Myth: We Make Rational Financial Decisions

Very few aspects of our financial decision making are rational, if any (depending on the person!).  Despite history, despite having been burned over and over and over, I see the same patterns repeating and it actually is making me nauseous this time.  This isn't out of self-righteousness or superiority; I'm as bad as anyone, if not worse in some cases.  Except when it comes your, my clients', money.
For example, variable annuity sales this quarter are the highest they've been since 3rd quarter 2007 according to the Insured Retirement Institute.  Yes, that's right.  Just before the last huge bubble burst.  People are chasing returns again, against all odds, laden with hope and desperation, just like in most casinos I've visited.  (I don't know about you, but I've never seen anyone smiling in a casino, usually not even the scantily clad "hostesses").  We're buying high so we can later sell low, compounding our losses.
Why do I make this claim?  Because you would think in the midst of record demand for their products, annuity companies would be throwing open their doors.  But yet another major variable annuity vendor is walking away: John Hancock.  (Variable, by the way, means that your returns can vary, up and down.  Pay attention to the "down" word.).
My preferred product at this point in the game is equity indexed annuities (EIAs).  Here's a great little video explaining the basics:  Reinventing Retirement Savings.
But even EIA companies are scaling back their guarantees, charging more for them, and reducing their minimum interest guarantees.  One of my primary carriers, American Equity, is knocking- another -half a point off all its guarantees.  Aviva, my favorite, is still hanging in there with its 2% minimum interest rate, several market indexes in which to participate, their unparalleled 7.2% income rider & high guaranteed payout rates on the income distribution side.  Plus, no one else doubles that guaranteed income if you need long term care (a few conditions apply so you should read the full disclosure).  All this for an annual fee of 0.75%, about half the average mutual fund fee for which you get no principal protection and no guaranteed income!
I expect a continuing trend of fee increases and benefit reductions as we head into the next bubble burst this coming year.  Once your contract is in force, however, most of the provisions cannot be changed.  Don't wait!

Myth: ObamaCare

Otherwise known as "ObamaCare" by its detractors (who thereby reveal they have never read the act), the Patient Protection and Affordable Care Act is one of the few bills excreted by Congress with congruence between its name and what it actually does.  The "ObamaCare" label is inaccurate because- after massive tinkering by the health care industry & Congress -the bill is vastly different from the White House's initial "principles".  Much miraculously made it through unscathed, however.
OK, Gary, what DOES it actually do?  (I recommend you review the whole thing on Wikipedia:
http://en.wikipedia.org/wiki/Patient_Protection_and_Affordable_Care_Act)
Well, of many great provisions, one resounding success of the PPACA is reduction of Medicare/caid fraud.  At a cost of $9.0 million last year (and with the help of 5000 volunteers), the bill's enforcement provisions returned over $4.0 billion to the Medicare Hospital Insurance Trust Fund, IRS & other agencies.  Let's see.  Isn't that a 44,444% return on the dollar?  Not bad for government work.  Naturally, Congressional puppets of the health "care" industry fought this provision tooth and nail.

I'll look at other great parts of this bill in future blogs.

Clients Prefer Financial Specialists- NOT

Financial services marketing powerhouse, Genworth Financial, conducted a recent survey- the LifeJacket Study -to assess what you and I think.  The numbers below surprised me . . . because they support what I've always believed:  most of us want a one-stop shop when it comes to financial services, and, many of us let things slide until it's too late.  (Genworth Financial is probably best known for its life and long term care insurance.  They are usually in the top three when I do my Top 12 company search for life and long term care clients.  They have the best rates for tobacco users too.)  Here are the numbers.

Genworth's LifeJacket Study revealed surprising statistics about the current life insurance marketplace:

• 52 million Americans with household incomes between $50,000 and $250,000 do not have coverage [they think they're immortal]
• 40% of those who have insurance don't think they have enough
• $155,000 is the national average death benefit [better than nothing!]

According to the study, consumers have specific expectations about the role they expect advisers to play.

• 66% of consumers believe that a financial adviser should offer life insurance as part of their overall financial strategy [emphasis mine]*
  
• 60% of respondents who own life insurance want to meet with their adviser at least once a year [I must have the other 40%!]
• 77% indicated that they don't expect their annual review to be a lengthy meeting – an hour or less will do  [ I feel the same way.  Honest. I'm military about ending on time.]

The LifeJacket Study reveals valuable insights needed to educate and motivate yourself to help secure your financial future, to preserve your wealth.   Download the study to learn more.
I'm a firm believer in self-education!

*The way regulatory trends are going, I think soon only licensed financial advisers will be able to recommend life insurance to the public due to the inherent & profound fiduciary responsibility such a recommendation entails.  Few of us have the patience to find & evaluate the top dozen policies in any given State.  And the Top 12 will vary widely for each individual because each company has its marketing sweet spot, the segment of the population in which it thinks it can best compete.

Medicare, hooboy!

Don't you love it when the Medicare Open enrollment period comes around every year?  I'm not even eligible yet but I've been getting all kinds of junk in the mail about which Medicare plan to buy.  And I hear that there is no lack of TV advertising.  (Oddly, the enrollment period was changed from 11/15-12/31 as in years past to 10/15-12/7.)  But here's the common element:  these ads and mail pieces encourage you to visit their website or call one of their "advisers" to determine which plan is best for you.  

I have a better strategy for you:  Visit www.medicare.gov and use their quick and easy search engine instead.  I just did it myself and 59 medical and drug plans in my zip code 97086 popped up.  If I narrow the search to Medicare Health plans with drug coverage the number drops to 11, including Original Medicare, with 5 different companies.  But even so, can you imagine calling 20 different companies to find and compare your expected total annual out of pocket risk for all 11 plans?

Well, you don't have to.  Just select "sort results by lowest estimated annual health and drug cost" button and the search engine does it for you.  Or, if you're on lots of prescriptions (I'm not on any) you can key in all of them to find out which plan will give you the lowest out of pocket cost for your drugs.

 

So your first stop should be www.medicare.gov  If you need help navigating this arena, just call or email me:  503-698-1110  g@garyduell.com

Myth: More is better, or, Why I downsized.

Not that it's that interesting but I recently made some big changes:

• I closed my office and moved it back into my home.  
• I got rid of pickup loads of stuff.  And then I sold my pickup.  
• I'm as vegetarian as I can be.  In his book Eating Animals  Jonathan Foer points out that since it has been proven we can survive quite well (at least in this country) without eating animals, shouldn't we at least try to do so?
• I rarely buy coffee out anymore, making my own at home.  
• I bike everywhere I can, when I can.  
• If I have to drive, I try to accomplish at least three tasks per trip. 
• After having to move boxes and boxes of books I now don't buy any book unless I've already checked it out from the library & can't live without it, or, if the library doesn't have it.
• My practice is virtually paperless.  I constantly beg all my companies to email rather than mail.  (One of my most progressive companies, Assurant Health, is going to begin delivering policies digitally only.  Yay!  One of my least progressive companies, Ohio National Life, still sends me single sheets of paper in 9x12 envelopes.)  The paper I do get is scanned and then shredded.
• My business itself has a very small carbon footprint.  I make a huge difference in the lives of many people without creating much waste, if any, simply by rearranging pixels on my screen.  Miraculous!  Some paper is still involved, unfortunately.
• I hold my breath for one minute every hour to reduce my CO2 emissions.  Kidding.

So that's what I've done.  Why?  The three year experiment with an external office was all for show, to look legitimate, to create an image.  But the fact is, my network of advisers, service & product providers, business colleagues, support services and educational sources is all virtual.  I average one hour-long webinar per day to keep up to date professionally.  I rarely drive to attend a class anymore.  I get dozens of newsletters and news feeds daily.  I don't take newspapers anymore.  Most of my business is conducted online.  I have more clients I've never met than the opposite (which is not really my preference).  Who needs an office full of furniture and people?  It was no longer necessary.  I did all this because life should be simpler!

When I do venture out into the big city the traffic jams astound me. what an insane way to live!  Why does anyone tolerate it?  What if, instead of building more roads in the metro area, we developed a super database of workers and jobs, then did a massive job exchange so people could work closer to where they live?  What if, instead of building the boondoggle called the Columbia River Crossing, we spent a tenth as much converting office jobs to online jobs so the Vancouverites didn't have to come over here?

Yes, life should be simpler.

MYTH: The Debt Ceiling is the most pressing issue facing Americans

Yes, despite all the hysteria in the media, the windbags in Congress and most people I talk to, the debt ceiling is much ado about nothing.  Congress and the President are playing a game of chicken to distract you from what you should really care about:  the greatest theft of wealth from you and me in the history of the world.  Some of that wealth is absolutely priceless, which I'll clarify in a minute.  I am exasperated by the failure of virtually every arm of the media to document this reality.  But after a lifetime of training-by TV -we have come to prefer drama over data, sensation over sobriety, raciness over reality.
Dennis Kucinich, despite himself, has an excellent article at CommonDreams.  I will summarize his list of the scale and means by which this theft is taking place while adding some history, details, and of course opinions.  All of these means serve to fleece all of us in order to enrich a few:

1. War.  Our so-called "defense" department was sanitized from its former more accurate name "Department of War" back in 1947.  Our war-making consumes half of discretionary spending and we spend more than all other countries combined.  President Eisenhower warned us of the Congressional/Industrial/Military complex (later, as a courtesy, he dropped "Congressional").  We didn't heed his warning and now we're being bled to death by it in two ways.  First, multinational corporations now exploit our military as their free mafia-like "enforcer", allowing them to destroy their competition and take over markets in ways that would be illegal were they to do it themselves.  That's what Iraq was all about and what most of our involvement in the Middle East is all about:  oil & oil infrastructure.  Although it would be far less costly- financially and in human sacrifice - and phenomenally quicker to simply reduce our energy consumption, the current energy market titans wouldn't make any money that way.  And they own Congress.  Secondly, most of the products manufactured by the MIC have no spin-off economic effects; they end up idle, destroyed or abandoned in the sand.  If you build a new school in an under-served community, the effects are profound, immediate & long term as well.  A $35 mil. helicopter sitting on the tarmac in Afghanistan really helps us out here, doesn't it?  Every billion dollars spent on war cost us at least 3200 jobs.  See War Costs.
2. Which brings us to Energy and the Environment.  Current environmental & energy laws and policies guarantee the transfer of massive monetary and, more importantly, resource wealth from all of us to the coffers of a few.  Some decry regulations as too strict, stifling business, hurting the economy.  This isn't true but if even it were that is a short-term view.  Our lack of self-discipline & reverence for this Earth is nothing but thievery from our own futures as well as other living things on the globe.
3. Insurance industry.  I part ways with Senator Kucinich here.  The insurance industry is complex and varied.  There are real scoundrels as well as saints.  The important question is, who adds value and who simply siphons off profits?  The test of who adds value is this:  does the company provide insurance benefits, that is, transferring risk away from consumers?  I agree that health insurers add little to no value- and even subtract from -the health care transaction.  For far less in expenditures, a single payer system would produce better health results for all of us.  It is ridiculous, and astonishingly immoral, that we have people with health insurance still going bankrupt from medical bills.  Property insurers, annuity companies, life insurers, disability insurers all perform genuine insurance functions, giving us tremendous leverage for relatively little cost.
4. Wall Street & the Banksters- now larger and more powerful than before the last crash & subsequent financial "reform", these guys are shameless, paying themselves record bonuses out of bailout funds paid by . . . you and me!  Need I say more?  What we need is genuine transparency and tax rates for speculators that are the same as those for working stiffs.  Taxes, like death, are not fair.  They are necessary.  And currently our public revenue streams are abysmally inadequate for maintaining the infrastructure, the commons, necessary for a civilized society.
5. Money Supply-  I don't know enough about The Fed to weigh in here but I do know that our money supply never should have been privatized.  Just look what would have happened to Social Security if our trust fund had been handed over to Wall Street three years ago; it would be bankrupt now.

I hate to say it, but until the average American stands up for his and her best interests, nothing will change.

This is no Myth: Big hitters weigh in on annuities

In another blow to the lousy financial advice promulgated by Rupert Murdoch's media empire, three major sources have sung the praises of annuities.  Especially significant is how annuities can be used to help delay Social Security benefits to full retirement age.  I'll give my sources credit for this info.  See the following link:
Robert Powell from MarketWatch

Powell bases most of his remarks on recent studies completed by the GAO and Putnam investments.  He goes on to recommend that seniors have no more than "5-25%" of their money in the stock market to ensure they don't run out of money. 

This is even more conservative than my Rule of 100, which simply states that 100 minus your age is the percent of your assets you should have at risk in "the market" which, in my practice, includes the real estate market.  Most folks I meet with already have way too much at risk via their home equity.  Throw in their retirement savings and most are upside down in risk allocation.  Why take risk at all if you can generate sufficient lifetime income without taking any??   

Finally, A Financial Publisher with a Positive Spin on Annuities- Barron's

Go to this link to read for yourself a very intelligent (finally) appraisal of annuities, oddly enough, in the financial press:  http://webreprints.djreprints.com/44207.html
Advisers like myself who have been recommending annuities for the last four years don't need a journalist to tell us how good they are; we have direct experience.  Annuities are ideal for avoiding at least the following risks:

1. Market risk- Your principal is- or can be, even with variable annuities -protected from downside risk.
2. Inflation Risk- Stereotypically "safe" havens like CDs & bank savings accounts while FDIC insured nontheless guarantee that you will lose money due to inflation.  The returns on these types of accounts have historically nearly always lagged behind inflation.  Substantially.  Several annuity lifetime income riders available can guarantee increasing income that will outpace inflation.
3. Longevity risk-  In the days when we only lived 5-7 years beyond retirement, this wasn't much of a risk.  But now that we live 20 or even 30 years after retirement, the risk of running out of dough is substantial.  Laddered annuity income riders can guarantee lifetime income.

There is a caveat.  But it's a good one.  Because annuities are issued by insurance companies, they are regulated by each State's insurance department.  So availability varies widely from state to state.  Oregon is especially tough so a lot of the companies & products listed in the Barron's article are not available here.,

MYTH: "YOU CAN TRUST US!"

Even an old goat like myself can learn something new (several times a day, as a matter of fact).  Until today, I did not know there was such a thing as the Death Master File.  Although one may think this is one of Satan's nefarious databases, rather, it is issued weekly by the Social Security Administration (SSA).  Hey, wait a minute (kidding).  How is this file used?
Well, this is very clever.  Turns out John Hancock was brilliantly both using, and not using, the database to boost its profits.  Here's how:  John Hancock sells both life insurance and annuities.  Annuity companies are anxious to find deceased owners of annuitized contracts because then they can stop making payments; most annuitized income streams end at the death of the annuitant (unless more intelligently structured which, unfortunately, most aren't).  So Hancock was using the list to find people to whom they could cease writing checks.  That's how they used the list.
The way they chose to not use the list was for finding deceased life insurance owners.  Until the state of Florida caught them.  Suppose, for example, your late uncle owned a paid up life insurance policy naming you as a beneficiary.  Oregon, and virtually all other states, require all known unclaimed property to be reported to the State, even as little as twenty cents!  Hancock simply chose not to know.
So how would you know?  If no one could find the policy, who would know whether or where to submit a death claim?  And the policy was paid up so there would be no check register entries to clue you in.  Since Hancock already has the Death Master List, wouldn't they use it to the benefit of their customers, to notify the beneficiaries of the policy's existence?  I guess not.  As a result, millions of dollars of potential life insurance claims ended up as unclaimed property.  So Hancock agreed to set up a $10 mil. fund to pay past claims.  To be fair, Florida Insurance Commissioner Kevin McCarty believes this is a pervasive industry practice not John Hancock's exclusive scheme.  And, you can use the National Association of Insurance Commissioners' website to see if your newly departed had a life insurance policy.  I have no idea how reliable it is.
How can you prevent this from happening to your family?  (In Oregon there is over $350 mil. in unclaimed property which, by the way, earns interest that is paid to the Common School fund.)  Get one of my Getting Your Estate in Order booklets (have to come meet with me; too heavy to mail), which includes a complete financial records data sheet.  Or, simply get your will done and include a Letter of Instruction listing the locations and contact info. for all important policies, advisers & documents.  After all, the devil's in the details.

Myth: The Stock Market will always out-perform all other investment options

Yours truly used to spout this myth, about betting on the ingenuity and hard work of the American worker, that "productive America", (which at the time implied Wall Street & the Banksters as opposed to actual workers actually working) would perpetually deliver us the American dream.  I also used to- and still do -issue the caveat that past performance is no guarantee of future results.  How are those two positions supposed to fit together?  They don't.  Which is why I've since abandoned the first one.  Because there are universal laws which, for example, prevent trees from growing into outer space.  And trees don't lie.  Similar "laws" apply to the financial world, and let me emphasize "world".

As I sit here at my desk looking at the two major indexes- DJI and the S&P 500 -I note that the Dow is now lower than it was at the end of 2006 and has grown a total of 8% since the peak of 1/21/2000!  The S&P is at the same level as March 1999.  Yet practically all I hear from people is how they've "made a fortune" in the last year.  Granted, an index does not include dividends.  But neither does it include fees & taxes so I think it's a fair performance evaluation of what Wall Street is actually delivering:  astounding wealth to itself.

Suppose, to illustrate, you had invested $100,000 with your broker 11 years ago and paid the low average mutual fund annual fee of 1.3%.  In addition, your broker charged you the low average 1% management fee.  Right now your money is worth the same as it was 11 years ago.  But you've lost 25% of what you could have gotten because of commissions and fees (2.3% x 11 years)!    Study after study shows an inverse relationship between high management fees and performance.  What could you have done instead?

Wall Street "gurus" like Ken Fisher & financial narcissists like Suze Orman like to trash annuities because, as I've said before, annuities make them unnecessary, proverbial tits on a boar.  And rather expensive tits at that as we've seen above.  But hey, they've shown us theirs, I'll show you mine!
Let's pretend it's 11 years ago and you pay me an indexed annuity premium of $100,000 and opt for the 8% lifetime income rider at an annual cost of 0.45% (yes, less than half a percent), and, the S&P500 index crediting strategy.  Other fees, commissions and expenses total . . .  zero.  Today, your principal balance would be about $172,000.  You could also rest assured that it would never ever be less than that in the future, unless you take withdrawals.  And, if you were now 65, your guaranteed lifetime income- should you decide to turn it on, without surrendering your principal by the way -would be approximately $1000/mo.  Or, you could simply walk away with your $172,000 with no fees or penalties.  Aren't indexed annuities just absolutely evil?!  In fact, they are so evil and expensive that Americans gave in excess of $31,400,000,000 to indexed annuity companies last year.

Annuity terms aren't nearly as favorable these days because annuity companies by nature are extremely conservative; they present themselves as bastions of safety and rightly so. ( I know of no annuity owner who has lost money ever, unless they violated the provisions of their contract, such as excessive withdrawals or premature surrender.)  So, they have had to increase fees and/or reduce guarantees.  Even so, with $100,000 today at age 55 I can guarantee that in 10 years you will enjoy $11,442 annual income for life.  And even if the market tanks or is flat for the entire ten years, I can also guarantee you will walk away with no less than $129,213 if you choose that option instead of the income.  Try that with Wall Street or CDs from the Banksters!  Impossible.

Ken Fischer Part II- debunking "Debunkery"

It is clear that Ken Fisher dislikes annuities.  It is also clear why:  they make him unnecessary.
What is unclear is, "Then why do investors love them??"  Well because of:

• Protection of principal
• Predictable future minimum values
• Lack of market risk
• Guaranteed lifetime income
• Leveraged death benefits for heirs
• Inflation protection

I'm not saying one can have all of these features at once in the same annuity but it is possible to accomplish all these goals with an annuity portfolio or "laddered" annuities.  But that's not what this post is about.  I wanted to make just one quick comment about chapter 15 in "Debunkery".

Chapter 15 trashes Variable Annuities (VAs), which they mostly deserve.  But the chapter contained such a glaring error that it warrants examination.  The author (we don't really know if it's Ken Fisher) states that the annuity subaccounts or separate accounts are subject to the financial risk of the insurance company, which is not true.  That's why they are called "separate" accounts.  The insurance company can go bankrupt but your subaccounts will not go with them.
Plus, the vast majority of these annuities- to the credit of the advisers who sell them -are set up with one or more principal, growth or income guarantees.  I don't use VAs anymore because of the high fees necessary to avoid the volatility of the separate accounts.

Is Wall Street Guru Ken Fisher Losing It?

The most dangerous books are those with a lot of truths mixed with a lot of falsehoods.  The ironically named newly published "Debunkery" is one of those books.  Let me focus on just Chapter 16 for which I have particular abhorrence because it contains so much false information that should have been easily researched.  The chapter deals with Equity Indexed Annuities (EIAs) which I love.
1. Annuities are a tough sale "(that's why they pay such big commissions to salespeople!)" he chortles.  "Big" compared to what?  Yes, EIAs are such a tough sale that Wall Street lost over $60 billion to them in the last two years.  If Ken Fisher manages your money over a ten year period you will pay him far more in commissions.  Far more.  And you will pay it whether you gain or lose.  And his commissions will come out of your money, not his company's.  This is not only a false argument, it is irrelevant.  The key is, do EIAs deliver anything important?  $60 billion dollars think so.
2. The account value of EIAs "fluctuates up and down with the market like any other investment, albeit with much higher fees".  TOTALLY FALSE!  Your account value can never go backwards unless you make withdrawals.  I'll say it again:  Your account value can never go backwards unless you make withdrawals.  Which drives stock brokers like Ken Fisher crazy because they cannot make such a promise.
3. The best EIAs offer guaranteed lifetime income.  This is true.  But Fisher goes on to say, "The income base doesn't really apply unless you decide to surrender ownership of the account in return for regular distributions . . ."  Well actually it really does apply.  And you DO NOT SURRENDER OWNERSHIP OF THE ACCOUNT!  That was true maybe ten years ago Kenny.
4. "Participate in the stock market's upside with no downside risk!"  This is sort of true.  But actually you participate in a market index such as the S&P 500 or Russell 2000.  And yes, returns are "capped" or participation rates are limited.  But this fact is never "hidden in the details".  Never.  EIAs are not intended to compete with the gambler's greed that drives the stock market, they are intended to protect people FROM the market.
5. Finally, Ken goes on to describe a "very wretched" tactic of EIAs:  not including dividends in the S&P 500 index performance.  Well don't blame the annuity, blame the index which of course does not include dividends because it tracks only stock values.  To get dividends you have to actually own the stocks in the index.  EIAs don't put your money in stocks.  That's why they are safe!

Well, it was fun to debunk at least this one chapter.  But this is the most self-serving book of lies I've read in a long time.

Myth: America is Different From Ancient Rome

At this excellent post, six parallels are drawn between ancient Rome (Which- key point -doesn't exist anymore by the way, in case you missed the memo) and the USA:
http://www.progressivereader.com/?p=812
In addition to these six, I would add #0:  Massive and growing income and wealth disparity.  Wealth oils the economic engine and if too much lubricant languishes in the oil pan, key engine parts can seize up from oil disparity.  This metaphor doesn't dictate equal distribution, just sufficient distribution to keep all the parts moving together.  That should appease the Ayn Rand people.
I'll summarize the six key points from Cullen Murphy's book, "Are We Rome?, the fall of an empire and the fate of America", the six scary ways in which we're similar to that failed empire:

1. The way we look at ourselves- We think the rest of the world revolves around us.  "Unfortunately, it’s not a self-fulfilling prophecy—just a faulty premise."  Such arrogance, even if deserved- it isn't -blinds a society to its weaknesses as well as to lessons to be learned from other countries.  Can you say "national healthcare"?
2. The way we run our military- Two points here; the widening gap between our military and civilian societies and, closely related, a shortage of manpower.  Most of us feel no responsibility for the physical defense of our country, unlike Germany for example which has mandatory military service.  As a result, Rome had to hire "barbarians" (i.e. "enemies") which didn't make much sense and didn't work out that well either.  The USA has also hired barbarians:  Al-Qaeda, Haliburton, Whackenhut & Blackwater (now sanitized as "Xe Services LLC) to name a few.
3. The way we privatize (in other words, corrupt) public services-  As the book points out, aside from the conflicts of interest that result, when boundaries blur between public and private resources it becomes easier to privatize profits and socialize losses.  Is water a public resource?  How about tax revenue? Banking?  Yes, they are.  Or were.
4. The way we look at others-  Arrogance about our capabilities and capacities (based, I believe, in a pervasive inferiority complex) and disparagement of non-Americans has the result that "either we don’t see what’s coming at us, or, we don’t see what we’re hurtling toward.”  Or both and.  Dangerous.
5. The way we set our borders-  I'm not sure I agree this matters much, but the similarity is that we and Rome resist a mutually beneficial permeability with our neighbors.  We gnash our nationalistic teeth without asking whether we're harming ourselves or protecting ourselves.
6. The way we can't control consequences-  I would rephrase this to:  The way we think we can violate basic adult principles- e.g. fairness, compassion -without expecting our victims to react.  "Control" isn't really the issue anyway.  In fact, it is our resistance to being affected by the rest of the world that will be our demise.  As John Cage so aptly opined, "I don't know why people are so afraid of new ideas.  It's the old ones I'm afraid of."  But it is true; the larger and more complex we allow ourselves to become, the more susceptible we are to events beyond our control.  So in the face of that given, wouldn't it make sense to adhere to just a few ideals, like truth, justice and simplicity?

What's with Ameriprise anyway?

Due to complete lack of quality control, Ameriprise (actually its subsidiary broker-dealer, Securities America) was sued by investors when a couple of large Ponzi schemes were told to them by Securities America representatives.  Initially attempting to settle for five cents on the dollar, it appears the ante has been bumped up to about nineteen cents by all parties involved.  Investors will have to approve the settlement, however.
Let me ask you this, though.  Should the representatives who sold this junk have to return their commissions?  Because they won't have to, under this settlement.  I think they should.  That would add another $20-30 mil. to the settlement, by the way.  From what swamp did this gaseous ethic arise, that  it's OK to screw people and then reward one'sself for it?  Why is it still going on???
Well, because Congress let the Banksters & Wallstreet exempt themselves from a fiduciary standard of care with the public.  I have ranted at length about this word, "fiduciary", and will continue to do so until at least both the people who read my blog get it.  Look it up.  It is a good word.  Anyone who gives financial advice or sells financial products should have to meet this standard, which exceeds even the Golden Rule.

A Massively Wealthy King Motivates Us & Makes Us Feel Secure

Unfortunately, this myth is partially true.  Especially due to the manner in which mainstream media portrays what it means to be "wealthy" (having lots of stuff and power), most of us harbor an irrational belief that we, too, have a shot at it.  In truth, it's a snowball's chance in hell.
Non-mainstream publication Mother Jones, has an excellent article that was forwarded to me by one of my good progressive friends, which he titled "Something even a Tea Partier should be able to understand"
Sure it's important to have the hope of being well rewarded for hard work, brains & creativity.  But our current system merely rewards wealth with more wealth and power with more power, regardless of merit.  Exceptions abound, of course.  But they are few and far between.  The reality is that meritless accumulation of wealth is rampant while the highway to the American Dream is in shambles.  The attempted union busting in Wisconsin by the billionaire Koch brothers is a recent case in point.
So who cares?  Income disparity is a fact of life, right?  Yes, to a certain extent.  Until it becomes malignant mental illness.  Here's an interesting article "Why Income Disparity Matters", a post by Charles Wheelan.  The key comment, in my opinion:
"There's a very interesting strain of economic research showing that our sense of well-being is determined more by our relative wealth than by our absolute wealth.
In other words, we care less about how much money we have than we do about how much money we have relative to everyone else. In a fascinating survey, Cornell economist Robert Frank found that a majority of Americans would prefer to earn $100,000 while everyone else earns $85,000, rather than earning $110,000 while everyone else earns $200,000.
Think about it: People would prefer to have less stuff, as long as they have more stuff than the neighbors ."
Is it just me who thinks that's crazy, wacko, bananas, and amazing?  What's worse, with the super-rich, I believe they are not happy unless they have more than they did a year ago, or last month, or even yesterday regardless of how they compare to others.  They want to be kings and queens except without any sense of responsibility to or leadership of the very society that enables their wealth.  That is what's known as sociopathy.
If you research past very successful former civilizations, the number one reason for their demise was wealth disparity.  Are we headed down the same chute?

Large Corporations Need Tax Relief

I remind you, just to be sure, that these blog post headings are FALSE.  Alright.  According to a recent article at ThinkProgress,  if you have change in your coin purse, you possess more than the combined income tax liability of GE, ExxonMobil, Citibank, and the Bank of America, all of whom recently reported record-breaking profits and all of whom receive billions in subsidies from  . . .  you and me.

MONEY magazine gives good advice

Lest there be any possible misunderstanding, the heading of this post is a MYTH, OK?  A solid myth.
In a recent article, MONEY vilified Equity Indexed Annuities (EIAs) focusing, naturally, on the most sensational anecdotes, worst products, most corrupt advisers & most heinous practices.
Their main talking point was that there were a couple of options other than EIAs that have performed better over the last couple of years.  I don't dispute that.  Unfortunately, MONEY apparently didn't know what those options were in 2007 because in Ben Stein's "Perfect Portfolio" article he recommended 90% of your money be exposed to the market, 5% in real estate & 5% in energy.  He then goes on to recommend "20% of your portfolio in cash", (which adds up to 120% by the way).
So let's compare Ben's Perfect Portfolio with an equity indexed annuity between 2007 and 2011.  (I have to confess that it gives me great pleasure to write this next sentence.)  With $100,000 in Ben's portfolio you would still be down 30%, meaning you would need to gain 42.85% this year just to be even with where you were in 2007.  Impossible.  What if I had planned to retire this year, Ben?
In contrast, how would the EIA have performed?  With just the average mediocre EIA, you would now have no less than $115,829 assuming a 6% bonus & minimum guaranteed rate of 3%.  In addition, had you planned to retire this year, your Income Account Value would be $145,911 which would provide you with lifetime guaranteed income of $8025.yr.  (Try that with a CD)  At that rate of withdrawal, Ben's portfolio would run out in 8.7 years unless it enjoyed pretty hefty future returns.  Which is unlikely.  The key point here is that EIAs are for your safe money.  They are never intended to compete with aggressive growth portfolios, even though they coincidentally competed quite well over the last ten years.,
It's easy to look back in time and rag on someone else's advice.  But it's hypocritical to do so without applying the same magnifying glass to your own recommendations.  The vast majority of Registered Investment Advisers want the absolute best options they can find for their clients.  Too bad Wall Street can't make the same claim.

Favorite MLK Jr. Quote

"Even if I knew that tomorrow the world would go to pieces, I would still plant my apple tree."

There's no way to tell what Dr. King meant by that statement.  But I know it was more than Pollyannaish foolish optimism.  He's not saying he believes or has faith that the world will not go to pieces and will therefore plant a tree.  He's saying "even if I knew" things were falling apart he would still take the long view, get down in the dirt, and do something organic and basic.


If Armageddon were indeed upon us would you run around screaming, pulling your hair out?  Or simply continue trying to relieve suffering in the world by becoming more awake in that moment?

Studded Snow Tires are the safest

I've been harping on this myth ever since studless snow tires emerged on the market.  Here are the reasons I believe studless tires are safer than studded tires, and are more economical as well:

1. The feeling of safety from studded tires is more psychological than anything else, probably due to the aggressive sound of the studs destroying pavement.  At Tire Information World  studies are cited that studded tires have an advantage only in a narrow range of circumstances, which most drivers would rarely ever encounter.  Studless tire are equal to or better in most normal winter conditions.
2. Studed tires grind troughs in the road which are extremely hazardous, wet or dry.  Perhaps, as a result, they create more hazard than they prevent.  I could find no studies about the cost history of this hazard.
3. Consequently, tons of asphalt dust are spewed into the air, into our lungs and onto our agricultural crops.  It costs billions for states and municipalities to replace this material.  Who know the dollar value of the health effects.
4. Tire Info. World states that studless tires cost 50% more but that has not been my experience locally.  They are actually cheaper.  Regardless, studded tires should be taxed sufficiently to repair all the damage they cause, in which case they would cost even more.  It is unfair for the rest of us to subsidize this damage.
5. Studless tires accelerate & stop better than studded tires.
6. Studless tires have better traction on wet and dry pavement when temperatures are above freezing.  This is important because it is very common for people to keep their studs on clear through April, even though temperatures are above freezing most of the time.
7. As the studs wear down, the effectiveness of studded tires (already inferior or just equal to studless tires) diminishes.

Although it is merely anecdotal, my personal experience bears out all of the above.  I had a 4x4 rig with traditional studded tires on it & although it did better than with ordinary tires it still did poorly on black ice.  Our Subaru Forester, armed with Blizzaks, cruised up the road to Timberline lodge on solid unsanded black ice as if it were dry pavement.  I had at the very least expected to need some inclement weather driving skills.  But I didn't.  It was pleasantly boring instead.  You've all seen gouges in icy roads from spinning studded tires.  Those Blizzaks stuck to ice like glue.