Investors are understandably concerned about the security of their assets, but if you follow a few simple rules odds are you will be OK - after all there are 8000 hedge funds and only a couple of Ponzi schemes.
1: A fund that uses an outside custodian will have great difficulty in pulling off a multi year scam. That's because the custodian sends a 1099r report to the IRS. When your fund files its tax return those trades have to match up, or every investor in the fund is going to get audited by the IRS. Of course, an intra year rip off is still entirely possible.
2: Get to know the fund's CPA. Call him up, make nice. Ask questions.
3: Get to know the fund's custodian. Some are well known, brand name shops like Fidelity or Goldman Sachs. Those names always give me that warm and fuzzy feeling I need to have about my money, but there are many smaller shops that are equally as secure. KNOW WHERE YOUR MONEY IS BEING HELD!
4: I don't let my investors send me all of their money. I tell them they need to have at least 1 other manager, and if they are really rich, as many as are necessary. If your fund wants every last dime you have... well, they are not considering your best interests (IMHO).
5: Desperate people do desperate things, so its best not to tempt desperate people. I can't emphasize this one enough. Is your manager a high flier? Fancy Schmancy? Have a history of litigation or unpaid bills? Signs of drug or alcohol abuse (we all know what they are)? Weekends in Vegas, showgirls, private jets, and Bentley cars? These are BAD signs. Used to be folks knew their banker and his family. Get to know yours. I am not saying the guy has to be Jimmy Stewart, but grounded, family-type-guys, living modestly are usually rational enough to understand the consequences of violating their fiduciary responsibilities (going to prison).
Just thinking out loud...
11 comments:
From 1989 to 2007, I was invested 100% in one fund .. the only fund you should ever invest in .. an index fund. I was in the S&P 500 100% for 18 years and amassed $260,000. That one was easy: stock index mutual funds all the way.
HOWEVER, I jumped out of that just in time at the end of 2007. Today for me, it's cash, metals and commodities. I have no personal recommendations today -- not even sure if I'm doing right now! -- but for 18 years, success had one name: stock index mutual funds.
I never have had much to invest. I'm vested in two pensions, if they're still around and the dollar is worth anything, and have no debt - house, cars etc all paid for.
For what I do have, the Alpha Strategy hasn't done too badly for me.
Just wanted to wish you and yours a Happy New Year Greg. I don't always agree with you but I do trust your integrity. I am no economist, just a tiny farm owner/home maker/writer who teaches food preservation and parenting classes but I have learned just how closely related economics and food and family are this past year. I have learned a lot of that from reading your blog. You are on my must read list. Thank you
From Tom Whipple (12/31/09):
Interestingly, US gasoline consumption for last four weeks is 1.1 percent higher than last year despite gasoline selling for almost $1 a gallon more and a considerable contraction in economic activity during the past year. This suggests that US motorists are continuing to drive personal vehicles at close to traditional rates despite widespread unemployment and economic hardships.
B,
Gotta have an addiction.
I will stop driving as all others when they pry the steering wheel from my cold, dead hands. Why? Because that is our society. This mindset should be a telling clue into the near future of our society when gasoline plays the part it does,and our direction. Which can not be changed at this point. Only slowed,some.
peace
I'm kinda surprised the gasoline usage is going up, even a little. But the majority of people have cemented themselves into a car/suburban lifestyle, where it is a need, not a want. Living in Chicago, I walk and ride the electric train alot instead. But several of my friends are trapped in suburbia with their cars. How they transition with me laughing at them (since I told them the "oil thing" would happen), we'll see. Problem with additions are, at some point, they aren't funny anymore. :)
Bur:
Total vehilce Miles traveled is down, while the VOLUME of gasoline consumed is up... the difference is ethanol.
Kathy:
A blessed, happy, healthy and prosperous new year to you, too! We don't have to agree on everything... besides, what the h*ll to I know? When I lack confidence that something is right, I simply stand clear... I can have an opinion, as opinions do no harm...
Integrity is the luxury afforded by a full belly. There probably isn't anything I would not stoop to if my kids didn't have enough to eat... As I said, "desperate people do desperate things"... If Bernie Madoff did not have 37 Rolex watches and 5 homes to support my bet is the temptation to steal would have been greatly diminished. Its not a perfect measure, but it has kept me from doing business with some bad guys over the years.
Tweel:
Mutual Funds and pensions are pretty safe from the issues I spoke of... I was directing my comments to hedge fund investors that read my stuff. Common sense stuff, really, but sometimes a little common sense goes a long way
Explain this to me please ...
"Total vehilce Miles traveled is down, while the VOLUME of gasoline consumed is up... the difference is ethanol."
I use E85/85% ethanol all the time. I know it isn't well liked (fewer BTUs per gallon for the same price as gasoline). The ethanol as additive is still 10%, tho the ethanol industry wants it increased. Ethanol will never deliver enough BTUs to displace any real amounts of gasoline or diesel. Given all that, what are you saying about ethanol?
The diffence is ethanol is a crappy alternative to crude oil gasoline. Which means that even more gas is consumed to make up the difference in the decrease of mileage.
peace
But we dont consume that much ethanol, whether as E85/85% ethanol liquid (which no one but me buys), or as a 10% additive, which has been an additive for decades. What's the big deal about ethanol now? We can't make that much of it, so whats the point?
Exactly,slows things done a tad bit maybe,that's all. No real long term solution there. But I still got "hope".
peace
Saw a great bumper sticker today;
"Out of work and hungry? Eat your hope in change."
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