22. July 2010 by Dan Walkow, CFA, CMT.

Most investors who buy mutual funds are unaware of the hidden charges embedded in the funds themselves. If not required to “write a check” hidden fund fees continue to escape investor’s attention. The United States Securities & Exchange Commission aims to force transparency, a win for investors.

If you invest in mutual funds read more here.

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23. May 2010 by Dan Walkow, CFA, CMT.

I have never been a fan of financially engineered products by Wall Street or Bay Street as more often than not these products benefit the broker or issuer far more than the client.

In recent years the latest “shell game” is a product called principle protected notes. These are very complicated deals where the capital value of the investment is supposedly “protected” meaning that if the market goes down that the investor is guaranteed the principle at a certain date. Furthermore these things are very expensive and because the charges are “internal” and embedded in the investment itself one cannot not see the true cost.

These types of investments are commonly issued by insurance companies in both Canada and the USA.

These types of products go against most of the basics I look for in an investment including transparency, low-c0st, liquidity and ease of understanding.

Gretchen Morgenson at the New York times documents a classic case  here. Worth a read if you own or are considering buying one of these investments.

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18. April 2010 by Dan Walkow, CFA, CMT.

The past several years have been a game-changer in terms of investment strategies with “buy and hold” strategies providing little in the way of investment returns for many investors. Making money requires a much more nimble approach where tactical asset allocation techniques, sector rotation  and profit specific targeting are the order of the day.

GREGORY ZUCKERMAN of the Wall Street Journal has a very good article on how to Play the Bubbles like the pros. You can read it here.

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17. April 2010 by Dan Walkow, CFA, CMT.

Chinese authorties take further action to rein in runaway real estate prices. Under the new rules, down payments for second homes must be at least 50 percent, up from 40 percent, and mortgage rates can’t be lower than 110 percent of benchmark rates, the State Council said. Banks should also raise down payment ratios and rates for third homes “by a broad margin,” it said.

Read more here.

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29. March 2010 by Dan Walkow, CFA, CMT.

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15. March 2010 by Dan Walkow, CFA, CMT.

At the beginning of the year we described China as one of our “5 biggest risks” of 2010.  Last week we mentioned (see here) the risks in the Chinese economy appear to be mounting as property prices surge and inflation begins to rear its ugly head.  Well, it looks as though we’re not the only ones who are concerned about the sustainability of the Chinese economic recovery.  According to Westpac Bank in Australia the leading economic indicators in China are beginning to roll over:

Read  more at the Pragmatic Capitalist here.

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15. March 2010 by Dan Walkow, CFA, CMT.

China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand. This is worth a read go here.

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29. January 2010 by Dan Walkow, CFA, CMT.

Following on China’s lead the Central Bank of India is tigthening monetary policy and has indicated that there is more to come. As the old adage goes ” Don’t fight the FED”, of China and India that is.

Tighthing monetary policies such as raising bank reserve requirements and raising interest rates are tools Central banks use to slow down the economy and arrest inflationary pressures. Tends not to bode well for both equity and bond markets.

See the story here.

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25. January 2010 by Dan Walkow, CFA, CMT.

Japan, the world’s second-biggest equity market, is up 3.7 percent this year as measured by the Topix index, the most among the world’s 10 largest economies. Overseas investors pumped almost $13 billion into Japan during the two weeks ended Jan. 15, the most since 2004. Companies trade for an average 1.2 times book value, almost half the valuation for the Standard & Poor’s 500 Index, according to data compiled by Bloomberg.

Thats cheap but key drive will be earnings growth, I am of the opinion that the likes of Sony, Pansonic and Canon may just be shining stars in 2010. Read more at Bloomberg here.

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17. January 2010 by Dan Walkow, CFA, CMT.

What are we smoking, and when will we stop?

A nationwide survey last year found that investors expect the U.S. stock market to return an annual average of 13.7% over the next 10 years.

Robert Veres, editor of the Inside Information financial-planning newsletter, recently asked his subscribers to estimate long-term future stock returns after inflation, expenses and taxes, what I call a “net-net-net” return. Several dozen leading financial advisers responded. Although some didn’t subtract taxes, the average answer was 6%. A few went as high as 9%.

We all should be so lucky. Historically, inflation has eaten away three percentage points of return a year. Investment expenses and taxes each have cut returns by roughly one to two percentage points a year. All told, those costs reduce annual returns by five to seven points.

So, in order to earn 6% for clients after inflation, fees and taxes, these financial planners will somehow have to pick investments that generate 11% or 13% a year before costs. Where will they find such huge gains? Since 1926, according to Ibbotson Associates, U.S. stocks have earned an annual average of 9.8%. Their long-term, net-net-net return is under 4%.

Read this excellent article at the Wall Street Journal Online. (subscription)

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