Apologies for errors on site recently. Am working on it.

Errold. F. Moody Jr.

click above for bio


Financial and Economic Daily Commentary 2019

Knowledge makes obsolete the inequities that ignorance and prejudice justify



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"  

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
  ain 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

“It’s not the Fed’s job to stop people from losing money.”



Revolutionary Method for Asset Allocation- Increase Returns, Reduce Risk

September 2018


October 2018

Have you sold your Equities yet???

December 2018

Rebuttal to NY Times Retirement article. Terrible Advice & High Risk

February 2019


2/14: Retail Sales Declined at Fastest Pace Since 2009 in December (WSJ)

An important measure of consumer spending posted its strongest drop since 2009 in December, a worrying sign for economic growth as shoppers reined in spending at the close of the year.

EFM- In early 2018 I said there would be THREE interest increases that year. Well, there were four. And I thought just two this year. The FED has essentially gone on hiatus for awhile so no idea where we stand except that the economy is doing OK but there are a LOT of storm clouds. I figured a recession would start in 2019- most said 2020. We shall see but it does look like we could make it OK in 2019. As always, pay attention to an inverted yield curve.


In its January Survey of Consumer Expectations, the bank found that respondents now expect rising unemployment down the road and said the odds of losing a job have risen.

EFM- ISIS may be curtailed since the U.S. is going to say for awhile. But we have done nothing on the death of Khashoggi- though we did stop giving weapons to Saudi Arabia for its war on Yemen- the worst human atrocity facing the world. But what happens with India and Pakistan? That is a wasp's nest. Are we to be placated by another lovefest with Un and Trump????

The study from Premier, a health care company that works extensively with Accountable Care Organizations (ACOs), said that six chronic conditions (check them out in the slideshow above) accounted for close to 60 percent of emergency department (ED) visits at the 750 hospitals it surveyed. The data from 2017 suggests those visits could result in up to $8.3 billion in preventable ED cost.


Theresa May suffers defeat in parliament on Brexit plan B


Theresa May has suffered an embarrassing parliamentary defeat on her Brexit plan B, undermining her credibility as she seeks to continue negotiations with the EU over the terms of the UK's exit.

The prime minister sought MPs’ backing for her approach to renegotiating the withdrawal agreement with the EU after the House of Commons emphatically rejected it last month. But on Thursday evening, the House of Commons again voted against her, by 303 to 258, bringing into serious question her claim two weeks ago to have “a substantial and sustainable majority” of MPs in favour of her approach.

EFM- this is a huge mess that appeared to go away a couple weeks ago. If there is no agreement by March 1, there will be chaos in Engalnd and the EURO. It will still over to us.
2/13: End of insurance agents? Not quite but going in that direction

Chatbots Using Artificial Intelligence are Selling Insurance in 2019
Mose Niccky, A Positive Mind Blogger / THRIVE GLOBAL

2019 will be a year of many new insurance technologies known as InsureTech

In fact, over $2B is estimated to be invested throughout 2019 in these InsureTech companies. Artificial Intelligence, Automation, and Blockchain are driving technology disruption in the insurance industry. They are making insurance shopping experience much better for consumers.

Here are a few more reasons chatbots are being developed and used:

Next-gen chatbots are becoming more and more utilitarian. The term “utility” in this context means something we find so useful that we turn to it on a daily basis without hesitation. The focus would be on improving the competence of the chatbot to execute specific tasks flawlessly, rather than try to be a catch-all conversationalist and source continued engagement.

Chatbots are personalizing customer experiences. Successful chatbots will work to understand using machine learning over time to learn and understand the nuances of the user’s requests and improve the first-contact resolution. The greater the ability to personalize responses will make the customer experience even greater.

Chatbots are now specialized. Users need to know exactly what the chatbot does and be confident that it will do these things well. For example, Leadsurance’s chatbot for insurance agencies does very specific insurance tasks, flawlessly. First, it segments a user into either an existing policyholder who needs assistance or a consumer looking for a quote. And then it executes the quote needed or provides the assistance requested. This means customers can get 24/7 help through the bot instead of trying to connect with an insurance agent.

2/13: How factors change

EFM- I have posted larger charts with many factors. Seems to be mostly the luck of the draw from year to year

When car loan delinquencies rise, it is usually a sign of significant duress among low-income and working-class Americans.


In today’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

Before we move on to the data Make sure you don't miss out on tomorrow's new and improved Oil & Gas Insider, which includes the latest intel on the struggle in Libya's oil crescent and rare data on Canadian crude prices Sign up today for your free trial.

Chart of the Week

-    U.S. exports of ethane have increased from almost nothing in 2013 to as much as 260,000 bpd on average in the first 10 months of 2018, according to the EIA.
-    Ethane is a critical feedstock for petrochemical manufacturing, with plastics as the main end-use.
-    The surge of oil and natural gas liquids production has led to a soaring supply of ethane. That has fueled a petrochemical boom along the U.S. Gulf Coast. 
-    But it has also led to a rapid increase in ethane exports. The U.S. surpassed Norway in 2015 to become the world’s top exporter of ethane (Norway is the only other country to ship ethane internationally). 


The Dangers of Winter Senior Isolation

2/12: Want proof of climate change???
A winter storm in Hawaii has brought violent winds and rare snow in spots. A 191-mph wind gust was generated on the Big Island’s mountain summit of Mauna Kea, and snow fell at Maui’s Polipoli State Park. State officials said it might be the first time ever.

As a geriatric care manager, I am considered an expert in issues relating to the elderly.  However, where my mother is concerned, I am just a daughter who cares.  She often takes the advice of friends and even strangers over mine.

So now she has become the caregiver for her boyfriend, a man diagnosed with Alzheimer’s disease.  Though I have been watching him decline, and discussing the disease process with her, she still does not want to believe that he can no longer take care of himself.   Recently at the doctor’s office, he was told that he could no longer drive, and needs someone to visually see him take his medications.  He has sent away the aides that were hired and needs to move to an assisted living residence.

My mother does not live with him, nor does she want to take on that kind of responsibility.  She cannot make this man move when he thinks it is unnecessary.  She has been communicating with his son who lives out of state and he has not come down to help.  He has been comfortable having my mother look after his father and does not want to accept that she can no longer do this. 

I see that there is a place for an eldercare mediator.  There is a breakdown of communication between my mother and his son, and caregiver responsibilities need to be clarified.  Since neither one of them will listen to me, another professional needs to be called in to help.  I know other geriatric care managers that are also certified mediators.

What Is Mediation?

Mediation is a process in which people meet in a private confidential setting to work out a solution to their problem with the help of a neutral person (a mediator).  The mediator is not a judge, does not decide who is right or wrong, and does not force the parties to accept any agreement or terms to an agreement.  Instead, the mediator listens to the parties explain their concerns and helps them develop and agree upon a workable, mutually acceptable solution.

Eldercare Mediation deals with any conflicts involving seniors and their families. Sometimes children argue about their parents’ care. Sometimes seniors argue with their children. When the conflict begins to deteriorate relationships, a mediator should be called in.

Why Try Mediation?

Mediation is private and confidential. Participants can express themselves in a safe situation where the other participants listen. Mediators keep the focus on the issues so that families can move beyond underlying problems. Exploration of different options and creative problem solving is encouraged. They become empowered and design their own agreements. Older persons participate if able, which gives them maximum control over basic life decisions. This approach is non-adversarial.

What Kinds Of Issues Can Be Mediated?

  1. Medical/Healthcare decisions
  2. Financial decisions
  3. Living arrangements
  4. Communication issues – sharing of information
  5. Family relationships
  6. Decision-making authority
  7. Respite care and support for caregivers
  8. Personal, household care and maintenance
  9. Safety/risk-taking/autonomy – should autonomy be limited?
  10. Needs of other family members
  11.  Less restrictive alternatives to guardianship

How Successful Is Mediation?

In a recent study, 8 out of 10 cases were successfully resolved; 8.5 out of 10 mediated cases were followed through by the parties. The success rate is so high because the solutions are designed by the parties themselves. Even if an agreement is not reached, the parties will walk away with clarified issues and a better understanding of each other’s viewpoints.

Why Do Geriatric Care Managers (with mediation training) Make The Best Eldercare Mediators?

Unlike lawyers, who have specialized knowledge of elder law and legal issues, geriatric care managers have specialized knowledge of elder care. We know what successful aging is, understand the healthcare system, know the local resources for seniors, understand housing options, insurance, and the different types of home health services. We can talk about end of life decisions and discuss palliative versus aggressive care. The utmost important goal is to provide the highest quality of life for our elders and can offer different options to achieve this.

Professional geriatric care managers are generally nurses and social workers with extensive experience working with seniors. We can evaluate and assist families in determining what course of action will provide the best care for their loved one.

For distant families, we can oversee the entire scope of care for our clients. We are on call 24/7 and keep families informed of changes. We provide peace of mind for families, as they know there is someone there to manage any situation that may arise. We are client advocates.


Beef is still for dinner: Meatless 'Impossible Burgers' are on more menus, but America's beef industry isn't budging

Americans love their beef, and despite the initial popularity of meat-free alternatives such as the lab-made Impossible Burger, which has won praise for its meaty appearance and flavor, there is no sign of a slowdown in consumption.

EFM- Why is this here?  Climate change. Say what? Where does most of the carbon dioxide gases come from? Cows by a family wide margin. But emerging market consumers now want to eat more meat so the environment would be negatively impacted as more land is needed for more cows.

If a cow can't produce milk is it a Milk Dud or an Udder Failure?

My reply

1’ll go one step further. I wrote an Ebook on Securities Arbitration about 9 years ago, ‘ The Failure of Securities Arbitration.’  I have acted as an arbitrator, expert witness, taught many, many educational and licensing courses for brokers, insurance agents et al. I have had courses approved by the California State Bar-

Practical Life Insurance and Annuities Analysis and Application.

Practical Investment Theory and Application

I have submitted material to the SEC and FINRA regarding the incomplete ability of arbitrators and arbitrations to update- actually simply initiate- education and training to the process starting in the mid 90s.

Another book, ‘Financial Planning Fiduciary Standards under Dodd Frank’ establishes what should be done by the industry so I have covered that area extensively.

With that background I unequivocally state that complainants are woefully behind the eight ball. First you have novice attorneys lacking in an understanding of securities issues and tend to mount a lot offerings that their client is old, cannot grasp the documents they signed, certainly took more risk, etc. etc. That’s all well and good but they are effectively clueless to be the basics of investing.

It is necessary to understand diversification BY THENUMBERS.  It is necessary to understand risk in real life application. It goes on and on. The plaintiff’s attorney rarely has a clue no matter what they intend. There is no mandatory training for an attorney at all during their degree studies nor anything else subsequently. (To my knowledge, the courses I prepared were the only ones like it in the Unites States. That said, few attorneys took part.)  That absolutely includes the defendant’s attorney as well but they have the ability of experience to use certain hot buttons to get their material across to the arbitrators. So, do the arbitrators understand the basics? Not a chance be they CPAs, judges and more. Look at any description of arbitrator training and see what is offered.

How about experts for the defendants? They are generally past brokers and supervisors that are used frequently to present esoteric positions that the plaintiff will be hard pressed to dispute since the arguments are beyond them. Recognize that the fundamentals of investing have not been taught to brokers as part of licensing. And nothing is added in the supervisory licenses. Actually, no one has to even know how to use a financial calculator as any part of licensing. That includes RIAs .

As for the arbitration I worked on decades ago, I was amazed at the lack of the presentations by both sides and even admonished plaintiffs to the fact that they were not only attempting to defend the offering of a product, but that it was illegal to do so since the defendant did not even remotely fit an ‘accredited investors.’ I was unwilling to let ‘wrongs’ and ineptness lead the way. Therefore it came to be that I was blackballed by the industry by their simply selecting a pool of arbitrators that were inclined to favor- if just from a lack of knowledge- lower awards or none at all to the defendant.

And as far as defendant attorneys, they were far more apt to compromise a case since they could claim fairness in that the defendant got ‘something’. To properly defend a client would take too much time than they were willing to expend.  

This is a short commentary that is backed up by teaching, writing and an experience that exceeds most. If you want more you can read the book but some material is now obviously out of date. And I have not been involved in cases for several years.  

But I will note what pundits might state. Who’s to say that court proceedings will be much better? I have not had but a few cases in court on the matter and lack the experience to judge its virtues- if any. I do think in such litigation, the attorneys might be better prepared………….. It is also true that small cases are simply too expensive since the amount of time to prepare would not be feasible against an unknown award. But a seasoned arbitrator said several years ago that arbitration was getting more like a court in its complexity, time and expense.


There are two major groups: focal seizures and generalized seizures. The difference between the two is how and when they begin in the brain.

  • Simple or Partial Focal – affects a small part of the brain without affecting consciousness or awareness. They may alter emotions, smell, feel, taste, sound. Involuntary jerking or sensory symptoms may also occur
  • Complex or Partial Focal – similar to simple focal, but also involves impaired consciousness
  • Tonic-clonic or grand mal – involves body convulsions. Muscles will stiffen (tonic phase) and the body will jerk and twitch rhythmically (clonic phase)
  • Absence seizures or petit mal – a milder, brief type of activity that causes unconsciousness without convulsions
EFM- It is possible to get life insurance on such individuals depending on their history. Generally it is going to be substandard but don't give up if you are initially denied. One point being that the potential insured only go to those companies that have a long history of such underwriting. Going to you 'average' company is probably going to be a waste of time

Reg BI under the three-pronged SEC package is “pretty broker friendly” and “pretty ambiguous in spots,” Simon said, with the scope of Reg BI being “questionable” in that “it’s episodic when somebody is talking to a broker about investment advice then they would have to wear that Regulation BI hat, but when they’re not then they could put on their broker hat.”

EFM- Yes, sure. It is really clear.

2/10: Stupid and Unnecessary

For government workers, the shutdown hangover won't end

With the threat of another government shutdown looming Friday, workers, federal agencies and private businesses are still trying to dig out from the damage of the last one. While the majority of 800,000 affected federal employees have been able to collect their lost wages, some haven’t received any of their back pay — and others have not been able to return to work.

The shutdown hangover is also hampering private businesses that are waiting for approvals from federal agencies before they can sell their products. Major companies hoping to go public are also experiencing lengthy delays as the Securities and Exchange Commission, which reviews Initial public offerings, is struggling to overcome a significant backlog following the historic 35-day partial shutdown.

the Himalayan mountains will lose more than one-third of their ice by the end of the century.

That would happen if the global average temperature rise could be stopped at 1.5 degrees Celsius above pre-industrial levels. Most scientists agree that target is unlikely to be met. If greenhouse gas emissions continue at a high rate, two-thirds of Himalayan glaciers could be gone by the end of the century, the report says.

EFM- I think most of the human race may be gone by then


2019 Defined Contribution Plan Limits

In Notice 2018-83, the IRS highlighted the following adjustments taking effect on Jan. 1, 2019, for 401(k), 403(b) and most 457 plans:

Defined Contribution Plan Limits 2019 2018 Change
Maximum employee elective deferral $19,000 $18,500 +$500
Employee catch-up contribution (if age 50 or older by year-end) $6,000 $6,000
Defined contribution maximum limit, all sources $56,000 $55,000 +$1,000
Defined contribution maximum limit (if age 50 or older by year end); maximum contribution all sources plus catch-up $62,000 $61,000 +$1,000
Employee compensation limit for calculating contributions $280,000 $275,000 +$5,000
Compensation limit of "key employees" in a top-heavy plan $180,000 $175,000
Compensation limit of "highly compensated employees" in a top-heavy plan (HCE threshold) $125,000 $120,000

"Key employees" and "highly compensated employees" are terms used for testing purposes in the annual nondiscrimination testing of a retirement plan.

The $6,000 catch-up contribution limit for participants age 50 or older applies from the start of the year to those turning 50 at any time during the year.

Source: IRS Notice 2018-83.


Catch Up Contributions

Most plans allow participants to start making catch-up contributions in the calendar year in which they reach age 50. Catch-up contributions are not included in annual deferral percentage nondiscrimination testing, which prevents plans from favoring high-earning participants. "Catch-up contributions can be used to enable higher total contributions and, as necessary, to re-characterize contributions that would otherwise be returned to participants due to IRS limits, said Jack Towarnicky, executive director at Plan Sponsor Council of America, an employers group.

Complying with Annual Contribution Limits

IRS records show that the vast majority of employees comply with annual limits on the amount of compensation that they can contributed to their 401(k) plans, according to an October 2018 report by the Treasury Inspector General for Tax Administration. Nonetheless, the inspector general identified two areas in which compliance could be improved:

  • Some 401(k) plans did not prevent taxpayers from exceeding the annual limit.
  • Some employees exceed annual limits when contributing to multiple 401(k) plans.

The findings suggest that employers ensure that their payroll systems don't accept participant contributions that exceed the annual dollar limit, and that employers educate plan participants who may be holding more than one job that the annual limit applies to total contributions to all 401(k) plans.

Annual Limit as a Contribution Goal

Employers should convey to employees their plan contribution limits for next year. Not all plan participants will be able to fund their 401(k) accounts up to the maximum, of course, but the contribution cap is a goal they should keep in mind and may encourage those who can defer extra dollars for retirement savings to do so.

Those who have not been contributing enough per paycheck to reach the annual cap and who can afford to do so can increase their contributions before the end of the year so that they reach the full annual limit.

Conversely, participants may want to ensure that they don't hit the annual limit prior to year-end, which could mean losing out on employer matching contributions tied to per-paycheck deferrals, unless the plan sponsor has agreed to "make whole" or "true up" participants who max out their annual contributions prior to their final paycheck.

Defined Benefit Plan Limits

Sponsors of defined benefit pension plans should note that the IRS announced the following cost-of-living adjustments under tax code Section 415, also taking effect on Jan. 1:

  • Annual benefit limit. The maximum annual benefit that may be provided through a defined benefit plan rises to $225,000 from $220,000.
  • Separation from service. For a participant who separates from service before Jan. 1, 2019, the annual benefit limit for defined benefit plans is computed by multiplying the participant's compensation limit, as adjusted through 2018, by 1.0264. This is an increase from the previous year, when the participant's compensation limit, as adjusted through 2017, was multiplied by 1.0197.


Medicare: Government Health Insurance

Medicare is a national, government-funded health insurance that all Americans receive upon turning 65 years of age. In some cases, disabled people who are under 65 can also enroll in Medicare with no premiums.

Medicare does not cover assisted living costs or long-term care but can cover short-term rehabilitation care at a nursing home after a hospitalization. It can also pay for rehabilitation services and in-home therapy in some cases.

It’s important to note that Medicare will not pay for the following types of senior living care:

  • Any long-term care services
  • Assisted living costs
  • Long-term care at a nursing home or senior living community
  • Residential care homes

Medicaid: Government-Assistance for Long-Term Care

In contrast, Medicaid is the leading government-assistance program for long-term care. Provided cooperatively by the federal government and the states, the majority of the funding comes from the U.S. government. Medicaid is essentially a safety net for senior Americans who can not afford the care they need without assistance.

Like Medicare, Medicaid acts as insurance but it covers nearly every type of healthcare cost and can be used to pay for assisted living costs and long-term care. While each state has its own rules and regulations, many states allow its residents to use Medicaid to cover assisted living communities and in-home care.

Medicaid eligibility requirements are as follows:

  1. Allocation of almost all your existing assets goes toward care.
  2. Low-income earners or people with medical-related care expenses that exceed their income.
  3. Must reside in the state where receiving benefits.
  4. Permanent resident or U.S. citizenship.

Note: If married, a couple does not need to have exhausted all financial resources. The healthy spouse can usually keep the home but may still have to make significant sacrifices.

Each state has its own guidelines, so it’s important to contact a State Medical Assistance Office for more details or contact an elder law attorney who can walk you through the nuances of a Medicaid application.

The bill grants authority through the Maryland Commissioner of Financial Regulation to adopt regulations impacting: broker dealers, a broker dealer agent, an insurance producer, an investment advisor, a federal covered adviser and an investment adviser representative. The legislation requires that they now adhere to a fiduciary duty to act in the best interest of a customer without regard to the financial or other interest of the person of firm providing advice.

The proposed rules in Nevada do not exempt any advice given to plan sponsors or participants in ERISA-covered retirement plans. New Jersey is also engaged in a regulatory project that would subject financial service professionals with a fiduciary standard of conduct with respect to recommendations of investments.

2/10: Oil prices failed to break out on Friday, as traders showed themselves cautious, voicing concerns about global economic growth

Energy Alert: Make sure you don't miss out on our new and improved Oil & Gas Insider, with two breaking columns on the brewing crisis in Venezuela and the multi-billion-dollar bet China has made on Maduro. Claim your risk-free 7-day trial here.


Friday, February 8, 2019

Oil prices have been flat for several days, weighed down by concerns about the health of the global economy, plus the potential return of supply from Libya. “Growing economic concerns, falling stock markets and emerging doubts that the trade conflict between the US and China will be resolved are putting oil prices under pressure,” Commerzbank wrote in a note on Friday. 

researchers found that education may not be as important in combating cognitive decline and dementia as they once thought.

scientists found that attaining more education did not seem to protect people from eroding thinking skills once the process of cognitive decline began. People with higher levels of education at the beginning of the study did show richer thinking skills on various tests, but education levels did not seem to have an effect on how quickly people progressed once cognitive decline, and in some cases dementia, began.


Decline in unplanned pregnancies has driven fertility trends

Fertility in the United States has fallen dramatically since 2007. Using data from the National Center for Health Statistics, Kasey Buckles from the University of Notre Dame, Lucie Schmidt of Williams College, and Melanie Guldi of the University of Central Florida show that 35 percent of this fertility decline can be attributed to a reduction in unintended pregnancies. They estimate that the share of births that are unplanned has declined by 17 percent since 2006, and that the overall birth rate for women ages 15 to 19—the group most likely to have unintended births—has declined by 50 percent. In contrast, birth rates among older and married women, who are significantly more likely to have planned births, have grown steadily since the 1980s. Because unintended births are most often funded by Medicaid and other healthcare programs, reducing the number of unintended births over the last decade may have significant implications for government spending.


"Continuity Planning for Family-Owned Businesses" Free Download

NICOLE GARTON, York University, Osgoode Hall Law School, Students
Email: nicole@bcheritagelaw.com

The overriding objective of any business family when undertaking succession planning is to ensure the smooth transition of wealth from one generation to the next, while maintaining family harmony and ensuring that the business survives the transition unscathed. The traditional approach of business succession and wealth transition planning, which focusses on a one time transactional process of transferring financial assets from one generation to the next in a tax efficient manner, often gets the timing and order of work wrong. Continuity planning is a long term, multidisciplinary process which starts with the human elements of the family.

Researchers have identified the following four main causes of wealth transfer failures: 1. Lack of family mission and vision: 10%; 2. Breakdown of trust and communication within the family: 60%; 3. Failure to prepare heirs for roles and responsibilities: 25%; and 4. Professional errors in accounting, legal or financial advisory planning: less than 5%.

Of note, less than 5% of succession plans that failed, failed due to professional negligence. Commonly implemented succession and wealth transition structures, which are primarily put in place to minimize or defer taxes and manage risk, result in a failed succession plan, not because of the structures themselves, but in spite of them. The technical skills of wealth transfer are certainly important and should in no way be diminished. That said, proficient legal and tax planning does not ensure a successful transition of wealth. Traditional succession planning only prepares the assets for the family. Continuity planning prepares the family for the assets.

What follows is an overview of: 1. The nature of family business; 2. The main theoretical concepts of family business; 3. The unique importance of succession for family business; 4. The concept of transgenerational wealth; and 5. Continuity planning, its process and management.

EFM-If you understand all that is addressed and how it would be used in real life- you are much better than I am. Not even AI could figure it out.

2/6: EFM- I just picked a random quote from above with my comments---

When faced with uncertainty the only rational course of action is to diversify. 

The overarching responsibility of investment fiduciaries is to seek diversification. Yet portfolios composed of 40% US stocks, 20% foreign stocks, and 40% domestic bonds are over 90% exposed to the equity risk premium, since stocks are so much more risky than bonds. This is a troubling degree of concentration in one source of returns. (The problem with over 'overutilization of equities' is that they will lose so much in a recession. So just use the Process, avoid the losses above 12% to 15% and increase total portfolio return)

Diversification means seeking returns from independent sources. Among traditional asset classes investors have the opportunity to invest in emerging bonds, TIPs, frontier markets, REITs,  commodities, etc. Investors can also diversify into dividend swaps, put-write strategies, reinsurance, variance swaps, and others. In addition, investors can choose from a handful of highly significant factors like value, momentum, carry, trend, and low volatility. (Yea, sure. Most of the added products are rarely ever used since they are so difficult to understand and tricky to use)

Some of these are more highly correlated to one another and to traditional portfolios than others. It is helpful to have a reasonable understanding about how to create portfolios with heterogeneous risks and correlations in order to create an appropriate mix of diversity and balance. This exercise does not need to be - indeed cannot reliably be - precise. But optimizations that are aware of the uncertainties in our estimates, such as Michaud resampled frontiers, can be quite useful. (Correlations are absolutely great in theory and almost impossible to figure out in real time. You do need to know about them and try to 'guess rights but that is about as close as I can get with ordinary use.)

From the perspective of maximizing the opportunity for investors to achieve their financial goals, it is incumbent upon fiduciaries to provide a solution that maximizes the opportunity for diversification. Advisors have a responsibility to determine which alternative sources of return are more or less likely to be helpful. I'm sure even the advisors in this thread would draw vastly diverse conclusions on this matter. (The Process does allow use of almost all funds and ETFs with a history. Mine is simply follow basic equities and sell them when phase 3 of the Process occurs.)

That said, advisors have a responsibility to be frank with clients about the financial realities. Investors can choose the comfortable path, with traditional portfolios that rely exclusively on equities. Or they can take the path of diversification, which is vastly more likely to lead to the financial outcomes the clients are counting on. (Phase 2 allows one to see what losses might occur in a recession and therefor makes plan to enact phase 3 when necessary. The aspect of large losses is removed) 

To be clear: neither of these paths is comfortable. The "easy" path is likely to lead to materially lower returns than investors require to support lifestyle objectives over the coming decades. Which just means investors will have to get comfortable with lower lifestyle expectations. Which is fine, as long as investors are told the truth and given a choice. (the {Process negates this sentence. You can use good equity funds for the greater gain and then avoid losses beyond 12% to 15%.)

Investing provides a premium because it is uncomfortable. The more experience I accumulate in this business, the more I have come to believe that the returns an investor can expect to achieve are directly proportional to the amount of discomfort that they are willing to tolerate. (The Process avoids most of the discomfort while allowing higher returns through equities)


2018 was the fourth-hottest year on record, NASA says. Climate scientists say 'global warming shows no signs of slowing down.'

New government data on temperatures around the world offers cold comfort to those who hope that global warming is on the wane. The data, released on Wednesday by NASA and the National Oceanic and Atmospheric Administration, shows that 2018 was the fourth-hottest year since 1880, the earliest year for which reliable global temperature data is available.

The three hottest years on record were 2015, 2016 and 2017.

The new report makes it clear that “global warming shows no sign of slowing down or stopping,” said Kristina Dahl, a senior climate scientist at the Union of Concerned Scientists.

EFM- Climate change is a war where the enemy is also us. We are not doing enough and along with the rest of the world are basically doing lip service- just see where we will be by 2030. It will  not be pretty.  Mother Earth will win out.

2/6: Returns on cash

The nearly $8 trillion of cash in savings deposits at commercial banks is earning interest at an average rate of 0.09%. The more than $1 trillion of cash at brokerage firms is paying investors just under 0.3% on average, estimates Peter Crane, president and publisher of Crane Data, a firm that monitors cash and other short-term investments.

Meanwhile, savings accounts at online banks and short-term U.S. Treasury securities are yielding 2% to 2.5%. Savings accounts are federally insured against loss, generally up to $250,000; U.S. Treasurys are considered risk free.

2/6: Drugs

Drug overdoses killed 70,237 Americans in 2017. Of these deaths, 47,600 (67.8%) involved opioids and 17,000 involved prescription opioids (24% of total overdose deaths). Legally prescribed opioids are killing 47 of us every day.

2/5: OIL

In this week’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

Energy Alert: Make sure you don't miss out on tomorrow's new and improved Oil & Gas Insider, which includes the latest data on Middle East crude exports and prices and a peek into the next move of energy hedge funds. Sign up today for your free trial.

Chart of the Week

-    The International Maritime Organization has new
regulations taking effect on January 1, 2020 that will slash the concentration of sulfur in marine fuels from 3.5 percent down to 0.5 percent. 
-    Marine vessels consume about 4 million barrels per day of oil, or about 4 percent of total oil demand. 
-    The shipping industry will need to replace high-sulfur fuel oil (the dark red section in the chart) will either low-sulfur fuel oil, higher priced distillate fuels, or LNG. 
-    All have pros and cons, and there will likely be a mix of responses from the industry. 

2/5: Caregiver stress

For many Americans, providing care for someone with an illness, injury or disability is a job — either paid or unpaid. Millions of Americans work in the caregiving field, in nursing homes, assisted living facilities, and in private homes. Millions more help their loved ones if they require assistance. According to the National Alliance for Caregiving, nearly 66 million Americans serve as family caregivers for an ill or disabled relative. On average, family caregivers provide 39.2 hours of care a week, which is roughly the equivalent of a full-time job.

Caregiving can be incredibly rewarding, both professionally and personally. Helping a person with their activities of daily living and ensuring that they can manage their lives successfully is satisfying — but it is also challenging. Providing care to a person with an illness, injury or disability can be emotionally and physically taxing, leading to caregiver stress. Because it can impact your ability to take care of others, managing this stress is vital. As a caregiver, self-care is incredibly important if you are to continue in your role.

What Is Caregiver Stress?

Caregiver stress is a condition that is often found in anyone — paid or unpaid — who is taking care of someone who is ill, injured or disabled. It is related to the emotional and physical strain of providing care, which often involves being “on call” all day. It arises from the overwhelming duty of taking care of a person who is disabled, ill, or injured. Caregiver stress may be compounded for family members as they experience grief due to the decline of their loved one. Caregivers who work with individuals with behavioral difficulties, such as memory issues, aggression and wandering, may suffer from even greater levels of caregiver stress.

Caregiver stress is associated with depression and anxiety, with 40 to 70% of caregivers reporting symptoms of depression. It may also lead to high blood pressure, diabetes, high cholesterol, and heart disease, particularly for women who are taking care of their spouse. Prioritizing the needs of another can often lead to caregivers neglecting their own health, from skipping doctor’s appointments to failing to eat right and get exercise.

Why Putting Yourself First Sometimes Is Critical

If you are a caregiver, you may be a person’s primary support system. The equation is pretty simple: if you fall ill because you are not taking care of yourself properly, then that person will not have anyone to take care of him or her.

There is a saying that is employed frequently in these circumstances that bears repeating: just like on a plane, you have to put your own oxygen mask on first before you can assist others. It may be a cliché, but it is used frequently for a reason — it is true.

Caregiver stress is not a made-up syndrome, or an excuse to be selfish. It is a real phenomenon that impacts people in situations just like yours. If you are taking care of someone, you know how difficult the day-to-day grind can be, from dealing with the emotions of your loved one to handling the challenges of medical appointments and the need to be ready for the unexpected. It wears on a person, both mentally and physically. Taking care of yourself is necessary so that you can continue to function, and keep being there — strong and determined.

How Caregivers Can Prioritize Their Health and Well-being

There are any number of ways that you can engage in self-care throughout the day. By taking care of yourself in ways both big and small, you will be able to take care of your loved one even better.

First, there are things that you should be doing routinely to help fortify yourself to handle the daily stresses that life as a caregiver will throw your way. Start by getting a good night of sleep, aiming for seven to eight hours every night. While it may be tempting to stay up late for some alone time, remember that your days will be long — and getting sleep should be your priority. Next, make sure that you eat well-balanced meals and drink plenty of water. It may be easier to eat junk food or guzzle soda as you focus on the needs of your loved one. But taking the time to eat fruits and vegetables and stay hydrated will help you feel better…and may help you avoid sickness. Finally, you should exercise every single day, even if it is just to do 15 minutes of stretching or a short walk. As a bonus, attempt to get outside during your exercise; you’ll find that the fresh air revives you and helps you stay focused.

Second, you should take the time to care for your physical and mental health needs on a regular basis. Schedule and attend medical appointments, and attend to your own aches and pains. When you are taking care of someone with a chronic illness or disability, you may tend to downplay your own health needs. But it is important to address your medical concerns as they arise — to keep yourself healthy and so that you can be there for your loved one. You should also consider scheduling therapy or counseling sessions. Caregiving is difficult, emotionally-draining work. Having a neutral third party to talk about your feelings with can be invaluable. Support groups may also be available in your area for caretakers. Alternatively, spend time with friends or family members, and allow yourself to vent. It is OK to have complicated emotions about your role as a caretaker — and to express them. Another way that you may be able to seek release from this stress is through other forms of relaxation, such as massage, yoga, mediation, prayer, or even reading.

Third, consider your overall needs. What makes you happy? Think about what you enjoy — and find a way to do it. Ask for help, from friends, family or religious support groups. Local agencies or social workers may be able to provide resources to give you respite. This can give you the opportunity to pursue the things in life that give you joy, such as painting, spending time with friends, golfing, or any other activity. They key is to ask for help, rather than waiting for others to guess that you might need assistance.

While caregiver stress is common, it isn’t unavoidable. By putting yourself first sometimes, you can avoid some of the pitfalls associated with caring for an injured, ill, or disabled individual. In the long run, both you and your loved one will be better off if you focus on yourself sometimes — which is a win-win for everyone.


Moving Averages: January Month-End Update

by Jill Mislinski, 1/31/19


The S&P 500 closed January with a monthly gain of 7.87% after a loss of 9.18% in December. Two of three S&P 500 MAs are signaling "cash"...


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2/5: Reading to the elderly

They don’t ask for much – just a good story now and then. Sometimes, a lot of the time, they may not be able to ask, but you can see it in their eyes. Tired eyes that are saying “I can’t make out the words anymore.” Proud eyes that hate to say, “I’ve had a stroke. I can’t hold a book in my hands.” Quiet eyes that are asking, “Could you take a minute and read me a story?”

Usually a love story that might take them back to a time when they were young and in love as only the young can love.

Helen closes her eyes when I read, perhaps to keep me from reading something in them that is for her eyes only. But she cannot hide the smile that dances across her face. She can not hide the way her hands, folded over her chest, sway back and forth to a melody of memories only she can hear.

Rebecca asks me to change the names in every story to Rebecca and Franklin. She does not close her eyes when I read. She stares, beyond the room, beyond the walls, beyond the building – beyond time itself, into a world where a man named Franklin and a woman named Rebecca lived and loved and promised a forever to each other.

John likes me to read to him. Most men don’t but John does. I think it’s because every woman in every story is, in John’s mind, a woman whose heart he once won. He doesn’t say it but … and lost.

I used to wonder if the seniors I read to considered me a time thief, stealing a little of what little they might have left. But no. I have learned that reading to someone is the antidote to loneliness. It is like giving and getting a hug when we need it most.

A good story is a good escape.

A good safe place to hide.

From a step that isn’t quite as strong as it once was, from eyes a little dimmer than just the other day, from a mind not quite as sharp.

A good story can turn today into yesterday, when loneliness was absent, love and respect ever present. A good story is, indeed, a good escape from, as Shakespeare wrote, “second childishness and mere oblivion, sans teeth, sans eyes, sans taste, sans everything.”

My grandmother was considered forever lost to Alzheimer’s. The last time I saw her, her eyes were closed. No, they were crushed shut. Her fists were clenched so tightly around her bible I could almost see the blood draining from her veins and she was tap, tap, tapping her feet, faster and faster until the tapping became an angry stomping. She was digging into her mind, trying to remember someone, something, anyone, anything, but the deeper she dug the further down she fell into the abyss that was once a well of golden memories. Every memory that had been tucked away for safekeeping, every moment of love and hope, every dream, every victory, every loss, every moment worth saving – no longer accessible.

I removed the Bible from her grip then sat on the floor and started reading. Before long her hands relaxed, she stopped stomping her feet and the only sound in the room was the sound of my voice. I read to her for about an hour. Finally, sadly, I kissed her goodbye. My hand was on the doorknob when she called to me.

“Billy? Is that you?”

I turned. Saw the recognition in her eyes.

“We had some times, didn’t we, Billy?”

That was all. As quickly as it had come, the light went from her eyes and she was gone again.

Don’t be afraid to read to someone considered forever lost to Alzheimer’s. You might just find yourself in the middle of a miracle.

Gwenna is 93.

In our world.

In hers, she is somewhere between seven and eight and what person between seven and eight-years-old doesn’t like a bedtime story? Gwenna prefers stories about angels. One night, long after the bedtime story had lulled her to sleep, Gwenna woke, saw me sitting at her bedside, book of stories still on my lap and asked, “Are you my guardian angel?”

“Yes, darlin’, I am.”

“And you have a book.”

“And I have a book.”

“I like that.”

Carry a book of stories with you. Read to someone who can no longer read for himself or herself.

A good story will lift your old friends from a life as empty as a weed-ridden patch of dirt into the Garden of Eden.


2/4: Northern Australia is having RECORD rains which has inundated 20,000 homes.

They say it is a one in 100 year storm- but we have been hearing that for a few years now as the come in once in every 10 to 20 years. And it will only get worse

2/4: We are doing OK but the world is having a bout of 'slowdown'.

UK construction growth at 10-month low


Brexit uncertainty bites as business activity slows, poll of industry executives shows


2/4: Here are a couple more issues that can sway the international economies- more so America

Netanyahu’s legal woes should be a gift to Israel’s left. Instead, his opponents are busy infighting.

The Labor Party is in disarray and crashing in the polls before April elections, even though police have recommended that Prime Minister Benjamin Netanyahu be indicted in three corruption cases.

Venezuelans are taking incredible risks to protest the Maduro regime

The collective madness behind Britain’s latest Brexit plan

EFM- What happens if all these issues- which obviously include China, Russia, North Korea and more just go sour? Add in our political mess and the answer is...........I don't know. Or better yet these are so many iterations of 'if it happens this way......or this way........or this way.......' you simply cannot get a decent focus. If it all goes well- then our economy can middle through. We still have either a emergency declaration for the wall, Mueller etc.

It just seems that we have too many issues that are coming up very quickly and perhaps a better focus might be valid


Saudi Arabia encouraged foreign workers to leave — and is struggling after so many did

The government imposed fees on the dependents of expatriate workers and restricted foreigners from working in certain sectors. The result, amid rising costs, has been a massive exodus of foreigners from the labor force, but Saudi citizens have not filled the jobs that expatriates are vacating.

EFM- The immigrants are needed to fulfill jobs Americans will not take. Though robotics will eliminate a lot of these jobs each and every year. At that point, I'm not sure there will be enough work for the unskilled.

2/4: Stats

 Not a pretty picture

P/E ratio is double the average. Admittedly looking at the past is far from perfect but when you 'add in' the enormous debt of companies and governments, you absolutely have risks that can mess up stock prices that are too high.

2/4: Here is another valid outlook from Research Affiliates

EFM- I have a couple other returns from reputable firms that tend to mirror the U.S. Large stocks just doing terrible, bonds kind of useless and emerging countries doing very well. It obviously means that if you stay with a buy and hold and get creamed in a recession your ability to invest back to what you lost may be just a pipe dream.

Image result for pipe dream

2/4: Obesity also reduces productivity. The CDC reports each year as much as $6.38 billion ($132 per obese person) is lost due to obesity-related absenteeism.

EFM- couldn't we bill them?


Weekly Market Performance









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*Bond Index




10-Year Treasury Yield




*Source: Bonds represented by the Bloomberg Barclays US Aggregate Bond TR USD. This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results

2/3: EFM- The economy did not blink from the Shutdown regarding employment and added many more workers. But we are getting close to a new arms race- or are maybe already in it. When you have Trump demanding 5.7 billion and the potential of calling an Emergency to build the wall- it stretches the U.S. perhaps too far. If there is a GOOD trade treaty with China, that will definitely help. If not, the issues you see in today's commentary (Caterpillar is a fine example) may come to bear. The world is also holding far more debt that 2008. Syria won and Assad and the Russians must be gloating. Russia also picked up the Ukraine and the Caspian Sea without as much as a word.

And of course there is Mueller's report.

Though on the plus side, Trump and Kim are still in love.

2/3: River basins drying out- Colorado Basin

Climate scientists expect another 2.5 to 4.5 degrees Fahrenheit of warming in the region by 2070 even if global greenhouse gas emissions are substantially reduced.

By mid-century, flows could drop another 20 percent, and there is a significant risk of long droughts in the coming century that will cut river flows even if there is an increase in precipitation. Some climate models do suggest that precipitation may increase — warmer air holds more water — but there is a lot of uncertainty around the projections.

Chart: In the Colorado River Basin: Less Water, Rising Temperatures

some studies have already suggested the region is at the beginning of a megadrought, based in part on reliable projections that global warming will drive an expansion of subtropical dry areas, which means the deserts of the Southwest could encroach on what are now the water producing-areas of the Colorado River Basin, he added.

The lower end of the river basin, in Southern California and Southern Arizona, is already one of the hottest parts of the country. The 2018 National Climate Assessment shows places like Phoenix and Las Vegas will have more frequent heat waves with extreme life-threatening temperatures in the decades ahead. Those extremes will also affect agriculture in the lower basin, but these types of impacts haven't even been considered in the current Colorado River talks, Udall said.