Longboat Retirement Solutions LLC

Why You Lost Money Today February 12, 2016

When the market as a whole goes down, people who own mutual funds that are “diversified” lose money (in general).  This includes most people who have an IRA or 401k through their employer, due to the fact that most institutional IRA’s or 401k’s are invested in mutual funds.

A true self directed retirement account lets you invest in individual stocks, precious metals, real estate, foreign markets, and more.

Large institutional banks advertise that they offer self directed accounts.  This is a sham.  These supposed self directed accounts only allow you to buy products that the bank that set it up for you sells – so that they can make money off of selling that product.  To me this represents a break in fiduciary responsibilities.

A Chevy dealer does not want to sell you a new Ford, even if the new Ford has better fuel mileage, better reliability, and costs less.  The Chevy dealer will sell you a Chevy, because that’s how he makes money – he makes a commission off of every Chevy he sells.  In fact the Chevy salesman is not allowed to sell a new Ford.

Similarly, a Fidelity guy will only sell products that he makes a commission off of – Fidelity products.  There may be an investment that he knows is a better fit for you, but if he makes no commission off of that sale, he won’t sell it.  In fact the Fidelity salesman (lets call him what he is) is not allowed to sell you a competitor’s product.

You are the only person in the world who has your best interest in mind when making decisions.  You may not always be right, but at least you are not trying to skim a small percentage of your savings, under the guise of “managing” it.


Why Asset Allocation Doesn’t Matter In The Long Run June 27, 2015


Obama’s MyRA Savings Plan: Wolf In Sheep’s Clothing? February 19, 2014

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 1:35 pm
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BY:  John E. Girouard


If you were wondering how the federal government is going to unload those trillions of dollars in long-term Treasury bonds it’s been buying for the past five or so years—quantitative easing is the technical term—President Obama dropped an anvil hint in his State of the Union address last week. You’re going to buy them, with the retirement savings you’ll be putting in the President’s new MyRA program.

If ever there was a misnamed initiative this one ranks near the top. It’s a mash-up of My and IRA. It implies a greater level of possession than the familiar Individual Retirement Account, which came into being forty years ago during another retirement crisis—the 1970s, when a deep, stubborn recession drove corporate defined-benefit pension plans into the ditch.

This time, a deep, stubborn recession triggered by the Wall Street institutions that also sell IRAs drove a lot of individual retirement plans into the ditch. The fix was the Federal Reserve’s buying up a staggering amount of Treasury bonds to keep interest rates low and hopefully encourage investment and economic recovery.

Those bonds that our government now owns are yielding low rates at a time when most experts are predicting that rates will be rising again. When rates rise, the value of a bond falls. So U.S. Treasury bonds have become so unpopular not even China wants them. In November, a People’s Bank of China official gave a speech in which he said, “it’s no longer in China’s favor” to keep buying U.S. debt the way it has over the past decade or so. There are better deals elsewhere.

That means the federal government is stuck with a lot of unpopular bonds and one sure-fire way to get rid of them is to sell them to the American public as a retirement savings vehicle. It’s a wolf in sheep’s clothing.

The pitch for the new MyRAs is that it’s an automatic savings vehicle, a little like the old-fashioned Savings bonds that our parents and grandparents bought for the kids and grandkids. On the surface, it sounds like a good idea—encourage people who don’t have the money or discipline to buy an IRA or Roth to put a little away each week for the next two or three decades.

MyRA contributions will be invested solely in U.S. debt, guaranteed against loss, and will pay the going Treasury bond rate. But there’s a catch or two. There’s no tax deduction for buying MyRAs, so you’ll be buying them with dollars that have already been taxed. The interest you’ll earn, such as it is, will be tax free, but Uncle Sam gets his cut up front and the use of your money for decades to come. And he unloads some of that mountain of bonds.

You, on the other hand, give up control of your money to the government and that money can never participate in a robust stock market or any other asset class, like your home, a business entity, or an insurance policy.

As a financial advisor for more than three decades, I know that automatic saving is the single most important tool in building a retirement fund. But the MyRA idea is just another example of how government controls so much of what we can and can’t do with our retirement savings by dialing up or down the tax rules.

There isn’t enough money in our economy for MyRAs to bail the government out of its bond glut. So we should be alert to what may be coming down the pike. The tax laws already require IRA funds to be invested in stocks and bonds to qualify for the tax deduction. It wouldn’t surprise me at all if at some point in the near future there was a proposal in Washington to require a percentage of all IRA funds to be invested in debt of the U.S. government.

In a capitalistic system, that would mean even more of the nation’s wealth would be locked up and unavailable to start and grow companies, buy homes, and make other investments that ultimately are the engine of individual prosperity.


Bondpocalypse February 13, 2013

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 10:10 pm
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…and another fraud begins.


New York Times, Gretchen Morgenson Applaud British, Issue Challenge To American Regulators Over LIBOR Scandal July 10, 2012

BY: Matt Taibbi

Ben Bernanke

Ben Bernanke
Alex Wong/Getty Images

The New York Times and its outstanding financial reporter, Gretchen Morgenson, have published an important article about the LIBOR banking crisis, challenging American regulators to take this mess as seriously as the British appear to be.

We found out just over a week ago that Barclays CEO Bob Diamond, as well as several other senior Barclays officials, were pushed out of their jobs after Bank of England chief Mervyn King trained a mysterious Vaderesque power on them, impelling them to leave with an “inflection of the eyebrows.”

Morgenson’s piece from Saturday, “The British, at Least, Are Getting Tough,” wonders aloud why American regulators – Ben Bernanke,  cough, cough – don’t take a similarly stern approach with our own corrupt bank officials. First, she summarizes what seems to be the mindset of American officials:

“Dirty clean” versus “clean clean” pretty much sums up Wall Street’s view of cheating. If everybody does it, nobody should be held accountable if caught. Alas, many United States regulators and prosecutors seem to have bought into this argument.

This viewpoint has been particularly in evidence since 2008. Time and again, American regulators have appeared to be paralyzed by corruption in cases when most or all of the banks have been caught raiding the same cookie jar. From fraudulent sales of mortgage-backed securities, to Enronesque accounting, to Jefferson-County-style predatory swap deals, to municipal bond bid-rigging, the strategy of American regulators has been to accept “Well, everybody was doing it” as a mitigating factor when negotiating settlements, where that should have made them want to crack the whip even harder.

Why? Because “everybody is doing it” corruption is way more dangerous than corruption involving one or two rogue firms going off-reservation. Regulators who spot that kind of industry-wide problem, to say nothing of cartel-style anticompetitive corruption, should be in a panic: They should always impose serious, across-the-board punishments, and it goes without saying that senior executives responsible have to be removed.

This is exactly what has begun to happen in England, now that the British have gotten wind of this LIBOR scandal, which involves the worst and most serious form of corruption – huge companies acting in concert to fix prices/rates. As the Times explains:

Last week’s defenestrations of Marcus Agius, the Barclays chairman; Robert E. Diamond Jr., its hard-charging chief executive; and Jerry del Missier, its chief operating officer, apparently occurred at the behest of the Bank of England and the Financial Services Authority, the nation’s top securities regulator. (Mr. del Missier also seems to have lost his post as chairman of the Securities Industry and Financial Markets Association, the big Wall Street lobbying group. His name vanished last week from the list of board members on the group’s Web site.)

Morgenson notes that the Barclays CEO, Diamond, seemed shocked that there were actual consequences for his misbehavior:

MR. DIAMOND seemed shocked to be pushed out. An American by birth, he probably thought he’d be subject to American rules of engagement when confronted with evidence of wrongdoing at his bank. You know how it works on this side of the Atlantic: faced with a scandal, most chief executives jettison low-level employees, maybe give up a bonus or two — and then ride out the storm. Regulators, if they act, just extract fines from the shareholders.

The article goes on to point out the frightening fact that del Missier, the outgoing Barclays COO, was at the time the scandal broke the sitting head of SIFMA, the trade group representing securities dealers. We know from the emails Barclays released last week that del Missier was privy to the discussions about rigging LIBOR rates; he was one of the people Diamond was writing to when he penned a memo claiming that Paul Tucker, the Bank of England deputy chief, had urged the bank to fake its LIBOR rates.

At the very least, del Missier should have said something, should have opposed the idea. Instead, he went right on being a front for Wall Street’s largest professional association:

With each new financial imbroglio, the gulf widens between Main Street’s opinion of Wall Street and the industry’s view of itself. When Mr. del Missier, the former Barclays chief operating officer, took over as chairman of the Securities Industry and Financial Markets Association last November, he said: “We will continue to work on maintaining and burnishing the level of confidence investors have in our markets, in our own financial institutions, and in the general economic outlook for the future.”

Given the Libor scandal, let’s just say good luck with that.

Hear hear.

When the rest of this scandal comes out, and it turns out that up to 15 more of the world’s biggest banks (including Chase, Bank of America, and Citi) were doing the same thing as Barclays, our regulators better start “inflecting their eyebrows” pretty damn vigorously. Because if it comes out that these other banks were all involved with this scandal (and it will come out that way, almost for sure), and their CEOs and COOs get to keep their jobs, that’ll be a sure sign that the fix is in. Let’s hope Ben Bernanke, Eric Holder, and Tim Geithner are listening.


It’s Over for the Banking Cabal July 6, 2012


Is this who you trust with your money? June 24, 2012

BY: Lars Forsberg
Longboat Retirement Solutions LLC

Sam Israel — Bayou Hedge Fund Group
Scammed $450 million from the hedge fund he ran.

Joseph Nacchio — Qwest Communications International
Scammed $3 billion through insider trading by selling $52 million in stock despite knowledge that his company was facing financial difficulties.  As part of his severance agreement, he continues to serve as a consultant to Qwest. He is paid $1.5 million a year.

Bernard Ebbers — WorldCom
Scammed $100 Billion with accounting shenanigans. $3.8 billion worth of normal operating expenses, which should all be recorded as expenses for the fiscal year in which they were incurred, were treated as investments and were recorded over a number of years. This accounting trick grossly exaggerated profits for the year the expenses were incurred. When the gig was up WorldCom’s stock price, plummeted from more than $60 to less than 20 cents.

Kenneth Lay and Jeffery Skilling — Enron
Scammed $74 Billion with some fairly complicated accounting practices that involved the use of shell companies, Enron was able to keep hundreds of millions worth of debt off its books. The complex web of deceit unraveled and the share price dove from over $90 to less than 70 cents.

Bernard Madoff — Bernard L. Madoff Investment Securities LLC
Scammed $18 billion with Ponzi scheme.

Tyco International
CEO, Dennis Kozlowski, CFO Mark Swartz and CLO Mark Belnick sold 7.5 million shares of unauthorized Tyco stock, for a reported $450 million.

HealthSouth — CEO and founder Richard Scrushy sold HealthSouth shares worth $75 million in late 2002, prior to releasing an earnings loss. The scandal unfolded in March, 2003, when the SEC announced that HealthSouth exaggerated revenues by $1.4 billion. The stock fell from a high of $20 to a close of 45 cents, in a single day.

Allen Stanford —  Recently sentenced to 110 years in prison and ordered to forfeit $5.9 billion dollars for his $7 billion dollar Ponzi scheme.

Raj Rajaratnam — The founder of the $7 billion Galleon hedge fund, was sentenced in October 2011 to an 11-year prison term on an insider-trading conviction.

Rajat Gupta — The former Goldman Sachs director, was convicted of conspiracy and three counts of securities fraud for feeding confidential information to a corrupt hedge fund manager.

Nice bunch of trustworthy guys.  These guys worked for large “trustworthy and knowledgeable” firms, with big names.

Who’s interests were they serving?

Maybe it’s time that you invest in yourself.  The good people at Longboat Retirement Solutions NEVER touch your money.  We liberate you from the Wall Street Ponzi scheme.  Make your move.