I had an interesting conversation with my mutual fund adviser this morning, on the matter of why the current economy is in such a funk. In a time when most baby boomer retirees are looking to collect on their hefty funds, they stare dividend declines in the face, and there's not a damn thing we can do. Yet, there is a large contingency, including myself, that has been brought up by these baby boomers, who taught us to save, save, save, and I do, among many others that I know who are trying to commit as much of our paycheck to our retirement plan as possible, among the overwhelming amount of other outrageous expenses we all have nowadays.
When I asked my adviser if he thinks that the lack of efficiency in out financial system is the root cause of why the markets are crumbling, he said "Yeah that's a very large factor!" There was a certain confidence in his voice, that made me absolutely believe him. He went on to mention that when the "big boys" want to invest, they can do it, without delay, and that their money is immediately passed into the investments without processing, and stocks and the market can both be monitored and traded in almost real-time. Unlike, us, retail investors, who are forced to operate through corporate brokers, in order to invest, and often times these investments spend days if not weeks being processed, and there is no way for the average investor to analyze or monitor the market, and compete at all with said "big boys".
Confidence in investing means that the avenue that an investor uses to access investment must be a level playing field. Consider for example the old school marketplace. Trades were handled face-to-face, in person, and in real-time, thus allowing any buyer to see, feel, and have 100% confidence in that the investment would be put into action right at that moment. Now, in today's markets there are so many different market approaches, and 9 times out of 10 those markets are unseen, because they are operated by middle men (large corporate financial investment firms), and the markets are only available to them, and not the actual investor. Now because an individual is forced to use this system, he has to await processing of his money, in order for the firm to implement his investment. Processing takes time, and as they say time is money. If an investor knows about a good stock today, by tomorrow that stock may be a completely different story. And, that is where the confidence in the markets fails the economy.
Why is the individual investor's money processed? Why isn't the investment firm's assets placed in check like that of the individual? There is no confidence in the economy because the economic institutions don't have confidence in the buyers or the face-to-face consumers. Everything is kept in check, as if even hard assets are considered credit, until it is processed by a higher entity in the financial system. Not a single person wants to have confidence in something they cannot buy or sell on site. If it is not available at that time of value, what will its value be a few days later? Should he preserve their confidence in that product if they don't yet own it? Of course not.
In conclusion, it should be noted that in this day and age where our credit can be monitored faster then our ability to own stock, why can't the process of investments be improved. There is no excuse for our technologies to enhance this system, and make it safer, easier, and more substantial of a market for consumers and investors to invest in.
Showing posts with label investments. Show all posts
Showing posts with label investments. Show all posts
Monday, November 24, 2008
Saturday, November 15, 2008
The Solutions To Our Economic Problems
When it comes to the solutions of the world's economic problems it stems mostly from a deteriorating economy within the U.S., which was not too long ago the world's strongest economic leader. Today it seems that the organizational structure of not just the government, but also the entire infrastructure of the U.S. is fouled up, by less progressive thinkers, and simply leaders who just "do their jobs", so as to promote themselves, and move on to the next task to add to their egotistical resume. All the while, nothing, absolutely nothing is being resolved. It's as if those not leading are being paid a lot of lip service, in order to sustain a system that our leaders have no idea how to manage.
Obama, working on a weekend, today, announced to Congress that he wants some kind of a plan implemented immediately, in order to get the economy back from its coma-like state. He wants to create more jobs, and ease up financial pressures on already financially burdened families, yet the Congress still feels it can solve our problems by using the age old stimulis solution, of which it is not. What the Democratic congress does not seem to understand, is that in a time when a Democratic president-elect is trying to push better solutions, the Democratic Congress is still sitting on Bush's Republican fence of stimulus initiatives, which have been proven not to work at all, and are beginning to drive a bigger hole into our collective wallets.
The most important thing the U.S. government needs to do is to focus on pouring money into infrastructure. Don't just hand money over to the people directly, which isn't even that much money in the first place, when divided among millions of taxpayers. Drive the money into education, utilities, progressive energies. Promote more tangible investments into the private sectors that can develop toward these industries. What Americans, and their leaders need to do is withdraw from old industrial economy, and begin to think in terms of investing in not the concept of the future, saving our environment, or giving better pay to teachers, because the ramifications of not supporting a newly reformed economy go way beyond those premises. There is no need to support a financial system that reworks itself repeatedly, in order to just turn money into a larger amount of money, which in the long run does not create a consistent and solid foundation for any economy.
If you place our economy up against globalization, it fails to move forward, if at all. American workers are compelled to get in their cars each morning drive an average hour to work and back each day, in a technically wired world, where individuals have become successful starting up Fortune 500 companies in their garages. Yet, millions of people still contribute to the workforce in the age old industrial complex's demand for proximity workers, being in the office. Not only does this drive up our already heavy demand for more oil, but it is wasteful and inefficient to on the job time. As the author Thomas Friedman states, "The more the workforce feels mobile – in terms of health care, pension benefits, and life-long learning possibilities – the more it will be willing to jump into the new industries and new job niches…and to move from dying companies to thriving companies." With kids in school being diagnosed with ADD, Autism, or a plethora of other learning disabilities, employees in the technology sector jumping from job to job (due to fast paced changes in tech progress), and the growth of information flow, it would only make complete sense to rearrange the system around the workforce. Employment benefits nowadays are not only too static for the economy, fits the old industrial mold, and it is not flexible enough, and often is not transparent, not allowing employees, as well as employers to grow, learn or innovate.
So let the financial firms collapse under their own faults. There is also no need to support an auto industry that has failed to change its business model of many decades, simply on the premise that change would be too costly, and would not benefit other inter-related industries like oil, which depended so much on the auto industry. Shut off the supply of funds to these industries. They are old, they are outdated, they damage our environment, they resist progress, they are failing to profit, simply because they are no longer a benefit to any economy.
The economic signs are all pointing in the direction of wealth redistribution. Not for the sake of benefitting a new group of special interests, but simply for the fact that our current industry's structure is simply dysfunctional. It may have been prosperous and thriving 50 years ago, but in this day and age it is just plain old, and not competent to live up to all the new factors that were introduced in that past twenty years. A redistribution of investments, and interests in the aforementioned industries would be much more capable of promoting growth, not just financially, but also professionally for those who are responsible for building it. It would be a revival for the American economy, and by indirectly funneling finances into these new industries, a wealth of new jobs would be created, Wall Street would gain from an increase in tangible investments, and the economy would not just rebound, but would stand itself up, independently.
Obama, working on a weekend, today, announced to Congress that he wants some kind of a plan implemented immediately, in order to get the economy back from its coma-like state. He wants to create more jobs, and ease up financial pressures on already financially burdened families, yet the Congress still feels it can solve our problems by using the age old stimulis solution, of which it is not. What the Democratic congress does not seem to understand, is that in a time when a Democratic president-elect is trying to push better solutions, the Democratic Congress is still sitting on Bush's Republican fence of stimulus initiatives, which have been proven not to work at all, and are beginning to drive a bigger hole into our collective wallets.
The most important thing the U.S. government needs to do is to focus on pouring money into infrastructure. Don't just hand money over to the people directly, which isn't even that much money in the first place, when divided among millions of taxpayers. Drive the money into education, utilities, progressive energies. Promote more tangible investments into the private sectors that can develop toward these industries. What Americans, and their leaders need to do is withdraw from old industrial economy, and begin to think in terms of investing in not the concept of the future, saving our environment, or giving better pay to teachers, because the ramifications of not supporting a newly reformed economy go way beyond those premises. There is no need to support a financial system that reworks itself repeatedly, in order to just turn money into a larger amount of money, which in the long run does not create a consistent and solid foundation for any economy.
If you place our economy up against globalization, it fails to move forward, if at all. American workers are compelled to get in their cars each morning drive an average hour to work and back each day, in a technically wired world, where individuals have become successful starting up Fortune 500 companies in their garages. Yet, millions of people still contribute to the workforce in the age old industrial complex's demand for proximity workers, being in the office. Not only does this drive up our already heavy demand for more oil, but it is wasteful and inefficient to on the job time. As the author Thomas Friedman states, "The more the workforce feels mobile – in terms of health care, pension benefits, and life-long learning possibilities – the more it will be willing to jump into the new industries and new job niches…and to move from dying companies to thriving companies." With kids in school being diagnosed with ADD, Autism, or a plethora of other learning disabilities, employees in the technology sector jumping from job to job (due to fast paced changes in tech progress), and the growth of information flow, it would only make complete sense to rearrange the system around the workforce. Employment benefits nowadays are not only too static for the economy, fits the old industrial mold, and it is not flexible enough, and often is not transparent, not allowing employees, as well as employers to grow, learn or innovate.
So let the financial firms collapse under their own faults. There is also no need to support an auto industry that has failed to change its business model of many decades, simply on the premise that change would be too costly, and would not benefit other inter-related industries like oil, which depended so much on the auto industry. Shut off the supply of funds to these industries. They are old, they are outdated, they damage our environment, they resist progress, they are failing to profit, simply because they are no longer a benefit to any economy.
The economic signs are all pointing in the direction of wealth redistribution. Not for the sake of benefitting a new group of special interests, but simply for the fact that our current industry's structure is simply dysfunctional. It may have been prosperous and thriving 50 years ago, but in this day and age it is just plain old, and not competent to live up to all the new factors that were introduced in that past twenty years. A redistribution of investments, and interests in the aforementioned industries would be much more capable of promoting growth, not just financially, but also professionally for those who are responsible for building it. It would be a revival for the American economy, and by indirectly funneling finances into these new industries, a wealth of new jobs would be created, Wall Street would gain from an increase in tangible investments, and the economy would not just rebound, but would stand itself up, independently.
Friday, October 10, 2008
Confidence is Nothing Without Value
Headlines everywhere today, are discussing how investors need to hold out and keep a positive outlook on where the markets are going. For seven days straight, the markets have been in negative territory, and yet the general public is being asked to stay positive, instead of dealing with the reality of the situation. How can people possibly hold their heads above water, when governments are tossing money at financial institutions that are failing, not because they are losing money, but because the average investor can't remain confident in an institution that has been absorbing money faster than the investors can put back into it.
Blame Wall Street, and blame the government for not owning up to being responsible with money. It is nearly impossible to look at an investment portfolio these days, and confidently get a solid understanding of what it's doing. For example, today I accessed my 401K plan online, and looked over my portfolio. Talk about scant information! I had one table showing all my funds, bonds, stocks, etc., along with prices of the stock at purchase, and quantity of stock I owned. Fair enough. Then it shows way at the bottom, my total earnings on these investments. No current stock price, no market values, and no break down of gains or losses. The company that runs this online software is CitiSmithBarney, which when I opened the 401K, was just SmithBarney, and also not to mention, that when I log in, I get a disclaimer saying that ING has just completed its acquisition of CitiStreet, which is an affiliate of CitiGroup. My eyes began to cross after the acknowledgment of CitiSmithBarney.
Wait, there's more! Now I see my list of investments, and then decide I'm going to look the stocks up on Google's finance site, and I could only find four out of the ten items in there. For instance, I was looking to do more research on the value of one of the items, Western Asst Mgmt US Gov. What the hell is that? There was no corresponding stock symbol. Why is it abbreviated. It doesn't come up in a search on Google, and Western Asset's web site, does even list it as a product, unless it's been named something else. I couldn't find any contact information on the site, so that I could call someone, and ask my unfulfilled questions. What kind of operation is this?
It is very frustrating to see that a Wall Street company, that is responsible for millions of people's hard earned money, and makes millions in profits a day, can offer up such a lousy excuse for an investment portfolio. It's almost as if they don't want you to understand it, because then it would be a lot easier to manipulate your money to grant them more profit.
The lesson for Wall Street to learn today is to respect your customers, and show a little more consideration for those who keep your hefty paychecks rolling in. If there is no confidence in the market, then it's because people just don't know. We are given half rate information, and expecting our advisers to do their job, and make sure we are headed toward a more secure future. So much for that. Would you invest in something you were unsure of, or something you nothing about, and if you did invest, would you be sure that things were going well, considering you nothing about what was going on?
Even our government is not providing the confidence we need in the markets. Today, George W. Bush gave a speech in the Rose Garden, explaining to us, all the facets of a failing economy. He simply restated everything we already know, and is not providing Americans with a sound and consistent plan. It's been 2 weeks already since the plan has been put into place, and the market is just getting worse. What is the plan? Why isn't it working? Why are we being told to not worry about the economy, yet every morning we wake up to a market that is diving? More rules need to be in place holding the Treasury accountable for all purchases and bail outs. All transactions should be openly available online for the taxpayer to see, so that they know what their return will be if and when the market climbs out f the depths. Also, all Wall Street firms need to be handed regulation making robust information readily available to public investors. Information just as well structured, and easy to understand as that of Google's or Yahoo's financing sites.
Information is a powerful tool. It can be used to take advantage of certain situations by limiting the amount that is granted forthwith. It can also benefit those who want to be informed, in order to make better decisions, because if those who are limiting information are harnessing that power, then the less informed will fail to effectively support the systems to which they contribute.
Blame Wall Street, and blame the government for not owning up to being responsible with money. It is nearly impossible to look at an investment portfolio these days, and confidently get a solid understanding of what it's doing. For example, today I accessed my 401K plan online, and looked over my portfolio. Talk about scant information! I had one table showing all my funds, bonds, stocks, etc., along with prices of the stock at purchase, and quantity of stock I owned. Fair enough. Then it shows way at the bottom, my total earnings on these investments. No current stock price, no market values, and no break down of gains or losses. The company that runs this online software is CitiSmithBarney, which when I opened the 401K, was just SmithBarney, and also not to mention, that when I log in, I get a disclaimer saying that ING has just completed its acquisition of CitiStreet, which is an affiliate of CitiGroup. My eyes began to cross after the acknowledgment of CitiSmithBarney.
Wait, there's more! Now I see my list of investments, and then decide I'm going to look the stocks up on Google's finance site, and I could only find four out of the ten items in there. For instance, I was looking to do more research on the value of one of the items, Western Asst Mgmt US Gov. What the hell is that? There was no corresponding stock symbol. Why is it abbreviated. It doesn't come up in a search on Google, and Western Asset's web site, does even list it as a product, unless it's been named something else. I couldn't find any contact information on the site, so that I could call someone, and ask my unfulfilled questions. What kind of operation is this?
It is very frustrating to see that a Wall Street company, that is responsible for millions of people's hard earned money, and makes millions in profits a day, can offer up such a lousy excuse for an investment portfolio. It's almost as if they don't want you to understand it, because then it would be a lot easier to manipulate your money to grant them more profit.
The lesson for Wall Street to learn today is to respect your customers, and show a little more consideration for those who keep your hefty paychecks rolling in. If there is no confidence in the market, then it's because people just don't know. We are given half rate information, and expecting our advisers to do their job, and make sure we are headed toward a more secure future. So much for that. Would you invest in something you were unsure of, or something you nothing about, and if you did invest, would you be sure that things were going well, considering you nothing about what was going on?
Even our government is not providing the confidence we need in the markets. Today, George W. Bush gave a speech in the Rose Garden, explaining to us, all the facets of a failing economy. He simply restated everything we already know, and is not providing Americans with a sound and consistent plan. It's been 2 weeks already since the plan has been put into place, and the market is just getting worse. What is the plan? Why isn't it working? Why are we being told to not worry about the economy, yet every morning we wake up to a market that is diving? More rules need to be in place holding the Treasury accountable for all purchases and bail outs. All transactions should be openly available online for the taxpayer to see, so that they know what their return will be if and when the market climbs out f the depths. Also, all Wall Street firms need to be handed regulation making robust information readily available to public investors. Information just as well structured, and easy to understand as that of Google's or Yahoo's financing sites.
Information is a powerful tool. It can be used to take advantage of certain situations by limiting the amount that is granted forthwith. It can also benefit those who want to be informed, in order to make better decisions, because if those who are limiting information are harnessing that power, then the less informed will fail to effectively support the systems to which they contribute.
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