READERS HAVE BENEFITED
The following quotes come from past articles and reports
written and distributed by CHANNER – UNIVERSITY™ regarding
the Banks, The Fed, Real Estate speculation, and Wall Street
The top five investment and brokerage firms will pay an estimated $36 billion in bonuses to their employees for 2006. Their average compensation is 20 times the national average, and those bonuses are 10 times the U.N. World Food Program’s 2006 budget, which feeds 79 million people.* Wall Street is not only eating our ‘lunch’, they are eating the breakfast, lunch and dinner for 79 million other people for the next ten years. No greater evidence could exist that Wall Street still believes in the words of Michael Douglas in the movie Wall Street, when he proclaimed, “Greed Is Good”. Aside from the disgrace these folks bring upon themselves, the lesson to be learned is that every unnecessary fee investors pay serves to deplete their future net worth, and further contributes to unnecessary, if not disgraceful, bonuses and profits for the elite.
(Note: Warren Buffett continues to draw his modest salary of $100,000. How could anyone really think they should be paid hundreds of times what the world’s best investor is paid?)
The big Banks have changed. They no longer are caring local institutions that feel responsible for the best interest of their customers. There was a time when a bank would not lend money if they thought the borrowers were going to use the money foolishly, imprudently, or to speculate. They simply said no. But today the Banks are huge impersonal institutions, and are likely to continue this process of change, as the big ones continue to gobble up the little ones.
How about a new credit card at an interest rate of zero for six months, or 5.9% forever? Read the fine print and you will find that there are many reasons they can declare you to be no longer eligible for this rate. They can even do it for “any reason they deem”, if you read the fine print carefully. But typically, just be one payment day late, and your rate changes to 25-30%, or more.
There have always been good reasons for borrowing money; there have always been bad reasons as well. Borrowing money to finance a trip to Las Vegas has topped the list of bad ideas, for as long as many of us can remember. But when speculators borrow huge sums to buy stocks, real estate, or to speculate on energy, they push prices up to unsustainable levels, and someone often gets hurt. If it is the speculator, who cares? If it is the general public, their welfare, their pension account, or their need to sell their home in an orderly market, everyone should care. But the speculators are greed driven, and they don’t care. They are literally laughing – all the way to the bank. And when they get there, the banks have a good laugh as well. Their profits have never been better. Speculating is no longer frowned on by the big banks. And we should be aware. Thank goodness there are still community banks which behave like responsible souls, and who care about the communities they service.
Alan Greenspan, “super-testifier” before congress, is doing it again. He sees speculative excesses, watches them, and then fails his own convictions by what he doesn’t do.
- There is excessive price speculation taking place again.
- There is a cause.
- There may be significant consequences.
- Real Estate & commodity speculators beware.
Greenspan won’t do it right, again. We do not know why. We suspect it has more to do with politics than failed intelligence. It amazes us and disappoints us. But that is not the point of this paper. The point is to alert you, the legitimate investor, to three things:
- Greenspan may not protect you from the behavior of greedy speculators, and their inevitable aftermaths.
- Speculating is gambling, it is not investing, and it never will be the stuff that salt-of-the-earth folks are proud of.
- It matters what you pay for assets. A major part of a successful investment is determined by the price paid for it.
In conclusion, write your representatives. Make your voice heard. Tell them:
“You failed us in the nineties; are you going to do it again?” Get the congress talking turkey. The growing of bubbles is to be prevented. It’s the 21st century.
“Are you really going to let the vigilantes, the hedge funds, and the banks chase profits with no regard for the public? If you look the other way again, you will lose my vote.”
2005 (from Wall Street is Broken):
Brokers are really professional sales people. Any person of average intelligence can acquire the registration required to be a broker. Revealingly, the registered brokers are regulated under the “Uniform Sales Practices” regulations. There is neither a requirement nor a provision that brokers have the knowledge or experience to be investment management experts. Ironically, it is the same great sales people that have the ability to cause their customers to lose sight of these realities.
Further, many of the brokerage offices that employ these sales people may not be designed to protect your best interest either, which is why they need exceptional sales people to keep the business model going. The proof? Check the “want ads.” Look at the ads for stockbrokers. Read those ads and you may quickly find proof that it is sales skills, not investment skills, which are sought. It’s right there, in black and white. Or if you have the courage, go to a large branch of any major brokerage firm and ask the Branch Manager (Sales Manager) to point out the top two brokers, based on profits for the branch. This question may embarrass them, but they will be able to answer it, if they choose – because they measure those results very carefully, and they know precisely who makes the most for the branch, and who makes the least. Now ask them the question that really counts. Which brokers make the greatest profits for their trusted clients? They may not be able to tell you. Why? Because historically, these organizations have chosen to not measure it. And common sense dictates that if they cared about it, they would measure it. The truth is – they care about their profits and paychecks, but they do not care about brokerage account performance – or they would measure it. Ever get a performance report on a brokerage account?
The Wall Street crowd has historically been so driven by greed that Hollywood even made a movie about it that (actually) attempted to convince people that “Greed is Good.” No apologies for the traditions of this club. Not long ago, I heard the following characterization: Wall Street steals from the public, gives a piece of the take to the politicians, then the politicians create a few rules hoping to convince the public that are being cared for. Sound cynical? 27 years in the business confirms that description. Fortunately, there are exceptions. A hand full of regionally managed firms were different. But in the overall, the ways of Wall Street have not historically put the customer first. The fines levied on the big firms in 2002 and 2003 barely impacted their earnings. There is no reason to believe these institutions will ever have trusted relationships with either their customers or their brokers, who are leaving in some cases, in search of independence and legitimacy.
The opinions voiced in this report is for informational purposes only and is not intended to provide specific recommendations for any individual. Consult a financial professional to determine what is appropriate for you. The information and data were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed, and the giving of the same is not deemed an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. For additional information, call 1-847-934-3800.
1625 Colonial Parkway, Inverness, IL 60067
Securities Offered through LPL Financial
A Registered Investment Advisor
Neither Channer Investment Management, Inc., nor LPL Financial have any proprietary investment products to sell, investment banking relationships to promote, or any other business conflicts to get in the way of providing our trusted clients with unbiased advice. Our fee-based compensations are not tied to any revenue-sharing arrangements; they are tied to the performance of our recommendations.