Wednesday, July 27, 2011

Remember When I Said...

I know that I am beginning to sound like a broken record, but I keep finding vindication for items on My Do Not Buy List. This time it relates to Structured Products. I do not like them for a lot of reasons, but the SEC Staff Report gives even more reasons not to buy them. See the SEC Staff Report via this link:

http://www.sec.gov/news/studies/2011/ssp-study.pdf

When I have more time, I am going to have to do a follow up Blog article on how many items on My Do Not Buy List have been vindicated by regulator scrutiny or financial media articles. I think it will match up pretty well. In other words, I think we will find that there are good reasons for the items on My Do Not Buy List. In case you missed it, here it is again below:

DO NOT BUY LIST

The following investments are on our Do Not Buy List. Although all of these investments are legal to be sold, it is our opinion, that these investments are not appropriate for most investors. Not all of the investments on the Do Not Buy List have all of these bad characteristics, but they have one or more of them.


The Do Not Buy List and their Bad Characteristics

(The numbers following each item refer to the Bad Characteristics listing below.)

• Private Placements – 1, 2, 3, 5, 6, 7, 8


• Structured Investments – 1, 6, 7, 8


• Non-Publicly Traded REIT’s – 1, 2, 5, 6, 7, 8


• Non-Publicly Traded Limited Partnerships – 1, 2, 5, 6, 7, 8


• Promissory Notes – 1, 2, 3, 4, 5, 6, 7, 8


• Regulation D Offerings – 1, 2, 3, 5, 6, 7, 8


• Exchange Traded Notes (ETN’s) – 1, 6, 7, 9


• Precious Metals – 1, 2, 3, 6, 7, 8


• Floating Rate Bank Loan Mutual Funds – 1, 5, 6, 7, 8


• Consumer Credit Funds – 1, 2, 3, 6, 8


• A Shares Mutual Funds (unless commission waived) – 5, 6, 7, 8


• B Shares Mutual Funds – 1, 5, 6, 7, 8


• C Shares Mutual Funds – 1, 5, 6, 7, 8


• Variable Annuities – 1, 5, 6, 7, 8, 10


Bad Characteristics


1. No liquidity, limited liquidity or penalty for early withdrawal.


2. Not publicly traded.


3. Not regulated.


4. Structured like Ponzi Schemes.


5. Excessive commission charges.


6. Higher risk of principal loss.


7. Excessive expenses and management fees.


8. Aggressively marketed.


9. Unfavorable taxation.


10. No tax deferred benefits if in IRA or Roth IRA.

If you currently own any of these investments, or have questions about them, then please feel free to contact me at 904-262-0888 or via email at rick@marianfs.com.

Keeping your informed and as always, at your service.