072 E-Har-Money

In today's episode:

Research from Citi Private Bank Says Liquidity is Hurting You

Yep, that's right.  The folks over at Citi Private Bank are telling us that they believe our fear of having money tied up for long periods of time or the willingness to have limited access to our money is hurting our returns.

They believe that people shouldn't be scared of locking up money money for months, if not years in hedge funds, private equity funds, and real estate. According to Citi private bank (which only works with clients who have at least $25million in assets), investors are missing the boat by their desire to have short term liquidity.

The research relies on some statistical “evidence” that shows, the top 25 percent of buyout-focused private equity fund produced a 10 year total annual return of 26.3% and the top 25 percent of real estate focus private equity funds returned 29 percent.  Then they go on to compare those returns to the S&P 500's total return of 7.2% over the same time period.

Rolling my eyes.

I have no idea where these numbers are coming from.  They didn't enlighten us with their sources but to make my point it's not all that important.

What is important…why would you compare this to the S&P 500?  Not even in the same ballpark–from the perspective of evaluating risk, availability, pricing, or liquidity.  I'm not disputing the numbers they quote, I'm just saying why bother comparing the two?

It's like comparing the build quality of a Bentley to a Chevy Malibu.

Athene is on the prowl

According to a recent report, Athene Holding Ltd., an insurer controlled by Apollo Global Management, LLC is looking to make more acquisitions in 2014. To do this, they are looking to raise $500 million from investors through a private placement offering.

Athene says it will raised the funds through a private placement seeing a minimum of $5 million from each investor.

As more blocks of business become available, it seems that Athene would like to keep some “dry powder” (cash) available for those opportunities.

Is this a new trend in private equity?

Apparently it is, a report released by Deloitte LLP on its outlook for the industry said, “there is a growing interest of private equity firms in the life insurance and annuity business…such capital market players see an opportunity to leverage their asset management skills and improve their returns by tapping into a large pool of capital while diversifying their portfolios.”

Is this a good thing for the life insurance and annuity industry?  You'll have to listen to find out what we think 😉

LinkedIn Sues John and Jane Doe

Well, it seems the people over at LinkedIn are a bit upset.

Some unknown hackers have been creating fake user profiles, connecting with people, and scraping all their usable data.  This is all done through automated scripts with the intent of compiling a huge database of LinkedIn user information.

Why would anyone do that?  Well, who knows exactly but our guess is that it's done to create a database that might be sold en masse or in pieces to various marketing organizations.  User data certainly has monetary value in the marketplace.

But who is LinkedIn gonna sue?  The “scraping” is clearly a violation of their user agreement and LinkedIn is claiming that it's faud.  However, the hackers are yet unknown and the scripts that were used have been traced to cloud computer housed on Amazon Web Services platform.  Yeah, that's the same amazon that sells you everything under the sun.

Amazon also has a large web services platform that allows paying customers to utilize much of the company's infrastructure.

We can understand why they're upset and maybe they'll get some where with figuring out who is behind the whole thing.

Is Your Partner/Spouse Keeping Money Secrets?

Research from Prudential PLC (the real Prudential based in the UK) tells us that about 20% of people living in the U.K. keeps secrets about their debts from their partners.

Uh-oh that doesn't sound good.

According to the study, this is even more pronounced in couples over 40.  It seems that of the people surveyed, 22 percent said they had concealed an average of $12,789 worth of debt from their significant others.  Their rationale varied.

But even more interesting…

The debts aren't the only things that are being hidden.  Almost 25% of the respondents said they were hiding a secret stash o'cash with the average amount being $6,558.

Is this normal behavior?

Who knows. I can say that it seems relatively normal for the people I've encountered who are a bit older when they enter into a serious relationship.  By older, I mean 35+.  All of my evidence is purely anecdotal but it does seem that people who've already established themselves, earn a bit more than average, and have accumulated a bit of money play their cards a bit closer to the vest when entering a relationship.

Is it good or bad?  I think that depends on the couple.


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