Master Financial Education
Daily Commentary 2015

E. F. Moody Jr.


I have asked Errold Moody to provide a brief example of what he has actually found on behalf of a client who engaged his services to review the insurance contracts which funded the client's estate plan. You will be amazed. In my 30 years in the business, I have never seen an authoritative, objective, prudent expert speak so clearly on the use of insurance. What Errold can do is unique in the industry.

Steven Winks

Secretary of State John Kerry - In America,  "you have a right to be (as) stupid (as) you want to be."
(But too many Americans are abusing the privilege)

Why did our systems fail and why will they continue to do so?  From Paul Volcker

"our economics are based on “an unjustified faith in rational expectations, market efficiencies and the techniques of modern finance"

You must not believe everything you think

Stephan Thomas Vitas

You are entitled to your own opinion. You are not entitled to your own facts.

Kevin Kind

Words  are chosen in order to influence us as manipulable objects, not to inform us as autonomous subjects.

Stephen Colbert

Great spirits have always encountered violent opposition from mediocre minds 

Albert Einstein


Retirement Manifesto
I am doing a rewrite to condense my comments. But it is still mandatory (though tough) reading for retirees. 

Linkedin members: this website started in 1996 and I have done the Daily Commentary since that time. I used to do more reports and commentary here but it simply seemed more important from  around the early 2000s to present some of what I review every day and let the readers figure out the relevant issues themselves. Of course investments are covered but long term care, economics, life insurance, arbitrations et al command the bulk of a planners capabilities- though generally it's nothing more than lip service, Not so here.

Risk of Loss
: There is a lot more to discuss but at this point I will give you a look at one of the most important videos you will ever see-  and that should change the industry regarding the "illusive" element of risk. You will need a financial calculator  Note- these were not initially designed for brokers but the material would not be much different.

Risk of Loss and Risk of Loss 2

Dollar Cost Averaging Down: Here is another very important video on risk-  that being a retiree will run out of money before death and the (semi) traditional 4% annual income rule. The position of the industry has been a buy and hold through the most perilous times and the market will always come back. So, over a long period of time, the investor will recoup their losses.  So, does it work? Well, from Peter Bernstein forward, the use of historical numbers tends to indicate that about 20- 30+ years you might do OK.   However, for middle income Americans,  it probably won’t work (very few things are 100% and maybe there will be far fewer major downturns in the next decades -as I type laughing greatly).  The trillions lost from 2000 and 2008 simply states that the middle class cannot take another big hit coming up soon.  So here is a video that will help consumers stem their losses on equities to around 10 to 15% (I was too pessimistic in the video at 20%-- that is too much to lose). It is DCAD- Dollar cost Averaging Down- another straight forward description to avoid large losses. Effectively guaranteed to work up to 95% of the time unless you are very emotional and/or stupid.  It's not perfect but it gets the job done. It is far better than the mathematical calculations that defy deities and are based on numbers from the 1800s.  (It's almost an hour long and your spouse must watch as well. Extra bacon is a good incentive for men.)


DCA UP  Dollar Cost Averaging UP What goes down hopefully comes back up. But effectively every critic and pundit says there are no such triggers to  help advisors. .WRONG This  video shows you that an independent point in time can provide a valid entrance to the equities (bonds now dance to a different Yellen drummer). It is unemotional, nothing to do with a seance by the guru du jour of the week and it also negates your own ego (if that actually is possible). . Should provide around 85% to 90% of the upside.

DCA Dollar Cost Averaging: This is a marketing tool that is still being taught to "supposed" investors. It IS a conservative way to buy stocks and funds simply by not buying them. By the same token, it also lowers overall return about 2/3rds of time.  And in most cases the term is misused.


Consumer Broker/Planner Questionnaires- Utter Bollocks!
While I am not indicating that some valid information is not obtained, the idea that the consumer determines the amount of risk to be taken is ludicrous, stupid, simplistic, sophomoric, pretentious and more. It is a sham foisted on the American (and pretty much every other country) public that they know the risk of the market, the products they are purchasing and, above all, can determine their risk of loss if/when the economy should/will take a hit.

Right now FINRA is taking some brokers to task for the use of products/risk wherein not only the consumer was clueless to what could happen, but the agent was as well.
That should not be a surprise in that the fundamentals of investing have never been taught to a broker nor a RIA. Neither is the use of a financial calculator so one cannot expect much. .


These are not to be redistributed or used by anyone else in any manner whatsoever.

Uniform (Im)Prudent Investor Act- Waaaaaaaaaaaaaaaaaay Out of Date

World Clock by

 I now have contracted with one of the major professional (non industry) associations in the U.S. to provide videos on a host of financial issues to their members

3/5" Indexing" the percentage of institutional investments in index-tracking strategies is small — about 19.2 percent for public pension plans and 11.2 percent for corporate plans

"If you want to outperform, then you have to think differently and act differently with higher level thinking," and that "if you have enough aggressiveness at the right time, you don’t need any skill."
Howard Marks

3/5: Military families are falling behind in financial literacy (Think Advisor)

Military families are becoming increasingly disconnected with their financial realities. A report commissioned by First Command Financial Services Inc. and the First Command Educational Foundation showed middle-class military families posted an average score of 69 on its financial literacy test, the first failing grade since the program's launch in 2012.

3/4: Volatility


10 Steps to Kidney Health

Recent studies indicate that 26 million American adults suffer from chronic kidney disease (CKD) and that the number is likely to rise unless Americans get serious about prevention. March is National Kidney Month and World Kidney Day 2015 is March 12. This is the perfect time for responsible adults to begin a kidney-health program by learning about the risk factors for CKD.

Primary risks include: diabetes; heart disease; high blood pressure; a family history of kidney disease; and age 60-plus.

Secondary risks include: obesity; autoimmune diseases; urinary tract infections and systemic infections.

Below are 10 important steps from the National Kidney Foundation to protect kidney health.

10 Ways to Keep Kidneys Healthy

  1. Exercise regularly

  2. Don’t overuse over-the-counter painkillers or NSAIDs

  3. Control weight

  4. Get an annual physical

  5. Follow a healthful diet

  6. Know your family’s medical history

  7. Monitor blood pressure and cholesterol

  8. Learn about kidney disease

  9. Don’t smoke or abuse alcohol

  10. Talk to your doctor about getting tested if you’re at risk for CKD

The National Kidney Foundation will also offer free kidney screenings to people at risk for CKD in a number of cities across the country on World Kidney Day (March 14, 2014). For locations and schedules,click here.

This article was is courtesy of the National Kidney Foundation.  For more information about kidney health or the foundation, visit their website at


The Average Retirement Age – An Update

byAlicia H. Munnell


The brief’s key findings are:

  • Labor force activity among older Americans began rising in the mid-1980s due to:
    • changing Social Security incentives;
    • the shift to 401(k) plans; and
    • improving health, longevity, and education.
  • Updated data, however, suggest that these factors may have played themselves out.
  • As a result, the average retirement age has increased only slightly in the last 10 years: to 64 for men and 62 for women.

3/4: Asset class correlation assumptions


Table 3: Asset class standard deviation assumptions

Asset Class Standard Deviation (Annualized)
US Stocks 16%
Foreign Developed Stocks 18%
Emerging Market Stocks 24%
Dividend Growth Stocks 14%
US Government Bonds 5%
Corporate Bonds 5%
Emerging Market Bonds 7%
Municipal Bonds 5%
Real Estate 18%
Natural Resources 18%

Table 4: Asset class expected real returns

Note: long-term inflation expectation is 2%.

Asset class CAPM Return Wealthfront View Black-Litterman
Gross Return
Net-of-Fee Return
US Stocks 5.3% 4.3% 4.6% 4.5% 3.9%
Foreign Stocks 6.2% 3.3% 5.3% 5.2% 4.4%
Emerging Markets 8.1% 5.4% 7.0% 6.8% 5.9%
Dividend Stocks 3.7% 5.3% 3.5% 3.4% 2.5%
US Government Bonds -0.8% -1.5% -0.9% -1.0% -1.4%
Corporate Bonds -0.2% 1.0% -0.3% -0.4% -1.1%
Emerging Market Bonds 1.0% 2.0% 1.1% 0.8% -0.5%
Municipal Bonds -0.8% 1.0% -0.7% -0.9% -1.0%
TIPS -0.5% -2.3% -0.7% -0.8% -1.2%
Real Estate 5.0% 3.5% 4.4% 4.3% 2.7%
Natural Resources 4.0% 4.0% 3.4% 2.7% 2.4%

3/4: Roubini

Why negative interest rates could become the new normal

 One still might think that it makes sense to hold cash directly, rather than holding an asset with a negative return. But holding cash can be risky, as Greek savers have learned

Monetary policy has become increasingly unconventional in the last six years, with central banks implementing zero-interest-rate policies, quantitative easing, credit easing, forward guidance, and unlimited exchange-rate intervention. But now we have come to the most unconventional policy tool of them all: negative nominal interest rates.

Gross has said similar. So when I say that this is a fabricated economy, I also mean that historical number crunching may be a thing of the past. Looking forward will have lower rates and yields and th volatility will be greater.


Correlation & Dispersion Index Dashboard


  Download this month's dashboard


Warning signals were flashing in European correlation levels prior to the European Central Bank's much-anticipated stimulus package at the end of last month; since the announcement, correlations have collapsed along with volatility levels in developed markets.


February’s 0.11 correlation for the S&P Europe 350 was the lowest since at least 2007, and similar record-low correlations were recorded in the S&P SmallCap 600®, the S&P Emerging BMI and the S&P Developed Ex-U.S. LargeMidCap.  Every single correlation measure was in the lowest quartile of its historic range.


Dispersion in each market remains high relative to recent history.


Below are the historical annualized real returns for stocks from 1970 to 2013 using the Dimson, Marsh, and Staunton data. 

Austria 3.85%
Australia 4.51%
Belgium 5.97%
Canada 4.91%
Denmark 7.58%
Finland 8.56%
France 5.69%
Germany 5.02%
Ireland 5.57%
Italy 0.60%
Japan 3.28%
Netherlands 6.44%
New Zealand 4.75%
Norway 6.95%
South Africa 7.56%
Spain 3.49%
Sweden 9.04%
Switzerland 4.83%
UK 5.88%
US 5.97%

3/2: No One Should Expect Returns of 5%’: Research Affiliates

The numbers don’t lie, according to experts at Research Affiliates, and that means it’s time to scale back expectations when it comes to real returns in the coming decade.

“We’ve plotted it – there’s nothing above 5%,

And Robert Shiller  says that with a U.S. equity ratio of 27, we should expect lower future returns ahead.

EFM- I don' know about 5% but 6% that I would use now is not really much betterr

3/2: Say it  isn't so
When mystery shoppers visited advisers for a 2012 study, 85 percent were told to ditch their diversified, low-fee portfolios.

Commissions, including load fees and 12b-1 fees, give advisers an incentive to recommend certain investment products over others. Firms can also give advisers bonuses for steering client money into the firms’ own funds. The result of this biased advice is that investment performance suffers, academic studies show—and not just because fees eat into returns. A 2014 study compared self-directed investors with clients who received advice with conflicts of interest. The self-directed investors performed an average of 1.25 percentage points better annually. A 2009 study found that direct-sold funds beat broker-sold funds by 0.14 to 0.9 percentage point per year, even disregarding the broker funds' higher fees. Over time, that performance gap can cost you thousands, or tens of thousands, of dollars.

3/1: Will the True Monte Carlo Number, Please Stand Up? By: Moshe A. Milevsky and Anna Abaimova

Note the termendous variability from the different products.

3/1: risk mansgement<

 '"Admittedly, some risk management is much better than none and I commend advisors who are pioneers in using this new technology. But the use of risk management in an advisory practice must rise to the critical next level. It must answer the ‘So what?’ question for the client, i.e., “Why exactly am I incurring this risk. If I am risking a large loss in a junk debt collapse or equity deleveraging, which specific goals am I reaching for? And if I reduce my risk, which goals do I need to give up?”

Advisors already answer these questions for their clients.  We are simply advocating that they connect financial planning to the rigorous risk management process. Risk tolerance is a very important concept, but it is not the only aspect of risk management. In fact, FINRA’s definition of suitability specifically includes the following:

“…customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs and risk tolerance.”

Risk tolerance is one out of ten on this list. While we would agree that its importance far exceeds 10%, it is essential to address objectives, horizon, taxes and the like to truly add value for your clients"

EFM-read article below since I am providing the answer to both issues.

3/1:  Retiremenet spending and ARVA- ( annually recalculated virtual annuity) READ THIS CAREFULLY (below are excerts only)

[In other words, the problem is not to find the correct, single, constant spending rate for the entirety of one’s retirement, as many practitioners seem to assume. There is no such rate—unless the entire portfolio is engineered to perfectly hedge planned consumption (and all spending goes as planned!). The problem is to recognize that with any other investment strategy—one that includes unhedged risky assets—spending must vary as total asset values and interest rates fluctuate; there is no other safe way to meter spending so that there is no danger of the money running out.

 A simulation approach tries to balance the desire for higher spending against the chance that the investor will run out of money, but we want an approach that guarantees that the portfolio will not be depleted, even if the investor is holding risky assets. Adjusting one’s spending is tolerable but ruin is not; therefore, we present an alternative to the probabilistic approach. Our innovation is important in both theory and practice: In the literature, the possibility of running out of money is said to have infinite disutility, meaning that any nonzero probability of ruin should be avoided entirely. This objective simply makes sense, even in a country such as the United States, where there is a Social Security safety net.

................... and readers of this article will see that a universal 4% or 3% answer is necessarily in error. At best, it is a heuristic usable only for certain combinations of specific retirement horizons and real interest rates—a fact that is obvious once stated but that is left out of much of the adviser literature. (EFM: I repeat- it is necessary to compute some conservative number for the asset base for the retiree looking at an acturarial lifetime plus a fudge factor. See the comments in the  risk of loss video.)

The ARVA strategy can be derived from an annuity payout calculation, repeated each period; simulations and other fancy techniques that accept some probability of ruin are not required. Of course, this ARVA strategy gives a completely stable real spending rate only if one invests in the nearly riskless TIPS ladder, the true risk-free asset allocation policy. The primary focus of this article, however, is on those who do not invest in a ladder of TIPS to fully hedge spending but instead choose to invest (partly or wholly) in equities and other volatile assets; for these investors, the unhedged risk must and will pass directly through to the amount that can be spent on consumption as the ARVA is recalculated each period.

In our view, the discussion should not be about whether 3% or 4% is correct, nor should it be about whether to tolerate a 10% or 20% possibility of failure in a simulation (any possibility of failure being unacceptable). Rather, it should be acknowledged that with risky investments, there is risk to one’s wealth, and in the presence of such risk, there cannot be a fixed spending rate. So, the discussion should be about how to recalculate the proper level of spending each year as one’s portfolio value and time horizon evolve. (Yes, excellent)

Others may calculate probabilities of failure, but we are not interested in failure. Running out of money before running out of life is a catastrophe, mitigated only by Social Security. It is not something we want an investor to do, even with a low probability. We want an approach that guarantees a wealthappropriate income right down to the last payment, not one that settles for some small but still very significant probability that such an outcome will not be achieved. This must be the starting point for any discussion of this topic. (Excellent)

A single generalized spending rule meets the needs of both the riskless and the risky investors: Spending in the current period should not exceed the payout that would have occurred in the same period if the investor had purchased with his or her available assets at the beginning of the period a fairly priced level-payment real fixed-term annuity with a term equal to the investor’s consumption horizon

The ARVA strategy has the advantage of connecting the dots between risk and return in the most meaningful possible way: Investment risk translates directly into consumption risk. More equities and other risky assets and less hedging of consumption mean more volatility—uncertainty—of consumption. Living standards will go up and down unpredictably to the extent of the unhedged risk in the portfolio

risk—the only risk—you care about when setting your investment policy. And it is controlled by the volatility of the portfolio chosen in the asset allocation process: The standard deviation of the portfolio’s investment strategy is also the standard deviation of consumption (for a constant discount rate). Hold that risk tolerance thought; you will use it repeatedly when considering spending rules and investment policies. As a result, in considering the degree of aggressiveness in risky asset holdings—that is, where to be on the surplus efficient frontier as described in Sharpe (1990) or, with a more specific link to multiperiod consumption, in Waring and Whitney (2009)—risk tolerance for the investment portfolio is equivalent to risk tolerance for spending volatility. Here is the deal: if you cannot take large hits to spending several years in a row, perhaps you should be considering a more closely consumption-hedged investment policy, with fewer nonhedged risky assets. Many people are probably invested more aggressively for their retirement than they might be if they thought this risk tolerance issue through. Some investors may not like experiencing consumption volatility. Many would like to have their aggressive risky asset portfolio “cake” and eat it smoothly too, as the old saying (almost) goes, holding lots of equities and other risky assets. But—this is a reality check—the “tough love” lesson of this article is worth repeating: consumption volatility directly follows from investment and discount rate volatility and is what risk is. Embrace it; remember it. Manage it with your investment policy; do not take risk the downside of which would make you unhappy

If one believes that the random walk model is a reasonably good model of the markets, the possibilities of ruinous long-term underperformance cannot be ignored.

What happens if your luck is bad? We alluded to it earlier, in our discussion of what risk is. As a result of our investor’s reaching for his aspiration by taking on greater risk, the assets might earn less than the risk-free return, and if they do, consumption will be lower than what he could have had risklessly with a ladder of TIPS worth his actual asset value— $600,000! Lower, not higher—completely defeating the aspirational effort—and perhaps much lower. Aggressive investment strategies that aim to increase spending beyond an investor’s apparent means generate a significant probability that the investor will be worse off, not better off. You can count on what you have (if invested correctly), but aspiring to do better by taking on additional investment risk may or may not end well.

The more interesting situation is when the investments include risky assets and are imperfectly hedged to consumption. If the investments involve risk, the recalculated annuity periodically adjusts spending to keep it appropriate to fluctuating portfolio values and interest rate levels; in this way, spending will always be sized appropriately to one’s assets and the possibility of ruin can be avoided.

Risk tolerance must be set carefully when deciding the aggressiveness of the asset allocation or investment strategy. Risk in the investment portfolio translates directly into risk in the investor’s lifetime consumption stream: a 10% portfolio loss requires a 10% reduction in spending. It should be no surprise to anyone that the decision to seek higher expected returns in an effort to increase consumption means taking on greater expected risk—risk that realized returns, and thus consumption, might end up lower rather than higher.

EFM- As stated these are just excerpts and I surmise you know what my comment is. The whole idea of risk is to control it. DCAD does exactly that but whatever the simplicity is, it is apparently beyond academia and all the supposed thought leaders. Do you see what the bold print says directly above? Think about the losses sustained in 2000 and 2008 and then tell me someone could accept a 44% reduction in assets for 2000 and corresponding income and then a 57% drop a few years later? But it's even worse than that as I have indicated in previous commentary. A retiree taking out funds will never see the complete return of assets. The authors note- "if you cannot take large hits to spending several years in a row, perhaps you shouldbe considering a more closely consumption-hedged investment policy, with fewer nonhedged riskyassets"- and I submit that is most of the middle income, then DCAD should be a major offset to such risky assets and allow greater income overall. Instead of a 44% loss, it could be 10%. Instead of a 57% loss, it could be 13%. No algorithms- just common sense. And DCAup provides an independent way to get back in.  Also recognize that the emotional stability of the family will be FAR better.

The authors however have a similar philosophy of doing an examination of the then budget and investments every year. This essentially precludes the innumerable articles preaching a 4% or 3.5% or 3% annualized income "good" for a 30 year or more lifetime.  

Their commentary on a very long lifetime was excellent. Not really sure how it could be handled for a very large populace.

3/1: I must hurry- this from an email just received.

I'd like to see you as a guest in Lake Tahoe, May 28-31, for our "Annual Premier Coaching Event".

Qualification only takes 3M production, and we've made it easier for you to qualify.

We are giving you double the points in March!

Would this be an incentive to agents to "get on board"? You decide
(Did it take long?)


Long-term Care Insurance

new study led by senior economist Anthony Webb of the Center for Retirement Research, finds that U.S. nursing home stays are relatively short: 11 months for the typical single man and 17 months for a single woman.  There’s some unpleasant news in the study, too, because the risk that an older person may one day need nursing home care is 44 percent for men and 58 percent for women.

For the last couple weeks I have read more LTC articles. They almost universally talk about nursing home care as being LTC. No. Effectively the journalists say something like above that the nursing home stays are relatively short. Did they mean just nursing home exclusively or was it assisted living AND nursing home?

So I have no idea what the statistics actually are. See if you can figure it out. 

more than half of women die before age 85 (80 for men)

3/1; Crap

Best Practices for Gauging and Managing Your Clients’ Risk Tolerance

Effective and meaningful conversations about risk are critical to relationship success, says Dr. James Grubman, a wealth psychologist who works with high-net-worth families and their advisors. Yet, for many advisors, talking about risk is right at the top of the “sensitive topics” list. Why? Because whether or not your clients admit it, their own feelings about risk are a reflection of their upbringing, personality, emotional security and experiences with money, regardless of how wealthy they may be.1  As an advisor, it’s clear that in the current landscape, it’s risky to rely upon untested assumptions about your clients’ attitudes toward risk. In light of the events over the past few years, advisors should consider re-assessing each client’s risk profile by encouraging clients to spend time discussing their attitudes toward risk. This will allow you to be successful in the analysis and calculation of your clients’ risk attributes. RAISING THE SUBJECT OF RISK: A CRUCIAL CONVERSATION2 Most financial advisors assess risk as a normal part of the client relationship. Your biggest challenge, however, is getting an accurate picture of your client’s risk tolerance3. For most people, ‘risk’ only means loss, damage and putting something in danger, says Grubman. “When you start a conversation with, ‘Let’s talk about risk,’ you are likely making your clients anxious from the start.” Using the word ‘risk’ right off the bat may create emotional roadblocks that prevent you from having a more productive and rational discussion4. For other clients, the concept of risk is so abstract that it may be difficult for both advisors and clients to articulate their thoughts in mutually comprehensible terms. Given the loaded nature of the word, especially within the construct of a financial relationship, Grubman advocates using real-world situations and experiences that will be more effective in probing and pinpointing your clients’ feelings about risk. Consider the following conversation starters: – “Let’s talk about those times in the market when you tend to get nervous.” – “What helps you sleep well at night when it comes to your money?” – “You have $100,000 in your portfolio today. How would you handle a scenario in which the value of your portfolio dropped to $80,000 over a three-month period?5” These kinds of open-ended questions will elicit emotional responses that will cue you in to how much risk your clients can actually manage. Grubman also points out that most clients only focus on the negative connotations of risk, without considering its benefits as a means of potentially capturing excess returns in strong markets or protecting against the potential erosion of the value of a portfolio during inflationary periods6

Attitude Towards Risk Risk equals danger to these investors, who have little confidence in their ability to make good financial decisions.
Risk equals danger or uncertainty; investors in this group adapt to poor decisions uneasily.
Risk relates to uncertainty, yet they are prepared to take a small to medium degree of risk in their investments. They are usually confident in their decisions.
Risk represents uncertainty to these investors. They have a reasonable amount of confidence in their ability to make good financial decisions.
Risk equals opportunity and a medium degree of risk is acceptable. They have a reasonable amount of confidence in their ability to make good financial decisions.

Risk equates to opportunity, a large degree of risk is acceptable. They have a great deal of confidence in their ability to make good financial decisions. These investors think of risk as an opportunity or thrill, and they have complete confidence in their ability to make good financial decisions.

Financial Profile Always more concerned with possible losses than possible gains. More concerned with possible losses than possible gains. Still usually more concerned with possible losses than possible gains. More concerned with possible gains than losses. Always more concerned with possible gains than possible losses.

1: They have put risk in a subjective position. Why not make it objective by showing what the risk actually is BY THE NUMBERS. Ever hear of Risk of Loss? You can define the risk for almost any portfolio.

2. The level of risk is one of the first issues of discussion- before any investments are made.

3. Getting a picture? Just show the numbers.

4. Change the focus to risk of loss and what do they want to do? Try a buy and hold and probably get slaughtered or limit losses to 10% to 15%.

5. That's 20% which is beyond the values I set for DCAD. DCAD would have already 'forced' sale of the equities. The question is why did it drop? Is it just a correction? 

6. DCAup 'forces' one to buy in on the upside. Might be able to do it before an announcement by the National Bureau of Econom6ic Research but this is independent.

If you have an advisor bent on the status quo, the risk conversation is a guide to disaster if a bad time occurs. And only a large mosquito bite with DCAD.




23/1: Interesting

Why Financial Advisers Should Factor Tech Advances in Retirement Planning
"In the next stage of our [65-year-old] client's life, from 80 to 85, robots will be able to help him with the activities of daily living, for about 15% less than the current cost of a home-health service. By the time this client is 85, robots will not only be cheaper but more capable, and the savings will continue to increase. These future savings, and clients' increasing life expectancy, need to be factored into plans we're making today. Planners may want to set aside money for emerging technologies, and make calculations based on longer life expectancies."
(The Wall Street Journal; subscription may be required)  

3/1: Side by side with the limitless possibilities opened up by the new technologies, reflection about international order must include the internal dangers of societies driven by mass consensus, deprived of the context and foresight needed on terms compatible with their historical character. As diplomacy is transformed into gestures geared toward passions, the search for equilibrium risks giving way to a testing of limits. … 

Because information is so accessible and communication instantaneous, there is a diminution of focus on its significance, or even on the definition of what is significant. This dynamic may encourage policymakers to wait for an issue to arise rather than anticipate it, and to regard moments of decision as a series of isolated events rather than part of a historical continuum. When this happens, manipulation of information replaces reflection as the principal policy tool. 

– Henry Kissinger, “World Order: Reflections on the Character of Nations and the Course of History” (2014)

3/1: Fiduciary Push Expected after State of the Union Address
"The administration is already prepared to defend the Department of Labor rule with an economic justification document that is seen as a key to getting a court to uphold the regulation if it is finalized but then challenged in court. The economic justification document ... purports to show that consumer protections for investment advice to the retail and small plan markets are inadequate and that the current regulatory environment 'creates perverse incentives that ultimately cost savers billions of dollars a year.' The justification document said evidence through various studies indicates these costs arise from incentives to steer savers into higher cost products within the IRA market."

3/1: One in Five Investors Have Tapped Into 401(k) Prematurely
"The majority of nonretired investors in the U.S. say their employer offers a 401(k) plan, and of these, 89% say they participate in it. Yet 21% of those who participate in such a plan say they have either taken out a 401(k) loan or even taken an early withdrawal from the plan in the last five years."


Caregivers Encourage, Motivate Loved Ones with Aphasia
By Joanne Marttila Pierson, Ph.D.


  • You ask your spouse for a plate, and he hands you a cup.

  • Your spouse seems to get “stuck” on the same word or phrase.

  • Your spouse can say words, but her sentences don’t make sense.

That’s Aphasia: a language disorder that results from damage to parts of the brain. It can affect all modes of language including speaking, writing, gesturing, understanding what others say, understanding writing, and using numbers. Aphasia often hides people’s thoughts, ideas, personality, intelligence and competence – they know what they want to say, but can’t always get the words out.

Stroke is the leading cause of aphasia; however, it also can result from brain tumors, head injuries, brain infections, and other conditions of the brain.

People who suffer from aphasia can have difficulty understanding others, particularly strangers. Or, they can follow the gist of a conversation, but lose track easily, or forget the beginning of a message before reaching the end of it. They may be able to say individual words, or parts of words, but struggle to complete the entire word or sentence. Or, they may speak nonsense quickly. And background noise or lively conversation among a group of people can really exacerbate the difficulty they have understanding conversations.

“Many times, too, a person with aphasia is so focused on themselves, they are unable to see that their caregiver is overwhelmed. The person with aphasia can’t help it; they’ve lost a lot of control in their lives between the loss of communication and physical disabilities. They are just trying to survive,” says Mimi Block, M.S., CCC-SLP, clinical services manager, University of Michigan Aphasia Program.

“And even if they could recognize how much their caregiver is dealing with, they cannot express their gratitude or appreciation,” she added.

It can be an enormously frustrating condition, for both the individual and the caregiver.

The University of Michigan Aphasia Program (UMAP) is the oldest and most effective program of its kind in North America for the treatment of aphasia. Established in 1947 to assist World War II veterans who sustained injuries in combat, UMAP has successfully treated thousands of individuals, offering as much speech-language therapy during a six-week session as a person would receive in one year of traditional therapy.

Caregiver education and support is a critical component of the UMAP.

This past summer, UMAP gave Robin Cox, wife of a (retired) National Guard Lieutenant Colonel with aphasia, the tools to help her husband with his therapy and the insight to help herself as his caregiver. Her husband Mark suffered a stroke in March 2009, just 30 days before he was due to be deployed to Afghanistan.

“I know it’s a cliché, but UMAP taught me this is not the end of the world, there is light at the end of the tunnel, and the little progress we make each day brings us that much closer to our goals,” Robin Cox said. “And those little improvements are exponentially more important for the caregiver,” she added. “They bring us ten times the joy.”

One morning, not too long ago, Mark found his glasses after looking for them for quite some time.

“He said, ‘I found them’ and I said, ‘Say that again!’ and he did! And then I made him say it again. It was one whole, complete sentence. It’s those little moments you must celebrate,” Cox said.

During the six-week session at UMAP, there are five caregiver meetings which focus on:

  • Acquiring a better understanding of aphasia, and the physical disabilities associated with a stroke (the most common cause of aphasia)
  • Facilitative conversation and other ways to communicate with people who have aphasia
  • Effective communication techniques and strategies
  • Practicing new communication skills using facilitative conversation
  • Options for the future

“Ongoing education is essential for the well-being of the loved one with aphasia and all the family members,” Block says. “The caregiver needs to connect with the speech-language pathologist who sees their loved one to learn about aphasia and specific techniques to communicate with him or her.”

To prompt conversation, Block encourages caregivers to use “topic cards,” which are lists of words or pictures—like family, sports, friends, birthdates, hobbies, maps, a calendar—as a starting point to determine what the person wants to talk about.

“There’s also the WH Chart—who, what, when, where and why, that can be used to get the person thinking in terms of sentence structure,” Block said. “The more information that’s available to them, the more successful they will be.”

One night when Mark Cox was trying to tell his wife Robin to change his schedule that week, she said they both “went round and round and round, and started to get flustered” until she resorted to using a calendar and writing down days of the week and appointments to clarify what her husband was trying to do.

“You have to keep digging to find the right way to get the point across,” Robin Cox says. “It’s more than just talking. You can use pictures, calendars or write words on paper. You’ve got to take a deep breath and be patient. Yelling isn’t going to do it. You have to try all of your options.”

UMAP also encourages caregivers to be advocates for their loved ones, providing them with the encouragement and motivation to continue on the road of recovery with realistic goals and expectations, and a better ability to communicate in their day-to-day living.

Lulu Smith, whose husband Louis suffered a stroke in 2005 and has aphasia, is in two therapy programs, including UMAP. She accompanies Louis to all of his therapy sessions, and either watches them or participates in them directly.

“I watch to see what the therapists are doing, and I insert their techniques into our daily routine at home,” she said.

Lulu Smith also tries to keep their lives as normal as possible. Louis is a legendary jazz trumpeter with an international reputation and many major recordings, and she regularly takes him to jazz festivals and clubs where he can interact with other musicians. They’ve always been great travelers, she said, and they go to Paris in October each year and to Mexico for two months in the winter.

“I never get someone to ‘sit’ with him. We’ve always done things together,” she said.

Robin Cox recently encouraged her husband to go with her to their 11-year-old son’s football game.

“He didn’t want to go at first. Since he had his stroke, he’s lost some endurance, too. But he ended up staying for the whole game. I think Mark realized he can socialize, and he can talk with others—not just his wife, his brothers, or people who are close to him. Physically, he was tired, but it was great for his spirit.

“He was put out of his comfort zone. I think that’s what a caregiver does. We try this, and if it doesn’t work, we’ll try something else,” Cox said.

“It is so important to keep trying,” says Joyce Zeigler, whose husband Mack suffered a stroke in 2004 and who has participated in two UMAP sessions in 2006 and 2008.

“Mack continues to make progress. I encourage people with aphasia and their loved ones to be patient and have hope. Mack and I have faith that more progress is in his future. We take it a day at a time and look forward to each day.”

Lulu Smith adds, “You must understand it takes a long time to have success. You have to keep working and working, and never give up. You’ve got to stick with it.”

2/26: The remote Alaskan village that needs to be relocated due to climate change 

The article is obviously about climate change but my focus is on the millions that the government may have to/will spend to move this town of 400.  As soon as that happens, the flood gates for assistance to U.S. shores will open- large communities all wanting billions to protect their shores.

And do not forget what everyone knew about New Orleans even before the hurricane hit. It was sinking anyway and it would be only a relatively short period of time before sections would be uninhabitable without billions in new dike construction. Do we keep on bailing out areas that are below the ocean? That's New Jersey. What about North Carolina?
Add that to the billions needed for Alzhemers. Our schools are doing a poor job with education. and the list is endless................................

2/26: What is Age-Related Macular Degeneration (AMD)?

Macular degeneration is an eye condition that attacks the macula, the region of the retina responsible for central, detailed vision. Although it does not cause complete blindness, it robs the individual of their central, straight-ahead vision, resulting in what is often referred to as a central vision “blind spot”. It does not affect the outer circle of peripheral vision, so a person will always be able to see things to the side, but this vision is too low resolution (blurry) to make up for lost central vision.

For many people, the first sign of AMD is something they notice themselves. Straight lines like doorways or telephone wires may appear wavy or disconnected. When they look at a person, their face may be blurred while the rest of them are in focus. Lines of print may be blurred in the center or the lines may be crooked.

What is End-Stage (or Advanced) AMD?

  • More than 15 million Americans are affected by some form of macular degeneration, a progressive disease which can lead to severe vision loss in the most advanced form, end-stage AMD. Approximately 2 million Americans have advanced forms of AMD with associated vision loss. 
  • End-stage macular degeneration is the most advanced form of age-related macular degeneration and the leading cause of irreversible vision loss and legal blindness in individuals over the age of 60. 
  • Despite the availability of new drug treatments that slow, but not stop, the progression of AMD, the number of people with end-stage AMD is expected to double by the year 2050.

How is AMD Diagnosed?
As the National Eye Institute explains, the early and intermediate stages of AMD usually start without symptoms. Only a comprehensive dilated eye exam can detect AMD. The eye exam may include the following:

  • Visual acuity test. 
    This eye chart measures how well you see at distances.
  • Dilated eye exam. 
    This provides a better view of the back of your eye. 
  • Amsler grid test. 
    This checks whether you are seeing unusual wavy lines.
  • Fluorescein angiogram. 
    This test makes it possible to see leaking blood vessels, which occur in a severe, rapidly progressive type of AMD. 
  • Optical coherence tomography. 
    Like an ultrasound, OCT can achieve very high-resolution images of any tissues that can be penetrated by light—such as the eyes.

During the exam, your doctor is looking for drusen, which are yellow deposits beneath the retina. Most people develop some very small drusen as a normal part of aging. The presence of medium-to-large drusen may indicate that you have AMD. Another sign of AMD is the appearance of pigmentary changes under the retina.

What are Wet AMD and Dry AMD?
Dry AMD, also called atrophic AMD, is the most common form of age-related macular degeneration. Macular Degeneration Partnership explains that it occurs when the there is a “breakdown or thinning of the layer of pigment epithelial cells (RPE) in the macula. These RPE cells support the light sensitive photoreceptor cells that are so critical to vision.” As these cells die and drusen (a yellow deposit) build up as a result, the macula is damaged, reducing central vision.

Wet AMD, also called neovascular AMD, is only diagnosed in about 10 percent of patients, according to the National Institutes of Health. Vision loss associated with wet AMD occurs when abnormal or very fragile blood vessels grow under the macular and then leak blood and fluid. This damages the macula. Typically, patients who develop wet AMD often are diagnosed with dry AMD, first.

How is AMD Treated?
Early AMD – Currently, there is no treatment, but it should be monitored annually by an ophthalmologist (eye doctor).

There are many service providers who can educate AMD patients and their caregivers about vision assistive devices such as reading glasses with high-powered lenses, video magnifiers, computer aids and many more. Ask your physician for a referral to a low vision occupational therapist.

Intermediate AMD – There are several treatments that may slow progression, but will not cure AMD.

  • Vitamin therapy (AREDS2 formulation)
  • Anti-VEGF injection - A few different anti-VEGF drugs are available (e.g., Lucentis) and vary in cost and how they are injected. 
  • Photodynamic therapy - This technique involves laser treatment of select areas of the retina.
  • Laser surgery – Used with only certain cases of neovascular (wet) AMD, it involves aiming an intense “hot” laser at the abnormal blood vessels in your eyes to destroy them.

End-Stage (Advanced AMD): The CentraSight treatment program uses a tiny telescope, an FDA-approved medical device, which is implanted inside the eye to improve vision and quality of life for individuals affected by End-Stage AMD. It is the only surgical treatment option for AMD. 

It is also a Medicare eligible, out-patient procedure. Learn more by calling 877-99-SIGHT (74448) or at

The telescope implant is not a cure for End-Stage AMD. It will not restore your vision to the level it was before you had AMD, and it will not completely correct your vision loss. Patients with this level of AMD have had to cease driving due to their vision; after the telescope procedure, although near and distance vision may improve, driving will not be possible because the implant does not restore normal vision.

How is AMD Prevented?
Common risk factors for AMD are:

  • Smoking. 
    Research shows that smoking doubles the risk of AMD.
  • Race. 
    AMD is more common among Caucasians than among African-Americans or Hispanics/Latinos.
  • Family history. 
    People with a family history of AMD are at higher risk.

To reduce your risk, avoid smoking, exercise regularly, maintain normal blood pressure and cholesterol levels and eat a healthy diet with green leafy vegetables and fish.

2/25: Gack!

 24 percent of Americans have more credit card debt than emergency savings, and 13 percent are not much better off—they don't have credit card debt but they don't have emergency savings either. Put another way, more than a third of Americans are living at risk of a financial crisis.

  1. Stock Market Volatility and Learning




Adam, Klaus (University of Mannheim) ; Marcet, Albert (Institute d'Analisi Economica) ; Nicolini, Juan Pablo (Federal Reserve Bank of Minneapolis)

Consumption-based asset pricing models with time-separable preferences can generate realistic amounts of stock price volatility if one allows for small deviations from rational expectations. We consider rational investors who entertain subjective prior beliefs about price behavior that are not equal but close to rational expectations. Optimal behavior then dictates that investors learn about price behavior from past price observations. We show that this imparts momentum and mean reversion into the equilibrium behavior of the price-dividend ratio, similar to what can be observed in the data. When estimating the model on U.S. stock price data using the method of simulated moments, we find that it can quantitatively account for the observed volatility of returns, the volatility and persistence of the price-dividend ratio, and t he predictability of long-horizon returns. For reasonable degrees of risk aversion, the model generates up to one-half of the equity premium observed in the data. It also passes a formal statistical test for the overall goodness of fit, provided one excludes the equity premium from the set of moments to be matched.


5 Wheelchair Van Shopping Tips for Caregivers
By Susan Hawkins

If you’re the caregiver for an individual who uses a wheelchair, owning a wheelchair accessible van is helpful and can be more affordable with these tips.

Family Caregiver
As the caregiver for a family member, you can choose a wheelchair van based on the needs of the person in your care. Wheelchair vans come with rear entry access or side entry access, and one can sometimes work better than the other in certain situations.

The family caregiver, as the driver of the van, can consider both styles. Side entry access means the van’s ramp deploys from one of the side-door openings. The wheelchair user can sit in the middle of the cabin just behind the front seats or in the front-passenger position when the adapted minivan has a removable front seat. The removable seat lets you to carry up to two wheelchair users at the same time. Jump seats can be added for extra seating for non-wheelchair users.

If the person uses an extra-large or extra-tall power chair, rear entry access may be the best choice. The rear door-opening width and height are larger, and the ramp is wider, too. The rear entry conversion usually features a manually operated ramp, but a power ramp can be added for an extra charge.

Professional Caregiver
Having a wheelchair van is a unique selling point for many self-employed caregivers and caregiving companies. Whether it’s taking a patient to a doctor’s appointment or providing the patient with a change of scenery, a wheelchair accessible vehicle can make a big difference.

Your patients will have different mobility devices, including power chairs and mobility scooters, so your best choice is a minivan adapted for rear entry access.
A rear entry van also has seating if a patient’s family member or two comes along.

A long-channel rear entry conversion can handle up to two passengers in wheelchairs at the same time. If you’re a self-employed caregiver or caregiving company, you’ll have a well-equipped vehicle that can be a rolling advertisement for your business.

General Shopping Tips

Tip #1: Shop around. 
Check out wheelchair van dealerships online and nearby to see what they have in your price range. There are also mobility classifieds online, where individuals list only wheelchair-accessible vehicles for sale.

Tip #2: Determine your budget. 
Budget is almost always a top concern for family and professional caregivers.
Today’s handicap accessible van market has three clear price levels that represent the three base van/conversion possibilities.

  • A New Van with a Brand-New Conversion. Shoppers usually pay the highest prices for a brand-new minivan equipped with a brand-new conversion.
  • A Used Van with a Brand-New Conversion. Some conversion companies buy used minivans with newer model years and low mileage, which they convert for wheelchair use. That means you can save money when you buy a used van with a brand-new conversion. You’ll find high-quality conversions in a wide range of prices.
  • A Used Van with a Used Conversion. Last, and almost always least—though only in cost—are used minivans with used accessible conversions. Online and local dealerships usually have a number of used/used accessible vehicles on hand, because their owners trade them in or sell them to upgrade to a newer model van. You can find some great deals when you buy used/used. 

If you’re on a budget, look for certified-used wheelchair vans with reasonable prices, and don’t forget to negotiate.

Tip #3: Understand kneeling systems. 
Many vans with wheelchair accessibility have a kneeling system. The vehicle “kneels” closer to the ground to lessen the incline. That makes entry and exit easier for the independent, manual wheelchair user. These systems can be pricey, unreliable, and unnecessary for caregivers.

Tip #4: Be Prepared with Questions for the Mobility Consultant. 
Mobility consultants, online or local, should give you this information, but if not, you should be aware of the following information before you buy:

  • What warranties do you offer? Warranties vary based on the base vehicle and conversion manufacturer. Brand-new minivans are always equipped with brand-new conversions, and you should have warranties on both. Used wheelchair vans for sale may have either a new or used conversion. A new conversion should come with a satisfactory warranty, and, if there’s time remaining on the base vehicle’s original warranty, you’ll have that, too.
  • Do you deliver? If you buy from a local dealer, pick-up may be your only choice. For caregivers who buy a handicap accessible van online, delivery options are a must. Ask about the company’s different delivery choices and charges.
  • What services do you provide after the sale? Every customer should receive a detailed demonstration of the adapted van and all its features at delivery or pick-up. Nationwide conversion service is important, because you might be in a remote location when service is needed. Ask about a toll-free, 24-hour Conversion Emergency Help Line, so you’re protected nationwide. Some dealers have a Buy Back Program, which is a stress-free way to sell your wheelchair van. 

Tip #5: Read Company Reviews and Testimonials Before You Buy. 
The most reliable online and local wheelchair van dealerships appear on review sites like Yelp and Google Local. Company web sites should feature customer testimonials.

When you shop for a wheelchair van, keep these tips in mind to make sure you get the best van for your needs at the best possible price.

2/24: Life settlements
  1. 65+ years and older who in your estimation have a 15 year +/- life expectancy
  2. Annual level premiums of 5% of the face amount or less until maturity (Premium Ratio)
  3. Policy face amount of $100,000 or greater

"90% of seniors who lapsed a life insurance policy would have considered a life settlement had they been aware of the possibility." Insurance Studies Institute

  1. The curse of knowledge increases self-selection into competition: Experimental evidence




Danz, David

The psychology literature provides ample evidence that people have difficulties taking the perspective of less informed others. This paper presents a controlled experiment showing that this "curse of knowledge" can cause comparative overconfidence and overentry into competition. In a broader context, the results provide an explanation for the overconfidence of nascent entrepreneurs and the substantial rate of failure among new businesses.

  1. Teams Contribute More and Punish Less




Thum, Marcel ; Auerswald, Heike ; Schmidt, Carsten ; Torsvik, Gaute

Many decisions in politics and business are made by teams rather than by single individuals. In contrast, economic models typically assume an individual rational decision maker. A rapidly growing body of (experimental) literature investigates team decisions in different settings. We study team decisions in a public goods contribution game with a costly punishment option and compare it to the behavior of individuals in a laboratory experiment. We also consider different team decision-making rules (unanimity, majority). We find that teams contribute significantly more and punish less than individuals, regardless of the team decision rule. Overall, teams yield higher payoffs than individuals.

2/24: ETFs

•    Assets in US listed ETFs at the end of January 2015 dropped to $1.94 trillion from a record $2.14 billion at the end of December 2014 due to a downtrend in the US equity markets and negative cash flows.

•    The US market now has over 60 ETF issuers with over 1,400 listed ETFs.

•    There were $3.8 billion in negative cash flows out of ETFs in January 2014.  This was a big fallback after record monthly inflows of $53 billion in December of 2014 which led to annual record inflows of over $240 million for all of 2014.

•    US equity ETFs had over $22 billion in net outflows in January led by the SPDR S&P 500 ETF which had $28 billion in outflows for the month. I believe this is a continuation of a long term trend of outflows in January of each year.  This occurs because many professional managers sell stock positions in December to take tax losses and use large Cap focused ETFs to maintain market exposure until they can buy the stocks back 30 days later and thus avoid "was sale" rules which would prohibit taking losses.

•    ETFs investing in US fixed income continued to gain assets and were the leading segment in January with $7.8 billion in new cash flows.

•    This was followed by ETFs investing in International Equities and Commodities which took in $6.2 and $3.1 billion respectively.

•    The leading ETF for new cash inflows in January was the WisdomTree Europe Hedged Equity which gives equity exposure while protecting against a weakening Euro. This ETF took in $2.9 billion for the month and now has over $9 billion in total assets.

•    The second leading cash inflows went to the SPDR gold which took in $1.9 billion as gold prices rose almost 9% for the month.

•    The top ten asset gainers with positive new cash flows for January 2015 include: WisdomTree Europe Hedged Equity ($2.9 billion); SPDR Gold ($1.9 billion); Vanguard S&P 500 ($1.7 billion); Vanguard Total Stock  Market ($1.5 billion);  Deutsche X-trackers MSCI EAFE Hedged Equity ETF ($1.2 billion); United States Oil ($1.2 billion); Health Care Select SPDR ($0.9 billion); WisdomTree Japan Hedged Equity ($0.9 billion); iShares iBoxx $ High Yield Corporate Bond ($0.9 billion) and Market Vectors Gold Miners($0.8 billion).

•    The positive cash flows in January show interest in US dollar developed market plays and commodities

•    The top ten asset losers with negative new cash outflows for January 2015 include: SPDR S&P 500 ($28.0 billion); PowerShares QQQ ($3.2 billion); Financial Select SPDR ($2.1 billion); iShares Russell 2000 ($1.7  billion);  iShares MSCI Japan ($1.3 billion); iShares MSCI ACWI ($1.0 billion); iShares MSCI Emerging Markets ($1.0 billion); SPDR Dow Jones Industrial Average Trust ($0.8 billion); Industrial Select SPDR ($0.7 billion) and SPDR S&P Regional Banking ($1.3 billion).

•    The negative cash flows in January 2015 do not show any major themes other than the likely reversal of large cap equity ETF positions used to keep market exposure while undertaking tax swap strategies.

•    Investors continue to embrace ETFs as an efficient means of gaining exposure to alternative assets.

•    Hedge Fund ETFs from IndexIQ are now available that seek to provide the diversification benefits of hedge funds without their structural impediments, namely lack of liquidity and transparency and high fees.

2/24: 205 ways to save money

I don't agree with a few but there is bound to be something that is worthwhile

The Arithmetic of Active Management By: William F. Sharpe

2/23: An excellent quote- "Even if it isn't true, it should be true, and that is close enough". It goes perfectly with moral egoism or situational ethics: Whatever one does is OK as long as it is good for you, your family, your business etc. A lot of people  justify almost anything they do within these parameters.

2/23: Not true

Consumers are getting ads like the above all the time. They are clueless to what is really saying. I even tried to find the asterick but nowhere to be found. No annuity yields 8%. What it means is that you can get a payment of 8% if you are old enough. Annuities pay interest (very low) AND provide some of your money back. The older you are, teh shorter the time frame, the more they are required to give you. It is NOT a yield- that is totally bogus.

> “A liberal paradise would be a place where everybody has
> guaranteed employment, free comprehensive healthcare, free
> education, free food, free housing, free clothing, free
> utilities, and only law enforcement has guns.” 
> “And believe it or not, such a place does, indeed, exist.
> It’s called prison.” 
> Sheriff Joe Arpaio
> Maricopa County, Arizona
2/23: Some readers (consumer and industry) may get tired of comments on caregiving, dementia, etc. But if you are old, know someone who is old or expect to get old, the material is mandatory. My mother had Alzheimers, two uncles, several friends (one with early onset) and I taught an 8 hour continuing education course of long term care for over 6 years, This is the death of the mind before the death of the body. Absolutely insidious, absolutely fatal (though many deaths may say it was cancer, stroke et al). Read this article. I will make one more more comment- this is the time in your life when you want to lie to the patient. My mother would ask where is dad (her husband). My sister wanted to tell her dad had died several years ago along with some specifics. NO. I told her to just say he was coming tomorrow and that would calm her down. By the time a few minutes went by, she had completely forgot the question.
Do not say anything that might confuse them at all.

If you you visit a dementia patient in the first or second stages, is it best to do so in the morning, afternoon or evening?

Look up sundowners.

Mid-to-late stage dementia and Alzheimer’s disease patients often present challenging behavior problems for their caregivers. The anger, sadness, paranoia, confusion and fear they’re experiencing can result in oppositional, aggressive and sometimes violent speech or actions. Understand and learn which strategies are most effective in dementia behavior management.

Communication difficulties can be one of the most upsetting aspects of caring for someone with Alzheimer’s or some other type of dementia — and it’s frustrating for the patient as well as for loved ones. Although it can be hard to understand why people with dementia act the way they do, the explanation is attributable to their disease and the changes it causes in the brain. Familiarize yourself with some of the common situations that arise when someone has dementia, so that if your loved one says something shocking, you’ll know how to respond calmly and effectively.

Common Situation #1: Aggressive Speech or Actions

Examples: Statements such as “I don’t want to take a shower!,” “I want to go home!,” or “I don’t want to eat that!” may escalate into aggressive behavior.

Explanation: The most important thing to remember about verbal or physical aggression, says the Alzheimer’s Association, is that your loved one is not doing it on purpose. Aggression is usually triggered by something—often physical discomfort, environmental factors such as being in an unfamiliar situation, or even poor communication. “A lot of times aggression is coming from pure fear,” says Tresa Mariotto, Family Ambassador at Silverado Senior Living in Bellingham, WA. “People with dementia are more apt to hit, kick or bite” in response to feeling helpless or afraid.

Ann Napoletan, who writes for, is all too familiar with this situation.

“As my mom’s disease progressed, so did the mood swings. She could be perfectly fine one moment, and the next she was yelling and getting physical. Often, it remained a mystery as to what prompted the outburst. For her caregivers, it was often getting dressed or bathing that provoked aggression.”

DO: The key to responding to aggression caused by dementia is to try to identify the cause—what is the person feeling to make them behave aggressively? Once you’ve made sure they aren’t putting themselves (or anyone else) in danger, you can try to shift the focus to something else, speaking in a calm, reassuring manner.

“This is where truly knowing your loved one is so important,” says Napoletan. “In my mom’s case, she didn’t like to be fussed over. If she was upset, oftentimes trying to talk to her and calm her down only served to agitate her more. Likewise, touching her–even to try and hold her hand or gently rub her arm or leg–might result in her taking a swing. The best course of action in that case was to walk away and let her have the space she needed.”

DON’T: “The worst thing you can do is engage in an argument or force the issue that’s creating the aggression,” Napoletan says. “Don’t try to forcibly restrain the person unless there is absolutely no choice.” Mariotto agrees: “The biggest way to stop aggressive behavior is to remove the word ‘no’ from your vocabulary.”

Common Situation #2: Confusion About Time or Place

Examples: Statements such as “I want to go home!”, “This isn’t my house.”, “When are we leaving?  “Why are we here?”

Explanation: Wanting to go home is one of the most common reactions for an Alzheimer’s or dementia patient living in a memory care facility. Remember that Alzheimer’s causes progressive damage to cognitive functioning, and this is what creates the confusion and memory loss.

There’s also a psychological component, says Mariotto:

“Often people are trying to go back to a place where they had more control in their lives.”

DO: There are a few possible ways to respond to questions that indicate your loved one is confused about where he or she is. Simple explanations along with photos and other tangible reminders can help, suggests the Alzheimer’s Association. Sometimes, however, it can be better to redirect the person, particularly in cases where you’re in the process of moving your loved one to a facility or other location.

“The better solution is to say as little as possible about the fact that they have all of their belongings packed and instead try to redirect them–find another activity, go for a walk, get a snack, etc.,” says Napoletan. “If they ask specific questions such as ‘When are we leaving?’ you might respond with, ‘We can’t leave until later because…’ the traffic is terrible / the forecast is calling for bad weather / it’s too late to leave tonight.”

“You have to figure out what’s going to make the person feel the safest,” says Mariotto, even if that ends up being “a therapeutic lie.”

DON’T: Lengthy explanations or reasons are not the way to go. “You can’t reason with someone who hasAlzheimer’s or dementia,” says Ann. “It just can’t be done.” In fact, says Mariotto. “A lot of times we’re triggering the response that we’re getting because of the questions we’re asking.”

This was another familiar situation for Ann and her mother. “I learned this one the hard way. We went through a particularly long spell where every time I came to see my mom, she would have everything packed up ready to go–EVERYTHING! Too many times, I tried to reason with her and explain that she was home; this was her new home. Inevitably things would get progressively worse.”

Common Situation #3: Poor Judgment or Cognitive Problems

Examples: Unfounded accusations: “You stole my vacuum cleaner!” Trouble with math or finances: “I’m having trouble with the tip on this restaurant bill.” Other examples include unexplained hoarding or stockpiling and repetition of statements or tasks.

Explanation: The deterioration of brain cells caused by Alzheimer’s is a particular culprit in behaviors showing poor judgment or errors in thinking. These can contribute to delusions, or untrue beliefs. Some of these problems are obvious, such as when someone is hoarding household items, or accuses a family member of stealing something. Some are more subtle, however, and the person may not realize that they are having trouble with things that they never used to think twice about.

According to Napoletan,

“There came a time when I began to suspect my mom was having problems keeping financial records in order. At the time, she was living independently and was very adamant about remaining in her house. Any discussion to the contrary, or really any comment that eluded to the fact that she may be slipping, was met with either rage or tears. It was when she asked me to help with her taxes that I noticed the checking account was a mess.”

DO: First you’ll want to assess the extent of the problem. “If you’re curious and don’t want to ask, take a look at a heating bill,” suggests Mariotto. “Sometimes payments are delinquent or bills aren’t being paid at all.” You can also flip through their checkbook and look at the math, or have them figure out the tip at a restaurant.

The Alzheimer’s Association says to be encouraging and reassuring if you’re seeing these changes happen. Also, you can often minimize frustration and embarrassment by offering help in small ways with staying organized. This is what Napoletan did for her mother: “As I sifted through records to complete her tax return, I gently mentioned noticing a couple of overdraft fees and asked if the bank had perhaps made a mistake. As we talked through it, she volunteered that she was having more and more difficulty keeping things straight, knew she had made some errors, and asked if I would mind helping with the checkbook going forward. I remember her being so relieved after we talked about it.” From there, over time, Napoletan was gradually able to gain more control over her mother’s finances.

DON’T: What you shouldn’t do in these circumstances is blatantly question the person’s ability to handle the situation at hand, or try to argue with them. “Any response that can be interpreted as accusatory or doubting the person’s ability to handle their own affairs only serves to anger and put them on the defensive,” says Napoletan.

2/23: It's only money

The Government Accountability Office (GAO) estimates that U.S. economic losses connected with the 2007-2009 credit crisis could exceed $10 trillion. Homeowner losses were nearly as great: $9 trillion in equity.

Collectively, the five largest U.S. financial institutions — JP Morgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs — account also for $9 trillion in assets. The biggest of them, JP Morgan Chase, paid between $22 billion and $25 billion — more than the total assets (less than $20 billion) of 99.1 percent of the banks chartered in the U.S.)

2/23: The News IQ Quiz

12 questions

The 411 on Parkinson's

By  Sandra Ray, Staff Writer 


Receiving a diagnosis of Parkinson’s disease (PD) can be devastating for families. Even more devastating is not understanding the disease, how to live with it, how it can be treated, or anything else about this debilitating disease. Families can be desperate for information on PD and what to expect in the coming weeks, months, and years.

PD is a movement disorder affecting more than one million people in the United States. According to Science News, more than 50,000 people are diagnosed with PD each year. There is no cure, yet there is treatment available and options vary greatly depending on how soon the diagnosis made.

Causes of Parkinson’s:

In order to understand what the disease is, it is helpful to understand what causes the disease. There is some evidence to suggest that the disease has a genetic component, although not all individuals who have the disease also have a family member with the disease. Environment also plays a role, although scientists have not determined to what extent environment interacts with genetics to cause (or not cause) Parkinson’s.

Some environmental theories include exposure to pesticides or some other environmental toxin. One interesting piece of research sponsored by the Parkinson’s Foundation suggests that there are several factors along the environmental track that may contribute to PD. These factors include “rural living, well water, and herbicide use and exposure to pesticides.”

In order for Parkinson’s to develop, a part of the brain, the substantia negra, begins to malfunction and eventually dies. This part of the brain is responsible for producing dopamine, a neurotransmitter that acts as a message relay for coordinated movement in the body. As the substantia negra dies, dopamine production diminishes greatly, causing further and further disruption to the movement centers within the brain. Finally, the person is unable to voluntarily control movement of the body.

Symptoms of Parkinson’s:

Before going to the physician for answers, many people start experiencing symptoms of PD that cause some concerns. These usually start in individuals older than 60 years of age, although people who are much younger have been diagnosed with PD. For example, Michael J. Fox is one of the most famous individuals with PD with news of his diagnosis announced in 1998. Up until his diagnosis at age 30 (in 1991, although his diagnosis was not made public for seven years), the disease was relatively unknown and received little funding or research directed toward its symptoms, diagnosis, causes, and treatment options.

Some of the symptoms that you can expect include:

  • Bradykinesia – slow walking or other movement related activities (walking, standing, or sitting down). Bradykinesia can also be seen in stiff facial muscles, often resulting in a “mask-like” appearance where facial expressions seldom change.
  • Trembling in the hands, fingers, forearms, feet, mouth, or chin
  • Rigid or stiff muscles, including muscles that suddenly freeze for no reason
  • Muscle pain, usually accompanied by the rigid or stiff muscles
  • Unsteady gait and balance.

Parkinson’s is usually characterized by a shuffling walk. The person usually looks down at the ground, not swinging their arms, keeping their shoulders drooped. The person can lean unnaturally forward or backward as they move. Some people have trouble starting to walk and often find their stride frozen as they try to move.

While the movement issues are paramount in helping physicians start the diagnosis process, there could be smaller (although no less significant), secondary symptoms that accompany the disease. A person may or may not exhibit these symptoms, and the disease varies widely from person to person depending on a variety of factors.

Secondary symptoms include:

  • Difficulty swallowing or chewing
  • Small, cramped handwriting
  • Constipation or loss of control of bowels and/or bladder movement
  • Depression, fear, and/or anxiety
  • Decreased cognitive functioning, including slower processing of information and thinking abilities
  • Fatigue and muscle pain
  • Dry skin on the face and scalp
  • Changes in speech, including talking in a low, soft voice
  • Sleep disturbances
  • Dementia

Making the Diagnosis:

While there is no definitive diagnosis for PD, doctors often run a battery of tests in order to rule out other causes of the patient’s problem. In other words, PD is a diagnosis of exclusion, with physicians making the final determination of PD after other avenues have been exhausted.

Some of the tests you might expect are blood tests, urine tests, CT and MRI scans, as well as neurological tests. A thorough neurological exam is needed in order to rule out other areas that could be causing the patient’s problems.

Seeking out Treatment Options:

Depending on how soon the disease is diagnosed, your physician may have several options. Since there is no cure, treatment is provided in order to manage symptoms. Doctors will often prescribe a medication to help replace the dopamine that the disease attacks, although this is not the only method of treatment you should consider.

Patients can help themselves at home through consistently exercising affected muscles, keeping them as flexible as possible. As the disease progresses, the exercise methods may change in order to provide a new level of comfort for the patient. In addition, there are diet considerations that can help; for some people, losing weight will help ease muscle pain and symptoms.

There are also surgical options for a limited set of patients who need more aggressive treatment. Your physician can discuss these options with you and determine if your case is a candidate for this type of treatment.

Recent studies have revealed that supplements, such as vitamin E and others like it, have no real role in treating PD. Families who may have once been instructed to try supplements in order to strengthen someone’s overall health, muscle tone, and other areas are finding that these assumptions have not born scientific fruit. In other words, save your money when it comes to supplements. There are other more effective treatment methods available to you and your loved ones.

Research concerning treatment and possible cures is ongoing. More patients are needed for clinical trials in order to develop additional lines of research and decide whether or not existing theories need more study. The Parkinson’s community has been under-represented in clinical trials, resulting in less advances in treatment options and causality of the disease. To find out more about clinical trials, visit

Living with Parkinson’s:

It is possible to lead a fulfilling life despite PD. The disease may change the way a patient views their activity level, yet it is possible through treatment to continue many of the same hobbies and even work on career choices. Your family’s doctor is the best place to start when asking questions about the level of activity that you can expect with each stage of the disease. Exercise, for example, is one area that should be discussed clearly with your physician. Finding out the areas where you may need more assistance is critical so you can plan and be prepared for them.

In addition, caregivers need to be prepared with questions for physicians to find out some of the aspects of the disease that can affect them. Traveling with someone who has PD can be challenging, for example, but that doesn’t mean that you need to shelve ideas of the family’s vacation. Making minor modifications may be all that is necessary. Including a physical therapist in the planning process may also be extremely beneficial since there are mobility concerns that need to be addressed as well.

Families need to be aware of the latest research, treatment options, and additional symptoms that could be experienced as the disease progresses. The disease may advance slowly, especially if caught early and treatment begins quickly; however, it may take its toll on someone quicker if he or she is in poor health and chooses not to take steps toward living a healthier lifestyle. Parkinson’s may not be curable, but it is manageable with help from a good family support system, solid medical advice, and advance planning.

2/22: Want to see what is really put out there as regards  active versus passive???  The original article is titled Is Skill Dead???
This is the subsequent professional discussion.

Anyone saying that they can discuss investment strategies has to be familiar with the article and the complete extra commentary by the "professionals". Really heady stuff by some heavy hitters (most of them). After you do all that, tell me who is the winner???

2/22: Just for information

After posting this from a major broker firm, I noted the red underlines. Who is going to use them? Nothing like steamlining the process. And i before e except after Thursday.

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As noted in my writings and on videos, I do not believe that long term (20 or 30 years)  retirement strategies make a of of sense. Of course it is necessary to get an overview of budgeting and assets available, but stuck in the mud, really old school formats just are not real life (buy and hold, rebalancing and more). Of course pundits can focus on smart beta, algorithms, etc., that will (supposedly) provide the nirvana to keeping risk within acceptable (whatever that means) limits. The point I repeatedly state is that nothing remains constant for the consumers even for the short term. You do not have to go further than your national papers to read the news on how much has gone on since 2000 to right now. But the article above references just how much individuals and families are caught up in the turmoil themselves.

Most of the professionals (as they are so aptly called by journalists) simply say- don't look at your account. Bogle is one. Buffet is another. That however is valid only for consumers who have lots of money and the losses of 44% and 57% won't materially impact you budget.  Or for those that do not read anything and would simply sell out at the bottom because they are dealing with pure emotion. Nothing anyone can do for them except a straight jacket. But the mid American needs  to miss the big drops while also getting most of the market's gain.


Fed underlines cautious rates stance


Many Federal Reserve members are inclined to keep interest rates low for longer, according to minutes of their January meeting which underscore the central bank’s cautious stance towards normalising monetary policy.

EFM- Some say international rates will have to go lower but a fabricated global economy makes a lot of plays on bonds and rates very problematic.

2/18: Vegetation density of the world

2/18: Worldwide freedom of the press

2/18: Worldwide acceptance of foreigners

2/18: Worldwide population density

2/18: Worldwide IQ scores    fascinating

Occupational Therapy Intervention is a Family Affair

By Janie L. Rosman, Staff Writer


Illness progression that includes loss of independence, initiative and participation in social and daily activities affects quality of life for those living with it, their loved ones, and their caregivers.

Whereas previous traditional therapy set goals to address, cure or minimize impairment, the primary rehabilitation focus is non-medical — modifying behaviors and/or the physical and social environment to help the person living with Alzheimer’s disease function and continue his or her participation in daily activities.

“Occupational therapy’s role with caregivers involves teaching them to understand the behaviors and the disease itself, and training them to help the person living with Alzheimer’s disease with daily activities,” says Coralie "Corky" Glantz, OT/L, BCG, FAOTA, of Glantz / Richman Rehabilitation Associates.

A caregiver directory developed by the Alzheimer’s Association defines an occupational therapist as someone who “helps residents change their activities or environment so they can eat, dress and bathe; may also help with other tasks  such as cooking, taking medication or driving; and may guide family members and caregivers.”

Researchers in The Netherlands concluded that 10 occupational therapy sessions improved daily functioning in patients 65 and under for up to three months, despite their limited learning ability, and also reduced caregiver burden, as reported in British Medical Journal. Patients learned to use aids to compensate for cognitive decline, and caregivers learned coping behaviors and supervision.

Occupational therapists can formulate a program attuned to the person’s skill set and level of understanding — sharing life story memories, adapting a home environment for exercise or movement — while advising the family and caregiver about making the home safer to avoid falls, purchasing or leasing equipment, and accessing other health care services that might be available.

Staff and family training are most times accompanied by a maintenance program for caregivers, taking the aforementioned into account. “Everything the OT does is taught to the caregiver,” Glantz says.

The American Occupational Therapy Association, Inc. suggests determining the person’s needs at various stages of illness progression, and focusing on his or her abilities (rather than deficits) to maximize engagement and setting, be it home or facility.

OT utilizes and analyzes abilities and strengths, in addition to social and perceptual abilities, then analyzes the task at hand, and seeing if they match — “Can the person living with Alzheimer’s disease do what you’re asking him or her to do?”

A complete evaluation should include an occupational profile of the person’s routines, hobbies and level of abilities. The caregiver’s input is crucial for providing information that the person living with Alzheimer’s disease is unable to supply or unaware of his or her ability level. “(It helps the caregiver to) know what current abilities are, and if you know they can’t do something, don’t ask,” says Glantz, an AOTA board member.

Compensating for lost cognitive skills — comprehension and action, attention, memory, logic and reasoning, auditory, visual and speed processing — while recognizing remaining abilities are goals for someone in the early stages of AD, since new learning might be impaired or absent as the condition progresses.

“The goal is to retain skills that were lost, continue those skills the person has, use compensatory skills, and to find a way to make them acceptable to the person and the caregiver,” Glantz says. OT instruction can help caregivers recognize abilities, and thus know if a task is too difficult.

“Analyze a task by looking at what memory a person needs to do the next step,” Glantz says. “He or she may need to be reminded what to do with the food since some people forget how to chew or use utensils.” Caregivers can learn how to segment tasks into smaller, manageable skills.

Appropriate cues are also helpful, like the caregiver putting undergarments on the outside of the hanger so the person will put those on first. Sometimes help is needed with choosing clothes; if a closet or drawer of garments is too overwhelming, the caregiver can select a few items to make the choice easier. 

If the person living with Alzheimer’s disease is distracted easily, then the environment shouldn’t be cluttered by objects or noise (an example would be two radios playing different music at the same time). If you don’t want him or her to walk out the door, hang the coat in a closet, not near the door. 

Working with the caregiver involves teaching him or her how to properly communicate. If the person living with Alzheimer’s disease understands visual cues more than verbal cues, incorporate these into activities. When during the day is the person most alert? If a pre-illness routine was working at night while sleeping during the day, keeping to a similar schedule may be more beneficial than reversing a once-familiar schedule.

Also consider physical limitations like hearing loss or visual impairment, as well as behavior (becoming difficult when given instructions). One challenge is for a caregiver is to understand a behavior, and then to understand its antecedent,” Glantz says. “What came first, and what is the cause?” 

Identify habits and familiar routines that the person living with Alzheimer’s disease can maintain to prolong independence, in addition to helping the person get used to a new living situation (health care facility or relative’s home). Combing hair or brushing teeth can promote independence, as can engaging the person in favorite hobbies — like a jigsaw puzzle, for example.

Intervention later stages of AD includes adapting to the environment and helping caregivers promote routines, and learning how to minimize unwanted behaviors like agitation and aggression during caregiving, or complicating their condition with weight loss or falls. Addressing safety issues is of the utmost importance, especially if the person living with Alzheimer’s disease is unsteady. 

Laura N. Gitlin, PhD, Director of the Jefferson Center for Applied Research on Aging and Health (CARAH) at Thomas Jefferson University in Philadelphia, concluded similar results from a four-month Care of Persons with Dementia in their Environment (COPE) intervention. 

A four-month COPE intervention showed improvement in functional activities like using the telephone, shopping, preparing meals, and doing housework, and self-care activities like bathing, dressing and grooming. Caregivers who also had COPE treatment said they had improved well-being and confidence...

The amount of therapy covered is up to each insurance company, according to the Medicare Rights Center. While it limits the amount of allowable covered outpatient therapy, Medicare will pay for medically-necessary therapy above the cap, particularly for complex cases, and includes various settings — home, health care professional’s office, skilled nursing facility — where therapy would be administered.

2/18: Pensions and divorce

The following methods for splitting a pension 50/50 have strikingly different outcomes for the participant in the pension plan and for his or her former spouse:

Defined contribution plans:

  • Tracing assets: If one spouse comes to the marriage with $50,000 in a 10-year-old 401(k) account, only contributions made during the marriage – and investment returns on the new contributions – are divided.  If the plan now has $150,000, anywhere from $0 to, say, $90,000 might be divided, depending on whether there were any new contributions and depending on fund returns.  The remaining balance goes to the spouse who started the 401(k) account.
  • Subtraction: The $50,000 initial balance is subtracted from the $150,000 account, and only the $100,000 is split 50/50. This generally favors the spouse who had little – or no – savings prior to marrying and will receive some of the investment income on the initial amount.
  • Coverture: The entire $150,000 retirement account is put into a shared pot, which is prorated based on a formula.  The formula is the number of years of marriage – say 10 – divided by the number of years the person participated in the plan – say 20 years.   So the spouses share $75,000; the spouse who brought the 401(k) to the marriage retains the other half.

Defined benefit plans:

  • Dividing benefit payments: If the participating spouse earned the entire pension while married, the stream of future pension payments is divided evenly – but only after the participant retires and claims a benefit.  For example, if the annual pension is expected to be $80,000, each party will receive $40,000.  But if some of the benefits were earned prior to the marriage, the payment stream may be prorated to ensure fairness to the plan participant.
  • Carve-out: The non-participating spouse may not want future benefit checks to hinge on things he or she can’t control.  For example, the pension plan participant might quit working or die suddenly, leaving a smaller pension than if the former spouse had worked longer. So, the non-participating spouse can hire an actuary to estimate the future annual pension payments he or she is entitled to in the future.  The court may then order the plan sponsor to carve out a separate defined benefit plan to pay the non-participant her agreed benefit.
  • Value and offset: Some employers allow participants to cash in their pension benefit for a lump sum, which is easily split. If not, an actuary can estimate the value today of the total future pension payments, say $500,000.  The non-participating spouse then receives other assets – a home, jewelry, a car – also valued at $500,000. The risk here is to the spouse who retains the pension: if he dies young, he never enjoys any of the shared wealth accumulated during the marriage.

Even after the final divorce decree is signed and sealed, a thoughtful division of pension assets remains important.  “A very ambiguous” property settlement agreement can, Phillips said, “cause the parties to argue a lot.”

2/18: Just for information




Fixed Guaranteed Rate

B++ Guggenheim Insurance 3-years 1.50% (minimum premium: $10K)
B++ GuggenheimInsurance 4-years 2% (minimum premium: $10K)
A+ North American Company 4-years 1.75% years 1-4 (High Band 200K) , 1.50% (Low Band $10K)
A- American Equity 5-years 2.25% years 1-5 (Low minimum premium = $10K)
A Reliance Standard 5-years 1.85% Current Yield to Surrender (Low minimum premium = $10K). 

North American Company

5-years Up to 2.70%
B++ Equitrust 5-years 2.25% years (minimum premium: $10K)
B++ Sentinel Security 5-years Up to 3.15% (A` la carte Features Available). Does your E&O Cover B++?
B++ Fidelity & Guaranty Life 5-years 2.85% First Year Rate
2/18: Just for information  

I have always recommended only A and better. Maybe an A- if other independent ratings indicate a good rating



Carrier Highlights

A Reliance Standard Life 5, 7, and 10 year duration index annuities. Liquidity in first year. Very competitive rates for premiums of $10K to $75K.
A VOYA 5, 7, and 10 year duration. Very competitive rates for premiums exceeding the $75K high band. Return of premium available on the 5 year duration. Innovative interest crediting methods.
A Forethought Annuity Rates Wealth transfer death benefit feature on the Bonus Advantage is ideal for qualified money and insurable clients. Also, income focused products with emphasis on taking early income.
A+ North American Rates Multiple crediting methods, including inverse index crediting options, and multiple index options to choose from. Surrender periods from 5 years to 14 years. Premium bonuses up to 10%. Premium bonuses available for deposits in multiple years. Renewal rate integrity. Income rider with 3 options to customize to your clients needs. Very versatile carrier.
A- Sagicor Rates Cumulative penalty free withdraws up to 50%. 5% premium bonus for older issue ages. Unique income guarantee feature. Great wealth transfer SPWL's with up to 10% premium bonus too.
A Great American Annuity Rates 10 year return of premium product. Two income riders to choose from specifically attractive for early income needs. Income rider rollup up to 10% simple interest. Death benefit feature for wealth transfer.
A Allianz Annuity Rates Endurance series are useful income focused products with income enhancement bonuses up to 20%. Other feature products offer premium bonus for additional deposits in multiple years. Also of interest is a 5 year index product tied to bond indexes.
B++ Fidelity & Guaranty Life Annuity Rates Premium bonus, income, chronic care, death benefit all in one rider. May be added to 7, 10, and 14 year products with varying index crediting rates. Also offering a product line with industry leading crediting rates.
A- American Equity Rates No Market Value Adjustment on their index products. Six attractive income rider options, including a no-cost income rider. Very competitive joint life payout. Premium bonuses up to

B++ EquiTrust Annuity Rates Premium Bonus up to 12%. Attractive income rider with up to a 15 year roll up period. Great for clients age 50 and under with qualified accounts looking to establish a future guaranteed income stream. Also offering a return of premium product with a 6% premium bonus. Competitive wealth transfer SPWL's with up to 12% premium bonus too!
A- Americo/Legacy New index annuity product offering very high participation rates, no bonus to drag down the interest rates, NO MVA, diverse choice of indexed strategies - many with uncapped potential.
2/18: Depressed? Anxious? It Could Be An Early Symptom Of These Illnesses

It’s crucial to remember that our minds and bodies are intimately connected. “We think of the brain as the organ that does our thinking, but the purpose of the brain is to control the body,” Arthur B. Markman, PhD, a psychologist at the University of Texas, tells Yahoo Health. “So, physical problems can influence mental states and mental problems can lead to bodily problems.”

2/17: Grease: Really bad news

A crucial meeting of eurozone finance ministers over the future of Greece’s bailout broke down in acrimony after Athens angrily rejected the bloc’s insistence that it extend its current €172bn rescue as “absurd” and “unacceptable”.

It is the second time in five days that negotiations between the new anti-austerity Greek government and its eurozone creditors have collapsed and it means Athens, whose public finances are deteriorating fast, could soon be left with no European financial backstop.

2/17: Cost of dying- interactive chart covers individual states for taxes, creditor protection and marriage recognition.

2/17: Fewer oil finds

Discoveries of new oil and gas reserves dropped to their lowest level in at least two decades last year, pointing to tighter world supplies as energy demand increases in the future.

Preliminary figures suggest the volume of oil and gas found last year, excluding shale and other reserves onshore in North America, was the lowest since at least 1995, according to previously unpublished data from IHS, the research company.

New finds of oil and gas are likely to have been about 16bn barrels of oil equivalent in 2014, IHS estimates, making it the fourth consecutive year of falling volumes. That is the longest sustained decline since 1950

2/17:Trouble at the lab An extensive article in the economist  addressing the inconsistencies, outright flaws and fraud in research studies and their ability to get published  in prominent
journals is eye opening. It provides statistics of wrong that is hard to comprehend.

My point is this- we have had tons of papers and theories in finance that are rarely vetted at all. They are then accepted at face value and used by  those that have no background as a fact to support ambiguous use. 

The one that comes to mind is annual rebalancing. This was promoted in the mid 90s as an effective and mandatory necessity. It would keep risk in line and assuredly lead to higher returns overall.

I did not like it since one had to know the correlations at the beginning of the allocations (tough to do since where do these correlations come from- an average from the last 20 years? a current correlation based on the most recent month, or...............  Actually, none of the papers that I had reviewed ever had the word correlation in them, They just said that revising the allocation to the percentage of stock and bonds was to provide higher returns at the same risk or lower risk.

The point is that Michael Edesess, mathematician, did do the numbers and showed that simply retaining the same allocation produced the same return. Well, his position might be read by just a few people and certainly not by the industry since it would stop the unnecessary ritual of yearly client review to do stuff that is illogical if not wrong.

Correlations, standard deviation, global, national and state economics and more all can change radically. These issues don't have to wait one year for adjustment to a completely different risk scenario.   

2/17: Taking more risk

Yields, which move inversely with prices, have this year dropped below zero on a rapidly expanding range of European governments’ bonds — and even some corporate bonds. The declines, which are driven by the European Central Bank’s “quantitative easing”, mean historically low borrowing costs. But senior finance experts interviewed by the Financial Times saw worrying side-effects.

Standard Life Investments, at the FT’s debt capital markets conference in London. “If it actually becomes permanent . . . There could be some very significant capital flows.”

“It has a huge impact on a lot of simple things like pension funds and insurance companies, and how their whole model works,” said Henry Cooke, executive director at Gryphon Capital Investments. “It is putting them under a lot of pressure . . . and when people are put under a lot of pressure, they take a lot more risk.”

2/16: Cultivating Intellectual Flexibility (Roubini)

Very good commentary

2/16: Making Brokers Toe the Mark

This is a NY Times article with various commentary pro and con about fiduciary duty, commissions and so on. And, quite frankly, it is yet another obtuse and banal- and fairly useless- review of the issues. What is missed by 99% of pros and cons is the simple fact that a broker cannot act as a fiduciary. Neither can an Registered Investment Adviser. Though you have read this repeatedly from me, new readers need to recognize the most necessary element to the advice offered. Does a broker or RIA know the fundamentals of investing. Therein lies the problem- they don't. Will continuing education make a difference? Maybe but it is generally written simply to accumulate the necessary hours to retain a license. Is diversification taught? Standard deviation? Asset allocation (true that there are a gazillion articles, seminars, internet and gurus galore saying the have the best one, but how do you know???), risk ( another gazillion comments yet nothing the consumer can comprehend).......................................  
It IS true that licensees know more than consumers but it's not enough to provide good advice. 

  1. Risk models–at–risk




Christophe M. Boucher
Jon Danielsson
Patrick S. Kouontchou
Bertrand B. Maillet


The experience from the global financial crisis has raised serious concerns about the accuracy of standard risk measures as tools for the quantification of extreme downward risk. A key reason for this is that risk measures are subject to model risk due, e.g., to specification and estimation uncertainty. While the authorities would like financial institutions to assess model risk, there is no accepted approach for such computations. We propose a remedy for this by a general framework for the computation of risk measures robust to model risk by empirically adjusting imperfect risk forecasts by outcomes from backtesting, considering the desirable quality of VaR models such as the frequency, independence and magnitude of violations. W e also provide a fair comparison between the main risk models using the same metric that corresponds to model risk required corrections.


model risk; value–at–risk; backtesting


F3 G3

  1. Model risk of risk models




Jon Danielsson
Kevin R. James
Marcela Valenzuela
Ilknur Zer


This paper evaluates the model risk of models used for forecasting systemic and market risk. Model risk, which is the potential for different models to provide inconsistent outcomes, is shown to be increasing with and caused by market uncertainty. During calm periods, the underlying risk forecast models produce similar risk readings, hence, model risk is typically negligible. However, the disagreement between the various candidate models increases significantly during market distress, with a no obvious way to identify which method is the best. Finally, we discuss the main problems in risk forecasting for macro prudential purposes and propose an evaluation criteria for such models.

2/16: How good are theories?
Too many of the findings that fill the academic ether are the result of shoddy experiments or poor analysis (see article). A rule of thumb among biotechnology venture-capitalists is that half of published research cannot be replicated. Even that may be optimistic. Last year researchers at one biotech firm, Amgen, found they could reproduce just six of 53 “landmark” studies in cancer research. Earlier, a group at Bayer, a drug company, managed to repeat just a quarter of 67 similarly important papers. A leading computer scientist frets that three-quarters of papers in his subfield are bunk. In 2000-10 roughly 80,000 patients took part in clinical trials based on research that was later retracted because of mistakes or improprieties.

EFM-Industry theories They  may not have to go through the same thousands upon thousands of initial  studies but they sure have had problems in the real world. Those that try are shuffled under the covers. A lot of that is also due to the fact that journalists have little background to know what is real and it is a lot easier to get quotes from those that have a lot of AUM- assets under management. There is a LOT of money there. But look at how robo advisors have taken over a lot of money. any good? No. But how good are those that merely have a license?

Yeah I know I am harsh. Ask me if I care. Every time I turn around I see more crap and more people victimized. Problem is when you see the numbers on financial illiteracy- it is not going to get better . Probably get worse with the massive introduction  of new products.     

  1. Does Investors' Personality Influence their Portfolios?




Alessandro Bucciol (Department of Economics (U niversity of Verona))
Luca Zarri (Department of Economics (University of Verona))


We present evidence that non-cognitive skills such as individual investors’ personality traits significantly impact their portfolio choices. Based on large-scale survey data from the 2006-2012 waves of the US Health and Retirement Study (HRS) we show that portfolio decisions are influenced by a variety of traits and facets traditionally investigated in the field of personality psychology. Two personality traits that taken together depict a self-centered personality profile appear to have the most significant impact on financial risk taking: lower Agreeableness and higher Cynical Hostility predict higher willingness to take risks. A number of robustness checks corroborate our results. W e also show that the effects of Agreeableness seem to pass through the preferences – rather than the beliefs – channel. Our findings shed new light on the non-cognitive side of individuals’ risk taking and have implications for our understanding of the sources of heterogeneity in financial decisions.

2/15: What the world would look like if all the ice should melt

2/15: " Get the February 20 Newsweek Great article on Death with Dignity (both sides)

Most states will allow euthanasia by 2030. But there are touchy emotional issues.

Increasing your savings by one more percentage point- interactive

2/15: Is skill dead??

It is incredibly important to avoid extrapolating short-term results. Just because active management in general has been through a difficult period, it does not necessarily follow that what is past is prologue. In today’s increasingly short-term-oriented investment culture, winning stock pickers are deemed to have exhibited superior foresight and brilliance while the losers have suddenly become idiots and are often shown the door. Reality is something quite different. In any given year, there can be a substantial amount of luck involved in outperforming a benchmark. Over a longer horizon, we think it is easier to make the determination between skill and luck. As investors find themselves asking questions about their active managers given their recent poor performance, we believe we have some insight as to what may be driving some of the headlines lamenting that performance.

EFM- I admit to a short term focus- but not necessarily for returns. Risk drives everything first and foremost. Active management can work and there are certain features to look for, IF AND ONLY IF the advisor/investor recognizes that, in almost all cases, the risk of loss may be substantial given a hiccup in the economy/market. Therefore if a buy and hold is really the only focus,  then this concept could/will lose more assets than an index. If the portfolio consists of a lot of bonds (which are earning nothing) and/or alternative investments, then the overall portfolio's losses should be tempered. But so will returns during growth periods. Pundits (actually 95% of advisors) will say that is how the game is played.  I disagree.

The point to recognize is that the index will take a bath as well (buy and hold) once that hiccup occurs.

So I go back to 'why use the market when Rome is burning?' Get out when risk really flares up (dcad)  and only go back in when the excessive risk is past. (DCA up and the National Bureau of Economic research has issued a press releases (see video).

That is the skill that is missed. Earning a 20 or 70 basis point advantage with a managed fund (say a three year historical advantage over an index) OR even the other way around is nothing compared to looking at your spouse after a buy and hold has decimated your retirement and saying 'well, we now have to work until 74 (or even forever)".

That is the true risk in not paying attention to something simple and real life that will reduce anxiety by HUGE amounts.

215: Why some stats are just plain wrong:

“What is able to get published is positive, innovative, novel, and it’s really clean and beautiful. But most research in the laboratory doesn’t look like that,” Nosek says. “We are incentivized to make our research more beautiful than it is.”

2/15:  the market isn’t efficient.  Why Smart Beta Can’t Win the Indexing Race

2/15:Corporate Retirement Plans Near Tipping Point   DC and DB stats for large corporations

2/15: Here is an interesting commentary by some industry "heavy hitters" discussing value, small cap, historical measures, standard deviation, risk, correlation and on and on and on and on and.... And obviously the winner can stand on the mountain top and say. "we are the best"

They get press, looks like some real thought process (though Edesess is a good thinker) and the winner is................... no one. A standoff?? Nope- just no one can even figure out if the facts presented in each argument are correct. Even if some could be shown as correct, the statistics are based on a woefully small amount of data since the markets didn't start till the late 1800s. Then who cares anyway? The focus then was the railroads and the surge of the industial revolution. 100 years later and manufacturing is an isolated endeavor and tech took off. It seems folly to me to use numbers on investment that have no/very little to do with current life. 

To me it is a bunch having a hissy fit based on old stats and undefinable determinants.  In this day and age of 24 hour trading, unbelievable algorithms (some may be very good over time but there really is no way to tell until it hits the fan)

and a completely fabricated economy, my concern is that the middle income portfolios miss the bulk of the major losses (which are here to stay as part of the new economic order globally) and earn the bulk of the growth. And to keep families from going through emotional turmoil that has ruined a lot of relationships.........................   Of course, none of these guys et al ever add that factor as part of risk. That is not real life.

2/15: Index versus hedge funds
Many of you will recall that seven years ago, Warren Buffet bet a group of hedges that a simple S&P 500 index fund would beat a fund of hedge funds over a 10-year period.

Seven years in, Buffett has of course been proven correct.

Buffett's pick, the Vanguard S&P 500 index beat Ted Seides' 5 hand picked hedge funds by 63.5% to 19.6%.  

Even the zero coupon bond used to store the bet money outperformed the hedge funds.

The funny part is  that when the hedge fund fees are put back, the Vanguard S&P 500 index still wins 63.5% to 44%.

Lone ranger- "We're surrounded by Indians Tonto. Looks as though we have had it"
Tonto- "What do you mean 'we' white man?"
Clayton Moore, Jay Silverheels

2/15" And more illiteracy (these stats are horrid.)

The three questions were: (Mitchell, Lusardi)

Question 1: “Suppose you had $100 in a savings account and the interest rate was 2% per year. After five years, how much do you think you would have in the account if you left the money to grow? A) More than $102. B) Exactly $102. C) Less than $102. D) Do not know/Refuse to answer.” (Answer: more than $102.)

Question 2: “Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After one year, how much would you be able to buy with the money in this account? A) More than today. B) Exactly the same. C) Less than today. D) Do not know/Refuse to answer.” (Answer: less than today.)

Question 3: “Please tell me whether this statement is true or false: Buying a single company’s stock usually provides a safer return than a stock mutual fund.” (Answer: false.)

The initial survey — of Americans 50 and older — found that only half could get both of the first two questions right, while only one-third answered all three correctly. The results were similar when the survey was given to a broader sample representing all Americans.

“Wondering whether Americans might be unusual in their financial knowledge, next we launched several comparable surveys around the world,” Mitchell and Lusardi write. “Again to our dismay, however, we found widespread financial illiteracy even in relatively rich countries with well-developed financial markets such as Germany, the Netherlands, Switzerland, Sweden, Japan, Italy, France, Australia and New Zealand. Performance was markedly worse in Russia and Romania.”

While people with more education did better, their results were still less than impressive. In the U.S., for example, only 44.3% of those with college degrees answered all three questions correctly, compared with 12.6% for those with less than a high school degree, 19.2% of those with only a high school degree and 31.3% for those with some college. Among those with post-graduate degrees, just 63.8% got all answers right. Other countries showed similar results.

                                                                                  "If you are afraid of being lonely, don't try to be right."

                                                                                                                            -- Jules Renard,""

Coping With Depression

By Janet Crozier


Seniors around the country flock to Florida for its nonstop sunshine and laid-back lifestyle, its lack of a state income tax and absence of snow. Florida has the highest percentage of residents age 65 and older - 17.6 percent - of any state.

But for all of the sunshine’s purported benefits on improving mood, depression and suicide among Florida’s senior population are a major health care concern.

“I just didn’t feel like going on anymore,” says a Jacksonville-area woman, aged 76, who declined to give her name. “Once my husband died, I sort of lost motivation to get up in the morning anymore.” She struggled with depression for years before seeking treatment.

Aging, with its life changes and inevitable losses, often precipitates a variety of life stressors that can lead to depression. Whether it’s the loss of a longtime spouse, major health problems and the accompanying medical bills, the loss of driving privileges, moving from a beloved home to an assisted living facility, or all of the above, seniors face unique changes and challenges that can lead to depression.

While most seniors are satisfied with their lives, those who are struggling can feel isolated and overwhelmed. Depression affects an estimated 7 million of the 35 million Americans 65 and older, according to the U.S. National Institute of Mental Health.

“Depression is not a normal condition. If seniors start feeling any of the signs and symptoms of depression, they should talk to their doctor,” says Dr. John Montgomery, a family physician, medical epidemiologist and vice-president of Senior Care Solutions with Blue Cross and Blue Shield of Florida. “It’s a condition that can be treated medically and should not be considered a natural part of aging. It’s a myth that seniors automatically get depressed as they age.”

What Is Depression?

Montgomery says it’s important for loved ones to be on the lookout for signs of depression in the seniors close to them. Sadness and low moods can come and go. Clinical depression, however, is much more serious than the occasional “down” mood everyone experiences. Symptoms include:

  • A persistent sad or “empty” mood;
  • Loss of interest or pleasure in ordinary activities;
  • Decreased energy, fatigue;
  • Sleep problems (insomnia, oversleeping, early morning waking);
  • Loss of appetite;
  • Feelings of hopelessness or pessimism;
  • Thoughts of death or suicide; a suicide attempt;
  • Irritability;
  • Excessive crying; and
  • Recurring aches and pains that don’t respond to medical treatment.

If the feelings and symptoms persist beyond three months, Montgomery advises seeking medical treatment.  Supportive counseling can help to ease the pain of depression.  Cognitive therapy to change the pessimistic mindset, unrealistic expectations and overly critical self-evaluations that can contribute to major depression is also a useful treatment. 

Additionally, major insurers such as Blue Cross and Blue Shield of Florida, offer Medicare coverage options with access to mental health counselors. A senior’s doctor can prescribe antidepressant medication as a supplemental treatment, if appropriate.

Caring For a Depressed Senior

The first step in helping an elderly person who seems depressed, experts say, is making sure he or she gets a complete checkup, since their depression could be a side effect of a pre-existing medical condition or a medication. If their physician recommends a psychiatrist or psychologist, the senior may need reassurance that an evaluation is necessary to determine if treatment is needed.

And while most people suffering from depression welcome support, some may be frightened and resist help. Should an elder friend or relative be potentially suicidal, mental health counselors say it’s imperative to actively intervene – by removing pills or weapons from the senior’s home if need be, and calling a mental health professional or family physician for assistance.

“Help is available, and often the biggest obstacle is encouraging the senior to accept it,” says Montgomery. “Don’t give up on your senior if you feel they’re struggling.”

2/15:  myalgic encephalomyelitis/chronic fatigue syndrome, or ME/CFS. To all the people who have no clue to this, it is almost utter exhaustion for long periods of time (6 months). Some say it is a "brain fog." Pray to god, a divine spirit or the cosmic muffin  that you never get it. Unfortunately I had it for 24 years straight. For 21 years it was coupled with some lung problems. In 2011, they gave me another medication that cured the lungs in 6 days. But the headaches, etc. persisted. Finally in December 2014, I was given another medication and they went away. It has been decades since I woke up without generally feeling like crap- and then no relief. I am very, very surprised I am still alive.
The point to this is that no matter how you plan, there are situations that can obliterate your life- which is what happened to me. The above link will describe it better. If you think that it is just psychological- as many doctors have done since they could not find anything wrong, give the person afflicted some slack. It is real.
If you have this, you are not alone and find a doctor who will work with you to find something that may help. Just keep asking/demanding. Most don't want to go to the bother since they then are not playing doctor, but spinning the medication wheel. But it can work

You will also note an article on depression. If you are acting as an advisor, recognize that anyone who has been sick or in pain for a long time will be impacted by depression and their ability to figure out difficult tasks- certainly with mathematics, compounding, etc,- might/will require additional time to make competent decisions. And it might require a witness to validate that the consumer understood what they were doing. Certainly this is necessary anytime some type of dementia is evident.

The problem is this: Who will be the witness? Another person age 80? Or someone younger- 70? High school education? College graduate? Unfortunately none may be worthwhile since their knowledge base for financial literacy is an F at best and a F------------ (those are minuses) for the rest. I have not figured out how the elderly (in particular) can avoid major screwups. Given our society, I think our consumers of every age will suffer. Not that some accounts may do well- the offset for rags versus riches- is that the stock market keeps going up. But it will not go up the way as it has in past decades and the losses will be in magnitudes of 40% to 60%.

Can good returns with minimal risk still be available? Not with buy and hold, rebalancing, "strange" algorithms, fancy alternatives etc? No or Debatable. Anything better? Just use DCAD and DCA up.


The desire for a new level of transparency is rooted in the growing realization that much ballyhooed research isn’t as good as everyone assumes it to be.  Sometimes there is outright fraud perpetrated by a researcher, but often there is merely incompetence.  Frequently, the storytelling of the researcher goes beyond the body of evidence at hand.

Further insight into the issues can be found in an October 2013 issue of Economist.  It features an editorial and an article on the topic.  Not only does “careerism [encourage] exaggeration and the cherry-picking of results,” but studies are often poorly designed, “statistical mistakes are widespread,” and there is much evidence that the vaunted peer review process is flawed, even at prestigious journals.  The whole system ensures that “replication is hard and thankless.”  Consequently, the results aren’t properly vetted and we end up believing things that we shouldn’t.

2/12: Returns over time

EFM- The author does a nice job regarding withdrawal rates. But the use of returns back to 1926 is tough for me to accept. The future will not be like an average of the past. Returns will be lower and the volatility/risks will be higher.

Comparing Durability of 3 Types of Portfolios

The first portfolio consisted of 100% U.S. bonds. Over the 89-year period from 1926 to 2014, U.S. bonds averaged an annualized return of 5.41%.

The second portfolio was an “age-in-bonds” model which allocated 65% to U.S. bonds at the start of the retirement simulation (when the retiree was 65) and increased the bond allocation to 66% the next year, 67% the next year, and so on; the remaining allocation each year was in large-cap U.S. stocks. (These stocks, as measured by the S&P 500 Index, produced an average annualized return of 10.12% from 1926 to 2014, and had negative years 27% of the time.) So, at age 80, the age-in-bonds model was 80% in bonds and 20% in large cap U.S. stocks. At age 90, it was 90% U.S. bonds and 10 percent large cap U.S. stocks.

The third portfolio was an equally-weighted, annually-rebalanced mix of four major asset classes (U.S. bonds, U.S. large cap stocks, U.S. small cap stocks and cash). Over the past 89 years, small U.S. stocks produced an average annualized return of 11.40% and experienced a one-year loss nearly 32% of the time. From 1926-2014 cash (represented by U.S. Treasury bills) had an average annualized return of 3.60%.

The equally-weighted four-asset portfolio averaged 8.55% over the 89-year period; its worst one-year return was -23.59%.

The objective of this analysis was to determine how often each retirement portfolio remained solvent for a full 35-year period (from age 65 to 100) over 55 rolling, 35-year periods from 1926 to 2014. A retirement portfolio that remains intact until an investor is 100 is a noteworthy achievement and represents a reasonable, if not admirable, goal for any investor.

As part of the analysis, I compared results with three annual withdrawal rates — 3%, 4% and 5% (with an annual cost-of-living adjustment of 3%) — and arbitrarily set the starting portfolio balance in retirement at $250,000.

Here’s what I found:

A 100% bond portfolio with a 3% withdrawal rate had a success ratio of 69% — that is, it lasted a full 35 years in 38 out of 55 rolling periods — or 69% of the time.

By comparison, both the age-in-bonds and the four-asset portfolio lasted a full 35 years in all 55 rolling periods, which led to a success ratio of 100% for both models.

What Happened With Higher Annual Withdrawal Rates

When the withdrawal rate was increased to 4% (the traditional rule-of-thumb withdrawal rate), the all-bond portfolio survived for a full 35 years in only 44% of the periods. Furthermore, in 16 periods, the all-bond portfolio was out of money before the investor was 90.

By comparison, with the 4% withdrawal rate, the age-in-bonds portfolio had an 82% success rate and the four-asset portfolio a 98% success rate.

He's everywhere!!!!!
2/12: One of the "best" algorithms that went bad

According to Gerard Janssen, co-designer of the Alex asset management system, the markets are to blame. (EFM The same comment I read about one of the first long short funds. The 'market did not do as it had been planned.)The automated system was designed so as to pull out quickly when the markets started to go down, and go back in as soon as they started recovering. This formula bore a lot of fruit during the crisis years, when markets fluctuated heavily. However, when the markets started drifting sideways, the weaknesses of the system were exposed. Mr. Janssen identifies the ‘V-spikes’ as the main cause of concern: the markets plunge down and then rise up again very quickly. The system automatically pulls out during the low, but does not go back in fast enough for the high, due to a specifically built-in delay function that is supposed to guarantee that the system does not step in too quickly in case of a false rise. 


As this example illustrates, the ‘imperfect algorithm’ – risk is very high. Even systems that seem flawless for a long period of time may become worthless when circumstances and conditions change. The main point is that automated trading, however convenient and beneficial it seems, can be a very dangerous and risky enterprise, and everyone involved needs to be fully aware of the risks, even the well-hidden ones. After all, nobody is perfect – not even an extremely well designed algorithm.


  1. Hedge fund flows and performance streaks: How investors weigh information




Guillermo Baquero (ESMT European School of Management and Technology)
Marno Verbeek (Rotterdam School Of Management, Erasmus University)


The importance they attach to performance metrics and fund characteristics in making investment and divestment decisions negatively affects hedge fund investors’ performance. Investor flows are highly sensitive to performance streaks, even after controlling for more traditional measures of performance, return smoothing, return volatility, share restrictions, and other characteristics. Although streaks contain valuable information about subsequent fund performance, simple allocation rules based on econometric forecasting models beat investor allocations by an economically and statistically significant margin. This suggests that hedge fund investors’ allocation decisions m ay reflect an overreaction to certain types of information.


Hedge funds, money flows, extrapolative expectations, law of small numbers, performance streaks, relative weights, smart money

  1. Financial integration in emerging market economies: effects on volatility transmission and contagion




Ben Rejeb, Aymen
Boughrara, Adel


The purpose of this paper is to examine the volatility relationship that exists between emerging and developed markets in normal times and in times of financial crises. The Vector Autoregressive methodology and the Bai and Perron (2003a,b)’s technique are used. The paper results lead to very interesting conclusions. First, it has been found that volatility spillovers are effective across financial markets. Second, it has been proven that geographical proximity is of great importance in amplifying the volatility transmission. Finally, it has been shown that financial liberalization contributes significantly in amplifying the international transmission of volatility and the risk of contagion.