Volatility speculation (and hedging) seems to be in fashion. Take the ProShares Ultra Short-term VIX ETF for example. The fund seeks to deliver 1.5X the performance of the short-term VIX futures contract. The fund isn’t terribly large with only $300 million in assets, but consider these volume figures. In 2016, the ETF traded 51 million shares. In 2017, volume increased to 814 million shares. Then last year, volume soared to over 2 billion shares. At an average price of about $60 per share, the dollar volume of the ETF was about $120 billion, or 400X the assets in the fund. You read that … [Read more...]
Is Your Grandma Getting Scammed?
Elder financial abuse is a rapidly growing problem in America. As the population ages, and wealthy boomers retire, they are being taken advantage of by unscrupulous scammers. Last year banks reported over 24 thousand cases of elder financial abuse in America. That's more than double the totals from only five years ago. Americans can fight such elder financial abuse by working with a reliable advisor earlier in life to build an investment plan that is right for them, and will stand the test of time as they age. Those advisors should absolutely be held to a fiduciary standard. If you ask your … [Read more...]
“Trees Don’t Grow to the Sky and I see Clouds…”
In Springsteen on Broadway now showing on Netflix, Bruce Springsteen talks fondly of a big copper beech tree in front of his childhood home that was a symbol of times when he was able to escape life for a little while and be with his army men and play. Years later when writing his book, he jumps in his car and goes back to where he grew up and that big ‘ole tree was gone. It’s a powerful segment in his wonderful performance. One that’s still with me and one I think you will love too. Trees don’t grow to the sky. And sometimes they’re cut down. But in the case of Springsteen, the soul … [Read more...]
The Dangers of Being Unemployed and Older
It's harder for older workers who have lost their jobs to get back to work. According to Ruth Simon in The Wall Street Journal "Nearly eight million older Americans are out of work or stuck in low-quality jobs." The problem with unemployment at an older age is the lack of time to make up for any mistakes. With retirement age right around the corner, you should be packing away as much savings as possible. Those years should be your peak earning years as well, but unfortunately, some older workers who have lost their jobs are still struggling to find new ones. The sad reality is that when … [Read more...]
Cryptocosm and Life After Google Part IV
You’re witnessing what happens when markets dry-up as shown here with bitcoin (see chart below). I've been warning readers about what George Gilder calls the "cryptocosm." (Read Parts I, II and III). If you have been hitching your wagon to cryptocurrencies, you might have been enduring a rude awakening this week. Steven Russolillo, writing at The Wall Street Journal, calls it bitcoin's "Week from Hell." He explains Now, another worry has emerged: Cryptocurrency miners, the outfits that solve complex equations to generate new digital coins, seem to be losing interest. The amount of … [Read more...]
You Must Save for Yourself, Because No One Else Will
In 1991, 35% of employees were participating in defined benefit pension plans. By 2005 that number had fallen to 21%. In March of 2018 only 17% of American employees had access to some sort of defined benefit pension plan. Companies are getting rid of their defined benefit pension plans, fast. If you rely on your company to save for you, it's time for a dose of reality, you must save for yourself, because no one else will. Pensioners from legacy companies Sears and Xerox are watching as their benefits are being stripped away. Around 100,000 pensioners from Sears are hoping the Pension … [Read more...]
Buyer Beware: Goldman Goes Retail
Goldman Sachs has signaled it is taking a step down to provide services to the masses. With online banking offerings, mutual funds and ETFs, Goldman is looking to widen its customer base. The investment bank may even have a robo-advisor offering clients advice, reports CNBC: While the bank hasn't officially said what form the product will take, one option is a robo-advisor, according to people with knowledge of the plans. Most robo-advisors have low or no account minimums to start investing. Presumably, the company could offer mutual funds and ETFs created in-house through its digital … [Read more...]
California Pensions Continue to Make Headlines
Is there a more Machiavellian story than this? We’re talking about a fiduciary responsibility in the many billions of dollars. Is anyone paying attention? The Wall Street Journal's Heather Gillers reports: In what was otherwise a lighthearted question-and-answer session at a staff meeting this month, Marcie Frost turned serious. After rising from a clerical position in Washington state government to head the largest pension fund in the country, the California Public Employees’ Retirement System, Ms. Frost had been the subject of reports questioning how she had presented her educational … [Read more...]
My Personal View on Fidelity Investments for You
Ned Johnson was CEO back in the mid-90’s when I worked at Fidelity Investments. Today the CEO is his daughter Abby. What hasn’t changed at Fidelity is its commitment to invest in technology to help give it an edge. John Tlumacki writes for the Boston Globe: Johnson said that when her father, Ned Johnson, launched FCAT in 1999, the goal was to help clients and employees explore emerging technologies that could help spur Fidelity’s growth. Among FCAT’s more recent initiatives: a virtual reality experiment known as “Cora” — created in partnership with Amazon Web Services — that could provide … [Read more...]
Failed Fiduciary Rule Spells Caution for You
Time and time again the leadership at big brokerage houses and insurance companies seem to have their own best interests in mind rather than their clients'. They allow their army of salesmen to prey upon the public, cloaked in fancy names such as Advisor with an “O”, Sr. VPs, and/or you fill in the blank with an “important title” while following a less strict “suitability” rule. I have explained the benefits of the fiduciary rule to readers before. See here, here, and here for an introduction to the idea. Like clockwork they fail to look out for those they’re supposed to serve, YOU, the … [Read more...]
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