Nov 24 2008

Never too late to make it right

Published by at 5:30 pm under Global Economy,Investing,Managing Money

“In their heyday, fund managers would go to ideas dinners at the best restaurants in New York and London and persuade one another to make the same investments.  Those excluded from the dinners would peer at the SEC filings of the smarter among them and copy their trades, eliminating the advantages the more intelligent investors had in the first place.” – Jesse Eisinger

 

Halleluiah!!!  The U.S. presidential election is over and whether or not you like the outcome at least maybe now we can get on with other pressing matters.  Let us hope and pray that our new president will be up to the task because there isn’t much that doesn’t need to be repaired!  When I first decided to start my own blog, my intention was to focus on financial and economic information that readers committed to prudent personal finance would find useful.  Unfortunately, recent developments have forced me to recognize that much of what we were taught or innately believed about the global financial markets and the economy in general was incomplete – at best.  In fact, even Alan Greenspan acknowledged under questioning that he was mistaken in believing that banks, operating in their own self-interest, would do what was necessary to protect their shareholders and institutions (see Greenspan Denies Blame for US Crisis, Admits Flaw).  So for the time being I will mostly limit my recommendations on how to invest.  It is certainly a good time to spend less than you bring in and build a significant cash position.  There are most definitely great investment opportunities out there, but it is still a better idea to have an adequate cushion and then to pay down any debt before you invest in such an unstable and uncertain environment.

 

Now for my soapbox.  We have all been a little too enamored with the financal wizards that make shiploads of money without producing anything of tangible value for many decades now.  I suppose this is largely because we believed the system was working for the most part and we were benefitting from it as our investments increased in value.  Now it is apparent that many of these same wizards actually contributed to the current crisis and now suddenly we don’t like them so much.

 

If we look at this situation from a sanguine perspective it could just be the the wake-up call we all needed.  Too many people around the globe have been caught up in taking whatever they could get regardless of the financial smoke and mirrors involved in getting it.  If you want to gamble, go to Las Vegas, but for those of us that wish to earn a decent living by providing a valuable product or service and then invest in other companies or enterprises that do the same in order to profit long term from the value being generated, we should be able to do this too.

 

I will gladly invest my money in worthwhile investments but the people I deal with and all that touch my hard-earned money for that matter need to understand the the meaning of fiduciary relationship.  They simply need to pick up a copy of Black’s Law Dictionary which defines a fiduciary relationship as, “one founded on trust or confidence reposed by one person in the integrity and fidelity of another.”  A fiduciary should feel the ultimate sense of responsibility for a client’s money – well above his or her own personal gain.  One final thought: W. Edwards Deming said, “Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.”  We all need to consider this very carefully!

5 responses so far

5 Responses to “Never too late to make it right”

  1. Allen Tayloron 27 Nov 2008 at 6:15 pm

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  2. Relationship Trusteeon 28 Nov 2008 at 2:23 am

    Keep in mind that any subject can change over time, so be sure you keep up with the latest news. Relationship Trustee

  3. RYErneston 01 Dec 2008 at 6:23 am

    Nice post u have here 😀 Added to my RSS reader

  4. Markon 04 Dec 2008 at 10:45 am

    Daren, great post; it couldn’t be more appropriate or timely. I can’t tell you how tired I have gotten of I-bankers going to $1000 lunches and talking more about their “social” activities than being able to actually understand what’s happening in the market. I think one of the things we have seen with the major bulge brackets is a widescale “humbling” – the market has a way of doing that to people who get out of control. The same goes for the so called “financial advisors.” These people who let their software manage assets for them and spend more time getting new clients rather than building partnerships with their existing ones explain to me why so many people’s retirement accounts are down 30% or more. Hopefully, we will see some fundamental changes in the way asset managers, financial advisors and bankers work with their clients/partners.

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