| I think the dirty little secret is that, aside from the top-tier VCs, almost no one else ever made good risk-adjusted returns, outside of a short window in the late 90s. There is disruption going on upstream. Second markets are disrupting the IPO pipeline. Independent high-frequency trading has taken over marketmaking from cartels of floor brokers and banks. Independent registered investment advisers are disrupting stockbrokers. Individuals are taking charge of their own portfolios with online tools, blogs, communities like StockTwits. Still more cartels and dinosaurs are ripe for disruption. I don't really agree about destroying wealth. Investment companies are financial intermediaries. To the extent they are disintermediated and the process becomes more efficient, the entrepreneurs and investors end up keeping more of their wealth instead the advisers. The intermediaries who really added value will still find a role, maybe as entrepreneurs, incubators etc. In the case of newspapers/music there were institutions that used to pay for value-added activities that shrank or disappeared. There is a loss of institutional memory / structure / craft. But arguably there is not that much value add in most of the investment models that are getting disrupted and what replaces them is superior. |
That's definitely one that's under-appreciated. High-frequency trading gets all the press, but the stockbroker is a dying breed. People want more than someone who can buy and sell stock for them, since they can do it online easier and cheaper than with a broker.
I think two things that create large opportunity in this old, ripe-for-disruption market are personal service and a feeling of security. I know someone who is an account manager (kind of like a "hedge fund" manager for the average person) who earns his clients about 3% annually, and he does quite well. Three percent! The average rate of inflation! But with how volatile markets are and now quickly financial instruments change, people are really afraid of losing it all, so they hand their money to an expert to manage.
So anyway, if anyone is looking to disrupt the financial market in the years directly directly following a crash, personal service and guaranteeing security seem to be the key strategies.