Steve Forbes Interviews Liz Ann Sonders, Charles Schwab chief investment strategist

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My Notes on the Interview:

2:20 – Establishes her investing philosophy of long time guidance over market timing
3:15 – Explains emotion and time as two components of risk
4:40 – Over time proper asset allocation drives 90% of returns (selling into strength and buying into weakness). It’s also automatic
8:00 – Pockets of recovery throughout the economy
9:45 – Bloomberg financial conditions index as a snapshot for the credit market
12:00 – Fed has a tough balancing job between stimulating economy and limiting inflation. Sonders gives them a good mark
18:30 – Greatest financial lesson: Finance needs to be more accessible (Hope I’m helping!)
19:50 – Not bad a time to go to graduate school, then come back out during boom
20:50 – Agreed, most models are BS. A lot of models are really complicated but depend strongly on a few variables, which can be tweeked by bankers. There’s also  the real life problem of “garbage in garbage out” meaning if what you use as inputs isn’t accurate, you’re output will be significantly off.

Steve Forbes Interviews John Catsimatidis, Entrepreneur & Commercial Real Estate Developer

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My Notes on the Interview:

2:20 – Own every piece of your business, including the real estate
5:50 – I hope nobody in who works in finance was dumb enough to buy their homes with company stock as collateral
7:30 – Americans like buying American? Well that depends on the product. On most stuff Americans don’t care. On politically sensitive issues, I agree
9:00 – What happened to oil when it jumped to $140 or why people hate Wall Street
11:40 – Principles of starting a business
13:00 – Salesmanship 101
14:30 – Doing his best Clinton impersonation

Steve Forbes Interviews P. Brett Hammond, TIAA-CREF chief investment strategist

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My Notes on the Interview:

Preinterview – A Republican complains about a Democrat. Shocking.
3:08 – Reframing 401(k)s, annuities (income) vs. nest eggs
5:05 – Differentiate the goals of your money
6:05 – Variable annuities explained (riskier than fixed annuities, but chance for higher payouts)
8:00 – Streamlining 401(k)s (autoenroll, assett allocation, annuities)
9:30 – Average contribution rates of 6-8% is not enough. Aim for 17%. (Increase your auto contribution)
10:30 – Why you should default into a lifecycle fund
11:30 – The paradox of choice affecting 401(k)s
12:20 – Inertia. Or people are lazy
14:30 – Pick the best company in a sector rather than sector. I disagree. I don’t think anybody should be picking their own stocks. Knowing just enough to be dangerous is worse than knowing nothing
16:20 – Look at Management. Buffett & Peter Lynch mentions investing in companies that are so good, that an incompetent executive won’t mess it up, as eventually somebody incompetent will be in charge
21:00 – Macroeconmic Viewpoints. Feel free to skip this
25:20 – “Bold Prediction: Euro as new standard.” Feel free to skip this

Thoughts:

Although inertia plays a role in why people aren’t more proactive when it comes to 401(k)s, behavioral economists have long proven that people feel the pain from losses much stronger than the joy of gains. So when the average small investor thinks about investing, he focuses more on what he might lose rather than on what he might gain. This is why left to their own devices, people tend to buy high and sell low.

This is also why people tend to adopt their company’s default option when it comes to selecting a 401(k) plan. Just making an option the default makes people think of it as superior to the other choices.

Extra Reading:

Loss Aversion and Status Quo Label Bias