The Bank Bailout is Taking Your Rights (again)!

One of the major contributing factors to the current bank crisis has been traced to the deregulation of that industry, and the “all things to all people” approach many financial institutions took on as a result. While this new format promised convenience for investors, many firms took advantage of their ability to offer multiple lines of financial services to manipulate and obscure the true value of their assets through the off-book, non-public exchange of financial products between corporate divisions and between financial institutions.

Investors were kept in the dark about many of these deals, which were often buried in corporate reports and incomprehensible to auditors. At the same time, mutual fund investing and third party money manager programs were aggressively promoted by those same financial institutions, further removing the investor from their ability to apply oversight and exert influence on individual investments, relegating them to a passive role.

A key tenet of 100-Mile Investing is personal responsibility. Clients are encouraged to become more informed by investing in locally based companies, to attend annual meetings, read corporate literature, and make their voices heard through proxy votes and shareholder resolutions. In the end, this approach will not only help investors understand why companies perform the way they do, and allow them to have anticipate movement in the market, but to effect change when necessary.

I have taken issue with the recent bank bailout, not just because, as Ralph Nader put it, we’re getting “socialism without the benefits” like universal healthcare or secure retirement. This new move by George Bush and the U.S. Treasury Department - direct investment in the stock of banks to prop up their values - effectively puts your money at significant risk for loss while taking away your voice in how those companies are run, limits your ability to perform any due diligence before your money is invested, and prevents you from deciding when to get out. We can’t even charge the government interest for the loan.

At least investors had a choice before in being passive, and could choose to self-direct their investments. Now we’re all being relegated to the role of silent partner.

While past performance is not an indicator of future results, the performance of politicians in systematically taking our fundamental rights as shareholders has been nothing but consistent, and does not bode well for the future of the individual within our financial system.

Silverman Strategies in the News: Post & Courier

A recent article in the Post & Courier, written by Adam Parker, discussed how the local economy has been weathering the financial storm created by Wall Street.  Josh was quoted as saying:

Josh Silverman used to work for Merrill Lynch, which was purchased by Bank of America last month for about $50 billion.

He said he saw the writing on the wall in 2006: There was a need for more alternative lending solutions. After all, Merrill Lynch was farming out a lot of business it considered too insignificant, Silverman said.

So he started Charleston-based Silverman Strategies, and became a registered investment adviser, helping to bring lenders and borrowers together through private equity or social venture arrangements. Silverman said the current blowup in financial markets has helped him.

“It actually made what I do more in demand,” he said. “Because people need advice.”

Big bankers and brokers don’t always do a good job keeping their customers informed about the condition of their investment portfolios, he said. What’s more, a lot of these managers now are out of work or moving between companies. So more people are calling Silverman for help.

Read the full article at the Post & Courier.

Silverman Strategies in the News: Statehouse Report

Andy Brack, esteemed publisher of the S.C. Statehouse Report, interviewed Josh as part of a larger article on how national trends are affecting the local economy:

Retirement plans whacked. Those hardest hit by the crisis are seniors who have a lot of their retirement income in the stock market, which has fallen significantly in the last two weeks. They’re feeling more pain because they don’t have as much time as, say, a guy who is 40, to wait for the market to right itself and for investments to recover.

Josh Silverman, a registered investment advisor with Silverman Strategies in Charleston, long has been preaching for people not to put all of their investment eggs in one basket like the stock market.

“A diverse investor has diverse assets that are non-correlated, which means they are not all tied to stock market,” Silverman said. “Things like gold, oil, currencies and commodities - - these are things that have nothing that do with the stock market and historically do very well when the stock market is volatile.”

Read the full article at the S.C. Statehouse Report website.

Silverman Strategies & Green Drinks

While socializing and social lubricants are a regular occurence here in Charleston, I was really impressed by the turnout at the recent Green Drinks event held at the Trusted Palette on King Street.  Once a month the group convenes at a local bar or restaurant to share a pint and new ideas on sustainability, going green, and supporting the cause.  I met organic food purveyors, a green interior designer, even a budding environmental attorney.

They even got my picture:  Check out the Post & Courier article to find out more.

Post & Courier also caught a sound byte: click here to hear.

Silverman Strategies honored by the United Nations

Silverman Strategies was recently chosen as a signatory for the United Nation’s Principles for Responsible Investment.  This places our firm among an elite group of investment managers and advisors worldwide, and makes us the first firm in South Carolina to achive this designation.

Becoming a signatory reaffirms our commitment to working with investors and institutions to provide more clarity in oversight and advice with regard to environmental, social, and governance issues in our investment practice.  These issues have played a key role in our analysis of mutual funds, stocks, and other securities over the years, and it is a tremendous honor to be chosen.

From the PRI website:

As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). We also recognise that applying these Principles may better align investors with broader objectives of society.

Please visit the United Nation’s Principles for Responsible Investment website for more information: http://www.unpri.org

Fuel Tech - On The Move

Fuel Tech (FTEK), a leading provider of clean energy engineering - carbon scrubbing for coal plants, air quality control - has rallied from it’s 52-week low of $14.15/share during the March sell-off and has broken through the market resistance that has held it below $20/share since January 2008.  Named one of the “Best. Investments. Ever.” by the Motley Fool, it’s considered too hot to handle by Jim Cramer, who says he’s “too conservative for this one”.  If they can maintain their steady operating margins and solid earnings growth, and their sales force continues to deliver key contracts, they should continue to add profitability despite above average volatility.

GMOs at the pump?

Genetically Modified Organisms (GMO), also known as “Frankenfoods” in Europe, are nothing I want in my dinner. In our family, we make efforts to eat organic fresh vegetables, try to shop locally whenever possible, and read the labels of our canned goods. Typically, GMOs are grown for specific resistance to pesticides and an increased yield at the stalk. And while I wonder whether Mother Nature, left to her own devices, would have created these super foods through natural selection and not human intervention, the potential to utilize GMOs for non-food crop production becomes an intriguing question. Would delivering a plentiful, economical non-food crop source for biofuel, clothing material, or vaccine production ease the pressure on current commodity and pharmaceutical prices, and can instances of cross-contamination with food-source crops be eliminated? The US rules regarding GMO use and labeling are already relatively unrestricted, which is my cause for concern at the table. At the pump, I imagine, it might be a cause for celebration.