Bob Carlson

September 2, 2014

Is Multi-Level Marketing In Your Future

Filed under: Retirement - General — Bob @ 5:20 pm

Here’s an interesting article explaining why the author believes that multilevel marketing companies will grow rapidly in coming years. His basic theory is that as the boomers retire from their main careers they will be looking for activities that will keep them busy and socially active while making some money. He thinks multilevel marketing will fit the bill for many. He believes that making big money and being one of the top producers isn’t the goal of many people and that legitimate multilevel marketing programs can help many boomers achieve some of their goals.

Daria M. Brezinski Ph.D, a practicing psychologist and former marketing director for a multi-level marketing magazine, echoes these sentiments.  “Many people don’t realize that multi-level marketing companies are successful because they help people satisfy a number of important human needs, including feeling significant, having connections, learning something new, and making a difference.  I have heard people in network marketing say again and again, ‘I’m doing this because I’m meeting amazing people … making so many connections … and I feel so good about myself.’”

46 Amazing Photos

Filed under: Retirement - General — Bob @ 12:20 pm

This has nothing to do with your finances or retirement, but it’s entertaining and worth a few minutes of your time.

New Highs Mean More Gains to Come?

Filed under: Asset Allocation — Bob @ 8:24 am

What happens after stock indexes reach new milestones? In general, a trend that’s in motion stays in motion. Read this summary and see the table. Of course, these are averages. The current period doesn’t have to conform to the average or normal path.

Two weeks after the passing of such a big, round number, the S&P 500 averages a 1% gain and is positive 79% of the time, according to Mr. Gassaway. Three months later, the index averages a 3.6% gain and is positive 89% of the time. When the S&P 500 surpassed 1900 back in May, it rallied for another five straight days and nine of the next 10.

August 29, 2014

The Fed and Market Manipulation

Filed under: Asset Allocation — Bob @ 5:17 pm

It is taken as a given by most that monetary policy affects market returns. But here’s a summary of an academic paper that goes further. It concludes that most of the equity risk premium (or excess returns from stocks) are earned about the Fed Open Market Committee’s meeting schedule. The authors say their data is robust and imply you could improve investment returns by weighting your portfolio based on the meeting schedule.

The equity premium is earned entirely in weeks 0, 2, 4 and 6 in FOMC cycle time (with week 0 starting the day before a scheduled FOMC announcement day). We show that this pattern is likely to reflect a risk premium for news (about monetary policy or the macro economy) coming from the Federal Reserve

The End of Your 401(k) Brokerage Window

Filed under: Retirement - General — Bob @ 12:20 pm

There’s one really good way to deal with a 401(k) plan that has bad investment choices. If the plan has one, use its brokerage window. This is the option to bypass the plan’s choices and buy other funds and investments through a brokerage account within the plan. The plan decides which broker you can use, what the fees will be, and how broad your investment options are. Some plans allow you to buy anything offered by the broker. Others limit members to mutual funds and perhaps a few other investments.

The Department of Labor, which doesn’t like choice in 401(k) plans and thinks investors need to be protected from themselves, makes periodic attempts to limit or eliminate brokerage windows. The latest is effort is a simple request for people to submit comments and suggestions on standards for brokerage windows in 401(k) plans. I have a suspicion that after DOL reviews the comments and adds its own analysis, it will conclude that brokerage windows or a problem that needs a solution. You can read some details here. At the end of the post is information on where to send your comments on the issue.

The DOL wants to know more about brokerage window costs, the role of advisers, and employers’ fiduciary duties. Some sample questions: Is there evidence of good or poor decision-making and outcomes by those participants using brokerage windows? How do plan fiduciaries monitor investments made through their plan’s brokerage window, if at all? To what extent are brokerage windows effectively subsidized by plan participants other than those participating in the brokerage window?

Knowing the S&P 500

Filed under: Asset Allocation,Investing — Bob @ 8:20 am

As part of the passive vs. active investing discussion, the composition of stock indexes doesn’t receive a lot of attention. It should. The indexes usually are referred to as “the market.” They aren’t. Indexes are portfolios constructed by people making choices, just as actively managed portfolios are. This post gives a brief but interesting history of the highlights of the S&P 500, including a few details of how it is constructed.

S&P originally tracked 233 stocks, but it was too hard to maintain daily or hourly quotes on that many stocks before computers, so the S&P 90 was created in 1928.  The S&P 90 was 50 industrial stocks, 20 railroad stocks, and 20 utility stocks, and performance data was made available as often as hourly. S&P also kept track of the original 233 stocks, but reported on them weekly.

August 28, 2014

Paying for Corporate Welfare

Filed under: Economy — Bob @ 5:20 pm

Not many people know about the sugar subsidy. They don’t know how their consumer and tax dollars have enriched a very small group of people through price, production, and import controls. Because of a surplus of sugar-related crops this year, the subsidy is making some noise. It’s going to cost taxpayers a lot more than in the past. In addition, it turns out there’s a double subsidy involved. Read this editorial from

But like most subsidies, and U.S. agricultural policy more broadly, the program benefits the few at the expense of everyone else. Each year, the federal government bestows $25 billion in handouts on the farm industry. Most of it goes to large agribusinesses and farmers who on average earn much more than the average American. According to one analysis, about three-fourths of all agriculture subsidies go to just 10 percent of the nation’s farms.

What’s more, consumers end up paying twice — first as taxpayers, and then at the supermarket, where inflated sugar prices cost shoppers an extra $3.5 billion a year, according to an Iowa State University study. Meanwhile, the U.S. sugar market remains protected from the lower prices that prevail around the world: Because of import restrictions, U.S. prices are higher than the world market price of about 18.8 cents a pound.

Is Unemployment Different This Time?

Filed under: Economy — Bob @ 12:20 pm

Since 2009 there’s been a lot of discussion about how unemployment is different than in past recessions. The long-term employed, in particular, are said to be in much worse straits than in previous downturns. This article discusses research that says it isn’t really that case. Unlike other research, this study used Social Security data rather than surveys of people who were willing to answer a survey and assume the questions are answered accurately. The paper has a lot of conclusions, but here are the key ones:

As the paper puts it:

There is no evidence that the rate of exit from long term nonemployment has slowed during the Great Recession compared to the patterns in all episodes since the 1990s.

But this is not all good news:

Based on the average survivor curve for the more recent period, about half the gap should have disappeared five years after the initial decline, and roughly 60% of the gap ten years after. Thus, five to ten years after the Great Recession the employment population ratio would be predicted to be 1 to 2 percentage points lower than it was before the recession.

If past patterns hold — and they mostly seem to be — we should expect some additional members of the ultra-long-term non-employed who are sitting on the sidelines of the job market to eventually re-enter the labor force as the economy continues to grow. Cold comfort for everyone else, although it should be reassuring to policymakers concerned that something unusual might prevent the labour market from reabsorbing the jobless.

Where Your Dollar Goes Farthest

Filed under: Cash Management,Economy — Bob @ 8:20 am

Here’s an interesting post that tries to compare the cost of living in different parts of the U.S. The basis of the article is data from the government’s Bureau of Economic Analysis and a report using that data from the Tax Foundation. Not surprisingly, it indicates that the cost of living, or the value of your dollar, varies greatly around the country. It has several interesting ways of looking at the data. Click through the article to the Tax Foundation report for even more detail.

The differences from one place to another are even more striking if you look at the cost of living in different metropolitan areas. In New York City, for instance, $100 will buy just $81.83 worth of goods and services, even less than the already-skimpy statewide average of $86.66. The Tax Foundation report notes that, adjusted for prices, real incomes are higher in Kansas than in New York or San Jose, despite those cities’ far higher nominal salaries.

“A person who makes $40,000 a year after taxes in Kentucky would need to have after-tax earnings of $53,000 in Washington, D.C. just to have an equal standard of living, let alone feel richer,” notes the report—and Washington doesn’t even make the Tax Foundation’s list of the five metro areas where $100 buys the least: Honolulu; New York/Newark/Jersey City; San Jose/Sunnyvale/Santa Clara; Bridgeport/Stamford/Norwalk (CT); and San Francisco/Oakland/Hayward.

August 27, 2014

Meditation, Yoga, and the Like

Filed under: Health — Bob @ 5:20 pm

Scientific evidence appears to be accumulating that some form of these exercises can improve physical and mental health, and especially mental performance. This article summarizes some research on meditation, but you can find similar research favoring different forms of yoga, prayer, and similar practices.

Harris cites another study out of Yale that shows evidence of meditation’s ability to train the brain to block out stressful digressions and instead focus on the here and now. This ability to shush the distracting voices in your head is why groups ranging from U.S. Marines to Olympic Athletes to elementary schoolchildren have all taken up the practice.

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