General

We’ve received a fair number of angry letters on our anti-mutual-funds column in Fast Company — exclusively, btw, from mutual fund employees or investment advisors. Here’s a teaser:

Let’s pull off the Band-Aid quickly. You’ve come to believe that mutual funds are a smart place to put your money. They’re not.

That’s the assessment of the smartest minds in finance, supported by a mountain of historical data. If you own actively managed mutual funds, you will almost certainly retire with less money — a lot less money — than if you’d simply dumped your money into boring index funds. So two questions: How can this possibly be true? And why, in gleeful defiance of the data, do more people keep buying mutual funds every year?

For more mutual-funds bashing, check out this great NYT piece by Mark Hlbert. Money quote:

A new study builds on this research by applying a sensitive statistical test borrowed from outside the investment world. It comes to a rather sad conclusion: There was once a small number of fund managers with genuine market-beating abilities, as judged by having past performance so good that their records could not be attributed to luck alone. But virtually none remain today. Index funds are the only rational alternative for almost all mutual fund investors, according to the study’s findings.

And for those of you who want the Extended Mutual Funds Hatred Package, go buy David Swensen’s book.

Let’s keep that anger flowing!

Sign spotted today: “YES, we have patchouli.”

Jacob Weisberg thinks Obama needs a good catchphrase for his economic plan:

If you go to the economy section on Obama’s Web site, the banner that greets you proclaims, “Responsible Tax Cuts for Ordinary Americans.” It’s accompanied by an image of two piggy banks, a small one labeled “Taxes” and a big one labeled “Savings.” The fat piggie is overflowing with pennies. What, exactly, is the concept here? That we should save less to feed the tax piglet?

Nicholas Kristof has a sticky piece today on the grotesque overpayment of CEOs who fail. Case in point: Richard Fuld, chief of the now-flushed Lehman Brothers, made a half-bil between 1993 and 2007. Good investment.

This story, and others like it, run the board on the traits of a sticky idea: They’re simple (Too much money!). Unexpected ($17,000 an hour!). Concrete ($6,000 shower curtains). Credible (the amounts are indisputable). Emotional (Outrage, envy, disgust). Story (Pick your CEO). And yet the public outcry never builds up to a roar. Only a half-hearted squawk.

I can’t explain it. Maybe people feel powerless to affect it. I.e., if you were really angry, to your core, about CEO pay, what would you do next? At least with global warming, you can switch out a  lightbulb. But sadly, there’s no incremental action with CEOs — you can’t take a dollar out of Fuld’s pocket. (Even if you did, it wouldn’t be worth his time to retrieve it, because in the next 10 seconds, he’d have made another $47.)

Chip and I were thrilled to work with the AHA on their new campaign promoting “Hands-only CPR.” (Our role was limited: We led a workshop early in the process as the AHA team contemplated how to talk about the new technique. But we had nothing to do with the ingenious commercials that Jerry Potts and his team have created.)

So here’s the simple idea: You can save a life just by pumping on someone’s chest. Mouth-to-mouth isn’t necessary. So if an adult collapses, call 911 and pump hard and fast on their chest until help arrives. (In a wonderful karmic coincidence, the correct pumping rhythm is about the same as the beat to the song “Stayin’ Alive.”)

The best sign that this idea has stuck is that SNL has already parodied it.

Add’l info: Our recent Fast Company column, which links the AHA campaign to some more general thoughts on how to explain new innovations.