Michael D’s advice are currently not followed by the super-HNWs (for reasons that are not super-legible to me, though admittedly I haven’t looked too deeply).
I don’t really know, but my guess is it’s mostly because of two things:
Most people are not strategic and don’t do cost-benefit analyses on big decisions. HNW people are often better at this than most, but still not great.
On the whole, investment advisors are surprisingly incompetent. That raises the question of why this is. I’m not sure, but I think it’s mainly principal-agent problems—they’re not incentivized to actually make money for their clients, but to sounds like they know what they’re talking about so they get hired. And the people who evaluate investment advisors know less than the advisors do (almost by definition), so aren’t good at evaluating them.
There is a reasonable third possibility, which is that nobody implements my unorthodox investing ideas because I’m wrong. I believe it would be valuable for a competent person with relevant expertise to think about the same things I’ve thought about, and see if they come up with different results.
ETA: One counterexample is Bill Gates. One of my pet issues is that people concentrate their wealth too much. But Bill Gates diversified away from Microsoft fairly quickly, and right now only a pretty small % of his wealth is still in Microsoft. I don’t know how he pulled that off without crashing the stock, but apparently it’s possible.
I don’t really know, but my guess is it’s mostly because of two things:
Most people are not strategic and don’t do cost-benefit analyses on big decisions. HNW people are often better at this than most, but still not great.
On the whole, investment advisors are surprisingly incompetent. That raises the question of why this is. I’m not sure, but I think it’s mainly principal-agent problems—they’re not incentivized to actually make money for their clients, but to sounds like they know what they’re talking about so they get hired. And the people who evaluate investment advisors know less than the advisors do (almost by definition), so aren’t good at evaluating them.
I just wrote a longer essay about this: https://mdickens.me/2021/10/29/obvious_investing_facts/ (I had been thinking about this concept for a while, but your comment motivated me to sit down and write it.)
There is a reasonable third possibility, which is that nobody implements my unorthodox investing ideas because I’m wrong. I believe it would be valuable for a competent person with relevant expertise to think about the same things I’ve thought about, and see if they come up with different results.
ETA: One counterexample is Bill Gates. One of my pet issues is that people concentrate their wealth too much. But Bill Gates diversified away from Microsoft fairly quickly, and right now only a pretty small % of his wealth is still in Microsoft. I don’t know how he pulled that off without crashing the stock, but apparently it’s possible.