My Sunday morning readings:

• An Investing Primer For Millennials (Patrick O’Shaughnessy)
• The Typical Household, Now Worth a Third Less (NY Times) see also Why voters aren’t angrier about economic inequality (NY Times)
Miller: Homebuying Gets a Housecleaning (BV)
• Wealthfront Tax Loss Harvesting  – How NOT to Calculate Tax Alpha (Kitces) see also Understanding the philosophy behind your investment portfolio (NYT)
• Record Student-Loan Debt Prompts Treasury Push to Stem Defaults (Bloomberg)
• The SEC should shine a light on dark political donations from corporations (The Week)
• Bloomberg struggles to break out of the box (Columbia Journalism Review)
• Superintelligence: Paths, Dangers, Strategies (FT)
• Facebook is no longer a social network.  It’s the world’s most powerful news reader. (Pando Daily)
• Near Miss: The Solar Superstorm of July 2012 (NASA)

What’s for brunch ?




Secret Political Spending at Record Highs

Source: The Week


Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “10 Sunday Reads”

  1. theexpertisin says:

    Here is my brunch today which is worth a word. I look forward to this every year. A small church hosts a brunch in their park adjacent to the church grounds. It is a beautiful place, with flowering plants, palm trees and native, somewhat ancient Carolina trees on the premises. One huge, old growth oak is said to have been a hitching tree for George Washington’s horse on his 1791 Southern Tour.

    The ladies fry up home raised fried chicken (in lard, of course) that is perfectly breaded and seasoned. In the smoker since yesterday afternoon are hickory and pecan wood prepared Boston Butts for the pulled pork. One parishioner makes a superb and secret East Carolina BBQ sauce to slather on the meat. Home made cornbread, beans (with pig snouts, of course), coleslaw (three ways – white, red or sweet), home made half sour pickles and pickled okra, greens and garden fresh tomatoes, corn, yams and assorted other delights. Old recipe southern deserts follow.

    Not to be ingested every week, but an annual treat on a hot, cloudless, Carolina blue sky summer noon.

  2. rd says:

    A couple of comments on the berating of millenials for their investing strategy:

    1. The threshold for the UBS millennial sample was $75,000 in income or $50,000 in investable assets. Personally, I think it would be quite reasonable for a person making $75k to hold $20k to $75k in cash/ST bonds as an emergency fund, savings for a home downpayment, to buy a car etc. With a $50k investable asset threshold, that cash cushion could easily be 50% or more of their assets. My two oldest kids have personal assets that look similar to the UBS pie. They are very clearly divided into a cash savings accounts in the bank and long-term equity heavy retirement accounts (primarily Roths). Their cash percentage will shrink over time.

    2. The UBS graphs show millenials with 50% cash compared to non-millenials (older people) with 28% cash. Once again, I would expect that the asset base of older workers would be much larger than people in their 20s and early 30s. They have probably also already bought a home. Since the older people’s total cash may be significantly more than the millenials’ cash, why aren’t the older people being chastised?

    3. The report doesn’t look at total asset amounts other than simply having a threshold for reporting. If the millenials’ cash hoard starts to greatly exceed their annual income, then it is probably time for a talk. However, if they are sitting on cash that is 25% to 100% of their income with additional equity-rich retirement savings, that would be an indication to me that they have a very balanced view on personal finance and will likely do better than the older generations in the coming years.

    4. I take these types of research reports with a huge shaker of salt. They strike me as being an exhortation to their sales staff to “go get the money” to extract fees rather than to help with beneficial financial planning of their clients.

  3. MarcK says:

    Now I agree with RD 1000%

    The first order of business for a young person (my kids are 18 and 20) is to save cash for emergencies, and to start to invest early in index funds and dollar cost average…everything else is designed to separate them from their money!

    so while putting money into an investment account is wise, till they build up a cushion, more than 50-50 is scam

  4. farmera1 says:

    Smart Beta a great investment or just a new marketing ploy.

    As is always the case there isn’t a simple answer to this question, with some 400 Smart Beta ETFs, there are probably some with good value for an investor and some are designed to separate the investor from their money.

    There does not even seem to be an accepted definition with the Financial Times giving a shot at the definition:

    “Smart beta is a rather elusive term in modern finance. It lacks a strict definition and is also sometimes known as advanced beta, alternative beta or strategy indices.
    It can be understood as an umbrella term for rules based investment strategies that do not use the conventional market capitalisation weights that have been criticised for delivering sub-optimal returns by overweighting overvalued stocks and, conversely, underweighting undervalued ones.’

    Smart Beta is the hot new investing idea. With returns of 2% above old market cap weighted index ETFs, what’s not to like, sounds like a free lunch to me. With some 400 ETFs sounding the Smart Beta drum, is this just a new marketing ploy or a way to riches (at least until it gets too popular)?

    There are some points to be considered:
    -Costs are higher than many capital weighted index ETFs
    -The excess returns are all calculated on historical data, so if I had bought in 1980 I would have had 2% greater compounded return by buying some Smart Beta ETFs vs the traditional capital weighted index ETF so I need a time machine to capture the excess return. The future maybe entirely different.
    -The risk is higher than capital weighted index ETFs.
    -Extended periods of under performance vs cap wight index ETFs will happen
    -Vanguard isn’t on the Smart Beta band wagon (pretty conservative organization, so maybe they will come around)

    Some practical issues remain: Like how to choose the best Smart Beta investment. Can I stick with this investment when it underperforms for 1, 2 or 10 years? Here is a little light reading list to jog your investment juices.

    Yes, I thing there are probably some Smart Beta investments that can help juice returns. The question is just which ones?

  5. barbacoa666 says:

    Brunch was an egg scramble with broccoli, mushrooms, and American buffalo cheddar cheese, accompanied by coffee.

    With regard to income inequality, IMO it’s come about because Republicans have perfectly tuned their platform to capture middle and lower income white suburban voters. The NYT captured the moral angle (abortion, perceived Federal over-reach, and and gun control) that draw in many. But one thing the NYT didn’t capture is that the Republican party has convinced followers that a tax code that subsidies the wealthy is good, despite the lack of evidence supporting it, and lack of support from economists. The Democrats ought to point out that Republicans are in fact, Socialists who favor the rich vice free marketers.

    • rd says:

      This is why I have been baffled that the Republicans keep wanting to go after the safety net. They have been successful recently by focusing on “the attack on Christianity” value voters etc. as well as it appears that a significant percentage of the base have a visceral hatred of the incumbent president.

      However, at some point in time, the Republican reach to grab everything will become evident even to the base voters when they realize that their retirement security is on the table with reductions to Social Security and Medicare (the only ways to significantly impact the federal budget).

      The recent “win” in the DC court could be the start of this process if a lot of Republican voters suddenly realize that their state governors and legislators have positioned them personally to have much more expensive health insurance than the people in the Blue states. BTW – many of the states that don’t have state exchanges also generally get more money back from the federal government than they pay in income taxes. Not getting Obamacare subsidies would be one step in reducing overall federal government spending and reducing unbalanced federal spending allocations, although I am not sure those voters would immediately see that as a positive outcome if it impacted their own personal pocketbook instead of the “takers”.

      • SumDumGuy says:

        Um, have to disagree. It’ll be spun that the raised rates are Obama’s fault, and it’ll just harden their views even more.

  6. ch says:

    Why are Millenials so cautious with investing? Because they owe $1.2T in student loans on which they are already 14.7% delinquent.

    If they put that 50% in the stock mkt and the stock market tanks, they default on their student loans and can never buy a house/car etc for at least 7 years till their credit record clears

  7. Jojo says:

    I like longer books. I am reading an SF novel now that is almost 1000 pages long.
    Why Are Books Getting Longer?
    By Jeremy Anderberg
    Jul 22, 2014

    I’ve had a theory, for a while now, that books are getting longer. It wasn’t until recently that I took some time to compile the data, and frankly, I was surprised at just how right I was.

    Obviously part of this experiment meant finding average book lengths for a cross-section of time long enough to mean anything. So I went 110 years back to 1904, and did some research for every 10 years. So I Googled “Best Books of…1904…1914…1924…etc.” and Google’s wizardry helped me out quite a bit, because the search results display an immediate gallery of books. It ends up being a combination of prize winners, best sellers, and attention garners. Perfect.

    So I then took those books, went to Amazon and found page numbers for the Kindle versions (just to keep things on the same playing field), and averaged them out. It’s not perfect, but it’s about as good as you’re going to get. While there are a couple outliers, the trend is clear:


  8. frodo1314 says:

    Maybe Americans are less interested in the government redistributing more because: 1) we don’t want to be more like Europe, 2) we understand the unintended consequences that just about always accompany such well meaning efforts, and 3) we realize government itself is grossly inefficent.

  9. BottomMiddleClass says:

    Cool food for thought.. impacts investing and global warming. (my morning reading came kind of late today)

    The short version is that everyone in China is finally getting a fridge…. and the china food supply chain is finally becoming refrigerated….