Weekend Links

QUOTE OF THE DAY

“Alchemy [read "hedge funds" per Josh Brown], however, is a chaste prostitute, who has many lovers but disappoints all and grants her favors to none. She transforms the haughty into fools, the rich into paupers, the philosophers into dolts, and the deceived into loquacious deceivers …” – Johannes Trithemius

PICTURE OF THE DAY

Grocery shelves in Venezuela

RETIREMENT FINANCE AND PLANNING

Retirement Income Planning Should Focus On Saving, NotWithdrawing, Wade Pfau.  

The Tradeoff Between Income and Capital in RetirementWithdrawals, John Walton at Advisor Perspectives.  

Bitterness, Retirement, and Trump, Tyler Cowen.  "…over the last few decades the U.S. has been conducting a large-scale social experiment with ultra-low savings rates, without a strong safety net beneath the high wire act."  

Saving Early No Longer Enough for Retirement Success: Survey, ThinkAdvisor.  

Better Financial Security in Retirement? Realizing thePromise of Longevity Annuities,

 Brookings.edu, "In this paper, we highlight how recent trends have precipitated a need for products that offer protection against longevity risk, consider whether longevity annuities can improve retirement security, highlight barriers to more widespread take-up of longevity annuities, and offer a menu of potential reforms to bolster this fledgling market." 

Does Retirement Feel Further And Further Away? You're NotAlone, Investors.com  

A Reverse Mortgage to Buy a Home? Here’s How, WSJ.   

How Are People Who Retired In The Year 2000 Doing Today?  Pfau at Forbes.com  "The 4% rule may work for 2000 retirees, but retirees should still remain cautious and monitor the evolution of their current withdrawal rate."  

The Whoosh! of Exponential Retirement,  Dirk Cotton.  "Our limited data on historical market returns is such a small sample that our estimates of return have a huge confidence interval. Our future liabilities are probably more uncertain than market returns. The length of our retirement is unknowable….If you base your retirement plan on your ability to predict the future, you are likely to be sorely disappointed." 

Estimating the True Cost of Retirement, Blanchett.  

Expenditure Patterns of Older Americans, 2001‒2009,  Sudipto Banerjee, Employee Benefit Research Institute.  

MARKETS AND INVESTING

Academic Finance as a Check on Pretensions, CFA Institute. “Essentially, all models are wrong, but some are useful.” — George E.P. Box  

There Are No “Bond Kings” in This Bond Market, Cullen Roche.  "…anyone who bought a 30 year T-Bond in 1985 generated about a 9% annualized return with just a 12% standard deviation. That’s 90% of the stock market’s return over the same period with just 68% of the risk. The investor who bought nothing but short-term Treasury Bills generated an average annual return of 5.25% with a standard deviation of just 4. That’s almost half of the stock market return with 25% of the risk. Those days are long gone though."  

Why are Investors so Tribal? Tony Isola.    

Our outlook for the second half, BlackRock Blog.  "More than 70% of the bonds in developed-market government bond indexes today have yields of 1% or lower"  

Deconstructing Peter Lynch, PersonalFinancialEngineer.  

The Fallacy behind Investor versus Fund Returns (and whyDALBAR is dead wrong), Michael Edesess [I have no point of view on this article…] "As I will explain, there is no way to determine if investors underperform the mutual funds they own, either because of bad timing or for any other reason." 

3 Reasons to Go Low-Cost Survivorship, fund returns, and thereturn gap, Morningstar.  

Is Inflation Headed Higher? Recent History Leaves Room ForDoubt, CapitalSpectator.  

2.4 Trillion Reasons to Keep an Eye on Inflation, AIER,    

Forecasting Interest Rates over the Long Run, New York Fed.  "Our forecasting horse race shows that interest rate forecasts based on term structure models outperform two common market-based alternatives. These results bolster evidence that risk premia are not constant, but instead vary over time with the economic and policy environment. Our exercise suggests that term structure models can in fact play a useful role in long-run financial planning." 

A Dozen Things I’ve Learned from Eugene Kleiner aboutInvesting and Business, 25iq.com  "The more difficult the decision, the less it matters what you choose." 

ALTERNATIVE RISK

Combining Different Momentum Factors. systematicrelativestrength.com.  

Style Momentum In Australia?Wesley Gray.  " Style momentum strategies are becoming more and more viable with lower trading costs and the fast growth of ETFs with targeted exposure."  

Index Investing and the Factor Evolution, Franklin Templeton.  "Patrick O’Connor, our head of global ETFs, offers this brief history of index investing and the evolution of factor-based investing which has led to today’s strategic beta ETF offerings."  

Hedge Funds Like ETFs Too, Alpha Attribution.  

A Little-Noticed Kink in Smart-Beta ETFs Might BlindsideBuyers,  Bloomberg.  “You can use smart beta for implementing factor investing, but you have to be very careful with how you do it,” said David Blitz, Robeco Asset Management’s head of quantitative equity research, who published a study in April about the complexities of using smart-beta indexes in pure factor investing. “What you end up with is very different than what you had in mind.”  

Managed Futures and Multi-Strategy Funds: The Search forDiversification, PIMCO.  "Pairing managers with differentiated yet complementary approaches may aid diversification and return potential."  

HSBC Currency Traders Got Greedy on Christmas, bloomberg.  "Is the government's theory here that any time a bank recommends trading at the 3 p.m. fix, that's fraud? Surely some people voluntarily trade at the 3 p.m. fix, no?"  

Detecting a ‘Smart’ Investment Strategy, PIMCO. "a lower-return environment increases investor demand for sources of alpha, and yet excess returns have been hard to find. We believe traditional active managers have struggled recently in part because factor biases, such as value or size, have overwhelmed their skills in stock selection."  

SOCIETY AND CAPITAL

Bitterness, Retirement, and Trump, Tyler Cowen.  "…over the last few decades the U.S. has been conducting a large-scale social experiment with ultra-low savings rates, without a strong safety net beneath the high wire act."  

Financial Stress Hurts, Literally, Scientific American.  "A recent study links shaky economic outlook and feelings of physical pain"  

Meth Lab Seizures 2000-2014 [GIF], MetricMaps.  

Saving for Old Age, World Bank.  

Jobs Found through Referrals Pay More, St. Louis Fed. "Many people find their jobs through referrals, and these jobs pay more. In this post, we will focus more directly on quantifying the extent and impact of job search through networks and discuss some theories behind it." 

Our Energy Problem: Putting the Battery in Context, Visual Capitalist.  "The Battery Series is a five-part infographic series that explores what investors need to know about modern battery technology, including raw material supply, demand, and future applications." 

Hungry Venezuelans cry at the sight of food, as economiccrisis deepens,  CNN

A New Deal for Old Age: Toward a Progressive Retirement, Anne Alstott Yale.  

Married/Not Married Divergent Map.  MetricMaps 

Costs of End-of-Life Care, ConversableEconomist.com  "The evidence shows that over time, the costs of end-of-life care are a diminishing share of US health care spending, and it is consistent with the belief that a shift toward greater use of hospice and other options at the end of life is gradually underway."