Customizing Your Portfolio To Your Financial Advisor’s Needs

Researchers question the degree of actual portfolio customization investors receive from through their financial advisors. Retail Financial Advice: Does One Size Fit All?

Using unique data on Canadian households, we assess the impact of financial advisors on their clients’ portfolios. We find that advisors induce their clients to take more risk, thereby raising expected returns. On the other hand, we find limited evidence of customization: advisors direct clients into similar portfolios independent of their clients’ risk preferences and stage in the life cycle. An advisor’s own portfolio is a good predictor of the client’s portfolio even after controlling for the client’s characteristics. This one-size-fits-all advice does not come cheap. The average client pays more than 2.7% each year in fees and thus gives up all of the equity premium gained through increased risk-taking.

Everyone’s A Guru

Bloggers become noisier and more outrageous in efforts to gain audience. Guru Dreams and Competition: An Anatomy of the Economics of Blogs:

The rise of social media has encouraged guru dreams because of the low entry barrier and highly skewed distribution of public attention that characterize social media. The pursuit of guru status, however, may be achieved through information provision or cheap talk, and competition inherent to social media may incentivize participants to either process better information or express more extreme options. Using a unique dataset of blogs covering S&P 1500 stocks over the 2006-2011 period, we find evidence that social media can be informative about future stock returns but that competition distorts opinions rather than encouraging participants to process better information. In particular, competition induces exaggerated negative tones in blogs, which is unrelated to information. Our results suggest that social media may provide mixed incentives for its participants in terms of information efficiency.

Mall Threatens Stores With Fine For Not Opening On Thanksgiving

Busy Mall

Staying closed on Thanksgiving is no longer an option.

An upstate New York shopping mall is threatening to fine retailers about $200 an hour if they fail to open at 6 p.m. on Thanksgiving.

Walden Galleria, a suburban Buffalo retail complex with more than 200 stores, told store managers in a meeting last week that they must open their doors when the shopping center opens on the holiday, or pay penalties specified in leases, 10 managers told The Huffington Post on Tuesday. Waiting until midnight to open may cost stores $1,200 or more.

Struggling to compete with big-box stores and online retailers, shopping malls around the country plan to kick off Black Friday early by opening on Thanksgiving. The malls are trying to keep up with stores like Kmart, Target and Walmart, which have all pushed holiday shopping’s start date to turkey day.

Smarter Guns For Law Enforcement

Police Guns

The MIT Technology Review sees a future of networked guns.

When a police officer draws a firearm he or she often doesn’t have an opportunity to radio for backup.

YardArm, a California-based company, is building technology that will automatically alert headquarters in such situations. The company makes a chip that goes into the handle of a regular firearm and transmits data over a cell-phone network connection. The data transmitted includes the location of a gun and whether it has been unholstered or discharged. The company is also working to track the direction in which a gun is pointing. The data can be fed to a police dispatch system or viewed on a smartphone.

Private Equity Makes The Rules

KKR

Demand for investing in alternative assets is high, and that has left some asset management firms with all of the leverage in the LP-GP relationship.

KKR & Co., a private equity firm, has threatened to bar the Iowa Public Employees’ Retirement System from investing in KKR’s funds if the Iowa system complies with a public records request for information on what it is paying KKR in fees.

What is KKR so afraid of? Letting the world know how much it charges?

Even sadder, Iowa’s system is so desperate to remain in KKR’s good graces that its general counsel is backing KKR’s right to keep its fees a secret.

The Navy’s Autonomous Swarm

The U.S. Navy recently demonstrated its Autonomous Swarm project, a fleet of unmanned vessels designed to overwhelm an adversary.

As a large ship moved through the water, a helicopter overhead spotted an unidentified boat approaching and sent a warning to a small fleet of escort boats. Some were armed with loudspeakers, others with flashing lights, another with a .50 caliber machine gun.

Once the fleet zeroed in on the threatening vessel with radar and infrared sensors, some of the escort boats broke away and quickly encircled it. They flashed lights and blasted warnings through loudspeakers. Threat resolved.

All of the escort boats were unmanned—and yet they moved together as a group, thanks to what’s known as “swarm intelligence.”