SEC sets new whistleblower record. Can investors really prosper? How?

 

Ray Bursey, one of our Newfoundland members, not long ago, sent a link to a recent article in the INVESTMENT EXECUTIVE , which dealt with the record payout by the US Securities and Exchange Commission (SEC) to a record number of whistleblowers.

Record payout, record number of whistleblowers by the end of the first quarter of this year?! Think this is an April Fool’s statement? It is not. What will that look like by the end of the year?

Recently, we posted an article titled Wall Street integrity, the oxymoron to end them all.

The article dealt with SEC enforcement actions with associated fines against Wall Street investment banks. In 2020, largely due to COVID-19, the SEC brought a record low of 405 actions against investment banks.

And the amount? At $4.68 billion, the amount was a record high!

And the reasons? Market manipulation, insider trading, misleading information about securities, the omission of important information about securities, stealing customers’ funds or securities and other crimes that would hurt investors if undiscovered.

And who pays? It appears that the investment banks pay, but for the real answer, look in the mirror.

Who pays the whistleblowers? Again, look in the mirror.

Can investors prosper, Wall Street “integrity” being what it is?

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A sincere welcome to new members! How to benefit from our suggestions.

A sincere welcome to the new members who joined us in March and thank you to those who referred others to us! We owe you.

New members can develop our investing habits and grow rich.

With over 440 articles that we have posted, new members might find it a challenge to select the ones from our library that most apply to their situation. Established members might benefit from a review.

We suggest the links below.

1. How is Monday Morning Millionaire Program opinion different from free advice from banks?

2.Anyone can equal the market. Few do. Why is that? Part 1

3.Anyone can equal the market. Few do. Why is that? Part 2

4.Anyone can equal the market. Few do. Why is that? Part 3

5.Better asset allocation leads to improved portfolio.

6.A Question About Foreign Markets

7.Wall Street integrity, the oxymoron to end them all

8.How to tilt risk/reward in our favor.

9.How to generate extra income safely and effectively.

10.Can the hopes of the average investor be realized?

With the habits of the Monday Morning program, luck hardly matters.

Good luck!


We have designed the Monday Morning Millionaire Program to offer abstracted investment education. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.

The program does not provide any investment advice or endorsements.

Members can read our posts in less than five minutes. Following and studying the links embedded in these posts would take longer. How members manage a post depends on their level of interest and investing knowledge.

De gustibus non est disputandum plus covered calls for income this week

Wanting to celebrate a special event, a couple went to their favourite high-end restaurant and ordered dinner and a $1000 bottle of wine. They raved about how exquisite it was! Worth every penny!

It turned out that the waiter had made a mistake and brought them a $30 bottle of wine!

Draw your own conclusions.

A single bottle of each of the 10 most expensive wines today would fund a comfortable retirement.

  1. Screaming Eagle Cabernet 1992 – $500,000
  2. Jeroboam of Chateau Mouton-Rothschild 1945 – $310,000
  3. Cheval Blanc 1947  – $305,000
  4. Shipwrecked 1907 Heidsieck – $275,000
  5. Chateau Lafite 1869 – $230,000
  6. Chateau Margaux 1787 – $225,000
  7. Ampoule from Penfolds – $168,000
  8. Chateau Lafite 1787 – $156,450
  9. Henri Jayer, Vosne-Romanée Cros Parantoux 1999 — $136,955
  10. Cheval Blanc St-Emilion 1947 – $135,125

It might be worth reviewing the greater fool theory.

On another issue, here is what Rosi and I plan to do today when the market opens at 9:30 AM.

Our core portfolios hold nothing but SPDR S&P 500 ETF Trust (SPY). Warren Buffett would approve.

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The greater fool theory; can it make you rich?

Note in the above chart, which we frequently show, that the best investments, global equities, are the only ones producing wealth. Bonds and cash (not shown) can help equities, but they produce nothing new.

And yes, any of the others can make you rich. To do so, these others depend on the greater fool theory. Investors buy them hoping that a greater fool will come along to whom they can sell at a higher price.

I am an amateur violinist. I once bought a violin bow for $3000 and sold it a few years later for $15,000. My equities, including Berkshire Hathaway (BRK), didn’t even come close.  At the start of their careers, some of my professional violinist friends bought a violin for the price of a Toronto house. At the end of their careers, some 35 years later, they sold these violins for the greatly appreciated price of three Toronto houses!

For every bow and violin described above, there are thousands and thousands, the price of which goes nowhere.

The Monday Morning way of investing is the most reliable, evidence-based way to invest successfully. Contact me for details. (705-441-4566 or milan@drmilan.com)

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Can the hopes of the average investor be realized?

Would the average investor be satisfied with a 6% annual return? Is that a modest rate of return? Is a 6% annual return realistic for the average investor?

Not a hope in hell!

17 trillion dollars are invested at negative interest rates today. Much of that is smart money. That means that putting money in a bank would require depositors to pay the bank rather than expect some interest payment from the bank.

Depositors paying the bank?

In his profoundly influential book, The Battle for Investment Survival, originally written in 1935, Gerald Loeb states: “Indeed, should some super-solvent agency agree to preserve the buying power of capital for a substantial length of time at a stated fee per annum, informed people would embrace the plan enthusiastically if they felt there was any real possibility of the agency staying solvent.”

Throughout history, hyperinflation, inflation rate of 50% or more per month, has victimized savers. The Weimar republic after World War I, Venezuela, Hungary, Zimbabwe, and Yugoslavia more recently, are examples. Wouldn’t savers gladly pay 1% annually to keep their money in safe-haven assets such as the  Swiss franc or the US dollar, backed by the largest economy in history?

In this global environment, Monday Morning members have averaged a 6% real return for several decades now. How do they do that?

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Will 2021 be better than 2020 was? March 13.21 Survey results

Greetings everyone,

First of all, a sincere thank you to all those who took the time to respond! We know full well that there are many, some legitimate, mostly hucksters, wanting some of your time.

On Friday, March 13, 2021, we asked our members and subscribers whether they think that 2021 will be better than 2020.

You can see the results below.

Choice Percentage
Yes, I am trying to stay positive. 85.7%

No, this year will be as bad.

3.6%
It is too early to tell. 10.7%

Some member comments follow.

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The evidence-based record shows that picking stocks is futile for most.

Larry Swedroe’s column in CBS Moneywatch is worth reading. Recently, he stated:

“For the period 1983-2008, the Russell 3000 (which represents about 98 percent of the investable market) returned almost 10 percent a year, producing a total return of 1,074 percent! During this period, about 40 percent of stocks had a negative return and about 20 percent of stocks lost nearly all of their value. Sixty-four percent of all the stocks underperformed the Russell 3000. Clearly a small number of stocks are responsible for a majority of the gains — about 10 percent of stocks recorded huge wins in excess of 500 percent.”

Focused on writing little and saying much, the Monday Morning program would state:

“Most stocks will cost most investors money, most of the time.”

Ergo, the program recommends investing in the entire market for the long term via an exchange-traded index fund.

Yesterday, the Dow Jones Industrial Index, one measure of the market, closed at 32,627.97. In November 1972, it closed above 1,000 for the first time.

That is what 10% compound annual growth rate does in 48 years!

And how does the Monday Morning program equal these results?

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Could Palantir be a winning security? We have the answer.

One of our members, an investment banker with an MA in economics and an MBA, an ultra high net worth  successful investor, recently bought some shares of Palantir. The link below leads to details on the company.

https://seekingalpha.com/article/4414059-palantir-rising-war-in-garden-of-google?mail_subject=googl-palantir-rising-war-in-the-garden-of-google&utm_campaign=rta-stock-article&utm_content=link-0&utm_medium=email&utm_source=seeking_alpha

Following the link will allow one to be better informed about Wintel Wars, DARPA programs, Europe’s GAIA-X and more. It might, but probably won’t improve one’s investment results.

Our member spends a good part of the day, every day managing his portfolios; Palantir is a small percentage of his portfolios.

…good part of the day…, …a small percentage…?

How do these two align with the Monday Morning investment philosophy? Do they get better results than the Monday Morning investment philosophy? What about better results for the time spent?

Investors who have the interest and who are investment bankers with an MA in economics and an MBA, might be able to outperform the market. Few investors qualify.

Nevertheless, we could teach a high school student in less than an hour how to equal the market.

Unless we are cherry picking, the market has provided investors with the best returns for over 100 years, as you can see in the chart above. Yet, equalling the market is a feat which a few investors achieve. SPIVA shows that in a convincing manner.

To review why that is so, go here, here and here.

Warren Buffett’s mentor Benjamin Graham once said, “To achieve satisfactory investment results is easier than most people realize.”

And what does it take?

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Can we trust our broker the way we trust our doctor?

The simple answer is, no! Not even close!

When I started investing over 50 years ago, my broker convinced me that his role in my financial health was like my doctor’s role in my physical health. Medical doctors have justly earned society’s trust, ergo, I trusted him.

He knew that I had money set aside for income taxes. He stated that if he invested that money, I could pay my taxes with the winnings and have lots left over.  To make it even more exciting, he could lend me money (margin my account) and we could make even more.

Who could refuse that?

And the outcome?

He received twice as much in commission income; I received margin calls. The value of my securities had dropped and I had to repay that borrowed money by selling these securities at a loss. More commissions for my broker.

The decline in the value of my securities was not his fault, of course. He had a long list of reasons why these things happen.

To review the conflict of interest between Wall Street and Main Street go here and here.

Your broker’s skills at persuasion exceed his skills at investing by a wide margin. He will laugh at your jokes and make you feel special.

You can do much better on your own. See habit number two.

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