Slate's Moneybox: Sam Alito, Financial Whiz

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ALEX CHADWICK, host:

Here in this country, supporters and opponents of Supreme Court nominee Samuel Alito are right now pouring over his written records trying to find out more about what kind of a judge and man he is. One kind of record that does not get as much public scrutiny is a nominee's financial disclosure. These are required for people to make when they're federal judges. Henry Blodget is a former securities analyst and a contributor to the online magazine Slate, and he's been going through Judge Alito's financial past to figure out what we can learn from it, and he joins us again now.

Henry, what is Judge Alito's net worth?

HENRY BLODGETT reporting:

He is worth, according to the financial statements, approximately $600,000 to $1.2 million, and that is excluding his house, which certainly could be worth a lot in today's market. He is mostly invested in low-cost funds and index funds, which is unusual and we thought very interesting.

CHADWICK: And what is interesting about that? What is it that you find interesting about his investment record that's public?

BLODGETT: Well, on Slate we have--we've started this sort of informal series of looking at financial disclosures and looking at them sort of as a psychological window into how people think and make decisions and so forth. And what's unusual here--and it's very different from John Roberts, for example--is that Alito is investing--he's very diversified, which is obviously good, but he's also mostly invested in Vangaurd, which is a low-cost fund provider. And I think one thing that people assume, if they don't actually do the work to look at what makes sense from a mutual fund perspective--they assume that the more a mutual fund costs or the more a company does to research other companies and so forth, the better. But actually, in fact, in the mutual fund world, Wal-Mart prices do not get you Wal-Mart-quality merchandise; they usually get you Saks-quality merchandise. And that's what Vanguard is providing. And Alito, whether it's just a financial adviser telling him that or whether he's figured it out on his own, he is invested in a low-cost fund provider, which is very smart.

CHADWICK: And you like his tax investment strategy as well.

BLODGETT: He also discovered that taxes matter. Most people, most casual investors, tend to focus on pretax returns. And we're taught, too, when we read the newspaper and we listen to mutual fund companies, they all focus on pre-tax returns. But, of course, the only thing that really matters is the post-tax return. And so several of Alito's funds are tax-managed or tax-exempt funds, which is another indication that he's really focused on the bottom line.

CHADWICK: You suggest that his investment strategy might lead you to think this is someone who can resist pressures around him. How is that?

BLODGETT: I think it's not only resisting pressures, it is the ability to look through and look beyond what is sort of the common wisdom about something like investing. Again, I think a lot of people believe, from listening to the television or reading a newspaper or listening to Wall Street, that the smart investment strategy is to either buy a few mutual funds or go out and research companies and so forth. And, in fact, if you actually look at the facts, it is much smarter to invest in index funds and managed costs and so forth. And that's hidden in any way. A lot of people have said that. But in order to really realize that and act on it, you have to look at the facts and you have to have the discipline to put it in practice. And my conclusion in looking at Alito doing that is that that was a very good sign for a judge, who obviously is going to be bombarded by stories from both sides and has to look through that and find the truth and then rule on it.

CHADWICK: Maybe he just isn't interested in money.

BLODGETT: That's possible, but if he is just not interested in money, which, by the way, is a great investment strategy, he has done the right thing with his lack of interest, whereas most people do the wrong thing because they're hearing what other people are saying and sort of acting on that. So whether he's not interested or not, he's doing the right thing.

CHADWICK: Opinion and analyst from Henry Blodget, who investigates the finances of high-profile federal nominees for the online magazine Slate.

Henry, thank you again.

BLODGETT: Thanks for having me.

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