Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index fu

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MFInvestor
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Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index fu

Post by MFInvestor » Wed Nov 15, 2017 9:28 am

The Likely Next Fed Chairman May Be Worth More Than $100 Million. Here's How to Steal His Best Investing Idea

Money

http://time.com/money/5021471/fed-powel ... -investor/

Jerome Powell, President Trump’s pick to be the next Fed chairman, would be richest person in recent memory to hold the job—with a fortune that could be worth more than $100 million. (By contrast, Janet Yellen was worth only up to $14.6 million when she took the job in 2014.)

But judging by what appears to be Powell’s largest single holding — possibly accounting for around half his fortune — his investment strategy is not all that different from one followed by millions of middle-class retirement savers.

Indeed, the largest holding in Powell’s investment portfolio appears to be Vanguard Total Stock Market index fund (VTSAX), the world’s largest mutual fund.

Either way Powell’s portfolio makes one thing clear: Being wealthy and sophisticated about the stock market doesn’t mean you need to dabble in exotic investments. No matter who you are, an ultra-low cost index fund will probably suit you just fine.

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nedsaid
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by nedsaid » Sat Nov 18, 2017 3:37 pm

Index funds are good investments for everyone, even the super wealthy.
A fool and his money are good for business.

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Mel Lindauer
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by Mel Lindauer » Sat Nov 18, 2017 7:47 pm

nedsaid wrote:
Sat Nov 18, 2017 3:37 pm
Index funds are good investments for everyone, even the super wealthy.
Or, put another way, "especially the super-wealthy" since the savings from the low-cost index funds amounts to many more dollars because of the huge amounts they have invested in the lower-cost funds.
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TD2626
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by TD2626 » Sat Nov 18, 2017 8:18 pm

The Time article (http://time.com/money/5021471/fed-powel ... -investor/) states:
Either way Powell’s portfolio makes one thing clear: Being wealthy and sophisticated about the stock market doesn’t mean you need to dabble in exotic investments. No matter who you are, an ultra-low cost index fund will probably suit you just fine.
However, Powell's disclosure form, linked to in the article, (https://extapps2.oge.gov/201/Presiden.n ... 17-278.pdf), shows over 6 dozen holdings. Many are quite exotic. He appears to have multiple whole life policies, high yield bond funds, etc.

Make sure you thoroughly read articles critically and actually go to the source material before jumping to conclusions. Although Powell does own a lot of Vanguard Total Stock, he also owns a lot of other stuff, too... and only by going to the source can you get the full details.

afan
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by afan » Sun Nov 19, 2017 8:38 am

The portfolio is very light on actively managed domestic stock funds. But he has plenty in overpriced funds. Goldman Sachs rather than Vanguard for Muni bond funds. Seems like a complete waste of money. Is he the trustee and investment manager of the trusts? Or was he forced to have someone else, presumably from GS, run them to avoid conflicts of interest?

The life insurance appears to be owned by trusts and could well be part if estate planning. For someone with his networth it would make sense to have whole life. Also has total, growth and value funds all based on Russell 1000. Using the combination for tax loss harvesting?

I suppose some of the individual holdings might be products of deals he did in his jobs and got paid in kind rather than cash.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by lostdog » Sun Nov 19, 2017 9:16 am

A portion of Hilary Clinton's fortune is held in Vanguard's S&P 500 index fund. It's her only mutual fund holding.

https://www.google.com/amp/www.marketwa ... 8E8523920B
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columbia
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by columbia » Sun Nov 19, 2017 9:35 am

That gentleman might be a candidate for simplifying with a 3 fund portfolio. :)

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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by bsteiner » Sun Nov 19, 2017 11:50 am

afan wrote:
Sun Nov 19, 2017 8:38 am
..
The life insurance appears to be owned by trusts and could well be part if estate planning. For someone with his networth it would make sense to have whole life. ...
Alternatively, the trustees could invest in low cost funds which over a long time would likely grow to more than the insurance proceeds.

The trusts are probably grantor trusts, so that when he pats the income tax on the trusts' income and gains he's effectively shifting additional wealth free of transfer taxes.

afan
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by afan » Sun Nov 19, 2017 5:45 pm

I suppose it would depend on how old he was and his life expectancy when he got rich enough to need this planning. If the wealth built slowly over decades he might have taken that course.

If he was a regular working stiff, well paid but not rich, then had an equity event that put him far into estate tax territory then he may have needed a solution that would work right away.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

Ron Scott
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Re: Largest holding in Powell’s (next Fed chairman) investment portfolio appears to be Vanguard Total Stock Market index

Post by Ron Scott » Mon Nov 20, 2017 12:07 am

afan wrote:
Sun Nov 19, 2017 5:45 pm
I suppose it would depend on how old he was and his life expectancy when he got rich enough to need this planning. If the wealth built slowly over decades he might have taken that course.

If he was a regular working stiff, well paid but not rich, then had an equity event that put him far into estate tax territory then he may have needed a solution that would work right away.
This^

You can do well by savings a portion of your W2s and investing smartly, but to generate very high net wealth you need to build big equity and realize a liquidity event of some sort.

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