AMAZING AND VERY COOL!
From my friend Peter: The French restaurant «Le Petit Chef» (The Little Chef) came up with an original way to entertain guests while waiting for their orders — using a projector on the ceiling, animation appears on the table. Click Here to View Video

Also, from my friend Judie, some amazing kids… Click Here to View Video

A FOOL AND HIS MONEY ARE EASILY PARTED That’s the quote that sprang to mind when my friend John shared with me a marketing piece he recently received.

Clearly a win/win as the sales commission is 9%!

I’m not against annuities, but I am against some of the products and how they are sold.

MORE DAVID VS. GOLAITH
From Investment News:
Industry groups opposed to the DOL’s fiduciary rule proposal are spending many times more on lobbying than the rule’s supporters. During the first half of 2015, funds paid to lobbyists were as follows:

Opponents of the DOL’s rule:
The National Association of Insurance and Financial Advisors $1.36 million
The Investment Company Institute $2.47 million
The American Council of Life Insurers $2.52 million
SIMFA $3.72 million
Financial Services Institute $428,876

This magnitude of money doesn’t just talk; it screams!

Proponents of the DOL’s rule:
AARP, a lobbying group for retired people $3.75 million
The Financial Planning Association $15,000
Financial Planning Coalition $20,000

STREET ART A must-see…Click Here to View Video.

SOBERING
From David Laster’s most excellent Merrill Lynch research paper “Tackling Retirement Risks.”

HOLDING FORTH
Here I am, trying to look and sound important during my presentation to the South Florida Financial Planning Association Annual Seminar:

OH MY
Kids can be expensive. Here are typical costs of back-to-school items from Money.
Parents of elementary school students $630
Parents of high school students $662

Total back-to-school spending in the U.S. $68,000,000,000

WHO OWNS WHAT
According to CBS News, “[t]he richest 1 percent now own half the world’s assets, the rest of the income distribution isn’t coming out ahead. The bottom 71 percent of the world’s population controls just 3 percent of the globe’s wealth, giving each person in that lowest level less than $10,000 per person in assets. The middle 21 percent own 12.5 percent of the world’s wealth, or less than $100,000 per person.”

WANT A REASON TO WORRY ABOUT THE STOCK MARKET?
• June 1948 to June 1949. Stocks decline 20.6%. A world still trying to figure out what a post-war economy looks like causes a second U.S. recession with more demobilization. Inflation surges as the economy adjusts. The Korean conflict heats up.
• June 1950 to July 1950. Stocks fall 14%. North Korean troops attack points along the South Korean border. The U.N Security Council calls the invasion “a breach of peace.” U.S. involvement in the Korean War begins.
• July 1957 to October 1957. Stocks fall 20.7%. There’s the Suez Canal crisis and Soviet launch of Sputnik, plus the U.S. slips into recession.
• January 1962 to June 1962. Stocks fall 26.4%. Stocks plunge after a decade of solid economic growth and market boom, the first “bubble” environment since 1929. In a classic 1962 interview, Warren Buffett says, “For some time, stocks have been rising at rather rapid rates, but corporate earnings have not been rising, dividends have not been increasing, and it’s not to be unexpected that a correction of some of those factors on the upside might occur on the downside.”
• February 1966 to October 1966. Stocks fall 22.2%. The Vietnam War and Great Society social programs push government spending up 45% in five years. Inflation gathers steam. The Federal Reserve responds by tightening interest rates. No recession occurred.
• November 1968 to May 1970. Stocks fall 36.1%. Inflation really starts to pick up, hitting 6.2% in 1969 up from an average of 1.6% over the previous eight years. The Vietnam War escalates. Interest rates surge; Ten-year Treasury rates rise from 4.7% to nearly 8%.
• April 1973 to October 1974. Stocks fall 48%. Inflation breaks double-digits for the first time in three decades. There’s the start of a deep recession; unemployment hits 9%.
• September 1976 to March 1978. Stocks fall 19.4%. The economy stagnates as high inflation meets dismal earnings growth. Adjusted for inflation, corporate profits haven’t grown for eight years.
• February 1980 to March 1980. Stocks fall 17.1%. Interest rates approach 20%, the highest in modern history. The economy grinds to a halt; unemployment tops 10%. There’s the Iran hostage crisis.
• November 1980 to August 1982. Stocks fall 27.1%. Inflation has risen 42% in the previous three years. Consumer confidence plunges, unemployment surges, and we see the largest budget deficits since World War II. Corporate profits are 25% below where they were a decade prior.
• August 1987 to December 1987. Stocks fall 33.5%. The crash of ’87 pushes stocks down 23% in one day. There is no notable news that day; historians still argue about the cause. A likely contributor was a growing fad of “portfolio insurance” that automatically sold stocks on declines, causing selling to beget more selling — the precursor to the fragility of a technology-driven marketplace.
• July 1990 to October 1990. Stocks fall 19.9%. The Gulf War causes an oil price spike. A short recession follows. The unemployment rate jumps to 7.8%.
• July 1998 to August 1998. Stocks fall 19.3%. Russia defaults on its debt, emerging market currencies collapse, and the world’s largest hedge fund goes bankrupt, nearly taking Wall Street banks down with it. Strangely, this occurs during a period most people remember as one of the most prosperous periods to invest in history.
• March 2000 to October 2002. Stocks fall 49.1%. The dot-com bubble bursts and 9/11 sends the world economy into recession.
• November 2002 to March 2003. Stocks fall 14.7%. The U.S. economy puts itself back together after its first recession in a decade. The military preps for the Iraq war. Oil prices spike.
• October 2007 to March 2009. Stocks fall 56.8%. The global housing bubble bursts, sending the world’s largest banks to the brink of collapse. It is the worst financial crisis since the Great Depression.
• April 2010 to July 2010. Stocks fall 16%. Europe hits a debt crisis while the U.S. economy weakens. Double-dip recession fears are raised.
• April 2011 to October 2011. Stocks fall 19.4%. The U.S. government experiences a debt ceiling showdown, U.S. credit is downgraded, and oil prices surge.
• June 2015 to August 2015. Stocks fall 11.9%. China’s economy grinds to a halt; the Fed prepares to raise interest rates.

The Motley Fool. Click Here for Article.

THE REST OF THE STORY
As the Motley Fool noted, the real story was “constant mayhem amid long prosperity.” The S&P 500 rose 1,100-fold over the last 70 years, including dividends.

The moral — investing is long term and if you want to make money in the market, you need to stay in the market.

WORTH REMEMBERING
From Money Magazine, “Be a Boring Investor” “Most millionaires don’t rely on complicated strategies to attain wealth. More than three-quarters of a typical millionaire’s portfolio is held in a basic mix of stocks, bonds, and cash — with some real estate and annuities mixed in.” I agree.

MIGHTY PROUD!
My little brother Jerry is an ace Professor of Economics at Syracuse University. One of the world’s foremost authorities on Adam Smith, Cambridge University Press just published his Adam Smith's Wealth of Nations: A Reader’s Guide. As described by Cambridge Press, “…this landmark book walks the reader through the five “Books” of The Wealth of Nations… and in doing so Evensky sets his examination of The Wealth of Nations into a larger, holistic analysis of Smith’s moral philosophy.” If you’re up to an intellectual challenge, Click Here to Check It Out.

MIGHTY PROUD OF OUR PARTNER TAYLOR AS WELL…
MAKE-A-WISH NAMES TAYLOR GANG CHAIR-ELECT OF ITS BOARD OF DIRECTORS “Taylor M. Gang, a principal at the Coral Gables-based wealth management firm Evensky & Katz/Foldes, has been elevated to chair-elect of Make-A-Wish Southern Florida’s Board of Directors for the nonprofit’s 2014-15 fiscal year.”

…AND OF OUR ASSOCIATE KRISTIN
FPA Announces Diversity Awards Two women from China and Columbia received the Financial Planning Association Diversity Scholarships, which recognize professionals who are working to encourage diversity in the financial planning profession, FPA announced. Danqin (Kristin) Fang was born in China and came to Lubbock, Texas, to pursue a career in financial planning. Since arriving in the United States, she has obtained a master’s degree in personal finance from Texas Tech University, earned the certified financial planner (CFP) certification and has been working toward her chartered financial analyst (CFA) designation. She is a senior financial analyst at Evensky & Katz/Foldes Financial Wealth Management in Coral Gables, Fla.

HOW THE MIGHTY FALL
U.S. News reports
“Harvard’s prestigious debate team loses to group of N.Y. inmates taking college courses. Months after winning a national title, Harvard’s debate team has fallen to a group of New York inmates.

The showdown took place at the Eastern New York Correctional Facility, a maximum-security prison where convicts can take courses taught by faculty from nearby Bard College, and where inmates have formed a popular debate club. Last month, they invited the Ivy League undergraduates and this year’s national debate champions over for a friendly competition.

The Harvard debate team also was crowned world champions in 2014. But the inmates are building a reputation of their own. In the two years since they started a debate club, the prisoners have beaten teams from the U.S. Military Academy at West Point and the University of Vermont. The competition with West Point, which is now an annual affair, has grown into a rivalry.”

THIS IS COOL
Did you know that there is only ONE factory mostly run by ladies that makes all the footballs for the NFL? Just one, and they’ve been doing it for over 40 years. Click Here to Check It Out.

DID YOU KNOW?
I didn’t, but now I do and my phone is updated.
You can set up something called a “Medical ID” on your iPhone. This can be accessed even while the phone is locked by clicking on the emergency options and can display things like name, DOB, emergency contacts, medical conditions, and even blood type! It can be managed by clicking on the little “Health” app that comes by default on the phone. Here’s what it will look like.



THIS IS PREPOSTEROUS
The headline in InvestmentNews read “SEC’s split decision helps appeal.” It seems that an investment advisor was fined and banned from the industry for misrepresenting a retirement investment strategy. Although the SEC voted to uphold the decision of an in-house judge, two commissioners dissented. According to the article, the advisor used inflation rates to back-test the strategy. However, “[t]he SEC said [the advisor] used inflation rates to back-test that did not reflect historical rates of inflation for the time periods to which he referred” [my emphasis].

According to Investopedia, back-testing is “[t]he process of testing a trading strategy on prior time periods. Instead of applying a strategy for the time period forward, which could take years, a trader can do a simulation of his or her trading strategy on relevant past data in order to gauge the its effectiveness” [my emphasis]. I would add that this is the definition any professional would provide.

Well, the dissenters seem to believe that “given the clear disclosure of the inflation rate assumptions in the slide show presentation, we find that a reasonable investor would not have believed that actual historical rates of inflation were used in the back-test.” I guess an advisor can “back-test” for any past historical period using any numbers he or she would like to make up as long as the “back-test” is clearly labeled to note that the data bears no relationship to reality. ABSURD!

WISE THOUGHTS FROM A WISE MAN
Jack Bogle is one of my all-time favorite investment professionals. He blends common sense with an astute knowledge of the financial markets and “tells it like it is.” Here are some excerpts from a MarketWatch interview.

“… [C]orporate finance — the reason Wall Street exists — is just a tiny slice of the total business. The nation's big investment banks probably could work for less than a week and take the rest of the year off with no real effect on the economy.”

“The job of finance is to provide capital to companies. We do it to the tune of $250 billion a year in IPOs and secondary offerings,” Bogle told Time in an interview. “What else do we do? We encourage investors to trade about $32 trillion a year. So the way I calculate it, 99% of what we do in this industry is people trading with one another, with a gain only to the middleman. It’s a waste of resources.”

“Research shows, over and over, that stock brokers can’t do much of anything demonstrably valuable. They don’t know which stocks will go up or down and when. They don’t know which asset classes will outperform this year or next.

“Nobody knows. That’s the point. If you’re among that small cadre of extremely high-level traders who can throw loads of cash at a short-term fluke, fantastic. If you have a mind for numbers like Warren Buffett that allows you to buy companies on the cheap and hold them forever, excellent.

“If you’re a normal retirement investor trying to get from A to B and retire on time, well, you have a really big problem to face: The toll-taker wants your money.

“So he needs you to trade — a lot. Because that’s how stock brokers make money. Not by doling out retirement advice, but by ensuring that your account is active and churning commissions on behalf of them and their employers.”

From MarketWatch.

CREDIT RATINGS
If you are into foreign credits you might find this U.S. News prognostication of interest.

WORTH WATCHING
30 Photos from History
Nature Beauty & Gratitude
8 Year Ago – The Announcement of the iPhone

CHECK OUT THE TIE

TRUE COST OF FINANCIAL ADVICE
Excerpts from an article from Financial Advisor IG.
“Investors are often unaware how much they pay for financial advice, but the difference over 30 years of investing among different brokerages can amount to close to half a million dollars, according to a survey cited by WealthManagement.com.

“The most expensive advice comes from Merrill Lynch, which charges an average combined total of 1.98% split between its 1.3% average advisor fee — the third highest among the 11 brokerages surveyed — and its 0.68% average expense ratio on mutual funds and ETFs. This is the highest in the industry, reveals an examination of anonymous data from more than 150,000 users of online advice provider Personal Capital, cited in WealthManagement.com.” To read the full article Click Here.

THIS IS SOME IMPRESSIVE EXPRESSWAY (?)


A view of a modest traffic jam from a drone on the Beijing-Hong Kong-Macau Expressway.

WHY AM I NOT SURPRISED?
Michael Sincere, MarketWatch (Click Here to Read) wrote a piece about a contest David O. England, a retired finance professor from Carbondale, Ill., established to test financial pornographer Jim Cramer. Here’s a summary of the story (Click Here to Read).

“On April 6, 2015, ‘Jim Cramer’s Picks — Here are 49 Stocks to Buy Right Now,’ was published on TheStreet.com. In the article, Cramer makes a strong case for these 49 stocks.

“‘Every single one of these companies reported excellent last quarters, and with no exceptions their charts are pretty much perfectly made for this downturn,’ Cramer wrote. Even if there is a correction or pullback, Cramer says these stocks will do well. Cramer writes, ‘This is THE list. Go forth and conquer.’

“The final result? Even after the most recent 1,000-point Dow Jones Industrial Average rally, Cramer got a failing grade. Although Cramer promised his picks could survive any downturn, these stocks didn’t survive during the market’s brutal third quarter. Only 14 of Cramer’s 49 stock picks closed higher after six months than their April trading price, a paltry 28% success rate.”

ARE YOU OLDER THAN DIRT?
Well, you are if you can remember these items from my friend Fred

STILL, THERE’S HOPE YET

INFLATION IS REAL
From my friend David:

I THOUGHT THIS WAS A NICE SENTIMENT TO END WITH

All my best,
Harold R. Evensky, CFP®, AIF®
Chairman Evensky & Katz / Foldes Financial Wealth Management

© Evensky & Katz / Foldes Financial Wealth Management

© Evensky & Katz / Foldes Financial Wealth Management

Read more commentaries by Evensky & Katz / Foldes Financial Wealth Management