Master Financial Education

Financial Planning Daily Commentary 2017
The  most intensive and extensive on the Web
  E. F. Moody



World Clock by

US Debt Clock
Simply Amazing= includes almost all statistics you would need globally+

3/23: Market timing

Investors typically fail at market timing because they exit too late and, likewise, re-enter too late, Odean says. Rather, clients should now be huddling with their financial advisors to structure a plan for if and when the market drops precipitously.

EFM-  Clients should already have a plan in place. They need to find out what the adviser did in 2000 and 2008. If they were not an adviser then, maybe you got the wrong adviser. Just as critical- if they said they just did a "buy and hold and the market always comes back."  Unfortunately the impact of 2000 had ego type investors losing well over 65%, In 2008, they were faced with everything dropping- their houses, jobs, businesses, marriages et al. Minor swings of 10% to even as high as 15% represent corrections- not wholesale devastation. But what you need to do in case of another big mess should have already been communicated  to you. If not, you may want to run away. .

3/23: I know this is a long article but the material is necessary if you are old, going to get old, know someone who is old.... well you get the picture. As regards financial planning, an adviser MUST be cognizant of the telling signs and that an 'investor' really has little clue to what they are being told.

Detection of Alzheimer's
By Kristine Dwyer, Staff Writer

Dementia itself is not a disease, but rather a set of symptoms that accompany specific diseases.  Dementia is a general term for the loss of memory, language and recognition that is severe enough to interfere with everyday life. Researchers believe dementia may be caused by a combination of genetic and environmental factors. Some diseases that cause dementia are irreversible and include Huntington’s disease, Pick’s disease, Parkinson’s disease, Lewy body dementia, multi-infarct dementia and Alzheimer’s disease (AD), the most common form of dementia, accounting for 60-70% of the diagnosed cases.

An estimated 4.5 million people in the United States have dementia. On average, patients with AD live from 8 to 10 years after they are diagnosed, although the disease can last up to 20 years. The disease usually begins after age 60 and the risk increases with age. Younger people may get AD; however, it is much less common. Ten percent (10%) of Americans age 65 and older have AD and it affects fifty percent (50%) of Americans age 85 and older. AD is one of the most feared mental disorders because of its progressive and relentless attack on the brain. Despite its prevalence, dementia may go unrecognized or be misdiagnosed in the early stages of the disease. 

According to the Alzheimer’s Association and current national studies, there are many reasons to support the early detection of AD.  An early diagnosis is crucial because that is when the most can be done to slow the progression of symptoms. In addition, early treatment can have a considerable effect on maintaining a patient’s current level of functioning. An early and accurate diagnosis can also help to identify reversible conditions that may mimic dementia such as depression, medication side effects, substance abuse, vitamin deficiencies, dehydration, bladder infections or thyroid problems. An initial assessment can avoid the trauma of a diagnosis of dementia where it does not exist. It also prevents unnecessary and possibly harmful treatment resulting from misdiagnosis.  Other reasons include:

  • Identifying the cause of dementia leads to proper care and allows patients a greater chance of benefiting from existing treatments

  • Early diagnosis can help resolve the anxiety that accompanies noticeable, yet unexplainable changes in behavior

  • Educating persons with dementia and their caregivers gives them time to develop advanced care planning

  • The quality of life for both the patient with AD and the family can be maximized.

The earlier the treatment, the better the chance of a favorable response to treatment, the longer the delay of progressive symptoms and the less financial cost overall. The early identification process, currently recommended by the Chronic Care Network for Alzheimer’s Disease, includes two key tools to identify people who may have dementia.

Tool 1: Education and Awareness Materials which recommend the use of triggers that signal possible dementia and include the Ten Warning Signs of Alzheimer’s Disease.

Tool 2: Family Questionnaire which aims to collect data from family members who are often the best historians and are more likely to be aware of the signs and symptoms (of possible dementia) that are not apparent to the medical staff.

The Ten Warning Signs of Alzheimer’s Disease

  1. Memory Loss

  2. Difficulty Performing Familiar Tasks

  3. Problems with Language

  4. Disorientation to Time and Place

  5. Poor or Decreased Judgment

  6. Problems with Abstract Thinking

  7. Misplacing Things

  8. Changes in Mood or Behavior

  9. Changes in Personality

  10. Loss of Initiative/Motivation

If you recognize any warning signs in yourself or a loved one, the Alzheimer’s Association recommends consulting a physician for a complete assessment. Early diagnosis of Alzheimer’s disease or other disorders causing dementia is an important step to getting appropriate treatment, care and support services.

The Family Questionnaire is designed to help identify patients with memory problems that might go unnoticed by clinicians. It consists of five simple questions:

In your opinion, does your loved one have problems with any of the following challenges and how often?

  1. Repeating or asking the same thing over and over?

  2. Remembering appointments, family occasions, holidays?

  3. Writing checks, paying bills, and balancing the checkbook?

  4. Deciding what groceries or clothes to buy?

  5. Taking medications according to instructions?

The information collected from these tools can be shared with the patient’s primary care physician and then a determination of need for further testing or a referral to a specialist can be made at that time.


There is no single diagnostic test to detect whether a person has Alzheimer’s disease.  However, diagnostic tools and criteria have been developed in recent years to make a clinical diagnosis of AD with an accuracy rate of 85-90%. The factors used to complete a diagnosis include:

  • Medical History

  • Mental Status Evaluation

  • Physical Examination

  • Neurological Examination

  • Neuropsychological Evaluation

  • Brain Scans

  • Laboratory Tests

The assessment of AD might begin with a memory screening test in the primary care physician’s office and then the patient may be referred to a neurologist, neuropsychologist, a geriatric psychiatrist or other specialist trained in the diagnosis of AD for further testing.  Caregivers and family members are essential to the process of diagnosing early-stage Alzheimer’s disease. They may be able to supply valuable information and validate or deny the patient’s own reports.

A diagnosis of Alzheimer’s disease usually falls into one of three categories:

  1. Probable Alzheimer’s— indicates a physician has ruled out all other disorders that may be causing the dementia.

  2. Possible Alzheimer’s— indicates the presence of another disorder that could be affecting the understood progression of Alzheimer’s. The disease process appears different than what is normally seen; yet Alzheimer’s disease is still considered the primary cause of dementia symptoms.

  3. Definite Alzheimer’s— this diagnosis can only be made at the time of an autopsy because it requires examination of actual brain tissue. An autopsy can confirm the presence of senile plaques and neurofibrillary tangles in the brain, which are the characteristic lesions of Alzheimer’s, to diagnose the disease with 100% accuracy.

Delay of Diagnosis:

Amazingly enough, there is a significant percentage of caregivers who are told, upon bringing their spouse or relative to the physician, that their decline is due to ‘normal aging.’ We now know that dementia is not a normal part of the aging process.

It is strongly recommended that persons experiencing any dementia-type symptoms should undergo diagnostic testing as soon as possible. A delay in diagnosis allows for a missed opportunity for treating the patient and also increases the chances for other problems and demands to multiply for the caregiver. For example, since AD affects memory, patients are at risk of not complying with the treatments that are necessary for problems such as diabetes, high blood pressure, mental health disorders and infections.  A health crisis can then develop, compound the effects of dementia and lead to emergency care or hospitalization. 

Caregivers may initially hesitate to bring a loved one with dementia to the physician.  Researchers at the University of Portland found that it takes an average of 30 months from the time family members notice the first changes and symptoms of dementia for the person to be diagnosed with AD. Reasons cited by caregivers were: lack of knowledge about AD, they did not imagine that the changing behavior was part of an illness, they were unsure what type of doctor to see or how to describe symptoms, they felt overwhelmed with the burden of caregiving or they feared that the illness was truly AD. Many caregivers have reported that prior to the diagnosis, they were nearly overcome with anxiety as they watched their loved one deteriorate. Once the diagnosis was made, they felt a great sense of relief and were finally able to name the disease and move forward toward a plan of care.

There are several other reasons that contribute to a delayed diagnosis of AD. Early symptoms are often disregarded, mistakenly attributed to aging or even misdiagnosed.  Sometimes people with dementia are unwilling to have their mental abilities evaluated, are defensive, or in denial of the changes that are occurring in their lives.  Physicians may not feel comfortable dealing with memory loss issues, may not be trained to administer cognitive tests or are reluctant to place a patient in an uncomfortable testing situation. Patients with high intelligence may be able to score above average on screening tests (despite cognitive decline) and compensate for or even mask their symptoms during the office examination, thus leaving the physician without sufficient evidence to provide a diagnosis. This is the point where caregivers play an important role and can provide the most valuable data to support the possible diagnosis of Alzheimer’s disease.

Treatments and Medication Benefits:

Although there is no cure for AD, new and improved treatments are on the horizon and offer hope. Most health professionals feel that the best plan of treatment includes a combination of medication, changes in lifestyle and support, along with a goal of managing symptoms that affect memory, thinking and behavior. The regional director of the Alzheimer’s Association of Minnesota-North Dakota points out that there is a growing interest in the use of non-medical interventions that may be effective on their own or used in combination with medications.  These interventions may include memory and communication aids, speech therapy, behavioral therapies, memory stimulation therapy, exercise, adequate sleep and  education. The environment also strongly influences the health and capabilities of persons with AD; thus, it is important for caregivers to pay attention to safety factors, reduce stimuli and adjust the surroundings to accommodate the disease.   

AD changes the brain in many ways, which results in a decrease of acetylcholine levels. It is believed that acetylcholine is a chemical messenger that is important for memory, thought and judgment. The US Food and Drug Administration currently approves five prescription drugs, yet only three are actively marketed for the treatment of mild to moderate AD. According to Mayo Clinic, these medications are referred to as cholinesterase (ko-lin-ES-tur-ase) inhibitors and seem to improve the effectiveness of acetylcholine either by increasing the amount in the brain or strengthening the way nerve cells respond to it. The top three cholinesterase inhibitors are Aricept, Razadyne and Exelon. They have all been effective treatment options in clinical trials. The other two medications are: Cognex, which has been on the market since 1993 but is rarely prescribed, and Namenda, which is the first drug approved by the FDA to treat moderate to severe dementia and may be co-prescribed with cholinesterase inhibitors. Treatment with medications has revealed delays in nursing home placements and improvements in cognition and functional abilities in many patients with AD.

Doctors usually start patients on a low dosage of medication and then gradually increase the dosage based on the tolerance level of the patient.  According to a journal of the American Academy of Family Physicians, the above named medications have a low incidence of serious reactions but they do have common side effects that can occur such as nausea, vomiting, diarrhea or weight loss.  Tolerance to these medications often develops over time. Cholinesterase inhibitors must be taken regularly and in a sufficient dosage to benefit the patient. Interruptions of the drug treatment over time will result in sustained or irreversible cognitive decline. If a patient is unlikely to follow a drug regimen or has an illness that could interrupt the drug regimen, benefits will decrease and patients may face greater side effects.  The healthcare provider should consult with the patient and the family to decide together on the best plan of treatment. Pharmacists are also a valuable resource for medication information.

It is important to understand that medication alone cannot stop the disease and medications do not work for everyone. For those who are helped, the effects may be only modest or temporary. Treatment with medication may help prevent symptoms such as depression, sleeplessness or wandering from becoming worse for a period of time and can help keep behavioral symptoms under control. Periodic monitoring and testing of a patient’s functional and cognitive abilities is also recommended.  These results may offer encouragement to the patient’s family and can serve as a guide for doctors, patients and families in planning for the future.

Clinical Trials:

The best evidence of progress in AD research lies in the growth of clinical testing of treatments, prevention of the disease and diagnosis. This alone gives patients and families a reason to hope. Advances in our knowledge and understanding of AD have also led to the development of many new drugs, diagnostic tests and treatment plans. Scientists now recognize the need for earlier detection of AD and are devising new brain imaging techniques and lab tests that could improve diagnosis. One landmark trial that began in 2005 is the Alzheimer’s Disease Neuroimaging Initiative. The goal of this trial is to determine whether standardized brain images combined with laboratory and psychological tests may offer a better way to identify those at risk for Alzheimer’s, track disease progression and monitor treatment effects.

Clinical trials are the final testing ground for new treatments that are currently under investigation. Each trial represents the results of years of scientific thought, observation, and data analysis and is only possible through the participation of patients and their family members. Clinical trials are the principal way that researchers can discover whether a treatment is safe and effective for patients, especially for those in the early stages of the disease. Trials take place at private research facilities, specialized AD research centers, teaching hospitals and even at physicians’ offices. Taking part in a clinical trial can be a big step for both the patient and the family so it’s necessary to discuss the expectations and pros and cons of participation with the clinical trials staff.

There are two kinds of drug trials available:

  • Treatment trials with existing drugs that assess whether an already approved drug may be useful for other purposes. For example, an arthritis treatment may help in the prevention of AD.

  • Treatment trials with experimental drugs or approaches to discover whether a new drug or treatment approach may help improve memory function, decrease symptoms, slow the progression of AD or prevent it altogether. Each one of these clinical trials includes up to three phases. Once these phases are complete and investigators are satisfied that the treatment is safe and effective, the research team can submit its results to the Food and Drug Administration (FDA) for review.

When a person signs up for a clinical trial, they are asked to sign an informed consent form to ensure that they are protected and well cared for during the study. If a participant is unable to provide informed consent because of memory loss, it is still possible for an authorized representative (usually a member of the family) to give permission. Next, patients go through a process of screening to see if they qualify and can safely participate before they proceed with the study. Although clinical trials may not produce miraculous results, many participants believe that even if the benefit to them is small, they are making a valuable contribution toward future research.  Family members have also found that the best benefit of participating in a clinical trial is the regular contact with the research team.  The team can be a link to education, provide advice on the emotional and physical aspects of AD, and offer supportive and helpful information.

The amount and variety of clinical trials underway are a sign of the intensity of research to seek solutions for a disease that robs the mind and takes away the essence of a person’s life. Current clinical trials are available on the Internet under or by contacting the Alzheimer’s Association or the Alzheimer’s Disease Education and Referral Center (ADEAR) at 1-800-438-4380 (a service of the National Institute on Aging).

Caring for a person with AD can be likened to driving on an unfamiliar road, riding a roller coaster or even walking on a tightrope. It can be an incredibly stressful ride, yet rewards can also be visible. The key is to balance your own needs against those of the person you are caring for day to day. Many caregivers find that they are stronger than they ever thought possible and that they feel rewarded knowing they have stayed committed to helping a loved one during the difficult years.

Caregiving can produce a great deal of stress that can lead to physical decline and emotional exhaustion. The health of caregivers is at risk, yet they often become the ‘hidden patients’ while focusing all of their attention on the person with AD. Caregivers need to keep their own health in check and visit their doctor on a regular basis. Support systems must also be alert to signs of caregiver burnout or depression and plans must be made to provide respite to the caregiver. No one can do it all alone. It is heartbreaking to watch a loved one go through the stages of Alzheimer’s disease and caring for them requires an abundance of courage and strength.  Asking for help and taking care of yourself cannot be overemphasized. 

The Alzheimer’s Association assistance is available nationwide and offers a wide variety of programs, educational materials and support services to persons with AD and their caregivers. Many communities have a local or regional chapter and offer regular education and support group meetings. The Alzheimer’s Association also provides:

  • A 24-hour, tollfree (multilingual) Information Helpline (800) 272-3900 that links callers to information about AD, treatments, caregiving strategies and local programs.

  • The nation’s largest Alzheimer’s library including books, journals, cassettes, videos and CDs that can be obtained through interlibrary loans at your local library.

  • Internet support at, including online chat rooms, research updates, brain health tips, the new CareFinder program that assists caregivers in planning care and finding support and the Safe Return program, which helps families locate a loved one who has wandered off or gotten lost.  This Internet site is set up to help families and caregivers make informed decisions.

  • Care Consultation— one of the core services of the Alzheimer’s Association (available in most states) that assists the person with AD or related dementias and their family in planning for, and dealing with, all aspects of the illness experience.

In addition to contacting the Alzheimer’s Association, consider care options such as in-home respite care, adult day programs, home care services, delivered meals programs, or chore services. Keep a personal journal of your journey or a medical journal to record helpful information for yourself and the physician. Continue with activities that are enjoyed. Maintain a network of support and communicate your needs to family members, friends, volunteers, and organizations to avoid isolation. Join a caregiver support group to find hope, gain valuable information from people who understand your position and learn new ways to cope with the challenges you face.

Alzheimer’s disease impacts the whole family. Like a pebble thrown into the water, the ripples of the disease touch the lives of everyone. The signs and symptoms of AD can’t be ignored! Early detection and current treatments can help maintain or even improve memory, thinking and behavior problems plus support the quality of life for persons with AD and their caregivers.


3/22: The Power of Honesty: Why Being Straightforward Matters

Worth the 7 minutes to read.

3/22: Where you will grow up compared to other local areas as well as other states

It is interactive and loaded with great statistics.


Plan Now In Case You Cannot Speak for Yourself Later
By Richard Barid and Michael Smith

If you suffered a stroke today and lost the ability to speak, would your spouse, children or parents have the legal authority to take care of you medically or financially?
Stroke is a brain attack, cutting off vital blood flow and oxygen to the brain. Two million brain cells die every minute during stroke, according to the NSA, increasing the risk of permanent brain damage, disability or death. About 795,000 people in the United States will have a stroke this year, according to the NSA. 
According to the NSA, many strokes could be prevented by practicing healthy habits such as eating right, exercising, managing cholesterol levels and diabetes, and not smoking or drinking heavily. But some strokes, including those in healthy young adults and children, are completely unpredictable.
As the fourth highest cause of death in the United States, stroke will kill about 133,000 people this year, but many more will be incapacitated due to coma or aphasia. Aphasia is a partial or total loss of ability to talk, understand what people say, read or write. About one million people in the United States have aphasia. Most cases are the result of stroke, according to the NSA. About 25 percent to 40 percent of stroke survivors acquire aphasia, according to the National Aphasia Association.
If you were incapacitated by stroke, would your loved ones be able to make financial or medical decisions on your behalf? Keep in mind that just because you are married doesn’t necessarily give your spouse the legal right to make decisions for you. Your loved ones may have to petition the court to be appointed your legal guardian.
However, there is another way. If you set up an advance directive for healthcare, you can rest assured that the person whom you trust most will be in charge should you be unable to speak for yourself. According to a recent article in the American Journal of Preventative Medicine, only 26 percent of people have an advance directive for healthcare.
In Georgia, an advance directive for healthcare combines a health care proxy and a living will. You may also want a durable power of attorney. You can assign one or more people to assume the duties for each.
A durable power of attorney gives someone legal authority to make financial decisions on another’s behalf. A health care proxy, as an advance directive is sometimes called, similarly appoints someone to make decisions on your behalf, but regarding medical treatment rather than finances.
A qualified estate planning attorney can help you set up an advance directive and a durable power of attorney. These documents do not expire, but it is recommended that you update them every couple of years for your and your family’s peace of mind. You will want to make sure that the person whom you designated as your proxy is still the best choice and your family will want to know that your directive still reflects your current wishes.


"Optimal Timing in Rotten Kid Families" Free Download
CESifo Working Paper Series No. 6333

JOŐO RICARDO FARIA, University of Texas - Pan American - College of Business Administration - Department of Economics & Finance
University of Alberta - Department of Marketing, Business Economics & Law

In a family context with endogenous timing, multiple public goods and alternative parental instruments, we show that the optimal timing for the sequential-action game played by rotten kids and a parent depends crucially on whether the kids are homogeneous or heterogeneous. For homogeneous kids, the rotten kid theorem holds irrespective of the parental policy instrument, implying that it is optimal to let the kids to be action leaders. If the kids are heterogeneous, however, parental leadership yields a first best outcome and, hence, it is optimal whenever the kids are economically dependent and agree on the tradeoff between public goods.


Types of home insurances

According to accepted insurance industry standards, there are seven types of homeowner's insurance on the market today. These are a few of the more common types:


  1. Bubbles for Fama




Robin Greenwood ; Andrei Shleifer ; Yang You

We evaluate Eugene Fama’s claim that stock prices do not exhibit price bubbles. Based on US industry returnpricels 1926-2014 and international sector returns 1985-2014, we present four findings: (1) Fama is correct in that a sharp price increase of an industry portfolio does not, on average, predict unusually low returns going forward; (2) such sharp price increases predict a substantially heightened probability of a crash; (3) attributes of the price run-up, including volatility, turnover, issuance, and the price path of the run-up can all help forecast an eventual crash and future returns; and (4) some of these characteristics can help investors earn superior returns by timing the bubble. Results hold similarly in US and international samples.


G02 G1 G12 G14


  1. Choosing two business degrees versus choosing one: What does it tell about mutual fund managers' investment behavior?




Andreu, Laura ; Pütz, Alexander

We analyze what a second business degree reveals about the investment behavior of mutual fund managers. Specifically, we compare investment risk and style of managers with both a CFA designation and an MBA degree to managers with only one of these qualifications. We document that managers with both degrees take less risk, follow less extreme investment styles, and achieve less extreme performance outcomes. Our results are consistent with the explanation that managers with a certain personal attitude that makes them take less risk and invest more conventionally choose to gather both qualifications. We rule out several alternative explanations: our results are not driven by the respective contents of the MBA and the CFA program, by the manager's skill, or by the fund family's investment policy.


Mutual funds,Investment behavior,Manager education,MBA,CFA




Sick but absolutely hilarious

3/20"Financial Ratios to assess investment performance: the Treynor and Sortino ratios

In order to fully understand the Treynor and Sortino ratios, we need to understand what a risk free asset is, what beta is, and what standard deviation is. Common examples of risk-free assets are U.S. Treasury Bonds. Buying these bonds pretty much means that the U.S. government is handing you an IOU. These bonds are backed by the U.S. government and are therefore commonly thought of as the closest thing to a rise free asset. Beta is a measure of the volatility that determines how much a security moves in comparison to the overall market. For example, if the market goes up 10% and a certain security goes up 20%, its beta would be 2. Another way analysts assess risk is by using standard deviation. Standard deviation tells us how much the investor’s performance deviated from the mean.

Have fun!

3/20: This smells like 2008.

3/20: Interesting
  1. Facing Yourself: A Note on Self-Image




Armin Falk (Universität Bonn)

Numerous signaling models in economics assume image concerns. These take two forms, as relating either to social image or self-image. While empirical work has identified the behavioral importance of the former, little is known about the role of self-image concerns. We exogenously vary self-image concerns in manipulating self-directed attention and study the impact on moral behavior. The choice context in the experiment is whether subjects inflict a painful electric shock on another subject to receive a monetary payment. Three between-subjects conditions are studied. In the main treatment, subjects see their own face on the decision screen in a real-time video feed. In the two control conditions, subjects see either no video at all or a neutral video. We find that the exogenous increase in self-image concerns significantly reduces the fraction of subjects inflicting pain.


self-image, moral behavior


D64 C91


3/20: Look at the bold print. Is it jealousy??
  1. Is trustworthiness written on the face?




Dilger, Alexander ; Müller, Julia ; Müller, Michael

Trust is an important driver of economic transactions, but how do people decide whom to trust? We conduct an experiment to investigate whether people are able to predict trustworthiness by judging the face of a stranger. The behavior of the second player in the Trust Game is used as a measure of trustworthiness. Other subjects assess the trustworthiness of the second players of the Trust Game in the second stage using standardized photos of their faces. We find no significant interrelation in our statistical estimations between trustworthiness ratings and the behavior of the examined players. Surprisingly, players that were rated as more attractive sent back significantly less in the Trust Game.


C72 C91 D03 D81 J71


3/20: Has some valid points though I do not agree with it all. Not bad overall

8 Things Most Americans Don’t Know About Retirement

3/20: I still feel that most of these are sold improperly

 IUL premium revenue for the three months ending December 31, 2016 totaled $534.5 million. That’s up a marked 18 percent from third quarter sales of $452.9 million. But fourth quarter 2016 sales dipped modestly (1.3 percent) from the $541.5 million revenue recorded in the fourth quarter of 2015.

For all of 2016, IUL sales topped $1.97 billion — an all-time high for the product. That compares with 2015 sales of $1.86 billion, a 5.9 percent increase.

NAIC Actuarial Guideline 49 (AG 49), which took on Sept. 1, 2015, establishes for policy illustrations a benchmark-crediting rate, one of many moving parts in an IUL policy. The guideline also establishes a ceiling for index values used in policy illustrations, limits loan crediting rates to 100 basis points over a charged rate and requires additional disclosures.

Like other NAIC model acts, the guideline is not mandatory for states. But most state insurance commissioners tend to adopt model laws, in part to lend consistency to insurance regulations across state lines.

Industry stakeholders have feared that the NAIC guideline would lead to greater uniformity, and thus less innovation, in IUL product design. Because policies must now be illustrated based on their general account, cash values will show in most cases a lower amount than when illustrating using an index.

Hedge trimmer
  1. Behavioural economics and financial consumer protection




Anne-Francoise Lefevre (OECD) ; Michael Chapman (OECD)

The G20/OECD Task Force on Financial Consumer Protection has highlighted that "regulators and supervisors can use the insights gained through behavioural economics research to inform their approach to potential remedies to help consumers". This paper, prepared under the aegis of the G20/OECD Task Force, first provides some historical context for the development of the field of behavioural economics and its increased application to policy. It then looks more specifically at the application of behavioural economics in the area of financial consumer protection. Common biases that individuals demonstrate in the context of making financial decisions are identified, and an overview of how numerous governments are testing and implementing the application of behavioural economics for policies promoting financial consumer protection is provided. The paper concludes by highlighting the opportunity for behavioural economics to help provide cost-efficient ways of making policy more effective at promoting positive outcomes for consumers, and stressing the need to continue an open dialogue with policy makers, regulators and supervisors to exchange experiences and good practices.


behevioural economics, financial consumer protection


D14 D18 G28


3/20" Inverse bonds

  1. Memory, Attention, and Choice




Pedro Bordalo ; Nicola Gennaioli ; Andrei Shleifer

We present a theory in which the choice set cues a consumer to recall a norm, and surprise relative to the norm shapes his attention and choice. We model memory based on Kahana (2012), where past experiences that are more recent or more similar to the cue are recalled and crowd out others. We model surprise relative to the norm using our salience model of attention and choice. The model predicts unstable and inconsistent behavior in new contexts, because these are evaluated relative to past norms. Under some conditions, repeated experience causes norms to adapt, inducing stable ? sometimes rational ?behavior across different contexts. We test some of the model?s predictions using an expanded data set on rental decisions of movers between US cities first analyzed by Simonsohn and Loewenstein (2006).


  1. Diversity in Cognitive Ability Enlarges Mispricing in Experimental Asset Markets




Nobuyuki Hanaki (Université Côte d'Azur) ; Eizo Akiyama (University of Tsukuba, Japan) ; Yukihiko Funaki (Waseda University, Japan) ; Ryuichiro Ishikawa (University of Tsukuba, Japan)

Does diversity of cognitive ability among market participants increase mispricing? Does common knowledge of heterogeneity in relation to cognitive ability of market participants further increase mispricing? We investigated these questions by measuring subjects' cognitive ability and categorizing those above median ability as type `H' and those below median ability as type `L'. We then constructed three market types, each containing six traders: 6H, 6L, and 3H3L. Subjects were informed of their own cognitive type and, depending on the treatment, that of the others in their market. We found that heterogeneous markets (3H3L) generated significantly larger mispricing than homogeneous markets (6H or 6L) regardless of whether subjects were informed about the cognitive type of others in their market. Thus, diversity of cognitive ability among market participants increased mispricing. However, common knowledge of heterogeneity or homogeneity in the market did not have a signi cant additional effect.


Cognitive ability, Heterogeneity, Mispricing, Experimental asset markets


C90 D84


3/20: Why these comments from economist Nuriel Roubini, Because his material is generally spot on. Brilliant mind

"[Markets] are overestimating the positives of the US-Trump policies. Infrastructure, stimulus, deregulation, tax cuts: I think Trump will achieve much less on those dimensions," he said. "And they're underestimating the risk that the U.S. protectionist policies are going to lead to trade wars, that the restrictions on immigration are going to slow down labor supply, and that micromanaging the corporate sector is going to be negative." 

Roubini added that the policy mix for the U.S. also presents a challenge: Fiscal stimulus is going to force the Fed to tighten more, it's going to push up interest rates and the dollar, he said. "In a way it's going to weaken the economy over time."

3/19" A sampling of what courses would be the most beneficial


3/19: Financial Literacy Test & Survey Center

Worth a look. Lots of 'stuff'

3/19" It's different this time (no it isn't) Robert Shiller

Back in the Dotcom era  traders were captivated by a “new era story” of technological transformation: The Internet had redefined American business and made traditional gauges of equity market value obsolete. Now, the game changer everyone’s buzzing about is political: Donald Trump and his bold hopes of slashing regulations, cutting taxes and turbocharging economic growth with a trillion-dollar infrastructure boom.

“They’re both revolutionary eras,” says Shiller, who’s famous for his warnings about the dot-com mania and housing market excesses that led to the global financial crisis. “This time a ‘Great Leader’ has appeared. The idea is, everything is different.”

EFM- this is momentum investing with globally manufactured/fabricated  economics. Zero and below zero interest rates still exist and someone can say, ' buy buy buy????? The letdown should be larger than 2000 (49%) and might even surpass 2008 (57%). I do not know when this will happen but the more Trump's mouth makes local, national and global stupidity, the closer it becomes. Maybe the FED can make up another type of new economy and spend billions more on muzzles, but it's ability to make it work is hampered by rates still being so low. It is true that the FED agrees that our rates can go below zero, but that is because we print out own money. The second and third tier countries will be crippled for decades. Maybe we can ask North Korea for a loan. (Though I believe that negotiations  with NK will be futile (as all others have) and some type of military action will be necessary to get that little twirp and stop a nuclear standoff down the line. China will be a major player and I am not so sure they will 'allow' such intervention. If so, we can maintain a balance of evenness in the area. If China disagrees (and very well might with their new islands in the China sea) , then our problems triple.

3/19:   Roubini : #Trump is against Capitalism

"The market is going higher but think about his (Trump's) economic policies ... His sense of policy doesn't make sense," 

"The supply-side trickle-down economic policies, they are not going to help the white working class," he added. "A strong dollar is going to force him to become even more protectionist and bash globalization, trade and migration."


EFM- this article is long and demanding. But it is an excellent insight to the human brain (oxtmoron?) . Probably take a few reads to put the issues into focus.

“Once formed,  impressions are remarkably perseverant.”

reasonable-seeming people are often totally irrational''

Humans’ biggest advantage over other species is our ability to coöperate. Coöperation is difficult to establish and almost as difficult to sustain. For any individual, freeloading is always the best course of action. Reason developed not to enable us to solve abstract, logical problems or even to help us draw conclusions from unfamiliar data; rather, it developed to resolve the problems posed by living in collaborative groups.

“Reason is an adaptation to the hypersocial niche humans have evolved for themselves,”. Habits of mind that seem weird or goofy or just plain dumb from an “intellectualist” point of view prove shrewd when seen from a social “interactionist” perspective.

“myside bias.” Humans aren’t randomly credulous. Presented with someone else’s argument, we’re quite adept at spotting the weaknesses. Almost invariably, the positions we’re blind about are our own.

“One implication of the naturalness with which we divide cognitive labor is that there’s “no sharp boundary between one person’s ideas and knowledge” and “those of other members” of the group.

This borderlessness, or, if you prefer, confusion, is also crucial to what we consider progress. As people invented new tools for new ways of living, they simultaneously created new realms of ignorance; if everyone had insisted on, say, mastering the principles of metalworking before picking up a knife, the Bronze Age wouldn’t have amounted to much. When it comes to new technologies, incomplete understanding is empowering.

People believe that they know way more than they actually do. What allows us to persist in this belief is other people.

Surveys on many other issues have yielded similarly dismaying results. “As a rule, strong feelings about issues do not emerge from deep understanding,” Sloman and Fernbach write. And here our dependence on other minds reinforces the problem. If your position on, say, the Affordable Care Act is baseless and I rely on it, then my opinion is also baseless. When I talk to Tom and he decides he agrees with me, his opinion is also baseless, but now that the three of us concur we feel that much more smug about our views. If we all now dismiss as unconvincing any information that contradicts our opinion, you get, well, the Trump Administration.

If we—or our friends or the pundits on CNN—spent less time pontificating and more trying to work through the implications of policy proposals, we’d realize how clueless we are and moderate our views. This “may be the only form of thinking that will shatter the illusion of explanatory depth and change people’s attitudes.”

EFM- engaging material that shows how malleable humans are.

3/19: Tips for Traveling with an Elderly Parent

Whatever your situation, don’t let the hassle hold you back. Here are some tips to help you get through traveling with an elderly parent:

Before You Travel

Travel insurance with medical coverage is absolutely necessary no matter what type of trip you’re planning, but if your parent has a pre-existing medical condition it could be difficult to get.

See if you can obtain travel insurance before you book your travel.

Though you’re probably going to take on the majority of the planning, it’s also important that your parent is involved in the decisions. They are an adult, after all, not a child – so be patient with them and try not to be patronizing. Incorporating their ideas into the planning and keeping their priorities in mind will help you keep the peace.

Choosing Your Destination

Some trips happen because of circumstances, and the destination is often not your choice. Births, graduations and reunions are examples. However, if you have the luxury to plan your destination vacation, try to choose a location and vacation that suits everyone’s needs.

Cruises and tours are often geared towards guests of all ages. Just remember to plan extra time for excursions and other outings so you’re not rushed.

The activity level and health of your elderly parent should also factor into the destination you choose. If your parent has mobility issues then choose a destination with terrain that is even and flat. The cobblestone streets of Paris may make for a romantic destination, but it won’t be fun for anyone in a wheelchair or for those with hip or knee problems.

It’s important that your trip can also accommodate privacy for your elderly parent and yourself. Try to book private rooms when possible so that you both can have time apart whenever needed. It’s also a good idea to look for destinations where you can pursue your different interests and then come together for meals. You don’t have to do everything together as a group.

Medical and Safety Considerations When Traveling

Your parent may need to get travel clearance from their doctor or have their doctor fill out information for their travel insurance. This is a good time to get a statement from your doctor clarifying any conditions your parent may have that would set off security alarms at airports or travel checkpoints (hip and knee implants are common culprits).

Your parent should plan to have enough medication to last the duration of the trip and have extra prescriptions on hand just in case.

Keeping on schedule with medications can sometimes be difficult when you’re out of routine and traveling. So also plan on keeping an alarm setting on your phone that will help keep dosages consistent.

Finally, pre-plan for any dietary restrictions or health issues that your parent may have, and make sure you know where local hospitals are before you reach your destination — especially if you’re traveling to a foreign country where English isn’t the first language.

Taking Advantage of Amenities

There are many amenities out there, but you usually need to pre-plan in order to take advantage of them.

You can:

  1. Ask for disabled traveler’s rows on airplanes, buses and trains.
  2. Call ahead for special services like a wheelchair if needed.
  3. If you need it, ask for assistance from the airline — it’s often a free courtesy, but if the assistance is given by airport personnel, keep in mind that it’s customary to tip.
  4. Look for hotels that have many amenities and are wheelchair friendly.
  5. Try to book accessible, ground floor rooms whenever possible.

Use an Elderly Friendly Itinerary and Pack Light When Traveling

It’s usually best to avoid a packed itinerary. Give your parent time to go to bed early and even take naps in the afternoon if that’s their custom. Try to avoid nighttime flights which can be extremely tiring. It’s best to plan for the most direct route with the shortest travel time.

It’s also a good idea to look for senior discount fares whenever possible. Check out:

It’s also best to prepare to be:

  1. Accommodating: If your parent has mobility issues, is hard of hearing, has vision problems, etc… then it’s you who will need to make adjustments, not them.
  2. Patient: Your parent may move slower than you and might not be in as much of a rush as you are. Instead of trying to rush them, give yourself plenty of time. Arrive at the airport early to ensure you get through all the lines – you don’t want to be in a position where you have to rush if your elderly parent is slow and simply can’t move quickly.
  3. Communicative: You want to be clear on expectations up front, including things like who is paying for different parts of the trip. It’s also a good idea to communicate and confirm your parent is clear on the travel itinerary, especially if they’re traveling alone or meeting you at a destination.

Finally, be sure to:

  • Keep all emergency contact numbers, insurance and medical information in an accessible spot in your carry on luggage or on your person(s) at all times
  • Keep four copies of important documentation (a copy for your carry-on, your checked luggage, to leave at home with a friend or relative, and to send ahead to family you may be visiting)
  • Keep necessities like medication in your carry on, in a transparent bag and keep all medication in the original pill bottles as dispensed by your pharmacist
  • Pack carry on only (if possible) so you don’t have too much luggage to manage
  • Pack light
  • Pack a prepaid phone calling card in case you don’t get cell service

Ultimately, traveling with an elderly parent can be a rewarding experience, and the time you’ll spend together will be a gift to you both that you’ll cherish for years to come.

Have you traveled extensively with an elderly parent before? What was your experience like? We’d love to hear your story in the comments below.

Related Articles:

Traveling with an Elderly Parent posted by 

Great social media
3/19: Well, this is comforting

Americans Are Switching From Beer to Pot
About one in four Americans are now spending their money on marijuana instead of beer, new research from Cannabiz Consumer Group found. Twenty-seven percent of beer consumers are legally purchasing cannabis instead of beer, or suggested they would purchase it instead if it were legalized in their state. The research group surveyed 40,000 Americans last year.

EFM- The sale of Twinkies should go through the roof

3/19: Clinical Trials

When doctors give their patients a difficult diagnosis, whether it’s for a condition like cancer or a rarer disease for which there is no standard treatment, they often refer them to The National Institutes of Health and National Library of Medicine provide this web site as a service for people who want to find and participate in trials of experimental treatments.

3/19: FIA Yields That Clients May Never See

The new no-commission indexed annuities, a response to the now-endangered Obama fiduciary rule, could be much richer for clients than commissioned products. But advisor fees are likely to consume the extra juice.


Women in Poverty…
Women live longer, earn less and spend more on healthcare (on average) than men[1]. They necessarily have to do more with less, where retirement is concerned; and the reality is women over age 65 are 80% more likely to live in poverty than their male counterparts according to the National Institute on Retirement Security.

3/19. Did not know this was happening

Climate-warming emissions from burning fossil fuels have remained flat for a third year in a row in a development that suggests a shift to a greener global economy is happening faster than previously thought.

3/19: Robots are acoming

 Michael  Edesess

The new world order will be run by robots and a few exceptional groups. The regular worker will really not be needed.

3/19: Real Estate is getting a little frothy in certain areas

3/19: WOMEN UNPREPARED - A Transamerica survey of women in the U.S. found that 10% of respondents think they are poised for a comfortable retirement, while more than half plan to retire past age 65. They "continue to encounter challenges, including lower pay, time out of the workforce for parenting or caregiving, and longer life expectances that all contribute to unique challenges in adequately saving for retirement."

Can retirement still work? In many cases, yes. Just have to know when and how to avoid big losses.

3/19: FED-UP - The Federal Reserve, which has struggled to stoke inflation since the financial crisis and up until now raised rates less frequently than it and markets expected, raised its key interest rate by 0.25 percentage point on Wednesday, from 0.75% to 1.00%. Fed officials also project they will raise rates two more times this year, depending on how the economy performs.

EFM- A couple months ago I thought there would be no more that two increases. The key economic indexes are generally good for the U.S.I will hold off further hikes at two for until we see what the next quarter. We- and globally- have fabricated economies that can tilt quickly. And though Trump has gotten away with stupidity, I am not so sure this banal foolishness will not cause him lots of problems going forward. Calling out Obama is beyond comprehension.

LTCI INSOLVENCY - The NAIC is looking into revising their Life and Health Insurance Guaranty Association Model Act with regard to insolvency of long-term-care insurers. Issues include policyholder protections and whether life or health insurers should face increased costs for such insolvencies. Agents and clients may be better served with hybrid plans.

These looked great in the late 1990s but almost every actuarial time of life was too short. And you also had interest rates tanking.

3/19: DEBT CRISIS - The math isn't complicated. If the federal government doesn't reform entitlements and government spending soon, the country will face a debt crisis. There is no disputing this. It's inevitable. The only unknown is timing. And the stubborn determination of some leaders in both political parties to ignore runaway entitlement growth - the most urgent domestic challenge facing the United States - means the crisis will come sooner rather than later. Per the CBO, in 2008 federal debt was 39% of the U.S. gross domestic product (GDP). In the summer of 2016, it was 75% of GDP. Without changes, it's projected to be 86% of GDP in 2026, and in 2046, it will be 141% of GDP.  The CPO says, "The prospect of such a large debt poses substantial risks for the nation and presents policymakers with significant challenges."


3/19: SEC HEAD ON DOL RULE - The acting chairman of the SEC has criticized the DOL's fiduciary rule as having nothing to do with investor protection. "To me, that rule, it was about one thing and it was about enabling trial lawyers to increase profits."