23 May
The Unforgiving Algebra of Retirement Planning
May 23, 2011
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Investments

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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22 Jun
Predictability Error
June 22, 2009
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Uncategorized

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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27 Oct
How to Turn Financial Crisis Into Economic Crisis
October 27, 2008
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Investments

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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28 Dec
December Dip
December 28, 2007
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Asset Allocation, Investments, Retirement Planning

Did you see a big dip in your mutual fund values this month?  This was either an actual market drop (things HAVE been bouncy lately), or not.  Likely, at least one of this month’s dips was due to your mutual fund distributing capital gains and dividends.  These mutual funds are really just a collection of stocks.  When stock shares (held inside the fund) are sold for a profit, the funds must distribute 90 percent of realized capital gains and dividends

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