A Heartfelt Thought

December 16, 2016

I was going to write about something else this week. But while I've been working as fast as I can to dump the seriously underperforming, high fee mutual funds out of new clients' portfolios, I saw that the penthouse of the most expensive address in NY real estate was sold. Here's the building, 432 Park Ave:

Curious, I looked it up. The buyer? The chairman of one of the largest actively managed mutual fund companies in America.

My accounting professor in college, Uwe Reinhardt, once said, "you can learn a lot in life by following the cash flow."

There are two ways this insanity stops for Americans. The first is through regulation. While the regulators I have met so far have been personally impressive, the financial industry has enough influence on politicians to mitigate real reform. I expect this will be the case going forward, no matter what party controls the federal government. I am not hanging my hat here.

The second approach is to take away the industry's cash flow. This is far more dangerous from their perspective because there isn't much they can do about it. And once consumers realize what is happening to them and switch to indexing, they almost never go back. This is the essence of One Day In July: by getting between the investor and the industry, we cut off the the industry's lifeline, and our clients get the rewards.

Should this spread, it will leave the traditional industry in quite a pickle. People I know in New York finance have told me executives at financial firms are worrying about indexing more than anything else.

To me, One Day In July is more of a mission than a business. But I (and soon "we") will need your help. Almost everyone is being afflicted by this, and it's time normal people stop giving up their retirements, their charitable giving, and their safety nets for the folks at 432 Park Ave.

What can you do? Don't be afraid to talk to people you know about money, and what you learn here. Others have to hear somehow what is going on, and I'm not going to be able to deliver the message alone. It will have to spread from person to person, like a wildfire. Or maybe, given that I'm in Burlington, like a cold wind from the North. (thanks for that one, Game of Thrones)

Have a nice holiday. I'll drop one more Friday newsletter at the end of the month wrapping up 2016. Plans for 2017 are already well underway, and it is going to be a whopper of a year.