Whether you've had a good financial year or a bad financial year, these eye-popping financial facts and figures will make you want to laugh... or cry.
• The hedge fund industry as a whole lost 1.6% last year, but the average, mid-level portfolio manager earned $950,000, according to Gawker.com. Just one more example of how we are in the wrong business.
• Similarly, mutual funds, hedge funds, and private equity firms each year rake off 1-3% (or more) of all the money they manage, whether or not the pool gains or loses in value. One percent may not sound like much, but 1% of each billion dollars is $10 million for them. Over the course of an investor’s lifetime that otherwise insignificant 1% can accrue to a six- or seven-figure shortfall in our retirement nest egg. Or, as they say in the business, “Where are the customer’s yachts?” So watch those expense ratios, not just the returns.
• On a related note, the top 100 CEOs’ retirement accounts averaged $49.3 million each as of last year, which could produce a monthly retirement check of $277,686, according to NBC News. To add perspective, the total for these 100 CEOs, $4.9 billion, equals the retirement savings of 50 million American families. Not to coin a phrase, but “…there is something rotten in Denmark.”
• Last month, according to the Kaiser Family Foundation, 24% of people in a survey said that they, or a family member, had skipped filling a prescription, or had cut their pills in half, because of cost. And we learned in our training that 9 out of 10 times, if you don’t take a med, it won’t help you….
• The Grant Study at Harvard over 75 years (!) found that smarter friends make us smarter and more social friends make us more social. More to our point here is that adults who have a friend that they see on most days adds as much to our wellbeing as an extra $100,000 of income per year does. But will our friend pay my mortgage?
• Being taller than average pays off. The average CEO is 6’3”, for instance. And The Atlantic reports that an extra inch of height for the rest of us is worth $800 per year in additional salary, on average. Stand tall, my friends. It can pay.
• One of the factors in our slower-than-desired economic recovery is that corporations have spent over $500 billion in stock buy-backs in the first part of this year alone, as has been widely reported. The good news is that the stock market has been elevated and people are happy to see the value of their stocks increase, including the CEOs who make that decision, and personally benefit, often hugely. The bad news is that buy-backs means $500 billion has not been pumped into growing their businesses or creating jobs. To say nothing of the $1 trillion, with a T, that the corporations are keeping offshore to avoid taxes. Which is also not going into building their businesses or creating jobs.
• In the midst of this election-cycle xenophobia/bigotry, it is interesting to note that researchers at Columbia tell us that ethnically mixed teams of analysts price stocks 21% more accurately than fundamentals alone do. More tellingly, homogenous teams’ performance actually declined 33%. The theory is that people more readily trust others who are similar to themselves while the skepticism in dealing with a mixed group led to “better analysis and logic,” and therefore, better returns. As one wag once put it, “Faith is a wonderful thing, but it’s doubt that gets you an education.”