Errold. F. Moody Jr.

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Financial and Economic Daily Commentary 2019

Knowledge makes obsolete the inequities that ignorance and prejudice justify

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

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

BUSINESS WEEK: "For an Expert, Click here"  

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

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

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

Losses limited to about 12% for recessions

Patent Pending
  ain as such given sophomoric DOL rules and flaccid organizational enforcement. Specific commentary to sexism and ethical and moral lapses of society impacting women. Not the standard drivel

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



Revolutionary Method for Asset Allocation- Increase Returns, Reduce Risk

September 2018


October 2018

Have you sold your Equities yet???

December 2018

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

February 2019

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

Benjamin Graham


The case for caregiving policies for Gen X workers
Bradd Chignoli / ebn

Who are these caregivers? More than half of Generation X workers are caregivers and this number will continue to grow. A full 41% of full-time workers are caregivers, which includes those who provide support for a dependent child, senior or both, according to recent data from a MetLife omnibus survey of 1,000 Americans. Notably, 54% of Gen X (ages 38 to 53) workers serve as a caregiver, and 13% — more than any generation — are serving as a caregiver for a senior.

These numbers are only likely to increase, as an additional 16% of Gen X workers are expected to take on a caregiver role in the next five years, whether taking care of a child or a relative, and 43% of Gen X workers will take on added caregiving on top of their current responsibilities — about half of which will be to take care of a senior.

Why is it important for employers understand the outside-of-work responsibilities of Gen X workers? First, this generation now accounts for a third of the U.S. workforce, or 53 million people, according to Pew Research Center. Further, the workplace has broadly overlooked this generation for the past two decades, instead choosing to fixate on preparing for the waves of baby boomers set to retire and creating a dynamic workplace to attract and retain the influx of millennials.

Meanwhile, Gen X became the least financially secure. MetLife’s 2019 U.S. Employee Benefit Trends study found just 59% of Gen X workers are confident in their finances, compared to two-thirds (67%) of millennials and 65% of boomers.

5/22: Trump effectively shuts down the government. Will this kill the economy? Not really sure but it raises the odds of a recession by 33%. Maybe the odds will change tomorrow.

What a mess.

5/22:  Do women really make better investors than men?


5/22: Ivy League college offering money programs

More states are recognizing the importance of financial literacy at the high-school level. Nineteen states now mandate high schools to educate students on basic financial knowledge before they graduate, up from 17 states in 2018 and 13 in 2011, according to the Council for Economic Education. These new requirements come as student-loan debt became an urgent national conversation. According to the Federal Reserve, the typical student-loan debt reported in 2017 ranged from $20,000 to $25,000, with total student debt approaching $1.5 trillion in outstanding loans nationwide.

5/22: CRAP:

Should you really do nothing amid market volatility? It depends on whether you’re 27 or 63
Younger clients who are investing in a retirement account such as 401(k) are advised to stick to the buy-and-hold strategy during a market downturn, according to this article on CNBC. By doing nothing, they will be taking advantage of the low-cost environment. However, they should hold the money earmarked for near-term expenses in cash or a CD and not in the stock market because of greater risk, says a CFP.

5/22: Risky Corporate Loans      A very Real Mess

Actions by federal regulators and Republicans in Congress over the past two years have paved the way for banks and other financial companies to issue more than $1 trillion in risky corporate loans, sparking fears that Washington and Wall Street are repeating the mistakes made before the financial crisis.

The moves undercut policies put in place by banking regulators six years ago that aimed to prevent high-risk lending from once again damaging the economy.

Now, regulators and even White House officials are struggling to comprehend the scope and potential dangers of the massive pool of credits, known as leveraged loans,

“This means that the next downturn that we have could be more serious and longer-lasting and more difficult to deal with than it would have been if we had constrained these practices,” former Federal Reserve chair Janet L. Yellen

leveraged loans. These are giant loans that banks make to heavily indebted — in financial speak, highly leveraged — companies. Bankers often have little assurance that the loans can be repaid, which can make them particularly risky. Bankers earn large fees off these products, and many banking executives say their institutions are sheltered from losses because they sell the loans to other investors such as hedge funds, mutual funds and insurance companies.

5/22: Long-Term Care for Parkinson’s Disease

What Is Parkinson’s Disease?Signs Of Parkinson’s DiseaseTreatment Of Parkinson’s DiseaseCare Needs With Parkinson’s DiseaseSelecting Healthcare Professionals For Parkinson’s DiseaseTransitioning Into Long-Term Care With Parkinson’s DiseaseLong-Term Care Options For Parkinson’s DiseaseSelecting A Long-Term Care Facility For Parkinson’s DiseaseEffects Of Parkinson’s Disease On CaregiversFinancial Considerations With Parkinson’s DiseaseLegal Considerations With Parkinson’s DiseaseSupport Organizations For Parkinson’s DiseaseFAQs About Parkinson’s Disease

5/21: Government Debt Bubble- and a hint to a bad recession

a remarkable government effort to conjure prosperity by distorting credit markets still isn’t working:

For five years, European nations have been trying to jump-start their ailing economies with what was supposed to be a radical, short-term remedy—negative interest rates.
Politicians playing by their own rules is an old story. But it should count as news that politicians have lately been rewriting a rule in place since 3,000 B.C.
This rule of history is that savers deserve to be compensated when they loan money. Not anymore. In much of the developed world lenders are the ones paying for the privilege of letting governments borrow their cash. Through the magic of modern central banking, countries in Europe and elsewhere have managed to drive their borrowing rates not just to historic lows but all the way into negative territory...
Paul Singer, founder of hedge fund Elliott Management, isn’t expecting a happy ending. He believes that because of massive entitlement promises plus huge debt, “the entire developed world is insolvent.”
The negative-rate policy’s ineffectualness is a sign of just how weak Europe’s economic engines are, and how vulnerable. The policy threatens pensions, creates the risk of real-estate bubbles and doesn’t fully quell the specter of deflation. European banks struggle with weak interest income and thin margins on loans, putting them behind American peers in profitability and making it harder for them to finance the economy... Profitless companies stay afloat, steering resources away from more efficient ones and weighing on productivity. Central banks’ inability to raise rates leaves them with little ammunition to cushion the next downturn with the conventional tool of interest-rate reductions.

5/21: Investment risk
Only the red portion is subject to investment risk.

No matter which route you decide to take with your retirement portfolio, take the time to develop a thoughtful asset allocation for your retirement savings in retirement, so you don’t toss and turn at night when the stock market is gyrating.

EFM- If you use my "Process" above you can just sleep through any major mess

5/21: I simply could not believe it. How could anyone do this? Probably a bunch of parents believed, if it was on Facebook, then it must be true

Some parents are poisoning their children with bleach to 'cure' autism. These moms are trying to stop it.

In private Facebook groups, parents describe feeding their children chlorine dioxide, a form of bleach, in a desperate attempt to "cure" them. They describe their children gasping, screaming and trying to escape the treatment — which they see as a sign that it's working.

Now, several moms are infiltrating the groups to fight back — by sending screenshots to local Child Protective Services divisions. "Kids are being abused," said Melissa Eaton, a single mother in North Carolina, who joins the groups in an effort to shut them down. "I'm not the kind of person who can see something like that and just forget about it."


-    Venezuela’s oil production plunged to just 830,000 bpd in April, down from 1.2 mb/d at the start of 2019, according to the
EIA. OPEC had a lower estimate for Venezuelan oil production – down to 768,000 bpd in April.

-    Outside of a 2003 strike by PDVSA workers, which saw production plunge, Venezuela’s oil output is at its lowest point in decades. 

-    In 2018, production declines averaged 33,000 bpd per month, a rate that accelerated to 135,000 bpd per month in the first quarter of 2019. The rig count fell from 70 rigs in 1Q2016 to just 24 in 1Q2019.

5/21: Junk all over

The scientists surveyed seven of the Australia's Cocos Islands, 27 islands, which made up 88 percent of the total landmass of the islands, and estimated that they were littered with 262 tons (238 metric tons) of plastic. A quarter of those pieces of debris were single-use or disposable items such as straws, bags and toothbrushes (about 373,000 of them), The researchers also identified some 977,000 shoes.

Roughly 93% of the debris found, most of it tiny micro-debris, was actually buried below the surface. But because they only dug 3.94 inches (10 centimeters) into the sand, and couldn't access some beaches that are known to have a lot of debris

in the last 13 years alone, we've manufactured nearly half of all the plastic produced in the last six decades A recent global estimate finds that 5.25 trillion

items of plastic are now in the ocean, which is more than the number of stars in the Milky Way,

a group of people sitting at a beach: Lead author Jennifer Lavers looks out at the plastic debris covering a Cocos (Keeling) Island beach

5/21: Mutual fund fees

The study found that the asset-weighted expense ratio across U.S. funds dropped to 0.48% in 2018 from 0.51% in 2017. The year-over-year decline of 3 basis points is the second largest recorded since Morningstar began tracking asset-weighted fees in 2000.

The move to lower-cost funds has been the main driver behind the decline in asset-weighted average fees. In 2018, active funds' fees fell to 0.67%, while passive funds' fees fell to 0.15%. On average, actively managed fund investors paid about 4.5 times more than investors of passively managed funds in 2018.

The results of Morningstar's annual study also reveal that investors are paying about half as much to own funds as they were in 2000, roughly 40% less than they did 10 years ago and about 26% less than they did five years ago.

The study reveals that in 2018, the cheapest 20% of funds saw net inflows of $605 billion, with the remaining 80% of funds experiencing net outflows of $478 billion. Of the $605 billion that flowed into the cheapest 20% of funds and share classes, 97% of net new money flowed into the least costly 10% of all funds.

Most investors own lower-priced funds, with 83% of all assets currently being held in mutual funds and ETFs whose fees rank in the bottom 40% when compared with other funds in their category group.

5/21: They need help

- 31% of 1,010 working adults surveyed in February 2019 say they would not be able to pay for daily necessities without utilizing credit card debt or accessing their retirement savings if they were to miss just a single paycheck. 51% of those surveyed say they would have to use a credit card or dip into savings if they were to miss more than 1 paycheck (source: National Opinion Research Center).

EFM- to be fair,where would one have extra cash? Checking account? Possible but they may just put any extra monies per month into savings.

Actually whenever there are statistics from a survey, it may be compromised. It depends who is making the questionnaire and whether the questions are geared to getting the answers they wanted to see.

5/20: Millenials

Hobbled by the financial crisis and recession that struck as they began their working life, Americans born between 1981 and 1996 have failed to match

every other generation of young adults born since the Great Depression. They have less wealth, less property, lower marriage rates and fewer children,

according to new data that compare generations at similar ages.

Rest rooms

5/20: It's just money

The SEC levies billions of dollars in fines each year, but it doesn’t always collect. Over the five years through 2018, the SEC took in 55% of the $20 billion in enforcement fines set through settlements or court judgments. During the prior five years, it collected on 60% of $14.6 billion. Last year, the agency collected just 28% of almost $4 billion—the lowest rate in a decade. The SEC has struggled for years to get defendants to pay more of their fines, although some are almost certain to avoid payment forever.

5/20: Health Care:

Voters perceive the U.S. healthcare system as deeply flawed, even as the majority of them report they're satisfied with what they have, according to a survey released Wednesday by RealClear Opinion Research.

The poll, which surveyed 2,000 people, found that 72% of voters are largely happy with the overall quality of their healthcare, with 20% rating is as "excellent," 52% rating it as "good," 22% rating it as "fair," and only 6% rating it as "poor."

5/20: Mean family net worth

Here's the mean net worth of U.S. families based on the age of the head of household:

Age 35 or younger: $76,200

Age 35-44: $288,700

Age 45-54: $727,500

Age 55-64: $1.17 million

Age 65-74: $1.07 million

Age 75 or older: $1.07 million

And here's the median net worth of U.S. families based on the age of the head of household:

Age 35 or younger: $11,100

Age 35-44: $59,800

Age 45-54: $124,200

Age 55-64: $187,300

Age 65-74: $224,100

Age 75 or older: $264,800


Approximately 17,804,321 lightning strikes were recorded in 2018, an 11% drop from the 10-year average

5/20: Massive amount of fund data

Mutual funds - Statistics & Facts

Mutual funds are vehicles pooling investors’ money and locating them on financial markets in accordance with the objectives specified in the fund prospectus. The advantages of investing money through mutual funds are, among others, entrusting the savings to professional fund managers, asset diversification, lower costs than in case of direct investments and access to global financial instruments and markets.
Read more

Mutual funds - Important statistics


Other studies on the topic

5/19: Farmers brace for aid. In the absence of a deal with China, the U.S. Department of Agriculture is assembling a farm relief program worth between $15 billion and $20 billion. Many farmers don't think it will be enough.

EFM- If all this ends up with a trade deal with China that does not include a restriction on China regarding company secrets, it will all be for naught. There is a concern that Trump might do it just for the sake of a 'deal'.

5/19: How much money a family of four needs to get by

a close up of a map: This map shows the minimum amount necessary to meet basic needs for a family of four without relying on outside help, including factors such as housing, food, child care and health insurance, in addition to other regular costs. All data from MIT's Living Wage calculator.

5/19: Men spent more time on video games

12.7% of millennials live with their mothers

Overall, according to Zillow, more than 14 million “early” and “middle” millennials nationwide live with their mothers in particular — up from 12.7% in 2000 to 21.9% this year.

That means 14.3 million adults (both men and women) aged between 23 and 27 live with their mothers, which is “not too far off from the number of children under age five who do the same” at 18.3 million,

Only 7.7% of the population had a college degree in 1960, versus 35% in 2018 according to Statista. In 2017, Americans were attending 13.4 years of schooling, which was up from 12.3 in 1990.

And the more time that a person spent on education — especially higher education — meant more debt. Hence the average millennial is now saddled with an average of $390 in monthly student loan repayments for years, which impedes their ability to reach major life milestones such as buying their own home.

early millennial men — aged 21 to 30 in particular — exhibited a “larger decline in work hours over the last fifteen years than older men or women,” due to them playing video games and “other recreational computer activities.”

5/19: On a lighter note:

Mississauga condo developer forgets to put 120 bathrooms in brand new building

5/19: OIL

The escalating trade war between the U.S. and China is keeping oil prices subdued, but the fear premium seems to be growing by the day as tensions across the Middle East threaten outages and even war.

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Friday, May 17th, 2019

Oil rose on Friday morning on supply outages and Middle East tensions before trade war fears dragged prices down again. Sentiment continues to swing between fears of weak demand in the wake of the U.S.-China trade war and fears of supply outages due to conflict in the Middle East. 

Trump blacklists Huawei, deepening rift. On Thursday, President Trump essentially blacklisted Chinese telecom giant Huawei Technologies from operating in the U.S., escalating the standoff with China. The Chinese government typically offered a cautious tone in response to trade actions from Washington, but Beijing and state media are taking an
increasingly strident line, which suggests China is not close to backing down. China’s currency slid on the news, as did the Shanghai Composite Index. 

“Ignorance more frequently begets confidence than does knowledge.”

Charles Darwin

5/19: business cycle for blacks and whites

The business cycle doesn't affect white Americans the way it does black Americans.

5/19: Dehumanization of Drinking Women in Social Contexts

The purpose of the present research was to examine the perceptions of women who drink in social contexts through the lens of dehumanization

5/19: Flood insurance:

What constitutes a flood

To be classified as a flood, two or more acres of normally dry land or two or more properties must be inundated by water or mudflow. Floods are the U.S.’s most common natural disaster and just “one inch of water in a home can cost more than $25,000 in damage.” (The average loss in a flood is $46,000.)

Who’s at risk?

Short answer: potentially everyone. Some are just at a higher risk than others. Given the changing climate, floods now occur in all 50 states and every month of the year.

Even if the FEMA map says your home is in a low-risk zone, your actual risk of flooding may be significantly higher. In Hurricane Harvey in Houston in 2017, for instance, approximately 82% of those who suffered losses were in areas not considered at high risk of flooding, and at least 25% of all flooding happens outside “high hazard” areas.

Standard homeowners’ policies don’t cover floods

Although there are federal and private markets for flood insurance — the NFIP has 89% of the market — NFIP policies have low coverage limits and don’t cover external structures, replacement cost, or temporary living expenses if a flood forces the homeowner from her home. Consumers also probably don’t realize that when FEMA comes in behind a flood and offers assistance funds, these are often not gratis. They are either low dollar grants that don’t cover all your losses, or government loans that must be repaid.

5/19: 15 companies face the greatest exposure of Midwest floods


UCSF study on marijuana legalization finds uptick in drug abuse, decrease in chronic pain reports


By Erin Allday



Since cannabis was legalized in Colorado, injuries from car accidents increased somewhat, while hospital visits for chronic pain fell, according to a new UCSF study.

5/16: Recession leading indicator????

  • Copper has been the "single-best leading indicator for stocks over the past 18 months," according to one research firm.
  • Sentiment in the copper market suggests prices should be about 7% below where they are currently trading, a Capital Economics analyst wrote. 
  • Trade-war tensions and the end of the Fed's rate-hike cycle are bad news for stocks,

 Statistically, over one in four ot today's 20 year olds will experience a long term disability before they retire.

5/16: Breast cancer

Women who followed a lower-fat diet rich in fruits, vegetables and grains had a lower risk of death from breast cancer than those who continued their normal, higher-fat diet, according to a new study.

The trial involved more than 48,000 women who were randomly assigned to a diet between 1993 and 1998. The new results show a difference in death rates 20 years after the study concluded, the first randomized clinical trial evidence that diet can reduce postmenopausal women’s risk of dying from breast cancer

EFM- sounds like it is a good diet no matter what


Trump declares national emergency to protect U.S. networks from foreign espionage, a move that appears to be aimed at China

President Trump has signed an executive order giving the federal government broad powers to block American companies from doing business with foreign suppliers believed to put U.S. national security at risk. Though the order does not immediately exclude specific firms or countries, it comes amid a deepening trade dispute between Washington and Beijing and is consistent with the president’s increasingly aggressive tack against China.

EFM. China originally agreed to stop demanding company secrets. Then reneged when Trump seemed to be in some legal problems and might sign an agreement anyway. The above was absolutely necessary.

5/15: Births
The number of births for the United States last year dropped to its lowest in about three decade.
From 2017 to 2018, the birth rate dropped 7% among teenagers aged 15 to 19; 4% among women 20 to 24; 3% among women 25 to 29; and 1% among women 30 to 34, according to the report.
The birth rate rose 1% among women aged 35 to 39 and 2% among women 40 to 44. The rate for women 45 to 49, which also includes births to women 50 and older, did not change from 2017 to 2018.

"Nearly one million species are at risk of extinction. Human activity is the root cause. "We are in a car that is speeding towards the edge of a cliff.
But we aren’t passengers — we’re driving."

Biologist Dr. Jonathan Kolby

5/15: Stretch IRA  Jacob Millican

A Long-Term Strategy

The stretch IRA strategy is an Individual Retirement Account (IRA) in which earnings are allowed to grow tax deferred over a beneficiary's lifetime. If you have an IRA that you do not need for retirement income, you can opt to restrict your withdrawals to the minimum annual distribution required by the Internal Revenue Service (IRS) starting at age 70½. Required minimum distributions are based on your life expectancy and the amount of funds in your account.

If you decide you want to stretch your IRA into future generations, you can establish a trust that allows for the distribution of IRA assets to primary, and possibly secondary, beneficiaries. Upon your death, your beneficiary will be permitted to take distributions over time, based on his or her age and life expectancy. This not only gives the investments in the account a chance to grow and compound, but it also means that income taxes owed on the IRA can be paid over an extended period of time.

If you choose a very young beneficiary, such as a grandchild, the funds in the IRA may compound substantially over the course of a lifetime. Provided the beneficiary does not access funds in the account along the way, due to a disability or other hardship, a considerable sum could amass by the time he or she reaches retirement.

Risks Involved

Before you integrate the stretch IRA strategy into your estate plan, it is important to note that this approach does carry some risk. If IRA assets decline in value, or if inflation erodes the value of your savings, the substantial returns for your heirs may not materialize.

Should you live a very long life, it is also possible that the funds in your IRA may not grow because you must continue to take required distributions. If, for example, longevity is on your side and you live to age 95, the amount you leave to a grandchild may be less than if you had passed on a decade earlier.

Keep in mind, too, that a stretch IRA strategy works best when only the required minimum distributions are withdrawn. If your beneficiary were to withdraw additional funds to buy a car or pay the rent, the account could be quickly depleted.

Finally, it is important to consider the tax implications of including a stretch IRA strategy in your inheritable estate. Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (2010 Tax Relief Act), the Federal estate tax and generation-skipping transfer (GST) tax, which was repealed in 2010, has an exemption amount of $11.4 million and a top tax rate of 40% through 2019.

Despite the inherent risks, a stretch IRA strategy can be a tax-efficient means for passing on savings to future generations. While there is no guarantee that inheriting a stretch IRA can turn your grandchild into a millionaire, it could help contribute toward making his or her retirement more comfortable.


current market valuations exceed both the 1929 and 2000 extremes. Not surprisingly, we estimate negative returns for the S&P 500 Index over the coming 10-12 year period, as valuations suggested in 1929, and as we projected in real-time in 2000.

given the depressed yields on long-term bonds, our estimate for 12-year total returns on a conventional asset mix (60% stocks, 30% Treasury bonds, 10% T-bills) has collapsed to just 0.8% annually. This is lower than any point in history except a 6-week period surrounding the 1929 market top, a 3-week period surrounding the January 2018 pre-correction market peak, and a 6-week period surrounding the September 2018 pre-correction market peak.

EFM_ I don't know when the collapse will occur but the inverted yield curve suggests something like 12 to 18 months. For the record, I felt a downtrend in the market would occur this year

In 2029, for people 75 to 84 (ages when they’re likely to need long-term care), for assisted living would mean they would need access to about $25,000 to $74,000 a year in current dollars. Over age 85, the middle-income category extends to $95,000.

About 14.4 million people will fall into the middle-income category, almost double the current number. Sixty percent will need canes, walkers or wheelchairs to remain mobile, the analysis estimated, and 20 percent will need extensive help with the so-called activities of daily living, such as bathing and dressing.

They’re a better educated and more diverse group of older adults than in the past, less likely to experience poverty. Still, most will be unable to afford assisted living, the authors found.