Electronic Records/Stock Certificates...Explain why I should trust them.

I awoke with a sense of doom on a global level. No big deal. I think many of us see what is coming. I couldn't remember dreaming and my mind immediately went to electronic records. I am in the medical field and work was my first thought. What a catastrophe if something caused all this to fail and you couldn't access patient history, labs etc.

Then I went on to think about electronic stock certificates. I have had a growing concern about their safety. As of the first of this year there was some kind of change so that you can't get a paper stock certificate. I follow Jim Sinclair, a gold guru, and he warned in 2007 you should start to protect yourself and your assets by removing as many people from between you and your stocks as possible. I did this by taking ownership of my personal account. My IRA was another matter.

What happens if this electronic medium is attacked or lost due to some natural phenomenon? And how is it safeguarded from those who would steal to protect their illegal deals.

I do think there may come a time when the PTB could prevent you from cashing in or allowing access to your cash once you do. I have thought of just getting out now, take the tax hit, just hold on to what I have.

If anyone can at least explain how the electronic record can't be totally lost or misused I would appreciate it. I think it wouldn't matter that we have our printed statement if the bank or brokerage is all electronic. Am I wrong? Do they keep a paper record?

By the way, this is my first attempt at a thread and would still only post occasionally if this had not alarmed me so much. I need answers and I know many of you are well versed in these matters.

Well, with all the turmoil and insanity of the last few months I tend to agree that hoarding "electronic money" is dumb.

We have all heard the possibility of a "bank holiday" as they scramble to prevent complete collapse after a run. Also, the possibility of a new currency if and or when our current dollar collapses.

You can damn sure bet that along with a transition of your assets to a new currency, they will also "convert" your debt as well.

Anyway, check your IRA / 401k rules. What I did was take a loan (50% vested value) with no penalties and that is about what you would get after penalties if you just cashed it.

The interest goes back into your own 401k account so your not loosing much doing this.... take the money, pay off any or as much debt as you can and invest the rest any way you feel is necessary.

So, I took out 50% of my money. After I paid off all of my outstanding debt (except mortgage / auto loans).

I will tell you my investment strategy.

I am torn on how bad it is going to get. It could be that we are denied access to "electronic" money for a time and "cash" would be king for a bit so I stash some cash in a fireproof lockbox I bought for $30. (This is what happened during the great depression, bank money went poof an cash was king").

I also have diversified and bought a few dozen silver eagles.

Now of course, My largest investment (and most urgent) was canned food!

Food prices are not going down, you cannot loose money on this investment unless you don't eat it. The on sale 35 cent cans of veggies 3 years ago now cost 50cents (if your lucky) or more.

If you have a basement, put up some shelves and buy and store food by the dates on the cans and simply use the oldest first. You cannot go wrong buying food, your investment will at least profit 25% if not double or triple the way things are going and that is better than any IRA interest.

Buying canned food and storing long term dry goods like Rice, Pasta, Sugar, etc. isn't just for survivalist anymore. It is sound investment strategy.

So, given the current situation and not really knowing how bad it is going to get, diversify your portfolio.... I would take that 50% loan if possible, stop contributions until we hit bottom if you prefer because in my case, my 5% contribution just about covers the monthly "payback" on the loan so I don't see a difference on my paycheck.

That way, if everything stabilizes your not out anything and don't have to pay ridiculous penalties, taxes, and fees for liquidating the whole thing.

Just some ideas.

reply to post by infolurker


Appreciate your thoughts.

I too have taken out some cash in case of a bank holiday...ending up spending it and now need to take out more to cover it. There is a tendency to get complacent when things move fairly smooth for a while.

The new currency that is expected is a concern. Take your cash but can you use it with a new currency? I guess you stand in line and take what they give you for it. I have a little gold and silver but that won't go far.

I have no 401K, just an IRA all in stocks and there is the concern, electronic stock certificates. How can they be protected? I am retirement age and just bought a house (had to live somewhere) and now also have a car payment. I don't really need a loan and this is the first time in my life I have ever owed anyone so all this hanging over my head, as I know it is others, just scares the bejeezus out of me. Everywhere you turn someone, government or bank, is taking someones money or refusing to give it back because they think their need supersedes the rights of others.

So I am looking for a good strategy to protect financial assets. Do you take your money and accept the penalty? Can a brokerage 'lose' your account or slowly dip into it without you knowing? I trust no one anymore and I am sounding like someone having a panic attack.

Paying everything off is what I am considering but it would take most of my assets and with the economy who knows how long any of us will work.

Yep, canned goods and non perishables...doing that too.

reply to post by infolurker



Great ideas. Exactly what I am doing.


When the economy of Argentina collapsed and food distribution channels dried up, people learned that the only way they were going to eat was to plant gardens in their own yards. Soon, everybody did it.

Perhaps that would be a good idea here? Spring is coming, I think I'm going to get planting.

The bigger question might be why is the money there in the first place. Is any of the gain person got for risking it there the last few years. Just another way for people with power or connections to grab or create money out of nothing. Remember players like Enron et al. it creates really cool jobs too. Charge to handle people's transactions and get paid no what happens. Dream middleman position.

reply to post by roadgravel



You are right. It seems it is all just a way to give someone an opportunity to take advantage.

But the money is there because it was the best place for it to grow and yes, since investing in 2002, I am up 500 percent.

Originally posted by liveandlearn
Then I went on to think about electronic stock certificates. I have had a growing concern about their safety. As of the first of this year there was some kind of change so that you can't get a paper stock certificate.

Hi liveandlearn. As of Jan 1, 2009, we are unable to request physical certificates from issuers that participate in the Direct Registration System (DRS), but we can still protect ourselves by requesting that our shares be registered in book entry form with the respective company's transfer agent...via DRS.

I think the main concern is the financial health of our brokers. In a bankruptcy scenario it could be months or even years before the legal dust settles, i.e., stock holdings unfrozen, and/or access to any cash held on account. Does XYZ discount broker have a significant exposure to mortgage backed securities? Derivatives? I eventually transferred my accounts to an online broker that was able/willing to give me a satisfactory answer to those questions....in written form...for whatever that may ultimately be worth.

Scroll down to Method #2 regarding IRA accounts.

GL

I agree with taking at least half your money out of the stock market
Another thing to think about is the actual fund owner of the $ you leave in.
It is shakedown time...any $ left in a fund shoud be the most financially sound. Consider Madoff, and Stanford Financial. With Madoff, people lost everything. If they ever get any percentage, it will be small compared to what they had. With Stanford, that shakedown just began. But already, all of the funds are frozen.

So if you leave your $ in...there could be a scenario (has already happened) Where your $ is in a fund that gets locked up, or frozen. Like this:

Sept. 18 (Bloomberg) -- An institutional fund run by Bank of New York Mellon Corp. designed to work like a money-market account fell to less than $1 a share after losses on debt issued by bankrupt Lehman Brothers Holdings Inc.

The $22 billion BNY Institutional Cash Reserves fell to $0.991 a share on Sept. 16, according to an e-mail sent by a bank representative to one client. BNY Mellon has ``isolated the Lehman assets in the fund into a separate structure,'' Ivan Royle, a spokesman for the New York-based company, said today in an e-mailed statement.

The fund invests cash deposited as collateral by clients who borrow securities from BNY Mellon, the world's largest custody bank. Lehman debt represented 1.13 percent of the fund's holdings, according to the statement. Royle declined in an interview to say whether investors withdrawing money from the fund would realize losses. The BNY Mellon fund, while not a registered money-market fund, is ``generally managed to be compliant with the investment-related provisions of'' U.S. law governing the accounts, according to a bank brochure.

Reserve Primary Fund, the oldest U.S. money-market fund, on Sept. 16 became the first in 14 years to fall below the $1 a share price, known as ``breaking the buck.'' Investors pulled 60 percent of their money from the $62.6 billion fund on Sept. 15 and 16 before withdrawals were delayed. "

and then this:

'Buck-breaking' money market mutual fund returns initial $26B
Updated 10/31/2008

NEW YORK (AP) — A money-market mutual fund that "broke the buck" amid a rush of orders to pull out cash has begun returning an initial $26 billion to investors who had been unable to access their money for more than a month.
The first in an unspecified number of distributions from the Reserve Primary Fund began Thursday with checks being mailed to retail-direct shareholders, Reserve Management Co. said. Payments to all other shareholders will be made by wire on Friday.

Each investor is getting about half their current account balance, the company said. It said all investors are being treated the same, whether or not they tendered redemption orders, and that the payout is being done on a pro-rata basis.

"This distribution marks a significant step in the process of liquidating the Primary Fund and distributing money back to shareholders," Reserve Management Co. President Bruce R. Bent said in a statement. "We are committed to making future distributions when more cash becomes available."

The fund had total assets of about $51 billion as of Sept. 30. It held $64 billion in assets on Sept. 12, before a soured investment in Lehman Brothers debt triggered a rush of institutional investors pulling out cash."

reply to post by OBE1


Thank you so much! At last an answer I needed. Jim Sinclair's site has not been easy to search.

I called my broker and asked that my shares be put on the books of my transfer agent. They didn't have a clue and said they were the transfer agent. I called later asking the same thing and told them I get dividends from CBIC Mellon. Was this my transfer agent? Yes, they say. I call Mellon and they give me a list of companies for my various stocks but tell me that certificates will have to be issued to me. Purpose defeated. Not until today did it occur to me that these secondary companies were the transfer agents and the people I should be addressing.

Thanks to you, I don't have to stumble around in the dark and know exactly what I need to do.

reply to post by burntheships


Thank you for your reply. Fortunately this is about stocks which I control and not mutual funds. I was unaware of the information about Mellon but not much surprised. Why would they come out clean.

reply to post by liveandlearn


Applause on your actions. Glad about the stocks as opposed to funds.
I missed one of your posts! In any case you can not be too careful.
Also, a little advice. I used to work for a large securities co.
You can get a paper copy of an electronic stock certificate. Do it. Someone might balk at the extra work, that is what they get paid for.

reply to post by burntheships


And my thanks to you. I did not know I could do that. I will make the request ASAP. I only wish more people knew about these options.