Sometimes to understand more, you need to know less.
-- 1483, Sir Thomas Lemuel Hawke of Cornwall ,
20 Rules for a Knight
CHART OF THE DAY
RETIREMENT FINANCE AND PLANNING
The Intertemporal Persistence of Risk Tolerance Scores, Grable,
Heo, & Kruger. The results from this
study suggest clients’ financial risk tolerance attitudes, as measured by a
valid and reliable test, exhibit some degree of persistence over time. This
finding aligns well with similar reports by Gerrans and his associates (2015)
and Guillemette and Finke (2014). Findings also provide support for the notion
that financial risk tolerance is much more akin to a trait than a passing
emotional disposition (Eysenck and Eysenck 1977), and that previous criticisms
of risk tolerance tests in general may be overstated.
The Perils of Early Retirement. RetireBy40.org I’ve been retired only 4 years
and I’m already skeptical about the 4% SWR.
Should You Plan On Your Retirement Lasting 30 Years Or 40? Pfau at Forbes. “What possible sense does it make to tell
your client that she can spend more money now because you’re assuming in some
of the Monte Carlo iterations that she’ll die early? How
does a person die ‘some of the time?’”
The HECM for Purchase Program Simplifies Home Buying forRetirees, Dirk Cotton and Jim Dean. most
home buyers do not have or choose not to deploy that much of their liquid
resources. Instead, they leverage "other people's money" – they take
out a mortgage and make monthly payments. Persons 62 years of age and older
have a third option. They can purchase the home using a down payment and a HECM
reverse mortgage
How to Consume and Invest for Retirement: RevisitingFriedman's Permanent Income Hypothesis, Park, National
University Singapore
(NUS) - Risk Management Institute. optimal
consumption and investment for retirement in an economic environment where an
individual has retirement flexibility and borrowing constraints. I show that
Friedman’s (1957) permanent income hypothesis (PIH) is generalized with
retirement and constrained borrowing against future labor income…
MARKETS AND INVESTING
The InflationInterest Rate Paradox: Why You Must Continuously Invest, FinancialSamurai. Don’t fight inflation. It will beat you with
a stick. Ride inflation, so you can beat its ass instead.
The Cause Of Myopic Loss Aversion, ETF.com. Investors “who are highly loss averse and
frequently evaluate investment performance and rebalance investment portfolios”
tend “to have low equity holdings in their financial portfolios, which is
likely to lead to utility losses over investors’ lifetimes. However, once
individuals establish their portfolio allocations according to their levels of
both loss aversion and myopia, myopic loss aversion is no longer associated
with further decreases in their levels of equity investment.”
ALTERNATIVE RISK
Uncertain Alpha, NewFound. The most important point to
remember is that all models can only describe so much about probabilistic
phenomena. Understanding the bounds of applicability can make the models useful
and make the risk of acting on bad data less likely.
The Worst Practice in Liquid Alternatives, Morningstar.
Hedge Funds: CTA Funds Offer Bright Spot, Barrons. Disheartened investors, including pension
funds, endowments and foundations, are increasingly snubbing hedge funds. It’s
easy to see why given big fees and lagging performance in the years since the
financial markets began their rally in 2009…Meanwhile, CTA funds that use
futures contracts boosted assets under management by 11% with inflows of $17
billion. That didn’t go unnoticed by investors, 17% of whom plan to increase
their exposure to discretionary CTA over the remainder of 2016.
When Academics Disagree On Momentum Investing,
AlphaArchitect.
A Brief History of Smart Beta, Canadian Couch Potato.
On Real Risk and Selling Options, Me.
SOCIETY AND CAPITAL
Snapshots of US Family Wealth, ConversableEconomist. Wealth is not income…
A New Strategy for Climate Change? Retreat. Bloomberg. Years from now, as the rising tides and
brutal storms wrought by climate change push the residents of coastal towns
around the U.S.
away from the water's edge, each of those towns will confront some version of
the same question: What do you do about people like the Nelsons?
It's the Dawn of the Community Solar Farm, Bloomberg.
Adam Smith on Teaching and Incentives,
ConversableEconomist. "Where the
masters, however, really perform their duty, there are no examples, I believe,
that the greater part of the students ever neglect theirs. No discipline is
ever requisite to force attendance upon lectures which are really worth the
attending, as is well known wherever any such lectures are given."
Killing Carried Interest,
NYT. Rarely has a policy existed
so long with such weak arguments in its favor."
Harry Berger on Multiple Interpretations, Conversable
Economist. urge all teachers everywhere
to insist that their students begin every day by murmuring in unison, and with
expression, dutifully and even prayerfully, the two parts of the primal
invocation that will prepare all American children to question both church and
state: …
How algorithms rule our working lives, theguardian.com. Employers are turning to mathematically
modelled ways of sifting through job applications. Even when wrong, their
verdicts seem beyond dispute – and they tend to punish the poor
Why Geographic Equality Matters, Bloomberg.
Perhaps Silicon Valley 's record on diversity
would be better if it had more jobs in metro areas with higher concentrations
of African-Americans or Hispanics. Making white male venture capitalists and
top tech executives travel to flyover country every now and then might not be
the worst thing in the world.
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