December 2015

Due Diligence, News December 18, 2015

Goofy, Esoteric Securities are a Red Flag

Financial entertainment got a holiday gift with the fiasco surrounding the Third Avenue Focused Credit Fund.  The fund halted withdrawals amid investor outflows which was “shocking” according to Barron’s.  The sharks are circling as the media has had easy filler content – “Worried About Your High-Yield Bond Fund?” and so on.  The thing is, the Third Avenue Focused Credit Fund was not a high yield bond fund and even cursory due diligence would have revealed this.  That anyone was caught off-guard by this development should be the real story here. I still have my notes from my due diligence on the fund in January of 2013.  The number one thing that stands out is that it is/was a DISTRESSED CREDIT fund.  This means that it invested in illiquid and sometimes non-performing stuff.  I say stuff because they didn’t hold just bonds.  The fund also held equities and other securities from restructuring…

No Picture

Fairway, Investing, News December 9, 2015

It’s Forecasting Season

  From the Fairway Wealth Management Blog: As the leaves fall from the trees and the temperature starts to drop here in Cleveland, I am reminded that forecasting season is right around the corner. The same people who predicted $200+ oil, hyper-inflation, and multiple Federal Reserve rate hikes for 2015 will be begging for you to believe that they know what is in store for 2016. They do not. Beware predictions of what the market will do, particularly if they are precise. It may be an interesting game to play for fun, but anyone making a prediction on the S&P 500 out to two decimal places is a charlatan. Predicting the markets is like predicting the weather except that meteorologists realize that predicting the exact weather conditions twelve months in advance is lunacy. The financial entertainment industry is not as self-aware. On December 31st, 2016, what will Cleveland’s exact temperature…