15 Year Mortgages

A very interesting article on the growing popularity of 15 year mortgages. Good to see home equity being built the old fashioned way...by paying down the debt. Perhaps this signals a change in attitude about housing and debt. Hope so.

When Bad means Good

Industry observer Mark Hulbert writes today about how bad sentiment may actually be a good thing. Maybe so but over-pessimism (or over optimism for that matter) can be a problem in maintaining the balance and discipline needed for a long term focus. People seems to be attracted to doomsday scenarios and prognosticators in skittish times.

Housing...again

We are a country obsessed with housing and home ownership as a fundamental segment of the American dream. This article by John Tamny makes some interesting observations , the most important perhaps being the need "to be untethered". We certainly need a workforce that can move where capital does and that often means renting instead of owning. Houses can be homes for family and friends but usually are not great investments per se. The past 3 or 4 years have certainly taught us that truth.

Huge Risks for Fixed Income Investors

Professor Siegel outlines the very real risks bond investors have in the market today. Investors scared of stocks have rushed into bonds and bond funds that carry a.) low yields and b.) huge capital loss risks. Because so few investors understand the true risks in these "safe" investments the upcoming period could be very traumatic . The proper role of fixed income is to act as a stabilizer or smoother of portfolio volatility. That is how we use it here.

Getting Older,Spending Less

This piece appear in the WSJ over the weekend. 2 very good points- first, that retirees either have to accept lower yields/returns from fixed income or stay in the market which is by definition "riskier". Second, at least the survey quoted indicates that retirement spending is starting to decline in purchasing power (inflation adjusted) terms. That is positive news indeed as spending has widely outpaced inflation from what we see in our practice.

Five Expenses that Add up

This short bullet point piece is one of the best I have seen. The simple rules of thumb are good broad guidelines that I largely agree with. Most people know the house and car ones but the middle two , which I think really are 1 regarding kids and higher education ring so true. We tell folks all the time you (or your kids) can finance college but you can't finance retirement. Good reading .

The Tax Debate

There are numerous opinion pieces out there debating the pending expiration of the Bush era tax cuts. This article is one of the better that I have seen as it addresses the whole issue in context . The end of her article is perhaps the best where solutions are described. I agree- either scrap the whole IRS code and go with a flat tax and no deductions or a consumption tax . As she says at the very end, if you want to remove the money influence from Congress then take the tax code away. Good idea indeed!

spending down, markets up

Saw this article on spending by "the wealthy" which makes some good points. Little doubt that many folks are somewhat frozen in place in terms of financial decisions given the high level of uncertainty. Despite all of this, the month just ended was true to form and posted the best monthly increase since July 09. As we wrote a few weeks ago, historically July is the best month for the stock market while September is the worst. The month we are starting now is about in the middle.