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.
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 it's nothing more than lip service,
Not so here. Risk of Loss: 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 that should
change the industry regarding the "illusive" element of risk. You
will need a financial calculator Note- these were not
initially designed for brokers but the material would not be much
Cost Averaging Down: Here is another very important video
on risk- that being a retiree will run out of money before
death and the (semi) traditional 4% annual income rule. The
position of the industry has been a buy and hold through the most
perilous times and the market will always come back. So, over a
long period of time, the investor will recoup their losses.
So, does it work? Well, from Peter Bernstein forward, the use of
historical numbers tends to indicate that about 20- 30+ years you
might do OK. However, for middle income
Americans, it probably won’t work (very few things are 100%
and maybe there will be far fewer major downturns in the next
decades -as I type laughing greatly). The trillions lost
from 2000 and 2008 simply states that the middle class cannot take
another big hit coming up soon. So here is a video that will
help consumers stem their losses on equities to around 10 to 15%
(I was too pessimistic in the video at 20%-- that is too much to
lose). It is DCAD- Dollar cost Averaging Down- another straight
forward description to avoid large losses. Effectively guaranteed
to work up to 95% of the time unless you are very emotional and/or
stupid. It's not perfect but it gets the job done. It is far
better than the mathematical calculations that defy dieties and
are based on numbers from the 1800s. (It's almost an hour
long and your spouse must watch as well. Extra bacon is a good
incentive for men.)
UP Dollar Cost Averaging UP What goes down
hopefully comes back up. But effectively every critic and
pundit says there are no such triggers to help advisors.
.WRONG This video shows you that an independent point in
time can provide a valid entrance to the equities (bonds now
dance to a different Yellen drummer). It is unemotional,
nothing to do with a seance by the guru du jour of the week
and it also negates your own ego (if that actually is
possible). . Should provide around 85% to 90% of the upside.
Dollar Cost Averaging: This is a marketing tool that
is still being taught to "supposed" investors. It IS a
conservative way to buy stocks and funds simply by
not buying them. By the same token, it also lowers
overall return about 2/3rds of time. And in most cases
the term is misused.
Broker/Planner Questionnaires- Utter Bollocks!
While I am not indicating that some valid information is not
obtained, the idea that the consumer determines the amount of risk
to be taken is ludicrous, stupid, simplistic, sophomoric,
pretentious and more. It is a sham foisted on the American (and
pretty much every other country) public that they know the risk of
the market, the products they are purchasing and, above all, can
determine their risk of loss if/when the economy should/will take
Right now FINRA is taking some brokers to task for the use of
products/risk wherein not only the consumer was clueless to what
could happen, but the agent was as well.
That should not be a surprise in that the fundamentals of
investing have never been taught to a broker nor a RIA. Neither is
the use of a financial calculator so one cannot expect much. .
Levy Forecasting Center, based in Mount Kisco, New York, and
run by Jerome’s grandson David, is again more worried than its
peers. Its half-dozen analysts attach a 65% probability of a
worldwide recession forcing a contraction in the U.S. by the
end of next year.
EFM- I am over 50/50
for a mess in 2015. But such timing is "unknowable". That said, it
is not necessarily the correct timing but what you are going to do
when it happens
Caregiver magazine is a gem. Covering every topic imaginable
no matter how sensitive.
Divorce among 50-somethings has doubled since 1990. One in
five adults have never married, up from one in ten 30
years ago. In all, a majority of American adults are now single, government data
show, including the mothers of
two out of every five newborns.
The effects of the Great
Recession on families are hard to ignore. Births and marriages
have plunged, as millions of
millennials skip or delay starting traditional families. The
economic uncertainty of the downturn dismantled job security
which, in turned, ripped up many wedding plans.
Families that have made
unconventional arrangements are the most financially fragile. An
Allianz survey of 4,500
Americans included an extra sample of families outside the
historical norm, including single parents, same-sex couples and
blended families. These “modern families” were less financially
secure than traditional families, the study found. They were 50
percent more likely to have unexpectedly lost their main form of
income -- and twice as likely to have declared bankruptcy.
Your local Caregiver Support Coordinator is a
licensed professional who can support you by matching
you with services for which you are eligible, and
providing you with valuable information about
resources that are available to you through the VA.
Adult Day Health Care (ADHC) Centers
ADHC Centers are a safe and active environment with
constant supervision designed for Veterans to get out
of the home and participate in activities. (ADHC
centers are generally open Monday through Friday
during normal business hours).
Home-Based Primary Care
Home-Based Primary Care (HBPC) is a program designed
to deliver routine health care services to your home
when the Veteran you care for has medical issues that
make it challenging for him or her to travel.
Skilled Home Care
The Skilled Home Care service provides a medical
professional who comes to your home to help care for a
homebound Veteran. Some of the care a Veteran can
receive includes basic nursing services and physical,
occupational, or speech therapies.
Homemaker and Home Health Aide Program
The Homemaker and Home Health Aide Program is
designed to help a Veteran with personal care needs.
Your local VA medical center can help arrange for a
home health aide who will come to your home on a
regular schedule to allow you time to take care of
your own needs.
The Home Telehealth program is designed to give you
ready access to a care coordinator by using technology
(e.g., telephone, computers) in your home. The program
is typically offered to individuals who live at a
distance from a VA Medical Center.
If a Veteran requires a Caregiver, you are eligible
to receive up to 30 days of respite care per year. The
care can be offered in a variety of settings including
at your home or through temporary placement of a
Veteran at a VA Community Living Center, a
VA-contracted Community Residential Care Facility, or
an Adult Day Health Care Center.
Home Hospice Care
During the advanced stages of a terminal disease,
Home Hospice Care can offer comfort and supportive
services for you and the Veteran you care for in your
own home. The team is there for you 24 hours a day,
seven days a week. Bereavement care (grief counseling)
is also available for you and other immediate family
Or call the VA's Caregiver Support Line at
Managing Lung Disease
By Cheryl Ellis, RPFT, CRT,
The lungs oversee the body’s oxygen needs by taking
in air deep into their corridors (called bronchi),
allowing for oxygen and carbon dioxide to filter in
and out of the blood. The dance of oxygen exchange
becomes more complicated with inhaled pollutants of
different kinds, such as tobacco smoke, pollution and
congestion from infections.
Our lungs also help the body’s metabolic process,
releasing more carbon dioxide in situations where the
kidneys need help keeping the body’s acid and alkaline
quantities balanced. They can release more or less
carbon dioxide if needed in a given situation.
Each body system works with the other to keep the
body in a state of health. Illness can be acute (short
term) or chronic (recurrent). Each disease has its own
definition of acute or chronic. Lung disease can be
caused by restrictive conditions such as spinal
curvature, or obstructive conditions like emphysema.
Lung disease is often a mixture of more than one
condition, and both restrictive and obstructive
conditions can occur at the same time.
The National Institute of Health estimates that 12
million people have been diagnosed with Chronic
Obstructive Pulmonary Disease (COPD).The term COPD is
a general designation for a group of lung diseases
that includes asthma, chronic bronchitis, emphysema
COPD causes shortness of breath, and problems with
mucus clearing and oxygen exchange from the lungs to
the blood vessels. Each of the diseases that fall
under the COPD classification creates different
changes in the lung tissue, but essentially similar
symptoms and challenges. Air flow is not only
obstructed from going deep into the lungs. The ability
to exhale properly hampers the next breath coming in.
The airways can collapse because the smaller airways
“flop” closed when exhaling. The closed airway may
need medication to open them up, or an altered
breathing pattern that lets the air flow out more
smoothly. Ideally, a combination of the two provides
consistent help. The trapping of air prevents easy
exchange of oxygen and carbon dioxide, and the “dance”
that occurs when a new breath carries in fresh air
causes “old” air to block the entry of “new” air. It’s
similar to people needing to exit an elevator before
others can get in.
DIAGNOSIS IS A BEGINNING
Individuals diagnosed in early stages of COPD may
have an easier time adapting to lifestyle changes to
assist with management of the disease. Eliminating
smoking is a first course of action; and the earlier
one starts, the simpler it may be.
Therapies like pulmonary rehabilitation are designed
to adapt to the current state of health, and provide
great benefits at any stage of diagnosis. Pulmonary
rehabilitation by competent professionals includes
breathing exercises, education on energy conservation
and supervised exercise to improve stamina.
In all cases, COPD increases the amount of work it
takes to breathe. Conserving energy, especially in
later stages, improves breathing and the body’s
ability to transfer oxygen. By supplying the body’s
oxygen needs adequately, everything from digestion to
sleep is positively affected.
ADJUSTING TO CHANGES
Family members and loved ones can have a difficult
time with COPD diagnosis, treatment and day-to-day
activities. Meals and medication schedules may have to
be changed to assist the loved one with maintaining
their health. Where meds and meals could be delayed or
possibly skipped until a “convenient” time, a stricter
schedule may have to be adhered to, delaying family
Friends may not understand a progressive intolerance
to certain odors from cleaning solutions, pets or
colognes. The COPD patient may have adapted to
exposure to some environments, but once diagnosed and
advised on making changes, it may be less tolerable.
Mrs. Valorie Bender has been diagnosed with COPD,
specifically emphysema, for fifteen years. She and her
husband Michael had a number of adaptations to make
during the first few years after her
diagnosis.“Michael is a lot taller than me. If he
sprayed air freshener or any kind of spray, I knew to
stay out of the room until he was done.” Any spray
releasing aerosol will have droplets that can be
breathed in. Mrs. Bender learned to stay away from the
area until the droplets had settled to avoid the mist
penetrating her lungs.
She goes on to explain that adapting to COPD comes
over time, and requires some creative thinking. With
over a foot difference in height between the Benders,
they are able to spot smokers to steer both of them
away from second-hand smoke.“You have to be careful of
people’s feelings” she indicates. Smokers, with or
without a cigarette, carry the odor on their breath or
clothing. The second- hand smoke can irritate lungs
and trigger the need to use an inhaler. Preceding that
would be a “coughing fit.”
Smokers may be used to strangers “commenting” on
smoking by faking an intense cough. Mrs. Bender has
chosen the middle path of dealing with this by
avoiding the situation as much as possible. Family
members may forget from time to time, or a new
individual may be brought into their circle, requiring
fancy footwork in being direct but kind. As her
husband and caregiver, Michael Bender’s biggest
adjustment was identifying what actions might be
needed.“Michael had to learn not to panic when I went
into a coughing attack.”
CAREGIVERS LEARN TO SAY “WHEN”
Loved ones with COPD may dig their heels in when it
comes to adapting. Caregivers may feel obliged to push
the situation. To eliminate stress on both parties, a
middle ground is a better path.
When Valorie Bender’s “coughing fits” started,
Michael learned to stay as calm as possible and just
observe Valorie’s actions. If her handheld inhaler was
needed, he could help by getting it for her, or help
her to a chair to sit down until the coughing spasm
passed. As they began to accept their roles in coping
with COPD, caregiver and care receiver panic
diminished. Michael learned the general “flow” of her
coughing spasm, and that not all episodes are an
emergency. Valorie, as the COPD patient, has adapted
to letting herself get through the cough experience at
her own rate, rather than push herself to “hurry up
and get better so as not to panic Michael.”
The Benders have developed a lifestyle that may have
limitations they didn’t have before Mrs. Bender’s
diagnosis. Their changed lifestyle takes their mutual
mental, emotional and physical well-being into the
spotlight. Developing coping skills and creative
management of activities has improved their
relationship and mutual health.
Setting up a CCAH program is a way for a CCRC to serve more people
without having to add facility beds. The CCRC that runs a CCAH
offers the users many different home care services, such as care
coordination, help with household chores and errands,
transportation and in-home nursing services.
We examine a
Japanese Panel Survey in order to check whether
self-reported risk aversion varies over time. In most
panels, risk attitude variables are collected only once
(found in only one survey wave), and it is assumed that
self-reported risk aversion reflects the individual's
time-invariant component of preferences to- ward risk.
Nonetheless, the question could be asked as to whether the
financial and macro shocks a person faces over his
lifetime modify his risk aversion. Our em- pirical
analysis provides evidence that risk aversion is composed
of a time-variant part and shows that the variation cannot
be ascribed to measurement error or noise given that it is
related to income shocks. Ta king into account the fact
that there are time-variant factors in risk aversion, we
investigate how often it is preferable to collect the risk
aversion measure in long panel surveys. Our result
suggests that the best predictor of current behavior is
the average of risk aversion, where risk aversion is
collected every two years. It is therefore advisable for
risk aversion measures to be collected every two years in
long panel surveys.
“No investment strategy based on mainstream finance theory can,
therefore, protect investors from market-wide crashes.” -
EFM-The issue is mainstream finance,
It is then noted in a new CFA study=
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
EFM- in 2000 and 2008, I did not know when the recession would
hit, how bad it would be nor how long it would last. But both DCAD
and DCAup both worked. They will work the next time, Just view the
Investment management has grown up alongside
the development of financial theory, via the efficient market
hypothesis and capital asset pricing model. Much of today’s
approach is predicated on the “obvious” advantage of diversification
accomplished through portfolio optimisation.
The real value of diversification was called into question when
the crisis hit and nearly all assets went down in price
together. That was unpredictable, and probably part of normal
variability, say defenders of the status quo. Most portfolios
are still constructed on the basis that wide diversification,
both within single asset classes and across asset classes, will
reduce risk without sacrificing return.
Those critical of the standard approach are talking about or
testing new ideas, such as diversification based on risk factors
and dynamic asset allocation.
Osborne will be forced to swing his axe much deeper into
the budgets of departments such as the army, police and
courts as the annual savings the chancellor must find to
meet his austerity targets are set to nearly double to
11/11: And so shall a bunch of
others. . I know the data but I still have a problem with the U.S.
And we have this mess- Clashes between government forces and
Russian-backed separatists in Ukraine’s breakaway eastern regions
intensified this weekend, as Kiev accused Moscow of supplying
rebels with heavy weaponry and new fighters
It will be interesting to look as this in a year
commentary I agree with, Mainly that the world has radically
changed and it will be tough to figure out. As regards
investments, I do believe the simplistic format I identified above
will tempter major losses by quite a bit.
"Plan advisors ought to take a somewhat jaundiced view of what
the mainstream economists are projecting about the future.
Prejudices aside, the world economy has become so complex that
it is difficult for anyone to make accurate financial
It is also not unreasonable to assume that the future pattern
will look very different from what it has been in the past.
While the U.S. has recently weaned itself off of QE, that may
not be the end of the story. At some point, the enormous debt
load the U.S. has assumed could very well create a day of
reckoning. What that day looks likes no one knows, other than it
is a righting of the scales.
It is also the case that the U.S. can kick the can down the
road further still".
with the Saver’s Credit
If you are a low-to-moderate income worker, you can take steps
now to save two ways for the same amount. With the saver’s
credit you can save for your retirement and save on your taxes
with a special tax credit. Here are six tips you should know
about this credit:
1. Save for retirement. The formal
name of the saver’s credit is the retirement savings
contributions credit. You may be able to claim this tax credit
in addition to any other tax savings that also apply. The
saver’s credit helps offset part of the first $2,000 you
voluntarily save for your retirement. This includes amounts you
contribute to IRAs, 401(k) plans and similar workplace plans.
2. Save on taxes. The saver’s
credit can increase your refund or reduce the tax you owe. The
maximum credit is $1,000, or $2,000 for married couples. The
credit you receive is often much less, due in part because of
the deductions and other credits you may claim.
3. Income limits. Income limits
vary based on your filing status. You may be able to claim the
saver’s credit if you’re a:
• Married couple filing jointly with income up to $60,000
in 2014 or $61,000 in 2015.
• Head of Household with income up to $45,000 in 2014 or
$45,750 in 2015.
• Married person filing separately or single with income
up to $30,000 in 2014 or $30,500 in 2015.
4. When to contribute. If you’re
eligible you still have time to contribute and get the saver’s
credit on your 2014 tax return. You have until April 15, 2015,
to set up a new IRA or add money to an existing IRA for 2014.
You must make an elective deferral (contribution) by the end of
the year to a 401(k) plan or similar workplace program.
If you can’t set aside money for this year you may want to
schedule your 2015 contributions soon so your employer can begin
withholding them in January.
5. Special rules apply. Other special rules that
apply to the credit include:
• You must be at least 18 years of age.
• You can’t have been a full-time student in 2014.
• Another person can’t claim you as a dependent on their
Ratings examined the investment portfolios of U.S. life
insurance companies at year-end 2013 based on statutory
information the agency compiles annually from an investment
survey of its universe of rated entities. Fitch Ratings
estimates these results represent approximately two-thirds of
the total life insurance industry's general account invested
assets. Fixed-income investments on average accounted for 84%
of total invested assets. The remaining 16% was made up of
Schedule BA assets at 6%, contract loans at 4%, cash at 2%,
stock at 2%, derivatives at 1%, and real estate at 1%. As
interest rates remain at historically low levels, life
insurers have made a modest allocation shift into less liquid
asset classes, including alternative investments, private
placement corporate bonds and commercial mortgage loans.
11/9: And he probably voted.......
Alabama, a citizen
saw the surveillance video of the robbery of a Subway
on Facebook, recognized the
suspect shopping in the Hueytown Walmart, and called police. The police
noticed he was wearing the
same clothes and shoes as the robbery suspect. They
believe he is also responsible for Subway robberies in
Birmingham, Midfield and Adamsville. The man was taken into
custody and admitted to the robbery in Hueytown. He told
police he did it out of anger because the “Jared diet” didn’t
work for him.
Surviving Caregiving with Dignity, Love
By Barbara Hanson Dennis
Yesterday, my husband Les died. No, it was actually a
year and 41 days ago, but it feels like yesterday. I’m
still wondering how this could really have happened.
He was diagnosed with Early Stage Early Onset Probable
Alzheimer’s Disease in January 2000 at age 63.
For the first week after diagnosis, I kept saying,
“WE have Alzheimer’s,” but then I quit saying that
even though it was certainly true. When a person is
diagnosed with dementia, there must be someone who is
the caregiver. That someone may be hired, but in most
cases it is a member of the family.
In many cases, that is the spouse of the person with
dementia. Whether that new caregiver knows anything
about the condition, she or he is thrust into a role
for which they may have no preparation at all.
This article is about how I learned to become a
caregiver and what I found to be the 10 most useful
things to know in caregiving—not only for myself, but
also for Les.
1. Love: Sometimes
we don’t have strong feelings of love—when we are
tired, scared or angry about the situation. I have
heard and read about situations where there is a great
deal of anger simmering in a relationship that may
make it extremely difficult to be a caregiver.
“Brotherly” love may help to get through those
difficult times. Inspirational readings can be calming
and encouraging. It may be useful also to talk with a
clergyperson or a therapist.
2. Learning: Learn
as much as possible about the particular kind of
dementia your loved one has. There are many books
about the subject now as well as articles on the
Internet. Ask the doctor for recommendations about
ideas for reading. If he or she doesn’t have any, then
try the library or Google.
3. Support groups: I
cannot say enough about the value of support groups. I
learned as much from other caregivers about how to
handle situations as I did from anywhere or anyone
else. Fellow caregivers can be an absolute
goldmine—not only for ideas, but for venting when
things are tough. It takes a fellow caregiver to fully
understand what you are going through.
4. Humor: This is
one of the best ways to get through those sticky
situations where you are getting resistance or
disagreement. Your own “private” jokes with your loved
one may be great for maintaining a bond between you.
Another way to get through a difficult time is
diversion. When humor doesn’t work, coming up with an
alternative activity or topic of conversation usually
does. It may be something as simple as looking for a
favorite object; i.e., “Now where did the coin box
go?” or possibly offering a drink of water or a
“treat” that is appropriate to the person’s diet.
6. Exercise: This
may sound like a nearly impossible thing to do if you
are a 24/7 caregiver, but it is not. It is really on a
par with being in a support group. Physical exercise
is very important for anyone with dementia and their
caregivers because it helps with depression, stress
and overall health. There are several ways to do this.
One possibility is to take your loved one with you as
long as she or he can walk. Another option is to leave
him/her doing some activity for the duration of your
walk or other exercise. Finally, ask a family member,
friend or agency person to stay while you exercise.
7. Planning: Time to
plan ahead may vary with the extent to which the
dementia has progressed when the diagnosis is given.
Contact an Elder Care Attorney and have him or her
help prepare all the Advance Directives one needs.
This includes Power of Attorney, Living Will,
Healthcare Power of Attorney and a regular Will. You
may also want a Do Not Resuscitate (DNR) Form.
8. Meaningful Activities:
While this may seem like an improbable recommendation
for a person with dementia, it was definitely my
experience that non-pharmacological activities were a
key to a slower progression of the disease in my
husband and others with dementia. Just as we are given
suggestions for activities to “prevent” dementia, I
strongly believe that activities can keep those
already diagnosed from going downhill faster. It does
not have to be huge. For Les, one year it was helping
to propagate poinsettias over a year for the Christmas
show at a Chicago conservatory and then taking people
there to see them all. Other years, it was going to
various nearby attractions with a caregiver willing to
take him places to keep him seeing new things and
9. Dignity: As long
as possible, it is important to treat those with
dementia with as much dignity as possible. This occurs
not only through participation in meaningful
activities, but also when going to visit the doctor.
One of my husband’s most important messages to doctors
and other groups he addressed was that patients do not
want to be ignored or separated from the caregiver
during discussion. If there were things I wanted the
doctor to know that I didn’t want to say in front of
Les, I wrote them down and handed them to the nurse
before we went in so the doctor could read them. It is
not always easy to work around the patient as their
abilities diminish, but it is vital to allow them to
maintain their dignity, and especially not to treat
them as a child. They have a lifetime of experience
even if they have lost some skills, so they must be
allowed personal freedom balanced with the degree of
10. Respite: This is
last, but not least. Even though Les had long-term
care insurance so we could have paid caregivers to
come in a few hours a day, I did have a stroke after
10 years of being a caregiver. It was only then that
my sons suggested we put Les into a nursing home. If
you have long-term care insurance, it’s good to use it
while your loved one is still home so you can get much
needed breaks. If you don’t have that insurance,
hopefully family and/or friends will offer to help. If
they don’t offer, ask. It you still need help, try
your church or social service agencies in your
municipality or township.
I have very fond memories of Les even after he was
diagnosed with Alzheimer’s. I will never forget that
he was still Les until the day he died; he was always
“there” after 11 years. Being there for those moments
was a blessing for me and our whole family. Dementia
is a disease, but it doesn’t have to be a disaster.
doesn’t interest me.
11/9: I knew it was bad- but not this bad
A crash in Genworth shares comes after the company on Wednesday
night reported earnings that widely missed expectations as
it had taken a massive $844 million loss after completing a review of its long-term care
"The company made changes to its assumptions and
methodologies primarily impacting claim terminations, most
significantly in later duration claims, and benefit
utilization reflecting that claimants are staying on claim
longer and utilizing more of their available benefits
in aggregate than had previously been assumed in the
company's reserve calculations."
Typical Resident- The
typical resident is a woman about 87 years old1who
is mobile, but needs assistance with approximately two to
three activities of daily living (ADLs). She would have two
to three of the Top 10 chronic conditions.2
Percentage Of All Residents By
Age Groups: In 2010, 54 percent of assisted living
residents are 85 years or older; 27 percent are 75-84
years old; 9 percent of residents are between 65 and
74 years; and 11 percent are younger than 65 years old.2
Seventy-four percent assisted living residents are female; 26
percent are male.2
Number of Residents - More
than 735,000 people nationwide live in assisted living
Activities of Daily - Thirty-eight
percent of residents received assistance with three of more
ADLs. The chart below shows the various ADLs
and the percentage of residents needing help with them.2
of Daily Living
Other Common Services
- Eighty-seven percent of assisted living residents need help
with meal preparation, while 81 percent need help managing
Top Ten Chronic Conditions 2
High Blood Pressure: 57%
Alzheimer's disease and other dementias: 42%
Heart Disease: 34%
COPD and allied conditions: 15%
Moving In - Residents come to
assisted living facilities from a variety of settings:1
70% moved from a private home or apartment
9% came from a nursing facility
9% moved from a retirement or independent living community
7% moved from a family residence (such as living with
5% came from another assisted living residence or group
Moving Out -
Fifty-nine percent of residents will move into a nursing
facility. Thirty-three percent will pass away. The remaining
will move home or to another location.1
Median Length of Stay:
The median length of stay for residents is about 22 months.2
Resident Rights -
The National Center for Assisted Living advocates that
residents' rights should include the right to:
Be treated at all times with dignity and respect
Control personal finances
Retain and have use of personal possessions
Interact freely with others both within the assisted
living residence and in the community
Freedom of religion
Control receipt of health-related services
Organize resident councils
1Overview of Assisted Living," published by the
American Association of Homes and Services for the Aging,
American Seniors Housing Association, Assisted Living
Federation of American, National Center for Assisted Living,
and National Investment Center for the Seniors Housing &
Care Industry, or reflects NCAL's philosophy of assisted
2 Data from the 2010 National Survey of
Residential Care Facilities. The National Center
for Health Statistics Data
Brief No. 91.
11/10: Scary numbers when needing ltc
Once the assets go below roughly $2,000, Medicaid takes over:
11/7: 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,” notes a
study by the CFA Institute,
right' through pragmatism is better then 'precisely wrong'
Following the 2007–09 financial crisis, mainstream finance theory
was criticized for failing to forecast the market crash, which
resulted in large losses for investors. Has our finance theory,
which many consider an idealization that does not take reality
into account, failed investors? Do we need to reconsider the
theory and how it is taught (and practiced)?
98% of drivers who say they "text daily" are "aware of the
dangers of texting behind the wheel. Nonetheless, three-quarters
of them admitted to texting while driving, despite broad
public-service campaigns and laws against it in some states."
"Two-thirds said they have read text messages while stopped at a
red light or stop sign, while more than a quarter said they have
sent texts while driving. More than a quarter of those who texted
while driving believed they "can easily do several things at once,
even while driving."
— Twenty-eight percent said they are worried about missing out
of something important if they don't check their phones right
— More than a quarter believes that their driving performance
is not affected by texting, and just as many people said they
believe that others expect them to respond to texts "right
— Just 6 percent answered that they are "addicted to texting,"
although 14 percent admitted that they are "anxious" if they
don't respond to a text right away, and 17 percent feel "a sense
of satisfaction" when they can read or respond to a text
\\11/5: Apparently we didn't learn anything
Financial Stability Board (FSB), a key watchdog and thought
leader in the industry, has just released data on the global
economy which shows that shadow banking is nearly matching its
pre-crisis peak in terms of overall size. In total, for the 20
countries, plus the EU, which it calculates, the global shadow
banking market is at $75 tn per annum. China, unsurprisingly,
is showing the fastest growth in the world, and its shadow
banking market is only smaller than the US and UK’s. The
global increase in shadow banking is largely due to
regulation, which has forced banks away from lending, and in
turn, given rise to other sectors springing up to fill the
credit void. Banking’s share of lending has shrunk from 49%
globally in 2008, to just 45.6% this year, while shadow banks
now account for 24.5% of all lending. The US dwarfs all other
markets in total shadow banking, with an industry worth $14.4
tn, while China’s is only $2.7 tn, though it is growing at 38%
Brokers need more
training on complex products, regulators say Regulators
are calling for improved training for financial professionals
who sell complex products such as annuities, alternative mutual
funds, floating-rate bank loans and sophisticated fixed-income
instruments. They say too many advisers can't explain such
surprised at how many [registered] reps cannot explain the
products they sell,” Tanya Solov, Illinois securities director
EFM- I'm not. A broker has never been taught the fundamentals of
investing so what do you expect.
11/5: Disability problems- 3 times greater than dying
disability insurance is one of the elementary financial needs of
any professional, and in a perfect world should be as commonly
prescribed as auto or homeowners insurance. That ideal is
far from the reality. There are currently fewer than 30
carriers offering disability insurance in the United States, but
more than 800 selling life insurance. More working
Americans annually purchase life policies than DI policies, but
the average person is over three
times more likely to become permanently disabled than die
during his/her career.
if a high net worth prospect has employer sponsored group long
term disability coverage (LTD) and a separate personal policy,
he/she may often times be improperly insured at unacceptably low
levels. It’s crucial to think of and advise on disability
risk assessment in layers or tiers. Group LTD usually
provides the basic coverage or first tier of insurance.
For a healthy client under the age of 60, the second tier of
protection can be comprised of an individual non-cancellable or
guaranteed renewable product readily available through the
“traditional” disability market. Most insured persons can
find sufficient levels of protection through the first and
European Commission slashed its economic outlook for
the eurozone on Tuesday, predicting the currency bloc
would grow only 1.1
per cent next year, down from a 1.7 per cent
forecast just six months ago.
The revisions were particularly big in the two largest
eurozone economies, Germany
and France, for which the commission cut its
projections by nearly a full percentage point for
2015. The gross domestic product forecast for Germany,
the common currency’s economic engine, was cut from 2
per cent in May to 1.1 per cent; France went from 1.5
per cent to 0.7 per cent.
EFM- with Germany with next to no growth, there goes any bailout
for other members of the EU
The Professional Care Manager As A Family
Caregiver: Unique Challenges
By Rona S. Bartelstone, MSW, LCSW, BCD, CMC
CEO, Rona Bartelstone Associates, Inc.
Care Management is probably the most holistic and consumer
centered approach to the provision of services for frail and
vulnerable populations. Care Management is a process
that looks at medical, social, emotional, spiritual, safety
and functional needs of an individual and his/her family and
support systems. The provision of services to meet some
of these needs may come from a variety of professionals, but
the care manager is the key to understanding, accessing and
coordinating those services that best meet the needs of the
Because the Care Manager has experience in the complex tasks
of assessing, organizing, facilitating, advocating and quality
assuring the services provided, s/he is expected to have the
ability to objectively understand the various systems’ needs
and requirements. S/he is also expected to understand
personal and professional boundaries and the most appropriate
therapeutic techniques. This central, objective role
enables advocacy and an interdisciplinary collaboration that
is based upon the understanding of the different
responsibilities of each member of the service delivery team
and the consumer.
So what happens when the professional Care Manager becomes a
family caregiver and is acting on behalf of his/her own family
system? This presents many issues around objectivity,
role and boundary definition, use of self and the emotional
aspects of caregiving. This is a concern that I
encountered, when after thirty years as a professional
caregiver, I found myself caring for a father with cancer, a
mother with mild cognitive impairment and a husband who had
suffered a stroke. I found myself in unfamiliar
territory in terms of emotional coping and my role within the
healthcare system, when it came to my own family.
Good News/Bad News
Like most human endeavors, things are often not clear cut for
the “proffamily” (a term I coined to describe my role as the
professional caregiver turned family caregiver)
caregiver. As we move into the role of family caregiver,
there are several unique challenges to our professionalism and
our most intimate and loving relationships. Many of
these challenges are double edged swords for the professional
who has both experience and knowledge of resources, but who
can no longer claim the objectivity and boundaries that are
expected in the work role. This can create a role
dissonance and challenge our professionalism.
1. Resource and Health Knowledge
When you have a lot of knowledge and experience in working
with health and social problems, it helps by enabling you to
have many more resources, more immediately available than lay
families. On the other hand, knowing the trajectory of a
disease process, the side effects of treatments, the nature
of, or limitations to recovery can be a very challenging
prospect for the “proffamily” caregiver, who doesn’t get the
“luxury” of learning to live with the illness and its impact
For example, when my mother was diagnosed with Mild Cognitive
Impairment, I immediately saw the nature of our future
together and began to experience the grief and sadness that
many families don’t face until much further into the disease
process. This makes it hard to stay in the moment and
deal with the current situation without anticipating the
future too much. Moving immediately into the later
stages of the disease process in thought and feeling can lead
to excess disability. The ability to balance present and
future concerns, the lifetime of relationship issues (both
positive and negative), and the immediate care needs can be a
challenge for the professional who “knows too much.”
2. Accessing & Managing Systems
On the other hand, knowing the health and social service
delivery systems is a strength that the “proffamily” caregiver
can call upon to assure access to the most appropriate
services in an efficient manner. This provides a sense
of control, confidence and self esteem, in the midst of the
Knowledge of how different systems function enables the
“proffamily” caregiver to manage the system to assure that our
loved ones receive appropriate care. This can include
the ability to assure second opinions, specialty consults,
appropriate discharge planning and timing, and the
implementation and coordination of home and community based
care services, for example.
At the same time, being a professional caregiver does not
make us immune to health and social service delivery problems.
However, as the consumer it is difficult for the “proffamily”
caregiver not to feel responsible for the deficits of the
system. This can be especially true if our own service
delivery system is proven deficient in some way. It can
be difficult to acknowledge to our loved ones and ourselves
that even we cannot “fix” the system, though that may have
been our goal in becoming a professional caregiver. This
certainly challenged my role as the family “health care
expert” when dealing with situations that are engrained in the
fractured delivery system.
3. Advocacy & Health Education
Advocacy and education is also a role in which the
“proffamily” caregiver can demonstrate skill and feel a sense
of mastery. Despite the proliferation of health
information and the emergence of consumer directed care
concepts, it is still very difficult for the health community
to adequately communicate the nature of health issues, the
variety of treatment options, and the consequences of the
various options. This is especially true when dealing
with complex, systemic health care treatments. By attending
physician visits, reviewing charts, assuring communication
among doctors and other related professionals, and asking
probing questions about treatment the “proffamily” caregiver
can bring a comprehensive and understandable approach to
treatment. Likewise, as a family member acting in the
role of care manager, even asking the “right” questions is
often a critical component for enabling healthy coping with
4. Role dissonance & Loss of control
One of the most challenging parts of being a “proffamily”
caregiver is the role dissonance that arises when the care
need is personalized. I vividly remember my own feelings
of helplessness and fear while I sat with my husband in the
hospital after his stroke. I felt that I had to “behave”
or the hospital staff would find me to be an imposition and my
husband’s care would be adversely affected. Finding the
appropriate balance between advocacy and intrusion is not easy
when the wound is so raw and intense. I felt that I was
in a position that was so uncharacteristic for me and so
lacking in control, that it was a most uncomfortable
experience. And while I felt this most acutely in this
particular situation, it remains a constant theme throughout
the course of my caregiving responsibilities.
5. Grieving/sadness vs. task orientation
One of the realizations that came to me in my role as
“proffamily” caregiver for both parents is that I had to
compartmentalize my grief in order to stay task oriented. In
other words, my grief would often be put on the back burner to
enable me to get through the variety of tasks related to
parent care. This compartmentalization further
necessitated that when I was not with my parents that I pay
attention to my grief and sadness and honor it by giving
myself time to feel. By periodically embracing my grief and
allowing its expression, I found that I was able to get back
to the tasks at hand.
Anticipatory grief, forgiveness work and learning acceptance
can be a powerful experience that enhances our ability to give
care to family, self and others. “Proffamily” caregivers
are in a unique position to understand this and to address
While “proffamily” caregivers certainly do not have a
monopoly on conflicted feelings at the time of an existential
crisis, I do believe that we come to it and work through it
with a special constellation of issues. Being able to
set appropriate boundaries and ensure self-care is critical
for “proffamily” caregivers, who are often more used to giving
than receiving. Therefore, it is imperative to allow
ourselves the opportunity to reach out to our closest support
systems and to let them take care of us. I know that
this is a huge challenge, but it can also be immensely
gratifying when we let others return the love that they feel
Our unique knowledge and experience can facilitate or inhibit
our ability to make conscious choices about how we use
ourselves in our caregiving role. When we choose to let
our background facilitate the best use of self, we can
experience the entire process of caregiving in a way that
turns burdens into blessings. We can further our self
actualization with a sense of purpose, dignity and grace that
creates growth as a professional, as well.
Here is an extended
commentary on which states legally offer the ability to takes
one's own life
11/4: Guy Debelle, head of
the BIS’s market committee, said investors have become far too
complacent, wrongly believing that central banks can protect
them, many staking bets that are bound to “blow up” [at] the
first sign of stress.
Mr. Debelle said the markets
may at any time start to question whether the global
authorities have matters under control, or whether their
pledge to hold down rates through forward guidance can be
believed. “I find it somewhat surprising that the market is
willing to accept the central banks at their word, and not
think so much for themselves,” he said. [Source: Ambrose
Evans-Pritchard, “BIS warns on 'violent' reversal of global
11/4: I sent a reply to a
reader indicating how difficult planning actually is. That type of
comment is heresy with all the tripe out there showing how to
simply invest for 30 years and everything will come out rosy
So here are recent comments by Bill Sharpe: At least someone
agrees with me.
The simple way in which most people have characterized the
accumulation phase is to say: You’re going to invest, maybe you
have a glide path, but the thing you’re going to produce is the
probability distribution of the value at retirement. You can
draw it on a flat piece of paper. It’s a probability of
distribution of one outcome.
When you are talking about retirement-income strategies, you’re
discussing probability distributions of what your income will be
next year and every year thereafter. You’ve
got 40 or 50 dimensions, even if you only do annual
To think about what one of
those problems looks like boggles the mind. To compare
an outcome with another two, three, four or 10 outcomes to
decide which one you like best is a nasty, nasty problem.
The question is how you cut into that. There are ways, but they
involve – at the very least – coming up with 50 or maybe 100
coefficients for preferences and risk aversion vis-à-vis income
at age 81, opposed to 82, etc.
Then you add in consideration of whether you are alive along
with your partner, or just one of you, or if it goes to the kids
and the charities after we die. Right there, you’re already up
to 100, 200 parameters that you’ve got to somehow or other nail
down before you can think about finding an optimum strategy.
The dimensionality is overwhelming, and the behavioral issues
are of course, very difficult.
EFM- yes you can do monte carlo estimates out 30 years. For
those that know my stuff, you can also do a risk of loss for 30
years. A budget one uses for 30 years. Your health for 30 years
and on and on. It is necessary to get some type of a guide but
frankly anything beyond 5 years just seems dicey. You have to
keep doing adjustments very frequently to include all sorts of
changes that happen. It's hard. ,
And while pundits may rail at DCAD (see video above) I think it
will help the bulk of retirees if they can avoid the huge market
losses that I expect many times over the next 30 years.
11/4: Fewer young home buyers
The share of first-time home buyers has dropped to its lowest
level in 27 years, highlighting the challenges facing the
housing market’s stalled recovery, according to an annual survey
released Monday by the National Association of Realtors.
Only 33 percent of buyers purchased their first home this year,
down from 38 percent a year ago. The last time the share was
lower was in 1987, when first-time buyers made up only 30
percent of home purchases. The Realtors group cited several
reasons for the decline, including a challenging job market and
lending standards that tightened too much in the wake of the
EFM Of particular note, new homes and construction have always
been the hallmark of a strong U.S. economy.
11/3 MORE UNSETTLING CORRELATIONS
11/3: Funny, cynical and TRUE
11/3: It's the economy stupid
11/3: Poor poor
11/3: Correlations don't change much, eh?
11/2: The rich are taking it all
I wish I had good advice for
your savings, but I can’t advise buying stocks that have
only been more expensive in 2000 on some key metrics right
before you know what, and I can’t recommend buying any
long term bond as the yields also stink relative to
inflation. With the Fed now saying that the dollars in
your pocket are now worth too much relative to money in
people’s pockets overseas and thus joining the global FX
war, maybe you should buy some gold, but I know that
yields nothing either. You are the sacrificial lamb in
this grand experiment conducted by the unelected officials
working at some building named Eccles who seem to have
little faith in the ability of the US economy to thrive on
its own as it did for most of its 238 years of existence.
Borrowers and debt are their only friends. To you
responsible saver that worked hard your whole life, may
you again rest in peace.
11/3: wow- did not know it was that much
Financial Assets Have Nearly DOUBLED Since 2008 (Composition
of financial assets, emerging markets, US$ billion)
11/3: Drink up
10 percent of Americans drink 74
servings of alcohol a week -- or 10
drinks per day
The top 10 percent of American drinkers -- 24 million adults
over 18 -- consume,
on average, 74 alcoholic drinks per week. That works
out to a little more than
four-and-a-half 750 ml bottles of Jack Daniels, 18 bottles of
wine, or three 24-can cases of beer. In one week. Or,
if you prefer, 10 drinks per day.
11/3: Please stop breathing.
11/3: You really shouldn't beat yourself with this graph. Use
total market for a base
11/2: Lower China
data was released this week which shows an alarming rise in
Chinese bad loans at the country’s biggest lenders. Across
China’s top five banks, including the sector leader ICBC,
average bad loans rose 9% to 10% this month as the country’s
economic situation deteriorated and borrowers became
increasingly unable to service their debts. The hardest hit
areas were in eastern provinces, such as in manufacturing
strongholds like the Yangtze and Pearl River Deltas, which
have a higher percentage of privately-owned companies.
Worryingly, it is likely that this contagion will spread west,
into areas where companies have even less backing of the
powerful Chinese government. As credit quality deteriorates,
funding is drying up and small to midsize companies are
running out of cash. China’s banks expect a 15% year-n-year
drop in annual revenues.
maybe we can weather the global economic storm since we are
not going to be impacted by higher oil prices. But it is iffy.
11/2: HOW TO DETERMINE CORRECTIONS. YOU CANNOT\
11/2: This is a conundrum what happens with rates so low if there
is another recession.???
11/2: I'm not so sure I agree. If all other countries truly
falter, OK. But the U.S. is far from the power and influence it
used to be. Admittedly however, we may see the dollar get better
when and if we hit another bad patch which is absolutely possible
11/2: Does Olive garden's problems ring a bell
11/2: Why they still buy our stuff
11/2: This tends to show how fabricated the economy is. And how
tough it is to figure out the future save that it will be
11/2: This is good
11/2: Very interesting with the "highest level ever." but if oil
prices drop a lot, would it make the cost of fracking
Conclusion: no evidence as yet for a rebalancing bonus
My conclusion is that while the subject is interesting enough
to warrant further research – certainly much more than has been
done heretofore, given how much rebalancing is advocated by
nearly all practitioners of the investment advice profession –
no evidence has as yet presented itself to confirm that there is
a rebalancing bonus.
Rebalancing is certainly not necessarily harmful, unless it
conflicts with another risk management strategy that better
suits the investor. It is better to have an investing discipline
than not to have one, and rebalancing is one acceptable default
discipline – especially when the investor would fail to adhere
to any discipline if his portfolio’s volatility exceeded a
particular level. It should not, however, be thought of as a
strategy that delivers a returns bonus as compared to other
banking relative to the overall economy is closing in
on its pre-crisis peak even as mainstream lenders’
share of business declines, according to official figures that
highlight the heft of alternative finance.
The broadest measure of shadow
banking assets tracked by the Basel-based Financial
Stability Board grew by $5tn to surpass $75tn last year
in 20 countries plus the euro area. That represented 120 per
cent of the region’s gross domestic product -- approaching the
high of 123.4 per cent recorded in 2007.
Shadow banks include a broad array of institutions engaged in
bank-like activities, including money market funds, finance
companies, and real estate investment trusts.
Last year shadow banking comprised 24.5 per cent of financial
assets, the highest share since 2007, according to the FSB. By
contrast, traditional banks’ share of the sector slipped to 45.6
per cent from a high of more than 49 per cent in 2008.
11/2: High yield bonds unquestionably have risk. foreign origin
to JP Morgan, the yield on high-yielding bonds across Europe
has moved from 3.82% in June all the way to as high as 5.3%
this month, and alongside that jump, the market for issuance
has virtually halted. Instead, borrowers are turning to the
loan market, though that strategy has not been going well
either, as investors in loans are demanding rigid structures,
pricing, and terms. The slowdown signals the end of the surge
in “covenant-lite” loans, or extremely loose forms of credit,
which had become common alongside QE. Sentiment on which way
the market will go is split, with ratings agencies saying a
return to normal issuance is likely, while top research
analysts believe Europe’s macro environment will mean that
credit extension remains ultra-low. Meanwhile,
Euro-denominated money market funds are nearing negative
sentiment, defined broadly, is a belief about future cash flows
and investment risks that is not justified by the facts at hand.
The question is no longer whether investor sentiment affects
stock prices, but how to measure investor sentiment and quantify
its effects. One approach is "bottom up," using biases in
individual investor psychology, such as overconfidence,
representativeness, and conservatism, to explain how individual
investors underreact or overreact to past returns or
fundamentals. The investor sentiment approach that we develop in
this paper is, by contrast, distinctly "top down" and
macroeconomic: we take the origin of investor sentiment as
exogenous and focus on its empirical effects. We show that it is
quite possible to measure investor sentiment and that waves of
sentiment have clearly discernible, important, and regular
effects on individual firms and on the stock market as a whole.
The top-down approach builds on the two broader and more
irrefutable assumptions of behavioral finance -- sentiment and
the limits to arbitrage -- to explain which stocks are likely to
be most affected by sentiment. In particular, stocks that are
difficult to arbitrage or to value are most affected by
for the Long Run when Returns Are Predictable
We examine how the evidence of predictability in asset returns
portfolio choice for investors with long horizons. Particular
attention is paid to
estimation risk, or uncertainty about the true values of model
parameters. We find
that even after incorporating parameter uncertainty, there is
in returns to make investors allocate substantially more to
stocks, the longer their
horizon. Moreover, the weak statistical significance of the
evidence for predictability
makes it important to take
estimation risk into account; a long-horizon investor
who ignores it may overallocate to stocks by a sizeable amount.
- Since the ACA took effect, the nation's uninsured rate has
dropped from around 18% to around 13% and health insurance
premiums have stabilized in some places. Not enough data have
been collected to determine whether health outcomes have
improved or whether the ACA has contributed to the slowing
growth in health care spending. We will have to wait until after
the elections to see the 2015 exchange premiums
11/2: Bears repeating
Financial Stability Board (FSB), a key watchdog and thought
leader in the industry, has just released data on the global
economy which shows that shadow banking is nearly matching its
pre-crisis peak in terms of overall size. In total, for the 20
countries, plus the EU, which it calculates, the global shadow
banking market is at $75 tn per annum. China, unsurprisingly,
is showing the fastest growth in the world, and its shadow
banking market is only smaller than the US and UK’s. The
global increase in shadow banking is largely due to
regulation, which has forced banks away from lending, and in
turn, given rise to other sectors springing up to fill the
credit void. Banking’s share of lending has shrunk from 49%
globally in 2008, to just 45.6% this year, while shadow banks
now account for 24.5% of all lending. The US dwarfs all other
markets in total shadow banking, with an industry worth $14.4
tn, while China’s is only $2.7 tn, though it is growing at 38%
- The federal government will recognize same-sex marriage in six
more states - Alaska, Arizona, Idaho, North Carolina, West
Virginia and Wyoming - bringing the total to
32 states and Washington DC.
Decades ago I was positive that Japan would get its economic act
Bank of Japan stunned investors on Friday by expanding
its ultra-aggressive monetary easing programme, saying
that a combination of weak demand and a lower oil
price meant that more action was needed to banish “a
The Japanese central bank said it would step up its
asset purchases so that the monetary base expanded at
an annual pace of Y80tn ($724bn), rather than Y60-70tn
as in the past.
Long and tedious but valuable in understanding how much longer we
are expected to live. I am afraid to look
11/2: Not very bright
Simonov and Andriy Bodnaruk of the University of Notre Dame
compared the portfolios of 84 mutual fund managers in Sweden
against the portfolios of untrained investors who had similar
incomes and backgrounds. The findings are applicable to the
United States and most other countries in the global
Simonov said the inability of financial experts to make better
investment decisions than their untrained peers is likely due to
a lack of talent and the fact that succeeding in the mutual fund
market is an extremely difficult task.
"I am not disputing that there is a very small fraction of
managers who are extremely talented," Simonov said. "But there
are very, very few of these superstars, and the average investor
probably can't afford to invest with them anyway."
The multiplier, a theoretical concept invented by John Maynard
Keynes in the 1930s, is the most fundamental concept in the whole
of macroeconomics. It measures the eventual impact on the economy
as a whole, GDP, of a sustained increase or decrease in public
spending. An increase in such expenditure brings more people into
work, they in turn will have more to spend, the companies whose
products they buy will have more revenue, and will employ even
more people. The initial impact is multiplied through the economy
An inescapable problem for these highly mathematical models is
that they do not take into account sentiment, the narrative which
emerges around policy changes. Osborne’s fiscal contraction has
gradually created a positive narrative across companies, so they
are willing to create jobs and invest. Psychology rather than
hardline maths is needed to tell us what the multiplier really is
in any particular situation.
11/2: \What a switch
Christine Lagarde, the IMF chief, said her organisation had
“underestimated” the strength of the recovery in Britain, and the
IMF now believes that the UK will
be the fastest growing of any major economy in 2014
10/31: GDP good
gross domestic product -- the value of the production of goods
and services in the United States, adjusted for price changes --
increased at an annual rate of 3.5 percent in the third quarter
of 2014, according to the "advance" estimate released by the
Bureau of Economic Analysis. In the second quarter, real
GDP increased 4.6 percent.
the last year, China has been on a strong economic mission to
guide its economy out of its reliance on low cost
manufacturing and exports and into a more domestic
consumption-based model. The success of this transition is
seen as key to maintaining the country’s growth rate, and in
turn, the solvency of its huge networks of banks, trusts, and
credit entities. New data has emerged on consumption, and
while somewhat confusing, points out that China’s level of
consumption is falling. Major retailers in China, including
Unilever, Nestle, and Colgate-Palmolive, all saw their
quarterly sales decline significantly, with Unilever seeing a
20% fall year on year. In total, the top 100 retailers in
China have only seen their sales rise 0.1% this year, and for
the third quarter, sales dropped significantly, reversing
gains of the first and second quarters of 2014. However,
Chinese government data, which many expect is heavily biased
and manipulated, reported that through the third quarter,
consumption spending grew 12% this year. Experts agree that if
the figure continues to grow, it will be in the single digits,
rather than the chunky 15% growth rates seen previously.
have largely recovered from the selloff two weeks ago, but
bond yields are still very low, and according to industry
analysts, Treasuries are seeing huge orders from funds. Many
speculate that since Treasuries are infinitely more liquid
than many credit products, funds are rotating heavily into
them in advance of what they see as a high level of
redemptions set to hit their businesses. Additionally, the
undeniable wariness that the market selloff has put into
investors seems to be leading many to close out equity
positions and take gains, moving cash into safe sovereign
bonds for a future they see as increasingly sluggish, with low
growth and low inflation. The head of fixed income ETFs at Van
Eck Global summed it up this way, saying “the more fund
managers add Treasuries to their corporate bond portfolios,
either as a hedge or as liquidity substitute, the more
pressure we will see on [Treasury] yields to drop. That may be
the reality of the next couple of months.”
Financial Times guest writer, Satyajit Das, who is a former
banker and author, has written a very intriguing essay in
today’s publication. Das argues that a complex mix of
regulation, sovereign creditworthiness, and illiquidity are
set to conspire to bring about a new crisis. Das makes a
compelling case that as the new capital rules for banks have
incentivized such firms to hold sovereign debt as collateral,
banks have become overexposed to sovereigns. Das’ crisis map
unfolds with the first step as a sovereign credit downgrade.
Once this happens, banks will automatically take losses on
their balance sheets and on their derivatives contracts (in
the form of CVA scores) and will be forced to post more
collateral, this time being compelled to hedge their sovereign
exposure by shorting government bonds or currencies. The
decreased creditworthiness of swaps will flow the system to
all counterparties, forcing everyone to hedge, and thus both
accelerating the decline of prices in sovereign bond markets,
but also radiating into all asset classes, as the use of
creative hedges grows alongside lower liquidity in some areas.
All of these issues will be greatly exacerbated by herd
behaviour, low credit liquidity due to regulations, and the
huge similarity of risk models between financial institutions.
Ultimately, the shocks will spread to the wider economy
through higher borrowing costs, extremely tight credit, and
weakness in investment and employment.
number of children in the United States living in poverty.
the share of U.S. children living in poverty has actually
increased by 2 percentage points since 2008. Overall, 24.2
million U.S. children were living in poverty in 2012, reflecting
an increase of 1.7 million children since 2008. "Of all newly
poor children in the OECD and/or EU, about a third are in the
Finding Balance for the Caregiver
16 Stress Reducing Strategies
By Lisa Bailey
When my husband Phil’s colorectal cancer returned in
October of 2006, this time in the liver and lungs, I
found myself stressed to the max. With my
full-time job as a kindergarten teacher, my commitment
to my adult children and grandchildren, and keeping
tabs on my teenage daughter, adding compassionate
caregiving to my life’s work demands from me an
incredibly difficult balancing act.
The following sixteen coping strategies have helped me
in my attempts to live a balanced life. Because
caregiving is such a universal task, faced by nearly
all of us at one time or another, I hope you find
these strategies helpful as well.
Make all choices from a solid base of integrity. I
try to make medical and personal choices from the
base of my Christian faith, which helps free me from
Be clear about today’s reality. Don’t imagine
things are worse than they are. Enjoy the good
parts of today and don’t let worries for tomorrow
take over your emotions and thoughts.
Talk honestly to family and friends. Honest,
frequent communication with close family and friends
from the start of diagnosis is much easier than
trying to play catch-up later. I discovered a
wonderful, free Internet service at
caringbridge.org which has allowed me to
create a Web site to communicate regularly about
Expect and prepare for tough talks. Family
and friends process the news about a serious illness
at their own pace. They will not accept the reality
of the illness on a schedule that meshes with yours.
This means that sometimes family and friends will
not understand the tension of your caregiving
lifestyle, especially at first. This requires a
difficult conversation about what the illness is,
how it will be treated, and what kinds of side
effects will be expected from the treatment and the
disease itself. It is helpful to have a family
conversation with the doctor present.This provides
an opportunity for questions to be answered
Learn the medical lingo. It will help you as
a caregiver and a medical advocate to learn the
lingo surrounding your loved one’s illness. The
Internet is a helpful resource, but you need to
learn what Web sites can be trusted and what Web
sites have a hidden agenda. I have included a list
of trusted Web sites I have used for medical
information. However, even with a trusted Web
site, don’t believe everything you read. Not all
information will pertain to your loved one’s
situation and you can worry yourself into a frenzy
over some Internet information you have read.
Ask questions of the doctors and nurses. Check the
accuracy of your information if you are at all
troubled or in doubt.
During treatment, pain or pain medication might do
some talking. Be aware that pain, stress and
pain medications will release the patient from their
social “filter” and they can and probably will say
some interesting and difficult things at
times. Actually, caregivers do this, too, as
stress lifts our social filters at unexpected
times—forgive yourself as well when this happens.
Listen and be compassionate as best you can.
Children and teenagers will need help understanding
the changes in their loved one’s personality,
especially to know that the changes are not
Control what you can control. Lots of articles
about stress-management advise letting go of
control; however, I have found that being in control
of some areas of my life has greatly reduced my
Get help with housework—paid or unpaid.
Help with household chores has helped to make
our home a cleaner refuge for Phil as he
recovers and a sanctuary for me.
Get help with yard work—paid or unpaid.
Our backyard is our vacation destination this
year; we eat most meals on the deck, enjoy the
variety of birds that visit our birdfeeders,
play cards, do art work and garden. Help
with yard work makes this vacation destination
Prepare meals in advance and freeze
them. I do bulk cooking and freeze
Keep bills and insurance paperwork organized
so there are fewer financial surprises. Make
necessary phone calls to insurance companies,
and pay bills, or call to arrange payments, on
Plan your work; then work your plan. Be
efficient at your outside job and in taking care
of home stuff. Don’t let things pile
Do three things every evening before you
go to bed—laundry, dishes and take out the
garbage. The morning will be much more of a
Let go of what you cannot control. For me, this
means “let go and let God.” I carry a scripture in
my pocket from Jeremiah 29:11 which says, “For I
know the plans I have for you,” declares the Lord,
“plans to prosper you and not to harm you, plans to
give you hope and a future.” Cancer is what it
is; I cannot change that, but I can and do trust God
for our future.
Nest. Everyone, especially people who are
recovering from illness or injury and their
caregiver, needs a comfy chair—a place to relax and
rejuvenate. Make a comfortable nest for your loved
one and for yourself by adding afghans, pillows,
fresh flowers, candles, books and great music to
your comfy chair area. This is important to do both
at your home and at the hospital should there be an
extended stay there.
Make comfort food. Think about what your
patient is hungry for, and then consider the
details—digestibility, comfort, correct textures,
temperature and presentation. A compassionate
and informative book that I found helpful as I
prepared food for Phil following chemotherapy and
surgery is Laurel’s Kitchen Caring: Recipes for
Everyday Home Caregiving, by Laurel Robertson, with
Carol Lee Flinders and Brian Ruppenthal, R.D.
Laurel speaks with such love for both the patient
and the caregiver and her encouraging voice revives
my spirit for caregiving, especially in providing
good nutrition for healing.
Enjoy life today. During my husband’s
chemotherapy treatments, our world becomes pretty
small. We find that watching television is an
important diversion, and we have become fans of
shows we probably never would have discovered
without some enforced downtime. We also play cards
and Monopoly, put puzzles together and rent many
movies. I found a new interest in sewing,
knitting and watercolor painting. Phil, a
drummer, has never stopped his daily drumming
practice or working at his business from home.
We try to enjoy simple pleasures everyday. We
remember that Phil is a person with interests, not
just a cancer patient. And I, too, am a person
with interests; not just a cancer patient’s
Journal for yourself. There are so many ways
to re-center yourself, but none works as well as
journaling, in my opinion. Even if you have
never kept a journal, starting one now will help you
clarify feelings, manage the stress and plan the
work you need to do as caregiver.
Keep a vision for the future. None of us
comes here to stay; we know that. But we also
know that we can “grow until we go,” and we
should. One scripture that came right to mind
when Phil was first diagnosed with a recurrence of
cancer was “Where there is no vision, the people
perish.” Proverbs. 29:18 KJV. We make plans for our
Give. While I have learned through Phil’s
illness to receive the gifts of help, encouragement,
prayer and love from other people, Phil and I
continue to enjoy giving as part of our marriage. We
enjoy praying for other people, talking to other
patients in the waiting rooms, encouraging others as
much as possible through conversations both in
person, in email and through good, old-fashioned
snail mail. Giving keeps us feeling emotionally and
spiritually full and is always worth the effort.
Take good care of yourself. Eat good food,
exercise a little, rest well and learn to say no to
outside demands. See your doctor and dentist
for checkups. Get away from the house now and
then—even if it is just to the laundromat to do the
Release yourself from expectations for perfection.
As humans, we all experience finitude, our “feet of
clay” when we do not have infinite energy, wisdom or
capabilities to manage our lives. This is normal.
Get through each day as best you can, and don’t
dwell on mistakes.
10/31 What problems do the elderly have
1. Ending up with wet or soiled clothes.
This problem affected 43 percent of the study
participants who needed help with going to the bathroom.
2. Getting stuck inside.
This problem affected 30 percent of the study
participants who needed help with going out.
3. Having difficulty going to places in their own homes or
This problem affected 26 percent of the study participants who
needed help with moving around their homes or buildings.
4. Making a mistake when taking medicine.
This problem affected 19.9 percent of the study participants
who needed help with taking medication.
5.. Going without bathing, showering or cleaning.
This problem affected 12.9 percent of the study participants
who needed help with bathing or cleaning.
6 Having to stay in bed is just the sixth most common bad
outcome. That "adverse consequence" has affected 11.5 percent of
the people who need help with getting out of bed.
My Sad, Sad & Happy, Happy Story
By Patsy Robertson
Today I hate my
bipolar because I feel depressed and very sad. But it
will not last. I will soon be happy again.
I skipped one or two doses of my medication and
that always throws me into a
miserable sad depression. As I drove to my
psychiatrist's office today to pick up
my Eskalith & Concerta I became vividly
aware that I thought about dying. But that will not
last. I will soon be happy again!
I was diagnosed
with Major Depression/Bipolar & ADD in 1994 when I
checked myself into the hospital for a week. I was
broken mentally & physically unable to work or get
out of the bed for that matter.
This was not the
first time I had been treated for depression in my
life. The first time I was a young mother
under a great deal of stress from an abusive husband.
I was first hospitalized for two weeks and then one
week shortly after my coming home the first time. I
was not given medication. A beautiful young mother was
my room mate. She got to go home on a weekend pass to
see how she would cope at home. She never returned
because she killed herself. This left a very strong
impression on me. I decided then that I would
run to my doctor anytime I felt the same feeling
of depression coming on.
That seemed to work
until around 1985 when a traumatic episode between my
[new] husband, my daughter & I happened. I went to
a psychiatrist for help because I recognized the exact
same feelings I had when I was in the hospital. The
feeling of hopelessness & darkness. My
psychiatrist was the first to tell me about
anti-depressants and how it would be trial & error
to discover the right medication for me. I was very
pleased to know he understood my depression. I began
taking Desyrel & still it every night before
going to sleep.
My father died in
1993, my mother moved in six months later. My
daughter-in-law had a mastectomy at seven months
pregnant when diagnosed with breast cancer. I was five
years breast cancer free at the time. My grand son was
delivered c-section & almost died when his lungs
collapsed. My husband lost his "big important
corporate job" after surviving 3 buy-outs. He & my
mother freaked out because their lives were not going
as planned. Everything began falling apart, I thought
I was going crazy - it seemed everything was my fault.
Oh! My middle child came to us for help with a "crank"
I knew I needed
help. I found a physiatrist & therapist that
I really liked. I began taking an additional
anti-depressant. I worked very hard at being strong. I
wanted to keep everyone & myself happy. I loved my
job. But it was getting harder to pretend everything
was OK. I was a special events coordinator at a
country club. I directed PGA golf tournaments, tennis
tournaments, weddings, golf outings, holiday parties
for the club members and booked corporate meetings
& golf outings. I worked with a lot of celebrities
& the press. I had to get well. I could not allow
anyone to know how sick I was. The mental
began making me physically ill. I could barely
walk at times. I had sores on my head & in my
mouth. I was broken physically & emotionally.
When I wasn't at
work, I was in bed. I would rest or sleep until it was
time to go back to work. I became a work-a-holic
because it was fun until I couldn't figure out what to
do next. I always had 10-12 event files on my
desk. I could not figure out which file to open
first. I became so overwhelmed that I would take a
walk around the club house. I would visit the pro-shop
& the dish washers - anyone I could find to talk
to early in the morning. Then I would go back to my
desk & try it again. I actually fired my assistant
because she made a mistake. This is something I am
ashamed of. I was trying to protect myself because she
had to be better at my job than I was in order to
protect me. She was a wonderful person but I would
never have fired her under normal circumstances. I was
not operating with a normal mind & I knew it. But
I thought it would go away. I couldn't loose my job.
brought the food & beverage manager into the
office to assist me. I knew I wasn't fooling anyone. I
had always been super on the job and I could barely
function on the job now.
My boss called me
into his office one day & very kindly suggested I
needed help. He gave me the name & phone number of
an intake counselor at a wonderful facility here in
Atlanta. I went right away and this was the beginning
of some very scary times for me but after ten years I
am doing better than I ever dreamed I would or could.
The most difficult
part for me was how my family responded to my "mental
illness" to my "depression" to my "Bipolar" and
I've never told them about ADD! ha! There is nothing
funny about what I have been through or what I have to
do now but I have found a sense of humor is
necessary for me.
My oldest son told
me that depression is not a medical illness while his
wife said "yes, it is." My daughter called me "Elvis"
because of all the meds I was taking. She will never
know how much I would like to dump the meds. It is
work to keep your medication organized & refilled.
Then you have to remember to take it at a certain time
each day & usually with food. Most people don't
understand how important anti-depressants are to me.
Every single time I
decide to skip a pill or run out of a prescription
& skip a pill I find myself thinking about dying.
I want to die. Then I remind myself that it is
skipping the meds that cause me to feel this way. I am
convinced 100% that if I stopped taking my
meds I would want to or try to kill myself. I don't
want to die, I want to live! I am beginning to feel so
much better now. I am not going back where I was. I am
not ashamed nor do I feel weak for taking my meds. I
feel smart, I feel like I am enabling myself to attend
my grand children's graduations & weddings. What
would they think if I gave up? That keeps me going to
my shrink more than anything on this earth.
It is very
difficult being bipolar. I have to take Concerta now
to "wake me up" because the Eskalith makes me so flat.
But by sticking to the regiment I am beginning to reap
some real benefits. I have a group of ladies in my
home every Thursday night for a Bible study. I
hadn't entertained in my home since 1998! They are new
friends and they accept me just the way I am & I
them too! It is so wonderful.
I began writing a
book in 1982. I am now writing again. With this
"Bipolar/ADD mind" of mine it is a challenge! But I
don't care if I never get it done, I am so happy I am
writing again. I did put the book together in a large
binder. That is a major achievement for me. There are
days that I look back over the last one to three days
and it seems I floated through them. I do get tired
when I have a string of mania days. I was mania most
of my life now that I look back on it but without the
drops. The drops are painful I think because I try to
analyze them too much. But I have to remind myself
even as I write this that the drops usually come when
I miss my medication. In a perfect world they would
make it easier to get the medications. There are such
tight restrictions on Concerta for example that I have
to drive all the way to my doctor's office to get a
new prescription every 30 days. This should be easy,
but for me it is not very easy. My daughter is allowed
to pick it up, but sometimes I forget to give her
& my doc enough notice.
If not for the
researchers, the doctors & the trials I would have
no hope. I am able to live a good life again because I
have fought hard to keep my mind and I seek out good
psychiatrists to help me. I am fortunate because I
have a family doctor who insists I go to my shrink for
my psychiatrist medications. It is not easy. It is
very hard battle but it is a fight worth fighting.
Ever been sick or in pain for a long time? You will get depressed.
The Assistant Secretary for Planning
and Evaluation (ASPE) is the principal advisor to the Secretary
of the U.S. Department of Health and Human Services on policy
development, and is responsible for major activities in policy
coordination, legislation development, strategic planning,
policy research, evaluation, and economic analysis.
The Espanola giant tortoises, a species that can live for over 100
years, had numbered in the thousands but dropped to 15 by 1960 due to human
exploitation, the study said. Between 1963 and 1974,
conservationists brought the 12 female and three male surviving
giant tortoises into captivity. Over 1,500 of their offspring have
since been released onto the island, and the species’ survival no
longer requires human intervention.
10/30: I have been saying this for years
some of the most supposedly financially knowledgeable people --
mutual-fund managers -- don't make better financial decisions
than other people, according to anew studyby Michigan State
and Notre Dame researchers, asreportedin
It's the latest evidence that a years-long
campaign to help normal Americans achieve "financial
literacy" is ineffective at best and misguided at worst.
As the Atlantic notes,expert
and forecasters in other fields have been derided for decades
as no better thandart-throwing monkeys.
When it comes to getting ordinary people to know more about
finance, however, the consensus has been that this time it’s
different. On the surface, it’s a well-intentioned and
uncontroversial mission: Helping people help themselves by
making better decisions. And there's plenty of evidence that
people have a scary lack of financial knowledge: One study
found thatjust a thirdof Americans
would correctly answer three simple financial questions.
those questions are models of transparency compared with the
opaque language consumers often face when making even the
simplest financial decisions. The
goal of making people financially literate seems to imply
that it's the individual’s responsibility to safely navigate
what is often intentionally inscrutable financial language.
The same companies who create the problem of financial products
Americans can’t understand push financial literacy as the
solution. For instance, Bank of America thinks the key is anonline course.
The financial industry’s self-regulatory organization has an
entire foundation devoted toinvestor
But financial literacy in this
gauzy, generalized form simply doesn’t work.The Cleveland Fedfound no
“conclusive support that any benefit at all exists” from
financial education as it is currently taught. Shocking no
one who has been to high school,one studyshowed that
taking a financial literacy class in high school does
nothing to improve financial literacy.
researchers at the Brookings Institution could not find
“strong evidence that financial literacy efforts have had
positive and substantial impacts."
In a 2011 presentation titled “The Financial Education Fallacy,”Lauren Willis,
a professor at Loyola Law School, shot down the idea that
“ordinary consumers would have made better mortgage choices
and would have accumulated sufficient precautionary savings to
weather the recession" if they'd just been financially
educated. Straightforward consumer protections, like putting
limits on how many single stocks people can own in retirement
accounts, are most effective. Financial education is no
substitute for financial regulation, she argues.
There is evidence that giving people specific information about a
specific product (say, aboutcredit card debtfor people who
are interested in applying for a credit card)works better.
It’s not easy, given the mountain of details involved. But single-serving consumer
information is likely to be far more helpful than vague
goals of getting Americans to solve their own financial
problems by thinking them through.
Personal finance authorHelaine Olenhas called financial literacy “both a
failure and a sham.” This conclusion deserves to be
managers are making dumb decisions, it’s time to admit that
making average Americans generally more financially literate
is not a useful goal. Starting with clear-cut consumer
protections and unbiased information about specific financial
products is far more helpful.
For the very few that will read five pages, take
a gander at commentary on why this rule is antiquated. It
is a very sophomoric regulation that is open to serious errors
in interpretation primarily since those rendering an opinion are
clueless to the real life fundamentals of investing.
I don't care if they are from the industry, government, are
litigants, judges, the Tooth Fairy, et al. One of the most
obvious missteps is the continuing lack of specificity to RISK,
If you cannot get that right (and they can't since risk of loss
is not taught) then the entire review of prudence is highly
The economic situation in Europe has deteriorated, the
unemployment rate in the US has fallen below 6%, and the Fed
looks poised to conclude its quantitative easing program this
Volatility has returned to markets, with the S&P 500
recently declining more than 9% before sharply rebounding, while
the bond market had one of its most volatile days in history as
the US 10-year yield fell 37 basis points in just a few
And in the background of all of this is the declining price of
oil, which on Monday fell below $80 a barrel for the first time
in over two years, and a Russian economy that is looking at a
dramatically depreciating ruble.
EFM- U.S. fracking has hurt a number of oil exporters and that
will destabilize many foreign countries that have little to fall
back on. U.S. consumers are seeing the benefits but we could end
up on the downside as our exports will drop. Another recession?
Don't know but a major correction is now quite possible. again, as
an investor one must accept a 10% to 15% drop in the market. But
it starting to get dicey as regards DCAD noted above. If you have
not viewed that video yet, I sure would take a look now. .
1. In 2013, the average size of new houses built
increased to an all-time high of 2,679 square feet
(see blue line in top chart), and the median size new
home set a new record of 2,491 square feet (see red
line in chart). Over the last 40 years, the average home has increased
in size by more than 1,000 square feet, from an
average size of 1,660 square feet in 1973 (earliest year
available from Census) to 2,679 square feet last year. Likewise,
the median-size home has increased in size by almost
1,000 square feet, from 1,525 square feet in 1973 to
2,491 last year. In percentage terms, the average home size has
increased by 61.4% since 1973, while the median home size
increased by 63.3%.
2. Meanwhile, the average household size has been declining,
from 3.01 persons per household on average in 1973 to a
new record low of 2.54 persons per household last year,
a reduction of almost one-half person per household over the
last 40 years (see brown line in top chart).
With the average new house in the US getter larger in size at
the same time that American households are getting smaller, the
square footage of living space per person in a new home
has increased from 506.6 to 980.7 square feet using the median
size home, and from 551.5 to 1,054.7 square feet using the
average size home. In percentage terms, that’s a 93.6% increase
using the median home size and a 91.2% increase using the
average home size. In either case, the average amount
of living space per person in a new home has almost doubled in
just the last forty years – that’s pretty amazing.
3. What about the cost of new homes over the last 40 years? On
a per square foot basis using median home prices and median
square footage, the inflation-adjusted price of new
homes has been relatively stable since 1973 in a range between
about $105 and $125 per square foot (see bottom chart
above). And the price of just under $106 per square foot for new
homes in 2013 was almost 16 below the peak of $125.50 per square
foot for a new home in 2004, and also below the cost per square
foot in every year during the 1970s and 1980s, and below every
year of the 1990s except 1992 and 1993.
10/26: Skin in the game
of the main aims of the current round of US financial
regulations was to ensure that banks had “skin in the game” as
it concerned loan risk. Regulators believe that the
overwhelming levels of securitization which occurred leading
up to the Crisis made banks highly complacent above giving out
loans, as they stood to lose little if they defaulted. The
Dodd-Frank act sought to correct his by forcing lenders to
hold at least 5% of the risk of a loan on their balance
sheets. However, a small loophole, which provided that super
safe mortgages did not need any part held by banks, has
blossomed and overgrown the intent of the law. According to
Barney Frank, the architect of the Dodd-Frank Act, the US’
most comprehensive set of financial reforms for several
decades, “the loophole has eaten the rule, and there is no
residential mortgage risk retention.” This means that despite
years of regulations, there is virtually no system in place to
contain explosive securitization levels and rampant
over-lending besides the wisdom of mortgage-backed securities
buyers, who have shown little restraint in the past.
10/23: Not a good sign with china
real estate figures have just hit the tape, and the results
are very poor. Prices fell for the sixth straight month, and
overall, prices dropped in 69 out of 70 major markets. The
country is currently suffering from chronic oversupply, and
reticence by buyers. Chinese property has been falling for
several months, but the market was hoping for some turnaround
in these figures, as the government has been continually
reducing lending and borrowing requirements in an effort to
boost the sector. Most startlingly of all, the figures were
accompanied by data on real estate investment which showed
that, astoundingly, investment in new property capacity
expanded 12.5% in the first three quarters of this year,
meaning builders are pouring more and more money into the
sector despite the dire outlook. Agents in the country say
that they have been disappointed by what has been a very weak
pick up in demand on the back of the government easing lending
and borrowing rules.
With commodity prices falling this far and fast, maybe it does
bode well for consumer economics.
Across a wide range of commodities, prices
are falling and sometimes falling fast. The Bloomberg
commodity index – which acts as a benchmark for commodity
investments – fell to its lowest level in five years this week. Prices
are being pushed down by the increasing
supply of most commodities and a weakening global economy,
including a slowing China, the world’s largest consumer for many
of these raw materials. Whether it is oil, corn, iron ore, coal,
cotton or copper, prices are falling quickly.
world has seen several rounds of quantitative easing (QE) over
the last six years in the US, UK, and Japan, mostly with
little to moderate success, but the most effective round yet
might be just beginning. The global decline in commodities
markets globally, which has seen prices drop in nearly every
market from food, to metal, to energy, will have a hugely
positive effect on nearly all consumers, no matter their
geography or economic power. Significantly lower commodities
costs, as we are seeing now, put real money back in the
pockets of consumers, and free up disposable income which can
be out into other areas. The IMF estimates that the declines
we have seen so far will automatically boost GDP by 0.5%
globally, and if sentiment grows, could raise this figure to
1.2% growth. According to economists, the current price falls
mean that 1% of the world’s GDP flow back to consumers from
commodities producers, and generally, half of this money will
be spent. This means that roughly $320 bn will flow back into
other areas of the economy, boosting growth. Such price drops
will affect countries differently, with big producers like the
US, Brazil, Russia, and Saudi Arabia seeing the least
benefits. Net importers gain the most, though, in the case of
the US, lower oil prices could lead to much larger consumer
spending, which might be a net positive.
Yes I do have a better way. It is direct, non emotional and, in my
mind, easy to communicate. I will only consider those 50/55 and
older at this point and only for the middle class. Yes the very
rich can use the fundamentals but the assets of a business et al
are too messy for this review. Most of the time what I am
suggesting is for those that will not have a taxable estate.
First and foremost a very detailed budget needs to be done. I have
one of the most detailed ones for middle class- I have not
liked what I have seen so far with standard questionnaires. There
are two sections. One for those not yet retired and next to it is
the estimated while retired. Each section is reviewed with
the client to reflect areas that may be questionable. (Health care
costs are tough.) You can get involved with innumerable numbers
after that- inflation, returns, time etc. to figure out what the
“lump sum” will be needed at retirement. N (time) reflects
their actuarial lifetime plus a fudge factor. (Minimum 5 years).
The return, i, may offered with two or three estimates. Inflation
is done about the same. And with a HP12c or similar, you can
determine a few scenarios of present value for the client. The
idea of doing tons of these strains credulity- stay focused to
being conservative or middle of the road. Also one should be aware
that when looking out 30 years or so the current analysis is
fraught with divorce, illness, and so many other factors where it
makes the numbers game intrinsically flawed.
The client does NOT pick what they want to do, has done before or
hoped to do in the future. The planner has to do the analysis
since only they have the skills and knowledge (chuckle). Want to
impress? Do a couple on the HP in front of the client. If you are
solely dependent on a software program to do the basics, you will
not be able to do a formal risk of loss addressed below. (Why?
There are no software programs to do risk of loss. )
Anyway, compare the PV with the asset base available and, voila,
you now may not need to invest anything since there is enough
assets already. Or the retiree needs to take a LITTLE risk. That
may be attainable. A shortage? Well the best thing to do is have
them reduce the budget. If not, one can increase the return
(perhaps) by taking more risk. But the budget determines the risk,
not the questionnaire.
In any case, no budget? No client.
Now to the fun part. Let’s just look at risk. And assume we are
just looking at the client questionnaire to see the risk comfort
zone identified by the consumer. There is nothing in the industry
set as a standard mainly because 1) they are stupid or 2) they
know that the number computed might scare consumers into just
buying CDs or doing nothing. But you can still do the job through
direct comparisons. This is somewhat simplistic due to the obvious
constraints but let’s say the consumer decides they do not want to
lose anything. End game since you do not have an investor. How
about a conservative entity. In such regard any investor should
accept a 10% to 15% loss in equities since that is the amount of a
normal market correction. If they cannot handle that, no investor.
So maybe a conservative investor has to be willing to take a 20%
to 25% hit. Moderate risk= probably something close to 30%
to 40% drawdown. Aggressive is probably closer to 40% to
60%. Speculative is up to 80% and is reflective of the dotcom
mania. (I am not using any outliers on a standard deviation
curve). This is just equities since the bonds will have a lower
standard deviation to determine overall risk, but they may also be
losing money every year for quite some time. So you lower the
overall risk but have a negative return? Illogical but I leave
that for another time.
Does that sound reasonable/? Then what’s next? Just figuring out
what might happen to the portfolio/allocation with a major
As a note, standard deviation/volatility is NOT risk ipso facto.
They are one of many risks that will occur but I use this to do
Let’s say you will invest for 9 years. Say the standard deviation
of the equity section of the portfolio is 30% (use historical SD,
not current (still too low). As another note, I do not like to use
historical numbers if I can avoid them, but I have no choice here.
The SD drops by the square root of the number of years. 30/3= 9%.
So over time, the SD goes down. DO NOT USE THIS TO EXPRESS RISK
What about if something went wrong and you did nothing? Take 1
minus SD for the number of years to the power of the number of
years, (9). That represents how much money is LEFT at the end of
that period. You can do the numbers for 15 years or so but I think
the variables are far too unsettled and it’s not worth the
bother. Go ahead and do the S&P 500 for 5 years with an
initial SD of 20%. You will end up with 63% as what would be left.
That is 37% lower than what you expected. (I cannot go into detail
for every issue or interpretation here.) Then look at the equity
losses for 2000. 44%. Look at the losses for 2008 top to bottom.
57%. In short, using the S&P 500 for 100% of the portfolio can
result in a 50% loss calculated/anticipated at the end of
the period. Is that conservative?? Not even close. So maybe you
use only 25% of the portfolio for equities. Well it sure could
/would be a lot better depending on the risk of the other assets.
(As I said, it will take more that I have time for here to address
Is that the end? Not even close.
If it was necessary to use 100% equities to make a retirement, et
al., could the retiree take a 50% hit because that is essentially
what the industry says you HAVE to since the industry does allow
any leeway to just sitting there. And therein is the
fallacy/fraud/ineptness with such rule of thumb. Just look at the
devastation in 2000 and 2008. No way were retirees could do that
in the past messes nor certainly could they so it with this next
mess. Right now advisers are trying all sorts of gimmicks to
correct their incompetence by adding non correlated (supposedly)
assets. This is a discussion in itself but recognize this per
Professor Diebold of Wharton School, “The dirty little secret of
diversification is that the only thing that goes up in a
down market is correlations” And from Taleb Co-association
between securities is not measurable using correlation," because
past history can never prepare you for that one day when
everything goes south. "Anything that relies on correlation
is charlatanism." .
If you are not going to try to alter those losses, then the
investor/401k participant has to be told that their $100,000
account will lose $50,000. You now have changed the game of
investing by informing the investor of the potential loss but also
by stating or inferring that you are going to simply rely on past
statistics of “the market always comes back”. You are going
to do nothing.
(As regards rebalancing see Michael Edesess)
In short, you now know what to do. You can determine the
allocation that a consumer must take for retirement (or other) and
explain simply what exposure there is. Due to this economy I tend
to use rough numbers for one year since 1) I feel that a mess is
not that far off and 2) as stated, going out 15 or 30 years just
Risk questionnaires should use a risk of loss similar to that
above. Then we all talk the same language. The numerical risk of
loss is done in more detail in two videos at
efmoody.com/gripes.html. These were not made with CE credit in
mind so view accordingly
Is that all? No because there are ways to limit the losses
unemotionally and objectively but that is another review
altogether. But even more important for retirement success.
10/26: Doesn't seem to be working though
plumbed new depths against the dollar on Thursday after reports
that the country’s biggest oil company made a request for more
than Rbs2tn of state cash that could add to the already acute
pressures on the currency.
10/26: All fall down
the face of near deflation, and widespread recession, Eurozone
ETF’s listed in the US have just seen their largest outflows on
record. According to Markit, just this month, Eurozone ETFs have
seen outflows of over $3 bn, compared with net outflows of $2.2
bn in August, which were already the largest to ever occur since
the ETFs’ creation a decade ago (the worst times of the Eurozone
debt crisis included). Part of the issue is the weaker Euro,
which led investors away, but much of it was simply worries over
growth. Interestingly, despite its strong growth, the UK has not
been able to escape outflows either, and British ETFs saw $700m
declines. Likewise, European equity funds have seen major
withdrawals recently, with $5.7 bn flowing out just last week.
Yet the US is better with its fabricated economy.
Retirement Plan Deferral Limit Increases
October 23, 2014 (PLANSPONSOR.com) - The Internal
Revenue Service (IRS) announced cost of living adjustments
affecting dollar limitations for pension plans, 401(k)s and
other retirement-related items for tax year 2015.
The elective deferral (contribution) limit for employees who
participate in 401(k), 403(b), most 457 plans, and the federal
government’s Thrift Savings Plan is increased from $17,500 to
$18,000. The catch-up contribution limit for employees aged 50
and over who participate in 401(k), 403(b), most 457 plans, and
the federal government’s Thrift Savings Plan is increased from
$5,500 to $6,000.
Effective January 1, 2015, the limitation on the annual benefit
under a defined benefit plan under Section 415(b)(1)(A) remains
unchanged at $210,000. For a participant who separated from
service before January 1, 2015, the limitation for defined
benefit plans under Section 415(b)(1)(B) is computed by
multiplying the participant's compensation limitation, as
adjusted through 2014, by 1.0178.
The limitation for defined contribution plans under Section
415(c)(1)(A) is increased in 2015 from $52,000 to $53,000.
The annual compensation limit under Sections 401(a)(17),
404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from
$260,000 to $265,000.
The dollar limitation under Section 416(i)(1)(A)(i) concerning
the definition of key employee in a top-heavy plan remains
unchanged at $170,000.
The dollar amount under Section 409(o)(1)(C)(ii) for
determining the maximum account balance in an employee stock
ownership plan subject to a five-year distribution period is
increased from $1,050,000 to $1,070,000, while the dollar amount
used to determine the lengthening of the five-year distribution
period remains unchanged at $210,000.
The limitation used in the definition of highly compensated
employee under Section 414(q)(1)(B) is increased from $115,000
The dollar amount under Section 430(c)(7)(D)(i)(II) used to
determine excess employee compensation with respect to a
single-employer defined benefit pension plan for which the
special election under Section 430(c)(2)(D) has been made is
increased from $1,084,000 to $1,101,000.
Ten percent of older individuals experiencing cognitive
decline said they had recently experienced fraud.
As cognitive difficulties increase, this study confirms that
seniors were more likely to have been victimized.
Confirming a finding reported in a previous blog post, over-confident older
people were more vulnerable to fraud.
Fraud victims in self-assessments also report that they’ve
become slightly more likely over time to take on risks, which
also makes them more vulnerable to fraud.
But people who’ve managed to avoid fraud have less tolerance
for fraud than they once did
10/23: Good for Them
new survey of baby boomers, from those in their late fifties
and above has shown some very interesting and relevant
insights into how they handle their wealth. Opposed to
generations before, 71% of those aged over 60 say that they
intend to spend nearly all their wealth and leave little or
none to the next generation. This fact runs contrary to
generations of people who were keen on devising long-term
plans to preserve and grow their family’s wealth. In their
lifetime, the baby boomers have benefitted from vast wealth
gains flowing from a long-term housing boom, massive
privatization, and a water tight pension system. Even though
they are getting older and retiring, politicians are still
very focused on their attention as they both command huge
amounts of capital—good for campaign contributions—and are
very active in polls—85% of boomers vote regularly.
10/23 Is QE light like the CFP light
many months of announcements and discussion, the European
Central Bank has finally launched its QE-light campaign with
targeted purchases of Eurozone covered bonds and asset-backed
securities. The bond-buying began on Monday, but quantities
are unknown. The ECB says it will announce how much it has
bought in the previous week every Monday as long as the
programme is running. The exact bonds already purchased are
unclear, however, “purchases included at least two Spanish
issues, one German and one French”, and were supposedly with
durations of two to six years. They are thought to have been
bought from BNP Paribas and Societe Generale. The ECB
announced the programme last month as a means to combat
recession and disinflation. Markets, however, are convinced
that the measures will not be enough to boost the Eurozone’s
economy, and many are calling for full scale quantitative
“No one can ever be fully prepared for the
challenges of care-giving. The tasks and
responsibilities involved can be demanding, even
more so when caregivers themselves are frail, have
been thrust into their role unexpectedly or
reluctantly, or must care for someone who is
uncooperative or combative.” - The Merck Manual of
Health and Healing
Caregivers can face overwhelming physical,
financial, and emotional demands as a function of
their service. In the face of these challenges,
communication can sometimes be difficult. This
article presents techniques for compassionate
communication, as well as ideas for caregiver
self-care and empowerment.
Communication is a process that allows a cyclical
exchange of information through speaking and
listening. However, as we all know, communicating
is not as simple as that. Effective communication
requires clarity from the person who is speaking
and openness and attention from the person who is
listening. This takes great commitment.
And to be compassionate, the communication should
touch the heart. Compassionate communication can
be understood through a breathing exercise. Put a
hand on your heart; this is the center of
compassionate communications. Notice your state of
well-being. Imagine your whole being is entirely
cared for. Take a breath in, and imagine this as a
listening breath. Allow the breath to be touched
by your heart, to be oxygenated and returned out.
As you breathe out, imagine this as a speaking
breath. And so is the cycle of breath and
communication – incoming breath – touched by heart
– and out going breath.
Compassionate communication includes:
2.Speaking with Clarity
3.Listening with Openness and Attention.
Compassionate communication begins with an
awareness of your own well being because when we
focus on our well-being we create a space for the
well-being of others around us. We create a space
for authentic listening and speaking.
Identify Needs and Values. To create a dialogue
of compassion, become familiar with your needs,
values, expectations, and motivations. How did the
role of caregiver come to you? Was it out of
choice, obligation or circumstance? Does this role
fulfill an underlying need or value to give or to
feel appreciated? What other needs or values may
be present for you? Perhaps there may be the need
or value for connection, sense of purpose, or
financial security. Marshall B. Rosenberg, Ph.D.
describes a list of “universal needs and values”
that all humans share. To become familiar with
this list visit
Options for Meeting Needs and Values. Once you’ve
identified some of your core needs and values, you
can evaluate how you might have these needs met.
It’s possible that your needs are met through care
giving. It’s possible that you hope or expect
these needs to be met through care giving, but
they are not. Clarify for yourself what your
expectations and motivations are and then
determine what is realistic for this relationship.
Use the “here and now” in your determination,
rather than remembering how things were at one
time or how you wish things to be. Consider all of
the ways your needs and values can be met,
including but not limited to this relationship.
2. Speaking with Clarity
We all have many years of experience in speaking,
but may not have skills in expressing ourselves
with clarity. Here are some suggestions:
Use “I” statements. Probably the easiest tip for
compassionate communications is to use “I”
statements. These statements begin with the word
“I” and they clearly express something about our
own view, not something about the other person.
For example “I am finding it hard to believe what
you are saying” Notice the difference between the
“I” statement and the following “You” statement.
“You are lying!” When we start sentences with the
word “You” we tend to put the other person on the
Use observations, not evaluations. An observation
is a statement of fact, similar to what might be
recorded on a video camera. For example, the
statement “Aunt Ann has been talking on the phone
for one hour”. An evaluation is a statement of
fact with an added value (a judgment of good or
bad). The statement “Aunt Ann talks too much on
the phone” is an evaluation.
Speak Authentically. There are times when we
choose to protect those we love from the truth
about our feelings. We are the best judges of the
impact of such non-disclosures. It’s possible that
when we choose not to share our feelings, an
opportunity for distance not closeness is created.
Although it may feel very risky, the loving and
heart-centered sharing of your feelings may be a
beginning to more open communications. Sharing of
feelings could begin with a sentence like “When
you said [insert the Observation], I felt [insert
the feeling].” See Marshall B. Rosenberg, Ph.D,
(http://www.cnvc.org/nvc.htm) for more tools for
Know many realities exist. If a group of five
people go to the same movie and each is asked the
question “what happened in the movie”, we would
get five each different stories. Each person’s
story is based on the unique backdrop of each
person’s perceptions. Many times our perceptions
are based on our values or experiences. Remember,
your reality belongs to you. Another person’s
reality belongs to them. Neither reality is
“right” or “wrong.” We simply perceive and
interpret things based on our own values.
3. Listening with Openness and Attention
Many communication breakdowns occur because of
difficulties in listening.
Waiting is not Listening. So often in our
conversations we are “waiting to speak” while the
other person is talking. We are formulating our
ideas in response to what is being said. We become
engaged in our own thoughts and their importance.
Anxiously waiting for the other person to stop
talking, we find that we are not listening.
Avoid Unspoken Stories. Another pitfall in
listening is when we interpret rather than listen.
While the other person is speaking, we create a
story about what is being said. For example, a
simple statement like “I think you look very nice
today” can be incorrectly interpreted to mean,
“Today, unlike any other day, you look very nice.”
So, you can see how easy it is to create your own
a story about someone’s communication.
Active Listening. Listening is truly an art. It
is a skill that can be acquired. One way to
practice this skill is through active listening.
Active listening is a technique in which the
person listening re-states his or her
understanding of what the speaker has said, before
introducing their response to what has been said.
For example; “What I heard you say is …,” followed
by “Does that sound about right?
Reframe Hostile or Difficult Communications. It’s
possible that the person you are caring for may
speak to you in anger. It may be helpful to
consider that their anger may be due to their own
frustrations, and not about you. For example, “You
are no good! You never help me!” This
statement might be reframed: “What I hear you
saying is that you are wanting help and it feels
like I am not helping now. Is that what you meant
to say?” In hostile or difficult communications,
it is sometimes helpful to involve a third neutral
person to help with this type of communication.
At the very heart of compassionate communication
is our desire to be collaborative in our
communications – to hold a balance between our
needs and the needs of the other. This is
particularly important for caregivers who are so
often looking after the needs of the other.
10/21 From a reader Mr. Moody while I'm going to school
to get my CFP, do you have any recommendations on how to gain
experience in the field of finance?
I wish there was a magic bullet of some type but it still
seems that either you become appointed with a large brokerage
firm to learn some of the ropes (mainly selling products that
few might comprehend to people who could use something
else.) In part that is cynical- mostly it is real life.
Or you could latch on to a fee planner for a few years as
perhaps another way to get started. You wouldn't get caught up
in most of the sale hype, That said, it is still about how
much Asset Under Management that will determine your supposed
'rung on the ladder''.
You didn't specifically ask about increasing knowledge while
getting experience (though I assume it was part of your
request) but I will tell you this. Financial planning,
properly done, requires a HUGE commitment to reading and
research- far more than the industry will ever let on since
there is no way they can provide it. The CFP is good but far
from good enough. I got mine 30 years ago and it was necessary
but I still didn't know that much. Got the Masters 23 years
ago. Much better of course but since 1995, the world economics
and finance has changed dramatically. Many of the revered
theories never were tested so you got to keep your eyes and
ears open to the entities who are very very good. Read Peter
Bernstein, Mandlebrot, some of Taleb's commentary; Mauldin and
Ben Hunt for economics and more, I like Edesess stuff
etc. Keep an open mind to change- which means don't let your
ego tell you what to do. I have to change my insight and
orientation regularly as I read some of those that have
a lot more expertise in their respective areas.
In short (though I wasn';t) you are not going to get that good
by just "working" because so many changes occur and you must
try and keep up. Maybe there are some courses or institutions
that are cutting edge though I am not aware of any.
The videos will give good real life (non marketing,. non
brokerage) insight and a firm is requesting that I do some for
Interesting visual but a little tough to comprehend.
Worth it though
10/21: Washington Posts commentary on the market and economy..
I tend to lean towards Larry Summers
The wave of panic that knocked down international stock
markets on Wednesday subsided
the end of the week, with equities recovering most of
their lost value. But is the tide coming in?
If selling continues, it may be that investors are starting
to buy the gloomy thesis of secular stagnation, according to
which the world will
struggle to avoid a long period of disappointing
growth -- decades, or more. On this view, an aging
global society, the end of a certain kind
of technological innovation, a
glut of saved-up cash moldering in banks worldwide, or
some other combination of factors will hobble the economy
for the foreseeable future. First it was Japan, next it will
be Europe, and then it will be all of us.
Academic economists don't all buy into this theory, with
one extremely notable exception. Larry Summers has
argued that secular stagnation is on the way, and that
there will be little central bankers can do to stop it.
They'll do they most they can -- keeping interest rates at
zero indefinitely, as they have been since the financial
crisis, with the goal of discouraging people from saving
money and encouraging them to borrow and spend.
If the global economy really is headed toward stagnation,
then Janet Yellen and the Federal Reserve might have no
choice but to keep interest rates there for a while longer,
and maybe a little longer after that, and maybe even...
wry column on Saturday, Robert Shiller basically
accuses Summers of giving investors Ebola (in a metaphorical
sense, of course):
markets are driven by popular narratives, which don’t need
basis in solid fact. True or not, such stories may
be described as “thought viruses.” When they are pernicious,
they are analogous to the Ebola virus: They spread by
In other words, Summers hasn't
the academy, but he just might have won over the
market. Shiller warns that Summers's pessimism about the
economy could become a kind of self-fulfilling curse as
squeamish investors pull back from the market, and less
money trickles into the real economy.
If the stock market continues to wobble this week, that
doesn't necessarily mean that Summers is right. It could
just be that he's very persuasive. We
won't know for years. In the meantime, the central
bankers of the world, especially in Europe, must do
everything in their power to prove him wrong.
extraordinary volatility in all financial asset
classes in the past week can only be described as
ominous. On Wednesday, the US ten year treasury,
perhaps the most liquid financial instrument in
the world, traded at yields of 2.21 per cent and
1.86 per cent within a matter of hours. This type
of volatility in the ultimate “risk free” asset
has previously been seen only in 2008 and other
extreme meltdowns, so it clearly cannot be swept
under the carpet.
EFM the statistical odds of that much movement is far beyond
the fluid standard deviation curve.
10/19: The FED may delay because of the fragile
The US Federal Reserve should carry on with its asset
purchases in October, said James Bullard of the St Louis Fed
on Thursday, as he became the first policy maker to call for
a central bank response to recent market turmoil.
“Declining inflation expectations are a serious matter for
a central bank,” . He said the Fed could “pause at the
October meeting”, wait for more data, and then cease
purchases in December if the economy looks strong.
10/19: For the first time
For the first time ever, mutual funds have surpassed banks
as the largest holders of corporate and foreign bonds,
holding 13 percent of these securities.
group of market watchers, led by the IMF, has signaled the
alarm over high yield bonds. A handful of large asset
managers, including Pimco, Fidelity, BlackRock, and Dodge
& Cox, hold an eye-popping proportion of high yield
bonds, and that poses an unequivocal threat to credit
markets. In many bonds, such as auto financier Ally
Financial, or student loan company SLM, managers like
Pimco control as much as 30-50% market share. This
commanding position creates severe issues for both the
managers and the markets, as most of their holdings are
highly illiquid and only held by one another, meaning in a
period of stress, perhaps similar to the one we have just
seen, the managers would very likely be unable to offload
the bonds without extraordinary losses. This is a major
concern because it would incite panic across credit
markets, but further, because individual managers would
therefore be very unlikely be able to meet redemption
demands from their own fund investors. If they cannot
liquidate the bonds quickly enough, or at prices high
enough, there is no way they could meet immediate
withdrawal demands. The same bond investors hold even
higher shares of bonds in European markets, including
heavily indebted sovereigns like Italy and Spain. Because
of regulatory constraints, banks are no longer major
market-makers in illiquid credits.
EVEN if we grade on a very
generous curve, many Americans flunk when it comes to
financial literacy. Consider this three-item quiz:
• Suppose you had $100 in a
savings account and the interest rate was 2 percent a
year. After five years, how much do you think you would
have if you left the money to grow? More than $102,
exactly $102 or less than $102?
• Imagine that the interest rate
on your savings account was 1 percent a year and that
inflation was 2 percent. After one year, would you be able
to buy more than, the same as or less than you could today
with the money?
• Do you think this statement is
true or false: “Buying a single company stock usually
provides a safer return than a stock mutual fund”?
Anyone with even a basic
understanding of compound interest, inflation and
diversification should know that the answers to these
questions are “more than,” “less than” and “false.” Yet in
a survey of Americans over age 50 conducted by the
economists Annamaria Lusardi of George Washington
University and Olivia S. Mitchell of the Wharton School of
the University of Pennsylvania, only
a third could answer all three questions correctly.
This is particularly troubling given the inherent complexity
of our modern economy. Whether in taking out a student
loan, buying a house or saving for retirement,
people are being asked to make decisions that are difficult
even if they have graduate training in finance and economics.
Throwing the financially
illiterate into that maelstrom is like taking students
currently enrolled in driver’s education and asking them to
compete in the Indianapolis 500.
paper by three business school professors — Daniel
Fernandes of Erasmus University in the Netherlands and the
Catholic University of Portugal, John G. Lynch Jr. of the
University of Colorado and Richard Netemeyer of the
University of Virginia — presents a discouraging assessment
of attempts to teach people how to deal with money. Their
article uses a technique called meta-analysis, looking at
results from 168 scientific studies of efforts to teach
people to be financially astute, or at least less clueless.
The authors’ conclusions are clear:
over all, financial education is laudable, but not
particularly helpful. Those who receive it do not perform
noticeably better when it comes to saving more, for example,
or avoiding ruinous debt. Even more depressing, the results
of efforts aimed at low-income people are particularly weak.
Those who need the help most seem to benefit the least.
shouldn’t fool ourselves into thinking that adding a
household finance class to a high school curriculum will
in itself create knowledgeable consumers who can
understand today’s wide array of financial products.
It would be premature to conclude
that all efforts at improving financial literacy are futile.
But it is a fair conclusion that simply doing more of the
training commonly used now will not produce significant
10/19: just-in-time education. Because learning decays
quickly, it’s best to provide assistance just before a
decision is made.
education decays over time; even large interventions with many
hours of instruction have negligible
effects on behavior 20 months or more from the time of
intervention. Correlational studies that measure
financial literacy find stronger associations with financial
behaviors. We conduct three empirical studies,
and we find that the partial effects of financial literacy
diminish dramatically when one controls for
psychological traits that have been omitted in prior research
or when one uses an instrument for financial
literacy to control for omitted variables. Financial education
as studied to date has serious limitations that
have been masked by the apparently larger effects in
correlational studies. We envisage a reduced role
for financial education that is not elaborated or acted upon
soon afterward. We suggest a real but
narrower role for “just in time” financial education tied to
specific behaviors it intends to help. We
conclude with a discussion of the characteristics of behaviors
that might affect the policy maker’s mix of
financial education, choice architecture, and regulation as
tools to help consumer financial behavior.
The financial services industry — either on its own or as
required by government regulators — needs to find ways to make
it easier for people to make sound decisions
10/19: Lower net worth
10/19 Everbody felt that oil prices would rise with all the
10/19: Very bad Greece and possible contagion
the wider market selloff, Greece has suffered a
particularly volatile period. Interest rates on the
country’s ten-year bonds have spiked in the last week,
soaring from around 6.5% to near 9% now, a level many
believe represents an unsustainable borrowing cost. Equity
markets in the country dropped 8% in just two days.
Meanwhile, German bonds touched new lows, hitting near
0.7% on ten-year bunds. Investors are increasingly worried
about Greece, because the party leading in the polls is in
favour of enforcing at least 50% haircuts to the country’s
bonds holders in an effort to cut the country’s debt,
which is currently 174% of GDP. Fears over Greece have
also reignited worries over other Eurozone periphery
countries and Italy saw its borrowing rates rise 40 bp on
Thursday morning alone. The Eurozone is in the midst of a
recession, with near deflation, and little prospect of
breaking out of the malaise because of serious political
disagreements over the proper course of action.
Times Columnist Gillian Tett has written an insightful
article on the links between the recent market selloff and
the important reality of liquidity. Tett explains that
liquidity has been hurt by four factors, and all of them
helped exacerbate market volatility over the last few weeks.
Firstly, most market investors are holding the exact same
views, which has left everyone caught by surprise. Last
week, 100% (truly) of surveyed economists said they believed
interest rates would rise soon—this helps explain the
like-mindedness of investors. Secondly, and leading on from
the first point, asset managers have adopted a severe herd
mentality, and are all buying and selling the same assets at
the same time, which makes rises and falls much steeper.
Thirdly, computer programs and algorithms, despite
purporting to boost market liquidity, have actually made
things worse. Most of them operate in a similar fashion to
one another, and because they can function at lightning
speed, move markets even faster downward than in the
phone-based days. Finally, and perhaps most critically,
regulations have forced large banks out of the market-making
space in many products. This means that there is simply not
enough liquidity in trading to handle the volume of bonds in
the market at an adequate level, leading to heavy losses.
The chief risk officer of Goldman Sachs, Craig W. Broderick,
warned at the I.M.F. meetings last week that the asset
management firms that now hold the bulk of these bonds had not
yet been tested in terms of how they would react to a market
shock.The chief risk officer of Goldman Sachs, Craig W.
Broderick, warned at the I.M.F. meetings last week that the
asset management firms that now hold the bulk of these bonds
had not yet been tested in terms of how they would react to a
Especially vulnerable, I.M.F. economists say, are companies in
which one manager and one investment view hold sway over a
wide family of funds. That can lead to a situation in which
numerous funds companywide accumulate concentrations in the
debt of a certain company, sector or country. When retail
investors are driving the investment money coming in and
flowing out, the dangers are compounded.
the last few years, the world has been flooded by so-called
big data, or large data sets culled from a wide variety of
sources. The idea of using massive amounts of data to solve
issues has been highly touted, promising to cure all evils
from healthcare to financial markets. However, despite a
decent amount of interest and promises made, fund managers,
from private equity to hedge funds to mutual funds, have
been scratching their heads with what to do on the topic.
Fund managers have reportedly been amazed with the data they
can obtain, from corporate sales, to Twitter data, to search
term analysis, but many simply do not know how to put them
altogether into a usable investment strategy. Many funds,
such as Schroders, say they are “fascinated” by the
possibilities, but have “nothing set in stone” as to how to
use the technology. This lack of uptake is worrying the same
managers, as they fear that asset management could quickly
come to be dominated by tech giants like Google, Facebook,
and Amazon, who have a great degree of expertise in using
big data to make decisions. “I suspect that [Google’s
artificial intelligence] people could clone an asset
management stalwart before breakfast”, says an FT commenter.
10:15: China's problem (oxfwd_
the fourth year in a row, US investors in Chinese-focused
equity funds have withdrawn money from the space. This year,
over $1.1bn was withdrawn from funds focusing on China,
meaning the space lost 20% of its capital. European
investors have withdrawn money as well, but not to such an
extent. Investors have become disgruntled with China’s
corruption, ailing real estate market, high indebtedness,
and its weakening economic outlook. Investors have also been
unhappy with the Chinese equity market’s volatility, down
6.8% last year, but up 16% this year. Because of a lack of
institutional investment in the country, the market is still
driven by retail trades, making it much more volatile. The
development will hurt large Chinese fund houses’ efforts to
penetrate western markets. Such businesses, which are
dominant in China, have been trying to attract AUM from
western sources, but have been unable to do so because of
the negative outlook for the Chinese economy, and a
generally distrusting view of the fund businesses
We will not see 3% however in 2015 or 2016
10/15: US oil exports
forty years the US has adamantly stuck to its policy of a
crude oil export ban. However, as the country has once again
become awash in black gold, companies are having more and
more success chipping away at the blockade. Several weeks
ago, a shipment of American crude oil left harbour in Texas,
destined for South Korea. The shipment represents a major
step towards exporting, as it was the first ship to leave
port with light liquid hydrocarbons, a category of oil which
has historically been referred to as “crude” because of its
only minute differences to the benchmark resource. Such a
substance, like many others that the US Commerce
departments’ new policy allows, is only very lightly
refined, and the process of doing so can be done right at
the wellhead in little time with low costs. This means that
much of Texas’ new oil is now exportable. Since refined
petroleum products, like gasoline, are already allowed to be
exported, the government says this is not a change of
policy. However, in reality, it represents a fundamental
shift, as an estimated 300,000 barrels a day are now
eligible to be exported.
I wonder if fracking will not cause significant problems. there
have been lots of earthquakes and ground water pollution. Mother
Earth may really get pissed and force a shutdown.
Active portfolio management involves the selection of securities
and market timing in an attempt
to provide value to fund investors. It has been suggested that
periods of falling securities prices provide
opportunities for expert managers to locate underpriced
investments. The notion that active managers are
better able to earn their management fees during recessions is
cited in the literature (Moskowitz ,
Kosowski , Glode ) as a justification for holding
actively managed funds within a portfolio.
This assertion has been subject to little scrutiny. In this
article, we estimate the performance of active
equity portfolio management across business cycles.
Our study attempts to answer two simple questions. Is active
portfolio management performance
superior in recessions relative to passive investing, and to what
extent is performance persistent across
business cycles? Our findings suggest that active portfolio
management is not superior to a passive
investment strategy in either expansions or recessions. We also
find that persistence is weak across
business cycles. Collectively, the findings support a low cost
passive investment strategy for retail
investors across all business cycles.
EFM- all critiques of active management tend to reflect the first
sentence. And that is fine for most purposes IF the consumer can
handle major losses without difficulty AND that the market will
always some back- or at least in enough time to make the consumer
whole once again. But middle class cannot accept huge losses under
a buy and hold nor accept the fact that the market will gain
enough in a relatively short period of time to make up such
losses. With the latter, the retiree is spending money for
retirement and waiting for the eventual gain. Probably will simply
lose out. Period
What to do? View DCAD above. Simple no brainer. .
the U.N. said that an estimated 180,000 Iraqis have fled Heet
since it fell earlier this month to the radical Islamist group
Kim Jong Un has bad feet
Ebola is scaring America
The Pope has softened views on homosexuality
And so on
But Putin and the Ukraine don't really get mentioned now,
By Lori K. Murphy, Esq., Bean, Kinney
& Korman, P.C.
A single mother of an adult child visited me to
prepare her estate plan. During our first
meeting, she shared that her 24-year-old adult son
lives at home and has a mental impairment. He
recently needed a new physician and my client
requested to direct his medical care. In response, the
new physician asked for her son’s medical power of
attorney. My client was thrown for a loop–she
had always directed his medical care and no one before
had asked for a power of attorney. Later, she
determined this was because her son had the same
medical treatment team since he was a young boy and
the team knew her son’s medical condition and that his
mother directed his care. Now that new care was
needed, the physician’s office properly sought the
mother’s authority to direct care and she needed to
determine how to continue to help him. Our
discussion turned from her own estate planning to one
about guardianship, conservatorship and powers of
In no legal field have I been challenged more than in
representing families with special needs
children. Over the past 14 years, I have had the
pleasure of working with families with estate planning
efforts, including those who have children with Down
syndrome, autism spectrum disorder, spina bifida,
birth injuries and other conditions impacting a
person’s mental capacity. A topic many families
are passionate about is determining how to attend to
the less-abled child after he or she attains the age
of 18 (the age of legal majority) and whether a
guardianship and conservatorship is appropriate.
When discussing this topic with clients, it is crucial
to consider both the cognitive capability of the child
and the parent’s perceived need to continue
involvement in the child’s financial life and medical
affairs. Other relevant factors include an
analysis of the pros and cons of guardianship,
conservatorship, agency under a financial power of
attorney, and agency under an advance directive/health
care power of attorney. Additional factors that
impact the analysis include whether the child needs
outside care, such as an assisted-living facility or
companion-care home, and the parent’s financial
In determining how to best help parents provide for
their adult child with special needs, it is important
to take into account the self-sufficiency of the adult
child. Here are factors to discuss when
tailoring a course of action:
Whether the child is capable of communicating his
or her needs and wants regarding his or her care;
Degree to which the child can adequately feed,
clothe and otherwise take care of his or her basic
Whether the child is employed
outside of the home;
Whether the child will require outside care (i.e.,
an assisted-living facility);
Degree to which the child can understand the
effects and consequences of his or her actions; and
Income and finances of the child and the child’s
It is crucial to take the adult child’s needs and
wants, if capable of expressing them, into account
when determining how to best provide for him or
her. Apart from moral sensitivities, Virginia
law provides that fiduciaries in charge of the child’s
care allow the child to participate in the process as
much as he or she is able. Further, if the child
has no input in the process, it could disrupt his or
her relationship with the parents, making the process
emotionally taxing on everyone involved.
Guardianships & Conservatorships
Run to the Courthouse
One way to provide continued care for special needs
children over the age of 18 is by securing a
guardianship and conservatorship. Adult
guardianship is the legal process in which a guardian
is appointed by a court to make personal decisions on
behalf of the adult child, including decisions about
where he or she lives and what medical treatment he or
she receives. In contrast, adult conservatorship
is a legal process in which a conservator is appointed
to make decisions about an adult’s financial world,
including property and estate. An adult’s
guardian and conservator are often the same person,
but need not be, and one does not have to seek the
appointment of both. If a guardianship and
conservatorship is sought by the parents, an official
opinion from a physician must be presented to a court
stating the reasons these are necessary.
Virginia law provides that a court order granting
guardianship be tailored to rectify the incapacity of
the individual. As a result, guardianship is a
particularly flexible system in Virginia: the court
order appointing a guardian can be as broad as
covering all decision-making or limited to specific
decision-making spheres, such as medical care.
Some parents welcome the child’s right to vote,
for example, and are pleased to learn that a court
order can provide that the adult child retains that
When a child does not have the cognitive ability to
direct his or her own financial or medical affairs, a
guardianship and conservatorship is appropriate.
The parents are relieved to know they can continue to
direct the child’s affairs after the age of 18 and
welcome the daily involvement. Most
parents of children with mental incapacity determine
that a guardianship and conservatorship is the right
thing to do for a child who cannot live independently.
However, guardianship and conservatorship are not
always the appropriate tools to protect individuals
with mental impairments. First, the cost to be
designated by a court as a guardian and conservator
can easily exceed several thousand dollars in legal
fees. Second, a guardian is required to provide
significant attention to the incapacitated
adult. Third, the guardian has to report at
least annually to the state as to, in part, the living
arrangements, mental, physical and social condition,
and the scope of services provided and whether those
services provide adequate care to the
individual. Furthermore, the guardian
directs the living arrangements and health care of the
incapacitated individual and often those decisions are
Conservatorships, in particular, require significant
maintenance. A full conservator is required to
post surety on a bond with the court, annually report
on all income received on behalf of the adult child,
and annually report on all funds expended on behalf of
the adult child to the local Commissioner of Accounts.
This means a conservator must collect and keep
records of all receipts, checks and bills so he or she
can account for all the child’s funds “to the
penny.” Without help from an accountant or
financial planner (which can be costly), this can be
time consuming. Many of my clients are working
parents, juggling the responsibility of raising
multiple children, including the special needs child,
so this additional work is burdensome.
Further, a guardianship and conservatorship can
infringe upon the child’s independence if it is not
tailored toward that child’s needs and level of
functioning. A child who is autistic, for
example, may be able to work, earn an income, ride
public transportation, and pay rent, and may not need
such parental control after the age of 18. Also,
the legal process of obtaining a guardianship and
conservatorship over an adult child may be a stressful
experience for such a child.
If a guardianship and conservatorship is the right
decision for a parent and child, the process is
typically instigated about six months before the child
turns 18. This provides sufficient time to
obtain the necessary medical, psychological, or
psychiatric opinions required, to seek the input of a
guardian ad litem (a person appointed to protect the
rights of the adult child), and to prepare the court
petition for appointment of guardian and conservator.
Powers of Attorney
Let’s get powers of attorney
An alternative to guardianship and conservatorship are
the powers of attorney. A power of attorney is a
legal document in which a person (the “principal”)
appoints an individual (the “agent”) to make decisions
and take action on behalf of the principal.
For our discussion purposes, an adult
child who has already attained the age of 18 would
execute powers of attorney as the principal and would
delegate authority to one or both parents as the
agent(s). The adult child would also name
successor agents if the parent was unable to attend to
the adult child’s affairs.
There are two types of powers of attorney used in lieu
of a guardianship and conservatorship: (1) Advance
Directive/Health Care Power of Attorney and (2)
Durable General Power of Attorney. The former
document allows an agent to make decisions about
medical affairs to include typical, daily health care
decisions as well as the serious end-of-life
decisions, and the latter document allows an agent to
make decisions about financial and administrative
affairs. Generally, if powers of attorney are
properly executed, a guardianship and conservatorship
is not necessary. Additionally, the cost to
secure powers of attorney is low in comparison to the
court-administered process of guardianship and
conservatorship and the ongoing cost is nil – there is
no annual reporting to a third party associated with
the powers of attorney (unless the adult child makes
that specific request).
The appointment of a power of attorney can be a wholly
private affair. So long as the adult child
demonstrates sufficient capacity, he or she can
execute the two powers of attorney and the
relationship between parent as caregiver and overseer
will be continued with little interruption after the
But only if there is capacity
However, powers of attorney can be executed by the
adult child only if he or she has sufficient mental
capacity. (For powers of attorney, “capacity” is
the term used rather than ability or
disability). In fact, determining capacity is
often the crux of the decision-making process of
whether to obtain a guardianship and conservatorship
or to request the child to execute powers of
attorney. No legal checklist exists that can be
used to determine whether a child meets the capacity
level required to execute a power of attorney.
Thus, it is often the most important thing an attorney
can do. Yet, many attorneys are uncomfortable
with making the assessment as it can be perceived to
cross into the medical arena of determining cognitive
Thus, if the adult child has a diagnosed condition
affecting decision-making capacity, it is important to
secure a medical opinion as to the adult child’s
mental capacity. If decision-making capability
is not a factor, then it is general practice that an
adult child with sufficient capacity must be able to
consciously understand (1) the nature of a power of
attorney; (2) the effect of signing a power of
attorney such as when the power begins and the subject
matter over which the agent can exercise control; (3)
the power of attorney can be limited or broad; (4) the
power of attorney can be revoked so long as the adult
child has capacity to do so; and (5) the power of
attorney continues even if the adult child becomes
incapacitated. However, in any case, the
attorney will want to meet with the adult child alone,
without the influence of his or her parents.
This allows the attorney to make the difficult
decision of whether the adult child has sufficient
capacity to execute the powers of attorney and that
the terms in the powers of attorney are directed by
the adult child.
An issue that needs to be acknowledged by the parents
is that if the adult child has sufficient capacity to
execute the powers of attorney in favor of his or her
parent, he or she can also execute powers of attorney
in favor of another person. An elderly woman
called me to express concern that her middle-aged
adult child with some mental impairment had recently
executed powers of attorney in favor of his
girlfriend. It was difficult to hear the elderly
woman express her concern that the girlfriend may take
advantage of her son. This is a real issue that
needs to be considered if powers of attorneys sound
like an easy, cost-effective solution to managing an
adult child’s care.
Even though executing a power of attorney comes with
its own complex issues, especially when adult special
needs children are slightly mentally impaired and the
determination of capacity is a close call, a power of
attorney is a far less invasive means of providing for
the care of a special needs adult child. It requires
almost no maintenance, unlike a guardianship and
conservatorship, and is a low-cost method to ensure
the continued care of the child by the parents.
When deciding whether to pursue a guardianship and
conservatorship of an adult child with special needs
or have the adult child execute powers of attorney, it
is imperative that the discussion includes
consideration of whether the child is receiving or
will receive public benefits (both Federal and local)
and whether the parent has completed his or her own
estate planning. Public benefits and the special
needs child go hand in hand with topics like
appointing Representative Payee for Social Security
payments, preparing special needs trusts, and the
relationship of the child to the parent’s own
In evaluating whether a guardianship and
conservatorship or powers of attorney are appropriate,
a parent should consider the adult child’s mental
capacity, the ability of the child to manage his or
her own affairs, and the deprivation of rights imposed
by a guardianship and conservatorship. If the
adult child has the capacity to execute powers of
attorney, then that is a good first step. A
formal guardianship and conservatorship may then be
sought later, but only if needed.
10/14: Global Economy DOWN
is expected to cut its estimate of global growth in 2014
from 3.4 per cent to a little over 3 per cent this week as poor
second quarter figures from Germany, Japan and other countries
weigh on the outlook. As recently as April, the IMF was
expecting 3.6 per cent growth this year, faster than the
FT Interactive – Tiger Index
the index, which delivers a snapshot of the state of the
global economy, with an interactive graphic
Eswar Prasad, an economist and senior fellow
at Brookings, said: “The world economy is now being powered
mostly by the US
growth engine, a situation that is untenable for a
sustained and durable global economic recovery”.
10/14: Probabilities (Kahneman)
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
Prof Ken French often reminds folks that identifying skill
is incredibly hard, indeed. For example, if you take a
manager who has outperformed by about 5% per year, but
experienced a similar level of volatility as the US stock
market, it would take roughly 64 years to say with
statistical significance that manager wasn't lucky.
60+ years to say with confidence it's skill, not luck.
Forget 64 years. Think about what our industry does
to managers who "ouperform" for 3 years, 5 years even 10
years--those "winners" are featured on the front page of
newspapers, grace magazine covers, and become the keynote
speakers at industry conferences. Money flows into
those mutual funds, advisors allocate to their funds /
separate accounts, and those same advisors tout their own
ability to pick-stock-pickers skill.
Just for a moment, check your ego, suppress your emotions,
detach your mind from your source of income and think
agnostically: SIXTY FOUR YEARS to say with confidence
that manager was indeed skillful, not just lucky.
Now tell me how good you are at picking winning managers
Lastly, studies comparing index vs. active performance
don't compare index performance the "average" manager.
They compare them to all managers. Every
credible study concludes the same: over short periods,
the relevant benchmark outperforms about 60% of active
managers; over 10 years about 70%; and over 20 years about
Interestly, the same long odds face those previous
periods' winners in the subsequent period. Past
winners are HIGHLY UNLIKELY to win again.
Yes, outperforming due to picking stocks / funds /
managers or through market timing is POSSIBLE but not
PROBABLE. Highly improbable, in fact.
Life expectancy at birth for the U.S. population reached
a record high of 78.8 years in 2012.
The age-adjusted death rate for the United States
decreased 1.1% from 2011 to 2012 to a record low of 732.8
per 100,000 standard population.
The 10 leading causes of death in 2012 remained the same
as in 2011. Age-adjusted death rates decreased
significantly from 2011 to 2012 for 8 of the 10 leading
causes and increased significantly for one leading cause
The infant mortality rate decreased 1.5% from 2011 to
2012 to a historic low of 597.8 infant deaths per 100,000
live births. The 10 leading causes of infant death in 2012
remained the same as in 2011
Much of the recent improvement in death rates and life
expectancy for population groups examined can be attributed to
reductions in death rates from major causes of death, such as
heart disease, cancer, stroke, and chronic lower respiratory
Although continuing declines in mortality have slowly reduced
longstanding gaps in life expectancy, differences in life
expectancy at birth and at 65 years between sexes persist (3).
rates in 2012 continued to decline among most groups
defined by sex, race, and Hispanic origin. Although changes in
mortality are relatively small from one year to the next,
long-term trends show the apparent progress in reducing
For example, the age-adjusted death rate in the United States
decreased 15.7% from 869.0 to 732.8 deaths per 100,000 standard
population from 2000 to 2012
DOW is now flat for the year
10/12: Life settlement
UL policy, insuring an 82 yr old male with a 9 year life
Cash offer of $325,000
Cash offer of $75,000 and $1,000,000 in Retained Death Benefit
My reply: Nice job! And I agree with almost everything in
your conclusions since, by reading Peter Bernstein,
Mandlebrot, Pfau et al, I reached the same conclusions
save for one area. That of the "irrational investor"
I have taught DCAD- Dollar Cost Averaging Down for close
to two decades. It is designed for the average middle
class investor/401k participant. It simply means that one
must accept a correction of 10% to 15% but that is about
all. A precipitous decline (validated by other economics
of course) dictates a reduction of risk to avoid
(potential) large loses.
Also, I do NOT understand why more advisers did not
adhere to the inverted yield curve evident in 2000 and
2006. A 100% indicator of recession is not to be a
guarantee 100% in the future, but one is hard
pressed to dismiss it. Mauldin noted in Oct 2000 that
..." everytime we have been at these yield curve
levels for the last 40 years we have had a recession.:(Admittedly
it cannot be used anymore.)
looking at your chart, a RATIONAL investor would
actually sell out at roughly your points 1 for both
recessions. (Though one does not just do this at one
singular point but I am taking the liberty here),
And in regards to your point 2s- since pundits will
always say this is market timing and no one knows when to
get back in, etc,. etc- these actually correspond to what
I suggest for consumers in getting back in. It's
independent of me, you, Cramer, Snow white or any other
entity with "amazing insight", they actually are the
points I use for Dollar cost Averaging UP.
They are the dates of the press releases by the National
Bureau of Economic Research indicating when the trough of
each recession had occurred. On July 17, 2003,
they stated that the trough had been reached on Nov 2001.
On Sep 10, 2010, they indicated that the
trough had been reached on June 2009.
Coincidence with your chart of the irrational investor?
Possibly. No matter, I am unwilling to simply assume that
after these major downturns (and another coming up soon I
submit) that a reversion will occur. I am not willing to
base a decision on numbers from the age of the dinosaurs
nor dismiss the teachings on risk by Benrstein,
Mandelbrot, Taleb, Lo and more.
Middle class investors and retirees specifically, cannot
take the risk that the market does NOT come back- or does
not do so in some (undefined) timeframe. This focus also
negates a lot of the monte carlo "studies" on what to take
out.annually since there is a logical, rational
avoidance of deep losses. If you miss deep losses, you
will do better, period.
Further, the emotional impact of huge
losses is far greater than that caused by the losses
themselves. Marriages/family life can still exist.
Is this prefect?.Of course not and it is does require an
interpretation at times.(But arrogance and ego tend
to destroy rational thought.) However, does it
reflect real life? YES and that is different from all the
formulas and statistics one can muster. And it
is simple which is a major
factor for the bulk in the business that are clueless.
Remember that the fundamentals of investing have
never been taught to brokers nor RIAs nor
is the use of a personal financial calculator required by
same nor insurance agents.
See efmoody.com/gripes.html for videos on Risk
of Loss and for DCAD. DCA UP will be available next
week. (These were made for intelligent consumers, not the
industry, so view accordingly).
theory should not be so simple that it does not conform
Hussman- As much as investors seem to want to
believe that aliens from Xenon have brought some brave new
world, our valuation approach is consistent with a century
of market history and has not missed a beat even in recent
market cycles. We continue to view long-term prospects for
the stock market as dismal at present valuations.
bear market lows don’t occur very often, but when they do,
valuations typically average about 50% of pre-bubble norms.
While every bear market in history except the October 2002 market
low brought our estimates of prospective 10-year nominal returns
above 10% annually, I have no particular expectation that the
present market cycle won’t be like the 2000-2002 instance and end
without bringing valuations to that level. As always, the
strongest estimated return/risk profiles emerge when a material
retreat in valuations is coupled with an early improvement in
market action. There is no requirement that stocks must
retreat anywhere near historical norms over the
completion of the present market cycle. Nor, of course, can we
rule out a substantial move below those norms, which has regularly
occurred throughout history, including the period prior to the
1960’s despite interest rates that were quite low
10/12: Oil prices
are now at their lowest levels in almost four years, since
December 2010. Prices have fallen dramatically over the last
few months, and even more sharply recently. Yesterday,
America’s WTI crude prices fell an eye-popping 3.7%, and ICE
Brent, the world’s benchmark, fell 3.2%, with the former at
just $84.06/barrel. Prices have been falling steadily for
several months as demand has slowed alongside stagnating
growth, especially in China, and supplies have increased due
to new technologies, like fracking. However, yesterday fears
of a global slowdown, including both in Asia and in Europe,
where German industrial output numbers shrunk dramatically,
culminated in a heavy sell-off. Equity markets fell as well,
with the S&P 500 down 2.1%. Saudi Arabia cutting its oil
prices also led to declines, as many believe the moves signals
the beginning of a new OPEC price war. The market fall comes
despite news that China has been on an oil “buying spree”. It
is unclear whether such Chinese buying is because of organic
demand, or simply due to efforts to grow their strategic oil
the last month, much press, including in this publication, has
been given to the pending issues regarding emerging market
debt. EM debt issuance has surged alongside low rates, and
countries now have large debt piles, often in foreign
currencies (meaning they have exchange rate risk), and are
highly vulnerable to rising US rates. However, the IMF has
just signaled the alarm on another issue, which has not been
discussed as frequently—EM inflation. Inflation is rising
alongside the strengthening of the Dollar, and in markets like
Turkey and South Africa—two of the “fragile five”—inflation is
now near 10%, far above targets. Brazil has risen to 6.7% as
well. In addition to exchange rate risk exacerbated by asset
quality deterioration, higher inflation would accelerate bond
sell offs, send interest rates spiking, and make it even
harder for EMs to pay off foreign currency debt. Ghana, Kenya,
and Nigeria are also major EM markets with inflation problems
10/12: Much worse than I thought
is aware of the Eurozone’s current struggles—high debt,
recession, crushing unemployment, and near deflation. However, a
new piece has been published which shows the extent to which the
Eurozone is blackhole on the rest of the global economy.
Deutsche Bank strategist George Saravelos, this week published a
paper explaining that because
of high levels of fiscal austerity, the Eurozone is current
running the largest fiscal account surplus in the history of
the world, bigger than China’s in the early 2000s.
Essentially, the Eurozone is exporting, but imports have
entirely dried up, sapping demand for the rest of the world’s
goods. Little money is being invested. In the early 2000s,
China’s surplus was used to invest in US Treasuries, keeping
interest rates abnormally low, which ultimately led to the US
subprime crisis because of huge lending. This time, the
combination of Europe’s huge surplus, and possible quantitative
easing, are likely to lead to the “largest capital outflows in
the history of financial markets”, said Saravelos. Saravelos
believes the QE would not lead to a pickup of domestic demand in
the Eurozone, and would create huge rounds of capital flight to
markets with better interest rates or return prospects.
Ultimately, this action could see the Euro fall to 95 cents to
the Dollar, from its current 1.2710/12: Humankind
may become extinct (Elon MUSK)
advanced artificial intelligence could spell the end of humanity.
I don’t think anyone realizes how
quickly artificial intelligence is advancing. Particularly if
[the machine is] involved in recursive self-improvement ... and
its utility function is something that’s detrimental to
humanity, then it will have a very bad effect.
He went on to muse about just how serious the problem could be.
If its [function] is just something
like getting rid of e-mail spam and it determines the best way
of getting rid of spam is getting rid of humans ...
Series DGS7: 7-Year Treasury Constant Maturity Rate