NewsLetter - Volume 10, No. 3 - August 2017

HOW LONG?
Do you ever wonder how long you’ll be around? Check out www.livingto100.com for a reasonably good guess.

INTERESTING TAKE ON MUNIS

From Nuveen’s “Opportunities in Municipal Bonds” Moody’s Average Cumulative Default Rates, 1970–2015

LIFE IS TOUGH IN THE BIG LEAGUES

“Harvard University’s endowment is trying to sell about $2.5 billion of private equity, venture capital and real estate investments, according to a person familiar with the matter. Harvard Management Co., which oversees the university’s $35.7 billion endowment, has hired Cogent Partners, a unit of Greenhill & Co., to seek bidders in the secondary market, the person said. Harvard is shopping almost $1 billion of private equity and venture capital investments, and about $1.6 billion of real estate, the person said. The proposed sale was earlier reported by Axios. Harvard Management declined to comment. Cogent couldn’t immediately be reached for comment.

“Harvard Management, which runs the largest endowment in higher education, is in the midst of major changes after years of producing returns that trailed peers such as Yale University. Earlier this year it announced plans to downsize a staff of 230 people by half, shutter internal hedge funds and seek to spin out some portfolio managers, including bond and equities traders as well as a team overseeing real estate.” https://www.bloomberg.com/news/articles/2017-05-08/harvard-said-to-seek-sale-of-2-5-billionin-endowment-assets

FROM MY FRIEND PETER

LOTS OF THEM According to WealthManagement, millennials represent the largest generation in U.S. history.

According to WealthManagement, millennials represent the largest generation in U.S. history.

They also:

• Put off buying a home
  Percent of adults 18-31 married and living in their own home

  1968	1981	2007	2012
  56%	43%	27%	23%

  • Are unsure about the financial markets
  93% distrust markets and investment advice
  • Consequently, they are uncertain about owning equities
  Percent of stock allocation by generation
  

  Millennials	Non-Millennials
  33%	51%

I WONDER WHAT THE NEXT ITERATION WILL LOOK LIKE

Sources of federal revenue (Journal of Accountancy)

WHY TEACHERS DRINK

From my #1 son:

The following questions were included in last year's GED examination.

These are genuine answers (from 18-year-old students).

• Q. Name the four seasons? A. Salt, pepper, mustard, and vinegar.
• Q. How is dew formed? A. The sun shines down on the leaves and makes them
perspire.
• Q. What guarantees may a mortgage company insist on? A. If you are buying a house,
they will insist that you are well endowed.
• Q. In a democratic society, how important are elections? A. Very important. Sex can
only happen when a male gets an election.
• Q. What are steroids? A. Things for keeping carpets still on the stairs. (Shoot yourself
now, there is little hope.)
• Q. Name a major disease associated with cigarettes? A. Premature death.
• Q. What is artificial insemination? A. When the farmer does it to the bull instead of the
cow.
• Q. How can you delay milk turning sour? A. Keep it in the cow. (Simple, yet brilliant!)
• Q. How are the 20 main parts of the body categorized (e.g., the abdomen)? A. The
body is consisted into 3 parts — the brainium, the borax, and the abdominal cavity. The
brainium contains the brain, the borax contains the heart and lungs, and the
abdominal cavity contains the five bowels: A, E, I, O, and U.
• Q. What is the fibula? A. A small lie.
• Q. What does ‘varicose’ mean? A. Nearby.
Q. Give the meaning of the term ‘Caesarean section.’ A. The caesarean section is a
district in Rome.
• Q. What is a seizure? A Roman Emperor.
Q. What is a terminal illness? A. When you are sick at the airport. (Irrefutable!)
• Q. What does the word ‘benign’ mean? A. Benign is what you will be after you be
eight. (Brilliant!)
• AND THE BEST IS LAST: Q. What is a turbine? A. Something an Arab or Sheik wears
on his head. Once an Arab boy reaches puberty, he removes his diaper and wraps it
around his head.

THIS IS AMAZING!

From my friend Leon: This painting is truly remarkable. Even more amazing though, is that the canvas has been computerized. When you click on the link below, a much bigger version of the computerized painting appears. Run your cursor over the people. The program tells you who they are — every single one of them. Click on a person and you can read the individual’s life history. http://cliptank.com/PeopleofInfluencePainting.htm

ONE MORE BITES THE DUST
Before you decide that you should be in “sophisticated institutional private equity” investments, remember this recent story from the NY Times. “Oil Bets Doom Texas Fund … A $2 billion EnerVest fund is all but tapped, erasing investments by pensions, charities.”

“A $2 billion private-equity fund borrowed heavily to buy oil and gas wells before energy
plunged is now worth essentially nothing.”

SOBERING

From Planadvisor:

• 74% of Americans underestimate how much they will need for a comfortable retirement
• 79% of Americans have never hired a financial professional (I think I see a relationship
here)
• Only 19% have a long-term financial plan
Even the very wealthy worry
• 28.8% of those with a net worth of $5 million or more are concerned that they may
have too little money to carry them through retirement.

TWO GREAT CHARTS FROM JP MORGAN

The first is a sobering reminder that significant losses can hurt far more than most investors realize.

The second is a powerful reminder that time and diversification should be the core of your investment planning.

WHY?

Also from my friend Leon:

• Why do men’s clothes have buttons on the right while women’s clothes have buttons on the left? When buttons were invented, they were very expensive and worn primarily by the rich. Since most people are right-handed, it is easier to push buttons on the right through holes on the left. Because wealthy women were dressed by maids, dressmakers put the buttons on the maid’s right! That’s where women’s buttons have remained since.
• Why are zero scores in tennis called ‘love’? In France, where tennis became popular, the round zero on the scoreboard looked like an egg and was called ‘l’oeuf,’ which is French for ‘the egg.’ When tennis was introduced in the U.S., Americans (naturally) mispronounced it ‘love.’
• Why do Xs at the end of a letter signify kisses? In the Middle Ages, when many people were unable to read or write, documents were often signed using an X. Kissing the X represented an oath to fulfill obligations specified in the document. The X and the kiss eventually became synonymous.
• Why is shifting responsibility to someone else called ‘passing the buck’? In card games, it was once customary to pass an item, called a buck, from player to player to indicate whose turn it was to deal. If a player did not wish to assume the responsibility of dealing, he would ‘pass the buck’ to the next player.
• Why are people in the public eye said to be ‘in the limelight’? Invented in 1825, limelight was used in lighthouses and theatres by burning a cylinder of lime which produced a brilliant light. In the theatre, a performer ‘in the limelight’ was the center of attention.

WHAT GOES UP MAY GO DOWN (AND VICE VERSA)

Some interesting flip flops in performance:

LOOKS LIKE A TREND

From MarketWatch http://www.marketwatch.com/story/investors-flock-to-vanguard-funds-dumpgoldman-wells-fargo-and-others-2017-07-11:

Morningstar looked at products from 852 fund families, and of those, only five had inflows of more than $10 billion so far in 2017. (In addition to Vanguard and iShares, they were Dimensional Fund Advisors, Pimco, and Schwab ETFs.) More than half the fund families — 439, amounting to 51.5% — had outflows.

The investment management giant has taken in more than $177.3 billion in inflows across its products thus far in 2017, according to Morningstar data. That’s about as much as its 10 closest competitors combined. Vanguard’s dominance is a byproduct of investors moving en masse to passive products, which simply track an index like. We’re not surprised. We’ve been in the passive, iShare, and DFA camps for a LONG time.

HARD TO BELIEVE, BUT FOR REAL

From TripAdvisor via my friend Marc Freedman’s “Planning Pointers” Newsletter — real complaints from travelers:

• On my holiday to Goa in India, I was disgusted to find that almost every restaurant served curry. I don’t like spicy food.
• They should not allow topless sunbathing on the beach. It was very distracting for my husband who just wanted to relax.
• We went on holiday to Spain and had a problem with the taxi drivers as they were all Spanish.
• The beach was too sandy. We had to clean everything when we returned to our room.
• It’s lazy of the local shopkeepers in Puerto Vallarta to close in the afternoons. I often needed to buy things during ‘siesta’ time — this should be banned.
• No one told us there would be fish in the water. The children were scared.
• Although the brochure said that there was a fully-equipped kitchen, there was no egg slicer in the drawers.
• I think it should be explained in the brochure that the local convenience store does not sell proper biscuits like custard creams or ginger nuts.
• It took us nine hours to fly home from Jamaica to England. It took the Americans only three hours to get home. This seems unfair.
• I compared the size of our one-bedroom suite to our friends’ three-bedroom and ours was significantly smaller.
• When we were in Spain, there were too many Spanish people there.
• My fiancée and I requested twin beds when we booked, but instead we were placed in a room with a king bed. We now hold you responsible and want to be reimbursed for the fact that I became pregnant. This would not have happened if you had put us in the room that we booked.

WHY INVESTORS SHOULDN’T IGNORE THE REST OF THE WORLD (also from JP Morgan)

(also from JP Morgan)

FOOD FOR THOUGHT

From my friend Judy. If you’re not familiar with the work of Steven Wright, he’s the famous erudite comic scientist who once said, “I woke up one morning, and all of my stuff had been stolen and replaced by exact duplicates.”

• Half the people you know are below average.
• A clear conscience is usually the sign of a bad memory.
• If you want the rainbow, you have got to put up with the rain.
• Okay, so what’s the speed of dark?
• How do you tell when you’re out of invisible ink?
• If everything seems to be going well, you have obviously overlooked something.
• When everything is coming your way, you’re in the wrong lane.
• Hard work pays off in the future; laziness pays off now.
• I intend to live forever.... So far, so good.
• Why do psychics have to ask you for your name?
• If at first you don’t succeed, destroy all evidence that you tried.
• The hardness of the butter is proportional to the softness of the bread.
• To steal ideas from one person is plagiarism; to steal from many is research.
• The problem with the gene pool is that there is no lifeguard.
• The sooner you fall behind, the more time you’ll have to catch up.
• The colder the X-ray table, the more of your body is required to be on it.
• Everyone has a photographic memory; some just don’t have film.
• If at first you don’t succeed, skydiving is not for you.

SECOND BITE AT THE APPLE

I noted this in my last NewsLetter but subsequently received this picture, so I figured, why not?

The J. Richard Joyner Wealth Management Impact Award honors individuals who have contributed exceptional advancements in the field of private wealth management, embodied by IMCA’s Certified Private Wealth Advisor® (CPWA®) program. The award recognizes key innovations and thought leadership in any of the following CPWA knowledge domains: human dynamics, wealth management strategies, client specialization, and legacy planning. The 2017 recipient of the J. Richard Joyner Wealth Management Impact Award is Harold Evensky, CFP®, chairman, Evensky & Katz, a more than 30-year-old fee-only investment advisory firm, and professor of practice in personal financial planning at Texas Tech University.

Hope you enjoyed,
Harold Evensky
Chairman
Evensky & Katz / Foldes Financial Wealth Management

© Evensky & Katz / Foldes Financial Wealth Management

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