Master Financial Education

Financial and Economic Daily Commentary 2018
The  most intensive and extensive on the Web

E. F. Moody Jr.

click above for bio


USA Today- "This is a high-powered personal bookmark list that spans the spectrum of the truly useful."

FORBES- "You'll find some great information."

BUSINESS WEEK: "For an Expert, Click here"  

World Statistical data
Market Quotes by TradingView

From an adviser: It is a daily read for me. Clearly biased towards the client. Great perspectives and links to thought provoking material. Greatly appreciated.

Investor/Investing Risk of Loss: Identify, Manage and Limit Investment
Risk of Loss on Mutual Funds and ETFs

Four Phase Process that will change the investment dichotomy for 75% of Middle and Lower Income investors overall and up to 90% for 401k Investors 

Losses limited to about 12% for recessions

Patent Pending

Morality, Sexism, Ethics, Corrupt Equilibrium

Critical reference to the limited fiduciary capabilities in the planning industry (and more) and why they may/will remain as such given sophomoric DOL rules and flaccid organizational enforcement. Specific commentary to sexism and ethical and moral lapses of society impacting women. Not the standard drivel

Analysis for investors and advisers. The economic changes from the Great Recession caused major adjustments in investing. One of the major issues is the flip flop of the correlations in bond funds versus equities  coupled with a truly lower return and an increased overall risk. It will take a lot more effort to provide adequate return for those in need and the discussion will address pros and cons particularly for retirement purpose Emphasis on risk, Click for full article.

2/16: This surprised me

In a surprising study, everyday chemicals now rival cars as a source of air pollution

As cars become cleaner, personal-care products, paints, indoor cleaners and other chemical-containing agents are an increasingly dominant source of key emissions, scientists say.

2/16: Capital Asset Pricing Model

What is the 'Capital Asset Pricing Model - CAPM'

The capital asset pricing model (CAPM) is a model that describes the relationship between systematic risk and expected return for assets, particularly stocks. CAPM is widely used throughout finance for the pricing of risky securities, generating expected returns for assets given the risk of those assets and calculating costs of capital.

BREAKING DOWN 'Capital Asset Pricing Model - CAPM'

The formula for calculating the expected return of an asset given its risk is as follows:

Capital Asset Pricing Model (CAPM)

The general idea behind CAPM is that investors need to be compensated in two ways: time value of money and risk. The time value of money is represented by the risk-free (rf) rate in the formula and compensates the investors for placing money in any investment over a period of time. The risk-free rate is customarily the yield on government bonds like U.S. Treasuries.

Find out which online brokers offer stock valuations in our new brokerage review center. 

The other half of the CAPM formula represents risk and calculates the amount of compensation the investor needs for taking on additional risk. This is calculated by taking a risk measure (beta) that compares the returns of the asset to the market over a period of time and to the market premium (Rm-rf): the return of the market in excess of the risk-free rate. Beta reflects how risky an asset is compared to overall market risk and is a function of the volatility of the asset and the market as well as the correlation between the two. For stocks, the market is usually represented as the S&P 500 but can be represented by more robust indexes as well.

The CAPM model says that the expected return of a security or a portfolio equals the rate on a risk-free security plus a risk premium. If this expected return does not meet or beat the required return, then the investment should not be undertaken. The security market line plots the results of the CAPM for all different risks (betas).

Example of CAPM

Using the CAPM model and the following assumptions, we can compute the expected return for a stock:

The risk-free rate is 2% and the beta (risk measure) of a stock is 2. The expected market return over the period is 10%, so that means that the market risk premium is 8% (10% - 2%) after subtracting the risk-free rate from the expected market return. Plugging in the preceding values into the CAPM formula above, we get an expected return of 18% for the stock:

18% = 2% + 2 x (10%-2%)


 Forward-Thinking Employers Are Managing Healthcare Spending With Self-Insurance, Leaner Plan Options, Stronger Program Engagement And Pharmacy Benefit Carve-Outs
Gallagher data highlights cost-shifting alternatives
By Bruce Shutan / Employee Benefit Adviser
Forward-thinking employers are managing healthcare spending with self-insurance, leaner plan options, stronger program engagement and pharmacy benefit carve-outs, suggests a recent analysis of selected data from Gallagher’s 2017 Benefits Strategy & Benchmarking Survey of 4,226 organizations. Respondents whose group health plan practices were closely studied and tied to talent management include 1,192 midsize firms and 315 large employers.
Brokers and advisers that serve middle-market clients will notice a more strategic approach trickling downstream in lieu of cost-shifting strategies. Midsize employers considered best in class were more inclined to invest in employee wellness (63% vs. 54%) and disease management (45% vs. 31 %) than others of comparable size. Key measures of success include program participation, engagement and satisfaction.
They also were less likely to increase deductibles, copays or coinsurance overall (41% vs. 55%). The same was true in terms of raising employee contributions to health plan premiums (43% vs. 57%). Between low unemployment and a growing economy, more attention is being paid to the impact these moves have on top talent.
In addition, large groups are leveraging their scale to keep a tighter lid on their financial outlay. As many as 62% of the companies examined spent less than $10,000 per eligible employee on benefits vs. 42% of their overall peers.
Gallagher’s recent analyses of its benchmarking data show that a “competitive advantage can be gained by employers who leverage and optimize their compensation and benefit approaches,” according to Ziebell. He describes their top three objectives as attracting and retaining talent, growing revenue and containing operating costs.

Health Savings Accounts Are Picking Up Serious Steam
For employees enrolled in a high-deductible health plan (HDHP), health savings accounts (HSAs) can be a real game-changer.
One on level, HSAs allow for the contribution of pre-tax dollars to pay for qualified health care expenses throughout the year, providing a cost-effective way for employees to manage their out-of-pocket responsibilities.
And on another level, HSAs are a powerful long-term savings vehicle, due to the fact that all funds can roll over from year to year and accumulate tax-free interest. They can essentially act like a 401(k) plan to save for health care costs in retirement, with the added benefit that withdrawals are tax-free – for qualified medical expenses – at any time.
Based on data from the Benefitfocus 2018 State of Employee Benefits report, employees are catching on to these benefits in a big way.
Participation in HSAs among eligible HDHP subscribers soared by more than 60 percent year over year – from roughly 50 percent in 2017 to 81 percent in 2018 – with dramatic increases observed across every age group. Millennials were especially eager to adopt, nearly doubling their HSA enrollment rate from last year.

Healthcare Spending Accelerating, 19.7% of Economy by 2026
Marcia Frellick / Medscape
By 2026, healthcare is projected to make up 19.7% of the US economy, up from 17.9% in 2016, according to a report released today by the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS).
Spending is projected to be $5.7 trillion by 2026, up from $3.5 trillion now. CMS projects that federal, state, and local governments will be financing 47% of that spending, up from 45% in 2016, partly related to the aging of the population.
The report, published online in Health Affairs by Gigi Cuckler, an economist in the Office of the Actuary in Baltimore, Maryland, and colleagues projects an average annual growth rate in health spending of 5.5% through 2026, which would outpace average projected growth in gross domestic product (GDP) by 1 percentage point. GDP is expected to grow 4.5% per year in that period.

Federal economists: 7 million more uninsured in a decade after Obamacare individual mandate repeal
by Kimberly Leonard / The Washingtn Examiner
The repeal of Obamacare's fine on people who are uninsured will result in 3.3 million more people not having healthcare coverage by 2020, according to a new federal analysis, clashing with other government economists about the expected impact.
The latest findings from the nonpartisan Office of the Actuary, which is part of the Centers for Medicare and Medicaid Services, projects the number of uninsured will rise to 8.3 million by 2026, absent the passage of any other healthcare law.
These figures are lower than those projected by another nonpartisan government agency. Last year, the Congressional Budget Office forecast 7 million people would become uninsured by 2020 and that the number would grow to 13 million people by 2026 as a result of the repeal of the individual mandate.
The Obamacare fine will go to zero beginning in 2019, a provision that was included in the Republican-passed tax bill signed into law in December by President Trump. Health insurers have warned that without a replacement for the mandate, more companies would leave the Obamacare exchanges, where people can buy tax-subsidized coverage, or premiums would become more expensive. The intent of the provision was to bring in customers who otherwise would choose to go uninsured, many of whom are healthier and rarely use medical coverage.

Make sure you read the bottom line

2/16:The Sharpe Ratio Defined 

Most people with a financial background can quickly comprehend how the Sharpe ratio is calculated and what it represents. The ratio describes how much excess return you are receiving for the extra volatility that you endure for holding a riskier asset. Remember, you always need to be properly compensated for the additional risk you take for not holding a risk-free asset.

We will give you a better understanding of how this ratio works, starting with its formula:

S (x) = (rx - Rf) / StdDev (x)


  • X is the investment
  • rx is the average rate of return of X
  • Rf is the best available rate of return of a risk-free security (i.e. T-bills)
  • StdDev(x) is the standard deviation of rx

Return (rx)
The returns measured can be of any frequency (i.e. daily, weekly, monthly or annually), as long as they are normally distributed. Herein lies the underlying weakness of the ratio – not all asset returns are normally distributed.

Kurtosis, fatter tails and higher peaks, or skewness on the distribution can be problematic for the ratio, as standard deviation doesn't have the same effectiveness when these problems exist. Sometimes it can be downright dangerous to use this formula when returns are not normally distributed.

Risk-Free Rate of Return (rf )
The risk-free rate of return is used to see if you are being properly compensated for the additional risk you are taking on with the asset. Traditionally, the risk-free rate of return is the shortest-dated government T-bill (i.e. U.S. T-Bill). While this type of security will have the least volatility, some would argue that the risk-free security used should match the duration of the investment it is being compared against.

For example, equities are the longest duration asset available, so shouldn't they be compared with the longest duration risk-free asset available – government issued inflation-protected securities (IPS)?

Using a long-dated IPS would certainly result in a different value for the ratio, because in a normal interest-rate environment, IPS should have a higher real return than T-bills.

For instance, the Barclays U.S. Treasury Inflation-Protected Securities 1-10 Year Index has returned 3.3% for the period ending Sept. 30, 2017, while the S&P 500 Index returned 7.4% over the same timeframe. Although it can be argued that investors are being fairly compensated for the risk of choosing equities over bonds in this period, the bond index's Sharpe ratio of 1.16% versus 0.38% for the equity index would indicate equities are the riskier asset.

Standard Deviation (StdDev(x))
Now that we have calculated the excess return from subtracting the risk-free rate of return from the return of the risky asset, we need to divide this by the standard deviation of the risky asset being measured. As mentioned above, the higher the number, the better the investment looks from a risk/return perspective.

How the returns are distributed is the Achilles heel of the Sharpe ratio. Bell curves do not take big moves in the market into account. As Benoit Mandelbrot and Nassim Nicholas Taleb note in "How The Finance Gurus Get Risk All Wrong" (Fortune, 2005), bell curves were adopted for mathematical convenience, not realism.

However, unless the standard deviation is very large, leverage may not affect the ratio. Both the numerator (return) and denominator (standard deviation) could be doubled with no problems. Only if the standard deviation gets too high do we start to see problems. For example, a stock that is leveraged 10-to-1 could easily see a price drop of 10%, which would translate to a 100% drop in the original capital and an early margin call.

The Sharpe Ratio and Risk

Understanding the relationship between the Sharpe ratio and risk often comes down to measuring standard deviation, which is also commonly referred to as the total risk. The square of standard deviation is the variance, as defined by Nobel Laureate Harry Markowitz, who is arguably best known as the pioneer of Modern Portfolio Theory. (For further reading, see Understanding Volatility Measurements.)

So why did Sharpe choose the standard deviation to adjust excess returns for risk and why should we care? We know that Markowitz defined variance, a measure of statistical dispersion or an indication of how far away it is from the expected value, as something undesirable to investors. The square root of variance, or standard deviation, has the same unit form as the data series being analyzed and is such more commonly used to measure risk.

The following example illustrates why investors should care about variance:

An investor has a choice of three portfolios, all with expected returns of 10% for the next 10 years. The average returns in the table below indicates the stated expectation. The returns achieved for the investment horizon is indicated by annualized returns, which takes compounding into account. As the data table and the chart clearly illustrates below, the standard deviation takes returns away from the expected return. If there is no risk – zero standard deviation – your returns will equal your expected returns.

Expected Average Returns
Year Portfolio A Portfolio B Portfolio C
Year 1 10.00% 9.00% 2.00%
Year 2 10.00% 15.00% -2.00%
Year 3 10.00% 23.00% 18.00%
Year 4 10.00% 10.00% 12.00%
Year 5 10.00% 11.00% 15.00%
Year 6 10.00% 8.00% 2.00%
Year 7 10.00% 7.00% 7.00%
Year 8 10.00% 6.00% 21.00%
Year 9 10.00% 6.00% 8.00%
Year 10 10.00% 5.00% 17.00%
Average Returns 10.00% 10.00% 10.00%
Annualized Returns 10.00% 9.88% 9.75%
Standard Deviation 0.00% 5.44% 7.80%

Using the Sharpe Ratio

The Sharpe ratio is a measure of return that is often used to compare the performance of investment managers by making an adjustment for risk.

For example, if investment manager A generates a return of 15% while investment manager B generates a return of 12%, it would appear that manager A is a better performer. However, if manager A, who produced the 15% return, took much larger risks than manager B, it may actually be the case that manager B has a better risk-adjusted return.

To continue with the example, say that the risk free-rate is 5%, and manager A's portfolio has a standard deviation of 8%, while manager B's portfolio has a standard deviation of 5%. The Sharpe ratio for manager A would be 1.25, while manager B's ratio would be 1.4, which is better than that of manager A. Based on these calculations, manager B was able to generate a higher return on a risk-adjusted basis.

For some insight: a ratio of 1 or better is considered good; 2 or better is very good; and 3 or better is considered excellent.

The Bottom Line

Risk and reward must be evaluated together when considering investment choices; this is the focal point presented in Modern Portfolio Theory. In a common definition of risk, the standard deviation or variance takes rewards away from the investor. As such, the risk must always be addressed along with the reward when you are looking to choose your investments. The Sharpe ratio can help you determine the investment choice that will deliver the highest returns while considering risk.

EFM- the punchline: risk is the major issue in investing. But what happens when one does NOT have to worry about the risk in the future since it can be contained and voided during times of extreme stress (recession)?  The answer is simple- look for the highest returns in a solid fund and then follow the Patent Pending advice. (The marketing of the Risk of Los will start soon and I will keep you posted)

Investing in any asset has risks that can be minimized by using financial tools to determine expected returns. The capital asset pricing model (CAPM) is one of these tools. This model calculates the required rate of return for an asset using the expected return on both the market and a risk-free asset, and the asset's correlation or sensitivity to the market.

Some of the problems inherent in the model are its assumptions, which include: no transaction costs, no taxes, investors who can borrow and lend at the risk-free rate and investors who are rational and risk averse. Obviously these assumptions are not fully applicable to real-world investing. Despite this, CAPM is useful as one of several tools in estimating the return expected on an investment. 

The unrealistic assumptions of CAPM have led to the creation of several expanded models that include additional factors and the relaxing of several assumptions used in CAPM. International CAPM (ICAPM) uses the same inputs as the CAPM but also takes into account other variables that influence the return on assets on a global basis. As a result, ICAPM is far more useful than CAPM in practice. However, despite relaxing some assumptions, ICAPM does have limitations that impact its practicality. 

One of the biggest worries for parents of children with special needs is what will happen when the parents are gone. Who will care for their children and will they have enough money, not just to survive but to enjoy life?

This worry is compounded by the financial restrictions levied by the Medicaid program, which often is the only type of health insurance for which their children qualify. To keep the special needs child within the income limitations, parents may think that they need to disinherit that child or bequeath his inheritance to a sibling. Both of these options are problematic.

Disinheriting a child would leave her only the bare necessities of food, housing and clothing provided through government benefits. Making a sibling her guardian puts an undue burden on your other children, who may be unable to fulfil those obligations if they face a financial crisis such as a divorce.

However, there is another way. Putting assets into a Special Needs or Supplemental Needs Trust allows your child to preserve assets to improve quality of life without disqualifying him from Social Security Income or Medicaid.

Parents should be aware that funds from the trust cannot be distributed directly to the disabled beneficiary. Instead, it must be disbursed to third parties who provide goods and services to the disabled beneficiary.

These trusts are flexible and can be customized to provide funding for the type of care that you would have provided if you were still alive. An attorney who specializes in special needs planning can help you set up a Special Needs Trust to supplement your loved one’s public benefits.

The Special Needs Trust can be used for a variety of life-enhancing expenditures such as:

  • Annual check-ups at an independent medical facility
  • Attendance at religious services
  • Supplemental education and tutoring
  • Out-of-pocket medical and dental expenses
  • Transportation (including purchase of a vehicle)
  • Maintenance of vehicles
  • Purchase materials for a hobby or recreation activity
  • Funds for trips or vacations
  • Funds for entertainment such as movies, shows or ballgames
  • Purchase of goods and services that add pleasure and quality to life: computers, videos, furniture, or electronics
  • Athletic training or competitions
  • Special dietary needs
  • Personal care attendant or escort

Special Needs Trusts are a critical component of your estate planning if you have disabled beneficiaries for whom you wish to provide after your passing. An estate planning attorney can help you create the trust that best fits your family’s needs.

You may need a pooled special needs trust. In a pooled special needs trust, the assets of a group of beneficiaries are pooled together and managed by a non-profit organization for the benefit of the beneficiaries. Your loved one has his own sub-account so that his funds are used only for him. This setup works well if there are no family members available to act as a trustee or the level of assets is not large enough to justify the complexity of establishing a stand-alone trust.

Alternately, you can establish a stand-alone trust funded with a separate asset like a life insurance policy. Other family members or friends may contribute to the trust as well.

If you have a child with special needs you cannot delay planning for her future. Procrastinating could have major consequences from which she may not recover, but making a plan now can give you peace of mind.

Nothing like a Blatz

This paper explores how an environment of persistent low returns influences saving, investing, and retirement behaviors, as compared to what in the past had been thought of as more “normal” financial conditions. Our calibrated lifecycle dynamic model with realistic tax, minimum distribution, and Social Security benefit rules produces results that agree with observed saving, work, and claiming age behavior of U.S. households. In particular, our model generates a large peak at the earliest claiming age at 62, as in the data. Also in line with the evidence, our baseline results show a smaller second peak at the (system-defined) Full Retirement Age of 66. In the context of a zero return environment, we show that workers will optimally devote more of their savings to non-retirement accounts and less to 401(k) accounts, since the relative appeal of investing in taxable versus tax-qualified retirement accounts is lower in a low return setting. Finally, we show that people claim Social Security benefits later in a low interest rate environment.

2/15: It happens all over

Tata steelworkers at Port Talbot claimed that in the autumn of last year they were lured by allegedly unscrupulous advisers into cashing in their pensions with the company, with the money then being moved into little-known investment funds that levy high charges. Experts said workers were victims of bad advice about their pensions. Members of Tata’s pension scheme have “been exploited for cynical personal gain by dubious financial advisers”, said the Commons work and pensions select committee

 members of the scheme “were shamelessly bamboozled into signing up to ongoing adviser fees and unsuitable funds characterised by high investment risk, high management charges and punitive exit fees”.

Workers could choose between joining a new, less attractive company pension scheme, moving to a special fund for collapsed companies, or cashing in their retirement pots and investing the money elsewhere.

FREE FOOD seminars

drummed up business from Tata workers by offering “obligation-free” advice sessions on their pension options. Mr Howells wooed workers at the meetings held in hotels and pubs around Swansea by offering them a free meal of sausage and chips.

investors faced estimated ongoing annual fees of 2.51 per cent, calculated on the value of their pension pots. The equivalent figure for the 5Alpha Adventurous fund is 2.12 per cent. Most significantly, workers who want to take cash from their investments in the first year after putting them in the funds are hit with a 5 per cent exit

So where were the regulators????
questions arise as to whether the regulator could have acted sooner, because concerns about Active Wealth and investments being put into the 5Alpha funds had surfaced previously.

EFM- anything with free food is suspect. But it is amazing how people are lured into fraudulent- or at least unsatisfactory ,investments.

millennials aged 18 to 24 had socked less than $1,000 away in their savings account, with nearly 50% of the participants having no savings at all

Words fail me
Anyone have a clue what the stuff is???


Home prices are at an all-time high in more than half of 112 metropolitan areas with a population of 200, 000, according to Attom Data Solutions U.S. Home Sales Report. On top of that, most U.S. wages were flat until just recently and mortgage rates are on the rise

2/15: Japan’s longest growth spurt since 1989
Japan’s economy has recorded eight consecutive quarters of economic growth — its longest streak for 28 years — despite the pace of expansion slowing in the final three months of 2017 to annualised growth of 0.5 per cent.

EFM- I gave up on Japan in the early 90s. I kept saying that a country that had been doing so well would bounce right back. And I kept saying it because I could not believe they could screw up so badly. Finally I gave up. So are they finally on the right track? Maybe but after 28 years......................But if we hit another recession, it might take another 28 years. 

2/15: Drugs

The scourge of crystal meth, with its exploding labs and ruinous effect on teeth and skin, has been all but forgotten amid national concern over the opioid crisis. But 12 years after Congress took aggressive action to curtail it, meth has returned with a vengeance.

When the ingredients became difficult to come by in the United States, Mexican drug cartels stepped in. Now fighting meth often means seizing large quantities of ready-made product in highway stops.

The cartels have inundated the market with so much pure, low-cost meth that dealers have more of it than they know what to do with. Under pressure from traffickers to unload large quantities, law enforcement officials say, dealers are even offering meth to customers on credit. In Portland, the drug has made inroads in black neighborhoods, something experienced narcotics investigators say was unheard-of five years ago.

“I have been involved with meth for the last 25 years. A wholesale plummet of price per pound, combined with a huge increase of purity, tells me they have perfected the production or manufacturing of methamphetamine,” 

“They have figured out the chemical reactions to get the best bang for their bucks.”

Nearly 100 percent pure and about $5 a hit, the new meth is all the more difficult for users to resist. “We’re seeing a lot of longtime addicts who used crack cocaine switch to meth,” said Branden Combs, a Portland officer assigned to the street crimes unit. “You ask them about it, and they’ll say: ‘Hey, it’s half the price, and it’s good quality.’”

2/15: Indexed annuity


1-Year Fixed Interest


1-Year Point-to-Point Cap


1-Year Point-to-Point Part


1-Year Monthly Avg Cap


1-Year Monthly Avg Part


1-Year Monthly Cap


2-Year Monthly Avg Cap


2/15: Economy and Markets

Martin Wolf argues in his column that the return of fear and some uncertainty to markets is therefore a good thing. Markets did experience a bout of turbulence last week, yet the real changes were relatively small. Still Martin thinks it could get worse for four reasons. The current environment of expensive equities and bonds, low interest rates, low inflation and low yields is remarkable. It "takes no imagination", he says, to visualise yields (long-term interest rates) "jumping massively". (EFM- I just can't see that happening......)

Second, the financial system remains fragile while indebtedness continues to rise. Largely thanks to the crisis, government debt has risen from 58 per cent of world output to 87 per cent. (EFM- A massive problem and getting worse under Trump) Third, a global economic recovery is underway - putting a rise in wages and inflation on the cards. And that could easily lead to fiscal tightening. Finally, we can not forget the great global uncertainty that is Donald Trump. Betting against what the US president will, or will not do, is unwise. He could still easily destablise expansion of the markets. (Very true and he has mired the country in so many levels of lies that I just don't know how worse it might get  Not that some of his policies are not valid- I just cannot stand the lies day after day after day..........)

2/14: SEC examinations

The Office of Compliance Inspections and Examinations said that examiners “will continue to prioritize our commitment to protect retail investors, including seniors and those saving for retirement,” focusing a close eye on products and services offered to retail investors, and the disclosures investors receive about those investments.

Well some of it will work. But with all the prospectuses I he read, risk is only stated that you could lose money and maybe all of it (that is essentially zero with mutual fund allocation. You would have to be a complete moron to devise a portfolio that could go to zero). But what people really need to know is how much could they lose n a recessionary climate. That's what risk is all about. Without that clarification, it is just sophomoric gibberish 

In Alabama, Louisiana and other states, it is  illegal to chain your alligator to a fire hydrant.
Excellent law- it should be passed in all 50 states

The promise of target date funds is that they help protect older beneficiaries from losses, but as you can see this protection is not adequate in the typical TDF. Most importantly, 75 million Baby Boomers are currently in the Risk Zone that spans the transition from working life to retirement. Losses in the Risk Zone are not recovered; they’re paid for with reduced standards of living. Some confuse this warning with market timing, but it is quite different.

Risk management is not timing

Many confuse risk management with timing, but timing has little to do with investor vulnerability and everything to do with market outlook. In the current market run-up, where U.S. stocks have earned more than 250%, there is great demand for crystal balls that will tell us when to get out of harm’s way, but that’s not risk management. Risk management is called “Tactical” asset allocation, while timing is called “Strategic.” The idea is that risk management is independent of market outlook and designed to protect when investors are most vulnerable, whereas timing is short term and all about market forecasts.

Sometimes risk management is easy

Age Risk

Risk management and timing are both usually very hard, and require different skill sets, but there is a time in every investor’s life when risk management is easy and obvious, although most don’t see it. It’s a time when a special kind of risk is at its highest and that risk could ruin our lifestyles for the rest of our lives. Unless we feel extraordinarily lucky we really should move to safety during the Risk Zone that spans the transition from working life to retirement when Sequence of Return Risk peaks. Baby Boomers have $30 trillion in the Risk Zone. At this stage in their lives they should be protecting their savings and figuring out how to make them last a lifetime.

Win by not losing

The arithmetic of financial losses is complex and emotional, so an example will help. In 2008, the 2010 SMART Target Date Fund Index lost 5% while the industry lost 25%. As a result, SMART investors were wealthier than other TDF investors for the next 6 years, when the riskier Industry funds caught up. But – and this is the important point – when the next crash happens, the whole scenario will reset, and SMART will shine again.

Investors win by not losing. It’s a safer course.


EFM- the point the author makes is that the Safe TDF had a much lower loss. True but its return prior to was not all that great. Obviously the standard TDF was worse. My point is this- go almost all the way to growth. Such a deal up to the start of the recessionary climate. Phase three of my work above simply shows a growth focus that is reduced so that the amount of losses would be about 12%. So you made MUCH more money than the safe funds or standard ETFs and yet your loss was about 12% versus the 57% loss (2008) and you had pretty much a 0% risk account at that point and an opportunity to get back in with a whole new economy and asset allocation still focused on growth rather than the safe funds- and certainly not the standard TDFs.


A whopping 84 percent of all stocks owned by Americans belong to the wealthiest 10 percent of households. And that includes everyone’s stakes in pension plans, 401(k)’s and individual retirement accounts, as well as trust funds, mutual funds and college savings programs like 529 plans.

“For the vast majority of Americans, fluctuations in the stock market have relatively little effect on their wealth, or well-being, for that matter,”

Roughly half of all households don’t have a cent invested in stocks, whether through a 401(k) account or shares in General Electric. That leaves half the population with some exposure to financial market whims, but as Mr. Boshara said, “some exposure can be 100 bucks.”

“It’s too bad such a small percentage of the population has any real or meaningful ownership stake in equities, given their historic and current growth,”

“If you look at where the money is really held, it’s among the top 10 percent  “And if you break it down by age, race and education and parental education, you’ll see the disparities are even larger.” Parents who lack a four-year degree and, later on, their children are much less likely to have a direct stake in the stock market than college graduates; blacks and Hispanics are much less likely than whites.

For 9 out of 10 households, even a shift in value of 10 percent — enough to qualify as a “market correction” — would “at most, have a 1 or 2 percent impact on their wealth holdings,” Mr. Wolff said.

If anything, foreign multinational and other investors would feel more of a pinch, since they own 35 percent of all United States corporate stock, up from 10 percent in 1982. That share of the pie exceeds the single slice owned by taxable American shareholders, defined benefit plans, defined contribution plans, or nonprofit institutions, t

Don’t confuse the Dow with the economy.

The stock market and the underlying economy are distinct. The two interact, but they do not proceed in lock step or even respond to each other in predictable ways. Certainly, market instability can undermine both consumer and business confidence and restrain spending and investment. And market bubbles, swelled by overextended borrowing, can explode, wreaking losses and stalling growth.

 investors may be worried that growth is too strong.

This might seem like a strange concern, after a decade of slow-but-steady economic expansion coming out of the recession.

But global growth — along with a shred of evidence that Americans are starting to get wage increases — started a broad sell-off that spread around the world. Since then, prices have been all over the place.


Here’s how the logic goes:

• The strong economy stokes fears that inflation is picking up.

• Fears about inflation drive worries the Federal Reserve could raise interest rates faster than indicated.

• The worries about the Fed fuel a long-held view that rising rates kill bull markets, partly because companies tend to grow more slowly when money becomes more expensive to borrow.

• That daisy chain of anxiety lead to a simple conclusion: Sell.

This may not be why investors may be panicky. Markets can be driven by perception as much as anything else, and the specter of the status quo being disrupted can rattle investors.

 markets have been plagued by volatility, and how long it will last remains to be seen.

Violent moves in financial markets can ultimately affect the economy — especially if they persist.

Here’s one way how:

• Steep market declines can wipe out portions of people’s savings and retirement accounts.

 Bond yields can rise as investors demand higher returns to stay ahead of inflation.

• Higher yields translate into higher borrowing costs for companies and individuals.

• And with higher borrowing costs, companies invest less in their business and people buy fewer things.

• Less spending and investment undermines economic growth.

EFM=- a good chunk of that money was for the U.S.

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

2/13: Notice the difference in rates for 2 companies. It's the commissions paid

42 Billion Dollar Carrier 

with an A Excellent A.M. Best Rating!

 3.00% Guaranteed 5 years!

3.12% Guaranteed 7 years!

 5 year surrender NO MVA

 7 year surrender NO MVA

2.00% Commission 0-75

4.00% Commission 0-75

3.50% Guaranteed for 7 Years




3.25% Guaranteed

for 5 Years


Full AV at Death

10% Free Withdrawals


Qualified ALIRT Rating

EFM- Trump has flipped on reducing the debt. Medicare and Medicaid suffer greatly. But here is something that the journalists haven't addressed-death. When you take away coverage for the poor and needy in regards to health care in their later years, you are simply going to see a higher death rate. Add in the opiods and obesity and the age at death will go backwards. Actually it already has


2/12: Cancer

2/12: Hard to believe. Or maybe just a sign of the times?.

CNN Exclusive: California launches investigation following stunning admission by Aetna medical director
Story by Wayne Drash, CNN
(CNN)California's insurance commissioner has launched an investigation into Aetna after learning a former medical director for the insurer admitted under oath he never looked at patients' records when deciding whether to approve or deny care.
California Insurance Commissioner Dave Jones expressed outrage after CNN showed him a transcript of the testimony and said his office is looking into how widespread the practice is within Aetna.

2/12: This deficit spending will ultimately bring a massive unsustainable debt that will crush the U.S. The supposed increase in GDP will not occur. This will result in (probably) more recessions and those that do occur will be similar to 2008.

The fiscal year 2019 budget was rendered pretty much obsolete last week when Congress adopted a sweeping deal to keep the government funded until March 23 while setting spending levels for the next two years. It gooses spending on the military and domestic programs by $500 billion over two years and ushers in the return of trillion-dollar deficits as soon as next year. 

President Trump endorsed the compromise. But White House budget director Mick Mulvaney -- a former fiscal hawk while a South Carolina congressman -- told CBS News’s “Face the Nation” on Sunday the deficit-financed fiscal stimulus the package will deliver is a “very dangerous idea” that he would have opposed if he were still in Congress. And he said in an appearance on "Fox News Sunday" that interest rates could "spike" as a result. (true)

The administration’s own budget forecasts 3 percent growth every year for the next decade in part by relying on some rosy — and outdated — assumptions about the nation’s borrowing costs despite yawning deficits.

2/12: Report: Millions in arbitration awards go unpaid

Between 2012 and 2016, investment firms did not pay investors who won arbitration awards in up to 30% of cases, according to a Financial Industry Regulatory Authority report. More than $50 million was unpaid in 2012, dropping to $14 million in 2016, the report noted. 

This will increase under fiduciary rules because more sales of debatable products will occur by less than ethical advisers. Or you can actually have an ethical adviser but since there are no actual standards- just sophomoric statements that one must be a fiduciary- many may breach a duty that can be shown in arbitration.

2/12: Old people


6 Powerful Ways To Help Seniors Avoid Isolation

It can be difficult for seniors to maintain their social lives as they age, especially if they live alone. This is a great resource for supporting them to stay active socially.


Home Modifications Increase Senior Safety

This is a given - it’s important for our elders to make sure their homes are a safe environment.


16 Chair Exercises for Seniors & How to Get Started

This is great - it’s got exercises for people of all abilities, and even includes helpful videos.


9 Essential Mobile Device Apps for Senior Citizens

I appreciate that this explains the kinds of apps seniors should have on their mobile devices rather than listing specific apps (which may or may not stick around).


Building The Ultimate Reading Nook For Your Home: A Guide For Bookworms

My mother loves to read and hosts a monthly book club - she actually referred me to this great resource. (Actually, it’s been a great way for her and my dad to avoid feelings of isolation!)

2/11: The police were called on us because my son was having a bad hair day.

EFM- this speaks volumes about our society. None of it really good

2/11:"Exchange Traded Funds 101 for Economists" Fee Download

CEPR Discussion Paper No. DP12629

MARTIN LETTAU, University of California - Haas School of Business, Centre for Economic Policy Research (CEPR), National Bureau of Economic Research (NBER)
BlackRock, Inc.

Exchange-traded funds (ETFs) represent one of the most important financial innovations in decades. An ETF is an investment vehicle that trades intraday and seeks to replicate the performance of a specific index. In recent years ETFs have grown substantially in assets, diversity, and market significance. This growth reflects the rise in passive asset management where investors seek to track a benchmark index rather than outperform the market as a whole. As a consequence, there is increased attention by investors, regulators, and academics seeking to assess and understand the implications of this rapid growth. This article explains the key drivers of ETF growth and their implications for economists and policy makers.

2/11: Not a good omen

The UK construction industry ended 2017 with its most sustained fall in quarterly output for more than five years, as businesses’ reluctance to commit to new projects more than offset record levels of housebuilding. Output in the three months to December fell by 0.7 per cent, the third consecutive quarter of declines and the longest period of such declines since the third quarter of 2012.

2/11: retirement outlay goes DOWN as we age

Examining data from the U.S. Department of Labor’s annual Consumer Expenditure Survey, Bernicke noticed that retirees spent significantly less than people who were still working, and that older retirees spent less than younger retirees. The drop in retiree spending was present in all basic categories — food, shelter, clothing, transportation and entertainment — except healthcare, which was somewhat higher for older retirees.

The reduction in spending does not seem to be the result of historical circumstances, such as having lived through the Great Depression, since it is evident across generations. As seen in the chart above, people aged 55 to 64 (born between 1932 and 1941) spent a little more than $55,000 per year in 1996. Twenty years later, they were spending $38,691.

Now, consider a younger generation. In 1996, those aged 45 to 54 (born between 1942 and 1951) spent an average of $65,111 per year. By the time they had retired in 2016, they were spending just $50,873, suggesting that regardless of the generation, personal expenditures decline in retirement.

2/11:The budget deficits will kill us sooner or later.

Off-Budget Games   (John Mauldin)

Politicians like to talk about managing the federal budget the way you manage a family budget. This rhetoric makes for good sound bites but ignores an obvious reality: The federal government isn’t like your family. It has exponentially greater powers and responsibilities and is a sprawling behemoth to boot. The same budgetary principles don’t always apply.

For one, you can’t set your home budget and then add additional expenses without changing your budget parameters. The government can do so, and it does. These are the so-called “off-budget expenditures” you may have heard about. They don’t affect the official deficit that is discussed in the press. They do affect the amount of cash the government needs. Where does it get that cash? It borrows it by issuing Treasury paper.

Off-budget expenditures pay for a variety of programs: Social Security, the US Postal Service, and Fannie Mae and Freddie Mac are among the more familiar ones. But the category also includes things like disaster relief spending, some military spending, and unfunded liabilities that turn into actual costs. Federal student loan guarantees sometimes force the government to disburse cash. That’s an off-budget outlay.

Off-budget outlays have risen in part because they include Social Security benefits, and the Baby Boomer generation is retiring. But the other categories mentioned above have grown as well, and they are increasingly problematic.


"The Impact of High School Financial Education on Financial Knowledge and Choices: Evidence from a Randomized Trial in Spain" Fee Download
CEPR Discussion Paper No. DP12632

OLYMPIA BOVER, Banco de España - Research Department, Centre for Economic Policy Research (CEPR)
Banco de España - Research Department
Banco de España - Research Department

We conducted a randomized controlled trial where 3,000 9th grade students coming from 78 high schools received a financial education course at different points of the year. Right after the treatment, test performance increased by 16% of one standard deviation, treated youths were more likely to become involved in financial matters at home and showed more patience in hypothetical saving choices. In an incentivized saving task conducted three months after, treated students made more patient choices than a control group of 10th graders. Within randomization strata, the main impacts are also statistically significant in public schools, which over-represent disadvantaged students.

EFM- The issue revolves around 'right after....' Previous studies in the U.S, shows that any time lag yields 0 results and that the instruction is worthless.  If you don't use it you lose it

While the death of anyone you are close to will be difficult, for grandparents coping with the loss of a grandchild, navigating the dark and unique road of grief may be decidedly more complex. Grandparents who are grieving the death of a grandchild are often “neglected mourners,” taking a back seat to the primary mourners – the parents and siblings of the child who died. When it comes to offering empathy and support, grandparents are often forgotten or are too focused on “staying strong” for their loved ones to process their own feelings.

A Grandparent’s Grief is Unique

According to Dr. Alan Wolfelt, renowned author, educator and grief counselor, when a grandparent experiences the death of a grandchild, they are faced with a unique grieving process, mourning the death on many levels.

Wolfelt explains, “when a grandchild dies, grandparents grieve twice. They mourn the loss of the child, and they feel the pain of their own child’s suffering.”

Grandparents are in the extraordinary position of playing two roles: that of mourner and protector. Dr. Wolfelt continues, “a parent’s love for a child is perhaps the strongest of all human bonds. For the parents of the child who died, the pain of grief may seem intolerable. For the grandparents, watching their own child suffer so and feeling powerless to take away the hurt can feel almost as intolerable.”

Grandparents who live at a distance and did not have close or frequent contact with their grandchild might also experience additional feelings of guilt and regret, or mourn the loss of a relationship they never had the opportunity to embrace.

The Search for Meaning

For people coping with the death of a loved one, the search to find meaning in such a tragedy is a normal and necessary part of the grieving process. This is no different for grandparents who have lost a grandchild. Dr. Wolfelt explains that grandparents – many of whom have already lived long, rich lives – may struggle with feelings of guilt.

It is not uncommon for grandparents to consider questions such as “why couldn’t it have been me, instead?” or “how could God let this happen?”

Searching for meaning in the death of a grandchild may naturally lead to more fundamental considerations, including:

  • How you will carry on living with this devastating loss in your life
  • The meaning and purpose of life
  • Your philosophy on life
  • Your religious and spiritual values

Talking to a trusted friend or professional – perhaps someone outside of the family unit – will allow you to express your feelings and help to relieve the heavy burden weighing on your heart.

How to Support Someone Who is Coping with the Loss of a Grandchild

Dr. Wolflet suggests considering the following tips when supporting a grandparent who has lost a grandchild:

  1. Avoid cliché’s: Words, particularly clichés, can be extremely painful for a grieving grandparent because they diminish the very real and very painful loss of a unique child.
  2. Be aware of holidays and other significant days: Visit the grandparent, write a note or simply give them a quick phone call during these times. Your ongoing support will be appreciated and healing.
  3. Be compassionate: Give the grandparent permission to express their feelings without fear of criticism. Don’t instruct, or set expectations about how they should respond. Never say, “I know how you feel.” You don’t.
  4. Listen with your heart: Listen attentively and try to understand. Don’t worry so much about what you will say, rather concentrate on the words that are being shared with you.
  5. Offer practical help: Preparing food and washing clothes are just a few of the practical ways of showing you care.

Whether you are coping with the loss of a grandchild or supporting someone who is, always be kind and don’t assume unrealistic expectations. There is no timeline for how long grief should last. Dr. Wolfelt suggests taking a one-day-at-a-time approach.

After all, “grief is not an enemy to be vanquished, but a necessity to be experienced as a result of having loved.”

If you had to go through the loss of a grandchild, what tips do you have for other grandparents working through this difficult experience?

Related Articles:

Coping with the Loss of a Grandchild posted by 

Nice Try

The total assets of the largest 1,000 U.S. retirement plans reached a record $10.326 trillion as of Sept. 30, up 10% from a year earlier, thanks in part to outstanding market returns, Pensions & Investments' annual survey found.

Assets of defined benefit plans among the P&I 1,000 rose 7.9% to $6.597 trillion while defined contribution plans rose 13.9% to $3.729 trillion.

Among the 200 largest retirement plans, assets totaled $7.452 trillion as of Sept. 30, up 9.7% from the previous year. DB plans in the top 200 reached $5.218 trillion, up 8% from a year earlier and DC plan assets totaled $2.234 trillion, up 13.9% from the year before.

  1. A Multivariate Model of Strategic Asset Allocation with Longevity Risk




Emilio Bisetti ; Carlo A. Favero ; Giacomo Nocera (Audencia Business School - Audencia Business School) ; Claudio Tebaldi

Population-wide increase in life expectancy is a source of aggregate risk. Longevity-linked securities are a natural instrument to reallocate that risk. This paper extends the standard Campbell–Viceira (2005) strategic asset allocation model by including a longevity-linked investment possibility. Model estimation, based on prices for standardized annuities publicly offered by U.S. insurance companies, shows that aggregate shocks to survival probabilities are predictors for long-term returns of the longevity-linked securities, and reveals an unexpected predictability pattern. Valuation of longevity risk premium confirms that longevity-linked securities offer inexpensive funding opportunities to asset managers.


2/11: Opiods

America's Deadly Addiction

Drug overdose is the single most common cause of death for people under 50 years old in the US and the numbers have rocketed up just in the last two decades, averaging 175 deaths per day. Professor Thad Polk attributes one of the causes to the use of opioids, which have seen an upswing in popularity after pharmaceutical companies and doctors advocated their use for chronic pain in the 1990s. Join this award-winning professor of psychology to explore these shocking numbers as he delves into how opioids affect our brains, why they are so addictive, and what we can do to counter this crisis.

 Some surprising stats:

  • In 2012 Doctors prescribed enough opioid prescriptions for every adult to have their own supply for an entire month.
  • In 2016, 12 states had recorded more prescriptions for painkillers than there were people.
  • 25% of people who are prescribed an opioid drug end up misusing it.
  • Over 2 million Americans are estimated to be addicted to opioids.
The term “gateway drug” is extremely relevant when it comes to opioids. 80% of heroin addicts turned to it after previously misusing a prescription painkiller.

2/11: Buy on the dip?????????????????

 I gotta tell you - NO WAY.  A correction will be more than this 'panic' right now

  1. The Fragility of Market Risk Insurance




Ralph Koijen ; Motohiro Yogo

Insurers sell retail financial products called variable annuities that package mutual funds with minimum return guarantees over long horizons. Variable annuities accounted for $1.5 trillion or 34 percent of U.S. life insurer liabilities in 2015. Sales fell and fees increased after the 2008 financial crisis as the higher valuation of existing liabilities stressed risk-based capital. Insurers also made guarantees less generous or stopped offering guarantees entirely to reduce risk exposure. We develop an equilibrium model of insurance markets in which financial frictions and market power are important determinants of pricing, contract characteristics, and the degree of market incompleteness.


G22 G32


2/11:   DEBT could take us down

The financial world faces at least three key issues, with echoes of the past: cheap money has fuelled a rise in leverage; low rates have also fostered financial engineering; and regulators are finding it hard to keep track of the risks, partly because they are so fragmented. The debt issue is the easiest to understand. When the financial crisis exploded a decade ago, the trigger was excess borrowing among American consumers and financial institutions. Thankfully, this has receded. Western banks and hedge funds have dramatically less leverage than before. This is important and reassuring. It means the core of the financial system is much healthier. We are unlikely to see a 2008-style crisis where strings of banks topple over. But this does not mean that debt has disappeared. Far from it. The Bank for International Settlements calculates that global debt to gross domestic product is now 40 per cent higher — yes, higher — today than it was a decade ago. That is partly due to rising government borrowing in the west. Chinese debt has also exploded. But leverage has crept, almost unnoticed, into the corporate world. Standard and Poor’s, for example, calculates that global non-financial corporate debt grew by 15 percentage points to 96 per cent of GDP, or $13.9tn, in the past six years, and a third of companies have debt-to-earnings above five times — five points more than in 2007. And while this is easy to service in a world of low interest rates, central banks are starting to raise rates. Indeed, this week the 10-year treasury yield rose above 2.8 per cent. One way to make sense of this week’s events, then, is that investors are starting to wake up to these issues. This highlights a second point: financial engineering has proliferated in the low-rate era. A decade ago, investors tried to manufacturer higher returns with products like collateralised debt obligations, or CDOs. This week it was other three-letter acronyms, such as those ETNs, that blew up. Thankfully, the scale of the exotic products creating havoc this week is a mere $6bn-$8bn, and they only affect equity markets, not credit channels. But the bigger point is this: in recent years many investors have built their portfolios assuming that rates would stay low. It will not be easy to unwind this calmly. To make matters worse, the structure of markets is changing due to a digital revolution. JPMorgan estimates that today a mere 10 per cent of equity trading is being conducted in the old-fashioned way, by discretionary human traders; the rest is mediated by computer programs. This appears to have contributed to the wild market swings we saw last week. It also creates a practical problem for regulators: the officials (and investors) who understand cyber issues tend to sit in different departments from those who study finance. The good news is that these issues will not necessarily spark a full-blown crisis — at least not anytime soon. The core of the financial system is much healthier than before, regulators are (a little) wiser, the global economy is still growing and many investors remain flush with cash. But the crucial point to understand is that as rates rise we will almost certainly see more financial shocks. So scoff, if you like, at Lilkanna’s folly. But his or her bad bet was a merely an extreme version of the game that many investors have played in a world of cheap money and rising debt. Ignore that at your peril.

French president Emmanuel Macron has reversed a decade of defence budget cuts by approving nearly €300bn in spending for the military by 2025, as France combats Islamist terror groups at home and abroad.

Does this increase the probability for large conflicts? Yes

How about nuclear war? 30% yes/70% no

  1. The Network of U.S. Mutual Fund Investments: Diversification, Similarity and Fragility throughout the Global Financial Crisis




Danilo Delpini ; Stefano Battiston ; Guido Caldarelli ; Massimo Riccaboni

Network theory proved recently to be useful in the quantification of many properties of financial systems. The analysis of the structure of investment portfolios is a major application since their eventual correlation and overlap impact the actual risk diversification by individual investors. We investigate the bipartite network of US mutual fund portfolios and their assets. We follow its evolution during the Global Financial Crisis and analyse the interplay between diversification, as understood in classical portfolio theory, and similarity of the investments of different funds. We show that, on average, portfolios have become more diversified and less similar during the crisis. However, we also find that large overlap is far more likely than expected from models of random allocation of investments. This indicates the existence of strong correlations between fund portfolio strategies. We introduce a simplified model of propagation of financial shocks, that we exploit to show that a systemic risk component origins from the similarity of portfolios. The network is still vulnerable after crisis because of this effect, despite the increase in the diversification of portfolios. Our results indicate that diversification may even increase systemic risk when funds diversify in the same way. Diversification and similarity can play antagonistic roles and the trade-off between the two should be taken into account to properly assess systemic risk.


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

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

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

NorthShore Care Supply delivers incontinence products discreetly including diapers, pads, wipes and underpads.

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

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

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

2/11: Hoarding

You may have seen reality TV shows about people who hoard mail, gadgets, cats, and even trash. Or, maybe for you, the reality is a little closer. It could be a neighbor or a family member.

When people aren’t able to throw things away, piles can grow to the ceiling. These piles can make it impossible to use bathrooms, bedrooms, and kitchens.

The piles may fall over, trap, and injure people. They can catch on fire. Cluttered homes and yards may attract pests. Neighbors may call the police. Parents may lose custody of children.

People don’t choose to be hoarders. And they aren’t being sloppy or lazy. “This is a very real mental disorder,” says hoarding disorder expert Dr. David F. Tolin of Hartford Hospital’s Institute of Living. “It is important to recognize that people with hoarding disorder have lost control of their decision-making abilities.”

Tolin’s NIH-funded research suggests why it’s hard for people with this disorder to part with items, even things with no real-world value. He found that brain activity was different between people with hoarding disorder and healthy people.

“We’re always puzzled by the fact that many people with hoarding disorder often don’t seem terribly bothered by their circumstance,” he says. “If they don’t have to make a decision, the parts of their brain that are largely in charge of becoming bothered are underactive.”

But if they are forced to decide about whether to discard something, that part of the brain becomes overactive. “And so, the brain is essentially screaming that everything is important.”

Doctors don’t know what causes hoarding disorder. There’s no X-ray or blood test for a diagnosis. Instead, doctors assess how well people are functioning in their lives.

Hoarding disorder can start during a person’s teens or later. It may grow more severe over the decades.

Try not to start an argument. “If a person is not really motivated to do something about the problem, they can dig in their heels. Arguing can even make the problem worse,” Tolin warns.

There’s no effective medication for hoarding disorder, although studies are in progress. Tolin says, “Right now, cognitive behavioral therapy is the only evidence-based treatment we have for hoarding.” This is a type of talk therapy that teaches people how to change their thinking patterns and react differently to situations.

Tolin’s team hopes to improve cognitive behavioral therapy so that it’s even better at helping people to discard items. They’re analyzing the brain activities of people before and after they’re successfully treated for hoarding disorder. If the research team can identify the biological mechanisms of successful treatments, they may be able to develop treatments that are even better.

Some people with hoarding disorder are helped by joining a support group with others who have the disorder. There are also organizing professionals who specialize in helping people get rid of clutter.

How to Help a Person Who Hoards

Explain why you’re concerned:

  • “I’m worried that you could fall or become trapped.”
  • “I’m concerned that you may lose custody of your children.”
  • “I’m afraid your home will catch on fire.”

Then say how to get help:

  • “I can help you find a therapist who specializes in hoarding.”
  • “We can look for a self-help program on how to let things go.”
  • “We can find support groups for people who hoard.”
  • “We can ask the county for resources.”

2/11: global stocks have fallen from peak to trough by more than 10% in two-thirds of the years since 1979, yet “most of those times posted a gain for the year.”

  1. Fund Tradeoffs




Pástor, Luboš ; Stambaugh, Robert F. ; Taylor, Lucian

We derive equilibrium relations among active mutual funds' key characteristics: fund size, expense ratio, turnover, and portfolio liquidity. As our model predicts, funds with smaller size, higher expense ratios, and lower turnover hold less liquid portfolios. A portfolio's liquidity, a concept introduced here, depends not only on the liquidity of the portfolio's holdings but also on the portfolio's diversification. We derive simple, theoretically motivated measures of portfolio liquidity and diversification. Both measures have trended up over time. We also find larger funds are cheaper, funds trading less are larger and cheaper, and excessively large funds underperform, as our model predicts.


Diversification; Mutual funds; portfolio liquidity


G11 G23


From 1926 through 2017, the S&P 500 returned about 10.2%. Unfortunately, many investors naively extrapolate historical returns when estimating future returns. In this case, that’s a bad mistake, because some of the return to stocks was a result of a declining equity risk premium, resulting in higher valuations. Those higher valuations now forecast lower future returns.

The best metric we have for estimating future returns is the Shiller cyclically adjusted price-to-earnings (CAPE) 10 ratio. The inverse of that metric is an earnings yield (E/P). It is used to forecast real returns. As I write this, the Shiller CAPE 10 is at 34.3, producing a forecasted real return of just 2.9%. To get an estimate of nominal returns, we add the difference between the yield on the 10-year nominal Treasury bond (2.63%) and 10-year TIPS (0.57%), which is about 2%. That gives us an expected, forward-looking nominal return to stocks of roughly just 5%, or about half the historical level.

Before moving on to look at bonds, I will note that forward-looking return expectations for international stocks are better, though, again, well below historical returns. The Shiller CAPE 10 earnings yield for non-U.S. developed markets and emerging markets at year-end 2017 were 5.1% and 6.3%, respectively.

Again, if forecasting nominal returns, you should add about 2% for expected inflation. Thus, if you have an allocation to international markets, your forecast for returns should be somewhat higher than for a U.S.-only portfolio.

Historically Low Bond Yields

From 1926 through 2017, the five-year Treasury bond returned 5.1%, and the long-term (20-year) Treasury bond returned about 5.5%. The current yields on those two Treasury securities are just 2.5% and 2.8%, respectively. Clearly, those investors relying on historical returns are likely to be disappointed, as the best estimate we have of future returns comes from the current yield curve.

Traditional 60/40 Portfolio

Over the last 36 years, from 1982 through 2017, a 60% S&P 500 Index/40% five-year Treasury portfolio returned 10.4% with volatility of 10.2%. Note that the 10.4% return was almost 2 percentage points a year higher than the portfolio’s return over the full 90-year period from 1928 through 2017, which was 8.5%, with a volatility of 12%.

Investors building plans based on that 10.2% return over the last 36 years, or even the lower 8.5% return figure covering the last 90 years, are running a great risk, as forward-looking return expectations are right now much lower. Even if we were to use a more aggressive 6% expected return to stocks, given the low yield on safe bonds, a 60/40 allocation would only provide an expected return of 4.6%.

The lesson here is that, when designing a financial plan, investors should be sure to use current estimates of returns.

EFM- but think of this. Is it possible over a 25 to 30 years period to avoid the big risks of recessions? Would that increase the average return? Yes and yes. Is it possible to use all equities and increase the return as well? Yes. So would it be possible to therefore show a potential return up to 6.5%? Yes. Is 6.5% much better than 4.6%. Yes. Would the risk of that allocation be less than that experienced with a 60%/40% standard split? Yes

If I was more conservative than 6.5%- let's say 5.6%, does it beat 4.6%. Yes.


The Jews had a message from the Holocaust- Never Again! Not enough people apparently remember

  • Leon Cooperman urges "regulators and the financial services industry to deal with the crazy" derivatives.
  • The billionaire founder of Omega Advisors says these instruments "have been created that are destroying the best capital market in the world."
  • He says the market swoon had "nothing to do with economics."
EFM- I also have a problem with a number of the newer ETFs and a bunch of 'Alternative Investments'.

2/8: Blockchain is a decentralized database shared across all users that facilitates the process of recording transactions and tracking assets in a business network.


Icahn warns. Reuters: "Billionaire activist investor Carl Icahn warned on Tuesday that investors have exposure to “way too many derivatives” and called the stock market’s nosedive just “rumblings of an earthquake... The market is really not a place for the average person to be playing around with derivatives,” Icahn said on CNBC. “Today, you have these triple-leveraged ETFs that are crazy.”

SSDI is not a gusher of free federal money for lazy people with backaches. It’s a stingy, hard-to-access program that helps some of the country’s most desperate citizens scrape by; applying takes months or years, and more than 60 percent of applicants wind up being rejected anyway.
SSDI is a thin piece of duct tape holding the American safety net together, ensuring people hit with severe medical misfortune have some means of survival. Cutting it without providing a viable alternative wouldn’t revitalize the economy or help disabled people find dignified work. It would leave some of the country’s most vulnerable without a way to get by.

The regions where people are more likely to be on disability map onto objective measures of health status — like years lost due to early death, diabetes and heart disease rates, and even cancer rates. SSDI serves people who are desperately sick or injured; its beneficiaries have a mortality rate triple that of other people their age, and one-fifth of men and one-sixth of women on the program die within five years of first getting benefits. It’s no accident that it’s concentrated in areas where that kind of severe hardship is also concentrated.
But the single best explanation for the distribution of SSDI, is the share of high school dropouts in each state.

Only about a fifth of people on SSDI lack a high school diploma, but education nonetheless is a powerful predictor of the program’s geographic distribution. That’s largely because low levels of education are correlated with poor health. A recent study by MIT economist James Poterba, Dartmouth's Steven Venti, and the National Bureau of Economic Research's David Wise found that "a large component of the relationship between education and DI participation — more than one-third for men, and over two-thirds for women — can be attributed to the correlation of education with health, and of health with DI receipt."

Rates of Disability Receipt, by State, and Related Factors


Social Security Disability Receipt Ratea
Social Security and SSI Disability Receipt Rateb
High-School Completion Rate, Native-Bornc
Median Aged
Foreign-born Share of Populatione
State Industry Mix (Percent “Blue-Collar”)f
Poverty Rateg
Unemployment Rateh
United States
District of Columbia
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Rhode Island
South Carolina
South Dakota