Money Advice Guide

Disgruntled investors are going after Wall Street once again, this time accusing one of investment bank Morgan-Stanley’s high-tech mutual funds of making biased stock picks.

Recent lawsuits allege the Morgan Stanley Technology fund was influenced to buy and hold stocks of companies that delivered huge investment banking fees - or could potentially bring big business - to the investment bank.

According to the lawsuits, the Morgan Stanley fund followed the biased recommendations of the firm’s analysts - decisions that have cost shareholders millions of dollars since the portfolio’s October 2000 inception.

The fund lost 48 percent in 2001 and was down another 50 percent during the first nine months of 2002. While Morgan Stanley strongly denied the allegations, I fail to see how the management of the fund is somehow distinct from the other divisions of Morgan Stanley. Ultimately, they all work for the same boss.

The suits further claim that the tech fund failed to disclose that the firm had investment banking ties with a number of companies whose stocks were part of the portfolio. They also failed to reveal that those links could affect the fund’s buy or sell calls.

Why bring all this up? For one thing, it is interesting to note that Morgan Stanley offered four of these types of funds in October 2000. Just around the time when we sold all of our positions (Oct. 13, 2000) and it became clear, at least to those of us who were tracking long-term trends, that a major trend change had taken place.

More recently in the news it’s been Merrill Lynch who had a questionable deal involving transactions with failed energy trader Enron. Of course, the financial services industry regulates itself so well, that an $80 million payment to the SEC is sufficient to wrap up this case without admitting or denying wrongdoing.

What’s the moral of this story? While it is impossible to predict these alleged conflict of interest schemes, it is definitely possible to follow a disciplined approach and be on the “right” side of the market so you can avoid jumping aboard a sinking ship.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped hundreds of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com

ulli@successful-investment.com

Tags: bonds, financial advisor, financial planning, investing, mutual funds, stock market, stock scandals, stocksbonds, financial advisor, financial planning, investing, mutual funds, stock market, stock scandals, stocks

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Knowing the potential volatility of the Valentine’s Day holiday, I’m going to skip the candy and flowers and head straight to the heart of the matter, for lack of a better metaphor. Everyone can get behind the concept of money, right? As in, more money in your account? More money to console your lack-of-date-having self in Cancun for the weekend? More cash on hand for that inevitable ice cream/shoe-buying binge triggered by Mr. He Who’s Name Will Not Be Mentioned’s aversion to calling?

In this sometimes cold, cruel world, it’s good to know that good stocks can sometimes replace the warm, cozy blanket of human interaction.

We’ve all heard the adage “Buy and Hold.” But what does that mean? Should you buy and hold regardless? How long is a good time to hold? Do you have to act like a day trader, checking ticker symbols every five minutes and acting like an over-caffeinated loony?

If you are interested in getting involved in the stock market, a good place to start is Jim Gard’s The Small Investor Goes to Market. It’s simple, easy to use, and won’t throw any weird jargon at you. It gives step-by-step information about how to get involved in the market without reaching for the Tylenol, and provides a great jumping-in place for the novice investor.

But what about that question of holding? Like all good relationships, a buy and hold stock has to be permitted to develop. Remember those first-date jitters, wanting to make a good impression? That’s like your stock, moments after you buy it. It may fumble the silverware at dinner (lose a few points in the market), take awhile to call you back (underperform), or even fail to hold the door open for you (definite downgrade). But imagine the huge smile on your face when he not only calls, but brings over two dozen roses. That could get Mr. He Who’s Name Will Not Be Mentioned a buy rating, and a one-way ticket to Luckyville.

Most stock analysts will not advise holding a stock for any particular interval of time. Instead, it’s important to observe the stock within the scope of the market. Is it considered a premium or recognizable brand? If so, it’s far more likely to have legs. How does the company’s approach make this stock different, and more likely to succeed? Are they known as a stingy company, or somewhere people are proud to say they work? Seemingly small things like a company’s image, or the perception consumers have, can drive the price of a stock, and determine its long-term worth in your portfolio.

On that note, if you’re looking for a helpful investing tool, try Black Box Investing’s subscription service. Subscribers receive conflict-free research (meaning Black Box has nothing to gain or lose by providing the information) on over 7,000 stocks. They provide technical analysis, using a stock’s performance record to determine whether it’s likely to make you money in the future. I find this service absolutely invaluable to making some of my own stock decisions, and perhaps it can help you, too.

Unless you’d like to renew that “Bitter, Table For One” reservation for next year.

For more stories, visit http://www.FindYourProsperity.com

Copyright 2006 Find Your Prosperity.com

Alyson Mead is founder of http://www.FindYourProsperity.com. In her 18-year career as an award-winning writer, she has published hundreds of articles in over 25 outlets, including Salon, AOL, MSN-NBC, BUST, New York Daily News, Bitch, The Sun, In These Times and more. She has received the Columbine Award for Screenwriting, the Roy W. Dean Filmmaking Grant, and a Writer’s Digest Award.

Tags: bonds, investing, Portfolio, stock market, stocks, wall streetbonds, investing, Portfolio, stock market, stocks, wall street

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