Wednesday, September 30, 2015

Wealth Management Ads, Fall of ’65

A few ads from the year When Wall Street Was Sitting Pretty.

New England had lots of antique shops five decades ago; visiting them was a popular fall pastime.

In the 1960's, only Merrill Lynch's thundering herd was bigger than Bache and Co.

"To manage capital profitably, someone must know the score…." Where but in Boston would you have found a wealth manager who considered being off key to be a fate worse than death? 

Boston Safe Deposit and Trust, alas, did not survive but was subsumed into what's now BNY/Mellon.

Here's a BNY ad from the fall of '65. Like Merrill Anderson's founder, BNY's agency favored illustrations over photos in ads.

Here's another fall tradition. Last Saturday morning my daughter's neighbor and a couple of friends were working away in the driveway with bushel baskets of apples and a cider press.

Tuesday, September 29, 2015

When Wall Street Was Sitting Pretty

These days Wall Street creates fear and anxiety, as illustrated in The New Yorker cover mentioned here.

Fifty Septembers ago the magazine offered a much prettier picture. Wall Street in the vicinity of The New York Stock Exchange was a symphony of color, superimposed on financial headlines.

At the time the Dow Jones Industrial Average was flirting with 1,000, a lofty height unimaginable back in the Depression. Members of the Greatest Generation who started investing after WWII were doing very well indeed.

The New York Stock Exchange was still a big deal in 1965. To build new business for its member firms the Exchange ran a series of ads. Here's one.

The ad's advice is prudent. Investors should buy stocks only with money they won't need in the foreseeable future, define their goals, study the companies that interest them. And, of course, consult a registered representative at a member firm. 

Today we know The New Yorker cover painted too rosy a picture. The mid-1960's marked the crest of the great postwar investment boom. The Dow wouldn't flirt with 1,000 again until the '80s.

If that 1965 New Yorker cover marked the end of an investment era, might this year's cat-and-mouse cover also herald a turning point? Since the Dot.Com bust of 1999, stock prices have soared, plunged, soared and, lately, plunged again. Plenty of sound and fury, more than enough fear and anxiety, but little or no net progress.

Back in 1999, Warren Buffett forecast that investors might have to wait 17 years for the beginning of another great bull market. That is, until 2016. So cheer up! Maybe we have only one more year of fear and anxiety to go.

Saturday, September 26, 2015

Yale 11.5, Harvard 5.8

For the fiscal year ending June 30, Yale's endowment recorded an 11.5% return, down from the previous year's 20.2% but handily beating Harvard's 5.8% return. (MIT outpaced even Yale, returning 13.2%.)

Hedge funds and private equity (giddy up, you unicorns!) now dominate Yale's portfolio. Because they're favored by Yale's endowment manager, David Swensen, these alternative assets should remain popular with UHNW investors.

Speaking of unicorns, if you're looking for an Advent calendar for a private equity player, The Metropolitan Museum of Art has just the ticket.

Thursday, September 17, 2015

Is “The Girl in the Spider's Web” Still Rich?

Lisbeth Salander, the late Stieg Larsson's invincible heroine, is back, in an estate-sponsored sequel written by David Lagercrantz.

Lisbeth shouldn't have to work for a living, Larsson left her with a net worth of half a billion or so. Is Jeremy MacMillan still running her family office?

Sunday, September 13, 2015

Best Wealth Management Commercial, U.S. Open

Before Federer and Djokovic finish their match, let's declare BNY/Mellon the clear winner for "Best Wealth Management Commercial" during ESPN's TV coverage of the US Open tennis.

BNY/Mellon's "Perlman" reinforces the theme of its print ads: unlike most banks, we actually manage our clients' investments. In the commercial, the violin soloist at a Perlman performance turns out to be the ungifted Rhea, not Itzhak. 

For years and years, we heard that banks were dweebs who ought to outsource the job of choosing investments. The outsources, of course, were no better than the banks. It's fun to see BNY/Mellon strike back.

Tuesday, September 08, 2015

JEB's tax plan: 1987 Redux

In a WSJ op-ed Jeb Bush proposes dropping income tax rates back to 1987 levels. He implies that he would also make hedgies treat their carried interest (their share of the fund's gains) as regular income. And, yes, Jeb would end the taxation of private wealth transfers. No death tax.

How much influence will Jeb's ideas have on the tax reform effort expected in 2017?

Monday, September 07, 2015

Post-Death Facebook Posts

"We're still waiting for real news, like post-death Facebook posts." I complained recently. 

My wait may be over. Eter9, now in beta, will use artificial intelligence to keep me posting for eternity.

The BBC explains here.

Friday, September 04, 2015

Will the Mouse of Wall Street Find More Cheese?

"The stock market is all about fear and anxiety, best shown in how a mouse reacts to a cat." So reasoned Dutch cartoonist Joost Swarte, creator of this week's New Yorker cover,"The Mouse of Wall Street."

Swarte's analysis was incomplete. A Facebook comment offers the necessary addition: "Fear, anxiety and greed."

Can the mouse still expect greed to be rewarded, despite the market correction? The New Yorker's James Surowiecki offers room for hope. Surowiecki points out that the economy looks better than the market. With obvious exceptions like Apple, China's woes shouldn't do significant harm to American companies.

Yale's Robert Shiller sees the mouse in peril. CAPE, the modified p/e ratio he helped to develop, continues to run dangerously high. 
It is entirely plausible that the shaking of investor complacency in recent days will, despite intermittent rebounds, take the market down significantly and within a year or two restore CAPE ratios to historical averages. This would put the S.&P. closer to 1,300 from around 1,900 on Wednesday, and the Dow at 11,000 from around 16,000. They could also fall further; the historical average is not a floor.
What do you think? Will the mouse find more cheese, or will the Dow collapse?