Good mischief-making piece in today’s L.A. Times on the investment practices of Nobel prizewinners:
Experts Are at a Loss on Investing
Nobel winners and top academics fumble the sorts of decisions Bush’s Social Security overhaul plan would ask average Americans to make.
By Peter G. Gosselin, Times Staff Writer
WASHINGTON — Harry M. Markowitz won the Nobel Prize in economics as the father of “modern portfolio theory,” the idea that people shouldn’t put all of their eggs in one basket, but should diversify their investments.
However, when it came to his own retirement investments, Markowitz practiced only a rudimentary version of what he preached. He split most of his money down the middle, put half in a stock fund and the other half in a conservative, low-interest investment.
“In retrospect, it would have been better to have been more in stocks when I was younger,” the 77-year-old economist acknowledged.
At least Markowitz invested more wisely than some of his fellow Nobelists. Several of them concede that they have significant portions of their nest eggs in money market accounts, some of the lowest-returning investment vehicles available.
“I know it’s utterly stupid,” confessed George A. Akerlof, a UC Berkeley professor and 2001 winner of the Nobel Prize in economics.
Related posts:
It’s amazing isn’t it. Some very intelligent people should know better. Imagine if the average American was going to invest a portion of their social security (who generally knows little on the subject) Even those who know are educated on the subject are at risk under the current plan by the way it is developed.
We need to keep things simple and educate at the same. It is hard enough just to get people to make an extra mortgage payment each year. We do not need to confuse people with a social secrity plan that is not beneficial.
It’s amazing isn’t it. Some very intelligent people should know better. Imagine if the average American was going to invest a portion of their social security (who generally knows little on the subject) Even those who know are educated on the subject are at risk under the current plan by the way it is developed.
We need to keep things simple and educate at the same. It is hard enough just to get people to make an extra mortgage payment each year. We do not need to confuse people with a social secrity plan that is not beneficial.
Some Interesting Tidbits
Paul Kedrosky of Infectious Greed has a couple of interesting posts up on his blog. The first shows that even economists have trouble practicing what they preach: Harry M. Markowitz won the Nobel Prize in economics as the father of “modern portfolio th…