Predicting and Avoiding the Next Financial Crisis

Fantastic TED talk showing that crises are in fact predictable and thereby avoidable. 

High-Speed Traders Profit at Expense of Ordinary Investors, a Study Says

By NATHANIEL POPPER and CHRISTOPHER LEONARD

Published: December 3, 2012

A top government economist has concluded that the high-speed trading firms that have come to dominate the nation’s financial markets are taking significant profits from traditional investors.

Read the article: http://www.nytimes.com/2012/12/04/business/high-speed-trades-hurt-investors-a-study-says.html?partner=rss&emc=rss&_r=1&

Living Cells Show how to Fix the Financial System

Living Cells Show how to Fix the Financial System

Great piece exploring the role of hierarchy and networks in the financial system, and how we ignore lessons learned from nature at our peril. In a nutshell, "too big to fail" banks are simply not good for the stability of the system. An interesting read!

The 100 Things I've Learned in Investing

Some excellent advice from Anand Chokkavelu, CFA

http://www.fool.com/investing/general/2012/06/29/the-100-things-ive-learned-in-investing.aspx#.T_q242jDldw

If you only read one point, read the first one! "1. Most of this list is dedicated to insight on beating the market, but know this: It's darn hard to beat the market. Ninety-nine percent of people are best served steadily buying and holding low-cost index funds at the core of their portfolios -- and I may be understating that 99% figure."

The Quiet Coup

THE CRASH HAS LAID BARE MANY UNPLEASANT TRUTHS ABOUT THE UNITED STATES. ONE OF THE MOST ALARMING, SAYS A FORMER CHIEF ECONOMIST OF THE INTERNATIONAL MONETARY FUND, IS THAT THE FINANCE INDUSTRY HAS EFFECTIVELY CAPTURED OUR GOVERNMENT—A STATE OF AFFAIRS THAT MORE TYPICALLY DESCRIBES EMERGING MARKETS, AND IS AT THE CENTER OF MANY EMERGING-MARKET CRISES. IF THE IMF’S STAFF COULD SPEAK FREELY ABOUT THE U.S., IT WOULD TELL US WHAT IT TELLS ALL COUNTRIES IN THIS SITUATION: RECOVERY WILL FAIL UNLESS WE BREAK THE FINANCIAL OLIGARCHY THAT IS BLOCKING ESSENTIAL REFORM. AND IF WE ARE TO PREVENT A TRUE DEPRESSION, WE’RE RUNNING OUT OF TIME.

By Simon Johnson

Read more: http://www.theatlantic.com/magazine/print/2009/05/the-quiet-coup/7364/

Sorry, Facebook Investors: It's Mostly Your Fault

Stop me if you've heard this one.

Thousands of largely novice investors line up for what's been billed as "the opportunity of a lifetime" to buy a "can't-miss" investment destined for easy gains. Pundits take position and say it's worth buying at "any price." People whisper in anticipation over how much they'll make. Fifty percent? Double their money? More?

In the end, the floor drops out and they're left with hefty losses -- totally predictable losses. Furious investors want answers. What went wrong, they ask? The answer is usually complicated, but has a common denominator: You overpaid. Fell for the hype. Gambled and lost. It happens.

This could explain the dot-com bubble or the housing collapse. But it also sums up what's happened to Facebook (Nasdaq: FB  ) over the last few days.

 Read more: http://www.fool.com/investing/general/2012/05/24/sorry-facebook-investors-its-mostly-your-fault-.aspx

WORLD BANK BOSS: We're Headed For "Impending Catastrophe" -- "A Rerun Of Great Panic Of 2008"

Read more: http://www.businessinsider.com/world-bank-boss-impending-catastrophe-a-rerun-of-great-panic-of-2008-2012-6#ixzz1wgfhXu3V

The head of the World Bank, Robert Zoellick, is about to step down after a 5-year term.

That means he can say what he really thinks.

The Correlation Conundrum and What to Do About It: With the rise in correlations, diversification is more important than ever

The Correlation Conundrum and What to Do About It: With the rise in correlations, diversification is more important than ever

Over the past two decades, the amount of equity assets invested passively has increased from roughly 10% in 1993 to about 30% today. At the same time, correlations between individual stocks have generally risen. Let’s take the S&P 500 as an example: Based on the average daily correlation over the trailing six months, correlations have risen from roughly 10% in 1994 to 66% at the end of 2011

The Hour Glass Economy

While global diversification is important, America remains the largest economy on the planet. So, how do you successfully invest in the USA?

This article offers some insights into America's "hour glass economy".

http://www.algemeiner.com/2012/04/09/corporations-plan-for-post-middle-class-america/

Some Helpful Tips if You are Just Starting Out

Morningstar has some suggestions for investing newcomers looking for diversification, especially if you don't have a lot of money to get started.

http://www.morningstar.co.uk/uk/news/article.aspx?articleid=102876&categoryid=5&refsource=newsletter

There's been some negative press about ETFs. This article is about why ETFs (and ETPs - exchange traded products) are a good investment choice.

http://www.morningstar.co.uk/uk/news/article.aspxarticleid=102268&categoryid=5&refsource=newsletter

Ten Commandments of ETF Investing

What began as a handful of securities seeking to replicate widely-known stock and bond indexes has grown into a lineup of more than 1,000 funds, offering exposure to nearly every asset class, region, and investment strategy imaginable. While this impressive growth has enhanced the arsenal of securities available to ETF investors, it has also created the potential for misuse and made finding the right ticker symbol a bit more challenging.

And while ETFs offer countless potential advantages relative to strategies that revolve around mutual funds and individual stocks, there are some potential pitfalls along path to enhanced cost and tax efficiency. Below, we offer up ten pieces of advice that will help to maximize the benefits of exchange-traded products for all types of investors, including tips on minimizing expenses, avoiding potential pitfalls, and picking the right fund for your portfolio.

Huffington Post: DAN SOLIN: Mega-Deficits and Your Investment Portfolio

 

		DAN SOLIN: Mega-Deficits and Your Investment Portfolio
	Most investors would not consider having heart surgery performed by someone without stellar credentials. Yet, they entrust their life savings to "investment professionals" with no formal training in finance.

 

Huffington Post: 1 In 4 Baby Boomers Say They'll Never Retire

 

		1 In 4 Baby Boomers Say They'll Never Retire
	WASHINGTON -- Baby boomers are starting to retire, but many are agonizing about their finances and believe they'll need to work longer than they had...

 

DAN SOLIN: Investing USA Style

 

		DAN SOLIN: Investing USA Style
	You don't trust the securities industry. You can't forget it was these "investment gurus" who brought us to the brink of a worldwide depression. If they can't manage their own money, what qualifies them to manage yours?

 

http://www.fool.co.uk/news/investing/2011/02/22/always-expect-the-unexpected.aspx

Boomers Find 401(k) Plans Come Up Short - WSJ.com

http://online.wsj.com/article/SB10001424052748703959604576152792748707356.html

Finance Formulas for Everyone

People from all walks of life, from students, stockbrokers and bankers; to realtors, homeowners and household managers, are finding finance formulas incredibly useful in their day-to-day lives. Whether you use the finance formulas for personal or educational reasons, having access to the right finance formulas can help improve your life.


Whether you are dealing with compound interest, annuities, stocks, or bonds, investors must be able to effectively evaluate the level of value or merit in their financials. This is done by estimating future profits and calculating them against present values or equivalent rates of return.

How to Pick the Right Mutual Funds

We recently covered the why and how of purchasing a mutual fund, but you were probably left wondering what exactly you should be looking for when choosing which funds to buy. It’s a great question and can often be a daunting one for a beginning investor. In reality, it’s relatively easy to research and find good mutual funds. Once you’ve done it a few times, you may actually begin to enjoy the thrill of the hunt!

NYTimes: Financial Crisis Was Avoidable, Inquiry Finds

From The New York Times:

Financial Crisis Was Avoidable, Inquiry Finds

A Congressional inquiry said bankers and regulators could have seen the 2008 crisis coming and stopped it.

http://nyti.ms/gBFn7Z

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