Did you catch the Sunday New York Times article on the supper clubs in Palm Beach? Look, Your Survival Guy loves Palm Beach, especially lunch at the Brazilian Court, but a supper club? Sounds expensive. But wait a second. When I started running the numbers, I thought, “Self, it could actually work.” That is, if it’s the right one.
You don’t have to be an uber-wealthy billionaire to have a nice life. Look for more supper clubs to show up, especially away from super high tax states. Welcome to Florida.
OK, you really can’t make up these headlines. Pension funds rethinking private equity investments, for example, because the prices are getting killed. It reads: “Some Public Pension Funds Are Pulling Back on Private Equity.” This stuff is like trying to price your daughter’s wedding or estimate construction costs. It’s near impossible.
And yet here we have the “administrators” of pensions giving money to the “billionaires” who manage it for the benefit of your high school teacher. Listen, the further you get from your money, the more you need to watch it.
Today, public servants on a typical pension—not the crazy ones in Chicago—are faced with nosebleed inflation on a fixed income. There is no inflation adjustment that can keep pace. It’s why I always recommend you work for as long as you can to keep control of your income.
What’s going on with your lazy cash? Not to throw stones, but if you have an account at Charles Schwab bank, make sure your cash is getting the return it deserves. If you’re not paying attention, you might realize your cash is getting paid a pittance while being lent for a song. Pay attention.
Not to be outdone are the king and queen of ESG, Blackrock and Vanguard. Here you have management voting their politics with your money. Wouldn’t it be nice if you could trust your manager to simply be a fiduciary? It’s a complicated world out there. Keep it simple.
In a conversation with a customer yesterday, we came up with an investment plan to transition some equity into investment-grade bonds. The yields I’m seeing today are good. But don’t reach for yield. Another headline: “Credit Suisse Bond-Wipeout Threatens $250 Billion Market.” Junk bonds are no place for Your Survival Guy.
When the “smartest” guys in the room run the bank and the “smartest” guys in government come to the rescue, what could possibly go wrong?
Stick with Your Survival Guy. Focus on return of assets, not return on them, and you might have enough for that supper club.
Action Line: When you’re ready to talk, I’m ready to listen.
E.J. Smith - Your Survival Guy
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