NO STRINGS ATTACHED NEWS THAT MAINSTREAM JUST WON'T COVER.
“It’s quite possible the next recession will see the third-worst spread peak in history (behind only the Depression and the GFC) due to these market dynamics.”
Source: The Coming Credit Meltdown Will Be As Bad As The Great Depression And The Financial Crisis: Deutsche
Student Expelled By Law School After Posting "It's OK To Be White" Flyers
Authored by Jennifer Kabbany via The College Fix,
An Oklahoma City University School of Law student was expelled after posting “It’s OK to be white” flyers on campus.
The Oklahoman reported that the student was expelled because he was on suspension and violated the terms of his suspension when, on the night of Oct. 31, he came on campus and posted the flyers on the door and exterior of the law school building.
The Dec. 10 article does not state why the student was already on suspension.
OCU Police Director Bill Citty cited federal privacy as the reason why he is not releasing the name of the student, the newspaper reported, adding police “didn’t find evidence of a crime,” that the student “was found to be non-threatening to campus safety,” and that “he isn’t facing a charge of trespassing.”
This incident stems from the latest smattering of “It’s OK to be white” posters hung on campuses recently. Inside Higher Ed reported Nov. 5 that several schools nationwide were hit with the posters around Halloween time, and the same thing occurred in fall 2018, too.
The signs first appeared in the fall of 2017 as a coordinated 4chan campaign, whose users spelled out their “game plan” on the anonymous Internet forum board instructing people to post the signs on campuses to prompt a “completely berserk” response.
It appears the trolling effort may now be an annual tradition.
While the student at Oklahoma City University School of Law was reportedly not expelled for posting the flyers, but rather for breaking the rules of his suspension, the dean of the law school, Jim Roth, wrote in a statement to students and faculty the day the flyers were found:
“Despite what the intentions of that message may have been, the message reminds me of one fact that I know our community embraces — it’s okay to be EVERYBODY. Exclusion and hate will not be tolerated here. You are accepted at OCU Law no matter how you pray, what you look like, or who you love. And you always will be.”
Some have questioned whether “It’s OK to be white” falls under free speech, prompting controversy and debate. As The College Fix reported earlier last month, East Tennessee State may be asking for a lawsuit by promising to prosecute its “It’s OK to be white” vandals, as posting offensive flyers in and of itself is “clearly established” as constitutional under longstanding case law.
And writing at Minding the Campus, attorney Hans Bader weighed in on the flyers popping up nationwide, noting administrators “cannot discriminate against these flyers based on their viewpoint by expelling or dismissing people for posting them, when it obviously would never expel or dismiss someone for posting flyers with a different viewpoint the university likes better, such as ‘It’s OK to Be Black.'”
“Even valid school rules, such as against posting flyers in the wrong place, or against littering or harassment, cannot be enforced against someone based on their viewpoint,” Bader wrote.
Tyler Durden Thu, 12/12/2019 - 13:25 Tags EducationTremendous Demand In 30Y Treasury Auction Following Morning Rout
There is just one word to describe demand for today's $16 billion 30Y auction: tremendous.
From the top to the bottom, this was one of the strongest auctions on record, largely aided by today's dramatic rout across the curve which built up a substantial concession ahead of the auction.
The auction stopped at a yield of 2.307%, well below last month's 2.43%, but more remarkably, this was a 2.1bps Stop Through the 2.328% When Issued, the biggest stop through since January 2018.
The bid to cover soared from last month's disappointing 2.233 to 2.455, the highest also since January 2018.
The internals were also blowout, with Indirects taking down 63.4%, the highest since December 2018, and with the Direct takedown also rising from 20.5% to 21.1%, the most since Dec 2014, Dealers were left holding just 15.5% of the alottment, the lowest on record.
In short, in the context of today's bond rout driven by the latest rumorgasm which sent stocks surging and bonds tumbling, the bond market is saying the selloff won't last.
Tyler Durden Thu, 12/12/2019 - 13:15 Tags Business Finance
Former CIBC Banker Wins Appeal Claiming He Was Discriminated Against For Being A Straight Man
A former employee of Canadian bank CIBC won an appeal to have his discrimination complaint reassessed this week, according to a federal court.
The employee's claim? That he was told he had "no hope" of a promotion because he was straight.
Previously, the Canadian Human Rights Commission had dismissed Aaren Jagadeesh's claim that he was subject to discrimination due to his sexual orientation as a straight man, according to the Daily Mail. Jagadeesh was turned down for multiple promotions and said he was told by his boss to join a "group" of gay and bisexual men in the office, as only they would get promoted.
Madam Justice Janet M. Fuhrer ruled in Federal Court that the Commission wrongly tossed Jagadeesh's lawsuit and ordered a new investigation and reassessment as a result. Last month in court, Jagadeesh described how, in a 2015 meeting, his boss told him that every manager in the company was gay or bisexual and there was "no hope" of him becoming a manager unless he joined this group.
Jagadeesh also claims that the boss told him to "be smart and learn" after explaining that sexual orientation was the reason why young male employees were being promoted ahead of him.
That manager is now on "extended leave of absence".
He also claimed the male employees were being sexually exploited in order to gain promotions, explaining how the incident impacted his "mental stress and self-dignity".
Jagadeesh received a disability diagnosis of muscle tension dysphonia several months into his job, which caused him pain in his throat and vocal chords. He was told by a doctor to take medical breaks from his role as a telephone sales representative. His job required him to speak to 60 to 70 customers a day for less than 30 seconds each to hit his targets. His medical breaks made this impossible.
CIBC fired him on May 10, 2016, after the workplace refused to accommodate his disability, he claims. The bank claims he was fired for being unqualified. Jagadeesh said he applied for 17 other roles with the company and was turned down.
The Canadian Human Rights Commission first dismissed his case last November after an investigator refused to go forward with allegations of discrimination for being straight after concluding the company had accommodated Jagadeesh's disability.
Crystal Jongeward, a senior consultant of public affairs for the bank, said: "While we are unable to comment as the matter is still before the commission, no form of harassment or discrimination is acceptable at our bank."
Jagadeesh represented himself in his appeal to the Federal Court, claiming that the previous investigation ignored key evidence proving discrimination. The court then found that the initial investigator had not followed procedure and ruled the case be open with a new investigator. Jagadeesh was awarded $3,332.30 from CIBC for the time and expenses incurred during the appeal.
Tyler Durden Thu, 12/12/2019 - 13:05 Tags Social Issues Law CrimeActive Vs. Passive & The Simple Reasons You Can't Beat An Index
Authored by Lance Roberts via RealInvestmentAdvice.com,
Just recently, I was reading an article from Larry Swedroe which “discussed” the “Surprising Results From S&P’s Latest SPIVA Analysis.” To wit:
“Over the 15-year period, on an equal-weighted (asset-weighted) basis, the average actively managed U.S. equity fund underperformed by 1.4% (0.74%)per annum. The worst performances were small caps, with active small-cap growth managers underperforming on an equal-weighted (asset-weighted) basis by 1.99% (0.90%) per annum, active small-cap core managers underperforming by 2.43% (1.82%) per annum, and active small–value managers underperforming by 2.00% (1.71%) per annum. So much for the idea that the small-cap asset class is inefficient and active management is the winning strategy.”
As Larry concludes from that analysis:
“S&P’s SPIVA scorecard provides persuasive evidence of the futility of active management.”
See, according to Larry, it is clear you should just passively index in funds and everything will be just fine.
If it were only that simple.
We Are Supposed To Be Long-Term InvestorsIn any given short-term period, a manager of an active portfolio may make bets which either outperform or underperform their relative benchmark. However, we are supposed to be long-term investors, which suggests that we should focus on the long-term results, and not short-term deviations.
The following chart of Fidelity Contra Fund versus the Vanguard S&P 500 Index proves this point. Which fund would you have rather owned?
(Source: Morningstar)
Finding funds with very long-term track records is difficult because the majority of mutual funds didn’t launch until the late “go-go 90’s” and early 2000’s. However, I did a quick look up and added 4-more active mutual funds with long-term track records for comparison. The chart below compares Fidelity Contrafund, Pioneer Fund, Sequoia Fund, Dodge & Cox Stock Fund, and Growth Fund of America to the Vanguard S&P 500 Index.
(Source: Morningstar)
I don’t know about you, but an investment into any of the actively managed funds over the long-term horizon certainly seems to have been a better bet.
Even Index Funds Can’t Beat The IndexDo you want to know what fund did NOT beat the index according to Morningstar? The Vanguard S&P 500 Index fund.
How is it that a fund that is supposed to purely replicate an index, failed to exactly match the performance of the index.
Simple.
Fees, taxes, and expenses.
Unfortunately, in the “real world” where people actually invest their “hard earned savings,” their overall returns are constantly under siege from taxes, previously commissions, fees, and most importantly – taxes.
An “index,” which is simply a mathematical calculation of priced securities, has no such detriments.
The chart below is the S&P 500 Total Return Index before, and after the same expense ratio charged by the Vanguard S&P 500 Index Fund. Since most advisers don’t manage client money for free, I have also included an “adviser fee” of 0.5% annually.
Of course, if your adviser is simply indexing for you, then maybe the real question is exactly what are you paying for?
The Differences Between You And An IndexWhich brings us to why you, nor any investment product that exactly mimics the S&P 500 index, can actually match it, must less beat it.
While Wall Street wants you to compare your portfolio to the ‘index’ so that you will continue to keep chasing an index, which keeps money in motion and creates fees for Wall Street, the reality is that you and an index are very different things. This is due to the following reasons:
1) The index contains no cash,
If you maintain cash for expected expenses, taxes, or any other reason, your performance will lag the benchmark index.
2) The index has no life expectancy requirements – but you do.
While it may sound great that if you just hold an index long-term you will generate 8-10% annual returns, the reality is that your investment horizon between accumulation and distribution fall within one “full-market” cycle. Start on the wrong end of a cycle (high starting valuations) and the end result will be far less than advertised.
3) The Index does not have to compensate for distributions to meet living requirements.
At the point in life when you begin withdrawing money to live on, performance is affected by the withdrawals against the value of the portfolio. (Read more here)
4) The index requires you to take on excess risk.
Cullen Roche once penned a salient point:
“Benchmarking is a pernicious thing in financial circles. Not only because it disconnects the way the client and a fund manager understand the concept of ‘risk’, but also because the concept of benchmarking seems to be misunderstood.”
Risk is rarely understood by investors until it is generally too late.
Chasing the S&P 500 index requires you to have your portfolio fully allocated to equity risk, at all times. This vastly increases the “risk profile” of the portfolio which may not be optimal for investors approaching, or in, retirement. (Read more here)
5) It has no taxes, costs or other expenses associated with it.
As noted above, an index does not have to pay taxes on realized gains and dividends, does not have management fees, or other expenses which must be covered. All of these items will lead to underperformance from one year, to the next, versus an index.
6) It has the ability to substitute at no penalty.
In an index, if a company goes bankrupt, the index simply takes it out and substitutes another stock in its position. The index value is then adjusted for the “market capitalization” of the new entrant and the index resumes. However, in your portfolio, given you only have a “finite” amount of capital, when a company goes bankrupt, or losses the majority of its value, you have to sell that stock at a loss and buy the replacement with whatever is left or add more capital.
It’s Your Brain, ManUnfortunately, investors rarely do what is “logical,” but react “emotionally” to market swings. When stock prices are rising, instead of questioning when to “sell,” they are instead lured into market peaks. The reverse happens as prices fall. First, comes “paralysis,” then “hope” that losses may be recovered, but eventually “capitulation” sets in as the emotional strain becomes too great and investors “dump” shares at any price to preserve what capital they have left. They then remain out of the market as prices rise only to “jump back in” about mid-way to the next market peak.
Wash. Rinse. Repeat.
Despite the media’s commentary that “if an investor had ‘bought’ the bottom of the market,” the reality is that few, if any, actually ever do. The biggest drag on investor performance over time is allowing “emotions” to dictate investment decisions. This is shown in the Dalbar Investor Study which showed “psychological factors” accounted for between 45-55% of underperformance. From the study:
“Analysis of investor fund flows compared to market performance further supports the argument that investors are unsuccessful at timing the market. Market upswings rarely coincide with mutual fund inflows while market downturns do not coincide with mutual fund outflows.”
In other words, investors consistently bought the “tops” and sold the “bottoms.” You will notice the other two primary reasons for underperformance was related to a lack of capital to invest. This is also not surprising given the current economic environment.
The Only Question That MattersThere are many reasons why you shouldn’t chase an index over time, and why you see statistics such as “80% of all fund underperform the S&P 500.” The impact of share buybacks, substitutions, lack of taxes and trading expenses all contribute to the outperformance of the index over those actually investing real dollars who do not receive the same advantages.
More importantly, any portfolio that is allocated differently than the benchmark to provide for lower volatility, create income, or provide for long-term financial planning and capital preservation will underperform the index as well. Therefore, comparing your portfolio to the S&P 500 is inherently “apples to oranges” and will always lead to disappointing outcomes.
“But it gets worse. Often times, these comparisons are made without even considering the right way to quantify ‘risk’. That is, we don’t even see measurements of risk-adjusted returns in these ‘performance’ reviews. Of course, that misses the whole point of implementing a strategy that is different than a long only index.
It’s fine to compare things to a benchmark. In fact, it’s helpful in a lot of cases. But we need to careful about how we go about doing it.” – Cullen Roche
For all of these reasons, and more, the act of comparing your portfolio to that of a “benchmark index” will ultimately lead you to taking on too much risk and into making emotionally based investment decisions.
But here is the only question that really matters in the active/passive debate:
“What’s more important – matching an index during a bull cycle, or protecting capital during a bear cycle?”
You can’t have both.
If you benchmark an index during the bull cycle, you will lose equally during the bear cycle. However, while an active manager that focuses on “risk” may underperform during a bull market, the preservation of capital during a bear cycle will salvage your investment goals.
Investing is not a competition and, as history shows, there are horrid consequences for treating it as such. So, do yourself a favor and forget about what the benchmark index does from one day to the next. Focus instead on matching your portfolio to your own personal goals, objectives, and time frames. In the long run, you may not beat the index, but you are likely to achieve your own personal investment goals which is why you invested in the first place.
Tyler Durden Thu, 12/12/2019 - 12:45 Tags Business Finance10 Former NFL Players Indicted In $3.4 Million Health Insurance Fraud
Every now and again, former pro athletes get caught up in some relatively minor and often ham-fisted financial crime, like getting caught participating in an insider-trading ring run by a former Goldman analyst. Having focused on sports their whole careers, many athletes leave the league with a lot of money, and not a ton of business savvy, making them popular marks for grifters and schemers.
Not this time. In a stunning fraud that bears all the hallmarks of an insurance kickback scheme constructed by the Russian mob, ten former NFL players have been charged by federal prosecutors in the Eastern District of Kentucky for participating in what is described as a "an alleged...nationwide fraud on a health care benefit program for retired NFL players."
The fraud centers around the Gene Upshaw NFL Player Health Reimbursement Account, which was established as part of the NFL players' union's 2006 collective bargaining agreement.
The union health plan is basically a backstop to ensure that any sports-related medical costs incurred by players are handled by the League, even if the issues don't manifest until after retirement. Each player can tap a maximum of $350,000 from the fund. According to prosecutors, the 10 indicted players filed just under $4 million in fraudulent claims, and received more than $3.4 million in payouts between June 2017 and December 2018.
Prosecutors bashed the players for abusing a fund intended to cover the medical costs of their fellow players and retirees.
"Ten former NFL players allegedly committed a brazen, multi-million dollar fraud on a health care plan meant to help their former teammates and other retired players pay legitimate, out-of-pocket medical expenses," said Assistant Attorney General Benczkowski. "Today’s indictments underscore that whoever you are, if you loot health care programs to line your own pockets, you will be held accountable by the Department of Justice."
Most of the fake claims involved expensive medical equipment that was never actually purchased. Equipment described by the claims included hyperbaric oxygen chambers and cryotherapy machines and even ultrasound machines.
Two separate indictments were filed in the Kentucky District against NFL players, including five former players on the Washington Redskins, Clinton Portis (a former Pro Bowl running back) and Carlos Rogers, according to the Department of Justice.
Robert McCune, 40, of Riverdale, Georgia, is charged with one count of conspiracy to commit wire fraud and health care fraud, nine counts of wire fraud and nine counts of health care fraud. John Eubanks, 36, of Cleveland, Mississippi; Tamarick Vanover, 45, of Tallahassee, Florida; and Carlos Rogers, 38, of Alpharetta, Georgia, are each charged with one count of conspiracy to commit wire fraud and health care fraud, two counts of wire fraud and two counts of health care fraud. Clinton Portis, 38, of McLean, Virginia; Ceandris Brown, 36, of Fresno, Texas; James Butler, 37, of Atlanta, Georgia; and Fredrick Bennett, 35, of Port Wentworth, Georgia, are each charged with one count of conspiracy to commit wire fraud and health care fraud, one count of wire fraud and one count of health care fraud. Correll Buckhalter, 41, of Colleyville, Texas, and Etric Pruitt, 38, of Theodore, Alabama, are charged with one count of conspiracy to commit wire fraud and health care fraud.Claims were submitted using forged paperwork leading back to fake medical practices.
Of course, the DoJ has no problem cracking down on NFL players caught taking kickbacks. But when it comes to persecuting the NFL for not taking care of their players after they retire.
10 players getting kickbacks from healthcare: "throw the book at them" the NFL misrepresenting concussion data and not taking care of their players after they retire: *crickets*
— David Wallace (@Andrew1TM) December 12, 2019 https://platform.twitter.com/widgets.js Tyler Durden Thu, 12/12/2019 - 12:30 Tags Health Medical Pharma Sports Law Crime
