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Also in industry news this week: A recent survey indicates that financial advisors continue to move towards ETFs and away from mutual funds when it comes to client portfolio recommendations, though a majority of advisors continue to see a role for active management in the investment management process A former employee has filed a lawsuit alleging (..)
Back before it became apparent that a financial crisis was happening, there was an immense amount of leverage in the banking system over which Bernanke had a responsibility to regulate. The banks had become over-extended, over-leveraged and Fed wasn’t paying attention at the time. That’s just the math.
The most prominent of which is Facet Wealth, which has stated a goal of getting advisors up to 250 clients/advisor by leveraging their own proprietary technology to make their advisors maximally productive. Which attracted a similar tech-enabled RIA competitor “Compound” earlier this year.
I was always good at math, but I really, I just didn’t relate to things that were more esoteric bonds options. And, and that is, you know, the treasuries were so low that you could be, have a 4%, 5% yield, even 3% on a real estate investment and still have a nice cushion over treasuries. I have no family history.
So whether you’re trying to get managed futures from an active manager or, you know, two months Treasuries, T bills, like the whole spectrum is now available in lose to 3,000 ETFs we are trading here in the U.S. NADIG: Well, I mean, there’s like TLT, with the big Treasury funds, LQD and HYG. It’s how math works.
You do the math and you’re like, “Okay, well, an advisor can handle about 100 clients, an associate advisor can help with some of those clients, you can leverage maybe an associate advisor with a couple of advisors, but there’s a capacity limit for each of the roles.” Is it at 1.5%?”
And what was interesting was the first leveraged buyout of a public company happened when I was in graduate school. KLINSKY: In 1979, it was the first leveraged buyout of a public company. We had sold the family business, maybe buy another family business one day through a leveraged buyout. The highest interest rates in U.S.
I’m good at math and science and you know, I always had an idea what go into business, but I felt that electrical engineering would be a good foundation. You know, I, it always, I I see different numbers all the time, so it’s always kinda like, who’s math if you will? 00:02:16 [Speaker Changed] Me too.
You know, people are comfortable, leverage builds. But since you mentioned getting return on the risk you take, how do you think about duration when the three-month Treasury is more or less the same or better than the 10-year? You know, the leverage in the system builds. And I think people underestimate U.S. RIEDER: Yeah.
We participated in that with treasury and FHFA and the regulators, the White House. It’s that the, so that’s the core competency and it’s just leveraged into, if it’s a loan, if it’s a security backed by a loan, if it’s the actual estate itself. So from a data perspective, think about it this way.
00:31:40 [Speaker Changed] So there’s the emotions and then there’s the math, right? We’ve re levered the economy, if you will, where the leverage of the private sector, the household sector, the corporate sector that got us into the great financial crisis that’s been healed. In a very short period of time.
I started out math and, and physics, and in high school I was a rock star in math and physics. And it covers the spectrum of fixed income from treasuries here to high yield there, and everything in between. I’m like, ah, we get six and a half, seven on the treasury. But those guys are great, right?
And I, and I really like the application of math and statistics and computer science to markets. You learn the math that can help you with, with market making operations. It’s just not smart on a math basis to do that. This is implicitly leverage. Leverage is a tool that accentuates both the good and the bad.
Wasn’t the Excel spreadsheet error, which changed their math. I’m buying mortgage backed securities and treasuries and I’m hoping it does something. But that generally involves leverage, right? I mean that was, that was the problem. The problem is Japan is running two 50%. That’s what he said.
They don’t let the reporters into the fun stuff, but it’s a bunch of CEOs with Steven Mnuchin, the Treasury Secretary, and they’re all yakking about this, the big theme that year, as it often has been since then, was environment, ESG, and they’re all talking about the kind of corporate babble that you hear at these things.
The transcript from this week’s, MiB: Howard Lindzon, Social Leverage , is below. So with no further ado, my discussion with Social Leverage’s Howard Lindzon. HOWARD LINDZON, MANAGING PARTNER, SOCIAL LEVERAGE: Hello, Barry. The next step from there was that Social Leverage. This all is leverage from the network.
I’d been ranked i i back in the seventies, if you can do the math. 00:31:28 [Speaker Changed] But you had no idea they were running a hundred to one leverage? Tell us a little bit about the plan for launching an independent economics research 00:09:15 [Speaker Changed] Shop. So at that point, I had a pretty big career.
In fact, I think Secretary of the Treasury at the time said the market will work out these things and they will not become a problem. Aren’t the big firms and the LBOs, the leveraged buyouts, very different than the middle market, smaller private equity firms that provide capital and equity to small companies.
It’s, it’s no different But, but inherently in futures, a whole lot more leverage, a whole lot more risk. You’re doing a lot of math in your head on the Fly. I’m doing, I’m doing an awful lot of math in my head on the fly. Hank Paulson had left to go become treasury secretary. I said, sure.
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