Ethics – Page 4 – The Aleph Blog

Enabling Others

Posted on 10 June 2014 by David Merkel

Whether on a micro-level (a business) or on a macro-level (a government) the way to build value comes from a simple concept. ?What can I/we do to enable the goals of others? ?Growth and success come through service.

Balzac famously said, “Behind every great fortune lies a great crime.” ?There’s only one problem behind this statement — it’s only true in crony ?economies, where connections to siphon tax dollars matter more than meeting human needs. ?It is false elsewhere.

I know there are some who will begrudge anyone the wealth that they have, because they are envious. ?Envy is a bad guide to life and public policy. ?If you want a poor society, encourage envy. ?If you want a rich society, encourage service.

Division of labor is an amazing thing, and it aids the well-being of all. ?I could see a business created that would aid rich people who are stretched for time, where many people would work for them, directly or indirectly, solving their needs. ?That could employ a decent number of people, much like things were in the UK in the early 1800s, where the wealthy gentlemen, living off of rents from their lands, employed servants. ?Those servants gained a better life, and so did the families of the gentlemen. ?Was it perfect? ?No, nothing is perfect aside from God, but when we help meet the goals of others, society improves, and the economy does as well. ?It reduces unemployment. ?People who work are far more happy than those that don’t work, even if the wages are small. ?We were created to work, and it is no surprise that when we don’t have work, we tend to be sad.

Governments should think along these lines as well — what can we do to enable our people to work hard and produce valuable goods and services? ?Some parts are easy:

A predictable legal structure
Regular enforcement — enforcement is not a surprise
Don’t be burdensome — government can’t solve every problem, so limit regulation to the most important aspects of society.
A tax structure that doesn’t change often, and reflects economics rather than politics. ?Tax businesses and individuals on their increase in value on an accrual basis, and at a single rate.

These policies would free businesses to produce, while meeting the most important goals of society (don’t force pollution on others, etc.)

Personal Application

Do you want to be well-off? ?Meet the needs of others, even if those needs are not well-known yet.

Mark Zuckerberg met the need of many people who want to share their lives with others via Facebook. ?The same applies to Twitter and Instagram.

Bill Gates created the operating system of Apple Computers at a much lower price point, enabling many people to have a GUI that could not afford a Mac, even if it had a lot of bugs.

Samsung created a competitor to the iPhone at a much cheaper price point using Android, software free from Google.

People want to look thin, sexy, etc? ?Provide shapewear for them a la Spanx.

The list could go on and on… there is a surfeit of human need, particularly on the low end of income, and those who meet those needs can do very well for their clients and themselves.

As for me

So what about me then? ?Well, I don’t charge anything for anyone to read me. ?I write this as a public service. ?People can evaluate whether it is really to their benefit or not.

That said most of my clients started as readers of my blog. ?What good do I do for my clients? ?Several things:

I leave them free. ?I don’t ask for all their assets, I don’t want to control all of their finances.
I free them from greed and panic. ?let me adjust risk to market conditions, and we will do well.
Transparency. ?My fee is my only income.
In general, my performance has exceeded the market in the past. ?There is nothing that says it will be true in the future.
I’m not going to lie to clients?or deceive them. ?After all, 80%+?of my own liquid assets?are on the line with them?in the same proportion– clients get a clone of my portfolio.

My clients get peace of mind. ?I am focused on improving my own wealth, and they travel along with me. ?My interests are entirely aligned with theirs.

I do think that all of us should have an attitude of service toward others. ?It makes for a better society, and better business practices. ?Beyond that, Jesus said, “Do to others what you would have them do to you.” ?Everyone wants good service, well, go deliver good service. ?The world will be better, and you will be happier with your own life. ?After all, no one is truly happy who cheats others in order to prosper.

On Overstated Book Titles

Posted on 4 June 2014 by David Merkel

I have a problem with book titles. ?They are often inflated far beyond what the book actually states or proves. ? I have a few in my hands now, and it burns me, because the books in and of themselves are good, but they don’t reflect the title. ?The title makes grandiose claims, and then there is not enough in the book to back them up.

I will review in the next few days, The Secret Club That Runs The World. ?Great book with a lousy title. ?Sensationalistic, and I bet the marketers at the publisher created the title. ?Why do I think this?

I have a lot of respect for Larry Swedroe, but I trashed what was a good book in my review of?Think, Act, and Invest Like Warren Buffett. ?Honestly, I wish I had approached Larry first, before posting my review, because the title was not his idea, but that of the publisher. ?The original title “Playing the Winner’s Game” would have gotten a five-star review from me.

And yet, I am coming to realize that publishers, manipulate people through titles. ?Make them sensational. ?Make them offer a solution to?an impossible problem through a title, and the book does not deliver. ?Really it stinks.

But here’s my specific problem: when I write a negative review (usually 3-star) of a good book that overstates in its title, I tend to get a large number of negative votes at Amazon.

To use a term from Cramer, book publishers are in the OPUD game [Over-promise, Under-deliver]. ?That works for a while, but eventually it dulls people from buying books. ?Far better to borrow it from the library, even via Inter-library loan, than pay up for a book where title promises aren’t delivered.

To publishers: honesty is a basic objective of publishing; do not destroy your franchise by creating deceptive book titles.

To the public: look at the books before you buy them, and do not buy books that overstate what they actually deliver.

Book Review: Treasure Islands

Posted on 1 April 2014 by David Merkel

Tax havens exist to lower taxes and regulations on corporations and wealthy individuals. ?But doing this involves significant complicated legal and accounting work. ?The average person could not benefit because the fixed costs are high. ?You need to have a lot of assets to benefit from tax havens.

So why do the wealthy governments of the world tolerate tax havens? ?Why don’t they “use NATO to blockade these places, and tell them to end their tax-avoidance-facilitation policies, or else.” ?Sadly, the wealthy have disproportionate power over politicians, and the majority of politicians are wealthy. ?They like the system as it is. ?You can make the tax code as progressive as you like; you will not end up taxing the intelligent wealthy much more.

This book confronts transfer pricing, where profits get shifted to low-tax countries by clever accountants. ?Very difficult to police.

The is an amusing section in the middle of the book about the City of London Corporation, which has unique rights in the UK. ?It is the home of most financial activity n London, and is mostly unaccountable to the UK.

In general, I believe that taxation should be the same regardless of the structure of the entity being taxed, its location, etc. ?To that end, I think that corporations should be taxed on their global income as expressed to its owners. ?Or, don’t tax corporations, but make all taxation like limited partnerships, and tax the individuals that own them.

There are other possible solutions. ?There can be limits on corporate structure. ?Israel limits subsidiaries such that the depth from the holding company cannot exceed two. ?There could be consolidation and/or non-recognition of ?subsidiaries in tax havens.

Additional Resources

Longreads article

Book website?(those reading at Amazon, come to Aleph Blog to get links)

Quibbles

The book makes its last chapter about how tax havens helped cause the financial crisis, but it makes a very weak case. ?Individuals and Banks overlevered themselves as asset prices rose, creating a bubble — not much different than the 1920s. ?Tax havens played little role, even if they aided securitization in a few ways.

The book argues for capital controls, but those controls often create incentives for greater corruption.

My main problem with the book is that it does not offer any workable solutions to the problems. ?My secondary problem is that the problem is not so much with the tax havens, which we could easily marginalize, but with the politicians, who do not do the hard work of seeing that taxation takes place, regardless of the corporate form or location.

Who would benefit from this book:?You have to be willing to endure complex arguments to benefit from this book.? If you want to, you can buy it here:?Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens.

Full disclosure: I borrowed it at my library.

If you enter Amazon through my site, and you buy anything, I get a small commission.? This is my main source of blog revenue.? I prefer this to a ?tip jar? because I want you to get something you want, rather than merely giving me a tip.? Book reviews take time, particularly with the reading, which most book reviewers don?t do in full, and I typically do. (When I don?t, I mention that I scanned the book.? Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.? Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.? Whether you buy at Amazon directly or enter via my site, your prices don?t change.

As Light As Hydrogen

Posted on 19 March 201419 March 2014 by David Merkel

Okay let?s roll the promoted stocks scoreboard:

Ticker	Date of Article	Price @ Article	Price @ 3/18/13	Decline	Annualized	Splits
GTXO	5/27/2008	2.45	0.040	-98.4%	-50.8%
BONZ	10/22/2009	0.35	0.001	-99.7%	-73.0%
BONU	10/22/2009	0.89	0.001	-99.9%	-79.1%
UTOG	3/30/2011	1.55	0.000	-100.0%	-95.1%
OBJE	4/29/2011	116.00	0.167	-99.9%	-89.7%	1:40
LSTG	10/5/2011	1.12	0.010	-99.1%	-85.7%
AERN	10/5/2011	0.0770	0.0001	-99.9%	-93.4%
IRYS	3/15/2012	0.261	0.000	-100.0%	-100.0%	Dead
RCGP	3/22/2012	1.47	0.300	-79.6%	-55.1%
STVF	3/28/2012	3.24	0.420	-87.0%	-64.5%
CRCL	5/1/2012	2.22	0.026	-98.8%	-90.6%
ORYN	5/30/2012	0.93	0.110	-88.2%	-69.5%
BRFH	5/30/2012	1.16	0.515	-55.6%	-36.3%
LUXR	6/12/2012	1.59	0.009	-99.4%	-94.7%
IMSC	7/9/2012	1.5	0.900	-40.0%	-26.1%
DIDG	7/18/2012	0.65	0.042	-93.5%	-80.7%
GRPH	11/30/2012	0.8715	0.085	-90.3%	-83.5%
IMNG	12/4/2012	0.76	0.045	-94.1%	-88.9%
ECAU	1/24/2013	1.42	0.240	-83.1%	-78.8%
DPHS	6/3/2013	0.59	0.010	-98.3%	-99.4%
POLR	6/10/2013	5.75	0.070	-98.8%	-99.7%
NORX	6/11/2013	0.91	0.210	-76.9%	-85.2%
ARTH	7/11/2013	1.24	0.360	-71.0%	-83.6%
NAMG	7/25/2013	0.85	0.164	-80.7%	-92.2%
MDDD	12/9/2013	0.79	0.320	-59.5%	-96.4%
TGRO	12/30/2013	1.2	0.220	-81.7%	-100.0%
VEND	2/4/2014	4.34	4.900	12.9%	187.3%

	3/18/2014		Median	-93.5%	-85.2%

Tonight’s loser-in-waiting is HydroPhi Technologies [HPTG]. ?This one can’t even get basic science right. ?It claims to be able to split water into hydrogen and oxygen, and then recombine them to create energy. ?Circular processes in general lose energy, otherwise we would have perpetual motion machines.

And behind the vapid analysis is an uber-loser. ?His analyses never pan out over one year. ?A clever speculator might make money occasionally, but not regularly, because the stocks he pumps are like this one. ?Little revenues, negative earnings, negative net worth. ?This is a recipe for disaster.

Think about it — if you had a miracle energy technology, would you merge your company with a failed internet advertising company “BigClix?” ?I would think not. ?You would keep your company private and enjoy the significant profits.

As it is, there are no profits, so where is this great energy technology? ?This is a scam, and laws should be revised to allow prosecution of those who write such promotional garbage as we have seen. ?It is no good to have the 4-point type disclaimers telling some of the truth, while the big type says “Buy, buy BUYYY!!!” ?Also, as far as the web version of this promotion goes, the promoters pour in half a million. ?As it says in the 4-point type:

Third Party Advertiser IMPORTANT NOTICE: Esquire Media Services Inc (EMS) has managed up to a $500,000 USD advertising production budget as of January 21, 2014 in an effort to build industry and investor awareness for HydroPhi Technology Group Inc (ticker symbol: HPTG).?

It’s easy to affect the price of a company that has bad fundamentals. ?It’s overvalued to start; it will only be more overvalued at the crest of the promotion. ?If you attract a bunch of people to the pump-and-dump who want to play the momentum, some may think they will be clever enough to scalp a quick profit along with the insiders. ?Some of them win, and others lose. ?Others believe the advertising, and stay to lose a ton.

Seth Klarman recently said,??It might not look like it now, but markets don?t exist simply to enrich people.? ?This needs to be remembered by all. ?Markets are for trading, and trading is a negative-sum game. ?Those who buy & hold valuable businesses for a span — that is a positive-sum game, because the underlying asset is appreciating.

To close: don’t buy promoted stocks. ?Never. ?Those who are paid directly or indirectly to encourage you to buy are at best sub-agents for the seller — they aren’t on your side. ?In buying promoted stocks, it’s like going to Vegas, minus the fun. ?You will lose. ?You will lose a lot. ? The house edge is fixed — it’s only a question of how much you will lose.

Avoid promoted stocks. ?As I often say: “Don’t buy what someone else wants to sell you, buy what you have researched and know has value.”

On the “770” Account

Posted on 6 March 201427 December 2016 by David Merkel

A letter from a reader:

Dave,

My Mom asked me about 770 accounts (apparently, she wants to open one). I’ve reserched [sic] them, but can’t quite figure out if it’s legit or not. So much, what I’ve found is that it is really some kind of insurance policy, it’s tax free, and it’s not openly advertized [sic].

Do you know anything about these accounts? Are they safe? Are they worth it?

Dear Friend,

We are talking about permanent life insurance here. ?I’ve written about this at least once before. ?The types of policies they talk about maximize the savings element inherent in permanent life insurance, and minimize the death benefit. ?Monies in the insurance policy accrue tax free, and at death they escape estate taxes. ?What could be better?

Well, permanent insurance is laden with fees, and agents love to sell it if they can, because the commissions are huge. ?Mortality charges are significant as well. ?As I often say with this kind of product, insurers love to create complex products because average people can’t tell whether they are getting a good deal or not. ?(Hint: usually, you are not getting a good deal.)

Life insurance is a very expensive way to manage assets, between the agents and the operating costs of the company. ?At present, insurance company assets yield more than market rates, which gives a subsidy to customers, but the day will come, like the late 70s — early 80s, where it was very much the reverse.

Aside from scamming the tax man, and providing protection to loved ones at your death, life insurance is a lousy vehicle for building wealth. ?If you have built?wealth already, it is an excellent way to preserve it for your heirs. ?But it won’t make you rich, and all of those advertising such accounts and those like them, make huge commissions off of permanent life policies if they are the agent. ?They make out far better than you will.

Are they safe? ?Yes, life insurance is safe. ?Are they worth it? ?No. ?Not that I am bullish on the stock market now, but under most conditions, the stock market outperforms the returns that insurance companies before expenses, much less after expenses.

This can make a lot of sense if you are rich already, but it will never make you rich. ?Having reviewed many of the advertisements for these products, they use a Madoff-like technique that tells you that you are being let in on a secret way of wealth. ?It’s all garbage, because permanent life insurance has been around for over 100 years.

Hey, let me tell you a secret. ?Did you know that insurance stocks ?have outperformed most other industry groups over the last 40-50 years? ?Buffett will tell you, insurance is a great business. ?Now, maybe I can give this a cryptic name, like a 321 fund, and tell people that owning the 321 fund is a way to wealth. ?(Psst… the same is true of the stocks of money managers… they do much better than mutual funds.)

Sadly, you would likely do better with my 321 fund, than the 770?account, especially if it is held within a tax-deferred account.

Be wary of any pitch that is too good to be true. ?Don’t buy what someone wants to sell you. ?Buy what you have researched and want to buy. ?Oh, and buy the 321 fund — really, buy it. 😉 ?(I feel ashamed.)

Final Note

THERE ARE NO SECRETS IN MONEY MANAGEMENT! ?THERE ARE NO SECRETS IN MONEY MANAGEMENT! ?THERE ARE NO SECRETS IN MONEY MANAGEMENT!

There is no secret club. ?There are no secret formulas. There are a lot of clever lawyers, accountants, and actuaries that the wealthy employ, but for average people, the high fixed costs won’t make it work.

If you want to be wealthy, you have to run your own firm, run it well, providing value to many. ?Don’t listen to those who say they have an easy way to wealth. ?They are lying, and are looking to make money off of you. ?Those who give you free advice are using you in some way. ?(Wait, what does that make me to be? Sigh.)

Signing off, your servant David, who does this for his own reasons…

Book Review: “The Up Side of Down”

Posted on 14 February 2014 by David Merkel

Failure. We’ve all experienced it. Can we benefit from it?? The answer is maybe, depending on the costs of failure.

If the costs of failure are high, e.g., repaying debts for the rest of life, people will avoid taking risks.? As a result, society will stagnate, because few take risks.

But if the costs of failure are low, people will take more chances, start more businesses, try experiments that might prove something bold.? That is one great thing about America; the penalties for failure are low.? Some have said we are the land of unlimited second chances.? After resigning from the presidency, Richard Nixon became an influential voice on foreign policy.

Megan McArdle uses her own life and many other societal problems to illustrate how a proper use of failure? can benefit individuals and society as a whole.? Failure is how we learn.? As some have said, “The wise learn from the failures of others, normal people learn from their own failures, but the stupid don’t learn.”

I enjoyed this book a great deal, but I want to point out a few of the chapters that particularly struck me.

In Chapter 8, she described the various ways that ideologues described the causes of the financial crisis.? The Left and the Right chose their own monologues to explain the economic failure that occurred.? The truth was far more banal, as average people bought into a housing mania, with financial institutions more than willing to facilitate it, levered as they were.? When the bull market ended, many people found themselves with too much debt relative to the value of their houses.

Chapter 9 was the one from which I learned the most, as it described a probation method used in Hawaii, that I would describe as the judicial equivalent of spanking.? When one on probation violates a term of probation, he gets sent to a rather grim prison for a short period of time.? Like spanking, it is short, and sharp.? Those on probation get tested randomly and regularly.? Most quickly get the idea that they need to change their lives.? The recidivism rate on this program is low.? Small failures get punished.? Resistance to the system means permanent jail.? No failures means freedom.

But what I really appreciated in the book was the willingness of the author to expose her own life failures — jobs, caring for her mother’s health, bad relationships, etc.? She learned from her mistakes, and ended up with a husband who loves her, a good job, and a home in DC, where there is not much debt on the property.? Well done.

My own life has had its share of failures, and they have all taught me something.? The question to you, reader, is what have you learned from your failures?? Memorialize failures, so that you can avoid them and their cousins in the future.? In that sense you can fail well.

There is not a bad chapter in this book.? I recommend it highly, and you will learn a lot.? I learned a lot.

Quibbles

None.

Who would benefit from this book: Anyone could benefit from this great book.? If you want to, you can buy it here: The Up Side of Down: Why Failing Well Is the Key to Success.

Full disclosure: The PR people offered me a book, and I accepted it.? I am glad that I did.

Serve Client Needs, or Die

Posted on 15 January 201415 January 2014 by David Merkel

Another letter from a reader:

Hi David:

Happy new year!

I’ve been reading the blog for about six months now and can’t thank you enough.? I have found so many of the post to be extremely thought provoking and helpful.? I also appreciate your openness about your faith.? As a young Christian man in the finance world I find it very encouraging.

I’m contacting you to ask a few questions but before I do that, let me give you some context.? This past April I started in sales on the fixed income trading desk at XXXXXXX.? My desk in particular is more “middle market” focused and has a strong tax exempt muni bias.? Although there is an effort to grow our mortgage business, most of our taxable business would be considered more “retail”.? That said, I have spent my last 10 months or so traveling YYYYYYY visiting with all sorts of institutional investors trying develop relationships that will eventually result in a trading relationship.? I’ve met with anywhere from small community banks, to a larger insurance company, and even sat down with a few portfolio managers at a state pension fund.

What I’ve learned from this experience is that one, we don’t have much of a “call” into some of these folks.? One example is the pension fund.? They really aren’t gonna care on any of our exempt positions and we dont bring any large taxable deals for there to be a great fit.? Ive also learned that there are many internal hurdles I am going to have to endure in order to develop a sustainable network of individuals to call on. (Account assignment, crm software, trader skill

All this considered, I’m wondering if you have any words of wisdom for a young aspiring fixed income sales person?? Any dos and dont’s from the coverage you’ve had over they years?? What can I do to set myself apart from my competition?

I realize you probably get inundated with emails so no rush on my end.? Just thought I’d reach out.?

Dear Friend,

I get a lot of emails, but I am not inundated.? Let me give you the perspective of a former corporate bond manager.? I divided my coverage into three groups: those who produced value every day, those who could help me occasionally, and those who could help me rarely, if at all.? I was not like those at the company that acquired my firm.? I would do business with anyone, so long as they offered value.

Yes, that is more difficult to deal with than limiting coverage, but I was aiming to do the best for my client.

You are in a difficult spot.? Your company needs to align itself with the market; it needs to seek a niche where it can add value for clients in a way that fits their tax status, yield needs and liabilities.? Look for niche areas where intelligent investors could provide adequate yields with safety.? I had several brokers that specialized in niches, and I used them to a high degree.

This would require a research effort from your firm that would reveal values to clients and potential clients.? But with most business efforts, client needs come first.? Re-orient the business to serve client needs, or die.

As for you, individually study your clients and potential clients to see what they need.? See if your firm can deliver that.? If it can’t, you may have to find another firm.? Big clients won’t deal with anything but the main office of the big firms, unless the regional coverage is particularly clever.? Medium and small clients are often happy to work with a local or regional firm, or the regional office of one of the big firms.

As coverage, you can be:

Prompt
Attentive
Knowledgeable about how to help your clients (if you can within your firm)
Empathetic, Friendly
Honest (that goes a long way)
Reliable
The guy who knows how to find the other side of a trade.

That last one is important: I’ve known coverage that could pry illiquid, hard-to-find bonds out of the hands of parties who don’t know what they are worth.? That’s a valuable skill, but difficult to do, except with insurance companies and mutual funds, which have to report their holdings at the security level by CUSIP.

But if your firm can’t deliver what your clients need, you will likely just be a nice guy on the phone who eats up the time of clients.? I knew a number of those, and I never got much business done with them.? You would be better off with another firm, if you can make the jump.

Warm up the Helicopter of Happiness

Posted on 28 December 201320 June 2017 by David Merkel

Here is a letter from a reader:

Hi David,

?Long-time reader of yours.? You put out some of the best blog content on the web and I am grateful for that.

I?ve got a question I?d hope you consider answering in the blog.? I?m almost embarrassed to ask it, for fear of appearing facile, but here goes:

Our economy is struggling with a lack of aggregate demand, low monetary velocity, and a whiff of deflation.? QE does not seem to be transmitting its monetary effects to the real economy, just helping to inflate asset prices instead.? So why wouldn?t we consider sending direct stimulus to households, similar to what we did in 2008-09, only on a much bigger scale?? Say there are 120MM households.? Send each one a $5k check, and if I?ve got the zeroes right, that?s a ?mere? $600B we?re borrowing to disburse ? about 60% of what the Fed is doing annually with QE.? Most of the money would recycle and multiply quickly to the economy (net of what gets allocated to debt paydown, and what gets banked by the well-off).? And due to some current one-times in the Federal budget, we?ve actually got a better balance sheet in the moment to do something with added borrowing/spending.?

Crazy thought, but these are uncommon times.? Curious what you think.?

Dear friend, I think about this in two ways: ethics and metaphysics.? The metaphysics are easy — yeah, let the Fed remit all of its seigniorage to the people rather than to the Treasury.? Far better than letting the government spend it.

But the ethics are touchy.? How do we define ethical taxation systems?? My view is that people should be taxed according to their increase in net worth, and at a flat rate, but with no ability to defer income from taxation.? Most wealthy people don’t care about tax rates because they can find ways to defer/reduce taxable income.? This is a major reason why you should distrust the Democrats, because their desire to raise tax rates would do little.? This is also a reason to distrust the GOP, because there is no decent reason to decrease tax rates.

We need to tighten up the definition of income in the US, and no longer allow citizens and businesses to defer income.? If we taxed all economic activity as it occurred we would have balanced budgets.

The rich aren’t paying enough in the US, not because of tax rates, but because they can hide their income.? That is the way that policy should proceed, to make the wealthy pay according to their increase in net worth.

I’ll write about this more later, but the main idea is to tax people proportionate to their increase in wealth.? That is the Bible’s solution for how people should give.

Protect Your Older Family & Friends

Posted on 26 December 2013 by David Merkel

This article was spurred by this article in the Wall Street Journal:?Financial Scammers Increasingly Target Elderly Americans. ?The elderly are indeed a target because of three reasons:

The poor elderly need to make money, and they become prone to scams that offer easy earnings, while milking them for “startup costs” and things like that.
The middle class elderly need to stretch the meager incomes that they have amid low interest rates (courtesy of the Fed), and are tempted by those offering plans where they can earn more on their assets.
The rich elderly have money — they are prime targets even if they are smart.

Seniors are targets, and not just by those who are regarded as fraudsters. ?I had an older friend who was approached by the sales professionals of a major bank to manage her $3 million portfolio, which was already well-managed. ?They made all manner of promises of what they would do for her, in exchange for a fee on assets — 3%/year.

At that level of expense, there are a lot of things that could benefit the Senior in question, but the nice-looking, unctuous people from the bank sell an expensive mirage. ?I’ve never seen a bank that was genuinely good at asset management, and certainly not to the degree of charging a 3% fee.

Every elderly person needs a younger skeptical friend who is sharp enough to be able sense when a deal is sketchy, and the elderly person needs to have the discipline to run things by their younger friend.

As I so often say, “Don’t buy what someone wants to sell you. ?Buy what you have researched for yourself.” ?The elderly should develop a hatred of marketers. ?Hang up on anyone who is offering something that is “too good to be true” because it almost always is too good to be true.

To those who Lead Churches

I am an elder in my Reformed Presbyterian congregation. ?I have served my denomination on the boards of its college, denominational trustees, finance committee, and pension board. ?In my congregation, we watch out for our elderly members. ?We make their requests a priority. ?If they need financial advice, I give it to them for free. ?God rewards those who aid widows.

I encourage Church leaders who have enough financial sense to be able to know when something financial “feels funny” to gather their elderly congregants, and tell them to call you if they are tempted by slick-talking salesmen to make them part with money.

To those who Love Elderly Family or Friends

Take the time to tell them to be careful, and that you are available to help them whenever someone calls them out of the blue, where that party will benefit from money from the senior, no matter what it is. ?This isn’t as tough as telling them to give up the car keys (been through that once). ?But they do need to be sensitized to two things:

There are people out there who want to cheat them, and
You love them, and will help them in any situation like that.

We’re supposed to take care of and honor elderly people anyway. ?Societies that don’t do that tend to fail. ?So look out for your elderly friends to the degree consonant with your relationship to them.

Three Dimensions, and Printed, but not Real

Posted on 10 December 2013 by David Merkel

Okay, let’s run the promoted stocks scoreboard:

Ticker	Date of Article	Price @ Article	Price @ 12/9/13	Decline	Annualized	Splits
GTXO	5/27/2008	2.45	0.014	-99.4%	-60.9%
BONZ	10/22/2009	0.35	0.001	-99.6%	-74.2%
BONU	10/22/2009	0.89	0.001	-99.9%	-79.4%
UTOG	3/30/2011	1.55	0.001	-99.9%	-93.0%
OBJE	4/29/2011	116.00	0.350	-99.7%	-89.1%	1:40
LSTG	10/5/2011	1.12	0.015	-98.7%	-86.2%
AERN	10/5/2011	0.0770	0.0001	-99.9%	-95.3%
IRYS	3/15/2012	0.261	0.000	-100.0%	-100.0%	Dead
RCGP	3/22/2012	1.47	0.300	-79.6%	-60.4%
STVF	3/28/2012	3.24	0.490	-84.9%	-67.1%
CRCL	5/1/2012	2.22	0.028	-98.8%	-93.5%
ORYN	5/30/2012	0.93	0.038	-95.9%	-87.6%
BRFH	5/30/2012	1.16	0.420	-63.8%	-48.6%
LUXR	6/12/2012	1.59	0.015	-99.1%	-95.6%
IMSC	7/9/2012	1.5	0.800	-46.7%	-35.8%
DIDG	7/18/2012	0.65	0.049	-92.5%	-84.4%
GRPH	11/30/2012	0.8715	0.053	-93.9%	-93.5%
IMNG	12/4/2012	0.76	0.063	-91.7%	-91.4%
ECAU	1/24/2013	1.42	0.330	-76.8%	-81.2%
DPHS	6/3/2013	0.59	0.007	-98.8%	-100.0%
POLR	6/10/2013	5.75	0.090	-98.4%	-100.0%
NORX	6/11/2013	0.91	0.160	-82.4%	-97.0%
ARTH	7/11/2013	1.24	0.182	-85.3%	-99.0%
NAMG	7/25/2013	0.85	0.785	-7.6%	-19.1%

	12/9/2013		Median	-97.2%	-88.4%

Market regularities are heartening.? It’s astounding how regular the losses are from promoted stocks.

On to tonight’s loser-in-waiting, Makism 3D Corp [MDDD].? This is another company with no revenues, has never earned a dime, etc.? It used to be a company that supposedly was trying to improve cellular telephony, but never earned a dime doing so.? So they bought a UK company that was supposedly working on 3D printing, and surrendered the company to them.

It would be incredibly surprising that a company of three people would be able to overthrow the 3D leaders — DDD and SSYS.? They have invested a lot of time, money, and effort to improve 3D printing, and a startup can beat them with less than a million bucks, and less than a year, with a young undifferentiated staff?? I don’t think so.? Or, as an old-style pinball machine might say, “TILT!”

I don’t buy it, and you should not either.? As with all promoted stock scams, the hard part is identifying who benefits.? My guess is affiliates of the guy who wrote the glowing report.? The company has disclaimed ay responsibility.

In any case, avoid promoted stocks.? Do your own research, and buy stocks that you find attractive.? Don’t buy anything that another is trying to pitch you.

Two zeroes merge, and should we expect a positive result?? I think not.