Recommended Reading

How well do you understand financial talk? In this elite dialect . . .

"Credit" means debt

"Bail out" means putting money in

"Synergy" means sacking people

"Noncore assets" means garbage.

Read john Lancaster's guide: Money Talks, Learning the Language of Finance. 

You're No Apple, You're a Bank

Happened on Heather Landy's last column for American Banker. Financial-services folks, she notes, seem fixated on emulating the success of Apple and Amazon.  That's not easy.

For example, while a focus on cross-selling makes perfectly good sense as a general business strategy, it doesn't hold up very well in an Apple business model context. Notice how when you visit an Apple store, nobody ever says, "Well, sir/ma'am, I see you have one of our phones. Have you considered trying one of our tablets?" There's no need to push products on us because we already know that we want them. We'll even line up around the block to get them. (Whereas a line around the block is never a good sign for a bank.)

Can banks develop a cross-buying culture? Can they give us new conveniences even more welcome than those smart credit cards the Europeans enjoy?

Can they create true wealth-management centers, units so innovative and quality-obsessed that customers clamor for the privilege of a referral?

We'll see.

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Landy is leaving her post as editor in chief of American Banker Magazine to join Quartz as global news editor.

Repeal the Estate Tax, Again?

Republicans in the House may vote to eliminate the federal estate tax this fall, it says here. (Curiously, the bill would keep the gift tax.) Purpose: to position repeal as an issue with heft when the subject of serious tax reform finally comes up. 2017, maybe?

Who would benefit from repeal 2.0, other than techie billionaires and hedge fund managers? Farmers. 

"[W]e’ve seen farmers in Iowa or Illinois get $15,000 an acre for their farm," says Paul Neiffer, The Farm CPA. "If the farm is 1,000 acres, they are looking at owing taxes."

From Ladies of Leisure to Women CEO’s

Sallie Krawcheck, in partnership with Pax World Management, is launching a fund to invest in enterprises with a better-than-average proportion of women in key positions.

What a difference half a century makes. Ladies of leisure like the ones depicted in these 1964 ads certainly didn't expect their daughters or granddaughters to be CEOs of major companies.

Philip Seymour Hoffman Didn't Want “Trust Fund Kids”

The actor rejected suggestions that he set aside funds for his children because he didn't want them to become spoiled brats.

He did want them exposed to art and culture, as suggested by an unusual instruction to the guardian of his eldest child:

“It is my strong desire [that] my son, Cooper Hoffman, be raised and reside in or near the borough of Manhattan [or] Chicago, Illinois, or San Francisco, California,” he said in the will.

Can Three-Second Trades Produce Long-Term Capital Gain?

With a ploy called "basket options," a hypertrading hedge fund claimed billions of dollars in tax savings. The Senate Permanent Subcommittee on Investigations seems impressed.

What Do Women Want?

"I never met a SRI investor who wasn't a woman," said a broker quoted somewhere recently. An exaggeration, of course.

More generally, the question of how women approach investing remains perplexing, especially to men. We know that women, on average, tend to be more conservative than male investors. And because they don't believe they know it all, women investors tend to be more successful.

M. J. Dunleavey, remembered on this blog from her years with The New York Times, tries to offer clues to what women want in her WSJ column. For instance, women like to ask questions of their investment advisers, but they also feel under time constraints. Lots of questions but no time for answers?

Wall Street will continue to wrestle with the question of how to relate to women. Funny thing, though – none of the women trust officers, brokers and investment advisers I've met over the years ever felt it necessary to ask me what men want.

In Deluge of Funds, Investors Sink or Swim

No wonder people find investing bewildering. The mid-year report on mutual funds in The New York Times contains page after page after page – ten pages in all – of mutual fund listings. If printed in type big enough to read, the listings would have covered 12 or 15 pages.

For the would-be investor, this sea of funds must be a daunting sight.

Yet it used to be even scarier. After cresting above 8,000 before the Great Recession, the number of mutual funds has eased off. Jack Bogle estimates that 7 percent of equity mutual funds gave up the ghost each year from 2001 to 1012.

Even so, more than 7,000 mutual funds are still operating.

And that's not all. Joining the thousands of conventional load and no-load funds are about 1,600 exchange-traded products, primarily ETFs.

In part the deluge of funds is an optical illusion. Sizable segments of the mutual fund listings consist of house funds – products intended for customers of a bank, brokerage or insurance company. Other funds may be moribund relics of faded hopes or failed algorithms.

Likewise, most exchange traded funds (or "products," to use the umbrella term) are lucky to get their names in the paper. Of 1,600 funds, a mere 241 hold almost 90 percent of the assets.

Perhaps the deluge of funds indicates the need for investment advisers, although fund-picking is no easier than stock-picking.

Or perhaps the deluge is driving bewildered investors toward online services that offer simple portfolios of a few basic ETFs.

What do you think?

Happy 125th Birthday, WSJ!

The Wall Street Journal was first published July 8, 1889. The first issue reported the average daily price movement of twelve active stocks, the original Dow Jones Industrial Average. (Update: I wrote in haste; this predecessor average led to the first DJIA in 1896. Only one charter member of the Dow remains: GE.)

Chase Nest Egg Ads: the Cliche and the Exotica

Imagine you're a Mad Man in Sterling Cooper's early days, the 1950s. Your client needs photos of individuals engaged in off-duty pursuits that appeal to the moneyed class.

"Golf, of course," you say.

"Forget golf. Too obvious. Think of something that's not a cliché."

Most likely, that's why none of the Chase Manhattan nest egg ads we've shown you over the years has included a golf club.

By 1964 the ads were in their post-classic phase. Most every upscale pastime involving wind, water or wildlife had been portrayed. So we come to the last resort:

A more characteristic nest egg ad from 1964 was this, featuring a Charolais calf. Imports of this prized French breed had been banned since the 1940s for fear of hoof and mouth disease.

Triumph of the Target-Date Funds

You read it here, five summers ago: Because needs and intentions differ for people reaching retirement age, target-date funds may not find much of a market.

Ha! Needs and intentions do differ, but target-date funds are on a roll. These auto-managed portfolios already hold about 20 percent of 401(k) money, and they're attracting more than 40 percent of the new funds flowing into 401(k) plans.

Target funds will maintain their momentum, Barron's predicts (subscription required, but I accessed the article via a Google search).

Looking out five years, target-date funds may be the only investment that most Americans have in their 401(k) plans. That would be quite an achievement for a product that was barely known just a decade ago.