Yes, Larry Fink really came into his own when he started talking about woke environmental social governance as the savior of humanity.
But this column has always sought to place his career in the context it deserves.
Fink is one of the most knowledgeable financiers on the planet, and it’s worth paying attention to what he says about the next crisis hitting the average American: not having enough money for retirement.
Fink is criticized, somewhat unfairly in my humble opinion, for proselytizing the corporate awakening and its manifestation in so-called ESG investing, i.e. asset managers incentivizing companies to reduce their carbon footprint and being good global citizens, instead of focusing on necessities such as creating shareholder value. and employ people.
Truth be told, he’s never been in favor of divestment from fossil fuels, and if you know him, he’s not that woke.
Still, he does this sort of thing a lot less now, because ESG has become politically toxic.
Fortunately, because it also overshadowed his many accomplishments during his 40-plus year career on Wall Street.
Remember that Fink is one of the fathers of what is called securitization which allows banks to grant real estate loans over 30 years, thus extending home ownership to the working class.
He created BlackRock literally from scratch because he saw promise in a company that helped average people tap markets to create wealth.
Since BlackRock is now the world’s largest money manager with $10 trillion in assets under management, when Larry Fink speaks, people should listen.
That’s why I pay attention to his annual “Letter from the Chairman” – thoughts 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 the average American makes much-needed changes to their savings plan.
Fink, of course, makes money by making you give yours to BlackRock, so it makes sense to wonder if he’s talking about his book with his predictions and the cures he calls for.
Maybe.
That said, his facts are compelling.
As Fink told me, medical advances in cancer treatments, drugs to fight Alzheimer’s disease, and even products like Ozempic, the diet pill that could be effective in treating Alzheimer’s-related illnesses, obesity, will further extend average life expectancy beyond its current age of 77 years. .
Tap into US capital markets
Simply put, relying on Social Security won’t be enough, and many Americans will need more money to avoid ending up in poverty after retirement.
On average, we will likely live beyond age 77, certainly longer than the retirement age of 65, so we need to plan accordingly.
One way to do that, he says, is to tap U.S. financial markets, which he says are the envy of the world and may be the only place to find the investment returns needed for a comfortable retirement .
Sure, there are scammers (crypto bro Sam Bankman-Fried was just sentenced to 25 years for scamming people in his crypto exchange), and plenty more all over social media selling the next system to become get rich quickly.
But these are outliers.
Our markets, for the most part, are not only efficient, they often protect investors from theft.
Big companies are all highly regulated.
They also all offer inexpensive and relatively transparent access to the stock market through index funds, exchange-traded funds, and individual blue-chip stocks.
And, says Fink, market trends are in your favor if you start exploiting them now.
Fink dismissed concerns that the S&P and Dow — currently in record territory — are in a bubble and about to burst.
There might be a correction or two or three, but Fink says technological advances, including artificial intelligence, combined with strong corporate balance sheets have made the U.S. economy, and by extension, markets, hyper- effective.
The Fed could cut rates once this year or stay its course if price data does not improve (it predicts a rate cut in June).
Yet he still doesn’t see a significant recession in sight.
Put it all together and he’s hyper bullish on U.S. stocks.
“I believe in our country and I believe in our capitalism,” he told me last week in an interview on Fox Business.
“And I believe in 10 years we will look back and say it was a good 10 years.”
That’s why Fink, even after his retirement age at 71, says he’s fully invested – “100%” – in stocks.
Then again, he’s also a billionaire, so the question becomes: what do we mere mortals do?
Fink says to trust the stock market’s track record and “the notion of compounding,” which happens when you buy stocks or funds that hold shares of high-quality companies.
Your money will grow exponentially as these companies power the American economy.
But also check.
Average people need to expand their knowledge of markets and investments; they could also be forced to retire after age 65 to build up their nest egg.
Above all, they cannot think that they will outsmart the pros, and they must stick to the essentials: the shares of companies at the forefront of new economic trends.
And of course, don’t get your information from questionable sources on social media, or you’ll find yourself like all those bag-holding “meme stock” investors, sitting on losses after the stocks fall to where they were before the onset of irrational exuberance.
“We spend so much time on health, but not enough on financial literacy,” Fink told me.
“We need to get more people to understand what I’m talking about.”
They can start by reading his latest CEO letter on BlackRock.com.
New York Post
