Diversions September 16, 2010

Angels in the Outfield? More Likely Ghosts…

In a commentary in The Baltimore Sun this week, two writers suggest that the woes of the Washington Nationals baseball team are caused by none other than John Wilkes Booth.
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Perhaps they are just two more depressed Washington Nationals fans, digging desperately for excuses as to why their team has yet again performed so poorly this season–or maybe Mark Greenbaum and David O’Leary, commentators for the Sun, are on to something…  

As a team with “mediocre arms, tired bats, and underwhelming prospects” (their words, not mine), Greenbaum and O’Leary have drawn the conclusion that the Nats have been cursed by the ghost of John Wilkes Booth–the notorious assassin of Abraham Lincoln.  

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They say that not only has the team suffered from the usual trials and tribulations of a new franchise (the Nationals have only been in D.C. since 2005), such as mismanagement, but something far more grave is unfolding.  When Stephen Strasburg, a young, new pitcher who struck out 14 batters in his first big league start, suffered a potentially career-ending arm injury, Greenbaum and O’Leary thought of other teams that have had similar bad luck. The Chicago Cubs have the “Curse of the Billy Goat” and the Red Sox had the “Curse of the Bambino”–now it appears that the Nats have the Curse of the Assassin.  

According to the commentators: 

“Nationals Park sits directly on an infamous stretch of the Anacostia River where authorities conducted the autopsy of John Wilkes Booth on the ironclad U.S.S. Montauk anchored at the Navy Yard. Next door at Fort McNair, Booth’s co-conspirators were held and tried at the country’s first federal penitentiary, and four of them were hanged there in July 1865. Booth himself was buried there until his remains were later moved.” 

Greenbaum and O’Leary go on to discuss how Abe Lincoln was a huge fan of baseball’s predecessor, “town ball.”  There are several anecdotes of Lincoln either playing or watching the sport.  Perhaps it was his love for baseball that has caused the Nats to be targeted by Booth…for all eternity.  

  

  

 

Data & Research September 15, 2010

Investors are “Clueless” as to Who Operates Under “Fiduciary Standards”

A recent survey found that the vast majority of investors do not know which financial professionals are held to official “fiduciary standards.”  
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The poll of 1,319 investors conducted by ORC/Infogroup revealed a population of investors who are largely confused about which financial professionals are required to operate under a “fiduciary standard,” requiring the financial professional to put their client’s interest ahead of their own.    

Such unanimous replies are not common in surveys, but 97% of investors agree that “when you receive investment advice from a financial professional, the person providing the advice should put your interests ahead of theirs and should have to tell you upfront about any fees or commissions they earn and any conflicts of interest that potentially could influence that advice.” 

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Likewise, investors often think they are getting fiduciary advice, when that is not necessarily the case: 

  • Three out of five U.S. investors mistakenly think that “insurance agents” have a fiduciary duty to their clients.   
  • Two out of three U.S. investors are incorrect in thinking that stockbrokers are held to a fiduciary duty.   

Barbara Roper, director of investor protection, Consumer Federation of America, said:   

“This survey confirms that investors are clueless when it comes to the different standards of care that apply to brokers and investment advisers.   They don’t even understand the differences between brokers, investment advisers, and financial planners, let alone that they are subject to different legal obligations to the client when they perform the same services.  This lack of understanding is not because investors are stupid; it is because, bluntly stated, the policy itself is stupid.  No one in their right mind would create a system in which individuals who call themselves by titles and offer services that are indistinguishable to the average investor are subject to two different standards when they do so.  But this is precisely the world that SEC policy over the past two decades has helped to create.  Now, Congress has given the SEC a chance to fix those past errors by adopting a policy that makes sense to investors and puts their interests first. ” 

 

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