old fashioned radio

Our past experiences affect our current investments

November 15, 2018

As human beings, we are influenced by all our past experiences. That means that our past experiences affect our current investments and other decisions. If your earliest investment experiences were during the 1970s — when interest rates were approaching 20% — you will forever think about investments differently than if your earliest investment experiences were during the dot.com bubble. This is why the research of behavioral economists like Nobelist Richard Thaler is so important for investors.

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Grim reaper

Collateralized debt obligations are back – that is scary!

October 26, 2018

Collateralized debt obligations rise from the dead A frightening Halloween development – the rise from the dead of collateralized debt obligations ( CDOs). These little darlings nearly brought down the entire financial system in 2008. But the fees that CDOs generate are just too attractive for financial firms to pass them up. And even if they blew up and contributed to the Great Recession, nobody went to jail.

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smartphone and investment decisions

Smartphone – bad investment decisions

October 24, 2018

Investment decisions based on smartphone research We think that using our smartphones to do research — including research for investment decisions — is a good thing. After all, how could using this tool to access more information be bad?   It turns out smartphones and investing go together like peanut butter and tuna fish. Two things that are just fine on their own but should not be combined.

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Regrets of creator of collateralized mortgage obligation

September 7, 2018

Lew Ranieri regrets creating the CMO “‘I’m the guy who played a central role in this home thing and I regret it because…it got abused beyond everybody’s imagination, ‘” says Lewis Ranieri, creator of the collateralized mortgage obligation (CMO), according to the Wall Street Journal. Ranieri’s creation of the CMO was nifty financial engineering by a sophisticated Wall Street investment banker that revolutionized the home mortgage market. But the CMO ended up being a financial weapon of mass destruction that crashed the global economy in 2008. The CMO brought us the Great Recession, from which we are still recovering.

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orangutan

Our brains cause us to make bad investment decisions

August 24, 2018

We invest like Dr. McCoy, not like Mr. Spock. As investors, we make bad investment decisions because we are emotional, distractible, impatient, and inconsistent. But that is not our fault. There are things that developed in our primitive brains that do not help us when we have to make decisions about complex matters like investments. Knowing how our brains are hard-wired can help us to avoid the tragic mistakes that we so often make in investing.

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gate with private sign

Private placements – great for broker, not so much for investor

June 25, 2018

Private Placements – what are they? Private placements can be stocks, limited partnership interests, or other securities issued by companies that are not publicly traded. Private placements can be investments in things like a single apartment complex, a single oil well, a basket of properties or oil wells, or a biotech company. The companies issuing these securities do not have to comply with many federal securities laws such as publicly filing their quarterly and annual financial statements. They are not required to provide ongoing disclosures to investors like public companies are. You cannot sell these securities on exchanges like the NASDAQ or NYSE when you need money.

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SEC seal

Regulation Best Interest is really Regulation Status Quo

April 24, 2018

Regulation Best Interest ? Under the SEC’s proposed Regulation Best Interest, the SEC says a broker-dealer would be required to act in the best interests of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. This is the SEC’s plan to displace the Department of Labor’s uniform fiduciary standard for retirement accounts which was adopted after YEARS of analysis.

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Bernie Madoff

Madoff ponzi scheme victims to recover more

April 12, 2018

$504 million more to victims of Madoff ponzi scheme. Madoff ponzi scheme victims are to receive another $504 million from assets that government seized after the collapse of one of the largest frauds in history. Payments to victims could reach $4 billion. Much of these funds were recovered from Madoff’s family and friends, Madoff’s bank J.P. Morgan Chase, and from wealthy investors who had cashed out billions of what turned out to be fictitious profits.

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Martin Shkreli

Martin Shkreli investor to recover losses

April 11, 2018

Shkreli investor to recover losses. A NJ federal court ordered convicted fraudster Martin Shkreli to pay one defrauded hedge fund investor about $388,000 in restitution. 

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Nun with ruler

Wells Fargo shamed by Nuns

April 6, 2018

Wells Fargo shamed by Nuns. Wells Fargo has been taken to task for failing to publicly report on the root causes that led to a rash of ethical lapses in recent years by an investor group led by the Interfaith Center on Corporate Responsibility and including about 20 religious organizations as well as state officials from Rhode Island and Connecticut.

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