The Stewardship of Wealth, + Website: Successful Private Wealth Management for Investors and Their Advisors

478 Pages·2012·2.92 MB·English

by  Gregory Curtis

Table of Contents
Series Page
Title Page
Copyright
Dedication
Preface
Acknowledgements
Part One: The Importance of Private Capital
Chapter 1: Wealth in America
Democracy and Capitalism
Capitalism and Its Contradictions
Providential Societies
Risk and Strength
America and Decline
On China
Addressing the Declinists
Conclusion: American Distinctiveness and Private Wealth
Notes
Chapter 2: Creative Capital
A (Brief) Moral History of Capitalism
The Ancients
Moral Arguments for Capitalism
Creative Capital in America
Higher Education: The Case of St. John's College
Politics: The Conservative Resurgence
New Business Ideas: Venture Capital in America
Creative Capital and Vibrant Societies
Why Do Creative Capitalists Persist?
The Indispensable Nation
Conclusion: Underdogs and Bullies
Notes
Part Two: The Stewardship of Wealth
Chapter 3: Are We Living in a Permanent Financial
Crisis?
The End of History (Again)
A Permanent Financial Crisis?
The Cause of the Crisis Matters
The Industrial Revolution and Its Aftermath
The Great (and Strange) Experiment
Seize the Means of Production!
The Power to Tax Is the Power to Destroy—Societies
“Borrowing … the Disease Is Incurable”
Now What?
But, First, a Note about Germany
Investing Capital in a (Very) Uncertain World
Conclusion: A World At Risk
Notes
Chapter 4: Risk
Families and Investment Risk
The Law of Supply and Demand (Again)
Idiosyncratic Ideas about Risk
Real Risks: Those Embedded in the Process of Investing
Variance Drain
Behavioral Finance: Are We Hard-Wired for Failure?
Edith and the Headwinds She Faces
What Should Edith Do?
Conclusion: Preserving Wealth Is Hard Slogging
Notes
Chapter 5: The Collapse of Ethical Behavior
What Caused the Crisis?
An Unsavory Rehash of the Ethical Failures
How Scandal Became Crisis
Why Such an Ethical Swamp?
Where Do We Go from Here?
Conclusion: Fixing the Industry
Notes
Chapter 6: Finding the Right Advisor
Open Architecture as a Disruptive Business Model in the
Advisory World
The Outsourced CIO Model
Finding the Right Advisor for Your Family
Conclusion: Focusing On a Few Key Variables
Notes
Chapter 7: Making Family Investment Decisions
The Family Investment Committee Today
Attempts to Deal with the Problem
The Family Investment Committee, Tomorrow
Opportunity Costs: Prudence versus Returns
Conclusion: Focusing On What Families Do Best
Notes
Chapter 8: Trusts
Open-Architecture Trusts
A Brief, Unconventional (but Wickedly Accurate) History of the
Common-Law Trust from the Client's Perspective
Down with the Bundled Trust! Up with the Open-Architecture
Trust!
Private Trust Companies
Total Return Trusts
Conclusion: Let's Get Revolutionary
Notes
Part Three: The Rich Get Richer
Chapter 9: Designing Taxable Investment Portfolios
The Markowitz Revolution
Problems with Mean Variance Optimization
Best Practices in Designing Investment Portfolios for Families
Traditional Asset Allocation Modeling
Modern Asset Allocation Modeling
Satisfying Portfolio Claims Prudently
Conclusion: Art versus Science
Notes
Chapter 10: Adding Value to Family Investment
Portfolios
Moving from the Current Strategy to the New Strategy
Adding Value through Manager Selection
Adding Value by Tactically Repositioning the Portfolio
Adding Value through Opportunistic Investments
Adding Value through Monitoring and Rebalancing
Conclusion: We Need All The Value-Add We Can Get
Notes
Chapter 11: Investing in U.S. and Non-U.S. Equities
U.S. Large-and Mid-Capitalization Stocks
U.S. Small-Capitalization Stocks
International Developed Country Stocks
Emerging and Frontier Markets
Conclusion: Equity Securities Are At the Core of Most Portfolios
Notes
Chapter 12: Investing Globally
Why Go Global?
Why Stay Home?
Global Investing in the Real World (or, Maybe, Real Investing in
a Global World)
Conclusion: Think Globally, Act Locally
Notes
Chapter 13: Investing in Real Assets
Real Estate
Oil and Gas
Commodities
Conclusion: The Use and Misuse of Real Asset Exposure
Notes
Chapter 14: Investing in Fixed Income
Mistakes Bond Investors Make
Employing Best Practices in Building Bond Portfolios
Managing Cash
Conclusion: Fixed Income Is Underappreciated
Notes
Chapter 15: Investing in Hedge Funds
What Is a Hedge Fund?
Types of Hedge Funds
Challenges for Hedge Fund Investors
Building a First-Rate Hedge Fund Portfolio
Conclusion: Should Anyone but Yale Invest in Hedge Funds?
Notes
Chapter 16: Investing in Private Equity
Why Invest in PE?
Persistence of Returns
The Importance of Diversification
Private Equity Returns
The Return Characteristics of PE Investments
Gaining Exposure to Private Equity
PE Funds of Funds
A Global Asset Class
Illiquidity and the J-Curve Effect
Ramping Up to Your Target Allocation
Waterfall Analysis
Secondary PE Investing
The Evolution of Secondary Investing
Secondary Investing Strategies
Identifying High-Quality Secondary Funds
Conclusion: The Ultimate Aspirational Asset
Notes
Chapter 17: Working with Money Managers
The Business of Money Management
Traditional Managers
Alternative Managers
Conclusion: At Least Managers Are Interesting
Notes
Chapter 18: Managing Investment-Related Taxes
Designing Portfolios from an After-Tax Perspective
Asset Location
Asset Class Strategies
Tax-Aware Managers
Harvesting Losses
Conclusion: You Can't Eat Gross Returns
Notes
Chapter 19: Asset Location and Implementation
Asset Location Issues
Implementation Issues
Conclusion: It's Not Just a Technical Issue
Notes
Chapter 20: Monitoring and Rebalancing Taxable
Portfolios
Performance Monitoring
Rebalancing Taxable Portfolios
Conclusion: Monitoring and Rebalancing Are Stewardship Issues
Notes
Chapter 21: Investment Policy Statements
The Investment Policy Statement
Spending Policy Statements
Cash Guidelines
Manager Guidelines
The Investment Committee Policy Manual
Letters to the Family
Conclusion: Don't Skimp on Documenting Your Decisionmaking
Chapter 22: Miscellaneous Challenges for Private
Investors
Asset Custody
Concentrated Security Positions
Establishing a Family Office
Family Investment Partnerships
Philanthropy
Conclusion: There Are Challenges Everywhere We Look
Notes
Afterword: On Happiness
Stereotypes of the Rich
The Rich and the “Faux Rich”
The Real Way the Rich Are Different
Children and the Wealthy
Marriage and the Wealthy
Work and the Wealthy
Failed Stewardship and Family Unhappiness
Wealth and Happiness
Notes
About the Companion Website
About the Author
Index