Ben Bernanke is the guy who, if confirmed, will be the most visible individual and listened-to voice in regards to the United States economy. So his portfolio should tell us a little about his market philosophies.
Here’s his financial disclosure form from 2003. Henry Blodget analyzed his portfolio and discovered:
* He’s rich, but not as rich as Alan Greenspan.
* His and his wife’s retirement accounts are worth $1 million to $5 million. (They both worked in Princeton, one at the University, the other at Princeton Day School).
* Bernanke owns a lot of Altria (aka Philip Morris).
* His other holdings are mainly actively managed mutual funds.
On that last point, Blodget says …
This is interesting because Bernanke is an academic economist, and most academics believe that the market is so efficient that stock-picking is usually a waste of time and money.
… and offers several explanations for the congnitive dissonance:
* Bernanke possesses less intellectual rigor than is commonly thought.
* Bernanke has the brainpower necessary to find the truth but lacks the willpower and decision-making discipline necessary to put it into practice.
* Bernanke, like most people, is overconfident about his own abilities, even as he recognizes the limitations of others.
* Bernanke is an easygoing optimist who views life as too short to worry about 1 or 2 percentage points lost to active management and full-service brokerage fees.
The other explanation I could see is that we are all wrong and those with actively managed funds are better situated for the future over time, but I doubt it. I’d stick with the fourth option.
Updated February 7, 2012 and originally published October 25, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.