Apr 12, 2019

Howdy Five Blocks!!!

It has come to my attention that I have come to the attention of a "Digital Reputation Management" firm called Five Blocks run by one Sam Michelson.  I'm not sure why I've sparked the interest of Five Blocks, maybe they're looking to hire me, but I'm honored nonetheless. 

See that though?  Just when you think no one's paying attention...

For the uninitiated, Digital Reputation Management is what used to be called turd-polishing, the process of making something worthless seem valuable, usually through lying or attempting to silence those inclined to tell the truth with a variety of tactics.  It sounds like exciting work!  I can't wait to start!

I do have a few questions though.  I mean there's only so far I'd be willing to go to silence somebody.  I would think if you push somebody too far (like showing up at their house of worship to intimidate them, for example), it could really blow up in your face.  I guess we'll see.

I'm just spit-balling here, but I think Sam might be looking for some advice on hedge funds because I have gobs of experience and his video entitled Reputation Management For Hedge Funds. has only mustered 19 views in two years.  Well have I got a story:  Back in 2015, Sam was a guest speaker at an event with Yisroel H. Levovitz of Lakewood, NJ (Link)(Link)  You may recall Eliyohu Levovitz of Lakewood co-founded the hedge fund now known as Crawford Lake Onshore Partners with the notorious Elka Shereshevsky in 2001. (Link) Small world.  I wonder if they all know each other?

I'm really looking forward to working with Sam and his crew at Five Blocks, but I'm very busy with the site upgrade right now.  Thanks for your interest!

And as always,

~atsj

Apr 9, 2019

Maybe Vanguard Isn't So Boring...

Is the $4.5 trillion indexing giant also the biggest tax cheater in history?

There's always been something Orwellian about index investing to me.  Average is awesome!  Not thinking is genius!  Call me old-fashioned, but I still admire people who strive for excellence, trying to distinguish good from bad and right from wrong along the way.  Not making those distinctions is the foundation of Vanguard Group, the world's largest asset manager.  So here's to the virtues of low fees and intellectual schlubbery, I guess.

I fully acknowledge your right to worship at the shrine of the late Jack Bogle or declare beige your favorite color, it just isn't for me.  I've spent more time thinking about why you can't tickle yourself than Vanguard Group.

Until yesterday. 

The 13,000-plus RIA web pages at Finding Fraud are generated from SEC data. I've never actually look at most of them.  I've been making test runs for the upgrade (yes, there really is an upgrade in the works!).  Yesterday I decided to spot-check Vanguard Group's page to make sure the programming is working correctly   When I saw this, I was pretty sure it wasn't:

As far as Vanguard is concerned, it has no US investors?  WTF? 

I checked their most recent Form ADV filing at the SEC website and sure enough, that's what they're saying.  At least now.  My original data capture for Vanguard was made in November 2018, and at that time (based on their May 2018 ADV filing), Vanguard claimed that non-US investors represented just 6% of their assets (which seems a whole lot more reasonable).

This raises a number of interesting questions:

• Does no US investors means no US taxes?
• Did Vanguard undergo a major restructuring in the last year?
• Am I the only one on Earth who reads these filings?
• Or, do the idgits at Vanguard just have no idea how to fill out a simple government form?

I don't know, but maybe somebody should look into it.

A few years ago, a former Vanguard lawyer named David Danon tried to turn whistleblower on the house that Jack built and was fired.  At that time, estimates of the scale of Vanguard's tax evasion exceeded $30 billion, but that story just seemed to die.    Instead every nimrod trying to pass himself off as a "journalist " thought it far more important to weigh in on whether or not Danon violated his ethical obligations to Vanguard by supplying the government with confidential company documents and was therefore not entitled to any whistleblower protections.  More than three years later Danon is a cautionary tale for people inclined to do the right thing, and nobody seems to care what, if anything Vanguard owes.

Congratulations, America!  We've got the government and the media we deserve.

This still doesn't answer my question.  How could a company reclassify over $4 Trillion without anybody noticing?

The answer probably has a lot to do with the fact that hardly anybody reads things like SEC documents, especially the SEC itself.  Another might be that most people who see something potentially wrong are paralyzed by the fear of being wrong and looking foolish.  Flawed as I am, I try not to be a bobblehead, so I will ask again:  What the fuck is this?

I'm extra angry at Vanguard and the SEC today because they've made more work for me.  Finding Fraud's RIA pages evaluate whether or not a firm has disclosures based on the firm's response to the very first question asked in Item 11 of Form ADV, which asks simply enough:

You might be inclined to think that answering "No" to that first question would make responses to the 20 questions that follow irrelevant.  That's what I thought anyway.  If you tell me you have never been convicted of a felony, I would assume I don't have to look at your response to the specific question "Have you ever been convicted of murder?" 

So riddle me this, Batman:

Apparently "No" means "Yes" at Vanguard, and the SEC is just fine with that!!!

Orwell was sooo right..

(And that upgrade is going to be delayed a little longer.)
 

Apr 9, 2019

And Another Thing...

One of the things I am most proud of is being one of the few (if not the only) free website that tracks Historical Regulatory Assets Under Management.  Since we are already talking about Vanguard today, I'd like to point out that in March 2019, Vanguard reported its first drop in RAUM since at least Jan 2012.  The drop was $309 billion or about 6.4%:

It's hard to say for sure why this happened, but it can't be explained by changes in the major US indexes.  Maybe they've lost clients, or maybe the overall flow of monies into retirement plans has reversed, and we are entering the big redemption phase.  That would be a very significant event. 

I am also submitting this as proof that there really is an update in the pipeline.  Hopefully it will be live soon. 

Feb. 6, 2019

Captain Obvious Issues Spoiler