by Chris Billowsin Business Beller0 commentstags: Corporate Corruption, Foolishness, Human Condition
I was reading about Bernie Madoff’s investment scandal and it suddenly struck me that defined-benefit pension plans (public and private) operate on the same principal as Madoff’s Ponzi plan. Bernie Madoff defrauded his investors of $65 billion dollars with a massive ponzi scheme. Madoff was smart by never offering suspicious high returns to everyone, but did guarantee a steady and modest return regardless of the state of the stock market. This latter point should be suspicious to any intelligent investor. Yet that is exactly what our public and private defined benefit plans are doing. They guarantee a return or benefit rate. Yet how can they do this? Just like Madoff did, by using new money brought in from new investors (or pension contributors) to help meet the payout obligations. As long as new citizens grow up and are forced to contribute to the pension plans, the plan remains viable. But, perhaps we would all be better served by a defined-contribution plan, where the return is based on how well one’s money is managed, instead of compelling citizens to make pension contributions to maintain unsustainable payouts.
by Chris Billowsin Business Beller0 commentstags: Change of Mind, Corporate Corruption, Free Enterprise
I have re-watched the Credit Crisis video a few times and each time its message really hits home. Not only was the crisis created by collective greed, but also a sophisticated scheme to generate money without actually contributing much useful. It was all about getting rewarded without doing any heavy work. Sure sounds like socialism. It is a socialist ideal to have people have all their needs met with minimal effort on their own part. Only within socialism are people allowed to make poor choices and still get away with it, because after-all the larger community will take care of you. Yet what we are witnessing is not socialism in its pure form. What we are seeing is a kind of socialism known as State Capitalism. This is where governments in the US, UK, and other places prop up their banks and financial institutions. This ends up saving and rewarding many of the same people who created the credit crisis. Yet, just like in the video, the state stood aside and allowed this to happen and even contributed to it by keeping interest rates too low. The state has to step in because it helped create the crisis in an […]
by Chris Billowsin Business Beller0 commentstags: Smart Money Management
My first investment was in mutual funds which is what most people invest in because the mutual fund industry is very effective at promoting its products. There is a certain sense of security knowing that everyone else is also buying mutual funds. Unfortunately for the most part we have been sold a product that does what it says but does not deliver what you need. Yes, mutual funds do invest in the stock market. Yes, mutual funds do diversify the risk over hundreds of stocks but no, most mutual funds do not give you the returns you need. Diversify and Die? Mutual Funds will give you built in diversification. Some of them invest in entire stock market indexes, others invest into a combination of stocks and bonds, and some invest into other company mutual funds (which are called Fund of Funds, yikes!). Diversification of your investment money is important. You should never put all of your money into one company. Because you have no control over how that company does or how other investors react to the company’s news, it is best to hedge your dollars by spreading the risk around. Yet it is possible to over-diversify. Because mutual funds […]
by Chris Billowsin Business Beller0 commentstags: How to Understand Money, Smart Money Management
Just like there are thousands of stocks to pick, there are hundreds of stock picking systems. And more are being created all of the time. But just like most stocks, most of them are not worth your time. This article will tell you what is wrong with most stock picking systems and what to look for in a system that works. There are basically three fundamental mistakes that need to be avoided. They are: 1) Choosing a system that is too narrow. 2) Choosing a system that is too broad. 3) Choosing a system that is too inflexible. Mistake #1: Picking a System that is too narrow Some systems will base their entire strategy on just technical indicators, multi-day candlestick patterns, or some form of divergence. The problem is that all of these systems are only using two factors: price and volume. Imagine if you were about to invest in a horse that competed in racing. Would you be satisfied with only the weight and speed of the horse? No matter how you graphed those two variables, they are only two criteria. You should also be interested in the breed of the animal, the competition it was racing against, the […]
by Chris Billowsin Business Beller0 commentstags: Smart Money Management
Do you believe in Dragons? No, I didn’t think so. While I do not believe in dragons as actual, living beings I do believe that they exist as three harmful things that can steal your financial wealth. Just like the King Arthur tales of old, these dragons will steal your wealth. Yet evolution has taught these dragons to be more subtle and sneaky and take from you without you even knowing it. Like a Knight of the Round Table you need to challenge these beasts to protect your financial kingdom. The purpose of this article is to tell you about these dragons and how you can fight them. Meeting the Dragons 1) The first is known as The Dragon of Taxes, 2) The second dragon is known as The Dragon of Inflation, and 3) The third and most important dragon is known as The Dragon of Poor Performance. Why is the third dragon the most important? Well, the first two dragons you cannot defeat. The Dragon of Taxes and the Dragon of Inflation are immortal! You see, the Dragon of Taxes represents the government’s ability to levy taxes on your earnings and wealth. Governments are always hungry for more revenue […]
by Chris Billowsin Business Beller0 commentstags: Customer Service, Defining Life, Human Condition
I just dealt with a situation where my financial institution originally said no to me when I tried open up a new business savings account. I expressed my frustration, then went ahead and asked another branch manager to do the same thing – he said yes. It just proves to me that people are more important than institutions. One person interprets rules one way, the other a different way. The thing to remember is not to ask for something that is unreasonable or illegal. In my case it was about the interpretation about a specific banking package. I explained to both how both the documentation and the staff below them interpreted the account the same way I did. That reasoning did not work with the person who said no, but thankfully worked with the person who said yes. Of course, I am more interested in bringing my personal business to the reasonable branch manager. Giving the answer the customer expects is easily the simplest way to retain them.
Recent Comments