Hedge Fund Catch-22

Here is one of the many reasons why you really shouldn’t invest in hedge funds.

There was a piece on Yahoo! Finance yesterday that touched on hedge funds and some of their problems. You’ve heard them all before. High fees. High risk. Lack of liquidity. etc. etc. etc. This Yahoo! piece was actually pretty benign toward the hedge funds. I think they were being way too nice.

But here is the real ...

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Nod Politely and Ignore Them

I was watching the first season of The Sopranos last night. There was a particular scene that jumped out at me. It was where Carmela Soprano was with a group of neighborhood wives that were bragging about their stock market performance. I was reminded of the investment environment in the late 90’s and how different it was from today.

I wasn’t in the industry in the 90’s, but I was there for the real estate boom of the ...

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Pop the Hood!

Just as all car engines are not alike, neither are investment vehicles — the subtle details of a mutual fund’s investment style can drastically alter its performance.  Investors can expose themselves to the wrong risks if they don’t “pop the hood” and understand how the vehicle works.

Currency hedging in international bond funds is a great example. Some funds do it and some don’t. It can make a big difference in a fund’s performance. And you can’t necessarily ...

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Profiting from the Next Grumpy Cat

Corporate power is often maligned these days. But last night, as I was being introduced to Grumpy Cat, the fact that corporations will get the lion’s share of revenue from this viral sensation was oddly comforting — almost quaint.

It was Sunday night, just before bed, and my two daughters had something they absolutely had to show me on the Internet. It was Grumpy Cat.

Grumpy Cat goes viral

This cat has become a viral online sensation because it happens ...

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Rising Interest Rates – Whose Risk is It?

Interest rates have crept up in the last few days. This leads me to a point I have tried to explain to many clients. Banks are supposed to deal with interest rate risk. Don’t let them dump this risk on you.

Many financial prognosticators have been calling for a rise in interest rates for years, and they are quick right to start claiming victory. I certainly wouldn’t say interest rates are sure to march straight upwards from here. ...

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Dangerous Knowledge

When I browse the financial media, it makes me extremely grateful for my experience in the investment industry. It helps me to separate the good information from the bad.

Here is a particularly dangerous article, masquerading as solid wisdom. Without a lot more experience and knowledge it would be easy to read an article like this and take it to be truth.

http://finance.yahoo.com/news/cramer-many-stocks-too-many-222302476.html

The article basically says to hold about 10 “quality” ...

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Unpredictability leads to Unpredictability

Carbon pollution, national security, politics, an earthquake, a tsunami, and a radioactive metal all combine to remind us how unpredictable investments can be.

I am always amazed at how predictable most people think the financial markets should be, especially when these very same people freely admit the unpredictability of other events.

In particular, I think the Uranium trade that went bad on March 11, 2011 is a great example.

First, there were a lot of very reasonable, learned, logical arguments ...

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