10 Thursday AM Reads

Celebrate my birthday with these fine morning train reads:

• Warren Buffett’s Lucky Millionaires Club Early Berkshire stockholders have used shares to finance children’s educations, buy homes, donate to charity (WSJ)
• You’re Not Supposed to Understand the Federal Reserve (NYTsee also How and why the Fed raises rates is as important as when (FT)
• 50 Years Isn’t Too Long—To Borrow Cheaply: If the Brits see record demand for their 50-year bonds, why shouldn’t Uncle Sam go ultra-long? (Barron’s)
• Borzi Says DOL Fiduciary Rule Will Have Legal Teeth (Wealth Managementsee also Pension trade group believes DOL fiduciary rule is all but inevitable (Investment News)
• Daniel Kahneman on Intuition and the Outside View (Compounding My Interests)


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  1. rd commented on Oct 22

    An interesting look at the US labor market and potential stock and bond returns.

    US corporations have used control of wages as a major lever in increasing their profit margins. They have also cut many overhead expenses, including training, to increase (or maintain) profit margins. These are probably a partial explanation for the reduction in labor force participation (as well as the obvious reason of an aging population). If you are not willing to train workers, then you are hoping to poach already trained workers from other companies but the pipeline gets smaller and smaller. Reducing real wages also discourages many workers – when we had our kids, my wife and I sat down and looked at the financial impacts. Ultimately, her income minus taxes (at our top marginal rate) minus daycare costs resulted in only a small additional income but a huge amount of stress. So she left the work force for almost two decades. With the growth of minimum and low wage jobs, and the decline of the real median income, decisions like that are probably being made all across the work force.


    • willid3 commented on Oct 22

      it also doesnt help that many employers in states that allow them to opt out of workers comp (many and moe coming) http://www.dallasnews.com/business/headlines/20151021-dallas-lawyer-leads-push-to-slash-workers-comp-costs—-and-employee-benefits.ece

      basically save cost by pushing all the risk on the employee and the costs too. such as limiting care to 2 years only, or excluding normal work risks . they also reduce the length of time wages are paid to those injured at work (2 years). course its also puts every body else at risk because the idea was eally based on making those that caused the damage to pay for it, but with this opt plan, they dont, and they dont really care if their workers get injured, sick o killed on the job. all of this is helps to cut the costs and increase profits. while it has the side effect of making a much sicker population and higher tax payer costs as those who could have returned to wok cant any more so end up on disability.

    • willid3 commented on Oct 22

      course this is just the continuation of the pro business anti consumer anti worker plan. all from Texas

  2. RW commented on Oct 22

    Horse, a hippo and middle-aged angst (ht E.V.)
    In his latest letter, Angus [Deaton] comments on the appeal of Donald Trump to the many voters disenchanted with the Washington political establishment as well as on a disturbing trend which sees legal opioids being marketed to a new class of addicts.

    …Trump is like the hippopotamus, which rapidly twirls its tail to create a fan through which it defecates, throwing a noxious cloud on all around.) The irony is that only an independent multi-billionaire could mount such a challenge, …

    It would not be unreasonable for many Americans to see themselves as having been set up as the prey for a range of well-funded predators (financial, pharmaceutical, and criminal) some of whom have great sway over the political system. To them, in spite of his noxious means of delivery, The Donald might seem like the only one who tells it like it is.

    Happy birthday BR!

    • willid3 commented on Oct 22

      so its really not the effect on patients that the question, its relationship with a specialty pharmacy? course they were happy and pleased as punch about the lack of R&D in a drug company (seems like a very extreme version of short termism . cause with out a product to sell they are toast., but then again if you only sell a few drugs, and only a few need them, there probably wont ever be a generic version of those drugs)

  3. VennData commented on Oct 22

    Where are all the right-wing market mouths who said Yellen was wrong about small cap biotech valuations?


  4. VennData commented on Oct 22

    Benghazi hearing breaks down into argument between Gowdy, Cummings

    ​“The parliamentarian told me that your motion would actually not be in order,” Gowdy replied.​


    Gowdy working for the GOP Media Machine shoots his credibility to Jahannam. His only future is being a loud-mouthed whore for the GOP Media Machine.

    Republicans are laughable.


  5. willid3 commented on Oct 22

    401ks only really work if you have enough income to save (which the majority of workers for small companies dont have). and when it was being created, it was designed with the idea there would be a pension and social security. take away those 2 legs of support for retirement, and retirement become a dream for the majority of workers. it just will never happen. and here we thought we had made progress with a higher standard of living, instead we have regressed to before the great depression when the majority of us worked until we died, and the elderly lived with their children, and had bad health , because they could do nothing else. if they weer lucky. and with the other regression in workers comp, we are back to where workers get maimed and killed at work. and companies pass the costs on to the taxpayer

    • rd commented on Oct 22

      The real key to successful retirement investing is to ignore almost all the advice from the “professionals” out there regarding how much house you can afford and their recommended investment funds and portfolios.

      You buy the smallest, cheapest house that meets your basic needs and invest the rest of the “affordable” monthly payments that the realtor wanted you to spend on a house in low cost, well-diversified mutual funds that are tax-deferred and rebalanced periodically. For most people, a low-cost Target Date fund is a very good place to start. A 401k is a great way to do this, but if you make median household income or less, you can put away 15% or more of your annual income into an IRA.This combined with Social Security and paying off the house can generally allow you to cover your working age income in retirement.

      Since housing has been generally proven to roughly track inflation over long periods of time, but the overall economy and the stock markets grow more than inflation over time, you creep ahead over time. However, to do this successfully, you need to ignore 99.9% of the nattering nabobs you run into starting in your 20s or 30s. The existing system is designed to convince people to fail in one of their primary long-term goals.

      The tiny cadre of fiduciary, fee-based financial planners (like RWM) are pretty much the only people in the entire financial community that would ever provide this advice. But slowly the people are getting the message and the revolution is beginning one household at a time which is why Vanguard is amassing more and more assets.

    • willid3 commented on Oct 22

      and considering the average income is some one around 25,000, you arent buying a house (and the median household is about 50,000, but thats likely to be 2 workers, not 1). and you might be able to invest any income not used for living expenses into the IRA, mainly cause its not that big a number to begin with. but you are renting cause you dont have the option to do otherwise

    • DeDude commented on Oct 22

      The problem is that most people never “get to” retirement savings until they are in their mid 50’ies. They come out with student loans and after those are paid down they purchase a house. Then they get kids, and after all those “young kid expenses” they face college cost for those kids. Through all those years putting money away for retirement took the hit whenever they had an unexpected expense. Then finally in their mid 50’ies, their kids have graduated college, the last mortgage payment has been paid – and the IRA/401K balance is 20K. Some can keep working (taking up jobs that society needs for young people), but many find out that employers don’t like old employees; so they find themselves forced into retirement way before their finances are ready.

      We need to expand social security by adding another 2% from employees and 2% from employer – all of it placed in a target date fund for the year the employee turns 67. For those who would have put away appropriate amounts of funds anyway this should not be a problem. The appropriate amount is 2-4 times more than this 4% being forced into target date funds, so if they want to take more or less risk with their retirement savings they can adjust how they invest the additional IRA/401K funds they are putting away. However, for the majority of people (who we know will have less than 1 years salary in their retirement accounts by age 55) this forced retirement savings will make the difference between a tight budget in retirement instead of living at or below the poverty line.

    • rd commented on Oct 22

      Actually $50k a year makes a decent house in our area quite affordable (median house price in the county is about $110k, very few sales are over $500k). The biggest affordability issues are in the big metropolitan areas where real estate costs have sky-rocketed. I have found it somewhat bizarre that in this age of cars, airplanes, and internet people feel it necessary to be in the big expensive cities in the first place, and then try to live there in the manner that they would in in fly-over country where the costs are dramatically lower.

    • willid3 commented on Oct 22

      well some arent all that happy with long commute times, used to live in SOCAL, worked in Orange county (and LA county). and we had folks commuting from Ocean side (down towards San Diego) and San Benadeno . their commute times were in the 2-3 hours per day as long as it didnt rain, or have a huge wreck that blocked traffic even more. but then folks in SOCAL are used to having long commute times, and most couldnt afford the houses closer to work even if they wanted too. but down in DFW, they arent as used long commutes, but it does happen. and housing prices in suburbs arent that much better. but then thats Texas for you, not much more than lower real estate prices, and nothing much else to do but work

  6. WickedGreen commented on Oct 22

    Happy Birthday, BR. Here’s to a good many more. I think I might survive if you took tomorrow off. Cheers …

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