A Rough Estimate

At a pinch, I would guess that the financial services industry has spent more than $2 trillion dollars on information systems, computing power, and investment expertise over the last thirty years. The end result has been a net decline in alpha. Every penny spent has actually resulted in a net decrease in ability to produce above market results. Notch that up to the "paradox of skill."

What would be interesting also, is to gauge how much the industry has spent on sales and marketing. 

One day I am going to take a much closer look at these areas and get a better idea of the money spent (compared to the amount of value added for investors).

 

Should Investing Be Fun?

Should investing be fun? Yes, in the sense that seeing your money grow is fun. But no, investing should not be pitched as a fun thing because it cannot deliver on that promise. Nobody has control over the markets and as a result, if your fun is conditional upon positive outcomes, then you are setting up for disappointment.  

The industry is prone to overpromising and underdelivering. It cannot deliver on any promise of performance (just look at the disclaimer on every investment product sold). And yet, investors are sold on outperformance and the hope they have the right manager. This is an easy sale. Much easier than educating investors what are realistic expectations and how things actually work.