“We didn’t give ourselves the participation trophies, just
saying!” -A millennial
CHART OF THE DAY
RETIREMENT FINANCE AND PLANNING
The 3 Stages of Retirement Income, Darrow Kirkpatrick. Based on my experience living in retirement,
I’m seeing three irreversible stages of retirement income. Once you leave each
one behind, you’ll be fully dependent on only what’s left….
The Implied Longevity Curve: How Long Does the Market ThinkYou Are Going to Live? Milevskey et. al. Journal of Investment Consulting Vol
17 2016. In other words, over the past
decade markets implied an improvement in longevity of between six and seven
weeks per year for males and between one and three weeks for females. Although
these values are implied from quotes, they are consistent with forward-looking
demographic projections… This research is relevant to practitioners interested
in the optimal timing and allocation to life annuities as our results indicate
that annuitization procrastinators are swimming against an uncertain but rather
strong longevity trend.
Lifecycle Consumption under Different Income Profiles:Experimental Evidence, Duffy and Li. We
report on a series of economic decision-making experiments exploring how
individuals make lifecycle consumption and saving plans when they face
different income profiles. We find that for every income profile we consider,
subjects on average over-consume in the early periods of life and under-consume
in later periods of life relative to the conditional optimum and any sudden
drop in income reduces their lifetime utility. We conduct a specification
search for a model to explain our data and find that a two-type model with one
type consuming the conditional optimum and the other type consuming endowments
best fits our data.
Let’s retire retirement, Blackrock Blog.
Putting Insurance Into 401(k) Plans, Morningstar.
Focus on Your Spending Budget in Retirement–Not How Much YouCan Withdraw from Your Investment Portfolio, Ken Steiner. [comment: Ken is correct. There is a
difference between spending and withdrawal and spending is the key thing that
drives it all, a point not often made in withdrawal strategy articles]
MARKETS AND INVESTING
How To Manage Investment Drawdowns By Thinking Differently,
PortfolioCharts.com A 51% deepest
drawdown, regular losses of 30%, and a longest drawdown lasting 13 years make
for a particularly scary market… If one
accepts that such risk is the price to pay for investing, then the advice to
toughen up and learn to brawl your way through it makes sense. However, …
Longest Period in S&P 500 Since 1950 Without A Six-DayWin Streak, PriceActionLab. One
consequence of this pattern is that while prices rise over the longer-term, it
is not possible to profit in the short-term by relying only on momentum.
Market Data Hints At Higher Rate-Hike Odds,
TheCapitalSpectator. The futures market
is currently predicting a 78% probability that the Fed will squeeze policy on
Dec. 14, based on Fed funds pricing via CME as of Oct. 25. By contrast, the
probability of a rate hike for next week’s meeting is priced at just 8%
Knocking Down a Straw Man, Josh Brown. You don’t have to trade every six minutes or
be an expert in every single development around the world in order to manage
risk. If you’re a purveyor of high-cost,
high-tax, high-transaction, high-bullshit, wannabe macro-genius strategies, you
might want to look into the things you have so much to say about before mocking
others who are doing the best they can to save and invest rationally. You’re
either pretending not to understand this in an attempt to mislead others or
you’re genuinely uninformed yourself.
ALTERNATIVE RISK
Hedge Funds Search for Their Real Killers, Cliff
Asness. After many years (decades) of
being one of the very early hedge fund critics I've recently (tepidly) defended
hedge funds from overwrought attacks that wrongly compare them to a beta of 1.0
in a bull market and, as usual, act as if we learn more from a few years than
we really do.
2016 Risk Parity Investment Survey, CIO. 2015 was a cruel one for risk parity.
SOCIETY AND CAPITAL
What Does Divorce Really Cost? ThinkAdvisor.
The Alternative Energy Sources of the Future, Visual
Capitalist.
An Overview of the Pension/OPEB Landscape, Alicia H.
MunnellandJean-Pierre Aubry at Boston
College
Homeowners slide and renters rise, the FRED Blog.
Privilege Helps Men—but Not Women—Get Fancy Jobs,
Theatlantic.com
Millennials and Women Redefine What It Means to Be a ReasonableInvestor, Institutional Investor.
The mathematics behind blockchain, The Mathematical Investor,
As with all the technology we rely on in our digital age, the weakest links are
users who are not careful.
The Weird Economics Of Ikea, 538. Some of these oddities may
be explained by one principle: Ikea is sui generis — in a class by itself. The
company navigates largely uncharted waters for traditional economic strictures.
“Ikea continues to be nearly unique,” Baxter said. “I would’ve told you that
they would have competitors all over the place by now, 15 years ago. I would’ve
been horribly wrong. There’s only them.”
Physical, hydraulic, macro models of the economy. Timothy
Taylor.
New Usage Note on the word "Conflate," American Heritage Dictionary.
Notes on Giving Away my First $100,000, Mr Money
Mustache.
I spent 15 years confusing money with happiness. Here’s howI learned to stop, QZ.com. I was
addicted to what entrepreneur Ben Casnocha calls “Status Cocaine.”
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