Will money managment have to change now? Part 1
Given the trillions lost since mid-2007, have the rules of money management changed? We're looking at a pretty big topic here, but we'll start nipping away today.
It's best to start with what you know. Let's begin our investigation with what has already changed or is now in the process of changing. As for what will change in the future, there's going to be some guesswork involved. That involves opinion more than fact, but we'll get to that too. I'll let you know when I'm giving you my opinion.
We begin with regulation. The government's working on that as we speak. Regulation is changing. How? The operational term: more.
That's what always happens after disaster strikes, mixed with scandal. And we've had plenty of financial disaster and scandal. So expect more regulations, more regulators - at the very least.
There's irony in this. The changes that will come about will probably address what's already happened. A good question to ask: Will that help anyone in the future? Well, it mightl help to prevent what's already happened from happening again - maybe. So to answer the question directly, it probably won't help a lot.
Another thing we're seeing now: finger-pointing, charges of wrongdoing, then indictments. Think Bernie Madoff...and that whole string of Ponzi schemes that were "discovered" since Madoff turned himself in.
These folks should be prosecuted - big time. They broke the law. They committed fraud. They stole people's money.
But where were the regulators while Madoff was conducting his crimes - for decades? The SEC, for one, conducted lots of audits of Madoff.
Have you noticed that question's been swept under the rug already? Isn't that the way it goes? The regulators miss their chance. Then they start pointing fingers at everyone but themselves.
So add the pointy fingers to the new avalanche of regulations.
Will this change money management? You bet. At least from the point of view of money managers. The cost of compliance will skyrocket.
One of two things will happen then: 1) money management fees will go up; 2) money management profits will decline.
Can money managers charge higher fees given the recent performance of most money managers. I don't think so. So profits will go down.
You've already seen big layoffs. I would guess more will come in the coming months.
Will it change the way individuals manage their own money? I haven't seen any impact of the evolving new regulations yet. But don't be surprised if the paperwork increases to open new accounts. You'll probably also see even more disclaimer-type clauses added to statements and other communications from the custodian (e.g., Schwab, Fidelity, Ameritrade, etc.) where you hold your accounts.
As if we didn't already have enough paperwork to deal with!
It's best to start with what you know. Let's begin our investigation with what has already changed or is now in the process of changing. As for what will change in the future, there's going to be some guesswork involved. That involves opinion more than fact, but we'll get to that too. I'll let you know when I'm giving you my opinion.
We begin with regulation. The government's working on that as we speak. Regulation is changing. How? The operational term: more.
That's what always happens after disaster strikes, mixed with scandal. And we've had plenty of financial disaster and scandal. So expect more regulations, more regulators - at the very least.
There's irony in this. The changes that will come about will probably address what's already happened. A good question to ask: Will that help anyone in the future? Well, it mightl help to prevent what's already happened from happening again - maybe. So to answer the question directly, it probably won't help a lot.
Another thing we're seeing now: finger-pointing, charges of wrongdoing, then indictments. Think Bernie Madoff...and that whole string of Ponzi schemes that were "discovered" since Madoff turned himself in.
These folks should be prosecuted - big time. They broke the law. They committed fraud. They stole people's money.
But where were the regulators while Madoff was conducting his crimes - for decades? The SEC, for one, conducted lots of audits of Madoff.
Have you noticed that question's been swept under the rug already? Isn't that the way it goes? The regulators miss their chance. Then they start pointing fingers at everyone but themselves.
So add the pointy fingers to the new avalanche of regulations.
Will this change money management? You bet. At least from the point of view of money managers. The cost of compliance will skyrocket.
One of two things will happen then: 1) money management fees will go up; 2) money management profits will decline.
Can money managers charge higher fees given the recent performance of most money managers. I don't think so. So profits will go down.
You've already seen big layoffs. I would guess more will come in the coming months.
Will it change the way individuals manage their own money? I haven't seen any impact of the evolving new regulations yet. But don't be surprised if the paperwork increases to open new accounts. You'll probably also see even more disclaimer-type clauses added to statements and other communications from the custodian (e.g., Schwab, Fidelity, Ameritrade, etc.) where you hold your accounts.
As if we didn't already have enough paperwork to deal with!
Comments