From June 8 2018 to June 8 2028, Vanguard’s S&P 500 Fund (VFIAX) will outperform a portfolio split evenly between: Firsthand Technology Opportunities Fund (TEFQX), Oppenheimer Global Opportunities (OGIYX), Fidelity Select Biotech (FBIOX), and Delaware Healthcare (DLHIX).
What Makes a Good Life? – In the longest study of happiness ever, good relationships have been determined to be the single greatest factor in life satisfaction. People who are more socially connected to family, to friends, to community, are happier, physically healthier, and live longer. Relationships are hard, they are messy, and sometimes they hurt, but investing in them is the best way to the good life. Do it.
Egoistic Altruism – The modern world is not a zero sum game- a selfish argument for making the world a better place.
Why go to Mars – The greatest argument I’ve ever seen for why attempting challenging things is pivotal to advancement of our species. In 1492 England and France signed a peace treaty, the Borgias took over the papacy, and Lorenzo de’ Medici, the richest man in the world, died. Yet we remember an Italian weaver’s son setting foot in the Americas. A mission to Mars is what will be remembered, that is why.
Peter Zeihan on the Future – The post WWII stability of the last 70 years that we have all taken for granted is ending. The world will have to come to terms with a more disinterested United States which Zeihan argues will cause global instability over the coming decades. History is not over, in fact, it’s back in session. I also highly recommend reading Zeihan’s Accidental Superpower and his newsletter.
Obi Nwankwo is chasing a dream in LA and he doesn’t care who knows. The corporate johnny pencil pusher post grad track got old real fast. He took a step back and said “I want to be a model, I want to be an actor, I want to be on TV.” Jack into his energy field, get juiced as Obi talks his all in or fall in mentality, being a black man in LA, and why you should cherish your name.
5:00 The idleness hit me. After I graduated I was eating what I wanted to, I was going out whenever I want to- things that I never got to do in college on a consistent basis. I thought wow, this is amazing. But it was weird because I felt like everything that I was doing wasn’t going towards an upward path of progress. Some people get gratification from that, but I didn’t so I went back to the drawing board and things that I have always said I wanted to do. Shit, I want to be a model, I want to be an actor, I want to be on TV.
50:30 I can’t say I’ve been in many uncomfortable conversations regarding the color of my skin in LA. That came out frequently in Boston, it would be stressful for me to be in a room full of white people and a rap song comes on, please don’t say the n word. I’m having a good time and people don’t realize I would stress out about that and that’s that stuff that people don’t really have to deal with. But I had to deal with that and I never really told many people but damn, subconsciously. You’re choking. I went to Boston College, a majority white school, I grew up in the suburbs of a majority white town. A lot of the people I hung out with were white and for years, I’d just be so stressed. I didn’t really notice. I almost became immune to it. It’s something that I just knew I was going to deal with. When I came to LA, people just aren’t really like that. People are very conscious of what they say around people because LA is one of those cities you never know who people know. Some of the the most unassuming people could be some of the most powerful people like just like john and so it’s like people are just very. People are just more caring and thoughtful of it. Like, no, no one’s this. Ivan. I can comfortably say I haven’t faced much discrimination out here where I did in Boston.
1:10:40 Go into everything you do with energy, put your best into everything you do. You never know what opportunity might come out of something. And any connection you make, cherish that connection because you never know when you might need that person. I’ve got opportunities from like the most random people, the most unassuming people. Always make sure you make a great first impression because a first impression is something that you only get once, so you might as well make it good. It makes no sense to make a bad impression on someone whether you like them or not. If you don’t like someone, treat them well. You don’t want anyone to put bad on your name. Cherish your name and who you are- you yourself as a person.
Investing is becoming ever more commoditized with the rise of index funds and passive strategies, forcing financial institutions to differentiate themselves on user experience. The Old Guard institutions like Black Rock and Vanguard were built in an age when user experience was not a priority. The New Guard institutions, often called “robo-advisors” like Betterment and Wealthfront, are staggeringly easier to use than their Old Guard counterparts. They include features like Tax Loss Harvesting and retirement and purchase planning tools, no human advisor necessary.
Unlike the Old Guard, the New Guard was built from the ground up for the internet age. The Old Guard views their online presence as a transition and a feature- the New Guard views their online presence as their entire product.
In terms of assets under management (AUM), the largest of the Old Guard is Blackrock with over US$6 trillion, and Betterment, the leader of the New Guard, a mere 13 billion.
In the following predictions, “top three” refers to the top three firms in terms of AUM. “Robo-advisor” excludes Old Guard companies that also offer a robo-advisor product, e.g. Vanguard Personal Advisor Services. When I say “robo-advisor” I mean companies created exclusively after 2007.
With that said, here is what that lunch eating is going to look like (tweeted for posterity):
By 2025 a top three robo-advisor will offer a checking account.
– A checking account is a huge point of leverage for the New Guard. If you already have your paycheck going to them, it is that much easier to invest.
By 2025 a top three robo-advisor will offer a credit card.
– Another leverage point for the New Guard.
By 2025 a top three robo-advisor will offer credit monitoring services similar to credit karma.
– The New Guard wants to be your one stop shop for all things finance, this feature is table stakes.
By 2025 the top three robo-advisors will collectively have >250 billion assets under management. A 1000% increase over the current 24.9 billion.
-Like I said,
By 2030 the top three robo-advisors will collectively have >1 trillion assets under management. A 4100% increase over the current 24.9 billion.
By 2030 a top three robo-advisor will start, at least in part, to manage your portfolio directly, instead of relying on Old Guard investment vehicles like Vanguard ETFs.
– New Guard firms like Betterment are pretty UIs built on top of Old Guard investment products, like Vanguard’s VTI Total Stock Market ETF. Once they reach enough scale, managing their own portfolio directly will allow for further optimization which will cut costs for clients. Currently Betterment charges you an annual fee on top of the expense rations that Vanguard charges.
By 2035 the term “robo-advisor” will have peaked and will be on it’s decent for the same reason we don’t hear people say “color TV” anymore. Algorithmic, passive investing will be the standard for individuals.
– Google Trends or something similar will be used to track the validity of this prediction.
By 2035 assets under management of the top three Old Guard firms compared to the top three New Guard firms will decrease from 570 times as big to less than 50 times as big.
– Currently in the Old Guard corner we have Blackrock (6.2 trillion), Vanguard (4.9 trillion), and UBS (3.1 trillion) totaling 14.2 trillion. Currently in the New Guard corner we have Betterment (13.5 billion), Wealthfront (10 billion), and Wealthsimple (1.4 billion) totaling 24.9 billion. 14.2 trillion / 24.9 billion = 570. This prediction gets a bit fuzzy for two reasons. First, the New Guard still relies on investment products provided by the Old Guard, so there is some double counting here. I.e. for every dollar invested through Betterment, Vanguard is still managing some of each dollar because Betterment purchases Vanguard products. Secondly, since there is not reliable data available on AUM for IRAs and personal taxable accounts specifically, I need to look at total AUM. If there were reliable data on this metric, I would happily predict that the New Guard would gorge themselves on this specific market because it is the one that individuals have agency in. Individuals can’t choose which financial institution their employer’s 401(k) or 403(b) invest with. Even though Betterment offers a 401k product (and I’m sure other robo-advisors will soon), I don’t expect a quick transition in this space. Employer payroll systems coupled with Old Guard financial relationships with said employers, and you have one of the slowest changing mechanisms ever concocted.
Let’s see what happens people.
Brothers and sisters,
I’m pumped to announce that the no gradient podcast has hit 1,000 unique downloads. I’ve talked with a marathon world record holder, a shamanic healer, a Marxist who tried to join the marines, a married couple in an open relationship, and just plain great conversationalists. Seriously, thank you to everyone who has listened, reached out to me about an episode, shared it- you all are my gods.
Thank you to Chris Derr for getting me started, James Newhouse for his constant feedback, and Chris Hoog for the famous intro and outro music. Most of all thank you to the guests who have been willing to come on the show. Without you, well, you know.
If you haven’t listened yet, dip your toes in. I always tell potential listeners to read through the episode descriptions and find one that speaks to them. I try to make the descriptions and the quotes I pull from each episode emblematic, so you know what you are getting yourself into.
I’ve started posting photos of my guests on Instagram, follow the show there if you are in to faces.
Thank you people, next stop, 10,000.