“Smart beta” is the latest investing fad

Vanguard, told the Bogleheads last month that many "smart beta" products favor small companies and stocks with bargain prices, which studies suggest may deliver higher returns over time.

If investors want to tilt in that direction, he said they should "do it intentionally"—and more cheaply—by adding conventional small-cap or value index funds to their portfolios.

Joel Dickson, a senior investment strategist in Vanguard’s Investment Strategy Group, said strategies that involve overweighting particular factors look a lot like active management "cloaked in index Halloween costumes."

Investors could think of it as "faux-dexing," he quipped.


Will Investors Ever Stop Underperforming Their Own Investments?

It’s the same mistakes over and over again.


Here is the bottom line:

So find a financial adviser who favors a handful of highly diversified funds rather than a jumble of narrowly focused, volatile funds. Make sure he tends to hold on for at least three years at a time. The simpler, smaller and smoother your collection of funds, the more likely you are to do as well as they do—instead of worse.

Google Employees Have Amazing Death Benefits


Google has universal employee death benefits of 50% of decedent’s salary for 10 years to a surviving spouse, plus $1,000 per month to surviving children until they’re 19, or 23 if a full-time student.

Sam Houston’s Last Will and Testament


Sam Houston’s Will. Some highlights:

"I wish my sons early taught an utter contempt for novels and light reading."

He gives his sword to his son, on the condition that "If any attempt should ever be made to assail one of these(the Constitution, the laws and Liberties of his country), I wish it to be used in its vindication."

Other than that, there are a whole lot of similarities between what we write and what’s here.

Yale endowment pulls back slightly from private equity


How to kick the tires on a hedge fund before you invest


Is it safe to move all of your assets to one brokerage company?

This article argues that it is.


Defrauded Madoff clients have recovered significant amounts

Madoff and MF Global

Madoff clients with under $875,000 have already been paid in full, says Mr. Harbeck. Those with multimillion-dollar claims have received 43% of their claim back plus the additional $500,000 from SIPC, Mr. Harbeck says, and will share in any additional assets recovered by the trustee and his counsel.

Nothing for the Nurse

Hughette ClarkEight years ago, near the end of her already long life, Hughette Clark set out to perform some estate planning. Ms. Clark was the heiress of an American copper magnate, who, among other things, spent time as a senator, established a railroad (at the height of the railroad era), and established Las Vegas. Clark county (where Las Vegas is) is named for him. A good chunk of this wealth passed to Ms. Clark upon her father’s death. Her estate plan, like most, sought to distribute this vast wealth to those she knew in life.

There are a number of interesting things about this case, but the first is the reclusive nature of Ms. Clark. She owned expansive real estate in California, Connecticut, and New York, but lived the last 23 years of her life in New York City Hospitals. This may have contributed to her impressive longevity, 104 years. Near the end of her life, the caretakers of her properties had not seen her for decades.

From an estate planning viewpoint, however, the most striking development here is that instead of using a will, which seems otherwise valid, a settlement was entered this week which includes distant relatives who were otherwise absent. Originally, her last will left portions of her estate to the hospital she resided in for over 20 years, her nurse, her accountant, and her attorney, who could be considered the people who were closest to her, although they were also on her payroll. During her estate planning process, however, she had apparently drafted another will several weeks before the final iteration, one which kept a portion of her wealth inside her family. The end result of a good deal of legal back-and-forth is that about nineteen of her half-great-grandnieces and half-great-grandnephews are cut in, over 10 million dollars in legal fees come out of the estate, and the lawyer, the accountant, and the nurse get nothing. For good measure, the lawyer and the accountant may be sued for malpractice.

Many of the articles I see on this mention the fact that the nurse, who otherwise would have inherited $30 million, was muscled out of the will. A good number of these accounts, however, fail to consider that the nurse also received gifts from Ms. Clark roughly totaling the same amount, when Ms. Clark was still alive.  The feeling of most of the coverage I’ve seen is that the poor loyal nurse was cheated out of her just reward by greedy distant relatives, but anyone who is given a 1.2 million dollar Stradivarius violin, and several Manhattan apartments could hardly be characterized as destitute. The nurse will have to give back to the estate roughly $5 million of gifts, these gifts having been deemed excessive (no word on whether this includes the violin). Contrary to most of what I see about this, it doesn’t appear that the loyal nurse was thrown out on the street.

There are some wide-ranging implications here, however. The family challenged the will on the grounds that Ms. Clark lacked mental capacity at the end of her life, but both of the wills were drafted in 2005, with the will the relatives favored drafted only six weeks before the final will that excluded them. If you assume Ms. Clark lacked capacity for the last will, it may raise questions of capacity for her first will (the one favored by the relatives). Also, any estate planning attorney worth his salt will have a system in place to defend against claims of this nature. For example, we typically have the witnesses declare in front of the notary that the testator appears to be of sound mind, among other things. The attorney’s failure to be able to prove capacity at the time of the will is curious.

While it’s impossible to say for sure that  Ms. Clark’s wishes were followed, it is safe to say that over $10 million could have remained in the estate if her estate had avoided litigation.

Fidelity Sued By Employees

Fidelity Sued by Employees Over Its Own 401(k) Plan

Fidelity is being sued by it’s own employees. They seem to feel that managed funds, like most of the ones Fidelity offers, aren’t worth the extra cost.