The Idea Farm

What’s the most effective asset allocation model? Turns out, that’s actually, that’s the wrong question. The correct starting question is, “Do asset allocation differences even matter?” I pulled the asset allocations of 40 of the nation’s leading wealth management groups to examine three allocations: 1️⃣ The allocation with the most amount in stocks (Deutsche Bank at 74%). 2️⃣ The average of all 40. 3️⃣ The allocation with the least amount in stocks (Northern Trust at 35%). Below are the returns for each allocation over the entire 1973-2024 period. 1️⃣ Most aggressive (DB): 9.48% update 2️⃣ Average: 9.32% 3️⃣ Least aggressive (AT): 8.98% There you have it – the difference between the most and least aggressive portfolios is a whopping 0.50% a year. Now, how much do you think all of these institutions charge for their services? How many millions and billions in consulting fees are wasted fretting over asset allocation models? So all those questions that stress you out… “Is it a good time for gold?” “What about the next Fed move – should I lighten my equity positions beforehand?” “Is the UK going to leave the EU, and what should that mean for my allocation to foreign investments?” Let them go. If you had billions of dollars under management and access to the best investors in the world, you’d think you’d be able to beat a basic 60/40 index. Turns out most institutions can’t. If you’re a professional money manager, go spend your time on value added activities like estate planning, insurance, tax harvesting, prospecting, general time with your clients or family, or even golf. https://lnkd.in/gNjsGt8E

𝗧𝗵𝗲 𝘂𝗻𝘀𝘁𝗼𝗽𝗽𝗮𝗯𝗹𝗲 𝗱𝗼𝗹𝗹𝗮𝗿 𝗺𝗲𝗲𝘁𝘀 𝘁𝗵𝗲 𝗶𝗺𝗺𝗼𝘃𝗮𝗯𝗹𝗲 𝗠𝗿 𝗧𝗿𝘂𝗺𝗽 Ninety One's Sahil Mahtani analyzed historic dollar cycles, trying to answer two questions: 𝟭. Why are dollar cycles much longer than other cycles 𝟮. Why is it that the market (which was short dollars in 2017 and 2021) got it so wrong? He explains why history suggests there are now enough shocks to decisively end the 2011–2025 dollar upcycle. Listen on 𝘛𝘩𝘦 𝘉𝘦𝘴𝘵 𝘐𝘯𝘷𝘦𝘴𝘵𝘮𝘦𝘯𝘵 𝘞𝘳𝘪𝘵𝘪𝘯𝘨 podcast 👇 🍎 Apple: https://lnkd.in/ePR94M_4 🍏 Spotify: https://lnkd.in/eiUEkhkc ✍ Show Notes: https://lnkd.in/ecQ2Fjbp 📺 YouTube: https://lnkd.in/eVcvC5pj

The electricity share of China's total energy use has doubled in the past 20 years, and now stands at 28%, behind only Japan among the major economies. Gavekal

Campbell Harvey raises a global competitiveness concern: Fewer work hours may seem like progress — but if countries stop investing in future productivity, they risk falling behind. #Investing #FinancePodcast #Productivity #AIImpact #EconomicGrowth #GlobalEconomy

“For practical purposes, the financial memory should be assumed to last, at a maximum, no more than 20 years. This is normally the time it takes for the recollection of one disaster to be erased and for some variant on previous dementia to come forward to capture the financial mind.” -- John Kenneth Galbraith

Mark J. Higgins, CFA, CFP® 𝗼𝗻 𝗮𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝘃𝗲 𝗮𝘀𝘀𝗲𝘁 𝗰𝗹𝗮𝘀𝘀𝗲𝘀 𝗯𝗲𝗶𝗻𝗴 𝗶𝗻𝘁𝗿𝗼𝗱𝘂𝗰𝗲𝗱 𝘁𝗼 𝗿𝗲𝘁𝗮𝗶𝗹 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀: "I remember writing about the closed end funds in the 1930s, they would charge a big load of 2.5%, 3.5%, and then an annual fee of 1-1.5%, all in would be like 6% or 7%. "You're actually starting to see things to get into private markets that are close to that." "And to be honest with you, I it's pretty appalling to me to watch it." 🍎 Apple: https://lnkd.in/eEQN_5ub 🍏 Spotify: https://lnkd.in/e5Wr7NPW ✍ Show Notes: https://lnkd.in/ejgx8zTM 📺 YouTube: https://lnkd.in/erhzcV9T

Mark J. Higgins, CFA, CFP® 𝗼𝗻 𝘁𝗵𝗲 𝗵𝗶𝘀𝘁𝗼𝗿𝘆 𝗼𝗳 𝗶𝗻𝘀𝗶𝗱𝗲𝗿 𝘁𝗿𝗮𝗱𝗶𝗻𝗴: “The oldest form of insider trading is not by Wall Street." “The people that make the laws are the people that profit, so there’s a pretty strong incentive not to outlaw it.”

Campbell Harvey explains how automation could reshape global trade. Emerging markets built their growth on cheap labor — but $1-per-hour robots that work 24/7 may change that dynamic entirely. #Investing #FinancePodcast #EmergingMarkets #Automation #FutureOfWork #GlobalEconomy

𝗖𝗮𝗻 𝘁𝗿𝗮𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝗺𝗮𝗿𝗸𝗲𝘁 𝗳𝗼𝗿𝗲𝗰𝗮𝘀𝘁𝘀 𝘀𝘁𝗶𝗹𝗹 𝗴𝘂𝗶𝗱𝗲 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆? The latest report from Man Group’s Henry Neville - Capital Market Assumptions: Redefined - answers this question. This paper calls into question the reliability of standard CMA frameworks—particularly the overused 10-year horizon—and offers a robust, customizable toolkit for investors to develop their own return forecasts grounded in strategic clarity and underlying data. 𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀 🕰 𝗧𝗶𝗺𝗲𝗳𝗿𝗮𝗺𝗲 𝗠𝗮𝘁𝘁𝗲𝗿𝘀: The ubiquitous 10-year CMAs may mislead—applying a uniform look-ahead across asset classes is likely oversimplified and potentially misaligned with user needs. 📉 𝗕𝗲𝘁𝗮 𝗥𝗲𝘁𝘂𝗿𝗻𝘀 𝗦𝗹𝗶𝗺𝗺𝗲𝗿: Future returns on beta assets may fall short of the past decade’s performance, challenging assumptions baked into many forward-looking models. 🛠 𝗗𝗜𝗬 𝗖𝗠𝗔𝘀 𝗘𝗺𝗽𝗼𝘄𝗲𝗿: A structured, transparent framework—one that includes defining purpose, selecting timeframe, evaluating drivers, and applying methodologies—can help allocators formulate their own more defensible capital market assumptions.