KANSAS CITY, Mo. The owner of the Kansas City Chiefs is being accused in a lawsuit of improperly receiving hundreds of millions in state investment money through a kickback deal with New Mexico officials.

The Kansas City Star reported Sunday that the New Mexico State Investment Council filed the lawsuit late last month against Clark Hunt and HFV Asset Management over the politically-influenced investment deals.

Hunt didnt comment to the newspaper on the lawsuit Sunday morning. Hunts father, Lamar, founded the Chiefs franchise and is in the Pro Football Hall of Fame.

The lawsuit says Hunt made a deal 12 years ago with two men with political connections who promised to steer New Mexico investment money to a hedge fund in exchange for payments. Hunt was a partner in the hedge fund.

New Mexico awarded $300 million to the hedge fund and paid millions in management fees. The lawsuit said one of the investment funds lost $13 million during the period.

Hunt sought to gain unfair advantage by paying for influence over the process, New Mexico officials said in the lawsuit.

The accusations are tied to the pay-to-play scandal that took place during administration of former New Mexico Gov. Bill Richardson.

New Mexico has already negotiated more than $30 million in settlements related to the pay-to-play investment scandal.

Link:
Chiefs owner Clark Hunt being sued by New Mexico State Investment Council - FOXSports.com

This post first appeared on A Wealth of Common Sense.

A reader asks:

I wanted your advice about when do you recommend one sells holdings that have appreciated? I understand the concept of buying low but would appreciate your advice on when to sell. I understand reversion to the mean and have been guilty in the past of holding on too long, only to see all the gains melt away as the market corrected.

This is a topic that probably doesnt get enough time share for investors. All of investing is more of an art than a science but there are plenty of books and research papers written about what to buy but very few about when to sell.

Sure, there are plenty of aphorisms about when to sell. Buffett says his favorite holding period is forever. Then you have phrases like the following:

We sell the rips and buy the dips.

Let your winners run but cut your losers short.

No one ever went broke taking a profit.

Its one thing to be wrong, its another thing to stay wrong.

Were taking some gains off the table.

These are fun things to say but they dont provide much help in the moment when you see an investment rising or falling.

The true determinants of when to sell an investment can be boiled down to the following questions:What kind of investor are you? Whats your time horizon? Why did you buy in the first place?

The wonderful and terrifying thing about investing is that you have two opportunities to be right and two opportunities to be wrong on every trade or investment when you buy and when you sell.

An intelligent investor spends some time up front before the buy occurs to consider when or why they would sell a holding. If you dont have some pre-established rules, guidelines or systems in place to understand what your sell trigger will be youre really just guessing.

Theres no right or wrong answer on when to sell because investing is personal. There are plenty of terrible reasons to sell Im nervous; someone on financial television scared me out of the market; I saw some guy on Twitter post a GIF about the how reckless the Fed is; I feel like the market is due for a correction.

Here are what I consider to be some legitimate reasons to sell an investment:

Rebalancing. Rebalancing back to target allocation weights is the simplest way to sell a little of whats been working and buy a little of what hasnt. Rebalancing is a systematic form of value investing. You can never time these things perfectly but this is one of the simplest forms of risk management available to investors who have a defined risk profile for their portfolio. How or when you do it probably doesnt matter nearly as much as following through with whatever your pre-established guideline are.

There are better opportunities available. Some investors are constantly searching the investable landscape for new opportunities in comparison to their current holdings. I find it can be a useful exercise to think through whether you would buy your current holdings all over again if you started from scratch (taking into account things like transaction costs and taxes).

Targets have been met. Other investors have price or valuation targets. Figuring out the intrinsic value of a security or asset class is never easy but coming up with estimates for where you will buy and where you will sell is a good way to place constraints on yourself from allowing investments to get away from you.

Your rules tell you to sell. Quantitative investment strategies continue to gain in popularity. Im a huge proponent of a rules-based approach but have witnessed far too many people who profess to invest this way change their process when things arent going their way. It requires discipline to follow your rules even when it doesnt feel right (and most of the time the right move wont feel right at the time).

Circumstances have changed. This one is a little more squishy, but there are times when your original investment thesis doesnt play out. Or your risk profile has changed because of a life or work event. Many investors de-risk as they approach retirement age. Others need to sell because they actually need to spend the money theyve been investing. The whole reason we invest is to delay current consumption for future consumption. You risk profile can and should change as you approach your future consumption date(s).

Regret also plays a huge role in any investment decision so it can be helpful to determine which would make you more miserable holding and seeing your investment crater or selling and seeing it go much higher.

Further Reading:When Holding is the Hardest Part

Here is the original post:
When to sell your investments - Yahoo Finance

KANSAS CITY, Mo. -- The owner of the Kansas City Chiefs is being accused in a lawsuit of improperly receiving hundreds of millions in state investment money through a kickback deal with New Mexico officials.

The Kansas City Star reports Sunday the New Mexico State Investment Council filed the lawsuit late last month against Clark Hunt and HFV Asset Management over the politically influenced investment deals.

Hunt didn't comment to the newspaper on the lawsuit Sunday morning. Hunt's father, Lamar, founded the Chiefs franchise and is in the Pro Football Hall of Fame.

The lawsuit says Hunt made a deal 12 years ago with two men with political connections who promised to steer New Mexico investment money to a hedge fund in exchange for payments. Hunt was a partner in the hedge fund.

New Mexico awarded $300 million to the hedge fund and paid millions in management fees. The lawsuit said one of the investment funds lost $13 million during the period.

"Hunt sought to gain unfair advantage by paying for influence over the process," New Mexico officials said in the lawsuit.

The accusations are tied to the pay-to-play scandal that took place during administration of former New Mexico Gov. Bill Richardson.

New Mexico has already negotiated more than $30 million in settlements related to the pay-to-play investment scandal.

Read more:
Chiefs owner Clark Hunt sued over New Mexico investment deal - ESPN

The owner of the Kansas City Chiefs struck a pay-to-play deal with former Gov. Bill Richardsons administration, the State Investment Council alleges in a new lawsuit, claiming the billionaire NFL scion secured hundreds of millions in state investment money by leaning on Richardson insiders Anthony and Marc Correra.

The father and son are at the heart of a massive Richardson administration investment scandal that continues to shake out almost eight years after Richardson left office. Richardson and the Correras have denied any wrongdoing, though Marc Correra, who filed for bankruptcy last year, has admitted he received about $20 million in fees from fund managers and others doing business with the State Investment Council.

The council, responsible for managing $21.5 billion in public trust funds, claims Chiefs owner Clark Hunt, 52, was able to secure $300 million in investments for a hedge fund in which he was a partner by using the Correras influence with former state investment officer Gary Bland.

The lawsuit, filed in the First Judicial District Court in Santa Fe in late August, is just the latest legal case involving investment deals during the Richardson administration. In July, a state district judge approved a deal between the state and a Chicago-based investment firm, Vanderbilt Capital, for $24.25 million in a decadelong case. Vanderbilt had lost about $90 million in state funds through bad investments, though a judge did not determine there was evidence the company had committed fraud.

The state also has a pending lawsuit against the Correras, as well as Bland and Guy Riordan, a Richardson friend and former securities broker.

Hunt, the son of Lamar Hunt, who founded the Chiefs franchise as the AFLs Dallas Texans in 1960, became CEO of the team after his fathers death in 2006.

A message left for an Albuquerque lawyer of Hunts was not immediately returned.

The State Investment Council says in its lawsuit that the $300 million allocation from the council to the Hunt hedge fund was three times larger than any other received by fund managers who responded to the investment councils request for proposals.

Hunt and his business partner met face to face in 2005 with the Correras at the Albuquerque International Sunport, according to the complaint, where the Correras told Hunt that by virtue of Anthony Correras close relationship with Governor Richardson and their close relationship with Bland, they had influence with respect to the selection process. The suit claims fund managers referred to the elder Correra as gatekeeper to Richardson and state investments.

Hunt and his partner, Barrett Wissman, who is not named as a defendant by the suit, paid Marc Correra a fee, according to the complaint, and Bland then awarded the Hunt-connected hedge fund the $300 million allocation, even though the State Investment Councils hedge fund adviser did not recommend that hedge fund be given any allocation whatsoever.

Bland was authorized to award the investment funds unilaterally, without advising the investment council or obtaining its consent. But the millions in management fees paid to the hedge fund enriched Hunt and Wissman, the suit claims, at the expense of the states billions in public trust funds, which include the Land Grant Permanent Fund and Severance Tax Permanent Fund.

The suit claims Hunt authorized the fund to pay a broker-dealer associated with Marc Correra 25 percent of those management fees as a finders fee, despite the fact, as the suit claims, that Correra did not find the well-publicized request for proposals but rather was able to tilt the selection process.

Hunt and Wissman knew they were paying for influence and were participating in a fraudulent scheme, the complaint alleges, seeking restitution, civil penalties, compensatory and punitive damages and others.

The hedge fund underperformed the state benchmarks; one of its investments lost the State Investment Council more than $13 million, the suit says.

The complaint names as defendants Hunt, the hedge fund which received the SIC allocation known at the time as Arbitex Asset Management, now called HFV Asset Management and 20 unnamed defendants. These John Does are, the State Investment Council says, Hunt family trusts through which Hunt owned some or all of his interest in HFV and/or of the trustees of those trusts.

The case was assigned to District Court Chief Judge Sarah Singleton, according to court documents.

Here is the original post:
State sues owner of NFL's KC Chiefs in investment scandal - Santa Fe New Mexican

JAKARTA, Sept 4 (Reuters) - Indonesias financial regulator has changed its rules governing investments by non-bank financial institutions, according to a new regulation signed last week, in a move aimed at getting those firms to support government infrastructure projects.

The OJK revised a regulation first implemented in January last year that required insurance companies, pension funds and other non-bank financial institutions to keep a minimum percentage of government bonds in their portfolio to help provide stability to the debt market.

In the revised version, the OJK has expanded the options for required investment products to include instruments issued by state-owned companies and their subsidiaries used to finance government infrastructure projects.

The new list of instruments includes asset-backed securities, as well as the so called limited participation mutual funds (RDPT), according to the regulation signed on Aug. 29, which took effect immediately.

The government is trying to create a market for such instruments. Last week, state-controlled toll road operator PT Jasa Marga sold 2 trillion rupiah of securities backed by the future revenue from one of its toll roads.

Other state-owned firms plan to raise funds in a similar way as part of a presidential drive to secure $10 billion in additional inflows, capitalising on Standard & Poors May 19 upgrade of the countrys credit ratings to investment grade.

Accelerating infrastructure projects is among the main focuses of Indonesias government and project financing is one the main hurdles.

The World Bank estimated that Southeast Asias largest economy would have to spend $500 billion to meet its infrastructure needs in the next five years and public spending alone wouldnt be enough.

The overall amount of government-linked securities the OJK requires non-bank financial institutions must keep as a minimum percentage of their investments remains unchanged from last years rules.

Such securities must make up at least 30 percent of pension funds and life insurance companies investments and 20 percent of general insurance firms investments. (Reporting by Gayatri Suroyo and Fransiska Nangoy; Editing by Sam Holmes)

Go here to read the rest:
Indonesia's regulator eases investment rule to aid infrastructure funding - Reuters

Investment is the military process of surrounding an enemy fort (or town) with armed forces to prevent entry or escape.[1][2] It serves both to cut communications with the outside world, and to prevent supplies and reinforcements from being introduced.

A circumvallation is a line of fortifications, built by the attackers around the besieged fortification facing towards an enemy fort (to protect the besiegers from sorties by its defenders and to enhance the blockade).[3][4] The resulting fortifications are known as 'lines of circumvallation'.[5] Lines of circumvallation generally consist of earthen ramparts and entrenchments that encircle the besieged city. The line of circumvallation can be used as a base for launching assaults against the besieged city or for constructing further earthworks nearer to the city.

A contravallation may be constructed in cases where the besieging army is threatened by a field army allied to an enemy fort.[6] This is a second line of fortifications outside the circumvallation, facing away from an enemy fort. The contravallation protects the besiegers from attacks by allies of the city's defenders and enhances the blockade of an enemy fort by making it more difficult to smuggle in supplies.[7]

Thucydides notes the role circumvallation played in the Spartan siege of Plataea during the initial stages of the Peloponnesian War in 429 BC.

Julius Caesar in his Commentaries on the Gallic War describes his textbook use of the circumvallation and contravallation to defeat the Gauls under their chieftain Vercingetorix at the Siege of Alesia in September 52 BC.

Another example from the pre-modern period is the siege of Constantinople in 717-718 AD. At that time, the Isaurian dynasty of emperors ruled in Constantinople. The Isaurian dynasty's founder, Leo the Isaurian, originally named Konon, was commander of the theme (i.e. province) of Anatolia, appointed by the Emperor Anastasius II Artemius. During Konon's term as general of the Anatolics, the Emperor Anastasius II had been deposed by the troops of the elite Opsician regiment, and replaced by an unwilling tax collector named Theodosius. He (Theodosius) finally accepted the offer of the purple, and was made Emperor Theodosius III. Theodosius, however, alienated the support of the Opsicians, and Konon, changing his name to Leo, took advantage of this and decided to use them to take the purple for himself. He allied with Artabasdus, the commander of the theme of Armenia, and was able to depose Theodosius III, becoming Leo III upon his accession to the Byzantine throne. Meanwhile, the leaders of the Islamic Empire took advantage of the violent anarchy within the Byzantine state to prepare a huge host, comprising more than 100,000 troops and 1,800 ships, to take them to the capital Constantinople. Upon arriving outside the Theodosian walls, the Arab host had some knowledge that the Emperor Leo had allied with Bulgaria under their khan Tervel, and so in preparation for the Bulgarian army, built such military investments, but they failed to work, and so the Arab army was defeated by a number of factors; the failure of their circumvallations and contravallations, the lack of supplies near the end of the siege, the (mostly) sudden and shocking arrival of Tervel's Bulgarian army, and most importantly, the use of a dangerously flammable substance invented by the Byzantines, an unknown mix of various ingredients that may have included naphtha, saltpetre, petroleum, pine resin, calcium phosphide, quicklime, sulphur and niter, that was called sea fire (Ancient Greek: pyr thalssion) or Roman fire ( pyr rhomakn), but is called Greek fire in modern historiography due to the Crusaders thinking that the Byzantine state was an Empire of the Greeks.

The basic objectives and tactics of a military investment have remained the same in the modern era. During the Second World War there were many sieges and many investments. One of the best known sieges of World War II, which demonstrated the tactical use of investment, was the siege of Stalingrad. During the first half of the siege the Germans were unable to fully encircle the city, so the Soviets were able to get men and supplies in across the Volga River. In the second half of the battle, the complete investment of Stalingrad by the Soviets (including air space which prevented the construction by the Germans of an adequately large airbridge) eventually forced the starving Germans inside the city to surrender. It was thus also the turning point of the Eastern front, when the Soviets began their push back, the end of their defensive campaign and the very beginning of their offensive one to ultimately take Berlin.

View post:
Investment (military) - Wikipedia

The talk around the table Aug. 16 sounded knowledgable enough. Apple was doing well, but the prevailing consensus is that its overvalued. Costco has also been strong, but a lawsuit from Tiffany & Co. was something to watch. Netflix had also been a good buy, but Disney announcing it would create its own streaming service could hurt the price.

The discussion was happening far from any stockbroker's office, in a conference room at Friends In Deed. Seven people gathered for the monthly meeting of the Profit Investment Group, a small group of Green Valley residents who jointly invest in the stock market. While all knew next-to-nothing about the market when they started, everyone said they have found the experience educational, not to mention profitable.

Each club member is charged with following one of their stocks and preparing a report on how it has done in the past 30 days and what experts say about its health going forward. The group currently owns stock in seven companies, from Apple to Yum! (the parent company of Pizza Hut, Taco Bell and KFC). Part of the discussion centered on diversifying and looking at financial companies such as Visa or American Express.

After a thorough reporting of their portfolio, the club decides by vote count whether to buy more stocks, sell what they have or hold for another month. At its August meeting, they decided to sit tight for another month and re-evaluate whether they need to shake up their investments. That month-to-month rhythm is the normal routine, but, in case of swifter developments in the market, an emergency group including the president, vice president and secretary can meet to respond more immediately.

All members pay a minimum of $25 a month to invest, though if 20 percent of the club's money is coming from one person, that person cannot give any more. New members must attend three meetings before they are allowed to start kicking in their own money. While they once had 20 members, today they are at seven.

Dave Armstrong, the club's president and a member since 1999, said that while stocks have fluctuated, not a single members has ever lost money investing with the club. Everyone has received a 100 to 200 percent return. Even the market downturn in 2008-9 didn't affect their bottom line, he said. Their stocks performed normally and without problem.

One of the only downsides is when someone has to leave the club. The club needs to sell stock to return their investment, which means potentially getting hit with capital gains taxes.

Armstrong is one of the more seasoned members of the group now, but when he started his only experience with the market was the employee shares from General Foods during his working years.

And while the financial gains are nice, Armstrong said he views the club as a non-threatening way to expose oneself to the stock market. The stakes are generally low and the group has been successful.

Nobody has their life savings in the club, he said.

Graham Kidde has been a member for less than two years, having heard about the club through a neighbor while poolside one day. He used to have a stockbroker and an account for his wife, but it was the club that gave him an in-depth view on how to evaluate stocks. That's what he likes he now knows how to more objectively pick a company that will return good dividends.

They are very thorough about their evaluations and don't make knee-jerk reactions, Kidde said.

That's not to say there haven't been missteps. In March, the club looked at investing in PayPal, with the stock at $42. It had dropped recently and the members decided to wait until it reached $41 before buying. Except it went up. And up again. Eventually, they pulled the trigger at buying it but at $58 a share.

Years ago the group also bought shares in Harley-Davidson, but sold them quickly after two months. Shortly thereafter the stock shot up, leaving the members kicking themselves. The rule now is that the club must hold onto a stock for three months before they can sell it.

Ellen Besse has been a member since 2007. She decided that she should learn about the stock market shortly after retiring as a librarian. She was part of a similar organization in her native Indiana, but with one key difference it was all women. That group had been very conservative, willing to sell stocks at the first sign of trouble. The mixed group here is a little more daring and willing to take more risks, she said.

It doesn't matter, she said, that they all started and in many ways still are stock market neophytes. In fact, active stock brokers aren't allow to join, though Armstrong points out that none has ever applied.

Besse said that's the whole point. The group is intentionally a gathering of novices gaining experience through trial and error.

Everyone in the stock market can't be Warren Buffet, she said.

David Rookhuyzen | 547-9728

See more here:
On the money: Local investment group sends novices into the market - Green Valley News

Editors Note: Making other countries more effective U.S. security partners is a vital part of counterterrorism, counterinsurgency and U.S. foreign policy in general. Yet it seems to fail often, and support for such aid appears to be declining. Part of the problem may be in how the United States does such assistance. Stephen Tankel of American University and Melissa Dalton of the Center for Strategic and International Studies argue that the United States should reverse its traditional approach. Instead of punishing partners that don't live up to their end of the bargain, the United States should reward those that docarrots, in other words, not sticks.

***

Security assistance is an expensive tool of statecraft, even if it is just one component of a total foreign aid allotment that represents only about one percent of the total U.S. budget. In FY 2015, the tab totaled an estimated $16.8 billion. Security assistance includes all grant assistance programs through which the United States provides defense articles, military training, and other defense-related services. The United States uses this assistance not only to build the capacity of allies and partners, but also to try to shape their behavior. Though this latter effort often fails, recipients rarely suffer the consequences.

A rare exception occurred last week. Trump administration sources acknowledged that the United States plans to withhold up to $290 million in aid to Egypt over democracy and human rights concerns. This is likely to prompt renewed debate over whether U.S. security assistance can be leveraged to promote behaviorial change in a recipient country. The decision was particularly surprising because President Trump has exhibited little interest in promoting democracy or human rights concerns. Yet perhaps it should not have been considering that he is skeptical about helping other countries deal with their problems, especially given the costs involved. Many Americans appear to share his skepticism.

The critics have a point. The reality is, the U.S. government has few mechanisms to reliably track how its security assistance dollars are performing in terms of return on investment for meeting strategic and policy goals. There have been a number of steps taken in the last three years to start to change that, through executive and legislative branch action. However, even the most ardent supporters of alliances and partnerships must acknowledge that the return on security assistance is often lower than it could be. More than merely wasting taxpayers dollars, this damages U.S. credibility and reinforces the belief that maintaining alliances and partnerships is simply not worth the costs involved.

We firmly believe security assistance should remain a critical pillar of U.S. statecraft. We also believe the United States could get a better rate of return on some of these programs by changing the way it conditions assistance. Changing the way the United States conditions assistance could change that for the better. This will not solve the problem of how to optimize our relationships with other countriesthere is no silver bullet for thatbut it would help the United States get more bang for its buck. This is a sentiment that should appeal to the dealmaker-in-chief.

The Swiss Army Knife of Statecraft

Security assistance objectives can be grouped into two buckets:

The first set of objectives falls under the umbrella of building partner capacity, which has become a catchall for a wide array of programs. This set of objectives includes building the capacity and capabilities of recipients to operate independently against shared threats; buttressing the military strength of friendly countries to positively influence the balance of power and provide deterrence and assurance in a given region; supporting coalition partners that assist the United States in an ongoing conflict; promoting interoperability to enable joint military missions; reducing internal instability and promoting governance and rule of law in countries where threats to the United States could manifest; and professionalizing partner forces.

Wielding influence and securing tactical cooperation is the second. This may translate into trading assistance for access to bases, airspace, or other transit routes. The United States sometimes uses assistance to incentivize short-term tactical cooperation against shared threats. In other cases, assistance is intended to reassure allies and partners of Americas commitment to its security, either in general or against common enemies. Here it is worth noting that plans to slash the State Departments budget and cut foreign assistance compound concerns about U.S. abandonment and further reduce American influence. Finally, the United States has tried, often without success, to use assistance as a lever to shape a recipients behavior either domestically or internationally.

As a result of competing priorities, the United States often chooses not to condition assistance ... or attempts to do so in an ad hoc manner.

Some U.S. objectives overlap with one another. Others conflict. And lest we forget, our partners also get a vote. American objectives for security assistance often do not align with theirs, due in large part to differences in how the United States and a recipient prioritize and perceive threats. The number of different objectives at play complicates efforts to condition assistance; enforcing conditions to achieve one set of objectives could hamper efforts to achieve another set. For example, after the Bahraini governments security forces launched a major crackdown on protesters during the Arab uprisings, the United States temporarily restricted arms sales to the country. Some members of the Obama administration also argued for placing conditions on security assistance. Others worried that this would undermine Bahrains support for U.S. basing and access, which is important for Afghanistan, Iran deterrence, and counterterrorism operations. As a result of competing priorities, the United States often chooses not to condition assistance, as was the case with Bahrain, or attempts to do so in an ad hoc manner. Worst of all, the United States sometimes imposes conditions, but then blinks first and backs down when they are not met.

Playing Chicken with Assistance

Any conversation about conditioning assistance should begin with what fails to work and why. Failed efforts to change a recipients behavior by conditioning assistance often share one or more characteristics. First, these efforts are almost always unilateral, meaning the United States imposes conditions without negotiating with the recipient in advance. Conditions are also sometimes retroactive, which is to say they are placed on already existing aid packages, which the recipient may view as an entitlement. This has been the case with Egypt.

Although Congress appropriates and authorizes this assistance every year, the United States has traditionally provided foreign assistance to both Egypt and Israel since the 1979 peace treaty to smooth security cooperation and maintain a balance of power between the two countries. Egypt has received $1.3 billion in military assistance per year since 1987. Following Egypts waves of authoritarian crackdowns in 2013, the Obama administration temporarily froze F-16 aircraft deliveries and other equipment to the Egyptian military. It lifted the hold two years later following improved relations with Egypts President Abdel Fattah el-Sisi and amid growing concerns about jihadist insurgency there. Some U.S. lawmakers objected to the decision to lift the holds, pointing out that Egypt had failed to follow through on governance reforms. The administrations decision to lift the holds also may have been an acknowledgement that they were not effectively changing Egyptian government behavior. In parallel, the U.S. administration also began to restructure U.S. assistance for Egypt to focus more on counterterrorism, deemphasizing large conventional arms sales that had historically been a feature of the relationship. Throughout this period, Egypt viewed these restrictions as an affront to its decades-long assistance relationship with the United States. Notably, Egypt and Israel are two of the few countries that would not see its foreign military financing (FMF) shrink in the Trump administration.

The Trump administration has reportedly expressed concerns over Egypts implementation of a law restricting the activities of NGOs to development and social work, as a way for the Egyptian government to further constrict popular dissent and civil society. As a result, the U.S. administration is reprogramming $65.7 million in FY 2017 FMF (as well as $30 million in FY 2016 Economic Support Funds) and withholding $195 million in FY 2016 FMF, the latter pending Egyptian improvement on its human rights and democracy record. Egypts view that it is entitlted to its annual FMF appropriation, along with the importance of the U.S.-Egyptian security cooperation relationship, will likely obstruct meaningful changes in Egyptian government behavior with respect to democracy and human rights.

[T]here is often an imbalance between what the United States is asking and what it is offering, as well as a misperception of the degree of leverage the United States has to get what it wants.

Second, although the executive branch can place its own internal conditions on releasing assistance, it is Congress that can mandate by law whether or not money is spent. Legislators are often reluctant to tie the hands of the executive branch and so build in waivers on the conditions they devise. This creates situations in which Congress imposes conditions and the administration caves (and waives) when the conditions are not met, usually for overriding U.S. national security imperatives. This cycle of imposing conditions and waiving them has been most evident in the case of Pakistan, where the Obama administrations worries about jeopardizing access to Afghanistan or losing other limited counterterrorism cooperation overrode congressional attempts to change Pakistans behavior in terms of supporting various terrorist groups and correcting the civil-military imbalance in the country. Over time, this pattern eroded the credibility of the conditions. There are fewer examples of Congress imposing conditions that cannot be waived, but here the record is not especially promising either.

Third, there is often an imbalance between what the United States is asking and what it is offering, as well as a misperception of the degree of leverage the United States has to get what it wants. As one of us found in a recent study and the other demonstrates in a forthcoming book, the non-compliance costs for the partner must be higher than the costs of adherence. Conditions are unlikely to work if they are intended to realize changes in behavior that would require a recipient government to alter its vital national interests or elites in that government to cede power. For example, after the Arab uprisings, the Sunni-minority regime in Bahrain dispatched its security forces to crack down on Shia protesters seeking governance reforms. The United States tried to use negative conditionality (placing a hold on assistance) to halt this behavior, but to no avail. When negative conditionality fails, this puts the United States in a precarious position because it must be prepared to stand firm. Yet, if a recipient is providing a good that America is loath to loseas was the case in Bahrain, Pakistan, and Egyptthis makes it easier for that country to refuse entreaties on other issues and keep assistance flowing. This damages U.S. credibility and encourages countries to extract as much assistance as possible, while doing the minimum in return. It also makes defending the utility of security assistance more difficult.

Implementing Positive Conditionality

Negative conditionality, which is what many people think of when the idea of conditioning assistance comes up, entails threatening to end, suspend, or reduce assistance if conditions are not met. Positive conditionality, which has been used for years in the development world, promises assistance in return for good behavior that is defined in advance. Rather than authorizing aid and then withholding it, the United States would identify positive actions that a recipient is consideringor at least open to takingand then incentivize them. Critically, we argue the process of identifying these actions and benchmarks to measure them should be done in consultation with the recipient. This would help to reduce the potential for mismanaged expectations on either side and get the recipient more invested in the process, signaling that it is a partner and not merely a proxy benefiting from U.S. paternalism. It would also reduce the chances for caving by the United States. Positive conditionality may also be the most optimal route for cases where the United States has little leverage over a recipient, but where the recipient desires further U.S. engagement and investment. We envision at least three different ways to implement this approach.

First, draft a memorandum of understanding with the partner nation that articulates a road map for the relationship. Currently, all grant security assistance to U.S. foreign partners carries conditions to ensure that the partner implements the assistance according to an agreed upon schedule and plan. In reality, this mainly guarantees that the partner can absorb the assistance and that sustainment needs are met. There is no established policy framework for leveraging security assistance to achieve broader foreign policy goals. The type of roadmap we envision would address this deficiency. It would include the shared goals of U.S. assistance, metrics for success, methods of measurement, and the consequences for the partner if these metrics are not met. For example, the United States might tie additional or more sophisticated assistance to benchmarks for reforms. Such a document should be classified or kept in sensitive channels to ensure maximum frankness in crafting the document and to enable deft diplomatic and public messaging on both sides.

Second, tie the ongoing provision of a certain piece of equipment or weapons system to its use for a specific, measurable purposesuch as a shared operational objective like clearing, securing, and transforming terrority from a terrorist organization and transitioning it back to civilian authorities. This would be more expansive than current end-use monitoring, which mainly aims to ensure that arms and equipment are not misused and remain within the security force to which they are assigned. We envision using their provision as a way to incentivize certain actions, for example by providing specific munitions on the condition that the recipient takes certain actions with them that meet U.S. security objectives. A key to this type of conditionality lies in providing specific goods that other countries do not manufacture, thereby enabling the United States to control the flow of these goods based on a partners behavior. These goods must also be consumable, unlike a weapons platform that can be reused and which is not easily taken back.

Third, set aside a portion of the total amount authorized for security assistance to the partner for a grant program modeled on those administered by the Millennium Challenge Corporation (MCC). In the MCC process, partner nations identify their priorities (for achieving sustainable economic growth and poverty reduction in the case of MCC money), and work with MCC teams to refine an assistance program. Countries must also meet certain criteria to qualify for MCC funds, the monitoring of which is typically rigorous and transparent. In a security assistance model, partners could be rewarded for achieving strategic and military goals that tie to sustainable governance and stability. Higher order or more difficult goals could be matched with a greater degree or sophistication of security assistance, with partners being able to graduate to more competitive grant levels once lower threshold goals are met.

In cases where MOUs are signed, negotiating roadmaps that include longer-term milestones could also ameliorate partners anxieties about abandonment. Positive conditionality is unlikely to prompt major changes in a partners behavior, but neither is the current approach toward assistance. The approach outlined above could promote tactical shifts in behavior or incremental steps toward reform that might have strategic effects over time. The U.S. security assistance relationship with Lebanon, particularly in the development of the Lebanese Armed Forces (LAF)s special operations forces (SOF) to counter Sunni extremist groups in Lebanon since 2007, can provide examples of rewarding performance with increasing capabilities. This assistance helped Lebanese SOF retake control of a refugee camp fromFatah al-Islam, an al-Qaeda associated terrorist group. Today, Lebanese SOF are a critical partner in ensuring the Islamic State and al-Qaeda affiliates do not seep through the Lebanese-Syrian border.

Finally, where capacity buildingvice cooperation or reformis the objective, positive conditionality can ensure that the partner is investing its own funds to support or sustain the capacity being built. Investing earlyi.e., before a crisisprovides additional space to take a firmer line with partner forces. This is not always possible. Where it is, the United States should seize these opportunities.

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How to Improve Return on Investment for Security Assistance - Lawfare (blog)

Whats the best-performing exchange-traded fund, mutual fund or index for 2017? An ETF that invests solely in bit-coin, the virtual currency. This ETF posted the highest year-to-date return through July, of 185 percent, according to Steele Expert, a database of mutual funds, ETFs and indices produced by Steele Systems, Inc. In comparison, the S&P 500 Index returned about 11 percent.

The same ETF beat all others over the three-year period ending July 2017. The ETF posted the highest three-year total return, 352 percent (65.4 percent average annual return). In comparison, the S&P 500 Index returned about 36 percent (10.7 percent average annual return).

The ETF has about $475 million in assets under management and invests in bitcoin, which according to its disclosure is currently unregulated, highly speculative and volatile.

If you have not followed the development of bitcoin since its introduction in 2009, let me share some basics. A virtual currency, bitcoin is an alternative payment system to currency issued by governments. A FINRA Investor Alert on bit-coin, called Bitcoin: More Than a Bit

Risky, puts it this way: Think of [bit-coin] as a sophisticated computer program that encrypts, verifies and records bitcoin transactions.

FINRA, the Financial Industry Regulatory Authority, regulates all securities firms doing business in the United States. Bitcoin is created by mining.

Quoting from the alert: Like mining for gold, the process is labor-intensive. Mining serves two purposes. First, miners use software algorithms to add transaction records to bitcoins public ledger of past transactions and verify legitimate bitcoin transactions. For their efforts, bit-coin miners get transaction fees. In addition, if the miner finds a new block, the miner is awarded new bitcoins. A finite number of bitcoins can be mined (21 million, based on the mathematics underlying bitcoin mining).

You can buy bitcoins online and at exchanges, but you dont get a physical paper or coin in exchange. Instead bit-coin exists in a digital wallet. The value fluctuates, and in fact is extremely volatile, and subject to wide price swings, according to the alert.

As a result, both regulators and speculators have been drawn to this virtual currency. Speculators are attracted by the possibility of outsized returns (and, as with any speculative investment, there is a potential for outsized losses).

And regulators raise warnings. Let me quote further from the alert.

Buying, selling and using bitcoins carry numerous risks: Digital currency such as bitcoin is not legal tender. No law requires companies or individuals to accept bitcoins as a form of payment. Instead, bitcoin use is limited to businesses and individuals that are willing to accept bitcoins. If no one

accepts bitcoins, bitcoins will become worthless.

Platforms that buy and sell bitcoins can be hacked, and some have failed. In addition, like the platforms themselves, digital wallets can be hacked. As a result, consumers can and have lost money.

Bitcoin transactions can be subject to fraud and theft. For example, a fraudster could pose as a bitcoin exchange, intermediary or trader in an effort to lure you to send money, which is then stolen.

Unlike U.S. banks and credit unions that provide certain guarantees of safety to depositors, there are no such safe-guards provided to digital wallets.

Bitcoin payments are irreversible. Once you complete a transaction, it cannot be reversed. Purchases can be refunded, but that depends solely on the willingness of the establishment to do so.

In part because of the anonymity bit-coin offers, it has been used in illegal activity, including drug dealing, money laundering and other forms of illegal commerce. Abuses could impact consumers and speculators; for instance, law-enforcement agencies could shut down or restrict the use of platforms and exchanges, limiting or shutting off the ability to use or trade bitcoins.

To read the Investor Alert, go to http://tinyurl.com/y94xt7s2

Also of interest is the bitcoin index (NYXBT).

On another note, not connected with the EFT, the Securities and Exchange Commission suspended trading of the securities of a bitcoin company incorporated in Canada Thursday through the morning of Sept. 7.

The reason: Concerns regarding the accuracy and adequacy of publicly available information about the company including, among other things, the value of [the companys] assets and its capital structure.

You can read more at the following link: https://www.sec.gov/litigation/suspensions/2017/34-81474.pdf

Should you buy a speculative ETF based on soaring past performance? My regular readers know the answer: Only if you are a gambler who can afford to lose the entire investment.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford, Conn.) and award-winning author, welcomes your questions/ comments (readers@juliejason.com). To hear Julie speak, visit http://www.juliejason.com/events

More:
Bitcoin shows big returns, but remains a risky prospect for investment - Norman Transcript

Greg Stiles Mail Tribune @GregMTBusiness

There is a gold mine so to speak on a 37-acre patch of land off Voorhies Road.

Eden Valley Orchard and EdenVale Winery are rich in agricultural history and encompass a potential enological motherlode.

Soon after Anne and Tim Root acquired the property in 1999, they sought approvals and permits that could one day turn the estate into a premier food and wine culinary destination as Southern Oregon's upstart industry matured.

That day is nearing, and the Roots are looking for someone to develop and transition Eden Valley and EdenVale into a marquis event and tourism location centered around wine. It comes at a $6.6 million price with the commitment to invest much more than that.

"This is an attractive winery property with a great location between Ashland and Jacksonville, where a good part of the tourist travel circulates through our valley," Anne Root said. "We have the great history of pear agriculture going back to 1885. I saw that this property at some point could be the centerpiece of the region."

Root did a rough master plan in 2000 for the acreage surrounding Voorhies Mansion, a National Register of Historic Places property that was completed in 1898. A pear orchard screens the estate from the road and a vineyard producing a dozen varietals borders the backside. The winery built in 2003 now incorporates pear cider into its annual production. In addition to an unlimited winery permit, Root obtained approvals for a conference center and 100-seat restaurant to go with the amphitheater that handles crowds of 2,500 or more.

A buyer or partnering organization will have to possess similar visionary traits.

"It's going to be a complicated acquisition for somebody," she admitted. "Essentially, what we're selling is the development rights. Someone will have to come in and invest $30 (million) or $40 million. A lot of cool buildings need to be built to handle the education part, and the conference and hospitality part."

Just as Asante Foundation is growing the Oregon Wine Experience well beyond the region, Root sees the potential for Eden Valley Orchards to become an upscale wine, culinary and hospitality center. She envisions a culinary education component similar to what Greystone Cellars offers in the Napa Valley.

"Our hope for this project is to find someone to take it to the next level," Root said. "I wanted to do the background, infrastructure, and get the thing set up. But I had never envisioned taking it to the next level, which is a regional destination location. We're wanting someone, or an organization, that has the capacity and heart to do that, to preserve the history, showcase the history, and make this an integral part of our entire Southern Oregon region."

Joseph Stewart named his first pear orchard Eden Valley in 1885. However, there is an Australian Eden Valley Winery, so EdenVale was adopted for the winery to avoid trademark issues. The 8,000-square-foot winery was designed to expand and adjust to future needs.

"In 2003, there wasn't much of a wine industry here, and we didn't know the direction it was going," Root said. "So we built in all sorts of potential that you could expand, or go different directions."

More important, however, was the 2001 approval for unlimited winery production.

"It's a real asset," she said. "It's unusual to have unlimited winery production out in the rural countryside, anywhere in Oregon. We can accommodate any size production that a future buyer might want."

The vineyard on the property is for demonstration purposes, with grapes used to produce EdenVale's annual average of 4,000 cases acquired from nearby vineyards. But there is room to develop additional pear blocks or plant more grapes, Root said.

With large organizations such as Santa Rosa, Calif.-based Jackson Family Wines always on the hunt for new brands, vineyards and property, Root's aspirations for Eden Valley aren't far-fetched.

Liz Wan, an Applegate Valley wine consultant, said one only needs to look north to the Eola-Amity Hills American Viticultural Area to see a transformation in the industry as major players invest in existing operations.

"We're seeing large winery operations continue to blossom and build," Wan said. "You're seeing it from California to Washington, there is a globalization of wine expertise."

Reach reporter Greg Stiles at 541-776-4463 or business@mailtribune.com. Follow him on Twitter at http://www.twitter.com/GregMTBusiness, and on Facebook at http://www.facebook.com/greg.stiles.31.

Continued here:
Investment opportunity? - Mail Tribune