MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for December, 2009

Happy Holiday Reading!

Monday, December 21st, 2009

Just in case you want to spend some time during your holidays pouring over good & bad investment advice, thinking about financial Armageddon or heavenly bull markets, the (limited) wisdom of market pundits, or even read about bankers on the run, well, then have a look at the following links:

Institutional Investor is gloomy about stocks - sounds for my taste just a little bit like these “STOCKS ARE DEAD” predictions in the late 1970s….

Doug Kass’s 20 surprises for 2010 - fun to read and Doug in many cases was spot on end of 2008 with his predictions for 2009

Obituary - Legendary Value investor Chris Browne dies

Surprise - Best performing fund of the decade is from…SWEDEN

LA Times - shares with us the top-5 investing lessons of 2009, very rational

“Banker On The Run” - Why the new bonus tax makes British bankers leave London in droves.  An example how punishing taxes can backfire? (from the German paper Sueddeutsche)


    Poor HSBC Security Standards

    Thursday, December 10th, 2009

    Yesterdays reports on an employee of HSBC Private Bank in Geneva, stealing data of up to 3,000 French people suspected of holding Swiss bank accounts to avoid paying tax in France and turning them to the French authorities underlines why offshore banking faces a dead end: Offshore clients will loose all trust in their providers.

    It is one thing that US and European authorities use all legal and illegal means to get hold of data on offshore accounts of their citizen. But it is another issue that obviously the banks have not established sufficient security routines to protect their confidential data. In this case, the employee supposedly “hacked” into the HSBC client database after foiling its security system. I am wondering how difficult this really was, given that for instance the contact form on the website of HSBC Private Bank is not even encrypted by the absolutely standard  https-protocol. If privacy and data protection is already handled in such a reckless matter on the website it tells you something about the overall security standards.

    To be fair: It is not only HSBC having such low security standards for their website. Wait for our new report on Private-Banking-Websites due next week providing more examples on poor security standards.


    Creative Performance Measurement

    Tuesday, December 8th, 2009

    “Calculation of performance is based on the time-weighted return and excludes front-end fees. Individual costs such as fees, commissions and other charges have not been included in this presentation and would have an adverse impact on returns if they were included.”

    That’s the typical wording you find in the fact sheet of your common mutual fund. Ok. Let me get this straight. If  that fund company would be a car manufacturer they would say the total yearly costs of running this car is x dollar. And in the small print they would state: Costs are calculated without taking in account fuel, repairs, maintenance and the cut the dealer gets for selling the car.

    Right ! What is next? Fund performance measured by taking out all years with double-digit losses? I understand that the fund industry feels the heat from the ETFs that deliver the same or better performance at a third or less of the costs. But this kind of “creative” fire-fighting adds to the frustration about funds as an investment vehicle in general. It’s time to change the rules and include ALL cost in the performance calculation of a fund.


    Will Monaco Be the Lone Offshore Survivor?

    Monday, December 7th, 2009

    Today we read in Wealth Bulletin that Monaco will be the only offshore survivor among the small offshore havens including Liechtenstein, Andorra, Channel Islands and Gibraltar. The reason would be that Monaco has the “glamour factor”:

    “Monaco might no longer have the mystique it did in the 1960s and 1970s when Princess Grace and Prince Rainier III held sway, but it still sparkles with glamour. In the debates over how various tax havens and off-shore centres will fare now that global governments have turned their attention to “black money”, this glamour is Monte Carlo’s X-factor, the overlooked detail that is likely to ensure its survival.”

    We beg to differ.  Monaco has always played a minor role as offshore heaven (compared with say the Channel Islands). It is more interesting as the residence of choice for the rich because of zero income tax. What will ensure the survival of a wealth management center once managing offshore money has lost its appeal is only the quality of service and the performance of its wealth advisors. We doubt that Monaco banks can compete with Liechtenstein or the Channel Islands in this respect.


    Goldman Bankers Buying Guns

    Friday, December 4th, 2009

    Is the popular uprising against Wall Street that near? Some Goldman employees obviously think it is better to prepare for the worst and get their hands on a few new guns. Not sure if this is the right way to hold on to these overblown bonuses.


    Which Industry Suffers Worst From Recession?

    Tuesday, December 1st, 2009

    Here is the answer.  I am not really sure if this industry is in worse shape than the housing, banking or car industry. Yet the report sounds really grim.  I hope that all the unemployed investment bankers have some time to spend on the green and start kind of a stimulus program.