During the dot-com era, the SEC fined the largest 10 securities firms $1.4 billion for selling knowingly trash stocks to investors, even issuing glowing research reports while sending internal memos about the inability of these same companies to ever earn money.  A simple and clear case of investor fraud.  It was clear to all who looked at the evidence that the issue was black and white, that the large securities firms basically say “screw you” to their clients.  These firms really don’t care about creating value or morals of any sort.  Do you work for any of these firms? If so, leave.   The insurance industry of course is no better and the fines also total in the BILLIONS (just do a Google search on any large insurance company accompanied by the word “fine”).
Here’s another example at just how low these morals go.  The securities firm I worked for had a large menu of annuities to offer our clients.  But I complained once that the 5% commission should  not be placed on the “grid” with other products because the grid offered me a 45% payout and the firm kept 55% of the commission.  In the midst of this conversation, the guy from the annuity department let it slip that in fact, the firm received 6% from the insurance company and put 1% in its pocket before placing the other 5% on the payout grid. In other words, these firms not only don’t give a hoot about their clients, they are just as happy to deceive and steal from their employees.  The good news—you can leave.

If you’re an insurance professional, you can be independent.  If you’re an investment professional, you can operate on your own as an RIA.  You really can operate with some ethics and add value for your clients.
When in the securities business, at the big firm, I always viewed my role as insulating my clients from the garbage that the firm peddled.  I recall that Blackrock was issuing these closed end funds one after the other.  They always looked like crap to me (and almost 2 decades later, Blackrock still peddles garbage). But the brokers in the office kept selling them. I think a small portion of these advisors did not know any better and others did not care what kind of crap they sold their clients. When I left the firm, every one of those Blackrock funds was selling for less than the issue price and some a LOT less.   But their great marketing has allowed them to become the largest investment manager in the world by artfully peddling crap.

Unfortunately, the average investor is no smarter than Homer Simpson. These people have entered a game and they don’t know the rules.  Much like the guy who has never played poker before, he is enticed by the sharks to enter the game and bet big.  The sharks take the suckers money.

Don’t be passive about this and continue your complicit participation in this racket.  If you wonder how this can continue, it’s because you and thousands of others come to work each day and participate in this fleecing of the investor and insurance buyer.  As they say, you’re either part of the solution or part of the problem.  If in fact you have a strong moral compass, I will show you in later posts some very direct ways to convert this to a business advantage.  But for now, you need to plan on how to change your daily activities to be consistent with your values.

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Michael Price

Terry Roberts

Omega Multimedia Group

brandreprepair@gmail.com

Details can be found at http://www.ripoffreport.com/Search/omega-multimedia.aspx

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Try this idea on for size.  Sell what people want and you will always have work and always have money.  You must break yourself of this mindset that you have a set of skills or experience and that’s what you have to sell.  That’s way too limiting and will keep you poor.  Instead, ask yourself–what do people want?  If you supply what people want, they you will always make money.

If you want to know what people want, there are several ways to find out:

1. Look in the newspaper and see what ads are always there.  You might say “I see a lot of jobs for accountants but I don’t like that type of work.”  That’s the exact attitude that keeps you poor.  You are more interested in what YOU want than what OTHER people want.  Wake up–life is about serving others and they will pay your handsomely to do so.  If you want to stay wedded to your self serving desires of what you want, then get happy to be poor.

2. Ask people.  Ask people you know what they want (tip–ask rich people because they have more money).  Write down what they say. They may say they want to lose weight and they have not lost weight because when they prepare meals, they prepare meals they like (e.g. fried chicken) rather than the low calorie foods that would be healthful (e.g. broiled chicken).  Ask how much would they pay to have three meals delivered to them daily that would help them lose weight because they would not need to prepare any meals.  Maybe there’s a weight-loss food prep business waiting for you.

Another example. Companies want to increase their sales.  Find a product you like and ask the company if you can sell their product, commission only.  They will hire you fast because anything you sell helps them and they are happy to pay you for your results.

Do you get the idea? There are TONS of ways to make money if you ask the right question: what do people want?

Like many people, you may be thinking, “I don’t know how to do accounting or sell things or make food.” So what?  In the age of the Internet, you can learn anything in a matter of days.   If you are not willing to learn on your own or study, then that’s the second reason you’re out of work and have no money.

This is the age of self learning.  Those that can teach themselves will ALWAYS be able to learn something new, something that people want, and provide it. if you happened to get your first job as a loan processor and think that’s all you can do, then good luck because you’ll need it.  But if you say to yourself that you can teach yourself new skills and get off your butt, determine what people want, learn how to deliver it and then deliver it, money will never be a problem.

Post provided by Prospectmatch

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Hey wait a minute folks.  Isn’t the first rule of investing to diversify?  And didn’t you violate that rule Mr. and Mrs. cry-in-spilt-milk when you placed all of your money in one place?  And now you want the government, the same government that you always want to get off your back, to come a give you your money back?

And thus the illustration for America’s failed version of capitalism.  Everyone wants a free economy and lots of cheap credit until they are irresponsible and then want help from the government.   In order to keep the public complacent, the government shells out money:

1. to people like my step-son-in-law who enjoyed extended unemployment which has now run out and who turned down jobs because “they were beneath him.”
2. to people who signed mortgage documents without reading them or getting professional help (e.g. an attorney or accountant) to read and explain them (caveat emptor–let the buyer beware–a public warning so old it started in a language that is not longer spoken).
3. to keep auto companies running that pay people $70 in compensation and benefits when long lines of people will willingly take those jobs for $25/hour

And thus we live in the midst of the crumbling of the American economy.  This is our downhill ride to economic ruin, to significantly lower standards of living and a crisis far worse than the one we are in. Why?  Because the politicians and the public want to avoid pain at all costs.  But it’s not possible!

The obese person must have some discomfort when he goes on a diet, to correct his habit of eating to excess.  The drunk person gets a hangover the next day as his body sends a message “don’t drink to excess again.”  But the American public says, “I just want to stay stupid, spend money I don’t have and enjoy the my standard of living which I don’t deserve and I don’t want ANY discomfort” and our government accommodates them.

The child learns early form a quick burn not to touch the stove top.  This painful lesson keeps him from walking into fires as he grows and the lesson helps him survive.  When people or an economy are not permitted to feel pain, the same errors will be repeated because the lesson does not get learned and they do not survive.

Post courtesy of prospectmatch

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You can only grab this investment opportunity if you have cash or are generating cash.  If you generate enough income to save each month, invest into mutual funds with a systematic investment program.  If you have cash, invest in stocks that cannot fail. Stocks to invest: Citicorp, Bank of America and JP Morgan.  The US Government has no choice but to keep these institutions alive and privately owned and will go to all lengths to support them.  These three institutions are the spine of the financial system.  Other no-brainer stock investments are supermarkets (people have to eat and buy MORE from supermarkets in a bad economy as they eat out less), movie theatre chains or production companies (the cheapest form of entertainment is movies and attendance and purchase of movies thrive in a bad economy), consumer product companies like Proctor and Gamble (people still keep buying Tide to wash their clothes).  You get the idea. Invest ins stocks that produce products and services that are absolutely essential and economically insensitive.  Even these stocks are at records lows for no logical reason.  And that’s the beauty of a bust–while everyone else is illogical, those that are rational get rich.

Your timing is not critical.  Even if you buy early and prices fall further, you’re buying quality merchandise while its price has overshot true value to the downside.  Hesitate or get rich.

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The new reality is explained in our article on the financial crisis.

Financial advisors build your business at ProspectMatch

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In five years, after giving tens of millions to the banking and auto industries, we will still have an inefficient auto industry and incompetent bankers. The auto companies are so poorly constructed  that they can only make money if they run at 90+% of capacity (i.e. they are designed to sell 17 million cars and if sales drop below 16 million, they start losing money). These companies cannot weather economic downturns and through our bailouts we will have saved one million jobs of people that generate negative output—i.e. the auto companies lose money keeping these people employed thereby subsidizing jobs that should not exist.  We will still have the same morons running banks—people who lent money to foreign countries in the 80s , countries that had no visible means of repayment (and got bailed out by the US government) only to do the same with homeowners 25 years later.

Where will China be in five years?  They will have new airports to support travel of their own residents and tourists that bring hard currency, they will have roads and other infrastructure to support economic growth of industry.

China will have something to show for their investment, we will have nothing so show for our investment. China embarrasses America because they are far better capitalists than us.

ProspectMatch

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This describes the US economy.  So much debt has accumulated that we now weigh 300 pounds.  It won’t work for us to stop increasing the debt or have the economy stand still.  We need to lose some weight.  How much weight?  Let’s assume that all of the people who purchased homes for 5% down needed to put a more reasonable 20% down and everything that Americans have purchased on credit required a 20% down payment.  That’s how much we need to contract—to a point where people have 20% equity in everything they own.

This amounts to trillions of dollars of contraction that could take several years of shedding debt.  Just as you don’t gain 300 pounds in a few weeks, we piled on this debt over the last two decades.  People have lost all sense of living within their means as has the governments (federal, state and local).  The math just does not work to earn $50,000 yet spend $60,000.  The jig is up and it’s time for the painful crash diet.

To the extent that politicians want to make this easy will just create more problems—like telling the 300 pound person that if they just don’t gain any more weight, they will be okay.  The obese person won’t be okay.  They need to lose 100 pounds or more to get down to a weight that will sustain reasonable health.

What this means is–General Motors needs to fail because people cannot afford to buy more cars, Circuit City needs to go under because people have purchased more electronic junk than they can afford or need, most home builders need to go bankrupt and unemployment needs to get to 12% or more as businesses that exist based on excessive consumption no longer survive.  Man, it’s painful but trying to avoid this with the government feeding us more won’t work.

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The brokerage industry always seeks a magic bullet to insulate its revenue stream from the markets and it looks like the fee based model has its flaws as the single solution.

Our thoughts are as follows.

Investment professionals who interact with retail clients do not manage portfolios, they manage relationships.  As such, you need to be a psychologist much more than a “financial” advisor.  People hate volatility–it messes with their psychology.  So the first order of business is to ALWAYS build balanced portfolios.  Yes, we all know that your clients will make more over time if they have 100% equities.  The only problem is they won’t be your clients very long because there are few investors that can tolerate the volatility of a simple S&P 500 Index fund.   By having a healthy dose (e.g. 50%) of fixed income instruments in their portfolios, you will retain clients in down markets.  The public is much more sensitive to pain (i.e. losing money) than they are to pleasure (making money).  You won’t lose clients if the market is up 20% and the client only sees a 12% gain in their account.

Additionally, you will keep clients if they understand the model for their portfolio.  If you hand the money off to a third party manager who says they analyze stocks and make buy and sell decisions based on their “brilliant analysis,” you have a problem.  The client does not understand the model being used to manage their money.  But if you use a model they can understand and explain it annually (they will forget unless you repeat it), they will never leave.  Such models would be the Dow Dividend strategy, the S&P 5 star portfolio, the Value Line #1 ranked stocks, etc.  These are easy to explain and understand models that are transparent.  Once your client buys into the sense of the model, you are no longer responsible for performance because they agreed that the model makes perfect sense.  You just need to remind them annually how the model works and have them agree again that it makes a lot of sense to manage their portfolio in that fashion.  Next time you lose a client, ask yourself, “Did they understand how their portfolio was managed or was it an uncertain black box to them?”

Fee Based Advisors, gain more prospects at ProspectMatch

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No doubt people were greedy. There were even people who were dishonest.  I am sure that plenty of mortgage brokers misrepresented terms of the loan to uneducated borrowers who did not read the loan documents.  The sheer number of lawsuits against Countrywide and the demise of Ameriquest indicate there was plenty of wrongdoing in with respect to subprime borrowers.

But does greed alone explain how we got into our financial mess or is another force at work?  There is another force at work other than greed and no one wants to say it.  It’s a word that is taboo in our culture.  It borders on being so offensive that it’s almost tantamount to a racial slur.  But what’s true must be said.  Much of this financial crisis was caused by people who are just plain STUPID.

In any transaction, there are two parties—the supposed greedy seller and the buyer.  If the greedy seller prevails, then what adjective do we use for the buyer?  In order to be taken advantage of, the buyer must be at least gullible, or let’s just say it, stupid.

If someone could not understand their loan documents and went ahead and signed them and did not have the money to hire an attorney to protect their interests, then maybe they had no business buying a home?  Maybe, they are just too stupid to be a homeowner and unprepared to fully participate in a capitalist economy.

What about the guy who decided to purchase a block of mortgages for his insurance company’s portfolio and didn’t ask about the underlying mortgages?  Or maybe he did ask and was told these mortgages were 100% loan-to-value and he bought them anyway.  Would it be out of line to call that guy STUPID?

What about the bankers who made those loans and kept these loans in their portfolio?  How STUPID could one be to lend money to someone who had placed no money in the deal.  Would you be that lender? I think not because you are not stupid.

What about the analyst at S&P, Moodys or Fitch that gave these pools of mortgages with little or no equity a AAA rating?  Did he miss that many finance classes in college or is he just plain stupid?  Or did he know better but stupidly succumbed to his boss’s pressure to overrate the securities?  Somebody, somewhere had to be spineless moron.

In America, we have too many people who are just plain stupid.  They can’t think.  A perfect example is Sarah Palin.  Regardless of your political leanings, she is a MORON and while you might like her, you don’t vote for stupid people to run the country.  It’s just not smart!

One of the first rules of a free economy is caveat emptor—let the buyer beware.  But buyers have become so complacent, thinking that the government will look out for them.  AIN’T no one looking out for you!

It’s time people got smart, made sure people they deal with others who are smart, elected people who are smart to govern them and we start penalizing people who are just plain stupid.

There are a lot of nice people that are stupid. and they deserve to be treated with respect and honor.  But they don’t deserve to have your hard-earned tax dollars given to them to bail them out of a mortgage note they should have never signed, to get unemployment checks with your tax dollars because they were too stupid to hold onto or get a job and they don’t deserve to have the same benefits that you do if you work hard to make smart choices.

Stupidity is very costly and other people’s stupidity might even kill you.  It could come from the guy at the FDA who stupidly approves a drug that kills you or some guy in charge of food safety who allows tainted meat to get into your refrigerator or some guy on the night shift at the nuclear power plant who forgets to close a valve and your entire neighborhood gets poisoned with radiation (oh yeh, that already happened in Chernobyl).

We have allow stupidity to go unchecked and run rampant so that we don’t have enough brains to go around.  We’ve got people in very responsible positions, people you depend on for your very life, who are simply not prepared.

This is a brazen indictment of many.  But those who are first to say that the emperor has no clothes are often castigated while others still want to believe that the emperor is immaculately dressed.

Note that this post is not the official corporate opinion of Javelin Marketing.  It is the writer’s personal opinion.

P.S. If you doubt that stupid people caused trillions of dollars in losses, just read this New Yor Times article “from Midwest to M.T.A. Pain form Global Gamble” http://www.nytimes.com/2008/11/02/business/02global.html?_r=1&scp=1&sq=from%20midwest%20to%20m.t.a.&st=cse&oref=slogin
In the article, one member of the school board, a FINANCIAL ADVISER, says “I’ve never read the prospectus” yet he voted to gamble the entire school board’s existence.

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