Yes, Larry Fink really went for it when he began sending a wake-up call to environmental social governance as the savior of humanity.
But this column has always sought to put his career into the context it deserves.
Mr. Fink is one of the most savvy financiers on the planet, and it’s worth paying attention to what he has to say about the next crisis hitting the average American: not having enough money for retirement. There is.
Mr. Fink talks about corporate reactionism and its manifestation in so-called ESG investing, where asset managers encourage companies to reduce their carbon footprint and become good global citizens rather than necessities such as building shareholder value. He has been tarred for proselytizing, which is a little unfair in my opinion. and employ people.
The truth is, he’s never been about divesting from fossil fuels, and those who know him may know that he’s not that woke. there is no.
Still, he does that much less now because ESG has become so politically toxic.
That was a good thing, because it also overshadowed many of his accomplishments during his 40-plus year career on Wall Street.
Remember, Mr. Fink was one of the fathers of so-called securitization, which allowed banks to make 30-year mortgages and extended home ownership to the working class.
He started BlackRock literally from scratch because he saw promise in the business of helping average people use the markets to build wealth.
When Larry Fink speaks, people should listen because BlackRock is now the world’s largest asset manager with $10 trillion in assets under management.
That’s why I pay attention to his annual “Chairman’s Letter,” a collection of thought pieces he writes on everything from current events to investment trends.
His 2024 letter, released last week, provides ample evidence that the country is on the brink of a retirement crisis unless average Americans make much-needed changes to their savings diet. ing.
Of course, Mr. Fink makes money by having people provide their opinions to BlackRock, so one wonders if he is telling his prophecies and the remedies he seeks in his book. Of course you think so.
perhaps.
That said, his facts are compelling.
Fink told me that medical advances like cancer treatments, drugs to fight Alzheimer’s disease, and even the weight-loss drug Ozempic, which may be effective in treating diseases caused by obesity, are helping to reduce life expectancy. will grow even further than the current age of 77. .
Leverage US capital markets
Simply put, Social Security alone won’t be enough to live on, and many Americans will need more money in retirement to avoid ending up in the workhouse.
On average, we’re likely to live to age 77, certainly past the retirement age of 65, so we need to plan accordingly.
One way to do that, he says, is to tap into the U.S. capital markets. He says it’s the envy of the world and perhaps the only place to find the investment return you need to live a comfortable retirement.
Yes, there are scammers out there (crypto buddy Sam Bankman Freed was just sentenced to 25 years in prison for defrauding people on his crypto exchange), and social media There are also many scammers selling the following get-rich-quick schemes.
But they are outliers.
Our markets are not only efficient most of the time, they often protect investors from theft.
All large companies are highly regulated.
They also all offer low-cost, relatively seamless access to the stock market through index funds, exchange-traded funds, and individual blue-chip stocks.
And Fink says market trends can work in your favor if you start taking advantage of them now.
Mr. Fink dismissed concerns that the S&P and Dow, currently at record levels, are in a bubble on the verge of bursting.
There may be one, two or three corrections, but Fink says advances in technology, including artificial intelligence, and strong corporate balance sheets have made the U.S. economy, and by extension, markets, hyper-efficient.
The Fed could cut rates once this year, or if the data doesn’t improve prices, it could continue to do so again (he expects a rate cut in June).
However, he still sees no prospects for a serious economic downturn.
Add all this together and he’s extremely bullish on US stocks.
“I believe in our country and I believe in capitalism,” he told me in an interview on Fox Business last week.
“And I believe that in 10 years we will be able to look back and say that the last 10 years were good.”
That’s why Mr. Fink says he remains “100%” fully invested in stocks, even after his retirement age of 71.
Again, he’s also a billionaire, so the question becomes, what do we ordinary people do?
Fink says you should trust the stock market record and the “concept of compound interest” that occurs when you buy shares in blue-chip companies or funds that own them.
Your money grows exponentially as these companies drive the U.S. economy.
But I will also verify it.
Average people need to expand their knowledge about markets and investing. They may also be forced to retire after age 65 to build their nest egg.
Above all, they can’t be expected to outsmart the pros and need to stick to the basics: stocks of companies that are at the forefront of new economic trends.
And don’t get information from dubious sources on social media. If you don’t, you’ll end up just like the “meme stock” investors who are sitting with losses as stocks fall to the levels they were at before the irrational exuberance started.
“We spend a lot of time on health, but not enough time on financial literacy,” Fink tells me.
“I need more people to understand what I’m talking about.”
Start by reading his latest CEO letter on BlackRock.com.
