Thursday, August 30, 2012

Dr. Bill Clark - Christian or Charlatan?

Trust me, I'm a doctor!
Unfortunately,  the rogues gallery of unscrupulous "advisors" with radio shows extends far beyond our friend Ken Moraif.  Another one of the worst is Dr. Bill Clark.  According to the bio on his website, he did his "doctoral work" at Cornerstone University.  But, here's an interesting fact - Cornerstone University's website doesn't list any doctoral degrees.  And, I'm sure that a lot of unsuspecting people assume that his degree is in something that would actually qualify him to give investment advice - but, it's not.  It's in counseling and psychology.  Oh, and let's not forget divinity and music - not a lot of math required.

He mails out flyers with scary lies ("IRA's and 401K's potential 80% Tax Rate" - utter nonsense) that are designed to frighten conservative elderly people into listening to the sales pitch that he gives at local restaurants.  It turns out that he was suspended from the investment industry by NASD (now called FINRA) for what the regulator reports as "fraud and deceipt" (sic), "high pressure sales tactics" and "false and misleading sales tactics".  He also got slapped with a big fine.  This happened while he was working at Merrill Lynch.

Now, this charlatan runs his own firm where he hawks insurance products to vulnerable elderly people.  He even offers to come to your event and play his trumpet for you (followed by the sales pitch, of course).  Even more amazing, he chooses to put his radio show/infomercial on christian radio stations in order to gain some credibility from that association.  Stay away from this guy and his firm!

Friday, January 20, 2012

Money Matters with Ken Moraif - Wrong Again!

Ken Moraif has admitted that his market timing system doesn't always work.  Of course, that's not a big shock to anyone who actually understands capital market behavior.  In a video post, he explained why he was wrong in 2010.  But, of course, he also slid right into sales mode and explained why you should continue to believe in his market timing system - because it's going to protect you even though it's not perfect.

He blew it again in 2011!  He got his clients out on August 5 and told everyone to expect "financial Armageddon", which was an incredibly irresponsible prediction.  The S&P 500 started the year at 1257.64.  It closed on August 5 at 1199.38.  Getting out locked in a loss of about 4.6%.  Today, the S&P 500 closed at 1315.38.  An investor who simply held an S&P 500 index fund has had a return of about 5.3% since the beginning of 2011 and they haven't incurred trading costs, paid high fees, or realized taxable capital gains on a sale.  As far as I can tell, Ken still hasn't advised clients to get back in.  You see, that's part of the problem with this absurd idea - it requires two decisions and both are statistically unlikely to be correct.

Moraif charges high fees for a strategy that's dubious, at best - and then uses those fees to purchase airtime for his infomercials to drive more suckers to his seminars.  Don't be one of them!  All that garbage about being a CFP with many years of experience doesn't have any correlation whatsoever to being able to manage a portfolio.  In fact, the CFP curriculum has one very basic section on investing that doesn't qualify anyone to do anything.  It's just another way that charlatans like Moraif can attempt to build credibility with their target audience.

What do some actual experts have to say about a market timing strategy?

"I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." - Warren Buffet

"If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what’s going to happen to the stock market." - Benjamin Graham, Author and "the father of securities analysis"

"Market-timing is bunk." - Pat Dorsey, Director of Morningstar Fund Analysis

"The market timer’s Hall of Fame is an empty room." - Jane Bryant Quinn, Author, Columnist - Newsweek

"Market timing is a poor substitute for a long-term investment plan." - Jonathan Clements, The Wall Street Journal

"No, I don’t believe in market timing. I’ve been around this business darn near a half-century, and I know I can’t do it successfully. In fact, I don’t even know anyone who knows anyone who has ever successfully timed the market over the long term." - John Bogle, Founder of The Vanguard Group

"Nobody but nobody, has consistently guessed the direction of the bond or stock market over any meaningful length of time." - John Markese, President, AAII Journal

"There is absolutely no evidence that anyone can time the market." - Bill Bernstein, Author

"Only liars manage to always be ‘out’ during bad times and ‘in’ during good times." - Bernard Baruch, Presidential Economic Advisor

"There is an overwhelming body of evidence to support the view that believing in the ability of market timers is the equivalent of believing astrologers can predict the future." - Larry Swedroe, Author

So, it's no surprise that this strategy doesn't work.  The only surprise is that people continue to fall for the sales pitch.  Maybe the cookies are laced with some sort of mind altering drug.