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


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

Steven Winks

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

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

 Paul Volcker

You must not believe everything you think

Stephan Thomas Vitas

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

Kevin Kind

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

Stephen Colbert

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

Ben Hunt

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

Dr. Who

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

 Al Capone

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

Charlie Munger

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

        John von Neumann

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

 Henry Louis “H. L.” Mencken

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

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

Former Dallas Federal Reserve President Richard Fisher

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

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

Charlie Munger

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

– Vernon A. Walters

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

Mike Myatt

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

Nassim Taleb

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

Alan Greenspan

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

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

John Mauldin

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

                                                                                                                                                             Benjamin Graham

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

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

Charlie Munger

The least competent are the most certain of their skills

Dunning-Kruger effect

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


The key to success is the ability to fake sincerity.

Many humorists

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

Charlie Munger

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

Mark Myatt

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

“You cannot manage returns but you can manage risk 

Peter L. Bernstein

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

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


Make everything as simple as possible, but not simpler


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

World Bank’s Social Protection and Labor Global Practice.

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

Brian Leitner

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

Noam Chomsky

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

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

Mark Twain

“Beware lest you lose the substance by grasping at the shadow.” 

Byron Estery

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

 George E.P. Box

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


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


Great spirits have always encountered violent opposition from mediocre minds 

Albert Einstein


World Clock by



Table 1: Expected US Equity Market Volatility and Average US Stock-Bond Correlations
Three-month rolling correlation(a)

1986 to 1999 2000 to 2014
Low expected equity market volatility −0.42 0.13
Average expected equity market volatility −0.40 0.34
High expected equity market volatility −0.14 0.50

(a) Low, medium and high volatility refer to levels of the VIX index below the first quartile, between the first and third quartile, and above the third quartile of its historical distribution, respectively

8/25:! Receive free access to form 5500s filed with the Dept. of Labor over the past 2 years, which include data on retirement, health, life, and other benefits plans from more than 1 million U.S. companies.

How to Tell Your Loved One It Is Alzheimer’s Disease
By Daniel Paris, MSW


There are a number of takes on telling the person with Alzheimer’s disease (AD) the truth. I would propose a couple of things to keep in mind:

  1. Ask yourself how much your loved one will understand of the explanation. Sometimes they can understand and retain a lot of the information (you have a disease of the brain, etc...); sometimes all they can understand is that they have "some memory loss;" sometimes they are unable to get any of it. Remember, the cognitive impairments of AD affect not only their ability to comprehend information, but also their ability to communicate.
  2. Often someone with Alzheimer’s knows something is wrong, they just can't figure out what. Are they stupid or going crazy, they may wonder.  Finding out there is something wrong that is a legitimate disease beyond their control can actually be comforting at times in this light.
  3. There are some people who will never accept what you tell them due to denial, resistance, the disease, etc.  Complicating this can be a host of personality or cultural traits pre-AD. There are times when telling the person can do more harm than good. Because of this, you can't force them to understand if they are unable or unwilling.
  4. This is an individual decision; you should think about the type of person your loved one is, and how the Alzheimer’s disease has impaired them. You can always try beginning the conversation and see how it goes.  If they become very upset and if it doesn’t work, there is a good chance they will not remember the conversation.
  5. Finally, if you are certain your loved one should know, be ready to repeat yourself numerous times as they will probably not remember what you said

8/22: 401k fund numbers- more is not necessarily better

Many plans, especially bigger ones or those that include educated professionals, have bloated lineups because the plan sponsors think that they are serving the needs of their more sophisticated employees. Turns out that 90% of all participants would rather delegate the decision to a professional using, for example, TDFs; 9% want to dabble; and 1% want lots of choice, which can be satisfied through a brokerage window.

  1. Dishonesty: From Parents to Children




Anya Samek ; Daniel Houser ; Joachim Winter ; John List ; Marco Piovesan

Acts of dishonesty permeate life. Understanding their origins, and what mechanisms help to attenuate such acts is an underexplored area of research. This study takes an economics approach to explore the propensity of individuals to act dishonestly across different contexts. We conduct an experiment that includes both parents and their young children as subjects, exploring the roles of moral cost and scrutiny on dishonest behavior. We find that the highest level of dishonesty occurs in settings where the parent acts alone and the dishonest act benefits the child. In this spirit, there is also an interesting, quite different, effect of children on parents' behavior: parents act more honestly under the scrutiny of daughters than under the scrutiny of sons. This finding sheds new light on the origins of the widely documented gender differences in cheating behavior observed among adults, where a typical result is that females are more honest than males.


  1. Do People Anticipate Loss Aversion




Alex Imas ; Anya Samek ; Sally Sadoff

There is growing interest in the use of loss contracts that offer performance incentives as upfront payments that employees can lose. Standard behavioral models predict a tradeoff in the use of loss contracts: employees will work harder under loss contracts than under gain contracts; but, anticipating loss aversion, they will prefer gain contracts to loss contracts. In a series of experiments, we test these predictions by measuring performance and preferences for payoff-equivalent gain and loss contracts. We find that people indeed work harder under loss than gain contracts, as the theory predicts. Surprisingly, rather than a preference for the gain contract, we find that people actually prefer loss contracts. In exploring mechanisms for our results, we find suggestive evidence that people do anticipate loss aversion but select into loss contracts as a commitment device to improve performance.


8/21:  some oil rigs back on line since prices have firmed. But Most have no idea if this will last or????


8/21: 403b

Non-profit organizations and their employees are doing more to improve retirement readiness, the Plan Sponsor Council of America found in a survey. Participants are now saving an average of 6.2% of their salaries, up from 5.4% in 2011. Employers are also matching employees’ first 4.6% of pay, up from 3.8% last year.

Additionally, 19% of 403(b) plans are automatically enrolling participants, up from 16.3% last year. However, 75% of these 403(b) sponsors are deferring 3% or less of participants’ pay, well below the recommended 6%.

More than half, 61.5%, of 403(b) sponsors evaluate whether their retirement plan is reaching its goals, and within this group, there was a 24% increase from last year in sponsors measuring their participants’ ability to meet retirement income goals. Forty-three percent of 403(b) plans work with an adviser, and among them, 50% ask the adviser for help with their fiduciary responsibility to select and monitor their investments, up from 39% last year. Twenty-six percent of 403(b) sponsors are examining their plans’ expenses, up from 16.8% in 2015, and nearly 57% have an investment policy statement, up sharply from 45% in 2009.

  1. Why Does Idiosyncratic Risk Increase with Market Risk?




Söhnke M. Bartram ; Gregory Brown ; René M. Stulz

From 1963 through 2015, idiosyncratic risk (IR) is high when market risk (MR) is high. We show that the positive relation between IR and MR is highly stable through time and is robust across exchanges, firm size, liquidity, and market-to-book groupings. Though stock liquidity affects the strength of the relation, the relation is strong for the most liquid stocks. The relation has roots in fundamentals as higher market risk predicts greater idiosyncratic earnings volatility and as firm characteristics related to the ability of firms to adjust to higher uncertainty help explain the strength of the relation. Consistent with the view that growth options provide a hedge against macroeconomic uncertainty, we find evidence that the relation is weaker for firms with more growth options.


G10 G11 G12


8/21: Overvalued stocks. Look at the change in percentage in joust one quarter.

CFA Society of the U.K. members think developed markets equities are overvalued, with the highest number of respondents viewing the asset class as overpriced in the history of its valuations index.

The index, which polls the society's members, found 62% of respondents view developed markets equities as overpriced in the second quarter, up from 40% in the previous quarter. That is the highest level in the four-and-a-half year history of the index, which the CFA said in a statement accompanying the data reflects “the uncertainty pervading developed markets in light of the U.K.'s vote to leave the European Union and the expectation of a bitterly contested U.S. presidential election.”

Investors' flight to safe haven assets also affected the perception of government bonds, seen as overvalued by 75% of respondents, compared with 67% in the first quarter.


8/21: Plan sponsors

Highlights of Fidelity’s 7th survey with DC plans sponsors about their plan advisor include:

8/21: It's just money

the wealthiest 10 percent of Americans now hold three-quarters of the nation's wealth, up from two-thirds in 1989, and a three percentage-point increase from the start of the recession. Most Americans found themselves with less wealth in 2013 than Americans of a similar age had in 1989; the only age group doing better than its counterparts from a quarter-century ago was senior citizens.

8/21: Passive versus active

Morningstar tells a traditional story: actively managed funds underperform over the short and long-term, especially high-cost actively managed funds

Close to two-thirds of the active diversified EM funds outperformed their passive counterparts over the one- and three-year periods ended June 30, and just over 50% outperformed over five years. Longer term their success rates lagged overall – less than one-third of these funds outperformed -- but it was a different story for the cheapest among them.

More than 60% of the lowest cost actively managed diversified emerging market funds outperformed their index fund counterparts over the 10-year period, while less than 12% of the highest cost funds in that category did.

8/21: More passive/active

8/21: I thought the bird flu would decimate mankind. More insidious is a tiny pesky mosquito. .

Zika can infect adult brain cells

8/21: To be or not to be- that is the question about inflation and interest rates

Fed officials generally agreed that a strengthening of the jobs market and the relatively benign market reaction to the UK’s vote to leave the European Union in June meant some of the uncertainties that had hung over the US economy had diminished.

But there was no consensus on the urgency of a second rate rise since last December, given the mixed prospects at home and abroad. Even as the Fed held rates unchanged during the meeting, two participants wanted to see an immediate move. Others said an increase would “soon be warranted.”

Several other participants were more cautious, according to the minutes. They said the Federal Open Market Committee would have “ample time” to react to a rise in inflation if needed and preferred to wait until they were more confident that price growth was heading sustainably to the Fed’s 2 per cent target

8/21: Cannot get a job

Manufacturing employment has been in steep decline for over 20 years, but even within this shrinking sector, older workers are less likely to be hired for manufacturing jobs than their younger peers. For example, men and women age 55 to 64 are 25 percent less likely to get machine operator jobs and 58 percent less likely to get metal worker jobs.

Instead, older workers are finding employment in lower-skilled service jobs. They are 65 percent more likely to find work in child care, 93 percent more likely to work as cabdrivers and twice as likely to find work in retail.


Most Common “Old People” Jobs

Job Number of Hires Chances of Getting Hired*
Truck, Delivery and Tractor drivers 827,383 +9%
Salespersons 683.280 +7%
Janitors 582,001 +79%
Nursing aides 509,121 +41%
Secretaries 506,560 +15%
Retail Sales Clerks 433,379 +100%
Guards and Watchmen 370,599 +211%
Real Estate Salespersons 362,835 +162%
Bookkeepers and Accounting Clerks 324,223 +56%
Cashiers 307,026 +31%

Least Common “Old People” Jobs

Job Number of Hires Chances of Getting Hired*
Supervisors of Construction Work 100,405 -22%
Electricians 111,539 -31%
Construction Workers 115,023 -33%
Computer Software Developers 124,971 -51%
Lawyers 126,197 -26%
Carpenters 154,164 -39%
Machine operators 155,241 -25%
Managers of Restaurants and Hotels 163,826 -27%
Computer Scientists 180,793 -51%
Cooks 244,071 -31%

8/21: Not the equality one was looking for

the number of women in local jails in the United States was almost 14 times what it was in the 1970s, a far higher growth rate than for men, although there remain far fewer women than men in jails and prisons.

The study found that the number of women held in the nation’s 3,200 municipal and county jails for misdemeanor crimes or who are awaiting trial or sentencing had increased significantly — to about 110,000 in 2014 from fewer than 8,000 in 1970.

(Over all, the nation’s jail population increased to 745,000 in 2014 from 157,000 in 1970.)

Much of the increase in the number of jailed women occurred in counties with fewer than 250,000 people, according to the study, places where just 1,700 women had been incarcerated in 1970. By 2014, however, that number had surged to 51,600, the report said.

And even as crime rates declined nationally, the trend toward jailing women in rural counties continued: Incarceration rates for women in sparsely populated counties rose to 140 per 100,000 in 2014 from 79 per 100,000 in 2000, the study found. During the same period, incarceration rates for women in the nation’s largest counties decreased to 71 per 100,000 from 76 per 100,000.

the study found that a vast majority of the women are poor, African-American or Latino, and have drug or alcohol problems. About 80 percent have children.

Most have been charged with low-level offenses, including drug or property crimes like shoplifting, but a growing number are in jail for violating parole or probation, for failed drug tests or for missing court-ordered appointments. Others are

8/21: Men not working

7 million — or 12 percent — of prime working-age men in the U.S. are neither working nor looking for a job.

lthough a small share of the men (less than 25 percent) have a breadwinning spouse and some collect government benefits such as Social Security Disability Insurance, Furman says the majority have given up on working after realizing that their limited skills and lack of education are hardly sought-after traits for employers. Says Furman:

“They’re not spending any more time on child care, not spending any more time on chores. They are spending a lot more time watching TV than men who are in the labor force.”

8/18: Every election cycle, nearly 100 House members raise at least a third of their campaign funds from outside the district

Between 2006 and 2012, about 100 House members per election cycle raised a third or more of their total campaign funds from people who live outside their districts. The average member of the House received just 11 percent of all campaign funds from donors inside the district.

The more money a House member gets from people outside the district, the less reflective the member’s ideology is of his or her constituents’ ideology. House members are following the money, not their voters.

The CCES data reveal that, on average, in-district donors’ ideology is closer to outside donors’ ideology than to the average ideology of voters in each party.


"Time Discounting and Economic Decision-Making Among the Elderly" Fee Download
NBER Working Paper No. w22438

DAVID HUFFMAN, Institute for the Study of Labor (IZA), Swarthmore College
Goethe University Frankfurt - Finance Department
University of Pennsylvania - The Wharton School, National Bureau of Economic Research (NBER)

This paper evaluates the extent of heterogeneity in time discounting among elderly Americans, as well as its role in explaining older peoples’ key behaviors. We first show how older Americans evaluate simple (hypothetical) intertemporal choices in which payments now are compared with payments in the future. This adds to the literature on time horizon experiments by focusing on a nationally representative sample of persons age 70+. Using the indicators derived from this experiment, we show how differences in discounting patterns are associated with characteristics of particular importance in elderly populations, such as serious health and mental conditions. We then relate our discounting measure to key outcome variables including wealth, the timing of retirement, investments in health, and decisions about end of life care.

8/18: Overdoses

8/18: 401k

As of year-end 2015, 38.2% of 401(k) plans with automatic enrollment are deferring 3% of participants’ salaries—but 29.0% are deferring 6%, T. Rowe Price found by analyzing its recordkeeping data.

Another 13.0% are deferring 4%, and 10.9% are deferring 5%. Just more than half, 51%, of the plans T. Rowe Price administers use automatic enrollment, a 28% increase since 2011.

T. Rowe Price also found that plans with automatic enrollment have an 88% participation rate, compared to 48% of plans where it is up to participants to take the initiative to opt into their retirement plan. Nearly all, 96%, of plans with automatic enrollment use target-date investments as the default, and 50% offer a Roth 401(k), up 49% since 2011. Furthermore, 40% of plans match 6% of participants’ contributions.

U.S. exchange-traded funds (ETFs) Deutsche Asset Management

just to see the management fees

8/17: Active Life Expectancy In The Older US Population, 1982–2011: Differences Between Blacks And Whites PersistedAbstract

Understanding long-range trends in longevity and disability is useful for projecting the likely impact of the baby-boom generation on long-term care utilization and spending. We examine changes in active life expectancy in the United States from 1982 to 2011 for white and black adults ages sixty-five and older. For whites, longevity increased, disability was postponed to older ages, the locus of care shifted from nursing facilities to community settings, and the proportion of life at older ages spent without disability increased. In contrast, for blacks, longevity increases were accompanied by smaller postponements in disability, and the percentage of remaining life spent active remained stable and well below that of whites. Older black women were especially disadvantaged in 2011 in terms of the proportion of years expected to be lived without disability. Public health measures directed at older black adults—particularly women—are needed to offset impending pressures on the long-term care delivery system as the result of population aging.

8/17:His comments are true

The Quick, but Painful, Death of Truth

Journalism has been on life support since the advent of social media, but this past year we have witnessed the quick, painful death of truth, and it may be gone forever. Put a comfortable lie in an echo chamber, and nobody will challenge it. It will reverberate until it is accepted as actually true. Then, the willfully ignorant will shout it as loudly as they can. It may be their truth, but that does not make it true.

8/17: Yep, great benefits for agent

8/17: Caring for an Ailing Spouse with Parkinson’s (Long but necessary to determine if you are up to the task)

By Richard N. Sater


The choice to provide care at home marks an important change affecting the lives of both partners. If you choose to be the primary caregiver for your spouse, you will find it is one of the most demanding tasks you’ve ever tackled. It is a major commitment, and not one to be taken lightly.  Once you make the choice to provide in-home care, it is entirely up to YOU to help your spouse get as much out of life as possible. 

The first consideration is attitude – not only of the potential caregiver, but of the ailing spouse as well.  If either of you considers the task to be a chore, it will probably not be done very well and neither partner will be satisfied.  For me, it was something I wanted to do for the woman who had given me so much love over the 54 years we spent together.  By making a commitment, I mean doing everything that you can for your spouse.  You make sacrifices as they are called for.

First things first. It is important for both partners to have Living Wills and Medical Powers of Attorney in place. (These documents are required to be witnessed and notarized.)  The first one defines the limits on health care that either partner is willing to accept in a crisis situation.  The second defines the procedures for transferring health care decisions to another party when the incumbent becomes incapable of making those decisions.  These documents take the need for critical decisions out of the hands of any caregiver.  It is important that all outside care providers are aware of the Living Will stipulations and have access to a copy of those instructions.

Regarding the practical, hands-on aspects of home care, first and foremost is providing a safe environment for your ailing spouse.  Use professional caregivers as a resource to determine the need for additional safety devices in your home.  (Such resources are available in most communities.) You may need to install safety bars and handrails in strategic areas – like bathrooms, stairways, areas across from open stairways, and other potentially hazardous areas.  A fold-down seat in the shower can make bathing much safer.  Eliminate tripping hazards such as loose carpets, extension cords, and low furniture. 

Single-floor living may be the best arrangement, but is not always possible. If your home is on multiple levels, consider installing a stairway lift to ensure safe passage from one floor to another. Consider using alarms to detect unsafe actions, such as getting out of a chair or bed without assistance.

A baby monitor or intercom can be useful to hear your spouse when you are in another part of the house. Special locks or gates for stairway doors or entries could be useful, as could arming your home security system (if you have one) to sound an alarm if an outside door is opened.  Think about how to keep your partner safe at all times.

An ailing spouse is likely to have increased medical needs, and it is important to manage doctor visits and medications. Schedule regular appointments and provide assistance in transporting your spouse to and from these appointments.  Sit in on the doctor visits and make sure you get satisfactory answers to any questions you have. Maintain adequate supplies of all necessary medications and make sure you administer them as directed.  Use a pill container that divides medications by the day of the week (and the time of day) and prepare everything in advance. If your spouse has trouble swallowing pills, try crushing them and mixing them with pudding or some other soft food. (Some medications cannot be crushed and administered this way – ask the doctor.)

Once you make the decision to be the primary caregiver, you must make sure to take very good care of your own health. Get regular physical examinations, a yearly flu shot, take your medications as prescribed, and exercise. You cannot help your spouse if you are ailing yourself.

Taking care of an ailing spouse may mean taking on a number of other household chores as well, including shopping for groceries, planning and preparing meals, doing laundry and housecleaning. Additionally, your spouse will likely need assistance with personal care – using the toilet, bathing, dressing and so on.
As illness closes in, the world becomes smaller and more restricted, which can be very frustrating for both of you. To the extent possible, try to see things from your spouse’s perspective. Be as patient and compassionate as you can. Adapt and improvise when you have to and you will have the best chance to overcome problems as they arise.

Mealtime can present some challenges. Remember the foods that your spouse especially enjoyed, and do your best to include those favorites regularly. If swallowing becomes a problem for your spouse, a speech therapist can give you some guidance.  You may need to puree food for safe consumption. Purchase a small food processor to help you out. (Baby food is an alternative also.) You may need to add a thickener to beverages, readily available at most pharmacies.  Specially-designed eating utensils and dishes are available that make it easier for your spouse to feed him- or herself, though you may need to feed your spouse at times. Use a bib or apron to protect clothing. Your spouse may need to eat small meals more than three times a day.  Keep favorite snacks on hand.

Keep an eye on your spouse to see how well he or she manages to accomplish routine activities like using the toilet, bathing, getting in and out of bed, dressing, just getting around. Be aware, and be ready to offer assistance if there appears to be a struggle.

Look for activities that your spouse can manage so that he or she feels useful around the home. There are a number of tasks that may be appropriate, such as sorting and folding laundry, drying dishes (nothing too heavy or fragile), setting the table, dusting, and so on. Even if your spouse is wheelchair-bound, such tasks may be possible with your help.

As often as possible, use your spouse as a resource – ask for advice or input about performing household tasks, planning meals, shopping for groceries, and so on. As much as possible, keep your spouse involved in your daily life, and certainly involved in any decision that directly affects him or her. Your spouse may not be able to dress without assistance, but he or she can still choose an outfit. Regular visits to the barbershop or salon for a haircut or style can do wonders for morale. Be creative – don’t get hung up on the way things were always done in the past. Communicate!

Give some thought to providing entertainment that your spouse can enjoy. Favorite movies on DVD can be enjoyed anytime. If your spouse enjoys reading, keep plenty of well-loved books on hand. Visit the library together! Make sure your spouse has adequate light, a comfortable chair, and glasses with extra magnification or a magnifier if necessary.  A special support for books, magazines or a newspaper may be helpful.  If short-term memory is a problem, consider options that don’t require remembering a storyline.  The MGM series That’s Entertainment consists of songs and dances excerpted from movie musicals. PBS ran a series on National Parks that includes beautiful scenery that can be enjoyed without having to follow a story.  Variety or talent shows may be good choices. As for books, consider episodic stories (such as James Herriott’s veterinary memoirs) that are light on plot.  Picture books or audio books may also be an option.

Encourage friends and family members to visit often; especially the grandkids! Even if your spouse has difficulty communicating, he or she can enjoy the company and conversation of others. Your place of worship may have a home-visitation program as well, allowing your spouse to keep up-to-date even if he or she is unable to attend services.

If physical intimacy has been a regular part of your lives, let it continue.  It is important for both of you. It shows your spouse that he or she is still a needed and desirable partner.  Find ways to work around any inconvenience that such intimacy may involve. It’s a small price to pay for the emotional benefits you both will gain.

Your spouse should have a regular exercise program, if possible – either for rehabilitation or to maintain a level of strength and mobility. Speak to a physical therapist or doctor and learn what exercises are appropriate and how (and how often) they should be done.  Provide suitable exercise equipment or visit a gym, if possible, to work with a knowledgeable trainer. Teach your children and grandchildren how to assist with the exercises. They’ll be pleased to help Mom or Dad, and you’ll get a break as well. (Other caregivers, if you use them, can help out also.)

Another area that should be addressed is keeping your spouse safe when traveling.  Always use a seat belt and shoulder belt. If your spouse has trouble sitting up straight, there are car seats available for adults that may be useful. They have a four-point harness like a child’s safety seat, and will keep your spouse in a safe position for traveling and reduce the risk of injury should the vehicle’s airbag be deployed.  A stool and a slippery covering on the seat may help them get in and out of the vehicle and be positioned for attaching the seat harness.  If your travel plans include staying in a hotel or motel, be sure to request a handicapped-equipped room. You may want to carry a rubber bathtub mat and suction-cup safety bars with you just in case. They’ll provide an extra measure of protection.

Your spouse will want your home to be just as it always was, so that it seems familiar. This is especially important if your spouse has short-term memory problems or dementia. However, it is important to keep your home clean and uncluttered at all times. Remove extra furniture and decorative items that could be hazardous if knocked over (glass vases or china figurines, for example).  Consider hiring a house-cleaning service to handle heavy cleaning, particularly in the kitchen and bathroom. Schedule a weekly appointment. It will be one less concern for you, and allow you to concentrate on care-giving.

If your home is unsuited to the demands of your spouse’s illness, you may have the option of relocating. If so, there are a number of features that you should consider: open spaces are much easier for maneuvering walkers and wheelchairs, as are wide doorways and short-pile carpets. Choose a single-story house (no stairs) and consider the use of ramps for access. If you can’t afford to move, you may want to talk to an expert about ways to modify your home to make it safer for your spouse.

As your spouse’s care becomes more time-consuming, you will find that you have difficulty getting everything done. Being responsible for your spouse’s care 24 hours a day is a heavy load to carry. You will require some time away from your spouse so that both of you have time to catch your breath. Check with social services agencies in your area to see what resources are available. (Your place of worship may have some suggestions also.) Consider engaging a part-time caregiver to assist, even one or two days a week for a few hours, so you can have some time to yourself. Adult daycare facilities are available in most areas, and that may be a workable option. If you choose to get assistance, talk with your spouse to make sure he or she understands the arrangement. When you leave your spouse in someone else’s care, make sure you commit to a time when you will come back and stick to it. Your spouse may become anxious otherwise, as he or she depends on you.

Be aware of what is going on with your spouse.  Be alert for changes and they may be gradual or sudden, so you need to keep an eye on behavior, both physical and mental. Even an unusual odor may alert you to a medical problem that requires treatment.  If you notice such a condition, SEEK HELP IMMEDIATELY.  Your spouse may disagree, but you must trust your own judgment.  Prompt action may be critical. Call 911.

As your spouse’s condition changes, you need to modify your caregiving to accommodate the change.

Making home care effective requires a commitment and input from both partners.  If either partner cannot do that, don’t do it at all.  Find someone or some place that can provide the needed care without letting it become a point of disagreement.  Even under the best of circumstances, there will be challenges and frustrations that require attention.  Do the best that you can with them. 

Though no one likes to think about such things, you need to take care of some end-of-life decisions. Do you want a funeral? Cremation? A service? End-of-life planning is never easy, and having an ailing spouse can compound the difficulty. If possible, involve your spouse in the choices. Inform your family. Make sure you put everything in writing. Update your will, if necessary, to spell out your decisions.
It is conceivable that the care you provide for your spouse at home will not be enough eventually.  Conditions change, people change and it just may not work any longer.  Perhaps the needs of your spouse become too great to manage, or perhaps the illness progresses to the point that medical monitoring is necessary. It is much better to have thought about this possibility in advance and have made a decision about how to handle that situation before a crisis arises.

It’s a good idea to do some research. Planning ahead will make the process less stressful for you and your spouse. Check out the long-term care facilities in your area. Look online for ratings and feedback about them. Ask doctors and social service providers for their advice and input to help you make an informed decision. Meet with customer service representatives from the various facilities with a list of questions.

Visit prospective care facilities and talk with residents and their families. Is the home clean, well-lit, and inviting? Observe how the staff treats its residents. Is there enough staff to manage the facility and care for the residents?  Does the facility offer a variety of appropriate activities on a regular basis? How is the food? Does the staff provide feeding assistance if necessary? Is the staff able to supervise bathroom visits, or provide other personal grooming services? What is the policy about taking a patient away from the facility for the day? (Is a doctor’s approval required?) What about visiting hours? How will your spouse feel about living there? There is nothing easy about the decision to move your spouse into a long-term care facility, particularly since there may be little or no chance that he or she will be able to return to your home.

Caring for an ailing spouse is a major responsibility, but it can also be very rewarding. You may find yourself (as I did) feeling closer to your partner than you ever had been before. When there is no more care to be given, the best that you can hope for is the comfort that you did everything you could.

8/17 Fed bank of SF'

“There is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low,” he said. A higher inflation target “would imply a higher average level of interest rates and thereby give monetary policy more room to manoeuvre”.

EFM- that maybe true but taking on a different rate above 2% says little to me in view of total squirrely economics globally. Very few things are going to work out the way the FED, World Bank, IMF hoped because we screwed up so bad'

Economists led by Larry Summers, former Treasury secretary, have been proposing the sobering theory that the US may be mired in so-called secular stagnation — a trap of lethargic economic growth and depressed interest rates. That view has been gaining more currency within the Fed itself.

8/16: MORE REGS - A poll by the Center for Responsible Lending (CRL) and Americans for Financial Reform (AFR), found that 66% of voters believe that more financial oversight is needed. Some 859,900 consumer complaints have been filed with the Consumer Financial Protection Bureau (CFPB) and $3.4 billion in restitution has been paid to consumers as of March 31. However, only 12% of financial advisors agree and say financial services providers have already improved practices sufficiently. Some advisers say clearer enforcement of existing regulations would be more beneficial than additional rules.

EFM- the issue is really not regs but the education and knowledge to know what you are doing. Licensing supplies only about 25% of what is needed.   

8/16: Sports??

Most parents spend $100 to $500 a month for each of their children's sports activities, according to a new survey by TD Ameritrade. Yet 1 in 5 parents spent a whole lot more: over $1,000 a month per child

All respondents have kids who play or have played "competitive youth sports" on highly competitive or elite club teams run by a nonschool organization, and most said they felt the investment in their kids was time and money well spent.

8/16: HOUSEHOLD DEBT - The NY FED says household debt reached $12.29 trillion in the second quarter, a $434 billion increase on a year-over-year basis. Auto debt rose $97 billion from a year earlier, and mortgage debt was $246 billion higher.


What is a Medicaid compliant annuity? It's a uniquely designed Single Premium Immediate Annuity (SPIA) (or a deferred annuity that can be converted to a compliant SPIA). The unique aspect of a Medicaid compliant annuity is that it must pay out over the annuitant's life expectancy (only option). The annuity must also have the following characteristics:

It must be irrevocable and non-assignable; it isactuarially sound; it must provide for payments in equal amounts, with no deferral and no balloon payments; and it must name the state Medicaid Program as the primary beneficiary to the extent that medical assistance benefits were provided to the institutionalized individual (certain exceptions may apply).

8/16: Texas is known for being big- and this is a big deficit

The Dallas Police and Fire Pension System, once applauded for a diverse investment portfolio that included Hawaiian villas, Uruguayan timber and undeveloped land in Arizona, finds itself needing to dig out of a deep hole.A $1.2 billion change last year in the difference between the value of its assets and what the pension owes retirees left the $2.6 billion fund with just 45% of the assets needed, down from 64% at the end of 2014. The pension, which was 90% funded a decade ago, could be out of cash in 15 years at the current rate of projected expenditures

EFM- note that the three investments are illiquid.  And if there is an economic bump, they are next to impossible to unload except with a major drop in value

Similar situations are playing out in cities such as Chicago and states including Illinois, Kentucky and New Jersey. But in many of those instances, the pension liabilities grew over many decades as their government sponsors failed to provide the required amount of funding to invest to pay future benefits. Junk-rated Chicago will pay at least $902 million in 2017 to its four retirement funds that are only 23% funded, according to a financial analysis.

Dallas’s police and fire pension, on the other hand, has seen its funding ratio decline precipitously as it recognized losses on its ill-fated investment strategy. Last year the fund lost 24%.


8/16: Correlation

Because covariance numbers cover a wide range, the covariance is normalized into thecorrelation coefficient, which measures the degree of correlation, ranging from -1 for a perfectly negative correlation to +1 for a perfectly positive correlation. An uncorrelated investment pair would have a correlation coefficient close to zero. Note that since the correlation coefficient is a statistical measure, a perfectly uncorrelated pair of investments will rarely, if ever, have an exact correlation coefficient of zero.

The most diversified portfolio consists of securities with the greatest negative correlation. A diversified portfolio can also be achieved by investing in uncorrelated assets, but there will be times when the investments will be both up or down, and thus, a portfolio of uncorrelated assets will have a greater degree of risk, but it is still significantly less than positively correlated investments. However, even positively correlated investments will be less risky than single assets or investments that are perfectly positively correlated. However, there is no reduction in risk by combining assets that are perfectly correlated.

Correlations can change over time and in different economic conditions. For instance, during the late 1990’s, stock prices increased significantly, then crashed in 2000. Interest rates were lowered to boost the economy, which caused real estate prices to increase significantly from 2001 - 2006. Hence, real estate prices were increasing while stocks were either declining, or not increasing by nearly the same rate. This reflects the general negative correlation between the stock market and the real estate market. The real estate market was forming a bubble due to the extremely low interest rates at the time. The bubble finally burst in 2007, and especially 2008, leading to the 2007– 2009 credit crisis. This caused money to move into commodities during the summer of 2008, which formed another bubble, with oil prices, for instance, reaching $147 per barrel. The fast increase in prices was not due to demand, but due to the transfer of money from assets doing poorly—stocks and real estate—to commodities and future contracts. In other words, it was another bubble. However, as credit dried up, due to the prevalence of many defaults of subprime mortgages, almost every investment came crashing down in September and October of 2008: real estate, stocks, bonds, commodities. Only United States Treasuries, which are virtually free of credit-default risk, rose significantly in price, driving their yields down proportionately, with the yields of short-term T-bills reaching almost zero.

8/16: I said decades ago when Japan first experienced economic problems that it would bounce back. After all, it had a great workforce .......

And now with a shrinking work force and declining competitiveness in industries like electronics, has grown at an average rate of less than 1 percent for the past two decades

8/16: LTC Kitces

“it’s estimated that as little as a 1% change in interest rates correlates to a 15% required change in premiums to keep an LTC insurance policy actuarially sound. Having a 1% lapse rate instead of a 5% lapse rate can increase future claims for an insurer by as much as 50%.”

  1. How Can We Realize the Value That Annuities Offer in a 401(k) World?




Steven A. Sass

Annuities have long been the basic building blocks of the U.S. retirement income system. Both Social Security and traditional employer pensions are annuities, paying retirees a specified sum each month for as long as they live. But due to the decline in Social Security replacement rates, for any given retirement age, and the shift in employer plans from defined benefit pensions to 401(k)s, a growing number of workers are entering retirement with more financial savings and less annuity income. Economists generally agree that many retirees would benefit if they annuitized at least some of their 401(k) savings. This brief reviews studies by the U.S. Social Security Administration’s Retirement Research Consortium that assess how best to meet this goal. The discussion proceeds as follows. The first section presents the value that annuities offer. The second section explains how this value is affected by medical expense risk and bequest motives. The third section iden tifies key behavioral impediments to annuitization. The fourth section reviews initiatives that address these impediments. The fifth section concludes that accustoming 401(k) participants to focus on retirement income rather than accumulations and developing an effective default distribution for 401(k) assets are promising initiatives to explore.



Variance in Investing

Variance is one of the key parameters in asset allocation. Along with correlation, variance of asset returns helps investors to develop optimal portfolios by optimizing the return-volatility trade-off in investment portfolios. Risk or volatility is often expressed as a standard deviation rather than variance because the former is more easily interpreted.

Example of Variance

Returns for a stock are 10% in year 1, 20% in year 2 and -15% in year 3. The average of these three returns is 5%. The differences between each return and the average are 5%, 15%, and -20% for each consecutive year. Squaring these deviations yields 25%, 225% and 400%, respectively; summing these squared deviations gives 650%. Dividing the sum of 650% by the number of returns in the data set (3 in this case) yields the variance of 216.67%. Taking the square root of the variance yields the standard deviation of 14.72% for the returns.

8/15: Covariance

Covariance is a statistical measure of how 1 investment moves in relation to another. If 2 investments tend to be up or down during the same time periods, then they have positive covariance. If the highs and lows of 1 investment move in perfect coincidence to that of another investment, then the 2 investments have perfect positive covariance. If 1 investment tends to be up while the other is down, then they have negative covariance. If the high of 1 investment coincides with the low of the other, then the 2 investments haveperfect negative covariance. The risk of a portfolio composed of these assets can be reduced to zero. If there is no discernible pattern to the up and down cycles of 1 investment compared to another, then the 2 investments have no covariance.

Because covariance numbers cover a wide range, the covariance is normalized into thecorrelation coefficient, which measures the degree of correlation, ranging from -1 for a perfectly negative correlation to +1 for a perfectly positive correlation. An uncorrelated investment pair would have a correlation coefficient close to zero. Note that since the correlation coefficient is a statistical measure, a perfectly uncorrelated pair of investments will rarely, if ever, have an exact correlation coefficient of zero.

The most diversified portfolio consists of securities with the greatest negative correlation. A diversified portfolio can also be achieved by investing in uncorrelated assets, but there will be times when the investments will be both up or down, and thus, a portfolio of uncorrelated assets will have a greater degree of risk, but it is still significantly less than positively correlated investments. However, even positively correlated investments will be less risky than single assets or investments that are perfectly positively correlated. However, there is no reduction in risk by combining assets that are perfectly correlated.

Correlations can change over time and in different economic conditions. For instance, during the late 1990’s, stock prices increased significantly, then crashed in 2000. Interest rates were lowered to boost the economy, which caused real estate prices to increase significantly from 2001 - 2006. Hence, real estate prices were increasing while stocks were either declining, or not increasing by nearly the same rate. This reflects the general negative correlation between the stock market and the real estate market. The real estate market was forming a bubble due to the extremely low interest rates at the time. The bubble finally burst in 2007, and especially 2008, leading to the 2007– 2009 credit crisis. This caused money to move into commodities during the summer of 2008, which formed another bubble, with oil prices, for instance, reaching $147 per barrel. The fast increase in prices was not due to demand, but due to the transfer of money from assets doing poorly—stocks and real estate—to commodities and future contracts. In other words, it was another bubble. However, as credit dried up, due to the prevalence of many defaults of subprime mortgages, almost every investment came crashing down in September and October of 2008: real estate, stocks, bonds, commodities. Only United States Treasuries, which are virtually free of credit-default risk, rose significantly in price, driving their yields down proportionately, with the yields of short-term T-bills reaching almost zero.

8/15: : “If these are the first sub-zero interest rates in 5,000 years, is this not the worst economy since 3,000 BC?”

Sidney Homer and Richard Sylla, the authors of A History of Interest Rates, found no instance of negative rates in 5,000 years. Now there are $11.7 trillion invested in negative-yield sovereign debt, including $7.9 trillion in Japanese government bonds and over $1 trillion in both French and German sovereign debt.

Investors have fallen into the trap of thinking that the future will be like the past, Grant says. The period of falling yields and rising bond prices that began in 1981 is entering its 35th year. He noted that a 35-year bear market preceded this. Yet the yield curve for Swiss bonds is sub-zero for the next 30 years, thereby implying that investors expect negative rates to persist for a long time.

Another reason to think rates must begin to rise: Bonds with negative yields are worse investments than cash. That has always been the reason for zero lower bound in monetary policy. So far, investors have been willing to pay for the convenience and security of storing wealth in banks and bonds, but if yields become sharply negative, some savers will no longer be able to accept guaranteed compounded losses. Then, conventional wisdom says, they will hoard cash, which returns 0%.

Central bankers have taken the evolution of currency from a measure of value to a macro-policy tool to, and perhaps beyond, its limits, Grant says. A federal funds rate below zero charges banks to store deposits at the central bank. These negative rates are passed on to depositors, which incentivizes them to spend rather than save. To avoid paying negative rates, banks and individuals buy bonds, so yields fall below zero when demand and price spike.

These “central bank acrobatics” create distortions, like inflated equity prices. Another example: Italian 10-year notes yield roughly 20 basis points (bps) less than US notes. If this is not evidence of the European Central Bank (ECB)’s currency manipulations, Grant said, then investors must expect “a return to the glory of Rome.” Even as the pound fell 12% after Brexit, 10-year gilt yields fell below 1%.

Negative funds rates squeeze banks’ profit margins. Low enough rates could cause many to become unprofitable. Pension funds depend on bond yields to meet their payment requirements. Grant says it is now impossible for them to hit 7% return targets. Insurance companies invest their premiums in fixed income, and are “dying on the vine” according to Grant.

If interest rates rise due to inflation or pushback from the market, several countries could have difficulty coping with the higher costs of borrowing. Italian stocks tumbled after Brexit, indicating that investors may fear a debt crisis. Japan will have even more difficulty disposing of its debt. Japan has the highest debt-to-GDP ratio in the world at over 200%, in part due to Abenomics intended to prop up stock prices and inflation. Grant also thinks China’s wealth management products are a threat to default.

8/15: Help,help!!!

Seventy percent said they want professional, personalized 401(k) investment advice; 74 percent say they would be very or extremely confident in their ability to make the right 401(k) investment decisions with the help of a financial professional, while just 44 percent would be that confident if left to their own devices; and 85 percent would be interested in using a broader financial wellness program if it were offered by their employer.

Most respondents said that a 401(k) is either their only or largest source of retirement savings — but that 401(k) is important to them; 90 percent consider it a must-have benefit, and would think twice before accepting a job that didn’t offer one.

8/15: Insurance premiums escalating

Around the world, life insurers are wrestling with existential questions. Interest rates are near zero, and in some places have turned negative — unprecedented until recent years. It is contributing to a crisis moment for a business once considered a bedrock of financial stability and an industry that supports the retirement of millions.

In particular, companies that sell policies that run for decades, like life and long-term care insurance, face a twofold challenge: how to fund policies that were sold back when their actuaries couldn’t envision a world of interest rates below 8 percent, and what to sell now, when those same actuaries can’t envision an appreciable rise in rates anytime soon.

People who bought universal life policies in the 1980s and 1990s — some of which guaranteed annual returns of 4 percent or more — are seeing their premiums soar.

8/14: Nice overview on insurance

8/14:: Best free online Social Security calculators

8/14: GDP forecasted down

Third Quarter 2016 Survey of Professional Forecasters

Forecasters See Weaker Outlook for Growth and Employment

The outlook for growth in the U.S. economy over the next three years looks slightly weaker than that of three months ago, according to 40 forecasters surveyed by the Federal Reserve Bank of Philadelphia. The panel expects real GDP to grow at an annual rate of 2.6 percent this quarter and 2.3 percent next quarter. On an annual-average over annual-average basis, the forecasters see real GDP growing 1.5 percent in 2016, down from the previous estimate of 1.7 percent. The forecasters predict real GDP will grow 2.3 percent in 2017, 2.2 percent in 2018, and 2.2 percent in 2019. The forecasts for 2016, 2017, and 2018 are slightly weaker than the previous estimates

On the employment front, the forecasters have revised downward their estimates for job gains in 2016 and 2017. The forecasters’ projections for the annual-average level of nonfarm payroll employment suggest job gains at a monthly rate of 204,600 in 2016, down from the previous estimate of 212,400, and 161,100 in 2017, down from the previous estimate of 178,400.

8/14: Allocation

8/14: What patterns are next????

8/14: Somewhat out of whack


Spotting Problems at the Wheel

Here are some signs that an older person may be having problems driving

8/14: Retirement Payouts

EFM- So what happens to a heavily loaded stock portfolio-at least 75%- that misses all the recessions (say 4) over a 30 year span? Lots more money that's what. Can it be done? Yep

8/11: How much loss the next time??

      September 1929 to June 1932

The stock market crash of Oct. 29, 1929, marked the start of the Great Depression and sparked America's most famous bear market. The S&P 500 fell 86 percent in less than three years and did not regain its previous peak until 1954.

S&P 500 high: 31.86

Low: 4.4

Loss: 86.1 percent

Duration: 34 months

S&P 500 high: 31.86

Low: 4.4

Loss: 86.1 percent

Duration: 34 months

Video: The crash of 1929: A look back

May 1946 to June 1949


Keystone  /  Getty Images

May 1946:  Sylvia Morrison examining the model of the trailer park which will be built in California and mainly rented to ex-military personnel.

Less than a year after the end of World War II, stock prices peaked and began a long slide. As the postwar surge in demand tapered off and Americans poured their money into savings, the economy tipped into a sharp "inventory recession" in 1948.

S&P 500 high: 19.25

Low: 13.55

Loss: 29.6 percent

Duration: 37 months

Š         December 1961 to June 1962


William Lovelace  /  Getty Images

May 1962: The trading floor of New York's Stock Exchange on Wall Street.

The economy expanded, but the Bay of Pigs attack of April 1961 and Cuban Missile Crisis of October 1962 sparked Cold War jitters and a brief bear market.

S&P 500 high: 72.64

Low: 52.32

Loss: 28.0 percent

Duration: 6 months

Š         November 1968 to May 1970


Hulton Archive  /  Getty Images

A young female protester wearing a helmet faces down armed officers at an anti-Vietnam War demonstration outside the 1968 Democratic National Convention in Chicago.

Rapid-fire growth ended with a mild recession, accompanied by relatively high inflation of about 6 percent annually. The bear market began just as Richard Nixon was elected president after a tumltuous year of assassinations and riots. The weak economy added to a tense national atmosphere dominated by the growing U.S. involvement in Vietnam.

S&P 500 high: 108.37

Low: 69.29

S&P 500 loss: 36.1 percent

Duration: 18 months

Š         Advertise

January 1973 to October 1974

Israel's Yom Kippur War and the subsequent Arab oil embargo sent energy prices soaring, sparking a lengthy recession. The annual consumer inflation rate topped 10 percent. The Watergate scandal forcing President Nixon to resign.

S&P 500 high: 119.87

Low: 62.28

Loss: 48.0 percent

Duration: 21 months

Video: Oct. 17, 1973: OPEC announces its 1973 oil embargo

Š         November 1980 to August 1982


Express  /  Getty Images

1981: Ronald Reagan at his California ranch shortly before his inauguration as 40th president of the United States.

After nearly a decade of sustained inflation, the Federal Reserve raised interest rates to nearly 20 percent, pushing the economy into recession. The combination of high inflation and slow growth — known as stagflation — was a factor behind Ronald Reagan's victory over President Carter in 1980.

Duration: 21 months

High: 140.52

Low: 101.44

S&P 500 loss: 27.8 percent

Š         August 1987 to December 1987

After a prolonged bull run, computerized "program trading" strategies swamped the market and contributed to the Black Monday crash of Oct. 19. Investors were also nervous after a heated debate between the U.S. and Germany over currency valuations, sparking fears of a devaluation of the dollar. As a result the Dow fell 22.6 percent -- the worst day since the Panic of 1914. Yet while the days after the crash were frightening, by early December the market had bottomed out, and a new bull run had started.

S&P 500 high: 337.89

Low: 221.24

Loss: 33.5 percent

Duration: 3 months

Video: Deja vu? 1987 markets rebound after 'Black Monday'

March 2000 to October 2002

The bursting of the dot-com bubble followed a period of soaring stock prices and exuberant speculation on new Internet companies. Companies with little or no profits had market values that often equaled or exceeded that of established "old-economy" corporate giants. The Nasdaq composite index, which soared in value thanks to the listings of hundreds of tech start-ups, plunged 50 percent in nine months and never again came close to its 2000 peak.

S&P 500 high: 1527.46

Low: 776.76

Loss: 49.1 percent

Duration: 30 months

Video: Free fall: The dot-com bust of 2001

Š         October 2007 to March 2009

A long-feared bursting of the housing bubble became a reality beginning in 2007, and the rising mortgage delinquency rate quickly spilled over into the credit market. By 2008, Wall Street giants like Bear Stearns and Lehman Bros. were toppling, and the financial crisis erupted into a full-fledged panic. By February the market had fallen to its lowest levels since 1997.

S&P 500 high: 1565.15, Oct. 9, 2007

Low: 682.55, March 5, 2009

S&P 500 loss: 56.4 percent

Duration: 17 months

Video: Dow goes under 10,000


Dangers of Caregiver Denial

It doesn’t matter how many times you’ve been through the caregiving experience. It never gets easy. But a little education helps, and there are definitely some good pointers to keep in mind. Elizabeth Lonseth, author of “A Gradual Disappearance” — a concise, intimate and sincere guide for people dealing with Alzheimer’s disease or dementia — is a seasoned caregiver who has watched not only both her parents be diagnosed with memory impairment, but also both her husband’s parents. Her fourth time around is still difficult, but at least she has some awareness to help guide her in the Alzheimer’s journey.

“I was in my 30s when my dad was diagnosed with dementia. I didn’t know how to deal with it and was in denial. Guilt was also a problem. Then, eventually, my husband’s parents were both diagnosed and my husband and I went through the myriad of emotions and caregiving challenges with them, as well. My mom’s Alzheimer’s diagnosis is the 4th time around. It’s still hard, but mom played a role in her choices as I was educated on what I needed to do and how to get things in order.”

Elizabeth has been asked to speak to many caregivers and senior care professionals who have been affected by Alzheimer’s and dementia. Denial was a key theme and problem she discovered from her audiences, so she decided to write a book about the dangers of denial, which comes out on October 14, 2015. This interview is a sneak peek at the gems of wisdom you can expect from her upcoming book, “The Dangers of Denial: Embracing the Challenges of Alzheimer’s and Dementia.”

7 Dangers of Denial for the Patient

“Denial is a tool. It protects us. But if we stay in denial, it becomes a problem… sometimes with dire consequences,” Elizabeth notes. “People try to hide their problems. But if both the patient and their loved ones ignore changes in behavior, even if they are subtle, this can lead to problems.” An Alzheimer’s or dementia patient only has a small window of being objective. If they can confront the problems they’re experiencing in a timely manner, they can participate in decisions that involve their care and finances.

Here are seven dangers that can occur that Alzheimer’s and dementia caregivers need to be cognizant of when caring for their aging loved one:

1. They can get lost.

This is pretty straightforward. The brain doesn’t remember directions or locations as it did before memory impairment; even if the person has been to a destination a thousand times before. If your loved one gets lost they can get hurt or panic, which only leads to more problems.

2. They can hurt themselves or others.

If your loved one tries to do everything as they’ve always done, but in reality they require supervision, they are bound to hurt themselves or others. For example, ignoring the fact that they need a walker can lead to a fall, resulting in broken bones, displaced joints, hospitalizations and the use of pain medication. Also if a wife with memory impairment is caring for her elderly husband or vice versa, she could unintentionally hurt her spouse in every day care.

3. They can have a home accident.

Leaving your loved one unsupervised could lead to accidents in the kitchen, bath, stairs or around the house. Fires could even occur.

4. They can suffer from poor nourishment.

Shopping and eating healthy requires proper planning and cooking techniques. If a loved one has memory impairment, he or she will more than likely not be eating healthy. This is why it is so crucial to regularly check cabinets to survey whether healthy foods have been purchased and to make sure your loved one doesn’t look sick or too thin.

5. They can cause an accident from driving.

Surprisingly accidents from senior driving don’t happen very often, but when they do, they’re catastrophic. Your loved one, pedestrians and other innocent bystanders could be hurt or even killed in the event of an accident.

Elizabeth shares a story she remembers about an elderly gentleman who shouldn’t have been driving:

“In the late 1970s we were gardening in the front yard of our home in Seattle. A car came down our narrow street on Queen Anne Hill. It ripped the side mirror off our truck, and sideswiped our neighbor’s car, and continued to roll slowly on down the street. My husband took off running and easily caught up with the elderly man at the wheel, who was oblivious to the damage he had caused. My husband jogged alongside the car, talking to the gentleman for another half block before he convinced the driver to pull over. My husband found out where he lived and drove him home. His wife drove my husband back and surveyed the damage. She promised her husband would not get behind the wheel again. We could only hope that was the case.”

6. They can overdose on medications.

Overdosing on medications is quite common for seniors who suffer from Alzheimer’s or dementia. Organizing medications for your loved one to take on their own can even create problems as they may not understand the days of the week or whatever dispensing system you may have in place.

7. They can become a victim of elder abuse.

Elder abuse can be subtle. Husband or wife caregivers can have good intentions, but not understand they are being abusive. For example, Elizabeth discusses a situation she heard of where a husband was trying to make his wife better again. He was “yelling at his wife to get up and do the dishes, not realizing she mentally or physically could not.”

Elizabeth candidly notes that there are more problems that she discusses in detail in the book, but the ones listed are the biggest ones she has encountered in her experience as a caregiver in addition to questions and problems from audience members during her speaking engagements.

6 Dangers of Denial for Family Members

Family members also suffer from denial that their loved ones have dementia and Alzheimer’s, according to Elizabeth. Having a realistic perspective about your loved one’s illness and his or her needs is crucial if you’re thinking about their wellbeing. But it can be hard for family members to accept that their parent, spouse or family member has changed. It’s even worse when both the elderly loved one with the problem and the family member is in denial:

“When loved ones and family members are both in denial, this presents a huge problem as it puts the sufferer at risk, not to mention, they can’t participate enough in the decision making for their care needs.”

Here are the six dangers of denial for family members that Elizabeth discusses:

1. Losing the chance to make special memories.

If you’re in denial and walking on eggshells trying to avoid signs of the disease, you’re probably not going to enjoy the time you have left with your loved one. For example, Elizabeth didn’t get a lot of quality time with her dad as she was so young when he was diagnosed and she didn’t know how to deal with the disease:

“I was in denial with my father and I avoided visiting him as often as I used to. It was so painful seeing this brilliant geneticist no longer able to hold a long, intelligent conversation. His communication skills became that of a young child. So instead of visiting every month like I had been, I came every other month or every three… Deep in denial, I lost the chance to create special memories with my father.”

Elizabeth happily mentions that she and her mom are still having a great time because she is not in denial and knows what to expect from the disease: “I did get mom to laugh on Monday quite a bit, so that was wonderful.”

2. Forfeiting being the best advocate for your loved one.

If you’re in denial, you can’t be your loved one’s advocate. Someone who doesn’t love them may have to take over, which can create even more problems, both emotionally and financially.

3. Not getting legal papers in order.

“Without Power of Attorney (POA), you’re not going to get anywhere with anything,” comments Elizabeth. Whether it’s social security, IRS, or even utility companies or banks. People need to know you’re the one in charge.

4. Family conflict.

Family conflict can create all kinds of frustrations for everyone. If some of the members are in denial, it adds to the conflict; and maybe even an old conflict can resurface. The family members in denial don’t help out and the aware ones take on multiple burdens; sometimes on their own. Often the ones in denial accuse their siblings of ‘over reacting.’

5. Loss of financial resources.

If someone is suffering from memory impairment, they are no longer fit to handle their finances. If the family member or caregiver ignores what’s was going on with mom and dad, stocks will get sold at the wrong time and sometimes bank accounts can be completely wiped out.

Elizabeth warns that it’s hard because often parents and/or loved ones don’t want to let you in. “Finances are private. Parents don’t want to share this information with their children. But it’s crucial you discuss financial plans ahead of time so that your family doesn’t fall under financial hardship.”

6. Stress involving illnesses and even the death of the caregiver before the patient passes away.

It’s not uncommon for family caregivers to put their own health at risk when they are in denial about the help they need caring for a loved one. Lonseth points out that family caregivers over age 66 have a 63% higher mortality rate than non-caregivers, and that “often the caregiver dies before the loved one they are taking care of does.”

In fact, Elizabeth notes, “There are couples who have been married 40-60 years, and one goes down hill and the other doesn’t want the rest of the world to know. The caregiver gets sick and the person with dementia doesn’t have care.”

This is especially scary. Family’s need to be cognizant of this sort of problem to prevent it from happening.

Survival Tips and Tips for Facing Denial for Dementia Caregivers

It’s no secret that Alzheimer’s and dementia can take a toll on caregivers. Elizabeth graciously shares some of the tips that have worked well to help embrace the disease as well as survive the disease as a caregiver once denial is no longer an issue:

Tips on Facing Denial

  • ​Start writing in a journal to get your thoughts on paper and identify fears or anger you may be experiencing (these are key emotions in denial)
  • Seek out a friend or loved one to talk to about your denial
  • Recognize that anger is a sign
  • Make it a team effort comprised of friends and family members as the support will help everyone involved
  • Get educated: The sooner, the better, from, APFM blog and newsletter (subscribe on the right column), or the MayoClinic blog and newsletter (subscribe on the left column)

Basic Survival Tips

  • Take a break
  • Use humor to help you through
  • Get a support group
  • Seek professional help

Embracing Memory Care

“The Dangers of Denial” is an expansion on “A Gradual Disappearance.” The short, easy-to-read guide is a complete focus on the denial aspect of Alzheimer’s and dementia as Elizabeth feels so many caregivers and family members need to be aware of the risks involved in denial.

Elizabeth discusses that there are many levels of denial. For example, you may acknowledge that your loved one suffers from memory impairment, but you may think professional help is not needed. “Many people think they can provide all the care themselves. But the truth is, there is awareness, education and medical knowledge that is needed. If your loved one is diagnosed with a heart problem and they need surgery, you wouldn’t take them home. Memory care needs to be approached in the same way. You need help, even if it’s someone coming to the home to provide care,” Elizabeth comments.

So take heed of Elizabeth’s expert advice.Talk to your loved one’s doctor about your options. Research memory care communities near you, and most of all – recognize when there’s a problem and be your loved one’s advocate. No one knows them better than you.

Elizabeth’s latest book comes out October 14. For more information, view her website.

8/11: Going to get VERY messy.

Look at these satellite images and you'll know that 'China has every intention of militarizing the Spratly Islands'

If this blows up, there comes a global recession

8/10: Stock charts glossary very inclusive for chartists

8/10: Pretty bad indicator



"Last week, market conditions joined the same tiny handful of extremes that defined the 1929, 1972, 1987, 2000 and 2007 market peaks." - John P. Hussman, Ph.D.


Caring for the Paralyzed

By Jennifer Bradley, Staff Writer


In 2009, the Centers for Disease Control and Prevention (CDC) reported that 1 in 50 Americans is living with some degree of paralysis. Paralysis can be either complete or partial, occurring on one or both sides of the body. It also can affect just one area, or be a widespread issue. Paraplegia is when paralysis affects the lower half of a loved one’s body, and quadriplegia is paralysis of both arms and legs.

Much of the time, paralysis is caused by strokes or a spinal cord injury. Other causes could be nerve or autoimmune diseases or Bell’s palsy. The care a person needs will vary depending on the cause and nature of the paralysis; but whether from an accident or illness, caregivers can learn ways to make life easier.


Shock and disbelief are probably the most common reactions immediately following the diagnosis of paralyzation. Adjustment takes time and a caregiver can expect a loved one to go through a variety of stages including: grieving, taking control, talking about the disability, taking care of self, and looking ahead.

A caregiver can find a lot of support for themselves and a loved one from local medical and/or counseling professionals, as well as support groups. The Web sites of the Christopher and Dana Reeve Foundation and the American Paralysis Association contain a wealth of information.

One major concern post-diagnosis is paying for the mounting costs of paralysis. The University of Alabama’s National Spinal Cord Injury Statistical Center and the CDC have estimated these costs and say that the first year of any type of paralysis will cost the most (up to $900,000 at the most severe level) and in subsequent years, less, but still total nearly $200,000 per year.

This same group reports that 12 days is the normal stay of initial hospitalization, followed by an average of 37 days in a rehabilitation unit. Nearly 90 percent of all spinal cord injured loved ones are discharged to their private homes, and about six percent to nursing homes.

While all of this can be overwhelming and terrifying to both caregiver and loved one, there is support available through grants and other funding. The paralysis foundations and associations offer a place for caregivers to locate and pursue these opportunities.

In a study done by the CDC and Reeve Foundation, it was found that the annual household income of most people in the paralysis group was less than $30,000, and for 25 percent, it was $10,000. The diagnosis of paralysis often leads to job loss. If the spouse is the main caregiver (as is often the case), he or she may also face job loss and loss of health care insurance. And while it’s been proven that technology is helping people with paralysis live longer, the cost will be extended as well.

The Reeve Foundation explains that being uninsured or underinsured does not mean there are no ways to get health coverage. Hospitals which accept federal funds on any level must provide specified amounts of free or reduced-fee care to patients. The hospital’s financial department can provide qualification information to caregivers.


Loved ones living with paralysis may experience a host of secondary conditions to varying degrees, depending on the location of the paralysis and its severity.

Some of these include blood clots, pneumonia, low blood pressure, pressure sores, spasticity, pain, bladder or bowel infections, and autonomic dysreflexia (AD), an emergency that must be treated immediately.

For general body health, a good rule of thumb for caregivers to know is to change a loved one’s position every two hours. Pressure sores, if not found and left untreated, can lead to a serious complications. They develop when an area of the skin is under a prolonged period of pressure. It can be helped if the pressure is relieved regularly (thus, the changing position guideline).

Choosing a rehabilitation facility is a very important decision and one that significantly will impact the progress of a loved one with paralysis. A caregiver should look for accreditation by the Rehabilitation Accreditation Commission (CARF) for spinal cord injury, which indicates that the facility meets a minimum standard level of care. Always ask if the facility has previous experience with the specific diagnosis and level of paralysis a loved one is facing.

The importance of regular exercise for someone with paralysis cannot be understated. Scientific studies predict that most recovery will come within six months of injury, and is complete within two years. Christopher Reeve proved that these medical expectations could be beaten, and did, having significant improvement five to seven years after his accident. Many believe that this was because of the exercise routine he began the year he became paralyzed. Though his regimen was targeted toward his needs, and each loved one that is paralyzed will not have the same outcomes, professionals all agree that exercise is a good thing for all those suffering with any form of paralysis.


Depression is very common in a newly paralyzed person, and there are warning signs a caregiver can watch for that will red flag this as an issue. They may include: oversleeping, change in weight, loss of interest and negative thoughts. Changes in mood can be gradual, so it may be harder for a caregiver to see a noticeable difference. Many times, other people will notice it first. A caregiver must be open to the observations of those who care for a loved one, but may not be a primary caregiver.

In a paralyzed individual, the onset of depression is two or three times greater than in someone without the condition. Though it’s very treatable when addressed, extra care must be given regarding prescription drugs. The side effects of some of the anti-depressants can be stronger for those living with paralysis. Weight loss or gain is a common concern, especially for those in a wheelchair or dealing with pressure sores.

To help combat the emotional downside of paralysis, there are things a caregiver can do. First, be candid about talking with your loved one about your feelings as well as theirs. Putting a person’s mind at ease is a huge hurdle to overcome at the beginning of such personal caregiving.
It also helps to maintain active conversations about family, friends, activities, plans, etc. A loved one should keep an interest in the world around them, whether it is through personal relationships or world and local news. Having a sense of what is going on around them while they are in the first stages of paralysis and treatment will help maintain optimism and interest and reduce the feelings of loss and disconnect.

A caregiver can encourage visitors to do the same—talk openly about the obvious “elephant in the room,” but also about their lives, mutual interests, friends and community happenings. Laughter is healthy, as is taking a loved one’s mind off of themselves and the difficulty surrounding their situation.

For many decades, it was thought spinal cord injuries were incurable. Today, advances are being made in research to restore sensation to nerves and muscles damaged by accidents, stokes and chronic diseases. The question is not whether major breakthroughs in treatment will occur, but rather how quickly they will be realized. For caregivers caring for those living with paralysis and their families, the future is one of hope of recovery.


  1. Leverage and Risk Taking


Santiago Moreno-BROMBERG (University of Zurich - Department of Banking and Finance) ; Guillaume ROGER (University of Sydney - School of Economics)

We study a dynamic contracting problem in which size is relevant. The agent may take on excessive risk to enhance short-term gains, which exposes the principal to large, infrequent losses. To preserve incentive compatibility, the optimal contract uses size as an instrument; there is downsizing on the equilibrium path. The contract may be implemented using the full array of financial securities or as a regulation contract with a leverage ratio. We show that holding equity is essential to curb risk taking. Firms that are less prone to risk taking can afford a higher leverage.


asymmetric information; dynamic contracts; moral hazard; risk taking


With a Little Help from My Friends
By Denise Watson, M.Ed.

Sometimes, the only way to get by is “with a little help from [our] friends,” as the old Beatles’ song reminds us. With more than five million Americans living with Alzheimer’s, we definitely need some help. Alzheimer’s is a disease which ravages the brain, causing dementia. Dementia affects cognitive abilities by impairing memory, language, judgment, and processing skills. The person affected becomes childlike, easily confused and fearful, needing help and supervision for daily living, and necessitating a commitment from someone to advocate for them and look out for their well-being. Ultimately, being a caregiver requires you to take care of someone who more than likely used to take care of you. Having this responsibility for someone with diminishing capacity is stressful, so for sanity’s sake and to continue life in good health, a person providing support needs help. Caregivers need friends and family to come alongside them and literally walk with them through this awful journey. Standing alone is not an option.

Exponential amounts of stress, fear and paranoia envelop the one responsible for a loved one with Alzheimer’s. Because caregivers are loving people and want to meet the needs of those that took care of them, they become stressed due to the daunting task. Caregiving is really a full-time job, but most who take on this task already work full time as well as carrying the additional responsibility of another human being with special needs. The most obvious stress is watching someone who used to take care of you suddenly begin to change and need you to care for them. There is a complete role reversal. The emotional and physical toll creates an onerous weight to bear and, to add stress upon stress, additional weight is brought on by fear.

The fear comes in knowing that dementia can be genetic, so more than likely this terrible disease will come to you in the future. Every day you are seeing what your life may one day be. Along with fear comes paranoia. Every time you forget something, you start to wonder if the disease is already affecting you. You repeat yourself so many times to your loved one that you begin to question if you are repeating yourself when you are with others. You create suppositions, surmising that others think you are starting to lose your mind. You feel as if everyone is standing in judgment to see if you are doing the best thing for the one in your care. Caregivers need the support of their family and friends more than they ever have to combat stress, fear and paranoia.

How can you help those who give so much of themselves to help others? Love them unconditionally, spend time with them and their loved one, spend time with their loved one when they need a break, and encourage the caregiver in their everyday life. Loving someone unconditionally does not come easy, but usually our parents give us that devotion. Unfortunately, while the one giving care still has a physical parent, the emotional parent is long gone, causing a depletion of unconditional love. The simple things like a hug, saying the actual words, “I love you,” and being there for someone despite what they do or don’t do for you, can show heartfelt affection unconditionally. Caregivers need to be covered in love to fill their “love tank,” which is being rapidly depleted during the caregiving process.

Spending time with someone shows love, but unfortunately the one giving care usually does not have time to spend with others. Therefore, it is important to be willing to spend time with the caregiver when they are with their loved one. Dementia brings isolation. The responsible advocate feels like the one they treasure so much is invisible to others. People who used to visit with them do not come around anymore and the phone calls stop. As the responsible party bearing the brunt of the load, you begin to feel like it is you against the world. No one seems to want to help, or that is at least how it feels. But with a little help from a friend, the process can be easier. Being isolated and alone is not good.

When a caregiver is alone with their loved one, there is typically no normal conversation. After you repeat something over and over, it gets old really fast. One can be pretty calm and collected the first 20 times something is asked/repeated, but the 21st time brings about an ungluing. By the 30th time, one may branch off into a world of delirium where the tone of voice starts taking a turn for the worse. The repetition becomes like Chinese water torture. You hear the same questions, stories, comments, and worries over and over. The interval rate can be seconds to minutes. If someone else is there to break up the monotony, insert into the conversation and smile at your soul, letting you know you are not alone during life’s tribulation, it is enough to spring forth hope, allowing the caregiver to feel as if they have some sort of life. When you are with them, you are literally giving them a sense of normalcy because there are two of you that can have a regular conversation, as well as someone who can see what you have to deal with and can comfort/reassure you. Your presence in the life of a caregiver is crucial, but it is also important to support them by being willing to spend time with their loved one who happens to have dementia. Time is a great gift.

Walking through this experience alongside my mom, who has Alzheimer’s, has made me a different person. I used to feel like I could take on the world and did not need anybody. I now realize, as the Beatles’ song says, I need “a little help from my friends.” And really, I should write a new song: “I need a LOT of help from my friends and family.” If you know of someone who is a caregiver, please give them a hug and a smile. If you can, give them your time.

  1. Asymmetric Beta Comovement and Systematic Downside Risk


Eric JONDEAU (University of Lausanne and Swiss Finance Institute) ; Qunzi ZHANG (Shandong University)

In this paper, we document evidence that downside betas tend to comove more than upside betas during a financial crisis, but upside betas tend to comove more than the downside betas during financial booms. We find that the asymmetry between Downside-Beta Comovement and Upside-Beta Comovement is the main driving force for market level skewness. An indicator called "Systematic Downside Risk" (SDR) is defined to characterize this asymmetry in the comovement of betas. This indicator negatively predicts future market returns. The SDR effectively forecasts future monthly stock market movements with an out-of-sample R-square above 2.27% relative to a strategy based on historical mean. An investor who timed the market using SDR would have obtained a Sharpe ratio gain of 0.206.


Systematic Risk, Skewness, Predictability, Trading Strategies


G11 G12 G14 G17


  1. A False Sense of Security: Why U.S. Banks Diversify and Does it Help?


Priyank Gandhi (University of Notre Dame) ; Patrick Christian Kiefer (UCLA Anderson School of Management) ; Alberto Plazzi (USI-Lugano and Swiss Finance Institute)

Modern U.S. banks engage into activities traditionally considered as non-core for the banking sector. Consistent with extant models of financial intermediation, which suggest banks diversify to lower risk and improve profitability, we document that banks with higher probability of financial distress and deadweight financial costs diversify more aggressively. Diversified banks appear to benefit from "coinsurance", are more profitable, less financially constrained, and supply more credit. However, diversification does not lead to real reductions in risk as its benefits are limited to "good" times. Diversified banks are more exposed to systematic risk and their lending is more sensitive to macroeconomic conditions. They are also more prone to correlation risk, the risk that diversification benefits provided by non-core activities may unexpectedly change especially when they are most needed. Our study contributes to the current debate on the optimal scope of bank acti vities, and highlights novel channels through which diversification impacts banks' credit supply and therefore the real economy.


Bank diversification, Non-interest income, Systemic risk, Financial crisis


G01 G21 G28


8/8: Online regtirement calculators   Very very inconsistent

A study of a dozen different retirement calculators finds as much as a 60% spread in the monthly income projections – and an even bigger gap in the income goals.

Using a consistent set of variables, Corporate Insight looked at 12 different calculators, finding that the highest monthly income projection for that profile was $6,013 (MassMutual), while the lowest (TIAA) projected just $3,772. The average (mean) monthly income projection is $4,792, while the median result was $4,568. No two calculators generated the exact same result, though two did produce monthly income projections that were within $88 of one another.

They found that the income goals provided by these tools vary by an even greater amount than the income projections. The one that generated the largest monthly income goal (Principal) targeted a monthly income goal of $9,029, while the lowest (TIAA) came in at $4,892 — roughly an 85% spread. The average (mean) monthly income goal is $6,615, while the median result is $6,458. Here at least three of the calculators provided identical income goals of $7,083 per month.

The study identified six key factors that seemed to be the primary results of the variation between tools’ income projections: taxes, inflation rates, salary growth, Social Security benefits, investment returns and ages—and four assumptions causing the differences in income goals: income replacement ratio, salary growth, inflation rates and taxes.

8/8: The Efficacy of Publicly-Available Retirement Planning Tool

Publicly-available retirement planning tools are publicized to aid households in their retirement planning efforts, but households are likely overestimating tool effectiveness.  The authors conclude that the advice provided from a majority of these tools is extremely misleading to households, and propose a more systematic approach to tool development by improved choice of input variables. Analyzing professional advisor opinion and theory, critical input variables are identified and recommended. A case scenario is developed incorporating these critical variables and used to test the efficacy of 36 publicly-available retirement planning tools.

8/8: Not sure I agree with ALL this is necessary to read it all.....................

Economic growth in advanced nations has been weaker for longer than it has been in the lifetime of most people on earth

This trend helps explain why incomes have risen so slowly since the turn of the century, especially for those who are not top earners. It is behind the cheap gasoline you put in the car and the ultralow interest rates you earn on your savings.

This slow growth is not some new phenomenon, but rather the way it has been for 15 years and counting. In the United States, per-person gross domestic product rose by an average of 2.2 percent a year from 1947 through 2000 — but starting in 2001 has averaged only 0.9 percent. The economies of Western Europe and Japan have done worse than that.

Over long periods, that shift implies a radically slower improvement in living standards. In the year 2000, per-person G.D.P. — which generally tracks with the average American’s income — was about $45,000. But if growth in the second half of the 20th century had been as weak as it has been since then, that number would have been only about $20,000.

To make matters worse, fewer and fewer people are seeing the spoils of what growth there is. According to a new analysis by the McKinsey Global Institute, 81 percent of the United States population is in an income bracket with flat or declining income over the last decade. That number was 97 percent in Italy, 70 percent in Britain, and 63 percent in France.

9/9:Does the "New Economy" Measure up to the Great Inventions of the Past?

During the four years 1995-99 U. S. productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age' of 1913-72. Accordingly many observers have declared the New Economy' (the Internet and the accompanying acceleration of technical change in computers and telecommunications) to be an Industrial Revolution equal in importance, or even more important, than the Second Industrial Revolution of 1860-1900 which gave us electricity, motor and air transport, motion pictures, radio, indoor plumbing, and made the golden age of productivity growth possible. This paper raises doubts about the validity of this comparison with the Great Inventions of the past. It dissects the recent productivity revival and separates the revival of 1.35 percentage points (comparing 1995-99 with 1972-95) into 0.54 of an unsustainable cyclical effect and 0.81 points of acceleration in trend growth. The entire trend acceleration is attributed to faster multi-factor productivity (MFP) growth in the durable manufacturing sector, consisting of computers, peripherals, telecommunications, and other types of durables. There is no revival of productivity growth in the 88 percent of the private economy lying outside of durables; in fact when the contribution of massive investment in computers in the nondurable economy is subtracted, MFP growth outside of durables has actually decelerated. The paper combines the Great Inventions of 1860-1900 into five clusters' and shows how their development and diffusion in the first half of the 20th century created a fundamental transformation in the American standard of living from the bad old days of the late 19th century. In comparison, computers and the Internet fall short. The rapid decline in the cost of computer power means that the marginal utility of computer characteristics like speed and memory has fallen rapidly as well, implying that the greatest contributions of computers lie in the past, not in the future. The Internet fails the hurdle test as a Great Invention on several counts. First, the invention of the Internet has not boosted the growth in the demand for computers; all of that growth can be interpreted simply as the same unit-elastic response to the decline in computer prices as was prevalent prior to 1995. Second, the Internet provides information and entertainment more cheaply and conveniently than before, but much of its use involves substitution of existing activities from one medium to another. Third, much internet investment involves defense of market share by existing companies like Borders Books faced with the rise of Amazon; social returns are less than private returns. Fourth, much Internet activity duplicates existing activity like mail order catalogues, but the latter have not faded away; the usage of paper is rising, not falling. Finally, much Internet activity, like daytime e-trading, involves an increase in the fraction of work time involving consumption on thejob

  1. Exposure to Poverty and Productivity




Dalton, Patricio (Tilburg University, Center For Economic Research) ; Gonzalez Jimenez, Victor (Tilburg University, Center For Economic Research) ; Noussair, Charles (Tilburg University, Center For Economic Research)

We study whether poverty can induce affective states that decrease productivity. In a controlled laboratory setting, we find that subjects randomly assigned to a treatment, in which they view a video featuring individuals that live in extreme poverty, exhibit lower subsequent productivity compared to subjects assigned to a control treatment. Questionnaire responses, as well as facial recognition software, provide quantitative measures of the affective state evoked by the two treatments. Subjects exposed to images of poverty experience a more negative affective state than those in the control treatment. Further analyses show that individuals in a more positive emotional state exhibit less of a treatment effect. Also, those who exhibit greater attentiveness upon viewing the poverty video are less productive. The results are consistent with the notion that exposure to poverty can induce a psychological state in individuals that adversely affects productivity.


poverty; productivity; mood; emotions; limited attention; experiments


D03 J24 C91


  1. Exposure to Poverty and Productivity




Dalton, Patricio (Tilburg University, Center For Economic Research) ; Gonzalez Jimenez, Victor (Tilburg University, Center For Economic Research) ; Noussair, Charles (Tilburg University, Center For Economic Research)

We study whether poverty can induce affective states that decrease productivity. In a controlled laboratory setting, we find that subjects randomly assigned to a treatment, in which they view a video featuring individuals that live in extreme poverty, exhibit lower subsequent productivity compared to subjects assigned to a control treatment. Questionnaire responses, as well as facial recognition software, provide quantitative measures of the affective state evoked by the two treatments. Subjects exposed to images of poverty experience a more negative affective state than those in the control treatment. Further analyses show that individuals in a more positive emotional state exhibit less of a treatment effect. Also, those who exhibit greater attentiveness upon viewing the poverty video are less productive. The results are consistent with the notion that exposure to poverty can induce a psychological state in individuals that adversely affects productivity.


poverty; productivity; mood; emotions; limited attention; experiments


D03 J24 C91


8/7:Medicaid Insurance in Old Age

De Nardi, a senior economist at the Federal Reserve Bank of Chicago, and her colleagues developed a model showing how people's saving and medical spending affect the amount of help those people get from Medicaid, and how much those people value Medicaid benefits. The researchers then tested their model by comparing their predictions to the figures in actual survey data. The predictions matched the data well enough that the researchers believe their model may tell users something about how consumers really think of Medicaid nursing home benefits and private LTCI.

8/7: This is for reminiscing about the good old days

"The Fed and Lehman Brothers: Introduction and Summary" Fee Download
NBER Working Paper No. w22410

LAURENCE BALL, Johns Hopkins University - Department of Economics, National Bureau of Economic Research (NBER), International Monetary Fund (IMF)

Why did the Federal Reserve let Lehman Brothers fail? Fed officials say they lacked the legal authority to rescue the firm, because it did not have adequate collateral to borrow the cash it needed. This paper summarizes a monograph that disputes officials’ claims (Ball, 2016). These claims are incorrect in two senses: a perceived lack of legal authority was not why the Fed did not rescue Lehman; and the Fed did in fact have the authority for a rescue.

8/7: Long Term Care and the DOL rules: : You need t