Thursday, December 17, 2020

Millennials Like ETFs

Vanguard's "How America Invests" offers a look at the behavior of five million households that invest with the firm. As you would expect, investors are moving into index funds and away from actively managed products. Some wealthier Vanguard customers are using exchange traded funds to add diversification, but the real fans of ETFs are the young. 

Most households who currently invest in ETFs are “diversifiers,” meaning ETFs make up less than a quarter of their assets. Their ETF investments are in addition to already-diversified mutual fund portfolios. These households tend to be wealthy and long- tenured. However, there's a small but growing group of ETF “enthusiasts,” typically millennials who have been with Vanguard for only three years, who build complete portfolios from ETFs.

Wednesday, December 16, 2020

Two Churned Accounts Cost Merrill Lynch Over $64 Million

 After the rise and fall of Cabletron, the company he co-founded, Craig Benson served a term as governor of New Hampshire. Now, as the result of investment misadventure, he’s the recipient of the largest monetary settlement in that state’s history.

In a claim filed with FINRA, Benson asserted that needless, ill-advised trades by his Merrill Lynch brokers had cost him $50 million. The New Hampshire Department of Securities Regulation launched a probe.

“My account was churned in large part for the benefit of generating commissions that benefited Charles Kenahan, Derm Cavanaugh, but mostly Merrill Lynch,” Benson told CNBC. “I certainly didn’t sign a document and say it’s OK to steal from me."

Apparently Merrill served Benson a full diet of upmarket investments, from IPOs to leveraged and inverse products. The results were so unpalatable that the New Hampshire settlement imposes a $2 million fine on Merrill Lynch and requires the BofA unit to pay Benson restitution of $24.25 million. 

These payments also resolve Benson's FINRA claim, making it the second largest FINRA settlement involving an individual over the last decade or so. The largest?  The $40 million Merrill Lynch was required to pay Robert Levine, Benson's friend and co-founder of Cabletron.

Friday, December 11, 2020

Jabbing the 1%

 Wondering why millions and millions of Red State voters detested the Blue State elite? Here's a clue from the Dow Jones Newswires:

These are the loopholes America's 1% can use to get early access to the COVID-19 vaccine

Actually, the "loopholes" sound too cramped to accommodate the whole 1%. Maybe the 0.1%.

Monday, December 07, 2020

The Bob Dylan solution to the Prince problem

 Reportedly Bob Dylan has sold the rights to all the music he has written.

This will be the subject of Merrill Anderson's January issue of the Investment and Trust Newsletter. Click here to sign up.