Master Financial Education
Finance Planning Daily Commentary 2016
The  most intensive and extensive on the Web
E. F. Moody Jr.


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)

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

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

“in preparing for battle, I have always found that plans are useless but planning is indispensable.”

Dwight Eisenhower

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

Former Dallas Federal Reserve President Richard Fisher

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

Nassim Taleb

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

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


Uniform (Im)Prudent Investor Act- Waaaaaaaaaaaaaaaaaay Out of Date

World Clock by

2/4: Bill Gross
 A few things he finds wrong

“Capitalism does not function well, and profit growth is stunted, if short-term and long-term yields near the zero bound are low and the yield curve inappropriately flat,”

2/3: Smoke, smoke, smoke that...................joint

JAMA Internal Medicine confirms what many of us have suspected for some time: If you smoke a lot of weed — like a lot of it — it can potentially do permanent damage to your short-term memory.

The study found that people who smoked marijuana on a daily basis for a long period of time — five years or more — had poorer verbal memory in middle age than people who didn't smoke, or who smoked less. This association remained even after researchers controlled for a variety of other factors known to affect cognitive performance, including age, education, use of other substances and depression.

Among the 3,385 study subjects, only 311 (8 percent) had more than five marijuana-years of exposure. But many drug policy experts are concerned that legalizing marijuana and making it easier to get will cause rates of heavy, problematic use like this to rise.

Did you already forget what you read???? Shame.

2/3: Recession?

Deutsche Bank strategist David Bianco said the second-half of 2015 was “clearly a profit recession” for S&P 500 companies, and suggested it probably won’t be until the second half of this year that “healthy” growth returns.

2/3: January was just terrible

2/3: Violence against women has to stop. It is hard to believe the world has become civilized when you read this.

Film prompts push to end ‘honour killings’ A Pakistani documentary about “honour killings” is giving impetus to a political effort to protect women , even before it has been screened in Pakistan. When the film was nominated for an Oscar last month it caught the attention of Nawaz Sharif, prime minister. He will convene a meeting this month to build consensus to tackle the tradition, which results in the murder of about three women a day in Pakistan for disobeying male elders in matters of love and marriage. .

2/3: Terrorism


Finding the Best Long Term Care 
By Dawn Waddell Elledge, RN, CCM-PGCM

Whether or not you have thought about long-term care for yourself or an elderly loved one, the reality is that human life expectancy has increased steadily over the past few decades. The number of people living past 70 has dramatically increased and because of higher standards of living, by the year 2040, the percentage of nursing home residents will jump from 50 to 130 percent.

The bottom line is that long-term care issues are here to stay. In fact, planning for long-term care should be implemented into every family’s order of business, just as planning for college or retirement would be done. Also very important is the awareness that long-term care insurance premiums are usually less if you buy them when you are younger; this is not a preparation that should be postponed until one is nearing the possibility of needing long-term care. The best indicator as to whether or not you should look into long-term care insurance is to ask yourself if there are enough assets in your/elderly loved one’s estate to pay for it. Long-term care insurance does not pay all long-term care needs; only a part of it.

Assuming a family has made a wise decision to plan for long-term care, the next question is how to go about finding the appropriate level of care for you or an elderly loved one. Where is the best place to go? Let’s look at your decision to move yourself or a loved one to a local long-term care facility. Now, like any other matter of family planning, assessment, investigation and/or research and ongoing evaluations will need to be considered. The guidelines I have listed here will be helpful as you start your planning for long-term care in a facility-based option.

There are basically a few major “levels of care,” commonly referred to as “L.O.C.” The main levels of care are: independent living, either at home or facility-based; assisted living; rehabilitation, commonly referred to as “skilled nursing unit;” and, of course, acute care, which is hospitalization. There are now levels of care called long-term care acute for patients that are coming from acute care intensive care units. An example of this is when a patient has not successfully been weaned from artificial means of respiration.

Here’s a rundown of some of the types of long-term care settings most commonly found in most communities throughout the United States today:

- Adult daycare alternative
- Accessory dwelling units alternative
- Subsidized senior housing
- Board and care homes
- Assisted living facilities
- Continuing retirement communities
- Certified (Medicare) home health care option to facility-based alternative
- Hospice care alternative
- Respite care alternative
- Home and community-based waiver programs for the Medicaid eligible
- Programs of all-inclusive care for the elderly who are Medicare/Medicaid eligible
- Nursing Homes (custodial non-skilled non-Medicare long-term care)
- Retirement centers/apartments
- Senior citizens’ centers for supportive services
- Multi-level of care complexes
- Other community-based organizations
- Personal private pay non-medical sitter and/or relative

If you and/or a loved one do decide on facility-based long-term care, a screening will be done to determine eligibility status. For example, if your elderly loved one is no longer able to care for his/herself, then custodial care in a nursing home is what your doctor would recommend. That is why many physicians refer their patients to a geriatric case manager. He or she is a highly trained licensed nurse or social worker certified as a case manager or geriatric case manager to assist patients and their families in finding the most appropriate level of care.

The level of dementia, if any, must also be considered. Dementia is a broad term for symptoms associated with cognitive function such as memory loss or impaired perception and comprehension of everyday tasks and inter-communicative skills. If a physician diagnoses Alzheimer’s, one form of dementia, most facilities are required by their state laws that such a resident is housed safely in a “locked unit.” (This unit is a section of the facility, not to be confused with one room or one apartment, but a group setting or unit.)

Before actually going on a facility search, make sure you have a list of the facilities’ nearby conveniences such as a family member’s home, a market, and other personal choices, like maybe a park or other types of stores. Don’t forget to go to to find out the highest star ratings assessed by the local state government in your area for each level of care; SNF (skilled nursing facility); ACLF (assisted care living facility); ICF (intermediate or custodial care facility) or other types such as Homes for the Aged.

I don’t always recommend calling ahead before you actually enter into a particular facility. Since you are a potential customer, you have a right to check it out— unannounced! The main question you will want to ask yourself as well as the facility administration is this: “Will my loved one be safe here; will they feel at home?” Remember, too, that this facility takes over the responsibility of the care of your loved one, not taking away who you are in relation to the loved one. Don’t forget your loved one, whether they are cognitively impaired or not, will need your ongoing evaluation of the care in which they will be receiving.

My best advice about finding a quality care facility is through the use of the five senses God gave to humans: sight, smell, taste, touch and hearing. Beginning with your vision, what do you see in each place? Is the visual aspect of the facility pleasant? Is it clean and orderly? Is there a “garden effect?” The “garden” or “Eden” effect is a popular movement where plants and animals are placed in the facility to create a more pleasant atmosphere. I particularly enjoy the use of “bird windows” where the facility maintains an enclosure for birds with a large window placed in the foyer, recreational area or corridors of the facility for the residents to enjoy.

What other visual things are there to help you identify the character of the facility or of the care the residents are receiving? Are there wheelchairs haphazardly placed in the hallways? Or are the wheelchairs nicely placed along the walls out of the middle of the halls? Are any of the residents “unkept?” Does the staff appear professionally and appropriately attired? Are you welcomed well? Would you feel at home here if you were an elderly patient?

Now using all of your senses, what do you smell, and what do you hear? Does the smell of urine overcome the atmosphere or is there a resident who is yelling loudly? These things do happen, so what you want to know is to what extent. Keep notes for comparison on each facility visited. Don’t forget to ask what services are available, such as laundry and podiatry for example.

Finally, just remember that as a family member of a long-term care resident, you are a part of the team that cares for your elderly loved one. You are the most important part. You provide the love!

2/3: Interesting but needs more research

COUCH POTATO REDEMPTION - Hitting the gym in the hope of burning up calories to lose weight can backfire as the body adapts to higher activity levels, according to new research. Gym bunnies who spend hours working out in an attempt to shed unwanted flab are wasting their time. The body adapts to higher activity levels - changing metabolism so that fewer calories are burned. Researchers measured the daily energy expenditure and activity levels of more than 300 men and women. Those with moderately active levels - such as a daily walk to work, and a trip to the gym twice a week - were found to burn about 200 calories more per day than those living couch potato lifestyles. But after a certain threshold the extra time working up a sweat made no difference to the amount of calories burned

2/3: I don't think this could work
SWISS PEOPLE - Swiss residents are to vote on a countrywide referendum about a radical plan to pay every single adult a guaranteed income of £425 a week (about $2,500 a month) and £100 for each child. The plan could make the country the first in the world to pay all of its citizens a monthly basic income regardless if they work or not. The group proposing the initiative, which includes artists, writers and intellectuals, cited a survey which shows that the majority of Swiss residents would continue working if the guaranteed income proposal was approved.

2/3: STCI - The American Association for Long-Term Care Insurance reports that the number of short-term-care insurance (STCI) policies sold in the first half of 2015 was up 71% year-over-year, with 26,237policies sold. "Agents need to seek other options to meet their client needs, and a policy that provides one year of coverage is a very viable solution."

  1. The Excess Returns of "Quality" Stocks: A Behavioral Anomaly




Jean-Philippe Bouchaud ; Stefano Ciliberti ; Augustin Landier ; Guillaume Simon ; David Thesmar

This note investigates the causes of the quality anomaly, which is one of the strongest and most scalable anomalies in equity markets. We explore two potential explanations. The "risk view", whereby investing in high quality firms is somehow riskier, so that the higher returns of a quality portfolio are a compensation for risk exposure. This view is consistent with the Efficient Market Hypothesis. The other view is the "behavioral view", which states that some investors persistently underestimate the true value of high quality firms. We find no evidence in favor of the "risk view": The returns from investing in quality firms are abnormally high on a risk-adjusted basis, and are not prone to crashes. We provide novel evidence in favor of the "behavioral view": In their forecasts of future prices, and while being overall overoptimistic, analysts systematically underestimate the future return of high quality firms, compared to low quality firms.








Senior Tax Credit Tips: How to Claim Caregiver Tax Deductions

1/31: Good overview

Senior Housing 101: Senior Care Types Explained

  1. How do risk attitudes affect measured confidence?




Zahra Murad (School of Economics, University of Nottingham & Surrey Business School, University of Surrey) ; Chris Starmer (Department of Economics, University of Amsterdam) ; Martin Sefton (School of Economics, University of Nottingham)

We examine the relationship between confidence in own absolute performance and risk attitudes using two confidence elicitation procedures: self-reported (non-incentivised) confidence and an incentivised procedure that elicits the certainty equivalent of a bet based on performance. The former procedure reproduces the "hard-easy effect" (underconfidence in easy tasks and overconfidence in hard tasks) found in a large number of studies using non-incentivised self-reports. The latter procedure produces general underconfidence, which is significantly reduced, but not eliminated when we filter out the effects of risk attitudes. Finally, we find that self-reported confidence correlates significantly with features of individual risk attitudes including parameters of individual probability weighting.


Overconfidence, Underconfidence, Experiment, Risk Preferences


1/31" This will screw up our economy- we are seeing it from the beginning of the year

Over all, the economy expanded at an annual rate of just 0.7 percent in the fourth quarter of 2015. It was projected to be twice that

the slowdown was brought on by slower sales of durable goods like cars and appliances, a weaker trade picture and falling inventories. Services held up a bit better, underscoring how domestically driven sectors are faring much better than industries that depend on overseas demand.

For all of 2015, the economy grew 2.4 percent, identical to the tempo recorded in 2014 but considerably better than the 1.5 percent gain for 2013.

1/31: And it reverberates globally

Bank of Japan adopts negative interest rates


The Bank of Japan has adopted negative interest rates in an unprecedented move that highlights pervasive weakness in the economy.

The BoJ moved just hours after releasing a slew of insipid data that showed sharper than expected drops in industrial production and soft inflation for December that was far from the BoJ’s 2 per cent target.

I want one
Then I am going through security at an airport
1/28: Looks can be deceiving.

"The headline unemployment rate has been at 5.0% since October, but the underemployment rate is 9.9%, near where it was in June 2008, though well off from its October 2009 peak at 17.4%. Meanwhile, the labor force participation rate came in at 62.6%, among its lowest levels in nearly four decades."

1/28: Case Shiller

1/28: Global view- some big changes

The World Bank on Tuesday dramatically revised down its forecast for crude oil prices, predicting they would average just $37 a barrel this year and warning commodity markets to brace themselves for the possibility of a much sharper than expected slowdown in emerging economies.

The new forecast — down from a predicted $52 average for 2016 just three months ago — underlines how rapid the recent fall in oil prices has been and the growing concerns at the World Bank and elsewhere over the link between tumbling oil and the health of emerging economies.

The biggest risk, it said, was a sharper than expected slowdown this year in China and other big commodity-importing emerging economies that would inevitably hit others.

1/28: Retirement

One in three U.S. workers doesn’t have access to workplace retirement savings plans, including half of workers at companies with fewer than 50 employees

 1/27: Some comments from Vanguard research

Millennials saving for retirement are bucking reports of savings insufficiency and equity aversion, according to a white paper published by Vanguard researchers. “The auto savings generation: Steering millennials to better retirement outcomes” finds that participation rates, saving rates, and equity allocations for Millennial participants (ages 18 to 34) have been on the upswing over the last decade in defined contribution (DC) plans. Vanguard attributes the advent of automatic plan design features and the increasing adoption of target-date funds for putting Millennials on the right path to retirement readiness. Read more »

Participants are saving more in their retirement plans than they were two years ago, according to the Plan Sponsor Council of America’s (PSCA) 59th Annual Survey. Lower-paid employees are contributing an average of 5.8% of their salaries, up from 5.3% in 2013; this is higher than it was prior to the steep market crash in 2008. Read more »

Women are 14% more likely than men to participate in their workplace savings plan and save at higher rates, according to a Vanguard analysis. Women earning less than $100,000 save 20% more than their male counterparts, and across all income levels, women save at rates that are 7% to 16% higher than men’s. Read more »

1/27: Nouriel Roubini

This is a fantastic 20  minute video overview of the global economy by a brilliant speaker. If you think you have a clue to what is going on in the world- you better watch this. Maybe twice


Tips and Techniques for Dealing with Stress
By Dr. Rita Nachen Gugel

Change is an expected part of our daily lives today. Dealing with it so that YOU control IT rather than vice versa is an important and positive force in controlling your life. Try a few of these tips.

1. Accept what you cannot change. Take a tip from AA. Change what you can, if it bothers you. But, if you cannot change it, learn to live with it.

2. Face up to your problems. Sort them out, and see which ones are real and which are simply imagined. Deal with them as they are, and not what you think they are.

3. Deal with one problem at a time. Sort out your priorities, and deal with them in the order of their importance to you.

4. Be flexible. Give in once and a while. If you do, others will too.

5. Don’t hold all of your worries inside yourself—talk it out. Frequently we swallow our unhappiness (along with candy, cake, ice cream, etc.) because we can’t let the problems out. Talk to someone. A burden shared is much less of a burden.

6. Work off Stress. Physical outlets for stress help your body to fight off many of the negative results of stress.

7. Get enough rest/relaxation/sleep. Give your body a chance to recover from day to day. Lack of sleep and rest will only make matters worse for you.

8. Avoid “self medication.” A “spoonful of sugar” may make the “medicine go down,” but it does your body no good. Sugar, alcohol, nicotine, and ice cream may all feel good going down, but they make matters worse—from the inside. They add to your body’s physical stresses, thus making dealing with external stresses much harder.

9. “Take time to smell the roses.” Have some fun. Relax.

10. Think about and do something for others. A little altruism never hurt. It even makes people feel better about themselves.

11. Be the “captain of your ship.” If you are not happy with your life, think about what’s wrong or missing, and then plan the necessary actions to change it to coincide with your needs and desires for your life.

12. Work on your relationships with those who share your life. Don’t hold back your feelings. Share them with your family and friends and co-workers. It can help to decrease tensions.

1/27: 3.75% for five years is not bad

1/27: Chew on this
Childhood obesity has reached alarming rates globally and become an “exploding nightmare” in the developing world, including Africa where the number of obese and overweight children under five has nearly doubled since 1990

Biological factors, inadequate access to healthy foods, a decline in physical activity in schools and the unregulated marketing of fattening foods are among the drivers of a worsening epidemic that requires a coordinated global response, the report said.

If not reversed, “the obesity epidemic has the potential to negate many of the health benefits that have contributed to the increased longevity observed in the world,”

1/26: Energy Junk

The value of debt issued by junk-rated US energy companies has plummeted to the lowest level for more than two decades, sending a warning signal about the outlook for the North American oil industry.

The average high-yield energy bond has slid to just 56 cents on the dollar, below levels touched during the financial crisis in 2008-09, as investors brace for a wave of bankruptcies.

1/26: So how well will they do in a true bear market???. They are SUPPOSED to gain

Liquid Alternatives Stumble to 3.5% Loss in 2015

Liquid alternatives limped out of 2015, their performance dragged down by losses in all the sub-strategies,

1/26: This hasn't changed
 (In the 1880s, parts of New York’s financial district were seven feet deep in manure.)
We are still digging out the crap. Actually it is still being piled up- but this time it is called marketing


Not a chance that we are the only advanced civilization that can make snow cones

1/25:     India

India appears to be a beacon of economic light in a troubled world. With China’s economy slowing down, pummelling emerging market stock markets in the process, global business leaders look hopefully to Asia’s other emerging giant to pick up the slack: this week for example, Apple, the technology group, announced plans to open its first retail outlet in the country.

EFM- If Modi's government can find a way to let India's economy take off, it would solve a lot of current economic ills.But it will be tricky. Nonetheless his effort to help women is changing the social structure; It will take some time considering the mano atmosphere but I do give him credit.
1/25: And he is right

    Mario Draghi has said he is confident European leaders can agree a solution to the region’s 
refugee crisis and help unburden the union from the challenge of its ageing societies.

The ECB president said in Davos on Friday that the arrival of more than 1m migrants in Europe last year could address the looming demographic problems faced in economies where populations are ageing fast.

We have to do the same

1/25: GDP  the importance of the Chinese economy for our markets. Consider that United States exports in goods to China have recently accounted for only six-tenths of 1 percent of our gross domestic product. (United States imports in goods from China, though about four times bigger, are still relatively small as an overall proportion.)

1/25: Recession

Of course the white walls only come with the deluxe model

1/24 A very informative political survey/

Highly recommended in seeing what candidate allay with

1/24 Real Life

Post-Retirement Experiences of Individuals Retired for 15 Years or More: SOA Findings (PDF)
88 pages. "This study provides direct evidence on this issue and does so through careful questioning of long-term retirees themselves: people who have been retired at least 15 years. By their own testimony most long-term retirees have coped with managing their finances during the first decade and a half of retirement well. Some had to make cutbacks in their lifestyles: a number state they have gone from satisfying 'wants' to satisfying 'needs.' But those who have had to make that transition have accomplished it with resilience and not bitterness. Some have experienced financial shocks, but most shocks have been absorbed and adjusted to well. Retirement clearly has a number of challenges, including declines in health and cognitive capacity, the loss of spouses and, in some cases, social isolation. These are difficult challenges and for many the financial challenges are the easiest to deal with."
(Society of Actuaries) 

1/24 Trust
In Japan, only 40 per cent trust their company. In France, the figure is 48 per cent; in the UK it is 57 per cent. In the US, workers’ trust in their companies is a more respectable 64 per cent, but this is still not great.
EFM:I do not trust the investment/insurance businisses nor the governmental entities that supervise them. They know next to nothing about the fundamentals of investing. The SEC took 16 years to get Madoff- while he was offering an impossible 12% annuity that should have taken any astute investigator a few minutes to recognize it could not exist. Never met an arbitrator or securities attorney who knew what diversification (by the numbers) was. that was some time ago but there is nothing to have changed my statement. Finra???? Ho, ho, HO

1/24: This sucks.  Putin is in way over his head with the Ukraine and Syria. Oil prices will firm this year but to what???? I don't know how he can ride this out unless it is yet another plea to its citizens to hunker down since the west is the cause of all their problems.

1/24: Give me a break

Jamie Dimon’s pay rises to $27m


JPMorgan chief must meet performance tests for full payout  EFM- Oh that makes me feel much better

1/24: Financial Expectations

1/24: Financial Times

European Central Bank president Mario Draghi has triggered a worldwide equities rally after dropping a strong hint on Thursday that the bank is ready to launch a fresh round of stimulus for the eurozone in March. After a savage New Year sell-off around the world, stocks in Tokyo closed 6 per cent higher, Europe has resumed its gains and US futures are pointing higher.

EFM- And here we are wondering when the rates will climb once again. A world economy that makes no sense.

1/24:Attention span

the average attention span had fallen to eight seconds, down from 12 in the year 2000. We now have a shorter attention span than goldfish,

Actually I had heard that a goldfish has an attention span of three seco.......

1/24: Shameful
About one in four of the 20 million refugees flooding the world is Syrian. The U.S. has accepted just 2,647.

Ah, nice to be white and living in America. Yes, I do understand certain issues, but just 2,647. Couldn't they at least rounded off to 3,000??? even 2,650??? 

1/24: Business Builder magazine

There are two of my articles included- How to make a killing in bonds and the second on how to research for retirement. That one will lead you to two of my videos on budgeting. Soon to be a ovie.

1/24: Today it's a hold, tomorrow is a rise, next week it is..............................................

ECB leaves interest rates on hold


The eurozone’s monetary policymakers have kept interest rates on hold, with the slump in oil prices and the rocky start to the year in financial markets not yet severe enough to push borrowing costs in the single currency area to fresh lows.
The governing council of the European Central Bank kept its benchmark main refinancing rate and deposit rate unchanged at 0.05 per cent and minus 0.3 per cent respectively.


By 2050, there will be more plastic than fish in the world’s oceans, study says

About 8 million metric tons of plastic end up in the world's waterways every year.
“Five bags filled with plastic for every foot of coastline in the world.”

more than 70 percent of the plastic we produce is either put in a landfill or lost to the world’s waterways and other infrastructure. Plastic production accounts for 6 percent of global oil consumption (a number that will hit 20 percent in 2050) and 1 percent of the global carbon budget (the maximum amount of emissions the world can produce to prevent global temperatures from rising more than 2 degrees Celsius). In 2050, the report says, we’ll be spending 15 percent of our carbon budget on soda bottles, plastic grocery bags and the like.

According to the report, worldwide use of plastic has increased 20-fold in the past 50 years, and it is expected to double again in the next 20 years. By 2050, we’ll be making more than three times as much plastic stuff as we did in 2014.

EFM- More plastic will kill more fish as they eat the crap and more birds will die as well. Mother earth is pissed and I do not believe we will ever do as much as we can to offset the messes we have made. Humankind may be around by 2200 but not in the same numbers as now. Sooner or later a pandemic will thin the herd and perhaps give the earth time to heal.  But most of humankind as we know it will have changed.


Robots are expected to replace five million jobs by 2020

  EFM- Wait till 2025 and 2030. Lots of unemployment in manufacturing and in food outlets as robots really take over.

1/21: Empty Land- If you have been through some of it, you know why

1/20. I have felt that the U.S. had a slightly better than 55/45 chance of holding it together and the rest of the world no better than 50/50. Any little thing could trigger a mess now.

The world economy is precariously balanced between continued recovery and a third leg of the global financial crisis, according to leading economists attending the World Economic Forum in Davos

The sharply contrasting outcomes highlight the uncertainties surrounding the global outlook in 2016 amid fears of a slowdown in China, plunging commodity prices and high levels of corporate US dollar-denominated debt in emerging economies

EFM- And Britain could leave the EURO. That would leave the rest of the countries wondering if it is time for them as well. Major upheaval that would hurt the world for some time


No Stable Distributions in Finance, please!




Lev B Klebanov

Failure of the main argument for the use of heavy tailed distribution in Finance is given. More precisely, one cannot observe so many outliers for Cauchy or for symmetric stable distributions as we have in reality. keywords:outliers; financial indexes; heavy tails; Cauchy distribution; stable distributions


1/20: And I ain't one of them

The combined wealth of the world’s wealthiest 62 people is now roughly equal to the combined wealth of the entire bottom 50 percent of humans. [Bloomberg]

1/20: Really slow

Chinese steel production and power generation contracted last year for the first time in at least a quarter of a century,  as the 
economy grew at its slowest pace since 1990.

You have not had a bad day till this happens

This is real


2. Most 401(k) plans use inadequate methods in selecting and monitor the investment options in their plans. To be perfectly honest, based on my experience as an ERISA/securities attorney and consultant, many 401(k) plans blindly follow the advice of their service providers, even though numerous court decisions have warned that doing so is not only improper, but constitutes a breach of their fiduciary duties to the plan and its participants.

A fiduciary's independent investigation of the merits of a particular investment is at the heart of the prudent person standard.(2)

The failure to make any independent investigation and evaluation of a potential plan investment is a breach of fiduciary obligations....(3)

Most plans analyze potential investment options by only looking at an investment's investment performance and its standard deviation. However, as everyone knows, past performance is no guarantee of future returns. Secondly, an investment's fees and other expenses must be considered since each additional 1 percent in fees and expenses reduces an investor's end return by approximately 17 percent over a twenty year period. Given the fees and costs associated with some investments, an investor could easily see his end return by one-third or one-half.

1/19: Market Correction- 

The S&P 500  has hit a 10% loss. Once it gets to 10.75% or so, the sale of some of  the most risky equities starts. Pretty much everything is gone by 13%. Still doesn’t mean a recession primarily since all the old ‘rules’ have been destroyed by 2008 and the FED

1/19 Is education worth it

Total student loan debt in the US has topped $1.3 trillion

An expert noted I also found that students who graduate with excessive debt are about 10% more likely to say that it caused delays in major life events, such a buying a home, getting married, or having children. They are also about 20% more likely to say that their debt influenced their employment plans, causing them to take a job outside their field, to work more than they desired, or to work more than one job.

1/18: HE SAID, SHE SAID - A LIMRA research paper delves into who is really making financial decisions. Some findings:
* Two-thirds of women age 50 and older say they split financial decisions with their spouses, while fewer than half of men admit to sharing decisions.
* In households with more than $1 million in net worth, only 30% of women are the primary financial decision makers.
* For both women and men who are primary decision makers, only one-quarter have a formal retirement income plan.
* Advisers who help their clients with retirement income planning have greater client satisfaction and loyalty

1/18: Quite appropriate

Roubini: The New Abnormal for a Troubled Global Economy

The world economy has had a rough start in 2016, and it will continue to be characterized by a new abnormal: in the behavior of growth, of economic policies, of inflation and of key asset prices and financial markets.
First, potential growth in developed markets and emerging markets has fallen, and actual growth will remain below this weak potential. That potential has fallen because of the burden of high private and public debt, population aging—older people tend to save more and invest less—and a variety of uncertainties that keep capital spending low. Meanwhile, technological innovations haven’t translated yet into higher productivity growth at the aggregate level, while structural reforms aren’t moving fast enough to increase potential growth. There’s also “hysteresis”—the way that protracted cyclical stagnation can weigh down potential growth, since human and physical capital become more obsolete if they aren’t used at full capacity.
What actual growth we’ve seen has been anemic, below its potential as a painful process of deleveraging has been under way, first in the U.S., then in Europe and now in emerging markets, to stabilize and reduce high levels of private and public debts and deficits.
At the same time, economic policies—especially ­monetary—have become increasingly unconventional, and the distinction between monetary and fiscal policy has become more blurred. Ten years ago, who had heard of terms such as ZIRP (zero-interest-rate policy), QE (quantitative easing), CE (credit easing), or UFXInt (unsterilized FX intervention)? These esoteric and unconventional monetary-policy tools are now the norm in most advanced economies, and even some emerging market ones as well.

1/17: Economics

Experience suggests that the best indicator of a country’s future economic prospects is the decisions its citizens make about keeping capital at home or exporting it abroad. The renminbi is under pressure because Chinese citizens are eager to move their money overseas.
Because of China’s scale, its potential volatility and the limited room for conventional monetary manoeuvres, the global risk to domestic economic performance in the US, Europe and many emerging markets is as great as at any time I can remember. Policymakers should hope for the best and plan for the worst.

1/17: How much is an education worth?

Total student loan debt in the US has topped $1.3 trillion.

One expert noted-
I also found that students who graduate with excessive debt are about 10% more likely to say that it caused delays in major life events, such a buying a home, getting married, or having children. They are also about 20% more likely to say that their debt influenced their employment plans, causing them to take a job outside their field, to work more than they desired, or to work more than one job.

1/17: Is China looking for a fight in order to limit exposure to its financial mess. Sure looks that way. Could be very interesting over the next few weeks

China steps up building in disputed waters


China has stepped up its construction of runways in the South China Sea since President Xi Jinping visited Washington in September, underscoring how US efforts to counter China’s assertive stance there appear to be having little effect.

Satellite images of Subi Reef and Mischief Reef obtained by the Financial Times suggest that Beijing will soon complete two runways that will join a newly operational landing strip on a third reef called Fiery Cross in the contested waters.

1/17: Few trainees stick with adviser profession, report finds
Only 20% of adviser trainees stick with the profession, says a report from Fidelity Clearing & Custody Solutions. Firms that are successful at retaining recruits typically offer training periods that last about three years, during which young advisers are given salaries, the report says.

EFM: Assuming implementation of some fiduciary elements, there will be fewer still. The salaries came from commissions not fees.

1/17: Just to give you an idea of how bad it is with shale producers:

BHP takes $7bn hit BHP Billiton, the most valuable miner by market capitalisation, revealed a huge hit from the sharp fall in the oil price with a $7.2bn writedown on its extensive US shale assets. The asset impairment, which equates to $4.9bn after tax, is the largest announced by the Anglo-Australian group during a wrenching commodities downturn that is devastating the mining and energy sectors. Energy groups have shelved nearly $400bn of spending on new oil and gas projects since prices plummeted. (FT)

1/17: Worldwide monetary policy interactive link

1/17: A different perspective about the capture of those 10 seaman. Makes a lot more sense than what we heard.

"We had an engine problem, nope we had a navigation error ( by 50 miles ? ) . It's all BS.
I'm betting the Iranians took these boats in International waters. As written by someone who would For an open-water transit between nations, the course is studied and planned in advance by the leaders of the Riverine Squadron, with specific attention given to staying wide and clear of any hostile nation's claimed territorial waters. The boats are given a complete mechanical check before departure, and they have sufficient fuel to accomplish their mission plus extra. If, for some unexplainable and rare circumstance one boat broke down, the other would tow it, that's why two boats go on these trips and not one! It's called "self-rescue" and it's SOP.

This entire situation is in my area of expertise. I can state with complete confidence that both Iran and our own State Department are lying. The boats did not enter Iranian waters. They were overtaken in international waters by Iranian patrol boats that were so superior in both speed and firepower that it became a "hands up!" situation, with automatic cannons in the 40mm to 76mm range pointed at them point-blank. Surrender, hands up, or be blown out of the water. I assume that the Iranians had an English speaker on a loudspeaker to make the demand. This takedown was no accident or coincidence, it was a planned slap across America's face."

1/17: LTC

1/17: Capitalization versus equal weighting

Twenty Ways To Care for Caregivers

Twenty of the best tips and ideas collected from Caregivers and care managers of the Medicare Alzheimer's Project in Broward and Dade Counties, Florida. 

  • Laugh about something everyday 

  • Take care of yourself physically. 

  • Eat a well-balanced diet. 

  • Talk with someone every day. 

  • Let family and friends help. Give them printed material on memory disorders so they can better understand your relative. Give them a chance. 

  • Give yourself permission to have a good cry. Tears aren't a weakness, they reduce tension.

  • Exercise. A brisk walk counts. 

  • Get adequate rest. 

  • Try a bowl of Cheerios and milk before bed to promote sleep. 

  • Avoid noisy and/or tension-filled movies at night. The late news itself can add to stress. Skip it.

  • Reduce daily caffeine intake. 

  • Get professional help if you feel your support system isn't adequate or if you feel overwhelmed. 

  • Take a break very day, even if it's only 10 minutes alone in the backyard. 

  • Explore community resources and connect yourself with them. 

  • Listen to music. 

  • Learn relaxation techniques. 

  • Regularly attend one or more support groups and education workshops. 

  • Give yourself a treat at least once a month: an ice cream cone....a new shirt or dress....a night out with friends....a flowering plant. 

  • Read your Caregiver's Bill of Rights (and Today's Caregiver magazine) 

  • Know your limitations.


IMF head Christine Lagarde warned on more US rate hikes (Reuters)

Christinbute Lagarde said interest-rate hikes by the Federal Reserve risked hurting emerging markets if they were too aggressive. "The key issue going forward will be the pace of normalization," Lagarde told a banking conference in Paris. "We agree that it should be gradual as announced, as stressed actually by the Fed, and based on clear evidence of firmer wage or price pressures." According to Reuters, the International Monetary Fund head also warned on the potential for volatility in the foreign-exchange market.

EFM- she is right but if inflation doesn't rise- does the FED simply stop? It's quite like dancing on a knife's edge. But sooner than later they have to get long term rates up in case of another debacle, Currently, they cannot drop rates any lower and get any impact at all in case of a recession.

Now that's scarry

1/13:Most Americans Rely on Their Spouse for Retirement Advice (oy!)

Half of investors surveyed by John Hancock credit their spouse as the person who has the most positive influence over their retirement planning decisions, followed by 40% who say their financial adviser has been the most instrumental. (EFM blind leading the blind)

One-quarter say their father has been the most important person when it comes to their retirement planning. This is based on John Hancock’s quarterly poll of affluent investors, conducted in the fourth quarter of 2015.

Just under half, 48%, plan to remain in their current home when they retire. Twenty-eight percent plan to move to a smaller home, and only 3% plan to move to a larger residence. Among those who plan to change their living situation when they retire, 43% plan to move out of the state where they currently reside. Seventeen percent plan to remain in the same city or town, and 13% plan to move to a new city or town in the same state. Four percent plan to move out of the country, and 20% are unsure of where they will live in retirement.

As to their outlook for their retirement prospects, 60% think their retirement will be better than their parents’, and 25% think their children will experience a better retirement than their own. However, this last figure is down from 33% a year ago. In fact, more than one-third of investors think their children will have a worse quality of life in retirement than their own.

EFM- I cannot say some of this won't work but the financial literacy of the American consumer is grade F

1/13"  The economies of all 50 US states and Washington, DC, from worst to best


2000 vs 2012 mortality tables


Virtually all companies in 2016 will be using the newer 2012 mortality tables. The difference is significant. When are we supposed to die under the different tables?


-Male 2000 table - 85.4-years old
-Male 2012 table - 88.5-years old


-Female 2000 table - 88-years old
-Female 2012 table - 90.3 years old


-Joint 2000 table - 92.1-years old
-Joint 2012 table - 94.7-years old

Talking about a male insured, the insurance company now needs to account for income that will last an additional 3.1 years. That's over 37 months of additional income from an annuity.


For this reason alone you should see ALL companies that offer guaranteed income riders to lower their roll up rates and/or their income payments.


We can expect a 10% decrease in benefits from income rider annuities. That means if the roll up rate used to be 7%, it would be lowered to 6.3%. If the payout rate a particular age would have been 5.5%, the new payout rate would be under 5%.


These are big differences for clients, but this will be our new normal when selling income rider annuities. The only hope to increase benefits on income rider annuities is to have bond yields increase. That is not something that seems likely for the foreseeable future.

1/12" This is REALLY good if you are going to die sometime

How to Tell What's Going to Kill You

It runs simulations and shows you what kills at certain ages. Certain to be a hit a cocktail parties and funerals.

U.S. Centers for Disease Control and Prevention''

1/12:  OMG

China poured more cement and concrete between 2011 and 2013 than the US did in the whole of the 20th century. I cannot comprehend the enormity of the construction that took place.

EFM- No wonder it has had to slow down. That number defies all thought.

1/12: Washington Post on China