MyPrivateBanking Blog
Daily Comments on the World of Wealth Management

Archive for the ‘What I've been reading’ Category

Robots forcing wealth managers into new roles

Monday, February 2nd, 2015

I read an interesting article about the fear AI (Artificial Intelligence) development causes due to an assumed threat of destroying jobs. However, the conclusion Andrew Ng, the famous AI researcher, makes, hits the nail on its head: the true challenge is not the robots but the retraining of the employees.

What does this imply for wealth managers? As robo-advisors gain ground, don’t waste your time but think about ways how to obtain benefits from this development. Define your new competitive advantage and exploit the psychological lead a human advisor (still) has over a robot.

Watch out for our upcoming report in March 2015 on digital interfaces for financial advisors to learn how.


Amazon’s Echo another milestone on the way to a no-click payment future?

Monday, November 10th, 2014

Amazon has released a new device called Echo – a device combining speaker and microphone with high-tech inner life. Working Siri-like, Echo is determined to read every wish from the user’s lips. Using voice-command, it is capable of playing music, putting products on a wish list, answering questions about any topic where information is available on the Internet and do a myriad of other things.

Reactions across social media and the blogosphere to this surprising release shortly before Christmas are mostly negative – in the aftermath of the NSA scandal it is only natural people are sceptic about data leeches.

Yet nobody should ignore that voice commanded devices is gaining in popularity. Just imagine a portfolio manager retrieving portfolio infos, drilling deep on some positions or even trading while driving her car to work or sitting at home just by talking into her smartphone, Echo speaker, digital windscreen or even an implanted chip. No matter how it will look like, you can be sure that voice-commanded processes will play an important role in the future and the market potential will be enormous.


Listen Up Stock Pickers!

Friday, January 28th, 2011

Here comes the first installment of the Barron’s Roundtable. This is always one of my favorite things in the yearly investment publication calendar. It’s because the participants have often very controversial hypotheses and are strongly at odds with each other about the outlook. At the roundtable you find such controversial figures like former Goldman investment head Abby Joseph Cohen and Dr. Doom Marc Faber. So, enjoy the games…


The 20 Richest People of All Time Are Listed….

Wednesday, September 8th, 2010

here. Great collection. Interestingly how diverse the wealth sources are/were. Whereas in the 18th/19th century and before trade, oil and transportation seemed to be the most prominent sources, in the 20th century wealth was generated more from retail, technology and investing.


WRONG! - How Bad Is the Advice You Get?

Monday, July 5th, 2010

Did you know that about two-thirds of the findings published in the top medical journals are refuted within a few years? It can get even worse: As much as 90% of physicians’ medical knowledge has been found to be substantially  wrong. In fact, there is a 1 in 12 probability that a doctor’s diagnosis will be so wrong that it causes the patient significant harm. These are some findings of the new book WRONG by David H. Freedman.

There are actually some very important implications the research of Freedman has for wealth management and investment strategies. In a recent Time interview he states:

“…there are certain experts who, not only is their advice very resonant, but they themselves are very resonant. Some experts project tremendous confidence. They have marvelous credentials. They can be very charismatic - sometimes their voice just projects it. Some experts get very, very good at this stuff. And what do you know? It really sort of lulls us into accepting what they say. It can take a while to actually think about it and realize their advice makes no sense at all.”

This is exactly what every investor should consider when sitting in his wealth advisers office, sipping a nice cup of coffee, listening to the latest analysis and investment proposals….


The Worst Enemy of Every Investor

Wednesday, June 16th, 2010

As a private investor, should you hire a good shrink or a good financial adviser? According to behavioural finance research the psychologist is  more valuable.   Forbes just published a good overview article on the most important findings of behavioral finance:

“…the burgeoning field of behavioral finance, which, over the past three decades, has blended elements of neurology, psychology and economics. It has revealed that, contrary to the preachings of classical economics, individual investors tend to be anything but rational, self-interested profit maximizers. Their own worst enemies would be a more apt description.”


Happy Holiday Reading!

Monday, December 21st, 2009

Just in case you want to spend some time during your holidays pouring over good & bad investment advice, thinking about financial Armageddon or heavenly bull markets, the (limited) wisdom of market pundits, or even read about bankers on the run, well, then have a look at the following links:

Institutional Investor is gloomy about stocks - sounds for my taste just a little bit like these “STOCKS ARE DEAD” predictions in the late 1970s….

Doug Kass’s 20 surprises for 2010 - fun to read and Doug in many cases was spot on end of 2008 with his predictions for 2009

Obituary - Legendary Value investor Chris Browne dies

Surprise - Best performing fund of the decade is from…SWEDEN

LA Times - shares with us the top-5 investing lessons of 2009, very rational

“Banker On The Run” - Why the new bonus tax makes British bankers leave London in droves.  An example how punishing taxes can backfire? (from the German paper Sueddeutsche)


    Top-Bankers Kept Wealth Despite Crisis

    Monday, November 23rd, 2009

    The New York Times discusses a new study about the effect of the financial crisis on the wealth of  top-investment-bankers. Yes, you guessed it right: The impact is rather small. Everybody can still keep those luxury condos, yachts, and expensive paintings (the exception being Bernie Madoff…). The study says that

    “… it is an urban myth that executives at Bear and Lehman were wiped out along with their companies. Though the chiefs at both investment banks lost more than $900 million in their stock holdings, the professors argue that it is important to also consider all the riches the bankers took off the table in the years preceding the crisis.At Lehman, the top five executives received cash bonuses and proceeds from stock sales totaling $1 billion between 2000 and 2008, and at Bear, the top five received more than $1.4 billion, according to the study, which was released on Sunday night.”

    Not very surprising, you might think. But if you put this situation in a historical context, you should think back to the days when all the big investment banks were private partnerships and a bankruptcy would indeed wipe out the personal wealth of the partners. Just consider how much things have changed over the last 30 years or so:

    Prior to 1970, all NYSE members had to be partnerships (and in those days, stock brokerage provided the bulk of industry earnings). That meant partners had their wealth tied up in the firm. The line at Goldman was that partners lived poor and died rich. (….) Moreover, if a firm went bankrupt, as Lehman did, the partners were personally liable. The creditors could seize their personal wealth. And those pay based incentives DID matter. Goldman was incredibly risk averse, both from a legal standpoint and in how it was cautious about deploying its capital (that does not mean it was not greedy, please, but was greedy in ways that had low odds of hurting its franchise).

    I guess if we want to avoid another financial disaster we have to somehow get these 1970s kind of incentives back into pay packages…


    “Verbal Diarrhoea”

    Tuesday, September 1st, 2009

    It has escalated to a gigantic verbal war: Krugman vs. Ferguson. The leftist Keynesian defending huge government spending, and the conservative economic historian in favour of financial prudence. Harsh words are being exchanged…including the allegation of verbal diarrhoea. The Times provides a nice summary of form and substance of the argument. Highly recommended if you want to understand what is at stake given the recent drastic government actions to fuel a boundless money supply. 


    Links for Pessimists, Optimists and Realists

    Monday, August 17th, 2009

    For Pessimists: Royal Bank of Scotland’s super-bear Bob Janjuah predicts new stock market lows in the coming fall. I am just wondering why these bankers with the cristal balls still have to work for a salary in a bank instead of making tons of money on their own predictions?

    For Optimists: The Economist analyzes the astonishing rebound of the Asian economies and what it means for the developed countries.

    For Realists: The Atlantic has a long piece on Warren Buffett and value investing: “What would Warren do?” Great introduction and outlook to the stock market for longterm investors.