Dear Reader:


I must admit, I’m somewhat of a Neanderthal when it comes to Twitter, but the good news is that I have some really sharp associates who know their stuff, so we now have our own E&K Twitter account. I look forward to you joining us. Follow us @EvenskyKatz.


I admit it, I do occasionally pick on MoneyMagazine and other consumer financial publications, but as I’ve written in the past, for the most part, Money does a great job of educating consumers. Its story on Lessons from the Crash “Lehman Brothers’ collapse in September 2008 sent stocks on a terrifying ride. A year-by-year look back reveals five key takeaways you need to heed today” is an excellent example. Here are Money’s “Lessons.”

  • You can’t bank on any one sector – even banks.
  • Buy and hold works eventually – as subsequent market performance has demonstrated, the proof is in the pudding. Market timers are still waiting for an “opportune” time to renter the market. Their problem is, it’s TOO HIGH.
  • Reaching for yield can lead to a fall. Once again, all too many investors confuse certainty with safety.
  • Diversification works in diverse ways. Spread your bets globally.
  • Stocks always recover; people don’t. Plan for short-term cash flow needs and keep those funds out of the markets.


“Some of us feel we are in a circular firing squad.” W. Virginia Republican Rep. Shelly Moore Capito, about the government shutdown. Reader’sDigest.


I read a Q&A in USAToday answering the question “Why do fines against investment bankers never seem to matter?” Part of the answer was “…the fines are pretty insignificant for firms of this size. For instance, in August the SEC charged UBS Securities with violating securities laws with the sale of certain debt securities. The monetary penalty was $50 million, which is pretty insignificant for a firm that earned $4.4 billion last year. I translated that into our world and realized it would get my attention. Not something I’d care to pay, but not much of a barrier to an unscrupulous practitioner who could make ten times that much being dishonest. I’m in the camp that believes Wall Street needs to have its feet held much closer to the fire when a firm goes astray.


In case you’ve not been paying attention, Goldman Sachs will replace Bank of America on the Dow Jones Industrial Average as the index looks to give financial services greater representation. Also, the 30-member index, which allots influence based on price rather than market value, removed three companies with the lowest stock price, including Hewlett-Packard and Alcoa, and also added Visa and Nike in its largest shift since April 2004.


At least if you’re a parent or grandparent you will enjoy this. These are a few examples from the “27 ReasonsWhyParentsShouldn’tBe Allowed To Text” that friend Mary Bell posted on Facebook.


Who knew?


According to the Journalof Indexes, it seems that MSCI (the creator/manager of many of the most used market indexes) has demoted Greece from its Developed Market status to Emerging Market. It was a fairly short ride as it only made the Developed Market list in 2001. Unfortunately it won’t be joining Morocco as those poor folks were demoted from Emerging to Frontier Market. On the other hand, Qatar and the United Arab Emirates have been promoted from Frontier Market status to join Greece in the Emerging Market universe. Potentially bigger news is that MSCI reported it’s beginning the review of the mainland Chinese market for possible inclusion in the Emerging Market index. Today it includes Hong Kong companies that represent 18% of the index. The addition of China would bring China’s total index percentage up to a whopping 32%.


Selecting health care coverage is getting more complex than building a spaceship but my friend Peter sent me a link to a site that seems pretty helpful:

Below is an example from around our Miami office.


According to Financial Advisor Magazine, Dollar Millionaires by Country of Residence:























Restofthe World



Do you wonder why I’m so concerned about the implementation of a fiduciary standard for everyone providing financial advice? Here are a few items listed in the Wall Street Journal’s “What’s News” column on page one for a single day.

  • The potential cost of JPMorgan’s settlement reached $11 billion after Holder rejected the bank’s $3 billion offer to end charges (later reports set it at $13 billion).
  • ICAP became the fourth firm to settle rate-rigging allegations with regulators.
  • Citigroup will pay Freddie $395 million in a settlement over defective mortgages.

That was followed by this just a few days later:

  • JPMorgan has agreed to pay $5.1 billion to Fannie Mae and Freddie Mac to resolve claims stemming from the housing bubble, federal housing regulators announced.

The final JPMorgan mortgage story is:

JPMorgan will pay a record $13 billion to resolve U.S. probes into the bank’s sale of mortgage bonds that officials said helped feed the financial chaos of 2008.

The accord settles allegations that JPMorgan, the biggest U.S. lender by assets, misled investors and the public when it sold bonds backed by faulty residential mortgages, according to a Justice Department statement today. U.S. and state officials blamed the bank’s actions in the statement for helping to cause the credit crisis, and said the settlement doesn’t shield JPMorgan or its employees from criminal charges. JPMorgan Chase & Co. still faces probes by the U.S. Justice Department that include its energy-trading business, recruiting practices in Asia and its relationship with convicted Ponzi scheme operator Bernard Madoff.

I obviously don’t understand how the law works. If we ever did something that would rise to the level of these fines, at best we’d lose the ability to stay active in the financial services world and we’d be lucky not to end up in jail. Go figure.


Earlier this year Deena and I had the privilege of speaking to the Brazilian Financial Planning Association in San Paulo and a few months ago a team of practitioners reciprocated by visiting our office.


It is a bit lengthy, but really incredible what they did at the laser show. It is a beam show which appears three dimensional unlike a projection show.


This is the transcript of the radio conversation of a U.S. naval ship with the Canadian authorities off the coast of Newfoundland in October 1995.

  • Canadians: Please divert your course 15 degrees to the south to avoid a collision.
  • Americans: Recommend you divert your course 15 degrees to the north to avoid a collision. Canadians: Negative. You will have to divert your course 15 degrees to the south to avoid a collision.
  • Americans: This is the Captain of a U.S. Navy ship. I say again, divert YOUR course.
  • Canadians: No. I say again, you divert YOUR course.
  • Americans: This is the aircraft carrier U.S.S. Lincoln, the second-largest ship in the United States’ Atlantic fleet. We are accompanied by three destroyers, three cruisers and numerous support vessels. I demand that you change your course 15 degrees north, I say again, that’s one-five degrees north, or countermeasures will be undertaken to ensure the safety of this ship.
  • Canadians: We are a lighthouse. It’s your call.

Before anyone writes to correct me, I know Snopes says it’s an urban legend dating back to at least the ’30s. Still, I think it’s a great story.


Here’s a recent headline from InvestmentNews. “Under new structure, fewer MetLife advisers pushed to produce more.” The story went on to say:

MetLife Inc. is revamping its distribution group, giving its two remaining broker-dealers higher required minimum production levels with the expectations of selling more proprietary products with fewer reps…. Last year, brokers needed to generate $60,000 in production to make their minimum. That number is now $90,000

  • and of that, at least $60,000 must come from proprietary products …” [My emphasis]

Caveat Emptor

Reminder, if you or a friend want to avoid working with an advisor who may face significant conflicts of interest, just have the advisor sign the Committee for The Fiduciary Standard, simply a mom-and-pop commitment to place their client’s interest first. Here’s what it says:


I believe in placing your best interests first. Therefore, I am proud to commit to the following five principles:

  • I will always put your best interests first.
  • I will act with prudence; that is, with the skill, care, diligence, and good judgment of a professional.
  • I will not mislead you, and I will provide conspicuous, full, and fair disclosure of all important facts.
  • I will avoid conflicts of interest.
  • I will fully disclose and fairly manage, in your favor, any unavoidable conflicts.

If you’d like a copy just drop me a note ([email protected]).


  • Volkswagen expects to be the world’s number one by 2018. ( BusinessLife )
  • 1,600,000 pounds – the estimated amount of Makara cinnamon used by Cinnabon in 2013. ( BW )
  • The Texas pickup truck market is #1 – three times larger then the next three – California, Oklahoma, and Florida.
  • According to a recent Harris poll, the expected retirement age of U.S. workers is now 67.1. That’s up 2.6 years from five years ago. ( Employee Benefit News )
  • It takes 10,000 doses of cleaning product, four tons of cleaning rags, and 25,000 trash bags to annually polish the Eiffel Tower. ( Reader’sDigest )


If you’re not retired and are still working I’ll bet you can. As always, thanks to Dr. Fields for the fun stuff.


More fun stuff from Dr. Fields:

  • “You know why a politician is like a banana?” “He comes in and first he is green, then he turns yellow, and then he’s rotten.”
  • “I think Congressmen should wear uniforms, you know, like NASCAR drivers, so we could identify their corporate sponsors.”
  • The reason politicians try so hard to get re-elected is that they would hate to have to make a living under the laws they’ve passed.


According to a Bloomberg report, the CPI (i.e., the main inflation measure) is up 7% since 2008. Here’s how different expense categories faired:


  • Televisions ………………..-66%
  • Toys…………………………-23%
  • Gasoline……………………. -6%
  • Novels………………………. -5%
  • WINE!! ………………………..0%


  • Cigarettes ………………….48%
  • Hospital Services ………..34% (I wonder if there is a correlation?)
  • Roast Beef …………………22%
  • Nursing Homes …………16%
  • Cable & Satellite TV …….14%


From Registered Rep’s “The REPINDEX”

  • Portion of the U.S. stock-market activity that is made up of computer-assisted microtrades: one-half
  • Estimated time, in seconds, by which a new transatlantic fiber optic cable will reduce the time to make a trade between New York and London: 0.0049
  • Rank of the Fortune 500 if it were a country among the largest economies in the world: 2nd
  • Number of U.S. retail jobs Taco Bell created by rolling out Doritos Locos tacos: 15,000
  • Number of retail jobs created by Apple in the same period: 400


Something older than me! (I was born in Memphis.)

Main Street in Memphis 1910

Wall Street in 1911

5th Avenue in 1914


Gene Fama, the newest recepient of the Economics Nobel, was recently asked about active management. His response: “Active management is a zero-sum game.” Then he was asked about alternative investments; his answer – “I can’t figure out why anyone invests in active management, so asking me about hedge funds is just an extreme version of the same question…. my advice would be to avoid high fees. So you can forget about hedge funds.”


According to a UBS survey, wealthy investors don’t see themselves as “old” until they’re 80. Of course, by the time I reach 80, I figure “old” will be 90+.


From the same list

  • Total inflation-adjusted amount an average single man who turned 65 in 2010 contributed to Medicare: $61,000
  • Amount he can expect to receive in benefits: $180,000 – Hmm, seems to be a bit of a shortfall.
  • Number of U.S. states whose highest-paid public employee is a sports coach: 37
  • Rank of the U.S. among industralized nations with the most women on corporate boards (Norway is #1):11th


It’s been a great year for the firm with lots of accolades. How could I not share? I can’t, so here we go….

Evensky & Katz received the InvestmentNews Best Practices Award for the firm’s outstanding use of technology.

At the Financial Planning Association National Convention, Deena and I received the Heart of Financial Planning Award recognizing “individual professionals, financial planning firms, organizations who engage in extraordinary work, contributing and giving back to the planning community and public through financial planning. Recipients embody the spirit of financial planning and also represent FPA’s Core Values.”

Katie Salter received the Volunteer Center of Lubbock’s Young Adult “Get Involved” Award for Outstanding Volunteerism and Community Service.

Best of all, Evensky & Katz (E&K) was awarded the prestigious Charles Schwab & Co., Inc. 2013 Trailblazer IMPACT Award™.The Trailblazer Award is one of three IMPACT Awards given annually to celebrate excellence in the independent investment advisory community. The Trailblazer IMPACT Award™ recognizes an independent advisory firm that is setting new ground in the RIA space by combining entrepreneurial spirit with a drive to advance the industry’s interests as a whole.

Here’s a video…

That’s a wrap for 2013. I wish everyone a very Happy and Healthy New Year (and don’t forget to eat your black-eye peas and cabbage). See you in 2014!!

Cordially yours,

Harold Evensky, CFP®, AIF® President

© Evensky & Katz

© Evensky & Katz / Foldes Financial Wealth Management

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