I have a soft spot for Barron’s Magazine, the investing weekly. When I was a kid my dad would always have a folded copy in his briefcase. A little over 13 years ago, when I decided I wanted to be a financial journalist, one of the first things I did was apply for a job at Barron’s. They weren’t hiring but I wound up writing a couple of dozen freelance pieces for them anyway.
I’m happy to say that they, or at least their book reviewer, have a soft spot for me too. The review that appeared of Heads I Win, Tails I Win was very flattering. I like how it starts:
Spencer Jakab comes off as a reluctant financial guru. You might expect a Wall Street Journal columnist and editor (Heard on the Street, Ahead of the Tape) to stress his investment prowess in a book on investing. But not until page 249 does Jakab confide that he rescued his mother’s stock portfolio from the dot-com bust of the early-2000s, persuading her to sell her Nasdaq-related holdings in the fall of 1999 and park the funds in “boring Treasury bonds.” Her circle of middle-age Hungarian immigrants ignored his advice and lived to regret it.
Anyway, read the whole thing and then read my book if you haven’t already.
I went on the WSJ Moneybeat podcast today for the first time and it was, um, interesting. For the first segment, Chris Dieterich of Barron’s, Stephen Grocer and Paul Vigna of Moneybeat, and Chuck Jaffe of Marketwatch and I discussed “smart beta,” the hottest trend in investment products. I talk about smart beta in my upcoming book.
In a nutshell, “beta” means stock market return whereas “alpha” is the extra gain that clever fund managers try and usually fail to generate. That’s why passive index funds are the best bet for most investors. But smart beta tweaks that by attaching allegedly smart criteria to a passive fund. These are getting more and more exotic, though they can be something as basic as equally-weighting stocks rather than using market value or favoring stocks with lower P/E ratios.
Some smart beta is a costly gimmick and other products are pretty sound, but beta can be as smart as a whip and not help investors who do dumb things. That tendency to buy high and sell low is hardwired into most of us.
It was a lively, respectful discussion. Then the gloves came off and we discussed the relative merits of Alexa, the Amazon.com talking speaker, and cheese. You see this week’s WSJ Heard on the Street podcast featured David Reilly’s very own Alexa. Stephen and Paul thought it was a cheap stunt to overshadow their podcast earlier in the week when they attempted to eat three pounds of cheese. You see there’s a big cheese surplus in the U.S. and every man, woman, and child in the country would have to consume that much of the stuff to deplete the excess.
Unfortunately, the lightweights on WSJ Moneybeat couldn’t eat all the cheese between them and had to leave plates of it in the newsroom for the rest of us to help polish off. Despite mild lactose intolerance, I bravely chipped in to whittle away at the surplus.