Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.
History The blog Calculated Risk made an awesome animation on how America's age distribution has changed over the the last century, and will change over the next half-century:
Efficiencies Josh Brown writes about a world where everyone invests in index funds:
You may want to consider that there is a major paradox at work here -- the more successful passive investing is in converting the masses, the less successful it will be going forward. The last thing a passive indexer should want is for everyone to stop guessing and trading in the markets. Massive amounts of speculation is what fuels the winship of the passive approach over other strategies. If there were only a handful of institutions left picking stocks and the whole world was sitting in a Vanguard fund, the returns of the pros would probably become incredible thanks to all the unexploited inefficiencies.
Analysts at JPMorgan attack the idea that investors are overweight bonds and underweight stocks:
It is often mentioned that the large inflows into bond funds over the past five years have made retail investors very overweight bonds and we should thus see a full reversal of these inflows over the coming years. This is incorrect. The AUM [assets under management] of bond funds as % of the sum of equity and bond funds (both mutual funds and ETFs) is very close to its historical average. Similarly the AUM of equity funds as % of the sum of equity and bond funds (both mutual funds and ETFs) is also very close to its historical average. That is, there is no evidence that retail investors are very overweight bonds or very underweight equities. If anything, the opposite is more likely to be true...
Productivity The Atlantic writes a good piece on globalization and productivity:
Fifty years ago, the four most valuable U.S. companies employed an average of 430,000 people with an average market cap of $180 billion. These days, the largest U.S. companies have about 2X the market cap of their 1964 counterparts with one-fourth of the employees. That's what doing more with less looks like.
Reversal of fortunes Bloomberg writes on the end of the gold boom:
"We're holding trash bags," said Philip Mann, 53, who with his wife put about $160,000, half their retirement savings, into gold and silver coins starting in 2009. They're now worth at least 40 percent less, including sales mark-ups, he said. The drop forced him to cash out a 401(k) retirement plan, losing money to penalties. It also drained resources for two sons' college bills and the planned purchase of a new home, said Mann, a retail supply chain manager in Portland, Tennessee.