I must be fully on West Coast time, because these morning reads are coming out later and later each day:
• Test drive of a petrol car (Tesla Club Sweden)
• Bernanke Inc.: Lucrative Life of a Former Fed Chairman (Bloomberg)
• Why words are the new numbers (Chicago Booth School of Business)
• The Amazon Web Services IPO (Stratechery)
• Conflicting Finance Narratives (A Wealth of Common Sense) see also No… Investors Haven’t Underperformed Every Asset Class (EconomPic)
• 20 charts suggest the slump is behind us (Grannis)
• Five really good reasons to hate millennials (Wonkblog)
• Here’s the Secret to Getting Way More Done During the Day (Time)
• Twitter data show that a few powerful users can control the conversation (Quartz)
• Robotic telescope discovers three super-Earth planetary neighbors (UC Berkeley) see also Is the universe a hologram? (Eurekalert)
What are you reading?
Happy Flash Crash anniversary!
BILLIONAIRES VS BIG OIL
“A growing number of the world’s wealthiest people, from both ends of the political spectrum, are banding together to bet on new technologies that could displace fossil fuels. The one thing they have in common? They believe it will make them a lot of money.”
Oregon Supreme court nixes the legislative fix for the state and local pension reductions. Oregon and possibly other states have to react.
I am pleased that EconomPic is taking on that Bernstein chart. The Bernstein chart notes that the investor returns are “net of mutual fund sales, redemptions, and exchange each month”. Since mutual funds are being compared directly to theoretical indexes, the Bogle argument about costs comes into play in a major way. When you couple this with the dollar-weighted timing that EconomPic looks at, it is clear that there is no way the average investor could have done well.
There were very few low cost index funds available to most small investors in their IRAs and 401ks in 1993. Most 401ks and IRAs would have offered funds with expense ratios of 1% or more. Many of the major shops would also have had 3% to 5.75% front-end loads as well although they were often waived for 401ks, but not IRAs. As a result, once EconomPic is done with the dollar weighting and comes up with a 4% average expected return for a 60/40 portfolio over that period of time, you can then simply subtract another 2% for what the financial industry has been extracting each year from the average investor in fees, and voila, you get a 2% average annual return which is what Bernstein bemoans.
So the argument was previously made that the 2% return is due to bad investor behavior, whereas the math based on actual fund flows appears to show that it is a combination of a sequence of returns timing problem combined with excessive costs extracted by the financial industry. So it appears it is more of a bad behavior problem of the industry than the typical investor. I am still astonished that major assessments are being done on investor returns without specifically factoring in expenses given the demonstrated importance of costs.
It is clear that investors have gotten the memo on this based on the avalanche of money going Vanguard over the past 5 years. I expect that investors will likely do better over the next 20 years, if for no other reason than their average costs are declining.
This is so cool. Not even The Onion, SNL, or FoxNews could come up with this. We don’t need professional satirists anymore. We have Texas governors filling in for them instead.
Texans are concerned that Obama is mobilizing the military to take over Texas under martial law. Governor Abbot is mobilizing the National Guard to observe the military and make sure that they don’t take over Texas. Apparently, the recent ISIS-inspired shooting is the beginning of the false flag operation. The irony is that many of these same people are concerned that military funding will be cut.
its actually the state guard. which isnt very big by the way. not that it make the governor look any better. but what do you expect? its Texas
Personally, I find it highly insulting to the US military which have done a very good job since George Washington in respecting the ultimate authority of democratic, civilian government and generally not interfering with the civilian political process.
I may disagree with the US military leadership about their overall war-fighting strategies and tactics, military-industrial complex relationships, etc., but it has never crossed my mind that they would turn on the civilian leadership and execute a military take-over of a state at any time other than the Civil War when states actively seceded and they fought the Civil War under the direction of the President and Congress.
dont disagree, its just that Texas politicians (as most of these are) arent exactly the brightest bulbs on the planet.
Remember Bill Clinton’s Black UN Helicopters?
It’s the Republican playbook. Through incredibly loony stuff out there and see what sticks. investigate. Accuse. but never, ever, ever be accountable. Just come up with the next thing: Hillary Clinton’s Benghazi email server!
There’s an Uber for Everything Now (wsj http://on.wsj.com/1FPIowU)
Radio signals puzzled astrophysicists for 17 years. They were coming from a microwave oven. (vox http://bit.ly/1EXCcCk) google didn’t kill glass, it’s just making it sexier (fc http://bit.ly/1dNBCwM)
The great Chinese coal collapse (AEIdeas http://bit.ly/1F63AQx) did chanos keep his shorts? lol at my own
Tom Brady is a scumball
Texans never worried about the “goings on” over at Ft Bliss or on Ft Hood.
“The irony is that many of these same people are concerned that military funding will be cut.”
Tx. enjoys more than its share of military industrial complex largesse.
The F-35, as well as F-16 before, are assembled in an Army Air Corps aircraft plant in Ft Worth run by Lockheed. A lot of other contractors and all kinds of training, very large garrisons (Ft Hood in Waco comes to mind, as well as Bliss in El Paso, etc.), arsenals, and depots are in Tx. So slowing the filling of the MIC trough is an issue for Tx.
Interesting, Jade Helm is a special forces command exercise. Practicing things they have been doing for years. Practice makes perfect in the complex technology infused dance required to do special ops.
US special forces have never been caught overthrowing a government. Now if CIA were practicing……………..
rd @ 1:46pm http://en.wikipedia.org/wiki/Business_Plot
Exactly. The US military broke up the Bonus Army of unemployed veterans under Hoover’s orders.
BTW – the CCC and other “make-work” programs did a great job of re-establishing dignity for a lot of people as well as leaving in place a lot of infrastructure in the US that is still used today. I live near and use several parks where most of the roads, trails, and facilities were constructed by the CCC. We are missing an opportunity to do similar construction work for future generations. Instead, we lock up our unemployed youth because they have dime bags of drugs. And we wonder why our poor cities are starting to riot.
incomes in the US
if your in that 1% or higher, your doing really well.
obviously you arent
congress decided to not have scientists be scientists even though they claim to not be scientist.
what could go wrong when we ignore our own world? the only one we have?
God will provide fresh water to the red states.
Vanguard doing some of what Dr. Shiller recommended: giving the less wealthy more financial advising. To the majority of the rest of the ‘industry’ (NOT profession): your behavior is an embarrassment.
interesting solutions for aging related issues: