worthless

JP Morgan has said that clients with less than $100,000 in assets to manage will not be profitable under new regulations. The regulations cited would cap fees charged to manage - which are quite high in many cases. Large banks are known to charge up to 3% of assets for managed accounts, and annual dollar charges on smaller, unmanaged accounts can work out even higher!

I have worked at an independent RIA for a little over a year now, and I can tell first hand that banks are not suited to manage accounts even reaching in to the millions. The larger the bank, the less personal service you receive. To get decent service from a bank, an account may have to have over $10,000,000. High fees are a hallmark of any wealth management bank.

While many people with smaller account may choose to manage their own accounts, essentially for free, most people can benefit from the advice and management of a professional. With banks focusing on larger revenue clients, independent RIAs fill an important gap that the vast majority of savers occupy.

any value in bonds?

There is always an argument between bonds and stocks. Plain vanilla bonds offer known returns in terms of capital gain or loss and a regular coupon payment. So long as the company stays in existence, you get exactly what you expect. Stocks, however, offer the chance to participate in the totally unknown future earnings of the company, or not, depending on how the market decides to act.

There are practical reasons to own bonds - namely, income. Unfortunately, right now, interest rates are terribly low, so there is very little income to be had from owning bonds. Dividend paying stocks offer income as well, but again, it is not contractually obligated income like bonds.

If a company can't pay interest on its bonds, it can go bankrupt. This is a bad thing. Bond owners and prospective owners need to assess the company's ability to pay interest. Ratings agencies watch this sort of thing and issue ratings based on the perceived ability to pay.

Recently, the ratings agency S&P put the bonds of United Technologies on a negative outlook - essentially saying they were worried that UTX may not have the same ability to pay their interest that they once did. One might think, that even in this low interest rate environment, people might shy away from this sort of thing. I checked.

As it turns out, you can get 17 year bonds issued by UTX for $1.45 on the dollar. Thats right, you are guaranteed to lose $0.45 for each overpriced bond you buy. (Cusip 913017BA6, if you are interested) What is the value in that?

is it really so unexpected?

Jobless Claims Unexpectedly Fall was the Bloomberg headline 8 minutes ago.

Unexpectedly?

We have been having months of economic improvement, increased spending, higher employment, and nobody expected this? The world is not ending, we just have to wait for expectations, news and the market to catch up with reality. Positive surprises are always appreciated, and the news hasn't been perfect, but the general trend has been improvement, improvement, improvement.

I expect more of this to come.