QUOTE OF THE DAY
The brave choice is always family.
CHART OF THE DAY
RETIREMENT FINANCE AND PLANNING
Don’t Forget Inflation in Your Retirement Plan,
RetireBy40.com I guess I haven’t been
there in a while because now the lunch special cost $7.
Providing Better Retirement Statements, Joe Tomlinson. Advisors can help overcome the shortcomings;
clients need more frequent reporting that goes beyond asset-value statements
and shows what their income in retirement will be. I’ll propose the
improvements that are needed.
The Crisis in Retirement Planning, Robert Merton. Clearly, the risk and return variables that
now drive investment decisions are not being measured in units that correspond
to savers’ retirement goals and their likelihood of meeting them. Thus, it
cannot be said that savers’ funds are being well managed.
Cognitive Constraints on Valuing Annuities, Brown et
al.
Retirement Spending Increases And Decreases Over Time, Pfau
at Forbes.
Robo advisers such as Wealthfront and Betterment are movinginto ‘529’ plans and 401(k) accounts
WSJ.
What Is The 'Retirement Spending Smile'? Pfau at Forbes
commenting on Blanchett. On average,
this household can expect to experience declining real expenditures through age
eighty-four, when real spending reaches a trough of $74,146. This reflects a
nearly 26% drop in real expenditures.
After this point, average real expenditures increase, though they do not
necessarily exceed their initial retirement levels until retirees reach their
mid-nineties.
Mentioned in this article [previously linked here] Exploring the Retirement Consumption Puzzle, David Blanchett 2014
Mentioned in this article [previously linked here] Exploring the Retirement Consumption Puzzle, David Blanchett 2014
MARKETS AND INVESTING
Trading changes how brain processes selling decisions
[endowment effect], Uchicago.edu. Researchers found that while selling,
experienced traders had reduced activity in an area of the brain often
associated with pain and negative emotions. A separate experiment showed a
similar reduction in brain activity after people previously inexperienced in
trading were given incentives to trade objects on eBay for two months. The
results suggest such experience reduces the emotional pain tied to selling
objects, mitigating the role the endowment effect plays in economic
decision-making.
Ten Attributes of Great Fundamental Investors,
PragmaticCapitalism.
Negative Interest Rates Will End — Badly. CFA Institute. Negative
interest rates are unsustainable and once investors decide to stop paying for
the privilege of holding government debt, a banking crisis could result, says
James Grant.
A Debtor’s Paradise: The Bull Casefor Equities, BlueSkyAssetManagement.
Volatility Drives Us Mad and Steals Our Future, Josh
Brown.
Can Successful Trading Be Taught?, traderfeed. What is clear from my observations and
experience is that patterns that have a positive edge in trading can be
identified and taught. What is also
clear is that learning those patterns doesn't become successful trading until
those patterns are truly internalized.
The many hours of study and performance review serve one important
purpose: taking a pattern that is
"out there" and becoming so familiar with it that you learn to feel
it internally.
ALTERNATIVE RISK
Finding 7.5% Returns, NewFound. In a world where forward returns look to be
depressed, but investor expectations remain high, a more dynamic and flexible
approach to asset allocation may be one of the only options.
Seeking Alternatives, irrelevantInvestor.com
SOCIETY AND CAPITAL
This startup uses machine learning and satellite imagery topredict crop yields, theverge.com Artificial
intelligence + nanosatellites + corn
Rising Sea Levels Could Cost U.S.Homeowners Close to $1 Trillion, Bloomberg.
Being underwater will soon mean exactly what it says. Especially in Florida .
IsraelProves the Desalination Era Is Here, Scientific American. One of the driest countries on Earth now
makes more freshwater than it needs
Why Renewable Power Can Still Be Wasteful, slate.com Because we’ve incentivized its production—but
not the infrastructure to transport it.
How Helicopter Parenting Can Cause Binge Drinking,
theatlantic.com. The way some white
professionals raise their children is exacerbating an alcohol problem on U.S.
college campuses.
The Psychology and Neuroscience of Financial DecisionMaking. Cell.com One area where this
newer data combined with principles from cognitive science can contribute to
behavioral finance is by determining how a very long list of behavioral effects
can be explained by a small number of principles. As we have described
throughout, there is a large number of trading patterns that are inconsistent
with the rational use of information and the ideal balance of risk and
return…We speculate that many of these seemingly distinct biases could be generated by a
common neural and psychological mechanism. Some emerging evidence for this
conjecture has already been found, as the same brain areas encode signals that
generate the disposition effect and repurchase effect [92]. This
neural overlap fits with a strong correlation between these
effects at the behavioral level.
Teaching the Unemployment Rate, and Its Limitations,
AIER.
A world without cash, John Cochrane. The anonymity of cash makes it enduringly
popular
Chart: 14% of Americans Have Negative Wealth,
VisualCapitalist
Higher Local Minimum Wages: Early Results from Seattle,
ConversableEconomist. the early evidence
from Seattle is that a higher
minimum wage at the city level doesn't raise total earnings by much, because
low-skilled workers end up with fewer hours on the job.
The Gender Gap That No One’s Talking About, Medium.com Women are lagging significantly behind men
when it comes to financial knowledge and security, increasing their chances of
falling into poverty.
A secret for cutting spending. NYT. Hint: a waiting period.
Is Support for Democracy Eroding? Timothy Taylor. the share of people saying that a democratic
political system is a bad or a very bad way to run the country has risen since
the mid-1990s, and this attitude is also more prevalent among younger adults. In
the US , the
support for a "strong leader" who doesn't have to "bother with
parliament and elections" has especially risen among those with higher
income levels.
The Gender Diversity Dividend CFA Institute.
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