More Window Dressing
Two weeks ago I wrote about what the Securities and Exchange Commission was doing to regulate the mutual fund industry to help the small investor, the "poor folks". It really added up to zero.
Now the SEC is going to make new regulations for hedge funds to protect the rich folks. And it is more window dressing. In fact, it looks downright stupid. When I say rich folks it is because in order to qualify to invest in a hedge fund you must have assets of one million dollars and income of $200,000 per year for a single person and $300,000 for a couple. With this kind of money you can hire an attorney or financial expert to read the hedge fund document. Furthermore, the major investors in hedge funds are not little investors, but pension plans, endowments and universities that are supposed to be administered by professionals.
The SEC says they want to put in regulations to help prevent fraud. Hey, you guys, what about all the fraud you did NOT find in the regular mutual fund industry? They missed multimillions of fraud in standard "poor folks" mutual funds and now they want regulations to protect the rich folks. All this will do is create more useless expensive jobs in Washington. Every time you hire a new government worker it is the same as putting more tax on everyone, rich and poor.
The Senate Banking Committee voted it in by a 3 to 2 committee decision. Three Democrats for and 2 Republicans against. It is the usual liberal Democrat who wants "feel good" legislation that does no good, but tells the public "we care". Such expensive nonsense.
And how are they going to put this new regulation into effect? More paperwork without question. The funds would be required to hire a Compliance Officer who would write out a set of trading procedures and a code of ethics. Because I have owned a regulated brokerage company I can tell you this is a pile of BS. The new compliance officer is paid by management. He is a toothless tiger. And the SEC will come to do an on-site audit every 2 to 5 years. Because my company was in Florida they did not show up until January or February.
What is most interesting is that there were only 46 hedge fund fraud cases during the past 5 years involving about one billion dollar. In an industry with more than $800 billion in assets this is a spit. Let the rich folks sue and don't burden us "poor" taxpayers.
This new regulation means nothing and is merely a first step for more stringent rules to follow. It is another additional cost of doing business and adds to our taxes.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
al@mutualfundstrategy.com; 1-888-345-7870
More Resources
Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exitingMore Stocks & Mutual Funds Information:
Related Articles
Investing in the Stock Market
From the book 'The Stockopoly Plan' by the author Charles M. O'MeliaThere are several factors an investor in the stock market should consider:1.
Where Is The Beef?
Where is the beef? Or maybe it should be where is the bull? Market, that is? The chief investment strategists and analysts of the major brokerage houses have been promising us a new bull market.So far the bull hasn't come in from the distant pasture.
Stock Market Diversification
In one of my previous articles (Investing in the stock market -9 powerful tips), tip number one was:1. Do not spread your money too thin.
10 Tips For Creating Wealth From the Stock Market
1. Do not spread your money too thin.
Time Out
Are you paying any attention to your retirement savings? Do you have it in cash or an account with a broker? Maybe you have a professional manager who is investing your money as you add to it every month.Is your account increasing in value every year? If it isn't why are you letting anyone else invest for you? There is no point having a loser in charge of your money.
Adding Funds
Someday you may want to retire and continue to live in the life style to which you have become accustomed. According to conventional wisdom you will need less money because you will have fewer expenses than when you had to go to the office every day.
Your Job
There are so many kinds of work that needs to be done and you are doing one of those jobs right now - unless you are one of those two and a half million that have been laid off during the past 3 years. The press continues to blame China and India for stealing away all these forms of employment, but they don't have it right.
Selection Vs Direction
As I have said many times before in this column it really doesn't make any difference what you buy - stocks, funds or indexes - it takes smarts to know when to sell. Direction of the general market is more important than selection of any equity.
Whitewater Stock Market
Ever done any whitewater rafting or canoeing? Long periods of tranquil river followed by short periods of terror. Suddenly the water grips your vessel and you are pushed and shoved by massive currents over which you have no control.
Stock Options Trading Strategies - Lean
Professional stock options traders use the term lean to refer to one's perception about the directional strength of the stock. When you own a stock option and intend to hold it for a period of time, you are aware that you will probably be holding it while it goes up and while it goes down.
Box Of Chocolates
Ever have one of those sample boxes of candy? Each little piece is beautifully wrapped in colorful foil or decorated with an interesting design. Taste just one.
What Can Model Airplanes Teach You About Trading?
I was devastated!I just couldn't believe it. I was 10 years old and my dreams were shattered.
Using Sector Funds to Construct Diversified Mutual Fund Portfolios
'Sector funds are too risky.' 'I doubled my money with Fidelity Select Technology in 12 months!' 'Avoid sector funds.
Emotional Trading
The single most expensive stock market trades are those made with emotions, but, of course, you are not an emotional trader are you?Before you bought that stock, mutual fund or Exchange Traded Fund (ETF) you did your research to be sure that what you were buying would return a good profit over the long haul. You bought it and over time you look at it less and less.
Overvalued & Underbought
With all the bad news that has been dumped upon the economy for some reason the stock market is going up. Why?The SEC (Securities and Exchange Commission) has just set up new guidelines for core earnings.
How to Evaluate Load vs. No Load Mutual Funds
If you have been dealing with mutual funds for any length of time, you undoubtedly have faced the question of which is better: Load Funds or No Load Funds. If you are new to investing, "load" simply refers to the commission paid to the broker selling the fund.
Trading Tips No 8: Picking the Best Stock Market Price
Carefully thinking through your goal as a trader is of prime importance, when picking the best stock market price. It is very difficult if not impossible to meet a goal that is ill defined.
Mid-Cap Stocks: Asset Class with an Identity Crisis
Much like the middle child, mid-cap stocks have long struggled to find their identity. Carved out from the upper echelons of the small caps and the lower end of the large caps, the mid-cap sector has a rough definition of stock with a market capitalization of greater than $2 billion, but less than $10 billion.
Robert Rodriguez Weathers the Stock Market
Robert Rodriguez likes to buy stocks at their lows. When there are not enough stocks hitting new lows, he closes his fund and piles up cash.
Basics of Stock Market
Financial markets provide their participants with the most favorable conditions for purchase/sale of financial instruments they have inside. Their major functions are: guaranteeing liquidity, forming assets prices within establishing proposition and demand and decreasing of operational expenses, incurred by the participants of the market.