Archive for November 2013
- In: Life | Wealth Management
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In the past year, my business has grown by 40.7% as measured by the AUM. This comes from three sources: new clients, existing clients adding assets and client asset growth. -
My newsletter “The Investment Scientist” is read by over 4,500 people, representing a growth of 41.5%. This portends well for future growth of the AUM.
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I am grateful for the people who support my business, especially Nicole my assistant, Vanessa my editor, John my programer and the Fidelity support team.
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I am grateful for this year’s Nobel Economics Prize winners, especially Eugene Fama, upon whose theory I’ve built the investment approach that has served me and my clients so very well.
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I have started the process of ghostwriting a book on Physician Wealth Management, as well as redoing my website with a sharpened marketing message around the science of investing.
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I have won three storytelling contests in DC and Philly, and have failed to win at least the same number of contests.
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I have performed standup comedy to standing ovations as well as stoic reactions in corporate, charity and political events.
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I have found a new challenge and passion in improv comedy. I am thankful to my teachers Shawn Westfall and Anna Marie Trester, and my many classmates.
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My parents and in-laws stay with my wife and I for extended periods of time, helping us to take care of the kids, allowing me time to indulge in my passions.
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My kids are growing up strong, healthy, smart and caring, thanks to their mom who is also my wife. I couldn’t be more proud of them.
What are you thankful for in 2013? Share it with us in the comment section.
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When I am approached by a prospective client, the question they always ask without fail is “Are you properly licensed?”
This is actually the wrong question. The right question should be, “Which license do you have?”
Generally, there are two types of licenses for people who call themselves a “financial advisor.” People who passed the series 65 test and people who passed the series 7 test. The nature of these two licenses are as far apart as heaven and earth.
Series 7 is a securities license. People who have passed this test can legally be a broker. They are actually prohibited by law to give financial advice, except incidental to the financial products they are selling.
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Recently a business owner asked me to review his investment portfolio. He is currently with an Ameriprise financial advisor and his gut feeling tells him something is amiss.
He is paying the advisor 1.6% in fees. First of all, this fee is quite exorbitant. For the size of his portfolio, he shouldn’t be paying more than 1% in advisor fees.
Adding insult to injury, for the fee that he is charging, this advisor puts his money into a collection of very expensive mutual funds like ODMAX.
It is very easy to check the expenses of a mutual fund. I just googled ODMAX and I found out it has a load of 5.75% and an expense ratio of 1.36%. (For those who don’t know, load is a one time charge to pay commision to the Ameriprise advisor who doubles as a broker. Expense ratio is an ongoing annual charge.)
ODMAX is a mutual fund that invests in emerging market stocks. If you use the low cost alternative, aka a Vanguard fund, you will pay no load and the expense ratio is only 0.33%, a saving of 1.06%.
Don’t ever underestimate these tiny savings. Because in ten years, the savings will be more than 10%, in twenty years, more than 20%. This businessman is in his 50s; he can easily live another 30 years. I asked him: “How would you like to be more than 30% poorer in retirement?” That is exactly what this financial advisor will make him.
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Obamacare: Sh*t Hits Fan
Posted on: November 13, 2013
Today I sat down with a bunch of professionals for our quarterly wealth management meeting. As the talks turned toward the implementation of the Affordable Care Act, I realized the mal-functioning website is the least of its problems.
In our group there is a professional, Andrea, who specializes in helping small to mid-sized businesses procure group health insurance. Andrea said insurance companies are cancelling old plans and giving their customers “upgraded” plans that cost more and provide less benefits.
This hasn’t just been happening in isolated cases, but is rather wide-spread. Why? For one, the ACA has many mandates, such as covering reproductive health. So if a man’s insurance plan does not cover a pap smear, he just lost his plan! OK, I made this up for comedy, but Andrea did mention a 55 year old woman losing her plan because it did not have maternity benefits.
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Today I went to listen to Professor Jing of Renmin University speaking about US – China relations. The last time I went to listen to the same subject, it was Professor Mearsheimer of the University of Chicago speaking. His theory predicts that the US and China will come into conflict inevitably. I was curious to hear a Chinese perspective.
When I told Professor Jing about Dr. Mearsheimer’s theory and prediction, I was surprised to learn that the two professors are friends. In fact, Dr. Mearsheimer teaches at Dr. Jing’s Renmin University as a visiting scholar.
Dr. Jing does not agree with Professor Mearsheimer’s theory and prediction.
He does however agree that the rivalry between China and the US will intensify in coming years. In his words, “This is structural.” No matter how hard the leaders of the two nations try, the most powerful nation on earth and the second most powerful will always be suspicious of each other.
However, Professor Jing believes this rivalry need not result in open conflict. “Both the US and China are nuclear states. Should war break out between us, only cockroaches will survive.”
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Two weeks ago, I wrote about these two Nobel Prize winners and how their respective economic research has shaped my investment practice.One very very sharp reader of my blog sent an email to me, and here is what it said:
Aren’t these 2 philosophies opposites of each other? If the market prices correctly based on all available information, how can the stock price be different from the expected dividend? Aren’t these 2 prize winning economists speaking in opposites?
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The Investment Scientist 