I stand out on the Aptus team for having not played major college basketball, but as an avid fan I can at least contribute to the banter. Complementing the content put out by my playing partners at The Backcourt Report, I periodically share my “Starting Five” posts highlighting the best I can find in the areas of investment management, behavioral finance, and the advisory business. I also throw in a favorite podcast episode, and an “oldie but goodie” post that warrants a new read. Enjoy, subscribe, share!
A Mirror Onto Ourselves: great reminder from Brendan that behavioral finance is as much about us as it is about others. What’s great here is that a great group of our favorite bloggers generously allowed us to see their personal blind spots. It can only help each of us to do this exercise on ourselves(mine is loss aversion, I have zero tolerance for drawdowns which results in an overly conservative approach).
The Market Won’t Provide High Returns Just Because You Need Them: Ben lays out quite clearly what CalPERS could do to meet its pension obligations. They could cut spending, raise funding, or take more risk…you can guess which door they’re choosing. As Ben makes clear, this is likely posturing by the investment office, but the entire pension world has gone mad looking to the past for future returns. As usual.
Two’s Are Now Underestimated – The Mikan Drill for Stocks: Ryan Krueger has become one of my favorite writers. An RIA in Houston, his ability is make the complex simple and add fun context(in this case, basketball) makes his blog a joy to read. Here, he draws parallels between old-fashioned dividend and coupon collecting in an era of ETFs and mutual funds, and old-fashioned midrange jumpers in an era of 3 pointers and dunks. Such a fun read.
ETFs’ Tax Fairness Advantage: Dave Nadig with an effective rebuttal to a ridiculous Bloomberg article implying that ETF issuers help investors dodge taxes through secret transactions. The truth is that, as Nadig puts it, “ETF investors are paying taxes, and doing so completely fairly. They’re paying when they sell(emphasis mine), not when other people sell, and not because the portfolio rebalanced months before they bought in.” Amen.
How Much Does a (Comprehensive) Financial Plan Actually Cost: As one would expect, Michael Kitces’ Nerd’s Eye View blog shares extraordinary detail on how a cross-section of advisors charge for services. For better or worse, there is no right answer and the variety of pricing approaches is actually becoming less standardized. It’s pretty obvious why consumers aren’t always clear on what they’re paying in fees, and what they’re paying for.
*Off the Bench: cannot NOT include The Four Sources of Alpha, such a treat to hear my favorite podcast host(Patrick O’Shaughnessy) ask uniquely insightful questions while my favorite author(Michael Mauboussin) answers them with his usual expertise. Must-listen for anyone who follows markets, sports, and human behavior.
**Throwback: an old classic from one of my playing partners, with a reminder that True Diversification is driven by the relationship between holdings, not the absolute number.
Hope you enjoy, thanks for reading!