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


Uniform (Im)Prudent Investor Act- Waaaaaaaaaaaaaaaaaay Out of Date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
  1. Underpricing, underperformance and overreaction in initial pubic offerings: Evidence from investor attention using online searches




Vakrman, Tomas ; Kristoufek, Ladislav

Online activity of Internet users has proven very useful in modeling various phenomena across wide range of scientific disciplines. In our study, we focus on two stylized facts or puzzles surrounding the initial public offerings (IPOs) - underpricing and long-term underperformance. Using the Internet searches on Google, we proxy the investor attention before and during the day of the offering to show that the high attention IPOs have different characteristics than the low attention ones. After controlling for various effects, we show that investor attention still remains a strong component of the high initial returns (underpricing), primarily for the high sentiment periods. Moreover, we demonstrate that the investor attention partially explains overoptimistic market reaction and thus also a part of the long-term underperformance.

  1. The Role of Information in Stock Market




Mahmood Mahmoodzadeh (Firoozkooh Branch, Islamic Azad University, Firoozkooh) ; Saleh Ghavidel (Firoozkooh Branch, Islamic Azad University, Firoozkooh) ; Mir Hosein Mousavi (Alzahra University)

With relying on game theory, this paper investigates the role of information played in decisions of economic agents in Tehran Stock Exchange (TSE). The behavior of economic agents in a company in the Cement, Lime & Gypsum industry named Tehran Cement listed on the TSE has been investigated through GARCH class models for the period of July 1999 to June 2006. The results suggest that general information through GARCH (1, 1) model affects the company stock price, while private information through GARCH (2, 1) model affects the trading volume. Having explored general and private information, we studied the role of this information in determining stock price and trading volume, according to which the results demonstrate that general information has more influence than private information in determining stock price and trading volume. Therefore, we accept information cascades theory in TSE which means economic agents mostly rely on general information in their tradi ng decisions.

  1. Predicting the direction of US stock markets using industry returns




Pönkä, Harri

In this paper, we examine the directional predictability of excess stock market returns by lagged excess returns from industry portfolios and a number of other commonly used variables by means of dynamic probit models. We focus on the directional component of the market returns because, for investment purposes, forecasting the direction of return correctly is presumably more relevant than the accuracy of point forecasts. Our findings suggest that only a small number of industries have predictive power for market returns. We also find that the binary response models outperform conventional predictive regressions in forecasting the direction of the market return. Finally, we test trading strategies and find that a number of industry portfolios contain information that can be used to improve investment returns.

  1. Predicting the direction of US stock markets using industry returns




Pönkä, Harri

In this paper, we examine the directional predictability of excess stock market returns by lagged excess returns from industry portfolios and a number of other commonly used variables by means of dynamic probit models. We focus on the directional component of the market returns because, for investment purposes, forecasting the direction of return correctly is presumably more relevant than the accuracy of point forecasts. Our findings suggest that only a small number of industries have predictive power for market returns. We also find that the binary response models outperform conventional predictive regressions in forecasting the direction of the market return. Finally, we test trading strategies and find that a number of industry portfolios contain information that can be used to improve investment returns.

  1. The Equity-like Behaviour of Sovereign Bonds




Alfonso Dufour (ICMA Centre, Henley Business School, University of Reading) ; Andrei Stancu ; Simone Varotto

Using a rich dataset of high frequency historical information we study the determinants of European sovereign bond returns over calm and crisis periods. We find that the importance of the equity risk factor varies greatly over time and crucially depends on country risk. In low risk countries, government bond returns are negatively related to equity returns, regardless of market conditions. Investors appear to migrate from low risk government bonds to stocks in calm periods and in the opposite direction when markets are under stress. On the other hand, government bonds of high risk countries lose their “safe-asset” status and exhibit more equity- like behaviour during the sovereign debt crisis, with positive and strongly significant co- movements relative to the stock market. Interestingly, this segmentation of the government bond market results in higher diversification benefits for fixed income investors and pension funds in periods of sovereign stress.

4/13: Care of Disabled Family Members      Nice article by the Times
soon there will be a new savings account to consider, known as a 529A or ABLE account, which will permit people with disabilities to keep more money in their own names without losing means-tested benefits.

  1. Familiarity and Competition: The Case of Mutual Funds




Ariadna Dumitrescu ; Javier Gil-Bazo

We build a model of mutual fund competition in which a fraction of investors ("unsophisticated") exhibit a preference for familiarity. Funds differ both in their quality and their visibility: While unsophisticated investors have varying degrees of familiarity with respect to more visible funds, they avoid low-visibility funds altogether. In equilibrium, bad low-visibility funds are driven out of the market of sophisticated investors by good low-visibility funds. High-visibility funds do not engage in competition for sophisticated investors either, and choose instead, to cater to unsophisticated investors. If familiarity bias is high enough, bad funds survive competition from higher quality funds despite offering lower after-fee performance. Our model can thus shed light on the persistence of underperforming funds. But it also delivers a completely new prediction: Persistent differences in performance should be observed among more visible funds but not in the more competitive low-visibility segment of the market. Using data on US domestic equity funds, we find strong evidence supporting this prediction. While performance differences survive at least one year for the whole sample, they vanish within the year for low-visibility funds. These results are not explained by differences in persistence due to fund size or investment category. The evidence also suggests that differences in persistence are not the consequence of other forms of segmentation on the basis of investor type (retail or institutional) or the distribution channel.

  1. Inefficient Reallocation, Loss Aversion and Prospect Theory




Ungureanu, S.

The paper shows that bounded rationality, in the form of limited knowledge of utility, is an explanation for common stylized facts of prospect theory like loss aversion, status quo bias and non-linear probability weighting. Locally limited utility knowledge is considered within a classical demand model framework, suggesting that costs of inefficient search for optimal consumption will produce a value function that obeys the loss aversion axiom of Tversky and Kahneman (1991). Moreover, since this adjustment happens over time, new predictions are made that explain why the status quo bias is reinforced over time. This search can also describe the behavior of a consumer facing an uncertain future wealth level. The search cost justifies non-linear forms of probability weighting. The effects that have been observed in experiments will follow as a consequence.

  1. What is the Causal Effect of Knowledge on Preferences?




Jacob LaRiviere (Department of Economics, University of Tennessee) ; Mikolaj Czajkowski (University of Warsaw, Department of Economic Sciences, Poland) ; Nick Hanley (Department of Geography and Sustainable Development, University of St. Andrews) ; Katherine Simpson (Economics Division, University of Stirling, Scotland)

We use a novel field experiment which jointly tests two implicit assumptions of updating models in a joint framework: that new information leads to new knowledge and that new knowledge can affect economic decisions. In the experiment, we elicit subjects’ prior knowledge state about a good’s attributes, exogenously vary how much new information about good attributes we provide to subjects, elicit subjects’ valuation for the good, and elicit posterior knowledge states about the same good attributes. Testing for changes in knowledge jointly with changes in preferences allows us to horserace updating models more completely than previous studies since we observe ex ante and ex post knowledge states. Our results are consistent with a model of incomplete learning, fatigue and either confirmation bias or costly search coupled with unbiased priors.

4/13: Retirement:A recent report shows that one third of pre-retirees are likely to retire poor or near poor as a result of a significant decrease in employer-sponsored retirement savings plans over the past decade and a half, according to this article on Time Money. The number of workers between 25 and 64 who have access to these plans decreased to 53% in 2011 from 61% in 1999, the report says. The decline can be attributed to various factors, such ineligibility for not having a job and decision to opt out, the research found

  1. Funding Liquidity, Market Liquidity and the Cross-Section of Stock Returns




Jean-Sébastien Fontaine ; René Garcia ; Sermin Gungor

Following theory, we check that funding risk connects illiquidity, volatility and returns in the cross-section of stocks. We show that the illiquidity and volatility of stocks increase with funding shocks, while contemporaneous returns decrease with funding shocks. The dispersions of illiquidity, volatility and returns widen following funding shocks. Funding risk is priced, generating a returns spread of 4.25 percent (annually) between the most and least illiquid portfolios, and of 5.30 percent between the most and least volatile portfolios. Estimates are robust using mimicking portfolio returns, alternative portfolio sorts, traditional test assets, other risk factors, monthly returns or quarterly returns.

  1. Parenthood and Risk Preferences




Görlitz, Katja (Free University of Berlin) ; Tamm, Marcus (RWI)

This study analyzes how risk attitudes change when individuals become parents using longitudinal data for a large and representative sample of individuals. The results show that men and women experience a considerable increase in risk aversion which already starts as early as two years before becoming a parent, is largest shortly after giving birth and disappears when the child becomes older. These findings show that parenthood leads to considerable changes in individual risk attitudes over time. Thus, analyses using risk preferences as the explanatory variable for economic outcomes should be careful in interpreting the findings as causal effects.

  1. Press Freedom and Jumps in Stock Prices




Thorsten Lehnert (Luxembourg School of Finance)

Proponents of the efficient markets hypothesis would claim that investors correctly and timely incorporate new information into asset prices. Bayesian rationality is assumed to be a good description of investor behavior (Fama (1965, 1970)). However, the quality of information disclosure differs substantially across countries. Media- or press freedom reflects the degree of freedom that journalists or news organizations enjoy in each country, and the efforts made by the authorities to respect and ensure respect for this freedom. In a ‘free’ environment, characterized by good information disclosure, any news becomes immediately public knowledge through mediums including various electronic media and published materials. In an ‘unfree’ environment, characterized by bad information disclosure, the media become strategic goals and targets for groups or individuals who attempt to control news. We argue that stock markets in countries characterize d by a high degree of press freedom tend to have good information disclosure. In those markets, economic agents would have no discretion to hide bad news or to release bad news slowly. However, stock markets in countries characterized by a low degree of press freedom tend to have poor information disclosure. In those markets, economic agents would have a greater discretion to hide bad news or to release bad news slowly, which at the stock market level would be reflected in a lower frequency of (substantial) negative jumps in stock prices. Hence, stock market returns in countries characterized by a low degree of press freedom are likely to be less negatively skewed. A number of recent empirical and theoretical studies find evidence for the existence of jumps and their substantial impact (see e.g. Johannes (2004)). Using an equilibrium asset-pricing model in an economy under jump diffusion, we decompose the moments of the returns of international stock markets into a diffusive and jum p part. Using stock market data for a balanced panel of 50 countries, we show that in an economy with a free press, the free disclosure of bad news leads to more frequent negative jumps, which directly relates to a more negatively skewed return distribution. At the same time, the contribution of jump risk to stock market volatility is not affected by any of our country- and market-specific explanatory variables.

  1. Familiarity and Competition: The Case of Mutual Funds




Ariadna Dumitrescu ; Javier Gil-Bazo

We build a model of mutual fund competition in which a fraction of investors ("unsophisticated") exhibit a preference for familiarity. Funds differ both in their quality and their visibility: While unsophisticated investors have varying degrees of familiarity with respect to more visible funds, they avoid low-visibility funds altogether. In equilibrium, bad low-visibility funds are driven out of the market of sophisticated investors by good low-visibility funds. High-visibility funds do not engage in competition for sophisticated investors either, and choose instead, to cater to unsophisticated investors. If familiarity bias is high enough, bad funds survive competition from higher quality funds despite offering lower after-fee performance. Our model can thus shed light on the persistence of underperforming funds. But it also delivers a completely new prediction: Persistent differences in performance should be observed among more visible funds but not in the more competitive low-visibility segment of the market. Using data on US domestic equity funds, we find strong evidence supporting this prediction. While performance differences survive at least one year for the whole sample, they vanish within the year for low-visibility funds. These results are not explained by differences in persistence due to fund size or investment category. The evidence also suggests that differences in persistence are not the consequence of other forms of segmentation on the basis of investor type (retail or institutional) or the distribution channel.


Corporate bonds are expensive (Bloomberg)

Corporate bond yields are sitting near their lowest levels on record, making the space unattractive to many investors. Bonnie Baha, the director of global developed credit at Jeffrey Gundlach’s DoubleLine Capital, noted, “In my 30-year career, it’s one of the most unattractive risk-return propositions that I’ve seen.” BlackRock's Chief Investment Officer for Fixed-Income, Rick Rieder, chimed in, "We have a higher level of interest-rate risk than we’ve ever had before and people have to be sensitive to it." However, investors are still flocking to the space due to a lack of better alternatives. 

4/12: Still a D- grade

When asked six basic questions about topics such as setting aside emergency savings and paying off student loans, freshmen at four-year colleges could only answer about two, on average.

4/12: Disability insurance

research shows that over 95 percent of disabilities are not work related; therefore workers’ compensation cannot be used. Here are what consumers tend to believe and the real facts:

  • 37% have never thought about how they would protect their income if they got sick or hurt.
  • Approximately 42% believe that they just need their sick leave and vacation days if disability were to strike.
  • Their own “personal odds” of becoming disabled are 1 in 100, when in fact 1 in every 4 Americans in the workforce will become disabled.
  • “Cancer is the leading cause of disability.” In reality, Musculoskeletal/Connective Tissue Disorders are the leading cause of disability at 28%, while cancer is the second leading cause at 15%.

4/12: High yield bonds
There are two kinds of high-yield bonds: those that originated as high-yield bonds and fallen angels, which were originally investment grade bonds. Relative to the broad high-yield bond market, fallen angels have had historically higher average credit quality and higher risk-adjusted returns.

4/9: U.S. Housing Market Tracker

Great charts

4/9: John Hussman

  • The U.S. has become a nation preoccupied with consumption over investment; outsourcing its jobs, hollowing out its middle class, and accumulating increasing debt burdens to do so.
  • U.S. wages and salaries have plunged to the lowest share of GDP in history, while the civilian labor force participation rate has dropped to levels not seen since the 1970’s. Yet consumption as a share of GDP is near a record high. This gap between income and expenses has been financed by debt accumulation, encouraged by the Federal Reserve’s policy of zero interest rates, and enabled by fiscal policies that prioritize income replacement rather than targeted spending and investment.
  • Since December 1999, total civilian employment among individuals 55 years of age and older has increased by 15.3 million jobs. Yet total civilian employment – including those over 55 – has grown by only 13.8 million jobs. This means exactly what you think: outside of workers 55 years of age and older, Americans of working age have 1.5 million fewer jobs today than 15 years ago.
  • There are now more than 46 million Americans on food stamps, with SNAP (Supplemental Nutrition Assistance Program) expenditures increasing five-fold since 2000.
  • While transfer payments and entitlements have increased, government consumption and investment as a share of GDP have declined to near the lowest levels in history. In effect, fiscal policy has been heavily biased toward income replacement, but has otherwise been a deer in the headlights in the face of repeated economic crisis. While the contribution of private investment has slowed to a crawl, fiscal policy – except for transfer payments – has actually been in retreat.
  • In the investment sector, real gross private domestic investment has grown at a rate of just 1.5% annually since 1999 (versus a 4.7% real annual rate in prior decades), with growth of just 1% annually over the past decade. Yet while real capital accumulation in the U.S. has weakened, corporate profit margins have never been higher.
  • In an economy where wages and salaries are depressed, but government transfer payments and increasing household debt allow households to bridge the gap and consume beyond their incomes, companies can sell their output without being constrained by the fact that households can’t actually afford it out of the labor income they earn. Meanwhile, our trading partners are more than happy to pursue mercantilist-like policies; exporting cheap foreign goods to U.S. consumers, and recycling the income by lending it back to the U.S. in order to finance that consumption.
  • Debt-financed consumption, while it proceeds unhindered, is a central driver of elevated corporate profits. Unusually elevated corporate profits (a surplus) are largely a mirror image of unusually large deficits in the household and government sectors.
  • The most reliable stock market valuation measures (i.e. the measures that have a nearly 90% correlation with actual subsequent stock market returns) are those that explicitly take account of the level of profit margins and mute the impact of that variability. These measures suggest that the S&P 500 Index is likely to be lower a decade from now than it is today (though dividend income should bring the total return to about 1.5% annually).
  • Even if the Federal Reserve was to immediately reduce the monetary base by one-third (from nearly 24 cents of monetary base per dollar of GDP to a smaller 16 cents of monetary base per dollar of GDP), short term interest rates would still be zero.
  • Once we account for movements in the Federal funds rate that can be captured by a fairly simple linear policy rule such as the Taylor Rule, additional activist monetary policy (deviations from that rule) have effectively no ability to explain subsequent changes in GDP or employment. There is a strong economic justification for proposals that would require the Fed to outline Taylor-type policy guidelines, and to explain deviations from those guidelines. These proposals should be advocated by Republicans and Democrats alike.
  • Yield-seeking speculation promoted by the Federal Reserve caused the housing bubble and the resulting global financial crisis. A change in accounting rules by the Financial Accounting Standards Board in March 2009, not extraordinary monetary policy, is what ended that crisis.
  • The true Phillips Curve is a relationship between unemployment and real wage inflation, it cannot be usefully exploited by monetary policy, and it is the only version of the Phillips Curve that actually exists in empirical data. Pursuing general price inflation does not somehow “buy” more jobs. It also does not raise real wages. It lowers them

4/9: LTC- Seventy percent of consumers over the age of 65 will need long term care (LTC) at some point in their lifetime.
EFM: Note that it does NOT say nursing home- just inferring help with at least 2 ADLs.

4/9: IMF
Most of the world’s leading economies should prepare for a prolonged period of lower growth rates, which would make it harder for governments and companies to bring down their debt levels

The findings, included in one of the analytical chapters of the IMF’s twice-yearly World Economic Outlook, mean that living standards — particularly in the developing world — could grow more slowly than they did before 2008.

They also show that the global financial crisis was worse than previous episodes of turmoil and could have permanently lowered the rate at which economies can expand, rather than only having a one-off effect.

The IMF says that the slowdown in the growth of potential output — or the level of output consistent with stable inflation — has roots going back beyond the 2008 slump. These include an ageing population and a slowdown in the rate of productivity growth in emerging markets.

China, in particular, could see a sharp contraction in the growth of potential output, as it tries to rebalance its economy away from investment and towards consumption.

Growth in potential output in the rich world will be 1.6 per cent a year between 2015 and 2020, the IMF forecasts. This is marginally higher than the rate of expansion in the past seven years, but significantly lower than growth rates before the slump, when potential output expanded at 2.25 per cent a year.

Emerging markets will find it harder to rebuild budget surpluses, which are essential to boosting government spending and cutting taxes during future slowdowns

The slowdown for emerging markets is set to be even sharper. Potential output, which continued to expand in the run-up to the crisis, is set to decline from 6.5 per cent a year between 2008 and 2014 to 5.2 per cent in the next five years.

4/8: Disability info only

Graded Benefit Disability Insurance Plan.  The new product is designed to provide comprehensive own-occupation disability insurance to those whose health concerns traditionally preclude them from acquiring any disability insurance or at the very least DI without medical exclusions.     

Plan Features

·                 Covers 65% of income up to $20,000 per month

·                Elimination periods of 60, 90, 180 or 365 days

·                Benefit periods of 36, 48 or 60 months

·                Benefit levels of 50%, 65% or 80%

·                Benefit levels remain constant from day one of the policy

·                Own occupation including specialties

·                Residual and COLA riders

·                Consideration of the removal of additional medical exclusions!

Conditions Considered For Coverage

  • Addison’s Disease
  • Aneurysm 
  • Angina 
  • Angioplasty
  • Ankylosing Spondylitis
  • Anxiety 
  • Aplastic Anemia
  • Arteriosclerosis 
  • Attempted Suicide
  • Cancer 
  • Cardiomegaly 
  • Cerebral palsy
  • Chronic Fatigue Syndrome
  • COPD 
  • Coronary Artery Disease
  • Crohn’s Disease
  • Diabetes
  • Elevated Liver Enzymes
  • Epilepsy 
  • Factor V Leiden
  • Fibromyalgia
  • Gastric Bypass 
  • Heart Attack
  • Heart Bypass
  • Heart Valve Replacement
  • Heart Murmurs
  • Hepatitis 
  • Hodgkin’s Disease
  • Idiopathic Thrombocytopenia
  • IGA Nephropathy
  • Kidney Transplant
  • Lupus, Discoid
  • Meniere’s Disease
  • Multiple Sclerosis
  • Narcolepsy 
  • Obesity
  • Osteomyelitis 
  • Pacemakers 
  • Pancreatitis 
  • Paraplegic 
  • Peripheral Vascular Disease
  • Poliomyelitis 
  • Psoriatic Arthritis
  • Rheumatic Heart Disease
  • Rheumatoid Arthritis
  • Sarcoidosis  
  • Sleep Apnea
  • Stroke
  • Tourette’s Syndrome
  • Tuberculosis 
  • Ulcerative Colitis
  • . . . . and more!


An explanation of life settlements (Financial Advisor)

Financial Advisor notes a life settlement says "an existing life insurance policy can be sold to a third party for more than the cash surrender value but less than the death benefit." Interestingly, a survey of 200 advisors showed 40% were completely unaware such a policy existed, or had heard of it but didn't understand its use. On the other end of the spectrum, only 11% of those surveyed had advised a client on such a policy. 

4/8: Reverse Mortgages- also has calculators to help figure out the amount available.

Disadvantages of a Reverse Mortgage include:

  • High Fees: The upfront fees (closing and insurance costs and origination fees) for a Reverse Mortgage are considered by many to be somewhat high – marginally higher than the costs charged for refinancing for example. However, the fees are financed by the Reverse Mortgage itself so nothing is paid out of pocket. Furthermore, recent changes to the HECM Reverse Mortgage reduced some of the fees.

    For more information on the fees charged on Reverse Mortgages, consult the Reverse Mortgage rates and fees article.

    Also, if fees concern you, try talking to multiple Reverse Mortgage lenders – you may find a better deal from one over another.

  • Accumulating Interest: There are no monthly payments on a Reverse Mortgage. As such, the loan amount – the amount you will eventually have to pay back -- grows larger over time. Every month, the amount of interest you will eventually owe increases – it accumulates. However, the amount you owe on the loan will never exceed the value of the home when the loan becomes due.

    Most Reverse Mortgage borrowers appreciate that you don’t have to make monthly payments and that all interest and fees are financed into the loan. These features can be seen as disadvantages, but they are also huge advantages for those who want to stay in their home and improve their immediate finances.

  • Not Enough Cash Can Be Tapped: If you have a lot of home equity, you might be frustrated that a Reverse Mortgage only enables you to use some of it. The HECM loan limit is currently set at $625,500. However, your actual loan amount is determined by a calculation that uses the appraised value of your home, the amount of money you owe on the home, your age and current interest rates.

  • It’s Complicated: A Reverse Mortgage is a mortgage in reverse – that can be hard to get your head around. With a traditional mortgage you borrow money up front and pay down the loan down over time. A Reverse Mortgage is the opposite – you accumulate the loan over time and pay it all back when you are no longer living in the home.

    The basics of Reverse Mortgages can seem so foreign to people that it has actually taken many financial advisors and personal finance gurus some time to understand the product. Many experts shunned the product early on thinking that it was a bad deal for seniors – but as they have learned about the details of Reverse Mortgages, experts are now embracing it as a valuable financial planning tool.

Advantages of a Reverse Mortgage

The main advantage of Reverse Mortgages is that you can eliminate your traditional mortgage payments and/or access your home equity while still owning and living in your home. Given the right set of circumstances, a Reverse Mortgage can be an ideal way to increase your spending power and financial security in retirement.

Key advantages and benefits of Reverse Mortgages include:

  • Stay in Your Home and Improve Your Immediate Finances: The key to a Reverse Mortgage is that it enables you to live in your home for as long as you want with absolutely no monthly mortgage payments and – in many cases – you can also get access to money to use for any purpose.

  • Flexibility: The Reverse Mortgage is a tremendously flexible product that can be utilized in a variety of ways for a variety of different types of borrowers. Households who have a financial need can tailor the product to de stress their finances. Households with adequate resources might consider the product as a financial planning tool.

  • Low Risk of Default: Unlike a home equity loan, with a Reverse Home Mortgage your home can not be taken from you for reasons of non-payment – there are no payments on the loan until you permanently leave the home. However, you must continue to pay for upkeep and taxes and insurance on your home. (Furthermore, you may be subject to foreclosure if you live somewhere other than the home longer than allowed by the loan agreement.)

    The Reverse Mortgage Lenders have no claim on your income or other assets.

  • No Downside: With a Reverse Mortgage you will never owe more than your home's value at the time the loan is repaid, even if the Reverse Mortgage lenders have paid you more money than the value of the home. This is a particularly useful advantage if you secure a Reverse Mortgage and then home price declines.

  • Tax Free: As a Reverse Mortgage is a loan, the money from it is typically tax-free, whether you receive it as fixed income or in a lump sum.

  • No Restrictions: How you use the funds from a Reverse Mortgage is up to you - go traveling, get a hearing aid, purchase long term care insurance, pay for your children’s college education, or simply leave it sitting for a rainy day - anything goes.

  • Flexible Payment Options: Depending on the type of loan you choose, you can receive the Reverse Mortgage loan money in the form of a lump sum, annuity, credit line or some combination of the above.

  • Home Ownership: With a Reverse Mortgage, you retain home ownership and the ability to live in your home. As such you are still required to keep up insurance, property taxes and maintenance for your home.

  • Guaranteed Place to Live: You can live in your home for as long as you want when you secure a Reverse Mortgage.

  • Federally Insured: The Home Equity Conversion Mortgages (HECM) is the most widely available Reverse Mortgage. It is managed by the Department of Housing and Urban Affairs and is federally insured. This is important since even if your Reverse Mortgage lender defaults, you'll still receive your payments.

  • Can Increase Your Wealth: Depending on your circumstances, there are a variety of ways that a Reverse Mortgage can increase your wealth. Some financial planners are recommending Reverse Mortgages to:

    • Preserve and increase the value of your home equity: If you take your loan amount as a Home Equity Line of Credit, then this money accrues interest – the bank pays you interest. This locks in a portion of the value of your home equity and might grow it faster or more certainly than increasing real estate values.
    • Maximize wealth: Personal finance can be complicated. You want to maximize returns and minimize losses. A Reverse Mortgage can be one of the levers you use to maximize your overall wealth.

Beyond Advantages and Disadvantages, Reverse Mortgages Are Not for Everyone

While the following are not strictly disadvantages, it is important to remember that a Reverse Mortgage may not be for everyone, consider the following:

  • Beware if You are Eligible for Low-Income Assistance: If you are currently or will be eligible to receive low-income assistance from the Federal or State government (like Medicaid), you will want to be careful that income from a Reverse Mortgage does not disqualify you from that assistance. (NOTE: Social Security and Medicare are not impacted by a Reverse Mortgage.)
  • Reconsider if You Are Planning to Move in the Near Term: Since a Reverse Home Mortgage loan is due if your home is no longer your primary residence and the up front closing costs are typically higher than other loans, it is not a good tool for those than plan to move soon to another residence.
  • Evaluate if You are Willing to Reduce Your Heirs Inheritance: Many people dismiss a Reverse Mortgage as a retirement option because they want to be sure their home goes to their heirs. And it is true, a Reverse Mortgage decreases your home equity - affecting your estate. However, you can still leave your home to your heirs and they will have the option of keeping the home and refinancing or paying off the mortgage or selling the home if the home is worth more than the amount owed on it. There are numerous potential Estate and Retirement Planning benefits to a Reverse Mortgage - see Innovative Uses of a Reverse Mortgage for more information on these options.

What Do You Think? Do the Advantages Outweigh the Disadvantages?

Studies indicate that more than 90 percent of all households who have secured a Reverse Mortgage are extremely happy that they got the loan. People say that they have less stress and feel freer to live the life they want.

Learn more about the fees associated with a Reverse Mortgage or instantly estimate your Reverse Mortgage loan amount with the Reverse Mortgage Calculator.

4/8: Flood Insurance

As of April 1, new rates took effect under the National Flood Insurance Program that increase individual policy premiums for homeowners in high-risk areas by as much as 25 percent. Plus, policyholders will see new surcharges, $25 for owner-occupied primary homes and $250 for second homes.

Standard homeowners’ insurance policies don’t cover flood damage, so consumers must buy special coverage to add that protection. The average premium for flood insurance is $650 a year, according to the federal flood insurance program. But rates for some properties in high-risk areas can be much higher. About 5.2 million people have flood insurance policies, and the premium increases will affect about one million of them

over the last decade — in part because of disastrous hurricanes like Katrina and Sandy — the program has fallen billions of dollars into debt. In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act to phase out federal discounts for policies in high-risk areas. But last year, Congress passed the owner Flood Insurance Affordability Act, which slows the impact of rate increases for many policies.


What is Hospice?
By Jon Radulovic MA

Hospice seeks to “de-institutionalize” the dying experience and provide a more humane system of care for those who have received a terminal diagnosis of six months or less. The first hospice program in this country was opened in New Haven, Connecticut in 1972; this was based on the Hospice Model of Care developed by Dame Cicely Saunders at St. Christopher’s Hospice in Great Britain. Currently, there are over 3,000 hospices in the United States and Puerto Rico.

Hospice is a concept of caring that brings comfort and support to people facing a terminal illness, and to their families. Hospice addresses all the symptoms of the disease with special emphasis on controlling pain and discomfort, allowing the patient and family to focus on maintaining quality of life. Hospice also deals with the emotional, social and spiritual impact of the disease on the patient, the patient’s family, and significant others. Hospice care brings this comfort and support directly into the family’s home enabling the patient to spend his or her final days in a familiar and loving environment.

A hospice team consists of physicians, nurses, aides, social workers, spiritual care givers, counselors, therapists, and volunteers – all of whom are specially trained to provide pain and symptom management for the patient and support for the family or other intimate network. Physicians who have been active in the patient’s care are encouraged to be part of this interdisciplinary team.

Because each person’s needs are unique, the hospice team works with the patient and family to develop a personalized care plan which ensures that the patient and family are at the center of all decision making. Always, the focus is on controlling pain, managing symptoms, and providing comfort, dignity and quality of life.

A unique characteristic of hospice care is the availability of bereavement resources that are an integral part of the hospice philosophy. Hospices have trained professionals working to assist the patient and family with the many aspects of grief which are present during the illness and then continue to provide bereavement services to the family for at least one year following the death. Their experience and understanding of the issues relating to grief, loss, and bereavement have led many hospices to serve as bereavement resources for their local community. Many hospices have support groups and other bereavement services available to serve people in need that have not been hospice clients.

Hospice Facts

Hospice is an aggressive medical choice that focuses on symptom management, comfort, dignity, and quality of life. Hospice neither lengthens life nor hastens death.

Whenever possible, patients are cared for in their own, or a family member’s, home. However, many hospices have facilities that provide the same care for hospice patients and their support networks. Hospice care is also available in nursing homes and other assisted living settings.

Hospice workers provide the patient and family with information and opportunities to participate in the decision making process.

Data shows that hospice care is less costly than care in a hospital.

The Medicare Hospice Benefit covers 100% of hospice services. Many private insurance plans, HMO’s, and Medicaid in many states also offer hospice benefits.

Bereavement care and resources are available to the family for at least one year; no other healthcare delivery system offers such support.

The patient, family, and/or physician can initiate an information/referral call or visit as soon as a terminal disease is diagnosed, or at the time a patient decides to move from a treatment plan focused on curing the disease to a plan focused on providing comfort and pain relief.


Top 10 Fitness and Nutrition Tips for Older Adults

By Peggy Buchanan

Today’s adults are living longer, healthier lives due in part to better fitness and nutrition programs. With the number of Americans 65+ expected to reach 20 percent of the U.S. population by 2050, exercise and diet are more important than ever. These tips can help older adults enhance overall wellness into their later years.

  1. Fight afternoon fatigue – Fatigue is a common problem among older adults, especially after lunch. Having a glass of water and a high-antioxidant food like a prune can revitalize the body and stimulate the mind.
  2. Exercise from the neck up – Keeping the brain active and fit is imperative to the health of older adults. Not only does it stave off memory-loss illnesses like Alzheimer’s and dementia, but it also fosters executive function. Try word games and recall exercises. For example, find five red objects during a walk in the neighborhood and recall them when back home.
  3. Pole walk – Walking poles allow for more balanced mobility than walkers or canes. Walking with poles engages the muscles of the upper torso, which increases upper-body strength and cardiovascular endurance. Consult a physician before making the switch to poles.
  4. Dine in duos – Those who share meals with others eat less than those who eat alone. This is an easy weight-loss tactic and one that fosters social interaction and engagement. While this is easy for those aging in community, older adults aging at home can plan to have meals with family or friends at least several times a week.
  5. Break routine – Routine limits brain stimulation. Introduce new foods or new ways of eating the same food. For example, replace canned peaches with freshly sliced ones. Also, try taking a different route to the grocery store or shopping center.
  6. Sole Support – As people age, the fat pads on the bottom of their feet compress, creating fatigue and pain. Consider wearing supportive shoes or inserting foot pads for better stability and comfort, wearing socks that have extra padding, and using a wicking agent to keep feet dry and comfortable.
  7. Fats: Out with the bad, in with the good – Older adults with an increased genetic risk for dementia can reduce the risk by increasing the amount of Omega-3 fatty acids in their diet. These fatty acids, found in fish, nuts, olive oil and green leafy vegetables, can reduce brain inflammation, a possible cause of Alzheimer’s disease.
  8. Decrease salt and increase your salsa – High blood pressure, which can lead to strokes and a significant decline in cognitive function, often increases with age. As adults get older, the sense of taste also fades, leading to a desire for more salt on food to enhance flavor. Decreasing salt intake by putting down the shaker – and increasing exercise habits by shaking to a salsa beat – will enhance cardio and cognitive health.
  9. Balancing act – In addition to exercises that build strength and improve flexibility and cardiovascular endurance, make sure to add balance activities to the daily routine. Good balance requires maintaining a center of gravity over the base of support. Tai chi, yoga, walking on challenging surfaces and water exercises all enhance overall balance. 
  10. Dance like there’s no tomorrow – Older adults getting regular physical exercise are 60 percent less likely to get dementia. Exercise increases oxygen to the brain and releases a protein that strengthens cells and neurons. Dance involves all of the above plus the cerebral activity present in learning and memory.

4/7: The amount of oil being shipped by rail has increased 50-fold since 2010
Rarely will you see numbers like that. But there are risks.


Analysts say that while emerging markets have been the setting for several recent financial squalls, the current exodus of capital could herald more fundamental changes. Indeed, although the “taper tantrum” of mid-2013 — triggered by the US Federal Reserve signalling its intention to unwind its monetary stimulus — caused turmoil in financial markets, its impact on real emerging market economies was transitory.

This time around, though, things look more serious. The International Monetary Fund said this week that total foreign currency reserves held by emerging markets in 2014 — a key indicator of capital flows — suffered their first annual decline since records began in 1995.

EFM- very few things have to make sense now- if they ever did.

4/7: Two-thirds of Americans have seen their long-term saving and retirement plans disrupted

4/7: 401k

Americans like to think of themselves as financially astute, but 90 percent of those under 50 have no idea how much money they’re allowed to add to their 401(k)s.
Sixty percent of respondents believe themselves to be up on financial matters, but their other answers belie that evaluation.
EFM- I bet that 90% of them were men. And I bet that 99% of them lost a bunch of money in 2000 and 2008. 

4/6: Risk, reward, diversification   

Ben Hunt. Not for novices

4/6: Investment outlook Bill Gross
Tough stuff........................


How to Better Afford Assisted Living

Arranging senior living can be challenging, emotionally taxing, and expensive, particularly when a person requires senior living with personal care, such as an assisted living community, residential care home or memory care provider.

“For family members seeking a place for a loved one,” says Tom L. who worked with A Place for Mom, “it can be a difficult time emotionally and mentally.” Add to that the ever-rising costs of senior care —and the average monthly assisted living rent — and the situation can go from difficult to overwhelming.

For the countless families caught in the gap between being able to pay for senior care out of pocket and, at the other end of the spectrum, having low enough income and assets to qualify for Medicaid, finding affordable assisted living may seem like an impossible dilemma. But don’t lose heart—there are plenty of strategies that can help you fit quality senior care into your budget.

1. Plan Ahead and Do Your Research

Give yourself and your senior loved ones enough time to evaluate senior care facilities before they move in. If you’ve got your eye on a specific location, join the waiting list. If you wait until the last minute, you may end up having to pay for a facility that’s at the high end of your budget — or that doesn’t meet your needs.

2. Get It Right the First Time

If you have to move your loved one several times until you get the right fit, you’ll end up spending more money. Instead, do your due diligence: visit locations multiple times, check their licensing, talk to the local long-term care ombudsman, and have an attorney review the contract. Use this assisted living checklist to help you find the right match.

3. Ask About Price Flexibility

The official cost of assisted living facilities may not be set in stone — ask about move-in incentives, and whether they might be willing to negotiate the monthly price.

4. Consider a Different Location

As with other types of housing, the cost of assisted living varies by location.

“In our initial search as a family, we hadn’t even considered looking out of state even though [the community we ended up choosing is] very close in proximity for many of my siblings,” said one A Place for Mom user. Suburbs or outlying communities may be more affordable, so be flexible enough to look outside your zip code or ideal location.

5. Compare A La Carte Costs with Inclusive Pricing

Some assisted living facilities offer a sort of “a la carte” menu, making it possible to choose some services but take care of others yourself. Family members or volunteer services may be able to fill in the gaps in a more cost-effective way. Bear in mind, though, that for some families an all-inclusive option might be more affordable, especially in some geographic areas where the cost of living is higher.

6. Consider Long-Term Care Insurance

For those unable to pay for assisted living out of pocket, private insurance, Medicare or Medicaid may help—but these services generally don’t pay for everything. Long-term care insurance can address that gap.

7. Share a Room

In many types of senior living, a shared space is more cost-effective than a single room or apartment. Check on the costs for shared vs. individual rooms.

8. Explore Veterans’ Benefits

If your loved one or his or her spouse has served in the armed forces, they may be eligible for benefits through the Department of Veteran Affairs to offset the cost of senior care.

9. Compare Care Types

What type of care is most appropriate for your loved one? Maybe you don’t need the added cost of assisted living—independent living, for instance, might better suit your budget and your requirements. Check our senior care cost calculator to compare the cost of living at home to assisted living expenses.

10. Get Personalized Advice

Making a final decision about elder care can be difficult, and sometimes having a knowledgeable advisor can help. Here’s just one example from our APFM community:

“I had gathered a significant amount of data (e.g., room prices, community fees, waiting list, etc.) which was overwhelming. I asked Hollis if she could pull it all together and she provided to me with a matrix of that information.  That was the key for us, as a family, in making a decision where to place my mom.”


The average American household's income declined for a second year in a row, the data from the Bureau of Labor Statistics show, down 0.9 percent to $64,432. The wealthiest fifth of Americans were an exception, as their incomes increased by 0.9 percent. Among the poorest fifth, by contrast, incomes declined by 3.5 percent.

4/5: Active versus passive
As of Aug. 31, actively managed funds held $9.87 trillion and passive funds were at $3.98 trillion

4/5: This is going down but the consumer confidence has soared.


This reader seems to know what  he is talking about:

an article written by a reporter who has no clue how the oil business actually works. Venezuelan super heavy crude is the dirtiest by far in the world and very difficult to refine. It is so think they have to inject steam into wells to heat it enough to flow and then keep it hot to transport it to process facilities that did a first step refining it to clean it up and break down some of the tar into lighter oil. The oil tankers have to keep the oil warm or it will solidify in the ships and require days of heating just to unload. Refineries have to heat the oil in storage as well. The refineries that can process it are twice as expensive ($ billions per refinery) to build and yield less useful products to sell. The US government policy pushed the industry to use Venezuelan oil and the reality is 60% of the refineries that can process it are in the US. Even China is not building any to take the Latin goo.

But the refineries are not bound to the Venezuelan oil. The first competition came form Africa and the Mexico. But the real killer is the Canadian Heavy from the oil sands which is much easier to handle. US refineries are struggling to meet EPA rules with the Latin goo and are facing massive costs to upgrade. BUT they found they easily meet it with the Canadian heavy and that is driving the problems for Venezuela. The Keystone XL pipeline capacity of 880,000 barrels just happens to align with the 840,000 barrels per day imported from Venezuela and it is not a coincidence. The Venezuelans had Citgo up for sale but the only offer on the table was a Canadian group who wanted to switch the company to the Canadian heavy crude. Reports out of Houston indicate there is a $20 per barrel refining cost advantage for the Canadian heavy plus major savings from EPA compliance. That is a huge cost issue. With 80% of Venezuela' foreign earnings coming from US oil sales, the Keystone XL is the means to put the socialist government down. And Obama's delays and rejection of the Keystone is directly tied to this fact. He is supporting the socialists in Venezuela by blocking the Keystone. Unfortunately for them, the Canadian oil is till flowing and will continue to take market away from the Latins who can not sell it to anyone else


Older Adults and Alcohol

A national 2008 survey found that about 40 percent of adults ages 65 and older drink alcohol. Older adults can experience a variety of problems from drinking alcohol, especially those who:

• Take certain medications
• Have health problems
• Drink heavily

There are special considerations facing older adults who drink, including:

Increased Sensitivity to Alcohol
Aging can lower the body’s tolerance for alcohol. Older adults generally experience the effects of alcohol more quickly than when they were younger. This puts older adults at higher risks for falls, car crashes, and other unintentional injuries that may result from drinking.

Increased Health Problems
Certain health problems are common in older adults. Heavy drinking can make these problems worse, including:

• Diabetes
• High blood pressure
• Congestive heart failure
• Liver problems
• Osteoporosis
• Memory problems
• Mood disorders

Bad Interactions with Medications
Many prescription and over-the-counter medications, as well as herbal remedies can be dangerous or even deadly when mixed with alcohol. Medications that can interact badly with alcohol include:

• Aspirin
• Acetaminophen
• Cold and allergy medicine
• Cough syrup
• Sleeping pills
• Pain medication
• Anxiety or depression medicine

Drinking Guidelines for Older Adults
Adults over age 65 who are healthy and do not take medications should not have more than:

• 3 drinks on a given day
• 7 drinks in a week

Drinking more than these amounts puts people at risk of serious alcohol problems.

If you have a health problem or take certain medications, you may need to drink less or not at all.


US credit conditions are at recessionary levels (Advisor Perspectives)

The Credit Managers Index has seen notable weakness at the start of 2015, and is now at levels last seen in 2008. The report says, "The rejections of credit applications fell out of the 50s with a resounding thud — going from 50.3 to 43.8. There is most definitely a credit crunch underway and it is now easy to determine what the prime factor is. There are many companies seeking credit that are too weak and there is obviously an abundance of caution showing up in those that issue that credit.” Alexander Giryavets of Dynamika Capital notes, "The speed of deterioration is shocking."

4/5: 2015 LTC Study  For planning students and seasoned planners; attorneys; CPAs etc. You have to read this.

4/3 Financial literacy by state. 




4/1" Mauldin

Presuppositions (we all have them) are at the heart of all sorts of irrational behavior that we are learning about from the growing understanding of behavioral economics. Not only can we demonstrate that humans are irrational, we are predictably irrational. That irrationality was actually bred into us when we were a young species, dodging lions and chasing antelopes on the African savanna. But what were useful survival traits two million years ago can now be problematic in modern society. Our presuppositions can lead us to errors in investing and cause all sorts of societal problems. Bluntly put, presuppositions can come seemingly out of nowhere and bite you on the ass.

4/1: ETF

The five primary legal structures used with ETFs are:

1) Open-End Investment Company

2) Unsecured Debt Instrument (ETN)

3) Partnership

4) Grantor Trust

5) Unit Investment Trust (UIT) 

While there is a sixth structure, because it only applies to one ETF, we'll bypass it. The following graph provides a breakdown of the five legal structures as measured by the number of ETFs in each. For example, the most common is the open-end investment company, which is utilized by more than 82% of all ETFs. 

Morningstar lists a total of 1,648 ETFs, and based on its data, the numerical breakdown by structure is as follows:

  • open-end investment company (1,356)
  • unsecured debt instrument or ETN (208)
  • partnership (54); grantor trust (20)
  • unit investment trust or UIT (8)

1) Open-End Investment Companies

As mentioned, the great majority of ETFs are structured as open-end investment companies, a structure that offers the greatest flexibility and, in many respects, makes an ETF function like a mutual fund. Two providers dominate in this structure: nine of the largest 16 and 13 of the largest 25 ETFs with this structure are from Blackrock (iShares), while Vanguard offers seven of the top 16 and 10 of the largest 25. Together, these companies are responsible for 23 of the 25 largest ETFs using this structure. The largest fund with this structure is iShares Core S&P 500 (IVV) with assets exceeding $67.8 billion. Open-end investment companies are registered under the Investment Company Act of 1940.

2) Unsecured Debt Instrument (ETN)

More commonly known as an exchange-traded note or ETN, this is the second most common legal structure. ETNs are issued by banks and are treated as a debt instrument; rhe first was launched in 2006. Assets in an ETN are subject to the claims and creditors of the issuing bank. In other words, if the issuing bank filed for protection under the bankruptcy code or if it ceased to operate for any reason, all funds invested in the ETN at that time would be at risk.

Approximately 50% of ETNs with this structure are established to track the performance of a currency or commodity index. The largest fund with this structure is the J.P. Morgan Alerian MLP ETN (AMJ) with $5.5 billion in assets.

Investments with this structure are registered under the Securities Act of 1933. 

3) Partnership

ETFs structured as a partnership comprise the third largest group, again based on the number of funds utilizing the structure. Similar to ETNs, the majority of the ETFs in this group are established to track currencies or commodities. The largest fund under this structure is PowerShares DB Commodity Tracking ETF (DBC) with nearly $3.8 billion under management.

ETFs with this structure are registered under the Securities Act of 1933. 

4) Grantor Trust

According to Morningstar data, every ETF with the legal structure of a grantor trust is in the currency or commodity category. The largest fund with this structure is the well known SPDR Gold Shares (GLD) with $31.3 billion. The second largest is also a gold ETF, the iShares Gold Trust (IAU) with $6.8 billion.

These ETFs are registered under the Securities Act of 1933. 

5) Unit Investment Trusts (UIT)

In a UIT designed to track an index, the fund manager is required to own every security in the underlying index. This differs from an ETN where the manager does not buy the actual securities. The largest ETF in this structure is also the first ETF created: the SPDR S&P 500 ETF (SPY) with over $184.0 billion. This is followed by another well-known ETF, the PowerShares QQQ ETF (QQQ) with $37.1 billion.

ETFs structured as a UIT are registered under the Securities Act of 1940.

3/31: Assisted suicide
Give states have legalized assisted suicide: Oregon, Montana, Washington, Vermont and most recently, New Mexico. Similar bills have been introduced in 21 other states.


3/31: Health coverage

3/31: Assisted living wait lists

Imagine you have been caring for your elderly mother at home, but her needs have progressed to the point that she requires professional 24-hour care at assisted living. You’ve done a good deal of research over the past year and even chosen a senior community in your neighborhood that meets your budget. But when you contact the community you learn that they have a three-month wait list. Your mother needs care now, and you’re back to square one.

1. Assisted Living Communities Have Limited Availability

As of 2013, assisted living communities across the nation had an 89% occupancy rate according the National Investment Center. This means that there is a good chance that your preferred community is full. Westermann estimates that 35–45% of senior living communities are fully occupied or nearly full.

2. Wait Lists Require Deposits

Most senior communities require payment to be added to a wait list. Fortunately, most community wait list deposits are fully refundable at any time. The cost of the deposit can vary significantly between communities. Westermann says he has “seen wait list deposits range from $250–$2,000 for independent living, assisted living and memory care.”

3. Not All Wait List Policies Are the Same

Westermann stresses that families should understand the deposit process when they are shopping for assisted living or memory care due to immediate need. Some communities will hold a specific apartment 15–30 days for a family that has made a refundable deposit. Other communities may offer “first right of refusal.”

A first right of refusal occurs when a second family becomes interested in an apartment the first family has already deposited on. The community normally gives the first family at least 24 hours to elect if they want to take an apartment. If the family elects to not take the apartment they can change their first right of refusal to a different apartment or keep their position on the wait list for the next available apartment.

Make sure to speak with a staff member at your preferred community if you have questions about their wait list policy.

4. You Can Reserve Your Favorite Apartment Suite

Wait lists allow consumers to reserve their first choice apartment suite without making a commitment. Families can use these policies to acquire the most desirable suite or room while giving themselves ample time to learn more about the community and research other options. Westermann explains, “Check to see if a wait list deposit is fully refundable at your chosen community. If it is, use this option to your advantage. Place a deposit on the exact apartment size, style, floor and view that you desire. When it becomes available you will get a call, and if you aren’t ready, you can hold that same position on the wait list. If something happens and you don’t plan on moving, the community will mail the check back to you in 30 days or so.”

5. Some Communities Have Internal Wait Lists for Special Care

Many assisted living communities also offer memory care for residents who have moderate to advanced Alzheimer’s disease and other types of dementia. Memory care is typically provided in a special, dedicated area at the community. This allows residents with dementia to graduate from assisted living to higher levels of care without having to move to a completely new community.

3/31: Anosognosia

A Definition of Anosognosia

It is a scary thought to consider. What if we were ill, suffering from dementia, and didn’t know it? How would our loved ones cope?

In fact, it is very difficult for caregivers and family members to make progress with a person’s illness when a loved one is showing signs of anosognosia. Yet, the condition is alarmingly common: After stroke, some studies show up to 77% of patients suffer anosognosia at least temporarily, reports one review of the literature.

It occurs frequently in those with mental illness, according to the Treatment Advocacy Center, and can also affect people who have suffered traumatic brain injury, as well as people with Alzheimer’s and other types of dementia.

What Causes Anosognosia?

Anosognosia is still difficult to define, but researchers know it results from physical, anatomical changes or damage to the part of the brain that affects perception of one’s own illness.

Anosognosia and Alzheimer’s

Anosognosia has long been recognized in individuals with strokes, brain tumors, Alzheimer’s and Huntington’s disease, says the Treatment Advocacy Center.  According to the University of Florida’s health resource AlzOnline, the prevalence of anosognosia in those with cognitive impairment or dementia can be very high.

Some researchers have estimated that as many as 60% of people with Mild Cognitive Impairment and 81% of people with Alzheimer’s disease have some form of anosognosia.”

To make the situation even more challenging, anosognosia may be complete or selective. They may be entirely unaware of their impairment for instance, or they may even react with anger and defensiveness if confronted about their illness. This makes it difficult to diagnose anosognosia, and tough to differentiate it from simple denial.

Here are some signs you can look for if you’re worried a loved one might have dementia with anosognosia:

  • Not keeping up with regular daily tasks or personal hygiene
  • Difficulty managing money or bills
  • Being more spontaneous or less inhibited in conversation without concern for their own behavior
  • Becoming angry when confronted with forgetfulness, lack of self-care, or poor decision making
  • Confabulation: making up answers they believe are true, though sometimes the details may be imaginary, may pertain to something that happened in the past, or even something they read or heard elsewhere

What You Can Do if a Loved One Doesn’t Know They Have Dementia

Whether your loved one is in denial of their dementia or has anosognosia, the most effective caregiver strategy is one of mitigation of the effects, rather than trying over and over to make the person understand. “Trying to make someone with this problem understand that they have changed and need to accept new limits often is an exercise in frustration,” says the New York Times. The Treatment Advocacy Center agrees: “Nobody wants to take medicine if they aren’t sick, and people with anosognosia are no exception.”

However, if not treated, a loved one could even put themselves and others in danger. AlzOnline has the following suggestions for your loved one  anosognosia:

  • Use positive approaches to communication: be gentle, encouraging and empathetic about necessary tasks
  • Provide a structured schedule of tasks, personal care and down time, and make yourself or another caregiver available to help
  • Downsize any responsibilities that are unnecessary: sometimes a home health care aide or memory care is the answer
  • Work together with the person on necessary tasks such as cleaning or money management
  • Stay calm and focused on the other person when voicing concerns: articulate your thoughts in a subtle and positive light

Lastly, try some recommended reading: I Am Not Sick. I Don’t Need Help! by psychologist Xavier Amador, a professor at Columbia University, provides practical recommendations for those who lack insight into their mental illnesses.

3/30" End of Life Decisions   Good stuff

According to Medicare data, per-capita spending on patients in their final year of life is nearly four times higher than that of living Medicare beneficiaries. Medicare spending peaks at age 96 at $14,278 per person per year — unless, that is, those who died during the year are included. In that case, average spending jumps to $16,145

“The waning days of our lives are given over to treatments that addle our brains and sap our bodies for a sliver’s chance of benefit,” writes physician and best-selling author Atul Gawande in his recent book Being Mortal: Medicine and What Matters in the End. “These days are spent in institutions — nursing homes and intensive-care units — where regimented, anonymous routines cut us off from all the things that matter to us in life.”
 (Yes, it really sucks but unless you have lots of money.............)

3/30: Oink

A new comprehensive study published in The Lancet looks at the state of obesity around the world, and shares several grim observations, including that no country has managed to curb its the obesity epidemic. It also looks specifically at the prevalence of child and adolescent obesity, which has risen significantly around the globe in a matter of "less than one generation." That troubling ascent can be seen in the chart above, which shows the rising percentage of children who are overweight or obese in 9 distinct countries around the world.

The United States, as is often the case when addressing obesity, is the country that stands out. There is good news in America: Children in the United States, after all, are less likely to be overweight today than they were in the mid 2000s. But there is also bad news: American kids are still far more likely to be overweight than kids in most other countries. Much of that damage has been done over the past thirty years, during which the average weight of an American child has risen by more than 11 pounds, according to the researchers.

  1. How to lose money in derivatives: examples from hedge funds and bank trading departments




Bill Ziemba ; Sebastien Lleo

What makes futures hedge funds fail? The common ingredient is over betting and not being diversified in some bad scenarios that can lead to disaster. Once troubles arise, it is difficult to take the necessary actions that eliminate the problem. Moreover, many hedge fund operators tend not to make decisions to minimize losses but rather tend to bet more doubling up hoping to exit the problem with a profit. Incentives, including large fees on gains and minimal penalties for losses, push managers into such risky and reckless behavior. We discuss some specific ways losses occur. To illustrate, we discuss the specific cases of Long Term Capital Management, Niederhoffer’s hedge fund, Amaranth and Société Genéralé. In some cases, the failures lead to contagion in other hedge funds and financial institutions. We also list other hedge fund and bank trading failures with brief comments on them.

3/30: Wheeeeeeeeeeee

  1. Risk-taking with Other People’s Money




Kvaløy, Ola (UiS)
Eriksen, Kristoffer (UiS)
Luzuriaga , Miguel (UiS)


We present an experimental study on how people take risk with other people’s money. We use three different elicitation methods, and study how each subject makes decisions both on behalf of own money and on behalf of another individual’s money. We find that a majority of subjects make different decisions on behalf of others than on behalf of themselves. Approximately one third of the subjects increase risk-taking when it is on behalf of another subject, while one third reduces risk-taking. In sum, we find a weak tendency of lower risk-taking with other’s money compared with own money. We also find that subjects on average think that others are more risk averse than themselves. Moreover, subjects believe that other participants take less risk with their own money than with other people’s money.

3/30: 63.5   Antarctica May Have Just Set a Record for Its Hottest Day Ever

In short order, you can kiss off New Orleans, then parts of Florida, Carolinas, New Jersey and so on. You do not have to believe global warming, but man has had a part in this fiasco and it is too late to reverse. Learn how to swim

  1. Value-at-Risk in turbulence time




Genest, Benoit ; Cao, Zhili

Value-at-Risk (VaR) has been adopted as the cornerstone and common language of risk management by virtually all major financial institutions and regulators. However, this risk measure has failed to warn the market participants during the financial crisis. In this paper, we show this failure may come from the methodology that we use to calculate VaR and not necessarily for VaR measure itself. we compare two different methods for VaR calculation, 1. by assuming the normal distribution of portfolio return, 2. by using a bootstrap method in a nonparametric framework. The Empirical exercise is implemented on CAC40 index, and the results show us that the first method will underestimate the market risk - the failure of VaR measure occurs. Yet, the second method overcomes the shortcomings of the first method and provides results that pass the tests of VaR evaluation.


  1. Do Psychological Fallacies Influence Trading in Financial Markets? Evidence from the Foreign Exchange Market


Michael Bleaney (Department of Economics, Maastricht University)
Spiros Bougheas (University of Nottingham, School of Economics)
Zhiyong Li (University of Nottingham, School of Economics)


Research in both economics and psychology suggests that, when agents predict the next value of a random series, they frequently exhibit two types of biases, which are called the gambler’s fallacy (GF) and the hot hand fallacy (HHF). The gambler’s fallacy is to expect a negative correlation in a process which is in fact random. The hot hands fallacy is more or less the opposite of this – to believe that another heads is more likely after a run of heads. The evidence for these fallacies comes largely from situations where they are not punished (lotteries, casinos and laboratory experiments with random returns). In many real-world situations, such as in financial markets, succumbing to fallacies is costly, which gives an incentive to overcome them. The present study is based on high-frequency data from a market-maker in the foreign exchange market. Trading behaviour is only partly explained by the rational exploitation of past patterns in the data, but there is also evidence of the gambler’s fallacy: a tendency to sell the dollar after it has risen persistently or strongly.

3/30: Calculating Retirement Savings Needs by Age, Gender, and Chance of Success (PDF)
"Given [certain] assumptions ... a single male age 25 earning $40,000 with no previous savings would need a total contribution rate (employee and employer combined) of less than 3 percent per year until retirement (age [65] for a 50 percent chance of success. A 6.4 percent contribution rate would achieve a 75 percent success rate and a 14 percent contribution rate would achieve a 90 percent success rate. But if a male earning $40,000 were to wait until age 40 to begin saving, he would need a 6.5 percent total contribution rate for just a 50 percent chance of success and a 16.5 percent total contribution rate for a 75 percent chance of success; a 90 percent probability of success would be impossible even with a 25 percent contribution rate."

3/29: Interactive map

25 Counties With Lowest Mortality Rates

County Mortality Rate
1 Pitkin, Colo. 118.5
2 Summit, Colo. 121
3 Presidio, Texas 126.3
4 Mono, Calif. 148.5
5 Eagle, Colo. 148.7
6 San Miguel, Colo. 153.2
7 Custer, Colo. 163.9
8 Teton, Wyo. 164.1
9 Hartley, Texas 167
10 Douglas, Colo. 169.3
11 Fairfax, Va. 172.5
12 Ouray, Colo. 173.6
13 Aleutians West, Alaska 173.7
14 Loudoun, Va. 176.8
15 Morgan, Utah 177.8
16 Montgomery, Md. 178.9
17 Lincoln, S.D. 179.2
18 Summit, Utah 181.7
19 Sublette, Wyo. 183
20 Leelanau, Mich. 183.2
21 Marin, Calif. 185.3
22 Howard, Md. 190.1
23 Blaine, Idaho 191
24 Carver, Minn. 191.5
25 Los Alamos, N.M. 194

25 Counties With Highest Mortality Rates