Abstract
Tailored Wealth Management is a fitting title for this book because wealthy investors experience markedly different outcomes in managing their wealth, which makes a “one size fits all” approach ineffective. Cause and effect is a theme that runs throughout this book, and I am more than ever convinced that it is time to challenge two theories: (1) that stock prices are random and (2) that prices revert to their mean, two widely held theories used by wealth management firms, academics, and robo-advisors. Most investors have an understanding that inception yield is predictive of the future returns of a fixed income (bond) portfolio. We aim to illustrate that starting earnings yields are similarly predictive of the future returns in an equity portfolio, over 20-year investment periods.
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Notes
- 1.
The Journal of Wealth Management, Fall 2006, http://www.efalken.com/pdfs/BlumGannonaftertaxreturns.pdf. I am grateful to Charlotte Beyer, who insisted that I study the topic, and to Jean Brunel, editor of The Journal of Wealth Management, for allowing me to share the results of my research.
- 2.
Seeking Alpha, March 6, 2018, www.seekingalpha.com. Scott Seibert, CFA, my co-author, has been a faithful companion on this work. You can read more of his work in The Journal of Wealth Management.
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Gannon, N.J. (2019). The Efficient Valuation Hypothesis: The Long View. In: Tailored Wealth Management. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-99780-3_7
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DOI: https://doi.org/10.1007/978-3-319-99780-3_7
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Publisher Name: Palgrave Macmillan, Cham
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