brooke07t7: personal finance manager

When I first arrived in Japan in 1974, international investors widely expected the country to collapse, a casualty of the overnight quadrupling of oil prices to $12 and the global recession that followed. Japanese borrowers were only able to tap foreign debt markets by paying a 200 basis point premium to the market, a condition that came to be known as “Japan Rates.”

Hedge fund manager, Kyle Bass, says that the despised Japan rates are about to return. There is nothing less than one quadrillion yen of public debt in Japan today. A perennial trade surplus powered high corporate and personal savings rates during the eighties and nineties, allowing these agencies to sell their debt entirely to domestic, mostly captive investors Those days are coming to a close. The problem is that the working age population peaked in Japan last year, and the country is entering a long demographic nightmare (see population pyramids below).

This year, the Ministry of Finance will see ¥40 trillion in receivables, the same figure seen in 1985, against ¥97 trillion in spending. Interest expense, debt service, and social security spending alone exceed receivables. The tipping point is close, and when it hits, Japan will have to borrow from abroad in size. Foreign investors all too aware of this distressed income statement will almost certainly demand big risk premiums, possibly several hundred basis points. That’s when the sushi hits the fan.

To top it all, no one in living memory in Japan has ever lost money in the JGB market, so expectations are unsustainably high. Need I mention that Japan’s Q2 GDP growth came in at an arthritic 0.1 %, not exactly a performance to run up the flagpole?

Both the JGB market and the yen can only collapse in the face of these developments. I know that the short JGB trade has killed off more hedge fund managers than all the irate former investors and divorce lawyers in the world combined. Read about my own recent, futile attempt to sell these markets by clicking here at http://www.madhedgefundtrader.com/august-6-2010.html .

But what Kyle says makes too much sense, and the day of reckoning for this long despised financial instrument may be upon us. How much downside risk can there be in shorting a ten year coupon of under 1%. I have included a breakdown of Kyle’s portfolio below, which you should note, has absolutely no equities anywhere in the world. Is Kyle trying to show us the writing on the wall?

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

If you walked into the average bookstore, you'd think that women rule the roost when it comes to personal finance. From Suze Orman's now-classic Women and Money to the more recent (and more colorfully titled) Bitches on a Budget, there's no shortage of do-it-yourself financial advice tailored to women.

Apparently, though, when women make the momentous move from self-help to seeking professional advice about investing and retirement, things go rapidly downhill. A recent study by the Boston Consulting Group revealed that women perceived themselves as receiving wealth management services at a level of quality that is inferior to that received by their male counterparts.

According to the study, women are the key decision-makers when it comes to 27% of the wealth worldwide: that's $20 trillion! But despite the massive chunk of power they wield, 55% of the women surveyed in the study said they felt their wealth manager could do a better job of advising them. Almost a quarter of the respondents said private banks needed "significant improvement" in the services they offer to women.

"The dissatisfaction stems from the unshakable perception that men get more attention, better advice, and sometimes even better terms and deals," according to study co-author Peter Damisch. "We heard this sense of subordination time and time again in our interviews."

This perceived disparity in service arose from several key disconnects in the relationships and communications between women and their financial advisers. Manisha Thakor, Chartered Financial Analyst and women's financial literacy advocate, offers some steps savvy female investors can take to avoid being under-served by their wealth managers and investment advisers:

1. Find your adviser and get your financial education from women-run resources.

The financial services industry is dominated by males and therefore the "DNA is structured around the male experience," Thakor explains, adding that she sees many firms making an effort to change this. Most financial advisers are men, who may not inherently understand the whole-life nature of the average woman's financial plans and needs. They also may have very different communication styles than their women clients.

Thakor recommends women use women-created resources like LearnVest and DailyWorth to educate themselves in order to avoid the intimidation factor when talking about investment products with their advisers. She also encourages women to consult Garrett Planning Network, founded by Certified Financial Planner Sheryl Garrett, to locate a local certified financial planner who works on an hourly-fee-only basis. Taking these steps, Thakor explains, may alleviate the concern expressed by many women in the BCG study that they were not being taken seriously or talked to on the same level as male clients by their financial advisers.

2. Expressly state your ideal career trajectory, then ask how you should alter your investment plans accordingly.

In the BCG study, women stated that their investment advisers fundamentally misunderstood what was actually important to them, and recommended a too-narrow range of inappropriate investment vehicles as a result. Many said their advisers assumed they had a lower risk tolerance than they actually did, or that their advisers focused on short-term results and disregarded their long-term goals, which often included time out to care for a child or parent.

Thakor offers women a script of sorts to remedy this communication disconnect. "Go in and say: "I want to be a mom and I may take X amount of time out of the work force," she advises. Then ask, "How do we adjust how much I need to save and how I should invest to compensate for this?"

3. Start saving early.

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brooke07t7

Friday, September 24, 2010

personal finance manager

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