I have posted before about my trend tracking investment philosophy.  This week I sold off small cap and mid cap positions due to downside technical breaches.  Large caps are on the bubble.  Monday will tell.  I don’t know where the market goes from here, but I urge you to stick with your discipline.  Avoid large losses and you will make money over time.  Get your emotions out of it, and trade when your rules say to trade.  I personally like a 7% down rule for domestic stocks.  10% for emerging markets, commodities, and other volatile investments.  Pay close attention next week!



An easy way for the SEC to make progress on the fiduciary duty issue is to impose a fiduciary duty on all advisors and salespeople dealing with seniors.  Research shows that even healthy seniors experience declines in their ability to make financial decisions as they age.  It is a steadily progressive decline that begins in a person’s 20’s.  Sometime between age 60 and 100 it becomes dibilitating to the point where a person should  not make financial decisions.   But the senior won’t know it or won’t admit it.  What if every transaction with a person over 60 was subject to a fiduciary standard?  Everyone from the parish priest to the annuity salesperson to the undertaker would be bound by this standard and held liable if a transaction was not in the senior’s best interest.  The financial ripoff of seniors is a huge problem with an easy fix.


First, I should say that I have a bias toward taking Social Security at age 70.  As I have posted before, you can’t buy a better inflation protected annuity, and the almost 8% boost each year you wait makes it almost too good to be true.  How do you cover your expenses until you turn 70?  My best advice is to keep working if you can.  Other than that, my 2nd best ideas are: 1) start withdrawals from tax deferred accounts, and 2) get a reverse mortgage on your house.  Yes, you will pay taxes on the tax deferred account withdrawals, but they will reduce the withdrawals you will be forced to take later, thereby reducing the amount of social security subject to income tax.  The reverse mortgage supplies money 100% tax free, and you can stop it as soon as you start your age 70 social security.  You never have to pay the money back, but it does remain as a lien against your house until you (and your spouse) die or sell the house.  You still own th ehouse and the bank can’t make you move.  The primary argument I hear against waiting for social security is that people want to make sure they get their money back before they die.  But if you change your mindset to think about it as longevity insurance, you can begin to see it in another light.  (Do you hurt yourself to make sure you collect your heath insurance, or crash your car to collect on your auto insurance?)  Of course, this means you will actually have to buy a house, and pay it off by the time you want to retire – but that is another blog.


I Thought “Black Swans” were Rare!

March 16, 2011

A once in a century 9.0 earthquake, followed by a tsunami hitting the same area, followed by three nuclear catastrophies, makes me wonder why the markets aren’t down more than they are.   “Sell” signals are being triggered.   The international developed markets (VEU for me) was sold today.  Emerging markets (VWO) are close.  The US markets […]

Read the full article →

401K Fee Disclosures Will Inspire Change

March 2, 2011

By July 16, 2011 you will know the total fees you are paying in your 401K.  That is when ERISA Section 408(b)(2) takes effect.  Most people and many plan sponsors are clueless about fees, even though plan fiduciaries are legally obligated to not only know what they are, but also to keep them reasonable.  I […]

Read the full article →

Fix Social Security

March 1, 2011

The fix is easy but the politics get in the way.  First, change the spin.  Raising the retirement age sounds like a reduction of benefits.  But, as life expectancy has increased, the number of years people will receive benefits goes up.  What if we change the political “spin” to the number of years you will expect to […]

Read the full article →

Social Security is the best Annuity

February 11, 2011

Take Social Security at age 70 if you can.  There is about an 8% benefit increase for every year you wait after age 62.  Then it pays for life, with a 100% spousal benefit if you die, a 50% spousal benefit while you live, and cost of living increases.  You cannot buy a better annuity.  […]

Read the full article →

Teachers and Annuities

February 8, 2011

Why is it that every teacher I know, or whom I meet with professionally, has one or more annuities in their 403b?  The answer is commissions.  The only people hanging around campuses to provide investment advice are commissioned sales reps.  Fee-only planners don’t hang out there because there is no money to be made.  Access in some […]

Read the full article →

Where To Put Your Fixed Income $

January 26, 2011

I think that this is a dangerous time for bond funds.  Municipals are already in trouble.  The Fed has not been shy in stating its intention to re-inflate the economy.  Money market funds are yielding close to zero, as is any cash sitting in banks or brokerage accounts.  There are ways of earning 6% and […]

Read the full article →

Beating the S&P takes Discipline Not Brains

August 19, 2010

I’m testing the stock screening software at www.stockscreen123.com and find it impressive.  There are plenty of good pre-defined screens that beat the S&P handily over 3, 5 and 10 year periods, but I developed some of my own.  Here is one that satisfies my need for simplicity.  It is an all-ETF screen using only the following […]

Read the full article →