks will create a "Wild West" complaints system favouring the banks themselves, critics warn.
The regulations "create a stronger, more independent consumer complaint system," Finance Minister Jim Flaherty said in a statement issued Wednesday.

The rules will require banks to belong to a federally approved external complaints body, starting in September, where consumers can go if they are unable to resolve their issues directly with the bank.
But that doesn't mean there will be a single, national body to field such complaints.
New Democrat consumer critic Glenn Thibeault said the new rules will instead create a free-for-all complaints system, allowing the banks to pick and choose who fields the grievances.

The rules permit the banks to select whomever they want to work as a complaints overseer, so long as that body is approved by the Financial Consumer Agency of Canada (FCAC), Thibeault said.

"Rather than having an independent kind of third-party single banking dispute resolution, you have what we're calling the Wild West of providers," he said.
"The banks can now hire whoever they see fit to actually be their dispute resolution mechanism."

The Public Interest Advocacy Group has also warned that having multiple complaints structures will lead to confusion among consumers and lead to inconsistent results.
Until recently, last-resort consumer complaints about the banks were heard by the Ombudsman for Banking Services and Investment (OBSI), a non-profit complaints agency financed by industry members after its creation in 1996.
But the two biggest banks, RBC and TD, pulled out of the agency and instead hired a private mediation firm, ADR Chambers, to handle their consumer complaints.

It was that action that effectively allowed the banks to select their own external complaints body, with no minimum standards and no guarantees for consumers, leading to uncertainty and uneven expectations of outcomes, said Flaherty.

“This new oversight, in tandem with additional compliance monitoring of the complaint system by FCAC, brings needed transparency and rigour to the complaint-handling process, so Canadians can expect faster, more effective recourse when issues arise."
The banking ombudsman expects to be granted approval as a complaints service provider to the banks, agency spokesman Tyler Fleming said Thursday.
"We already meet or exceed all of the requirements," he said. "We'll be submitting our application in September."
OBSI also deals with complaints about the investment sector, representing consumers on behalf of about 600 firms including mutual fund dealers and group scholarship providers, and is hoping to expand its reach through provincial securities regulators.
The new regulations, taking effect Sept. 2, will require banks and other federally regulated financial institutions to maintain staff and procedures to handle consumer complaints through internal processes.

If a complaint is not resolved, consumers will be given the option to contact an external complaints body associated with the financial institution.
The banks, and the external complaints bodies, will also be required to publicly issue annual reports detailing the number and nature of complaints they received and investigated.

http://www.brandonsun.com/business/brea ... html?thx=y

(advocate comments: HEADS THE BANKS WIN, TAILS THE CUSTOMER LOSES? Canada's banks (and ADVOCIS life insurance sellers) prefer to use their own kangaroo court system of "self" regulators, and failing that you can take them to court if you have ten years of your life to waste and can afford a couple hundred grand. Is it wise to deal with those who act more like legal bullies when a complaint occurs? )
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Re: Where NOT to invest, Some What TO do's?

Postby admin » Mon Apr 15, 2013 4:02 am

"Conflicted remuneration (that is, misaligned incentives) influence recommendations to the detriment of financial consumers (unbeknownst to consumers)"

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April 12, 2013

Sent via e-mail to: comments@osc.gov.on.ca
Me Anne-Marie Beaudoin Corporate Secretary
Autorité des marchés financiers 800, square Victoria, 22e étage C.P. 246, tour de la Bourse Montréal, QB H4Z 1G3
Sent via e-mail to: consultation-en-cours@lautorite.qc.ca

RE: Canadian Securities Administrators (“CSA”) Discussion Paper and Request for Comment 81-407 Mutual Fund Fees (the “Consultation Paper”)
FAIR Canada is pleased to offer comments on the Consultation Paper issued by the CSA regarding the mutual fund fee structure in Canada.
1 Yonge Street, Suite 1801 | Toronto, ON | M5E 1W7 | 416-214-3440 | http://www.faircanada.ca v. 130412

FAIR Canada is a national, non-profit organization dedicated to putting investors first. As a voice of Canadian investors, FAIR Canada is committed to advocating for stronger investor protections in securities regulation. Visit http://www.faircanada.ca for more information.

1. FAIR Canada is of the view that the mutual fund fee structure in Canada is in urgent need of reform and the necessary reforms go beyond improved disclosure to investors. While FAIR Canada supports Point of Sale disclosure and the Cost Disclosure and Performance Reporting Requirements (“CRM2”) as important initiatives, more needs to be done to protect investors.

Reforming mutual fund fees by banning third-party embedded commissions including banning trailing commissions on mutual funds sold through discount brokerages and direct from the manufacturer, needs to occur so that: Serious conflicts of interest, which are systemic and structural in nature and which lead to investment recommendations that provide higher compensation to the advisor while disregarding the costs to the consumer, will be significantly reduced;

Consumers will be able to determine the amount they pay for the operating costs of the mutual fund versus the costs they pay for advice;
Consumers will have more control over the costs they pay as they will
(1) know that they pay for “advice”;
(2) be able to compare the costs and services of different advisors; and
(3) be able to negotiate directly with their advisor as to the costs and the type of fee arrangement they will enter into;
Consumers will be more aware of the costs they pay (for the fund or for the advice) which will allow them to assess the value;
The fee structure of mutual funds, which is complicated and confusing to the average consumer, will be simplified and made more transparent; and
Consumers will be better able to compare the costs of various mutual funds and will be able to compare the costs of mutual funds to other investment products such as exchange traded funds (“ETFs”).

2. Banning embedded commissions will lead to better investment recommendations for many consumers. If advisors are compensated directly by the clients they serve rather than the product manufacturers, they will no longer be incented by higher trailing commissions to sell high-fee products to their clients, and will be better able to provide recommendations that are in the best interest of the client.

Banning embedded commissions will allow consumers to make more informed investment decisions. If consumers know the price they are paying, they will be able to assess the value they receive for their fees and be empowered to make better decisions. This will result in better outcomes for consumers.
Banning embedded commissions should lead to a more price-competitive market for mutual funds, which should lower the average fees paid by Canadians, which are currently among the highest in the world. If consumers end up paying less for their investments, they will improve their returns, thereby enabling them to accumulate more savings for their retirement or other financial goals. This is an important public policy objective of all governments in Canada.
Banning embedded commissions should enhance the professionalism of the financial services industry and enhance public trust in the industry and financial markets. This would be of benefit to both consumers and dealers and advisers.

The current mutual fund fee structure contains serious conflicts of interest which are not addressed by the Point of Sale initiative or CRM2. These conflicts result in inadequate consumer protection and inadequate consumer information. Given the concerns identified by the CSA, and in order to fulfill CSA Members’ mandates to foster efficient capital markets and protect investors, there is no justifiable reason to wait and “...monitor and assess the effects of related regulatory reforms in Canada and around the world”1 before considering any of these regulatory options further. We see no reason to wait until CRM2 comes into effect three years from now, and then to wait beyond that to see their effect, when those requirements do not meaningfully address the serious conflicts of interest that have been identified by the CSA in the Consultation Paper and that we discuss in this submission.
FAIR Canada urges all members of the CSA to take immediate steps to address the serious concerns identified in the Consultation Paper and in this submission by banning third party commissions, including banning trailing commissions on mutual funds sold through discount brokerages and direct from the manufacturer.

FAIR Canada also recommends that a statutory best interest standard be introduced, as being both feasible and highly desirable.

FAIR Canada is pleased with the depth and breadth of the Consultation Paper published by the CSA. We believe that the CSA has provided a good overview of the mutual fund industry in Canada and identified the main current issues arising from the mutual fund fee structure in Canada.
1 (2012) 35 OSCB 11233 at page 11234.

1.2. We note that the issues raised by the Consultation Paper with respect to mutual funds are not new and have been identified and discussed regularly in other reports, consultations, and in the media. For example, Glorianne Stromberg’s 1995 investment fund regulation report noted:
“The single most difficult issue of all of the issues that have been raised in the context of investment funds is how to deal with situations involving conflicts of interest.

Situations which involve potential conflicts of interest arise in connection with every investment decision or other transaction where there is a reason to question whether the investment decision or other transaction was motivated by considerations other than what is in the best interests of the investment fund and its securityholders.”

Ms. Stromberg noted in that report at that time that this was not a new issue.

1.3. Early on in their evolution, mutual funds enlisted investment dealers as distribution arms and, in the process, created a system of charging clients that resulted in confusion about what was being paid for managing the fund versus selling the funds, and what component of fees pay for advice. FAIR Canada believes such confusion persists.

(full report found at the link below)
Partial apology found here: I have been suspect and critical of Fair Canada since learning of their 100% funding from the investment industry itself. It gave an early impression that Fair Canada may have been set up by the industry as a "facade" to pretend to be active in investor protection issues while simply being another diversion for the industry to get away with financial murder. I am beginning to see that they have a serious and valuable investment protection interest and I apologize for my early criticisms. I (and others) remain suspect and on guard against the principles of investor protection being "taken over" by the investment industry, as that is just not their proven interest, but will give them some respect for this and other recent efforts towards fairness, honesty and good faith practices for investment consumers.

http://faircanada.ca/wp-content/uploads ... pdf?aff0c9
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Re: Where NOT to invest, Some What TO do's?

Postby admin » Sat Apr 13, 2013 10:00 pm

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Advisers making statement by shunning formal investment statements
Ignoring a useful tool for keeping investors on course; wealthier clients do get written plan

By Jeff Benjamin
Mar 21, 2013 @ 10:17 am (Updated 2:59 pm) EST

If you're the kind of financial adviser who doesn't take the time and effort to create specific investment policy statements for your clients you are, believe it or not, in the majority.

Shocking as it might seem to most anyone even marginally connected to the broader notion of financial advice, the majority of advisers are not committing their clients to formal investment plans.

“A lot of advisers are talking about the importance of advice and practice management, but not a lot of them are backing it up and doing it,” said Rod Greenshields, consulting director at Russell Investments, which uncovered this odd finding in its latest quarterly adviser survey.

While advisers tend to be more diligent about creating investment policy statements for their wealthier clients, 61% of those surveyed are not doing it for all clients and many are not doing it for any of their clients.

“It is much like the way everyone knows how they should be dieting, but we still don't always eat well,” Mr. Greenshields said.

Yes, it is like that and it is also like not making the basic effort to ensure that clients have a plan and are most likely to stick to it.

“With the industry shift toward advisory-based relationships, it is surprising that so many advisers remain uncommitted to the best practice of utilizing investment policy statements with all clients,” Mr. Greenshields said. “One of the best ways an adviser can fulfill their fiduciary duty and encourage a client to stick to a long-term, disciplined plan is to develop a statement of their objectives and related recommendations.”

The survey of nearly 500 advisers, conducted in February, found that 60% of respondents had clients who requested to deviate from their investment strategy last year.

The survey findings don't make direct connections between 61% of advisers not creating formal investment policy statements and 60% of advisers saying their clients won't stick to a plan. But, hey, that seems like more than a simple coincidence.

“These investment statements can serve as a type of commitment device, reminding investors of their goals and helping them make productive decisions in times of uncertainty,” Mr. Greenshields said. “These are not just conversations, but they allow an adviser to refer clients back to something they agreed upon.”

What is even more perplexing about this whole thing is that the survey also found that 72% of advisers described themselves as optimistic about the markets and the economy. But only 21% of those same advisers described their clients as optimistic.

With that in mind, it seems something like a formal investment policy statement could go along way toward keeping those nervous clients from straying off course.

(advocate comment: if you are dealing with someone who will not provide you, your immediate family (if you desire) and your legal and accounting professionals (if you wish) with a personalized and professional INVESTMENT POLICY STATEMENT, then you are probably dealing with a commission seller of products in "advisor" disguise. Like in this video vhttp://youtu.be/KH6XMXlfdBw )

http://www.investmentnews.com/article/2 ... 130329991#
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Re: Where NOT to invest

Postby admin » Sat Oct 15, 2011 6:26 pm

On October 15, 2011, at 3:07 PM, Ron wrote:

Hello Larry - My husband and I have spent a lot of the morning watching your videos. We've always felt that just keeping up with our RRSP's (altho' nowhere near the given allowed amount), we'll be okay. We're close to retirement - within a few months likely.

For the past year or so however, we have actually been getting a little uncomfortable with watching the financial world and remembering that during the Depression, people who had lots of money in institutions, lost it all - the money just was not there. We've joked about cashing in our RRSP's, taking the loss in tax we'd be paying, and "putting the remainder in our mattress"! Maybe it's nothing to joke about!! Should we?!

If you don't advise that - is there something else we should do? We have, over the years, transferred those RRSP's, as they matured to Credit Union, from RBC as we've not been happy with that former facility for a number of reasons. What do you think?

You've obviously a very busy person and realize you just may not have the time to address this, but if so, we would appreciate it.

We are honestly impressed with what you're doing here and have forwarded this website to many others who we know do have mutual funds. Hard to know if they'll resent knowing about this or will be glad to know of it however........

Thanks for writing, here is a bit of suggestions for you to ponder"

I would direct you to http://www.investoradvocates.ca to do some of your own research and reading there as well. I have placed a great deal of answers to your good question already on this site. It just takes some sifting through, and that is where you learn to look after yourself better.

You will find that Canadian mutual funds are mostly designed to reward the fund company first, with the 2.5% management fee, and some huge commissions for the middleman.

I really urge you to look at ways of eliminating the middleman (the "salesperson who claims to be an advisor). That will eliminate 90% of the phoney advisor risk to your account, which is one of the greatest risks that you face. Second I urge you to investigate either professional money management (http://www.portfoliomanagement.org/ ) if you have enough money to have your own professional fiduciary investment person, OR to look at do-it-yourself funds like the lowest cost ETF and or index funds.

the greatest drag right now on your account is the fees to make your mutual fund rich, plus the fees to make your salesperson rich. Get rid of those two drags and I hope you will have a much better chance of becoming rich

thanks again

join me on facebook and I will keep you up to date as I learn and produce more tips for the public


larry elford, former CFP, CIM, FCSI, Associate Portfolio Manager, retired.

--youtube channel about professional investment abuses:
http://www.youtube.com/user/investoradv ... ature=mhum

--xtranormal cartoons about investment industry abusers: http://www.xtranormal.com/profile/3166153/

--facebook group to work toward protection from fraud: http://www.facebook.com/home.php?sk=gro ... 8485502497

--web page to explain how albertans are defrauded starting with our government: http://www.albertafraud.com
(by the way, EVERY province screwed every Canadian over with exactly the same scam thanks to the PASSPORT system among regulators)

----Probably the shortest, funniest, and most telling site about your money v professional predators found here: http://www.therundown.tv/videos/misc-vi ... one-scene/
(two minute video)

---www.albertafraud.com also hosts a short movie trailer for Sony Pictures INSIDE JOB

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Re: Where NOT to invest

Postby admin » Tue Sep 20, 2011 8:21 pm

Pet Peeve: Broadcast producers who need a "talking head" to appear on their TV or radio segment, about the "markets". Wh do they turn to, the telephone book, and they call until they find a commissioned salesperson from one of the many brokerage firms who will speak to them.

The salesperson is always willing to go on air appearing as an expert, as it bolsters their marketing image. The TV or radio host has not idea whether they are talking to a professional advisor, a salesperson posing as an advisor, a money manager, a mutual fund manager, an institutional trader, an analyst.......they just interview people.

End result is that most shows feature a talking salesperson pretending to be a market guru.

Big mistake. Big consumer misrepresentation.
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Re: Where NOT to invest

Postby admin » Tue Sep 20, 2011 7:09 pm

images.jpeg (3.24 KiB) Viewed 28571 times
Where not to invest............

Do NOT invest with most of the folks who appear on TV. Most are "sales geeks" posing and misrepresenting themselves as some kind of advisor, without the license or qualifications to do so. As this author says, they are "minor leaguers" at best.
read on


Dan SolinAuthor, 'The Smartest Portfolio You'll Ever Own'
http://www.huffingtonpost.com/dan-solin ... 31280.html
Real Financial Experts Won't Go on TV
Why do these real experts refuse to go on TV?

David Swensen gave us an insight into what he would say in a recent article in The New York Times. He has little confidence in the mutual fund industry, noting that it "...has employed market volatility to produce profits for itself far more reliably than it has produced returns for its investors." He has less regard for brokers and advisers, noting that: "Most understand too little about financial markets to make informed decisions, intervene too frequently in counterproductive ways and gather too little information about portfolio holdings to evaluate results."

He advises individual investors "...to embrace low-cost index funds and shun the broker-driven churning of high-cost, actively managed funds."

I wanted to stand up and applaud.

This is information the financial industry doesn't want you to know. The guests on these shows primarily are from the mutual fund industry or are advisers who recommend actively managed funds -- precisely those who Swensen rails against.

The other "smartest people" would not differ from Swensen. The financial media understands their views would be good for investors, but bad for ratings and for their securities industry advertisers.

Keep this in mind the next time you watch a self-anointed "expert" explain what investors are thinking today, or why the market did what it did. You are getting the views of those in the minor leagues, who share an agenda to keep you confused, trading, relying on them and buying their products.

The smartest people alive in finance refuse to participate in this charade.

And if I have not repeated it endlessly in this forum elsewhere, the special "money show" radio hours on AM radio that you typically hear from coast to coast are usually cleverly disguised, bought and paid for commercial pitches for whatever minor league junk the pitchman is touting. Buyer beware there.
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Re: Where NOT to invest

Postby admin » Thu Aug 11, 2011 9:54 am

(If you can read this, you are a better man than I am. I wrote it and even to me it sounds terrible. But with that said, it is an attempt to state some underlying causes of our current economic storm and to answer the question on everyones mind; when will it be safe again?)
Aug 11th, 2011
In today's environment of falling markets, and riots in England, instability in European countries over debt downgrades etc., etc, the following causes occur to me. A failure of "agency" at each and every level.

My level was that of a retail investment seller, and here our failure was that our entire industry shifted it's focus from "stockboker" in the 1980's to "investment advisor" in the '90's and beyond.

The failure was in the fact that we only changed our name, and not our game. We used a freshly printed business card, saying "advisor" on it to mislead the public into believing we were acting in their interests and acting as some kind of professional. Then (as evidenced in the image attached) the industry fought behind the scenes the make certain, that we never had to actually act in the interests of the customer. We promised to be the agent of the customer and then about 80% of the time, sellers screwed the customer. Still do today. Still mostly commission paid today. (if you do not accept this premise, please ask your investment "advisor" to show you his government license or registration category. I will buy you lunch if you can find one that is licensed as an "advisor".....think about the definition of fraudulent misrepresentation)

This image below is from the FAIR Canada site, http://faircanada.ca/ an agency set up with $4 million dollars of money from the association of investment dealers. When funded by the investment dealers and promising to protect customers interests, it begs the question of whether it is yet another "trick" of the trade. Is it just another politically correct name (or agency) on a business card to lead or mislead customers into thinking acting in a trusting and vulnerable manner to financial predators? Is it leading them down a path without being aware that it possible should be "buyer beware"? Time will tell, but if so, it will be simply another solid example of agency misrepresentation.

Screen shot 2011-08-07 at 11.25.00 AM.png
click image to enlarge

The regulators in Canada, all 13 securities commissions and a few dozen other self appointed, self regulators are all chosen and paid by the industry they regulate. There are enough examples with sound backing to suggest that this group of agents is on the side of the industry that pays them. The financial violence allowed to be done, knowingly, to the public suggests nothing short of criminal breach of the public trust by 95% of the regulatory agents in Canada. A truly buyer beware investment environment.

Above the regulators are the bureaucrats and politicians who are in charge of these regulators. The provincial securities commissions are crown corporations after all, fully answerable to the legislature. Funny then, when Alberta's auditor general Fred Dunn wanted to audit the practices and operation of the Alberta Securities Commission, the ASC, spent over $1 million dollars on lawyers to try and wiggle out of having the auditor look into their files. What would they have to hide? It turns out quite a bit. The organization was found to be failing in nearly all levels of process and procedure. That they were "making things up as they went along", and breaking all pretence of rules and procedures, as alleged by two or three dozen employees who stepped forward. The entire problem was quashed when the most vocal employees were fired and the politicians did nothing.

Long story short is that the politicians also turn a blind eye to failure to protect the public, and they themselves prefer to protect themselves, and their jobs when faced with the difficult choice of protecting the public or protecting their jobs. They (politicians) like Finance Minister Shirley Mclellan, followed by Iris Evans, and Ted Morton, do NOT want to ruin their career by rocking the boat, so they go along. They are experts in the game of "go along to get along".

This is yet another failure to live up to their oath of office to serve and protect the people of the province. Another failure by an "agent" supposedly hired to serve our interests. About the third level of agency failure we have now talked about, with no accountability.

Finally lets look at the United States, suffering a Standard and Poors debt rating downgrade at the moment, and all the drama resulting from this. (I will digress here slightly and add in another level of failure, but not by an agent with any duty to us, but to themselves.) The media is running around, asking if they should "buy, sell or hold" today, asking investment questions, asking investment people. The problem is that they are asking the wrong questions and asking the wrong people. The people they are asking are all advertising themselves as investment "advisors", which nearly none are licensed as. They are asking commission investment salesmen and women for "advice". That is like asking a barber if you need a haircut. You are asking someone with a financial conflict of interests (not to mention a lack of qualifications) for investment advice, and what they give you is investment indsutry "cheerleading", every time.

The media also has full page advertisers to thank for being still in business, in a tough economic environment, so you might notice recently that the papers, BNN, and the like, are no longer the deliverer of news, but more often the deliverer of "publicity". Another layer of failure, by the media, but they do not owe you the promise and delivery of an agent's duty. They have failed themselves. Back to the conclusion.

The United States is seeing all these layers piled one upon the other, like stepping stones into the garden. They are no worse than we are here in Canada, but they are just better at public discussion of these things. Their media has a bit more open discourse than we do here in Canada, so you can learn more in the US than is possible here in Canada. I don't know the true number, but probably some figure like six men in Canada control 99% of all the media. Some of these men might be like Rupert Murdoch when it comes to self survival practices.

Again I digress. From the top of the economic food chain in the States, with wealthy and powerful corporations "buying" politicans, (for which there should be jail) to the politicians themselves (which have clearly sold out to corporate interests), acting in breach of the public trust for personal gain, to the regulators beneath the politicians, to the salesmen, appraisers, mortgage brokers etc., etc etc. A perfect storm and a perfect example of failure to act as a proper agent at every level. Failure to act in the interest of the one that hired you by nearly every person. Political malpractice, financial malpractice, and illegal, self serving behaviours at every level. And why?

Because they can. Because our justice system is unable, unwilling, and perhaps a tiny bit beholden to the richest, most powerful people among us. It works really well at prosecuting the poor for $50 crimes. It does not work well for prosecuting the rich for $50 million dollar crimes. Here in Canada it does not work at all, for prosecuting powerful people for crimes up in the $50,000,000 to $100,000,000. It is as if the legal system works as the perfect handmaiden to those rich enough and powerful enough to commit crimes where they can afford to hire 100 lawyers. Not a pretty picture, and may be another layer of malpractice, or agency failure to perform. So where was I?

I was trying to lend a "non commission salesperson" answer to the question of how and why we got into this mess, and when it will end. So here goes: "we got into this mess by a complete failure to hold agents and public servants to account, for their promises, or failed promises to serve. There is a "black hole" of accountability it the top of the economic food chain, and it allows people to steal or skim billions and billions each year from the economy. It allows political and financial malpractice to become "standard industry practice", and allows such malpractice to be the most rewarding work in the world. It gives the greatest economic rewards to those most ruthless. (I am coming to the single line that sums it up, thinking it through as I write)

How about this: It allows the people who lie, cheat and abuse those they promised to serve, to get away scott free with lying, cheating and abusing the customer and the public interest. And it allows them to police themselves in doing so. Self regulation leads to decriminalization, and every financial and political game is a game of self regulation. We own the referees, and you (the public) are screwed.
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Re: Where NOT to invest

Postby admin » Tue Aug 09, 2011 9:32 am

It is just my opinion (and my experience) but I would have to say that certain media is probably not the right place to get your investment information.

I faithfully read two or three top business papers daily for about twenty years, every morning, while I was a broker.

It was not until I left the trenches and found myself a recovering investment broker that I found greater perspective and learned what I was reading. "News is the information that people would like to keep hidden from view, EVERYTHING else is just publicity".

I had been following mostly the publicity about the world, about business and about markets. Publicity fed to me by the biggest, and most important financial players in the country. Don't believe me, look at who runs the full page ads in your paper this weekend. (Besides the auto sellers I mean)

Look at who writes the "advertorials" about where to invest, where to place your RRSP etc., etc. It is the same folks getting the ink. they are selling you publicity in the guise of news and Canadians have no other independent source. The media has been nearly bankrupted, certainly captured by market pressures, to bow down deeply to those large advertisers left. You are getting virtually nothing but publicity.

The old, hard core investigative, and independent thinking, drinking, smoking reporters are nearly dead and gone. In their place are fresh faced journalism graduates, who will write and do anything they are told. And they are often told what to do by the dictates of whatever brings in the ad dollars.

The other item to watch the media for is the laziness of using the wrong sources. Why, for instance, does CBC etc always find a commission salesperson to interview about what the market did and why? They are asking a sales guy, to give investment advice. His advice is always the same. You know it by heart......buy, buy, buy. You are food for these guys commissions and the media is usually a sucker for their sound bites. They also love to appear on the radio for the "credibility".

Speaking of radio, if you listen to the usualy "money show" on saturday mornings, AM radio, did you know you are often listening to a paid infomercial. Sometimes they disclose this and sometimes they do not. But when I was in the business, for $7000, you could book an hour with Guy Friendly, the easy announcer type, who would then act as your sidekick and throw really easy scripted questions at you. And for every question, of course you held the scripted answers. The answer is always, to buy what you are selling, or take your special valuable advice. Mostly bullshit. Beware of the saturday morning informercial, it is fairly unregulated.

Long story short, if you depend on financial press, BNN, and the media, radio for your information, your are "bank food", or "broker food" in Canada. (Banks own 90% of the brokerage firms now)

You will be hearing little else but publicity and what you really need for your financial health is news.

best of luck
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Re: Where NOT to invest

Postby admin » Sat Aug 06, 2011 5:50 pm

Screen shot 2011-07-10 at 5.07.57 PM.png
click to enlarge

Do NOT go to a commission salesperson, even IF they call themselves an "advisor" or a wealth manager or anything other than what it says on their licence with the government. What? No license displayed you say? Wonder why that might be?

Going to a salesperson for investment advice is a bit like asking a barber if you need a haircut, don't you think?

You should either be doing it yourself and saving yourself the 2% to 4% "skim" that you are going to suffer from using a salesperson for "advice", or you should be going upscale and using a true, honest to goodness professional money manager (a licensed one) through someone like the PORTFOLIO MANAGERS ASSOCIATION OF CANADA http://www.portfoliomanagement.org/index.php

I believe people from the above group include some of the only truly licensed "advisors" in Canada, and I know for certain that they include people who have a fiduciary duty to place your interests ahead of their own interests. Anyone else you will deal with who just might happen to call themselves an "advisor" is misrepresenting their license and their job description. I know, I used to work within that game.

I will include an image with this post from FAIR Canada that you can click on to enlarge. If I recall correctly, the average misrepresenting guy calling him or herself an "advisor" does not owe you a fiduciary duty, will likely not even tell you in writing what duty they do owe you, does NOT have to place your interests ahead of their own selfish interests (no shit) and does not even have to ensure that the investment they suggest for you is not more suitable for their own commissions than other similar or nearly identical choices they could have and should have told you about...........

enough said about guys who call themselves "advisors" in canada.......buyer beware, do not go there

learn more at http://www.examiner.com/crime-in-calgar ... and-switch
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Re: Where NOT to invest

Postby admin » Mon Jun 20, 2011 2:56 pm

BMO came out with the article below on June 8, promoting Exchange Traded Funds or ETF's. The reason banks are moving into this area
is due to the fact that ETF's are one of the best investing tools for DIY investors, allowing 100% diversification at the absolute
lowest management fee. This is accomplished by applying a passive management approach (small changes every 3 months or so) which reduces management costs, a potential mutual fund killer. The average Canadian equity mutual fund has an MER of about 2.5%. It does not sound like much, but when compounded
for 30 years, it reduces your returns by around 50%. Technically, if you had zero return, and started with $100,000, you would end up with roughly $50,000.

Where the banks pull the wool over investors eyes is that the banks will charge you around 4 times the management fee for the same
ETF you can buy online yourself. For example, one of the popular Canadian ETF's is called the XIU.

Read up on it at http://ca.ishares.com/product_info/fund ... rue&qt=XIU

It's management fee is 0.15% and the MER is 0.17%. I bought this fund through a bank for a special account and the bank charges 0.78 %.

The bank has no control over the weightings of the ETF. It simply charges you more to hold it for you. Salaries and overhead costs need to be met.

When you are a DIY investor, you can buy this fund in about 1 minute for $10.00 or so, and pay yourself for babysitting it.

If you want to sell it in a month or a year or whenever, the cost is $10.00 or so. Compare that option to the huge commission costs to sell a mutual fund early.

Remember the age old fact, over 60% of mutual fund managers never beat the benchmark passive index they compete against.

Are bank ETF's bad? No, not if you do not want to do your own investing.

The BMO article is below:

http://ca.reuters.com/article/businessN ... PO20110608

Regards to all,

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Re: Where NOT to invest

Postby admin » Thu Mar 10, 2011 8:57 am

I should also mention (or give cudos) to the CFA folks. Chartered Financial Analyst.

They are probably the best and highest educated people in Canada, and it is noted that the very least amount of consumer complaints (if any) occur against those who have this designation.

It is not the CFP, or any of the other hundred garden variety correspondence courses (that we all took to help market ourselves.......), it is the very upper echelons of financial education in Canada. If you run into someone with a CFA it is not a guarantee, but it is far more likely that he or she will not simply be a salesperson in "advisor" clothing. If they are in sales, they are probably pretty damn serious about doing it well.

Yes, it is rare for me to not be bitching about finance, but a job well done deserves a pat on the back.


see below, investment industry trade mag comments about commission sellers in "advisor" clothing

Nine of the 16 markets surveyed by the CFA Institute said that financial advisors miss-selling products to generate commissions is the biggest ethical concern in their local markets. In Canada, concerns about advisors were cited as the top worry by 32% of respondents, double the next biggest concerns, market fraud,

misrepresentation as “advisers” Competition Bureau Section 52 Criminal Complaint.......completely ignored by the Competition Bureau of Canada

Misconduct by financial advisors the most serious ethical issue facing Canadian market: CFA Institute survey

Derivatives the most serious issue facing global financial markets

Tuesday, March 8, 2011

By James Langton

Misconduct by financial advisors is the most serious ethical issue facing the Canadian market, according to a recent global survey of CFA Institute members.

Nine of the 16 markets surveyed by the CFA Institute said that financial advisors miss-selling products to generate commissions is the biggest ethical concern in their local markets. In Canada, concerns about advisors were cited as the top worry by 32% of respondents, double the next biggest concerns, market fraud, and the use and disclosure of derivatives positions, which both garnered 16%.

The quality of financial reporting, market trading practices (such as high frequency trading) and investment management (the quality of service and cost/compensation models), received 14%, 12% and 9%, of Canadian responses, respectively.

In terms of global markets, both the survey overall, and Canadian respondents, ranked derivatives as the biggest ethical concern, followed by financial reporting and market fraud. Financial advisors only ranked fourth (in both Canada and globally), with trading practices and investment management rounding out the list.

Additionally, Canadian respondents ranked “improved enforcement of existing laws and regulations” first on the question about the sort of regulatory action they believe is most needed to improve market trust and integrity. This was also in line with the overall survey, which put improved enforcement first, improved regulation and oversight of global systemic risk second, and improved transparency of financial reporting and other corporate disclosures third.

The survey also found that 32% of CFA Institute members think the integrity of global capital markets will be better than 2010, 13% think it will be worse, and 55% said about the same (the breakdown was more or less the same in Canada, at 29%, 12%, and 58%, respectively).

“We created the Financial Market Integrity Outlook Survey as a way for CFA Institute members to help us assess the ethical framework of our profession and to identify any ‘hot spots’ facing the industry,” said Kurt Schacht, managing director of the Standards and Financial Market Integrity division at the CFA Institute.

“Sadly, only one-third of all respondents are optimistic that the integrity of capital markets will be better in 2011 than in 2010. A more optimistic view of financial market integrity will likely depend on increased global transparency of risk and risk-related instruments and better regulatory coordination of systemic risk detection and mitigation,” he added.

The survey was completed January 21, and carries a margin of error of ±1%.

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Re: Where NOT to invest

Postby admin » Thu Mar 10, 2011 8:53 am

I just today saw half page ads in two newspapers about the consumer protection act, which of course does not apply to financial products.

Self regulation leads to criminalization, and the financial industry prefers to remain "outside" and "self policing" when it comes to consumer protection.

I suggest investors tread in markets where the foxes are not allowed to police themselves.
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Re: Where NOT to invest

Postby admin » Wed Jan 05, 2011 10:48 am

With apologies if I have mentioned this previously in this post, but it is of sufficient importance to bear repeating:

Canada is a country which has not one investor protection agency which is not paid for by the investment industry. And not one investor protection agency which does not have the dual mandate of "fostering the marketplace" (read allowing industry to run wild) and protecting investors. With every agency, regulator, self regulator, trade association, ombudsman etc, getting a salary from the indsutry the unfortunate result is a captured group looking closely at how to protect and enhance their salaries, and distantly at investor protection.

See below commentary from the Financial Post by the executive director of the Canadian Coalition for Good Governance:

http://opinion.financialpost.com/2011/0 ... rotection/

By Stephen Griggs

The recent flurry of articles in the media questioning the future of the proposed national securities regulator has highlighted the political debate as to which provinces may or may not opt in to the proposed national system. But these political and constitutional battles do not ask the most important question: Why should a national securities regulator matter to ordinary Canadians?

The Canadian Coalition for Good Governance represents most of Canada’s leading institutional investors, which collectively manage well over $1.4-trillion on behalf of ordinary Canadians, including the pension plans of municipal workers, retired teachers, participants in the Canada Pension Plan and many mutual fund investors.

CCGG believes a national securities regulator — with a national focus on enforcing the administrative and criminal laws applicable to our capital markets — is the best way to protect all Canadian investors and to have efficient and effective Canadian capital markets.

Canadian investors deserve to have investor protection laws that keep up with rapidly changing global capital markets and evolving international best practices. Even more important, these laws must be — and must be seen to be — strictly enforced.

Canadian securities regulators have laudably worked over the past decade or two to co-ordinate the development of new laws, policies and rules through the “virtual” Canadian Securities Administrators (CSA). This co-operation is needed because capital and investments rarely stay in one province. They instead flow rapidly between provinces and countries.

But the policy efforts of provincial regulators today are limited because they must operate by consensus. The refusal by one province to endorse a reform leads either to a watered-down “lowest common denominator” policy or to no action at all.

To adequately protect investors, Canada needs a national regulator that can follow the money across Canada and around the world using the combined administrative and criminal law powers needed to do it effectively.

In contrast, the CSA today has the legal power only to deal with half of the rules governing our capital markets — the administrative side of the markets — and cannot under our constitution make or enforce the equally important criminal laws that should be applied when the markets are abused or defrauded.

Even the best investor protection laws are of no use if they are not strictly enforced. There is a widespread belief in the investment community that the current fractured system of securities regulation does not result in timely or effective enforcement of capital market administrative and criminal offences. When enforcement actions are brought, they take years and rarely result in sanctions or penalties that act as meaningful deterrents to future offenders. Without the credible threat of prompt action and significant penalties, illegal market activities will continue in Canada and investors in Canadian businesses will continue to be harmed.

Under our current system, provincial co-ordination of a regulatory enforcement action can only be achieved through agreement by each province. If the matter is criminal, the province must co-ordinate the case with the federal criminal justice system, which is scattered among a number of police agencies across Canada. Police rarely see “white collar” crime as a priority for their limited resources; neither do they have the skilled staff needed to understand a securities fraud.
The lack of a “one-stop shop” for enforcement makes it far too easy for wrongdoers to avoid being discovered. Even if caught in one province, they can simply move to another and resume their activities. For the worst perpetrators, the unco-ordinated system often leads to no criminal charges (or in some cases trials that span a decade or more) and rarely results in timely or significant penalties.

In contrast, a national regulator as proposed by the federal government would have the constitutional power to develop and co-ordinate both administrative and criminal laws and policies to protect investors equally across the country. It could develop specialized investigative and prosecutorial teams within each province focusing only on capital market offences, responsive to the needs of investors and companies in a province while at the same time creating national accountability. And it could ensure that criminal and administrative enforcement is swift and effective across Canada.

Only a national regulator would ensure that the same investigative tools and powers are used across Canada to pursue administrative offences and produce consistent, uniform decisions. Only a national regulator could place clear responsibility for the investigation and prosecution of securities-related criminal matters in one government agency.

The investments of all Canadians, whether in individual retail accounts or managed for them, deserve to be protected from fraud and other improper activity. All Canadians, as direct or indirect investors in our capital markets, deserve the same laws and equal protection of their retirement saving, no matter where they happen to live. For the protection of their investments and their financial future, a national securities regulator should matter to all Canadians.

Stephen Griggs is executive director of the Canadian Coalition for Good Governance.

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Re: Where NOT to invest

Postby admin » Mon Jan 03, 2011 11:22 am

and while I am on the topic of where to invest.......sorry, where NOT to invest, here is some wisdom gained from two top Canadian experts who visited with me a while back. Both with decades of Bay Street and wall street experience, both so rare as to hardly ever be found anywhere.......why, because they tell the truth in an age where most industry people have to only tell the industry story in order to keep their salary going.

Here is what one former Bay street bank analyst told me in response to public questions of "where to invest" posed after the real estate/sub prime collapse of 2008:

"Invest in things you know"......meaning your own business, your farm, your land, your inventory. Invest close to home. Invest in real things, rather than rocket scientist designed things, derivatives, synthetic investments. She went on to describe how ANY company in North America can be brought to it's knees using CDS's, (credit default swaps). Credit default swaps are insurance policies that can be like buying insurance on your neighbors house, and then burning it down for profit. How will you know if a company you invest in will not be next. How will you know if your investment is not the next Nortel, where such things along with zero regulatory oversight, and corrupt, kleptomaniac management will literally steal the company out from underneath investors. Imagine, having the largest company in the entire country stolen and bankrupted for personal gain of a few men. Now imagine that no one is ever prosecuted for same. One man walked away with a $120 million dollar bonus (look up John Roth) with the help of phoney accounting tactics, faked sales figures. nice work it you can get it I guess. But what might be the mental health damages to a man who has to live the rest of his life, with that on his mind? Do you think enough money can bury his thoughts? It does not work for me.

Anyway, enough said about the comment "invest in things you know".

What about those of us (like my daughter) who have no choice but to place retirement funds into market investments?

The second expert and I argued for some time about retail solutions. He was a brilliant man who wrote the Book SWINDLERS. A look at how many ways accountants can steal, or he used to help corrupt CEO's to steal, complete with examples. His argument was that all retail investors in Canada are at the bottom of the economic food chain, and they are fed lies, false reports etc, and used as cannon fodder for financial types to skim or outright steal their investments........all true by the way.
His solution was to invest only with professional money managers (not the retail salesman/broker/phoney advisor selling retail funds etc) who charge more like less than 1% to manage money, and have no, none, never, ever, commission based incentives to fight with. I agree, but what about the little guy? How can a small retail investor play in this field where professional money management requires a $1 million dollar (or more) minimum investment? He had nothing for me, so I said this:

Why dont we consider using ETF's (exchange traded funds) or similar low, low cost investments, where you invest in an index or the like, get the long term return of same, and NOT have to pay some phoney advisor/seller two or more percent so he can buy a new porsche? We came to some agreement on this point, that for small retail investors, this might hold some value. He was so used to investing much larger amounts, that he had some difficulty sitting in a room with retail investors, knowing the pitfalls they face, while that is all I know.

In the end, we were both right. He knows full well from experience (read SWINDLERS, learn 40 years of his experience in one sitting) that retail investors get sold investments, using false bookeeping if necessary, certainly false analysis (by in house analysts owned by the very people selling you the investment), perhaps rated by rating agencies that are on the payroll of those selling to you, using under the table legal exemptions to sell their crap granted to the sellers by regulators who are also conflicted at best, corrupt at worst......and so on...................that is YOUR lot in life if you are a retail investor. It would be like putting a three year old child into the jungle and expecting him to make it out alive.
He and I agree that IF, and it is a big if, you can find your way into the hands of true professional money managers (no not your local 24 year old bank sales geek), you will then at least have a trusted guide to this jungle. If like me, you cannot meet the minimum requirements to reach this professional level of investing, then get on line, get the hell away from 24 year old sales geeks, and get learning index investing, ETF's, how to manage your own money etc., etc. Read Warren Buffet, his books can tell you everything you need to know. Join investors aid coop in vancouver (like mountain equipment co-op, but for investors) and learn how to safely and effectively manage your own finances. Just DO NOT, I repeat NOT let the 24 year old sales geek be your "advisor". He was selling vacuum cleaners last week.
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