The Online Investing AI Blog

Automated Trading systems use computers to trade stocks and other assets. It may sound like science fiction, but computers are playing a more pivotal role in trading. Huge companies utilize computers to conduct complicated trades.

I know what you’re saying… how does that help you? All these big companies with deep pockets can invest in technology that you can’t afford.

But things are changing and advanced Automated Trading Technology will rapidly reach more investors and more self-directed investors.

There are a number of ways that Automated Trading is equal to–or better than–mutual funds as a tool for the self-directed investor. This performance should only improve over time.
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Online Investing AI, US Economy Automated Trading, funds, index funds, mutual funds, trading

The Titanic went to sea with more passengers and crew members than there were spaces on lifeboats.

“Why would an unsinkable boat need lifeboats, at all,” some passengers might have thought, considering the long boats nothing more than quaint odes to a bygone seafaring era.

Some investors found themselves in a similar position recently. Mutual funds, hedge funds, and money market accounts would never sink, right?

Well, just like a black swan of an iceberg sunk the Titanic, a flock of them flew into the flight path of the market last year.

If you weathered the storm, good for you, but that doesn’t mean you ditch your personal financial lifeboats. You should always have an emergency fund. Experts differ on the exact sum of the fund, but saving anywhere from three to six months of your salary is a good start. You also want to make sure this fund is in something extremely safe: cash, preferably.

Why do you need to have this emergency fund established. Here are three reasons–and some may seem contrarian.

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Investing, Money, Online Investing AI, US Economy debt, emergency, emergency fund, funds, Investing, Money, savings account, wealth

Reading about the whole Bernie Madoff billion-dollar Ponzi scheme made me think: How can you protect yourself from putting your money into a Ponzi scheme?

The best way to avoid being taken by a confidence scheme, although not guaranteed, is to get inside the mind of a Ponzi-Scheme manager. Find out how they run their business and then you can more easily see the warning signs.

A Ponzi scheme, named for underground financier Charles Ponzi, is simply using money from new investors to pay off previous investors, sort of like the Social Security system without the press and the AARP to back it up.

To get your Ponzi scheme running, you should do the following:

Offer nearly-impossible returns to new investors.

The less astute Ponzi schemers will usually offer extremely high rates of return, but they often attract attention and get discovered quickly. Madoff’s rate of return was small–8 percent or so–but it was so consistently 8 percent that alarm flags should have been raised.

Hide behind social connections.

Madoff was a member of the financial establishment and he worked them over more than he did his investors.

Make sure you are the custodian of your investors’ funds.

You’ll need to issue false statements. To do that, you should be the custodian of your investors accounts. A simpler way to explain it, according to the Brett Arends of the Wall Street Journal:

“If your adviser manages your investments, but the funds are actually held at, say, Charles Schwab or Fidelity, it’s almost impossible for him or her to run a Ponzi scheme.”

Resist transparency

Make sure you pick investors who don’t insist on transparency. If they insist on information, baffle them with B.S. by citing the level of “trust” you have with your investors. Or, simply fill them with a mind-dulling array of investment statistics and number-crunching.

Finally, insist on picking investors for your scheme that don’t want to play a role in their own wealth-generation. Even though independent investors are busier than ever, technology, like Automated Trading systems, are making it easier for them to be independent of financial managers.

As this technology grows, we hope Ponzi scheme managers find it more difficult to dupe new investors.

Automated Trading, Investing, Money, Online Investing AI financial industry, funds, invest, investment, Money, Ponzi, ponzi scheme, schemes

It seems like the rug has really been pulled out from under self-directed investors and traders.

Mutual funds don’t look like a good investment. Hedge funds are shaky. (And only accept rich investors.)

Then there’re 401Ks and pension plans–all of which are under scrutiny.

Some people are already suggesting that the government will move us into some sort of communal retirement accounts. That will end up as broke as Social Security in a few years of unrestrained over-spending.

I believe that this is–and will be–the time that entrepreneurial investment service providers will create new, innovative and more effective investment strategies. It’s what we’re committed to.

The challenge has been sounded.

Business Strategy, Investing, Money, Online Investing AI funds, markets, Money, mutual funds, stock market, stocks