2MERRILL

AGING POPULATIONS - AND FOR UN RETIREES, WHAT ABOUT PENSIONS?

Until the early 1990s nobody thought about populations getting older writes the Economist.  Of all and sundry, it was  our very own UN that had the foresight to organize a "world assembly on aging in 1982." Then silence, until the World Bank made a report out  in 1994 on "Averting the Old Age Crisis", arguing that pension arrangements in most countries were unsustainable. However, the retirement age at the UN has remained at the same low levels and the UN pension fund has been sustainable ever since; but we don't know at what cost to all of us. However, the UN Pension Fund may get very expensive in the future unless the retirement age in the UN is dramatically increased.

WHEN STOCK PRICES DROP, WHERE DOES THE MONEY GO?

When stock prices drop, where does the money go? is a great read how stock values are moved by market perception.  I still think that mutual funds make sense for the ordinary investor as you don't have to worry about all these market theories. 

SAVING AND INVESTMENT TIPS - FROM THE GOVERNMENT

Check out these saving and investment tips from the US government's SEC Office of Investor Education and Advocacy.  If you have any questions, do not contact the US Treasury Department, Financial Management Service, or the writer of this message.  This message is purely for educational and informational purposes.  Here are some highlights which you should have already received in the mail from the IRS:

MUTUAL FUNDS MAKE SENSE FOR ORDINARY INVESTORS

Jon Stewart spotlight on CNBC is a is a good read .  It is so interesting that the experts did not see the market downturn coming.  But those who manage your money blame the market that your portfolio is down because the market is down.  But when the market is up they take credit for "themselves" and fail to give credit to the market, and the investors are so blind-sighted to notice it because the portfolio manager highlights the returns as his individual capability and not that of the market. For instance, if the market is up 12% and your expert-managed portfolio is 13%, that is one-percent credit to the expert and not 13%.

PORTFOLIO THEORY - LESSONS LEARNED

 

The market has dropped and many seem to have the answers now, in retrospect of course, and we may turn to them and say - So you are a big shot now?  But basically what has happened is that they have ignored the advice of the Three Wise Men of Finance. While portfolio theory can get a bit complex, its basic message that in order to reduce risk a portfolio should contain investments that are not correlated to each other.  For instance, if you own Dell and HP or Exxon Mobil and Shell, you can clearly see that these stocks will be correlated to what happens in the industry.  To dispel more complexity, it is clear that stocks and bonds are not correlated, at least in most market conditions.  So a properly diversified portfolio should reduce the exposure to risk.

SAVING MORE EACH MONTH

25 Ways to Save More Each Month caught my eye on the web news this morning.  There are some useful tips here for the average middle-class person and is worth reading. 

HEALTHY LIVING

Bulking purchases from the grocery stores is a great read, particularly if you purchase in bulk from a discount or membership store (Sam's club or Cosco) for example.

HOW TO CUT YOUR GAINS

Buffet Cut Your Gains can show how many investors reduce their gains by paying for middlemen or middle-women.

BEACH-HOUSE BARGAINS

Beach-house bargains is a good read for retirees contemplating relocating or purchasing second homes.

MONEY FOR OLD HOPE

Money for old hope is a great read if you like to learn something how markets work and how hard they are to predict.