12 Sep 2014

Planning on a Long Life with Longevity Insurance

One evening, years ago, I was fiddling around with a life expectancy calculator online and after running the numbers on myself, I decided to run through the program for my wife. Her problem was very different than mine (I’m on borrowed time already). According to this calculator, her life expectancy was 116! It made sense, there is a lot of longevity in her family and she doesn’t chain smoke or… Read More

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11 Sep 2014

Avoid This Catastrophic Loss

Every now and then, I come across some research that really drives a point home. Yesterday, I found a terrific study by JP Morgan on what they called catastrophic losses – or what kids today might call ‘epic fails,’ which Urban Dictionary defines as: a complete and total failure when success should have been reasonably easy to attain. In the JP Morgan study, a catastrophic loss is defined as a… Read More

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10 Sep 2014

It’s a Bird, It’s a Plane, It’s Smart Beta

Speaking of hot topics, the investment community is abuzz with a new term: smart beta. The term is gaining increasing popularity and the current edition of Institutional Investor magazine has a lengthy article (and series of ‘sponsored content’ pages) on the topic. Despite the popularity of the phrase in the industry right now (I do think it’s a fad, but I will get to that in a minute), let me… Read More

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9 Sep 2014

Value in the Modern World

I like old-timers. They have terrific knowledge, perspective and, above all, experience. I love hearing the war stories about how decisions were made, what succeeded and what failed and the people who were in the room. Over the weekend, I watched a rerun of WealthTrack on YouTube, a PBS show that features a reporter named Consuelo Mack interviewing many of the titans of finance. Most of them are from what… Read More

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8 Sep 2014

Markets React to Disappointing Jobs Data

The employment situation in the US was worse-than-expected in August, according to new data from the Bureau of Labor Statistics. The headline unemployment rate fell from 6.2 to 6.1 percent, but as it is often the case, the headline rate doesn’t tell the whole story.  For starters, one of the largest contributors to the decline can be explained by a lower unemployment rate among teenagers and other less-educated workers. The… Read More

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5 Sep 2014

Why We Avoid Junk Bonds

The Wall Street Journal had a headline yesterday that I couldn’t resist: Junk Bonds Deserve a Place in Investors’ Portfolio. I like to read articles where I agree with the fundamental proposition, but I REALLY like to read articles where the premise completely contradicts my view, or the view of Acropolis. This article falls in the second category since we believe that junk bonds don’t deserve a place in your… Read More

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4 Sep 2014

Supreme Court Weakens Inherited IRA

The Supreme Court unanimously ruled in June that inherited IRAs are not protected in bankruptcy. Since Individual Retirement Accounts (IRAs) were first created in 1974, they have been terrific savings vehicles. Contributions to traditional IRAs are tax-deductible and the assets grow on a tax-deferred basis until you draw the money out, as early as age 59 ½. If you haven’t started pulling money out by 70 ½, the government requires… Read More

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3 Sep 2014

Falling Dollar Fallout

Five years ago, dire predictions were a dime a dozen. It was, after all, a very scary time fraught with uncertainty. Amid all of the dreadful forecasts, one bothered me a lot less than the others: the US dollar would collapse leaving Americans pushing around wheelbarrows of worthless cash in order to buy just one loaf of bread like in Germany’s Weimar Republic. The idea was that the Federal Reserve… Read More

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2 Sep 2014

Want Value? Look Overseas at the Shiller PE

Last week, when the S&P 500 closed over the 2,000 mark for the first time, I wrote that the US large cap stocks are on the expensive side, especially if you use one of my preferred metrics, the Shiller PE ratio (a refresher on the Shiller PE ratio can be found here). Over the weekend, I received an email alert from a research firm that I respected and it ranked… Read More

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29 Aug 2014

Retire Your Mortgage or Retire With Your Mortgage?

I am frequently asked whether you should pay off your mortgage prior to retiring. The calculus is a little trickier today than it was five or ten years ago because interest rates are so low now. According to 2011 data from the Consumer Financial Protection Bureau, 81 percent of Americans age 65 and older own a home and 30 percent of those homeowners still carry a mortgage. Ten years earlier,… Read More

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