Worst Decisions Made at Market Extremes

The 5 minute video below provides interesting insight for managing one's portfolio as they enter retirement. I call it the "bucket portfolio", since people compartmentalize it's a way for them to manage behavior. It calms their fears by having three years of spending safe and secure. Then, the next five years spending is invested in a relatively mild portfolio. One that exposes them to additional mild risk for an enhanced return. The remainder of the portfolio is focused on the long-term.

In case the video doesn't start click the following:
Video Link

Comments on Greece Debt Deal

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Bob Rodriguez Blasts - Bernanke, Congress and Consumer

A must read interview. Here is a quote from the article - "The country is headed for recession next year, Rodriguez forecasts. His outlook for the markets? Unequivocally cautious. Congress and the Obama administration have created high levels of uncertainty that continue to create volatility and a negative bias in the markets, the money manager says."

Below is a link to the article, well worth your time to read.

Bob Rodriguez Interview Link

Inflation At 3-Year High of 3.9%

Source Article Link

New Research Challenges 4% Withdrawal Rule

"New, award-winning research shows some people might be able to spend more in retirement, says a professor who recently published his own controversial paper that says retirement planning should focus on savings rates rather than withdrawal rates.

This is illustrated in the new research article, “Determining Optimal Withdrawal Rates: An Economic Approach,” by Duncan Williams and Michael Finke of Texas Tech University. The article appears in the Fall 2011 issue of the Retirement Management Journal, and it won the journal’s Academic Thought Leadership Award. Williams and Finke find that an aggressive retiree with a $1 million nest egg and a guaranteed Social Security income base of $20,000, could actually maximize their utility with a 7 percent withdrawal rate. So much for the 4 percent rule!"

Article Link

Source: www.fa-mag.com/online-extras/8890-new-research-challenges-4-withdrawal-rule.html

Feds Effect on Lowering Interest Rates

Bespoke said:

"The chart above shows the yield on the ten-year U.S. treasury going back to September 2008. The red dots in the chart represent each time where the Fed formally announced intentions to buy Treasuries in the open market (QE1, QE2, and Operation Twist). As shown, following each of the prior two announcements, the yield on the 10-year rose by more than 100 basis points (bps) in just a matter of months. Following its most recent announcement in September, the yield on the 10-year is already up 36 bps.

While one could argue that yield declined ahead of each of the prior announcements due to the fact that each move was widely telegraphed, at face value it appears that the Fed’s attempts to lower long-term interest rates have been futile."

Source: SeekingAlpha - http://seekingalpha.com/article/299771-fed-efforts-to-reduce-long-term-interest-rates-strike-3

The Lost Decade

The past decade has not meet financial planning expectations. If you had retired at the beginning of 2000 and had used historical returns for your financial projections your portfolio is approximately 50% of its original value. This all depends on your withdrawal rate.

One most be vigilant in managing one's portfolio.

Source: SeekingAlpha - Doug Short 10-11-2011

Is the US like Rome or Bysantium?

Classicist Victor Davis Hanson explains causes of Rome’shttp://www.blogger.com/img/blank.gif fall and how the U.S. might follow Byzantium’s more hopeful path.

The article highlights three negative challenges the US faces:

1) Societal shift toward redistribtuion of capital from creatio of capital.
2) Declining demographics
3) Outsourcing of morality form the individual to the state.


Great read!

Article Link