Weekend Reading for Financial Advisers: LinkedIn, Cash, and Taxes

Like many of you, I’m sure, my reading over the past few weeks was largely influenced by the presidential election, discussions about the fiscal cliff, and the fallout from the resignation of General David Petraeus. Still, there were plenty of articles, studies, and videos of interest to financial advisers. Here are a few, in case you missed them:

The Election

• Barry Ritholtz discusses ten nonpolitical lessons from the 2012 election. (Washington Post)

Stock Selection

• What happens when academics publish papers on price anomalies in the stock market and then investors promptly read the articles and enter the market to take advantage of the anomaly? Does the discrepancy disappear? According to “Keep Digging: The Treasure Buried in Academic Papers about Market Anomalies,” researchers “looked at 82 separate anomalies discovered by academics and examined the returns from the suggested strategy both before and after publication. They find that investors can still earn excess returns after publication, but that these returns fall by around a third.” (Economist)
• For more, here is the study: “Does Academic Research Destroy Stock Return Predictability?” (SSRN)

Lehman Brothers vs Lehman Sisters?

• There is a pervasive belief that women are less risk-tolerant than men. After all, haven’t you heard more than once that the financial crisis might have been avoided if more women were in charge on Wall Street? Well. it’s time to rethink the conventional wisdom: “Why Women Don’t Take Risks With Their Money” points out “you can’t separate economic status from risk tolerance. . . . It’s not because [women] view themselves as savers rather than investors. It’s because they live economically more precarious lives than men.” (The Atlantic)

Practice Management

• Adam Bryant’s interview with Jeff Weiner, CEO of LinkedIn, for the weekly Corner Office column, is one of the best management articles I’ve read in a while. And while it ostensibly has nothing to do with wealth management, Weiner’s insights on management versus leadership, important leadership lessons, and firm culture are universal. (New York Times)

Muni Bonds

• Cate Long, the go-to gal on all matters muniland (and a speaker at the CFA Institute Wealth Management 2013 conference in Boston), explains why she is not a big fan of municipal bond-related mutual funds. (Reuters)

Holding Cash

• “Cash is trash” goes the saying in the market these days. At other times, however, you hear market participants express another sentiment entirely: “Cash is king.” In a blog post “Cash as Trash, Cash as King, and Cash as a Weapon,” Tom Brakke, CFA, explains that “investment professionals should get away from misguided notions about how much cash is too much cash in a portfolio. Let the manager use the value and power of cash to execute a strategy.” (Inside Investing)

Retirement Planning

• Wade Pfau offers his take on “Adaptive Investing: A Responsive Approach to Managing Retirement Assets,” published in the fall issue of the Retirement Management Journal. (Retirement Researcher)
• “Investment Performance, Inflation, and Taxes: Redefining History’s Bear Markets” reveals that bear markets are not always found where expected. When pretax nominal return, taxes, and inflation are considered concurrently, investment outcomes can be quite different than they appear based on total return alone. (Fidelity Investments, PDF)

Tax Planning

• Thomas O. Katz, a partner at the law firm Katz Baskies LLC, recently spoke to The Community Foundation of Broward County on end-of-year gift and income tax planning. His outline provides a top-notch summary of what you should be thinking about in the coming weeks and beyond. (Katz Baskies LLC, PDF)
• Lori Montgomery, writing in the Washington Post, notes that “unless Congress acts by the end of the year, more than 26 million households will for the first time face the alternative minimum tax (AMT), which threatens to tack $3,700, on average, onto taxpayers’ bills for the current tax year.” She cautions that “unlike most tax increases in the fiscal cliff, including the expiration of the George W. Bush–era income tax cuts, the AMT bill would come due almost immediately. And tax experts say it would be extremely disruptive to try to fix the AMT after the 2012 tax year closes Dec. 31.” (Washington Post)

Behavioral Economics

• NPR applies Daniel Kahneman’s logic to superstorm price gouging. (NPR)
• In “Show Me the Money,” Cass Sunstein discusses behavioral economics and consumer protection in the context of Oren Bar-Gill’s new book, Seduction by Contract: Law, Economics, and Psychology in Consumer Markets. (The New Republic)

Social Media

• Some handy tips for LinkedIn, especially if you work for a broker-dealer: “LinkedIn ‘Do’s and Don’ts’ for Financial Professionals.”(AssetMarketingSystems)
• More good ideas here: “Three Weapons of Influence to Impact Your Social Media for Financial Advisers.” (Financial Social Media)
• In this podcast, Brittney Castro, CFP, and author of the blog Financially Wise Women, discusses building a brand focused on women and integrating video and social media in her practice. (Wired Advisor)

Philanthropy

• A new study explores the relationship between family offices and family philanthropy, highlighting emerging best practices and providing benchmark data on the roles of each entity. The report finds that wealthy families are increasingly considering a family office to manage their philanthropic giving. (National Center for Family Philanthropy)
• According to a new report, private foundations with assets of less than $50 million increased their investments in alternative assets and gave away double the minimum requirement during a four-year period. The reporter quotes William Sutton, who heads U.S. Philanthropic Services at UBS: “This kind of attention has not been paid to the small size foundations even though these are some of the wealthiest families in the country,” he said. “I have not seen anything of this sample size, certainly nothing this recent, and nothing that is this comprehensive.” (Reuters)
• If you would like to read the full report, here it is: “The Foundation Source First Annual Report on Private Foundations.” (Foundation Source, PDF)

And Now for Something Completely Different

• The FT‘s John Gapper has lunch with Conrad Black. What follows is a delicious piece of writing. (Financial Times)
• “The Strange Neuroscience of Immortality” is a fun piece about connectomics (a new branch of neuroscience focused on connectomes, or complete maps of a brain’s neural circuitry), networks, immortality, and “uploading your brain” — the transfer of a biological brain to a silicon-based operating system. (Chronicle of Higher Education)
• In this brief video clip, two capuchin monkeys demonstrate what one researcher refers to as “the Wall Street protest” — same job, different pay check. (YouTube via 22 Words)

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