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Notes From the Fieldby Martin Weil

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July 22, 2014

A Correction Will Come – Are You Ready?

As I wrote in my July letter, it has been some three years since the stock market last had a normal correction, a decline of more than 10%. These can be nasty experiences for those who may have accustomed themselves once again to steady market gains. This seems a dirty trick but it is just the way of the market.

A recent study, explored in Jason Zweig’s Intelligent Investor column in the WSJ, finds that individuals become risk-averse very quickly when exposed to the sorts of stresses provoked by sudden market declines. After such rapid sell-offs, markets typically recover gradually, but investors remain fearful of further losses and unwilling to take that risk for the prospect of seemingly small gains.

Exposure to stress makes people more loss-averse and diminishes their overall sensitivity to reward. and if a reward is of low magnitude, [people under stress] often don’t care about it very much.

Mauricio Delgado, a neuroscientist in the psychology department at Rutgers University in Newark, N.J.

There is no way to know whether the next market correction will come next week, next month or next year. But if there is anything that is certain, it is that there is one in our future. Which is why I am stressing that investors “fasten their seat belts,” by which I mean making sure that their portfolios are positioned so that the investor can psychologically (and financially) endure a 15% or greater stock market sell-off without panicking into selling.

 

July 19, 2014

Global Income Inequality is Falling

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. …

Policies on immigration and free trade, for example, sometimes increase inequality within a nation, yet can make the world a better place and often decrease inequality on the planet as a whole….

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth….

Yes, we might consider some useful revisions to current debates on inequality. But globally minded egalitarians should be more optimistic about recent history, realizing that capitalism and economic growth are continuing their historical roles as the greatest and most effective equalizers the world has ever known.

Tyler Cowen in the NY Times

 

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

- See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

- See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

- See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough…

The message from groups like Occupy Wall Street has been that inequality is up and that capitalism is failing us. A more correct and nuanced message is this: Although significant economic problems remain, we have been living in equalizing times for the world — a change that has been largely for the good. That may not make for convincing sloganeering, but it’s the truth…

- See more at: http://marginalrevolution.com/#sthash.tVnFynL5.dpuf

July 16, 2014

Comcast Customer Service Fail

This recorded telephone call of a consumer attempting in vain to cancel his Comcast service is lighting up the Internet, and creating a PR nightmare for the company. While this sounds like a parody but apparently is not, the experience seems not that different from ones I – and according to Yahoo Finance, most other consumers – have had with the cable company’s customer service reps of late.

July 14, 2014

Great News for Some. Maybe not so Great for the Auto Industry

The Finnish capital has announced plans to transform its existing public transport network into a comprehensive, point-to-point “mobility on demand” system by 2025 – one that, in theory, would be so good nobody would have any reason to own a car.

Helsinki’s extremely ambitious and forward-thinking plan is reported in The Guardian

July 11, 2014

Someone Who Has Thought Through His Priorities

And as a result, he has attained a degree of financial freedom many would envy.

Doug Immel recently completed his custom-built dream home, sparing no expense on details like cherry-wood floors, cathedral ceilings and stained-glass windows — in just 164 square feet of living space including a loft.

The 57-year-old schoolteacher’s tiny house near Providence, Rhode Island, cost $28,000 — a seventh of the median price of single-family residences in his state.

“I wanted to have an edge against career vagaries,” said Immel, a former real estate appraiser. A dwelling with minimal financial burden “gives you a little attitude.” He invests the money he would have spent on a mortgage and related costs in a mutual fund, halving his retirement horizon to 10 years and maybe even as soon as three. “I am infinitely happier.”

Bloomberg

Not many people would be comfortable living in 200 sft.  But I wonder how many would have a happier life trading that unused 3rd, 4th or 5th bedroom for a greater degree of financial freedom.

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