Retirement Ready Income Programs

SIBORAP: The Securities Investors' Bill Of Rights - Part One

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We the securities investors of the United States, in order to form more transparent financial markets, establish effective regulations, defend against destructive speculation and manipulation, promote financial well-being, preserve working capital, and protect retirement income, do establish this Securities Investors Bill of Rights and Protections (SIBORAP).

These rights are intended to replace, amend and/or abolish all laws and regulations currently in conflict with SIBORAP, and are to be implemented by all parties to financial transactions.

Any institutional efforts to create and/or market securities and/or derivative products that do not comply with the spirit of SIBORAP will result in fines to corporate officers and directors, congressional oversight committee members, regulatory agency directors, and their financial or legal counsel.

All derivative investment products of any kind, any investment programs or specific recommendations promoted in any medium by non-professionals and professionals alike, SEC registered or not, must comply with SIBORAP. Any non-plain-vanilla security, or derivative product containing college-level mathematical complexity, must comply with SIBORAP.

If the average investor cannot understand the purpose of the security, view its content, and form valid expectations about its market value and/or income generation performance in varying market environments--- that security should not be purchased by that person, and must not be sold to him.

It is important that the regulatory bodies responsible for implementing SIBORAP include non Wall Street representatives in their advisory committees. Any and all financial products, contracts, options, and programs approved by regulators will be given a layman's language risk assessment.

All producers of derivative products must provide regulators with clear written documentation of the specific risks involved, in layman's terms. Regulators will label derivatives as to risk "tier level", and identify the entities, persons, and programs prohibited from purchasing them.

The primary purpose of SIBORAP is to protect investors from the actions of others by lessening the global impact of specific types of transactions. A secondary objective is to protect the majority of investors from themselves.

SIBORAP includes these ten specific sections: (1) Product Transparency, (2) Regulation and Education, (3) Protection from Speculators (4) Control of Hedge Funds, (5) Brokerage Account Statements, (6) Retirement Account Investments, (7) Executive Compensation, (8) Corporate Financial Statements, (9) Taxation of Investment and Retirement Income, and (10) Transactional Greed and Fear Controls.

Section One: Product Transparency.

All individual investors, regardless of size, tax status, or educational achievement have the right to see precisely what securities are inside any investment product they purchase, and not only in terms of the top ten positions and asset allocation. All securities within the portfolio must be visible electronically, and updated daily. The top ten holdings would typically represent less than 30% of the portfolio.

Investment Companies shall create no products that contain more than one level of content identification, or whose make-up would artificially or inappropriately impact the market valuation of the securities it contains. A product containing individual negotiable securities of any kind, either equity or income based, may not become a part of any other product or publicly traded security.

This rule would outlaw all multi-level derivatives such as funds-of-funds, index funds that purchase more than 100 shares of the stocks they track, CDOs, and other multi-level gambling devices so popular within the derivative markets.

It will also allow shareholders and regulators to see if any illegal or undisclosed activities or processes are being used in-between standard reporting periods. (Note that funds, corporations, and brokerage firms would no longer be required to send quarterly or annual reports to anyone, so long as the documents are available on line.)

Full disclosure, always in laymen's terms, is required for all gain-enhancing/risk-increasing activities such as leverage, options, and futures transactions.

Section Two: Regulation and Education.

Since the investor community has grown to include nearly all employed persons, and because such persons may have a limited understanding of investing, they have the right to expect government regulators to protect their interests.

Incidentally, and because approximately 99.9% of "middle class" members are investors, the tax rules associated with SIBORAP Section Nine will be effective retroactive to the 2007 tax year--- for middle class families and small business taxpayers only. The resultant tax credit will be applied to withholding taxes.

A well-regulated securities industry is needed to assure that the risks associated with securities are clearly identified and labeled. Investors have the right to clear, non-legalese, explanations of risk, particularly when their selections involve other than stocks and bonds.

Specific risk assessment for individual securities and derivatives (securities whose value depends upon the value of other securities) is more important than disclosure of company operations and affiliations. If Registered Investment Advisors (RIAs) have no weapons of mass financial destruction (WMFDs) to sell, no mass financial destruction will recur.

Section Two (Regulation and Education) is continued in Part Two of the SIBORAP report. Part Two also includes Sections Three (Protection from Speculators) and Four (Control of Hedge Funds).

Click for Details --> Part 2 <--

Retirement Ready Income Programs
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Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.

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Risk Management: Income, 401k, and IRA Programs

Take a tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:


In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.

At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.

The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.

Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,

Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.

Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side...  while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.

To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.

Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.

Total income is 6.5% of capital and more than covers the RMD.

Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds. 

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Please read this disclaimer:
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.