Not Walking the Talk: Bankers Are Conservative Investors
by Todd Shriber
One would think that with all the money some bankers on Wall Street haul in that they would be willing to take some risks with their personal investment accounts. After all, they work for banks that are out touting riskier asset classes such as stocks to their clients. However, that’s just not the case as many investment bankers are quite conservative with their personal investment strategies.
In fact, a recent examination of the personal investing practices of a dozen senior investment bankers by The Wall Street Journal reveals this group is downright boring in its approach to seeking alpha. One banker quoted by the newspaper confesses to being 80% in cash and Treasuries, while another admits to a portfolio heavy on Treasuries and other investment-grade debt.
To some degree, the “boring is beautiful” philosophy employed by some members of the Wall Street crowd makes sense. As Dealbreaker notes, the future earnings of investment bankers are levered to the performance of their employers. And as everyone not living in a cave now knows, this is a less-than-appealing environment to be long bank stocks.
What’s interesting about the conservative investment proclivities of Wall Streeters is that, by comparison, members of Congress and their staffers are far less risk-adverse. That anecdote comes despite the fact that no one in Congress receives compensation worth seven or eight figures, as many bankers do.
That doesn’t mean it would be best to follow the investment advice of Congress. As Cabot Wealth Advisory points out, the most widely held stocks on Capitol Hill have a distinct “dogs of the Dow” feel to them.
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