Met Moshe Milevsky Last Week...........

[FinanceDude]

At a lunch meeting with ING. He did a presentation on Longevity risk and how it's a risk noone is talking about. Fascinating stuff. He covered the rise and fall of tontine insurance in the early 1900's, and how that led to social programs such as SS coming of age. Also, the death of defined benefit programs.

His main focus was on the risk management of DISTRIBUTION for retirees, and how the financial industry is just now getting "around to it".

He pretty much HATES Target Retirement Funds, his comment was: "Great, I just stopped working and have to live the rest of my life on my nest egg, so you have me "gliding into bonds" when inflation could kill my portfolio....thanks a lot"!!

I introduced myself and we talked for a minute or so. What a funny guy..........

[Sarah in SC]

He's the guy that wrote the retirement ruin gamma distribution formula I asked about in the other thread. How cool! Congrats on getting to meet him and hear him talk!

Longevity and distribution are really hot topics right now, my older boss has been working on a lot of nifty stuff with that monster ERG formula from Milevsky's book The Calculus of Retirement Income (page 193).

Glad to hear he's more interesting than his materials would indicate!

[FinanceDude]

Quote:

Originally Posted by Sarah in SC He's the guy that wrote the retirement ruin gamma distribution formula I asked about in the other thread. How cool! Congrats on getting to meet him and hear him talk! Longevity and distribution are really hot topics right now, my older boss has been working on a lot of nifty stuff with that monster ERG formula from Milevsky's book The Calculus of Retirement Income (page 193). Glad to hear he's more interesting than his materials would indicate!

He's a funny guy, kind of rants, soapboxes, and one-lines as he hops around the stage. He used himself as an example: "All I want these days is ALPHA, don't talk to me about risk management, I WANT ALPHA"!!!!!

[ETFnerd]

I agree with Moshe. Here is a link to a thread in the forum that links a paper by Zvi Bodie that addresses longevity risk. A lifelime inflation protected annuity is probably the best way to address this risk. These products will be available soon. Whether they're cost efficient is an open question.

http://www.early-retirement.org/foru...1-a-33704.html

[Nords]

Did he explain (1) the personal-capital earnings potential of an early retiree, and (2) his own asset allocation?

[FinanceDude]

Quote:

Originally Posted by Nords Did he explain (1) the personal-capital earnings potential of an early retiree, and (2) his own asset allocation?

In regards to the first, what exactly do you mean?

He told us a few things about his asset allocation, he has some money in a hedge fund, and venture capital money in a real estate venture. Come to think of it, I don't know Dave Ramsey or Scott Burn's asset allocation mix either..........

[Nords]

Quote:

Originally Posted by FinanceDude In regards to the first, what exactly do you mean?

Eh, now I can't find the link.

A few months back, when Roy Weitz was still writing his monthly "Highlights & Commentary" on FundAlarm.com, I thought he mentioned Milevsky's "human capital" concept. The idea is that one's salary income should be viewed as a bond allocation since it's (more or less) reliable and thus employees should hold high-equity portfolios during their working years.

The other side of the concept is that retirees need a steady income (pension, annuity, bond portfolio) since they're no longer earning a steady paycheck.

A third aspect of the discussion was that ERs are a "tragic case" of wasting their potential for lifetime income, or words to that effect. But I might have Milevsky confused with some other name ending in -sky.

Quote:

Originally Posted by FinanceDude He told us a few things about his asset allocation, he has some money in a hedge fund, and venture capital money in a real estate venture. Come to think of it, I don't know Dave Ramsey or Scott Burn's asset allocation mix either..........

I think a financial advisor's/researcher's credibility rests upon their reasoning behind their personal asset allocation-- or more importantly how willing they are to discuss it.

[FinanceDude]

Quote:

Originally Posted by Nords I think a financial advisor's/researcher's credibility rests upon their reasoning behind their personal asset allocation-- or more importantly how willing they are to discuss it.

Are you asking for MY asset allocation, or Moshe's, or both? He was not asked about his asset allocation directly, although he did say he doesn't keep any cash except for an emergency fund. I took that to believe he's 100% in equities, although I don't know the exact mix.

[haha]

Quote:

Originally Posted by FinanceDude Are you asking for MY asset allocation, or Moshe's, or both? He was not asked about his asset allocation directly, although he did say he doesn't keep any cash except for an emergency fund. I took that to believe he's 100% in equities, although I don't know the exact mix.

It seems to me that the retirement guru's allocation may not matter much, since he is obviously working and likely making very god money with a lot of security.

On the other hand if we are talking investment advisors, and the skill being claimed is the ability to get good risk adjusted equity returns, then it is relevant to know how they are investing- in particular are they invested in what they are recommending for you?

Ha

[Nords]

Quote:

Originally Posted by FinanceDude Are you asking for MY asset allocation, or Moshe's, or both? He was not asked about his asset allocation directly, although he did say he doesn't keep any cash except for an emergency fund. I took that to believe he's 100% in equities, although I don't know the exact mix.

No, no, no, no personal attacks, my apologies if that's the interpretation, no offense intended.

I'm interested in Moshe's asset allocation because of the asset allocations he recommends. Bernstein claims that he'll never retire as long as he can write, Burns admits the same although he works with a guy who sells retirement-planning software, Buffett readily discloses his asset allocation (other than individual stock picks), and even Bogle submits to occasional scrutiny. I think an advisor's asset allocation is a critical component of their credibility, and if I was making a living on recommending AAs then I'd have mine posted on my office door.

Compare that to people like Suze Orman who don't hesitate to dispense advice or even castigate their customers but who appeared bashful, even deceptive, about their own AAs. Of course Orman & Ramsey aren't even fit to clean the mud off Milevsky's footwear, but that's another rant thread.

[haha]

Quote:

Originally Posted by Nords Compare that to people like Suze Orman who don't hesitate to dispense advice or even castigate their customers but who appeared bashful, even deceptive, about their own AAs.

I saw Suze Orman once; she disclosed her AA early in the talk.

Ha

[Art G]

Milevsky also said something that hit home. He compared the auto manufacturers and said, (I'm sure I don't have his exact numbers), GM has something like 501 retirees for every current worker, Ford has like 146/1, Nissan 15/1 and Toyota 3/1.
Anyway, his point being that GM isn't an auto manufacturer, they are a health care and retirement company who sidelights in the auto business.

[brewer12345]

Quote:

Originally Posted by Nords No, no, no, no personal attacks, my apologies if that's the interpretation, no offense intended. I'm interested in Moshe's asset allocation because of the asset allocations he recommends. Bernstein claims that he'll never retire as long as he can write, Burns admits the same although he works with a guy who sells retirement-planning software, Buffett readily discloses his asset allocation (other than individual stock picks), and even Bogle submits to occasional scrutiny. I think an advisor's asset allocation is a critical component of their credibility, and if I was making a living on recommending AAs then I'd have mine posted on my office door. Compare that to people like Suze Orman who don't hesitate to dispense advice or even castigate their customers but who appeared bashful, even deceptive, about their own AAs. Of course Orman & Ramsey aren't even fit to clean the mud off Milevsky's footwear, but that's another rant thread.

Milevsky is an academic. He spends his time trying to "prove" (as far as that is possible in these matters) what teh optimal solution is for retired folks. As a working individual, I don't think his personal allocation matters much.

[RockOn]

Quote:

Originally Posted by haha I saw Suze Orman once; she disclosed her AA early in the talk. Ha

What did she reveal?

I read that Cramer has most of his money in safe investments like TBills and CD's, that is a joke.

[W2R]

Quote:

Originally Posted by RockOn What did she reveal? I read that Cramer has most of his money in safe investments like TBills and CD's, that is a joke.

I have heard her mention her investments on the show, but to be honest I can't exactly remember what they were. Maybe it will come to me. I do remember her saying that her plan probably would not be suitable for the average joe, because she is so well off.

[brewer12345]

Quote:

Originally Posted by RockOn I read that Cramer has most of his money in safe investments like TBills and CD's, that is a joke.

Just like Cramer.

I think its a tossup as to whether he or Kiyosaki is the bigger assclown.

[saluki9]

Quote:

Originally Posted by brewer12345 Just like Cramer. I think its a tossup as to whether he or Kiyosaki is the bigger assclown.

Is that even in question? I though Kiyosaki had that locked up?

As for Nords statement about asset allocation. Being in a business where so much of your income depends on the performance of the broader market (which obviously is out of your control) does some weird things to your own choice in investments.

I have a very non traditional asset allocation which I would be happy to tell clients about, but I don't think it would add anything of value to them.

[brewer12345]

Quote:

Originally Posted by saluki9 Is that even in question? I though Kiyosaki had that locked up?

What Cramer lacks in "quality," he at least makes up for in quantity. You can fertilize a field with bullcrap or pigeons!ht.

[saluki9]

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Originally Posted by brewer12345 What Cramer lacks in "quality," he at least makes up for in quantity. You can fertilize a field with bullcrap or pigeons!ht.

No doubt that Cramer pollutes more people with his BS, but at least he became rich doing what he preaches.

Kiyosaki got rich being a phony, Cramer at least became a phony AFTER he got rich.

[brewer12345]

Quote:

Originally Posted by saluki9 No doubt that Cramer pollutes more people with his BS, but at least he became rich doing what he preaches. Kiyosaki got rich being a phony, Cramer at least became a phony AFTER he got rich.

You really think Cramer got rich by making hundreds of snap (usually wrong) judgements about equities?

I think the man is the equivalent of a monkey throwing its poop at the stock tables of the WSJ so that its owner will know what to buy.