Master Financial Education

E. F. Moody Jr.


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

Steven Winks

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

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

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

You must not believe everything you think

Stephan Thomas Vitas

Stephen Colbert

  Albert Einstein

Retirement Manifesto
I am doing a rewrite to condense my comments. But it is still mandatory (though tough) reading for retirees. 

Linkedin members: this website started in 1996 and I have done the Daily Commentary since that time. I used to do more reports and commentary here but it simply seemed more important from  around the early 2000s to present some of what I review every day and let the readers figure out the relevant issues themselves. Of course investments are covered but long term care, economics, life insurance, arbitrations et al command the bulk of a planners capabilities- though generally 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 different.

Risk of Loss and Risk of Loss 2

Dollar 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.)


DCA 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.

DCA 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.


Consumer 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 a hit.

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. .

These are not to be redistributed or used by anyone else in any manner whatsoever.

Uniform (Im)Prudent Investor Act- Waaaaaaaaaaaaaaaaaay Out of Date

World Clock by

1/28: World GDP

(Bloomberg) -- The IMF made the steepest cut to its global- growth outlook in three years, with diminished expectations almost everywhere except the U.S. more than offsetting the boost to expansion from lower oil prices.

The world economy will grow 3.5 percent in 2015, down from the 3.8 percent pace projected in October, the International Monetary Fund said in its quarterly global outlook released late Monday in Washington. The Washington-based lender also cut its estimate for growth next year to 3.7 percent, compared with 4 percent in October.

1/28: Working parents with children with Autism


Glaucoma on the Rise

GlaucomaIt’s the first month of the new year—a time when more than 40 percent of American adults make one or more resolutions. What are your resolutions for the new year? Losing weight? Quitting smoking? How about learning more about glaucoma and how you can protect your sight?

Glaucoma is a group of diseases that can damage the optic nerve of the eye and lead to vision loss and blindness. Primary open-angle glaucoma is the most common form. In this condition, fluid builds up in the front chamber of the eye, and the optic nerve is damaged by the resulting increase in eye pressure. This potentially blinding eye disease currently affects 2.7 million people nationwide, and studies show that at least half of all people with glaucoma do not know they have it.

“While anyone can develop glaucoma, we encourage people at higher risk to get a comprehensive dilated eye exam every one to two years,” said director Dr. Paul Sieving of the National Eye Institute (NEI) of the National Institutes of Health. “Individuals at higher risk include African Americans age 40 and over; everyone over the age of 60, especially Mexican Americans; and people with a family history of glaucoma.”

The prevalence of glaucoma is projected to reach 4.2 million by the year 2030 and 6.3 million by 2050. Last year, NEI invested $71 million on a wide range of studies to understand causes and potential areas of treatment for glaucoma.

“Primary open-angle glaucoma often has no early warning signs,” said Dr. James Tsai, chair of the Glaucoma Subcommittee for the NEI National Eye Health Education Program. “Often, a person will not experience any noticeable vision loss in the early stages of glaucoma. But as the disease progresses, a person may notice his or her side vision decreasing. If the disease is left untreated, the field of vision narrows and blindness may result.”

Glaucoma can be detected in its early stages through a comprehensive dilated eye exam. During this exam, drops are placed in your eyes to dilate, or widen, the pupils. This allows your eye care professional to examine the optic nerve for signs of glaucoma and other vision problems. An eye pressure test alone is not enough to detect glaucoma. “It’s very important that people don’t wait until they notice a problem with their vision to have an eye exam,” adds Dr. Tsai.

If you have Medicare and are African American age 50 or older, are Hispanic/Latino age 65 or older, have diabetes, or have a family history of glaucoma, you may be eligible for a low-cost, comprehensive dilated eye exam through the glaucoma benefit. Call 1–800–MEDICARE or visit for more information. To learn about other possible financial assistance for eye care, visit

“It’s a new year,” said Dr. Sieving. “Make and keep a resolution to maintain healthy vision. Contact your local eye care professional and make an appointment for a dilated eye exam today.”

For more information about glaucoma, visit or call NEI at 301–496–5248.

1/28: More fighting

Leaders from all 28 EU countries have threatened Russia with further sanctions after fighting in eastern Ukraine entered a dangerous new phase.


Of Promises and Pumpkins
Valerie Roberts-Toler

It has been said that grief is like a wave that you don’t see coming; one that drenches you from behind and threatens to pull you under. I was nearly pulled under when I was riding up on the elevator for my weekly visit with Dad. He recently moved to a nursing home. The walls of the elevator were covered with Halloween decorations including some child-like pumpkins. The faces were made from string and scraps. I saw my dad’s name on one of them. It was then that the wave hit.

Dad was an apple farmer, as was his father before him. On the 150 or so acres that were farmed, he grew all kinds of vegetables and fruits. There was always a huge garden; a garden that seemed to get larger each year. The surplus produce always found its way into the backseat of our car when we visited, or onto a neighbor’s doorstep. He grew peaches and pears, blueberries, raspberries and cherries. And he grew pumpkins.

Standing in the elevator and staring at that construction paper pumpkin, I was frozen and far away. I was in the pumpkin patch over in the Pond Lot on the farm. The patch stretched out along the top of the hill. In the fall, pudgy pumpkins were harvested and loaded onto the wagon pulled by the tractor. They were heavy, but my dad was strong. He climbed ladders. He built houses. He lifted children and grandchildren. He lifted bushels of apples, bales of hay and pumpkins.

How did we get from there to here? How did we get from the quickening outdoor air, scented with hay and leaves and pine, to this place? A place that is often too warm and sometimes filled with the smells of medicine and sickness. A place where my dad now struggles for breath at the least exertion.

In my work as a pastor, I have spent many an hour at the bedside of a nursing home resident who is my parishioner. I have led countless worship services in these places. And I have walked with families through the heartrending discussions about how to provide for their elderly family members. But I never thought it would come to this…to the day when my own father would have to be in a nursing home.

Like so many others, I said that I would never put dad in a nursing home. I was determined to care for him in my own home. It was a promise I made to myself. It was a promise I could not keep. My dad is a heavy man who has lost the use of his legs. I cannot lift the man who had carried and raised me.

I know I am not alone. There are no easy answers. Aging in place is preferred, but needed services are costly and not as accessible in rural areas. And sometimes, I will hear someone say what I said: “I will never put my father or mother in a nursing home.”

I get it. And I wince. I want to gently suggest that this is a promise that might have to be broken. I want to be able to offer grace that the adult son or daughter may not be able to find for themselves if that day comes. A grace that is still evasive for me. The sadness ebbs and flows.

So I keep visiting. Near the bed, my sister has hung a painting of the farm. And I bring whatever I can find that speaks of his life on the farm. In the spring, I brought May flowers. In the summer, I brought fresh tomatoes, cucumbers and green beans from the garden for him to taste. I brought bouquets of mint for the nurses. This fall, I brought brown-eyed Susans. But I didn’t bring a pumpkin.

EFM- I know a lot of couples that promise each other to never put them in a nursing home. Want to find why it is a bad obligation. Go down to Home Depot and pick up a bag of cement (60#). Very few elderly can do that. Even given that, the average weight of an elderly man was 185# and an elderly woman 165# and that was 15 years ago, Given the rise in obesity, you can be sure the weight is even higher now.

1/28: Car loans
. Subprime automotive lending at its highest since the subprime housing crash: Loans purchased with poor credit are on the rise, according to Equifax, and make up 30 percent of all loans. Analysts are quick to defend the data, saying only 0.71 percent of subprime loans are in default. But there’s no sign of abating, and 8.4 percent of borrowers who took out loans in the Q1 of 2014 and had weak credit and missed payments by November, according to Moody’s analysis of Equifax’s data. That’s the highest since 2008, when the subprime housing market came crashing down.

Granted, automotive subprime doesn’t nearly have the same risks as housing subprime because it’s much easier to reposess a car than a house, and there's no counterpart to toxic mortgage-backed securities. But as recent Federal Reserve figures show with the $15 billion increase in non-revolving credit, the burden for auto loans is only getting worse. Plus, unlike houses, cars are a depreciating asset that drop in value as soon it goes off the lot.

1/28: Told ya

The number of oil and gas rigs in use in the US fell by 43 last week to 1,633, according to data from Baker Hughes.

This is the lowest level since the week of August 6, 2010. 

The drop in rig count last week was comprised of 49 oil rigs falling out of use and 6 natural gas rigs coming on-line. The number of oil and gas rigs in use is now down by 144 from a year ago. Oil rigs in use are down 99 from last year to 1,317 and are down 209 from their peak of 1,609 hit in October. 

This week's drop in rig use saw the biggest decline from the Williston shale basin after the Permian and Eagle Ford basins had paced losses over the last few weeks.

The number of oil and gas rigs has tumbled over the last several weeks as the price of oil has cratered.

Read more:

1/28: Obesity and Workers Compensation
What does obesity have to do with workers compensation? A lot, it seems. Three separate studies have shown that obese workers are more likely than non-obese workers to sustain disabling injuries that are costly to treat. As this article explains, such injuries drive up the cost of workers compensation insurance.

1/27: Wages

average hourly earnings dropping 0.2 per cent in December from November and increasing only 1.7 per cent from the previous year.

This comes despite America’s strongest year for job creation since 1999 and an unemployment rate of 5.6 per cent, well below the heights of 10 per cent reached in late 2009.

A breakdown by the Economic Policy Institute shows that wages adjusted for inflation in health and education services were just 2 per cent higher at the end of 2014 than they were half a decade earlier in November 2009 — when unemployment started dropping from its peak.

1/27:  LTC
The average monthly cost in 2012 for assisted living was $2,714 — an increase of 5.1 percent over 2002 costs
In 2011, seniors and families paid a total of $36 billion on institutional care, including nursing facilities, and another $3 billion on community-based care, including adult day care, home care, and other facilities, reports the Congressional Budget Office. According to the 2012 MetLife Market Survey of Nursing Home, Assisted Living, Adult Day Services, and Home Care Costs, nursing care cost over $90,000 annually; assisted living cost over $42,000, and home health aide services cost about $21,000.

assisted living surpassed the popularity of receiving help from community programs (40%), moving-in with a family member or friend (36%), hiring a paid caregiver (32%) and living in a nursing home (20%).

This does not mean that seniors necessarily see moving to assisted living as inherently desirable. Indeed. a vast majority of seniors (77%) indicated that they intend to live at home for their rest of their lives

assisted living surpassed the popularity of receiving help from community programs (40%), moving-in with a family member or friend (36%), hiring a paid caregiver (32%) and living in a nursing home (20%).

assisted living was the first choice while nursing homes was the last choice in the survey. The fact that there was such a disparity between the preference for assisted living as compared to nursing homes indicates that seniors have a better understanding of the options that are available to them and the difference between assisted living communities and nursing homes.

This is contrary to a phenomenon that A Place for Mom called the “Nursing Home Paradox,” which seemed to suggest that seniors and caregivers often times simply don’t understand the difference between assisted living and nursing homes. New evidence and a recent analysis of Google data indicates that the “Nursing Home Paradox” is abating and that seniors are increasingly aware of the care options that are available to them.

Still, there are some clues that indicate seniors are not completely aware of the distinction between care options. Slightly more seniors express concern about being able to afford assisted living or a licensed caregiver (41%) than express concern about being able to afford a nursing home (39%). Since nursing homes are generally considerably more expensive than assisted living, it’s somewhat surprising that seniors would express less concern about affording nursing homes than other care types

This does not mean that seniors necessarily see moving to assisted living as inherently desirable. Indeed. a vast majority of seniors (77%) indicated that they intend to live at home for their rest of their lives

Hot airJason Furman, chairman of Obama’s Council of Economic Advisers, drafted a Jan. 13 memo citing research that says some broker practices, such as boosting commissions with excessive trading, cost investors $8 billion to $17 billion a year. The document was circulated to senior aides and indicates the White House may support tighter oversight of brokers who handle retirement accounts.

The memo, obtained by Bloomberg News, makes the case for a Labor Department regulation that would impose a fiduciary duty on brokers handling retirement accounts, requiring them to act in their clients’ best interest. Under current rules, brokers are held to a ‘suitability’ standard, meaning they must reasonably believe their recommendation is right for a customer.

EFM- Why hot air? Brokers and RIAs have never been taught the fundamentals of investing. Reasonablenss is highly debatable and fiduciary is essentially out of the question without a lot of extra training

1/25: Can one beat an index? Yes


ProShares Large Cap Core Plus (CSM) has beaten the S&P 500 and its large cap fund peer group average over the last five years. How has it done that? According to David Nadig from, CSM has "a better mousetrap." It uses a multi-factor approach that is designed to produce more consistent outperformance than strategies that rely on any single factor. CSM tracks the Credit Suisse 130/30 Large Cap Index.

Download CSM  Nadig Article

CSM offers an alternative to both passive and active large cap investing. In addition to using a multi-factor approach, it employs leverage and shorting to enhance returns. The approach has delivered a Morningstar 5-star overall rating. And it has historically been tax efficient—it has never had a capital gain distribution.

Compare the performance of CSM and its index versus the S&P 500 and the Morningstar large cap blend mutual fund average.

As of 12/31/14 Ticker 1-year 3-year 5-year Since CSM
Inception on 7/13/09
4Q 2014 Volatility
ProShares Large Cap
Core Plus
NAV Total Return
ProShares Large Cap
Core Plus
Market Price Total Return
Credit Suisse 130/30
Large Cap Index
(CSM's Index)
S&P 500 SPTR
Large Cap Mutual Funds
(Morningstar Large Blend)

Source: Bloomberg, Morningstar (large cap mutual funds). The Morningstar Large Blend category covers large cap funds that blend growth and value investment styles. The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. For standardized returns and performance data current to the most recent month end, visit ProShares. Returns are annualized "since CSM inception." "Volatility" refers to annualized standard deviation, a statistical measure that captures the variation of returns from their mean and that is often used to quantify the risk of a fund or index over a specific time period. The higher the volatility, the more the returns fluctuate over time. Gross expense ratio is 1.01%; net expense ratio is 0.45% (with contractual waiver through 9/30/15).

EFM- Did I know they would do so? Not a clue. The chart does not include the great recession and only 4th quarter SD.

The Vanguard extended market did 16.58% for 5 years.

Date: 2014-12-03
By: Allen, Franklin (The Wharton School of the University of Pennsylvania and Imperial College London)
Goldstein, Itay (The Wharton School of the University of Pennsylvania)
Jagtiani, Julapa (Federal Reserve Bank of Philadelphia)
Lang, William W. (Federal Reserve Bank of Philadelphia)
The financial crisis has generated fundamental reforms in the financial regulatory system in the U.S. and internationally. Much of this reform was in direct response to the weaknesses revealed in the precrisis system. The new “macroprudential” approach to financial regulations focuses on risks arising in financial markets broadly, as well as the potential impact on the financial system that may arise from financial distress at systemically important financial institutions. Systemic risk is the key factor in financial stability, but our current understanding of systemic risk is rather limited. While the goal of using regulation to maintain financial stability is clear, it is not obvious how t o design an effective regulatory framework that achieves the financial stability objective while also promoting financial innovations. This paper discusses academic research and expert opinions on this vital subject of financial stability and regulatory reforms. Specifically, among other issues, it discusses the impact of increasing public disclosure of supervisory information, the effectiveness of bank stress testing as a tool to enhance financial stability, whether the financial crisis was caused by too big to fail (TBTF), and whether the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) resolution regime would be effective in achieving financial stability and ending TBTF.

Date: 2014-12
By: Martin Goetz
Luc Laeven
Ross Levine
We develop a new identification strategy to evaluate the impact of the geographic expansion of bank holding company (BHC) assets across U.S. metropolitan statistical areas (MSAs) on BHC risk. We find that the geographic expansion of bank assets reduces risk. Moreover, geographic expansion reduces risk more when BHCs expand into economically dissimilar MSAs, i.e., MSAs with different industrial structures and business cycles. We do not find that geographic diversification improves loan quality. Our results are consistent with arguments that geographic expansion lowers risk by reducing exposure to idiosyncratic local risks and inconsistent with arguments that geographic expansion, on net, increases risk by reducing the ability of BHCs to mo nitor loans and manage risks.

By: David E. Allen (School of Accounting, Finance and Economics Edith Cowan University, Australia.)
Michael McAleer (Econometric Institute, Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute, The Netherlands, Department of Quantitative Economics, Complutense University of Madrid, and Institute of Economic Research, Kyoto University.)
Shelton Peiris (School of Mathematics and Statistics, University of Sydney)
Abhay K. Singh (School of Accounting, Finance and Economics, Edith Cowan University, Australia)
This paper features an analysis of the e_ectiveness of a range of portfolio diversification strategies as applied to a set of 17 years of monthly hedge fund index returns on a set of ten market indices representing 13 major hedge fund categories, as compiled by the EDHEC Risk Institute. The 17-year period runs from the beginning of 1997 to the end of August 2014. The sample period, which incorporates both the Global Financial Crisis (GFC) and subsequent European Debt Crisis (EDC), is a challenging one for the application of diversi_cation and portfolio investment strategies. The analysis features an examination of the diversification bene_ts of hedge fund in vestments through successive crisis periods. The connectedness of the Hedge Fund Indices is explored via application of the Diebold and Yilmaz (2009, 2014) spillover index. We conduct a series of portfolio optimisation analyses: comparing Markowitz with naive diversi_cation, and evaluate the relative e_ectiveness of Markowitz portfolio optimisation with various draw-down strategies, using a series of backtests. Our results suggest that Markowitz optimisation matches the characteristics of these hedge fund indices quite well.

1/25: Health care inflation

The cost of providing health care for employees continues to increase, especially for large multinational firms. While the increases aren’t as steep as they were a few years back, a study by Aon Hewitt shows that the increases still outstrip annual inflation and are costing big employers plenty.

Aon surveyed professionals, clients and carriers that participate in its portfolio of medical plans, and found that the expected 2015 increase, before plan design changes and vendor renegotiations, will be about 10.15 percent. In 2014, overall plan costs for this group rose 10.34 percent

1/25: The Relationship Between Stock Returns and Investor Sentiment: Evidence from Social Media
December 8, 2014
Zachary McGurk College of Business and Economics, West Virginia University Morgantown, WV 26506, United States Adam Nowak College of Business and Economics, West Virginia University Morgantown, WV 26506, United States
The recent behavioral finance literature has found investor sentiment having some predictive ability in equity returns. This differs from the standard finance theory provides no role for investor sentiment. We examine the relationship between investor sentiment and stock returns by employing textual analysis on social media posts. Overall we find that our investor sentiment measure has a positive and significant effect on stock returns. These finds are consistent across a number of different models and specifications, thus finding further evidence against the standard finance theory

1/25: Homeowners insurance

The 2012 report, available for free download on the NAIC website, includes some interesting statistics as well as detailed charts.

  • In 2012, homeowners owner-occupied policy exposures accounted for 76.8% of overall exposures countrywide.
  • Tenant and condominium policy exposures accounted for 21.3% of the total, while dwelling fire exposure made up the remaining 1.9%.
  • Approximately 53.2% of policies sold in Washington, D.C. in 2012 were tenant or condo/co-op policies, reflecting the high level of urbanization.

Here are several key factors affecting the cost of insurance that also were identified in the report.

  • Geographic areas. Generally, the more densely populated the location, the higher the real estate values and construction costs. You’ll also find relatively higher real estate values in vacation and retirement areas.
  • Construction costs. The type of residence, the availability of building materials, local climate and building regulations all affect construction costs. Premiums also reflect higher expected repair costs for designs intended to reduce structural damages from earthquakes or hurricanes, for example.
  • Degree of exposure to catastrophe. Homeowners insurance premiums also are affected by the degree of exposure to catastrophes, for example, a waterfront property exposed to hurricanes or a mountaintop property exposed to brush and forest fires. According to the Property Claims Services unit of the Insurance Services Office, an event is a catastrophe if it results in insured losses that total $25 million or more.
  • Stricter building codes. After major catastrophes like Hurricane Katrina or Superstorm Sandy many state and local governments enact stricter building codes in an attempt to minimize damage and losses from future catastrophes.
  • Economic factors. Such economic factors as inflation increase the amount of insurance premiums over time. Interest rates and inflation can affect not only the value of the real estate and building but also the price of the insured contents.

These factors as well as others listed in the report can result in wide variations in premiums, not only by region or state, but on local levels as well. It pays to shop around

1/25: More States Considering Right-to-Die Laws After Brittany Maynard

Probably all states might have this by 2025

Pity that so few pay attention

1/25: Just an example


1/23" We are finished and they have just started. No way hardly anyone could now figure out what will happen.

European Central Bank unleashes quantitative easing
The ECB finally embarked on a large-scale sovereign bond-buying programme on Thursday, after months of intense speculation on whether bank president Mario Draghi could overcome political debate and divisions among policy makers on the central bank’s governing council to win convincing support for a QE package.
The €60bn monthly asset purchases include asset-backed securities and covered bonds.
The government bond-buying scheme will commence in March and last until the end of September 2016, Mr Draghi said. The scheme would continue until there was a “sustained adjustment in the path of inflations that is consistent with our aim of achieving inflation of close to 2 per cent”.

There are decades where nothing happens; and there are weeks where decades happen.
― Vladimir Lenin (1870 – 1924)

1/22: How Income Inequality May Be Hurting Economic Growth

Economic growth is the casualty of a widening gap between the rich and the poor among member countries of the Paris-based Organisation for Economic Co-operation and Development (OECD), according to a report issued last month. The richest 10% of the population in OECD countries earn 9.5 times more than the poorest 10%. In the 1980s, that ratio was 7:1, and the income gap is at its highest level in about 30 years. The report suggests that the growing income inequality has, over the past two decades, cost the U.S. between 6 and 7 percentage points in economic growth, nine points in the U.K., and 10 points in New Zealand and Mexico.

“Income inequality is a source of concern not just from a social point of view, but also from an economic point of view

Wake Up and Fight Parkinson's with Exercise

By Jackie Russell, RN


Parkinson’s disease (PD) remains, for the most part, a mystery of medical science.  For reasons unknown, certain brain cells stop producing a substance called dopamine.  The lack of dopamine affects an individual’s movement, strength and balance.  PD causes a slow, yet progressive deterioration in function, taking many years to run its course.  When the diagnosis of PD is made, you experience a life-altering event.  It is not a condition you would desire, but PD does have the capacity to cause you to reassess your priorities and make lifestyle choices that can affect the course of the disease.

An emerging reality is the positive effect of exercise on the course of this disease.  An exercise agenda may offer stimulation to the various neurological pathways, increasing the capacity to counteract the progression of symptoms.  The exercise plan is a “Wake Up Call,” giving one a sense of purpose and direction, offering the opportunity to proactively improve conditions such as stability, flexibility, and management of tremor.  More importantly, it helps you to understand that you may have Parkinson’s disease, but it does not have you.

David Zid,  an ACE, APG certified personal trainer and president of Columbus Health Works, in collaboration with a local surgeon, Thomas H. Mallory, M.D., have authored a user-friendly guide, detailing a Parkinson’s - specific exercise plan that can be used daily.  Zid is an energetic trainer in the central Ohio area that has taken a specific interest in designing fitness regimens for individuals afflicted with Parkinson’s.  Dr. Mallory, a prominent and internationally renowned orthopaedic total joint surgeon was diagnosed with PD several years ago.  He has found that his enthusiasm for exercise has actually improved many of the symptoms of this progressive neurologic disease.  He has been using Zid’s program for the last two years and is ecstatic with the results including improvement in balance, strength and flexibility. They both feel that these obviously positive results should be shared with all individuals with PD, from the newly diagnosed to those in the well-advanced stages of this affliction. This manual is in the process of publication and will soon be available for purchase, including a corresponding video. 

 The workbook describes and demonstrates specific exercises tailored to the Parkinson’s patient.  It requires a mental and physical commitment to a daily routine. With this routine, all parts of the body are challenged, from the dexterity and flexibility of the fingers, hands, and feet to stretching the shoulders, back and hips.  Emphasis is also placed on activities of daily living that frequently become a challenge, such as rising from a chair, getting out of bed, moving about in crowds, walking over uneven ground.  The Wake Up Call agenda is a metaphor for an attitude that commences each day as you realize there is an opportunity to modify the progression of this condition.  Dr. Mallory feels that the challenge presented to the individual with PD is to never give up.  “We must continuously pursue a positive and active approach with our exercise regime.  It is important that we all leave a legacy and are remembered as those who were privileged with the opportunity offered to manage PD.”

Has exercise been proven beneficial for the individual with PD, or is it just a casual relationship?  How does an exercise agenda influence the symptoms of this disease?  Well, exercise has long been proven advantageous to everyone’s general health.  Aerobic activity (any movement that increases the heart rate) strengthens the heart, maintains lung function and keeps muscles strong.  But it appears that regular exercise may also impact the brain and nervous system.  An exciting study out of Pittsburgh has shown that forced exercise had a major impact on rats that were given a toxin that induced Parkinson’s disease.  This study demonstrated that exercise appears to prevent loss of brain cells that worsens this disease.  There are numerous other published studies supporting that daily exercise does indeed improve the ability to move in the individual with PD.  These findings overwhelming show that a program of exercise therapy combined with appropriate medication has a positive effect on symptoms.

When your ability to move improves, so does your feeling of accomplishment and sense of well being.  Scientific evidence shows that not only can motor function improve, but mood and a “feeling of well being” is clearly related to routine activity.  This manual will get you started and walk you simply through every exercise.  No matter how long you have been diagnosed with Parkinson’s disease, it’s not too late to start, and it’s never too early.

This manual includes detailed exercises that are divided into easy to follow sections including:

  • Wake Up Call
  • Walking and Balance Drills
  • Cardiovascular Exercise
  • Strength Training
  • Workout with Weights
  • Non-Weight (Core) Days
  • Facial and Voice exercises
  • Night Time Stretching

Exciting news for those with Parkinson’s?  We think so.  Get started on a fitness plan and see the results for yourself. 

Jackie Russell is a nurse in Columbus, Ohio and has a dedicated interest in the treatment of Parkinson’s patients.  Her intrigue with Parkinson’s disease (PD) began when her mother-in-law was afflicted and eventually succumbed to this progressive illness.  She has collaborated with Dr. Mallory and a professional fitness trainer, David Zid, to develop a Parkinson’s-specific exercise plan, including helping to author a manual detailing the specifics of the program.  Jackie can be reached at


IRA withdrawal Exceptions

  • The death of the IRA owner: Upon death, your designated beneficiaries may begin taking distributions from your account. Beneficiaries are subject to annual required minimum distributions.
  • Disability: Under certain conditions, you may begin to withdraw funds if you are disabled.
  • Unreimbursed medical expenses: You can withdraw the amount you paid for unreimbursed medical expenses that exceed 10% of your adjusted gross income in a calendar year. Individuals older than 65 can claim expenses that surpass 7.5% of adjusted gross income through 2016.
  • Medical insurance: If you lost your job or are receiving unemployment benefits, you may withdraw money to pay for health insurance.
  • Part of a substantially equal periodic payment (SEPP) plan: If you receive a series of substantially equal payments over your life expectancy, or the combined life expectancies of you and your beneficiary, you may take payments over a period of five years or until you reach age 59½, whichever is longer, using one of three payment methods set by the government. Any change in the payment schedule after you begin distributions may subject you to paying the 10% tax penalty.
  • Qualified higher-education expenses: For you and/or your dependents.
  • First home purchase, up to $10,000 (lifetime limit).


Employer-Sponsored Plan Exceptions

  • The death of the plan owner: Upon death, your designated beneficiaries may begin taking distributions from your account. Beneficiaries are subject to annual required minimum distributions.
  • Disability: Under certain conditions, you may begin to withdraw funds if you are disabled.
  • Part of a SEPP program (see above): If you receive a series of substantially equal payments over your life expectancy, or the combined life expectancies of you and your beneficiary, you may take payments over a period of five years or until you reach age 59½, whichever is longer.
  • Separation of service from your employer: Payments must be made annually over your life expectancy or the joint life expectancies of you and your beneficiary.
  • Attainment of age 55: The payment is made to you upon separation of service from your employer and the separation occurred during or after the calendar year in which you reached the age of 55.
  • Qualified Domestic Relations Order (QDRO): The payment is made to an alternate payee under a QDRO.
  • Medical care: You can withdraw the amount allowable as a medical expense deduction.
  • To reduce excess contributions: Withdrawals can be made if you or your employer made contributions over the allowable amount.
  • To reduce excess elective deferrals: Withdrawals can be made if you elected to defer an amount over the allowable limit.


How Does Aging Affect Financial Decision Making?

byKeith Jacks Gamble,Patricia A. Boyle,Lei YuandDavid A. Bennett


The brief’s key findings are:

  • With the shift from traditional pensions to 401(k) plans, the welfare of retirees depends increasingly on their ability to make sound financial decisions.
  • Using a dataset that follows a group of older individuals in the Chicago area, the analysis examines how aging affects financial decision making.
  • Participants who suffer cognitive decline experience a reduction in their financial literacy but no change in their confidence in managing their money.
  • Perhaps not surprisingly then, while they are more likely to get help with financial decisions, more than half retain primary responsibility for managing their money.

The study excludes individuals who were diagnosed with dementia at the time of their first decision-making assessment.  It also excludes participants who did not complete at least two assessments, needed to measure change over time, over the two or three years for which data are available for the particular individual.  Of the 575 such participants without dementia who completed at least two assessments, the cognition scores of about 66 percent declined. 

Financial literacy.  The assessment asks nine questions testing numeracy and seven testing financial knowledge – capabilities that declining cognition is likely to adversely affect.  The numeracy questions range in difficulty from elementary calculations to understanding compound interest.  The financial knowledge questions ask whether the participant knows what the initials FDIC represent and test whether they understand issues such as the value of paying off credit card debt, the relationship between bond prices and interest rates, and historical differences between stock and bond returns.  The percent of questions answered correctly in each category, and in both categories combined, is used as the measure of numeracy, financial knowledge, and overall financial literacy.8 •

EFM- while I am sure the authors were diligent in their work and quite sincere in their conclusions, it pretty much is wrong. But this is like most similar studies since if you look at the questions about compounded interest. how bonds relate to interest rate movements, they have essentially no correlation with a real life understanding  of what a fixed annuity is, what a 12b-1 fee is, who is head of the FED and on and on. Their view of financial literacy necessary to run their lives before retirement, during retirement , at the later stages towards death is at a minimum, misleading, and at the worst is allowing wall street to keep on selling stuff just for the money.

The financial literacy tests for high school students all the way into the late stages of life are a failing grade. If you were to do real life examination of financial issues, the score could probably be 20%.

I won't insult your intelligence by suggesting that you really believe what you just said.
William F. Buckley Jr. (1925 - 2008)


Parkinson's Disease with Dementia -
Special Challenges

By Sandra Fuson, Staff Writer

In the U.S. today there are more than one million people with Parkinson’s Disease (PD). Approximately 50,000 new cases are diagnosed annually. PD is a progressive movement disorder that affects the central nervous system. Its causes are unknown, and while physicians can manage some symptoms of the disease, there is no known cure.

Primarily individuals over the age of 60 are most at risk for developing PD, although cases as young as 30 years old have been diagnosed (juvenile PD). For some patients, however, hallucinations and severe uncontrollable muscle difficulties make them especially vulnerable for dementia as PD progresses.

Dementia has been defined as cognitive impairments that are sufficient to interfere with activities of daily living. Dementia worsens over time, with cognitive processing declining each year faster than that of the general population. Most people think of Alzheimer’s disease when dementia is mentioned, although there are many types of dementia. .

Estimates are that 20 – 30 percent of the patients with PD will develop dementia, generally after age 70. If it is going to develop, there is generally a 10 to 15 year lag from the time that motor difficulties appear with PD. If symptoms of dementia appear earlier, experts suggest that the cause could be something other than PD.

Signs of Dementia:

Before discussing possible causes of dementia, it would be helpful to explore what signs or symptoms the PD patient may experience. Dementia will first be noticed at home, not in the doctor’s office, even if you don’t have a name to put with it. Since caregivers are with their loved ones more often than doctors, it is helpful to bring any changes in behavior to the doctor’s attention.

Some of the most common signs of dementia in PD include:

  • Memory recall and processing

  • Impaired thinking, often at a much slower rate

  • Apathy or lack of motivation

  • Moodiness

  • Confusion and disorientation

  • Easily distracted

Keep a diary of signs as they develop and schedule an appointment with your physician to discuss them. It would also be helpful to note how often symptoms appear and even the circumstances when they were first noticed. Giving your doctor enough information to make a determination is the first step in making the correct diagnosis.

Remember that if someone is going to develop dementia, there is generally a “lag” of at least 10 to 15 years. If dementia develops earlier, it is important to take note of the symptoms and discuss them with your physician. Correctly diagnosing the cause will make treatment and adjustments much easier. Some signs that the dementia is caused by something other than Parkinson’s disease include: anxiety, restlessness, and even delusions (irrational thought processes). Speech or language difficulties are also a signal that the dementia is not caused by Parkinson’s.

Finally, depression can mimic the signs of dementia in Parkinson’s patients. Depression is a common companion to PD, and having your loved one fully evaluated can aid in their recovery from these troublesome symptoms if depression is the underlying cause. Medications to treat depression can bring relief and can even improve memory and mood. 

Lewy Bodies and their Role in Dementia:

In patients who develop dementia, Lewy bodies are usually present. Lewy bodies are protein deposits on the nerve cells. Scientists haven’t determined yet if the Lewy bodies play a role in killing the cells or if the cells, in the process of dying, are more susceptible to developing the protein deposits. Perhaps even the Lewy bodies develop as a method to repair the cell, and instead play a role in developing dementia.

Dopamine is the neurotransmitter involved in regulating movement. In Parkinson’s patients, the ability to regulate the amount of dopamine is damaged. For this reason, medications such as Levodopa, try to increase the amount of dopamine in the brain, thus helping the movement issues with Parkinson’s. Lewy bodies generally damage not just dopamine, but other neurotransmitters as well. By impairing movement and thought processes, the person with Parkinson’s demonstrates the symptoms of dementia: unable to process new information, blankly staring off into space, unable to recall specific incidences, and inability to make sound judgments. There are other symptoms as well, depending on the area of the brain that is damaged.

Medication-induced Dementia:

In some patients, the type of medication that they are taking can induce the symptoms of dementia. Regardless of the cause, your doctor needs to be involved as soon as symptoms are noted in the patient. By adjusting medications, your physician may be able to detect whether or not Lewy bodies are to blame or if the medication is actually causing the problem. Dementia is not a normal process of PD; and in the cases of medication inducing the dementia, it can be reversed.

Vascular Dementia:

Although not common in Parkinson’s, it is possible to have vascular dementia. Vascular dementia generally develops when there are small, unnoticed strokes. By determining if vascular dementia is indeed present, doctors can sometimes halt the advancement by treating the underlying causes. Further tests will be needed to find out if these strokes have occurred and what the underlying cause of the stroke was. By stabilizing the patient’s vascular health, you can greatly improve chances of improving vascular dementia.

Changes in Daily Living:

Finding out that your loved one had Parkinson’s was difficult enough. Adjusting to dementia can significantly add to stress. Remember not only to consider the person with Parkinson’s and how their life is affected, but it is especially important to reduce caregiver stress during this adjustment. In order to make a successful transition, you’ll need to make changes to daily routines. This requires not only cooperation from the patient, but the caregiver as well.

Avoid open-ended questions such as “What would you like to eat?” Since thought processing is affected, the patient may feel frustrated when they are unable to name something specific that they like to eat. Offer choices: “Would you like chicken or pork chops?” Give a limited number of choices so the person can name what they want without too many options.

Establish schedules and stick to them. Lists of activities may help. For example, next to the bed may be a list that reads:

  •  Wake up

  • Put on slippers

  • Put on robe

By breaking down the daily routine into small, manageable steps, you can avoid frustration from the patient and the caregiver perspective. Both people know what to expect and in what order you need to do the steps.

Remember that as the dementia worsens over time, you may need to develop lists with more specific steps. For example, the first list may have said, “Brush your teeth.”

The new list may read:

  • Open toothpaste

  • Get toothbrush

  • Put toothpaste on toothbrush

  • Brush teeth

  • Rinse

If you think your loved one may not be able to remember which medications they need to take, how much they need to take, etc., you may have to lock away medications and dispense doses as needed. This may be an adjustment to the person who was accustomed to independence in taking their medication. Explain the reasons why you need to control medications and that you want the person to be safe. Over time you can make this transition as well.

Keep living environments simple, free of clutter. Clutter in the home can resemble the clutter that the person feels in their thought processes. By keeping the environment free to extraneous objects, you can help decision-making processes go much smoother. Remember too that Parkinson’s will gradually worsen over time, making smooth movements almost impossible. Keeping the home area safe and fall-free will help with this as well

Other ideas that you may want to consider:

  •  Keep travel plans simple. As much as possible, continue  established routines if you need to travel.

  • Keep dangerous objects, such as knives, out of reach and out of sight. Other objects you may want to put  away include ladders, step stools, small appliances that require supervision when in use, and anything else in your home environment that you think would be a danger to your loved one.

  • Use mental exercises to keep memory as sharp as possible. These include puzzles, card games, reading, listening to music, and even keeping a diary.

  • Continue a good exercise routine. This not only keeps the movement portion of PD under control, but it can   aid in cognitive processing as well.

  • Keep dressing as simple as possible. Buttons and snaps can be a challenge. Slip-on clothing and even Velcro work well.

  • Get a wrist or pendant ID for your loved one to wear.  The Alzheimer’s Association can provide one.

Financial Obligations:

Develop a plan for finances and how your loved one’s assets will be used before the dementia develops too much. Scientists have demonstrated that each year the person with dementia loses mental processing at more than twice the rate of a person without dementia. You’ll want to put these arrangements in place as soon as possible. You’ll want to consider:

  • Preparing a will and keeping it in a safe place.

  • Consulting a financial planner to decide how assets  need to be used, dissolved, or otherwise distributed.

  • Deciding about long-term care options.

  • Deciding how bills will be paid on an ongoing basis – especially important if the person with Parkinson’s is not married, is widowed or lives alone (although they may not be able to continue living alone for long).

By making these decisions in advance, you’ll save much stress later as the disease develops further.

Many people with Parkinson’s will not develop dementia. For those patients who do, it is important to learn your medical options and make adjustments to the home environment. Some of these adjustments can transition over time, while others need to be made more quickly. Even with dementia, the person will have good days and days that thought processes are not as sharp. By keeping the lines of communication open with your doctor, the disease can be managed as effectively as possible, despite its debilitating effects on daily living.

1/21" Retirement UK

Almost a third of people approaching retirement are failing to save for their old age, underlining the lingering impact of the downturn on savings habits.

Almost half of UK workers stopped or reined in their saving for retirement in the slowdown that followed the financial crisis, new research has found, reducing their savings in cash deposits, investments and personal pension schemes.

1/21" Saudi Arabia could win this little game. They can keep pumping oil very very cheaply and let the prices drop where they may. But fracking is expensive  and many U.S. wells are now losing money and have to shut down. So Saudi Arabia is, once again, increasing market share.

Billions of dollars of spending on oil and petrochemicals projects has been scrapped or put on hold, with Royal Dutch Shell and UK-based Premier Oil announcing the first big cost-cutting moves of 2015 after a brutal slide in crude prices.

1/21: Illogical

The argument now that the spread of pop culture and consumer goods around the world represents the triumph of Western civilization trivializes Western culture. The essence of Western civilization is the Magna Carta, not the Magna Mac. The fact that non-Westerners may bite into the latter has no implications for their accepting the former.
– Samuel P. Huntington

1/21: WOW! This really shows that a LOT of workers just plain gave up working

"the effect of demographics is so large that we do not expect a meaningful increase in labor force participation as long as the baby boomers are transitioning into retirement."


China GDP growth slowest in 24 years
China’s economy grew at its slowest pace in nearly a quarter of a century last year, even as it overtook the US to become the world’s largest in purchasing power terms.
The annual expansion of 7.4% in 2014 is the slowest since 1990, when the country faced international sanctions in the wake of the 1989 Tiananmen Square massacre.

The 7.4% is still high but the 24 years should unease investors.

1/20: The Shiller P/E Enters Rarefied Air

Good comments on future returns. I do not necessarily agree that 2015 will see a big drop and I certainly do not use statistics going back to the 1800s. But I do see the correctness of lower returns for some time.

1/20: John Hussman: Really Mean Reversion Mainly just for me if I want to quickly review reversion later on. This site is a blog but unique in that these links, in many cases, allow me to go back and find other info I may need for whatever purposes.
Q:     What do you think of Western civilization?
A:     I think it would be a good idea.

– Mahatma Gandhi
1/20: Great comment from Kareem Abdul Jabbar

In Alan Bennett’s brilliant play, The History Boys, one of the teachers explains to his students why a World War I monument to the dead soldiers isn’t really honoring them, but rather keeping people from demanding answers as to how Britain unnecessarily contributed to the cause of the war and is therefore responsible for their deaths. By appealing to our emotional sense of loss, the government’s monument distracts the people from holding the hidden villains responsible. The teacher says, “And all the mourning has veiled the truth. It’s not lest we forget, but lest we remember. That’s what this [war memorial] is about … Because there’s no better way of forgetting something than by commemorating it.”

Date: 2014-11
By: Seth Anderson
T. Randolph Beard
Hyeongwoo Kim
Liliana Stern
This paper investigates the short-run relationship between closed-end fund prices and their net asset values. In particular, we document three systematic differences between the short-run pricing behaviors for stock and bonds funds. For equity funds, we show that returns processes for both prices and asset values have characteristics of a random walk, while bond funds returns are more predictable. Similarly, multivariate GARCH analysis establishes the existence of stronger news and volatility spillover effects between the fund price and the net asset value for bond funds than for stock funds. Finally, we find significantly weaker dynamic conditional correlations between the fund price and its fundamental value for bond funds after the Lehman Brothers failure, whereas no such evidence is found for stock funds. To explain these findings, we propose a mechanism based on bond market illiquidity.

Corrupt politicians make the remaining ten percent look bad.
– Henry Kissinger


  1. Date: 2014-12-10
    By: David E. Allen
    Michael McAleer (University of Canterbury)
    Shelton Peiris
    Abhay K. Singh
    This paper features an analysis of the effectiveness of a range of portfolio diversification strategies as applied to a set of 17 years of monthly hedge fund index returns on a set of ten market indices representing 13 major hedge fund categories, as compiled by the EDHEC Risk Institute. The 17-year period runs from the beginning of 1997 to the end of August 2014. The sample period, which incorporates both the Global Financial Crisis (GFC) and subsequent European Debt Crisis (EDC), is a challenging one for the application of diversification and portfolio investment strategies. The analysis features an examination of the diversification benefits of hedge fund investments through successive crisis periods. The connectedness of the Hedge Fund Indices is explored via application of the Diebold and Yilmaz (2009, 2014) spillover index. We conduct a series of portfolio optimisation analyses: comparing Markowitz with naive diversification, and evaluate the relative effectiveness of Markowitz portfolio optimisation with various draw-down strategies, using a series of backtests. Our results suggest that Markowitz optimisation matches the characteristics of these hedge fund indices quite well.
Date: 2014-09
By: Kruttli, Mathias
Patton, Andrew J
Ramadorai, Tarun
This paper provides empirical evidence of the impact of hedge funds on asset markets. We construct a simple measure of the aggregate illiquidity of hedge fund portfolios, and show that it has strong in- and out-of-sample forecasting power for 72 portfolios of international equities, corporate bonds, and currencies over the 1994 to 2013 period. The forecasting ability of hedge fund illiquidity for asset returns is in most cases greater than, and provides independent information relative to, well-known predictive variables for each of these asset classes. We construct a simple equilibrium model based on liquidity provision by hedge funds to noise traders to rationalize our findings, and empirically verify auxiliary predictions of the m odel.

“Injustice anywhere is a threat to justice everywhere.”

Date: 2014-12
By: Luc Arrondel
Laura Bartiloro
Pirmin Fessler
Peter Lindner
Thomas Y. Mathä
Cristiana Rampazzi
Frederique Savignac
Tobias Schmidt
Martin Schürz
Philip Vermeulen
Using the first wave of the Eurosystem Household Finance and Consumption Survey (HFCS), a large micro-level dataset on households? balance sheets in 15 euro area countries, this paper explores how households allocate their assets. We derive stylised facts on asset participation as well as levels of asset holdings and investigate the systematic relationships between household characteristics and asset holding patterns. Real assets make up the bulk of total assets. Whereas ownership of the main residence varies strongly between countries, the value of the main residence tends to be the major asset for homeowners and represents a significant part of total assets in all countries. While almost all households hold safe financial ass ets, a low share of households holds risky assets. The ownership rates of all asset categories generally increase with wealth (and income). The significance of inheritances for home ownership and holding of other real estate is remarkable. We tentatively link differences in asset holding patterns across countries to differences in institutions, such as mortgage market institutions and house price-to-rent ratios.

1/20: This will be interesting (UK)

The government has been accused of dragging its feet over providing details of pension reforms which will give up to 300,000 people a year new freedom to cash in their pensions.

In less than three months, reforms announced last March by George Osborne will come into force, giving savers aged 55 and over new flexibility to take defined pension pots as cash and avoid buying an annuity.

1/19: Columbia university study'

Investors who are driven by daily fluctuation in the market rebalance their holdings to get out of stocks that are dropping and miss out when they go back up. The report suggests it’s better to rebalance less frequently and let the market go through its ups and downs naturally.

“History has shown us that the stock market is a relatively safe bet over the long term because it has typically grown,” Michaela Pagel, assistant professor of finance and economics at the business school, said in a statement. “Investors would be wise to keep this in mind, because those that check their portfolio too often and are driven by the daily or hourly fluctuations in the market may make decisions that have a negative impact on their long-term financial prospects.”

EFM- first,. rebalancing doesn't really work and actually no one has a clue to the risk (correlation) when they do it. I don't remember a single comment on correlation in any rebalancing article (though I am getting old)

Those "espousing" reversion need to recognize that the time to do well is now around 30 years or even longer. If you are at retirement when the period began, you are probably going to be long gone..

1/19: OUT OF BALANCE Risk, returns and the contradictory views of individual investor (Natixis)

More than one-quarter of the investors we spoke with defined investment success as experiencing only gains and no losses in their portfolio.

Raising investors’ game is a top priority In a prime example of this dilemma, a surprising majority (9 in 10) of investors globally say they try to measure the level of risk in their investments. Outwardly, this is a significant bright spot on the horizon, but in reality it may be another  case of wishful thinking. Based on their own admission, they may not have the know-how to actually follow through – especially when only 18% of those  surveyed globally say their investment knowledge is strong. 

Helping investors raise their investment knowledge through communication  and education may be a simple first step toward helping them overcome their apprehensions and helping them make investment decisions guided by clear  goals and objectives rather than gut instinct

EFM- The article/survey paints the same picture as essentially all other questionnaires. The statement by the authors about wishful thinking by consumers should be the same for brokers and planners regarding their ability to determine the risk of a portfolio. It notes that communication and education are needed but brokers/planners/small furry animals but they have not been taught risk except, perhaps,  in the most esoteric (and useless) manner.
I have provided a simple format  to numerically identify the potential losses of an allocation. If you have read my stuff for a long time, you will have seen my video on the Risk of Loss. If not, view both parts (looks like my site may have been hacked and I will try and fix the links post haste.) 

1/18: Index returns from Morningstar

Index Performance: Return (%)
Click on a column heading to sort data by that column.
USD: in dollars NR: net dividends reinvested TR: total return
PR: price change LCL: in local currency

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year

Morningstar Stock Indexes
Broad Market
US Market TR 01-15-15 -3.30 -3.13 0.50 7.69 9.08 18.10 14.50
Large Cap TR 01-15-15 -3.35 -3.07 0.30 7.45 9.99 17.96 13.96
Large Core TR 01-15-15 -3.22 -2.51 0.26 9.92 14.20 20.68 15.72
Large Growth TR 01-15-15 -3.24 -2.98 -0.03 7.60 10.86 19.12 14.52
Large Value TR 01-15-15 -3.63 -3.81 0.68 4.70 4.94 14.35 11.66
Mid Cap TR 01-15-15 -3.12 -3.06 1.08 8.64 8.13 18.92 16.09
Mid Core TR 01-15-15 -2.97 -3.05 0.65 9.96 11.13 19.46 17.32
Mid Growth TR 01-15-15 -3.10 -2.85 1.14 8.68 5.61 16.99 15.34
Mid Value TR 01-15-15 -3.30 -3.30 1.47 7.19 7.87 20.40 15.60
Small Cap TR 01-15-15 -3.26 -3.96 0.90 7.61 2.28 16.99 15.07
Small Core TR 01-15-15 -3.33 -3.84 0.71 7.50 4.11 17.11 14.43
Small Growth TR 01-15-15 -3.16 -3.48 1.65 7.89 -1.86 16.01 15.63
Small Value TR 01-15-15 -3.29 -4.54 0.37 7.45 4.53 17.83 15.13
US Core TR 01-15-15 -3.17 -2.71 0.37 9.77 12.85 20.18 16.01
US Growth TR 01-15-15 -3.21 -2.99 0.30 7.83 8.94 18.47 14.83
US Value TR 01-15-15 -3.53 -3.75 0.83 5.39 5.50 15.82 12.70
Cyclical TR 01-15-15 -4.34 -4.78 -0.96 7.62 6.16 19.54 14.00
— Basic Materials TR 01-15-15 -3.45 -3.50 1.56 2.45 1.25 9.51 8.08
— Consumer Cyclical TR 01-15-15 -4.34 -4.68 -0.83 9.78 5.68 21.02 19.92
— Financial Services TR 01-15-15 -5.99 -7.70 -3.99 5.02 2.23 21.40 11.23
— Real Estate TR 01-15-15 1.03 5.30 8.22 15.89 31.67 17.31 17.50
Defensive TR 01-15-15 -1.60 0.97 3.09 13.55 22.43 22.82 17.02
— Consumer Defensive TR 01-15-15 -1.47 0.39 3.11 11.02 18.75 18.61 16.15
— Healthcare TR 01-15-15 -2.26 1.08 2.26 15.35 23.18 28.37 19.74
— Utilities TR 01-15-15 0.96 2.04 6.95 13.91 30.73 16.19 14.12
Sensitive TR 01-15-15 -3.57 -4.43 -0.01 4.09 3.91 14.43 12.48
— Communication Services TR 01-15-15 -0.94 -1.79 2.35 2.01 3.83 19.35 17.02
— Energy TR 01-15-15 -5.35 -7.87 0.37 -9.20 -13.71 3.53 6.78
— Industrials TR 01-15-15 -3.14 -4.19 -0.15 8.91 4.54 17.84 15.26
— Technology TR 01-15-15 -3.68 -3.85 -0.79 7.77 12.81 17.28 13.51
Morningstar Wide Moat Focus TR 01-15-15 -5.39 -7.35 -5.24 -2.76 1.48 16.92 13.49

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year

Other Domestic Stock Indexes
DJ Industrial Average TR TR 01-15-15 -3.25 -2.73 0.92 7.98 7.58 14.56 13.18
NASDAQ Composite PR PR 01-15-15 -3.49 -3.49 -0.75 8.43 8.44 19.03 14.84
NYSE Composite PR --- 01-15-15 -2.65 -3.00 0.99 4.01 1.24 11.27 7.40
Russell 2000 TR TR 01-15-15 -3.45 -4.13 1.39 8.02 -0.12 16.33 14.11
S&P 500 TR TR 01-15-15 -3.35 -3.15 0.30 7.53 10.04 18.13 14.28
S&P MidCap 400 TR 01-15-15 -2.90 -2.83 1.44 9.06 5.74 17.62 15.35

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year

Morningstar Bond Indexes
Broad Market
Core Bond TR 01-15-15 0.99 1.68 1.76 1.75 7.13 3.24 4.62
Intermediate Core Bond TR 01-15-15 0.80 1.30 1.35 1.31 6.27 3.16 4.39
Long-Term Core Bond TR 01-15-15 2.03 3.65 3.99 4.48 17.45 6.18 8.95
Short-Term Core Bond TR 01-15-15 0.46 0.66 0.62 0.19 1.63 1.28 1.80
Corp Bond TR 01-15-15 1.18 2.05 2.43 1.61 8.37 5.72 6.40
Intermediate Corp Bond TR 01-15-15 1.09 1.76 1.88 0.77 5.62 5.60 5.96
Long-Term Corp Bond TR 01-15-15 1.64 2.99 3.75 3.00 14.43 7.64 8.91
Short-Term Corp Bond TR 01-15-15 0.46 0.69 0.71 0.02 1.96 3.04 3.14
Intermediate US Govt Bond TR 01-15-15 1.38 2.20 1.98 1.32 5.65 1.82 4.14
Long-Term US Govt Bond TR 01-15-15 2.69 4.89 4.73 6.35 21.57 5.02 8.98
Short-Term US Govt Bond TR 01-15-15 0.47 0.66 0.58 0.23 1.51 0.75 1.39
US Govt Bond TR 01-15-15 1.22 2.04 1.90 1.91 6.67 2.01 4.02
Mortgage Bond TR 01-15-15 0.52 0.87 1.01 1.38 6.58 3.08 4.15
TIPS TR 01-15-15 1.27 1.78 1.58 -0.14 4.56 0.90 4.37

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year

Other Bond Indexes
Barclays US Agg Bond TR TR 01-15-15 0.94 1.62 1.68 1.52 7.05 3.07 4.53
Barclays US Government TR TR 01-15-15 1.21 2.01 1.87 1.86 6.55 2.02 3.91
Barclays US MBS TR TR 01-15-15 0.39 0.71 0.88 1.14 6.21 2.49 3.65
BofAML US HY Master II TR TR 01-15-15 -0.09 0.02 2.16 0.03 1.60 7.99 8.40
USTREAS T-Bill Auction Ave 3 --- 12-31-14 --- 0.03 0.00 0.01 0.03 0.06 0.08
USTREAS T-Bill Cnst Mat Rate 10 TR 12-31-14 --- 10.56 0.27 3.72 10.56 1.29 5.41

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year

Municipal Indexes
Barclays Municipal TR USD TR 01-15-15 0.77 1.39 1.41 1.21 9.26 4.22 5.35

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year

Foreign Indexes
DJ Malaysia PR USD TR 01-15-15 1.27 -2.03 1.90 -10.18 -11.77 -0.07 5.02
Euronext BEL 20 PR EUR PR 01-16-15 3.70 2.53 5.98 16.64 13.61 16.52 5.84
Euronext Paris CAC 40 NR EUR TR 01-16-15 4.80 2.50 7.01 12.02 3.71 13.66 4.95
Euronext Paris CAC 40 PR EUR PR 01-16-15 4.80 2.50 7.00 11.76 1.40 10.74 2.06
FSE DAX PR EUR PR 01-16-15 5.38 3.69 6.31 18.47 1.78 14.27 8.03
FSE DAX TR EUR TR 01-16-15 5.38 3.69 6.31 18.47 4.63 17.80 11.59
FTSE 100 PR GBP PR 01-16-15 0.76 -0.24 3.45 5.72 -3.89 5.01 3.73
FTSE 100 TR GBP TR 01-16-15 0.81 -0.18 3.55 6.38 -0.47 8.93 7.48
FTSE 250 PR GBP PR 01-16-15 -0.55 -1.01 3.21 9.96 -1.77 14.97 10.79
Hang Seng Hong Kong Composite PR HKD TR 01-16-15 0.11 1.53 5.37 5.46 3.53 8.17 1.63
Hang Seng HSI PR HKD PR 01-16-15 0.92 2.27 6.48 5.41 5.02 8.29 2.20
MSCI AC Far East Ex Japan PR USD PR 01-16-15 0.16 0.58 3.51 3.14 3.61 6.03 3.04
MSCI ACWI PR USD PR 01-15-15 -1.67 -2.44 0.83 3.49 -0.07 10.08 5.84
MSCI EAFE NR USD TR 01-16-15 0.73 -1.84 -0.56 1.89 -6.70 10.22 4.34
MSCI EAFE PR LCL PR 01-16-15 -0.12 -1.29 2.18 8.84 0.95 12.05 4.03
MSCI EASEA PR LCL PR 01-16-15 0.17 -0.80 2.60 7.43 -0.11 9.28 3.59
MSCI EM Latin America PR USD PR 01-15-15 -2.09 -3.50 3.89 -17.08 -15.41 -11.42 -8.59
MSCI EM PR LCL PR 01-15-15 -0.33 0.27 3.54 2.31 4.76 4.75 2.14
MSCI EM PR USD PR 01-15-15 0.12 0.38 3.89 -2.30 -1.83 0.25 -1.03
MSCI Europe NR USD TR 01-16-15 1.40 -2.22 -1.47 2.26 -8.64 10.99 4.59
MSCI Europe PR LCL PR 01-16-15 0.47 -0.76 2.56 8.61 -0.56 9.41 3.92
MSCI Hong Kong PR USD PR 01-16-15 3.01 2.30 4.22 2.55 5.10 11.29 6.53
MSCI Japan NR USD TR 01-16-15 -0.16 -1.21 0.43 3.29 -5.13 9.40 3.36
MSCI Japan PR LCL PR 01-16-15 -1.20 -3.08 0.70 14.38 5.21 23.75 6.73
MSCI North America NR USD TR 01-15-15 -3.35 -3.36 0.33 6.63 8.23 16.15 12.71
MSCI Pacific Ex Japan NR USD TR 01-16-15 -1.17 -0.99 2.64 -2.47 0.54 7.95 5.20
MSCI Pacific Ex Japan PR LCL PR 01-16-15 -1.30 -1.09 2.90 1.35 1.46 8.86 2.35
MSCI Pacific NR USD TR 01-16-15 -0.53 -1.13 1.24 1.10 -3.07 8.87 4.05
MSCI Pacific PR LCL PR 01-16-15 -1.23 -2.34 1.52 9.26 3.60 17.51 4.72
MSCI World ex USA NR USD TR 01-15-15 0.22 -2.18 0.85 0.94 -6.30 9.52 4.19
MSCI World Ex USA PR LCL PR 01-15-15 -0.80 -1.33 3.05 7.51 1.32 11.39 4.01
Nikkei 225 Average PR JPY PR 01-16-15 -1.94 -3.36 0.65 14.42 7.09 26.26 8.96
S&P BSE SENSEX India INR PR 01-16-15 2.42 2.26 5.01 8.16 32.24 20.21 9.88
S&P/ASX All Ordinaries PR PR 01-16-15 -2.97 -2.04 2.88 0.66 -0.76 7.84 1.38
S&P/TSX Composite PR PR 01-15-15 -2.88 -4.04 2.46 1.24 1.95 4.71 3.74
Shanghai SE Composite PR CNY PR 01-16-15 2.77 4.38 11.75 43.28 66.85 15.24 0.93
SIX SMI CHF PR 01-16-15 -13.25 -12.06 -10.18 -1.96 -6.52 9.41 3.74
SIX SMI TR CHF PR 01-16-15 -13.25 -12.06 -10.18 -1.94 -3.60 12.98 7.08

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
Morningstar Global Equity Indexes

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
Morningstar Target Risk Indexes
Aggressive Target Risk TR 01-15-15 -1.92 -2.52 0.62 3.83 2.62 13.18 10.33
Conservative Target Risk TR 01-15-15 0.16 0.22 0.67 0.60 3.24 4.36 4.82
Moderate Target Risk TR 01-15-15 -0.99 -1.24 0.65 2.42 3.40 9.31 8.07
Moderately Aggr Target Risk TR 01-15-15 -1.52 -1.99 0.61 3.16 2.84 11.51 9.34
Moderately Cons Target Risk TR 01-15-15 -0.43 -0.51 0.71 1.64 3.47 6.97 6.55

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
Morningstar Target-Date Indexes
Lifetime Aggressive 2000 TR 01-15-15 -0.78 -0.84 0.51 1.97 3.66 7.89 7.65
Lifetime Aggressive 2005 TR 01-15-15 -0.84 -0.93 0.57 2.23 3.98 8.62 8.15
Lifetime Aggressive 2010 TR 01-15-15 -0.97 -1.08 0.62 2.54 4.19 9.49 8.70
Lifetime Aggressive 2015 TR 01-15-15 -1.15 -1.32 0.63 2.89 4.27 10.51 9.29
Lifetime Aggressive 2020 TR 01-15-15 -1.40 -1.67 0.62 3.30 4.15 11.66 9.89
Lifetime Aggressive 2025 TR 01-15-15 -1.69 -2.08 0.57 3.69 3.80 12.68 10.36
Lifetime Aggressive 2030 TR 01-15-15 -1.92 -2.41 0.53 3.95 3.34 13.30 10.60
Lifetime Aggressive 2035 TR 01-15-15 -2.01 -2.58 0.51 4.02 2.94 13.46 10.60
Lifetime Aggressive 2040 TR 01-15-15 -2.00 -2.61 0.53 3.94 2.66 13.35 10.47
Lifetime Aggressive 2045 TR 01-15-15 -1.95 -2.58 0.55 3.81 2.45 13.18 10.31
Lifetime Aggressive 2050 TR 01-15-15 -1.90 -2.54 0.58 3.67 2.25 13.00 10.14
Lifetime Aggressive 2055 TR 01-15-15 -1.84 -2.51 0.61 3.53 2.05 12.82 9.96
Lifetime Aggressive Income TR 01-15-15 -0.77 -0.84 0.49 1.93 3.53 7.63 7.43
Lifetime Conservative 2000 TR 01-15-15 0.10 0.21 0.59 0.51 3.19 4.20 5.33
Lifetime Conservative 2005 TR 01-15-15 0.11 0.25 0.70 0.72 3.78 4.77 5.80
Lifetime Conservative 2010 TR 01-15-15 0.07 0.22 0.80 1.00 4.30 5.50 6.34
Lifetime Conservative 2015 TR 01-15-15 -0.01 0.12 0.87 1.31 4.72 6.31 6.91
Lifetime Conservative 2020 TR 01-15-15 -0.13 -0.02 0.92 1.63 5.01 7.20 7.49
Lifetime Conservative 2025 TR 01-15-15 -0.31 -0.26 0.94 1.97 5.14 8.26 8.11
Lifetime Conservative 2030 TR 01-15-15 -0.59 -0.64 0.92 2.39 5.00 9.53 8.77
Lifetime Conservative 2035 TR 01-15-15 -0.93 -1.12 0.85 2.81 4.57 10.74 9.36
Lifetime Conservative 2040 TR 01-15-15 -1.23 -1.56 0.78 3.13 4.01 11.57 9.73
Lifetime Conservative 2045 TR 01-15-15 -1.39 -1.80 0.75 3.26 3.54 11.85 9.81
Lifetime Conservative 2050 TR 01-15-15 -1.42 -1.88 0.75 3.24 3.25 11.88 9.76
Lifetime Conservative 2055 TR 01-15-15 -1.40 -1.89 0.77 3.15 3.03 11.79 9.63
Lifetime Conservative Income TR 01-15-15 0.09 0.19 0.57 0.47 3.02 4.02 5.11
Lifetime Moderate 2000 TR 01-15-15 -0.36 -0.35 0.55 1.27 3.44 6.12 6.55
Lifetime Moderate 2005 TR 01-15-15 -0.38 -0.36 0.64 1.49 3.88 6.75 7.02
Lifetime Moderate 2010 TR 01-15-15 -0.46 -0.45 0.71 1.77 4.25 7.52 7.55
Lifetime Moderate 2015 TR 01-15-15 -0.58 -0.60 0.75 2.09 4.50 8.41 8.12
Lifetime Moderate 2020 TR 01-15-15 -0.77 -0.86 0.77 2.45 4.59 9.50 8.75
Lifetime Moderate 2025 TR 01-15-15 -1.06 -1.25 0.74 2.89 4.43 10.77 9.41
Lifetime Moderate 2030 TR 01-15-15 -1.39 -1.71 0.68 3.32 4.01 11.91 9.94
Lifetime Moderate 2035 TR 01-15-15 -1.66 -2.10 0.62 3.61 3.48 12.61 10.23
Lifetime Moderate 2040 TR 01-15-15 -1.78 -2.30 0.60 3.70 3.05 12.84 10.27
Lifetime Moderate 2045 TR 01-15-15 -1.79 -2.35 0.61 3.64 2.77 12.77 10.16
Lifetime Moderate 2050 TR 01-15-15 -1.74 -2.33 0.63 3.53 2.57 12.64 10.02
Lifetime Moderate 2055 TR 01-15-15 -1.69 -2.30 0.66 3.40 2.37 12.48 9.85
Lifetime Moderate Income TR 01-15-15 -0.36 -0.35 0.53 1.23 3.29 5.91 6.33

Name Type As of Date 1-Week YTD 4-Week 13-Week 1-Year 3-Year 5-Year
Morningstar Commodity Indexes
Long/Flat Commodity TR 01-15-15 -0.40 -0.39 -0.48 -0.98 -5.66 -4.59 0.37
Long/Short Commodity TR 01-15-15 -0.06 -0.65 0.36 -1.34 -5.34 -4.86 -0.14
Long-Only Commodity TR 01-15-15 -2.23 -4.97 -10.59 -19.87 -27.28 -10.43 -3.23
Short/Flat Commodity TR 01-15-15 0.33 -0.25 0.82 -0.59 0.20 -0.46 -0.62
Short-Only Commodity TR 01-15-15 1.84 4.38 10.27 23.40 33.03 7.83 0.56
top arrow

1/18: Slowing???? (Philly FED)

Indicators Suggest Slower Pace of Growth

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased 18 points, from a revised reading of 24.3 in December to 6.3 this month (see Chart 1).* Demand for manufactured goods, as measured by the current new orders index, decreased 5 points, from a revised reading of 13.6 last month to 8.5 this month. Shipments also fell, with its index falling 22 points to -6.9, its first negative reading since February 2014. Firms reported shorter delivery times and a decrease in unfilled orders this month, on balance.

Firms’ responses suggest weaker labor market conditions in January. The percentage of firms reporting a decrease in employees (15 percent) exceeded the percentage reporting an increase (13 percent) for the first time in 19 months. The current employment index fell 10 points, from 8.4 to -2.0. Firms also reported reductions in the workweek: The percentage of firms reporting a shorter workweek (23 percent) was greater than the percentage reporting a longer workweek (16 percent).

1/18: check the hedging    Lots and LOTS of charts and data here

1/18: This is a chart by a mutual fund company showing what they did in 2014 and backtesting in 2000 and 2008. They refer to it as tactical investing by going to cash when necessary 'r'

Looks like D CAD and DCAup except there was no indicator to move to cash or ??? in 2014. The S&P and overall market did 10% and 9% respectively5

1/18" 2015 Taxes: What's on Deck for Your Investments 0r

A checklist of 2015 contribution limits
1/18: Just plain hot

National Oceanic and Atmospheric Administration and NASA calculated that in 2014 the world had its hottest year in 135 years of record-keeping.

NOAA said 2014 averaged 58.24 degrees Fahrenheit (14.58 degrees Celsius), 1.24 degrees (0.69 degrees Celsius) above the 20th-century average.

But NASA, which calculates temperatures slightly differently, put 2014's average temperature at 58.42 degrees Fahrenheit (14.68 degrees Celsius) which is 1.22 degrees (0.68 degrees Celsius) above the average of the years 1951-1980.

Earth broke NOAA records set in 2010 and 2005. The last time the Earth set an annual NOAA record for cold was in 1911.

NOAA also said last month was the hottest December on record. Six months in 2014 set marks for heat. The last time Earth set a monthly cold record was in December 1916.

/18   Europe has slipped into deflation

Well, here's another  a fine mess you got me into Ollie.

/18:  I usually watch this for any insight  but there has been about 0 forecast for years. Which pretty much means (absent some other valid indicators) that one just plods along in the market. You can make slight adjustments as required but DCAD does not have to be implemented.


Almost All Major Economics Will Face Population Problems Like Japan In 10-20 Years (Advisor Perspectives)

Investors are worried about Japan's "banzai charge monetary policy" and demographic issues (people are dying faster than they are being born, and Japan's population is growing older). Nevertheless, "this is not a thematic call to short Japan, flee Japanese stocks, or to herald the demise of the Japanese," writes Chris Richey.

"Japan is not alone in facing the daunting challenge of an aging and shrinking population; it is merely at the front of the line of ships of state heading into these waters. Almost all major economies, including China, face their own population crests sometime in the next 10-20 years,"

1/18: Little old Switzerland screws up the world

Switzerland is not known normally for jolting the global financial system — but that is what it has done, and without warning. It has abandoned a self-imposed peg of the Swiss franc against the euro, introduced in 2011, and lowered the already negative interest rate on deposits from minus 0.25 per cent to minus 0.75 per cent.

1/18:  Send me one

High-income women are younger and better educated than male affluent investors, according to a new report from Spectrem Group, a research and analysis organization for financial advisors.

Defined as those with $200,000 or more in household income, the average high-income woman is 50 compared to age 63 for high income males

The average high-income woman is also better educated than her male counterpart, Spectrem says. Ninety-three percent of high-income women have a college degree compared to 75 percent of males, and 35 percent have an advanced degree compared to 13 percent of males.

Fifty-four percent of high income women say they would be willing to take more risk in a portion of their portfolios to gain more in returns, compared to 32 percent of male affluent investors who say the same

1/18: Chart of the oil producing countries of the world

Very interesting

1/18: Millennials blame student debt for poor retirement saving
Sixty-five percent of student debtors polled by Merrill Edge said they want to defer saving more for retirement so they can pay off their student loans first. The survey also found that 51% of millennials with investable assets of $50,000 to $250,000 failed to save for retirement last year, with only 35% of them planning to set aside money for their nest egg this year

1/18: Rebalancing for Retirement by Kitces

Yet another long article with lots of charts and graphs showing the best or better withdrawal rate  during retirement. It has stuff going back to 1967. If an investor goes through one or two 50% losses each decade with no concern about finances or emotional security and believe that reversion to the mean is the way to fly, knock yourself  out. I do not feel that huge losses as are acceptable nor that a smooth gaussian curve will prevail for this century. One will need to observe economics and use DCAD and DCAup.
But his article is for those that disagree with me.

1/18: Oilfield Services Company Schlumberger Is Cutting 9,000 Jobs

Here it comes. As the price drops, more and more fracking producers won't be able to make any money. So they close wells while Saudi Arabia keeps oil flowing because it is cheap to produce over there. So they get a greater and greater share of the market and can control the prices. 


Date: 2014-12-20
By: Pasche, Markus
This brief note rises doubts on the argument that nudging will help people to behave more rational in terms of their own preferences. This justification of soft paternalism overlooks some methodological problems of expected utility theory which are one of the roots of behavioral economics.

1/16:  College Goal Sunday  a program in 34 states that provides hundreds of free college planning events for parents and high school students. At more than 1,000 events running through March, states will deploy college aid experts, school counselors and financial planners to walk families through the FAFSA process.

1/16: Crime across the U.S


1/16: Bad is better

The 10 stocks rated the worst investments on Wall Streets by analysts at the start of 2014 produced an overall return of 19% during the year, including reinvested dividends, according to my analysis using FactSet data.

That beat the S&P 500 SPX, -0.92%  by a hefty 5 percentage points — or, to put it another way, it earned you nearly a third as much as again a simple index fund.

EFM= When you read this, just remember you can play statistics from any point in time and suggest that is the orientation the consumer should take. Statistics can lie.

And then this- "Most investors think of the stock market like a casino, where the spins of the wheel are completely outside their control, whereas it’s actually like poker, where we are all betting against each other. "

EFM- If you believe that, you may not do that well. The market is a tool that does not have to be used all the time. You can get about 85% to 90% of all up markets while limiting losses to 10% to 15% about 90% to 95% of the time.

1/16" Oil will be a savior.
I don't think so

Cheaper oil prices and a resurgent US economy are unlikely to be enough to pull the global economy out of a growth pattern that is “too low, too brittle and too lopsided”, Christine Lagarde,
Look her up and remember her name.

1/16" It is my birthday. Please send lots of money- or fishing gear. Probably the best present was finally getting this new computer to do what I say. (yeah right)

1/16: Stephen Hawking has warned that robots my become so bright that they will usurp humans as the major "power" by around 2050. He is not the only one but just by happenstance I watched Automata on Netflix. Stars Antonio Banderas in a different role for him. Nonetheless, the film seems to hit a lot of hot buttons on how robots may beat humanity

In that same view is Roubini-

  1. Dogs rule

73 percent of claimants are receiving benefits outside of a nursing home:

  • 49 percent: Home health care.

  • 24 percent: Assisted living.

  • 27 percent: Nursing home.

2. 21 percent of claims are expected to last five years or longer.

3. What are the odds of needing long term care?

  • 58 percent of men ages 65 and over will need care, for an average of 2.2 years.

  • 79 percent of women ages 65 and over will need care, for an average of 3.7 years.

4. Assisted living facility, average length of stay: 21 months.

5. The average premium for a stand-alone LTCI policy is $2,400. That's 3 percent higher than it was a year ago.

6. 92.3 percent of buyers are buying policies with elimination period of 90 to 100 days.

7. Medicaid: $117,240 is the maximum amount of assets that the federal government will let a healthy spouse keep before the other spouse can be eligible for Medicaid long-term care benefits. (Many states set the cap at a lower level.)

8. Lapse rate for LTCI policies:

  • 1 percent is the estimated lapse rate for stand-alone LTCI policies.

  • 0.5 percent is the estimated lapse rate now being used by Genworth in its projections.

9. 4.5 years is the average length of time someone lives after being diagnosed with dementia.

10. Claims length:

  • 42 percent of claims last less than one year.

  • Claims lasting less than year are usually for home health care and caused by falls.

  • The average length of claim that lasts more than a year is four years.

11. Claims: How much?

  • $7.5 billion of LTCI claims were paid in 2013.

  • Over $5.2 million was paid each business day.

  • 273,000 people received benefits.

12. Claims: Who's getting the benefits?

  • 71 percent of the benefits dollars are paid to female claimants

  • 51 percent of the benefits are paid to claimants with mental disorders, including dementia.

13. Claim records (from Genworth):

  • 27 is the age of the youngest person to go on claim.

  • 103 is the age of the oldest person to go on claim.

  • About 20 years is the length of the longest claim.

  • $1.3 million is the amount of benefits paid in connection with the biggest single claim.

  • 14. Buyers’ use of the Internet:

  • 69 percent of buyers will go to the internet before and after the sale,

  • They are going to an average of six sites.

  • Internet leads convert at a higher rate than direct mail leads because these prospects are being proactive about researching and are in a buying mode.

  • Direct-mail leads are having a 1 percent response.

15. Industry sales:

  • In 2013, 470 individuals bought policies per day.

  • In 2014, this was down to 350 purchases per day.

16. Age of buyers:

  • 24.7 percent are between the ages of 45 and 54.

  • 54 percent are between the ages of 55 and 64.

  • 57 is the average age of applicants.

17. In 2011 and 2012, 67 percent of nursing home residents were female.

18. The number of people using long-term care services:

  • 15 million: The number of people in the United States using nursing homes, alternative residential care or home-care services for LTC needs in 2000.

  • 27 million: The number of people in the United States who are projected to be using nursing homes, alternative residential care or home-care services for LTC needs by 2050.

19. Demographics:

  • 40.2 million: The number of Americans ages 65 or older in 2010.

  • 88.5 million: The projected number of Americans ages 65 or older in 2050.

20. Burden on unpaid caregivers:

  • 80 percent of long-term care is provided by unpaid caregivers at home.

  • 67 percent is the approximate percentage of unpaid caregivers who are female.

  • 67 percent of the people who plan to have a loved one provide care, haven’t asked the loved one.1/10: Quotes on large liability insurance and E&O for many industries

By Alicia H. Munnell, Jean-Pierre Aubry, and Mark Cafarelli

The brief’s key findings are:
  • A new analytical tool tells a clear story of why unfunded liabilities rose during 2001-2013. 

  • The primary factor was investment returns that fell short of expectations due to the two financial crises.

  • A secondary factor was that many plans failed to make adequate contributions, a more serious problem among the worst-funded plans.

  • This type of analysis should be added to every plan’s annual actuarial valuation.
 EFM- Boston College has some good stuff. As regards the above, the problem was/is that effectively all money managers were/are solely bent on returns not risk.Risk is the primary element for investing. You do NOT put money into a market unless you have already set up a plan for the failure of the market. 

The identification of risk always comes first.

1/10: Bill Gross

Each downward spike in the economy and its related financial markets was met with additional credit expansion generated by lower interest rates, financial innovation and regulatory easing, or more recently, direct central bank purchasing of assets labeled “Quantitative Easing.” The power of additional and cheaper credit to add to economic growth and financial asset bull markets has been underappreciated by investors since 1981. Even with the recognition of the Minsky Moment in 2008 and his commonsensical reflection that “stability ultimately leads to instability,” investors have continued to assume that monetary (and at times fiscal) policy could contain the long-term business cycle and produce continuing prosperity for investors in a multitude of asset classes both domestically and externally in emerging markets.

There comes a time, however, when zero-based, and in some cases negative yields, fail to generate sufficient economic growth. While such yields almost automatically result in higher bond prices and escalating P/E ratios, their effect on real growth diminishes or in some cases, reverses. Corporate leaders, sensing structural changes in consumer demand, become willing borrowers, but primarily to reduce their own outstanding shares as opposed to investing in the real economy. Demographics, technology, and globalization reversals in turn have promoted a sense of “secular stagnation” as economist and former Treasury Secretary Larry Summers calls it and the “New Normal” as I labeled it as early as 2009. The Alice in Wonderland fact of the matter is that at the zero bound for interest rates, expected Returns on Investment (ROI) and Returns on Equity (ROE) are capped at increasingly low levels. The private sector becomes less willing to take a chance with their owners’ money in a real economy that has a lack of aggregate demand as its dominant theme. Making money by borrowing at no cost for investment in the real economy sounds like a no-brainer. But, it comes with increasing risk in an environment of secular stagnation, demand uncertainty, and with the ROI closer to zero itself than an entrepreneur is willing to bear.

1/7:When to Take Social Security: A Breakdown by Marital Status

Good charts

Investors Are Worried About The Near-Term Market (Charles Schwab) 

Investors are worried. The Yale one-year confidence chart shows that individual investors have a very low confidence level about the near-term future of the stock market
EFM-But at the same time, overall consumer confidence is very high

1/7: Well, that hurt

Close to 90% of disabilities are not covered by workers' compensation because even though they remove a person from the workforce, they aren't specifically work-related.

1/7:: Economic Indicators and Stocks, Bonds, and the Dollar

Here is a list of a few but it is very difficult to figure out which one, if any, provides an understanding of when something will go wrong. The inverted yield curve was good but nothing exists now due to the QE

1/7:Bill Gross: ‘The Good Times Are Over’
say what you want about him, the above article is a good overview of future returns.

Date: 2014-11
By: Farzad Pourbabaee
Minsuk Kwak
Traian A. Pirvu
We consider the problem of minimizing capital at risk in the Black-Scholes setting. The portfolio problem is studied given the possibility that a correlation constraint between the portfolio and a financial index is imposed. The optimal portfolio is obtained in closed form. The effects of the correlation constraint are explored; it turns out that this portfolio constraint leads to a more diversified portfolio.

Date: 2014-11-14
By: Mamatzakis, E
bermpei, t
This paper examines factors that affect the performance of investment banks in the G7 and Switzerland. In particular, we focus on the role of risk, liquidity and investment banking fees. Panel analysis shows that those variables significantly impact upon performance as derived from stochastic frontier analysis (SFA). Given our sample also comprises the financial crisis, we further test for regimes switches using dynamic panel threshold analysis. Results show different underlying regimes, in particular over the financial crisis. In addition, a strong positive effect of Z-Score on performance for banks in the regime of low default risk is reported, whilst fee-income ratio has also a positive impact for banks with low level of fees. On the ot her hand, liquidity exerts a negative impact. Notably, there is a clear trend of mobility of banks across the two identified threshold regimes with regards to risk a year before the financial crisis. Our results provide evidence that recent regulation reforms regarding capital adequacy and liquidity requirements are on the right track and could enhance performance

Date: 2014
By: Hoang, Daniel
Ruckes, Martin
This paper studies the effects of hedge disclosure requirements on corporate risk management and product market competition. The analysis is based on a simple model of market entry and shows that incumbent firms engage in risk management when these activities remain unobserved by outsiders. The resulting equilibrium is desirable from a social standpoint. Financial markets are well informed and entry is efficient. However, potential attempts for more transparency by additional disclosure requirements introduce a commitment device that provides firms with incentives to distort risk management activities thereby influencing entrant beliefs. In equililibrium, firms engage in significant risk-taking. This behavior limits entry and adversely affec ts the nature of competition in industries. Our findings thus suggest that more disclosure on risk management may change risk management in socially undesirable ways.


Vanguard's Last Year Shows That Investors Are Falling For Passive Management (The Wall Street Journal)

"Investors gave stock pickers a resounding vote of no confidence in 2014, pouring $216 billion — a record inflow for any mutual-fund firm — into Vanguard Group, the biggest provider of index-tracking products," reports Kirsten Grind.

This reflects that larger trend of investors moving away from active managers in favor of passive managers.

Through December 29, about 74% of active stock funds in the US underperformed their category benchmarks, according to Morningstar. In the same time period, the S&P 500 gained 15.4%.

EFM: but what good will they really do if you suffer 50% losses twice a decade??? You already know the answer- nothing. Nothing at all.


Best Retirement Calculators

Date: 2014
By: Felix Kubler (University of Zurich and SFI)
John Geanakoplos (Yale University)
To illustrate the first mechanism we present a very simple example without collateral and default where restricting borrowing leads to a Pareto-improvement over the competitive equilib- rium allocation because financial markets are incomplete. Limiting borrowing naturally leads to a change in spot-prices that makes all agents better off. We then introduce collateral, default, endogenous margin requirements and production and we illustrate the second mechanism by showing that the endogenous margin requirements are suboptimal because they result in too much default. Finally we show how the two effects interact - forcing agents to leverage less leads to a Pareto-improvement because it reduces default and because it reduces borrowing.

Date: 2014-11-26
By: Yogo, Motohiro (Federal Reserve Bank of Minneapolis)
Koijen, Ralph S.J. (London Business School)
Liabilities ceded by life insurers to shadow reinsurers (i.e., affiliated and less regulated off-balance-sheet entities) grew from $11 billion in 2002 to $364 billion in 2012. Life insurers using shadow insurance, which capture half of the market share, ceded 25 cents of every dollar insured to shadow reinsurers in 2012, up from 2 cents in 2002. Our adjustment for shadow insurance reduces risk-based capital by 53 percentage points (or 3 rating notches) and raises default probabilities by a factor of 3.5. We develop a structural model of the life insurance industry and estimate the impact of current policy proposals to contain or eliminate shadow insurance. In the counterfactual without shadow insurance, the ave rage company currently using shadow insurance would raise its price by 12 percent, and annual life insurance underwritten would fall by 11 percent for the industry.

1/6: Just How Big Is the 401k Biz?

Reported by Neil Anderson, Managing Editor

401(k)s may be the single most important channel for the mutual fund industry, and 2014 was another big year for 401(k)s. Our sister publication, 401kWire, is taking stock of where the defined contribution stands, by the numbers. Here’s some statistics about the overall size and shape of the business, using the latest available data (which sadly can still be as much as two years old).

. . .

Total Assets

$24.2 trillion: that’s the total retirement assets in the U.S. as of September 30, 2014 (per the ICI). That represents 36 percent of all household assets.

27.4 percent of those assets, $6.630 trillion, are in defined contribution plans (again, per the ICI). That compares with $4.26 trillion on December 31, 2012 (per the DoL).

$4.475 trillion (67.5 percent of DC assets) was in 401(k)s as of September 30, 2014 (per the ICI). That compares with $3.530 trillion (82.9 percent) on December 31, 2012 (per the DoL).

By way of comparison, IRAs held $7.343 trillion (i.e. 30.3 percent of all retirement assets) as of September 30, 2014 (per the ICI).

Breaking that down into households, the median household retirement account value was $59,000 as of December 31, 2013 (per the Fed). The mean was $201,300. By comparison, the mean retirement savings for households age 35-64 with IRAs or DC savings was $194,800.

. . .

Investment Product Types

Of the $4.475 trillion in 401(k)s as of September 30, 2014, $2.816 trillion (62.9 percent) was in mutual funds (per the ICI). Of the $7.343 trillion in IRAs, $3.504 trillion (47.7 percent) was in mutual funds.

. . .


In 2012, $352.8 billion was contributed to defined contribution plans (per the DoL). $306.1 billion of that went into 401(k)s.

. . .


In 2012, plans paid out $3.615 billion for administrative expenses (per the DoL).

. . .


In 2013, 80.7 million people worked for employers sponsoring some kind of retirement plan (DB or DC), and 64.2 million of those workers participated (per EBRI). 58.7 million full-time, full-year wage and salary workers age 21-64 worked for employers sponsoring some kind of retirement plan, and 51.4 million of those workers participated.

On the flip side, in 2013 93.1 million workers didn’t participate in a workplace retirement plan (including 76.6 million who worked for an employer who didn’t offer such a plan) (per EBRI).

There were 74.811 million 401(k) participants in 2012, including 63.088 million active participants (per the DoL).


Participation Rate

Translating those participant counts into participation rates, in 2013 51.3 percent of workers had an employer offering a retirement plan, and 40.8 percent of workers participated in such a plan (per EBRI). Among full-time, full-year wage and salary workers age 21-64, 62.3 percent worked for employers sponsoring plans and 54.5 percent participated in those plans.

In 2013, 49.2 percent of all households held retirement accounts of some kind (per the Fed).

Number of Plans

There were 676,689 retirement plans in 2012 (per the DoL). 632,970 (93.5 percent) of those were DC plans, and 516,346 (81.6 percent) of those DC plans were 401(k)s.

1/5: More illiteracy

Our kids flunked financial literacy tests.  Over 62% of the 15-18 year olds tested by the National Financial Educators Council received either a “D” or “F” on the 2014 National Financial Literacy Test.

Does this behavior follow kids into adulthood? Again, you know the answer:

·        According to the 2014 Consumer Financial Literacy Survey, conducted by the National Foundation for Credit Counseling, 61% of U.S. adults do not have a budget and “one in three U.S. adults (34%) indicated their household carries credit card debt from month to month.”

·        U.S. households, as of March 2014, have an average credit card debt of over $15,000 and an average mortgage of over $152,000. Furthermore, the average student graduating from college has student loan debt of almost $33,000. (By the way, I really don’t like this statistic, because it lumps in all students.  Some are fortunate enough to graduate with no debt because they come from families where the parents diligently saved for college or where the parents were wealthy enough to write a check.  The truth is, a student paying all of their college tuition via incurring debt has staggeringly higher loans than the aforementioned $33,000.)

1/5: F grade

National Financial Capability Test Results

2012-2013 Youth Financial Literacy Test Results: 59.6% Average Score for Participants Ages 15 – 18

Take the National Financial Capability Test Now

 did not get all of them right.  I did not know (maybe it was obvious), 'hanging out with friends' doesn't mean much to me as regarding risk; it is next to impossible to lose 100% of value overnight. If the point was individual stock, possibly in the worst case scenario, but not in a mutual fund. Consider Russia.

I thought the test was OK but not great. However, it had nothing to do with real life investing or insurance where grades on an exam I would write probably would not exceed 20%. But it is obvious that if someone did not score, say 70% on their exam they would end up as cannon fodder for the industry.

Date: 2014-03-31
By: Da Silva, Sergio
Group thinking is the notion that natural selection favors what is good for the group or the species, not for the individual. Most mainstream evolutionary biology rejects this idea and natural selection is viewed as working on the individual’s genes to promote their own survival and reproduction. Here I show through a couple of examples how group thinking also pervades economics. I argue that the reason for the mistake relies on the fact that economics fails to ground itself in the underlying knowledge provided by biology. Then I suggest how economics can aspire more than being applied logic and turn into a scientific discipline by placing biology on its basis. Finally, I outline how economi cs should treat group behavior properly.

1/4:Two thirds of cancers could be explained as biological misfortune

Researchers have found that bad luck plays a major role in determining most types of cancer, rather than genetics or risky lifestyle choices such as smoking.

After examining 31 cancer types, researchers found 22 were from mutations in stem cells that could not be prevented.

Cancers that could be explained with biological bad luck included pancreatic, leukemia, bone, testicular, ovarian and brain cancer.

But the researchers say lifestyle choices such as avoiding smoking, eating healthily and staying out of the sun will help to prevent certain cancers, just not all of them.

Date: 2014-11-25
By: Tim Kautz
James J. Heckman
Ron Diris
Bas ter Weel
Lex Borghans
IQ tests and achievement tests do not capture non-cognitive skills — personality traits, goals, character and motivations that are valued in the labour market, in school and elsewhere. For many outcomes, their predictive power rivals or exceeds that of cognitive skills. Skills are stable across situations with different incentives. Skills are not immutable over the life cycle. While they have a genetic basis they are also shaped by environments, including families, schools and peers. Skill development is a dynamic process. The early years are important in shaping all skills and in laying the foundations for successful investment and intervention in the later years. During the early years, both cognitive and non-cognitive skills are h ighly malleable. During the adolescent years, non-cognitive skills are more malleable than cognitive skills. The differential plasticity of different skills by age has important implications for the design of effective policies.<P> This paper reviews a variety of interventions across different stages of the life cycle. We interpret these studies using an economic model of skill development. Many effective programs work because they foster non-cognitive skills. Some have annual rates of return that are comparable to those from investments in the stock market. Parental involvement is an important component of successful early interventions just as successful adolescent mentoring is an age-appropriate version of parental involvement. Building an early base of skills that promote later-life learning and engagement in school and society is often a better strategy than waiting for problems to occur.

Date: 2014-11
By: Salm, Martin (Tilburg University)
Vollaard, Ben (Tilburg University)
We provide evidence that perceptions of crime risk are severely biased for many years after a move to a new neighborhood. Based on four successive waves of a large crime survey, matched with administrative records on household relocations, we find that the longer an individual lives in a neighborhood, the higher their perception of the crime rate in the neighborhood. This finding holds irrespective of whether the move is from a relatively low-crime to a relatively high-crime area or vice versa. We find that avoidance behavior adjusts in line with the observed changes in beliefs.

Date: 2014-11-25
By: Anna Conte (Max Planck Institute of Economics, Jena, and WBS, University of Westminster, EQM Department)
Marco Scarsini (Dipartimento di Economia e Finanza, LUISS, Roma)
Oktay Sürücü (Center for Mathematical Economics, Bielefeld University)
We conduct an experiment meant to explore the factors driving customers' decisions in a queueing system. Under different time allowance conditions, the experimental subjects are asked to join one of two queues that differ in their length, server speed, and entry fee. We investigate some aspects of a queue on which subjects base their decision and what is the effect of time pressure on their decision criteria. We find that only a proportion of subjects behave rationally and use the relevant information efficiently. The size of this proportion increases when time limitation is relaxed. The rest of the subjects seem to adopt a rule of thumb that ignores the information on se rver speed and follows the shorter queue. Consequently, these subjects use less time than rational types when making their decisions. Furthermore, time pressure harms decision performance since the presence of time limitation stresses a great deal of subjects and causes them to use time inefficiently.

1/1: Unequal
the wealth gap between the country’s top 20 percent of earners and the rest of America had stretched to its widest point in at least three decades.

Last year, the median net worth of upper-income families reached $639,400, nearly seven times as much of those in the middle, and nearly 70 times the level of those at the bottom of the income ladder.

While those at the top have managed to recoup much of the wealth lost during the economic downturn, middle-income families have not made any gains.

“The Great Recession destroyed a significant amount of middle-income and lower-income families’ wealth, and the economic ‘recovery’ has yet to be felt for them,

12/31: Retirement Manifesto

12/28: 100% Exclusion for Gain on Small Business Stock
Qualified small business stock acquired before January 1, 2015 and held for more than five years is eligible for a 100% exclusion for gain on the sale or exchange of the stock.

12/28: Bill Sharpe on Retirement

At the CFA Institute’s annual conference in May, you said that retirement-income planning is the most complex problem you’ve analyzed in your career. Why is that so?

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 joint-probability distributions.

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.


How much willingness should a retiree have to adjust their spending in response to market returns? If they don't have much flexibility, what should they do?

The extreme case is the 4% rule or, more generally, the X% rule in which there are no such adjustments. Two things are self evident and shouldn’t require much discussion. What you spend should depend upon (1) how much you’ve got and (2) how long you think you might live, or the range of possible lengths of life. The 4% rule is fine on both fronts on day one. For example – you’ve got $1 million and you’re 65. Spend $40,000. This may be just fine.

After the initial year, however, what you spend with this rule has nothing to do with how much you have, or for that matter, how long you expect to live. Most importantly, it doesn’t depend how much you have at the moment. Any rational person would say, “What you spend ought to depend upon how much money you have.” Isn’t that self evident?

A rule that doesn’t do that after year one doesn’t make any sense. And this should be the end of the discussion. But we see such an approach advocated in many places. For example, endowments don’t determine what they spend in a year based on what they’ve got at the beginning of that year. More likely, they use an average of the values of their endowments over the previous, say, five years. Their spending depends upon what they used to have.

One possible argument for such approaches is that markets tend to “mean revert.” You might assume that if you just lost 40% of your savings, the markets are going to feel really sorry for you and work very hard to go up more than they would otherwise. If you believe there are predictable cycles and you can count on them, then that might justify some degree of neglect of the current value of your assets.

Personally, I don’t believe that it makes sense to assume that there is sufficient mean reversion in the markets to just say, “I’m going to spend that $40,000 increased for inflation, and it matters not whether I have $200,000 or $3 million left.”


Do you believe in some degree of mean reversion?

Not enough to assume there is mean reversion when adopting a retirement-income strategy.

There is a theoretical argument for mean reversion. I made it in a paper many years ago and found a bit of empirical support for the assumption that when the market falls and everybody becomes poorer, the average investor may become more risk-averse, so premiums may increase. I showed that if this were the case, those whose risk aversion falls less than that of the average investor should take on relatively more equity risk when markets fall.

But there are two problems with this argument. One is the empirical data are very weak. Second, the data assume that everybody has a relatively short horizon, say one year. If there are investors who have a longer horizon and others who have a shorter one, then you could get a very complex equilibrium. And I have no notion what that might look like.

So I believe that it’s not a good idea to assume that the expected return is a function of what happened recently. And, even if it is, if you are average in terms of how your risk aversion moves with your wealth, then you should continue to hold whatever you held.

EFM- Pay attention and see what I have said for years and years.

You CAN do DCAD and DCAup.

12/28: Close but no cigar.

The past two months have been challenging for stock market investors. The S&P 500 quickly tumbled 9.8% from its Sept. 19 all-time high of 2,019 to as low as 1,820 on Oct. 15.

Because of the way our brains work, most of us worried about the possibility that this correction was turning into an outright market crash.

EFM- DCAD says a correction is 10% to 15%. As stated, you would not be putting any money INTO stocks once any decline hit around 6% to 8% and only till it reaches 10% would you start to sell the most risky of investments. Yeah, 9.8% is awfully close but it still ain't 10%. Further, no decision is made in a vacuum. You weigh all the factors  before you pull the trigger.
 I know the GDP was 5% the last quarter but there is no way that is it sustainable. Roubini thinks the U.S. and U. k. will grow at 3% in 2015. I don't think so. But there is NOTHING regarding a consensus for boom or bust.. Nothing. It is an absolutely fabricated economy where few of the historical rules of thumbs may be viable. .
DCAD should still work.

12/28: Higher Education Deduction
Taxpayers can deduct qualified tuition and fees paid in 2014 for post-secondary education.  This is an "above-the-line" deduction, meaning that a taxpayer need not itemize in order to take the higher education deduction.  The maximum deduction is $4,000 for taxpayers with adjusted gross income (AGI) not exceeding $65,000 ($130,000 for joint returns), $2,000 for AGI from $65,000 to $80,000 ($130,000 - $160,000 for joint returns) and $0 for all other taxpayers.    NOTE:  Expenses paid by the end of 2014 for an academic term starting on or before March 31, 2015 qualify for the deduction in 2014

Charitable Distributions from IRAs
Individuals age 70-1/2 and older can continue through 2014 to make a maximum of $100,000 in tax-free distributions from IRAs to qualified charitable organizations.  Amounts in excess of $100,000 must be included in income, but may be taken as an itemized charitable deduction, subject to the normal AGI annual caps for charitable contributions. 

12/25 U.S. Cost of Living INTERACTIVE MAP:

12/25Risk, returns and the contradictory views of individual investors

12/25: OIL
"There has only been one other time in history when the price of oil has crashed by more than 40 dollars in less than 6 months. The last time this happened was during the second half of 2008, and the beginning of that oil price crash preceded the great financial collapse that happened later that year by several months.

EFM If price gets too low, fracking could die of high costs and Saudi Arabia could then get their strangle hold again

12/25: One in Five Investors Have Tapped Into 401(k) Prematurely
"The majority of nonretired investors in the U.S. say their employer offers a 401(k) plan, and of these, 89% say they participate in it. Yet 21% of those who participate in such a plan say they have either taken out a 401(k) loan or even taken an early withdrawal from the plan in the last five years.... [N]ot only have a fifth of investors tapped into 401(k) funds prematurely, but also barely more than half of those with a plan, 55%, say they understand the tax consequences of early 401(k) withdrawals 'extremely well.' Most of the rest, 40%, say they understand the consequences 'somewhat well,' and 5% say 'not very well' or 'not at all.' " (Gallup) 

12/25 2014 global investor insights

12/23: Retirement, 4% rule, monte carlo, inflation and much more
This is a long article about 14 pages which is not finished. but I thought I would put it up now so you could read it to your kids Christmas Eve.
Guaranteed to put people to sleep

12/22: Retirement income: What’s wrong with the 4% rule

Lots. You cannot plan a number like that. Far too many years.
Read above


World Development Report 2015: Mind, Society, and Behavior

By the world bank

12/14: Pay attention class:

Oil price fall sparks market turmoil
An accelerating slide in oil prices triggered broader turmoil across international financial markets on Friday, capping a turbulent week for energy that has compelled investors to sell shares and corporate bonds.

The speed of the descent in oil prices has cast a shadow across broader markets, with the US S&P 500 index falling 3.5 per cent this week, cutting its gain for the year to date to 8.3 per cent.

The S&P energy sector has fallen 18 per cent since the start of October with nearly a fifth of lower rated US energy bonds now trading as distressed securities.

View DCAD. The S&P has a ways to go before a major selloff. The problem is when you use higher risk- the energy sector for example- 18% drop is tough to handle. Now, if you had used only 5 to 10% of a portfolio, it might be OK. But bonds are also going to be a problem as well  since you are getting very little income  (IF ANY) from them and the asset value declines as well.
You are looking for a 10 to 15% correction. If you go out too soon (and you have a decent allocation) a small correction may just turn around. Once there is a 6% to 8% drop, you become concerned.

12/14: And more    FT
falling prices of oil and other commodities have been more bad than good for emerging economies as a whole. Commodities exporters have lost more than importers have gained,

  1. Date: 2014
    By: Barunik, Jozef
    Kočenda, Evžen
    Vácha, Lukáš
    Asymmetries in volatility spillovers are highly relevant to risk valuation and portfolio diversification strategies in financial markets. Yet, the large literature studying information transmission mechanisms ignores the fact that bad and good volatility may spill over at different magnitudes. This paper fills this gap with two contributions. One, we suggest how to quantify asymmetries in volatility spillovers due to bad and good volatility. Two, using high frequency data covering most liquid U.S. stocks in seven sectors, we provide ample evidence of the asymmetric connectedness of stocks. We universally reject the hypothesis of symmetric connectedness at the disaggregate level but in contrast, we document the symmetric transmission of info rmation in an aggregated portfolio. We show that bad and good volatility is transmitted at different magnitudes in different sectors, and the asymmetries sizably change over time. While negative spillovers are often of substantial magnitudes, they do not strictly dominate positive spillovers. We find that the overall intra-market connectedness of U.S. stocks increased substantially with the increased uncertainty of stock market participants during the financial crisis.
    Keywords: volatility,spillovers,semivariance,asymmetric effects,financial markets
    JEL: C18 C58 G15
  2. Date: 2014-07
    By: Georg, Co-Pierre
    When banks choose similar investment strategies, the financial system becomes vulnerable to common shocks. Banks decide about their investment strategy ex-ante based on a private belief about the state of the world and a social belief formed from observing the actions of peers. When the social belief is strong and the financial network is fragmented, banks follow their peers and their investment strategies synchronize. This effect is stronger for less informative private signals. For endogenously formed interbank networks, however, less informative signals lead to higher network density and less synchronization. It is shown that the former effect dominates the latter. JEL Classification: G21, C73, D53, D85
    Keywords: endogenous nancial n etworks, multi-agent simulations, social learning, Systemic risk
  3. Date: 2014-06
    By: Makoto Nirei (Hitotsubashi University)
    Tsutomu Watanabe (The University of Tokyo)
    Using a simultaneous-move herding model of rational traders who infer other traders' private information on the value of an asset by observing their aggre- gate actions, this study seeks to explain the emergence of fat-tailed distributions of transaction volumes and asset returns in financial markets. Without mak- ing any parametric assumptions on private information, we analytically show that traders' aggregate actions follow a power law distribution. We also provide simulation results to show that our model successfully reproduces the empirical distributions of asset returns. We argue that our model is similar to Keynes's beauty contest in the sense that traders, who are assumed to be homogeneous, have an incentive to mimic the average trader, leading to a situation similar to the indeterminacy of equilibrium. In this situation, a trader's buying action causes a stochastic chain-reaction, resulting in power laws for financial fluctuations.
12/14: True

Retirement calculators are wrong—but you need one anyway

Clients cannot rely heavily on retirement calculators as these tools only give an opinion of the sufficiency of their retirement savings, and as such, do not provide an accurate assessment, according to this article on Time Money. There are calculators that can offer help in making decision on taxes, Social Security benefits, and sequencing withdrawals from retirement accounts. When choosing a suitable retirement calculator, clients are advised to know the entity that developed the tool, its fidelity, and its real rate of return. –Time Money

EFM- like that'll wprk. If you have the ability to find out who really  wrote the program, its fidelity(?) and the real rate of return, you don't need a calculator.Do it yourself.

12: 14" False

When markets tumble, be like Bogle — 'Don't peek

Risk-adjusted investing is the best approach to build a retirement nest egg, allowing investors to resort to passive management as their investments grow even in the midst of dwindling markets, according to this article on MarketWatch. "One of my favorite rules is 'Don't peek.' Don't let all the noise drown out your common sense and your wisdom. Just try not to pay that much attention, because it will have no effect whatsoever, categorically, on your lifetime investment returns," says John Bogle, founder of the Vanguard Group. –MarketWatch

EFM- Follow DCAD and dcaup and you will be financially better off particularly if more things in your life go wrong . More than that, you will be better off emotionally.

If you are an absolute twit, pretty much nothing will work.

12/14:  Sing along please         All of me, please take all of me.........

Full body donations

go to and click on the button “Join the registry now.” We will add you to the list of registered donors, and send you and your family personalized ID cards to keep in your wallet for that time of need. Also, you could just simply pick up the phone and call 24 hours a day at our toll-free number, 1-800-417-3747, and we can walk you through the process, educate you and your family, and actually sign you up on the registry. And, the third way is that we have a special program for hospice patients called the Hope Program.

I have done this.

  1. Date: 2014-05
    By: Bekaert, Geert
    Hoerova, Marie
    We decompose the squared VIX index, derived from US S&P500; options prices, into the conditional variance of stock returns and the equity variance premium. We evaluate a plethora of state-of-the-art volatility forecasting models to produce an accurate measure of the conditional variance. We then examine the predictive power of the VIX and its two components for stock market returns, economic activity and financial instability. The variance premium predicts stock returns while the conditional stock market variance predicts economic activity and has a relatively higher predictive power for financial instability than does the variance premium. JEL Classification: C22, C52, G12, E32
    Keywords : economic uncertainty, financial instability, option implied volatility, realized volatility, risk aversion, risk-return trade-off, stock return predictability, variance risk premium, VIX
  2. Date: 2014
    By: Baruník, Jozef
    Kukacka, Jiri
    This paper develops a two-step estimation methodology that allows us to apply catastrophe theory to stock market returns with time-varying volatility and to model stock market crashes. In the first step, we utilize high-frequency data to estimate daily realized volatility from returns. Then, we use stochastic cusp catastrophe on data normalized by the estimated volatility in the second step to study possible discontinuities in the markets. We support our methodology through simulations in which we discuss the importance of stochastic noise and volatility in a deterministic cusp catastrophe model. The methodology is empirically tested on nearly 27 years of U.S. stock market returns covering several important recessions and crisis periods. While we find that the stock markets showed signs of bifurcation in the first half of the period, catastrophe theory was not able to confirm this behavior in the second half. Translating the results, we find that the U.S. stock market's downturns were more likely to be driven by the endogenous market forces during the first half of the studied period, while during the second half of the period, the exogenous forces seem to be driving the market's instability. The results suggest that the proposed methodology provides an important shift in the application of catastrophe theory to stock markets.
Date: 2014-02
By: Dominique Guegan (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
Bertrand Hassani (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
Stress testing is used to determine the stability or the resilience of a given financial institution by deliberately submitting. In this paper, we focus on what may lead a bank to fail and how its resilience can be measured. Two families of triggers are analysed: the first stands in the stands in the impact of external (and / or extreme) events, the second one stands on the impacts of the choice of inadequate models for predictions or risks measurement; more precisely on models becoming inadequate with time because of not being sufficiently flexible to adapt themselves to dynamical changes.

12/12: Sound familiar?????????   UK regulator criticised for not taking action on annuities

The City regulator was on Thursday accused of sweeping annuity mis-selling “under the carpet” after a two-year probe uncovered evidence of sales failings but did not recommend fines or customer compensation.\\

The probe, which was first launched in 2013, found evidence that some insurers were incentivising call centre staff to sell annuities to existing customers. There was also evidence that they did not explain to customers the benefits of shopping around for an annuity, or that they could get a better rate if they were in poorer health. In February this year, the FCA found that eight out ten customers could have got a better deal for their annuity, which converts pension savings into a guaranteed income, had they not bought from their existing provider, but on the open market.

12/12: 87 percent of middle-class military families are dealing with concerns about cuts to defense spending through increased financial preparedness

Top cost-cutting strategies identified during the most recent quarter include:

·        Cooking at home more often (36 percent)

·        Increasing the use of coupons (29 percent)

·        Spending less on junk food (27 percent)

·        Bringing lunch to work instead of eating out (27 percent)

·        Reducing clothing purchases (27 percent)

·        Reducing holiday spending (27 percent)

·        Reducing leisure activities (26 percent)

·        Shopping at discount stores (25 percent)

·        Reducing travel and staying closer to home (25 percent)

·        Attempting to reduce electric bills (25 percent)

12/12: Here Are The Breakeven Oil Prices For Every Drilling Project In The World

oil prices have fallen more than 30% in just the last six or so months, everyone wants to know how low prices can go before oil projects start shutting down, particularly US shale projects.

In a note in mid-November, Citi's Ed Morse highlighted this chart, showing that for most US shale plays, costs are below $80 a barrel.

The US shale plays

Over the last few years, Morse writes that companies have been willing to consider projects if they can sell the project's oil for $90 a barrel. 

And while the chart shows that almost every project that has been considered by companies to this point has required prices less than $90 to break-even, Morse writes that companies are canceling projects that require oil prices above $80 a barrel to break-even as the futures market has made hedging above that price a challenge. 

And beyond the implications for the economic feasibility of projects right now, there are also implications for future global supply. 

"We think the world has plenty of oil at $90 going forward," Morse writes, "but supply may be less adequate on a sustainable basis at prices much below $70...even though on a shorter-term basis, US shale production can continue to grow robustly even at lower prices."

EFM= Pay attention to prices by using this as a guide. However with a fabricated economy (QE), it is tough to how to figure it all out

12/12: Indexed universal life

The returns are similar to bond funds.Not easy to understand but this may help

12/12: North America is likely to be a net exporter of liquid fuels in the next decade, as production grows while demand in the US and Canada stagnates

Probably true- I'm just wondering if fracking might be detrimental to the environment because it pushes bad water back into the soil.

12:11: The obesity epidemic may be responsible for a spike in cancer cases — especially in women.

12/11: The Challenges with Participant Education
"Employers should work with their vendors to develop an education strategy ... specifically designed to direct the efforts of the vendors as they provide education services to employees on the importance of retirement savings and the value of the contributions made by the [employer]. Understanding that individuals learn differently, the key elements of these efforts should be focused on the four key drivers of successful retirement plan education programs: Plan participation; Employee deferral rates; Asset allocation; [and] Income replacement."

EFM- Sounds good but none of the instruction will cover a risk of loss calculation regarding the asset allocation. Asset allocation is usually designed in a vacuum of few probabilities and static correlations. That might be OK for the bulk of the time, but when a serious hiccup occurs it will fall apart.

12/11: Retirement Spending: How Much Can You Afford?
"There are a few caveats about the 4% rule you should be aware of: It applies to a specific portfolio composition.... It includes a very high level of confidence that your portfolio will last for a 30-year period.... [It] assumes that in nearly every scenario the hypothetical portfolio would not end with a negative balance.... It assumes a 30-year retirement."

EFM- I don't know what Schwab was really saying here but my point is that you do crunch numbers for 30 years to get some idea of the spending pattern and needed PV. . But the key is to really focus on not more than five years since the probabilities of life will cause some major wrinkles. Also that you cannot accept 50% losses once or twice a decade. See DCAD. If you can get around these, not only will you have more money but you will also retain your sanity..  

12/10: My hard drive went as well as the screen. My car is in the shop and it goes from there. Lots of material coming/

By Charles D. Ellis, Alicia H. Munnell, and Andrew D. Eschtruth

The book’s key findings are:

  • Today’s workers face a major retirement income gap because they will need more but can expect less from traditional sources.

  • The solutions are to save more and work longer.

    • Save more: shore up Social Security; make all 401(k)s fully automatic; extend coverage to those without a retirement plan; and tap home equity.

    • Work longer: encourage people to retire later, which boosts monthly Social Security benefits, adds to 401(k)s, and reduces the retirement span
Then there always is, don't lose money. If you stay invested when this next mess hit, all of Mid America will be lost in retirement

12/10  Bogle"

You once told a story about an adviser who said he was worried he'd be fired if he kept telling his clients to just stick to their long-term plan. He said his clients don’t see the value in doing nothing.

Right. And my point is that advisers need to sell their value as keeping their clients from doing the wrong thing at the wrong time. That’s what advisers have to offer: Keeping you from making a mistake is what you need me for.

EFM= Read above. You cannot take another 50% loss

12/10:  Not that bright


Predictors of '29 Crash See 65% Chance of 2015 Recession

November 12, 2014
By The Trust Advisor

The Jerome 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

11/13: Today's Caregiver magazine is a gem. Covering every topic imaginable no matter how sensitive.

Caregiving Innovations: Male Incontinence Support

Leaving a legacy

11/13: Changes
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.


Checklist for Older Adults

·        Falls at Home

o   Floors

o   Stairs & Steps

o   Kitchen

o   Bathrooms

o   Bedrooms

·        Other Things You Can Do to Prevent Falls

·        Other Safety Tips


VA Caregiver Support Services



Caregiver Support Coordinator

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.   

Services include:

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.

Home Telehealth

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.

Respite Care

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 members.

To access these and other services visit

Or call the VA's Caregiver Support Line at 1-855-260-3274

Managing Lung Disease

By  Cheryl Ellis, RPFT, CRT, Staff Writer


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 and bronchiectasis.

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.


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.


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 activities.

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.”


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.

11/11: Continuing care at home- new, untested and very interesting

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.

Date: 2014
By: Seeun Jung
Carole Treibich (Université de Cergy-Pontoise, THEMA)
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.

11/11: True

“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 system.

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 videos.


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.

11/11: Britain will go into another recession

Blow for Cameron as UK faces deeper cuts
George 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 £48bn,

11/11: And so shall a bunch of others. . I know the data but I still have a problem with the U.S. at 3%

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
11/9: Economic 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 forecasts. 

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".


Save Twice 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 tax return.

11/9: Insurance company investments

In September, Fitch 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.......

In Hueytown, 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 and Kindness

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.

5. Diversion: 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 active.

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 risk.

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.

Reality doesn’t interest me.

         Leni Riefenstahl,

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 businesses. 

"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."

11/9i: Assisted living stats

Resident Profile

Typical Resident The typical resident is a woman about 87 years old1 who 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

Gender - 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 settings.

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


Activities of
Daily Living
% of Residents
Needing Help
Bathing 72%
Dressing 52%
Toileting 36%
Transferring 25%


Other Common Services - Eighty-seven percent of assisted living residents need help with meal preparation, while 81 percent need help managing their medications.1

Top Ten Chronic Conditions 2 

  • High Blood Pressure: 57%
  • Alzheimer's disease and other dementias: 42%
  • Heart Disease: 34%
  • Depression: 28%
  • Arthritis: 27%
  • Osteoporosis: 21%
  • Diabetes: 17%
  • COPD and allied conditions: 15%
  • Cancer: 11%
  • Stroke: 11%


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 adult childrens)
  • 5% came from another assisted living residence or group home

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:

  • Privacy
  • 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 living. 

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,

'Approximately right' through pragmatism is better then 'precisely wrong' through theory.
11/6: The answer is yes

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 away.

— 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 away."

— 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 message.

\\11/5: Apparently we  didn't learn anything

The 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% per year.

11/5: 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 products.

“We're 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

Personal 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.

Even 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 second tiers. 

11/5 Big differences


European Commission slashes eurozone forecasts


The 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 consumer. 

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 over time.  

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 crisis. 

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 catastrophic situations. 

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 it. 


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 for us.

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.

11/4: Puts the problem into perspective

11/4: Death with dignity

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 markets”]

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 joint-probability distributions.

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 housing bust.

EFM Of particular note, new homes and construction have always been the hallmark of  a strong U.S. economy.



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.

Peter Boockvar

11/3: wow- did not know it was that much

Emerging-Market 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

New 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.

EFM- 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: Funny



11/2: Interesting

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 tumultuous


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 prohibitive.?


11/2: Here's an understatement



11/2: REbalancing

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 strategies


11/2: Fail

The scale of shadow 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 more so

According 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 yields.

11/2:           Investor Sentiment in the Stock Market

Investor 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 sentiment.

11/2: Investing for the Long Run when Returns Are Predictable
We examine how the evidence of predictability in asset returns affects optimal
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 enough predictability
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.

11/2:  ACA PROGRESS - 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

The 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% per year.

32 AND COUNTING - 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.

11/2: Japan
Decades ago I was positive that Japan would get its economic act together. But.........

BoJ stuns investors by expanding monetary easing programme


The 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 deflationary mindset”.

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.

11/2: Society of Actuaries RP-2014 Mortality Tables

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 marketplace.

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."

11/2: the fiscal multiplier.

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

Real 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.

BUT Greenspan says buy gold.


10/31: Working with dementia

Good stuff


10/31: not good

Over 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.

10/31: Bonds/Treasuries

Equity markets 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.”

10/31: dire