Master Financial Education

E. F. Moody Jr.


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

Steven Winks

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

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

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

You must not believe everything you think

Stephan Thomas Vitas

  Albert Einstein
Linkedin members: this website started in 1996 and I have done the Daily Commentary since that time. I used to do more reports and commentary here but it simply seemed more important from  around the early 2000s to present some of what I review every day and let the readers figure out the relevant issues themselves. Of course investments are covered but long term care, economics, life insurance, arbitrations et al command the bulk of a planners capabilities- though generally its nothing more than lip service, Not so here.
There is a lot more to discuss but at this point I will give you a look at one of the most important videos you will ever see-  and one that should change the industry. You will need a financial calculator 

Risk of Loss and Risk of Loss 2

These are not to be distributed in any manner whatsoever.
 Does Rebalancing Really Pay Off??

Knock yourself out. Very extensive. But you note that they still like standard deviation as risk. It is not.

9/17: ECB money

Back in June, the ECB announced that it would take serious steps to combat its persistently low inflation, which recently dropped to 0.3%. Now, three months later, the ECB is set to take action, and will this month auction €174 bn of loans to financial institutions, followed by €167 bn in October. All told, the ECB plans to give out at least €400 bn in loans in the next three months. The ECB hopes the move will stimulate lending in the Eurozone and boost inflation. However, the bank is also planning to ramp up its promised Asset-backed security (ABS) stimulus package in the near future, and plans to buy nearly €1 tn of ABS. The issue is that the European ABS market is still very quiet, with weak issuance, meaning the ECB has little to buy in order to stimulate lending. The bank hopes that by buying ABS, it will incentivise banks to lend by taking the risk of loans off their balance sheets.

9/16: This will actually get worse. 

firms such as Merrill Lynch have started to offer internship programs to college students. Additionally, colleges have started financial planning programs where students work with the Certified Financial Planner Board of Standard, Inc. to "provide students with the education requirement for the group's financial planner certification."

However, there's a problem. Only about one-third of students "who graduated from a college program that prepares them for the CFP certification actually choose to sit for the CFP exam" and programs have noticed a recent decrease in enrollment. Only approximately 50% of students get a passing grade, which is definitely a contributing factor to why less and less are taking the courses..

EFM- Having written courses, it is possible to design whatever passing rate you want. I think they just want to make in hard by, probably, demanding theoretical knowledge, not real life.  That way it is  either right or wrong and avoids intellectual subjectivity. Further, I truly wonder on the instructor's insight to the real world and the products coming to market daily are truly addressed. . 

The Big Book of Everything

Great great material


Table of contents
Personal Information
Current Resume
Emergency Plan
Passwords and Logins
Data backup plans
Groups and Organizations
Bank Accounts
Account Numbers
Previous Addresses
Employment History
Schooling History
Life Insurance Policies
Health Insurance Policies
Car Insurance Policies
Homeowner/Renter Insurance
Medical History
Prescription Medication
Extended Family Medical History
Long Term Health Care
Organ and Body Donation
Final Arrangements
Eulogy Notes
Personal Letters
Estate Plans
Other Contacts
Funeral Receipts
Other Assets
Retirement Plans
Private Business
Real Estate
Safes and Storage
Valuables Inventory
Tax Issues
Loan Obligations
Credit Report
Credit Cards
Other Debts
Debts Owed to You


Asset allocation:

Students of finance and investment management heading for the classroom this autumn will be taught the same mainstream theories as their predecessors.

Those theories failed to anticipate the 2008 financial crisis, or earlier crashes, and probably will not spot the next one. How can they when the underlying assumption is that markets are in a state of equilibrium that can only be disturbed by unpredictable events unconnected to market operations?

“No investment strategy based on mainstream finance theory can, therefore, protect investors from market-wide crashes,”

The assumptions underlying mainstream finance theory are “clearly false”, it says. Markets are not in general equilibrium or populated by rational agents with perfect knowledge of the future. Even supporters of the theory acknowledge the unrealistic nature of the models and the need to add extra components, such as taking account of money creation and the banking system.

In spite of this, the study reports a consensus that students should still learn the prevailing theory, with the caveat that it should be taught less dogmatically and more pragmatically.

The CFA study is encouraging in some respects, dispiriting in others. It gives a thorough airing to the critiques of finance theory that have surfaced post-crisis (although some are longer standing than that). It also acknowledges the difficulties in moving away from established theory and practice, not least because faith in the efficiency of markets and their self-correcting mechanisms is the dominant ideology.

With so much at stake, though, it is disappointing to realise that investment professionals are to a surprising extent working in the dark.(Who is an investment professional????? Inquiring minds would like to know)

"That the reality of markets should be the primary object of study is perhaps the key adjustment that needs to be made to both the theory and the teaching of finance,”

EFM: The bulk of those doing investments at the fund level do include CFAs. But I took two years of the courses in the mid 90s and was trying to figure out why they were teaching pure theory in a dot com bubble where every analyst was coming up with different valuation numbers> Or nobody did anything except listen to a 30 year old pretty boy on CNN say that business cycles were just a thing of the past. While I tend to agree that it is next to impossible to determine the scale of a downturn, in 2000 and 2006 a recession was readily identifiable.

There will be a pretty big drop due to our fabricated economy, but a consumers exposure to equities loss should not exceed about 10 to 15%. But consumers are irrational and  not very bright. Advisers are extremely limited since few have much background.

9/14: Permanent life insurance- just 22 percent of Americans own one. For the very wealthy they can make sense. Otherwise, why?????

Soldiers From Poor Countries Have Become the World’s Peacekeepers

On balance, the troops contributed by developing countries are more likely to be less well trained, under-supplied and ill equipped for the missions. Delays in financial contributions only complicate the challenges of modern peacekeeping.

So does the fractured nature of modern conflicts. Military experts, like General Sir Rupert Smith, have noted the shift from “industrial wars” of the past to today’s “war amongst the people.” Modern conflicts involve combatants whose ends are not merely the control of territory or the monopoly of politics. They wage war with their own rules, without concern for the U.N.’s mission to referee.

9/14: Just an example

Joint LTC: Are You Using the Right Plan?

$100,000 total
single premium

$100,0000 total
single premium

Thomas and Michelle
$200,000 total
Single Premium

Benefit Pool:

Monthly LTC Max:

Death Benefit:

Benefit Pool:

Monthly LTC Max:

Death Benefit:

Benefit Pool:

Monthly LTC Max:

Death Benefit:

Receive $2,498 more monthly LTC benefit, $42,558 more death benefit,
and an unlimited pool of LTC for the same premium!


Financial schemes against the elderly increasing. "And trusted caregivers...are often the ones at fault, according to legal and financial specialists. The over-65 segment is expected to grow to 20 percent of the total United States population by 2050 from 13 percent today, according to the Census Bureau, and financial abuse is expected to rise in tandem, draining hard-won retirement money....Older adults are appealing — and vulnerable — targets....They are also usually debt-free and own their homes. As dementia and Alzheimer’s rates climb, the elderly may also be increasingly incapable of protecting themselves from fraud." Constance Gustke in The New York Times.


Technical Market Indicators: An Overview

Current evidence on the predictability of technical analysis largely concentrates on price-based technical indicators such as moving averages rules and trading range breakout rules. In contrast, the predictability of widely used technical market indicators such as advance/decline lines, volatility indices, and short-term trading indices has drawn limited attention. Although some market indicators have also become popular sentiment proxies in the behavioral finance field to predict returns, the results generally rely on using just one or a few indicators at a time. This approach raises the risk of data snooping, since so many proxies are proposed. We review and examine the profitability of a wide range of 93 market indicators. We give these technical market indicators the benefit of the doubt, but even then we find little evidence that they predict stock market returns. This conclusion continuously holds even if we allow predictability to be state dependent on business cycles or sentiment regimes

A survey on 692 fund managers shows that 87% of the fund managers place some importance on technical analysis when making their investment decisions

Using a wide range of 93 market indicators, we find no evidence that they show predictability for future stock returns. This conclusion consistently holds even if we allow predictability to be state dependent on business cycles or sentiment regimes.

We review the predictability of a wide range of 93 technical market indicators in predicting the S&P 500 returns. This adds to the literature with evidence from widely used but less examined market indicators, to more conclusively answer the question of whether technical analysis is useful or not. Overall, we do not find the market indicators generate profits that beat the buy and hold strategy. This result does not change if we consider the possibility of regime-switching predictability on business cycles or sentiment cycles. Moreover, our results remain robust if we use a GARCH (1,1) or robust regression method. With previous mixed findings on price-based technical indicators, it is still not easy to provide a simple positive or negative answer to the broad question of whether or not technical analysis is useful. Our results, at least, make the answer not inconclusive with evidence from the family of market indicators missing.

9/14: Widows




Women are widowed in the US every year

Percent of women change advisors after a spouse dies

Average age a wife becomes a widow

I did not realize however that the average age was that low


New deposit regulations enacted by Fed and FDIC

Partner at Treasury Strategies, Inc.

Heads up: US regulators have finalized a rule that may affect the relationships many of you have with your banks.

Under Basel III guidelines, the US Federal Reserve and the FDIC finalized a rule called the LCR, or liquidity coverage ratio. The goal is to ensure banks have sufficient funding to withstand a crisis.

The LCR requires banks to segregate your demand deposits into "operational" and "non-operational" categories. Operational demand deposits are those arising from your day-to-day cash management and payments activities. Non-operational demand deposits are those in excess of your daily activities, or rate-sensitive deposits not subject to withdrawal limitations. In other words, non-operational deposits are those you can quickly move in the event of a problem at your bank.

• Under LCR, banks are free to use your operational deposits to make loans, leases and other general banking activities, much as they do today.

• Non-operational deposits can no longer be used in that manner. They must be backed only by high-quality, highly liquid assets, most likely US government securities. Thus, they are far less valuable to your banks and will be a drag on your banks' overall rates of return. Not all banks will be impacted in exactly the same way, however.

As banks look to attract operational demand deposits and discourage non-operational deposits, the economics of your banking relationship will change. We expect to see changes in bank service pricing and earnings credit rates, as well as entirely new deposit products. Depending on your banks, your cash flow volatility, service mix and absolute deposit levels, you may need to redesign your operational banking structure or reallocate your deposits.

9/14: Major Companies Move HQs Out of China

This article chronicles a subtle, but important, shift that is occurring in the Chinese corporate and real estate markets. Just as manufacturing is beginning to migrate away from China, so too are corporate offices. A subtle mix of forces is compelling large businesses, like Proctor Gamble, GM, or Archer Daniels Midland, to build and move staff to major offices outside of mainland China. The reasons for this are many—from heavy government scrutiny to rising costs of doing business—but the result is the same. Another major reason companies are leaving is that they are having a very hard time compelling talented staff to work in China, mostly because of choking air pollution and crowded expatriate schools for children. However, companies have been afraid to discuss such actions as all fear heavy retaliations from the Chinese state, which is willing to slap heavy sanctions on any country that abandons domestic offices. In the 1990s, Beijing imposed harsh punishments on Jardine Matheson, a UK firm, who decided to move their corporate headquarters overseas and delist from the Hong Kong stock exchange before the UK ceded Hong Kong to China in 1997.

9/11: 9 reasons why the economy stinks, according to Alan Greenspan

Read it, Pay attention

9/11: Home lending

This article, written by a New York Times economics columnist, argues that the post-Crisis era has brought with it an excessive focus on risk mitigation by banks. Mirroring banking industry commentary, the piece argues that regulators have forced banks into a position where they can tolerate almost no risks at all, and as such, many Americans are left in a position where they can access little financing to buy a first home. Long before subprime lending reached its pre-crisis excesses, the sector allowed borrowers with less than stellar credit or hard-to-prove income access to home ownership. The industry was risky, but it operated smoothly, at least until the early 2000s. However, the pendulum has swung so far in the other direction—subprime lending barely exists in the US—that it may be damaging the economy. Home ownership provides benefits to the economy that renting does not—like more purchases on furnishing, maintenance, and landscaping. However, most analysts recognise that the reasons for buying a home are as much emotional as economic.


9/11: Jerks

The level of carbon dioxide in the atmosphere surged at its fastest rate in 30 years last year amid signs the world’s oceans and forests might not be storing the planet-warming gas as readily as they have in the past.

CO2 lingers in the atmosphere for hundreds of years, and according to a new analysis by the UN’s World Meteorological Organization, CO2 concentrations rose 2.9 parts per million (ppm) between 2012 and 2013, the biggest annual increase since 1984.

Soldiers rescue Taliban sex slaves


9/10" Domestic violence vs wars
"For every civil war battlefield death, roughly nine people ... are killed in inter-personal disputes," 

9/10: An absolute fraud-

“Over and over again, I see the CFP Board is not enforcing fiduciary behavior on thousands of its members,” says Kahler.  “I see stuff coming in my door all the time, these crappy high-commission annuities sold by CFPs. You have all these insurance agents out there thumbing their noses at fiduciary, and holding themselves out to the public: hey, I’m a CFP, and CFPs look out for you.  We put your interests above ours.  Their ads that say that, but is the CFP Board paying attention?”

This, at least, is clearly spelled out in the Rules of Conduct, under the definition of the relationship with the prospective client or client:

1.4 A certificant shall at all times place the interest of the client ahead of his or her own. When the certificant provides financial planning or material elements of financial planning, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board.

EFM- At least 75% of all fee only financial planners nationally are illegal.

9/10: New Mortality Tables Will Impact Pension Plan Management: Wilshire Consulting estimates defined benefit pension plan liabilities will increase between 3% and 8% in total for most plans when they move to new Society of Actuaries mortality tables. Wilshire expects that many corporate plan sponsors will use the new mortality tables to calculate their accounting liabilities for the 2014 year-end disclosure. Even though the table is still in exposure draft form, auditors are likely to require the use of these tables for 2014 fiscal year-end disclosures. This will immediately increase reported pension liabilities and therefore decrease reported pension surpluses or increase reported pension deficits on balance sheets. The increase in liabilities will increase pension expense or decrease pension income. Read more »

9/10: Dark corners" If macroeconomic policy and financial regulation are set in such a way as to maintain a healthy distance from dark corners, then our models that portray normal times may still be largely appropriate. Another class of economic models, aimed at measuring systemic risk, can be used to give warning signals that we are getting too close to dark corners, and that steps must be taken to reduce risk and increase distance. Trying to create a model that integrates normal times and systemic risks may be beyond the profession’s conceptual and technical reach at this stage…The main policy lesson is a simple one: Stay away from dark corners.

Olivier Blanchard


When Caregiving is  Not Enough -
Finding Good Homecare

By Leah M. Pavela, LCSW


Find out if the agency you are considering is licensed and bonded.  In the case of a home health agency, this means that the quality of care being provided has been surveyed/accredited by an outside accrediting agency such as Medicare or the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).  The agency should also be licensed by the state in which it operates.  Agency outcomes can be researched by going to and going to their new “home health compare” tool, or calling the Medicare helpline at 1-800-MEDICARE. 


In terms of employees, confirm that all home health employees (nurses, physical therapists, home health aides, and social workers) are certified or licensed in the state they are working (regulations may vary by state), in order to ensure they meet minimum requirements to perform their duties.  Also important is to make sure that the agency does screenings of employees to ensure that not only do they not have a criminal background, but that they are free of communicable diseases which could affect the compromised immune system of a patient.


Ask what policies are in place to ensure patient confidentiality, and find out how far that policy extends.  Many caregivers, particularly ones who arrange for assistance long distance, find themselves frustrated after they arrange for care for a loved one, only to be told that due to HIPAA regulations, the agency cannot provide information on their health status.  At the outset of care, make sure of what the company’s policy for communication is and ensure that it is noted who may and may not receive information about the patient. 

Kathy R. found communication a problem with one home health agency while caring for her stepmother cross- country.  She faxed a durable power of attorney right to the home health agency but “they still wouldn’t tell me anything!”  She states that “especially when you are working from a distance, your hands are tied when there is no communication.” 


For most people, it is a far better choice to choose a “full service” agency which provides for all their needs (nursing, home health aide, physical therapy) than to pick and choose services from different agencies.  This ensures that caregivers are free to communicate amongst themselves on a patient’s progress and work collaboratively to resolve any issues, rather than if they are all from different agencies and forced to stab blindly at problems as they arise.


Most patients fare better when they see one or two familiar faces rather than a steady stream of strangers passing through their lives.  Find out if the same person will be caring for your loved one, or if they will see a new person on a continual basis.  Having one or two familiar caregivers is particularly helpful in the case of people who are confused or frail, as this helps both the patient and caregiver get used to a routine.  It also helps the caregiver know what is “normal” for a patient and what is not normal and warrants a call to the doctor.  Also important to find out is what will happen should the regular worker call in sick.  Will the person be forced to wait for assistance until the next day?  Will a substitute come out at the same time?  Will the person have to wait for hours until another worker has time in their schedule? 


Find out what the procedure is if there is an emergency.  Is there always someone on call?  Will a patient need to wait until the next business day to speak with someone should an emergency happen after the regularly scheduled service is performed?  A good agency should have someone on call 24 hours a day, seven days a week, so urgent matters need not wait until the next scheduled visit.

FINANCIAL RESPONSIBILITY – A reputable agency will not hesitate to address the patient’s financial considerations and should provide the patient/caregiver with a written statement explaining what is/is not covered by insurance/Medicare, and what services the patient will be responsible for out of pocket, if any. 


Check with friends, your physician, ask people at your place of worship, or attend a support group and ask which home care agencies others are using.  One of the best ways to assess how an agency performs in the home is to look past the glossy brochure and ask people how they feel about the service that has been given to their loved ones.  Chances are that good or bad, people will be happy to share their experiences. 


Many people who look for home care erroneously assume that if their loved one needs assistance in the home, Medicare will cover the service.  This is not always the case.  Medicare limits itself to “reasonable and necessary part time or intermittent skilled nursing care and home health services,” and does not include 24 hour care, services which are limited to “homemaking” services, assistance with transportation, or companion services.  Unless a person has a long-term care insurance policy which provides for these services in the home, home care can be cost prohibitive.  Although most people prefer to “age in place,” there are times that due to financial resources and the availability of finding good, reliable, continuous care, that an assisted living community may be a better choice than in-home care, both financially and for the assurance of the safety and health of a loved one.

As one popular commercial for menswear states, “An educated consumer is our best customer.”  There is possibly no arena in which this is truer than in the search for good, reliable home health care.  Ronnie Thomas, who is a part owner/administrator for a home health agency in Broward County, states that when a person is considering home health care for a loved one, one should make an informed decision and weigh all the options.  She believes that first and foremost to remember is that the services the patient is receiving is paid for by insurance (usually Medicare) and since this is money the loved one worked hard for and paid into the system, they are entitled to and deserve good, quality care which puts the patient’s needs first, out of the system.  “Attentive, kind, quality care from committed professionals who involve the family as much as possible,” are things she believes should be insisted on.  Kathy R. believes the same.  “Compassion and good communication between caregiver, patient, and the home health provider are paramount,” she states, and although she has had many sleepless nights worrying about her stepmother’s health, she knows that the home health provider she now uses provides her with one less thing over which to worry.

  1. Individual and Group Behaviour Toward Risk: A Short Survey




Temerario, Tiziana


In the real life groups, rather than individuals, take the most part of decisions. So that it is useful to study how groups take a decision in different strategic environments. This paper provides an overview of previous research about groups’ preferences over risk. I compare different experimental designs and examine their different results, focusing on how groups reach agreement in risky choices, compared with individuals.

9:8: Adult Obesity Rates by State, 2013

Obesity rates rates for blacks exceed 40 percent in 11 states and 30 percent in 41 states; for Latinos, they are greater than 30 percent in 23 states; but for whites, they are higher than 30 percent in only 10 states.

There is also a wealth divide: More than a third of U.S. adults earning less than $15,000 a year are obese, while only a quarter of those earning more than $50,000 annually carry that distinction.

And there's even a generational divide: Baby boomers (adults aged 45 to 64 years old) are more likely to be obese than any other age group.

This is hard to believe

9/7: Watch the U.S. transition from a manufacturing economy to a service economy, in one gif

Illuminating. We are not going back to a manufacturing society no matter what the government may like 

9/7: Autos kill 40,000 Americans per year. Alcohol about 88.000. 40,000 on drug overdoses

9/7 Most of us will be useless in 20 or so years. Absolutely in 40 years

9/7: 1 in 5 U.S. Women Are Raped at Some Point
And another 40% experience another form of sexual violence.

And we call ourselves civilized??????

Rapists and pedophiles should not exist in our society.

9/7: A outline for student financial literacy

Pretty good but it won't help them in the real world of investing.

9/7: Origins and Destinations of the World’s Migrants, from 1990-2013

Taking Care

By LeAnn Thieman


Terry stacks the breakfast dishes into the sink, hands the freshly-packed lunchboxes to her son and daughter, bundles them into their coats and boots and hustles them to the school bus. With a smile and a wave she promises, “I’ll pick you up after school. We’ll make Christmas cookies for your Girl Scout meeting, then go to your basketball game.”

She scurries back into the house to spoon-feed one more before leaving for her part-time job. After wiping his hands and face, she kisses his nose, helps him into the car, buckles him in, and drives him to daycare. Hugging him, she promises, “I’ll pick you up at lunchtime, Dad.” With a vacant look in his eyes he asks, “But what about breakfast?”

Terry is one of the 54 million Americans caring for a family member. Over 40 percent of families who provide care for an elder have children at home under the age of eighteen. Seventy-five percent of caregivers are women. Part of the “sandwich generation,” many will spend more years caring for a parent than they will raising a child. Not only are they ministering to their parents and children, many are caring for their children’s children. From 1990-2000, the number of kids living with grandparents increased 30 percent.

Alarmingly, women who care for grandchildren have a 55 percent greater risk of heart disease. Caregivers of someone with a chronic illness have a 63 percent chance of dying early. It’s no wonder caregivers often experience troublesome feelings such as depression, resentment, worry, helplessness, exhaustion, guilt, anger, and sadness with reversal of parent-child roles. But when caregivers care for themselves, these statistics and severe emotions can be drastically reduced.

Caregiving depletes a person not only physically, but also emotionally and spiritually. Because 25 percent of the world population is caring for someone, we all know a person in a caregiving role. Here are 12 easy tips for you to help care for that caregiver, not only during the holidays, but every day:

  1. Extend compassion and empathy first.
  2. Encourage them to care for themselves as attentively as they do another. Remind them to get regular checkups, to eat properly, exercise, and get adequate sleep.
  3. Suggest they take time out for themselves and use relaxation or stress management techniques such as meditation, visualization, biofeedback and yoga.
  4. Advise them to pay attention to their own feelings and emotions and to seek counseling and support groups if needed.
  5. Listen.
  6. Help them to stay actively involved with friends and hobbies.
  7. Assist them in finding respite care so they can regularly take time for themselves.
  8. Subscribe them to supportive caregiving periodicals and magazines such as Today’s Caregiver and gift them with spiritual, inspirational, encouraging books.
  9. Help them tap into community-based and national resources for support. The National Family Caregiver’s Association, and the Area Agency on Aging, are great places to start.
  10. Deliver a heat-and-eat meal.
  11. Offer to sit with their loved one, even for 30 minutes, so they can take a bubble bath or a walk.
  12. Tell them how much you admire them for all they are doing.

These small efforts to care for the caregiver create a win/win/win situation. Your relationship with the caregiver will flourish; the family member will receive care from a happier, healthier caregiver; and that caregiver will feel cared for, too—a much needed and overdue gift, any time of year.

9/7 Fee only versus commission


Unemployment trickles down to poorer workers, study finds. "During recessions, higher-income workers with more education take jobs that are below their qualification level, according to new research. Such underemployment, in turn, leaves fewer job openings for which the so-called lower-skilled workers are qualified....Making a case that several Fed officials, including Chairwoman Janet Yellen, have emphasized in the past, Messrs. Barnichon and Zylberberg argue the U-3 rate is too narrow to capture all of the labor market weakness that has resulted from the recent recession, the most severe economic downturn since the Great Depression." Pedro Nicolaci da Costa in The Wall Street Journal.


Caring for Someone with Bipolar Disorder

By Julie Totten

(Page 1 of 3)

Soon after Missy had her daughter, she stopped sleeping, going from eight hours a night down to only two or three. Her thoughts were racing, and she was going a million miles an hour. After a few nights, Missy’s husband Bill finally took her to the hospital. He couldn’t believe that one minute his wonderful wife seemed just fine and now she had become a patient in a psych unit.

From the time Ally was nine months old, her parents Bill and Nancy knew that something was wrong. Ally couldn't sleep, had temper tantrums up to 20 times a day, and increasingly became more aggressive. Medical professionals told Bill and Nancy not to worry, that she’ll grown out of it, but they continued to seek help from doctor after doctor.

Nell’s sister, Maud, stopped taking her medication for bipolar disorder and fell into a depressive episode. Nell threw all her energies into visiting her sister at the hospital, comforting and supporting her while the doctors tried drug after drug before finding the right ones; explaining to Maud’s boss why she would be out of the office for weeks or more; and wondering how to cope with the new financial and emotional burdens in her life.

Missy, Ally, and Maud all have bipolar disorder (also known as manic depression), in which moods gyrate between the highs of mania and the lows of depression. They have been hospitalized, have struggled to come to terms with their diagnosis, and have suffered deeply.  All three have family caregivers -- a spouse, parents, a sibling – who are dedicated to helping them recover, but who feel uninformed, isolated, overwhelmed, sad, and at times, angry and hopeless.

Caring for someone with any illness is difficult. Caring for someone with a psychiatric illness is especially hard for many reasons.  Health care coverage is far more limited than for other illnesses. Just getting someone who is in a state of mania -- even when psychotic -- hospitalized and accurately diagnosed is a major accomplishment. Bipolar sufferers, particularly when they are in an up (manic) rather than down (depressed) phase, often refuse to see a clinician and stop taking their medication. The medications are powerful and have unpleasant side effects.  There is no cure for bipolar disorder and so the drugs must be taken for life, a daunting prospect, especially for younger sufferers.  Finding the right meds may take as long as several years, and over time they may stop working.   For family caregivers, coping with someone who is manic or depressed takes a heavy emotional toll and strains the relationship, often to the breaking point. An added burden is the stigma of mental illness, which leaves families feeling frightened and isolated, unaware that many other families share their experience.

Given all these challenges, caring for someone with bipolar disorder can be overwhelming and at times an impossible responsibility to maintain. But there are ways to cope effectively. Families for Depression Awareness, the nonprofit organization I founded (after losing my brother and helping my father get diagnosed with depression), has interviewed many families that are doing well. True, it took a while to learn how best to help and support their bipolar family member, and time, too, to learn that caregivers also have needs that must be met.  Sometimes the stresses and strains were intense, and these families have had their ups and downs. But by educating themselves about bipolar disorder, improving treatment by finding the best possible medication and therapy solutions possible, and communicating as a tightly knit unit, these families have met the challenges, survived intact, and are emotionally healthy.

Here are ways that you can help someone with bipolar disorder:

Become educated. The first step is to become educated about bipolar disorder, so you have realistic expectations and coping options. There are books, brochures, and videos on a variety of topics. We have Family Profiles, (stories of people who cope with bipolar disorder), a brochure, and other resources on our web site,

Make this is a family matter. Acknowledge that one member’s depressive disorder affects the entire family. Everyone in your immediate family needs to learn about bipolar disorder, its symptoms and early warning signs, how it is treated, and what the side effects of medications may be. And to whatever degree possible, each member should participate in the caregiving process.  Being a caregiver is stressful, and it is important that family members discuss their feelings and opinions. Sometimes it helps if a skilled family therapist facilitates these discussions in group sessions.

Be a partner in treatment. Find the right treatment for each individual bipolar sufferer usually means going through a process of trial and error with multiple different medications. Patients also need talk therapy to heal. Finding qualified clinicians (e.g., psychopharmacologist, psychiatrist, psychologist) is essential.  As a family caregiver, you can help by finding the best clinicians in your area, scheduling appointments, keeping track of medications and making sure they are taken as prescrib

ed, and being an early warning systems by reporting changes to the clinicians.

Meet with the patient’s clinician. Make sure to meet with the clinician treating your family member from time to time. Try to go with your family member and if needed, set up some appointments on your own. Although clinicians have to maintain patient confidentiality, they can listen to you and you can report issues you are having caring for your family member.

Be understanding. Let your family member with bipolar disorder continually know that you care. People with bipolar disorder have negative thoughts and are hopeless in a depressive state. They need to be reminded that you and others are concerned about them and that you are working together to help them get well.

Take care of yourself. Set healthy boundaries on how much you do so you don’t burn out. Take a vacation from caregiving from time to time. Many caregivers develop depression, so don’t be afraid to seek medical help for yourself. You also may need help processing and dealing with your emotions.

Find social support. Dealing with bipolar disorder can be lonely and isolating. You’ve watched the healthy person you once knew deteriorate and suffer. Your friends don’t understand bipolar disorder, and it is difficult for you to go out. Make sure you find sources of support such as a bipolar support group in your area.

Develop a crisis plan. Talk to your family member with bipolar disorder about what you will do if the person becomes manic or suicidal. For example, some people with bipolar disorder and their families decide that it is best for the person with bipolar disorder not to use credit cards. Also, determine what you will do if you need to hospitalize the person. Put your plan in writing.

Symptoms of Bipolar Disorder

Bipolar disorder is depression alternating with mania (elated or irritable moods and increased energy).

For at least two weeks, five or more of these symptoms:

  • Feeling miserable and sad almost everyday
  • Losing interest or pleasure in most activities
  • Feeling anxious or irritable
  • Having trouble concentrating or remembering
  • Feeling tired
  • Feeling guilty
  • Sleeping too much or too little
  • Eating too much or too little
  • Have medically unexplained aches and pains
  • Abusing alcohol or drugs
  • Thinking of death or suicide

At least three of these symptoms:

  • Increased energy and decreased need for sleep.
  • Excessive irritability, euphoria, or aggressive behavior.
  • Increased talkativeness or pressured speech.
  • Disconnected and racing thoughts.
  • Impulsive behavior and poor judgment such as spending sprees, erratic driving, or sexual indiscretions.
  • Inflated self-esteem
  • Increased goal-directed activities
  • Distractibility

Signs of Suicide
If someone has been preoccupied with thoughts of death or suicide, call his or her clinician today. If you think the person may be harmful to you or others, call 911 or take the person to your local emergency room. Other warning signs include:

  • Talking about hopelessness and worthlessness
  • Suddenly being happier and calmer during a depressive episode
  • Making unusual visits or calling people one cares about
  • Making arrangements or getting one’s affairs in order
  • Giving things away

If someone is manic 
During mania, a person may become paranoid, believe ideas that aren’t based in reality, spend a lot of money, or engage in unsafe activities. Remember that these behaviors are part of a manic state and the person is not in a normal state of mind. Try to prevent the person from carrying out these actions by talking to them and calling the clinician. You also need to keep the person and your family safe. Sometimes people in a manic state must be hospitalized. Make sure you discuss the behavior and options with your clinician, if possible before a crisis occurs so you can take appropriate action.

Have hope. Remember that in most cases, bipolar disorder is treatable and can be stabilized. The condition is usually cyclical, so be prepared for it to worsen and/or improve at times. Finding the right treatment can be a drawn out process, but in time, a solution will be found.


Most emerging markets managers underperform

Emerging markets are held up as the poster children for inefficiency and, it follows, as the perfect region for active managers to outperform benchmarks. But despite heightened volatility, uncertainty and wide return dispersion, the majority of money managers failed to outperform their benchmarks


That 40-hour workweek is a lot more than 40 hours. "Full-time American workers labor the equivalent of nearly an additional day each week, averaging47 hours instead of the standard 40, according to Gallup poll results released Friday. Just 42% of full-time employees work 40 hours a week, the traditionaltotal based on five 9 a.m.-to-5 p.m. workdays, Gallup said of findings it released ahead of the Labor Day weekend. Nearly the same percentage — 39% — saythey work at least 50 hours a week. And almost one in five Americans, or 18%, said their workweek stretched 60 hours or more." Jim Puzzanghera in the Los Angeles Times.

9/3: The Federal Deposit Insurance Corporation (FDIC) and Consumer Financial Protection Bureau (CFPB) have made available a resource guide entitled Money Smart for Older Adults.

home care claims accounted for 51% of those opened under long-term care policies in 2012

home care services are what more than 70% of Genworth’s long-term care claimants seek.

9/2: Risk wheel

1/3 of the key drivers of risk identified by the FCA are Behavioural Economics theories in action

 the FCA divides the key drivers of risk into 3 categories: inherent, structures and business conduct and environmental, as shown in their ‘key drivers of risk’ diagram. The third in the inherent category are driven by Behavioural Economics theories.

Consumers’ understanding, time and capacity to take in financial information and assess risk is limited. We all know that clients often take mental short cuts and can display seemingly illogical biases towards certain products or services. We all understand that those within financial services have a greater level of information, knowledge and financial capability than their clients… after all that’s why consumers come to regulated firms for advice; they come for your superior expertise, knowledge and experience.

Yet many organisations’ conduct risk policies, though created to ensure customer are treated fairly and consistently, in practice don’t allow advisers enough flexibility to tackle these issues head on. Advisers must be educated on the risks posed by these features of Behavioural Economics and empowered to adjust their customer conversations to minimise the impact of the particular biases, information asymmetries and levels of financial capability displayed by each client.  In most cases, a principle led approach, where culture and values drive the customer conversation, is more effective than strict adherence or a tick box approach to governance.

EFM" I get really tired of yet more rhetoric explaining risk as it pertains to the retail client. Effectively every asset allocation has a risk of loss that can then be compared to almost all other allocations. Now both teh adviser and client are on the same page (objectively though not necessarily emotionally) and can then decide what to do. Of course, that begs the issue if the advisor has a clue to what can be done.

“For every good idea, ten thousand idiotic ones must first be posed, sifted, sniffed, tried, and discarded. A mind that's afraid to toy with the ridiculous will never come up with the brilliantly original."

 David Brin, Orbit interview


  1. Social psychology and gender efficiency wage gap




Jellal, Mohamed


Our paper introduces the dimension of social psychology in a model of efficiency wages and gender diversity. In this context, we show that women earn lower wages than men but provide in return relatively less effort. Therefore in order to increase women's productivity, the firm increases their level of employment. In our efficiency-wage theory, women’s lower wages is explained by assuming that efficiency-wages function for women are believed to be different from those of men. This could be the case if the firm believes that women do not react with more effort to higher wages because they are not work career oriented, so it might not be worth it to pay them high wages. In that case, firms would employ more women for the minimum possible wage. This assumption can be based on stereotypes describing about women as more averse to wage competition pressure than men and less career oriented.

  1. The magic of storytelling: How curiosity and aesthetic preferences work




Bianchi, Marina


Why do we love stories? That this is not an idle question is shown by the fact that we spend an enormous amount of time in our lives following stories: telling and listening to them; reading them; watching them on television or in films or on stage. Despite their recurrent similarity and even predictability, we continue to enjoy them. The paper brings to bear on this question two different strands of current literature in experimental psychology: the literature on aesthetic preferences, and the literature on curiosity and interest. The paper discusses how, in the case of storytelling in particular, though also of creative activities in general, there are two types of curiosity at work: explorative curiosity - associated with investigating new ideas for the simple joy of it and regardless of source - and specific curiosity, corresponding to focused exploration and aimed at solving problems for which the accuracy and relevance of i nformation is of importance. In both cases curiosity is felt as an intensely pleasant experience, which is affected not only by external, but also by the internal stimuli of novelty and challenge. But how does interest/curiosity solidify into preferences that have stability enough to guarantee guidance yet sufficient flexibility to allow for change? The answer explored here highlights the distinction between comfort goods and activities and creative goods and activities. The latter, which allow for complexity, variety and multiplicity of dimensions have a transformative power that allows also for sustained stimulation and interest. The broader aim is to analyze the behavior of individual preferences in consumption activity, not only of art, the usual focus in discussion of aesthetic preferences, but also of all those goods and activities that can be called creative. --


Depression, pain, ill health- a life in retrospect

This is, in part, a reaction to Robin Williams, and others such as Catherine Zeta- Jones,  but I waited till some of the excess rhetoric about depression, et al, settled down. However, sometimes one needs to say something to give others an idea that the grass is not always greener on the other side.

I am more than familiar with the elements that can have a life take a turn that one could not plan for. Readers know that I have worked in the personal planning area for decades and obviously followed the basic formats for retirement, etc. However, as some are aware when looking at statistics and the smooth curves of probabilities, there are scenarios that fall far afield of the norm. As I did.

About 20/25 years I started feeling lethargic- the energy level dropped, the ability to concentrate dulled by various headaches and other maladies. The headaches became a daily occurrence, a part of the way I lived. These were not migraines- but were often diagnosed that way. They were not sinus- though often diagnosed that way. Nor were they compounded by late stage polio, asthma, allergies, rheumatoid arthritis……

MRIs, cat scans, blood tests galore- nothing. Every day I get up and “check to see if I died”. You face a day wondering how bad you will be, not whether you will be happy, competent or even functional.

As I have said about clients, anyone who has been in pain or ill for a long time will encounter depression, anxiety and a lot more. It is a given. I have faced these demons and for the most part they have won. My business suffered irreparably since I was only lucid for a couple hours per day. The retirement I had properly planned for took a real hit. But what can you do when the “tail risks” happen? Recently I had other medications that offered promise- but the side effects halted those.

This is not for those to offer their sympathy but to suggest that when you hear about a Robin Williams or others that suffer, it is not something you shake away nor might even be able to alleviate. Sometimes life is not forgiving. All that said, I think of those in Syria who were killed, children in slave trades- I go back to those in the holocaust and find the suffering and loss unimaginable. None of us in America are that bad off- though it sometimes feel like it is.

In short, don’t prejudge those you meet who have mental or physical difficulties. We just plod along as best we can. The grass is not always greener…………….. 


State-by-State Guide to Taxes

Click on any state in the map below for a detailed summary of state taxes on income, property, and everything you buy. View additional maps below, including our picks for the 10 most tax-friendly and the 10 least tax-friendly states in the U.S. (Retirees, visit our Retiree Tax Map to learn how each state taxes different kinds of retirement income and to discover special tax breaks for seniors.)

Hover over or click on any state in the map for the option to add the state to your compare list to quickly see how selected states stack up.

9/2 ISIS:

HOW BAD ARE THEY? - A pastor serving in Iraq says the "Islamic State's murderous rampage is like nothing seen since the days of the Holocaust." "People have lost their homes, they have lost their future." Tragically many have lost their lives. His organization, which has 150 total staff members, including doctors, dentists and relief workers, had raised about a half million pounds (approximately $828,540) toward these efforts, money that predominately came from British churches

8/31: Brain fat and Alzheimers


Obesity harms most organs in the body, and new research suggests the brain is no exception. What’s more, the researchers found that getting rid of excess fat actually improves brain function, reversing the ill effects of the extra weight. The new study, which focused on people who underwent bariatric surgery, found that the procedure had positive effects on the brain, but other research has shown that less invasive weight loss strategies, like exercise, can also reverse brain damage thought to be related to body fat.

Here’s why that matters: Obese men and women are estimated to be about 35% more likely to develop Alzheimer’s compared to people of a normal weight. Some research suggests that body fat ups the number of proteins in the brain that trigger a cascade of events that predispose someone to the disease, and other research in mice has suggested that fat cells release a substance called interleukin 1, which can cause severe inflammation and, in turn, gunk up the brain.

In a recent study, a team of researchers looked at 17 obese women prior to bariatric surgery and found that their brains metabolized sugars faster than the brains of a control group of women at a normal weight. The women underwent cognitive function tests before their surgery as well as after. The results show that after surgery, the obese women showed improvement in the troubling brain activity seen prior to going under the knife, and they performed better on their cognitive function tests—especially in the area of executive function, which is used during planning and organization. The findings suggest that the fat loss reversing its bad effects on the brain.

It is possible that the long-term “cerebral metabolic activity”—meaning the way the brains of obese people process sugars—leads to structural damage that can hasten or contribute to cognitive decline

19 things to know about Medicare Advantage

  1. Lost at Sea:The Euro Needs a Euro Treasury




Jörg Bibow


The euro crisis remains unresolved even as financial markets may seem calm for now. The current euro regime is inherently flawed. Recent reforms have failed to turn the dysfunctional euro regime into a viable one. The investigation is informed by the “cartalist” critique of traditional “optimum currency area” theory (Goodhart 1998). Various proposals to rescue the euro are assessed and found lacking. A Euro Treasury scheme operating on a strict rule and specifically designed not to be a transfer union is proposed here as condition sine qua non for healing the euro’s potentially fatal birth defects. The Euro Treasury proposed here is the missing element that renders sense to the current fiscal regime that is unworkable without it. The proposed Euro Treasury scheme would end the currently unfolding euro calamity by switching policy from a public thrift campaign that can only impoverish Europe to a public investment campai gn designed to secure Europe’s future. No mutualization of existing national public debts is involved. Instead, the Euro Treasury is established as a means to pool eurozone public investment spending and have it funded by proper eurozone treasury securities.

Differences in U.S. Cost of Living

Fascinating interactive graph

8/31:Americans Find Conversations About Finances Difficult

– A significant number of Americans find conversations about financial issues difficult, a survey finds.

Northwestern Mutual's 2014 Planning and Progress Study found 42% of American adults have not spoken to anyone about their retirement. Only 39% have had conversations with their spouse or partner about the subject. 

8/28: You heard it here first- if the world does not institute major global warming changes now, by 2050 you will see a drop in actuarial lifetimes worldwide.

8/28 way out of whack


Bernanke: Lehman Was Worse Than The Great Depression (WSJ)

WSJ's Pedro da Costa has pulled a fairly stunning quote out of an AIG bailout lawsuit: Bernanke believed the 2008 financial crisis was worse than the Great Depression. “September and October of 2008 was the worst financial crisis in global history, including the Great Depression,” the former Fed chair said. Of the 13 “most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.”


8/27: I agree- the optimism on manufacturing was simply that- optimism

Factories keep losing ground to global rivals. "America's shale boom has raised hopes of a revival in U.S. manufacturing, in part fueled by cheaper energy. But U.S. factories still are losing ground to rivals in Asia and Europe....The U.S. deficit on trade in goods swelled in the first half to $371.59 billion from $354.64 a year earlier. Imports rose 3.3%, while exports increased 2.6%....Without a strong, sustainable increase in exports, U.S. factories are unlikely to have the kind of resurgence forecast by some pundits. But achieving that growth is difficult as China and other countries have pursued aggressive export strategies and the U.S. has lost manufacturing skills and suppliers after shifting production overseas." James R. Hagerty, John W. Miller and Bob Tita in The Wall Street Journal.

8/27: Interesting-

5 year fixed income note, 5.5% rate, 5 year surrender charge reducing by 2% over 5 years, monthly income or deferral, Very attractive Broker/Dealer or RIA commission/fee.

Available in two months.

Risk must be high


Medicare covers those aged 65 and older, along with younger persons with disabilities and end-stage renal failure. To qualify at age 65, a person must have been a U.S. resident for at least five years and they or their spouse must have paid Medicare taxes for at least 10 years. 

Medicare Part A

Medicare Part A covers in-patient hospital expenses (with limits); skilled nursing care and nursing home care (under certain circumstances and with limits), and hospice care. As for the limitations to coverage, there is a limit of 90 days per stay in a hospital, plus a coinsurance. During the first 60 days there is no coinsurance. However, from day 61 to 90, the individual is responsible for a co-pay of $304 per day. From the 91st day on, the coinsurance is $608 per each "lifetime reserve day" up to a maximum of 60 days total over the individual’s lifetime.

To clarify, a lifetime reserve day is any day over the first 90 days of an individual's lifetime. For example, if a Medicare patient were in the hospital for 100 days during one hospital stay, the last 10 days would be considered "lifetime reserve days" leaving the person with 50 of these days to use over their lifetime. The point here is that Medicare Part A has some potentially expensive gaps which is why a person should purchase a Medicare supplement plan (or see Medicare Part C below). 

Medicare Part B

Medicare Part B is optional and covers outpatient expenses such as lab tests, outpatient surgeries, doctor visits and limited outpatient prescription drugs (typically not drugs you would administer yourself). Coverage begins after meeting an annual deductible of $147 (2014). After meeting the deductible, the individual must also pay a coinsurance of 20 percent of the Medicare-approved charges for services and drugs.

Medicare Part C

Medicare Part C is not actually a separate coverage, but is the part of Medicare which allows private health insurers to create Medicare replacement policies. In short, an individual may elect to purchase one of these plans in lieu of Medicare and a supplement.

In the past, an individual with Medicare would often buy a Medicare supplement to cover procedures or illnesses which Medicare did not cover. However, when Congress passed the Balanced Budget Act of 1997 it included a provision to allow what was originally called Medicare +Choice or Part C plans.

When Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the name of these plans was changed to Medicare Advantage plans. Therefore, Medicare Part C created the Medicare Advantage plan which is an option that can be purchased in lieu of traditional Medicare. Normally, these plans are fairly comprehensive in coverage. 

Medicare Part D

This is the newest part of the Medicare program and covers prescription drugs. Moreover, it is also available to anyone with Medicare. There are two ways to obtain Medicare Part D coverage. They are: 

1) Join a plan run by an insurance company or other private company approved by Medicare; or

2) Purchase a Medicare Advantage plan which covers prescription drugs (see Medicare Part C above). 

Medicare Part D covers prescription drugs up to a maximum of $2,970 per year.

To find a Medicare Part D program, you can view the Medicare choices online or call 800-633-4227

People who are right a lot of the time are people who often change their mindsMuch of dealing with our biases is simply being willing and able to change our minds when its appropriate.  It’s hard, but the reward is huge
Jeff Bezos


8/26: Bad banks:

A new article, published in the New York Times, argues that several European Banks may be on the verge of collapse as new analysis shows that many do not have enough of a capital buffer to absorb the bad loan rates they are experiencing. In the late 1980s an equity analyst invented a very simple ratio for assessing the health of Texas banks during a regional debt crisis—the Texas ratio, which simply compares bad loans rates versus the capital set aside by banks. The ECB is expected to come down hard on banks who do not have adequate cash buffers, so investors have been scrambling to decipher which banks may fall victim to heavy scrutiny, or even closure. According to analysis by Nomura, 11 of the Eurozone’s 100 largest banks stood out as having inadequate capital, but three in particular had ratios of over 150% (bad loans vs. capital)—Piraeus Bank, Banco Popolare in Italy, and Banco Popular Espanol in Spain.

8/26: Gross output:

Why pay attention to gross output? For starters, research I published in 1990 shows it does a better job of measuring total economic activity. GDP is a useful measure of a country's standard of living and economic growth. But its focus on final output omits intermediate production and as a result creates much mischief in our understanding of how the economy works.

In particular, it has led to the misguided Keynesian notion that consumer and government spending drive the economy rather than saving, business investment, technology and entrepreneurship. GDP data at the end of 2013 put consumer spending first in importance (68% of GDP), followed by government expenditures (18%), and business investment third (16%). Net exports (-2%) makes up the difference.

Thus journalists and many economic analysts report that “consumer spending drives the economy.” And they focus on retail spending or consumer confidence as the critical factors in driving the economy and stock market. There is an underlying anti-saving mentality in this analysis, as evidenced by statements frequently made during debates on tax cuts or tax rebates that if consumers save their tax refund instead of spending it, it will do no good for the economy. Presidents including George W. Bush and Barack Obama have echoed this sentiment when they encouraged consumers to spend rather than save and invest their tax refunds.

Although consumer spending accounts for about 70% of GDP, if you use gross output as a broader measure of total sales or spending, it represents less than 40% of the economy. The reality is that business outlays – adding capital investment and all business spending in intermediate stages of the supply chain – are substantially larger than consumer spending in the economy. They make up more than 50% of economic activity.

Going back to my more visual “dials” metaphor, when you look at gross output you see that it gives us an additional and much larger dial for stimulating growth than simply trying to increase consumer spending. The real driver of the economy, as measured by gross output, is not consumer spending but private production and business spending. And indeed, we find that that is where the jobs are, and they are far higher-paying jobs than in the retail sector, which is where final consumption resides

8/26: Idiots


This derives from the fact that economists are not exogenous observers of economic processes. They are, rather, fallible humans who are just as engaged in the phenomena they observe as anyone else. Arguably, more so. As Soros notes, the output of economists' models, as expressed via the economists' own social behavior, affects the behavior of the economic system they are attempting to describe:

"I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity."

We cannot attribute [our adversaries'] responses to the nature of the events or issues that elicited them because we deem our own different responses to be the ones dictated by the objective nature of those events or issues. Instead …. we infer that the source of their responses must be something about them.
 IUL  (Veralytic)

Never have we heard a better description of Indexed Universal Life (IUL) then in the comment section of an article describing IUL looking like the El Camino (part sedan, part truck but it does neither particularly well) of life insurance. IUL has often been described as part downside protection and part upside potential but like the El Camino neither one works really well.  Which is all the more surprising when in 2012, Fox Business had this to say about IUL: “An emerging and fast-growing contract design — the indexed universal life (IUL) policy — may come very close to being the ideal contract for most consumers in today’s interest and overall market environment.” 

The newest type of life insurance product, introduced in 1997, the market share for this product type has grown steadily since 2004 and is the fastest growing of all permanent life insurance products.  Indexed universal life (indexed UL) improved 1 percent in the fourth quarter, ending 2013 up 13 percent and recording the greatest increase in absolute dollars compared to other product lines. In 2013, indexed UL represented a record 35 percent of UL premium and 13 percent of total life insurance premium. (Source: LIMRA).  Does this takeover of market share from other products, such as Whole Life and Current Assumption Universal Life (Current Assumption UL), imply that Indexed UL is inherently a “better” product?  Is it really the ideal contract?

Unfortunately, probably not.  When a new product is introduced, it has no history, no track record, so the illustrations used in the sales process have few if any restrictions.  This can be seen in the 1980s when Current Assumption UL was illustrated at 12%.  As many consumers have come to realize, the crediting rates on those policies have declined to an average of 4% - 5% and many are underfunded and in danger of lapsing without value if they do not pay considerably higher premiums than originally illustrated.

When it was first introduced, Indexed UL was also commonly illustrated at higher rates of return, as high as 12% in some cases.  Over time regulators have now introduced formulas that must be used that restrict the rate of return for the illustrations to something that is more reasonable, but is it really realistic to be illustrating Indexed UL at 7% and Current  Assumption UL at 4%?  Are the products really that different and can Indexed UL produce returns 300 basis points higher than Current Assumption UL?

Indexed UL is said to deliver higher returns than Current Assumption UL with equity-linked participation rates.  The insurance company uses their general account yield to purchase equity exposure from a third party, whereas the Current Assumption UL crediting rate is based solely on that general account yield.  In addition, both products also have expenses that the insurance company deducts from cash values.  Indexed UL therefore, is not that much different from Current Assumption UL.  Both products produce returns that are linked to the insurance company’s general account. Both products are subject to expenses deducted by the insurance company.

  1. Financial Regulation After the Crisis:How Did We Get Here, and How Do We Get Out?




Gerard Caprio, Jr.


Following the crisis of 2007, regulatory authorities either are or should be engaging in a fundamental reconsideration of how they approach financial regulation and supervision. This paper briefly summarizes the present international consensus on regulation as embodied in the Basel framework, looks at how we came to be in such a situation, and proposes a re-start of the process that has been organized by the Basel Committee on Bank Supervision. It reviews the flaws of that framework and concludes that its weaknesses are fundamental, in its neglect of the endogeneity of risk to the regulatory structure, and of the dynamic nature of finance, and thus of its regulation as well. Neither a static rulebook, nor an ever increasingly complex one, will ever provide financial safety and soundness. Specific recommendations are made, starting with an abandonment of risk weights and the adoption of a simple leverage rule, supplemented by CoCo s, and some simple rules. More radically, a different approach is urged, one that focuses on the oversight and accountability of regulators and greater transparency, both of banks and of the regulatory process.

Marginal  Tax Bracket Calculator for 2014


Humans prefer to think linearly, manufacturing a storyline, in effect, with a beginning, middle and end.  That’s why we are so susceptible to the “narrative fallacy.”  We inherently prefer stories to data.  Contingencies and (perhaps random) consequences don’t correspond to the way we like to see the world.  We are — pretty much all the time — either looking backward and creating a pattern to fit events and constructing a story that explains what happened along with what caused it to happen, fitting what we see or assume we see into a preconceived narrative, or both.

Dealing effectively with probabilities and the markets requires that we recognize the power of the random and contingent.  No matter how good a story we have concocted with respect to what we expect to happen, no matter how careful our analysis, stuff happens that can and often does mess up and with our hopes, dreams and schemes.

Decanting a trust.

For many years, practitioners have struggled to find ways to change the terms of an irrevocable trust. However, through common law and through the decanting statutes that have been enacted in many jurisdictions, it is now possible to modify an irrevocable trust. Decanting is essentially a “do-over”.


8/21: $1.25/day to $1.50 per day

A Financial Times analysis of World Bank data this year showed that almost 1bn people in the developing world were at risk of slipping out of the ranks of the nascent middle class, underlining the fragility of the global march out of poverty of the past 30 years.

Kevin Watkins, executive director of the UK-based Overseas Development Institute think-tank, said developing countries risked social discord and instability if they failed to reflect the aspirations of those who had risen out of poverty but remained economically fragile.

“The big public backlash we saw in Brazil was largely from people who have escaped poverty and were being served by abysmal public services but wanted to raise the bar,” he said. “These people are maybe earning $4-$5 a day and they are not just asking can my child get into a school but can they get a good education that will mean something in the job market?”

The ADB report said its existing poverty line of $1.25 a day was not enough to maintain minimum welfare in many parts of the region.

It said the number of poor in Asia would rise from 473m to 1.5bn as of 2015 if this was raised to $1.50 a day and rapidly rising food prices and vulnerability to shocks were taken into account.

That would push the poverty rate in Asia, up from 12.7 per cent to 41.2 per cent

8/21: BIG difference

This commentary ignores the important difference in economic performance between the US and the EU since 2009. In 2009 both the US and eurozone experienced a rise in unemployment to about 10%. Since late 2009 unemployment has fallen in the US to 6.1% in June 2014. During this same period unemployment rose to 12% in  the eurozone in June  2013 and then declined to 11.5% in the euro area in June 2014.  The gap in unemployment between the Eurozone and the US is thus 5.4% in 2014. This is for the eurozone as a whole, rates of unemployment are much higher in the eurozone periphery which is necessary to force through internal devaluations.

Obesity will climb to 50% soon

In June 2013, the American Medical Association (AMA) House of Delegates approved a resolution reclassifying obesity as “a disease state.” This essentially means 1 out of every 3 Americans (78 million adults and 12 million children) suffer from a medical condition that requires treatment and interventions. WC costs could rise significantly as a result.

Obesity as Comorbidity

One effect of the AMA reclassification is more physicians may look to treat obesity as part of the work injury, arguing that it’s required for a more successful chance of recovery. These physicians would cite obesity as a disease on WC medical bills and counsel obese claimants on weight reduction prior to a major medical procedure, such as surgery.

For example in 2009, the Indiana Workers’ Compensation Board decided an injured worker was entitled to bariatric surgery as a precursor to back surgery. The board also decided the claimant should receive temporary total disability benefits while preparing for, undergoing, and recovering from both procedures.

Other Comorbidities and Complications

Obese patients often have additional comorbidities, such as diabetes and high blood pressure, which can slow the healing process. For example, a minor ankle fracture experienced by an obese worker with diabetes has the potential to become chronic, complex, and costly.

BMI, the Unreliable Indicator

Obesity has traditionally been assessed through an individual’s body mass index (BMI), which takes a person’s weight and height into consideration. A BMI of 25-29.9 is considered overweight and a BMI of 30 or greater is considered obese. Using these parameters, roughly 30% of Americans are estimated to be obese.


Hydration and Delirium

By Catherine D’Aniello, MSN, RN


Did you know that:

  • Delirium is different from dementia?

  • Dehydration is a cause of delirium?

  • Older adults can avoid delirium by staying hydrated?

Delirium is a mental disturbance characterized by new or worsening confusion, changes in level of consciousness or hallucinations. Delirium is different from the slow progression of dementia or Alzheimer’s disease. It has a sudden onset from hours to days and although delirium can be reversed, it is easier to prevent than cure.

All “elderly” adults (people over 65 years old) are at risk for delirium due to factors involving their own internal weakness and environmental insults. Some risk factors, such as advanced age or having dementia, are fixed. Other risk factors such as pain, malnutrition, dehydration, sensory loss, depression and fever are modifiable with intervention. With each factor present, delirium risk increases. Therefore, the key to preventing delirium is reducing the number of modifiable risk factors.

Infection and dehydration are common modifiable delirium risk factors. Older adults usually know when they have an infection, but do not recognize when they are dehydrated.

Mental status changes begin with mild dehydration and worsen with each stage, ending in delirium. In moderate dehydration, short-term memory loss occurs.

Once an older person is thirsty, they are already mildly dehydrated. Symptoms of severe dehydration include dry mouth and lips, sunken eyes, increased mental status changes and decreased urine output. This is a medical emergency which results in delirium and if not reversed, death ensues.

Failure to recognize signs of dehydration predisposes older adults to becoming increasingly and chronically dehydrated, which is a slippery slope towards delirium. Closing this knowledge gap will reduce delirium risk because inadequate fluid intake is relatively easy to remedy.

Why are older adults prone to dehydration?

Generationally, older adults are not focused on hydration. Many seniors purposely limit fluid intake because they fear bladder accidents. Others with compromised mobility may curb fluid intake to avoid extra bathroom trips. Poor access to fluids or needing help to drink may limit intake. Many drink water only when taking medication. Living in over-heated indoor spaces dehydrates even without sweating.

Older adults have decreased muscle mass and increased fat; because 75 percent of body water is stored in muscle, seniors have less capacity to store water.  Women have more body fat than men at any age, so older women are at even higher risk of dehydration. Due to decreased kidney function, older adults cannot conserve fluids as well as younger people. 

How do you know if you are drinking enough?

An older adult, their home caregiver or family member can take simple steps daily to check hydration status. First, thirst should not be experienced at any time. Second, urine should be colorless or straw colored, and odorless. Being familiar with a urine color chart is good practice for all ages and critical for older adults to avoid dehydration. First morning urine should not be dark, and urination should occur every two to four hours during waking hours. Some medications and foods such as asparagus give urine an odor, but normally urine should not smell.

Increase daily fluid intake, especially water!

At least half of your daily fluids should be water. Water significantly reduces older adults’ risk of becoming delirious. Milk, vegetable or fruit juice, and soup are also healthy fluid choices. Carbonated and caffeinated drinks should be limited due to their diuretic effect. The body needs water to filter alcoholic beverages from the body. Therefore, increased water consumption is needed overall as well as to balance the dehydrating effects of unhealthy drinks. Drinking healthy fluids is as important as eating healthy foods. 

Family members and home caregivers should:

  • Educate older adults on dehydration risks

  • Encourage/remind seniors to drink

  • Teach loved ones not to wait to feel thirsty to drink

  • Teach loved ones to drink regularly throughout the day

  • Make fluids easily accessible 

  • Serve fluids at a temperature the individual prefers

  • Encourage water with ALL meals

  • Boost the flavor of water by adding drops of lemon/ lime juice

  • Limit fluid intake one to three hours before bed

  • Offer popsicles, juice, gelatin, Italian ice, sherbet and pudding
    to those who dislike water. 

Increased awareness of dehydration as a cause of confusion and delirium should begin when older adults are “young-old” (65-74 years) in order to form healthy drinking habits carrying them into “middle-old” (75-84 years) and “old-old” (85 years and above). Family should report poor eating or drinking to the primary care provider so interventions can be initiated to prevent dehydration and its consequences. Educate your older family members and their caregivers on the importance of hydration and ways to facilitate good fluid intake.

Why not reduce your or an older loved one’s chance of developing delirium by eliminating the dehydration risk factor?

Catherine D’Aniello holds a BSN from University of Connecticut and MSN from University of Hartford. She has 30 years of geriatric experience and is currently a Resident Care Coordinator at a skilled nursing facility.


someone  asked Kahneman why it is so difficult for people generally to compute and deal with probabilities, Kahneman offers an interesting answer. He did not point to innumeracy. Instead, he said, “to compute probabilities you need to keep several possibilities in your mind at once. It’s difficult for most people. Typically, we have a single story with a theme. People have a sense of propensity, that the system is more likely to do one thing than the other, but it’s quite different from the probabilities where you have to think of two possibilities and weigh their relative chances of happening.”

This analysis may well explain much of why models — which simplify, often greatly, of necessity — can be so inadequate, especially with respect to markets, where there are infinite possibilities.  It may also explain, at least in part, why it is so difficult for us to deal with our cognitive and behavioral biases.  Finally, and perhaps most practically for the purposes of this blog’s usual readers, it helps to explain why success in the markets is so hard to achieve.

We prefer to think linearly, manufacturing a storyline, in effect, with a beginning, middle and end.  That’s why we are so susceptible to the “narrative fallacy.”  We inherently prefer stories to data.  Contingencies and (perhaps random) consequences don’t correspond to the way we like to see the world.  We are — pretty much all the time — either looking backward and creating a pattern to fit events and constructing a story that explains what happened along with what caused it to happen, fitting what we see or assume we see into a preconceived narrative, or both.


Disability Benefits:
What Caregivers Should Know
By Glenn Kantor and Peter Sessions

If you are entitled to disability benefits through an employer-provided or private plan, you may be surprised to find that your plan has provisions that allow the insurer to deduct from your benefits other types of income you receive or are eligible to receive for your disability. These deductions are called “offsets,” and are permissible under state and federal law. Common offsets include Social Security disability benefits, workers’ compensation benefits, and benefits from state disability programs like those in California, New York, New Jersey, Rhode Island, and Hawaii.  Insurers can also deduct from your benefit any amounts you receive from working part-time (usually called “partial disability” or “residual disability” benefits), as well as retirement or pension benefits (including disability pension benefits).
The rationale behind offsets is this: If you were allowed to keep the full amount of all of the various disability benefits to which you might be entitled, it would be possible for you to earn more money on disability than you would by working.  Disability benefit programs, both public and private, are designed to avoid that result.
In cases where people are receiving benefits from enough different sources that their disability income exceeds the benefit amount in their policy, most policies have a minimum monthly benefit that is payable regardless of the total offset amount.  Each policy calculates this benefit differently.  Some policies have a set amount, such as $100; some set the amount as a percentage of your regular benefit; and some have a combination of the two.  Some policies, however, do not have a minimum monthly benefit at all­— insurers are not required to include one in their policies.
You can determine whether your plan contains offsets by looking at the part of the plan that explains how your benefit amount is calculated.  Most plans have language indicating that the insurer is allowed to deduct “other benefits” or “other income benefits.”  The policy will then have a separate section shortly thereafter explaining what types of benefits constitute “other benefits,” and how the insurer can offset them from your regular benefit. This language can vary significantly from policy to policy, so it is always extremely important to read and understand your policy to ensure your insurer is applying the offset provisions accurately.
You may wonder what kinds of offsets are allowed under the law and if there are any restrictions on how insurers can apply them.  For the most part, offset provisions are not heavily regulated.  For example, the Employment Retirement Income Security Act, or ERISA, is the federal law which governs employee benefits, including disability benefits.  However, ERISA is primarily concerned with explaining what employers and insurance companies must do if they offer benefits to employees.  It does not tell employers and insurers what kinds of benefits they have to offer, or how those benefits should be calculated.
You may also wonder if there is anything you can do to change the offset provisions that are in your policy.  Unfortunately, if you are receiving a disability benefit through your employer, the terms of your disability benefit plan have already been negotiated between your employer and the insurance company, and you can do nothing to change those terms.  If you are receiving benefits through a private policy of insurance, you can try to negotiate with your insurer to remove offset provisions, but they are unlikely to be receptive to your requests.
There are, however, some rules that govern how insurers may apply policy offsets.  Here are some examples:
Workers’ Compensation  
Workers’ compensation benefits are designed to compensate injured workers for replacement of wages, loss of use, and medical treatment, among other things.  If you receive workers’ compensation benefits, the insurer may attempt to offset all of your workers’ compensation benefits, even if they are not attributed specifically to lost wages. There is a strong argument that insurance companies should not be allowed to do this.  Under this argument, it would be permissible for an insurer to offset your “temporary total disability” benefits, because these benefits are typically based on your prior salary.  After you have become “permanent and stationary,” the insurer would not be allowed to offset the full amount of your “permanent total disability” benefits, because these benefits include compensation for multiple injuries, not just your lost wages.
California has recently enacted an insurance regulation that supports this argument. It allows group disability insurers to offset temporary total disability benefits, but prohibits them from offsetting permanent total disability benefits.  (10 California Code of Regulations Section 2232.45.4)
As always, read your policy carefully because it may contain language that limits the insurer from offsetting your entire workers’ compensation benefit.  For example, some policies only allow offsets for benefits based on “loss of time,” while others are more broadly worded.  This can be a confusing issue, so you should consult with your workers’ compensation attorney to ensure that your benefits are properly attributed to avoid being offset.
An insurer can also offset your benefit by money you receive in a lawsuit against a party who caused your disability. The legal term for this situation is called “subrogation,” and involves the “make whole” doctrine. The make whole doctrine is a legal rule that says that if you are entitled to benefits from different sources for your injury – for example, from both the person who caused your injury and the insurer – the insurer can only collect its offset, that is, enforce its “subrogation rights,” if you have been “made whole” for your injury, or, in other words, you have been fully compensated for your injury. If your claim is governed by ERISA, conflicting legal decisions govern whether the make whole doctrine applies to your claim.  In some states (such as California) the courts will apply the doctrine, but in others, they will not.  If you are in this situation, you should consult with an attorney who specializes in ERISA law to determine whether the make whole doctrine applies to your claim so you can determine if the insurer has the right to offset your benefits, and if so, by how much.
Social Security 
Social Security disability benefits typically increase over time to compensate for the effect of inflation on fixed incomes.  This increase is called a “COLA,” or cost-of-living adjustment.  Some states, such as California, have laws that prevent insurance companies from reducing your benefit if your Social Security disability benefit goes up.  (California Insurance Code Section 10127.1)  Even if no law prohibits an insurer from reducing your benefit, insurance policies will often contain a provision stating that the insurer will not do so.
If you are receiving family Social Security benefits, or “dependent benefits,” in addition to your individual Social Security benefit, be aware that these benefits may also be offset.  Most policies limit offsets only to those benefits you are entitled to receive personally for your disability, but there is no law prohibiting insurers from offsetting dependent Social Security benefits as well.  Again, every policy is different, so read yours to see whether your insurer has the right to apply this kind of offset.
Regardless of what specific offsets might apply in your particular case, you may be surprised to learn that your policy probably gives your insurer the right to estimate those offsets before you even begin to receive them.  Insurers assume that if you are eligible for benefits from them, then you are probably eligible for benefits from other sources, such as Social Security, as well, and will estimate and apply an offset for those benefits as soon as possible.  Sometimes your insurer will give you a choice.  An insurer might ask you if you want it to estimate the other benefits and apply the offset now, or whether you want to wait until you receive the other benefits, and then pay the insurer back.
Some states, however, prohibit certain kinds of estimates.  For example, in California, group disability insurers are not allowed to estimate retirement benefits (10 California Code of Regulations Section 2232.45.2), or workers’ compensation temporary total disability benefits (10 California Code of Regulations Section 2232.45.3), and therefore may not offset those kinds of benefits until you actually receive them.
In sum, offsets are an important part of a disability benefit plan, as they directly affect, and often substantially reduce, your benefit amount.  However, they can also be very confusing.  If you are concerned that your benefit has been miscalculated because your insurer has not correctly applied the policy’s offset provisions, you should request a detailed calculation in writing from your insurer.  If your benefits are governed by ERISA, as most disability benefits are, you have the right to appeal the insurer’s calculation, and if that appeal is denied, you have the right to bring a lawsuit in federal court.  To maximize your chances of succeeding, you should contact an attorney who specializes in ERISA law before going through the ERISA appeal process.  ERISA imposes strict evidentiary limits, so if you do not present your best evidence and arguments during the appeals process, you may be prevented from doing so later when you get to court.  As a result, it is important to get legal advice as early in the process as possible.


Social Security Survivor Benefits: What Advisors Should Know

Social Security survivor benefits have some unique rules which can be especially hard to remember. Survivor benefits can seem similar to other parts of the Social Security system, but they actually have some significantly different features and regulations. Following is a summary of those unique features and and how survivor benefits differ from the more common Social Security benefits.

The formal title of the Social Security program, Old Age, Survivor and Disability Insurance (OASDI) provides an immediate clue that the Survivor program is distinct from the “old age” portion of the system to which most of us are usually referring when we say Social Security. The Disability portion of the program has its own trust fund and is totally separate program. The Old Age and Survivor programs, however, have a hybrid relationship, sharing the same trust fund while operating under some significantly different rules.


The differences between the spousal benefits of the Old Age program and survivor benefits are the heart of the issue. Spousal benefits are benefits based on a living spouse’s (or ex-spouse’s) work history. Survivor benefits are benefits based on a deceased spouse’s (or ex-spouse’s) work history.

Here are the primary differences between Survivor and Spousal benefits:

1) Survivor Benefits are much higher, as much as twice as high. Maximum survivor benefits are 100% of the deceased worker’s last Social Security benefit. Maximum spousal benefits are only 50% of the worker’s SS benefit.

2) The worker’s benefit used to calculate benefits could be different in each case. Survivor benefits are based on the deceased’s Full Retirement Age (FRA) benefit plus any delayed retirement credits the worker may have accrued by waiting as late as 70 before filing for their benefits. Spousal benefits are based only on the worker’s FRA benefit and are not enhanced by any delayed retirement credits for the worker.

3) File before the Full Retirement Age (FRA) and either benefit will be reduced, although not in the same way. At the earliest allowable age for spousal benefits of 62 one will only get 35% of the worker’s benefit. A widow claiming survivor benefits at the earliest possible age of 60 (two years younger, another difference) will get 71.5% of the deceased worker’s benefit.

4) The window for a Full Retirement Age at 66 is slightly different. For spousal benefits FRA is formally 66 for people born between 1943 and 1954. For survivor benefits FRA is 66 for people born between 1945 and 1956. If you are born in 1944 or 1955 you will have a different FRA for each benefit.

5) The minimum length of marriage required in order to qualify for either benefit differs, 12 months for spousal benefits but only nine months for survivor benefits. There are different exceptions to each of these.

6) If one is divorced and collecting benefits on the work record of the ex-spouse, remarrying may affect benefits differently. Remarriage will completely nullify any spousal benefits based on the ex-spouse, no matter the age at which the person remarried.

If the ex-spouse has died however, and the survivor remarries after the age of 60, they can keep the survivor benefit even though they are now remarried. This sets up an interesting situation where the remarried person will ultimately have the option of choosing between three benefit options: a survivor benefit on the ex-spouse, a retirement benefit on their own work record or a spousal benefit based on their current spouse.

It may also present some important planning opportunities. For instance, if a woman collecting survivor benefits on her ex-husband is 59 and planning to remarry, she might want to delay the wedding bells until her 60th birthday in order to keep receiving the survivor benefit based on her decrease ex-husband.

Finally, the benefit calculations for the two benefits are independent of each other. For instance, filing for one benefit before FRA will not affect the filing for the other benefit. For instance, a person can apply for survivor benefits before FRA thereby reducing their survivor benefits. This early survivor filing will not affect their application for their own old age retirement benefits. They would still be eligible to collect their full benefit at 66 or even accrue Delayed Retirement Credits by waiting until age 70.


  1. Model Risk of Risk Models




Danielsson, Jon (London School of Economics)
James, Kevin (London School of Economics)
Valenzuela, Marcela (University of Chile)
Zer, Ilknur (Board of Governors of the Federal Reserve System (U.S.))


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

8/19: Consumer confidence has deteriorated in the past month.

The University of Michigan's consumer confidence index fell to a nine-month low of 79.2 in August from 81.8 in July.

EFM- this is not the definitive statistic for formal planning but it always bears viewing

Fish are cheaper:  And you can eat them too

It will cost an average middle-income family nearly a quarter-million dollars to raise a child in 2013 to adulthood.

Food, housing, childcare, education and other expenses will total $245,340 by the time the child turns 18, the Department of Agriculture estimates in a new report. That is a 1.8 percent increase over the year before. In 2013 alone, the cost of caring for a child ranges from $12,800 to $14,970.

Dollar cost averaging

Bernstein Global Research recently conducted its own study of the subject, and was able to quantify some of the cost of investing gradually. Using the Standard & Poor’s 500-stock index and its predecessors, Bernstein examined the rolling one-year returns of the stock market through 12-month periods from the beginning of 1926 to the end of 2013 — a total of more than 1,000 such periods. It compared lump-sum investments made at the beginning of each period with stock purchases made through “dollar-cost averaging” — regular monthly investments in the S.&P. 500 for 12 months. Money on the sidelines stayed in three-month Treasury bills.

The firm found that the average one-year return was 12.2 percent for immediate investments into the stock index, 8.1 percent for the dollar-cost-averaging portfolios and 3.6 percent for the cash holdings. The penalty for investing gradually, in other words, was 4.1 percentage points. On the other hand, that gradual approach was 4.5 points better than just holding cash.


True but still wrong

 There is no doubt that if you had been able to time the market perfectly, deliberately avoiding big declines and investing only at market bottoms, you would have been even better off. “We’d all like to do that,” Mr. Bosse of Vanguard said. “But no one can. We don’t think it’s worth even attempting to go down that road.”

EM- the ability to hit the very top or the very bottom is illusory. By the same token, it is possible to ride optimism and to avoid all but 10% to 15% of any slide. As to finding the bottom- you need to wait a bit anyway after the (supposed) bottom is hit because you do not know it is the bottom. It could go lower or rebound just a tad and then drop further. Well, the government comes out with independent statistics about 1.5 years after the bottom and indicates the formal bottom/end of recession was reached on xyz date and the economy improved thereafter. Use this and you will get at least 90% of the upside. 


The CAPE ratio, a stock-price measure stood at around 23 a year ago, far above its 20th-century average of 15.21. (CAPE stands for cyclically adjusted price-earnings.) Now it is above 25, a level that has been surpassed since 1881 in only three previous periods: the years clustered around 1929, 1999 and 2007. Major market drops followed those peaks.

It works like this: Using inflation-adjusted figures, we divide stock prices by corporate earnings averaged over the preceding 10 years. Our ratio differs from a conventional price-to-earnings ratio in that it uses 10 years, rather than one year, in the denominator. It does so to help minimize effects of business-cycle fluctuations, and it’s helpful in comparing valuations over long horizons.


Leveraging Filial Support Laws Under the State Partnership Programs to Encourage Long-Term Care Insurance

Jamie Patrick Hopkins

The American College

Ted Kurlowicz

The American College

Christopher P Woehrle

The American College

July 21, 2014

Widener Law Review, Vol. 20, No. 165, 2014, 20 Widener L. Rev. 165 (2014)

As thousands of the United States’ baby-boomers retire each day, people live longer, families disperse, and the population ages. Financing long-term care needs has become an increasingly important focal point in both civilian and government budget discussions. In order to reduce reliance on government provided long-term care funding programs such as Medicaid, states can leverage the often unenforced filial responsibility laws and State Long-Term Care Partnership Programs. Through the enforcement of existing filial responsibility laws, states can provide the proverbial “stick” to incentivize people to purchase long-term care insurance by increasing their personal liability for their family members’ long-term care expenditures. Furthermore, by offering liability protections from filial responsibility laws under the state’s long-term care insurance partnership program, states will be able to offer a “carrot” to encourage participation in the long-term care insurance market. Ultimately, by leveraging these two existing legal structures, states can incentivize the purchase of long-term care insurance and reduce reliance on government provided long-term care financing programs.


Why Seniors Don’t Eat: It’s Complicated.

More than half of older adults who visit emergency departments are either malnourished or at risk for malnutrition, but not because of lack of access to health care, critical illness or dementia. Despite clear signs of malnutrition or risk of malnutrition, more than three-quarters had never previously been diagnosed with malnutrition, according to the results of a study published online in Annals of Emergency Medicine (“Malnutrition Among Cognitively Intact, Non-Critically Ill Older Adults in the Emergency Department”).

“We were surprised by the levels of malnutrition or risk of it among cognitively intact seniors visiting the ER, and even more surprised that most malnourished patients had never been told they were malnourished,” said lead study author Timothy Platts-Mills, MD, of the University of North Carolina Department of Emergency Medicine in Chapel Hill, N.C. “Depression and dental problems appear to be important contributors, as is difficulty buying groceries. Given that seniors visit ERs more than 20 million times a year in the U.S., emergency physicians have an opportunity to screen and intervene in ways that may be very helpful without being very costly.”

Of patients age 65 and older, 16 percent were malnourished and 60 percent were either malnourished or at risk for malnutrition. Of the malnourished patients, 77 percent denied have been previously diagnosed with malnutrition. Malnutrition was highest among patients with symptoms of depression (52 percent), those residing in assisted living (50 percent), those with difficulty eating (38 percent) and those reporting difficulty buying groceries (33 percent). Difficulty eating was mostly attributed to denture problems, dental pain or difficulty swallowing.

In this study, nearly all (95 percent) of patients had a primary care physician, nearly all (94 percent) lived in a private residence and nearly all (96 percent) had some type of health insurance. More than one-third (35 percent) had a college education.

Malnutrition is defined as lacking “adequate calories, protein or other nutrients needed for tissue maintenance and repair.”

“For patients who report difficulty buying groceries, Supplemental Nutrition Program, Meals on Wheels, Congregate Meals Programs or community-based food charities can be helpful, although other factors may also need to be addressed,” said Dr. Platts-Mills. “The growing role of the emergency department as community health resource makes it an essential place for identifying and addressing unmet needs of older adults. Implementation of oral nutritional supplementation is inexpensive and may reduce overall costs by accelerating recovery from illness and reducing readmissions.”

"Political correctness is a doctrine, fostered by a delusional, illogical minority, and promoted by main stream media, which holds forth the proposition that it is entirely possible

to pick up a piece of shit by the clean end."

8/17: Eurozone going nowhere and getting worse

Very bad omen

8/17: Can a ‘Fiduciary-Only’ Advisor Take Commissions? by Bob Clark

My reply- this is a 20+ year fight with Clark. California DOES have a legal obligation for fee insurance advise but none of those supposed :fiduciary organizations (CFP Board, NAPFA, FPA, CPA society et al) has demanded their reps to adhere. Even told CFPs to keep lying about their lack of legality but just keep quiet about it. NAPFA indicated they had a singular exemption from the law. ( Clark's statement, " In my view, like the other areas of personal finance, insurance consumers need a professional who is legally obligated to act in their best interest when making decisions about their coverage" is correct but fails to note that about 35 states have mandatory laws for fee insurance advice. Some of the laws are just plain 'crap' with no knowledge base needed to do fee advice. No matter, you have to be legal to be a fiduciary. There was only ONE fully licensed and legal CFP fee financial planner in CA for over 10 years. That is a joke. Do not have other statistics but you could probably count the number of legal reps on two hands in each state.

If you charge for advice, you cannot take a commission. If you are in a state with no fee insurance regulations, you can offer fee advice with, I believe, impunity since you are breaking no laws.

Overall however, if you are dumb as a rock in this area and have not attained at least the minimum amount of classes as an agent, you, as I see the current commentary, may act as a fee fiduciary by just saying you will do the best for the client (and apparently believing it). However, even if you did match licensing "knowledge", it still would be a lie because insurance licensing education is for far behind real life necessity as to be prehistoric.

Further, you have to know indexed life and annuities, guaranteed income, long term care (very involved) life settlements, etc - where 98% of insurance agents are unqualified/clueless. That’s going to be hard to accomplish but is the responsibility of the fiduciary.

Lastly, if you did do competent work AND charged a fee, now what do you do? Turn the product implementation over to some commissionable schmuck where you are clearly unsure if your work will be carried out properly. Now the client pays a fee AND a commission!!! In order to do the best for the client, you have to take the lesser value of the two (and if it was term, you’d lose money  since it takes more time to go through a competent process for a client by fee than a commission would pay).

This conversation about fiduciary has a long ways to go.

State Debt Clock


World Debt Clocks

8/17: REtirement

Incomes for the highest-earning 1% of Americans soared 31% from 2009 through 2012, after adjusting for inflation. For everyone else, incomes inched up an average of 0.4%.

Researchers at the liberal Economic Policy Institute say households in the top fifth of income saw median retirement savings increase from $45,539 in 1989 to $160,000 in 2010 in inflation-adjusted dollars. But, for households in the bottom fifth, median retirement savings were down from $8,433 in 1989 to $8,000 in 2010, adjusted for inflation. [$8,000 will provide next to nothing in retirement for the next 30 years.  Sad. These folks must stay in the work force for ever and die with their boots on.]  The calculations did not include households without retirement savings.

 in households where annual income is less than $25,000, nine in 10 saved less than $10,000, up slightly from 2009. For households with six-figure incomes, 42% saved at least $250,000,[$250,000 will provide income of about between $7,500 per year at a 3% withdrawal rate and $10,000 at a 4% withdrawal rate.] up from 34% five years earlier.

The days of retirees being able to count on set monthly payments from pensions continue to fade among non-government workers. Only 13% of private-sector workers now participate in "defined benefit" plans, compared with a third of such workers in 1985. They've been eclipsed by "defined contribution" plans, often 401(k)s, in which employers match a portion of employee contributions.































  • When a long-term care rider is added to a policy, the death benefit can be spent on long term care.
  • Accelerations for long term care draw down the death benefit dollar for dollar.
  • The long-term care benefits are received income tax free.
  • Any remaining death benefit is also received income tax-free.
  • No matter what happens, the full benefit will be distributed to the owner or beneficiaries.

Annual Premium: $250,000 NLG Policy with a $5,000/Month LTC Benefit*

















Women with Urge Incontinence Have an Increased Risk of Falling

By Jennifer B. Buckley

Older women with urge incontinence may be more likely to fall and fracture a bone compared to women who are not urge incontinent, according to a new study. Although slip and falls are common health concerns for older women, their risk of falling increases if they also have urge incontinence.

The study conducted by researchers at the University of California, San Francisco discovered, women who feel a strong need to urinate and have urine leakage before getting to the bathroom, increase their risk of falling by 26% and their risk of fracturing a bone by 34%. Researchers studied more than 6,000 women aged 72 and older, with frequent urinary incontinence. The study was published in the July issue of the Journal of the American Geriatrics Society.

Urge incontinence is a common condition for older women occurring in up to 40% of women over the age of 60. Falls are also a frequent problem in the elderly population. In fact, falls affect one out of three people ages 65 and older each year, according to the U.S. Centers for Disease Control. They rate as the most widely seen cause of injuries and hospital admissions for trauma. In addition, falling and fracturing a bone can change someone’s life forever. About half of older adults who are hospitalized with a hip fracture, are unable to live independently again.

A person with urge incontinence may feel an overwhelming compulsion to empty their bladder, if it contains urine. This increases the likelihood of someone rushing and then tripping on her way to the bathroom. It can be an especially dangerous situation during the night, if there aren’t any lights illuminating the way. A person can’t avoid tripping over something they can’t see. In fact, six out of ten fatal falls happen to older people in the safety of their home.

The findings suggest that identification and treatment of urge incontinence may actively prevent the risk of falls and fractures. Often times, women neglect to speak with physicians about the problem of incontinence and therefore, may not seek treatment, because they are too embarrassed. Some invasive, new treatments for urinary incontinence include: biofeedback, FemSoft Inserts, Neocontrol, tension-free transvaginal tape(TVT) and the prescription medication, Ditropan.

Perhaps the conclusion of this recent study will prompt women, neglecting to communicate with their doctors about their incontinence, to speak up and in turn, receive one of the many treatment options available. Based on the study, women with incontinence may have more to fear then public embarrassment; they could potentially fracture a bone, putting them in an even more precarious situation


Home care planning: 4 things LTC planners should know about the new regs  Very Important

Financial planners will have to read and know this. they will not be able to depend on an insurance agent.
(But I do not know where an FP would really have much of a background on LTC in the first place)

8/14: LTC: States' Medicaid programs pay the nursing home bills for about 60 percent of U.S. nursing home residents.

8/14: 6 sigma outflow

"HY [high yield] flowmageddon," said Goldman Sachs' Charles Himmelberg in a research note we saw via @lebullmarche. "This is the largest HY outflow on record - a 6-sigma event when flows are scaled by mutual fund assets under management!"

Sigma is another way of saying standard deviation. And the greater the number of standard deviations, the more unlikely the event.

A 6-sigma event is extremely rare. If you want to put a number to it, think 1 in 500 million. According to Business Insider quant reporter Andy Kiersz, it's like flipping a coin 29 times in a row and getting heads each time.

US debt clock
Fascinating and very, very disturbing

8/14: Can't spend what you don't have
The latest evidence is a study by the U.S. Conference of Mayors that highlights stark disparities between the jobs lost during the recession and jobs gained since. The types of jobs lost paid nearly $62,000 per year, on average. The jobs gained during the past six years pay only about $47,000. That 23% shortfall adds up to about $93 billion in lost wages per year — money not being spent because it vanished from the economy.

This is a pernicious problem that can’t be easily fixed by policy prescriptions or Federal Reserve maneuvers. The Fed has said repeatedly it sees “slack” in the economy, and the income shortfall could be a prime example of what the Fed means by slack. Yet even if the Fed continues to hold interest rates at super-low levels, it’s not clear that would help boost pay or living standards for ordinary people.

Workers who lose jobs in one sector don’t necessarily go to work in another. It’s not as if there are a lot of former assembly-line workers now manning the registers in stores or waiting tables. Many workers who lose decent-paying jobs basically wait for those jobs to return, drawing unemployment insurance as long as they can and then pulling out of the labor force. This could help explain why the labor-force participation rate — the portion of adult Americans either working or looking for work — has hit the lowest levels since the 1970s.

8/14: What is a plan
The 5th U.S. Circuit Court of Appeals noted that a “pension plan” as defined by ERISA is “any plan, fund, or program . . . maintained by an employer . . . to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program (i) provides retirement income to employees, or (ii) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan…”

8/14: Wrap fees

The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has recently been focusing on wrap fee programs sponsored by Registered Investment Advisers.  In their most recent request letter, the OCIE requests information on how advisers determine the suitability of wrap fee programs, how advisers ensure best execution for their clients, and whether advisers are allowed to “trade away” from their usual trading desk.  SEC examiners also request that advisers specify which types of fees are covered in their wrap fee programs.

Part of the request letter focuses heavily on the adviser’s review process of the wrap fee program and wrap fee accounts, therefore it is important that the adviser regularly analyze the suitability of wrap fee programs for their clients.  Before placing a client in a wrap fee program, advisers will need to conduct an initial review and document the factors that they considered in making their determination to place a client into a wrap fee program.  Advisers should proactively monitor client accounts for high cash balances, low levels of trading, and other factors relevant in determining the continuing suitability of the wrap fee program.  Examiners expect to see that client accounts in wrap fee programs have high levels of trading in order to justify their higher fees.  The SEC typically focuses on whether or not advisers have inactive client accounts with low levels of trading misplaced in wrap fee programs.  Examiners will want to see that firms are striving to serve client’s best interests rather than their own. 


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.

Where I'm living now
8/13: I agree- just plain slow

The Federal Reserve’s vice-chairman has pointed to weak labour force participation and a soft US housing recovery as two reasons for disappointing global growth, saying this could be a long-term phenomenon.

Stanley Fischer’s comments reflected continuing concern about the economy that has fuelled debate over whether the Fed should move sooner than expected to raise interest rates, despite solid job growth and strong gross domestic product expansion in the US.

“This pattern of disappointment and downward revision [in growth] sets up the first, and the basic, challenge on the list of issues policy makers face in moving ahead: restoring growth, if that is possible,” Mr Fischer said on Monday in a speech in Stockholm. “It is also possible that the underperformance reflects a more structural longer-term shift in the global economy, with less growth in underlying supply factors.”

Outside the US, the recoveries of advanced economies had been “well below average”, while performance in emerging markets, especially in Asia, is sharply down. The challenge for policy makers was separating the “cyclical from the structural, the temporary from the permanent,” Mr Fischer said.

“The difficulty in disentangling demand and supply factors makes the job of the monetary policy maker especially hard since it complicates the assessment of the amount of slack, or underutilised productive capacity, in the economy,”

8/12: CFPs-
there are 372 board-registered financial-planning programs offered at 227 different colleges and universities.  But many are not finishing the courses and are foregoing  the business altogether.



  1. Window dressing in mutual funds




Agarwal, Vikas
Gay, Gerald D.
Ling, Leng


We provide a rationale for window dressing where investors respond to conflicting signals of managerial ability inferred from a fund's performance and disclosed portfolio holdings. We contend that window dressers take a risky bet on their performance during a reporting delay period, which affects investors' interpretation of the conflicting signals and hence their capital allocations. Conditional on good (bad) performance, window dressers benefit from higher (lower) investor flows as compared to non-window dressers. Window dressers also have poor past performance, possess little skill, and incur high portfolio turnover and trade costs, characteristics which in turn result in worse future performance. --


The indirect effect of monetary incentives on deception

     Janna Ter Meer (University of Cologne)


This paper investigates whether working under competitive or cooperative incentives affects deception in a subsequent, unrelated task. I use a laboratory study with two stages. First, participants work under a piece rate, tournament or team incentive in a real effort task. The second part consists of a sender-receiver game where the sender can gain financially at the expense of the receiver by sending a deceptive message. I find that senders who worked under tournament incentives are less honest than those who worked under a piece rate. I find no increase in honesty for those who performed under team incentives relative to the piece rate. Interestingly, this only holds when participants are not informed about their relative performance during the work task. When such feedback is provided I find that relative performance affects honesty across all incentive conditions. In particular, honesty decreases as relative performance differences become small.


JEL:      M52 C92 D02 D03

Date:     2014-07-07


US banks warn on ‘excessive’ risk-taking

An influential group of Wall Street banks has warned the US Treasury that low volatility in many markets is creating a feedback loop that exacerbates “excessive risk-taking” by investors.

A member of the Treasury Borrowing Advisory Committee – a group of banks and investors selected to help advise on markets and the economy – made the warning in a presentation this week.

The caution from the TBAC comes as volatility in the markets has drifted to historic lows due to central bank policies that suppress sharp market movements and dissuade investors from hoarding cash.

The concern now is that large investors may have grown too complacent following years of one-way markets that encourage them to take on ever greater amounts of risk to hit their return targets.

Sales of riskier investments – such as the junk bonds sold by low-rated companies – have subsequently soared thanks to demand from yield-hungry investors.

“Against [an] environment of low vol[atility] and low returns, the only way to achieve the same return targets is to take on more risk,”

Assets invested into hedge funds, which typically undertake riskier strategies, have ballooned to $2.8tn in the second quarter of this year, up from about $1.75tn just before the financial crisis, TBAC said. Meanwhile conservative investors such as pension funds are still trying to reach an average return target of a little less than 8 per cent, at a time when yields on benchmark US Treasuries are at 2.45 per cent.

Because banks and investors incorporate volatility into their internal risk management models, there is a chance that suppressed markets are creating a feedback loop that amplifies further risk-taking, TBAC noted.

The “value-at-risk” models used by most large Wall Street banks and investors typically incorporate volatility data to try to calculate how much a trading portfolio might be expected to lose in a given day with a given probability.

With volatility drifting lower and lower in recent years, these models are spitting out extremely small chances of investors sustaining large losses, allowing Wall Street to assume additional risk without violating its own internal risk management standards.

EFM- volatility is NOT risk, ipso facto. It is a form of risk only. You determine risk by the risk of loss- which is how much you can lose by a major decline. It is true that a VAR can anticipate a daily loss within, perhaps, a reasonable range, but that is all. After that, the VAR may prove highly debatable to useless.



8/11: The answer is Yes

Do leaders affect ethical conduct?

     Giovanna d’Adda

    Donja Darai

    Roberto A. Weber


We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct—prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders’ strategies reveals that leaders’ statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders’ propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.


Ten Things to Know About the Taxpayer Advocate Service

1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS and is your voice at the IRS.

2. We help taxpayers whose problems are causing financial difficulty. This includes businesses as well as individuals.

3. You may be eligible for our help if you’ve tried to resolve your tax problem through normal IRS channels and have gotten nowhere, or you believe an IRS procedure just isn't working as it should.

4. The IRS has adopted a Taxpayer Bill of Rights that includes 10 fundamental rights that every taxpayer has when interacting with the IRS:

Taxpayer Bill of Rights

  • The Right to Be Informed.
  • The Right to Quality Service. 
  • The Right to Pay No More than the Correct Amount of Tax.
  • The Right to Challenge the IRS’s Position and Be Heard. 
  • The Right to Appeal an IRS Decision in an Independent Forum. 
  • The Right to Finality. 
  • The Right to Privacy. 
  • The Right to Confidentiality.
  • The Right to Retain Representation.
  • The Right to a Fair and Just Tax System.

Our TAS Tax Toolkit at can help you understand these rights and what they mean for you. The toolkit also has examples that show how the Taxpayer Bill of Rights can apply in specific situations.

5. If you qualify for our help, you’ll be assigned to one advocate who will be with you at every turn. And our service is always free.

6. We have at least one local taxpayer advocate office in every state, the District of Columbia, and Puerto Rico.  You can call your advocate, whose number is in your local directory, in Pub. 1546, Taxpayer Advocate Service -- Your Voice at the IRS, and on our website at You can also call us toll-free at

7. The TAS Tax Toolkit at has basic tax information, details about tax credits (for individuals and businesses), and much more.

8. TAS also handles large-scale or systemic problems that affect many taxpayers. If you know of one of these broad issues, please report it to us at

9. You can get updates at

10. TAS is here to help you, because when you’re dealing with a tax problem, the worst thing you can do is to do nothing at all.

8/10: 401k confusement:

Different investment strategies. Managed accounts provide investment management services for 401(k) plan participants, but often use wildly different strategies. The Government Accountability Office conducted case studies of eight managed account providers that represent over 95 percent of assets under management in 2013, and all of them used different investment options, asset allocations and rebalancing intervals for the same hypothetical participant. "Some participants cannot be assured that they are receiving impartial managed account services or are able to rely on accountable investment professionals taking on appropriate fiduciary responsibilities," GAO found.

Unused personalization. Some managed accounts customize the investments for individuals more than others. Two of the eight providers studied allocated investments based on information obtained from the plan's record keeper including age, gender, income, account balance and savings rate. But the majority of the providers used more personal information including risk tolerance and spousal assets to select asset allocations. However, fewer than a third of participants provided this personal information, which means that many 401(k) participants may not be getting the full value of the service they are paying for. "Participants who are defaulted into managed accounts that offer a highly personalized service run the risk of paying for services they are not using if they are disengaged from their retirement investments," according to the GAO report. "Participants who never supply additional personalized information to managed account providers may be allocated similarly over time to those participants in target-date funds."

8/10: Retirement oops

31 percent of people said they have zero money saved for retirement. That included 19 percent of people between the ages of 55 and 64, or those closest to retirement age.

What's going on here? A lot of people said they rarely thought about retirement, at least not until it was too late. About 41 percent of people ages 18 to 29 said they never thought about retirement planning, a number that understandably declined to 20 percent for people above the age of 60.

But researchers said the dismal saving rates weren't fully explained by lack of caring. They also cited a combination of low resources and poor awareness:

For many people, particularly those working part time or earning low wages, the biggest obstacle to a steady retirement savings plan is access. About three-fourths of private sector workers with full-time jobs have access to a retirement plan,

 but that number drops to 37 percent for part-time workers, according to the Bureau of Labor Statistics.


“Demographic transition, frequently considered a long-term problem, is upon us now and will significantly lower economic growth,” said Elena Duggar, a Moody’s vice-president and one of the authors of the report.

Moody’s said the global working-age population would grow only half as fast between 2015 and 2030 as during the previous 15 years. It said all countries except a handful in Africa would see their working-age populations either decline or grow more slowly over that period.

The “unprecedented pace” of population ageing would slow annual global economic growth by 0.4 per cent over the next five years and by 0.9 per cent between 2020 and 2025, it forecast.

The OECD, a Paris-based club of countries that promotes sustainable growth, warned about the issue last month when it predicted population ageing would help to slow global annual economic growth from an average 3.6 per cent in this decade to about 2.4 per cent between 2050 and 2060.

Some societies in Asia are forecast to age particularly rapidly. China will have six working-age adults per elderly person in 2020, but 4.2 in 2030 and 2.6 by 2050, Moody’s said. Hong Kong and Korea will have 3.8 and 4.6 working-age adults per elderly person in 2020, but 2.3 and 2.7, respectively, by 2030, and just 1.5 apiece by 2050.

8/7: Hospice: 

It is normal for a hospice to release a small portion of patients before death — about 15 percent has been typical, often because a patient’s health unexpectedly improves.

But researchers found that at some hospices, and particularly at new, for-profit companies, the rate of patients leaving hospice care alive is double that level or more.

The number of “hospice survivors” was especially high in two states: in Mississippi, where 41 percent of hospice patients were discharged alive, and Alabama, where 35 percent were.

While judging life expectancy is inexact, the rising rates of live discharge in the U.S. in recent years has raised concerns that the rapidly changing industry has become rife with one of two types of improper practices.

First, some hospices appear to be forsaking patients when their care becomes expensive. Hospices bill by the day, so added tests and treatments can cut into their profits. Researchers found, for example, that 1 of 4 patients who leave hospice alive are hospitalized within 30 days.

Some hospices “abandon their end stage residents to the nearest hospital ER and have the legal representative sign the [hospice] revocation papers — all to save money and avoid intensive continuous care at the end of life,” W. T. Geary Jr., medical director at the Alabama Department of Public Health, said in an e-mail.

In what researchers described as a particularly alarming pattern, more than 12,000 patients in 2010 were released alive from hospice, entered a hospital and within two days of leaving the hospital were re-enrolled in hospice. Those are the kind of abrupt transitions that can be disruptive and confusing for the dying, and which hospice care is supposed to transcend.

The other problem driving up the numbers of people leaving hospices alive is the practice of hospices enrolling patients who aren’t actually dying.

The federal government in recent years has sought to recover more than $1 billion from hospices that, according to attorneys, illegally billed Medicare for patients who weren’t near death.

The new research supports the idea that many of the patients released alive from hospice are far from death: More than one-third of patients who were released alive from hospices did not re-enroll in a hospice and were still alive six months after being released.

Between 2000 and 2012, the overall rate of live discharges increased from 13.2 percent of hospice discharges to 18.1 percent in 2012.

8/7: Is there a correlation?????
Oh yeah


8/6: LTC- 
Most people will never be in a nursing home (less than 15% of people who need LTC are in a nursing home)

8/5: Liar liar:

Both men and women lied to women more often than men. In one experiment in the study, 24% of men said they lied to a female participant, but only 3% of men admitted to lying to a male participant in the exercise. Women lied to men 11% of them but lied to other women 17% of the time.


Investors rotate from small to large caps


Underperformance of small-caps on the Russell 2000 index last month by 4.4 percentage points is the largest amount since October of 2009

8/4: Marquette Law School article "review" (
Elder Investments: A Critique of Professional and Consumer Mediocrity)

I reviewed your paper with Marquette on the fraud that takes place involving elderly people. I have my 80 year old mother living with my wife and I (kids are grown) and I see all kinds of stuff that comes addressed to her through the mail. She asked me about them and I explain what they are trying to do, some of the mail "looks" legit and to a unknowing person they might even think it is a government or legal document that they "have" to pay. We talk about how many older people probably send in the money not knowing.

My mother has also attended the "free" lunches you describe in your paper. Her investments are with someone we know and trust so she is safe there, but she went with a friend to this lunch invitation and they are as real as you describe.

Thank you for your efforts in assisting the elderly in understanding the fraud that is out in this world.

8/4: Home ownership
U.S. home prices increased 9.3 percent in the 12 months through May, according to the S&P/Case-Shiller 20-city index released today.

as recently as five years ago, an armada of tankers sailed every month from Africa to the US coast, delivering oil worth billions of US dollars.

Not any more. The American shale revolution, which was supposed to liberate the US from Middle Eastern oil, has instead brought freedom from an unexpected location: Africa. US oil imports from the African continent have this year plunged to a 40-year low.

The trend is unlikely to be reversed anytime soon. Indeed, if anything, African producers should expect even less demand from the US over the next few years, says Jason Bordoff, director of the Center on Global Energy Policy at Columbia University.

“African oil exports to the US may not go exactly to zero but they will drop close to zero [and stay at that level] for a while,” says Mr Bordoff, who until last year was a senior oil official at the White House.

The collapse in the oil trade means the US is the only major region that today trades less with sub-Saharan Africa than before the global financial crisis in 2007-8.

China, the EU and Japan have all increased the import-export volumes compared with eight years ago


The trough in returns on bonds and other fixed-income instruments has been particularly devastating to the carriers. Forty percent to 60% of the money insurers accumulate to cover future claims comes from investment returns,

Nuriel Roubini and Jason Cummins video- Keeping Up with change


“The single most important indicator for evaluating the state of the U.S. labor market is the share of working age population (ages 25 to 54) with a job. Here we can clearly see not only that have we not fully recovered from the ravages of the Great Recession but also that we haven’t even recovered from the first recession of the early 2000s. As of last month, the share of the U.S. working age population with a job was just under 77 percent, a full 3 percentage points below its pre-recession level in December 2007. This means that there are 3.7 million working-age people who’d have a job if we were at employment-rate levels prior to the Great Recession. Being below the 2007 level is enough of an issue, but we are also below the level in 2000. We’re about 5 percentage points below the share of working age people with a job more than 14 years ago. 8

8/3: Long term care
40.2 million: Number of Americans age 65 or older in 2010.88.5 million: Projected number of Americans age 65 or older in 2050.67%: Percentage of Americans age 65 or older who will need some form of long-term care in their lifetimes.6.3 million: Projected number of Americans age 85 or older in 2015. 17.9 million: Projected number of Americans age 85 or older in 2050.Usage
15 million: Number of people in the U.S. using nursing facilities, alternative residential care, or home-care services for long-term care needs, 2000. 27 million: Projected number of people in the U.S. using nursing facilities, alternative residential care, or home-care services for long-term care needs by the year 2050.29.5%: Percentage of nursing home residents who were under age 75 in 2011.27.5%: Percentage of nursing home residents who were between the ages of 75 and 84 in 2011. 35.3%: Percentage of nursing home residents who were between the ages of 85 and 95 in 2011. 7.6%: Percentage of nursing home residents who were over age 95 in 2011.

67%: Percentage of nursing home care residents who were female, 2011-2012. 72%: Percentage of residential care community residents who were female, 2011-2012. 14%: Percentage of people age 71 or older who suffered from Alzheimer's disease or other types of dementia, 2007.  49%: Percentage of nursing home residents who suffered from Alzheimer's or other types of dementia, 2011-2012.4.5 years: Average length of time someone lives after being diagnosed with dementia.

12%: Percentage of adults age 65 or older who suffered from depression, 2008. 49%: Percentage of nursing home residents who suffered from depression, 2011-2012. 2.8 years: Average length of nursing home stay. 5 months: Average length of nursing home stay for patients who eventually died in the nursing home.
$87,600: Median annual cost for nursing home care, private room, nationally, 2014.

4.35%: Increase in cost of private room in nursing home between 2013 and 2014, nationally. $58,765: Median annual cost for nursing home care, private room, Louisiana, 2014. $164,250: Median annual cost for nursing home care, private room, Manhattan, 2014. $42,000: Median annual cost for assisted-living facility, nationally, 2014. $19: Average hourly rate for home health aides, nationally, 2014. 1.59%: Increase in hourly rate for home health aides between 2013 and 2014.34%: Percentage of seniors who had incomes that were less than 200% of the poverty threshold in 2013 ($20,916 for individuals and $26,388 for couples). Unpaid Caregivers
80%: Percentage of long-term care provided by unpaid caregivers at home. 67%: Approximate percentage of unpaid caregivers who are female.14%: Percentage of unpaid caregivers who are age 65 or older. 20%: Percentage of unpaid caregivers who provide more than 40 hours of care per week. 10%: Percentage of unpaid caregivers who go from full-time to part-time work because of their caregiving responsibilities.67%: Percentage of people who plan to have a loved one provide care but haven't asked. State and Federal Funding
$143 billion: Amount of long-term care services and supports financed by Medicaid, 2011. 40%: Percentage of all long-term care costs financed by Medicaid. $117,240: Maximum amount of assets that a healthy spouse can retain for the other spouse to be eligible for long-term care benefits provided by Medicaid. (Actual amounts vary by state.)100 days: Amount of care in a skilled nursing facility covered in full or in part by Medicare following a qualifying hospital stay.

24.7%: Percentage of people who apply for long-term care insurance between the ages of 45 and 54. 54%: Percentage of people who apply for long-term care insurance between the ages of 55 and 64. 57: Average age of long-term care insurance applicants. 92.3%: Percentage of long-term care policies with an elimination period of 90-100 days. 63.7%: Percentage of new long-term care claims that were opened by people over age 80, 2012. $2,466: Average annual cost for long-term care insurance for a 55-year-old couple, 2012; daily benefit of $150 with 3% inflation option and three-year benefit period. $3,381: Average annual cost for long-term care insurance for a 60-year-old couple, 2012; daily benefit of $150 with 3% inflation option and three-year benefit period.$6.6 billion: Amount of long-term care claims paid in 2011. 45.9%: Average premium increase requested for approval by John Hancock for 8,600 long-term care policies in force in Connecticut, 2014. 1%: Estimated lapse rates for long-term care insurance policies.102: Number of companies selling long-term care insurance policies in 2002.12: Estimated number of companies selling long-term care insurance policies at the end of 2009.


Retirement Planning with Annual Available Spend

by John D. Craig, J.D., CPA

General framework of methodology

Implementing the AAS requires a six-step procedure:

  1. The advisor will work directly with the client to determine all parameters of his or her expected spending needs during retirement.
  2. The advisor will obtain a complete analysis of all sources and types of the client's income. Each of these items will constitute a different column in the model. All items will be entered after tax, so it is necessary to have a full understanding of the client's income tax position.
  3. Fundamental returns and inflation will be applied. A conservative year of death will be included. The model will then compute the base-case annual available spend – the amount that can be spent each year, with the value of the investment portfolio decreasing to zero in the year of death.
  4. Negative and worst-case scenarios will be entered into the model. The scenarios chosen will be keyed to the specific situation of the client.
  5. The AAS model can be set to automatically adjust for market value changes and recompute the base-case AAS. Cash and portfolio quantities can be updated monthly. The advisor must determine if and when the base case or negative assumptions should be revised.
  6. The advisor will review the AAS scenarios with the client and evaluate the client's spending and investment plan on a periodic basis. Changes will be made as necessary and appropriate.
8/3: I had used late in this decade but it keeps going up and up. 

8/3: I agree and vehemently disagree

Per Bob Veres: (New software for Financial advisers ) ....frees you up to spend more time in client-facing activities: giving advice on life transitions, holding your clients’ hands during the next market downturn (and the one after that), coaching clients as they create more satisfying lives and careers that require them to navigate difficult financial obstacles.

EFM-.  The word “financial” is a lot more than investments and superficial help- you have to advise on insurance, annuities, long term care, life settlements et al. He has never wanted to address those issues. He simply cannot and does not.

Some of his material is very good- but he has been an enabler to many “financial” entities who act illegally and with limited knowledge.  

I know I have destroyed bridges along the way, but I still refuse to accept the massive losses and destroyed lives of the simplistic buy and hold entities.  

I am also available for Bar Mitzvahs

8/3: Robo advisors