There are plenty of ways to get rich — start a business, save & invest wisely, inherit money, get lucky, etc. But staying rich involves just a few simple things — self-awareness, modesty, and the ability to delay gratification with a portion of your capital. Ben Carlson
RETIREMENT FINANCE AND PLANNING
How High Net Worth Individuals Invest: Their Asset
Allocation Breakdown, Financial Samurai
it’s obvious you should start a business if you hope to get
really rich one day. https://www.financialsamurai.com/how-high-net-worth-individuals-invest-asset-allocation-breakdown/
One More Advantage of Using the Actuarial Approach—No
Sequence of Return Risk, Ken Steiner
the Actuarial Approach and Actuarial Budget Benchmark (ABB)
advocated in this website is a dynamic approach that will avoid SORR. It automatically recalculates the annual
spending budget to maintain the balance between the market value of the retiree’s
assets and the market value of the retirees’ spending liabilities. http://howmuchcaniaffordtospendinretirement.blogspot.com/2018/06/one-more-advantage-of-using-actuarial.html
Some Risks Can't be Modeled, Dirk Cotton
The shortcoming of MC simulation is not that it will create
unrealistic scenarios — quite the opposite — it won’t generate many highly
unlikely outcomes. So, even after we test retirement plan risk with simulation
we still don’t know much about the effects of low-probability catastrophic
events…After simulations, we still need a way to plan for the unknowable…Avoiding
unforeseeable risks is clearly not an option. It's hard to steer around an
obstacle you don't know is there…The best spending rules won’t eliminate these
risks. After a long sequence of poor returns, they will simply reduce safe
spending to a level that no longer supports the household’s standard of living.
Nor will the best simulation software ferret them out and suggest fixes….Low-probability
catastrophic outcomes defy avoidance and mitigation but they’re worth
contemplating and possibly worth insuring. http://www.theretirementcafe.com/2018/05/unpredictable-retirement-risk.html
Is typical retirement advice good? – Testing popular
Retirement rules of thumb, Ed Rempel
When it comes to retirement income, most financial advisors
rely on a few rules of thumb handed down from one generation of advisors to the
next. The rules appear to be common sense and are usually accepted without
question. Do these rules of thumb actually work? http://findependencehub.com/is-typical-retirement-advice-good-testing-popular-retirement-rules-of-thumb/ and
https://twitter.com/RetirementQuant/status/1018506668991115264
MARKETS AND INVESTING
Learning how to invest by doing, AbnormalReturns
Investors do as much damage to their portfolios as adverse
markets have ever done. https://abnormalreturns.com/2018/07/15/learning-how-to-invest-by-doing/
ALTERNATIVE RISK
Momentum's Magic Number, Corey Hoffstein
the result suggests that the optimal holding period is one
selected such that the formation period plus the holding period is equal to
14-to-18 months: a somewhat “magic” result that makes little intuitive, statistical,
or economic sense. … While lacking a specific reason why this effect exists, it
suggests that investors looking to leverage shorter-term momentum signals may
benefit from longer investment horizons, particularly when costs are
considered. https://blog.thinknewfound.com/2018/07/momentums-magic-number/
low fees doesn’t [sic?] trump low performance, rcm
alternatives
low-cost stock index replication is not the same as
replicating more complex hedge fund strategies, and a few recent articles are
pointing out that the low fee experiment in alternative investments might not
be working so well… https://www.rcmalternatives.com/2018/07/low-fees-doesnt-trump-low-performance/
SOCIETY AND CAPITAL
My $3500 Tiny House, Explained, Mr Money Mustache
Technically, it’s just a fancy shed. http://www.mrmoneymustache.com/2018/06/30/tinyhouse/
Relationship between Financial Planning Horizon and
Charitable Giving, Liu and james
This paper concludes that American adults who have longer
financial planning horizons are more likely to make charitable donations
compared to those whose planning horizon is short, i.e., less than six months.
Among donors, major gifts are associated with long-term financial planning
horizon, wealth, religious activity frequency, volunteer experience, and
education. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3213057
The Extent and Nature of State and Local Government Pension
Problems and a Solution, Mercatus
we propose that all government pension plan participants be
given accurate information about the funded status of their pensions.
Furthermore, we propose that, at the discretion of the plan sponsor, retirees
and older workers be given the voluntary option to take their pensions as a
lump sum, discounted according to the funded status of the plan. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3211655
Can Public Pensions Fulfill Their Promises? MERCATUS
Despite having assets of more than $75 billion,
Pennsylvania's two largest public pension plans may be underfunded by as much
as $100 billion. In fact, given their current funding ratios and an assumed
distribution of asset returns, a 100 percent probability exists that both plans
have sufficient assets to pay benefits without any increase in contributions
for only the next five years. After five years, the probability declines; by
2030, the likelihood that both plans will be able to meet their promised
obligations falls to 31 percent in the public schools plan and to just 16
percent in the state employees' plan. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3211614
Pricing Sin Stocks: Ethical Preference vs. Risk Aversion,
Univ of Magdeburg
Our investors do not necessarily boycott sin companies.
Rather, they are open to invest in any company while trading off dividends
against ethicalness. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3206538
How Has the Average House Size Changed? Wayne Chen
Over time, we can see that the average floor area has been
steadily increasing over time. Every
passing year, according to the linear regression equation on the chart, will
yield a 18.5 square feet increase in the average floor area. https://supplychenmanagement.com/2018/07/15/average-house-size/
How a Facebook Founder Wants to Solve Income Inequality,
advisorperspectives
Many people who get rich feel that they have to “give back”
in some socially-redeeming way. Hughes set out to use his new-found wealth,
which he felt was largely due to unique circumstances and luck, to do something
socially useful. He discovered that this isn’t so easy. https://www.advisorperspectives.com/articles/2018/07/16/how-a-facebook-founder-wants-to-solve-income-inequality
Agriculture Around the World, Tannenbaum et al. at
advisorperspectives
Trade actions that put a target on the agriculture sector
will lead to costs borne by all Americans. https://www.advisorperspectives.com/commentaries/2018/07/13/agriculture-around-the-world
Towards Lawful Money, Salter
Over the past several weeks, I have argued that current
monetary institutions are incompatible with the rule of law; that those
monetary institutions do not work well at delivering macroeconomic stability;
and that we should seriously explore alternative regimes that adhere to the
rule of law, especially those conducive to monetary cosmopolitanism. The next question is, how do we get
there? What do we do if we want to move
towards lawful money? https://www.aier.org/article/sound-money-project/towards-lawful-money
What Would LDI Look Like for Public Pensions? CIO
Perhaps instead of LDI,
this strategy could more accurately be called funded status volatility
minimization, but I suppose FSVM hardly rolls off the tongue. https://www.ai-cio.com/news/ldi-look-like-public-pensions/
Low rates troubles for insurances and pension funds, sr-sv
A CGFS report highlights the pressure of a ‘low for long’
interest rate environment on life insurance companies and defined-benefit
pension funds. This pressure reflects a fundamental mismatch: the duration of
liabilities is greater than that of assets. Hence low rates (discount factors)
have reduced funding ratios below 100% after the great financial crisis.
Simulations suggest that funding ratios could decline further, possibly
accompanied by negative net cash flows. A ‘low-for-long’ scenario would broadly
make things worse. While the nature of this risk is well known, its
manifestation is gradual and partly mitigated by the asset reflation of the
2010s. The worst scenario for insurance companies and pension funds is one
where rates ultimately fail to rise or are pushed even lower (negative) due to
new deflationary financial market shocks.
http://www.sr-sv.com/low-for-long-rates-pressure-on-pensions-and-insurances/
Fisher on debt - It is a cycle and when optimism falls so
will financial assets, mrzepczynski.blogspot.com/
The uncertainty of higher nominal and real rates, variable
inflation, currency changes, and variable growth all contribute to a change in
the optimism that caused more borrowing. A change in these expectations will rob
current borrowers of refinancing and rob lenders of a chance to see a return of
the funds. Financial assets will deflate, wealth will decline, and future
growth slowed. http://mrzepczynski.blogspot.com/2018/07/fisher-on-debt-it-is-cycle-and-when.html
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