“He who knows all the answers has not been asked all the questions.”
Questions. We got ’em. This week we published another edition of Blogger Wisdom. It’s always a surprise (and pleasure) to ask a bunch of smart and accomplished bloggers (hopefully) provocative questions. We want to thank everyone who participated and those of you who stopped by to read their thoughts. Without any further ado here is my own take on this week’s questions. (Click on the question to read the original post.)
Question: Assume you are advising a pension fund, endowment or foundation. What is a reasonable long-term expectation for real returns for a well-diversified portfolio? Support as you see fit. (Inspiration was this Vanguard piece.)
I would love to say that I came up with some magical way of generating 5%+ real returns on a well-diversified portfolio going forward but that would be a lie. My estimate of 3% sits right there alongside the other bloggers. Which by itself makes me feel like we are missing something altogether. That challenge for society as a whole if we really entered realistic return assumptions into our pension models we would unleash political chaos. Don’t expect that anytime soon.
This may seem superficial but I am still shocked that we see/saw negative interest rates on so many debt instruments for so long. Learning about finance and economics in the dark ages nobody told me, or I forgot, about that possibility. Once you start entering negative numbers into financial models for the interest rate, models start breaking.
Question: What ETF, if it were launched tomorrow, would you invest in with little (or no) hesitation? Said another way what asset class or strategy is not currently (effectively) available in an ETF wrapper?
According to the bloggers we are full up with ETFs. I love Morgan Housel’s call for a true “World Fund” that would serve as a default investment option for many. The stuff I would like to see in an ETF are probably too illiquid like farmland, timberland or residential real estate.
I liked this question because you can go in so many different directions. At some point the falling number of public (US) companies will become an issue. However, today my answer is Lyft. In large part just to see them mess with Uber.
On the blogging front I look forward to posts from Nick Maggiulli (@ofdollarsanddata) at Of Dollars and Data. On the podcasting front I am a big fan of the finance-adjacent Khe Hy (@khemaridh) at Rad Awakenings. Khe’s weekly e-mail is also worth subscribing to as well.
We will get back to our regular publishing schedule tomorrow. Cheers.