Monday, March 26, 2007

Fool Me Once Shame on Me....Fool Me Twice, Must Be A Hedge Fund!

Trader who sank Amaranth to start new hedge fund |

This is perhaps the most audacious thing I've read lately. The idiots who ran the now defunct hedge fund Amaranth Advisors into the ground are now starting..........their own hedge fund. These are the geniuses that turned a $5 billion gain into a $2 billion dollar loss in just under a week - and they think they deserve another shot at managing your money.

Not only do they think you are so stupid as to give them your money, they want to charge the standard Hedge fund fee of 2% of assets plus a 20% performance fee. Logic has gone out the window if this fund attracts money. But hey, in the funds prospectus there is a provision that allows shareholders to meet the idiots who run the fund!!!!! I'm in.

Scott Dauenhauer, CFP, MSFP, AIF

Wednesday, March 21, 2007

AXA Equitable Propaganda Site

:: Variable Annuities Knowledge Center ::

I hate to even link to this site, but I think it is a good example of the way insurance companies mislead people into their variable annuity products. This site claims to "provide you with unbiased, fact-based information about variable annuities that will assist you in determining whether a variable annuity is right for your personal situation and future financial needs."

Sounds like a good thing, a non-profit education center to help consumers make wise choices...In reality the site is just a propaganda tool for AXA/Equitable, a life insurance company and Broker/Dealer. What follows is at the bottom of the "About Us" page:

"The Variable Knowledge Center is funded by Smarter Consumer Inc., a Delaware not-for-profit corporation committed to educating and informing the public about variable annuities. AXA Equitable Life Insurance Company (AXA Equitable) and its affiliated broker/dealer, AXA Distributors, LLC, are the founding supporters of Smarter Consumer Inc. It is anticipated that additional organizations will join in supporting Smarter Consumer Inc. and its educational mission described in the site. "

AXA knows that if they set up a website to provide information and stated it was unbiased that they'd be laughed at, but if they set up a dummy not for profit with a different name and then use that non-profit to "educate" they can potentially steer people to Variable Annuities, their main offering. This is yet another example of the insurance industry not being honest and attempting to use mislead the consumer (and they have the gall to use the term "Smarter Consumer".

Don't fall for this little stunt.

Scott Dauenhauer, CFP, MSFP, AIF

Tuesday, March 20, 2007

CRAMER REVEALS A BIT TOO MUCH By RODDY BOYD - Business - New York Post Online Edition

CRAMER REVEALS A BIT TOO MUCH By RODDY BOYD - Business - New York Post Online Edition

Jim Cramer is an idiot. I've said it before and I'll say it again. Cramer ran a successful hedge fund years ago and now is the raving lunatic on "Mad Money," a stock tip show on CNBC. He is also an owner and founder of

In an interview from The's "Wall Street Confidential" we find out how Cramer was so successful at his hedge, he used illegal trading tactics, I'll let Cramer explain:

"A lot of times when I was short, I would create a level of activity beforehand that would drive the futures. . . . It's a fun game," Cramer said in the Webcast, which was moderated by Executive Editor Aaron Task.

Cramer later said that "no one else in the world would ever admit that, but I don't care."

He added that the strategy - while illegal - was safe enough because, "the Securities and Exchange Commission never understands this."

Ethics doesn't appear to be at the top of his the video here.

Don't take advice from this guy.

Scott Dauenhauer, CFP, MSFP, AIF

Monday, March 19, 2007

Quotas tied to benefits irk advisers

Quotas tied to benefits irk advisers - InvestmentNews

Imagine if you were a financial advisor and where faced with the following choice: Sell proprietary firm products (that may or may not be in your clients interest) or lose health insurance for yourself, your spouse, and your children. Sounds like a dilemma and a conflict of interest to me. I wonder if any of these agents (and it appears there are a lot of them) have ever disclosed this conflict to potential clients.....I highly doubt it.

Investment News has written a good article that names some of the firms that practice such abhorent behaviour, among them are Metlife, AXA, and Lincoln (all three have a big presence in the 403(b) market. None of these companies can honestly represent themselves as Fiduciaries (someone who is required to place your best interest first). You shouldn't do business with people who won't place your interest first.

Utilizing health insurance as a way to increase a companies sales and bottomline might be a great motivator, but it isn't right and it taints every recomendation made.

Scott Dauenhauer, CFP, MSFP, AIF

TSP Management

:FEATURES: :Honey Pot (3/15/07) Government Executive

This is an article about the Federal Government's Thrift Savings Plan, basically a 401(k) for federal employees. It starts out by ridiculing a board member for poor attendance, which I think is probably deserved, this member has clearly not executed his fiduciary responsibilities, however we haven't heard his side of the story and attending meetings doesn't neccesarily mean you aren't providing oversight. In addition, a $22,000 stipend doesn't exactly endear someone to spend hours and hours on oversight - clearly some board reform is needed.

The rest of the story applauds the board for their great oversight and for bringing about great changes during a time of tremendous growth. It talks about the low fees and advancement of a "daily valuation platform". It also talks about employees being forced out because of their beliefs on certain legal issues.

My take on the TSP is that it is a very cheap plan that is just O.K. If you've been to the website you'll understand when I use the term "underwhelming". For a plan with $200 billion in assets it is a disgrace. The plan may be a "daily valued" plan, but it is difficult to navigate through, provides little education, doesn't even download in QIF format and the investment options don't provide enough asset class diversification. If you don't believe me just talk to the people who lived through 2000 - 2002 in the C Common Fund.

This plan is a disaster and needs some major reform, even if it means raising the fees from .03% to .05%.

Scott Dauenhauer, CFP, MSFP, AIF

Many Brokers Offer Financial Advice They Shouldn't Give

Many Brokers Offer Financial Advice They Shouldn't Give (SmartMoney Magazine) |

Great article.

Smart Money Magazine made the rounds at the major brokerage firms as a "secret shopper" of sorts. What were they shopping for? Honesty. They didn't find much of it. Every firm missed the mark in at least one area (College Savings, Insurance, Financial Planning and Fiduciary). Of the eight firms examined (Bank of America, Schwab, Dreyfus, Merrill Lynch, Morgan Stanley, Northwestern Mutual, Smith Barney and Wachovia), only three followed the rules on offering financial planning and fiduciary based advice. Of those three none of them are glittering jewels, one of which (Morgan Stanely) was quoted regarding its outrageous fees "you buy the best doctor, why get cheap about your money?". I don't have to point out (but I will) that financial advisors are not doctors, in fact one can become an "advisor" with minimal training, literally less than six weeks. Would any of you goto a doctor who had no degree and only six weeks of training? In addition, most people have no clue what they pay their doctor, the insurance company usually is the payor.

The point here is that brokerage firms and brokers exist to sell you products, not a financial plan. They want to give you the look and feel of being with a qualified financial planner but without any of the regulatory requirements. In other words, they don't want to be required to PUT YOUR BEST INTEREST FIRST. The main reason is if they were required to do so (this is called being a Fiduciary) they would have to quit the brokerage firm (as I did) they work for and start their own company, then they'd have to stop being product salespeople......that can be tough, after all, financial planning is much different than sales.

For those of you who don't know, I came from the brokerage background, I worked for four of the eight companies listed above: Bank of America, Merrill Lynch, Smith Barney, and Morgan Stanley. It was my years at these firms that shape my view of the industry (not a great view, see the article on my webpage - Secrets of the Wirehouse). I was an employee, not an advisor free to make my own decisions for my clients. I could not put my clients best interests first, that is why I left and started my own company and became an RIA (Registered Investment Advisor).

I act as a Fiduciary for my clients, meaning I am required to put their best interests first.

Is your broker a Fiduciary?

Scott Dauenhauer, CFP, MSFP, AIF

Friday, March 02, 2007

Savings, Shmavings

Savings, Shmavings (The Pro Shop) |

The next time you hear about our nation's negative savings rate you'll thank me for posting this article.

The way the savings rate is calculated is just plain stupid and measures nothing meaningful. According to this oft quoted statistic we Americans are simply gluttons who can't control ourselves, the truth is somewhat more encouraging.

I encourage you to read this article, you'll start ignoring those news clips that talk about how bad we are for not saving!

Scott Dauenhauer, CFP, MSFP, AIF

Thursday, March 01, 2007

Bernanke Renews Call for Action as Population Ages

Bernanke Renews Call for Action as Population Ages - New York Times

"Bernanke told Congress that over time, the United States needed to move toward fiscal policies that were sustainable and that would promote more savings to support the Social Security retirment program without imposing undue costs on taxpayers"

Social Security and Medicare are major problems looming on our horizon, action must be taken, yet it doesn't appear anybody in congress has the will to do it.

Scott Dauenhauer, CFP, MSFP, AIF

Fund Rankings Shouldn't Be Sole Criteria - Finance | Personal | Business | Personal Finances - Fund Rankings Shouldn't Be Sole Criteria - Finance | Personal | Business | Personal Finances

Never use fund rankings to pick mutual funds, unless of course you're attempting to underperform over the long term. This article details out information that shows that funds in the top quartile of performance rarely stay in the top quartile, but funds in the bottom quartile typically do stay at the bottom.

Bottom services like Morningstar can be useful, but don't buy a fund just because it has 4 or 5 stars.

Scott Dauenhauer, CFP, MSFP, AIF

Don't let short-term drops blow up your long-range strategies: Financial News - Yahoo! Finance

Don't let short-term drops blow up your long-range strategies: Financial News - Yahoo! Finance

Excellent article about the long term, it echoes much of what I have been saying. Did you know that we've gone 47 months without a 10 correction, that is the second longest period in the history of the S & P 500.

Scott Dauenhauer, CFP, MSFP, AIF