22 May 2017

Don't think Safe Deposit Boxes are safe

Thieves and Tax authorities are a threat to Safe Deoposit Boxes, whether they are in your home or in a bank - not sure which one is worse!
Greek Authorities To Launch Mass Confiscation Of Safe Deposit Boxes, Securities, Homes In Tax-Evasion Crackdown

21 May 2017

Cliff Asness: ESG May Help the World But It Won’t Help Your Portfolio

Could not agree more. Legislation is the way to solve the World's problems, not posturing by companies and asset managers.
Cliff Asness: ESG May Help the World But It Won’t Help Your Portfolio

12 May 2017

Robo-Advice vs. Human Adviser

Automated financial advisers, also known as Robo-Advisers, are taking a growing share of the market for financial advice and planning. Lower cost and easy access are the main factors behind this trend.

Traditional Advisers argue that they are the only ones that can give personalized advice on complex problems.

But even the most complex portfolios can be handled without resort to high fees.

Let's see what complex issues may face the average - and even high-net - investor: in most cases they are related to Estate or Retirement Planning - but they can easily - and more expertly handled by tax experts (or accountants or lawyers with relevant qualifications). These professionals will not charge an ongoing fee based on the value of your asset but a fee based on an hourly rate schedule. On an estate of $US 5 million and up this should be substantially cheaper. A 1pct annual management fee would total $50,000 PER YEAR!

This leaves the question of HOW your wealth should be invested, first of all the basic asset allocation (property, shares, bonds etc). To a certain extent automated models based on questionnaires should go a long way to provide the answer. It may not be precise, it may even not be the best choice in hindsight but remember: all recommendations by human advisers may also not work out exactly as hoped for (to put it mildly).

My solution to this dilemma is as follows: put a large part of your wealth into the asset structure that is recommended by the Robo-Adviser and put the rest of your wealth into the hands of carefully picked human portfolio managers. Make sure that they charge reasonable fees (expensive does not guarantee better performance!) - preferably with a well-structured performance component.

Traditional Advisers vs. Robo-Advisers

5 May 2017

Your Adviser gets incentive not to offer cheaper Funds

That could happen if Morgan Stanley decides not to pay its brokers for clients' ETF holdings.
morgan-stanley-weighs-changing-broker-compensation-on-vanguard-funds-1493987204 (Paywall)

4 May 2017

Is The World's Largest Bitcoin Exchange Headed For Collapse?

Exotic but risky! Remember that  Bitcoin consists of nothing but bits on some distant computer! While the same can be said of most other assets (Bank deposits, Bonds, most Shares) this is less regulated - and if it is we would like to learn about this from the promoters or fans!
Is The World's Largest Bitcoin Exchange Headed For A Mt. Gox-Style Collapse

3 May 2017

100-year bonds - only for traders and madmen!

If anyone seriously considers 'investing' in 100-year bonds he should immediately see a doctor, or even better, a psychotherapist. There is no value in this piece of financial garbage, certainly not when global interest rates are at all time lows, and artificially (criminally?) depressed by Central Banks in the pay of useless and inept governments. There may be times when these ultra-long maturity bonds offer trading opportunities, but apart from opportunities to sell them short the time to go long is in the distant future. Be careful that your financial adviser does not stuff your portfolio with this paper! Institutional investors may be tempted to buy into this hype, but it is not their own money and when the s**t hits the fan the fund managers responsible will long be gone.
Trump's 100-Year Bonds Contain Lots of Risks for Traders

28 April 2017

Checklist: Is your Private Banker/Fund Manager in the same boat?

Interesting question to ask when you do due diligence on your Private Banker or Fund Manager!
Is your Private Banker/Fund Manager in the same boat?

26 April 2017

Performance Comparisons: Danger of first Impression

Fund Supermarkets (or Platforms as they are sometimes called) are a massive step in the right direction, i.e. giving private investors more control over their investments. But apart from the problem that each one of these sites can only cover so many funds the performance comparisons can be difficult to interpret. In the example below one would have to know what exactly is meant when a Sterling bond fund is having the 'Extra Yield' words in its name. Does it really make sense to compare it to the Investment Association's 'Strategic' Sterling bond fund? Is one comparing apples and oranges? However small the difference between the two, the verdict on the fund could be heavily influenced by it.
Royal Sterling Extra Yield Bond Fund - Analysis by Hargreaves Lansdown

25 April 2017

Robo-Advisers - useful but not ultimate Solution

Robo-Advice - like the (related) growth in 'passive' investment strategies and vehicles - can be a worthwhile addition to any investor's toolbox. But the devil is in the detail - apart from the 64000 dollar question (The selection of the right investment strategy, sector etc) most Robo-Advisers (or Websites) can only cover a limited amount of available investment products. In the case of the recently-launched eVestor I notice with interest that they claim they 'invest with the largest investment companies in the world'. All very honest, but bigger is not always better!

Gold and Silver - how to store safely?

If you think that Precious Metals or Stones will protect your Wealth you have to be careful. And first of all make sure you don't get sold fake gold or silver!
How To Store Silver Bars & Coins At Home – Mike Maloney