A common disclaimer in the investment business is that “past performance is not indicative of future results.” This is consistent with the Theory of Finance which argues that obvious advantages disappear quickly in a competitive market.
Everyone is asking: Can a Wirehouse RIA work?
Financial advisers will generally recommend what has become the standard asset allocation, which is 80 percent in stocks and 20 percent in bonds, with investors allocating more to bonds as they age. But even that is too risky.
New exchange-traded funds must endure a brutal Darwinian struggle for attention and assets. To attract enough capital to survive amid the competition, new ETFs need a good investment idea and a catchy marketing approach.
Big asset management companies are warning about a stock-bond correlation disaster that can play havoc with even 60-40 stock-bond portfolios when inflation rises.
Quick — what’s the first word you associate with Vanguard Group Inc., the $5.1 trillion investing giant? John Hollyer, global head of fixed income at Vanguard, would much prefer you use the term “low cost.”
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Senator Elizabeth Warren’s proposed wealth tax is a more promising idea, I think, than Alexandria Ocasio-Cortez’s plan for a top marginal income-tax rate of 70 percent. A levy that high on very high incomes is likely to be fiscally self-defeating, but an annual 2-3 percent tax on wealth would be a big revenue-raiser even if confined to the very rich.
But the problem with these contests isn’t transparency or lack thereof, but rather that the entire exercise is futile because the outcomes are entirely random.
Close on the heels of Representative Alexandria Ocasio-Cortez’s proposal to tax top income at 70 percent, Senator Elizabeth Warren has released her own big idea — a tax of 2 percent a year on all wealth above $50 million, rising to 3 percent for those fortunes of more than $1 billion.