Real Financial Facts

                 

The vast public has had  financial basics poorly taught by the vast majority of experts, Wall Street insiders and inept financial media.

                       

Everyone’s always looking for confirmation of investment facts they can use to advantage. But unfortunately with what has become dubious input.

                       

And so the public continues to buy into pap. Garbage often sells like proverbial hot cakes. Gobbled up by the same unwary and gullible folks who believe gibberish and fantasy thrown at them every day in the media.    (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Essential “Ulysses Contracts” Investment Discipline

                  

Shlomo Benartzi, a household behavioral-finance specialist and professor at the UCLA, Anderson School of Management has used the term “Ulysses Contract.” as a means of keeping investors focused.

                       

Ulysses of ancient Greek literature had resisted the Sirens’ song to avoid shipwreck, by having himself tied to his ship. In the same way, individuals could be under some form of voluntary contract with themselves, not to act unwisely under outside pressure, whenever volatile and erratic events occur.

                       

As a researcher and student of the importance of discipline for several decades, I have investigated about 1,600 strategies, along with their pros and cons. I have found that discipline is far more essential to investment success than strategy itself. (See the EarlJ. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Securities Promotions

                  

You get media suggestions from time to time, advising you of a company stock that’s “hot” along with the reasons why. You may get pages of data by mail, on reasons why what you see may be another Google, Apple or whatever stock at the time.

                       

What you observe is a promotion. The outfit who has placed the release may be getting enormously well paid for the reportage. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Avoid Flashy “Alternative” Investments

                    

You may hear of so-called alternative investments from the sharp- pencil boys on Wall Street. This occurs when investors’ interests be flag when using the plain vanilla types.

                       

The problem is that the alternates are usually too sophisticated for most investors, and are generally too risky.They do, however, generate interest and thus produce articles in the media and more

business transactions for Wall Street. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

   

Be Careful When Buying Gold

                

As with other financial investments, folks learn from experience, often costly to them.

                                   

Gold investors have learned that the price can drop even when there is inflation that promises to become rampant, and the U.S. dollar buys less. Even when the European economies are failing and the American system is closely following a similar disastrous budget- deficit path.

                       

Obviously, all those reasons for buying gold have not always worked for investors. Even with often clueless Federal Reserve action.

                       

The truth is, gold has never been an inflation hedge, only a bulwark against a cheapening dollar. The latter can get stronger, however, compared to other currencies. Such as the Euro. Or the Indian Rupee. (India is a big factor in gold purchases.) At which time the dollar can get stronger (as it’s now) and gold can be cyclically cheaper. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Real Costs of Pensions

                    

Most recipients of pensions, and those who pay for them, have little idea of cost.

                       

Fact: $1 million at 4% yields only $40,000 income a year. How many millions have to be contributed to meet the capital and income required?

                       

Now you see the shortages for taxpayers to meet in annual pensions for the life of  any government worker. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Costly Government-Worker Pensions

                    

In the states and cities of the U.S. the government unions have been able to get costly pensions and fringe benefits, at the expense of taxpayers, terms of which the latter were not fully aware.

                       

When times got bad, taxpayers soon learned government workers were being paid as much as twice they themselves were getting from pensions and benefits. Worse, the payments were unsustainable,

amidst ever-higher taxpayer loads.

                                           

One example why the burden is onerous: teachers who contributed nothing to their pensions retired at age 60, at 65% of pay. And their retirement check increased 3% a year for inflation. Not bad when secure investments earn less than 3% to 4% a year, while such pensions assume earnings as much as 8%.

                       

Yet, little is being done to rectify the problem, owing to government union stone-walling during labor negotiations. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Facts About IPO Disclosures

                     

When uninformed investors speculate with the purchase of new securities issues, they often assume it’s all a one-way street to quick riches.

                       

And when proven wrong, it’s someone else’s fault. They got the wrong information or were lied to; anything but the fact they never bothered to get the facts beforehand.

                       

The company prospectus as a rule does a good job in its SEC filing, describing the risks involved. However, misinformed speculators and the plaintiff lawyers seeking to profit, usually fulminate about insufficient or poor information or disclosure. Or they claim insiders have gotten information that retail customers did not receive.

                       

The fact is, the SEC itself is very strict about the way a company and its underwriters can make disclosures during the period leading to the IPO. What is legal in the eyes of the SEC may be an uneven playing field in the eyes of the public.

                                           

Moreover, thanks to the efforts to a former attorney general of New York State, brokers are now prevented from making comments on

soon-to-be-issued securities. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

A Venture Capital-Seeking Tip

                     

In the event you get turned down, as you will often be, when seeking venture capital, keep coming back with follow-ups. Few seekers of

venture capital are successful with their early attempts.

                                           

You must be consistent and persistent, to get attention. So stick to these basics and keep trying. Good luck counts.

                       

I have found that venture capitalists are not all brighter than most in the financial community. Those who have made fortunes at what they do, mostly have stumbled upon the big winners. They have been taking unmerited bows the way lottery winners often do when

they pick winners. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Our Shortage of Skilled Workers

                        

You constantly hear that manufacturing jobs are being lost to get lower costs overseas. Could it be that we actually have a shortage of skilled workers? That we are educating too many kids in college with the wrong skills?

                       

The Organization for Economic Cooperation and Development did a study that showed less than 10% of teenagers in the U.S. learned skilled trade careers for jobs with manufacturers and utilities.

                       

We have had this shortage for over twenty years. As a result, there aren’t sufficient qualified workers in many areas of essential work. And the workforce is getting older, so the problem is becoming more acute.

                       

We get more unemployable college grads, amid more lawyers and the like, but with more manufacturing jobs sent overseas where the skills may be. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Consumer Complaint Arbitration

                    

There’s a movement afoot to do away with arbitration for many complaints consumers may have where the dollar amounts are relatively small and the legal fees relatively high.

                       

The pressure to do away with arbitration is especially strong in the securities industry where the complaint is about alleged arbitration bias in favor of the industry.

                       

On closer inspection, note the complaints arise from the plaintiff lawyers who are financially hurt when legal disputes can be equitably and cheaply adjudicated without the use of expensive legal assistance.

                                       

There is little evidence of bias where the consumer or investor has been hurt by the arbitration process. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Venture Capitalists’ Essential Business Plans

                                  

When making a proposal for venture capital always use reasonable numbers. At the same time, you must show that your business can become big enough to attract attention.

                       

Venture capitalists make money by eventually selling their equity interest to the public on a large scale. They think in terms of hundreds of millions and more in potential profits. Your business therefore has to grow fast in just a few years, in order to be an interesting investment for them.

                       

There has to also be what venture capitalists call an ”exit strategy.” When that eventual public underwriting or IPO, or a sale to a large

corporation can take place. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)