Money Matter$

Adam always seems to be tweaking his investment method madness. Recently he decided to simplify his clients’ pie charts to only three slices (asset classes) to allow for increased opportunistic monetary benefits. Say what? Imagine you are a caterer. You provide a menu for a mid-summer event, and dessert is listed as BAKED PIE. How vague, right? How lame, right? Au contraire! At event time, you will choose the very best of the season. Fruits at their peak ripeness! Locavore pies! Wonderful, bursting-with-flavor summer pies! If tree fruits are not in season, then you will go with berries.

Thank Dodd for taxes. And Frank—Barney Frank—the infamous former Chair of the House Financial Services Committee, who so badly wanted every American to own a home that I feel he bears much of the responsibility for the recent housing crisis. In 2003, he said about Fannie Mae and Freddie Mac, now under the stewardship of the government and being fed billions of taxpayer dollars every quarter, "These two entities are not facing any kind of financial crisis.” Frank also stated "I do not want the same kind of focus on safety and soundness [in the regulation of Fannie Mae and Freddie Mac] that we have in the Office of Thrift Supervision. I want to roll the dice a little bit more in this situation towards subsidized housing." In July 2008, Frank said in an CNBC interview, "I think this is a case where Fannie and Freddie are fundamentally sound, that they are not in danger of going under.”

Most of us have heard the predictions. Crude oil is a finite resource and the world is running out. Oil plays a role in everything we consume, and the price influences the cost of any product. Consider an example of a box of cereal, Corn Flakes. Let’s start at the farm where the corn is grown:

I read Morningstar Advisor last month, and have come to the conclusion that this is indeed the era for ETFs. For the 15 years that I’ve been in the investment business, Morningstar has focused most of their attention on the mutual fund industry. They developed, and have modified, a mutual fund star ranking system, and they have an extensive fund research platform. But this month, they turned their attention to ETFs; and for good reason.

I was thinking the other day about how the federal government and the Federal Reserve Bank continue to discuss stimulating our ailing economy with plans such as QE3 and another round of fiscal stimulus. Why is it that some central body (government) thinks they can “create jobs” with policy? The reality is that businesses create jobs; government can only assist with regulation and tax policy. Fiscal stimulus and the printing of money are two temporary ways to “create jobs”. Once the stimulus is spent, the jobs created don’t have 100% sticking power. With quantitative easing, the money supply must be contracted at some point to avoid hyper-inflation, meaning quantitative easing is simply—by design—a temporary creator of jobs as well. Keynesian governments assume that a temporary lift is all we businesses need to get the ball rolling.