In the aftermath of the global financial crisis many investors have begun to reassess their finances and seek out more objective and honest advice.  As a result, investors are taking their money and migrating away from the traditional Wall Street brokerage houses in favor of independent investment advisors. 

But how does one go about finding the right advisor for their unique circumstances?  Today’s Wall Stree Journal featured an article which discusses how to choose the right advisor for you.  You can read it here.

   

In its quarterly “Global Prospects” research publication, the Centre for Economics and Business Research predicts that Europe, the U.S. and Canada will generate less than 50% of global economic output this year. “We had expected this to happen but not quite so soon,” CEO Douglas McWilliams said. “The West will have to start to get to grips with the fact that we are no longer dominant and cannot expect to have things our own way.”

Article:   Bloomberg

   

We thought the following article from the Wall Street Journal had a lot of terrific information for small investors on how they should evaluate their current and prospective financial advisors.  We believe strongly that small investors deserve an advisor who acts as a true fiduciary…keeping the clients’ best interests first.  Due the pervasive “sales culture” of Wall Street, this kind of financial advisor is rather hard to find.

Taking Control

Small investors have been whipsawed by the market turmoil. But there are some simple steps they can take to better protect themselves.

   

I have just returned from the CFA Institute’s Annual Investment Conference in Orlando, Florida, and I thoroughly enjoyed the lineup of some of the top economists and strategists in the world.  One significant take-away from this conference was that the financial crisis is not over, particularly with regard to further losses in the banking system due to non-performing loans.  Also, there is considerable risk that the policy actions and stimulus being implemented by the U.S. government may have negative consequences for the Unites States for many years to come.

At Maxim, we have begun to make certain investment changes in anticipation of:

1)      A diminished outlook for the U.S. economy due to high deficits and national debt.  We are looking to increase investments in “creditor nations” like China and much of Asia; they will have greater economic power given their critical role as lender to other nations for the foreseeable future.

2)      An increased investment in commodities (particularly energy and agriculture) given the risk of inflation over the next few years and the supply / demand dynamic for commodities going forward.

   

Please see the link at the bottom of this post for the complete US Senate Report on Offshore Tax Havens dated July 17, 2008.  In it, the U.S. Senate Subcommittee on Investigations delivers an incredible amount of detail into the dark world of offshore banking practices aimed at helping American citizens hide assets offshore, often with a goal of evading taxes or financial judgments resulting from litigation or divorce.

In addition to being an incredibly interesting read, this report combined with the legal action recently taken against UBS by the IRS will in our opinion be the “first shot” of a new war on international money laundering and tax evasion, as many more foreign countries will no doubt join in the battle.  These actions will forever change the allure of offshore banking and will lead to much greater focus on global wealth management for U.S. citizens which seeks to maximize tax efficiency while also remaining in full compliance with all U.S. and international tax authorities.

We at Maxim Global Wealth Advisors promise to maintain abreast of the relevant tax and investment strategies and to communicate our vision of best practices in global wealth management to both our clients directly, and to the greater public via our website.

http://online.wsj.com/public/resources/documents/071708PSIReport.pdf

   

In the latest “shot across the bow” in the unfolding world of American citizens with hidden assets in offshore accounts, the IRS has now demanded that UBS provide the names of some 52,000 American account holders of offshore Swiss investment accounts.

This action will now force a painful showdown for UBS and the Swiss government.  The request represents a fundamental threat to the Swiss banking model, which is primarily predicated on secrecy and tax avoidance. Make no mistake that other major countries are watching these events closely and will be following up with their own requests in short order.

We at Maxim see these events as a huge positive for our business niche, which is to serve as the global specialist for investment and wealth management for American expatriates as well as foreign-nationals and multi-nationals who are U.S. taxpayers.  Our service is built around the notion of constructing investment portfolios that are optimized for internationally-mobile families in full compliance with the IRS and all international tax authorities.

Please see the most recent WSJ article on the UBS / IRS standoff at the below link:

http://online.wsj.com/article/SB123531487617042081.html

   

This week we finally saw some relief as the US market rose by over 6% due to optimism surrounding the coming stimulus plans in the US and abroad and out of a belief that the stock market has fallen enough to discount the obvious recession going on.  I am particularly happy that this strength has occurred in spite of continued bad news regarding unemployment and economic slowing.  When you start to see positive moves by the market even though the news is mostly negative, that implies that the market is already reflecting the bad news.

Of course, there is much more bad news ahead and my sense is that we’ll see continued up and down markets for some time as the global economy works toward stabilization.  The “pain” going on now in terms of job losses and falling economic activity are, however painful, a vital and necessary element of the retrenchment that must occur in order to set the stage for future growth and the next economic cycle.

I believe that these market rallies will be followed by pull-backs as investors sell positions to raise cash on strength…much the same way we did on several occasions recently.  I don’t recommend we try timing every one of these market swings will become a sustained rally.  My sense is that there is still a healthy amount of bad news which will hold the market down for a while.

   

While international investments have faired poorly over the past year for American investors, investing abroad still makes sense as investors can achieve a higher level of diversification while gaining access to better investment opportunities.  This article does a great job of explaining the factors that make investing globally a necessity for good.

Why Venturing Abroad Still Makes Sense for Fund Investors

Some people have pulled dollars from foreign-stock funds as their performance has tanked. But thinking global is still a smart way to go.

Wall Street Journal, February 2, 2009
By: Eleanor Laise

http://online.wsj.com/article/SB123308918983621063.html?mod=todays_us_the_journal_report

   

We like the point that Donna makes in this article regarding separating your investments into goal-based buckets, thereby allowing you to take a longer term perspective on the pools of money which are saving for a longer term goal. Sage advice for people questioning their investment strategy.

http://www.beijing-kids.com/magazine/2008/12/18/Expat-Economies
Source: beijingkids Magazine www.beijing-kids.com
By: Donna Gorman, December 18, 2008