Dear Investors, the Time to Leave your Brains at the Door has Come …

This is really too funny. The latest investment fad – which strikes us as a typical “late bubble” idea, we might add – is letting machines do your “investing” for you. And statistically speaking, it actually seems to be a good idea. Of course, it presumably only works as long as no grueling long term bear market intervenes, such as has happened in Japan. Or even worse, something like the 68 year long bear market in Europe following the peak of the South Seas and Mississippi bubbles in Britain and France.

 

“Investment advisers concerned about competition from cut-rate digital investment firms known as “robo-advisers” received an olive branch on Wednesday from Betterment LLC, one of the largest of the new competitors.

The New York-based firm, which uses questionnaires and algorithms to create portfolios of inexpensive exchange-traded funds for individual investors, said it is now offering the program to advisers who tout financial planning and investment skills to generally wealthy individuals.

Fidelity Investments, which provides brokerage services to clients of 3,000 independent advisers and has custody of their assets, is referring Registered Investment Advisers (RIAs) who want to test digital investing to Betterment. The mutual fund giant will receive a one-time asset-based fee for RIA clients or prospects referred to Betterment.

Advisers who have tested the program said it will allow them to accept younger, less wealthy people who they had previously ignored and perhaps appeal to traditional clients. Betterment says that it produces returns 4.30 percent higher than those achieved by the average do-it-yourself investor.”

 

(emphasis added)

So are the robo-advisors selling now? Just asking.

Call us old-fashioned, but in spite of being often wrong (and always in doubt), we actually prefer to use what is left of our own hand-full of brain cells to make investment decisions.

 

 

 

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Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

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2 Responses to “Robo-Investing”

  • No6:

    I think I will stick to buying Gold right now.

  • Kreditanstalt:

    Why call it “robo-INVESTING”?

    There’s no “market”…this is a casino and this is “robo-GAMBLING”…has been so since real (not nominal!!!) economic growth ceased.

    And, in the absence of new players coming in, bettors are reduced increasingly to ripping the same shirt repeatedly off one another’s back and cannibalizing one another’s winnings.

    Even those winnings confer ever-shrinking purchasing power…

    There is no real economic growth anymore. Imagine the dilemma of a fund, annuity-provider, or insurer whose business model is predicated on 6-8% REAL returns…they have no choice but to roll the dice with one another.

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