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The Best of What They Said and I Read week ending 5/14/2017

Short excerpts from articles I found interesting.

I may not agree with the author and the following material is not intended as investment advice.


The Wall Street Journal – May 13- 14, 2017 – New Parents Don’t Like Mike – by Janet Adamy

  • “American Parents don’t want their sons to be like Mike anymore.  Michael had been one of the most popular male monikers in American history, having held the No. 1 spot on the federal list of top baby names for 43 out of 44 years, the longest reign of the 20th century.  New federal figures released Friday show Michael losing fashion, with fewer than 14,000 U.S baby boys getting the name last year, the lowest level on record since 1940.  It clocked in at No. 8 on the Social Security Administration’s annual roster, a list where Noah took the No. 1 boy’s spot and Emma topped the girl’s rankings.


Bob Carlson’s Retirement Watch – May 11, 2017 – Bob’s Journal

  • “…Americans who don’t have college degrees report having their highest levels of optimism in the almost 40 years of the survey. Those with college degrees or more education have reported steadily less optimism since mid-2015… Traditionally, more educated Americans report higher levels of optimism than less educated Americans, but the direction of optimism for the two tends to track each other, with few exceptions. But the two diverged sharply after the election, and the less educated now are more optimistic than the more educated.”

    “Likewise, optimism among older Americans surged after the election while optimism fell for those 34 and under. Normally, the younger age group reports being more optimistic than the older group, but now the two are about equal.”

    “Less educated people and older people are the least likely groups in the country to have major increases in income or to go on spending sprees using savings or credit. That is likely why their optimism in the surveys isn’t being translated into hard economic data. Most of the discretionary spending is done by higher-income people, and they aren’t in the mood to spend…Until we see higher real income increases paid to workers, we aren’t likely to see economic growth match the surveys and anecdotes.”

AAII Journal – May 12, 2017 – Mr. Market is Distorting Your Tolerance for Risk - by Charles Rotblut

  • “Called the stock market’s “fear index,” the VIX ended Monday at 9.77 …this the lowest close since December 1993… To give you a sense of how low this number is, the median closing level for the VIX over its entire history is 17.70, based on data from the CBOE. (The average is 19.57, but this number is skewed higher by the financial crisis when the fear index closed above 80 on both October 27 and November 20, 2008.)”
  • “The VIX is a measure of the implied or expected volatility of S&P 500 options over the next 30 days. Implied volatility is the market’s estimated future volatility. In layman’s terms, the VIX tells you whether traders are paying a little or a lot to protect their portfolios against a downward drop. Think of the VIX as tracking the cost of insurance with variable premiums; the more you perceive the risk of danger occurring, the more you are willing to pay to protect yourself against damage...”
  • “All this matters because periods of low volatility lure investors into thinking they can handle more risk than they actually can. An investor’s tolerance risk is not determined by how they feel during periods of calm, but rather by how they feel during periods of high volatility.  …As important as it is to accept short-term price volatility to build long-term wealth, it’s also important to put yourself in a position where the pain and fear of falling wealth won’t cause you to panic and abandon your allocation strategy.”

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