Good News for DC Plan Sponsors, But Small Step Forward in Context of History

By Norton Reamer and Jesse Downing

In May, the Department of Labor issued a rule requiring financial professionals managing certain retirement accounts to act as fiduciaries for their clients, ensuring that retirement savings are invested in their clients’ best interests. In their article for Pensions & Investments, the authors of Investment: A History offer a unique perspective on this development based on their study of the history of funded retirement, a relatively recent invention in the grand scheme of financial progress. To view the article, click here.

Ancient History Offers Investors Lessons About Market Volatility

By Norton Reamer and Jesse Downing

What can tulip sales tell us about the psychology of investment? What investment advice can you find in the Bible and in Shakespeare? And what other lessons can today’s investors glean from history? In a recent article, the authors of Investment: A History discuss how people today can learn from past events, ranging from ancient Greece and Rome to the European Renaissance, and on to the early twentieth century. Click here to read the article on TheStreet.

A Brief History of Life Insurance

By Norton Reamer and Jesse Downing

To understand the insurance industry today, we must first look to its history. An article on this subject by the authors of Investment: A History appears in the June 2016 issue of Life & Health Advisor Magazine. “Today we consider life insurance part of the bedrock of families’ financial security in the United States,” write Reamer and Downing. “But where did it come from, how did it grow into the industry we know it as today, and what’s next for insurers and insureds?” To find out, click here to read the full article.

This New Fiduciary Rule Is a Baby Step Toward Protecting Dignified Retirement

By Norton Reamer and Jesse Downing

The Department of Labor announced a new “conflict of interest rule” on April 8 that expands requirements for investment managers to act in the best interests of clients with retirement accounts. Norton Reamer and Jesse Downing explore what this means for investors today, grounding their analysis of this recent development in their extensive research and writing on the history of investment. Click here to read their article on TheStreet.com.

Clarifying Insider Trading: A Societal Obligation

By Norton Reamer and Jesse Downing

In our blog post for The Hill, we discuss a recent ruling by the United States Court of Appeals for the Second Circuit that makes it more difficult to prosecute those who trade on inside information. By adding historical perspective, we hope to provide insights into this current debate. Read the full article here.

For more information, see chapter 5 in our book.

Museum of American Finance / C-SPAN

Authors Norton Reamer and Jesse Downing talked about the major themes of their book at the Museum of American Finance in New York City on February 26, 2016. Their talk was recorded and broadcast on C-SPAN. In the speech, they covered the history of retirement funding, financial wrongdoings, and economic crisis management, among other topics. Click here to watch the speech at C-SPAN.org.

Retirement Changed the World, But Our Approach to Retirement Still Needs to Evolve

By Norton Reamer and Jesse Downing

Retirement funding has changed the world. Giant pools of capital – now totaling $24 trillion in the U.S. alone – provide a financial cushion for millions of average working people in their “golden years.” Moreover, pensions funds, defined contribution plans, public retirement funds and others invest their capital to earn a return for retirement beneficiaries: that investment program has become an enormous driver of growth for the economy overall.

It wasn’t always so, however, and the story of how modern “retirement” came to be should provide a sobering lesson for those who put off retirement planning and saving – and for politicians eager to tinker with, and even roll back, the modern systems it took such effort to build. Continue Reading →

Worried About Stocks? Smart Investors Do These 3 Things

By Norton Reamer and Jesse Downing

We believe that history has lessons for investors today. In our book, Investment: A History (Columbia Business School Publishing, Feb. 2016), we explain why diversification has always been so important – and we spoke recently with Heather Long of CNNMoney about why it’s especially crucial in volatile markets like the ones we’re seeing so far this year: http://money.cnn.com/2016/01/19/investing/stocks-market-rebalance/index.html

Avoid These Five Archetypal Investing Mistakes

By Norton Reamer and Jesse Downing

For thousands of years, investors have been making the same mistakes over and over. True financial literacy should include understanding the history of investment successes and also investing failures. Unfortunately, the recent history of the financial crisis and Great Recession indicate that many investors—even professionals—have not learned those lessons.

Decade after decade, we see markets collapse and fortunes vanish for the same basic reasons. Most of the time the root cause is not some complex technical error. It’s just some new flavor of an archetypal mistake. Continue Reading →

Greater Access Brings Greater Responsibility For Investors

By Norton Reamer and Jesse Downing

For thousands of years, the only people who qualified as “investors” were wealthy and politically connected landowners. Investment opportunities were few and accessible only to the elite. Yet in the blink of an eye historically speaking, that world has been replaced by one full of investment opportunities for everyone, from stocks and bonds, to mutual funds, life insurance, pension plans, real estate, and many other vehicles.

If people knew their history, they would marvel at the sheer range of investment opportunities now available to them. The idea that investing has become democratic probably feels alien to most people, but investing is extremely democratic today compared to past eras. It is incumbent on the average person to learn enough to be his or her own best advocate in taking advantage of all this newfound opportunity. Continue Reading →

Novel Policy Approaches Reduced Impact of Great Recession and Produced Speedier Recovery

By Norton Reamer and Jesse Downing

The actions taken by the U.S. Federal Reserve (the Fed) and U.S. Department of the Treasury following the 2007 – 2008 U.S. stock market crash were, in the end, a brilliant response to a truly frightening financial crisis and incipient major economic collapse. The economic impact of the crisis, while severe, was clearly contained. America experienced the gravest economic setback in 80 years, but one whose duration and magnitude fell far short of the country’s experience in the 1930s.

No other country can claim as brilliant a use of the economic toolkit as what was brought to bear in the United States. The historical record clearly shows the superiority of the response to the Great Recession versus the Great Depression. Every day now, one can look at the world around us and see the efficacy of the novel and successful response by U.S. policymakers, in contrast with less successful methods employed by other governments, particularly in Europe. Continue Reading →

Look Back To Move Forward Successfully

By Norton Reamer and Jesse Downing

Thinking about how to improve your portfolio next year? Don’t forget the last five thousand.

A healthy understanding of investment history is a true bonus for investors, lay and professional alike, to avoid pitfalls and to be the best advocates for their own financial interests. Ancient history has lessons for all portfolios today, from personal retirement accounts to university endowments.

For thousands of years, the only people who qualified as “investors” were wealthy and politically connected landowners. Yet in the blink of an eye, historically speaking, that world has been replaced by one full of investment opportunities for average people: stocks and bonds, mutual funds, life insurance, pensions and real estate. Continue Reading →

A Conversation With The Authors of Investment: A History

What will readers find in Investment: A History?

The book explains key elements in the long history of investment. Each chapter includes important stories and lessons that are intended to illustrate crucial dimensions of the investment world, as they have developed over the centuries. Our goal is to increase understanding of the investment practices and opportunities of today by understanding the history of investing.

In broad scope, what are the most important findings in the book?

Readers will be surprised to find out how remarkably uncomplicated it is to be a sensible investor, and in that regard we identified four basic investing principles. Continue Reading →