Investment Articles

Over the course of the last two decades in the financial industry, I have had good fortune, and yes, bad fortune in learning about the realities of investments. When I speak with investors, it’s not uncommon for some people to insist on certain delusions they have accumulated regarding the subject. This article is an effort to give you some the characteristics of any investment proposal that deserves your careful scrutiny and distrust.

Most investment scams have certain characteristics in common:

1. Secrecy – Any investment program that is worth anything can stand up to the scrutiny of financial advisors, accountants, attorneys and anybody else with some investment acumen. Many scams create this confidentiality to give the investor the feeling that they are “on the inside,” privy to investments only available to wealthy families or a select group of fortunate people. The confidentiality requirement is designed to prevent you from communicating with others about your involvement so you will keep believing what the scammers are telling you.

2. High Returns – What rates of return should a person receive for investing money? Well, if it sounds too good to be true, it probably is. While 20% returns may be possible for very speculative investments under certain circumstances, anything beyond that is simply not real over time. If any return on investment is greater than what would normally be earned on that type of asset, it is a good indicator that something isn’t right. Consult a knowledgeable financial advisor of your investment plans if you have any doubt.

3. No Track Record – Any investment program should have returns that can be verified by a reputable third party, such as an accounting or law firm. Further, the principals of the program should have fully verified backgrounds with a proven record of successful past investment programs. Moreover, any start-up would have a logical product and a complete business plan replete with reasonable financials and marketing plan. If there is no track record, forget it.

4. Lack of Full Documentation – Any legitimate investment has full documentation, including a prospectus (a document that explains the details of an investment) or offering memorandum (which is for private placement programs, investment programs that are made available to qualified investors and not to the general investor public). Complete contracts would also be provided carefully covering all of the details of the proposed investment. Insist on full disclosure.

5. Guarantees – To my knowledge, the only investments that provide guarantees are insurance policies. If someone is offering you guaranteed returns or a personal guarantee, it’s not worth anything. If you lose your money in the investment, the personal guarantee is only as good as the assets of the person issuing the guarantee (if they had the money for the guarantee, why would they need yours?)

6. No Registration with Regulating Authorities – In order to offer an investment to the public, in most cases, the principal creating such an investment will have to register it with the State. Further, the person selling the investment will have to be registered with the State as a securities salesperson or investment advisor. Lack of such registration is a red flag.

7. Offshore Tax Benefits – For American citizens, there are no offshore tax havens. In other words, US citizens are taxed on worldwide income, regardless of the source. Anyone stating that you can save or avoid income taxes by moving offshore is just dead wrong. There is no surer way of creating a problem than attempting to evade taxes. While there are asset protection reasons to use offshore entities, there are no legitimate income tax saving strategies offered offshore that cannot be done domestically.

I know I said 7 tips, but I thought of one more…

8. International Lure – Investing internationally has a certain allure to it. It’s exotic and different. The only problem is that you transfer your assets overseas and the chance of getting them back may be zilch. The complexities of international financial regulations and laws make it a great justification for someone to not be able to deliver on intended investment results. Just keep your money closer to home.

Greed and Desperation

People invest in these programs due to desperation for money or the desire of getting something for nothing. The way to wealth is through investing wisely in your own ability and production and being intelligent enough to not spend everything you make. Falling victim to any investment scam can be a significant setback to your quality of life. Just don’t play that game. Learn the natural laws of money and apply them and you will be where you want to be in due course.

And if you feel that you are far too beholden to your creditors, maybe it’s time to do something about it. Christopher Music has helped many professionals gain control over their finances and achieve financial freedom — or at least move steadily in that direction. For more information on how you too can loosen your creditors’ grip on your pocketbook, visit Christopher’s website at http://www.wealthadvisoryassociates.com.

Wealth Advisory Associates, LLC is a Florida Registered Investment Advisory Firm and only transacts business in states where it is properly registered or notice filed, or excluded or exempted from registration requirements.

As the dust settles from the Wall Street meltdown of 2008, the average investor needs to chart a course that threads its way through future growth and perils. Simply relying on the old investment adages may not be the wisest course. Here’s some things to think about.

(1) Wall Street is not your friend. At this point, it should come as no surprise that the goal on Wall Street is to make money for Wall Street, rather than giving investment advice that the average investor can actually benefit from. Washington makes a lot of noise about reform, but don’t hold your breath about anything happening. We have gone through two major Wall Street screw ups since 2000 that cost most individual investors a good chunk of their portfolios. First was the attempt to convince everyone that there was a “new math” on how to value companies that had some relationship to the internet and, after that didn’t exactly work out, Wall Street moved to use the environment of easy money to package high risk real estate mortgages that fell apart when real estate values started to decline. Even though most investors never owned internet stocks or CDO’s, the collapse of these products helped drive down the stock market in general. To thrive, Wall Street must continue to find and distribute economic “hot spot” products. A good bet in the future might be derivatives created from “cap and trade.” After all, trading air seems ready made for the street.

(2) Take a new look at “asset allocation.” Although asset allocation models do not ensure a profit or protect against a loss, they have become the standard of investment models for many investors. The theory itself is over 50 years old. The world has changed since Dwight Eisenhower was in the White House. Thanks to a developing global economy, asset class correlations are becoming more similar and this increases volatility in a portfolio. Don’t exit asset allocation like the last helicopter out of Saigon, but do avoid the rigid “pigeon holing” of asset classes that’s become prevalent in asset allocation design. Investment managers today need the flexibility to move a little if the asset class returns really moves against them. You can’t take your boat out without a life preserver on board. Your portfolio should be no different.

(3) Does passive indexing investing still work? Index investing was the “flavor of the month” back in the 1990’s when proponents of “efficient markets” promoted that it was so difficult to beat the market that everyone’s best bet was simply to mirror a market index and go to the beach. Today, the market is full of inefficiencies and with the S&P 500 flat lining over the last decade, it’s time to pour the sand out of your shoes and get back in the game.

(4) Portfolio “compression” is the next best idea. The average investor doesn’t need to squeeze all the upside out of a bull market as long as there’s some protection against the next bear. Cutting portfolio volatility should be on your new year’s resolution list. The future market road will continue to be rough and rocky roads generally demand good shock absorbers. If you are a competent investment mechanic, by all means install them yourself. If you need a qualified mechanic, seek one out. If you enjoy a really rough ride, just hang on with your current portfolio. You may get a few teeth knocked out, but that’s not what’s going to hurt the most.

Although the stock market is going through a tough patch, it’s still where a lot of the action is to outpace inflation and grow funds for the future. No promises, no guarantees, but that’s always been the story from the beginning. Going forward, caution will be your best friend. One old adage you will still be able to hold near and dear is that if it looks too good, it probably is.

Glenn (”Chip”) Dahlke, a senior contributor to the Living Trust Network, has 30 years in the investment business.

Copyright 2010. Living Trust Network, LLC. All Rights Reserved

As the resident ETF expert, I’m always on the lookout for new ways to make money with these wonderful financial tools. Some of the most exciting developments over the last few years are the leveraged and inverse ETFs.

As a regular reader of the Dynamic Wealth Report, you’ve seen me write about these before. I’m a big fan of leveraged and inverse ETFs. But I’m sorry to say if you have a managed account at some big bank or brokerage, you’ll never hear about some of the most exciting new products. It’s not because your broker doesn’t want you to make money. It’s not because he doesn’t know about these products (the smarter brokers do). They’re not allowed to offer these ETFs to anyone.

Here’s the deal.

Regulators are turning up the heat on anyone involved with leveraged ETFs. The list includes the ETF providers like Profunds’ ProShares and Deutsche Bank’s Powershares. They’re also looking at brokers and the exchanges. All of the extra attention from regulators has some major players running scared.

Take Wells Fargo for example. They’re no longer offering leveraged or inverse ETFs to anyone with a managed account. And Deutsche Bank is shutting down one of its most popular leveraged ETFs.

The reason brokers are pulling these products off the shelf is FINRA (Financial Industry Regulatory Authority). They sent a ’shot across the bow’ of brokers reminding them they’re looking over their shoulder. And it got everyone’s attention.

FINRA’s main point of contention is the investor’s suitability to these types of investments. The fact is leveraged ETFs deliver the targeted return for one day. But the relationship can breakdown over time periods longer than a single day. And the effects are amplified in times of increased volatility, like we’ve had the past year.

Their conclusion is leveraged and inverse ETFs aren’t suitable for buy-and-hold investors with a long term time horizon. (But if you’ve read the prospectus or their website, you’d already know this.)

The truth is I don’t think regulators are done, not by a long shot. It’s going to get more difficult to trade leveraged and inverse ETFs. In the not so distant future, you’ll need specific approval, like option trading already requires, to trade them.

In the last six days, the S&P 500 is up just under 5%, but UPRO is up better than 15%.

It’s a great way to turn a decent profit into a windfall. And you can do it in a short time frame.

As long as you understand these ETFs, they can deliver some impressive gains. In my opinion, they’re best used for speculation with a short time horizon. Make sure you take the time to understand the regulator’s ‘game’. You don’t want to be left on the outside looking in…

Corey Williams is the co-editor of the Dynamic Wealth Report, a free investment newsletter that offers investment ideas and news you can’t get from the mainstream investment press. Corey and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today. In addition to leveraged etfs trade ideas, you’ll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit. For more information on a FREE subscription to the Dynamic Wealth Report, please visit: http://www.DynamicWealthReport.com/new.htm

Investors are once again turning their attention overseas. The US Dollar is crumbling in value. And, the global recession appears to be near an end. While the US markets are up nicely, it’s nothing like the returns we’re seeing overseas.

One area of hot growth before the recession was India.

Smart investors riding this red hot economy were making money hand over fist. From 2003 to 2006, the market tripled in value… then doubled in value again in less than 18 months.

Investing in India is spectacular and scary all at the same time.

Risk taking is catching on again.

Investors are looking for big returns. India’s showing some interesting economic data. The Bombay Sensex is up 68% year to date.

Some think India looks like a great place to invest… could they be right?

India is one of the fastest growing economies in the world. Just look at their GDP growth over the last few years.
In 2005, it was over 7%.

GDP growth was over 9% in 2006, 2007, and 2008.

But, the country is estimating 2009 growth around 6%.

Should we be worried?

While any slowdown in economic growth gives me pause, remember investing in everything is relative. What do I mean by that? Simply, looking at numbers in a vacuum is worthless. We need to know how these GDP numbers compare to others.

For example, the US GDP estimates for 2009 are downright sad. Right now, estimates for the US are for a contraction of nearly 2%. The UK, and EuroZone are also estimating negative GDP rates for 2009.

Taken in this context, India’s GDP growth rate is downright amazing.

So, the drop in India’s GDP doesn’t scare me.

What scares me is runaway government spending. The Indian government recently announced a $210 billion budget. A lot of it is earmarked for social welfare programs. It increases total spending some 16% from the prior year.

It also increases the federal deficit to the highest levels in 18 years!

I’m not alone in my fear. The day the budget was announced, the Bombay Stock Exchange fell 5.8%. Clearly, Indian investors are also concerned.

There’s also another problem with India.

No one seems to know what the government’s stance is on international investment.

Right now is a critical stage in India’s development. They need to open the country to more international investment. They need to attract corporations and encourage expansion into their country. Without it, growth rates will slow.

This is an important unresolved issue… but not the only one.

India also has problems with their sovereign debt ratings. When the budget was announced, several ratings agencies started looking closely at India’s debt. If these debt instruments get downgraded, we’ll see money flow out of the country.

Clearly, investing in India’s not a slam dunk.

India’s economy is growing fast… but problems with debt ratings, government budgets, and international investment have some concerned.

Personally, I think the potential rewards are worth the risk. One easy way to capture the growth in India is with a country ETF. The iPath MSCI India Index ETN (INP) offers broad exposure. It’s comprised of 60 leading Indian companies.

Since the lows set in the first quarter, INP is up more than 100%. This is a great return but it still has more room to run.

I happen to also like the Indian currency – the Rupee. I think it’s poised for a big move higher. Savvy currency investors should look closely at this opportunity.

Brian Mikes is the editor of the Dynamic Wealth Report, one of the world’s most popular investment newsletters that offers investment ideas and news you can’t get from the mainstream press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today. In addition to india gdp trade ideas, you’ll also receive FREE updates on penny stocks, options, ETFs, commodities and currencies that offer the best opportunity for immediate profit.

For more information on a FREE subscription to the Dynamic Wealth Report, please visit: http://www.DynamicWealthReport.com/new.htm

A good investment advisor can make financial decision making a hassle-free experience-and help you develop the peace-of-mind to sleep well at night regardless of what happened in the stock market during the day. Since investment advice comes in many flavors, the challenge is to find the one that is right for you.

The Trouble With Titles

Do you need a broker, a financial planner, or an investment advisor? While these titles are often used interchangeably, the services provided by each of these professionals are often quite different. Brokers’ help investors buy and sell securities. Financial planners help investors prepare strategies for specific goals, such as retirement, and investment advisors provide advice for a fee. Of course, it is a bit more complicated than it first appears. Many of the investment professionals who you might think of as brokers are actually financial planners, just as some planners are actually brokers in disguise. To further complicate matters, most investment advisors are also financial planners, but only some financial planners are investment advisors. Investment advisors, of course, are available in numerous makes and models-some provide advice on just a single topic, such as tax-aware investing, while others offer complete financial planning services. Confused yet?

It’s a Lot Simpler Than it Seems

Forget the titles and their definitions for a minute and think about what it is that you want from a financial services professional. To find someone who can help guide your investment decisions, begin the search with a strict focus on your needs. Are you seeking advice about a single topic such as buying or selling a security? Are you planning your estate, planning for retirement or purchasing insurance? Are you in a high-tax bracket and looking to minimize the impact of taxes on your portfolio? Do you need guidance in creating a financial plan that encompasses all of these issues and more? Once you have a good idea of the types of services you need, you will be much better prepared to find an advisor who offers those services. If you are not exactly sure what you need, find an advisor who offers a full-range of services and let the advisor help you review your situation.

Ask the Right Questions

Once you have found an investment professional that can meet your needs, be sure to ask the following questions before you invest:

What are your qualifications? While there are no uniform credentials for financial services professionals, experience counts. In addition to experience, professional designations are often a good sign that the advisor takes his or her career seriously.

Have you ever been disciplined by any government regulator for unethical or improper conduct? Although disciplinary action does not necessarily mean that this advisor will steer you wrong, there are just too many honest advisors out there to risk your money by taking unnecessary chances. Ask to see a copy of the advisor’s “Form ADV” before you invest. The ADV will show you whether the advisor has been disciplined.

Whom do you work for? An increasing number of investors are making the decision to invest with independent advisors-that is, advisors who do not work for a big company, but instead founded their own small businesses. Independent professionals are not constrained by the need to support corporate business decisions, so they often have access to a much broader array of investment options than can be found at a big brokerage firm. Furthermore, because independent shops don’t have the name recognition and marketing muscle of a national brokerage, odds are that they have to provide good service if they want to develop a solid reputation in the community and stay in business for any length of time.

How are you paid? For investment professionals, compensation can come in many forms. Common compensation methods include: Fee: Fee-based advisors either charge a percentage based on the value of the assets they manage for you, an hourly consulting fee or a fixed fee. Commission: Commission-based advisors earn a commission on securities they sell. Fee and Commission: Fee and commission-based advisors receive a combination of fees and commission for their services. Before you sign any papers, ask your advisor how he or she is compensated and how that method of compensation benefits investors.

The Bottom Line

Selecting a good advisor is not difficult; it just requires a little thought and patience. The right financial advisor can help you make investment decisions that have a lasting and meaningful impact on your life. Therefore, before you rush out and make an investment, take the time to choose your advisor carefully-after all, it is your money and your future.

Financial Management Strategies (FMS) is a Registered Investment Advisory firm in the State of Maryland. We specialize in comprehensive wealth management and wealth preservation for individuals and small businesses, providing premium services in financial planning, business consulting, financial analysis and research, wealth management and real estate development.

Mr. Petiri is a Registered Investment Advisor. His nearly two decades of financial experience covers virtually all areas of finance from tax, insurance, stockbrokerage, personal financial planning and personal banking to corporate credit, business planning and consumer lending.

Tucker & Cowen Solicitors have been recently engaged by the liquidators of Storm Financial Limited, one of the largest financial services companies in Australia.

In 2008, Storm Financial Limited (”Storm”) was a company with some 14,000 clients under investment advice, well over a billion dollars of funds under management, and as at 30 June 2008 had an audited net profit of approximately $28 million.

By 9 January 2009, administrators had been appointed to the company, clients were threatening law suits for substantial losses, over $500 million in equity for clients had been wiped out and the business was insolvent and in ruins. Over $100 million in claims have been submitted to the liquidator for consideration at this time, and the assets seem unlikely to discharge the main secured banks’ indebtedness let alone meet any of the claims of unsecured creditors.

Tucker & Cowen Solicitors have been engaged by the liquidators, Messrs Khatri and Worrell of Worrells Solvency & Forensic Accountants, to investigate the collapse of the company and to assist in its winding up.

As is now well known, throughout 2008, share markets worldwide suffered significant downturns, the greatest seen since the Great Depression of the early 1930s. Storm was a financial advising company, whose principal strategy consisted of “gearing” by borrowing against real estate or other assets to invest in managed index funds, and then defer the gear up against that investment by taking out margin loans. Many Storm clients were therefore geared well in excess of 50% against the total value of their investments, which of course proves catastrophic with an approximate decline in the Australian All Ordinaries Index of 47% throughout calendar 2008.

The Regulator – ASIC

Given that Storm held a financial services licence to advise clients from the Australian Government regulator, the Australian Securities and Investments Commission (”ASIC”), it is unsurprising that the regulator took a considerable interest in the liquidation. Indeed, the regulator’s detailed investigations had begun slightly before the appointment of the administrators on 9 January 2009 by private examinations commenced in December 2008. ASIC provided funding to Tucker & Cowen Solicitors and Worrells for the purpose of investigations, and of conducting a lengthy examination.

We conducted an examination that went for well over a month of hearing days in the Federal Court of Australia, examining the directors, officers, bankers, insurers, senior investment advisers, clients and others to determine the cause of the collapse, the consequences of the collapse, and to investigate potential prosecutions under the Corporations Law and other securities laws against any persons who may have contravened those provisions.

Those investigations are still at a preliminary stage. We are presently assisting the liquidators to prepare their final reports to ASIC in relation to the nature and causes of the collapse, and in relation to further investigations and any potential prosecutions that may be considered warranted. Those findings are still confidential at this stage.

The Lessons

Of particular interest was the rapidity of the collapse in this particular case. As noted above, the company had an extensive client base and considerable net profits at 30 June 2008, and yet six months and nine days later was insolvent, in administration with many of its clients financially ruined for the rest of their lives. It was particularly distressing in that a number of the clients of Storm who took financial advice were elderly or retired persons, who quite literally lost all of their life savings, and more in the collapse.

The lessons seem to be:-

1. Storm had a consistent model of advice whereby substantially the same advice was given to most of their clients. Storm’s directors argue that this is because the advice was only given to the sort of clients that the advice suited. Nevertheless, the losses suffered by many clients demonstrate that there were serious risks involved with the advice.
2. Although it is perhaps a lesson that has been learned many times before, everyone needs to be aware of the dangers of gearing. Gearing or leverage can certainly rapidly increase returns when times are good and markets are rising. It has an equal and opposite effect when markets are falling.
3. The rate of the fall in stock markets in late 2008 around the world was such that margin calls and stop losses did not operate as they ought to have, and clients who thought they had reserve or protected positions because of stop losses or margin calls, found that they in fact lost everything and those did not work.
4. Terms and conditions need to be read carefully. Most of Storm’s clients had margin loans through the Commonwealth Bank of Australia. The Commonwealth Bank’s terms and conditions provide the bank is not actually obliged to make any margin calls at all, and it is up to clients to monitor their own investments. Therefore, as always, be aware of the fine print.

The Unusual Aspects

The speed of the collapse also means that many of the usual issues such as insolvent trading or substantial voidable transactions will only arise on a much smaller scale than Storm. However, that will give rise to unusual considerations about breaches of directors’ duties and/or breaches of the financial licensing provisions of the securities legislation. If prosecutions are in fact launched, it is likely that some of these will be novel and it is the first time some of the provisions may have been used for prosecution. The lesson is that directors of companies involved in the financial services industry certainly need to consider worst case scenarios, and thoroughly prepare for what might occur.

Of course, that may lead to less spectacular growth in boom times, but that lack of performance will be more than made up by the comfort directors can feel when times go bad that they had adequate provisions for the worst.

Tucker & Cowen Solicitors were ideally placed to assist the liquidators with this administration, given not only our strong expertise in insolvency and litigation, but our experience in corporate and commercial matters, all of which were required to form the team to assist the liquidators in relation to the liquidation of Storm. This was particularly the case because of the lack of available assets, and the public funding provided via ASIC, which required a tight team to manage the investigations and reporting under extremely tight time and budgetary guidelines.

The liquidators retained the expertise of Tucker and Cowen for this important liquidation, with the team led by Richard Cowen and Senior associate Dan Ryan.

Please contact James Officer (03) 8399 9513 or james.officer@strategyco.net for more information.

I’m sitting in a bar in New York. It’s the Bull & Bear at the Waldorf-Astoria. The place just smells of money, lots of money. I’m sipping a scotch while waiting for a client. Little did I know, tonight I’d be learning an investment secret…

The place is immaculate. You can feel the history. The waiters and barmen are sharply dressed in black and white uniforms. Service is attentive, but not rushed. And the drinks are stiff. The dark wood paneling gives the room an air of importance, and dimmed lighting sets the stage.

This isn’t your ordinary bar. This place has history.

Billions worth of deals have been struck right in this very bar…

My dining companion this evening is a venture capitalist from Los Angeles. I’m working on a deal to raise one of his alternative energy companies $50 million.

He arrives in a flurry with his cell phone glued to his ear. It’s nothing new. He’s always like this. Always talking about the next deal… always closing new investors.

We settle in and after the first round of drinks, the atmosphere eases.

I give him a quick update on the deal. After a spirited debate about the next steps, our discussion turns to the market. I don’t want to miss this opportunity to pick his brain. I start firing away question after question about his business and his views on the market.

I figure somebody investing millions probably has an interesting thought or two… but what he said really surprised me.

Honestly, I don’t even remember the question… It was probably about some recent economic indicator. Something probably splashed across the front page of the Wall Street Journal. The question I don’t remember… What I do remember is his response.

“Forget it… It doesn’t mean anything.”

“What? What do you mean forget it?” I gasped.

“Forget it.” Then leaning in he said, “Look, some things matter. Some things don’t. The key is knowing what to look at and ignoring the rest.”

He went on…

“I don’t make money on the deals I do… I make money on the deals I don’t do. I look at hundreds of deals every week. If I spent hours on each and everyone, I’d never find the great investment ideas. Find what’s important and ignore the rest.”

What I took away from that meeting was nothing short of life changing.

My meeting took place a few years ago. But this little bit of wisdom applies to us even today.

Right now, we find ourselves in the middle of August. It’s one of the worst times to analyze the market. Why? Because everyone who matters is on vacation right now. Seriously.

As a banker, I’d schedule meetings year round except for the last two weeks of August. It was a sacred time. Nobody was in town. Not the money managers, not the hedge fund managers, not the analysts, not the bankers.

Everyone was on holiday. Some in the Hamptons… some in Europe.

The only people on Wall Street this time of year are junior traders and junior bankers.

If you don’t believe me, just look at trading volumes. They always fall off at the end of August. That’s why it’s important not to give too much weight to market action right now.

I’m a big believer and follower of market action. That’s why I’m studying the markets every day.

I’m still studying the markets. However, I’m not about to make any earth shattering changes to my positions this week or next. I’m not going to discover a major change in market sentiment… not this time of the year. Not the last two weeks of August.

We’ll discover the real direction of the market in early September. That’s when all the traders and money managers are back at their desks. That’s when the market shows its true colors.

Brian Mikes is the editor of the Dynamic Wealth Report, one of the world’s most popular investment newsletters that offers investment ideas and news you can’t get from the mainstream press. Brian and his team bring decades of Wall Street and Silicon Valley experience to help you discover profitable trading ideas you can use today.

For more information on a FREE subscription to the Dynamic Wealth Report, please visit: http://www.DynamicWealthReport.com/new.htm

Be afraid if you own long term bonds or treasuries. The bond market is getting ready to implode due to Washington’s unquenchable thirst for debt.

Say goodbye to the “good ole days” of high bond income and say hello to higher interest rates and falling bond prices. The bond market is getting ready to get squashed like a fat bug and you don’t want to be nowhere around when that happens.

Why is the bond market crashing and burning? Simple. Washington is running up record budget deficits–$1.6 trillion in 2010– and no one want’s to buy America’s debt-leveraged securities any more. In the last treasury auction, mountains of notes went unsold. The rest of the world has wised up to the fact that the “emperor has no clothes on” and America is no longer the financial super power it once was. Foreign governments and institutions are pulling back from investing in America and that is having a dire impact on the bond prices.

Without the influx of foreign investment, America cannot finance its deficits. That puts more upward pressure on interest rates. As interest rates soar bond prices drop like a rock. The only thing holding back a complete collapse of the bond market right now is that the Fed Chairman is acting like the little dutch kid plugging the hole in the dike with his finger to hold back the onrush of water. The Fed is just forestalling the inevitable because this collapse is going to happen. It is just a matter of time.

So as an individual investor what should you be doing right now?

Getting out of the long term bond market as quickly as you can. In the next couple of months the bond market is going to be a wasteland. Don’t get left behind holding the bag. Escape while you can. There is no surviving the cataclysm that is about to happen, if you hold long term bonds.

George Stark is an experienced business analyst, consultant and writer who holds an MBA degree. For latest insights on stock trading and other investment tips. Visit http://www.stocktradingclearinghouse.com

With all of our connectedness in the world today (Facebook, Twitter, etc.) it’s easy to fall into the “everybody’s my friend” trap.

Unfortunately, this is not true. In business, not everybody is your friend.

The “no-brainerness” of this should be obvious, but is lost on many. For instance, consider raising private money. Everybody is your friend when you are raising capital, right?

First of all, before we get too far in, let me say that you must always treat everyone as though they could be either A: an investor with you or B: a referral source for private money.

With that being said it helps if you know who your biggest adversary will be when raising private money. This person is a formidable opponent. Usually they have a lot of marketing dollars and brand power behind them. Sometimes it can feel like a David vs. Goliath battle (never forget who won that fight by the way). But, if you underestimate or fail to account for this opponent, you’ll cost yourself a great deal of private money.

So, who am I talking about here? Who is this great ‘Public Enemy’ number 1? It is…financial planners or investment advisors.

Ouch.

Did I hurt someone’s feelings?

Well, I probably offended every financial advisor out there. Oh well. Can’t make everyone happy.

Public Enemy

Public Enemy was a ground breaking hip-hop group from the late 1980’s and early 1990’s. Led by front men Chuck D and Flavor Flav…ooops…you didn’t want to know about those guys did you?

Back to regular programming…

Financial advisors are your public enemy number 1 when raising private money because you are both pursuing the same thing.

It’s kind of like two guys that are going after the same girl for a date. Only one of them is going to win. While the guys may be cordial with each other, it’s pretty hard for them to be friends. All is fair in love & war.

When it comes to private money, you are competing for the same investment dollars the financial advisor is. The private investor has a choice about where they allocate their money. The Ameriprise or Merrill Lynch representative certainly has a home for that money – and all of it. You’ve got to stand your ground to get a piece of the pie.

I’ve had financial advisors purposely try to sabotage deals where I had private investors pulling money out to invest with me via a self-directed IRA. It wasn’t pretty. These people are largely brainwashed into thinking that mutual funds and insurance products are the only investments available on earth. They walk the corporate line. They realized all of their compensation based in some form on bringing client money in the door.

Keep in mind also that most financial advisors work out of large firms that have big marketing budgets. This is why it’s so important that you have a unique selling proposition for your investment opportunity. One thing that always works well for me is to remind my private investors about the incentives the financial advisor has.

The financial establishment makes money no matter what. Market goes up; they make money. Market goes down; they make money. I guess it’s nice work if you can get into that sort of thing. But anyway, you – as a real estate investor – are going to make money only if the project is profitable. That’s a 180 degree opposite and well-aligned incentive. You and your investor win/win. Not “heads I win, tails you lose.”

Please just don’t make the mistake in thinking that your private money investor’s financial advisor is going to be excited about them pulling $250,000 out of their firm to invest with you. They’ll probably be trying to find a doll and stick pins in it to derail your deal with some kind of weird voodoo (after all, I think that’s how those guys pick their stocks). Luckily, voodoo doesn’t work on real estate investors like you!

Adam Davis is a real estate investor, author, speaker and founder of Ultimate Private Money. He teaches real estate investors how to raise capital from private investors. Adam has completed hundreds of real estate deals- from single family house flips, lease options to apartment buildings, land contracts and hard money loans – all with none of his own money. All told, he has raised millions of dollars from private individuals to finance real estate deals. For a FREE audio program on how to get private money go to: http://www.UltimatePrivateMoney.com.

Are we destined to go down that same road, the road traveled by Japan over the last 20 years.

As you probably know the Japanese stock and real estate bubbles preceded ours by a few years, and they’ve been mired in a no growth/slow growth economy ever since.

Could it happen here? Is it already happening? Certainly questions no one can answer with certainty. The real question is are we ready for such a scenario? What steps can we take to handle and even prosper from such an outcome?

Some would say stock up on canned goods, TP and ammo. Others scoff at such an event ever happening in the good ole USA.

I guess I’m somewhere between those two camps. I don’t believe Armageddon is on the horizon nor do I think a rapid return to giddy prosperity is in the cards any time soon.

I do believe a no growth/slow growth economy is a very real possibility. This would likely be accompanied by a long term sideways stock market.

So, what to do? There are no simplistic and easy answers of course, but there are a number of steps we can take to protect our financial security. A few are highlighted below.

Step 1: Build an ‘All Weather’ portfolio composed of deflation hedge investments like high quality, short to intermediate term bonds/bond funds, guaranteed annuities, and short term bank accounts.

Step 2: Add inflation hedge vehicles to the portfolio including domestic and foreign stocks or funds, sprinkled with holdings in real estate and commodities.

Step 3: Be prepared for violent and fast moving market whipsaws, meaning market movements in either direction and of short duration. And have an action plan in place to deal with them.

Step 4: And most important, have an exit strategy. The type of strategy(s) I’ve talked about in many bulletins, blogs etc. That exit plan should be designed to get out of any specific investments before they move dramatically against us.

It should also be designed to exit the stock market entirely, if necessary. No one, at any age, can afford the kinds of losses visited upon so many in recent years. A ten year go nowhere market coupled with jaw dropping declines has certainly imbued loss prevention into our collective DNA.

Step 5. Last but not least, retain the services of an astute and proven financial advisor who has done all the above. Shower him with referrals and chocolate chip cookies whenever possible. He will be forever grateful.

Note: The usual caveat here. No investment program comes with guarantees. There is inherent risk in all we do in the investment world.

Learn how to manage your investments with a ‘Plan’. Ride the ‘Bull’ and avoid the ‘Bear’. Visit our website @ http://www.iramanage.com and subscribe to our free Trend Tracker E-Bulletin.

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