Keeping an eye on our public servants — The integrity of our financial markets depends on disclosure and fairness

Nancy Anderson — Tue, 22 Nov 2011 21:10:42 +0000

As a Chartered Financial Analyst, I am bound by the CFA Code of Ethics. As a registered financial advisor, I operate under federal law that recognizes me as a fiduciary. Both sets of rules require me to behave better than my local congressman.
The integrity of our financial markets depends on disclosure and fairness. All investors must be assured of a level playing field, or else the whole thing falls apart.
While insider trading is clearly defined in the law, many people have no clue what it is. Trading on ANY information that has not been made public is insider trading. It doesn’t matter if you got the information from the CEO or from the janitor. If you make hay off an inside tip, you could find yourself in jail.
In the South, such tips are often seen, simply, as friendly advice. There are stories of Mississippi executives calling buddies and letting them in on big announcements. No one understands that they could be breaking the law. Just a couple folks gossiping over the fence. Who cares if you make a few extra bucks off the information?
Congress is exempt from the same laws that I have to operate under. They are not required to put their constituents first. And by their own sets of records, they are profiting grandly from trading on inside information.
There is a move to stop this activity. It’s called the STOCK law. Surprise, surprise. It can’t seem to get enough votes to pass. Even if it passed, would this stop these guys from making a few extra dollars on the side? Probably not. Insider trading is difficult to prove. What did they know? When did they know it? And did they make money off the knowledge? It’s a tough case.
Instead, I propose requiring the people in the know to invest in pooled funds or blind trusts. And they must go long and stay long regardless of a meeting with the Fed declaring the end of the world. Finally, they should be required to have professional financial advisors calling the shots, people who have a lot at stake if they break the law.
For now, I’m planning to send a copy of the CFA Code of Ethics to each of our congressmen. At least, now they know we’re watching!

Nancy Lottridge Anderson, Ph.D., CFA, is president of New Perspectives Inc. in Ridgeland — (601) 991-3158. She is also an assistant professor of finance at Mississippi College. Her e-mail address is nanderson@newper.com, and her website is www.newper.com.

Easing back into the real estate market

Nancy Anderson — Fri, 11 Nov 2011 15:14:20 +0000

I love to walk through new houses. The smell of new wood, the clean, shiny surfaces, the perfect landscaping. All hold a promise for a perfect home, one where we can raise children in idyllic settings, dine with friends around a gloriously set table, and share rich, intimate moments with our spouses. Ahh, home.

The last few years have been hard on the family home. Foreclosure rates climbed. Home values fell. The real estate market bottomed out. Houses lost their homey feel and became the albatross around our necks. Real estate agents began selling shoes. Mortgage brokers disappeared, and appraisers found themselves sitting by a silent phone.

But we had a Parade of Homes here in Jackson this year. It wasn’t the big splash we’ve seen in previous years, but there were enough houses in the parade to make it interesting. The good news is that builders are sticking their toes in again. New construction is evident. Even existing home sales are inching up, as sold signs slowly appear.

The overbuilding that occurred before 2008 will take some time to clear out, and the recovery of home prices will be gradual, but the housing market is healing. Don’t expect to see double digit annual returns on your home equity anytime soon, though. We’ll all be happy just to go back to normal appreciation numbers in the 4-5 percent range.

A couple of houses on the parade were priced over $1 million. Wow! Who has that kind of money, especially in these difficult times? Not me. Many of the houses were a more reasonable price for the rest of us. It seems that, when it comes to our homes, we are coming back to our senses.

We tried moving during the real estate crisis a few years ago and just gave up. While I’m not ready to dive back in, I can see that things are improving. In the meantime, my walk through those new houses has spurred me into action. I may not be ready for a million dollar home, but I plan to keep my place I call home looking like a million. Time to remodel.

Mind Over Money » REAL ESTATE – Market Sector

Keeping an eye on our public servants — The integrity of our financial markets depends on disclosure and fairness

Easing back into the real estate market