This one is really something else. I don't know how else to describe it. Your other guests kind of echo each other in many ways (which is fine) but this guy is his own solar system.
Wow.. Relatively new to this podcast. To put it simply never learned so much about finance and economics in a single day! I thought I knew a lot, but this gives a whole new perspective!
Wow. Speechless. I don't know how you manage to get guests like that, but keep up the good work. I would really like to have each and every one of your guests sharing his own asset allocation if possible.
Never heard Merton talk, but his insights are great. ICAPM sounds very complicated to use in practice. I tend to learn best from examples - like how should a 30 year old nurse invest her money to provide for her standard of living in retirement? Her human capital is bond like and stable, has a long time horizon, resilient to inflation as her human capital is a real asset vs. how should a near retiree with 1mm invest to provide for 50k/yr inflation adjusted income - little human capital, huge inflation risk, big sequence risk, huge risk to prevailing interest rates. Would've been helpful to have some building blocks for what assets to hold to best minimize the unique risks they face at each stage of their lives.
Prof Merton made a comment near the end, "what's the underlying explanation for value and so forth. That would be for another day." I think this would be a great podcast. What is the underlying explanation for small cap, value factors, etc? I still don't get it.
Einstein famously said that everything should be made as simple as possible, but no simpler. You guys seem to have struck this delicate balance in the tricky world of investment.
I am attracted to idea of stabilizing the volatility of the portfolio instead of rebalancing for say, 60/40 to stabilize risk...but stabilizing the volatility sounds elusive to me. What is the approach to stabilizing the volatility?
I loved the discussion about framing retirement in terms of income. So often retirement is "do the best you can till you turn 65" or "I need X amount at X age". I like looking at it as "I can retire when my portfolio can sustain my lifestyle". Obviously there are caveats, but it's a much better framing device.
I was listening to that and wondering if it's really possible or right to simplify it like that. Because then you'll have people assuming it's the same as pension and thinking of it as guaranteed, which it won't be.
@@krdxz he didn't say this but I think the point is that most people should just periodically annuitize financial assets during retirement as their income need rises.
@@gmh953 The original poster liked the whole idea of changing way of thinking from wealth to income, which is appealing to many people, I agree. What I'm saying thought is those "caveats" mentioned will cost you, there are always associated costs when inserting a middle man between investor and his/her money.
This is 3rd time I listened to this episode, still learned a lot. Will keep come back listen to it, I am sure. Professor Merton is truly amazing, and so clear minded.
I hope you've asked about the new Brazilian Treasury bond Prof Merton helpe do to conceive. The bond has a "inflation+rate" yield and is expected to pay 240 monthly payments after maturity (8 options from 2040 to 2065). At today's market, the yeild is abot inflation +6 in BRL. The cost is zero if held to maturity.
Nice But I guess LCTM would also have provided a good experience and lessons learned. Understand that topic was to be avoided, would have found it interesting though. Maybe for another platform.
Lol “selling your human capital is illegal” yeah Abraham Lincoln got rid of that in the States. Also Merton seems like such a thoughtful and humble guy
Benjamin Franklin put his money in a savings account and told the bank not to take it out for 200 years after he died. They cashed it out 200 years later for 7 million dollars
Theory that can't be put into practice. Saying everyone should not use shares/retirement investments because they are risky and use risk-free annuities instead that don't exist... even if there was I doubt it'll be a great return. Could increase social security for all by increasing taxes and hope population growth can cover it in perpetuity, not risk free.
Nice gentleman but I very much disagree with his stance on education. Some time ago we were discussing how the lack of financial knowledge/literacy led to retirement income gap, and after watching this video, I can totally see how some people have been handicapped by advisors.
The issue is people who don't want to get educated, and resent attempts to educate them for whatever emotional reason. That comprises most people, particularly the elderly. You have to meet those people where they're at, that will at least enable them to make better, if still sub-optimal decisions.
This one is really something else. I don't know how else to describe it. Your other guests kind of echo each other in many ways (which is fine) but this guy is his own solar system.
Wow.. Relatively new to this podcast. To put it simply never learned so much about finance and economics in a single day! I thought I knew a lot, but this gives a whole new perspective!
He throws this little gold nugget right at the end, valuing growth stocks as options, not by discount rate. Food for thought.
This bloke is awesome. Never learned so much and gained brand new perspective in one interview…ever
Wow. Speechless. I don't know how you manage to get guests like that, but keep up the good work.
I would really like to have each and every one of your guests sharing his own asset allocation if possible.
Such a great man and so humble he thought he's apologizing for taking your time amazing.
Prof. Merton is a true Boss
Very happy to find this channel - esp being 2 years from retirement and heading into 2023 🙂
The main lesson: in a world where a lot of people waste lots of time having nothing to say,, Prof. Merton still apologizes for taking too much "tape".
Never heard Merton talk, but his insights are great. ICAPM sounds very complicated to use in practice. I tend to learn best from examples - like how should a 30 year old nurse invest her money to provide for her standard of living in retirement? Her human capital is bond like and stable, has a long time horizon, resilient to inflation as her human capital is a real asset vs. how should a near retiree with 1mm invest to provide for 50k/yr inflation adjusted income - little human capital, huge inflation risk, big sequence risk, huge risk to prevailing interest rates. Would've been helpful to have some building blocks for what assets to hold to best minimize the unique risks they face at each stage of their lives.
Prof Merton made a comment near the end, "what's the underlying explanation for value and so forth. That would be for another day."
I think this would be a great podcast. What is the underlying explanation for small cap, value factors, etc? I still don't get it.
Einstein famously said that everything should be made as simple as possible, but no simpler. You guys seem to have struck this delicate balance in the tricky world of investment.
I am attracted to idea of stabilizing the volatility of the portfolio instead of rebalancing for say, 60/40 to stabilize risk...but stabilizing the volatility sounds elusive to me. What is the approach to stabilizing the volatility?
I loved the discussion about framing retirement in terms of income. So often retirement is "do the best you can till you turn 65" or "I need X amount at X age". I like looking at it as "I can retire when my portfolio can sustain my lifestyle". Obviously there are caveats, but it's a much better framing device.
I was listening to that and wondering if it's really possible or right to simplify it like that. Because then you'll have people assuming it's the same as pension and thinking of it as guaranteed, which it won't be.
@@krdxz he didn't say this but I think the point is that most people should just periodically annuitize financial assets during retirement as their income need rises.
And seeing the income your 401k can generate when annuitized in the future is a much better gauge of retirement readiness.
@@gmh953 The original poster liked the whole idea of changing way of thinking from wealth to income, which is appealing to many people, I agree. What I'm saying thought is those "caveats" mentioned will cost you, there are always associated costs when inserting a middle man between investor and his/her money.
This is 3rd time I listened to this episode, still learned a lot. Will keep come back listen to it, I am sure. Professor Merton is truly amazing, and so clear minded.
The sequel to Ep 200? Hahaha. Great work guys!
Thank you!
Actually it was Modigliani who worked on life cycle. Friedman was permanent income vs transitory.
I hope you've asked about the new Brazilian Treasury bond Prof Merton helpe do to conceive. The bond has a "inflation+rate" yield and is expected to pay 240 monthly payments after maturity (8 options from 2040 to 2065). At today's market, the yeild is abot inflation +6 in BRL. The cost is zero if held to maturity.
Nice But I guess LCTM would also have provided a good experience and lessons learned. Understand that topic was to be avoided, would have found it interesting though. Maybe for another platform.
Lol “selling your human capital is illegal” yeah Abraham Lincoln got rid of that in the States.
Also Merton seems like such a thoughtful and humble guy
Great discussion.
What a cool ass boss!
This must be humbling. So no monte carlo anymore?
😂 nice
Benjamin Franklin put his money in a savings account and told the bank not to take it out for 200 years after he died. They cashed it out 200 years later for 7 million dollars
😎👌🏻
Theory that can't be put into practice. Saying everyone should not use shares/retirement investments because they are risky and use risk-free annuities instead that don't exist... even if there was I doubt it'll be a great return. Could increase social security for all by increasing taxes and hope population growth can cover it in perpetuity, not risk free.
2:22
3:20 size cant be a risk.
Nice gentleman but I very much disagree with his stance on education. Some time ago we were discussing how the lack of financial knowledge/literacy led to retirement income gap, and after watching this video, I can totally see how some people have been handicapped by advisors.
Esoteric knowledge is power money wrapped up by the elite mummy tombs.
The issue is people who don't want to get educated, and resent attempts to educate them for whatever emotional reason. That comprises most people, particularly the elderly. You have to meet those people where they're at, that will at least enable them to make better, if still sub-optimal decisions.
Definetly not a man of few words
10:00
11:42
27:45
31:28
34:50
36:55
LTCM
...
Basically, dividends are the only thing that matters. That's what he said.
😆🤣🤣🤣