Master Financial Education

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


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

Steven Winks

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

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

 Paul Volcker

“The events of the past few years have revealed limits in economists’ understanding of the economy..."

“Extreme economic events have often challenged existing views of how the economy works and exposed shortcomings in the collective knowledge of economists,”

Janet Yellen

You must not believe everything you think

Stephan Thomas Vitas

You are entitled to your own opinion. You are not entitled to your own facts.

Kevin Kind

Words  are chosen in order to influence us as manipulable objects, not to inform us as autonomous subjects.

Stephen Colbert

language intentionally designed to influence rather than inform is now ubiquitous in the business of sports and politics and markets
 Why? Because it works.

Ben Hunt

Hatred is too strong an emotion to waste on someone you don't even like

Dr. Who

Be careful who you call your friends. I'd rather have four quarters than one hundred pennies.

 Al Capone

Investing is not easy. Anyone thinking that it is, is stupid

Charlie Munger

There is no sense in being precise when you do not know what you are talking about

        John von Neumann

“ . . . there is always a well-known solution to every human problem — neat, plausible, and wrong.”

 Henry Louis “H. L.” Mencken

“As skill improves, performance becomes more consistent, and therefore luck becomes more important.”
Michael Mauboussin

'The Federal Reserve is a giant weapon that has no ammunition left'

Former Dallas Federal Reserve President Richard Fisher

The reason the professors teach nonsense is that if they didn’t, what would they teach the rest of the semester?

Teaching people formulas that don’t really work in real life is a disaster for the world.”

Charlie Munger

“The expected rarely occurs and never in the expected manner.”

– Vernon A. Walters

Nations rise and fall with the quality of their leaders, and their leaders succeed and fail based upon who they are at their core – what they believe, how they think, and what they do. Nothing shapes a leader or a society like their education or lack thereof. Let me be clear: when I refer to an education, I’m not referencing earning a degree, I’m talking about developing a rich intellect – they are not always one and the same.

Mike Myatt

“Some people die at the age of 25 only to be buried at 75.”

Benjamin Franklin

 "If you see fraud and don't shout fraud, you are a fraud"

Nassim Taleb

“We really can’t forecast all that well, and yet we pretend that we can, but we really can’t.”

Alan Greenspan

Arrogance diminishes wisdom

Fail with honor rather than succeed by fraud

Obi Wan Kenobi

. I do not base my forecasts on mathematical models or some finely honed methodology, but on my sense of where the economic world stands today and where I think it might likely be in the near future.

Actually, I’m going to spend the first few pages demonstrating that the mathematical models used to forecast GDP and all sorts of interesting economic events are basically nonsense.

John Mauldin

The essence of investment management entails the management of risk, not the management of returns.

Benjamin Graham

“For the foreseeable future any risks from tracker funds are far outweighed by their ability to offer cheap, diversified funds to retail investors. The real problem is not the rise of Vanguard and the other tracker funds; it is the rotten deal that retail investors have received from the fund-management industry for far too long.”
The Economist

“If you are not confused about the economy, you don’t understand it very well.”

Charlie Munger

The least competent are the most certain of their skills

Dunning-Kruger effect

"In equity markets, high-frequency traders (HFTs) ... account for a larger share of transactions. "Indeed, trading in the U.S. nowadays is concentrated at the beginning and the last hour of the trading day, when HFTs are most active; for the rest of the day, markets are illiquid, with few transactions."


The key to success is the ability to fake sincerity.

Many humorists

“I think the reason why we got into such idiocy in investment management is best illustrated by a story that I tell about the guy who sold fishing tackle. I asked him, “My God, they’re purple and green. Do fish really take these lures?” And he said, “Mister, I don’t sell to fish.”

Charlie Munger

It’s difficult to put in the hard work of reading a great work of literature, when we spend our time writing in 140 characters. 

Mark Myatt

…the current culture of education has displaced parents as the primary instructors of children in favor of professionals who try their best to recreate the home environment at school; has the federal government rather than the community determining the structure of equal educational opportunity; has deserted the idea that memorization trains the brain; has fostered a loss of literacy by replacing the study of original writings with abridged textbooks; and has created a populace unable to engage in reasonable discourse. We have rejected the historically successful model of rigorous, classical education in favor of entertainment and job training.”
Leigh Bortins

“You cannot manage returns but you can manage risk 

Peter L. Bernstein

There is an important methodological point here — distrust conclusions reached primarily on the basis of model results. Models are estimated or parameterized on the basis of historical data. They can be expected to go wrong whenever the world changes in important ways.
Larry Summers

“What you think is much less important than how you think.”
Philip Tetlock

“Doubt is not a pleasant condition, but certainty is absurd.”


Many aspects of investing are fun, but your future wealth isn’t a game. You should manage it in the most cold-blooded fashion. Emotion, pride, ego, dreams, and nightmares have nothing to do with the process, although some investors rely on little else. It is in this sense that volatility really matters

Peter Bernstein

Make everything as simple as possible, but not simpler


“We observe the world how it is today and make these very simple projections and turn them into a terrible scenario. “This approach fails to take into account that the world is changing.”

World Bank’s Social Protection and Labor Global Practice.

The most glaring problem with current risk tolerance questionnaires is its failure to add any perspective and context to what the risk score means.

Brian Leitner

Markets are supposed to be be based on informed consumers making rational choices. Instead, the point of marketing is to create uninformed consumers who will make irrational choices often against their best interests 

Noam Chomsky

Facts do not cease to exist because they are ignored.
Aldous Huxley

“It is not only a low interest rate world, it is also a low expected return world on any long-only investment. Low expected returns are going to anchor bad news for all of us for the rest of our working lifetimes. And maybe beyond.

Antti Ilmanen

"Get your facts first, and then you can distort them as much as you please."
Mark Twain

In science — unlike in politics — being hesitant when you don’t know something, and being willing to change your mind in the face of new evidence, are virtues.

Chris Mooney

It's also the same in financial theory and heuristics. Unfortunately, most in the finance field don't know what they don't know,

"Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time."

Erin Beinhocker

A lie can travel halfway around the world while the truth is getting its boots on.

Mark Twainn

A wise man can learn more from a foolish question that a fool can learn from a wise answer

Bruce Lee

     The power to understand and predict the quantities of the world should not be restricted to those with a freakish knack for manipulating abstract symbols...

Brett Victor

In the absence of regulation, someone will always be willing to exploit our irrational tendencies, leading to a “phishing equilibrium” in which individuals are harmed.

Phishing for Phools; George Akerlof and Robert Shiller

A fact with an unknown truth value (a FWUTV)

Paul Romer

Knowledge is a rumor until your body knows it


Most economics students are not required to study psychology, philosophy, history, or politics. They are spoon-fed models of the economy, based on unreal assumptions, and tested on their competence in solving mathematical equations. They are never given the mental tools to grasp the whole picture. The economists are the idiots savants of our time.

"Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then – whether it works or not – it gets locked in for a long time."

Robert Skidelsky

New economics does not accept the orthodox theory that has dominated economics for the past several decades that humans are perfectly rational, markets are perfectly efficient, institutions are optimally designed and economies are self-correcting equilibrium systems that invariably find a state that maximises social welfare. Social scientists working in the new economics tradition argue that this theory has failed empirically on many points and that the 2008 financial crisis is only the latest and most obvious example.

Eric Beinhocker

“Essentially, all models are wrong, but some are useful.”

 George E.P. Box

A Single Death is a Tragedy; a Million Deaths is a Statistic


“The general change in our culture toward numerical formulations will give room for explicit reference to uncertainty,”

Amos Tversky

There are decades where nothing happens; and there are weeks where decades happen.


Great spirits have always encountered violent opposition from mediocre minds 

Albert Einstein


World Clock by

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

What General  George Patton might say today

2/27: Retirement/Target Date funds (TIAA)

The vast majority of plan participants who were in target date funds thought they had a lifetime income option even when they didn't.

2/27: Population

Our numbers will grow from 7.36 billion people today to 9 billion in 2040, an increase of 22%. Rapidly developing nations, however, will supercharge global energy consumption at more than twice that rate.

2/27: Passive investing: Over the three years ended Aug. 31, investors added nearly $1.3 trillion to passive mutual funds and their brethren—passive exchange-traded funds—while draining more than a quarter trillion from active funds, according to Morningstar Inc.”

“Investors bailed on actively managed funds in record numbers during 2016, preferring the reliability and low costs of index funds over taking a chance on finding a stock picker who could beat the market.”

The exodus from actively managed mutual funds is occurring for four primary reasons.
  1. Expenses: The management fees on passive funds are extremely low as the funds do not require investment analysis. In fact, an excel spreadsheet with a few lines of macro coding can replace a traditional portfolio manager. The WSJ article found that fees are almost eight times higher for active funds than passive ones (.77% vs. .10%).
  2. Relative Performance: Not surprisingly, in a market that has been fueled by massive Central Bank interventions, passive funds have outperformed actively managed funds. In the aforementioned article, the WSJ found that over the last five years a meager 11.2% of U.S. large-company mutual funds (actively managed) outperformed the Vanguard 500 passive index fund. Of course, this is due to expense difference as noted above.
  3. Technology Shifts: The advancement for algorithmic and computerized trading is leading to a migration of assets into ETF’s which are ideal for computer-driven allocation models.
  4. Media: One of the biggest reasons for the flows from actively managed mutual funds into ETF’s has been the increased press and media attention on ETF’s. As the markets have pushed higher, and the performance and expense differential exposed, the media has berated investors for not being invested regardless of the risk. Therefore, investors have been “psychologically pushed” to buy ETF’s as the “fear of missing out” has accelerated.

The above graph is not reflective of my real world of investing. Great for a scare however

2/27: “Finances in Retirement: New Challenges, New Solutions,”

Among the findings from this latest survey of more than 4,800 respondents:

  • While most Americans realize retirement will be the biggest purchase of their lifetime, 81% say they do not know how much money they will need to fund their retirement.
  • Americans are saving only a fraction of what they think they should: 5.5% vs. 25% of their annual income (after taxes).
  • More than half of Millennials feel a secure retirement is beyond reach, though only 30% of Boomers (who, let’s face it, are closer to that goal line) feel this way. Of course, Millennials expect 65% of their retirement income to come from personal sources, including savings and continued employment, far more than earlier generations, which might have something to do with their concerns.
  • While most people say they want to live to the age of 90, only 27% of pre-retirees age 50+ feel financially prepared to fund a retirement that lasts 10 years, let alone 20-30 years.
  • Nearly two-thirds (65%) of Americans say the language of finance is confusing and not user-friendly (don’t you wonder about the other 35%?).
  • Americans are seven times more likely to say that talking about personal finances is taboo than they are to say it can be discussed openly. Only 11% feel comfortable discussing their personal finances
Behavioral Financing?

Ninety-one percent say they would make healthier choices to reduce potential expenses in later life, and the same percentage would use more generic medications and supplies.

Sixty-eight percent say they would consider purchasing long-term care insurance.

Three in four say they would downsize their home to both lower ongoing costs and benefit from the equity, while 67% would be willing to move to a less expensive location and 47% would consider selling their home and renting an apartment.

Ninety percent of people would be willing to cut back on basic expenses and save more, while 77% would increase use of tax-protected retirement accounts. Two-thirds would sell belongings or real estate that they no longer need, and three in five would adjust the timing of their Social Security benefits.

One positive thought: Among those who are saving for retirement, 46% said that what got them started in the first place was an employer offering a retirement savings plan.

2/27: Financial fraud:

The AARP survey found stark differences between the past investment fraud victims and regular investors in three areas:

        1. Psychological Mindset: More victims reported preferring unregulated investments, valuing wealth accumulation as a measure of success in life, being open to sales pitches, being willing to take risks, and describing themselves as ideologically conservative.
        2. Behavioral Characteristics: Victims reported that they more frequently receive targeted phone calls and emails from brokers, they make five or more investment decisions each year, and more of them respond to remote sales pitches — those delivered via telephone, email or television commercials.
        3. Demographics: Somewhat replicating the previous industry studies, higher percentages of victims were found to be of older age, male, married and military veterans.
According to the True Link Financial study, risk and vulnerability can play an equal role in putting consumers in the crosshairs of financial criminals. “People often assume that those perceived as most vulnerable — widows, the very old, people with severe memory loss — are at greatest risk. In fact, risk equals vulnerability plus exposure. Seniors who are young, urban, and college-educated lose more money than those who are not.”

Unfortunately, those who are friendly and welcoming to others, including strangers, are most at risk. “Seniors described as extremely friendly lose four times as much to elder financial abuse, perhaps because they are approachable and may give strangers the benefit of the doubt.”

2/26:  structured family caregiving  (very innovative and good article) as a scenario where a caregiver moves into a senior’s home to provide care, or an elderly person moves into the caregiver’s home to receive care. The caregiver is financially compensated for providing care to the elderly individual who would otherwise require care in a nursing home.

2/26: Insurance coverage- caveat emptor

Insurance companies sell to the insured the coverage requested: Carriers have no obligation to force, or even advise, the insured about the limits of liability of automobile liability insurance that should be carried by the insured. Rather, the insurer is obligated only to provide the insurance coverages ordered, as some insureds found out when they tried to convince a court to provide liability limits that were not ordered because they believed, as longtime customers, they should have been advised to carry higher limits


This brief summarizes the explosion of recent

research on cognitive aging by answering basic questions about what researchers are learning and why

their findings matter to retirement experts and the

public. This overview is the first


in a series of three; the other two will focus on how cognitive aging

affects the ability of individuals to work between ages

50-70 and to handle personal finances between ages


The discussion proceeds as follows. The first section introduces definitions and measures of cognitive

ability. The second section discusses how researchers

identify changes in cognitive ability with age, while the

third summarizes their findings. The fourth section

discusses how age-related changes in different cognitive capacities can affect real-world performance. The

final section concludes that: 1) most older workers can

maintain their productivity up to age 70, although they

will generally need more time to learn new skills or

concepts; and 2) many retirees can continue to manage their own financial affairs in their 70s and 80s,

though about one quarter will likely develop a cognitive impairment that will pose a threat to their financial independence.

2/26: “All caregiving is national in implication and local in application” Here is the recent Caregicing magazine


2/26: Prudent man????

The original prudent man rule dates back to the common law, specifically the 1830 Massachusetts case of Harvard College v. Amory. From that case came the notion that trustees were directed “to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.” In the absence of specific directions in the trust agreement, the trustee was to invest as he would invest his own property, taking into account the needs of beneficiaries, the need to preserve the estate (or corpus of the trust), and the amount and regularity of income.

ERISA’s prudent man rule goes further, requiring that a fiduciary must perform its duties “with the care, skill, prudence and diligence under the circumstances then prevailing, that a prudent man acting in like capacity and familiar with such matters would use…”

EFM- the problem is that there is no definition of anything. The law decides and the law is very fickle in that knowledge is not identified. In investing, I submit the ability to use a financial calculator is mandatory. But a broker, insurance agent nor a Registered Investment Adviser has never been required to learn the basics at all. Something is wrong there.

2/26: Interesting and a great visual

Animated map shows the states with the most and least mortgage debt

2/26:ADT Healthcare offers free help and assistance to people suffering from drug and alcohol addiction. Contact: 0800 088 66 86 ''

Home sweet home

2/26: Roubini- "The US dollar's appreciation since the election could destroy almost 400,000 manufacturing jobs over time,"

2/26: Interesting

"An Offer You Can't Refuse? Incentives Change What We Believe" Free Download
CESifo Working Paper Series No. 6296

SANDRO AMBUEHL, University of Toronto - Rotman School of Management

Much of economics assumes that higher incentives increase participation in a transaction only because they exceed more people’s reservation price. This paper shows theoretically and experimentally that when information about the consequences is costly, higher incentives also change reservation prices to further increase participation. A higher incentive makes people gather information in a way that is more favorable to participation—as if they were persuading themselves to participate. Hence, incentives change not only what people choose, but also what they believe their choices entail. This result informs the debate about laws around the world that severely restrict incentives for transactions such as organ donation, surrogate motherhood, human egg donation, and medical trial participation. It helps bridge a gap between economists on the one hand and the policy makers and ethicists on the other.

2/26: Retirement: More than 66 percent of workers with access to 401(k)s and other defined-contribution retirement saving plans aren’t using them. That’s according to recent research from the Census Bureau, which analyzed tax records to estimate how workers are actually participating in these plans. On top of that, only 14 percent of companies offer these types of retirement plans, far lower than previous estimates,

Americans with higher incomes were more likely to be socking money away for their old age. That dovetails with other data, such as the Federal Reserve’s annual survey on household finances, which found that almost 9 out of 10 Americans with more than $100,000 in annual income have a 401(k), compared with just four out of 10 earning less than $40,000.


"Liberty in Loyalty: A Republican Theory of Fiduciary Law" Free Download
Texas Law Review, Vol. 94, No. 6, 2017 Forthcoming

EVAN J. CRIDDLE, William & Mary Law School

Conventional wisdom holds that the fiduciary duty of loyalty is a prophylactic rule that serves to deter and redress harmful opportunism. This idea can be traced back to the dawn of modern fiduciary law in England and the United States, and it has inspired generations of legal scholars to attempt to explain and justify the duty of loyalty from an economic perspective. Nonetheless, this Article argues that the conventional account of fiduciary loyalty should be abandoned because it does not adequately explain or justify fiduciary law’s core features.

The normative foundations of fiduciary loyalty come into sharper focus when viewed through the lens of republican legal theory. Consistent with the republican tradition, the fiduciary duty of loyalty serves primarily to ensure that a fiduciary’s entrusted power does not compromise liberty by exposing her principal and beneficiaries to domination. The republican theory has significant advantages over previous theories of fiduciary law because it better explains and justifies the law’s traditional features, including the uncompromising requirements of fiduciary loyalty and the customary remedies of rescission, constructive trust, and disgorgement.

Significantly, the republican theory arrives at a moment when American fiduciary law stands at a crossroads. In recent years, some politicians, judges, and legal scholars have worked to dismantle two central pillars of fiduciary loyalty: the categorical prohibition against unauthorized conflicts of interest and conflicts of duty (the no-conflict rule), and the requirement that fiduciaries relinquish unauthorized profits (the no-profit rule). The republican theory explains why these efforts to scale back the duty of loyalty should be resisted in the interest of safeguarding liberty.

2/23: Going UP:

. Japan, once the picture of longevity, will tumble down the global rankings, as will the US. (BBC, FT)

2/23: Major institutions such as the IMF and the OECD have recently upgraded their global economic growth forecasts largely due to expectations that tax cuts, infrastructure spending and deregulation will boost the U.S. economy under President Trump. But the World Bank's latest report suggests global trade growth is constrained by a number of factors, like policy uncertainty, rising protectionism and threats to unwind trade agreements.

EFM- And the market is going nuts.Yellen might pull the trigger soon on another rate hike. This reminds me of the Dotcom because such a runup without viable stats (P/E ratio) means the correction couldl easily be another recession.  . 

2/23: This is not going to end well. A simple 'pullback' might be possible but my concern is for much worse

Goldman Sachs: Investors Are At ‘Maximum Optimism’ And Have A Letdown Coming

Goldman Sachs strategists aren’t buying into all the optimism surrounding the stock market in 2017. In fact, they believe investors are reaching “the point of maximum optimism” that will lead later in the year to a pullback. read more

2/23:Kitces noted that  "v
arious studies are finding that real spending actually declines throughout retirement, by as much as 1% to 2% per year

I have not seen such studies. No matter, the cost of health care GOES WAY UP as a person gets closer to death. If, in fact, there is a reduction, it might be a good idea to budget those funds for care.

Kitces also notes "
Further, an appropriate safety margin will vary by retiree, depending on their risk tolerance and spending flexibility."

The key is this- risk tolerance. What does it mean? Conservative, moderate, aggressive- which are you?.  Does it mean that you could lose 20% of your investable  assets in a recession (you should expect at least 3 recessions over 30 years). Is the loss at 40% (49% loss in 2000 and 57% in 2008). You do not know what he is talking about and neither do I. But I can tell you that it is possible to keep the worst times to about a 12% loss. You will see this fleshed out over the next couple months.

2/22: Looks good for nonmanufacturing



If labor productivity grows at its old 2% rate, the living standard doubles in 35 years. If it grows at its current 0.7% rate, it’ll take 116 years.

Trump wants 4%. Pipedream


Surviving Caregiving with Dignity, Love and Kindness

By Barbara Hanson Dennis


Yesterday, my husband Les died. No, it was actually a year and 41 days ago, but it feels like yesterday. I’m still wondering how this could really have happened. He was diagnosed with Early Stage Early Onset Probable Alzheimer’s Disease in January 2000 at age 63.

For the first week after diagnosis, I kept saying, “WE have Alzheimer’s,” but then I quit saying that even though it was certainly true. When a person is diagnosed with dementia, there must be someone who is the caregiver. That someone may be hired, but in most cases it is a member of the family.

In many cases, that is the spouse of the person with dementia. Whether that new caregiver knows anything about the condition, she or he is thrust into a role for which they may have no preparation at all.

This article is about how I learned to become a caregiver and what I found to be the 10 most useful things to know in caregiving—not only for myself, but also for Les.

1. Love: Sometimes we don’t have strong feelings of love—when we are tired, scared or angry about the situation. I have heard and read about situations where there is a great deal of anger simmering in a relationship that may make it extremely difficult to be a caregiver. “Brotherly” love may help to get through those difficult times. Inspirational readings can be calming and encouraging. It may be useful also to talk with a clergyperson or a therapist.

2. Learning: Learn as much as possible about the particular kind of dementia your loved one has. There are many books about the subject now as well as articles on the Internet. Ask the doctor for recommendations about ideas for reading. If he or she doesn’t have any, then try the library or Google.

3. Support groups: I cannot say enough about the value of support groups. I learned as much from other caregivers about how to handle situations as I did from anywhere or anyone else. Fellow caregivers can be an absolute goldmine—not only for ideas, but for venting when things are tough. It takes a fellow caregiver to fully understand what you are going through.

4. Humor: This is one of the best ways to get through those sticky situations where you are getting resistance or disagreement. Your own “private” jokes with your loved one may be great for maintaining a bond between you.

5. Diversion: Another way to get through a difficult time is diversion. When humor doesn’t work, coming up with an alternative activity or topic of conversation usually does. It may be something as simple as looking for a favorite object; i.e., “Now where did the coin box go?” or possibly offering a drink of water or a “treat” that is appropriate to the person’s diet.

6. Exercise: This may sound like a nearly impossible thing to do if you are a 24/7 caregiver, but it is not. It is really on a par with being in a support group. Physical exercise is very important for anyone with dementia and their caregivers because it helps with depression, stress and overall health. There are several ways to do this. One possibility is to take your loved one with you as long as she or he can walk. Another option is to leave him/her doing some activity for the duration of your walk or other exercise. Finally, ask a family member, friend or agency person to stay while you exercise.

7. Planning: Time to plan ahead may vary with the extent to which the dementia has progressed when the diagnosis is given. Contact an Elder Care Attorney and have him or her help prepare all the Advance Directives one needs. This includes Power of Attorney, Living Will, Healthcare Power of Attorney and a regular Will. You may also want a Do Not Resuscitate (DNR) Form.

8. Meaningful Activities: While this may seem like an improbable recommendation for a person with dementia, it was definitely my experience that non-pharmacological activities were a key to a slower progression of the disease in my husband and others with dementia. Just as we are given suggestions for activities to “prevent” dementia, I strongly believe that activities can keep those already diagnosed from going downhill faster. It does not have to be huge. For Les, one year it was helping to propagate poinsettias over a year for the Christmas show at a Chicago conservatory and then taking people there to see them all. Other years, it was going to various nearby attractions with a caregiver willing to take him places to keep him seeing new things and active.

9. Dignity: As long as possible, it is important to treat those with dementia with as much dignity as possible. This occurs not only through participation in meaningful activities, but also when going to visit the doctor. One of my husband’s most important messages to doctors and other groups he addressed was that patients do not want to be ignored or separated from the caregiver during discussion. If there were things I wanted the doctor to know that I didn’t want to say in front of Les, I wrote them down and handed them to the nurse before we went in so the doctor could read them. It is not always easy to work around the patient as their abilities diminish, but it is vital to allow them to maintain their dignity, and especially not to treat them as a child. They have a lifetime of experience even if they have lost some skills, so they must be allowed personal freedom balanced with the degree of risk.

10. Respite: This is last, but not least. Even though Les had long-term care insurance so we could have paid caregivers to come in a few hours a day, I did have a stroke after 10 years of being a caregiver. It was only then that my sons suggested we put Les into a nursing home. If you have long-term care insurance, it’s good to use it while your loved one is still home so you can get much needed breaks. If you don’t have that insurance, hopefully family and/or friends will offer to help. If they don’t offer, ask. It you still need help, try your church or social service agencies in your municipality or township.

I have very fond memories of Les even after he was diagnosed with Alzheimer’s. I will never forget that he was still Les until the day he died; he was always “there” after 11 years. Being there for those moments was a blessing for me and our whole family. Dementia is a disease, but it doesn’t have to be a disaster.

2/21: State imports

2/21: State export

2/20: I did NOT expect this

Philly Fed manufacturing demolishes expectations, hits its highest level since 1984

Much higher that I thought it could be. Trump is part of it...........

2/20: CFAs were asked about 2016

2/20: Short video (5 min) on what the human race might expect. 

Evidence of a New Economic Revolution - Nouriel Roubini

I agree

2/20: Don't read the article if you want to save your sanity.

The Myths and Fallacies about Diversified Portfolios

Ths is one of the most involved discussions of diversification you will ever read. My point is when you truly get to addressing something that, it has no benefit  to the average investor. It also appears in many articles on Advisor Perspectives that only but a very few advisor do subsequent questions... because they are the only ones that (assumingly) know what is being stated. It may make the writers feel good and soothe their ego but it does next to nothing to help 99 44/100% of the public

Just saying..............


In the behavioral world, this is called herding

2/19: Market Sentiment Indicator

2/19: Notice the vast difference in earnings last year

2/19: Military spending

2/19: A teaspoon for your bad thoughts

Put a teaspoon in the left or right pocket of your pants. Whenever you catch yourself thinking a negative thought, move it over to the other pocket. Do this without exception. Over time you will notice that you kick out the negative thought before it has a chance to be fully formulated in your mind. The first couple of days you will constantly have to move it back and forth between your pockets. After a month, sometimes less, it becomes a habit and you develop the reflex to dismiss negative thoughts, no sweat. If after a while they do creep back in, put the spoon back in your pocket and scoop them away.
2/16: No No No.......... It can't get worse
Yes Yes Yes it can

America’s February warmth is extreme, and it’s just getting started   
Read more »

Since this has been going on for years and it probably will not stop for a decade or more- if that. There goes a lot of the east coast, New Orleans, Texas and since I lived in Newport Beach CA for decades, the prime houses on the island and Balboa island will go bye bye very soon.

“Some people die at the age of 25 only to be buried at 75.”
Benjamin Frankln

State Well-Being Rankings 2016

Scientists have just detected a major change to the Earth’s oceans linked to a warming climate

paper, found a decline of more than 2 percent in ocean oxygen content worldwide between 1960 and 2010. The loss, however, showed up in some ocean basins more than others. The largest overall volume of oxygen was lost in the largest ocean — the Pacific — but as a percentage, the decline was sharpest in the Arctic Ocean, a region facing Earth’s most stark climate change. The loss of ocean oxygen “has been assumed from models, and there have been lots of regional analysis that have shown local decline, but it has never been shown on the global scale, and never for the deep ocean,”


  1. “Resolution of optimization problems and construction of efficient portfolios: An application to the Euro Stoxx 50 index"




Víctor Adame-García (Universidad Complutense de Madrid, Campus de Somosaguas, 28223 Madrid, Spain.) ; Fernando Fernández-Rodríguez (Universidad de Las Palmas de Gran Canaria, Campus de Tafira, 35017 Las Palmas de Gran Canaria, Spain.) ; Simón Sosvilla-Rivero (Complutense Institute for International Studies, Universidad Complutense de Madrid, Campus de Somosaguas, 28223 Madrid, Spain.)

We assess the effectiveness of various portfolio optimization strategies (only long allocations) applied to the components of the Euro Stoxx 50 index during the period 2002-2015. The sample under study contemplates episodes of high volatility and instability in financial markets, such as the Global Financial Crisis and the European Debt Crisis. This implies a real challenge in portfolio optimization strategies, since all the methodologies used are restricted to the assignment of positive weights. We use the daily returns for the asset allocation with a three year estimation window, keeping the assets in portfolio for one year.In the context of strategies with short-selling constraints, we contribute to the debate on whether naive diversification proves to be an effective alternative for the construction of the portfolio, as opposed to the portfolio optimization models. To that end, we analyse the out-of-sample performance of 16 strategies for the selection of assets and weights in the main stock index of the euro area. Our results suggest that a large number of strategies outperform both the naive strategy and the Euro Stoxx 50 index in terms of the profitability and Sharpe's ratio. Furthermore, the portfolio strategy based on the maximization of the diversification ratio provides the highest return and the classical strategy of mean-variance renders the highest Sharpe ratio, which is statistically different from the Euro Stoxx 50 index in the period under study.


Optimization problems; portfolio choice; investment decisions; asset allocation;econometrics; minimum-variance portfolios; robust statistics; out-of-sample performance. JEL classification:C14, C61, G11.


2/15: I want to buy something

e-commerce will truly become the future of retail, as nearly all of the growth in the retail sector now takes place in the digital space.

BI Intelligence, Business Insider's premium research service, forecasts that U.S. consumers will spend $385 billion online in 2016. Moreover, BI Intelligence predicts that number will grow to $632 billion in 2020.

This is hardly surprising considering e-commerce's healthy growth. Though the U.S. retail average growth rate in the first half of 2016 was just 2% for total retail, it was 16% for e-commerce.

The number of online shoppers has grown by nearly 20 million from 2015 to 2016. And these 224 million shoppers are spending more, as the total amount spent online grew from $61 billion in the first quarter of 2015 to $68 billion in Q1 2016. Finally, these customers are transacting more frequently, as the number of online transactions has risen by 115 million from 2015 to 2016.

2/15:  The FED Tuesday

7 Essential Do’s and Don’ts for People Caring for Caregivers

By  Lisa Lopez


One year ago, my father was diagnosed with Wernicke–Korsakoff syndrome, a form of dementia resulting from chronic alcohol abuse. My dad, who worked hard his entire life, raised a family and built a strong reputation in his community, spent the last 10 years of his life succumbing to this terrible disease that befalls so many.  After the official dementia diagnosis, I was appointed his guardian and my family and I made the excruciating decision to place him in an assisted living facility. This past year, I’ve experienced everything from anger to guilt, from optimism to despair.

Since becoming one of my dad’s caregivers, the people I’ve leaned on the most are my friends. Somehow, my friends just get it. I don’t need to tell them what questions to ask, when to ask them or when to leave me alone. In the beginning, however, my husband and some other close family members had to be reminded how to react to the very fragile and stressed side of me. I am happy to report that after a few meetings of the mind and heart, my own circle of caregivers, including husband and family, is right on track. I decided to write this article to provide some tips to the wonderful people who are caring for caregivers.

The Do’s and Don’ts:

1. DO LISTEN - It may seem like a simple concept; but for some people, the idea of listening can be a hard job. Once, early on in my dad’s journey, I returned home from one of the worst days of my life. The day involved a neurologist, an escape attempt by my father and a deputy sheriff. You get the picture.  

When I walked into my house that evening, I was distraught and grief-stricken. My poor husband had no idea how to react to me.  When I tried to describe the day, his response was, “Well, you’re home now. Don’t worry about it.” He then proceeded to watch TV. After a little yelling and a lot of crying on my part, we came to an understanding. A word of advice to those caring for caregivers:  when your loved one is stressed or wants to talk about their day, just listen. Stop what you’re doing and give them your full attention. You don’t even have to speak. A hug every once in a while wouldn’t hurt either!

2. DON’T OFFER UNSOLICITED ADVICE – This is another toughie for the folks who love and care about caregivers. It’s hard because you hate to see your loved one in pain. Each time the caregiver in your life comes to you with another problem or unpleasant situation, you try to fix it. It’s very common and well-intentioned. In my case, a few family members were very eager to give unsolicited advice.

During his first memory care unit experience, my father was involved in an altercation with another resident. As with most of these cases, there were about five sides to the story. In the end, however, it was my father who was discharged from the facility. We all believed, including me, my aunt and the ombudsman I had enlisted for help, that my father had been treated unfairly. In the one or two hours my aunt and I had to make vital decisions about my father’s immediate care, I’m sure we made a few mistakes and in hindsight, probably would have done things a little differently. However, we did the best we knew how under the circumstances. But that didn’t stop a few family members from telling us exactly what we had done wrong. If you’re caring for a caregiver, stop before you offer advice. Remember, chances are the caregiver in your life has never had a dress rehearsal for this role. They’re doing the best they can and will ask you if they need your advice.

3. DO GIVE THEM THEIR SPACE  Space, the “vital” frontier. When you’re given the enormous responsibility of caring for someone else, you feel like you’re in a fishbowl. Family members, doctors, bill collectors, you name it are constantly in need of something. Occasionally, I need time and space to recharge my batteries. Whether it’s a nap, time with friends, a massage or a weekend away, caregivers need to take the time to care about themselves. When the caregiver in your life says they need a break, don’t hesitate – pack a suitcase, make reservations for a weekend away, or just follow their lead. Time and space away from the duties and responsibilities of caregiving is essential to avoiding burnout. 

4. DON’T GIVE THEM A GUILT TRIP – I live in the South and down here, guilt is something we pass down through generations, like broaches and pound cake recipes. Before I became my dad’s caregiver, my husband and I spent a lot of free time together. We don’t have children, so we had the luxury of spending the weekends hiking, gardening or doing a whole lot of nothing. When my dad was diagnosed with dementia, my home life and much of my work life was sucked away. I had to spend days on end with my dad and family visiting assisted living facilities, meeting with lawyers, and talking to social workers. When I was at home, I was either on the phone talking to my dad, talking about my dad or doing paperwork. My husband quickly felt abandoned. He got in the habit of making me feel guilty any time I spent attending to my dad’s needs. I explained that this only made my highly stressful situation worse and it only made me resent him. He eventually came to understand that this was my choice and the only way for us to be a functional, happy family was for him to support me. Again, the tough parts are only temporary and it’s a lot easier if you support the caregiver in your life.

5. DO HAVE EMPATHY – As Atticus Finch said in the wonderful novel To Kill a Mockingbird, “You never really understand a person until you consider things from his point of view—until you climb into his skin and walk around in it.” If your caregiver’s family member doesn’t already live with you, make a point to accompany them to visit their loved one from time to time. This will give you a glimpse into their world and what they are going through. In my case, my dad lives two and a half hours away. It takes every ounce of energy I have to get in the car, drive to see him, spend time with him and then drive another two and a half hours back home. Doing it alone can be downright drudgery. It’s nice to have my husband along so that I can vent, cry or even laugh. This has also really helped him see what I go through and why I sometimes need that two hour nap when I get home!

6. DON’T JUDGE – No matter what your loved one’s relationship is to the person they’re caring for, remember, it’s their choice to be the caregiver. In my case, my husband didn’t understand why I wanted to take on the responsibility of becoming my father’s guardian. My father and I weren’t very close when I was growing up. Add this to the fact that his dementia was most likely brought on by alcoholism and my husband had a couple of handy rationales as to why I should wash my hands of the whole thing. I had to explain to my husband that the past doesn’t matter and I wouldn’t be able to forgive myself if I didn’t do everything in my power to make the rest of my dad’s life comfortable. So, no matter the circumstances, leave the judgment out of it, accept your loved one’s choice and support them in any decision they make.

7. DO LAUGH – It’s been said that laughter is the closest distance between two people. No truer words have been spoken, especially when it comes to caregiving. Laughter is the main thing that has gotten me through this past year. My aunt and I have a saying, “If we didn’t laugh, we’d cry.” Even though there have been a few times when we never thought we’d ever see another ray of sunshine, my aunt and I have somehow been able to find humor, and sometimes in the most bizarre, morbid places. When I try to explain some of the perversely funny things I’ve seen and heard since taking over my dad’s care, some of my friends and family look at me as if I have two heads. I want to say to them, “Hey, lighten up! It’s okay to laugh.”  So, loosen up and follow your loved ones’ lead. If they’re laughing, join in. It’s contagious and that’s a sickness everyone can afford to catch.


2/15: Too big to fail???????

  1. Bank Ratings: What Determines Their Quality?


Harald Hau (University of Geneva, Swiss Finance Institute, Centre for Economic Policy Research (CEPR), and CESifo (Center for Economic Studies and Ifo Institute)) ; Sam Langfield (European Central Bank - European Systemic Risk Board Secretariat) ; David Marques-Ibanez (European Central Bank (ECB))

This paper examines the quality of credit ratings assigned to banks in Europe and the United States by the three largest rating agencies over the past two decades. We interpret credit ratings as relative assessments of creditworthiness, and define a new ordinal metric of rating error based on banksČŘ™ expected default frequencies. Our results suggest that rating agencies assign more positive ratings to large banks and to those institutions more likely to provide the rating agency with additional securities rating business (as indicated by private structured credit origination activity). These competitive distortions are economically significant and help perpetuate the existence of ČŘųtoo-big-to-failČŘ™ banks. We also show that, overall, differential risk weights recommended by the Basel accords for investment grade banks bear no significant relationship to empirical default probabilities.


Rating Agencies, Credit Ratings, Conflicts of Interest, Prudential Regulation


G21 G23 G28


2/14: Annuity info. You can get a fixed rate 5 year annuity at 3.5%. Or you can give a commission to agent of 5.5% and earn????




  1. The Determinants of Systematic Risk: A Firm Lifecycle Perspective




Jimmy Saravia ; Carlos Garcia ; Paula Almonacid

This paper investigates how of systematic risk varies over the lifecycle of the firm. If market equity beta is determined by firm characteristics as the literature on the determinants of systematic risk holds, and if those characteristics change over the lifecycle of the firm following a definite pattern as firm lifecycle theory suggests, then market equity beta should change over the lifecycle of the firm following a predictable pattern. Our findings indicate that, holding other determinants of beta constant, the coefficient of systematic risk tends to fall in magnitude following a nonlinear pattern as firm age increases. In addition, we find that the volatility of market equity beta also tends to fall over the lifecycle of the firm. We argue that our main variable of concern, i.e. firm age, proxies for variables that have hitherto been omitted in the literature on the determinants of systematic risk. In particular, we maintain that firm age may proxy for the positive reputation that firms acquire over time with shareholders. This research is useful for both practitioners and researchers in that it may suggest ways to adjust empirical estimates of systematic risk. In addition, our results are important for research on beta forecasting as they show that the length of the stationary interval of betas is shorter for young companies, so that beta forecasting may be less accurate for firms in the early stages of their lifecycle compared to beta forecasting for mature firms.


Systematic risk, firm lifecycle, intrinsic business risk, financial leverage, operating risk.


G11 G12

2/13: Overview (FT)

US economic data Consumer prices are expected to show that CPI was unchanged on a monthly basis at 0.3 per cent in January but is expected to advance 2.4 per cent from a year ago. Investors also get updates on the health of US consumer and industrial output.

While estimates for a 0.1 per cent monthly rise in retail sales, following a 0.6 per cent gain in December, might lead some to believe that Americans tightened their purse strings last month, economists estimate that so-called core retail sales, which strip out autos and petrol, climbed 0.4 per cent.

Finally, industrial production, which was boosted by cold weather at the end of last year after an unseasonably warm November, is expected to have slowed in January as well. Economists forecast that output rose just 0.1 per cent, after a 0.8 per cent rise in December.

2/3: Inequality
According to a recent study by Oxfam International, in 2010 the top 388 richest people owned as much wealth as the poorest half of the world’s population– a whopping 3.6 billion people. By 2014, this number was down to 85 people. Oxfam claims that, if this trend continues, by the end of 2016 the top 1% will own more wealth than everyone else in the world combined. At the same time, according to Oxfam, the extremely wealthy are also extremely efficient in dodging taxes, now hiding an estimated $7.6 trillion in offshore tax-havens.[3]

history shows that too much concentration of wealth at the top, and too much stagnation everywhere else indicate an economy nearing collapse. For example, as Reich shows (Figure 1a & b), both the crashes of 1928 and 2007 followed on the heels of peaks in which the top 1% owned 25% of the country’s total wealth.

most common explanations for today’s situation include: the rise of technology which makes many jobs obsolete (Not going to change) ; and globalization which puts incredible pressures on companies to lower wages and outsource jobs to compete against low-wage workers around the world (Not going to change)

EFM- where does that leave the middle class worker who used to have great jobs on car assembly lines? Nowhere. They will become more and more obsolete as technology takes over more and more.  Those with little education (or bad education) used to be able to flip burgers. Technology will take over those tasks  leaving young people dispirited and angry.


  1. Investors’ Expectations, Management Fees and the Underperformance of Mutual Funds


Andreas D. Huesler (ETH Zürich) ; Yannick Malevergne (University of Saint Etienne) ; Didier Sornette (Swiss Finance Institute and ETH Zürich)

Why do investors keep buying underperforming mutual funds? To address this issue, we develop a one-period principal-agent model with a representative investor and a fund manager in an asymmetric information framework. This model shows that the investor’s perception of the fund plays the key role in the fund’s fee-setting mechanism. Using a simple relation between fees and funds’ performance, empirical evidence suggests that most US domestic equity mutual funds have added high markups during the period from July 2003 to March 2007. For these fees to be justified, we show that the investor would have expected the fund manager to deliver an overall annual net excess-return of around 1.5% the S&P 500 on a risk adjusted basis. In addition, our model offers a new classification of funds, based on their ability to provide benefits to investors’ portfolios.


Mutual Fund Fee, Mutual Fund, Asymmetric Information, Principal-Agent Relationship, Markup


G23 G11 D82


2/13: Would we or should we do the same???

One in 10 of Britain’s top 100 companies are considering ditching controversial “long-term incentive plans” as shareholders push back against excessive executive pay, according to consultants and investor groups



2/13: Oy, not again

EFM- this is bad!!!!!

Chinese-backed Forest City rises above the sea

Very interesting. Reclaimed land. Though doesn't indicate a future problem with rising seas.

2/12: Info


Junk bonds and investment grade debt see capital inflows


Trump’s promise of a ‘phenomenal’ corporate tax shake-up may swing investor sentiment

2/12: This is either 43.79% correct or 82.11% wrong

Bad statistics
The declining authority of statistics – and the experts who analyse them – is at the heart of the crisis that has become known as “post-truth” politics. And in this uncertain new world, attitudes towards quantitative expertise have become increasingly divided. From one perspective, grounding politics in statistics is elitist, undemocratic and oblivious to people’s emotional investments in their community and nation. It is just one more way that privileged people in London, Washington DC or Brussels seek to impose their worldview on everybody else. From the opposite perspective, statistics are quite the opposite of elitist. They enable journalists, citizens and politicians to discuss society as a whole, not on the basis of anecdote, sentiment or prejudice, but in ways that can be validated. The alternative to quantitative expertise is less likely to be democracy than an unleashing of tabloid editors and demagogues to provide their own “truth” of what is going on across society.

2/12: I knew we spent a lot on the military, but this chart REALLY puts it into perspective. WOW


One-Third Don’t Know Obamacare and Affordable Care Act Are the Same

A survey finds confusion, particularly among groups most likely to be affected by the repeal of the health law.

EFM: there is one of the scariest statistics on consumer literacy. It is 'impossible' to not be aware that they are the same products- certainly  if it involves their health. Switch now to investing and  it is much, much worse.
the only way to help the consumer is through knowledge. Not theirs- they will remain clueless. It is the industry that needs to ramp up.  But that is not going to happen.

Pundits don't like that type of (real life) comment. The proof, if you will, involves my MSFP in 1991. Hardly any of it was really viable  after 2000. The insurance and securities business caused a complete overhaul of theory, heuristics, taxes, and so on.  And then 2008 radically changed finance. Now we have Trump that is radically changing the U.S.
The average person is out to lunch.  So are most advisors

2/9: Hard to comprehend

The median home value in San Francisco — the nation's most expensive housing market — in January was $1,146,800

2/9: Gives you a good idea what is going on. Not very pretty

CalSTRS to cut assumed rate of return to 7%

CalSTRS on Wednesday evening approved lowering the pension fund's assumed rate of return to 7% from 7.5% over the next two years because of diminished capital market and inflation forecasts.

Fitch lowers Illinois' credit rating to BBB

Fitch Ratings lowered Illinois' credit rating to BBB from BBB+ on Wednesday because of the state's continued budget impasse.

   How Investors Should Deal With the Overwhelming Problem of Understanding the World Economy;

by , Very  good professional article

2/8: Having a bad day? No you're not

She felt a ‘crawling sensation.’ Doctors found a live cockroach in her skull.

2/8: This only happens in recessions

2/8: Now this is interesting

Uber hires veteran NASA engineer to develop flying cars

After years of research into so-called VTOL - vertical takeoff and landing - cars, Mark Moore is leaving the confines of the U.S. National Aeronautics and Space Administration, where he has spent the last 30 years, to join Uber Technologies Inc. Moore is taking on a new role as director of engineering for aviation at the ride-hailing company, working on a flying-car initiative known as Uber Elevate.

2/8: Guaranteed Disability Insurance (GSI)  for Heavy hitters

The personal income protection GSI market is all abuzz and is just beginning to be exploited, but the business GSI market remains completely unsaturated. Have you ever come across a guaranteed-issue key person DI plan? What about guaranteed-issue BOE coverage? Ever heard of GSI buy/sell or severance insurance? While extremely uncommon and with limited scope in the traditional disability market, these programs do exist through Petersen International. High-limit, robust benefit structures make for unique and exciting corporate solutions.

Encompassing the same incredible attributes and large multi-life premium discounts of more familiar guaranteed-issue group personal DI products, business insurance plans are great sales tools and door openers when approaching small to large companies with multiple proprietors or with a number of key personnel. Business GSI benefits aren’t readily known to anyone outside the specialty DI world which makes them new and exciting, providing your business clients with something they haven’t seen before. And it doesn’t hurt that these benefit platforms can be true saviors to companies affected by the unforeseen and premature disablement of employees and employers.

Besides the obvious use for multi-life key person, BOE, buy/sell and severance coverage, the GSI benefits platform has also proven to be very useful with regards to buy-in funding, contract guarantees, loan indemnification and salary continuation funding. Petersen International has the rare ability to financially protect a business, virtually no matter the size, on a multi-life chassis with a guaranteed issuance of high-limit disability insurance. Leveraging your relationship with Petersen International offers you the chance to provide your clients with unique products that others don’t have, making you a true disability insurance superstar.


Pot’s Lingering Effect on the Business of Insurance

Cannabis use for medicinal purposes is now legal in 28 states as well as Washington, D.C. Recreational use of marijuana is now legal in seven states as well as Washington, D.C., and after recent elections, several more states will soon be added to both of those lists. Encompassing multiple generations, America has grown more liberal in its attitude toward herbal intoxicants in the last 15 years.

That fact has carried over into the life and health insurance industry. Disability and life underwriters have become more accustomed to seeing clients who smoke marijuana or use pot-laced products on a regular basis. In the past, these prospects would have been automatic declines by most life insurance and disability insurance companies. But underwriting methodologies have liberalized to a greater extent in the past few years and pot users are generally classified and rated similarly to tobacco users. Bottom line, persons who use marijuana can now find sufficient levels of income and asset protection from disability and life carriers.