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What’s A Girl To Do?

September 30, 2013

Essay. FAIR Canada (Canadian Foundation for Advancement of Investor Rights) has made a big to-do about “FAIR Canada’s 5 Rules for Avoiding Investment Fraud” in which the bottom-line is only two rules: (1) only deal with “registered advisers” and (2) don’t deal with them, or anyone else, who promises guaranteed returns, possibly “enhanced” by new debt.

You Decide.

OK, So You Decide.

However, that doesn’t solve the problem or even address the problem. The alleged solution is a formula for poverty because they are suggesting that we should turn over our responsibility for safe investing to registered folks, in effect, to let them drive (our money) and we’ll be the passengers (like in a taxi, with a calculatable cost, hopefully less than all of our money).

In our view, a “registered adviser” needs to guarantee the capital, 100% capital safety, and to prove that they can do it, no matter what. If that is required for “registration”, then the number of “registered advisers” drops to zero. There aren’t any.

Nor is the requirement unreasonable. The insurance company “segregated funds” will provide the “capital guarantee” net of their fees, which are typically 2% to 3% per  year to the customer, and 7% to the salesperson funded by the company. However, in broad terms, the capital guarantees on “segregated funds” are bankrupting them, absent collateral business in the insurance business.

Moreover, the government provides Real Return Bonds (RRBs) that can and do guarantee a return above the rate of inflation. But, let’s face it, governments pay for their promises with other people’s money, some of which is ours.

The only company that guarantees the capital – 100% capital safety – and knows how to do it is The RiskWerk Company. But we will never be registered until the rest of the industry is prepared to meet that same burden.

This year’s capital markets have been near explosive because there is a lot of money looking for an investment return. But how much of that will be picked up by the “registered” investment advisers and the pension funds and be paid to their clients?

Not Much Courtesy: Alex Gregory, Conde Nast

Not Much But They Like Us
Courtesy: Conde Nast

For more on what risk averse investing has done for us this year, please see our recent Posts on The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100.

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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