Need money asap – If you try instant loans keep these things in mind

With the growth of technological advances and the ease in financing, getting an answer to “need money asap” is not a struggle anymore. There are so many available options that one can look into, the prospect of instant loans being one of the most common help. But, with such efficiency of lending of the money, comes complications that many fail to look into. 

If you don’t want to end up facing issues with your decision of taking out an instant loan, it is important that you do keep certain things in mind when it comes to the same.

Review the reputation

Given that the concept of the instant loan is still a freshly brewed matter that most people are getting used to, it is not readily available in the big financial organizations. You will hardly find the reputed banks sanctioning an instant loan. But, that doesn’t mean that the outlets which are giving instant loans are bad. The only thing that you need to do is verify that you are taking the loan out from a reputable organization that won’t have any kind of hidden agenda behind their contracts and such. This is a necessity.

Maintain a balanced credit history

When you are trying to sanction an instant loan from anywhere, even the lender will try and gauge if you are capable of returning the loaned amount. If you want to keep a good track record, it is very important that you do maintain a good credit history. This will help serve as authentication for your capabilities of being able to pay the debt back on time as stated in the agreement that you have signed before taking the money.

Compare the rate of interest

It is true that there aren’t many places you will get an instant loan from but even when you do, it is important that you keep an eye out on the rate of interest that you are paying for the sanctioned amount. The last thing that you want is to end up paying more than what is standard. Given that you are taking out an instant loan, it is normal that the rate of interest for the same will be slightly higher than normal. But, don’t end up paying way higher than normal. Tally the various reliable outlets and see which one provides the best policies.

Assess the costs involved

When you are taking the loan, there are going to be a number of factors involved in it. From the prospects of the processing fee to the late payment fees, there are a number of parameters involved. It is very important for you to ensure that you gauge every single one of them before taking the loan. The last thing you want is to end up facing an issue with the higher costs involved in the process.

Ensure your capabilities

Taking a loan out is very easy and won’t even make you question anything. It is when the time for repayment comes that the problems arise. If you have taken a loan, make sure that you will be able to repay it on time without any fail. This isn’t a question, it is a requirement that you just can’t miss out on. It is thus important to assess these and then take the loan.

When it comes to the instant loan, as fancy and enticing as it sounds, it isn’t that easy of a process. There are a number of obstacles involved and it is important that you check off all of them and then proceed with acquiring the loan if everything seems well.

How Pilgrimages Are Increasing the Saudi Arabia Economy

More than 2 million Muslims from all over the world are gathering annually to complete the fifth and final pillar of Islam, which is the Hajj pilgrimage. Until the 1950s, the number of pilgrims coming from overseas was not bigger than 100,000, but by 2013 the total number passed the 3 million mark.

The cities of Makkah and Medina represent a major slice of Saudi Arabia’s non-oil economy, providing annual incomes of around $12 billion from food, transport accommodation and fees. But with these numbers looking to increase in the next years, how will the local population be affected by the on-growing development of commercial and accommodation sites?

Makkah And Madinah Pilgrimages

To better understand why these areas attract millions of religious visitors yearly, we must first take a look at the meanings behind the pilgrimages.

Makkah is the birthplace of Prophet Muhammad and hosts the Grand Mosque, house of the Kaaba. The Kaaba is Islam’s holiest ground, a stone structure clothed in black silk, built by the Prophet Abraham. Here, over 3 million Muslims gather once a year, on the last month of the Islamic calendar to complete the fifth and last pillar of the Muslim practice. The pilgrimage begins on the 8th day of the month and ends on the 12th or sometimes the 13th. All Muslims who are financially and physically able to make the pilgrimage, also known as Hajj, are expected to do so at least once in their life.

To complete the Hajj, every Muslim must first enter ihram (the sacred state of a pilgrim), wearing plain robes. Before crossing the outer boundaries of Makkah, the pilgrim must follow certain rules, such as restraining from anger or sexual activities. After entering Makkah, the pilgrims must follow an 8km journey to Mina, where they will be accommodated in tents. On the second day, they make a 14km journey from Mina to Arafat, where prophet Muhammad gave his last sermon. The second day of Hajj is considered to be one of the most important days of the Islamic calendar. The third days marks the longest day of the Hajj. Pilgrims return to Mina, where they perform the symbolic act of stoning the devil, by throwing seven pebbles at the Jamarat, the largest column. On this day, the men trim their hair and all pilgrims remove their ihram clothes. Many choose to return to Makkah to circle the Kaaba and walk between the hills of Safa and Marwah. Both actions are performed seven times. On the last two days, the pilgrims will stone the devil again, this time stoning each of the three pillars seven times. They will spend the rest of their pilgrimage days in Mina. Before leaving, the pilgrims return to Makkah to circle the Kaaba one more time.

Although not mandatory, after the pilgrimage in Makkah, many pilgrims chose to head to Madinah, where Prophet Muhammad is buried. Madinah is the place of another pilgrimage that, although not mandatory, is performed by millions of pilgrims yearly. The Umrah pilgrimage was performed by almost 7 million pilgrims in 2017.

While the Hajj is performed during a specific time of year, Umrah can be performed year-round and is much less time-consuming. It can be performed both in the Hajj period, prior to the actual Hajj pilgrimage, or separate. During the Umrah, similar rituals as those included in the Hajj are performed, such as circling the Kaaba and walking between the hills of Safa and Marwah.

Increasing Economy and Expansion Plans

One of the most important roles in Vision 2030, a development plan aiming to turn the focus of Saudi Arabia’s economy away from oil incomes, are played by Makkah and Madinah, as religious tourism represents 20% of the Saudi’s non-oil income. The plan, initiated by the Crown Prince Mohammed bin Salman bin Abdulaziz Al Saud, aims to increase the number of pilgrims traveling to Makkah and Madina, especially for the Umrah pilgrimage.

One of the important steps taken to increase the number of religious visitors was the ease of the quota system that was very strict until 2017. The visas were reduced by 20% in 2013, in order to ease the infrastructure works done at the Grand Mosque. By 2030, over 6 million pilgrims are expected to enter the gates of Makkah. Although the number of visas decreased, the demand for luxury hotels in Makkah increased, which left the Saudis confused. In 2016, the occupancy percentage in Makkah hotels was around 90% and if the expected targets for the following years are met, there is no wonder the hospitality sector is evolving at a rapid pace. But that is not the only sector expected to benefit from the increased number of religious tourists. Airline companies, telecom operators and catering firms are looking to expand their business, as the demands increase.

Another way of increasing revenue is the introduction of Umrah visa fees. While first-timers are exempt, future visits require a fee of around $500. There is also an Umrah Plus visa, which allows pilgrims to visit other non-religious sites across Saudi Arabia, combining religious and non-religious tourism. The number of Umrah pilgrims is expected to reach 30 million by 2030. Infrastructure upgrades are also ongoing, to facilitate the pilgrims’ arrival in Makkah and Madinah.

But as tourism increases and the demand for accommodation is at raise, another challenge arose. How is the on-growing population of Saudi Arabia going to fit in with the increasing number of religious visitors? A large number of both Makkah and Madinah residents found themselves overwhelmed by the extending number of developments made to meet the needs of pilgrims. The areas around both cities experienced a decrease in residential capacity, as various changes were developed, to make room for accommodation and commercial spaces. Vision 2030 appears to have a solution for this as well, as by 2020 home ownership is expected to increase from 47% to 52%. A solution is to utilize government-owned land to provide housing units at an affordable price. This is expected to decrease the price discrepancy between residential proprieties in the holy cities and Jeddah, the major urban center in the area.

James Dean of MONEY.CA and Money Magazine found this important link and website helpful


Norma Walton, 8 Reasons That Receivership Sales are Always at a Discount

Unfortunately I am something of an expert on receivership sales.  Back in 2013, my ex-partner petitioned our real estate portfolio into receivership without notice to our lenders. As a result, almost every property was sold via receivership or power of sale for a significant discount off the fair market value, all in a rising real estate market.  During that process, I became painfully aware of the eight reasons that Receivership sales are always at a discount.

Reason # 1:  Negative Publicity

Placing a property under receivership requires a court order.  Court proceedings are public.  As a result, there is publicity surrounding receivership sales.  When someone hears that a property went into receivership, the perception is usually that there must be something wrong with the property.  Generally receivership sales are ordered when there is controversy and contention between warring factions, be they partners, a lender and borrower, or family members.  This perceived stigma detrimentally impacts the property.  Negative publicity will reduce a property’s value.

Reason # 2:  The Process

In a private sale transaction, typically one buyer negotiates with one seller to purchase a property.  Receivers don’t have that option; they must run a sales process.  This usually means offering the property to market for a specified period of time with specific advertisements in specific publications, a real estate listing, and an offering to customers of the Receiver’s firm.  Receivers generally want to review all offers at the same time.  This tender process is a disincentive to a lot of potential purchasers.  Potential purchasers prefer to deal one on one with the seller of the property.  Most purchasers don’t want to be put in a competing arena with other purchasers.  Hence the process that Receivers need to run turns away many potential purchasers.

Reason # 3:  Uncertainty

Obtaining approval for a Receivership sale requires a Judge’s approval.  The Judge has a number of competing interests to address and if one of the parties objects to the sale, that objection often delays or stops the sale from being approved.  As a result, there is very little certainty in putting in an offer for a property being sold via receivership.  Until the sale has closed, the sale may be cancelled at any time.  This lack of ability to plan causes many purchasers to not bother offering in the first place.  The end result is so dependent on forces beyond the purchaser’s control that it discourages some purchasers from buying.

Reason # 4:  Higher Deposit Requirements

Receivers want certainty even though they cannot offer the purchasers certainty.  As a result, they usually require at least 10% of the proposed purchase price to be tendered with the offer to purchase during the tender process.  Generally the deposit cheque must be certified.  Hence a purchaser, before knowing if his or her offer is even going to be accepted, has to go to the bank and obtain certified funds for 10% of the proposed purchase price just to offer.  This is a major disincentive for many buyers and thus reduces the pool of potential buyers.

Reason # 5:  Complex Purchase Agreements

The standard TREB or OREA form is fairly straight forward.  Once you have dealt with it a few times, it is user friendly.  Not so with receivership forms.  Offers to purchase through receivership are typically at least four times as long as the OREA form.  They are full of legal language explaining all of the ways the Receiver can exit the deal and everything that must occur before closing.  A prospective purchaser usually requires legal advice just to understand the agreement before he or she can sign.  The need to seek legal advice before offering is a disincentive and reduces the pool of potential purchasers.

Reason # 6:  No Warranties or Representations

A Receiver cannot give warranties or representations.  As a result, a purchaser of a property under receivership takes the property “as is, where is”.  That means the purchaser must be comfortable with more risk than in a normal private real estate transaction.  A Receiver cannot represent the rents being collected on a commercial property, for example, nor can he or she warrant the status of the building systems in any capacity.  They guarantee nothing!  That reduces prices because purchasers must shoulder more risk than in a private sale transaction where there are almost always representations and warranties.

Reason # 7:  Lack of Specific Property Knowledge

The Receiver did not purchase the property.  They generally have not run it very long if at all.  They are not real estate experts.  They generally don’t understand the strategic buyers of a property or its highest and best use.  Their expertise is in accounting.  As a result, the property is generally not marketed as effectively as it would have been if a private owner sold it.  The person who bought it can usually market it better than a Receiver.  This lack of expertise reduces property value.

Reason # 8:  Firm Offers are Preferred

Receivers have to go to Court to recommend that a Judge accept a purchase agreement.  This takes a lot of coordination, effort and paperwork.  As a result, they ideally want to present firm offers.  Otherwise the purchaser could exit the deal after all that time and money is spent to secure approval.  Receivers generally won’t accept anything other than firm offers from purchasers.  This puts purchasers in a position to have to waive all conditions even though they may not have a good sense of the property and its perils.  Having to provide a firm offer instead of a conditional one always discounts prices.


Our real estate portfolio was sold at 70 cents on the dollar in a rising real estate market.  Watching that process made me acutely aware that it is a legal fiction that fair market value is ever achieved through a Receivership sale.  The eight reasons listed above guarantee that Receivership sales will always trade at a discount.

How To Save Money On Stamps

Once again, the price of stamps was raised by a penny, making the cost of mailing a simple domestic letter forty-six cents each. Since I forgot about it at the time, the surprise made me think about stamps, and the amount of money I spend on them annually. Further down, I will share some great ideas I had for chopping that number down.

Hopefully you purchased some Forever Stamps before the hike. If not, let that be a lesson to do so before the next rise in rates. The postal service also announced a brand new forever stamp. Known as the Global Forever First-Class Mail International, they only cost $1.10 and will get a one-ounce parcel to any country on the planet. You can also send a Canadian pal a two-ounce envelope with this stamp.

Now that you know you can stock up on Forever Stamps for your domestic and international correspondence, let’s also take a look at ways to reduce your dependence on stamps:

  1. Don’t send as many letters, notes and cards. E-mail messages are faster and easier than snail mail.
  2. Use online bill pay. Virtually every utility company and phone service provider takes online payments these days. You might even be able to pay your rent or mortgage while on your home computer. Look for the secure lock on the site URL, and rest assured that your information is safe.
  3. Fax is still an option. Although not as popular as before the internet, faxes are a great way to deliver documents almost immediately. Always ask for permission to use the fax machine at your job unless the transfer is specifically job-related. Many home printer/scanner devices have a fax option as well, which means that you probably have the means to send faxes from your home already.
  4. Stamp collectors and outlets often have old stamps that aren’t collectibles. You can usually get these vintage stamps at a slight discount from their face value.
  5. Forever Stamps are the perfect solution because price increases will never diminish the value of these stamps.
  6. Bulk purchases through Costco and similar retailers sometimes include a small discount as well. is a good list of places to get stamps at good prices

How Much Does It Cost to Repair a Home’s Sewer Main?

Sewer repair is a messy job, but when the line backs up, repairs are necessary. Depending on the extent of the damage, an entire replacement may be necessary.

No matter what type of repair is needed, you can expect to spend quite a bit of money to get the job done. How much does it really cost to repair a sewer main?

Initial Signs of Sewer Main Problems

Before diving into the costs of repair and replacement, it’s important to talk about the initial signs and symptoms of sewer main problems. If you catch these warning signs early on, the repairs will be far less costly than an entire sewer main replacement.

Here’s what to look for:

Flooding Around the Perimeter of the Home

Wastewater should stay in the ground where it belongs. When wastewater floods around the yard, the perimeter of the home or on the street, it’s a sign that the sewer line is either clogged or broken.

Call in a plumber if you see flooding around your home. A plumber will fix the problem and help keep your sewer healthy.

Clogged Pipes

Clogged pipes may be a sign of a sewer main issue, but it may also just be a simple clog. If you hear bubbling sounds coming from the toilet, it may just be a pipe clog that’s causing the problem.  

High Water and Sewer Bills

If you’ve been living in the home for a while, you should know your average water and sewer bill. If you see a sudden spike in your sewer and water bills, it may be a sign that something is wrong. Significant changes typically indicate that the sewer main is broken.

Clogged Drains

Drains get clogged from time to time, but if you’re clearing clogs every week, something may be wrong with the sewer main.

The Average Cost of a Sewer Main Repair and Replacement

Sewer repairs are never cheap. While costs will vary depending on the extent of the damage and the plumber, most homeowners can expect to spend about:

  • $2,000 for repairs
  • Between $1,300 and $2,700 for replacement

Yes, the costs are high, but this is a home repair that you can’t put off.

Excavation Repair

Traditional sewer repair methods require excavation before any pipes can be repaired or replaced.

Your plumber will need to find and dig up the trouble area. That means having to dig up your yard, which can ruin your landscaping, driveway or your patio.

All of this adds up to you having to spend a lot on repairs and replacement. If excavation is needed, costs can easily reach $20,000.

Here’s a breakdown of the costs:

  • Land clearing: $2,500
  • Land excavation: $2,600
  • Sewer cleaning: $300

You’ll also need to consider the costs of repairing your lawn and any hardscapes (patio, driveway, etc.) that may be damaged in the excavation process.

Non-Excavation Repair

In some cases, excavation isn’t necessary to make repairs to a sewer line. Trenchless or cured-in-place-pipe repairs can resolve the issue without forcing you to dig up your yard.

Sewer main projects that do not require excavation typically cost less than $1,000.

5 Ways to Save Money on Plumbing Repairs

No one wants to have to call a plumber, but at some point, every homeowner will have to. Plumbing repairs don’t have to cost you an arm and a leg. Use these six tips to save money on plumbing repairs.

1. Fix Small Problems Right Away

It’s easy to procrastinate on fixing small problems. Right now, that dripping faucet is nothing more than an annoyance. It’s easy to close the door and forget about it. But if you don’t fix the problem now, it can easily progress into a bigger and more expensive issue.

A small problem will take just a little bit of time and money to repair. A big problem will take up a lot of time and cost a lot of money.

2. Inspect and Clean Your Drains

Drain clogs can be caused by a number of different things, from hair to grease and everything in between. But clogs can also be caused by collapsed pipes and tree roots.

Have your drain inspected by a plumber, and invest in a good drain cleaning to keep your drains free and clear. Instead of pouring liquid drain cleaner down the drain, have your plumber use a snake to clear clogs and clean out your pipes.

3. Be Careful What You Flush and Pour Down the Drain

The only thing that should be flushed down the toilet is human waste and toilet paper. Even products that are marketed as flushable, like wipes and sanitary products, can eventually cause clogs and costly plumbing repairs.

Even hair and bleach can damage your pipes over time.

Be equally as cautious about what you pour down your drains. You may have been told that it’s okay to pour grease down the drain as long as it’s followed by hot water and soap. But this won’t prevent all of the grease from clogging your pipes.

Instead of pouring grease down the drain, dump it into a Ziploc bag, and wipe down pots and pans before washing them.

4. Strain Your Drains

Hair can cause serious drain clogs and even damage pipes over time. A simple way to prevent expensive clogs is to cover drains with mesh screens. These drain strainers will catch loose strands of hair. Clean out these strainers weekly to prevent build-up.

5. Pour Water Down Unused Drains

If you have drains in your home that don’t get much use, like spare bathrooms or basement drains, things can start to get smelly after a while. That smell is actually sewer gas, and it’s as unhealthy as it is foul-smelling.

Make it a point to pour water down these drains at least once a week. Every few months, pour baking soda and vinegar down the drain followed by hot water to clean out the pipes.

6. Insulate Pipes

Frozen pipes can crack and eventually burst, leaving you with a giant mess and a costly plumbing repair. You can’t prevent freezing temperatures, but you can insulate exposed pipes to keep them from freezing and potentially bursting. Interior pipes can be kept warm by leaving the cabinet doors under sinks open. Allowing water to drip from the faucet can help prevent pressure build-up that can damage pipes.

7 Essential Benefits of Online Shopping

Millions of people enjoy online shopping, with impressive choice and availability at the heart of its consistent success across the globe. Considering this contemporary climate, it’s no surprise that one of the primary considerations of big and small shopping outlets in Canada is the need to have an online presence, allowing commercial brands to reach and cater to their clients 24/7. Indeed, from a customer’s perspective, online shopping is ideal in many respects; fast, convenient and comfortable, we are able to access a world of items with the most minimal effort. With benefits going far beyond these initial factors, it looks like online shopping is here to stay:


  1. It’s convenient.


The main advantage of online shopping is unquestionably its convenience, with the ability to make an order at any time, from any place. You can shop at 3AM in your pajamas, in the office while you’re on your coffee break, or on the bus as you make your way home. With the further advantages of avoiding traffic and pushy shop assistants, it is by far the most peaceful way to find all that you need.


  1. It’s cheaper.


You’ll have an easier time finding good deals online, thanks to how the Internet allows quick and efficient research of all of the offers currently available. Web-based stores have lower overhead so they can pass on their savings to their customers, meaning that you’re almost always likely to enjoy cheaper prices online. Moreover, comparison sites allow you to quickly identify how to purchase your item for the best possible price.


  1. You have more options.


When you shop in a physical store, your options can be limited; an entire high street might only have a few retail stores offering what you require, and you still aren’t guaranteed to find exactly what you’re looking for after having made the effort to venture to each different store. This problem is totally minimized with the endless availability found on the Internet, with tens of thousands of choices at your fingertips. With just a few clicks of your mouse, you can browse to your heart’s content.


  1. Sending gifts to loved ones is easy.


Christmas is a busy time of the year for shoppers, and can spell a lot of stress for those struggling to find the perfect gift. If you want to give gifts to a dozen family members and friends, you can end up spending the entire day buying gifts for them and then arranging their delivery. Online shopping greatly reduces the laborious nature of this process, by offering the opportunity for customers to have the e-store mail a gift to them directly and maximizing the ease of buying many things at once – there is no question that having a variety of gifts delivered directly to your door is far favorable to carrying huge bags of items across your local shopping center.


  1. There are no lines.


One of the worst things about shopping in person is the need to spend ages waiting at the checkout counter, especially if you’re hard-pressed for time or feeling exhausted from shopping. With online shopping, you don’t have to deal with long queues, angry customers or abrupt cashiers. By browsing online from the comfort of your home, benefit from total peace and quiet as you seek out your items.


  1. You spend less.


It’s no secret that shopping in person often means that we end up buying unnecessary things, with the irresistible appeal of certain items attracting our attention (and money). Shopping in person also has the necessary considerations of spending money on practical aspects, such as transportation and parking. Internet shopping eliminates these inconveniences, by offering the opportunity to focus on exactly what you want to buy through the use of dedicated searches and website sections. With many stores offering free shipping, online shopping allows you to save money at every stage.


  1. Hard to find items can be found online.


If you’re looking for a specific type of antique or a niche item, it can take an eternity to find these by shopping in person. With the power of research and vast availability, the Internet allows you to discover this type of product both far more quickly and far more easily – and will sometimes even allow you to buy items that are otherwise impossible to find. In addition, online shopping will frequently provide these items at a far slower price than elsewhere.


These are just a few of the benefits of shopping online, with many other positive benefits always waiting to be discovered. Although it’s always necessary to be vigilant while shopping online – despite recent developments in anti-fraud protection and security in technology, it’s still possible to be caught out – online shopping remains one of the most desirable ways to purchase the products you require. With enormous availability, tailor-made convenience and the highest levels of ease, there has been no better time to embrace Internet shopping.


Effective Ways to Reduce Your Weekly Shopping Costs

Do you spend more money on shopping than you should? It’s a problem most consumers face and it can be tempting to overspend every time you go to your local store to purchase your weekly shopping. However, there are many ways you can control your spending and eventually only buy the items you really need. Below are some of the most effective ways to reduce your weekly shopping costs.

Plan and Create a Shopping List

First of all, you have to become more disciplined when it comes to shopping. Creating a plan and drawing up a shopping list is the most effective way to focus on the items you really need to buy. It also allows you to eliminate the items you don’t need that are adding the additional dollars to your weekly shopping bill.

Stick to Your Plan and Shopping List

It’s all good and well creating a plan and a shopping list. However, when you go to your local stores, there are many temptations that can lead you astray. Once you have created your plan and shopping list, stick to it and don’t buy anything else.


Coupons from coupon providers like can greatly reduce the amount you spend on a wide range of products. Once again, make sure you use these coupons to purchase essential items or an item you have planned to buy.

Shop Online

Today’s shoppers have more choices than the previous generations of shoppers. The internet in particular gives you a much wider range of products to choose from. You can quickly compare prices and decide whether or not it’s cheaper to purchase certain items online or in your local store.

Buy Generic Products

Consider purchasing generic products. In many cases, a generic product and a branded product are exactly the same, but you’re paying extra just for the label that appears on many branded products. If you do this for the products you buy the most often, you could end up making substantial savings each week.

Shop Around

It pays to shop around and understand how each store tries to entice customers inside their doors. For example, most stores use loss leader strategies whereby they advertise and sell certain products at a loss to tempt you into their store. However, other products often cost more or you end up purchasing more products than you intended to buy. You can turn this to your advantage by shopping around in different stores and only buying these lower cost items.

Buy Healthy Products

We’re all being told to eat healthy. However, many people live hectic lives and are more inclined to buy products that are convenient, such as microwavable foods. However, buying healthier foods will not only benefit your health, but it could also benefit your financial health too.

Shopping is one of those costs most people face each week. However, there are many ways you can reduce your outgoings and the tips mentioned above are a great starting point for anyone who wants to reduce this necessary expenditure.

Index and Sector ETFs: Mutual Funds: Speculation X3

How many of you remember the immortal words of P. T. Barnum? On Wall Street, the incubation period for new product scams may be measured in years instead of minutes, but the end result is always a greed-driven rush to financial disaster.

The meltdown spawned index mutual funds, and their dismal failure gave life to “enhanced” index funds, a wide variety of speculative hedge funds, and a rapidly growing assortment of Index ETFs. Deja Vu all over again, with the popular ishare variety of ETF leading the lemmings to the cliffs.

How far will we allow Wall Street to move us away from the basic building blocks of investing? Whatever happened to stocks and bonds? The Investment Gods are appalled.

A market or sector index is a statistical measuring device that tracks prices in securities selected to represent a portion of the overall market. ETF creators:

  • select a sampling of the market that they expect to be representative of the whole,
  • purchase the securities, and then
  • issue the ishares, SPDRS, CUBEs, etc. that speculators then trade on the exchanges just like equities.

Unlike ordinary index funds, ETF shares are not handled directly by the fund. As a result, they can move either up or down from the value of the securities in the fund, which, in turn, may or may not mirror the index they were selected to track. Confused? There’s more — these things are designed for manipulation.

Unlike managed Closed-End Funds (CEFs), ETF shares can be created or redeemed by market specialists, and Institutional Investors can redeem 50,000 share lots (in kind) if there is a gap between the net-asset-value and the market price of the fund.

These activities create artificial demand in an attempt to minimize the gap between NAV and market price. Clearly, arbitrage activities provide profit-making opportunities to the fund sponsors that are not available to the shareholders. Perhaps that is why the fund expenses are so low — and why there are now thousands of the things to choose from.

Two other ETF idiosyncrasies need to be appreciated:

a) performance return statistics for index funds may not include expenses, but it should be obvious that none will ever outperform their market, and

b) index funds may publish P/E numbers that only include the profitable companies in the portfolio.

So, in addition to the normal risks associated with investing, we add: speculating in narrowly focused sectors, guessing on the prospects of unproven small cap companies, experimenting with securities in single countries, rolling the dice on commodities, and hoping for the eventual success of new technologies.

We then call this hodge-podge of speculation a diversified, passively managed, inexpensive approach to Modern Asset Management — based solely on the mathematical hocus pocus of Modern Portfolio Theory (MPT).

Once upon a time, but not so long ago, there were high yield junk bond funds that the financial community insisted were appropriate investments because of their diversification. Does diversified junk become un-junk? Isn’t passive management as much of an oxymoron as variable annuity? Who are they kidding?

But let’s not dwell upon the three or more levels of speculation that are the very foundation of all index and sector funds. Let’s move on to the two basic ideas that led to the development of plain vanilla Mutual Funds in the first place: diversification and professional management.

Mutual Funds were a monumental breakthrough that changed the investment world. Hands-on investing became possible for everyone. Self-directed retirement programs and cheap to administer employee benefit programs became doable.

The investment markets, once the domain of the wealthy, became the savings accounts of choice for the employed masses — because the “separate accounts” were both trusteed and professionally managed. When security self-direction came along, professional management was gone forever. Mutual fund management was delegated to the financially uneducated masses.

ETFs are not the antidote for the mob-managed & dismal long term performance of open end Mutual Funds, where professionals are always forced to sell low and to buy high. ETFs are the vehicles of choice for Wall Street to ram MPT mumbo jumbo down the throats of busy, inexperienced investors… and the regulators who love them because they are cheap.

Mutual fund performance is bad (long term, again) because managers have to do what the mob tells them to do — so Wall Street sells “passive products” with controlled content that they can manipulate more cheaply.

Here’s a thumbnail sketch of how well passive ETFs may have performed from the turn of the century through 2013: the DJIA growth rate was about 0% per year, the S & P 500 was negative; the NASDAQ Composite has just recently regained its 2000 value.

How many positive sectors, technologies, commodities, or capitalization categories could there have been?

Now subtract the fees… hmmmm. Again, how would those ETFs have fared? Hey, when you buy cheap and easy, it’s usually worth it. Now if you want performance, I suggest you try real management, as opposed to Mutual Fund management… but you need to take the time to understand the process.

If you can’t understand or accept the strategy, don’t hire the manager. Mutual Funds and ETFs cannot “beat the market” (not a well thought out investment objective anyway) because both are effectively managed by investor/speculators… not by professionals.

Sure, you might find some temporary smiles in your ETFs, but only if you take your profits will the smiles last. There may be times when it makes sense to use these products to hedge against a specific risk. But stop kidding yourself every time Wall Street comes up with a new short cut to investment success.

There is no reason why all of you can’t either run your own investment portfolio, or instruct someone as to how you want it done. Every guess, every estimate, every hedge, every sector bet, and every shortcut increases portfolio risk.

Products and gimmicks are never the answer. ETFs, a combination of the two, don’t even address the question properly — AND their rising popularity has raised the risk level throughout the Stock Market. How’s that, you ask?

The demand for the individual stocks included in ETFs is raising their prices without having anything to do with company fundamentals.

What’s in your portfolio?

How will ETFs and Mutual Funds fare in the next correction?

Are YOU ready.

Stock Market Corrections Are Beautiful… When

A correction is a beautiful thing, simply the flip side of a rally, big or small. Theoretically, even technically I’m told, corrections adjust equity prices to their actual value or “support levels”. In reality, it’s much easier than that.

Prices go down because of speculator reactions to expectations of news, speculator reactions to actual news, and investor profit taking. The two former “becauses” are more potent than ever before because there is more self-directed money out there than ever before. And therein lies the core of correctional beauty!

Mutual Fund unit holders rarely take profits but often take losses. Additionally, the new breed of Index Fund Speculators over-react to news of any kind because that’s what speculators do. Thus, if any brief little market hiccup becomes considerably more serious, new investment opportunities will become abundant!

Here’s a list of ten things to think about doing, or to avoid doing, during corrections of any magnitude:

1. Your present Asset Allocation should be tuned in to your long-term goals and objectives. Resist the urge to decrease your Equity allocation because you expect a further fall in stock prices. That would be an attempt to time the market, which is (rather obviously) impossible. Asset Allocation decisions should have nothing to do with stock market expectations.

2. Take a look at the past. There has never been a correction that has not proven to be a buying opportunity, so start collecting a diverse group of high quality, dividend paying, NYSE companies as they move lower in price— Investment Grade Value Stocks. I start shopping at 20% below the 52-week high water mark— the bargain bins are filling.

3. Don’t hoard that “smart cash” you accumulated during the last rally, and don’t look back and get yourself agitated because you might buy some issues too soon. There are no crystal balls, and no place for hindsight in an investment strategy. Buying too soon, in the right portfolio percentage, is nearly as important to long-term investment success as selling too soon is during rallies.

4. Take a look at the future. Nope, you can’t tell when the rally will resume or how long it will last. If you are buying quality equities now (as you certainly could be) you will be able to love the rally even more than you did the last time— as you take yet another round of profits. Smiles broaden with each new realized gain, especially when most Wall Streeters are still just scratchin’ their heads.

5. As (or if) the correction continues, buy more slowly as opposed to more quickly, and establish new positions incompletely. Hope for a short and steep decline, but prepare for a long one. There’s more to Shop at The Gap than meets the eye, and if you are doing it properly, you’ll run out of cash well before the new rally begins.

6. Your understanding and use of the Smart Cash concept has proven the wisdom of The Investor’s Creed (look it up). You should be out of cash while the market is still correcting— it gets less scary each time. As long your cash flow continues unabated, the change in market value is merely a perceptual issue.

7. Note that your Working Capital is still growing, in spite of falling prices, and examine your holdings for opportunities to average down on cost per share or to increase yield (on fixed income securities). Examine both fundamentals and price, lean hard on your experience, and don’t force the issue.

8. Identify new buying opportunities using a consistent set of rules, rally or correction. That way you will always know which of the two you are dealing with in spite of what the Wall Street propaganda mill spits out. Focus on Investment Grade Value Stocks; it’s just easier, as well as being less risky, and better for your peace of mind. Just think where you would be today had you heeded this advice years ago—

9. Examine your portfolio’s performance: with your asset allocation and investment objectives clearly in focus; in terms of market and interest rate cycles as opposed to calendar Quarters (never do that) and Years; and only with the use of the Working Capital Model (look this up also), because it is based upon your personal asset allocation. Remember, there is really no single index number to use for comparison purposes with a properly designed portfolio.

Unfortunately, only Self Directed 401k and IRA programs are able to use Market Cycle Investment Management.

10. So long as everything is down, there is nothing to worry about. Downgraded (or simply lazy) portfolio holdings should not be discarded during general or group specific weakness. Unless of course, you don’t have the courage to get rid of them during rallies— also general or sector specifical (sic).

Corrections (of all types) will vary in depth and duration, and both characteristics are clearly visible only in institutional grade rear view mirrors. The short and deep ones are most lovable (kind of like men, I’m told); the long and slow ones are more difficult to deal with. Short ones (those that last a few days, weeks, or months) are nearly impossible to deal with using Mutual Funds.

So if you overthink the environment or overcook the research, you’ll miss the party. Unlike many things in life, Stock Market realities need to be dealt with quickly, decisively, and with zero hindsight.

Because amid all of the uncertainty, there is one indisputable fact that reads equally well in either market direction: there has never been a correction/rally that has not succumbed to the next rally/correction—

Think cycle instead of year, and smile more often.

Join my Linked In Network

Join my private mailing list