Insight
Advisers should manage asset exposure instead of picking star active managers
“Why the fuck are we apologizing for active managers when all we really need to do is get clients the right exposure in these asset classes, and then the decision making is not, did we back secretariat or a glue horse? Then the question is like, do we own too m…”
Insight
Forcing clients to endure 50% drawdowns guarantees behavioral blowups
“In the real world, nobody can watch a 50% drawdown take place in their portfolio and live through it. And actually, the more you try to force people to do that, probably, the more of a likelihood there is That your client's going to blow themselves up.”
Opinion
Public small caps no longer capture historical returns as companies stay private
“There is an argument to be made that absent private companies at this point, you're not really capturing what small caps historically gave you because these companies are not coming public anymore. They're coming public as large caps.”
Opinion
The retail transactional stockbroking business model is fatally flawed
“The entire business model of transactional Brokerage with retail clients was fatally flawed, could not be done correctly”
Insight
Regulation cannot cure investor fear, greed, or Wall Street evasion
“There is no amount of regulation and I'm pro regulation, but there is no amount of it that's going to cure, you know, the fear and greed aspect to investing or that's going to stop someone from doing what they want to do, like in the end. And you can do, Three…”
Insight
Asset management is useless without a comprehensive financial plan
“The asset management is great, and it's really important to us, and it's the thing that I focus on and Barry focuses, but at the end of the day, it's useless if it's not in service to a financial plan.”
Disclosure
Ritholtz Wealth holds zero commodity exposure across client portfolios
“We have no commodity. None.”
Opinion
Currency hedging is unnecessary because currency risk generates investment returns
“We're not big buyers of the currency hedging idea. We think that currency is a risk, but risks are sources of return. So give me the risk.”
Insight
The easiest financial product to sell is whatever just worked
“The first is the easiest thing to sell is whatever has just been working. And the reason it's the easiest to sell is because it's the only thing the buyer wants is to be a part of whatever's working now.”
Opinion
Barry Ritholtz uniquely connected the housing bubble to market risk publicly
“Barry was really the guy that was drawing that line from mortgages to houses to the stock market. There are other people that were doing that too, but Barry was doing it like on a blog, and Seriously doing it. Like, six, seven posts a day sourcing from ex-trea…”
Insight
Cash need timing matters more than the absolute dollar amount required
“The timing, arguably, is more crucial than anything. Not how much money will you need? When will you need it?”
Disclosure
Ritholtz Wealth weeds out prospective clients seeking complex financial products
“The people that are coming to us and they want the bells and whistles. Within the first conversation, we're going to weed them out. And it's for their own benefit, because we're not doing enough circus act stuff to make them happy.”
Disclosure
Ritholtz Wealth invests client capital exclusively in liquid public markets
“At the current moment, everything we do is in a liquid public market.”
Assertion Supported
Amazon is classified as a consumer discretionary stock, not technology
“You think Amazon's a tech stock? It's not. It's consumer discretionary. It's not in the tech index.”
Insight
Financial advisory is about behavioral coaching, not short-term stock picking
“The real job is not define, you know, divining, ooh, is like Dr. Pepper Snapple going to be better than Pepsi? Which one do I buy for this quarter? Like, that's not the gig. The gig is getting people through.”
Assertion Supported
Jim Cramer advises putting initial market investments into index funds
“Jim Cramer's last book, the first, this is a change in religion for him.
The first thing he says is the first money you accumulate in the market should be in an index fund.”
Insight
Stock prices move on performance relative to expectations, not product popularity
“It's not about whether or not people are buying the clothes. Are people buying more or less of the clothes than the people investing in the stock thought they would? And teaching him about expectations, and then throwing this up, and then one day it would go u…”
Insight
A business is flawed if it must hurt clients to make money
“If you're in a business where you have to hurt your clients in order to make money, you're in the wrong business.”
Disclosure
Ritholtz Wealth targets portfolio expense ratios under 50 basis points
“We would like to have the internal expense ratios in our portfolios be less than 50 basis points, but that doesn't mean they all are, and some of them are way below.”
Assertion Supported
S&P outperforming international stocks by 100% over a decade is historically rare
“This is the first time in a long time, and only the third time in history, that international stocks have been outperformed by the S&P by a hundred percent. Over the trailing 1010 year period.”
Disclosure
Brown avoids his firm's investment committee to eliminate conflicts of interest
“Now, why am I removed from it? Because I'm the CEO of the firm, and I never, ever want us to make an asset allocation decision for our clients for the sole benefit of the firm or for Where there could potentially be some conflict”
Disclosure
Ritholtz staff retirement assets are invested in their client models
“My retirement money, my real money is all in the models that we manage for clients.
So I eat my own cooking and everyone at the firm, by the way, all of our, for one K contributions go right into the same models our clients own.”
