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The Silly Season For Investment Advisers

April 5, 2013

Drama. How much gold and silver does William Devane (the current spokesman for Rosland Capital™ LLC) own? What reverse mortgages do Henry Winkler (One Reverse Mortgage® – a Quicken®Loans®Company) and Fred Thompson (AAG American Advisors Group) have? We wonder because if it’s good for them, and they certainly look good, then it might be good for us, one would think. Unfortunately, we couldn’t find out anything about the companies that sponsor them – they’re all privately owned and don’t file any reports with the Securities and Exchange Commission (SEC); there’s less information about them than there is about hedge funds (please see below).

Rosland Capital™ LLC has a website and an (800) number, and seems to be responsible to the Civil Courts in Santa Monica, California; the American Advisors Group has a website, an (800) number, and is head quartered in Orange, California; One Reverse Mortgage is a licensed mortgage lender and has a website, an (800) number, and an address in San Diego, California, but answers to the Civil Courts in Wayne County, Michigan; and Quicken®Loans® also has a website, an (800) number, and head office in Detroit, Michigan. We give up. We just can’t make life changing decisions with a phone number, a website, and a secret identity for all the parties involved, including our new secret name and new secret secure access code.

And what do we know about the principals of a raft of hedge funds that are currently trying to change our investments through noisy and unsolicited proxy votes? Please see, Reuters, April 5, 2013, Big funds pick sides as Agrium-Jana battle nears climax in Santa Monica, California, and Reuters, April 5, 2013, Hedge fund manager Ackman says mistakes made in JCPenney turnaround.

Just imagine how much money is being spent in time, documentation, lawyers, and the Courts, because some hedge funds made some investments with some edge attached, and, now, they want to take over and get a bigger cut, or recover their losses.

Some of our earlier Posts might be helpful. Please use the Search box for information on Agrium Incorporated, Herbalife Limited, J.C. Penney Company Incorporated, Target Corporation, Canadian Pacific Railway Limited, Canadian National Railway Company, and Procter & Gamble. And, of course, O’the Slings And Arrows Of Outrageous Fortunes, March 2013.

“Index Funds” also cause us some misgiving because we don’t think that it’s the index finger that we’re getting. Please see our Posts, Extraterrestrial Funds (ETFs) and The Wall Street Wealth Extraction Machine, both in March 2013. For another view, Ben Stein, the co-author of the preceding book, was interviewed on The O’Reilly Factor, April 5, 2013, and there’s an archive.

And what about Fidelity Investments (a private company) and The Charles Schwab Corporation that pay third-party investment advisers as much as 0.25 percent of the assets that their clients put into no-transaction-fee mutual funds (Reuters, April 5, 2013, Exclusive: Some wealth advisers take a fee for client fund assets).

And how has The Charles Schwab Corporation fared as a business, and what has it done for its own investors? Not too much between $10 and $20 for five years, up and down, and a current dividend of $0.24 per share per quarter or $300 million a year to its shareholders for a current yield of  1.5%. The estimated downside due to the stock price volatility is minus ($2) which takes them down to the Risk Price (SF) of $15; the May put at $15 costs $0.05 per share today and the May call at $18 per share can also be sold or shorted against our long position for $0.05 per share today, so that for a modest transaction cost, we could collect some dividends and protect the share price between $15 and $18 for the next month.

Exhibit 1: (B)(N) SCHW The Charles Schwab Corporation – Risk Price Chart

(B)(N) The Charles Schwab Corporation

The Charles Schwab Corporation is a savings and loan holding company, which through its subsidiaries is engaged in securities brokerage, banking and related financial services.

(Please Click on the Chart to make it larger if required.)

The company manages about $134 billion for its clients – which is a lot of money to be responsible for and to invest profitably – and has a net worth of $9.6 billion which has doubled since 2009. If we were a hedge fund, we could acquire the company for about $20 billion in cash, which is about 15¢ for every $1 that they manage, so to speak, and then offer to insure the capital safety – 100% Capital Safety – of investor monies invested in the broad equity markets, and still make more money for everybody than Croesus ever dreamed of, and certainly a lot more than the current $1 billion or so that they’re making now; it seems like win-win situation to us.

For more information on real investments in real companies in real time, please see our recent Posts, S&P TSX Winners & Losers, April 2013, The Dow Transports, March 2013, or The Wall Street Put, March 2013, or The Risk Adjusted Dow, March 2013, or The Canada Pension Bond, February 2013.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond™
“Alpha-smart with 100% Capital Safety and 100% Liquidity”
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are, now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

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