Master Financial Education
Financial Planning Daily Commentary 2017
The  most intensive and extensive on the Web
  E. F. Moody


I have asked EF 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)

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

 Paul Volcker

“The events of the past few years have revealed limits in economists’ understanding of the economy..."

“Extreme economic events have often challenged existing views of how the economy works and exposed shortcomings in the collective knowledge of economists,”

Janet Yellen

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

language intentionally designed to influence rather than inform is now ubiquitous in the business of sports and politics and markets
 Why? Because it works.

Ben Hunt

Hatred is too strong an emotion to waste on someone you don't even like

Dr. Who

Be careful who you call your friends. I'd rather have four quarters than one hundred pennies.

 Al Capone

Investing is not easy. Anyone thinking that it is, is stupid

Charlie Munger

There is no sense in being precise when you do not know what you are talking about

        John von Neumann

“ . . . there is always a well-known solution to every human problem — neat, plausible, and wrong.”

 Henry Louis “H. L.” Mencken

“As skill improves, performance becomes more consistent, and therefore luck becomes more important.”
Michael Mauboussin

'The Federal Reserve is a giant weapon that has no ammunition left'

Former Dallas Federal Reserve President Richard Fisher

The reason the professors teach nonsense is that if they didn’t, what would they teach the rest of the semester?

Teaching people formulas that don’t really work in real life is a disaster for the world.”

Charlie Munger

“The expected rarely occurs and never in the expected manner.”

– Vernon A. Walters

Nations rise and fall with the quality of their leaders, and their leaders succeed and fail based upon who they are at their core – what they believe, how they think, and what they do. Nothing shapes a leader or a society like their education or lack thereof. Let me be clear: when I refer to an education, I’m not referencing earning a degree, I’m talking about developing a rich intellect – they are not always one and the same.

Mike Myatt

 "If you see fraud and don't shout fraud, you are a fraud"

Nassim Taleb

“We really can’t forecast all that well, and yet we pretend that we can, but we really can’t.”

Alan Greenspan

Arrogance diminishes wisdom

Fail with honor rather than succeed by fraud

Obi Wan Kenobi

. I do not base my forecasts on mathematical models or some finely honed methodology, but on my sense of where the economic world stands today and where I think it might likely be in the near future.

Actually, I’m going to spend the first few pages demonstrating that the mathematical models used to forecast GDP and all sorts of interesting economic events are basically nonsense.

John Mauldin

The essence of investment management entails the management of risk, not the management of returns.

Benjamin Graham

“For the foreseeable future any risks from tracker funds are far outweighed by their ability to offer cheap, diversified funds to retail investors. The real problem is not the rise of Vanguard and the other tracker funds; it is the rotten deal that retail investors have received from the fund-management industry for far too long.”
The Economist

“If you are not confused about the economy, you don’t understand it very well.”

Charlie Munger

The least competent are the most certain of their skills

Dunning-Kruger effect

"In equity markets, high-frequency traders (HFTs) ... account for a larger share of transactions. "Indeed, trading in the U.S. nowadays is concentrated at the beginning and the last hour of the trading day, when HFTs are most active; for the rest of the day, markets are illiquid, with few transactions."


The key to success is the ability to fake sincerity.

Many humorists

“I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”

Charlie Munger

It’s difficult to put in the hard work of reading a great work of literature, when we spend our time writing in 140 characters. 

Mark Myatt

…the current culture of education has displaced parents as the primary instructors of children in favor of professionals who try their best to recreate the home environment at school; has the federal government rather than the community determining the structure of equal educational opportunity; has deserted the idea that memorization trains the brain; has fostered a loss of literacy by replacing the study of original writings with abridged textbooks; and has created a populace unable to engage in reasonable discourse. We have rejected the historically successful model of rigorous, classical education in favor of entertainment and job training.”
Leigh Bortins

“You cannot manage returns but you can manage risk 

Peter L. Bernstein

There is an important methodological point here — distrust conclusions reached primarily on the basis of model results. Models are estimated or parameterized on the basis of historical data. They can be expected to go wrong whenever the world changes in important ways.
Larry Summers

“What you think is much less important than how you think.”
Philip Tetlock

“Doubt is not a pleasant condition, but certainty is absurd.”


Many aspects of investing are fun, but your future wealth isn’t a game. You should manage it in the most cold-blooded fashion. Emotion, pride, ego, dreams, and nightmares have nothing to do with the process, although some investors rely on little else. It is in this sense that volatility really matters

Peter Bernstein

Make everything as simple as possible, but not simpler


“We observe the world how it is today and make these very simple projections and turn them into a terrible scenario. “This approach fails to take into account that the world is changing.”

World Bank’s Social Protection and Labor Global Practice.

The most glaring problem with current risk tolerance questionnaires is its failure to add any perspective and context to what the risk score means.

Brian Leitner

Markets are supposed to be be based on informed consumers making rational choices. Instead, the point of marketing is to create uninformed consumers who will make irrational choices often against their best interests 

Noam Chomsky

Facts do not cease to exist because they are ignored.
Aldous Huxley

“It is not only a low interest rate world, it is also a low expected return world on any long-only investment. Low expected returns are going to anchor bad news for all of us for the rest of our working lifetimes. And maybe beyond.

Antti Ilmanen

"Get your facts first, and then you can distort them as much as you please."
Mark Twain

In science — unlike in politics — being hesitant when you don’t know something, and being willing to change your mind in the face of new evidence, are virtues.

Chris Mooney

It's also the same in financial theory and heuristics. Unfortunately, most in the finance field don't know what they don't know,

"Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time."

Erin Beinhocker

A lie can travel halfway around the world while the truth is getting its boots on.

Mark Twainn

A wise man can learn more from a foolish  question that a fool can learn from a wise answer

Bruce Lee

     The power to understand and predict the quantities of the world should not be restricted to those with a freakish knack for manipulating abstract symbols...

Brett Victor

In the absence of regulation, someone will always be willing to exploit our irrational tendencies, leading to a “phishing equilibrium” in which individuals are harmed.

Phishing for Phools; George Akerlof and Robert Shiller

A fact with an unknown truth value (a FWUTV)

Paul Romer

Knowledge is a rumor until your body knows it


Most economics students are not required to study psychology, philosophy, history, or politics. They are spoon-fed models of the economy, based on unreal assumptions, and tested on their competence in solving mathematical equations. They are never given the mental tools to grasp the whole picture. The economists are the idiots savants of our time.

"Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time."

Robert Skidelsky

New economics does not accept the orthodox theory that has dominated economics for the past several decades that humans are perfectly rational, markets are perfectly efficient, institutions are optimally designed and economies are self-correcting equilibrium systems that invariably find a state that maximises social welfare. Social scientists working in the new economics tradition argue that this theory has failed empirically on many points and that the 2008 financial crisis is only the latest and most obvious example.

Eric Beinhocker

“Essentially, all models are wrong, but some are useful.”

 George E.P. Box

A Single Death is a Tragedy; a Million Deaths is a Statistic


“The general change in our culture toward numerical formulations will give room for explicit reference to uncertainty,”

Amos Tversky

There are decades where nothing happens; and there are weeks where decades happen.


Great spirits have always encountered violent opposition from mediocre minds 

Albert Einstein


World Clock by

US Debt Clock
Simply Amazing= includes almost all statistics you would need globally+

What General  George Patton might say today

  1. Measuring risks in the extreme tail: The extreme VaR and its confidence interval




Dominique Guegan (Centre d'Economie de la Sorbonne) ; Bertrand K. Hassani (Grupo Santander et Centre d'Economie de la Sorbonne) ; Kehan Li (Centre d'Economie de la Sorbonne et Labex ReFi)

Contrary to the current regulatory trend concerning extreme risks, the purpose of this paper is to emphasize the necessity of considering the Value-at-Risk (VaR) with extreme confidence levels like 99.9%, as an alternative way to measure risks in the “extreme tail”. Although the mathematical definition of the extreme VaR is trivial, its computation is challenging in practice, because the uncertainty of the extreme VaR may not be negligible for a finite amount of data. We begin to build confidence intervals around the unknown VaR. We build them using two different approaches, the first using Smirnov's result (Smirnov, 1949 [24]) and the second Zhu and Zhou's result (Zhu and Zhou, 2009 [25]), showing that this last one is robust when we use finite samples. We compare our approach with other methodologies which are based on bootstrapping techniques, Christoffersen et al. (2005) [7], focusing on the estimation of the extreme quantiles of a distribution. Finally, we apply these confidence intervals to perform a stress testing exercice with historical stock returns during financial crisis, for identifying potential violations of the VaR during turmoil periods on financial markets


Regulation; Extreme risk; Extreme Value-at-Risk; Confidence interval; Asymptotic theory; Stress testing


C14 D81 G28 G32


or Trump or whoever you want
1/24: Aging and health care     Excellent article

The median age in the United States will rise to about 40 by 2040, up from 37.7 today. That’s partly because the average American lives three years longer today — reaching nearly 79 years old — than in 1995. The Congressional Budget Office credits population aging for a substantial portion of its projected increase in health care spending — from 5.5 percent of the economy today to almost 9 percent by 2046.

But research suggests that living longer, by itself, isn’t a big driver of rising health care spending. Because the baby boom generation is so large — members of which are now in their 50s to late 60s — the average age of Americans would rise even if life expectancy didn’t. For every 100 working-age American today, there are about 25 Americans over 65. By 2040 there will be 37.

Older people need more health care, and they spend more. Compared with the working-age population (people 19 to 64 years old), those 65 to 74 spend two times as much; those 75 to 84 spend four times as much; and those 85 and older spend six times as much. And the growth in health care spending is faster for retirees than for younger Americans.

The vast majority of the seven years of life expectancy gains in the latter half of the 20th century were because of better — and more costly — treatments for premature infants and cardiovascular disease,.  smoking rates and education levels — also influence longevity.

Just how much longer life spans boost spending depends on how many of those extra years are spent in good health versus poor health. Several studies warn that Americans will spend more of those years in poor health and with disability, which would push health spending higher.

other analysis suggests that the leading causes of death, including cancer, heart disease and stroke, are being pushed off until later in life, giving us more years of good health. A recent study by Mr. Cutler and researchers from Harvard and the National Bureau of Economic Research found that between the early 1990s and the late 2000s, the elderly population gained more disability-free years than years with disability.

These findings are consistent with other work showing that higher health care spending by older patients has more to do with their proximity to death than with their age. One study found that hospital expenses grow 1,000 percent in the last five years of life, but increase only 30 percent from 65 years old to 80. Another study found that a majority of Americans over age 85 have no limitations to their daily activities because of health, which suggests that age is a poor marker of health and its associated costs.

living longer doesn’t increase health care spending so much as it delays the large amount spent near death. Some health care spending is associated with those intervening, relatively healthy years, just not much compared with that spent in one’s final years.

Fresh frozen fish at your lake today

1/24:Why is work making us miserable?

Office life is better than ever before, but dissatisfaction is rising

Most surveys show less than a third of workers care for their jobs, and the long-term trend is getting worse. In the UK there is some evidence we like our jobs a good deal less than we did in the 1960s.

Part of our modern disaffection may be due to job hopping. Because we can leave at the drop of a hat, we are less likely to make a go of wherever we are. If everyone is constantly coming and going, no one ever feels secure or has any sense of belonging. But the biggest reason for unhappiness is that we expect too much. Office jobs may have improved, but our expectations have far outstripped them. Better education has not helped. People with university degrees tend to dislike their jobs more than people without them. And so as more people have degrees, unhappiness rises.

1/23:I followed Nouriel Roubini for decades. One of the best thinkers on global economics. Here is his comments on Trump

Roubini just unloaded on Donald Trump

Trump Carnage: Protectionist, Nationalist, Isolationist, Unilateralist, Xenophobic, Nativist, Chauvinist, Angry, Depressing "America First said Roubini later adding  "Angry, divisive, populist, nationalist, unilateralist, depressive, insulting, mean, tone-deaf, intolerant, arrogant America First speech." 

1/23: restaurant chains are struggling Excellent overview

Restaurant chains posted some of their weakest results since the recession last year as sales and foot traffic continued to decline, according to a new report.  

Overall, sales at chain restaurants open at least 18 months dropped 2.4% in the fourth quarter that ended in December, the bleakest quarterly performance by the industry in more than five years, according to retail analytics firm TDn2K.  December contributed significantly to that dip as store sales plunged 4.3%, the poorest monthly showing in more than three years.

A mall once worth millions has been auctioned off for $100

EFM-  It would appear that the demise of Sears, etc and major restaurants might be an indication that consumers are just not spending they way they used to. If Trump's first 100 days goes bad, one of the first warnings may be far more closings and a bad homegrown bear market leading to a recession. 

1/22: The Myths and Fallacies about Diversified Portfolios

The most unbelievable commentary by some of the top analysts you will ever hear about.  And basically it is only them that can understand the discussion. It is beyond my comprehension and I do not believe it serves the greater good for consumers.

Anyway, if you want to wade in the conversation, be my guest.


Steps to Take When Your Parents Need Assisted Living

Some of us will provide care to our parents in our own home for a period, but this is not always possible for all families, or always desired by the children or parents themselves. Many families find themselves searching for assisted living, an intermediate level of residential care for seniors who aren’t safe living alone.

Ideally, your parents can be full participants in the search, but when your loved one is impaired by Alzheimer’s disease or dementia, you may have to proactively take more control of the decision making.

If you see that your parents need assisted living care, here are some steps that can help you find them the right care:

1. Get Your Loved One Involved

The more involved your parents are in the search, the better. Of course you can do much of the legwork for them, but have discussions with your parents about their desires and preferences and, ideally, present them with a range of options. If your parent is in denial about his or her need for care, read our article about overcoming resistance in the situations.

2. Determine What You Can Afford

Like it or not, money is going to be a factor in most families’ searches. Look at what your family can afford on a monthly basis. Our guide to financing senior care page could be a helpful reference. Look into veterans benefits and other creative ways to pay for care. Some seniors and families may have to consider difficult options such as pooling resources from the adult children, selling a family home or even cashing-in a life insurance policy.

3. Get Connected with a Senior Living Advisor

This really could have been the first step on our list, as you can call us at any point in your search. A good point for your initial consultation from an A Place for Mom Senior Living Advisor is after you have already done a little investigating into what your family can afford. That way your Advisor can provide a list of seniors communities that meets the needs and preferences you have already established, and ones that are in your price range. This list of communities is an excellent starting point for your search. From there, a logical way to proceed with the decision making process is through the process of elimination. For those families who ultimately cannot afford private-pay senior care and require state assistance in the form of Medicaid (not to be confused with Medicare), your Advisor will connect you with the appropriate liaison at the Area Agency on Aging so that you can get this process started.

4. Tour Senior Communities

No amount of time viewing photos, brochures, floor plans or reviews can substitute for an in-person visit to a community. Schedule visits for you and your parent at a minimum of three communities on your short-list. If you and your parent have the time and stamina, it may be helpful to view up to five or six communities as you narrow the search. A good time to tour is during a meal, such as lunch, for example. Potential residents can try the food and get a good sense of the community’s culture; as most of the residents will be out and about during a mealtime. Based on these initial tours, narrow down your search to two or three favorites. Perform follow-up tours, perhaps even unannounced, to get a good sense for the community you and your parent are considering. Your Senior Living Advisor can make this process easier for you by arranging all your tours in one short call.

5. Come to a Decision

Whether your parent is choosing the community themself, or whether you need to make that decision for parents impaired by Alzheimer’s or dementia, try to make sure that everyone in your family feels good about the choice. When possible, have conversations with your parents discussing the pros and cons of each option and try to find consensus about the right option. You can always bounce ideas off of your Senior Living Advisor during your decision making process and get his or her impressions of communities on your referral list. Another smart move is reading reviews of senior communities on can also help you make an informed and confident decision. Finally, you can also check the background of an assisted living community you are considering with the licensing agency in your state that monitors assisted living.

6. Make the Move

If you’ve come this far in the process, there’s no sense in delaying the move. It’s risky to procrastinate when a parent needs care, as the delay can lead to avoidable accidents and medical problems. Our blog article, “6 Survival Tips for Moving Your Elderly Loved One” has important information about helping to assure this move goes smoothly.

1/21: biodegradable burial.

1/21: Cake, a start-up in Boston created at M.I.T.’s Hacking Medicine conference’s Grand Hack in 2015, helps users decide end-of-life preferences, like the extent of life support or what to do with their Facebook page. It then stores the choices in the cloud and shares them with those who are designated.

1/21: Grace, tackles all of the issues that can overwhelm family members coping with grief after the death of a loved one. “Like what are the 60 things I need to do in the next three months? At Grace we say, ‘Here are the 17 things you need to do this week’ and you can check them off as you do them. Here’s what you do the week before someone dies, when they die and then two weeks later.”

1/21:Parting, is an online directory of funeral homes searchable by ZIP code, which allows users to compare prices and services, and view the homes’ locations.

1/21: Willing, provides state-specific estate planning documents online that can be updated any time,

1/21: Very few thought would happen- - myself included

1/21: Looks like a continuing trend. Does it mean recession?????

1/19: Retail has taken it on the chin. A K mart near me is closing  as well as many more nationwide. The internet and the Amazons broke their backs

U.S. Chain Store Sales Doing Little

January is a transition month, so activity will be softer.

1/19: As a point repeated- we will never be a manufacturing nation again.

U.S. Industrial Production Falls Short of Expectations

Utilities get a weather-related boost, but manufacturing disappoints.

EFM- add in this: At age 13, girls in households with low maternal education spend on average 6 minutes per day reading (95% CI 6-14), and 12 minutes per day in sport (95% CI 23-31), while girls in households with high maternal education spend 14 minutes reading (95% CI 11-17) and 27 minutes in sport (95% CI 27-31). Similar differences were found for boys

6 to 14 minutes per day is going to get one no place.

1/19:Turnaround is fair play??

The share of crimes committed by the elderly in Japan has risen dramatically in recent years. According to 2015 data from the National Police Agency, 5.8% of arrests in 2005 involved people 65 years or older. Within the decade, that rate had risen to 20%,the AFP reports.

As more of these senior citizens get locked up, experts say, the more Japan's prisons are turning into nursing homes.

The spike in petty crime (mostly shoplifting) can be traced to a number of factors, researcher Yuki Shinko recently told NPR. Increasingly, the elderly populations feel lonely, bored, and unafraid of the legal ramifications. Many have even come to see prison as an upgrade from their daily lives. "If you are arrested, you still get a roof over your head, you're fed three times a day and you get health checkups. So it's sort of a win-win situation either way,"Seniors in Japan often struggle to find meaningful work. Many of Japan's companies still rely on the structure of lifetime employment — once somebody jumps ship, it can be nearly impossible to reclaim their place in the hierarchy in old age. As a result, many of Japan's seniors perform low-skill, low-wage jobs. Prison offers a respite from that drudgery, replete with healthcare and financial security.

The incentive to shoplift isn't going away any time soon. Nearly 27% of Japan's population is above 65 — a proportion that could rise as high as 33% by 2035 — so there will soon be even more seniors exposed to the same incentives that elderly people face today.

Plus, younger generations are increasingly prioritizing their professional lives over starting families — fertility rates are so low in Japan that the population is actually shrinking. That has created a vicious cycle economists refer to as a "demographic time bomb," in which  younger generations' consumption and social security payments aren't enough to support the elderly. The economy begins to shrink, leading to an even greater emphasis of work over family, which creates even fewer consumers, and so on.

Perhaps the most troubling short-term aspect of Japan's geriatric crime wave is that rising arrest rates compel prisons to make facilities more accommodating for the elderly. In turn, that makes them more appealing — obviously the wrong incentive for aging citizens.


"A Structural Analysis of the Effects of the Great Recession on Retirement and Working Longer by Members of Two-Earner Households" Fee Download
NBER Working Paper No. w22984

ALAN L. GUSTMAN, Dartmouth College - Department of Economics, National Bureau of Economic Research (NBER)
Texas Tech University - Department of Economics and Geography
Dartmouth College - Department of Economics

This paper uses data from the Health and Retirement Study to estimate a structural model of household retirement and saving. It applies that model to analyze the effects of the Great Recession on the work and retirement of older couples who were both employed full-time at the beginning of the recession. We analyze the effects of job loss, changes in wealth and changes in expectations. The largest overall effects of the Great Recession are observed for 2009 and 2010. In 2009, an additional 2.5 percent of all 55 to 59 year old husbands were not working full-time as result of the Great Recession, amounting to a reduction of 3.2 percent in full-time work. In 2010, 2.8 percent of 55 to 59 year old husbands were not working full-time as a result of the Great Recession, amounting to a 3.8 percent reduction in full-time work. For wives the reductions in full-time work due to the Great Recession were 1.7 percent and 2.2 percent of those who initially held a job, or reductions of full-time work of 2.3 and 3.0 percent respectively. For those 60 to 64, the reductions were 1.2 percent of men and 0.9 percent of women. Having been laid off in the last three years reduces full-time work by 30 percent. There also are lingering effects of layoff on the probability of working longer. Having been laid off three or more years in the past reduces full-time employment in the current year by about 12 percent. This reflects the reduced work incentives for full-time work arising from lower earnings due to the loss of job tenure with a layoff as well as the additional earnings penalty from a layoff. The effect on own work of a spouse having been laid off is much smaller. The reason is that, as found in the estimation of our structural model, having one spouse not working increases the value of leisure for the other. In contrast, when one member of the household loses their job, the value of consumption increases relative to leisure. For recent layoffs, these effects are roughly offsetting. All told, the effects of the Great Recession on retirement seem relatively modest. These findings are consistent with our earlier descriptive analyses.

EFM- I have a problem with the last statement. I another paper I am doing, it seems that the economic commentary is all that is addresses. Not so. If one goes out into the average workforce, they will find an emotional impact to their body and soul. Yes. it did from emanate the loss of job and security but is that not the focus of the middle income worker. Safety, security, et al was destroyed by the mess OR AT LEAST felt like it since so many of their friends and family were impacted. Leisure time? Get real.

1/19: Then there is this

JPMorgan Chase settles federal mortgage discrimination suit for $55 million

The Justice Department had alleged that black and Hispanic borrowers were charged about $1,000 more for a mortgage than white borrowers.

1/19:  U.S. scientists officially declare 2016 the hottest year on record. That makes three in a row.

1/19: I have some disagreement.

Cross-Sectional Patterns of Mortgage Debt During the Housing Boom: Evidence and Implications

The reallocation of mortgage debt to low-income or marginally qualified borrowers plays a central role in many explanations of the early 2000s housing boom. We show that such a reallocation never occurred, as the distribution of mortgage debt with respect to income changed little even as the aggregate stock of debt grew rapidly. Moreover, because mortgage debt varies positively with income in the cross section, equal percentage increases in debt among high- and low-income borrowers meant that wealthy borrowers accounted for most new debt in dollar terms. Previous research stressing the importance of low-income borrowing was based on the inflow of new mortgage originations alone, so it could not detect offsetting outflows in mortgage terminations that left the allocation of debt stable over time. And while defaults on subprime mortgages played an important part in the financial crisis, the data show that subprime lending did not cause a reallocation of debt toward the poor. Rather, subprime lending prevented a reallocation of debt toward the wealthy.


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"Transparency, Reproducibility, and the Credibility of Economics Research" Fee Download
NBER Working Paper No. w22989

GARRET S. CHISTENSEN, University of California, Berkeley
University of California, Berkeley - Department of Economics, National Bureau of Economic Research (NBER)

There is growing interest in enhancing research transparency and reproducibility in economics and other scientific fields. We survey existing work on these topics within economics, and discuss the evidence suggesting that publication bias, inability to replicate, and specification searching remain widespread in the discipline. We next discuss recent progress in this area, including through improved research design, study registration and pre-analysis plans, disclosure standards, and open sharing of data and materials, drawing on experiences in both economics and other social sciences. We discuss areas where consensus is emerging on new practices, as well as approaches that remain controversial, and speculate about the most effective ways to make economics research more credible in the future.


We construct a novel database containing the universe of financial advisers in the United States from 2005 to 2015, representing approximately 10% of employment of the finance and insurance sector. Roughly 7% of advisers have misconduct records. Prior offenders are five times as likely to engage in new misconduct as the average financial adviser. Firms discipline misconduct: approximately half of financial advisers lose their job after misconduct. The labor market partially undoes firm-level discipline: of these advisers, 44% are reemployed in the financial services industry within a year. Reemployment is not costless. Following misconduct, advisers face longer unemployment spells, and move to less reputable firms, with a 10% reduction in compensation. Additionally, firms that hire these advisers also have higher rates of prior misconduct themselves. We find similar results for advisers of dissolved firms, in which all advisers are forced to find new employment independent of past misconduct or performance. Firms that persistently engage in misconduct coexist with firms that have clean records. We show that differences in consumer sophistication may be partially responsible for this phenomenon: misconduct is concentrated in firms with retail customers and in counties with low education, elderly populations, and high incomes. Our findings suggest that some firms "specialize" in misconduct and cater to unsophisticated consumers, while others use their reputation to attract sophisticated consumers

1/17: Rehab Recovery offers a free helpline and intervention service for people suffering from eating disorders. Tel: 0800 088 66 86 Website:


World’s 8 Richest Have as Much Wealth as Bottom Half of Global Population

The eight, all men, hold as much money as the 3.6 billion people who make up the world’s poorest half,

1/16: It's about time

A type of vampire bat has started feeding on humans in Brazil for the first known time

1/16: “There are something like 310,000 financial advisers in the U.S. now, which is about 40,000 fewer advisers than there were 10 years ago,”
EFM- if the Fiduciary rule actually goes through, there will be a lot less and a lot faster.

But being right means you still may lose all as your detractors try to silence you
  1. Heterogeneity in Early Life Investments: A Longitudinal Analysis of Children’s Time Use




Mark E. McGovern ; Slawa Rokicki

Early life investments in children promote skills and capabilities, and subsequently influence a variety of health, social, and economic outcomes in later life. In this paper, we examine heterogeneity in children’s time use using diary data from two waves of a nationally representative longitudinal cohort study. Children from disadvantaged households spend significantly less time reading and engaging in sport than their counterparts, and more time in unstructured activities and using media. Though gaps are relatively small at age 9, they widen considerably over time. At age 13, girls in households with low maternal education spend on average 6 minutes per day reading (95% CI 6-14), and 12 minutes per day in sport (95% CI 23-31), while girls in households with high maternal education spend 14 minutes reading (95% CI 11-17) and 27 minutes in sport (95% CI 27-31). Similar differences were found for boys. Using a decomposition analysis, we find that resources, preferences, initial endowments, and differential costs all play a role in explaining time use concentration across households, indicating that disadvantaged families may be constrained in how they choose their preferred time use options. Given the important role of extra-curricular activities in promoting cognitive and non-cognitive skill development, the systematic differences in time use we document in this paper are likely to contribute to cumulative disadvantage and widening skill gaps over adolescence and into adulthood.


Time Use; Socioeconomic Disparities; Early Life Conditions; Skill Development


I30 J10 J22


1/15: The real problem facing employment

, WorkingNation asserts that half of all jobs will likely be eliminated by technology and globalization within the next 25 years

1/15: Life expectancies rich and poor
Enlightening video

1/15: Trump and Russia

Nouriel Roubini
‏: Only a total stooge/useful idiot would believe Russia when they lie & claim that they don't systematically collect info on global leaders 


An Introduction to Investment Theory

© William N. Goetzmann

1/12: We just L O V E pills

Americans comprise less than 5 percent of the world’s populace, but consume 80 percent of the world’s opioids and 99 percent of the world’s hydrocodone

1/12: The focus of the article is whether computers will overtake the human in financial planning. In part, yes. The problem is that the software written will encounter thousands of problems  which they will not be able to cover. Remember Long Term Capital- 27 PhDs and two Nobel Laureate blew up the U.S. banking system.

"We have to be careful about letting loose artificial intelligence."

1/12:  EFM- I didn't think the percentage was going to  be that HIGH

Analysis shows how the ACA swamped the individual market

By Allison Bell

About 78 percent of the new 2014 individual enrollees may have been in poor health
1/12 Retirement lapse

A study of financial and emotional confidence found that nearly 60% of Americans prioritize having at least one source of guaranteed income in retirement outside of Social Security benefits. However, less than one in four report feeling very confident in any aspect of their retirement finances. Moreover, the survey found 52% of respondents said building savings is a major priority, but more than two-thirds say they don’t describe themselves as living within their means. Forty-seven percent prioritized having a solid, long-term plan for achieving financial goals, but 81% don’t feel that they have one.  Overall, 78% of working American families are stressed and worried about their financial future, regardless of age, gender, income or other demographics


"China's Growing Influence on Asian Financial Markets" Free Download
IMF Working Paper No. 16/173

SERKAN ARSLANALP, International Monetary Fund (IMF)
International Monetary Fund
International Monetary Fund (IMF)
International Monetary Fund (IMF)

This paper finds that financial spillovers from China to regional markets are on the rise. The main transmission channel appears to be trade linkages, although direct financial linkages are playing an increasing role. Without an impact on global risk premiums, China's influence on regional markets is not yet to the level of the United States, but comparable to that of Japan. If China-related shocks are coupled with a rise in global risk premiums, as in August 2015 and January 2016, spillovers to the region could be significantly larger. Over the medium term, China's financial spillovers could rise further with tighter financial linkages with the region, including through the ongoing internationalization of the renminbi and China's capital account liberalization.

1/11: Innovation in Participant Education
"[O]nly 12% of approximately 1,500 respondents indicated that they accessed educational content on their participant site in the past 12 months; however, 43% said educational articles and 39% said education videos about retirement planning and investing were either extremely or very important elements of a participant site.... 65% stated having access to a retirement income projection tool is at least 'very important,' despite only 23% having used one in the previous 12 months. This disparity may point to a lack of engagement with the plan, and therefore a lack of awareness that these resources exist for free on the participant site. It likely also points to a lack of engaging educational content[.]"

EFM= Well the 12% is a direct indication by 1) the public's unwillingness to spend ANY time with the basics that could help them and 2) the material was terrible. But if 88% did not even bother to look, there may be little education that can help them for retirement i

1/11:Most state pension funds made benefit cuts in years following financial crisis

Of the 114 state plans whose data from 2009 to 2014 was sampled, 74% made some kind of benefit reductions, compared to 57% of the 132 local plans from 2009 to 2014. Overall, about 65% of plans made benefit reductions.

Of those state plans that made cuts, 65% made reductions affecting only new employees compared to 35% that made changes affecting both new and current employees. Of local plans, 60% made reductions affecting new employees, while 40% made changes affecting both.

Of state and local plans that made benefit changes for current employees, the most common types of changes were increased employee contributions and changes in the cost-of-living adjustment calculations. The brief said that COLAs in particular are “not viewed as core benefits and have less protection under the law.”

Of state plans that made changes of this kind, 17% made employee contribution changes and 9% made COLA changes, while 13% of local plans made COLA changes and 12% made employee contribution changes.

For benefit changes for new employees, those kind of “core” benefit changes are far more common, according to the brief. For example, 60% of state plans that made benefit changes for new employees changed retirement age and tenure rules, compared to 4% of state plans that made benefit changes for current employees.



"Negative Interest Rate Policy (NIRP): Implications for Monetary Transmission and Bank Profitability in the Euro Area" Free Download
IMF Working Paper No. 16/172

ANDREAS (ANDY) JOBST, World Bank Group
International Monetary Fund

More than two years ago the European Central Bank (ECB) adopted a negative interest rate policy (NIRP) to achieve its price stability objective. Negative interest rates have so far supported easier financial conditions and contributed to a modest expansion in credit, demonstrating that the zero lower bound is less binding than previously thought. However, interest rate cuts also weigh on bank profitability. Substantial rate cuts may at some point outweigh the benefits from higher asset values and stronger aggregate demand. Further monetary accommodation may need to rely more on credit easing and an expansion of the ECB's balance sheet rather than substantial additional reductions in the policy rate.

1/10: Sad and will not end well

The killer behind closed doors: How heroin gutted a proud blue-collar town

It’s the worst drug crisis in American history, killing more people in the past two years than gun homicides. In the town of Wilkes-Barre, Pennsylvania, the opioid epidemic has claimed so many lives that attending funerals has become commonplace for some families. "We went to 14 funerals of my son’s friends who died of addiction in just one year,’ said Christopher Emmett, whose own son died of a drug overdose this August. NBC NEWS reports from the town that researchers dubbed ‘the most unhappy place in America’ where four times as many people die from drug overdoses than in New York City.

1/10:Well this sucks- exercising

now it is pretty well accepted both that physical inactivity is bad — recently linked to 6 percent of all cases of heart disease worldwide and 11 percent of all premature deaths in the United States — and that exercise is good, because it tends to increase life span and protect against heart disease. Yet few studies actually show that exercise reduces the unhealthful impacts of too much sitting. People who work out but also sit for long hours — active couch potatoes, you might say — may often share the same elevated risks for disease and early death as their less active peers.

1/9: Paraphrasing: But most 'planners' are not statisticians. Victoria Stodden, a statistician at Columbia, speaks for many in her trade when she says that 'planners'  grasp of statistics has not kept pace with the development of complex mathematical techniques for crunching data. Some 'planners' use inappropriate techniques because those are the ones they feel comfortable with; others latch on to new ones without understanding their subtleties. Some just rely on the methods built into their software, even if they don’t understand them.

1/9: New economics is not a single theory, or even a coherent body of work. It is a broad research programme best characterised by its unifying desire to embrace the messy reality of the economy. To accept human behaviour, imperfect institutions, and the complex interactions and dynamics of the economy as they really are rather than what an idealised model says they should be. Eric Beinhocker

1/9 and more/
European Central Bank (ECB) president Jean-Claude Trichet said: ‘As a policymaker during the crisis, I found the available models of limited help. In fact I would go further: in the face of the crisis, we felt abandoned by conventional tools.

Central banks, finance ministries, and economic regulators all have large staffs of well-trained economists, fancy models and vast quantities of data. But when the crunch came, their theories and models could not describe what they were experiencing. The Economist reported that the Bank of England’s large macro model wasn’t much help because it didn’t have banks in it. It is hard to make policy in the middle of a banking crisis if one’s economic model doesn’t have banks in it.

The reason these models and formal theories were of limited use is they were built on assumptions that people are rational, markets always clear, bubbles can’t form, and that banks are just boring bits of plumbing that shuffle money from one part of the system to another and can be safely ignored. It is therefore not surprising that when people started panicking, markets were not clearing, a massive bubble had just burst, and the banking system was on the verge of collapse, that models with such assumptions were not that helpful.

1/9: There is something to be said about high yield funds but sometimes I think you have to be lucky in picking a really optimistic. If you pick wrong you can get decimated. economy to be good. But if you are right- look at the CCC rated bonds. 36.5%!!!!

Rally caps
Corporate credit picked up where it left off 2016, with high yield bonds and senior secured loans strengthening this week on the back of rising U.S. equities, higher oil prices and ongoing inflows into both asset classes. In what was the asset class’s best annual performance since 2009, high yield bonds returned approximately 17.5% in 2016, led by a sharp rally in both the metals and mining and energy industries.1,2,3 Similarly, value-based areas of the high yield bond market led 2016’s rally after sharply lagging the broader benchmark in 2015. After returning -15.0% in 2015, CCC rated bonds provided gains of 36.5% in 2016 as investors exhibited a renewed appetite for risk in their ongoing search for yield.4 Senior secured loans followed a similar trajectory, with the asset class providing total returns of approximately 9.9% in 2016, with momentum building towards year-end amid rising Treasury yields and large flows into bank loan mutual funds.5 Following outflows of more than $45.5 billion across 2014 and 2015, bank loan mutual funds recorded inflows of $7.8 billion in 2016 as investors increasingly sought out investments whose values are less affected by rising interest rates.6

1/9: Priming studies suggest that decisions can be influenced by apparently irrelevant actions or events that took place just before the cusp of choice.

1/8: Larry Summers on Trump

“This is probably the largest transition ideologically and in terms of substantive policy that we’ve seen in the U.S. in the last three quarters of a century,” Summers told Tom Keene in a Bloomberg Television interview. “Those kinds of transitions have to be -- given the central role of the U.S. in the global system -- matters of enormous uncertainty. I don’t think that’s fully recognized by markets.”

1/8: LTV expenses

1/8: Reflects the price of oil but fracking may still be limited.

US oil rig count rises for 10th straight week

1/8: Economists’ mea culpa The Bank of England’s chief economist has warned against putting too much faith in economic forecasts. Andy Haldane admitted that economists had failed to properly warn about the financial crisis. But he reiterated the BoE’s stance that Brexit will hit the economy this year, despite recent positive data.

1/6: Very, very interesting. In any case, we really need Mexico as a  good trading partner. And it would help if we could get Cuba focused the same way- though that is apt to take five years or more. .

Last September, Luis Videgaray, then Mexico’s finance minister, arranged for Donald Trump to visit his country. The visit was a public relations fiasco for the Mexicans; the MIT-educated Mr Videgaray was branded a national traitor and resigned from his post.

 Mr Videgaray is back — as foreign minister, hoping to parlay the goodwill he won with Mr Trump to cut better deals for Mexico with the US-president elect. “With Luis, Mexico and the US would have made wonderful deals together,” as Mr Trump tweeted at the time.

Mr Videgaray’ appointment is Mexico’s first step in playing transactional politics with the incoming president, analysts said, and comes as Mexico braces itself for Mr Trump’s threats of high tariffs, immigrant deportations and the end of the North American Free Trade Agreement (Nafta).

“[Videgaray] understands political bargaining and that’s going to be very important in the coming weeks and months,”

1/5: Commissions

Americans pay approximately $17 billion annually in excess fees because of such conflicts of interest. The high fees mean that the typical saver will run out of retirement money five years earlier than he or she would have with better, more disinterested advice.

1/5: Expansion but a huge debt

Fed officials cite rate rise uncertainty over Trump tax cuts


Many officials of the US Federal Reserve said the central bank could be forced to lift rates higher than expected if Congress passed economy-boosting tax cuts next year, according to minutes of the Fed’s final policy meeting of 2016.

Almost all Fed officials meeting on December 13-14 said the risks of growth surpassing their forecasts had grown because of the possibility of more “expansionary” fiscal policy under president-elect Donald Trump and the Republican-controlled Congress.

Click here to read more


1/4: PASSIVE INVESTING GROWING - Morningstar reports the shift from active to passive investments continued in 2016 with nearly $429 billion moving into passive funds and more than $285 billion shifting out of active funds. The trend will continue in 2017 and may accelerate...again the DOL rule will be a driving factor


Make a New Year’s Resolution to Schedule an Eye Exam

Early Diagnosis and Treatment Can Lessen Effects of Glaucoma, the “Sneak Thief of Sight”


Many people are making New Year’s resolutions to improve their health.  However, many may not be aware that an eye exam cannot only help to protect vision, it can uncover evidence of other diseases including diabetes or hypertension.

And, for eye diseases such as glaucoma, the damaging effects may be detected through an eye exam before a patient notices any symptoms.  In fact, patients in the early stages of glaucoma usually have no symptoms, no noticeable vision loss and no pain, which is why it is called the “sneak thief of sight.” By the time symptoms start to appear, some permanent damage to the eye has usually occurred.

Glaucoma is the second leading cause of blindness in the world and the leading cause of blindness in African American and Hispanic populations in America.  According to the study “Vision Problems in the U.S.” by Prevent Blindness America and the National Eye Institute (NEI), there are nearly 2.3 million Americans ages 40 and older who have glaucoma. 

Glaucoma is an eye disease that causes loss of sight by damaging a part of the eye called the optic nerve. This nerve sends information from the eyes to the brain. When the optic nerve is damaged, peripheral vision begins to diminish.  If left untreated, over time, glaucoma may also damage central vision. Unfortunately, once vision is lost to glaucoma, it cannot be restored.  Vision loss can be lessened, however, if glaucoma is detected and treated early.

Prevent Blindness America has joined other leading eye care groups to build awareness during January’s National Glaucoma Awareness Month to educate the public on what they can do to help save their vision.

“Our key message is that, unfortunately, there is no cure for glaucoma.  But the good news is that if detected and treated early, the effects of vision loss can be diminished,” said Hugh R. Parry, president and CEO of Prevent Blindness America.  “We hope everyone has a happy and healthy 2011 and that it includes a visit to the eye doctor.”

There are many risk factors for glaucoma including:

Age: Those that are 40 and older are more likely to develop glaucoma. The older you are, the greater your risk.
Race: Glaucoma is the leading cause of blindness in African American and Hispanic populations in America.  
Family History: If you have a parent or sibling who has glaucoma, you are more likely to develop the disease.
Diabetes: People with diabetes have a higher risk of developing glaucoma.
Nearsightedness: People who are very nearsighted are at greater risk.
Eye Injury or Surgery: Those who have had eye surgery or eye injuries may develop secondary glaucoma.
Steroid Medication: Steroids may increase the risk of glaucoma when used for extended periods of time. 

Prevent Blindness America offers a dedicated website for free information on glaucoma at  Additional information may also be obtained in English or Spanish by calling (800) 331-2020.

1/4: Is it time again??? Frankly I thought the highly promoted bird flu would have chewed up a part of the population already

History’s comfort If you think 2016 was bad, take comfort in history. 75,000 years ago the eruption of Mount Toba caused a “volcanic winter” that nearly killed off humanity, while in the 1340s, the Black Death also killed off millions. More recently in 1918, during the closing stages of first world war, the deadly outbreak of so-called “Spanish Flu” killed between 20m and 50m people.

1/4: Larry Summers and Nouriel Robinni on Trump           Read the article

Two real heavy hitters that are VERY uncomfortable about the future

With Trump’s ascent to the presidency on an America First platform, the global economy can’t count on the U.S. to provide “guardrails” anymore, according to Eurasia, which advises investors on political risk. Trump’s signals of a thaw with Russia, skepticism toward the North Atlantic Treaty Organization and his “alignment” with European anti-establishment parties such as France’s National Front could weaken the main postwar alliance protecting the global order,

the biggest political risk facing Europe is National Front leader Marine Le Pen’s chance of winning the French presidential election. “If Le Pen comes to power in France, if an anti-euro party comes to power in Italy, this could be the beginning of the end of Europe and the euro zone,

1/4: And more bad news

“It is not only a low interest rate world, it is also a low expected return world on any long-only investment,
” said Ilmanen, who is a principal and researcher at hedge fund AQR. Low expected returns are going to anchor bad news for all of us for the rest of our working lifetimes, he said. And maybe beyond.

  • Slow Pain: In this scenario, low yields persist for years, and there are no more windfalls from declining rates. Life insurance companies may suffer badly in this instance.
  • Fast Pain: Payback time for the boomer generation’s windfall gains. All assets’ real yields rise, so long-only institutional portfolios suffer across the board (although liability values fall).
  • 2008 Redux: Equity valuations fall, while bond yields also fall. A double whammy for underfunded pension plans with a duration mismatch.

1/4: Apparently it's working

Ford scraps plans for $1.6bn Mexico plant


Ford said on Tuesday that it will scratch plans to build a new $1.6bn plant in Mexico and invest some of those funds instead at an existing facility in the US. The decision comes as US manufacturers brace for a shift in American policy later this month when President-elect Donald Trump moves into the White House. Mr Trump has publicly criticised companies that have shifted production to lower-cost areas outside of the US border.

1/4: Forecasting the market

After examining forecasts by major investment houses going back to 1998, Mr. Mehta found that 8 percent of individual analyst predictions called for a small market decline in subsequent years. But those predictions of decline were worse than random: In the years when the market did fall, 9 percent of forecasts — never enough to counter the bullish consensus — predicted that it would happen, essentially the same as in a year in which the market rose.

Yet, as Mr. Mehta found, the typical negative individual forecast only called for a 5 percent decline, so the size of forecast errors, like the 49-percentage-point error of 2008, was larger than would be expected from mere chance. On a statistical basis, the forecasters were “actively adding negative value” — essentially destroying value by issuing spurious numbers.


The Present Value of Future Lost Profits, and the Time Value of Money

Experts estimating the present value of a business’ future lost profits have much less direction from the courts than their counterparts estimating the present value of a person’s lost earning capacity. Professional literature has attempted to fill this gap providing many articles discussing the differing methods for analyzing lost profits (e.g., yardstick, before-and-after, but for) or how to determine the discount rate by applying a weighted cost of average capital, equity rates of return, or some form of risk premium build-up. This article moves away from these others to address the concept of the time value of money and how it applies to the discount rate applied to the future lost profits.