The MacDougal Post: Following the Money, or Not, with that ETF of Yours

April 9, 2015

Following the Money, or Not, with that ETF of Yours

The typical Exchange Traded Fund (ETF) is marketed as a passive investment because its portfolio manager simply strives to offer investors some stock index in an investable form. A bunch replicate the popular Dow Jones Industrial Average or S&P 500 for you, and loads more are based on the so many lesser-known indexes that are now around. Since stock-picking isn't involved, ETF's are supposed to charge relatively low management fees, one reason for their popularity among investors large and small, plus lately those cited above have outperformed mutual funds for a notable period of time, reason enough to listen up no matter what is going down.

MacDougal has a problem with any investment vehicle that makes him pay capital gains tax on a schedule other than his own, and could never wrap his head around all the active investing involved in passive investing, namely those huge volumes of buying and selling needed to accommodate fundholder purchases and sales. He really got scared off when the widespread clandestine use of derivatives was revealed to be the ETF solution to the very question he had in mind.

Below is a Seeking Alpha link to a brand new issue that, to our knowledge, hasn't been raised before - the lack of transparency in cash flow management in this industry, namely, steady streams of dividend income coming into your ETF getting turned into lumpy, unpredictable chunks of dividend outflow for reasons totally unknown.

Bernie Madoff left us a warning call. If you're going to hand over your money to somebody else, it's a really good idea to make sure you know what's going on inside that shop. Everything. Here, we don't. The topic's probably a tad arcane for non-accountants, but if you're interested, there are juicy comments under the piece made by some of the biggest buy-side gurus in the dividend investment game. You may want to check them out too; they're the folks coming up with all the answers down there if you're unfamiliar with their names.

Mostly, we're sending this to our valued subscribers because the issue is so brand spanking new MacDougal feels that, like him, you'd probably enjoy being let in on the cutting edge of some Wall Street thing for a change - and there's a whole lot of great stuff in and under the piece that's also getting passed along.

http://seekingalpha.com/article/3056576-several-dividend-etfs-slash-their-dividends-by-up-to-22-percent?ifp=0

Inside the Scam

Short-sellers flood markets with bogus shares, involving buyers in bookkeeping transactions, not stock, and not telling them about it. Wall Street helps hide the fraud with Madoff accounting, even letting shorts pay dividends as part of this scam, duping investors into believing they get real dividends paid by the company they thought they invested in.

Worse, short-selling, in effect, adds these phony shares to the actual total number reported in company financial statements, which goes into the various earnings per share (EPS) calculations, essential components of the critical metric universally used to value common stocks, the price/earnings ratio (P/E). In a selling frenzy, EPS can be cut from, say, $4.00 to $0.40 or $0.04 or whatever, by the immense volume of fake shares these pretend investors are drubbing the real ones with at point of purchase.

Every reference made to P/E as a calculable metric is a lie. Our stock market is gamed by short-side racketeers, rendering equity investment in this country a massive securities fraud. Their humongous swindle purloins much of our savings during every market downdraft.

Odds are the SEC staff belongs in jail. Gangland racketeering is more than enabled by the complicity of our regulatory hotshots. Mob stooges inside that agency have spearheaded these cons for generations, flat out lying to us all those years.

Surely, the SEC's remarkable contention that short-sellers borrow their shares from you and me is, in its downright absurdity, the nadir of arrogance and criminal obfuscation.

That's why we're never asked to go along with it.

Site Exclusives

As our young readers know, any loser who steals mommy and daddy's savings is a stupid ninny.

Wall Street hires the biggest dumbbells in the world. That's because God hates stealers, and the nincompoops don't even know it.

Keep an eye on bad men like hedge fund managers, bank CEOs and proprietary traders right here in The MacDougal Post. Incorrigible dingbats like Mucus Poole-Knightly, Pockets MulGoon, and Lewie the Dip, just to name a few of the head cases found on the site, are contracted to appear here exclusively.

You won't find that kind of financial coverage anywhere else in cyberspace.

Check in with us regularly to find out what's really going on with your money, if there's any left. And when it's all gone, take a shower whenever you can and drop in on us from the local public library.

The MacDougal Post

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April 9, 2015

Following the Money, or Not, with that ETF of Yours

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