Dear Readers,One reader wrote in with the following suggestions for additional articles. I thank this individual for following the Moneywise column and providing this feedback. As always, I am very grateful to receive comments and inquiries on a reader’s interests or financial situations. All personal inquiries are entirely confidential.“Holding a diversified fund low-cost index fund, perhaps mimicking the S&P often produces a return exceeding the returns of most hedge funds, mutual funds, ‘fund-of-funds’ etc — with much less fees are offered by major US institutional mutual fund firms, along with low cost exchange-traded funds (EFTs), again with very low fees.“My question is what is the downside of doing this as a Bermudian?“How long are US Internal Revenue Service’s tentacles on things like capital gains, withholding taxes, death taxes, even if the investor is a Bermudian with no obvious ties to the United States?“We understand that there are considerable compliance forms to be filled out in a timely matter, but this idea might provide more diversification — that is only for funds earmarked to long term investing, and allocated in an appropriate percentage of my portfolio.“The upside might be adequate returns, low fees, diversification among financial institutions, so not keeping all your eggs in Bermudian financial institutions while also diversifying among more than one currencies, i.e. US, BDA$, etc.” (Edited for personal content)This great set of questions from an interested reader will generate a pretty lengthy report on its own.However, we will combine these questions in conjunction with an overview of current investment markets. Look for specific segments as listed below for the next few weeks, interspersed with other financial and economic events.Investing in capital markets isn’t what it used to be.It is very different place now for the individual investor, or is it?It is said that the capital market environment has become so sophisticated that only the investing gurus with advanced degrees in quantitative analysis and advanced mathematics combined with IT technology can take a real place at the table.Is there still a place for the small individual investor? Or should they pack it in?As another reader said recently, “I have given up on any individual security acquisition or running my own portfolio. I’ve liquidated everything and put my cash into a group of diverse high grade mutual funds.”He had simply had the constant feeling of complete loss of control in his rather ordinary investment plan that had provided comfortable appreciation in the past.Exacerbated swings of volatility, uncertainty about market manipulation, inability to understand the oblique side of an options trading position (for instance), along with unexplained unpredictability above the normal processes that left him decidedly worried about an abrupt major loss in his retirement portfolio.These comments came from an experienced long-term investor, who now prefers not to compete with proprietary computer-drive investment models.There are a number of reasons that the investing environment has changed, aside from change evolution itself: a natural progression through technology that many mature investors have witnessed first hand, starting with stock buy/sell orders submitted on paper; market makers controlling the market; brokers trading on floors of exchanges, and related processes.But, there is one very important thing to remember.The basic concept of investing hinges upon investment securities that are bought or sold in shares (and other types of securities, and instruments) based upon the underlying value of public company capital strength and financial performance.Yes, there are other investments such as currency, where the underlying value is based on the country of issue and its economic standing in the global markets.So, we shall explore some areas of investing as below.I welcome comments and feedback from readers for additional material ­— all to be added to the Bermuda Investment Primer.A. The condition and sentiment of today’s marketPredictability of future events — when you lay your cash down, you’d better be sure that you can win (the trade), volatility, uncertainty, low volume, electronic trading, middle men now an anachronismdirect to direct, but who knows who that person (or robot) is on the other side?B. Investment Choices in the marketBuy and hold, selected individual securities, bonds, stocks — volatile small cap, dividend, staid large cap, ETFs, mutual funds, options, currency trading, private equity — which is a different story, but visible none the less.C. The competitive investors in (and out of) the marketInsider trading — why are they selling in this market environment and why are small investors buying?Short sellers, commodity speculation, financial institutions and very large players, high frequency traders and computer-driven models. What happened in the Knight trading event?D. Economic and government policy effect on marketsInflation, politics, sovereign debt, recessions, catastrophes.E. Social media influencing the market• Twitter — is the Tweeter a real person, or a fake account, with ability to act almost instantaneously• Blogs, some real experts, some not, some conflicted, but the constant chatter can be a distraction• Financial physical media — some quietly expert, others loudly aggressive, and some utterly obnoxious financial talking heads, talking down to us while using jargon.If some individual is not screaming at us from the Big Screen, he/she (particularly a certain she) is putting down some influential investor guest — who nine times out of ten know nine times more than she does. Can anyone believe anything these people say?Whenever I watch them, I cannot help thinking, I wonder who really is paying their salaries.• Social media and socially correct investments• Market analysts• Investors themselves — their behaviour could be the best predictorsF. Cost to be in the market• Fees — DYI — do-it-yourself• Fees — the role of your advisor• Fees — generic mutual funds versus direct investing in your own account versus etfs• Fees — for compliance — citizenship, jurisdiction and taxationG. Lack of current information versus complete saturation of information, picking the truth out of the detritus of millions of search sites.• Unexpected unrealised losses• Taxation effect and drag on return• Trade or business• Investment opinionators — conflicts of interest in business investing media but what about those investment news letters who own no investments. Do they have more credibility?• Who can you trust?If you are not feeling confident right now about investing, it is well to remember a couple of things.Even a genius’ fails, spectacularly. Read at your leisure “When Genius Fails: the Story of Long-term Capital Management.”Martha Harris Myron JP CPA PFS CFP is a Bermudian journalist and a cross border financial planning specialist focused on offshore financial perspectives for international citizens living, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle: United States, Canada, United Kingdom, Europe, and the island of Bermuda, the premier international finance centre.President of Pondstraddler? Life™ Consultancy. Publications, Presentations and Seminars. www.pondstraddler.com inquiries to info@pondstraddler.com