BITS of advice and AND FITS of regulators. This is the last weekend of the year, next week the beginning of the second year of the Millennium, the real one according to the mathematicians. As a schoolchild growing up in remote Bermuda (yes, it was), we thought reaching the year 2000 was over the hill and far away. After all, who could plan almost 50 years ahead? Who knew if you'd really be here? Amazingly, and due in main part to living in a civilised caring community, most of us are still here and moving proactively forward; new history in the making.

It's time to say goodbye to one of society's worst years on record in terms of human tragedy, investment markets, and personal emotional suffering. It's time to carry on and not to look back. It's time to apply every single bit of positive radiant energy we possess to make this year better. And while unemployment and consumer anxiety remains high in the United States, overall the markets are looking a tad better, too. At the investor confidence crossroads once again, the time factor of probability seems ready to swing positively, as historically, capital markets tend to recover nine months to one year ahead of a recessive economy.

Investing for the individual investor was tough last year. Along with the challenge of picking the right investments, there is always the chance the investment may not be exactly what it seems. You will do yourself a favour by checking from time to time, Internet websites for scams, frauds, and the latest scheme developed to relieve trusting investors of their hard-earned money. The expression, "a fool and his money are soon parted", sounds like so terribly condescending, almost rude. The reality is that investors are smarter and wiser than they used to be, and very canny when it comes to assessing products.

Unfortunately, investors and many thousands of want-to-be retirees have been subject to pure abuse of trust by highly paid individuals and companies of stature who did not do the honourable thing. You may have read about the prospective retiree employee at Enron who watched 30 years of pension benefits virtually disappear. For these individuals, the future looks very bleak indeed. Should the responsible executives of this company, if tried and found guilty, be charged and sentenced as felons? In a bank robbery, if the same amount had been heisted, federal courts would have tried, most probably convicted, and sentenced to maximum time by now. Is this kind of white-collar crime any less heinous? As all sides line up now with expensive, intense attorneys, the average shareholder/employee gets to pick up the pieces and try again, knowing there is precious little time, recourse, or available funds left for recompense to be made whole.

A look at the The United State Securities and Exchange Commission website (www.sec.gov) notes that in the last year, 81,507 complaints and questions were received, an increase of 88 percent in the last six years. Traditional broker-dealer complaints continued to rise for the third consecutive year, no surprise there given the huge increase in investment activity. Among the top ten types of complaints, transfer of account problems, errors/omissions in account records, and the worst of all, margin position sellouts, which figured at the top of the list. Since aggrieved customers filed many lawsuits last year claiming incomprehension and misunderstandings as to relative margin account terms, it certainly appears that legitimate strategy or not, margin accounts are not easily understood and are not suitable for the average investor. Losing half of your portfolio in one fell swoop is a lesson most people would rather not experience.

Borrowing on margin is the process whereby the broker-dealer loans you 50 percent of the market value of the portfolio you have placed with them. If the value of those stocks suddenly drop by one-third, two thirds, the broker-dealer will liquidate your portfolio, and can do so in many cases, without even notifying you, to satisfy the debt. You are legally bound to repay the margin account if you get a margin call; in many instances, investors have had their homes attached (and sold). How many investors would really put their families' future in this kind of jeopardy? Investor psychology reports indicate far more than you think. Customers are not always victims even in legitimate investing as unrealistic expectations of instant wealth plays a part in the emotional decision making, rather than rational well-thought out choices.

Online trader broker-dealers received even more complaints at the SEC. Since 1997, complaints have risen over 814 percent. And the litany of errors are the same as traditional firms, just more of them, margin position sellouts, transfer of account problems, errors in processing, etc. plus two Internet related issues, failures/delays in processing orders, and difficulty in accessing accounts.

The SEC site also has a list as long as your arm of their current litigation cases, as the imagination of those who would soon part you from your money knows no limits. Along with Dunyasha Yetts, Dublin, Ohio who owned World Wide Sports Group, a sports agency. Not content with representing highly paid or overpaid athletes, he turned to running an unregistered broker/dealer firm. The only problem is that the only stock he was investing in on behalf of his clients was the stock of D. Yetts.

The ultimate scavengers prey on fear; another firm purportedly developed an anti-anthrax wand that you waved prior to entering your home. It, of course, possessed magical powers to rid your entire abode of these dangerous spores. This miraculous claim was not, of itself, enough to gain SEC notice, but then the principals decided to inundate investment websites with stories of the rising value of their stock, thereby escalating the price. They then sold their shares at the high leaving all the investment chat room investors to absorb their losses. Otherwise known as pump and dump, these tactics get immediate SEC reaction.

What is truly amazing is that these lists go on and on, with depressing monotony, the same fraudulent tactics are tried again and again. In the largest settlement ever levied against a broker, formerly employed at Paine Webber, the New York Stock Exchange fined him $409 million dollars for acts of fraud, forgery, breach of fiduciary duty, self-dealing and other heinous acts.

The last two years have been extremely rough on financial advisors as well. From all accounts, those who spent considerable time talking to their clients, calming their fears, helping them focus on their long-term goals, working to help their clients attain financial security, have survived and thrived. Those who raised clients' fears and anxieties by lack of contact, lack of information, or insistence on paths of choice the client was not comfortable with, will continue to lose clients. The best type of financial advisor sticks with the client through thick and thin, by focusing on the clients' best interests. This group will gain satisfaction and recognition in ripple effects beyond measurability in the years ahead.

Get smart financially this year. Shop carefully for the advisor to invest with, and for what you decide to invest in. It can be done, and it can be done well. There are many good advisors out there. But remember that in today's markets anything above a 4-5 percent return that is guaranteed, IS NOT. Use those numbers as a benchmark, and if still unsure, look for tangible proof. One last thing, avoid sending your money to a nameless, faceless Internet site. Always ask, how can you physically recoup your investment? A visit to any of these websites may convince you that I am not a broken record, but an advocate of client choice.

sec.gov

www.nasd.com

www.nasaa.com

www.nyse.com

or simply go to google.com and type in ..search for securities exchanges.....The information is there, use it to your benefit.

Martha Harris Myron CPA CFP is a Certified Financial Planner (TM) (US) practitioner. She holds a NASD Series 7 license, is a US tax practitioner, and is the winner 2001-The Bermudian Magazine - Best of Bermuda Gold Award for Investment Advice.

Confidential E-mail can be sent to:

marthamyronnorthrock.bm

The article expresses the opinion of the author alone. Under no circumstances is this advice to be taken as recommendations to buy or sell investment products or as a promotion for financial plans.

The Editor of The Royal Gazette has final right of approval over headlines, content, and length/brevity of article.