Thursday, September 24, 2009

Another Reason 2010 May Not Be So Great-Hooked On TARP

"There's no question that the Troubled Asset Relief Program is going to be extended into next year. Some members of Congress may not like it, but the financial sector and by extension the economy are addicted to TARP."

Visit Hooked On TARP! at for the full article.

Investing lesson:

Ask yourself if you believe that continuing to run up TRILLION dollar debts for the U.S.A. is a positive for the country and financial markets. While it "might be" short term, I believe this “over- stimulated chicken” will come home to roost in a not so pretty, tornado-damaged economic hen house somewhere in the future.

Wednesday, September 23, 2009

Attention CHRW Investors!

Wade Financial Group, Inc. (WFG) has been blessed with a large number of C. H. Robinson CHRW employees choosing our firm for Comprehensive Wealth Management and Investment Management services. The following link will take you to an interesting blog on CHRW:

This link is provided as a courtesy to our many CHRW clients. WFG neither agrees nor disagrees with this article.

Investing lesson:

Diversification across various asset classes and types has proven over long periods of time to assist investors in not only accumulating wealth, but just as important-protecting it.

The Wisdom of Mark Twain on Investing

"October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February".

Mark Twain

Monday, September 21, 2009

New Gold ETF Houses Bullion In Switzerland

At Wade Financial Group, Inc., we own several ETFs that own gold bullion, primarily SPDR Gold Shares (GLD). When used as part of a well-diversified portfolio, ownership of physical gold may potentially reduce overall risk and may ultimately assist with a greater wealth preservation of the portfolio. We believe having a small portion of a well-diversified portfolio in gold is prudent, especially at this time.

In our mutual fund, we own 0.5% in (GLD) and 0.5% iShares Silver Trust (SLV). Our fund also owns precious metals via Managed Futures contracts via several Managed Futures mutual funds and an ETF. We have recently purchased shares of a new gold bullion based ETF, ETFS Physical Swiss Gold Shares (SGOL).

Background on GLD

Each share in GLD is offered by State Street Global Advisors. The trustee for GLD is Bank of New York who does not deal directly with the public. The trust handles creation and redemption orders for the shares with authorized participants, i.e. State Street.

The gold that underlies GLD shares is held in the form of allocated 400 oz. London Good Delivery Bars in the London vaults of the Custodian, HSBC Bank USA. The custodian is responsible for the safekeeping of the gold held on behalf of the trust. The safekeeping methods are essentially no different from those that have operated without a problem in the London market for centuries. Those safeguards have stood the test of time for both individuals and institutions (including many governments) that store their gold in London vaults. State Street has tremendous confidence in the custodian's efforts to ensure the safety of GLD’s gold bullion.

Background on SGOL

The sponsor of ETFS Physical Gold Shares (SGOL), ETF Securities has established itself as a market leader in the European ETF market, with assets of more than $13 billion in over 130 products. JP Morgan serves as the custodian for the new ETF Securities fund.

(SGOL) is designed to cater to gold buyers who want to guard against extreme situations. The British company will hold its gold in Switzerland, which is "probably one of the most independent countries in terms of political influence," said William Rhind, head of sales and marketing for ETFS Marketing, the marketing arm for ETF Securities.

The vast majority of gold is stored in London and the U.S. SPDR Gold Shares (GLD), the world's largest gold fund, has all its bars stored with HSBC Holdings in London. (SGOL) will store its metals in Zurich in vaults managed by J.P. Morgan Chase.

"With regards of terrorism, war and all sorts of extreme events, the feeling is that Switzerland is probably the safest venue to store gold," Mr. Rhind said. “The feedback that we’ve received from investors is that they would like to be able to hold their gold in Switzerland for a number of different reasons including diversification of geography, vault, custodian and issuer.”

Don’t Buy Gold Coins Unless You Are a Coin Collector!

While most consumers hear/see the countless advertisements for investing in gold coins, etc, attempting to own gold in this fashion has several disadvantages:

  1. You never really know if you are “getting a good deal” as there is now “exchange” that would allow for daily pricing and liquidity.

  2. You will pay an imbedded commission as part of your purchase.

  3. You will then have to safely store your gold somewhere other than a drawer in your bedroom!

  4. It is very hard to get an ongoing picture of how your overall investment portfolio is doing, when you really have no idea how your gold is contributing (either positive or negative) to your results.
Investing lesson:

It’s OK to buy your favorite performing artists’ CDs and DVDs via 1-800 numbers but avoid investing in gold via such methods.

Wednesday, September 02, 2009

History, Today and the Folly of “The Experts”

Did you know that the Great Depression was preceded by a great real estate boom centered in Florida? The Florida real estate bubble burst in 1926, three years before equities.
Just as in 2007, no one foresaw a decline, let alone the seriousness of the decline. On December 4, 1928, President Coolidge sent the following message on the state of the Union to the reconvening Congress:
“No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment and the highest record of years of prosperity. In the foreign field there is peace. You may regard the present with satisfaction and anticipate the future with optimism.”
Harvard-How Great Thou Art!
Before and during the Great Depression of the 1920/30’s, the Harvard Economic Society, previously esteemed for its pessimism, turned bullish a few months before the market topped. In fact, the Society remained bullish all throughout the downturn until it was dissolved just before the depression ended.
One of the many blunders that lead to the untimely (though not soon enough for investors' welfare) demise of the Society, was its March 24th, 1930 assessment that; 'The outlook is favorable.' This was just days before the onset of the above mentioned second leg to new lows. The second leg reduced the Dow by another 47%, but it didn't stop there.
There are many modern-day parallels to the Harvard Economic Society. The Blue Chip Economic Indicator survey, a survey of private economists, is just one of them. According to their most recent survey, 90% of economists believe that the current recession will be declared to have ended this quarter.
Watch Out!
Interestingly, the consensus estimate of U.S. economists also believed that in March 2009 the market's worst was yet to come, when the Dow traded below 7,000.
* Source: much of the above was based upon, a research service that my firm, Wade Financial Group, Inc. subscribes to.
Investing lesson:
It may sound crazy, but the more college degrees and closer to academia a purported “expert” is, the further you should probably run.