If they’re selling you IPOs, they’re not your fiduciary advisor.

My friend Professor Scott Galloway – author of The Four and Algebra of Happiness – has launched a new podcast series and I’ve agreed to become his markets contributor. We taped this the other day and it just hit YouTube over the weekend. We talked about the unavoidable conflicts wirehouse firms have when they’re doing both initial public offering underwriting and wealth management, trying to set an IPO’s price so that the company raises the optimal amount of money at the optimal valuation, while there’s still some potential upside left over for the other clients at the bank to make money on the stock.

It usually doesn’t work out great for one of the two parties, although the bank gets paid either way. WeWork is one of those extraordinary situations where pretty much every side lost.

There’s nothing inherently wrong with this conflict existing and IPOs are a critical part of the capital markets ecosystem. Someone has to buy. Investors are better off understanding how and why it exists before participating.

We also get into the difference between how young people should feel about market volatility versus how their parents ought to feel. Not all investors should be rooting for the same near-term outcomes.


Thanks to Scott for having me on!

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. claims commented on Dec 06

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2019/11/25/if-theyre-selling-you-ipos-theyre-not-your-fiduciary-advisor/ […]

  2. replika rolex commented on Jan 18

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2019/11/25/if-theyre-selling-you-ipos-theyre-not-your-fiduciary-advisor/ […]

  3. Login Area commented on Jan 29

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2019/11/25/if-theyre-selling-you-ipos-theyre-not-your-fiduciary-advisor/ […]

  4. https://www.zonnepaneelwereld.nl commented on Feb 03

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2019/11/25/if-theyre-selling-you-ipos-theyre-not-your-fiduciary-advisor/ […]