Every year, billionaire investment icon Warren Buffett auctions off lunch with him to anyone willing to write a big check to charity. Last June, someone paid an astounding $3.3 million for the privilege of having lunch with him.
Imagine sitting with an investing icon for a whole hour, him open to any investing question you might think to ask.
Now imagine that times three! That’s a taste of what happens to me and my partner Mitch Tuchman when we convene the Rebalance Investment Committee in New York for our annual all day session.
We get the honor of learning from the very people who created the indexing world that we live in today: Burt Malkiel, a Princeton professor and author of A Random Walk Down Wall Street, Charley Ellis, an esteemed investment author and former chairman of the investment committee at Yale University, and Jay Vivian, former managing director of the IBM Retirement Funds.
These three men literally wrote the book(s) on modern portfolio theory (MPT) and index investing, putting the idea into real-world practice for an incalculable number of investors over the years.
If you didn’t know, MPT is the science of increasing investment return while lowering risk. At Rebalance we use low-cost exchange-traded index funds (ETFs) in precisely calibrated portfolios to achieve that miracle for our clients day in and day out.
The amazing thing for Mitch and me is that we know that there’s no investor in the world who could call up these gentlemen and just buy their services. Doesn’t matter if you have $100 million to invest. Doesn’t matter who you know or what you offer to pay them. But, if you are a Rebalance client, you enjoy the rare privilege of these great minds at the helm of your investments.
As a Rebalance client, their deep investment wisdom is simply included. Costs nothing extra at all and, frankly, it’s not clear to us that one could even put a price on it.
Malkiel, Ellis, and Vivian are in this for more than money. For them, it’s about legacy. It’s about having a broad impact on millions of lives through investment vehicles that ensure the kinds of outcomes usually experienced only by big endowments and foundations.
So, what exactly does our firm’s Investment Committee do? At the regular meetings, our job is to sit down with Burt, Charley and Jay and carefully reexamine key assumptions about the firm’s investment portfolios. Our profound commitment is to the mission of helping Rebalance clients live well and retire with more.
That means seeking out new ETFs and then back testing the portfolios to find out what happens when they are exposed to the stresses of economic change. It’s not just going cheaper (though cheap is great!), but better at the same time… more return for less risk!
Case in point, our Investment Committee recently developed a groundbreaking income portfolio made up of corporate bonds in a unique “ladder” arrangement. Called the Rebalance Income Ladder, it provides steady returns that beat CDs and savings accounts while not adding significant risk. Genius, right?
Many of our clients initially are attracted to Rebalance thanks to the famous names of our Investment Committee. But many of them likely are not sure what the Investment Committee actually does or what this means for their investments.
These are no mere figureheads, and they absolutely are not here to deliver market tips or suggest stocks. That’s what a lot of investment committees do, and there’s an ocean of difference between the norm and the Rebalance experience.
In fact, their job is to build on the decades of success that has come precisely from not choosing among stocks, not making bets on sectors, and not seeking out trendy, short-term investment themes.
Instead, it’s about the consistency that comes from research that has earned Nobel Prizes for the indexing movement’s academic pioneers. It’s the time-honored values and practices of the late John Bogle, a close associate of Malkiel and Ellis, both of whom served on the board of Vanguard Group.
And it’s the hard-nosed logic of a longtime pension professional such as Vivian, who held the retirement futures of thousands of IBM engineers squarely in his hands — and delivered better outcomes to them at lower cost and lower risk, year after year.
Everyone at Rebalance has skin in the game, ourselves included. We invest our own retirement money in exactly the same investment portfolios we provide to our clients.
Even Buffett not long ago instructed his estate lawyers to put money for his heirs in index funds. However, you can do the same by putting the Rebalance Investment Committee to work on your investments, while saving yourself a few million dollars and a lunch tab to boot!