Buyer Beware!!

2008-12-22

Title: Investor Watch: B.C. securities regulator cautions investors about investment pitches

The British Columbia Securities Commission is publishing an Investment Caution List to warn investors about unregistered companies that have contacted B.C. residents to open brokerage accounts, or buy unqualified investments that may not comply with securities laws.

“The BCSC helps protect investors from unsuitable and potentially fraudulent investments through investor education and warnings,” said Brenda Leong, BCSC executive director. “Investors should always know who they are dealing with and research an investment, before they invest. We encourage investors to immediately report any suspicious investment activity to the BCSC.”

Investors need to be particularly careful when dealing with companies located in offshore jurisdictions. Investigating offshore companies can be complicated and can delay enforcement action. In addition, when money is sent offshore, recovery of investor funds is often difficult or impossible.

The Investment Caution List does not identify all unregistered activity or unqualified securities being promoted in the province. In compiling the Investment Caution List, the BCSC relies on information it receives from the public or other agencies.

The $50-billion BMIS debacle: How a Ponzi scheme works

Article from: http://www.cbc.ca/money/story/2008/12/15/f-langan-bmis.html

It looks as if the smart money on Wall Street was pretty dumb.

They were the ones who invested with Bernard Madoff, who is alleged to have run a huge Ponzi scheme. It is said to be one of the biggest frauds in the history of Wall Street.

"Our complaint alleges a stunning fraud that appears to be of epic proportions," said Andrew Calamari, the associate director of enforcement at the New York office of the Securities and Exchange Commission, the watchdog for securities fraud in the U.S.

Last Thursday police arrested Madoff saying the scheme he ran on a separate floor of his New York office could end up costing investors as much as $50 billion US. Madoff is out on $10-million bail.

His lawyer says it's all a terrible misunderstanding. "Bernard Madoff is a longstanding leader in the financial services industry and we are co-operating fully with the government and regulators investigations into this unfortunate set of events."

But prosecutors say Madoff told the people who arrested him, "There is no innocent explanation."

The 24 pages of charges by the SEC say that, "Madoff admitted to one or more employees of BMIS [Bernard Madoff Investment Securities] that for many years he has been conducting a Ponzi-scheme through the investment adviser activities of BMIS and that BMIS has liabilities of approximately $50 billion."

Bernard Madoff
The man behind the alleged scam, 70-year-old Bernard Madoff, is described as having been a fixture on Wall Street for almost 50 years. He was once chairman of the board of the NASDAQ exchange. This is like a bishop being arrested and accused of stealing from the poor box.

Madoff and his wife were big-time philanthropists and split their time between a $5-million apartment on New York's Upper East Side and Palm Beach, Fla. Madoff was a member of the Palm Beach Country Club, where he found many of his new clients.

Some super-rich people are said to be potential victims of the fund run by Madoff. According to the Wall Street Journal, they include the chairman of GMAC (General Motors Acceptance Corporation), and the owners of the New York Mets and the Philadelphia Eagles. Hedge funds in the United States and banks in France, Switzerland and Japan were also said to be taken in.

"I'm wiped out," hedge fund manager Sandra Manzke told the Wall Street Journal. Her losses are estimated at $280 million.

The charges
The SEC charges say the operation was run on a separate floor of Bernard L Madoff Investment Securities, its "cryptic" financial statements kept "under lock and key."

Bernard L. Madoff, now facing fraud charges as a result of an alleged Ponzi scheme that might amount to $50 billion US, is shown in his firm's New York office in 1999. (Ruby Washington/New York Times/Associated Press)According to the SEC charges, Madoff took in investors' money and said it was for investments that used options to guarantee a safe return. His investors reported he returned eight to 12 per cent a year, pretty spectacular in these markets. But Madoff never really earned the money, says the SEC — it's alleged he paid the first investors with money from the new investors, building up debt, not assets.

Many people just reinvested their money, so Madoff was alleged to be able to churn over the cash. The SEC charges say when investors short of cash asked for about $7 billion, the scheme fell apart.

Throughout its charges the SEC uses the term "Ponzi scheme," and even quotes Madoff as admitting last week: "It's all just one big lie … basically a giant Ponzi scheme."

So what exactly is a Ponzi scheme?

Well, it's a kind of pyramid sales scam, where the original investors are paid off by the new investors. It is named after Charles Ponzi, who immigrated to the United States in 1903, moving to Montreal in 1907. He worked for a bank in Montreal, it failed, and then he forged cheques to make a living. He served a jail term in Quebec before moving back to Boston.

The scam that made Ponzi immortal started in early 1920. He offered depositors a 50 per cent return in 45 days. Within weeks money was pouring in. He paid off some early investors with money from the later investors. By July of 1920 Ponzi was making $250,000 a day.

Of course it couldn't last. By November he was in jail, serving a five-year sentence. But Ponzi's name lives on to describe his type of fraud.

What is amazing about the alleged Ponzi scheme at Madoff Securities is how long it's said to have lasted.

"The cops can't catch every crook, but a sophisticated financial system should be able to spot a multibillion-dollar Ponzi scheme operating in its midst for years," said the Wall Street Journal.

Visit the firm's website and a short note tells you a law firm has been appointed as "… receiver over the assets and accounts of Bernard L. Madoff Investment Securities LLC ("BMIS")."

The blunt message tells them to call a number with a Texas area code. Ring the number and a recording asks investors to be patient — but it looks like the end of the line for Madoff's unfortunate clients, who range from schoolteachers, with as little as $50,000 invested, to billionaires.

Fred Langan is host of Newsworld Business News.

Capital Market Field Day

This article sums my thoughts nicely.



Daytraders' Field Day

By Rev Shark

About this article:
What makes this market so tough is how quickly the mood shifts. In the final hour yesterday sellers wanted out and buyers had absolutely no interest in bottom-fishing. Today the attitude is maybe things really aren't that bad. GE is actually going to earn what it thinks it will and banks are shrugging off more estimate cuts and finding buyers. Oil is very weak once again but other commodities are holding up OK. When things are this random day to day, you really have to be clear on what sort of trader or investor you are. If you are daytrading, which seems to be the best approach at the moment, you can deal with the changes in personality on a daily basis. However, if you are trying to hold positions for a while, you are going to get whipsawed and have stops triggered....

Canadian Mortgage Trends

source:Canadianmortgagetrends.com

CAAMP has released its annual mortgage report and it's chock full of mortgage stats. Here's a rundown on the more notable ones:

5,250,000: The number of Canadian home owners with mortgages.
29%: The percentage of Canadian homeowners who got a new mortgage in the last 12 months.
86%: The percentage of people renewing or refinancing that stayed with their existing lender.
$136,000: The average mortgagor's equity. This equity equals 51.7% of their home value on average.
22%: The percentage of mortgagors who took equity out of their homes in the past 12 months. People are spending more because last year it was 17%.
$41,000: The average equity that borrowers took out of their homes this year. That's up 16% from last year. The most common reason for borrowing this equity? Debt consolidation.
50%: The ratio of new mortgages taken out in the last year with amortizations greater than 25 years.
5.41%: The average Canadian's mortgage rate. Last year it was 5.56%.
0.40%: The average interest rate improvement realized by people who refinanced in the past year.
1.59%: The average discount off of bank-posted rates.
1.96: The average number of quotes people get when shopping for a mortgage.
0.28%: The percentage of Canadians who are 90 days or more past due on their mortgage. That's up just slightly from last year.
10%: The approximate decline in mortgage approvals that CAAMP foresees in 2009.
36%: The percentage of Canadians who are aware that insured 40-year and 100% LTV mortgages have disappeared.
Peoples' favourite mortgage terms:

1-3 years: 29% of borrowers
4-5 year: 61% of borrowers
Over 5 years: 10% of borrowers
CAAMP says there's a noticeable trend in borrowers taking shorter terms when compared to last year.

There's also a big trend towards variable rates. 40% of mortgages were variable in the past year. In CAAMP's 2007 report the number was just 21%. CAAMP says that's because "consumers may be expecting interest rate reductions." We'd also like to think they're becoming more educated about the long-term advantage of variable rates.

Where did people get their new mortgages this year?

Major banks: 47%
Mortgage brokers: 35%
Credit Unions: 11%
Other: 6%
Thanks to CAAMP economist Will Dunning for putting together this wealth of data.

Baltic Dry Index

The leading economic indicators—which serve as the foundation of massively important political and economic decisions—can frustrate even the wisest economists. They quibble over whether the payroll or establishment employment numbers make more sense and wonder whether consumer confidence figures measure anything more than sentiment. The figures of the gross national product are consistently revised. Pay attention Baltic Dry Index




Article from Investment U:

Forget unemployment. Inflation. Consumer confidence. Personal Incomes...

You can even ignore the ever-popular gross domestic product (GDP).

Most of the indicators that the market relies on to forecast the future are worthless in this type of environment. The truth is the data coming out of the traditional economic indicators isn't current. By the time it's being reported, the information is already weeks or even months old.

If you want to know when the global slowdown that's erased $28 trillion in wealth (so far) will finally reverse course, pay attention to the obscure Baltic Dry Index (BDI). And nothing else. Here's why...

To Build it, You Need Raw Materials

Despite the name, the index has nothing to do with markets in Lithuania, Latvia or Estonia. Instead, it's all about the cost of shipping major raw materials. Like iron ore, coal, grain, cement, copper, sand and gravel, fertilizer, even plastic granules.

The value for the index is determined by the London-based Baltic Exchange, which traces its origins back to 1744. Each day, the exchange canvasses hundreds of brokers around the world for price quotes on moving goods. For instance: Shipping 100,000 tons of coal from South Africa to Japan, or 50,000 tons of iron ore from Australia to China. It then aggregates the quotes to form the BDI.

Basic economic principles of supply and demand explain the significance of the index...

The supply of cargo ships is tight and inelastic. It takes roughly two years to build a new cargo ship. And the high cost of each prohibits docking ships during slow periods. In other words, a change in cargo rates does not change the number of ships in operation. So even the slightest changes in demand for shipping raw materials results in a change in the index.

And because the index tracks the cost of shipping raw materials - the precursors of economic output - instead of intermediate or finished goods, it provides a precise and rare measurement of the volume of global trade at the earliest possible stage.

A sharp move up, means global trade is increasing. Conversely, a sharp move down, means it's decreasing. Since global economic activity ultimately influences the equity markets, sharp moves in the BDI often predict and precede similar moves in the equity markets.

Of course, there are other reasons to favor the BDI over other leading indicators, including:

No room for speculation. The index is not tradable, which means the only people booking cargo ships are those with actual cargo to ship. That makes the BDI, as economist Howard Simons put it, "totally devoid of speculative content."
Not subject to revisions. Unlike almost every other piece of economic data, the BDI is not revised on a monthly or quarterly basis. The price is the price. And it's completely reliable.
An inability to be manipulated. Governments, both here and abroad, love to "massage" economic data, especially inflation figures. Obviously, it's difficult to base investment decisions off incomplete or "mostly" accurate data. But because of the way the BDI is measured, that's simply not possible. Again, the price is the price. And it's completely reliable.
Real-time, daily updates. We all know markets shift fast. And in turn, we need indicators able to reflect those sudden movements. At best, we only get weekly updates for other leading indicators. And all are backward looking. The BDI represents the only indicator with "real-time" updates. And such frequency dramatically increases its relevancy and value.

In light of the above, it doesn't take a market maven to predict what direction the BDI's been heading lately - practically straight down. Here's the thing. The BDI started plummeting in early June, before the global equity markets went into a tailspin, proving its predictive abilities.

So if you're looking for a clear indication of a market bottom, forget about any other leading indicator or popular convention. Just look for the BDI to start trending noticeably higher.

Good investing,

Lou Basenese

Show me the light not Heat!!

As predicted the market did tumble right as election polls started closing. This in my mind was traders feeding on election rally.

So what are in for next. My fear is mutual fund liquidations, 401k sales to cover seller's positions may drive this market even lower. Tax loss selling compounded drop in US exports due to strong dollar will keep the Richter scale shaking.

This market is beyond many analyst. The looming currency crisis, unproductive government intervention. It's all a big mess and is going take time to wane out.

It is still best to stay on sidelines and not get tricked by short lived rallies.

CASH IS KING!

Warren Buffet comes out and says its time to buy and the herd follows.I have been following a few analysts and they all claim that it is time to back up the truck. But this is what they all have been saying since August 17th, 2007. The troubles in Canada has just begun. Last week I travelled to Oregon Coast and talked to some interesting locals. Most felt we are not out of the woodworks yet. Then off to Kelowna to a controllers meet and wallah! "business is slowed down", "we are cutting back", "hiring freeze", "diffculty getting finance", "m&a on hold", "shifts cut back", "all temp labors gone", "5 trucks still parked for a while".- Hell I don't see these in the press. So folks wait for the wild round of shock and awe in Canada before going on stock shopping spree.

You see all the text book style market trading is passe. The Feds intervention in the market has made this trading business a bit tricky and treacherous. You don't know what you don't know.

For now I believe it is safe to stay on the sidelines and catch the next wave with buy high, sell higher strategy.

Life is a Sucking Despair

BoC joins world bankers and cuts rate by 1/2% but CIBC and TD only cut their prime by 1/4%. Prime minus mortgage disappears, Credit scores raised for new loans, falling commodity prices.

Something is about to hit the fan in Canada. Can someone define infression!

Bond Yields - Biggest Drop in a Decade

Canada's 5-year bond soared on Monday. In turn, its yield plummeted a stunning 27 basis points (0.27%). Bonds yields haven't had a one-day plunge that big in over 10 years (as far back as the Bank of Canada has public data).
The powerful move was prompted, of course, by the Lehman bankruptcy in the U.S., Merrill Lynch's surprise takeover (savior), and AIG's enormous liquidity crisis. Traders ran for cover in the safest securities available, Canadian and U.S. treasuries.

BMO economist Sherry Cooper says this financial crisis is "the worst" she's ever seen. It will therefore be interesting to see how things play out in Canada's mortgage market this week. Usually, big dips in bond yields are good for mortgage rates, but we'll have to wait and see where all the dust settles.

Data source: Bank of Canada & Mortgage Architects.

I Smell a Nice Rally !!!

Record oversold situation. Nice Rally Ahead. This is the time to position your portfolio with Gold, Silver and Uranium. I am leaning towards selling American dollar.

Also take a look at BAJA MINING CORP.

Baja Mining Corp. owns a majority interest in El Boleo Project, an advanced polymetallic (copper, cobalt, zinc, manganese) property located in Baja California Sur, Mexico. Baja has assembled an exceptional management team and finance to develop Mexico’s largest copper-cobalt deposit.

A BLEAK WINTER !!!!

GlobeinvestorGOLD (TORONTO) - If the stock market continues to hold to its historic pattern as a leading economic indicator, it's going to be a long, bleak winter for Canadians. No wonder Stephen Harper is so anxious to get to the polls!
In the space of less than three months, the Toronto Stock Exchange has gone from being the number one performer in the world to the global "Worst Ten" list. It seems like a decade ago but in fact it was only in mid-June that the S&P/TSX Composite Index hit an all-time high of 15,154.77 as we rode the commodities boom.

Today we stand on threshold of an official bear market. As of Friday, the Composite Index was down more than 15 per cent from that lofty June peak. A retreat of 20 per cent or more is considered to be a bear market.

If you want a little good news, the TSX still has the best record on the planet in 2008, with a year-to-date loss of 7.3 per cent as of Friday's close. Every other market of any significance shows double-digit declines and in many cases (e.g. Germany, France, and Hong Kong) the losses exceed 20 per cent. But that's small consolation in the context of what's been happening in Toronto recently.

How long can this go on? To be honest, there's no way to predict that. What we do know based on past experience is that severe market corrections are usually followed by a recession within about six months. If that holds true once again, the first half of 2009 will not be a happy time. Here's what we might expect.

Job losses. Despite the mildly cheering August employment news from Statistics Canada, the winter will likely bring more layoffs and plant closures especially in eastern Canada. If the price of oil continues to tumble, we might also see a reduction in labour demand in Western Canada, over and above the usual seasonality in the energy sector.

A decline in house prices. We have already had indications that the Canadian housing market is softening. This trend could accelerate as we move through the fall and winter although it won't be anywhere near as bad as in the United States because of our stricter lending standards. Based on historical precedent, the greatest impact is likely to be felt in regions that have experienced unusually high increases in property values in the past few years. Condos in overbuilt markets are especially vulnerable.

Lower interest rates. As unemployment rises and housing prices drop, the Bank of Canada will finally get off its backside and start cutting rates again. Governor Mark Carney and company should have started the process on Tuesday but instead held steady at 3 per cent, in part because of lingering inflation concerns.

Lower energy prices. We have not yet seen the full impact of falling oil prices at the gas pumps and on our home heating bills. But if the price slips below $100 (U.S.) a barrel and stays there, we should see gasoline back at around $1.10 to $1.15 a litre by late fall. That would have a ripple effect right through the economy which could result in deflation replacing inflation as the Bank of Canada's primary concern.

A government deficit. The probability of this happening is low but it is a concern if the economy hits the skids over the winter. Remember, the government's accounts were in deficit in the first two months of the 2008-2009 fiscal year, which began on April 1. Although Ottawa moved back to a surplus in June, the overall economy appears to have deteriorated since.

A stock market rally. Just when things couldn't seem worse, the stock market will take off and a new bull will be born. At the time, the economy will still be weak but investors will be looking ahead to the recovery stage and will be snapping up bargains everywhere. That's the way it's always been. It won't be any different this time.

written by Gordon Pape

Fannie Mae and Freddie Mac Bailout

Fannie and Freddie provide back about $5 trillion of US mortgages. This is significant liquidity to about 80% of the US mortgage market. The US Government (Feds) took control of these two companies. The implosion that most of us have been betting on is no more.

What does this mean for us? Liquidity in housing market will improve and the fear mongering in the press will likely turn bullish. This should also help Canadians as the stability in US means increased business for Canadians.

Muddy Market !!!!!

Most traders and Investors look forward to September for financial markets to stabilize and see progressive trends but I cringe to see market turmoil continue.
Just hope that another brokerage, real estate shock or dollar implosion doesn't happen . The Feds are caught in a conundrum - The FEDS have flooded the market with so much money that rubbing fingers on interest rate hike trigger switch is all they can do. Well it ain't over yet.

Paris Hilton for President! she gets it right

See more funny videos at Funny or Die

GENERAL ELECTRIC GE $27.90

General Electric - a diversified stock play for every portfolio. This star has been beaten so much with credit woes that it is a must have for attractive energy play.

INFRESSION !!!!!!!!

US Dollar making new lows, Market’s lower with more scary news from bankers. Chinese stocks in bear market, Lay-offs at factories and continuing real estate crash headlines.
People we are at crossroads to INFLATIONARY DEPRESSION.
It means that inflation will not only make prices for everything rise faster and faster, which is the inflation part, the depression means that people won’t buy or sell anything. They won’t be able to.
We are going to see this in many parts of North America. Even Garage Sales will sell almost nothing. You may want that used electronics, but you don’t dare buy it- your utility bills and gasoline expenses are going up at such rates that you may need the extra money just to keep afloat. You may want to sell that Coffee Table because you’ve lost your house, and are hoping to raise the cash for a move elsewhere, but nobody wants it for a price. You have to nearly give it away.

Starbucks (SBUX) $15.56

Not too long ago a friend suggested I get in on Starbucks. At that time it was trading at around $25.50 on average. I kept pushing back saying nah!! I think the Cinderella is losing steam etc. etc. Well, Today the announcement comes 600 stores closing and 12,000 people losing jobs. You can call it bad market conditions or changing demographics. But in my opinion I couldn't justify paying for $5.00 for a cup of coffee. Closing stores is like cutting your fingers. Looking at your competitors coming with better and relatively well priced similar products with cost effective operation . Ah ah! shit that's where my sales is going.

Energy Sector is Top Ranked

In youth we learn; in age we understand.
Marie von Ebner-Eschenbach

Currently, energy sector is the best performer. Sector relative strength is as powerful a catalyst as earnings, when it comes to big moves. Rightnow, the energy sector is top ranked sector and many stocks in that sector are making big moves.