Yesterday, Business Insider posted a huge piece, wherein they ask various folks for their best idea for a decade.

With the low key headlne, Wall Street’s Brightest Minds Reveal Their Best Investment Ideas For The Next Decade, here is how I responded:

Financial planning: “As it turns out, that is an easy question: Our own business. I have been plowing money into our own asset management business. This is not a reflection on the price of stocks or bonds, but more on the state of the financial industry. Wall Street is very good at serving its own interests, but terrible at serving its clients.

This has created a huge opportunity or anyone who wants to put their clients first. I expect we have a 5 year ramp up before the rest of Wall Street starts to notice something is amiss.

I believe there are 4 areas ripe for disruption: 1) Full service Financial Planning/Asset management, 2) Retirement Planning, 3) low cost asset management, 4) RIA Advisory services to members of the industry.

We are in the midst of a very significant set of changes; The financial services industry is likely to look very different 10 years hence.”

—Barry Ritholtz, chief investment officer at Ritholtz Wealth Management

 

You can see the full list of 27 ideas here.

Category: Apprenticed Investor, Asset Allocation, Finance, Media

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Your Best Investment Idea for the Next Decade”

  1. EdMcGon says:

    Barry,
    I can poke one hole in your idea: “Nobody ever went broke underestimating the stupidity of the American people.” While I appreciate and respect your financial planning idea, I doubt Wall Street will be losing most of their business, because the sheep will keep coming back to get sheered again and again. But I do sincerely hope your asset management business works out. I even hope you prove me wrong.

    Here are two simple investment ideas for the next 10 years: Google and Disney.

    • I hope you are wrong, but fear you may be right

      • MacroEconomist says:

        Ed and Barry, great posts. Here’s another trend: the commoditization of many of aspects of the business, including a big part of the hedge fund industry.

        I think many parts of the Asset Allocation business – will be gone in 10 years. If Pension Funds wise up, they will fire most of their staff and/or advise them to just go to 60/40 indexing and use advisors like Barry.

        If you work in any organization and you don’t “own” your track record, you’re in trouble.

        Conversely, those who can produce alpha will be rewarded handsomely. In a low return world, 3% alpha is viewed much for favorably than the same achievement in a high return world.

        With respect to GOOG and DIS, I am on the other page. I prefer stocks with variant perception. I say John Deere and IBM.

        Barry, I hope we can meet again one day (we have mutual friends).

      • rd says:

        @Macroeconomist

        I think that a reasonable percentage of the financial sector, especially the proliferation of hedge funds, will simply vanish with the next recession and bear market instead of being commodified. In my experience, the quickest and best way to reduce costs and improve efficiency and quality is to simplify and eliminate entire elements of a system instead of trimming them.

        The clients will finally get it that they are simply paying too much money to too many and poor performers will get slaughtered along with the muppets. They need to make sure they have been saving their 2 & 20 instead of spending it or they will end up in the 47%. Head count has been dropping quietly in the financial industry and the recent earnings reports with various trading areas profits dropping as well as increased regulation will bring that process to a crescendo when the profits vanish again. The same focus on quarterly profits will be used to eliminate jobs on Wall Street as occurred on Main Street over the past 30 years. It is not accidental that Vanguard has been taking in boatloads of money over the past couple of years as they are the low-cost leaders.

  2. VennData says:

    Brilliant.

    Wall Street won’t go broke. But people are wising up to their full fee nonsense.

  3. jp2 says:

    Hoping you are right, but I’ve heard that when you dance with the devil, the devil don’t change. The devil changes you.

  4. rd says:

    Sam Stovall had the best advice: Yourself.

    I am constantly amazed at how little effort many people put into themselves and advancing their own careers and lives. Constantly improving your capabilities means that you are positioned to advance and make more money, are more likely to survive down-sizing, and are flexible enough to shift into other careers or positions if the opoortunity arises or is forced upon you.

  5. 4whatitsworth says:

    Invest in yourself until the demand for what you do exceeds the supply. Next look for others to invest in and don’t get taken. We are at an interesting time in the economy where many who invested to get their people and companies through tough times will be left holding the bag when the next job opportunity or outsourcing arrangement comes along. This is unfortunately a fact of life these days. Tragically todays business (and political) environment does not seem to involve loyalty or shame. If you are an employee or company owner invest in and watch out for yourself and save your money some money to clean up the mess if you need to. Of course if you are in investor in the stock market you better already know this and when you see a CEO doing the “Everything is fine” tour hit the sell button.

    Otherwise if I had to pick one investment area I would say select Emerging Markets specifically areas with natural resources where family, education and hard work matter.

  6. cschene says:

    I am an engineer with a pretty decent inventing track record and I have often thought of switching careers to the financial planning. I am fascinated by Macro economics and the investment market…might be worth a go.

    I also believe most folks are really in need of good financial planning.

  7. intlacct says:

    Stovall (and Simon Kuznets) are correct. By far the best investment long-term is almost always in human capital. (Obviously some human capital is more investment-worthy than others.)