Texas Investor Guide

The Texas State Securities Board has published a really nice guide for investors. The Investor Guide explains a lot of things about investing in general with a glossary of terms. In addition, it explains the differences in registration types for financial advisors. The best part to me is the validation of what I wrote about in my book, Meet Wally Street. The Reason You're Stupid. 2nd Edition and of course, the validation is how fraudsters steal your money and the tactics that they use.

I have been writing about investment scams for years with my three basic rules of investing. If you follow these three simple rules, then you stand a fighting chance against all the fraudsters out there trying to steal your money. You always have to be on guard however. Nothing is ever fool proof. 

1. Keep it Public
2. Keep it Liquid
3. Do Your Homework

Keep it public means to only buy investments that are publicly traded on a major stock exchange like stocks, bonds, CD's, mutual funds and exchange traded funds.

Keep it liquid means to only buy investments that you can get your money back within normal trade settlement within one or two business days. No exceptions!!!!

Do your homework means do a easy online checkup on your financial advisor and make sure they are licensed in your state for one thing. You can do this at Investor.gov. After you do that first critical step, then follow up and see if they have any complaints on their record and if so, what are the details of those complaints. Also, check other licenses like CFP, or other financial designations. Don't forget about insurance agent licensing either. You will have to go to the individual state insurance department web site for this information and you may have to dig around for it. It might be just as easy to call them for the information.

In the Texas State Securities Board's Investor Guide they talk about some of the scams that I have been writing about for years. Promissory notes, Non-Publicly Traded REIT's, Private Placements and other hocus-pocus investments that do not exist. All of these fail the first of my two rules above. None of these are publicly traded and none of these are liquid. That ought to be your first clue. If it isn't liquid and it isn't publicly traded, then hold onto your wallet. Somebody is out to steal money from you. Most Ponzi schemes come from these areas as pointed out in the Texas Investor Guide.

I highly recommend this Texas Investor Guide and you can get your copy by visiting the Texas State Securities Board web site here:

https://www.ssb.texas.gov/news-publications/order-2019-texas-investor-guide

My book Meet Wally Street. The Reason You're Stupid. 2nd Edition is available here and at your favorite ebook retailer. Make sure it is the 2nd edition!

 https://www.amazon.com/Meet-Wally-Street-Reason-Stupid/dp/1720401543

Economic Inflation Worries

Economic inflation worries are overblown. They have always been overblown ever since Jimmy Carter was President. Back then, banks were hawking CD's at unsustainable rates of 15% and more. Insurance companies were promising annuity rates just as high. Mortgage rates were also similarly high. Auto loans were equally ridiculous. There was an oil embargo that caused the price of oil to sky rocket and the supply to shrink. The people or economists who lived through this all blame "inflation" as the culprit.

It was not inflation. It was simply idiots in charge of everything. What kind of idiot was in charge of the bank making 30 year mortgages at 15% interest and expecting people to be able to pay that rate over the life of the loan? Or, how about a 15% auto loan? Really? I would have loved to be in the Board of Directors meeting listening to one of these idiots explaining why we needed to offer 30 year mortgages at 15% interest. I would have fired them on the spot for being so stupid.

What kind of idiot was in charge of the bank who paid CD's at the rate of 15% for a one year CD?  What kind of idiot was in charge of the insurance companies who promised annuity rates of 15% for 5 years no less? You read that right. For 5 years! They were doing it back then, believe it or not.

Paul Volcker, the Federal Reserve chairman was heralded as the savior who saved America from the evil culprit of "inflation." What a joke. He didn't save anything. The markets adjusted to the stupidity of the people running the banks and insurance companies. These bank executives and their Board of Directors finally got a clue that they could not pay 15% CD rates, loan money profitably on a 30 year mortgage at 15%, or a car loan for that matter. Paul Volcker did not have anything to do with it. Although, economists everywhere give him the credit for saving America from the ravages of "inflation." The market adjusted. It is called capitalism at work.

"Inflation" was not the problem. Stupidity was the problem. Ever since this period in our economy happened, we have been stuck with these Federal Reserve policy makers who are so scared of "inflation" that they think a 2% cap on "inflation" is all that we can handle. TWO-PERCENT! Are you kidding me? What is wrong with these people? They are so scared that we will see a repeat of the Jimmy Carter days of "inflation" that they have to stop it from happening at all costs! Anytime that the economy starts to do well, these Federal Reserve governors step in and put the brakes on. All in the name of saving the economy from the ravages of "inflation." They did it last December and the stock market immediately tanked as a result. Their justification was they were trying to get back to "neutral". Neutral? Neutral? Now, they are inserting a new Federal Reserve policy. Neutrality. What the hell is neutrality? It is some arbitrary number that they want to achieve that gives them some warm and fuzzy feeling. This is so freaking stupid it is simply unbelievable. Stupid is my favorite word, by the way. Read my latest version of Meet Wally Street. The Reason You're Stupid. 2nd Edition. https://www.amazon.com/Meet-Wally-Street-Reason-Stupid/dp/1720401543

Sadly, there is no common sense in the Federal Reserve's way of thinking. They are way over-thinking it. Take a moment and spend a few minutes looking at this page and you should come to the same conclusion that I did. The Federal Reserve has done an awful job of raising and lowering interest rates over time. https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135

Who bears the brunt of these poor decisions? The middle class. The people with a 401(k) who are trying to save for retirement. Just when the market gets going in the right direction, these Federal Reserve Governors, slam the brakes on the economy by raising interest rates at the most inopportune time, like December 2017. This kills the growth in the average middle class 401(k) account. Why on earth would the Federal Reserve Governors have a policy that stymies growth? Their answer is because they are worried about the "inflation" that they experienced personally when Jimmy Carter was President. They have never really evaluated this period in time. Like I said above. Stupidity was the problem, not "inflation."

Does anyone have any good old fashion common sense any more? I would make the case that "inflation" is a good thing and the market will correct on its own without intervention from these brilliant Federal Reserve Governors. Even in the most notorious inflationary period in recent memory, the Jimmy Carter Presidency, the markets corrected. It is called capitalism at work.

Alas, what can a peon like me do about it? All I can do is make my point and hope to change some ingrained (stupid) ways of thinking.