23 May
May 23, 2011

Portfolio balance times annual rate of return assumption minus annual
inflation adjusted CASH FLOW= how long the portfolio is likely to last

When one retires, their investment focus typically changes from a focus on accumulating wealth to a focus on preserving wealth and creating the needed CASH FLOW to fund living expenses. Facing 25+ years of rising living costs in retirement, retirees often and eventually recognize (hopefully sooner than later) that a ‘low risk” bond strategy can actually be quite risky. For

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10 Jul
July 10, 2009

The emerging field of “behavioral economics” describes many ways that our minds play tricks on us when it comes to making good financial and investment decisions. Oftentimes these cognitive errors cause us to take action when the right thing to do is to simply maintain our current strategy (Don’t just DO something, sit there!). So it might seem strangely contradictory when I describe this next error, called “decision paralysis”, or “status quo bias”. This error involves choosing NOT to take

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22 Jun
June 22, 2009

In the emerging field of “behavioral economics” academics are studying what makes us tick as investors and how we make investment decisions. You’re probably not surprised to learn that the process of investment decision-making is not always rational. Often times what we know we should do and what we actually do are vastly different. We often buy high, sell low, and succumb to panic selling. We attempt to time markets in spite of the preponderance of academic evidence

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28 Oct
October 28, 2008

Rule number one of investing is to “buy low”.  Low is of course a relative term, and the markets argue every day about what the right price is for a given company, those who sell PRESUMABLY believe the stock price is high, and those who buy think it is low.  Consider the fact that for each panic sell in recent weeks, there was an opportunistic buyer.  Not everyone is so pessimistic.

Most successful investors (as contrasted with

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27 Oct
October 27, 2008

If Dr. Evil were in charge of our government, and the governments of the world, how would he go about creating chaos -AKA a Great Depression?   For guidance on how to truly create chaos, Dr. Evil would need to dust off his history books.

STEP 1: It seems there would need to be a triggering event of sorts, just to get things started.  A housing and credit bubble would certainly work, and have the added benefit of going largely unnoticed while

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