3/15: Info only
5 YEAR MYGA
3.25% for 5 Years
Issued Through Age 90
2.25% Commission to Age 90
3/12> It is true that emotionalism by the bulk of
consumers in a bear market causes untold calamity. If you are
unemotional and use DCAD, you will beat most everyone in return by
about 90% and reduce risk compared to them by close to 100%.
Mother of All Bubbles by 2017
"The dilemma facing the Fed, Roubini contends, is that if it
tightens monetary policy too late, it could lead to 'the mother
of all bubbles' by 2017. And if the Fed tightens too soon, it
could cause a hard landing of the real economy.
EFM- sounds about right to me
the rate of
dementia among 60- to 64-year-olds is 0.8% and that rate doubles
every five years. The rate of dementia among 80- to 84-year-olds
increases to 12.8% and among the 85-and-older crowd, 30% are
experiencing clinical dementia.
another study that found that 60% of those that are experiencing
clinical dementia are still managing their own money. Only 30% of
those experiencing clinical dementia reported delegating their
money management to someone else.
EFM- Irrespective of dementia, the elderly have a F score on
financial literacy to begin with and there is a loss of competency
of 2% per year after age 65. Certain studies also indicate that
their perception of competency INCREASES by the same 2% annually.
A very dangerous combination
exactly the same way that we have given away our personal
behavioral data to banks and credit card companies and wireless
carriers and insurance companies and a million app providers, so
are we now being tempted to give away our portfolio behavioral
data to mega-banks and mega-asset managers and the technology
providers who work with them. Don’t worry, they say, there’s
nothing in this information that identifies you directly. It’s
all anonymous. What rubbish! With
enough anonymous portfolio behavioral data and a laughably small
IT budget, any competent magician can design a Big Data system
that can predict with 90% accuracy what you will buy and sell in
your account, at what price you will buy and sell, and under
what external macro conditions you will buy and sell.
By Ben Hunt. Read his stuff
article on economic forecasting by the NY Times, but
market has been rising despite a barrage of corporate reports
that might suggest that stock prices are overextended. After
all, growth in both revenue and earnings for the last quarter
has decelerated. For the 440 companies in the Standard &
Poor’s 500-stock index that had reported by Wednesday, revenue
for the fourth quarter rose only 1.5 percent over the period a
year ago, compared with a 4.1 percent growth rate for the third
quarter at the same point in the previous earnings season, Mr.
numbers for earnings were an annual increase of 5.9 percent in
the fourth quarter, versus a 10.4 percent rise at the same point
in the previous earnings season. The strong dollar, falling oil
prices and a sluggish global economy have all taken their toll.
worse, guidance for future earnings turned extremely
EFM- so should you care that much? Well, how are you invested? To
gain assets, quite obviously. But on the other side you are
terribly concerned about a major drop. But you can only have a
major drop in your equities if you want to. If you don't want to,
then don't. You have to know how much a true correction is
(percentage) and then DCAD. Pretty simple actually.
Of course pundits will tout the element of emotionalism. Fair
enough but then they are naive investors knowing little and
forgetting much. Very little you can do with them if they are not
willing to learn. Do people learn? In school, some do. Afterwards,
not really. The validation is in reviewing financial literacy
scores. Some of the research resides in material below,
Dispensing and the Caregiver
One of the common issues that caregivers have to
deal with on a daily basis is the need to dispense
their care recipient’s medication in a safe and
timely fashion. Navigating the dangerous waters of
different pill sizes, colors and dosages can be an
intimidating experience as most family members and
home care workers possess neither an in-depth
knowledge of these medications nor the ability to
discern when a problem with the pills may be
developing. Elderly and infirm clients often seem to
be on a never ending slew of pills that need to be
doled out on a regular basis. It doesn’t matter that
the clients have accumulated them honestly, usually
a few at a time during each hospital admission; but
the sum total is what the home care worker, family
member or employee, must face every day on the job.
In past years, medications were often dispensed
three or four times per day or worse. Thankfully, in
our modern day, each medication only has to be taken
once or twice every twenty-four hour period. The
downside is that there are a lot more diseases we
can treat and consequently a lot more pills people
In an effort to decrease the angst this process can
cause and keep the client on a safe and effective
regime, there are several simple rules one can
First of all, it’s a good idea to keep all
medications in a safe and secure place. Playful
grandchildren, nosey visitors and even confused
patients will get into the pill bottles if they’re
left unattended. Some medications have to be
refrigerated, but most can be safely stored in a
secure cupboard. Pharmacies, in an effort to keep
your business, have developed blister packs that
link the pills with specific days of the week. So,
in the middle of a busy day, if the caregiver
suddenly wonders “Did I give him his morning pills?”
all it takes is a quick look at the package to
confirm that, yes, it was given. In the same vein,
all medications should be administered at the same
time every day. Modern pills have been designed for
specific durations and maintaining a regular dosing
schedule will decrease the risk of adverse
Not to overstate the obvious, but dosages of drugs
should not be changed without first consulting the
client’s physician. The old adage “If one is good,
two is better” does not apply in these situations.
Playing with the dosages of blood thinners, heart
pills and pain killers can easily have unforeseen
and unfortunate side effects.
Despite what the infomercials say, don’t start
using over-the-counter products, herbs, vitamins and
supplements without first discussing it with a
physician. Not only is quality control for these
products somewhat lacking (as compared to
prescription medications), but they may interact
with the client’s normal medications by increasing
or decreasing the medicinal concentration in the
Check the expiry date on the prescription bottle.
Medications that are only used on an as-needed basis
may become ineffective if left too long on the
shelf. A good example would be nitroglycerin pills
for chest pain or a ventolin inhaler for an asthma
exacerbation. The one time you need it could be the
time you discover it’s out of date. Likewise, it’s
prudent to double check the prescriptions that are
picked up from the pharmacy against a home list of
medications being given. The employees filling the
prescription are human too (and often pharmacy
assistants) and can make mistakes.
There are also options to consider if the condition
of the person you are caring for begins to
deteriorate. For example, if problems develop
with his or her ability to swallow, there may be
some pills that can be changed to a liquid or even
given through a small butterfly needle in the skin.
Some newer medications are actually a combination of
two or three different drugs and using them could
decrease the total number of pills consumed daily.
Another aspect to consider, especially if his or
her condition is worsening, is whether they really
require all those medications. If
grandmother, who is well into her ninth decade, is
truly failing, does she really need that
cholesterol pill or that Alzheimer’s drug? Maybe
it’s time to have a family discussion with the
physician and ask the question, “Have we reached
the point where we are treating the disease
instead of the patient?” One of the
benefits of modern medicine is that we have so many
wonderful drugs to combat the detrimental aspects of
aging and disease. However,
just because these drugs now exist doesn’t always
mean it’s in the best interest of the client to
The use of medicines is one aspect of caregiving
that will not disappear in the foreseeable future.
It is a complicated and precise job that requires
concentration and adherence to a rigorous schedule.
The aforementioned tips are meant to simplify this
task and make life that much easier for the
caregiver in your family.
Changes in the last decade
So if it doesn't make sense to do a regression analysis/monte
carlo on job changes with the idea that the future will be
like the past, why do it with returns????
3/11: A lot of falls are due to drinking
is Brain Injury Awareness Month
Traumatic Brain Injuries can Result from Senior Falls
Traumatic brain injuries due to falls caused nearly
8,000 deaths and 56,000 hospitalizations in 2005 among
Americans 65 and older, according to a new report from
the Centers for Disease Control and Prevention
released in the June issue of the Journal
of Safety Research.
Traumatic brain injuries, or TBIs, are caused by a
bump or blow to the head; however, they may be missed
or misdiagnosed among older adults. TBI often results
in long-term cognitive, emotional, and/or functional
impairments. In 2005, TBIs accounted for 50 percent of
unintentional fall deaths and eight percent of
nonfatal fall-related hospitalizations among older
Falls are not an inevitable consequence of aging, but
they do occur more often among older adults because
risk factors for falls are usually associated with
health and aging conditions. Some of these conditions
include mobility problems due to muscle weakness or
poor balance, loss of sensation in feet, chronic
health conditions, vision changes or loss, medication
side effects or drug interactions, and home and
environmental hazards such as clutter or poor
“Most people think older adults may only break their
hip when they fall, but our research shows that
traumatic brain injuries can also be a serious
consequence,” said Dr. Ileana Arias, director of CDC′s
National Center for Injury Prevention and Control.
“These injuries can cause long-term problems and
affect how someone thinks or functions. They can also
impact a person’s emotional well-being.”
Each year, one in three older Americans (65 and
older) falls, and 30 percent of falls cause injuries
requiring medical treatment. In 2005, nearly 16,000
older adults died from falls, 1.8 million older adults
were treated in emergency departments, and 433,000 of
these patients were hospitalized. Falls are the
leading cause of injury deaths and nonfatal injuries
for those 65 and over.
This study analyzed 2005 data from the National Center
for Health Statistics’ National Vital Statistics
System and the Agency for Healthcare Research and
Quality’s Nationwide Inpatient Sample.
Key findings are:
Death rates for fall-related TBIs were
higher among men than women (26.9 per 100,000
and 17.8 per 100,000, respectively).
Rates for fall-related TBI hospitalizations
were similar among men and women (146.3 per
100,000 and 158.3 per 100,000, respectively).
Death and hospitalization rates for
fall-related TBIs generally increased with age.
The majority of men and women hospitalized
with a fall-related TBI spent two to six days in
the hospital (54.9 percent of men; 61.5 percent
The median total charges for these
hospitalizations were $19,191 for men and
Arias also points out that as more baby boomers reach
retirement age, these types of injuries will increase
demands on the health care system unless action is
taken to prevent the injuries. “CDC has developed tips
and suggestions for older adults, their caregivers,
health care providers, and communities to help prevent
falls,” Arias said.
For older adults, their children, caregivers, and
health care providers, CDC recently developed the
“Help Seniors Live Better, Longer: Prevent Brain
Injury” initiative. Developed in collaboration with 26
organizations, it features easy-to-use English- and
Spanish-language materials in a concise
question-and-answer format to help prevent, recognize,
and respond to TBI. For more information and
CDC has also created resources for practitioners and
community-based organizations. “Preventing Falls: What
Works. A CDC Compendium of Effective Community-based
Interventions from Around the World” and “Preventing
Falls: How to Develop Community Based Fall Prevention
Programs for Older Adults” can be downloaded or
Rates for long-term care insurance,
which can help pay for care in your own house or in a nursing
home, rose this year an average of nearly 9 percent
healthy 55-year-old man can now expect to pay, on average,
$2,075 per year for $164,000 in initial benefits, up from $1,765
cost for a healthy, single woman of the same age is higher: Her
average premium is $2,411, up from $2,307. Insurers take gender
into account when pricing long-term care policies, since,
statistically, women live longer and are more likely to need
generally get a discount if they buy a joint policy; the
rationale is that one or the other is likely to provide some
care for a spouse initially, Mr. Slome said. A married couple,
both age 60, would now pay $3,930 combined, up from $3,840, for
$328,000 of initial coverage.
numbers assume a “three-year” policy that uses a daily benefit
of $150 to compute a maximum payout, and includes inflation
protection — a 3 percent compounded annual increase in benefits.
Eliminating inflation protection greatly reduces the cost — the
average premium for a single man would be cut roughly in half —
but that means you will probably have to pay more out of pocket
if you eventually need care. A middle option, which costs more
than the base premium, allows the choice of adding inflation
3/10: India rape
months after India was rocked by the
gang rape and murder of a young physiotherapist on a Delhi bus,
popular Bollywood actress Kalki Koechlin made a satirical video
called “Rape: It’s your fault”.
three-and-a-half minutes of very black humour, the actress
mocked pervasive patriarchal attitudes — expressed openly by
Indian public figures — that blamed urban women and their
conduct for the rising violence against them
Now New Delhi has gone into overdrive trying to prevent further
broadcasts of a BBC documentary that exposes the chauvinistic
mindset of one of the men convicted in the notorious 2012 case.
the film India’s
aired in the UK on Wednesday night, Mukesh Singh, who has been
sentenced to death for his role in the attack, expresses no
remorse, and blames the young woman for her own fate, saying she
should have neither been out at night nor resisted the assault.
girl is far more responsible for a rape than a boy,” the convict
told Leslee Udwin, the British director, in a chilling interview
filmed in New Delhi’s Tihar jail. “A decent girl won’t roam
around at 9 o’clock at night.” Calling her death an “accident,”
Singh added, “when being raped, she should not fight back. She
should just be silent and allow the rape”.
EFM- I know that Modi is trying to clean up India but with the
pervasive attitude towards women, it;s going to take some time.
Same with a lot of other countries
50 US state economies from worst to best
MILLIONS OF MILLLENIALS -
According to projections from the U.S. Census Bureau, the
"Millennial" generation is expected to surpass the Baby Boom
generation as the country's largest living generation this
year. Millennials are ages 18 to 34 this year. They are
projected to number 75.3 million this year, up from 74.8
million last year, an increase due in large part to the many
immigrants. Baby boomers - ages 51 to 69 - peaked at 78.8
million in 1999 and are projected to drop to 74.9
million. Then there is Generation X - ages 35 to 50
this year - is projected to number around 66 million this
year. Millennials have to a considerable extent fared poorly
in financial terms, due in part to recessions, a sluggish
recovery, and student loan burdens. The Census Bureau
recently reported that 30.3% of Americans 18 to 34 years old
are living with their parents, up from 22.9% in 1980. See
for more on "generations."
LOWEST IN 21 YEARS
- The home ownership rate in the United States has fallen to
its lowest level in more than two decades, giving the rental
market a boost. According to new figures from the Census
Bureau, the rate was 64% in the fourth quarter of 2014. That
is the lowest rate since the second quarter of 1994, when it
stood at 63.8%. New York had the lowest homeownership rate
in the last quarter, 53.1%, followed closely by California
at 53.2%, and Nevada at 56.8%. The District of Columbia's
rate is lower than any state's, 41.2%. The highest rate is
in West Virginia (77.5%), followed by Delaware (74.3%) and
Negative Way to Growth? by Nouriel Roubini -Project
policy has become increasingly unconventional in the last six
years, with central banks implementing zero-interest-rate
policies, quantitative easing, credit easing, forward guidance,
and unlimited exchange-rate intervention. But now we have come
to the most unconventional policy tool of them all: negative
nominal interest rates.
The idiot forescaster
average, chief market strategists' forecasts are worse than
those made by a guy I call the Blind Forecaster. He's a
brainless idiot who assumes the market goes up 9% -- its
long-term historic average -- every year, regardless of
quick math shows the strategists' forecasts were off by an
average of 14.7 percentage points per year.
about the Blind Forecaster? Assuming the market would rise 9%
every year since 2000 provided a forecast that was off by an
average of 14.1 percentage points per year.
the Blind Forecaster isn't due to 2008, which forecasters like
to write off as an unforeseeable "black swan." Excluding 2008,
the strategists' error rate is 12 percentage points per year,
versus 11.6 percentage points per year for the Blind Forecaster.
3/10: Maybe we should do the same??
Pensions civil servants face cuts of a third
than a third of staff at the Department for Work and
Pensions are expected to lose their jobs in the next
five years as Whitehall leaders brace themselves for
more sweeping cuts across the civil service after the
retirement, it turns out, is bad for your physical and emotional
health. The World Health Organization estimatesthat
a suicide occurs every 40 seconds worldwide. The highest rates,
for both men and women in almost all regions, are among those 70
2013, France’s federal health agency INSERM studied
dementia prevalence among 429,000 people. Controlling for the
possibility that some people retired because of their dementia,
they found that jumping ship at 60 increased your risk for the
illness by about 15 percent, compared with those who waited an
extra five years before hanging up their hats. They concluded
that work keeps our brains young and fit. Meetings can be
stressful, but binging on reruns is actually unhealthy.
than two-thirds of
today’s adults, or 68.8 percent, are overweight or obese.
even more troubling, having grown from 7 percent in 1980 to 18
percent in 2012. Being overweight burdens the entire body and
can even cut short a person’s career. In 2009, a study published
that overweight status at 25 and the eventual slide into obesity
in middle age was associated with earlier retirement due to poor
health. “They essentially have less vitality,” Fries says of the
younger generations, “because of the problems that go along with
more important, climbing rates of Alzheimer’s
disease—and FaceTime replacing actual face time—are
combining to make trouble upstairs, in the brain. In 2013, the
nonprofit organization Alzheimer’s Disease International shook
the medical community with the prediction that by 2030
worldwide dementia rates will double, and by 2050, they will
triple. Millennials are doomed to be the most dementia-racked
generation ever. As it stands now, medical
science has no tools to stem the tide of Alzheimer’s;
it can only watch as the disease overtakes its victims without
rules forcing fund supermarkets to reveal their pricing
structures have prompted more wealthy self-directed investors to
move their money, research shows.
fund supermarkets that charge flat fees, an arrangement that
benefits those with large amounts of money to invest, have seen
a steep increase in the average size of customer accounts,
according to research by The Platforum, a business information
average account size on fixed-fee platforms, which include
Alliance Trust Savings, Interactive Investor and The Share
Centre, increased 22 per cent to £44,403 between the end of
September 2013 and the same date in 2014, the research shows.
These platforms charge a fixed monthly or quarterly fee
regardless of the sums invested.
marked the 25th anniversary of the bankruptcy of Drexel
Burnham Lambert. I remember driving to work at Drexel’s
Beverly Hills office that morning having no idea what was
about to happen. My years at Drexel in the late 1980s and
those I spent managing the firm’s private equity holdings in
the 1990s were an intensive education in credit and human
nature. Twenty-five years after Drexel’s demise and seven
years after a crisis that pushed the global economy to the
brink of collapse, the world is drowning in debt and
derivatives. As a point of reference, when Drexel filed for
bankruptcy, it had a balance sheet of $3 billion. When Lehman
Brothers filed for bankruptcy in 2008, its balance sheet was
two hundred times larger at $600 billion. As Figure 1 below
illustrates, debt has grown exponentially while the global
economy has crept along at a petty pace. Six years after the
financial crisis, interest rates have been driven below zero
in much of the developed world,2 a sign that policy makers
have failed to create sustainable economic growth. (The latest
tally is that $1.9 trillion of European sovereign debt is
trading with negative yields.) They have managed to inflate
financial assets but left the real economy behind. For
example, U.S. equity prices have gained 122% since 2009 while
US nominal growth has grown by only 18% over the same period.
Having exhausted their ability to employ interest rates as a
policy tool, policy makers are now shifting their sights to
currencies to stimulate growth. But currencies are themselves
nothing more than a form of debt, a promise by a sovereign.
And those promises are being actively debauched in a series of
currency wars that are certain to end badly for those who
depend on fiat money for their daily bread...
disorders are a significant source of concern — especially
in the geriatric population. Changes in sleep patterns are part
of the normal aging process, but sleep disorders have been
implicated with increased mortality, and side effects such as
dementia, cognitive impairment and falls. This week, the
National Sleep Foundation urges everyone to celebrate sleep and
its health benefits for National
Sleep Awareness Week. We’ve put together an overview of
why sleep is critical for senior health, how conditions such as Alzheimer’s
change sleep patterns, and what caregivers can do to make sure
they get enough rest.
Deprivation and Insomnia Increase Dementia Risk
all know a good night’s sleep is the key to feeling energetic
and clear-headed the next day, but sleeping soundly is also
linked to a lower risk of cognitive impairment later in life.
Unfortunately, older adults are more likely to have health
issues that disturb their sleep, such as insomnia or sleep
2011 study at
the University of California, San Francisco, showed a clear
association between sleep-disordered breathing in older women
and the risk of cognitive impairment.
who developed disruptions of their circadian rhythm were also
at increased risk,” reports NPR.
“So were those who awoke throughout the night, tossing and
seniors who are under some form of psychological stress, this
link may be even stronger. Not only does stress affect our sleep
patterns, stress in itself has been associated with dementia
risk. A study
in 2010 found
a link between stress in middle-aged women and the later
development of dementia, particularly Alzheimer’s.
Kristine Yaffe, who co-authored the UCSF study, advises older
adults to get regularly screened for sleep problems, so that any
issues can be caught early and treated before they lead to
significant cognitive impairment.
Sleep Problems and Sundowning
problems are even more pronounced in older adults with
Alzheimer’s. Brain changes associated with the disease are the
underlying cause of issues such as difficulty sleeping,
nighttime wandering, daytime napping, shifts in the sleep/wake
cycle, and late-afternoon/early-evening agitation referred to as
sometimes causes a natural disruption of Circadian rhythms — our
daily cycles of waking, sleeping, body temperature, and
metabolism — a disruption which is often significantly worse in
those with Alzheimer’s, reports the National
Sleep Foundation. In fact, the Alzheimer’s
that “in late stages of Alzheimer’s, individuals spend about 40%
of their time in bed at night awake and a significant part of
their daytime sleeping.” Sleep disruptions, in turn, are one of
the factors that contribute to sundowning behavior.
your loved one shows increased mood swings, confusion, memory
loss, or even anger as the day winds down, there are several coping
strategies caregivers can use to
improve sleep for seniors, including establishing a daytime
routine that includes some degree of physical activity.
Need Sleep, Too
after study has shown that caregivers need a good night’s sleep
just as much as their loved ones do. According to a report from
Alliance for Caregiving, stress and depression are common
in caregivers, and 87% of those surveyed reported problems with
sleep and energy levels. Many caregivers said that their sleep
was interrupted during the night, sometimes several times a
night, while others said it was the stress
of their responsibilities keeping
National Sleep Foundation reports that “sleep problems among
caregivers increases the likelihood of Alzheimer’s patients
being cared for in an institutional facility,” as well as taking
its toll on the health of the caregiver. It’s therefore
especially important for caregivers to care for themselves as
much as possible, adopting healthy day-to-day habits as well as
taking longer breaks as needed, such as those provided by respite
care or “dementia
equity risk premium: a review of models
Duarte, Fernando M.
(Federal Reserve Bank of New York) ; Rosa, Carlo
(Federal Reserve Bank of New York)
We estimate the equity risk premium (ERP) by
combining information from twenty models. The ERP in
2012 and 2013 reached heightened levels—of around 12
percent—not seen since the 1970s. We conclude that the
high ERP was caused by unusually low Treasury yields.
is better than us.The
will announce plans on Friday to cap charges on new
products designed for people drawing
down their pension
after claims that the public could be charged excessive fees.
Labour leader’s latest market intervention reflects concerns
that people exercising new freedoms over their pension savings could be
exploited by companies offering new products.
market survey of drawdown products by Which? found big
variations in annual charges between companies and even with the
same pension provider. “Our research uncovered several
high-charging drawdown products, including one that charges 2.76
per cent,” said Which?. “We think this is too high for the mass
market and want to see a cap introduced on products sold to
customers by their existing provider.”
said a saver with a typical £36,000 pension pot, taking £2,000 a
year in income drawdown, would save £10,300 over their
retirement if charges were capped at 0.5 per cent instead of
2.75 per cent.
3/8:Falling Marriage Rates Reveal Economic Fault Lines
There has been a long decline in married households in the United
3/8: Generational differences force
re-examination of workplace retirement education
the past five years, employers have realized just how precarious
a position their employees are in when it comes to retirement
and they have begun to put plans in place to help get them
moving in the right direction.
report released this week by Financial Finesse, a provider of
financial wellness programs, shows just how ill-prepared baby
boomers, Gen Xers and millennials are for retirement.
the case of baby boomers, they are generally doing well
financially but “those who are unprepared for retirement have
little time to save, and even those who are prepared face some
are becoming more aware of their employees’ financial
situations, particularly when it comes to older workers.
seen an increase in their urgency and willingness to dedicate
teams to this by building financial wellness programs,” said Liz
Davidson, CEO of Financial Finesse. “People are designing and
monitoring these programs and the budget dollars have gotten
much larger. They are also doing much more analysis on
behavioral change and what is triggering the behavioral change.”
EFM- None are teaching risk cause they have never been taught it.
Nor how to mitigate almost all major losses.
employees stressed out about their personal finances be as
productive as those who are not? Not likely. Survey data
supports the intuitive answer. For example, 41% members of the
Society for Human Resource Management responding to a poll last
year reported that an “overall lack of monetary funds to cover
personal expenses” took a toll on some of their employees’
assumption seems to be not that employees aren’t paid a living
wage, but that they have some shortcomings in their personal
financial management skills.
Suicide is the second-leading cause of death among children and
young adults aged 10 to 24. In 2012, more than 5,000 teens and
young adults died by suicide.Results of the analysis indicated
that, during 1994-2012, suicide rates by suffocation increased, on
average, by 6.7 percent and 2.2 percent annually for females and
Most countries can't get inflation high enough. But...........
government of Brazil’s President Dilma Rousseff is being forced
to allow energy and fuel prices to rise after earlier
subsidising them in a bid to boost consumption and spur the
country’s slowing economy.
has fuelled inflation, which
grew at a monthly rate of 1.24 per cent in January
compared with December, or an annualised rate of 7.14 per cent —
exceeding the central bank’s target range of 4.5 per cent plus
or minus two percentage points.
I gave up on Mexico and South America years and years ago. Huge
graft and terrible economics.
|What to look for in a
Yes, it is long but it's necessary for you or your
the following checklist to assist you in assess nursing
homes. If possible, both the caregiver and care
recipient should be involved in the decision making
process. The more an older person participates in the
planning process, the easier it will be to adjust to the
there handrails along the walls?
the doorways wheelchair-accessible?
management take safety precautions to prevent
residents from falling down stairs?
the floor kept dry and free of litter?
case of fire, can the facility be easily evacuated?
fire extinguishers easy to locate?
the facility appear clean?
there lingering odor?
the faucets, call buttons, telephones, and
television sets work?
heating and cooling adequate?
the atmosphere pleasant?
staff seem to genuinely enjoy working with the
staff appear to care about and respect residents?
residents treated as individuals?
the staff appear interested in the residents?
staff seem interested in speaking to visitors or
your questions answered clearly, frankly, and in
any other residents have conditions similar to your
residents clean and adequately dressed?
staff appear to refrain from making unrealistic
promises or predictions?
the rights of the residents clearly posted?
the food hot, attractive, and tasty?
special diets available? What kinds?
a resident have plenty of drinking water easily
planned, posted, and varied recreational and social
the listed activities seem interesting and
most of the people at an activity program seem to be
religious services held weekly?
the facility in good standing with the state
fees increased significantly in the past few years?
the structure easy to understand and reasonable?
the institution readily reveal what service are
covered in the quoted fee?
services are extra?
Medicaid accepted? Is Medicare accepted?
billing and accounting procedures understandable and
transportation of patients provided?
a resident advisory council exist?
visiting hours reasonable?
therapeutic services available? (Speech, physical
social work services or other mental health services
community organizations (library, church group,
the charge nurses, social workers, department heads,
and top-level administrators have geriatric
experience and/or education?
Living Alternatives, which, publishes FREE semi-annual
guides to senior housing in the Detroit, Chicago,
Cleveland, Cincinnati, Columbus and Toledo areas, and
Milwaukee and Madison, Wisconsin. Call toll-free for
free copy: 1-888-SLA-7276. For Nationwide Information,
to Look for in Assisted Living Communities
the following checklist to assist you in assesses
assisted living communities. If possible, both the
caregiver and care recipient should be involved in the
decision making process. The more an older person
participates in the planning process, the easier it will
be to adjust to the new environment.
an Assisted Living residence as you tour the facility:
you arrive at the residence, do you like the
location and outward appearance of the residence?
you enter the lobby and tour the residence, is the
decor attractive and home-like?
you and your potential resident both receive a warm
greeting from staff welcoming you to the residence?
the administrator/staff call residents by name and
interact warmly with them as you tour the residence?
residents socialize with each other and appear happy
you able to talk with residents about how they like
the residence and staff?
the residents seem to be appropriate housemates for
your loved one?
staff appropriately dressed, personable and
the staff members that you pass during your tour
friendly to you?
visits with the resident welcome at any time?
the community well-designed for resident's needs?
the recreational and non-living spaces free from
storage items or other obstacles?
the floor plan easy to follow?
doorways, hallways and rooms accommodating to wheel
chairs and walkers?
elevators available for those unable to use
hand rails available to aid in walking?
cupboards and shelves easy to reach?
doors of a non-skid material and carpets firm to
the residence have good natural and artificial
the residence clean, free of odors and appropriately
the residence meet local and/or state licensing
assessments, contracts, costs & finances
there a written plan for the care of each resident?
long after admission is this care plan written?
the family and resident involved in writing the care
is the procedure for assessing a potential
resident's need for services and are those needs
a resident be discharged for refusing to comply with
a care plan?
may a contract be terminated and what are refund
there any government, private or corporate programs
available to help cover the cost of services to the
a contractual agreement available to include
accommodations, personal care, health care and
additional services available if the resident's
there different costs for various levels or
categories of services?
do you pay for additional services such as nursing
care when needed on a temporary basis?
are the billing, payment and credit policies? May a
resident handle their own finances with staff
assistance if able, or should a family member or
outside party be designated to do so?
is the residence policy regarding storage of
medication, assistance with medications, training
and supervision of staff and record keeping?
self-administration of medication allowed?
coordinates home care visits from a nurse, physical
therapist, occupational therapist, etc. if needed?
staff available to assist residents who experience
memory, orientation, or judgment losses?
a physician or nurse, visit the resident regularly
to provide medical checkups?
is the procedure for responding to a resident's
staff available to provide 24-hour assistance with
activities of daily living (ADL) if needed?
include: __Dressing __Eating __Mobility __Hygiene and
grooming __Bathing, __toileting __incontinence __Using
the telephone __Laundry __Housekeeping in unit
__Transportation to doctor, hairdresser, activities,
etc. __Shopping __ walking/caring for pets.
of individual units
different sizes and types of units available?
units for single and double occupancy available?
residents have their own lockable doors?
a 24-hour emergency response systems accessible from
bathrooms private with handicapped accommodations to
accommodate wheelchairs and walkers?
residents able to bring- their own furnishings for
their unit and what may they bring?
all units have a telephone and cable TV and how is
a kitchen area/unit provided with a refrigerator,
sink and cooking element?
residents keep food in their units?
residents smoke in their units? In public spaces?
residents have pets?
and recreational activities
there evidence of an organized activities program,
such as a posted daily schedule, events in progress,
reading materials, visitors, etc?
residents participate in the neighboring community?
volunteers, including family members, come into the
residence to help with or conduct programs?
the residence require residents to undertake any
chores or perform specific activities that benefit
the residence have its own pets or provide for pets
to visit the facility?
the residence provide three nutritionally balanced
meals a day, seven days a week?
a resident request special foods?
common dining areas available?
residents eat meals in their units?
meals be provided at a time a resident would like or
are there set times for meals?
Living Alternatives(c), which, publishes FREE
semi-annual guides to senior housing in the Detroit,
Chicago, Cleveland, Cincinnati, Columbus and Toledo
areas, and Milwaukee and Madison, Wisconsin. Call
toll-free for free copy: 1-888-SLA-7276. For Nationwide
Information, visit http://www.senioralternatives.com
3/8" Genworth a major player in LTC policies:
We have concluded that we did
not have adequate controls designed and in place to ensure
that we correctly implemented changes made to one of our
methodologies as part of our comprehensive long-term care
insurance claim reserves review completed in the third
quarter of 2014. As a result, we failed to identify a
$44 million after-tax calculation error. Although this control
deficiency did not result in a material misstatement in the
consolidated financial statements, we
have concluded a material weakness exists in the controls
over the implementation of our long-term care insurance
claim reserves assumption and methodology changes because
such a misstatement could have occurred. We
are currently working to remediate the material weakness
... We cannot be sure when we will successfully
remediate the material weakness or whether compensating
controls will be effective b efore then in preventing or
detecting material errors.
EFM- now I wonder what will happen
to all the other companies selling any form of their policies.
Putting a Stop to Retirement Plan Leakage
"[P]roposals that have been suggested include:  Raise
the age requirement for early withdrawal from 59-1/2 to 62 to
match the earliest Social Security retirement age;
 Limit balances for in-service withdrawals to only
employee contributions;  Tighten hardship rules even
more and only allow hardships in case of 'unpredictable events,'
for both 401(k) plans and IRAs;  Remove cash-outs
altogether (this will mostly likely be met with resistance from
plan sponsors because small balances can be expensive and
burdensome to administer)." (Milliman
Retirement Town Hall)
EFM- it's a good start
periods when the markets do not change dramatically, most
investors get it right most of the time but it does not make
them any money. It is very valuable to forecast radical changes,
as in the case of oil prices, but most people don’t get this
right and this makes forecasting so unavailing. When something
radical happens, someone gets it right, but Marks asks himself
did this person get anything else right before or after, or do
they just take extreme positions?
not what you don’t know that gets you in trouble but what you
know for certain that just ain’t true.”
you think the same as everybody else, you will act the same as
everybody else. If you act the same as everybody else, you will
perform the same as everybody else. If you want to outperform,
then you have to think differently and act differently with
higher level thinking.
first-level thinking, an investor thinks that a company is great
and buys the stock. With second-level thinking the investor
thinks that the company is great but not as great as everyone
thinks and therefore sells the stock. Marks described first-,
second- and third-level thinking in the context of Maynard
Keynes’ observations in predicting winners in newspaper beauty
contests in London in the 1920s. With first-level thinking, you
pick the winner based on your opinion. However to win the
contest you need to have at least second-level thinking and pick
the girl who you think will get the most votes.
Hunt provided further details on Keynes’ observations of
third-level thinking on his Epsilon
Hunt stated that to win the contest you have to make a
third-level decision and pick “who will get the most votes when
all the voters are basing their votes on who they think will get
the most votes”.
I'm not sure the liquor makes
slowdown will negatively impact us (doesn't take
any brains for that) but I have no idea how bad it will be
will target economic growth of “around 7 per cent” this year,
Premier Li Keqiang told parliament on Thursday,
signalling that the leadership expects the country’s economy to
slow further following the slowest
expansion for 24 years in
EFFECTS OF CONFLICTED INVESTMENT ADVICE ON RETIREMENT SAVINGS
from the whitehouse
3/8: As Australia
goes, so I think we will as well
face a future of lower economic growth, falling living
standards and increasing
public debt unless they embrace structural reforms that meet the
challenges posed by an ageing population, a government report
“Ongoing deficits and rising debt is not sustainable. We need to
be better placed to respond to the potential for future economic
downturns and pressures on the budget as we live longer."
went into further detail on luck and skill in describing the
2006 collapse of the hedge fund Amaranth. Marks said that
Amaranth lost 90% of its assets not due to poor bets in 2006 but
because of their success in 2005 when they were up 100%. He
offered that “losing 100% is only the flip side of making 100%
if there is no skill.” Marks said Amaranth made some “wild ass”
bets in 2005 and got lucky and then made similar bets in 2006
and got unlucky.
3/5" Indexing" the
percentage of institutional investments in index-tracking
strategies is small — about 19.2 percent for public pension
plans and 11.2 percent for corporate plans
you want to outperform, then you have to think differently
and act differently with higher level thinking," and that
"if you have enough aggressiveness at the right time, you don’t need any skill."
3/5: Military families are
falling behind in financial literacy (Think Advisor)
families are becoming increasingly disconnected with their
financial realities. A report commissioned by First Command
Financial Services Inc. and the First Command Educational
Foundation showed middle-class military families posted an
average score of 69 on its financial literacy test, the first
failing grade since the program's launch in 2012.
Steps to Kidney Health
Recent studies indicate that 26 million American adults
suffer from chronic kidney disease (CKD) and that the number
is likely to rise unless Americans get serious about
prevention. March is National Kidney Month and World Kidney
Day 2015 is March 12. This is the perfect time for responsible
adults to begin a kidney-health program by learning about the
risk factors for CKD.
risks include: diabetes;
heart disease; high blood pressure; a family history of kidney
disease; and age 60-plus.
risks include: obesity;
autoimmune diseases; urinary tract infections and systemic
Below are 10 important steps from the National Kidney
Foundation to protect kidney health.
10 Ways to Keep Kidneys Healthy
over-the-counter painkillers or NSAIDs
Get an annual
family’s medical history
pressure and cholesterol
Don’t smoke or
Talk to your
doctor about getting tested if you’re at risk for CKD
The National Kidney Foundation will also offer free kidney
screenings to people at risk for CKD in a number of cities
across the country on World Kidney Day (March 14, 2014). For
locations and schedules,click
This article was is courtesy of the National Kidney
Foundation. For more information about kidney health or
the foundation, visit their website at www.kidney.org.
The brief’s key
force activity among older Americans began rising in the
mid-1980s due to:
Social Security incentives;
shift to 401(k) plans; and
health, longevity, and education.
data, however, suggest that these factors may have played
a result, the average retirement age has increased only
slightly in the last 10 years: to 64 for men and 62 for
This device, called the “Iter Avto” was the first ever
attempt at having a GPS in the car, except this
obviously didn’t use satellites. The device came
with a set of paper maps that could be attached to a scroll.
These were wound from one roll to another across a display and
a cable connected to the speedometer controlled the scroll
rate. The speed with which the display moved was proportional
to the speed of the car so it always showed the correct point.
Pretty high-tech for 1930!
3/4: Asset class correlation assumptions
||Standard Deviation (Annualized)
|Foreign Developed Stocks
|Emerging Market Stocks
|Dividend Growth Stocks
|US Government Bonds
|Emerging Market Bonds
Table 4: Asset class expected real
Note: long-term inflation expectation is 2%.
|US Government Bonds
|Emerging Market Bonds
1930 car elevator. Unbelievable
negative interest rates could become the new normal
still might think that it makes sense to hold cash directly,
rather than holding an asset with a negative return. But holding
cash can be risky, as Greek savers have learned
Monetary policy has become increasingly unconventional in the
last six years, with central banks implementing
zero-interest-rate policies, quantitative easing, credit easing,
forward guidance, and unlimited exchange-rate intervention. But
now we have come to the most unconventional policy tool of them
all: negative nominal interest rates.
Gross has said similar. So when I say that this is a fabricated
economy, I also mean that historical number crunching may be a
thing of the past. Looking forward will have lower rates and
yields and th volatility will be greater.
& Dispersion Index Dashboard
signals were flashing in European correlation
levels prior to the European Central Bank's
much-anticipated stimulus package at the end
of last month; since the announcement,
correlations have collapsed along with
volatility levels in developed markets.
0.11 correlation for the S&P Europe 350
was the lowest since at least 2007, and
similar record-low correlations were recorded
in the S&P SmallCap 600®, the
S&P Emerging BMI and the S&P Developed
Ex-U.S. LargeMidCap. Every single
correlation measure was in the lowest quartile
of its historic range.
in each market remains high relative to recent
are the historical annualized real returns for stocks from 1970
to 2013 using the Dimson, Marsh, and Staunton data.
New Zealand 4.75%
South Africa 7.56%
3/2: No One Should Expect Returns of 5%’: Research Affiliates
numbers don’t lie, according to experts at Research Affiliates,
and that means it’s time to scale back expectations when it
comes to real returns in the coming decade.
plotted it – there’s nothing above 5%,
Robert Shiller says that with a U.S.
equity ratio of 27, we should expect lower future returns
EFM- I don' know about 5% but 6% that I would use now is not
really much betterr
3/2: Say it isn't so
mystery shoppers visited advisers for a 2012 study,
85 percent were told to ditch their diversified, low-fee
including load fees and 12b-1 fees, give advisers an incentive
to recommend certain investment products over others. Firms
can also give advisers bonuses for steering client money into
the firms’ own funds. The result of this biased advice is that
investment performance suffers, academic studies show—and not
just because fees eat into returns. A 2014 study compared
self-directed investors with clients who received advice with
conflicts of interest. The self-directed investors performed
an average of 1.25 percentage points better annually. A 2009 study found that
direct-sold funds beat broker-sold funds by 0.14 to 0.9
percentage point per year, even disregarding the broker funds'
higher fees. Over time, that performance gap can cost you
thousands, or tens of thousands, of dollars.
I dress up well
I never knew these even existed
the True Monte Carlo Number, Please Stand Up
? By: Moshe A.
Milevsky and Anna Abaimova
Note the termendous variability from the different products.
risk management is much better than none and I commend advisors
who are pioneers in using this new technology. But the use of
risk management in an advisory practice must rise to the
critical next level. It must answer the ‘So what?’ question for
the client, i.e., “Why exactly am I incurring this risk. If I am
risking a large loss in a junk debt collapse or equity
deleveraging, which specific goals am I reaching for? And if I
reduce my risk, which goals do I need to give up?”
already answer these questions for their clients. We are
simply advocating that they connect financial planning to the
rigorous risk management process. Risk tolerance is a very
important concept, but it is not the only aspect of risk
management. In fact, FINRA’s definition of suitability
specifically includes the following:
age, other investments, financial situation and needs, tax
status, investment objectives, investment experience, investment
time horizon, liquidity needs and risk tolerance.”
tolerance is one out of ten on this list. While we would agree
that its importance far exceeds 10%, it is essential to address
objectives, horizon, taxes and the like to truly add value for
article below since I am providing the answer to both issues.
spending and ARVA
- ( annually recalculated virtual annuity)
READ THIS CAREFULLY (below are excerts only)
[In other words, the problem is not to find the correct, single,
constant spending rate for the entirety of one’s retirement, as
many practitioners seem to assume. There
is no such rate
—unless the entire portfolio is engineered
to perfectly hedge planned consumption (and all spending goes as
planned!). The problem is to recognize that with any other
investment strategy—one that includes unhedged risky
assets—spending must vary as total asset values and interest rates
fluctuate; there is no other safe way to meter spending so that
there is no danger of the money running out.
A simulation approach tries to balance the desire for higher
spending against the chance that the investor will run out of
money, but we want an approach
that guarantees that the portfolio will not be depleted, even if
the investor is holding risky assets. Adjusting
one’s spending is tolerable but ruin is not;
therefore, we present an
alternative to the probabilistic approach. Our innovation is
important in both theory and practice: In the literature, the
possibility of running out of money is said to have infinite
disutility, meaning that any
nonzero probability of ruin should be avoided entirely
This objective simply makes sense, even in a country such as the
United States, where there is a Social Security safety net.
................... and readers of this article will see that a
universal 4% or 3% answer is necessarily in error. At best, it is
a heuristic usable only for certain combinations of specific
retirement horizons and real interest rates—a fact that is obvious
once stated but that is left out of much of the adviser
literature. (EFM: I repeat- it is necessary to compute some
conservative number for the asset base for the retiree looking at
an acturarial lifetime plus a fudge factor. See the comments in
the risk of loss video.)
The ARVA strategy can be derived from an annuity payout
calculation, repeated each period; simulations and other fancy
techniques that accept some probability of ruin are not required.
Of course, this ARVA strategy
gives a completely stable real spending rate only if one invests
in the nearly riskless TIPS ladder, the true risk-free asset
The primary focus of this article,
however, is on those who do not invest in a ladder of TIPS to
fully hedge spending but instead choose to invest (partly or
wholly) in equities and other volatile assets; for these
investors, the unhedged risk must and will pass directly through
to the amount that can be spent on consumption as the ARVA is
recalculated each period.
In our view, the discussion should not be about whether 3% or 4%
is correct, nor should it be about whether to tolerate a 10% or
20% possibility of failure in a simulation (any possibility of
failure being unacceptable). Rather, it
should be acknowledged that with risky investments, there is
risk to one’s wealth, and in the presence of such risk, there
cannot be a fixed spending rate. So, the discussion should be
about how to recalculate the proper level of spending each year
as one’s portfolio value and time horizon evolve
Others may calculate probabilities of failure, but we are not
interested in failure. Running out of money before running out of
life is a catastrophe, mitigated only by Social Security. It is
not something we want an investor to do, even with a low
probability. We want an approach that guarantees a
wealthappropriate income right down to the last payment, not one
that settles for some small but still very significant probability
that such an outcome will not be achieved. This must be the
starting point for any discussion of this topic. (Excellent)
A single generalized spending rule meets the needs of both the
riskless and the risky investors: Spending
in the current period should not exceed the payout that would
have occurred in the same period if the investor had purchased
with his or her available assets at the beginning of the period
a fairly priced level-payment real fixed-term annuity with a
term equal to the investor’s consumption horizon
The ARVA strategy has the advantage of connecting the dots between
risk and return in the most meaningful possible way: Investment
risk translates directly into consumption risk. More equities and
other risky assets and less hedging of consumption mean more
volatility—uncertainty—of consumption. Living standards will go up
and down unpredictably to the extent of the unhedged risk in the
risk—the only risk—you care about when setting your investment
policy. And it is controlled by the volatility of the portfolio
chosen in the asset allocation process: The standard deviation of
the portfolio’s investment strategy is also the standard deviation
of consumption (for a constant discount rate). Hold that risk
tolerance thought; you will use it repeatedly when considering
spending rules and investment policies. As a result, in
considering the degree of aggressiveness in risky asset
holdings—that is, where to be on the surplus efficient frontier as
described in Sharpe (1990) or, with a more specific link to
multiperiod consumption, in Waring and Whitney (2009)—risk
tolerance for the investment portfolio is equivalent to risk
tolerance for spending volatility. Here is the deal: if you cannot
take large hits to spending several years in a row, perhaps you
should be considering a more closely consumption-hedged investment
policy, with fewer nonhedged risky assets. Many people are
probably invested more aggressively for their retirement than they
might be if they thought this risk tolerance issue through. Some
investors may not like experiencing consumption volatility. Many
would like to have their aggressive risky asset portfolio “cake”
and eat it smoothly too, as the old saying (almost) goes, holding
lots of equities and other risky assets. But—this is a reality
check—the “tough love” lesson of this article is worth repeating:
consumption volatility directly follows from investment and
discount rate volatility and is what risk is. Embrace it; remember
it. Manage it with your investment policy;
do not take risk the downside of which would make you unhappy
If one believes that the random walk model is a reasonably good
model of the markets, the possibilities of ruinous long-term
underperformance cannot be ignored.
What happens if your luck is bad?
We alluded to it earlier, in our discussion of what risk is. As
a result of our investor’s reaching for his aspiration by taking
on greater risk, the assets might earn less than the risk-free
return, and if they do, consumption will be lower than what he
could have had risklessly with a ladder of TIPS worth his actual
asset value— $600,000! Lower, not higher—completely defeating
the aspirational effort—and perhaps much lower. Aggressive
investment strategies that aim to increase spending beyond an
investor’s apparent means generate a significant probability
that the investor will be worse off, not better off.
can count on what you have (if invested correctly), but aspiring
to do better by taking on additional investment risk may or may
not end well.
The more interesting situation is
when the investments include risky assets and are imperfectly
hedged to consumption.
If the investments involve risk,
the recalculated annuity periodically adjusts spending to keep it
appropriate to fluctuating portfolio values and interest rate
levels; in this way, spending will always be sized appropriately
to one’s assets and the possibility of ruin can be avoided.
Risk tolerance must be set carefully when deciding the
aggressiveness of the asset allocation or investment strategy. Risk in the investment portfolio
translates directly into risk in the investor’s lifetime
consumption stream: a 10% portfolio loss requires a 10%
reduction in spending.
It should be no surprise to
anyone that the decision to seek higher expected returns in an
effort to increase consumption means taking on greater expected
risk—risk that realized returns, and thus consumption, might end
up lower rather than higher.
As stated these are just excerpts and I surmise you
know what my comment is. The whole idea of risk is to control
it. DCAD does exactly that but whatever the simplicity is, it is
apparently beyond academia and all the supposed thought leaders.
Do you see what the bold print says directly above? Think about
the losses sustained in 2000 and 2008 and then tell me someone
could accept a 44% reduction in assets for 2000 and
corresponding income and then a 57% drop a few years later? But
it's even worse than that as I have indicated in previous
commentary. A retiree taking out funds will never see the
complete return of assets. The authors note- "if you cannot take
large hits to spending several years in a row, perhaps you
shouldbe considering a more closely consumption-hedged
investment policy, with fewer nonhedged riskyassets"- and I
submit that is most of the middle income, then DCAD should be a
major offset to such risky assets and allow greater income
overall. Instead of a 44% loss, it could be 10%. Instead of a
57% loss, it could be 13%. No algorithms- just common sense. And
DCAup provides an independent way to get back in. Also
recognize that the emotional stability of the family will be FAR
The authors however have a similar philosophy of doing an
examination of the then budget and investments every
year. This essentially precludes the innumerable
articles preaching a 4% or 3.5% or 3% annualized income "good"
for a 30 year or more lifetime.
Their commentary on a very long lifetime was excellent. Not
really sure how it could be handled for a very large populace.
3/1: I must hurry- this from an email just received.
to see you as a guest in Lake Tahoe, May 28-31, for our
"Annual Premier Coaching Event".
only takes 3M production, and we've made it easier for you to
are giving you double the points in March!
Would this be an incentive to agents to "get on board"? You decide
(Did it take long?)
study led by senior
economist Anthony Webb of the Center for Retirement Research,
finds that U.S. nursing home stays are relatively short: 11
months for the typical single man and 17 months for a single
woman. There’s some unpleasant news in the study, too,
because the risk that an older person may one day need nursing
home care is 44 percent for men and 58 percent for women.
the last couple weeks I have read more LTC articles. They
almost universally talk about nursing home care as being LTC.
No. Effectively the journalists say something like above that
the nursing home stays are relatively short. Did they mean
just nursing home exclusively or was it assisted living AND
I have no idea what the statistics actually are. See if you
can figure it out.
more than half of women die
before age 85 (80 for men)
Best Practices for Gauging and Managing Your Clients’ Risk
Effective and meaningful conversations about risk are critical to
relationship success, says Dr. James Grubman, a wealth
psychologist who works with high-net-worth families and their
advisors. Yet, for many advisors, talking about risk is right at
the top of the “sensitive topics” list. Why? Because whether or
not your clients admit it, their
own feelings about risk are a reflection of their upbringing,
personality, emotional security and experiences with money,
regardless of how wealthy they may be.
1 As an
advisor, it’s clear that in the current landscape, it’s risky to
rely upon untested assumptions about your clients’ attitudes
toward risk. In light of the events over the past few years,
advisors should consider re-assessing each client’s risk profile
by encouraging clients to spend time discussing their attitudes
toward risk. This will allow you to be successful in the analysis
and calculation of your clients’ risk attributes. RAISING
THE SUBJECT OF RISK: A CRUCIAL CONVERSATION2
financial advisors assess risk as a normal part of the client
relationship. Your biggest
challenge, however, is getting an accurate picture of your
client’s risk tolerance3.
For most people, ‘risk’ only
means loss, damage and putting something in danger, says Grubman.
“When you start a conversation with, ‘Let’s talk about risk,’ you
are likely making your clients anxious from the start.” Using
word ‘risk’ right off the bat may create emotional roadblocks
that prevent you from having a more productive and rational
For other clients, the concept of risk is
so abstract that it may be difficult for both advisors and clients
to articulate their thoughts in mutually comprehensible terms.
Given the loaded nature of the word, especially within the
construct of a financial relationship, Grubman advocates using
real-world situations and experiences that will be more effective
in probing and pinpointing your clients’ feelings about risk.
Consider the following conversation starters: – “Let’s talk about
those times in the market when you tend to get nervous.” – “What
helps you sleep well at night when it comes to your money?” –
“You have $100,000 in your
portfolio today. How would you handle a scenario in which the
value of your portfolio dropped to $80,000 over a three-month
These kinds of open-ended questions will elicit
emotional responses that will cue you in to how much risk your
clients can actually manage. Grubman also points out that most
clients only focus on the negative connotations of risk, without
considering its benefits as a means of potentially capturing
excess returns in strong markets or protecting against the
potential erosion of the value of a portfolio during
TABLE 1: FINAMETRICA SCALE OF INVESTOR RISK PROFILES GROUP 1 GROUP
2 GROUP 3 GROUP 4 GROUP 5 GROUP 6 GROUP 7 ATTRIBUTES RISK AVERSE
Attitude Towards Risk Risk equals danger to these investors, who
have little confidence in their ability to make good financial
Risk equals danger or uncertainty; investors in this group adapt
to poor decisions uneasily.
Risk relates to uncertainty, yet they are prepared to take a small
to medium degree of risk in their investments. They are usually
confident in their decisions.
Risk represents uncertainty to these investors. They have a
reasonable amount of confidence in their ability to make good
Risk equals opportunity and a medium degree of risk is acceptable.
They have a reasonable amount of confidence in their ability to
make good financial decisions.
Risk equates to opportunity, a large degree of risk is acceptable.
They have a great deal of confidence in their ability to make good
financial decisions. These investors think of risk as an
opportunity or thrill, and they have complete confidence in their
ability to make good financial decisions.
Financial Profile Always more concerned with possible losses than
possible gains. More concerned with possible losses than
possible gains. Still usually more concerned with possible losses
than possible gains. More concerned with possible gains than
losses. Always more concerned with possible gains than
1: They have put risk in a subjective position. Why not make it
objective by showing what the risk actually is BY THE NUMBERS.
Ever hear of Risk of Loss? You can define the risk for almost any
2. The level of risk is one of the first issues of discussion-
before any investments are made.
3. Getting a picture? Just show the numbers.
4. Change the focus to risk of loss and what do they want to do?
Try a buy and hold and probably get slaughtered or limit losses to
10% to 15%.
5. That's 20% which is beyond the values I set for DCAD. DCAD
would have already 'forced' sale of the equities. The question is
why did it drop? Is it just a correction?
6. DCAup 'forces' one to buy in on the upside. Might be able to do
it before an announcement by the National Bureau of Econom6ic
Research but this is independent.
If you have an advisor bent on the status quo, the risk
conversation is a guide to disaster if a bad time occurs. And only
a large mosquito bite with DCAD.
Why Financial Advisers Should Factor Tech Advances
in Retirement Planning
"In the next stage of our [65-year-old] client's life,
from 80 to 85,
robots will be able to help him with the activities
of daily living, for about 15% less than the
current cost of a home-health service. By the time
this client is 85, robots will not only be cheaper but
more capable, and the savings will continue to
increase. These future savings, and clients'
increasing life expectancy, need to be factored into
plans we're making today. Planners may want to set
aside money for emerging technologies, and make
calculations based on longer life expectancies." (The
Wall Street Journal; subscription may be required)
by side with the limitless possibilities opened up by the new
technologies, reflection about international order must include
the internal dangers of societies driven by mass consensus,
deprived of the context and foresight needed on terms compatible
with their historical character. As diplomacy is transformed
into gestures geared toward passions, the search for equilibrium
risks giving way to a testing of limits. …
Because information is so accessible and communication
instantaneous, there is a diminution of focus on its
significance, or even on the definition of what is significant.
This dynamic may encourage policymakers to wait for an issue to
arise rather than anticipate it, and to regard moments of
decision as a series of isolated events rather than part of a
historical continuum. When this happens, manipulation of
information replaces reflection as the principal policy tool.
Henry Kissinger, “World Order: Reflections on the Character of
Nations and the Course of History” (2014)
Fiduciary Push Expected after State of the Union
"The administration is already prepared to defend the Department
of Labor rule with an economic justification document that is
seen as a key to getting a court to uphold the regulation if it
is finalized but then challenged in court. The economic
justification document ... purports to show that consumer
protections for investment advice to the retail and small plan
markets are inadequate and that the current regulatory
environment 'creates perverse incentives that ultimately cost
savers billions of dollars a year.' The justification document
said evidence through various studies indicates these costs
arise from incentives to steer savers into higher cost products
within the IRA market."
One in Five Investors Have Tapped Into 401(k)
"The majority of nonretired investors in the U.S. say their
employer offers a 401(k) plan, and of these, 89% say they
participate in it. Yet 21% of those who participate in such a
plan say they have either taken out a 401(k) loan or even taken
an early withdrawal from the plan in the last five years."
Caregivers Encourage, Motivate Loved Ones with Aphasia
Joanne Marttila Pierson, Ph.D.
You ask your spouse for a plate, and he hands you a cup.
Your spouse seems to get “stuck” on the same word or
Your spouse can say words, but her sentences don’t make
That’s Aphasia: a language disorder that results from damage
to parts of the brain. It can affect all modes of language
including speaking, writing, gesturing, understanding what
others say, understanding writing, and using numbers. Aphasia
often hides people’s thoughts, ideas, personality,
intelligence and competence – they know what they want to say,
but can’t always get the words out.
Stroke is the leading cause of aphasia; however, it also can
result from brain tumors, head injuries, brain infections, and
other conditions of the brain.
People who suffer from aphasia can have difficulty
understanding others, particularly strangers. Or, they can
follow the gist of a conversation, but lose track easily, or
forget the beginning of a message before reaching the end of
it. They may be able to say individual words, or parts of
words, but struggle to complete the entire word or sentence.
Or, they may speak nonsense quickly. And background noise or
lively conversation among a group of people can really
exacerbate the difficulty they have understanding
“Many times, too, a person with aphasia is so focused on
themselves, they are unable to see that their caregiver is
overwhelmed. The person with aphasia can’t help it; they’ve
lost a lot of control in their lives between the loss of
communication and physical disabilities. They are just trying
to survive,” says Mimi Block, M.S., CCC-SLP, clinical services
manager, University of Michigan Aphasia Program.
“And even if they could recognize how much their caregiver is
dealing with, they cannot express their gratitude or
appreciation,” she added.
It can be an enormously frustrating condition, for both the
individual and the caregiver.
The University of Michigan Aphasia Program (UMAP) is the
oldest and most effective program of its kind in North America
for the treatment of aphasia. Established in 1947 to assist
World War II veterans who sustained injuries in combat, UMAP
has successfully treated thousands of individuals, offering as
much speech-language therapy during a six-week session as a
person would receive in one year of traditional therapy.
Caregiver education and support is a critical component of
This past summer, UMAP gave Robin Cox, wife of a (retired)
National Guard Lieutenant Colonel with aphasia, the tools to
help her husband with his therapy and the insight to help
herself as his caregiver. Her husband Mark suffered a stroke
in March 2009, just 30 days before he was due to be deployed
“I know it’s a cliché, but UMAP taught me this is not the end
of the world, there is light at the end of the tunnel, and the
little progress we make each day brings us that much closer to
our goals,” Robin Cox said. “And those little improvements are
exponentially more important for the caregiver,” she added.
“They bring us ten times the joy.”
One morning, not too long ago, Mark found his glasses after
looking for them for quite some time.
“He said, ‘I found them’ and I said, ‘Say that again!’ and he
did! And then I made him say it again. It was one whole,
complete sentence. It’s those little moments you must
celebrate,” Cox said.
During the six-week session at UMAP, there are five caregiver
meetings which focus on:
- Acquiring a better understanding of aphasia, and the
physical disabilities associated with a stroke (the most
common cause of aphasia)
- Facilitative conversation and other ways to communicate
with people who have aphasia
- Effective communication techniques and strategies
- Practicing new communication skills using facilitative
- Options for the future
“Ongoing education is essential for the well-being of the
loved one with aphasia and all the family members,” Block
says. “The caregiver needs to connect with the speech-language
pathologist who sees their loved one to learn about aphasia
and specific techniques to communicate with him or her.”
To prompt conversation, Block encourages caregivers to use
“topic cards,” which are lists of words or pictures—like
family, sports, friends, birthdates, hobbies, maps, a
calendar—as a starting point to determine what the person
wants to talk about.
“There’s also the WH Chart—who, what, when, where and why,
that can be used to get the person thinking in terms of
sentence structure,” Block said. “The more information that’s
available to them, the more successful they will be.”
One night when Mark Cox was trying to tell his wife Robin to
change his schedule that week, she said they both “went round
and round and round, and started to get flustered” until she
resorted to using a calendar and writing down days of the week
and appointments to clarify what her husband was trying to do.
“You have to keep digging to find the right way to get the
point across,” Robin Cox says. “It’s more than just talking.
You can use pictures, calendars or write words on paper.
You’ve got to take a deep breath and be patient. Yelling isn’t
going to do it. You have to try all of your options.”
UMAP also encourages caregivers to be advocates for their
loved ones, providing them with the encouragement and
motivation to continue on the road of recovery with realistic
goals and expectations, and a better ability to communicate in
their day-to-day living.
Lulu Smith, whose husband Louis suffered a stroke in 2005 and
has aphasia, is in two therapy programs, including UMAP. She
accompanies Louis to all of his therapy sessions, and either
watches them or participates in them directly.
“I watch to see what the therapists are doing, and I insert
their techniques into our daily routine at home,” she said.
Lulu Smith also tries to keep their lives as normal as
possible. Louis is a legendary jazz trumpeter with an
international reputation and many major recordings, and she
regularly takes him to jazz festivals and clubs where he can
interact with other musicians. They’ve always been great
travelers, she said, and they go to Paris in October each year
and to Mexico for two months in the winter.
“I never get someone to ‘sit’ with him. We’ve always done
things together,” she said.
Robin Cox recently encouraged her husband to go with her to
their 11-year-old son’s football game.
“He didn’t want to go at first. Since he had his stroke, he’s
lost some endurance, too. But he ended up staying for the
whole game. I think Mark realized he can socialize, and he can
talk with others—not just his wife, his brothers, or people
who are close to him. Physically, he was tired, but it was
great for his spirit.
“He was put out of his comfort zone. I think that’s what a
caregiver does. We try this, and if it doesn’t work, we’ll try
something else,” Cox said.
“It is so important to keep trying,” says Joyce Zeigler,
whose husband Mack suffered a stroke in 2004 and who has
participated in two UMAP sessions in 2006 and 2008.
“Mack continues to make progress. I encourage people with
aphasia and their loved ones to be patient and have hope. Mack
and I have faith that more progress is in his future. We take
it a day at a time and look forward to each day.”
Lulu Smith adds, “You must understand it takes a long time to
have success. You have to keep working and working, and never
give up. You’ve got to stick with it.”
remote Alaskan village that needs to be relocated due to climate
The article is obviously about climate change but my focus is on
the millions that the government may have to/will spend to move
this town of 400. As soon as that happens, the flood gates
for assistance to U.S. shores will open- large communities all
wanting billions to protect their shores.
And do not forget what everyone knew about New Orleans even before
the hurricane hit. It was sinking anyway and it would be only a
relatively short period of time before sections would be
uninhabitable without billions in new dike construction. Do we
keep on bailing out areas that are below the ocean? That's New
Jersey. What about North Carolina?
Add that to the billions needed for Alzheimers. Our schools are
doing a poor job with education. and the list is
My sister was strange
2/26: What is Age-Related Macular Degeneration (AMD)?
Macular degeneration is an eye condition that attacks the
macula, the region of the retina responsible for central,
detailed vision. Although it does not cause complete
blindness, it robs the individual of their central,
straight-ahead vision, resulting in what is often referred to
as a central vision “blind spot”. It does not affect the outer
circle of peripheral vision, so a person will always be able
to see things to the side, but this vision is too low
resolution (blurry) to make up for lost central vision.
For many people, the first sign of AMD is something they
notice themselves. Straight lines like doorways or telephone
wires may appear wavy or disconnected. When they look at a
person, their face may be blurred while the rest of them are
in focus. Lines of print may be blurred in the center or the
lines may be crooked.
What is End-Stage (or Advanced) AMD?
- More than 15 million Americans are affected by some form
of macular degeneration, a progressive disease which can
lead to severe vision loss in the most advanced form,
end-stage AMD. Approximately 2 million Americans have
advanced forms of AMD with associated vision loss.
- End-stage macular degeneration is the most advanced form
of age-related macular degeneration and the leading cause of
irreversible vision loss and legal blindness in individuals
over the age of 60.
- Despite the availability of new drug treatments that slow,
but not stop, the progression of AMD, the number of people
with end-stage AMD is expected to double by the year 2050.
How is AMD Diagnosed?
As the National Eye Institute explains,
the early and intermediate stages of AMD usually start without
symptoms. Only a comprehensive dilated eye exam can detect
AMD. The eye exam may include the following:
- Visual acuity test.
This eye chart measures how well you see at distances.
- Dilated eye exam.
This provides a better view of the back of your eye.
- Amsler grid test.
This checks whether you are seeing unusual wavy lines.
- Fluorescein angiogram.
This test makes it possible to see leaking blood vessels,
which occur in a severe, rapidly progressive type of AMD.
- Optical coherence tomography.
Like an ultrasound, OCT can achieve very high-resolution
images of any tissues that can be penetrated by light—such
as the eyes.
During the exam, your doctor is looking for drusen, which are
yellow deposits beneath the retina. Most people develop some
very small drusen as a normal part of aging. The presence of
medium-to-large drusen may indicate that you have AMD. Another
sign of AMD is the appearance of pigmentary changes under the
What are Wet AMD and Dry AMD?
Dry AMD, also called atrophic AMD, is the most common form of
age-related macular degeneration. Macular Degeneration
Partnership explains that it occurs when the there is a
“breakdown or thinning of the layer of pigment epithelial
cells (RPE) in the macula. These RPE cells support the light
sensitive photoreceptor cells that are so critical to vision.”
As these cells die and drusen (a yellow deposit) build up as a
result, the macula is damaged, reducing central vision.
Wet AMD, also called neovascular AMD, is only diagnosed in
about 10 percent of patients, according to the National
Institutes of Health. Vision loss associated with wet AMD
occurs when abnormal or very fragile blood vessels grow under
the macular and then leak blood and fluid. This damages the
macula. Typically, patients who develop wet AMD often are
diagnosed with dry AMD, first.
How is AMD Treated?
Early AMD – Currently, there is no treatment, but it should be
monitored annually by an ophthalmologist (eye doctor).
There are many service providers who can educate AMD patients
and their caregivers about vision assistive devices such as
reading glasses with high-powered lenses, video magnifiers,
computer aids and many more. Ask your physician for a referral
to a low vision occupational therapist.
Intermediate AMD –
There are several treatments that may slow progression, but
will not cure AMD.
- Vitamin therapy (AREDS2 formulation)
- Anti-VEGF injection - A few different anti-VEGF drugs are
available (e.g., Lucentis) and vary in cost and how they are
- Photodynamic therapy - This technique involves laser
treatment of select areas of the retina.
- Laser surgery – Used with only certain cases of
neovascular (wet) AMD, it involves aiming an intense “hot”
laser at the abnormal blood vessels in your eyes to destroy
End-Stage (Advanced AMD): The
CentraSight treatment program uses a tiny telescope, an
FDA-approved medical device, which is implanted inside the eye
to improve vision and quality of life for individuals affected
by End-Stage AMD. It is the only surgical treatment option for
It is also a Medicare eligible, out-patient procedure. Learn
more by calling 877-99-SIGHT (74448) or at CentraSight.com.
The telescope implant is not a cure for End-Stage AMD. It
will not restore your vision to the level it was before you
had AMD, and it will not completely correct your vision loss.
Patients with this level of AMD have had to cease driving due
to their vision; after the telescope procedure, although near
and distance vision may improve, driving will not be possible
because the implant does not restore normal vision.
How is AMD Prevented?
Common risk factors for AMD are:
Research shows that smoking doubles the risk of AMD.
AMD is more common among Caucasians than among
African-Americans or Hispanics/Latinos.
- Family history.
People with a family history of AMD are at higher risk.
To reduce your risk, avoid smoking, exercise regularly,
maintain normal blood pressure and cholesterol levels and eat
a healthy diet with green leafy vegetables and fish.
24 percent of
Americans have more credit card debt than emergency savings, and
13 percent are not much better off—they don't have credit card
debt but they don't have emergency savings either. Put another
way, more than a third of Americans are living at risk of a
Market Volatility and Learning
(University of Mannheim) ; Marcet, Albert
(Institute d'Analisi Economica) ; Nicolini, Juan Pablo
(Federal Reserve Bank of Minneapolis)
Consumption-based asset pricing models with
time-separable preferences can generate realistic
amounts of stock price volatility if one allows for
small deviations from rational expectations. We
consider rational investors who entertain subjective
prior beliefs about price behavior that are not equal
but close to rational expectations. Optimal behavior
then dictates that investors learn about price
behavior from past price observations. We show that
this imparts momentum and mean reversion into the
equilibrium behavior of the price-dividend ratio,
similar to what can be observed in the data. When
estimating the model on U.S. stock price data using
the method of simulated moments, we find that it can
quantitatively account for the observed volatility of
returns, the volatility and persistence of the
price-dividend ratio, and t he predictability of
long-horizon returns. For reasonable degrees of risk
aversion, the model generates up to one-half of the
equity premium observed in the data. It also passes a
formal statistical test for the overall goodness of
fit, provided one excludes the equity premium from the
set of moments to be matched.
Wheelchair Van Shopping Tips for Caregivers
If you’re the caregiver for an individual who uses a
wheelchair, owning a wheelchair accessible van is helpful and
can be more affordable with these tips.
As the caregiver for a family member, you can choose a
wheelchair van based on the needs of the person in your care.
Wheelchair vans come with rear entry access or side entry
access, and one can sometimes work better than the other in
The family caregiver, as the driver of the van, can consider
both styles. Side entry access means the van’s ramp deploys
from one of the side-door openings. The wheelchair user can
sit in the middle of the cabin just behind the front seats or
in the front-passenger position when the adapted minivan has a
removable front seat. The removable seat lets you to carry up
to two wheelchair users at the same time. Jump seats can be
added for extra seating for non-wheelchair users.
If the person uses an extra-large or extra-tall power chair,
rear entry access may be the best choice. The rear
door-opening width and height are larger, and the ramp is
wider, too. The rear entry conversion usually features a
manually operated ramp, but a power ramp can be added for an
Having a wheelchair van is a unique selling point for
many self-employed caregivers and caregiving companies.
Whether it’s taking a patient to a doctor’s appointment or
providing the patient with a change of scenery, a wheelchair
accessible vehicle can make a big difference.
Your patients will have different mobility devices, including
power chairs and mobility scooters, so your best choice is a
minivan adapted for rear entry access.
A rear entry van also has seating if a patient’s family member
or two comes along.
A long-channel rear entry conversion can handle up to two
passengers in wheelchairs at the same time. If you’re a
self-employed caregiver or caregiving company, you’ll have a
well-equipped vehicle that can be a rolling advertisement for
General Shopping Tips
Tip #1: Shop around.
Check out wheelchair van dealerships online and nearby to see
what they have in your price range. There are also mobility
classifieds online, where individuals list only
wheelchair-accessible vehicles for sale.
Tip #2: Determine your budget.
Budget is almost always a top concern for family and
Today’s handicap accessible van market has three clear price
levels that represent the three base van/conversion
- A New Van with a Brand-New Conversion. Shoppers
usually pay the highest prices for a brand-new minivan
equipped with a brand-new conversion.
- A Used Van with a Brand-New Conversion. Some
conversion companies buy used minivans with newer model
years and low mileage, which they convert for wheelchair
use. That means you can save money when you buy a used van
with a brand-new conversion. You’ll find high-quality
conversions in a wide range of prices.
- A Used Van with a Used Conversion. Last,
and almost always least—though only in cost—are used
minivans with used accessible conversions. Online and local
dealerships usually have a number of used/used accessible
vehicles on hand, because their owners trade them in or sell
them to upgrade to a newer model van. You can find some
great deals when you buy used/used.
If you’re on a budget, look for certified-used wheelchair
vans with reasonable prices, and don’t forget to negotiate.
Tip #3: Understand kneeling systems.
Many vans with wheelchair accessibility have a kneeling
system. The vehicle “kneels” closer to the ground to lessen
the incline. That makes entry and exit easier for the
independent, manual wheelchair user. These systems can be
pricey, unreliable, and unnecessary for caregivers.
Tip #4: Be Prepared with Questions for the Mobility
Mobility consultants, online or local, should give you this
information, but if not, you should be aware of the following
information before you buy:
- What warranties do you offer? Warranties
vary based on the base vehicle and conversion manufacturer.
Brand-new minivans are always equipped with brand-new
conversions, and you should have warranties on both. Used
wheelchair vans for sale may have either a new or used
conversion. A new conversion should come with a satisfactory
warranty, and, if there’s time remaining on the base
vehicle’s original warranty, you’ll have that, too.
- Do you deliver? If
you buy from a local dealer, pick-up may be your only
choice. For caregivers who buy a handicap accessible van
online, delivery options are a must. Ask about the company’s
different delivery choices and charges.
- What services do you provide after the sale? Every customer
should receive a detailed demonstration of the adapted van
and all its features at delivery or pick-up. Nationwide
conversion service is important, because you might be in a
remote location when service is needed. Ask about a
toll-free, 24-hour Conversion Emergency Help Line, so you’re
protected nationwide. Some dealers have a Buy Back Program,
which is a stress-free way to sell your wheelchair van.
Tip #5: Read Company Reviews and Testimonials Before
The most reliable online and local wheelchair van dealerships
appear on review sites like Yelp and Google Local. Company web
sites should feature customer testimonials.
When you shop for a wheelchair van, keep these tips in mind
to make sure you get the best van for your needs at the best
2/24: Life settlements
- 65+ years and older who in your estimation
have a 15 year +/- life expectancy
- Annual level premiums of 5% of the face amount
or less until maturity (Premium Ratio)
- Policy face amount of $100,000 or greater
"90% of seniors who lapsed a life
insurance policy would have considered a life settlement had
they been aware of the possibility." Insurance Studies
curse of knowledge increases self-selection into
competition: Experimental evidence
The psychology literature provides ample evidence
that people have difficulties taking the perspective
of less informed others. This paper presents a
controlled experiment showing that this "curse of
knowledge" can cause comparative overconfidence and
overentry into competition. In a broader context, the
results provide an explanation for the overconfidence
of nascent entrepreneurs and the substantial rate of
failure among new businesses.
Contribute More and Punish Less
Thum, Marcel ; Auerswald, Heike ;
Schmidt, Carsten ;
Many decisions in politics and business are made
by teams rather than by single individuals. In
contrast, economic models typically assume an
individual rational decision maker. A rapidly growing
body of (experimental) literature investigates team
decisions in different settings. We study team
decisions in a public goods contribution game with a
costly punishment option and compare it to the
behavior of individuals in a laboratory experiment. We
also consider different team decision-making rules
(unanimity, majority). We find that teams contribute
significantly more and punish less than individuals,
regardless of the team decision rule. Overall, teams
yield higher payoffs than individuals.
Assets in US listed ETFs at the end of January 2015 dropped to
$1.94 trillion from a record $2.14 billion at the end of
December 2014 due to a downtrend in the US equity markets and
negative cash flows.
• The US market now has over 60 ETF issuers
with over 1,400 listed ETFs.
• There were $3.8 billion in negative cash
flows out of ETFs in January 2014. This was a big fallback
after record monthly inflows of $53 billion in December of 2014
which led to annual record inflows of over $240 million for all
• US equity ETFs had over $22 billion in net
outflows in January led by the SPDR S&P 500 ETF which had
$28 billion in outflows for the month. I believe this is a
continuation of a long term trend of outflows in January of each
year. This occurs because many professional managers sell
stock positions in December to take tax losses and use large Cap
focused ETFs to maintain market exposure until they can buy the
stocks back 30 days later and thus avoid "was sale" rules which
would prohibit taking losses.
• ETFs investing in US fixed income continued
to gain assets and were the leading segment in January with $7.8
billion in new cash flows.
• This was followed by ETFs investing in
International Equities and Commodities which took in $6.2 and
$3.1 billion respectively.
• The leading ETF for new cash inflows in
January was the WisdomTree Europe Hedged Equity which gives
equity exposure while protecting against a weakening Euro. This
ETF took in $2.9 billion for the month and now has over $9
billion in total assets.
• The second leading cash inflows went to the
SPDR gold which took in $1.9 billion as gold prices rose almost
9% for the month.
• The top ten asset gainers with positive new
cash flows for January 2015 include: WisdomTree Europe Hedged
Equity ($2.9 billion); SPDR Gold ($1.9 billion); Vanguard
S&P 500 ($1.7 billion); Vanguard Total Stock Market
($1.5 billion); Deutsche X-trackers MSCI EAFE Hedged
Equity ETF ($1.2 billion); United States Oil ($1.2 billion);
Health Care Select SPDR ($0.9 billion); WisdomTree Japan Hedged
Equity ($0.9 billion); iShares iBoxx $ High Yield Corporate Bond
($0.9 billion) and Market Vectors Gold Miners($0.8 billion).
• The positive cash flows in January show
interest in US dollar developed market plays and commodities
• The top ten asset losers with negative new
cash outflows for January 2015 include: SPDR S&P 500 ($28.0
billion); PowerShares QQQ ($3.2 billion); Financial Select SPDR
($2.1 billion); iShares Russell 2000 ($1.7 billion);
iShares MSCI Japan ($1.3 billion); iShares MSCI ACWI ($1.0
billion); iShares MSCI Emerging Markets ($1.0 billion); SPDR Dow
Jones Industrial Average Trust ($0.8 billion); Industrial Select
SPDR ($0.7 billion) and SPDR S&P Regional Banking ($1.3
• The negative cash flows in January 2015 do
not show any major themes other than the likely reversal of
large cap equity ETF positions used to keep market exposure
while undertaking tax swap strategies.
• Investors continue to embrace ETFs as an
efficient means of gaining exposure to alternative assets.
• Hedge Fund ETFs from IndexIQ are now
available that seek to provide the diversification benefits of
hedge funds without their structural impediments, namely lack of
liquidity and transparency and high fees.
ways to save money
I don't agree with a few but there is bound to be something that
Arithmetic of Active Management
By: William F. Sharpe