Financial Press

For me it's always interesting to follow the financial press. You can learn a lot about different investment products and more importantly financial journalists perform a great public service in helping protect consumers from financial predators. There are plenty of those in the financial field.
However stories that are positive and reflect well on a financial product or a company appear to me to be seldom reported. Maybe there are no stories like that around but I don't think so. After all it does make a much better story if Tom LaHein's investment is stolen by some shady broker than if Tom made 20% every year for ten years.
Remember the technology boom. Millions were made on the way up and millions were lost on the way down. Somehow the headlines in the financial press were bigger on the negative stories.
I too sometimes find it easier to be critical than constructive. In Thailand for instance it's much easier to criticise a crooked cop who wants 200 baht from a motorist than praise an honest cop on a small salary, who rears a family of two or three children that anyone in this world would be proud of.
One reason financial journalists can be so critical is that they never have to recommend any fund or broker. They would have to be accountable if they did. A broker like me has to recommend and stand accountable for that recommendation.
Because of this most honest financial professionals will never recommend anything fishy.
Currently going the rounds is a company offering 9% guaranteed per annum. In to day's low interest environment, I wouldn't touch this with a barge poll.
Currently financial journalists are having a field day on hedge funds. Here are a few quotes from a recent article. (Reuters) "Following nine years of steady growth, managed (hedge fund) assets fell to $618.6 billion from $622.3
The fall in assets comes in part because hedge funds which claim to make money whether markets rise or fall have not lived up to their promise of high returns amid deteriorating profits.
The decline in assets is striking considering the dire performance of equity markets and indicates the lower risk appetite of many investors not helped by recent hedge fund blow ups like Beacon Hill and Lipper"
Firstly let's look at the fall in assets. After nine years of steady growth the first quarter of this year was the first to experience a reversal. Should we head for the door because of It.? No. Any broker worth his salt would never recommend a client to abandon ship on a successful investment on one quarter's performance. .
Secondly to make a generalization that hedge funds, which claim to make money in rising or falling markets have not lived up to their promise, is wrong.
The hedge funds I recommend have made money and have lived up to their promise. And then by implication that the run from hedge funds is because they are high risk. No again. Some for sure are, but not all. Since its inception in January 1999 a fund I have happily recommend for low risk investors has an annualized return to date of 16.2% and an annualized volatility of just 4.1%. This is even lower risk than bonds. I am not trying to say I am cleverer than this journalist. Probably I'm not. He expresses very real concerns about the hedge fund industry and its lack of regulation. The point I'm making is that if I were a full time journalist I too would probably hunt down stories which show the fastest growing section of the financial industry in a negative light and not particularly go out of my way to hunt down the good companies that investors want to know about.
The difference between him and me as I've already said is that I will be standing by my recommendations. I'm sure that even he would admit there are some excellent companies in the industry.
My job is to find the good ones. His job I guess and hope he continues to do it is find the crooks.
But please a little lighter on the generalizations.