iiinova — where your digital self keeps evolving

Martin Schmalz @martincschmalz.bsky.social · 06/10/2026

Stock picking games are harmful to your financial education. Maximizing the probability of winning makes a very different portfolio (and trading strategy!) optimal than what would be suitable for typical long-term financial goals. People end up confused. www.ft.com/content/c2c6...

ft.com

https://www.ft.com/content/c2c6a470-b1c9-4f98-af3a-65983371e6b8?syn-25a6b1a6=1

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Martin Schmalz @martincschmalz.bsky.social · 05/10/2026

The FTC continues to enforce Section 8 -- common directors on competitors' boards -- but allows the minority share acquisition. Stock price jumps on the announcement. www.ftc.gov/news-events/... Economic incentives through horizontal shareholding are more important than governance arrangements?

ftc.gov

FTC Takes Action to Prevent Anticompetitive Arrangement in Beretta, Ruger Deal

The Federal Trade Commission took action to resolve antitrust concerns arising from a stock purchase agreement between two of the largest firearm manufacturers, Beretta Holding S.A.

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Martin Schmalz @martincschmalz.bsky.social · 30/09/2026

What happens to consulting firms amid the AI disruption? - fewer juniors - record profits - record pay for seniors Why? "AI can’t replace lived experience or replicate the judgment and unwritten knowhow built over years". www.ft.com/content/94a2...

ft.com

https://www.ft.com/content/94a227c6-cded-415d-aa31-90f1da53a4ba

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Martin Schmalz @martincschmalz.bsky.social · 29/09/2026

Half a decade into the LLM revolution, I still receive data consistent with the theory that it's becoming EASIER to screen applications. You too?

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Martin Schmalz @martincschmalz.bsky.social · 28/09/2026

Audit committees can no longer rely on auditors to check internal controls. Liabilities pile up. How will they react? Are private-market solutions the answer? www.ft.com/content/2ef0...

ft.com

https://www.ft.com/content/2ef0c2fa-9626-4785-94cd-65fbf5be5741?syn-25a6b1a6=1

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Martin Schmalz @martincschmalz.bsky.social · 27/09/2026

... which would have driven home the point that the family office manager was a walking agency problem. But then again, they killed Socrates. So I shut up and let it go. Was that wrong? Was it cowardice? Should I have responded?

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Martin Schmalz @martincschmalz.bsky.social · 27/09/2026

"There are no agency conflicts," exclaimed a family office manager, insulted by remarks I gave last week at a family office conference -- remarks that included a hint at severe agency conflicts out there in family office land. "Do you take a salary?" was the Socratic response I had on my lips ...

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Martin Schmalz @martincschmalz.bsky.social · 25/09/2026

Kids these days. Listening to a Real Estate Investor panel this week, where the view was pronounced that "interest rates are back at a historically normal level" and hence no source for concern. Uh? What will happen to real estate (and the overall economy) when rates go back to 1980 levels?

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Martin Schmalz @martincschmalz.bsky.social · 24/09/2026

Why do mathematicians complain -- and sometimes resign -- as AI makes their jobs easier?? Brilliant explanation by Terrence Tao, including an illustration of the COMPLEMENTARITY between humans and AI. LOTS more work for human mathematicians thanks to AI! www.youtube.com/watch?v=svl_...

youtube.com

The paradox at the heart of AI and science | Terence Tao

Become a Big Think member to unlock expert classes, premium print issues, exclusive events and more:…

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Martin Schmalz @martincschmalz.bsky.social · 22/09/2026

The DOJ weighs joining the States' #antitrust lawsuit against BlackRock and State Street. Why would one publicize that? Tell me. Share your thoughts.https://www.bloomberg.com/news/articles/2026-09-18/doj-weighs-joining-texas-blackrock-state-street-antitrust-case

bloomberg.com

DOJ Weighs Joining Texas BlackRock, State Street Antitrust Case

The US Justice Department is considering joining a state-led antitrust lawsuit against BlackRock Inc. and State Street Corp., two of the world’s largest asset managers, according to people familiar…

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Martin Schmalz @martincschmalz.bsky.social · 19/09/2026

One basic incentive misalignment in economics is that nobody gets rich by telling you: Water, not Red Bull. Index funds, not Robinhood. Walking, not biohacking. Sleep, not supplements. Books, not content. Checklists, not heroics. Compounding, not excitement. Boring is the new sexy.

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Martin Schmalz @martincschmalz.bsky.social · 19/09/2026

10 years ago, Bill Ackman worried that increasing rates of index fund ownership would lead to a keiretsu-style governance disaster in America, pointing to 20% as a threshold for control. That threshold is now breached for typical large-cap publicly traded companies. Corporateownershipdata.com

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Martin Schmalz @martincschmalz.bsky.social · 01/09/2026

Hello everyone, and welcome to my bluesky account. I'm starting to follow a lot of accounts here since I'm finally discovering folks that I follow on twitter

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

7/7➡️ FT: www.ft.com/content/a8a1... Talk: www.youtube.com/watch?v=tr14... My upcoming book: tally.so/r/eqyWZ0

ft.com

https://www.ft.com/content/a8a14c7e-2b7f-4ded-a48d-efa3338ff4ba

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

6/7➡️ An investigation, not a finding. Regulators worry, per the FT, that asset managers are using policyholders' funds as cheap financing for risky investments in their owners' other companies. The industry's answer, per the FT, is that too many arm's-length loans get mislabeled "affiliated."

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

5/7➡️ The FT reports prosecutors have subpoenaed two life insurers owned by the private-capital arm of a sprawling holding company, over whether they adequately disclosed that certain private-credit investments were tied to other businesses under the same ownership.

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

4/7➡️ Since then, per the FT: after subpoenas from US prosecutors, a life insurer reclassified some private-credit holdings. Its "affiliated" investments went from 3% to about 42% of invested assets. S&P revised its outlook to negative.

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

3/7➡️ Regulatory capital is reduced by private ratings, leverage on leverage, liquidity mismatch, and rising interconnectedness between credit funds and other financial institutions — insurers hold close to $1tn in illiquid credit, per Moody's, about a fifth of fixed income.

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

2/7➡️ Sponsors buying insurance companies "might create the appearance or reality of circular ties." To meet capital requirements they need ratings, increasingly private ones — known only to a few selected parties.

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Martin Schmalz @martincschmalz.bsky.social · 25/08/2026

On 4 July, at Princeton's Markus' Academy, the private-capital/insurance nexus was on my list of neglected risks in private markets.

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Martin Schmalz @martincschmalz.bsky.social · 21/08/2026

Taking investment advice from lottery winners seems like an obviously bad idea. But then why do people flock towards those whose financial success clearly had a gigantic portion of luck involved? It doesn't seem like what a Bayesian would do. papers.ssrn.com/sol3/papers....

papers.ssrn.com

Fund Flows and Market States

This paper establishes a new empirical fact: mutual funds' flow-performance sensitivity is a hump-shaped function of aggregate risk-factor realizations. Explana

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Martin Schmalz @martincschmalz.bsky.social · 08/08/2026

Hypothesis: dual class share structures are viable -- or even preferable -- when employees can withdraw their human capital, which serves as a governance tool. It doesn't work, by contrast, when labor is a more generic, commoditized, input. Your thoughts?

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Martin Schmalz @martincschmalz.bsky.social · 08/08/2026

Dual class shares = horrible governance Or so the arrived corporate governance literature would make you believe. Yet, several of the world's most valuable companies have dual-class share structures. What gives?

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Martin Schmalz @martincschmalz.bsky.social · 23/07/2026

3/ From the talk: one bank charged 1.25% mgmt + 17.5% carry over an 8% hurdle for access to the Anthropic round — another offered the same round for a one-time 1%. That's close to hedge-fund fees just to access one deal.

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Martin Schmalz @martincschmalz.bsky.social · 23/07/2026

2/ The core problem is the Russian-doll model of fees: fee after fee after fee — placement, management, carry. The cumulative effect is dramatic, and buyers rarely understand what they're paying.

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Martin Schmalz @martincschmalz.bsky.social · 23/07/2026

1/ "Do private assets belong in retail investment portfolios?" asks Robert Armstrong in the FT. His answer on the fee structures: retail investors shouldn't go anywhere near them. That's the argument I made at Princeton's Markus' Academy a few days before that . 🧵

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Martin Schmalz @martincschmalz.bsky.social · 16/07/2026

A point of agreement with Larry Fink. I can easily believe that the "Trump accounts" create a different mindset of the population. In particular, few people will think of this mostly as a re-distributive policy. Related paper: www.nber.org/system/files...

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Martin Schmalz @martincschmalz.bsky.social · 15/07/2026

A propos of nothing, when is the last time you read Catch-22?

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Martin Schmalz @martincschmalz.bsky.social · 13/07/2026

5/ Liquidity is an illusion once redemptions correlate — and insurers now hold ~a fifth of fixed income in private credit, leaning on overoptimistic private ratings. Summary: markusacademy.substack.com/p/neglected-... · My upcoming book: tally.so/r/eqyWZ0

markusacademy.substack.com

Neglected Risks in Private Markets

Martin Schmalz is a Professor of Finance, Economics and Real Estate at Oxford.

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Martin Schmalz @martincschmalz.bsky.social · 13/07/2026

4/ Fees stack Russian-doll style: account, management, placement, carry — paid for longer than investors expect. One bank charged 1.25% + 17.5% carry for access to the Anthropic round; another offered it at a one-time 1%. A 2% annual cost steals half your wealth in a generation.

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Martin Schmalz @martincschmalz.bsky.social · 13/07/2026

3/ Private markets diversify less than advertised: a single fund is a concentrated bet on a manager, not an "asset class." In public markets ~4% of firms drive all net wealth creation (Bessembinder) — you must buy the haystack, and most family offices probably can't.

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Martin Schmalz @martincschmalz.bsky.social · 13/07/2026

2/ Reported returns overstate what investors actually earn: IRRs are measured from the capital call, not the commitment — and subscription lines, NAV loans, and unfunded commitments inflate the headline number while quietly adding leverage.

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Martin Schmalz @martincschmalz.bsky.social · 13/07/2026

1/ I joined Markus Brunnermeier's Markus' Academy (Princeton) to talk about neglected risks in private markets — returns, diversification, fees, liquidity, and why these risks get ignored. 🧵 Full talk: youtu.be/tr14tjLLOyw

youtu.be

Neglected Risks in Private Markets with Martin Schmalz | Markus Academy | Ep. 163

Follow the link for the full summary: https://markusacademy.substack.com/p/neglected-risks-in-private-equity Link to sign up for the webinar series: https://markusacademy.substack.com/ For our…

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Martin Schmalz @martincschmalz.bsky.social · 04/07/2026

"Brilliant talk, though you just destroyed my career" - most interesting compliment (I guess?) received so far. Was it pointing out that a 2% steals half your wealth within a generation? Or that large PE stakes probably increase rather than decrease your portfolio risk? If you want more, sign up:

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Martin Schmalz @martincschmalz.bsky.social · 03/07/2026

Remember when "hipster" antitrust-ers debated the IO establishment whether industry concentration was a contributing factor to price increases during negative supply shocks?

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Martin Schmalz @martincschmalz.bsky.social · 08/06/2026

Why does this happen? 1. Cheap diversification is boring. 2. It’s easier—and far more lucrative for advisers—to recommend concentrated, active bets and to downplay fees.

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Martin Schmalz @martincschmalz.bsky.social · 08/06/2026

Affluent families lose wealth because they: 1) fail to diversify properly and 2) neglect reducing the ongoing costs of holding their portfolios.

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Martin Schmalz @martincschmalz.bsky.social · 08/06/2026

Those traits serve entrepreneurship but can be liabilities for investing.

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Martin Schmalz @martincschmalz.bsky.social · 08/06/2026

Some takeaways from a few family firm/family office conferences I attended: most wealth creators assume the same skills and instincts that made them rich will protect their capital. I disagree. Creation often involved luck and taking idiosyncratic risks—optimism and gut calls over analysis.

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Martin Schmalz @martincschmalz.bsky.social · 08/06/2026

If you want to enable your kids to study medicine at Oxbridge, read ready to set aside half a million each www.ft.com/content/36e2...

ft.com

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Martin Schmalz @martincschmalz.bsky.social · 05/06/2026

Conclusion: I can manufacture any level of profits, without a single $ of cash flow. Lesson: not just P/E ratios matter. Also what's behind the E. Accounting matters.

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Martin Schmalz @martincschmalz.bsky.social · 05/06/2026

One thought on hyperscaler / frontier-lab profitability & valuations. I own two firms, A and B. They have no assets, no revenue, no customers. A finds a tennis ball on the attic, and sells it to B against an IOU. B draws a smiley on it, which makes it worth $2 to A - sold. Etc.

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Martin Schmalz @martincschmalz.bsky.social · 02/06/2026

I'm at a conference, and people ask me whether #commonownership had any real-world impact. Should I resume my tweeting activity on the subject? Just a few months ago, the EC enforced a common-ownership case! ec.europa.eu/commission/p...

ec.europa.eu

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Martin Schmalz @martincschmalz.bsky.social · 01/06/2026

The PCAOB Office of Economic and Risk Analysis alumni are killing it! After Josh White becoming Chief Economist at SEC, Patrick Schorno is becoming Chief Economist at CFTC. Congratulations, Patrick! www.cftc.gov/PressRoom/Pr...

cftc.gov

CFTC Chairman Selig Announces Dr. Patrick J. Schorno as Chief Economist

CFTC Chairman Michael S. Selig today announced Dr. Patrick J. Schorno has been named the agency’s chief economist to serve as economic adviser to the Commission and integrate rigorous economic…

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Martin Schmalz @martincschmalz.bsky.social · 25/05/2026

Natural experiment just dropped ‘Fast entry’ SpaceX, OpenAI and Anthropic IPOs to ignite Wall Street trading frenzy www.ft.com/content/970b...

ft.com

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Martin Schmalz @martincschmalz.bsky.social · 03/04/2026

How do you reconcile the view that China is toast because of an aging population with high rates of young-people unemployment?

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Martin Schmalz @martincschmalz.bsky.social · 27/03/2026

I don't have an American Economic Review paper. In some ways, it becomes *easier* to screen applicants that use AI to write their pitches thanks to hallucinations. If you want to signal your ability to do high-quality research, check the AI output for factual accuracy.

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Martin Schmalz @martincschmalz.bsky.social · 12/03/2026

Announcing the second edition of the Zurich-Oxford Symposium on Real Estate Markets. (Check out the placement of last year's participants!)

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Martin Schmalz @martincschmalz.bsky.social · 20/02/2026

I read "there's never been a better time to be a fraudster" -- investors will reel in a few years when the consequences hit www.ft.com/content/b5d9... Perhaps private-market solutions will fill the void.

ft.com

The giant void of nothingness where US financial regulation used to sit

‘There has never been a better time to be a crook’

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