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Time for the counterintuitive investor to look for losers

The fact that mutual funds investing in small companies have been lagging the rest of the stock market for the past year prompted me to recall the situation back in 1999. That year marked the swan song of the dot-com boom. Small cap value funds earned zero for the year while Large Cap Growth funds averaged a 60 percent return. The Janus mutual fund company, which offered a number of successful growth-oriented funds, was capturing over one-third of all the new money invested in the entire mutual fund industry.

Justice gets served

In spite of my skepticism regarding the ability of new regulations to avert another financial meltdown, I have to admit that we seem to be making progress. At least we can, in the words of Archibald Cox, "take joy in the endeavor." Cox was the Watergate Special Prosecutor who was fired by President Nixon in what became the "Saturday Night massacre." Later, in a speech to young workers experiencing low morale, if not absolute despair, at what they were experiencing in Washington politics at the time, he pointed out that success came incrementally.

Too Big to Fail But Failing Anyway? Walk the Plank

I have a soft spot for so-called “gadflies,” so I was pleased to read in the New York Times about Stanford finance professor Ms. Anat Admati who is striking fear and loathing into the hearts of those “too-big-to-fail” banks. What prompts the latter’s angst is the contention that they should increase their ratio of stockholders’ equity to loan proceeds beyond the 5 percent dictated by the famous Dodd-Frank banking reform act. “Add perhaps another zero,” says Admati.

Exercise and diet can pay big dividends

For all that readers may have learned about the financial preparations that improve retired life, any accumulation of money management expertise becomes a moot point in the face of serious health problems that might have otherwise been avoided. It's not just that we might die before enjoying many retirement years. It's more debilitating when the quality of retired life is adversely impacted by persistent health problems.

Putting my money on Yellen

Five years ago, experts writing for the Wall Street Journal editorial page predicted that inflation and interest rates would be going up soon because of the government's massive deficit spending. Experience would suggest that interest rates can't stay this low forever. However, we're still waiting for the long-predicted "spike" in inflation rates to start happening, and in the meantime, interest rates have adopted a life of their own. They ignore pundits and remain stubbornly low.

Long-term care policies and your rights

When it comes to long-term care insurance, regular readers will recall my negative feelings on the subject, but with my father approaching two years in a nursing home, I'm beginning to see how insuring this cost can make sense for many Americans. My "go-to-guy" for advice on the subject is Allen Hamm of Pleasanton, who wrote the definitive book: "How to Plan for Long-Term Care."

The choice is yours

Today's question for retirees is the classic, "How much of my retirement account should I leave in cash so I won't have to sell income-producing assets in a down market?" Like so many answers regarding money, "It all depends."

Taxes - Does Anyone Pay them Anymore?

I love what I hear about the new Commissioner of the Internal Revenue Service. He sounds like the kind of person that will go after what the July 6th New York Times editorial cited as the $385 billion ANNUAL shortfall between what taxpayers owe and what they pay. The Commissioner, like me, is of Finnish descent which means that he traces his roots to Genghis Kahn and the Mongolian hoards.

Financial Insight from American History

The so-called "Prudent Man Rule" defined how someone was supposed to invest when they were charged with managing Other People’s Money. The term "fiduciary" today describes someone who presides over a managed pool of money and who is legally obligated to act in the sole interest of the beneficiaries of that money. The concept has been around for a long time. It goes back to the court case in 1831, Amory vs. Harvard College, which ruled that a fiduciary should act as "any prudent man." So the two terms became intertwined at that point.

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