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Wall Street is promoting a colossal lie.
Money managers are in a desperate race to stuff illiquid, so-called private-market assets into funds anyone can buy, including your 401(k). They say we all can earn high return and low risk with nontraded “alternatives” like private equity, venture capital and private real estate.
Because private assets don’t trade, it’s the fund managers—not the market—that determine what they’re worth. That enables the managers to report much fewer and lower fluctuations than public funds do. Then they get to declare that private funds are low risk.
That’s ridiculous. In the real world, risk is the chance of losing money, which has nothing to do with how often prices are reported. Cliff Asness, co-founder of AQR Capital Management, calls the smooth returns reported by alternative funds “volatility laundering.”
Owning an alternative fund is a lot simpler than selling it. When you own it, you might take the manager’s valuations for granted, even if that’s a bad idea. When you sell it, the valuation matters—a lot. That’s a risk.
In short, an alternative fund can claim to be low risk and to be at least partly liquid—but, sooner or later, it won’t be able to sustain both claims at once. That’s true here, and for all the other funds hoping to rope in a much wider base of everyday investors.
Remember that as politicians ease the way for alternative funds to land in your retirement plan.
Link to Full Article:
— There are alternatives to the conventional strategy of drawing on a taxable
account first, followed by tax-deferred accounts (e.g., Traditional individual retirement
accounts) and then Roth accounts.
— A variety of strategies can be employed at different phases of retirement, such as
filling low tax brackets, taking tax-free capital gains, and executing Roth conversions.
— Coordinating a withdrawal strategy and a Social Security claiming strategy can
drive even more tax efficiency than either approach alone.
— If planning to leave an estate to heirs, consider which assets will ultimately
maximize their after-tax value.
source:the new $6,000 deduction is stacked on top of both the regular standard deduction — $15,750 for single filers or $31,500 for married couples filing jointly in 2025 — and the 65-plus addition. For instance, a 65-year-old single taxpayer who qualifies for the full $6,000 deduction would be able to deduct a total of $23,750 from these three tax breaks on their 2025 tax return. A qualifying 65-year-old couple could deduct up to $46,700.
My opinion is very fungible, because a lot is based on changing circumstances. But, it sounds like we are in a similar position and have a similar approach. Some de-risking, and chasing returns where possible at the same time. One of the notions that has me on the fence is what is going to happen with rates.@DrVenture, thank you for sharing. The falling dollar since Dec 2024 was concerning when it fallen 9% YTD. The question of whether the dollar remains as the world last resort have been brought up several times. The last downgrade by Moody due to increased deficit is alarming and it is getting worse, not better with the latest tax cut bill. Since late last year, we rebalanced from US to developed and emerging market aggressively and made considerable gains.
With our retirement are coming up, we want to takes some equity risk of the table and focus on better multi-sector and foreign bonds, and not so much with treasury, especially long bond. In all cases, we are staying with short duration in light of inflation still lingering.
My concerns are the following :
1. Staginflation
2. Can US continue to finance its deficient by selling long bonds ? Bessent said her can takes care of that.
3. What will happen when on one would work on the fields and meat packing factories?
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