Financial CEO Refutes Warren Buffett’s Criticism of Fund Managers & Advice for Investors to Stick with Passive S&P Index in his Annual Shareholder Letter
Julian Rubinstein, President of American Asset Management, says this strategy works well for billionaires, but not for normal investors who often never make up substantial losses.
Boca Raton, Florida March 1, 2017 – Warren Buffett’s highly-anticipated annual stockholder letter was released on Saturday, February 25th and in this letter, Buffett says investors should stick with the passive S&P 500 index. His main argument is most money managers fail to beat the index. However American Asset Management’s (www.americanasset.net) President and CEO, Julian Rubinstein, says Buffett’s strategy is for billionaires who can afford losses, not the average investor.
Warren Buffett
According to Mr. Rubinstein, the S&P 500 lost a massive 65 percent from January 2008 through March 12, 2009. Rubinstein asks “How many people can tolerate such sustained losses? Buffett’s idea of how to make the most money is great, unless the pain along the way causes investors to abandon the strategy. From that period, many investors never made up those losses.”
Rubinstein’s theory is that investing should be a combination of making money but not living through tremendous deficits along the way. Rubinstein has been a successful financial advisor for the past 17 years and his firm manages 500+ portfolios. He says, “Had someone been invested in our current strategies, they would have made money in 2008. That same year, stock in Warren Buffett’s Berkshire Hathaway lost 31.78% and the low cost S&P Index he recommends lost 37.02%. Generally, when losses of that capacity with low cost index funds happen, many individuals abandon their strategy, sell their assets and lose money that they can never seem to regain.”
To Buffett’s criticism of fund managers who he singled out as profiting from charging higher fees, Rubinstein refutes that money managers get paid to protect investors during a down turn. He says that very few people can afford to have an “I don’t care how much I lose as long as I make it back eventually” attitude. A retiree that losses half of his portfolio and then sells it in a panic will probably outlive his money. Managers are paid to control risk. They are paid to design portfolios that are diversified and are not subject to 100% stock market risk. They are also paid to know when it is time to reduce your holdings in an asset that is going down. Mr. Buffet’s idea of just watching your money disappear is ok when you are worth billions as you will still have billions left. But for average investors, Rubinstein says, they should be happy to pay for risk management.
According to Mr. Rubinstein, “Our 500+ portfolios are managed with the goal of the client having the opportunity to make money whether we are in a bull or bear market. Low volatility is our key to remaining fully invested which we believe prevents the biggest investing mistake; buying high and selling low.” The firm’s primary goal is to protect clients no matter what the future holds.
American Asset Management has no minimum for investors to start – which is unlike many other companies – and no maximum either. The American Asset Management ethos is simple: develop low volatility portfolios that allow clients to sleep at night without the worry of their money. The same high level customer service is provided to millionaires and beginning investors alike.
All accounts are held at TD Ameritrade in the client’s own name. American Asset Management has no access to any of the cash in the account. The firm decides what to buy and sell. TD Ameritrade provides monthly statements, internet access and they insure all accounts up to $100 million.
Julian Rubinstein
Founder and President of American Asset Management, Inc., is an Investment Advisor Representative with over 17 years of hands-on business and investment management experience. Mr. Rubinstein’s career includes the founding of the largest manufacturer of shower stalls in the United States (American Shower & Bath, Corp.) and then selling the company to Masco Corporation, a Fortune 500 company (MAS; NYSE), five years of executive management and mergers and acquisitions work with MASCO and participation as the operational partner at Sun Capital, one of the largest private equity firms in the United States, specializing in the turnarounds of both private and public companies. Possessing significant stock market valuation and income expertise, Mr. Rubinstein has been advising individuals and corporations on their investments and 401(k) plans since 1994. Mr. Rubinstein has also been at the forefront of providing independent advice on section 529 College savings Plans. Mr. Rubinstein was honored as an INC. Magazine Entrepreneur of the year in 1992. He received his Bachelor of Science with a concentration in Business Management from Syracuse University.
