Friday, September 23, 2022

Short Takes: Investment Signs, Alternative Asset Class Returns, and more

I’ve been reading a lot lately about how a recent ruling in Ontario has crushed the hopes for making the designation “Financial Advisor” meaningful.  Sadly, this is hardly surprising.  The big banks want to be able to call their employees financial advisors.  Banks will always be formidable foes, and any designation a bank employee is able to hold is necessarily meaningless.  Bank financial advisors may mean well, but they are no match for the carefully constructed banking environment that forces them to sell expensive products to unwary customers.

I wrote one post in the past two weeks:

Nobody Knows What Will Happen to an Individual Stock

Here are some short takes and some weekend reading:

Tom Bradley at Steadyhand has an entertaining and important list of investment signs we should look for.

Ben Felix and Cameron Passmore come up with estimates of returns for alternative asset classes including private equity, venture capital, angel investing, private credit, hedge funds, private real estate, and cryptocurrencies.  I don’t know much about most alternative asset classes, but I do have a way of modeling investing in things you don’t understand.  Just load your cash into a device most people have in their backyards, spark it up, and feel the heat of investing for your ego.

Morgan Housel explains how incentives can bend our definitions of right and wrong, even though few of us believe this is true of ourselves.  This reminds me of discussions about Nortel after the tech bubble burst.  The CEO cashed in stock options for a 9-figure payday before the stock burned to the ground.  It was widely believed that the CEO had taken actions to enrich himself at the expense of the company’s future health.  However, when I asked these people if they could have resisted hundreds of millions of dollars themselves, they all said they would have resisted.  I guess I’m the only one in the world who doubts whether his morals would have survived such temptation.

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