Michael Edesess Exposes the Conspiracies in Common Financial Practices

Money Tree Investing

Money Tree Investing Podcast

Stockmarket, Valuestocks, Investing, Finance, Passiveincome, Wealth, Business, Personalfinance

4.6 • 658 Ratings

🗓️ 14 June 2024

⏱️ 65 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Do you think there are conspiracies in common financial practices? I do. Michael Edesess thinks so too. He thinks there may be some conspiracies with pensions as well. He explains why strategies like rebalancing, diversification, mean variance optimization, and tax loss harvesting might not be as beneficial as they seem. Michael sheds light on how institutions like Ivy League endowments and public pension funds waste billions on active management that underperforms simple market indices, driven by the industry's profit motives rather than investors' best interests.

Today we discuss...

Michael's unexpected entry into the finance world, influenced by a classmate's suggestion to explore a brokerage firm using mathematics.
Why the finance industry and its practices, such as rebalancing and tax loss harvesting, fundamentally flawed.
Michael's perspective on rebalancing, challenging the belief that it improves investment returns, and why he believes this advice is often misguided.
The misconception of diversification in mutual funds and clarify the real benefits of diversification according to Harry Markowitz's theory.
Modern portfolio theory (MPT) and Michael's critique of its practical application, especially concerning mean variance optimization.
Why tax loss harvesting is not as beneficial as commonly perceived and the costs associated with it.
Robo advisors, their cost efficiency, and why Michael believes they still don't offer significant value over simple index funds.
The inefficiency and high costs of investment management for Ivy League endowment funds and public pension funds, labeling the industry as a conspiracy of inefficiency.

Today's Panelists:

Kirk Chisholm | Innovative Wealth
Barbara Friedberg | Barbara Friedberg Personal Finance
Phil Weiss | Apprise Wealth Management

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For more information, visit the show notes at https://moneytreepodcast.com/conspiracies-in-common-financial-practices-michael-edesess-616

Transcript

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0:00.0	Welcome to the Money Tree Investing Podcast.
0:04.0	Stock market, wealth, personal finance, value stocks, invest in your life.
0:10.0	Hello, Smart Money Tree Podcast listeners.
0:12.0	Welcome to this week's show.
0:13.0	My name is Kirk Chisholm and I'll be your host.
0:16.0	So today I'm joined with Michael Edisness.
0:18.0	How you doing today, Michael?
0:19.0	Um, just fine. How are you? Good. Well, glad to have you here. Really excited to have Michael in the show.
0:24.6	He's a wealth of wisdom and has a very deep math background, which I'm envious of. I love people
0:31.0	who are good at math because that's what runs the world. So, Michael, maybe you can tell us a
0:34.9	little bit about your background. Without going into too much of it, I'll just state what's relevant for this.
0:40.7	I got a high-level education, so to speak.
0:43.4	I went to MIT and majored in philosophy and mathematics, started graduate school in philosophy
0:50.5	for some reason, but found that that wasn't going to work.
0:54.0	So I switched into math,
0:56.1	got a PhD in pure mathematics, which is not the same as applied mathematics.
1:03.0	There was an applied math department at the university. There was no communication between
1:08.9	pure math and applied math,
1:11.2	because pure math was regarded itself as kind of above it all, you know,
1:15.9	just like an art form.
1:18.0	But nevertheless, you can use it.
1:20.0	How'd you get started in finance?
	...

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