Wednesday, March 31, 2010

Harry Markopolos on "next Ponzi scheme"

"Where do you think the next big Ponzi scheme will occur?" That's what I asked Harry Markopolos, author of No One Would Listen, during the Q&A following his March 30 talk to Boston Security Analysts Society (BSAS).

Markopolos isn't too worried about seeing another big Ponzi scheme soon. He gave two reasons.
  1. Markets are down. That's what triggered the redemptions that brought down Madoff and others.
  2. The SEC is now making Ponzi schemes a high priority.
However, most Ponzi schemers don't register with the SEC, said Markopolos. That helps them to stay hidden from the SEC. Markopolos said the SEC typically finds out about Ponzi schemes through tips. The many poor-quality tips submitted to the SEC make it hard to sort out the good from the bad. 

If you'd like to learn more about Markopolos' perspective, check out his book. Many BSAS members lined up after the talk to have him sign their books. He's a hometown favorite and past president of the BSAS.

Related post
* Tweets on talk by Harry Markopolos, Madoff whistleblower





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The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. If you can't attend this session, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Tuesday, March 30, 2010

Tweets on talk by Harry Markopolos, Madoff whistleblower

Here are my tweets on today's talk to the Boston Security Analysts Society by Harry Markopolos, the Madoff whistleblower and author of No One Would Listen.
  • "This case was a global tragedy" said Markopolos. "It was beyond evil."
  • Madoff case is only in its 2nd innings, said Markopolos. There'll be more arrests due to cooperating witnesses.
  • CFA# Code of Ethics is important to Markopolos. "It's about investors and doing the right thing," he said.
  • CPAs, is this true? CPA code of conduct lacks affirmative duty to report fraud.
  • Lesson #1 for Madoff victims: 0-25% is proper allocation to hedge funds, said Markopolos
  • Lesson #2 for Madoff victims: Never put all of your eggs in one basket, said Markopolos
  • Markopolos book is a good road map for conducting due diligence, said Sam Jones of the CFA Institute's board of governors. 

____________________
The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

The compliance-constrained financial advisor's guide to using LinkedIn: Part I

"I'll connect on LinkedIn if my clients ask me, but I don't see the value of LinkedIn because my compliance officer won't let me do anything."

If this is how you feel about LinkedIn, this article is for you.

Even if you can't post more than your name and company affiliation, you can benefit from LinkedIn in two big ways. First, your listing makes you more easily located in an Internet search. That's the focus of this article. In Part II of this article, I will address more active, yet compliance-friendly, strategies you can apply.


It's easier for clients, prospects, and referral sources to find you
 
You want clients, prospects, and referral sources to find good information when they Google your name.  LinkedIn profiles tend to rank high in such searches. 
Just make sure you've made your profile public by clicking on "Edit Public Profile Settings" and checking "Full View" instead of "None."

You can increase the ease with which you're found by creating a custom URL for your LinkedIn profile, so the URL reads http://www.linkedin.com/in/YOURNAME. Simply edit the Public Profile URL at the bottom of the "Edit My Profile" page.

Your LinkedIn profile also offers the advantage of presenting yourself as you'd like to be seen, within the confines of what's permitted by your compliance department.

Another factor to consider: Many LinkedIn users will look for you using the site's search box. If you're not on LinkedIn, it's almost as if you don't exist.


So, hurry and put your profile up on LinkedIn. If you're already on LinkedIn, stay tuned for my article on compliance-friendly ways to use LinkedIn. 

Related posts
* My most popular blog posts of 2009
* Guest Post: "How to Use LinkedIn When Your Compliance Department Says No"
* Twitter to the rescue of my colleague with an RFP dilemma
* How to publicize your white paper using LinkedIn
____________________
The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Saturday, March 27, 2010

I'm quoted in "Using Social Media in Your Job Search: Look before you Tweet"

 Usually I'm the interviewer, not the interviewee. So I felt more anxious than usual during the interview for "Using Social Media in Your Job Search: Look before you Tweet." Luckily I was interviewed by a capable reporter. Writer Janet Aschkenasy's article appears on the eFinancial Careers site.

I know and like several of the writers for eFinancial Careers. So I recommend checking out the site if you're job hunting.
____________________
The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Friday, March 26, 2010

Technical analysis of stocks can boost the power of your fundamental research

You can use technical analysis in combination with your firm's fundamental equity analysis to help decide when to buy or sell stocks. This is the message I took away from "Applying Technical Analysis to a Fundamental Investment Strategy," a March 23 presentation to the Boston Security Analysts Society by David Keller, who oversees technical analysis as a managing director of research for Fidelity Investments. 

Technical analysis is not voodoo science, throwing darts at a board, or even a prediction of the future, said Keller. Rather, it's a way to analyze supply and demand using patterns, he said.

Fundamental research and technical analysis tackle different parts of the decision to trade a stock. Here's how Keller described them.
  1. Fundamental research analyzes the company for the what and why of buy and sell decisions.
  2. Technical analysis analyzes the stock, looking purely at market activity for when and how to buy or sell
These two approaches overlap, in the opinion of Keller and the Fidelity portfolio managers who use his team's research. Technical research helps to identify the best time to execute a fundamental strategy, he said. You can think of technical analysis as a trigger, he said.  

When the results of technical analysis diverge from those of fundamental research, portfolio managers should pay attention, according to Keller. He referred to point and figure charts as "a gut check on how I look at individual stocks."

Relative strength indicators are among the most important technical indicators, Keller said. They can be warning signs, he added.

Keller's message was warmly received by members of the audience, most of whom raised their hands when asked if they regularly consulted technical indicators. 

Related post
* Fidelity's head of technical research addresses "Where will the stock market go from here?"
____________________
The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Tuesday, March 23, 2010

Question re: client portals--is there a way to capture your emails to clients?

It's tough to separate investment communications from technology, especially given the strict retention guidelines of the SEC and FINRA. That's why my ears pricked when an investment manager said that client portals can't retain emails sent through them. I took that as a challenge.

I discovered that at least one client portal, FamilyOfficeNetwork (FON), satisfies this retention need. 

"FamilyOfficeNetwork does retain messages sent within our portal and they meet the SEC's retention requirements. We can also have any notification email sent from our system BCC to any email address a firm desires," wrote FON's Aaron Pickett in response to my inquiry.

Bill Winterberg, I must thank you again for helping me find an answer to a technology question.

____________________
The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Fidelity's head of technical research addresses "Where will the stock market go from here?"

Will the bull market continue? 

Investment professionals are always curious. So naturally the question came up during a Q&A session with David Keller, who oversees technical analysis as a managing director of research for Fidelity Investments. The question followed Keller's March 23 presentation to the Boston Security Analysts Society on "Applying Technical Analysis to a Fundamental Investment Strategy."

The bottom line: It appears that the market is in an uptrend and the offensive sectors will outperform their defensive peers. 

However, Keller framed his comments cautiously, saying that there is little evidence that the stock market is not in a sustained uptrend. Nor does he see evidence that the market is overbought.

"I can't say," replied Keller, when asked to identify his favorite sector. He's looking at groups that are traditionally considering offensive. "But it's not as clear cut as in the past," he said.


____________________
The next session of "How to Write Blog Posts People Will Read: A Five-Week Teleclass for Financial Advisors" will start in April. For more information, sign up to receive "Information on upcoming classes, workshops, and other events" as well as my free monthly newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Thursday, March 18, 2010

Institutional equity research job hunters, check out this site!

If you're an analyst looking for a job in institutional equity research, you should read the ResearchWatch blog published by Integrity Research.

The blog will help you stay current on trends and players--especially independent research firms--in institutional equity research. Some recent topics included 


You can subscribe to ResearchWatch by email or RSS feed.
____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Wednesday, March 17, 2010

JP Morgan's Eigen: Put your clients in non-traditional, long-short fixed income

Too many of your clients are over-invested in traditional fixed income, in the opinion of William Eigen, JPMorgan Asset Management's director of absolute return strategies and portfolio manager of the JPM Strategic Income Opportunities Fund. He made a case for using fixed income funds that can go short and use synthetic financial instruments during his presentation to the Boston Security Analysts Society on March 15. 

Why bond funds haven't changed
Fixed income funds really haven't changed in 30 years, said Eigen. Their managers still basically rely on changes on interest rates to make money. In contrast, he said, managers of equities have driven the development of hedge funds.

Fixed income hasn't evolved because interest rates have been falling for 30 years, said Eigen. In other words, with falling rates driving capital appreciation, there was no need for new techniques.

Can you imagine, Eigen asked, what would have happened to stock funds if the Standard & Poor's 500 had gone straight up for thirty years? Clearly he believes this would have stifled innovation in the management of stocks. Instead, the stock market's ups and downs spurred creativity. 

The need to protect your clients' capital 
Traditional fixed income performed more or less okay for thirty years, with some rocky years here and there. But the interest-rate decline that drove bonds' long-term positive performance will end. "I'm nervous with short rates at zero," said Eigen, "yet investors are still piling in."

Indeed, Eigen managed traditional bond funds during his 12-year career at Fidelity Investments. He left because he felt he couldn't protect his investors' capital adequately under the limitations of traditional bond investing. "I won't be held prisoner to duration," said Eigen. He wanted to be able to short-sell and put on relative value trades using synthetic instruments.

It's important to earn positive returns in fixed income by taking advantages of factors other than falling interest rates. If not, asked Eigen, what happens when a long-term trend of rising interest rates takes hold? If you're familiar with concept of duration, you know that bond prices fall when interest rates rise. Another negative: With interest rates at historic lows, there's no "coupon cushion" of attractive interest rates to ease the pain of bond investors.

It's easy to see the appeal of short-selling bonds in a rising interest-rate scenario. Investors would profit by essentially betting on bond prices' decline.

Now Eigen can take advantage of short-selling as manager of the JPM Strategic Income Opportunities Fund, a long-short relative value fund that does not use leverage. The fund can use synthetic instruments. It can also hold cash because Eigen's top priority is not to lose money. That's a challenge for which cash is sometimes the only solution.

The fund is managed as an absolute-return fund with a target of t-bills plus 2%-8%. "You don't need duration to generate solid fixed income returns," Eigen said. Another potential benefit of his approach: it has "zero correlation to traditional fixed income," Eigen said. 

Outlook: Rising rates, risky sovereign debt, relative value
Eigen thinks interest rates could rise faster than most pundits expect. Investors might get scared once rates start rising. Then they might quickly bail out of bonds to cut their losses.

Eigen is also scared about sovereign risk. Look at what's happened in Europe and Dubai, he said. His fund is taking advantage of that on the short side.

Synthetic instruments such as credit default swaps are a good way to take advantage of the relative value opportunities that arise in times of low volatility in bond markets. For example, investors seem to perceive a solid company such as Berkshire Hathaway as on a par with lesser insurance companies. Synthetic instruments are sometimes the only economical way to invest in this disparity.

What do you think? Is the end near for traditionally managed fixed income funds--or have they still got some life left in them?

Related posts
Fund using alternative strategies gain steam
* I LOVE this fixed income presentation
* Strong words from editor of Financial Analysts Journal

____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Tuesday, March 16, 2010

Tip for organizing information in your blog posts and articles

"Group similar points together. They gain power from consolidation and lose power from interruption."
--Francis Flaherty, author of The Elements of Story, p. 89
____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Friday, March 12, 2010

How should you thank clients for referrals?

Everybody knows you should thank clients when they refer business to you. But financial advisors can't agree on the right way to express their thanks.

Is a verbal thank you at your next client meeting enough? How about adding a card, gift or discount on your professional services? Often your response depends on the nature of your relationship with the client and the value of their referral.

If you decide on a card, must it be handwritten? Or could you use an automated service such as SendOutCards? I know advisors on both sides of this debate.

Some advisors reward referrals with a discount on their fees. Others shrink from this approach. They feel discount make clients question the validity of their pricing. The non-discounters may prefer to buy dinner or send a gift to the referral source.

What do YOU think? Express your opinion in the poll you'll find in the right-hand column of this blog. I'll share the results of the poll in my April e-newsletter.

Related posts
* Guest post: "The Lost Art of the Thank You Card"
* "You" can help your job hunting "thank you"

____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Wednesday, March 10, 2010

"What the HELL is Social Media?" with a hat tip to Sree Sreenivasan

If you're still wondering why you should learn about social media, check out this video, which I discovered thanks to Sree Sreenivasan.



____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Wednesday, March 3, 2010

Tip for bloggers from novelist Will Self

Bloggers should constantly be on the lookout for topics. Inspiration often hits at awkward times. That's why I like the following advice from British novelist Will Self.
Always carry a notebook. And I mean always. The short-term memory only retains information for three minutes; unless it is committed to paper you can lose an idea for ever.
I recently wished I'd taken a notebook onto the elliptical machine. A women's magazine sparked a new blog post idea. I was so worried about forgetting the idea that I didn't enjoy the rest of my workout.

Self was quoted in "Ten rules for writing fiction (part two)," which appeared in The Guardian, a U.K. newspaper.
____________________

Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Copyright 2010 by Susan B. Weiner All rights reserved

Tuesday, March 2, 2010

Reader question: How can I share my investment commentary on LinkedIn?

You can use LinkedIn, yet stay within your compliance officer's guidelines, by sharing approved materials through your LinkedIn "status line." I often suggest this to investment managers and financial advisors. 

So I wasn't surprised to receive an email saying, "Help! Please remind me how to share a link to my investment commentary on LinkedIn." 

Here's my answer.

Step 1 Shorten the URL that takes readers to your commentary. The URL for your commentary is probably be too long for the limits of LinkedIn's status updates, especially because you need text to lure readers to your commentary. This is when link shorteners come in handy. You can use a free service, such as TinyURL.com. To shorten your link, simply follow the directions at the link shortening website of your choice.


Step 2 Enter your text into LinkedIn. When you go to your LinkedIn home page, you'll see below your Inbox the Network Updates section.  Type your text into the box. If your commentary is provocative, you might say something like "You won't believe what I'm saying about the stock market  http://tinyurl.com/....." LinkedIn automatically converts URLs beginning with http:// into live links.

Hit the Share button and your investment commentary becomes available to folks on LinkedIn.

Related posts
* The LinkedIn status line is your friend, whether you're looking for clients or a job
* My top tips for LinkedIn newbies who want to attract financial clients, referrals, and jobs
____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Financial writers clinic: Lessons from Floyd Norris of The New York Times

I'm a big fan of New York Times columnist Floyd Norris. His Feb. 27 column illustrates techniques you can use for your financial articles and blog posts. 

Lesson 1: Make your title provocative--and consider giving away your conclusion. "Think Banks Are Out of the Woods? Maybe Not," says Norris' title. 

The title achieves two positive results. First, it challenges a growing number of pundits who believe banks are in much better shape than one year ago. That's provocative. Folks will want to know the reasons behind his statement.

Second, the title gives away the article's main point. Making your conclusion clear up front will attract more people than a title that doesn't express an opinion, such as "Percentage of bad bank loans" or even "Bad bank loans soar." Busy people want to get a sense upfront of whether an article will justify their spending the time to read it. 

Lesson 2: A startling fact will hook your readers in your opening sentence. Norris opens with "More than $1 in every $10 that American banks have outstanding in loans is lent to a troubled borrower, a ratio far higher than previously seen in the quarter-century that such numbers have been compiled." I had to continue reading after that opening. 

Lesson 3: Lead with your message, not your source, as I've written on this blog. Norris didn't mention the Federal Deposit Insurance Corporation report that's the source of his data until his third paragraph. Naming your source boosts the credibility of your article or blog post. But it's usually not a particularly interesting piece of information. 

Lesson 4: Use graphs or some sort of graphic. A non-text element attracts the eyes of people who might otherwise skip an article. However, Norris' graphs could have been stronger if they were integrated into the layout of the article and carried more descriptive text. 

Lesson 5: Your ideas count. Norris always has something interesting to say. I might read his articles even if they weren't well organized.

Related posts
Vary your paragraph length like NYT writer Floyd Norris
Financial writers clinic: Getting rid of "mitigate"
Financial writers clinic: Rhythm can help you 
Financial writers clinic: Great title, lousy intro

____________________
Susan B. Weiner, CFA
Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved