I feel dumber for reading this meaningless drivel. FriendlyChemist
RETIREMENT FINANCE AND PLANNING
No Pension? You can pensionize your savings, Ann Carrns NYT.
(I thought Milevsky trademarked "pensionize." No excerpt here since NYT hates copy
paste…though I can break that. The short
version is:1) work later, 2) delay SS, and 2) draw down savings using RMD
method.)
[ I normally like Kitces' posts. But the idea that I, as a customer, would be
somehow "hiding" assets that really "belong" to an
advisor's fee generating AUM is appalling. That's fee-blinded
irrationality. Maybe, just maybe, a
client can optimize themselves across multiple platforms and/or advisors for
reasons that make sense to them. And let's celebrate the ones that take full
ownership and responsibility for their own financial education and outcomes.]
I will understand almost none of this and will suffer
greatly for my choices.
Pascal’s Retirement, Jonathan Clements
Indeed, there’s evidence we care more about our future self
if we’re pushed to imagine the person we will become. For instance, experiments
have found that if folks are shown what they might look like at retirement age,
they’re inclined to spend less today and save more for tomorrow. Interested in
trying this yourself? Check out your future self with a site like ChangeMyFace.com
or in20years.com—and remember there’s almost a 90% chance that one day you’ll
be that person.
Three Steps to Understanding the Impact of Pre-Medicare Healthcare Costs on Your Ability to Retire, Cordant
Understanding the worst case scenario and the actions
necessary in that scenario relieves anxiety and lessens the fear which comes
from feeling that potential health care costs are a great unknown. We can
research the minimum costs (i.e., the premiums) and the maximum out-of-pocket
costs (the maximum a plan will require you to pay), and we can incorporate risk
into planning then make decisions about what we would do in the worst case.
Not necessarily “Maximum money at all costs so I can have a
nice, spendy retirement!”
More like “A good, fun amount of money so I can walk outa
this cubicle with confidence and never look back.” Making that mental leap is a
huge one. It takes you from a life of permanent pursuit of the unattainable, to
one where you get to the “Enough” stage pretty quickly. This alone will change
the course of your life for the better.
The 5 Biggest Market Risks That Billionaires are Hedging Against, Jeff Desjardins
Today’s infographic comes to us from Sprott Physical Bullion
Trusts and it highlights some of the potential market risks that could move
markets, as well as how these elite investors are hedging to protect their
fortunes.
Distress & Returns, Swedroe
John Birge and Yi Zhang, authors of the April 2017 study
“Default Risk Premia and a Non-Linear Asset Pricing Model,” found that, when a
company is not near financial distress, investors require a return premium for
holding extra default risk. However, when a firm is close to, or in, financial
distress, a negative relationship exists between default risk and return.
There will be few places to hide when rising rates force low-volatility-pegged
strategies to unwind… Now, troubling evidence has begun to mount that the tide
is turning for the corporate debt market. U.S.
investment-grade debt has been one of the worst-performing asset classes year-to-date.
Bond mutual funds and credit ETFs have seen persistent outflows for months. Sales
volume for new investment-grade corporate debt is at its lowest level since 2014.
And international buyers, from Europe to Japan ,
are backing away from U.S.
corporate debt as a falling dollar drives up hedging costs at the same time
curtailed central-bank buying drives up global yields. If bond-investor concern
turns to panic, a corporate-bond liquidity crisis could result.
ALTERNATIVE RISK
Protect & Participate: Managing Drawdowns with Trend Following, thinknewfound.com
A particularly interesting feature about trend following is
its potential ability to avoid significant losses. Evidence suggests that trend
following approaches can be used as alternative risk management techniques…Relative
to other risk management techniques, even very simple trend following
strategies have exhibited very attractive return profiles.
So, nothing’s wrong with AQR if you know that it’s a longer
term, financial futures skewed, long volatility type program which won’t do
well in periods of low volatility, or confusingly – periods of sharp spikes in
volatility accompanying sharp trend reversals. The problem is, many investors
don’t know the details. Many don’t know there is a bevy of different managed
futures strategy types – some with a shorter term focus, some with more
commodity exposure, some with decidedly not managed futures like short option
profiles (@#^&% LJM) just in the mutual fund space alone. Even more, don’t know that there’s a whole
private fund and managed account side to the asset class with strategies as
diverse as discretionary cattle trading to systematic AI models to crude oil
calendar spreads. All this is to say, rely on more than the fund prospectus to
know what you’re investing in.
Why Financial Trends Persist, Swedroe
“The intuition is that most bear markets have historically
occurred gradually over several months, rather than abruptly over a few days,
which allows trend followers an opportunity to position themselves short after
the initial market decline and profit from continued market declines…. In fact,
the average peak-to-trough drawdown length of the 10 largest drawdowns of a 60%
stocks/40 bonds portfolio between 1880 and 2016 was approximately 15 months.” … The bottom line is that, given the
diversification benefit and its downside (tail-risk) hedging properties, a
moderate portfolio allocation to trend-following strategies merits
consideration. Note, however, the generally high turnover of trend-following
strategies renders them relatively tax inefficient.
There are limited excuses for failure if the decision-maker
is also the forecaster. The question is clear - did my forecast make money? An
advantage of systematic (quant) fund managers is that they place their
forecasting skill directly in the their program.
When things are calm people believe what they tell
themselves. When things are crazy they believe what other people tell them… The
history of financial forecasts is long. And…pathetic.
Advances in Financial Machine Learning, mathinvestor.org
In this book, Lopez de Prado strikes a well-aimed karate
chop at the naive and often statistically overfit techniques that are so
prevalent in the financial world today. But Lopez de Prado does more than just
expose the mathematical and statistical sins of the field. Instead, he presents
a technically sound roadmap for those who want to do state-of-the-art work in
the field. One particularly refreshing feature is that unlike many other
treatments, this book emphasizes real-world empirical data analysis, as opposed
to theoretical treatments that look pretty on paper but are often ineffective
in practice. Secondly, as many readers will attest, the field of real-world
quantitative finance is plagued by “knowledge hoarding.” In contrast, this work
is completely open, offering considerable nuts-and-bolts instruction on how to
implement truly effective techniques.
SOCIETY AND CAPITAL
A beginner's guide to longevity research, Laura Deming
I spend a lot of time thinking about what could increase
healthy human lifespan. This is my overview of the field for beginners.
The Distribution and Redistribution of US Income, Tim Taylor
As the figure shows, the reduction in inequality for
programs aimed at the elderly--Social Security and Medicare--is about as large
as the total reduction in inequality due to all the reduction in inequality
that happens from mean-tested spending and federal taxes.
Contiguous Us Population Density [Sq Mi] By Time Zone,
Metricmaps.org [this explains a lot about my desire to move west]
![Contiguous Us Population Density [Sq Mi] By Time Zone](https://metricmaps.files.wordpress.com/2018/03/us-population-density-by-sq-mile-by-time-zone.png){kind=link}
Us population access to a hospital with an emergency room,
MetricMaps.org https://metricmaps.org/2018/03/24/us-population-access-to-a-hospital-with-an-emergency-room/
I find evidence of branch closure clusters in the Chicago
and Philadelphia MSAs; however, this spatial pattern is only observable within
the suburbs, not the primary city itself. Using a random labelling test is a
methodological innovation in regional economic studies and propels our
understanding of banking deserts and underserved neighborhoods.
The second line item is the check box that asks whether you
want to contribute a few dollars to the presidential election campaign. That
item has been on an even more precipitous decline, independent of the political
flavor of the president in office at the time. But with a little more than 4%
of returns currently opting to make that contribution, this isn’t likely to be
a meaningful indicator of philanthropic spirit.
A housing recovery without homeowners, FRED blog
The graph shows that, in the wake of the financial crisis,
house prices declined by over 25 percent, from an index value of around 180 to
around 135. The homeownership rate also dropped from a high of over 69 percent
to just over 63 percent, its lowest level since 1980. Unlike in the past, the
homeownership rate continued to fall even after house prices began to recover…All
of the above explanations likely contribute somewhat to the divergence of house
prices and homeownership. However, any explanation must consider that this
trend isn’t just limited to the United States United
Kingdom Canada Germany Spain
The Definition Of A Middle Class Lifestyle Is The Same As It Ever Was, financialsamurai.com
Whenever I publish posts with six figure household incomes
and detailed expenses my comments section and social media light up with
displeasure.
The Terror of Totalitarianism Explained, Farnam
Street
How does a totalitarian government harness this attitude of
the masses? By completely isolating individuals through random “liquidating”
(mass murder) so that “the most elementary caution demands that one avoid all
intimate contacts, if possible – not in order to prevent discovery of one's
secret thoughts, but rather to eliminate, in the almost certain case of future
trouble, all persons who might have not only an ordinary cheap interest in your
denunciation but an irresistible need to bring about your ruin simply because
they are in danger [in] their own lives.”
When Finance Turns Parasitic - Institutional Investor
At its best, finance is productive — but all too often,
excess intermediation results in the transfer of risk to those least able to
understand it. Here’s what to do about it.
Millicent Fawcett's rejoinder "Equal Pay for Equal
Work," was published 100 years ago this month. (Economic Journal, March 1918 28:109, pp. 1-6). Fawcett refers
to Rathbone's "interesting article," which seems like the prelude to
a robust British disagreement. Fawcett
sidesteps the arguments about the role of the state in supporting children.
Instead, she insists on equal pay for equal work. Her case is partly a matter
of fairness; indeed, she cites examples that the inexperienced and untrained
women who entered the workforce during World War I were in some prominent cases
much more productive than the experienced and trained men they replaced. But in
addition, she argues that if women are paid less than men, there will always be
a harsh conflict between male workers who will be correct to fear being
undercut by lower-wage femail workers.
Modern financial system leverage -- sr-sv.com
“Nonbank funding (i.e., wholesale and household deposits) to
banks is on the rise among economies with large and inter-connected financial
systems…Omission of off-balance sheet items in the standard measures implies a
substantial underestimation of bank leverage…The financial leverage metric
needs to augment nonbank funding to banks [through]…off-balance sheet data
where transactions between hedge funds funding from banks (i.e., prime
brokerage) and other sizable collateral flows from repo or derivatives or
securities lending business do not come to balance sheet, due to netting that
is permissible under regulations…A similar case could be made for
wealth-management products.”
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