Fiduciary Duty Can’t Be Killed

Striking the fiduciary rule down could make it, in the words of Obi-Wan Kenobi, “more powerful than you can possibly imagine.”

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The Truth Behind The Push To Delay The Fiduciary Rule


The Department of Labor’s fiduciary rule is under fire again. Essentially, those opposing the rule are saying that fulfilling a fiduciary standard—acting in the best interests of their clients—is too costly to work with their business model.

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There’s No Getting Out Of Fiduciary Duties


We think investors’ expectation for the fiduciary standard is here to stay no matter what the official rules say — and those investors will increasingly demand that their advisers apply to their non-retirement accounts too.

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The Future of Wealth Management And Morgan Stanley’s $28 Billion Opportunity


The big banks still have significant advantages. Their brand names, financial capital, advisor networks, and large client bases give them the opportunity to leverage the innovations of startups and become the biggest winners in this new wealth management model.

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Invested Capital: Explanation & Examples

We calculate invested capital in two mathematically equivalent ways: financing and operating approach. Figure 1 shows the basic calculations. On page 2, we share the complete calculations for specific companies.

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Long Idea: Wells Fargo & Company (WFC)


In the search for safe investments in today’s volatile markets, investors should focus on companies that have a history of creating shareholder value, the ability to earn quality returns on capital, and an undervalued stock. This week’s Long Idea, Wells Fargo & Company (WFC) not only fits the description of a safe investment, but its shares are also greatly undervalued.

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Why the Fed’s Stress Test Isn’t a Stamp of Approval for Investors

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In this podcast, CEO David Trainer will explain why many of the big banks will not be as good investments now as they have been in the past.

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David Trainer Explains Why Big Banks Are No Longer an Attractive Investment

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David Trainer discusses why big banks are no longer an attractive investment.

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How To Avoid the Worst Sector ETFs


Picking from the multitude of sector ETFs is a daunting task.

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Danger Zone: Value Investors


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Danger Zone: Momentum Investors and the Financial Sector


As regulators dole out punishments that fit the crimes, they are finally closing many of the illegal trading loopholes that have driven so much of Wall Street profits over the past decade.

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Preferred Stock – Valuation Adjustment


Preferred stock is a hybrid instrument that carries no voting rights but has a senior claim on assets and cash flows to common stock. Dividends usually must be paid out to preferred stock owners before common stock owners can receive any money. In the event of liquidation, preferred shareholders also have priority.

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Accumulated Goodwill Amortization and Unrecorded Goodwill – NOPAT Adjustment


Converting GAAP data into economic earnings should be part of every investor’s diligence process. Performing detailed analysis of footnotes and the MD&A is part of fulfilling fiduciary responsibilities.

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Off-Balance Sheet Debt – Invested Capital Adjustment


Investors who ignore off-balance sheet debt are not holding companies accountable for all of the capital invested in their business. By adding back off-balance sheet debt to invested capital, one can get a true picture of the value that management is creating for shareholders. Diligence pays.

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Off-Balance Sheet Reserves – Invested Capital Adjustment


Reported assets don’t tell the whole story of the capital invested in a business. Accounting rules provide numerous loopholes that companies can exploit to hide issues and obscure the true amount of capital invested in a business over its life.

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Non-Operating Tax Adjustment – NOPAT Adjustment


Without removing the tax impact of non-operating items, one still gets distorted picture of a company’s operating profitability.

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Change in Total Reserves – NOPAT Adjustment


Reported earnings don’t tell the whole story of a company’s profits. They are based on accounting rules designed for debt investors, not equity investors, and are manipulated by companies to manage earnings. Only economic earnings provide a complete and unadulterated measure of profitability.

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Non-Operating Expenses Hidden in Operating Earnings – NOPAT Adjustment


Non-operating expenses are unusual charges that don’t appear on the income statement because they are bundled in other line items. Without careful footnotes research, investors would never know that these non-recurring expenses distort GAAP numbers by lowering operating earnings.

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How To Find the Best Sector ETFs


Finding the best ETFs is an increasingly difficult task as there are more and more to choose from every day.

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Best & Worst ETFs and Mutual Funds: Large-cap Value Style


The Large-cap Value style ranks second out of the twelve fund styles as detailed in my Style Rankings for ETFs and Mutual Funds report. It gets my Neutral rating, which is based on aggregation of ratings of 41 ETFs and 772 mutual funds in the Large-cap Value style as of May 1, 2013.

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